Mutual Fund MBA project by NikunjHOT

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A

PROJECT REPORT

ON

“A study on top five tax saving schemes in Mutual Fund in India

from 2008-2012”

SUBMITTED TO

RASHTRASANT TUKADOJI MAHARAJ NAGPUR UNIVERSITY,

NAGPUR IN PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

MR. NIKUNJ B. SHENDE

UNDER THE GUIDANCE OF

PROF. RAHUL KAPALE

PRIYADARSHINI LOKMANYA TILAK INSTITUTE OF

MANAGEMENT STUDIES & RESEARCH

NAGPUR, 2012-2014

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Priyadarshini Lokmanya Tilak Institute of

Management Studies & Research,

Opp. Lata Mangeshkar Hospital, Digdoh Hills, Hingna Road,

Nagpur.

CERTIFICATE

This is to certify that the project entitled “A study on top five tax saving

schemes in Mutual Fund in India from 2008-2012” has been submitted

by Nikunj B. Shende, a student of fourth semester M.B.A in Financial

Management from Lokmanya Tilak Institute of Management Studies &

Research, Nagpur. This is a bonafide of the work done by her in the

session towards the fulfillment of the requirement for the award of

degree in Masters of Business Administration under the supervision&

guidance of Prof. RAHUL KAPALE and he has undergone the requisite

hours of practical prescribed by the University for the Project.

Prof. Rahul Kapale

(Project Guide) (Principal)

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CERTIFICATE OF STUDENT

Priyadarshini Lokmanya Tilak Institute of management Studies

& Research,

Opp. Lata Mangeshkar Hospital, Digdoh Hills, Hingna Road,

Nagpur.

This is to certify that the project report titled “A study on top five tax

saving schemes in Mutual Fund in India from 2008-2012” that has been

submitted by me in the partial fulfillment of M.B.A is bonafide record

exclusively carried out by me.

Place: NAGPUR Mr. NIKUNJ B. SHEND

Date:

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ACKNOWLEDGEMENT

Since the beginning of this work, I have been helped & assisted by

many people. Though it is my capacity, to mention all of it is extremely

important for me to acknowledge some of them. I express deep sense of

gratitude for my guide Prof. Rahul Kapale for this valuable guidance

through tout this work. I am also grateful to, Principal of Priyadarshini

Lokmanya Tilak Institute of Management Studies & Research, Nagpur .

Place: NAGPUR Mr. NIKUNJ B.SHENDE

Date:

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DECLARATION

I hereby declare that this project wok entitled “A study on top five tax

saving schemes in Mutual Fund in India from 2008-2012” is result of

my own study under the guidance of Prof. Rahul Kapale Professor of

Priyadarshini Lokmanya Tilak Institute of Management Studies &

Research, Nagpur during Academic year 2012-2014.I further declare

that this project work has not been submitted to any other University or

this university for the award of the degree.

Place: NAGPUR Mr. NIKUNJ B. SHENDE

Date:

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TABLE OF CONTENTS

Sr no. Particulars Page no.

1 Introduction to topic 8

2 Introduction to companies 21

3 Objectives of study 36

4 Scope of study 38

5 Limitations of study 40

6 Research Methodology 42

7 Data analysis & Interpretation 47

8 Conclusions & Findings 55

9 Suggestions & recommendations 57

Bibliography 59

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LIST OF TABLES

Table no. Title of the Tables Page no.

1.1 Standard Deviation for HDFC Tax Saver. 48

1.2 Standard Deviation for Franklin India Tax

Shield.

49

1.3 Standard Deviation for DSP Blackrock Tax

Saver.

50

1.4 Standard Deviation for SBI Magnum Tax

Gain.

51

1.5 Standard Deviation for Reliance Tax Saving

Fund.

52

1.6 Return vs. Risk estimated of selected tax

saving schemes.

53

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Chapter [1] :- Introduction to

Topic

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Chapter [1]: - Introduction to Topic

INTRODUCTION The Indian financial system based on four basic components like Financial Market, Financial

Institutions, Financial Service, Financial Instruments. All are play important role for smooth

activities for the transfer of the funds and allocation of the funds. The main aim of the Indian

financial system is that providing the efficiently services to the capital market. The Indian capital

market has been increasing tremendously during the second generation reforms. The first

generation reforms started in 1991 the concept of LPG. (Liberalization, privatization,

Globalization).

Then after 1997 second generation reforms was started, still the it‟s going on, its include reforms

of industrial investment, reforms of fiscal policy, reforms of ex- imp policy, reforms of public

sector, reforms of financial sector, reforms of foreign investment through the institutional

investors, reforms banking sectors. The economic development model adopted by India in the

post independence era has been characterized by mixed economy with the public sector playing a

dominating role and the activities in private industrial sector control measures emaciated form

time to time. The last two decades have been a phenomenal expansion in the geographical

coverage and the financial spread of our financial system.

The spared of the banking system has been a major factor in promoting financial intermediation

in the economy and in the growth of financial savings with progressive liberalization of

economic policies, there has been a rapid growth of capital market, money market and financial

services industry including merchant banking, leasing and venture capital, leasing, hire

purchasing. Consistent with the growth of financial sector and second generation reforms its

need to fruition of the financial sector. It's also need to providing the efficient service to the

investor mostly if the investors are supply small amount, in that point of view the mutual fund

play vital for better service to the small investors. The main vision for the analysis for this study

is to scrutinize the performance of five star rated mutual funds, given the weight of risk, return,

and assets under management, net assets value, book value and price earnings ratio.

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Concept of Mutual Fund:

Mutual fund is the pool of the money, based on the trust who invests the savings of a number of

investors who shares a common financial goal, like the capital appreciation and dividend

earning. The money thus collect is then invested in capital market instruments such as shares,

debenture, and foreign market. Investors invest money and get the units as per the unit value

which we called as NAV (net assets value). Mutual fund is the most suitable investment for the

common man as it offers an opportunity to invest in diversified portfolio management, good

research team, professionally managed Indian stock as well as the foreign market, the main aim

of the fund manager is to taking the scrip that have under value and future will rising, then fund

manager sell out the stock. Fund manager concentration on risk – return trade off, where

minimize the risk and maximize the return through diversification of the portfolio. The most

common features of the mutual fund unit are low cost.

Mutual funds concept can be well understood with the following diagram

Figure: 1.1 Concept of mutual fund

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INVEST THEIR MONEY INVEST IN VARIETY OF

STOCKS/BONDS

PROFIT/LOSS FROM

PORTFOLIO

INVESTMENT

PROFIT/LOSS FROM

INDIVIDUAL INVESTMENT

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Growth of Mutual Fund Industry

The history of mutual funds dates support to 19th century when it was introduced in Europe, in

particular, Great Britain. Robert Fleming set up in 1868 the first investment trust called Foreign

and colonial investment trust which promised to manage the finances of the moneyed classes of

Scotland by scattering the investment over a number of different stocks. This investment trust

and other investment trusts which were afterward set up in Britain and the U.S., resembled

today‟s close – ended mutual funds. The first mutual fund in the U.S., Massachusetts investor‟s

trust, was set up in March 1924. This was the open – ended mutual fund.

The stock market crash in 1929, the Great Depression, and the outbreak of the Second World

War slackened the pace of growth of the mutual fund industry. Innovations in products and

services increased the popularity of mutual funds in the 1950s and 1960s. The first international

stock mutual fund was introduced in the US in 1940. In 1976, the first tax – exempt municipal

bond funds emerged and in 1979, the first money market mutual funds were created. The latest

additions are the international bond fund in 1986 arm funds in 1990. This industry witnessed

substantial growth in the eighties and nineties when there was a significant increase in the

number of mutual funds, schemes, assets, and shareholders. In the US the mutual fund industry

registered s ten – fold growth the eighties. Since 1996, mutual fund assets have exceeds bank

deposits. The mutual fund industry and the banking industry virtually rival each other in size.

ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organizational set up of a

mutual fund

Figure:1.2 Organization structure of mutual fund

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Mutual funds have a unique structure not shared with other entities such as companies of firms.

It is important for employees & agents to be aware of the special nature of this structure, because

it determines the rights & responsibilities of the fund‟s constituents viz., sponsors, trustees,

custodians, transfer agents & of course, the fund & the Asset Management Company(AMC) the

legal structure also drives the inter-relationships between these constituents.

The structure of the mutual fund India is governed by the SEBI (Mutual Funds) regulations,

1996. These regulations make it mandatory for mutual funds to have a structure of sponsor,

trustee, AMC, custodian. The sponsor is the promoter of the mutual fund,& appoints the trustees.

The trustees are responsible to the investors in the mutual fund, & appoint the AMC for

managing the investment portfolio. The AMC is the business face of the mutual fund, as it

manages all affairs of the mutual fund. The mutual fund & the AMC have to be registered with

SEBI. Custodian, who is also registered with SEBI, holds the securities of various schemes of the

fund in its custody.

Sponsor:- The sponsor is the promoter of the mutual fund. The sponsor establishes the

Mutual fund & registers the same with SEBI. He appoints the trustees, Custodians & the

AMC with prior approval of SEBI, & in accordance with SEBI regulations. He must have

at least five year track record of business interest in the financial markets. Sponsor must

have been profit making in at least three of the above five years. He must contribute at

least 40% of the capital of the AMC.

Trustees:- The Mutual Fund may be managed by a Board of trustees a of individuals, or a

trust company – a corporate body. Most of the funds in India are managed by board of

trustees. While the board of trustees is governed by the provisions of the Indian trust act,

where the trustee is the corporate body, it would also be required to comply with the

provisions of the companies act, 1956. the board of trustee company, as an independent

body, act as protector of the unit-holders interest. The trustees don‟t directly manage the

portfolio of securities. For this specialist function, they appoint an AMC. They ensure that

the fund is managed by AMC as per the defined objectives & in accordance with the trust

deed & SEBI regulations. The trust is created through a document called the trust deed

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i.e., executed by the fund sponsor in favor of the trustees. The trust deed is required to be

stamped as registered under the provision of the Indian registration act & registered with

SEBI. The trustees begin the primary guardians of the unit-holders funds & assets, a

trustee has to be a person of high repute & integrity.

Asset Management Company (AMC):- The role of an Asset management companies is

to act as the investment manager of the trust. They are the ones who manage money of

investors. An AMC takes decisions, compensates investors through dividends, maintains

proper accounting & information for pricing of units, calculates the NAV, & provides

information on listed schemes. It also exercises due diligence on investments & submits

quarterly reports to the trustees. AMCs have been set up in various countries

internationally as an answer to the global problem of bad loans. Bad loans are essentially

of two types: bad loans generated out of the usual banking operations or bad lending, and

bad loans which emanate out of a systematic banking crisis. It is in the latter case that

banking regulators or governments try to bail out the banking system of a systematic

accumulation of bad loans which acts as a drag on their liquidity, balance sheets and

generally the health of banking. So, the idea of AMCs or ARCs is not to bail out banks,

but to bail out the banking system itself.

Types of AMCs in Indian Context

The following are the various types of AMCs we have in India.

AMCs owned by banks.

AMCs owned by financial institutions.

AMCs owned by Indian private sector companies.

AMCs owned by foreign institutional investors.

AMCs owned by Indian & foreign sponsors.

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Custodian:- Often an independent organization, it takes custody all securities & other

assets of mutual fund. Its responsibilities include receipt & delivery of securities

collecting income-distributing dividends, safekeeping of the unit & segregating assets &

settlements between schemes. Mutual fund is managed either trust company board of

trustees. Board of trustees & trust are governed by provisions of Indian trust act. If trustee

is a company, it is also subject Indian Company Act. Trustees appoint AMC in

consultation with the sponsors & according to SEBI regulation. All mutual fund schemes

floated by AMC have to be approved by trustees. Trustees review & ensure that net worth

of the company is according to stipulated norms, every quarter. Though the trust is the

mutual fund, the AMC is its operational face. The AMC is the first functionary to be

appointed, & is involved in appointment of all other functionaries. The AMC structures

the mutual fund products, markets them & mobilizes fund, manages the funds & services

to the investors. A draft offer document is to be prepared at the time of launching the fund.

Typically, it pre-specifies investment objectives of the fund, the risk associated, the cost

involved in the process & the broad rules to enter & to exit from the fund & other areas of

operation. In India as in most countries, these sponsors need approval from a regulator,

SEBI in our case. SEBI looks at track records of the sponsor & its financial strength

granting approval to the fund for commencing operations. A sponsor then hires an asset

management company to invest the funds according to the investment objective. It also

hires another entity to be the custodian of the assets of the fund & perhaps the third one to

handle registry work for the unit holder of the fund.

Registrars & Transfer Agent (R & T Agent):- The Registrars & Transfer Agents(R & T

Agents) are responsible for the investor servicing function, as they maintain the records of

investors in mutual funds. They process investor applications; record details provide by

the investors on application forms; send out to investors details regarding their investment

in the mutual fund; send out periodical information on the performance of the mutual

fund; process dividend payout to investor; incorporate changes in information as

communicated by investors; & keep the investor record up-to-date, by recording new

investors & removing investors who have withdrawn their funds.

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TAX PLANNING AND MUTUAL FUND

Investors in India have option for the tax-saving mutual fund schemes for the simple reason that

it helps them to save money. The tax-saving mutual funds or the equity- linked savings schemes

(ELSS) receive certain tax exemptions under Section 88 of the Income Tax Act. That is one of

the reasons why the investors in India add the tax-saving mutual fund schemes to their portfolio.

The tax-saving mutual fund schemes are one of the important types of mutual funds in India that

investors can option for. There are several companies in India that offer tax saving mutual fund

schemes in the country.

While planning our investments we spend a considerable amount of time evaluating various

options and determining which suits us the best. But when it comes to planning out investments

from a tax saving perspective, more often than not, we simply go the traditional way and do the

exact same thing that we did in the earlier years. Well, in case you were not aware the guidelines

governing such investments are a lot different this year and lethargy on your part to rework your

investment plan could cost you dear.

TAX SAVING SCHEME

Equity Linked Saving Schemes (ELSS): Equity Linked Saving Scheme (ELSS) is also a type

of mutual fund and falls under the Equity Mutual Fund category. As the name indicates, ELSS

mutual fund invests major portion of its corpus into equity and equity related instruments. But

there are some distinct features which makes ELSS plans different from other equity mutual

funds.

Investments made in ELSS plans are eligible for deduction from the taxable income under

Section 80C of the Income Tax Act. There is no limit for investments in ELSS plans, but

investments of up to Rs 1,00,000 qualify for income tax benefits. Investments made in normal

mutual funds (other than ELSS plans) do not qualify for income tax deduction.

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Features of an ELSS Plan

ELSS is an equity linked tax saving investment instrument.

Money collected under ELSS plan is mainly invested in equity and equity related

instruments.

This financial product is more suited to those investors who are willing to take high risk

and looking for high returns.

There is no upper limit on investments that can be made in ELSS. However investments

upto INR 1,00,000 made in ELSS in a financial year qualify for deduction from taxable

income under Section 80C of the Income Tax Act.

ELSS comes with a 3 year lock in period.

Long term capital gains earned on investments from ELSS are tax free.

Also dividends earned from ELSS plan are tax free in the hands of the investor

SWOT ANALYSIS

SWOT Analysis presents the information about external and internal environment of mutual fund

in structured from where by key external opportunity and threats can be compared systematically

with internal capabilities and weakness. The basic objectives of SWOT analysis is provide a

framework to reflect on the industry capabilities to avail opportunities or to overcome threats

presented by environment.

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Strength

Full benefit of diversification

Tax benefit

Transparancy & flexibility

Expert investment management

Weakness

Lesser return compared to equity

Poor technology & service level

Lack of proper marketing

Opportunity

Government policies & Tax concession

Setting up a specific fund

Technology development

Threats

Arrival of more private & foreign

players

Introduction of more debt instrument in

market.

ADVANTAGES OF INVESTING IN MUTUAL FUNDS

There are several that can be attributed to the growing popularities and suitability of mutual

funds as an investment vehicle especially for retail investors.

a) Professional management: Mutual funds provide the services of experienced and skilled

professionals, backed by a dedicated investment research team that analysis the

performance and prospects of companies and selects suitable investments to achieve the

objectives of the scheme.

b) Diversification: Mutual funds invest in a number of companies across a broad cross-

section of industries and sectors. This diversification reduces the risk because seldom do

all stocks decline at the sane time and in the same proportion. You achieve this

diversification through a mutual fund with far less money than you can do on your own.

c) Convenient administration: Investing in a mutual fund reduces paperwork and helps

you avoid many problems such as bad deliveries, delayed payment and follow up with

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brokers and companies. Mutual funds save your time and make investing easy and

convenient.

d) Return potential: Over a medium to long term, mutual funds have the potential to

provide a higher return as they invest in a diversified basket of selected securities.

e) Low costs: Mutual funds are a relatively less expensive way to invest compared to

directly investing in the capital markets because the benefits of scale in brokerage,

custodial and other fees translate into lower costs for investors.

f) Liquidity: In open ended schemes, the investors get the money back promptly at net

asset value related prices from the mutual fund. In closed end schemes, the units can be

sold on a stock exchange at the prevailing market price or the investor can avail of the

facility of direct repurchase at NAV related prices by mutual fund.

g) Transparency: You get regular information on the value of your investment in addition

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

each class of assets and the fund manager‟s investment strategy and outlook.

h) Flexibility: Through features such as regular investment plans, regular withdrawal plans

and dividend reinvestment plans, you can systematically invest or withdraw funds

according to your needs and convenience.

i) Affordability: Investors individually may lack sufficient funds to invest in high-grade

stocks. A mutual fund because of its large corpus allows even a small investor to take the

benefit of its investment strategy.

j) Choice of schemes: Mutual funds offer a family of schemes to suit your varying needs

over a lifetime.

k) Safety: Mutual Fund industry is part of a well-regulated investment environment where

the interests of the investors are protected by the regulator. All funds are registered with

SEBI and complete transparency is forced.

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DISADVANTAGES OF INVESTING IN MUTUAL FUNDS

No Guarantees :- No investment is risk free. If the entire stock market declines in value,

the value of mutual fund shares will go down as well, no matter how balanced the

portfolio.

Dilution :- Although diversification reduces the amount of risk involved in investing in

mutual funds, it can also be a disadvantage due to dilution.

Fees and Expenses :- Most mutual funds charge management and operating fees that pay

for the fund‟s management expenses (usually around 1.0% to 1.5% per year for actively

managed funds). In addition, some mutual funds charge high sales commissions, and

redemption fees.

Management risk :- When we invest in a mutual fund, we depend on the fund's

manager to make the right decisions regarding the fund's portfolio. If the manager does

not perform as well as we had hoped, we might not make as much money on our

investment as we expected.

Taxes :- During a typical year, most actively managed mutual funds sell anywhere from

20 to 70 percent of the securities in their portfolios. If our fund makes a profit on its sales,

we will pay taxes on the income we receive, even if we reinvest the money made.

Recent Market Trends

India is at the first stage of a revolution that has already peaked in the U.S. The U.S.

boasts of an Asset base that is much higher than its bank deposits. In India, mutual fund

assets are not even 10% of the bank deposits, but this trend is beginning to change.

Recent figures indicate that in the first quarter of the current fiscal year mutual fund

assets went up by 115% whereas bank deposits rose by only 17%. (Source: Thinktank,

the Financial Express September, 2012).

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Banks v/s Mutual fund

Characteristics Banks Mutual Fund

Returns Low Better

Network High penetration Low but improving

Administrative exp. High Low

Liquidity At a cost Better

Risk Low Moderate

Quality of assets Not transparent Transparent

Interest calculation Minimum balance between

10th & 30th of every month

Everyday

Investment options Less More

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Chapter [2] :- Introduction to

Companies

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Chapter [2]: - Introduction to Companies

1] HDFC ASSET MANAGEMENT COMPANY LIMITED.

HDFC Asset Management Company Ltd (AMC) was

incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as

an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3,

2000.

HDFC Mutual Fund is one of the largest mutual funds and well-established fund house in the

country with consistent fund performance across categories since its incorporation on December

10, 1999. While our past experience does make us a veteran, but when it comes to investments,

we have never believed that the experience is enough.

Investment Philosophy

The single most important factor that drives HDFC Mutual Fund is its belief to give the investor

the chance to profitably invest in the financial market, without constantly worrying about the

market swings. To realize this belief, HDFC Mutual Fund has set up the infrastructure required

to conduct all the fundamental research and back it up with effective analysis. Our strong

emphasis on managing and controlling portfolio risk avoids chasing the latest "fads" and trends.

In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset

Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is

Rs. 25.169 core.

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a review

of its overall strategy, had decided to divest its Asset Management business in India. The AMC

had entered into an agreement with ZIC to acquire the said business, subject to necessary

regulatory approvals.

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On obtaining the regulatory approvals, the following Schemes of Zurich India Mutual

Fund have migrated to HDFC Mutual Fund on June 19, 2003. These Schemes have been

renamed as follows:

Former Name New Name

Zurich India Equity Fund HDFC Equity Fund

Zurich India Prudence Fund HDFC Prudence Fund

Zurich India Capital Builder Fund HDFC Capital Builder Fund

Zurich India TaxSaver Fund HDFC TaxSaver

Zurich India Top 200 Fund HDFC Top 200 Fund

Zurich India High Interest Fund HDFC High Interest Fund

Zurich India Liquidity Fund HDFC Cash Management Fund

Zurich India Sovereign Gilt Fund HDFC Sovereign Gilt Fund*

The equity shareholding pattern of the AMC as on September 30, 2013 is as follows :

Particulars % of the paid up equity

capital

Housing Development Finance Corporation Limited 59.81

Standard Life Investments Limited 39.87

Other Shareholders (shares issued on exercise of Stock

Options)

0.32

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a review

of its overall strategy, had decided to divest its Asset Management business in India. The AMC

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had entered into an agreement with ZIC to acquire the said business, subject to necessary

regulatory approvals.

*HDFC Sovereign Gilt Fund has been wound up in March 2006

The AMC is also providing portfolio management / advisory services and such activities are not

in conflict with the activities of the Mutual Fund. The AMC has renewed its registration from

SEBI vide Registration No. - PM / INP000000506 dated February 12, 2013 to act as a Portfolio

Manager under the SEBI (Portfolio Managers) Regulations, 1993. The Certificate of Registration

is valid from January 1, 2013 to December 31, 2015.

AWARDS & RECOGNITION

ICRA Mutual Fund Awards 2012

Bloomberg UTV Financial Leadership Awards, 2012

Outlook Money Awards 2011

CNBC-TV18-CRISIL Mutual Fund Awards 2012

HDFC TaxSaver (ELSS)

The nature of the scheme is open ended equity linked savings (ELSS) scheme with a

lock-in period of 3 years. It will be comes in market at March 31, 1996. The minimum

application amount is for new & existing investors Rs.500 and in multiples of Rs. 500

thereafter.

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2] FRANKLIN TEMPLETON MUTUAL FUND.

FTMF has been constituted as a Trust on January 4,

1996 in accordance with the provisions of the Indian Trusts Act, 1882 and the Deed of Trust is

registered under the Indian Registration Act, 1908. FTMF has been sponsored by Templeton

International Inc. (liability restricted to the seed corpus of Rs.l lakh) with Franklin Templeton

Trustee Services Pvt. Ltd. (“Trustee”) as the Trustee. The Trustee has entered into an Investment

Management Agreement dated January 5, 1996 with Franklin Templeton Asset Management

(India) Pvt. Ltd. (“AMC”) appointing the AMC as the Investment Manager for all the schemes of

FTMF. FTMF is registered with SEBI on February 19, 1996.

Templeton International Inc. is a part of the Franklin Templeton Group, which is one of the

largest Investment Management Company with US$683.5 b ln (approximately Rs.3,856,478

core) in assets under management as on May 31, 2012 and around 26 million Shareholder

Accounts. Franklin Templeton has offices in over 30 countries including the United States of

America, Bahamas, Canada, Argentina, France, Germany, Italy, Luxembourg, Poland, Russia,

the United Kingdom, Hong Kong, Singapore, Korea, India, China, Australia and South Africa.

Review of activities of Franklin Templeton Mutual Fund: During the year under review, the

Mutual Fund continued to focus on launching meaningful products with investment objectives

that are relevant to investors. The Mutual Fund launched Templeton India Corporate Bond

Opportunities Fund, an open end debt fund investing in corporate bonds, mobilizing over Rs.250

core, FT India Feeder - Franklin U.S. Opportunities Fund, a fund of funds scheme investing in

the units of Franklin U. S. Opportunities Fund, an overseas fund that invests primarily in U. S.

securities, mobilizing over Rs.100 core and Franklin Templeton Fixed Tenure Fund Series XVI

mobilizing over Rs.68 core. As a part of product rationalization process to make the offerings

more meaningful and easy to understand for investors and to reduce product overlap between

similar schemes, few schemes / plans were merged during the year. The Liquid Plan of

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Templeton India Treasury Management Account (TITMA) was merged into Regular Plan of

TITMA effective September 4, 2011. Franklin FMCG Fund and Franklin Pharma Fund merged

into Franklin India Prima Plus effective September 9, 2011. Franklin India Index Tax Fund

(FITF) merged into Franklin India Index Fund – NSE Nifty Plan effective September 9, 2011.

Franklin India Index Tax Fund (FITF) was launched in February 2001 as open end passively

managed ELSS scheme. The scheme invested in companies, whose securities are part of the S&P

CNX Nifty, with the aim to generate returns commensurate with S&P CNX Nifty. As part of our

product rationalization process and with a view to reduce overlap between similar schemes, it

was decided to merge FITF with the Growth Option under the Nifty Plan of Franklin India Index

Fund. The effective date of the merger was September 9, 2011. As on March 31, 2012, the

Mutual Fund served more than 20 lakh active investors through its 34 branches and 105 offices

of our collection partners across India.

Frankline India Tax Sheild

The nature of the scheme is open ended equity linked savings (ELSS) scheme with a lock-in

period of 3 years. It will be comes in market at April 10 1999. The minimum application amount

is for new & existing investors Rs.500 and in multiples of Rs. 500 thereafter.

Mutual funds

Franklin Templeton has over 200 different open-ended mutual funds and 7 closed-end funds in

the fund family. Included in these are 36 state and federal tax free income funds, an area of

investment pioneered by Franklin.

Prominent funds in the fund family include the world's largest equity fund Templeton Growth

Fund, Inc. (opened 1954, $29.5bn assets), the Mutual Shares fund (opened 1949, $7.9bn assets),

and the Mutual Discovery Fund (opened $1992, 7.6bn assets) and the Templeton Growth (Euro)

Fund A (acc) ($6.1bn assets).

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The Franklin Income Fund (FKINX, assets $33.6bn) is a mutual fund in Morningstar's

"conservative allocation" category and "large/value" style box. The fund was created in 1948 and

has paid uninterrupted dividends for 60 years. The Franklin Income Fund is constructed

primarily of dividend-paying stocks and bonds (2%).

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3] DSP BLACK ROCK INVESTMENT MANAGEMENT LIMITED.

DSP BlackRock Investment Managers Pvt. Ltd. is the

investment manager to DSP BlackRock Mutual Fund. The philosophy of DSP BlackRock

Investment Managers Pvt. Ltd. has been grounded in the belief that experienced investment

professionals, using a disciplined process and sophisticated analytical tools, can consistently add

value to client portfolios.

Joint Venture between the DSP Group & BlackRock Inc

DSP Group holds 60 % stake and BlackRock holds 40 % stake in DSP BlackRock

Investment Managers Private Limited

DSP Group

The Kothari family of D. S. Purbhoodas and Co. is the promoter and owner of DSP

Group

Track record of over 145 years, one of the oldest financial services firms in India

One of the founding members and first directors of the Bombay Stock Exchange (BSE)

Each generation of the DSP Group has seen a partner serving as President of the Bombay

Stock Exchange, bearing testimony to the long-standing position DSP Group occupies in

the Indian financial arena

Mr. Hemendra Kothari, Chairman of DSP BlackRock Investment Managers, has an

experience of over 40 years in the financial services industry, and also served the

Bombay Stock Exchange as President in 1991-92

BlackRock Inc

Largest Asset Management company in the world. Established in 1988, BlackRock is a

Public Company (NYSE:BLK)

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BlackRock‟s assets under management is USD 3.67 trillion as of September 30, 2012

Global firm with offices in 26 countries across the world

One of India‟s leading asset management companies managing / advising total assets of

INR 39,520 crores / USD 7.31 billion as of October 31, 2012

Joint Venture between the DSP Group and BlackRock, Inc., which is the largest asset

management company in the world

Commenced operations in 1997

Proven Performance track record

Dominance in equity assets under management / non binding advice*

Business activities

Domestic Mutual Fund business

Investment Advisory Services to offshore Funds

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4] SBI FUNDS MANAGEMENT LIMITED (SBIFM).

SBI Funds Management Ltd. is the investment manager

of SBI Mutual Fund. SBI Mutual Fund has been constituted as a trust, sponsored by State Bank

India. Today the Fund has an investor base of over 2.8 million spread over 23 schemes. With a

large network of collecting branches and investor service centers, SBI Mutual Fund constantly

endeavors to get closer to its growing family of investors.

SBI Mutual Fund (SBI MF) is one of the largest mutual funds in the country with an investor

base of over 4.6 million. With over 20 years of rich experience in fund management, SBI MF

brings forward its expertise in consistently delivering value to its investors.

Proven Skills in wealth generation:

SBI Mutual Fund is India's largest bank sponsored mutual fund and has an enviable track record

in judicious investments and consistent wealth creation. The fund traces its lineage to SBI -

India's largest banking enterprise. The institution has grown immensely since its inception and

today it is India's largest bank, patronized by over 80% of the top corporate houses of the

country. SBI Mutual Fund is a joint venture between the State Bank of India and Society General

Asset Management, one of the world's leading fund management companies that manages over

US$ 500 Billion worldwide.

Exploiting expertise, compounding growth:

In twenty years of operation, the fund has launched 38 schemes and successfully redeemed

fifteen of them. In the process it has rewarded it's investors handsomely with consistently high

returns A total of over 5.4 million investors have reposed their faith in the wealth generation

31 | P a g e

expertise of the Mutual Fund. Schemes of the Mutual fund have consistently outperformed

benchmark indices and have emerged as the preferred investment for millions of investors and

HNI‟s. Today, the fund manages over Rs. 51,461 cores of assets and has a diverse profile of

investors actively parking their investments across 36 active schemes. The fund serves this vast

family of investors by reaching out to them through network of over 130 points of acceptance, 28

investor service centers, 46 investor service desks and 56 district organizers.

SBI Mutual is the first bank-sponsored fund to launch an offshore fund – Resurgent India

Opportunities Fund. Growth through innovation and stable investment policies is the SBI MF

credo.

Currently the SBI Mutua l Fund offers 177 schemes in with different investment objective

and needs, as fo llows.

SBI mutual fund schemes offers

No. of schemes includ ing options 177

Equity Schemes 36

Debt Schemes 115

Short term debt Schemes 11

Equity & Debt 3

Money Market 0

Gilt Fund 12

SBI Mutua l fund is India‟s largest bank sponsored mutua l fund and has an enviable track

record in judicious investments and consistent wealth creation. The fund traces

its lineage to SBI India‟s largest banking enterprise. The institut ion has grown immensely

since its inception and today it is India‟s largest bank patronized by over 80% of the top

corporate houses of the country.

Started in July 1987, the fund has launched 67 schemes and successfully redeemed 15 schemes.

In the process, it has rewarded its investors handsomely with consistently high returns. A total of

over 3.5 million investors have reposed their faith in the wealth generation expertise of the

32 | P a g e

mutual fund. Schemes of the mutual fund have consistently outperformed benchmarks indices

and have emerged as the preferred investment for the millions of investors.

Today the fund manages Rs.29492.9685 core as on Mar 31, 2012 of assets and has diversified

profile of investors actively parking their investments across 37 active schemes. The fund serves

this vast family of investors by reaching out to them through network of 100 collection branches,

26 investor service centers, 28 investor service desks, and 52 district organizers.

SBI Mutual fund is the first bank sponsored fund to launch an off-shore fund called Resurgent

India Opportunity Fund Growth through innovation and stable investment policies is the SBI

mutual fund.

SBI Magnum Tax Gain (ELSS)

The nature of the scheme is open ended equity linked savings (ELSS) scheme with a lock-in

period of 3 years. It will be comes in market at 1996. The minimum application amount is for

new & existing investors Rs.500 and in multiples of Rs. 500 thereafter.

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5] RELIANCE MUTUAL FUND.

Reliance Mutual Fund ('RMF') is one of India‟s leading

Mutual Funds, with Average Assets under Management (AUM) of Rs. 90,636 Cores and an

investor count of over 58.42 and 64.53 Lakh folios.

Reliance Mutual Fund, a part of the Reliance Group, is one of the fastest growing mutual funds

in India. RMF offers investors a well-rounded portfolio of products to meet varying investor

requirements and has presence in 179 cities across the country. Reliance Mutual Fund constantly

endeavors to launch innovative products and customer service initiatives to increase value to

investors. Reliance Capital Asset Management Limited („RCAM‟) is the asset manager of

Reliance Mutual Fund. RCAM is a subsidiary of Reliance Capital Limited (RCL). Presently,

RCL holds 65.23% of its total issued and paid-up equity share capital and the balance of its

issued and paid up equity share capital is held by other shareholders which includes Nippon Life

Insurance Company (“NLI”), holding 26% of RCAM‟s total issued and paid up equity share

capital. NLI acquired the said 26% share holding in RCAM on August 17, 2012.

Reliance Capital Ltd. is one of India‟s leading and fastest growing private sector financial

services companies, and ranks among the top 3 private sector financial services and banking

companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life

and general insurance, private equity and proprietary investments, stock broking and other

financial services.

Reliance Mutual Fund (RMF) was initially set up as a Trust in accordance with the provisions of

the Indian Trust Act, 1882 by Reliance Capital Limited acting as a Settler /Sponsor, vide a Trust

Deed dated April 25, 1995 (the “Original Trust Deed”).The Original Trust Deed was duly

registered under the Indian Registration Act, 1908. The Original Trust Deed was subsequently

amended from time to time. In order to consolidate all amendments to the Original Trust Deed in

34 | P a g e

one document, an Amended and Restated Trust Deed was executed on March 15, 2011 (the

“Amended and Restated Trust Deed”). The Amended and Restated Trust Deed was subsequently

registered under the Indian Registration Act, 1908 and the Amended and Restated Trust Deed

was duly filed with SEBI. Reliance Capital Trustee Co. Limited entered into an Investment

Management Agreement dated May 12, 1995 with Reliance Capital Asset Management Ltd.

(RCAM) to function as the Investment Manager for all the Schemes of RMF.

Reliance Mutual Fund, a part of the Reliance Anil Dhirubhai Ambani Group is the No. 1 Mutual

Fund in India. Reliance Mutual Fund offers investors a well rounded portfolio of products to

meet varying investor requirements. Reliance Mutual Fund has a presence in over 100 cities

across the country, an investor base of over 3.9 million and manages assets over Rs. 67,598

Cores as on August 31, 2007. Reliance Mutual Fund constantly endeavors to launch innovative

products and customer service initiatives to increase value to investors.

Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Ltd.,a

wholly owned subsidiary of Reliance Capital Ltd. Reliance Capital Ltd. is one of India‟s leading

and fastest growing private sector financial services companies, and ranks among the top 3

private sector financial services and banking companies, in terms of net worth. Reliance Capital

Ltd. has interests in asset management and mutual funds, life and general insurance, private

equity and proprietary investments, stock broking and other financial services.

This groupdominates this key areain the financialsector..This megabusiness houses show that it

hasassetsunder management ofRs. 90,938 crore(US$ 22.73 billion) andan investor base of

over6.6 million. Reliance‟s mutual fundschemes are managed byReliance

CapitalAssetManagement LimitedRCAM), a subsidiary of Reliance Capital Limited,which holds

93.37% ofthe paid-up capitalof RCAM.The company notchedup a healthygrowth ofRs. 16,354

crore(US$ 4.09 billion)in assets under management in February2008 and helped propelthe

totalindustry-wideAUM to Rs. 565,459 crore (US$ 141.36 billion)(Source:

indiainvestments.com). A sharp rise infixedmaturity plans (FMPs) and collection ofRs. 7000

crore(US$ 1.75 billion) through newfund offers (NFOs) created this surge. In AUrankings,

Reliance continues to be inthenumber one spot.

35 | P a g e

The Anil Dhirubhai Ambani Group owns Reliance; they are the fastest growing investment

company in India so far. Tomeet the erratic demand of the financial market, RelianceMutual

Fund designed a distinct portfolio that is sure to please potential investors. Reliance Capital

AssetManagement Limited manages RMF.

36 | P a g e

CHAPTER [3] :- OBJECTIVES OF STUDY

37 | P a g e

CHAPTER [3]: - OBJECTIVES OF STUDY

The main objective of the study is to make investors aware of performance and provide

information on the comparison of tax saving funds of selected asset management companies. The

specific objectives are:

To understand the organisation of mutual fund industry.

To compare the performance of selected tax saving schemes in comparison with standard

deviation.

To offer suggestions based on the findings arrived from the study.

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CHAPTER [4] :- SCOPE OF STUDY

39 | P a g e

CHAPTER [4] :- SCOPE OF STUDY

The study is all about understanding the customer‟s perception to the tax benefit in mutual fund.

The purpose of this study of performance evaluation of tax saving mutual funds by taking five

selected companies which are HDFC, Franklin Templeton,DSP BlackRock,SBI and Reliance is

to employ the resources in such a manner as to afford for the investors combine benefits of low

risk, steady returns, high liquidity and capital appreciation through diversification and expert

management.

40 | P a g e

CHAPTER [5] :- LIMITATIONS OF STUDY

41 | P a g e

CHAPTER [5]: - LIMITATIONS OF STUDY

The study was limited by the time constraint; hence extent to study is not possible.

The study was limited to 5 companies only.

The policy and application are applicable to the particular assessment year only.

The analysis and interpretation purely based on the data collected from various website.

The accuracy of interpretation depends upon the accuracy of these data.

The return from the mutual fund depends upon the returns of the securities involved in

the portfolio. The return from the market depends upon the efficiency of the market and

other various factor affecting the fund and economy as a whole. So the researcher

doesn‟t claim the 100% accuracy of the result conducted from the study.

42 | P a g e

CHAPTER [6] :- RESEARCH

METHODOLOGY

43 | P a g e

CHAPTER [6]: - RESEARCH METHODOLOGY

What is Research:-

Different investment avenues are available to investors. Mutual funds also offer good investment

opportunities to the investors. Like all investments, they also carry certain risks. The investors

should compare the risks and expected yields after adjustment of tax on various instruments

while taking investment decisions. The investors may seek advice from experts and consultants

including agents and distributors of mutual funds schemes while making investment decisions.

With an objective to make the investors aware of performance of mutual funds, an attempt has

been made to provide information on the comparison of tax saving funds of selected Asset

Management Companies such as HDFC, FRANKLIN INDIA, RELIANCE, SBI and DSP

BlackRock which may help the investors in taking investment decisions. The analysis is also

compared with the calculations based on the Average return and Standard deviation for the

period 2008-12. This paper is carried out to find out the returns of funds thereby studying the

performance of the selected tax saving schemes in the market. The investor invests the funds

based on the returns, net asset value and also the trend prevailing in the market.

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

financial goal. Mutual funds are one of the best investments ever created because they are very

cost efficient and very easy to invest in. Investors in India opt for the tax-saving mutual fund

schemes for the simple reason that it helps them to save money. The tax-saving mutual funds or

the equity-linked savings schemes (ELSS) receive certain tax exemptions under Section 80C of

the Income Tax Act. That is one of the reasons why the investors in India add the tax-saving

mutual fund schemes to their portfolio. The tax-saving mutual fund schemes are one of the

important types of mutual funds in India that investors can opt for. The present study is carried

out to find out the returns of funds thereby studying the performance of the tax saving funds in

the market. The investor invests the funds based on the returns, net asset value and also the trend

prevailing in the market. Since the market being high volatile there is a need to study the

performance and comparative statement of various tax saving funds performing in the market.

44 | P a g e

REVIEW OF THE LITERATURE

John and Donald (1974) examined the relationship between the stated fund objectives and their

risks-return attributes and concluded that on an average, the fund managers appeared to keep

their portfolios within the stated risk. It concludes that mutual funds on aggregate offer superior

returns but they are offset by expenses and load charges.

Barua, Raghunathan and Varma (1991) evaluated the performance of Master Share during the

period 1987 to 1991 using Sharpe, Jensen and Treynor measures and concluded that the fund

performed better that the market, but not so well as compared to the Capital Market Line.

Although emerging markets such as India have attracted the attention of investors all over the

world, they have remained devoid of much systematic research, especially in the area of mutual

funds.

A study by Gupta and Aggarwal (2007) sought to check the performance of mutual funds

operation in India. In this regard, quarterly returns performance of all the equity-diversified

mutual funds during the period from January 2002 to December 2006 was tested.

Guha (2008) focused on return-based style analysis of equity mutual funds in India using

quadratic optimization of an asset class factor model proposed by William Sharpe. The study

found the “Style Benchmarks” of each of its sample of equity funds as optimu m exposure to 11

passive asset class indexes. The study also analyzed the relative performance of the funds with

respect to their style benchmarks. The results of the study showed that the funds have not been

able to beat their style benchmarks on the average.

Anand and Murugaiah (2008) examined the components and sources of investment

performance in order to attribute it to specific activities of Indian fund managers. They also

attempted to identify a part of observed return which is due to the ability to pick up the best

securities at given level of risk. For this purpose, Fama's methodology is adopted here. The study

covers the period between April 1999 and March 2003 and evaluates the performance of mutual

funds based on 113 selected schemes having exposure more than 90percent of corpus to equity

stocks of 25 fund houses. The empirical results reported reveal the fact that the mutual funds

45 | P a g e

were not able to compensate the investors for the additional risk that they have taken by

investing in the mutual funds.

Devasenathipathi (2011) investigated the performance of public-sector and private-sector

mutual funds for the period of 2005 to 2007. Selected funds of LIC (Public sector) and Reliance

(Private sector) were chosen for the purpose of analysis. Statistical techniques like Mean and

Standard Deviation were applied to study the consistency in returns subject to market risks of

each fund. The study revealed that performance of all the funds seemed to be volatile during the

study period; as such it was quite difficult to earmark one particular fund that out performed

consistently.

KEYWORDS

Asset Management Companies, Performance, Tax saving schemes.

Data collection Methods:-

The following research methodology has been adopted for assessing the performance of tax

saving funds of selected Asset Management Companies in the market.

Sources of data

The present study is purely based on secondary data. Top five ELSS schemes were as per their

AUM . The sample ELSS schemes are HDFC Tax Saver, DSP BlackRock Tax saver fund,

Reliance Tax Saver, SBI Magnum Tax Gain and Franklin India Tax shield. The data is collected

from the fact sheets, reports, websites, magazines, books and journals etc. are considered. The

deviations are properly analyzed. For each of the scheme, the risk ratios (Average return and

Standard Deviation) were also observed carefully and correlated with the returns. Accordingly,

46 | P a g e

proper findings were found out and conclusions were drawn about the best performance scheme

among all.

TOOLS FOR PERFORMANCE MEASURES

In this study, the tools used for the analysis are Average return and Standard Deviation Measure

for a period of 5 years from 2008 to 2012.

Average Mean: The most popular & widely used measure for representing the entire

data by one value is what most layman call an „average‟ & what the statistician call the

„arithmetic mean‟. It is obtained by adding together all the items & by dividing this total

by the number of items.

=

Where:

= Average Mean

ΣX = Sum of the frequency

N = Total number of frequency.

Standard Deviation: The degree that a single value in a group of values varies from the

mean (average) of the distribution. Standard deviation is a statistical measure that uses

past performance of an investment or portfolio to determine the potential range of future

performance and assess the probability of that performance. Standard deviations can be

calculated for an individual security or for the entire portfolio.

47 | P a g e

CHAPTER [7] :- DATA ANALYSIS &

INTERPRETATION

48 | P a g e

CHAPTER [7] :- DATA ANALYSIS & INTERPRETATION

CALCULATION OF STANDARD DEVIATION OF SELECTED FUNDS

1. HDFC Tax Saver

Table 1.1 Standard Deviation for HDFC Tax Saver

Average Return ( y) =

= 77.91/5

= 15.58

∑dy2 = 9962.43

Variance =

= 9962.43/4

= 2490.61

Standard Deviation (S.D) = = 49.90

YEAR

RETURN

(Y)

AVERAGE

RETURN

( y)

dy = (Y- )

dy2

2008 -51.55 15.58 -35.97 1293.84

2009 99.07 15.58 83.49 6970.58

2010 26.42 15.58 10.84 117.55

2011 -22.62 15.58 38.2 1459.24

2012 26.59 15.58 11.01 121.22

Total 77.91 9962.43

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2. Franklin India Tax Shield

Table 1.2 Standard Deviation for Franklin India Tax Shield

Average Return ( y) =

= 67.25/5

= 13.45

∑dy2= 9373.86

Variance =

= 9373.86/4

= 2343.47

Standard Deviation (S.D) = = 48.41

YEAR

RETURN

(Y)

AVERAGE

RETURN ( y)

dy = (Y - )

dy2

2008 -49.22 13.45 -62.67 3927.53

2009 78.81 13.45 65.36 4271.93

2010 23.47 13.45 10.02 100.40

2011 -15.19 13.45 -28.64 820.24

2012 29.38 13.45 15.93 253.76

Total 67.25 9373.86

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3. DSP Blackrock Tax Saver

Table 1.3 Standard Deviation for DSP Blackrock Tax Saver

Average Return ( y) =

= 93.75/5

= 18.75

∑dy2= 16496.93

Variance =

= 16496.93/4

= 4124.23

Standard Deviation (S.D) = = 64.22

YEAR

RETURN

(Y)

AVERAGE

RETURN ( y)

dy = (Y - )

dy2

2008 -56.03 18.75 -74.78 5592.05

2009 112.00 18.75 93.25 8695.56

2010 24.11 18.75 5.36 28.73

2011 -23.96 18.75 -42.71 1824.14

2012 37.63 18.75 18.88 356.45

Total 93.75 16496.93

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4. SBI Magnum Tax Gain

Table 1.4 Standard Deviation for SBI Magnum Tax Gain

Average Return ( y) =

= 55.32/5

= 11.06

∑dy2 = 11759.78

Variance =

= 11759.78/4

= 2939.95

Standard Deviation (S.D) = = 54.22

YEAR

RETURN

(Y)

AVERAGE

RETURN ( y)

dy = (Y - )

dy2

2008 -54.86 11.06 -65.92 4345.45

2009 86.41 11.06 75.35 5677.62

2010 12.98 11.06 1.92 2.69

2011 -23.50 11.06 -34.56 1194.39

2012 34.29 11.06 23.23 539.63

Total 55.32 11759.78

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5. Reliance Tax Saving Fund

Table 1.5 Standard Deviation for Reliance Tax Saving Fund

Average Return ( y) =

= 73.97/5

= 14.79

∑dy2 = 11585.35

Variance =

= 11585.35/4

=2896.34

Standard Deviation (S.D) = = 53.82

YEAR

RETURN

(Y)

AVERAGE

RETURN ( y)

dy = (Y - )

dy2

2008 -52.35 14.79 -67.14 4507.78

2009 82.01 14.79 67.22 4518.53

2010 22.49 14.79 7.7 59.29

2011 -24.23 14.79 -39.02 1522.56

2012 46.05 14.79 31.26 977.19

Total 73.97 11585.35

53 | P a g e

Standard deviation and return of selected tax saving schemes

Table 1.6 Return vs. Risk estimated of selected tax saving schemes

Chart 1.1 Showing returns Vs risk of selected tax saving schemes

0

10

20

30

40

50

60

70

HDFC Franklin DSP BlackRock

SBI Reliance

Return

Standard Deviation

Fund Return Standard deviation

HDFC 15.58 49.90

Franklin 13.45 48.41

DSP Blackrock 18.75 64.22

SBI 11.06 54.22

Reliance 14.79 53.82

54 | P a g e

Interpretation: From the table 1.6 shows that average return and standard deviation details.

From the table it can be seen that DSP Blackrock fund making highest average return of 18.75%

during the period. However it‟s also facing highest risk of 64.22 of all the four funds. The SBI

fund, HDFC fund, Franklin India funds and Reliance fund are making similar amount average

return but risk is not much higher.

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Chapter [8] :- Conclusions &

Findings

56 | P a g e

Chapter [8]: - Conclusions & Findings

CONCLUSION

Mutual funds are one of the best investments ever created because they are very cost efficient

and very easy to invest in. All the selected schemes have allocated majority of corpus to large

cap stock and some schemes also have allocation to mid cap. Various external causes affect the

fund performance. It is suggestible for the investors to choose the right scheme according to their

risk apatite tolerance and objective of the scheme. And it is always suggested to invest in equity

schemes for longer tenure. Investors while investing in the mutual funds is very cautious.

SUMMARY OF FINDINGS

In order to know the performance of the tax saving schemes in mutual fund as per the research

design from five selected AMC company data was collected. Further the data was analyzed in

previous chapter evaluating by (Average return and standard deviation determination methods of

mutual fund) to getting some finding.

An Individual can take an advantage of this funds and schemes to save tax by investing

maximum of Rs 1,00,000.

After analyzing the data, it is understood that the DSP BlackRock Tax Saver, Reliance

Tax Saving, Franklin India Tax Shield and HDFC Tax saver fund have performed better

with average return of 18.75, 14.49, 13.45 and 15.58% respectively.

Further, DSP BlackRock Tax Saver has a higher risk (standard deviation) of 64.22, which

has given the highest return among selected schemes. In the case of return, the SBI

Magnum Tax Gain has given less return with a high risk (standard deviation) of 54.22%.

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Chapter [9] :- SUGGESTIONS &

Recommendations

58 | P a g e

Chapter [9] :- SUGGESTIONS & Recommendations

Investors can go ahead in investing in DSP BlackRock Tax Saver, Reliance Tax Saving,

Franklin India Tax Shield and HDFC Tax saver fund for acquiring better returns as well

as tax savings.

SBI AMC has to revise SBI Magnum Tax Gain portfolio to increase fund returns and

provide to the investors a more secure investment option along with tax saving.

The Franklin India Tax Shield scheme tends to hold portfolio that were less risky than the

market portfolio.

According return against the risk schemes will be ranked accordingly DSP BlackRock

fund is ranked 1st, HDFC fund 2nd, Reliance fund is 3rd, Frankline fund is 4th and SBI fund

is 5th .

AMC‟s should take more efforts on spreading awareness about taxing mutual funds as

these investment instruments provides a higher return with tax saving

It should also induce technology that reduces turnaround time for services like

investment, redemptions and transfers and bring them on par with bank in turnaround

time.

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BIBLOGRAPHY

60 | P a g e

BIBLOGRAPHY

Books:

Gordon E. (2008) Financial Markets and Services, Mumbai; Himalaya Publising House.

Sadhak H. (2008) Mutual Funds in India (Marketing Strategies and Investment

Practices), New Delhi; Sage Publication.

Chandra P. (2010) Investment Analysis and Portfolio Management, Noida; Tata Mcgraw

Hill Education.

Mehrotra C.H. (2012) Direct Taxes Law & Practice, Agra; Sahitya Bhawan Publication.

Websites:

http://www.amfiindia.com

http://www.valueresearchonline.com

http://www.moneycontrol.com

http://www.mutualfundsindia.com