a project report on different schemes of mutual funds and their comparative analysis

Track Record of the Different Schemes of Mutual funds and their comparative

analysis

EXECUTIVE SUMMARY:

Primary investment objective of an individual or organization is to maximize the returns

and minimizing Market risk through effective diversification.

Mutual funds have become latest buzz word for the average person to invest their

money. It is said that the bank investment is the first priority of people to invest their

savings and next and safer investment place is in mutual funds. A Mutual fund pools

resources from thousands of investors and then diversifies its investment into many

different holdings such as in stocks ,bonds/debt instruments, Government securities etc.

in order to provide more safer and relatively high returns as compared with Fixed

deposits etc.

The Project is basically “FINANCE PROJECT” which tries to explain in layman’s

language about the history, growth and pros & cons of investing in mutual funds.

In the second part of this project it will cover the detailed track record of the three

Mutual fund schemes such as : Franklin Blue chip Fund

ICICI Prudential Power and

HDFC capital builder fund.

And also comparative analysis of these funds with their respective benchmark indices.

The main reason for selecting these three schemes is : All three schemes incepted in the

year 1994 and since then they are in market , it will give me an opportunity to take in

depth 15 year track records with market performance and also to know how these funds

performed during market crash/ups and downs of the market movement.

Babasabpatilfreepptmba.com 1


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Topic of the study:

“Track Record of the Different Schemes of Mutual funds and their comparative

analysis”

Main Objective of the Project:

“Understanding the Concept of Mutual funds, and comparative analysis of three

Mutual fund schemes”

Sub Objectives:

1. Study the Mutual fund industry in India

2. Analyzing the performance of three funds since 1994.

3. To study the performance of schemes compared to their respective benchmark.

4. To study the risk involved in these 3 schemes compared to their Benchmark.

Research Design:

Descriptive research is study of existing facts to a conclusion. In this research I will

make an attempt to analyze the performance of the funds and also how much risk

associated with them.



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Methodology:

Primary data: Discussion with company Guide and with other officials,

Secondary Data:

1. Materials Provided by Organization like

[1] Research reports [2] Monthly fact sheets

2. Business Magazines like

[1] Mutual funds insight

[2] Money Today etc.

3. Internet.: www.bseindia.com

www.nseindia.com

www.valueresearch.com etc.



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Benefits of the study:

1. This study will help us to know the workings and concept of Mutual funds.

2. this research helps to find how much return can earned by investing in Mutual

funds as compared with FD

3. It will also help to convince the others regarding how Mutual Funds re better risk

adjusted as compared with direct investment through shares.

4. and finally it will give Picture about how these three funds [Franklin

Bluechip,ICICI Prudential power,HDFC capital builder fund] performing over

last 15 years.

Limitations: Main Limitation is that in this project we are only considering three

schemes of mutual funds, and another limitation is data availability/collection is very

tedious



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FINDINGS OF THE PROJECT ARE:

Among these three funds more popular among investors is Franklin blue chip

fund.

Both Franklin blue chip fund and ICICI pru power fund faced problems during

2000 and 2001 main reasons are:

1.Ketan Parek’s case and

2.September 11th attack on US WTO

HDFC capital Builder fund faced crucial period during 2006, main reason was its

portfolio then mainly consisting of FMCG companies and in that year they

drastically came down.

Among these three funds highest Beta is of Franklin i.e 0.96,lowest is of HDFC

capital builder fund and sharp ratio high in case of Franklin and low in case of

HDFCCB fund .

ICICI Pru Power’s performance is more or less is stable even if we see its

BETA,Alpha,Sharp ratio and average returns also good i.e 2.86.

Average Return is high in case of HDFC CB Fund i.e 3.04

Franklin blue-chip fund once upon a time it was considered to be as star in mutual

funds but due to high market volatility in the year 2006 and 2007 but now from

2008 January on words it could salvage some of its lost pride because of

comparatively low volatility in Blue chip stocks



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SUGGESTION/RECOMMENDATON TO INVESTORS:

By the study and analysis of the mutual fund industry it will be better to suggest that even

though mutual funds are subject to risk but they are better risk adjusted as compared with

stocks, from last five years it has become a buzz word for investment main reason it is

useful in case of getting tax reductions etc.

If a person wants to earn more as compared to Bank FD where possible returns are just

10-12% where as in mutual fund minimum is around 15-20% mutual funds are good

option compared with stock market .

If person does not want to take much risk then he can invest in the funds like HDFC

Capital builder fund because as we have already seen in returns chart, compared with

other two funds(Franklin blue-chip and ICICI power).that it has given constant returns in

shorter period of time, with less BETA and arithmetic mean return is also high

If a person is more interested and ready to take risk then the Franklin Blue-chip fund will

the good option. By looking at its BETA and SD Risk both are high but if person invest

in this fund for more than 4 years he will get returns around 35%.



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Mutual funds

The concept:

In earlier times 'direct' was the only investment vehicle available. If we wanted to buy

fixed deposit/bond we had to apply on our own. Similarly, when we wanted to buy

shares, we had to call up stock brokers, who would procure shares on our behalf and

same was the case with property. The cost involved in 'direct' buying is least amongst all

investment vehicles. However we need to have skills and time to use this form of

investing.

Another investment vehicle is a mutual fund. Mutual fund works on the concept of

pooling in money. Assume there are 5 to 6 friends who want to invest money in a

particular asset class say equity. Also assume they do not have skills and time. However

one of them knows an expert who regularly invests in stock markets. All these friends go

to an expert and give him their investment amount. The expert invests on their behalf. If

there is profit in investment, they all benefit and if there is any loss they suffer. Experts

get certain fee for investing on their behalf. This is the concept of a mutual fund.

Investing in mutual fund is slightly expensive than "direct" form of investing. However

the decision-making and procedure of investing is transferred to the Mutual Fund

Company. Insurance as an investment vehicle works somewhat similar to mutual fund,

while traditional insurance plans invest only in debt-based products and are not market

linked.

A vehicle for investing in stocks and bonds

A mutual fund is not an alternative investment option to stocks and bonds, rather it pools

the money of several investors and invests this in stocks, bonds, money market

instruments and other types of securities.Buying a mutual fund is like buying a small



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slice of a big pizza. The owner of a mutual fund unit gets a proportional share of the

fund’s gains, losses, income and expenses.



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Each mutual fund has a specific stated objective

The fund’s objective is laid out in the fund's prospectus, which is the legal document that

contains information about the fund, its history, its officers and its performance

Fund Objective What the fund will invest in

Equity (Growth) Only in stocks

Debt (Income) Only in fixed-income securities

Money Market (including

Gilt)

In short-term money market instruments (including

government securities)

Balanced Partly in stocks and partly in fixed-income securities,

in order to maintain a 'balance' in returns and risk

Managed by an Asset Management Company (AMC)

The company that puts together a mutual fund is called an AMC. An AMC may have

several mutual fund schemes with similar or varied investment objectives.

The AMC hires a professional money manager, who buys and sells securities in line

with the fund's stated objective.

All AMCs Regulated by SEBI, Funds governed by Board of Directors

The Securities and Exchange Board of India (SEBI) mutual fund regulations require that

the fund’s objectives are clearly spelt out in the prospectus.

In addition, every mutual fund has a board of directors that is supposed to represent the

shareholders' interests, rather than the AMC’s.



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For small and medium investor – who does not have skills and time – mutual fund

seems the best option.

Currently in India we have mutual funds, which invest mainly in two asset classes, debt

and equity. And now many mutual fund companies also investing in real estate,

infrastructure projects, natural energy resources etc.

Mutual funds concept can be well understood with the following diagram:


INVESTORS

MUTUALFUND

SCHEMES

MARKET

FLUCTUATION

INVEST THEIR MONEY

INVEST IN VARIETY OF STOCKS/BONDS

PROFIT/LOSS FROM PORTFOLIO INVESTMENT

PROFIT/LOSS FROM INDIVIDUAL INVESTMENT


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Benefits through investing in Mutual funds:

Professional Money Management: Fund managers are responsible for implementing a

consistent investment strategy that reflects the goals of the fund. Fund managers monitor

market and economic trends and analyze securities in order to make informed

investment decisions.

Diversification: Diversification is one of the best ways to reduce risk Mutual funds

offer investors an opportunity to diversify across assets depending on their investment

needs

Liquidity: Investors can sell their mutual fund units on any business day and receive the

current market value on their investments within a short time period (normally three- to

five-days

Affordability: The minimum initial investment for a mutual fund is fairly low for most

funds (as low as Rs500 for some schemes).

Convenience: Most private sector funds provide you the convenience of periodic

purchase plans, automatic withdrawal plans and the automatic reinvestment of interest

and dividends. Mutual funds also provide you with detailed reports and statements that

make record-keeping simple. You can easily monitor the performance of your mutual

funds simply by reviewing the business pages of most newspapers or by using our Mutual

Funds section in Investor’s Mall.

Flexibility and variety: You can pick from conservative, blue-chip stock funds, sectoral

funds, funds that aim to provide income with modest growth or those that take big risks



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in the search for returns. You can even buy balanced funds, or those that combine stocks

and bonds in the same fund.



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Tax benefits on Investment in Mutual Funds:

1) 100% Income Tax exemption on all Mutual Fund dividends

2) Capital Gains Tax to be lower of -

10% on the capital gains without factoring indexation benefit and

20% on the capital gains after factoring indexation benefit.

3) Open-end funds with equity exposure of more than 50% are exempt from the

payment of dividend tax for a period of 3 years from 1999-2000.

Disadvantages of Mutual Funds:

No Control Over the costs

No tailor made portfolios



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INDUSTRY OVERVIEW

A little history :

Mutual funds made an opening in India in 1963 under the enactment f Unit Trust of India

(UTI), which came out with is debut scheme named US-64, an open ended scheme n,

which is operating till date. Up to 1986-87 it had launched 20 schemes, mobilizing net

resources amounting to Rs. 4564 crores.for these 23 long years up to 1987 UTI enjoyed

complete monopoly of the unit trust business in India. It remained one and the only

mutual fund in India. as the next logical step, public sector banks and financial

institutions were allowed to float mutual funds and their success emboldened the

government to allow the private sector to foray into this area.

The initial years of the industry also saw the emerging years of the Indian equity market,

when a number of mistakes were made and hence the mutual fund schemes, which

invested in lesser-known stocks and at very high levels, became loss leaders for retail

investors. From those days to today the retail investor, for whom the mutual fund is

actually intended, has not yet returned to the industry in a big way. But to be fair, the

industry too has focused on brining in the large investor, so that it can create a significant

base corpus, which can make the retail investor feel more secure.

Ups & Downs of Mutual fund Industry In India

Ten years ago, close-end funds were the order of the day. Most debt funds offered

assured returns. And even equity funds managed to convey the impression of fixed

returns by sporting calling themselves "Triple Plus" and "Double Square Plus". Equity

funds were largely judged by their dividends, rights and bonus offers, rather than by the

returns.

The mutual fund industry has lived through its share of crises of confidence over the past

ten years. And there are still grey areas. But the regulatory framework, disclosure norms



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and service standards have all changed beyond recognition, making mutual funds one of

the most investor-friendly avenues available today.

Private sector plays:

When the first crop of private sector-sponsored mutual funds (such as Kothari Pioneer,

20th Century Finance and Apple Finance) debuted in 1993-94, they had a difficult time

weaning investors away from the Unit Trust of India and the public sector bank-

sponsored funds.

The bull market of 1994 and the subsequent IPO boom changed all this. With retail

investors tasting the power of the equity, a spate of private equity funds made their debut

in 1994-95.

Funds such as the Apple Midas the Goldshare and Morgan Stanley Growth Fund drew

retail investors in large numbers. Unfortunately, as the IPO bubble burst, and the equity

market went into a slide, so did the NAV of the equity funds launched in the bull market.

But the important development during this period was the emergence of open-end funds,

which offered on-tap liquidity to their investors and raised the bar on NAV and portfolio

disclosures.

The second coming: After the upsets of 1994-95, it was a slow and painstaking recovery

for the private sector funds. In the five years that followed, many more private sector

funds threw their hat into the ring, some of them big global names such as Alliance

Capital, the Templeton group, Newton and Principal Financial.

With a lull in the equity market, fund houses spent this period expanding their portfolio

of debt offerings. Alongside the plain-vanilla debt funds, came the gilt, liquid, cash funds



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and treasury management plans, to cater to high net worth and corporate investors. There

was also a slew of balanced and hybrid fund launches.

During this period, assured return schemes from the UTI and the bank-sponsored funds

were buffeted by controversy, after some reneged on promises. This was followed by the

crisis in US-64. These events helped drive the concept of market-linked returns firmly

into the minds of investors. And this put private sector fund houses firmly back on the

radar screens of investors.

Restructuring pays off: The years from 1996 to 1998 saw equity funds restructuring

their portfolios and piling them up with FMCG, pharma and infotech stocks. By end-

1999, the secular bull run, led by the IT stocks, had helped many an equity fund build an

impressive record of performance. But this "second coming" of equity funds was also to

end in disappointment. The newfound fancy for equity saw the rollout of a slew of

technology funds at the height of the bull markets in 2000. When these crashed, some of

the goodwill painstakingly built by the equity funds also took a beating.

Debt in fashion: But, by then, private sector fund houses had managed to build up a

strong performance track record in their debt products. Helped by the secular decline in

interest rates and a basket of innovative offerings, mutual funds managed to deliver

returns that were substantially higher than what was available from alternative savings

avenues such as fixed deposits.

This led to a large-scale migration of assets to debt-oriented mutual funds.

By 2003, private sector mutual funds had wrested a lion's share of the mutual fund assets

from the UTI and the PSU bank-sponsored funds. By end-December 2003, the mutual

fund industry was managing Rs 1,40,000 crore of assets, with 80 per cent of it in private

sector funds.



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Swept by consolidation: The years from 1999-2003 saw a considerable churn in the

industry. With competition intensifying, the weaker players were taken over. There was

also a coming together of some of the larger fund houses.



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The takeover of the Kothari Pioneer funds by the Franklin Templeton group and the

Zurich funds by the HDFC group are instances. A few fund houses saw their foreign

partners pull out, only to be replaced by new ones. Over the past couple of years, some of

the big global names in financial services — HSBC, Grindlays and Deutsche Bank —

have made an entry into the Indian fund arena. With US fund behemoth — Fidelity —

now readying to enter the Indian market, the industry, at long last, appears to be reaching

maturity.

Regulations stay in tune: Regulations have kept pace with the rapid changes in the

industry structure over the past decade. Both the offer documents and the financial

statements of mutual funds have been simplified over the years. Half-yearly portfolio and

financial disclosures have been made compulsory.

Stringent investment norms have been put in place to prevent concentration and reduce

exposure to illiquid and thinly traded securities. Disclosure requirements have been fine-

tuned to reveal more about the pattern of ownership in a fund, and transactions with

related and group companies. SEBI recently trained its sights on reforming the

distribution and selling side of the mutual fund business.

Healthy competition: Intensifying competition has ensured that the fund houses have

kept two jumps ahead of the regulatory requirements, at least on disclosures and service

standards. Daily NAV is now a standard feature with funds, and transaction-processing

times have been compressed to less than 48 hours.

Many funds have moved to a monthly disclosure of portfolios. Dissemination of

information has leapfrogged with the use of websites for routine disclosures. Value-added

services such as systematic investment plans, switch options, cheque-writing facilities,

and call centre services promise to improve the investing experience for investors.



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Savvy investors: As the equity market pauses after the secular bull run of 2003, equity

funds appear to be back in the investors' good books. Hybrid products such as the MIPs

(Monthly Income Plans) and equity funds have attracted sizeable inflows in the recent

months. Is this a sign that retail investors are finally beginning to channel their

investments in equities through mutual funds? Or, are they, yet again, falling into the age-

old trap of jumping onto the bandwagon, in the late stages of a stock market rally?

It is early days yet to say which of these is true. But there are a couple of positive signals

from the pattern of fund flows in the recent months.

For one, inflows have been pretty selective, a sign that investors are tracking fund

performance far more closely than before.

Second, outflows from equity funds have also been rising, which suggests that investors

are selling out when their target returns are met.

These are signs that mutual fund investors may be on to the two crucial skills for

successful investing — a sense of timing and investment discipline; and that, too, at the

same time.

Basis on which Mutual funds are compared :

Choosing a mutual fund seems to have become a very complex affair lately. There are no

dearth of funds in the market and they all clamor for attention.

The most crucial factor in determining which one is better than the rest is to look at

returns. Returns are the easiest to measure and compare across funds.



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At the most trivial level, the return that a fund gives over a given period is just the

percentage difference between the starting Net Asset Value (price of unit of a fund) and

the ending Net Asset Value.



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Returns by themselves don't serve much purpose. The purpose of calculating returns is to

make a comparison. Either between different funds or time periods. And, you must be

careful not to make a mistake here. Or else, you could end up investing in the wrong

funds.

Absolute returns

Absolute returns measure how much a fund has gained over a certain period. So you look

at the NAV on one day and look at it, say, six months or one year or two years later. The

percentage difference will tell you the return over this time frame.

But when using this parameter to compare one fund with another, make sure that you

compare the right fund. To use the age-old analogy, don't compare apples with oranges.

So if you are looking at the returns of a diversified equity fund (one that invests in

different companies of various sectors), compare it with other diversified equity funds.

Don't compare it with a sector fund which invests only in companies of a particular

sector. Don't even compare it with a balanced fund (one that invests in equity and fixed

return instruments).

Benchmark returns

This will give you a standard by which to make the comparison. It basically indicates

what the fund has earned as against what it should have earned. A fund's benchmark is

an index that is chosen by a fund company to serve as a standard for its returns. The

market watchdog, the Securities and Exchange Board of India, has made it mandatory for

funds to declare a benchmark index. In effect, the fund is saying that the benchmark's

returns are its target and a fund should be deemed to have done well if it manages to beat

the benchmark.



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Let's say the fund is a diversified equity fund that has benchmarked itself against the

Sensex.

So the returns of this fund will be compared vis-a-viz the Sensex. Now if the markets are

doing fabulously well and the Sensex keeps climbing upwards steadily, then anything

less than fabulous returns from the fund would actually be a disappointment.

If the Sensex rises by 10% over two months and the fund's NAV rises by 12%, it is said

to have outperformed its benchmark. If the NAV rose by just 8%, it is said to have

underperformed the benchmark.

But if the Sensex drops by 10% over a period of two months and during that time, the

fund's NAV drops by only 6%, then the fund is said to have outperformed the benchmark.

A fund's returns compared to its benchmark are called its benchmark returns.

At the current high point in the stock market, almost every equity fund has done

extremely well but many of them have negative benchmark returns, indicating that their

performance is just a side-effect of the markets' rise rather than some brilliant work by

the fund manager.

Time period

The most important thing while measuring or comparing returns is to choose an

appropriate time period.

The time period over which returns should be compared and evaluated has to be the same

over which that fund type is meant to be invested in.

If you are comparing equity funds then you must use three to five year returns. But this is

not the case of every other fund.



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For instance, cash funds are known as ultra short-term bond funds or liquid funds that

invest in fixed return instruments of very short maturities. Their main aim is to preserve

the principal and earn a modest return. So the money you invest will eventually be

returned to you with a little something added.

Investors invest in these funds for a very short time frame of around a few months. So it

is alright to compare these funds on the basis of their six month returns.

Market conditions

It is also important to see whether a fund's return history is long enough for it to have

seen all kinds of market conditions.

For example, at this point of time, there are equity funds that were launched one to two

years ago and have done very well. However, such funds have never seen a sustained

declining market (bear market). So it is a little misleading to look at their rate of return

since launch and compare that to other funds that have had to face bad markets.

If a fund has proved its mettle in a bear market and has not dipped as much as its

benchmark, then the fund manager deserves a pat on the back.



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TYPES OF MUTUAL FUNDS: Mutual fund schemes can be broadly classified in to

two categories. They are

PORTFOLIO CLASSIFICATION

OPERATIONAL CLASSIFICATION

MUTUAL FUND SCHEME

Portfolio classification operational classification

Return based

Income scheme

Growth scheme Open-ended scheme

Conservative scheme

Investment based

Equity scheme

Bond scheme

Balanced structure

Sector based

Real Estate schemes

Industry specific Closed ended scheme

Other scheme



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Leveraged Based

Leveraged schemes

Non-leveraged

Other schemes

Gilt scheme

Index funds



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Operational schemes

A) Open-ended schemes

In these schemes, size of the fund is not predetermined as

entry to or exit from the funds is open to investor who can buy or sell the securities to

the fund at any time. This fund has greater liquidity to the funds along with the

predetermined repurchase price based on the declared Net Asset Value. Portfolio mix

of such schemes consists of actively traded securities in the market, preferably equity



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shares. As investors can anytime withdraw from the fund, therefore the management

of such funds is quiet tedious.

B) Closed –ended schemes

This scheme has deposits redemption date unlike open-

ended schemes. These funds have fixed capital base and are traded among the

investors among the secondary market. the forces of demand and supply hence

determine their price. Price is free to deviate from its net asset value. Management of

such fund is comparatively easier because manager can evolve long term investment

plans depending upon the life of the scheme.

Within these two broad operational classification there are following

classification being made.

RETURN –BASED CLASSIFICATION

Income funds: These are for the investors who are more concerned about regular

returns from their investment.

Growth funds: The main objective of this fund is to achieve an increase in value of

investment through capital appreciation and not the regular income.



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Conservative funds: These funds aim at giving reasonable rate of return in addition to

capital appreciation.

Investment –based classification:

Equity funds :These funds invest in the equity shares of companies and undertake greater

risk associated with it. This gives good rate of return in rising market.

Bond funds: These funds provide greater security to investors by investing in bonds,

debenture, etc. investment here has no capital appreciation.

Balanced funds: These funds are a combination of both debt and equity .trends in market

will determine which proportion of the mix is to be determined.

Sector based classification: These funds or the schemes that invest in the securities of

only those sectors or industries as specified in the offer documents.eg pharmaceuticals,

software, fast moving consumer goods (FMCG), petroleum stocks etc. the returns on

these funds or the schemes depends on the performance of that particular

sector/industries. These schemes may give the higher returns but are very risky compared

to diversified funds. Investors need to keep an eye on the performance of these of these

sectors and should exit on an appropriate time.

Leverage based classification:In this type of fund or scheme investment is made by

borrowing money from the market and making investment in fund there by making

leverage benefits available to mutual fund investor, i.e. giving good returns to the

investors from the income earned by investing borrowed funds.

Index-based classification :Index funds replicate the portfolio of a particular index such

as the BSE sensitive index, S&P NSE 50 index (nifty). These schemes invest in the



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securities in the same weight age comprising of an index. NAVs of such schemes would

rise or fall in accordance with the rise or fall in the index, through not exactly by the



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same by the same percentage due to some factors. Necessary disclosure in this regard is

made in offer document of the mutual fund schemes. There are also exchange traded

index funds launched by the mutual funds that are traded on the stock exchanges.

GILT-FUND:These funds invest exclusively in government securities. Government

securities have no default risk .NAVs of these schemes also fluctuate due to change in

interest rates and other economic factors as are the case with income or debt –oriented

schemes.

DIFFERENT TYPES OF PLANS THE MUTUAL FUND OFFERS

Mutual fund offers different types of plans to its investors. they are as follows.

1. GROWTH PLAN

Under growth plan the investor realizes only the capital

appreciation on the investment and does not get any income in the form of dividend.

2. INCOME PLAN

Under income plan, the investor realizes income in the form of

dividend. However, his NAV will all to the extent of the dividend.

3. DIVIDEND RE-INVESTMENT PLAN

Here the dividend accrued on the mutual funds is

automatically re-invested in the purchasing additionally units in the open ended

funds. In most cases mutual funds offer the investor an option of collecting dividends

or re-investing the same.



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4. SYSTEMATIC INVESTMENT PLAN In this type of plan the investor is given

the option of preparing a predetermined number of post dated cheques in favour of the

fund. He will get the units on the date of cheque at the existing NAV. For instances , if on

the 5th March ,he has given a post dated cheque for June 5 th 2006, he will get units on 5th

June 2006 at the existing NAV.

5. SYSTEMATIC WITHDRAWAL PLAN As opposed to SIP, the systematic

withdrawal plan allows the investor the facility to withdraw predetermined

amount/units from his fund at a pre-determined interval. The investor’s units will

be redeemed at the existing NAV as on that day. The unit holder may set-up a

systematic Withdrawal plan on a monthly, quarterly or semi annually or on a

annual basis to redeem a fixed number of units or redeem enough units to provide

a fixed amount of money.

6. RETIREMENT PENSION PLAN Some schemes are linked with retirement

pension. Individuals participate in these plans for themselves, and corporate for their

employees.

7. INSURANCE PLANS:

Some schemes launched by UTI and LIC offer insurance cover to investor.



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TAX SAVING SCHEMES

These schemes offer tax rebates to the investors under specific provisions

of the income tax act, 1961 as the government offers tax incentives for investment in

specified avenues, eg: Equity Linked Saving Scheme (ELSS). Pension schemes

launched by the mutual fund also offer tax benefits. These schemes are growth-

oriented and invest pre-dominantly in equities. Their growth opportunities and risk

associated are like any equity oriented scheme.

LOAD OR NO LOAD FUND

A load fund is one that charges a percentage of NAV for entry or exit. That is,

each time one buys or sells the units in the fund, a charge will be payable. This charge

is used by the mutual fund for marketing and distribution expenses. Suppose the NAV

per unit is Rs.10 .if the entry as well as exit load charge is 2% , then the investors who

buy would be required to pay Rs.10.20 and those would want to repurchase must pay

Rs.9.80 per unit. A no-load fund is the one that does not charge for entry or exit. It

means the investors can enter the fund/scheme at NAV and no additional charges are

payable on the purchase or sale of units.



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Terminologies Demystified…

• Asset Allocation

– Diversifying investments in different assets such as stocks, bonds, real

estate, cash in order to optimize risk.

• Fund Manager

– The individual responsible for making portfolio decision for a mutual

fund, in line with fund’s objective.

• Fund Offer Document

– Document with investment objectives, risk factors, expenses summary,

how to invest etc.

• Dividend

– Profits given to the investor from time to time.

• Growth

– Profits ploughed back into scheme. This causes the NAV to rise.

• NAV

– Market value of assets of scheme minus its liabilities.

• Per unit NAV = Net Asset Value

No. of Units Outstanding on Valuation date

• Entry Load/Front-End Load (0-2.25%)

– The commission charged at the time of buying the fund.



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– To cover costs for selling, processing

• Exit Load/Back- End Load (0.25-2.25%)

– The commission or charge paid when an investor exits from a mutual

fund. Imposed to discourage withdrawals

– May reduce to zero as holding period increases.

• Sale Price/ Offer Price

– Price you pay to invest in a scheme. May include a sales load. (In this

case, sale price is higher than NAV)

• Re-Purchase Price/ Bid Price

– Price at which close-ended scheme repurchases its units

• Redemption Price

– Price at which open-ended scheme



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ASSOCIATION OF MUTUAL FUNDS IN INDIA[AMFI]

With increase in Mutual Fund players in India, a need for mutual fund association in

India was generated to function as a non-profit organization.

Association of mutual funds in India (AMFI) was incorporated on 22nd August, 1995.

AMFI is an apex body of all Assets Management Companies (AMC) which has been

registered with Security Exchange Board of India (SEBI) .till date all the AMCs are that

have mutual fund schemes are its members. It functions under the supervision and

guidelines of its board of Directors.

Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to

a professional and a healthy market with the ethical lines enhancing and maintaining

standards. It follows the principle of both protecting and promoting the interests of

mutual funds as well as their unit holders.

THE OBJECTIVES OF ASSOCIATION OF MUTUAL FUNDS IN INDIA

The Association of Mutual Funds of India works with 30 registered AMCS of the

country. It has certain defined objectives which juxtaposes the guidelines of its Board of

Directors. The objectives are as follows.

This Mutual Fund Association of India maintains high professional and ethical

standards in all areas of operation of the industry.

It also recommends and promotes the top class business practices and code of conduct

which is followed by members and related people engaged in activities of Mutual Fund

and Assets Management. The agencies that are by any means connected or involved in

this code of conduct of the association.



analysis

AMFI interacts with SEBI and works according to SEBI’s guidelines in the mutual

fund industry.

Association of Mutual Fund of India do represent the government of India , the

Reserve bank of India and other related bodies on matters relating to the Mutual

Fund Industry.

It develops a team of well qualified and trained agent distributors. It implements a

programme of training and certification for all intermediaries and other engaged in

the Mutual Fund Industry.

.

AMFI undertakes all India awareness programme for investors in order to promote

proper understanding of the concept and working of mutual funds.

At last Association of mutual fund of India also disseminate information on mutual

fund industry and undertakes studies and research either directly or in association

with other bodies.



analysis

The sponsors of Association of Mutual Funds in India.

Bank sponsored

1) SBI Mutual management Ltd.

2) BOB asset management CO. Ltd.

3) Canbank Investment Management Services. Ltd

4) UTI Asset management Company Pvt, Ltd.

Institution

GIC Asset management Co.Ltd

Jeevan Bima sahayog asset management Company.

PRIVATE SECTOR

INDIAN

Benchmark asset management company

Cholamandalam Asset Management Co.Ltd

Credit Capital Asset Management Co.Ltd

Escorts Asset Management Ltd

JM Financial Mutual fund

Kotak Mahindra asset management company

Reliance capital Asset management Ltd

Sahara Asset management Co.Ltd

Sundaram Asset management Co.Ltd

Tata Asset Management Private Ltd



analysis

Indian joint ventures

Birla Sun life Asset management company

DSP Merill Lynch Fund Managers company

HDFC Asset management company

Predominantly Foreign Joint Ventures:-

ABN AMRO Asset Management (I) Ltd.

Alliance Capital Asset Management (India) Pvt. Ltd.

Deutsche Asset Management (India) Pvt. Ltd.

Fidelity Fund Management Private Limited

Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.

HSBC Asset Management (India) Private Ltd.

ING Investment Management (India) Pvt. Ltd.

Morgan Stanley Investment Management Pvt. Ltd.

Principal Asset Management Co. Pvt. Ltd.

Prudential ICICI Asset Management Co. Ltd.

Standard Chartered Asset Mgmt Co. Pvt. Ltd.

Association of Mutual Funds in India Publications: AMFI publishes mainly two types

of bulletin. One is on the monthly basis and the other is quarterly. These publications are

of great support for the investors to get intimation of the know how of their parked

money.

SEBI REGULATIONS ON MUTUAL FUNDS

The Government brought Mutual Funds in the Securities market under the regulatory

framework of the Securities and Exchange board of India (SEBI) in the year 1993.



analysis

SEBI issued guidelines in the year 1991 and comprehensive set of regulations relating to

the organization and management of Mutual Funds in 1993.

SEBI REGULATIONS 1993 (20.1.1993)

The regulations bar Mutual Funds from options trading, short selling and carrying

forward transactions in securities. The Mutual Funds have been permitted to invest only

in transferable securities in the money and capital markets or any privately placed

debentures or securities debt. Restrictions have also been placed on them to ensure that

investments under an individual scheme, do not exceed five per cent and investment in all

the schemes put together does not exceed 10 per cent of the corpus. Investments under

all the schemes cannot exceed 15 per cent of the funds in the shares and debentures of a

single company.

SEBI grants registration to only those mutual funds that can prove an efficient and

orderly conduct of business. The track record of sponsors, a minimum experience of five

years in the relevant field of Investment, financial services, integrity in business

transactions and financial soundness are taken into account. The regulations also

prescribe the advertisement code for the marketing schemes of Mutual Funds, the

contents of the trust deed, the investment management agreement and the scheme-wise

balance sheet. Mutual Funds are required to be formed as trusts and managed by

separately formed as trusts and managed by separately formed Asset Management

Companies (AMC). The minimum net worth of such AMC is stipulated at Rs.5 crores of

which, the Mutual Fund should have a custodian who is not associated in any way with

the AMC and registered with the SEBI.

The minimum amount raised in closed-ended scheme should be Rs.20 Crores and for the

open-ended scheme, Rs.50 Crores. In case, the amount collected falls short of the

minimum prescribed, the entire amount should be refunded not later than six weeks from



analysis

the date of Closure of the scheme. If this is not done, the fund is required to pay an

interest at the rate of 15 per cent per annum from the date of expiry of six weeks. In

addition to these, the Mutual Funds are obliged to maintain books of accounts and

provision for depreciation and bad debts.

Further, the Mutual Funds are now under the obligation to publish scheme-wise annual

reports, furnish six month un-audited accounts, quarterly statements of the movements of

the net asset value and quarterly portfolio statements to the SEBI. There is also a

stipulation that the Mutual Funds should ensure adequate disclosures to the investors.

SEBI has agreed to let the Mutual Funds buy back the units of their schemes. However,

the funds cannot advertise this facility in their prospectus. SEBI is also empowered to

appoint an auditor to investigate into the books of accounts or the affairs of the Mutual

Funds.

SEBI can suspend the registration of Mutual Funds in the case of deliberate manipulation,

price rigging or deterioration of the financial position of Mutual Funds.

SEBI REGULATIONS, 1996

SEBI announced the amended Mutual Fund Regulations on December 9, 1996 covering

Registration of Mutual Funds, Constitution and Management of Mutual funds and

Operation of Trustees, Constitution and Management of Asset Management Companies

(AMCs) and custodian schemes of MFs, investment objectives and valuation policies,

general obligations, inspection and audit. The revision has been carried out with the

objective of improving investor protection, imparting a greater degree of flexibility and

promoting innovation.

The increase in the number of MFs and the types of schemes offered by them

necessitated uniform norms for valuation of investments and accounting practices in



analysis

order to enable the investors to judge their performance on a comparable basis. The

Mutual Fund Regulations is sued in December 1996 provide for a scheme-wise report

and justification of performance, disclosure of large investments which constitute a

significant portion of the portfolio and disclosure of the movements in the unit capital.

The existing Asset Management Companies are required to increase their net worth from

Rs.10 crores within one year from the date of notification of the amended guidelines.

AMCs are also allowed to do other fund-based businesses such as providing investment

management services to offshore funds, other Mutual Funds, Venture Capital Funds and

Insurance Companies. The amended guidelines retained the former fee structure of the

AMCs of 1.25% of weekly average Net Asset Value (NAV) up to Rs.100 crores and 1%

of NAV for net assets in excess of Rs.100 crores.

The consent of the investors has to be obtained for bringing about any change in the

fundamental attributes of the scheme on the basis of which the unit holders had made

initial investments. The regulation empowers the investor. The amended guidelines

require portfolio disclosure, standardization of accounting policies, valuation norms for

NAV and pricing. The regulations also sought to address the areas of misuse of funds by

introducing prohibitions and restrictions on affiliate transactions and investment

exposures to companies belonging to the group of sponsors of mutual funds. The

payment of early bird incentive for various schemes has been allowed provided they are

viewed as interest payment of early bird incentive for early investment with full

disclosure.

The various Mutual Funds are allowed to mention an indicative return for schemes for

fixed income securities. In 1998-99 the Mutual Funds Regulation were amended to

permit Mutual Funds to trade in derivatives for the purpose of hedging and portfolio

balancing. SEBI registered Mutual Funds and Fund managers are permitted to invest in



analysis

overseas markets, initially within an overall limit of US $500 million and a ceiling for an

individual fund at US$ 50 million.

SEBI made (October 8, 1999) investment guidelines for MFs more stringent. The new

guidelines restrict MFs to invest no more than 10% of NAV of a scheme in share or share

related instruments of a single company. MF’s in rated debt instruments of a single

issuer is restricted to 15% of NAV of the scheme (up to 20% with prior approval of

Board of Trustees or AMC). Restrictions in un- rated debt instruments and in shares of

unlisted companies. The new norms also specify a maximum limit of 25% of NAV for

any scheme for investment in listed group companies as against an umbrella limit of 25%

of NAV of all schemes taken together earlier. SEBI increased (June 7, 2000) the

maximum investment limit for MFs in listed companies from 5% to 10% of NAV in

respect of open-ended funds. Changes in fundamental attributes of a scheme was also

allowed without the consent of three fourths of unit holders provided the unit holders are

given the exit option at NAV without any exit load. MFs are also not to make assurance

or claim that is likely to mislead investors. They are also banned from making claims in

advertisement based on past performance.



analysis

COMPANY PROFILE

The Kotak Mahindra Group

Kotak Mahindra is one of India's leading financial conglomerates, offering complete

financial solutions that encompass every sphere of life. From commercial banking, to

stock broking, to mutual funds, to life insurance, to investment banking, the group caters

to the financial needs of individuals and corporates.

The group has a net worth of over Rs. 5,609 crore, employs around 17,100 people in its

various businesses and has a distribution network of branches, franchisees, representative

offices and satellite offices across 344 cities and towns in India and offices in New York,

London, Dubai, Mauritius and Singapore. The Group services around 3.6 million

customer accounts.

Kotak Group Products & Services:

1. Bank

2. Life Insurance

3. Mutual Fund

4. Car Finance

5. Securities

6. Institutional Equities

7. Investment Banking

8. Kotak Mahindra International

9. Kotak Private Equity

10. Kotak Realty Fund



analysis

KOTAK SECURITIES: Kotak Securities Ltd. 100 % subsidiary of Kotak

Mahindra Bank is one of the oldest and largest broking firms in the Industry with a

market share of 8.5 % (as on 30th September).

Their offerings include stock broking through the branch and Internet, Investments in

IPO, Mutual funds and Portfolio management service.

Their Accolades include:

Best Performing Equity Broker in India – CNBC Financial Advisor Awards 2008

Avaya Customer Responsiveness Awards (2007) in Financial Services Sector

Best Brokerage Firm in India by Asiamoney in 2007

The Leading Equity House in India in Thomson Extel Surveys Awards for the year 2007

Euromoney Award (2006 and 2007) - Best Provider of Portfolio Management: Equities

Avaya Customer Responsiveness Awards (2006) in Financial Institution Sector

Asiamoney Award (2006) - Best Broker in India

Euromoney Award (2005) - Best Equities House in India

Finance Asia Award (2005) - Best Broker in India

Finance Asia Award (2004) - India's best Equity House

Prime Ranking Award (2003-04) - Largest Distributor of IPO's

They have been the first in providing many products and services which have now become industry standards. Some of them are:



analysis

Facility of Margin Finance to the customers

Investing in IPOs and Mutual Funds on the phone

SMS alerts before execution of depository transactions

Mobile application to track portfolios

Auto Invest - A systematic investing plan in Equities and Mutual funds

Provision of margin against securities automatically against shares in your Demat

account

They have a full-fledged research division involved in Macro Economic studies, Sectoral

research and Company Specific Equity Research combined with a strong and well

networked sales force which helps deliver current and up to date market information and

news.

They are also a depository participant with National Securities Depository Limited

(NSDL) and Central Depository Services Limited (CDSL), providing dual benefit

services wherein the investors can avail our brokerage services for executing the

transactions and the depository services for settling them. They use to process more than

600000 trades a day which is much higher even than some of the renowned international

brokers.

Their network spans over 310 cities with 867 outlets.

Kotak Securities Limited has over Rs. 4000 crore of Assets Under Management (AUM)

as of 31st December, 2007. The portfolio Management Service provides top class service,

catering to the high end of the market. Portfolio Management from Kotak Securities



analysis

comes as an answer to those who would like to grow exponentially on the crest of the

stock market, with the backing of an expert.



analysis

ORGANIZATION STRUCTURE OF KOTAK SECURITIES


Chairman & MD

Vice-President

Regional Heads

South East west

State heads State heads State heads State heads

Area managers

Area managers

Area managers

Area managers

BR Mgr BR Mgr BR Mgr BR Mgr

RM RM RM RM

North


analysis

ANALYSIS PART OF THE PROJECT

Analysis part of the project starts from the detailed information about the funds selected

that is as follows:


Fund Manager: Chandresh Nigam

Fund Manager: Mr Anand Shah

Fund Manager: K. N. Siva Subramanian

Min Investment:Rs 5000Min Investment:Rs 5000Minimum Investment (Rs:5000

Inception: Dec 31, 1993 Inception: Aug 24, 1994 Inception: Nov 30, 1993

Bench mark: S&P CNX500

Benchmark:S&P CNX NiftyBench mark:BSE sensex

Type: Open Ended diversified equity Scheme



Objective: The fund plans to achieve capital appreciation in fixed period of time by investing predominantly in equity oriented securities

Objective: To generate capital appreciation through investments in equity related securities in core sectors and associated feeder industries.

Objective: : Aims to achieve a high degree of capital appreciation through investments in well-established, large size blue chip companies

HDFC capital builder fund

ICICI Prudential Power

Franklin India Blue chip Fund


analysis

TRACK RECORD OF THE PROJECTS:-

Under this project we selected those funds that are introduced during the year 1993-94

As this was the year when major private sectors entered into mutual fund business, until

that only the UTI enjoyed the monopoly in this industry. The main reason for this is to

study and analyze the industry properly.

Franklin India Blue-chip Fund(G)

About Franklin Templeton

Franklin Templeton is one of the largest* private sector fund houses in the country with

over Rs.31,175 crores of assets under management for over 24 lakh investor accounts (as

of December 31, 2007). It manages one of the most comprehensive ranges of mutual

funds (48) catering to varied investor requirements and offering different investment

styles to choose from. It has Offices in 33 cities and Collection Centres in another 46

locations across the country.

Franklin Templeton Investments is one of the largest financial services groups in the

world based at San Mateo, California USA. The group has US$ 647 billion in assets

under management globally (as of November 30, 2007). Franklin Templeton has 60 years

of experience in investment management and with offices in over 29 countries, provides

investment management and advisory services to a client base of over 17.7 million

unitholder accounts.



analysis

Franklin Templeton Mutual Funds are managed by Franklin Templeton Investments - a

global investment management major. Franklin Templeton started their India operations

in 1996 as Templeton Asset Management India Pvt. Limited. It flagged off the mutual

fund business with the launch of Templeton India Growth Fund in September 1996.

Franklin Templeton Asset Management (India) Private Limited acts as the asset

management company with Templeton holding a majority of 75 per cent of the equity.

Franklin India Blue chip Fund

Fund Details:

Type of Scheme Open EndedNature of Scheme EquityInception Date Nov 30, 1993 Face Value(Rs/Unit) 10Fund Size (Rs. in crores) 2471.4888 on Jan 31, 2008 Increase/Decrease since Dec 31, 2007 (Rs. in crores)

-452.855

Previous Name Pioneer ITI Bluechip - GrowthMinimum Investment (Rs) 5000Purchase Redemptions DailyNAV Calculation DailyFund Manager K. N. Siva SubramanianEntry Load Entry Load is 2.25%. Exit Load Exit Load is 0%.

Objective: Aims to achieve a high degree of capital appreciation through investments in well-established, large size blue chip companies

Scheme Performance (%) as on Mar 4 , 2008

14 days 1 month 3 months 1 year 3 yrs* Inception*-7.81 -10.88 -17.43 27.3 32.4 27.5Top 10 Holdings as on Jan 31, 2008



analysis

Company Nature Value (Cr.) %Reliance Industries Ltd EQ 185.99 7.53Bharati Tele - Ventures EQ 169.46 6.86Larsen & Toubro Limited EQ 169.3 6.85Housing Development Finance Corporation Ltd EQ 156.39 6.33Grasim Industries Ltd EQ 138.59 5.61ICICI BANK LTD. EQ 131.75 5.33Kotak Mahindra Bank Ltd. EQ 123.94 5.01Infosys Technologies Ltd EQ 120.31 4.87Aditya Birla Nuvo Limited. EQ 103.9 4.2Bharat Heavy Electricals Ltd EQ 98.04 3.97

Top Industry Allocation as on Jan 31, 2008

Banks 13.5176%

Oil & Gas, Petroleum & Refinery 12.172%

Engineering & Industrial Machinery 9.3138%

Telecom 8.3178%

Finance 7.1913%

Computers - Software & Education 7.1902%

Electricals & Electrical Equipments 6.9137%

Auto & Auto ancilliaries 6.7521%

Cement 6.0963%

Textiles 4.2038%



analysis

Special Features: Easy liquidity : all transactions are processed within 3 working days. Pioneer ITI Bluechip - Growth changed to Franklin India Bluechip - Growth w.e.f Aug 30, 2002.

Asset Allocation as on Jan 31, 2008

Equity Debt Money Market96.54 0 3.46

Best and worst performance:

Best (Period) Worst (Period)

Month 41.78 (16/02/1994 - 18/03/1994) -27.80 (12/05/2006 - 13/06/2006) Quarter 55.99 (15/12/1998 - 16/03/1999) -31.51 (22/02/2000 - 23/05/2000) Year 199.42 (04/01/1999 - 04/01/2000) -36.54 (15/09/2000 - 17/09/2001)

Relative performance [fund v/s Category wise]



analysis

Fund Style:

Performance Analysis:

FRANKLIN INDIA Bluechip Fund--formerly Pioneer ITI Bluechip Fund--has been a top

performer almost since its inception in October 1993. After the Franklin Templeton-

Pioneer ITI merger in July 2002, the scheme is managed by Franklin Templeton

Investments, but the equity fund management team is intact. K.N. Siva Subramanian is

still the fund manager and Ravi Mehrotra continues as Chief Investment Officer.

Allaying investors' fears about a change in fund management styles, Mehrotra says: "The

stock picking style will remain, as that was a prerequisite demanded by Pioneer ITI while

selling the funds."

FIBCF was launched as a three-year close-ended fund but was converted to an open-

ended one in January 1997. The fund aims to provide medium to long-term capital

appreciation by seeking steady and consistent growth from well-established large

companies.



analysis



analysis

Rating. Outlook Money has consistently ranked FIBCF among the top performing funds

in the diversified equity category. The fund has a good performance track record and has

delivered steady and consistent returns. In last five years, its CAGR (compounded

annualised growth rate) has been 26.14 per cent; its three-year performance is 0.62 per

cent, and one-year performance is 14.74 per cent.

Its benchmark index, BSE Sensex, on the other hand, has reported a pathetic -1.93 per

cent for five years, -11.37 per cent for three years and -1.79 per cent for one year. In

money terms, Rs 10,000 invested in FIBCF at inception (December 1, 1993) would have

grown to Rs 52,270 as of today. In contrast, Sensex would have given a meagre Rs 9,808.

By outperforming its benchmark index, FIBCF has proved (at least historically) that

active funds can outperform index funds in long term.



analysis

ICICI PRUDENTIAL POWER FUND

ABOUT ICICI PRUDENTIAL

ICICI Prudential Asset Management Company enjoys the strong parentage of

Prudential plc, one of UK's largest players in the insurance & fund management sectors

and ICICI Bank, a well-known and trusted name in financial services in India. ICICI

Prudential Asset Management Company, in a span of just over eight years, has forged a

position of pre-eminence in the Indian Mutual Fund industry as one of the largest asset

management companies in the country with assets under management of Rs. 37,906.24

crore (as of March 31, 2007). The Company manages a comprehensive range of schemes

to meet the varying investment needs of its investors spread across 68 cities in the

country.

Sponsors

ICICI Bank is India's second-largest bank with total assets of about Rs. 344,658 crores as

at March 31, 2007 and profit after tax of Rs. 3,110 crores for the year ended March 31,

2007 (Rs. 2,540 crores for the year ended March 31, 2006). ICICI Bank has a network of

about 710 branches and 45 extension counters and over 3,271 ATMs. ICICI Bank offers a

wide range of banking products and financial services to corporate and retail customers

through a variety of delivery channels and through its specialised subsidiaries and

affiliates in the areas of investment banking, life and non-life insurance, venture capital

and asset management. ICICI Bank set up its international banking group in fiscal 2002

to cater to the cross border needs of clients and leverage on its domestic banking

strengths to offer products internationally. ICICI Bank currently has subsidiaries in the

United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri

Lanka and Dubai International Finance Centre and representative offices in the United

States, United Arab Emirates, China, South Africa and Bangladesh. UK subsidiary of



analysis

ICICI Bank has established a branch in Belgium. ICICI Bank is the most valuable bank in

India in terms of market capitalisation.

Headquartered in London, Prudential plc is a leading international financial services

group, offering a significant portfolio of life insurance and fund management products in

the United Kingdom, the United States, Asia and continental Europe.

Prudential plc is a leading international financial services group providing retail financial

products and services and fund management to many millions of customers worldwide.

As a group Prudential plc has, as of December 31, 2006, over GBP251 billion of funds

under management, more than 20 million customers and over 23,000 employees

worldwide as of December 31, 2006.In the United Kingdom Prudential is a leading life

and pensions provider offering a range of retail financial products. M&G is Prudential's

UK & European Fund Manager, with around £250 billion of funds under management (as

of 31 December 2006). Jackson National Life, acquired by Prudential in 1986, is a

leading provider of long-term savings and retirement products to retail and institutional

customers throughout the United States. Egg provides banking, insurance and investment

products through its Internet site www.egg.com. In Asia, Prudential is the leading

financial services group with an extensive network of over 30 life insurance and 10 fund

management operations spanning 13 diverse markets.



analysis



analysis

ICICI PRUDENTIAL POWER MUTUAL FUND-G

ICICI Prudential Power, is an open-ended equity fund which does just that. The

portfolio is made up of large-cap and mid-cap stocks, and is aimed at capturing the

growth opportunities across multiple sectors in the market.

INVESTMENT PHILOSOPHY:

ICICI Prudential Power follows a blend of top-down macro research to identify growth

sectors and bottom-up fundamental research to identify stocks. It seeks to optimise risk-

adjusted return by building a portfolio of large and mid-cap stocks across select sectors.

ICICI Prudential Power is a multi-sector fund focused on investing in carefully selected

stocks offering optimum risk-adjusted return across select growth sectors.

Investment objective: To generate capital appreciation by actively investing in equity/

equity related securities. For defensive considerations, the Scheme may invest in debt,

money market instruments, to the extent permitted under the Regulations. The AMC will

have the discretion to completely or partially invest in any of the type of securities stated

above so as to maximize the returns.



analysis

Benefits by investing in this fund:

ICICI Prudential Power offers the following key benefits:

It gives you a core large-cap portfolio with some exposure to mid-cap stocks

It provides you the edge as it seeks to capture the best sectoral opportunities in the

market.

Fund information

Type of Scheme Open EndedNature of Scheme EquityInception Date Aug 24, 1994 Face Value(Rs/Unit) 10Fund Size (Rs. in crores) 1094.0721 on Mar 31, 2008 Increase/Decrease since Feb 29, 2008 (Rs. in crores)

-186.953

Rolled Over To Open Ended Previous Name Prudential ICICI PowerMinimum Investment (Rs) 5000Purchase Redemptions DailyNAV Calculation Daily

Entry LoadAmount Bet. 0 to 49999999 then Entry load is 2.25%. and Amount greater than 50000000 then Entry load is 0%.

Exit Load

Fund manager

If redeemed bet. 0 Months to 6 Months; and Amount Bet. 0 to 49999999 then Exit load is 1%. If redeemed bet. 6 Months to 12 Months; and Amount Bet. 0 to 49999999 then Exit load is 0.5%. and Amount greater than 50000000 then Exit load is 0%.

Mr Anand Shah



analysis

Top Ten holdings as on Feb 29, 2008

Company Nature Value (Cr.) %Reliance Industries Ltd EQ 93.61 7.31Steel Authority of India Ltd EQ 62.71 4.9Sterlite Industries (India) Ltd EQ 62.23 4.86Bharti Airtel Ltd EQ 57.84 4.51Bharat Heavy Electricals Ltd EQ 56.6 4.42Zee Entertainment Enterprises Ltd EQ 54.85 4.28Larsen & Toubro Limited EQ 46.66 3.64ICICI BANK LTD. EQ 45.6 3.56Sun Pharmaceuticals Industries Ltd EQ 43.93 3.43Union Bank Of India Ltd EQ 41.89 3.27

Top industry allocation as on Feb 29, 2008

Banks 12.7765%

Oil & Gas, Petroleum & Refinery 11.5705%

Housing & Construction 9.3932%

Entertainment 8.7206%

Steel 6.5094%


Pharmaceuticals 5.0092%

Telecom 4.9636%

Metals 4.8579%

Computers - Software & Education 4.5851%

Asset Allocation as on Mar 31, 2008




analysis

Scheme Performance (%) as on Apr 3 , 2008

14 days 1 month 3 months 1 year 3 yrs* Inception*NA -9.72 -29.4 15.48 32.69 17.35

Net Asset Value (Rs/Unit) 86.89 As On Apr 3, 2008

Best and worst performance period :

Best period Worst periodMonth 34.39 (03/12/1999 - 04/01/2000) -35.48 (11/04/2000 - 12/05/2000) Quarter 78.29 (22/11/1999 - 22/02/2000) -46.59 (22/02/2000 - 23/05/2000) Year 215.03 (08/03/1999 - 07/03/2000) -59.60 (13/03/2000 - 13/03/2001)

Relative Performance (Fund v/s category)



analysis

Performance Analysis:

This fund isn't shooting out the lights but has put up a respectable return. Its 13-year

performance is suggestive of a decent record with neither a blockbuster performance, nor

a massive blow-up. Only one year (2000) did it land in the bottom quartile.

The fund's focus on fundamentals is its strength. It would be rare to come across any

unheard names in its portfolios. If they did appear, it would be in miniscule proportions.

Since the fund refuses to chase momentum plays that have the tendency to fall as

dramatically as they rise, it steered clear of real estate stocks which had been in fashion in

the last couple of years. This is precisely why the fund doesn't set the charts on fire, but

neither does it give its investors sleepless nights.

Although this is encouraging, instability at the helm rarely benefits investors. The high

degree of churn in fund management continues to worry. Under Anand Shah's leadership

(since January 2007), the portfolio has become more focused with under 35 stocks, as

against the earlier count of 50. Consequently, the concentration in the top three holdings

has also gone up from 15 per cent to over 20 per cent. But once you realize that these

holdings include Reliance Industries, Bharti Airtel and ICICI Bank, any apprehensions on

this front disappear.

Its theme of core and feeder industries is more diverse than what appears at first blush. Its

inclusion of sectors as diverse as energy, transportation, financial services, info tech,

healthcare, electricity, media and hotels, give it a more diversified slant. The large-cap tilt

along with its concentrated portfolio and broad theme make it an appealing option.



analysis

HDFC CAPITAL BUILDER FUND

ABOUT HDFC ASSET MANAGEMENT COMPANY:

HDFC Asset Management Company Limited (AMC) was incorporated under the

Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset

Management Company for the Mutual Fund by SEBI on June 30, 2000. The sponsor

HDFC was incorporated in 1977 as first specialised housing finance institution in India.

HDFC provides financial assistance to individuals, corporates and developers for the

purchase and construction of residential housing. It also provides property-related

services, training and consultancy. In the mutual fund venture, HDFC has tied up with

Standard Life, one of the leading Insurance companies in the United Kingdom, having

vast experience in management of funds. HDFC has developed a strong and dedicated

team of agents that market its fixed deposit products. These key partners would constitute

the backbone of the marketing and distribution network of Mutual Fund and will remain a

central theme of the organisational framework in times to come.

No. of schemes 88

No. of schemes including options 351

Equity Schemes 34

Debt Schemes 292

Short term debt Schemes 15

Equity & Debt 6

Money Market 0

Gilt Fund 4

Fund Managers : Anil Bamboli , Chirag Setalvad , Dhawal Mehta , Mustafa Mehmood ,

Prashant Jain, Shabbir Kapasi, Shobhit Mehrotra , Srinivas Rao Ravuri , Vinay R

Kulkarni.



analysis

ABOUT HDFC CAPITAL BUILDER FUND:

HDFC Capital Builder is a value-style diversified equity fund investing in midcaps

(benchmark S&P CNX 500). Value style investing involves identifying good stocks that

trade at a steep discount to their fair value.

INVESTMENT STYLE

FUND INFORMATION:

Type of Scheme Open EndedNature of Scheme EquityInception Date Dec 31, 1993 Face Value(Rs/Unit) 10Fund Size (Rs. in crores) 645.7181 on Mar 31, 2008 Increase/Decrease since Feb 29, 2008 (Rs. in crores)

-102.576

Rolled Over To Open Ended

Previous NameZurich I C B F - Zurich India Quantum Growth Fund

Minimum Investment (Rs) 5000Purchase Redemptions DailyNAV Calculation DailyFund Manager Chandresh Nigam

Entry LoadAmount Bet. 0 to 49999999 then Entry load is 2.25%. and Amount greater than 50000000 then Entry load is 0%.

Exit Load Exit Load is 0%.Top Ten holdings are as follows:



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Company Nature Value (Cr.) %ICICI BANK LTD. EQ 54.42 7.27State Bank of India EQ 40.52 5.41Bharat Heavy Electricals Ltd EQ 40.25 5.38Crompton Greaves Ltd EQ 34.38 4.59Sintex Industries Ltd EQ 30.91 4.13Exide Industries Ltd EQ 30.24 4.04IPCA Laboratories Ltd EQ 29.74 3.97SKF Bearings India Ltd EQ 29.17 3.9Indraprastha Gas Ltd EQ 25.28 3.38Thermax Limited EQ 24.86 3.32

Top industry allocation Feb 29, 2008

Banks 17.7639%

Electricals & Electrical Equipments 9.973%

Pharmaceuticals 9.491%

Finance 8.2077%

Auto & Auto ancilliaries 7.9401%


Steel 5.6552%

Chemicals 5.0128%

Metals 4.166%

Plastic 4.1309%



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Asset Allocation as on Mar 31, 2008 :


Scheme Performance (%) as on Apr 4 , 2008

14 days 1 month 3 months 1 year 3 yrs* Inception*NA -10.87 -32.9 22.93 25.76 14.92



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Best and Worst performance of the fund:

Best performance worst performanceMonth 30.93 (20/03/1998 - 21/04/1998) -33.87 (12/05/2006 - 13/06/2006) Quarter 45.72 (22/09/2003 - 22/12/2003) -32.90 (04/01/2008 - 04/04/2008) Year 146.48 (24/04/2003 - 23/04/2004) -46.06 (30/11/1994 - 30/11/1995

Relative performance of the fund(fund v/s category average)



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Performance analysis of the fund:

Equity fund investors have rarely had it so ironical. During 2003 time they were jubilant

spectators to an astonishing surge in equity markets that saw them double their money in

less than 12 months. A year later they have seen more than 25% of their gains shaved off.

While there is nothing startling about this to the seasoned equity fund investor, it is

nevertheless disquieting to investors with a low to moderate risk profile. At Personalfn

we have seen a lot of investors who have been distraught at the volatility in stock markets

over the last few months. This got us to look at funds that did reasonably well during the

bull run last year and redeemed themselves equally well during the slide over the last 3

months. One fund that caught our eye was HDFC Capital Builder.

HDFC Capital Builder is a fund that has for long lived in the shadow of its more

renowned siblings – HDFC Equity and HDFC Top 200. However, the fund is now

emerging as a force to reckon with and its performance in the year 2004 and 2005. HDFC

Capital Builder is a value-style diversified equity fund investing in midcaps (benchmark

S&P CNX 500). Value style investing involves identifying good stocks that trade at a

steep discount to their fair value.

Investors can retain their holdings in HDFC Capital Builder. After hugely under

performing the market in 2006, the fund has saw a pick-up in performance over a one-

year period. Capital Builder’s portfolio has undergone a major overhaul and wears a more

aggressive look. This makes it more suitable to investors with a risk appetite.

While the fund enjoys a long track record, it has displayed a chequered performance over

the past three years. This may be partly due to the frequent changes in the fund’s

positioning. Capital Builder has changed its focus from a value/defensive fund to a mid-

cap focused fund in 2003-04 and now sports a profile similar to other diversified funds.



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Some of the changes are likely to have occurred due to fund manager changes; three fund

managers have handled this fund in the last three years. Investors can wait for the fund to

display a greater consistency in its performance over the next year or so, before

contemplating fresh exposures. For now, the fund need not form a core part of your

portfolio. HDFC Capital Builder has generated a return of about 55 per cent during 2005,

beating the category average of about 45 per cent. Until 2006, Capital Builder did display

a strong performance record and was among top choices for those who desired a fund

with a mid-cap focus.

However, it was a laggard in 2006. In a year when only an aggressive investment strategy

helped funds outpace the markets, Capital Builder’s focus on defensive sectors such as

FMCG and its well-diversified approach to investing worked against its favour.

The massive underperformance resulted in considerable outflows from the fund, which

added instability to its performance. Over the past year, however, the portfolio appears to

have undergone significant changes. Capital Builder shed its exposure to FMCG and auto

ancillaries and has considerably stepped up its holdings in banks, electricals and electrical

equipments, capital goods and metals stocks etc.



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RETURNS OF THE FUNDS COMARED TO BENCH MARK:

1.FRANKLIN INDIA BLUE-CHIP FUND

2.ICICI PRUDENTIAL POWER FUND

3.HDFC CAPITAL BUILDER FUND



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Risk and Return Analysis of the Schemes

Whenever an investor goes for investment he/she will use to analyze the Risk associated

with that particular investment and what may be the expected return by investing their,

But some times expected returns may vary due to some reasons so it is very important for

a investor to calculate about the rate of risk associated with the particular stock. There are

mainly two types of risks:

1. Systematic Risk

2. unsystematic Risk

Systematic risk: The systematic risk affects the entire market. The economic

conditional, political situations, sociological changes affect the entire market in

turn affecting the company and even the stock market. These situations are

uncontrollable by the corporate and investor.

Unsystematic risk: The unsystematic risk is unique to industries. It differs from

industry to industry. Unsystematic risk stems from managerial inefficiency,

technological change in the production process, availability of raw materials,

changes in the consumer preference, and labor problems. The nature and magnitude



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of above mentioned factors differ from industry to industry and company to

company.



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THE TOOLS USED FOR CALCULATION OF RISK AND RETURN:

1. Standard Deviation

2. Beta

3. Alpha

4. Sharp ratio

5. Treynor ratio

6. Arithmetic mean

STANDARD DEVIATION

S.D= √(y-Y)²

N

The standard deviation is a measure of the variables around its mean or it is the

square root of the sum of the squared deviations from the mean divided by the

number of observations.S.D is used to measure the variability of return i.e. the

variation between the actual and expected return.

BETA

Beta = N*∑XY- (∑X) (∑Y/ N(X*X) * (∑x)

Where



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N- No of observation

X- Total of market index value

Y- Total of return to Nav

Beta describes the relationship between the stock’s return and index returns. In

short it mainly analyzes the sensitivity of stock to systematic risk.

If the BETA is 0: No risk

If the BETA is 1: Same risk profile as the market as a whole.

If the BETA is Less than 1: It is as sensitive to market risk.

If the BETA is More than 1: It is more sensitive to the market risk.

Negative beta value indicates that the stocks return move in opposite direction to

the market return.

ALPHA

Alpha = Y- beta(X)

Where

Y- avrage return to nav return

X- average return to market index .



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Alpha indicates that the stock return is independent of the market return. A

positive value of alpha is a healthy sign. Positive alpha values would yield

profitable return.



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SHARPE RATIO

St= Rp --Rf

S.D

WHERE

Rp – Avereage return to portfolio

Rf—Risk free rate of interest

S.D- Standard Deviation

Sharpe’s performce index gives a single value to be used for the performance

ranking of various funds or portfolios. Sharpe index measures the risk premium of

the portfolio relative to the total amount of risk in the portfolio. The risk premium

is the difference between the portfolio’s average rate of return and the risk less rate

of return. The standard deviation of the portfolio indicates the risk.

Higher the value of sharpe ratio better the fund has performed. Sharpe ratio

can be used to rank the desirability of funds or portfolios. The fund that has

performed well comapred to other will be ranked first then the others.



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TREYNOR RATIO

Ty= Rp—Rf

B

WHERE

Rp- Average return to portfolio

Rf- Risk less rate of interest.

B- Beta coeffecient

Treynor ratio is based on the concept of characteristic line. Characteristic

line gives the relation between a given market return and fund’s return. The fund’s

performance is measured in relation to market performance. The ideal fund’s return

rises at a faster rate than the market performance when the market is moving

upwards and its rate of return declines slowly than the market return, in the decline.

Treynor’s risk premium of the portfolio is the difference between the aveage return

and the risk less rate of return. The risk premium depends on the systematic risk

assumed in a portfoilo.



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Risk and Return analysis of following Data:

SCHEMES SELECTED FOR RISK AND RETURN ANALYSES ARE:

FUND NAME BENCH MARK INDEX

FRANKLIN BLUECHIP FUND BSE SENSEX

ICICI PRUDENTIAL POWER FUND S&P CNX NIFTY

HDFC CAPITAL BUILDER FUND S&P CNX 500



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FRANKLIN BLUECHIP FUND:

Date Sensex x x*x NAV y y-y bar y-ybar sq xy 30-Jan-2004 5,69

5.67 0 051.62

0 0 0 0 27-Feb-2004 5,66

7.51 (0.49) 0.24444252.57

1.840372 -0.79436 0.631005 -0.9099 31-Mar-2004 5,59

0.60 (1.36) 1.84153952.52

-0.09511 -2.72984 7.452034 0.129069 30-Apr-2004 5,65

5.09 1.15 1.33066254.00

2.817974 0.183244 0.033578 3.250656 31-May-2004 4,75

9.62 (15.83) 250.739745.25

-16.2037 -18.8384 354.8866 256.5818 30-Jun-2004 4,79

5.46 0.75 0.56701147.04

3.955801 1.321071 1.745228 2.978723 30-Jul-2004 5,17

0.32 7.82 61.1051349.64

5.527211 2.892481 8.366445 43.20608 31-Aug-2004 5,19

2.08 0.42 0.17712650.54

1.813054 -0.82168 0.675152 0.763049 30-Sep-2004 5,58

3.61 7.54 56.865353.56

5.975465 3.340735 11.16051 45.06043 29-Oct-2004 5,67

2.27 1.59 2.52130553.16

-0.74683 -3.38156 11.43492 -1.18586 30-Nov-2004 6,23

4.29 9.91 98.1724859.39

11.71934 9.084608 82.5301 116.1176 31-Dec-2004 6,60

2.69 5.91 34.9192864.07

7.880114 5.245384 27.51406 46.56559 31-Jan-2005 6,55

5.94 (0.71) 0.50132763.12

-1.48275 -4.11748 16.95367 1.049856 28-Feb-2005 6,71

3.86 2.41 5.80235565.67

4.039924 1.405194 1.97457 9.731401 31-Mar-2005 6,49

2.82 (3.29) 10.839262.78

-4.40079 -7.03552 49.49857 14.4887 29-Apr-2005 6,15

4.44 (5.21) 27.1608159.61

-5.04938 -7.68411 59.04553 26.31536 31-May-2005 6,71

5.11 9.11 82.9922564.30

7.867807 5.233077 27.3851 71.67579 30-Jun-2005 7,19

3.85 7.13 50.8268567.20

4.510109 1.875379 3.517045 32.1539 29-Jul-2005 7,63

5.42 6.14 37.67773.08

8.75 6.11527 37.39653 53.7089 31-Aug-2005 7,80

5.43 2.23 4.95773276.89

5.213465 2.578735 6.649872 11.60828 30-Sep-2005 8,63

4.48 10.62 112.815282.85

7.751333 5.116603 26.17963 82.33041 31-Oct-2005 7,89

2.32 (8.60) 73.8792975.99

-8.28002 -10.9148 119.1319 71.16934 30-Nov-2005 8,78

8.81 11.36 129.027385.74

12.83064 10.19591 103.9565 145.7434 30-Dec-2005 9,39 6.93 48.03365 90.48 5.528341 2.893611 8.372987 38.3149



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7.93



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31-Jan-2006 9,919.89 5.55 30.84679

96.676.841291 4.206561 17.69515 37.99645

28-Feb-2006 10,370.24 4.54 20.61041

101.885.389469 2.754739 7.588588 24.46748

31-Mar-2006 11,279.96 8.77 76.95518

111.889.815469 7.180739 51.56301 86.10532

28-Apr-2006 12,042.56 6.76 45.70655

117.364.898105 2.263375 5.122866 33.11443

31-May-2006 10,398.61 (13.65) 186.3544

101.99-13.0965 -15.7312 247.4702 178.7819

30-Jun-2006 10,609.25 2.03 4.10328

100.38-1.57859 -4.21332 17.75203 -3.19767

31-Jul-2006 10,743.88 1.27 1.610328

101.541.155609 -1.47912 2.1878 1.466452

31-Aug-2006 11,699.05 8.89 79.03857

110.839.149104 6.514374 42.43706 81.33886

29-Sep-2006 12,454.42 6.46 41.68869

117.415.937021 3.302291 10.90512 38.33343

31-Oct-2006 12,961.90 4.07 16.60316

124.025.629844 2.995114 8.970708 22.93991

30-Nov-2006 13,696.31 5.67 32.10257

128.994.007418 1.372688 1.884272 22.70568

29-Dec-2006 13,786.91 0.66 0.437572

131.672.07768 -0.55705 0.310304 1.374369

31-Jan-2007 14,090.92 2.21 4.862301

134.231.944255 -0.69048 0.476757 4.287203

28-Feb-2007 12,938.09 (8.18) 66.93478

122.35-8.85048 -11.4852 131.9101 72.40904

30-Mar-2007 13,072.10 1.04 1.072838

122.930.47405 -2.16068 4.668539 0.491011

30-Apr-2007 13,872.37 6.12 37.47851

131.45816.937363 4.302633 18.51265 42.47032

31-May-2007 14,544.46 4.84 23.47219

139.78436.333729 3.698999 13.68259 30.68572

29-Jun-2007 14,650.51 0.73 0.53165

142.43061.893131 -0.7416 0.549969 1.380364

31-Jul-2007 15,550.99 6.15 37.77832

151.07566.069623 3.434893 11.79849 37.30637

31-Aug-2007 15,318.60 (1.49) 2.233155

148.1788-1.91745 -4.55218 20.72235 2.865389

28-Sep-2007 17,291.10 12.88 165.8043

165.002411.35358 8.718851 76.01836 146.1944

31-Oct-2007 19,837.99 14.73 216.9577

184.307611.69995 9.065221 82.17823 172.3343

30-Nov-2007 19,363.19 (2.39) 5.728304

183.8756-0.23439 -2.86912 8.231855 0.560988

31-Dec-2007 20,286.99 4.77 22.76156

194.09225.556257 2.921526 8.535316 26.50839

31-Jan-2008 17,64 (13.00) 169.1245 166.6356 -14.1462 -16.7809 281.5984 183.9679



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8.71



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124.9268 2383.795 total 129.1018 2039.262 2317.735

ARITHMETIC MEAN:

ARITHMETIC MEAN GROWTH OPTION

X= ∑Y

N

129.1018 = 2.63

49

STANDARD DEVIATION:

S.D GROWTH

S.D=√(y-Y)²

N

2039.262 = 0.92

49



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BETA

ALPHA

SHARPE RATIO

St= Rp-Rf

S.D


BETA GROWTH

= N*∑XY- (∑X) (∑Y)

N* ∑X² -(∑X)²

49*2317.73.-(124.92*129.1) = 0 .96

49 *2383.79– (124.92)²

ALPHA GROWTH

= Y-B(X) 2.63- 0 .96 (2.54) = 0.179


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Rf = The risk less return for all the schemes is taken to be 9.5%

Rp= alpha +beta (i)

i = Market returns (Rm)

al b i2004 0.17986 0.96286 1.45 1.396147 1.5760072005 0.17986 0.96286 3.176 3.05804336 3.237903362006 0.17986 0.96286 3.418 3.29105548 3.470915482007 0.17986 0.96286 3.449 3.32090414 3.50076414

11.78558/4Rp = 0.029464

Rf = 0.095

Sharpe ratio Growth

Rp-Rf

S.D

0.0294-0.095 = -0.0711

0.92

TREYNOR RATIO

TREYNOR RATIO GROWTH

Rp-Rf

B

0.0294 – 0.095 =-0.068

0 .96



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analysis

ICICI PRUDENTIAL POWER FUND

DATECNX NIFTY x x*x NAV y y-y bar

y-ybar sq xy

30-Jan-04 2062.42 0 0 28.87 0 0 0 027-Feb-04 2052.4 -0.48584 0.236038 29.27 1.385521 -1.4762499 2.1793 -0.673131-Mar-04 2020.25 -1.56646 2.453793 28.11 -3.9631 -6.8248734 46.579 6.2080430-Apr-04 2048.22 1.384482 1.916791 29.34 4.375667 1.51389582 2.2919 6.0580331-May-04 1698.16 -17.0909 292.1001 24.57 -16.2577 -19.11944 365.55 277.85930-Jun-04 1727.93 1.753074 3.073268 25.38 3.296703 0.4349321 0.1892 5.7793630-Jul-04 1878.62 8.720839 76.05304 26.91 6.028369 3.1665976 10.027 52.572431-Aug-04 1882.09 0.18471 0.034118 28.05 4.236343 1.37457217 1.8894 0.782530-Sep-04 2020.62 7.360434 54.17599 29.83 6.345811 3.48403985 12.139 46.707929-Oct-04 2069.39 2.413616 5.82554 30.5 2.246061 -0.6157102 0.3791 5.4211330-Nov-04 2268.99 9.645354 93.03286 33.35 9.344262 6.4824911 42.023 90.128731-Dec-04 2418.88 6.606023 43.63954 36.98 10.88456 8.02278652 64.365 71.903631-Jan-05 2393.76 -1.0385 1.078476 36.19 -2.13629 -4.9980611 24.981 2.2185328-Feb-05 2447.94 2.263385 5.122911 37.98 4.946118 2.08434651 4.3445 11.19531-Mar-05 2369.69 -3.19657 10.21803 36.29 -4.44971 -7.3114816 53.458 14.223829-Apr-05 2214.96 -6.52955 42.63497 35.31 -2.70047 -5.5622396 30.939 17.632831-May-05 2433.73 9.876928 97.5537 38.35 8.609459 5.74768788 33.036 85.03530-Jun-05 2599.93 6.829024 46.63557 39.61 3.285528 0.42375683 0.1796 22.436929-Jul-05 2711.24 4.281269 18.32927 44.45 12.21914 9.35736538 87.56 52.313431-Aug-05 2801.99 3.347177 11.20359 47.78 7.491564 4.62979236 21.435 25.075630-Sep-05 3066.15 9.427585 88.87937 50.37 5.420678 2.55890691 6.548 51.103931-Oct-05 2795.89 -8.81431 77.69208 45.31 -10.0457 -12.907433 166.6 88.545630-Nov-05 3127.8 11.87135 140.929 50.71 11.9179 9.05612772 82.013 141.48230-Dec-05 3353.37 7.211778 52.00975 54.85 8.16407 5.302299 28.114 58.877531-Jan-06 3549.92 5.861268 34.35446 59.74 8.915223 6.05345214 36.644 52.254528-Feb-06 3639.43 2.521465 6.357787 62.26 4.218279 1.35650801 1.8401 10.636231-Mar-06 4028.82 10.6992 114.4729 69.16 11.08256 8.22078582 67.581 118.57529-Apr-06 4213.88 4.593405 21.09937 74.05 7.070561 4.20878982 17.714 32.477931-May-06 3642.31 -13.564 183.9817 64.87 -12.397 -15.2588 232.83 168.15330-Jun-06 3721.71 2.179935 4.752118 61.74 -4.82503 -7.6868059 59.087 -10.51831-Jul-06 3745.46 0.638148 0.407232 62.63 1.441529 -1.4202422 2.0171 0.9199131-Aug-06 4073.55 8.759672 76.73185 68.71 9.707808 6.84603656 46.868 85.037229-Sep-06 4288.97 5.288262 27.96572 72.76 5.894339 3.03256733 9.1965 31.170831-Oct-06 4476.5 4.372378 19.11769 76.22 4.75536 1.89358889 3.5857 20.792230-Nov-06 4729.13 5.643471 31.84877 79.55 4.368932 1.50716084 2.2715 24.655929-Dec-06 4758.45 0.619987 0.384384 81.67 2.664991 -0.1967806 0.0387 1.6522631-Jan-07 4899.39 2.961889 8.772786 83.32 2.020326 -0.8414455 0.708 5.9839828-Feb-07 4504.73 -8.05529 64.88767 77.66 -6.79309 -9.6548581 93.216 54.720330-Mar-07 4605.89 2.24564 5.042897 77.49 -0.2189 -3.0806741 9.4906 -0.491630-Apr-07 4934.46 7.133692 50.88956 83.5 7.755839 4.89406826 23.952 55.327831-May-07 5185.95 5.096606 25.9754 89.2 6.826347 3.96457611 15.718 34.7912



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29-Jun-07 5223.82 0.730242 0.533254 89.72 0.58296 -2.2788116 5.193 0.4257



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31-Jul-07 5483.25 4.966289 24.66403 92.75 3.377173 0.51540223 0.2656 16.77231-Aug-07 5411.29 -1.31236 1.72229 91.26 -1.60647 -4.4682402 19.965 2.1082728-Sep-07 6094.11 12.61843 159.2248 98.65 8.097743 5.23597151 27.415 102.18131-Oct-07 7163.3 17.54465 307.8146 111.01 12.52914 9.66737224 93.458 219.81930-Nov-07 6997.6 -2.31318 5.3508 111.25 0.216197 -2.6455745 6.9991 -0.500131-Dec-07 7461.48 6.62913 43.94536 122.41 10.03146 7.16968948 51.404 66.499931-Jan-08 6245.45 -16.2974 265.6065 102.66 -16.1343 -18.996074 360.85 262.948

124.0164 2650.732 total 140.2268 2275.1 2489.28

ARITHMETIC MEAN:


X= ∑Y

N

140.2 = 2.86

49

STANDARD DEVIATION:

S.D GROWTH

S.D=√(y-Y)²

N

2275.1 = 0.973

49



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BETA

ALPHA

SHARPE RATIO

St= Rp-Rf

S.D

years alpha beta i2004 0.55 0.9133 1.577 1.440274 1.9902742005 0.55 0.9133 2.96 2.703368 3.2533682006 0.55 0.9133 3.13 2.858629 3.4086292007 0.55 0.9133 4.02 3.671466 4.221466

total 12.87374


BETA GROWTH

= N*∑XY- (∑X) (∑Y)

N* ∑X² -(∑X)²

49*2489.28.-( 124.01*140.2) = 0 .91

49 *2650.7– (124.01)²

ALPHA GROWTH

= Y-B(X) 2.86- 0 .91 (2.53) = 0.55


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Rp=0.032184

Rf = 0.095

Sharpe ratio Growth

Rp-Rf

S.D

0.032-0.095 = -0.064

0.973

TREYNOR RATIO


Rp-Rf

B

0.032 – 0.095 = -0.0687

0 .91



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analysis

HDFC CAPITAL BUILDER FUND:

DATE CNX 500x x*x NAV y y-y bar y-ybar sq xy30-Jan-04 1459.8 0 0 22.751 0 0 0 027-Feb-04 1442.8 -1.16454 1.356161 22.621 -0.5714 -3.61173 13.04461 0.6654239431-Mar-04 1457.5 1.018852 1.03806 22.863 1.069802 -1.97053 3.882975 1.0899705630-Apr-04 1507.55 3.433962 11.7921 24.721 8.126668 5.086339 25.87084 27.906669731-May-04 1226.55 -18.6395 347.4315 21.541 -12.8636 -15.9039 252.9336 239.77046230-Jun-04 1248 1.748808 3.058328 22.364 3.820621 0.780292 0.608856 6.6815314130-Jul-04 1351.45 8.289263 68.71188 24.089 7.713289 4.67296 21.83656 63.937481531-Aug-04 1377.2 1.905361 3.6304 26.243 8.941841 5.901512 34.82784 17.037433730-Sep-04 1478.75 7.373657 54.37081 27.645 5.342377 2.302048 5.299425 39.39285429-Oct-04 1502.05 1.575655 2.482689 28.404 2.745524 -0.29481 0.08691 4.3259983130-Nov-04 1653.2 10.06291 101.2622 31.664 11.47726 8.436928 71.18175 115.49464831-Dec-04 1804.9 9.176143 84.2016 35.22 11.23042 8.19009 67.07758 103.05193731-Jan-05 1768.25 -2.03058 4.123269 34.746 -1.34583 -4.38616 19.23836 2.7328124328-Feb-05 1827.4 3.345115 11.1898 36.32 4.530018 1.489689 2.219173 15.153431731-Mar-05 1772.85 -2.98512 8.910914 35.744 -1.5859 -4.62623 21.40202 4.7341038229-Apr-05 1688.65 -4.74941 22.55694 35.926 0.509176 -2.53115 6.406734 -2.418289831-May-05 1834.85 8.657804 74.95756 37.666 4.843289 1.80296 3.250665 41.932244730-Jun-05 1906.2 3.888601 15.12122 37.474 -0.50974 -3.55007 12.60301 -1.982189329-Jul-05 2027.4 6.3582 40.4267 41.82 11.59737 8.557045 73.22302 73.738419431-Aug-05 2126.35 4.880635 23.8206 45.956 9.890005 6.849676 46.91806 48.269506430-Sep-05 2274 6.943824 48.21669 48.846 6.288624 3.248295 10.55142 43.667097131-Oct-05 2067.8 -9.06772 82.22358 44.938 -8.00066 -11.041 121.9033 72.547717130-Nov-05 2306.15 11.52674 132.8658 49.433 10.00267 6.962341 48.4742 115.29821430-Dec-05 2459.2 6.636602 44.04449 51.96 5.11197 2.071641 4.291695 33.926109231-Jan-06 2585.95 5.154115 26.5649 54.099 4.116628 1.076299 1.15842 21.217575728-Feb-06 2658.95 2.822947 7.96903 55.293 2.207065 -0.83326 0.694329 6.230427231-Mar-06 2910.35 9.45486 89.39438 60.169 8.818476 5.778147 33.38698 83.377457128-Apr-06 3064.7 5.303486 28.12696 65.153 8.283335 5.243006 27.48911 43.930551331-May-06 2635.25 -14.0128 196.3583 56.969 -12.5612 -15.6015 243.4078 176.01749730-Jun-06 2562.5 -2.76065 7.621182 50.408 -11.5168 -14.5571 211.9097 31.793813131-Jul-06 2562.55 0.001951 3.81E-06 50.059 -0.69235 -3.73268 13.9329 -0.001350931-Aug-06 2807.95 9.576399 91.70741 53.977 7.826764 4.786435 22.90996 74.952215129-Sep-06 2988.25 6.421055 41.22994 57.277 6.113715 3.073386 9.445702 39.256497931-Oct-06 3114.55 4.226554 17.86376 60.551 5.716081 2.675753 7.159651 24.159327130-Nov-06 3280.45 5.326612 28.3728 63.082 4.179947 1.139618 1.29873 22.264959229-Dec-06 3295.05 0.445061 0.198079 63.171 0.141086 -2.89924 8.405609 0.0627919531-Jan-07 3393.1 2.975676 8.854645 64.459 2.03891 -1.00142 1.002839 6.0671355828-Feb-07 3107.75 -8.40971 70.72329 61.259 -4.9644 -8.00472 64.07562 41.749149530-Mar-07 3145.35 1.209879 1.463806 60.3 -1.56548 -4.60581 21.21352 -1.894045830-Apr-07 3379.1 7.431605 55.22876 65.818 9.150912 6.110583 37.33923 68.0059677



analysis

31-May-07 3563.65 5.461513 29.82813 69.818 6.077365 3.037036 9.223587 33.191609729-Jun-07 3625.75 1.742595 3.036639 73.27 4.944284 1.903955 3.625044 8.6158859131-Jul-07 3783.85 4.360477 19.01376 76.914 4.973386 1.933057 3.73671 21.686336431-Aug-07 3711.55 -1.91075 3.650974 76.323 -0.76839 -3.80872 14.50635 1.4682042228-Sep-07 4188.55 12.85177 165.1681 83.094 8.871507 5.831178 34.00263 114.01459431-Oct-07 4806.85 14.76167 217.907 96.061 15.60522 12.56489 157.8764 230.35910830-Nov-07 4869.55 1.304389 1.701429 99.034 3.094908 0.054579 0.002979 4.0369630731-Dec-07 5354.7 9.962933 99.26003 106.538 7.577196 4.536867 20.58316 75.491092631-Jan-08 4349 -18.7816 352.7497 88.367 -17.0559 -20.0962 403.8579 320.337362

123.1053 2751.786 total 148.9761 2219.377 2513.34471

ARITHMETIC MEAN:


X= ∑Y

N

148.97 = 3.04

49

STANDARD DEVIATION:

S.D GROWTH

S.D=√(y-Y)²

N

2219.377 = 0.96

49



analysis



analysis

BETA

ALPHA

SHARPE RATIO

al b i B*i rp2004 0.84 0.8757 2.065 1.8083205 2.64832052005 0.84 0.8757 2.78 2.434446 3.2744462006 0.84 0.8757 2.66 2.329362 3.1693622007 0.84 0.8757 4.31 3.774267 4.614267

tot 13.706395/4

Rp = 0.034

Rf = 0.095


BETA GROWTH

= N*∑XY- (∑X) (∑Y)

N* ∑X² -(∑X)²

49*2513.54.-( 123.10*148.7) = 0 .87

49 *2751.7– (123.10)²

ALPHA GROWTH

= Y-B(X) 3.04- 0 .87 (2.51) = 0.84


analysis



analysis

Sharpe ratio Growth

Rp-Rf

S.D

0.034-0.095 = -0.063

0.96

TREYNOR RATIO


Rp-Rf

B

0.034 – 0.095 = -0.069

0 .87



analysis



analysis

CALCULATED DATAS:


-0.0693

-0.06310.840.87570.96143.04032HDFC capital builder fund

-0.0687-0.06450.550.91330.97342.86177ICICI Pru Power

-0.0680-0.07110.179860.962860.921592.63473Franklin blue-chip fund

Treynor Ratio

Sharpe Ratio

alphaBetaSDArithmetic Mean

Fund


analysis

FINDINGS OF THE PROJECT ARE:

Among these three funds more popular among investors is Franklin blue chip

fund.

Both Franklin blue chip fund and ICICI pru power fund faced problems during

2000 and 2001 main reasons are:

1.Ketan Parek’s case and

2.September 11th attack on US WTO

HDFC capital Builder fund faced crucial period during 2006, main reason was its

portfolio then mainly consisting of FMCG companies and in that year they

drastically came down.

Among these three funds highest Beta is of Franklin i.e 0.96,lowest is of HDFC

capital builder fund and sharp ratio high in case of Franklin and low in case of

HDFCCB fund .

ICICI Pru Power’s performance is more or less is stable even if we see its

BETA,Alpha,Sharp ratio and average returns also good i.e 2.86.

Average Return is high in case of HDFC CB Fund i.e 3.04

Franklin blue-chip fund once upon a time it was considered to be as star in mutual

funds but due to high market volatility in the year 2006 and 2007 but now from

2008 January on words it could salvage some of its lost pride because of

comparatively low volatility in Blue chip stocks



analysis

SUGGESTION/RECOMMENDATON TO INVESTORS:

By the study and analysis of the mutual fund industry it will be better to suggest that even

though mutual funds are subject to risk but they are better risk adjusted as compared with

stocks, from last five years it has become a buzz word for investment main reason it is

useful in case of getting tax reductions etc.

If a person wants to earn more as compared to Bank FD where possible returns are just

10-12% where as in mutual fund minimum is around 15-20% mutual funds are good

option compared with stock market .

If person does not want to take much risk then he can invest in the funds like HDFC

Capital builder fund because as we have already seen in returns chart, compared with

other two funds(Franklin blue-chip and ICICI power).that it has given constant returns in

shorter period of time, with less BETA and arithmetic mean return is also high

If a person is more interested and ready to take risk then the Franklin Blue-chip fund will

the good option. By looking at its BETA and SD Risk both are high but if person invest

in this fund for more than 4 years he will get returns around 35%.



analysis

Benefits of the study:

This study helps us to know the workings and concept of Mutual funds.

This research helps to find how much return can earned by investing in Mutual

funds as compared with FD

It will also help to convince the others regarding how Mutual Funds re better risk

adjusted as compared with direct investment through shares.

And finally it has given Picture about how these three funds [Franklin

Bluechip,ICICI Pru power,HDFC capital builder] performing over last 15 years.

Limitations: Main Limitation is that in this project we are only considering three

schemes of mutual funds, and another limitation is data availability/collection is very

tedious.



analysis

BIBLIOGRAPHY

www.mutualfundsindia.com

www.indiainfoline.com

www.valueresearcersonline.com

www.amfi.com

www.rediff.com

Reference books

SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

- Donald Fischer

- Punithavathy.P

Reference Magazine

- Mutual fund Insight

- Out look Money.


a project report on different schemes of mutual funds and their comparative analysis

Economy & Finance