An Analytical Performance

of Top Tax Saving Schemes in

Mutual Fund for the period
2010 2014

Made By :- Sakshi
Mittal
05015903913

About the Industry

A Mutual Fund is a trust that
pools the savings of a
number of investors who
share a common financial
goal.
The
money
thus
collected is then invested in
capital market instruments
such as shares, debentures
and other securities. The
income earned through these
investments and the capital
appreciation
realized
are
shared by its unit holders in
proportion to the number of
units owned by them.

Advantages &
Disadvantages
Advantages

Disadvantages

Professional
Management
Diversification
Low cost
Economies of scale
Transparency
Safety
Choice of schemes

No Guarantee
Fees & Expenses
Taxes

About the Organization

1)
2)
3)
4)
5)

Reliance Mutual Fund

Axis Mutual Fund
Franklin Templeton Mutual Fund
ICICI Prudential Mutual Fund
HDFC Mutual Fund

About the topic

PERFORMANCE MEASUREMENT TOOLS OF
MUTUAL FUND
1)
2)
3)
4)
5)
6)
7)
8)

Average Mean
Standard deviation
Beta
Correlation
Coefficient of Determination
Treynors Ratio
Sharpe Ratio
Jensens Measure

RESEARCH METHODOLOGY
Objectives of study

To compare the performance of selected tax saving

schemes in comparison with market portfolio.
To measure the comparative beta analysis of selected
AMC.
To offer suggestion based on the finding arrived from
the study.
To employ performance evaluation measure using
volatility ratio such as treynor, sharpe and jensen

DATA COLLECTION &

STATISTICAL TECHNIQUES
Secondary Data
Collected from the websites related to mutual funds, books,
and brochures.
Statistical Tools
Mean
Standard deviation
Beta
Correlation
Coefficient of Determination
Sharpe Measure
Treynor Measure

Jensen Measure

ANALYSIS & INTERPRETATION

1) Standard deviation and return on tax saving schemes

Inference: The above table shows average return and standard

deviation details. From the table it can be seen that HDFC Fund
making lowest average return of 18.37% and Reliance fund making
highest average return of 26.36% during the period. However
Reliance Fund is also facing highest risk of 41.26 of all the four
funds because of the greatest difference between its Return and
Standard deviation. The HDFC fund, ICICI funds and Axis fund are
making similar amount average return but risk is not much higher.

2) Analysis of BETA VALUES OF FIVE SCHEMES

Inference: The result of beta is present in table. It

shows that only HDFC Tax Saver fund beta value is
(0.88< 1), that means only HDFC Tax Saver fund will
be performed in defensive way as compare to all the
other selected tax saving schemes.

3) CORRELATION VALUES OF FIVE SCHEMES

Inference: Table represent the result of correlation

estimated of selected tax saving schemes. The analysis
reveals that all the scheme are highly correlated with
market index suggesting direct relationship between
returns of tax saving schemes and benchmark index. It
shows that the results follow the market index.

4) COEFFICIENT OF DETERMINATION OF FIVE SELECTED SCHEMES

Inference: It shows the percentage of variation

attributes to the market movement. It is seen that
except ICICI Prudential Tax Plan having highest values of
(r2), all other schemes indicates that much of the
variation in return of the scheme are return by market.

5) STATISTICAL ANALYSIS OF FUND PERFORMANCE

Inference: The result of Treynors, Sharpe and Jensen

method is present in above table. It show the performance
level of all the five selected tax saving schemes. It is seen
that analysis of returns in relation to the market risk of the
fund. The higher returns are ranked accordingly where
ranks are- 1st Axis Fund, 2nd Reliance fund, 3rd Franklin
fund, 4th ICICI fund, 5th HDFC Fund by using all the three
methods.

FINDINGS
In order to know the performance of the tax saving schemes in mutual fund
as per the research design from five selected AMC company data was
collected. Further the data was analysed in previous chapter evaluating by
( Average return, standard deviation, beta, correlation, coefficent of
determination and methods of mutual fund) to getting some finding.
An Individual can take an advantage of these funds and schemes to save tax
by investing maximum of Rs 1,00,000.
After analyzing the data, it is understood that the ICICI Prudential Tax Plan,
Reliance Tax Saving, Franklin India Tax Shield and AXIS Long Term Equity Fund
have performed better with average return of 19.75, 26.36, 20.14 and 26.32%
respectively when compared to its benchmark return S&P CNX 500 of 45%.
Further, Reliance Tax Saving has a higher risk (standard deviation) of 41.26%,
which has also given the highest return among selected schemes. The HDFC
Tax saver fund has given less return when compared to its benchmark of
market index.

Cont.
Beta of the selected schemes have posted a beta value less than 1; thus belonging
to defensive category. A beta (<1) implies that this schemes tend to hold portfolio
that were less risky than the market portfolio. So that only HDFC Tax Saver Fund
has a defensive performed.
According to correlation it is found that the entire schemes are highly correlated
with market index.
The entire scheme have highest values of coefficient of determination (r 2) indicates
that much of the variation in return of the scheme are return by market.
All the five tax saving schemes have positive sharp ratio. The highest sharp ratio is
found in AXIS Long Term Equity Fund. While suggest that the fund has generated
adequate returns as against the level of risk.
The maximum treynors value of index are found in AXIS Long Term Equity Fund
(16.07) and minimum value was found in HDFC Tax saver fund (10.01). it indicates
that the schemes have provide adequate returns as against the risk involved in the
investment.

SUGGESTIONS

Investors can go ahead in investing in ICICI Prudential Tax Plan,

Reliance Tax Saving, Franklin India Tax Shield and AXIS Long Term
Equity fund for acquiring better returns as well as tax savings.

HDFC AMC has to revise HDFC Tax Saver Fund portfolio to increase
fund returns and provide to the investors a more secure investment
option along with tax saving.

The HDFC Tax Saver Fund scheme tends to hold portfolio that were
less risky than the market portfolio.

According to return against the risk schemes will be ranked

accordingly 1st Axis Fund, 2nd Reliance fund, 3rd Franklin fund, 4th ICICI
fund, 5th HDFC Fund by using all the three methods.

AMCs should take more efforts on spreading awareness about taxing

mutual funds as these investment instruments provides a higher
return with tax saving.

Cont.
As Tax-saving schemes offer tax rebates, Under Sec.80(C)
of the Income Tax Act, it is better to invest in the Tax Funds,
as one can get good returns & also tax exemption.
As the stock markets are in the bullish trend it is better to
invest in the funds which have Beta values above 0.5.
Average return of index is higher and the performance of
Mutual funds is much above the index performance. So I
suggest everybody to invest in Mutual funds.
Average bank rates are also around 8%. So I suggest the
investors to invest in Mutual Funds.

Conclusion
Mutual funds are one of the best investments ever created
because they are very cost efficient and very easy to
invest in. All the selected schemes have allocated majority
of corpus to large cap stock and some schemes also have
allocation to mid cap. Various external causes affect the
fund performance. It is suggestible for the investors to
choose the right scheme according to their risk apatite
tolerance and objective of the scheme. And it is always
suggested to invest in equity schemes for longer tenure.
Investors while investing in the mutual funds is very
cautious. ICICI Prudential Tax Plan, Franklin India Tax shield,
Axis Long Term Equity, and Reliance Tax Saving funds
beta is more than one, so these funds are having
aggressive relationship with market.

THANK YOU