comparative analysia of mf reported by archana.k

8/3/2019 Comparative Analysia of MF Reported by ARCHANA.K

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Comparative analysis of Mutual Funds

PROJECT REPORT

ON

COMPARATIVE ANALYSIS OF MUTUAL FUNDS

AT

RELIGARE FINANCIAL SERVICES Ltd.

Submitted by

ARCHANA.K

(H.T-NO.213309672059)

Submitted to Osmania University

In Partial fulfillment for award of the degree ofMASTER OF BUSINESS ADMINISTRATION

(FINANCE)

(2009-2011)

Under the guidance of

Ms. Seema Nazneen

(Assistant professor)

LALITHA DEGREE & P.G COLLEGE

(Affiliated Osmania University)

HYDERABAD.

500 007.


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DECLARATION

I hereby declare that this Project Report titled COMARATIVE

ANALYSIS OF MUTUAL FUNDS submitted by me to the Department of

Business Management, O.U., Hyderabad, is a bonafide work undertaken by

me and it is not submitted to any other University or Institution for the

award of any degree diploma / certificate or published any time before.

Name and Address of the Student Signature of the Student


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CERTIFICATION

This is to certify that the Project Report title COMPARATIVE

ANALYSIS OF MUTUAL FUNDS submitted in partial fulfillment for the

award of MBA Programme of Department of Business Management,O.U.

Hyderabad, was carried out by ARCHANA.K H.TNo 213309672059 under my

guidance. This has not been submitted to any other University or Institution

for the award of any degree/diploma/certificate.

Name and address of the Guide Signature of the Guide

ABSTRACT


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Comparative analysis of Mutual Fundsoptions could be a bank deposit, a post office account, investment in shares, real estate,

bullions etc. with so many options available, it is but obvious that one faces a

dilemma as to which investment option; one should go for and also at the same time

having a diversified portfolio.

A mutual fund is an ideal investment option to solve this dilemma. A

mutual fund is a pooled investment where like-minded investors come together and

invest with a common objective. Thus the funds are pooled from the various

investors who are geographically spread. These funds are collected and managed by

professionals. Information of the markets is a key factor, which is not widely available

to the common man at the precise moment. The professionals solve this problem.

Based on the investment objective, the funds collected are invested in various

marketable securities, in order to have a diversified portfolio and minimize the risk.

The objective of this study is to do a Comparative study on Mutual Fundsschemes so as to assist the organization in its vision to give a personalized advice

regarding the appropriate Mutual Fund scheme to its clients based on their risk

profile and expected returns determined through the administration and analysis of

the questionnaire.

This report deals with the structu re and regulatory norms of the mutual fund

industry and studies the classification of funds into Equity, Balanced and Debt

schemes along with Sharpe and Trey nor Ratios to understand risk and returns ofthe funds.

Market Risk associated with each mutual fund scheme has also been

calculated by using Beta Coefficient (Systematic Risk) of each of the mutual fund

scheme when compared with the Risk of Market Portfolio (i.e. the Benchmark

Index) and by using Treynors Ratio.

So as to determine the actual risk associated with each of the schemes. Based on

this risk and return analysis mutual funds schemes have been categorized into highrisk high return, moderate risk moderate return, low risk low return categories.

ACKNOWLEDGEMENT


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Comparative analysis of Mutual FundsI gladly take this opportunity to express my deep sense of gratitude to all those

who have made it feasible for me to accomplish this report work.

I sincerely and honestly acknowledge the grace and needful support of Prof

N.GOPALREDDY, The principal, to fulfill this work successfully.

My sincere thanks to our H.O.D Ms.G.PRASHANTHI for her encouragement.

It is my primary and pleasant duty to express my humble thanks and deep debt of

gratitude to my project guidem Ms. Seema Nazneen for her splendid and exemplary

guidance.

I also thanks to the staff for providing me all help and facilities in carrying out

my project and making feel at home.

I would like to owe my sincere appreciation to all the Employees of RELIGARE

FINANCIAL SERVICES Ltd, who gave me the opportunity for doing this project work,

provided a friendly environment and supported through out my project.

Finally, I whole heartedly conveys my thanks to my parents and friends for their

unforgettable encouragement in the completion of this work.

ARCHANA.K

(21330967205

9)


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Comparative analysis of Mutual FundsS. No Chapter Page No

List of Tables : (i)List of Figures: (ii)

CHAPTER-1 1-5

INTRODUCTION OBJECTIVES OF THE STUDY NEED OF THE STUDY RESEARCH METHODOLOGY SCOPE OF THE STUDY LIMITATIONS

CHAPTER-2 6-28

REVIEW OF LITERATURE

CHAPTER-3 29-40

COMPANY PROFILE

CHAPTER-4 41-61

DATA ANALYSIS & INTERPRETATION

CHAPTER-5 62-64

FIDINGS & SUGGESTIONS

CHAPTER-6 65-66BIBLIOGRAPHY

ANNEXURE 67-68


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LIST OF TABLES

S.No Name of Table Page

No

1. Risk return grid 21

2. Rupee cost averaging 25

3. Company value position 39

4. Reliance growth fund 47

5. ING Visya Equity fund 49

6. FT India balanced fund 51

7. SBI Magnum MIP fund 53

8. HSBC Cash fund 55

9. HDFC Short term plan fund 57

10. All Mutual Funds Schemes 60


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LIST OF FIGURES

S.No Name of the figure Page No

1. Mutual fund asset percentage 08

2. working of mutual funds 093. Structure of Mutual Funds 09

4. Organization of mutual funds 11

5. Types of mutual fund schemes 12

6. Investment objective schemes 14

7. Types of risks 19

8. Process of company-I 33

9. Process of company-II 34

10. Company Service Offerings 40

11. Reliance Fund Growth 48

12. ING Visya Equity Fund Growth 50

13. FT India balanced growth Fund 52

14. SBI Magnum MIP Fund Growth 54

15. HSBC Fund growth 56

16. HDFC Short Term Plan Growth 58


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CHAPTER-1

Introduction

Objectives of study

Need of the study

Research & Methodology

Scope of the study

limitations


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INTRODUCTION OF MUTUAL FUNDS

Mutual Funds are professionally managed pool of money from a group of

investors. A Mutual fund manager invests your funds in securities including stocks and

bonds, Money Market instruments or some combination and decides the best time to buy

and sell. By pooling your resources with other investors in Mutual Funds, you can

diversify even a small investment over a wide spectrum.

With the emergence of the capital market at the center stage of the Indian

financial system from its marginal role a decade earlier, the Indian capital market also

witnessed during the same period a significant institutional development in the form of

diversified structure of Mutual Funds. A Mutual fund is a special type of investment

institution which acts as an investment conduit.

It pools the savings, particularly of the relatively small investors, and invests

them in a well-diversified portfolio of sound investment. As an investment intermediary,

it offers a variety of services/advantages to the relatively small investors who on their

own cannot successfully construct and manage investment portfolio mainly due to the

small size of their funds, lack of expertise and experience, and so on. These services

include the diversification of portfolio, expertise of the professional management,liquidity of investment, tax shelter, reduced risk and reduced cost.

Mutual fund is the most suitable investment mode for the common man as it

offers an opportunity to invest in a diversified, professionally managed portfolio at a

relatively low cost. Any body with an investible surplus of as little as a few thousand

rupees can invest in mutual funds. Each Mutual fund scheme has a defined investment

objective and strategy.

The most important trend in the Mutual Fund industry is the aggressiveexpansion of the foreign owned Mutual Fund companies and the decline of the

companies floated by nationalized banks and smaller private sector players.

Funds issue and redeem shares on demand at the fund's net asset value (NAV).

Mutual fund management fees typically range between 0.5% and 2% of assets per year,

exchange fees and other administrative charges also apply.


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According to SEBI - Mutual Fund is defined as - A fund established in the

form of a trust to raise moneys through the sale of units to the public or a section of the

public under one or more schemes for investing in securities, including money marketinstruments.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 the offer document.

NEED OF THE STUDY

The Study presents basic concept and trends in the Mutual fund Industry.

The Study enables a fresh investor to understand easily the various benefits

offered by Mutual Funds and their working in the Market.

The Study provides a clear idea on growth of Mutual Funds from past to the

present scenario and its scope in the future.

At the end of the study, one can conclude what type of investments would be

ideal with reference to the risk taking abilities of the investors and which type of

investments would suit their financial needs and goals.

OBJECTIVES OF THE STUDY

To project mutual fund as the productive avenue for investing activities.

To show the wide range of investment option available in Mutual Funds by

explaining its various schemes

To compare & analyze the schemes based on sharpes Ratio,Treynor Ratio, Beta

coefficient, Returns& show which scheme is best for investor based on His risk

profile.

To help the investor in selecting the scheme with the help of risk return factor.

RESEARCH METHODOLOGY

All information related to the topic needs to be carefully scrutinized to avoid the

risk of biased analysis. Having once identified which information is relevant and need to

be collected, we will have to define how this will be done.


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The Method employed in the investigation depends on the purpose and scope of the

study.

Primary Data:

Primary Data as expressed above was collected through RELIGARE Ltd in

course of interviewing through personal interaction.

Secondary Data:

Secondary data can be defined as - data collected by some one else for purpose

other than solving the problem being investigated. Secondary data is collected from

external sources which include information from published material of SEBI and some

of the information is collected online. The data sources also include various books,magazines, newspapers, websites etc. The organization profile is collected from the

Hyderabad Stock Exchange.

SCOPE OF THE STUDY

The Indian corporate sector is facing the challenge in commensuration of the

risk involved with the expected level of returns. In this scenario of fluctuating capital markets, the risk level never pays off with

the returns.

The based on the objective, the study has covered two aspects of the

business these are:

- Categorization of the various mutual fund schemes into three risk-return

categories on the basis of risk and returns associated with them

- Risk profiling of the clients so as to categorize them into high, moderate andlow risk taking category

Thus, in this scenario, we will help them in selecting the appropriate Mutual

Fund Schemes so as to minimize their risk and maximize returns as per their individual

needs.


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LIMITATIONS

The study is conducted in short period due to which the study may not giveaspects of MF schemes

The study is limited only to the analysis of different schemes & its suitability to

different investors according to their risk taking ability

The study is based on secondary data available from monthly fact sheets, web

sides, offer documents, magazines & news papers etc.as primary data was not

accessible

Study of all the scheme was not possible due to time constrain


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CHAPTER-2

REVIEW OF LITERATURE


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Comparative analysis of Mutual FundsA Mutual Fund is a financial intermediary which acts as an instrument of

investment. It collects the funds from different investors to a common pool of investible

funds and then invest these funds in a wide variety of investment opportunities in

diversified portfolios of securities such as Money Markets instrument, corporate and

government bonds and equity shares of joint stock companies.

The investment may be diversified to spread risk and to ensure good return to the

investors. The Mutual Funds employ professional, experts and investment consultants to

conduct investment analysis and then to select the portfolio of securities where the funds

are to be invested.

Each investor owns units, which represent a portion of the holdings of the fund. You can

make money from a MF in three ways:-

1. Income is earned from dividends on stocks and interest on bonds. A Fund paysout nearly all income it receives over the year to fund owners in the form of a

distribution.

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

gain. Most funds also pass on these gains to investors in the form of dividends.

3. If fund holdings increase in price but are not sold by the fund manager, the

funds shares increase in price. You can then sell your Mutual Fund units for a

profit. Funds will also usually give you a choice either to receive a cheque fordividends or to re-invest the same and get more units.

GROWTH AND HISTORY OF MUTUAL FUNDS

The First investment trust (now called Mutual Fund) began in the Netherlands in

the early 1800s. The first in the U.S. was the New York Stock Trust, which started in

1889. Since Boston was the economic center of the nation until the turn of the century,

the majority of funds started thereFidelity, Pioneer and Putnum Fund, to name a few.

A Fund that was comprised of both stocks and bonds (the Wellington Fund) started in

1928 and is still part of Vanguard. As the 20's crashed to a close, there were 10 Mutual

Funds in the nation.

F d ti f th M t l F d i I di l id b th li t i 1963


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Comparative analysis of Mutual Fundsprovide an opportunity for the middle and lower income groups to acquire

property in the form of share. Thus UTI came out with the mission of catering to the

needs of individuals investors whose means are small, with its maiden fund, an open

ended fund in 1964.

Distribution of Worldwide Mutual Fund Assets by Region, 2008

(Percentage of Total Assets)

Figure 2.1

At present, there are 20 stock exchanges recognized under the Securities

Contracts (Regulation) Act, 1956. These recognized stock exchanges mobilize and

direct the flow of savings of the general public into productive channels of investment.) .

According the latest statistics the market capitalization (assets) of Mutual

Funds in India is amounting to

Rs. 3, 00,000 Crores.


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Figure 2.2

STRUCTURE AND CONSTITUENTS OF FUND

SPONSOR

Establishes the MUTUAL FUND

Need to have sound financial track record.

Appoints TRUSTEES.

Appoints Asset Management Company.

Must contribute 40% of the net worth of the AMC. Sometimes this power is given by the sponsor to the trustees through the trust

deed.

At least 50% of directors on the board of Asset Management Company should be

independent of the sponsor.

MUTUAL

FUND

Sponsor Trustee AMC Custodian


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Comparative analysis of Mutual Funds Asset Management Company shall not deal with any broker or firm associated

with sponsor beyond 5% of daily gross business of the Mutual Fund.

All securities transactions of the Asset Management Company with its associates

should be disclosed.

TRUSTEE

Manages the Mutual Fund and look after the operation of the appointed AMC.

The investments are held by the Trustees, in a fiduciary responsibility.

Trustees approve each Mutual Fund Scheme floated by AMC.

Furnish report to SEBI on half yearly basis on AMC and Fund Functioning.

ASSET MANAGEMENT COMPANY

AMC acts as investment manager of the trust under the board supervision and

direction of the trustees.

AMC floats the different Mutual Fund schemes.

Submits report to the Trustees on quarterly basis, mentioning activity and

compliance factor.

AMC is responsible to the trustees.

AMC fees have a ceiling, decided by SEBI.

Should have a net worth of at least Rs.10 crores at all the times.

CUSTODIAN

Appointed by board of trustees for safekeeping of securities.

Its an entity independent of sponsors.

SEBI regulates the securities market in India. According to SEBI every Mutual Fund

require that at least two thirds of the directors of trustee company or board of trustees

must be independent i.e. they should not be associated with the sponsors. Also, 50% of

the directors of AMC must be independent. All Mutual Fund are required to be

registered with SEBI before they launch any Scheme.


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Comparative analysis of Mutual FundsORGANISATION OF MUTUAL FUND

Figure 2.4

CHARACTERISTICS OF MUTUAL FUNDS

A Mutual Fund actually belongs to the investors who have pooled their funds.

The ownership of the Mutual Fund is in the hands of the investors.

Mutual funds are trusts or registered associations managed by investment

professionals and other service providers, who earn a fee for their services from the

fund.

The pools of the funds are invested in a portfolio of marketable investments

(Shares and Securities). The value of the portfolio is updated everyday. Mutual funds collect money from small investors and in return, they will issue a

certificate in units.

The investors share in the fund is denoted by UNITS". The value of the units

changes with the change in the portfolios value every day.

The profits of investments will be distributed to the unit holders. The unit

holders can sell their units in the open market at Net Asset Value (NAV).

NET ASSET VALUE (NAV)Mutual Funds invest the money collected from the investors in securities markets. In

simple words, Net Asset Value is the market value of the securities scheme also varies

on day to day basis. The NAV per unit is the market value of securities of a scheme

divided by the total number of units of the scheme on any particular date. The

performance of a particular scheme of a Mutual Fund is denoted by Net Asset

Value.


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Comparative analysis of Mutual FundsFor example; if the market value of securities of a MF Scheme is Rs. 200 lakhs and the

Mutual Fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per

unit of the fund is Rs. 20. NAV is required to be

disclosed by the MF on a regular basis daily or weekly depending on the type of

scheme.

NAV = Market value of the funds investments + Receivables + Accrued Income

Liabilities Accrued Expenses

Number of Outstanding units

SCHEMES OF MUTUAL FUNDS

Mutual fund schemes are usually open-ended (Perpetually open for investors and

redemption) or close-ended (with a fixed term). A Mutual Fund scheme issues units that

are normally priced at Rs.10/- during the initial offer. The number of units you own

against the total number of units issued by a Mutual Fund scheme determines your

share in the profits or losses in the scheme.

TYPES OF MUTUAL FUND SCHEMES

The Mutual Funds can be classified under the following types:

ACCORDING TO STRUCTURE

STRUCTURE

OPEN-ENDED

SCHEME

CLOSED-ENDED

SCHEME

INTERVAL

SCHEME


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Comparative analysis of Mutual FundsOPEN - ENDED SCHEME

An open-ended scheme is a scheme in which an investor can buy and sell units

on a daily basis. The scheme has a perpetual existence and flexible, ever changing

corpus. Open-Ended schemes do not have a fixed maturity period. The investors are

free to buy and sell any number of units, at any point of time, at prices that are linked to

the NAV of the units.

In these schemes the investor can invest and disinvest any amount, any time after

a short initial lock in period. This scheme gives investors with instant liquidity and

fund announces sale and repurchase price from time to time. The units can be bought

from and sold to any Mutual Fund.

Advantages of Open-ended funds over Close-ended funds

Any time Entry Option.

This provides ready liquidity to the investors and avoids reliance on transfer

deeds, signature verifications and bad deliveries.

Allows to enter the fund at any time and even to invest at regular intervals.

Any time Exit Option

CLOSE ENDED SCHEME

A Close-ended scheme has a stipulated maturity period. E.g. 5-7 years. A Close-ended scheme is one in which the subscription period for the Mutual Fund remains open

only for a specific period, called the redemption period. At the end of this period, the

entire corpus is disinvested and the proceeds distributed to unit holders. After final

distribution the scheme ceases to exist. Such schemes can be rolled over by approval of

unit holders.

Reasons for fluctuations in NAV

Investors doubts about the abilities of the funds management. Lack of sales effort (Brokers earn less commission on closed end schemes than

on open ended schemes).

Riskiness of the fund.

Lack of marketability of the funds units.


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INTERVAL SCHEMES

Interval schemes are those that combine both the features of both open-ended and

close-ended schemes. The units may be traded on the stock exchange or may be open for

sale redemption during during predetermined intervals at NAV related prices.

ACCORDING TO INVESTMENT OBJECTIVE

ADVANTAGES OF MUTUAL FUNDS

The key advantages of both open and close-end Mutual Funds is that they put

professional managers with experience and access to sophisticated financial research to

work for you this, and other wide range of key benefits are as follows :-

INVESTMENT

OBJECTIVE

EQUITY SCHEME

DEBT OR BOND SCHEME

BALANCED SCHEME

MONEY MARKETSCHEME

GROWTH & INCOME

FUND

OTHER SCHEMES


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1) Professional Management

Experienced portfolio managers carefully select a funds holdings according to

the funds seated investment objective. The portfolio management team

continuously monitors and evaluates the funds holdings to help make sure it keeps

pace with changing market conditions. The team decides when to buy and sell

securities. There is a fee associated with this professional management.

2) Diversification

A Single diversified Mutual Fund may invest in dozens even hundreds of

different holdings. This approach may reduce the impact on your return if any one

investment held by the fund declines. Diversification spreads your assets among

different types of holdings and may be one of the best ways to protect yourself amidthe complexity and uncertainty of the financial markets.

3) Compounding

In a Mutual Fund, you may choose to reinvest your earnings automatically to buy

more shares. When you reinvest, not only do you have the potential to earn money

on your initial investment, you may also have the opportunity to earn money on the

dividends and capital gains you accumulate. Compounding may increase the impactof what you contribute and can help your money grow faster. And the longer you

invest, the greater the potential growth.

4) Systematic Investing

You can invest in most mutual funds automatically through regular payments

directly from your bank account; you can start building a long-term investment

program.

With systematic investing you invest a fixed amount of money at regular

intervals regardless of market conditions, helping out market fluctuations.


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Comparative analysis of Mutual FundsWith most Mutual Funds, buying and selling shares, changing distribution

options, and obtaining information can be accomplished conveniently by telephone,

by mail, or online. Although a funds shareholder is relieved of the day-to-day tasks

involved in researching, buying and selling securities, an investor will still need to

evaluate a Mutual Fund based on investment goals and risk tolerance before making

a purchase decision. Investors should always read the prospectus carefully before

investing in any Mutual Fund.

6) Buying Power

When you invest in a mutual fund, you join the other investors in a pool of

investment money. The result is that you have a partial stakein each company the

fund holds for a relatively small amount of principal invested, while potentially

offsetting some of the risk associated with holding individual securities.

7) Choice

There is an incredible array of mutual funds more than 10,000 available to

meet your specific Investment objective. Funds have different investment objectives

and degrees of investment risk often indicated through asset classes and sub-

classes, such as money market funds, fixed income funds, balanced funds, growth

and income funds, growth funds and aggressive growth funds.

8) Liquidity

Mutual fund shares are liquid and orders to buy or sell are placed during markethours. However, orders are not executed until the close of business when the NAV

(Net Asset Value) of the fund can be determined. Fees or commissions may or may

not be applicable. Fees and commissions are determined by the specific fund and the

Institution that executes the order.

9) Transparency

You get regular information on the value of your investments in addition to

disclosure on the specific investments made by your scheme, the proportion invested

in each class of assets and the fund managers investment strategy and outlook.


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Comparative analysis of Mutual Funds1) Over Diversification

Diversification is usually a good thing because it reduces risk, but Mutual

Funds sometimes make small investments in so many securities that they become

over diversified. In other words, the Mutual Funds holdings in each security may be

so small that it is difficult to realize

substantial return from any of those holdings, which in turn means that the overall

return for each investor is small.

2) Unused Cash

Your cash may occasionally serve as liquidity insurance rather than work for

you as an investment. The constant availability of shares is certainly convenient for

investors in a mutual fund, but it can also operate as a disadvantage. A Mutual Fund

manager must always prepare for the possibility than an investor will cash in his or

her shares.As a result Mutual Funds must maintain a ready cash supply at all times.

3) Fluctuating Returns

Mutual funds are like many other investments without a guaranteed return.

There is always the possibility that the value of your mutual fund will depreciate.

Unlike fixed-income products, such as Bonds and Treasury Bills, mutual funds

experience price fluctuations along with stocks that make up the fund.

4) Costs Despite Negative ReturnsInvestors must pay sales charges, annual fees, service charges and other

expenses regardless of how the fund performs. In addition, depending on the timing

of their investment, investors may also have to pay taxes on any capital gains

distribution they receive even if the fund went on to perform poorly after they

bought shares.

5) Misleading Advertisements The misleading advertisements of different funds can

guide investors down the wrong path. Some funds may be incorrectly labeled as growth

funds, while others are classified as small-cap or income.


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Comparative analysis of Mutual FundsNot offer investors the opportunity to compare the P/E ratio, sales growth,

earnings share, etc. A Mutual Funds Net Asset Value gives the investors the total

value of the Another limitation of mutual fund is the difficulty they pose for

investors interested in researching and evaluating the different funds. Unlike stocks,

mutual funds do funds portfolio less liabilities.

7) Poor Transparency

Technology used for servicing of investors and for portfolio management and

investment decision making is poor and general efficiency and timeliness are lacking

as a result of antiquated methods of operation. Telex, telephone and communication

systems are poor and antiquated.

RISK ASSOCIATED WITH MUTUAL FUND INVESTMENT

The Principal that the greater risk you take, the greater the potential reward.

Typically, risk is defined as short term price variability. But on a long term basis,

risk is the possibility that your accumulated real capital will be insufficient to meet your

financial goals. And if you want to reach your financial goals, you must start with an

honest.

At the cornerstone or investing is the basic appraisal of your own personalcomfort zone with regard to risk. Individual tolerance for risk varies, creating a distinct

investment personality for each investor. Some investors can accept short-term

volatility with ease, others with near panic. So whether you consider you investment

temperament to be conservative, moderate or aggressive, you need to focus on how

comfortable or uncomfortable you will be as the value of your investment moves up or

down

TYPES OF RISK

All investments involve some form of risk. Even an insured band account is

subject to the possibility that inflation will rise faster than your earnings, leaving you

with less real purchasing power than when you started (Rs.1000 gets you less than it got

your father when he was your age).


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Figure 2.8

1) Market Risk: At times the prices or yields of the all the securities in a particular

market rise or fall due to broad outside influences. When this happens, the stock prices

of both an outstanding, highly profitable company and a fledging corporation may beaffected. This change in price is due to Market Risk.

2) Inflation R isk: Some times referred to as loss of purchasing power. Whenever

TYPE OF

RISKS

Market

Inflation

Credit

Interest Rate

Employees

Exchange Rate

Investment

Government Policies


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Comparative analysis of Mutual Fundsthat youll actually be able to buy less, not more. Inflation risk also occurs when

prices rise faster than your return.

3) Credit Risk: In short, how stable is the company or entity to which you lend

your money when you invest. How certain are you that it will be able to pay the

interest you are promised, or repay your principal when the investment matures.

4) Interest Risk: Changing interest rates affect both equities and bonds in many

ways. Investors are minded that predicting which way rates Effect of loss rev

professionals and inability to adapt:

An industries key asset is often the personnel who run the business i.e.

intellectual properties or the key employees of the respective companies. Given the

ever-changing complexion of few industries and the high obsolescence levels,

availability of qualified, trained and motivated personnel is very critical for the

success of industries in few sectors. It is, therefore, necessary to attract keypersonnel and also to retain them to meet the changing environment and challenges

the sector offers. Failure or inability to attract/retain such qualified key personnel

may impact the prospects of the companies in the particular sector in which fund

invests.

5) Exchange risk: A number of companies generate revenues in foreign currencies

and may have investments or expenses also denominated in

foreign currencies. Changes in exchange rates may, therefore, have a positive negativeimpact on companies which in turn would have an effect on the investment of the

fund.

6). Changes in government policy: Changes in government policy especially in regard

to the tax benefits may impact business prospects of the companies leading to an

impact on the investments made by the fund.

RISK RETURN GRID


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Comparative analysis of Mutual FundsRISK

TOLERANCE/

RETURN

EXPECTED

FOCUSSUITABLE

PRODUCTS

BENEFITS

OFFERED BY

MFS

Low DebtBank/company FD,

Debt based Funds

Liquidity, Better

Post-Tax return

Medium

Partially Debt,

Partially

Equity

Balanced Funds, some

Diversified Equity

Funds are some debt

Funds, Mix of share

and Fixed Deposits

Liquidity, Better

Post-Tax returns,

Better Management,

Diversification

High Equity

Capital Market, Equity

Funds (Diversified as

well as Sector)

Diversification,

Expertise in stock

picking, Liquidity,

Tax free dividends

COST INVOLVED IN MUTUAL FUNDS

An investor must know that there are certain costs can be classified into 2 broad

categories:

Operating expenses - Which are paid out of the funds earnings

Sales charges - That are directly deducted from your investment. It is not

compulsory that every mutual fund levy sales charges but they certainly have operating

expenses. No doubt they influence returns on investment in a fund.

Operating expenses

These referred to cost incurred to operate a mutual fund. Advisory fees paid to

investment mangers, Audit fees to chartered accountant, custodial fees, register and

transfer agent fees, trustee fee, agent commission. Operating expenses also known as

expenses ratio which is annual expenses expressed as a percentage of the funds averagedaily net assets mutual funds.

The break up of these expenses is required to be reported in the schemes offerdocument (or) prospectus


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Comparative analysis of Mutual FundsExpenses Ratio = -----------------------------

Average Net Assets

For instant, if funds Rs. 100 Crores and expenses 20 lakhs. Then expenses ratio is 2%

expenses ratio is available in the offer document and from historical per unit statistics

included in the financial results of the fund which are published by annually. UN audited

for the half year ending Sep30 and audited for the physically year end in March 30.

Depending upon schemes and net asset, operating expenses are determined by

limits mandated by SEBI Mutual fund regulation Act. Any excess over specified limits

as to be born by Asset Management Company, the trustees or sponsors.

Sales charges :

These are known commonly sales loads; these are charged directly to investor.Sales loads are used by mutual fund for the payment of agents commission, distribution

and marketing expensed. These charges have not effect on the performance of the

scheme. Sales loads are usually express in percentage and or of two types front-end and

back end.

Front-end load: It is a one time fixed fee paid by an investor when buying

a mutual fund scheme. It determines public offer price which intern decideshow much of your initial investment actually get invested the standard

practice of arriving a public offer price is as follows:

Net Asset Value

Public offer price = ---------------------------

(1- front end load)

Let us assume, an investor invests Rs.10, 000 in a scheme that charges a 2%front end

load at a NAV per unit RS. 10 using the formula public offer price =10/ (1-0.02) is Rs.10.20. So only 980 units are allotted to the investor

Amount invested


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Comparative analysis of Mutual Funds10,000/10..20= 980 units at a NAV of Rs. 10

This means units worth 9800 are allotted to him on an initial investment of Rs. 10,000.

Front end loads tent to decrease as initial investment amount increase.

Back end load :

May be a fixed fee redemption (or) a contingent deferred sales charges-a

redemption load continues so long as the redeeming or selling of the units of the units of

a fund does not take place in the event of back end load is applied. The redemption price

is arriving at using following formula.

Net Asset Value

Redemption price = ------------------------------

(1+ back end load)

Let us assume an investor redeems units valued at Rs. 10,000 in a scheme that

charges a 2% back end load at a NAV per unit of Rs. 10. Using the formula redemption

price 10/ (1+0.02) = Rs. 9.8

So, what the investor gets in hand is 9800(908*1000)

Contingent Deferred Sales Charges (CDSC) :

Contingent deferred sales charges are a structured back end load. It is paid when

the units are redeemed during the initial years of ownership. It is for a pre determinedperiod only and reduced over the time youre invested for a fund. The longer the

investor remains in fund the lower the CDSC.

The SEBI (mutual fund Regulation 1996) stipulate that a CDSC may be charge

only for first 4 years after purchase of units and also stipulate the maximum CDSC that

can we charge every year. The SEBI Mutual funds Regulation 1996 do not allow either

the front end load or back end load to any combination is higher that 7%.

Transaction cost:

Some funds may also impose a switch over fee which is a charge on transfer of

investment from one scheme to another with in a same mutual fund family and also to


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It is an investment vehicle, where you need to deposit a fixed amount at regular

intervals (monthly, quarterly, etc.) in a MF scheme; just like you do in a recurring

deposit account with a bank or the post office.

Regular Investing is not easy. Owing to lack of time, most people invest

sporadically. The result? The returns are rarely optimal. However, there is a foolproof

way of investing a fixed amount of money at regular intervals: Chola Mutual Funds

Systematic Investment Plan (SIP). SIP uses the concept of rupee cost averaging,

ensuring investors buy more when prices are low; and fewer units when prices are high.

Benefits of Systematic Investment Plans

Discipline Saving:

Inculcating discipline in your investment has been easier. Your investment is

done on a regular basis by the mutual fund without any intervention required by you.

The best part is that you will not feel the pain of having to save since the money will

move from your bank account automatically.

Rupee Cost Averaging:

The SIP helps you take advantage of the fluctuation in the stocks market by rupee

cost averaging. The investor buys more units when the prices are low and fewer

units cost. Assume you are investing Rs.1000/- each for next four months.

Month Amount Invested Purchase Price No of Units Purchased


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Comparative analysis of Mutual Funds2 1000 09 111.11

3 1000 10 100

4 1000 11 90.9

Total Investment = Rs. 4000; No of units purchased is 402.21. The average cost per

units work out to be Rs9.95.

As illustrated, over time you have a lower average cost per unit. By investing a

fixed amount of money at regular intervals, you as an investor stand to gain reasonable

returns and create significantly wealth-over time.

Lower Cost of Investing:

Getting into SIP program does not required large investment amounts at regular

intervals. Even as small as Rs. 1000 can be invested at regular intervals

Builds Investment Kitty:

You have to give Post-Dated cheque (PDCs) to the mutual fund for deposit on

specific dates, for the amount you want to invest. These cheques are presented to your

bank account on these dates and the funds are withdrawn from your account for

investment in the mutual fund scheme at the prevailing NAV. Other than making the

initial investment and issuing the cheques at the beginning, no further efforts arerequired from you.

Overcoming market volatility:

SIPs help you avoid missing market falls because of lack of time to track the

market. You dont have the responsibility of actively monitoring market movement to be

able to enter during falls.

Market timing doesnt work:

Trying to time the markets, i.e. entering when the markets fall and exiting when

the markets rise, usually does not work. It is best to take the systematic investment

approach to stay above market


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Comparative analysis of Mutual FundsThe units can be redeemed (i.e. sold back to the mutual fund) or switched-out

subject to completion of lock in period, on every business day at the redemption price.

The redemption/switch out request can be made by way of a written request, on a pre

printed form or by using the relevant tear off section of the transaction slip enclosed

with the account statement, which should be submitted at/may be sent by mail to any of

the ISCs.

Redemption price:

Redemption price will be calculated on the basis of the loads of different

plans/options. The redemption price per unit will be calculated using the following

formula:

Redemption Price = Application NAV * (1 exit Load, if any)

Example for calculation of redemption Price

If the application NAV is Rs.10.00; Exit/redemption load is 2%, then the redemption

price will be calculated as follows:

= Rs.10.00 *(1-0.02)

= Rs.10.00 * (0.98)

= Rs.9.80ASSOCIATION OF MUTUAL FUNDS OF INDIA

With the increase in Mutual Fund players in India, a need for mutual fund

association in India was generated to function as a non-profit organization. Association

of Mutual Funds in India (AMFI) was incorporated on 22nd August 1995.

AMFI is an APEX body of all Asset Management Companies (AMC), which has

been registered with SEBI. Till date all the AMCs are that have launched mutual fund

schemes are its members. It functions under the supervision and guidelines of its Board

of Directors.

A i ti f M t l F d f I di h b ht d th I di M t l F d


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Comparative analysis of Mutual Fundsmaintaining standards. It follows the principle of both protecting and promoting the

interests of mutual funds as well as their unit holders.

Objectives

The AMFI works with 30 registered AMCs of the country. It has certain defined

objectives, which juxtaposes the guidelines of its Board of Directors. The objectives are

as follows:

This mutual fund association of India maintains high professional and ethical

standards in all areas of operation of the industry.

It also recommends and promotes the top class business practices and code of

conduct which is followed by members and related people engaged in the activities

of MF and asset management. The agencies who are by any means connected orinvolved in the field of capital markets and financial services also involved in this

code of conduct of the association.

AMFI interacts with SEBI and works according to SEBIs guidelines in the

mutual fund industry.

AMFI do represent the Government of India, the Reserve Bank of India and

other related bodies on matters relating to the Mutual Fund Industry.

It develops a term of well-qualified and trained Agent distributors. It implementsa programmed of training and certification for all intermediaries and other engaged

in the mutual fund industry.

AMFI undertakes all India awareness programmed for investors in order to

promote proper understanding of the concept and working of mutual funds.

BEFORE INVESTING IN MUTUAL FUNDS

1) First choose a scheme (equity/debt/balanced) according to your returns/risk

profile.2) Select the scheme which is giving income according to your requirements.


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Comparative analysis of Mutual Funds3) Select the fund which gives maximum returns and high security and liquidity

and low risk.

4) Then compare similar schemed offered by various MFs and their track

record. Examine the track record of the mutual fund and its sponsors.

5) Study the track record of the fund manager.

6) Examine the investment strategy of the scheme.

7) Check the load (entry/exit).

8) Check out on special facilities like switching options, account statements,

sale/repurchases policy etc.

9) Do not buy in to new schemes that are deceptively being offered at par.

RIGHTS AND OBLIGATIONS OF INVESTORS

Right to proportionate beneficial ownership.

Right to timely service.Right to information.Right to approve changes in fundamental attributes.

Rights to wind up a scheme.

Right to terminate the AMC.

LEGAL LIMITATIONS TO INVESTORS RIGHTS

1) Investors cannot sue the trust.

2) Investors can initiate legal proceedings against the trustees.

3) Sponsors of mutual funds have no obligations to meet the shortfall in non-assured schemes.

4) Only if the OD has specifically provided such guarantee by a named sponsor,

the investors have the right to sue the sponsor.

5) Prospective investors cannot sue the trust/the AMC or any other

constituent.Companies act cannot protect investors as fund investors are neither

share holders in the

AMC nor depositors.


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CHAPTER-3

COMPANY PROFILE

COMPANY PROFILE:

Religare is one of the leading integrated financial services institutions of India,

backed by a blue chip promoter pedigree and a proven track record. Religares

businesses are broadly clubbed across 3 key verticals, the retail, institutional and the

l h i di d id b f li d h l h


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Comparative analysis of Mutual FundsThe company offers a diverse bouquet of services and through its consolidated

network reach, Religare is present in more than 1300 locations across more than 400

cities and towns.

As part of its recent initiatives the group has also started expanding globally. Religare

has also successfully partnered with Aegon, one of the global leaders to launch Life

Insurance, Mutual Fund and Pension products in India and with Macquarie Company,

for a wealth management joint venture.

The vision of the company is to build Religare as a globally trusted brand in the

financial services domain and present it as the Investment Gateway of India. All

employees of the group relentlessly strive to provide financial care, driven by the core

values of diligence and transparency

Mission - To provide financial care driven by the core values of diligence &transparency

Brand Essence The company Core essence is diligence and ethical and dynamic

processes for wealth creation drive it

Brand Identity

Name

Religare is a Latin word that translates as 'to bind together'. This name has been

chosen to reflect the integrated nature of the financial services the company offers. The

name is intended to unite and bring together the phenomenon of money and wealth to

co-exist and serve the interest of individuals and institutions, alike.

Symbol

The Religare name is paired with the symbol of a four-leaf clover. The four-leaf

clover is used to define the rare quality of good fortune that is the aim of every

financial plan. It has traditionally been considered good fortune to find a single

four leaf clover considering that statistically one may need to search throughover 10,000 three-leaf clovers to even find one four leaf clover.


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Comparative analysis of Mutual Funds The first leaf of the clover represents Hope. The aspirations to succeed. The

dream of becoming. Of new possibilities. It is the beginning of every step and

the foundations on which a person reaches for the stars.

The second leaf of the clover represents Trust. The ability to place ones own

faith in another. To have a relationship as partners in a team. To accomplish a

given goal with the balance that brings satisfaction to all not in the binding but in

the bond that is built.

The third leaf of the clover represents Care. The secret ingredient that is the

cement in every relationship.

The truth of feeling that underlines sincerity and thetriumph of diligence in every

aspect. From it springs true warmth of service and the ability to adapt to evolving

environments with consideration to all.

The fourth and final leaf of the clover represents Good Fortune. Signifying that

rare ability to meld opportunity and planning with circumstance to generate those

often looked for remunerative moments of success.

Hope. Trust. Care. Good fortune. All elements perfectly combine in the

emblematic and rare, four-leaf clover to visually symbolize the values that bind

together and form the core of the Religare vision.

RETAIL SPECTRUM

Equity Trading

Trading in Equities with Religare truly empowers you for your investment needs.

A highly process driven, diligent approach backed by powerful Research & Analytics

and one of the best in class dealing rooms ensures that you have a superlative


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Comparative analysis of Mutual FundsFurther, Religare also has one of the largest retail networks, with its presence in more

than 1,217 locations across more than 392 towns & cities. This means, you can walk

into any of these branches and connect toreligareshighly skilled and dedicated

relationship managers to get the best services. You could also choose to enjoy the

freedom to execute your own trades through Religares online mechanism

Commodities Trading

Religare Commodities Limited (RCL) was initiated to spearhead Exchange

based Commodity Trading. As a member of NCDEX, MCX and NMCE, RCL is a trade

facilitator providing the platform to trade in commodities.

Grounded in the Religare philosophy, highly skilled and dedicated professionals

strive to offer the client best investment solutions across the country.

Online Investment

Investing online will never be the same again withreligares360 degree portal

www.religareonline.comNow you can not just invest online in Equities, IPOs, Mutual

Funds, Commodities and much more but, also get TRADE REWARDS each time you

invest.

Personal Financial Services

Religare has recently entered into personal financial advisory services. It catersto the financial needs of individuals by advising them on various financial plans.

Religares Personal financial advisors, also called financial planners or financial

consultants, use their knowledge of investments, tax laws, and insurance to recommend

financial options to individuals in accordance with the individuals short-term and long-

term goals. Some of the issues that planners address are general investments, retirementand tax planning.
http://www.religareonline.com/http://www.religareonline.com/


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Comparative analysis of Mutual Funds Insurance - Life & Non - Life

Bonds

Funds

IPOs

Small Savings Instruments

PHILOSOPHY

Define Refine. Achieve..

At Religare The Company believes Our clients are people, not accounts hence

successful investment management relationship begins with a clear understanding of

each clients specific needs, concerns and long term objectives. Religares investment

philosophy applies a disciplined approach to building a customized strategy designed tomeet your individual financial goals and tolerance for risk.

PROCESS

The Religare Edge


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Comparative analysis of Mutual Funds Strong pedigree driven by diligent processes and ethical business

practices

Wide & varied platter of products & services to choose from

Our Process

WEALTH SPECTRUM

Wealth Management @ Religare

To provide investment advisory and execution services

To work hand in hand with clients to identify and analyze their long-term goals,

risk tolerance and existing asset base

To Utilize Religares full-suite platform with an open architecture along with a

fully focused client centric approach to offer customized solutions for clients

Supported by dedicated team of highly skilled and qualified wealth managers and

research professionals.

Critical Steps in Religares Client Centric Operating Process


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Comparative analysis of Mutual Funds Product Recommendations

Review & Rebalancing

International Advisory Fund Management Services (AFMS) - A new horizon

for international investments Religares wealth clients is an opportunity to invest

in international financial instruments (currently limited to the US). Equities,Mutual Funds and Debts are some the key instruments available and the clients

have the option to choose from various asset allocation modules.

Portfolio Management Service

Religare offers PMS to address varying investment preferences. As a focused

service, PMS pays attention to details, and portfolios are customized to suit the unique

requirements of investors.

Religare PMS currently extends five portfolio management schemes - Panther,

Tortoise, Elephant, Caterpillar and Leo. Each scheme is designed keeping in mind the

varying tastes, objectives and risk tolerance of Religares investors

Investment Philosophy

We believe that Religares investors are better served by a disciplined investment

approach, which combines an understanding of the goals and objectives of the investor

with a fine tuned strategy backed by research.

Stock specific selection procedure based on fundamental research for making

sound investment decisions.

Focus on minimizing investment risk by following rigorous valuation disciplines.

Capital preservation.

Selling discipline and use of Derivatives to control volatility.

Schemes


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Comparative analysis of Mutual FundsReturn investor with a strategy to invest across sectors and take advantage of various

market conditions.

Tortoise

The Tortoise portfolio aims to achieve growth in the portfolio value over a

period of time by way of careful and judicious investment in fundamentally sound

companies having good prospects. The scheme is suitable for the Medium Risk

Medium Return investor with a strategy to invest in companies, which have

consistency in earnings, growth and financial performance.

Elephant

The Elephant portfolio aims to generate steady returns over a longer period by

investing in Securities selected only from BSE 100 and NSE 100 index. This plan is

suitable for the Low Risk Low Return investor with a strategy to invest in blue chipcompanies, as these companies have steady performance and reduce liquidity risk in the

market.

Caterpillar

The Caterpillar portfolio aims to achieve capital appreciation over a long period

of time by investing in a diversified portfolio. This scheme is suitable for investors with

a high-risk appetite. The investment strategy would be to invest in scrips which are

poised to get a re-rating either because of change in business, potential fancy for a

particular sector in the coming years/months, business diversification leading to a better

operating performance, stocks in their early stages of an upturn or for those which are in

sectors currently ignored by the market.

Leo

Leo is aimed at retail customers and structured to provide medium to long-term capitalappreciation by investing in stocks across the market capitalization range. This scheme


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Comparative analysis of Mutual Fundsportfolio comprising selected investments from both Tortoise and Panther. Exposure to

Derivatives is taken within permissible regulatory limits.

The Religare Edge

We serve you with a diligent, transparent & process driven approach and ensure that

your money gets the care it deserves.

No experts, only expertise. PMS brought to you by Religare with its solid reputation of

an ethical and scientific approach to financial management. While The Company offer

you the services of a Dedicated Relationship Manager who is at your service 24x7, The

Company do not depend on individual expertise alone. For you, this means lower risk,

higher dependability and unhindered continuity. Moreover, you are not limited by a

particular individuals investment style.

No hidden profits. The company ensures that a part of the broking at ReligarePortfolio Management Services is through external broking houses. This means that

your portfolio is not churned needlessly. Using more broking firms gives us access to a

larger number of reports and analysis, enabling us to make better, more informed

decisions. Furthermore, your portfolio is customized to suit your investment objectives.

Daily disclosures. Religare Portfolio Management Services gives you daily

updates on your investment. You can pinpoint where your money is being invested,

24x7, instead of waiting till the end of the month to keep track.

No charge till you profit*.So sure are The company of religaresapproach to

Portfolio Management that The company do not charge you for Religares services, until

your investments start showing profit. With customized investment options Religare

Portfolio Management Services invites you to invest across five broad portfolios to suit

your investment needs

INSTITUTIONAL SPECTRUM

Institutional Broking Services


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Comparative analysis of Mutual Fundswould like to be seen as a one-stop investment gateway and knowledge repository for its

clients servicing their unique and sophisticated needs.The division is structured as a

separate SBU and is housed out of Mumbai, manned by a small yet fleet footed and

extremely skilled group of top-notch professionals drawn from the best in the industry.

The key highlights of Religares service platter are:

Highly skilled, dedicated dealing, research and sales teams

Dealing capabilities on the NSE, BSE and in the cash and derivatives segment

In-depth, detailed and insightful coverage of more than 60 stocks across diverse

sectors. The sectors covered are FMCG, Hotels, Media, Pharma,

Auto, Cement, Steel pipes, Logistics, Telecom, Construction and much more.

Companys Current clientele includes some major domestic mutual funds,

insurance companies, companies and FIIs We provide innovative, integrated and best-

fit solutions to Religares corporate customers. It is Religares continuous endeavor to

provide value enhancement through diverse financial solutions on an on-going basis,

through offerings like corporate debt, private equity, IPO, ECB, FCCB, GDR/ADR etc.

Religare's Investment Companying Division offers the following services:

Corporate Finance

It focus on finding partners for Religares clients, who not only help in adding

value, but also improve the future valuation of the organization. The company specialize

in structured financing and in providing advisory services related to financial planning,

modeling and advising on financial requirements.

Religares wide range of Corporate Finance solutions to Religares clients:

Placement of Debt


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Comparative analysis of Mutual Funds Securitization

Debt Swap & Loan Restructuring

Short Term Corporate Debt

Working Capital (Cash Credit & Short term Loan)

Capital Market Instruments

Overseas Acquisition

Merchant Companying

IPO/FPO/RIGHTS

Mergers & Acquisitions

Corporate Advisory Services

ADR/GDR/FCCB

Buy Back Of Shares

Value Proposition

Presence Pan India foot printStrong Domain

ExpertiseRich domain knowledge and Industry experts

Comprehensive Risk

Portfolio ManagementExpertise to meet all your Insurance needs

Flexibility Market understanding, proactive and customer centricStability Part of a US$ 1.4 Billion Ranbaxy GroupInfrastructure Human, technical, physical presence, CRMQuality Best business practices and highest quality service

Strategic PartnershipsAlliance with global and national players to get you the

best deals

Our Service Offerings


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Research Services

We at Religare believe in providing independent research for clients to make

investment decisions, with strict emphasis on self-regulation, avoiding possible conflictof interest in objectivity.

Varied research reports are prepared on different categories of Equities like

Fundamental research

Technical research

Daily reports

Intraday trading tech calls

Intraday Derivative call

Directional F&O calls

Structured products

Index Arbitrage

Arbitraging between Index (NIFTY) Futures and its constituents

(Underlying Stock Futures).


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CHAPTER-4

DATA ANALYSIS

AND

INTERPRETATION


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Comparative analysis of Mutual FundsTABULATION:

A Table is a systematic arrangement of statistical data in rows and columns.

Rows are horizontal arrangements whereas columns are vertical arrangements.

Tabulation is a systematic presentation of data in a form suitable for analysis and

interpretation.

PRESENTATION OF DATA:

The impression created by a picture has much greater impact than detailed

explanation. Statistical data can be effectively presented in the form of diagrams and

graphs. Graphs and Diagrams make complex data simple and easily understandable.

They help to compare related data and bring out subtle data with amazing clarity. The

diagrams used are as follows Fa cto rs A ffe cti ng NAV

The investors funds are deployed in a portfolio of securities by the fund

manger. The value of these investments keeps on changing as market price of the

securities change. And the market price changes because of the various factors which

have analyzed below so that the organization stays alert when such factors happen

again.

Calculation of NAV

Since investors are free to enter and exit the fund at any time, it is essential that

the market value of their investments is used to determine the price at which such

entry and exit will take place. The net assets represent the market value of assets,

which belong to the investors, on a given date.

Net Assets are calculated as:

Market value of investments + Current assets and other assets + accrued

incomecurrent liabilities and otherliabilities accrued expenses

Net Asset Value or NAV of a mutual fund is the value of one unit of

investment in the fund, in net asset terms. It is computed by dividing the net assets ofthe fund by the number of units that are outstanding in the books of the fund.


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Comparative analysis of Mutual FundsUnits Outstanding

For example, consider a mutual fund that collects Rs.10crore by issuing units

of Rs.10 each. Therefore when the mutual fund begins operations, it would

have1,00,00,000 units of Rs.10 each. Let us assume that the portfolios in which

these funds are invested are as follows:

Equity Shares Rs. 4,50,00,000

Government Bonds Rs. 3,00,00,000

Corporate Bonds Rs. 1,50,00,000

Money Market instruments Rs. 1,00,00,000

Total Assts Rs. 10,00,00,000

After 30 days, the fund is scheduled to open for fresh sales as well as

repurchases. The investors, who come into the fund, will buy new units at a price

that represents the value of the underlying portfolio. Similarly, investors who redeem

their units will do so at a price that reflects the current value of the portfolio in which

they originally invested.

Therefore the investment portfolio will have to be valued again, to ascertain

what its current value is. In the interim, the mutual fund would have incurred

expenses, earned incomes, which also will have to be reflected in the price per unit.

We call these charges as accrued expenses. Mutual funds have internal accounting policies that that enable the computation of these accruals. Let us assume that the

status of the investments at the end of the 30 days is as follows:

Equity shares Rs. 6,50,00,000

Government Bonds Rs. 2,80,00,000

Corporate Bonds Rs. 1,20,00,000

Money Market instruments Rs. 1,00,00,000Total assets Rs. 11,50,00,00

The value of the investments has changed with the change in market prices.


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Comparative analysis of Mutual FundsRs. 1,35,000 respectively. Let us also assume that the level of current assets and

current liabilities were Rs. 4,00,000 and Rs. 3,00,000 respectively.

The net assets of the fund can be computed as

follows:

Market-to-Market value of the investments:11,50,00,000

Plus current assets 4,00,000

Plus accrued income 1,00,000

11,55,00,000

Less current liabilities 3,00,000

Less accrued expenses 1,35,00011,50,65,000

Net assets of the fund 11,50,65,000

Since the number of units is 1,00,00,000, the net asset value on this date will

be Rs.11.5065.The price at which new investors can buy the units, and existing

investors can redeem their units will be based on this number.

A fund's NAV may change every day to reflect changes in the value of its

portfolio holdings, which in turn respond to changing market conditions.Further, many

funds are open-ended, meaning they allow for daily purchases and redemptions,


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Significant Factors Affecting NAV

Macroeconomic Factor

Following are the macroeconomic factors that affect the market price of the

securities constituting the portfolio of the mutual fund scheme: BenchmarkIndex

The performance of any mutual fund scheme is measured relative to market

indices. Hence, changes in the market index bear significance.

This is especially true for portfolios that have a high degree of correlation

with the benchmark. Index is "a statistical measure of the changes in a portfolio of

stocks representing a portion of the overall market."Ideally, a change in the price ofan index would represent an exactly proportional change in the stocks included in the

index. Index reflects the performance of the market. Index reflects both the

Macroeconomic factors and the micro economic factors that affect the performance

of the NAV.Government Policies

Government Policies like monetary, credit, fiscal etc do have an effect on thecapital

market and in turn the NAV of the mutual fund scheme.

Microeconomic Factors

There are various microeconomic factors that also affect the valuation of the NAV of the

mutual fund scheme these have been explainedbelow:

1. Sale and purchase of securities

2. Sale and repurchase of units

3. Valuation of all investment securities held

4. Accrued income and liabilities

5. Portfolio Turnover

6. Dividend

Sale And Purchase OfSecurities

Fund houses buy securities out of the money invested by people. There might be

a rise or fall in the price of these securities due to their sale and purchase and

accordingly the value of the NAV will be affected.


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Sale And Repurchase OfUnits

If the investors redeem their units, the fund managers will also have to sell the

securities to pay the amount to the investors. It is possible that they have to sell thesecurities at a lower price. So the NAV of the scheme will also fall

Valuation Of All Investment SecuritiesHeld

If the securities held by the mutual fund are traded on stock exchanges

regularly, the process of marking to market is simple. The market price of the security is

used to value the security. The market price is used to value the security. The last quoted

closing price on the stock exchange is principally traded is used for valuation. A thinly

traded securitys market price may not be representative of its underlying value, as it is

not valued frequently in the market. Mutual funds have to use fair valuation methodology

for such securities.

Accrued Income And Liabilities

Accrued income includes any income due to the fund but not received at the

time of valuation (for example, dividend announced by a company yet to be received).

Accrued Liabilities include expenses payable by the fund, for example custodian fees or

even the management fees payable to the AMC. These income and liabilities items have

to be accrued and included in the computation of the NAV.

PortfolioTurnover

The turnover rate measures how often the investment manager changes the

total holdings in a funds portfolio. Higher the Turnover rate more active is the fund and

can capitalize on the short-term profits. Higher Turnover rate results in higher brokerage

and other fees. It describes the timing of the market to maximize the return.

DividendDividend is issued as a percentage of Face value. The NAV of the

scheme varies with changes in the value of the portfolio, and the impact of the

proportion of income earned by the fund, to what is actually distributed as dividend. Issue

of dividend lowers the NAV as the net assets of the fund are lowered.


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30-Mar-09

28-Feb-09

31-Jan-09

29-Dec-08

29-Sep-08

31-Jul-08

30-Jun-08

31-Mar-08

30-Dec-07

30-Sep-07

30-Jun-07

31-Mar-07

31-Dec-06

30-Sep-06

30-Jun-06

31-Mar-06

30-Dec-05

Average


COMPARA TI VE ANALYSI S OF MUTUAL FU ND SCHEMES

Rel ia nce Grow th Fund Growth

Treasury Bills Returns Sensex Returns Fund Returns

Date

Interest

Rate % Returns

Index

Values % Returns NAV % Returns

265.38 -0.4576144

7.8382 1.814639 14091 8.9104 266.6 -5.73842945

7.6985 6.400475 12938 3.8835 282.83 3.695692026

7.2354 4.827446 12454 -9.665 272.75 13.60796401

6.9022 -1.311143 13787 6.3649 240.08 21.26477422

6.9939 -0.814034 12962 -5.362 197.98 -2.95098039

7.0513 9.778615 13696 5.6659 204 -13.1656238

6.4232 4.036281 12962 50.118 234.93 21.45478985

6.174 6.610029 8634.5 -8.124 193.43 8.54657688

5.7912 2.987623 9397.9 6.9306 178.2 29.45877225

5.6232 -0.592218 8788.8 11.359 137.65 12.66164675

5.6567 -1.367021 7892.3 41.348 122.18 6.838055264

5.7351 6.717404 5583.6 -15.43 114.36 26.50442478

5.3741 15.93856 6602.7 37.686 90.4 27.21643681

4.6353 4.431578 4795.5 -14.22 71.06 -7.61830473

4.4386 3.033961 5590.6 25.54 76.92 -3.89805097

4.3079 4453.2 80.04

4.166146 9.666588127 8.588758068

Std. Div. 13.68853Beta 0.133264Al ha 7.300549

Shar e Ratio 0.323088TreynorRatio 33.18683

47


56/78


INTERPRETATION:

In 31 mar 08 the highest SENSEX return percentage is 50.118, and the lowestSENSEX return is -15.43 in 31 Dec 06.

In 30 Dec 07 the highest fund return percentage is 29.45, and the lowest fundreturn is -13.16 in 30 Jun 08.

48


57/78


49


58/78

30-Mar-09

28-Feb-09

31-Jan-09

29-Dec-0829-Sep-08

31-Jul-08

30-Jun-08

31-Mar-08

30-Dec-07

30-Sep-07

30-Jun-07

31-Mar-07

31-Dec-06

30-Sep-06

30-Jun-06

31-Mar-06

30-Dec-05

Average

ING Vysya EquityFund - Growth


Date

Interest

Rate %

Returns

Index


31.36 0.480615187

7.8382 1.814639 14091 8.9104 31.21 -6.640741849

7.6985 6.400475 12938 3.8835 33.43 1.610942249

7.2354 4.827446 12454 -9.66532.9 7.375979112

6.9022 -1.311143 13787 6.3649 30.64 16.41337386

6.9939 -0.814034 12962 -5.362 26.32 0.11411183

7.0513 9.778615 13696 5.6659 26.29 -11.71927468

6.4232 4.036281 12962 50.118 29.78 16.37358343

6.174 6.610029 8634.5 -8.124 25.59 6.669445602

5.7912 2.987623 9397.9 6.9306 23.99 14.94968855

5.6232 -0.592218 8788.8 11.359 20.87 9.842105263

5.6567 -1.367021 7892.3 41.348 19 -0.523560209

5.7351 6.717404 5583.6 -15.43 19.1 19.7492163

5.3741 15.93856 6602.7 37.686 15.95 18.58736059

4.6353 4.431578 4795.5 -14.22 13.45 -9.792085848

4.4386 3.033961 5590.6 25.54 14.91 -6.520376176

4.3079 4453.2 15.95

4.166146 9.666588127 4.810648951

Std. Div. 10.47198 8Beta 0.089957 1Al ha 4.94107006

Shar e Ratio 0.081545 3Treynor 8.060599 2


59/78

ING Vysya Eq uityFund- Growth

INTERPRETATION:

In 31 mar 08 the highest SENSEX return percentage is 50.118, and the lowestSENSEX return is -15.43 in 31 Dec 06.

In 31 Dec 06 the highest fund return percentage is 19.74, and the lowest fundreturn is -11.7 in 30 Jun 08

51


60/78

30-Mar-09

28-Feb-09

31-Jan-09

29-Dec-08

29-Sep-08

31-Jul-08

30-Jun-08

31-Mar-08

30-Dec-07

30-Sep-07

30-Jun-07

31-Mar-07

31-Dec-06

30-Sep-06

30-Jun-0631-Mar-06

30-Dec-05

Average

FTIndiaBalancedFund - Growth


Date

Interest

Rate %

Returns

Index


35.21 0.772753291

7.8382 1.814639 14091 8.9104 34.94 -4.87340049

7.6985 6.400475 12938 3.8835 36.73 2.683813251

7.2354 4.827446 12454 -9.665 35.77 9.121415497

6.9022 -1.311143 13787 6.3649 32.78 12.33721727

6.9939 -0.814034 12962 -5.362 29.18 4.569073643

7.0513 9.778615 13696 5.6659 27.905 -9.604794299

6.4232 4.036281 12962 50.118 30.87 13.78547733

6.174 6.610029 8634.5 -8.124 27.13 5.15503876

5.7912 2.987623 9397.9 6.9306 25.8 16.32100992

5.6232 -0.592218 8788.8 11.359 22.18 5.268153773

5.6567 -1.367021 7892.3 41.348 21.07 1.249399327

5.7351 6.717404 5583.6 -15.43 20.81 10.63264221

5.3741 15.93856 6602.7 37.686 18.81 11.10454814

4.6353 4.431578 4795.5 -14.22 16.93 -5.100896861

4.4386 3.033961 5590.6 25.54 17.84 -0.223713647

4.3079 4453.2 17.88

4.166146 9.666588127 4.57485857

Std. Div. 7.393480 3Bet 0.059387 6

Al h 4.000783 0Shar e Ratio 0.055280 0

TreynorRatio 6.882114

52


61/78

INTERPRETATION:

In 31 mar 08 the highest SENSEX return percentage is 50.118, and thelowest SENSEX return is -15.43 in 31 Dec 06.

In 30 sep 07 the highest fund return percentage is 16.32, and the lowest fundreturn is -9.6 in 30 Jun 08

53


62/78

54


63/78

30-Mar-09

28-Feb-09

31-Jan-09

29-Dec-08

29-Sep-08

31-Jul-08

30-Jun-08

31-Mar-08

30-Dec-07

30-Sep-07

30-Jun-07

31-Mar-07

31-Dec-06

30-Sep-06

30-Jun-06

31-Mar-06

30-Dec-05

Average

SBIMagnumMIP- Growth


Date

Interest

Rate

%

Returns

Index


16.554 0.311466072

7.8382 1.814639 14091 8.9104 16.503 -1.324435994

7.6985 6.400475 12938 3.8835 16.724 0.703305173

7.2354 4.827446 12454 -9.665 16.607 1.285640228

6.9022 -1.311143 13787 6.3649 16.397 2.729169408

6.9939 -0.814034 12962 -5.362 15.961 0.309836849

7.0513 9.778615 13696 5.6659 15.912 0.641994674

6.4232 4.036281 12962 50.118 15.81 3.025583547

6.174 6.610029 8634.5 -8.124 15.346 1.158199353

5.7912 2.987623 9397.9 6.9306 15.170 3.357565765

5.6232 -0.592218 8788.8 11.359 14.677 2.935029596

5.6567 -1.367021 7892.3 41.348 14.259 1.554064641

5.7351 6.717404 5583.6 -15.43 14.041 2.828392313

5.3741 15.93856 6602.7 37.686 13.654 1.735275491

4.6353 4.431578 4795.5 -14.22 13.422 -1.907546136

4.4386 3.033961 5590.6 25.54 13.683 0.631775591

4.3079 4453.2 13.597

4.166146 9.666588127 1.248457286

Std. Div. 1.524555559

Beta 0.021621301

Alpha 1.39453077

Sharpe Ratio -1.913796428

Treynor Ratio -134.9451185


64/78

INTERPRETATION:

In 31 mar 08 the highest SENSEX return percentage is 50.118,and thelowest SENSEX return is -15.43 in 31 Dec 06.

In 30 sep 07 the highest fund return percentage is 3.35,and the lowest fundreturn is -1.907 in 30 Jun 06


65/78

30-Mar-09

28-Feb-09

31-Jan-09

29-Dec-08

29-Sep-08

31-Jul-08

30-Jun-08

31-Mar-08

30-Dec-07

30-Sep-07

30-Jun-07

31-Mar-07

31-Dec-06

30-Sep-06

30-Jun-06

31-Mar-06

30-Dec-05

Average

HSBC Cash Fund -Reg - Growth


Date

Interest

Rate %

Returns

Index


12.61 0.713241695

7.8382 1.814639 14091 8.9104 12.52 0.551736323

7.6985 6.400475 12938 3.8835 12.452 0.664543147

7.2354 4.827446 12454 -9.665 12.369 1.701130524

6.9022 -1.311143 13787 6.3649 12.163 1.048494969

6.9939 -0.814034 12962 -5.362 12.036 0.521133465

7.0513 9.778615 13696 5.6659 11.974 1.49953378

6.4232 4.036281 12962 50.118 11.797 1.395836556

6.174 6.610029 8634.5 -8.124 11.635 1.288457855

5.7912 2.987623 9397.9 6.9306 11.487 1.290089327

5.6232 -0.592218 8788.8 11.359 11.34 1.270762636

5.6567 -1.367021 7892.3 41.348 11.198 1.210220443

5.7351 6.717404 5583.6 -15.43 11.064 1.188941019

5.3741 15.93856 6602.7 37.686 10.934 1.09470492

4.6353 4.431578 4795.5 -14.22 10.816 1.099260616

4.4386 3.033961 5590.6 25.54 10.698 1.105745149

4.3079 4453.2 10.581

4.166146 9.666588127 1.102739527

Std. Div. 0.337327 943Beta 0.001302 734Alpha 1.090146 533

Sharpe Ratio -9.0813903 8

Treynor Ratio -2351 .5211 91

57


66/78

INTERPRETATION:

In 31 mar 08 the highest SENSEX return percentage is 50.118, and thelowest SENSEX return is -15.43 in 31 Dec 06.

In 29 Dec 08 the highest fund return percentage is 1.701, and the lowest

fund return is 0.52 in 31 July 08

58


67/78

30-Mar-09

28-Feb-09

31-Jan-09

29-Dec-08

29-Sep-08

31-Jul-08

30-Jun-08

31-Mar-08

30-Dec-07

30-Sep-07

30-Jun-07

31-Mar-07

31-Dec-06

30-Sep-06

30-Jun-06

31-Mar-06

30-Dec-05

Average

HDFC Short Term Plan - Growth


Date

Interest

Rate %

Returns

Index


12.61 0.713241695

7.8382 1.814639 14091 8.9104 12.52 0.551736323

7.6985 6.400475 12938 3.8835 12.452 0.664543147

7.2354 4.827446 12454 -9.665 12.369 1.701130524

6.9022 -1.311143 13787 6.3649 12.163 1.048494969

6.9939 -0.814034 12962 -5.362 12.036 0.521133465

7.0513 9.778615 13696 5.6659 12.974 1.49953378

6.4232 4.036281 12962 50.118 12.797 1.395836556

6.174 6.610029 8634.5 -8.124 12.434 1.288457855

5.7912 2.987623 9397.9 6.9306 12.487 1.290089327

5.6232 -0.592218 8788.8 11.359 12.138 1.270762636

5.6567 -1.367021 7892.3 41.348 11.198 0.210220443

5.7351 6.717404 5583.6 -15.43 11.064 0.188941019

5.3741 15.93856 6602.7 37.686 11.934 0.09470492

4.6353 4.431578 4795.5 -14.22 11.816 0.099260616

4.4386 3.033961 5590.6 25.54 11.698 0.105745149

4.3079 4453.2 11.581

4.166146 9.6665881 0.99627573

Std. Div. 0.43660937Beta 0.003044982Alpha 0.966684114

Sharpe Ratio -7.260193709

Treynor Ratio -1041 .014553

59


68/78


INTERPRETATION:

In 31 mar 08 the highest SENSEX return percentage is 50.118, and the lowestSENSEX return is -15.43 in 31Dec 06.

In 29 Dec 08 the highest fund return percentage is 1.701, and the lowest fund

return is 0.094 in 30 Sep 06.

60


6

comparative analysia of mf reported by archana.k

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