report india bulls

8/6/2019 Report India Bulls

1/32

FUND

MANAGEMENT

[Type the abstract of the document here. The abstract is typically a short

summary of the contents of the document. Type the abstract of the

document here. The abstract is typically a short summary of the contents

of the document.]

FUNDMANAGEMENT[ Submitted to

Indiabulls Financial Services

Limited]

[This Report shall cover the analysis of various investment and

source options available. ]

Harsh Kumar Mittal

Indian Institute of Management Lucknow

5/28/2010


2/32

Funds Management submitted by Harsh Mittal, Class of 2011, IIM Lucknow Page 2 of32

ACKNOWLEDGEMENT

I would like to extend my sincere gratitude to my mentor Mr Anil

Sharma and Supervisor Mr Kuldeep Mittal for their support and

encouragement during this project.

I would like to thank Mr Kailash Mehra and Mr Narayan Sharma

for making my stay at Indiabulls memorable.


3/32


CONTENTS ACKNOWLEDGEMENT ................................................................................................... 2

Contents ....................................................................................................................... 3

List Of Figures................................................................................................................ 5

EXECUTIVE SUMMARY ................................................................................................... 6

Background ................................................................................................................... 7

Financial Strength of the company................................................................................. 8

Income Statement ........................................................................................... 8

Consolidated Balance Sheet ............................................................................. 9

Risks ........................................................................................................................... 11

Funds Costand Sources ............................................................................................... 12

Cost of Funds ................................................................................................. 12

IBFSL Products ............................................................................................................. 13

Managing Funds .......................................................................................................... 14

Mutual Funds .............................................................................................................. 15

Criteria for evaluation of Mutual Funds ....................................................................... 16

Ways to calculate Return ............................................................................................. 17

1. Arithmetic Mean: ................................................................................... 17

2. Geometric Mean: ................................................................................... 17

3. Yield: ...................................................................................................... 17

4. Risk Adjusted Return: ............................................................................. 17

Ways to calculate Risk on funds ................................................................................... 18

1. Standard Deviation: ................................................................................ 18

2. eta: ...................................................................................................... 18

3. R-Squared: ............................................................................................. 18

4. Bond Duration: ....................................................................................... 18


4/32


Ways to calculate Performance of funds ...................................................................... 19

1. Coefficient of variation: .......................................................................... 19

2. Sharpe Ratio: .......................................................................................... 19

3. Treynor ratio: ......................................................................................... 19

Key statistics to be considered to select mutual fund .............. ............... .............. ........ 20

1. Expense Ratio: ........................................................................................ 20

2. Turn Over rate: ....................................................................................... 20

3. Manager tenure: .................................................................................... 20

Mutual Funds Analysis ................................................................................................. 21

SBI Liquid Fund Premiere Growth ................................................................................ 21

Return Analysis .............................................................................................. 23

RISK Analysis.................................................................................................. 24

Funds Performance........................................................................................ 24

Fund Facts ..................................................................................................... 25

SBI Super Inst Growth.................................................................................................. 26

Return Analysis .............................................................................................. 29

RISK Analysis.................................................................................................. 29

Funds Performance........................................................................................ 30

Fund Facts ..................................................................................................... 31

Bibliography ................................................................................................................ 32


5/32


LIST OF FIGURES

Figure 1. Loan Assets ............................................................................................................................................ 10

Figure 2. Loan Book Mix ....................................................................................................................................... 10

Figure 3. NPA for IBFSL ......................................................................................................................................... 11

Figure 4. Assets Quality ........................................................................................................................................ 11

Figure 5 Cost of Funds .......................................................................................................................................... 12

Figure 6 IBFSL Products ........................................................................................................................................ 13

Figure 7 Operational Flow Chart ........................................................................................................................... 15

Figure 8 ROI SBI Premiere ..................................................................................................................................... 23

Figure 9 ROI SBI Super Inst Growth ....................................................................................................................... 28


6/32


EXECUTIVE SUMMARY

Fund Management represents the core of sound financial planning. Proper Fund

Management helps in minimizing the requirement of the working capital and

maximizing the profit of the organization. During my stint with Indiabulls I learned

the various processes followed to evaluate various investment options available

in the market. This Report shall have the comparative study of the mutual funds


7/32


BACKGROUND

Indiabulls Group is one of Indias top Business houses with

businesses spread over Real Estate, Infrastructure, Financial

Services, Securities and Power sectors. The group companies

are listed on important Indian and Overseas markets.

Indiabulls has been conferred the status of a Business

Superbrand by The Brand Council, Superbrands India.

Indiabulls Financial Services is one of Indias leading and

fastest growing private sector financial services companies.

Indiabulls Financial Services is an integrated financial services

powerhouse providing Consumer Finance, Housing Finance,

Commercial Loans, Life Insurance, Asset Management and

Advisory services. The company is focused on providing

multiple financial services through an extensive network of

consumer touch-points covering Tier 1, Tier 2 & Tier 3 cities.

Indiabulls serves more than 500,000 customers acrossdifferent financial products through its branch network, call

centers & the internet. It also ranks among the top private

sector financial services and banking groups in terms of net

worth.


8/32


FINANCIAL STRENGTH OF THE COMPANY

INCOME STATEMENT


9/32


CONSOLIDATED BALANCE SHEET


10/32


FIGURE 1. LOAN ASSETS

Loan Assets have grown 23.41% from Rs. 8,931.9 cr on Mar 31, 2009 to Rs.

11,023.2 cr as of Mar 31, 2010. The Following figure depicts the loan mix break up.

FIGURE 2.LOAN BOOK MIX


11/32


RISKS

FIGURE 3.NPA FOR IBFSL

The Net NPA has reduced substantially in last two quarters.

The Quality of Assets has improved over the period as shown in the figure below the

ratio of NPA to AUM has reduced significantly

FIGURE 4.ASSETS QUAL ITY


12/32


FUNDS COSTAND SOURCES

COST OF FUNDS

The cost of funds for IBFSL has decreased over the period owing to the better credit

ratings given to IBFSL by CRISIL.

CRISIL has also expanded the total borrowing capacity of IBFSL from 9040 Cr to 19540 Cr

FIGURE 5COST OF FUNDS


13/32


IBFSLPRODUCTS

FIGURE 6IBFSLPRODUCTS


14/32


MANAGING FUNDS

Returns from

Mainline Business

Returns From

Mutual Funds

Interests Received /

Loan Received

Disinvestments

FUNDS

Interests Payments Capital

Requirement s for

Mainline Business

Loan Repayment /

Loans Extended

Investment in

Mutual Funds


15/32


MUTUAL FUNDS

Mutual Fund is a trust that pools the savings of a number ofinvestors who share a common financial goal. The money thus

collected is then invested in capital market instruments such as

shares, debentures and other securities.

FIGURE 7OPERATIONAL FLO W CHART


16/32


CRITERIA FOR EVALUATION OF MUTUAL FUNDS

Expense

Ratio and

Turn Over

rate

Risk onMutual

Funds

Risk to

Return

Ratio

Return on

Mutual

Funds

Mutual

Funds


17/32


WAYS TO CALCULATE RETURN

1. ARITHMETIC MEAN :It is average return on the mutual funds over the last period

Arithmetic Mean = ( Return) / n

2. GEOMETRIC MEAN:It is calculated using the basic GP Mean formula

r = [(1 + r1)(1 + r2)(1+ r3) ]1/n - 1

3. YIELD:It is the return on per 100 units of amount invested.

Yield = ( Dividends Paid) / Amount Invested * 100

4. RISK ADJUSTED RETURN:can be calculated by dividing mutual fund returns by standard deviation then

multiplying by a relevant benchmark's standard deviation. This shall give

returns that are relative to the benchmark on a risk-to-return basis.


18/32


19/32


WAYS TO CALCULATE PERFORMANCE OF FUNDS

1.COEFFICIENT OF VARIATION:

It is the funds standard deviation divided by its return

CV = Si ri

Si = the standard deviation of the fund

ri = the mean return on fund

2. SHARPE RATIO :It is the measure of excess return per unit of total risk

This can be calculated by dividing the excess return by the standard deviation

of the returns

Sharpe Ratio = (Ri R*) Si

Ri = Return on fund

R* = Risk free return

Si = Standard deviation

3. TREYNOR RATIO:It is the measure of excess return per unit of systematic risk

This can be calculated by dividing the excess return by eta of mutual fund

Treynor Ratio = (Ri R*)

Ri = Return on fund

R* = Risk free return

= Mutual funds eta


20/32


KEY STATISTICS TO BE CONSIDERED TO SELECT

MUTUAL FUND

1. EXPENSE RATIO :It usually include inside management and administrative costs.

Expense ratio of the mutual fund should be compared to the other peer mutual

funds. Mutual Funds which have higher expense ratio can turn out to be a less

profitable than in comparison to mutual funds having

2. TURN OVER RATE:Higher Turn over rate could be detrimental to the NAV and return of the

mutual fund owing to the higher trading costs. One should select the mutual

fund with optimal turn over rate.

3. MANAGER TENURE:If the fund manager is associated with the fund for long time, it shows the sign

of stability of the fund. It is one of the parameter to consider while buying the

mutual fund though its not that strong a point to reject the fund.


21/32


MUTUAL FUNDS ANALYSIS

This Section contains the analysis of some popular mutual funds as Examples

SB

I LIQUID FUND PREMIERE GROWTH

Date

SBI Liquid Fund

Premiere SBI Return S&P Index Index Return

27-03-2010 14.6167 6588.34

28-03-2010 14.6183 0.01094638 6588.34 0

29-03-2010 14.6203 0.01368148 6588.34 0

30-03-2010 14.6223 0.01367961 6538.16 -0.76164861

31-03-2010 14.6243 0.01367774 6521.55 -0.25404701

01-04-2010 14.6264 0.01435966 6572.99 0.788769541

02-04-2010 14.6285 0.0143576 6572.99 0

03-04-2010 14.6305 0.01367194 6572.99 0

04-04-2010 14.6326 0.01435358 6572.99 0

05-04-2010 14.6344 0.0123013 6669.82 1.473149967

06-04-2010 14.6362 0.01229979 6666.78 -0.045578441

07-04-2010 14.6381 0.01298151 6677.56 0.161697251

08-04-2010 14.6402 0.01434612 6590.34 -1.306165725

09-04-2010 14.6417 0.01024576 6661.54 1.080369146

10-04-2010 14.6437 0.01365962 6661.54 0

11-04-2010 14.6457 0.01365775 6661.54 012-04-2010 14.6477 0.01365589 6634.12 -0.411616533

13-04-2010 14.6496 0.01297132 6615.8 -0.276148155

14-04-2010 14.6515 0.01296964 6615.8 0

15-04-2010 14.6534 0.01296796 6554.45 -0.927325494

16-04-2010 14.6553 0.01296627 6540.82 -0.207950324

17-04-2010 14.6573 0.01364694 6540.82 0

18-04-2010 14.6592 0.01296282 6540.82 0

19-04-2010 14.6611 0.01296114 6467.49 -1.121113255

20-04-2010 14.6629 0.01227739 6500.38 0.5085435

21-04-2010 14.6647 0.01227588 6518.8 0.28336804922-04-2010 14.6666 0.01295628 6549.19 0.466190096

23-04-2010 14.6684 0.01227278 6592.4 0.659776247

24-04-2010 14.6706 0.01499823 6592.4 0

25-04-2010 14.6745 0.02658378 6592.4 0

26-04-2010 14.6763 0.01226618 6615.25 0.346611249

27-04-2010 14.6781 0.01226467 6597.71 -0.26514493


22/32


Date

SBI Liquid Fund

Premiere SBI Return S&P Index Index Return

28-04-2010 14.6799 0.01226317 6482.27 -1.749698001

29-04-2010 14.6817 0.01226166 6530.38 0.7421782830-04-2010 14.6835 0.01226016 6559.98 0.453266119

01-05-2010 14.6874 0.02656042 6559.98 0

02-05-2010 14.6892 0.0122554 6559.98 0

03-05-2010 14.691 0.0122539 6491.43 -1.044972698

04-05-2010 14.6929 0.01293309 6399.12 -1.422028736

05-05-2010 14.6947 0.01225082 6369.8 -0.458188001

06-05-2010 14.6966 0.01292983 6327.5 -0.664071085

07-05-2010 14.6985 0.01292816 6237 -1.430264718

08-05-2010 14.7005 0.01360683 6237 0

09-05-2010 14.7025 0.01360498 6237 0

10-05-2010 14.7043 0.01224282 6459.39 3.565656566

11-05-2010 14.7061 0.01224132 6387.96 -1.105831975

12-05-2010 14.708 0.01291981 6413.47 0.399345018

13-05-2010 14.7098 0.01223824 6441.15 0.431591634

14-05-2010 14.7116 0.01223674 6334.91 -1.649394906

15-05-2010 14.7135 0.01291498 6334.91 0

16-05-2010 14.7153 0.01223366 6334.91 0

17-05-2010 14.7171 0.01223217 6293.1 -0.659993591

18-05-2010 14.719 0.01291015 6300.98 0.125216507

19-05-2010 14.721 0.01358788 6119.53 -2.879710775

20-05-2010 14.723 0.01358603 6155.32 0.584848836

21-05-2010 14.7251 0.0142634 6134.86 -0.332395391

22-05-2010 14.727 0.01290314 6134.86 0

23-05-2010 14.7288 0.01222245 6134.86 0

24-05-2010 14.7306 0.01222095 6150.77 0.259337621

25-05-2010 14.7324 0.01221946 5980.08 -2.775099703


23/32


FIGURE 8RO ISB IPREM IER E

RETURN ANALYSIS

AVERAGE RETURN (ARITHMET I C METHOD)

(SBI PREM IER E) 0.01336438

(S&P INDEX) = -0.159635126

Conclusion: The Average Return on SBI Premiere is much higher than the corresponding S&P Index

Recommendation: Recommended

AVERAGE RETURN (GEOMETRIC MEAN METHOD)

(SBI PREM IER E) 0.013364349

(S&P INDEX) = -0.1640475

Conclusion: The Average Return on SBI Premiere is much higher than the corresponding S&P Index



24/32


R I SKAD JU STED RETURN

(SBI PREM IER E) 0.00365

Conclusion: The risk adjusted return of SBI Premiere is good enough to be invested in


RISK ANALYSIS

STANDARD DEV IAT ION

(SBI PREM IER E) 0.000342994

Conclusion: The standard deviation of SBI Premiere is low, Hence the risk associated is low


R-SQUARED VALUE

(SBI PREM IER E) 0.696152507

Conclusion: The R-Squared Value of SBI Premiere with respect to S&P is low. It could be risky to gauge SBI

Premieres performance on the basis S&P index

FUNDS PERFORMANCE

COEFF I C IENT OF VARIAT ION

(SBI PREM I ERE ) 0.025664772

Conclusion: The Coefficient of Variation is very low, Hence better and consistent funds performance


SHARPE S RATIO

(SBI PREM I ERE ) 1.49507

Conclusion: Sharpes ratio indicates good performance by SBI Premiere Plan

Note: The risk free return is assumed to be 3.5% per annum


25/32


FUND FACTS

Fund Manager Parijat Agrawal

Expense ratio(%) 0.28

Portfolio Turnover

Ratio(%)

NA

Type of Scheme Open Ended

Nature Short Term Debt

Option Growth

Inception Date Nov 24, 2003

Face Value (Rs/Unit) 10

Fund Size in Rs. Cr. 1557.93 as on Apr 30, 2010


26/32


SBI SUPER INST GROWTH

Date

SBI Super

Inst Growth SBI Return S&P Index Index Return

27-03-2010 14.4584 6588.34

28-03-2010 14.46 0.011066231 6588.340

29-03-2010 14.4621 0.014522822 6588.340

30-03-2010 14.464 0.013137788 6538.16-0.76164861

31-03-2010 14.4661 0.014518805 6521.55-0.25404701

01-04-2010 14.4682 0.014516698 6572.990.788769541

02-04-2010 14.4702 0.01382342 6572.990

03-04-2010 14.4723 0.014512584 6572.990

04-04-2010 14.4743 0.013819503 6572.990

05-04-2010 14.4761 0.012435835 6669.821.473149967

06-04-2010 14.4779 0.012434288 6666.78-0.045578441

07-04-2010 14.4798 0.01312345 6677.56

0.161697251

08-04-2010 14.4818 0.013812345 6590.34-1.306165725

09-04-2010 14.4834 0.01104835 6661.541.080369146

10-04-2010 14.4853 0.013118467 6661.540

11-04-2010 14.4873 0.013807101 6661.540

12-04-2010 14.4893 0.013805195 6634.12-0.411616533

13-04-2010 14.4912 0.013113125 6615.8-0.276148155

14-04-2010 14.493 0.012421332 6615.80

15-04-2010 14.495 0.013799765 6554.45-0.927325494

16-04-2010 14.4969 0.013107968 6540.82-0.207950324

17-04-2010 14.4988 0.01310625 6540.820


27/32


18-04-2010 14.5008 0.013794245 6540.820

19-04-2010 14.5026 0.012413108 6467.49-1.121113255

20-04-2010 14.5045 0.013101099 6500.380.5085435

21-04-2010 14.5063 0.012409942 6518.80.283368049

22-04-2010 14.5081 0.012408402 6549.190.466190096

23-04-2010 14.51 0.013096133 6592.40.659776247

24-04-2010 14.5121 0.014472777 6592.40

25-04-2010 14.5121 0 6592.40

26-04-2010 14.516 0.026874126 6615.250.346611249

27-04-2010 14.5178 0.01240011 6597.71 -0.26514493

28-04-2010 14.5195 0.011709763 6482.27-1.749698001

29-04-2010 14.5213 0.012397121 6530.380.74217828

30-04-2010 14.5231 0.012395584 6559.980.453266119

01-05-2010 14.525 0.013082606 6559.980

02-05-2010 14.525 0 6559.980

03-05-2010 14.529 0.027538726 6491.43

-1.044972698

04-05-2010 14.5308 0.012389015 6399.12-1.422028736

05-05-2010 14.5326 0.01238748 6369.8-0.458188001

06-05-2010 14.5345 0.013074054 6327.5-0.664071085

07-05-2010 14.5363 0.012384327 6237-1.430264718

08-05-2010 14.5382 0.013070726 62370

09-05-2010 14.5401 0.013069018 6237

0

10-05-2010 14.542 0.01306731 6459.393.565656566

11-05-2010 14.5439 0.013065603 6387.96-1.10583197

12-05-2010 14.5458 0.013063896 6413.470.399345018


28/32


13-05-2010 14.5476 0.012374706 6441.150.431591634

14-05-2010 14.5494 0.012373175 6334.91-1.649394906

15-05-2010 14.5512 0.012371644 6334.910

16-05-2010 14.553 0.012370114 6334.910

17-05-2010 14.5549 0.013055727 6293.1-0.659993591

18-05-2010 14.5566 0.011679915 6300.980.125216507

19-05-2010 14.5584 0.012365525 6119.53-2.879710775

20-05-2010 14.5603 0.013050885 6155.320.584848836

21-05-2010 14.5623 0.013735981 6134.86-0.332395391

22-05-2010 14.5643 0.013734094 6134.86 0

23-05-2010 14.5663 0.013732208 6134.860

24-05-2010 14.5682 0.013043807 6150.770.259337621

25-05-2010 14.57 0.012355679 5980.08-2.775099703

FIGURE 9RO I SB ISUPER INST GROWTH


29/32


RETURN ANALYSIS

AVERAGE RETURN (ARITHMET I C METHOD)

(SBI SUPER INST GROWTH) 0.013033

(S&P INDEX) -0.159635126

Conclusion: The Average Return on SBI Super Inst Growth is much higher than the corresponding S&P Index


AVERAGE RETURN (GEOMETRIC MEAN METHOD)

(SBI SUPER INST GROWTH) 0.01303

(S&P INDEX) -0.1640475

Conclusion: The Average Return on SBI Super Inst growth is much higher than the corresponding S&P Index


RISK ANALYSIS

STANDARD DEV IAT ION

0.02

Conclusion: The standard deviation is low, Hence the risk associated is low


ETA

0.03

Conclusion: The low eta suggests that this fund is less risky.



30/32


FUNDS PERFORMANCE

SORT INO RAT IO

2.73

Conclusion: The Sortino Ratio is 2.73, which is high when compared to other funds with similar portfolio .


SHARPE S RATIO

1.96

Conclusion: Sharpes ratio indicates good performance by SBI Super Inst Growth


TREYNOR S RATIO

-1.40

Conclusion: The Negative value of Treynors ratio indicates that return is more than the expected.

Note: The risk free return is assumed to be 3.5% per annum


31/32


FUND FACTS

Fund Manager Parijat Agrawal

Expense ratio(%) 0.28

Portfolio Turn

overRatio(%)

NA

Type of Scheme Open Ended

Nature Short Term Debt

Option Growth

Inception Date Mar 22, 2007

Face Value (Rs/Unit) 10


32/32

Funds Management submitted by Harsh Mittal Class of 2011 IIM Lucknow Page 32 of 32

BIBLIOGRAPHY

(2010, May 25). Retrieved from wikipedia: http://en.wikipedia.org/wiki/

(2010, May 25). Retrieved from Mutual funds India: http://www.mutualfundsindia.com/

Hull, J. (2009). Options, futures and Other Derviatives , 7th Edition. Newyork : Prentice

Hall.

Indiabulls. (2010, May 26). Indiabulls Financial Services Limited. Retrieved from

Indiabulls Group: www.indiabulls.com/financial

Kahn, R. G. (1999).Active Portfolio Management: A Quantitative Approach for producing

superior Returns and Controlling Risks. McGraw-Hill.

SBI. (2010, May 25). Retrieved from SBI Mutual Fund: http://www.sbimf.com/

Schweser. (2010). Scheweser Notes for CFA and FRM. Kaplan.

report india bulls

Documents