Pratiksha Msop

PROJECT SUBMITTED TO
INSTITUTE OF COMPANY SECRETARIES OF INDIA

NEW DELHI
COMPILED BY: PRATIKSHA RAMLAL BAID
REGISTRATION NUMBER: 420680168/08/2009
PROJECT ON: MUTUAL FUNDS
SUBMITTED ON: 13 APRIL 2019

INDEX
Sr no. PARTICULARS Page no
PREFACE 3
ACKNOWLEDGEMENT 4
Chapter-1 INTRODUCTION 5
History of mutual funds 5
Meaning of mutual funds 6
Structure of mutual funds 7
Types of mutual funds 8-9
How to invest in mutual funds 10
Statement of the problem and need of the study 11
Beneficiary and objective of the study 12
Review of literature 13
Chapter-2 METHODOLOGY 14
Selection of variables 14
Data sources 15
Statistical tools 16-7
Scope of the study 18
Chapter-3 ORGANISATION OF THE STUDY 19

Chapter-4 ANALYSIS AND INTERPRETATION OF THE STUDY 20-40
Chapter-5 FINDINGS 41
An overview of findings 41
Result of application of methods 42
Analysis of the findinds 43
Chapter-6 CONCLUSION 44
Summary conclusion 44
Implications 45-46
Limitations of the study 47
Suggestion and direction for the future research 47
QUESTIONNAIRE 48-49
BIBLIOGRAPHY 50
2
PREFACE
Mutual Fund has emerged as a tool for ensuring one’s financial well being. Mutual Funds
have not only contributed to the India growth story but have also helped families tap into the
success of Indian Industry. As information and awareness is rising more and more people are
enjoying the benefits of investing in mutual funds. The main reason the number of retail
mutual fund investors remains small is that nine in ten people with incomes in India do not
know that mutual funds exist. But once people are aware of mutual fund investment
opportunities, the number who decide to invest in mutual funds increases to as many as one
in five people. The trick for converting a person with no knowledge of mutual funds to a new
Mutual Fund customer is to understand which of the potential investors are more likely to
buy mutual funds and to use the right arguments in the sales process that customers will
accept as important and relevant to their decision.
This Project gave me a great learning experience and at the same time it gave me enough
scope to implement my analytical ability. The analysis and advice presented in this Project
Report is based on market research on the saving and investment practices of the investors
and preferences of the investors for investment in Mutual Funds.
3
ACKNOWLEDGEMENT
I would like to take the chance of expressing my gratitude to those who helped me
to complete my project on corporate law which would have been a difficult task
without their kind help.
I am highly indebted to my seniors at my Office for their guidance and their
constant supervision as well as for providing necessary information regarding the
project, and also their support in completing the project.
I would like to express my gratitude towards my parents who have made me
competent to face challenging tasks.
My thanks and appreciations also goes to colleagues in developing the project and
people who have willingly help me out with their ability.
I am really very much grateful to our ICSI for giving me such an opportunity which
is not only empowers our knowledge but also paves the way for our journey to the
infinite future.
4
INTRODUCTION:
Every investor today is intimidated by the task of choosing a mutual fund and why not there
are hundreds of companies with thousands of funds spread across hundreds of different
market sectors but as Alfred .A. Mont pert (motivational author) once said "Nobody ever did,
or ever will, escape the consequences of his choices" so it's imperative for investors to do a
complete analysis before buying a mutual fund.
The modern mutual fund was first introduced in Belgium in 1822. This form of investment
soon spread to Great Britain and France. Mutual funds became popular in the United States
in the 1920s and continue to be popular since the 1930s, especially open-ended mutual funds.
Mutual funds experienced a period of tremendous growth after World War II, especially in
the 1980s and 1990s.
The first introduction of a mutual fund in India occurred in 1963, when the Government of
India launched Unit Trust of India (UTI). Until 1987, UTI enjoyed a monopoly in the Indian
mutual fund market. Then a host of other government-controlled Indian financial companies
came up with their own funds. These included State Bank of India, Canara Bank, and Punjab
National Bank. This market was made open to private players in 1993, as a result of the
historic constitutional amendments brought forward by the then Congress-led government
under the existing regime of Liberalization, Privatization and Globalization (LPG).
The first private sector fund to operate in India was Kothari Pioneer, which later merged
with Franklin Templeton. In 1996, SEBI, the regulator of mutual funds in India, formulated
the Mutual Fund Regulation which is a comprehensive regulatory framework. Income from
MFs could take two forms—dividends and capital gains.
5
Meaning of Mutual Fund?
“A mutual fund can be a very good investment. However, it is also risky and should be
thoroughly researched. An investor can start by studying and comparing the prospectuses of
various mutual fund offerings. Many websites exist that compare returns and expenses on
popular mutual funds.”
A mutual fund is just the connecting bridge or a financial intermediary that allows a group of
investors to pool their money together with a predetermined investment objective. The
mutual fund will have a fund manager who is responsible for investing the gathered money
into specific securities (stocks or bonds). When you invest in a mutual fund, you are buying
units or portions of the mutual fund and thus on investing becomes a shareholder or unit
holder of the fund.
Mutual funds are considered as one of the best available investments as compare to others
they are very cost efficient and also easy to invest in, thus by pooling money together in a
mutual fund, investors can purchase stocks or bonds with much lower trading costs than if
they tried to do it on their own. But the biggest advantage to mutual funds is diversification,
by minimizing risk & maximizing returns.
A mutual fund is a professionally managed Medium or vehicle that pools money from many
investors and invests it in stocks, bonds, short-term money market instruments and other
securities. Mutual fund is managed by professional managers who have deep knowledge and
understanding of Stock Market, Bonds, money market.
Mutual funds are distinctive because instead of buying a security like stocks or bonds issued
by a single institution; you buy into a portfolio that includes securities issued by a number of
companies and/or government agencies. This diversification reduces risk for investors. Of
course, you can build such a portfolio yourself, but you must research and select each
investment yourself. In addition, many investors (especially those starting out) don't have the
resources to buy a really diversified set of securities. For these, mutual funds are a very
attractive option.
6
Structure of Mutual Fund:
In India, the mutual fund industry is highly regulated with a view to imparting operational
transparency and protecting the investor's interest. The structure of a mutual fund is
determined by SEBI regulations. These regulations require a fund to be established in the
form of a trust under the Indian Trust Act, 1882. A mutual fund is typically externally
managed. It is now an operating company with employees in the traditional sense.
Instead, a fund relies upon third parties that are either affiliated organizations or independent
contractors to carry out its business activities such as investing in securities. A mutual fund
operates through a four-tier structure. The four parties that are required to be involved are a
sponsor, Board of Trustees, an asset management company and a custodian.
7
Types of Mutual Fund:
Mutual funds are those institutions which take the money under mutual funds schemes. These
schemes are also managed by Asset Management Companies (AMC), which are sponsored
by different financial institutions or companies. These mutual funds schemes can be divided
under different basis and need of customers. Details of these schemes are given below:
Types of Mutual Funds Schemes on the Basis of Structure:
OPEN ENDED SCHEMES:
Open - ended schemes is that structure of mutual fund which allow investors to buy the
shares of MF at its unlimited level and time and sell it when they want in market.
CLOSE ENDED SCHEMES:
Close - ended schemes issue the Mutual Funds under many restrictions like to offer to limited
investors or limit of time of issue etc.
INTERVAL SCHEMES:
This is a mutual fund scheme whose redemption features is between those of closed-end and
open-end funds.
Types of Mutual Funds Schemes on the Basis of Investment objectives:
GROWTH SCHEMES :
8
In the growth scheme, all profits made by the fund are ploughed back into the scheme. This
causes the Net Asset Value to rise over time. The NAV is the price of a unit of a mutual fund.
INCOME OR DIVIDEND SCHEMES:
The dividend option does not re-invest the profits made by the fund through its investments.
Instead, it is given to the investor from time to time.
BALANCED SCHEMES:
The aim of balanced schemes is to provide both growth and regular income. Such schemes
invest both in equities and fixed income securities in the proportion indicated in their offer
documents. They generally invest 40-60% in equity and the rest in debt instruments.
Other Mutual Funds Schemes:
MONEY MARKET SCHEMES:
It is open ended mutual funds whose amount will be only invested in money market. These
funds invest in short term (one day to one year) debt obligations such as Treasury bills,
certificates of deposit, and commercial paper. The main goal is the preservation of principal,
accompanied by modest dividends.
TAX SAVINGS SCHEMES:
Tax saving schemes of mutual funds which saves the tax of investors. Tax benefits to be
mentioned under the "objects of the offering" column.
Any exclusive tax advantages for the mutual fund company and its shareholders by
mentioning the section number of the Income Tax Act 1961 without revealing the content of
the section.
SPECIAL SCHEMES:
This is the mutual funds which have something special and mutual funds provider will
mention this in invitation form. You can read the discussion of reliance mutual funds
updates to know what is special in it.
INDEX SCHEMES:
Index schemes attempt to replicate the performance of a particular index such as the BSE.
9
How to invest in Mutual Fund:
Get Your Finances in Order

Learn the Basics
Seat Goals
Determine your risk
tolerance
Find your investigating style
Learn the costs
Find a Broker or Advisor
Choose Investment
Keep Emotions at Buy
Review and Adjust
10
STATEMENT OF PROBLEM AND JUSTIFICATION OF THE STUDY
The study under investigation here is related to analyzing the growth potential of Mutual
Funds in India. Also the researcher makes an attempt here to investigate the impact of
different factors on the growth potential of Mutual Fund. It is seen whether the Mutual Fund
offering are in accordance to the need of the investors and the due weightage is given to their
needs and requirement. This project is taken on to assess the investor’s perception of mutual
fund investment. This project also evaluates the financial performance of mutual fund
schemes.
NEED FOR RESEARCH
a) Synoptic view of Indian Mutual Fund Industry:

Analysis of Mutual Funds in the International and domestic arena is made to develop an
understanding of the ongoing trends in the global and domestic arena.
b) Exploring the Untapped Market:
Identifying the untapped market is and exploring the opportunities for the investment of
individual investors.
c) Identifying the variables that affect selection of Mutual Funds:
The major issue this project deals with is to analyse the variables that affect the selection
process of mutual funds and will help to identify the opportunities that exist for surpassing
the growth potential of Indian Mutual Fund Industry.
d) Customer Awareness Campaign:
One of the important issue this projects deals with is the impact of the awareness level on the
growth of Mutual Fund.
11
BENEFITS TO WHOM?
This research will be important for the investors in choosing a particular mutual fund scheme
from among various companies spread across this industry.
This report will also help the various mutual fund companies to know about their position in
this industry.
This report will also help the companies pertaining to their competitors in this industry.
AIMS AND OBJECTIVE OF THE STUDY
PRIMARY OBJECTIVE:
To determine whether the financial storm the investors are currently dealing in is appropriate
or not.
To find out how different performance measures are used to calculate the performance of
mutual fund schemes.
To find out the risk associated with each fund scheme of the particular company.
SECONDARY OBJECTIVES:
To evaluate and compare the performance of mutual fund schemes of selected companies on
the basis of risk and return. The companies selected are:
1) TATA Mutual Fund
2) SBI Mutual Fund
3) HDFC Mutual Fund.
12
REVIEW OF LITERATURE
Review of the literature plays an important role in any research, it is considering the
importance of mutual funds and several academicians have tried to study the performance of
various mutual funds. Literature on mutual fund performance evaluation is enormous.
Herewith some of the research studies that have influenced the preparation of this Research
work substantially are discussed in this section.
In depth financial review to identify among the selected equity funds that earns higher returns
than benchmark and competitors, M.VijayAnand (2000)[1].
R.Nithya (2004)[2] state that the values of mutual funds to the target people by identifying
Asset Management Company that is performing well and identifying the top schemes in the
category such as equity, balanced, Monthly Income Plan(MIP) & Income in the Assets
Management Company (AMC), and it performed well and met the expectations.
Prasath.R.H in Anna University (2009)[3],emphasizes the core values of mutual fund

investment, benefits of mutual funds and types of mutual funds and before choosing the
mutual fund scheme, the investor should undergo fact sheet thoroughly and he has to choose
the best one by calculating Sharpe Ratio, Treynor’s Ratio, Jensen Ratio, IR Ratio and NAV
calculation. If the investor finds difficulty of getting Rp, Rf, Standard deviation, and Beta
parameters, NAV calculations are the best alternative to assess the performance.
Open ended mutual funds have provided better returns than others and some of the funds
provided excess returns over expected returns based on both premium for systematic risk and
total risk. S Narayan Rao (2002)[4].
An Indian sponsored mutual fund seems to have outperformed both Public- sector sponsored
and Private-sector foreign sponsored mutual funds, SharadPanwar and Madhumathi.R,
(2005)[5].
Kaushi k, Bhattacharjee and Bijan Roy (2008)[6], state that to understand whether or not the
selected mutual funds (hence forth called funds) are able to outperform the market on the
average over the studied time period and concluded that there are positive signals of
information asymmetry in the market with mutual fund managers having superior
information about the returns of stocks as a whole.
Jaspal Singh and Subhash (2006)[7], stated that the investors consider gold to be the most
preferred form of investment, followed by National Savings Certificate and Post Office
schemes. Hence, the basic psyche of an Indian investor, who still prefers to keep his savings
in the form of yellow metal, is indicated.
13
RESEARCH METHODOLOGY
SELECTION OF VARIABLES:
The whole research is made on the dependent variables of investment in mutual funds which
is mentioned below:
Risk : It is the chance that an investment's actual return will be different from what was
expected.
Return: It is the gains or losses one brings in as a result of an investment.
And dependency of the above mentioned two variables are analyzed and discussed below
with the data of different mutual fund schemes of different companies.
FORMULATION OF RESEARCH DESIGN:
It is a descriptive research where the comparison between different mutual fund schemes is
made. It is quantitative in nature.
14
DATA SOURCES:
1) Primary Sources
Since the study requires a systematic gathering of information, a survey research (using a
structured questionnaire) was selected.
2) Secondary Sources
Data also are collected through various books, magazines, journals, internet, fact sheets of
the companies, news papers, periodicals, etc published by the respective companies.
SAMPLING SIZE:
3 companies
SAMPLING FRAME:
It includes mutual fund companies in India.
SAMPLING ELEMENTS:
TATA Mutual Fund Pvt. Ltd
HDFC Mutual Fund Pvt. Ltd
SBI Mutual Fund Ltd
15
STATISTICAL TOOLS
ALPHA & BETA
What is Alpha?
Alpha is a measure of an investment's performance on a risk-adjusted basis. It takes the

volatility (price risk) of a security or fund portfolio and compares its risk-adjusted
performance to a benchmark index.
The excess return of the investment relative to the return of the benchmark index is its
“ALPHA”.
A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%.
Correspondingly, a similar Negative alpha would indicate an underperformance of 1%. For

investors, the more positive an alpha is, the better it is.
What is Beta?
Beta, also known as the "beta coefficient," is a measure of the volatility, or systematic risk, of
a security or a portfolio in comparison to the market as a whole. Beta is calculated
using regression analysis.
A beta of 1.0 indicates that the investment's price will move in lock-step with the market.
A beta of less than 1.0 indicates that the investment will be less volatile than the market, and,
correspondingly,
A beta of more than 1.0 indicates that the investment's price will be more volatile than the
market.
For example, if a fund portfolio's beta is 1.2, it's theoretically 20% more volatile than the
market.
MEAN, SHARP INDEX & STANDARD DEVIATION
Mean:The mean is the average of the numbers: a calculated "central" value of a set of
numbers. To calculate: Just add up all the numbers, then divide by how many numbers there
are.
The formula of mean is given below:
16
Standard Deviation:
The standard deviation of a sample is known as S and is calculated using: Where x represents
each value in the population, x is the mean value of the sample, Σ is the summation (or total),
and n-1 is the number of values in the sample minus 1.
Sharp Index:
The formula can be used to measure portfolio performance on any time frame assuming a
normal distribution of returns.
The risk free rate of return is the benchmark used to determine excess portfolio return. It is
usually benchmarked against a treasury security whose duration matches term of the
investment that it is being used to benchmark. For shorter term portfolios, the risk free rate
could be derived using the T-Bill rate. Medium term portfolios can use treasury notes while
longer term portfolios can use bond rates.
17
SCOPE OF THE PROJECT:
The scope of the project is mainly concentrated to understand the various categories of
mutual funds such as equity funds, debt funds and balanced funds.
The scope of the project is to understand the various risks associated with each fund scheme.
The scope focuses on measurement of risks with the help of various tools such as Sharpe,
alpha, beta, mean, standard deviation, etc.It also focuses on analyzing various fund schemes
for the investors.
EQUITY FUND
An equity fund is a mutual fund that invests principally in stocks. It can be actively or
passively (index fund) managed.. Stock funds can be contrasted with bond funds and money
funds. Fund assets are typically mainly in stock, with some amount of cash, which is
generally quite small, as opposed to bonds, notes, or other securities. This may be a mutual
fund or exchange-traded fund.
The objective of an equity fund is long-term growth through capital gains, although
historically dividends have also been an important source of total return.
LIQUID FUND
Liquid funds are used primarily as an alternative to short-term fix deposits. Liquid funds
invest with minimal risk (like money market funds). Most funds have a lock-in period of a
maximum of three days to protect against procedural (primarily banking) glitches, and offer
redemption proceeds within 24 hours. The minimum investment size in a liquid fund varies
from Rs.25000 to Rs.1 Lakh.
A liquid fund provides good liquidity, low interest rate risk and the prevailing yield in the
market. Liquid funds have the restriction that they can only have 10 per cent or less mark-to-
market component, indicating a lower Interest rate risk.
BALANCED FUND
A balanced fund is a fund that combines a stock component, a bond component and,
sometimes, a money market component, in a single portfolio. Generally, these hybrid
funds stick to a relatively fixed mix of stocks and bonds that reflects either a moderate
(higher equity component) or conservative (higher fixed-income component) orientation.
A balanced fund is a mutual fund that generally keeps to a 50-50 mix of stock and bond
investments.
The purpose of balanced funds is to provide investors with a single mutual fund that
combines both growth and income objectives, by investing in both stocks and bonds.
18
ORGANISATION OF THE STUDY AND DISCRIPTION:
Selection of the various companies mutual fund product to study.
Collected data through primary sources from the general public to know their preferences
needs and reasons for selecting particular company’s product.
Detailed study of the selected company’s product through secondary sources.
Interpretation of the data by using different methodologies on selected variables.
Analysis of the findings resulting by the interpretation of the whole methodology.
And arriving to conclusion of the study
19
ANALYSIS AND INERPRETATION
Analysis of the responses captured from the questionnaire
In total 200 responses were captured through questionnaire and the gender wise break up is
as under:
Male 120
Female 80
Total Respondents
200
In order to get the brief understanding of the comparison study undertaken, the first and
foremost step which was taken was to get the responses captured from the both the genders
on fairly basis.
Getting the brief insights from both the genders will actually increase the acuteness of the
study that has been undertaken and help us to understand the investment pattern into MF
industry and help us to draw accurate conclusion.
In total 200 responses were captured out of which 120 were male and 80 were Female.
The responses were captured from various age groups as well, 20-35 Years -80 responses,36-
50 years- 70 responses, 50-65 years 50 responses.
In the survey conducted 97 salaried and 103 self employed participated.
The income wise segregation of people who participated in the survey is below 3 lakh is 70,
Between 3-5 lakh is 80 and more than 5 lakh is 50
Savings percentage wise data has been gathered from the survey is as under
<=25% 120
<=35% 60
<=45% 12
More Than 45% 8
20
The responses that were captured basis return on the investment following responses were
captured
High Risk / High Return 45
Low Risk /Low return 0
Low Risk/High Return 155
The responses captured on whether the investment that an individual does is preferred on Tax
savings or not, following was the outcome
Yes 183
No 17
Out of the selection given to the people for knowing their avenue of investment following
responses were gathered, out of 200 respondents,25 person of opinion of that savings account
is best way of saving money, 65 were of opinion that Fixed deposit/Recurring deposit were
good when it comes to savings, 40 were of opinion that investing shared and debentures is
good,25 supported Gold/silver,10 were of opinion that investing in Postal savings is good, 10
were in favor of real estate, 20 opted for Mutual Fund and insurance was not given
preference by any one.
When question came to role of brand name while selecting the investment avenue it was
noticed that out of total responses all were in favor of that brand name plays a big role.
When asked about of type of mutual fund which can be selected for investing out of total
responses the outcome was 120 were in favor of Equity type, 40 opted for liquid and 40
opted for balanced.
Out of total reponses captured when it came to selecting the Mutual fund from given three
options on whom the comparative study has been conducted it was known that 80 people
showed their interest in SBI mutual fund, and 55 people showed their interest in each TATA
and 65 People in HDFC, basis on the responses captured it can be also understood that SBI
being the government undertaking people have more trust on it and rest two being private
players they were second choice basis the return on the investment and other parameters like
ease of investment and redemption.
21
Analysis of past data of selected company’s mutual fund product
EQUITY FUND:
HDFC EQUITY SAVING FUND:
YEAR 2011 2012 2013 2014 2015

ANNUAL
RETURNS -14.2 39.7 -7.3 21.6 -32.9
(%)
RETURN
60
40 39.7
20 21.6
0
-7.3
-20 -14.2
-32.9
-40
2011 2012 2013 2014 2015
RETURN -14.2 39.7 -7.3 21.6 -32.9
Risk:
Alpha: -0.77
The value of alpha being NEGATIVE, it can be said that the above fund provides excess
return then what was expected by -0.77%. The above fund UNDERPERFORMED the index
by -0.77%.
Beta:0.38
As the beta value is less than 1, the above fund is considered to be less volatile meaning that
the fund’s price will not change drastically for over a long period of time. The less the
volatility, the less is the risk.
Mean:
22
=6.9/5
=1.38
Standard deviation:
YEAR RETURN (x)
2011 -14.2 -15.58 242.74

2012 39.7 38.32 1468.42
2013 -7.3 -8.68 75.34
2014 21.6 20.22 408.84
2015 -32.9 -34.28 1175.12
Total - 0 3370
Mean = 6.9/5 S.D=
-
=1.38 29.03
Shape Index = Portfolio average return - Risk free rate of interest
Standard deviation of the portfolio return
= 1.38 - 7.56
29.03
= -0.21
23
INTERPRETATION:
This ratio indicates whether the returns are appropriate in relation to the risk connected with
the fund or not.
Here, for the above fund scheme, the negative Sharpe ratio indicates that the risk is more
whereas the returns gained are less in relation to the risk. Any other less risky scheme would
have given better results rather than the above present fund scheme.
SBI MAGNUM EQUITY FUND:
Return:
YEAR 2011 2012 2013 2014 2015

ANNUAL
RETURNS -28.8 13.5 4.8 24.8 -13.9
(%)
RETURN
40
20 24.8
13.5
0 4.8
-20 -13.9
-28.8
-40
2011 2012 2013 2014 2015
RETURN -28.8 13.5 4.8 24.8 -13.9
Risk:
Alpha: 4.28
The value of alpha being POSITIVE, it can be said that the above fund provides excess
return then what was expected by 4.28%. The above fund OUTPERFORMED the index by
4.28%.
Beta:0.95
24
Mean:
=0.4 / 5
=0.08
Standard deviation:
YEAR RETURN(x)
2011 -28.8 -28.88 834.0544

2012 13.5 13.42 180.10
2013 4.8 4.72 22.28
2014 24.8 24.72 611.08
2015 -13.9 -13.98 195.44
Total - 0 1842.9544
Mean = 0.4 / 5 - S.D=
=0.08 21.46
= 0.08 - 7.56
21.46
= -0.35
25
INTERPRETATION:
TATA INCOME FUND:
Return:
YEAR 2011 2012 2013 2014 2015

ANNUAL
RETURNS (%) 6.68 10.4 7.24 12.95 6.9
RETURN
15
12.95
10 10.4
6.68 7.24 6.9
5
0
2011 2012 2013 2014 2015
RETURN 6.68 10.4 7.24 12.95 6.9
Risk:
Alpha: 2.24
2.24%.
26
Beta: 1.53
As the beta value is more than 1, the above fund is considered to be more volatile meaning
that the fund’s price may change drastically in a short period of time. The more the volatility,
the more is the risk. Such funds are called aggressive funds.
Mean:
=44.17/ 5
=8.83
Standard deviation:
YEAR RETURN(x)
2011 6.68 2.15 4.62

2012 10.4 1.57 2.46
2013 7.24 -1.59 2.53
2014 12.95 4.12 16.97
2015 6.9 -1.93 3.72
Total - 0 30.3
Mean = 44.17/ 5 S.D = 2.75
=8.83
27
= 8.83 – 7.56
2.75
= 0.46
INTERPRETATION:
Here, for the above fund scheme, the positive Sharpe ratio indicates that the risk is less
whereas the returns gained are more in relation to the risk. The greater the Sharpe ratio, the
better is its risk-adjusted performance i.e. the risk is less whereas the returns are more.
LIQUID FUND
TATA LIQUID FUND:
Return:
YEAR 2011 2012 2013 2014 2015
ANNUAL
RETURNS (%) 8.99 9.66 9.2 9 8.34
RETURN
10
9.5 9.66
9.2
9 8.99 9
8.5
8.34
8
7.5
2011 2012 2013 2014 2015
RETURN 8.99 9.66 9.2 9 8.34
Risk:
Alpha: 2.13
28
2.13%.
Beta: 0.29
volatility, the less is the risk
Mean:
=45.19/ 5
=9.04
Standard deviation:
YEAR RETURN(x)
2011 8.99 -0.05 0.0025

2012 9.66 0.62 0.3844
2013 9.2 0.16 0.0256
2014 9 -0.04 0.0016

2015 8.34 -0.7 0.49
Total - 0 0.9041
Mean = 45.19/ 5 S.D=
= 9.04 0.48
= 9.04 – 7.56
29
0.48
= 3.08
INTERPRETATION:
SBI LIQUID FUND:
Return:
YEAR 2011 2012 2013 2014 2015

ANNUAL
RETURNS 8.97 9.63 9.22 9.04 8.28
(%)
RETURN
10
9.5 9.63
9.22
9 8.97 9.04
8.5
8.28
8
7.5
2011 2012 2013 2014 2015
RETURN 8.97 9.63 9.22 9.04 8.28
30
Risk:
Alpha: 2.12
return then what was expected by 2.12 %. The above fund OUTPERFORMED the index by
2.12 %.
Beta: 0.28
Mean:
=45.14/ 5
=9.028
Standard deviation:
YEAR RETURN(x)
2011 8.97 -0.06 0.0036

2012 9.63 0.6 0.36
2013 9.22 0.19 0.0361
2014 9.04 0.01 0.0001
2015 8.28 -0.75 0.5625
Total - 0 0.9623
Mean = 9.03 S.D=
31
0.49
= 9.03 – 7.56
0.49
= 3
INTERPRETATION:
HDFC LIQUID FUND:
Return:
YEAR 2011 2012 2013 2014 2015

ANNUAL 8.8 9.56 9.28 9.1
RETURNS 8.35
(%)
32
RETURN
10
9.5 9.56
9.28 9.1
9 8.8
8.5 8.35
8
7.5
2011 2012 2013 2014 2015
RETURN 8.8 9.56 9.28 9.1 8.35
Risk:
Alpha: 2.13
2.13%.
Beta: 0.24
Mean:
=45.09/ 5
=9.02
Standard deviation:
33
YEAR RETURN (x)
2011 8.8 -0.22 0.0484
2012 9.56 0.54 0.2916

2013 9.28 0.26 0.0676
2014 9.1 0.08 0.0064
2015 8.35 -0.67 0.4489
Total - 0 0.8629
Mean = 45.09/ 5 S.D=
=9.02 0.46
= 9.02 – 7.56
0.46
= 3.17
INTERPRETATION:
5.3 BALANCED FUND:
SBI MAGNUM BALANCE FUND:
Return:
YEAR 2011 2012 2013 2014 2015
34
ANNUAL
RETURNS -22.23 35.03 9.8 44 -7.2
(%)
RETURN
50 44
35.03
0 9.8
-7.2
-22.23
-50
2011 2012 2013 2014 2015
RETURN -22.23 35.03 9.8 44 -7.2
Risk:
Alpha: 2.12
return then what was expected by2.12 %. The above fund OUTPERFORMED the index by
2.12%.
Beta: 0.28
Mean:
=59.4/ 5
=11.88
Standard deviation:
35
YEAR RETURN (x)
2011 -22.23 -34.21 1170.32

2012 35.03 23.15 535.92
2013 9.8 -2.08 4.33
2014 44 32.12 1031.69
2015 -7.2 -19.08 364.05
Total - 0 3106.31
Mean = 11.88 S.D=
27.87
= 11.88– 7.56
27.87
= 0.16
INTERPRETATION
TATA BALANCED FUND:
Return:
36
YEAR 2011 2012 2013 2014 2015
ANNUAL
RETURNS (%) -12.5 30.5 6.7 49.3 6.8
RETURN
60
49.3
40
30.5
20
6.7 6.8
0
-12.5
-20
2011 2012 2013 2014 2015
RETURN -12.5 30.5 6.7 49.3 6.8
Risk:
Alpha: 9.25
9.25%.
Beta: 1.01
As the beta value is more than 1, the above fund is considered to be more volatile meaning
that the fund’s price may change drastically in a short period of time. The more the volatility,
the more is the risk. Such funds are called aggressive funds.
Mean:
37
=80.8/ 5
=16.16
Standard deviation:
YEAR RETURN (x)
2011 -12.5 -28.31 801.46

2012 30.5 14.34 205.64
2013 6.7 -9.46 89.49
2014 49.3 33.14 1098.25
2015 6.8 -9.36 87.60
Total - 0 2282.44
Mean = 16.16 S.D=
23.89
= 16.16 – 7.56
23.89
= 0.36
38
INTERPRETATION:
HDFC BALANCED FUND:
Return:
YEAR 2011 2012 2013 2014 2015

ANNUAL
RETURNS -20.4 12.4 0.9 42 -7.7
(%)
RETURN
100
42
0 -20.4 12.4 0.9 -7.7
-100
2011 2012 2013 2014 2015
RETURN -20.4 12.4 0.9 42 -7.7
Risk:
Alpha: 8.84
return then what was expected by8.84 %. The above fund OUTPERFORMED the index by
8.84%.
Beta: 0.92
Mean:
39
=27.2/ 5
= 5.44
Standard deviation:
YEAR RETURN (x)
2011 -20.4 -25.84 667.71

2012 12.4 6.96 48.44
2013 0.9 -4.54 20.61
2014 42 36.56 1336.63
2015 -7.7 -13.14 172.66
Total - 0 2246.05
Shape Mean = 5.44 S.D= Index =
23.70
Portfolio average return - Risk free rate of interest
= 5.44– 7.56
23.70
= -0.09
INTERPRETATION:
40
FINDINGS
AN OVERVIEW:
By comparing risk and return of various mutual fund schemes, I found that:
EQUITY SCEMES:
On the basis of sharp index TATA is on 1st position which provides positive returns where
SBI at last position which provides lower return.
On the basis of alpha TATA is again on 1st position where SBI also having value 2 to 5%&
HDFC at last position with negative value of alpha.
On the basis of Beta TATA is best where the value of beta is more than 1 and the value of
beta in SBI is nearer to 1.
BALANCED SCEMES:
On the basis of sharp index TATA is 1st position which provides positive returns where
HDFC gives negative return.
On the basis of alpha TATA is on 1st position where SBI having lower value which is 2%.
On the basis of Beta TATA is best where value of beta is more than 1and the value of beta in
HDFCis nearer to 1.
LIQUID SCEMES:
All three companies provides nearer to 3% return.
All the companies having same values of alpha which is nearer to 2%.
All the companies having same values which is lower than 1.
41
RESULT OF APPLICATION OF DIFFERENT METHODOLOGY
By applying different methodology on the data collected of various companies mutual fund
products we could compare the profitability of investment in a particular scheme out of
different schemes analyzed in the study which is shown in a tabular and graphical manner
below:
COMPARISON OF EQUTY FUND, DEBT FUND & BALANCED FUND
SCHEM TATA HDFC SBI

E
NAME
EQUI LIQU BALAN EQUI LIQ BALAN EQUI LIQ BALAN
TY ID CED TY UID CED TY UID CED
MEAN 8.83 9.04 16.16 1.38 9.02 5.44 0.08 9.03 11.88
S.D 2.75 0.48 23.89 29.0 0.46 23.70 21.46 0.49 27.87
SHARP 0.46 3.08 0.36 -0.21 3.17 -0.09 -0.35 3 0.16

INDEX
ALPHA 2.24 2.13 9.25 -0.77 2.13 8.84 4.28 2.12 2.12
BETA 1.53 0.29 1.01 0.38 0.24 0.92 0.95 0.28 0.28
60
50
40
30
20
10
0
LIQUID
LIQUID
LIQUID
EQUITY
BALANCED
EQUITY
BALANCED
EQUITY
BALANCED
TATA HDFC SBI

MEAN S.D SHARP
INDEX ALPHA BETA
42
ANALYSIS OF THE RESULTS:
INTERPRETATION:
The sharp index of TATA is better than HDFC & SBI .It is positive in all three schemes
where in HDFC the sharp values of equity & balanced are negative & in SBI the value of
sharp is negative only in equity. This means TATA provide more return and less risky funds
then other two companies.
The alpha of TATA and SBI are positive where TATA Balanced Fund is the highest. It
provides highest excess return of 9.25% to the investor. Whereas the lowest excess return
provided is by HDFC equity Fund.
The beta of TATA equity fund is highest 1.53%. Being more than 1, it is a more volatile
fund, more risky fund whose prices can change drastically. The beta of HDFC & SBI is
almost similar. Beta value is less than 1, the above fund is considered to be less volatile
meaning that the fund’s price will not change drastically for over a long period of time. The
less the volatility, the less is the risk.
43
CONCLUSION
Mutual fund industry has given huge opportunities in sub-urban and rural markets, which
lays untapped yet with the growing income levels in the country. The industry’s future looks
quite bright and growth of mutual fund industry will help as a fuel to the booming Indian
economy.
Comparison of the EquityFunds, Liquid Funds & Balanced Funds - the reason for selecting
these schemes is that-here exists exceedingly fluctuating market. One can get to know how
these funds get affected and their performance.
If we take the comparison of the Studied 5 years, it was finally concluded that from all the
schemes presented above, TATA BALANCED FUND is a good returns providing fund with
normal risk associated with it as can be known from its Sharpe’s ratio. It also provides good
average excess return though lower than other schemes. It shows less volatility of its stock
prices which also reduces the risk as the stock prices do not change drastically over a short
period of time as its Beta being less than 1. Also the mean average of returns is the highest
than all other above mentioned funds which suggest that it provides highest returns.
44
IMPLICATIONS OF MUTUAL FUND
Mutual funds have gained popularity among Indian investors as they offer a number of
benefits like affordable professional management, diversification, liquidity, flexibility, etc.
As with all other investments, mutual fund investing too has its own tax implications. Firstly,
let’s understand how you earn from your mutual fund investments. There are two ways in
which you can get your returns from your mutual fund investment. They are:
Dividends: The mutual fund scheme may declare dividends based on the investment gains
generated by it. If you have opted for the ‘dividend payout’ option, you would receive these
dividends as and when they are declared. You may also opt for the ‘dividend reinvestment’
option in which case, the dividend due to you is reinvested in the same scheme to buy more
units. If you opt for the ‘growth’ option, no dividends are declared; instead, the profits are
retained in the scheme.
Capital gains: In addition to dividends, the NAV (Net Asset Value) of the mutual fund
scheme rises over time to reflect the rise in the market prices of securities that the scheme has
invested in. When you redeem your mutual fund units, if the NAV has increased as a result
of this rise in prices of securities, you will earn profits {Profit = Number of units x (NAV at
which you redeem your units minus NAV at which you purchase your units)}. This is called
capital gains.
Now that we have understood how we earn from investing in mutual funds, let’s take a look
at the broad categories of mutual funds as per income tax.
Equity-oriented and debt-oriented schemes
All mutual fund schemes are broadly classified as equity oriented or debt oriented based on
their portfolio characteristics. If the scheme invests at least 65 per cent of its corpus in shares
and related instruments (like futures, options etc), it is classified as an equity oriented
scheme. Otherwise it is treated as a debt oriented scheme. The two are taxed differently. But
in general, equity oriented schemes suffer lower tax than debt oriented schemes.
Another aspect that we need to consider is the duration of investing in a mutual fund. This
impacts the amount of tax we pay on the profits earned.
Short term capital gains and long term capital gains
Capital gains are taxed according to their holding period and the type of scheme. In equity
oriented schemes, if you have held your investment for at least one year, it is treated as Long
Term Capital Gain (LTCG). If the holding period is lesser than a year, it is treated as Short
Term Capital Gain (STCG). For debt oriented schemes, the minimum holding period to
qualify as LTCG is 3 years; if you hold for less than 3 years, the gains are treated as STCG.
Generally, LTCG suffers lower taxation than the corresponding STCG.
45
Dividend Distribution Tax (DDT)
While all dividends are tax-free in the hands of the investor, debt oriented schemes deduct a
certain potion of the declared dividend and pay it to the government as DDT. So the net
dividend that you realize would be the gross declared dividend minus the DDT deducted. As
the scheme deducts DDT and pays it, you have no hassles in this regard.
46
LIMITATIONS OF THE STUDY
To get an insight in the process of risk and return of mutual fund is a difficult task.
Comparison between only 3 companies is done here.
Time period of comparison does not represent overall performance of mutual fund schemes.
It is limited only to 6 years.
The risk and return may change from time to time as per the market conditions.
The data is collected mainly through secondary sources, so it may be possible that the data
are not accurate and complete
DIRECTIONS FOR FUTURE RESEARCH
A comparative analysis is also done between the sectors, different investment avenues and
different schemes. The future work will consists of the study of the portfolio of each of the
funds. The proportion of investments of the funds invested in different sectors and also in
different type of stocks (like large cap, mid cap and small cap stocks) will also be found out
and analyzed. Thus, it will give an overall view of the risks and returns of the selected funds
over the last one year and also analysis of their portfolio to understand the variability of
returns over the last one year.
RECOMMENDATION
Selecting a particular scheme largely depends on the needs of the investors; so no scheme is
the best of all.
Investor must carefully see the performance of the mutual funds of the past years before
investing into any fund/scheme.
Investor should be aware of the manner in which the performance of a mutual fund can be
measured by using various measuring techniques in terms of risk and return.
The investors can easily find out the risk & return by using to Mean, Sharpe, Standard
Deviation, Alpha and Beta and should do so respectively.
The investor should carefully assess his benefit before investing in to the mutual funds.
Mutual funds give higher returns & are low risky. Equity, income & balanced schemes-all
schemes given good returns.
47
QUESTIONNAIRE
A study of preferences of the investors for investment in mutual funds.
1. Personal Details:
(a). Name:-
(b). Add: -
(c). Age:-
(d). Qualification:-
(e). Occupation. Pl tick (√)
Govt. Ser Pvt. Ser Business Agriculture Others
(g). What is your monthly family income approximately? Pl tick (√).
Up to Rs. 10,001 to Rs. 15,001 to Rs. 20,001 to Rs. 30,001

Rs.10,000 15000 20,000 30,000 and above
2. What kind of investments you have made so far? Pl tick (√). All applicable.
a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund
e. Post Office-NSC, f. g. Gold/ Silver h. Real Estate

etc Shares/Debentures
3. While investing your money, which factor will you prefer? .
(a) Liquidity (b) Low Risk (c) High Return (d) Trust
4. Are you aware about Mutual Funds and their operations? Pl tick (√). Yes No
5. If yes, how did you know about Mutual Fund
a. Advertisement b. Peer Group c. Banks d. Financial Advisors
48
6. Have you ever invested in Mutual Fund? Pl tick (√). Yes No
7. If not invested in Mutual Fund then why?

(a) Not aware of MF (b) Higher risk (c) Not any specific reason
8. When you plan to invest your money in asset management co. which AMC will you
prefer?
Assets Management Co.
a. SBIMF
b. UTI
c. Reliance
d. HDFC
e. Kotak
f. ICICI
9. Which Channel will you prefer while investing in Mutual Fund?
(a) Financial Advisor (b) Bank (c) AMC
10. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tick (√)
a. One Time Investment b. Systematic Investment Plan (SIP)
49
BIBLOGRAPHY
BOOKS:
Madhusudan V. Jambodekar, “Marketing Strategies of Mutual Funds – Current Practices and

Future Directions”, Fourth Edition, Capital Markets Publisher, Bangalore, 1966, P.189-199.
SujitSikidar and Amrit Pal Singh, “Financial Services: Investment in Equity and Mutual
Funds – A Behavioural Study, in Bhatia B.S., and Batra G.S., ed., Management of Financial
Services”, Third Edition, Deep and Deep Publications, New Delhi, 1996, Chapter 10, P.136-
145.
Agrawa, D, “A Comparative Study of Equity Based Mutual Fund of Reliance and HDFC”,
Fifth Edition, Prabandhan Publisher, New Delhi, 2009, P.145-154.
WEBSITES:
http://www.appuonline.com/mf/debt-income-funds/10.html
http://www.projectworkworld.blogspot.com/2012/11/comparative-analysis-of-mutual-fund-
on.html
http://www.valueresearcheronline.com/funds/fundperformance.asp?schemecode=600
http://www.investsmartindia.com/mutual funds/2012.html
http://www.indiainfoline.com/Mutualfunds/Tata-Fund-Growth/1500961
http”//www.appuonline.com/24-HDFC-Growth-Fund-Growth.html
http://www.moneycontrol.com/
https://www.sbimf.com/
http://www.tatamutualfund.com/
http://www.hdfcfund.com/
50

Pratiksha Msop

Transféré par

Informations du document

Description originale:

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Pratiksha Msop

Transféré par

Droits d'auteur :

Formats disponibles

PROJECT SUBMITTED TO

INSTITUTE OF COMPANY SECRETARIES OF INDIA

COMPILED BY: PRATIKSHA RAMLAL BAID

REGISTRATION NUMBER: 420680168/08/2009

PROJECT ON: MUTUAL FUNDS

SUBMITTED ON: 13 APRIL 2019

Chapter-3 ORGANISATION OF THE STUDY 19

accept as important and relevant to their decision.

and preferences of the investors for investment in Mutual Funds.

without their kind help.

I am highly indebted to my seniors at my Office for their guidance and their

constant supervision as well as for providing necessary information regarding the

project, and also their support in completing the project.

I would like to express my gratitude towards my parents who have made me

competent to face challenging tasks.

people who have willingly help me out with their ability.

Types of Mutual Funds Schemes on the Basis of Structure:

OPEN ENDED SCHEMES:

CLOSE ENDED SCHEMES:

Types of Mutual Funds Schemes on the Basis of Investment objectives:

INCOME OR DIVIDEND SCHEMES:

Other Mutual Funds Schemes:

MONEY MARKET SCHEMES:

TAX SAVINGS SCHEMES:

Get Your Finances in Order

NEED FOR RESEARCH

a) Synoptic view of Indian Mutual Fund Industry:

b) Exploring the Untapped Market:

c) Identifying the variables that affect selection of Mutual Funds:

d) Customer Awareness Campaign:

AIMS AND OBJECTIVE OF THE STUDY

1) TATA Mutual Fund

2) SBI Mutual Fund

3) HDFC Mutual Fund.

Prasath.R.H in Anna University (2009)[3],emphasizes the core values of mutual fund

Return: It is the gains or losses one brings in as a result of an investment.

FORMULATION OF RESEARCH DESIGN:

It includes mutual fund companies in India.

TATA Mutual Fund Pvt. Ltd

HDFC Mutual Fund Pvt. Ltd

SBI Mutual Fund Ltd

ALPHA & BETA

Alpha is a measure of an investment's performance on a risk-adjusted basis. It takes the

Correspondingly, a similar Negative alpha would indicate an underperformance of 1%. For

MEAN, SHARP INDEX & STANDARD DEVIATION

The formula of mean is given below:

Selection of the various companies mutual fund product to study.

Detailed study of the selected company’s product through secondary sources.

Interpretation of the data by using different methodologies on selected variables.

Analysis of the findings resulting by the interpretation of the whole methodology.

And arriving to conclusion of the study

Analysis of the responses captured from the questionnaire

In the survey conducted 97 salaried and 103 self employed participated.

More Than 45% 8

Low Risk /Low return 0

Low Risk/High Return 155

HDFC EQUITY SAVING FUND:

YEAR 2011 2012 2013 2014 2015

YEAR RETURN (x)

2011 -14.2 -15.58 242.74

Shape Index = Portfolio average return - Risk free rate of interest

Standard deviation of the portfolio return