Performance of Mutual Funds Schems - Narender.l - 051

7/29/2019 Performance of Mutual Funds Schems - Narender.l - 051

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A STUDY ON PERFORMANCE OF MUTUAL FUND SCHEMES IN THE FRAME

WORK OF RISK AND RETURNS at Data Monitor

Chapter 1: Introduction

Introduction to the study:

A mutual fund is a scheme in which several people invest their money for a common financial

cause. The collected money invests in the capital market and the money, which they earned, is

divided based on the number of units, which they hold.

The mutual fund industry started in India in a small way with the UTI Act creating what was

effectively a small savings division within the RBI. Over a period of 25 years this grew fairly

successfully and gave investors a good return, and therefore in 1989, as the next logical step,

public sector banks and financial institutions were allowed to float mutual funds and their

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

The advantages of mutual fund are professional management, diversification, and economies of

scale, simplicity, and liquidity. The disadvantages of mutual fund are high costs, over-

diversification, possible tax consequences, and the inability of management to guarantee a

superior return.

The biggest problems with mutual funds are their costs and fees it include Purchase fee,

Redemption fee, Exchange fee, Management fee, Account fee & Transaction Costs. There are

some loads which add to the cost of mutual fund. Load is a type of commission depending on the

type of funds.

Mutual funds are easy to buy and sell. You can either buy them directly from the fund company

or through a third party. Before investing in any funds one should consider some factor like

objective, risk, Fund Managers and scheme track record, Cost factor etc.

A code of conduct and registration structure for mutual fund intermediaries, which were

subsequently mandated by SEBI. In addition, this year AMFI was involved in a number of

developments and enhancements to the regulatory framework.


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Chapter 2: Conceptual Framework & Literature Review

CONCEPTUAL FRAMEWORK

What is a Mutual Fund?

A mutual fund is just the connecting bridge or a financial intermediary that allows a group of

investors to pool their money together with a predetermined investment objective. The mutual

fund will have a fund manager who is responsible for investing the gathered money into specific

securities (stocks or bonds). When you invest in a mutual fund, you are buying units or portions

of the mutual fund and thus on investing becomes a shareholder or unit holder of the fund.

Mutual funds are considered as one of the best available investments as compare to others they

are very cost efficient and also easy to invest in, thus by pooling money together in a mutual

fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to

do it on their own. But the biggest advantage to mutual funds is diversification, by minimizing

risk & maximizing returns.

Concept of Mutual Funds

A Mutual Fund is a trust that pools the savings of a number of investors who share a commonfinancial 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 appreciation realised are shared by its unit holders in proportion to the number of units

owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it

offers an opportunity to invest in a diversified, professionally managed basket of securities at a

relatively low cost. The flow chart below describes broadly the working of a mutual fund.

Diversification

Diversification is nothing but spreading out your money across available or different types of

investments. By choosing to diversify respective investment holdings reduces risk tremendously

up to certain extent.


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Mutual Fund Operation Flow Chart

The most basic level of diversification is to buy multiple stocks rather than just one stock.

Mutual funds are set up to buy many stocks. Beyond that, you can diversify even more by

purchasing different kinds of stocks, then adding bonds, then international, and so on. It could

take you weeks to buy all these investments, but if you purchased a few mutual funds you could

be done in a few hours because mutual funds automatically diversify in a predetermined category

of investments (i.e. - growth companies, emerging or mid size companies, low-grade corporate

bonds, etc).

Types of Mutual Funds Schemes in India

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk

tolerance and return expectations etc. thus mutual funds has Variety of flavors, Being a

collection of many stocks, an investors can go for picking a mutual fund might be easy. There

are over hundreds of mutual funds scheme to choose from. It is easier to think of mutual funds in

categories, mentioned below.


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Overview of existing schemes existed in mutual fund category: BY STRUCTURE

1. Open - Ended Schemes:

An open-end fund is one that is available for subscription all through the year. These do not have

a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV")

related prices. The key feature of open-end schemes is liquidity.

2. Close - Ended Schemes:

These schemes have a pre-specified maturity period. One can invest directly in the scheme at the

time of the initial issue. Depending on the structure of the scheme there are two exit options

available to an investor after the initial offer period closes. Investors can transact (buy or sell) the

units of the scheme on the stock exchanges where they are listed. The market price at the stock

exchanges could vary from the net asset value (NAV) of the scheme on account of demand and

supply situation, expectations of unit holder and other market factors. Alternatively some close-

ended schemes provide an additional option of selling the units directly to the Mutual Fund

through periodic repurchase at the schemes NAV; however one cannot buy units and can only

sell units during the liquidity window. SEBI Regulations ensure that at least one of the two exit

routes is provided to the investor.

3. Interval Schemes:

Interval Schemes are that scheme, which combines the features of open-ended and close-ended

schemes. The units may be traded on the stock exchange or may be open for sale or redemption

during pre-determined intervals at NAV related prices.


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The risk return trade-off indicates that if investor is willing to take higher risk then

correspondingly he can expect higher returns and vise versa if he pertains to lower risk

instruments, which would be satisfied by lower returns. For example, if an investors opt for

bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest incapital protected funds and the profit-bonds that give out more return which is slightly higher as

compared to the bank deposits but the risk involved also increases in the same proportion.

Thus investors choose mutual funds as their primary means of investing, as Mutual funds

provide professional management, diversification, convenience and liquidity. That doesnt mean

mutual fund investments risk free. This is because the money that is pooled in are not invested

only in debts funds which are less riskier but are also invested in the stock markets which

involves a higher risk but can expect higher returns. Hedge fund involves a very high risk since it

is mostly traded in the derivatives market which is considered very volatile.


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Overview of existing schemes existed in mutual fund category: BY NATURE

1. Equity fund:These funds invest a maximum part of their corpus into equities holdings. The structure of the

fund may vary different for different schemes and the fund managers outlook on different

stocks. The Equity Funds are sub-classified depending upon their investment objective, as

follows:

Diversified Equity Funds

Mid-Cap Funds

Sector Specific Funds

Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-

return matrix.

2. Debt funds:

The objective of these Funds is to invest in debt papers. Government authorities, privatecompanies, banks and financial institutions are some of the major issuers of debt papers. By

investing in debt instruments, these funds ensure low risk and provide stable income to the

investors. Debt funds are further classified as:

Gilt Funds: Invest their corpus in securities issued by Government, popularly known as

Government of India debt papers. These Funds carry zero Default risk but are associated

with Interest Rate risk. These schemes are safer as they invest in papers backed by

Government.

Income Funds: Invest a major portion into various debt instruments such as bonds,

corporate debentures and Government securities.


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MIPs: Invests maximum of their total corpus in debt instruments while they take

minimum exposure in equities. It gets benefit of both equity and debt market. These

scheme ranks slightly high on the risk-return matrix when compared with other debt

schemes.

Short Term Plans (STPs): Meant for investment horizon for three to six months. These

funds primarily invest in short term papers like Certificate of Deposits (CDs) and

Commercial Papers (CPs). Some portion of the corpus is also invested in corporate

debentures.

Liquid Funds: Also known as Money Market Schemes, These funds provides easy

liquidity and preservation of capital. These schemes invest in short-term instruments like

Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for

short-term cash management of corporate houses and are meant for an investment

horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are

considered to be the safest amongst all categories of mutual funds.

3. Balanced funds:

As the name suggest they, are a mix of both equity and debt funds. They invest in both equities

and fixed income securities, which are in line with pre-defined investment objective of the

scheme. These schemes aim to provide investors with the best of both the worlds. Equity part

provides growth and the debt part provides stability in returns.

Further the mutual funds can be broadly classified on the basis of investment parameter viz,

Each category of funds is backed by an investment philosophy, which is pre-defined in the

objectives of the fund. The investor can align his own investment needs with the funds objective

and invest accordingly.

By investment objective:


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Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these

schemes is to provide capital appreciation over medium to long term. These schemes

normally invest a major part of their fund in equities and are willing to bear short-term

decline in value for possible future appreciation.

Income Schemes: Income Schemes are also known as debt schemes. The aim of these

schemes is to provide regular and steady income to investors. These schemes generally

invest in fixed income securities such as bonds and corporate debentures. Capital

appreciation in such schemes may be limited.

Balanced Schemes: Balanced Schemes aim to provide both growth and income by

periodically distributing a part of the income and capital gains they earn. These schemes

invest in both shares and fixed income securities, in the proportion indicated in their offer

documents (normally 50:50).

Money Market Schemes: Money Market Schemes aim to provide easy liquidity,

preservation of capital and moderate income. These schemes generally invest in safer,

short-term instruments, such as treasury bills, certificates of deposit, commercial paper

and inter-bank call money.

Other schemes

Tax Saving Schemes:

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to

time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings

Scheme (ELSS) are eligible for rebate.

Index Schemes:

Index schemes attempt to replicate the performance of a particular index such as the BSE Sensex

or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the


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index. The percentage of each stock to the total holding will be identical to the stocks index

weight age. And hence, the returns from such schemes would be more or less equivalent to those

of the Index.

Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those sectors or industries as

specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods

(FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of

the respective sectors/industries. While these funds may give higher returns, they are more risky

compared to diversified funds. Investors need to keep a watch on the performance of those

sectors/industries and must exit at an appropriate time.

Types of returns

There are three ways, where the total returns provided by mutual funds can be enjoyed by

investors:

Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly

all income it receives over the year to fund owners in the form of a distribution.

If the fund sells securities that have increased in price, the fund has a capital gain. Most

funds also pass on these gains to investors in a distribution.

If fund holdings increase in price but are not sold by the fund manager, the fund's shares

increase in price. You can then sell your mutual fund shares for a profit. Funds will also

usually give you a choice either to receive a check for distributions or to reinvest the

earnings and get more shares.


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Pros & cons of investing in mutual funds:

For investments in mutual fund, one must keep in mind about the Pros and cons of investmentsin mutual fund.

Advantages of Investing Mutual Funds:

Professional Management - The basic advantage of funds is that, they are professional

managed, by well qualified professional. Investors purchase funds because they do not

have the time or the expertise to manage their own portfolio. A mutual fund is considered

to be relatively less expensive way to make and monitor their investments.

Diversification - Purchasing units in a mutual fund instead of buying individual stocks or

bonds, the investors risk is spread out and minimized up to certain extent. The idea

behind diversification is to invest in a large number of assets so that a loss in any

particular investment is minimized by gains in others.

Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus

help to reducing transaction costs, and help to bring down the average cost of the unit for

their investors.

Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate

their holdings as and when they want.

Simplicity - Investments in mutual fund is considered to be easy, compare to other

available instruments in the market, and the minimum investment is small. Most AMC

also have automatic purchase plans whereby as little as Rs. 2000, where SIP start with

just Rs.50 per month basis.

Disadvantages of Investing Mutual Funds:

Professional Management- Some funds doesnt perform in neither the market, as their

management is not dynamic enough to explore the available opportunity in the market,


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thus many investors debate over whether or not the so-called professionals are any better

than mutual fund or investor himself, for picking up stocks.

Costs The biggest source of AMC income, is generally from the entry & exit load

which they charge from an investors, at the time of purchase. The mutual fund industries

are thus charging extra cost under layers of jargon.

Dilution - Because funds have small holdings across different companies, high returns

from a few investments often don't make much difference on the overall return. Dilution

is also the result of a successful fund getting too big. When money pours into funds that

have had strong success, the manager often has trouble finding a good investment for all

the new money.


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UNDERSTANDING MUTUAL FUND

Mutual fund is a trust that pools money from a group of investors (sharing common financial

goals) and invest the money thus collected into asset classes that match the stated investment

objectives of the scheme. Since the stated investment objectives of a mutual fund scheme

generally forms the basis for an investor's decision to contribute money to the pool, a mutual

fund can not deviate from its stated objectives at any point of time.

Every Mutual Fund is managed by a fund manager, who using his investment management skills

and necessary research works ensures much better return than what an investor can manage on

his own. The capital appreciation and other incomes earned from these investments are passed on

to the investors (also known as unit holders) in proportion of the number of units they own.


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When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets

of the fund in the same proportion as his contribution amount put up with the corpus (the total

amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit

holder.

Any change in the value of the investments made into capital market instruments (such as shares,

debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the

market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is

calculated by dividing the market value of scheme's assets by the total number of units issued to

the investors.

For example:

A. If the market value of the assets of a fund is Rs. 100,000

B. The total number of units issued to the investors is equal to 10,000.

C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00

D. Now if an investor 'X' owns 5 units of this scheme

E. Then his total contribution to the fund is Rs. 50 (i.e. Number of units held multiplied by

the NAV of the scheme)

ADVANTAGES OF MUTUAL FUND

S.No. Advantage Particulars

1.Portfolio

Diversification

Mutual Funds invest in a well-diversified portfolio of securities which

enables investor to hold a diversified investment portfolio (whether the

amount of investment is big or small).

2.Professional

Management

Fund manager undergoes through various research works and has

better investment management skills which ensure higher returns to the

investor than what he can manage on his own.

3. Less Risk

Investors acquire a diversified portfolio of securities even with a small

investment in a Mutual Fund. The risk in a diversified portfolio is

lesser than investing in merely 2 or 3 securities.

4. Low Due to the economies of scale (benefits of larger volumes), mutual


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Transaction

Costs

funds pay lesser transaction costs. These benefits are passed on to the

investors.

5. Liquidity

An investor may not be able to sell some of the shares held by him

very easily and quickly, whereas units of a mutual fund are far moreliquid.

6.Choice of

Schemes

>Mutual funds provide investors with various schemes with different

investment objectives. Investors have the option of investing in a

scheme having a correlation between its investment objectives and

their own financial goals. These schemes further have different

plans/options

7. Transparency

Funds provide investors with updated information pertaining to the

markets and the schemes. All material facts are disclosed to investors

as required by the regulator.

8. Flexibility

Investors also benefit from the convenience and flexibility offered by

Mutual Funds. Investors can switch their holdings from a debt scheme

to an equity scheme and vice-versa. Option of systematic (at regular

intervals) investment and withdrawal is also offered to the investors in

most open-end schemes.

9. Safety

Mutual Fund industry is part of a well-regulated investment

environment where the interests of the investors are protected by the

regulator. All funds are registered with SEBI and complete

transparency is forced.


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DISADVANTAGES OF MUTUAL FUND

S.No. Disadvantage Particulars

1.

Costs Control

Not in the Hands

of an Investor

Investor has to pay investment management fees and fund distribution

costs as a percentage of the value of his investments (as long as he holds

the units), irrespective of the performance of the fund.

2.No Customized

Portfolios

The portfolio of securities in which a fund invests is a decision taken by

the fund manager. Investors have no right to interfere in the decision

making process of a fund manager, which some investors find as a

constraint in achieving their financial objectives.

3.

Difficulty in

Selecting a

Suitable Fund

Scheme

Many investors find it difficult to select one option from the plethora of

funds/schemes/plans available. For this, they may have to take advice

from financial planners in order to invest in the right fund to achieve

their objectives.

TYPES OF MUTUAL FUNDS

Open-end Funds | Closed-end Funds

Open-end Funds

Funds that can sell and purchase units at any point in time are classified as Open-end Funds. The

fund size (corpus) of an open-end fund is variable (keeps changing) because of continuous

selling (to investors) and repurchases (from the investors) by the fund. An open-end fund is not

required to keep selling new units to the investors at all times but is required to always

repurchase, when an investor wants to sell his units. The NAV of an open-end fund is calculated

every day.

Closed-end Funds


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Funds that can sell a fixed number of units only during the New Fund Offer (NFO) period are

known as Closed-end Funds. The corpus of a Closed-end Fund remains unchanged at all times.

After the closure of the offer, buying and redemption of units by the investors directly from the

Funds is not allowed. However, to protect the interests of the investors, SEBI provides investors

with two avenues to liquidate their positions.

Load Funds | No-load Funds

Load Funds

Mutual Funds incur various expenses on marketing, distribution, advertising, portfolio churning,

fund manager's salary etc. Many funds recover these expenses from the investors in the form of

load. These funds are known as Load Funds.

No-load Funds

All those funds that do not charge any of the above mentioned loads are known as No-load

Funds.

Tax-exempt Funds | Non-Tax-exempt Funds

Tax-exempt Funds

Funds that invest in securities free from tax are known as Tax-exempt Funds. All open-end

equity oriented funds are exempt from distribution tax (tax for distributing income to investors).

Long term capital gains and dividend income in the hands of investors are tax-free.

Non-Tax-exempt Funds

Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In India, all funds,

except open-end equity oriented funds are liable to pay tax on distribution income. Profits arising

out of sale of units by an investor within 12 months of purchase are categorized as short-term

capital gains, which are taxable. Sale of units of an equity oriented fund is subject to Securities

Transaction Tax (STT). STT is deducted from the redemption proceeds to an investor.


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BROAD MUTUAL FUND TYPES

1. Equity Funds

Equity funds are considered to be the more risky funds as compared to other fund types,

but they also provide higher returns than other funds. It is advisable that an investor


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looking to invest in an equity fund should invest for long term i.e. for 3 years or more.

There are different types of equity funds each falling into different risk bracket.


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2. Debt / Income Funds

Funds that invest in medium to long-term debt instruments issued by private companies,

banks, financial institutions, governments and other entities belonging to various sectors

(like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are

low risk profile funds that seek to generate fixed current income (and not capital

appreciation) to investors. In order to ensure regular income to investors, debt (or

income) funds distribute large fraction of their surplus to investors. Although debt

securities are generally less risky than equities, they are subject to credit risk (risk of

default) by the issuer at the time of interest or principal payment. To minimize the risk of

default, debt funds usually invest in securities from issuers who are rated by credit rating

agencies and are considered to be of "Investment Grade". Debt funds that target high

returns are more risky.

3. Gilt Funds

Also known as Government Securities in India, Gilt Funds invest in government papers

(named dated securities) having medium to long term maturity period. Issued by the

Government of India, these investments have little credit risk (risk of default) and provide

safety of principal to the investors. However, like all debt funds, gilt funds too are

exposed to interest rate risk. Interest rates and prices of debt securities are inversely

related and any change in the interest rates results in a change in the NAV of debt/gilt

funds in an opposite direction.

4. Money Market / Liquid Funds

Money market / liquid funds invest in short-term (maturing within one year) interest

bearing debt instruments. These securities are highly liquid and provide safety of

investment, thus making money market / liquid funds the safest investment option when


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compared with other mutual fund types. However, even money market / liquid funds are

exposed to the interest rate risk. The typical investment options for liquid funds include

Treasury Bills (issued by governments), Commercial papers (issued by companies) and

Certificates of Deposit (issued by banks).


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5. Hybrid Funds

As the name suggests, hybrid funds are those funds whose portfolio includes a blend of

equities, debts and money market securities. Hybrid funds have an equal proportion of

debt and equity in their portfolio.

6. Commodity Funds

Those funds that focus on investing in different commodities (like metals, food grains,

crude oil etc.) or commodity companies or commodity futures contracts are termed as

Commodity Funds. A commodity fund that invests in a single commodity or a group of

commodities is a specialized commodity fund and a commodity fund that invests in all

available commodities is a diversified commodity fund and bears less risk than a

specialized commodity fund. "Precious Metals Fund" and Gold Funds (that invest in

gold, gold futures or shares of gold mines) are common examples of commodity funds.

7. Real Estate Funds

Funds that invest directly in real estate or lend to real estate developers or invest in

shares/securitized assets of housing finance companies, are known as Specialized Real

Estate Funds. The objective of these funds may be to generate regular income for

investors or capital appreciation.

8. Exchange Traded Funds (ETF)

Exchange Traded Funds provide investors with combined benefits of a closed-end and an

open-end mutual fund. Exchange Traded Funds follow stock market indices and are

traded on stock exchanges like a single stock at index linked prices. The biggest

advantage offered by these funds is that they offer diversification, flexibility of holding a


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single share (tradable at index linked prices) at the same time. Recently introduced in

India, these funds are quite popular abroad.

9. Fund of Funds

Mutual funds that do not invest in financial or physical assets, but do invest in other

mutual fund schemes offered by different AMCs, are known as Fund of Funds. Fund of

Funds maintain a portfolio comprising of units of other mutual fund schemes, just like

conventional mutual funds maintain a portfolio comprising of equity/debt/money market

instruments or non financial assets. Fund of Funds provide investors with an added

advantage of diversifying into different mutual fund schemes with even a small amount

of investment, which further helps in diversification of risks. However, the expenses of

Fund of Funds are quite high on account of compounding expenses of investments into

different mutual fund schemes.

Risk Heirarchy of Different Mutual Funds

Thus, different mutual fund schemes are exposed to different levels of risk and investors should

know the level of risks associated with these schemes before investing. The graphical

representation hereunder provides a clearer picture of the relationship between mutual funds and

levels of risk associated with these funds:


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Chapter 3: Company Profile

Data Monitor

Datamonitor is an international company providing market intelligence, data analysis andopinion via a worldwide network of in-house analysts. According to the organization's website in

2011, Datamonitor assists over 6000 of the worlds leading corporations in making strategic and

operational decisions. The company uses audited methodologies to deliver their advice across the

major industrial sectors. Datamonitor is a division of Informa plc (FTSE: INF), a United

Kingdom-based publisher and conference company.

In the guidance of Data Monitor Financial research team this project was undertaken to compare

and risk and return performance of Mutual Funds considering various Banks.

Kotak Mahindra:

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

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

mutual funds, to life insurance, to investment banking, the group caters to the financial needs of

individuals and corporates.

The group has a net worth of Rs.7,911 crore and employs around 20,000 employees across its

various businesses, servicing around 7 million customer accounts through a distribution network

of 1,716 branches, franchisees and satellite offices across more than 470 cities and towns in India

and offices in New York, California,San Francisco, London, Dubai, Mauritius and Singapore.

Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary
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of KMBL, is the Asset Manager for Kotak Mahindra Mutual Fund (KMMF). KMAMC started

operations in December 1998 and has over 10 Lac investors in various schemes. KMMF offers

schemes catering to investors with varying risk - return profiles and was the first fund house in

the country to launch a dedicated gilt scheme investing only in government securities.

Kotak Mahindra Bank: Facilities and Customer Care

The facilities of Kotak Mahindra Bank are wide spread. It's banking sector acts as a central

platform for customer relationships across the entire Kotak Mahindra group's various businesses.

The bank marks its presence in the commercial vehicles, retail finance, corporate banking and

treasury and housing finance segments. It offers you several facilities like personal banking,

commercial banking, insurance and investment banking.

Apart from traditional facilities like deposits accounts, savings account, current account, term

deposits, personal loans, home loans the bank has spread its wing in the investment services by

providing its customer facilities like Demat, mutual fund and insurance. The bank has also opted

for net banking, mobile banking and phone banking for convenience of its customers.

SBI

The evolution of State Bank of India can be traced back to the first decade of the 19th century. It

began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806. The bank was

redesigned as the Bank of Bengal, three years later, on 2 January 1809. It was the first ever joint-

stock bank of the British India, established under the sponsorship of the Government of Bengal.

Subsequently, the Bank of Bombay (established on 15 April 1840) and the Bank of Madras

(established on 1 July 1843) followed the Bank of Bengal. These three banks dominated the

modern banking scenario in India, until when they were amalgamated to form the Imperial Bank

of India, on 27 January 1921.

An important turning point in the history of State Bank of India is the launch of the first Five

Year Plan of independent India, in 1951. The Plan aimed at serving the Indian economy in

general and the rural sector of the country, in particular. Until the Plan, the commercial banks of

the country, including the Imperial Bank of India, confined their services to the urban sector.

Moreover, they were not equipped to respond to the growing needs of the economic revival


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taking shape in the rural areas of the country. Therefore, in order to serve the economy as a

whole and rural sector in particular, the All India Rural Credit Survey Committee recommended

the formation of a state-partnered and state-sponsored bank.

The All India Rural Credit Survey Committee proposed the take over of the Imperial Bank of

India, and integrating with it, the former state-owned or state-associate banks. Subsequently, an

Act was passed in the Parliament of India in May 1955. As a result, the State Bank of India (SBI)

was established on 1 July 1955. This resulted in making the State Bank of India more powerful,

because as much as a quarter of the resources of the Indian banking system were controlled

directly by the State. Later on, the State Bank of India (Subsidiary Banks) Act was passed in

1959. The Act enabled the State Bank of India to make the eight former State-associated banks

as its subsidiaries.

The State Bank of India emerged as a pacesetter, with its operations carried out by the 480

offices comprising branches, sub offices and three Local Head Offices, inherited from the

Imperial Bank. Instead of serving as mere repositories of the community's savings and lending to

creditworthy parties, the State Bank of India catered to the needs of the customers, by banking

purposefully. The bank served the heterogeneous financial needs of the planned economic

development.

Branches

The corporate center of SBI is located in Mumbai. In order to cater to different functions, there

are several other establishments in and outside Mumbai, apart from the corporate center. The

bank boasts of having as many as 14 local head offices and 57 Zonal Offices, located at major

cities throughout India. It is recorded that SBI has about 10000 branches, well networked to cater

to its customers throughout India.

ATM Services

SBI provides easy access to money to its customers through more than 8500 ATMs in India. The

Bank also facilitates the free transaction of money at the ATMs of State Bank Group, which

includes the ATMs of State Bank of India as well as the Associate Banks State Bank of

Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, etc. You may also transact


27/58

money through SBI Commercial and International Bank Ltd by using the State Bank ATM-cum-

Debit (Cash Plus) card.

Subsidiaries

The State Bank Group includes a network of eight banking subsidiaries and several non-banking

subsidiaries. Through the establishments, it offers various services including merchant banking

services, fund management, factoring services, primary dealership in government securities,

credit cards and insurance.

The eight banking subsidiaries are:

State Bank of Bikaner and Jaipur (SBBJ)

State Bank of Hyderabad (SBH)

State Bank of India (SBI)

State Bank of Indore (SBIR)

State Bank of Mysore (SBM)

State Bank of Patiala (SBP)

State Bank of Saurashtra (SBS)

State Bank of Travancore (SBT)

Products And Services

Personal Banking

SBI Term Deposits SBI Loan For Pensioners

SBI Recurring Deposits Loan Against Mortgage Of Property

SBI Housing Loan Loan Against Shares & Debentures

SBI Car Loan Rent Plus Scheme

SBI Educational Loan Medi-Plus Scheme


28/58

Other Services

Agriculture/Rural Banking

NRI Services

ATM Services

Demat Services

Corporate Banking

Internet Banking

Mobile Banking

International Banking

Safe Deposit Locker

RBIEFT

E-Pay

E-Rail

SBI Vishwa Yatra Foreign Travel Card

Broking Services

Gift Cheques

ICICI Bank:

ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial

institution, in 1994. Four years later, when the company offered ICICI Bank's shares to the

public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank offered made an

equity offering in the form of ADRs on the New York Stock Exchange (NYSE), thereby

becoming the first Indian company and the first bank or financial institution from non-Japan Asia

to be listed on the NYSE. In the next year, it acquired the Bank of Madura Limited in an all-


29/58

stock amalgamation. Later in the year and the next fiscal year, the bank made secondary market

sales to institutional investors.

With a change in the corporate structure and the budding competition in the Indian Banking

industry, the management of both ICICI and ICICI Bank were of the opinion that a merger

between the two entities would prove to be an essential step. It was in 2001 that the Boards of

Directors of ICICI and ICICI Bank sanctioned the amalgamation of ICICI and two of its wholly-

owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital

Services Limited, with ICICI Bank. In the following year, the merger was approved by its

shareholders, the High Court of Gujarat at Ahmedabad as well as the High Court of Judicature at

Mumbai and the Reserve Bank of India.

Present Scenario

ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and the National

Stock Exchange of India Limited. Overseas, its American Depositary Receipts (ADRs) are listed

on the New York Stock Exchange (NYSE). As of December 31, 2008, ICICI is India's second-

largest bank, boasting an asset value of Rs. 3,744.10 billion and profit after tax Rs. 30.14 billion,

for the nine months, that ended on December 31, 2008.

Branches & ATMs

ICICI Bank has a wide network both in Indian and abroad. In India alone, the bank has 1,420

branches and about 4,644 ATMs. Talking about foreign countries, ICICI Bank has made its

presence felt in 18 countries - United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar

and Dubai International Finance Centre and representative offices in United Arab Emirates,

China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The Bank proudly holds its

subsidiaries in the United Kingdom, Russia and Canada out of which, the UK subsidiary has

established branches in Belgium and Germany.

Products & Services

Personal Banking

Deposits


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Loans

Cards

Investments

Insurance

Demat Services

Wealth Management

NRI Banking

Money Transfer

Bank Accounts

Investments

Property Solutions

Insurance

Loans

Business Banking

Corporate Net Banking

Cash Management

Trade Services

FXOnline

SME Services

Online Taxes

Custodial Services


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HDFC Bank

Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd,

was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by

Reserve Bank of India (RBI). It was one of the first banks to receive an 'in principle' approval

from RBI, for setting up a bank in the private sector. The bank was incorporated with the name

'HDFC Bank Limited', with its registered office in Mumbai. The following year, it started its

operations as a Scheduled Commercial Bank. Today, the bank boasts of as many as 1412

branches and over 3275 ATMs across India.

Amalgamations

In 2002, HDFC Bank witnessed its merger with Times Bank Limited (a private sector bank

promoted by Bennett, Coleman & Co. / Times Group). With this, HDFC and Times became the

first two private banks in the New Generation Private Sector Banks to have gone through a

merger. In 2008, RBI approved the amalgamation of Centurion Bank of Punjab with HDFC

Bank. With this, the Deposits of the merged entity became Rs. 1,22,000 crore, while the

Advances were Rs. 89,000 crore and Balance Sheet size was Rs. 1,63,000 crore.

Tech-Savvy

HDFC Bank has always prided itself on a highly automated environment, be it in terms of

information technology or communication systems. All the braches of the bank boast of online

connectivity with the other, ensuring speedy funds transfer for the clients. At the same time, the

bank's branch network and Automated Teller Machines (ATMs) allow multi-branch access to

retail clients. The bank makes use of its up-to-date technology, along with market position and

expertise, to create a competitive advantage and build market share.

Capital Structure

At present, HDFC Bank boasts of an authorized capital of Rs 550 crore (Rs5.5 billion), of this

the paid-up amount is Rs 424.6 crore (Rs.4.2 billion). In terms of equity share, the HDFC Group

holds 19.4%. Foreign Institutional Investors (FIIs) have around 28% of the equity and about

17.6% is held by the ADS Depository (in respect of the bank's American Depository Shares

(ADS) Issue). The bank has about 570,000 shareholders. Its shares find a listing on the Stock


32/58

Exchange, Mumbai and National Stock Exchange, while its American Depository Shares are

listed on the New York Stock Exchange (NYSE), under the symbol 'HDB'.

Products & Services

Personal Banking

Savings Accounts

Salary Accounts

Current Accounts

Fixed Deposits

Demat Account

Safe Deposit Lockers

Loans

Credit Cards

Debit Cards

Prepaid Cards

Investments & Insurance

Forex Services

Payment Services

NetBanking

InstaAlerts

MobileBanking

InstaQuery


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ATM

PhoneBanking

NRI Banking

Rupee Savings Accounts

Rupee Current Accounts

Rupee Fixed Deposits

Foreign Currency Deposits

Accounts for Returning Indians

Quickremit (North America, UK, Europe, Southeast Asia)

IndiaLink (Middle East, Africa)

Cheque LockBox

Telegraphic / Wire Transfer

Funds Transfer through Cheques / DDs / TCs

Mutual Funds

Private Banking

Portfolio Investment Schemes

Loans

Payment Services

NetBanking

InstaAlerts

MobileBanking


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InstaQuery

ATM

PhoneBanking


35/58

Chapter 3: RESEARCH METHODOLOGY

Need for the study:

In India very little work has been done to investigate fund managers forecasting abilities. Active

fund managers are expected to reward higher return. If the fund manager feels that market on the

whole overvalued, then he would get out the market. Hence the present study has the objective of

finding out. The performance of mutual fund schemes in the frame work of risk and returns.

Objectives of the study:

1. To understand the basic concepts of mutual funds and its benefits as an investment

avenue.

2. To understand the importance of mutual funds in investing money

3. To analyze the performance of different mutual funds on the basis of various parameters

4. To analyze the alternative investment options for investing money

5. To analyze the risk, return, volatility of mutual funds.

Scope of the study:

This study covers Equity linked schemes of Kotak Mahindra gold scheme, SBI Gold scheme,

ICICI gold scheme, HDFC gold scheme in which share khan is a distributor and this study

covers only open ended type schemes only and the study covers the period of past one year only

i.e. 2011 to 2012. Because of the non availability of data I restricted my research to 1 Year.

Data collection

The methodology followed for the collecting information are using two sources of data namely

Primary data

Secondary data

Primary data: the data collected first hand by the researcher concerned with the research

problem refers to the primary data.


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Secondary data

The information available at various sources made for some other purpose but facilitating the

study undertaken is called as secondary data.

Limitations of the study:

1. Time constraint

2. The data collected from the respondents may not be reliable. So the fluctuations in the

result might occur.


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Chapter 4:Data Analysis and Interpretation

STATE BANK OF INDIA STOCK PRICES AS ON 2011

Month Openprice

Highprice

Lowprice

Closeprice

No.ofShares

No. ofTrades

TotalTurnover (Rs.)

11-Mar 2072 2115 2036 2053.31 13175 1744 27275812

11-Apr 2074.99 2299 2053.31 2196.82 19239 2173 41268355

11May 2205 2260 2096 2227.44 24318 2986 53410797

11-Jun 2228 2239.65 2165.01 2176.25 19666 2593 43387959

11-Jul 2173 2310 2133 2298.99 43026 2985 94043075

11-Aug 2306.9 2990 2239.99 2647.81 97735 9977 2.56E+08

11-Sep 2680 2842.5 2551.25 2572.1 84834 9994 2.27E+08

11-Oct 2575 2848 2550 2645.58 50305 8299 1.32E+08

11-Nov 2650 2840.99 2650 2814.37 42094 5738 1.17E+08

11-Dec 2842 2869.5 2631.02 2672.48 35273 5762 96921997

12-Jan 2675 2759.99 2670.56 2756.82 19468 3738 52840213

12-Feb 2750 2820 2700 2809.67 16662 3193 46062704

12-Mar 2785.5 2800.05 2655 2785.79 26290 4097 71751265

12-Apr 2785.79 2860 2730.01 2851.44 27395 5116 76873782


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Interpretation:

1. Over the Period SBI has a steady increase in the closing Price and has reached its peak in

the month April 2012.

DETEMINATION OF RISK AND RETURNS (2011)

YEAR BSE-500 SBI INDEX RETURNS SBI RETURNS

1-Mar 7,437.26 2053.31 0.001363 -0.06533

1-Apr 7,427.14 2196.82 0.02672 -0.01375

1-May 7,233.85 2227.44 -0.00433 0.0235221-Jun 7,265.32 2176.25 0.021657 -0.05339

1-Jul 7,111.31 2298.99 0.096203 -0.13174

1-Aug 6,487.22 2647.81 0.015888 0.029435

1-Sep 6,385.76 2572.1 -0.05582 -0.02777

1-Oct 6,763.26 2645.58 0.10565 -0.05997

1-Nov 6,117.00 2814.37 0.058546 0.053093

1-Dec 5,778.68 2672.48 -0.11767 -0.03059

1-Jan 6,549.31 2756.82 -0.04491 -0.01881

1-Feb 6,857.28 2809.67 0.014446 0.008572

1-Mar 6,759.63 2785.79 0.009124 -0.02302

1-Apr 6698.51 2851.44

INDEX

VARIANCE

SBI VARIANCE COVARIANCE BETA SDX SDY ALPHA

0.003611 0.002315 -0.00063 -0.17504 0.06009

2

0.04811

6

-0.289

SYSTEMATIC RISK UNSYSTEMATIC RISK TOTAL RISK RETURNS

0.000111 0.291311 0.291421 -0.31

Risk Free Rate is 0.18.

Treynor Ratio = (Average Return of the Portfolio Average Return of the Risk free rate)/ Beta


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= ( -0.31- 0.18) / -0.17

= 2.882

Sharpe Measure = (Average Return of the Portfolio Average Return of the Risk free rate)/S.D.

= (-0.31-0.18)/ 0.04811

= -10.185

Jensen Measure = Portfolio Return [Risk Free Rate + Portfolio Beta * (Market Return Risk

Free Rate)]

= -0.31-(0.18-0.17504*(0.126-0.18))

= -0.499

Interpretation:

1. The overall risk of the mutual fund as measured by the standard deviation of the

total returns of the fund returns for the period from 1 st march 2011 to 1st April 2012 is

0.048.

2. The systematic Risk of the Mutual fund as given by the coefficient for the

period from 1st March 2011 to 1st April 2012 is -0.17504

3. Treynors Measure for the fund for the period from 1st March 2011 to 1st April

2012 is 2.882 which indicates that for every one unit change in the beta there will be

2.882 unit charge in the returns.

4. Sharpes Measure for the fund for the period from 1 st March 2011 to 1st April

2012 is -10.185 which indicates that for every one unit change in the standard deviation

there will be -10.185 units change in the returns.

5. Jensens Measure for the fund for the period 1 st March 2011 to 1st April 2012 is

-0.499.

ICICI BANK STOCK PRICES AS ON 2011


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Month Open

Price

High Price Low

Price

Close

Price

No.of

Shares

No. of

Trades

Total

Turnover (Rs.)

11-Mar 2050 2300 2002 2099.99 540 33 1110744

11-Apr 2102 2227.99 2003 2227.99 789 68 1657788

11May 2200.1 2577 2150.01 2235 3733 95 8308646

11-Jun 2245 2499 1940 2180.25 793 73 1757661

11-Jul 2024 2398 2024 2300 852 96 1906890

11-Aug 2251.51 2840 2251.51 2650 2461 148 6422179

11-Sep 2700 2861.5 2500 2556.4 1907 116 5176998

11-Oct 2553 2900 2326 2674 1979 172 5205589

11-Nov 2699 2890 2652.25 2855 6355 293 17563659

11-Dec 2855 3000 2650 2672.66 1853 270 5165723

12-Jan 2681 2800 2661 2740.1 885 192 2422425

12-Feb 2780 2845 2700 2819 1610 237 4456818

12-Mar 2760 2824.5 2680 2754 1895 198 5167633

12-Apr 2737.25 2890 2737.25 2848 1914 199 5385136

Interpretation:

1. The closing price of ICICI bank is increasing over the years and it is highest at December

2011.

2. The present closing price of the ICICI bank is good compare to previous price.


41/58


YEAR BSE-

500

ICICI INDEX RETURNS ICICI RETURNS

1-Mar 7,437.26 2099.99 0.001363 -0.05745

1-Apr 7,427.14 2227.99 0.02672 -0.00314

1-May 7,233.85 2235 -0.00433 0.025112

1-Jun 7,265.32 2180.25 0.021657 -0.05207

1-Jul 7,111.31 2300 0.096203 -0.13208

1-Aug 6,487.22 2650 0.015888 0.036614

1-Sep 6,385.76 2556.4 -0.05582 -0.04398

1-Oct 6,763.26 2674 0.10565 -0.0634

1-Nov 6,117.00 2855 0.058546 0.068224

1-Dec 5,778.68 2672.66 -0.11767 -0.02461

1-Jan 6,549.31 2740.1 -0.04491 -0.02799

1-Feb 6,857.28 2819 0.014446 0.023602

1-Mar 6,759.63 2754 0.009124 -0.03301

1-Apr 6698.51 2848

INDEX

VARIANCE

ICICI

VARIANCE

COVARIANCE BETA SDX SDY ALPH

0.003611 0.002739 -0.00052 -0.14498 0.06009

2

0.05233

6

-0.262


0.000075896117 0.265342 0.265418 -0.28



= ( -0.28- 0.18) / -0.144

= 3.194


= (-0.28-0.18)/ 0.052336

= -8.789


42/58


Free Rate)]

= -0.28-(0.18-0.14498*(0.12-0.18))

= 0.0006

Interpretation:



0.05233.







2012 is -8. Which indicates that for every one unit change in the standard deviation there

will be -8.789 units change in the returns?


-0.0006.

KOTAK MAHENDHRA STOCK PRICES AS ON 2011

Month Open

Price

High

Price

Low

Price

Close

Price

No. of

Shares

No. of

Trades

Total

Turnover (Rs.)

11-Mar 2023 2059.99 1945 2014.8 11206 1233 22726519

11-Apr 2015 2160 2015 2151.88 12216 1331 25598512

11May 2218 2218 2100 2185.63 21875 2149 47232721

11-Jun 2190 2198.9 2130 2136.75 12580 1700 27202624

11-Jul 2128 2268 2088 2258.33 15447 1876 33782235


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11-Aug 2257 2758.45 2230 2594.64 48648 4490 1.23E+08

11-Sep 2625 2782 2480 2513.11 60491 5669 1.58E+08

11-Oct 2525 2747 2485 2616.13 40416 4839 1.04E+08

11-Nov 2624 2808 2621 2782.44 30521 3395 83373390

11-Dec 2800.55 2818.99 2580 2610.83 18702 2618 50710854

12-Jan 2635 2722 2616.25 2719 19053 1743 5078237312-Feb 2711.01 2775 2647.5 2740.68 10549 1700 28568780

12-Mar 2698 2761 2605 2685.02 20610 2030 54857454

12-Apr 2683.5 2799.15 2666.6 2769.71 19379 2743 53065023

Interpretation:

The closing price of Kotak Mahindra is fluctuating every month and it is high at November

2011. The present closing price of the Kotak Mahindra is 2769.71


YEAR BSE-500 KOTAK

MAHINDRA

INDEX

RETURNS

KOTAK MAHINDRA

RETURNS

1-Mar 7,437.26 2014.8 0.001363 -0.0637

1-Apr 7,427.14 2151.88 0.02672 -0.01544

1-May 7,233.85 2185.63 -0.00433 0.022876


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1-Jun 7,265.32 2136.75 0.021657 -0.05384

1-Jul 7,111.31 2258.33 0.096203 -0.12962

1-Aug 6,487.22 2594.64 0.015888 0.032442

1-Sep 6,385.76 2513.11 -0.05582 -0.03938

1-Oct 6,763.26 2616.13 0.10565 -0.05977

1-Nov 6,117.00 2782.44 0.058546 0.06573

1-Dec 5,778.68 2610.83 -0.11767 -0.03978

1-Jan 6,549.31 2719 -0.04491 -0.00791

1-Feb 6,857.28 2740.68 0.014446 0.02073

1-Mar 6,759.63 2685.02 0.009124 -0.03058

1-Apr 6698.51 2769.71

INDEX

VARIANCE

KOTAK MAHINDRA

VARIANCE

COVARIANCE BETA SDX SDY ALPHA

0.003611 0.002599 -0.00046 -0.12823 0.060092 0.050976 -0.27461


0.000059 0.277211 0.27727 -0.29



= ( -0.29- 0.18) / -0.128

= 3.67


= (-0.29-0.18)/ -0.2746

= 1.711


Free Rate)]

= -0.29-(0.18-0.12823*(0.12-0.18))

= 0.0009

Interpretation:


45/58



0.048.




2012 is 3.67 which indicates that for every one unit change in the beta there will be 3.67

unit charge in the returns.


2012 is 1.711 which indicates that for every one unit change in the standard deviation

there will be 1.711 units change in the returns.


0.0009


46/58

HDFC BANK STOCK PRICES AS ON 2011

Month Open

Price

High

Price

Low Price Close

Price

No. of

Shares

No. of

Trades

Total

Turnover (Rs.)

11-Mar 2062 2099.95 2040 2075 3299 583 6846955

11-Apr 2085 2245 2060.15 2198.23 8155 916 17581235

11May 2247.99 2260 2151.5 2221.38 8923 756 19693719

11-Jun 2220 2300 2155.1 2187.71 6067 617 13427763

11-Jul 2189 2310.14 1925 2284.57 11617 874 26109882

11-Aug 2278 2895 2278 2644.99 21639 2375 56386906

11-Sep 2684.4 2834.8 2505 2575.99 23909 2321 63903095

11-Oct 2600.1 2705 2547 2651.09 21384 1727 56238876

11-Nov 2650 2920 2650 2826.6 25493 1933 70851414

11-Dec 2845 2876.95 2636 2659.49 9871 1324 27308863

12-Jan 2670 2759.96 2650 2757.3 6319 1131 17116458

12-Feb 2760 2814.97 2714.9 2794.85 7842 1176 21619660

12-Mar 2786 2799.96 2710 2755.96 5305 1086 14568210

12-Apr 2800 2928 2730 2877.57 7414 1272 20739077

Interpretation:


47/58

The closing price of HDFC bank over the years fluctuating and in the month April it is at 2877

which has rapid increase from the previous year.


YEAR BSE-500 HDFC INDEX RETURNS HDFC RETURNS

1-Mar 7,437.26 2075 0.001363 -0.05606

1-Apr 7,427.14 2198.23 0.02672 -0.01042

1-May 7,233.85 2221.38 -0.00433 0.015391

1-Jun 7,265.32 2187.71 0.021657 -0.0424

1-Jul 7,111.31 2284.57 0.096203 -0.13627

1-Aug 6,487.22 2644.99 0.015888 0.026786

1-Sep 6,385.76 2575.99 -0.05582 -0.02833

1-Oct 6,763.26 2651.09 0.10565 -0.06209

1-Nov 6,117.00 2826.6 0.058546 0.062835

1-Dec 5,778.68 2659.49 -0.11767 -0.03547

1-Jan 6,549.31 2757.3 -0.04491 -0.01344

1-Feb 6,857.28 2794.85 0.014446 0.014111

1-Mar 6,759.63 2755.96 0.009124 -0.04226

1-Apr 6698.51 2877.57

INDEX

VARIANCE

HDFC

VARIANCE

COVARIANCE BETA SDX SDY ALPHA

0.003611 0.002444 -0.00059 -0.16457 0.060092 0.049432 -0.2802


0.000097 0.282695 0.282792 -0.3



= ( -0.31- 0.18) / -0.164

= 2.987



48/58

= (-0.31-0.18)/ -0.28025

= 1.748


Free Rate)]

= -0.31-(0.18-0.16457*(0.12-0.18))

= 0.0002

Interpretation:


total returns of the fund returns for the period from 1st

march 2011 to 1st

April 2012 is

0.049.







2012 is 1.748 which indicates that for every one unit change in the standard deviation

there will be 1.748 units change in the returns.


0.0002.

Findings:

1. Kotak Mahindra Gold Scheme

Average Returns -0.29

Market Average Return 0.12

Standard Deviation 0.050976

Beta -0.12823


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a. The average return of the fund is lower than that of the average market return which

indicates that the fund is not performing well as compared to the market

b. The standard deviation of 0.0509 indicates the amount of risk involved in investing in the

fund.

c. The funds beta of -0.12823 is relatively lower than that of the market index which gives

the idea that the proportionate change in the fund resulting from the change in the market

index is relatively low.

2. SBI Gold Scheme




Beta -0.17504



b. The standard deviation of 0.04816 indicates the amount of risk involved in investing in

the fund.




3. ICICI Gold Scheme




Beta -0.14498


50/58



b. The standard deviation of 0.052336 indicates the amount of risk involved in investing in

the fund.




4. HDFC Gold Scheme




Beta -0.16457



b. The standard deviation of 0.049432 indicates the amount of risk involved in investing inthe fund.




Treynors Index

Name Value Rankings

Kotak Mahindra Gold Scheme 3.67 1

SBI Gold Scheme 2.882 4

ICICI Gold Scheme 3.194 2


51/58

HDFC Gold Scheme 2.987 3

Out of these 4, Kotak Mahindra Gold scheme has high Treynors value . This implies that Kotak

Mahindra Gold Scheme has been the most profitable when the relative risks involved in the

investments have been taken into account.

Sharpes Index

Name Value Rankings


SBI Gold Scheme -10.185 4

ICICI Gold Scheme -8.789 3


From the above Sharpes risk, compared to other Gold Schemes HDFC gold scheme is giving

more return for the same risk.

Jensens Index

Name Value Rankings


SBI Gold Scheme -0.499 4

ICICI Gold Scheme 0.0006 2


Jensens alpha is used to determine the abnormal return of a security or a portfolio. From the

above table it is understood that kotak Mahindra Gold scheme has high expected returns with

less risky assets.

Suggestions:

1. The investors who are ready to take risk can invest in Kotak Mahindra Gold Scheme are

suggested to invest because the risk is less and the returns are more.


52/58

2. The investors who are not much interested in taking risk can invest in HDFC gold

scheme because it is giving high returns with a given risk.

3. The investor can also invest in ICICI gold scheme which is 2 position in the category of

low risk- more returns and more returns- with a given risk.

4. Investors are not suggested to invest in SBI Gold scheme which is highly volatile.

Conclusion:

The study on performance of mutual fund schemes in the frame work of risk and returns was

undertaken with an objective of understanding the basic concepts of mutual funds and its benefits

as an investment avenue and to understand the importance of mutual funds in investing money. It

was also taken up with and objective of analyzing the performance of different mutual fund

schemes on the basis of Various parameters and to analyze the alternative investment options for

investing money.

The study covers Equity linked schemes of Kotak Mahindra gold scheme, SBI Gold scheme,

ICICI gold scheme, HDFC gold scheme in which share khan is a distributor. The study was done

using the closing and opening prices of above schemes, Trenoys index, sharpen index and

Jensens index. The entire study is based on the secondary data only. The study is done at

Hyderabad for a period of 60days. The study had few limitations which were taken care of.

The financial information obtained was analyzed using the appropriate techniques and it was

found that that the Kotak Mahindra Gold Scheme has been the most profitable when the relative

risks involved in the investments have been taken into account and HDFC gold scheme is giving

more return for the same risk.


53/58

It is suggested to the investors who are ready to take risk can invest in Kotak Mahindra Gold

Scheme are suggested to invest because the risk is less and the returns are more and to invest

ICICI gold scheme which is No. 2 position in the category of low risk- more returns and more

returns- with a given risk.


54/58

Bibliography:

1. S.Kelvin, Security analysis and portfolio management, 1st edition, phi-

learning publications, 2009.

2. Bhat Sudhindra, Security analysis and portfolio management, 1

st

edition, excel books, 2007.

3. Rohini singh, Security analysis and portfolio management, 1st edition,

Excel Books, 2009

4. M. Ranganatham, R. Madhumathi, Security analysis and portfolio

management, 2nd edition, Pearson publications, 2012.

Websites:

1. www.investopedia.com

2. www.managementparadise.com

3. www.wikipedia.com

4. www.iloveindia.com

5. www.icicibank.com

6. www.kotak.com

7. www.hdfc.com

8. www.sbi.co.in
http://www.investopedia.com/http://www.managementparadise.com/http://www.wikipedia.com/http://www.iloveindia.com/http://www.icicibank.com/http://www.kotak.com/http://www.hdfc.com/http://www.sbi.co.in/http://www.investopedia.com/http://www.managementparadise.com/http://www.wikipedia.com/http://www.iloveindia.com/http://www.icicibank.com/http://www.kotak.com/http://www.hdfc.com/http://www.sbi.co.in/


55/58

Appendix

SBI Opening and Closing Price Index

MonthOpenPrice

HighPrice

LowPrice

ClosePrice

No.ofShares

No. ofTrades

TotalTurnover (Rs.)

Sprea

dHigh-Low

SpreadClose-Open

11-Mar 2062

2099.95 2040 2075 3299 583

6846955 59.95 13

11-Apr 2085 2245

2060.15

2198.23 8155 916

17581235

184.85 113.23

11-May

2247.99 2260 2151.5

2221.38 8923 756

19693719 108.5 -26.61

11-Jun 2220 2300 2155.1

2187.71 6067 617

13427763 144.9 -32.29

11-Jul 21892310.1

4 19252284.5

71161

7 874261098

82385.1

4 95.5711-Aug 2278 2895 2278

2644.99

21639 2375

56386906 617 366.99

11-Sep

2684.4 2834.8 2505

2575.99

23909 2321

63903095 329.8

-108.41

11-Oct

2600.1 2705 2547

2651.09

21384 1727

56238876 158 50.99

11-Nov 2650 2920 2650 2826.6

25493 1933

70851414 270 176.6

11-Dec 2845

2876.95 2636

2659.49 9871 1324

27308863

240.95

-185.51

12-Jan 2670 2759.96 2650 2757.3 6319 1131 17116458 109.96 87.312-Feb 2760

2814.97 2714.9

2794.85 7842 1176

21619660

100.07 34.85

12-Mar 2786

2799.96 2710

2755.96 5305 1086

14568210 89.96 -30.04

12-Apr 2800 2928 2730

2877.57 7414 1272

20739077 198 77.57


56/58

HDFC opening and closing price index

Month

Open

Price

High

Price

Low

Price

Close

Price

No.ofShare

s

No. ofTrade

s

TotalTurnov

er (Rs.)

SpreadHigh-

Low

SpreadClose-

Open11-Mar 2062

2099.95 2040 2075 3299 583

6846955 59.95 13

11-Apr 2085 22452060.

152198.

23 8155 916175812

35184.8

5113.2

311-

May2247.

99 22602151.

52221.

38 8923 756196937

19 108.5 -26.61

11-Jun 2220 23002155.

12187.

71 6067 617134277

63 144.9 -32.29

11-Jul 21892310.

14 19252284.

57 11617 874261098

82385.1

4 95.5711-

Aug 2278 2895 2278

2644.

99 21639 2375

563869

06 617

366.9

9

11-Sep

2684.4

2834.8 2505

2575.99 23909 2321

63903095 329.8

-108.4

1

11-Oct2600.

1 2705 25472651.

09 21384 1727562388

76 158 50.9911-

Nov 2650 2920 26502826.

6 25493 1933708514

14 270 176.6

11-Dec 2845

2876.95 2636

2659.49 9871 1324

27308863

240.95

-185.5

1

12-Jan 2670

2759.

96 2650

2757.

3 6319 1131

171164

58

109.9

6 87.312-Feb 2760

2814.97

2714.9

2794.85 7842 1176

21619660

100.07 34.85

12-Mar 2786

2799.96 2710

2755.96 5305 1086

14568210 89.96 -30.04

ICICI opening and closing price index

MonthOpenPrice

HighPrice

LowPrice

ClosePrice

No.of

Shares

No. of

Trades

Total

Turnover (Rs.)

Spread

High-Low

Spread

Close-Open

11-Mar 2050 2300 2002

2099.99 540 33

1110744 298 49.99

11-Apr 21022227.

99 20032227.

99 789 68165778

8224.9

9125.9

911-

May2200.

1 25772150.

01 2235 3733 95830864

6426.9

9 34.9


57/58

11-Jun 2245 2499 19402180.

25 793 73175766

1 559 -64.75

11-Jul 2024 2398 2024 2300 852 96190689

0 374 27611-

Aug2251.

51 28402251.

51 2650 2461 148642217

9588.4

9398.4

9

11-Sep 2700

2861.5 2500

2556.4 1907 116

5176998 361.5 -143.6

11-Oct 2553 2900 2326 2674 1979 172520558

9 574 12111-

Nov 2699 28902652.

25 2855 6355 293175636

59237.7

5 156

11-Dec 2855 3000 2650

2672.66 1853 270

5165723 350

-182.3

4

12-Jan 2681 2800 26612740.

1 885 192242242

5 139 59.1

12-Feb 2780 2845 2700 2819 1610 237 4456818 145 3912-Mar 2760

2824.5 2680 2754 1895 198

5167633 144.5 -6

12-Apr2737.

25 28902737.

25 2848 1914 199538513

6152.7

5110.7

5

Kotak Mahindra Opening and closing price index

MonthOpenPrice

HighPrice

LowPrice

ClosePrice

No.ofShares

No. ofTrades

TotalTurnover (Rs.)

Sprea

dHigh-Low

Sprea

dClose-Open

11-Mar 2023

2059.99 1945

2014.8 11206 1233

22726519

114.99 -8.2

11-Apr 2015 2160 20152151.

88 12216 1331255985

12 145136.8

811-

May 2218 2218 21002185.

63 21875 2149472327

21 118 -32.37

11-Jun 21902198.

9 21302136.

75 12580 1700272026

24 68.9 -53.25

11-Jul 2128 2268 2088

2258.

33 15447 1876

337822

35 180

130.3

311-

Aug 22572758.

45 22302594.

64 48648 44901.23E+

08528.4

5337.6

4

11-Sep 2625 2782 2480

2513.11 60491 5669

1.58E+08 302

-111.8

9

11-Oct 2525 2747 24852616.

13 40416 48391.04E+

08 262 91.13


58/58

11-Nov 2624 2808 2621

2782.44 30521 3395

83373390 187

158.44

11-Dec

2800.55

2818.99 2580

2610.83 18702 2618

50710854

238.99

-189.7

2

12-Jan 2635 2722

2616.

25 2719 19053 1743

507823

73

105.7

5 8412-Feb

2711.01 2775

2647.5

2740.68 10549 1700

28568780 127.5 29.67

12-Mar 2698 2761 2605

2685.02 20610 2030

54857454 156 -12.98

12-Apr2683.

52799.

152666.

62769.

71 19379 2743530650

23132.5

5 86.21

Performance of Mutual Funds Schems - Narender.l - 051

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