Performance Comparison of Different Mutual Funds

ii shree ii

2010

2010

Performance Comparison of Different

Mutual Funds

Summer Internship Programme

At

ESCORTS SECURITIES LIMITED

11, SC India House, K.G. Marg, Connaught Place,

NEW DELHI - 110001

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Accman Institute of Management

SUMMER INTERNSHIP REPORT

On

PERFORMANCE COMPARISON OF DIFFERENT MUTUAL FUNDS

At


SUBMITTED BY:

SATYENDRA SINGHAL

(Accman Institute of Management, Greater Noida, U.P.)

Certificate of Authenticity 2 | P a g e


This is certify that the project work was done on “Performance

Comparison of Different Mutual Funds” submitted to Accman

Institute of Management, Greater Noida is in partial fulfillment the

requirement for the award of Post Graduate diploma in Management, is a

bonafide `work carried out by me at ‘Escorts Securities Limited’ at

Connaught Place in New Delhi. I declare that the form and the

content of the above mentioned project are original and have not been

submitted in part or full, for any other degree or diploma of this or any

other Organization/ Institute/ University.

Place: New Delhi (Satyendra Singhal)

Date: 30th June 2010

Signature

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Certificate of Approval of Organization

PREFACE: 4 | P a g e


A Mutual Fund is nothing more than a collection of stocks and/or bonds.

Mutual fund as a company that brings together a group of people and

invests their money in stocks, bonds, and other securities. Each

investor owns shares, which represent a portion of the holdings of the

fund.

The mutual fund industry in India started in 1963 with the formation of

Unit Trust of India, at the initiative of the Government of India and

Reserve Bank of India.

It is registered with SEBI and functions under the Mutual Fund

Regulations.

Conforming to the SEBI Mutual Fund Regulations, and with recent

mergers taking place among different private sector funds, the mutual

fund industry has entered its current phase of consolidation and growth.

ACKNOWLEDGEMENT

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With great pleasure, we express our sincere thanks to our project guide,

Mr. Jagveer Singh Fauzdar, Designation- Fund Manager (Equity),

Escorts Securities Limited, for guiding us right form the inception till the

successful completion of the project. We also thankful to Mr. Manuj Jain for

guiding us. We sincerely acknowledge them for extending their valuable

guidance, support for literature, critical reviews of project and the report and

above all the moral support they had provided to us with all stages of this

project.

We express our heartiest thanks to Prof. Mr. A. K. Paul & Prof. Preetanjan

Kaur for giving us an opportunity to work under their guidance. They gave us

the guidelines that helped us a lot in the preparation of our Project Report.

We express our sincere gratitude to our friends and all others who have

directly or indirectly inspired and helped us to complete our project with

unremitting zeal and enthusiasm.

Thank You………..

Yours Truly:-

KARAN ARORA

SATYENDRA SINGHAL

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EXECUTIVE SUMMARY

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.

Portfolio Managers evaluate their portfolio performance and identify the

sources of strength and weakness. The evaluation of the portfolio provides a

feed back about the performance to evolve a better management strategy.

Even through evaluation of portfolio performance is considered to be the last

stage of investment process, the managed portfolios are commonly known as

mutual funds. Various managed portfolios are prevalent in the capital market.

Their relative merits of return and risk criteria have to be evaluated.

Sharpe’s performance index gives a single value to be used for the

performance ranking of various funds or portfolios. Sharpe index measures the

risk premium of the portfolio relative to the total amount of risk in the portfolio.

This risk premium is the difference between the portfolio’s average rate of

return and risk less rate of return. The standard deviation of the portfolio

indicates the risk. The index assigns the highest values to assets that have best

risk-adjusted average rate of return. The Sharpe ratio provides me with a return

for unit of the risk measure

Table of Contents

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Serial No. Particular Page

No.

1.

1.0 Introductory Page:- 5-7

1.1 Preface 5

1.2 Acknowledgement 6

1.3 Executive Summary 7

2.

2.0 Concept of Mutual Funds:- 11-38

2.1 History of Mutual Funds 12-15

2.2 Understanding of Mutual Funds 16-23

2.3 Mutual Funds in India 23-24

2.4 Various Kinds of Mutual Funds 24-38

3.

3.0 Industry Overview:- 39-50

3.1 Indian Stock & Investment Market 39

3.2 Bombay Stock Exchange (BSE) 40-45

3.3 National Stock Exchange (NSE) 46-50

4.

4.0 Company Overview: 51-70

4.1 Escorts Group: History 52

4.2 Leadership Team & Fact Sheet & Products 53-55

4.3 Escorts Securities Limited: About Us 56-57

4.4 Key Personnel 58

4.5 Escorts Products 59-69

4.6 List of Mutual Fund Schemes 70

5.0 Research Methodology 71-73

5.1 Objective 71

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5.

5.2 Data Collection 72

5.3 Techniques Used 73

5.4 Scope & Limitations 73

6.

6.0 Analysis & Interpretations:- 74-113

6.1 Performance Comparison Techniques 74-77

6.2 Sharpe Performance Index Model 77-80

6.3 Performance Evaluation of Different Mutual Funds 81-112

6.3.1

6.3.2

6.3.3

6.3.4

6.3.5

Birla Sunlife Mutual Funds

Kotak Mahindra Mutual Funds

Escorts Mutual Funds

ICICI Prudential Mutual Funds

Reliance Mutual Funds

832-86

87-91

92-102

103-107

108-112

7. 7.0 Findings, Suggestions/

Recommendations and Conclusion

113-114

7.1 Findings 113

7.2 Suggestions / Recommendations 114

7.3 Conclusions 114

8. 8.0 Bibliography 115

Table of Figures

Serial

No.

Figure

No.

Particular Page No.

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1. 2.1 Mutual Funds Operations 11

2. 2.2 Working of Mutual Funds 11

3. 2.3 Growth In Assets Under Management (AUM) 15

4. 2.4 Understanding of Mutual Munds 16

5. 2.5 Risk & Return Matrix 19

Table of Tables

Serial

No.

Table

No.

Particular Page No.

1. 2.1 Amount Mobilized in Mutual Funds 13

2. 2.2 Gross Fund Mobilization & AUM 14-15

3. 4.1 & 4.2 Shareholding Pattern of Escorts Limited 54

4. 4.3 Escorts Power & Energy Fund 59

5. 4.4 Escorts Opportunities Fund 60

6. 4.5 Escorts Balanced Fund 61

7. 4.6 Escorts Income Plan 62

8. 4.7 Escorts Tax Plan 63

9. 4.8 Escorts Growth Plan 63

10. 4.9 Escorts Gilt Plan 64

11. 4.10 Escorts Liquid Plan 65

12. 4.11 Escorts Leading Sectors Fund 66

13. 4.12 Escorts Income Bond 67

14. 4.13 Escorts High Yield Equity Plan 68

15. 4.14 Escorts Floating Rate Fund 69

Concept of Mutual Fund

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

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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:

History of Mutual Funds (Evolution: Mutual Funds Industry in India)

The formation of Unit Trust of India marked the evolution of the Indian mutual fund

industry in the year 1963. The primary objective at that time was to attract the small

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Mutual Fund

Operation Flow Chart

Working of Mutual Fund

Figure: 2.1

Figure:2.2

investors and it was made possible through the collective efforts of the Government

of India and the Reserve Bank of India. The history of mutual fund industry in India

can be better understood divided into following phases:

Phase 1 Establishment and Growth of Unit Trust of India - 1964- 87

Unit Trust of India enjoyed complete monopoly when it was established in the year

1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it

continued to operate under the regulatory control of the RBI until the two were de-

linked in 1978 and the entire control was transferred in the hands of Industrial

Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as

Unit Scheme 1964 (US-64), which attracted the largest number of investors in any

single investment scheme over the years.

UTI launched more innovative schemes in 1970s and 80s to suit the needs of different

investors. It launched ULIP in 1971, six more schemes between 1981- 1984,

Children's Gift Growth Fund and India Fund (India's first offshore fund) in 1986, Master

share (India's first equity diversified scheme) in 1987 and Monthly Income Schemes

(offering assured returns) during 1990s. By the end of 1987, UTI's assets under

management grew ten times to Rs 6700 crores.

Phase II. Entry of Public Sector Funds - 1987-1993

The Indian mutual fund industry witnessed a number of public sector players entering the market in the year 1987.

In November 1987, SBI Mutual Fund from the State Bank of India became the first non-UTI mutual fund in India. SBI

Mutual Fund was later followed by Can bank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India

Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of the industry

increased seven times to Rs. 47,004 crores. However, UTI remained to be the leader with about 80% market share.

1992-93 Amount MobilizedAssets Under Management

Mobilization as % of gross Domestic

Savings

UTI 11,057 38,247 5.2%

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Public Sector 1,964 8,757 0.9%

Total 13,021 47,004 6.1%

Phase III. Emergence of Private Sector Funds - 1993-96

The permission given to private sector funds including foreign fund management

companies (most of them entering through joint ventures with Indian promoters) to

enter the mutual fund industry in 1993, provided a wide range of choice to investors

and more competition in the industry. Private funds introduced innovative products,

investment techniques and investor-servicing technology. By 1994-95, about 11

private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed robust growth and stricter regulation from the

SEBI after the year 1996. The mobilization of funds and the number of players

operating in the industry reached new heights as investors started showing more

interest in mutual funds.

Inventors' interests were safeguarded by SEBI and the Government offered tax

benefits to the investors in order to encourage them. SEBI (Mutual Funds)

Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual

funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands

of investors from income tax. Various Investor Awareness Programmes were launched

during this phase, both by SEBI and AMFI, with an objective to educate investors and

make them informed about the mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal

status as a trust formed by an Act of Parliament. The primary objective behind this

was to bring all mutual fund players on the same level. UTI was re-organized into two

parts:

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Table: 2.1

1. The Specified Undertaking,

2. The UTI Mutual Fund

Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past

schemes (like US-64, Assured Return Schemes) are being gradually wound up.

However, UTI Mutual Fund is still the largest player in the industry. In 1999, there was

a significant growth in mobilization of funds from investors and assets under

management which is supported by the following data:

GROSS FUND MOBILISATION (RS. CRORES)

FROM TO UTIPUBLIC SECTOR

PRIVATE SECTOR

TOTAL

01-April-98 31-March-99 11,679 1,732 7,966 21,377

01-April-99 31-March-00 13,536 4,039 42,173 59,748

01-April-00 31-March-01 12,413 6,192 74,352 92,957

01-April-01 31-March-02 4,643 13,613 1,46,267 1,64,523

01-April-02 31-Jan-03 5,505 22,923 2,20,551 2,48,979

01-Feb.-03 31-March-03 * 7,259* 58,435 65,694

01-April-03 31-March-04 - 68,558 5,21,632 5,90,190

01-April-04 31-March-05 - 1,03,246 7,36,416 8,39,662

01-April-05 31-March-06 - 1,83,446 9,14,712 10,98,158

ASSETS UNDER MANAGEMENT (RS. CRORES)

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Table: 2.2

AS ON UTI PUBLIC SECTOR PRIVATE SECTOR TOTAL

31-March-99 53,320 8,292 6,860 68,472

Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and acquisitions recently, examples

of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C

Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more

international mutual fund players have entered India like Fidelity, Franklin Templeton

Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a

continuing phase of growth of the industry through consolidation and entry of new

international and private sector players.

UNDERSTANDING MUTUAL FUND

Mutual fund is a trust that pools money from a group of investors (sharing common

financial goals) and invest the money thus collected into asset classes that match the

stated investment objectives of the scheme. Since the stated investment objectives

of a mutual fund scheme generally form the basis for an investor's decision to

contribute money to the pool, a mutual fund can not deviate from its stated

objectives at any point of time. Every Mutual Fund is managed by a fund manager,

who using his investment management skills and necessary research works ensures

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Concept of Mutual FundsConcept of Mutual Funds

Figure: 2.3

much better return than what an investor can manage on his own. The capital

appreciation and other incomes earned from these investments are passed on to the

investors (also known as unit holders) in proportion of the number of units they own.

When an investor subscribes for the units of a mutual fund, he becomes part owner of

the assets of the fund in the same proportion as his contribution amount put up with

the corpus (the total amount of the fund). Mutual Fund investor is also known as a

mutual fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments

(such as shares, debentures etc.) is reflected in the Net Asset Value (NAV) of the

scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net

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Many Investors with common financial objectives pool their money

Many Investors with common financial objectives pool their money

Investors, on a proportionate basis, get mutual fund units for the sum contributed to

the pool

Investors, on a proportionate basis, get mutual fund units for the sum contributed to

the pool

The money collected from investors is invested into shares, debentures and the other

securities by the fund manager

The money collected from investors is invested into shares, debentures and the other

securities by the fund manager

The fund manager realize gains or losses, and collects dividend or interest income

The fund manager realize gains or losses, and collects dividend or interest income

Any capital gains or losses from such investment are passed on to the investors in

proportion of the number of units held by them

Any capital gains or losses from such investment are passed on to the investors in

proportion of the number of units held by them

Figure:2.4

of its liabilities. NAV of a scheme is calculated by dividing the market value of

scheme's assets by the total number of units issued to the investors.

For example:

A. If the market value of the assets of a fund is Rs. 100,000

B. The total number of units issued to the investors is equal to 10,000.

C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00

D. Now if an investor 'X' owns 5 units of this scheme

E. Then his total contribution to the fund is Rs. 50 (i.e. Number of units held

multiplied by the NAV of the scheme)

DIVERSIFICATION

Diversification is nothing but spreading out your money across available or different

types of investments. By choosing to diversify respective investment holdings

reduces risk tremendously up to certain extent.

The most basic level of diversification is to buy multiple stocks rather than just one

stock. Mutual funds are set up to buy many stocks. Beyond that, you can diversify

even more by purchasing different kinds of stocks, then adding bonds, then

international, and so on. It could take you weeks to buy all these investments, but if

you purchased a few mutual funds you could be done in a few hours because mutual

funds automatically diversify in a predetermined category of investments (i.e. -

growth companies, emerging or mid size companies, low-grade corporate bonds, etc.)

TYPES OF RETURN

There are three ways, where the total returns provided by mutual funds can be

enjoyed by investors:

1. Income is earned from dividends on stocks and interest on bonds. A fund pays

out nearly all income it receives over the year to fund owners in the form of a

distribution.

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2. If the fund sells securities that have increased in price, the fund has a capital

gain. Most funds also pass on these gains to investors in a distribution.

3. If fund holdings increase in price but are not sold by the fund manager, the

fund's shares increase in price. You can then sell your mutual fund shares for a

profit. Funds will also usually give you a choice either to receive a check for

distributions or to reinvest the earnings and get more shares.

UNDERSTANDING AND MANAGING RISK

All investments whether in shares, debentures or deposits involve risk: share value

may go down depending upon the performance of the company, the industry, state of

capital markets and the economy; generally, however, longer the term, lesser the

risk; companies may default in payment of interest/principal on their

debentures/bonds/deposits; the rate of interest on an investment may fall short of the

rate of inflation reducing the purchasing power.

While risk cannot be eliminated, skillful management can minimize risk. Mutual Funds

help to reduce risk through diversification and professional management. The

experience and expertise of Mutual Fund managers in selecting fundamentally sound

securities and timing their purchases and sales help them to build a diversified

portfolio that minimize risk and maximizes returns.

The risk return trade-off indicates that if investor is willing to take higher risk then

correspondingly he can expect higher returns and vise versa if he pertains to lower

risk instruments, which would be satisfied by lower returns. For example, if an

investors opt for bank FD, which provide moderate return with minimal risk. But as he

moves ahead to invest in capital protected funds and the profit-bonds that give out

more return which is slightly higher as compared to the bank deposits but the risk

involved also increases in the same proportion.

Thus investors choose mutual funds as their primary means of investing, as Mutual

funds provide professional management, diversification, convenience and liquidity.

That doesn’t mean mutual fund investments risk free. This is because the money that

is pooled in are not invested only in debts funds which are less riskier but are also

invested in the stock markets which involves a higher risk but can expect higher

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returns. Hedge fund involves a very high risk since It is mostly traded in the

derivatives market which is considered very volatile.

INDICATORS OF INVESTMENT RISK

There are five main indicators of investment risk that apply to the analysis of stocks,

bonds and mutual fund portfolios. They are alpha, beta, r-squared, standard

deviation and the Sharpe ratio. These statistical measures are historical predictors

of investment risk/volatility and are all major components of modern portfolio

theory (MPT). The MPT is a standard financial and academic methodology used for

assessing the performance of equity, fixed-income and mutual fund investments by

comparing them to market benchmarks.

All of these risk measurements are intended to help investors determine the risk-

reward parameters of their investments. In this article, we'll give a brief explanation

of each of these commonly used indicators.

1. Alpha

Alpha is a measure of an investment's performance on a risk-adjusted basis. It takes

the volatility (price risk) of a security or fund portfolio and compares its risk-adjusted

performance to a benchmark index. The excess return of the investment relative to

the return of the benchmark index is its "alpha".

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Figure: 2.5

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Simply stated, alpha is often considered to represent the value that a portfolio

manager adds or subtracts from a fund portfolio's return. A positive alpha of 1.0

means the fund has outperformed its benchmark index by 1%. Correspondingly, a

similar negative alpha would indicate an underperformance of 1%. For investors, the

more positive an alpha is, the better it is.

2. Beta

Beta, also known as the "beta coefficient," is a measure of the volatility, or systematic

risk, of a security or a portfolio in comparison to the market as a whole. Beta is

calculated using regression analysis, and you can think of it as the tendency of an

investment's return to respond to swings in the market. By definition, the market has

a beta of 1.0. Individual security and portfolio values are measured according to how

they deviate from the market.

A beta of 1.0 indicates that the investment's price will move in lock-step with the

market. A beta of less than 1.0 indicates that the investment will be less volatile than

the market, and, correspondingly, a beta of more than 1.0 indicates that the

investment's price will be more volatile than the market. For example, if a fund

portfolio's beta is 1.2, it's theoretically 20% more volatile than the market.

Conservative investors looking to preserve capital should focus on securities and fund

portfolios with low betas, whereas those investors willing to take on more risk in

search of higher returns should look for high beta investments.

3. R-Squared

R- Squared is a statistical measure that represents the percentage of a fund

portfolio's or security's movements that can be explained by movements in a

benchmark index. For fixed-income securities and their corresponding mutual funds,

the benchmark is the U.S. Treasury Bill and, likewise with equities and equity funds,

the benchmark is the S&P 500 Index. R-squared values range from 0 to 100.

According to Morningstar, a mutual fund with an R-squared value between 85 and

100 has a performance record that is closely correlated to the index. A fund rated 70

or less would not perform like the index. Mutual fund investors should avoid actively

managed funds with high R-squared ratios, which are generally criticized by analysts

as being "closet" index funds.

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4. Standard Deviation

Standard deviation measures the dispersion of data from its mean. In plain English,

the more that data is spread apart, the higher the difference is from the norm. In

finance, standard deviation is applied to the annual rate of return of an investment to

measure its volatility (risk). A volatile stock would have a high standard deviation.

With mutual funds, the standard deviation tells us how much the return on a fund is

deviating from the expected returns based on its historical performance.

5. Sharpe Ratio

Developed by Nobel laureate economist William Sharpe, this ratio measures risk-

adjusted performance. It is calculated by subtracting the risk-free rate of return (U.S.

Treasury Bond) from the rate of return for an investment and dividing the result by

the investment's standard deviation of its return.

The Sharpe ratio tells investors whether an investment's returns are due to smart

investment decisions or the result of excess risk. This measurement is very useful

because although one portfolio or security can reap higher returns than its peers, it is

only a good investment if those higher returns do not come with too much additional

risk. The greater an investment's Sharpe ratio, the better its risk-adjusted

performance.

ADVANTAGES OF MUTUAL FUND

1. Portfolio Diversification: Mutual Funds invest in a well-diversified portfolio of

securities which enables investor to hold a diversified investment portfolio

(whether the amount of investment is big or small).

2. Professional Management: Fund manager undergoes through various

research works and has better investment management skills which ensure

higher returns to the investor than what he can manage on his own.

3. Less Risk: Investors acquire a diversified portfolio of securities even with a

small investment in a Mutual Fund. The risk in a diversified portfolio is lesser

than investing in merely 2 or 3 securities

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4. Low Transaction Costs: Due to the economies of scale (benefits of larger

volumes), mutual funds pay lesser transaction costs. These benefits are passed

on to the investors.

5. Liquidity: An investor may not be able to sell some of the shares held by him

very easily and quickly, whereas units of a mutual fund are far more liquid.

6. Choice of Schemes: Mutual funds provide investors with various schemes

with different investment objectives. Investors have the option of investing in a

scheme having a correlation between its investment objectives and their own

financial goals. These schemes further have different plans/options.

7. Transparency & Flexibility:: Funds provide investors with updated

information pertaining to the markets and the schemes. All material facts are

disclosed to investors as required by the regulator.

DISADVANTAGES OF MUTUAL FUND

1. Costs Control Not in the Hands of an Investor: Investor has to pay

investment management fees and fund distribution costs as a percentage of

the value of his investments (as long as he holds the units), irrespective of the

performance of the fund.

2. No Customized Portfolios: The portfolio of securities in which a fund invests

is a decision taken by the fund manager. Investors have no right to interfere in

the decision making process of a fund manager, which some investors find as a

constraint in achieving their financial objectives.

3. Difficulty in Selecting a Suitable Fund Scheme: Many investors find it

difficult to select one option from the plethora of funds/schemes/plans

available.

REGULATORY AUTHORITIES

To protect the interest of the investors, SEBI formulates policies and regulates the

mutual funds. It notified regulations in 1993 (fully revised in 1996) and issues

guidelines from time to time. MF either promoted by public or by private sector

entities including one promoted by foreign entities is governed by these Regulations.

SEBI approved Asset Management Company (AMC) manages the funds by making

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investments in various types of securities. Custodian, registered with SEBI, holds the

securities of various schemes of the fund in its custody.

According to SEBI Regulations, two thirds of the directors of Trustee Company or

board of trustees must be independent. The Association of Mutual Funds in India

(AMFI) reassures the investors in units of mutual funds that the mutual funds function

within the strict regulatory framework. Its objective is to increase public awareness of

the mutual fund industry. AMFI also is engaged in upgrading professional standards

and in promoting best industry practices in diverse areas such as valuation,

disclosure, transparency etc.

MUTUAL FUNDS IN INDIA

1) ABN AMRO Mutual Fund

2) Benchmark Mutual Fund

3) Birla Sun Life Mutual Fund

4) Bharti AXA Mutual Fund

5) BOB Mutual Fund

6) Canara Robero Mutual Fund

7) DBS Chola Mutual Fund

8) Deutsche Mutual Fund

9) DSP BlackRock Mutual Fund

10)Escorts Mutual Fund

11)Fidelity Mutual Fund

12)Fortis ( ABN ) Mutual Fund

13)Franklin Templeton Mutual Fund

14)HDFC Mutual Fund

15)HSBC Mutual Fund

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16) ING Vysya Mutual Fund

17) JM Financial Mutual Fund

18)Kotak Mahindra Mutual Fund

19)LIC Mutual Fund

20)Principal Mutual Fund

21) ICICI Prudential Mutual Fund

22)Reliance Mutual Fund

23)Sahara Mutual Fund

24)SBI Mutual Fund

25)Standard Chartered Mutual Fund

26)Sundaram Mutual Fund

27)Tata Mutual Fund

28)Taurus Mutual Fund

29)UTI Mutual Fund

Various kinds of Mutual funds in India

Classification of Mutual Funds in India has been done on the basis of their investment

objective and structure. Classification of Mutual Funds in India has be done into main

types such as Income Funds, Sector- Specific Funds, Large Cap Funds, Fixed- Income

Funds, Interval Funds, Closed- End Funds, and Tax Saving Funds. Income Funds in

India are a kind of mutual fund whose aim is to provide to the investors with steady

and regular income. They usually invest their principal in securities such as corporate

debentures, bonds, and government securities.

Sector- Specific Funds in India are funds that make investments in specified sectors

only. They give importance to one sector only such as pharmaceuticals, software,

infrastructure, and health care. Large Cap Funds in India are a kind of mutual fund

24 | P a g e


http://www.mutualfundsnavindia.com/getfundsmajor.php?key=uti

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=taurus

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=tata

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=sundaram

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=G

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=sbi

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=sahara

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=reliance

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=ICICI+Prudential

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=principal

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=lic

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=kotak+mahindra

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=jm+financial

http://www.mutualfundsnavindia.com/getfundsmajor.php?key=ing

that makes investment in the shares of large blue chip companies. Fixed- Income

Funds in India makes investment in debt securities that have been issued either by

the banks, government, or companies. They are also known as income funds and debt funds.

Interval Funds Income Funds

Tax Saving Funds Sector-Specific Funds

Fixed-Income Funds Closed-End Funds

Open-End Funds Large Cap Funds

Mid-Cap Funds Equity Funds

Balanced Funds Growth Funds

No Load Funds Exchange Traded Funds

Value Funds Money Market Funds

International Mutual Funds Regional Mutual Funds

Sector Funds Index Funds

Fund of Funds

Open- End Funds

Abstract:

Open- End Funds in India is a kind of mutual fund that can be sold and purchased

all through out the year. Open- End Funds in India have no fixed date of maturity. The

investors buy and sell Open- End Funds in India at related prices of Net Asset Value

(NAV).

25 | P a g e


http://business.mapsofindia.com/mutual-funds/classification/fund.html

http://business.mapsofindia.com/mutual-funds/classification/index-funds.html

http://business.mapsofindia.com/mutual-funds/classification/sector.html

http://business.mapsofindia.com/mutual-funds/classification/regional.html

http://business.mapsofindia.com/mutual-funds/classification/international.html

http://business.mapsofindia.com/mutual-funds/classification/money-market.html

http://business.mapsofindia.com/mutual-funds/classification/value.html

http://business.mapsofindia.com/mutual-funds/classification/exchange-traded.html

http://business.mapsofindia.com/mutual-funds/classification/no-load.html

http://business.mapsofindia.com/mutual-funds/classification/growth.html

http://business.mapsofindia.com/mutual-funds/classification/balanced.html

http://business.mapsofindia.com/mutual-funds/classification/equity.html

http://business.mapsofindia.com/mutual-funds/classification/mid-cap.html

http://business.mapsofindia.com/mutual-funds/classification/large-cap.html

http://business.mapsofindia.com/mutual-funds/classification/open-end.html

http://business.mapsofindia.com/mutual-funds/classification/closed-end.html

http://business.mapsofindia.com/mutual-funds/classification/fixed-income.html

http://business.mapsofindia.com/mutual-funds/classification/sector-specific.html

http://business.mapsofindia.com/mutual-funds/classification/tax-saving.html

http://business.mapsofindia.com/mutual-funds/classification/income.html

http://business.mapsofindia.com/mutual-funds/classification/interval.html

An overview of Open- End Funds in India:

Open- End Funds in India is such that the investors can sell as well as buy all through

out the year. The investors sell and buy units of Open- End Funds in India at the

related prices of Net Asset Value (NAV) each day. An investor can buy Open- End

Funds in India either from a brokerage house or through the mutual fund company.

Open- End Funds in India have no fixed date of maturity. The main advantage of

Open- End Funds in India is that it offers liquidity to the investors for they can sell the

units whenever they need the money.

Major Open- End Funds in India are:

UTI Gold Exchange Traded Fund

Standard Chartered Premier Equity Fund

Sahara Mid- Cap Fund

Lotus India Tax Plan

Reliance Tax Saver (ELSS) Fund

Canara Robeco Equity Tax Saver- 93

DSP Merrill Lynch Tax Saver Fund

Tata Life Sciences and Technology Fund

JM Arbitrage Advantage Fund

Kotak Gold ETF

Closed- End Funds

Closed- End Funds in India have a specified period of maturity which varies

between three to fifteen years. The investors can make investments in Closed- End

Funds in India during the period of public offer or they have to buy the units of the

funds from the stock exchanges.

26 | P a g e


Closed- End Funds in India:

Closed- End Funds in India have a fixed period of maturity which can vary between

three to fifteen years. Closed- End Funds in India can be subscribed to only during the

period of time that has been specified. Investors can make investments in Closed-

End Funds in India either during the period of public offer or buy the funds from the

stock exchanges.

Major Closed- End Funds in India are:

UTI Wealth Builder

HDFC Long-Term Equity

Standard Chartered Enterprise Equity

Franklin India Smaller Companies

Birla Long-Term Advantage

Tata Capital Builder

ING Vysya C.U.B.

Prudential ICICI Fusion

Tata Equity Management

Equity funds

Equity funds or also called stock mutual funds are a special type of mutual fund

wherein, the corpus accumulated through this fund is invested in stocks of public

companies. The operation of the Equity Funds is regulated by the Association of the

Mutual Funds of India (AMFI).

With the opening up of the Indian economy post 1990s witnessed tremendous rise of

the Indian financial sector, especially the capital market. The Ministry of Finance

Government of India played an important role in the substantial growth of the Indian

27 | P a g e


financial market. The regulatory of the capital markets of India were made more

transparent and accountable in dealing with capital market transactions.

Definition and features of the Equity Funds:

Equity funds also known as stock mutual funds are a special type of mutual

fund wherein, the corpus accumulated through this fund is invested in stocks of public

companies. Holding of stocks or equity in a company means having part ownership or

equity in that particular company. The main objective of holding stocks of a company

is to reap profit on investment in such stocks after the company makes a profit in its

business.

These stocks are generally classified as small, medium, and large sized stocks, which

is further defined according to their individual market capitalization. The equity

managers are trained professionals who format and pick stocks for investments. The

formation of equity portfolios are generally made either by applying value-approach

or by growth-approach. In the value-approach method the stocks with lesser value

than its competitors are picked and in the growth-approach method the stocks with

higher growth opportunity than its competitors or markets are picked for investments.

In another type of approach, both the value and growth based stocks are picked for

investments.

Equity funds are considered to be the more risky funds as compared to other fund

types, but they also provide higher returns than other funds. It is advisable that an

investor looking to invest in an equity fund should invest for long term i.e. for 3 years

or more.

Debt / Income Funds

Funds that invest in medium to long-term debt instruments issued by private

companies, banks, financial institutions, governments and other entities belonging to

various sectors (like infrastructure companies etc.) are known as Debt / Income

Funds. Debt funds are low risk profile funds that seek to generate fixed current

income (and not capital appreciation) to investors. In order to ensure regular income

28 | P a g e


to investors, debt (or income) funds distribute large fraction of their surplus to

investors. Although debt securities are generally less risky than equities, they are

subject to credit risk (risk of default) by the issuer at the time of interest or principal

payment. To minimize the risk of default, debt funds usually invest in securities from

issuers who are rated by credit rating agencies and are considered to be of

"Investment Grade". Debt funds that target high returns are more risky Some Debt

Funds are:

Diversified Debt Funds –

Focused Debt Funds – 1 . High Yield Debt funds

2. Assured Return Funds

3. Fixed Term Plan Series.

Large Cap Funds

Abstract:

Large Cap Funds in India are a kind of mutual fund which makes investments

mainly in the shares of big companies. The investors prefer to make investments in

Large Cap Funds in India for they are considered to have lower levels of risks and this

ensures that their money is safe.

A glance at Large Cap Funds in India:

Large Cap Funds in India are a kind of mutual fund that looks for appreciation of

capital by investing mainly in the shares of companies that are big blue chip. The big

blue chip companies in which Large Cap Funds in India make their investments have

above- average potential for growth in earnings. The large cap companies in which

Large Cap Funds in India makes investments are usually companies that have a

market capitalization that is more than Rs. 1000 crores. The main advantage of Large

Cap Funds in India is that they are considered to be of low return and low risk

category. This ensures that the investments of the investors are relatively safe.

Major Large Cap Funds in India are:

Franklin India Blue Chip

DSPML Top 100 Equity

29 | P a g e


HDFC Top 200

Principal Large Cap Fund

Reliance Growth Fund

Kotak 30

UTI Large Cap Fund

Interval Funds

Abstract:

Interval Funds in India combine the characteristics of both close and open ended

funds. Interval Funds in India offer flexibility to the investors for they can be

repurchased and sold at a time period that is predetermined. Interval Funds in India

have been launched by many fund houses.

Meaning of Interval Funds in India:

Interval Funds in India combine the characteristics of both the close ended funds and

open ended funds. This means that Interval Funds in India can be repurchased and

sold at the time that has been predetermined. Interval Funds in India are usually

repurchased every six or twelve months or as has been unveiled in the annual report

and prospectus of the fund. Interval Funds in India are sold and repurchased at the

prices that are related to the Net Asset Value (NAV).

Advantages of Interval Funds in India:

The advantage of Interval Funds in India is that it allows the investor more flexibility

than the close ended funds for he can sell it at the predetermined time. Further the

advantage of Interval Funds in India is that it ensures that the investor has liquidity of

capital at regular intervals of time.

Mutual Fund companies that have launched Interval Funds in India

are:

Birla Sun Life Mutual Fund

Prudential ICICI Mutual Fund

ABN-AMRO Mutual Fund

30 | P a g e


Tax Saving Funds

Abstract:

Tax Saving Funds in India are also known as equity-linked savings schemes. Tax

Saving Funds in India provide tax rebates under Section 88 of the Income Tax Act.

They are beneficial for those investors who want to benefit from the rebates that are

given in taxes. .

Meaning of Tax Saving Funds in India:

Tax Saving Funds in India offer to the investors rebates in taxes under the Income

Tax Act, Section 88 and they are also known as equity-linked savings schemes. Tax

Saving Funds in India usually have a period of lock- which is generally of three years.

As a result of this, the manager of the fund is not concerned about factors such as the

pressures of redemption, performance of the fund during a short time, and thus does

his job by keeping in view the long term goal.

Major Tax Saving Funds in India is:

Franklin India Tax Shield

HDFC Tax Saver

Sundaram Tax Saver

HDFC Long Term Advantage

Prudential ICICI Tax Plan

Birla Equity Plan

UTI Equity Tax Savings

Tata Tax Saving Fund

Magnum Tax Gain

Fixed- Income Funds

31 | P a g e


Abstract:

Fixed- Income Funds in India are a kind of mutual fund which makes investment in

debt securities that have been issued either by the companies, banks, or government.

Fixed- Income Funds in India are also known as debt funds and income funds.

A glance at Fixed- Income Funds in India:

Fixed- Income Funds in India are also known as debt funds or income funds.

Fixed- Income Funds in India make investments in debt securities that have been

issued either by the banks, government or companies. The debt securities in which

Fixed- Income Funds in India makes investments are also known as commercial

papers of deposit or treasury bills if the duration is less than one year and in case the

duration is more than one year then the debt securities are known as bonds or

debentures. The issuer of the debt securities has the obligation to pay the interest

and principal on the time schedule that has been fixed.

Major fund houses that have launched Fixed- Income Funds in India

are:

Sundaram BNP Paribas Mutual Fund

Franklin Templeton India Mutual Fund

Fidelity Fund Management

Reliance Mutual Fund

Mid-Cap Funds

Mid-cap funds are a special type of mutual fund wherein, the corpus accumulated is

invested in small or medium sized companies. With the rise of large caps the heavy

weight investors like the mutual funds and Foreign Institutional Investors are

increasingly investing in mid cap funds.

Definition and features of the Mid-Cap Funds:

Mid-cap funds are a special type of mutual fund wherein, the

corpus accumulated is invested in small or medium sized companies. In the absence

of any standardized definition or definite classification of small or medium sized

32 | P a g e


company, each mutual fund classifies small and medium sized companies according

to its own policies. In general, companies with a market capitalization up to Rs 500

crores are regarded as small and companies with a market capitalization over Rs 500

crores but below Rs 1,000 crores are defined as medium sized by the mutual fund

industry. Mid-cap funds bear high risk factors and thus offer high returns in case of

positive movements of the indexes. Further, opportunity of investment in Mid-cap

funds is high due to low identification factor in the market. Another important feature

of these Mid-Cap Funds is that they tend to grow in size as more investors get

involved.

The net effect is that, huge amount of money are invested against few stocks.

Experts are of the opinion that investments in Mid-Cap Funds should follow

investment patterns of sectorial funds and one should not focus only on these funds

alone. Further, investment in Mid-Cap Funds should have long term perspective. With

the rise of large caps the heavy weight investors like the mutual funds and Foreign

Institutional Investors are increasingly investing in mid cap funds. However

investment in Mid-cap funds should be undertaken with caution since these tend to

be volatile because of the high risk involved.

Balanced Fund

Balanced funds also known as the hybrid funds wherein, the corpus accumulated

is invested in combination of common stock, preferred stock, bonds, and short-term

bonds. The balanced funds provide the investors with an opportunity to invest in a

single mutual fund that offers growth and income at the same time.

The Balanced Funds came into being in the Indian Capital market after the economic

reforms effected during the early 1990s. The Indian financial market got a major

boost from the reforms. The mutual funds market in India also experienced

substantial expansion.

Definition and features of the Balanced Funds:

Balanced funds also known as the hybrid funds wherein, the corpus accumulated is

invested in combination of common stock, preferred stock, bonds and short-term

33 | P a g e


bonds. In other words, it is a combination of many stocks and bonds, which is

structured to strike a balance of income and capital appreciation.

This combination is essentially done to minimize the risk involved in such

investments. Thus, the balanced funds provide the investors with an opportunity to

invest in a single mutual fund that offers growth and income at the same time. The

stocks meet the growth requirements and the bonds meet the income requirements.

Further, this combination helps to negate any fall in the value of the stocks in the

financial market.

Sector Funds

Sector Funds invest in a single type of industry, or in other words, a single sector.

Sector funds can be highly profitable.

Definition and features of the Sector Funds:

The Sector Funds are those types of mutual funds which accumulate stocks of

particular sector.

In other words sector funds invest in a single type of industry, like Information

Technology, Telecommunication, Pharmaceuticals, Infrastructure, etc.

The Sector Funds are structured in this particular manner in order to take advantage

of growth of particular type of industry. The Sector Funds can offer tremendous profit

to the investor if the funds are carefully chosen. The authorities to the Sector Funds in

India are the Association of Mutual Funds of India (AMFI), which operates in

accordance with the laid down guidelines of the Securities and Exchange Board of

India (SEBI). Moreover, investments in Sector Funds offer tax exemptions to the

investors (Chapter III of the Income Tax Act, 1961). With the growth of the Indian

industries the financial markets have undergone tremendous transformation. The rise

of different sectors has necessitated structuring of sector specific funds to attract

substantial amount of money for the growth of a specific sector in India.

34 | P a g e


Fund of Funds

Fund of funds is a type of mutual fund in which investment is done in other mutual

funds. Fund of funds offer a diversified portfolio to the investors. A mutual fund is a

consortium of independent organizations that accumulates the investments of

investors, both institutional and individual having common financial objectives. The

corpus accumulated by such investment is invested in capital market instruments.

The capital market instruments in which such investments are made are, shares,

debentures and other types of securities.

The profit earned on such investments is shared by the unit holders in proportion to

the number of units owned by them. Mutual fund is one of the most popular and

suitable type of investment instrument for the common investors. The main

advantage of investing in mutual funds is that they are relatively low in price and

involves lower risk factor in comparison to other forms of financial market

investment instruments. Moreover, the Chapter III of the Income Tax Act, 1961

provides tax exemption on mutual fund investments.

Definition and features of the Fund of Funds:

Amongst the wide variety of mutual funds are available in India, fund of funds is a

type of mutual fund wherein, the corpus accumulated is invested in types of other

mutual funds. Further, the most significant feature of fund of funds is that it holds

shares of a variety of mutual funds. Furthermore, Funds of funds are structured in

such a way so as to attain a more diversified approach than what the other types of

mutual funds offer. Generally, the Fund of Funds costs higher than any other type of

mutual fund. This is due to the fact that the cost of Fund of Funds involves part of the

expense fees charged by the component funds.

Income Funds

Abstract:

Income Funds in India provide to the investors regular income and also stability of

capital. Income Funds in India usually invest their principal in securities of fixed

35 | P a g e


income such as government securities, bonds, and corporate debentures. There are

many mutual funds houses that have launched Income Funds in India.

Meaning of Income Funds in India: Income Funds in India usually invest their

principal in companies that give high payouts of dividends and also in securities of

fixed income such as corporate debentures, government securities, and bonds. The

advantage of Income Funds in India is that it provides regular income to the investor

either on a monthly or quarterly basis. Further the advantage of Income Funds in

India is that it also provides stability of capital to the investor. Income Funds share

prices are not fixed for they have a tendency to grow with the fall in interest rates

and fall with the rise of the interest rates. The bonds that are there in Income Funds

are usually of the investment grade. The other bonds are of such credit quality that

they assure the protection of the capital.

Mutual fund companies that have launched Income Funds in India are:

Prudential ICICI Mutual Fund

HDFC Mutual Fund


Birla Sun Life Mutual Fund

Franklin Templeton India Mutual Fund

Tata Mutual Fund

Growth Funds

Growth Funds are special type of mutual funds, the objective of which is to achieve

capital appreciation by investing in growth stocks. The rise of the Growth Funds in

recent years can be attributed to the rise in value of growth stocks in the Indian

mutual fund market.

The Growth Funds became popular after the tremendous growth of the Indian

industries during the post reforms period. The rise of the Indian industries attracted

investor's money in sectors of high growth and this in turn again propelled the

growth of these Growth Funds.

36 | P a g e


Definition and features of the Growth Funds:

Growth Funds are special type of mutual funds, the objective of which is to

achieve capital appreciation by investing in growth stocks. Generally, the corpus

accumulated in the Growth Funds is invested in stocks of those companies, which are

registering prominent earnings or revenue growth. In other words, the growth funds

focus on the fastest-growing companies in the market. One of the significant features

of the Growth fund is that it offers tremendous growth, when the financial market is

bullish. Market trend shows that investments in these growth funds are generally

made by aggressive investors.

Exchange Traded Funds

Definition and features of the Exchange Traded Funds

Exchange traded funds popularly also known as ETFs, is a type of mutual fund

wherein, the corpus is invested in a basket of securities, which is being traded on an

exchange. Further, an Exchange traded fund investments are being made either on

all the securities or on a sample of the representative securities that are being traded

in the said index. The exchange traded funds employ the process of arbitration during

trading, in order to keep its trading value in sync with the values of the underlying

stocks, which makes up the portfolio.

Exchange Traded Funds - advantages

One of the striking features of the Exchange Traded Funds is that they are not

volatile like other mutual funds and thus remain much more stable during bearish

market. Further, Exchange Traded Funds cost less and are transparent. Furthermore,

these funds can be traded and as well as diversified simultaneously

Money Market Funds

The Money market instruments that are being used to structure the money market

mutual funds are highly liquid debt instruments like the treasury bills. The

Association of the Mutual Funds of India (AMFI) and the Securities and Exchange

Board of India (SEBI) has been instrumental in introducing the wide array of mutual

funds in the Indian capital market. Individuals and companies invest in mutual funds

with the expectation of appreciation of the capital invested in these companies. 37 | P a g e


Mutual funds are of various types and are structured according to the risk bearing

factor of the investors.

Definition and features of the Money Market Funds:

Money Market Funds is a special type of mutual fund that invests in the money

market instruments only. The Money market instruments that are being used to

structure the money market mutual funds are highly liquid debt instruments like the

treasury bills. These Money market funds generally bear less risk and are regarded as

the safest type of mutual funds. The main objective of investment in a money-market

fund is to safeguard principal investment while earning a modest return on such

investments. In other words, investments in a Money-market mutual fund are similar

to a high-yield bank account with a decent risk factor. Caution should be exercised

with respect to the interest rate that is being offered while investing in a money-

market fund.

Regional Mutual Funds

The Regional Mutual Fund as the name suggests, is a special type of mutual fund,

wherein the investment is made in such funds that are confined to the securities from

a specified geographic region. The development of a particular region for

industrialization, especially for the setting up of Special Economic Zones or Export

Oriented Units necessitated huge inflow of funds and subsequently structuring special

funds to attract region specific investment.

The rise of the Indian mutual fund market was recorded after the economic reforms

were undertaken by the government of India. The meteoritic rise of the Indian capital

market after the 1990s was the effect of shift of Indian market from closed to open-

market policy. The growth of the Indian Industry saw huge inflow of funds, both from

domestic private and foreign sources. This further propelled the growth of the Indian

infrastructure and real estate industry.

The development of particular region for industrialization, especially for the setting up

of Special Economic Zones or Export Oriented Units necessitated huge inflow of funds

and subsequently structuring special funds to attract region specific investment. The

Association of the Mutual Funds of India (AMFI) came up with Regional Mutual Funds

38 | P a g e


to fill the void of region specific funds. The Regional Mutual Funds grew very popular

along with the other types of mutual funds in the recent years.

Definition and features of the Regional Mutual Funds:

The Regional Mutual Fund as the name suggests, is a special type of mutual

fund, wherein the investment made in such funds are confined to the securities from

a specified geography. In other words, the investments made in the Regional Mutual

Fund are dependent on the geographical origin of the fund. The most important

feature of this fund is that it invests in portfolio of companies operating in a particular

geographical area. The main objective of investing in the Regional Mutual Funds is to

take leverage of the geographical growth of that particular area. These funds are

created on regions which are supposed to undergo tremendous modernization. The

Regional Mutual Funds picks up securities that are not confined to geographical

criteria.

INDUSTRY PROFILE

Indian Stock & Investment Market:-

The Indian Stock & Investment market divided into 2 parts, Namely the capital market

and the Money market. The stock market is an important part of the capital market in

the country which one can carry out the transaction of capital. It is usually done

through the means of direct financing through the use of security and investment.

The investment market can further be sub divided in to the Primary and Secondary

Market.

Features of the Primary Market:-

In case o the Primary Market, The listed shares are traded for the first time which is

transferred to the investors from the listed company. In case of the primary market,

the stock issuers and the listed companies make use of the capital by offering the

39 | P a g e


stocks to the investors. The investors, in turn, buy the shares and supply the needed

capital. In Simple terms, the primary market is a type of platform where new

securities and stocks are dealt with.

Primary Market can be an ideal source of funding for various business enterprises and

companies, Public sector units and government organizations. All of these

organizations can make the funding by selling new bonds, Stocks, and other form of

securities. The buying and selling of the securities are done through dealers. The

processes though which the new securities sold in the investors are referred to as

Underwriting. On the other hand, if any new stock is issued to the investor, It is known

as Initial Public Offering (IPO). In most cases the dealers who carry out the process

get a sum of money in the form of a commission. The terms and condition of the

commission are based on the price offering of the securities

Features of the Secondary Market:-

An Important part of the India Stock and investment market is the Secondary Market.

In Simple Terms, It is also known as the stock market. Mainly it is a type of continues

market which offers a very good platform for trading and business of securities and

stocks. In most cases the trading is done through a license broker, Stock & Securities

units, Security firms and other financial institutions. The trading has to be done

according to the terms and conditions that are set by the specific stock exchange.

There are two main stock exchanges in India which operates the

bulk of the share and securities trading. They are:

Bombay Stock Exchange

The Bombay Stock Exchange Limited is the oldest stock exchange in Asia

and has the third largest number of listed companies in the world, with 4700 listed as

of August 2007. It is located at Dalal Street, Mumbai, India. On 31 December 2007,

the equity market capitalization of the companies listed on the BSE was US$ 1.79 40 | P a g e


http://en.wikipedia.org/wiki/US$

http://en.wikipedia.org/wiki/Market_capitalization

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Mumbai

http://en.wikipedia.org/wiki/Dalal_Street

http://en.wikipedia.org/wiki/File:Bombay_Stock_Exchange_3.jpg%00%E5%A1%B9%EF%92%81%E1%B4%BB%E4%A1%BF%E2%B2%AF%E5%B6%82%E8%97%84%E6%8C%A7%00%00%EA%AE%A5

trillion, making it the largest stock exchange in South Asia and the 12th largest in the

world.

With over 4700 Indian companies listed & over 7700scrips on the stock exchange, it

has a significant trading volume. The BSE SENSEX (Sensitive index), also called the

"BSE 30", is a widely used market index in India and Asia. Though many other

exchanges exist, BSE and the National Stock Exchange of India account for most of

the trading in shares in India.

History

The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its

history to the 1850s, when 4 Gujarati and 1 Parsi stockbroker would gather under

banyan trees in front of Mumbai's Town Hall. The location of these meetings changed

many times, as the number of brokers constantly increased. The group eventually

moved to Dalal Street in 1874 and in 1875 became an official organization known as

'The Native Share & Stock Brokers Association'. In 1956, the BSE became the first

stock exchange to be recognized by the Indian Government under the Securities

Contracts Regulation Act. The Bombay Stock Exchange developed the BSE Sensex in

1986, giving the BSE a means to measure overall performance of the exchange. In

2000 the BSE used this index to open its derivatives market, trading Sensex futures

contracts. The development of Sensex options along with equity derivatives followed

in 2001 and 2002, expanding the BSE's trading platform. Historically an open outcry

floor trading exchange, the Bombay Stock Exchange switched to an electronic trading

system in 1995. It took the exchange only fifty days to make this transition. This

automated, screen-based trading platform called BSE On-line trading (BOLT) currently

has a capacity of 80 lakh orders per day. The BSE has also introduced the world's first

centralized exchange-based internet trading system, BSEWEBx.co.in to enable

investors anywhere in the world to trade on the BSE platform.

Timeline

Following is the timeline on the rise and rise of the Sensex through Indian stock

market history.

41 | P a g e


http://en.wikipedia.org/wiki/National_Stock_Exchange_of_India

http://en.wikipedia.org/wiki/Asia

http://en.wikipedia.org/wiki/BSE_Sensex

http://en.wikipedia.org/wiki/List_of_stock_exchanges

http://en.wikipedia.org/wiki/List_of_stock_exchanges

http://en.wikipedia.org/wiki/South_Asia

http://en.wikipedia.org/wiki/1000000000000_(number)

1830 Business on corporate stocks and shares in Bank and Cotton presses started in

Bombay.

1860-1865 Cotton price bubble as a result of the American Civil War

1870-90 Sharp increase in share prices of jute industries followed by a boom in tea

stocks and coal

1978-79 Base year of Sensex, defined to be 100.

1986 Sensex first compiled using a market Capitalization-Weighted methodology for

30 component stocks representing well-established companies across key sectors.

30 October 2006 The Sensex on October 30, 2006 crossed the magical figure of

13,000 and closed at 13,024.26 points, up 117.45 points or 0.9%. It took 135 days for

the Sensex to move from 12,000 to 13,000 and 123 days to move from 12,500 to

13,000.

5 December 2006 The Sensex on December 5, 2006 crossed the 14,000-mark to

touch 14,028 points. It took 36 days for the Sensex to move from 13,000 to the

14,000 mark.

6 July 2007 The Sensex on July 6, 2007 crossed the magical figure of 15,000 to

touch 15,005 points in afternoon trade. It took seven months for the Sensex to move

from 14,000 to 15,000 points.

19 September 2007 The Sensex scaled yet another milestone during early

morning trade on September 19, 2007. Within minutes after trading began, the

Sensex crossed 16,000, rising by 450 points from the previous close. The 30-share

Bombay Stock Exchange's sensitive index took 53 days to reach 16,000 from 15,000.

Nifty also touched a new high at 4659, up 113 points.

The Sensex finally ended with a gain of 654 points at 16,323. The NSE Nifty gained

186 points to close at 4,732.

26 September 2007 The Sensex scaled yet another height during early morning

trade on September 26, 2007. Within minutes after trading began, the Sensex

42 | P a g e


crossed the 17,000-mark . Some profit taking towards the end, saw the index slip into

red to 16,887 - down 187 points from the day's high. The Sensex ended with a gain of

22 points at 16,921.

9 October 2007 The BSE Sensex crossed the 18,000-mark on October 9, 2007. It

took just 8 days to cross 18,000 points from the 17,000 mark. The index zoomed to a

new all-time intra-day high of 18,327. It finally gained 789 points to close at an all-

time high of 18,280. The market set several new records including the biggest single

day gain of 789 points at close, as well as the largest intra-day gains of 993 points in

absolute term backed by frenzied buying after the news of the UPA and Left meeting

on October 22 put an end to the worries of an impending election.

15 October 2007 The Sensex crossed the 19,000-mark backed by revival of

funds-based buying in blue chip stocks in metal, capital goods and refinery sectors.

The index gained the last 1,000 points in just four trading days. The index touched a

fresh all-time intra-day high of 19,096, and finally ended with a smart gain of 640

points at 19,059.The Nifty gained 242 points to close at 5,670.

29 October 2007 The Sensex crossed the 20,000 mark on the back of aggressive

buying by funds ahead of the US Federal Reserve meeting. The index took only 10

trading days to gain 1,000 points after the index crossed the 19,000-mark on October

15. The major drivers of today's rally were index heavyweights Larsen and Toubro,

Reliance Industries, ICICI Bank, HDFC Bank and SBI among others. The 30-share index

spurted in the last five minutes of trade to fly-past the crucial level and scaled a new

intra-day peak at 20,024.87 points before ending at its fresh closing high of

19,977.67, a gain of 734.50 points. The NSE Nifty rose to a record high 5,922.50

points before ending at 5,905.90, showing a hefty gain of 203.60 points.

8 January 2008 The sensex peaks. It crossed the 21,000 mark in intra-day trading

after 49 trading sessions. This was backed by high market confidence of increased FII

investment and strong corporate results for the third quarter. However, it later fell

back due to profit booking.

13 June 2008 The sensex closed below 15,200 mark, Indian market suffer with

major downfall from January 21, 2008

43 | P a g e


25 June 2008 The sensex touched an intra day low of 13,731 during the early

trades, then pulled back and ended up at 14,220 amidst a negative sentiment

generated on the Reserve Bank of India hiking CRR by 50 bps. FII outflow continued in

this week.

2 July 2008 The sensex hit an intra day low of 12,822.70 on July 2, 2008. This is

the lowest that it has ever been in the past year. Six months ago, on January 10,

2008, the market had hit an all time high of 21206.70. This is a bad time for the

Indian markets, although Reliance and Infosys continue to lead the way with mostly

positive results. Bloomberg lists them as the top two gainers for the Sensex, closely

followed by ICICI Bank and ITC Ltd.

6 October 2008 The sensex closed at 11801.70 hitting the lowest in the past 2

years.

10 October 2008 The Sensex today closed at 10527,800.51 points down from the

previous day having seen an intraday fall of as large as 1063 points. Thus, this week

turned out to be the week with largest percentage fall in the Sensex

18 May 2009 After the result of 15th Indian general election Sensex gained

2110.79 points from the previous close of 12173.42, a record one-day gain. In the

opening trade itself the Sensex evinced a 15% gain over the previous close which led

to a two-hour suspension in trading. After trading resumed, the Sensex surged again,

leading to a full day suspension of trading.

BSE Indices

For the premier stock exchange that pioneered the securities transaction business in

India, over a century of experience is a proud achievement. A lot has changed since

1875 when 318 persons by paying a then princely amount of Re. 1, became members

of what today is called Bombay Stock Exchange Limited (BSE).

Over the decades, the stock market in the country has passed through good and bad

periods. The journey in the 20th century has not been an easy one. Till the decade of

eighties, there was no measure or scale that could precisely measure the various ups

44 | P a g e


and downs in the Indian stock market. BSE, in 1986, came out with a Stock Index-

SENSEX- that subsequently became the barometer of the Indian stock market.

The launch of SENSEX in 1986 was later followed up in January 1989 by introduction

of BSE National Index (Base: 1983-84 = 100). It comprised 100 stocks listed at five

major stock exchanges in India - Mumbai, Calcutta, Delhi, Ahmadabad and Madras.

The BSE National Index was renamed BSE-100 Index from October 14, 1996 and since

then, it is being calculated taking into consideration only the prices of stocks listed at

BSE. BSE launched the dollar-linked version of BSE-100 index on May 22, 2006.

With a view to provide a better representation of the increasing number of listed

companies, larger market capitalization and the new industry sectors, BSE launched

on 27th May, 1994 two new index series viz., the 'BSE-200' and the 'DOLLEX-200'.

Since then, BSE has come a long way in attuning itself to the varied needs of

investors and market participants. In order to fulfill the need for still broader,

segment-specific and sector-specific indices, BSE has continuously been increasing

the range of its indices. BSE-500 Index and 5 sectorial indices were launched in 1999.

In 2001, BSE launched BSE-PSU Index, DOLLEX-30 and the country's first free-float

based index - the BSE TECk Index. Over the years, BSE shifted all its indices to the

free-float methodology (except BSE-PSU index).

BSE disseminates information on the Price-Earnings Ratio, the Price to Book Value

Ratio and the Dividend Yield Percentage on day-to-day basis of all its major indices.

The values of all BSE indices are updated on real time basis during market hours and

displayed through the BOLT system, BSE website and news wire agencies.

All BSE Indices are reviewed periodically by the BSE Index Committee. This

Committee which comprises eminent independent finance professionals frames the

broad policy guidelines for the development and maintenance of all BSE indices. The

BSE Index Cell carries out the day-to-day maintenance of all indices and conducts

research on development of new indices.

Sensex correlation with emerging market indices:

Sensex is significantly correlated with the stock indices of other emerging markets.

45 | P a g e


Awards

The World Council of Corporate Governance has awarded the Golden

Peacock Global CSR Award for BSE's initiatives in Corporate Social

Responsibility (CSR).

The Annual Reports and Accounts of BSE for the year ended March 31, 2006

and March 31 2007 have been awarded the ICAI awards for excellence in

financial reporting.

The Human Resource Management at BSE has won the Asia - Pacific HRM

awards for its efforts in employer branding through talent management at

work, health management at work and excellence in HR through technology

To cater to the customer, the Bombay Stock Exchange offers a number of facilities and services. They are:

BSE Investors Services

BSE On – Line Trading Process (BOLT)

BSE On – Line Surveillance System (BOSS)

BSE Training Institute of Various Certification Programs

National Stock Exchange

The National Stock Exchange of India Limited is

a Mumbai-based stock exchange. It is the largest stock exchange in India in terms of

daily turnover and number of trades, for both equities and derivative trading. NSE has

a market capitalization of around Rs 47, 01,923 crore (7 August 2009) and is

46 | P a g e


http://en.wikipedia.org/wiki/Indian_rupee

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Stock_exchange

http://en.wikipedia.org/wiki/Mumbai

http://en.wikipedia.org/wiki/File:National_Stock_Exchange_of_India_2.jpg%00%E5%A1%B9%EF%92%81%E1%B4%BB%E4%A1%BF%E2%B2%AF%E5%B6%82%E8%97%84%E6%8C%A7%00%00%EA%AE%A5

expected to become the biggest stock exchange in India in terms of market

capitalization by 2009 end. Though a number of other exchanges exist, NSE and the

Bombay Stock Exchange are the two most significant stock exchanges in India, and

between them are responsible for the vast majority of share transactions. The NSE's

key index is the S&P CNX Nifty, known as the Nifty, an index of fifty major stocks

weighted by market capitalization.

NSE is mutually-owned by a set of leading financial institutions, banks, insurance

companies and other financial intermediaries in India but its ownership and

management operate as separate entities. There are at least 2 foreign investors NYSE

Euro next and Goldman Sachs who have taken a stake in the NSE. [4] As of 2006, the

NSE VSAT terminals, 2799 in total, cover more than 1500 cities across India [5]. In

October 2007, the equity market capitalization of the companies listed on the NSE

was US$ 1.46 trillion, making it the second largest stock exchange in South Asia. NSE

is the third largest Stock Exchange in the world in terms of the number of trades in

equities. It is the second fastest growing stock exchange in the world with a recorded

growth of 16.6%.

Origins

The National Stock Exchange of India was promoted by leading financial institutions

at the behest of the Government of India, and was incorporated in November 1992 as

a tax-paying company. In April 1993, it was recognized as a stock exchange under the

Securities Contracts (Regulation) Act, 1956. NSE commenced operations in the

Wholesale Debt Market (WDM) segment in June 1994. The Capital market (Equities)

segment of the NSE commenced operations in November 1994, while operations in

the Derivatives segment commenced in June 2000.

Innovations

NSE has remained in the forefront of modernization of India's capital and financial

markets, and its pioneering efforts include:

Being the first national, anonymous, electronic limit order book (LOB) exchange

to trade securities in India. Since the success of the NSE, existent market and

new market structures have followed the "NSE" model.

47 | P a g e


http://en.wikipedia.org/wiki/Derivative

http://en.wikipedia.org/wiki/Stock

http://en.wikipedia.org/wiki/Capital_market

http://en.wikipedia.org/w/index.php?title=Debt_Market&action=edit&redlink=1

http://en.wikipedia.org/w/index.php?title=Securities_Contracts_(Regulation)_Act&action=edit&redlink=1


http://en.wikipedia.org/wiki/Government_of_India

http://en.wikipedia.org/wiki/Financial_institutions


http://en.wikipedia.org/wiki/South_Asia

http://en.wikipedia.org/wiki/1000000000000_(number)

http://en.wikipedia.org/wiki/US$

http://en.wikipedia.org/wiki/Market_capitalization

http://en.wikipedia.org/wiki/National_Stock_Exchange_of_India#cite_note-4

http://en.wikipedia.org/wiki/VSAT

http://en.wikipedia.org/wiki/National_Stock_Exchange_of_India#cite_note-3

http://en.wikipedia.org/wiki/S%26P_CNX_Nifty

http://en.wikipedia.org/wiki/Bombay_Stock_Exchange

Setting up the first clearing corporation "National Securities Clearing

Corporation Ltd." in India. NSCCL was a landmark in providing innovation on all

spot equity market (and later, derivatives market) trades in India.

Co-promoting and setting up of National Securities Depository Limited, first

depository in India.

Setting up of S&P CNX Nifty.

NSE pioneered commencement of Internet Trading in February 2000, which led

to the wide popularization of the NSE in the broker community.

Being the first exchange that, in 1996, proposed exchange traded derivatives,

particularly on an equity index, in India. After four years of policy and regulatory

debate and formulation, the NSE was permitted to start trading equity

derivatives

Being the first and the only exchange to trade GOLD ETFs (exchange traded

funds) in India.

NSE has also launched the NSE-CNBC-TV18 media centre in association with

CNBC-TV18.

NSE.IT Limited, setup in 1999, is a 100% subsidiary of the National Stock

Exchange of India. A Vertical Specialist Enterprise, NSE.IT offers end-to-end

Information Technology (IT) products, solutions and services.

Markets:

Currently, NSE has the following major segments of the capital market:

Equity

Futures and Options

Retail Debt Market

Wholesale Debt Market

Currency futures

MUTUAL FUND

48 | P a g e


http://en.wikipedia.org/wiki/CNBC-TV18


http://en.wikipedia.org/wiki/Derivatives_market

STOCKS LENDING & BROWING

August 2008 Currency derivatives were introduced in India with the launch of

Currency Futures in USD INR by NSE. Currently it has also launched currency futures

in EURO, POUND & YEN. Interest Rate Futures was introduced for the first time in

India by NSE on 31st August 2009, exactly after one year of the launch of Currency

Futures.

NSE became the first stock exchange to get approval for Interest rate futures as

recommended by SEBI-RBI committee, on 31 August,2009, a futures contract based

on 7% 10 Year GOI bond (NOTIONAL) was launched with quarterly maturities.

NSE Milestones:-

November 1992 Incorporation

April 1993 Recognition as a stock exchange

May 1993 Formulation of business plan

June 1994 Wholesale Debt Market segment goes live

November 1994 Capital Market (Equities) segment goes live

March 1995 Establishment of Investor Grievance Cell

April 1995 Establishment of NSCCL, the first Clearing Corporation

June 1995 Introduction of centralized insurance cover for all trading members

July 1995 Establishment of Investor Protection Fund

October 1995 Became largest stock exchange in the country

April 1996 Commencement of clearing and settlement by NSCCL

April 1996 Launch of S&P CNX Nifty

June 1996 Establishment of Settlement Guarantee Fund

November 1996 Best IT Usage award by Computer Society of India

49 | P a g e


December 1996 Commencement of trading/settlement in dematerialized

securities

December 1996 Dataquest award for Top IT User

December 1996 Launch of CNX Nifty Junior

February 1997 Regional clearing facility goes live

November 1997 Best IT Usage award by Computer Society of India

May 1998 Promotion of joint venture, India Index Services & Products Limited

(IISL)

May 1998 Launch of NSE's Web-site: www.nse.co.in

July 1998 Launch of NSE's Certification Programme in Financial Market

August 1998 CYBER CORPORATE OF THE YEAR 1998 award

February 1999 Launch of Automated Lending and Borrowing Mechanism

April 1999 CHIP Web Award by CHIP magazine

October 1999 Setting up of NSE.IT

January 2000 Launch of NSE Research Initiative

February 2000 Commencement of Internet Trading

June 2000 Commencement of Derivatives Trading (Index Futures)

September 2000 Launch of 'Zero Coupon Yield Curve'

November 2000 Launch of Broker Plaza by Dotex International, a joint venture

between NSE.IT Ltd. and i-flex Solutions Ltd.

December 2000 Commencement of WAP trading

June 2001 Commencement of trading in Index Options

July 2001 Commencement of trading in Options on Individual Securities

November 2001 Commencement of trading in Futures on Individual Securities

December 2001 Launch of NSE VaR for Government Securities 50 | P a g e


January 2002 Launch of Exchange Traded Funds (ETFs)

May 2002 NSE wins the Wharton-Infosys Business Transformation Award in the

Organization-wide Transformation category

October 2002 Launch of NSE Government Securities Index

January 2003 Commencement of trading in Retail Debt Market

June 2003 Launch of Interest Rate Futures

August 2003 Launch of Futures & options in CNXIT Index

June 2004 Launch of STP Interoperability

August 2004 Launch of NSE’s electronic interface for listed companies

March 2005 ‘India Innovation Award’ by EMPI Business School, New Delhi

June 2005 Launch of Futures & options in BANK Nifty Index

December 2006 'Derivative Exchange of the Year', by Asia Risk magazine

January 2007 Launch of NSE – CNBC TV 18 media centre

March 2007 NSE, CRISIL announce launch of IndiaBondWatch.com

June 2007 NSE launches derivatives on Nifty Junior & CNX 100

October 2007 NSE launches derivatives on Nifty Midcap 50

January 2008 Introduction of Mini Nifty derivative contracts on 1st January 2008

April 2008 Launch of India VIX

April 2008 Launch of Securities Lending & Borrowing Scheme

August 2008 Launch of Currency Derivatives

August 2009 Launch of Interest Rate Futures

November 2009 Launch of Mutual Fund Service System

December 2009 Commencement of settlement of corporate bonds

February 2010 Launch of Currency Futures on additional currency pairs

51 | P a g e


INDICES

NSE also set up as index services firm known as India Index Services & Products

Limited (IISL) and has launched several stock indices, including:

S&P CNX Nifty (Standard & Poor's CRISIL NSE Index)

CNX Nifty Junior

CNX 100 (= S&P CNX Nifty + CNX Nifty Junior)

S&P CNX 500 (= CNX 100 + 400 major players across 72 industries)

CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)

Exchange Traded Funds on NSE

NSE has a number of exchanges. These are typically index funds and GOLD

ETFs. Some of the popular ETFs on NSE are.

NIFTYBEES - ETF based on NIFTY index Nifty BEES Live quote

Gold Bees - ETF based on Gold prices. Tracks the price of Gold. Each unit

is equivalent to 1 gm. of gold and bears the price of 1gm of gold.

Bank Bees - ETF that tracks the CNX Bank Index. BSE and NSE

ESCORTS GROUP – ABOUT US

The Escorts Group is among India's leading engineering conglomerates

operating in the high growth sectors of Agri-machinery, construction &

material handling equipment, railway equipment and auto components.

Having pioneered farm mechanization in the country, Escorts has played a pivotal

role in the agricultural growth of India for over five decades. One of the leading

tractor manufacturers of the country, Escorts offers a comprehensive range of

tractors, more than 45 variants starting from 25 to 80 HP. Escort, Farmtrac and

Powertrac are the widely accepted and preferred brands of tractors from the house of

Escorts. A leading material handling and construction equipment manufacturer, we

manufacture and market a diverse range of equipment like cranes, loaders, vibratory

rollers and forklifts.

52 | P a g e


http://indianewsbox.in/NIFTYBEES.php

http://en.wikipedia.org/wiki/S%26P_CNX_500

http://en.wikipedia.org/wiki/CNX_Nifty_Junior


Escorts today are the world's largest Pick 'n' Carry Hydraulic Mobile Crane

manufacturer. Escorts have been a major player in the railway equipment business in

India for nearly five decades. Our product offering includes brakes, couplers, shock

absorbers, rail fastening systems, composite brake blocks and vulcanized rubber

parts. In the auto components segment, Escorts is a leading manufacturer of auto

suspension products including shock absorbers and telescopic front forks. Over the

years, with continuous development and improvement in manufacturing technology

and design, new reliable products have been introduced.

Throughout the evolution of Escorts, technology has always been its greatest ally for

growth. In the over six decades of our inception, Escorts has been much more than

just being one of India's largest engineering companies. It has been a harbinger of

new technology, a prime mover on the industrial front, at every stage introducing

products and technologies that helped take the country forward in key growth areas.

Over a million tractors and over 16,000 construction and material handling

equipment that have rolled out from the facilities of Escorts, complemented

by a highly satisfied customer base, are testimony to the manufacturing excellence of

Escorts. Following the globally accepted best manufacturing practices with relentless

focus on research and development, Escorts is today in the league of premier

corporate entities in India. Technological and business collaboration with world

leaders over the years, globally competitive indigenous engineering capabilities, over

1600 sales and service outlets and footprints in over 40 countries have been

instrumental in making Escorts the Indian multinational.

At a time when the world is looking at India as an outsourcing destination, Escorts is

rightly placed to be the dependable outsourcing partner of world's leading

engineering corporations looking at outsourcing manufacture of engines,

transmissions, gears, hydraulics, implements and attachments to tractors, and shock

absorbers for heavy trailers. In today's Global Market Place, Escorts is fast on the

path of an internal transformation, which will help it to be a key driver of

manufacturing excellence in the global arena. For this we are going beyond just

adhering to prevailing norms, we are setting our own standards and relentlessly

pursuing them to achieve our desired benchmarks of excellence.

HISTORY OF ESCORTS:- 53 | P a g e


The genesis of Escorts goes back to 1944 when two brothers, Mr. H. P. Nanda and Mr.

Yudi Nanda, launched a small agency house, Escorts Agents Ltd. in Lahore. Over the

years, Escorts has surged ahead and evolved into one of India's largest

conglomerates. In this journey of six decades, Escorts has had the privilege of being

associated with some of the world leaders in the engineering manufacturing space

like Minneapolis Moline, Massey Ferguson, Goetze, Mahle, URSUS, CEKOP,

Ford Motor Company, J C Bamford Excavators, Yamaha, Claas, Carraro,

Lucky Goldstar, First Pacific Company, Hughes Communications, Jeumont

Schneider, and Dynapac. These valued relationships be it technological or

marketing, are our highly cherished experiences treasures, which have helped us

inculcate best in class manufacturing practices and to emerge as a technologically

independent world class engineering organization.

.

LEADERSHIP TEAM

Mr. Rajan Nanda

Chairman

Mr. Nikhil Nanda

Joint Managing Director

Mr. Rohtash Mal

Executive Director and Chief Executive Officer - Agri Machinery Group

54 | P a g e


http://www.escortsgroup.com/the_group/group_leadership_team.html#rohtas%23rohtas

http://www.escortsgroup.com/the_group/group_leadership_team.html#rohtas%23rohtas

http://www.escortsgroup.com/the_group/group_leadership_team.html#Nikhil%23Nikhil



http://www.escortsgroup.com/the_group/group_leadership_team.html#Rajan%23Rajan




Mr. Kanwal Kishore Vij

ED & CEO – Escorts

Construction

Equipment Limited (ECEL)

Mr. G.B. Mathur

Executive Vice President – Law & Company Secretary

Mr. O K Balraj

Group Chief Financial Officer

Mr. Partha Dasgupta

Group Head Human Resources & Employee Relations

FACT SHEET OF ESCORTS LIMITED

Distribution of shareholding as on 30th September 2009

Category %age to the Capital

1. Promoters and Promoter Group 32.00

2. Foreign Institutional Investors 16.83

3. Domestic Institutional Investors 14.14

4. Public & Others 37.03

55 | P a g e


http://www.escortsgroup.com/the_group/group_leadership_team.html#dasgupta%23dasgupta

http://www.escortsgroup.com/the_group/group_leadership_team.html#dasgupta%23dasgupta

http://www.escortsgroup.com/the_group/group_leadership_team.html#okbalraj%23okbalraj

http://www.escortsgroup.com/the_group/group_leadership_team.html#okbalraj%23okbalraj

http://www.escortsgroup.com/the_group/group_leadership_team.html#gbmathur%23gbmathur

http://www.escortsgroup.com/the_group/group_leadership_team.html#gbmathur%23gbmathur

http://www.escortsgroup.com/the_group/group_leadership_team.html#kkvij%23kkvij





Total

100.00

Shareholding Pattern as on 30th September, 2009

Range of holding Number of shareholders % of Total

001 to 10050218 60.97

101 to 50026124 31.72

501 to 1,0003103 3.77

1,001 to 5,0002346 2.85

5,001 to 10,000294 0.36

10,001 to 50,000207 0.25

50,001 to 1,00,000 270.03

Above 1,00,000 46 0.05

TOTAL 82365 100.00

PRODUCTS & SERVICES OF ESCORTS

TRACTORS

Farmtrac: Most powerful tractor in its range with excellent productivity in

terms of output.

Powertrac: Most fuel efficient and tractor which has best value for money

Escorts: Reliable and trustworthy with a powerful feel. Low maintenance cost

ENGINES

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Figure: 4.1

Figure: 4.2

http://www.escortsgroup.com/brands_products/brand_products_farmtrac.html

http://www.escortsgroup.com/brands_products/brand_products_farmtrac.html

G 15 G 20 G 25 G 30

IMPLEMENTS & TRAILORS

Spring Tyne Tiller Rigid Tyne Tiller 12 Disc Offset Disc

Harrow

12 Disc Tandem Harrow


Escorts Securities Limited is the premier Asset Management Company offering

Investment products across a broad cross-section of Financial Assets covering both

Debt and Equity. It was registered with Securities and Exchange Board of India (SEBI)

in 1996.The Company is the one of the earliest entrants into the Indian Mutual Funds

Industry.

It is associated with Escorts Group - with Escorts Limited as its Flagship Company,

which is amongst India's leading corporations, operating in diverse fields of Agri-

Machinery, Construction and Railway Ancillaries and Financial Services. The genesis

of Escorts goes back to 1944 and over the decades, Escorts has surged ahead and

evolved into one of the India's leading conglomerates. The group holds a great repute

and trust amongst people.

57 | P a g e


http://www.escortsgroup.com/brands_products/brands_products_implements.htm#%23






http://www.escortsgroup.com/brands_products/brands_products_engines.htm#%23







http://www.escortsgroup.com/brands_products/brands_products_engines.htm%00%E5%A1%B9%EF%92%81%E1%B4%BB%E4%A1%BF%E2%B2%AF%E5%B6%82%E8%97%84%E6%8C%A7%00%00%EA%AE%A5#%23%00





Escorts Mutual Fund has been established as a trust in accordance with the provisions

of the Indian Trusts Act, 1882 and the Deed of Trust dated 15th April, 1996 has been

registered under the Indian Registration Act, 1908. Backed by one of the most trusted

and valued brands in India, Escorts Mutual Fund has earned the trust of lakhs of

investors with its consistent performance and excellent service.

Escorts Mutual Fund, has made impressive gains by constantly increasing its retail

client base over the years. We at Escorts Mutual Fund aim to provide best risk-

adjusted returns to our clients. The Escorts philosophy is centered on seeking

consistent, long-term results. It aims at overall excellence, within the framework of

transparent and rigorous risk controls.

SERVICE:

We offer a wide range of services to assist investors have a fulfilling and rewarding

financial planning experience with us. We have designed our services keeping in mind

the needs of our investors, giving them a smooth and hassle-free financial planning

process. Balanced Fund, Growth Plan and Floating Rate Fund are some popular open

ended plans of Escorts Mutual Fund. Balanced Fund aims to generate long term

capital appreciation and current income from a well diversified portfolio of equity

shares and fixed income securities. Floats Rates objective is to make regular income

through investment in a portfolio comprising substantially of Floating Rate Debt

Securities. Growth Plan generates capital appreciation by investing mainly in a well

diversified portfolio of equity shares with growth potential.

INVESTMENT PHILOSPHY:

We believe in a simple philosophy that different people have different needs.

That is why our investment strategies and products are geared towards

fulfilling the needs of our investors. e derives our satisfaction from the

fulfillment of the expectations of those special people, who have exposed faith

in us and have invested their savings in our schemes.

The following fundamentals define and guide our investments:

A Value-Based Approach

58 | P a g e


We believe in the concept of value investing and look for a consistent track-

record and the inherent fundamental soundness of the entities we invest our

in. We also give weightage to the future business prospects and the

sustainability of the earnings .Such a value based investment approach

ensures that the investor’s money grows with us.

Emphasis on Research

Our extensive research on the industry, the corporates and the money markets

helps us in planning our investments and formulating our strategies in a wise

manner. In periods of uncertainties and fluctuating market trends, the research

work gives substance to strategies and ensures their soundness.

Discipline

In markets that are characterized by cyclical booms and busts, it is vey essential to be cautious and prudent. That is

why, we believe in well thought out and well planned investments and in having a healthy suspicion of volatile

market situations. We need to do all this because we feel that we have a responsibility towards our investors.

KEY PERSONNEL

Board of Directors of the Escorts Asset Management Company

Ms. Ritu NandaProf. Asish K. Bhattacharyya

Ms. Nitasha Nanda Prof. S.C. Kuchhal

Mr.P.C.Gupta Mr. Lalit K. Khanna

Board of Trustees

Mr. Rajan Nanda, Chairman and Managing Director, Escorts

Limited.

Dr. Rakesh Khurana Chairman & Managing Director, Knowledge Network

India Pvt. Ltd.

59 | P a g e


Mr. Deba Prasad Roy, Financial Consultant.

Mr. Ashok Kumar Bhargava

KEY PERSONNEL

Name Designation

Mr. Lalit K. Khanna Chief Executive Officer

Mr. Pradeep K. Jain Head Legal & Compliance

Ms. Sunjit Sahel Company Secretary & Compliance Officer

Mr. Jagveer Singh Fauzdar Fund Manager (Equity)

Mr. Sanjeev Sharma Fund Manager (Debt)

Mr. Prabhash Chandra National Sales Head

Ms. Mohini Sharma Investor Relations & Registrar Services Officer

PRODUCTS AVAILABLE

Escorts Power & Energy Fund –

Mission to ensure energy independent country by 2030.The investment objective of the scheme is to provide

income distribution and/or medium to long-term capital gains by investing predominantly in equity/equity related

instruments of the companies in the Power/Energy Sector and/or Debt/Money-Market instruments. Fund details

are as follows:

Type of Scheme Open Ended Growth Scheme

Investment

Objective

Investment Objective of the scheme is to provide income

distribution and/or medium to long term-capital gains by

investing predominantly in Equity/Equity related instruments

of the companies in the Power / Energy Sector and /or

60 | P a g e


Table: 4.3

Debt/Money Market instruments.

Asset Allocation

Equity Shares and Equity related Instruments: 65-100,

Debt Instruments, Govt. Bonds, Money Market Instruments

etc.: 0 – 35

Minimum Application

Amount

Purchase: Rs. 1000/- and Multiples of Re. 1/-

Additional Purchase : Rs. 1000 and Multiples of Re.1/-,

Repurchase: Minimum of Rs. 1000/-

Load Structure Entry Load: Nil : Exit Load :1% if exit <= 1 yrs.

Option Available

Daily NAV

publication

NAV will be declared on business days.

Escorts Opportunities Fund

It was Launched in February 2001, Escorts opportunities Fund (EOF), Designed to

provide regular income. We invest in well- diversified portfolio for both equity and

debt. Also, in case of equities, we as a matter of policy only invest in well researched

large cap stocks. Further to reduce the volatility in returns induced due to the equity

component, the fund aggressively uses derivatives by selling option. This premium

income received in the process not only reduces the volatility but also enhances the

risk adjusted return on the scheme. Through this mechanism, we also partially hedge

any potential downside in the portfolio to the extent of premium received. Fund

details are as follows:

Type of Scheme An Open-Ended Growth Fund

Investment

Objective

The scheme seeks stable and regular income through an actively

managed portfolio of stocks, bonds and money market

instruments. The asset allocation is dynamically planned to capture

the best of the opportunities in equity and debt Exposure in equity

is a blend of large and mid cap stocks, skewed largely towards the

61 | P a g e


Table: 4.4

Table: 4.4

well-researched blue chips. In debt, the scheme invests mainly in

Central and State Government debt papers besides PSUs and bank

bonds. The highlight of the scheme is the extensive use of

derivatives not only as a hedging tool but also in generating

regular income, which in turn enhances the overall portfolio’s risk-

adjusted return.

Asset Allocation Fixed Income 0-49

Equity and Equity Related Securities 51-100

Minimum

Application

Amount

Growth Option & Dividend Re-investment option Rs. 1000/-,

Dividend Payout Option: Rs 30,000/-, Additional Purchase :Rs.

1000, Repurchase: Minimum of Rs. 1000/-

Load Structure Entry Load: Nil

Exit Load: 1% if exit < = 1 year

Option Available

Daily NAV

publicationNAV will be declared on business days

Dividend Paid

April 02-March

06

April 06-

Septembe

r 07

October

07-

Septembe

r 08

November

08-

January 09

May,09

June

09-

Dec09

Jan

10

Rate 1.25%

(47-Div.)

1.5%

(18 Div.)

1.6%

(12 Div.)

Avg. 0.97

%

(7 Div.)

1.962 0.9810.61

3

Escorts Balanced Fund –

To generate long term Capital Appreciation and current

income from a portfolio of equity & fixed income securities.

Type of Scheme Open Ended Balanced Scheme

Investment An open-ended balanced scheme, with the investment objective

62 | P a g e


Table: 4.5

Objective to generate long term capital appreciation and current income

from a portfolio of equity & fixed-income securities.

Asset Allocation Equity Shares and Equity Related Instruments. 50-80

Debt Instruments, Govt. Bonds 20-45

Minimum

Application

Amount

Purchase: Rs. 1000 and Multiple of Re. 1/-

Additional Purchase: Rs. 1000 and Multiple of Re.1/-

Load Structure Entry Load: NIL : Exit Load :1% if exit <=1yrs

Option Available

Daily NAV

publication


Dividend Mar’02 Dec’03 Mar’05 Mar’06 Mar’07Mar’0

8

Rate 10% 45% 70% 40% 20% 30%

Escorts Income Plan –

To generate current income by investing predominantly in a well diversified portfolio

of Fixed Income securities with moderate risk levels. This income may be

complemented by possible Capital Appreciation.

Type of Scheme An Open Ended Income Scheme

Investment

Objective

To generate current income by investing predominantly in a well

diversified portfolio of Fixed Income securities with moderate risk

levels. This income may be complemented by possible Capital

Appreciation.

Asset Allocation Money Market Instruments: 10 – 20; Fixed Income Securities: 80

- 90 (max 100); Equity and Equity Linked Instrument: 0 - 10 (max

63 | P a g e


Table: 4.6

20); Units of other Mutual

Funds: 0 - 5 (max 5);

Minimum

Application

Amount

Purchase: Rs. 1000/- and Multiples of Re. 1/-, Additional Purchase

: Rs. 1000 and Multiples of Re.1/-, Repurchase: Minimum of Rs.

1000/-

Load Structure Entry Load – Nil, Exit Load – 0.5% if exit <= 6 months

Option Available

Daily NAV

publication NAV will be declared on business days.

Dividend Paid 126 Dividends Since May 1998

Escorts Tax Plan –

To generate Capital Appreciation by investing predominantly

in a well diversified portfolio of Equity Shares with growth potential. This Income may

be complemented by possible dividend and other income.

Type of Scheme Open Ended Equity Linked Saving Scheme

Investment

Objective

To generate Capital Appreciation by investing predominantly in a

well diversified portfolio of Equity Shares with growth potential.

This Income may be complemented by possible dividend and other

income.

Asset Allocation Equity, Cumulative convertible preference shares; fully convertible

Debentures and Bonds. 80-100, Money Market Instruments 0-20

Minimum

Application

Purchase: Rs. 500 and Multiple of Re. 1/-

64 | P a g e


Table: 4.7

Amount Additional Purchase : Rs 500 and Multiple of Re. 1/-,

Load Structure Entry Load : Nil Exit Load : Nil

Lockin of 3 years being ELSS

Option Available

Daily NAV

publication


Dividend March 2004 March

2005 March 2006

March

2007

March

2008

Rate 80% 30% 35% 25% 30%

Escorts Growth Plan –

To generate Capital Appreciation by investing predominantly in a well diversified

portfolio of Equity Shares with growth potential. This income may be complemented

by possible dividend and other Income.


Investment

Objective

To generate Capital Appreciation by investing predominantly in a

well diversified portfolio of Equity Shares with growth potential.

This income may be complemented by possible dividend and

other Income.

Asset Allocation

Equity Shares and Equity Related Instruments Approx. 0-20

Fixed Income Securities and Money Market Instruments (Including

Securitized debt not exceeding 10%) Approx. 0-20 Units of other

Mutual Fund Scheme(s) Approx. 0-5

Minimum

Application

Amount

Purchase: Rs. 1000/- and Multiples of Re. 1/- Additional Purchase :

Rs.1000 & Multiples of Re.1/, Repurchase: Minimum of Rs. 1000/-

65 | P a g e


Table: 4.8

Load Structure Entry Load : Nil , Exit Load: 1% if exit <= 1 year

Option Available

Daily NAV

publication


Dividend Dec 03 Mar 06 Mar’06 Mar’07 Mar’08

Rate 80% 40% 50% 30% 30%

Escorts Gilt Plan –

To generate income and capital appreciation through investments in Government

Securities. The aim is to generate returns commensurate with minimal credit risk by

investing in securities created and issued by the Central Government and/or a State

Government and/or repos/reverse repos in such government securities as may be

permitted by RBI

Type of Scheme Open Ended Gilt Scheme

Investment

Objective

To generate income and capital appreciation through investments

in Government Securities. The aim is to generate returns

commensurate with minimal credit risk by investing in securities

created and issued by the Central Government and/or a State

Government and/or repos/reverse repos in such government

securities as may be permitted by RBI.

Asset Allocation Govt. Securities 80-100, Money Market Instruments 0-20

Minimum

Application

Amount

Purchase: Rs. 1000/- and Multiples of Re. 1/-,

Additional Purchase : Rs. 1000 and Multiples of Re.1/-,


Load Structure Entry Load: Nil, Exit Load - 0.50% if exit <= 6 months

66 | P a g e


Table: 4.9

Option Available

Daily NAV

publication


Dividend Sep 01 Dec 01 Mar 02

Rate 30 30 20

Escorts Liquid Plan –

The primary investment objective of the scheme is to provide income and liquidity

consistent with the prudent risk from a portfolio comprising of money market and

debt instruments. This income may be complemented by possible capital

appreciation. The aim is to optimize returns while providing liquidity.

Type of Scheme Open Ended Liquid Scheme

Investment

Objective

To provide income and liquidity consistent with the prudent risk

from a portfolio comprising of Money Market and Debt

Instruments. This income may be complemented by possible

capital appreciation. The aim is to optimize returns while

providing liquidity.

Asset Allocation Money Market Instruments: 90 – 100, Debt Securities: 0 - 10

Minimum

Application Amount

Purchase: Rs. 1000/- and Multiples of Rs. 1/-

Additional Purchase : Rs 1000 and Multiples of Rs.1/-,


Load Structure Entry Load : Nil, Exit Load :Nil

Option Available

Daily NAV

publication


67 | P a g e


Table: 4.10

Escorts Leading Sectors Fund –

The investment objective of the scheme is to provide capital appreciation or income distribution by investing in

companies from Leading Sectors, depending upon their growth prospects and sustainability of future earnings

growth.


Investment

Objective

To Provide capital appreciation or income distribution by investing

in companies from Leading Sectors, depending upon their growth

prospects and sustainability of future earnings growth.

Minimum

Application

Amount

Purchase: Rs. 1000/-and Multiples of Re. 1/-

Additional Purchase: Rs.1000 and Multiple of Re. 1/-, Repurchase:

Minimum of Rs. 1000/-

Load Structure Entry Load : Nil , Exit Load: 1% if exit <= 1 years

Option Available

Daily NAV

publication


Escorts Income Bond –

To generate income by investing predominantly in a well diversified portfolio of Fixed

Income securities with moderate risk levels. This income may be complemented by

possible Capital Appreciation.

Type of Scheme Open Ended Income Scheme

Investment

Objective

To generate current income by investing predominantly in a well

diversified portfolio of Fixed Income Securities with moderate risk

levels. This income may be complemented by possible Capital

68 | P a g e


Table: 4.11

Table: 4.12

Appreciation.

Asset Allocation Money Market Securities: 0-25 ; Debt Securities: 40-90

Equity and Equity Related Instrument : 0-25

Minimum

Application

Amount

Purchase: Rs. 1000/- and Multiples of Rs. 1/-



Load Structure Entry Load : Nil, Exit Load : 0.50% if exit <=6 months

Option Available

Daily NAV

publication


Bonus 24.02.2010

Rate 3:50 (3 bonus units for 50 units held in growth option of EIB)

Escorts High Yield Equity Plan –

To generate income by investing predominantly in a well diversified portfolio of Fixed

Income securities with moderate risk levels. This income may be complemented by

possible Capital Appreciation.


Investment

Objective

To generate income by investing predominantly in well diversified

portfolio of equity stocks providing high dividend yield but at the

same time capture long term capital appreciation as and when the

opportunity arises .This long style of investment tries to locate , in a

disciplined manner, shares ,which for a variety of reason are selling

at prices which are substantially lower than the company’s actual

business value or future earnings potential, and are also yielding a

higher return than normal dividend yield. These companies would be

backed by stable earnings in the past while offering fair growth

69 | P a g e


Table: 4.13

potential in the future.

Asset Allocation

Equity Shares and Equity related Instruments: 65- 100,Debt

Instruments,(Govt. Bonds, Money Market Instruments etc.): 0 – 25

Securitized Debt : 0-10, Units of other Mutual Fund Scheme(s): 0 – 5

Minimum

Application

Amount

Purchase: Rs. 1000/- and Multiples of Re. 1/-

Additional Purchase : Rs.1000 & Multiples of Re.1/-,


Load Structure Entry Load : Nil , Exit Load: 1% if exit <= 1 years

Type of Scheme Open Ended Income Scheme

Investment

Objective

To generate regular income through investment in a portfolio

comprising substantially of Floating Rate Debt Securities (including

floating rate securitized debt, Money Market Instruments and Fixed

Rate Debt Instruments swapped for floating rate returns).The

scheme shall also invest in Fixed Rate Debt Securities (including

fixed rate securitized debt, Money Market Instruments and Floating

Rate Debt Instruments swapped for fixed returns

Asset Allocation Floating Rate Debt Securities: 65 – 100

Fixed Rate Debt Securities.: 0 – 35

Minimum Purchase: Rs. 1000/- and Multiples of Rs. 1/-

70 | P a g e


Escorts Floating Rate Fund –

To generate regular income through investment in a portfolio comprising

substantially of Floating Rate Debt Securities (including floating rate securitized

debt, Money Market Instruments and Fixed Rate Debt Instruments swapped for

floating rate returns).The scheme shall also invest in Fixed Rate Debt Securities

(including fixed rate securitized debt, Money Market Instruments and Floating Rate

Debt Instruments swapped for fixed returns.

Application

Amount



Load Structure Entry Load : Nil , Exit Load: Nil

Option Available

Daily NAV

publication


List of Mutual Funds Schemes of Escorts Mutual Fund

Escorts Income Bond-Dividend

Escorts Income Bond-Growth

Escorts Income Plan-Bonus

Escorts Income Plan-Dividend

Escorts Income Plan-Growth

Escorts Growth Plan-DIVIDEND OPTION

Escorts Growth Plan-GROWTH OPTION

Escorts High Yield Equity Plan - Bonus Option

Escorts High Yield Equity Plan - Dividend Option

Escorts High Yield Equity Plan - Growth Option

Escorts Opportunities Fund-Dividend

Escorts Opportunities Fund-Growth

Escorts Balanced Fund-Dividend Option

71 | P a g e


Table: 4.14

Escorts Balanced Fund-Growth Option

Escorts Liquid Plan-Daily Dividend Option

Escorts Liquid Plan-Growth Option

Escorts Liquid Plan-Monthly Dividend Option

Escorts Liquid Plan-Weekly Dividend Option

Escorts Gilt Plan-DIVIDEND OPTION

Escorts Gilt Plan-GROWTH OPTION

Escorts Tax Plan-Dividend

Escorts Tax Plan-Growth

Escorts Floating Rate Fund-Dividend Option

Escorts Floating Rate Fund-Growth Option

OBJECTIVES:

The objectives of the study is to analyses, in detail the growth pattern of

mutual fund industry in India and to evaluate performance of different schemes

floated by most preferred mutual funds in public fund in public and private

sector. The main objectives of this project are:-

To study about the Mutual Funds in India

To study the various Mutual Funds schemes in India.

To study about the risk factors involved in the Mutual Funds and How to

analyze it?

To study the performance of overall mutual funds schemes by analyzing

the NAV and their respective returns.

72 | P a g e


RESEARCH METHODOLOGY:-

Research is an organized enquiry designed and carried out to provide

information for solving a problem.

Research methodology is a way to systematically solve the research

problem. It may be understood as a science of studying how research is

done scientifically.

DATA COLLECTION

The task of data collection begins after a research problem has been

defined. While deciding about the method of data collection to be used for the

study, the researcher should keep in mind two types of data viz, primary and

secondary.

Primary data may be described as those data that have been

observed and recorded by the researchers for the first time to their

knowledge. Primary data can be classified into two types:

Data classified by their nature.

Data classified according to function.

73 | P a g e


Primary data can be collected through several methods. Some of

the

important ones are:

i. Observation method

ii. Interview method

iii. Questionnaires

iv. Schedules

v. Other methods

Secondary data are statistics not gathered for the immediate study

at hand but for some other purposes.

Secondary data can be classified into two types:

Internal data which include sales analysis.

External data which include libraries, literature etc.

TECHNIQUES USED IN THIS STUDY

In this study, we have used various statistics tools like descriptive

statistics, percentage, ratio analysis, annual growth rate etc. for

analyzing, interpreting and comparison of different mutual fund

schemes. The Sharpe Index Model is also used to analyze the performance

evaluation and ranking for the difference mutual funds schemes in India.

SCOPE OF THE STUDY:

The 5 most preferred public and private sector mutual funds schemes have

been taken for the study. These public and private mutual funds schemes were

studies during the period of 1st April, 2009 to 31st March, 2010.

74 | P a g e


LIMITATIONS OF THE STUDY:

Due to shortage of time and money, we selected only 5 mutual funds

schemes which include public and private mutual funds. The data was

collected for analysis from 1 April, 2009 to 1 April, 2010. My study is based

on the limited 5 mutual funds schemes only which affect the results of the

study.

ANALYSIS & INTERPRETATION

PERFORMANCE EVALUTION OF MUTUAL FUNDS

SCHEMES:

Portfolio managers evaluate their portfolio performance and identify the sources of

strength and weakness. The evaluation of the portfolio provides a feed back about

the performance to evolve a better management strategy. Even through evaluation of

portfolio performance is considered to be the last stage of investment process, the

managed portfolios are commonly known as mutual funds. Various managed

portfolios are prevalent in the capital market. Their relative merits of return and risk

criteria have to be evaluated.

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.

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

75 | P a g e


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 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:

i. The Treynor Measure

ii. The Sharpe Measure

iii. Jenson Model

iv. Fama Model

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

76 | P a g e


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 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

77 | P a g e


fund that ranks higher on Treynor measure, compared with another fund that is

highly diversified, will rank lower on Sharpe Measure.

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.

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.

78 | P a g e


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.

The evaluation part is very important and needs a lot of concentration. The statistical

tools help us in reaching suitable results. In the study, we have taken help of

statistical tools like mean, standard deviation and the most important tool which

evaluates the performance is the Sharpe index model.

Sharpe’s Performance Index Model:-

The Sharpe ratio or Sharpe index or Sharpe measure or Performance index

model is a measure of the excess return (or Risk Premium) per unit of risk in an

investment asset or a trading strategy, named after William Forsyth Sharpe. Since its

revision made by the original author in 1994, it is defined as:

where R is the asset return, Rf is the return on a benchmark asset, such as the risk

free rate of return, E[R − Rf] is the expected value of the excess of the asset return

over the benchmark return, and σ is the standard deviation of the asset excess

return.

Note, if Rf is a constant risk free return throughout the period,

The Sharpe ratio is used to characterize how well the return of an asset compensates

the investor for the risk taken. When comparing two assets each with the expected

return E[R] against the same benchmark with return Rf, the asset with the higher

79 | P a g e


http://en.wikipedia.org/wiki/Expected_value

http://en.wikipedia.org/wiki/Risk_free_rate

http://en.wikipedia.org/wiki/Risk_free_rate

Sharpe ratio gives more return for the same risk. Investors are often advised to pick

investments with high Sharpe ratios. However like any mathematical model it relies

on the data being correct. Pyramid schemes with a long duration of operation would

typically provide a high Sharpe ratio when derived from reported returns but the

inputs are false. When examining the investment performance of assets with

smoothing of returns (such as with profits funds) the Sharpe ratio should be derived

from the performance of the underlying assets rather than the fund returns.

Sharpe ratios, along with Tenor ratios and Jensen's alphas, are often used to rank the

performance of portfolio or mutual fund managers. This ratio was developed by

William Forsyth Sharpe in 1966. Sharpe originally called it the "reward-to-variability"

ratio in before it began being called the Sharpe Ratio by later academics and financial

professionals.

Sharpe's 1994 revision acknowledged that the risk free rate changes with time. Prior

to this revision the definition was assuming a constant Rf .

Recently, the (original) Sharpe ratio has often been challenged with regard to its

appropriateness as a fund performance measure during evaluation periods of

declining markets.

The Sharpe ratio has as its principal advantage that it is directly computable from any

observed series of returns without need for additional information surrounding the

source of profitability. Unfortunately, some authors are carelessly drawn to refer to

the ratio as giving the level of 'risk adjusted returns' when the ratio gives only the

volatility of adjusted returns when interpreted properly. Other ratios such as the Bias

ratio (finance) have recently been introduced into the literature to handle cases

where the observed volatility may be an especially poor proxy for the risk inherent in

a time-series of observed returns.

SHARPE’S PERFORMANCE INDEXES MODEL:

80 | P a g e


http://en.wikipedia.org/wiki/Bias_ratio_(finance)

http://en.wikipedia.org/wiki/Bias_ratio_(finance)

http://en.wikipedia.org/wiki/William_Forsyth_Sharpe

http://en.wikipedia.org/wiki/Mutual_fund

http://en.wikipedia.org/wiki/Jensen's_alpha

http://en.wikipedia.org/wiki/Treynor_ratio

http://en.wikipedia.org/wiki/With_profits

Sharpe’s performance index gives a single value to be used for the performance

ranking of various funds or portfolios. Sharpe index measures the risk premium of the

portfolio relative to the total amount of risk in the portfolio. This risk premium is the

difference between the portfolio’s average rate of return and risk less rate of return.

The standard deviation of the portfolio indicates the risk. The index assigns the

highest values to assets that have best risk-adjusted average rate of return. The

Sharpe ratio provides me with a return for unit of the risk measure.

For example: assume equity fund one returned 20% over the last 5 year, with a

standard deviation of 2%. The risk free rate is generally the interest rate on a

government security. Assume that the average return of a risk free government bond

fund over this period was 7.5%. The Sharpe ratio would be (the return of the portfolio-

the risk free rate)/ the standard deviation of the portfolio. In the case of equity fund

one, the Sharpe ratio is (20%-7.5%)/ 2% or 6.5%. therefore, for each unit of risk, the

fund returned 6.5% over the risk free rate.

Generally, investors evaluating the performance of the fund would compare its

Sharpe ratio to a benchmark. This could include, but is not limited to, the average

performance of similar funds and an equity index. For example, assume the S&P 500

was used as a benchmark. Further, assume that the return of S&P 500 index fund

over the last 5 year was 10% with a standard deviation of 2%. The Sharpe ratio for

index fund is (10%-7.5%)/2% or 1.5%. An investor doing a side by side comparison

between equity fund 1 and the S&P 500 index fund would clearly prefer equity fund 1.

this fund provided a higher level of excess return for each unit of risk.

Some Statistics of Sharpe Index Model:

Sharpe Index = Portfolio average return - Risk free rate of return.

Standard Deviation of the portfolio

81 | P a g e


Where St = Sharpe Index

Rp = Portfolio average return

Rf = Risk free rate of return (currently it is considered as 7.5%)

σ p = Standard deviation

Where, X = monthly return Y = average monthly return

N = total number of periods

NAV and corresponding returns of 5 Mutual Funds

Schemes:

In this study, we have selected the 5 mutual fund companies. Following is the NAV

and corresponding return of last 1 year starting from 1st April, 2009 to 31st March,

2010. The funds are chosen randomly from the available means.

82 | P a g e


***PERFORMANCE EVALUTION OF

MUTUAL FUNDS SCHEMES***

Birla Sunlife Mutual Fund

Birla Sunlife Mutual Fund is one of India's leading mutual funds with assets of over

Rs.17, 098 crore under management as of Aug 2006. Birla Sun Life Asset

Management Company Limited, the investment manager of Birla Sunlife Mutual Fund,

is a joint venture between the Aditya Birla Group and Sun Life Financial

Services, leading international financial services organization.

Established in 1994, Birla Sunlife AMC provides investors a range of 18 investment

options, which include diversified and sector specific equity schemes, a wide range of

debt and treasury products, and two offshore funds. Both the sponsors have equal

stakes in the AMC.

In recognition to its high quality investment products, Birla Sun Life AMC became

India's first asset management company to be awarded the coveted ISO 9001:2000

certification by DNV Netherlands.

83 | P a g e


No. of schemes 71

No. of schemes including options 219

Equity Schemes 64

Debt Schemes 106

Short term debt Schemes 17

Equity & Debt 10

Money Market 0

Gilt Fund 16

Corpus Under Management : Rs.49983.17 Crs. as on Feb 28, 2009

Key Personnel : Mr. Donald Stewart (Chairman),

A Balasubramanian (CEO), Ashok Suvarna (COO), Abhay Palnitkar

(CFO),

Sanjay Singal (CMO), Bhavdeep Bhatt (Head Products),

For Performance Comparison we take three Mutual Fund

Schemes of Company:

Birla Sun Life Equity Fund (Growth)

Birla Sun Life Income Fund (Growth)

Birla Sun Life Tax Plan (Growth)

The Monthly NAV & Returns of above three Mutual Fund Schemes as Follows:-

Particular

MonthNet Assets Value

(NAV – In Rs.)Monthly Return

(In %age)April 2009 123.90 - 183.76 48.3132

May 2009 183.76 - 195.43 6.3507

June 2009 195.43 - 194.66 -0.3940

July 2009 194.66 - 216.34 11.1374

84 | P a g e


August 2009 216.34 - 216.34 0.0000

September 2009

216.34 - 231.95 7.2155

October 2009 231.95 - 223.08 -3.8241

November 2009

223.08 - 239.77 7.4816

December 2009

239.77 - 252.08 5.1341

January 2010 252.08 - 241.77 -4.0900

February 2010 241.77 - 237.14 -1.9150

March 2010 237.14 - 252.91 6.6501

AVERAGE RETURN 6.8383 %

Birla Sun Life Equity Fund (Growth)

Calculation of Sharp Index or Sharp Ratio:

Sharpe Index = Portfolio average return - Risk free rate of

return.


Birla Sun Life Income Fund (Growth)

85 | P a g e


Particular



(In %age)April 2009 32.0807 - 31.9038 -0.5514

May 2009 31.9038 - 32.3045 1.2560

June 2009 32.3045 - 33.0633 2.3489

July 2009 33.0633 - 32.8129 -0.7573

August 2009 32.8129 - 33.0589 0.7497

September 2009

33.0589 - 33.3736 0.9519

October 2009 33.3736 - 33.9135 1.6177

November 2009

33.9135 - 33.7813 -0.3898

December 2009

33.7813 - 33.8415 0.1782

January 2010 33.8415 - 33.7849 -0.1673

February 2010 33.7849 - 33.7849 0.0000

March 2010 33.7849 - 33.9643 0.5310




return.


Birla Sun Life Tax Plan (Growth) 86 | P a g e


Particular



(In %age)April 2009 7.13 - 8.65 21.3184

May 2009 8.65 - 10.66 23.2370

June 2009 10.66 - 10.28 -3.5647

July 2009 10.28 - 11.44 11.2840

August 2009 11.44 - 11.44 0.0000

September 2009 11.44 - 12.19 6.5559

October 2009 12.19 - 11.42 -6.3167

November 2009 11.42 - 12.24 7.1804

December 2009 12.24 - 12.87 5.1471

January 2010 12.87 - 12.15 -5.5944

February 2010 12.15 - 12.09 -0.4938

March 2010 12.09 - 12.85 6.2862

AVERAGE RETURN (in %age) 5.4199 %



return.


87 | P a g e


Interpretation of the Funds Performance

Particular Average

Return

Sharp Index

Ratio

Rank

Birla Sun Life Equity Fund-

Growth

6.8383 % - 0.049 I

Birla Sun Life Income Fund

-Growth

0.4806 % - 7.78 III

Birla Sun Life Tax Plan

(Growth)

5.4199 % - 0.226 II

Kotak Mahindra Mutual Fund

Kotak Mahindra mutual fund is one of the leading mutual funds in the country with

assets of over Rs.12,530 crore under management as of Aug 2006The fund is

promoted by Kotak Mahindra Bank, one of India's leading financial institutions that

offer financial solutions ranging from commercial banking, stock broking, life

insurance and investment banking.

Kotak Mahindra Asset Management Company Limited, a wholly owned subsidiary of

Kotak Mahindra Bank, is the asset manager for Kotak Mahindra mutual fund. The

company is headed by Uday Kotak of Kotak Bank as chairman and the fund

management function is headed by Sandesh Kirkire, chief executive officer. Kotak

Mahindra mutual fund launched its schemes in December 1998 and today manages

assets of 4, 34,504 investors in various schemes. Kotak Mahindra mutual fund was

88 | P a g e


the first fund house in the country to launch a dedicated gilt scheme investing only in

government securities.

Corpus Under

Management: Rs.36776.2375 Crs. as on May 31, 2010

Key Personnel: Uday S Kotak (Chairman), Sandesh Kirkire (CEO),

Alroy Lobo (Chief Strategist & Global Head Equities Asset Mgmt),

V R Narasimhan (CCO), R. Krishnan (COO)

Sandeep Kamath (Compliance), R. Chandrasekaran (IRO)


Schemes of Company:

Kotak Equity-FOF-Growth

Kotak Income Plus-(Growth)

Kotak Tax Saver-Scheme-Growth

The Monthly NAV & Returns of above three Mutual Fund Schemes as

Follows:

Kotak Equity-FOF-Growth

Particular



(In %age)

89 | P a g e


No. of schemes 50


Equity Schemes 22

Debt Schemes 74


Equity & Debt 1

Money Market 0

Gilt Fund 7

April 2009 18.755 - 20.77 10.7438

May 2009 20.77 - 27.76 33.6543

June 2009 27.76 - 27.516 -0.8790

July 2009 27.516 - 30.134 9.5145

August 2009 30.134 - 30.134 0.0000

September 2009

30.134 - 32.362 7.3936

October 2009 32.362 - 31.2190 -3.5319

November 2009

31.2190 - 33.2560 6.5249

December 2009

33.2560 - 34.354 3.3017

January 2010 34.354 - 33.1050 -3.6357

February 2010 33.1050 - 32.9910 -0.3444

March 2010 32.9910 - 34.8960 5.7743

AVERAGE RETURN 5.7097%



return.


90 | P a g e


Kotak Income Plus-(Growth)

Particular



(In %age)April 2009 12.8357 - 13.1026 2.0794

May 2009 13.1026 - 13.736 4.8342

June 2009 13.736 - 13.6629 -0.5249

July 2009 13.736 - 14.0937 3.1455

August 2009 14.0937 - 14.0937 0.0000

September 2009 14.0937 - 14.1651 0.5066

October 2009 14.1651 - 14.2771 0.7907

November 2009 14.2771 - 14.5153 1.6684

December 2009 14.5153 - 14.6471 0.9080

January 2010 14.6471 - 14.5702 -0.5250

February 2010 14.5702 - 14.5597 -0.0721

March 2010 14.5597 - 14.8148 1.7521




return.


91 | P a g e


Kotak Tax Saver-Scheme-Growth

Particular



(In %age)April 2009 9.122 - 9.98 9.4058

May 2009 9.98 - 13.789 38.1663

June 2009 13.789 - 13.447 -2.4802

July 2009 13.447 - 14.894 10.7608

August 2009 14.894 - 14.894 0.0000

September 2009 14.894 - 15.918 6.8753

October 2009 15.918 - 14.9270 -6.2257

November 2009 14.9270 - 16.06 7.5903

December 2009 16.06 - 16.675 3.8294

January 2010 16.675 - 15.85 -4.9475

February 2010 15.85 - 15.8110 -0.2461

March 2010 15.8110 - 17.1080 8.2031

AVERAGE RETURN (in %age) 5.9110%



return.


92 | P a g e



Particular Average

Return

Sharp Index

Ratio

Rank

Kotak Equity-FOF-Growth 5.7097 % - 0.186 II

Kotak Income Plus-

(Growth)

1.2136 % - 4.11 III

Kotak Tax Saver-Scheme-

Growth

5.9110 % - 0.141 I

Escorts Mutual Fund

Escorts Mutual Fund is promoted by the business conglomerate Escorts group. Escorts

Asset Management Limited acts as the AMC to the mutual fund. Escorts Mutual Fund

usually offers open ended schemes and the fund category is Equity- balanced fund.

The fund is a member of the Escort Group of Companies, which deals with a number

of high

growth

industries like

93 | P a g e


No. of schemes 13


Equity Schemes 13

Debt Schemes 7


Equity & Debt 4

Money Market 0

Gilt Fund 2

construction and material handling equipment, farm machinery, two wheelers, auto

ancillary products and financial Services. Balanced Fund, Growth Plan and Floating

Rate Fund are some popular open ended plans of Escorts Mutual Fund. Balanced Fund

aims to generate long term capital appreciation and current income from a well

diversified portfolio of equity shares and fixed income securities. Floats Rates

objective is to make regular income through investment in a portfolio comprising

substantially of Floating Rate Debt Securities. Growth Plan generates capital

appreciation by investing mainly in a well diversified portfolio of equity shares with

growth potential.

Corpus Under Management : Rs.195.75 Crs. as on May 31, 2010

Key Personnel : Rajan Nanda (Chairman & MD), Lalit K Khanna (CEO &

Compliance),

Sanjay Arora (CIO), Mohini Sharma (IRO).

Fund Managers : Mr. Jagveer Singh Fauzdar ,

Mr. Sanjeev Sharma.


Schemes of Company:

Escorts Growth Plan (Growth)

Escorts Income Plan (Growth)

Escorts Tax Plan (Growth)

94 | P a g e


SCHEME DETAILS AS FOLLOWS OF ABOVE:

Escorts Growth Plan (Growth)

Fund Size as on May 31, 2010

Fund Size ( Rs. in crores)

6

Asset Allocation as on May 31, 2010

Equity 73.6172368421053%

Debt 0%

Others 26.3827631578947%

Portfolio as on May 31, 2010

EQUITY*

Company Name Instrument

No. of Shares

Market Value (Rs. in

crores)

% of Net Assets

Kalyani Investment Company Ltd.

Equity --- 0.27 4.57

LIC Housing Finance Ltd Equity 2400 0.23 3.76

McNally Bharat Engineering Corporation

Equity 7000 0.21 3.49

Tata Motors Ltd Equity 2730 0.21 3.43

Jammu and Kashmir Bank Ltd

Equity 2700 0.20 3.39

Hindustan Dorr-Oliver Ltd

Equity 16286 0.19 3.12

Maharashtra Seamless Ltd

Equity 4500 0.17 2.89

Motherson Sumi Systems Ltd

Equity 11000 0.15 2.57

Kalyani Steels Ltd. Equity 17014 0.14 2.28

HBL Nife Power Systems Ltd

Equity 41000 0.13 2.16

95 | P a g e


IL & FS Transportation Networks Ltd.

Equity 4522 0.13 2.11

Andhra Bank Equity 9000 0.12 2.05

Glenmark Pharmaceuticals Ltd.

Equity 4400 0.12 1.99

Oriental Bank of Commerce Ltd

Equity 3500 0.12 1.96

Indian Bank Equity 5000 0.11 1.91

Mazda Equity 10000 0.11 1.89

Godawari Power & Ispat Ltd.

Equity 4750 0.11 1.78

Nagarjuna Construction Company Ltd

Equity 6000 0.10 1.74

PSL Limited Equity 8000 0.10 1.63

Unichem Laboratories Ltd

Equity 2345 0.09 1.56

Gujarat NRE Coke Ltd. Equity 14061 0.09 1.5

Techno Electric & Engg Co Ltd.

Equity 2900 0.08 1.35

JaiPrakash Associates Ltd.

Equity 6300 0.08 1.31

Asian Hotels Ltd Equity 1800 0.08 1.29

Zee News Limited Equity 53010 0.07 1.16

Chillwinds Hotels Ltd. Equity 0.07 1.12

Vardhaman Hotels Ltd Equity 0.07 1.12

Allied Digital Services Ltd

Equity 3000 0.07 1.11

IRB Infrastructure Developers Ltd.

Equity 2500 0.07 1.1

Polyplex Corporation Ltd Equity 3125 0.07 1.1

Ranbaxy Laboratories Ltd

Equity 1500 0.06 1.07

SJVN Ltd Equity 25755 0.06 1.06

Mclead Russel India Ltd. Equity 3000 0.06 0.98

Industrial Development Bank of India Ltd

Equity 5000 0.06 0.95

96 | P a g e


Alphageo (India) Ltd Equity 2991 0.06 0.95

ITC Ltd Equity 2000 0.06 0.94

Marg Constructions Ltd. Equity 3256 0.06 0.94

Visaka Industries Ltd Equity 3184 0.05 0.88

Piramal Healthcare Ltd Equity 1000 0.05 0.86

Suzlon Energy Ltd. Equity 9000 0.05 0.84

Supreme Infrastructure India Ltd

Equity 1735 0.03 0.57

Punj Lloyd Ltd. Equity 2000 0.02 0.4

Mid-Day Multimedia Limited

Equity 6000 0.02 0.29

Gujarat Apollo Inds. Ltd. Equity 626 0.01 0.22

Simbhaoli Sugar Mills Ltd

Equity 3540 0.01 0.22

Fem Care Pharma Ltd. Equity 0.00 0.01

* No. of shares shown above may have been calculated on the basis of percentage of net assets and market values taking NSE closing prices and not

necessarily declared by fund house.

OTHERS

Company Name Instrument Market Value (Rs. in crores)

% of Net Assets

Current Assets Current Assets

1.5829 26.3

The Monthly NAV & Returns of above Mutual Fund Scheme as Follows:

Particular



(In %age)

97 | P a g e


April 2009 34.8155 - 36.6330 5.2204

May 2009 36.6330 - 56.9001 55.3247

June 2009 56.9001 - 55.5782 -2.3232

July 2009 55.5782 - 60.7149 9.2423

August 2009 60.7149 - 60.7149 0.0000

September 2009

60.7149 - 63.0134 3.7857

October 2009 63.0134 - 60.7351 -3.6156

November 2009

60.7351 - 64.4480 6.1133

December 2009

64.4480 - 68.3673 6.0813

January 2010 68.3673 - 65.7441 -3.8369

February 2010 65.7441 - 64.8682 -1.3323

March 2010 64.8682 - 70.1250 8.1038




return.


Escorts Income Plan (Growth)

98 | P a g e



DEBT


Rating No. of Debentur

es

Market Value (Rs. in crores)

Percentage of Net Assets

Rural Electrification Corporation

Bond 0.95 22.56

Tata Sons Ltd. Bond 0.75 17.84

ICICI Home Finance Co Ltd

Bond 0.72 17.19

ICICI BANK LTD. Bond 0.52 12.33

State Bank of India Bond 0.51 12.05

OTHERS

Company Name Instrument Market Value (Rs. in crores)

% of Net Assets

Monnet Ispat Ltd.Commercial

Paper0.5398 12.84

Current Assets Current Assets 0.2181 5.19

The Monthly NAV & Returns of above Mutual Fund Scheme as Follows:

Particular



(In %age)April 2009 27.1535 - 28.2081 3.8838

May 2009 28.2081 - 27.8613 -1.2294

99 | P a g e



Fund Size ( Rs. in crores) 4.2


Equity 0%

Debt 81.9686842105263%

Others 18.0313157894737%

June 2009 27.8613 - 28.1730 1.1188

July 2009 28.1730 - 28.1160 -0.2023

August 2009 28.1160 - 28.1160 0.0000

September 2009

28.1160 - 28.3370 0.7860

October 2009 28.3370 - 28.4620 0.4411

November 2009

28.4620 - 28.9679 1.7775

December 2009

28.9679 - 28.9170 -0.1757

January 2010 28.9170 - 29.0567 0.4831

February 2010 29.0567 - 29.0088 -0.1649

March 2010 29.0088 - 29.2065 0.6815




return.


Escorts Tax Plan (Growth)

100 | P a g e


101 | P a g e



Fund Size ( Rs. in crores) 5.56


Equity 84.2244736842105%

Debt 0%

Others 15.7755263157895%

102 | P a g e



EQUITY*


No. of Shares


crores)

% of Net Assets


J Kumar Infraprojects Ltd.

Equity 17175 0.33 6


Equity 0.22 3.89

Larsen & Toubro Limited Equity 1300 0.21 3.81



Equity 6000 0.20 3.62

Axis Bank Ltd Equity 1250 0.15 2.77

Power Finance Corporation Ltd

Equity 5200 0.15 2.77


Equity 5000 0.15 2.69

Punjab National Bank Equity 1400 0.14 2.52

JBF Industries Ltd Equity 10000 0.13 2.41

PTC India Ltd. Equity 13000 0.13 2.41


Equity 9000 0.13 2.27


GEI Industrial Systems Ltd

Equity 10000 0.12 2.14

Apar Industries Ltd Equity 5000 0.12 2.11

Ashok Leyland Ltd Equity 19000 0.11 2.06

Sunil Hitech Engineers Ltd.

Equity 5000 0.11 1.96


South Indian Bank Ltd Equity 6100 0.10 1.86


Equity 2487 0.10 1.79

Maruti Suzuki India Ltd. Equity 800 0.10 1.78

Jupiter Bio Science Equity 11805 0.10 1.76

Titagarh Wagons Ltd Equity 2800 0.09 1.62

The Monthly NAV & Returns of above Mutual Fund Scheme as Follows:Particular



(In %age)April 2009 25.9839 - 27.2905 5.0285

May 2009 27.2905 - 37.1072 35.9711

June 2009 37.1072 - 38.6629 4.1924

July 2009 38.6629 - 40.8944 5.7717

August 2009 40.8944 - 40.8944 0.0000

September 2009

40.8944 - 42.8570 4.7992

October 2009 42.8570 - 41.6245 -2.8758

November 2009

41.6245 - 44.1556 6.0808

December 2009

44.1556 - 45.8891 3.9259

January 2010 45.8891 - 44.3687 -3.3132

February 2010 44.3687 - 42.6067 -3.9713

March 2010 42.6067 - 45.3606 6.4635


Calculation of Sharp Index or Sharp Ratio: Sharpe Index = Portfolio average return - Risk free rate of return. Standard Deviation

of the portfolioInterpretation of the Funds Performance

Particular Average

Return

Sharp Index

Ratio

Rank

Escorts Growth Plan (Growth) 6.8970 % - 0.039 I

Escorts Income Plan (Growth) 0.6167 % - 5.160 III

Escorts Tax Plan (Growth) 5.1727 % - 0.232 II

ICICI Prudential Mutual Fund

103 | P a g e



EQUITY*


No. of Shares


crores)

% of Net Assets


J Kumar Infraprojects Ltd.

Equity 17175 0.33 6


Equity 0.22 3.89

Larsen & Toubro Limited Equity 1300 0.21 3.81



Equity 6000 0.20 3.62

Axis Bank Ltd Equity 1250 0.15 2.77

Power Finance Corporation Ltd

Equity 5200 0.15 2.77


Equity 5000 0.15 2.69

Punjab National Bank Equity 1400 0.14 2.52

JBF Industries Ltd Equity 10000 0.13 2.41

PTC India Ltd. Equity 13000 0.13 2.41


Equity 9000 0.13 2.27


GEI Industrial Systems Ltd

Equity 10000 0.12 2.14

Apar Industries Ltd Equity 5000 0.12 2.11

Ashok Leyland Ltd Equity 19000 0.11 2.06

Sunil Hitech Engineers Ltd.

Equity 5000 0.11 1.96


South Indian Bank Ltd Equity 6100 0.10 1.86


Equity 2487 0.10 1.79

Maruti Suzuki India Ltd. Equity 800 0.10 1.78

Jupiter Bio Science Equity 11805 0.10 1.76

Titagarh Wagons Ltd Equity 2800 0.09 1.62

Prudential ICICI Mutual Fund is the largest private sector mutual fund in India with

assets of over Rs.34,119 crore under management as of Aug 2006. The asset

management company, Prudential ICICI Asset Management Company Limited, is a

joint venture between Prudential Plc, Europe's leading insurance company and ICICI

Bank, India's premier financial institution.

Prudential Plc holds 55 per cent of the asset management company and the balance

by ICICI Bank. In a span of just over six years, Prudential ICICI Asset Management

Company has emerged as one of the largest asset management companies in the

country. The Company manages a comprehensive range of schemes to meet the

varying investment needs of its investors spread across 68 cities in the country. The

management is headed by Pankaj Razdan, managing director and the fund

management team is headed by Nilesh Shah, chief investment officer.

104 | P a g e


No. of schemes 98


Equity Schemes 59

Debt Schemes 213


Equity & Debt 4

Money Market 0

Gilt Fund 7

Corpus Under Management : Rs.68324.057017781 Crs. as on May 29,

2009

Key Personnel : Ms. Chanda Kochhar (Chairman), Nimesh Shah (CEO & CIO),

Supriya Sapre (Compliance), Kamaljeet Saini (IRO),


Schemes of Company:

ICICI Prudential Growth Plan-(Growth Option)

ICICI Prudential Income Plan- (Growth Option)

ICICI Prudential Tax Plan-(Growth Option)

The Monthly NAV & Returns of above three Mutual Fund Schemes as

Follows:

ICICI Prudential Growth Plan-(Growth Option)

Particular



(In %age)April 2009 72.94 - 79.73 9.3090

May 2009 79.73 - 99.72 25.0721

June 2009 99.72 - 98.41 -1.3137

July 2009 98.41 - 107.67 9.4096

August 2009 107.67 - 107.67 0.0000

September 2009

107.67 - 116.39 8.0988

October 2009 116.39- 111.17 -4.4849

November 2009

111.17 - 118.36 6.4676

December 2009

118.36 - 123.01 3.9287

105 | P a g e


January 2010 123.01 - 116.67 -5.1541

February 2010 116.67 - 116.96 0.2486

March 2010 116.96 - 125.02 6.8912




return.


ICICI Prudential Income Plan- (Growth Option)

Particular



(In %age)April 2009 27.7341 - 29.4577 6.2147

May 2009 29.4577 - 29.0718 -1.3100

June 2009 29.0718 - 29.4018 1.1351

July 2009 29.4018 - 29.2732 -0.4374

August 2009 29.2732 - 29.2732 0.0000

September 2009

29.2732 - 29.3743 0.3454

October 2009 29.3743 - 29.5396 0.5627

November 29.5396 - 30.0600 1.7617

106 | P a g e


2009December

2009

30.0600 - 29.8737 -0.6198

January 2010 29.8737 - 29.9950 0.4060

February 2010 29.9950 - 29.7610 -0.7801

March 2010 29.7610 - 29.9240 0.5477




return.


ICICI Prudential Tax Plan-(Growth Option)

Particular



(In %age)April 2009 56.88 - 63.84 12.2363

May 2009 63.84 - 85.02 33.1767

June 2009 85.02 - 85.95 1.0939

July 2009 85.95 - 100.63 17.0797

107 | P a g e


August 2009 100.63 - 100.63 0.0000

September 2009

100.63 - 107.97 7.2940

October 2009 107.97 - 106.29 -1.5560

November 2009

106.29 - 113.55 6.8304

December 2009

113.55 - 121.69 7.1686

January 2010 121.69 - 118.88 -2.3091

February 2010 118.88 - 120.47 1.3375

March 2010 120.47 - 127.34 5.7027




return.


Interpretation of the Funds Performance 108 | P a g e


Particular Average Return

Sharp Index Ratio

Rank

ICICI Prudential Growth Plan-

(Growth Option)

4.8724 % - 0.335 II

ICICI Prudential Income Plan-

(Growth Option)

0.6522 % - 3.673 III

ICICI Prudential Tax Plan-

(Growth Option)

7.3379 % - 0.0168 I


Reliance mutual fund, promoted by the Anil Dhirubhai Ambani (ADAG) group, is

one of the fastest growing mutual funds in India having doubled its assets over the

last one year. In March, 2006, the Reliance mutual fund emerged as the largest

private sector fund house in the country, overtaking Prudential ICICI which has been

holding that position for many years.

The sponsor of the fund is Reliance Capital Limited, the financial services arm of

ADAG. Reliance Capital Asset Management Limited, a wholly owned subsidiary of

Reliance Capital Limited, acts as the AMC to the fund. Directors of the company

include Amitabh Jhunjhunwala, a senior executive of ADAG. Amitabh Chaturvedi is the

managing director of the AMC. As of end August 2006, Reliance mutual fund has Rs

28,753 crore of assets under management. Reliance Equity Fund, launched by

Reliance MF in early 2006, is the largest mutual find scheme in the country with a

fund size of over Rs 5,500 crore.

109 | P a g e


Corpus Under Management : Rs.109485.69 Crs. as on May 31, 2010

Key Personnel : Sundeep Sikka (CEO) Madhusudan Kela (Hd-Equity)

Rajesh Derhgawen (Head HRD) Himanshu Vyapak (Sales & Dist)

Milind Nesarikar (IRO) Suresh T Viswanathan (Compliance)


Schemes of Company:

Reliance Equity Fund-Growth Plan-(Growth Option) Reliance Income Fund-Retail Plan - Growth Plan (Growth

Option) Reliance Tax Saver (ELSS) Fund-Growth Plan- (Growth

Option)

The Monthly NAV & Returns of above three Mutual Fund Schemes as Follows:-

Reliance Equity Fund-Growth Plan-(Growth Option)

Particular



(In %age)April 2009 9.2882 - 10.0227 7.9079

110 | P a g e


No. of schemes 57


Equity Schemes 60

Debt Schemes 100


Equity & Debt 2

Money Market 0

Gilt Fund 6

May 2009 10.0227 - 13.0391 30.0957

June 2009 13.0391 - 12.9842 -0.4210

July 2009 12.9842 - 14.0367 8.1060

August 2009 14.0367 - 14.0367 0.0000

September 2009

14.0367 - 14.9553 6.5443

October 2009 14.9553 - 14.0006 -6.3837

November 2009

14.0006- 14.7205 5.1419

December 2009

14.7205 - 15.1637 3.0108

January 2010 15.1637 - 14.5187 -4.2536

February 2010 14.5187 - 14.4188 -0.6881

March 2010 14.4188 - 14.8268 2.8296

AVERAGE RETURN 4.3241



return.


Reliance Income Fund-Retail Plan - Growth Plan (Growth Option)

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Particular



(In %age)April 2009 29.0575 - 30.4693 4.8586

May 2009 30.4693 - 29.9680 -1.6453

June 2009 29.9680 - 30.0525 0.2820

July 2009 30.0525 - 29.9510 -0.3377

August 2009 29.9510 - 29.9510 0.0000

September 2009

29.9510 - 30.0241 0.2434

October 2009 30.0241 - 30.2366 0.7084

November 2009

30.2366 - 30.6048 1.2177

December 2009

30.6048 - 30.5788 -0.0850

January 2010 30.5788 - 30.7195 0.4601

February 2010 30.7195 - 30.6491 -0.2292

March 2010 30.7195 - 30.8515 0.6604

AVERAGE RETURN 0.5111



return.


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Reliance Tax Saver (ELSS) Fund-Growth Plan- (Growth Option)

Particular



(In %age)April 2009 9,714 - 10.7404 10.5662

May 2009 10.7404 - 14.0519 30.8322

June 2009 14.0519 - 14.1409 0.6334

July 2009 14.1409 - 15.4560 9.3000

August 2009 15.4560 - 15.4560 0.0000

September 2009

15.4560 - 16.5706 7.2114

October 2009 16.5706 - 15.9138 -3.9636

November 2009

15.9138 - 16.9834 6.7212

December 2009

16.9834 - 18.2047 7.1911

January 2010 18.2047 - 17.6641 -2.9696

February 2010 17.6641 - 17.6091 -0.3114

March 2010 17.6091 - 18.7234 6.3280

AVERAGE RETURN (in %age) 5.9616



return.


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Particular Average

Return

Sharp Index

Ratio

Rank

Reliance Equity Fund-Growth

Plan-(Growth Option)

4.3241 % - 0.357 II

Reliance Income Fund-Retail

Plan - Growth Plan - Growth

0.5111 % - 4.738 III

Reliance Tax Saver (ELSS)

Fund-Growth Plan- (Growth

Option)

5.9666 % - 0.174 I

FINDING, SUGGESTION AND CONCLUSION

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By the above study, one can have a lot of findings regarding the performance

of the funds in his portfolio. The comparison in performance of these mutual

funds can be done easily. The following finding can be:

The mutual funds performance is evaluated easily with the help of Sharpe

Index Model. The fund having low ‘St’ (Sharp Index Ratio) value performs

weakly and form high ‘St’ performs comparatively well. It also shows

effectiveness of Sharpe Index Method.

With a number of mutual funds scheme existing in the market, it is very

difficult by an investor to choose the best among them. This paper

provides a necessary and sufficient result to help to choose the best

portfolio to get maximum return with minimum risk.

Standard deviation and mean proves to be very useful statistical tool in

order to reach to some valuable result. Without help of average and

standard deviation one cannot apply Sharpe Index Method.

The best performing and worst-performing funds can be easily identified.

The last two tables 9 & 10 are in a good support of this study. By studying

these tables one can easily interpret it. Like the Reliance mutual fund is a

best-performing fund where as UTI mutual fund is worst-performing.

Suggestions:

This study can be easily understand and help an investor in many

ways. Some of the suggestions are below

It is not only fund or company’s goodwill which can be taken into

consideration while choosing a portfolio, the market factors like

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government policies, economic of sales and the trend in a particular

sector should also be considered.

Today investor is having enough funds to invest in a number of schemes.

He is always in search of such statistical tools which can provide him

maximum return with lower risk. In this regard, mutual fund is the best

choice.

Conclusion:

It is well known that now-a-day, mutual funds are most popular and safe

parameter for an investor to invest. Keeping the present and future aspects

regarding the mutual funds in the India, it is easily concluded that this market

will give enough to an investor for long period. The Sharpe Index model is

easily understood and helps investors to decide which mutual funds are

performing well and which funds are not.

BIBLIOGRAPHY

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Punithavathy Pandiann (2004), “Securities Analysis and Portfolio

Management”, New Delhi, Vikash Public House Pvt. Ltd.

www.amfindia.com

www.sebi.gov.in

www.rbi.org.in

www.bseindia.com

www.nseindia.com

www.indobase.com/markets/index.htm

www.valueresearchonline.com

www.mutualfundsindia.com

www.escortsmutualfund.com

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http://www.escortsmutualfund.com/

http://www.mutualfundsindia.com/

http://www.valueresearchonline.com/

http://www.indobase.com/markets/index.htm

http://www.nseindia.com/

http://www.bseindia.com/

http://www.rbi.org.in/

http://www.sebi.gov.in/

http://www.amfindia.com/

ACCman Institute of Management

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Performance Comparison of Different Mutual Funds

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