portfolio analysis of all the open ended equity mutual fund schemes in india

PORTFOLIO ANALYSIS OF ALL THE OPEN ENDED EQUITY MUTUAL FUND SCHEMES IN INDIA

FY 2015

Excel model to analyze portfolios of more than 340 parent open ended equity mutual fund schemes in India.

TABLE OF CONTENTS

Contents

Introduction ______________________________________________________________________________________________ 1

Company Profile __________________________________________________________________________________________ 3

Objective and Methodology ______________________________________________________________________________ 4

Comparative Analysis __________________________________________________________________________________ 22

Findings and observation ______________________________________________________________________________ 33

Suggestions and Recomendations _____________________________________________________________________ 36

Bibliography ____________________________________________________________________________________________ 37

1

Introduction

FINANCIAL HIGHLIGHTS

It has been a little over 20 years since the asset management industry was opened up to the entry

of new players. The objective was to expand the business by widening and deepening the market

for asset management products. The inclusion of asset management products in the basket of

traditional investment avenues such as cash-in-hand, corporate and fixed deposits (FDs), savings

accounts, stocks and gold was expected to occur over time. The mid-90s saw the emergence of

stock investment trends with large-scale retail investments in the primary and secondary stock

markets. The IPO boom of the early 90s saw retail investors opting to invest a significant portion of

their investible surpluses in the stock markets. The enhanced liquidity chasing stocks

correspondingly saw a surge in the BSE Sensex from under 2000 in 1992 to around 5000 as on 31

March 2000. The same period also saw the asset management industry expand rapidly in terms of

number of schemes, products and companies. Considering the industry is still relatively young, its

evolution and growth over the two decades is impressive. This is true in all aspects and not just

about the scale of growth of assets under management (AuM). It applies to the creation of evolved

products as well as the human capital and skill development. The ecosystem including support and

outsourced functions has been created and knit together almost from scratch. The regulatory

regime kept pace with the changing environment and the AuM of the asset management industry

grew from 470 billion INR in 1993 to 1396 billion INR in 2004 and to 8252 billion INR in 2014.

LOOKING AHEAD

We earn regularly, we spend regularly but do we invest regularly??We all have various dreams that

we want to realize such as owning a house, owning a car or going on a vacation. Investments in

mutual funds can help realize such dreams. As we all know mutual funds have become highly

popular financial instrument in the recent years. Half of the household in America invest in a

mutual fund which stands out to trillions of dollars. This is indeed a huge sum of money. Slowly but

steadily the Indian Market is also adopting to investments in the Mutual Fund Industry. Currently

there are about 78 Lakh Investors in India who contribute to Mutual Funds on a regular basis. This

might be a small number as compared to other developed markets but one must consider this as

taking a baby step towards the right direction. This project gives you an insight into the mutual

fund industry and the likely trend in the Mutual Fund industry in the near future.

Pranjal Mitra

Xavier Institute of Social Service

June 26, 2015

2

WHAT IS A MUTUAL FUND??

The history of Mutual Funds in India can be dated back to 1963, when UTI was established, by an

act of Parliament. There has been a drastic rise in the AuM in this period a mere 470 billion INR in

1993 to 1396 billion INR in 2004 and to 8252 billion INR in 2014. In this context it becomes

pertinent to study the pattern and behavior of the Mutual fund schemes, to which the common

man is still unaware of. The risk-return relationship is perhaps one of the best ways to analyze the

performance of a mutual fund. (AMFI, 2015)

A Mutual Fund is a trust that pools the savings of a number of investors who share a common

financial goal. It is essentially a diversified portfolio of financial instruments - these could be

equities, debentures/bonds or money market instruments. The corpus of the fund is then

deployed in investment alternatives that help to meet predefined investment objectives. The

income earned through these investments and the capital appreciation realised are shared by its

unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is a 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 various types of funds are Balanced,

Debt. , Dynamic/Asset Allocation, Equity, ETF, Fund of Funds, GILT, Liquid, Regular and Speciality

Funds.

WHY ANALYSIS OF OPEN ENDED EQUITY MUTUAL FUNDS??

Open-ended Mutual Funds are priced daily and are always willing to buy back units from investors.

This means that investors can sell their holdings in Mutual Fund investments anytime without

worrying about finding a buyer at the right price. In the case of other investment avenues such as

stocks and bonds, buyers are not necessarily available and therefore these investment avenues are

less liquid compared to open-ended schemes of Mutual Funds. Thus there is a continuous shift in

the portfolio of an Open ended equity mutual fund. A closer look into the various portfolios can

help us predict an industry shift i.e. uptrend and downtrend in the NAV (Net Asset Value) of a fund.

3

Company Profile

Tata Asset Management

Tata Asset Management has a track record of more than 20 years in investment management. The

company offers a range of investment solutions for financial planning and wealth creation. The

company also advises international investors in Indian equity assets.

The core strength of the company stems from its intellectual capital and its robust risk

management framework based on in-built controls and balances.

AREAS OF BUSINESS

Tata Asset Management manages funds across the entire risk-return continuum. These include

equity, hybrid and debt. The company also offers portfolio management services to high net worth

individuals and advisory services to offshore investors / funds investing in India. It also plans to

offer access to real estate investments via the alternative investment fund structure which has

been permitted by the Securities and Exchange Board of India.

As part of its social initiative, Tata Asset Management has taken the lead in providing financial

planning education to distributors and investors. Through its vastly popular Professor Simply

Simple jargon buster tool, the company has spread financial literacy to people in India and abroad.

LOCATION

Tata Asset Management is headquartered in Mumbai and has offices across India. (TataAMC, 2015)

“What comes from the people should go back to them many times over”

- J R D Tata

4

Objective and Methodology

OBJECTIVE:

To analyze all the open ended equity mutual Fund schemes in India using an in house built in excel

tool.

“The Market offers more than 340 Parent open ended mutual fund schemes in India. Each mutual

fund is promising better returns than the other. In this paper an attempt has been made to analyze

the performance of all the open ended equity mutual funds schemes in India.”Comparisons have

been made on the basis of current 2 months portfolio data.

Impact of performance and overall market movement on inflows:

72 % of the investors profit on exit, even during turbulent times. Worryingly, may be cutting

themselves off from further gains. It’s time for distributors and fund houses to reinforce the

benefits of sticking around longer. It has also been noticed that the largest 4 schemes in the open

ended equity category are the ones which have built up a reputation for performance for a

substantial part of their long existence - HDFC Top 200, Reliance Growth Fund, HDFC Equity and

Franklin India Prima fund. (Jain, 2015)

The report concludes on an optimistic note that equity funds have come of age and are likely to

keep up this momentum over the next five to six years given many favorable factors such as under

penetration, high economic growth rate, tax benefits such as equity linked savings schemes and

enhanced presence in household savings products.

5

METHODOLOGY:

An excel tool had been built for the comparison of data. The tool helped us to amalgamate data

from MFI Explorer and Capital Line.

The project can be divided into 3 parts:

1. Data extracted from MFI Explorer, data extracted from Capital Line in an excel sheet(.xls

format )

2. Compilation of data into a master file (.xls format)

3. Analysis of data using Pivots in Excel Sheet. Data changes based on Large Cap, mid cap,

diversified funds etc.

MFI EXPLORER:

MFI Explorer, a mutual fund analysis tool, addresses complete research and analysis requirement

for both fund advisory and fund management industry. The desktop application is powered by the

most comprehensive and authentic industry data and numerous benchmark information to help

you analyse fund’s performance and portfolio and compare it with peer-group or a benchmark

index. Over the years the product has established itself as the major source of custom peer

performance reports and industry analysis reports across many fund houses, wealth managers,

banks, brokers and advisors. (Explorer, 2015)

User Groups:

1. Fund management

2. Advisors and Financial Planners

3. Distributors and Brokers

4. Treasuries and Trusts

5. Education institutions

Features:

1. Large inbuilt report library: MFI Explorer comes with a massive collection of inbuilt reports

which adds to perspective and flexibility to analyze.

2. Flexible parameter selection: Flexibility in our case not only includes selection of some

additional data points in a report but also includes selection of most granular parameters

necessary for any report in the application.

3. Data quality: ICRON's content management team ensures that only the correct data goes

into MFI Explorer. This increases the reliability and consistency of reports many folds.

6

Benefits:

1. Analyse fund performance with returns and ratios and the flexibility to select all the

parameters.

2. Get to know how portfolio was churned over different periods of time with details at

company or sector level.

3. Create Fund of Funds and compare its performance with any other scheme or index.

4. Create composite indices and use it along with standard indices to benchmark your scheme

set.

4. Save time on generating your frequently used reports by creating templates and

automatically updating data from the spreadsheet using Active Workbook.

Fig. I: The figure shows the screen shot of the Pilot Page of MFI Explorer. The screen shot

shows that there are a total of 341 parent open ended equity mutual funds schemes in India.

7

CAPITAL LINE

Capitaline database provides fundamental and market data on more than 35,000 Indian listed and

unlisted companies, classified under more than 300 industries, along with powerful analytic tools.

Extensive data and analysis on every company profile, directors, more than 10-year financials

(P&L, balance sheet, cash flow, consolidated financial data, segment data, forex data, R&D data,

ratios, etc), quarterly results, ownership pattern, finished products, raw materials, share price

data, directors' report, management discussion, notes to account, business news, corporate events,

etc. Capitaline database is a sister product of Capital Market, India's foremost investment

fortnightly. The specialized expertise in data collection, standardization and presentation built up

since 1985 has earned Capitaline database the highest level of respect and confidence in the

financial information Industry. (Capitaline)

Fig. II: The figure shows the screen shot of the Pilot Page of Capitaline.

8

Capital Line Master Files Steps:

File Name: Background

Components:

CO_CODE, CO_NAME, BSE Code, ISIN No, Company Long Name, Sector, BSE Scrip ID, BSE Group,

Bloomberg, Sensex, Nifty, BSE 100, BSE 200, BSE 500, BSE Teck, BSE IT, BSE CG, BSE FMCG, BSE CD,

BSE HC, BSE PSU, BSE Dollex, BSE Auto, BSE Greenex, BANK NIFTY, BSE IPO, BSE BANKEX, BSE

Metal, BSE Mid Cap, BSE Oil and Gas, BSE Power, BSE Realty, BSE Small Cap, Shariah 50, Nifty Jr,

Midcap 200, CNX 500, CNX IBG, CNX 100, CNX MNC, CNX IT, CNX 200, CNX FMCG, CNX Millen, CNX

PSE, CNX AUTO, CNX COMMODI, CNX CONSUMP, CNX DIVIDEN, CNX ENERGY, CNX FINANCE, CNX

INFRAST, CNX MEDIA, CNX METAL, CNX MID50, CNX MIDCAP, CNX PHARMA, CNX REALTY CNX

SERVICE, CNX SMALL CAP

File Name: Returns

Components:

Co_Code, Co_Name, BSE Code, ISIN No, Company Long Name, 7D, 15D, 1M, 3M, 6M, 1Y

File Name: Latest Equity

Components:

CO_CODE, CO_NAME, BSE Code, ISIN No, BSE Scrip ID, Price Date, Date:(ind. data), Latest No. of

Equity Shares, Latest Reserve, Latest EPS-Unit Curr., Latest Book value-Unit Curr., Face Value,

Latest Market Price-Unit Curr.(BSE), Latest P/E Ratio(BSE), Latest P/BV(BSE),52 Week High – Unit

Curr.(BSE), 52 Week High-Date(BSE), All Time High -Unit Curr.(BSE), All Time High-Date(BSE), 52

Week Low -Unit Curr.(BSE), 52 Week Low-Date(BSE), All Time Low -Unit Curr.(BSE), All Time

Low-Date(BSE), Market Capitalisation(BSE), Dividend Yield -%(BSE), Latest Industry P/E(BSE),

Latest Industry P/BV(BSE), Close PE (201504), Close PE (201503), Difference in PE in Comparison

with the Industry PE, Category Band

File Name: Monthly Equity

Components:

CO_CODE, CO_NAME, BSE Code, BSE Scrip ID, Year and Month(Latest), Month(Latest), Year

(Latest), High(Latest), Low(Latest), Close(Latest), High PE(Latest), Low PE(Latest), Close PE

(Latest), Market Cap(Latest), Volume(Latest), No of Trades(Latest), Net Turnover-Rs Thousands

(Latest)

File Name: MF Category (Mutual Fund Category)

Components:

DCode, RCode, Fund Name, Category

9

Steps for Extraction of Background file.

1. Open Capital Line >> Open Screener [S symbol.

2. Go to Domain, click on Listed Companies (All the listed companies are selected. A total of 8808 companies as on 07/05/2015)

3. Click on the check box and click on select all.

4. Click on Filters. Open General >> Background.

5. For Compilation of the Background Files desired fields are being chosen. Eg. Company Long Name, BSE Code, BSE Scrip ID, and all the BSE Indices.

6. Field criteria value can also be set based on our requirement.

7. Query saved as PT_Background so that fields need not be selected each month.

8. Run Query to import the files in Excel format. Fields are being verified and can be sorted out accordingly as per requirement.

10

Steps for Extraction of Return File.




4. Click on Filters. Open General >> Share Price Data

5. Click on Stock Return >> BSE Return

6. Select Simple, Select the date manually and separate fields according to 7D,15D, 1Month,6 Months, 1Year Respectively.

7. Query saved as PT_Returns so that fields need not be selected each month.


11

Steps for Extraction of Latest Equity File.





5. Click on Latest Equity

6. Select all fields.

7. Query saved as PT_Latest Equity so that fields need not be selected each month.


12

Steps for Extraction of Monthly Equity File





5. Click on Monthly Adjusted Price >> BSE

6. Select all fields.

7. Query saved as PT_Monthly Equity so that fields need not be selected each month.


13

Steps for Extraction of Debt. MF Category

1. This List is being generated by the Investment team on a Monthly/ Quarterly / Yearly Basis

2. The file includes old and new mutual fund scheme codes. 3. Also includes the type of mutual fund i.e Arbitrage, Liquid, Diversified, Mid Cap, Large Cap,

Small-Micro Cap and GILT Funds.

14

MFI Explorer File Steps:

MFI Explorer File: Directly extracted from MFI Explorer. Components:

MutFund_Name, Scheme Code, Scheme Name, Port Date, Company Code, Company Name, Corpus

Percent, Market Value(Crs.), No Of Shares, Company Instrument, Company Nature, Company ISIN,

BSE Code

Fig. III. Excel Sheet extracted from MFI Explorer. The Screen Shot Show the

various components as per the query in the MFI Explorer.

15

Steps for Extraction of MFI Explorer Files

1. Go to Menu >> General >> Select Schemes. The Selected Schemes are Parent Open ended equity mutual fund schemes.

2. Go to Menu >> Performance >> Query Builder 3. Select the fields as per your requirement get the output in Excel and save the file on a

monthly basis.

Fig. IV: Excel Sheet extracted from MFI Explorer. The Screen Shot Show the

various components as per the query in the MFI Explorer.

16

Master File Steps:

FIRST PART COMPONENTS:

Concat, Concatenate, Benchmark, AMFI Sector Classification

Concatenate: Helps us to calculate the change in number of Shares Month on Month basis. It takes

into consideration Scheme Code, Date and BSE Code.

Benchmark: Benchmark can be mentioned manually or benchmark can be exported from MFI

Explorer. Different Funds have different benchmarks that they follow. For Example it is no

necessary that all the Large Cap Funds will have the same benchmark.

17

AMFI Sector Classification: Sector classifications have been done on the basis of AMFI (Association

of Mutual Funds of India).

Formula USED: VLOOKUP (BSE CODE) >> AMFI

SECOND PART COMPONENTS:

AMC, Scheme Code, Fund Name, Date, MFI Co Code, Company Name, % to Corpus, Market Value

(Rs. Crs), No. of Shares, Instrument Nature, ISIN, BSE, NSE

The Data in this part is being extracted from the MFI Explorer. Data is on a month on Month basis.

The data for the latest month is kept on top while the later months are kept at the bottom.

18

THIRD PART COMPONENTS

Cline Code, Cline Co Name, Price, Market Cap, Market Cap Band, Instrument, Change in Share Price

Band, Change in Volume of Shares Traded, Return, Debt Market Cap Ratio, Additional Cline 2

Cline Code: Cline Code represents capitaline company code. Formula used VLOOKUP (BSE Code,

ISIN Code) >> Cline Company Name.

Cline Co Name: Cline Co Name represents capitaline company name. Formula used VLOOKUP (BSE

Code, ISIN Code)>> Cline Company Name.

19

Price: Price represents the current market price of the stock. Price variable can be adjusted based

on the monthly average price or the day price. Formula Used VLOOKUP (BSE Code, ISIN Code)>>

Capitaline Master.

Market Cap: Market Cap represents the total market capitalization of a company. It represents the

value of all the listed shares of that particular company. Formula Used VLOOKUP (BSE Code, ISIN

Code)>> Capitaline Master.

Note: Market cap represents the total market capitalization based on the current price of the share.

Market Cap Band: Market cap band represents the current market cap scenario of the company.

The company can be small, mid, micro or a large cap company. Bifurcations have been made on the

basis of size of the market capitalization.

The entire Market cap lies in the range of 0 to 10000 Cr, 10000 Cr. and above. It signifies type of

companies the mutual funds are investing in.

Instrument: Instrument signifies the type of instrument the Mutual Fund scheme has invested in, it

can be an equity or debt. Any other instrument apart from equity is named as “Other Instrument”.

Change in Share Price Band: Change in the share price band represents the percentage change in

the price of shares. The change in share price detail is on month on month basis. Data is framed

from MFI Explorer as the current month on top and the previous month on bottom.

The range of change in Share price band is categorized into 6 bifurcations from “More than 30%

Decrease to More than 30% increase “.

Change in Volume of Shares Traded: Change in the volume of shares traded represents the

percentage change in the volume of shares traded. This field forms an important part as we see

from our analysis that there is not always an increase in the price due to an increase in the volume

of shares being traded.

The range of change in volume of shares traded band is categorized into 6 bifurcations from “More

than 30% Decrease to More than 30% increase “.

Return: Returns on the stock. Returns can be 1M, 3M, 6M, 1Y returns. Formula used HLOOKUP

(“Based on time frame”) >> Capitaline Master.

Returns can turn out to be positive or negative.

20

FOURTH PART COMPONENTS

Index Weighatge, Coverage Ratio, Active Ratio, Scheme Classification, Previous Month, MoM

Change in Shares, No Chg in Shares, M Val of Chg in Shares (Cr.), MTHYR

Index Weighatge: This field shows the weightage of the particular stock in stated benchmark index.

Benchmark index can be BSE Sensex, Nifty, BSE 100, BSE 200, BSE Sharia Index etc. It means a

mutual fund considering BSE Sharia as its benchmark will only invest in stocks present in the BSE

Sharia index.

Note: it is not necessary that all large cap, small cap etc. should follow the same set of index. A

HDFC fund may follow a different index than a DSP Blackrock fund though both may be large cap

funds.

21

Coverage Ratio: Coverage ratio is the weightage of that particular stock in the fund. We usually

compare the coverage ratio with the index weightage. It briefs us about the stocks exposure in the

fund as compared to the exposure of the stock in the index.

Active Ratio: The difference of the corpus percentage and the coverage ratio is the active ratio. It

signifies what percentage of the investment has been done outside the coverage ratio.

Note: Till date no mutual fund officially publishes the coverage rate or the active ratio.

Scheme Classification: Scheme classification shows type of scheme i.e Diversified, balanced, large

cap, GILT Funds etc.

MoM Change in Shares: MoM shows the changes in the number of shares on a monthly basis. There

can be an increase or decrease in the number of shares on a monthly basis.

M Val of Chg in Shares (Cr.): It emits the market value of the MoM change in Shares.

22

Comparative Analysis

COMPARISON OF LARGE CAP FUNDS FOR MARCH TO APRIL

Comparison has been done on the basis of the type of Mutual Fund.

Case1. 10 – 20 % increase in the value of the stock.

10 – 20 % increase in the volume of shares traded.

Date 30/04/2015 Market Cap Band (All) Change in Share Price Band 10 to 20 % Increase Change in Volume of Shares Traded 10 to 20 % Increase

Sum of % to Corpus Column Labels

Row Labels HCL Technologies Ltd. Ultratech Cement Ltd.

Birla Sun Life Frontline Equity Fund - Regular - Growth

0.3825

HSBC Equity Fund - Growth 4.0832 SBI Bluechip Fund - Growth

1.4774

Grand Total 4.0832 1.8599

As per the above observation we find that HCL Tech and Ultratech Cement has outperformed in

the month of March to April Giving above 10 % returns. Invariably there is a substantial increase in

the volume of shares traded as well.

What we also find is that HSBC Equity fund was holding more than 4 % of its corpus. Values for the

same are mentioned below:

Date 30/04/2015 Market Cap Band (All) Change in Share Price Band 10 to 20 % Increase Change in Volume of Shares Traded 10 to 20 % Increase

Sum of Market Value (Rs. Crs) Column Labels

Row Labels HCL Technologies Ltd. Ultratech Cement Ltd.


33.4013

HSBC Equity Fund - Growth 26.4165 SBI Bluechip Fund - Growth

25.5946

Grand Total 26.4165 58.9959

HSBC Equity fund holds 26.41 Cr. worth of Shares for HCL Tech. Birla Holds around 33.40 Cr. of

Ultratech Shares as compared to 25.59 Cr. of holdings by SBI Bluechip Fund.

23


More than 30 % increase in the volume of stocks traded.

Date 30/04/2015 Market Cap Band (All) Change in Share Price Band 5 to 10 % Increase Change in Volume of Shares Traded More Than 30 % Increase


Row Labels Blue Dart Express Ltd.

Century Textiles & Industries Ltd.

IndusInd Bank Ltd.

Lupin Ltd.

Maruti Suzuki India Ltd.

Sun Pharmaceuticals Industries Ltd.

Wipro Ltd.

Franklin India Bluechip - Growth

263.616 HDFC Index Fund - Sensex Plus Plan

1.5451

HDFC Large Cap Fund - Growth

37.26 IDBI India Top 100 Equity Fund - Growth

3.7554

IDFC Imperial Equity Fund - Regular - Growth

3.7071 Kotak 50 - Regular - Dividend 3.4668

Principal Large Cap Fund - Growth

2.8947 Reliance Focused Large Cap Fund - Growth

37.26

SBI Bluechip Fund - Growth

5.844 Grand Total 3.4668 2.8947 267.3231 5.844 74.52 3.7554 1.5451

The figure specifies there is substantial amount of holding of IndusInd bank by Franklin India

Bluechip- Growth Fund. The stock has risen almost 10% in the period of March to April. A holding

of 263 Cr. might have given outstanding returns for Franklin India Bluechip – Growth Fund. Stock

picking had been precise and accurate.

24

Case3. 10 – 20 % increase in the value of the stock based on sector.

Date 30/04/2015

Market Cap Band (All) Change in Share Price Band 10 to 20 % Increase


Row Labels AUTOMOBILE CEMENT & CEMENT PRODUCTS CONSTRUCTION

CONSUMER GOODS


33.4013

103.849

Birla Sun Life Top 100 Fund - Growth Franklin India Bluechip - Growth HDFC Large Cap Fund - Growth

15.249

HSBC Equity Fund - Growth 9.3156 12.1865 ICICI Prudential Focused Bluechip Equity Fund - Retail – Growth

ICICI Prudential Top 100 Fund - Growth

21.1063 IDFC Imperial Equity Fund - Regular - Growth

L&T India Large Cap Fund - Growth

3.202 4.3034

SBI Bluechip Fund - Growth

25.5946

12.5327

Sundaram Growth Fund - Regular - Growth Sundaram Select Focus - Regular - Growth Tata Pure Equity Fund - Plan A - Growth UTI Leadership Equity Fund - Growth

UTI Top 100 Fund - Growth Grand Total 9.3156 71.1824 24.3083 135.9341

Consumer goods have been a major contributor of increase in the portfolio value during the month

of March to April. BirlaSun Life was holding a major chunk of corpus in the consumer goods

segment.

Moreover Cement and Cement Products had also outperformed the other sectors. Top AMC’s were

holding a major part of the corpus in this sector.

25

COMPARISON OF LARGE CAP FUNDS FOR APRIL TO MAY


10 – 20 % increase in the volume of shares traded.

Date 31/05/2015 Change in Share Price Band 10 to 20 % Increase Change in Volume of Shares Traded 10 to 20 % Increase


Row Labels Ambuja Cements Ltd. Bharti Airtel Ltd.

Britannia Industries Ltd.

HSBC Equity Fund - Growth

1.5224 SBI Bluechip Fund - Growth

1.2967

Sundaram Growth Fund - Regular - Growth 0.5088 Grand Total 0.5088 1.5224 1.2967


5 – 10 % Decrease in the volume of shares traded.

Date 31/05/2015 Change in Share Price Band 5 to 10 % Increase Change in Volume of Shares Traded 5 to 10 % Decrease


Row Labels Castrol India Ltd. Gujarat Pipavav Port Ltd.

KPIT Technologies Ltd.

Yes Bank Ltd.

Birla Sun Life Top 100 Fund - Growth

1.3203


1.5128 Kotak 50 - Regular - Dividend

1.0003

LIC Nomura Equity Fund - Growth

1.2179 Sundaram Select Focus - Regular - Growth 0.9921

Grand Total 0.9921 1.5128 1.2179 2.3206

26

Case3. All companies with a market cap of 10000 Crores.

5 – 10 % Decrease in the volume of shares traded.

Date 31/05/2015 Market Cap Band Above 10000 Crores Change in Share Price Band 10 to 20 % Increase


Row Labels CEMENT & CEMENT PRODUCTS

CONSUMER GOODS ENERGY

FINANCIAL SERVICES

INDUSTRIAL MANUFACTURING

MEDIA & ENTERTAINMENT PHARMA


1.9345 57.1374

Birla Sun Life Top 100 Fund - Growth

0.1888 HDFC Large Cap Fund - Growth

15.741


21.44

14.141

ICICI Prudential Focused Bluechip Equity Fund - Retail - Growth

89.858

ICICI Prudential Top 100 Fund - Growth

18.418 IDFC Imperial Equity Fund - Regular -

Growth

3.2375 SBI Bluechip Fund - Growth

38.8292

54.22

26.5835

Sundaram Growth Fund - Regular - Growth 1.3249

Tata Pure Equity Fund - Plan A - Growth

UTI Leadership Equity Fund - Growth

16.815 UTI Top 100 Fund - Growth

11.1276

Grand Total 1.3249 54.5702 39.858 65.3476 16.815 5.3608 187.72

As per the above observation we find that there has been a substantial investment and return in

the pharmaceutical sector. Returns in the April to May Months have been in the range of 10-20%

MoM (Month on Month) basis.

The total investment in the pharmaceutical sector in the April to May months have been in the

range of 187.72 Crores. The major funds investing in these sectors are ICICI Prudential, BirlaSun

life and SBI Bluechip.

The consumer goods sector has consistently performed over 2 months from March to April.

27

COMPARISON OF DIVERSIFIED FUNDS FOR MARCH TO APRIL

Case1. All companies with a market cap of 10000 Crores.

More than 30% Increase in the

Date 31/03/2015 Market Cap Band Above 10000 Crores Change in Share Price Band More Than 30 % Increase

Sum of Market Value (Rs. Crs)

Row Labels Crompton Greaves Ltd.

Power Grid Corporation of India Ltd.

Birla Sun Life Advantage Fund - Growth Birla Sun Life Equity Fund - Growth Birla Sun Life Long Term Advantage Fund - Growth Canara Robeco Equity Diversified - Growth Goldman Sachs India Equity Fund - Growth ICICI Prudential Value Discovery Fund - Growth

96.1388

Mirae Asset India Opportunities Fund - Regular - Growth Principal Growth Fund - Growth Reliance Growth - Growth 94.6267

SBI Magnum Multi Cap Fund - Growth UTI Multi Cap Fund - Regular - Growth Grand Total 94.6267 96.1388

28

MARKET EXPOSURE OF INFRASTRUCTURE FUNDS FOR APRIL

The figure shows the allocation of stocks for all prominent Infrastructure funds in Large Cap, Mid

Cap and Non-Equity Exposure.

DSP Blackrock India Tiger Fund - Growth has the maximum exposure in the large cap segment

compared to other funds. HSBC Progressive Themes Fund – Growth has the least amount of

exposure in the Large Cap Sector but it has maximum exposure in the Mid Cap Sector.

As per the figure we can also see a huge amount of exposure in the Non- Equity front for certain

funds. This is generally CBLO’s (Collateral Borrowing and Lending Obligation) and cash

Components.

Date 30/04/2015 Instrument (All)


Row Labels LARGECAP MID CAP Non Equity

SMALL CAP Total

Birla Sun Life Infrastructure Fund - Plan A - Growth 45.0596 49.9936 4.947

100

Canara Robeco Infrastructure Fund - Growth 62.602 33.2983 4.0997

100

DSP BlackRock India Tiger Fund - Regular - Growth 61.0561 36.6496 2.2943

100

Franklin Build India Fund - Growth 52.8241 33.435 13.7409

100

HDFC Infrastructure Fund - Growth 51.2808 41.0143 7.5889 0.1158 100

HSBC Progressive Themes Fund - Growth 28.8644 66.5091 4.6266

100

ICICI Prudential Infrastructure Fund - Growth 60.5176 36.6274 2.8548

100

IDFC Infrastructure Fund - Regular - Growth 55.4731 30.6412 13.8856

100

Kotak Infrastructure & Economic Reform Fund - Regular - Growth 47.8644 50.2254 1.9103

100

L&T Infrastructure Fund - Growth 47.1656 41.0646 11.7698

100

SBI Infrastructure Fund - Growth 45.5524 46.1119 8.3357

100

Sundaram Infrastructure Advantage Fund - Regular - Growth 49.3392 45.6681 4.9928

100

Tata Infrastructure Fund - Plan A - Growth 52.3584 40.6493 6.9927

100

UTI Infrastructure Fund - Growth 62.5544 36.1685 1.2769

100

Grand Total 722.5121 588.0563 89.316 0.1158 100

29

VOLUME MOVERS FOR INFRASTRUCTURE FUNDS FOR APRIL

Date 30/04/2015 Change in Share Price Band (All) Change in Volume of Shares Traded 10 to 20 % Increase


Row Labels Ambuja Cements Ltd. Bharti Airtel Ltd.

Ultratech Cement Ltd.

Birla Sun Life Infrastructure Fund - Plan A - Growth

Canara Robeco Infrastructure Fund - Growth

8.783

DSP BlackRock India Tiger Fund - Regular - Growth

2.2279

Franklin Build India Fund - Growth

4.0862

1.5079

HDFC Infrastructure Fund - Growth

1.6344

HSBC Progressive Themes Fund - Growth

ICICI Prudential Infrastructure Fund - Growth

4.6182

1.1472

IDFC Infrastructure Fund - Regular - Growth

10.1836

4.8545

Kotak Infrastructure & Economic Reform Fund - Regular - Growth

9.6423

4.7662

L&T Infrastructure Fund - Growth 1.1287 0.9428

SBI Infrastructure Fund - Growth

7.4587

Sundaram Infrastructure Advantage Fund - Regular - Growth 1.6506

0.9869

Tata Infrastructure Fund - Plan A - Growth

3.6781

UTI Infrastructure Fund - Growth

0.4966

3.4822

Grand Total 2.7793 39.0628 31.4339

The figure represents the volume movers in the range of 10-20% MoM Basis. Both Bharti Airtel Ltd

and UltraTech Cement have been volume movers.

All the major infra funds holds a substantial amount of Shares in Bharti Airtel and UltraTech

Cement Ltd.

30

DISTRIBUTION OF EQUITY COMPONENT FOR INFRASTRUCTURE FUNDS FOR THE MONTH OF MAY

Date 31/05/2015 Instrument Equity


Row Labels LARGECAP MID CAP SMALL CAP

Birla Sun Life Infrastructure Fund - Plan A - Growth 48.0115 49.613 DSP BlackRock India Tiger Fund - Regular - Growth 60.532 35.4868 HDFC Infrastructure Fund - Growth 53.1627 40.8644 0.0904

HSBC Progressive Themes Fund - Growth 28.9965 69.9899 ICICI Prudential Infrastructure Fund - Growth 56.5226 35.3504 IDFC Infrastructure Fund - Regular - Growth 54.296 32.2596 Kotak Infrastructure & Economic Reform Fund - Regular - Growth 46.7018 46.4097 SBI Infrastructure Fund - Growth 44.1222 43.6047 Sundaram Infrastructure Advantage Fund - Regular - Growth 47.9692 48.1135 Tata Infrastructure Fund - Plan A - Growth 52.1493 43.4278 UTI Infrastructure Fund - Growth 61.6769 36.5689 Grand Total 554.1407 481.6887 0.0904

All the infrastructure funds have majorly invested in Large and Mid Cap segments.

31

CHANGE IN NUMBER OF SHARES FOR INFRASTRUCTURE FUNDS FOR THE MONTH OF MAY

The figure shows the sum of all the MoM change in Shares. As we can see HDFC infrastructure fund

is the market leader with a net asset under management of 1971.67 Crores followed by ICICI Pru

Infrastructure fund and DSP Blackrock India Tiger fund.

As per the figure we also find that Tata Asset Management highest MoM change in the number of

Shares. There has also been massive selling by DSP Blackrock Mutual Fund. What we also find in

our observation that the corpus of top 5 mutual funds is massive as compared to its younger peers.

Date 31/05/2015

Values

Row Labels Sum of MoM Change in Shares

Sum of Market Value (Rs. Crs)

Birla Sun Life Infrastructure Fund - Plan A - Growth 489775 834.27

DSP BlackRock India Tiger Fund - Regular - Growth -562852 1609.68

HDFC Infrastructure Fund - Growth 2367390 1971.67

HSBC Progressive Themes Fund - Growth -65000 137.89

ICICI Prudential Infrastructure Fund - Growth 2141418 1757.94

IDFC Infrastructure Fund - Regular - Growth -159624 136.07

Kotak Infrastructure & Economic Reform Fund - Regular - Growth -63708 144.29

SBI Infrastructure Fund - Growth 400000 552.89

Sundaram Infrastructure Advantage Fund - Regular - Growth 451217 710.25

Tata Infrastructure Fund - Plan A - Growth 3772146 731.39

UTI Infrastructure Fund - Growth 29410 1565.79

Grand Total 8800172 10152.1272

32

ACTIVE RATIO AND COVERAGE RATIO OF ALL INDEX FUNDS

Portfolio profiles are always carefully monitored in terms of 'active ratio’ and 'coverage ratio'

which measures aggregate active weights in individual stocks and overlaps with benchmark

holdings respectively.

While active ratio is a key metric for the alpha generation potential of a portfolio, coverage ratio

represents the alpha preservation component needed to maintain the desired beta and style

characteristics. The figure shows the Active ratios and the coverage ratios of all the prominent

index funds in the industry.

Date 31/05/2015

Row Labels Coverage Ratio Active Ratio Total

Birla Sun Life Index Fund - Growth 88.92 11.08 100.00

HDFC Index Fund - Nifty Plan 96.90 3.10 100.00

ICICI Prudential Index Fund 81.11 18.89 100.00

IDFC Nifty Fund - Regular - Growth 92.31 7.69 100.00

LIC Nomura MF Index Fund - Nifty - Growth 97.79 2.21 100.00

Principal Index Fund - Nifty - Growth 99.89 0.11 100.00

Reliance Index Fund - Nifty Plan - Growth 98.99 1.01 100.00

SBI Nifty Index Fund - Growth 98.16 1.84 100.00

Tata Index Fund - Nifty Plan - Plan A 99.52 0.48 100.00

UTI Nifty Fund - Growth 96.84 3.16 100.00

Grand Total 951.40 49.57 1000

33

Findings and Observation

Findings and observation are based on the current economic scenario.

1. Oil Prices:

Oil prices have risen about 35-40% from the low levels seen in the recent past. Currently crude oil

is trading at 66 Dollars per Barrel. India has benefitted disproportionately from the sharp

fundamental fall in crude prices. Crude price has fallen from ~110 in the FY 14 to ~65 now.

(http://www.oil-price.net/, 2015) India's crude import bill for FY 14 was 165 Billion USD. The

sharp fall has helped the economy save nearly 50 Billion USD. The budgeted subsidy bill for

petroleum has been reduced by Rs. 30 thousand Crs. Further, with the fuel reforms, the pressure

on Government from increasing crude prices is far lower. India will be easily able to manage the

current oil prices (or even a marginally higher level from now). (NASDAQ, 2015) In addition, the

fundamental outlook for crude is for the prices to remain muted. Therefore, the recent hike in the

prices is not a major concern but oil and Gas stocks have thereby not performed substantially.

Returns in the Oil and gas sector are a mere 2.5% for the past 3months. Mutual funds holding huge

corpus under the Oil and Gas Sector have not benefited much from the sharp fall in the crude oil

prices.

2. Rupee:

Rupee had depreciated to 64 levels against the Dollar - lowest in 20 Months, before retracing

marginally to current levels of 63.7. However, despite the recent depreciation, Rupee is one of the

Best among EM currencies. Rupee has lost just 1.86% in the current year, as against Turkish Lira or

Brazilian Real, which have fallen by about 14%. Over the medium term, sustained economic

growth will attract capital flows, and help Rupee. (Currency, 2015)

Global investors still feel that the Indian markets are overvalued. The market had therefore had

correction in the recent months leading to a decrease in NAV Net asset value) of all the leading

funds.

3. Bond Yields

The 10 Year G-Sec Yields had inched closer to 8%.The movement in gilt yields is in line with sharp

sell-off in the global bonds. US 10 year Yield inched up to 2.27%, a sharp increase in the recent

past, perhaps on the fear that oil prices could go up further. In my view India is one of the few

34

countries in the world, which could afford to cut interest rates meaningfully - Current over-night

rates are 250 bps above CPI inflation. Rates across the yield curve far higher. The Central Bank is

targeting a real rate of 1.5-2%, leaving enough headroom to cut rates. Continuing fiscal prudence,

disinflationary trends and benign liquidity scenario are expected to result in lowering of interest

rates. The Lowering of the rate cut could lead to an improvement of market sentiments.

4. Monsoon and RBI Rate Cuts.

The RBI cut interest rates for a third time this year on 2nd June 2015, taking advantage of subdued

inflation to lend more support to an economy that the bank itself says is not doing as well as latest

impressive growth numbers suggest. The Reserve Bank of India also left open the possibility of

further cuts later this year, even with forecasts of a below-average monsoon that could put

pressure on food prices. Previous cuts in January and March had also been by 25 basis points. As

on the first week of June the monsoon was below average thus leading to only 25 basis points

reduction in the interest rates rather than a 50 basis point reduction in the rate cut estimated by

many analysts. Over the month of June the conditions of Monsoon had increased leading to an

estimation of further rate cut in the next quarter. If the conditions of stable monsoon improve we

can expect further rate cut leading to an uptick in Sensex and Nifty indices.

Despite demands from India's commercial banks, the RBI did not take steps to free up liquidity,

which bankers had said were needed for them to lower lending rates further and pass on the

benefits of monetary easing to the broader economy. Instead, with growth in bank lending at its

lowest in almost two decades, the RBI urged banks to reduce rates quickly.

The market had been down by about 600-700 points on the day the rate cuts had been declared.

The Mid and Micro cap had fallen by around 10-12% on intraday trading. The conditions of

Monsoon improved during the month of June leading to an improvement in market sentiments and

leading to an increase in the Indices.

5. Sharp run-up in markets.

Indian equities had gone up by 55% since Sep 2013 (since Mr. Modi was announced as BJP

candidate), before the recent correction of 8-10%.There may be a bit of fatigue and profit-booking

in some stocks. However, the valuation of Indian equities is very attractive. At 19x trailing P/E on

low cyclical earnings, and 15x 2 Yr Fwd PE on expectations of decent turnaround in earnings, the

valuations are quite attractive. Market Cap / GDP at 75% low in absolute and relative terms.

35

6. Flows to other countries.

Countries like China, Korea, Taiwan and Japan have been attracting inflows in the recent past. Most

investors were heavily underweight in countries like China because their economy was

systemically slowing down. However, cheap valuations have started attracting fund flows recently.

For instance, since the beginning of August 2014, their markets have gone up by nearly 85%. Some

of the recent IPOs have also attracted flows into China. However, over the medium to long term,

investors are likely to be guided by fundamentals, and hence we believe India is well-placed to

receive flows. In Dollar Terms, Indian equity markets are at the same level as in May 2014, around

elections, making it particularly attractive for FIIs. This had led to a correction in the market.

FIIs have pulled out nearly Rs. 4000 Crs from equity markets in the first two weeks of May.

However, FIIs have been consistently investing into India over the longer term. Since 2009, they

have invested 120 Billion USD, an average of 20 Bn USD per year. They have been net sellers only in

2008-2009 during the global crisis when they had sold 10.4 Bn USD. With the fundamental outlook

for India remaining strong, we expect FII flows to be robust. In addition to FII flows, Domestic

Flows will also help. Mutual Funds, for instance, invested 6.6 Bn USD in 2014.

7. Policy Issues.

The current government is working on various reforms and is trying to implement reforms swiftly.

Government is firmly committed to bringing about key reforms and implementing them. GST has

been passed in the Lok Sabha, diesel price has been deregulated, gas price revision, targeted

subsidy, hiking FDI limit in critical sectors of Railways, Defence and Insurance, etc., to name a few.

It’s very much likely that more such reforms will get implemented, benefiting the economy.

36

Recommendations

1. India is extremely well-placed for long-term economic growth and to generate attractive

equity returns. The current market correction should be used as a good opportunity to

increase allocation to equities. Mutual Funds provides up an opportunity to invest in

mutual funds with lesser risk and higher returns.

2. It is on the basis on one’s risk appetite that once should decide on the type of Mutual Fund

he should invest in. Equity Mutual Funds is high risk instrument and one should invest in

equity mutual funds over long term to negate the risk factor. Balanced Funds invest in both

equity and debt components and thus the risk factor is moderate. Tata Balance fund has

given decent return of 16 % over a period of 5 Years. Certain Mutual Funds invests in Bonds

and Government securities where the risk factor is less but the returns are low as well.

3. Investing in mutual fund once should always have a long term perspective. If one would

have remained invested in Reliance Growth Fund for 20 years it would have earned CAGR of

above 20 %. In short if one would have invested Rs. 1,00,000 in 1995 he would have an

asset value of 78,50,000 by 2015. Thus it is advisable to invest in mutual funds to fulfill long

term goals.

4. Mutual Funds can also be segmented into various types based on the sector where the Fund

has invested its corpus into. The various sectors might be Pharmaceuticals, Banking and

Financial Services, Infrastructure or PSU’s. We should be very clear about the asset class the

fund is investing into. The various asset classes might not give similar returns every time.

Pharmaceuticals Funds has given maximum returns for the past 10 Years where as Banking

& Financial Services have given a return of more than 60 % CAGR return only over a period

of 3 years. Thus the portfolio of the scheme should be thoroughly analyzed before investing.

5. One must take help from financial planners and investment advisors before investing into a

mutual fund scheme.

37

Bibliography

AMFI. (2015, 06 11). AMFI. Retrieved from AMFI: http://www.amfiindia.com/research-information/mf-history

Capitaline. (n.d.). Capitaline. Retrieved from Capitaline: https://www.capitaline.com/Demo/Plus.aspx

Currency, H. (2015, 06 22). Historical Currency. Retrieved from http://tools.currenciesdirect.net/currency-chart/

Explorer, M. (2015, 06 11). MFI Explorer. Retrieved from MFI Website:

http://www.mutualfundindia.com/ProductEnquiry/MFIExplorer

http://www.oil-price.net/. (2015, 06 15). Oil-price. Retrieved from Oil-price: http://www.oil-price.net/

Jain, P. (2015, 05 23). Mutual Fund Perspectives. (T. AMC, Interviewer)

NASDAQ. (2015, 06 15). NASDAQ Oil Prices. Retrieved from NASDAQ Oil Prices:

http://www.nasdaq.com/markets/crude-oil.aspx

TataAMC. (2015, 06 11). Tata AMC. Retrieved from Tata AMC: http://www.tata.co.in/company/profileinside/Tata-

Asset-Management

38

Contact Information

PRANJAL MITRA SUMMER INTERNSHIP TRAINEE

Tel 7033174839

[email protected]

Company Information

Tata Asset Management Limited

9th Floor, Mafatlal Centre, Nariman Point

Mumbai 400021

Tel 180-02090101

http://www.tatamutualfund.com/

http://www.tatamutualfund.com/

portfolio analysis of all the open ended equity mutual fund schemes in india

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