CONTENTS

Sl.No.DESCRIPTION

PAGE NO.

CHAPTER – I INTRODUCTION 2-39

CHPATER – II COMPANY PROFILE 40-52

CHPATER – III REVIEW OF LITERATURE 53-60

CHAPTER – IV DATA ANALYSIS AND INTERPRETATION 61-89

CHAPTER – V CONCLUSIONS AND SUGGESTIONS 90-95

BIBLIOGRAPHY 96

1

CHAPTER-1

INTRODUCTION

2

INTRODUCTION

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 invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciation realized by the scheme is shared by its unit holders in proportion to the number of units owned by them (pro rata). 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 portfolio at a relatively low cost. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy.

MUTUAL FUND CYCLE

A mutual fund is the ideal investment vehicle for today’s complex

and modern financial scenario. Markets for equity shares, bonds and other fixed

income instruments, real estate, derivatives and other assets have become mature

and information driven. Price changes in these assets are driven by global events

occurring in faraway places. A typical individual is unlikely to have the knowledge,

skills, inclination and time to keep track of events, understand their implications

and act speedily. An individual also finds it difficult to keep track of ownership of

his assets, investments, brokerage dues and bank transactions etc.

3

A mutual fund is the answer to all these situations. It appoints professionally

qualified and experienced staff that manages each of these functions on a full time

basis. The large pool of money collected in the fund allows it to hire such staff at a

very low cost to each investor. In effect, the mutual fund vehicle exploits economies

of scale in all three areas – research, investments and transaction processing. While

the concept of individuals coming together to invest money collectively is not new,

the mutual fund in its present form is a 20th century phenomenon. In fact, mutual

funds gained popularity only after the Second World War. Globally, there are

thousands of firms offering tens of thousands of mutual funds with different

investment objectives.

Typical asset management companies utilize a basic set of resources to achieve success for their investors:

Investment Services - These are the planned programs that seek to balance

growth with risk. These programs usually combine various types of

investments such as stocks, bonds, and precious metals.

Research - Asset management companies employ an array of researchers and

consultants who concentrate on individual market sectors and try to forecast how

each sector will perform in the short, mid, and long terms.

4

STRUCTURE OF MUTUAL FUNDS

There are many entities involved in the mutual funds organization. The structure is explained below. It mainly comprises the following

STRUCTURE OF MUTUAL FUNDS

5

Three key players namely Sponsor, Trust and Asset Management Company are

involved in setting up a mutual fund. They are assisted by other independent

administrative entities like banks, registrars transfer agents and custodians.

Typically, a mutual fund scheme is initiated by a Sponsor, which organizes and

markets the fund. It pre specifies the investment objectives of the fund, the risks

associated, the costs involved in the process and the broad rules for entry into and

exit from the fund and other areas of operation. In India, as in most countries these

sponsors need approval from the regulator viz, SEBI (Securities Exchange Board

of India), SEBI looks at track record of the sponsor and its financial strength.

Sponsor:

Sponsor means any person who acting alone or with another body corporate

establishes a mutual fund. The sponsor of a fund is similar to the promoter of a

company as he gets the fund registered with SEBI. SEBI will register the mutual

fund if the sponsor fulfills the following criteria.

The sponsor should have a sound track record and general reputation of

fairness and integrity in all his business transactions. This means that the

sponsor should have been doing business in financial services worth of the

immediately preceding year should be more than the capital contribution of

the sponsor in AMC and the sponsor should show profits after providing

depreciation, interest and tax for three out of the immediately preceding five

years.

The sponsor and any of the directors or principal officers to be employed by

the mutual fund, should not have been found guilty of fraud or convicted of

an offence involving moral turpitude or guilty of economic offences.

The sponsor forms a trust and appoints a Board of Trustees. He also appoints

an Asset Management Company as fund managers. The sponsor, either directly

or acting through the Trustees also appoints a custodian to hold the fund assets.

The sponsor is required to contribute at least 40 per cent of the minimum net

worth of the asset management company.

6

Trusts:

A mutual fund in India is constituted in the form of a public Trust created under

the Indian Trust Act, 1882. The sponsor forms the Trust and registers it with

SEBI. The fund sponsor acts as the settler of the Trust, contributing to its initial

capital and appoints as trustee to hold the assets of the Trust for the benefit of

the unit holders, who are the beneficiaries of the trust. The fund then invites

investors to contribute their money in the common pool, by subscribing to

‘units’ issued by various schemes established by the Trust as evidence of their

beneficial interest in the fund. Thus, a mutual fund is just a ‘pass through’

vehicle. Most of the funds in India are managed by the Board of Trustees,

which is an independent body and acts as protector of the unit holders’ interests.

At least, 50 per cent of the trustees shall be independent trustees (who are not

associated with an associate, subsidiary or sponsor in any manner). The trustees

shall be accountable for and be the custodian of funds/property of respective

scheme.

Asset Management Company

The trustees appoint the Asset Management Company with the prior approval of

SEBI. The AMC is a coany formed and registered under the Companies Act,

1956, to manage the affairs of the mutual fund and operate the schemes of such

mutual funds. It charges a fee for the services it renders to the mutual fund

trust. It acts as the investment manager to the Trust under the supervision and

direction of the trustees. The AMC, in the name of he Trust, floats and then

manages the different investment schemes as per SEBI regulations and the Trust

Deed. The AMC should be registered with SEBI. The AMC of a mutual fund

must have a net worth of at least Rs. 10 Crore at all times and this net worth

should be in the form of cash. It cannot act as a trustee of any other mutual

fund. It is required to disclose the scheme particulars and base of calculation of

NAV. It can undertake specific activities such as advisory services and

financial consultancy. It must submit quarterly reports to the mutual fund. The

trustees are empowered to terminate the appointment of the AMC and may

appoint a new AMC with the prior approval of the SEBI and unit-holders. At

7

least 50 per cent of the directors of the board of directors of AMC should not be

associated with the sponsor or its subsidiaries or the trustees.

Custodian

The AMC has to hire an outside custodian, which is responsible for the custody

of the assets of the fund. The custodian is also responsible for the receipt of all

kinds of cash and non-cash benefits such as bonus, dividends, rights, etc. The

custodian is usually a bank or any other financially sound institutions.

Transfer Agent

AMC’s also hire a registry and transfer agent which takes care of purchase and

sale of the units of the fund, issues certificates/account statements to investors,

issues redemption checks, maintains the register of members, makes dividend

payments and handles investor related services like change of address,

replacement of lost unit certificates etc.

Obligations of an AMC:

The AMC shall take all the reasonable steps and exercise due diligence

to ensure that any scheme is not contrary to the Trust deed and

provisions of investment of funds pertaining to any scheme is not

contrary to the provisions of the regulations and Trust deed.

The AMC shall exercise due diligence and care in all its investment

decisions. The AMC shall be responsible for the acts of commission or

commissions by its employees or the persons whose services have been

procured.

An AMC shall submit to the trustee’s quarterly reports.

The trustees at the request of an AMC can terminate the assignments of

the AMC.

An AMC shall not deal in securities through any broker associated with

a sponsor or a firm which is an associate of sponsor beyond 5 per cent of

the daily gross business of the mutual fund.

8

No AMC shall utilize services of the sponsor or any of its associates,

employees, or their relatives for the purpose of any securities transaction

and distribution and sale of securities, unless disclosure is made to the

unit-holders and brokerage/commission paid is disclosed in half-yearly

accounts of the mutual fund.

No person, who has been found guilty of any economic offence or

involved in violation of securities law, should be appointed as key

personnel.

The AMC shall abide by his code of conduct specified in the fifth

schedule.

The registrars and share transfer agents to be appointed by AMC are to

be registered with SEBI.

9

MUTUAL FUND INVESTORS.

Mutual funds in India are open to investment by(a) Residents including

Resident Indians Individuals, including high net worth individuals and

the retail or small investors

Indian Trusts/Charitable Institutions

Banks

Non-Banking Finance Companies

Insurance Companies

Provident Fund

(b) Non-residents, including

Non-resident Indians

Other Corporate Bodies (OCBs)

(c) Foreign Entities, namely, Foreign Institutional Investors (FIIs)

registered with SEBI. Foreign citizens/entities are however not

allowed to invest in mutual funds in India.

10

OBJECTIVES OF THE STUDY

To study the performance of the selected mutual funds and comparing with

the SBI Mutual Funds.

To offer the suggestions for investors how to choose best schemes.

To study about the returns pay by the different selected Mutual funds

To evaluate the performance of different kinds of mutual funds in SBI

mutual funds to compare with ICICI prudential.

To offer the suggestions for investors as well as mutual fund companies.

SCOPE OF THE STUDY

The scope of the study is to give clear picture about the comparing

and selecting best mutual fund schemes and to suggest measures to

overcome the problems.

11

NEED OF THE STUDY

While selecting the investment avenues, we have to consider the investor

needs like available funds and risk willing to take and expected return from the

securities. But he cannot select his own portfolio and manage on his own. So he

needs a portfolio manager to manage his invest able funds. The mutual funds

provide the services of portfolio manager, so we can select the mutual funds for

investments. To know which fund is best for his needs, I have chosen the

comparative performance of selected mutual fund schemes with special reference to

SBI Mutual Fund schemes and ICICI Prudential.

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LIMITATIONS

The main limitation of mutual fund is that it takes to invest money.

Unfortunately, most mutual funds receive money when markets are in boom

phase and investors are willing to try out mutual funds. Since it is difficult

to invest all funds in one day, there is some money waiting to be invested.

Further, there may be a time lag before investment opportunities are

identified.

Mutual funds, although regulated by the Government, are not insured

against losses. The Federal Deposit Insurance Corporation (FDIC) only

insures against certain losses at banks, credit unions, savings and loans but

not mutual funds.

The other limitation of mutual is the trading limitation, where the funds are

highly liquid in general; most mutual funds (called open-ended funds)

cannot be bought or sold in the middle of the trading day. Investor can also

buy and sell them at the end of the day, after they have calculated the

current value of their holdings. Absence of investment focus for an

individual investor, gain from a single security is very less comparatively

direct investment by the investor

13

RESEARCH METHODOLOGY

Primary Data:-

It has been collected from industrial guides and other executive form different

Functional areas.

Secondary Data:-

It has been collected from the websites, Company records & Economic Times

news papers.

Tools of Analysis:-

Expected return or mean return and standard deviation are used to analyze the data.

14

CHAPTER-2

COMPANY PRFOILE

15

Company profile:

STATE BANK OF INDIA - MUTUAL FUND

A partner for life

SBI Mutual Fund (SBI MF) is one of the largest mutual funds in the

country with an investor base of over 4.6 million. With over 20 years of rich

experience in fund management, SBI MF brings forward its expertise in

consistently delivering value to its investors

Proven Skills in wealth generation:

SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an

enviable track record in judicious investments and consistent wealth creation.

The fund traces its lineage to SBI - India’s largest banking enterprise. The

institution has grown immensely since its inception and today it is India's

largest bank, patronized by over 80% of the top corporate houses of the

country.

SBI Mutual Fund is a joint venture between the State Bank of India and

Société General Asset Management, one of the world’s leading fund

management companies that manages over US$ 500 Billion worldwide.

Exploiting expertise, compounding growth:

In twenty years of operation, the fund has launched 38 schemes and

successfully redeemed fifteen of them. In the process it has rewarded it’s

investors handsomely with consistently high returns.

16

A total of over 5.4 million investors have reposed their faith in the wealth

generation expertise of the Mutual Fund.

Schemes of the Mutual fund have consistently outperformed benchmark

indices and have emerged as the preferred investment for millions of investors

and HNI’s.

Today, the fund manages over Rs. 51,461 crores of assets and has a diverse

profile of investors actively parking their investments across 36 active

schemes.

The fund serves this vast family of investors by reaching out to them through

network of over 130 points of acceptance, 28 investor service centers, 46

investor service desks and 56 district organizers.

SBI Mutual is the first bank-sponsored fund to launch an offshore fund –

Resurgent India Opportunities Fund.

Growth through innovation and stable investment policies is the SBI MF

credo.

KEY PERSONNEL

Mr. Achal K. Gupta Managing Director & Chief Executive Officer

Mr. Didier Turpin Dy. Chief Executive Officer

Mr. Navneet Munot Chief Investment Officer

Mr. R. S. Srinivas Jain Chief Marketing Officer

Mr. Ashwini K Jain   Chief Operating Officer

Mr. C A Santosh Chief Manager - Customer Service.

17

Ms. Aparna Nirgude Chief Risk Officer

Ms. Vinaya Datar   Company Secretary & Compliance Officer

Mr. Parijat Agrawals   Head – Fixed Income

Risk Management Team:

The Risk Management unit is a separate division within the organization

headed by the Chief Risk Officer (CRO). A Risk Management Committee,

comprising the MD, Deputy CEO, CRO, COO, CIO and the CMO meets on a

regular basis to manage risk within the organization.

The CRO is responsible for risk management over all the functions within the

organization including Investments, Marketing, Operations, etc. Currently, the

CRO is an experienced investment professional and is assisted by a two-

member team, one being an investment Professional with an MBA in Finance

and the other being an investment professional deputed from SGAM.

SBI- MUTUAL FUND PRODUCTS:

EQUITY SCHEMES:

The investments of these schemes will predominantly be in the stock markets

and endeavor will be to provide investors the opportunity to benefit from the

higher returns which stock markets can provide. However they are also

exposed to the volatility and attendant risks of stock markets and hence should

be chosen only by such investors who have high risk taking capacities and are

willing to think long term. Equity Funds include diversified Equity Funds,

Sectoral Funds and Index Funds. Diversified Equity Funds invest in various

stocks across different sectors while Sectoral funds which are specialized

Equity Funds restrict their investments only to shares of a particular sector

18

and hence, are riskier than Diversified Equity Funds. Index Funds invest

passively only in the stocks of a particular index and the performance of such

funds move with the movements of the index.

Magnum COMMA Fund

Magnum Equity Fund

Magnum Global Fund

Magnum Index Fund

Magnum MidCap Fund

Magnum Multicap Fund

Magnum Multiplier Plus 1993

Magnum Sector Funds Umbrella

   MSFU - FMCG Fund

          MSFU - Emerging Businesses Fund

          MSFU - IT Fund

          MSFU - Pharma Fund

         MSFU - Contra Fund

SBI Arbitrage Opportunities Fund

SBI Blue chip Fund

SBI Infrastructure Fund - Series I

SBI Magnum Taxgain Scheme 1993

SBI ONE India Fund

SBI TAX ADVANTAGE FUND - SERIES I

DEBT SCHEMES:

Debt Funds invest only in debt instruments such as Corporate Bonds,

Government Securities and Money Market instruments either completely

avoiding any investments in the stock markets as in Income Funds or Gilt

Funds or having a small exposure to equities as in Monthly Income Plans or

Children's Plan. Hence they are safer than equity funds. At the same time the

expected returns from debt funds would be lower. Such investments are

19

advisable for the risk-averse investor and as a part of the investment portfolio

for other investors.

Magnum Children’s Benefit Plan

Magnum Gilt Fund

  Magnum Gilt Fund (Long Term)

         Magnum Gilt Fund (Short Term)

Magnum Income Fund

Magnum Income Plus Fund

  Magnum Income plus Fund (Saving Plan)

         Magnum Income plus Fund (Investment Plan)

Magnum Insta Cash Fund

Magnum InstaCash Fund -Liquid Floater Plan

Magnum Institutional Income Fund

Magnum Monthly Income Plan

Magnum Monthly Income Plan Floater

Magnum NRI Investment Fund

SBI Capital Protection Oriented Fund - Series I

SBI Debt Fund Series -370 Days – 3

SBI Debt Fund Series -180 Days - 9

SBI Debt Fund Series -90 Day – 33

SBI Debt Fund Series – 90 Day - 33

SBI Debt Fund Series

   SDFS 15 Months Fund

         SDFS 90 Days Fund

         SDFS 13 Months Fund

         SDFS 18 Months Fund

         SDFS 24 Months Fund

         SDFS 30 DAYS

         SDFS 30 DAYS

         SDFS 60 Days Fund

         SDFS 180 Days Fund

          SDFS 30 DAYS

SBI Premier Liquid Fund

20

SBI Dynamic Bond Fund

SBI Dynamic Bond Fund

SBI Debt Fund Series – 15 Months- 5

SBI Short Horizon Fund

   SBI Short Horizon Fund - Liquid Plus Fund

         SBI Short Horizon Fund - Short Term Fund

BALANCED SCHEMES:

Magnum Balanced Fund invests in a mix of equity and debt investments. Hence

they are less risky than equity funds, but at the same time provide commensurately

lower returns. They provide a good investment opportunity to investors who do not

wish to be completely exposed to equity markets, but is looking for higher returns

than those provided by debt funds.

Magnum Balanced Fund

Magnum NRI Investment Fund - Flexi Asset Plan

21

Magnum Multiplier Plus 1993

Investment Objective:

Magnum Multiplier Plus is an open-ended diversified equity fund and the

investment objective of the scheme is to provide investors long term capital

appreciation along with the liquidity of an open-ended scheme. The scheme will

invest in a diversified portfolio of equities of high growth companies.

Asset Allocation

Instrument % of Portfolio of Plan

A & B

Risk Profile

Equity and related

instruments

Not less than 70 % Medium to High

Debt instruments

(including Securitized

debt) and Govt.

Securities

Not more than 30% Low to Medium

Money Market

instruments

Balance Low

Scheme Highlights:

1. An open-ended equity scheme aiming for aggressive growth from

investments in equities.

2. Scheme opens for Resident Indians, Trusts, and Indian Corporates and

on a fully repatriable basis for NRIs, FIIs & Overseas Corporate

Bodies.

22

3. Facility to reinvest dividend proceeds into the scheme at NAV.

4. Easy entry and exit on the basis of sales and repurchase prices

determined daily. NAV will be declared on every business day.

5. Nomination facility available for individuals applying on their behalf

either singly or jointly upto three.

Launch Date Minimum Application

February 28, 1993 Rs. 1000

Entry Load Exit Load

Investments below Rs. 5 crore -

2.25% Investments of Rs 5 crores

and above- Nil

Investments below Rs 5 crores <= 6

months - 1.00% and NIL thereafter.

Investments of Rs 5 crores and above -

NIL

SIP SWP

Rs 500/month - 12 months, Rs

1000/month - 6 months, Rs

1500/quarter - 12 months

A minimum of Rs 500 can be

withdrawn every month or quarter by

issuing advance instructions to the

Registrars at any time.

Nav's

Plan Latest Nav Date

Dividend 52.42 24/04/2011

Growth 64.65 24/04/2011

23

MSFU - Emerging Businesses Fund

Investment Objective

To provide the investors maximum growth opportunity through equity

investments in stocks of growth oriented sectors of the economy. There are

five sub-funds dedicated to specific investment themes viz. Information

Technology, Pharmaceuticals, FMCG, Contrarian (investment in stocks

currently out of favour) and Emerging Businesses. The investment objective

of the Emerging Business Fund would be to participate in the growth potential

presented by various companies that are considered emergent and have export

orientation/outsourcing opportunities or are globally competitive by investing

in the stocks representing such companies. The fund may also evaluate

emerging businesses with growth potential and domestic focus.

Asset Allocation

Instrument % of Portfolio of Plan A & B Risk Profile

Equities or equity related instruments including derivatives across diversified sectors *

At least 90% Medium to High

Money market instruments 0%-10% Low

Scheme Highlights

1. An open-ended scheme in which there are five sub-funds, viz. Information

Technology (IT), Pharmaceuticals, Fast Moving Consumer Goods (FMCG)

and a Contra sub fund - investing in stocks currently out of favour and

Emerging Businesses Fund to participate in the growth potential presented by

various companies that are considered emergent and have export orientation /

outsourcing opportunities or are globally competitive by investing in the

24

stocks representing such companies. The fund may also evaluate emerging

businesses with growth potential and domestic focus. Accordingly, investors

can chose to invest in one or more of the five sub funds. The fund allows free

switchover from one sector to another. The merits of each of the five sectors

are detailed in the following pages.

2. Growth and Dividend Option available under Contra, Pharmaceuticals and

Emerging Businesses Fund.

3. Switch-over facility at NAV related price to other open-ended schemes of

SBI Mutual Fund, is available. This facility is not available to NRIs.

Launch Date Minimum Application11/10/2004 Rs. 2000/- and multiples of Rs. 500/-

Entry Load Exit LoadInvestments below Rs 5 crores - 2.25% Investments of Rs 5 crores and above - NIL

Investments below Rs 5 crores <= 6 months - 1.00% and NIL thereafter. Investments of Rs 5 crores and above - NIL

SIP SWP

Rs 500/month - 12 months, Rs 1000/month - 6 months, Rs 1500/quarter - 12 months

A minimum of Rs 500 can be withdrawn every month or quarter by issuing advance instructions to the Registrars at any time.

Nav's

Plan Latest Nav Date

Emerging Businesses Fund – Growth 35.26

24/04/2008

SBI Magnum Taxgain Scheme 1993

Investment Objective

25

The prime objective of scheme is to deliver the benefit of investment in a

portfolio of equity shares, while offering tax rebate on such investments made

in the scheme under section 80 C of the Income-tax Act, 1961. It also seeks to

distribute income periodically depending on distributable surplus.

Asset Allocation

Instrument % of Portfolio of Plan A & B Risk Profile

Equity,PCD’s and FCD’s and bonds 80-100% Medium to High

Money market instruments 0 – 20% Low

Scheme Highlights

1. There is a statutory lock-in period of three years for investments in a Tax

Saving Scheme (irrespective of the fact whether the investors claim the rebate

u/s 80C or any other section or not).

2. Dividends may be declared depending on distributable profits of the

scheme. Facility to reinvest dividend proceeds into the scheme at NAV.

3. Switchover facility to any other open-ended schemes of SBI Mutual Fund at

NAV related prices available after the statutory lock-in period.

Launch Date Minimum ApplicationMarch 31, 1993 Rs. 500 and Multiples of Rs 500

Entry Load Exit LoadInvestments below Rs. 5 crores - 2.25% Investments of Rs.5 crores and above - NIL

Nil

SIP SWP

26

Rs.500/month - 12 months Rs.1000/month - 6months Rs.1500/quarter - 12 months

A minimum of Rs. 500 can be withdrawn every month or quarter by issuing advance instructions to the Registrars at any time. This facility is available only after the lock-in period of three years.

Nav's

Plan Latest Nav Date

Magnum Tax Gain Scheme - 1993 - Dividend 43.34

24/04/2011

Magnum Tax Gain Scheme - 1993 - Growth 53.34

24/04/2011

27

CHAPTER-3

REVIEW OF LITERATURE

28

SEBI – Securities and Exchange Board of India:

Securities and Exchange Board of India (SEBI) is a board (autonomous body)

created by the Government of India in 1988 and given statutory form in 1992 with

the SEBI Act 1992 with its head office at Mumbai.

The Securities and Exchange Board of India is perhaps the most important

regulatory body. Similar to the Securities Exchange Commission in the US, it is the

authority that has to always be on its toes. More so, when the markets are doing

well and there are a spate of IPOs (initial public offerings) or FPO’s (follow-on

public offerings) like now.

Its main mandate is to protect the interest of investors in the securities markets and

to promote the development of and to regulate the securities markets so as to

establish a dynamic and efficient securities market.

When investors have complaints against listed companies or registered

intermediaries, SEBI acts as the nodal agency for addressing these complaints, if

they are not solved directly between the parties concerned, or if the investor is not

happy with the response.

SEBI has listed certain categories of grievances for which investors can file

complaints with it. These include:

Non-receipt of refund order or allotment advice in case of investment in

IPO's, FPO's and rights issues

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Non-receipt of dividend from listed companies

Non-receipt of share certificates after transfer from listed companies

Non-receipt of debentures after transfer or non-receipt of interest or

principal on redemption and non-receipt of interest on delayed repayment

Non-receipt of rights offer letter

Collective investment schemes like plantation companies. Investors can send

complaints to SEBI regarding non-receipt of invested principal and returns there

from.

Mutual funds/venture capital funds/foreign venture capital investors/foreign

institutional investors/portfolio managers/custodians - Complaints mutual funds like

non-receipt or delay in receipt of dividends/redemptions, non-availability of

portfolio disclosures, non-receipt of transaction statement, etc.

Brokers - This is the most common area of complaints for the average investor.

Complaints against brokers stem from disputes over brokerage rates, non-receipt of

purchased shares or payments for sold shares, auction of shares sold and delivered

timely, but delay at broker's end, etc.

Complaints against securities lending intermediaries may arise due to non-receipt of

shares lent by the investor or interest thereupon, or non-receipt of funds upon return

of borrowed shares or excessive interest charged upon borrowing.

Complaints against merchant bankers, registrar and transfer agents, bankers to

issues and underwriters generally stem from problems in primary market issues,

like non-disclosures, service issues etc.

Complaints against securities exchanges, clearing or settlement houses or

depositories - these concern irregularities or failure to act diligently, like the

Calcutta Stock Exchange in the last securities scam or the NSDL in the recent IPO

scam.

Derivative trading - Many investors sign legal papers empowering the broker to

trade on their behalf, without proper knowledge and wake up on seeing their margin

money eroded due to sustained losses.

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In other instances, major complaints are against brokers squaring off outstanding

derivatives positions due to lack of margins or not giving the client adequate time or

notice, leading to huge losses for investors/traders. These happen especially when

markets turn volatile of see sustained and large one- way movements.

There are other areas such as corporate governance, corporate restructuring,

acquisitions, buybacks, delisting and other compliance related issues for which one

could approach SEBI. For all this one can

File complaints electronically on the SEBI website

Get a complaint registration number

Track the status of the complaint online

SEBI looks into the merit of the complaint and takes up the matter with the

concerned company or intermediary

It can also direct intermediaries to redress the investor complaints satisfactorily if

the case merits such an order one can also send grievances by post or fax.

In other words, there is a wide range of issues that come under the jurisdiction of

SEBI. And the onus is entirely on it to keep the stocks markets healthy.

31

TYPES OF MUTUAL FUND SCHEMES:

By Structure

o Open-ended schemes

o Close-ended schemes

o Interval schemes

By Investment Objective

o Growth schemes

o Income schemes

o Balance schemes

o Money Market schemes

Other types of schemes

o Tax Saving schemes

o Special schemes

o Index schemes

o Sector specific schemes

Schemes according to maturity period:

A mutual fund scheme can be classified into open-ended scheme or close-ended

scheme depending on its maturity period.

Open-ended Fund / Scheme

An open-ended fund or scheme is one that is available for subscription and

repurchase on a continuous basis. These schemes do not have a fixed maturity

period. Investors can conveniently buy and sell units at Net Asset Value (NAV)

32

related prices which are declared on a daily basis. The key feature of open-end

schemes is liquidity.

Close-ended Fund / Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The

fund is open for subscription only during a specified period at the time of launch of

the scheme. Investors can invest in the scheme at the time of the initial public issue

and thereafter they can buy or sell the units of the scheme on the stock exchanges

where the units are listed. In order to provide an exit route to the investors, some

close-ended funds give an option of selling back the units to the mutual fund

through periodic repurchase at NAV related prices. SEBI Regulations stipulate that

at least one of the two exit routes is provided to the investor i.e. either repurchase

facility or through listing on stock exchanges. These mutual funds schemes disclose

NAV generally on weekly basis.

Interval scheme

Interval funds combine the features of open-ended & closed ended schemes. They

are open for sale or redemption during pre-determined intervals at NAV related

prices.

Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or balanced

scheme considering its investment objective. Such schemes may be open-ended or

close-ended schemes as described earlier. Such schemes may be classified mainly

as follows:

Growth / Equity Oriented Schemes

33

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

term. Such schemes normally invest a major part of their corpus in equities. Such

funds have comparatively high risks.

These schemes provide different options to the investors like dividend option,

capital appreciation, etc. and the investors may choose an option depending on their

preferences. The investors must indicate the option in the application form. The

mutual funds also allow the investors to change the options at a later date. Growth

schemes are good for investors having a long-term outlook seeking appreciation

over a period of time.

Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors. Such

schemes generally invest in fixed income securities such as bonds, corporate

debentures, Government securities and money market instruments. Such funds are

less risky compared to equity schemes. These funds are not affected because of

fluctuations in equity markets. However, opportunities of capital appreciation are

also limited in such funds. The NAVs of such funds are affected because of change

in interest rates in the country. If the interest rates fall, NAVs of such funds are

likely to increase in the short run and vice versa. However, long term investors may

not bother about these fluctuations.

Balanced Fund

The aim of balanced funds is to provide both growth and regular income as such

schemes invest both in equities and fixed income securities in the proportion

indicated in their offer documents. These are appropriate for investors looking for

moderate growth. They generally invest 40-60% in equity and debt instruments.

These funds are also affected because of fluctuations in share prices in the stock

markets. However, NAVs of such funds are likely to be less volatile compared to

pure equity funds.

Money Market or Liquid Fund

34

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

preservation of capital and moderate income.

These schemes invest exclusively in safer short-term instruments such as treasury

bills, certificates of deposit, commercial paper and inter-bank call money,

government securities, etc. Returns on these schemes fluctuate much less compared

to other funds. These funds are appropriate for corporate and individual investors as

a means to park their surplus funds for short periods.

Other Schemes

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the

Income Tax Act, 1961 as the Government offers tax incentives for investment in

specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes

launched by the mutual funds also offer tax benefits. These schemes are growth

oriented and invest pre-dominantly in equities. Their growth opportunities and risks

associated are like any equity-oriented scheme.

Gilt Fund

These funds invest exclusively in government securities. Government securities

have no default risk. NAVs of these schemes also fluctuate due to change in interest

rates and other economic factors as is the case with income or debt oriented

schemes.

Index Funds

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

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

same weight age comprising of an index. NAVs of such schemes would rise or fall

in accordance with the rise or fall in the index, though not exactly by the same

percentage due to some factors known as "tracking error" in technical terms.

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

fund scheme.

35

There are also exchange traded index funds launched by the mutual funds which are

traded on the stock exchanges.

Sector specific funds / schemes

These are the funds/schemes which invest in the securities of only those sectors or

industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast

Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these

funds are dependent on the performance of the respective sectors/industries. While

these funds may give higher returns, they are more risky compared to diversified

funds. Investors need to keep a watch on the performance of those sectors/industries

and must exit at an appropriate time. They may also seek advice of an expert.

36

Advantages & Disadvantages of Mutual Funds The advantages of investing in a Mutual Fund are:

• Professional Management –

The primary advantage of funds (at least theoretically) is the professional

management of your money. Investors purchase funds because they do not have the

time or the expertise to manage their own portfolio. A mutual fund is a relatively

inexpensive way for a small investor to get a full-time manager to make and

monitor investments.

• Diversification –

By owning shares in a mutual fund instead of owning individual stocks or bonds,

your risk is spread out. The idea behind diversification is to invest in a large number

of assets so that a loss in any particular investment is minimized by gains in others.

In other words, the more stocks and bonds you own, the less any one of them can

hurt you (think about Enron). Large mutual funds typically own hundreds of

different stocks in many different industries. It wouldn't be possible for an investor

to build this kind of a portfolio with a small amount of money.

• Economies of Scale –

Because a mutual fund buys and sells large amounts of securities at a time, its

transaction costs are lower than you as an individual would pay.

Convenient Administration:

Investing in a Mutual Fund reduces paperwork and helps you avoid many problems

such as bad deliveries, delayed payments and follow up with brokers and

companies. Mutual Funds save your time and make investing easy and convenient.

37

Return Potential

Over a medium to long-term, Mutual Funds have the potential to provide a higher

return as they invest in a diversified basket of selected securities.

LowCosts

Mutual Funds are a relatively less expensive way to invest compared to directly

investing in the capital markets because the benefits of scale in brokerage,

custodial, demat costs, depository costs etc and other fees translate into lower costs

for investors.

Liquidity

In open-end schemes, the investor gets the money back promptly at net asset value

related prices from the Mutual Fund. In closed-end schemes, the units can be sold

on a stock exchange at the prevailing market price or the investor can avail of the

facility of direct repurchase at NAV related prices by the MutualFund.

Transparency

You get regular information on the value of your investment in addition to

disclosure on the specific investments made by your scheme, the proportion

invested in each class of assets and the fund manager's investment strategy and

outlook.

Flexibility

38

Through features such as regular investment plans, regular withdrawal plans and

dividend reinvestment plans, you can systematically invest or withdraw funds

according to your needs and convenience.

Affordability

Investors individually may lack sufficient funds to invest in high-grade stocks. A

mutual fund because of its large corpus allows even a small investor to take the

benefit of its investment strategy.

Choice of Schemes:

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

Well-Regulated

All Mutual Funds are registered with SEBI and they function within the provisions

of strict regulations designed to protect the interests of investors. The operations of

Mutual Funds are regularly monitored by SEBI.

AMFI is the supervisory body of Mutual Fund Industry.

Simplicity –

Buying a mutual fund is easy! Pretty well any bank has its own line of mutual

funds, and the minimum investment is small. Most companies also have automatic

purchase plans whereby as little as $100 can be invested on a monthly basis.

39

Disadvantages of Mutual Funds:

The disadvantages of investing in a Mutual Fund are:

• Professional Management-

Did you notice how we qualified the advantage of professional management with

the word "theoretically"? Many investors debate over whether or not the so-called

professionals are any better than you or I at picking stocks. Management is by no

means infallible, and, even if the fund loses money, the manager still takes his/her

cut. We'll talk about this in detail in a later section.

• Costs –

Mutual funds don't exist solely to make your life easier--all funds are in it for a

profit. The mutual fund industry is masterful at burying costs under layers of

jargon. These costs are so complicated that in this tutorial we have devoted an entire

section to the subject.

• Dilution –

It's possible to have too much diversification (this is explained in our article entitled

"Are You Over-Diversified?"). Because funds have small holdings in so many

different companies, high returns from a few investments often don't make much

difference on the overall return. Dilution is also the result of a successful fund

getting too big. When money pours into funds that have had strong success, the

manager often has trouble finding a good investment for all the new money.

40

• Taxes –

When making decisions about your money, fund managers don't consider your

personal tax situation. For example, when a fund manager sells a security, a capital-

gain tax is triggered, which affects how profitable the individual is from the sale. It

might have been more advantageous for the individual to defer the capital gains

liability.

The above pyramid speaks about the different types of risk and the respective

growth associated with the risk.

It can be seen that, at the lower level risk is very less and their more safety. This

kind of portfolio is usually preferred by the in the third level of their life cycle i.e.

mainly people who are pension holders.

As we move on to the pyramid we see that there is average risk and reasonable

growth and income. These are people in second level of their life cycle who are

well settled in life who are ready to take the calculated risk.

The last level depicts a picture of people who can assume the highest risk. These are

people who have just started their career who can take high risk.

WHY TO INVEST IN MUTUAL FUNDS:

A proven principle of sound investment is –do not put all eggs in one

basket. Investment in mutual funds is beneficial due to following reasons.

They help in pooling of funds and investing in large basket of shares of

different companies. Thus by investing in diverse companies, mutual

funds can protect against unexpected fall in value of investment.

An average investor does not have enough time and resources to

develop professional attitude towards their investment. Here

professional fund managers engaged by mutual funds take desirable

41

investment decision on behalf of investors so as to make better

utilization of resources.

Investment in mutual funds is comparatively more liquid because

investor can sell the units in open market or can approach mutual fund

to repurchase the units at net asset value depending upon the type of

scheme.

Investors can avail tax rebates by investing in different tax saving

schemes floated by these funds, approved by the government.

Operating cost is minimized per head because of large size of investible

funds, there by realizing more net income of investors.

HISTORY OF MUTUAL FUND

Mutual funds made an opening in India in 1963 under the enactment f Unit Trust of

India (UTI), which came out with is debut scheme named US-64, an open ended

scheme n, which is operating till date. Up to 1986-87 it had launched 20 schemes;

mobilizing net resources amounting to Rs. 4564 crores for these 23 long years up to

1987 UTI enjoyed complete monopoly of the unit trust business in India. It

remained one and the only mutual fund in India.

It was in 1986 that the government of India amended banking regulation

act and allowed commercial banks in public sector to set up mutual funds. This lead

to promotion of ‘SBI-MUTUAL FUND’ by State Bank Of India (SBI) in July 1987

followed by

Canara Bank

Indian bank

42

Bank of India

Bank of Baroda

Punjab National bank

The government of India further granted permission to Insurance Corporation to

public sector to float mutual funds. The following were the corporations,

Life Insurance Corporation

General Insurance of Corporation

This was the picture till 1991, but when in 1991 the government of India followed a

policy of liberalization, privatization, and globalization it opened the gates to

private sector to launch mutual funds.

The History of Indian mutual fund industry can be broadly classified in to

The four phases:

Phase 1— July 1964 to November 1987

Phase 1— November 1987- October 1993

Phase 3--- October 1993- February 2003

Phase 4-- since February 2003

Phase 1--- MONOPOLY OF UTI

This period was marked by the operations of a single institution, UTI, which

prepared ground for the future mutual fund industry.

The first decade of UTI’s operations was the formative period.

The first and still more popular product launched by UTI was US-64. Due to

43

immense popularity of unit 64, UTI launched a reinvestment plan in 1966-67.

Another popular scheme, Unit Linked Insurance Plan (ULIP), was launched in

1971. By the end of June 1974 there were six lakhs unit holders with UTI .the unit

capital totaled Rs.152 crore and investible funds Rs.172 crore.

The second phase of operations (1974-84) was one of the consolidation

and expansion. In this period UTI was delinked from RBI .The period was marked

by the introduction of open ended growth funds. Six new schemes were introduced

during 1981-84. by the end of June 84 the investible funds crossed Rs. 1000 crore

and unit holders numbered to 17 lakhs.

During 1984-87, innovative and widely accepted schemes such as Children’s

Gift Growth Fund, Master share were launched. The first Indian off shore fund,

India Fund was launched in august 1986.

Towards the end of 1980s, winds of change had started blowing in the

Indian economy. UTI was one of the few organizations to prepare fully to face the

emerging challenges. In the following years it launched all round diversification

programmes through backward and forward integration in order to retain its

position as the undisputed market leader.

Phase 2—PUBLIC SECTOR COMPETITION

This period was marked by the entry of non-UTI

public sector mutual funds in the market, bringing in competition. With the opening

up of the economy many public sector financial institution established mutual funds

in India. However, the mutual fund industry remained the exclusive domain of the

public sector in this period.

The first non-UTI mutual fund ---- SBI mutual fund –was launched

by the State Bank of India in 1987.this was followed by Canbank mutual fund

scheme (launched in December 1987),LIC mutual fund scheme (launched in June

1989) and Indian bank mutual fund scheme (launched in January 1990).

44

The entry of the public sector mutual funds created waves in the market and

attracted small investors. The cumulative mobilization of resources went up from

Rs.4500 crores in 1987 (mobilized by UTI alone.) to Rs.19000 crore in 1990

(mobilized collectively by UTI, SBI mutual fund, CANBANK mutual fund, LIC

mutual fund, and Ind Bank mutual fund).

With the entry of three more mutual funds in the market namely, Bank of India

mutual fund, GIC mutual fund , PNB mutual fund ,collection increased to

Rs.37,480 crore (1991-92) indicating a 96% increase in between 1989-90 and 91-

92. However UTI continued to be the dominantly player in the market, though its

share declined marginally from 87.9 % in 1988-89 to 84% in 1991-92.

The years 1992-93 and 93-94 saw a decline in collections by the public sector

mutual funds. The total collection declined from the 2500 crore to 1960 crore in 92-

93. There were two reasons for the fall in the collection. First, SEBI had prohibited

mutual funds from any scheme with an assured return. Second according to mutual

fund regulations, 1993, Indian mutual funds were to form Asset Management

Company (AMC) pending which they could not launch any scheme.

Before 1989 there were no regulatory guidelines for the mutual fund

industry in India. The first such guidelines for setting up and regulating mutual

funds were issued by Reserve Bank Of India but they were applicable to mutual

funds floated by banks. Then the guidelines were issued by the government of India

in 1990 covering all mutual funds and making them mandatory for all the mutual

funds to be registered with SEBI. These guidelines also set the norms for

registration, management, investment objectives, disclosure, pricing and valuation

of securities, and so on.

These guidelines were revised and Security and Exchange Board of India (SEBI)

regulations 1993 came in to effect on the 20th Jan 1993, rules for formulation,

administration, and management of mutual

45

funds in India were clearly laid down. The regulation made the formulation of

AMC and listing of the closed ended schemes compulsory. With view to protect the

investor’s right disclosure, norm was also tightened.

Another significant development during this period was the opening up of the

mutual funds market to the private sector.

PHASE 3-EMEREGENCE OF COMPETITATIVE MARKET.

A new era in mutual fund industry began with the entry of private sector funds

in 1993, posing a serious competition to the existing public sector funds. The new

private sector funds have distinctive operational advantages. They are:

Most of them are jointly floated by Indian organization along with

experienced foreign asset management companies, facilitating access the

latest technology and foreign fund management strategies.

Private sector funds are able to attract the best managerial talents from the

public sector.

Starting of the mutual funds has been easier for them because infrastructural

inputs created by the public sector mutual funds were already available.

The first private sector mutual fund to launch a scheme was the Madras

based Kothari Pioneer Mutual fund. It launched the open ended prima fund in

November 1993.

During the year 93-94, five private sector mutual funds namely

Kothari Pioneer Mutual Fund

ICICI Mutual fund

20th century mutual fund

46

Morgan Stanley Mutual Fund

Taurus Mutual fund

During 1994-95 six more private sector funds were launched they are

Apple mutual fund

JM mutual fund

Shriram mutual fund

CRB mutual fund

Alliance mutual fund

Birla mutual fund

Between 1993 and 1995, further regulatory measures were introduced

The government of India has allowed NRIs and Overseas Corporate

Bodies (OCB) to invest in UTI and other mutual funds (in both

primary and secondary market).

The practice of obtaining prior approval for advertising by mutual

funds has been dispensed with..

47

Mutual funds are allowed to invest in money market instruments up

to 25% of resources mobilized.

The practice of reissuing of units of closed ended schemes has been

dispensed with.

Mutual funds are allowed to buy back their own units from the

secondary marketing case they are traded at a substantial discount to

NAV.

With effect from 1 December 1993 new issuers have been allowed to

reserve 20% of the public issue for mutual funds.

Mutual funds have been allowed to launch income schemes with

assured returns one at a time.

PHASE-4 - (SINCE 2003 FEBRUARY)

On Feb 2003, UTI was bifurcated in to 2 separate entities. One is

specified undertaking of the UTI with asset under management of Rs.29, 835 crores

as at the end of Jan 2003. The second is the UTI mutual funds Limited, sponsored

by the State Bank of India, Bank of Baroda and Life Insurance Corporation of

India. UTI is functioning under an administrator and rules framed by the

government of India do not come under the purview of the Mutual fund

Regulations. The Mutual Funds Limited is registered with SEBI and functions

under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI, with

the setting up of a UTI mutual fund, confirming to the SEBI Mutual Fund

Regulations and recent mergers taking place among different private sector funds,

the mutual fund industry has entered its current phases of consolidation and growth.

At the end of September 2004, there are 29 funds, which manage assets

of Rs. 153108 crores under 421 different schemes.

At the end of July 2005 the status of mutual fund industry was

48

No of schemes amount (crores)

Open ended schemes 414 1, 64,998

Closed ended schemes 46 10 920

Risk factors associated with investing in mutual funds:

Mutual funds and securities investments are subject to market risks and there is no

assurance or guarantee that the objectives of the schemes will be achieved

As with any investment in securities, the NAV of the units issued under the

schemes can rise or fall depending on the factors and forces affecting capital

markets. Neither the past performance of the mutual funds managed by the

sponsors and their affiliates / associates nor the past performance of the sponsors,

asset management companies (AMC) nor fund is necessarily indicative of the future

performance of the schemes

Equity Funds are open to market risk i.e. there is a possibility that the price of the

stocks in which the Fund has invested may decrease. Of course, the prices may also

go up, making it possible for the Fund to earn profits

Debts Funds are open to two main risks - Credit Risk and Interest Rate Risk. Credit

Risk refers to the possibility that the company that has issued the bond or debenture

in which the Fund has invested may default on interest or on principal payments.

Debt Fund managers take care of this by investing in bonds which have good credit

rating

Interest Rate Risk refers to the possibility that the price of the bond in which the

Fund has invested may go down because of an increase in the interest rates in the

economy. In general, it is useful to remember that this is a "see-saw" relationship - a

49

bond price (and therefore, NAV) goes up when interest rates drop and drops when

interest rates rise.

RISK RETURN ANALYSIS OF THE SCHEMES

A rational investor before investing his or her money in any stock analyses

the risk associated with the particular stock. The actual return he receives

from a stock may vary from the expected one and thus a investor is always

cautious about the rate of risk associated with the particular stock. Hence it

becomes very essential on the part of investors to know the risk as the hard

earned money is being invested with the view to earn good return on the

investment.

Risk mainly consists of two components

Systematic risk

Unsystematic risk

Systematic risk

The systematic risk affects the entire market. The economic

conditional, political situations, sociological changes affect the entire market

in turn affecting the company and even the stock market. These situations are

uncontrollable by the corporate and investor.

Unsystematic risk

50

The unsystematic risk is unique to industries. It differs

from industry to industry. Unsystematic risk stems from managerial

inefficiency, technological change in the production process, availability of

raw materials, changes in the consumer preference, and labour problems. The

nature and magnitude of above mentioned factors differ from industry to

industry and company to company.

In a general view, the risk for any investor would be the probable loss for

investing money in any mutual fund. But when we look at the technical side of

it , we can’t just say that these schemes/fund carry risk without any proof.

They are certain set of formulas to say the percentage of risk associated with

it.

There are certain tools or formulas used to calculate the risk associated with

the schemes. These tools help us to understand the risk associated with the

schemes. These schemes are compared with the benchmark BSE 100.

THE TOOLS USED FOR CALCULATION

Standard Deviation

Beta

Alpha

Sharp ratio

Treynor ratio

Arithmetic mean

∑ Y/N

51

Where Y- return of Nav values

N- Number of observation

Average return that can be expected from investment. The arithmetic

average return is appropriate as a measure of the central tendency of a number

of returns calculated for a particular time i.e. for five years. It shows the

Standard deviation

S.D= √(y-Y)²

N

The standard deviation is a measure of the variables around its mean or it is

the square root of the sum of the squared deviations from the mean divided by

the number of observations.

S.D is used to measure the variability of return i.e. the

variation between the actual and expected return.

BETA

Beta describes the relationship between the stock’s return and index

returns. There can be direct or indirect relation between stock’s return and

index return. Indirect relations are vary rare.

1) Beta =+1.0

It indicates that one percent change in market index return

causes exactly one percent change in the stock return. It indicates that stock

moves along with the market.

52

2) Beta= + 0.5

One percent changes in the market index return causes 0.5

percent change in the stock return. It indicates that it is less volatile

compared to market.

3) Beta=2.0

One percent change in the market index return causes 2

percent change in the stock return. The stock return is more volatile. The

stocks with more than 1 beta value are considered to be very risky.

4) Negative beta value indicates that the stocks return move in opposite

direction to the market return.

Beta= N*∑XY- (∑X) (∑Y/ N(X*X) * (∑x)

Where

N- No of observation

X- Total of market index value

Y- Total of return to Nav

ALPHA

Alpha = Y- beta(X)

Where

Y- avrage return to nav return

53

X- average return to market index .

Alpha indicates that the stock return is independent of the market return.

A positive value of alpha is a healthy sign. Positive alpha values would yield

profitable return.

SHARPE RATIO

St= Rp --Rf

S.D

WHERE

Rp – Avereage return to portfolio

Rf—Risk free rate of interest

S.D- Standard Deviation

Sharpe’s performce 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. The risk premium is the difference between the portfolio’s average

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

portfolio indicates the risk.

Higher the value of sharpe ratio better the fund has performed. Sharpe

ratio can be used to rank the desirability of funds or portfolios. The fund that

has performed well comapred to other will be ranked first then the others.

54

TREYNOR RATIO

Ty= Rp—Rf

B

WHERE

Rp- Average return to portfolio

Rf- Risk less rate of interest.

B- Beta coeffecient

Treynor ratio is based on the concept of characteristic line.

Characteristic line gives the relation between a given market return and fund’s

return. The fund’s performance is measured in relation to market performance.

The ideal fund’s return rises at a faster rate than the market performance when

the market is moving upwards and its rate of return declines slowly than the

market return, in the decline.

Treynor’s risk premium of the portfolio is the difference between the aveage

return and the risk less rate of return. The risk premium depends on the

systematic risk assumed in a portfoilo.

55

CHAPTER-4DATA ANALYSIS

Date

Magnum Multiplier Plus Scheme - 93 -

BSE-100    

Dividend Growth close X X2 NAV Y X*Y NAV Y X*Y

30-Dec-11 5224.37     36.05     39.54    30-Jan-12 5422.67 3.796 14.407 37.6 4.300 16.320 41.24 4.299 16.31928-Feb-12 5904.17 8.879 78.844 42.25 12.367 109.812 46.34 12.367 109.80830-Mar-12 6251.39 5.881 34.585 44 4.142 24.359 48.27 4.165 24.493

30-Apr-12 5385.21-

13.856 191.983 38.9-

11.591 160.601 42.64 -11.664 161.60830-May-12 5387.11 0.035 0.001 36.21 -6.915 -0.244 39.72 -6.848 -0.242

30-Jun-12 5422.39 0.655 0.429 36.81 1.657 1.085 40.37 1.636 1.07231-Jul-12 5933.77 9.431 88.942 40.16 9.101 85.829 44.04 9.091 85.735

56

31-Aug-12 6328.33 6.649 44.214 42.18 5.030 33.446 46.26 5.041 33.51930-Sep-12 6603.6 4.350 18.921 44.18 4.742 20.625 48.45 4.734 20.59231-Oct-12 6931.05 4.959 24.588 47.41 7.311 36.253 52 7.327 36.33330-Nov-12 6982.5 0.742 0.551 49.27 3.923 2.912 54.03 3.904 2.89831-Dec-12 7145.91 2.340 5.477 50.34 2.172 5.082 55.19 2.147 5.02430-Jan-13 6527.12 -8.659 74.984 46.16 -8.304 71.903 50.61 -8.299 71.86128-Feb-13 6587.21 0.921 0.848 46.23 0.152 0.140 50.68 0.138 0.12730-Mar-13 7032.93 6.766 45.785 49.38 6.814 46.105 54.14 6.827 46.19630-Apr-13 7468.7 6.196 38.392 51.43 4.151 25.723 56.39 4.156 25.75030-May-13 7605.37 1.830 3.349 54.46 5.892 10.781 59.71 5.888 10.774

30-Jun-13 8004.05 5.242 27.479 57.8 6.133 32.149 63.38 6.146 32.220

31-Jul-13 7857.61 -1.830 3.347 51.3-

11.246 20.575 63.28 -0.158 0.28931-Aug-13 8967.41 14.124 199.484 57.65 12.378 174.828 71.11 12.374 174.76330-Sep-13 10391.2 15.877 252.088 65.04 12.819 203.527 80.22 12.811 203.40631-Oct-13 10384.4 -0.065 0.004 67.93 4.443 -0.290 83.78 4.438 -0.29030-Nov-13 11154.3 7.414 54.965 72.24 6.345 47.039 89.09 6.338 46.989

31-Dec-13 9440.94-

15.360 235.941 60.11-

16.791 257.920 74.13 -16.792 257.93230-Jan-14 9404.98 -0.381 0.145 58.21 -3.161 1.204 71.79 -3.157 1.202

29-Feb-14 8232.82-

12.463 155.331 50.53-

13.194 164.434 62.31 -13.205 164.579                 

TOTAL 197981 53.473 1595.085 1333.83 42.669 1552.117 1529 53.705 1532.957 MAGNUM MULTIPLIER PLUS SCHEME-93 (SBI)

MAGNUM MULTIPLIER PLUS SCHEME-93 (SBI)

TOOLS FOR CALCULATION

ARITHMETIC MEAN:

ARITHMETIC MEAN DIVIDEND OPTION GROWTH OPTION

X= ∑Y

N

42.669 = 1.580

27

53.705 = 1.998

27

CALCULATION FOR STANDARD DEVIATION:

Magnum Multiplier Plus Scheme – 93 -               

57

Date

Dividend   Growth                 

NAV Y z (z)2 NAV Y Z (Z)230-Dec-11 36.05 0 0 0 39.54 0 0 030-Jan-12 37.6 4.300 2.719 7.394 41.24 4.299 2.310 5.33828-Feb-12 42.25 12.367 10.787 116.352 46.34 12.367 10.378 107.69430-Mar-12 44 4.142 2.562 6.562 48.27 4.165 2.176 4.73430-Apr-12 38.9 -11.591 -13.171 173.482 42.64 -11.664 -13.653 186.39530-May-12 36.21 -6.915 -8.496 72.174 39.72 -6.848 -8.837 78.095

30-Jun-12 36.81 1.657 0.077 0.006 40.37 1.636 -0.353 0.12431-Jul-12 40.16 9.101 7.520 56.557 44.04 9.091 7.102 50.43631-Aug-12 42.18 5.030 3.450 11.899 46.26 5.041 3.052 9.313

30-Sep-12 44.18 4.742 3.161 9.993 48.45 4.734 2.745 7.53531-Oct-12 47.41 7.311 5.731 32.840 52 7.327 5.338 28.49530-Nov-12 49.27 3.923 2.343 5.489 54.03 3.904 1.915 3.666

31-Dec-12 50.34 2.172 0.591 0.350 55.19 2.147 0.158 0.02530-Jan-13 46.16 -8.304 -9.884 97.691 50.61 -8.299 -10.288 105.83628-Feb-13 46.23 0.152 -1.429 2.041 50.68 0.138 -1.851 3.42530-Mar-13 49.38 6.814 5.233 27.389 54.14 6.827 4.838 23.40730-Apr-13 51.43 4.151 2.571 6.611 56.39 4.156 2.167 4.69530-May-13 54.46 5.892 4.311 18.586 59.71 5.888 3.898 15.198

30-Jun-13 57.8 6.133 4.553 20.726 63.38 6.146 4.157 17.28331-Jul-13 51.3 -11.246 -12.826 164.507 63.28 -0.158 -2.147 4.60931-Aug-13 57.65 12.378 10.798 116.593 71.11 12.374 10.384 107.838

30-Sep-13 65.04 12.819 11.238 126.301 80.22 12.811 10.822 117.11731-Oct-13 67.93 4.443 2.863 8.197 83.78 4.438 2.449 5.99630-Nov-13 72.24 6.345 4.764 22.700 89.09 6.338 4.349 18.913

31-Dec-13 60.11 -16.791 -18.372 337.515 74.13 -16.792 -18.781 352.72930-Jan-14 58.21 -3.161 -4.741 22.479 71.79 -3.157 -5.146 26.47829-Feb-14 50.53 -13.194 -14.774 218.270 62.31 -13.205 -15.194 230.866

                 TOTAL 1333.83 42.669 1.580 1682.706 1528.7 53.705 1.989 1516.241

STANDARD DEVIATION

S.D DIVIDEND GROWTHS.D= √(Z)²

√(N)

= √(1682.706) = 7.89

√27

√(1516.241) =7.493

√27

58

BETA

BETA DIVIDEND GROWTH

= N*∑XY- (∑X) (∑Y)

N* ∑(X)² -(∑X)²

= 27(1552.116)-(53.473)(42.669)

27(1595.085) - (53.473)2

= 0.985

27(1532.957)-(53.47)(53.70)

27(1595.085) - (53.473)2

= 0.9579

ALPHA

ALPHA DIVIDEND GROWTH

= Y-B(X) = 1.580-0.985(1.980)

- 0.3696

= 1.989-0.957(1.980)

0.092

SHARPE RATIO

Sharpe ratio Dividend Growth

Rp-Rf

S.D

= 1.580 – 0.08 = 0.190

7.89

= 1.989 – 0.08 = 0.254

7.493

TREYNOR RATIO

TREYNOR RATIO DIVIDEND GROWTH

59

Rp-Rf

B

= 1.580 – 0.08 = 1.522

0.9855

1.989 – 0.08 = 1.992

0.9579

POWER PLAN (ICICI PRUDENTIAL):

Date

POWER PLAN

S&P CNX NIFTY   

Dividend Growth close X X2 NAV Y X*Y NAV Y X*Y

30-Dec-11 3001.1     18.02     59.74    30-Jan-12 3074.7 2.452 6.014 18.78 4.218 10.343 62.26 4.218 10.34528-Feb-12 3402.55 10.663 113.696 20.86 11.076 118.097 69.16 11.083 118.17130-Mar-12 3557.6 4.557 20.765 22.34 7.095 32.331 74.05 7.071 32.220

30-Apr-12 3071.05-

13.676 187.043 19.57 -12.399 169.577 64.87 -12.397 169.546

60

30-May-12 3128.2 1.861 3.463 18.62 -4.854 -9.034 61.74 -4.825 -8.979

30-Jun-12 3143.2 0.480 0.230 18.89 1.450 0.695 62.63 1.442 0.69131-Jul-12 3413.9 8.612 74.171 18.62 -1.429 -12.310 68.71 9.708 83.60631-Aug-12 3588.4 5.111 26.127 19.71 5.854 29.922 72.76 5.894 30.129

30-Sep-12 3744.1 4.339 18.827 20.65 4.769 20.693 76.22 4.755 20.63331-Oct-12 3954.5 5.620 31.579 21.55 4.358 24.492 79.55 4.369 24.55130-Nov-12 3966.4 0.301 0.091 22.12 2.645 0.796 81.67 2.665 0.802

31-Dec-12 4082.7 2.932 8.597 22.57 2.034 5.965 83.32 2.020 5.92430-Jan-13 3745.3 -8.264 68.296 21.04 -6.779 56.022 77.66 -6.793 56.13928-Feb-13 3821.55 2.036 4.145 18.91 -10.124 -20.610 77.49 -0.219 -0.44630-Mar-13 4087.9 6.970 48.577 20.38 7.774 54.180 83.5 7.756 54.056

30-Apr-13 4295.8 5.086 25.865 21.77 6.820 34.687 89.2 6.826 34.71730-May-13 4318.3 0.524 0.274 21.9 0.597 0.313 89.72 0.583 0.305

30-Jun-13 4528.85 4.876 23.773 22.63 3.333 16.253 92.75 3.377 16.46631-Jul-13 4464 -1.432 2.050 22.27 -1.591 2.278 91.26 -1.606 2.30031-Aug-13 5021.35 12.485 155.886 21.95 -1.437 -17.940 98.65 8.098 101.104

30-Sep-13 5868.75 16.876 284.797 24.7 12.528 211.430 111.01 12.529 211.44131-Oct-13 5762.75 -1.806 3.262 24.76 0.243 -0.439 111.25 0.216 -0.390

30-Nov-13 6138.6 6.522 42.537 27.24 10.016 65.326 122.41 10.031 65.426

31-Dec-13 5137.45-

16.309 265.987 22.85 -16.116 262.837 102.66 -16.134 263.13630-Jan-14 5223.5 1.675 2.805 22.32 -2.319 -3.885 100.32 -2.279 -3.81829-Feb-14 4734.5 -9.362 87.638 17.48 -21.685 203.001 87.93 -12.350 115.619

                   

TOTAL 112277 53.128 1506.496 572.5 6.078 1255.020 2252.49 46.037 1403.695

POWER PLAN:

TOOLS FOR CALCULATION

ARITHMETIC MEAN DIVIDEND OPTION GROWTH OPTION

X= ∑Y 6.078 = 0.225 46.037 = 1.7050

61

N 27 27

CALCULATION FOR STANDARD DEVIATION:

POWER PLAN                 

Date

Dividend   Growth                                 NAV Y z (z)2 NAV Y z (z)2

30-Dec-11 18.02 0.000     59.74 0    30-Jan-12 18.78 4.218 3.993 15.940 62.26 4.218 2.513 6.31728-Feb-12 20.86 11.076 10.851 117.736 69.16 11.083 9.378 87.93930-Mar-12 22.34 7.095 6.870 47.196 74.05 7.071 5.366 28.78930-Apr-12 19.57 -12.399 -12.624 159.373 64.87 -12.397 -14.102 198.86730-May-12 18.62 -4.854 -5.079 25.800 61.74 -4.825 -6.530 42.64130-Jun-12 18.89 1.450 1.225 1.501 62.63 1.442 -0.263 0.06931-Jul-12 18.62 -1.429 -1.654 2.737 68.71 9.708 8.003 64.045

31-Aug-12 19.71 5.854 5.629 31.685 72.76 5.894 4.189 17.55130-Sep-12 20.65 4.769 4.544 20.649 76.22 4.755 3.050 9.30531-Oct-12 21.55 4.358 4.133 17.085 79.55 4.369 2.664 7.09730-Nov-12 22.12 2.645 2.420 5.856 81.67 2.665 0.960 0.92231-Dec-12 22.57 2.034 1.809 3.274 83.32 2.020 0.315 0.09930-Jan-13 21.04 -6.779 -7.004 49.055 77.66 -6.793 -8.498 72.21728-Feb-13 18.91 -10.124 -10.349 107.093 77.49 -0.219 -1.924 3.70130-Mar-13 20.38 7.774 7.549 56.982 83.5 7.756 6.051 36.61330-Apr-13 21.77 6.820 6.595 43.499 89.2 6.826 5.121 26.22830-May-13 21.9 0.597 0.372 0.138 89.72 0.583 -1.122 1.25930-Jun-13 22.63 3.333 3.108 9.662 92.75 3.377 1.672 2.79631-Jul-13 22.27 -1.591 -1.816 3.297 91.26 -1.606 -3.311 10.966

31-Aug-13 21.95 -1.437 -1.662 2.762 98.65 8.098 6.393 40.86730-Sep-13 24.7 12.528 12.303 151.375 111.01 12.529 10.824 117.16231-Oct-13 24.76 0.243 0.018 0.000 111.25 0.216 -1.489 2.21730-Nov-13 27.24 10.016 9.791 95.867 122.41 10.031 8.326 69.33031-Dec-13 22.85 -16.116 -16.341 267.028 102.66 -16.134 -17.839 318.24130-Jan-14 22.32 -2.319 -2.544 6.474 100.32 -2.279 -3.984 15.87529-Feb-14 17.48 -21.685 -21.910 480.030 87.93 -12.350 -14.055 197.556

                 TOTAL 572.5 6.078 0.228 1722.095 2252.49 46.037 1.707 1378.669

STANDARD DEVIATION

S.D DIVIDEND GROWTH

62

S.D= √(Z)²

√(N)

= √(1722.095) = 7.986

√27

√(1378.669) =7.145

√27

BETA

BETA DIVIDEND GROWTH

= N*∑XY- (∑X) (∑Y)

N* ∑(X)² -(∑X)²

= 27(1255.020)-(53.128)(6.078)

27(1506.496) - (53.128)2

=0.886

27(1403.695)-(53.128)(46.03)

27(1506.496) - (53.128)2

= 0.936

ALPHA

ALPHA DIVIDEND GROWTH

= Y-B(X) = 0.225-0.8866(1.967)=

- 1.518

= 1.7050-0.9366(1.967)

- 0.1372

SHARPE RATIO

Sharpe ratio Dividend Growth

63

Rp-Rf

S.D

= 0.225– 0.08 = 0.018

7.986

= 1.7050 – 0.08 = 0.227

7.145

TREYNOR RATIO

TREYNOR

RATIO

DIVIDEND GROWTH

Rp-Rf

B

= 0.225– 0.08 = 0.018

0.8866

1.7050 – 0.08 = 1.734

0.9366

MAGNUM MULTIPLIER 1993 PLUS (SBI)

POWER PLAN (ICICI PRUDENTIAL)

Dividend Growth Dividend GrowthAverage return

1.5803 1.9890 0.225 1.7050

Beta 0.9855 0.9579 0.8866 0.9366

S D 7.89 7.493 7.986 7.145

Alpha 0.3696 0.092 -1.518 -0.1372

Sharpe ratio 0.190 0.254 0.018 0.227

Treynor ratio 1.522 1.992 0.163 1.7349

ANALYSIS & INTERPRETATION:

64

The SBI Magnum Multiplier plus1993 Dividend option & Growth option

has given high returns compared to ICICI prudential Power Plan.

The larger the Sharpe ratio, better the fund is performing. So, the SBI

Magnum Multiplier plus 1993 fund has a greater Sharpe ratio compared to

ICICI PRUDENTIAL Power Plan, all options show the positive value, this

means funds are performing well.

Since the market has risen up, this has resulted in funds positive return.

Since the funds objective is to invest in Diversified portfolios the

benchmarks index has performed very good, which has resulted in good

performance of the fund.

As per the Treynor index, the SBI Magnum Multiplier 1993 has given

higher returns compared to ICICI PRUDENTIAL Power Plan due to which

the risk is also high. But incase of ICICI PRUDENTIAL Power Plan the

returns are low and the risk is high compared to SBI Magnum Multiplier

1993.

As per Beta for dividend option and growth option of SBI Magnum

Multiplier 1993 has got the highest risk. When market is 1 it moves at

0.9855 in dividend &

0.9579 in growth compared to ICICI PRUDENTIAL Power Plan.

Overall, all the options are performing well.

EMERGING BUSINESS FUND SBI:

DateEMERGING BUSINESS FUND SBI

   

65

BSE 500 Dividend Growth

close X X2 NAV Y X*Y NAV Y X*Y

30-Jan-12 2726.49 0.000 0.000 12.43 0 0 12.43 0 028-Feb-12 2825.65 3.637 13.227 13.74 10.539 38.329 13.75 10.619 38.62230-Mar-12 2734.66 -3.220 10.369 14.57 6.041 -19.452 14.57 5.964 -19.20430-Apr-12 2610.5 -4.540 20.614 15.15 3.951 -17.937 15.17 4.118 -18.69730-May-12 2829.2 8.378 70.186 16.53 9.112 76.336 16.56 9.163 76.76330-Jun-12 2928.31 3.503 12.272 17.00 2.877 10.079 17.02 2.778 9.73131-Jul-12 3124.78 6.709 45.015 19.41 14.188 95.194 19.44 14.219 95.397

30-Aug-12 3273 4.743 22.500 22.29 14.815 70.272 22.33 14.866 70.51630-Sep-12 3521.83 7.603 57.798 22.58 1.301 9.889 22.62 1.299 9.87330-Oct-12 3198.69 -9.175 84.187 20.57 -8.885 81.527 20.6 -8.930 81.93730-Nov-12 3568.37 11.557 133.570 22.37 8.713 100.697 22.39 8.689 100.42430-Dec-12 3795.96 6.378 40.679 23.47 4.942 31.519 23.5 4.958 31.61930-Jan-13 4004.96 5.506 30.314 24.72 5.332 29.359 24.75 5.319 29.28628-Feb-13 4130.07 3.124 9.759 25.32 2.433 7.599 25.35 2.424 7.57330-Mar-13 4516.73 9.362 87.648 27.58 8.922 83.526 27.61 8.915 83.46530-Apr-13 4829.73 6.930 48.022 29.11 5.539 38.385 29.14 5.541 38.40130-May13 4157.93 -13.910 193.479 25.83 -11.279 156.882 25.86 -11.256 156.56730-Jun-13 4029.97 -3.077 9.471 22.67 -12.209 37.573 22.7 -12.220 37.60631-Jul-13 4029.43 -0.013 0.000 21.78 -3.943 0.053 21.81 -3.921 0.053

31-Aug-13 4423.88 9.789 95.829 24.12 10.746 105.198 24.16 10.775 105.47830-Sep-13 4739.67 7.138 50.955 25.96 7.615 54.355 26 7.616 54.36531-Oct-13 4957.37 4.593 21.097 27.62 6.387 29.336 27.65 6.346 29.14930-Nov-13 5227.73 5.454 29.743 29.40 6.474 35.309 29.45 6.510 35.50331-Dec-13 5270.76 0.823 0.678 30.38 3.317 2.730 30.42 3.294 2.71130-Jan-14 5408.71 2.617 6.850 31.13 2.461 6.442 31.16 2.433 6.36728-Feb-14 4938.08 -8.701 75.713 28.31 -9.034 78.607 28.35 -9.018 78.46830-Mar-14 4955.39 0.351 0.123 27.71 -2.124 -0.745 27.74 -2.152 -0.75430-Apr-14 5311.03 7.177 51.507 29.16 5.220 37.463 29.2 5.263 37.77330-May-14 5646.9 6.324 39.993 31.78 8.974 56.754 31.83 9.007 56.95930-Jun-14 5781.37 2.381 5.671 33.63 5.831 13.886 33.67 5.781 13.76631-Jul-14 6063.2 4.875 23.764 34.36 2.175 10.603 34.41 2.198 10.714

31-Aug-14 5950.11 -1.865 3.479 33.89 -1.372 2.559 33.94 -1.366 2.54830-Sep-14 6773.54 13.839 191.515 37.74 11.367 157.306 37.79 11.344 156.98231-Oct-14 7785.22 14.936 223.077 42.57 12.791 191.039 42.62 12.781 190.89630-Nov-14 7865.98 1.037 1.076 45.95 7.942 8.239 45.98 7.884 8.17831-Dec-14 8592.43 9.235 85.292 50.01 8.843 81.671 50.03 8.808 81.347TOTAL 166527.6 123.497 1795.471 960.85 150.002 1700.581 962.000 150.048 1700.383

EMERGING BUSINESS PLAN SBI

TOOLS FOR CALCULATION

66

ARITHMETIC MEAN DIVIDEND OPTION GROWTH OPTION

X= ∑Y

N

150 = 4.055

37

150.048 = 4.055

37

CALCULATION FOR STANDARD DEVIATION:

EMERGING BUSINESS PLAN SBI

Date

Dividend   Growth   NA

V Y z (z)2 NAV Y z (z)230-Jan-12 12.43 0 0.000 0.000 12.43 0 0 028-Feb-12 13.74 10.539 6.484 42.042 13.75 10.619 6.564 43.09230-Mar-12 14.57 6.041 1.986 3.943 14.57 5.964 1.909 3.64330-Apr-12 15.15 3.951 -0.104 0.011 15.17 4.118 0.063 0.00430-May-12 16.53 9.112 5.057 25.571 16.56 9.163 5.108 26.09030-Jun-12 17.00 2.877 -1.178 1.387 17.02 2.778 -1.277 1.63131-Jul-12 19.41 14.188 10.133 102.683 19.44 14.219 10.164 103.298

30-Aug-12 22.29 14.815 10.760 115.774 22.33 14.866 10.811 116.88330-Sep-12 22.58 1.301 -2.754 7.586 22.62 1.299 -2.756 7.59730-Oct-12 20.57 -8.885 -12.940 167.456 20.6 -8.930 -12.985 168.61430-Nov-12 22.37 8.713 4.658 21.696 22.39 8.689 4.634 21.47730-Dec-12 23.47 4.942 0.887 0.787 23.5 4.958 0.903 0.81530-Jan-13 24.72 5.332 1.277 1.632 24.75 5.319 1.264 1.59828-Feb-13 25.32 2.433 -1.622 2.632 25.35 2.424 -1.631 2.65930-Mar-13 27.58 8.922 4.867 23.685 27.61 8.915 4.860 23.62130-Apr-13 29.11 5.539 1.484 2.203 29.14 5.541 1.486 2.21030-May13 25.83 -11.279 -15.334 235.120 25.86 -11.256 -15.311 234.42730-Jun-13 22.67 -12.209 -16.264 264.516 22.7 -12.220 -16.275 264.86431-Jul-13 21.78 -3.943 -7.998 63.962 21.81 -3.921 -7.976 63.612

31-Aug-13 24.12 10.746 6.691 44.773 24.16 10.775 6.720 45.15730-Sep13 25.96 7.615 3.560 12.670 26 7.616 3.561 12.68031-Oct-13 27.62 6.387 2.332 5.438 27.65 6.346 2.291 5.24930-Nov-13 29.40 6.474 2.419 5.853 29.45 6.510 2.455 6.02731-Dec-13 30.38 3.317 -0.738 0.545 30.42 3.294 -0.761 0.58030-Jan-14 31.13 2.461 -1.594 2.540 31.16 2.433 -1.622 2.63228-Feb-14 28.31 -9.034 -13.089 171.320 28.35 -9.018 -13.073 170.90330-Mar-14 27.71 -2.124 -6.179 38.180 27.74 -2.152 -6.207 38.52330-Apr-14 29.16 5.220 1.165 1.357 29.2 5.263 1.208 1.46030-May-14 31.78 8.974 4.919 24.200 31.83 9.007 4.952 24.52130-Jun-14 33.63 5.831 1.776 3.155 33.67 5.781 1.726 2.97831-Jul-14 34.36 2.175 -1.880 3.535 34.41 2.198 -1.857 3.449

31-Aug-14 33.89 -1.372 -5.427 29.450 33.94 -1.366 -5.421 29.38630-Sep-14 37.74 11.367 7.312 53.464 37.79 11.344 7.289 53.12331-Oct-14 42.57 12.791 8.736 76.312 42.62 12.781 8.726 76.14630-Nov-14 45.95 7.942 3.887 15.108 45.98 7.884 3.829 14.65831-Dec-14 50.01 8.843 4.788 22.928 50.03 8.808 4.753 22.593TOTAL 960.85 150.002 145.947 1593.515 962 150.048 145.993 1596.199

67

STANDARD DEVIATION

S.D DIVIDEND GROWTH

S.D= √(Z)²

√(N)

= √(1593.515) = 6.563

√37

√(1596.199) =6.568

√37

BETA

BETA DIVIDEND GROWTH

= N*∑XY- (∑X) (∑Y)

N* ∑(X)² -(∑X)²

= 37(1700.58)-(123.49)(150)

37(1795.42) - (123.49)2

= 0.867

37(1700.38)-(53.47)(53.70)

37(1595.085) - (53.473)2

= 0.867

ALPHA

ALPHA DIVIDEND GROWTH

= Y-B(X) = 4.055-0.867(3.337) = 4.055-0.867(3.337)

68

1.162 1.162

SHARPE RATIO

Sharpe ratio Dividend Growth

Rp-Rf

S.D

= 4.055 – 0.08 = 0.605

6.563

= 4.055 – 0.08 = 0.605

6.568

TREYNOR RATIO

TREYNOR RATIO DIVIDEND GROWTH

Rp-Rf

B

= 4.055 – 0.08 = 4.584

0.867

4.055 – 0.08 = 4.584

0.867

EMERGING STAR FUND ICICI PRUDENTIAL:

Date EMERGING STAR FUND ICICI PRUDENTIAL

69

BSE 500   

Dividend Growth close X X2 NAV Y X*Y NAV Y X*Y

30-Jan-12 4247.8 0.000 0.000 11.44 0 0 11.44 0 028-Feb-12 4388.2 3.305 10.925 11.93 4.283 14.157 11.93 4.283 14.15730-Mar-12 4275.15 -2.576 6.637 11.82 -0.922 2.375 11.82 -0.922 2.37530-Apr-12 4024.4 -5.865 34.402 12.18 3.046 -17.864 12.18 3.046 -17.86430-May-

12 4364.55 8.452 71.440 13.47 10.591 89.518 13.47 10.591 89.51830-Jun-12 4393.25 0.658 0.432 13.51 0.297 0.195 13.51 0.297 0.19531-Jul-12 4919.1 11.969 143.269 14.21 5.181 62.018 15.21 12.583 150.615

30-Aug-12 5053 2.722 7.410 16.57 16.608 45.208 17.73 16.568 45.09930-Sep-12 5303.5 4.957 24.576 17.18 3.681 18.250 18.38 3.666 18.17530-Oct-12 4714.45 -11.107 123.361 15.23 -11.350 126.067 16.3 -11.317 125.69230-Nov-12 5242 11.190 125.218 17.45 14.576 163.112 18.68 14.601 163.38930-Dec-12 5541.45 5.713 32.633 18.91 8.367 47.795 20.25 8.405 48.01230-Jan-13 5882.9 6.162 37.967 20.32 7.456 45.944 21.76 7.457 45.94728-Feb-13 5966.65 1.424 2.027 20.58 1.280 1.822 22.04 1.287 1.83230-Mar-13 6412.1 7.466 55.736 23.12 12.342 92.142 24.76 12.341 92.13530-Apr-13 6856 6.923 47.926 24.94 7.872 54.496 26.71 7.876 54.52230-May13 5827.4 -15.003 225.088 18.93 -24.098 361.538 23.3 -12.767 191.53930-Jun-13 5264.3 -9.663 93.373 16.87 -10.882 105.154 20.76 -10.901 105.33931-Jul-13 5335.1 1.345 1.809 16.58 -1.719 -2.312 20.4 -1.734 -2.332

31-Aug-13 5940.5 11.347 128.766 18.63 12.364 140.304 22.93 12.402 140.73130-Sep-13 6510.4 9.593 92.035 19.37 3.972 38.106 23.84 3.969 38.07331-Oct-13 6823.15 4.804 23.077 20.57 6.195 29.761 25.32 6.208 29.82330-Nov-13 6967.25 2.112 4.460 22.08 7.341 15.503 27.18 7.346 15.51431-Dec-13 7106.35 1.996 3.986 23.09 4.574 9.132 28.41 4.525 9.03530-Jan-14 7268.05 2.275 5.178 21.8 -5.587 -12.712 29.92 5.315 12.09428-Feb-14 6722.1 -7.512 56.425 20 -8.257 62.023 27.45 -8.255 62.01130-Mar-14 6878.05 2.320 5.382 19.39 -3.050 -7.076 26.61 -3.060 -7.09930-Apr-14 7527.3 9.439 89.103 21.08 8.716 82.273 28.93 8.719 82.29830-May-

14 8022.55 6.579 43.288 22.38 6.167 40.575 30.71 6.153 40.48230-Jun-14 8699.05 8.432 71.107 23.74 6.077 51.243 32.58 6.089 51.34731-Jul-14 8849.6 1.731 2.995 21.73 -8.467 -14.653 33.21 1.934 3.347

31-Aug-14 8632.75 -2.450 6.004 21.31 -1.933 4.736 32.56 -1.957 4.79630-Sep-14 9820.9 13.763 189.428 22.45 5.350 73.628 34.3 5.344 73.55131-Oct-14 10643.3 8.374 70.124 24.74 10.200 85.418 37.8 10.204 85.449

30-Nov-14 11431.7 7.407 54.864 25.45 2.870 21.257 38.88 2.857 21.16331-Dec-14 12488.3 9.243 85.429 30.19 18.625 172.144 46.12 18.621 172.113TOTAL 238343 117.527 1975.876 693.24 111.767 2001.278 867.380 151.773 1963.071

EMERGING STAR FUND ICICI:

TOOLS FOR CALCULATION

70

ARITHMETIC MEAN DIVIDEND OPTION GROWTH OPTION

X= ∑Y

N

111.767 = 3.020

37

151.773 = 4.101

37

CALCULATION FOR STANDARD DEVIATION:

EMERGING BUSINESS PLAN ICICI

Date

Dividend   Growth   NAV Y z (z)2

NAV Y z (z)2

30-Jan-12 11.44 0 0.000 0.000 11.44 0 0 028-Feb-12 11.93 4.283 1.263 1.596 11.93 4.283 0.182 0.03330-Mar-12 11.82 -0.922 -3.942 15.540 11.82 -0.922 -5.023 25.23130-Apr-12 12.18 3.046 0.026 0.001 12.18 3.046 -1.055 1.11430-May-12 13.47 10.591 7.571 57.322 13.47 10.591 6.490 42.12230-Jun-12 13.51 0.297 -2.723 7.415 13.51 0.297 -3.804 14.47131-Jul-12 14.21 5.181 2.161 4.671 15.21 12.583 8.482 71.949

30-Aug-12 16.57 16.608 13.588 184.634 17.73 16.568 12.467 155.42730-Sep-12 17.18 3.681 0.661 0.437 18.38 3.666 -0.435 0.18930-Oct-12 15.23 -11.350 -14.370 206.509 16.3 -11.317 -15.418 237.70430-Nov-12 17.45 14.576 11.556 133.553 18.68 14.601 10.500 110.25530-Dec-12 18.91 8.367 5.347 28.588 20.25 8.405 4.304 18.52230-Jan-13 20.32 7.456 4.436 19.681 21.76 7.457 3.356 11.26128-Feb-13 20.58 1.280 -1.740 3.029 22.04 1.287 -2.814 7.92030-Mar-13 23.12 12.342 9.322 86.901 24.76 12.341 8.240 67.90130-Apr-13 24.94 7.872 4.852 23.542 26.71 7.876 3.775 14.24830-May13 18.93 -24.098 -27.118 735.377 23.3 -12.767 -16.868 284.52130-Jun-13 16.87 -10.882 -13.902 193.271 20.76 -10.901 -15.002 225.06931-Jul-13 16.58 -1.719 -4.739 22.458 20.4 -1.734 -5.835 34.048

31-Aug-13 18.63 12.364 9.344 87.316 22.93 12.402 8.301 68.90630-Sep-13 19.37 3.972 0.952 0.906 23.84 3.969 -0.132 0.01831-Oct-13 20.57 6.195 3.175 10.082 25.32 6.208 2.107 4.44030-Nov-13 22.08 7.341 4.321 18.669 27.18 7.346 3.245 10.53031-Dec-13 23.09 4.574 1.554 2.416 28.41 4.525 0.424 0.18030-Jan-14 21.8 -5.587 -8.607 74.078 29.92 5.315 1.214 1.47428-Feb-14 20 -8.257 -11.277 127.168 27.45 -8.255 -12.356 152.67930-Mar-14 19.39 -3.050 -6.070 36.845 26.61 -3.060 -7.161 51.28130-Apr-14 21.08 8.716 5.696 32.443 28.93 8.719 4.618 21.32230-May-14 22.38 6.167 3.147 9.904 30.71 6.153 2.052 4.21030-Jun-14 23.74 6.077 3.057 9.344 32.58 6.089 1.988 3.95331-Jul-14 21.73 -8.467 -11.487 131.945 33.21 1.934 -2.167 4.697

31-Aug-14 21.31 -1.933 -4.953 24.530 32.56 -1.957 -6.058 36.70230-Sep-14 22.45 5.350 2.330 5.427 34.3 5.344 1.243 1.54531-Oct-14 24.74 10.200 7.180 51.559 37.8 10.204 6.103 37.24830-Nov-14 25.45 2.870 -0.150 0.023 38.88 2.857 -1.244 1.54731-Dec-14 30.19 18.625 15.605 243.508 46.12 18.621 14.520 210.842

                 

71

TOTAL 693.24 111.767 6.067 2590.687 867.38 151.773 8.238 1933.558

STANDARD DEVIATION

S.D DIVIDEND GROWTH

S.D= √(Z)²

√(N)

= √(2590.687) = 8.151

√37

√(1933.558) =7.042

√37

BETA

BETA DIVIDEND GROWTH

= N*∑XY- (∑X) (∑Y)

N* ∑(X)² -(∑X)²

= 37(2001.278)-(117.52)(111.76)

37(1975.87) - (117.52)2

= 0.867

37(1963.07)-(117.52)(151.72)

37(1975.87) - (117.52)2

= 0.867

ALPHA

72

ALPHA DIVIDEND GROWTH

= Y-B(X) = 3.020-1.027(3.176)

-0.241

= 4.101-0.924(3.176)

1.167

SHARPE RATIO

Sharpe ratio Dividend Growth

Rp-Rf

S.D

= 3.020 – 0.08 = 0.360

8.151

= 4.101 – 0.08 = 0.571

7.042

TREYNOR RATIO

TREYNOR RATIO DIVIDEND GROWTH

Rp-Rf

B

= 3.020 – 0.08 = 2.862

1.027

4.101 – 0.08 = 4.351

0.924

EMERGING BUSINESS FUND (SBI)

EMERGING STAR FUND (ICICI PRUDENTIAL)

Dividend Growth Dividend GrowthAverage return

4.055 4.055 3.020 4.101

Beta 0.867 0.867 1.027 0.924

S D 6.563 6.568 8.151 7.042

Alpha 1.162 1.162 -0.241 1.167

Sharpe ratio 0.605 0.605 0.360 0.571

Treynor ratio 4.584 4.584 2.862 4.351

73

ANALYSIS & INTERPRETATION:

The SBI EMERGING BUSINESS FUND Dividend option has given high

returns compared to ICICI prudential EMERGING STAR FUND. But

incase of growth option ICICI prudential EMERGING STAR FUND has

given high returns compared to SBI EMERGING BUSINESS FUND.

The larger the Sharpe ratio, better the fund is performing. So, the SBI

EMERGING BUSINESS FUND fund has a greater Sharpe ratio compared

to ICICI PRUDENTIAL EMERGING STAR FUND, which has given

excess return over the risk free return, all options show the positive value,

this means funds are performing well.

Since the market has risen up, this has resulted in funds positive return.

Since the funds objective is to generate capital appreciation by actively

investing in diversified mid cap stocks. The benchmarks index has

performed very well, which has resulted in good performance of the fund.

The negative value of Alpha incase of ICICI PRUDENTIAL EMERGING

STAR FUND dividend option which has resulted in low returns compared

to SBI EMERGING BUSINESS FUND.

As per the Treynor index, the SBI EMERGING BUSINESS FUND has

given higher returns compared to ICICI PRUDENTIAL EMERGING

STAR FUND due to which the risk is also high. But incase of ICICI

PRUDENTIAL EMERGING STAR FUND the returns are low and the

risk is high.

The Beta for dividend option and growth option of SBI EMERGING

BUSINESS FUND is 0.867 which indicates that one percent change in

market index return has caused 0.867 percent change in the stock return.

This shows that the stock is less volatile compared to the market. Incase of

ICICI PRUDENTIAL EMERGING STAR FUND beta for dividend option

is 1.027 which indicates that one percent change in market index return has

caused 1.027 per cent change in the stock return. This shows that the stock

moves in tandem with the market.

74

MAGNUM TAXGAIN SCHEME (SBI):

Date

MAGNUM TAXGAIN SCHEME

BSE 100 

Dividend close X X2 NAV Y X*Y

30-Dec-10 3521.71 0 0 33.58 0 030-Jan-11 3611.9 2.561 6.559 36.86 9.768 25.01528-Feb-11 3481.66 -3.606 13.002 38.57 4.639 -16.72830-Mar-11 3313.45 -4.831 23.342 41.09 6.534 -31.56630-Apr-11 3601.73 8.700 75.695 45.47 10.660 92.74130-May-11 3800.24 5.512 30.377 37.07 -18.474 -101.81830-Jun-11 4072.15 7.155 51.195 41.33 11.492 82.22431-Jul-11 4184.83 2.767 7.657 46.03 11.372 31.467

30-Aug-11 4566.63 9.123 83.237 47.3 2.759 25.17230-Sep-11 4159.59 -8.913 79.448 44.47 -5.983 53.32930-Oct-11 4649.87 11.787 138.927 49.21 10.659 125.63330-Nov-11 4553.28 -2.077 4.315 51.37 4.389 -9.11830-Dec-11 5224.37 14.739 217.227 54.17 5.451 80.33530-Jan-12 5422.67 3.796 14.407 55.93 3.249 12.33228-Feb-12 5904.17 8.879 78.844 46.07 -17.629 -156.53630-Mar-12 6251.39 5.881 34.585 48.89 6.121 35.99830-Apr-12 5385.21 -13.856 191.983 42.53 -13.009 180.24730-May-12 5387.11 0.035 0.001 40.61 -4.514 -0.15930-Jun-12 5422.39 0.655 0.429 41.44 2.044 1.33831-Jul-12 5933.77 9.431 88.942 44.72 7.915 74.646

31-Aug-12 6328.33 6.649 44.214 47.26 5.680 37.76730-Sep-12 6603.6 4.350 18.921 50.13 6.073 26.41531-Oct-12 6931.05 4.959 24.588 54.7 9.116 45.20530-Nov-12 6982.5 0.742 0.551 55.65 1.737 1.28931-Dec-12 4082.7 -41.530 1724.703 57.87 3.989 -165.67030-Jan-13 3745.3 -8.264 68.296 53.97 -6.739 55.69428-Feb-13 3821.55 2.036 4.145 42.42 -21.401 -43.57030-Mar-13 4087.9 6.970 48.577 44.93 5.917 41.24030-Apr-13 4295.8 5.086 25.865 46.57 3.650 18.56430-May-13 4318.3 0.524 0.274 48.12 3.328 1.74330-Jun-13 4528.85 4.876 23.773 50.15 4.219 20.56931-Jul-13 4464 -1.432 2.050 50.03 -0.239 0.343

31-Aug-13 5021.35 12.485 155.886 55.65 11.233 140.25230-Sep-13 5868.75 16.876 284.797 62.84 12.920 218.03831-Oct-13 5762.75 -1.806 3.262 63.71 1.384 -2.50130-Nov-13 6138.6 6.522 42.537 68.61 7.691 50.16231-Dec-13 5137.45 -16.309 265.987 59.35 -13.497 220.11730-Jan-14 5223.5 1.675 2.805 47.15 -20.556 -34.43028-Feb-14 4734.5 -9.362 87.638 41.5 -11.983 112.180TOTAL 190524.9 52.784 3969.042 1853.74 39.964 1247.960

MAGNUM TAX PLAN SBI

TOOLS FOR CALCULATION

75

ARITHMETIC MEAN DIVIDEND OPTION

X= ∑Y

N

39.964 = 1.024

39

CALCULATION FOR STANDARD DEVIATION:

Date

MAGNUM TAXGAIN SCHEME       

Dividend   NAV Y Z (Z)2

30-Dec-10 33.58 0 0 0.00030-Jan-11 36.86 9.768 8.744 76.45328-Feb-11 38.57 4.639 3.615 13.06930-Mar-11 41.09 6.534 5.510 30.35530-Apr-11 45.47 10.660 9.636 92.84330-May-11 37.07 -18.474 -19.498 380.16130-Jun-11 41.33 11.492 10.468 109.57431-Jul-11 46.03 11.372 10.348 107.07930-Aug11 47.3 2.759 1.735 3.01030-Sep-11 44.47 -5.983 -7.007 49.09930-Oct-11 49.21 10.659 9.635 92.83130-Nov-11 51.37 4.389 3.365 11.32630-Dec-11 54.17 5.451 4.427 19.59530-Jan-12 55.93 3.249 2.225 4.95128-Feb-12 46.07 -17.629 -18.653 347.94130-Mar-12 48.89 6.121 5.097 25.98130-Apr-12 42.53 -13.009 -14.033 196.91930-May-12 40.61 -4.514 -5.538 30.67530-Jun-12 41.44 2.044 1.020 1.04031-Jul-12 44.72 7.915 6.891 47.487

31-Aug-12 47.26 5.680 4.656 21.67630-Sep-12 50.13 6.073 5.049 25.49031-Oct-12 54.7 9.116 8.092 65.48530-Nov-12 55.65 1.737 0.713 0.50831-Dec-12 57.87 3.989 2.965 8.79330-Jan-13 53.97 -6.739 -7.763 60.26828-Feb-13 42.42 -21.401 -22.425 502.87130-Mar-13 44.93 5.917 4.893 23.94230-Apr-13 46.57 3.650 2.626 6.89730-May-13 48.12 3.328 2.304 5.31030-Jun-13 50.15 4.219 3.195 10.20631-Jul-13 50.03 -0.239 -1.263 1.596

31-Aug-13 55.65 11.233 10.209 104.22930-Sep-13 62.84 12.920 11.896 141.51631-Oct-13 63.71 1.384 0.360 0.13030-Nov-13 68.61 7.691 6.667 44.450

76

31-Dec-13 59.35 -13.497 -14.521 210.84730-Jan-14 47.15 -20.556 -21.580 465.69728-Feb-14 41.5 -11.983 -13.007 169.183TOTAL 1887.32 39.964 1.052 3509.482

STANDARD DEVIATION

S.D DIVIDEND

S.D= √(Z)²

√(N)

= √(3509.482) = 9.487

√39

BETA

BETA DIVIDEND

= N*∑XY- (∑X) (∑Y)

N* ∑(X)² -(∑X)²

= 39(1247.96)-(52.78)(39.96) = 0.306

39(3969.04) - (52.784)2

ALPHA

ALPHA DIVIDEND

= Y-B(X) = 1.024-0.306(1.353)

0.61

77

SHARPE RATIO

Sharpe ratio Dividend

Rp-Rf

S.D

= 1.024-0.08 = 0.099

9.487

TREYNOR RATIO

TREYNOR RATIO DIVIDEND

Rp-Rf

B

= 1.024 – 0.08 = 3.084

0.306

TAX PLAN SCHEME (ICICI PRUDENTIAL):

78

Date

TAX PLAN SCHEME ICICI PRUDENTIAL

S&P CNX NIFTY 

Dividend close X X2 NAV Y X*Y

30-Dec-10 2057.6     18.56    30-Jan-11 2103.25 2.219 4.922 20.03 7.920 17.57228-Feb-11 2035.65 -3.214 10.330 19.96 -0.349 1.12330-Mar-11 1902.5 -6.541 42.783 19.93 -0.150 0.98330-Apr-11 2087.55 9.727 94.608 22.07 10.738 104.44130-May-11 2220.6 6.374 40.622 22.6 2.401 15.30630-Jun-11 2312.3 4.130 17.053 25.4 12.389 51.16231-Jul-11 2384.65 3.129 9.790 25.51 0.433 1.355

30-Aug-11 2601.4 9.089 82.617 26.4 3.489 31.71130-Sep-11 2370.95 -8.859 78.476 24.07 -8.826 78.18530-Oct-11 2652.25 11.864 140.765 26.3 9.265 109.92030-Nov-11 2836.55 6.949 48.286 28.04 6.616 45.97330-Dec-11 3001.1 5.801 33.652 29.13 3.887 22.55030-Jan-12 3074.7 2.452 6.014 29.78 2.231 5.47228-Feb-12 3402.55 10.663 113.696 27.87 -6.414 -68.38830-Mar-12 3557.6 4.557 20.765 31.43 12.774 58.20830-Apr-12 3071.05 -13.676 187.043 27.05 -13.936 190.59030-May-12 3128.2 1.861 3.463 23.48 -13.198 -24.56030-Jun-12 3143.2 0.480 0.230 23.9 1.789 0.85831-Jul-12 3413.9 8.612 74.171 27.42 14.728 126.841

31-Aug-12 3588.4 5.111 26.127 28.96 5.616 28.70830-Sep-12 3744.1 4.339 18.827 29.29 1.140 4.94431-Oct-12 3954.5 5.620 31.579 26.81 -8.467 -47.58130-Nov-12 3966.4 0.301 0.091 27.26 1.678 0.50531-Dec-12 4082.7 2.932 8.597 27.59 1.211 3.55030-Jan-13 3745.3 -8.264 68.296 20.4 -26.060 215.36528-Feb-13 3821.55 2.036 4.145 19.81 -2.892 -5.88830-Mar-13 4087.9 6.970 48.577 21.07 6.360 44.33030-Apr-13 4295.8 5.086 25.865 22.19 5.316 27.03430-May-13 4318.3 0.524 0.274 22.42 1.037 0.54330-Jun-13 4528.85 4.876 23.773 22.7 1.249 6.08931-Jul-13 4464 -1.432 2.050 20.25 -10.793 15.455

31-Aug-13 5021.35 12.485 155.886 21.95 8.395 104.81630-Sep-13 5868.75 16.876 284.797 23.91 8.929 150.69231-Oct-13 5762.75 -1.806 3.262 24.81 3.764 -6.79930-Nov-13 6138.6 6.522 42.537 28.43 14.591 95.16331-Dec-13 5137.45 -16.309 265.987 21.9 -22.969 374.59930-Jan-14 5223.5 1.675 2.805 21.17 -3.333 -5.58328-Feb-14 4734.5 -9.362 87.638 18.67 -11.809 110.552TOTAL 139842.3 93.795 2110.401 948.52 18.750 1885.795

TAX PLAN SCHEME ICICI

79

TOOLS FOR CALCULATION

ARITHMETIC MEAN DIVIDEND OPTION

X= ∑Y

N

18.749 = 0.4807

39

CALCULATION FOR STANDARD DEVIATION:

Date

TAX PLAN SCHEME               Dividend NAV Y Z (Z)2

30-Dec-10 18.56 0 0 030-Jan-11 20.03 7.920 7.440 55.34728-Feb-11 19.96 -0.349 -0.830 0.68930-Mar-11 19.93 -0.150 -0.631 0.39830-Apr-11 22.07 10.738 10.257 105.20430-May-11 22.6 2.401 1.921 3.68930-Jun-11 25.4 12.389 11.909 141.81731-Jul-11 25.51 0.433 -0.048 0.002

30-Aug-11 26.4 3.489 3.008 9.04930-Sep-11 24.07 -8.826 -9.306 86.61030-Oct-11 26.3 9.265 8.784 77.15830-Nov-11 28.04 6.616 6.135 37.64230-Dec-11 29.13 3.887 3.407 11.60530-Jan-12 29.78 2.231 1.751 3.06528-Feb-12 27.87 -6.414 -6.894 47.53330-Mar-12 31.43 12.774 12.293 151.11530-Apr-12 27.05 -13.936 -14.416 207.83330-May-12 23.48 -13.198 -13.678 187.10130-Jun-12 23.9 1.789 1.308 1.71131-Jul-12 27.42 14.728 14.247 202.987

31-Aug-12 28.96 5.616 5.136 26.37530-Sep-12 29.29 1.140 0.659 0.43431-Oct-12 26.81 -8.467 -8.948 80.06230-Nov-12 27.26 1.678 1.198 1.43531-Dec-12 27.59 1.211 0.730 0.53330-Jan-13 20.4 -26.060 -26.541 704.41828-Feb-13 19.81 -2.892 -3.373 11.37630-Mar-13 21.07 6.360 5.880 34.57130-Apr-13 22.19 5.316 4.835 23.37630-May-13 22.42 1.037 0.556 0.30930-Jun-13 22.7 1.249 0.768 0.59031-Jul-13 20.25 -10.793 -11.274 127.095

31-Aug-13 21.95 8.395 7.914 62.637

80

30-Sep-13 23.91 8.929 8.449 71.38031-Oct-13 24.81 3.764 3.283 10.78130-Nov-13 28.43 14.591 14.110 199.09731-Dec-13 21.9 -22.969 -23.449 549.87430-Jan-14 21.17 -3.333 -3.814 14.54728-Feb-14 18.67 -11.809 -12.290 151.041

         TOTAL 948.52 18.750 0.483 3400.486

STANDARD DEVIATION

S.D DIVIDEND

S.D= √(Z)²

√(N)

= √(3400.486) = 9.33

√39

BETA

ALPHA

ALPHA DIVIDEND

= Y-B(X) = 0.4807-0.9765(2.405)

-1.867

BETA DIVIDEND

= N*∑XY- (∑X) (∑Y)

N* ∑(X)² -(∑X)²

= 39(1885.79)-(93.79)(18.75) = 0.9765

39(2110.40) - (93.79)2

81

SHARPE RATIO

Sharpe ratio Dividend

Rp-Rf

S.D

= 0.4807-0.08 = 0.0429

9.33

TREYNOR RATIO

TREYNOR

RATIO

DIVIDEND GROWTH

Rp-Rf

B

= 0.4807– 0.08 = 0.410

0.9765

MAGNUM TAXGAIN

SCHEME (SBI)

TAX PLAN (ICICI

PRUDENTIAL)

DIVIDEND DIVIDEND

Average return 1.024 0.4807

Beta 0.306 0.9765

S D 9.487 9.33

Alpha 0.61 -1.867

Sharpe ratio 0.099 0.0429

Treynor ratio 3.084 0.410

ANALYSIS & INTERPRETATION:

The SBI MAGNUM TAXGAIN SCHEME Dividend option has given

high returns compared to ICICI prudential TAX PLAN. The maximum

82

returns indicate the dividend received by the investor during the holding

period.

The larger the Sharpe ratio, better the fund is performing. So, the SBI

MAGNUM TAXGAIN SCHEME has a greater Sharpe ratio compared to

ICICI PRUDENTIAL TAX PLAN, which has given excess return over the

risk free return. Which indicates that the high returns of a portfolio are

because of smart investment decisions or a result of excess risk

Since the market has risen up, this has resulted in funds positive return.

Since the funds objective is to seek to generate long-term capital

appreciation from a portfolio that is invested predominantly in equity and

equity related securities. The benchmarks index has performed very well,

which has resulted in good performance of the fund.

The negative value of Alpha of ICICI PRUDENTIAL TAX PLAN dividend

option which has resulted in low returns compared to SBI EMERGING

BUSINESS FUND.

As per the Treynor index, the SBI MAGNUM TAXGAIN SCHEME has

given higher returns compared to ICICI PRUDENTIAL TAX PLAN which

relates excess return over the risk-free rate.

The Beta for dividend option of SBI MAGNUM TAXGAIN SCHEME is

0.306 which indicates that one percent change in market index return has

caused 0.306 percent change in the stock return. This shows that the stock is

less volatile compared to the market. Incase of ICICI PRUDENTIAL TAX

PLAN beta for dividend option is 0.9765 which indicates that one percent

change in market index return has caused 0.9765 per cent change in the

stock return. This shows that the stock moves in tandem with the market.

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CHAPTER-5

FINDINGS & SUGGESTTIONS

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Findings:o It is very difficult for an investor to just select schemes for investments in

any fund. Before investing, the investor should go for a detailed study of the

fund, which includes portfolio analysis, type of fund and its return for last

one year, three year, and since inception. & the risk involved in each fund,

which is mentioned in the Fact Sheet

o

o The Beta of SBI MAGNUM MULTIPLIER 1993 PLUS is 0.9855 for

dividend option which indicates that one percent change in market index

return has caused 0.9855 percent change in the stock return., for growth

option it is 0.9579 which indicates that one percent change in market index

return has caused 0.9579 percent change in the stock return. This shows that

the stock is less volatile compared to the market. Incase of ICICI

PRUDENTIAL POWER PLAN beta for dividend option is 0.866 which

indicates that one percent change in market index return has caused 0.866

per cent change in the stock return, for growth option it is 0.9366 which

indicates that one percent change in market index return has caused 0.866

per cent change in the stock return. This shows that the stock is less volatile

compared to the market.

o The Beta for dividend option and growth option of SBI EMERGING

BUSINESS FUND is 0.867 which indicates that one percent change in

market index return has caused 0.867 percent change in the stock return.

This shows that the stock is less volatile compared to the market. Incase of

ICICI PRUDENTIAL EMERGING STAR FUND beta for dividend option

is 1.027 which indicates that one percent change in market index return has

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caused 1.027 per cent change in the stock return. This shows that the stock

moves in tandem with the market.

o The Beta for dividend option of SBI MAGNUM TAXGAIN SCHEME is

0.306 which indicates that one percent change in market index return has

caused 0.306 percent change in the stock return. This shows that the stock is

less volatile compared to the market. Incase of ICICI PRUDENTIAL TAX

PLAN beta for dividend option is 0.9765 which indicates that one percent

change in market index return has caused 0.9765 per cent change in the

stock return. This shows that the stock moves in tandem with the market.

o The negative value of Alpha incase of ICICI PRUDENTIAL EMERGING

STAR FUND dividend option which has resulted in low returns compared

to SBI EMERGING BUSINESS FUND.

o The negative value of Alpha of ICICI PRUDENTIAL TAX PLAN dividend

option which has resulted in low returns compared to SBI EMERGING

BUSINESS FUND.

o The larger the Sharpe ratio, better the fund is performing. So, the SBI

Magnum Multiplier plus 1993 fund has a greater Sharpe ratio compared to

ICICI PRUDENTIAL Power Plan, all options show the positive value, this

means funds are performing well.

o Treynor ratio is similar to Sharp ratio. it also speaks about the risk

premium associated with the fund. Higher the ratio better the fund has

performed. The only difference between these two schemes is that the

sharp ratio takes in to account both systematic and UN systematic risk

where as Treynor ratio takes in to consideration only systematic risk.

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SUGETTIONS:

o The financial advisory is recommended that they should first analyze the

needs of the investors and recommend that fund which fulfills the

requirements of the investor. The risk taking ability of the investor

should also be analyzed by looking into his income, nature of work age

of the investor time period of the investment.

o As Treynor ratio speaks about the risk premium associated with the

fund. Higher the ratio better the fund has performed. Compared to

the three funds of SBI & ICICI PRUDENTIAL the EMERGING

BUSINESS FUND of SBI has a higher Treynor ratio which relates

to excess return over risk free rate so I would recommend that the

advisor should concentrate on these fund & recommend the

investors the same.

o If the advisor is recommending any of the SBI fund then I would

recommend investing in EMERGING BUSINESS FUND with a

dividend or growth option as the returns for both option are same, which

would give a very good return, and redeem it in between if there is

down fall in the market since it is a Sectorial fund. If the investor is

interested in EMERGING BUSINESS FUND.

o For a long term investment in diversified equity fund, MAGNUM

MULTIPLIER 1993 PLUS of SBI compared to POWER PLAN of

ICICI PRUDENTIAL is good, taking risk into consideration and its

past performance has been good.

o Complete information should be provided regularly to the advisors as

well as to the investors to keep them updated about developments. As

the customers are not aware, the company should see how best it advises

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the investors and also provide the entire information about the Mutual

Fund.

CONCLUSION:

The Global market is fast growing in investment business. Countries like US, whole

of Europe spread their investment in different investment alternatives with the help

of advisory services to recommend investor.

In Indian scenario the investments are spread over Bank Deposits, Savings

Certificate, Post Office, Equity Markets and the latest Mutual Fund. Since Mutual

Funds are subject to market risk the investor take help of advisory services for

financial planning which helps the investor to take calculated risk.

It was in 1995, the scenario got changed when depository act was passed and

PAN card details and D mat account was made compulsory for all those

investor who are investing a heavy amount. So as to protect the interest of the

investors. From July 2 of 2007 it has been made mandatory to have PAN card

details, this will enhance the faith of investors in stock market and many

investor would come forward to invest in mutual fund .

No doubt, watching the value of investments go down day after day can be pretty

tough. However, the pain becomes more bearable if one follows a proper

investment plan and invests for the long term. Having a well diversified portfolio as

well as a plan to rebalance it from time to time also helps a great deal. No wonder,

Mutual funds are considered to be the best way to invest in the stock market.

The mutual fund industry has gained a higher growth in the recent years. There are

around 34 Asset Management Companies which are currently operating and the

numbers of Mutual funds are around 630 funds, so it is difficult to analyze each and

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every fund in order to known their riskiness and return. Some tools are used to find

risk and return of the fund, which helps an investor to find out their risk.

The schemes taken for study proved to be a good investment avenue for all the

investors as the risk associated with these schemes are low and they are

yielding a very good return.

The volatility in the market might have affected the ratios but definitely

not the performance of the schemes. The schemes have been the one of the

best schemes of SBI MF & ICICI PRUDENTIAL.

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BIBLIOGRAPHY:

www.sbimf.com

www.amfiindia.com

www.bseindia.com

www.nseindia.com

www.investopedia.com

www.researchonline.com

Reference books:

Security analysis & portfolio management

- Punithavathy Pandian

- Donald E. Fischer

- Ronald J. Jordan

Business Statistics

- G.C. Beri

- S P Gupta.

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