A Comparative Study of Mutual Fund Schemes of State Bank of India and Unit Trust of India

VolII,No.
6,December2013(ISSN2319250X)
ACOMPARATIVESTUDYOFMUTUALFUNDSCHEMESOFSTATEBANKOF
INDIAANDUNITTRUSTOFINDIA
By
TOMJACOB,
AssistantProfessor,Dept.ofCommerce,ChristCollege,Irinjalakuda.
ANILASHELVI
B.ComStudent,Dept.ofCommerce,ChristCollege,Irinjalakuda.
&
ATHIRA.A.R.
B.ComStudent,Dept.ofCommerce,ChristCollege,Irinjalakuda
ABSTRACT
Mutual fund industry has experienced a drastic growth in the past two decades. Increase in the
numberofschemeswithincreasedmobilizationoffundsinthepastfewyearsshowstheimportanceofIndian
mutualfundsindustry.Properassessmentofvariousfundperformanceandtheircomparisonwithotherfunds
helpsretailinvestorsformakinginvestmentdecisions.Amongvariousfinancialproducts,mutualfundensures
theminimumrisksandmaximumreturnstotheinvestors,Growthanddevelopmentsofvariousmutualfunds
products in the Indian capital market have proved as one of the most catalytic instruments in generating
momentous investment growth in the capital market. In this context, close monitoring and evaluation of
mutual funds have become essential. Therefore, choosing profitable mutual funds for investment is a very
important issue. The main objectives of this research work are to analysis financial performance of selected
mutual fund schemesthrough the statistical parameters suchas (alpha,beta, standarddeviation, rsquared,
Sharpe ratio). The findings of this research study will be helpful to investors for their future investment
decisions.
KEYWORDS:MutualFund,NAV,Beta,SharpeRatio,StandardDeviation
INTRODUCTION
Presentlymutualfundshavebecomehotfavoriteofmillionsofpeopleallovertheworld.A
mutualfundisaninvestmentvehicleforinvestorswhopooltheirsavingsforinvestingindiversified
portfolioofsecuritieswiththeaimofattractiveyieldandappreciationinvalue.Thedrivingforceof
mutual fund is the safety of the principal guaranteed plus the added advantage of capital
appreciationwiththeincomeearnedintheformofcollectiveinvestment.Itisformedbythecoming
together of a number of investors who transfer their surplus funds to a professionally qualified
organization to manage it. It has emerged as a popular vehicle of creation of wealth due to high
return,lowercostofwealthanddiversifiedrisk.OnecanownastringofbluechipslikeITC,TISCO,
and Reliance etc. Thus mutual fund acts as a gateway to enter into big companies hitherto
inaccessibletoanordinaryinvestorwithhissmallinvestment.
Mutual funds provide professional management, diversification, convenience and liquidity.
That does not mean investments are risk free. This is because the money that is pooled is not
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JournalofBusinessManagement,Commerce&Research
Vol.II,No.6,December2013(ISSN2319250X)
AcomparativestudyofMutualFundSchemesof
StateBankofIndiaandUnitTrustofIndia
investedonlyindebtsecuritieswhicharelessrisky,butalsoinstockmarketswhichinvolveshigher
risk.
Inafewyearsmutualfundshasemergedasatoolforensuringonesfinancialwellbeing.
MutualFundshavenotonlycontributedtothecountrysgrowthstorybuthavealsohelpedfamilies
tapintothesuccessofIndianIndustry.Themainreasonthenumberofinvestorsremainsmallisthat
nineintenpeoplewithincomesinIndiadonotknowthatmutualfundsexist.Butoncepeopleare
awareofmutualfundinvestmentopportunities,the numberwhodecidetoinvestinmutualfunds
increases to as many as one in five people. With emphasis on increase in domestic savings and
improvement in deployment of investment through markets, the need and scope for mutual fund
operationshasincreasedtremendously.Thustheinvolvementinmutualfundsinthetransformation
ofIndianeconomyhasmadeiturgenttoviewtheirservicesnotonlyasafinancialintermediarybut
alsoasapacesetterastheyareplayingasignificantroleinspreadingequityculture.
Operationaldefinition
AccordingtoSEBI(MutualFunds)(Amendment)Regulation,2008Mutualfundmeansafund
establishedintheformofatrusttoraisemoniesthroughthesaleofunitstopublicorasectionof
the public under one or more schemes for investing in securities including money market
instrumentsorgoldorgoldrelatedinvestmentsorrealassets
Statementoftheproblem
Mutualfundisanemerginginvestmentarea.Butcommonpeoplehavealotofconfusionsin
selectingthebestmutualfundforinvestment.Thestudyaimsatmeasurementofperformance of
mutualfundschemesonthebasisofriskandreturn andselectingthemostbeneficialoneonthe
basisofriskandreturnIthelpstheinvestorstoselectthebestmutualfundschemetoinvesttheir
money.
Scopeandsignificanceofthestudy
Today in India there are a lot of mutual fund schemes available for investment. However
investinginmutualfundisalittledifficultprocessforalayman.Theyselectthosemutualfundsthat
heavilyadvertiseandsellaggressivelywithoutpayingattentiontotheirperformance.
Thisstudyisaimingatanalyzingtheperformanceofmutualfundsschemeandselectingthe
bestonebyconsideringtheaspectsofriskandreturn.Thisstudycoversthe15selectedschemesof
StateBankofIndiaMutualFundandUnitTrustofIndiaMutualFund
OBJECTIVESOFTHESTUDY
The following are the main objectives of A Comparative Study of Mutual Fund Schemes of
1. TocomparevariousmutualfundschemesofStateBankofIndiaMutualFundandUnitTrust
ofIndiaMutualFund.
2. TomeasureandevaluatetheperformanceofmutualfundsintermsofReturn.
3. Toknowthepotentialriskinvolvedineachmutualfundscheme.
4. Tofindoutthebestmutualfundschemeintermsofriskandreturn
METHODOLOGY
Datacollection
This study is based on secondary data. It covers the information related to the selected
schemesofStateBankofIndiaMutualFundandUnitTrustofIndiaMutualFund.Dataiscollected
fromTheHandbookofStatisticsofIndianEconomy,HandbookofSEBI,IndianSecuritiesmarketetc.
Dataanalysis
The Net Asset Value Returns of various schemes of Reliance Mutual Fund and Unit Trust of
India Mutual Fund are analyzed .For measuring the risk various statistical toolslike beta, standard
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deviation etc. are used. To know the mutual fund having the highest return at each unit of risk,
Sharperatioisused.
Limitationsofthestudy
Secondarydatais usedforthisstudy.Sectorwiseclassificationofmutualfundanalysisisnot
possible. As the scope of this study is limited to the selected schemes, the investors cannot fully
dependonitsresults.
DATAANALYSIS
SBIMutualFund
Table1:showingtheaveragereturnofSBIMutualFundSchemes
AnnualReturn
Average
Return
No
Schemes
1
2
SBIBluechipFund
SBIContraFund
2009
87.9
90.55
2010
11.89
9.59
2011
24.23
28.24
2012
38.23
34.19
2013
7.58
1.75
24.274
20.868
SBIDynamicBondFund
1.8
7.58
11.58
10.97
3.77
7.14
SBIEmergingBusinessFund
108.96
33.08
10.58
56.31
7.87
35.98
SBIFMCGFund
66.37
48.08
6.18
55.3
9.29
37.044
SBIITFund
126.32
24.95
14.52
5.68
54.5
39.386
SBI Magnum Children's Benefit

13.67
Plan
10.79
0.21
19
0.07
8.72
SBImagnumEquityFund
18.32
19.71
29.89
5.54
24.396
SBIMagnumGiltFundShortTerm
3.17
Plan
5.18
8.36
9.19
8.75
5.662
10
SBIMagnumGlobalFund
119.56
18.1
14.21
35.98
9.71
33.828
11
SBIMagnumIncomeFund
2.43
4.88
8.59
12.55
3.93
5.504
12
SBIMagnumMidcapFund
104.11
14.7
25.79
47.98
13.57
30.914
13
SBIMagnumMulticapFund
80.82
9.76
30.69
38.35
5.2
20.688
14
SBI Magnum Multiplier Plus Fund

87.53
1993
19.3
25.79
47.98
13.57
28.518
15
SBINiftyIndexFund
17.99
24.61
28.36
6.19
20.534
87.94
74.74
Source:www.valueresearchonline.com
Interpretation
TheabovetableshowstheNAVReturnsover5yearsofSBIMutualFund.SBIITFundprovides
thehighestreturnamongtheschemesshowninthetablei.e.39.386%.Soonthebasisofreturns,SBI
ITFundisthebest.
Interpretation
TheabovetableshowstheNAVReturnsofvariousMutualFundSchemesofUTIMutualFund
for5yearsandtheiraverage.UTITransportationandLogisticsFundhasthehighestaveragereturnof
40.364%.Thereforeitisthebestschemeintermsofreturn.
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33
UTIMutualFund
Table2:ShowingtheAverageReturnofUTIMutualFund
AnnualReturn
No
Average
Return
Schemes
2009
2010
2011
2012
2013
1
2
3
4
UTIBalancedFund
UTIBankingSectorFund(Reg)
UTIBondFund
UTIDividendYieldFund
62.41
77.75
5.01
85.78
16.36
36.48
5.24
24.27
19.23
32.58
11.17
17.54
27.96
58.69
10.51
22.37
6.82
13.51
3.96
0.2
18.864
25.366
5.174
23.016
UTIFloatingRateFundST(Reg)
5.95
5.42
8.23
9.75
7.67
11.36
63.16
65.92
74.16
117.3
110.6
21.57
82.03
17.9
4.65
22.98
0.87
18.47
27.16
18.94
7.18
26.17
7.29
7.79
13.93
36.49
19.72
25.16
23.92
0.64
6.04
2.24
10.29
33.14
32.15
25.07
30.39
41.55
15.13
31.26
11.8
3.98
5.83
11.46
5.9
9.73
9.69
6.54
10.63
6.07
3.07
22.236
10.198
20.776
31.894
31.39
9.956
28.81
9.06
132.1
26.56
19.28
37.72
24.69
40.364
6
7
8
9
10
11
12
13
14
UTIGiltAdvantageFundLongTerm
UTIIndiaLifestyleFund
UTIInfrastructureFund
UTIMasterShareFund
UTIMastervalueFund
UTIMidcapFund
UTIMisAdvantagePlan
UTIMNCFund
UTIMonthlyIncomeScheme
UTITransportationandLogistics
15
Fund
SBIMutualFund
Table3:showingBetaofReliancemutualfundschemes
No
Scheme
Beta
1
2
0.88
0.91
SBIBluechipFund
SBIContraFund
3
4
5
6
7
8
9
10
11
12
13
14
15
SBIDynamicBondFund
SBIFMCGFund
SBIITFund
SBIMagnumChildren'sBenefitPlan
SBImagnumEquityFund
SBIMagnumGiltFundShortTermPlan
SBIMagnumGlobalFund
SBIMagnumIncomeFund
SBIMagnumMidcapFund
SBIMagnumMultiplierPlusFund1993
SBINiftyIndexFund
1.36
0.75
0.94
0.88
1.36
0.87
0.01
0.68
1.32
0.87
0.96
0.88
1
Interpretation
The above table shows that SBI Magnum Gilt Fund Short Term Plan has the lowest beta (
0.01).Thereforethatschemeislessrisky.Itmeansthateventhoughthemarketisdown,thisscheme
willbesafe.Ithasthelowestsystematicrisk
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UTIMutualFund
Table4:showingBetaofUTIMutualFundschemes
No
1
2
Scheme
UTIBalancedFund
Beta
0.92
1.03
UTIBondFund
1.01
4
5
6
UTIGiltAdvantage FundLongTerm
0.81
0.08
0.65
7
8
9
UTIMasterShareFund
0.78
1.2
0.85
10
11
12
13
UTIMastervalueFund
UTIMidcapFund
UTIMisAdvantagePlan
UTIMNCFund
0.95
0.9
1.03
0.57
14
15
UTITransportationandLogisticsFund
0.79
1.01
Interpretation
SchemehavingleastbetaisUTIFloatingRateFundST(Reg)i.e.0.08.Thereforethatschemeis
suitableforinvestmentItmeansthateventhoughthemarketisdown,thisschemewillbesafe.It
hasthelowestsystematicrisk
SBIMutualFund
Table5:showingStandardDeviationofSBIMutualFundSchemes
No
Scheme
StandardDeviation
SBIBluechipFund
17.2
2
3
SBIContraFund
SBIDynamicBondFund
18.04
5.55
18.43
5
6
7
8
SBIFMCGFund
SBIITFund
SBImagnumEquityFund
16.11
22.19
8.27
16.77
9
10
SBIMagnumGlobalFund
2.07
16.1
11
12
SBIMagnumIncomeFund
SBIMagnumMidcapFund
5.31
19.95
13
14
18.88
17.84
15
SBINiftyIndexFund
18.88
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35
Interpretation
SBIMagnumGiltFundShort termplanhasthe lowestStandardDeviationof 2.07.Soitis the
best one to choose. It means that this scheme is safe both in terms of systematic as well as
unsystematicrisk.
UTIMutualFund
Table6:showingStandardDeviationofUTIMutualFundSchemes
No
Scheme
1
UTIBalancedFund
2
3
UTIBondFund
4
5
6
7
8
9
UTIMasterShareFund
10
UTIMastervalueFund
11
UTIMidcapFund
12
UTIMisAdvantagePlan
13
UTIMNCFund
14
15
StandardDeviation
13.63
31.72
4.46
16.05
0.43
6.11
15.5
24.6
16.67
19.58
20.01
5.37
14.15
4.1
22.51
Interpretation
UTIFloatingRateFundST(Reg)hasthelowestStandardDeviationof0.43.Sothisschemeis
the best to invest. It means that this scheme is safe both in terms of systematic as well as
unsystematicrisk.
SBIMutualFund
Table7:showingSharpeRatioofSBIMutualFundSchemes.
No
Schemes
1
SBIBluechipFund
2
SBIContraFund
3
SBIDynamicBondFund
4
5
SBIFMCGFund
6
SBIITFund
7
8
SBImagnumEquityFund
9
10
SBIMagnumGlobalFund
11
SBIMagnumIncomeFund
12
SBIMagnumMidcapFund
13
14
15
SBINiftyIndexFund
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SharpeRatio
0.06
0.37
0.08
0.2
0.9
0.32
0.04
0.12
0.86
0.19
0.02
0.14
0.24
0.12
0.21
Interpretation
SBIFMCGFundhasthehighestSharpeRatio(9).ThereforeSBIFMCGFundisthebestonein
termsofriskandreturn.Thisschemeprovidesthehighestreturnforagivenunitofrisktaken.
UTIMutualFund
Table8:showingSharpeRatioofUTIMutualFundSchemes
No
Scheme
1
UTIBalancedFund
2
3
UTIBondFund
4
5
6
7
8
9
UTIMasterShareFund
10
UTIMastervalueFund
11
UTIMidcapFund
12
UTIMisAdvantagePlan
13
UTIMNCFund
14
15
SharpeRatio
0.17
0.14
0.11
0.3
5.59
0.21
0.07
0.55
0.19
0.12
0.05
0.05
0.34
0.01
0.31
Interpretation
HereUTIFloatingRateFundST(Reg)hasthehighestSharpeRatioi.e.5.59.Thereforethat
schemeisthebestoneonthe=basisofriskandreturn.Thisschemeprovidesthehighestreturnfor
agivenunitofrisktaken.
FINDIGS,SUGGESTIONSANDCONCLUSIONS
Findings
The study was undertaken to compare the performance of SBI Mutual Fund and UTI Mutual
Fund.Themajorfindingsarethefollowing.
InSBIMutualFundschemestheschemeshowinghighestreturnisSBIITFund(39.386%)
In the case of UTI Mutual Fund Schemes UTI Transportation and Logistics Fund has the
highestaveragereturnof(40.364%.)
OnthebasisofbetaSBIMagnumGiltFundShortTermPlanshowsthelowestbeta(0.01).So
itistheschemehavinglowestsystematicrisk.
In the case of UTI Floating Rate Fund ST (Reg) (0.08) shows the lowest beta. So it is the
schemehavinglowestsystematicrisk.
Standard deviation is lower for SBI Magnum Gilt Fund Short term plan (2.07). Therefore it
haslowestsystematicaswellasunsystematicrisk.
Standard deviation is lower for UTI Floating Rate Fund ST (Reg) ( 0.43). Therefore it has
lowestsystematicaswellasunsystematicrisk.
SharpeRatioisthehighestforSBIFMCGFund(9).Soitgeneratesthehighestreturnforeach
unitofrisktaken.
Sharpe Ratio is the highest for UTI Floating Rate Fund ST (Reg) (5.59) So it generates the
highestreturnforeachunitofrisktaken
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37
SUGGESTIONS
Based on the study, the following suggestions can be made. The suggestions for the better
performanceofthemutualfundsare:
Most of the investors are unaware of the various schemes of mutual funds. So initiative
shouldbetakentospreadawarenessaboutmutualfund.
The commission charged for offering the service by mutual fund companies should be
reduced.
Increasetheceilinglimitofforeigninvestmentinmutualfund(presentlyUS$50million)
Themutualfundsshouldadoptmoreinvestorfriendlyprogrammes.
CONCLUSIONS
ThestudywasconductedtoknowthebestmutualfundschemeofStateBankofIndiaMutual
FundandUnitTrustofIndiaMutualFund.FromtheanalysisitisclearthatinthecaseofStateBank
of India Mutual Fund, SBI FMCG Fund is the best one in terms of risk and return, as it shows the
highestSharpeRatio,itgivesthehighestreturnforagivenlevelofrisk.InthecaseofUnitTrustof
IndiaMutualFund,UTIFloatingRateFundST(Reg)isthebestone,asitshowsthehighestSharpe
Ratio. The investors can invest in these two schemes as they are the best among the selected
schemesofStateBankofIndiaMutualFundandUnitTrustofIndiaMutualFund.
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VolII,No.

SBI Magnum Children's Benefit

SBI Magnum Multiplier Plus Fund

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