A

PROJECT REPORT

ON

PERFORMANCE EVALUATION IN PUBLIC AND PRIVATE SECTOR

MUTUAL FUNDS AT
INDIAN INFOLINE FINANCE LIMITED

Submitted by

ABDULAZIZ KHAN

(Hall ticket no: 1062-20-684-159)

SUBMITTED IN PARTIAL FULFILLMENT OF THE AWARD OF THE REQUIREMENT FOR THE

AWARD OF DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION

DEPARTMENT OF BUSINESS ADMINISTRATION

ANWARUL ULOOM COLLEGE

(AUTONOMOUS)
(Affiliated To Osmania University)

NEW MALLEPALLY, HYDERABAD.

(2022-2023)

1
 DECLARATION

I hereby declare that this project report titled “ PERFORMANCE EVALUATION IN

PUBLIC AND PRIVATE SECTOR MUTUAL FUNDS WITH REFERENCE TO
INDIAN INFOLINE FINANCE LIMITED ” Submitted by ABDULAZIZ KHAN
Bearing Roll no. 1062-20-684-159 to the Department of Business Administration,
Anwarul Uloom College, is a bonafide work undertaken by me and it is not submitted to
any other University or Institution for the award of any degree/ diploma/ certificate or
published any time before .

DATE: ABDULAZIZ KHAN

PLACE: (1062-20-684-159)

2
 ABSTRACT

Investment may be defined as an activity that commits funds in any financial/physical form in

the present with an expectation of receiving additional return in the future. The expectation

brings with it a probability that the quantum of return may vary from a minimum to a

maximum. The possibility of variation in the actual return is known as investment risk. Thus

every investment involves a return and risk. The investor can choose the investment funds he

wants to invest his money, providing the investor an opportunity to have a direct stake in the

performance of the financial markets. He can also benefit from attractive tax advantages.

A mutual fund is a professionally managed firm of collective investments that collects money

from many investors and puts it in stocks, bonds, short-term money market instruments, and/or

other securities. The fund manager, also known as portfolio manager, trades the fund's

underlying securities, realizing capital gains or losses and passing any proceeds to the

individual investors. Today, the worldwide value of all mutual funds totals more than $26

trillion in assets.

The principal paid are invested in fund/funds of the investor’s choice (depending on the

Allocation rate) & units are allocated depending on the price of units for the fund/funds.

3
 ACKNOWLEDEMENT

On successful completion of the project I would like to express my profound, gratitude to all
those who have been very supportive in the preparation of my project report.

I would like to thank the Project guide Mrs. Tabasum Wajida, for the
guidance, encouragement and valuable suggestions offered during the project report.

I would also like to thank INDIAN INFOLINE FINANCE LIMITED for guiding me to
explore the PERFORMANCE EVALUATION IN PUBLIC AND PRIVATE SECTOR
MUTUAL FUNDS and giving me the exposure of the procedures or processes followed by the
company.

4 4
Table of Contents

DECLARATION........................................................................................................................... 2
ACKNOWLEDEMENT................................................................................................................5
ABSTRACT....................................................................................................................................6
CHAPTER-I...................................................................................................................................8
INTRODUCTION......................................................................................................................9
NEED FOR THE STUDY 9
SCOPE OF THE SYUDY 10
OBJECTIVES OF THE STUDY 11
LIMITATIONS OF THE STUDY..........................................................................................11
CHAPTER-II...................................................................................................................................
REVIEW OF LITERATURE.................................................................................................12
CHAPTER-III..................................................................................................................................
RESEARCH METHODOLOGY...........................................................................................15
CHAPTER-IV..................................................................................................................................
THEORITICAL FRAMEWORK..........................................................................................17
CHAPTER -V...................................................................................................................................
INDUSTRY PROFILE................................................................................................................30
CHAPTER-VI..................................................................................................................................
COMPANY PROFILE................................................................................................................39
CHAPTER-VII................................................................................................................................
RESEARCH DATA ANALYSIS................................................................................................47

CHAPTER VIII.................................................................................................................................
RESEARCH FINDINGS & CONCLUSIONS..........................................................................68
CHAPTER X1..................................................................................................................................
SUGGESTIONS & RECOMMENDATIONS...………………………………………………71

BIBLIOGRAPHY………………………………………………………………………………73

5 5
 CHAPTER-I

INTRODUCTION

6 6
 INTRODUCTION
The financial system comprises of financial institutions, instruments and markets t

The financial system comprises of financial institutions, instruments and markets that
provide an effective payment and credit system that facility the channeling of funds from savers
to the investors of the economy. Indian Mutual Funds have emerged as strong financial stability
to the financial system. Mutual Funds have opened new vistas to investors and imported much
needed liquidity to the system.
Mutual Funds are dynamic financial institutions, which play a crucial role in an economy
by mobilizing savings and investing in the capital markets savings and the investing in the
capital markets. Therefore, the activities of Mutual Funds have both short and long term impact
on the savings and capital market and national economy.
Mutual Funds provide households an option for portfolio diversification and relative risk
aversion through collection of funds from the households and makes investments in the stock and
the debt market.

NEED OF THE STUDY

Mutual Funds are financial intermediaries concern with the mobilizing savings of those have
surplus income and channels lavation of those avenues where there is demand of Funds.

The purpose of this study of performance evaluation of mutual funds is to see that these
mutual funds employ the resources in such a manner as to afford for the investors combine
benefits of low risk, steady returns, high liquidity and capital appreciation through diversification
and expert management.

Therefore, activities of mutual funds have short and long term impact on the savings and
capital markets and national economy; mutual finds thus assist the process of financial deepening
and intermediation

7 7
 SCOPE OF THE STUDY

 The Study covers the basic meaning, concept, structure and the organization of the Mutual

Funds.

 The Study is restricted to explain only the returns provided by the Mutual Funds from

various schemes.

 Under this study investments relating to Open-Ended Balanced Growth Fund of Mutual

Funds are taken into account.

 The theoretical part of the study include the following concepts:-

 Characteristics of Mutual Funds.

 Advantages/ Disadvantages of Mutual Funds.

 Net Asset Value (NAV).

 Investment Process.

 Risk return grid of Mutual Funds.

 SEBI guidelines

 The tools used for graphical representation of data include Pie charts, bar diagrams, and

other accessories.

 The Study is made to equip the investors with the information, which will enable them to

choose the type of Scheme depending upon their investing objective and respective Risk

return grid.

8 8
 OBJECTIVES OF THE STUDY

 The specific objectives of the study are as follows

 To analyze the trends in returns of selected mutual funds.

 To evaluate the performance of selected Public and Private sector Mutual Funds.

LIMITATION OF THE STUDY

The study has certain limitations

• The concept of mutual funds is like ocean. So a detailed study of each and every
component of this concept is not possible because of the limited time constraint.

• The mutual funds and securities investment are subjected to market risks and there can
be no assurances or guarantee that the schemes objectives will be achieved.

•The analysis as had been done very few schemes of selected for public and private
sector mutual funds.

9 9
 CHAPTER-II

REVIEW OFLITERATURE

1 10
 REVIEW OF LITERATURE

Barua and Verma (1991) provided empirical evidence of equity mutual fund
performance in India. They studied the investment performance of India’s first 7year
close-end equity mutual fund, Master share. They found that the fund performed
satisfactory for large investor in terms of rate of return. Ippolito (1992) expressed that
fund/scheme selection by investors is based on past performance of the funds and
money flows into winning funds more rapidly than they flow out of losing funds.
Sarkar and Majumdar (1995) evaluated financial performance of five close- ended
growth funds for the period February 1991 to August 1993, concluded that the
performance was below average in terms of alpha values (all negative and statistically
not significant) and funds possessed highrisk.

Jaydev (1996) evaluated performance of two schemes during the period, June 1992
to March 1994 in terms of returns / benchmark comparison, diversification,
selectivity and market timing skills. He concluded that the schemes failed to perform
better than the market portfolio (ET’s ordinary share price index). Gupta and Sehgal
(1997) evaluated mutual fund performance over a four year period, 1992-96. The
sample consisted of 80 mutual fund schemes. They concluded that mutual fund
industry performed well during the period of study. The performance was evaluated
in terms of benchmark comparison, performance from one period to the next and their
risk-returncharacteristics.

Mishra (2001) evaluated performance over a period, April 1992 to December1996.

The sample size was 24 public sector sponsored mutual funds. The performance was
evaluated in terms of rate of return, Treynor, Sharpe and Jensen measures of
performance. The study concluded dismal performance of PSU mutual funds in India,
in general, during 1992-96.

1 11
ZakriY.Bello (2005) matched a sample of socially responsible stock mutual funds
matched to randomly selected conventional funds of similar net assets to investigate
differences in characteristics of assets held, degree of portfolio diversification and
variable effects of diversification on investment performance. The study found that
socially responsible funds do not differ significantly from conventional funds in
terms of any of these attributes. Moreover, the effect of diversification on investment
performance is not different between the two groups. Both groups underperformed
the Domini 400 Social Index and S & P 500 during the studyperiod.

Mayank V. Bhatt and Chetan C. Patel (2008) studied the performance comparison
of different mutual funds schemes in India through Sharpe index model and
concluded that mutual funds are the most popular and safe parameter for an investor
to invest.

KavitaChavali and ShefaliJain(2009)evaluated the performance of equity linked

savings schemes and concluded that the fund chosen by the investor should match the
risk appetite ofthe investor. Narayan Rao and M. Ravindran evaluated performance of
Indian mutual funds inabear market through relative performance index, risk-return
analysis, Treynor ratio, Sharperatio, Jensen measure, and Fama’s measure.

The results of performance measures suggested that most of mutual fund schemes in
the sample of 58 were able to satisfy investor’s expectations by giving excess returns
over expected returns based on both premium for systematic risk and total risk.
Mutual Fund as an investment vehicle is capturing the attention of various segments
of the society, like academicians, industrialists, financial intermediaries, investors and
regulators.

1 12
 CHAPTER-III

RESEARCH METHODOLOGY

CHAPTER-III

13

1
 RESEARCH METHODOLOGY

Source of Data:
Secondary data refers to data that is collected by someone other than the primary
user data is collected from Secondary Sources. The data was collected from Past Records,
Books, Journals, Magazines, Internet and all other types of published data.

STATISTICAL TECHNIQUES

The simple statistical techniques like percentages and growth rates are calculated.
For the purpose of evaluation the popular methods such as Sharpe, Treynor and Jensen
are applied.

PERIOD OF THE STUDY

For the study data collected for five years, from the period last 2 years .
THE STUDY

SCOPE OF THE STUDY

14

1
 CHAPTER-IV

THEORITICAL FRAMEWORK

TRODUCTION

15

1
 THEORITICAL FRAMEWORK

INTRODUCTION

To state in simple words, a mutual fund collects the savings from small investors,
invest them in Government and other corporate securities and earn income through
interest and dividends, besides capital gain. It works on the principle of” small drop of
water makes a big ocean’.

DEFINITION
The securities and Exchange Board of India (Mutual Funds) Regulation, 1993
defines a mutual fund “a fund established in the form of a trust by a sponsor, to raise
monies by the trustees through the sale of units to the, public, under one or more
schemes, for investing in securities in accordance with these regulations”
According to Weston J. Fred and Brigham, Eugene, F, Unit trusts are
“corporations which accept dollars from savers and then use these dollars to buy stock,
long term bonds, short term debt instruments issued by business or government units;
these corporations pool funds and thus reduce risk by diversification”.

TYPES OF MUTUAL FUNDS

Closed-ended Funds
A closed-end fund has a stipulated maturity period which generally ranging from
3 to 15 years. The fund is open for subscription only during a specified period. Investors
can invest in the scheme at the time of the initial public issue and thereafter they can buy
or sell the units of the scheme on the stock exchanges where they are listed. In order to
provide an exit route to the investors, some close-ended funds give an option of selling
back the units to the Mutual Fund through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that at least one of the two exit routes is provided to the
investor.

16

1
Interval Funds

Interval funds combine the features of open-ended and close-ended schemes

Interval Funds

Interval funds combine the features of open-ended and close-ended schemes.

They are open for sale or redemption during pre-determined intervals at NAV related
prices.

INVESTMENT OBJECTIVE:

Equity Funds Dividend

The aim of Equity Funds Dividend is to provide capital appreciation over the
medium to long- term. Such schemes normally invest a majority of their corpus in
equities. It has been proven that returns from stocks, have outperformed most otherkind
of investments held over the long term.

Equity Funds Growth

The aim of Equity Funds growth is to provide capital appreciation over the
medium to long- term. Such schemes normally invest a majority of their corpus in
equities. It has been proven that returns from stocks, have outperformed most other kind
of investments held over the long term.

Balanced Funds Dividend

The aim of balanced funds dividend is to provide both dividend and regular
income. Such schemes periodically distribute a part of their earning and invest both in

17

1
equities and fixed income securities in the proportion indicated in their offer documents.

Balanced Funds Growth

The aim of balanced funds is to provide both growth and regular income. Such
schemes periodically distribute a part of their earning and invest both
Balanced Funds Growth
The aim of balanced funds is to provide both growth and regular income. Such
schemes periodically distribute a part of their earning and invest both in equities and
fixed income securities in the proportion indicated in their offer documents.

OTHER SCHEMES:

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the
Indian Income Tax laws as the Government offers tax incentives for investment in
specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and
Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961.

SPECIAL SCHEMES:

Industry Specific Schemes

Industry Specific Schemes invest only in the industries specified in the offer
document. The investment of these funds is limited to specific industries like InfoTech,
FMCG, and Pharmaceuticals etc.

Index Schemes

Index Funds attempt to replicate the performance of a particular index such as the
BSE Sensex or the NSE 50.

18

1
Spectral Scheme

Spectral Funds are those, which invest exclusively in a specified industry or a

group of industries or various segments such as 'A' Group shares or initial public off.

ADVANTAGES OF INVESTING IN MUTUAL FUNDS

 Professional management.
 Diversification.
 Convenient administration.
 Return potential.
 Low cast.
 Liquidity.
 Flexibility.
 Choice of schemes.
 Tax benefits.
 Well regulated.

TAX - BENEFITS

 No tax on dividends in the hands of the investor (only a 12.610/0 dividend

distribution tax paid by the fund before distribution of dividends)
 No dividend distribution tax for equity mutual funds (completely tax free
dividends)
 Tax liability only when investment is redeemed/ withdrawn (not every year)
 Long term capital" gains tax benefits.

19

1
  Benefit of indexation for investments held over a year. 

THEORITICAL STUDY

PROFILES OF SELECTED MUTUAL FUNDS

CONCEPT

This chapter is devoted for providing conceptual framework of mutual funds

India. This chapter also presents the types of various schemes, advantages and drawbacks
and also explains the relevant terminology.

A Mutual fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in capital
market instruments such as shares, debentures and other securities. The income earned
through these investments and the capital appreciations realized are shared by its unit
holders in proportion to the number of units owned by them. Thus a mutual fund is the
most suitable investment of the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost. The flow
chart below describes broadly the working of mutual funds.

MUTUAL FUNDS IN INDIA

ABN AMRO Mutual Fund │Birla Sun Life Mutual Fund│Bank of Baroda Mutual
Fund (BOB Mutual Fund)│HDFC Mutual Fund│HSBC Mutual Fund│INGVysya
Mutual Fund │Prudential ICICI Mutual Fund│Sahara Mutual Fund │State Bank of India
Mutual Fund (SBI)│Tata Mutual Fund.

20

2
 The concept of mutual funds in India dates back to the year 1963. The era between
1963 and 1987 marked the existence of only one mutual fund Company in India with Rs.
67bn assets under management (AUM).by the end of its monopoly era. The Unit Trust of
India (UTI), by the end of the 80s decade, few other mutual fund companies in India took
their position in mutual fund market.

The new entries of mutual fund companies in India were SBI Mutual Fund,
Canbank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund,
Bank of India Mutual Fund.
The succeeding decade showed a new horizon in India mutual fund industry. By
the end of 1993, the total AUM of the industry was Rs.470.04 bn. The private sector
funds started penetrating the fund families. In the same year the first Mutual Fund
Regulations came into existence with re-registering all mutual funds except UTI. The
regulation was further given a revised shape in 1996.
Kothari Pioneer was the first private sector mutual fund company in India which
has now merged with Franklin Templeton. Just after ten years with private sector players
penetration, the total assets rose up to Rs. 1218.05 bn . Today there are 33 mutual fund
companies India.

ASSET MANAGEMENT COMPANIES

Asset management companies are the companies involved in the mutual fund business.
These companies manage all the transaction of mutual funds from the beginning to the
end.
The following are the list of AMC’s operating currently in India. They are

A. UTI Asset management company (P) ltd

B. Bank sponsored
BoB asset management company ltd
Can bank investment management services ltd

21

2
 PNB asset management company ltd
SBI funds management company ltd
C. Institutions
GIC asset management company ltd
IDBI principal asset management co ltd
IL&FS asset management co ltd
Jeevanbimasahayoge asset management co ltd

D. Private sector
1. Indian
Benchmark asset management co ltd
Cholamandalam asset management co ltd
Escort asset management co ltd
JM capital management ltd
Kotak Mahindra asset management ltd
Sundaram asset management co ltd
Reliance capital asset management ltd
2. Joint ventures - Pre dominantly Indian
Burlap sun life insurance management co ltd
Credit capital asset management co ltd
DSP Merrill Lynch fund manager pvt ltd
First Indian management co ltd
Tata TD water house asset management pvt ltd
HDFC asset management pvt ltd
3. Joint ventures - Pre dominantly Foreign
Alliance capital asset management (India) pvt ltd
Deut she asset management (India) pvt ltd
Dundee investment management research pvt ltd
HSBC asset management (India) pvt ltd
ING investment management (India) pvt ltd
Morgan Stanley investment management pvt ltd

22

2
 Prudential ICICI management co ltd
Standard Chartered asset management co pvt ltd
Sun F & C asset management (India) pvt ltd
Templeton asset Management (India) pvt ltd
Zurich Asset management company (India) pvt ltd.

SBI (State Bank of India) Mutual Fund:

SBI mutual funds is the first Bank sponsored mutual fund to lunch offshore fund ,the
India magnum fund with a corpus of Rs 225cr. Approximately. Today it is the largest
Bank sponsored mutual funds in India They have already launched 35 schemes out of
which 15 have already yielded handsome returns to investors. SBI mutual fund has
more than RS 5500 cores as AUM. Now it has an investor base over 8lakhs spread
over 18 schemes.

UTI (Unit Trust of India)

UTI Asset management company private limited, established in Jan 14,2003,
manages the UTI mutual fund with the support of UTI trustee .company private
limited .UTI asset management company presently manages corpus of over rs
20000corors. The sponsor of UTI mutual funds are Bank of Board (BOB) Punjab
national Bank (PNB), State Bank of India (SBI) and life insurance Corporation of
India (LOIC). The schemes of UTI mu7tual fund are liquid funds, asset management
funds, index funds, equity funds and balance Fund.

HDFC (Housing Development Finance Corporation)

HDFC mutual funds was setup on June 30,2000with two sponsors namely HDFC
limited and standard Life investments Limited.

23

2
HDFC Mutual Fund
Mutual Fund has been one of the best performing mutual funds in the last few
years. HDFC Asset Management Company Limited (AMC) functions as an Asset
Management Company for the HDFC Mutual Fund.

AMC is a joint venture between housing finance giant HDFC and British investment firm
Standard Life Investments Limited. It conducts the operations of the Mutual Fund and
manages assets of the schemes, including the schemes launched from time to time. As of
Aug 2018, the fund has assets of Rs.25, 892 cores under management.

IN 2003, following a decision by the Zurich Insurance Company (ZIC), the Sponsor
of Zurich India Mutual Fund, to divest its asset management business in India, AMC had
entered into an agreement with ZIC to acquire the asset management business.
Consequently, all the schemes of Zurich Mutual Fund in India had been transferred to
HDFC Mutual Fund and renamed as HDFC schemes.

Here is a list of mutual funds of HDFC:

Equity Funds:
HDFC Growth Fund
HDFC Long Term Advantage Fund
HDFC Index Fund

 HDFC Index Fund Nifty Plan

 HDFC Index Fund SENSEX Plan
 HDFC Index Fund SENSEX Plus Plan

HDFC Equity Fund

HDFC Capital Builder Fund
HDFC Tax Saver

24

2
HDFC Top 200 Fund
HDFC Core & Satellite Fund
HDFC Premier Multi-Cap Fund
HDFC Long Term Equity Fund
Balanced Funds
HDFC Children's Gift Fund Investment Plan
HDFC Children's Gift Fund Savings Plan
HDFC Balanced Fund & HDFC PRUDENCE FUND
Debt Funds
HDFC Income Fund
HDFC Liquid Fund
HDFC Gilt Fund Short Term Plan
HDFC Gilt Fund Long Term Plan
HDFC Short Term Plan
HDFC Floating Rate Income Fund Short Term Plan
HDFC Floating Rate Income Fund Long Term Plan
HDFC Liquid Fund - PREMIUM PLAN
HDFC Liquid Fund - PREMIUM PLUS PLAN
HDFC Short Term Plan - PREMIUM PLAN
HDFC Short Term Plan - PREMIUM PLUS PLAN
HDFC Income Fund Premium Plan
HDFC Income Fund Premium Plus Plan
HDFC High Interest Fund
HDFC High Interest Fund - Short Term Plan
HDFC Cash Management Fund - Savings Plan
HDFC Cash Management Fund - Call Plan
HDFCMF Monthly Income Plan - Short Term Plan
HDFCMF Monthly Income Plan - Long Term Plan
HDFC Cash Management Fund - Savings Plus Plan
HDFC Multiple Yield Fund

25

2
HDFC Multiple Yield Fund Plan 2017
HDFC Fixed Maturity Plan

Awards in 2019

Business Today 'Best Bank' Award

Dun & Bradstreet – 'Corporate Best Bank' Award
American Express
Corporate Best Bank
Award 2019
The Bombay Stock 'Best Corporate Social Responsibility Practice' award
Exchange and Masco
Foundation's Business
for Social
Responsibility Awards
2019
Outlook Money & Best Bank Award in the Private sector category.
NDTV Profit
The Asian Banker Best Retail Bank in India
Excellence in Retail
Financial Services
Awards
Asian Banker Our Managing Director Aditya Purim wins the Leadership
Achievement Award for India

JM financial Mutual Fund

One of India's first private sector mutual funds, JM mutual fund was launched by
the one of the best-known domestic brokerages, JM Financial, owned by the Company
family. The Niles Company-led JM Group played a pivotal role in the development of

26

2
India's nascent capital markets in the 1950s.

JM mutual fund is not a part of JM Morgan Stanley, JM Financials joint venture

with Morgan Stanley for investment banking and other financial services. The fund is
sponsored by JM Financial and Investment Consultancy Services Private Limited and JM
Financial Limited.

The AMC of the fund is JM Financial Asset Management Private Limited. The AMC
started operations in MAY 1994 with a simultaneous launch of three funds, JM Liquid
Fund (now JM Income Fund), JM Equity Fund and JM balanced Fund. The company is
headed by Vijay Kelkar, former finance secretary and advisor to the government of India,
as chairman of the board.

As of Aug 2018, the fund has assets of over Rs.4, 241 crore under management.

Debt Funds

JM Income
JM Income Institutional
JM Equity & Derivative
JM Short Term
JM Short Term Institutional
JM Floater Long Term
JM Floater Short Term
JM FMP Quarterly SA3
JM FMP Quarterly SB3
JM High Liquidity
JM High Liquidity Institutional
JM High Liquidity Super Institutional

Gilt Fund
JM G-Sec PF
JM G-Sec PF plus
JM G-Sec Regular

Equity Funds
JM Equity

27

2
JM Basic Fund
JM Autosector Fund
JM Healthcare Sector Fund

MIP
JM MIP Dividend Monthly
JM MIP Dividend Quarterly
JM MIP Dividend Yearly
JM MIP Growth

Balanced Funds
JM Balanced Growth
JM Balanced Dividend

CHAPTER –V

INDUSTRY PROFILE

28

2
 INDUSTRY PROFILE

PROFILE OF THE INDUSTRY:

The Indian mutual fund industry has evolved over distinct stages. The growth of the
mutual fund industry in India can be divided into four phases: Phase I (1964-87), Phase II
(1987-1992), Phase III (1992-1997) and Phase IV (beyond 1997).

Mutual fund industry started in India with the establishment of Unit Trust of India
(1964), which was the only player in the mutual fund industry up to 1987. In 1987, the
government permitted public sector banks and financial institutions to join the fray.
From 1993 onwards the industry was opened up for private participation. Thus, private
and foreign players have started setting up mutual funds in India. Today, mutual funds
are one of the fast-growing sectors in India.

The Indian Mutual Fund industry has grown tremendously in the last decade. There are
29 mutual funds as on March 31st, 2005 with Assets under Management (AUM) of rs.
1,49,600 cr (Table1). AUM crossed Rs. 1,00,000 cr during the year 1999-2000 recording
a growth rate fo 65%. Besides, a vast majority of equity schemes outperformed the
market.

The origin of mutual fund industry in India is with the introduction of the concept of
mutual fund by UTI in the year 1963. The main reason of its poor growth is that the
mutual fund industry in India is new in the country. Large sections of Indian investors are
yet to be intellectuated with the concept. Hence, it is the prime responsibility of all
mutual fund companies, the up with condition to market the product correctly abreast of

29

2
selling.
The mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under.
First Phase – from 1964-87:

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up
by the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and administrative
control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the
end of 1988 UTI totally had Rs.6,700crores of assets under management.

Second Phase - 1987-1993 (Entry of Public Sector Funds):

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank
Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank
Mutual Fund of (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92).
LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under
management.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the
year in which the first Mutual Fund Regulations came into being, under which all mutual
funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer
(now merged with Franklin Templeton) was the first private sector mutual fund registered
in July 1993.

30

3
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI and (MutualFund)Regulations1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets
of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541crores of assets under
management was way ahead of other mutual funds.

Fourth Phase - since February 2003

Fourth Phase - since February 2003:

This phase had bitter experience for UTI. It was bifurcated into two separate entities. One
is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835crores (as
on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an
and administrator and under the rules framed by Government of India and does not come
under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
with registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000crores of
AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector
funds, the mutual fund can industry has entered its current phase of consolidation and
growth. As at the end of September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421 schemes.

31

3
 The major players in the Indian Mutual Fund Industry are:

GROWTH IN ASSETS UNDER MANAGEMENT:

STRUCTURE OF MUTUAL FUND INDUSTRY IN INDIA:

MUTUAL FUND INDUSTRY

SEBI ASSOCIATION OF MUTAUL FINDS

MUTUAL FUNDS

SPONSOR BOARD OF ASSET CUSTODIAN INVESTORS

TRUSTEES MANAGEMENT
COMPANY
32

3
 PUBLIC SECTOR PRIVATE SECTOR
UTI BANKS FI
SPONSORED SPONSORED

MUTUAL FUND SCHEMES

Rating of Mutual fund schemes in mutual fund industry:

Mutual fund schemes are periodically evaluated by independent institutions. CRISIL,

Value Research India, and Economic Times are three such institiutions whose rankings or
evaluations are currently very popular.

CRISIL Credit Rating nd Information Services of India Limited (CRISIL) carries out
Composite Performance Rankings that cover all open-ended schemes that disclose their
entire portfolio composition and have NAV information for at least two years. It
currently ranks schemes in five categories, viz., Equity Schemes, Debt Schemes, Gllit
Schemes, Balanced Schemes, and Liquid Schemes. Its ranking is based on four criteria,
viz., risk-adjusted return of the scheme’s NAV, diversification of the portfolio, liquidity,
and asset size. The weights assigned to these criteria vary from category to
category.within each category, the top 10 percent are considered vbery good, thenext 20
percent good, the next 40 percent average, the next 20 percent below average, and the last
10 percent poor.

Value research India like CRISIL, value research India rates schemes in different
categories. Each scheme is assigned a risk grade and a return grade and a composite
measure of performance is calculated by subtracting the risk grade from the return grade.
Within each category, the top 10 percent are consideree five star, the next 22.5 percent

33

3
four star, the next 35 percent three star, the next 22,5 percent two star, and the last 10
percent one star.

Some facts for the growth of mutual fund industry in India:

 100% growth in the last 6 years.

 Number of foreign AMC's are in the que to enter the Indian markets like Fidelity
Investments, US based, with over US$1trillion assets under management
worldwide.

 Our saving rate is over 23%, highest in the world. Only channelizing these
savings in mutual funds sector is required.

 We have approximately 29 mutual funds which is much less than US having more
than 800. There is a big scope for expansion.

 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are
concentrating on the 'A' class cities. Soon they will find scope in the growing
cities.

 Mutual fund can penetrate rurals like the Indian insurance industry with simple
and limited products.

 SEBI allowing the MF's to launch commodity mutual funds.

 Emphasis on better corporate governance.

 Trying to curb the late trading practices.

 Introduction of Financial Planners who can provide need based advice.

FOLLOWED BY THAT OF COMPANY

Here in this project we considered two companies for analysis part Kotak Investment
pvt.ltd. (ING Group ) and HDFC mutual fund(HDFC GROUP).

34

3
Kotak Group management structure:

ING Vysya Mutual Fund:

ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee
Company. It is a joint venture of Vysyaand Kotak. The AMC,Kotak Investment
Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

ING Group is known for its philosophy of 'keeping it simple' covering some 60 million
private, corporate and institutional clients in 50 countries. It is the world's fourth largest
financial services group .
ING Vysya Mutual Fund aims to provide investors with the most practical and secure
investment opportunities to invest their valuable savings. This is combined with a range
of innovative options to deliver healthy returns combined with a high degree of security.
Currently, the fund offers four equity, five debt and two hybrid schemes to its investors.

Kotak Investment Management:

In IndiaKotak Investment Management (I) Pvt Ltd has an investor base of over 1,52,677
with Rs. 5080.97 crores as of June 30th, ’07 (SOURCE: WWW.AMFIINDIA.COM ).
With a presence in 34 locations, we currently manage 21 schemes.

ING Investment Management (I) Pvt Ltd has been associated with innovation and
responsive adaptability with sharp minds at work.Kotak Investment Management has
sealed a position of strength and is considered as one of the top contenders to challenge
the market leaders.Kotak Investment Management has enjoyed many firsts and has
always maintained a pioneering outlook.

Few achievements are:

First Investment Manager to launch a packaged concept in Asset Management Industry.

 Awarded “Abby Gold 2006” for its advertising Campaign forKotak LION Fund.
 Two CRISIL AAAf * products in Debt Fund space. (ING Liquid Fund &Kotak
Floating Rate Fund).

35

3
  First Asset Manager to launch a debt fund based on Credit risk with a portfolio
based on credit monitor. (ING Select Debt Fund).
 First Private Sector Mutual Fund to launch a concept dedicated to women.
(Mahilanivesh)
 ING Dynamic Asset Allocation Fund was awarded “Most Innovative Product” by
Asia Asset Monitor.
 ING Mutual Fund recently launched India’s first DAILY TRANSFER PLAN
called Zoom Investment Pac (ZIP).
 ING Mutual Fund has also pioneered a new reality show on television called
Indian Investor of the Year.

* The assigned rating of AAAf is valid only for ‘ING Floating Rate Fund’ and ‘ING
Liquid Fund’.The rating of the fund is not an opinionof the asset management company’s
willingness or ability to make timely payments to the investor. The rating is also not an
opinion onthestability if the NAV of the fund, which could vary with market
developments.

Financial markets:

ING Vysya Bank Financial Markets is a leading player in the Indian Financial Markets
providing one of the widest ranges of products for large corporate, small and medium
enterprises as well as individual needs. Supported by state-of-the-art systems and the
capabilities of theKotak Group, we offer competitive pricing and efficient execution
across markets and a comprehensive suite of products.
Wholesale banking:
Wholesale Banking is a reflection of Kotakmahindra ability to provide its corporate
clients in India a full range of commercial, transactional and electronic banking products.
The bank offers a wide array of client-focused corporate banking services, including
working capital finance, trade and transactional services, foreign exchange and cash
management, to name a few.

Investment banking, local debt syndication and securitization:

The bank is uniquely positioned to be able to advise, lead manage and place, thus giving

36

3
the customer the advantage of being a full fledged Commercial Bank along with
investment banking. As a Category I merchant banker registered with SEBI, the bank has
an advanced product portfolio that includes the following.

Financial advisory service: for mergers and acquisitions, capital and debt structuring
and restructuring, private capital raising and structured financing. This includes onshore
as well as offshore.
Local debt distributin: both in loan and bond forms, including plain vanilla debt and
structured dedt.
Securitization: We advise our clients on securitising their assets with a view to sell
them. Our services include advisory, structuring portfolios, assist in obtaining ratings for
the portfolios & sell-down of the portfolio.
investment banking services are provided to a range of Indian as well as offshore clients.
For cross border transactions involving global clients, the investment-banking group
works closely withKotak Bank's global corporate finance and investment banking office.

CHAPTER-VI

37

3
COMPANY PROFILE

38

3
 INDIA INFOLINE LIMITED

India Infoline is a one-prevent financial offerings preserve, most awesome for amazing of

its records, customized enterprise and current-day era.

Vision

Our vision is to be the maximum expert enterprise employer inside the economic services

region.

India Infoline Group

The India Infoline corporation, comprising the maintaining business organisation

corporation, India Infoline Limited and its in truth-owned subsidiaries, include the whole

monetary services vicinity with offerings beginning from Equity research, Equities and

derivatives looking for and selling, Commodities purchasing for and selling, Portfolio

Management Services, Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and one-

of-a-kind small economic financial savings gadgets to mortgage merchandise and

Investment banking.

India Infoline moreover owns and manages the net net web sites www.Indiainfoline.Com

and www.5paisa.Com. The organization has a community of over 2100 commercial

business company employer places (branches and sub-dealers) unfold in some

unspecified time in the future of more than 450 towns and towns. The company caters to

about a million clients.

39

3
Founded in 1995 through Mr. Nirmal Jain (Chairman and Managing Director) as an

impartial business enterprise enterprise research and data industrial organisation business

enterprise, the organisation corporation step by step superior proper right into a one-

prevent financial services answers enterprise.

India Infoline acquired registration for a housing finance organization from the National

Housing Bank and purchased the ‘Fastest developing Equity Broking House - Large

groups’ in India with the useful aid of Dun & Bradstreet in 2009. It furthermore acquired

the Insurance employer license from IRDA; obtained the mission capital license;

obtained in principle approval to sponsor a mutual fund; acquired ‘Best agency- India’

award from Finance Asia; ‘Most Improved Brokerage- India’ award from Asia coins.

COMPANY STRUCTURE

India Infoline Limited is indexed on every the number one stock exchanges in India, viz.

The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is

likewise a member of every the exchanges. It is engaged inside the companies of Equities

broking, Wealth Advisory Services and Portfolio Management Services. It offers dealer

offerings inside the Cash and Derivatives segments of the NSE similarly to the Cash

segment of the BSE. It is registered with NSDL in addition to CDSL as a depository

player, presenting a one-prevent answer for customers searching out and selling inside

the equities marketplace. It has currently launched its Investment banking and

Institutional Broking enterprise agency corporation business enterprise business

enterprise.

40

4
A SEBI prison Portfolio Manager; it gives Portfolio Management Services to clients.

These offerings are provided to clients as one-of-a-type schemes, which might be

primarily based completely absolutely mostly on differing funding techniques made to

mirror the severa chance-skip decrease decrease once more possibilities of clients.

India Infoline Media and Research Services Limited

The offerings constitute a strong manual that drives the organisation, commodities,

mutual fund and portfolio manipulate services organizations. It undertakes equities

research that is stated through none other than Forbes as 'Best of the Web' and '…a need

to take a look at for traders in Asia'. India Infoline's research is to be had not just over the

internet but furthermore on worldwide twine offerings like Bloomberg (Code: IILL),

Thomson First Call and Internet Securities wherein India Infoline is some of the most

have a observe Indian stores.

41

4
India Infoline Commodities Limited.

India Infoline Commodities Pvt Limited is engaged within the business enterprise of

commodities issuer. Their experience in securities provider empowered them with the

needful competencies and era to permit them to offer commodities supplier as a contra-

cyclical possibility to equities provider. It enjoys memberships with the MCX and

NCDEX, crucial Indian commodities exchanges, and presently obtained club of DGCX.

It has a multi-channel shipping version, making it most of the pick out outout few to

provide on-line further to offline shopping for and selling centers.

India Infoline Marketing & Services

India Infoline Marketing and Services Limited is the preserving industrial organization

business enterprise of India Infoline Insurance Services Limited and India Infoline

Insurance Brokers Limited.

• India Infoline Insurance Services Limited is a registered Corporate Agent with the

Insurance Regulatory and Development Authority (IRDA). It is the maximum critical

Corporate Agent for ICICI Prudential Life Insurance Co Limited, that is India's biggest

non-public Life Insurance Company. India Infoline modified into the primary company

agent to get licensed with the beneficial resource of IRDA in early 2001.

• India Infoline Insurance Brokers Limited India Infoline Insurance Brokers

Limited is a newly formed subsidiary a superb way to carry out the company of Insurance

issuer.

42

4
India Infoline Investment Services Limited

Consolidated shareholdings of all the subsidiary companies engaged in loans and

financing sports activities sports activities sports activities underneath one subsidiary.

Recently, Orient Global, a Singapore-primarily based definitely really without a doubt in

fact investment industrial enterprise business business agency business enterprise

invested USD 76.7 million for a 22.Five% stake in India InfolineInvestment Services.

This will help focused boom and capital raising in the said subsidiaries for numerous

lending organizations like loans in opposition to securities, SME financing, distribution

of retail loan products, client finance agency and housing finance commercial enterprise

employer employer agency organization agency company. India Infoline Investment

Services Private Limited includes the subsequent step-down subsidiaries.

• India Infoline Distribution Company Limited (distribution of retail loan products)

• Moneyline Credit Limited (client finance)

• India Infoline Housing Finance Limited (housing finance)

IIFL (Asia) Private Limited

IIFL (Asia) Private Limited is absolutely owned subsidiary which has been protected in

Singapore to pursue monetary region sports activities sports sportssports activities

activities sports activities particularly Asian markets. Further to obtaining the crucial

regulatory approvals, the company company has been to start with capitalized at 1 million

Singapore greenbacks.

43

4
 IIFL MANAGEMENT

 THE MANAGEMENT TEAM

Mr. Nirmal Jain, Chairman & Managing Director

Nirmal Jain, MBA (IIM, Ahmadabad) and a Chartered and Cost Accountant, based

totally India’s crucial economic services company India Infoline Ltd.

In 1995, imparting globally acclaimed financial services in equities

and commodities broker, life coverage and mutual price range distribution, amongst

others.

Mr. R Venkataraman, Executive Director

R Venkataraman, co-promoter and Executive Director of India

Infoline Ltd., is a B. Tech (Electronics and Electrical Communications

Engineering, IIT Kharagpur) and an MBA (IIM Bangalore). He joined

the India Infoline board in July 1999..

 THE BOARD OF DIRECTORS

Apart from Nirmal Jain and R Venkataraman, the Board of Directors of India Infoline

Ltd. Accommodates:

Mr. Nilesh Vikamsey, Independent Director

Mr. Vikamsey, Board member because of the truth that February 2005 - a

taking walks within the direction of Chartered Accountant and companion

(KhimjiKunverji& Co., Chartered Accountants), a member business enterprise of HLB

44

4
International, headed the audit branch until 1990 and thereafter moreover handles

financial offerings, consultancy, investigations, mergers and acquisitions, valuations and

lots of others.

Mr Sat Pal Khattar, Non Executive Director

Mr Sat Pal Khattar, - Board member since April 2001 - Presidential Council of Minority

Rights member, Chairman of the Board of Trustee of Singapore

Business Federation, is also a life trustee of SINDA, a non profit body,

helping the under-privileged Indians in Singapore. He joined the India Infoline board in

April 2001.

45

4
CHAPTER-VII
DATA ANALYSIS

46

4
 DATA ANALYSIS

PERFORMANCE EVALUATION OF SELECTED MUTUALFUNDS

EVALUTATION OF MUTUAL FUNDS:

In India, at present, there are many mutual funds as also investment companies
operating both in the public sector as well as in the private sector. These compete with
each other for mobilizing the investment funds with individual investors and other
organizations desirous of placing their funds with these mutual funds would like to know
the comparative performance of each so as to select the best mutual fund or investment
company. For this, evaluation of the performance of mutual funds and their schemes is
necessary.

PERFORMANCE MEASURES OF MUTUAL FUNDS

In order to determine the risk adjusted returns of investing portfolio, several

eminent authors have worked since 1960’s to develop composite performance indices to
evaluate a portfolio by comparing alternative portfolio within a particular risk class. The
most important and widely used measures of performance of Mutual Funds are:

1 The Treynor’s Measure

2 The Sharpe’s Measure
3 The Jenson’s Model

MEASURING MUTUAL FUNDS RETURN

The first step in mutual fund evaluation is calculation of the rate of return earned
over the holding period. Return may be defined to include changes in the value of the
mutual fund over the holding mutual fund plus any income earned over the period.
However, in the case of mutual funds, during the holding period, Cash inflows into the

47

4
fund and cash withdrawals from the fund may occur. The unit-value method may be used
to calculate return in this case.

The one period rate of return, r, for a mutual fund may then be defined as the
change in the per unit net asset value (NAV), plus it’s per unit cash disbursements (D)
and per unit capital gains disbursements (C) such as bonus shares, it may be calculated
as.

Rap= (NAVt-NAVt-1) + DT + C
NAVt-1
Were:
NAVt = NAV per unit at the end of the holding period
NAVt-1 = NAV per unit at the beginning of the holding period
Dt = Cash disbursements per unit during the holding period
Ct = Capital gains disbursements per unit during the holding period

This formula gives the holding period yield or rate of return earned on a mutual
fund. This may be expressed as a percentage.K ADJUSTED RETURNS

RISK ADJUSTED RETURNS

Risk free rate of interest is the return that an investor can earn in a risk less security, i.e.,
without bearing any risk. The return earned over and above the risk free rate is the risk
premium that is the reward for bearing risk.

THE SHARPE’s MEASURE:

In this model, performance of fund is evaluated on the basis of Sharpe ratio, which
is ratio of returns generated by the fund over and above risk free return and the total risk
associated with it. According to Sharpe it is the total disk of the fund that the investors
are concerned about. So, this model evaluates funds on the basis of reward per unit of

48

4
total risk
Portfolio average return – Risk free rate of return
Sharpe index = -------------------------------------------------------------------
Standard deviation of the portfolio return

Symbolically, it can be written as:

(Rp- Rf )
Sp = --------------------------
p
Where
Sp = Sharpe index
Rp = Portfolio average return
Rf = Risk free rate of return
p = Standard deviation of the portfolio return
While a high and positive Sharpe ratio shows a superior risk adjusted performance
of a fund, a low and negative Sharpe ratio is an indication of unfavorable performance.

THE TREYNOR’s MEASURE:

It was developed by Jack Treynor. Treynor’s Index is a ratio of return generated

by the fund over and above risk free return (i.e. Government securities, Treasury
bills), during the given period of time and systematic risk associated with beta.

(Rap - Fro)
Tenor’s Index = ----------------------
p

49

4
 Where

Rp= represent the return of fund

Rf= represents the risk free rate
p = represent beta of funds

All risk-averse investors would like to maximize this value. While a high and
positive treynor’s index shows a superior risk adjusted performance of fund, a low
and negative treynor’s index is an indication of unfavorable performances

JENSENs MODEL:

Jensen’s model proposes another risk adjusted performance measure.

Michael Jenson developed this measure and is something referred as the differential
return method. This measure involves evaluation of returns that the fund has
generated Vs the return actually out of the fund given at that level of systematic risk.
The surplus between the two returns in called Alpha, which measures the
performance of a fund compared with the actual returns over the period. Required rate
of return on fund at a given level of Beta
Can be calculated as:
p
Rp= ----------
p

Where_
p = Rp- Rp
_
Rp = Rf+ p ( Rm - Rf)

Jp = Jensen’s Ratio

p = The intercept

p = A measure of systematic risk

Rp = Average return of portfolio

50

5
 Rf = Risk free rate of return

Rm = Average market return

Rm is average market return during the given period.

Fro is the risk free rate of return

Performance Measurement

In this section, an attempt is made to measure the performance of selected

mutual funds. For this purpose the models developed by Sharpe, Trey nor and
Jenseen were used. Before taking up this, the details about returns of selected funds
are presented. In addition, to have an idea about volatility of funds to market return,
the Beta values and standard deviation values are calculated.

Table 1.1: Equity Fund Dividends

Year Percentage of return

SBI UTI HDFC JM Market
financial Index

2017 9.70 6.65 13.25 4.18 9.60

2018 9.15 2.35 5.00 0.692 11.41
2019 12.93 10.70 8.70 11.40 10.10
AVG 10.40 6.57 8.98 5.43 10.37
Source: www.mutualfundsindia.com
www.bseindia.com

The average return of SBI is 10.40% and highest is 12.93% and lowest is 9.15% it is

51

5
concluded that the return is increased trend.
The return of UTI fund shows that it has earned highest return of 10.70 % on its
investments in the year 2019. It has, on an AVG generated a return of 6.57% for the
period from 2017-2019.

Average return of HDFC is 8.978% and the highest in 2017 is 13.25% and lowest is in
2018 is decreased 5.00%.

The return of JM financial fund shows that earned highest return of 11.40% on its
investments in the year 2019. And lowest is in 2018 is decreased 0.692%. It has on AVG
generated return of 5.43%for the period from 2017-2019.

Market return is in 2017 9.60% and in 2018 11.47% and in 2019 is 10.105%. So, it
concluded that market return also high in 2017 but it decreased in 2018 and increased in
2019.

The average return of SBI is more than other mutualfunds

Table1.2: Equity fund growth

Percentage of return
Year
SBI UTI HDFC JM Market
financial Index

2017 9.70 11.20 13.22 11.25 9.60

2018 10.83 3.33 5.10 10.05 11.41

2019 11.68 7.07 11.65 11.65 10.10

AVG 10.73 7.20 9.99 10.98 10.37

52

5
 Source:www.mutualfundsindia.com
:www.bseindia.com

The above table reveals that SBI made a highest return of 11.68% on its investment
year 2019.and lowest is in 2017 is decreased 9.70%. However it has earned on an average
10.73% return on investment for the period 2017- 06

The UTI fund made highest return of 11.20% on its investment in the year 2017 and
lowest is in 2018 is decreased 3.33%.on an average the fund made a return 7.20% in
period 2018-19.

The return of HDFC fund also following this same trend. It has need highest return
13.22% and lowest is in 2018 is decreased 5.10%. The fund however average return of
9.99% during period.

The JM financial fund made a highest return of 11.65% on its investments in the year
2018 it has also and lowest return of 10.05% in year 2018 on average return of 10.98%
for the period 2018-19.

Market return fund also following same trend it has made highest return of 11.41% it
investment in year 2018 and lowest return of 9.60% in year 2017. The fund hewer AVG
return of 10.37% during the period.

The comparative analysis this fore funds shows that JM finance fund made a highest
average return 10.98% and on its investment for the period 2018-19, followed by SBI and
UTI and HDFC fund that order,

Table 1.3: Balanced Fund Dividend

Years Percentage of return

SBI UTI HDFC JM Market

financial Index

2017 6.3 8.93 -1.73 11.43 9.60

2018 8.13 19 3.375 5.65 11.41

2019 9.45 5.58 12.42 10.30 10.10

53

5
AVG 7.98 11.17 4.69 9.13 10.37

Source :www.mutualfundsindia.com
:www.bseindia.com

For the above can be concluded that SBI fund made highest return of 9.45% on it
investment for the year 2019 and lowest return of 6.30%,in 2017. However the fund
made on an AVG 7.98% for period 2018-19,

The return of UTI fund shows that it has earned a highest return of 19.00% on its
investment in year 2018 and lowest return of 5.58% in 2019. it has on an AVG a return of
11.17% for period 2018-19.
In this fund also the return of HDFC fund also following the same trend. It has
made highest return 12.42% on its investment in the year 2019. it has also incurred lose
of 1.73%n in year 2017. it has on an average generated a return of 4.69% for the period
2018-19.

The return of JM finance fund show that has earned a highest return of 11.43% on
investment in the year 2017 and lowest return of 5.65% in year 2018.the fund however
AVG of 9.13% during period.

The return of market return fund also following the same trend it has made highest
return of 10.41% and lowest return of 9.60% in year 2017.the fund however AVG of
10.37% during period, the average return UTI more then other mutual funds.

Table 1.4: Balanced Fund Growth

Years Percentage of return

SBI UTI HDFC JM Market

financial Index

2017 10.60 5.78 6.48 6.59 9.60

2018 7.78 5.85 6.43 9.55 11.41

2019 10.78 8.28 6.70 10.38 10.70

AVG 9.74 6.64 6.53 8.84 10.37

Source :www.mutualfundsindia.com
:www.bseindia.com

54

5
 Its can observed from the above table that SBI fund made return of about 10.78%.on
it’s invest in the year 2019. it has lowest return of 7.78% in the year 2018. The fund also
made an AVG return of about 9072 during period from 2017to 2019.
The return of UTI fund show that it earned a highest return of 80.28% on its
investments in the year 2019and lowest return of 50.78% in 2017. It has on an average
generated a return of 6.64% for the period from 2018-19.
The HDEFC fund has made a highest return of 6.70% on its investment for the year
2019and lowest return of 6.43%in 2018.the fund made average return of 6.53% during
the period.
The JM financial fund has mad a highest return of 10.38% on its investment for the
year 2019 and lowest return of 6.59%in 2017. Fund made an AVG return of 8.84% in the
period from 2017-2019.
The average return of 10.37% market index more then other mutual funds.

Table – 2: Index Return

year Absolute returns%

2017 9.60

2018 11.41

2019 10.10

AVG return 10.37

Source: www.bseindia.com

From the above table it can be noted that the index made highest of 11.41% for the
year 2018 index return also incurred a lowest of 9.60% in year 2017 an on average the
index made a 10.37%for the period 2018-19.

QUANTIFICATION OF RISK

Expected Risk (δ) =  Σn( Raj - E (ra))2Pj

55

5
 J=1

Where
Raj = Return on security “a” under event of “j”
E (ra) = Expected average return on security “a”
Pj = Probability of event “j”

This formula is used to find the expected risk. But in the study my objective is to
calculate the Historical Risk. The formula is:-

Σn( Raj– Řa)2

J=1 
Historical Risk (δ)=
N
Where

Raj = Return on security “a” in period of “j”

Ra = Average return of security “a”
N = No of observations

The expanded form of the formula is:

Historical Risk (δ)= (Ra1 - Ra)2+(Ra2 - Ra)2+ - - - - - - - - +(Ran - Ra)2

Fund name 3year Average Return Standard Deviation

SBI 10.40 9.81
UTI 6.57 11.96
HDFC 8.98 11.32
JM financial 5.43 15.43

56

5
 Market index 10.37 7.29

Source:www.mutualfundsindia.com
: www.bseindia.com

From the above table present the average return and “” details. From the table it
can be seen that SBI fund making highest average return of 10.4% during the period.
However it’s also facing highest “” of 15.43 of all the four funds. The UTI fund and
HDFC fund and JM financial funds both are making similor amount average return of
about 10.37% but market index is facing highest” ” of 7.29.

Table 3.2: Equity fund Growth

Fund name 3year Average return Standard Deviation

SBI 10.73 12.09

UTI 7.20 7.60

HDFC 9.99 11.56

JM financial 10.98 11.94

Source:www.mutualfundsindia.com
: www.bseindia.com

From the above value it con be concluded that compared with other funds JM
financial fund making more returns and bearing risk of 11.94. Whereas SBI fund making
10.73% average return with the”” of 12.09. It has very low risk as compared to UTI
fund and HDFC fund.
Table3.3: Balanced fund Dividend

Fund name 3year Average return Standard Deviation

SBI 9.39
7.98
UTI 11.17 17.98

HDFC 4.69 15.67

JM financial 9.136 7.95

57

5
Source:www.mutualfundsindia.com
: www.bseindia.com

From the given values it is found that UTI fund is earning 11.17% AVG return with
the higher  as compared to other funds

Concept of Beta

Beta is a measure of relative risk of a security or its sensitivity to the movements

in the market. It is a measure of volatility or the systematic risk faced by an asset or
portfolio or project. It is calculated by using the covariance between returns of assets and
returns of the market portfolio, divided by variance of return on the market portfolio. It
shows how the price of a security responds to market factors. Market return is measured
by the average return of a large sample of stocks.

The beta for the overall market is equal to 1.00 and other betas are viewed in
relation to this value. Betas can be positive or negative. Many large brokerage firms,
investment companies and financial consultants provide beta for large number of stocks.

BETA CALCULATION

NΣXY - ΣXΣY

58

5
β=
NΣX2 – (Σ X)2
Where
N = No of observations
ΣX = Sum of X returns (Here X is market return)
ΣY = Sum of Y returns (Here Y is a particular fund return)
X2 = X * X
ΣXY = Sum of X * Y

Calculation of Beta
Table 4.1: Equity fund Dividend

Fund name X Y XY X2 

SBI 127.1 124.48 1738.00 2501.63 0.36

UTI 78.8 124.48 1051.18 2234.50 0.14

HDFC 107.80 124.48 1473.95 2508.06 0..23

JM
financial 65.07 124.48 1024.17 3211.26 0.17

Source:www.mutualfundsindia.com
: www.bseindia.com

It is observed from the above table that SBI fund responding to the market rate by
0.36 times whereas UTI fund is responding only 0.14 times to the market return. The SBI
fund is more volatile than UTI and HDFC and JM financial funds.

Table4.2: Equity fund Growth

Fund name x y xy x2 

SBI 128.8 124.48 1967.85 3138.60 0.38

UTI 86.38 124.48 884.38 1315.77 -0.016

59

5
HDFC 119.90 124.48 1276.2 2691.89 0.112

JM 132.10 124.48 1753.21 3165.69 0.22

financial

Source:www.mutualfundsindia.com
: www.bseindia.com

It is seen form the table that SBI fund, HDFC fund and JM financial more than one
times of market return whereas UTI fund responding only -0.016 times.
Table 4.3: Balanced Fund Dividend

Fund Name x y xy x2 

SBI 95.60 124.48 1219.06 1820.56 0.21

UTI 111.20 124.48 1230.01 4912.77 0.019

HDFC 56.30 124.48 1194.68 3211.23 0.21

JM 111.20 124.48 1230.01 4912.77 0.22

financial

Source:www.mutualfundsindia.com
: www.bseindia.com

Above table from it can be concluded that that the SBI fund and HDFC fund and
JM financial fund are responding more than one time of market return. Whereas UTI
fund responding only 0.019 tunes.

Table 4.4 Balanced fund Dividend

Fund Name x y xy x2 

SBI 116.60 124.48 1634.31 2038.36 0.45

UTI 79.60 124.48 1115.59 1075.92 0.53

HDFC 78.40 124.48 1332.85 1353.71 0.61

60

6
JM 106.06 124.48 1412.33 1795.29 0.36
financial

Source:www.mutualfundsindia.com
: www.bseindia.com

From the above table it can be concluded that the SBI fund, UTI fund and HDFC
fund are responding more than times of market return. Whereas JM financial fund
responding only 0.36 times.

Sharpe Measurement Ratio Tables

Table 5.1: Equity Fund Dividend

Fund Name Rp Rf p Sharpe Rank

Ratio
SBI 10.59 6.50 9.81 0.416 I

UTI 6.59 6.50 11.98 0.007 III

HDFC 8.98 6.50 11.32 0.219 II

JM 5.42 6.50 15.43 -0.0069 IV

financial
Market 10.38 6.50 7.29 0.532 -
Index

Source:www.mutualfundsindia.com
: www.bseindia.com

The table shows that SBI fund as per Sharpe measurement is ranked one wherese
HDFC fund getting IInd rank. The UTI fund getting IIIrd rank.JM financial getting IVth
rank in the Sharpe evaluation.
As compared a market index SBI fund is earning good return and UTI fund is
getting better returns where as HDFC fund is better return where JM financial fund is
getting whereas returns.

Table 5.2: Equity Fund Growth

Fund Name Rp Rf p Sharpe Rank

Ratio
SBI 10.73 6.50 12.09 0.34 I

UTI 7.19 6.50 7.60 0.090 IV

61

6
HDFC 9.99 6.50 11.56 0.301 III

JM 11.00 6.50 11.94 0.376 II

financial

Source:www.mutualfundsindia.com
: www.bseindia.com

As per sharpe measurement, SBI fund is ranked Ist, JM financial fund is ranked IInd and
HDFC fund is III ranked, and UTI fund is IVth ranked. By comparing with market return
all the funds are getting low return

Table 5.3: Balanced Fund Dividend

Fund Name Rp Rf p Sharpe Rank

Ratio
SBI 7.96 6.50 9.39 0.155 II

UTI 9.26 6.50 17.90 0.154 III

HDFC 4.69 6.50 15.67 -0.115 IV

JM 9.12 6.50 7.95 0.329 I

financial

Source:www.mutualfundsindia.com
: www.bseindia.com

According sharpe model, JM financial fund is placed First ranked SBI fund and
UTI fund sharpeIIIrd and IInd ranked, HDFC fund is placed IVth ranks respectively
company with market return al the funds one performing well.

Table 5.4: Balanced Fund Growth

Fund Name Rp Rf p Sharpe Rank
Ratio
SBI 9.71 6.50 8.68 0.369 I

UTI 6.63 6.50 6.75 0.019 III

HDFC 6.52 6.50 8.37 0.003 IV

JM 8.88 6.50 8.45 0.281 II

financial

62

6
Source:www.mutualfundsindia.com
: www.bseindia.com
According sharpe model, SBI fund is placed first rank JM financial and UTI fund
share IIIrd andIInd rank HDFC fund is placed IVth ranked. Respectively comparing with
market return all fund are performing well.
By comparing all the four schemes i.e. SBI, UTI, and HDFC and fund it can be
found that the balanced fund growth is getting good return than the any schemes the
balanced dividend scheme is bearing more risk them the any other schemes

Treynor Measurement Ratio Tables

Table 6.1: Equity Fund Dividend

Fund Name Rp Rf p Trey nor Rank
Ratio
SBI 10.59 6.50 0.36 14.13 I

UTI 6.59 6.50 0.14 0.642 III

HDFC 8.99 6.50 0.23 10.78 II

JM 5.42 6.50 0.17 -69.352 IV

financial
Market 10.38 6.50 1 3.88 -
Index

Source:www.mutualfundsindia.com
: www.bseindia.com

Above table reveals that SBI fund ranked first in terms of making returns whereas IInd
rank shared by HDFC fund and IIIrd rank by UTI fund and the IVth rank JM financial in
terms of making return of in relating to market returns.

Comparing with the market return again SBI fund is getting good returns. UTI
fund is earned better returns, whereas HDFC fund is earned better returns JM financial
fund is not making surricient.

Table 6.2: Equity Fund Growth

Fund Name Rp Rf p Trey nor Rank
Ratio
SBI 10.73 6.50 0.38 11.13 I

63

6
UTI 7.19 6.50 0.016 -43.12 IV

HDFC 9.99 6.50 0.42 10.78 II

JM 11.00 6.50 0.22 -6.352 III

financial

Source:www.mutualfundsindia.com
: www.bseindia.com
From the given table it is observed that SBI fund is ranked First, HDFC fund and
JM financial fund are ranked IIIrd and IInd and UTI fund is ranked IVth respectively.
When compared with market return all the funds are not getting sufficient returns

Table 6.3 Balanced Fund Dividends

Fund Name Rp Rf p Trey nor Rank

Ratio
SBI 7.96 6.50 0.21 6.952 III

UTI 9.26 6.50 0.019 145.26 I

HDFC 4.69 6.50 0.21 -8.61 IV

JM 9.12 6.50 0.22 11.90 II

financial
Source:www.mutualfundsindia.com
: www.bseindia.com
Observing given table it is known that UTI fund is ranked First JM financial fund
IInd SBI fund is IIIrd and HDFC fund is IVth comparing with market return all the funds
are not getting sufficient returns.
Table 6.4 Balanced Fund Growth

Fund Name Rp Rf p Trey nor Rank

Ratio
SBI 9.71 6.50 0.415 7.33 I

UTI 6.63 6.50 0.53 0.245 III

HDFC 6.53 6.50 0.37 0.081 IV

JM 8.88 6.50 0.36 6.611 II

financial

Source:www.mutualfundsindia.com
: www.bseindia.com

64

6
 From the given it is observed that SBI fund is ranked First JM financial and UTI
fund are ranked IIIrd and IInd and HDFC fund IVth respectively comparing with market
return all the fund are making good return.
According to terynors measurement also balanced fund growth scheme is
performing well as compared to the market return and balanced growth fund is not
performing of the bench market i.e., Market return.

JENSEN PERFORMANCE MEASUREMENT RATIO TABLE

Table 7.1: Equity Fund Dividend

Fund Name Rm Rf βp Rp Rp αp Jp Rank

SBI 10.37 6.50 0.36 10.40 26.54 -16.41- -44.83 I

UTI 10.37 6.50 0.14 6.57 25.70 -19.13 136.64 IV

HDFC 10.37 6.50 0.23 8.98 -25.78 -169.80 -73.14 II

JM financial 10.37 6.50 0.17. 5.43 25.81 -20.38 -119.8 III

Source:www.mutualfundsindia.com
: www.bseindia.com

As per Jensen performance measurement the SBI fund ranked First getting a negative
figure of -44.83 which is an indication that the management has used greater skills in
managing the investment.

Whereas HDFC ranked IInd getting a positive figure of -73.14 which is

moderately performing. However the UTI fund is performing negatively, the
management of UTI fund failed to manage the investment effectively.

Table 7.2 Equity Fund Growth

Fund Name Rm Rf βp Rp Rp αp Jp Rank

SBI 10.37 6.50 0.38 10.73 26.62 -15.89 -41.81 IV

UTI 10.37 6.50 -0.016 7.20 25.09 -17.89 111.12 I

HDFC 10.37 6.50 0.42 9.92 26.78 -16.86 -40.14 III

65

6
JM financial 10.37 6.50 0.22 10.98 26.00 -15.02 -6.83 II

Source:www.mutualfundsindia.com
: www.bseindia.com

According to Jensen model all the funds are failed to earn up to the mark returns. The
UTI Fund ranked first getting a figure of 0(approx), which is an indication that the
management has did not use great skills in managing the portfolio.

From the given that observed UTI ranked First. Whereas JM financial Fund is ranked
second by getting a negative figure of less then 1. However the UTI fund is performing
negatively, the management of UTI fund failed to manage the portfolio effectively

Table 7.3: Balanced Fund Dividends

Fund Name Rm Rf βp Rp Rp αp Jp Rank

SBI 10.37 6.50 0.21 7.99 25.97 -17.99 -85.66 II

UTI 10.37 6.50 0.019 11.17 25.22 -14.05 -739.47 IV

HDFC 10.37 6.50 0.21 4.69 25.97 -21.28 -101.33 III

JM financial 10.37 6.50 0.22 9.23 26.00 -16.87 -76.68 I

Source:www.mutualfundsindia.com

According to Jensen model all the funds are failed to earn up to the mark returns. As
compared to other funds UTI fund performing with worst return of –739.47. On the basis
of the above presentation, it can be found that the MNC industry is facing a problem, so
all the funds are not getting sufficient returns.
Table 7.4: Balanced Fund Growth

Fund Name Rm Rf βp Rp Rp αp Jp Rank

SBI 10.37 6.50 0.45 9.72 26.89 -17.17 -38.15 III

UTI 10.37 6.50 0.53 6.64 27.20 -20.56 -38.79 II

HDFC 10.37 6.50 8.37 6.53 57.54 -51.01 -6.09 I

JM financial 10.37 6.50 0.36 8.84 26.54 -17.70 -49.16 IV

66

6
Source:www.mutualfundsindia.com
: www.bseindia.com
According to Jensen model all the funds are failed to earn up to the mark returns. The
HDFC Fund ranked first getting a figure of 0(approx), which is an indication that the
management has did not use great skills in managing the portfolio.
Whereas HDFC Fund is ranked second by getting a negative figure of less than 1.
However the HDFC fund is performing negatively, the management of HDFC fund failed
to manage the portfolio effectively.

CHAPTER-VIII

FINDING & CONCLUSION

FINDING & CONCLUSION

67

6
FINDINGS

According to Sharpe Measurement the following are the conclusion:

Equity Fund Dividend Scheme

The SBI Fund, as per Sharpe measurement is ranked one. Where as HDFC Fund
got second rank. The SBI Fund is got third rank whereas JM financial fund got fourth
rank.

Equity Fund Growth Scheme

UTI Fund is placed first rank, JM financial Fund and HDFC Fund share second
and third ranks respectively and SBI IVth rank. Comparing with market return all Funds
is very low returns.

Balanced Fund Dividend

As per Sharpe measurement, JM financial fund is ranked One, SBI fund is ranked
two and UTI fund is ranked Three and HDFC fund Forth rank. By comparing with
market return all the funds are getting very low returns.

Balanced Fund Growth

According to Sharpe model SBI fund is placed First ranked, JM financial fund

68

6
and UTI fund share Second and Third ranks and HDFC Forth rank respectively.
Comparing with market return all the funds are very low.
By comparing al the schemes .i.e., SBI, UTI and HDFC, JM financial funds that
the all scheme is troubling more then the all schemes.

CONCLUSION

It is hopeful that this study creates awareness that the mutual funds are worth
investment practice. The various schemes of mutual funds provide the investors with a
wide range of investments options according to his risk bearing capacities and interest.
Besides they also give a handy return to the investors. The project analyses various
schemes of Different Companies.
In India Mutual funds are playing important role. The mutual fund
Companies pool the savings of small investors and invest those collected huge amount of
funds in different sectors of the economy. They are performing like intermediary between
small investor and the Indian capital market. In recent years many mutual fund
companies are established. Through this competition is increased among the companies.
To encounter the competition the different companies are introducing different types of
mutual fund schemes with attractive returns and low risk. So it is an advantage to the
investors,.

For taking a decision to invest in mutual funds, the evaluation plays a greater role.
The rankings given to the mutual funds attract the investment by the investors to the
respective funds. For the purpose of ranking the performance of various mutual funds the
methods such as Sharpe. Trey nor and Jensen were applied to the various funds in
different schemes. It is hoped that the ranks provided for the fund in this chapter explains
relative performance of the schemes. The relative performance of different types of funds
according to different types of performance measurements are explained in the next page.

69

6
 CHAPTER-IX
SUGGESTIONS & RECOMMENDATIONS

70

7
 SUGGESTIONS & RECOMENDATIONS

SUGGESTIONS

The section tries to present certain suggestions. The suggestions emerge from the
observations made on the performance positions of various funds taken for the study.

It was observed that as per Sharpe performance measurement for the equity fund
dividend scheme, the equity fund growth lagging behind. Therefore it is advised to re-
organize the balanced fund dividend and balanced fund growth investment so as to make
more returns.

In case of equity fund growth, balanced fund dividend may consider to re-organize
it’s investment as it is lagging far behind when compared to this portfolio to take the
advantage of more returns from the pharmaceutical sector.

In the equity fund dividend analysis, the balanced fund placed in second position,
therefore this fund may consider reconstruction of this investment take the advantage of
more returns from the pharmaceutical sector.

All the equity fund growth in comparison to the other funds is not advisable for

71

7
investment as per present analysis.

The investors are advised to invest their funds in any equity dividend mutual fund.

BIBLIOGRAPHY

Books:-

1. Nataragan and Gordan “Financial Services and Markets”

2. Ponithavatih Pandian “Security Analysis and Portfolio

-Management”
3. Preeti Singh “Investment Managemet “Security Analysis and
-Portfolio Management

4. S. Kevin “Security Analysis and Portfolio Management”

Prentice- Hall of -India PVT LTD (Edition 2003)

5. Donald E. Fisher, Ronald J. Jordan “Security Analysis and

Portfolio-Management”

News papers: -
The Economic Times
Business line
Magazines:-
Business World

72

7
 India Today
Web sites:
www.mutualfundindia.com
www.indiamart.com
www.indiainfoline.com
www.bseindia.com
www.sbhindia.com

73