-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
1/76
AA
Project ReportProject Report
OnOn
Comparative analysis of close endedComparative analysis of close endedmutual fund on the basis of return,mutual fund on the basis of return, risk & NAV for portfolio of Sundramrisk & NAV for portfolio of Sundram
bsp, Dsp black rock & Religarebsp, Dsp black rock & Religare mutual fund with movement in Niftymutual fund with movement in NiftyIndex on NSE for last eight QuartersIndex on NSE for last eight Quarters ending on june,2009 (A Case Studyending on june,2009 (A Case Study
of Stock Holding Corporation Ofof Stock Holding Corporation OfIndia LTD., Karnal)India LTD., Karnal)
Conducted at:Conducted at:
STOCK HOLDING CORPORATION OF INDIA LTD.
KARNAL
Submitted toSubmitted to::Kurukshetra University, KurukshetraKurukshetra University, Kurukshetra
In the partial fulfillment of the Requirement forIn the partial fulfillment of the Requirement for
the course ofthe course of
Masters in Business AdministrationMasters in Business Administration
Under Supervision of: Submitted By:MS. Shaili gupta VISHAL LUTHRA(Faculty) ROLL NO: 1116/08TIMT, Ynr MBA-Final
________________________________________
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
2/76
DECLARATION
DECLARATION
This is to certify that I, vishal luthra the student of Tilak Raj Chadha
Institute Of Management & Tecnology (Timt) Institute of Management
studying in M.B.A. (IInd Sem.) Class Roll no.1116/08 & Univ. Roll No.-
has undergone summer training in STOCK HOLDING
CORPORATION OF INDIA LIMITED (SHCIL), for six weeks and have
submitted a project on the title Comparative analysis of close ended
mutual fund on the basis of return, risk & NAV for portfolio of Sundram
bsp, Dsp black rock & Religare mutual fund with movement in Nifty Index
on NSE for last eight Quarters ending on june,2009 as assigned by the
Company, for partial fulfillment of Degree of Master of Business
Administration (M.B.A.) to Kurukshetra University, Kurukshetra.
I solemnly declared that the work done by me is original and no copy
of it has been submit to any other Universities for award of any other degree
or on similar title and topic.
Tilak Raj Chadha Institute Of Management & Technology,(TIMT)M.L.N. Educational Complex, Yamuna Nagar-135001 (Haryana) India,Phone Numbers: 01732-220103, 234010, 234110, Fax: -91-1732-234110
Hostel: 01732-254848(Girls), 01732-221170(Boys)
E-mail: [email protected] Website: www.timt.ac.in
mailto:[email protected]://www.timt.ac.in/mailto:[email protected]://www.timt.ac.in/ -
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
3/76
PREFACE
Project work is a part of our curriculum that gives us the
knowledge about the practical work in any organization and makes
are stand in an organization. This also helps to understand &
correlate the theoretical concepts better which remains uncovered
in the classrooms. I have prepared this report in the process of my
postgraduate diploma in business management.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
4/76
ACKNOWLEDGEMENT
Today after completing my training I feel a lot more relieved. But when I look
back I still remember the first day of my training. I was very much excited and a
bit nervous. I would never have had completed it if the staff members of the
personnel department had not helped me. I wish to express my humble thanks
towards all of them. First of all I would like to thank the supreme power, the
almighty God who is obviously the one who has always guided me to work on the
right path of life. Without his grace this would never come to be today's reality.
Next to him I would like to convey my sincere thanks to the management of Stock
holding Company of India Ltd, karnal for providing me ample opportunity to work
in this esteemed organization. I am deeply indebted to Dr. Vikas Daryal (Director)
for their valuable contribution during the academic session.
I also want to pay my sincere regards to Mr.vikas Gupta branch manager and
vikram jeet senior executive, karnal who guided me for the entire training and help
me to get acquaintance with various practical aspects of finance prevailing in the
industry.
Vishal luthra
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
5/76
EXECUTIVE SUMMARY
Mutual fund is a mechanism for pooling the resources by issuing units to the
investors and investing funds in securities in accordance with objectives as
disclosed in offer document. Investments in securities are spread across a wide
cross-section of industries and sectors and thus the risk is reduced. Diversification
reduces the risk because all stocks may not move in the same direction in the same
proportion at the same time.
Mutual fund issues units to the investors in accordance with
quantum of money invested by them. Investors of mutual funds are known as unit
holders. The profits or losses are shared by the investors in proportion to their
investments. The mutual funds normally come out with a number of schemes with
different investment objectives, which are launched from time to time.
Mutual funds provide the vehicle for small investors to invest in financial market.
So it is very necessary for an investor to evaluate the performance of a mutual
fund before investing into it.
The present study is based on the past performance of various
open ended equity mutual funds scheme. The analytical tools such as Standard
Deviation, Alpha, Beta has been show the risk and return of the portfolio &
correlation between the fund return & market return has been used to show the
investment pattern in mutual fund industry.
At last, the study is helpful for an investor to evaluate his
existing portfolio as well as to take the decision regarding further investment.
CONTENTS
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
6/76
Introduction
Profile of the study
Concept of mutual fund
History of Indian mutual fund industry
Why invest through a mutual fund
Association of mutual funds of India (AMFI)
SEBI code of conduct for intermediaries of mutual funds
Types of fund
life cycle of different investor
Names of AMC
Justification of study
Objectives of study
Literature Review
Research Methodology and Analytical Tools
Sampling &Sampling Design
Analytical Tools
Statistical Tools
Data Collection
Hypothesis Testing (T- test)
Limitations of Study
Results & Discussions/Findings
Recommendations
Bibliography
Annexure
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
7/76
COMPANY BACKGROUND
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
8/76
Introduction to the Company
Stock Holding Corporation of India Ltd. (SHCIL) was incorporated at the special
initiative of the Government of India as a Public Limited Company in 1986. It has been
jointly promoted and owned by the All India Banks and Financial Institutions, viz., LIC,
GIC and its subsidiaries, ICICI Bank, UTI, IDBI, IFCI and IIBI, all leaders in their fields
of business.
SHCIL began by offering custodial and post trading services, adding depository services
and other services to its portfolio over a period of time.
SHCIL has established itself in India as a one-stop solution provider in the Financial
Services domain.
SHCIL maintains dedicated communication channels, well connected to Client
institutions, Stock Exchanges, Clearing houses and Depositories, thus maintaining
process & quality leadership.
As a custodian entrusted with sizeable assets, SHCIL is continuously leveraging its scale
and capabilities to help its clients mitigate risk and optimise efficiencies with greater
control.
VISION
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
9/76
To be a global major in providing complete investment solutions, with relentless focus on
investor care, through superior efficiency and complete transparency.
APPROACH
VALUE FOR INVESTORS TRUST:SHCIL values the trust reposed in by theclients and is committed to uphold it at all cost.
INTEGRITY AND HONESTY: Integrity, honesty and transparency are theunderlying principles in all our dealings.
PERSONALISZED ATTENTION: The most valued asset is our relationshipwith the clients, which has been built over years by giving personalized attention.
NETWORK WHICH WORKS: SHCIL has a vast network extending to 200+cities/towns ensuring easy accessibility, convenience and hassle free trading experience
RESEARCH BASED ADVISORY SERVICES:SHCIL offers proactive andtimely world class research based advice and guidance to its clients to enable them to
take informed decisions.
CoreValuesof SHCIL
1. Safety & Efficiency of Operations is a hallmark of SHCIL
2. Professionalism & Integrity
3. Customer First
4. Relationship building
5. Commitment to Quality irrespectiveof asset size
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
10/76
COREVALUES
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
11/76
SERVICESPROVIDEDBYTHECOMPANY
Financial Institutions
Mutual Funds
Banks (Nationalised, Scheduled, Public Sector, Private Sector,Co-operative,
Foreign)
Insurance Companies
foreign Institutional Investors
Corporates
Venture Capital Companies
Foreign Venture Capital Companies
PF Trusts
Clearing and Settlement services
Post tradingservices
SHCIL has specially trained personnel handling thousands of trade instructions involving
large values on sophisticated systems using digital signature on STP (Straight Through
Processing) systems, ensuring smooth trade confirmations to Stock Exchanges.Physical Custody (Vault) Services
SHCIL has extensive Vault capacity with state-of-the-art technology . This includes
tracking with bar-coding techniques. Certificates are held in customised, fire resistant
Modular Sliding Storage Units, with automated location tracking, and Logs with tight
security
Institutionaldpservices
Depositories, viz. NSDL (National Securities Depository Ltd.) and CDSL (Central
SHCIL has installed dedicated DPMs (Depository Participant Modules) on both the
Depository Services (India) Ltd).
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
12/76
Client Relationship Management
Every Institutional client is assigned to an experienced Client Relationship Manager who
assists in resolving special issues relating to the client.
Over and above the services offered we have a premium offering called ADVAIT, an
integrated, web-based, online reporting system which provides a single window access to
institutional reports with enhanced security features
Derivatives Processing (Custodian & Clearing)
Mutual Fund Distribution utilizing our Pan-India presence with more than 150 centers in
A, B, C class cities and towns of India.
SHCIL PRODUCTS
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
13/76
ADD SHARESUse the dematerialized shares in your account as a collateral to get you a loan.
EQUIBUY
Purchase shares now without coordinating with brokers or worrying about your
settlement obligation at the exchange.
FUND INVEST
Invest in a wide range of Mutual Funds schemes.
GOI BONDS
Subscribe to Relief Bonds issued by the GOI and hold them in the electronic mode with
SHCIL, RBI authorized intermediary.
INSURANCE
Corporate Agent of Life Insurance Corporation for Life Insurance products and New
India Assurance for Non-Life Insurance products.
STOCK DIRECTHelps you combine your buy and sell of shares, your settlement and fund transfer all at
one go.
OurFinancials
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
14/76
We are a zero-debt financially sound company with healthy reserves. We have a
consistent dividend-paying track record.
Highly Authenticated Research Team
SHCIL is having a high tech in-house research wing equipped with highly experienced
personnel & latest technical tools to give right advice at the right time to its clients.
The research based advisory support is forwarded to the clients in the following ways:
Weekly research magazine Wise Money distributed to clients
Research Based SMS support to clients for equities.
Live interactive chat rooms with the market experts during trading hours.
Fundamental Research reports sent to clients.
Daily market update reports sent through E-mails twice daily (morning mantra
and evening buzzer).
Investor awareness seminars conducted across the country on a regular basis.
SHCIL as one Stop Solution for financial Services.
SHCILs core competence in Custodial business spans 18 years, with a dedicated pool of
trained and experienced professionals working literally round the clock using state-of-art
computer systems and world class technology.
SHCIL maintains dedicated communication channels, well connected to Client
institutions, Stock Exchanges, Clearing houses and Depositories, thus maintaining
process & quality leadership.
As a custodian entrusted with sizeable assets, SHCIL is continuously leveraging its scale
and capabilities to help its clients mitigate risk and optimize efficiencies with greater
control. It is also Providers of one of the best trading platforms in terms of speed,
convenience and risk management to trade inNSE, BSE, F&O, NCDEX, and MCX &
DGCX.
Accolades and Certifications
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
15/76
Citation and Medal from Smithsonian Institute, Washington D.C, U.S.A. for " Visionary
and Innovative use of Technology in Finance, Banking and Insurance Industry". First
South Asian Corporate to receive this.
Computer Society of India Award for best IT usage in the Country
Our software processes have been assessed at SEI CMM Level 3.
Accepted industry leader and pioneer in Custodial Systems.
Our Technology
Comprehensive business solutions adept in handling high volume time critical
transactions within a secured environment.
Zero error approach towards delivery of products and services
Single window view of business and up-to date information
Oracle database currently of 1.6 Terabytes size (and growing) managed by
competent IT personnel with domain expertise.
Data mirroring using cluster technology and fibre optic connection as part of
Disaster Management Plan
Network Security using Firewall, Proxy, Intrusion Detection System(IDS) and
Intrusion Prevention System (IPS)
Internet products with built in PKI features.
Dedicated communication channels with built-in redundancies in connectivity to
Client Institutions, Stock Exchanges, Clearing houses and Depositories
Why SHCIL?
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
16/76
Why you would choose SHCIL as a preferred Service Provider
Well integrated front and back office, paper and electronic systems. A focused
Client Relation Team to manage your needs & queries. A single point contact for
your comfort.
In-house capability to address all IT needs in terms of software development,
maintenance, back office processing, database administration, network
maintenance, backups and disaster recovery.
Multilevel security is maintained in software, applications and guards to access to
various data, client and internal reports.
Expertise in running processes utilizing digital signatures.
Regular Audits internal and external, by SEBI, Depositories, Clients and
compliance to rules and regulations.
Constant review and benchmarking of processes to ensure adherence to global
best practices.
Insurance cover with international re-insurance.
Full Confidentiality of business operations.
Achievements
SHCIL began by offering custodial and post trading services, adding depository services
and other services to its portfolio over a period of time.SHCIL has established itself in
India as a one-stop solution provider in the Financial Services domain.
ISO 9001:2000 certified DP for both shares and commodities
SHCILs core competence in Custodial business spans 18 years, with a dedicated pool of
trained and experienced professionals working literally round the clock using state-of-art
computer systems and world class technologySHCIL maintains dedicated communication
channels, well connected to Client institutions, Stock Exchanges, Clearing houses and
Depositories, thus maintaining process & quality leadership.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
17/76
As a custodian entrusted with sizeable assets, SHCIL is continuously leveraging its scale
and capabilities to help its clients mitigate risk and optimize efficiencies with greater
control.
Our Depository Participant services address your individual investment needs. With a
parentage of leading financial institutions and insurance majors and a proven track record
in the Custodian business, we have reiterated our past success by establishing ourselves
as the first ever and largest Depository Participant in India.
SHCIL's long-standing association with Clearing Members has enabled it to develop
services based on an understanding of their working and their requirement for timely and
accurate information. We currently offer Depository services to more than 680 clearing
members of various exchanges connected with NSDL and CDSL. Our Customer Care
lines answer all your DP queries while the Interactive Voice Response (IVR) system
gives you information on your account and other valuable data like CC calendar details,
tariff, ISIN information, etc. via telephone, fax and e-mail.
Everyone wants to be rich and wealthy. But to amass wealth and make it grow, it is
necessary for one to invest wisely. Then SMC Global became long and exciting journey.
Where service of a knowledgeable and trustworthy guide is invaluable and imperative to
make journey easier and more enjoyable. Mutual Funds became a part of the company
three years before i.e. from July 2005. The company has grown radically in the mutual
fund industry and has able to get a noticeable position.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
18/76
Founders and Promoters
Stock Holding Corporation of India Ltd. (SHCIL) was incorporated at the special
initiative of the Government of India as a Public Limited Company in 1986. It has been
jointly promoted and owned by the All India Banks and Financial Institutions, viz., LIC,
GIC and its subsidiaries, ICICI Bank, UTI, IDBI, IFCI and IIBI, all leaders in their fields
of business.
SHCIL began by offering custodial and post trading
services, adding depository services and other services to its portfolio over a period of
time.SHCIL has established itself in India as a one-stop solution provider in the Financial
Services domain.SHCIL has a network of 190 branches spread across the countryproviding services at your doorstep. Please select your state to locate the nearest branch
address and contact details. Call up any of our nearest branch for information on Products
and Services.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
19/76
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
20/76
Theory without practice is sterile,
Practice without theory is blind
MUTUAL FUND
A mutual fund is a trust that pools the savings of a number of investors with common
financial goals. The collected money is invested in various instruments like debentures,
shares, etc. The income generated from these instruments and the capital appreciation is
shared by the investors in proportion to the number of units owned by them.
Mutual fund is a mechanism for pooling the resources by issuing units to the investorsand investing funds in securities in accordance with objectives as disclosed in offer
document. Investments in securities are spread across a wide cross-section of industries
and sectors and thus the risk is reduced. Diversification reduces the risk because all
stocks may not move in the same direction in the same proportion at the same time.
Mutual fund issues units to the investors in accordance with quantum of money invested
by them. Investors of mutual funds are known as unit holders. The profits or losses are
shared by the investors in proportion to their investments. The mutual funds normally
come out with a number of schemes with different investment objectives, which are
launched from time to time.
Unit Trust of India (UTI) was the first mutual fund set up in India in the year1963. In
early 1990s, Government allowed public sector banks and institutions to set up mutual
funds. SEBI formulates policies and regulates the mutual funds to protect the interest of
the investors. All mutual funds whether promoted by public sector or private sector
entities including those promoted by foreign entities are governed by the same set of
Regulation
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
21/76
A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset
Management Company (AMC) and custodian. The trust is established by a sponsor
or more than one sponsor who is like promoter of a company. The trustees of the
mutual fund hold its property for the benefit of the unit holders. Asset Management
Company (AMC) approved by SEBI manages the funds by making investments in
various types securities.
Mutual fund operation flow chart:--
Investors
Pool their
Passed back to money with
Returns Fund Manager
Securities
Custodian, who is registered with SEBI, holds the securities of various schemes of the
fund in its custody. The trustees are vested with the general power of superintendence
and direction over AMC. They monitor the performance and compliance of SEBI
Regulations by the mutual fund.
The performance of a particular scheme of a mutual fund is denoted by Net Asset Value
(NAV). In simple words, Net Asset Value is the market value of the securities held by the
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
22/76
scheme. Since market value of securities changes every day, NAV of a scheme also
varies on day-to-day basis. The NAV per unit is the market value of securities of a
scheme divided by the total number of units of the scheme on any particular date. For
example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and
the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV
per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a
regular basis - daily or weekly - depending on the type of scheme.
CONCEPT
A Mutual Fund is a trust that pools the savings of a number of investors who share acommon financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
these investments and the capital appreciations realized are shared by its unit holders in
proportion to the number of units owned by them. Thus a Mutual Fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost. The flow
chart below describes broadly the working of a mutual fund:
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
23/76
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
24/76
HISTORY OF INDIAN MUTUAL FUNDINDUSTRY
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank the. The history ofmutual funds in India can be broadly divided into four distinct phases
First Phase 1964-87
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
25/76
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up
by the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and administrative
control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the
end of 1988 UTI had Rs.6,700 crores of assets under management.
Second Phase 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation
of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June
1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund
(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda
Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set
up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47,004
crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the
year in which the first Mutual Fund Regulations came into being, under which all mutual
funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer
(now merged with Franklin Templeton) was the first private sector mutual fund registered
in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
26/76
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets
of Rs.1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under
management was way ahead of other mutual funds.
Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust
of India with assets under management of Rs.29, 835 crores as at the end of January
2003, representing broadly, the assets of US 64 scheme, assured return and certain other
schemes. The Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and does not come
under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of
assets under management and with the setting up of a UTI Mutual Fund, conforming to
the SEBI Mutual Fund Regulations, and with recent mergers taking place among
different private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of September, 2004, there were 29 funds, which
manage assets of Rs.153108 crores under 421 schemes.
Structure of the Indian mutual fund industry
The Indian mutual fund industry is dominated by the Unit Trust of India, which has a
total corpus of Rs700bn collected from more than 20 million investors. The UTI has
many funds/schemes in all categories i.e. equity, balanced, income etc with some being
open-ended and some being closed-ended. The Unit Scheme 1964 commonly referred to
as US 64, which is a balanced fund, is the biggest scheme with a corpus of about
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
27/76
Rs200bn. Most of its investors believe that the UTI is government owned and controlled,
which, while legally incorrect, is true for all practical purposes.
The second largest category of mutual funds is the ones floated by nationalized banks.
Can bank Asset Management floated by Canara Bank and SBI Funds Management
floated by the State Bank of India are the largest of these. GIC AMC floated by General
Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of
the other prominent ones.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
28/76
The structure indicated by the new regulations is indicated as under:
A Mutual Fund Company of four separate entities, namely Sponsor, Trustee, AMC
(Asset Management Company) and Custodian.
SponsorThe sponsor is the promoter of the Mutual Fund and gets it registered with SEBI.Sponsor
appoints the trustees, custodians and the AMC with prior approval of SEBI, and in
accordance with SEBI regulations. The sponsor is required to contribute at least 40% of
the minimum net worth (Rs. 10 crore) of the Asset Management Company.
Trustee
In India, Mutual Funds are organized as trusts. The trust is created by sponsor, who isctually the entity interested in creating the Mutual Fund Business. The Mutual und, which
is a trust, is managed by a by a trust company or a Board of trustees.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
29/76
The Provisions of the Indian trust Act govern board of trustees and trust companies.
If the Trustee is a Company; it is also subject to the provisions of the Indian Companies
Act. The sponsor executes and registers a trust deed in favor of the trustees. SEBI
Regulations stipulate that the trustees are fully responsible for the compliance of theMutual Funds with SEBI regulations, and for the protection of the interest of the Mutual
Fund investors.
Asset Management Company
The trustees, on the advice of the sponsors, usually appoint the AMC. The trust deed
authorizes the trustees to appoint the AMC. The AMC is usually a private limited
company, in which the sponsors and their associates or joint venture partners are
shareholders. The AMC has to be a SEBI registered entity, and should have a minimum
net worth of Rs.10 crore. The trustees sign an investment agreement with the AMC,
which spells out the functions of the AMC. Though the trust is the Mutual Fund, the
AMC is its operational face. The AMC structures the Mutual Fund products, markets
them and mobilizes the funds of the investors, according to the mandate they receive
from the trustees. The fee is defined as a percentage of the funds managed by the AMC.
Against this fee, the AMC will bear all its operational expenses. Resultant profits wouldbe available for distribution to the sponsors.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
30/76
AMCs can be of following types:
AMCs owned by Banks.
AMCs owned by Financial Institutions.
AMC s owned by Indian Private Sector Companies.
AMCs owned by Foreign Institutional Investors.
AMCs owned by Indian & Foreign Sponsors.
Custodians
Custodians are responsible for the securities held in the Mutual Funds portfolio. They
ensure that securities that are bought are delivered and transferred to the books of the
Mutual Funds, and that Funds are paid out when a Mutual Fund buys securities.
Custodians also track corporate actions like bonus issues, right offers, offer for sale, buy
back & open offers for acquisitions.
Why invest through a Mutual Fund
Affordability: Mutual funds allow you to start with small investments. For example,
if you want to buy a portfolio of blue chips of modest size, you should at least have a few
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
31/76
lakhs of rupees. A mutual fund gives you the same portfolio for meager investment of Rs
1,000-5,000. A mutual fund can do that because it collects money from many people and
it has a large corpus.
Professional management: The major advantage of investing in a mutual fund is
that you get a professional money manager for a small fee. You can leave the investment
decisions to him and only have to monitor the performance of the fund at regular
intervals.
Diversification: Considered the essential tool in risk management, Mutual Funds makes
it possible for even small investors to diversify their portfolio. A mutual fund can
effectively diversify its portfolio because of the large corpus. However, a small investor
cannot have a well-diversified portfolio because it calls for large investment. For
example, a modest portfolio of 10 blue-chip stocks calls for a few a few thousands.
Convenience: Mutual funds offer tailor-made solutions like systematic investment
plans and systematic withdrawal plans to investors, which is very convenient to investors.
Investors also do not have to worry about the investment decisions or they do not have to
deal with their brokerage or depository, etc. for buying or selling of securities. Mutual
funds also offer specialized schemes like retirement plan, childrens plan, industry
specific schemes, etc. to suit personal preference of investors. These schemes also help
small investors with asset allocation of their corpus. It also saves a lot of paper work.
Cost effectiveness: A small investor will find that a mutual fund route is a cost
effective method. AMC fee is normally 2.5% and they also save a lot of Transaction costs
as they get concession from brokerages. Also, they get the service of a financial
professional for a very small fee. If they were to seek a financial advisor's help directly,
they may end up pay more. Also, the size of the corpus should be large to get the service
of investment experts, who offer portfolio management.
Liquidity: You can liquidate your investments anytime you want. Most mutual funds
dispatch checks for redemption proceeds within two or three working days. You also do
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
32/76
not have to pay any penal interest in most cases. However, some schemes charge an exit
load.
Tax breaks: You do not have to pay any taxes on dividends issued by mutual funds.
You also have the advantage of capital gains taxation. Tax-saving schemes and pension
schemes give you the added advantage of benefits under Section 88. Investments up to Rs
10,000 in them qualify for tax rebate.
Transparency: Mutual funds offer daily NAVs of schemes, which help you to
monitor your investments on a regular basis. They also send quarterly newsletters, which
give details of the portfolio, performance of schemes against various benchmarks, etc.
They are also well regulated and SEBI monitors their actions closely.
DISADVANTAGES
Costs Despite Negative Returns
Investors must pay sales charges, annual fees, and other expenses (which we'll
discuss below) regardless of how the fund performs. And, depending on the timing of
their investment, investors may also have to pay taxes on any capital gains
distribution they receive even if the fund went on to perform poorly after they
bought shares.
Lack of Control
Investors typically cannot ascertain the exact make-up of a fund's portfolio at any
given time, nor can they directly influence which securities the fund manager buys
and sells or the timing of those trades.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
33/76
Price Uncertainty
With an individual stock, you can obtain real-time (or close to real-time) pricing
information with relative ease by checking financial websites or by calling your
broker. You can also monitor how a stock's price changes from hour to hour or even
second to second. By contrast, with a mutual fund, the price at which you purchase or
redeem shares will typically depend on the fund's NAV, which the fund might not
calculate until many hours after you've placed your order. In general, mutual funds
must calculate their NAV at least once every business day, typically after the major
U.S. exchanges close.
Association of Mutual Funds of India (AMFI)
With the Increase in Mutual und players in India, a need for Mutual fund association was
generated to function as a non-profit organization. Association of Mutual Fund of India
(AMFI) was incorporated on 22nd August 1995.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
34/76
AMFI is governed by a board of directors elected from Mutual Funds and its headed by
a full time chairman.
AMFI is not a registered SRO (Self Regulatory Organization), and therefore can only
issue guidelines to members. It cannot enforce regulation. However, in order to enable
orderly growth of the industry, and bring about uniformity and standards in practice, most
members tend to abide by the guidelines.
Objectives of AMFI
To define and maintain high professional and ethical standards in all areas of
operation of Mutual fund industry.
To recommend and promote best business practices and code of conduct to be
followed by members and others engaged in the activities of mutual fund and
asset management including agencies connected or involved in the field of capital
markets and financial services.
To interact with the Securities and Exchange Board of India (SEBI) and to
represent to SEBI on all matters concerning the mutual fund industry.
To represent to the Government, Reserve Bank of India and other bodies on all
matters relating to the Mutual Fund Industry.
To develop a cadre of well-trained Agent distributors and to implement aprogramme of training and certification for all intermediaries and other engaged
in the industry.
To undertake nation wide investor awareness programme so as to promote proper
understanding of the concept and working of mutual funds.
To disseminate information on Mutual Fund Industry and to undertake studies and
research directly and/or in association with other bodies.
SEBI Code of Conduct for Intermediaries of Mutual
Funds
Take necessary steps to ensure that the clients' interest is protected
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
35/76
Adhere to SEBI Mutual Fund Regulations and guidelines related to selling,
distribution and advertising practices. Be fully conversant with the key provisions
of the offer document as well as the operational requirements of various schemes.
Provide full and latest information of schemes to investors in the form of offer
documents, performance reports, fact sheets, portfolio disclosures and brochures,
and recommend schemes appropriate for the client's situation and needs.
Highlight risk factors of each scheme, avoid misrepresentation and
exaggeration, and urge investors to go through offer documents/key information
memorandum before deciding to make investments.
Disclose all material information related to the schemes/plans while canvassing
for business.
Abstain from indicating or assuring returns in any type of scheme, unless the
offer document is explicit in this regard.
Maintain necessary infrastructure to support the AMCs in maintaining high
service standards to investors, and ensure that critical operations such as forwarding
forms and cheques to AMCs/Registrars and dispatch of statement of account and
redemption cheques to investors are done within the time frame prescribed in the
offer document and SEBI Mutual Fund Regulations.
Avoid colluding with clients in faulty business practices such as bouncing
cheques, wrong claiming of dividend/redemption cheques, etc.
Avoid commission driven malpractices such as:
(a) recommending inappropriate products solely because the intermediary is getting
higher commissions there from.
(b) Encouraging over transacting and churning of mutual fund investments
to earn higher commissions, even if they mean higher transaction costs and
tax for investors.
Avoid making negative statements about any AMC or scheme and ensure that
comparisons if any are made with similar and comparable products.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
36/76
Ensure that all investor related statutory communications (such as changes in
fundamental attributes, exit/entry load, exit options, and other material
aspects) are sent to investors reliably and on time.
Maintain confidentiality of all investor deals and transactions.
When marketing various schemes, remember that a client's interest and
suitability to their financial needs is paramount, and that extra commission or
incentive earned should never form the basis for recommending a scheme to
the client.
Intermediaries will not rebate commission back to investors and avoid
attracting clients through temptation of rebate/gifts etc.
A focus on financial planning and advisory services ensures correct selling,
and also reduces the trend towards investors asking for pass back of
commission.
All employees engaged in sales and marketing should obtain AMFI
certification. Employees in other functional areas should also be encouraged
to obtain the same certification
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
37/76
Choice offered by a Mutual Fund to the Investor
Mutual Funds are investment portfolios that invest in financial market instruments. These
portfolios are created by pooling investor contributions, usually denominated in units.
There are a variety of ways in which Mutual Funds are created, to cater to the varied risk
and return requirements of investors. Depending on the investment portfolios that are
created, and the segments of the various markets in which funds are invested, there is
choices of funds to investor.
Mutual Funds can offer further Generic choices to the Investors interms of:
Nature of participation: Open or Closed ended Nature of Income distribution: Dividend, Growth, and Re-investment of
dividends.
Open-ended Funds/Schemes
These funds are sold at the NAV based prices, generally calculated on every business
day. These schemes have unlimited capitalization, Open-ended schemes do not have a
fixed maturity, i.e. there is no cap on the amount you can buy from the fund and the unit
capital can keep growing. These funds are not generally listed on any exchange.
Open-ended funds are bringing in a revival of the Mutual Fund industry, owing to
increased liquidity, transparency and performance in the new Open-ended funds
prompted by the private sector and foreign players.
Close-ended Funds/Schemes
Schemes that have stipulated maturity period, limited capitalization and the units are
listed on the stock exchange are called Closed-ended schemes. These schemes have
historically scene a lot of subscription. This popularity is estimated to be on account of
firstly, public sector Mutual Funds having floated a lot of Closed-ended income schemes
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
38/76
with guaranteed returns and secondly easy liquidity on account of listed on the stock
exchanges.
Dividend OptionInvestors, who choose a dividend option on their investments, will receive dividend from
the Mutual Fund, as and when dividends are declared. Dividends are paid in the form of
warrants, or are directly credited to the investors bank account.
In a normal dividend plan, periodicity of dividend is left to the Fund Managers, who may
pay annual or an interim dividend. Fund Managers decide the time of the payouts.
Mutual Funds provide investors the option of receiving dividends at pre-determined
frequencies, which can vary from daily, weekly, monthly, quarterly, half yearly and
annually. The NAV of these investors holding will vary with changes in the value of the
portfolio.
Growth Option
Investors who do not require periodic income distributions can choose the Growth
Option, where the incomes earned are retained in the investment portfolio, and allowed to
grow, rather than being distributed to the investors. Investors with longer-term
investment horizons, and limited requirements for income, choose this option The
returned to the investor who chooses a Growth option is the rate at which his initial
investment has grown over the period for which he has invested in the Fund.
Re-investment Option
Mutual Funds also provide option to investors in the form of Re-investment. Investors
Re-invest the dividends that are declared by the Mutual fund, back into the Fund itself, atNAV that is prevalent at the time of Re-investment. In this option, the number of units
held by the investor will change with every Re-investment. The value of the units will be
similar to that under the dividend option.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
39/76
Types of Fund
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
40/76
Classification on the Basis of Structure
Open-ended Funds
An open-end fund is one that is available for subscription all through the year. These do
not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset
Value ("NAV") related prices. The key feature of open-end schemes is liquidity.
Closed-ended Funds
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can
invest in the scheme at the time of the initial public issue and thereafter they can buy or
sell the units of the scheme on the stock exchanges where they are listed. In order to
provide an exit route to the investors, some close-ended funds give an option of selling
back the units to the Mutual Fund through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that at least one of the two exit routes is provided to the
investor.
Interval Funds
Interval funds combine the features of open-ended and close-ended schemes. They are
open for sale or redemption during pre-determined intervals at NAV related prices
By Investment Objective
Growth Funds
The aim of growth funds is to provide capital appreciation over the medium to long-
term. Such schemes normally invest a majority of their corpus/amount in equities. It has
been proven that returns from stocks, have out performed most other kind of investments
held over the long term. Growth schemes are ideal for investors having a long-term
outlook seeking growth over a period of time.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
41/76
Income Funds
The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate debentures
and Government securities. Income Funds are ideal for capital stability and regular
income.
Balanced Funds
The aim of balanced funds is to provide both growth and regular income. Such schemes
periodically distribute a part of their earning and invest both in equities and fixed income
securities in the proportion indicated in their offer documents. In a rising stock market,
the NAV of these schemes may not normally keep pace, or fall equally when the market
falls. These are ideal for investors looking for a combination of income and moderate
growth.
Money Market Funds
The aim of money market funds is to provide easy liquidity, preservation of capital and
moderate income. These schemes generally invest in safer short-term instruments such as
treasury bills, certificates of deposit, commercial paper and inter-bank call money.
Returns on these schemes may fluctuate depending upon the interest rates prevailing in
the market. These are ideal for Corporate and individual investors as a means to park
their surplus funds for short periods.
Speciality / Sectoral funds
These funds invest in securities of a specific industry or sector of the economy such as
health care, technology, leisure, utilities or precious metals. The fund enables investors to
diversify holdings among many companies with in an industry, a more conservative
approach then investing directly in one particular company.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
42/76
Sector fund offers the opportunity for sharp capital gains in cases where the funds
industry is in Favor but also in entailed the risk of capital losses when the industries out
of favor. While Sector funds restrict holdings tom a particular industry, other specialty
funds such as Index funds gives investors a broadly diversify portfolio and attempt to
mirror the performance of various market averages, Index Funds generally buy share in
all the companies composing the BSE Sensex or NSE Nifty or other stock market indices.
Load or No-Load Funds
A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each
time one buys or sells units in the Funds, 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 charged is 1 %, then the investors who buy would
be required to pay Rs.10.10 and those who offer the units for repurchase to the Mutual
Fund will get only Rs.9.90 per unit. The investor should take the loads into consideration
while making investment as these affect their yields/returns. However, the investor
should also consider the performance track record and service standards of the Mutual
Funds, which are more important. Efficient funds may give higher returns in spite of
Loads.
A No-Load Fund is one that does not charge for entry or exit. It means investors can
enter the fund/scheme at NAV and no additional charges are payable on purchase or sale
of units.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
43/76
Other Schemes
Tax Saving Schemes
These schemes offer tax rebates to the investors under specific provisions of the Indian
Income Tax laws as the Government offers tax incentives for investment in specified
avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension
Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also
provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing
in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the
amount is invested before September 30, 2000.
Special Schemes
Industry Specific Schemes
Industry Specific Schemes invest only in the industries specified in the offer document.
The investment of these funds is limited to specific industries like InfoTech, FMCG, and
Pharmaceuticals etc.
Index Schemes
Index Funds attempt to replicate the performance of a particular index such as the BSE
Sensex or the NSE 50.
Sectoral Schemes
Sectoral Funds are those, which invest exclusively in a specified industry or a group of
industries or various segments such as 'A' Group shares or initial public offerings.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
44/76
Life cycle of mutual fund
Life CycleStage
Financial Needs Ability toInvest
Choice ofInvestmentProducts
ChildhoodStage
Taken care of byparents
Investmentof
Gifts
Long Term
YoungUnmarried
Immediate &Short Term
Limited dueto higherSpending
Liquid plans &Short termInvestment.
Some exposure toEquity and
Pension products.
YoungMarried
Short&Immediate term
Housing &Insurance
Needs.Consumer
financial need.
Limited dueto
Higherspending.Cash flow
requirements are
also limited
Medium to Longterm
Investments. Abilityto
take risks fixedIncome, insurance &
Equity products.
YoungMarried
withChildren
Medium To Longterm
Needs. ChildrensEducation.Housing &Consumer
financeHousing.
Limited,FinancialPlanning
needsare highest
asthis stage is
idealfor
discipliningSpending &
Savingregularly
Medium to Longterm
Investments. Abilityto
take risks. Portfolioof
Products, for growth&
long term
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
45/76
Married witholder
Children
Medium termneeds forChildrens
education andmarriage. Need
for pension,Insurance &
Medical cover.
Highersavingratios
recommended.
Requirementfor
intermittentcash
flows higher.
Medium termInvestment with high
Liquidity needs.Portfolio of products
including equity,
debt & Pension plans
Post Family /Pre-
retirementstage
Ensuringadequate Incometo pressure the
standard ofliving, Postretirement
AdequateIncome
& Savings.
MaximumInvestment
in Pension products.
RetirementStage
Short to Mediumterm
LowerSaving,Ratios,Higher CashFlow
Medium termInvestments.Preference for liquid&Income Pro
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
46/76
Some of the AMCs operating currently are:
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
47/76
Justification of Study
Name of the AMC Nature of ownership
Alliance Capital Asset Management (I) Private Limited Private foreign
Birla Sun Life Asset Management Company Limited Private IndianBank of Baroda Asset Management Company Limited Banks
Bank of India Asset Management Company Limited Banks
Can bank Investment Management Services Limited Banks
Cholamandalam Cazenove Asset Management Company Limited Private foreign
Dundee Asset Management Company Limited Private foreign
DSP Merrill Lynch Asset Management Company Limited Private foreign
Escorts Asset Management Limited Private Indian
First India Asset Management Limited Private Indian
GIC Asset Management Company Limited Institutions
IDBI Investment Management Company Limited Institutions
Indfund Management Limited Banks
ING Investment Asset Management Company Private Limited Private foreign
J M Capital Management Limited Private Indian
Jardine Fleming (I) Asset Management Limited Private foreign
Kotak Mahindra Asset Management Company Limited Private Indian
Kothari Pioneer Asset Management Company Limited Private Indian
Jeevan Bima Sahayog Asset Management Company Limited Institutions
Morgan Stanley Asset Management Company Private Limited Private foreign
Punjab National Bank Asset Management Company Limited Banks
Reliance Capital Asset Management Company Limited Private Indian
State Bank of India Funds Management Limited BanksShriram Asset Management Company Limited Private Indian
Sun F and C Asset Management (I) Private Limited Private foreign
Sundaram Newton Asset Management Company Limited Private foreign
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
48/76
Every one wants to invest in the Stock Market. In order to directly investing in the Stock
market there is a need of high amount of money for the purpose of construct a portfolio
and also good knowledge about the stock market otherwise there can be chances of
losses. Generally very few people have big amount of capital and good knowledge of
Stock market to overcome this problem Mutual fund was introduced.
People prefer to invest through Mutual funds because in this they get the facility of
Low investment is possible
Professionally managed portfolio
Facility of portfolio even with the small amount of investment
Diversification
I have undertaken Close ended Equity Dividend Mutual fund topic. So as to analysis the
reasons for buying and selling of those stocks even when these fund are not listed on
stock exchange & to know the various income generated by the fund after the investment.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
49/76
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
50/76
OBJCTIVES OF THE STUDY
Main objectives:
To analyses the performance of SUNDRAM BSP, DSB BLACK ROCK, RELIGARE
mutual fund with different analytical tools.
Sub objectives:1. To know about the various types of close ended equity fund Schemes and
Different players working in Indian Market.
2. To analyze the various advantage and disadvantage related with the investment in
the stock market.
3. To analyze the guideline given to the fund houses regarding to the investment
4. To analyze the various rights available with the investor
5. To analyses the performance of DSP Black Rock, Sundaram BSP, Religaremutual fund with different analytical tools in comparison with nifty return
6. To analyze what could be the different steps in investing the money in the mutual
fund.
.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
51/76
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
52/76
Literature Review
The literature review includes the academic books, journals, internet access, magazines
etc.
ICFAI reader1- Mutual fund distribution channel- In this I gathered the
information about the various parties involved in mutual fund transaction. It
guided me to know about the growth of the various schemes of Mutual Fund over
the last few years.
Economic & political weekly2 April-2006 It helped me to know about the
trends of mutual fund industry. Some data regarding this has been taken from it.
Gupta S.P.3. The information regarding the statistical tools and their
limitations in different fields the research is given in this section. This section
explains why to use correlation and what are the situations in which correlation
can be used, and what does correlation means.
Schaums: Statistical Methods4- Sultan Chand Publication The information
regarding the statistical tools and their limitations in different fields the research is
given in this section. This section explains why to use trend analysis and what are
the situations in which correlation can be used, and what does correlation means.
Fisher & Jordan5: Security Analysis & Portfolio management-this book has
been used to calculate the indices on which basis the ranking has been given.
Pandian Punitawathy6: Security Analysis & portfolio management: This
book helped in understanding the concept of different indices for portfolio
evaluation.
Beri G.C.7- Marketing Research 3rd edition: This book helped in
understanding the different research designs and analytical tools used here.
Kothari C.R.8 The information regarding the basics of research and research
methodology , what are the different types of research designs, what is problem
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
53/76
statement, what are the sources of data collection and what are the methods of
data collection is given in this section
Pandey I.M.9-Financial Management by Vikas Publishing House the concept
of mutual funds & various schemes have been studied from this book.
Srivastva10: Management of Indian Financial Institutions-Himalaya
Publishing House 6th edition. Introduction of mutual funds, their advantages,
disadvantages and various types have been taken from it.
Indian journal of commerce11-jun, 2006: In this article they shows the
growth of the mutual fund in India is given
Southern Economist12 Sep.2006: In this the performance of the mutual fund
was given.
Journal of finance13-feb, 2006: In this the various schemes offered by the
mutual fund houses were given.
Facts for you14-jan, 2006: In the information about the risk and return was
given.
The Management Accountant15 - April 2005: In this article related to the
benefit related to the mutual fund as comparison to the fixed deposits in he Banks
was given.
Southern Economist16 - December 15, 2005: In this the portfolio of the
different Mutual fund houses was given.
SEBI Bulletin 17 July, 2005: In the Asset Management of the different
mutual fund houses was given.
Charter financial analysis18-jan, 2007: In this information about the various
Analytical tools was given
Journal of finance19-dec, 2005: In this the fund size of the different Mutual
fund was given.
ICFAI reader20-july2006, Feb 2006: In this information about the Entry and
Exit load was given.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
54/76
Websites visited:
http://www.amfiindia.com/showhtml.asp?page=aboutusa-This site explained the
information regarding various mutual funds and its growth in past years.
www.mutualfundsindia/navreports.jspb It provided me the data
regarding various parties involved in mutual funds and
investment pattern of public and private sector mutual funds
http://www.amfiindia.com/navtypereport.asp#Type10c Data regarding NAVs on
different dates has been taken from this site.
www.financeindiamart.comd- Different expert comments have
been extracted & the mechanism of mutual funds has been
taken from this site
.http://www.hdfcfund.com/navcorner/index.jspe This site
provided information regarding managing of funds by the
investors and investment criteria in different funds
http://www.tatamutualfund.com/aboutus/index.jspf--- This site
provided information regarding Tata mutual fund such as history
of Tata mutual fund, portfolio etc
http://www.utimutualfund.com/aboutus/index.jspg-- This site
provided information regarding UTI Mutual fund such as history,
portfolio, board of director etc
http://www.valuereserachonline.com/history/ index.jsp-- This site
provided information regarding nifty index. This site provided
past year of return nift.
http://www.amfiindia.com/showhtml.asp?page=aboutushttp://www.mutualfundsindia.com/http://www.mutualfundsindia.com/http://www.mutualfundsindia.com/http://www.amfiindia.com/navtypereport.asp#Type10http://www.financeindiamart.com/http://www.hdfcfund.com/navcorner/index.jsphttp://www.tatamutualfund.com/aboutus/index.jspf---http://www.tatamutualfund.com/aboutus/index.jspf---http://www.tatamutualfund.com/aboutus/index.jspf---http://www.utimutualfund.com/aboutus/index.jspg--http://www.utimutualfund.com/aboutus/index.jspg--http://www.utimutualfund.com/aboutus/index.jspg--http://www.amfiindia.com/showhtml.asp?page=aboutushttp://www.mutualfundsindia.com/http://www.amfiindia.com/navtypereport.asp#Type10http://www.financeindiamart.com/http://www.hdfcfund.com/navcorner/index.jsphttp://www.tatamutualfund.com/aboutus/index.jspf---http://www.utimutualfund.com/aboutus/index.jspg-- -
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
55/76
Sundaram BNP Paribas AssetManagement Co Ltd.
Sundaram Asset Management Company Limited is a public limited company
incorporated under the Companies Act, 1956 with a paid up capital of Rs. 15
crores. It is a wholly owned subsidiary of Sundaram Finance Limited. It has been
appointed Investment Manager vide Investment Management Agreement (IMA)
dated August 24, 1996 executed between the trustees and the AMC. Sundaram
Finance Limited is the Sponsor for the Mutual Fund and Sundaram Finance
Trustee Company Ltd. is the trustee.
No. of schemes 43
No. of schemes including options 160
Equity Schemes 31
Debt Schemes 106Short term debt Schemes 14
Equity & Debt 5
Money Market 0
Gilt Fund 2
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
56/76
Corpus under management
Rs.14794.08 Crs. as on Aug 31, 2009
Key Personnel
D.N. Ghosh (Chairman)
T.P. Raman (CEO)
T S Sritharan (Hd of Operation),
P.Sundararajan(Compliance
Officer)
S.Balasubramanian (IRO)
Dr. Ashoke Bijapurkar (Director),
Mr. T.N. AnantharamaIyer
(Director)
.
Fund Managers
Satish Ramanathan
Dheeraj Singh
K Ramkumar
J. Venkatesan
Mr. S Krishnakumar
N Prasad, Rahul Pal
Srividhya Rajesh
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
57/76
DSP Black Rock InvestmentManagers Pvt. Ltd.
DSP BlackRock Investment Managers Ltd. is the investment manager to DSP
BlackRock Mutual Fund. The philosophy of DSP BlackRock Investment
Managers Ltd. has been grounded in the belief that experienced investment
professionals, using a disciplined process and sophisticated analytical tools, can
consistently add value to client portfolios. DSP BlackRock Investment Managers
Ltd. takes a three dimensional approach to the management of the organization,
incorporating functional, product and regional elements in support of clients goals.
The functional dimension looks at the company s operations by specific task, such
as portfolio management, account management or operations. The product
dimension brings together the cross-disciplinary expertise critical to managing
client assets in each class. Finally, the regional aspect of the company s model
recognizes the unique, geography-specific needs of clients as well as the
importance of local regulatory issues.
No. of schemes 25
No. of schemes including options 96
Equity Schemes 25
Debt Schemes 44
Short term debt Schemes 12
Equity & Debt 2
Money Market 0
Gilt Fund 6
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
58/76
Corpus under management Rs.15902.556 Crs. as on Sep 30, 2009
Key Personnel
S. Naganath (President & CIO),
Anup Maheshwari (head equities and
corporate strategy),
Dhawal Dalal (Senior VP and Head-
Fixed income),
Apoorva Shah (Senior VP and fund
manager),
Ramamoorthy Rajagopal (CAO)
Fund Managers
Aniruddha NahaAnup Maheshwari
Aseem Gupta
Dhawal DalalMayana Sobti Rajani
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
59/76
Religare Asset ManagementCompany Limited
Religare Asset Management is promoted by the Religare Group, one of the leading
integrated financial services groups in India. The businesses of the Religare Group
extend across three key verticals; the Retail, Institutional and Wealth spectrums,
catering to a diverse and wide base of clients. Religare, with its pan India and
global footprint, offers a diverse bouquet of investment offerings and financial
services.
No. of schemes
23
No. of schemes including options 86
Equity Schemes 26
Debt Schemes 38
Short term debt Schemes 11
Equity & Debt 0
Money Market 0
Gilt Fund 11
Corpus under managementRs.8618.52 Crs. as on Apr 30, 2009
Key PersonnelMr Saurabh Nanavati (CEO),
Mr Ketan Ugrankar (COO)
Mr Suresh Jakhotiya (Comp)
Mr. Surinder Singh Negi (ISO),
Ashish Nigam (Hd FI),
Vetri Subramanium( Hd Eq).
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
60/76
Fund ManagersMr. Pradeep Kumar
Ashish Nigam
Mr. Vetri Subramaniam
Mr. Vinay Paharia
Nitish Sikand
Umesh Sharma
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
61/76
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
62/76
RESEARCH METHODOLOGY
Research is commonly refers to the search for knowledge. It is the scientific and
systematic search for pertinent information on a specific topic. In fact research is an art of
scientific investigation.
As by Clifford Woody: -Research comprises of defining and redefining the problems,
formulating hypothesis or suggesting solutions, collecting, organizing and evaluating the
data, making deductions and reading the conclusion and at last carefully testing the
conclusion to determine whether they fit formulated hypothesis.
INTERPRETATION
ANALYSIS OF DATA
COLLECTION OF DATA
EXTENSIVE LITERATURE SURVEY
FORMULATION OF RESEARCH PROBLEM
RECOMMENDATION
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
63/76
RESEARCH DESIGN
A research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in
procedure.
The research design with help to answer the following questions:
Why the study is being made?
From where the data needed could be collected?
What time is required for the study to be competed & how much material is
needed?
What will be the technique for data collections?
How the data can be analyzed?
Research Design can be categorized as:
TYPES OF RESEARCH
DESIGN
EXPLORATORY
RESEARCHDESIGN
DESCRIPTIVE
&DIAGNOSTIC
RESEARCH DESIGN
EXPERIMENTAL
RESEARCH DESIGN
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
64/76
Research design in study: -
In the study I will apply descriptive research design. As descriptive research
design is the description of state of affairs, as it exists at present. In this type of
research the researcher has no control over the variables, he can only report what
ahs happened or what is happening.
DATA COLLECTION
After the research problem has been identified and selected the next step is to
gather the requisite data. While deciding about the method of data collection to be
used for the researcher should keep in mind two types of data VIZ. primary and
secondary
.
Data has been collected from secondary source.
The secondary data as it has always been important for the completion of any
report provides a reliable, suitable, adequate and specific knowledge. The standard
cost reports, working sheets provide the knowledge and information regarding the
relevant subjects.
TYPES OF DATA
PRIMARY
DATASECONDRY
DATA
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
65/76
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
66/76
ANALYTICAL TOOLS
MEASURE FOR SHARPE'S PORTFOLIOS PERFORMANCE
The Sharpe's index measures the risk premium of the portfolio relative to the total
amount of risk in portfolio. The Sharpe's index is measured as:
S = rP rf/ pWhere,
S = Sharpe's Index
rp= Average monthly return of fund. rf= risk free return *.
* Risk free return (rf) is taken as 7.73% per annum
TREYNOR'S PERFORMANCE MEASURES FOR PORTFOLIOS
Jack Trey nor, as measures by portfolio beta coefficients put an index of portfolio
performance that is based on systematic risk, forward. It is used to rank the interest
performance of different assets. It is a risk - adjusted rate of return measure than is
calculated by dividing the assets risk premium by their beta coefficient.
Tn =rP rf/ pWhere
Tn = Treynor's index
rp = average return on portfolio
rf = risk free return
p = beta coefficient of portfolio.
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
67/76
JENSEN MEASURE
The Sharpe and Treynor index models provide measures for ranking the relative
performance of various portfolios on a risk-adjusted basis according to Jensen
equilibrium average return on a portfolio would be a benchmark. Equilibrium average
return of the portfolio by the market with respect to systematic risk to portfolio should
earn with the systematic return.
Rp = + (rm - rf ) pWhere,
Rp= average return of the portfolio.
rf = risk free return
rm= average market return
= A measure of systematic
= Y-X
If the alpha is positive, the portfolio has performed better and if alpha is negative it
has not shown performance up to the benchmark, i.e. the market Index.
Standard Deviation: It is used to measure the variation in the individual return from
the average expected return over a certain period. Standard deviation is used in the
concept of risk of a portfolio of investment. Higher the Standard Deviation means a
greater fluctuation in expected return.
= (Y- Y)
N
Where, Y = fund returnBeta: Beta measures the systematic risk and show how price of security respond to
the market foresees. It is calculated by relating the return on security with return for
market.
= n XY ( x y) / n x (x)Where,
X =index return
Y = fund return
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
68/76
Alpha: It measures the stock unsystematic return and it is average return independent
of market return. It is calculated by comparing the funds actual performance with the
risk adjusted expected return.
= Y-XWhere,
X =index return
Y = fund return
PERFORMANCE EVALUATION OF DSB BLACK ROCK [ Equity Fund (D)
X(nifty) (X) Y(return) (Y) XY y y
-13.44 180.63 -26.25 689.06 352.8 -34.38 1181.98
30.47 928.42 22.65 513.02 690.14 14.52 210.8
14.48 209.6 17.01 292.41 247.60 8.88 78.85
3.47 12.04 8.24 67.89 28.51 .11 .012
-8.47 71.74 -4.25 18.06 35.99 -12.38 153.2
22.71 515.74 14.24 202.77 323.39 6.11 37.33
19.76 390.45 25.44 647.19 502.69 17.37 301.71
14.74 217.26 7.45 55.50 109.81 -.68 .46
X=86.93
(X) =2526.37
Y =65.09 (Y)=2486.69
XY=2305.44
y=0 y=1964.34
Table : analysis of sundram mutual fund
y=Y-YX =index returnY = fund return
n= no. of years
1 Beta
= n XY ( x y) / n x (x)
= 8*2305.44-86.93*65.09/8*2526.37-(86.93)=1.01
2 Standard Deviation
= y
n Where
Y =65.09/8
= 8-13
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
69/76
= 1964.34/8= 15.66
3 Alpha = Y-X
Y =28.01/8= 3.5
X =35.05/8
= 4.38
= 3.5-1.08*4.38= -1-23
4 Sharpe's index
S = RP Rf/ p
rf= 6.75%
p = 22.61RP= 3.5
Sp= 3.50-6.75/22.61= -.14
5 TREYNOR
Tn = rP rf/
p
= 1.08rf= 6.75%
RP= 3.5
Tn= 3.50-6.75/1.08= -3
6 JENSEN
Rp = + (rm - rf ) p
= 1.08rf= 6.75%
= -1.23rm = 4.38
Rp= -1.23+(4.38-6.75)*1/08=-3.78
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
70/76
PERFORMANCE EVALUATION OF SUNDRAM BSP Equity Fund
X(nifty) (X) Y(return) (Y) XY y y
-13.44 180.63 -20.40 416.16 268.26 -23.58 556.01
30.47 928.42 17.57 308.70 156.37 14.39 207.0714.48 209.6 9.82 96.43 141.89 6.64 44.08
3.47 12.04 8.38 70.22 45.41 5.2 27.04
-8.47 71.74 -1.8 3.24 4.86 -4.98 24.04
22.71 515.74 8.23 67.73 119.33 5.05 25.50
19.76 390.45 10.05 101 52.56 6.87 47.19
14.74 217.26 -6.35 40.32 14.60 -9.53 90.82
X=86.93
(X) =2526.37
Y =25.5 (Y)=1103.08
XY=803.27
0 y=1022.51
Table : analysis of DSB equity fundy=Y-Y
X =index returnY = fund return
n= no. of years
1. Beta = n XY ( x y) / n x (x)
= 8*803.27-25.5*86.93/8*30.17-(30.17) = 1.11.
2 Standard Deviation
= y
N
Where
Y =25.5/8= 3.18
= 1022.51/8= 3.99
3 Alpha = Y-XY =65.09/8
= 8.13X =86.96/8
= 10.86
= 8.13-1.01*10.86
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
71/76
= -2.83
4 Sharpe's index
S = RP Rf/ p
rf= 6.75%
p = 15.66RP= 8.13
Sp= 8.13-6.75/15.66
= .08
5 TREYNOR
Tn = rP rf/ p
= 1.01rf= 6.75%
RP= 8.13
Tn= 8.13-6.75/1.01
= 1.36
6 JENSEN
Rp = + (rm - rf ) p
= 1.01rf= 6.75%
= -2.83rm = 10.86
Rp= -2.83+(10.86-6.75)1.01
= 1.32
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
72/76
PERFORMANCE EVALUATION OF RELIGARE Fund
X(nifty) (X) Y(return) (Y) XY y y
-13.44 180.63 -26.36 694.84 520.34 -30.81 949.25
30.47 928.42 25.12 631.01 815.64 20.67 429.24
14.48 209.6 18.24 332.69 172.36 13.79 190.16
3.47 12.04 18.46 340.77 507.09 14.01 196.28
-8.47 71.74 -6.76 45.69 32.04 -11.21 125.66
22.71 515.74 12.60 158.76 245.32 7.61 57.91
19.76 390.45 13.16 173.18 71.98 8.71 75.86
14.74 217.26 -18.85 355.32 424.87 -23.3 542.89X=86.93
(X) =2526.37
Y =35.61 (Y)=2732.26
XY=2789.64
0 y=2567.25
Table : analysis of RELIGARE mutual fundy=Y-Y
X =index return
Y = fund returnn= no. of years
1 Beta
= n XY ( x y) / n x (x)
= 2789.64*8-(87.93*35.61)/8*86.93-(86.93) = .87
2 Standard Deviation
= y
n
Where
Y =35.61/8
= 4.45 = 2567.25/8
= 17.91
3 Alpha = Y-X
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
73/76
Y =35.61/8
= 4.45
X =86.93/8= 10.08
= 4.45-(-.87*5.91)
= -.69
4 Sharpe's index
S = RP Rf/ p
rf= 6.75%
p = 17.91
RP= 4.45
Sp= 4.45-6.75/17.91= -12.8
5 TREYNOR
Tn = rP rf/ p
= .87rf= 6.75%
RP= 4.45
Tn= 4.45-6.75/.87
= -2.646 JENSEN
Rp = + (rm - rf ) p
= .87rf= 6.75%
= -.69
rm = 5.91
Rp= -.69+(5.91-6.75).87= -1.42
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
74/76
Comparison of SUNDRAM,DSB,RELIGARE Equity Mutualfund schemes
1. Analysis of Fund On The Bases Of Sharpe's Index
MUTUAL FUND SHARPE'S INDEXDSB BLACK ROCK -1.4
SUNDRAM BSP 0.8
RELIGARE -12.8
Table 13: SHARPES index table
Chart 3: Sharpe's Index analysis
INTERPRETATION:
Sharpe shows the risk adjusted return. Higher the Sharpe Index better the fund. In this
case SUNDRAM Equity Fund has the maximum value i.e...8 in comparison to other
fund i.e.DSB Equity Fund and RELIGARE Fund. So we can say that the SUNDRAM
Equity Fund is the best fund amongst the three funds.
2.Analysis Of Mutual Fund On The Bases Of Treynor's Index
MUTUAL FUND TREYNOR'S INDEXDSB BLACK ROCK -.3
SUNDRAM BSP 1.36
RELIGARE -2.64
SHARPE'S INDEX
-1.40.8
-12.8
0
DSB
Equity
Fund (D)
S.BSP
Equity
Fund (D)
RELIGARE
Equity
PE Fund
NAV
SHARPE'S
INDEX
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
75/76
Table 14: TREYNORS Index table
Chart 4: Treynor's Index analysis
INTERPRETATION
This shows the risk adjusted return. In this case SUNDRAM Equity Fund
(D) have the maximum i.e. 1.36 index value in comparison to the other two
i.e. DSB Equity Fund and RELIGARE Equity Fund. So we can say that the
UTI Equity Fund is the best fund as it provides the maximum risk premium
in comparison to the other two funds
3. Analysis Of Fund On The Bases Of Jensen's Index
MUTUAL FUND JENSEN'S INDEXUTI Equity Fund (D) 21.1
HDFC Equity Fund (D) 28.26
Tata Equity PE Fund 38.84
TREYNOR INDEX
-.3
1.36
-2.64
0
DSB
Equity
Fund (D)
S.BSP
Equity
Fund (D)
RELIGARE
Equity
PE Fund
NAV
TREYNOR
INDEX
JENSEN INDEX
-3.78 -1.42
1.32
DSB
Equity
Fund
RELIGARE
Equity
Fund
Sundram
Equity
Fund
NA
V
JENSENINDEX
-
8/3/2019 Comparative Analysis of Close Ended Mutual Fund on the Basis of Return
76/76
Chart : Jensen's Index analysis
INTERPRETATION
This shows the risk adjusted return. In this case sundran Equity Fund have
the maximum i.e. 1.36index value in comparison to the other two i.e. DSB
Equity Fund and RELIGARE Equity Fund Fund. So we can say that the
SUNDRAM Equity is the best fund as it provides the maximum risk
premium in comparison to the other two funds