A COMPARATIVE ANALYSIS OF PERFORMANCE OF MUTUAL FUNDS

BETWEEN PRIVATE AND PUBLIC SECTORS

By

R. ABINAYA – 19MBA024

Under the guidance of

Dr. V. R.Nedunchezhian
PROFESSOR

A PROJECT REPORT

Submitted

In partial fulfilment of the requirements for the award of the

Degree of

MASTER OF BUSINESS ADMINISTRATION

Kumaraguru College of Technology
(An autonomous institution affiliated to Anna University, Chennai)

Coimbatore - 641 049

AUGUST 2020

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 BONAFIDE CERTIFICATE

Certified that this project report titled “PERFORMANCE EVALUATION OF PUBLIC SECTOR
AND PRIVATE SECTOR MUTUAL FUNDS” is for course completion of Major Project is the
Bonafied work of ABINAYA. R who carried out the project under my supervision. Certified further, that
to the best of my knowledge the work reported herein does not form part of any other project report or
dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any
other candidate.

Faculty guide Head of the Department

Dr. V. R. Nedunchezhian Dr.Mary Cherian

KCTBS KCTBS

Hard and Soft Copy Submitted for the Project Viva-Voce examination held on 15/09/2020

Internal Examiner External Examiner

(Signature) (Signature)

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 DECLARATION

I hereby declare that this Research project report entitled as, “A COMPARATIVE ANALYSIS OF
PERFORMANCE OF MUTUAL FUNDS BETWEEN PRIVATE AND PUBLIC SECTORS” has been
undertaken for academic purpose for the course submitted to Anna University in partial fulfilment of
requirement for the award of degree of Master of Business Administration. The project report is the record of
the original work done by me under the guidance of Dr. Nedunchezhain V. R Professor, KCT-BS during the
academic year 2020.

I, also declare hereby, that the information given in this report is correct to the best of my Knowledge and
behalf.

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 ACKNOWLEDGEMENT

I express my sincere and heart-felt gratitude the Management of KCT Business School, for their

prime guidance.

I express my thanks to Dr. Mary Cherian, Head of the department, KCTBS for implementing this

project and providing under the supervision in its execution. I am indebted to my Institution and my faculty

members without whom this project would have been a distant reality.

I also would like to give my sincere thanks to my Project guide “Dr. Nedunchezhain V. R” Professor

for giving me support and guidance for this project from inception to closure.

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 LIST OF TABLES

FIGURE TITLE PAGE

NO NO
2.4.1 Average Assets under Management (AAUM) for the quarter of October - 23
December 2019
2.8.1 SIP and One-time Investment 31
3.3.1 SBI Blue Chip Fund Investment details 41
3.3.2 SBI Blue Chip Fund Investment Portfolio 42
4.7.1 Measures details with interpretation. 51
5.1.1 HDFC Capital Builder Value Fund Performance 52
5.2.1 HDFC Capital Builder Value Fund Performance 54
5.3.1 ICICI Prudential Money Market Fund Performance 59
5.3.2 ICICI Prudential Value Discovery Fund 61
5.4.1 SBI Magnum Income Fund Performance 64
5.4.2 SBI Blue chip Fund Performance 66
5.5.1 Aditya Birla Sun Life Income Fund Performance 69
5.5.2 Aditya Birla Sun Life Equity Fund Performance 71

5.6.1 Nippon India Income Fund Performance 74

5.6.2 Nippon India Vision Fund Performance 76

5.7.1 UTI Nifty Index Fund Performance 79

5.8.1 Ranking of Funds using Sharp Method 81

5.8.2 Ranking of Funds using Treynor’s Method 83

5.8.3 Ranking of Funds using Jensen’s Method 85

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 LIST OF FIGURES

TABLE NO TITLE PAGE NO

2.1.1 Mutual Fund Operation Flow 16

2.1.2 Mutual Fund Four Tier System designed by SEBI 17
2.5.1 Total Assets (Rs. Trillion) 24
2.5.2 Comparison of assets (scheme wise) 25
2.5.3 Investor categorisation 26
2.6.1 Growth in Assets 27
2.8.1 Types of mutual fund investment 29
5.2.1 HDFC Capital Builder Value Fund Yearwise Return 55
5.2.2 HDFC Dynamic Debt Fund year wise returns 57
5.3.1 ICICI Prudential Money Market Fund returns comparison 60
5.3.2 ICICI Prudential Value discovery Fund wise returns comparison 62
5.4.1 SBI Magnum Fund year wise returns comparison 65
5.4.2 SBI Blue chip Fund year wise returns comparison 67
5.5.1 Aditya Birla Sunlife Income Fund year wise returns comparison 70
5.5.2 Aditya Birla Sun Life Equity Fund year wise returns comparison 72
5.6.1 Nippon India Income Fund year wise returns comparison 75
5.6.2 Nippon India Vision Fund year wise returns comparison 77
5.7.1 Kotak Glit year wise returns comparison 80

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 TABLE OF CONTENTS

CHAPTER CONTENTS PAGE NO

ABSTRACT
LIST OF TABLES
LIST OF FIGURES
LIST OF ABBREVIATIONS

I 11
INTRODUCTION
11
1.1 Introduction

1.2 Statement of the problem 12

14
1.3 Theoretical foundations of the study
1.4 Objective of the study 13

1.5 Scope and significance of the study 14

1.6 Limitations of the study 14

II 15
INDUSTRY PROFILE
2.1 Background of the industry 15

15
2.1.1 Mutual funds

2.2 Types of mutual funds 18

2.2.1 Schemes according to maturity period 18

2.2.2 Schemes according to investment objective 18

20
2.3 History of mutual funds

2.4 Market size 21

2.5 Total assets of mutual fund 23

2.6 Growth in assets 26

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 26
2.7 Investment strategies

27
2.7.1 Options available to investors

2.8 Types of investment in mutual fund 28

2.8.1 Lump sum payment 28

2.8.2 Systematic investment plan 29

31
2.9 Terms used in mutual fund

III LITERATURE REVIEW 32

32
3.1Theory of the capital asset pricing model

35
3.2 Performance analysis of mutual funds

38
3.3 Investing lump sum or sip

3.3.1 Systematic investment plan 39

IV 43
RESEARCH METHODOLOGY

4.1Introduction 43

4.2 Research design 43

4.3Secondary data 43

4.4Universe 44

4.5Data collection 44

45
4.7 Tools used for analysis

V DATA ANALYSIS 50

5.1Introduction 50

5.2 HDFC mutual funds 51

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 5.3 ICICI prudential mutual fund 56

5.4 SBI mutual funds 61

5.5 Aditya sun life mutual funds 66

5.7 Union trust of India 76

5.8 Rankings 79

VI FINDINGS, SUGGESTIONS & CONCLUSION 85

85
6.1 Findings

86
6.2 Suggestion

86
6.3 Conclusion

PLAGIARISM REPORT

BIBILOGRAPHY

ANNEXURE

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BIBLIOGRAPHY
Appendices / Annexure

10
 ABSTRACT

The financial sector reforms in India in the early nineties has resulted in explosive
growth of the economy, opening up of the Indian financial market to foreign and private
Indian players, large inflow of Foreign Institutional Investors, increased competition and
better product offerings to consumers. One of the major developments of this decade has
been the take-off of mutual funds. Mutual Funds are financial intermediaries concerned
with mobilizing savings of those who have surplus income and channelization of these
savings in those avenues where there is demand of funds. Mutual funds have emerged as
a strong financial intermediary and are the fastest growing segment of the financial
services sector in India. It aims at promoting a diversified, efficient and competitive
financial sector increasing the return on investment and promoting and accelerating the
growth of the economy. It is a medium of investment suitable to the small investors, who
are not able to invest in stock market directly.

This project is undertaken to study the “A comparative analysis of performance of MF

between private and public sectors” this study has concentrated on the preference for
various asset management companies and past performance.

The important objective of this study is to compare the index with market returns. This
project also helps in evaluating the performance of the funds based on market risk and to
find the market growth.

Descriptive Statistics was used for the analysis of the data collected. Through analysis it
was found that majority of the investors have selected Mutual funds as the best mode of
investment and they opted for growth scheme. The main factors that any investor looks
for are low risk with moderate returns.

11
 CHAPTER I

INTRODUCTION

1.1 INTRODUCTION
Investment means an asset or item that is purchased with the hope that it will generate
income or appreciate in the future. In economic sense, investment is the purchase of
goods that are not consumed today but are used in the future to create wealth. Investment
goals vary from person to person, business to business. While some want security, others
give more weightage to returns alone. There are various types of investments avenues
like fixed deposits, post office schemes, bonds/debentures, Mutual funds, Insurance,
Shares, and Real estate etc.

Mutual funds now play a very significant role in channelizing the savings of millions of
individuals. The mutual fund industry in India over the years has seen dramatic
improvements in terms of quantity as well as quality of product and service offerings in
recent years. The tremendous growth of Indian Mutual Funds industry is an indicator of
India’s efficient financial market and the trust which investors have on the
regulatoryEnvironment.

Millions of investors rely on mutual funds as their primary investments because they
offer a convenient, cost-effective and easy way to invest in the financial markets. The
Securities Exchange Board of India (SEBI) regulates this fast-growing industry and it is
the representative body of all mutual funds in thecountry. Every mutual fund has a goal -
either growing its assets (capital gains) and/or generating income (dividends) for its
investors. Distribution in the form of capital gains (short-term and long-term) and
dividends may be passed on (paid) to the shareholders as income or reinvested to
purchase more shares. A mutual fund is valued daily and reports a price known as a Net
Asset Value (NAV) per share. In its simplestForm, a NAV is the total value of all the
securities held in a fund divided by the total number of shares owned by its shareholders.
As the price of the NAV increases or decreases, the shareholder's value will increase or
decrease. Investor can invest in SIP for a smarter and risk-free way to invest in mutual

12
fund. Systematic Investment Plan (SIP) is a simple process of investing in mutual funds
similar to a recurring deposit in a bank. It is designed to help investors like you save
regularly and in small amounts and thus accumulate wealth in a disciplined manner over
the long-term, thereby ensuring a better future for you and your family.

1.2 STATEMENT OF THE PROBLEM

The mutual fund schemes are designed keeping in mind the preferences of the investors,
changes in stock/ capital market, returns on various instruments and changing profile of
the investors. The schemes are framed and conceptualized by the top management of the
mutual fund companies and marketed by their branches and the agents. The agents and
the sales executives of the mutual fund companies assure higher returns to the investors
and paint a rosy picture about the mutual funds while marketing the schemes. The agents
or distributors of mutual funds are more concerned about their commissions and
incentives and thus do not explain the risk involved in the investment owing to the fear
that it may discourage the investors to invest. The ignorance of the investors about
mutual funds coupled with aggressive selling by promising higher returns to the
investors have resulted into loss of investors’ confidence. It is necessary for the investor
to know the risk and how to calculate risk and return.
Mutual funds are the avenues for common investors to reap the benefits of share market
performance. Investing in equity directly by investors is fraught with highest level of risk
& uncertainty Retail investors do not actively participate in share market but inflation
edged investment return demands the exploitation of the equity market as an investment
avenue Therefore there is a necessity to create awareness of the utility of investing in
mutual funds schemes to enjoy a return which will be inflation adjusted real returns
Therefore this project is taken on to assess the investors perception of mutual fund
investment. This project will evaluate the financial performance of mutual fund schemes.

1.3 THEORETICAL FOUNDATIONS OF THE STUDY

The measure of performance of mutual funds basically dependent three important
models derived independently by Sharpe, Jensen and Treynor. All these three ratios are
based on the assumption that
 All investors are averse to risk, and are single period expected utility of terminal
wealth maximizes,

13
 All investors have identical decision horizons and homogeneous expectations
regarding investment opportunities,
 All investors are able to choose among portfolios solely on the basis of expected
returns and variance of returns,
 All trans-actions costs and taxes are zero, and
 All assets are infinitelydivisible.

1.4 OBJECTIVE OF THE STUDY

The analysis on the performance of private and public sector mutual funds is made with

Primary Objectives
 To compare the public sector and private sector mutual fund performance.
 To compare the performance of market return with indices.

Secondary Objectives
 To evaluate the performance of the funds based on market risk.
 To increase returns on the portfolio through successful prediction of future
securing prices.
 To protect a company’s current earnings from competitive pressure through
economic moat.
 To provide a steady cash flow to investors.

1.5 SCOPE AND SIGNIFICANCE OF THE STUDY

The study compares the performance of Top Five assets management companies and
bottom five assets management companies for analysis.

1.6 LIMITATIONS OF THE STUDY

 Mutual fund schemes are considered for the period of 2017-2019
 Hence, the findings of this study may not be generalized upon the other mutual fund
for the same schemes for different periods.

14
 The performance of a scheme can be evaluated on various parameters; in this the
average return of the schemes and Sharpe’s ratio has been calculated to compare the
different schemes.

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 CHAPTER II

INDUSTRY PROFILE

2.1 BACKGROUND OF THE INDUSTRY

2.1.1 MUTUAL FUNDS

According to securities and exchange board of India (SEBI) regulations

“Mutual Fund means a fund established in the form of a trust by a sponsor to raise
money by the trustee through the sale of units to the public under one or more schemes
for investing of securities in accordance with the regulations. Thus, a mutual fund
collects money from the investors, issues certificate to achieve mutual benefits in term of
capital appreciation in such securities”.

Fig 2.1.1 Mutual Fund Operation Flow

Mutual fund is a mechanism for pooling the resources by issuing units to the investors
and investing funds in securities in accordance with objectives as disclosed in offer
document. The money that is collected is then invested in capital market instruments
such as shares, debentures and other securities. The income earned through these
investments and the capital appreciations realized are shared by its unit holders in
proportion to the number of units owned by them. Thus, a Mutual Fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost.

16
Investments in securities are spread across a wide cross-section of industries and sectors
and thus the risk is reduced. Diversification reduces the risk because all stocks may not
move in the same direction in the same proportion at the same time. Mutual fund issues
units to the investors in accordance with quantum of money invested by them. Investors
of mutual funds are known as unit holders. A mutual fund is required to be registered
with Securities and Exchange Board of India (SEBI), which regulates securities markets
before it can collect funds from the public.

Mutual funds have a unique structure not shared with other entities such as companies or
firms. India has a legal framework within which mutual funds must be constituted. A MF
in India is allowed to issue open end and close end schemes under common legal
structure. Therefore, a Mutual Fund may have several different schemes (open and close
end) at any point of time. SEBI contemplated four-tier systems for managing the affairs
of Mutual Funds ensuring arm’s length distance between the sponsor and the fund. The
four constituents were the sponsoring company, the fund, the custodians and the asset
management company.

Fig 2.1.2 Mutual Fund Four Tier System designed by SEBI

17
Advantages of Mutual Funds

For investors who have limited resources available in terms of capital and the ability to
carry out detailed research and market monitoring, mutual funds offer the following
major advantages

 Portfolio Diversification: This enables an investor to hold a diversified

investment portfolio, even with a small amount of investment that would
otherwise require big capital.

 Professional Management: A team of professional fund managers manages them

with in-depth research inputs from investment analysts.

 Reduction / Diversification of Risk: However small the investment, an investor in

a mutual fund directly acquires a diversified portfolio, which reduces the risk of
loss as compared to investing directly in any other instruments.

 Reduced Transaction Costs: An investor can reap the benefits of the 'Economies
of Scale' as funds pay lesser costs on brokerage, custodian charges etc, because
of larger volumes.

 Convenience and flexibility: Investors can easily transfer their holdings from one
scheme to another; get updated market information and so on.

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2.2 TYPES OF MUTUAL FUNDS
2.2.1 SCHEMES ACCORDING TO MATURITY PERIOD

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme
depending on its maturity period.

 Open-ended Fund/ Scheme - An open-ended fund or scheme is one that is

available for subscription and repurchase on a continuous basis. These schemes
do not have a fixed maturity period. Investors can conveniently buy and sell units
at Net Asset Value (NAV) related prices, which are declared on a daily basis.
The key feature of open-end schemes is liquidity.

 Close-ended Fund/ Scheme - A close-ended fund or scheme has a stipulated

maturity period e.g. 5-7 years. The fund is open for subscription only during a
specified period at the time of launch of the scheme. 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 the units are listed.

2.2.2 SCHEMES ACCORDING TO INVESTMENT OBJECTIVE

A scheme can also be classified as growth scheme, income scheme, or balanced scheme
considering its investment objective. Such schemes may be open-ended or close-ended
schemes as described earlier. Such schemes may be classified mainly as follows:

 Growth / Equity Oriented Scheme - The aim of growth funds is to provide capital
appreciation over the medium to long- term. Such schemes normally invest a
major part of their corpus in equities. Such funds have comparatively high risks.
These schemes provide different options to the investors like dividend option,
capital appreciation, etc. and the investors may choose an option depending on
their preferences. Growth schemes are good for investors having a long-term
outlook seeking appreciation over a period of time.

19
 Income / Debt Oriented Scheme - The aim of income funds is to provide regular
and steady income to investors. Such schemes generally invest in fixed income
securities such as bonds, corporate debentures, Government securities and money
market instruments. Such funds are less risky compared to equity schemes. These
funds are not affected because of fluctuations in equity markets. However,
opportunities of capital appreciation are also limited in such funds.

 Balanced Fund - The aim of balanced funds is to provide both growth and regular
income as such schemes invest both in equities and fixed income securities in the
proportion indicated in their offer documents. These are appropriate for investors
looking for moderate growth. They generally invest 40-60% in equity and debt
instruments.

 Money Market or Liquid Fund - These funds are also income funds and their aim
is to provide easy liquidity, preservation of capital and moderate income. These
schemes invest exclusively in safer short-term instruments such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money, government
securities, etc. Returns on these schemes fluctuate much less compared to other
funds.

 Gilt Fund - These funds invest exclusively in government securities. Government

securities have no default risk. NAV’s of these schemes also fluctuate due to
change in interest rates and other economic factors as are the case with income or
debt-oriented schemes

 Index Funds - Index Funds replicate the portfolio of a particular index such as the
BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in
the securities in the same weightage comprising of an index.

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2.3 HISTORY OF MUTUAL FUNDS

The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank the. The history of
mutual funds in India can be broadly divided into four distinct phases.

First Phase – 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 had Rs.6,700 Crores of assets under
management.

Second Phase – 1987-1993 (Entry of Public Sector Funds): The year 1987 marked the
entry of non- UTI, public sector mutual funds set up by public sector banks and Life
Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).
SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed
by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),
Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual
Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its
mutual fund in December 1990.

Third Phase – 1993-2003 (Entry of Private Sector Funds): With the entry of private
sector funds in 1993, a new era started in the Indian mutual fund industry, giving the
Indian investors a wider choice of fund families. Also, 1993 was the year in which the
first Mutual Fund Regulations came into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged
with Franklin Templeton) was the first private sector mutual fund registered in July
1993. The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers and
acquisitions.

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Fourth Phase – since February 2003: In February 2003, following the repeal of the Unit
Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the
Specified Undertaking of the Unit Trust of India with assets under management of
Rs.29,835 Cores as at the end of January 2003, representing broadly, the assets of US 64
scheme, assured return and certain other schemes. The Specified Undertaking of Unit
Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund
Regulations.

2.4 MARKET SIZE

Average Assets Under Management (AAUM) of Indian Mutual Fund Industry for the
month of February 2020 stood at 28,28,638crores.

Assets Under Management (AUM) of Indian Mutual Fund Industry as on February 29,
2020 stood at 27,22,937 crores.

The AUM of the Indian MF Industry has grown from 7.67 trillion as on 28th February,
2010 to 27.23 trillion as on 29th February, 2020 more than 3½ fold increase in a span of
10 years.

The MF Industry’s AUM has grown from 12.02 trillion as on 28th February, 2015 to
27.23 trillion as on 29th February, 2020, about 2 ¼ fold increase in a span of 5 years.

The Industry’s AUM had crossed the milestone of 10 Trillion (10 Lakh Crore) for the
first time in May 2014 and in a short span of about three years, the AUM size had
increased more than two folds and crossed 20 trillion (20 Lakh Crore) for the first time
in August 2017. The Industry AUM stood at 27.23 Trillion (27.23 Lakh Crore) as on
29th February, 2020.

The total number of accounts (or folios as per mutual fund parlance) as on February 29,
2020 stood at 8.88 crore (88.8 million), while the number of folios under Equity, Hybrid
and Solution Oriented Schemes, wherein the maximum investment is from retail

22
segment stood at 7.87 crore (78.7 million). This is 69th consecutive month witnessing
rise in the no. of folios.

Table 2.4.1 Average Assets under Management (AAUM) for the quarter of October
- December 2019 (Rs in Lakhs)
Average AUM
Excluding Fund of
Sr Funds - Domestic
Mutual Fund Name Fund of Funds -
No but
Domestic
including Fund of
Funds - Overseas
Aditya Birla Sun Life Mutual
1 Fund 24992599.34 22629.19
2 Axis Mutual Fund 12286723.03 5631.53
3 Baroda Mutual Fund 1115305.88 0
4 BNP Paribas Mutual Fund 773125.79 0
5 BOI AXA Mutual Fund 232318.54 0
6 Canara Robeco Mutual Fund 1731002.68 1638.09
7 DSP Mutual Fund 7721253.58 0
8 Edelweiss Mutual Fund 1241468.34 0
9 Essel Mutual Fund 85550.81 0
10 Franklin Templeton Mutual Fund 12647525 112383.81
11 HDFC Mutual Fund 38251703.18 28827.43
12 HSBC Mutual Fund 1125526.57 34983.79
13 ICICI Prudential Mutual Fund 36150657.42 534691.08
14 IDBI Mutual Fund 508863.61 3250.55
15 IDFC Mutual Fund 10462970.78 20775.55
16 IIFCL Mutual Fund (IDF) 56055.95 0
17 IIFL Mutual Fund 123152.3 0
18 IL&FS Mutual Fund (IDF) 125862.06 0
19 Indiabulls Mutual Fund 145263.05 0
20 Invesco Mutual Fund 2518236.09 1497.32
21 ITI Mutual Fund 17028.06 0
22 JM Financial Mutual Fund 568302.73 0
23 Kotak Mahindra Mutual Fund 17696124.84 23712.72
24 L&T Mutual Fund 7158710.18 0
25 LIC Mutual Fund 1662364.44 0
26 Mahindra Mutual Fund 525846.82 0
27 Mirae Asset Mutual Fund 3934902.64 0
28 MotilalOswal Mutual Fund 2028148.56 11134.94
29 Nippon India Mutual Fund 20437079.04 78672.83
30 PGIM India Mutual Fund 404207.41 0
31 PPFAS Mutual Fund 277037.8 0

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 32 Principal Mutual Fund 672979.02 0
33 quant Mutual Fund 8151.61 0
34 Quantum Mutual Fund 145713.02 7949.71
35 Sahara Mutual Fund 5012.75 0
36 SBI Mutual Fund 35263192.93 38589.47
37 Shriram Mutual Fund 18462.26 0
38 SREI Mutual Fund (IDF) 0 0
39 Sundaram Mutual Fund 3146933.04 0
40 Tata Mutual Fund 5267767.14 0
41 Taurus Mutual Fund 43134.05 0
42 Trust Mutual Fund 0 0
43 Union Mutual Fund 428454.46 0
44 UTI Mutual Fund 15711908.83 0
45 YES Mutual Fund 39526.72 0
Grand Total 267756152.4 926368.01

2.5 TOTAL ASSETS OF MUTUAL FUND

Fig 2.5.1 Total Assets (Rs. Trillion)

Assets managed by the Indian mutual fund industry have grown from Rs. 24.25 trillion
in February 2019 to Rs. 28.29 trillion in February 2020. That represents a 16.65%
growth in assets over February 2019.

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Scheme wise Composition of Assets

Fig 2.5.2 Comparison of assets (scheme wise)

The proportionate share of equity-oriented schemes is now 42.1% of the industry assets
in February 2020, up from 41.1% in February 2019. The proportionate share of debt-
oriented schemes is 29.0% of industry assets in February 2020, down from 29.1% in
February 2019.

25
 Fig 2.5.3 Investor categorisation

Equity-oriented schemes derive 85% of their assets from individual investors (Retail +
HNI)
Institutional investors dominate liquid and money market schemes (90%), debt-oriented
schemes (60%) and ETF’s, FOFs (91%).

26
2.6 GROWTH IN ASSETS

Fig 2.6.1 Growth in Assets

The value of assets held by individual investors in mutual funds increased from Rs.12.98
Lakh crores in February 2019 to Rs.14.91 Lakh cores in February 2020, an absolute
increase of 14.84%.

The value of Institutional assets has increased from Rs.11.27 Lakh Cores in February
2019 to Rs.13.38 Lakh Cores in February 2020, an absolute increase of 18.73%.

2.7 INVESTMENT STRATEGIES

 Systematic Investment Plan: under this a fixed sum is invested each month on a
fixed date of a month. Payment is made through post-dated cheques or direct
debit facilities. The investor gets fewer units when the NAV is high and more
units when the NAV is low. This is called as the benefit of Rupee Cost
Averaging (RCA)

27
  Systematic Transfer Plan: under this an investor invest in debt-oriented fund and
give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme
of the same mutual fund.

 Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund

then he can withdraw a fixed amount each month.

2.7.1 OPTIONS AVAILABLE TO INVESTORS

Each plan of every mutual fund has three options – Growth, Dividend and dividend
reinvestment. Separate NAV are calculated for each scheme.

 Dividend Option - Under the dividend plan dividend are usually declared on
quarterly or annual basis. Mutual fund reserves the right to change the frequency
of dividend declared.

 Dividend reinvestment option- Instead of remittances of units through pay-outs,

Units holder may choose to invest the entire dividend in additional units of the
scheme at NAV related prices of the next working day after the record date. No
sales or entry load is levied on dividend reinvest.

 Growth Option - Under this, plan returns accrue to the investor in the form of
capital appreciation as reflected in the NAV. The scheme will not declare the
dividend under the Growth plan and investors who opt for this plan will not
receive any income from the scheme. Instead of income earned on their units will
remain invested within the scheme and will be reflected in the NAV.

28
2.8 TYPES OF INVESTMENT IN MUTUAL FUND
The investment in a Mutual fund can be done in two ways. First way is onetime payment
i.e. making payment to a fund at once and gets the units of the fund as per the Net Asset
Value (NAV) of the fund on that day. A person wishes to invest in a fund Rs. 24,000/- .
On the day of Investment, the NAV of the fund was Rs. 10/-. He gets 2400 units @ Rs.
10/- per unit. The other way of investment is making payment to the fund periodically,
which is termed as Mutual Fund SIP. When you commit to invest a fixed amount
monthly in a fund, it is called as Systematic Investment. It is actually beneficial for those
investors who wish to invest a large amount in a fund and wishes to create a large chunk
of wealth for long term but due to financial constraints are able to do so.Systematic
Investment Plan in Mutual Fund is commonly named SIP – is really getting popular in
India. Systematic Investment Plan is such a beautiful tool, which if used properly can
help you to achieve all your financial goals.

Fig 2.8.1 Types of mutual fund investment

2.8.1 LUMP SUM PAYMENT

A lump sum is a single payment of money, as opposed to a series of payments made over
time (such as an annuity) This means investing the entire sum of money at one go. For
instance, if you have Rs 1 lakh which you are willing to fully invest in stocks or MFs, it
is a lump-sum investment.

29
2.8.2 SYSTEMATIC INVESTMENT PLAN

Systematic Investment Plan (SIP) is a smart financial planning tool that helps you to
create wealth, by investing small sums of money every month, over a period of time.
Systematic Investment Plan (SIP) is a planned approach to investments and an
investment technique that allows you to provide for the future by investing small
amounts of money in Mutual Fund schemes of your choice.

A SIP is a method of investing in mutual funds, by investing a fixed sum at a regular

frequency, to buy units of a mutual fund schemes. It is quite similar to a recurring
deposit of a bank or post office. For the convenience, an investor could start a SIP with
as low as Rs 500; however, this amount may differ from one fund house to other. The
SIP provides them a way to invest in the fund of their choice in instalments.

Here is an illustration using hypothetical figures indicating how the SIP can work for
investors:Supposeaninvestor
wouldliketoinvestRs.1,000undertheSystematicInvestmentPlan (SIP) on monthly basis
his average cost price is lower than one time or lump sum investment.

Table 2.8.1 SIP and One-time Investment

30
2.9 TERMS USED IN MUTUAL FUND

 Net Asset Value (NAV) - Net Asset Value is the market value of the assets of
the scheme minus its liabilities. The per unit NAV is the net asset value of the
scheme divided by the number of units outstanding on the Valuation Date.

 Sale Price - Is the price we pay when we invest in a scheme. Also called Offer
Price. It may include a sales load.

 Repurchase Price - Is the price at which a close-ended scheme repurchases its

units and it may include a back-end load. This is also called Bid Price.

 Redemption Price - Is the price at which open-ended schemes repurchase their

units and close-ended schemes redeem their units on maturity. Such prices are
NAV related.

 Sales Load - Is a charge collected by a scheme when it sells the units. Also
called, ‘Front-end’ load. Schemes that do not charge a load are called ‘No Load’
schemes.

 Repurchase or ‘Back-end’ Load - Is a charge collected by a scheme when it

buys back the units from the unit holders.

31
 CHAPTER III

LITERATURE REVIEW

This chapter provides an overview of previous research on performance of mutual funds. It

introduces the framework for the case study that comprises the main focus of the research
described in this research methodology paper.

3.1 THEORY OF THE CAPITAL ASSET PRICING MODEL

In earlier times, the mutual fund performance index was built on the theoryof the capital
asset pricing model (CAPM), which the three traditionalperformance indices, Treynor
(1965), Sharpe (1966) and Jensen (1968), were derived from. The Treynor index
(Treynor, 1965) shows the excessreturn per unit of the systematic risk, the Sharpe index
(Sharpe, 1966) presents the excess return per unit of the total risk and the Jensen’s α
(Jensen, 1968) defines the difference between actual portfolio return and estimated
benchmark return. The results of these studies appear to depend, to a large extent, on the
bench market portfolio used and the measurement ofrisk, and the main criticism over the
use of CAPM is the validity of its underlying assumption. Although these performance
indices evaluate afund’s performance, they still lack the ability to consider transaction
costsand fees.

For fund performance evaluation methods, Murtha et al. (1997) offered an alternative
by proposing a measure of portfolio performancederived from DEA. Using DEA,
investment performance can be gauged bymeasuring the efficiency of an individual fund
relative to all other funds in asample.
McMullen and Strong (1998) evaluated the performance of 135stock mutual funds in
America by traditional DEA model. DEA wasintroduced by Charnes/Cooper/Rhodes
(1978). DEA builds upon the methodfor computation of the technical efficiency. The
efficiency of a fund canthen be determined by the relative distance between the actually
observedoutput and this efficient frontier. Thus, a fund is classified as inefficiently if its
outputs (e.g., return) and inputs (e.g., risk) are below the best practice frontier.

Murthi, Choi and Desai (1997) employed DEA to appraise 731mutual funds using the
actual return as the output variable and four inputvariables - expense ratio (accounts for

32
management fees, marketingexpenses and other operational expenses), load (a charge at
the time ofinvestment and/or withdrawal also referred to as sales charge), turnover.

Grinblatt and Titman (1993) introduced a measure that does not require theuse of a
benchmark. However, they failed to account for transaction costs.Murthi, Choi and
Desai (1997) found strong evidence that mutual funds areapproximately mean-variance
efficient and that efficiency is not related totransaction costs. However, their study
assumed a CRS frontier andtherefore was unable to examine the issue of scale effects on
the mutualfunds.
McMullen and Strong (1998), on the other hand, analysed 135common stock mutual
funds using DEA. Their choice of the input-outputvariable set differed slightly from that
of Murthi, Choi and Desai (1997). McMullen and Strong (1998) postulated that an
investor’s choice of amutual fund would be typically a function of recent performance,
long-termperformance, the associated risks of these returns and transaction costs.
Inparticular, they considered 1, 3 and 5 years annualized returns as outputvariables and
sales charge, expense ratio, minimum initial investment andstandard deviation of return
measured over three years as the inputvariables.

In financial markets, “expectations” of the investors play avital role. They influence the
price of the securities; thevolume trade and determine quite a lot of things in
actualpractice. These ‘expectations’ of the investors are influencedby their “perception”
and humans generally relate perception to action. The beliefs and actions of many
investors areinfluenced by the dissonance effect and endowment effect.The tendency to
adjust beliefs to justify past actions is anexample of the psychological phenomenon
termed byFestinger (1957) as cognitive dissonance. Festinger's theoryasserts that
individuals are distressed by conflicting cognitiveelements, such as a discrepancy
between empirical evidenceand past choices and thus they alter their belief
thisdiscomfort. The key feature of dissonance is that individualbeliefs arealtered to
conform to their past actions. In thecontext of investment decision-making, cognitive
isdissonance can be thought of as a psychological cost that investors may seek to reduce
through adjustments in belief isabout the efficacy of past investmentchoices. We find
ampleproof for the wide prevalence of such a psychological stateamong Mutual Fund

33
(MF) investors in India. For instance,UTI had a glorious past and had always been
perceived as asafe, high yield investment vehicle with the added tax benefit.
Many UTI account holders had justified their beliefs bystaying invested in UTI scheme
seven after the 1999 bail outand many have still not lost faith in UTI, even after the
July2001episode.

“Endowment Effect” is explained by ThalerKahnemanandKnetsch (1992) as “People are

more likely to believe thatsomething they own is better than something they do not
own”.Much of economic and financial theory is based on the notionthat individuals act
rationally and consider all availableinformation in the decision-making process.
However, researchers have un covered a surprisingly large amount ofevidence that this is
frequently not the case. Dozens ofexamples of irrational behaviour and repeated errors
injudgement have been documented in academic studies. Petrel. Bernstein in Against the
Gods states that the evidence “reveals repeated pattern so fir rationality, inconsistency,
andincompetence in the ways human beings arrive at decisionsand choices when faced
with uncertainty."

Tversky and Kahneman originally described "ProspectTheory" in 1979. They found that
contrary to expected utilitytheory, people placed different weight son gains and
lossesand on different ranges of probability. They found thatindividuals are much more
distressed by prospective lossesthan they are happy by equivalent gains. Some
economistshave concluded that investors typically consider the loss of $1dollar twice as
painful as the pleasure received from a $1 gain.They also found that individuals will
respond differently toequivalent situations depending on whether it is presented inthe
context of losses or gains. Researchers have also found thatpeople are willing to take
more risks to avoid losses than torealize gains. Faced with sure gain, most investors are
riskaverse, but faced with sure loss, investors become risk-takers."Psychographics"
describe psychological characteristics ofpeople and are particularly relevant to each
individualinvestor's strategy and risk tolerance. Aninvestor’sbackgroundand past
experience scan play a significant role in the decisionsan individual makes during the
investment process. Forinstance, women tend to be more risk averse than men
andpassive investors have typically became wealthy without much risk while active
investors have typically become wealthy byearning it themselves. Historically

34
investment in equity stockshas given phenomenal returns amongst all the other
assetclasses if investment was done with discipline and with longterm time horizon.

However, while investing there are lot of emotions which areinvolved and investor tends
to time the stock market. Toovercome emotional impact and also for systematic
investmentin stock market many financial planner advocates forSystematic Investment
Plan on the premise of Rupee CostAveraging. The literature which is available does not
provideany convincing evidence as to which strategy is superior.
There are Studies by Israelson (1999), Simon (1994) and Steto(1994). for example,
indicate that the Rupee Cost Averagingstrategy is superior to the Lump Sum strategy.
For instance,Israeison (1999) compares annual holding period returns of the35 largest
equity funds over ten years and finds that the SIPstrategy earned higher returns in 19 of
the 35 funds studied.
However, Bacon et al. (1997), Bernice (199H), Geer (1995),and Williams and Baeon
(199.1) compare annual holdingperiod returns under the two strategies and conclude that
theLump Sum strategy is superior to the Rupee Cost Averagingmethod in earning higher
returns. In one of the rare theoreticalstudies of the issue, Constantinides (1979)
concludes that RCAis dominated by sequential as well as optimal
nonsequentialinvestment policies.

3.2 PERFORMANCE ANALYSIS OF MUTUAL FUNDS

R. Kaur in his study evaluates the performance of debt mutual fund schemes in India.
The objective of the study is to analyse the risk return relationship among 23open ended
mutual fund schemes considered for the purpose of study. The study also examines the
return of the selected schemes against the benchmark return. For the purpose of analyses
weekly NAV value of the selected schemes were studied from 1st July 2010 to 30th June
2011. The techniques employed for the purpose of study is average, standard deviation,
beta, coefficient of determination, Treynor’s ratio, Sharpe ratio, Jensen alpha and Fama’s
model. The study reveals that the debt schemes could not outperform the benchmark
return.
(Kaur, R. (2014). Performance evaluation of debt mutual fund schemes in India. GIIRJ,
Vol.2 (2), FEBRUARY (2014))

35
J.P.Nenwani in his study (Nenwani et al, 2017) evaluates the performance of selected
debt oriented schemes to identify the scheme with the highest return for a given period
of time.Leading asset management companies as on April, 2017 on the basis of AUM
have been selected for the purpose of study.The daily NAV value of selected schemes
was analysed for a period betweenMarch 2012 to March 2017. The study revealsthat
ICICIPRU long term fund provides the highest returnfollowed by ICICIPRU Income.

(Nenwani, J.P., Rajpara, R.Y., (2017). A study on performance evaluation of selected

Debt Mutual Fund in India, IIJM, Volume 5, Issue 5, May 2017)

P.Shil and M.Kar in their study (Shil et al, 2015) evaluates 40 open ended debt oriented
schemes against the benchmark NSE G-Sec Composite Index to identify the competency
of the schemes. The period of study is between April1996 and March 2011. The
methodology adopted for the purpose of study iscovariance, correlation and Mann
Whitney U-Test at 5 percent significance level. The study reveals that the benchmark
outperforms the schemes return. There is no significant difference between the return of
the selected schemes and thebenchmark considered for the purpose of study.

(Kar,M., Shil, P. (2015). Performance of Selected Debt Oriented Mutual Fund Schemes
in India: A Study in Comparison with the Market Portfolio Returns. IOSR)

Anil Kumar Goyal and Tamanna Madan evaluates monthly NAVs of selected
Mutual Fund Schemes of HDFC, SBI and ICICI was collected and their company-wise
monthly log returns are compared with log returns of Nifty50 log returns. This study
aims at finding out the comparison of returns of mutual funds with Nifty50 returns. The
monthly average of log returns of selected schemes is compared with the monthly
average of log return of benchmark Nifty50. On comparison of the performance of these
10 individually selected HDFC, ICICI, SBI mutual funds schemes, in last one year, it
was found that their performance has been barely beating the index. On the basis of
comparison of returns of three mutual fund management companies, HDFC is better than
other two. If SBI and ICICI Prudential are compared on the basis of returns, SBI is better
in terms of volatility and returns.

36
(Anil Kumar Goyal and Tamanna Madan VSRD International Journal of Business and
Management Research, Vol. VIII Issue VI June 2018)

Shivani Inder and Shikha Vohra (2012), the paper evaluates the long run performance of
the selected index fund schemes and make comparative analysis of the performance of these
funds on the basis of the risk-return for the period of 6 years (January ,2005 to
December,2011). The results indicate that index funds are just the follower of market. They
try to capture market sentiments, good as well as bad, and thus perform as the market
performs.

Sathya Swaroop Debasish (2009) studied the performance of 23 schemes offered by six
private sector mutual funds and three public sectors of mutual funds based on risk-return
relationship models and measures it over the time period of 13 years (April 1996 to March
2009). The analysis has been made on the basis of mean return, beta risk, co-efficient of
determination, Sharpe ratio, Treynor ratio and Jensen Alpha. The overall analysis concludes
Franklin Templeton and UTI being the best performers and Birla Sun Life, HDFC and LIC
mutual funds showing below-average performance when measured against the risk-return
relationship models.

Prakash and Sundar (2014) tried to analyse the performance of equity-oriented

schemes of three private mutual fund companies, viz., HDFC Mutual Fund Company,
ICICI Mutual Fund Company, and Franklin Templeton, and the study concluded that the
relation between mutual fund performance and fund characteristics is a much interesting
aspect for financialmarket practitioners and investors.

Annapurna and Pradeep (2013) made an attempt toanalyse the return of selected
mutual fund schemes. The study concluded that the meanreturn on equity mutual fund
schemes is higher than the mean return on other mutual fundschemes and SBI domestic
term deposit rate. The mean return on debt mutual fund schemesis lower than SBI
domestic term deposit rate. But the mean return on money market mutualfunds is
consistently positive and very close to SBI demotic term deposit rate.

Kshama and Prerna (2014) made a comparative study of the performance of equity
funds focusing on the growth of public sector mutual funds and private sector mutual

37
funds. The study basically evaluated the risk and return profile of the equity funds of the
selected sample companies from both the sectors. The study concluded that there is a
significant differencebetween the performance of private and public sector mutual funds,
and the private sector has performed better than the public sector.

Manju (2011) tried to measure the performance of mutual fund managers on the
parameters of ‘stock selection’ and ‘market-timing’ ability using Jensen’s alpha and
Merton-Herriksson model on a sample of 36 Indian mutual fund schemes, with S&P
CNX Nifty as a benchmark. The study revealed that on an average, fund managers are
not able to predict security prices well enough to outperform a buy-the-market and hold
policy. The study also revealed that there was very little evidence of individual fund
being able to do significantly better than expected from random chance. Finally, the
study suggests that the performance of the mutualfunds is not superior to the market
during the study period, though a few funds are performingbetter than the market.

Manju Punia Chopra (2011), “Do Indian Mutual Fund Managers Select the Stock and
Time the Market Correctly?”, The IUP Journal of Applied Finance (IJAF), Vol. 17, No. 2,
pp. 77-84.

3.3 INVESTING LUMP SUM OR SIP

Mutual Fund companies and many financial advisors havebeen advocating on investing
in equity market through SIP (Systematic Investment Plan). A Systematic Investment
Plan (SIP) is a vehicle offered by mutual funds to help investor saveregularly. It is just
like are recurring deposit with the postoffice or bank where you put in a small amount
every month.The difference here is that the amount is invested in a mutualfund. The
minimum amount to be invested can be as small as100 and the frequency of investment
are usually monthly orquarterly. A SIP allows you to take part in the stock
marketwithout trying to second-guess its movements. It is also knownas Rupee Cost
Averaging.

Why systematic investing

The goal of the most investor it to buy when the price is low, and sell when the price is
high.

38
  Sounds simple, but trying to time the market like this is:
 Time consuming
 Risky
 And almost impossible
 A more successful strategy is to adopt rupee cost averaging.

What is rupee cost averaging?

The market is volatile: they move up and down in an unpredictable manner. Invest a
fixed amount, at a regular, predetermined interval and use the market fluctuation to your
benefits.
How does it helpyou?
 You buy more when the market is down
 You buy less when the market is up)
 Over time the market fluctuation is averaged
 Most likely you will realize a saving on the cost per units
 This leads to Higher Returns.

3.3.1 SYSTEMATIC INVESTMENT PLAN

 SIP dates are the 1st, 10th, 15th, &25th of every month.
 Minimum amount is Rs 1000 and multiples of Rs 100 thereof for the growth
option.
 Minimum amount under dividend option is Rs 5000 to start a folio and Rs1000
and multiples of Rs100 thereof for a SIP unless a folio of the same scheme and
option is available.
 Applicable entry load originally waived will be levied if the units are redeemed
on or before expiration of 3654 days from the date of allotment.

Units will be allocated on the SIP dates of as same. if the dates fall on a non –business
day, the immediate next business day will be considered for the applicability of the NAV
subjects to the realization of the cheque.

39
  The 1st cheque can be of any date and the subsequent cheques should be of the
SIP.
 For discontinuing a written request must be received at the ISC at least 7 days
prior to the due date of the next cheque.
 The SIP enrolment from should be completed in English and in block letters
only.
 SEBI has now made it mandatory for applicants to mention his/her permanent
account number (pan) in case application amount of and above Rs50000.

In SIP means investor commits itself to investing a fixed amount every period
commonlymonthly. This method of investment has been encouraged bymany financial
advisors and is aggressively marketed byMutual Fund companies. The method has its
merit on accountfor retail investors as they can start saving by a small amountof Rs 500
per month itself. It also inculcates habit ofcompulsory savings and helps in maintaining
financialdiscipline. The table below illustrates an example of workingof SIP of any
Mutual Fund Scheme. In this it is assumed thanan investor invests Rs 10,000 per month
in SBI Blue Chip Fund – GrowthFundbeginning from Jan 1, 2016 for 49 Months till Jan
2020
Table 3.3.1 SBI Blue Chip Fund Investment details

SBI Blue Chip Fund - Gr

Summary:
Investment Period 01-01-2016 and28-01-2020
Amount Invested: 4,90,000 Rs.
Installment Amount: 10,000 Rs.
No of Months: 49
Total Units: 13190.53
Total Amount: 5,87,643 Rs.
Return: 22.43 %

Table 3.3.2 SBI Blue Chip Fund Investment Portfolio

PURCHASED
INVESTMENT DATE NAV
UNITS
January 01, 2016 29.135 343.23

40
 February 01, 2016 28.0128 356.98
March 01, 2016 26.6763 374.86
April 01, 2016 28.5074 350.79
May 01, 2016 29.241 341.99
June 01, 2016 30.5479 327.35
July 01, 2016 31.2198 320.31
August 01, 2016 32.8699 304.23
September 01, 2016 33.0992 302.12
October 01, 2016 33.1149 301.98
November 01, 2016 33.4278 299.15
December 01, 2016 31.3071 319.42
January 01, 2017 30.8149 324.52
February 01, 2017 32.8745 304.19
March 01, 2017 33.6543 297.14
April 01, 2017 34.7876 287.46
May 01, 2017 35.7292 279.88
June 01, 2017 36.4582 274.29
July 01, 2017 36.2961 275.51
August 01, 2017 38.3406 260.82
September 01, 2017 38.2653 261.33
October 01, 2017 37.3634 267.64
November 01, 2017 39.3923 253.86
December 01, 2017 39.1305 255.56
January 01, 2018 40.37 247.71
February 01, 2018 41.1714 242.89
March 01, 2018 39.5256 253
April 01, 2018 39.0107 256.34
May 01, 2018 41.3129 242.06
June 01, 2018 40.233 248.55
July 01, 2018 39.4868 253.25
August 01, 2018 41.3099 242.07
September 01, 2018 42.252 236.68
October 01, 2018 38.8003 257.73
November 01, 2018 37.6531 265.58
December 01, 2018 39.1751 255.26
January 01, 2019 39.4101 253.74
February 01, 2019 38.6033 259.05
March 01, 2019 38.6217 258.92
April 01, 2019 41.644 240.13
May 01, 2019 41.7626 239.45
June 01, 2019 43.2082 231.44
July 01, 2019 43.1792 231.59

41
 August 01, 2019 40.0827 249.48
September 01, 2019 40.1581 249.02
October 01, 2019 42.0248 237.95
November 01, 2019 43.8438 228.08
December 01, 2019 - -
January 01, 2020 44.2574 225.95

As seen from the table the benefit of Rupee Cost Averagingwhere by maintaining
investment of Rs 10000 continuouslyinvestor purchase more units when NAV is low or
whenmarkets were relatively down and he is buying less units whenNAV is high or
markets are high and this follows the basicprinciple of investing in Stock Market on
Buying Low andSelling High even though partly as the method only helps inbuying and
not selling.

42
 CHAPTER IV

RESEARCH METHODOLOGY

4.1 INTRODUCTION
This chapter provides information about adopted research design, population, sample,
research instruments, and statistical treatment of data used in our Study. The Chapter
ends with a note of the choice and use of tools and techniques for accomplishment of the
objectives of the study.

4.2 RESEARCH DESIGN

The research design adopted in this the research is based on factors which determine the
student perception towards technology enabled leaning during Lockdown based on
different factors and as a result help to have effective and efficient education which is
descriptive research design. Descriptive research, also known as statistical research,
describes data and characteristics about the population or phenomenon being studied.
This method describes the characteristics of the population or phenomenon that is being
studied. This methodology focuses more on the “What” rather than the “Why” of the
research subject. This research Focuses on performance of selected mutual fund
schemes.

4.3 SECONDARY DATA

Secondary data collected from Scheme Information documents, AMFI website and
factsheet is used for analysis.
Secondary data is the data which is already collected and available from other sources
such as articles, newspapers, government websites and other data sources. The secondary
data used in our study is the analysis and the applications which the students are using
for e-learning and the difficulty they face which have made as the variables of data
study.
Advantages of secondary data

43
  It helps to make primary data collection more specific since with the help of
secondary data, we are able to make out what are the gaps and deficiencies and
what additional information needs to be collected
 It helps to improve the understanding of the problem
 It provides a basis for comparison for the data that is collected by the researcher.
 Basic comparison for the research for the data collected
 It is economical. It saves efforts and expenses.
 Data is validated

4.4 UNIVERSE
Universe talks about the population of the study. Universe is the combination of every
survey elements which are included in the research study possessing certain similarities
which need to be studied and defined prior the sample population.
Mutual Fund taken for study are
1. HDFC Mutual Funds
2. Icici Prudential Mutual Funds
3. SBI Mutual Funds
4. Aditya Sunlife Mutual Funds
5. Reliance Nippon
6. UTI
7. Motilal Oswal Mutual Fund
8. Canara Robeco Mutual Fund
9. Edelweiss Mutual Fund
10. LIC Mutual Funds.

4.5 DATA COLLECTION

Thestratifiedsamplingmethodisadoptedandten mutual funds which consists of both
public and private sector mutual funds are taken for study.

4.6 DATA COLLECTION METHOD

Secondary data were used for analyses such as (NAV) and performance of various
schemes of the asset management companies.

44
The net asset value (NAV) of the funds were collected from various websites. The
benchmark indices were collected from the respective company’s fact sheets and also
from the company’s common application forms.

4.7 TOOLS USED FOR ANALYSIS

Sharpe, Treynor and Jensen Method
Portfolio performance was measured mostly in terms of returns in early days, though
there was an awareness of the concept of risk, which was difficult to quantify. Risk
could not be incorporated in evaluation, as there were no measures that combined both
return and risk. Returns on portfolios performance are Sharpe Ratio, Treynor measure
and Jensen measure. These are absolute measure of portfolio performance that can be
used to rank different portfolios.

RETURN

For each mutual fund scheme under study, the monthly returns are computed as:

NAVt  NAVt 1
Ri 
NAVt _ 1

AVERAGE

R  Ri/ n

I = 1,2,3...................... n

RISK

Standard deviation : Measurement of Total Risk

45
Financial analysts and statisticians prefer to use a quantitative risk surrogate called the
clash of returns, denoted by I.

The standard deviation and the variance are equally acceptable and equivalent
quantitative measures of an asset’s total risk. The variance and standard deviation are
computed from logarithmic monthly returns.

 2
I   Ri  R / n 
1/ 2

BETA

Measurement of Systematic Risk

To obtain the measure of systematic risk (Beta) of the mutual fund scheme, Market
Model is applied.

N XY  EY

NX2 (X)2

RISK-LESS ASSET

By definition, a risk less asset has zero variability of returns. If an investor buys an asset
at the beginning of the holding period with the known terminal value, such type of asset
can be called as risk-less or risk-free asset. Government securities and nationalized bank
deposits fall under this category. As the government securities are not easily available to
the common man, we take the nationalized bank deposits as the risk-free asset and the
interest rate on such deposits are considered as risk free return.

46
 SHARPE RATIO
This is a measure of risk-adjusted return on a portfolio. It is a ratio of excess return to
the standard deviation of portfolio returns. An implicit assumption of the Sharpe ratio is
that the portfolio is not combined with other risky portfolios. It is relevant for
performance evaluation when comparing mutually exclusive portfolios.

The Sharpe measure follows his earlier work on capital asset pricing model (CAPM)
dealing specifically with capital market line (CML).
The Sharpe measure of performance denoted by S is given by
Ri  Rf
S 
i

Where,

Ri = the average rate of return on portfolio ‘i’ during a specified time period.
Rf = the average rate of return on a risk-free investment during the same period

TREYNOR MEASURE

This is also a measure of risk-adjusted return on a portfolio. It is a ratio of excess return

to the systematic risk () of the portfolio. It is relevant for performance measurement
when evaluating portfolios separately or in combination with other portfolios. A high
Treynor measure indicated a favourable relationship between risk and return on the
portfolio.

Sharpe Ratio and Treynor measure give the same results in the case of highly diversified
portfolios as the total risk of portfolios approaches that of a market portfolio.

T
Ri  Rf




Where,
47
Ri = the average rate of return on portfolio ‘i' during a specified time period.
Rf = the average rate return on a risk-free investment during the same period.
 = the slope of the fun’s characteristic line during that time period (this indicates
portfolio’s relative volatility with respect to market portfolio).

A larger ‘T’ value indicates a better portfolio performance for all investors regardless of
their risk performances. The numerator of this ratio (Ri-Rf) is the risk premium and the
denominator is a measure of market risk. The Treynor measure is risk premium per unit
of systematic risk.

JENSEN’S ALPHA

This is the difference between a fund’s actual return and the return on a benchmark
portfolio with the same systematic risk () of the portfolio whose performance is being
evaluated. It measures the ability of active fund management to earn returns in excess of
the reward for market risk. We can infer meaningful results if it is used to compare two
portfolios with similar betas.

Jensen’s measure is also based on capital asset pricing model. CAPM estimates the
expected return on any security or portfolio by the following expression:

E (Ri) = Rf + i [E(Rm-Rf)
Where,
E (Ri) = expected return on security or portfolio I

Rf = Risk free return

I = Systematic risk (beta) of security

E (Rm) = expected return on the market portfolio I

Jensen’s alpha () is defined as:

48
 Ri – Rf = I + I (Rm-Rf) + I

The value of ‘aj’ suggests whether the portfolio manager possesses superior (inferior)
market timing and stock selection skills. A positive () is an indication of superior fund
management ability.

Table 4.7.1. Measures Details With Interpretation.

MEASURES DESCRIPTION INTEPRETATION

Sharpe Ratio Sharpe Ratio= Fund return in
The higher the Sharpe ratio,
excess of risk-free return/
the better a funds returns
Standard deviation of Fund.
relative to the amount of
Sharpe ratios are ideal for
risktaken.
comparing funds that have a

mixed assetclasses.

Treynor Ratio Treynor ratio= Fund return in The higher the Treynor ratio

excess of risk-free return/ Beta of shows higher returns and

Fund. Treynor ratio indicates lesser market risk of thefund

relative measure of marketrisk.

Jensen Measure This relative ratio between Jensen measure is based on

showsalpha systematic risk. It is also

and beta suitable for evaluating a

portfolio’s performance in

combination with other

portfolios.

49
 CHAPTER V

DATA ANALYSIS
5.1 INTRODUCTION
The following are the descriptive analysis of performance of mutual schemes for three
years from 2017, 2018, 2019. Daily Net Asset value returns has been calculated and
average for a month has been summarized. Monthly bench mark index has been
compared with the portfolio return. Standard deviation, Alpha, Beta, Co relation co
efficient, Sharpe, Jensen and Treynor has been calculated. The schemes have been
ranked according to the above-mentioned factors and the best performing schemes in the
three years have been identified. The below mentioned schemes from the fund houses
have been taken for study.

Table 5.1.1.HDFC Capital Builder Value Fund Performance

Mutual Funds Schemes

HDFC Mutual Funds HDFC Capital Builder Value Fund.
HDFC Dynamic Debt Fund
ICICI Prudential Mutual Funds ICICI Prudential Money Market Fund
ICICI Prudential Value Discovery Fund
SBI Mutual Funds SBI Magnum Income Fund
SBI Blue chip Fund
Aditya Sunlife Mutual Funds Aditya Birla Sun Life Income Fund
Aditya Birla Sun Life Equity Fund
Reliance Nippon Nippon India Income Fund
Nippon India Vision Fund
UTI UTI Nifty Index Fund
UTI Floater Fund
Motilal Oswal Mutual Fund Motilal Oswal Focused 25 Fund
Motilal Oswal Dynamic Fund
Canara Robeco Mutual Fund Canara Robeco Blue Chip Equity Fund
Canara Robeco Equity Hybrid Fund

50
 Canara Robeco Dynamic Bond Fund
Edelweiss Mutual Fund Edelweiss Large Cap Fund
Edelweiss Liquid Fund
LIC Mutual Fund LIC MF Equity Hybrid Fund
LIC Government Securities Fund
LIC MF Growth Fund
LIC MF Bond Fund

5.2 HDFC MUTUAL FUNDS

HDFC Mutual Fund is currently the largest mutual fund and actively managed equity
mutual fund in India. It is the most profitable asset management company (AMC) in the
country.
The funds taken for analysis from HDFC mutual funds are

Type Of Fund Fund Benchmark Index

Equity - Growth Fund HDFC Capital Builder Value Nifty 500
Fund.
Theme Based Debt HDFC Dynamic Debt Fund CRISIL Dynamic Debt
Index

51
 HDFC Capital Builder Value Fund

Table 5.2.1 HDFC Capital Builder Value Fund Performance

2017 2018 2019

Month
Return Index Return Index Return Index
Jan 2.654 3.645 1.615 4.986 12.003 3.187
Feb 2.624 0.637269 3.212 2.078 8.251 2.290
Mar 5.967 7.78365 6.712 3.636 7.997 2.355
Apr 2.476 3.91725 0.984 0.386 5.707 7.890
Ma
6.078 12.282 10.699
y 9.293456 16.583 8.805
Jun 7.791 11.55789 0.757 0.081 3.067 5.426
Jul 4.644 5.869298 7.607 5.973 10.888 5.262
Aug 10.761 13.31084 3.626 0.128 6.665 2.756
Sep 3.140 3.696144 5.150 6.963 3.895 7.624
Oct 15.648 9.291876 0.870 0.390 10.739 10.198
Nov 1.329 1.621901 6.262 9.221 7.754 12.835
Dec 9.519 14.45042 10.559 7.039 7.382 4.974

S.D 6.22 6.33 6.23

Beta 0.772 0.842 0.401

Sharpe 5.26 0.01 0.34

Treynor 7.64 0.05 5.62
Jensen 0.36 3.75 5.72
Correlation 0.91 0.93 0.08

52
INTERPRETATION

In Sharpe method,2017 Portfolio has higher return than other portfolios. That
means the company performs better fund in the year 2017. Indicating in 2017 the fund
has performed well with respect to the risk associated to it.
In Treynor’s method, the Portfolio of 2017 has higher return than other
portfolios.
In Jensen’s method, the Portfolio of 2019 has higher return than other
portfolios.

It is known from the correlation that the relationship between the HDFC Capital
Builder Value Fund and stock market index return is high in 2018.

HDFC Capital Builder Value Fund

18
16
14
12
10 2017
8 2018
6 2019
4
2
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fig 5.2.1HDFC Capital Builder Value Fund Yearwise Return

53
 HDFC Dynamic Debt Fund

Table 5.2.2 HDFC Dynamic Debt Fund Performance

2017 2018 2019

Month
Return Index Return Index Return Index
Jan 0.054 1.368 2.584 1.165 2.039 0.232
Feb 0.843 0.361 0.370 0.003 0.462 0.375
Mar 3.040 0.198 0.445 0.507 1.401 0.363
Apr 1.699 0.856 1.030 0.164 2.427 0.372
May 2.594 1.304 1.419 0.068 4.369 0.361
Jun 5.574 0.744 1.205 0.701 0.779 0.418
Jul 0.091 0.274 0.066 1.423 2.977 0.728
Aug 2.508 1.394 1.402 0.697 1.555 0.960
Sep 0.704 1.775 3.221 0.355 0.057 0.279
Oct 0.157 0.134 1.404 1.138 3.226 0.444
Nov 4.202 0.405 2.102 0.135 1.736 0.765
Dec 3.586 0.391 7.761 0.230 1.762 0.450

S.D 2.38 2.77 2.31

Beta 0.302 0.725 2.582

Sharpe 3.39 6.41 16.21

Treynor 7.17 6.28 2.16
Jensen 0.32 5.01 14.95
Correlation 0.08 0.19 0.40

54
INTERPRETATION

In Sharpe method, theHDFC Dynamic Debt Fund2019 Portfolio has higher return than
other portfolios. That means the company performs better fund in the year 2019.

In Treynor’s method, the Portfolio of 2017has higher return than other

portfolios.

In Jensen’s method, the Portfolio of 2019has higher return than other portfolios.

It is known from the correlation that the relationship between the stock return
and stock market index return is high in 2019.

HDFC Dynamic Debt Fund

9

5 2017

4 2018
2019
3

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fig 5.2.2HDFC Dynamic Debt Fund year wise returns

55
5.3 ICICI PRUDENTIAL MUTUAL FUND

ICICI Prudential Mutual Fund is one of India’s top 2 largest Asset Management
Companies. It is one the oldest and most profitable Mutual Funds. ICICI Prudential
was set up in 1993 with ICICI Bank and Prudential Plc acting as partners. The
Prudential Group is one of the world’s oldest, largest and most influential insurance
companies.

ICICI Prudential Mutual Fund has played a major role in setting up the CRISIL rating
system in India. As a CIBIL score determines the creditworthiness of an individual,
the CRISIL score determines the health of Mutual Funds in India.

The funds taken for analysis from ICICI Prudential mutual Funds are

Type Of Fund Fund Benchmark Index

Debt ICICI Prudential Money Market CRISIL Composite Bond
Fund Fund Index
Equity ICICIPrudential Value Discovery Nifty 500 Value 50 TRI
Fund

56
 ICICI Prudential Money Market Fund

Table 5.3.1ICICI Prudential Money Market Fund Performance

2017 2018 2019

Month
Return Index Return Index Return Index
Jan 0.803 5.299 0.228 5.360 0.391 2.714
Feb 0.464 0.768 0.666 1.769 0.566 2.107
Mar 1.205 7.617 0.865 4.361 0.400 2.339
Apr 1.579 5.105 0.363 1.294 0.374 7.987
May 1.044 7.300 0.275 16.024 0.416 8.911
Jun 0.612 11.722 0.127 0.153 0.324 6.374
Jul 0.580 4.878 0.174 6.187 0.214 4.539
Aug 0.490 13.448 0.448 0.445 0.328 2.873
Sep 0.546 2.991 0.147 6.729 0.402 8.133
Oct 0.502 9.505 0.232 0.662 0.353 9.852
Nov 0.856 0.849 0.526 8.958 0.427 11.124
Dec 1.324 13.398 0.435 6.037 0.110 5.098

S.D 0.37 0.27 0.11

Beta 0.018 0.005 0.001

Sharpe 0.83 0.86 0.88

Treynor 3.47 1.44 6.90
Jensen 0.94 0.37 0.36
Correlation 0.36 0.12 0.05

57
INTERPRETATION

In Sharpe method,2019 Portfolio has higher return than other portfolios. That
means the company performs better fund in the year 2019.

In Treynor’s method, the Portfolio of 2019 has higher return than other
portfolios.

In Jensen’s method, the Portfolio of 2017 has higher return than other
portfolios.

It is known from the correlation that the relationship between the stock return
and stock market index return is high in 2017.

ICICI PrudentiIal Money Market Fund

1.8
1.6
1.4
1.2
1 2017
0.8 2018
0.6 2019
0.4
0.2
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fig5.3.1ICICI Prudential Money Market Fund returns comparison

58
 ICICI PRUDENTIAL VALUE DISCOVERY FUND
Table 5.3.2 ICICI Prudential Value Discovery Fund

2017 2018 2019

Month
Return Index Return Index Return Index
Jan 3.762 5.299 1.491 5.360 1.206 2.714
Feb 4.959 0.768 4.517 1.769 5.135 2.107
Mar 5.904 7.617 5.714 4.361 5.792 2.339
Apr 2.851 5.105 0.306 1.294 6.441 7.987
May 6.628 7.300 16.432 16.024 6.963 8.911
Jun 8.696 11.722 1.583 0.153 4.078 6.374
Jul 5.421 4.878 6.676 6.187 7.712 4.539
Aug 12.412 13.448 2.581 0.445 5.382 2.873
Sep 2.413 2.991 3.226 6.729 9.789 8.133
Oct 15.191 9.505 0.003 0.662 9.193 9.852
Nov 1.357 0.849 5.595 8.958 7.888 11.124
Dec 15.060 13.398 8.143 6.037 4.595 5.098

S.D 7.10 6.61 6.57

Beta 0.907 0.908 0.803

Sharpe 5.35 0.45 2.41

Treynor 4.90 3.21 1.12
Jensen 0.39 4.62 2.81
Correlation 0.95 0.94 0.81

59
INTERPRETATION

In Sharpe method,2017 Portfolio has higher return than other portfolios. That
means the company performs better fund in the year 2017.

In Treynor’s method, the Portfolio of 2017 has higher return than other
portfolios.

In Jensen’s method, the Portfolio of 2018has higher return than other portfolios.

It is known from the correlation that the relationship between the stock return
and stock market index return is high in 2017.

ICICI PRUDENTIAL VALUE DISCOVERY FUND

18
16
14
12
10 2017
8 2018
6 2019
4
2
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fig 5.3.2 ICICI Prudential Value discovery Fund wise returns comparison

60
5.4 SBI MUTUAL FUNDS

The SBI Mutual Fund Trustee Company Private Limited was set up as a trust under
the Trust Act of 1882. This Trust controls the SBI Mutual Fund, one of India’s largest
and oldest MFs. The SBI Mutual Fund is a Joint Venture (JV) between one of India’s
largest and most profitable banks, the State Bank of India, and Amundi, which is a
French asset management company.

SBI Mutual Fund is the first in India to launch an ESG Fund. An acronym for
Environment, Social and Governance, the fund provides resources for sustainable
investment in major markets.

The funds taken for analysis from SBI Mutual Funds are

Type Of Fund Fund Benchmark Index

Debt SBI Magnum Income Fund CRISIL Medium to Long
Term Debt Index
Equity Large Cap SBI Blue chip Fund S&P BSE 100 Index

61
 SBI Magnum Income Fund

Table 5.4.1SBI Magnum Income Fund Performance

2017 2018 2019

Month
Return Index Return Index Return Index
Jan 1.7970 8.452 4.370 4.078 4.400 2.962
Feb 3.1779 2.164 0.618 5.298 0.630 5.863
Mar 4.6906 5.747 6.015 0.835 6.004 5.221
Apr 1.2131 2.214 0.519 4.073 0.506 4.998
May 4.3139 8.495 11.183 0.488 11.274 1.886
Jun 5.9484 3.237 0.758 3.418 0.681 2.893
Jul 4.0678 6.972 5.820 0.615 5.829 4.094
Aug 11.1112 4.914 3.787 9.794 3.690 5.674
Sep 3.9788 2.368 7.027 0.602 6.951 4.945
Oct 11.5740 4.665 6.503 2.153 6.891 1.206
Nov 0.3638 1.396 5.650 3.488 5.547 1.583
Dec 12.4841 3.523 4.569 3.235 5.050 0.425

S.D 5.56 5.83 5.90

Beta 0.639 0.181 0.134

Sharpe 4.95 1.60 1.06

Treynor 33.19 35.74 28.57
Jensen 7.83 0.94 0.96
Correlation 0.51 0.13 0.09

62
INTERPRETATION

In Sharpe method,2017 Portfolio has higher return than other portfolios. That
means the company performs better fund in the year 2017.

In Treynor’s method, the Portfolio of 2018 has higher return than other
portfolios.

In Jensen’s method, the Portfolio of 2017 has higher return than other
portfolios.

It is known from the correlation that the relationship between the stock return
and stock market index return is high in 2017.

SBI MAGNUM INCOME FUND

18
16
14
12
10 2017

8 2018

6 2019

4
2
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fig 5.4.1. SBI Magnum Fund year wise returns comparison

63
 SBI Blue chip Fund

Table 5.4.2 SBI Blue chip Fund Performance

2017 2018 2019

Month
Return Index Return Index Return Index
Jan 1.210 5.299 4.011 5.360 2.219 2.714
Feb 2.853 0.768 6.131 1.769 5.212 2.107
Mar 4.515 7.617 3.590 4.361 0.431 2.339
Apr 0.138 5.105 1.590 1.294 2.278 7.987
May 8.642 7.300 14.867 16.024 7.738 8.911
Jun 8.657 11.722 0.154 0.153 5.173 6.374
Jul 7.471 4.878 5.387 6.187 3.419 4.539
Aug 14.590 13.448 3.024 0.445 9.789 2.873
Sep 2.857 2.991 5.000 6.729 3.393 8.133
Oct 11.459 9.505 0.455 0.662 9.727 9.852
Nov 4.180 0.849 5.416 8.958 10.068 11.124
Dec 13.379 13.398 8.815 6.037 3.930 5.098

S. D 5.98 6.36 5.70

Beta 0.781 0.881 0.747

Sharpe 4.70 0.40 2.35

Treynor 42.68 2.95 19.97
Jensen 1.09 4.08 1.58
Correlation 0.97 0.94 0.87

64
INTERPRETATION

In Sharpe method,2017 Portfolio has higher return than other portfolios. That
means the company performs better fund in the year 2017.

In Treynor’s method, the Portfolio of 2017 has higher return than other
portfolios.

In Jensen’s method, the Portfolio of 2018 has higher return than other
portfolios.

It is known from the correlation that the relationship between the stock return
and stock market index return is high in 2017.

SBI Blue Chip Fund

16
14
12
10
2017
8
2018
6
2019
4
2
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fig 5.4.2.SBI Blue chip Fundyear wise returns comparison

65
5.5 ADITYA SUN LIFE MUTUAL FUNDS

Aditya Birla Sun Life Mutual Funds (ABSLMF) is a joint-venture company co-
sponsored by the Indian company, Aditya Birla Capital Limited and Canada-based
financial service company, Sun Life AMC Investments, Inc.

The primary commitment of ABSLMF is to increase mutual fund penetration in India.

As of May 2019, there are over 83.2 million mutual fund folios in India aggregating
over Rs. 25.43 trillion. It has quadrupled in the past decade alone, and ABSLMF has
had a defining role in it.

The funds taken for analysis from Aditya Birla Sun Life Mutual Funds are

Type Of Fund Fund Benchmark Index

Debt Aditya Birla Sun Life Income Fund CRISIL Composite Bond
Fund Index
Equity Fund Aditya Birla Sun Life Equity Fund S&P BSE All CAP -TRI

66
 Aditya Birla Sun Life Income Fund

Table 5.5.1. Aditya Birla Sun Life Income Fund Performance

2017 2018 2019

Month Return Index Return Index Return Index
Jan 0.995 1.368 0.211 1.165 2.262 0.232
Feb 0.737 0.361 0.075 0.003 1.530 0.375
Mar 0.723 0.198 1.306 0.507 1.577 0.363
Apr 1.742 0.856 0.255 0.164 3.512 0.372
May 1.382 1.304 0.598 0.068 0.055 0.361
Jun 0.358 0.744 1.143 0.701 4.548 0.418
Jul 0.430 0.274 0.191 1.423 0.397 0.728
Aug 1.247 1.394 0.131 0.697 1.698 0.960
Sep 0.774 1.775 0.191 0.355 0.223 0.279
Oct 0.238 0.134 0.376 1.138 0.338 0.444
Nov 0.218 0.405 0.398 0.135 5.121 0.765
Dec 1.183 0.391 0.210 0.230 0.211 0.450

S.D 0.84 0.60 2.54

Beta 0.234 0.052 2.768

Sharpe 5.68 8.26 16.74

Treynor 12.52 13.47 2.08
Jensen 0.87 0.30 1.67
Correlation 0.19 0.06 0.39

67
INTERPRETATION

In Sharpe method,2019 Portfolio has higher return than other portfolios. That
means the company performs better fund in the year 2019.

In Treynor’s method, the Portfolio of 2018 has higher return than other
portfolios.

In Jensen’s method, the Portfolio of 2019 has higher return than other
portfolios.

It is known from the correlation that the relationship between the stock return
and stock market index return is high in 2019.

Aditya Birla Sun Life Income Fund

4
2017
3
2018

2 2019

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fig 5.5.1 Aditya Birla Sunlife Income Fundyear wise returns comparison

68
 Aditya Birla Sun Life Equity Fund

Table 5.5.2 Aditya Birla Sun Life Equity Fund Performance

2017 2018 2019

Month Return Index Return Index Return Index
Jan 1.552 0.864 0.324 0.524 0.984 0.244
Feb 0.019 0.022 0.384 0.343 0.883 0.316
Mar 1.474 0.284 1.300 0.018 0.311 0.298
Apr 1.874 0.674 0.307 0.314 1.216 0.441
May 1.888 0.688 0.813 0.094 1.117 0.425
Jun 0.826 0.555 0.738 0.120 0.563 0.468
Jul 1.033 0.219 0.025 0.279 0.538 0.421
Aug 2.050 0.574 0.253 0.060 0.321 0.464
Sep 1.073 0.723 0.237 0.391 0.354 0.313
Oct 0.006 0.288 1.954 0.807 0.538 0.444
Nov 0.806 0.433 0.481 0.060 0.669 0.478
Dec 2.054 0.143 1.077 0.054 0.563 0.438

S.D 1.34 0.87 0.59

Beta 0.307 1.739 0.855

Sharpe 14.71 34.96 46.07

Treynor 12.38 5.65 10.27
Jensen 1.24 10.11 5.52
Correlation 0.06 0.59 0.29

69
INTERPRETATION

In Sharpe method,2019 Portfolio has higher return than other portfolios. That
means the company performs better fund in the year 2019.

In Treynor’s method, the Portfolio of 2017 has higher return than other
portfolios.

In Jensen’s method, the Portfolio of 2018 has higher return than other
portfolios.

It is known from the correlation that the relationship between the stock return
and stock market index return is high in 2018.

Aditya Birla Sun Life Equity Fund

2.5

1.5
2017
2018
1
2019

0.5

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fig 5.5.2 Aditya Birla Sun Life Equity Fund year wise returns comparison

70
5.6 RELIANCE NIPPON

Nippon India Mutual Funds (formerly Reliance Mutual Fund) is one of the leading
asset management companies in India. It manages assets across managed accounts,
mutual funds, pension funds, alternative investments, and offshore funds. Nippon
India Mutual Fund’s (NIMF) asset manager is Nippon Life India Asset Management
Limited (NAM India). NAM India’s promoters are Reliance Capital Limited and
Nippon Life Insurance Company that hold 75.93% of its total issued and paid-up
equity share capital.

The funds taken for analysis from Reliance Nippon Mutual Funds are

Type Of Fund Fund Benchmark Index

Debt Nippon India Income Fund NIFTY Medium to Long Duration
Debt Index
Equity Fund Nippon India Vision Fund Nifty Large Midcap 250 TRI

71
 Nippon India Income Fund

Table5.6.1Nippon India Income Fund Performance

2017 2018 2019

Month Return Index Return Index Return Index
Jan 4.071 0.864 1.386 0.524 2.716 0.244
Feb 1.107 0.022 3.382 0.343 1.761 0.316
Mar 4.509 0.284 0.080 0.018 3.633 0.298
Apr 3.579 0.674 3.143 0.314 5.468 0.441
May 13.099 0.688 15.491 0.094 3.980 0.425
Jun 7.974 0.555 0.447 0.120 0.419 0.468
Jul 12.389 0.219 3.957 0.279 9.916 0.421
Aug 15.199 0.574 1.090 0.060 5.542 0.464
Sep 4.611 0.723 4.998 0.391 2.834 0.313
Oct 11.827 0.288 1.394 0.807 9.906 0.444
Nov 0.715 0.433 7.651 0.060 8.627 0.478
Dec 11.447 0.143 7.678 0.054 5.672 0.438

S. D 7.02 5.99 5.93

Beta 1.183 0.496 7.805

Sharpe 22.64 11.65 13.44

Treynor 4.95 6.60 3.33
Jensen 12.92 1.36 14.71
Correlation 0.05 0.02 0.26

72
INTERPRETATION

In Sharpe method,2017 Portfolio has higher return than other portfolios. That
means the company performs better fund in the year 2017.

In Treynor’s method, the Portfolio of 2018 has higher return than other
portfolios.

In Jensen’s method, the Portfolio of 2019 has higher return than other
portfolios.

It is known from the correlation that the relationship between the stock return
and stock market index return is high in 2019.

Nippon India Income

18

16

14

12

10 2017
2018
8
2019
6

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fig 5.6.1Nippon India Income Fund year wise returns comparison

73
 Nippon India Vision Fund

Table 5.6.2Nippon India Vision Fund Performance

2017 2018 2019

Month Return Index Return Index Return Index
Jan 7.642 0.936 6.660 2.129 2.242 0.555
Feb 0.963 0.004 7.621 1.016 2.750 0.773
Mar 7.854 0.412 5.000 0.345 1.581 0.683
Apr 12.254 0.722 2.279 0.297 2.778 0.328
May 1.365 1.822 15.085 0.385 11.111 0.278
Jun 11.960 0.970 1.095 1.072 2.215 0.554
Jul 2.530 0.634 4.272 1.815 9.406 1.270
Aug 7.407 1.409 3.145 0.356 6.220 1.530
Sep 4.948 2.004 5.966 0.475 1.145 1.553
Oct 9.789 2.269 0.662 1.335 7.203 0.779
Nov 2.305 1.043 9.201 0.109 8.422 1.094
Dec 10.972 1.237 12.340 0.216 7.834 0.635

S.D 7.87 7.61 5.72

Beta 0.471 1.500 1.724

Sharpe 0.18 2.40 10.89

Treynor 0.40 1.63 4.63
Jensen 0.90 10.34 7.24
Correlation 0.07 0.21 0.23

74
INTERPRETATION

In Sharpe method,2019 Portfolio has higher return than other portfolios. That
means the company performs better fund in the year 2019.

In Treynor’s method, the Portfolio of 2019 has higher return than other
portfolios.

In Jensen’s method, the Portfolio of 2018 has higher return than other
portfolios.

It is known from the correlation that the relationship between the stock return
and stock market index return is high in 2019.

Nippon India Vision Fund

16

14

12

10
2017
8
2018
6 2019

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fig 5.6.2 Nippon India Vision Fund year wise returns comparison

75
5.7 UNION TRUST OF INDIA

In 2003, the Unit Trust of India was bifurcated into two components- the SUUTI and
the UTI Mutual Funds or UTIMF. The UTI Mutual Fund was registered with the SEBI
on the First of February 2003.4 of the largest PSU banks now back this Mutual Fund.

All UTI Mutual Funds are managed by the UTI Asset Management Company Ltd. The
4 big partners- State Bank of India, the PNB or Punjab National Bank, Bank of
Baroda, and the Life Insurance Corporation of India each holds 18.24% of the shares
in the UTIMF.

A significant share of 26% is held by the T Rowe Price Group Inc, also known as the
TRP Group, and controlled by its subsidiary - T Rowe Price Global Investment
Services Ltd.

The funds taken for analysis from UTI Mutual Funds are

Type Of Fund Fund Benchmark Index

Equity Fund UTI Nifty Index Fund Nifty 50

Debt UTI Floater Fund CRISIL Ultra Short-Term Bond
Index

76
 UTI Nifty Index Fund

Table 5.7.1UTI Nifty Index Fund Performance

2017 2018 2019

Month Return Index Return Index Return Index
Jan 0.261 1.498 0.242 5.138 0.194 0.679
Feb 0.422 0.588 0.278 1.451 1.545 0.709
Mar 0.528 0.594 0.370 2.699 0.321 0.907
Apr 0.731 1.082 0.183 0.044 0.191 0.439
May 0.392 2.815 0.190 0.112 0.190 0.355
Jun 0.309 1.164 1.940 1.703 1.879 0.035
Jul 0.416 0.954 1.641 3.652 1.645 1.879
Aug 0.506 2.044 0.191 1.515 0.192 3.481
Sep 0.368 3.066 0.191 1.515 0.190 3.376
Oct 0.238 0.728 0.194 1.812 0.194 0.801
Nov 0.244 2.055 0.197 0.069 0.194 2.140
Dec 0.234 0.973 0.191 0.235 0.379 0.490

S.D 0.15 0.62 0.84

Beta 0.034 0.121 0.016

Sharpe 3.49 2.19 3.53

Treynor 15.23 9.54 5.68
Jensen 0.18 1.20 0.24
Correlation 0.36 0.45 0.03

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INTERPRETATION

In Sharpe method,2019 Portfolio has higher return than other portfolios. That
means the company performs better fund in the year 2019.

In Treynor’s method, the Portfolio of 2017 has higher return than other
portfolios.

In Jensen’s method, the Portfolio of 2018 has higher return than other
portfolios.

It is known from the correlation that the relationship between the stock return
and stock market index return is high in 2018.

UTI Nifty Index Fund

2.5

1.5
2017
2018
1 2019

0.5

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Fig 5.7.1Kotak Glit year wise returns comparison

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 5.8 RANKINGS
Ranking Using Sharpe Method
Table 5.8.1. Ranking of Funds using Sharp Method

S.
Name of the Fund 2017 Rank 2018 Rank 2019 Rank
No.
HDFC Capital Builder Value
1 Fund. 1.678 3 2.324 1 1.012 11
2 HDFC Dynamic Debt Fund 1.932 2 1.675 4 0.922 13
ICICI Prudential Money
3 Market Fund 1.089 10 1.113 9 2.967 1
ICICI Prudential Value
4 Discovery Fund 1.235 8 0.986 11 2.134 3
5 SBI Magnum Income Fund 1.432 4 1.998 2 1.234 10
6 SBI Blue chip Fund 2.129 1 1.932 3 1.655 8
Aditya Birla Sun Life Income
7 Fund 1.032 11 1.009 10 0.988 12
Aditya Birla Sun Life Equity
8 Fund 0.124 16 -1.456 22 0.873 14
9 Nippon India Income Fund -1.134 20 -0.321 17 -1.662 23
10 Nippon India Vision Fund 0.945 13 -0.345 18 -1.461 21
11 UTI Nifty Index Fund 1.401 5 1.432 6 2.243 2
12 UTI Floater Fund 1.389 6 1.567 5 2.003 4
Motilal Oswal Focused 25
13 Fund -0.876 19 0.734 14 1.345 9

14 Motilal Oswal Dynamic Fund -0.235 18 0.145 16 0.632 15

Canara Robeco Blue Chip
15 Equity Fund 1.003 12 1.345 7 1.762 7
Canara Robeco Equity Hybrid
16 Fund 1.123 9 0.912 12 1.976 5
Canara Robeco Dynamic
17 Bond Fund -0.128 17 1.245 8 1.879 6

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18 Edelweiss Large Cap Fund 1.324 7 0.534 15 -0.013 17
19 Edelweiss Liquid Fund 0.785 14 0.875 13 0.324 16
20 LIC MF Equity Hybrid Fund -1.877 23 -0.567 19 -0.345 18
LIC Government Securities
21 Fund -1.765 22 -0.675 20 -1.561 22
22 LIC MF Growth Fund 0.623 15 -1.245 21 -0.998 19
23 LIC MF Bond Fund -1.456 21 -1.756 23 -1.345 20

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 Table 19
Treynor’s Method
Table 5.8.2 Ranking of Funds using Treynor’s Method

S.
Name of the Fund 2017 Rank 2018 Rank 2019 Rank
No.
HDFC Capital Builder Value
1 Fund. 0.092 4 0.023 11 0.057 13
2 HDFC Dynamic Debt Fund 0.074 7 0.162 2 0.079 11
ICICI Prudential Money
3 Market Fund 0.087 5 0.045 10 0.181 3
ICICI Prudential Value
4 Discovery Fund 0.014 11 0.081 8 0.112 8
5 SBI Magnum Income Fund 0.043 8 0.154 4 0.143 6
6 SBI Blue chip Fund 0.137 2 0.173 1 0.168 5
Aditya Birla Sun Life
7 Income Fund 0.001 13 -0.049 17 -0.023 18
Aditya Birla Sun Life Equity
8 Fund -0.074 17 -0.045 16 0.023 15
9 Nippon India Income Fund -0.082 19 -0.072 20 -0.076 21
10 Nippon India Vision Fund -0.094 23 0.005 13 -0.097 23
11 UTI Nifty Index Fund 0.081 6 0.113 5 0.198 1
12 UTI Floater Fund 0.162 1 0.087 6 0.177 4
Motilal Oswal Focused 25
13 Fund -0.023 14 -0.062 19 0.052 14
Motilal Oswal Dynamic
14 Fund -0.087 20 -0.058 18 0.082 10
Canara Robeco Blue Chip
15 Equity Fund 0.103 3 0.014 12 0.187 2
Canara Robeco Equity
16 Hybrid Fund 0.035 9 0.073 9 0.122 7
Canara Robeco Dynamic
17 Bond Fund 0.021 10 0.158 3 0.091 9

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18 Edelweiss Large Cap Fund -0.034 15 0.083 7 0.068 12
19 Edelweiss Liquid Fund 0.008 12 0.003 14 0.012 16
20 LIC MF Equity Hybrid Fund -0.089 21 -0.087 23 0.003 17
LIC Government Securities
21 Fund -0.078 18 -0.083 22 -0.056 20
22 LIC MF Growth Fund -0.064 16 -0.012 15 -0.035 19
23 LIC MF Bond Fund -0.091 22 -0.079 21 -0.082 22

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 Table 20
Jensen’s Method
Table 5.8.3 Ranking of Funds using Jensen’s Method

S.
Name of the Fund 2017 Rank 2018 Rank 2019 Rank
No.
HDFC Capital Builder Value
1 Fund. 0.032 1 0.028 4 0.007 12
2 HDFC Dynamic Debt Fund 0.018 4 0.019 7 0.019 8
ICICI Prudential Money
3 Market Fund 0.007 9 0.012 8 0.023 7
ICICI Prudential Value
4 Discovery Fund 0.004 11 0.023 5 0.005 13
5 SBI Magnum Income Fund 0.028 2 0.007 11 0.026 5
6 SBI Blue chip Fund 0.021 3 0.039 2 0.017 9
Aditya Birla Sun Life Income
7 Fund 0.017 5 0.003 13 0.011 10
Aditya Birla Sun Life Equity
8 Fund 0.013 6 -0.034 23 -0.004 16
9 Nippon India Income Fund 0.006 10 -0.017 17 0.002 15
10 Nippon India Vision Fund -0.013 18 -0.021 19 -0.009 17
11 UTI Nifty Index Fund -0.011 17 0.043 1 0.028 4
12 UTI Floater Fund -0.017 19 0.021 6 0.039 1
Motilal Oswal Focused 25
13 Fund -0.006 14 -0.029 20 0.008 11
14 Motilal Oswal Dynamic Fund 0.011 7 0.001 14 0.003 14
Canara Robeco Blue Chip
15 Equity Fund -0.009 16 -0.003 15 0.032 2
Canara Robeco Equity Hybrid
16 Fund 0.001 12 0.033 3 0.031 3
Canara Robeco Dynamic Bond
17 Fund 0.009 8 0.011 9 0.024 6
18 Edelweiss Large Cap Fund -0.007 15 0.005 12 -0.023 23

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19 Edelweiss Liquid Fund -0.004 13 0.009 10 -0.013 19
20 LIC MF Equity Hybrid Fund -0.029 23 -0.012 16 -0.018 20
LIC Government Securities
21 Fund -0.026 22 -0.032 22 -0.011 18
22 LIC MF Growth Fund -0.019 20 -0.031 21 -0.021 22
23 LIC MF Bond Fund -0.021 21 -0.019 18 -0.019 21

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 CHAPTER VI

FINDINGS, SUGGESTIONS &CONCLUSIONS

6.1. FINDINGS
From the Sharpe analysis for 2017, 2018 & 2019 it is inferred that the below mentioned
funds are performing better than other funds.
 HDFC Capital Builder Value Fund
 ICICI Prudential
 UTI NIFTY index Fund
 Canara Robeco Blue Chip Equity Fund,
 SBI Magnum Income Fund

From the Treynor analysis it is inferred that the below mentioned funds provide good
returns.

 ICICI Prudential Money Market Fund

 SBI Magnum Income Fund
 SBI Blue chip fund
 Canara Robeco Equity Hybrid Fund
 UTI Nifty Index Fund

As per Jensen’s ratio the funds that provide good returns are

 HDFC Capital builder fund,

 UTI Nifty Index Fund
 UTI Floater fund,
 Canara Robeco Equity Hybrid Fund
 Most of the investors ignore the long – term periods.
 Bond / income fund is to provide a steady cashflow to investors.

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6.2 SUGGESTION

 Investors should know about the basic elements of mutual fund.

 Investors should choose their risk level and according to that they have to choose
the funds.
 Investors should analyse the company performance and then invest the funds.
 Investors should know the market trends.
 Investors should wait for the long - term returns.
 Effects of differential degrees of risk on the return of the portfolios must be taken
into account.

6.3 CONCLUSION
As of analysis done for the selected mutual funds schemes, and mutual fund houses it
can be interpreted that private sector mutual funds perform better than public sector
mutual funds. In public sector mutual funds UTI has performed all the three years,
followed by SBI Mutual funds and CanaraRobeco. In Private sector mutual funds HDFC
tops the list followed by ICICI.

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 References

 I.M. Pandey, (1977), “Financial management”, Vikas Publishing House Pvt. Ltd.,
Vol.26, New Delhi.

 C.R. Kothari, (1985), “Research Methodology”, New Age International (P)

Limited, Publishers, New Delhi.

 Natarajan. S. (2006), “Dalal Street” Vol. XXI, No.8, April, Mutual fund data
bank and Mutual funds analysis – journal of investment P. No:90-92.

 Chandra Sekar. C. (2006), “Business Today”, Vol.15, No.7, April, current the
great Indian M-cap race, P. No. 36-38.

 www.kotakmutualfund.com
 www.amfiindia.com
 www.moneycontrol.com
 www.crisile.com
 www.nseindia.com
 www.bseindia.com
 https://www.amfiindia.com/indian-mutual

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