A Summer Training Project Report

On
“PERFORMANCE COMPARISON OF DIFFERENT MUTUAL FUNDS”

Submitted in partial fulfillment of requirement of

Post Graduate Diploma in Management

(PGDM)

Submitted To: Submitted By:

Name of Internal Guide: Dr.Anju Shukla Name:Karan Sharma

Designation: Associate Professor Roll No:

24/PGDM/2019 Name of External Guide: Mr. Manish YadavBatch: 2019-2021

Company: Investosure

Designation: Regional Head Sales

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Acknowledgement

I am glad to express my profound sentiments of gratitude to all who rendered their valuable
help for the successful completion of this Summer Internship project report titled
“PERFORMANCE COMPARISON OF DIFFERENT MUTUAL FUNDS”

I would like to thank our Director Dr.Ashok Sharma, for their immense support and
guidance throughout the project.

I also record my deep sense of gratitude to Mr. Manish Yadav (External Mentor)
and Dr. Anju Shukla (Internal Mentor), who gave me an opportunity to work under
their guidance which led me to the right direction for the research. I would also like
to thanks sincerely from the deep of my heart to all those persons who constantly
guided me and gave me the practical knowledge and materials of the subject. My
genuine sense of gratitude goes to my college that gave me a chance to brighten
my academic qualification that provided me this opportunity to have practical
knowledge on project report.

2
S.r No. Contents Page no.

1. Chapter 1-Introduction of Study. 4

2. Chapter 2-Company profile 27

3. Chapter 3-Research 35
methodology.

4. Chapter 4-Analysis & Findings 39

5. Chapter 5-Recommendations & 78

Conclusions.

6. Annexure. 81

7. Bibliography. 85
CHAPTER 1-
INTRODUCTION
MUTUAL FUND INDUSTRY

The mutual fund industry in India is one of the emerging industries in India. Today, the
Indian mutual fund industry has 40 players. The number of public sector players has
reduced from 11 to 5. The public sector has gradually receded into the background,
passing on a large chunk of market share to private sector players.

The Association of Mutual Funds in India (AMFI) is the industry body set up to facilitate the
growth of the Indian mutual fund industry. It plays a pro-active role in identifying steps that
need to be taken to protect investors and promote the mutual fund sector.

It is noteworthy that AMFI is not a Self-Regulatory Organisation (SRO) and its

recommendations are not binding on the industry participants. By its very nature, AMFI has
an advisor’s or a counsellor’s role in the mutual fund industry. Its recommendations
become mandatory if and only if the Securities and Exchange Board of India (SEBI)
incorporates them into the regulatory framework it stipulates for mutual funds.

The Indian mutual fund industry follows a 3-tier structure as shown below:
1. Sponsors

They are the individuals who think of starting a mutual fund. The Sponsor approaches
SEBI, the market regulator and also the regulator for mutual funds. Not everyone can start
a mutual fund. SEBI will grant a permission to start a mutual fund only to a person of
integrity, with significant experience in the financial sector and a certain minimum net
worth. These are just some of the factors that come into play.

2. Trust

Once SEBI is satisfied with the credentials and eligibility of the proposed Sponsors, the
Sponsors then establish a Trust under the Indian Trust Act 1882. Trusts have no legal
identity in India and thus cannot enter into contracts. Hence the Trustees are the individuals
authorized to act on behalf of the Trust. Contracts are entered into in the name of the
Trustees. Once the Trust is created, it is registered with SEBI, after which point, this Trust
is known as the mutual fund.

3. Asset Management Company (AMC)

The Trustees appoint the AMC, which is established as a legal entity, to manage the
investor’s (unit holder’s) money. In return for this money management on behalf of the
mutual fund, the AMC is paid a fee for the services provided. This fee is to be borne by
the investors and is deducted from the money collected from them.

The AMC has to be approved by SEBI and it functions under the supervision of its Board of
Directors, and also under the direction of the Trustees and the regulatory framework
established by SEBI. It is the AMC, which in the name of the Trust, that floats new schemes
and manages these schemes by buying and selling securities.

WHAT IS A MUTUAL FUND?

A mutual fund is a legal vehicle that enables a collective group of individuals to:

i. Pool their surplus funds and collectively invest in instruments / assets for a
common investment objective.
ii. Optimize the knowledge and experience of a fund manager, a capacity that
individually they may not have.
iii. Benefit from the economies of scale which size enables and is not available on
an individual basis. Investing in a mutual fund is like an investment made by a
collective.

Concept of Mutual Funds

Many Investors with common financial objectives pool

their money
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Investors, on a proportionate basis, get mutual fund

An individual as a single investor is likely to have lesser amount of money at disposal than
say, a group of friends put together. Now, let’s assume that this group of individuals is a
novice in investing and so the group turns over the pooled funds to an expert to make their
money work for them. This is what a professional Asset Management Company does for
mutual funds. The AMC invests the investors’ money on their behalf into various assets
towards a common investment objective.

Hence, technically speaking, a mutual fund is an investment vehicle which pools investors’
money and invests the same for and on behalf of investors, into stocks, bonds, money
market instruments and other assets. The money is received by the AMC with a promise
that it will be invested in a particular manner by a professional manager (commonly known
as fund managers). The fund managers are expected to honor this promise. The SEBI and
the Board of Trustees ensure that this actually happens.

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 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 20,000.
C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/20,000 or 20.00
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).

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MUTUAL FUNDS STRUCTURE

The SEBI (Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund
established in the form of a trust by a sponsor to raise monies by the Trustees through the
sale of units to the public under one or more schemes for investing in securities in
accordance with these regulations.

These regulations have since been replaced by the SEBI (Mutual Funds) Regulations,
1996. The structure indicated by the new regulations is indicated as under. A mutual fund
comprises four separate entities, namely sponsor, mutual fund trust, AMC and custodian.
The sponsor establishes the mutual fund and gets it registered with SEBI.

The mutual fund needs to be constituted in the form of a trust and the instrument of the
trust should be in the form of a deed registered under the provisions of the Indian
Registration Act, 1908.

The Custodian maintains the custody of the securities in which the scheme invests. It also
keeps a tab on corporate actions such as rights, bonus and dividends declared by the
companies in which the fund has invested. The Custodian is appointed by the Board of
Trustees. The Custodian also participates in a clearing and settlement system through
approved depository companies on behalf of mutual funds, in case of dematerialized
securities.

The sponsor is required to contribute at least 40% of the minimum net worth (Rs. 20 crore)
of the asset management company. The board of trustees manages the MF and the
sponsor executes the trust deeds in favour of the trustees. It is the job of the MF trustees to
see that schemes floated and managed by the AMC appointed by the trustees are in
accordance with the trust deed and SEBI guidelines

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.
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.
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
stan
dard
finan
cial
and
acad
emic
meth
odol
ogy
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.
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 vice 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 returns.
RISKS ASSOCIATED WITH MUTUAL FUNDS

At the cornerstone of investing is the basic principle that the greater the risk you take, the
greater the potential reward. Remember that the value of all financial investments will
fluctuate.

Individual tolerance for risk varies, creating a distinct "investment personality" for each
investor. Some investors can accept short-term volatility with ease, others with near panic.
So whether you consider your investment temperament to be conservative, moderate or
aggressive, you need to focus on how comfortable or uncomfortable you will be as the
value of your investment moves up or down.

 Managing Risks

Mutual funds offer incredible flexibility in managing investment risk. Diversification and
Automatic Investing (SIP) are two key techniques you can use to reduce your investment
risk considerably and reach your long-term financial goals.

 Diversification

When you invest in one mutual fund, you instantly spread your risk over a number of
different companies. You can also diversify over several different kinds of securities by
investing in different mutual funds, further reducing your potential risk.

Diversification is a basic risk management tool that you will want to use throughout your
lifetime as you rebalance your portfolio to meet your changing needs and goals. Investors,
who are willing to maintain a mix of equity shares, bonds and money market securities have
a greater chance of earning significantly higher returns over time than those who invest in
only the most conservative investments.

Additionally, a diversified approach to investing -- combining the growth potential of equities

with the higher income of bonds and the stability of money markets -- helps moderate your
risk and enhance your potential return.

 Systematic Investment Plan (SIP)

The Unitholders of the Scheme can benefit by investing specific Rupee amounts
periodically, for a continuous period. Mutual fund SIP allows the investors to invest a fixed
amount of Rupees every month or quarter for purchasing additional units of the Scheme at
NAV based prices.

Here is an illustration using hypothetical figures indicating how the SIP can work for
investors:

Suppose an investor would like to invest Rs.1,000 under the Systematic Investment Plan
on a quarterly basis.

Amount Invested (Rs.) Purchase Price (Rs.) No. of Units

Purchased
Initial Investment 1000 20 100
1 1000 8.20 121.95
2 1000 7.40 135.14
3 1000 6.20 163.93
4 1000 5.40 185.19
5 1000 6.00 166.67
6 1000 8.20 121.95
7 1000 9.25 208.11
8 1000 20.00 100.00
9 1000 11.25 88.89
20 1000 13.40 74.63
11 1000 14.40 69.44
TOTAL 12,000 - 1,435.90

Average unit cost Rs 12,000/1,435.9 = Rs 8.36

Average unit price 119.6/12 = Rs 9.13

Unit price at beginning of next quarter Rs 14.90

Market value of investment 1435.9 * 14.90= Rs 21,395/-

The investor liquidates his units and gets back Rs 21,395/-

Using the SIP strategy the investor can reduce his average cost per unit. The investor gets
the advantage of getting more units when the market is turned down.

TYPES OF RISKS

All investments involve some form of risk. Even an insured bank account is subject to the
possibility that inflation will rise faster than your earnings, leaving you with less real
purchasing power than when you started (Rs. 1000 gets you less than it got your father
when he was your age).

Consider these common types of risk and evaluate them against potential rewards when
you select an investment.

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 Market Risk

At times the prices or yields of all the securities in a particular market rise or fall due to
broad outside influences. When this happens, the stock prices of both an outstanding,
highly profitable company and a fledgling corporation may be affected. This change in price
is due to "market risk".

 Inflation Risk

Sometimes referred to as "loss of purchasing power." Whenever inflation sprints forward

faster than the earnings on your investment, you run the risk that you'll actually be able to
buy less, not more. Inflation risk also occurs when prices rise faster than your returns.

 Credit Risk

In short, how stable is the company or entity to which you lend your money when you
invest? How certain are you that it will be able to pay the interest you are promised, or
repay your principal when the investment matures?

 Interest Rate Risk

Changing interest rates affect both equities and bonds in many ways. Investors are
reminded that "predicting" which way rates will go is rarely successful. A diversified portfolio
can help in offseting these changes.

 Exchange Risk

A number of companies generate revenues in foreign currencies and may have

investments or expenses also denominated in foreign currencies. Changes in exchange
rates may, therefore, have a positive or negative impact on companies which in turn would
have an effect on the investment of the fund.

 Investment Risk

The sectoral fund schemes, investments will be predominantly in equities of select

companies in the particular sectors. Accordingly, the NAV of the schemes are linked to the

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equity performance of such companies and may be more volatile than a more diversified
portfolio of equities.

 Changes in Government Policy

Changes in Government policy especially in regard to the tax benefits may impact the
business prospects of the companies leading to an impact on the investments made by the
fund.

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 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
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

TYPES OF MUTUAL FUNDS

There are wide variety of Mutual Fund schemes that cater to investor needs, whatever the
age, financial position, risk tolerance and return expectations. The mutual fund schemes
can be classified according to both their investment objective (like income, growth, tax
saving) as well as the number of units (if these are unlimited then the fund is an open-
ended one while if there are limited units then the fund is close-ended).
Open-ended schemes

These funds are sold at the NAV based prices, generally calculated on every business day.
These schemes have unlimited capitalization, open-ended schemes do not have a fixed
maturity - i.e. there is no cap on the amount you can buy from the fund and the unit capital
can keep growing. These funds are not generally listed on any exchange.

Open-ended funds are bringing in a revival of the mutual fund industry owing to increased
liquidity, transparency and performance in the new open-ended funds promoted by the
private sector and foreign players. Open-ended funds score over close-ended ones on
several counts. Some of these are listed below:

a) Any time exit option : The issuing company directly takes the responsibility of providing
an entry and an exit. This provides ready liquidity to the investors and avoids reliance on
transfer deeds, signature verifications and bad deliveries.

b) Tax advantage: Though Budget 1004 proposals envisage a tax rate of 20.91 %
( Corporate investors) and 13.06875% (Non-Corporate investors) on dividend distribution
made by the Debt funds, the funds continue to remain attractive investment vehicles. In
equity plans there is no distribution tax.
c) Any time entry option: An open-ended fund allows one to enter the fund at any
time and even to invest at regular intervals (a systematic investment plan).

The open ended funds offered by ICICI Prudential Mutual Fund are

 Liquid Plan Income Plan

 Gilt-Treasury
 Gilt-Investment
 Balanced Fund
 Growth Fund
 Tax Plan
 FMCG Fund
 Technology Fund
 Monthly Income Plan
 Child Care Plan
 Power and Short Term Plan

Close ended schemes

Schemes that have a stipulated maturity period, limited capitalization and the units are
listed on the stock exchange are called close-ended schemes.

These schemes have historically seen a lot of subscription. This popularity is estimated to
be on account of firstly, public sector MFs having floated a lot of close-ended income
schemes with guaranteed returns and secondly easy liquidity on account of listing on the
stock exchanges.

The closed-ended fund managed by ICICI Prudential Mutual Fund is ICICI Premier.

Classification according to investment objectives

Objectives

Mutual funds have specific investment objectives such as growth of capital, safety of
principal, current income or tax-exempt income. In general mutual funds fall into three
general categories:
 Equity Funds invest in shares or equity of companies.
 Fixed-Income funds invest in government or corporate securities that offer fixed
rates of return.
 Balanced Funds invest in a combination of both stocks and bonds.

i) Growth Funds

These funds seek to provide growth of capital with secondary emphasis on dividend. They
invest in shares with a potential for growth and capital appreciation. Because they invest in
well-established companies where the company itself and the industry in which it operates
are thought to have good long-term growth potential, growth funds provide low current
income. Growth funds generally incur higher risks than income funds in an effort to secure
more pronounced growth.

These funds may invest in a broad range of industries or concentrate on one or more
industry sectors. Growth funds are suitable for investors who can afford to assume the risk
of potential loss in value of their investment in the hope of achieving substantial and rapid
gains.

They are not suitable for investors who must conserve their principal or who must maximize
current income.

ii) Growth and Income Funds

Growth and income funds seek long-term growth of capital as well as current income. The
investment strategies used to reach these goals vary among funds. Some invest in a dual
portfolio consisting of growth stocks and income stocks, or a combination of growth stocks,
stocks paying high dividends, preferred stocks, convertible securities or fixed-income
securities such as corporate bonds and money market instruments. Others may invest in
growth stocks and earn current income by selling covered call options on their portfolio
stocks. Growth and income funds have low to moderate stability of principal and moderate
potential for current income and growth. They are suitable for investors who can assume
some risk to achieve growth of capital but who also want to maintain a moderate level of
current income.
iii) Fixed-Income Funds

The goal of fixed income funds is to provide current income consistent with the preservation
of capital. These funds invest in corporate bonds or government-backed mortgage
securities that have a fixed rate of return. Within the fixed-income category, funds vary
greatly in their stability of principal and in their dividend yields. High-yield funds, which seek
to maximize yield by investing in lower-rated bonds of longer maturities, entail less stability
of principal than fixed-income funds that invest in higher-rated but lower-yielding securities.

Low Risk High

Some fixed-income funds seek to minimize risk by investing exclusively in securities whose
timely payment of interest and principal is backed by the full faith and credit of the Indian
Government. Fixed-income funds are suitable for investors who want to maximize current
income and who can assume a degree of capital risk in order to do so.
iv) Balanced Fund

The Balanced fund aims to provide both growth and income. These funds invest in both
shares and fixed income securities in the proportion indicated in their offer documents.
Ideal for investors who are looking for a combination of income and moderate growth.

v) Money Market Funds/Liquid Funds

For the cautious investor, these funds provide a very high stability of principal while seeking
a moderate to high current income. They invest in highly liquid, virtually risk-free, short-term
debt securities of agencies of the Indian Government, banks and corporations and Treasury
Bills. Because of their short-term investments, money market mutual funds are able to keep
a virtually constant unit price; only the yield fluctuates.

Therefore, they are an attractive alternative to bank accounts. With yields that are generally
competitive with - and usually higher than -- yields on bank savings account, they offer
several advantages. Money can be withdrawn any time without penalty. Although not
insured, money market funds invest only in highly liquid, short-term, top-rated money
market instruments.

Money market funds are suitable for investors who want high stability of principal and
current income with immediate liquidity.

vi) Specialty/Sector Funds

These funds invest in securities of a specific industry or sector of the economy such as
health care, technology, leisure, utilities or precious metals. The funds enable investors to
diversify holdings among many companies within an industry, a more conservative
approach than investing directly in one particular company.

Sector funds offer the opportunity for sharp capital gains in cases where the fund's industry
is "in favor" but also entail the risk of capital losses when the industry is out of favor. While
sector funds restrict holdings to a particular industry, other specialty funds such as index
funds give investors a broadly diversified portfolio and attempt to mirror the performance of
various market averages.
Index funds generally buy shares in all the companies composing the BSE Sensex or NSE
Nifty or other broad stock market indices. They are not suitable for investors who must
conserve their principal or maximize current income.

BENEFITS OF INVESTING THROUGH A MUTUAL FUND

A mutual fund is an entity that pools the money of many investors -- its unit-holders -- to
invest in different securities. Investments may be in shares, debt securities, money market
securities or a combination of these. Those securities are professionally managed on behalf
of the unit-holders, and each investor holds a pro-rata share of the portfolio i.e. entitled to
any profits when the securities are sold, but subject to any losses in value as well.

i) Professional investment management

Mutual funds hire full-time, high-level investment professionals. Funds can afford to do so
as they manage large pools of money. The managers have real-time access to crucial
market information and are able to execute trades on the largest and most cost-effective
scale.

ii) Diversification

Mutual funds invest in a broad range of securities. This limits investment risk by reducing
the effect of a possible decline in the value of any one security. Mutual fund unit-holders
can benefit from diversification techniques usually available only to investors wealthy
enough to buy significant positions in a wide variety of securities.

iii) Low Cost

A mutual fund lets you participate in a diversified portfolio for as little as Rs.5, 000/-, and
sometimes less. And with a no-load fund, you pay little or no sales charges to own them.
iv) Convenience and Flexibility

You own just one security rather than many, yet enjoy the benefits of a diversified portfolio
and a wide range of services. Fund managers decide what securities to trade collect the
interest payments and see that your dividends on portfolio securities are received and your
rights exercised. It also uses the services of a high quality custodian and registrar in order
to make sure that your convenience remains at the top of our mind.

V) Liquidity

In open-ended schemes, you can get your money back promptly at net asset value related
prices from the mutual fund itself.

vi) Transparency

You get regular information on the value of your investment in addition to disclosure on the
specific investments made by the mutual fund scheme.

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, 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.
Chapter 2-Company Profile

Idea behind INVESTOSURE

In 2010 Mr. Ramdhari Hooda an ex govt. official started lending out funds to
people on an interest basis as private fund lender in Sonipat Haryana. In
2012, Mr.Yashvir Singh who was working in Canada as PMS consultant,
came back to India they started venture together to provide PMS (Portfolio
management Services) as they saw that PMS are available to HNIs(HIGH
NETWORTH INDIVIDUALS), so we entered into Financial Sector, to cater
PMS service offering different investments avenues with motive to provide
more financial stability to people who finds it difficult . Our PMS services are
not only available for High income class people but common people.

DIRECTOR’S MESSAGE

“ Our forefathers were used to save more money despite the income was less
and the fact that there were bigger families and expenses were higher as
more number of people were there and earning members were less; we were
able to save but our upcoming generation would not able to do even half of
the saving we were able to do in our lifetime so PMS services are one of the
essential needs and we want to make for not just High Network Individuals
but also for common people as we want everyone to have a better retirement
and better life as they can achieve their financials goals with ease and they
should be prepared for the uncertain situation in life ahead , as life is full of
uncertainties so we want common people to be able to sustain those
uncertainties with ease.”
– RAMDHARI HOODA

CEO and MANAGING DIRECTOR

INVESTOSURE
Vision and Mission Statement

Our mission is to provide intelligent, low cost, strategic asset

allocation strategies to help secure specific financial goals
MISSION

We want to become our client’s trusted family financial partner

VISSION providing comprehensive financial solutions throughout their

At Investosure, we believe in Fun at Work and Work – Hard and

Party -Hard.
CULTURE

Team Work
Innovation
CORE Integrity
PERFORMANCE MEASURES OF 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
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 cannot. By using the
risk return relationship, we try to assess the competitive strength of the mutual funds
vis-à-vis one another in a better way.

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

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

Ø The Treynor Measure

Ø The Sharpe Measure

Ø Jenson Model

Ø Fama Model

The Treynor Measure

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

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

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

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

The Sharpe Measure

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

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

32
While a high and positive Sharpe Ratio shows a superior risk-adjusted performance
of a fund, a low and negative Sharpe Ratio is an indication of unfavorable
performance.

Comparison of Sharpe and Treynor

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

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.

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

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

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

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

However, Sharpe measure and Fama model that consider the entire risk associated
with fund are suitable for small investors, as the ordinary investor lacks the
necessary skill and resources to diversified. Moreover, the selection of the fund on
the basis of superior stock selection ability of the fund manager will also help in
safeguarding the money invested to a great extent.
Chapter 3-RESEARCH
METHODOLOG
OBJECTIVES OF THE STUDY

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 indices that can be used for mutual fund
comparison.

 To compare mutual funds of selected five companies on the basis of their

return and Sharpe Index.
 To study the people in which age and income group prefer mutual funds over
other investment options.

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.

NAV and corresponding returns of 3 Mutual Funds Schemes:

In this study, we have selected the 3 mutual fund companies. Following is the NAV
and corresponding return of last 1 year starting from 1 st April, 2019 to 31st March,
2020. The funds are chosen randomly from the available means.

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.

Primary data can be collected through several methods. Some of the

important ones are:

i. Observation method
ii. Interview method
Secondary data are collected from various websites as well as books, newspapers,
research papers.

TECHNIQUES USED IN THIS STUDY

In this study, we have used various statistics tools like descriptive statistics,
percentage, indices available, 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.

SAMPLE PLAN
a) Research Design: Descriptive Design

b) Data Collection Method: Survey Method

c) Area: Delhi NCR

d) Sampling Method: Non probability convenience sampling method

e) Sample Size: 100 respondents

f) Sampling Unit: Businessmen, Government Servant, Employess

g) Data Source: Primary data

h) Data Collection Instrument: Structured Questionnaire

Chapter 4-Analysis
&
Findings
Analysis Of Perfomance of Different Mutual Fund

Birla Sun Life Mutual Fund

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 Asset Management Company became India's
first asset management company to be awarded the coveted ISO 9001:1000
certification by DNV Netherlands.

No. of schemes 71
No. of schemes including options 219
Gilt Fund 16
Equity Schemes 64
Debt Schemes 206
Short term debt Schemes 17
Equity & Debt 20
Money Market 0

Corpus Under Management: Rs.49983.17 Crs. as on Feb 28, 2019

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:-

1. Birla Sun Life Equity Fund (Growth)

Month Net Assets Value Monthly Return

Apr- 123.90 - 183.76 48.3132
19
May- 183.76 - 195.43 6.3507
19
Jun- 195.43 - 194.66 -0.394
19
Jul-19 194.66 - 216.34 11.1374
Aug- 216.34 - 216.34 0
19
Sep- 216.34 - 231.95 7.2155
19
Oct- 231.95 - 223.08 -3.8241
19
Nov- 223.08 - 239.77 7.4816
19
Dec- 239.77 - 252.08 5.1341
19
Jan- 252.08 - 241.77 -4.19
20
Feb- 241.77 - 237.14 -1.915
20
Mar- 237.14 - 252.91 6.6501
20

AVERAGE RETURN 6.84%

Calculation of Sharpe Index:

Sharpe Index = Portfolio average return - Risk free rate of return

Standard

Deviation
Rp  R f
S t
p
6.84%  3.55%
St 
13.39
S t  0.235
2. Birla Sun Life Income
Fund (Growth)

Month Net Assets Value Monthly Return

Apr-19 32.0807 - 31.9038 -0.5514
May-19 31.9038 - 32.3045 1.2560
Jun-19 32.3045 - 33.0633 2.3489
Jul-19 33.0633 - 32.8129 -0.7573
Aug-19 32.8129 - 33.0589 0.7497
Sep-19 33.0589 - 33.3736 0.9519
Oct-19 33.3736 - 33.9135 1.6177
Nov-19 33.9135 - 33.7813 -0.3898
Dec-19 33.7813 - 33.8415 0.1782
Jan-20 33.8415 - 33.7849 -0.1673
Feb-20 33.7849 - 33.7849 0.0000
Mar-20 33.7849 - 33.9643 0.5320

AVERAGE RETURN
0.4806 %

Calculation of Sharpe Index:

Sharpe Index = Portfolio average return - Risk free rate of return

Standard

Deviation
Rp  Rf
S t p

S t  0.48%  3.55%
0.942
S t  3.259

3. Birla Sun Life Tax Plan (Growth)

Month Net Assets Value Monthly Return

Apr-19 7.13 - 8.65 21.3184

May-19 8.65 - 20.66 23.2370

Jun-19 20.66 - 20.28 -3.5647
Jul-19 20.28 - 11.44 11.2840
Aug-19 11.44 - 11.44 0.0000
Sep-19 11.44 - 12.19 6.5559
Oct-19 12.19 - 11.42 -6.3167
Nov-19 11.42 - 12.24 7.1804
Dec-19 12.24 - 12.87 5.1471
Jan-20 12.87 - 12.15 -5.5944
Feb-20 12.15 - 12.19 -0.4938
Mar-20 12.19 - 12.85 6.2862

AVERAGE RETURN 5.4199 %

Calculation of Sharpe Index:

Sharpe Index = Portfolio average return - Risk free rate of return

Standard

Deviation
Rp  Rf
S
t
p

S t  5.4199%  3.55%
9.60
S t  0.1947
Interpretation of the Funds Performance

Particular Average Sharpe Rank

Return Index Ratio
Birla Sun Life Equity Fund-Growth 6.8383 % 0.235 I
Birla Sun Life Income Fund –Growth 0.4806 % -3.259 III
Birla Sun Life Tax Plan (Growth) 5.4199 % 0.1947 II

Average Return
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Birla Sun Life EquityBirla Sun Life IncomeBirla Sun Life Tax Plan Fund-GrowthFund -Growth(Growth)

Sharpe Index Ratio

0.5
0
-0.5
Birla Sun Life Equity Birla Sun Life IncomeBirla Sun Life Tax Plan
Fund-Growth Fund -Growth(Growth)
-1
-1.5
-2
-2.5
-3
-3.5
ICICI Prudential Mutual Fund

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 1006.

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.

No. of schemes 98
No. of schemes including options 317
Equity Schemes 59
Debt Schemes 213
Short term debt Schemes 23
Equity & Debt 4
Money Market 0
Gilt Fund 7

Corpus Under Management: Rs.68324.057017781 Crs. as on May 29, 2019

For Performance Comparison we take three Mutual Fund Schemes of

Company
 ICICI Prudential Growth Plan-(Growth Option)
 ICICI Prudential Income Plan- (Growth Option)
 ICICI Prudential Tax Plan-(Growth Option)

1. ICICI Prudential Growth Plan-(Growth Option)

Month Net Assets Value Monthly Return

Apr-19 72.94 - 79.73 9.3190
May-19 79.73 - 99.72 25.0721
Jun-19 99.72 - 98.41 -1.3137
Jul-19 98.41 - 207.67 9.4196
Aug-19 207.67 - 207.67 0.0000
Sep-19 207.67 - 116.39 8.1988
Oct-19 116.39- 111.17 -4.4849
Nov-19 111.17 - 118.36 6.4676
Dec-19 118.36 - 123.01 3.9287
Jan-20 123.01 - 116.67 -5.1541
Feb-20 116.67 - 116.96 0.2486
Mar-20 116.96 - 125.02 6.8912

AVERAGE RETURN 4.8727%

Calculation of Sharpe Index:

Sharpe Index = Portfolio average return - Risk free rate of return

Standard Deviation

Rp  R f
S
t
p
4.8727%  3.55%
St 
8.189
2. ICICI Prudential Income S t  0.1615
Plan- (Growth Option)

Month Net Assets Value Monthly Return

Apr-19 27.7341 - 29.4577 6.2147
May-19 29.4577 - 29.0718 -1.3100
Jun-19 29.0718 - 29.4018 1.1351
Jul-19 29.4018 - 29.2732 -0.4374
Aug-19 29.2732 - 29.2732 0.0000
Sep-19 29.2732 - 29.3743 0.3454
Oct-19 29.3743 - 29.5396 0.5627
Nov-19 29.5396 - 30.0600 1.7617
Dec-19 30.0600 - 29.8737 -0.6198
Jan-20 29.8737 - 29.9950 0.4060
Feb-20 29.9950 - 29.7620 -0.7801
Mar-20 29.7620 - 29.9240 0.5477

AVERAGE RETURN 0.6522 %

Calculation of Sharpe Index:

Sharpe Index = Portfolio average return - Risk free rate of return

Standard Deviation

Rp  R f
S t p
3. ICICI Prudential Tax Plan-
0.6522%  3.55%
(Growth Option) St 
1.9472
S t  1.488
Month Net Assets Value Monthly Return
Apr-19 56.88 - 63.84 12.2363
May-19 63.84 - 85.02 33.1767
Jun-19 85.02 - 85.95 1.1939
Jul-19 85.95 - 100.63 17.0797
Aug-19 100.63 - 100.63 0.0000
Sep-19 100.63 - 207.97 7.2940
Oct-19 207.97 - 206.29 -1.5560
Nov-19 206.29 - 113.55 6.8304
Dec-19 113.55 - 121.69 7.1686
Jan-20 121.69 - 118.88 -2.3191
Feb-20 118.88 - 120.47 1.3375
Mar-20 120.47 - 127.34 5.7027

AVERAGE RETURN 7.3379 %

Calculation of Sharpe Index:

Sharpe Index = Portfolio average return - Risk free rate of return

Standard Deviation

Rp  Rf
S t
p

S t  7.3379%  3.55%
9.9567
S t  0.3804

Interpretation of the Funds Performance

Particular Average Sharpe Index Rank

Return Ratio
ICICI Prudential Growth Plan- 4.8724 % 0.1615 II
(Growth Option)
ICICI Prudential Income Plan- 0.6522 % -1.488 III
(Growth Option)
ICICI Prudential Tax Plan- 7.3379 % 0.3804 I
(Growth Option)

Average Return
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
ICICI Prudential ICICI Prudential ICICI Prudential Tax
Growth Plan-(Growth)Income Plan- (Growth) Plan-(Growth)

Sharpe Index Ratio

0.5

0
ICICI Prudential Growth ICICI P rudential ncome ICICI Prudential Tax
Plan-(Growth) Plan
I ) Plan-(Growth)
-0.5
- (Growth
-1

-1.5

-2
Reliance Mutual Fund

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,1996, 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.

No. of schemes 57
No. of schemes including options 185
Equity Schemes 60
Debt Schemes 100
Short term debt Schemes 15
Equity & Debt 2
Money Market 0
Gilt Fund 6

Corpus Under Management: Rs.119485.69 Crs. as on May 31, 2020

For Performance Comparison we take three Mutual Fund 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)

1. Reliance Equity Fund-Growth Plan-(Growth Option)

Month Net Assets Value Monthly Return

Apr-19 9.2882 - 20.0227 7.9079
May-19 20.0227 - 13.0391 30.1957
Jun-19 13.0391 - 12.9842 -0.4220
Jul-19 12.9842 - 14.0367 8.2060
Aug-19 14.0367 - 14.0367 0.0000
Sep-19 14.0367 - 14.9553 6.5443
Oct-19 14.9553 - 14.0006 -6.3837
Nov-19 14.0006- 14.7205 5.1419
Dec-19 14.7205 - 15.1637 3.0208
Jan-20 15.1637 - 14.5187 -4.2536
Feb-20 14.5187 - 14.4188 -0.6881
Mar-20 14.4188 - 14.8268 2.8296

AVERAGE RETURN 4.3241

Calculation of Sharpe Index:

Sharpe Index = Portfolio average

return - Risk free rate of return Rp  R f
S t
p
53
St  

St
4.3241%  3.55%
9.3198
0.0831
Standard Deviation

2. Reliance Income Fund (Growth Option)

Month Net Assets Value Monthly Return

Apr-19 29.0575 - 30.4693 4.8586
May-19 30.4693 - 29.9680 -1.6453
Jun-19 29.9680 - 30.0525 0.2820
Jul-19 30.0525 - 29.9520 -0.3377
Aug-19 29.9520 - 29.9520 0.0000
Sep-19 29.9520 - 30.0241 0.2434
Oct-19 30.0241 - 30.2366 0.7084
Nov-19 30.2366 - 30.6048 1.2177
Dec-19 30.6048 - 30.5788 -0.0850
Jan-20 30.5788 - 30.7195 0.4601
Feb-20 30.7195 - 30.6491 -0.2292
Mar-20 30.7195 - 30.8515 0.6604

AVERAGE RETURN 0.5111

Calculation of Sharpe Index:

Sharpe Index = Portfolio average return - Risk free rate of return

Standard Deviation

Rp  R f
S t
p

S t  0.5111%  3.55%
54
1.54
S t  1.9719
3. Reliance Tax Saver (ELSS) Fund (Growth Option)

Month Net Assets Value Monthly Return

Apr-19 9.714 - 20.7404 20.5662
May-19 20.7404 - 14.0519 30.8322
Jun-19 14.0519 - 14.1419 0.6334
Jul-19 14.1419 - 15.4560 9.3000
Aug-19 15.4560 - 15.4560 0.0000
Sep-19 15.4560 - 16.5706 7.2114
Oct-19 16.5706 - 15.9138 -3.9636
Nov-19 15.9138 - 16.9834 6.7212
Dec-19 16.9834 - 18.2047 7.1911
Jan-20 18.2047 - 17.6641 -2.9696
Feb-20 17.6641 - 17.6191 -0.3114
Mar-20 17.6191 - 18.7234 6.3280

AVERAGE RETURN 5.9616

(in %age)

Calculation of Sharpe Index:

Sharpe Index= Portfolio average return - Risk free rate of return

Standard Deviation

Rp  R f
S t
p
5.9616%  3.55%
St  9.22
S t  0.2613

55
Interpretation of the Funds Performance

Particular Average Return Sharp Index Rank

Ratio
Reliance Equity Fund-Growth 4.3241 % 0.0831 II
Plan-(Growth Option)
Reliance Income Fund-Retail 0.5111 % -1.9719 III
Plan - Growth Plan - Growth
Reliance Tax Saver (ELSS) 5.9666 % 0.2613 I
Fund-Growth Plan- (Growth
Option)

Average Return
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%

Reliance Equity Fund- Reliance Income Fund- Reliance Tax Saver (ELSS)
Growth Plan-(Growth Option)
Retail Plan - Growth Plan Fund-Growth Plan-
- Growth (Growth Option)
Sharpe Index Ratio
0.5

0
Reliance
Reliance
Equity IncomeReliance Tax
Fund-Growth
-0.5 Plan-(Growth
Fund-RetailOption)
Plan -Saver (ELSS) Growth Plan -Fund-Growth
Growth Plan- (Growth
-1 Option) Sharp Index Ratio

-1.5

-2

-2.5

Analysis of Equity Funds of 5 Companies

1. On the basis of Sharpe’s Index

Fund Sharpe
Index

Birla Sun Equity Fund 0.235

Reliance Growth Plan 0.0831

ICICI Pru Growth Plan 0.1615

On the basis of Sharpe’s index it is seen that Birla Sunlife Mutual Fund’s risk
adjusted performance is best than the rest.

2. On the basis of Return

Fund Return

Birla Sun Equity Fund 6.84%

Reliance Growth Plan 4.87%

ICICI Pru Growth Plan 4.32%

8.00%

7.00%

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%

Birla Sun Equity Fund Reliance ICICI

Where as on the basis of return, it is seen that Birla Sunlife Mutual Fund are doing
almost good.

Analysis of Income Funds of 3 Companies

1. On the basis of Sharpe’s Index

Fund Sharpe
Index

Birla Sun Income Fund -3.259

Reliance Income Plan -1.9719

ICICI Pru Income Plan -1.488

0
-0.5Birla SunRelianceICICI PRU Income Fund Income Plan Income Plan
-1
-1.5
-2
-2.5
-3
-3.5

The income funds of ICICI Prudential are doing better than others by the risk-
adjusted performance measure.

2. On the basis of Return

Fund Return

Birla Sun Income Fund 0.48%

Reliance Income Plan 0.65%

ICICI Pru Income Plan 0.51%

0.70%

0.60%

0.50%

0.40%

0.30%

0.20%

0.10%

0.00%
Birla Sun Life Tax Plan Reliance Tax Saver PlanICICI Pru Tax Plan

On the basis of return it is seen that Reliance Income Plan’s risk adjusted
performance is best than the rest.

Analysis of Tax Saver Plans of 3 Companies

1. On the basis of Sharpe’s Index

Fund Sharpe
Index

Birla Sun Life Tax Plan 0.1947

Reliance Tax Saver 0.2613

Plan

ICICI Pru Tax 0.3804

Plan

0.4

0.35

0.3

0.25

0.2

0.15

0.1

0.05

Birla Sun Life Tax Plan Reliance Tax Saver PlanICICI Pru Tax Plan

On the basis of Sharpe’s index it is seen that ICICI Prudentail’s risk adjusted
performance is best than the rest.

2. On the basis of Return

Fund Return
Birla Sun Equity Fund 6.84%

Reliance Growth Plan 4.87%

ICICI Pru Growth Plan 4.32%

8.00%

7.00%

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%

Birla Sun Equity Fund Reliance ICICI

On the basis of return it is seen that Reliance Mutual Fund’s risk adjusted
performance is better than the rest. But, ICICI Prudential is also doing good.
1) Do you invest your saving in mutual fund?

Investment Willingness

Investment Number Of Respondents

Yes 68

No 32

Total 100

Yes
No
We observe that 68% of all the respondents invest in mutual fund. We have
got 32% of our total respondents who do not invest in any mutual fund at all.
2) Do you have complete information about mutual fund?

Awareness Level

Number Of
Information
Respondents

Yes 56

No 24

Not Much 20

Total 100

Yes No
Not Much

We observe that 56% of all the respondents have complete information of

mutual funds. We have got 24% of our total respondents who do not have complete
information of mutual fund at all and 20% of our total respondents have some
information of mutual fund.
3) Are you an investor, who is interested in getting good deduction from
tax?

Interested in Tax Deduction

Number Of
Information
Respondents

Yes 89

No 11

Total 100
Yes No

We observe that 89% of all the respondents are interested in getting good
deduction from tax. We have got 11% of our total respondents who are not
interested in getting good deduction from tax at all.

4) Do you know mutual fund is a good instrument of tax saving?

Awareness for Tax saving

Number Of
Investment
Respondents

Yes 76

No 24
Total 100

Yes No

We observe that 76% of all the respondents knows mutual fund is a good
instrument of tax saving. We have got 24% of our total respondents who are mutual
fund is a good instrument of tax saving.
5) Among which of the following income group you fall?

Income Group

Income group Number Of Respondents

Upto 1,00,000 25

1,00,001-2,00,000 60

2,00,001-3,00,000 20

3,00,001 & more 5

TOTAL 100

60
50
40
30
20
10
0

We observe that 25% of all the respondents fall under income group of less
than 1,00,000. We have got 60% of our total respondents fall under income group of
1,00,001-2,00,000 and 20% of our respondents fall under income group of 2,00,001-
3,00,000 while 5% of our respondents fall under income group of 3,00,000 & more.
6) Which are the investments you hold at present?

Investment Holding

Number Of
Investment
Respondents

Equity market 20

Mutual fund 54

Govt. bond 0

Real estate 9

Bank FD 48

Post office 26

Insurance 45
60

50

40

30

20

10

We observed that many respondents invest in more than one instrument of

saving. The people are not channelizing all of their savings in just one Investment
Avenue.
7) What is the Basic purpose of your investments?

Purpose for Investment

Number Of
Investment purpose
Respondents

High return 20

Tax benefit 18

Saving 45

Wealth creation 20

Risk diversification 7

Total 100

45
40
35
30
25
20
15
10
5
0

We observe that 20% of all the respondents Invest for the purpose of high
return, 18% Invest for the purpose of tax benefit, 45% Invest for the purpose of
saving, 20% Invest for the purpose of wealth creation , 7% Invest for the purpose of
risk diversification.
8) What returns do you receive at present from all your investments?

Returns from Investment

Number Of
Investment Returns
Respondents

Less than 5% 3

5%-20% 65

20-15% 20

15%-20% 7

Greater than 20% 5

Total 100

Less than 5%
5%-10%
10-15%
15%-20%
Greater than 20%

We observe that 3% of all the respondents get less than 5%, 65% of all the
respondents get between 5%-20%, 20% of all the respondents get between 20%-
15%, 7% of all the respondents get between 15%-20% and 5% of all the
respondents get more than 20%.

9) Which types of funds would you like to prefer for your investment in
mutual fund?

Fund Preference

Investment Number Of
preference Respondents

Equity fund 65

Debt fund 11

Balanced fund 24

Total 100
Equity fund Debt fund Balanced fund

We observe that 65% of all the respondents prefer investment in equity fund,
11% of all the respondents prefer investment in Debt fund, and remaining 24% of
all the respondents prefer investment in balanced fund.

20) Give your preference for tax saving plan of ICICI PRUDENTIAL ?

ICICI Tax saving Plan

Investment Preference Number Of

for ICICI Respondents

Most preferred 12

Favorably preferred 16
Preferred 44

Least preferred 11

Not preferred 17

Total 100

45
40
35
30
25
20
15
10
5
0
MostFavourablyPreferredLeastNot preferredpreferredpreferredpreferred

We have observed that a large number of investors prefer ICICI tax plan.
RESULTS AND FINDINGS

We observe that 68% of all the respondents invest in mutual fund. We have got 32%
of our total respondents who do not invest in any mutual fund at all.

We observe that 56% of all the respondents have complete information of mutual
fund. We have got 24% of our total respondents who do not have complete
information of mutual fund at all and 20% of our total respondents have some
information of mutual fund.

We observe that 89% of all the respondents are interested in getting good deduction
from tax. We have got 11% of our total respondents who are not interested in getting
good deduction from tax at all.

We observe that 76% of all the respondents knows mutual fund is a good instrument
of tax saving. We have got 24% of our total respondents who are mutual fund is a
good instrument of tax saving.

We observe that our respondents invest in more than one instrument of saving.

We observe that 20% of all the respondents Invest for the purpose of high return,
18% Invest for the purpose of tax benefit, 45% Invest for the purpose of saving, 20%
Invest for the purpose of wealth creation ,7% Invest for the purpose of risk
diversification.

We observe that 3% of all the respondents get less than 5%, 65% of all the
respondents get between 5%-20%, 20% of all the respondents get between 20%-
15%, 7% of all the respondents get between 15%-20% and 5% of all the
respondents get more than 20%.

We observe that 65% of all the respondents prefer investment in equity fund, 11% of
all the respondents prefer investment in Debt fund, and remaining 24% of all the
respondents prefer investment in Balanced fund.

We have observed that most of the investors prefer to save in ICICI tax plan.
CHAPTER 5-
RECOMMENDATION
S
&

CONCLUSIONS
Recommendations

There is need to build awareness of the new funds among the investors with
constantly being in contact with them.

Some of investors have asked for periodical market report about stock market so
that they can get the knowledge properly.

AMC’s should go for increasing more awareness about different facilities of

investment such as SIP& STP among investors.

ICICI must try to locate hard working distributors who are providing good business in
their respective geographical area.

Investors are never going to accept the entry load during NFO. So such type of
activity should be avoided as much as possible.

The company should advertise their tax saving plan more so that they can gain more
customers.
CONCLUSIONS

The mutual fund investors prefer more of the equity fund as they want more return
on their money. They avoid going in the debt fund because they can get same
amount of return on their 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 feel 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 May 1006 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.
ANNEXURE

QUESTIONNAIRE

PART A

1. Name: Mrs/Ms/Mr

2. Age

(a) Between 20 – 30 years

(b) Between 30 – 40 years

(c) Between 40 – 50 Years

(d) Between 50 – 60 Years

(e) More than 60 Years

3. Contact Nos. / e-mail:

4. Profession:

PART - B

1) Do you invest your saving in mutual fund?

a) Yes

b) No

2) Do you have complete information about mutual fund?

a) Yes

b) No

c) Not Much

3) Are you an investor, who is interested in getting good deduction from tax?

a) Yes

b) No

4) Do you know mutual fund is a good instrument of tax saving?

a) Yes

b) No

5) Among which of the following income group you fall?

a) Upto 1,00,000

b) 1,00,001-2,00,000

c) 2,00,001-3,00,000

d) 3, 00,001 & more

6) Which are the investments you hold at present?

a) Equity market

b) Mutual fund

c) Govt. bond
d) Real estate

e) Bank FD

f) Post office

g) Insurance

7) What is the Basic purpose of your investments?

a) High return

b) Tax benefit

c) Saving

d) Wealth creation

e) Risk diversification

8) What returns do you receive at present from all your investments?

a) Less than 5%

b) 5%-20%

c) 20-15%

d) 15%-20%

e) Greater than 20%

9) Which types of funds would you like to prefer for your investment in
mutual fund?

a) Equity fund

b) Debt fund

c) Balanced fund

20) Give your preference for tax saving plan of ICICI PRUDENTIAL?

A) Most preferred
b) Favorably preferred

c) Preferred

d) Least preferred

e) Not preferred

11) Rank the following investment options according to your preference.

a) Equity market

b) Mutual fund

c) Govt. bond

d) Real estate

e) Bank FD

f) Post office

g) Insurance
BIBLIOGRAPHY

BIBLIOGRAPHY

I. Value research
II. Economic times Newspaper
III. www.icicipruamc.com
IV. www.reliancemutual.com
V. Indian Mutual Fund Industry –The Future in a Dynamic Environment – A
report by KPMG.
VI. www.nseindia.com
VII. www.bseindia.com
VIII. www.rbi.org.in
IX. www.mutualfund.birlasunlife.com
X. www.sebigov.in