functioning of sbi mutual fund -...
TRANSCRIPT
CHAPTER - IV
FUNCTIONING OF SBI MUTUAL FUND
INTRODUCTlOh
PERFORMANCE. EVALUATION OF SBI MUTUAL FUND
PERFORMANCE EVALUATION OF SBI MUTUAL FUND SCHEMES BY
USING PERCENTAGE CHANGE IN NAV METHOD
PERFORMANCE EVALUATION OF SBI MUTUAL FUND SCHEMES BY
USING IRR
TREND ANALYSIS AND CURVE FITTING OF SBI MUTUAL FUND
SCHEMES BY USING METHOD OF REGRESSION ANALYSIS AND
LEAST SQUARE
COMPARISON OF SBI MUTUAL FUND RETURN WITH OTHER
ALTERNATIVES
PERFORMANCE EVALUATION OF SBI MUTUAL FUND SCHEMES ON
THE BASIS OF AVERAGE ANNUAL GROWTH
IMPLEMENTED OBJECTI'JES OF SBI MUTUAL FUND SCHEMES - AN
EVALUATION
FUND SIZE AND FUND PERFORMANCE
4.1 The basic objective of SBI Mutual fund is to provide a vehicle for investors
to avail of the opportunit~es offered by the capital market and money market. They
offer this opportun~ty even to the smallest nvestors in urban as well as rural areas
and offer an openlng to employ their funds profitably. At SBI Mutual Funds, the
emphasis is on performarice. Returns safety and liquidity packaged in different
forms are the three maln teatures, whict! tbey offer to the~r investors.
As on March 31"' 2001, the aggregate corpus of the 19 domestic schemes
of the fund stood at Rs :2 339 crores as ccmpared to Rs.2,079 crores as on March
3lS', 2000. The corresponding net asser value was Rs. 2,446 crores as on March
31,2001 compared to Rs 4,285 icrclres as on March 31, 2000.
During the year MRlS 93 ancl MMlS 91, both income funds, were
redeemed at Rs 13 45 and at par respectively MELS - 91 a tax saving scheme,
was redeemed on March 31 2001 at Rs 155 35 The fall in technology stocks has
been much hfgher and as the schemes were overwe~ght in technology sector they
have under performed
As on March 31, 2001, the number of investors in SBI Mutual Fund is 10.76
lakhs.
4.2 PERFORMANCE EVALUATION OF SBI MUTUAL FUND
The investor would naturally be Interested in tracking the value of his
investment. The investor snou~d acqutre the basic knowledge of technical terms
used in performance evaluatton The most common term used is Net Asset Value
or NAV.
NAV (Net Asset Value) Concept and Computation
NAV is one of the important factors. which decides the performance of a
mutual fund scheme I t is a quick measure to find the worth of Investments of a
mutual fund scheme on a articular date and is calculated separately for each
scheme For example. an NAV of Rs 120 (face value Rs.100) indicates that every
Rs 100 invested in the scheme is presently worth Rs.120-the fund Manager has
enhanced the value of investments by 2G per cent. NAV is the value the investors
wo~lld get if the fund were liquidated as on that date. The redemption price of a
mtjtual fund unit shall be decided on the basis of NAV. The funds, which are
offering the repurchase facility to the investors, decide the repurchase price on the
bass of NAV NAV of a mutual fund scheme is as important as Earning Per
Share (EPS) to a company's share. In short, NAV or Net Asset Value is the value
of a single unit. It is analogous to the book value of a share. NAV helps the
investor to assess the growth or decline in the value of his investment. The actual
gain or loss of an Investor depends on the NAV at the time of purchase versus
that of redemption for open-end fund and difference between purchase and sale
price for close-end fund.
The following are the accounting definitions of NAV laid down by SEBl
(Securities and Exchange Board of India)
NAV = Net Assets of the Scheme / No of units outstanding.
ie., Market Value of Assets -- Liabilities I No. of units outstanding
NAV +/- load, if any, IS the value at which a fund buys and sells units SEBl
has defined a 'load' as the one-time fee payable by the investor to allow the fund
to meet inltlal Issue expenseSj lncludlng brokers' / agents' / d~str~butorsl
commlsslons, advertlslng and marketlng expenses
PERFORMANCE MEASURES
4 2 1 CHANGE IN NAV- THE MOST COMMON MEASURE
If an investor wants to conlpute return on Investment between two dates.
he can simply use the Per Unit Net Asset Value at the beginning and the end
periods, and calculate the change in the value of NAV between the two dates in
absolute and percentage terms
Absolute Change In NAL' =: NAV at the end of the period - NAV at the
beginning of the period
Percentage change in NAV = N,4V at the end - NAV at the beginning x 100.
NAV change is most conirnonly used by investors to evaluate fund
performance, and so is also most commonly published by mutual fund Managers.
The advantage of thrs measure is that it is easily understood and applies to
virtually any type of fund.
4.2.2 T3TAL RETURN METHOD
Total return is arrived by adding d~vidend distributed by the fund between
the two NAV dates with NAV
Formula for Total Return =: (Distnbut~ons + Change in NAV) / NAV at the
beginning x 100.
This method is applicable to all funds especially interim dividend declared
fund or Income fund.
4.2.3 RETURN ON INVESTfvlENT CR TOTAL RETURN WITH DIVIDEND RE-
INVESTED A~T NAV
Return on Investmen; (ROI) 1s iomput~ng the total return with re-investment
of d~vidends in the fund itself at the Nf\LJ on the date of distribution
Formula for ROI = iUi-uts held + dividend on NAV x end NAV) - beginning
NAV I Beginning NAV k 100
This method I?, acceoted b, hAutuaI fund tracking agencies such as
Credence in Mumbai and Value Research in New Delhi. It is suitable for
measuring performance o i accumu!ati-.n plans. monthly / quarterly income
schemes and debt funds that distribute ~nterim dividends.
4.2.3 THE EXPENSE PATIO
The expense raric s an indicat.,r of the fund's efficiency and cost
effectiveness. It is defined as the ratio of total expenses to average net assets of
the fund. This method is suitable to the Bond Funds or Debt funds because its
income is spent an expenses
4.2.5 THE INCOME RATIO
A funds income ratlo 1s defined as 11s net investment income divided by its
net assets for the period
This ratio is a useful measure for evaluating income-oriented funds,
particularly debt funds
4.2.6 PORTFOLIO TURNOVEK RATE
Portfolio turnover rate measures the armount of buying and selling done by
a fund. It is defined as the lesser of assets purchased or sold divided by the
fund's net assets.
This method IS su~table in :he case of equity and balanced funds,
particularly those that derive a large part of their income from active trad~ng
The other evaluations of fund performance measures are Internal Rate of
Return and Benchmark~ng through the comparison of alternatives in investment
4 2 7 1NTERNP.L KATE OF RETURN METHOD (IRR METHOD)
IRR IS the rate \~hlch equates ttie present value of the cash Inflow from the
hold~ng of mutual fund unit3 to the acqu~slt~on cost The cash ~nflow Includes
dividends and !errnlnai price
Formula used b y s rnt t~ ia l fclrid which paid d~vidends on the scheme -
Where, F'o represents acquisition price per unit;
D,, Dz.. . . .Dn represents tne cash dividends received in respective year;
Pn represents the NAV and Repurchase PricelMarket Price as on March 31
'r' represents (wh~ch may be positive or negative) rate of return per rupee per
annum.
Formula used by a mutual fund scheme, which has not paid dividends
P Po = .i ( 1 + r)"
This method is popular in the valuation of debentureslbonds. The advantage of
this method is that it allows for additional inflow and oufflow of investment.
A fund's oerforniance can only be judged in relation to investor's
expectations. It 1s Important for the investor to define his expectations in relation
to certain 'guideposts' on what is possible to achieve, or moderate his
expectations with reallst~c Investment alternatives available to him in the financial
market. One of the benchmarks' to evaluate fund performance is to compare the
return on alternative Investments such as bank deposits, post office deposits etc.
4.3 PERFORMANCE EVALUATION OF SBI MUTUAL FUND SCHEMES BY
USING PERCENTAGE CHANGE IN NAV METHOD
NAV change 1s the popular metnod of evaluating fund performance
Percentage charge iri NAV for s particular year =(NAV at the end) - (NAV at
the beglnnlng) x 100 1 NAV at the beg~rrilng
The following table shows the performance evaluation of SBI Mutual Fund
Schemes from 1992 to 2001--01
Tal~le 4.1
Table Showing Scheme-wise Performance of SBI Mutual Fund for the year-1992 -. ---- ~~ - . -
Schemes Face value rk%as I
I k - ~ ~
NAV I
MRIS-89 -- ~ ~~ ~. --
MMIS-89
MMIS-91 1001- 97.70 110.42 12.72 13.00 - - -~ ~
MTSS-88-89 201.58 30.35 17.72
MTSS-90 141.73 47.07 ~- ~-.-
49.72 -
27.00
1 MEX-91 1 + - ~
11 43 14.3 - L--.-
- -~ ~ - 125.78
,~ - 25.78
MMS-90 14.61 17.01 I
MGIFTS-92 I
-5.30 -5.30 1
I 1 8-95.20 -4.80 -4.80 1 - _ . - - --
Source: SBI Mutual Fund Annual Report - 1992.
Table 4 1 shows that on the basis of percentage change in NAV, Magnum
Tax Saving Scheme 1990 (MTSS-90) shows good performance and Magnum
Growing Investment from Tax Saving Scheme-92 (MGIFTS-92A&B) and Magnum
Regular Income Scheme-89 (MRIS-89) shows poor performance during the yea1
Table show~rtg Scheme-w~se Performance of SBI Mutual Fund
clurlng the year 1993-94 I -T- - - . - - ~
Face Value 1 NAV a: on i
I
c ~- . ( 1.1.93 ~- - 1 31 3 94
I MRlS 89 I ! Rs. 1001..
- 4 ~~ ~
d-- 153.85 - 4 - . - &
48.53
I 1 MMlS 89 ; RS 1OOi- i 106 52 11824 1 11.72 1 I 1 1 1~ -. -
- ~
1 - _ _ - -
MRIS91 ::.- - ~ ~-~ ~
MRlS 93 ~ ~ -
MTPL 91 RsI00i- 125.78 -~ ~ ~-~ - -
168.56 42.78
MMS 90 / ~ s l O l - 1 23 22 +-- I I
MMPS 93 - -~
MTSS 90 -
MGIFTS 92A --- ~ ~~ ~
MGIFTS 92B Rs 1001- 41.24 - ~- ~~
MELS 91 Rs. 1001- 79.04 --- . ~ - -~
181 98 ~- ~ ~
261.02 43.0
MTGS 93 Rs 101- ~-
4.48 - 1 ~ ~ - 1-
44.8 --
Source: Annual Report of SBI Mutual Funds - 1993-94
During the Year 1993-94 all the schemes show good performance on the
basis of percentage change in NAV MMPS 93 (Magnum Multiple Plus Scheme
93) shows out performance when compared to other schemes.
Table 4.3
Table showing Scheme-wse Performance of SBI Mutual Fund for the year 1994-95 -~ ~ . - -~ ----
[ - - scheme - Face Val,)t3 , NAV as o r I NAV as on 7 Change in ' % ~ h a r i F
0 1 . 0 4 9 ~ i 31.03.95 I
I NAV 1 in NAV
- MMlS 89 1 RS 100i~ 107.59
-~ ~4 . -~ - I
MRlS 90 I Rs 1001~ 1
- i , ~ - MMlS 91 I 1, Rs 1001 ; 118 24 f ~ l 2 . 7 3
1 ~~
I
,o do -----
MRlS 93 , Rs ,131~ I I
10.00
. ,- -. - - MBF 94 I R S i 0 / ~ I .
---- -- - - I -
MTPL 91 I Rs IOOi-~ 1 6 8 . 5 6 1 - 173.48- 4.92 I , -~ ~
I-- ~- MMS 90 RS 101- 23.22. ( 18.46 -4.76
~- ~ ~ ~- - - - MEX 91 Rs 1Oi- ! 16.01 I-- 14.61 -1.4
""7 -8.74
<
MMPS 93 Rs 101- 1 5 . 5 ' 14.31 -1.16 -7.49
MGF 94 Rs 101- 8.77 - ~~~, ~~ -
M T S S 90 -T-~-RS i ooi ' 170.151 171.14 0.99
.
MELS Rs 10Qi- ' ,261 0 2 7 220.69 -40.33 I
, ~~
Rs 1001- 124.331 11 1 4 9 -12.84
-8 27
13.16 -1 3 2 ~ .-
1 0 0 10.44 0.44
-
0.58
- -15.45
- -1 0
-6.06 -~ -
-9.1 1
4.4
Source: Annclal Report of SBI Mutual Fund - 1994 -95
Table shows that durlng the year 1994-95 all the schemes except Magnum Triple Plus 91 (MTPL-91) have unde~r performed
'Table 4.4
Table showfrlg Scheme-w~se Performance of SBI Mutual Fund
for the year 1995-96
1 Scheme Face NAV as on 1 NAV as on ; Change I
In 1 % Change / I 1 MMlS 89 Rs 4 0 0 1 - 107.59
~,~ ~- 96.72 , ;
' -1087 ----
MMlS 91 i ~~
1 - - -- _ 9.09
7- -- MBF 94 / RS 10: 9.11 1 -0.89 -8.9
~- -
10.00 . - -
' --
:""1 *I f . . . ~ " , 173.48 .- __ . -. ! 166.06
MMS 90 Rs.101- 1 18.46 14.57 - * . - -
I MEX 91 RS 101 14.61 ! 1217 -2.48 -16.65 - ~
. ~~ ~
I I MMPS 93 a s 101- -1.14
MGF 94 1 R . 1 8.77 1 7.43 1 -1.34 1 -15.27 1 - ~- - .~ ~ - , ~
&9(. 100! 1 220.69 178.40 -42.29 -19.16 - . t
MGIFTS 92A I Rs. 100;- 111.49 -- .- - . 1 - - i MGIFTS 92 B Rs. 1001 128.17
- I ~~ ~~ - ~ - - - -
MTGS 93 Rs 101- 13.16 10.48 -20.74 ----- 1 - , 4 . .- -2.73
MTPS 94
MELS 95 1 0.00 * ~-
MOF 95 --
10.39
Source : Annual Reporl of SBl mutual fund - 1995-96
In the year 1995-96 also all schemes have under performed. Percentage
change in Net Asset value of all the stxteen schemes is negative.
Table 4 5
Table show~ng Scheme-wise Performance of SBI Mutual Fund for the year 1996-97 I -- .
~~~~ ~ I - . - - -- - - -- / Scheme Face value ~ N A V as on NAv as on r-- Change In T c G 1
-- --- , ~~~ ~.
I - .
MMlS 89 - - - -
! Rs. 1001- 69.32 I 82.60 +~ . ~
, - 1 - + - -~ ------ -16.07
I -- -
MMlS 91 I Rs. 1001- 78.88 ! 90.40 1 - 1 1 5 2 -12.74 - - - 7~~ - ~ ~ -.-, ---
MRlS 93 ( Rs. 101- 8.9'2 I - . - - . -'-I-~
MBF 94 8.54 8.56
172.77 MTPL 91 --IRS lo'-
~- ) Rs 1001- , 1 264.07 - t - ~ - - - * - ~-
MMS 90 -~ -
I 12.89 -2.4 -18.61
MMPS 93 -- - ---
MGF 94 Rs. 101- -0.42 -5.66
MELS 91 W- 155.71 -13 55
MGIFTS 92 - A Rs. 1001- -5.24 ~- ~.
MGIFTS 92 - B Rs. 1001- 101.73 -1 1 03 -9.78
-
-1 1.3
MOF 95 Rs. 101- 10.82 10.37 0.45 0.43 -.I --
Source : Annual Repori of SBI Mutual Fund - 1996-97
During 1996-97 as in the previous year all the schemes except Magnum
Triple Plus 91 (MTPL-91) shows a negative trend and have under performed
The year 1996-97 witnessed entry of some of the foreign funds into the
Mutual Fund lnduslrl Thus the competition in the Mutual Fund l n d ~ ~ t r y has
intensified and there 1s expected to be a shake out in the industry
Table show~ng Scheme-wise Performance of SBI Mutual Fund for the year 1997-98 , - ,
1 Scheme I
Value L---- ~ f
MOF 95 Rs. 101 10 75 10.82 -0.07 - ~ ~ - ~ .
-0.64
-- MELS 91 155.71 1.58 1.01
92.12 4.99
~
101.73 -~
3.35 3.29 t- ~
MTGS 93 Rs lo/- -- - --
MTPS 94 Rs 101-
MELS 95 1 Rs 10i-
MELS 96 RS 101- _ -
Source : Annual Report of St31 Mutoai Fund - 1997-98
During 199'7-98 performance was better than it was during the three
previous years. Majority of the schemes out performed and only Magnum Multiple
Plus Scheme 93 (MMPS - 93) and Magnum Open Fund (MOF - 95) shows under
performance
Table 4 7
Table showing Scheme-w~se Performance of SBI Mutual Fund for the year 1998-99 -- _~ - . , Scheme I Face
I Value - 1
MMlS 91 Rs 100l ' 102.59 ~ , + ~~~~-
10.03 11.80 -. MRlS 93 R s 1 0 i I 11.69
~~ ~~
16.20 ;
MBF 94 j Rs 101- , 12.47 10.72 16.32 I
I--
&s:l;i,. ' ,
MMlS 97 . ~- -- -
1 9.46 , -~~ -- --
9.72 - -- , ~- --
0.57 5.7 - 10.00 0.36 3.6
MLlF 98 10.51 -
MTPL 91 + ~
45.13 23.32 '
1- MMS 90 RS. 101 j 16.49 11.02
L i 5.47 49.63
MMPS 93 Rs. 101- I
16.09 ! 11.76 +~ ~.
4.33 36.81 3-
9.57 7.63 1.94 . I .. 25.42
MOF 95 Rs. 101- 14.55 10.75 3.8 35.5
~~~ ~
~ ~
--
- MELS 91
. , -~ .~ 157.29 25.15 15.98
101.16 104.59
, ~ -~ 105.08 26.95 25.64
T
MTGS 93 -1 6.04 ' 10.12 5.92 58.49 , . . I
MTPS 94 Rs 101- ' 11.04 8.21 2.83 34.47 ~~ --
MELS 95 . - - -~ . - -
2.55 25.02 i
MELS 96 .
4.57 47.75
Source : Annual Repoti of SBI Mutual Fund - 1998-99
During 1998-99 all schemes of SBlMF outperformed especrally MGIFTS 92
A (Magnum Growing Investment from Tax Scheme 92 A) shows 104 59 per cent
change in NAV and Magriurn Tax Gain Scheme 93 (MTGS 93) recorded 58 49 per
cent IVAV change dunng the 1998-99
Table showtng Scheme-wise Performance of SBI Mutual Fund
for the year 1999-'00 ~ ~
SIN0 / Scheme
.
- .-
16 MSFU - 17
" CONTRA Rs 101- , ~ - -- -
I
Rs 1C101 ! 303 39 --- - -1- . -.
66.40
! 1 21. MGIFIS 92 A Rs 1001- 163 08 i 19788 1 134.02 - $ - - -- 1
265.2 1 1 1
MTPS 94 Rs. 101- 1 27.82 12.74 ~-
RS 101- 27.82 12.74
j Rs. 10i. 2898 13.73 -1 /L_-
Source: Annual Report of SBI Mlltua/ Fund - 1999-2000.
In the year 1999-2000 also there is good performance by all the schemes
except Magnum Monthly Income Scheme 91 (MMIS 91) and Magnum Sector
Fund Umbrella - Contra (MSFIJ - Contra) scheme. Out of the 26 schemes,
Magnum Tax Gain Scheme 93 (IVITGS 93) stands out with a performance of
228.30 per cent change in NAV
Table showing Scheme-wise Performance of SBI Mutual Fund for the year 2000-'01
1 NAV as on ' Value
1 31 03.01 1 01.04.00 f--- .; - - + - 4 MEF98
(MM90) ---- -
- -----.
3. MGF 94 ---- ~ .~ - - --
4 - - - -
5.
- -
.~
-52.62
13 65 52.66 -39.01 -74.07
8. 8.21 -10.31 -55.66 -.
9. MELS 95 RS 101 9 27 27.82 -18.55 -67.33 ~~~ --
10. MELS 96 Rs. 101- I I .96 28.98 -17.02 -58.73
MBALF95 11 Rs. 101- 9.79 25.48 -1 5.69 -61.57
- ~.- ~ -.-. ~
12 MMlS 97 Rs. 101- 1010 10.57 -0.4'7 -4.44 - --
10 03 11.57 -1.54 -13.31
14 Us 101- ~ ~ --- ~~
15. Rs. 101- I 0 21 10.34 - 0 13 -1.25 '3 C'
.- ~ - ~ - ~ - - ~ - !
r - - - -~ ,, ~ ~~ ~. ~ -~---a-
18. [;Divlder~d Rs. 101- ---- , 10.31
~~. - ~ - . --
19. MGF 99 ; Rs. 101- 7.94 16.36 -8.42 -51.46 , . . - - ~ - --
2 0 4 MSFU -IT Rs 101- ~~ - -
6.99 I . -~ ~ - ~ -
126.80 -19.81 -73.91
i FMCG I Rs. 101- 6 70 -38.46
t ' R s 101-
~ 1 ~~~ - . ~ . 2.04 18.59
I 123. 1 CONTRA I Rs 101- 7.88 , - --.-
k . 4 5 I -1.57 1 -16.67 A -- -
b. -- LMGSI RS. .; 01- .-- ~ I _ 1 _
Source: Annual Report of SBi Mutual Fund - 2000-2001.
During the year 2000-01, all schemes of SBI Mutual Fund except Magnum
Liqui Bond Insurance Fund 98 (MLIF 38) Growth Scheme and Magnum lnsta
Cash Fund 99 (MICF 99 Cash) Scheme shows under performance. This is
because of the UTI-US64 slash and fall on the technology stock. The fact that
schemes were oveweight in technology sector leads to under performance
During this period, total resources mobilised by the Mutual Fund Industry
in India stood at Rs 92,957 crores wh~ie the total repurchaselredemption amount
was Rs. 83,829 crores as per SEBl data The industry thus shows a net inflow of
Rs. 9128 crores as compared to Rs. 18.970 crores in the previous year
4.4 PERFORMANCE EVALUATION OF SBI MUTUAL FUND SCHEMES BY USING INTERNAL RATE OF RETURN (IRR)
Return is an outcome of the ~nvestment policy adopted by the mutual fund
An investor can analyse the performance on the basis of IRR Percentage.
IRR = Po = + -Qz + Pn .-
(l+r) (1+2)' ( l+r)"
'PO' represents the acquis~t~on price per unit. D l , D2 . . . . . . Dn represents the
cash dividends received in respective years.
'P,' represents the NALI as on 31"' March 2001
' r ' represents (whtch rnay be positive or negative) rate of return per rupee per
annum.
IRR 1s the rate whlch equates the present value of the cash lnflow from holdlng of
mutual fund unlts to the acqulsitron cost The cash lnflow lncludes dlv~dends and
termtnal prices
Table 4.10 shows the scheme-wise IRR percentage on NAV basis as on
31S' March 2001. MELS 96 (Magnum Equity Linked Saving Scheme-96) shows
better performance than all other schemes and MELS 95 shows poor
performance. For majority of the schemes IRR percentage is lower than Bank rate
or Post Office deposit rate. When we analyse the table 4.10 the IRR percentage of
Income schemes is greater than the Growth schemes.
Table 4.10
Table showing IRR% of SBI Mutual Fund Schemes as on 31.03.2001 - - - r '~~
-~ -- No. ( Scheme
- t ~ ,- r 2 m m e n c e r n L r ? F - -
~ ~ -
I MMIS 91 1 1 0 03 1991 t - - .
I
~
I 15 :2.1993 I L ~. ~
12.00
MTPL r r 1 21. 11 1991 ' 13.20 - -
4. -
MMS 30 - 1~ ~ - , - - - ~ -
I
5. MELS 9" -~ - ~
' 2C 11.1991 4 3 - ~
~~ -~ - - -~ 1.53
-
6. I MMPS 93 10 -0.01 4~ ~~
01 03.1993 - t ,
7. j MGF 94 10 11.62 ~ -
1 01 09.1994 , - - _
8. ~~
1 MELS 91 01 04.1991 1 ~~ - -- -. 100 13.50
9. I MGIFTS 92 A / 01 04.1992 100 -
2.48 I - - ~ -~
10. ~ ! F T V 2 ~ B 01 ;"992 100 5.46 -
11. MTGS 93 01.04 1993 10 4.54
01.04.1994 ~~
10 -3.23
13. MBF 94 01.02.1995 10 10.52 -~ ~ -.
14. 1107.1997 10 11.80 ~ ~
15. I 20.101995 10 -0.63 ~ ~~
16. MELS 95 01.04.1995 10 -1.25 - ~ ~8 - - .
17. MEL~S 96 01 04.1996 10 30.47 - . ~
18. MLlF 98 06.10.1998 10 9.44 -
19. ~~~~
7.28
20.
Source SBI Annual Reporf - 1992-2007
4.5 TREND ANALYSIS AND CURVE FITTING OF SBI MUTUAL FUND
SCHMES BY USING METHOD OF LEAST SQUARES
Least squares method is the most accurate method of finding the trend
values wlth the help of a mathemat~cal technique. which gives us a straight-line
trend. A line of the 'Best Fit' can be obta~ned by the regression equation Y or X. It
is a line from which the actual values deviate on either side. The sum of the
deviations taken from the arithmetic. rnean will be zero Consequently, the sum of
squares of dewations will be least. as compared to the other alternatives. That is
why this method is called the 'Method of least square.'
Trend analysis enables us to study the past behaviour of the mutual funds,
i.e.; to determine the type and nature of the variations in the data and to compare
the actual current performance of accomplishments with the expected ones and
analyse the cause of such variations, if any. It enables us to predict or estimate or
forecast the behaviour of the mutual funds in future and to compare the changes
in the values of different mutual funds at different time.
The trend line, the line of 'Best Fit', will be drawn under the least square by
an equation,
yon x ... . . ... . . . y = a+bx
a = u and b = & n Ex2
Cx = 0 (as the valuations are calculated from mean)
X = Period or Years (Independent variable)
Y = Values. (Dependent variable on X)
Figure 4.1
MMlS - 91
-
Y'
-
20 -
- - - - - - - - - - - - o * & , - ,
- 1 2 3 4 5 6 7 8 9 10
YEAR
Table 4 12
Table show~ng the Trend Values of the scheme MTPL - '91 -~
Net Asset Value . ~~
~ ~ --
A ~ ~ - - ~ ~~
Source : SBI Mutual Funcl Annual Reports - 1992-2001
The above table is dep~cted as Trena Curve in Figure 4.2
From the figure 4 2 . ~t IS seen that the scheme having postive or upward
trend
Figure 4.2
MTPL-'91
156
Table 4.13
Table show~ng the Trend Values of MELS - '91 -- - --- -- 7 ---
I
Year - --
I Net Asset Value + -- -~
I Fitted Value . 1 ~- ~- -~
Source : SBI Mutual Fund annual Reporfs - 1991-2001
The above table is drawn as trend curve in Figure 4.3.
From the figure 4.3 it is seer1 that the scheme MELS - '91 shows a positive
or upward trend.
YEAR
Table 4 14
Table show~r~g the Trend Values of MGIFTS - 92A - - --.- - - - - -
I Year I - - - . _ _ ~ ~
NAV . ~ 1 Fitted Value
I - - - - ! I I 1 1 I I - . - _ _ I - ~~ -~ - -
I
Source : SBI Mutual Furid Aritiua~' Report - 1992-2001
Table 4.14 is depicted as Trend Curve or Curve of best Fit in figure 4.4
From the f~gure 4.4, it is seen that the SBI Mutual Fund Scheme, MGIFTS - 92 A
shows a positive or upward trend
YEAR
Table 4 15
Table si.iow~r~g the Trenti 'Jalues of MGIFTS - 92-8 . ~- ~- ~ ~- - --
Year ; Net As!jet Value Fitted Value ! ~- ~. -p .- ..
Sou,rce : SBI Murua! Forit1 Annual Re~.ci:t - 1992-2001
Table 4.15 1s drawn as Trend Curve .ri F lgure 4 5
Figure 4.5 MGIFTS 92:-B scheme snows a positive or upward trend.
YEAR
ToMe showing the Trend Values of MGF -94
r I I I
Soum : SBI h4utual Fund Annual Report-1B2-2001
Table 4.16 is depicted as a Trend C w in Figure 4.6.
Figure 4.6 MOf-94 shovvs a pos~tive or upward @end.
Year NAV Fitted Value
YEAR
Table 4 17
Table show ng the Trerd Values of MRIS-93
Year F~tted Value -
Source SBI Muici,)~ iZ [ i r in ' Anr~ual Repon -1992-2001
Table 4.1 7 1s drawn as a Trend (Curve in Figure 4.7
Figure 4 7 snows l.he SBI Mutual Fund Scheme MRIS-93 indicating e
positive or upward trend
04' '. r 2 s 4 s. 6' r b .a- UT
YEAR
Table 4 18
Table showing the Trend Values of ~ ~ x . 9 1 ~~ ~ - ~ - ~
~ - - - - - ~ - 1- - - ~ - - --1 I Year I
-~ ~
I NAV i . ~ ~ ~~
Fitted value 1 ~ ~ - ~ -
- i -7-
- - - - . l 2 _I 12.65
I 12.76
- - c 2 . 8 7
Source : SBI Mutual Fund annual Repofl--1992-200y,
Table 4.18 1s drawn as a Trend Curve in Figure 4.8
Figure 4 8 shows SBi Mutual Fund Scheme, MEX-91 indicating a positive trend
Table 4 19
Table showing the Trend Values of MMPS-93 ~ - -~ -~ ~ ~ ~ ~~~ -~ ~ ---r-.p.- ~~ ~p -.
Ye,ar 1 ~- ~~
NAV ( Fitted Value i
~p~ +- ~~~4
1 1000 1 11.15 I
-~ ~~ ~-~ ~~ . ~ ~ -- I
15.47 12.22 ---- ~ ~ ~~ ~- -I- -- - ~ ~- --~,
Source : Si31 Mutual Fund A ~ / J u ~ / Reporf- 1992-2001
Table 4.19 is depicted as 'Trend Curve in Figure 4.9
Figure 4.9 shows SBI Mutiial fund Scheme MMPS-93 as having positwe or
upward trend
YEAR
Table 4 20
Table show~ng trend Values of MMS-90
i - ~ ~ -- I 7 ~ -
Year - -
Fitted Value 1 -
Sourc:e : SBI Mutual Fund Annual Reports - 1992-2001
Table is dep~cted in F~gure 4.10 showing Trend Curve.
Figure 4.10 shows SBI Mutual Fund Scheme MMS-90's NAV Curve
fluctuating its movement but Trend Curve goes upward
s 1
1 2 3 4 1 6 7 6 S *
YEAR
Table 4.21
I I Year
I - -
-
Table sl?owtng the Trend Values of MTGS-93 - - - -- 7-
NAV
Source : SBI Mutual F I I I I ~ Annual Report 1992-2001
Tat~le 4 21 IS depicted in F~gure 4 11 shows trend curve of MTGS-93
Figure 4 11 show that the SBI Mutual Fund Scheme MTGS-93 has an
lncreaslng trena or pos~tt\/e trend Seventh year the NAV increased from 16 04 to
52 66 but the trend value increased from 18.88 to 21.12
$ Z 3 4 8 7 8 0 U
YEAR
Table 4 .I2
Table showing the Trend !/slues of MTps-94
~ ----
1 I
- - ~-~ ~ 10 1: I - -
I 2 10 44 --- ~.~ ~ ~
~
3 7 55 + 9.45
4 7.25 7 - 9.92
I 5 1 - - - ._ -~ - ~~
8.21 -
- , ~- ~ ~
~
-. - I
10.39 -
11.04 10.86
i
i 8.21 I i~ ~~~ 11.32
I I
>~~
11.79
I
12.26
~- - -- 12.73
Source : SBI Mutual Fund Annuel Reports- ;99f.200f
Table 4.22 is drawn as a Trend C:urve in Figilre 4.12
Figure 4.12 indicates SBI Mutual Fund MTPI-94 in an upward or increasing trend
Fire 4.12
MTPS-94
YEAR
Table 4 23
Table show~ng the Trerla Values of MELS-95
Year -- -~ -
I F~tted value - -
Source : SBI Mutual Fund Annual Reports-1991-2001
Table 4.23 shows the trend vali~es ana NP,V of scheme MELS-95. This
table is depicted as Trend Curve ir Figure 4 13
Figure 4.13 deprcts the Trend (.:urue of b1ELS-95. The Trend Curve
indicates positive or upward trend
Table 4 24
Table showlng the Trend Values of MELS-96
Year I- I F~tted value
Source SBI Motiia, F i , / ,ci ' Annual Reaorls-1992-2001
Table 4.24 shows the NAV and fitted values of MELS-96.
Figure 4.14 depicts the table 17 a Trend Curve. This curve shows an
increasing or pos~tive trend
BY urkrO L.ertSqum,andydng the 1 4 ~ d S B I M u t u a l F u n d . I I
theschemez,e#crptMMlSO1shawrporithreor~tfend.
COMPARISON OF TREND VALUES OF. FIVE SELECTED SCHEMES
Table 4 25 shows the trend values and NAV of MMIS-91, MTPL-91
MEL-S-91, MGIF7 S-92A and MGIFTS-92Ei
Figure 4 15 shows rhe cornparlson of Fitted Values or Trend Values of five
schemes. MMIS-91 slopes downwat-ds. MTPL-91 slops more upwards than
MGIFTS-92A&B MELS-91 shows a h~gher posit~ve trend than all other schemes.
Table 4.25
Table showing the Trend Values of MMIS-91, MTPL-91, MELS-91, MGIFTS-92-A &
Source : SBI Mutual Fund Annual Report -1991-2001
YEAR
Seriesl: MMlSgl Sefiea2: MTPL-91 Sorims3: MESS1 M MGiFTSB2A
MGIFTWB
4.6 COMPARISON OF SBI MUTUAL FUND RETURN WITH OTHER
ALTERNATIVES
Mutual Fund performance car! be evaluated in relation to investor's
expectations. The investors compare tne return with alternative investment. The
benchmark to evaluate fund performai~~e 1s the return on alternat~ve investmenl
such as fixed depos~ts in banks, Post Office term ciepos~ts etc
The following tables compared the return on each SBI Mutual Fund
scheme with Bank and Post office retur'is In this study the return from Mutual
Fund units are constdered as the NAV of different years and Return from Bank
fixed deposit compound interest, 9 per cent for one year. 10.50 per cent for 2
years and 3 years and 12 per cent for more than three years are considered. In
the case of Post Office deposit, compound rate of 12 per cent considered as
interest For the purpose of comparison SBl's fourteen major schemes are
selected and compared with alternatives
Table showing Cornpailson of Return on SBI Mutual Fund Scheme - MMIS-91
w~th Bank and Post Office Depos~t Returns - - -
1 - I - R e t u r n f r o m Return from I Return f r o q - - T
i MFU closed I
Bank f~xed I post office / 1
i dividend) lilterest interest 1 . -
on 31 March deposit w~th Year 1 D~fference
(wlth compound I
12000 1 2200 Z 73 .08 . .. -
-573.08 1 2475.96 1 -275.96 1 - ~ .~ .
Source : SBl Mutual f u l ~ d ;?nllual ~e~orl-1992-2001] Bank and Post Office
deposlt wlth
compound D~fference
Table 4.26 shows that if the investor ~nvested Rs.10001- in SBI mutual fund
scherne at 31" March 1991. he gets Rs 11071- if closed on 31'' March 1992 with
dividend and ~f the same amount is Invested in Bank fixed deposit, he gets
Rs.10901-. In this case there is a higher return of Rs. 171- from mutual fund units.
For the same lnvestmerrt the Investor gets Rs 1364.2 if it IS closed on 31" March
1993 and from bank f~xed deposit he gets only Rs. 1221.03, wh~ch IS rupees
143.17 more from mutual fund units. If it is closed on the third year the investor
gets Rlj. 1572.4 from mutual fund units and Rs. 1349.23 from bank fixed deposit.
If the investment IS closed on the fourth year the investor gets Rs. 1647.3 from
mutual fund units and Rs 1573.52 from bank fixed deposit. here also mutual fund
return is greater than the fixed deposit return of bank. In the fifth year investor
gets Rs. 1572.8 if it is closed on 31'' March 1996 from MMIS-91 units, Rs.
1762.34 from bank fixed deposit and Rs. 1573.52 from Post Office deposit. It
shows that from fifth year onwards return from mutual fund is lesser than Bank
fixed deposit and post office deposit. During the year 1996 to 2000 the return on
SBI mutual fund scheme MMIS-91 compared to Bank deposit and Post o f i ce
deposit is lower and the alternatives are profltable.
Table showing Comparrson of Return on SBI Mutual Fund Scheme-MRIS-93 with
Bank and Post Office Deposit Returns
- - ~ -~ j - - 7- Return [-%rn r---~ Return r - 1
Table 4.27 shows the returns from deposits if the investor had invested Rs.
1 from MFU if I from Bank i from post i
10001- in SBI Mutual fund scheme MRIS-93 or the alternatives, bank deposit or
closed on ! fixed : I I I Office year 31 March depos,! Difference deposit I (with ' with with
Post Office deposit and closed on 31'' March of different years, when we compare
Difference
returns from 1993-2000. bank and post office returns are found to be higher than
( dlvldend) ' compour~r' I compound I 1
-- ~ - - - 4 - I Interest 1 ~
interest ~~- !
! + ~_
I 1 I 2 3 !
4 - ~ ,~~ -~~
5 6=2-5 I
1000 1 1000 0 I t
--
- - -1 -_ -- - I
1994 I000 , 1090.00 ~, ~ ~ ~. - - ~
-90 . ~~ ~ -~ ~ ~~
!
1995 1155 1221.03 -66.03
1996 1 1349.23 -1602.3 .-<- -~ -+ --
! 1573.52 - I ]
-681.52 ! - _ _
1998 I 1762.34 ! -756.34 i I 1762.34 -756.34 _ +.~ - r --- ',
1999 1169 : 1973.82 ! -804.82 ~~+~~ +.-
1973.82 -804.82 I
2000 1528 ! 2210.68 ; -682.68 1 ~~ 1 . - __._
2210.68 -682.68
Source : SBI Mutual Fund Annual Report 1993-2001, Bank and Post O f k e
Records
the return from MRIS-93
l able 4 28
Table show~ng Compar~son of Returr~ on SBI Mutual Fund Scheme -MTPL-91 with
Bank and Post Office Deposit Returns -~ - ,
( ~ e t u r n I Return r ---
I from MFU if from Bark 8
closed on fixed ; Year 31 March
with deposit ;
compound Interes!
-~ - interest i ~~~ ----
I 3 6=2-5
I 100C! - -~ 4 - ~ ~-~
90 I ~
I 1437 6 , 1221.0:1 1 216.77
i - . - - - +
~-
1349.22, I
88.57 t - --
-
--
- 1865.6 1573.52 1 292.08 1573.52 292.08
~7 -- -- I -- t---
~ ~
1762.34 ( 152.46 ~- ~ ~~ -
1762.34 152.46
1997 1840.6 1973.82 -133.22 1973.82 -1 33.22
1998 i -
1901 ' 1 2210.68 ' -308.98 2210.68 -308.98
21 15.4 1 2475.96 -360.56 2475.96 -360.56 ~ ~ .~-.~ ---
2000 2566 7 -- ~
2773.08 ! -206.38 2773.08 -206.38 ~ ~ ~ I
Source : SBI Mutual ~ i i n d Annual Report -1992 to 2000, Bank and Post Ofice
Records
Table 4.28 shows trbe comparison of return on MTPL-91 with Bank and
Post Office returns. Wher, we compare the returns from 1992 to 1996 return from
MPTL-91 is greater than the Bank and Post Office returns. But from 1997 to 2000
Bank and Post Ofice returns are found to be higher than that of MTPL-91.
Table 4.29
Table showing Comparison of Return on SBI Mutual ~ u n d Scheme - ~ ~ s . 9 0
with Bank and Post Office Deposit Returns , - _ _ _- 7 ~;turn ; Return
( from MFU if from Bank
-- T ' --
~~ ' __1-_-~ 1827 I 1273.82 i -146.82
~~ ~ ~ . . ~
Source : C;BI Mutual Fund Annual Reporf- 1992-2001, Bank and Post Office
Records
From Table 4.29 when we compare the return on SBI mutual fund scheme
MMS-90 with bank and post office depos~t return, we found that for the first five
years and also for the last year return from MMS-90 is greater than return from
Bank and Post Ofice deposits. 1996 to 2000 Bank and Post-office returns are
greater. It is clear that for long-term investment Bank and Post Office deposit is
more profitable than Mutual fund units.
Table 4.30
Table showtng Comparison of Return on SBI Mutual Fund Scheme - MEX-91 with
Bank and Post Office Deposit Returns
1-- ~ ~- -- - . . -- - 1 Return
fixed
1 with 1 1 div~dendi compouna compound I interest I interest 1 I C ~-~ 1- ~ ~ . .
1 - _ - . ~~ ~
I - - - , . L-
1
1 1998 ) 1166 1 247596 I
-1309 96 I 2475 96 1 -1309 96 ---__1 --_
Source SB1 Mutual Fund Annual Report - 1992-1998, Bank and Post Ofice
Records
Table 4.30 shows that when we compare the return on MEX-91 with Bank
and Post office deposits from first year to last year except 1994, return from MEX-
91 is lesser than alternative Bank and Post ofice deposits. During the years 1999
and 2000 MEX-91 return shows poorer performance
'able 4 31 Table show~ng Comparison of Return on SBI Mutual Fund Scheme - MMPS-93
w~th Bank and Post Office Deposit Returns
-- - -~ Return I ' R ~ ; ~ I from MFU if from Bank closed on fixed
Year 1 31 March deposit i (with with
I dividend: compouna Interest
. -- , ~~ - -~
3 4=2-3 . ~- ~~ - --
1000 1000 . ~ - ~~ -.- ~~
0 ~
1994 1547 ~
'1 090 00 , ~ - ~-
457 .
1431 1221.03 . ~ ~~
209.97 ~.
1996 1317 : 1349.23 ' -32.23 - - ~
1573.52 ' -385.52
1 1
1997 1188 .~~ ~ / 4
1998 1176 1762.34 1 -586.34 . ~+ ~ 4. -
1609 - ~~~
1973.82 --364.82 4 . I
3810 ' 2210.68 , 1599.32 -- - -- 999 2475.96 -1476.96
_ Source : S B ~ ~ u t g f l i n d Annual Reports 1993-2001. Bank and Post Office
Records
Table 4.31 shows tnat for the first two years and 2000, return from MMPS-
93 is greater than the return on Bank and Post-office returns, and in all the other
years return from Bank and post-office deposits is greater than return on MMPS-
93. It is also shows the initial years of investment in SB1 mutual fund unit received
good return but for long per~ods of investment Bank and post office deposit are
preferable.
1573.52
1762.34 .
1973.82
2210.68
2475.96
-385.52
-586.34
-364.82
1599.32
-1476.96
Table 4.32
Table showing Comparisor~ of Return on SBI Mutual Fund Scheme - MGF-94 with
Bank and Post Office Deposit Returns ,
1 Return Return from MFu j from Bank closed on fixed
'fear 31 March deposit 1 (with with
dividend) compound
! interest . . .- . . I
Difference
from post 1 deposit Difference
with Office i cYE2d i
I
2001 2210.68 -1476.68 1 2210.68 -1476.68 i Soutce : SBl Mutual Fund ~ K u a l Reports 1994-2001, Bank and Post Office
Records
Table 4.32 shows that in all the years from 1994 to 2001, return from MGF-
94 is lesser than Bank and Post - off~ce deposit returns. If the investors compare
the alternatives in Investment they would prefer Bank and Post-office deposits
Table 4.33
Table showlng Comparison of Return on SBI Mutual Fund Scheme - MELS-91
w~th Bank and Post Office Deposit Returns
I !
Year I
I
1 ~
~
Return from MFU if closed on 31 March
(w~th d~v~dend)
- - - Return I
from Bank
Difference 1 fixed
deposit ' D~fference with I
I I?: pg 1173.08 8 865.82 1 2773.08 1 8 6 5 g --
~
2158.5 3105.85 -947.35 3105.85 -947.35 ~~ ~ ~~ L-~ ~- --
Source : SBI Mutual Fund Ar~ntlal Reports 1992-2001, Bank and Post Office
Records
Office deposit
with
Table 4.33 shows the comparison of return on MELS-91 with alternatives.
Magnum Equity Llnked Saving Scheme-91 shows higher return from
commencement to thls time except 1998 and '99 and 2001. It indicates that this
scheme offers good return when compared to Bank and post oftice deposits.
compound I compound lnterest - -
interest
Table 4.34
Table show~ng Comparison of Return on SBI Mutual Fund Scheme - MGIFTS-92A
with Bank and Post Ofice Deposit Returns
Year
-
Return from MFU if closed on 31 March
(with dlv~dendi
~
Return from Bank
fixed deposit
with compound
interest - - ~ -
Return from Post
-- --F- Oftice
wlth compound
~nterest
T --- --
4800 8 2475.96 2324.84 ~
I 2001 1386 5 2773.08 -1386.58 I ~~ , .- ~- .~ Source : SBI Mutual Fund Annual Reports 1992-2001, Bank and Post Ofice
Records
1-able 4.34 shows that in all the years except 1994 and 2000, return from
MGIFTS-92A is lesser than return on Bank and Post - office returns. It indicates
that investors would prefer Bank and Post-office deposit to MGIFTS-92A.
Tab'e 4.35
Table showing Conlparlson of Return on SBI Mutual Fund Scheme - MGIFTS-~~B
with Bank and Post Office Deposit Returns
! (wlth , with
7
1281 7 1349.23 (
3230.3 ' 2475.96 754.34 ~-
Records
Table 4.35 shows the comparison of return on MGIFTS-92-0 and Bank and
Post-office deposits. From 1992 to 2001 except 1994 and 2000 return from,
MGIFTS-92-B is less than return from Bank and Post-office deposits
Table 4 36
Table show~ng Cornparisor! of Return on SBI Mutual Fund Scheme - MTGS-93
w~th Bank and Post Clfflce Deposlt Returns , ~ .
l -~- -~eturn Return ~t~~~ I
Year
Records
1 2001 1 1545 2475 96 , -L- -
-930 96 1 --
'Table 4.36 shows that in most of the year's returns from MTGS-93 is lesser
from MFLJ if from Bank closed on fixed 31 Marck deposit Difference
than Bank and Post-offlce deposit returns In the first two years and in 2000,
wlth
Source . SBI ~ u t u a l ~ u n d Annual Reports 1993-2001, Bank and Post Office
2475 96
MTGS-93 providing good returns. It reveals investors would prefer Bank and
wlth
from Post Office
deposit
-930.96
Post-office deposits when they compare the returns.
1 I compoun" Interest
D~fference
Table 4.37
Table showing Comparison of Return on SBI Mutual Fund Scheme - MTPS-94
with Bank and Post Office Deposit Returns
Year Difference 1
-~ - . -
Return Return 7 Return
I/ - J -I- Source SBI Mutual f und 'Annual Reports 1994-2001, Bank and Post Office
from MFU f from Bank closed or? fixed 31 March deposit Difference
(with with div~deriu~ compound
~nterest ~ -- ~~-~~ -
Records
from Post Office
deposit with
compound interest
Table 4 37 shows ooor return fron? MTPS-94 when compared to Bank and
Post ofice returns from 1994 to 2001. When we invest Rs. 1000/- in 1994 in
MTPS--94, we get Rs 821 durlng the year 2001. Rs 2210.68 each from Bank and
Post office Th~s shows bad performance of MTPS-94 when compared to
alternative investments
Table 4.38
Table show~ng Compar~son of Return on SBI Mutual Fund Scheme - MELS-95
w~th Bank and Post Office Deposit Returns
I- - - - , ~--iieiurn - . --~.A
7 - - ~-
Return Return I 7 I from MFU if from Bank ~
closed on fixed Office I I year Difference Difference 1
I ! 1 31 March deposit I deposit 1
I
(wcth , with i with '1 I d~v~dend) 1 compound ,
I lnterest
I1 ~L I I -__l______i
Source : SBI Mutual Fund Annual Reports 1995-2001, Bank and Post Office
Records
From 1995 to 2001 except 2000, MELS-95 shows less return when
compared to return from Bank and Post-office. From this comparison investors
would prefer Bank deposit or Post office deposit to MELS-95.
Table showing Comparison of Returr~ on SBI Mutual Fund Scheme - MELS-96
w~th Bank and Post Office Deposit Returns .~
Return Return
. ~
. -~ ~_
.~ -~ -~ ~ ~~~
Records
Table 4.39 shows that during the years '999 and 2000 return from MELS-96 is
greater than Bank and Post-office depos~ts. In the other three years Bank and
post-office returns are greater than return from MELS-96
Conclusion:
When we compare the return from Mutual Fund units with returns from fixed
deposits in Bank and Post-office, for major~ty of schemes the return for periods
above 3 years is lesser than the same from fixed deposits in banks and from Post
office deposits.
4.7 PERFORMANCE EVALUATION OF SBI MUTUAL FUND SCHEMES ON
THE BASIS OF AVERAGE ANNUAL GROWTH
SF.1 MUTUAL FUND.. -- INCOME SCHEMES
Tab:? 4 40
Table showing A v e , ' l t Y i i l l ~ a l Growth Rate of SBl MF - income Schemes as on
3" t 2001 --
------A ~
Source: SBI Mutual Fl l~ io ' kr1111i.i1 Report--1992-2001
The growth rate of SBI mutual fiind schemes are measured by comparing two
consecutive years NAV of the schemes
Table 4.40 shows that the average annual growth rate of MMlS 98(11) is greater
than the other income schemes MMIS-91 shows the least growth rate.
SRI MUTIJAL FUND: -GROWTH SCHEMES
Tatle 4 41
Table showtng Average Annual Growth Rate of SBI MF - Growth Schemes as
31 03.2001 r - ~ ~ - -
- ~ --
k4~TPL.-91 I
MMS-90 , - -~ - -~ ~- -
MEX-91 1 - ~- ~- - ~ ---- i Year Valoti Growth Value Growth Value 1 Growth
I I
I rate rate
i- - -
~~ ~~ ~ ~
I
i
1 31/12/91 I 190 00 I 14.61 1 l - ~ - ~ - ~ ~
~ : - 1 - ~ 1000 .- 1 14.30 '
I I
131112192 , 100 0; t
16.43 I
11.43
1
- 17.01 0.00
i -- 1 - _~ i
31/3/94 ! 125 78 , 0.00 23.22 36.51 " ' ; 16.01 40.07
1
31/3/95 168.56 18.46 20.50
~-
- ~- -- - . -1 1.34
172 17 3.68 . ~ .~-- - - .- . - -- ..
12.41 16.49 49.64 ~ -
238 67 23 32
~ ~- ~ ---
10.87 - .
11.70 3.66
M M P S - 9 3 M G F - 9 4 I I .~ ------ . I
MGF-99 1 ---- ~ ------ * -- -- - ---
I Year Value I - -- i I Growth dalue / Growth I Value / Growth !
1 rate / rat ! . I I
i - i 3113191 1 \
1 - -~ , -~ ~ ~
1 - + - -- , - - - ~ ~ - ~ ~ . - ~ ~ ~ ~ - - - - - - --
I I j
Source: SBI Mutual Fund A~rt~ual Repod --7992-2001
Table 4.41 shows that the average annual growth rate of M M P S - 9 3 is
higher than the other schemes. MEX-91 shows the least growth rate
SBI MUTUAL FUNDS - TAX SAVING SCHEMES
Table show~ng Average Anriual Growth Rate of SBI MF - Tax Savings Schemes
as or. :i il3/2001 ~ ~ ~~
MGIF!S-92A MGIFTS-92B MTGS-93
13.16 -9.12
9.20 -11.79
!
I-__ -- , MTPS-94
' . MELS-95
~ - ~ ~ -7-- ------ MELS-96
~ ------ 1 ~ e a r Value , Growth Value I Growth Value [ Growth I I .
rate ~~ ~~ ~
rate ~ - . _ -~ ~ -- --- rate -~
i !
~
I - ~ -. --
131112192 ~, ! ~ - - - - ~
~3113193 ! I
. . -- ~ ---- ---- ~ -
- - - I - - - - -
4.40 . ~ --
10.00
31/.0/97 -1 1.30
31/3/98 6.81 9.16 3.27
31/3/99 12 74 25.02 13.73 -- -. 49.89 -
31 /3/00 18.52 2898 111.07 -
31/3/01 8.21 i - - , 11.96 -58.73
I
Source: SBI Mutual Fund Ai~nual Report -7992-2001
Table 4.42 shows !+,at the average annual growth rate of MTGS-93 is
higher than other schemes MTPS-94 shows the least growth rate of 4.64. All the
other tax saving schernes illso shows a good annual average growth rate when
compared to Income and yr w t h schemes
SBI MUTUAL FUND - INDUSTRY-SPECIFIED GROWTH SCHEMES.
Table 4.43
Table Showing Average Annual Growth Rate of SBI MF-Industry Spec~fied Growth
Schemes as on 31.03.2001 ~~
T- 1 i ,
I1 I
1 1-- ------- ~
PHARMA 1 ~ <
FMCG I CONTRA i .- 4 I Year I Value Growth ' Value Value Growth 1
!
i I rate b- - - - . - - * - rate
I
Source : Sf31 Mutual F [irlci Annual Report - 1999-2001
Table 4.43 snows the positive average annual growth rate only in IT
schemes. All the other industry-spec~fic schemes show a negative average
annual growth rate
4.8 IMPLEMENTED OBJECTIVES OF SBI MUTUAL FUNDS - EVALUATION
1-he basic objecti.ie uf a.iy Mutual fund is to provide a vehicle for investors
to avail of the opportunities offered by the capital market and money market Sf31
Mutual fund was also formed with this basic objective and to provide such
opportun~ty even to the smallest ~nvestor in urban as well as rural areas and offer
an opening to employ investor's funds profitably
Mutual fund schemes generally fall into one of four broad categories
. Schemes largely invested in eqiliv - "Growth Funds "
. Fund Schemes largely invested Indebt - "Income Funds
. Fund Schemes ~nvested in a co~nb~nation of the two -- 'balanced funds "
Special purpose veh~cles - 'the tax and rnsurance l~nk-ups and educatiori
schemes
When an Investor decides to put his money in a debt or equlty investment
he knows exactly what he is buying. An investor in a pure growth fund scheme
expects aggressive ~nvestment in equ~ties, and returns match~ng the risk profile at
the end of the scheme tenure. This IS not achieved when a fund changes its
nature from year to year, depending on the market conditions and its fund
requirement.
The objective of evaluation is to find whether SBI Mutual fund has been
able to attain the implemented objectives of their various schemes.
For the purpose of analysis, the SBI Schemes launched during 1992
and 2000-2001 has been taken. During 1992, SBI issued their first Annual Report
and 2000-2001 ends the year of my study (Study period ranges from 1991 to
2000-01 )
frccording to SEBl guidelines Income funds issued, weighmtage given to
reinvestment in the order of Debt, Money Market and equity. The growth funds
invested in the order of we~ghtage to Equity Debt and Money Market and
Balanced funds - equity debt and money market respect~vely, Income fund aims
regular income to the investors, Grow*h funds - Capital Growth and Balanced
Funds - Capital Growth and Iqcorne ,ix saving funds arms at Tax-Rebate plus
Capital growth Spec~alized funds 113, r in spec~fic ~ndustr~es and target speclfil:
customer segments
Table 4 44 shows the portfo ,oinpos~tion of varlous SBI Mutual Fund
schemes for the year ?992
Table showing Porttc : Composrtlon of Var~ous
SBI Mutual Fun0 sc emes as on 31 12 1992
--- - Mutual fund- [ Date of i I schemes I launch~ng
I Income Funds ,
T - Date of Portfolio data (%)
t- redernntion I Equity I I
Market
I I
Growth Funds I I I - -- ~ . - 1. ' . _ . .. _ i
I Tax Savinq Schemes 1
- +
I MGIFTS - 92 01 04 1992 31,032002 81.56 7 '1 I 11 3 3 ! ~~~. ~~ , ~ ~ ~~ ~ --- ~.
Source : Annual Reporl of SBi Mutual Fund 1992
4.8.1 INCOME FUNDS
i) MAGNUM REGULAR INCOME SCHEME - 1987 (MRIS - 87)
MRIS-87 was launched with the objective of 'Regular Income ' The table
shows that, 27.46 per cent of the port-folio was invested in equlty 58.72 per cent
in debt and 13.82 per cent in cash and money market instrumer~t. This implies
that the scheme has not digressed from its objectives.
ii) MAGNUM REGULAR INCOME SCHEME 1989 (MRIS - 89)
MRIS - 89 was also launched with the objective of 'regular income.' The
table shows, 43.82 per cent of the fund was invested in equities, 46.05 per cent in
Debt and Bonds and 10.13 per cent in cash and money market instruments. This
shows a balanced investment in equity and Debt, despite it being considered as
an income fund.
iii) MAGNUM MONTHLY INCOME SCHEME - 1989 (MMIS-89)
MMlS -- 89 was launched as an income fund. The scheme invested 24.01 per
cent in equity, 69.45 per cent in Debt and Bonds and 6.5 per cent in cash and
money market instruments. This shows the scheme predominantly invested in
Debt and follows the order of weightage to achieve the objective
iv) MAGNUM MONTHLY INCOME SCHEME - 1991 (MMIS - 91)
MMlS - 91 was also launched as an Income fund. The table shows,
41 1 2 per cent of the fund was invesrec In equities, 47 11 per cent in Debt and the
balance 11.77 per cent in cash and noney market instrument This shows the
scheme investment gave priority to dec; lo achrsve its objective
4.8.2 GROWTH FUNDS
i) MAGNUM MULTIPLIER SCHEME - 1990 (MMS-90)
MMIS-90 was launched as a pule growth oriented close.-end scheme with
high potential cap~tal appreciation and returns. The major portion ie., 81 per cent
of the portfolio was invested in equity. 12 8 per cent with debt and balance 5.2 per
cent in cash and money market instrument as per the table. This indicates the
fact that the scheme was able to maintain its implemented objectives.
ii) MAGNUM EXPRESS - 1991 (MEX - 91)
MEX-91 was also launched as a growth scheme. The table shows that
the scheme made an rnvestment of 93.47 per cent in equity and 6.53 per cent in
debt. This implies the scheme was able to attain its objective of pure growth.
iii) MAGNUM TRIPLE PLUS - 1991 (MTPL - 91)
MTPL - 91 was also a pure growth scheme. Capital appreciation was its
objective. The table shows that 45.71 percent was invested in equities, 48.88 per
cent in debt and 5.41 per cent in cash and money market instruments. This
indicates the scheme gave priority to investment in debts and was not able to
implement its objective of growth.
4.8.3 TAX SAVING SCHEMES
i) MAGNUM TAX SAVING SCHEME - 7989 (MTSS)
MTSS-89 was launched w i i rhe objective of tax rebate plus capital
growth or steady returns 63 37 per :.?!it of the investment was in equities, 33.73
per cent in debt and 2 9 per cent 11 ~ ~ i l s h and money market instrument as per
table. This implies the scheme was a! r ro attain its objectives of capital growth.
ii) MAGNUM TAX SAVING SCHEME '990 (MTSS-90)
This scheme was also launchei; with the objective of tax saving plus capital
growth. The table shows that 38.13 percent was invested in equities. 57.70 per
cent in debt and 4 17 pel cent in cash and money market instrument. Majority
investment in debt mean?. it cannot attain the implemented objective of capital
growth.
iii) MAGNUM EQUITY LINKED SAVING SCHEME - 1991 (MELS - 91)
MELS-91 commenced with the objective of tax rebate plus capital growth.
This scheme could attain the implemented objective since 90.11 per cent was
invested in equities. Only 5.88 per cent was invested in debt and 4.01 per cent in
cash and money market instruments as per table.
iv) MAGNUM GROWING INVESTMENTS FROM TAX SAVING - 1992 (MGIFTS-92)
MGIFTS 92 was also launched w~th the objective of tax rebate plus capital
growth. The table shows that 81.56 per cent of the fund was invested in equities,
7.11 per cent in debt and 7 1.33 per cent 1n cash and money market instruments.
It shows the scheme was able to attain the ~mplemented objective.
Dur~ng the vf?aj 1992 out of the four Income Schemes three schemes
coulcl atta~n its ob!ectives whereas MRlS - 89 could not attar its object~ve There
are 3 growth funds (1: I f is two could attain the~r object~ves and one MTPL- 91
could not All the tar s:tne:l?es except MTSS-90 could attain its objective
Table 4.45
Table show~r:c~ I i.+( , J Compos~tion of Varlous SBI Mutual Fund Schemes
as on 31 03.2001 ~~ - .- - r l tu i~ fund [.jaw , l f Date of 1 Portfolio data (%) 1
schemes
I
~. Market
Income - -
!
Scheme
MMIS-97 1 ' 13 i997' 1 3006.2003 -- -~
MMIS-98 (I) ~--,
93.38 --
MMIS-98 (11) ; 23 I.! 1998 :%~TOO~ 97.25 I . I 6 - - ~ .
MLIF-98 -- 97.11 2.89 -----_ 4 ~~ ~ ~~
MlCF -- - 1- - ~
90.6
!
Debt Fund
MMlP 15.00 85.00 -- -- - --
MGilt Fund I 11 122000 -- ~
~~ - .- 100.00
I , Growth-
MGF-99 -~ ~
i 15 05 q999 i 0 pen-en&; 65.75 1 3:
* , -- -- ~ ~ -- -~ - - ~- -
MEF-2001 r 37 03 2007 Open-ended 1 99.87 ! !
(MMPS-90) ! I - -
- -
MMPS-93 ! 0104.1998 : Open-ended 97.35 - -- - - - ~ ~ - I - , , ~ --
MGF-94 I 2408 1994 ! 30,091999 99.99 -- -. , - .-- - -
Balanced Scheme
MBF-95
MSFLJ
)TaxSaving , Schemes
11 08 1995 1 Open-ended 1 67 66 1 3:;:-+ -- i P-
04 06 1999 ope~?-ended 100 00 -.
! (Open ended j on 11 11 99)
99.91
99.49 .5 1
99.46 5 4 ~~. ~
Source A ~ i ~ ~ i i a i Reiiofl : I ( SBI Mutual Fund- 2000-2001
4.8.4 INCOME FUNDS
Table 4 45 shows that all the income funds have predominantly invested in
Debt and Bonds. This ~mplies that all the income funds during the year 2000-2001
could attain their implemented objectives
4.8.5 DEBT FUNDS
The two Debt funds, which ex~sted also, attain their stated objective by
majority investment in debt ~nstruments
4.8 6 GROWTH FUNDS
The table shows that all the growth-oriented schemes could attain their
objective because they followed the weightage properly in their investment
4.8.7 BALANCED FUNDS
These schemes also gave pr~ority to equity investment. Through equity
investment they attained the objective of providing regular Income tl2 the investors.
4 8 . 8 TAX SAVING SCHEMES
All the tax savlngs schemes offer tax rebate and capital growth to investors.
They could also attar the implemented objective through the Investment in
equities.
During the year 2000-01, Fund Manager's followed the guidelines of SEBl
in portfolio management From the investors perspective, the need for successful
portfolio management funct~on is obviousijl paramount.
From the evaluat~on of implemented objectives of 11 SBI mutual fund
schemes for the year 1992, we can conclude that majority of the schemes attained
their stated objectives. From the studies during the year 2000-01 we can say that
all the funds have achieved their investment objectives.
4.9 FUND SIZE AND PERFORMANCE ANALYSIS
Fund size can affect performance of schemes. Small funds are easier to
collect and can achieve the11 objectives in a tocused manner with limited holdings.
Large funds benefit from economies of scale with lower expense ratios and
superior fund management sk~lls. They also gain through greater risk bearlng and
management capacity There can be no definition of what IS a small fund and
what is a big fund. But slmpiy considering the unit capital plus reserves of each
scheme for the previous year or opening balance as fund size and net income of
each scheme for the present year or closing balance as fund performance.
The main purpose of the :.tudy was to ascertain if there exist any
relationship between the fund size i nd fund performance and the degree of
relationship between these two var~ables Correlation analysis helps us In
determining the degree of relationshir) retween two or more variables.
CORRELATION
The ferm correlation refers i f the relationship between two variables
When two variables rniove togethe: ve say they are correlated. Thus two
variables are correlated if the change i . 1 one varrable results in a corresponding
change in the other variable Definitic.: 'An analysis of the co-variation of two or
more variables is usually called correlatio~? " - A M Tuttle.
Whenever some def~nite connect~on exists between two or more groups or
classes or series of data there is said to be correlation " - Bodd~ngton
Formula applied:
To analyse the relationship of fund size and fund performance, Karl
Pearson's simple co-efficient of correlztion has been applied. 13f the several
mathematical methods of measuring correlation the Karl Pearson's method.
popularly known as Pearsontan co-efficient of correlation, is most widely used in
practice. The Pearsonian co-efficient of correlation is denoted by the symbol of 'r.'
The formula for computing Pearsoniar? 'r' is.
r 1: _ .-XX_Y- -- \i(7x2 X ] V ' /
Where, x = (x- -x)
Y = ( Y - Y )
In this fund size and fund performar~ce analysis, last five years (1996-'97 to
2000-2001) schemes are considered
Table 4.46 Fund Size And Fund Performance Analysis of SBI Mutual Fund Schemes for the
Year 1996-97
. - ~
(Ks. in Crores) I -~ ~ v--- -7--- 7
Sl Various SBI
I No I Mutual fund
schemes :
MMIS-8s
MMIS-9 1
I
Scheme Reserves Capital !
; (a) & - ~ ~~
(b) * - --
71.53 ' -0-
Fund Size Net Income performance
797.65 1 211.87 1009.52
3.20 105.33
31.85 5.35 37.20
. 64.65
12 17.79 129.98
- 75.88
6.20 49.77 -9.07
40.63 -1 9 3
-- ~~~ ~-
MELS-96 2 0 4 4 20.44
1-77 7 1 - ! MOF-95 L ~ _ _ ~- !-
53.79 ~.~ . - -1--
3.40 57.19
Source : SBI Mutual Fund Annual Report 1996-97
Karl Pearson's co-efftcient of correlation =r=0585
7-able 4.46 shows the calculated value of correlation co-efficient or 'r'=0.585.
When we interpret the correlation co-efficient, if it is .5 or more it is generally considered to be significant. So in the above table during the year 1996- 97 the variables fund size and fund performance of SBI mutual fund schemes are positively correlated.
Table 4.47
Table showing Fund Size and Fund Performance of SBI Mutual Fund Schemes
for the Year 1997-98 (Rsin Crores)
T-
performance
schemes I (a)
149.25 . -
136.12 1 324.74
I - -- -
-
Source : Annual Report of SBi Mutual Fur~d - 1997-'98.
Karl Pearson's Correlation co-efficient =r= 971
Table 4.47 shows co-efficient of correlation as ,971. It shows very high positive correlation between the variables fund size and fund performance during
the year 1997-'98.
Table 4.48 Table showing Fund S~ze and Fund Performance of SBI Mutual Fund Schemes
for the Year 1998-'99
-~ ~~ ~
(Rs.in Crores)
I r ~- -T---Y 7 SI. SBI mutual fund / Unit Capital ' Reserves I Fund size Net income
I I No ) schemer I oerformance
Co-efficient of Correlation = r = ,9056
~ -
MMIS-91 I 72.42 , - - - - _ I 72.42 9.81 ~ ~. ~ ~
2 --
MRIS-93 -
' 61.92 ~ -- , . ~ -
39 62.31 - ~
10.04
Table 4.48 shows that the co-efficient of correlation value is ,9056. It shows the variables fund size and fund performance of SBI mutual fund schemes are high positively correlated during the year 1998-'99
-
17.91 -
7.91
21.42
6.00
1.99
3
4
5 t
6
7 - - - . ~ ~
i
8 I- -
MTPL-91 .- ~ ~
83.55
9 MMS90 113.26 48.26
10 MMPS-93 446.28 142.00
11 MGF-94 -.
17.54
12 MOF-95 19.07
13 5.43
14 MGIFTS-92A 3.84 43.12
15 18.99
16 MTGS-93 56.49 . - , ~ ~-.:
57.16 28.82
17 - i
38.87
18 MELS-95 1 40.57 -- - i _ 7.95
I - - - -- -
19 MELS-96 1 20.44 1 - 1 20.44 - . : ._____1~.. -
9.34
Source : Annual Report of SBI Mutual Fund -. 1998-'99.
MBF-94 73.38 9.31 1 82.69 ~ ~ - ~ -~ ~ L--
MMIS-97 67.92 I 61.92 ~
'
-- - .~ ,
MMIS-98 (1) i- , 11633 8.48 +- 1124.81 - - +
~ b- MMIS-98 (1 1) 184.90
- ~ ~ . - 4.81 -~ 1189.71 MLIF-98 5815 2.99 61.14
i
Table 4.49 Table Fund Size and Fund Performance of SBI Mutual Fund Schemes for
the Year 1999-2000
~ r-;IT SBI mutual fund
1 No 1 schemes
MMIS-98(11)
MGF-99
10 MEF-
11 MGF-94
12 MBALF-95
- - (Rs.in Crores) r--- ' Unit Capital Rere=. Fund size F m a I
(a) (b) ,' 1 (a+b) 1 performance 1
I L . -____L_____-__-_____!
Source : Annual Repori of SEI Mutual Fund - 1999-2000.
Karl Pearson's Co-efficient of Correlation = r = ,8170
Table 4.49 shows the Correlation co-efficient value as ,8170. It shows the
variables fund size and fund performance of SBI Mutual Fund Schemes are highly correlated.
Table 4.50
Table showing Fund Size and Fund Performance of SBI Mutual Fund Schemes for
the Year 2000-2001
(Rs. in Crores)
schemes , MMIS-97 47.42
1 - - - - - - -
~ - 1 160.27 25.41 . . ~~ ------- ~ - - - -- - -- .
1 - - - . _ 68.80 1 - - - - . -
- - -IMMIP- 7.79 6 5 1 -3522 - ; 8.44 ~
~ 0 2 35.24 0 1 1 - -
7 MGILTFUND 309.04 ' 4.04
' 8
9 ~~
.- - MGF%~
1
-
! 206.70 I 131.48 4
MEF- -
8 118.83 208.86
313.08 -
I
Source: Annual Report of SBI Mutual Fund - 2000-01'
Karl Pearson's Co-eff~c~ent of Correlation - r = -3.675.
Table4.50 shows the correlation co-efficient of fund size and performance is - 3.675. It shows the variables are negatively correlated. There is high negative correlation between fund size and performance during the year 2000-01 '.
From the five years analysis, it can be seen that a positive correlation between fund size and fund performance of various SBI Mutual Fund Schemes at during the years, only the year 2000-01 shows a negative correlation. This shows that the size of a scheme has relevance to its performance.
I 327.69
- .
798.94 - 77.78 -
302.76
-21.28
10
11
12
13
14
15
16
17
18 --
19
-
-141.04 .
-15.67
-97.45
-1.96
338.18
,.--. - MMPS-93 ': 221.29
MGF-94 ~- - -
I 40.21 ~ - 1~
MBALF- -- ~ - ~-
118.82
MSFU- ' T - : 128.80 - - . ! --
MELS-91 1 19.19
MGIFTS-92 -- - : 77.65
-- - . ~+ MTGS-93 ! 35.76
- - - 1 - - MTPS-94
- -~ 25.24
i ~-
MELS-95 -~ ~~ I
21.33
MELS-96 - . A ~ - -
9.53
13.23 (
-57.03
577.65 -
37.57
183.94 - -150.08
39.04
217.74
152.55
21.50
38.00
18.08
58.23
295.39 - 188.31
-.
46.74 -
59.33 ---
27.61
-9.31
-13.66
-31.69
-17.73
-19.55
-3.98