PALLAVI SHARMAMB09A09

“Performance Of Mutual Funds And ItsAwareness

Among The Patrons Present In The Market

At

Stock Holding Corporation of India Ltd. Dehradun”

To get the insight knowledge about mutual funds.

To know the awareness of mutual funds among different groups of

investors.

To analyze the comparative study between other leading mutual

funds in the funds in the present market.

Study factor responsible for the low investment in mutual funds.

To evaluate consumer feedback on mutual funds.

OBJECTIVE

Stock Holding Corporation Of India Limited (SHCIL) was promoted by Public Financial Institutions and insurance majors likes IDBI, UTI, ICICI, LIC, GIC and its subsidiaries, IFCI and IIBI.SHCIL was incorporated as a public limited company on July 28, 1986.SHCIL commenced operations in August 1988 and has been providing Custodial and related services of international standards for more than a decade.

SHCIL provides depository, post trading, custodial services, securities lending to institutional and retail investors.

Other auxiliary services provided by SHCIL include Derivatives clearing, PF Fund accounting, SGL constituent. SHCIL has also commenced operations on NCDEX (Commodities Exchange and has emerged as the major player in that realm).

Mutual Fund

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

realised are shared by its unit holders in

proportion to the number of units owned by

them

Types of Schemes

By StructureOpen Ended SchemesClose Ended SchemesInterval Schemes

By Investment ObjectivesGrowth SchemesIncome SchemesBalance SchemesMoney Market Schemes

Special SchemesIndex SchemesSector Specific SchemesTax Saving Schemes

VARIOUS CRITERIA TO EVALUATE THE MUTUAL

FUNDS AND THEIR PEER GROUP COMPARISONP/E Ratio : A valuation ratio of a company's current share price compared to its per-share earnings(EPS). Calculated as:

Turnover RatioThe turnover ratio is the lower of the total sales or total purchases over the period divided by the average of the net assets. Higher the turnover ratio, greater is the volume of trading carried out by the fund.

BetaBeta determines the volatility, or risk, of a fund in comparison to that of its index or benchmark. A fund with a beta very close to 1 means the fund's performance closely matches the index or benchmark. A beta greater than 1 indicates greater volatility than the overall market, and a beta less than 1 indicates less volatility than the benchmark.

Sharpe RatioThe Sharpe ratio represents the trade off between risk and returns. The Sharpe ratio tells us whether the returns of a portfolio are due to smart investment decisions or a result of excess risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance has been. Sharpe ratio = (Avg. return –Risk free return) Standard deviation

Expense RatioThe percentage of the assets that are spent to run a mutual fund(as of the last annual statement). This includes expenses such as management and advisory fees, overhead costs, and 12b-1(distribution and advertising) fees.For example, a mutual fund may have a 10% return per year, which is quite high; however, if the total expense ratio is 8%, this means that shareholders only receive 2% of the return.

SCHEME OBJECTIVE LOADS RATINGMarch 2010

Franklin India Prima Plus – Growth

Aims to achieve growth of capital and dividend through a diversified portfolio

Entry Load : 0%.Exit Load: If redeemed bet. 0 Year to 1 Year; Exit load is 1%.

4-Star Fund ICRA Online MF Rank

Tata Growth Fund – Growth

Aims to provide a vehicle to investors for generation of long term capital appreciation.

Entry Load : 0%.Exit Load: If redeemed bet. 0 Days to365Days; Exit load is 1%.

5-Star Fund ICRA Online MF Rank

Reliance Growth – Growth

The primary investment objective is to achieve long term growth of capital by investing in equity and equity related securities through a research based investment approach

Entry Load : 0%.Exit Load: If redeemed bet. 0 Year to 1 Year; Exit load is 1%.

3-Star Fund ICRA Online MF Rank

SBI Magnum Global Fund 94 – Growth

The Objective of the Scheme is to provide investors with maximum growth opportunity.

Entry Load : 0%.Exit Load: If redeemed bet. 0 Year to 1 Year; Exit load is 1%.

5-Star Fund ICRA Online MF Rank 3 Year

1220.09

7681.36

54.96

1798.05

Schemes assets (Rs in cr)

SBIRe-lianceTata

This graph represents the scheme assets of the four major companies. The value mentioned in the graph are in crores.

6 months 1 year 3 years 5 years0

5

10

15

20

25

30

35

40

45

franklin

SBI

Tata

Reliance

Annual Returns for 5 years

This graph stands a symbolic representation of annual returns of the four major companies to their customers for the last 5years. This value represents Scheme Performance (%) as on Jul 26, 2010.

Franklin IndiaPrima Plus

SBI Magnum Global

Tata Growth Fund

Reliance Growth Fund

0 5 10 15 20 25 30

23.51

28.58

19.07

28.22

P/E Ratio

Series 1

From the P/E ratio the stocks in the

Portfolio Tata Growth Fund are earning

highest with less risk than that of other

AMcs and the stocks in the portfolio of

Reliance Growth Fund is earning least

with same risk.

Franklin India

Prima Plus

SBI Magnum Global Fund

Tata Growth Fund

Reliance Growth

0.72

0.74

0.76

0.78

0.8

0.82

0.84

0.86

0.88

0.9

0.79

0.89

0.820000000000001

0.78

Beta

Beta

From the Beta graph the volatility of all

the funds is less volatile than that of the

market because beta of all the funds is

less than 1

-0.25

-0.2

-0.15

-0.1

-0.05

0-0.09 -0.2 -0.21 -0.14Sharpe Ratio

Sharpe Ratio

Franklin India Prima Plus

SBI Magnum Global Fund

Tata Growth Fund

Reliance Growth

4.2 4.4 4.6 4.8 5 5.2 5.4 5.6 5.8

4.79

5.57

5

4.7

Standard Deviation

Standard Deviation

A negative Sharpe ratio indicates that a

risk-less asset would perform better

than the security being analyzed. The

graph shows that Franklin India Prima

Plus has higher risk taking capacity

and higher returns means it has high

risk taking capacity than other AMCs

The portfolio of SBI MAGNUM GLOBAL

Fund comprises of the volatile stocks hence

the volatility in their returns is higher than

other AMCs because it has higher standard

deviation.

Time and Cost – The time and cost play an important role where one goes for a particular study. Both of these factors become constraints especially when a study is conducted at academic level.

Sample Size – Due to time and cost constraints the large sample was not taken. Since the study conducted was with a small sample hence the exact picture cannot be revealed and the findings cannot be generalized.

Choice of Population- The population selected was limited to SCHIL Dehradun.Hence results would have altered if some other population had been selected.

Inherent Discrepancies in the Questionnaire- The questionnaire might be having some undetectable errors and limitations, which could shape the responses into a particular fashion. No pre-test was done before the circulation of the questionnaire.

Bias in Response- The data is entirely based on responses given by respondents which may be biased one due to their personal bias in replying the questions. They may not be very serious or interested in replying the questions and make it very lightly, due to which data may not be very accurate.

Limitations of the Study

The mutual fund investors prefer more of the equity fund as they want more return on there money. They avoid going in the debt fund because they can get same amount of return on there banks that is also without taking any risk.

Usually people preferred to invest in mutual fund during NFO rather than seeing the performance of mutual fund scheme. Sometimes due to lack of detailed awareness about mutual fund schemes the investors seek advice of distributors.

Investors feels that the AMC should go for more promotional activities & should try to come up with new innovative schemes which can easily be understood by the investors.

Even after seeing the market crash in May2009 people still thinks that mutual fund is much reliable way to invest in stock market. So investors are not going for redemption during crash & were ready to wait. In fact during the crash time many people were ready to invest in mutual fund.

People will not accept the entry load if the company would any such type loads during NFO because during NFO the investors were not sure whether the given scheme can really give them better return or not.

Conclusions

Most vital problem spotted is of ignorance. Investors should be made aware of the benefits.

Mutual funds are offering a large number of benefits which no other single option could offer. But most of the people are not aware that what mutual funds is? So they should be provided the information. Their mindset should be changed.

Mutual funds company needs to give the training of the individual financial advisor about the fund schemes and its objectives.

Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers.

Younger people aged under 35 will be a key new customer group into the future, so making greater efforts with younger customers who show some interest in investing should pay off.

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