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AN ANALYTICAL STUDY ON INVESTMENT PERFORMANCE OF EQUITY LINKED SAVINGS SCHEME

Dissertation submitted in partial fulfillment of the requirements for the Award of the degree of MASTER OF BUSINESS ADMINISTRATION Of BANGALORE UNIVERSITY

By Lovin Easo Varkey Reg. No. 11JJCMA049 Under the guidance of Prof. Aloysius Edward J

Department of Management Studies KRISTU JAYANTI COLLEGE OF MANAGEMENT AND TECHNOLOGY


K.Narayanapura Kothanur post Bangalore - 560077

CERTIFICATE

It is certified that the Project entitled A study on investment performance of Equity Linked Savings Schemes is an original study carried out by Lovin Easo Varkey; 11JJCMA049 is being submitted in partial fulfillment for the Award of the Degree of Master of Business Administration of Bangalore University. The report has not been submitted earlier to any University / Institution for the fulfillment of the requirement of a course of study.

Prof. Aloysius Edward Research Guide

Dr. Justin Nelson Michael Head Dept. of Management Studies

Rev. Fr. Sebastian T.A. Principal

Bangalore Date:

DECLARATION

I, Lovin Easo Varkey, hereby declare that the Project entitled A study on investment performance of Equity Linked Savings Scheme s is an original study carried out by me. The Report does not form a part of any other work submitted to any University / Institution for the award of any degree, diploma, associateship or other similar title.

Lovin Easo Varkey Bangalore Date: 11JJCMA049

ACKNOWLEDGEMENTS

At the successful completion of my project I would like to extend my gratitude to all those, without whose valuable guidance and support it would have not been possible. I would first thank God Almighty for giving me the wisdom and strength to undertake and complete this project. With all sincerity and respect, I would like to express my gratitude to Fr. Sebastian T. A., Principal, Kristu Jayanti College, for giving me an opportunity to have a platform to this project. I also owe my gratitude to my internal guide Prof. Aloysius Edward, Department of Management, Kristu Jayanti College of Management & Technology, for his support and assistance for the completion of this project. I thank all the faculty of Department of Management Studies whose contribution has helped in completion of study. I like to extent m thanks to the Librarian of Kristu Jayanti College who helped in locating various books and journal which was necessary for the completion of this study. I affirm my renewed thanks to everyone who one way or the other helped me to complete this project .I deeply acknowledge every service with grateful attitude.

LOVIN EASO VARKEY 11JJCMA049

TABLE OF CONTENTS

CHAPTER NO.

PARTICULARS

PAGE NO

List of Tables List of Figures Abstract 1 2 3 4 5 Introduction Review of Literature & Research Design Profiles Results, Analysis & Discussion Findings, Conclusion And Recommendation Annexure

i iv v 1 18 25 61 109

LIST OF TABLES

Table No. 1.1 1.2

Description Tax Saving Schemes Comparison Of ELSS with other Tax Saving Instruments List Of Top 10 Performing ELSS Funds Based On Performance List Of Top 10 Performing ELSS Funds Based On Return(5 years) List Of Mutual Funds In India Investment Pattern SBI Magnum Tax Gain Quarterly Return SBI Magnum Tax Gain Return V/S The Index Return Birla Sun Life Tax Relief 96 Quarterly Return Birla Sun Life Tax Relief 96 V/S Index Return HDFC Tax Saver Quarterly Return HDFC Taxsaver Return V/S The Index Return ICICI Prudential Tax Plan Quarterly Return ICICI Prudential Tax Plan V/S Index Return HDFC Long Term Advantage Quarterly Return HDFC Long Term Advantage V/S Index Return i

PAGE NO. 13 13

1.3

14

1.4

15

3.1 3.2 4.1 4.2

28 39 62 63

4.3

65

4.4

66

4.5 4.6

68 69

4.7

71

4.8

72

4.9

74

4.10

75

4.11 4.12 4.13

Birla Sunlife Tax Plan Quarterly Return Birla Sunlife Tax Plan V/S Index Return Principal Personal Tax Saver Quarterly Return Principal Personal Tax Saver V/S Index Return Franklin India Tax Shield Quarterly Return Franklin India Tax Shield V/S Index Return DSP Blackrock Tax Saver Quarterly Return DSP Blackrock Tax Saver V/S The Index Return Tata Tax Savings Fund Quarterly Return Tata Tax Savings Fund V/S The Index Return HSBC Tax Saver Quarterly Return HSBC Tax Saver Equity Quarterly Return BNP Paribas Tax Advantage Plan Gain Quarterly Return BNP Paribas Tax Advantage Plan V/S The Index Return Religare Tax Plan Gain Quarterly Return Religare Tax Plan V/S The Index Return Kotak Tax Saver Quarterly Return Kotak Tax Saver V/S The Index Return ING Tax Saving Fund Quarterly Return ING Tax Saving Fund V/S The Index Return

77 78 80

4.14

81

4.15

83

4.16

84

4.17

86

4.18

87

4.19 4.20

89 90

4.21 4.22 4.23

92 93 95

4.24

96

4.25 4.26 4.27 4.28 4.29 4.30

98 99 101 102 104 105

ii

4.31

Comparative Performance Analysis based on Sharps Ratio Top 5 Schemes Return and its Correlation to Index Return

107

4.32

108

iii

LIST OF FIGURES

Figure No. 1.1 3.1 4.1 4.2

Description

Page No.

Classification of Investments Growth In Assets Under Management Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index

3 28 63 64

4.3 4.4

65 67

4.5 4.6

68 70

4.7 4.8

71 73

4.9 4.10

74 76

4.11 4.12

77 79

4.13 4.14

80 82

4.15 4.16

83 85

iv

Return 4.17 4.18 Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return Comparison of Quarterly Return Comparison of Scheme Return And Index Return 86 88

4.19 4.20

89 91

4.21 4.22

92 94

4.23 4.24

95 97

4.25 4.26

98 100

4.27 4.28

101 103

4.29 4.30

104 106

ABSTRACT

The objectives of this study are to compare equity-linked saving schemes with other traditional forms of tax saving schemes. To analyze the equity-linked saving scheme picked at random on the basis of risk and return. To understand the level of awareness regarding the mutual funds among the Indian salaried class and the various factors that influence investors to invest in equity linked saving schemes. The methodology conducted for this study is by using Sharpe ratio, standard deviation, beta, multivariate statistical tool was used to cluster the funds into groups based on various parameters and analyzed. The secondary data were collected by visiting various websites of the asset management companies, articles available on the web, investment magazines and facts sheets of the asset management companies. All funds had a step declined in the year 2008 and 2010 because of financial crisis and melt down stock market. The sharps index is at maximum for HSBC Tax Saver Equity with .023 Some Equity Linked Savings Schemes have shown better returns than their respective benchmark index. The beta of Birla Sun Life Tax Relief 96, Principal Personal Tax Saver Kotak Tax Saver, ING Tax Saving Fund suggest that they are highly sensitive be relative to the market as a whole. The beta of SBI Magnum Tax Gain, HDFC Tax Saver, ICICI Prudential Tax Plan, HDFC Long Term Advantage, Birla Sunlife Tax Plan, Franklin India Tax Shield, DSP BlackRock Tax Saver, TATA Tax Savings Fund, HSBC Tax Saver Equity, BNP Paribas Tax Advantage Plan, Religare Tax Plan Gain suggest that they are less sensitive be relative to the market as a whole. The fund chosen by the investor should match the risk appetite of the investor. It is suggested that the equity linked saving scheme should be seriously considered by investors because of the dual advantage of tax saving and high return. Investing in HSBC Tax Saver Equity is the best option in all 15 schemes Keywords NAV- Net Annual Value Scheme Return AMC- Asset Management Company Risk Return

CHAPTER 1 INTRODUCTION

1.1 INTRODUCTION

Investment is the employment of fund with the aim of achieving additional income or growth in value. The essential quality of an investment is that it involves waiting for reward. It involves the commitment of resources which have been saved or put away from current consumption in the hope that since benefit will accrue in future.

Investment is the allocation of monetary resources to assets that are expected to yield some gain or positive return over a given period of time. These assets range from safe investment to risky investments. Investment in this form is called as financial Investments.

Why should one invest? One needs to invest to: Earn return on your idle resources. Generate a specified sum of money for a specific goal in life. Make a provision for an uncertain future.

One of the important reasons why one needs to invest wisely is to meet the cost of inflation. Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of gods or services in the future as it does now or did in the past. The aim of investments should be to provide a return above the inflation rate to ensure that the investment does not decrease in value.

1.2 FACTORS INFLUENCING INVESTMENT Increasing rate of taxation. High interest rate. High rate of inflation.

1.3 TYPES OF INVESTMENTS Short term investment Long term investment

FIGURE 1.1

Classification of investments

SHORT TERM

LONG TERM

Savings Bank Account Money Market or Liquid Funds Fixed Deposits with Banks

Post Office Savings Public Provident Fund Company Fixed Deposits Securities [Shares, Bonds]

India by 2032 will become the third largest economy in the world, as reported by Goldman Sachs in their wealth report. Indias domestic savings as a percentage of its GDP is 28%, one of the forms of investment avenues like gold, fixed deposits, insurance, mutual 3

funds and capital markets. Investments in equities have shown better results and have potential grow in the long run which can be an ideal approach to adjust inflation and provide an opportunity for capital appreciation, provided the investors are high on risk. The majority of Indian investors considerably have a low risk appetite, on an average. The only option left for the investors in the mutual fund industry which has dual advantage of investing in equity and getting goods return with optimum risk.

The Indian mutual fund market is in the process of evolving and the statistics on various parameters like number of customers, types of products, types of channels, and geographical locations along with the projection till 2005.

Equity linked Savings schemes are equity funds floated by mutual funds. They offer a 20 per cent tax rebate on investments upto Rs 10,000 in a given financial year. There is a three year lock-in on investments and there is no assurance on returns. The ELSS funds have to invest more than 80 per cent of their money in equity and related instruments. Returns form ELSS funds tend to fluctuate widely, in line with the performance of the stock markets. Young people should definitely invest in the ELSS funds as they have the ability to take on higher risk. Ideally one should invest in them when the markets are down. These funds are now open all the year round. Therefore, investors can time their investment. The other way of investing in these funds could be a systematic investment, which essentially means investing a small sum regularly (monthly or quarterly). It is one of the popular and good investments available under section 80c. Most people not utilizing the power of mutual funds as the tax savings instrument. If you are comparing with all the other tax saving instruments, ELSS is the one offers you high return. There is risk associated with this investment. One think you have to keep in mind, if you are taking the risk, return will be higher. In our life, every where there is some kind of risk exists. An equity-linked saving scheme (ELSS) is a great investment option that offers the twin benefits of tax saving and capital gains. Earlier, investors had to spread their investments across different instruments such as PPF, ELSS, NSC and infrastructure bonds. But now, its possible to invest the entire limit of Rs 100,000 available under Sec 80C in ELSS. According

to the new Income Tax Act, Sec 80C investments in ELSS are allowed as deduction from the total income, up to maximum Rs100, 000 in a financial year. ELSS schemes have a three-year lock-in period, which works to the investors benefit as the fund manager can have a portfolio of stocks that can out-perform over a period of time.

1.4 Before investing in ELSS

Investment in an ELSS helps get a tax benefit to a maximum limit of Rs 1 lakh under Section 80C of the Income Tax Act. Various other options like contribution to provident fund, contribution to public provident fund, insurance premium paid, etc also get tax benefit under Section 80C of the I-T Act. Investments made in ELSS are locked-in for a period of three years and each scheme has a different portfolio.

LOWER COST

Mutual fund investments have a cost attached to them because every scheme incurs some cost while managing your money. This cost is charged annually and eats into the returns on your investments. An equity-oriented scheme attracts a fund management fee, also called as expense ratio. This cost is adjusted in the net asset value (NAV) of the scheme and not charged separately. Therefore, the investor does not realize that he is pays this amount to the asset management company. The expense ratio is a percentage of the scheme's assets under management. For example, if scheme returns 10 per cent and its expense ratio is 1 per cent, it means, the scheme earned 11 per cent of which 1 per cent went towards the various expenses. According to the data from mutual rating agency, Value Research, 14 schemes had an expense ratio of 2.5 per cent and 19 others had a lower expense ratio. Of the top 10 ELSS schemes seven had a ratio lower than 2.5 per cent, while the remaining three had a ratio of 2.5 per cent, in the last one year ending January 27. This kind of lower cost is good for a long-term investor who stays invested in the scheme for several years.

OLDER SCHEMES

Many ELSS have been launched till now, but, since fund houses usually do not launch multiple schemes with similar features, the total number of ELSS is limited. And, the presence of a large number of schemes with a long performance record helps investors research enough for selecting the right scheme. Thus, it is not surprising that most of the top performing schemes, even in the past one year, are those that have been in the market for several years. In the last one year, six ELSS have returned more than 100 per cent. Last ELSS scheme was launch in October 2005 and the first scheme came to the market in March 1993. Investors need to look at each ELSS portfolio. Moreover, when time-tested schemes perform well, investors are more confident about putting their money.

LOW PERFORMANCE DIFFERENTIAL

If your scheme selection goes wrong, there are chances of witnessing a big difference in the return you receive as schemes differ in their performance from one another. This situation can be illustrated better when it involves the selection of a equity diversified scheme. In this case, a wrong choice can lead to a large difference in overall performance and hence the returns received by the investor. However, this does not hold true for ELSS. As the variance is comparatively less in their case. In the last one year, the best performing scheme returned 127 per cent and the worst performer returned 63 per cent, as on January 27. In comparison, the difference between the worst and best performing equity diversified fund was a whopping 138 per cent When compared over a period of two or three years, returns given by the best and the worst performing ELSS were 24 per cent and 22 per cent per annum, respectively.

This is less than half, when the best and the worst performing equity diversified schemes are compared. The difference stood at 57 per cent and 46 per cent per annum, respectively. The absolute difference will be far higher, as the figures are compounded over different time periods. This helps investors select a good ELSS scheme before investing.

1.5 How to choose this scheme


Short term performances of the fund can be ignored as its negligible and concentrate on the brand and track record for over a period. Consistency in performance of fund is the key. Many times certain funds become hit over a period but the quality deteriorates over a period of time. Dont go just by the brand also as there have been times when investors have been doomed by just going by brand name and have lost their capital.

1.6 Why should one invest ELSS?


Lock-in for three years helps in staying invested over a long period. Investments in equity over a long-term delivers better returns. Tax savings and high returns. Through SIPs, one can invest small amount of Rs 500 in ELSS every month.

There are different types of mutual funds available in the market. Based on the style of investing the 3 well known types of mutual funds are: 1. Equity Mutual Funds: These mutual funds invest a major portion of their corpus in equity shares and equity related instruments. The aim of this type of mutual fund is to generate long term capital appreciation for the investor. This type of mutual fund is suited to those investors who are looking for high returns and have a high appetite for risk.

2. Debt Mutual Funds: These mutual funds invest a major portion of their corpus in debt instruments like Government Bonds and Securities, Corporate Bonds, Fixed Deposits, Money Market Instruments etc. The aim of this type of mutual fund is to generate regular income for the investor. This type of mutual fund is suited for those 7

investors who are looking to generate regular income for themselves without taking much risk.

3. Balanced Mutual Funds: These mutual funds invest a major portion of their corpus in a mix of equities and debt instruments. The distribution may be in the ratio of Equity 70 and Debt 30 or 50:50 or any other ratio as specified by the mutual fund. The equity component aims at generating long term appreciation and the debt component aims at providing stability and generating regular income.

Equity Linked Saving Scheme (ELSS) is also a type of mutual fund and falls under the Equity Mutual Fund category. An ELSS mutual fund invests major portion of its corpus into equity and equity related instruments. But there are some distinct features which makes ELSS plans different from other equity mutual funds.

1.7 Difference between ELSS Plans and Other Mutual Funds There are 2 major features that make ELSS plans different from other mutual funds: 1. Income Tax Benefit: Investments made in ELSS plans are eligible for deduction from the taxable income under Section 80C of the Income Tax Act. There is no limit for investments in ELSS plans, but investments of upto Rs 1,00,000 qualify for income tax benefits. Investments made in normal mutual funds (other than ELSS plans) do not qualify for income tax deduction. 2. 3 Year Lock-in Period: Investments made in ELSS plans have a lock-in period of 3 years. In case of normal mutual funds this lock-in period is not there. In an ELSS plan every instalment has a lock-in period of 3 years. Example: Let us assume that a person starts investing on a monthly basis from Jan 2009. The lock-in period of the 1 st instalment (Jan 2009) will end in Jan 2012. The lock-in period of the 2nd instalment (Feb 2009) will end in Feb 2012 and so on.

1.8 Features of an ELSS Plan 1. ELSS is an equity linked tax saving investment instrument. 2. Money collected under ELSS plan is mainly invested in equity and equity related instruments. 3. This financial product is more suited to those investors who are willing to take high risk and looking for high returns. 4. There is no upper limit on investments that can be made in ELSS. However investments upto INR 1,00,000 made in ELSS in a financial year qualify for deduction from taxable income under Section 80C of the Income Tax Act. 5. ELSS comes with a 3 year lock-in period. 6. Long term capital gains earned on investments from ELSS are tax free. 7. Also dividends earned from ELSS plan are tax free in the hands of the investor. 8. The other tax saving instrument that comes closest to comparison with ELSS is Unit Linked Insurance Plan (ULIP).

1.9 Benefits of ELSS


Tax Benefits - Deduction under section 80C - No tax on Capital gains - Dividends are tax free in the hands of investor Lock in period (3 years) - Lowest among all tax saving instruments under section 80C - Long enough to minimize market volatility Better Return - Compared to all tax saving instruments under sec 80C

1.10 Options in an ELSS Plan ELSS plans come with 2 options of growth and dividend. 1. Growth Option: If the investor selects growth option, he will not get any income during the tenure of the investment. He will get a lump sum amount at the time of redemption or on maturity. In other words the investor will not get any returns till the time he is holding the instrument and the profit/loss is realized when the securities are sold/transferred. 2. Dividend Options: Under the dividend option the investor has 2 options. Dividends give income tax benefits to the investor. For example let us assume that the investor invests Rs 1 Lakh in an ELSS plan (NAV Rs 10) in the month of April and the ELSS scheme declares a dividend of 25% in the following month in May. The investor will get back Rs 25,000 on his investment of Rs 1 Lakh. So effectively the investor has invested only Rs 75,000 but he gets the income tax benefit on the entire Rs 1 Lakh. So if the investor is falling in the 30% tax bracket, the tax saving of Rs 30,000 on Rs 75,000 (net investment amount as Rs 25000 is received back as dividend) effectively works out to 40% instead of 30%. Also the lock-in period of the Rs 25,000 received as dividend gets reduced from 3 years to 1 month only. Please Note: The above calculation is done assuming the investor falls in the 30% tax b racket and the investor has invested Rs 1, 00,000 and the ELSS scheme declares a dividend of 25% in the subsequent month.

3. Dividend Re-investment Option: If the investor opts for dividend re-investment option, then any dividends declared are re-invested on behalf of the investor. The investor can claim additional tax benefits on the re-invested dividend amount. For example let us assume that the investor has invested Rs 1 Lakh in the ELSS plan.

In the next year the scheme declares a dividend and the investor is entitled to a dividend of Rs 20,000. This dividend is re-invested on behalf of the investor and he gets additional units of the scheme. The investor can claim income tax deduction for this Rs 20,000 from his taxable income as this investment of Rs 20,000 is treated as fresh investment. 10

1.11 Charges in a Mutual Fund There are 3 types of charges in an ELSS Plan: 1. Entry Load: This is the charge levied by the mutual fund at the time of investment. For example if the entry load is 2.25% and the investor has invested Rs 100, the Rs 2.25 will go towards entry load charges and the remaining Rs 97.75 is invested by the mutual fund on behalf of the investor. If the NAV on that day is Rs 10, then the investor will get 97.75/10 = 9.775 units in his account. Recently from 1st August 2009, Securities Exchange Board of India (SEBI) has abolished the entry load for mutual funds. So now all ELSS plans are free of entry load charges. This effectively means that if the investor invests Rs 100, the full Rs 100 will be invested without deduction of any entry load charge. 2. Fund Management Charges: This is the recurring charge levied by the mutual fund. This charge is for the day to day expenses of the mutual fund. The maximum permissible by SEBI is 2.5% and the industry average is around 2.25%. This charge is collected by the mutual fund by cancelling equivalent units from the investors account. 3. Exit Load: This charge is levied by mutual funds when the investor sells the units. In ELSS plans there is no exit load.

1.12 Advantages of ELSS over NSC and PPF


1. Main advantage of ELSS is its short lock-in period. Maturity period of NSC is 6 years and PPF is 15 years. 2. Since it is an equity linked scheme earning potential is very high. 3. Investor can opt for dividend option and get some gains during the lock-in period 4. Investor can opt for Systematic Investment Plan 5. Some ELSS schemes also offer personal accident death cover insurance 6. Provides 30 to 40% returns compared to 8% in NSC and PPF

11

1.13 Disadvantages of ELSS


1. Risk factor is high compared to NSC and PPF 2. Premature withdrawal is not allowed but it is allowed in other instruments in some specific conditions.

1.14 ELSS vs other tax-saving instruments There is no upper limit on investment is ELSS. However, investments of only upto Rs 100,000 are allowed to be claimed as deductions under section 80C. The performance of the top five funds in India over a period of three years. Past performance may or may not be sustained in the future. Investors may note that though as of now the Finance Act, 2005 does not tax any withdrawals from ELSS; it may be possible that as and when the proposed EET system becomes fully operational, any redemption from ELSS may be subjected to tax. In order to work out the roadmap for smoothly moving towards the EET system, the Bill has proposed to set-up a committee of experts. Such committee will examine the mix of savings instruments that would qualify under the new system and propose suitable tax incidence. Investors should note the above before making any investment under ELSS.

1.15 Investment strategy for ELSS funds


Risk appetite should at all times determine the total investments in tax-saving funds. Don't go overboard in the segment simply because of the opportunity to rake in impressive returns, thereby ignoring the risk involved. Use the SIP route for investing in tax-saving funds. Not only does it do away with the need for timing markets, but it also reduces the strain on your wallet at the end of the financial year when most investors conduct their tax-planning exercise.

12

1.16 TAX SAVING SCHEME (ELSS) TABLE 1.1 Tax Saving Schemes

Parameter Returns Interest Receipt Tenure Tax Benefits Minimum Investment Maximum Investment Monthly Plans
Source: Secondary data

PPF 8% On Maturity 15 Years Sec 80C ,sec10 Rs 500 p.a. Rs 70,000 N.A

NSC 8% On Maturity 6 Years Sec 80C Rs 100 Rs 1,00,000 N.A.

ELSS Market linked* Depends on Performance Minimum 3 years Sec 80C Lump sum: Rs 5000/No Upper Limit SIP : Rs. 500/-

Comparison of ELSS with other tax saving instruments TABLE 1.2 Comparison of ELSS with other tax saving instruments

Particulars

PPF

NSC 6 100 1,00,000 8.00

ELSS 3 500 1,00,000 32.25^

15 Tenure (Years) Min. investment (Rs) 500 Max. Investment (Rs) 70,000 for sec 80C benefits 8.00 Return (CAGR)
Source: Secondary data

Bank Deposits 5 10,000 1,00,000 8.25*

ULIP 5 10,000# 1,00,000 NA

1.17 ELSS over ULIP (Unit linked insurance plan) Though one must not discount importance of insurance, ELSS still has edge over ULIP. ELSS has much lesser administration cost just 2% either in the form of entry load or exit load. The entire amount of investment goes in to mutual fund unlike ULIP where a certain amount is deducted for mortality charges, administration charges etc. The lock in

13

period of ELSS is three years and can be withdrawn later. Dividends received from ELSS are tax free. Growth option is the best choice for ELSS as there is substantial capital appreciation. Avoid dividend reinvestment option as the small amounts will get locked in for three years again. You can choose the SIP way again for ELSS.

TABLE 1.3 List of top 10 performing ELSS funds based on performance Open Ended - Equity: Tax Planning - (Since Launch Return) Funds NAV (Date) Returns(%) Return as on 1/15/2013 1/15/2013 1/15/2013 1/15/2013 1/15/2013 1/15/2013 1/15/2013 1/15/2013 1/15/2013 1/15/2013 1/15/2013

Union KBC Tax Saver Scheme (G) 12.93 (15-Jan) HSBC Tax Saver Equity Fund SBI Tax Advantage Sr-2 IDFC Tax Saver Fund IDFC Tax Advantage Axis Long Term Equity Fund DSP-BRTax Saver Fund DWS Tax Saving Fund Quantum Tax Saving Fund Principal Tax Savings Sundaram BNP Paribas Taxsaver 15.75 (15-Jan) 11.45 (15-Jan) 15.61 (15-Jan) 21.18 (15-Jan) 14.39 (15-Jan) 17.84 (15-Jan) 13.30 (15-Jan) 24.34 (15-Jan) 78.82 (15-Jan) 23.13 (15-Jan)

13.7 12.8 11.8 11.7 11.5 11.1 10.4 10.4 10.1 9.8 18.14

14

From a tax management perspective, ELSS investment stands out as a preferred investment. Investors, who want to lock-in their funds and not succumb to the temptation of re-working and shuffling their holdings, will find ELSS a good avenue for investment as there is three year lock-in period.

1.18 TOP 10 TAX SAVING MUTUAL FUNDS (ELSS)


The following 3 tables list the top 10 ELSS schemes in descending order of their 5 years, 3 years and 1 year returns. This may help you in selecting the best ELSS scheme for your needs.

TABLE 1.4 List of top 10 performing ELSS funds based on Return (5 years)

Rank 1 2 3 4 5 6 7 8 9 10

Fund Name Can Robeco Eqty TaxSaver Reliance ELSF - Series 1 Religare Tax Plan UTI Long Term Advantage S2 Franklin India Tax Shield (G) Reliance Tax Saver HDFC Tax Saver L&T Tax Advantage ICICI Pru Tax Plan HSBC Tax Saver Equity Fund

1 Year 7.6 3.8 9.1 9.1 6.6 0.6 1.8 5.2 8.4 12.8

Return (%) 2 Years 3 Year 4.3 6.2 3.4 3.7 2.0 3.7 2.2 -1.5 -0.1 1.6 4.2 6.5 6.1 4.2 6.9 5.6 3.3 5.3 4.8 4.4

5 Year 11.2 9.2 8.3 8.1 8.1 7.9 7.7 7.7 7.6 7.2

15

1.19 ADVANTAGES OF AN OPEN-ENDED ELSS


Mutual funds have been allowed to offer Equity Linked Saving Schemes (ELSS) structured as open-end funds. ELSS offer 20 per cent tax rebate for investments up to Rs 10,000 with a three year lock-in period, under section 88 of the Income Tax Act. For instance, if tax liability of an investor is Rs 3000, and he invests Rs 5000 in an ELSS, 20 per cent of Rs 5000 or Rs 1000 would be reduced from his tax liability, thus bringing it down to Rs 2000. Earlier, these schemes were allowed to be structured only as 10-year closed-end funds with a lock-in period of three years commencing from the beginning of the new financial year. Under the revised regulation, all investments under ELSS will continue to attract a lock-in period of three years from the date of allotment or holding of units as the case may be and not just from the beginning of the new financial year. 1. Wider Choice: With the new regulation, fund companies have been saved from the process of floating a new fund in the last quarter of every financial year. The effort and expense involved in launching such schemes and the small corpus garnered have deterred funds even with a good track record from launching new schemes. Now there is the flexibility than even if one tax-saving scheme is launched and garners a modest sum, funds can leverage their performance and attract fresh subscription. This would lead to addition of an open-end tax saver to the product portfolio of every AMC giving investors a wider choice.
2. Periodic Investments: The open-end structure will make the fund less vulnerable to

market moods. Since all ELSS schemes were floated in the last quarter of the fiscal and most of the money was collected in March, the fund's performance depended on the market performance at that time. As these funds will now be sold throughout the year, tax-savers can choose to invest at any point of time and take advantage of market conditions. Importantly, the open-end structure for ELSS provides for natural product enhancements, with features of regular investment plan (rupee cost averaging) which will be of special appeal to marginal taxpayers while planning their investments. Right in the beginning of the year, the investor can estimate his tax liability and chalk out a strategy.
3. Buy a Hot Fund: The earlier framework did not allow an investor to buy an ELSS

based on its track record. The investor could take clue from the performance of the 16

tax-plans of a particular AMC, but could invest only in a tax-plan launched for that year. And if a better performing AMC chose not to launch one in that year, investor would have to settle for the second best. With open-end ELSS schemes, an investor can buy into a fund that has a track record and can know the portfolio he is buying beforehand.
4. Roll-Over: The instant liquidity after three years can be advantageous for investors

facing a cash crunch. An investor can get his units redeemed after three years and redeploy the principal in the same fund and avail of tax rebate once again. Earlier, one would have to put in investments in a new closed-end fund launched every year. Effectively, it is now possible to lock-in Rs 30,000 over a period of three years and enjoy the tax rebate on Rs 10,000 every year!! That of course assumes that the NAV after three years is above the par value. Even after allowing for the capital gains tax after adjusting for the inflation-index, it could work out to be beneficial. In fact, in certain circumstances, the investor could take advantage of the fund's

underperformance i.e if the NAV falls below par value. Investors confronted with substantial capital gains, can simply get the units redeemed and actualize a capital loss and offset it against a capital gain. And if the investor is still optimistic about the fund, he can redeploy the proceeds in the same fund may be at the same NAV.
5. Performance Pressure: The fact that there could be numerous open tax-savings

schemes competing for the investor's pie will optimize investment performance by fund managers. So far, they could sit back in comfort - at least for three years. Now, they will be under constant pressure to retain existing investors as well as to attract fresh inflows.
6. ELSS for the Year: Many AMCs have indicated their intention to convert one of

their existing ELSS schemes into an open-end fund instead of launching a new one. Currently, Birla and Alliance are offering open-end ELSS while Kothari and UTI have launched closed-end ELSS. Both Birla and Alliance funds have been superior performers till date. Both the tax plans are on a equal footing considering the impressive performance of existing funds from both AMCs. In the past one year, Birla Advantage has witnessed a spectacular appreciation of 95.69 per cent while Birla Tax plan '98 has posted a total return of 62 per cent with the NAV at 16.22 as on February 25, 1

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CHAPTER 2 REVIEW OF LITERATURE & RESEARCH DESIGN

18

2.1 INTRODUCTION
The title of the study is A study on investment performance of equity linked saving scheme

2.2 REVIEW OF LITERATURE


Shefali Jains conducted an empirical study on Investment Performance of Equity Linked Savings Schemes.Tax saving is the motive of any Indian investor today with increasing average income and cash inflows. Investors have a choice of investing in a lot of traditional tax saving instruments. They are all supported by Government of India and offer low rate of return with long lock-in periods. The study evaluates the performance of equity-linked saving schemes selected at random vis--vis the traditional schemes to give an insight into how these funds perform with respect to risk and returns. This is done to help investors to choose an ideal option to save tax and enjoy the benefits of investing in equity market which offers good returns. Nalini Prava Tripathy has done an empirical study on Market Timing Abilities and Mutual Fund Performance - An Empirical Investigation into Equity Linked Saving Schemes. The Indian financial system in general and the mutual fund industry in particular continue to take turns from around early 1990s. Growth of various mutual fund products has proved to be one of the catalytic instruments in generating momentous investment growth in the capital market. Therefore the present study evaluates the market timing abilities of Indian fund managers of thirty-one tax planning schemes in India over the period December,1995 to January, 2004 by using Jensen &Mazuy Model and Henriksson and Merton model. The study indicates that the fund managers have not been successful in reaping returns in excess of the market, rather they are timing the market in the wrong direction Dr. S. Vadivelu has done A Study on Performance of Mutual Fund Schemes an overview about mutual funds and various schemes related mutual funds are discussed in this paper. The investors have been guided with investment portfolio. The common principles of funds management (i.e.) Safety, liquidity and profitability are also discussed. A comparative study has been made between the mutual fund investment and other investment avenues. The study is made like an emperial research using latest tools and techniques. The conclusion and suggestions are worth to emulate for the future development of mutual fund segments and eye opener to bring the surplus resources into the organized sector 19

2.3 STATEMENT OF THE PROBLEM


India by 2032 will become the third largest economy in the world, as reported by Goldman Sachs in their wealth report. Indias domestic saving as a percentage of its GDP is 28%, one of the highest in the world. A significant proportion of this saving is in the form of investment avenues like gold, fixed deposits, insurance, mutual funds and capital markets. Investments in equities have shown better results and have the potential to grow in the long run which can be an ideal approach to adjust inflation and provide an opportunity for capital appreciation, provide the investors are high on risk. The study is undertaken to know the performance of ELSS.

2.4 SCOPE OF THE STUDY


For the Purpose of this study the following different ELSS Mutual Fund Schemes for five years are considered: a) SBI Magnum Tax Gain b) Birla Sun Life Tax Relief 96 c) HDFC Tax Saver d) ICICI Prudential Tax Plan e) HDFC Long Term Advantage

f) Birla SunLife Tax Plan


g) Principal Personal Tax Saver

h) Franklin India Tax Shield i) DSP BlackRock Tax Saver


j) TATA Tax Savings Fund

k) HSBC Tax Saver Equity


l) BNP Paribas Tax Advantage Plan

m) Religare Tax Plan n) Kotak Tax Saver

o) ING Tax Saving Fund


All those Mutual Funds were schemes of mutual funds(ELSS open-ended scheme) The returns are undertaken for 5 years

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2.5 OBJECTIVES OF THE STUDY


To compare equity-linked saving schemes with other traditional forms of tax saving schemes. To understand the quarterly return for 5 year of the schemes. To analyze the equity-linked saving scheme picked at random on the basis of risk and return.

2.6 HYPOTHESIS
H0: There is no relationship between the scheme return and index return H1: there is relationship between the scheme return and index return

2.7 OPERATIONAL DEFINITION OF CONCEPTS


2.7.1 Net Asset Value or NAV NAV is the total asset value (net of expenses) per unit of the fund and is calculated by the Asset Management Company (AMC) at the end of every business day. Net asset value on a particular date reflects the realizable value that the investor will get for each unit that he his holding if the scheme is liquidated on that date.

Net asset Value of an investment company is the companys total assets minus its tota l liabilities. For Example, if an investment company has securities and other assets worth $100 million and has liabilities of $10 million, the investment companys NAV will be $90 million one day, $100 million the next, and $80 million.

21

For Calculating NAV in Years NAV Closing Value NAV Opening Value = NAV Opening Value 2.7.2 MARKET RETURN The return on the market as a whole is known as market return. Market return is derived for analysis is from BSE SENSEX index. *100

2.8 METHODOLOGY
Risk is measured using the parameters like Sharpe ratio, standard deviation, beta, multivariate statistical tool was used to cluster the funds into groups based on various parameters and analyzed. The secondary data were collected by visiting various websites of the asset management companies, articles available on the web, investment magazines and facts sheets of the asset management companies. 2.8.1METHOD OF ANALYSIS Standard Deviation Beta Sharpe measure

2.8.2 SOURCES OF DATA COLLECTION Secondary Data: The various secondary data which will be used in this work includes Internet News Papers Journals Books related to investments etc

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2.9 LIMITATIONS OF THE STUDY

The comparison of the fund was mainly dependent on the information collected from secondary data i.e., fact sheets of various funds and from websites like value research online. There could be possibility of error in the secondary data. The results are generalized to all the Equity-linked saving scheme though the comparison was done for few schemes.

2.10 CHAPTER SCHEME CHAPTER 1 INTRODUCTION In this chapter consists of introduction, factors influencing investment, types of investments, classification of investments, before investing in ELSS, difference between ELSS plans and other mutual funds, features of an ELSS plan, benefits of ELSS, options in an ELSS plan, charges in a mutual fund, advantages of ELSS over NSC and PPF, disadvantage of ELSS, ELSS v/s tax saving instruments ,investment strategy for ELSS funds, tax saving scheme v/s ELSS, ELSS over ULIP, list of ten performing ELSS funds based on performance since launch, top ten tax saving mutual funds(ELSS), advantages off an open-ended ELSS.

CHAPTER 2 REVIEW OF LITERATURE & RESEARCH DESIGN This contains Title of the study, Statement of the Problem, Review of Literature, Objective of the Study, scope of the study, Methodology, Method of analysis, Sources of data collection, operational definition of concepts Limitation of the Study. CHAPTER 3 PROFILES In this chapter it contains industry profile, its history, list of mutual funds available in India, investment opportunities. This chapter contains the selected companies profiles.

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CHAPTER 4 RESULTS, ANALYSIS & DISCUSSION In this chapter, it contains the quarterly return average, the yearly average of fund and the index, standard deviation and sharps ratio CHAPTER 5 FINDINGS, CONCLUSION AND RECOMMENDATION In this chapter contains all the findings that is been done on the research analysis chapter. The conclusion, suggestions, bibliography and annexure is been include in this chapter

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CHAPTER 3 PROFILES

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3.1 PROFILES History of the Indian Mutual Fund Industry


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 the. 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 the 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 Can bank 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 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 26

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 more comprehensive 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 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds.

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 an administrator 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.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

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The graph indicates the growth of assets over the year GROWTH IN ASSETS UNDER MANAGEMENT FIGURE 3.1 Growth In Assets Under Management

Table 3.1 LIST OF MUTUAL FUNDS IN INDIA

Mutual Fund

Sponsors

Year Entry

of

Bank sponsored BOB Asset Management Co. Ltd Bank of Baroda 1992 1987

Can Bank Investment Management Canara Bank Services Ltd., S.B.I. Funds Management Ltd., State Bank of India

1987 1963

UTI Asset Management Co., Pvt. SBI, PNB, BOB, LIC Ltd.,

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Institutions G.I.C. Asset Management Co. Ltd., General Insurance 1990

Corporation & other 4 PSU GIC Jeevan Bhima Sahyoga Asset LIC 1989

Management Co. Ltd., Private Sectors Benchmark Asset Management Co. NICHE Pvt. Ltd., Chola Mandalam Services Asset Chola Investments Escorts Finance 1996 Mandalam 1997 Financial 2001

Management Co. Ltd., Escorts Asset Management Ltd.,

J. M. Capital Management Pvt. J.M. Shares and Stock 1994 Ltd., Brokers 1998

Kotak Mahindra Asset Management Kotak Mahindra Bank Co. Ltd., Reliance Capital Asset Reliance Capital

1995

Management Co. Ltd., Sahara Asset Management Co. Pvt. Sahara India Finance Ltd., Sundaram Asset Management Co. Sunadaram Finance Ltd., Tata Asset Management Pvt. Ltd., Tata Sons 1995 1996 1996

Joint Ventures Predominantly Indian Birla Sun Life Asset Management Birla Global Finance Pvt. Ltd., 1994

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D.S.P.

Merrill

Lynch

Fund D.S.P. Merrill Lynch

1996

Manager Ltd., HDFC Asset Management Co. Ltd., HDFC & Std Life 2000

Investment Joint Ventures Predominantly Foreign Alliance Capital Asset Management Alliance Pvt. Ltd., Management Asset 2002 Capital 1994

Deutsche Asset Management Pvt. Deutsche Ltd., Franklin Templeton Management Asset Franklin Investments HSBC Security

Templeton 1996

Management Pvt. Ltd., HSBC Asset Manageent Pvt. Ltd.,

2002 1999

ING Inveatment Management Pvt. ING Group Ltd., Morgan Stanley Investment Morgan Stanley

1993

Management Pvt. Ltd., Prudential ICICI Asset Prudential ICICI 1993

Management Pvt. Ltd., Principal Asset Management Co. Principal Pvt. Ltd., Standard Charted Service Asset Standard Charted Bank 2000 Financial 1994

Management Ltd.,
Source: Secondary Data

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Recent Trends in Mutual Fund Industry


The most important trend in the mutual fund industry is the aggressive expansion of the Foreign owned mutual fund companies and the decline of the companies floated by Nationalized Banks and smaller Private Sector players. Many Nationalized banks got into the mutual fund business in the early nineties and got off to a good start due to the stock market boom prevailing then. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity. Few hired specialized staff and generally chose to transfer staff from the parent organization. The performance of the schemes floated by these funds was not good Some schemes offered guaranteed returns and their parent organization had to bail out these AMCs by paying large amounts of money as the difference between the guaranteed and actual returns. The service levels were also very bad. Most of these AMCs have not been able to retain staff, float new schemes etc. and it is doubtful whether, barring a few exceptions they have serious plans of continuing the activity in a major way. The experience of some of the AMCs floated by private sector Indian companies was also very similar. They quickly realized that the AMC business, which makes money in the long term and requires deep-pocketed support in the intermediate years. Some have sold out to Foreign owned companies, some have merged with others and there is general restructuring going on. The Foreign owned companies have deep pockets and come in here with the expectation of a long haul. They can be credited with introducing many new practices such as new product innovation, sharp improvement in service standards and disclosure, usage of technology, broker education and support etc. In fact they have forced the industry to Upgrade it and service levels of organizations like UTI have improved dramatically in the last few years in response to the competition provided by these companies.

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Future Scenario
The asset base will continue to grow at an annual rate of about 30 to 35% over the next few years as investors shift their assets from banks and other traditional avenues. Some of the older and private sector players will either close shop or be taken over. In the coming years the market will witness a flurry of new players entering the arena. There will be a large number of offers from various AMCs in the time to come. Some big names like Fidelity, Principal, and Old Mutual etc. are looking at Indian market seriously. One important reason for it is that most major players already have presence here and hence these big names would hardly like to get left behind. The mutual fund industry is awaiting the introduction of Derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in its NAV. SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have called on the regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade derivatives.

3.1.1 INVESTMENT OPPORTUNITIES


Savings bank account with commercial banks: A safe, liquid and convenient investment option, it gives an interest rate of an average 4.5% per annum, ideal parking funds for emergencies or unexpected expenses, the account holder may keep an average balance equal to three months of his living expenses. Objective: To provide high liquidity and safety to the account holders. Risk: The savings rate is usually very low as compared to the other financial instruments and it cannot offset inflation. Bank fixed deposits Being a safe investment option bank fixed deposits give interest rates around 5.25% to 8%. A bank fixed deposit is recommended for those looking for preservation of capital along with 32

current income in the short term. However, over long term the returns may not keep pace with inflation. Objective: To provide regular and fixed income to the account holders who wish to have regular and steady savings and earnings. Risk: Although not rated, fixed deposits facilitate 100% assurance of principal with interest rates regulated by RBI. But there is inflation risk involved. Bonds and debentures They are long-term debt instruments with interest rate ranging between 9-18% per annum. Many types of debts and bonds have been structured to the investors with different time horizons. Though the risk is high they offer better returns when compared to bank fixed deposits. Objective: It is the safest investment and loans can be borrowed against bonds or debentures. Risk: The inflation and interest fluctuation affects investment decision. commercial ratings. Company deposits Fixed investment schemes offered by various Public limited companies or the private sector may be cumulative or non-cumulative. They can be offered to the public as well as the existing shareholders and employees. Non-Banking Financial Companies cannot offer more than 14% of interest on the fixed deposits. Objective: It confers faster capital appreciation and hence it is suitable for regular income holders and an investor can borrow against the deposits depending on the credit rating. Risk: It is an unsecured investment and there is no asset backing and provides limited protection against inflation risk. They have no

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Gold: In India gold is more of a sense of security and a fixed asset rather than for any use or for the purpose of making profit or income. Since a long time it has been used extensively for speculation. Gold may be invested either in the form of gold shares which are banned in India, gold coins, gold bars, gold jewellary etc. Objective: gold offsets inflation rates to some extent and offers good appreciation over a long period of time. Risk: there are no regular earnings and the rates fluctuate. appreciation are not fixed or certain. Even the rates of capital

Real estate
Land and house property are the main real estate investments. These investments are taken by and large number of people for hedging the inflation rates.

Objective: In India it is found that almost all banks and financial institutions consider land as good collateral. Hence it is considered a safe investment. Risk: investment in real estate involves a lot of pressures in terms of tax payment for capital appreciation, stamp duties etc.

Shares
It is the most risky investment with highest returns in the long run. Sensex indicates the price movements of shares on weighted average basis. Dividends up to Rs.1000 are not taxed. Objective: to provide high capital appreciation and very high rates of dividend.

Risk: being highly volatile the price movements depends on the market and the companys performance. The earning may even become negative.

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3.2 COMPANY PROFILES 3.2.1 SBI CAPITLA MARKET LIMITED SBI CAPITAL MARKETS LIMITED (SBICAPS) is India's leading investment bank and project advisor, assisting domestic companies fund-mobilisation efforts for last many years.

Foreseeing the changing needs of clients in a rapidly opening economy, over the years, we have evolved an array of advisory services in almost all sectors of the economy. We are known for professionalism and business ethics and provide a full range of Investment, Advisory and Financial Services under one umbrella. A pioneer in privatization in India, we have established ourselves as a leader in providing financial and advisory services in the core sector and infrastructure industries.

We began operations in August 1986 as a wholly owned subsidiary of the State Bank of India, which is the largest commercial bank in India. In January 1997, fresh equity shares were issued to Asian Development Bank (ADB) and ADB now holds 13.84% stake in the equity of SBICAPS. The distinguished parentage (with a 86.16% stake) together with the long standing association of an internationally renowned financial institution like the Asian Development Bank further enhances our image as a truly 'World Class Investment Bank'.

SBI MAGNUM TAX GAIN (ELSS) Magnum Tax gain has consistently yielded superior returns over the past couple of years. The fund has capitalized on the bullish trend in the markets in 2003 and 2004; its shift to mid-cap stocks has also paid rich rewards. The scheme has generated 13.8% annualized return since it turned open-ended in November 1999 against 9.2% annualized return by its benchmark, BSE 100 over the same period. Head of Equity at SBI Mutual Fund and Fund

35

Manager for the scheme Sandip Sabharwal attributes this performance to the superior stock selection with a long-term view on investments.

Experts believe that the scheme will become even more attractive now with the Finance Minister's budget proposal to remove the cap on investment in tax saving instruments, allowing an investment of Rs 1 lakh in equity linked saving schemes, ELSS. Sabharwal says, We believe this will be a big driver for flows into the equity markets. Earlier the cap was at Rs 10000, so it really did not make sense for a lot of people to invest this small amount and then monitor the performance. However with Rs 1 lakh limit, we are likely to see huge inflows into this category of schemes from April 1st onwards. Commenting on the advantages of investing in ELSS, Sabharwal says, If you see ELSS schemes across fund houses they are one of the best performing schemes mainly due to stable long-term funds where the fund manager can also take a long-term view. The other advantages of no long term capital gains tax and tax free dividends also is a big positive as all the returns that an investor makes out of this scheme are free of tax which is not so for most asset classes today. Meanwhile, the government is mulling over the proposal to tax the maturity value of the tax saving instruments. When asked about the impact of the same on the scheme, Sabharwal said, The Finance Minister has proposed the EET scheme but it is yet to be implemented. Even if it gets implemented it will be uniform across tax saving asset classes and as such will not have a significant impact on the inflows. PORTFOLIO ANALYSIS Magnum Tax gain Scheme has portfolio largely invested in mid-cap stocks. Barring Gujarat Ambuja Cement, it has weeded out even the few large-cap stocks that it held last year. The scheme invests with a bottom up approach with certain sectoral caps. Its current turnover ratio is close to 110%, says the fund manager. The scheme's strategy to stick with quite a few of its midcap stocks in the top ten holdings Thermax, Praj, Crompton, KPIT, Sintex, and United Phosphorus for several months now, has paid off. Besides this, Magnum Tax gain is heavily skewed to Electrical Equipment stocks which together account for almost 32% of the net assets. Sabharwal says, Actually the 36

companies into which we have invested in belong to different product classes and each is different in its product profile. We are positive on this sector due to the strong capital investment cycle

3.2.2 HDFC ASSET MANAGEMENT COMPANY LIMITED HDFC Asset Management Company Ltd. is a privately owned investment manager. The firm primarily manages equity, fixed income, and balanced mutual funds for its clients. It invests in public equity and fixed income markets. The firm employs fundamental analysis to make its investments. It operates as a subsidiary of Housing Development Finance Corp. Ltd. HDFC Asset Management Company Ltd was founded in 1999 and is based in Mumbai, Maharashtra. HDFC Mutual Fund Declares Dividend on Quarterly Interval Fund HDFC Mutual Fund has approved Feb. 8, 2010 as the record date for declaration of dividend under dividend option in retail and wholesale plan of HDFC Quarterly Interval Fund - Plan C. The quantum of dividend will be 100% of distributable surplus as on the record date. HDFC Announces Launch of New Fund Named as HDFC FMP 19M November 2009 HDFC Asset Management Company Ltd. announced the launch of a new fund named as HDFC FMP 19M November 2009, fixed maturity plan under HDFC Fixed Maturity PlansSeries XI, a close-ended income scheme. The face value of the new issue will be INR 10 per unit. The new issue will be open for subscription on Nov. 6, 2009 and close subscription on 16 Nov. 2009. The investment objective of the plans under the scheme is to generate regular income through investments in debt/money market instruments and government securities maturing on or before the maturity date of the respective plan(s). Maturity date of the scheme would be 19 months from the date of allotment of units of the scheme. The fund would invest 60% to 100% of assets in debt and money market instruments including securitized debt. Investments in securitized debt would be upto 75% of the net assets of the plan. The scheme may invest upto 40% of the schemes net assets in government securities. The entry and exit

37

load charge will not be applicable for the scheme. The units of the scheme will be listed on the National Stock Exchange.

HDFC Asset Management Reportedly Mulls Listing An Industry official said, HDFC Asset Management Company Ltd (HDFC Mutual Fund) plans to conduct an initial public offering by early 2010. A leading mutual fund distributor said, The fund house is planning to list itself in January. Business Standard added that HDFC Mutual Fund officials, when approached, did not comment. Milind Barve, Managing Director, HDFC MF, could not be reached for comments. Lately Housing Development Finance Corp (HDFC) Chairman Deepak Parekh had said that it plans to list both insurance, and mutual fund companies and plans to list the mutual fund business first. HDFC TAX SAVER (ELSS) Investment objective The investment objective of the Scheme is to achieve long term growth of capital. BASIC SCHEME INFORMATION Nature of scheme: open ended equity linked scheme with a lock-in period of 3 years. Inception date: December 18, 1995 Option / plan: Dividend option, growth option. The dividend option offers dividend payout and Reinvestment facility. Entry load (purchase/additional purchase/switch-in): NIL (with effect from August 1, 2009 Minimum application amount: for new and existing investors: Rs 500 and in multiple thereafter. Lock-in-period: 3 years from the data allotment of the respective units. Redemption proceeds: Normally dispatched within 3 Business day (subject to completion of Lock- in-period)

38

INVESTMENT PATTERN TABLE 3.2 Investment pattern Sl No Asset type (% Of Portfolio) Risk Profile Medium to High 1 Equities & Equity Minimum 80%

related intruments 2 Debt Securities,Money Market instruments(including cash/call Money)


Source: secondary data

Low to Medium Minimum 80%

Investment in securitized debt, if undertaken, would not exceed 20% of the net assets of the scheme. The scheme may also invest up to 25% of net assets of net assets of the scheme in derivatives such as futures and options and such other derivative instruments as may be introduced from time to time for the purpose of hedging and portfolio balancing an do there uses as may be permitted under the regulations and guidelines.

The scheme may also invest a part of its corpus, not exceeding 40% of its net assets, in overseas markets in Global Depository Receipts(GDRs), ADRs, overseas equity, bonds and mutual funds and such other instruments as may be allowed under the Regulations from time to time . Subject to the Regulations and the application guidelines, the scheme may, engage in stock Lending activities. Also refer to section on stock lending by the fund.

The ELSS (equity linked saving scheme) guidelines, as applicable, would be adhered to in the management of this fund.

39

If the investment in equities and related instruments falls below 80% of the portfolio of the scheme at any point in time, it would be endeavored to review and rebalance the composition.

Not with standing anything stated above, subject to the regulations, the asset allocation patter indicated above may change from time to time, keeping in view market conditions, market opportunities, Applicable regulations and political and economic factors. It may be clearly understood that the percentage stated above are only indicative and are not absolute and that they can vary substantially depending upon the perception of the AMC, the intention being at all times to seek to protect the NAV of the scheme. Such changes will be for short term and defensive considerations.

Provided further and subjective to the above, any changes in the asset allocation affecting the investment profile of the scheme and amounting to change in the fundamental attributes of the scheme shall be effected in accordance with sub-regulation(15A) of regulation 18 of SEBI regulations.

Investment strategy

Debt securities (in the form of non-convertible debentures, bonds, secured premium notes, zero interest bonds, deep discount bonds, floating rate bond / notes, securitised debt, pass through certificates, asset backed securities, mortgage backed securities and any other domestic fixed income securities including structured obligations etc.) include, but are not limited to :

Debt obligations of the Government of India, State and local Governments, Government Agencies and statutory bodies (which may or may not carry a state / central government guarantee),

Securities that have been guaranteed by Government of India and State Governments, Securities issued by Corporate Entities (Public / Private sector undertakings), Securities issued by Public / Private sector banks and development financial institutions.

40

Money Market Instruments include:


Commercial papers Commercial bills Treasury bills Government securities having an unexpired maturity upto one year Collateralized Borrowing & Lending Obligations (CBLO) Certificate of deposit Usance bills Permitted securities under a repo / reverse repo agreement Any other like instruments as may be permitted by RBI / SEBI from time to time.

Investment policies
Consistent with the investment objectives of the scheme, the AMC aims to identify securities which offer superior levels of yield at low levels of risk. The investment team of the AMC will carry out an internal credit analysis of all securities included in the investment universe. The Scheme may also use various derivative and hedging products from time to time, as would be available and permitted by SEBI, in an attempt to protect the value of the portfolio and enhance Unit holders interest. The Investment Manager may t herefore enter into forward contracts, future contracts or buy or sell options in an effort to maintain risks at acceptable levels. The Scheme may also invest in suitable investment avenues in overseas financial markets for the purpose of diversification, commensurate with the Scheme objectives and subject to necessary stipulations by SEBI / RBI. Towards this, the Mutual Fund may also appoint overseas investment advisors and other service providers, as and when permissible under the regulations.

41

HDFC Long Term Advantage Fund(ELSS)


Investment objective The primary objective of the Scheme is to generate long term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments. Nature of Scheme Open Ended Equity Linked Savings Scheme with a lock-in period of 3 years Inception Date Option/Plan January 02, 2001 Dividend Option,Growth Option. The Dividend Option offers Dividend Payout and Reinvestment Facility. Entry Load NIL (With effect from August 1, 2009)

(purchase / additional purchase / switch-in)

(click here for SIP Details) Exit Load

Please click here to go through the addendum.

(as a % of the Applicable NAV) (click here for SIP Details) Minimum Amount (click here for SIP Details) Lock-In-Period Net Asset Value Periodicity Redemption Proceeds Application

No Exit Load shall be levied on bonus units and units allotted on dividend reinvestment.

For new & existing investors :Rs.500 and in multiples thereafter.

3 years from the date of allotment of the respective Units Every Business Day. Normally dispatched within 3 Business days(subject to completion of Lock-in period, Only Individuals and HUF)

Investment Pattern The net assets of the scheme wil be invested primarily in equity an dequity related instruments. The scheme may invest a part of its net assets in debt and money market instruments, in order to manage its liquidity requirements from to time, and under certain circumstance, to protect the interest of the unit holders. 42

The asset allocation under the Scheme will be as follows : Sr.No. Type of Instruments Normal Allocation (% of Net Assets) 1 Equities & Equity related instruments 80 Medium High 2 Debt Securities, Money Market 20 Low Medium to to Risk Profile

instruments(including cash/call money)

Investment Strategy

The funds collected under the Scheme shall be invested in equities, cumulative convertible preference shares and fully convertible debentures and bonds of companies. Investment may be made in partly convertible debentures and bonds including those issued on a rights basis subject to the condition that, as far as possible, the non convertible portion of the debenture so acquired or subscribed shall be disinvested within a period of 12 months.

It shall be ensured that funds of the Scheme shall remain invested to the extent of at least 80% in securities specified above. In exceptional circumstances, this requirement may be dispensed with by the AMC, in order that the interests of the Unit holders are protected.

Pending investment of funds of the Scheme in the required manner, the AMC may invest the funds of the Scheme in short term money market instruments or other liquid instruments or both. After 3 years from the date of allotment of the Units, the Mutual Fund may hold up to 20% of net assets of the Scheme in short-term money market instruments.

The investment approach will be based on a set of well established but flexible principles that emphasis the concept of sustainable economic earnings and cash return on Investment as the means of valuation of company.

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3.2.4 PRUDENTIAL ICICI ASSET MANAGEMENT PRIVATE LIMITED Company Overview ICICI Prudential Asset Management Company Limited is a privately owned investment manager. The firm provides its services to individuals and institutions. It manages separate client-focused equity, fixed income, and balanced mutual funds. The firm invests in the public equity and fixed income markets of India. It operates as a subsidiary of ICICI Bank Ltd. ICICI Prudential Asset Management Company Limited was founded in 1998 and is based in Mumbai, India. ICICI Prudential Asset Management Company (AMC) is a child of two of the strongest names in the world finance market - Prudential PLC of UK and ICICI Bank India. Incepted in 1998, ICICI AMC Ltd is already a pre-eminent name in investment sector of India. With just 2 funds under management in 1998, ICICI Prudential mutual fund count has grown to 35 in the past decade.

Get the services of full-time, professionally trained and well-experienced investment professionals for managing your funds at ICICI Prudential Asset Management Co. Whats more you can also get personal consultations at the customer service segment with information to all your queries. Complete transparency is rendered in every investment by ICICI Prudential Advisor. Prompt liquidity at the net asset values (NAV) in open-ended schemes makes ICICI Prudential Mutual Funds a popular choice among investors.

ICICI Prudential Asset Management Company enjoys the strong parentage of prudential plc, one of UK's largest players in the insurance & fund management sectors and ICICI Bank, a well-known and trusted name in financial services in India. ICICI Prudential Asset Management Company, in a span of just over eight years, has forged a position of preeminence in the Indian Mutual Fund industry as one of the largest asset management companies in the country with average assets under management of Rs. 82,168.12 Crore (as of Nov 30, 2009). The Company manages a comprehensive range of schemes to meet the varying investment needs of its investors spread across 230 cities in the country.

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ICICI PRUDENTIAL TAX PLAN (ELSS)

ICICI Prudential Tax Plan (the Scheme) is a diversified equity fund that aims to generate capital appreciation by investing in equity instruments. As an Equity Linked Savings Scheme (ELSS), investments of upto Rs.1,00,000 are eligible for tax deduction u/s 80C of the Income Tax Act, 1961. The scheme offers significant advantages in terms of (i) potential for higher returns, and (ii) shorter lock-in period of 3 years as compared to other traditional tax saving instruments. The 3-year lock-in, allows fund managers freedom to select stocks with a long-term perspective without day to-day liquidity pressure which provides potential for higher returns. The scheme offers potential to earn tax-free dividend. Maturity proceeds do not attract Long Term Capital Gains Traditional tax saving instruments may have implicit / explicit guarantee of Government of India or respective issuer for repayment of principal and interest. Partial or pre mature withdrawals are also allowed in some instruments. Investments in ELSS are subject to market risks and the NAV of units of ELSS may go up or down, depending on the factors and forces affecting the capital markets. Partial or pre mature withdrawals are not permitted in ELSS. Investors shall read and understand risk factors before making an investment decision.

Portfolio Strategy
ICICI Prudential Tax Plan is a blend of large and mid/small cap fund, seeking to provide steady returns. The large cap stocks constitute about 57% of the net assets as on Oct 30, 200 9. The 3-year lock in and mandate for patient long term investment enabled the fund to maintain ~ 90% to 95% equity exposure on an average during the 2008 and 2009. This mandate has allowed fund manager to take advantage of investing at lower market levels during early 2009 and subsequently has benefitted from the recent market recovery. For defensive purposes, the fund as on Oct 30, 2009, continues to remain over -weight on Pharmaceuticals 45

The fund has also turned overweight on Software by invest ing at current valuations due to expected growth revival across the globe, lending higher growth visibility for the sector and a favourable risk reward scenario The fund has been accumulating good quality stocks at lower levels and booking profits intermittently at every possible opportunity

Scheme Features

Type Open-ended Equity Linked Savings Scheme Investment Pattern Equity and Equity related instruments upto 90% & Debt, Money Market and Cash upto 10% Options Growth & Dividend Default Option Dividend Reinvestment Application Amount Rs. 500 (plus in multiples of Re. 1) Minimum Additional Investment Rs. 500 & in multiples thereof Redemption Cheques Issued Generally within 3 Business Days for specified RBI locations and an additional of 3 Business Days for Non RBI locations after lock-in period of 3 yrs. Cut off time: Purchase/Switch in : 3pm Redemption/Switch out : 3pm Systematic Investment Plan (SIP) Monthly: Minimum of Rs. 500 or multiples thereof & 5 postdated cheques for a minimum of Rs. 500for a block of 5 months in advance. Quarterly: MinimumRs.5000+ 4postdatedcheques of Rs. 5,000each. Systematic Withdrawal Plan (SWP) Not Available Systematic Transfer Plan (STP) Available.

3.2.5 BIRLA SUN LIFE ASSET MANAGEMENT PRIVATE LIMITED Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment managers of Birla Mutual Fund, is a joint venture between companies of the Aditya V. Birla Group and the Sun Life Financial Services of Canada Inc.

The Aditya Birla Group is a multinational group of companies comprising of some of the best known companies in India. The group companies have attained a leading position in a range of key core sector areas and rank among the countrys largest, most profitable and fastest growing companies with an excellent track record of returns to investors. At the Aditya Birla Group, growth with excellence is a way of life. With a turnover of over Rs 280 billion, and fixed assets worth Rs 265 billion, the group is India's second largest business house. The Group's family of 81,000 employees is spread across 40 companies situated in 17 countries around the globe. With the beginning of economic reforms in India, the Aditya 46

Birla Group entered the financial services sector in the early nineties. The aim is to become the first choice of Indian customers for world class financial services.

Sun Life Financial Services of Canada Inc. is the holding company of Sun Life Assurance Company of Canada. The group ranks as one of the largest global insurance and wealth management organizations with assets under management of more than $300 billion and credit ratings that places it at the top of the financial sector in North America. With major operations for over a century and with businesses in 21 key markets throughout the world, Sun Life Financial is a global force in financial services. Sun Life has major presence in the growing mutual fund markets through MFS Investment Management in the U.S. and through the Spectrum United Mutual Fund in Canada. MFS is listed in four stock exchanges and has US$147 billion total assets under management with a four year compounded growth of 30% across international, institutional, retail annuities and retail mutual funds.

The joint venture brings together the Aditya Birla Groups' experience in the Indian market and Sun Life's global experience. Birla Mutual fund has been constituted as a trust in December, 1994. It has a spectrum of 17 investment schemes including 2 off shore funds, designed to cater to every need of the investor. Birla Mutual Fund today has emerged as one of India's leading Mutual Funds with over Rs. 9200 crores1 of assets under management and an investor base in excess of 5.75lac folios.

Birla Mutual Fund follows a long-term, fundamental research based approach to investment. The approach is to identify companies, which have excellent credit-worthiness and strong Fundamentals. The fundamentals include the quality of the company s management, sustainability of its business model and its competitive position, amongst other factors.

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Birla Sun Life Tax Plan (ELSS)


FUND OVERVIEW

Category

ELSS

Fund Family

Birla Sun Life Mutual Fund

Scheme Plan

Growth

Scheme Class

Open End

Tax Benefit

Yes

Net Asset

1.66 B

1 Year Return Fund Inception Date

99.87% 16-02-1999

Birla Sun Life Tax Plan (BSLTP) aims at achieving long term growth of capital along with Income Tax benefits for investors. It follows a bottom-up approach to investing, where the emphasis is on identifying companies in quality businesses with a strong competitive position and run by quality management. Essentially the focus is on long term fundamentally driven values. The fund offers superior growth opportunities. Since investments are planned for a 3 year period it helps the Fund Manager to take a long term view while selecting stocks and not remain constrained by short term liquidity pressures.

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TAX BENEFITS U/S 80C:

Investments in this fund would enable you to avail benefits under Section 80C of the Income Tax Act, 1961. Investments upto Rs. 1 lakh by eligible investors in the scheme may qualify for deductions. Investors are requested to consult their tax advisor in this regard.

BIRLA SUN LIFE TAX RELIEF 96 Investment Objective An open-ended equity linked savings scheme (ELSS) with the objective of long term growth of capital through a portfolio with a target allocation of 80%equity, 20% debt and money market securities. Scheme details Fund Type Investment Plan Launch date Asset Size (Rs cr) Minimum Investment Load Details Entry Load Exit Load Nil 0.00% Open-Ended Growth Mar 06, 2008 703.13 (Mar-30-2013) Rs.500

3.2.6 PRINCIPAL ASSET MANAGEMENT COMPANY PRIVATE LIMITED Principal Mutual Fund (formerly known as IDBI-PRINCIPAL Mutual Fund) has been constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882). The Mutual Fund is registered with SEBI under Registration No. MF/019/94/0, dated December 13, 1994. The underlying objective of Principal Mutual Fund is to mobilize savings from the public, provide investment expertise to achieve optimal returns on their investments. 49

The Fund was initially set up by Industrial Development Bank of India (IDBI) in 1994 by execution of a Trust Deed dated November 25, 1994, under which IDBI was the sole Settlor, Subsequently, on March 31, 2000, Principal Financial Services Inc. USA became the deemed sponsor (along with the IDBI) by acquiring 50% stake in IDBI-PRINCIPAL Asset Management Company Limited. In June 2003, Principal Financial Services Inc. USA became the sole sponsor by acquiring 100% stake in IDBI-PRINCIPAL Asset Management Company Limited, through its wholly owned subsidiary Principal Financial Group (Mauritius) Limited (Principal Mauritius). Principal Mauritius has become the sole settlor of the Fund. Name of the Asset Management Company was changed to Principal Asset Management Company Private limited, to reflect the change in ownership.

Our Investment Philosophy Having thoroughly understood the needs of our investors, we at Principal Mutual Fund provide investors with a disciplined investment approach that takes acceptable risks, whilst attempting to minimize volatility in the portfolio. Equity Funds create wealth for our investors by investing in well-managed companies that are attractively valued, to generate sustainable cash flows in the future. We add value by maintaining a strong focus on credit research and every company is added to the portfolio after it undergoes a thorough credit analysis. We proactively manage our Debt and Liquid Funds by continuously monitoring the macroeconomic environment and undertaking fundamental research of the fiscal and the monetary position.

Both our corporate and individual clients get to choose from a variety of structured, diversified investment options that meet their investment needs at all stages in their life.

PRINCIPAL PERSONAL TAX SAVER (ELSS)


Objective: Principal Personal Tax Saver Fund will invest in equity and equity linked instruments, debt securities and money market to achieve long term capital gain. Investment in the Scheme is subject to a lock-in period of 3 years from the date of allotment.

50

Structure: open-ended equity linked saving scheme. Inception Date: April 12, 1996 Plans and options under the plan: Not Applicable Face Value(Rs/unit): Rs 10 Minimum Investment: Rs 500 and any amount thereafter under each option. Entry Load: 2.25% Exit Load: Nil

3.2.7 FRANKLIN TEMPLETON ASSET MANAGEMENT (INDIA) PRIVATE LIMITED Franklin Templeton Asset Management (India) Private Limited is a privately owned investment manager. The firm primarily caters to individuals, and investment companies. It manages equity, fixed income, and balanced mutual funds for its clients. The firm invests in the public equity and fixed income markets. It employs a combination of fundamental and quantitative analysis along with bottom-up stock picking approach to make its investments. The firm conducts in-house research to make its investments. It was founded in 1996 and is based in Mumbai, India. Franklin Templeton Asset Management (India) Private Limited operates as a subsidiary of Franklin Templeton Holding Ltd.

FRANKLIN INDIA TAX SHIELD Investment Objective An open end Equity Linked Savings scheme with an objective to provide medium to longterm growth of capital along with income tax rebate.

Scheme details Fund Type Investment Plan Open-Ended Growth

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Launch date Asset Size (Rs cr) Minimum Investment Load Details Entry Load Exit Load Load Comments Nil

Apr 10, 1999 905.20 (Dec-31-2012) Rs.500

0.00% 3 yr lock-in

3.2.8 DSP BLACKROCK INVESTMENT MANAGERS PVT LTD

DSP BlackRock Investment Managers Pvt. Ltd. is the investment manager to DSP BlackRock Mutual Fund.

The philosophy of DSP BlackRock Investment Managers Pvt. Ltd. has been grounded in the belief that experienced investment professionals, using a disciplined process and sophisticated analytical tools, can consistently add value to client portfolios. DSP BlackRock Investment Managers Pvt. Ltd. takes a three dimensional approach to the management of the organization, incorporating functional, product and regional elements in support of clients' goals. The functional dimension looks at the company's operations by specific task, such as account management or operations. The product dimension brings together the cross-disciplinary expertise critical to managing client assets in each class. Finally, the regional aspect of the company's model recognizes the unique, geographyspecific needs of clients as well as the importance of local regulatory issues.

With our three-dimensional approach to managing the organization, we seek to:


Ensure consistency on a global basis; Allow for the tailoring of products and services according to client or local needs; Promote teamwork among our employees worldwide; and Facilitate operational integrity and efficiency 52

DSP BLACKROCK TAX SAVER FUND Investment Objective An Open ended equity linked savings scheme whose primary investment objective is to seek to generate medium to long-term capital appreciation from a diversified portfolio that is substantially constituted of equity and equity related securities of corporates and to enable investors avail of a deduction from total income as permitted under the Income Tax Act,1961 from time to time. Scheme details Fund Type Investment Plan Launch date Benchmark Asset Size (Rs cr) Minimum Investment Load Details Entry Load Exit Load Nil 0.00% Open-Ended Growth Nov 27, 2006 CNX 500 763.17 (Dec-31-2012) Rs.500

3.2.9 HSBC GLOBAL ASSET MANAGEMENT World-class investment solutions backed by the strength of the HSBC Group HSBC Global Asset Management has an outstanding track record and a longstanding presence globally. With approximately USD409 billion (as on 30 June 2012) of assets under

53

management worldwide and a presence in about 30 countries, it is one of the premier fund management organizations in the world.

HSBC Global Asset Management in India provides a comprehensive range of investment management solutions to a diverse client base and is committed to delivering consistent investment performance, world-class service and a broad range of solutions for all types of investors. Our range of offerings in India comes under two broad categories Mutual Fund and Portfolio Management Services.

HSBC TAX SAVER EQUITY Investment Objective Aims to provide long term capital appreciation by investing in a diversified portfolio of equity & equity related instruments of companies across various sectors and industries, with no capitalization bias The Fund may also invest in fixed income securities Scheme details Fund Type Investment Plan Launch date Benchmark Asset Size (Rs cr) Minimum Investment Open-Ended Growth Nov 20, 2006 S&P BSE 200 196.21 (Mar-30-2013) Rs.500

Load Details Entry Load Exit Load Nil 0.00%

54

3.2.10 BNP PARIBAS ASSET MANAGEMENT INDIA

About BNP Paribas Investment Partners

BNP Paribas Investment Partners is the dedicated autonomous asset management business of the BNP Paribas Group. BNP Paribas Investment Partners It offers the full range of investment management services to both institutional and retail clients around the world. Central to the way we it works is the concept of partnership both in terms of how we it behaves as a family of companies and our its relationships with our its clients. Nearly 800 investment professionals work across o ur BNP Paribas Investment Partners' network of some 60 investment centers, each specializing in a particular asset class or type of product. With total assets under management of EUR 513 billion, BNP Paribas Investment Partners is the 6th-largest asset manager in Europe and the 15th-largest in the world. Fortis Mutual Fund have been acquired by BNP Paribas Asset Management, Accordingly, all existing schemes of Fortis Mutual Fund has been renamed with BNP Paribas with effect from October 19, 2010. BNP PARIBAS TAX ADVANTAGE PLAN Investment Objective The investment objective of the Scheme is to generate long-term capital growth from a diversified and actively managed portfolio of equity and equity related securities along with income tax rebate, as may be prevalent from time to time. Scheme details

Fund Type Investment Plan Launch date

Open-Ended Growth Dec 20, 2005

55

Asset Size (Rs cr) Minimum Investment Load Details Entry Load Exit Load Nil

118.64 (Mar-30-2013) Rs.500

0.00%

3.2.11 RELIGARE INVESCO ASSET MANAGEMENT COMPANY PRIVATE LIMITED Religare Invesco Asset Management Company Private Limited, the domestic asset management arm of Religare, is the countrys 13th largest mutual fund house by AUM. With nearly 2,50,000 folios, we have a presence in 58 business locations across 55 cities within the country.

A commitment to building a strong, process driven organization that follows a team approach rather than revolving around star fund managers is central to our success. We cater to both individual investors and institutional clients through mutual funds and sub-advised portfolios. We have successfully forayed into managing offshore funds as well.

Our core investment philosophy leverages the inefficiency of equity markets, by relying on sound research and disciplined portfolio management. Our equity investment philosophy is a matrix of company, industry, technical and economic analysis. Our fixed income investments focus on optimizing the risk-adjusted returns by investing in high credit-quality assets, managing interest rate risk and minimizing liquidity risks. Lotus India Mutual Fund renames as Religare Mutual Fund w.e.f. February 5, 2009.

56

RELIGARE TAX PLAN Investment Objective To generate long term capital growth from a diversified portfolio of predominantly equity and equity related securities. Scheme details Fund Type Investment Plan Launch date Asset Size (Rs cr) Minimum Investment Load Details Entry Load Exit Load Nil 0.00% Open-Ended Growth Nov 20, 2006 134.20 (Mar-30-2013) Rs.500

3.2.12 KOTAK MAHINDRA ASSET MANAGEMENT COMPANY LIMITED Kotak Mahindra Asset Management Company Limited is privately owned investment manager. The firm manages equity and fixed income, and balanced mutual funds for its clients. It also manages exchange traded funds for its clients. The firm was founded in 1998 and is based in Mumbai, India. Kotak Mahindra Asset Management Company Limited operates as a subsidiary of Kotak Mahindra Bank Limited. KOTAK TAX SAVER Investment Objective To generate long-term capital appreciation from a diversified portfolio of equity and equity related securities and enable investors to avail the income tax rebate, as permitted from time to time. 57

Scheme details Fund Type Investment Plan Launch date Asset Size (Rs cr) Minimum Investment Open-Ended Growth Oct 28, 2005 400.81 (Mar-30-2013) Rs.500

Load Details Entry Load Exit Load Nil 0.00%

3.2.13 ING INVESTMENT MANAGEMENT (INDIA) PVT. LTD. About ING Group

ING Group is a global financial institution of Dutch origin with 94,500 employees. ING offers banking, insurance and asset management services to more than 67 million clients in over 40 countries. The clients are individuals, families, small businesses, large corporations, institutions and governments. ING comprises a broad spectrum of prominent businesses that increasingly serve their clients under the ING brand. ING Investment Management

At ING Investment Management, we provide a comprehensive range of investment solutions and services to our clients and partners. We manage assets for institutional clients, fund distributors and the ING labels.

58

ING Investment Management has nearly 322 billion assets under management. Worldwide 2800 professionals watch over our clients money. We operate along regional lines with centers of expertise in Europe, Americas and Asia-Pacific. ING Investment Management is the principal asset manager of ING Group. Against the background of ING Group realizing its global ambitions, ING Investment Management has also expanded across borders. Nowadays we are active in well over 25 countries. ING in India:

In India, ING is present in all three fields of banking, insurance and asset management in the form of ING Vysya Bank, ING Life Insurance and ING Investment Management respectively. The presence in all three fields signifies the importance that the group attaches to the Indian markets and the group's operations here, as well as its bullish future outlook on the country. ING Investment Management India

ING Investment Management (I) Pvt. Ltd has been associated with innovation and responsive adaptability with sharp minds at work. ING Investment Management has sealed a position of strength and is considered as one of the top contenders to challenge the market leaders. ING Investment Management has enjoyed many firsts and has always maintained a pioneering outlook. ING Investment Management India operates under two divisions Mutual Fund

Under the Mutual Fund division, ING offers a range of equity, debt and alternative asset class funds in Single Manager & Multi Manager category. Each fund follows a stringent investment process backed by in house research. Multi Manager business offers open architecture, zero brand bias and active management. The belief to construct a Multi Manager fund is not by simply combining the third party mutual funds with the best performance records. Instead, use core research and proprietary investment tools to blend funds which offer the potential for superior, consistent performance in the future. 59

Portfolio Management Service (PMS)

ING Private is the umbrella brand of ING Investment Management (India) Pvt. Ltd. in India for all PMS product offerings. This exclusive offering especially created for high net worth individuals and institutional investors, offers invest ment solutions that are built on INGs global and local quantitative strategy expertise, using years of in-depth research that together enable innovation in product design.

ING TAX SAVING FUND Investment Objective To generate medium to long term growth of capital along with income tax rebate. Scheme details Fund Type Investment Plan Launch date Asset Size (Rs cr) Open-Ended Growth Mar 12, 2004 25.99 (Mar-30-2013)

Load Details Entry Load Exit Load Nil 0.00%

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CHAPTER 4 RESULTS, ANALYSIS & DISCUSSION

61

4.1 INTRODUCTION This chapter deals with analysis and interpretation of fund and market return in relationship with ELSS. 4.2 SBI MAGNUM TAX GAIN Table 4.1 SBI Magnum Tax Gain Quarterly Return

Year 2012 2011 2010 2009 2008

Q1 16.86 -7.97 0.05 -0.26 -25.62

Q2 0.39 -1.35 2.89 47.69 -17.06

Q3 9.37 -8.37 9.55 18.58 -4.58

Q4 4.65 -8.05 0.18 6.72 -23.33

Average 7.8175 -6.435 3.1675 18.1825 -17.6475

Source: Secondary data

Inference From the table4.1, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -17.6475 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 18.1825. In the year 2010 all quarter had positive return with average return of 3.1675. In 2011 return fell back to negative in all quarter with an average return of -6.435. In 2012 return back to positive return for all quarter with an average return of 7.817

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Figure 4.1 Comparison of Quarterly Return


60 50 40 30
Return

20 10 0 -10 -20 -30 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

Table: 4.2 SBI Magnum Tax Gain Return V/S the Index return

Year 2008 2009 2010 2011 2012 Total

Rp -54.86 86.41 12.98 -23.50 34.29 55.32

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

11.06 9.414 0.90

SDRp SDRm Sharpe

26.57 27.15 0.03

Source: Secondary data

63

Inference The fund has performed fairly; the return of the fund is greater for the period 2009, and 2012. The fund has fairly performed in 2010. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 86.41 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.90 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 26.57 not much comparable to that of the benchmark at 27.15 has lower risks.

Figure 4.2 Comparison of Fund Return and Index Return


100 80 60 R e t u r n 40 20 0 -20 -40 -60 -80 Year 2008 2009 2010 2011 2012 Rp Rm

64

4.3 BIRLA SUN LIFE TAX RELIEF 96 Table: 4.3 Birla Sun Life Tax Relief 96 Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 15.73 -9.53 0.21 -3.13 -32.11 Q2 -0.27 -1.32 4.44 59.66 -21.62 Q3 10.29 -11.71 11.07 22.68 -3.95 Q4 7.31 -10.71 -2.4 6.87 -26.96 Average 8.265 -8.3175 3.33 21.52 -21.16

Source: Secondary data

Inference For the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -21.16 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 21.52. In the year 2010 Q1, Q2, Q3 quarter had positive return with average return of 3.33. In 2011 return fell back to negative in all quarter with an average return of -8.3175. In 2012 return back to positive return for Q1, Q3, Q4with an average return of 8.265. Figure 4.3 Comparison of Quarterly Return
80 60 40
Return

Q1 20 0 2012 -20 -40 2011 2010 2009 2008 Q2 Q3 Q4

Year

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Table: 4.4 Birla Sun Life Tax Relief 96 V/S Index Return

Year 2008 2009 2010 2011 2012 Total

Rp -62.67 102.77 13.46 -29.62 36.60 60.54

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

12.108 9.414 1.05

SDRp SDRm Sharpe

31.50 27.15 0.02

Source: Secondary data

66

Inference From the Table 4.4, the fund has performed fairly; the return of the fund is greater for the period 2009, and 2012. The fund has fairly performed in 2010. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 102.77 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 1.05 which shows that it is more volatile and it has larger risks than compared to the benchmark index. Its standard deviation was at 31.50, which is much deviation from the normal return to that of the benchmark at 27.15 has lower risks. The standard deviation of fund return and Index return is satisfactory

Figure 4.4 Comparison of Fund Return and Index Return

120 100 80 R e t u r n 60 40 20 0 -20 -40 -60 -80 Year 2008 2009 2010 2011 2012 Rp Rm

67

4.4 HDFC TAXSAVER Table 4.5 HDFC Tax Saver Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 15.71 -6.49 4.39 -1.93 -25.58 Q2 -2.9 1.09 6.12 51.17 -16.82 Q3 6.59 -11.47 14.82 24.92 4.93 Q4 5.71 -7.54 -0.62 7.48 -25.41 Average 4 -6.1025 6.1775 20.41 -15.72

Source: Secondary data

Inference From the Table 4.5, the four quarters of year 2008, there is a negative return due to the financial crisis, but had a positive return for the Q3. The average return is -15.72 which is a loss for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 20.41. In the year 2010 quarter had positive return for Q1, Q2, and Q3 with average return of 6.1775. In 2011 return fell back to negative in all quarter with an average return of -6.1025. In 2012 return back to positive return for all quarter with an average return of 4. Figure 4.5 Comparison of Quarterly Return
60 50 40 30
Return

20 10 0 -10 -20 -30 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

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Table: 4.6 HDFC TAXSAVER Return V/S the Index return

Year 2008 2009 2010 2011 2012 Total

Rp -51.55 99.07 26.42 -22.62 26.59 77.91

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

15.582 9.414 0.88

SDRp SDRm Sharpe

26.54 27.15 0.18

Source: Secondary data

69

Inference From the Table 4.6, the fund has performed fairly; the return of the fund is greater for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 99.07 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.88 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 26.54 not much comparable to that of the benchmark at 27.15 has lower risks.

Figure 4.6 Comparison of Fund Return and Index Return

120 100 80 R e t u r n 60 40 20 0 -20 -40 -60 -80 Year 2008 2009 2010 2011 2012 Rp Rm

70

4.5 ICICI PRUDENTIAL TAX PLAN Table: 4.7 ICICI Prudential Tax Plan Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 18.28 -6.69 4.64 -0.91 -28.95 Q2 0.13 0.56 3.77 51.11 -9.83 Q3 8.18 -10.47 12.29 25.62 -7.51 Q4 7.42 -9.48 1.79 12.71 -25.75 Average 8.5025 -6.52 5.6225 22.1325 -18.0175

Source: Secondary data

Inference From the Table 4.7, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -18.0175 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 22.1325. In the year 2010, all quarter had positive return with average return of 5.6225. In 2011 return fell back to negative inQ1, Q3, Q4 quarter with an average return of -6.52. In 2012 return back to positive return for all the quarter with an average return of 8.5025. Figure 4.7 Comparison of Quarterly Return
60 50 40 30
Return

20 10 0 -10 -20 -30 -40 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

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Table 4.7 ICICI Prudential Tax Plan V/S Index Return

Year 2008 2009 2010 2011 2012 Total

Rp -56.03 112.00 24.11 -23.96 37.63 93.75

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

18.75 9.414 0.94

SDRp SDRm Sharpe

28.39 27.15 0.18

Source: Secondary data

72

Inference From the Table 4.7, the fund has performed fairly; the return of the fund is greater for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 112.00 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.18 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 28.39 not much comparable to that of the benchmark at 27.15 has lower risks.

Figure 4.4 Comparison of Fund Return and Index Return


140 120 100 R e t u r n 80 60 40 20 0 -20 -40 -60 -80 Year 2008 2009 2010 2011 2012 Rp Rm

73

4.6 HDFC LONG TERM ADVANTAGE Table: 4.9 HDFC Long Term Advantage Quarterly Return

Year 2012 2011 2010 2009 2008

Q1 17.43 -6.64 2.65 -3.58 -25.49

Q2 -1.72 0.29 6.18 52.45 -11.51

Q3 7.56 -10.79 15.56 49.93 -3.24

Q4 3.78 -8.38 1.91 7.14 -25.37

Average 6.7625 -6.38 6.575 18.985 -16.4025

Source: Secondary data

Inference From the Table 4.9, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -16.4025 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 18.985. In the year 2010 all quarter had positive return with average return of 6.575. In 2011 return fell back to negative with only Q2 in positive with an average return of -6.38. In 2012 return back to positive return for Q1, Q3, Q4with an average return of 6.7625 Figure 4.9 Comparison of Quarterly Return
60 50 40 30
Return

20 10 0 -10 -20 -30 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

74

Table 4.10 HDFC Long Term Advantage V/S Index Return

Year 2008 2009 2010 2011 2012 Total

Rp -52.39 88.89 28.37 -23.48 28.83 70.22

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

14.044 9.414 0.90

SDRp SDRm Sharpe

25.98 27.15 0.16

Source: Secondary data

75

Inference From the Table 4.10, the fund has performed fairly; the return of the fund is greater for the period 2009, and 2012. The fund has fairly performed in 2010. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 88.89 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.16 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 25.98, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks.

Figure 4.10 Comparison of Fund Return and Index Return

100 80 60 R e t u r n 40 20 0 -20 -40 -60 Year 2008 2009 2010 2011 2012 Rp Rm

76

4.7BIRLA SUNLIFE TAX PLAN Table: 4.11 Birla Sunlife Tax Plan Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 15.76 -4.15 -0.24 -0.29 -30.66 Q2 -0.33 -1.74 0.51 42.76 -15.17 Q3 10.23 -8.45 12.2 18.6 -5.1 Q4 7.22 -10.54 0.8 5.61 -24.22 Average 8.22 -6.22 3.3175 16.67 -18.7875

Source: Secondary data

Inference From the Table 4.11, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -18.7875 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 16.67. In the year 2010, Q2, Q3, Q4 quarter had positive return with average return of 5.6225. In 2011 return fell back to negative in all quarter with an average return of -6.22. In 2012 return back to positive return for Q1, Q3, Q4 quarter with an average return of 8.22 Figure 4.11 Comparison of Quarterly Return
50 40 30 20
Return

10 0 -10 -20 -30 -40 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

77

Table 4.12 Birla Sunlife Tax Plan V/S Index Return

Year 2008 2009 2010 2011 2012 Total

Rp -57.69 78.31 13.40 -22.86 36.38 47.54

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

9.508 9.414 0.88

SDRp SDRm Sharpe

26.21 27.15 0.01

Source: Secondary data

78

Inference From the Table 4.12, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 78.31 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.88 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 26.21, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks.

Figure4.11 Comparison of Fund Return and Index Return


100 80 60 R e t u r n 40 20 0 -20 -40 -60 -80 Year 2008 2009 2010 2011 2012 Rp Rm

79

4.8 PRINCIPAL PERSONAL TAX SAVER Table: 4.13 Principal Personal Tax Saver Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 16.02 -8.05 0.21 -2.38 -31.15 Q2 0.85 -2.19 4.02 48.42 -14.6 Q3 9.1 -12.59 1.92 21.84 -8.45 Q4 5.62 -9.27 -1.25 5.85 -29.24 Average 7.8975 -8.025 3.975 18.4325 -20.86

Source: Secondary data

Inference From the Table 4.13, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -20.86 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 18.4325. In the year 2010, all quarter had positive return except for the Q4, with average return of 3.975. In 2011 return fell back to negative in all quarter with an average return of -8.025. In 2012 return back to positive return for all the quarter with an average return of 7.8975 Figure 4.13 Comparison of Quarterly Return
60 50 40 30
Return

20 10 0 -10 -20 -30 -40 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

80

Table 4.14 Principal Personal Tax Saver V/S Index Return

Year 2008 2009 2010 2011 2012 Total

Rp -61.91 86.87 16.23 -28.67 34.83 47.35

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

9.47 9.414 0.95

SDRp SDRm Sharpe

28.28 27.15 -0.06

Source: Secondary data

81

Inference From the Table 4.14, the fund has performed poorly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 86.87 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.95 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 28.28 which is more volatile from the normal return to that of the benchmark at 27.15 has lower risks.

Figure 4.14 Comparison of Fund Return and Index Return


100 80 60 R e t u r n 40 20 0 -20 -40 -60 -80 Year 2008 2009 2010 2011 2012 Rp Rm

82

4.9 FRANKLIN INDIA TAX SHIELD Table: 4.15 Franklin India Tax Shield Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 14.47 -3.19 4.95 -1.91 -25.63 Q2 -1.18 0.19 1.74 49.52 -14.09 Q3 7.66 -5.56 14.24 14.91 0.23 Q4 6.24 -6.77 1.23 8.28 -20.69 Average 6.7975 -4.0025 5.5375 16.95 -15.045

Source: Secondary data Inference From the Table 4.15, the four quarters of year 2008, there is a negative return due to the financial crisis except shown a positive of 0.23 in Q3 . The average return is -15.045 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of16.95. In the year 2010, all quarter had positive return with average return of 5.5375. In 2011 return fell back to negative inQ1, Q3, Q4 quarter with an average return of -4.0025. In 2012 return back to positive return for Q1, Q3, Q4 quarter with an average return of 6.7975 Figure 4.15 Comparison of Quarterly Return
60 50 40 30
Return

Q1 Q2 Q3 2012 2011 2010 2009 2008 Q4

20 10 0 -10 -20 -30 Year

83

Table 4.16 Franklin India Tax Shield V/S Index Return

Year 2008 2009 2010 2011 2012 Total

Rp -49.22 78.81 23.47 -15.19 29.38 67.25

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

13.45 9.414 0.80

SDRp SDRm Sharpe

23.82 27.15 0.18

Source: Secondary data

84

Inference From the Table 4.16, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 78.81 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.80 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 23.82, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks.

Figure 4.16 Comparison of Fund Return and Index Return


100 80 60 R e t u r n 40 20 0 -20 -40 -60 Year 2008 2009 2010 2011 2012 Rp Rm

85

4.10 DSP BLACKROCK TAX SAVER Table 4.17 DSP BLACKROCK Tax Saver Quarterly Return Year 2012 2011 2010 2009 2008 Inference From the Table 4.17, for the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -18.265 which is a loss for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 18.025. In the year 2010, Q1, Q2, Q3 quarter had positive return with average return of 5.4775. In 2011 return fell back to negative in all quarter with an average return of -7.38. In 2012 return back to positive return for all quarter with an average return of 8.88875 Figure 4.17 Comparison of Quarterly Return
60 50 40 30
Returen

Q1 16.79 -8.3 4.49 -3.28 -32.75

Q2 0.79 -0.78 5.86 47.9 -10.49

Q3 9.68 -11.3 12.54 21.28 -8.19

Q4 8.29 -9.14 -0.98 6.2 -21.63

Average 8.8875 -7.38 5.4775 18.025 -18.265

Source: Secondary data

20 10 0 -10 -20 -30 -40 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

86

Table 4.18 DSP BLACKROCK Tax Saver V/S the Index return

Year 2008 2009 2010 2011 2012 Total

Rp -56.68 84.22 23.26 -26.68 39.81 63.93

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

12.786 9.414 0.87

SDRp SDRm Sharpe

26.00 27.15 0.10

Source: Secondary data

87

Inference From the Table 4.18, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 84.22 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.87 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 26.00, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks.

Figure 4.18 Comparison of Fund Return and Index Return


100 80 60 R e t u r n 40 20 0 -20 -40 -60 -80 Year 2008 2009 2010 2011 2012 Rp Rm

88

4.11 TATA TAX SAVINGS FUND Table 4.19 TATA Tax Savings Fund Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 12.07 -5.77 1.15 -2 -27.56 Q2 -0.42 0.15 2.96 46.3 -16.03 Q3 829 7.58 11.1 16.97 -2.86 Q4 5.39 -6.37 1.98 7.53 -23.34 Average 6.325 -4.8925 4.295 17.205 -17.6975

Source: Secondary data

Inference From the Table 4.19, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -17.6975 which is a loss for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 17.205.In the year 2010 all quarter had positive return with average return of 4.285. In 2011 return fell back to negative in the first quarter and last with an average return of -4.8925. In 2012 return back to positive return for Q1, Q3, Q4 quarter with an average return of 6.325 Figure 4.19 Comparison of Quarterly Return
60 50 40 30
Return

20 10 0 -10 -20 -30 -40 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

89

Table 4.20 TATA Tax Savings Fund V/S the Index return

Year 2008 2009 2010 2011 2012 Total

Rp -55.17 80.37 17.97 -18.34 27.32 52.14

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

10.428 9.414 0.84

SDRp SDRm Sharpe

25.14 27.15 0.06

Source: Secondary data

90

Inference From the Table 4.20, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 80.37 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.84 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 25.14, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks.

Figure 4.18 Comparison of Fund Return and Index Return


100 80 60 R e t u r n 40 20 0 -20 -40 -60 -80 Year 2008 2009 2010 2011 2012 Rp Rm

91

4.12 HSBC TAX SAVER EQUITY Table 4.21 HSBC TAX SAVER Equity Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 15.58 -8.39 2.08 -1.77 -32.11 Q2 1.87 -1.36 2.4 42.63 -10.53 Q3 9.394 -10.6 12.45 19.53 -3.34 Q4 7.33 -6.22 0.3 7.53 -17.72 Average 8.68 -6.6425 4.3025 16.98 -15.925

Source: Secondary data

Inference From the Table 4.21, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -15.925 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 16.98. In the year 2010 all quarter had positive return with average return of 4.3025. In 2011 return fell back to negative in all quarter with an average return of -6.6425. In 2012 return back to positive return for all quarter with an average return of 8.68. Figure 4.21 Comparison of Quarterly Return
50 40 30 20
Return

10 0 -10 -20 -30 -40 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

92

Table4.22 HSBC Tax Saver Equity V/S the Index return

Year 2008 2009 2010 2011 2012 Total

Rp -51.69 80.08 17.90 -24.24 38.93 60.98

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

12.196 9.414 0.80

SDRp SDRm Sharpe

24.04 27.15 0.23

Source: Secondary data

93

Inference From the Table 4.22, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 80.08 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.80 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 24.04, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks.

Figure 4.22 Comparison of Fund Return and Index Return

100 80 60 R e t u r n 40 20 0 -20 -40 -60 Year 2008 2009 2010 2011 2012 Rp Rm

94

4.13 BNP PARIBAS TAX ADVANTAGE PLAN Table 4.23 BNP PARIBAS Tax Advantage Plan Gain Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 15.23 -6.61 1.09 -1.7 -38.05 Q2 0.96 3.38 4.6 39.2 -19.41 Q3 7.37 -4.85 11.49 19.35 -9.45 Q4 7.53 -7.47 -2.52 4.2 -23.8 Average 7.7725 -3.8875 3.665 15.2625 -22.6775

Source: Secondary data

Inference From the Table 4.23, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -22.6775 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 15.2625. In the year 2010, Q1, Q2, Q3 quarters had positive return with average return of 3.665. In 2011 return fell back to negative in Q1, Q3, Q4 quarters with an average return of -3.8875. In 2012 return back to positive return for all quarter with an average return of 7.7725 Figure 4.23 Comparison of Quarterly Return
50 40 30 20
Return

10 0 -10 -20 -30 -40 -50 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

95

Table 4.24 BNP PARIBAS Tax Advantage Plan V/S the Index return

Year 2008 2009 2010 2011 2012 Total

Rp -65.56 70.18 14.92 -15.00 34.31 38.85

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

7.77 9.414 0.82

SDRp SDRm Sharpe

24.78 27.15 -0.03

Source: Secondary data

96

Inference From the Table 2.24, the fund has performed poorly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 70.18 at positive zone. The average return of the fund is not satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.82 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 24.78, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks.

Figure 4.24 Comparison of Fund Return and Index Return

100 80 60 R e t u r n 40 20 0 -20 -40 -60 -80 Year 2008 2009 2010 2011 2012 Rp Rm

97

4.14 RELIGARE TAX PLAN Table 4.25 RELIGARE Tax Plan Gain Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 14.46 -6.13 3.35 -4.34 -25.49 Q2 -.75 3.55 6.04 43.7 -19.35 Q3 8.17 -8.02 12.88 23.14 -1.42 Q4 6.04 -9.32 -1.27 8.4 -14.78 Average 6.98 -4.98 5.25 17.725 -15.26

Source: Secondary data

Inference From the Table 4.25, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -15.26 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 17.725. In the year 2010, Q1, Q2, Q3 quarters had positive return with average return of 5.25. In 2011 return fell back to negative in Q1, Q3, Q4 quarters with an average return of -4.98. In 2012 return back to positive return for Q1, Q3, Q4 quarters with an average return of 6.98 Figure 4.25 Comparison of Quarterly Return
50 40 30 20 10 0 -10 -20 -30 2012 2011 2010 2009 2008 Q1 Q2 Q3 Q4

98

Table 4.26 RELIGARE Tax Plan V/S the Index return

Year 2008 2009 2010 2011 2012 Total

Rp -49.51 83.49 22.13 -18.92 30.31 67.5

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

13.5 9.414 0.82

SDRp SDRm Sharpe

24.77 27.15 0.21

Source: Secondary data

99

Inference From Table 4.26, the fund has performed fairly well; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 83.49 at positive zone. The average return of the fund is not satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.82 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 24.77, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks.

Figure 4.26 Comparison of Fund Return and Index Return


100 80 60 R e t u r n 40 20 0 -20 -40 -60 Year 2008 2009 2010 2011 2012 Rp Rm

100

4.15 KOTAK TAX SAVER Table 4.27 KOTAK Tax Saver Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 17.06 -7.92 2.6 -4.27 -30.34 Q2 .81 -0.24 3.62 47.41 -17.86 Q3 9.13 -11.75 14.2 18.38 -7.26 Q4 5.81 -8.76 -1.22 4.76 -23.45 Average 8.2025 -7.1675 4.8 16.57 -19.7275

Source: Secondary data

Inference From Table 4.27, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -19.7275 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 16.57. In the year 2010, Q1, Q2, Q3 quarters had positive return with average return of 4.8. In 2011 return fell back to negative in all quarters with an average return of -7.1675. In 2012 return back to positive return for all quarters with an average return of 8.2025. Figure4.27 Comparison of Quarterly Return
60 50 40 30
Return

20 10 0 -10 -20 -30 -40 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

101

Table 4.28 KOTAK Tax Saver V/S the Index return Year 2008 2009 2010 2011 2012 Total Rp -59.38 74.99 19.93 -26.03 36.25 45.76 Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

9.152 9.414 0.97

SDRp SDRm Sharpe

28.87 27.15 -0.03

Source: Secondary data

102

Inference

From the Table 4.28, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 74.99 at positive zone. The average return of the fund is not satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.97 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 28.87, which is more volatile from the normal return to that of the benchmark at 27.15 has lower risks.

Figure 4.28 Comparison of Fund Return and Index Return

100 80 60 R e t u r n 40 20 0 -20 -40 -60 -80 Year 2008 2009 2010 2011 2012 Rp Rm

103

4.16 ING TAX SAVING FUND Table 4.29 ING Tax Saving Fund Quarterly Return
Year 2012 2011 2010 2009 2008 Q1 9.06 -5.48 2.55 -2.3 -33.39 Q2 -.98 -1.45 7.6 52.39 -12.79 Q3 5.75 -9.22 12.25 23.9 -12.04 Q4 5.26 -6.96 1.65 5.85 -31.46 Average 4.7725 -5.7775 6.0125 19.96 -22.42

Source: Secondary data

Inference From the Table 4.29, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -22.42 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 19.96. In the year 2010, all quarters had positive return with average return of 6.0125. In 2011 return fell back to negative in all quarters with an average return of -5.7775. In 2012 return back to positive return for Q1, Q3, Q4 quarters with an average return of 4.7725 Figure4.29 Comparison of Quarterly Return
60 50 40 30
Return

20 10 0 -10 -20 -30 -40 Year 2012 2011 2010 2009 2008

Q1 Q2 Q3 Q4

104

Table4.30 ING Tax Saving Fund V/S the Index return

Year 2008 2009 2010 2011 2012 Total

Rp -64.98 95.26 25.90 -21.32 20.21 55.07

Rm -52.45 81.03 17.43 -24.64 25.70 47.07

Arp Arm Beta

11.014 9.414 1.00

SDRp SDRm Sharpe

30.05 27.15 -0.01

Source: Secondary data

105

Inference

From the Table 4.30, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 95.26 at positive zone. The average return of the fund is not satisfactory compared to the benchmark index mean. The Beta of this scheme was 100 which show that it is volatile and it has risks than compared to the benchmark index. Its standard deviation was at 30.05, which is more volatile from the normal return to that of the benchmark at 27.15 has lower risks.

Figure 4.30 Comparison of Fund Return and Index Return

120 100 80 R e t u r n 60 40 20 0 -20 -40 -60 -80 Year 2008 2009 2010 2011 2012 Rp Rm

106

Table 4.31 Comparative Performance Analysis based on Sharps Ratio


Schemes HSBC Tax Saver Equity Religare Tax Plan Franklin India Tax Shield ICICI Prudential Tax Plan HDFC Tax Saver HDFC Long Term Advantage DSP BlackRock Tax Saver TATA Tax Savings Fund Principal Personal Tax Saver SBI Magnum Tax Gain Birla Sun Life Tax Relief 96 Birla SunLife Tax Plan ING Tax Saving Fund BNP Paribas Tax Advantage Plan Kotak Tax Saver Ranking 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

107

Hypothesis Ho: there is no relationship between the scheme return and index return H1: there is significant relation between scheme return and index return

Taking the correlation of the first 5 ranked ELSS schemes with its index return Table 4.32 Top 5 Schemes Return and its Correlation to Index Return
Schemes HSBC Tax Saver Equity Religare Tax Plan Franklin India Tax Shield ICICI Prudential Tax Plan HDFC Tax Saver Correlation 0.993597 0.999681 0.997763 0.998663 0.997295 Inference Highly Positive Correlation Highly Positive Correlation Highly Positive Correlation Highly Positive Correlation Highly Positive Correlation

From the Table 4.32, we can see that all the top 5 schemes is highly positive correlation to the index return Therefore reject null hypothesis, that is, there is significant relation between scheme return and index return

108

CHAPTER 5 FINDINGS, CONCLUSION AND RECOMMENDATION

109

5.1 FINDINGS

All funds had a step declined in the year 2008 and 2010 because of financial crisis and melt down stock market.

The analysis of Mutual funds schemes based on NAV returns for a period of 5 years ranked. Some Equity Linked Savings Schemes have shown better returns than their respective benchmark index. The beta of Birla Sun Life Tax Relief 96, Principal Personal Tax Saver Kotak Tax Saver, ING Tax Saving Fund suggest that they are highly sensitive be relative to the market as a whole. The beta of SBI Magnum Tax Gain, HDFC Tax Saver, ICICI Prudential Tax Plan, HDFC Long Term Advantage, Birla Sunlife Tax Plan, Franklin India Tax Shield, DSP BlackRock Tax Saver, TATA Tax Savings Fund, HSBC Tax Saver Equity, BNP Paribas Tax Advantage Plan, Religare Tax Plan Gain suggest that they are less sensitive be relative to the market as a whole. The performance measures of all Equity Linked Savings Schemes are not that satisfactory on an average, but some are having fairly good return. SBI MAGNUM TAX GAIN the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -17.6475 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 18.1825. In the year 2010 all quarter had positive return with average return of 3.1675. In 2011 return fell back to negative in all quarter with an average return of -6.435. In 2012 return back to positive return for all quarter with an average return of 7.817. 110

SBI MAGNUM TAX GAIN, the fund has performed fairly; the return of the fund is greater for the period 2009, and 2012. The fund has fairly performed in 2010. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 86.41 at positive zone. SBI MAGNUM TAX GAIN, the average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.90 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 26.57 not much comparable to that of the benchmark at 27.15 has lower risks. The sharps ratio is 0.03. For the four quarters of year 2008, BIRLA SUN LIFE TAX RELIEF 96, there is a negative return due to the financial crisis. The average return is -21.16 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 21.52. In the year 2010 Q1, Q2, Q3 quarter had positive return with average return of 3.33. In 2011 return fell back to negative in all quarter with an average return of -8.3175. In 2012 return back to positive return for Q1, Q3, Q4with an average return of 8.265. BIRLA SUN LIFE TAX RELIEF 96, the fund has performed fairly; the return of the fund is greater for the period 2009, and 2012. The fund has fairly performed in 2010. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 102.77 at positive zone.

BIRLA SUN LIFE TAX RELIEF 96,The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 1.05 which shows that it is more volatile and it has larger risks than compared to the benchmark index. Its standard deviation was at 31.50, which is much deviation from the normal return to that of the benchmark at 27.15 has lower risks. The standard deviation of fund return and Index return is satisfactory. The sharp ratio is 0.02

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HDFC TAXSAVER, the four quarters of year 2008, there is a negative return due to the financial crisis, but had a positive return for the Q3. The average return is -175.72 which is a loss for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 20.41. In the year 2010 quarter had positive return for Q1, Q2, and Q3 with average return of 6.1775. In 2011 return fell back to negative in all quarter with an average return of -6.1025. In 2012 return back to positive return for all quarter with an average return of 4. HDFC TAXSAVER, the fund has performed fairly; the return of the fund is greater for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 99.07 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.88 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 26.54 not much comparable to that of the benchmark at 27.15 has lower risks. The sharps ratio is 0.18. ICICI PRUDENTIAL TAX PLAN, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -18.0175 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 22.1325. In the year 2010, all quarter had positive return with average return of 5.6225. In 2011 return fell back to negative inQ1, Q3, Q4 quarter with an average return of -6.52. In 2012 return back to positive return for all the quarter with an average return of 8.5025. ICICI PRUDENTIAL TAX PLAN, the fund has performed fairly; the return of the fund is greater for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 112.00 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.18 which shows that it is less volatile and it has lesser risks than compared to the benchmark

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index. Its standard deviation was at 28.39 not much comparable to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is 0.18. HDFC LONG TERM ADVANTAGE, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -16.4025 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 18.985. In the year 2010 all quarter had positive return with average return of 6.575. In 2011 return fell back to negative with only Q2 in positive with an average return of -6.38. In 2012 return back to positive return for Q1, Q3, Q4with an average return of 6.7625. HDFC LONG TERM ADVANTAGE, the fund has performed fairly; the return of the fund is greater for the period 2009, and 2012. The fund has fairly performed in 2010. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 88.89 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.16 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 25.98, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is 0.16. BIRLA SUNLIFE TAX PLAN, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -18.7875 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 16.67. In the year 2010, Q2, Q3, Q4 quarter had positive return with average return of 5.6225. In 2011 return fell back to negative in all quarter with an average return of -6.22. In 2012 return back to positive return for Q1, Q3, Q4 quarter with an average return of 8.22.

BIRLA SUNLIFE TAX PLAN, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and 113

market index return at negative zone due to financial crisis. In 2009 it has increased by 78.31 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.88 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 26.21, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is 0.01.

PRINCIPAL PERSONAL TAX SAVER, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is 20.86 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 18.4325. In the year 2010, all quarter had positive return except for the Q4, with average return of 3.975. In 2011 return fell back to negative in all quarter with an average return of -8.025. In 2012 return back to positive return for all the quarter with an average return of 7.8975. PRINCIPAL PERSONAL TAX SAVER, the fund has performed poorly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 86.87 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.95 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 28.28, which is more volatile from the normal return to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is -0.06. FRANKLIN INDIA TAX SHIELD, the four quarters of year 2008, there is a negative return due to the financial crisis except shown a positive of 0.23 in Q3 . The average return is -15.045 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of16.95. In the year 2010, all quarter had positive return with average return of 5.5375. In 2011 return fell back to

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negative inQ1, Q3, Q4 quarter with an average return of -4.0025. In 2012 return back to positive return for Q1, Q3, Q4 quarter with an average return of 6.7975.

FRANKLIN INDIA TAX SHIELD, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 78.81 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.80 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 23.82, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is 0.18. DSP BLACKROCK TAX SAVER, for the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -18.265 which is a loss for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 18.025. In the year 2010, Q1, Q2, Q3 quarter had positive return with average return of 5.4775. In 2011 return fell back to negative in all quarter with an average return of -7.38. In 2012 return back to positive return for all quarter with an average return of 8.88875.

DSP BLACKROCK TAX SAVER, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 84.22 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.87 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 26.00, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is 0.10.

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TATA TAX SAVINGS FUND, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -17.6975 which is a loss for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 17.205.In the year 2010 all quarter had positive return with average return of 4.285. In 2011 return fell back to negative in the first quarter and last with an average return of -4.8925. In 2012 return back to positive return for Q1, Q3, Q4 quarter with an average return of 6.325.

TATA TAX SAVINGS FUND, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 80.37 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.84 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 25.14, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is 0.06. HSBC TAX SAVER EQUITY, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -15.925 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 16.98. In the year 2010 all quarter had positive return with average return of 4.3025. In 2011 return fell back to negative in all quarter with an average return of 6.6425. In 2012 return back to positive return for all quarter with an average return of 8.68. HSBC TAX SAVER EQUITY, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 80.08 at positive zone. The average return of the fund is also satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.80 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its 116

standard deviation was at 24.04, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is 0.23. BNP PARIBAS TAX ADVANTAGE PLAN, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -22.6775 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 15.2625. In the year 2010, Q1, Q2, Q3 quarters had positive return with average return of 3.665. In 2011 return fell back to negative in Q1, Q3, Q4 quarters with an average return of -3.8875. In 2012 return back to positive return for all quarter with an average return of 7.7725. BNP PARIBAS TAX ADVANTAGE PLAN, the fund has performed poorly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 70.18 at positive zone. The average return of the fund is not satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.82 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 24.78, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is -0.03. RELIGARE TAX PLAN, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -15.26 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 17.725. In the year 2010, Q1, Q2, Q3 quarters had positive return with average return of 5.25. In 2011 return fell back to negative in Q1, Q3, Q4 quarters with an average return of 4.98. In 2012 return back to positive return for Q1, Q3, Q4 quarters with an average return of 6.98. RELIGARE TAX PLAN, the fund has performed fairly well; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased 117

by 83.49 at positive zone. The average return of the fund is not satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.82 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 24.77, which is less volatile from the normal return to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is 0.21.

KOTAK TAX SAVER, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -19.7275 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 16.57. In the year 2010, Q1, Q2, Q3 quarters had positive return with average return of 4.8. In 2011 return fell back to negative in all quarters with an average return of -7.1675. In 2012 return back to positive return for all quarters with an average return of 8.2025. KOTAK TAX SAVER, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 74.99 at positive zone. The average return of the fund is not satisfactory compared to the benchmark index mean. The Beta of this scheme was 0.97 which shows that it is less volatile and it has lesser risks than compared to the benchmark index. Its standard deviation was at 28.87, which is more volatile from the normal return to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is -0.03. ING TAX SAVING FUND, the four quarters of year 2008, there is a negative return due to the financial crisis. The average return is -22.42 which a loss is for the investor. For the year 2009, there was a recovery from the financial crisis which made the return to jump back to positive figures for the Q2, Q3 and Q4 with an average return of 19.96. In the year 2010, all quarters had positive return with average return of 6.0125. In 2011 return fell back to negative in all quarters with an average return of 5.7775. In 2012 return back to positive return for Q1, Q3, Q4 quarters with an average return of 4.7725.

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ING TAX SAVING FUND, the fund has performed fairly; the return of the fund is in positive for the period 2009, 2010 and 2012. In 2008 and 2011 fund return and market index return at negative zone due to financial crisis. In 2009 it has increased by 95.26 at positive zone. The average return of the fund is not satisfactory compared to the benchmark index mean. The Beta of this scheme was 100 which show that it is volatile and it has risks than compared to the benchmark index. Its standard deviation was at 30.05, which is more volatile from the normal return to that of the benchmark at 27.15 has lower risks. The sharps ratio for the scheme is -0.01. HSBC Tax Saver Equity scheme is the having the highest Sharp. The schemes return is highly correlated to the index return, that is the market fluctuation has an high impact on the schemes.

5.2 CONCLUSION

Saving money is not enough. Each of us also need to invest the savings intelligently in order to have enough money available for funding the higher education of ones chi ldren, for buying a house, or for ones own golden years.

The study will guide the new investor who wants to invest in mutual fund schemes by providing knowledge about how to measure the risk and return of particular scrip or mutual fund schemes of different companies. The biggest advantage of the Mutual Funds is the diversified investment and transparency in the operation of the Asset management Company.

The study is about understanding and comparing the various tax saving instruments in the market with focus on the equity linked saving schemes. The performance of various funds is evaluated using various parameters of risk and return and comparing their performance with

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its benchmark S&P BSE SENSEX. It is just not the past performance or returns, but qualitative criteria like reputation and performance of fund house, credentials and expertise of the fund manager and the other funds managed.

Finally, the fund chosen by the investor should match the risk appetite of the investor. It is suggested that the equity linked saving scheme should be seriously considered by investors because of the dual advantage of tax saving and high return.

5.3 SUGGESTIONS

For the scheme, SBI MAGNUM TAX GAIN, beta is less volatile. Hence it is suggested that the companies should not reallocate their funds according to the market performance. For the scheme, BIRLA SUNLIFE TAX PLAN RELIEF 96, the beta of the scheme shows that its more sensitive to the index. Hence it is suggested that the companies can reallocate their funds according to the market performance. For the scheme, HDFC TAXSAVER, the beta of the scheme shows that its less sensitive to the index. Hence it is suggested that the companies should not reallocate their funds according to the market performance.

The beta of ICICI PRUDENTIAL TAX PLAN is high and it is more volatile. Hence it is suggested that the companies can reallocate their funds according to the market performance.

The beta of HDFC LONG TERM ADVANTAGE is low and it is less volatile. Hence it is suggested that the companies should not reallocate their funds according to the market performance.

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The beta of BIRLA SUNLIFE TAX PLAN is low and it is less volatile. Hence it is suggested that the companies should not reallocate their funds according to the market performance. The beta of PRINCIPAL PERSONAL TAX SAVER is high and it is more volatile. Hence it is suggested that the companies can reallocate their funds according to the market performance. The beta of FRANKLIN INDIA TAX SHIELD is high and it is more volatile. Hence it is suggested that the companies can reallocate their funds according to the market performance. The beta of DSP BLACKROCK TAX SAVER is low and it is less volatile. Hence it is suggested that the companies should not reallocate their funds according to the market performance. The beta of TATA TAX SAVINGS FUND is low and it is less volatile. Hence it is suggested that the companies should not reallocate their funds according to the market performance. The beta of HSBC TAX SAVER EQUITY is low and it is less volatile. Hence it is suggested that the companies should not reallocate their funds according to the market performance. The beta of BNP PARIBAS TAX ADVANTAGE PLAN is low and it is less volatile. Hence it is suggested that the companies should not reallocate their funds according to the market performance.

The beta of RELIGARE TAX PLAN is low and it is less volatile. Hence it is suggested that the companies should not reallocate their funds according to the market performance

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The beta of KOTAK TAX SAVER is high and it is more volatile. Hence it is suggested that the companies can reallocate their funds according to the market performance

The beta of ING TAX SAVING FUND is high and it is more volatile. Hence it is suggested that the companies can reallocate their funds according to the market performance The top 5 schemes are: HSBC TaxSaver Equity, Religare Tax Plan, Franklin India Tax Shield, ICICI Prudential Tax Plan and HDFC TaxSaver. Investing in HSBC Tax Saver Equity is the best option in all 15 schemes according to Sharps Index

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BIBLIOGRAPHY
BOOKS Chandra Prasanna, Investment Analysis and Portfolio Management, 2nd edition, Tata McGraw-Hill publishing company Ltd., New Delhi, 2005. Fischer Donald E & Ronald Jordan J, Security Analysis and Portfolio Management, 6th edition, Pearson Prentice Hall, New Delhi, 2009.

Avadhani V.A, Investments and Securities Markets in India,2nd edition Himalaya Publishing House, 2003.

JOURNALS Indian journal of finance, Vol III, Jan 2011

WEBSITES www.valueresearchonline.com www.mutualfundindia.com www.amfiindia.com www.moneycontrol.com www.bseindia.com www.yahoofinance.com www.sebi.gov.in www.morningstar.in

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ANNEXURE

STANDARD DEVIATION Standard Deviation (Risk) of the Fund:

p =

n Rp2

- ( R )
p

1/2

n2
Where: p : Risk of the Fund. Rp : Return of the fund.

Standard Deviation (Risk) of the benchmark index:

1/2 m= += n Rm2

- ( R )
m

n2

Where Rm Index Return (Market Return) m Risk of the Index

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BETA Beta of the Fund: Where:

p =

(Rp - ARp) (Rm ARm


n
i=1

p : Beta of the fund. Rp: Return of the fund. ARp: Average return of the Mutual Fund Scheme. ARm: Average return of the benchmark index.

Rm ARm2

SHARPES MEASURE

Sharp index = Portfolio average return risk free rate of return / standard deviation of the Portfolio return

CORRELATION

x: return of fund y: return of index

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