yogesh bba

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A

Report

On

Comparatives Study Between Mutual Funds Schemes by Various

Companies in Indian Market.

A Project Report submitted in partial fulfillment Requirements for the

award of the degree of

BECHELOR OF BUSINESS ADMINISTRATION

TO

VEER NARMAD SOUTH GUJARAT UNIVERSITY,

SURAT

Submitted By:-MAHAJAN YOGESH S.

T.Y.B.B.A (Sem. - VI)

Roll No.-09

Under the guidance of:-

Mrs. BHUMI DESAI

Submitted to:V.T. PODDAR COLLEGE OF MANGEMENT STUDIES

PANDESARA, SURAT ( March 2013)


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DECLARATION

I, MAHAJAN YOGESH S. here by declare that the person .project report entitled

Comparatives Study Between Mutual Funds Offer by Various Companies in IndianMarket under the guidance ofMrs. BHUMI DESAIsubmitted in partial fulfillment ofthe requirement for the award of the degree of Bachelor of Business Administration to

Veer Narmad South Gujarat University, Surat is my original work research study carried out during 5th January, 2011to 1st March, 2011 and not submitted for the award of

any of any other degree/diploma/fellowship or other similar titles or prizes to any other

institution/organization or university by any other.

Place : Signature

Date :

MAHAJAN YOGESH S.

T.Y. B.B.A.

Roll No.- 09


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ACKNOWLEDGEMENT

Knowledge is an experience gained in life, it is the choicest possession , whichshould not be shelved but should be happily shared with others.

I express my gratitude to my esteemed guide, Faculty guide Mrs.BHUMI DESAI,VIMAL

TORMAL PODDAR COLLEGE OF MANAGEMENT STUDIES & Dr. Aditya srinivasan,

SHARP EDUCATION for their valuable critiques, assistance and encouragement, which

enabled me to carry on the project successfully. They gave me a wonderful opportunity to

work on this project. Their time-to-time guidance and incessant support helped me to

broaden my outlook on the project I am highly obliged for their support hroughout the

Training.

I would like to thanks to all for give their valuable inputs and time.

MAHAJAN YOGESH S.

T.Y. BBA


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EXECUTIVE SUMMERY

Mutual fund is a fund contributed by the investors to the mutual fund company with the

specific objective to invest in equities, debt, deposits, Government securities etc

As mutual fund is a collection of fund the risk will also be distributed amongst the investors.

Hence the profit and loss both will be distributed amongst them.

Mutual fund is now on the growing stage, but unfortunately the awareness about the mutual

fund is less as compared to other investment avenues.Mutual fund is a diversified portfoliowith diversification of risk, advantage of qualified professional management, affordability,

transparency.

In mutual fund itself, there is one other alternative, which is offshore mutual fund. Offshore

mutual fund refers to the investment made out of the investors home country. But whenmutual fund companies invest in foreign companies, have to follow some rules and

regulations guided by the SEBI.

The objective of the offshore mutual fund is to seek the benefit of multi economy, multi

equity market. But with it some risks are also associated, like market risk, currencyfluctuations, political risk etc. Investors do not like to invest in such type of funds; the only

reason is that these funds have booked badly past performance.

The only need towards the offshore mutual fund to earn profit, even then its poor

performance is to build a strategy. Systematic Investment Plan (SIP) is a way to earn good

return from the poor performing funds. SIP works on the base of Rupee Cost Averaging.

Through SIP the cost of unit decreases, and when the NET Asset Value goes down (NAV),

investor will get more units, so overall the volume of unit will be raise, and even in less

NAV, investor will able to earn good return from it.

So, even if it performs badly, good strategies will able investor to earn good return. The only

need is to make aware the investors about such type of strategies.


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INDEX

CH

No. Subject Page No.1. Introduction of Mutual Funds Industry 01-07

1. The beginning of Mutual Fund 02

2.Growth of mutual fundsglobal view 03

3. Mutual Fund Industry in India 04

4.Mutual Fund industry phases 05

2. Company Profile 07-11

1.Kotak Mahindra Mutual Fund Ltd. 082.Reliance Mutual Fund Ltd. 09

3.Franklin Templeton's mutual fund Ltd. 10

4.HDFC Asset Management Company Ltd 11

3. Introduction to Mutual Funds 12-431.What is Mutual Fund? 13

2.Organisation of a mutual fund 15

3.Important Characteristics of a Mutual fund 19

4.Types of Mutual fund 23

5.Risk associated with mutual fund 25

6.Performance Measures of Mutual Funds 27

7.Types of Mutual fund schemes 31

8.Mutual fund investing strategies 34

9.Advantages of investing through mutual funds 35

10.Drawbacks of investing through mutual funds 38

4. Research Methodology 39-43

5. Data Analysis and Interpretation 44-60

6. Observation 617. Suggestions 63

8. Conclusion 64

9. BIBLIOGRAPHY 66

10. ANNEXURE 68


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T


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THE BEGINNING OF MUTUAL FUND

Mutual funds really captured the public's attention in the 1980s and '90s when mutual fundinvestment hit record highs and investors saw incredible returns. However, the idea of

pooling assets for investment purposes has been around for a long time. Here we look at the

evolution of this investment vehicle, from its beginnings in the Netherlands in the eighteenth

century to its present status as a growing, international industry with fund holdings

accounting for trillions of dollars in the United States alone.

Historians are uncertain of the origins of investment funds; some cite the closed-end

investment companies launched in the Netherlands in 1822 by King William I as the first

mutual funds, while others point to a Dutch merchant named Adriaan van Ketwich whose

investment trust created in 1774 may have given the king the idea. Van Ketwich probably

theorized that diversification would increase the appeal of investments to smaller investors

with minimal capital. The name of van Ketwich's fund, Eendragt Maakt Magt, translates to

"unity creates strength". The next wave of near-mutual funds included an investment trust

launched in Switzerland in 1849, followed by similar vehicles created in Scotland in the

1880s.

The idea of pooling resources and spreading risk using closed-end investments soon took root

in Great Britain and France, making its way to the United States in the 1890s. The Boston

Personal Property Trust, formed in 1893, was the first closed-end fund in the U.S. The

creation of the Alexander Fund in Philadelphia, Pennsylvania, in 1907 was an important step

in the evolution toward what we know as the modern mutual fund. The Alexander Fund

featured semi-annual issues and allowed investors to make withdrawals on demand.


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GROWTH OF MUTUAL FUNDSA GLOBAL VIEW

The background for the growth of mutual funds throughout the developed anddeveloping nations has similar characteristics.

Mutual funds have emerged as rivals to banks in savings mobilization becausebanking services could not exhibit extraordinary efforts to employ household savings

in remunerative avenues. Banks did not tap the capital market to obtain higher yield

and offer better return to investors.

Individual investors over the years have developed keen interested in securitiesmarket and changed their investment behavior as witnessed in the shift in their

preference from bank deposits to acquire financial instruments for attaining higher

returns and capital gains accompanied with fiscal concessions.

The above phenomena exist globally and provide support to the growth of mutualfund industry. A beginning was made in 1960 when the concept of mutual fund was

familiarized in most of the developed nations, but it made tremendous growth only in

1980s.

Published materials reveal that mutual funds during 1980s, in many developedcountries had registered enormous growth. These developed nations include Italywhere mutual fund registered a growth of 200%, Japan 600%, UK 350%, Germany

330%, but USA exhibit super performance. At present US Mutual Funds have worth

of over $1 trillion spreading over 30,000 mutual funds commanding investment of

25% of the households and having over 5 crores shareholders account. Mutual fund

industry in USA occupied first position in financial sector.

Besides above countries, mutual fund industry has witnessed significant growth incommonwealth countries like Canada, Australia, third world countries like Mexico

and South Africa.


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MUTUAL FUND INDUSTRY IN INDIA

The origin of mutual fund industry in India is with the introduction of the concept ofmutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated

from the year 1987 when non-UTI players entered the industry.

In the past decade, Indian mutual fund industry had seen dramatic improvements, bothqualities wise as well as quantity wise.

Before, the monopoly of the market had seen an ending phase; the Assets UnderManagement (AUM) was Rs. 67bn.

The private sector entry to the fund family raised the AUM to Rs. 470 bn in March1993 and till April 2004; it reached the height of 1,540bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of itis less than the deposits of SBI alone, constitute less than 11% of the total deposits

held by the Indian banking-industry.

The main reason of its poor growth is that the mutual fund industry in India is new inthe country. Large sections of Indian investors are yet to be intellectuated with the

concept.

Hence, it is the prime responsibility of all mutual fund companies, to market theproduct correctly abreast of selling.


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MUTUAL FUND INDUSTRY PHASES

The Mutual Fund industry in India started in 1963 with the formation of Unit Trust of India,

at the initiative of the Government of India and Reserve Bank of India. The History of

Mutual Funds in India can be broadly divided into four distinct phases.

First Phase (1964-87):-

Unit Trust of India (UTI) was established on 1963 by an act of parliament. It was set up by

Reserve Bank of India and functioned under the regulatory and administrative

control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the

Industrial Development Bank of India (IDBI) took over the regulatory and

administrative control in place of RBI. The first scheme launched by UTI was Unit

Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

Second Phase (1987-1993)(Entry of Public Sector Funds):-

1987 marked the entry of non-UTI, Public Sector Mutual Funds set up by Public Sector

Banks and Life Insurance Corporation of India (LIC) and General Insurance

Corporation of India (GIC). SBI Mutual Fund was the first non -UTI Mutual Fund

established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank

Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of

Baroda Mutual Fund (Oct 92). LIC established its Mutual Fund in June 1989 while GIC had

set up its Mutual Fund in June 1989 while GIC had set up its Mutual Fund in December

1990.At the end of 1993, the Mutual Fund industry had assets under

management of Rs.47,004 crores.

Third Phase (1993-2003) (Entry of Private Sector funds) :-

With the entry of private sector funds in 1993, a new era started in the Indian Mutual Fund

industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year

in which the first Mutual Fund Regulations came into being, under which all Mutual Funds,

except UTI were to be registered and governed. The erstwhile Kothari pioneer

(now merged with UTI were to be registered and governed. The erstwhile Kothari

pioneer (now merged with Franklin Templeton) was the first Private Sector Mutual Fund

registered in July 1993.The 1993 SEBI (Mutual Fund) regulations were substituted by a morecomprehensive and revised Mutual Fund Regulations in 1996. The industry now functions

under the SEBI (Mutual Fund) regulations 1996.The number of Mutual Fund houses went

on increasing, with many foreign Mutual Funds setting up funds in India and also the

industry has witnessed several mergers and acquisitions. As at the end of January 2003,

there were 33 Mutual Funds with total assets of Rs.1,21,805 Corers.The Unit Trust of India

with Rs.44,541 crores of assets under management was way ahead of other Mutual Funds.


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Fourth Phase (since February 2003) :-

In February 2003, following the repeal of the Unit Trust of India Act 1963. UTI was

bifurcated into two separate entities. One is the specified Undertaking of the Unit Trust of

India with assets under management of Rs.29,835 crores As at the end of January 2003,

representing broadly, the assets of US 64 scheme, assured return and certain other schemes.

The specified Undertaking of Unit Trust of India, functioning under anadministrator and under the rules framed by Government of India and does not come under

the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is

registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation

of the erstwhile.

UTI which had in March 2000 more than Rs. 76,000crores of assets under management and

with the setting up of a UTI Mutual Fund, confirming to the SEBI Mutual Fund Regulations,

and with recent mergers taking place among different private sector funds, the Mutual Fundindustry has entered its current phase of consolidation and growth. As at the end of October

31, 2003, there were 31 funds, which manage assets of Rs.1, 26,726crores under 386

schemes.


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INTRODUCTION TO MUTUAL FUNDS:-

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 appreciations realized are 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. The flow chart below

describes broadly the working of a Mutual Fund.


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A Mutual Fund is a body corporate registered with the Securities and Exchange Board of

India (SEBI) that pools up the money from individual/corporate investors and invests the

same on behalf of the investors/unit holders, in Equity shares, Government ,Bonds, Call Money Markets etc, and distributes the profits. In the other words, a

Mutual Fund allows investors to indirectly take a position in a basket of assets.

Mutual Fund is a mechanism for pooling the resources by issuing units to the investors and

investing funds in securities in accordance with objectives as disclosed in offer document.

Investments in securities are spread among a wide cross-section of industries and sectors thus

the risk is reduced. Diversification reduces the risk because all stocks may not move in the

same direction in the same proportion at same time. Investors of mutual funds are known as

unit holders.

The investors in proportion to their investments share the profits or losses. The mutual funds

normally come out with a number of schemes with different investmentobjectives which are launched from time to time. A Mutual Fund is required to be

registered with Securities Exchange Board of India (SEBI) which regulates securities markets

before it can collect funds from the public.


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ORGANISATION OF A MUTUAL FUND:-

There are many entities involved and the diagram below illustrates the organizational set upof a Mutual Fund:

Mutual Funds diversify their risk by holding a portfolio of instead of only one asset. This is

because by holding all your money in just one asset, the entire fortunes of your portfolio

depend on this one asset. By creating a portfolio of a variety of assets, this risk is

substantially reduced.

Mutual Fund investing in Mutual Funds contains the same risk as investing in the markets,

the only difference being that due to management of funds the controllable risks are

substantially reduced. A important risk involved in Mutual Fund investments is the marketrisk. However, the company specific risks are largely eliminated due to professional fund

management.


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STRUCTURE OF A MUTUAL FUND

INVESTOR

Sponsor

Trustees Mutual

fund

ASSET MANAGEMENT

COMPANY

Custodian Registrar


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SEBI

SPONSOR

Sponsor is the person who acting alone or in combination with another body corporate

establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the

Investment Managed and meet the eligibility criteria prescribed under the Securities and

Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible

or liable for any loss or shortfall resulting from the operation of the Schemes beyond the

initial contribution made by it towards setting up of the Mutual Fund.

TRUSTEE

Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals).

The main responsibility of the Trustee is to safeguard the interest of the unit holders and inter

alias ensure that the AMC functions in the interest of investors and in accordance with the

Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of

the Trust Deed and the Offer Documents of the respective Schemes. There must be at least 4

members in the Board of Trustees; At least 2/3rd directors of the Trustee are independent

directors who are not associated with the Sponsor in any manner. Trustee of one mutual fund

cannot be a trustee of another mutual fund.

ASSET MANAGEMENT COMPANY (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The

AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act

as an asset management company of the Mutual Fund. At least 50% of the directors of the

AMC are independent directors who are not associated with the Sponsor in any manner. The

AMC must have a net worth of at least 10 crore at all times. AMC has to discharge mainlythree functions as under:S

I. Taking investment decisions and making investments of the funds through

market dealer/brokers in the secondary market securities or directly in the

primary capital market or money market instruments

II. Realize fund position by taking account of all receivables and realizations,

moving corporate actions involving declaration of dividends,etc to compensate investors for

their investments in units; and


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III. Maintaining proper accounting and information for pricing the units and arriving at net

asset value (NAV), the information about the listed schemes and the transactions of

units in the secondary market. AMC has to feed back the trustees about its fund management

operations and has to maintain a perfect information system.

CUSTODIANS

Mutual funds run by the subsidiaries of the nationalized banks had their respective sponsor

banks as custodians like canara bank, SBI, PNB, etc. Foreign banks with higher degree of

automation in handling the securities have assumed the role of custodians for mutual funds.

With the establishment of stock Holding Corporation of India the work of custodian for

mutual funds is now being handled by it for various mutual funds. Besides, industrial

investment trust company acts as sub-custodian for stock Holding Corporation of India for

domestic schemes of UTI, BOI MF, LIC MF, etc

FEE STRUCTURE:-

Custodian charges range between 0.15% to 0.20% on the net value of the

customers holding for custodian services space is one important factor which has fixed costelement.

RESPONSIBILITYOFCUSTODIANS:-

Receipt and delivery of securities

Holding of securities.

Collecting income

Holding and processing cost

Corporate actions etc

REGISTRAR AND TRANSFER AGENT

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to theMutual Fund. The Registrar processes the application form, redemption requests and

dispatches account statements to the unit holders. The Registrar and Transfer agent also

handles communications with investors and updates investor records


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IMPORTANT CHARACTERISTICS OF A MUTUAL FUND:-

Funds. The ownership of the mutual fund is in the hands of the Investors.A MutualFund actually belongs to the investors who have pooled their

A Mutual Fund is managed by investment professional and other Service providers,who earns a fee for their services, from the funds.

The pool of Funds is invested in a portfolio of marketable investments. The value of the portfolio is updated every day. The investors share in the fund is denominated by units. The value of the units

changes with change in the portfolio value, every day. The value of one unit of

investment is called net asset value (NAV).

The investment portfolio of the mutual fund is created according to The statedInvestment objectives of the Fund.

OBJECTIVES OF A MUTUAL FUND:-

To Provide an opportunity for lower income groups to acquire without Muchdifficulty, property in the form of shares.

To Cater mainly of the need of individual investors, whose means are small? To Manage investors portfolio that provides regular income, growth, Safety,

liquidity, tax advantage, professional management and diversification.


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ADVANTAGES OF MUTUAL FUNDS:-

1. Professional Management -The basic advantage of funds is that, they areprofessional managed, by well qualified professional. Investors purchase funds

because they do not have the time or the expertise to manage their own portfolio.

A mutual fund is considered to be relatively less expensive way to make and

monitor their investments.

2. Diversification - Purchasing units in a mutual fund instead of buyingindividual stocks or bonds, the investors risk is spread out and minimized up to

certain extent. 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.

3. Economies of Scale -Mutual fund buy and sell large amounts of securities ata time, thus help to reducing transaction costs, and help to bring down the average

cost of the unit for their investors.

4. Liquidity -Just like an individual stock, mutual fund also allows investors toliquidate their holdings as and when they want.

5. Simplicity - Investments in mutual fund is considered to be easy, compare toother available instruments in the market, and the minimum investment is small.

Most AMC also have automatic purchase plans whereby as little as Rs. 2000,

where SIP start with just Rs.50 per month basis.


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Disadvantages of Investing Mutual Funds:-

1. Professional Management- Some funds doesnt perform in neither themarket, as their management is not dynamic enough to explore the availableopportunity in the market, thus many investors debate over whether or not the so-

called professionals are any better than mutual fund or investor him self, for

picking up stocks.

2. CostsThe biggest source of AMC income, is generally from the entry & exitload which they charge from an investors, at the time of purchase. The mutual

fund industries are thus charging extra cost under layers of jargon.

3. Dilution -Because funds have small holdings across different companies, highreturns 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.

4. Taxes -when making decisions about your money, fund managers don't consideryour 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.


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INVESTORS PROFILE:

An investor normally prioritizes his investment needs before undertaking aninvestment. So different goals will be allocated to different proportions of the total

disposable amount. Investments for specific goals normally find their way into the debt

market as risk reduction is of prime importance, this is the area for the risk-averse

investors and here, Mutual Funds are generally the best option. One can avail of the

benefits of better returns with added benefits of anytime liquidity by investing in open-ended

debt funds at lower risk, this risk of default by any company that one has chosen to invest

in, can be minimized by investing in Mutual Funds as the fund managers analyze the

companies financials more minutely than an individual can do as they have the expertise to

do so.

Moving up the risk spectrum, there are people who would like to take some risk and invest

in equity funds/capital market. However, since their appetite for risk is also

limited, they would rather have some exposure to debt as well. For these investors,

balanced funds provide an easy route of investment, armed with expertise of investment

techniques, they can invest in equity as well as good quality debt thereby reducing risks and

providing the investor with better returns than he could otherwise manage. Since they can

reshuffle their portfolio as per market conditions, they are likely to generate moderate returns

even in pessimistic market conditions.

Next comes the risk takers, risk takers by their nature, would not be averse to investing in

high-risk avenues. Capital markets find their fancy more often than not, because they have

historically generated better returns than any other avenue, provided, the money was

judiciously invested. Though the risk associated is generally on the higher side of the

spectrum, the return-potential compensates for the risk attached.


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TYPES OF MUTUAL FUNDS:

1. OPEN-ENDED MUTUAL FUNDS:-

The holders of the shares in the Fund can resell them to the issuing Mutual Fund

company at the time. They receive in turn the net assets value (NAV) of the shares at the

time of re-sale. Such Mutual Fund Companies place their funds in the secondary securities

market. They do not participate in new issue market as do pension funds or life insurance

companies. Thus they influence market price of corporate securities. Open-end

investment companies can sell an unlimited number of Shares and thus keep going larger.

The open-end Mutual Fund Company Buys or sells their shares. These companies sell newshares NAV plus a Loading or management fees and redeem shares at NAV.In other words,

the target amount and the period both are indefinite in such funds.

2.CLOSED-ENDED MUTUAL FUNDS:-

A closedend Fund is open for sale to investors for a specific period, after whichfurther sales are closed. Any further transaction for buying the units or repurchasing

them, Happen in the secondary markets, where closed end Funds are listed. Therefore new

investors buy from the existing investors, and existing investors can liquidate their units by

selling them to other willing buyers. In a closed end Funds, thus the pool of Funds cantechnically be kept constant. The asset management company (AMC) however, can

buy out the units from the investors, in the secondary markets, thus reducing the

amount of funds held by outside investors. The price at which units can be sold or redeemed

Depends on the market prices, which are fundamentally linked to the NAV. Investors in

closed end Funds receive either certificates or Depository receipts, for their holdings in a

closed end mutual Fund.

3. Interval Schemes:

Interval Schemes are that scheme, which combines the features of open-ended and close-

ended schemes. The units may be traded on the stock exchange or may be open for sale or

redemption during pre-determined intervals at NAV related prices.


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RATE OF RETURN ON MUTUAL FUNDS:-

An investor in mutual fund earns return from two sources:

Income from dividend paid by the mutual fund.

Capital gains arising out of selling the units at a price higher than theacquisition price.

The risk return trade-off indicates that if investor is willing to take higher risk then

correspondingly he can expect higher returns and vise versa if he pertains to lower risk

instruments, which would be satisfied by lower returns. For example, if an investors opt for

bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest

in capital protected funds and the profit-bonds that give out more return which is slightly

higher as compared to the bank deposits but the risk involved also increases in the same

proportion

Thus investors choose mutual funds as their primary means of investing, as Mutual funds

provide professional management, diversification, convenience and liquidity. That doesntmean mutual fund investments risk free. This is because the money that is pooled in are not

invested only in debts funds which are less riskier but are also invested in the stock markets

which involves a higher risk but can expect higher returns. Hedge fund involves a very highrisk since it is mostly traded in the derivatives market which is considered very volatile.


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RISKS ASSOCIATED WITH MUTUAL FUNDS:-

Investing in Mutual Funds, as with any security, does not come without risk. One of the most

basic economic principles is that risk and reward are directly correlated. In other words, the

greater the potential risk the greater the potential return. The types of risk commonly

associated with Mutual Funds are:

1) MARKET RISK

Market risk relates to the market value of a security in the future. Market prices fluctuate and

are susceptible to economic and financial trends, supply and demand, and many other factors

that cannot be precisely predicted or controlled.

2) POLITICAL RISK

Changes in the tax laws, trade regulations, administered prices, etc are some of the many

political factors that create market risk. Although collectively, as citizens, we have indirect

control through the power of our vote individually, as investors, we have virtually no control.

3) INFLATION RISK

Interest rate risk relates to future changes in interest rates. For instance, if an investor invests

in a long-term debt Mutual Fund scheme and interest rates increase, the NAV of the scheme

will fall because the scheme will be end up holding debt offering lower interest rates.

4) BUSINESS RISK


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Business risk is the uncertainty concerning the future existence, stability, and profitability of

the issuer of the security. Business risk is inherent in all business ventures. The future

financial stability of a company cannot be predicted or guaranteed, nor can the price of its

securities. Adverse changes in business circumstances will reduce the market price of the

companys equity resulting in proportionate fall in the NAV of the Mutual Fund scheme,which has invested in the equity of such a company.

5) ECONOMICRISK

Economic risk involves uncertainty in the economy, which, in turn, can have an adverse

effect on a companys business. For instance, if monsoons fail in a year, equity stocks ofagriculture-based companies will fall and NAVs of Mutual Funds, which have invested in

such stocks, will fall proportionately.


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PERFORMANCE MEASURES OF MUTUAL FUNDS:

Mutual Fund industry today, with about 30 players and more than six hundred schemes, is

one of the most preferred investment avenues in India. However, with a plethora of schemes

to choose from, the retail investor faces problems in selecting funds. Factors such asinvestment strategy and management style are qualitative, but the funds record is an

important indicator too.

Though past performance alone cannot be indicative of future performance, it

is, frankly, the only quantitative way to judge how good a fund is at present. Therefore,

there is a need to correctly assess the past performance of different Mutual Funds.

Worldwide, good Mutual Fund companies over are known by their AMCs and this fameis directly linked to their superior stock selection skills.

For Mutual Funds to grow, AMCs must be held accountable for their selection ofstocks. In other words, there must be some performance indicator that will reveal the quality

of stock selection of various AMCs.

Return alone should not be considered as the basis of measurement of the performance of a

Mutual Fund scheme, it should also include the risk taken by the fund manager because

different funds will have different levels of risk attached to them. Risk

associated with a fund, in a general, can be defined as Variability or fluctuations in the

returns generated by it. The higher the fluctuations in the returns of a fund during a given

period, higher will be the risk associated with it. These fluctuations in the returns generated

by a fund are resultant of two guiding forces. First, general market fluctuations,

which affect all the securities, present in the market, called Market risk or Systematic risk

and second, fluctuations due to specific securities present in the portfolio of the

fund, called Unsystematic risk. The Total Risk of a given fund is sum of these two and is

measured in terms of standard deviation of returns of the fund.

Systematic risk, on the other hand, is measured in terms of Beta, which represents

fluctuations in the NAV of the fund vis--vis market. The more responsive the NAV of a

Mutual Fund is to the changes in the market; higher will be its beta. Beta is calculated by

relating the returns on a Mutual Fund with the returns in the market. While

Unsystematic risk can be diversified through investments in a number of instruments,

systematic risk cannot. By using the risk return relationship, we try to assess the

competitive strength of the Mutual Funds one another in a better way. In order to

determine the risk-adjusted returns of investment portfolios, several eminent authors

have worked since 1960s to develop composite performance indices to evaluate

a portfolio by comparing alternative portfolios within a particular risk class.


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The most important and widely used measures of performance are:

The TreynorMeasure

The Sharpe Measure

Jenson Model

Fama Model

1) The Treynor Measure:-

Developed by Jack Treynor, this performance measure evaluates funds on the basis of

Treynor's Index.

This Index is a ratio of return generated by the fund over and above risk free rate of return

(generally taken to be the return on securities backed by the government, as there is no credit

risk associated), during a given period and systematic risk associated with it (beta).

Symbolically, it can be represented as:

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

Where,

Ri represents return on fund,

Rf is risk free rate of return, and

Bi is beta of the fund.

All risk-averse investors would like to maximize this value. While a high and positive

Treynor's Index shows a superior risk-adjusted performance of a fund, a low

and negative Treynor's Index is an indication of unfavorable performance.

2) The Sharpe Measure :-

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

ratio of returns generated by the fund over and above risk free rate of return and the total riskassociated with it

According to Sharpe, it is the total risk of the fund that the investors are concerned about.

So, the model evaluates funds on the basis of reward per unit of total risk.

Symbolically, it can be written as:


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Sharpe Index (Si) = (Ri - Rf)/Si

Where,

Si is standard deviation of the fund,

Ri represents return on fund, and

Rf is risk free rate of return.

While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund,

a low and negative Sharpe Ratio is an indication of unfavorable performance.

Comparison of Sharpe and Treynor

Sharpe and Treynor measures are similar in a way, since they both divide the risk

premium by a numerical risk measure. The total risk is appropriate when we are

evaluating the risk return relationship for well-diversified portfolios. On the other hand, the

systematic risk is the relevant measure of risk when we are evaluating less than fullydiversified portfolios or individual stocks. For a well-diversified portfolio the total risk is

equal to systematic risk. Rankings based on total risk (Sharpe measure) and systematic

risk (Treynor measure) should be identical for a well-diversified portfolio, as the total risk

is reduced to systematic risk. Therefore, a poorly diversified fund that ranks higher on

Treynor measure, compared with another fund that is highly diversified, will rank lower on

Sharpe Measure.

3) Jenson Model:-

Jenson's model proposes another risk adjusted performance measure. This measure was

developed by Michael Jenson and is sometimes referred to as the differential Return

Method. This measure involves evaluation of the returns that the fund has generated vs. the

returns actually expected out of the fund1 given the level of its systematic risk. The surplus

between the two returns is called Alpha, which measures the performance of a fund compared

with the actual returns over the period. Required return of a fund at a given level of risk (Bi)

can be calculated as:

Ri = Rf + Bi (Rm - Rf)

Where,Ri represents return on fund, and

Rm is average market return during the given period,

Rf is risk free rate of return, and

Bi is Beta deviation of the fund.


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After calculating it, Alpha can be obtained by subtracting required return from the actual

return of the fund.Higher alpha represents superior performance of the fund and vice versa.

Limitation of this model is that it considers only systematic risk not the entire risk associated

with the fund and an ordinary investor cannot mitigate unsystematic risk, as his knowledge

of market is primitive.

4) Fama Model:-

The Eugene Fama model is an extension of Jenson model. This model compares the

performance, measured in terms of returns, of a fund with the required return

commensurate with the total risk associated with it. The difference between these two is

taken as a measure of the performance of the fund and is called Net Selectivity.

The Net Selectivity represents the stock selection skill of the fund manager, as it is the excess

returns over and above the return required to compensate for the total risk taken by the fund

manager. Higher value of which indicates that fund manager has earned returns well

above the return commensurate with the level of risk taken by him.

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

Where,


Sm is standard deviation of market returns,

Rm is average market return during the given period, and

Rf is risk free rate of return.

The Net Selectivity is then calculated by subtracting this required return from the actualreturn of the fund.

Among the above performance measures, two models namely, Treynor measure and

Jenson model use Systematic risk is based on the premise that the Unsystematic risk is

diversifiable. These models are suitable for large investors like institutional investors

with high risk taking capacities as they do not face paucity of funds and can invest in a

number of options to dilute some risks. For them, a portfolio can be spread across a

number of stocks and sectors. However, Sharpe measure and Fama model that consider the

entire risk associated with fund are suitable for small investors, as the ordinary investor

lacks the necessary skill and resources to diversify. Moreover, the selection of the fund on the

basis of superior stock selection ability of the fund manager will also help in safeguarding the

money invested to a great extent. The investment in funds that have generated big returns at

higher levels of risks leaves the money all the more prone to risks of all kinds that may

exceed the individual investors' risk appetite.


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MUTUAL FUND SCHEME TYPES:

Equity Diversified Schemes :-These schemes mainly invest in equity. They seek to achieve long-term capital

appreciation by responding to the dynamically changing Indian economy by moving across

sectors such as Lifestyle, Pharma, Cyclical, Technology, etc.

Sector Schemes :-

These schemes focus on particular sector as IT, Banking, etc. They seek to generate

long-term capital appreciation by investing in equity and related securities of

companies in that particular sector.

Index Schemes :-

These schemes aim to provide returns that closely correspond to the return of

a particular stock market index such as BSE Sensex, NSE Nifty, etc. Such schemes invest in

all the stocks comprising the index in approximately the same weightage as they are given in

that index.

Exchange Traded Funds (ETFs) :-

ETFs invest in stocks underlying a particular stock index like NSE Nifty or BSE

Sensex. They are similar to an index fund with one crucial difference. ETFs are listed and

traded on a stock exchange. In contrast, an index fund is bought and sold by the fund and its

distributors.

Equity Tax Saving Schemes :-

These work on similar lines as diversified equity funds and seek to achieve long-term capital

appreciation by investing in the entire universe of stocks. The only difference between

these funds and equity-diversified funds is that they demand a lock-in of 3 years to gain

tax benefits.

Dynamic Funds :-

These schemes alter their exposure to different asset classes based on themarket scenario. Such funds typically try to book profits when the markets are overvalued

and remain fully invested in equities when the markets are undervalued. This is suitable for

investors who find it difficult to decide when to quit from equity.


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Balanced Schemes :-

These schemes seek to achieve long-term capital appreciation with stability of

investment and current income from a balanced portfolio of high quality equity and fixed-

income securities.

Medium-Term Debt Schemes :-These schemes have a portfolio of debt and money market instruments where the

average maturity of the underlying portfolio is in the range of five to seven years.

Short-Term Debt Schemes :-

These schemes have a portfolio of debt and money market instruments where the

average maturity of the underlying portfolio is in the range of one to two years.

Money Market Debt Schemes :-

These schemes invest in debt securities of a short-term nature, which generally means

securities of less than one-year maturity. The typical short-term interest-bearing

instruments these funds invest in Treasury Bills, Certificates of Deposit, Commercial

Paper and Inter-Bank Call Money Market.

Medium-Term Gilt Schemes :-

These schemes invest in government securities. The average maturity of the securities in the

scheme is over three years.

Short-Term Gilt Schemes :-

These schemes invest in government securities. The securities invested in are of short to

medium term maturities.

Floating Rate Funds :-

They invest in debt securities with floating interest rates, which are generally linked to some

benchmark rate like MIBOR. Floating rate funds have a high relevance when interest

rates are on the rise helping investors to ride the interest rate rise.

Monthly Income Plans (MIPS) :-

These are basically debt schemes, which make marginal investments in the range of 10-25%

in equity to boost the schemes returns. MIP schemes are ideal for investors who seek slightlyhigher return that pure long-term debt schemes at marginally higher risk.


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DIFFERENT MODES OF RECEIVING THE INCOME

EARNED FROM MUTUAL FUND INVESTMENTS

Mutual Funds offer three methods of receiving income:

Growth Plan :-

In this plan, dividend is neither declared nor paid out to the investor but is builtinto the valueof the NAV. In other words, the NAV increases over time due to such incomes and the

investor realizes only the capital appreciation on redemption of his investment.

Income Plan :-

In this plan, dividends are paid-out to the investor. In other words, the NAV only

reflects the capital appreciation or depreciation in market price of the underlying

portfolio.

Dividend Re-investment Plan :-

In this case, dividend is declared but not paid out to the investor, instead, it is reinvested back

into the scheme at the then prevailing NAV. In other words, the investor is given additionalunits and not cash as dividend.


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MUTUAL FUND INVESTING STRATEGIES:

1.Systematic Investment Plans (SIPs) :-

These are best suited for young people who have started their careers and need to build their

wealth. SIPs entail an investor to invest a fixed sum of money at regular intervals in the

Mutual fund scheme the investor has chosen, an investor opting for SIP in xyz Mutual Fund

scheme will need to invest a certain sum on money every month/quarter/half-year in the

scheme.

2. Systematic Withdrawal Plans (SWPs) :-

These plans are best suited for people nearing retirement. In these plans, an investor

invests in a mutual fund scheme and is allowed to withdraw a fixed sum of money at regular

intervals to take care of his expenses.

3. Systematic Transfer Plans (STPs) :-

They allow the investor to transfer on a periodic basis a specified amount from one

scheme to another within the same fund family meaning two schemes belonging to thesame mutual fund. A transfer will be treated as redemption of units from the scheme from

which the transfer is made. Such redemption or investment will be at the

applicable NAV. This service allows the investor to manage his investments actively to

achieve his objectives. Many funds do not even charge any transaction fees for his

servicean added advantage for the active investor.


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ADVANTAGES OF INVESTING TRHOURGH MUTUAL

FUNDS :-

There are several reasons that can be attributed to the growing popularity and suitability of

Mutual Funds as an investment vehicle especially for retail investors:

ASSET ALLOCATION

Mutual Funds offer the investors a valuable tool Asset Allocation. This is explainedby an example.An investor investing Rs.1 lakh in a mutual fund scheme, which has collected

Rs.100 crores and invested the money in various investment options, will have

Rs.1 lakh spread over a number of investment options as demonstrated below:

Investment Type Percentage of

Allocation (%

of

total portfolio)

Total portfolio of

the Mutual Fund

scheme (Rs. In

crores)

Investors

portfolio

allocation

(Rs.)

EQUITY: 57% 57 57000

State Bank of India 15% 15 15000

Infosys Technologies 12% 12 12000

ABB 10% 10 10000

Reliance Industries 9% 9 9000

MICO 7% 7 7000

Tata Power 4% 4 4000

DEBT: 43% 43 43000

Govt. Securities 20% 20 20000

Company Debentures 10% 10 10000

Institution Bonds 9% 9 9000

Money Market 4% 4 4000

Total 100% 100 100000

Thus Asset Allocation is allocating your investments in to different investment optionsdepending on your risk profile and return expectations.


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DIVERSIFICATION

Diversification is spreading your investment amount over a larger number of

investments in order to reduce risk. For instance, if you have Rs.10,000 to invest in

Information Technology (IT) stocks, this amount will only buy you a handful of stocks ofperhaps one or two companies. A fall in the market price of any of these company stocks will

significantly erode your investment amount instead it makes sense to invest in an IT sector

mutual fund scheme so that your Rs.10,000 is spread across a larger number of stocks thereby

reducing your risk.

PROFESSIONALS AT WORK

Few investors have the time or expertise to manage their personal investments every day, to

efficiently reinvest interest or dividend income, or to investigate the thousands of

securities available in the financial markets. Fund managers are professionals andexperienced in tracking the finance markets, having access to extensive research and

market information, which enables them to decide which securities to buy and sell for

the fund. For an individual investor like you, this professionalism is built in when you

invest in the Mutual Fund.

REDUCTION OF TRANSACTION COSTS

While investing directly in securities, all the costs of investing such as brokerage, custodial

services etc. Borne by you are at the highest rates due to small transaction sizes. However,

when going through a fund, you have the benefit of economies of scale; the fund pays lessercosts because of larger volumes, a benefit passed on to its investors like you.

EASY ACCESS TO YOUR MONEY

This is one of the most important benefits of a Mutual Fund. Often you hold shares or bonds

that you cannot directly, easily and quickly sell. In such situations, it could take several days

or even longer before you are able to liquidate his Mutual Fund investment by selling the

units to the fund itself and receive his money within 3 working days.

TRANSPARENCYThe investor gets regular information on the value of his investment in addition to disclosure

on the specific investments made by the fund, the proportion invested in each class of assets

and the fund managers investment strategy and outlook.

SAVING TAXES

Tax saving schemes of Mutual Funds offer investor a tax rebate under section 88 of the

Income Tax Act. Under this section, an investor can invest up to Rs.10,000 per Financial year

in a tax saving scheme. The rate of rebate under this section depends on the investors totalincome.


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INVESTING IN STOCK MARKET INDEX

Index schemes of mutual funds give you the opportunity of investing in scrips that make up a

particular index in the same proportion of weightage that these scrips have in the index.

Thus, the return on your investment mirrors the movement of the index.

INVESTING IN GOVERNMENT SECURITIES

Gilt and Money Market Schemes of Mutual Funds also give you the opportunity to invest in

Government Securities and Money Markets (including the inter banking call money

market).

WELL-REGULATED INDUSTRY

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.

CONVENIENCE AND FLEXIBILITY

Mutual Funds offer their investors a number of facilities such as inter-fund transfers, online

checking of holding status etc, which direct investments dont offer.


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DRAWBACKS OF INVESTING TRHOURGH MUTUAL

FUNDS :-

NO GUARANTEES:No investment is risk free. If the entire stock market declines in value, the value of mutual

fund shares will go down as well, no matter how balanced the portfolio. Investors

encounter fewer risks when they invest in mutual funds than when they buy and sell

stocks on their own. However, anyone who invests through a mutual fund runs the risk of

losing money.

FEES AND COMMISSIONS:All funds charge administrative fees to cover their day-to-day expenses. Some funds alsocharge sales commissions or "loads" to compensate brokers, financial consultants, or

financial planners. Even if you don't use a broker or other financial adviser, you will pay

a sales commission if you buy shares in a Load Fund.

TAXES:During a typical year, most actively managed mutual funds sell anywhere from 20 to 70

percent of the securities in their portfolios. If your fund makes a profit on its sales, you

will pay taxes on the income you receive, even if you reinvest the money you made.

MANAGEMENT RISK:When you invest in a mutual fund, you depend on the fund's manager to make the right

decisions regarding the fund's portfolio. If the manager does not perform as well as you

had hoped, you might not make as much money on your investment as you expected. Of

course, if you invest in Index Funds, you forego management risk, because these funds do

not employ managers.

In spite of the drawbacks, the advantages win over these drawbacks. We can

clearly see by the growth of the Mutual fund Industry. Some facts can prove the statement

that why are the Mutual fund Industry is growing tremendously.


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RESEARCH :-

It refers to the systematic method of a definite problem ,formulating a hypothesis,collecting the data ,analyzing the data , & reaching to certain conclusions towards the

concerned problem.

RESEARCH METHODOLOGY

It refers to all those methods that are used for conduction of research which systematicallysolve the research problem.

The Methodology involves randomly selecting Open-Ended equity schemes of different fund

houses of the country. The data collected for this project is basically from two sources,

they are:-

1. Primary sources: The monthly fact sheets of different fund houses and research reports

from banks.

2. Secondary sources: Collection of data from Internet and Book.

SCOPE:

The study here has been limited to analyse open-ended equity Growth schemes of

different Asset Management Companies namely Kotak Mahindra Mutual Fund,

Reliance Mutual Fund, HDFC Mutual Fund, Franklin Templeton Mutual Fund, each

scheme like

1. Kotak Opportunities fund.

2. Reliance Equity Opportunities fund.

3. Franklin India Flexi fund.

4. HDFC Core & satellite fund.

is analysed according to its performance against the other, based on factors like Sharpes

Ratio, Treynors Ratio, (Beta) Co-efficient, Returns.


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NEED OF THE STUDY:

The projects idea is to project Mutual Fund as a better avenue for investment on along-term or short-term basis. Mutual Fund is a productive package for a lay-investor with

limited finances, this project creates an awareness that the Mutual Fund is aworthy investment practice. Mutual Fund is a globally proven instrument. Mutual

Funds are Unit Trust as it is called in some parts of the world has a longand successful history, of late Mutual Funds have become a hot favorite of millions of

people all over the world.

The driving force of Mutual Funds is the safety of the principal guaranteed, plus the addedadvantage of capital appreciation together with the income earned in the form of interest or

dividend. The various schemes of Mutual Funds provide the investor with a wide range of

investment options according to his risk bearing capacities and interest besides; they also give

handy return to the investor. Mutual Funds offers an investor to invest even a small amount

of money, each Mutual Fund has a defined investment objective and strategy. Mutual

Funds schemes are managed by respective asset managed companies sponsored by

financial institutions, banks, private companies or international firms. A Mutual Fund is

the ideal investment vehicle for todays complex and modern financial scenario.

The study is basically made to analyze the various open-ended equity schemes of

different Asset Management Companies to highlight the diversity of investment that

Mutual Fund offer. Thus, through the study one would understand how a common man could

fruitfully convert a pittance into great penny by wisely investing into the right schemeaccording to his risk taking abilities.

LIMITATIONS OF THE STUDY

1. The study is limited only to the analysis of different schemes and its suitability to different

investors according to their risk-taking ability.

2. The study is based on secondary data available from monthly fact sheets, websites and

other books, as primary data was not accessible.

3. The study is limited by the detailed study of various schemes of Four Asset Management

Company.


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OBJECTIVES:

1.To project Mutual Fund as the productive avenue for investing activities.

2. To show the wide range of investment options available in Mutual Funds byexplaining its various schemes.

3.To compare the schemes based on Sharpes ratio, Treynors ratio, Co-efficient,Returns and show which scheme is best for the investor based on his risk profile.

4. To help an investor make a right choice of investment, while considering the inherent

risk factors.

5. To understand the recent trends in Mutual Funds world.

The comparison between these schemes is made based on the followingfactors

A) Sharpes Ratio

B) Treynors Ratio

C) (Beta) co-efficient.

D) Returns

A) The Sharpes Measure :-

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

ratio of returns generated by the fund over and above risk free rate of return and the total risk

associated with it. According to Sharpe, it is the total risk of the fund that the investors

are concerned about. So, the model evaluates funds on the basis of reward per unit of

total risk. Symbolically, it can be written as:

Sharpe Index (Si) = (Ri - Rf)/Si

Where,Si is Standard Deviation of the fund.

While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund,

a low and negative Sharpe Ratio is an indication of unfavorable performance.


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B) The Treynor Measure:-

Developed by Jack Treynor, this performance measure evaluates funds on the basis of

Treynor's Index This Index is a ratio of return generated by the fund over and above risk free

rate oreturn (generally taken to be the return on securities backed by the government, as there

is no credit risk associated), during a given period and systematic risk associated with it

(beta). Symbolically, it can be represented as: Treynor's Index (Ti) = (Ri - Rf)/Bi.

Where,


Rf is risk free rate of return,

and Bi is beta of the fund.

All risk-averse investors would like to maximize this value. While a high and positive

Treynor's Index shows a superior risk-adjusted performance of a fund, a low

and negative Treynor's Index is an indication of unfavorable performance.

C) (Beta) Co-efficient:-

Systematic risk is measured in terms of Beta, which represents fluctuations in the NAV of the

fund vis--vis market. The more responsive the NAV of a Mutual Fund is to the changes in

the market; higher will be its beta. Beta is calculated by relating the returns on a Mutual

Fund with the returns in the market. While unsystematic risk can be diversified

through investments in a number of instruments, systematic risk cannot. By using using the

risk return relationship, we try to assess the competitive strength of the Mutual

Funds vis--vis one another in a better way.

(Beta) is calculated as :-

() ()()()()


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Note: The all data used in research is period up to February 2011 .

KOTAK OPPORTUNITIES FUND Kotak opportunities is a open-ended equity Growth scheme.

Kotakopportunities is a diversified aggressive equity scheme The fund has portfolio turnover ratio.

The fund manager is optimistic on the markets in the long term and expects good returnsfrom the same.

The fund manager is of the opinion that the market may not fall due to the abundentliquidity in the system.However the fund managers sees high oil prices a big concern in the

global markets.

The fund has invested into equities to the tune of 94.45% of the total portfolio.

Fund Manager: Mr. Krishna Sanghuvi & Mr. Pankaj Tripathi.

OBJECTIVE:-

To generate capital appreciation from a diversified portfolio of equity and equity related

securities Kotak Opportunities is a diversified equity scheme, with a flexible investing style.

It will invest in sectors, which our Fund Manager believes would outperform othersin the

short to medium-term. Kotak Opportunities speciality lies in giving the Fund Managerflexibility to act based on his views on the market; and in allowing him to invest higher

concentrations in sectors he believes will outperform others.As markets evolve and grow,

new opportunities for growth keep emerging. Kotak Opportunities would endeavour to

capture these opportunities to generate wealth for its investors.


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KOTAK OPPORTUNITIES FUND PERFORMANCE:-

YEAR Rp Rm Rf (Rm

Rf)

(Rp

Rf) XY X-

X Y D

LAST 6

MONTHS

-2.42 2.84 6.99 -8.12 -9.41 65.93 76.41 -8.52 72.59

LAST 1

YEAR

9.16 13.11 6.99 -0.53 2.17 0.28 -1.15 -0.93 0.87

LAST 3

YEAR

-0.95 30.1 6.99 -6.41 -7.94 41.09 50.90 -6.82 46.38

LAST 5YEAR

15.10 11.33 6.99 4.34 8.11 18.84 35.20 3.94 15.52

Since

Inception

26.29 19.73 6.99 12.74 19.3 162.31 245.88 12.34 152.28

TOTAL 2.02 12.23 288.45 407.24 0 287.64

Where,

Rp - Portfolio Return- Kotak opportunities

Rm - Market Return-Funds bench mark- S& P CNX 500Rf - Risk free rate of return.

CALCULATION OF ARTHMETIC MEAN :-= X / N

= 2.02/ 5

= 0.404

CALCULATION OF STANDARD DEVIATION ( ) :-

= ( ) / N

= 287.64/5

= 57.52

= 7.58


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CALCULATION OF BETA CO-EFFICIENT:-

=()()()

()()

=()()()

()()

=

=

= 1.40

CALCULATION OF SHARPES RATIO:-

= Rp-Rf /

=12.23 /7.88

= 1.61

= 0.016

CALCULATION OF TREYNORS RATIO:-

= Rp-Rf /

= 12.23/1.40

= 8.74/100

=0.0874


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GRAPH SHOWING KOTAK OPPORTUNITIES FUND

PERFORMANCE:-

Interpretation:-

Last 6 Month : It reveals that Kotak Opportunities Returns are -2.42 As compare to Funds

Benchmark Returns are 2.84, and The Risk Free Rate is average of last three months t-

bill rate.it is 6.99.fund give not good return.

Last 1 year : It reveals that Kotak Opportunities Returns are 9.16 As compare to Funds


bill rate.it is 6.99. fund give good market return.

Last 3 years : It reveals that Kotak Opportunities Returns are -0.95 As compare to Funds


bill rate.it is 6.99.fund market return is very high but fund return is very law.

Last 5 years : It reveals that Kotak Opportunities Returns are 15.1 As compare to Funds

Benchmark Returns are 11.33 and The Risk Free Rate is average of last three months t-

bill rate.it is 6.99.fund give good performance.

Since Inception: It reveals that Kotak Opportunities Returns are 26.29 As compare to

Funds Benchmark Returns are 19.73 and The Risk Free Rate is average of last three

months t-bill rate.it is 6.99.fund give high fund return.

-2.42

9.16

-0.95

15.1

26.29

2.84

13.11

30.1

11.33

19.73

6.99 6.99 6.99 6.99 6.99

R

E

T

U

R

E

n

PERIOD

Rp Rm Rf


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HDFC CORE& SATELLITE FUND

HDFC Core and Satellite Fund is an Open-Ended Equity Scheme.

HDFC Core and Satellite Fund is an diversified equity scheme

The Scheme may seek investment opportunity in the ADR / GDR / Foreign Equity and DebtSecurities, in accordance with guidelines stipulated in this regard by SEBI and RBI from time

to time.

The net assets of the Scheme will be invested primarily in equity and equity relatedinstruments in a portfolio comprising of 'Core' group of companies and 'Satellite' group of

companies.

The 'Satellite' group will comprise of predominantly small-mid cap companies that offerhigher potential returns but at the same time carry higher risk.

Objective :-

The objective of the scheme is to generate capital appreciation through equity investment in

companies whose shares are quoting at prices below their true value. The Core groupcompanies aim to provide stability to the portfolio and lay the foundation to build a large

score. The Satellite group companies, though riskier than the Core group, aims to buildon this foundation and pile up a match-winning total at a faster run rate. Both these groups

come together in the HDFC Core & Satellite Fund to create a team with a good blend of

defense and aggressive stroke play.


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HDFC CORE& SATELLITE FUND PERFORMANCE:-

YEAR Rp Rm Rf (Rm

Rf)

(Rp

Rf) XY X-

X Y DLAST 6MONTHS

2.01 -0.5 6.99 -7.49 -4.98 56.10 37.30 -14.01 196.28

LAST 1

YEAR

38.42 20.79 6.99 13.8 31.43 190.44 433.73 7.28 52.998

LAST 3

YEAR

12.23 6.08 6.99 -0.91 5.24 0.83 -4.77 -7.43 55.20

LAST 5

YEAR

20.31 18.16 6.99 11.17 13.32 124.77 148.78 4.65 21.62

Since

Inception

27.48 23.01 6.99 16.02 20.49 256.64 328.25 9.5 90.25

TOTAL 32.59 65.5 628.78 943.29 0 416.35

Where,

Rp - Portfolio Return-HDFC core & Satellite Fund

Rm - Market Return-Funds benchmark-BSE-200Rf - Risk free rate of return.

CALCULATION OF ARTHMETIC MEAN:-

= X / N

= 32.59/5

= 6.52

CALCULATION OF STANDARD DEVIATION () :-

= ( ) / N

= 416.35/5

= 83.27

=9.125


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CALCULATION OF BETA CO-EFFICIENT:-

=()()()

()()

=

()()()

()()

=

=

= 1.24

CALCULATION OF SHARPES RATIO:-

= Rp-Rf/

= 65.5/9.125

= 7.18/100

= 0.0718

CALCULATION OF TREYNORS RATIO :-

= Rp-Rf/= 65.5/1.24

= 52.82/100

=0.53


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GRAPH SHOWING HDFC CORE& SATELLITE FUND

PERFORMANCE:-

Interpretation:

Last 6 Month : It reveals that HDFC Core & Satellite Fund Returns are 2.01 as compare

to Funds Benchmark Returns are -0.5, and The Risk Free Rate is average of last three

months t-bill rate.it is 6.99.

Last 1 years : It reveals that HDFC Core & Satellite Fund Returns are 38.42 as compare

to Funds Benchmark Returns are 20.79 and The Risk Free Rate is average of last three

months t-bill rate.it is 6.99.hera fund give high return.

Last 3 years : It reveals that HDFC Core & Satellite Fund Returns are 12.23as compare to

Funds Benchmark Returns are 6.08 and The Risk Free Rate is average of last three months

t-bill rate.it is 6.99.hear fund return is decrease compare to the 1 year.

Last 5 years : It reveals that HDFC Core & Satellite Fund Return are 20.31,as compare to

Funds Benchmark Returns are 18.16 and The Risk Free Rate is average of last three

months t-bill rate.it is 6.99.hear fund give good return.

Since Inception : It reveals that HDFC Core & Satellite Fund Returns are 27.48as compare

to Funds Benchmark Returns are 23.01 and The Risk Free Rate is average of last three

months t-bill rate.it is 6.99.hear fund give high market return.

2.01

38.42

12.23

20.31

27.48

-0.5

20.79

6.08

18.16

23.01

6.99 6.99 6.99 6.99 6.99

R

e

t

u

r

n

Period

Rp Rm Rf


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RELIANCE EQUITY OPPORTUNITIES FUND:

Reliance Equity Opportunities Fund is an Open-Ended Equity Scheme.

Reliance Equity Opportunities Fund is an aggressive diversified equity scheme

Reliance Equity Opportunities is to seek to generate capital appreciation and provide longterm growth opportunities by investing in a portfolio constituted of equity

securities and equity related securities.

The fund has a high portfolio turnover ratio.

It has Instrument type such as Equity & Equity related Instruments and Debt &Money Market Instruments.

Investment Objective:

The primary investment objective of the scheme is to seek to generate capital appreciation

& provide long-term growth opportunities by investing in a portfolio constituted of equity

securities & equity related securities and the secondary objective is to generate

consistent returns by investing in debt and money market securities.


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RELIANCE EQUITY OPPORTUNITIES FUND PERFORMANCE:-

YEAR Rp Rm Rf (Rm

Rf)

(Rp

Rf) XY X-

X Y D

LAST 6

YEAR

-0.27 0.13 6.99 -6.86 -7.26 47.06 49.80 -12.26 155.25

LAST 1

YEAR

53.80 17.05 6.99 10.86 46.81 101.20 470.91 4.46 19.90

LAST 3

YEAR

15.33 7.00 6.99 0.01 8.34 0.0001 0.083 -5.59 31.24

LAST 5

YEAR

23.49 18.12 6.99 11.13 16.5 123.88 183.65 5.53 30.58

Since

Inception

26.58 20.63 6.99 13.64 19.59 186.05 267.21 8.04 64.64

TOTAL 27.98 83.98 458.19 971.65 0 301.61

Where,

Rp - Portfolio Return-Reliance equity opportunities fund

Rm - Market Return-Funds Benchmark BSE-500Rf - Risk free rate of return.

CALCULATION OF ARTHMETIC MEAN:-

= X / N

= 27.98/ 5

= 5.60

CALCULATION OF STANDARD DEVIATION () :-

= ( ) / N

= 301.61/5

= 60.322


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=7.77

CALCULATION OF BETA CO-EFFICIENT ;-

=()()()

()()

=()()()

()()

=

=

= 1.66

CALCULATION OF SHARPES RATIO :-

= Rp-Rf/

= 83.98/ 7.77

= 10.81/100

= 0.108

CALCULATION OF TREYNORS RATIO :-

= Rp-Rf/

= 83.98/1.66

= 50.59/100

= 0.51


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GRAPH SHOWING RELIANCE EQUITY OPPORTUNITIES FUND

PERFORMANCE:-

Interpretation:-

Last 6 Month : It reveals that Reliance Equity Opportunities Fund Returns are -0.27as

compare to Funds Benchmark Returns are 0.13, and The Risk Free Rate is average of last

three months t-bill rate.it is 6.99. hear we have see that the fund not give good return.

Last 1 years : It reveals that Reliance Equity Opportunities Fund Returns are 53.8 as

compare to Funds Benchmark Returns are 17.05, and The Risk Free Rate is average oflast three months t-bill rate .it is 6.99. hear the fund give high fund return.

Last 3 years It reveals that Reliance Equity Opportunities Fund Returns are 15.33 as

compare to Funds Benchmark Returns are 7.00 and The Risk Free Rate is average of last

three months t-bill rate.it is 6.99.hear fund return is decrease compare to one year.

Last 5 years It reveals that Reliance Equity Opportunities Fund Returns are 23.49 as


three months t-bill rate.it is 6.99.hear fund give both return is good.

-0.27

53.8

15.33

23.49 26.58

0.13

17.05

7

18.1220.63

6.99 6.99 6.99 6.99 6.99

R

e

t

u

r

n

Period

Rp Rm Rf


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Since Inception :It reveals that Reliance Equity Opportunities Fund Returns are 26.58 as

compare to Funds Benchmark returns are 20.63, and The Risk Free Rate is average of last

three months t-bill rate.it is 6.99.hear market reurn is high.

FRANKLIN INDIA FLEXI CAP EQUITY FUND Franklin india flexi cap Fund is an Open-Ended Equity Scheme.

Franklin india flexi cap Fund is an aggressive diversified equity scheme

It is an investment avenue that has the potential to provide steady returns and capitalappreciation over a five-year period through a mix of fixed income and equity instruments.

It has a investment team has a rich experience of investing in both equity and fixed incomeinstrument that has translated in to a good investment performance from its hybrid scheme

HSBC India opportunities Fund

HSBC India Opportunities Fund is an Open-Ended Equity Scheme.

It is a scheme seeking long term capital growth through investments across all marketcapitalizations, including small, mid and large cap stocks.

The investment is to seek aggressive growth by focussing on mid cap companies in additionto investments in large cap stocks.

The fund aims to be predominantly invested in related equity and equity securities.

Investment objective:

Stocks of companies are usually categorized as large-cap, midcap, and small-cap depending

on their market capitalization. History has demonstrated that these categories tend to perform

differently through economic and market cycles. For example, mid or small cap stocks could

move up sharply during a certain time period while large cap stocks remain range bound and

vice versa. On the other hand, large-cap stocks tend to be less volatile than mid & small-cap

stocks on account of factors such as size, market leadership..etc. Moreover, such periods ofout performance are typically followed by a consolidation phase and a possible reversal of the

situation. In order to derive optimal returns from the stock markets, investments need to be

diversified and have flexibility to shift allocations across market caps.

Designed to help you achieve this with a single investment is Franklin India Flexi Cap Fund

(FIFCF). An open-end diversified equity fund, FIFCF seeks to provide medium to long-term

capital appreciation by investing in stocks across the entire market capitalization range.


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FRANKLIN INDIA FLEXI CAP FUND PEFORMANCE:-

YEAR Rp Rm Rf (Rm

Rf)

(Rp

Rf) XY X-

X Y D

LAST 6

MONTHS

-5.24 -6.39 6.99 -13.28 -12.23 176.36 162.41 -10.42 108.58

LAST 1

YEAR

10.60 2.90 6.99 -4.09 3.61 16.73 -14.77 -1.23 1.51

LAST 3

YEAR

5.28 -0.88 6.99 -7.87 -1.71 61.94 13.46 -5.01 25.10

LAST 5

YEAR

12.73 9.81 6.99 2.82 5.74 7.95 16.19 5.68 32.26

Since

Inception

20.22 15.12 6.99 8.13 13.23 66.07 107.56 10.99 120.78

TOTAL -14.29 8.64 329.05 284.85 0 288.23

Where,

Rp - Portfolio Return-Franklin flexi cap fund

Rm - Market Return-Funds Benchmarks S&P CNX-500Rf - Risk free rate of return.

CALCULATION OF ARTHMETIC MEAN:-= X / N

= -14.29/ 5

= -2.86

CALCULATION OF STANDARD DEVIATION () :-= ( ) / N

= 288.23/5

= 57.646

= 7.59


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CALCULATION OF BETA CO-EFFICIENT;-= ()()()

()()

=()()()

()()

=

=

= 1.07

CALCULATION OF SHARPES RATIO:-= Rp-Rf/

= 8.64/7.59

= 1.14/100

= 0.0114

CALCULATION OF TREYNORS RATIO :-= Rp-Rf/

= 8.64/1.07

= 8.07/100

= 0.08


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GRAPH SHOWING FRANKLIN INDIA FLEXI CAP FUND

PERFORMANCE:-

Interpretation:

Last 6 Month : It reveals that Franklin India flexi Cap Fund Returns are -5.24 as compare

to Funds Benchmark Returns are -6.39 and The Risk Free Rate is average of last

three months t-bill rate.it is 6.99.

Last 1 years : It reveals that Franklin India flexi Cap Fund Returns are 10.6 as


three months t-bill rate.it is 6.99. so that we have see htat hear return is enter in positive

finger so that fund give return on long term.


compare to Funds Benchmark Returns are -0.58 and The Risk Free Rate is average of

last three months t-bill rate.it is 6.99.hear we have seen that compare to fund return market

return is very law.



three months t-bill rate.it is 6.99. hear we have see that fund give good return in this period.

Since Inception : It reveals that Franklin India flexi Cap Fund Returns are 20.22 as

compare to Funds Benchmark Returns are 15.12 and The Risk Free Rate is average of

last three months t-bill rate.it is 6.99.compare to other fund this return is very law.

-5.24

10.6

5.28

12.73

20.22

-6.39

2.9

-0.88

9.81

15.12

6.99 6.99 6.99 6.99 6.99

R

e

t

u

r

n

Period

Rp Rm Rf


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OBSERVATIONS

Observations are made from the data analysis.The following observations are drawn from the

analysis of scheme

According to observations the reliance equity fund is more suitable for investment itgives higher return compare to other fund. It risk also high compare to the other fund.

So that investor get higher return on high risk.

Hear the reliance give high 6 month return. The hdfc fund also give good return.Kotak give very law return.

Fraklin india risk is law according to the above data but their return is also law.

KOTAKOPPORTUNITIES

FUND

FRANKLININDIA

FLEXI

CAP FUND

RELIANCEEQUITY

OPPORTUNITIEs

FUND

HDFCCORE &

SATELLITE

FUND

1 Year

returns

9.16 10.60 53.80 38.42

Sharpes Ratio 0.016 0.0114 0.108 0.0718

Treynors

Ratio

0.087 0.08 0.51 0.53

Co-efficient () 1.40 1.07 1.66 1.24

Std.Deviation 7.58 7.359 7.77 9.125


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The Asset Management Company must design the portfolio in such a way, to

increase the returns.

The Asset Management Company must design the portfolio in such a way, to lessen the riskthat is common in the market.

The Asset Management Company must dedicate itself, because it motivates theinvestors and potential investors to invest in Mutual Funds.

The Asset Management Company must manage the Fund efficiently and withdedication to earn the goodwill of the public.

The Asset Management Company must make the most advantageous use of print andelectronic media in order to motivate the investors and potential investors to invest in

Mutual Funds


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After interpeting the above data the following conclusions have been made

Kotak Opportunities Fund:

It is a diversified aggressive equity fund.

It is a open-ended equity scheme

As the returns are lessin Kotak Opportunities compare to other Four AMCs

It is suitable for investors looking for medium risk and moderate returns with in a timeperiod of 1-5 years.

Franklin India Flexi Cap Fund:

It is a diversified equity fund.


Since the ratio is law it implies the risk is law but return is also law. In this fund investorwho want bear less risk they invest in this fund.

In Franklin the returns are less compare to other Three AMCs (HDFC,RELIANCE, kotak )

Reliance Equity Opportunities Growth Fund:



Since the ratio is high it implies the risk is high. in this fund investor get high returnaccordingly high risk.

In Reliance Equity Opportunities the returns are high compare to other AMCs

HDFC Core & Satellite Fund:



In HDFC the returns are goodcompare to other AMCs

It is a value based fund

It is a high risky fund. Investor also get good return in this fund.


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BIBLIOGRAPHY

Mutual Funds Primer By ECONOMIC TIMES

INVSETMENT MANGEMENT by V.K BHALLA

Web-sites :-

www.amfiindia.com

www.kotakmutual.com

www.reliancemutual.com

www .hdfcfund.com

www fraklinindia.comS
http://www.reliancemutual.com/http://www.reliancemutual.com/http://www.reliancemutual.com/


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