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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684

Risk-Return Analysis of Mutual Fund Equity Growth Schemes


*Ms. Parul Kumar
**Dr. Sunil K. Gupta
***Dr. R. K. Sharma
*Assistant Professor, Vivekananda Institute of Professional Studies, Delhi
**Associate Professor, School of Management Studies, IGNOU
***Professor, BVIMR, Delhi
Abstract
After the downfall in 2008-2009, mutual fund industry has gained momentum in 2010
and, is now mapping its course onto the next echelon of growth and development. This
research paper analyzed the change in the composition of Indian mutual fund selected
growth schemes from the year 2010 till July 2015. Paper accomplishes the objective by
way of analyzing the overall performance of open ended equity growth schemes along with
the top gainers among them. Sample of 23 mutual fund schemes has been scrutinized by
the way of performance indicators i.e. risk, return and beta, and also Sharpe,
Treynor&Sortino ratios. These were used to unearth the best scheme, by way of ranking
them on the basis of obtained results. All the schemes selected were open ended growth
schemes and their relationship was also established by way of interpreting their correlation
with the BSE Sensex. Paper also discusses the future prospects of Indias mutual fund
industry, highlighting newer products needs to attract the new customer base, expanding
reach to other cities, easy accessibility, newer norms & regulations & investors education.
Keywords: Open ended, Risk, Beta, Sharpe, Treynor, Sortino, Return
1.

Introduction

Gone are the years when mutual funds asset under management stood at just 25, as now
the scenario is more than flattering. Investors have started exploring the full potential of
Mutual funds due to which they have been gaining vast popularity since many areas and
also owing to changes in investors preferences, volatile market, risky shares, lack of
professional experience in dealing in stock market, etc., have led to growth of mutual fund
industryin the current scenario. This scenario is clearly reflected by Chart I, which shows
the robust growthin assets under management since 1965. Despite of few downfalls,
mutual fund industry has still kept its charm alive and even it is increasing with the each
passing year. But still if the growth is compared with other countries, mutual fund
penetration is still low in India.

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684

Growth In Assets Under Management (Chart I)


613979
592250

505152

417300

326388
231862
139616

121805
87190

Phase II

Phase III

Years

Phase IV since Feb'03

Although India is in the strong league of being a super power and even bypass the
economy of US by year 2045, as India is having high savings and investment rate which is
not present in other countries. Indian GDP is also expected to quadruplet in the coming
years as well as it has maximum of its population is below the age of 25 years, which will
be the main reason of India shining in the next coming years, as the working population of
India will be more as compared to US and china whose population is graying at a faster
pace. Increasing middle class segment withincrease in income levels and household
spending have led to increase in demands for almost everything be it infrastructure,
development of alternate investment market, more savings avenues, FMCG products,
roads, highways etc., and story doesnt ends here the number of HNI segment is also
increasing as there are almost more than 120,000 dollar millionaires in India, who are
expected to invest huge amounts in Indian markets.
Chart II depicts the average assets under management in the last three years (Mar12
July15), in which may15 showed the highest interest of investors in mutual funds, rest of
the year portrays mixed reaction of investors, as it is increasing with few units at times
and then falling for the month of June. It seems that mutual fund industry is gaining
momentum in the beginning of year 2011, as assets under management have increased till
the current month of July. This increase can be attributed to the regained investors
confidence; changes taking place in rules and regulations; new options being explored by
mutual fund companies; better time to market by the funds; investors becoming more
informed and calculative & searching for alternate investment opportunities, and many
others.

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Mar'11

Mar'10

Mar'09

Mar'08

Mar'07

Mar'06

Mar'05

Mar'04

Mar'03

Feb'03

Mar'87

Phase I

149554
79464

Jan'01

4564
Mar'93

25
Mar'65

47000

Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684

Growth in Assets Under Management (Chart II)


11,73,294

11,86,364

13,17,267

12,03,547
10,82,757
8,25,240
5,87,217
7,01,443

Mar'12

Mar'13

Mar'14

Mar'15

Apr'15

May'15

Jun'15

Jul'15

It is in the milieu of Indian statistics, the mutual fund industry of India is flourishing and
has travelled a long path after opening itself to retail investors and changing itself
according to changing market scenario. Mutual fund is the pool of various investors funds.
These are transparent and low cost investment avenues offering professional guidance to
its investors. Lot of schemes areavailable in the market which investor has to evaluate in
terms of benefits, returns, risk involved, duration and also past performance. Performance
of the scheme or the fund has to be analyzed to look for stability, risk return profile, i.e.
how well or badly fund has returned as compared to its stated objectives and competitors.
It is also true that not every investor has that knack to analyze every aspect as well as
inclination to invest, so the professional expertise of mutual funds plays a key part in this
scenario. It also helps in diversifying ones investment even by adding investment options
of world markets. These investments are then affected by number of other factors like
fluctuation in currency prices, hike in crude prices, and recession in international
markets, and others.
Paper proceeds in the following way: Section 2 covers the conceptual discussion on mutual
funds. Section 3 highlights the available literature covering performance & analysis of
mutual funds, followed by objectives & methodology used to analyze the mutual funds in
section 4. Analysis & findings are presented in section 5 and section 6 list the limitations
of the study. Section 7 highlights the future prospects of the mutual fund industry
followed by references.
2.

Conceptual Discussion

Mutual Funds
A mutual fund is just the connecting bridge or as a Trust or a financial intermediary that
invest according to the certain investment objective, the money of various individual
investors, who have common financial goal, into one pool of funds. When investor invests
in a mutual fund he/she becomes shareholder or unit holder of the fund as he/she is
buying portion of that mutual fund or scheme. The mutual fund manager is responsible for
investing the gathered money into specific securities like stocks, bonds, gold, commodities,
hedge funds, other alternative investments & international bonds or stock. The holders of
the fund share the income and returns earned through these investments presented in the
scheme in proportion to the number of units held by them. The value of these units
changes every day with the changes in the portfolios value. This value is known as NAV or
Net Asset Value. ((AMFI), About Mutual Funds, 2011). Benefits of Mutual Funds are
presented in figure 1.

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684
Figure 1: Benefits of Mutual Funds

Reduction
in Risk

Portfolio
Diversificat
ion

Professiona
l
Manageme
nt

Reduction
in
Transaction
Costs

Liquidity

Various
Schemes

Source: www.amfiindia.com
Various schemes of mutual funds can be divided into various categories. These are
depicted in figure 2. First categorization is by Structure; this includes Open ended
schemes and Close ended schemes. Open ended mutual funds remain open for
throughout the year for subscription and/or redemption, they dont have fixed maturity
time thus their best feature is liquidity whereas Close ended mutual funds have fixed
maturity usually ranging from 2-15 years, these can only be issued at the beginning and
cannot be redeemed before their respective maturities and also these are traded at a
discount to NAV. Open ended funds have less flexibility as they have to invest in readily
marketable securities because they can face liquidity conditions at any time but on the
other hand close ended funds are more flexible as they dont face liquidity situations so
often, so they is no need to invest in readily marketable securities.(Sisodiya & Pemmaraju,
2010)
Figure 2: Classification of Mutual Funds
Mutual Funds

Nature/
Investment
Objectives

Structure

Open Ended

Close Ended

Equity Fund

Debt Fund

Diversified
Equity Fund

Other Schemes

Balanced Funds

Tax Saving
Schemes

Index Schemes

Mid Cap Fund

Sector Specific
Fund

Tax Savings
Fund

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684
On the basis of Nature or Investment Parameters mutual are divided into 3 categories
i.e. equity fund, debt fund and balanced fund.

Equity funds invest the major share of funds in equities holdings. These are also
known as growth schemes. Selection of stocks may depend on the fund managers outlook
towards various stocks available. Since equity investments are usually for longer duration
as compared to other investment avenues so these funds rank high on the risk-return
profile. In other words, these are for longer durations and no regular income is guaranteed
to the investor, so the investors who want their money back in short term or looking for
regular income should not invest in this scheme. These are further classified as Diversified
Equity Funds, Mid-Cap Funds, Sector Specific Funds and Tax Savings Funds (ELSS).

Debt funds unlike equity funds invest majorly in debts. These are also known as
income schemes. These funds generate stable income for the unit holders as they carry a
low risk as compared to equity funds which are highly volatile. Debt funds like bonds,
debentures, are mostly issued by financial institutions, banks, government and
authorities. unlike equity schemes these doesnt provide much capital appreciation but
generates regular and steady income for its investors thus suitable for the people looking
for regular income or capital stability like retired persons, widows etc.

Balanced funds try to create the balance between the investment patter of the fund.
They carry a mix of both equity and debt funds usually 50:50. Their main aim is to fulfill
growth objective as well as return stability to its diversified pool of investors. Growth
objective is met with equity investments and stability in returns is ensured by debt papers,
thus providing the better of the two worlds in one fund to the investors. These are best for
those investors who are looking for capital appreciation and income & are also willing to
take some risk.

Money Market Schemes as the name suggests deals only in money market, since
these are for shorter duration so they provide easy liquidity, average income and also
protection of capital. Money market instruments are like treasury bills, commercial papers,
certificate of deposits etc., all of these are considered as safe investments, can easily be
liquidated and mostly preferred by those investors (corporate or individual) who want to
park their surplus or excess funds for shorter durations.
Asset of the mutual funds have mixed effects. In some cases it helps in manager in
investing funds as the money in the fund increases but the flip side is that with the
increase in asset size, investment manager also faces problems in selecting more funds to
invest the newly added money and then they need to buy wide variety of securities to
balance their risk or other option is to increase their holdings in the already existing
portfolio of securities, thus surrounded with option confusions.
3.

Literature Review

Arora & Deepa (2009) in their report analyzed the current & future aspects of the Indian
mutual fund industry. Report showed the growth in asset under management in various
countries; as compared to GPD ratio of India; share of mutual funds in hosuehold savings;
industry investor composition and groth rate across various types of mutual funds, from
year 2005 till 2009. They interpreted the drivers of growth for the mutual fund from the
customer point of view, which highlighted many key issues faced by them. Few issues were
less knowledge of the funds, not enough coverage, financial literacy, distribution of funds,
quality of advice and many others.
Duggimpudi, Abdou, & Zaki (2010) analyzed the risk & return of equity diversified funds
for the period of 2000 till 2009. They also compared the risk adjusted parameteres of all
the funds with the BSE Sensex, to analyze their performance. Their study concluded that
risk & return of selected mutual funds had positive relation and their beta values were less
1, indicating less risky nature than market.
Kumar (2011) studied the performance of the mutual funds by way Sharpe, Treynor &
Jensen. He also analyzed the funds senstivity to the market movements. Paper concluded
that all the schemes have beta less than the market, thus explaining that they are less

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684
risky than the market. Also top 5 performing mutual funds suggested by the paper were
Reliance Growth Fund, Reliance Vision Fund, ICICI Prudential Tax Plan, HDFC Top 200
and Birla Sun Life Equity Fund. These funds also perform better according to the risk
adjusted measures used by the author.
Goel, Sharma, & Mani (2012) evaluated the open ended mutual schemes on the
parameters of asset soze, risk adjusted performance & expense ratio for the peirod of Apr
2006 to Mar 2011. By regression analysis they concluded that future performance of the
mutual funds is dependednt on their past performance. Also as the expense ratio lowers &
asset size increases, mutual funds results in high risk adjusted returns.
Jain (2012), studied the risk return relationship of 45 equitymutual funds and also used
Capital Asset Price Model (CAPM) for the perios of 15 years from 1997 2012. He
concluded that ICICI & HDFC were best performers in terms of return adjusted with their
return and UTI & LIC were average to worst performers.
Mehta & Shah (2012) conducted a survey of 100 investors to unearth the preferrred
mutual schemes and then analyzed their performance. They concluded that Equity tax
saving, Equity diversified and Equity sectoral schemes were mostly preferred by the
investors. Study then concluded the best performing mutual scheme in all the three
categories based on NAV, sharpe, treynor & beta.
Narayanasamy & Rathnamani, (2013) analyzed the risk return parameters of the selected
equity large cap mutual funds for the period of Jan 2010 Dec 2012. Study concluded
that all the funds have perofrmed well in the selecetd period and downfall in CNX Nifty in
2011 had an adverse impact on the mutual funds selected. They also highlighted that for a
investor it is very important to analyze & study the risk parameters of mutual funds i.e.
sharpe, treynor, and beta of fund along with NAV & total returns. As then only true
performance of the fund can be known and analyzed.
Vasantha, Maheswari, & K.Subashini (2013) by using Sharpe, Treynor & Jensen analyzed
the performance of growth equity mutual fund schemes for the period of Jan 2008 Dec
2012. They concluded that all the selected funds were less risky than the market as their
betas were less than 1. HDFC top 200 fund was the best performer among the lot in terms
of retunrs of last 5 years. Even the standard deviation of HDFC top 200 fund & Birla
Sunlife front line equity fund was least w.r.t other funds. Also it conclude that investors
who need regular income should invest in HDFC top 200 fund & Canara Robeco equity
diversified fund.
Annapoorna & Gupta (2013) evaluated the performance of the top rated schemes by the
CRISIL w.r.t. SBI domestic term deposit rates. NAV, returns & asset size has been used to
analyse their performance with respect to term deposit rates for that period. Study
concluded that many mutual fund have delivered returns above term deposit rates and
returns were also remarkeable for the period of 1 year & 5 years. Also hybrid mutual funds
provided capital appreciation as well as income appreciation, thus fulfilling their motive
and debt funds were beneficial only when invested for more than 1 year. Lastly returns
were average & positive for money market mutual funds as compared to SBI term deposit
rates.
4.

Objective & Methodology

The objective of the paper is to analyze the Indian mutual fund scenario from the year
2010 2015 by way of analyzing 23 Open Ended Equity Mutual Fund Growth (G) Schemes.
These schemes have been scrutinized by the way of performance indicators i.e. risk, return,
beta, Sharpe &Sortino ratios to unearth the best scheme during the span of 5 years.
Secondary data is used in the research which is extracted from Mutualfundindia.com,
Morningstar.in, Economictimes.com and Moneycontrol.com. Convenience sampling was
used to select the various mutual fund schemes. Monthly returns of various schemes have
been annualized to draw out the return for the various years. In the end giving appropriate
ranking to all 23 mutual funds according to the Return, Risk (measured by Standard
deviation (SD), Beta, Sharpe, Sortino and even by the correlation with the market and thus
top 5 mutual fund schemes are zeroed in.

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684
Data analysis forms the main part of the research paper. It adds meaning to the theoretical
practices quoted. The data analysis techniques used in the paper are as follows:
Return on the Mutual fund scheme is calculated as:
Annualized Return = Rp = Monthly Return / 12
Beta refers to the systematic risk attached to each mutual fund, which is compared with
the market. It reflects how significantly the return of the fund or security varies with the
changes in the market and is calculated as follows:
= Cov (Rp Rm) / m 2
Where m 2 = Variance of the market
Rm = Market Return
Rp = Portfolio Return
Sharpe Ratio helps in measuring the reward of the fund based on its total risk. When this
ratio is compared with the market return its shows whether the fund or security has
performed better (if Sharpe ratio > Market return) or worse (if Sharpe ratio < Market return)
than the market. It is calculated as follows:
(Rp Rf) /
Where Rf = Risk Free Rate
= Standard Deviation of the fund/portfolio
Treynor Ratio also helps in measuring the return of the portfolio but it is based on the
systematic risk measure i.e. beta. To conclude the performance of the fund Treynor
measure of the fund is compared with the Treynor measure of the market, since market
beta is also equal to 1, market risk premium i.e. (Rp Rf) becomes the slope of security
market line and if the Treynor ratio of fund >Treynor of market, the fund has outperformed
and vice-a-versa.
(Rp Rf) /
Where = Beta of the fund/portfolio
Expected Returnis calculated by way of Capital Asset Pricing Model (CAPM). If the fund
actual returns are more than the expected returns, then it can be said that it has
outperformed.
Re = Rf+ (Rm Rf)
Sortino is the risk adjusted measure and the only difference with Sharpe &Treynor is that,
it penalizes the negative returns.
5.

Analysis & Findings

Mutual funds were analyzed by way of various risk return measures, so that best scheme
can be selected. Table 1 analyzes the performance of the mutual funds by way of
calculation of relative return. If the funds relative actual return is less than expected return
calculated by way of CAPM, then it is considered to be underperformed otherwise over
performed. Out of 23 schemes selected only 6 schemes over performed according to their
expectation during the period under study. These were UTI transportation & logistics, Kotak
Midcap fund, Religare Invesco banking fund, Kotak emerging equity, Sundaram select
midcap and HSBC mid cap equity fund. Top fund according to the returns generated in the
period of 5 years came out to be DSP Blackrock Micro cap fund (2.39%) followed by UTI
transportation & logistics fund (2.25%). Reliance pharma fund, ICICI prudential FMCG
fund, ICICI prudential value discovery fund, and IDFC premier equity fund were among the
top 10 performers in the market but still they were projected to have more returns. Worst
performing funds were Mirae asset global commodity stock fund, Franklin India index fund,

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684
Templeton India Equity Income fund & Edelweiss absolute return fund. These funds
underperformed as well as generated very low returns & even in negative.
Table 1: The Performance & Ranking according to Relative Measure of Return

Mutual Fund Scheme

Relative
Expected
Return

Relative
Actual
Return

Performance

Rank

Reliance Pharma Fund (G)

4.85%

1.84%

Underperformed

CanaraRobeco Equity Diversified (G)

2.20%

1.21%

Underperformed

17

ICICI Prudential Value Discovery Fund(G)

1.94%

1.73%

Underperformed

SBI Magnum Balanced Fund (G)

3.26%

1.12%

Underperformed

19

Birla Sun Life Dividend Yield Plus (G)

2.03%

1.21%

Underperformed

17

IDFC Premier Equity Fund - Plan A (G)

2.61%

1.71%

Underperformed

UTI Transportation And Logistics Fund(G)

0.79%

2.25%

Overperformed

Edelweiss Absolute Return Fund (G)

6.01%

0.99%

Underperformed

20

Franklin India Index Fund NSE Nifty


Plan

0.92%

0.86%

Underperformed

DSP Blackrock Micro Cap Fund - Regular


Plan (G)

3.12%

2.39%

Underperformed

ICICI Prudential Balanced (G)

3.59%

1.34%

Underperformed

12

Kotak Midcap Fund

1.01%

1.57%

Overperformed

ICICI Prudential FMCG Fund (G)

4.56%

1.79%

Underperformed

Religare Invesco Banking Fund - Regular


Plan (G)

-1.23%

1.51%

Overperformed

Mirae Asset Global Commodity Stocks


Fund (G)

3.79%

-0.17%

Underperformed

HDFC Balanced Fund (G)

3.68%

1.41%

Underperformed

11

UTI Equity Fund (G)

1.72%

1.25%

Underperformed

16

Franklin Infotech Fund (G)

4.51%

1.29%

Underperformed

14

TATA Dividend Yield Fund (G)

2.48%

1.32%

Underperformed

13

Kotak Emerging Equity Regular Fund (G)

1.04%

1.56%

Overperformed

Sundaram Select Midcap (G)

1.14%

1.62%

Overperformed

HSBC Midcap Equity (G)

-1.24%

1.27%

Overperformed

15

Templeton India Equity Income Fund (G)

2.58%

0.88%

Underperformed

21

22
1

10
23

Beta of more than 1 indicates that fund is more risky than the market. As shown in table 2,
only three stocks have beta more than i.e. UTI transportation & logistics, Religareinvesco
banking fund & HSBC midcap equity. Among them also UTI transportation & logistics fund
had a beta equal to 1, which means that it is same as market. Rest all the mutual funds
were less risky than the market as their betas were less market beta of 1. Also variation in
their returns, as measured by standard deviation, also shows that HSBC midcap equity
&Religareinvesco banking fund were the most deviating funds. In other words they had the
maximum standard deviation of 26.48 % & 25.39% respectively. Due to so much variation
& risky nature of these funds, they were not able to generate great return in the period of 5

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684
years as calculated by way of absolute returns. Absolute returns were calculated by way of
average difference in the value of fund NAV on the last day i.e. 31 stJuly 2015 & on 31stJuly
2010. Highest return were generated by UTI transportation& logistics funds, Reliance
Pharma fund, ICICI prudential FMCG fund, DSP Blackrock microcap fund and ICICI
prudential value discovery fund. These results were almost in conjunction with the results
obtained by way of relative return of the funds. Worst performing according to absolute
returns also was Mirae asset global commodity stocks fund, Franklin India index fund &
IDFC premier equity fund, which were also same according to the relative returns.
Table 2: Absolute Risk & Return of Funds
Mutual Fund Scheme

S.D
(%)

Return
(%)

Rank

Beta

Reliance Pharma Fund (G)

14.57

21.96

0.45

CanaraRobeco Equity Diversified (G)

14.92

13.46

17

0.81

ICICI Prudential Value Discovery Fund (G)

17.46

20.26

0.85

SBI Magnum Balanced Fund (G)

12.54

14.19

15

0.67

Birla Sun Life Dividend Yield Plus (G)

16.51

11.87

21

0.83

IDFC Premier Equity Fund - Plan A (G)

16.22

19.08

0.75

UTI Transportation And Logistics Fund (G)

21.98

27.50

1.00

6.95

12.12

20

0.29

Franklin India Index Fund NSE Nifty Plan

17.06

9.85

22

0.98

DSP Blackrock Micro Cap Fund - Regular Plan


(G)

20.10

20.97

0.69

ICICI Prudential Balanced (G)

11.75

16.98

0.62

Kotak Midcap Fund

20.13

16.50

10

0.97

ICICI Prudential FMCG Fund (G)

13.57

21.37

0.49

Religare Invesco Banking Fund - Regular Plan


(G)

25.39

13.85

16

1.27

Mirae Asset Global Commodity Stocks Fund (G)

17.46

-2.03

23

0.60

HDFC Balanced Fund (G)

12.50

16.18

11

0.61

UTI Equity Fund (G)

15.62

15.73

12

0.87

Franklin Infotech Fund (G)

21.40

14.63

13

0.50

TATA Dividend Yield Fund (G)

14.96

14.25

14

0.77

Kotak Emerging Equity Regular Fund (G)

19.44

17.45

0.95

Sundaram Select Midcap (G)

19.29

19.65

0.94

HSBC Midcap Equity (G)

26.48

12.67

18

1.26

Templeton India Equity Income Fund (G)

15.15

12.66

19

0.75

Edelweiss Absolute Return Fund (G)

Table 3shows ranks the various open ended equity growth mutual funds on the basis of
three years Sharpe ratio, Treynor ratio and Sortino ratio. UTI Transportation and Logistics
Fund holds the top position on the basis of Sharpe ratio i.e. per unit return measured by
way of total risk and as well as on the basis of Sortino& second rank on the basis of
Treynor measure. DSP Blackrock microcap fund holds the first rank according to the risk
measured by the Treynor ratio but in terms of Sharpe ratio it came on rank 3. From the

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684
analysis it also came to light that out of 23 funds four mutual funds have same ranking in
either of the two ratios and even these risk adjusted measures proved that Mirae asset
global commodity stock fund was the worst performer in the whole lot. Franklin India index
fund &Religareinvesco banking fund performed badly according to almost all the three
ratios i.e. Sharpe, Treynor&Sortino.
Table 3: 3 years Risk Parameters of Funds
Mutual Fund Scheme

Treynor

Rank

Sharpe

Rank

Sortin
o

Rank

Reliance Pharma Fund (G)

26.95

1.62

2.86

CanaraRobeco Equity Diversified (G)

13.96

20

0.97

18

1.84

15

ICICI Prudential Value Discovery


Fund (G)

24.22

1.48

2.62

SBI Magnum Balanced Fund (G)

20.81

1.66

2.57

Birla Sun Life Dividend Yield Plus


(G)

13.08

21

0.85

20

1.69

17

IDFC Premier Equity Fund - Plan A


(G)

24.99

1.49

2.50

UTI Transportation And Logistics


Fund (G)

30.64

1.72

3.28

Edelweiss Absolute Return Fund (G)

16.46

18

1.24

11

2.36

10

Franklin India Index Fund NSE


Nifty Plan

10.92

22

0.80

21

1.50

19

DSP Blackrock Micro Cap Fund Regular Plan (G)

31.49

1.65

2.42

ICICI Prudential Balanced (G)

17.62

15

1.51

2.70

Kotak Midcap Fund

18.99

12

1.17

12

1.84

15

ICICI Prudential FMCG Fund (G)

14.63

19

0.99

17

1.33

20

Religare Invesco Banking Fund Regular Plan (G)

19.11

11

0.69

22

1.13

22

Mirae Asset Global


Stocks Fund (G)

-51.49

23

-0.69

23

-1.25

23

HDFC Balanced Fund (G)

16.90

16

1.33

10

2.65

UTI Equity Fund (G)

16.70

17

1.17

12

2.21

11

Franklin Infotech Fund (G)

19.52

10

0.86

19

1.21

21

TATA Dividend Yield Fund (G)

17.97

14

1.14

15

2.12

12

Kotak Emerging
Fund (G)

23.84

1.37

1.91

14

Sundaram Select Midcap (G)

25.63

1.44

2.6

HSBC Midcap Equity (G)

22.29

1.16

14

1.97

13

18.33

13

1.00

16

1.69

17

Templeton
Fund (G)

India

Commodity

Equity

Equity

Regular

Income

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684
As in the previous table comparative analysis of the funds performance was done by way
ranking their 5 years ratios, same is done in table 4. In this analysis now the ratio of last
five years ending on 31st July 2015 was taken. As the Treynor ratio of many mutual funds
were not available for the period of 5 years, so only Sharpe&Sortino ratios were taken into
consideration. Major analysis which came into light was that out of 23 mutual fund
schemes, 17 schemes had same ranking in both the ratios. All of these 17 fundsperformed
same according to both the measure of performance, top fund being ICICI prudential FMCG
fund followed by UTI transportation & logistics and ReliancePharma fund. These results
again correspond with the 3 years performance as well as the relative & absolute
returns.Least performing funds were again the same i.e. Mirae asset global commodity
fund, Franklin India Index fund and HSBC midcap equity fund.
Table 4: 5 years Sharpe &Sortino Ratios of Funds
Mutual Fund Scheme

Sharpe

Rank

Sortino

Rank

Reliance Pharma Fund (G)

0.96

1.60

CanaraRobeco Equity Diversified (G)

0.45

16

0.73

16

ICICI Prudential Value Discovery Fund (G)

0.74

1.30

SBI Magnum Balanced Fund (G)

0.56

13

0.85

13

Birla Sun Life Dividend Yield Plus (G)

0.33

20

0.53

20

IDFC Premier Equity Fund - Plan A (G)

0.73

1.17

UTI Transportation And Logistics Fund (G)

0.91

1.61

Edelweiss Absolute Return Fund (G)

0.68

1.24

Franklin India Index Fund NSE Nifty Plan

0.22

22

0.34

22

DSP Blackrock Micro Cap Fund - Regular


Plan (G)

0.71

1.12

ICICI Prudential Balanced (G)

0.81

1.40

Kotak Midcap Fund

0.52

14

0.80

14

ICICI Prudential FMCG Fund (G)

0.98

1.63

Religare Invesco Banking Fund - Regular Plan


(G)

0.36

19

0.59

19

Mirae Asset Global Commodity Stocks Fund


(G)

-0.44

23

-0.58

23

HDFC Balanced Fund (G)

0.71

1.20

UTI Equity Fund (G)

0.57

11

0.92

11

Franklin Infotech Fund (G)

0.40

17

0.62

17

TATA Dividend Yield Fund (G)

0.50

15

0.78

15

Kotak Emerging Equity Regular Fund (G)

0.57

11

0.88

12

Sundaram Select Midcap (G)

0.67

10

1.08

10

HSBC Midcap Equity (G)

0.32

21

0.42

21

Templeton India Equity Income Fund (G)

0.40

17

0.62

17

From the all the above 4 tables few conclusions can be made i.e.:

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684

Least performing funds were Mirae asset global commodity fund, Franklin India Index
fund and HSBC midcap equity fund according to all the risk & return parameters.

Best performer among the lot of 23 open ended equity growth schemes were UTI
transportation & logistics fund, ICICI prudential FMCG fund and Reliance Pharma fund.

Average performer being DSP Blackrock microcap fund, ICICI prudential value
discovery fund, ICICI prudential balanced fund, and HDFC balanced fund.

All of these funds have almost same risk return profile and as the risk increase their
returns also increase to some extend but not in the same proportion.
Table 5: Funds Correlation with BSE SENSEX
Mutual Fund Scheme

Rank

Reliance Pharma Fund (G)

0.51

22

CanaraRobeco Equity Diversified (G)

0.92

ICICI Prudential Value Discovery Fund (G)

0.83

11

SBI Magnum Balanced Fund (G)

0.90

Birla Sun Life Dividend Yield Plus (G)

0.86

IDFC Premier Equity Fund - Plan A (G)

0.78

17

UTI Transportation And Logistics Fund (G)

0.78

16

Edelweiss Absolute Return Fund (G)

0.73

18

Franklin India Index Fund NSE Nifty Plan

1.00

DSP Blackrock Micro Cap Fund - Regular Plan (G)

0.59

19

ICICI Prudential Balanced (G)

0.91

Kotak Midcap Fund

0.82

12

ICICI Prudential FMCG Fund (G)

0.57

20

Religare Invesco Banking Fund - Regular Plan (G)

0.86

Mirae Asset Global Commodity Stocks Fund (G)

0.56

21

HDFC Balanced Fund (G)

0.84

UTI Equity Fund (G)

0.95

Franklin Infotech Fund (G)

0.40

23

TATA Dividend Yield Fund (G)

0.88

Kotak Emerging Equity Regular Fund (G)

0.80

14

Sundaram Select Midcap (G)

0.80

13

HSBC Midcap Equity (G)

0.79

15

Templeton India Equity Income Fund (G)

0.83

10

Last but not the least Table 5 explains the relationship between mutual funds & the stock
market. It shows the correlation between returns of various funds and the BSE Sensex as
the benchmark index. All funds have positive correlation with the Sensex and Franklin
India index fund have the perfect positive relation i.e. r = 1. This is followed by UTI equity
fund, CanaraRobeco Equity Diversified, ICICI Prudential Balanced, SBI Magnum Balanced
Fund, & Tata dividend yield fund. All of these funds have a strong correlation with the
market. Franklin Infotech Fund, Reliance Pharma Fund, Mirae Asset Global Commodity

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684
Stocks Fund and ICICI Prudential FMCG Fundhas low correlation with the market, but still
ICICI Prudential FMCG Fund was able to generate favorable & impressive returns for its
investors.
Overall from the analysis it can be said that overall performance of equity mutual funds is
above the market and maximum of the funds generated money for their investors thus
keeping their faith in the fund.
6.

Limitations Of The Study

Simple random sampling is used, so results may vary, if different schemes are
included.

Sample is selected from a small universe of Open Ended Equity funds, thus limiting
researchs scope & analysis to one type of mutual funds only.

Data used is of only 5 years i.e. analysis time span is small & also previous year
volatility is not considered.
7.

Future Prospects

After analyzing the current scenario of various mutual funds, lets discuss the future
prospects of Indias mutual fund industry. The road ahead for mutual fund industry is not
easy as lot have to be done by the government and fund houses in order to gain continuous
attention of the investors. Also the success of the mutual fund industry will depend upon
the capital market movements, expanding of mutual fund houses investment avenues by
regulators of markets and adoption of these changes by fund houses. Thus it is now vital
for the mutual fund industry to proactively map its course onto the next echelon of growth.
So, the key issues on which mutual fund industry has to evolve further for its sustained
future growth or challenges faced by the industry which are in the way hampering the true
potential of mutual funds are presented in Figure 3.

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Journal of Exclusive Management Science July 2016 - Vol 5 Issue 7 ISSN 2277-5684

Figure 3: Future Prospects of Indian Mutual Industry

Newer
Products

Products innovation should be


there.
Should look for comprehensive
life cycle planning.
Schemes should be customer
focused rather than product
focused.
Inclusion of well structured
debt market.

Expanding the
Reach

Easy
Accessibility

Increase the distribution reach.


Move beyond Tier I and II
cities.
Tap the needs of new age
investors i.e. growing middle
class.

Increase the distribution


channels and investor
servicing.
Indian post network should
be involved more in
providing mutual funds to
rural areas.

Build norms for green


funds, fund of hedge
funds, renewable energy funds
etc.
Newer Norms
Fees structure should be made
& Regulations
flexible.
Regulations conflict with other
counterparts like
insurance, ULIPs, etc, should
be answered.
Investor's awareness
programes should be designed
according to the segment of
investors.
Investor's
Informed about all the vital
Education
details of investing in mutual
funds.
Educate the investors about
nuances of financial planning.
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