INTRODUCTIONA Dissertation Report on

STUDY ON PERFORMANCE OF SELECTED MUTUAL FUND SCHEMES

By B.N. HARSHA

Reg No 08KXCM6065

Surana College P.G Centre

Under the Guidance of Mrs.Poornima .S Professor, Surana P.G. Centre

Meaning of a Mutual Fund

A Mutual Fund is a trust that pools the savings of a number of

investors who share a common financial goal. The money thus

collected is then invested in capital market instruments such as shares,

debentures and other securities. The income earned through these

investments and the Capital appreciation realized is shared by its unit

holders in proportion to the number of units owned by them.

Thus a Mutual Fund is the most suitable investment for the common

man as it offers an opportunity to invest in a diversified, professionally

managed basket of securities at a relatively low cost.

Organization of a Mutual FundA mutual fund is set up in the form of a trust, which has sponsor, trustees,

asset Management Company (AMC) and custodian.

1. Sponsor

The sponsor of a mutual fund is like the promoter of a company. The

sponsor may be a bank, a financial institution, or a financial service

company. The sponsor is responsible for setting up and establishing the

mutual fund.

2. Trust

The trust is established by a sponsor or more than one sponsor who is like

promoter of a company. The trustees of the mutual fund hold its property for

The benefit of the unit holders.

3. Asset Management Company (AMC)

The AMC is approved by SEBI manages the funds by making investments in

Various types of securities.

4. Custodian

Is registered with SEBI, holds the securities of various schemes of the fund

In its custody.

Types of Mutual Funds:

Open-end FundsClosed-end FundsGrowth/Equity Oriented Funds Income/ Debt oriented FundsBalanced FundsMoney Market/Liquid Funds Index FundsGilt FundsSectoral FundsExchange Traded Funds (ETF)

Professional Management

Diversification

Low Costs

Liquidity

Transparency

Flexibility

Affordability

Well Regulated

Convenient Administration

Return Potential

No Guarantees

No Customized Portfolios

Fees and commissions

Taxes

Management risk

MERITS

DE-MERITS

Objectives of the Study

To understand the working & management of a Mutual

Fund.

To understand the calculation of Net- Asset Values of

mutual funds.

To evaluate investment performance of mutual funds

in terms of risk and return.

To get an insight knowledge about mutual funds.

Limitations of the Study The study is restricted to secondary data only.

Different tools used for analysis may suggest different results as the approach

differs.

The study considers data for only a limited period of time.

The study is based only on selected 10 schemes therefore limiting the area of

research.

Tools for analysis

Beta

Standard deviation

Sharpe index

Treynor’s Index

Jensen Measures

FINDINGS

1. Reliance Regular Savings Balanced Fund has outperformed all

the other funds, as it has yielded the highest return (91.36%).

2. Franklin Templeton India Balanced Fund has delivered more

consistent returns, as it has the lowest Standard Deviation

(23.52) among all the funds.

3. Birla Sun Life 95 Fund has the lowest risk among all the

selected funds, as it has the lowest Beta (0.83) and thus is less

volatile.

4. In terms of size UTI Balanced Fund is the largest fund, as it has

Net Assets of Rs. 1057.19 crore, which is the highest among all

the selected funds.

FINDINGS

5. HDFC Balanced Fund has the best performance according to

the Sharpe Ratio (3.15).

6. HDFC Balanced Fund also has the best performance

according to the Treynor’s Measure (0.86).

7. Reliance Regular Savings Balanced Fund has the highest

ranking according to Jensen’s Measure (40.61).

8. Comparing the overall performance of all the selected mutual

fund schemes, HDFC Balanced Fund has been the best

mutual fund scheme, as it has the best ranking as per both

Sharpe & Treynor and also the second ranking according to

Jensen’s measure.

SUGGESTIONS

Investors while investing their funds should consider both the risk

and the returns associated with the mutual fund, as they should

balance both the risk and the return to earn optimum profits.

Another important thing to be remembered is that investors

should invest in a mutual fund that matches their objective of

investment which should be very clearly decided.

A good Fund Manager is also very important for a mutual fund, as

he will be responsible for the fund’s performance. Therefore

investors should invest in a fund which has a good & capable

fund manager.

CONCLUSIONS Investors who want the highest returns and are willing to take higher risk

should invest their funds in Reliance Regular Savings Balanced Fund, as

it has yielded the highest returns (91.36%) among all the selected mutual

funds.

Investors here should understand the basic fact that all investments are

associated with risk and therefore only by taking a higher risk, can they

obtain higher returns.

Investors who are interested in consistent returns should invest in Franklin

Templeton India Balanced Fund, as it has the lowest standard deviation

(23.52) among all the selected mutual funds.

Investors who have a lower risk appetite should invest in Birla Sun Life 95

Fund, as it has the lowest Beta (0.83) among all the selected mutual

funds. Beta measures the volatility of a fund relative to a particular market

benchmark. Therefore lower the Beta lower the risk and vice-versa.