STUDY THE PERFORMANCE OF MUTUAL FUND SCHEMES IN THE FRAMEWORK OF RISK AND RETURN

A

DISSERTATION REPORT ON

“A STUDY THE PERFORMANCE OF MUTUAL FUND SCHEMES IN THE FRAMEWORK OF RISK AND RETURN”. (ELSS)

TO Share khan LIMITED

Dissertation submitted in partial fulfillment of the requirements of Bangalore

University for the Award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Of

BANGALORE UNIVERSITY

SUBMITTED BY:

Under the Guidance of

Mr.VAGGANA VAR

R.K INSTITUTE OF MANAGEMENTAND COMPUTER SCIENCE

Bellandur Gate, Sarjapur Main Road

Banglore-560034

STUDENT DECLARATION

I hereby declare that this dissertation titled “A STUDY THE PERFORMANCE OF MUTUAL FUND SCHEMES IN THE FRAMEWORK OF RISK AND RETURN”. (ELSS) submitted by me to the department of management, Bangalore University in partial fulfillment of requirements of MBA program is a bonafide work carried by me under the guidance of Mr. VAGGANAVAR. This has not been submitted earlier to any other university or institution for the award of any degree / diploma / certificate or published any time before.

BASAVARAJ.Y

ACKNOWLEDGEMENT

Working in a well-reputed organization is a challenging task. I have

completed this study on time. This study could not have been successful without

the help of following persons.

I sincerely express my thanks to Mr. VAGGANAVAR Lecturer,

Department Of Management Studies, for giving me timely advice and suggestions

as internal guide of MBA Department, RKIMCS, Bangalore.

I wish to thank all faculty members of Department of Management

Studies, RKIMCS, Bangalore and my dear friends for their co-operation and

support.

Last but not least I would like to thank my family members for moral

support and encouragement they have given.

Place: Bangalore BASAVARAJ.Y

Date: (Reg. No. 07JPCM6027)

LIST OF CONTENTS

CHAPTER

NO CONTENTS

PAGE

NO

EXECUTIVE SUMMARY 1

1 INTRODUCTION

Part A: About the Industry

Part B: About the Subject

2-5

6-17

2 RESEARCH DESIGN

Statement of the Problem

Objective of the Study

Sample design

Need for study

Scope of study

Research design

Operational definition of the concepts

Tools and techniques for data collection

Limitations of the Study

Overview of Chapter scheme

18-27

3 COMPANY PROFILE

Introduction

Objectives, vision, culture and values

Strategy

Product profile

Competitors

28-43

4DATA ANALDDATA ANALYSIS AND INTERPRETATION 44-69

5 SUMMARY OF FINDINGS, CONCLUSIONS,

SUGGESTIONS AND RECOMMENDATIONS

70-76

BIBLIOGRAPHY 77

LIST OF TABLES

TABLE

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PAGE

NO

1 Table showing the monthly return of Birla Sunlife tax relife96 45

2 Table showing the calculation rsk,beta, trenyor,share and

jenson

46

3 Table showing the monthly return of Franklin India Taxshield 50


jenson

51

5 Table showing the monthly returns of hdfc tax saver 55


jenson

56

7 Table showing the SBI magnum Taxgain 60


jenson

61

9 Table showing the Sundaram tax saver98 65


jenson

66

LIST OF GRAPHS

TABLE

NO

CONTENTS PAGE

NO

1 Graph showing the Birla Sunlife tax relief96 nav movement 49

2 Graph showing the Franklin India Taxshield 54

3 Graph showing the hdfc tax saver 59

4 Graph showing the sbi magnum tax gain 64

5 Graph showing the Sundaram tax saver 98 69

EXECUTIVE SUMMARY

Financial market’s main function is to facilitate transfer of funds from surplus

sectors to deficit sectors. A financial market consists of investor or buyers, sellers, dealers

and does not refer to physical location. Indian financial system consists of two markets,

viz. money and capital market. The core of money market is the inter-bank call money

market. It has two components - organised and unorganised.

Capital market provides the framework in which savings and investments take

place. On one hand it enables companies to raise resources from the investing community

and on the other, it facilitate households to invest their savings in industrial or

commercial activities. The capital market consists of primary and secondary segments. In

primary market it deals with the issue of new instruments by the corporate sector such as

equity shares, preference shares, and debentures. The secondary market or stock

exchanges where existing Securities are traded. Capital market plays a major role in

Indian financial system.

So, Equities & mutual fund is the part of capital market. Mutual fund industry in

India began with setting up of Unit Trust of India (UTI) in 1964 by the government of

India. Now a day mutual fund is playing very important role in the industry. Investors

will get the benefit of return, capital appreciation, tax benefits and safety to there

investment and companies will get the capital for there growth. Recently they have also

started Systematic Investment Plan(SIP) with the help of this even small investors

(minimum of Rs. 100)can start investing, by this even students can also invest in this

fund. So, we came to know how this mutual fund works. .

The saving of an individual are spread through different means of investment one

of them is mutual fund which is a growing investment now a days because of diversified

risk and lack of time to look after their money.

CHAPTER-1

INTRODUCTION

1.1 ABOUT THE INDUSTRY

Indian capital market is one of the oldest and largest capital markets of the world.

It history can be traced back to 19th century. The first instance of organized trading

corporate securities in India is related to the trading in securities of East India Company.

The concept of limited liability introduced with enactment of companies act, 1850 helped

in commencing an era of joint-stock companies, which in turn paved the way for the

development of capital market. In due course, broker used to assemble at some common

places to conduct trade. By 1874, Dalal Street in Mumbai became a prominent place of

meeting of the broker. Bombay Stock Exchange (BSE) the first organized stock

exchange in the country was started functioning in 1875. However, it was in 1887 the

BSE formally established as a society named Native Share and Stock Brokers

Association.

The effects of industrial revolution began to be felt in India by the dawn of 20 th

century. This period was also marked by the Swadeshi Movement which created much

industrial enthusiasm in the country. During the period of first and Second World War,

industrial sector as well as capital market exhibited much dynamism. After independence

the Indian government gave priority to the infrastructure development, considering the

urgency of proceeding with large scale industrial development. Accordingly many

financial institutions like IFC, ICICI, LIC, UTI, and IDBI were established to accelerate

the pace of industrialization in India. The promulgation of the companies’ act, 1956

based on recommendations of the company Law committee was another important event.

The passing of FERA 1973 limited the share holding of foreign firms to 40%, if they

were recognized to be as Indian company. For diluting their share holding, many MNC’s

offered shares to the public at attractive rates. Encouraged by good response to these

issues, much domestic company also came out with public issues. Individual investors

were enthusiastic to invest in the capital market as the found equity investment to be

hedge against inflation and source of higher earning compared to other investments.

CAPITAL MARKET OPERATIONS

It consist manly of primary market operation and secondary market operations.

Primary market or new issue market deals with the issue of new securities to investors on

facilitates the corporate sectors in raising funds. The primary market is made up of two

components: where the firms go public for the first time through initial public offering

and where the firms which are already traded raise additional capital through seasoned

equity offerings.

In the Secondary market the securities which are floated and subscribed in the

primary market are traded. The primary function of stock exchange or secondary market

is to provide liquidity of capital and continuous market for outstanding securities. The

stock exchange brings about a correct evaluation of securities and set prices of securities

close to their investment worth.

OVERVIEW OF INDIAN STOCK MARKET

The only stock exchanges operating in the 19th century were those of Mumbai set

up in 1875 and Ahmadabad set up in 1894. These were organized as voluntary non-profit

making associations of brokers to regulate and protect their interest. Before the control on

securities trading became a central subject under the Constitution in 1950, it was a state

subject and the Bombay Security Contracts (Control) Act of 1925 used to regulate trading

in securities. Under this act, the Bombay Stock Exchange was recognized in 1927 and

Ahmadabad in 1937. During the war boom, a number of stock exchanges were organized

even in Mumbai, Ahmadabad and other centers, but they were not recognized. Soon after

it became a central subject. Central legislation was proposed and a committee headed by

A.D. Gorwala went into the Bill for securities regulation. On the basis of the committee’s

recommendations and public discussion, the Securities Contracts (Regulation) Act

SC(R) Act became law in 1956.

Stock exchange

“Stock Exchange means any body or individuals whether incorporated or not,

constituted for the purpose of assisting, regulating or controlling the business of buying,

selling, or dealing in securities”. It is an association of member brokers for the purpose of

self – regulation and protecting the interests of its members. It can operate only if it is

recognized by the government under the Securities Contracts (Regulation) Act, 1956. The

recognition is granted under section 3 of the act by the central government, ministry of

finance.

Present recognized stock exchanges

At present, there are 21 stock exchanges recognized under the securities contracts

(regulation) Act, 1956. They are located at Bombay, Calcutta, Madras, Delhi,

Ahmedabad, Hyderabad, Indore, Bhuwandeshwar, Mangalore, Patna, Bangalore, Rajkot,

Guwahati, Jaipur, Kanpur, Ludhiana, Baroda, Cochin and Pune. The recently recognized

stock exchanges are at Coimbatore and Meerut. Visakhanatnam stock exchange was

recognized in 1996 for electronic trading. A stock exchange has also been sought for this

body as the jurisdiction of the Securities Contracts (Regulation) Act, 1956 has not so far

been extended to the areas covered by the state. A decade ago, there were hardly 8 stock

exchanges in the country. There is no trading, how ever, in Meerut and Vishakhapatnam

stock exchanges.

The Bombay Stock Exchange (BSE) and the National Stock Exchange of India

Ltd (NSE) are the two primary exchanges in India. In addition, there are 22 Regional

Stock Exchanges in India. However, the BSE and NSE have established themselves as

the two leading exchanges and account for about 80% of the equity volume traded in

India.

The NSE and BSE are equal in size in terms of daily traded volume. The average

daily turnover at the exchanges has increased from 851 crore in 1997-98 to 1,284 crore in

1998-99 and further to Rs 2,273 crore in 1999-2000 (April –August 1999).

NSE has around 1500 shares listed with a total market capitalization of around 9,21,500

crores.The BSE has over 6000 stocks listed and has a market capitalization of around

9,68,000 cores.

The primary index of BSE is BSE Sensex comprising 30 stocks. NSE has the

S&P NSE 50 Index (NIFTY) which consists of fifty stocks. The BSE Sensex is the older

and more widely followed index. Both the exchanges have switched over from the open

outcry trading system to a fully automated computerized mode of trading known as (BSE

Online Trading) BOLT and (National Exchange Automated Trading) NEAT system. It

facilitates more efficient processing, automatic order matching, faster execution of trades

and transparency.

The key regulator governing stock exchanges, brokers, depositories, depository

participants, mutual funds, FII and other participants in Indian secondary and primary

market is the Securities & Exchange Board of India (SEBI) Ltd.

1.2 ABOUT THE SUBJECT

HISTORY OF THE MUTAL FUND

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

common financial goal. The money thus collected is then invested in capital market

instruments such as shares, debentures and other securities. The income earned through

these investments and the capital appreciations realized are shared by its unit holders in

proportion to the number of units owned by them. Thus a Mutual Fund is the most

suitable investment for the common man as it offers an opportunity to invest in a

diversified, professionally managed basket of securities at a relatively low cost.

Definition of Mutual Fund-

The SEBI (MF) Regulations, 1993 defines mutual fund as “A fund established in

the form of a trust by a sponsor to raise monies by the trustees through the sale of units to

the public under one or more schemes for investing in securities in accordance with these

regulations.”

Mutual Fund Industry-

Mutual fund industry in India began with setting up of Unit Trust of India

(UTI) in 1964 by the government of India. During last 39 years UTI has grown to be a

dominant player in the industry. The UTI is governed by a special legislation, the Unit

Trust of India Act 1963. In 1987 public sector banks and insurance companies were

permitted to set up mutual funds and accordingly in 1987 six public sectors banks have

set up mutual funds. Also the two insurance companies LIC and GIC established the

mutual funds.

Securities Exchange Board of India (SEBI) formulated the mutual fund regulation

in 1993, which for the first time established a comprehensive regulatory framework for

the mutual fund industry. Since then several mutual funds have been set up the private

and joint sectors.

History of Mutual Fund-

The mutual fund industry in India started in 1963 with the formation of Unit Trust

of India, at the initiative of the Government of India and Reserve Bank. The history of

mutual funds in India can be broadly divided into four distinct phases.

First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It

was set up by the Reserve Bank of India and functioned under the Regulatory and

administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the

RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and

administrative control in place of RBI. The first scheme launched by UTI was Unit

Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

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

1987 marked the entry of non- UTI, public sector mutual funds set up by public

sector banks and Life Insurance Corporation of India (LIC) and General Insurance

Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund

established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National

Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90),

Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989

while GIC had set up its mutual fund in December 1990.

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

With the entry of private sector funds in 1993, a new era started in the Indian

mutual fund industry, giving the Indian investors a wider choice of fund families. Also,

1993 was the year in which the first Mutual Fund Regulations came into being, under

which all mutual funds, except UTI were to be registered and governed. The erstwhile

Kothari Pioneer (now merged with Franklin Templeton) was the first private sector

mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive

and revised Mutual Fund Regulations in 1996. The number of mutual fund houses went

on increasing, with many foreign mutual funds setting up funds in India and also the

industry has witnessed several mergers and acquisitions.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI

was bifurcated into two separate entities. One is the Specified Undertaking of the Unit

Trust of India with assets under management of Rs.29, 835 corers as at the end of January

2003, representing broadly, the assets of US 64 scheme, assured return and certain other

schemes. The Specified Undertaking of Unit Trust of India, functioning under an

administrator and under the rules framed by Government of India and does not come

under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC.

It is registered with SEBI and functions under the Mutual Fund Regulations. With the

bifurcation of the erstwhile UTI which had more than Rs.76, 000 crores of assets under

management and with the setting up of a UTI Mutual Fund, conforming to the SEBI

Mutual Fund Regulations, and with recent mergers taking place among different private

sector funds, the mutual fund industry has entered its current phase of consolidation and

growth.

Concept of Mutual Fund-

Steps of concepts of Mutual Fund-

1. Many investors with the common objective pool their money in Mutual Fund.

2. Investors on a proportionate basis, get mutual fund units for the sum contributed

to the pool.

3. The money collected by the investors is invested into the shares, debentures

and other securities by the Fund Manager.

4. The Fund manager realizes gains or losses, and collects dividends or interest

Income.

5. Any capital gains or losses from such investment are passed on to the

6. Investors in proportion of the number of units held by them.

Any change in the value of the investments made into capital market instruments

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

NAV is defined as the market value of the Mutual Fund scheme's assets net of its

liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets

by the total number of units issued to the investors.

Working of Mutual Fund

To protect the interest of the investors, SEBI formulates policies and regulates the mutual funds. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time. MF either promoted by public or by private sector entities including one promoted by foreign entities is governed by these Regulations.

SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types of securities. Custodian, registered with SEBI, holds the securities of various schemes of the fund in its custody.

According to SEBI Regulations, two thirds of the directors of Trustee Company or board of trustees must be independent.The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual funds that the mutual funds function within the strict regulatory framework. Its objective is to increase public awareness of the mutual fund industry.

AMFI also is engaged in upgrading professional standards and in promoting best industry

practices in diverse areas such as valuation, disclosure, transparency etc.

Organization of a Mutual fund

There are many entities involved and the diagram below illustrates the

organizational set up of a mutual fund:

Types of Mutual Fund schemes-

A. Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or close-ended

scheme depending on its maturity period.

1. Open-ended Fund/ Scheme

An open-ended fund or scheme is one that is available for subscription and

repurchase on a continuous basis. These schemes do not have a fixed maturity period.

Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices

which are declared on a daily basis. The key feature of open-end schemes is liquidity.

2. Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The

fund is open for subscription only during a specified period at the time of launch of the

scheme. Investors can invest in the scheme at the time of the initial public issue and

thereafter they can buy or sell the units of the scheme on the stock exchanges where the

units are listed. In order to provide an exit route to the investors, some close-ended funds

give an option of selling back the units to the mutual funds NAV related prices. SEBI

Regulations stipulate that at least one of the two exit routes is provided to the investor i.e.

either repurchase facility or through listing on stock exchanges. These mutual funds

schemes disclose NAV generally on weekly basis.

B. Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or balanced

scheme considering its investment objective. Such schemes may be open-ended or close-

ended schemes as described earlier. Such schemes may be classified mainly as follows.

1 Equity Funds-

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

fund types, but they also provide higher returns than other funds. It is advisable that an

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

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

the order of decreasing risk level, there are following types of equity funds:

Growth Funds - Growth Funds also invest for capital appreciation (with time

horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in

the sense that they invest in companies that are expected to outperform the market

in the future. Without entirely adopting speculative strategies, Growth Funds

invest in those companies that are expected to post above average earnings in the

future.

Sector Funds: Equity funds that invest in a particular sector/industry of the

market are known as Sector Funds. The exposure of these funds is limited to a

particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or

Fast Moving Consumer Goods) which is why they are more risky than equity

funds that invest in multiple sectors.

Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower

market capitalization than large capitalization companies are called Mid-Cap or

Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of

big, blue chip companies (less than Rs. 2500 crores but more than Rs. 500 crores)

and Small-Cap companies have market capitalization of less than Rs. 500 crores.

Market Capitalization of a company can be calculated by multiplying the market

price of the company's share by the total number of its outstanding shares in the

market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of

Large-Cap Companies which gives rise to volatility in share prices of these

companies and consequently, investment gets risky.

Equity Linked Saving Scheme- These funds are well diversified and reduce

sector-specific or company-specific risk. However, like all other funds diversified

equity funds too are exposed to equity market risk. One prominent type of

diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As per

the mandate, a minimum of 90% of investments by ELSS should be in equities at

all times. ELSS investors are eligible to claim deduction from taxable income (up

to Rs 1 lakh) at the time of filing the income tax return. ELSS usually has a lock-

in period and in case of any redemption by the investor before the expiry of the

lock-in period makes him liable to pay income tax on such income(s) for which he

may have received any tax exemption(s) in the past.

Dividend Yield Funds -The objective of Equity Income or Dividend Yield

Equity Funds is to generate high recurring income and steady capital appreciation

for investors by investing in those companies, which issue high dividends. Equity

Income or Dividend Yield Equity Funds are generally exposed to the lowest risk

level as compared to other equity funds.

Gold Fund- The objective of this fund is accumulating the money at the gold rate

according to the units held by the investors. This is one of the new fund

introduced. Here all the investors will invest for the pool account of mutual fund

and that amount is invested in the gold. And according to the fluctuation of the

rates of gold in the market, fund manager invest when rates are in good rates like

this profit earned from this gold fund is distributed according to the units held by

the investors

2. Debt funds-

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

companies, banks, financial institutions, governments and other entities belonging to

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

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

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

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

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

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

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

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

returns are more risky. Based on different investment objectives, there can be following

types of debt funds:

Diversified Debt Funds - Debt funds that invest in all securities issued by entities

belonging to all sectors of the market are known as diversified debt funds. The best

feature of diversified debt funds is that investments are properly diversified into all

sectors which results in risk reduction. Any loss incurred, on account of default by a

debt issuer, is shared by all investors which further reduces risk for an individual

investor.

High Yield Debt funds - As we now understand that risk of default is present in all

debt funds, and therefore, debt funds generally try to minimize the risk of default by

investing in securities issued by only those borrowers who are considered to be of

"investment grade". But, High Yield Debt Funds adopt a different strategy and prefer

securities issued by those issuers who are considered to be of "below investment

grade". The motive behind adopting this sort of risky strategy is to earn higher

interest returns from these issuers. These funds are more volatile and bear higher

default risk, although they may earn at times higher returns for investors.

Assured Return Funds - Although it is not necessary that a fund will meet its

objectives or provide assured returns to investors, but there can be funds that come

with a lock-in period and offer assurance of annual returns to investors during the

lock-in period. Any shortfall in returns is suffered by the sponsors or the Asset

Management Companies (AMCs). These funds are generally debt funds and provide

investors with a low-risk investment opportunity. To safeguard the interests of

investors, SEBI permits only those funds to offer assured return schemes whose

sponsors have adequate net-worth to guarantee returns in the future. In the past, UTI

had offered assured return schemes (i.e. Monthly Income Plans of UTI) that assured

specified returns to investors in the future. UTI was not able to fulfill its promises and

faced large shortfalls in returns. Eventually, government had to intervene and took

over UTI's payment obligations on itself. Currently, no AMC in India offers assured

return schemes to investors, though possible.

Fixed Term Plan Series - Fixed Term Plan Series usually are closed-end schemes

having short-term maturity period (of less than one year) that offer a series of plans

and issue units to investors at regular intervals. Unlike closed-end funds, fixed term

plans are not listed on the exchanges. Fixed term plan series usually invest in debt /

income schemes and target short-term investors. The objective of fixed term plan

schemes is to gratify investors by generating some expected returns in a short period.

3. Balanced Fund-

A balanced fund is one that has a portfolio comprising debt instruments,

convertible securities, and Preference equity shares. Their assets are generally held in

more or less equal proportions between debt/money market securities and equities. By

investing in a mix of this nature, balanced funds seek to attain the objectives of

income, moderate capital appreciation and preservation of capital, and are ideal for

investors with a conservative and long-term orientation.

ADVANTAGES AND DISADVENTAGE OF MUTUAL FUND

ADVANTAGES OF MUTUAL FUND:

1. Portfolio Diversification: Mutual Funds invest in a well-diversified portfolio

of securities which enables investor to hold a diversified investment portfolio

(whether the amount of investment is big or small).

2. Professional Management: Fund manager undergoes through various research

works and has better investment management skills, which ensure higher returns

to the investor than what he can manage on his own.

3. Less Risk: Investors acquire a diversified portfolio of securities even with a

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

than investing in merely 2 or 3 securities

4. Low Transaction Costs: Due to the economies of scale (benefits of larger

volumes), mutual funds pay lesser transaction costs. These benefits are passed on

to the investors.

5. Flexibility: Investors also benefit from the convenience and flexibility offered

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

equity scheme and vice-versa. Option of systematic (at regular intervals)

investment and withdrawal is also offered to the investors in most open-end

schemes.

6. 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.

DISADVANTAGES OF MUTUAL FUND

1. Cost control not in the Hands of an Investor: Investor has to pay

investment management fees and fund distribution costs as a percentage of the

value of his investments (as long as he holds the units), irrespective of the

performance of the fund.

2. No Customized Portfolios: The portfolio of securities in which a fund invests

is a decision taken by the fund manager. Investors have no right to interfere in the

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

constraint in achieving their financial objectives.

3. Difficulty in Selecting a Suitable Fund Scheme: Many investors find it

difficult to select one option from the plethora of funds/schemes/plans available.

Mutual Fund

Type

Who

Should

Invest

Objective Investment

Portfolio

Risk Term of

investment

Growth Fund Aggressive

investors

High growth Equity shares High

Risk

3-5 years

Sector Fund Aggressive

investors

High growth Equity shares Very

high

1-3years

Mid-cap and

Small-cap

Fund

Aggressive

investors

Long term

growth

Equity shares High

risk

1-3 years

Equity Linked

Saving

Scheme

Moderate

and

aggressive

investors

Long-term

growth with

tax saving

Equity shares High 1-3years

Dividend Fund Moderate

Investors

Return Preference

shares

Low 1-3 years

Gold Fund Moderate

and

aggressive

investors

Long term

growth

Equity shares Low 3-5 years

Diversified

debt

Moderate

and

aggressive

investors

High growth Equity shares

and

Preference

share

High 1-3years

High yield

debt

Moderate

Investors

High Return Equity shares Low 1-3years

Assured return Moderate

Investors

Return Equity shares Low 1-3years

Fixed term

plan

Moderate

Investors

Moderate

Investors

Equity shares Low 3-5 years

CHAPTER-2

RESEARCH METHODOLOGY

2.1 STATEMENT OF THE PROBLEM

In India, very little work has been done to investigate fund managers forecasting

abilities. Active fund managers are expected to reward higher return. If the fund manager

feels that market on the whole overvalued, then he would get out of the market. Hence

the present study has the objective of finding out. The performance of mutual fund

schemes in the framework of risk and return. (ELSS)

2.2 OBJECTIVE OF THE STUDY:

To identify the risk & return involved in Mutual funds.

To study the concept of mutual funds

To compare the performance of different mutual funds.

To understand the concept of Net Asset Value (NAV) and mutual fund

SAMPLE DESIGN

The population consists of 5 old funds of risk and return of last three year the entire

population has been taken in to consideration for the study.

Need for the Study

Business concerns, corporate investors worldwide are using these new financial

instruments; “Mutual Funds” effectively to reduce substantial loss, countries have proved

that these instruments can effectively reduce risk.

There has always been high volatility in India, which leads to very high-risk levels. So

there is an absolute need to develop. This concept makes all the investors aware of its

advantages and makes them use these instruments according to their needs.

To study the concept of Mutual funds such as how mutual funds have come into

existence, the different types of mutual funds schemes such as open ended schemes

closed ended schemes, to compare the performance of different mutual funds to

understand the concept of NAV and mutual funds, to identify the different players in

mutual fund industry, to compare equity funds with sensex and nifty

2.3 SCOPE OF THE STUDY:

This study covers Equity Linked Savings Schemes (ELSS) of six AMC’s, of

which Share khan is a distributor.

The study covers the period of past three years i.e. from Jan 2006 to Dec

2008.

The study covers only open ended type.

The study applies only three approaches to evaluate performance, namely

Treynor’s Index, Sharpe’s Index and Jensen’s Index.

2.4 RESEARCH DESIGN

The methodology is the plan, structure and strategy of the investigation process

that sets out to obtain answer to the study. The methodology followed for the collecting

information are using two sources of data namely

Primary Data

Secondary Data

Primary Data

The data collected first hand by the researcher concerned with the research

problem refers to the Primary data.

Personal discussion was made with Unit manager and interaction with other

personnel in the organization for this purpose. There is no formal design of questionnaire

used in this study.

Secondary Data

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

facilitating the study undertaken is called as Secondary Data.

The various sources that were used for the collection of secondary data are

Various Text books were used to understand the concepts of portfolio

management.

Websites – Various sites like www.5paise.com, www.sharekhan.com

www,amfi.com www.bseindia.com and other websites.

Newspapers such as Economic Times, Financial Express.

Magazines such as Business World, Business Today, Investors Guide, Capital

Market.

2.5 OPERATIONAL DEFINITIONS OF CONCEPTS

NET ASSET VALUE (NAV)

Net Asset Value (NAV) denotes the performance of particular scheme of a mutual fund.

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 held by the scheme.

Since market value of securities changes every day, NAV of a scheme also varies on day-

to-day basis. The NAV per unit is market value of securities of scheme divided by the

total number of units of the scheme on any particular date.

Formula of the calculation of Net Asset Value (NAV)

Market Value of Investments

Net Asset Value =

No. of units Outstanding

http://www.bseindia.com/

http://www.sharekhan.com/

THE CONCEPT OF RETURN

Return can be defined as the amount or rate or produce, proceeds, gain profit which

accrues to an economic agent from an undertaking or enterprise or real/ financial

investment. It is a reward for and a motivating force behind investment, the objective of

which is usually to maximize return.

Return is said to have two components

The basic one, which is the periodic cash or income receipts, either interest or dividend.

The other which is the appreciation or depreciation in the price of value of the asset, or

called the capital gain or capital loss.

The total return can thus be defined as

R= Income + (-) Price Appreciation (Depreciation)

Required Rate of Return of Expected Return

The concept of required rate of return plays an important role in the valuation of assets

and in both financial and real investment decisions.

The required rate of return for a security is defined as the minimum expected rate of

return needed to induce or persuade an investor to purchase the security, given its risk.

The required rate of return has two components:

Risk-Free rate of Return, which is the basic temporal exchange rate in the economy. It

can be defined as that reward or price which is expected by an investor to induce him to

forgo his present consumption in favor of future consumption plus a premium for

expected inflation.

The second component is the Risk Premium. The rational risk hover investor, purchasing

an asset, expects to be compensated for the risk. The premium for risk must reflect all

the uncertainty involved in investing in the security. Thus

Required Rate of Return = Risk Free Rate of Return + Risk Premium

It should be noted that there are many financial assets, and therefore, many required rates

of return. They are also different within a particular asset class or category. The RRR

may change over a period also. The RRR and market interest rate are positively related.

RISK – RETURN TRADE OFF

The objective of maximizing return can be pursued only at the cost of incurring higher

risk. The financial markets offer a wide range of assets from very safe to very risk, with

corresponding low to high returns. The investor has to consider both its return potential

and risk involved while selecting the asset for investment. The empirical evidence shows

that generally there is a high correlation between risk and return over a long period. The

securities are generally priced such that high risk is rewarded with high return, and low

risk is accompanied by a corresponding low return. This relationship is known as risk –

return trade off.

MEASUREMENT OF HISTORICAL RETURN

The total return on an investment for a given period is

Total Returns = cash payment received during the year+ Price change over the period

Price at the beginning of the period

RISK

Risk refers to the possibility that the actual outcome of an investment will differ from the

expected outcome. In other words, risk refers to the variability or dispersion. If an

asset’s return has no variability, it is risk less. The risk of a portfolio can be measured in

various ways. The two most commonly used measures of risk are

Variance

Beta

VARIANCE AND STANDARD DEVIATION

The most commonly used measure of risk in finance is variance or the standard deviation.

The variance and the standard deviation of a historical return series are defined as

follows:

² = ∑ (x-x')² N-1

Where

² : Variance of Return

: Standard Deviation of Return

X : Return for the stock in period

x' : Arithmetic Return

N : Number of periods

BETA

The sensitivity of a security to market movements is called beta (β). A measure of risk

commonly advocated is beta. It represents the most widely accepted measure of the

extent to which the return on a security fluctuates with the return on the market portfolio.

It describes the relationship between the securities return and the index returns. To

calculate the beta of a portfolio, regress the rate of return of the portfolio on the rate of

return of a market index. The slope of this regression line is the portfolio beta. By

definition, the beta for the market portfolio is 1. Beta of a portfolio can be calculated as

follows

Beta (βA) = COV ( RA,RM)

²M

Where

RA : Return of the portfolio A

RM : Return of the market M

R’A : Average rate of return of portfolio A

R'M : Average rate of return of market M

N : Number of periods

COV (RA, RM) = ∑ (RA-R'A)(RM-R'M)

(N-1)²M = ∑ (RM-R'M)²

(N-1)

RISK ADJUSTED PERFORNMANCE MESURES

1. A MEAN – VARIANCE MODEL

The simplest measures of risk – adjusted performance have their roots in the mean –

variance framework developed by Harry Markowitz in the early 1950’s, In the mean-

variance world, the standard deviation of an investment measures its risk and the return

earned is the reward. If you compare two investments with the same standard deviation

in returns, the investment with the higher average return would be considered the better

one.

2. SHARPE’S INDEX (SI)

It is the measure of risk premium related to the total risk. It gives a single value

to be used for the performance ranking of various funds or portfolios. This risk premium

is the difference between the portfolio’s average rate of return and the risk free rate of

return. The standard deviation of the portfolio indicates the risk. It assigns the highest

values to assets that have best risk-adjusted rate of return.

The Sharpe ratio is a versatile measure that has endured the test of time. Its focus is on

the standard deviation as the measure of risk does bias it against portfolios that are

diversified widely across the market. A sector specific mutual fund (such as Pharma or

Banking fund) will tend to do poorly on a Sharpe ratio basis because its standard

deviation will be higher because of the presence of sector-specific. Since investors in

these funds can diversify the risk by only way of holding multiple funds, it does seem

unfair to penalize these funds for them.

Sharpe’s Index SI given by the formulae

SI = R’A-RF

A

Where,

R’A : Average rate of return of Portfolio A

RF : Average rate of return on a risk-free investment

A : Standard deviation of return of portfolio A.

3. TREYNOR’S INDEX (TI)

It measures the fund’s performance in relation to the market performance.

To understand it better one must know about the Characteristic line. The relationship

between the given market return and the fund return is given by the characteristic line.

The ideal fund’s return rises at a faster rate than the general market performance when

the market is moving upwards and its rate of return declines slowly than the market

return, in the decline.

Treynor’s Index (TI) given by the formulae

TI = R'A-RF

βA

Where

R’A : Average rate of return of Portfolio A


βA : Beta of portfolio A

JENSEN’S INDEX

The absolute risk adjusted return measure was developed by Michael Jensen and

commonly known as Jensen’s measure. It is mentioned as measure of absolute

performance because a definite standard is set and against that the performance is

measured. The standard is based on the manager’s predictive ability. Successful

prediction of the security price would enable the manager to earn higher returns than the

ordinary investor expects to earn in a given level of risk. The basic model of Jensen is

Jensen index = R'A-[RF+ βA(R'M-RF)]

Where

R'A : Average rate of return of Portfolio A


βA : Beta of portfolio A

R'M : Average rate of return of market M

There have been a number of studies of Mutual Fund performance using the above three

indices. Most studies have found that the fund managers are unable systematically to

beat the market and hence they do not out perform an unmanaged (yet diversified)

portfolio such as the index.

2.6 TOOLS AND TECHNIQUES

Performance measure

Trenor’s Index

Sharpe’s Index

Jensen’s Index

Statistical techniques

Mean

Standard Deviation

2.7 LIMITATIONS OF THE STUDY

Not all the information required was freely available.

Interaction with the company professional was limited, due to their busy schedule.

The study is limited to the evaluation of performance of the selected funds.

NAV s considered for the calculations of returns is obtained from AMFI website

and the same is taken as true value without verification.

2.8 AN OVERVIEW OF THE REPORT

Chapter 1.

Provide a brief insight in to the topic, the theoretical background of the study and

also deals with industrial background of the study.

Chapter 2.

Includes the statement of the problem, review of literature. Objectives of the study,

significance of the study, operational definition of the concepts, research design of data, ,

tools of gathering data, an overview of the report, scope and limitations of the study.

Chapter 3.

Provides information relevant to the origin of the organization. It also gives the

present status of the organization and briefs the growth and development plans of the

organization, its future prospects, the structure and the functional departments in the

organization and also provides a profile of the respondents.

Chapter 4.

Provides the classification and tabulation of collected data, its analysis and

interpretation.

Chapter 5.

Provides a summary of the findings and includes the conclusion and

recommendations of the researcher.

3.1 COMPANY PROFI CHAPTER-3

COMPANT COMPANY PROFILE

3.1COMPANY PROFILE

Share khan is a retail broking arm of S.S Kantilla Ishwarlal Investors Services Pvt Ltd, an

organization with more than 8 decades of trust and credibility in the stock market. Share

khan Ltd (Formally SSKI Investors Services Pvt Ltd) was promoted by Mr.Shripal.S

Morakhia and Mr.Shreyas.S Morakhia. It is currently India’s largest broking house. It is a

member of the stock exchange, Mumbai. It is a depository participant of the NSDL and

CDSL. Its business includes stock broking, depository services, portfolio management

and derivatives.

The company’s core specialty lies in its retail distribution with a large network of

branches i.e. 510 share shops (retail shops) in 170 cities in India and

sub-brokers/authorized persons. Its strengths lies in its investment research capabilities.

Its research division has several analysts continuously monitoring global, national and

regional political, economic and social situations so as to assess their impact on the

economy in general, the sectors and companies they research which helps them if

offering quality research and advice to clients.

NATURE OF THE BUSINESS CARRIED:

Share khan is a stock broking company. The company offers a complete range of pre

trade, trade and post trade service on the BSE (Bombay stock exchange) and the NSE

(National stock exchange).

Whether the client come in to the companies conventionally located offices and trade in

a dedicated environment or issue instructions over the phone, our highly trained team and

sophisticated equipment ensure smooth transactions and prompt service.

Investment Advisory service

Facilitation services to Retail Investors, Corporate.

Depository services

Investment options includes:

1. Online trading(Includes equity, derivatives)

2. Commodities trading

3. Mutual funds

4. Portfolio management services

Share khan Branches are conceptualized to be place where investors can come in contact

with investment opportunities in an atmosphere of convenience and comfort. Our services

are available through our network of 510 Share shops spanning 170 major towns and

cities in the country.

Professional seeks to educate clients & end their confusion by custom an Investment Plan

according to the needs of clients and are also today a part of companies induction

program advising employees on how to plan their investments

COMPANY PROFILE WITH REFERENCE TO McKinney’s 7’S MODEL

The McKinney’s 7’s framework model was developed by the consultants of the

McKinney Company, a very well known management consultancy firm in U.S.A,

towards the end of 1970s to diagnose the cause of organizational problems and to

formulate programs for improvements.

The McKinney’s 7s framework is one of the early and widely accepted

framework and it identifies the key factors shown in the Fig. 2.1. McKinney’s 7s

framework provides useful visualization of the key components that managers must

consider in making sure a strategy.

Mckinsey’s consultants call ‘Strategy’ and ‘Structure’ as the hardware of the

organization and other 5s that is System, Style, Staff, Skills and Shared values are the

software of the organization.

STRATEGY

Strategy refers to a set of decisions and actions aimed at gaining a sustainable

competitive advantage.

Organizations must have a consistent set of narrow intentions to move them

towards producer intention and also organization’s most critical responsibility is to

establish the parameter that shape the values, motives and actions of others throughout

the organization. These parameters are called as hierarchy of strategic intent.

The hierarchy of strategic intent includes five types of elements. They are :

1) A Broad Vision of what the organization should be.

2) The organization’s Mission.

3) Specific goals that are operationalised as

4) Various strategic objectives to be reached by acting according to specific.

5) Plans.

VISION

Vision refers to the category of intentions that are broad all inclusive and forward

thinking. A vision describes aspirations for the future without specifying the means that

will be used to achieve those desired ends.

Share khan practices customer centric approach to be the leading broking firm. Our

company Vision is

To be the top most company for providing investment advisory & financial

planning services in India.

To be a leading investment intermediary for transaction through both online and

offline medium.

MISSION

A vision becomes more tangible in the form of a ‘Mission Statement’. Such

statement can verbalize the beliefs and the directions of the organization. Most mission

statements are more specific than anyone’s visionary thinking but they are still hardly

concrete directions for action. Therefore a mission statement tries to make vision more

specific.

To Educate & Empower the individual investor to make better investment

decisions through quality advice & superior service.

Educate & Empower

1) Research backed advice which is easy to understand, retail specific and

discipline.

2) Total equity solutions for the entire investment process.

3) Relationship management

Superior service

1. Integrity

2. Transparency

3. Professionalism

4. Information – product ,news, operations

5. Hassle free trading

6. Enjoyable experience

MILESTONES OF SSKI

1922: The SSKI started its operation in stock broking

1922: The SSKI became the first member in the BSE as institutional broker

1984: Ventured into corporate finance

2002: The site was launched on February 8th in on-line trading

2002: The next generation technology product “Speed trade” was launched on

April 17th

2002: The advanced technology in the online business “ Speed trade plus” was

launched on October 28th for derivative trading

2008: The SSKI crossed US $ 8 billion of private equity dea

ACHIEVEMENTS OF SHARE KHAN:

Rated among the top 20 wired companies along with Reliance, HLL, Infosys, etc

by ‘Business Today’, January 2006 edition

Awarded ‘Top Domestic Brokerage House’ four times by Euro money and Asia

money.

Pioneers of online trading in India amongst the top 3 online trading websites from

India. Most preferred financial destination amongst online broking customers

Winners of “ Best Financial Website” award

India’s most preferred brokers within 5 years. “ Awaaz Consumers Award 2005”

FUTURE PLANS:

2,00,000 plus retail customers being serviced through centralized call centers/web

solutions

Branches/semi branches servicing affluent/ aggressive traders through high skill

financial advisor

250 independent investment managers/franchisee servicing 50,000 highly valued

clients

New initiatives- Portfolio Management Services and Commodities trading

OWNERSHIP PATTERN:

The shareholder of SSKI investor Pvt. Ltd are Mr. Shripal Morkhia, Mr. Shreyas

Morkhia, foreign private equity funds and key employees of the company. The key

promoter of the company is Mr. Shirpal Morkhia who as on march 31, 2005 along with

his family owns 55.47% of the paid up capital of the company and the remaining balance

i.e.54.53% is HSBC, CARLYE, and INTEL PACIFIC.

INFRASTRUCTURE FACILITIES:

Sharekhan outlets are designed to be places where retail investors can come in

touch with Investment opportunities in an atmosphere of convenience and comfort. The

look and feel of the offices across India projects a consistent branch image for the

company. The features that enable a unique facility for retailing financial service include

among others.

3.2 PRODUCT PROFILE

The share khan provides trade execution facility for equity, commodity backed

with investment and derivatives.

EQUITY TRADING

Equity share is a product which represents ownership capital. Those shares of the

company which are listed in NSE and BSE can be purchased and sold through brokers.

COMMODITY TRADING

It comprises of raw material and products that can be traded on special

commodity exchange across the country. Sharekhan is founder member of two major

commodity exchanges, the MCX and NCDEX and offers trading facility for the

following commodities and both these exchanges:

Bullion: Gold and Silver

Oil and Oil seed: Castor, Soya, Rapeseed/Mustard Oil, Crude Palm

Oil, RBD Palmolein.

Soft Commodities: Cotton.

Spices and Plantation: Pepper and Rubber.

DERIVATIVE TRADING

Derivative is product which derives their values from the underlying asset or

securities in a contractual manner. The underlying asset can be Equity, commodity or

any other asset.

SERVICE

Share khan is a complete service orient organization serves a vast range of

customers all over India. The trading services are design to offer an easy, hassle free

trading experience and the customer will be entitle to a host of value added

services ,intended to assist investment process depending on investor investing style. The

main service provided by Sharekhan is Depository service, online trading, Classic, speed

trade and speed trade plus.

Depository service

A depository can be define as an institution where the investors can keep their

financial asset such as Equities Etc., in the dematerialized form and transaction could be

effected on it.

Online trading

With a Share khan Online trading account, an investor can buy and sell shares

through the web site www.sharekhan.com in an instant. Sharekhan offers three types of

online trading account that suits investors trading habits and preferences.

An online products offered by Sharekhan are as follows

Online products

1. Classic Account

2. Speed trade

3. Speed tradeplus

1. Classic Account:

This account allows the client to the trade through out website and is suitable for the

retail investors. Our online trading website also comes with the Daily Trade service that

enables you to buy and sell shares by calling their dedicated toll free number. This

account for retail investor who is risk averse and hence prefer to invest in stock

selectively or who does not trade frequently.

http://www.sharekhan.com/

The account opening charge for classic account is 750/- in which client will get the

DEMAT account free for one year, after one year client should pay an annual

maintenance of rupees 300/- for demat account..

2 .Speed trade

Speed trade is a next-generation online trading product that brings the power of your

broker’s terminal to your PC. It is ideal for active traders who transact frequently during

day’s trading session capitalize on intra-day price movements. Speed trade is an internet-

based application available on a CD, which provides every-thing a trader needs on one

screen, thereby, reducing the required to execute a trade.

Speed trade has all the above-mentioned features with the power to trade in cash and

derivatives from a single screen. For this account opening charge is 1000/-

The brokerage charged for both a/c is 0.1% each sides for intra day [i.e., buys & sell the

same day and 0.5% for delivery [i.e., investment].the minimum brokerage in trading

account is 33% margin and 100% delivery.

3. Speed Trade Plus

A speed trade plus has all the above mention future with an additional

functionality of trading in derivatives from the same single-screen inter-face.

Basis of Trading

The NEAT F&O system supports an order driven market, where in orders match

automatically. Order matching is essentially on the basis of security, its price, time and

quantity. All quantity fields are in units and price in rupees. The lot size in the Futures

market is for 200 Nifties the exchanging notifies the regular Lot size an ticks sizes for

each of the contracts traded in the segment from time to time. When any order enters the

trading system, it is an active order. It tries to find a match on the other side of the book if

it finds a match, a trade is generated. If it does not find a match, the order becomes

passive and goes and sits in the respective outstanding order book in the system.

Order type and conditions

The system allows the trading member to enter orders with various conditions

attached to them as per their requirements. This condition is broadly divided into the

following categories.

Time conditions

Day order: A day order which is valid for the day on which it is entered. If the

order is not executed during the day, the system cancels the order automatically at

the end of the day.

Good till canceled: It is the order remains in the system until the user cancels

it. The maximum number of days an order can remaining the system is notified by

the exchange from time to time after which the order is automatically cancelled by

the system.

Good till days: An order allows the user to specify the number of days till

which the order should stay in the system is not executed. The maximum days

allowed by the system are the same as in good till cancelled order.

Immediate or cancel: An immediate or cancel order allows user to buy or sell a

contract as soon as order is released into the system, failing which the order is

cancelled from the system. Partial match is possible for the order, and the

unmatched portion of the order is cancelled immediately.

Price Condition

Stop-Loss: This facility allows the user to release an order in to the system, after

the market price of the security reaches or crosses a threshold price.

Other Condition

Market price: Market orders are orders for which no price is specified at the

time the orders are entered. For such orders, the system determines the price.

At opening price: It is the price arrived at by the system after the pre-open phase

is over.

Trigger price: Price at which an order gets triggered from stop-loss book.

Limit Price: Price of the order after triggering from stop- loss book.

Description Brokerage Minimum brokerage per share

Intra day Buying 0.10% 5 Paisa*

Intra day Selling 0.10% 5 Paisa*

The Brokerage Charges are calculated as under:-

For Intra-day Trades:

This means that if the share price you trade in is Rs 50/- or less, a minimum

brokerage of 5 paisa per share will be charged.


Delivery Buying 0.50% 10 Paisa**

Delivery Selling 0.50% 10 Paisa**

For Delivery Based Trades:-

** Minimum brokerage of 10 paisa per share is applicable when the share price is Rs 20/-

or less and minimum brokerage of Rs 16/- per scrip on selling side will be applicable

when the traded volume is Rs 3200/- or less

For F&O trades:-


First Leg 0.10%*** NA

Second Leg ( If it is intraday) 0.02%*** NA

Second leg (For any other day

selling)

0.10%*** NA

*** All the brokerages are charged in derivatives on the value of contract.

The Transaction Charges are:-

Statutory costs as it stands on 21st Nov 2005

Details Cash (BSE / NSE) NSE F&O Remarks

Exch. Turnover Charges0.0035%

Futures: 0.0021% On Actual Rate

Options:0.0510% On Premium

Stamp Duty Trading : 0.002%0.002%

On Actual Rate

Delivery: 0.01% On Premium

Service Tax 12.24% on Brokerage 12.24% on Brokerage

(II) Nature of transaction: Rate of STT (Charged on Traded Value)

(II.A)Equity segment

Description Buyer to pay Seller to pay

Delivery based transaction 0.125% 0.125%

Intra day transactions NA 0.025%

(II.B)DERIVATIVE SEGMENT

Seller to pay 0.017% (Applicable for both intraday and next day selling)

Speed Trade Plus

A speed trade plus has all the above mention future with an additional

functionality of trading in derivatives from the same single-screen inter-face.

Basis of Trading

The NEAT F&O system supports an order driven market, where in orders match

automatically. Order matching is essentially on the basis of security, its price, time and

quantity. All quantity fields are in units and price in rupees. The lot size in the Futures

market is for 200 Niftiest the exchanging notifies the regular Lot size a ticks sizes for

each of the contracts traded in the segment from time to time.

When any order enters the trading system, it is an active order. It tries to find a

match on the other side of the book if it finds a match, a trade is generated. If it does not

find a match, the order becomes passive and goes and sits in the respective outstanding

order book in the system.

SERVICES OFFERED BY SHAREKHAN

Following services are offered:

1. Trading Facilities:

Sharekhan as a member of NSE& BSE provides both offline and online trading

facilities nationwide for trading the securities in secondary market to its clients.

The company’s wide network of outlets spread across the country facilities to

executive the orders in secondary market.

2. Derivatives: (Futures and Options)

The company also facilitates the trading system for trading in secondary market under

future and options segment of NSE and BSE. The equity dealers in the company will

be eager to give insights into the new sets introduction in the Indian Capital Market

futures and options.

3. Depository services:

Sharekhan is a Depository participant of National Securities Depository Limited

and Central Depository and Securities Limited.

Sharekhan will open De-mat accounts, which will investors to convert physical

certificates of shares into electronic balances in an account maintained.

4. Margin Financing:

In the present rolling settlement scenario, Sharekhan understand investor need for

additional capital availability for daily purchaser shares. It offers unique facility avail

finance, for purchasing shares at very competitive interest rates.

5. IPO’s and Mutual Funds:

Sharekhan offers the change of investing in the potentially lucrative IPO market.

Sharekhan is a distribution house for all mutual funds. This is the news scheme

introduced by the company and it also offers schemes catering to investors with varying

risk return profiles.

6. Stock lending and Borrowing:

One can place an order of shares with Sharekhan. It is approved intermediary of the

security or lending scheme. These would be sent out the borrowers, these earnings fees

for all investors’ idle shares. Thus Sharekhan fulfill the investor need for borrowing and

lending of shares.

7. Equity Research:

Share khan has a highly rated research using involved in macro economic studies,

industry and company specific equity research. The research team’s inputs will be

available as daily trading calls, quarterly investment picks and long term investment

picks, based on the fundamentals of particular company and the industry as a whole.

8. Trading:

Investors can also trade their securities through this facility by logging into

company’s website. The virtual world that Sharekhan offers online trading services

through.

9. Portfolio Management Services:

Sharekhan securities are a registered portfolio manager with SEBI to manage

portfolios on behalf of clients with a discretionary and non discretionary right. This

service is a provision for those who may not have the time to manage their stock

investments or require the service of company’s highly specialized profession team.

10. Other Services

Free access to investment advice from Share khan’s research team

“Sharekhan “Value line” (A monthly publication with review of recommendations

stocks to watch out)

Daily research reports and market review (high noon and eagle eye)

Daily trading calls based technical analyses

Cool trading products (Daring derivatives and market strategy)

Personalized advice

Live management information

Internet- Based online trading

Online BSE & NSE executions through BOLT & NEAT terminals)

3.3 ORGANISATION STRUCTURE

Successful strategy implementation depends in large part on a firm’s

“Organizational Structure”. Organizational structure refers to the way the work is

organized. The various activities that reflect the work of the enterprise are divided in

ways that are intended to get the work done efficiently and effectively. Organization

structure of SSKI and Sharekhan Branch Office structure is shown in Fig. 4.1 and Fig.

4.2 Respectively.

The operations Share khan can be broadly classified in to Online and offline

media. The Online channel is followed through to modes that is

1. Direct

2. Alternative

The Offline channel is followed through Sub brokers and Franchises.

The various departments in Share Khan as a company are

a. FINANCE

It is the department which handles all the necessary financial operations which are

needed for any organization. The accounts department is responsible for handling all the

financial requirements of the company.

b. DEMAT ACCOUNT DEPARTMENT

As the trading activity is of a nature where the Demat A/C is mandatory

requirement of any of the investor a separate department handles all the operations that

are used in handling the operations of this Demat A/C.

c. RISK & COMPLIANCE

This department handles all the details regarding the safeguard of the individual

investor’s money. The software keeps track of the account s of all the investors and any

slip will immediately known and it is rectified to meet the guidelines of the SEBI.

d. REGULATION

The regulation department handles the legality requirement of all the operations

involved in this business. The transaction costs, brokerage, turnover tax, stamp duty and

service tax norms are to be met by every organization and this department handles all

these operations.

e. MARKETING

The Offline operations are handled by the marketing department and the

acquisition of the customers is mainly based on the contacts and periodical reviews of

these employees are done to keep tab of the growth.

CHAPTER-4

ANALYSIS AND INTERPRETATION OF DATA

The analysis and interpretation of data conducted in Sharekhan limited at

electronic branch, Bangalore, covers an overview of the Mutual fund segment, other

related data with percentage and narrative data, supported by charts and tables form the

information collected during the project study.

In this study five funds have been considered. Their relative benchmark indices are

BIRLA SUNLIFE TAX RELIEF 96 – BSE 200

FRANKLIN INDIA TAXSHIELD – S&P CNX 500

HDFC TAX SAVER - S&P CNX 500

SBI MAGNUM TAXGAIN 93 – BSE 100

SUNDARAM TAX SAVER 98 - BSE 200

Table 1.1: Monthly returns of Birla Sunlife Tax Relief 96 and BSE 200 Index

* As on 1st of every month

Table 1.2: Calculation of Risk, Beta, Trenor, Sharpe and Jensen Measure for Birla Sunlife Tax Relief 96

BIRLA SUNLIFE TAX RELIEF 96

Period NAV*Fund

ReturnIndex* (BSE 200)

Market Return

Jan-06 115.69 769.67Feb-06 116.14 0.3890 731.89 -4.9086Mar-06 123.42 6.2683 725.49 -0.8744Apr-06 112.15 -9.1314 731.81 0.8711May-06 116.72 4.0749 753.00 2.8956Jun-06 97.52 -16.4496 618.34 -17.8831Jul-06 96.52 -1.0254 626.77 1.3633Aug-06 104.30 8.0605 676.66 7.9599Sep-06 103.99 -0.2972 684.55 1.1660Oct-06 111.90 7.6065 733.42 7.1390Nov-06 111.58 -0.2860 746.92 1.8407Dec-06 119.72 7.2952 818.03 9.5204Jan-07 133.16 11.2262 890.48 8.8566Feb-07 126.46 -5.0315 871.61 -2.1191Mar-07 125.11 -1.0675 899.17 3.1620Apr-07 120.48 -3.7007 868.74 -3.3842May-07 119.20 -1.0624 824.95 -5.0406Jun-07 128.78 8.0369 890.28 7.9193Jul-07 132.35 2.7722 921.58 3.5157Aug-07 145.92 10.2531 977.60 6.0787Sep-07 153.55 5.2289 1014.05 3.7285Oct-07 162.91 6.0957 1101.33 8.6071Nov-07 147.47 -9.4776 1009.59 -8.3299Dec-07 167.43 13.5350 1116.68 10.6073Jan-08 176.19 5.2320 1188.78 6.4566Feb-08 188.78 7.1457 1255.05 5.5746Mar-08 191.78 1.5892 1294.92 3.1768Apr-08 219.71 14.5636 1419.57 9.6261May-08 176.75 -19.5530 1507.07 6.1638Jun-08 157.89 -10.6704 1297.70 -13.8925Jul-08 143.08 -9.3799 1272.80 -1.9188Aug-08 145.50 1.6914 1274.60 0.1414Sep-08 158.24 8.7560 1399.37 9.7890Oct-08 174.22 10.0986 1498.95 7.1161Nov-08 185.97 6.7443 1564.30 4.3597Dec-08 193.22 3.8985 1649.74 5.4619

Jan-09 171.23 -11.3808 1655.28 0.3358

Fund Return (RA)

RA-R'AReturn from Market (RM)

RM-R'M(RA-R'A) (RM-R'M)

(RM-R'M)² (RA-R'A)²

0.3890 -1.0568 -4.9086 -7.2720 7.6850 52.8816 1.11686.2683 4.8225 -0.8744 -3.2378 -15.6145 10.4835 23.2567-9.1314 -10.5772 0.8711 -1.4922 15.7837 2.2268 111.87704.0749 2.6291 2.8956 0.5322 1.3992 0.2832 6.9123

-16.4496 -17.8954 -17.8831 -20.2465 362.3194 409.9213 320.2452-1.0254 -2.4712 1.3633 -1.0001 2.4713 1.0001 6.10688.0605 6.6147 7.9599 5.5965 37.0192 31.3206 43.7547-0.2972 -1.7430 1.1660 -1.1974 2.0870 1.4337 3.03807.6065 6.1607 7.1390 4.7756 29.4213 22.8065 37.9546-0.2860 -1.7317 1.8407 -0.5227 0.9052 0.2732 2.99897.2952 5.8494 9.5204 7.1571 41.8648 51.2234 34.2160

11.2262 9.7804 8.8566 6.4933 63.5069 42.1625 95.6566-5.0315 -6.4773 -2.1191 -4.4825 29.0343 20.0924 41.9556-1.0675 -2.5133 3.1620 0.7986 -2.0071 0.6377 6.3167-3.7007 -5.1465 -3.3842 -5.7476 29.5802 33.0350 26.4866-1.0624 -2.5082 -5.0406 -7.4040 18.5707 54.8194 6.29108.0369 6.5911 7.9193 5.5559 36.6196 30.8679 43.44312.7722 1.3264 3.5157 1.1524 1.5285 1.3280 1.7593

10.2531 8.8073 6.0787 3.7153 32.7220 13.8035 77.56935.2289 3.7831 3.7285 1.3651 5.1645 1.8636 14.31206.0957 4.6500 8.6071 6.2437 29.0329 38.9837 21.6221-9.4776 -10.9234 -8.3299 -10.6933 116.8073 114.3468 119.320613.5350 12.0892 10.6073 8.2439 99.6620 67.9619 146.14845.2320 3.7863 6.4566 4.0933 15.4982 16.7548 14.33587.1457 5.6999 5.5746 3.2112 18.3038 10.3121 32.48911.5892 0.1434 3.1768 0.8134 0.1166 0.6616 0.0206

14.5636 13.1178 9.6261 7.2627 95.2706 52.7468 172.0764-19.5530 -20.9988 6.1638 3.8005 -79.8052 14.4435 440.9505-10.6704 -12.1162 -13.8925 -16.2559 196.9599 264.2542 146.8026-9.3799 -10.8257 -1.9188 -4.2822 46.3574 18.3369 117.19621.6914 0.2456 0.1414 -2.2220 -0.5457 4.9371 0.06038.7560 7.3102 9.7890 7.4256 54.2827 55.1392 53.4396

10.0986 8.6528 7.1161 4.7527 41.1241 22.5880 74.87116.7443 5.2986 4.3597 1.9963 10.5778 3.9854 28.07493.8985 2.4527 5.4619 3.0985 7.5997 9.6006 6.0158

-11.3808 -12.8266 0.3358 -2.0276 26.0068 4.1110 164.5212

52.0478 85.0816 1377.3100 1481.6275 2443.2127

N=36∑ RA=52.0478 R'A=1.4458∑ RM=85.0816 R'M=2.363∑ (RA-R'A)(RM-R'M)= 1377.3100

∑ (RM-R'M)²= 1481.6275

∑ (RA-R'A)²= 2443.2127

RF= 8.5%

Rate of Return = (Terminal value – Initial value)+ Dividend

Initial Value

Rate of Return for Jan 06(Fund) = 116.14 – 115.69 * 100 = 0.3890

115.69

Rate of Return for Jan 06(Market) = 731.89 -769.67 * 100 = -4.9086

769.67

Beta (βA) = COV ( RA,RM)

²M

βA = 0.9296

A= ∑ (RA-R'A)² √ (N-1)A = 8.3550

Treynor’s Measure = R'A-RF

βA

Treynor’s Measure = 1.4638

Sharpe Measure = R’A-RF

A

Sharpe Measure = 0.1629Jensen Measure = R'A-[RF+ βA(R'M-RF)]

Jensen Measure =-0.7572INFERENCE

The overall risk of the mutual fund as measured by the Standard Deviation (A) of

the total returns of the fund returns for the period from 1 Jan 2006 to 31st Dec

2008 is 8.3550.

The Average Returns of the Mutual Fund as depicted by Arithmetic Mean (R'A)

for the period from 1 Jan 2006 to 31st Dec 2008 is 1.4458.

The Average Returns of the Market Index – BSE 200 as depicted by Arithmetic

Mean (R'M) for the period from 1 Jan 2006 to 31st Dec 2008 is 2.3634.

The Systematic Risk of the Mutual Fund as given by the β coefficient for the

period from 1 Jan 2006 to 31st Dec 2008 is 0.9296.

Treynor’s Measure for the fund for the period from 1 Jan 2006 to 31st Dec 2008 is

1.4638 which indicates that for every one unit change in the beta there will be

1.4638 unit change in the returns

Sharpe’s Measure for the fund for the period from 1 Jan 2006 to 31st Dec 2008 is

0.1629 which indicates that for every one unit change in the standard deviation

there will be 0.1629 unit change in the returns.

Jensen’s Measure for the fund for the period from 1 Jan 2006 to 31st Dec 2008 is -

0.7572

Graph 1.3: Birla Sunlife Tax Relief 96 NAV movement from 2006 to 2008

BIRLA SUN LIFE TAX RELIF 96 NAV MOVEMENT FROM 2006-2008

0

50

100

150

200

250

6-Mar

6-Ju

n

6-Sep

6-Dec

7-Mar

7-Ju

n

7-Sep

7-Dec

8-Mar

8-Ju

n

8-Sep

8-Dec

DATE

NA

V

NAV*

INTERPRETATIONS

1. The NAV of Birla Sun life Tax Relief 96 has increased steadily over the 3 year

period.

2. Over the period it has a steady increase in the NAV and has reached its peak in

March 2008 of Rs. 219.71.

3. After its high in March 2008 it has started decreasing and had closed at Rs.171.23

at the end of December 2008.

Table 2.1: Monthly returns of Franklin India Taxshield and S&P CNX 500 Index

FRANKLIN INDIA TAXSHIELD

Period NAV* Fund ReturnIndex * (S&P

CNX 500)Market Return

Jan-06 50.33 1531.35

Feb-06 49.24 -2.1657 1459.80 -4.6723Mar-06 19.75 -59.8903 1442.80 -1.1645Apr-06 51.58 161.1646 1457.50 1.0189May-06 53.33 3.3928 1507.55 3.4340Jun-06 46.06 -13.6321 1226.55 -18.6395Jul-06 47.43 2.9744 1248.00 1.7488Aug-06 50.4 6.2619 1351.45 8.2893Sep-06 52.09 3.3532 1377.20 1.9054Oct-06 54.98 5.5481 1478.75 7.3737Nov-06 54.71 -0.4911 1502.05 1.5757Dec-06 61.56 12.5206 1653.20 10.0629Jan-07 66.38 7.8298 1804.90 9.1761Feb-07 65.48 -1.3558 1768.25 -2.0306Mar-07 69.68 6.4142 1827.40 3.3451Apr-07 67.89 -2.5689 1772.85 -2.9851May-07 65.49 -3.5351 1688.65 -4.7494Jun-07 70.59 7.7874 1834.85 8.6578Jul-07 73.45 4.0516 1906.20 3.8886Aug-07 80.09 9.0402 2027.40 6.3582Sep-07 86.71 8.2657 2126.35 4.8806Oct-07 89.57 3.2984 2274.00 6.9438Nov-07 81.53 -8.9762 2067.80 -9.0677Dec-07 92.82 13.8477 2306.15 11.5267Jan-08 98.86 6.5072 2459.20 6.6366Feb-08 106.32 7.5460 2585.95 5.1541Mar-08 110.51 3.9409 2658.95 2.8229Apr-08 120.07 8.6508 2910.35 9.4549May-08 123.2 2.6068 3064.70 5.3035Jun-08 108.41 -12.0049 2635.25 -14.0128Jul-08 103.68 -4.3631 2562.50 -2.7606Aug-08 103.16 -0.5015 2562.55 0.0020Sep-08 111.29 7.8810 2807.95 9.5764Oct-08 118.28 6.2809 2988.25 6.4211Nov-08 122.94 3.9398 3114.55 4.2266Dec-08 125.79 2.3182 3280.45 5.3266Jan-09 125.72 -0.0556 3295.05 0.4451


Table 2.2: Calculation of Risk, Beta, Trenor, Sharpe and Jensen Measure for Franklin India Taxshield

Fund Return (RA)

RA-R'A

Return from

Market (RM)



-2.1657 -7.6069 -4.6723 -7.0466 53.6024 49.6543 57.8643

-59.8903 -65.3315 -1.1645 -3.5388 231.1937 12.5230 4268.2029

161.1646 155.7234 1.0189 -1.3554 -211.0650 1.8371 24249.77893.3928 -2.0484 3.4340 1.0597 -2.1707 1.1230 4.1958

-13.6321 -19.0733 -18.6395 -21.0138 400.8006 441.5777 363.78902.9744 -2.4668 1.7488 -0.6254 1.5428 0.3912 6.08506.2619 0.8207 8.2893 5.9150 4.8545 34.9875 0.67363.3532 -2.0880 1.9054 -0.4689 0.9790 0.2198 4.35965.5481 0.1069 7.3737 4.9994 0.5346 24.9942 0.0114-0.4911 -5.9322 1.5757 -0.7986 4.7374 0.6377 35.191512.5206 7.0794 10.0629 7.6887 54.4313 59.1158 50.11817.8298 2.3886 9.1761 6.8019 16.2471 46.2659 5.7054-1.3558 -6.7970 -2.0306 -4.4048 29.9395 19.4024 46.19906.4142 0.9730 3.3451 0.9709 0.9447 0.9426 0.9468-2.5689 -8.0100 -2.9851 -5.3594 42.9286 28.7226 64.1607-3.5351 -8.9763 -4.7494 -7.1237 63.9439 50.7464 80.57367.7874 2.3463 8.6578 6.2836 14.7431 39.4832 5.50514.0516 -1.3896 3.8886 1.5144 -2.1043 2.2933 1.93109.0402 3.5990 6.3582 3.9840 14.3383 15.8720 12.95298.2657 2.8245 4.8806 2.5064 7.0794 6.2820 7.97813.2984 -2.1428 6.9438 4.5696 -9.7917 20.8811 4.5916-8.9762 -14.4174 -9.0677 -11.4420 164.9630 130.9184 207.860613.8477 8.4065 11.5267 9.1525 76.9407 83.7684 70.66946.5072 1.0661 6.6366 4.2624 4.5440 18.1678 1.13657.5460 2.1049 5.1541 2.7799 5.8513 7.7277 4.43053.9409 -1.5002 2.8229 0.4487 -0.6732 0.2013 2.25078.6508 3.2096 9.4549 7.0806 22.7263 50.1352 10.30182.6068 -2.8343 5.3035 2.9292 -8.3025 8.5805 8.0335

-12.0049 -17.4460 -14.0128 -16.3870 285.8884 268.5346 304.3637-4.3631 -9.8042 -2.7606 -5.1349 50.3435 26.3670 96.1227-0.5015 -5.9427 0.0020 -2.3723 14.0978 5.6277 35.31567.8810 2.4398 9.5764 7.2022 17.5719 51.8711 5.95276.2809 0.8397 6.4211 4.0468 3.3983 16.3767 0.70523.9398 -1.5013 4.2266 1.8523 -2.7810 3.4311 2.25402.3182 -3.1229 5.3266 2.9524 -9.2201 8.7165 9.7528-0.0556 -5.4968 0.4451 -1.9292 10.6043 3.7217 30.2148

195.8815 85.4725 1353.6618 1542.0990 30060.1787

N=36∑ RA=195.8815 R'A=5.4412∑ RM=85.4725 R'M=2.3742∑ (RA-R'A)(RM-R'M)= 1353.6618

∑ (RM-R'M)²= 1542.0990

∑ (RA-R'A)²= 30060.1787

RF= 8.5%


Initial Value

Rate of Return for Jan 06(Fund) = 49.24 – 50.33 * 100 = -2.1657

50.33

Rate of Return for Jan 06(Market) = 1459.8 -1531.35 * 100 =-4.6723

1531.35Beta (βA) = COV ( RA,RM)

²M

βA = 0.8778

A= ∑ (RA-R'A)² √ (N-1)

A = 29.3064


βA



A


Jensen Measure =3.3466

INFERENCE



2008 is 29.3064.



The Average Returns of the Market Index – S&P CNX 500 as depicted by

Arithmetic Mean (R'M) for the period from 1 Jan 2006 to 31st Dec 2008 is 2.3742.




6.1018.


0.1828.

Jensen’s Measure for the fund for the period from 1 Jan 2006 to 31st Dec 2008 is

3.3466.

Graph 2.3: Franklin India Taxshield NAV movement from 2006 to 2008

FRAKLIN INDIA TAX SHIELD NAV MOVEMENT FROM 2006-08

020406080

100120140

1/6/

2009

2/6/

2009

3/6/

2009

4/6/

2009

5/6/

2009

6/6/

2009

7/6/

2009

8/6/

2009

9/6/

2009

10/6

/200

9

11/6

/200

9

12/6

/200

9

DATE

NA

V

NAV*

INTERPRETATIONS

1. The NAV of Franklin India Tax shield has increased steadily over the 3 year

period.

2. During Feb 04 its NAV declined sharply and reached it’s lowest ever of Rs.19.75.

3. After decline the NAV has steadily increased over the period and has reached its

peak of Rs.123.2 during April 2008.

Table3.1 : Monthly returns of HDFC Tax Saver and S&P CNX 500 Index

HDFC TAX SAVER

Period NAV* Fund ReturnIndex * (S&P

CNX 500)Market Return

Jan-06 41.82 1531.35Feb-06 40.08 -4.1818 1459.80 -4.6723Mar-06 39.77 -0.7586 1442.80 -1.1645Apr-06 40.12 0.8851 1457.50 1.0189May-06 43.00 7.1680 1507.55 3.4340Jun-06 37.72 -12.2794 1226.55 -18.6395Jul-06 37.76 0.0981 1248.00 1.7488Aug-06 41.22 9.1721 1351.45 8.2893Sep-06 45.37 10.0779 1377.20 1.9054Oct-06 49.33 8.7232 1478.75 7.3737Nov-06 49.41 0.1520 1502.05 1.5757Dec-06 55.89 13.1300 1653.20 10.0629Jan-07 62.48 11.7797 1804.90 9.1761Feb-07 63.42 1.5062 1768.25 -2.0306Mar-07 67.12 5.8390 1827.40 3.3451Apr-07 67.56 0.6481 1772.85 -2.9851May-07 68.64 1.6046 1688.65 -4.7494Jun-07 75.88 10.5507 1834.85 8.6578Jul-07 78.12 2.9427 1906.20 3.8886Aug-07 87.97 12.6109 2027.40 6.3582Sep-07 94.90 7.8792 2126.35 4.8806Oct-07 99.31 4.6535 2274.00 6.9438Nov-07 92.78 -6.5832 2067.80 -9.0677Dec-07 104.24 12.3622 2306.15 11.5267Jan-08 109.24 4.7878 2459.20 6.6366Feb-08 116.56 6.7076 2585.95 5.1541Mar-08 116.14 -0.3595 2658.95 2.8229Apr-08 131.22 12.9840 2910.35 9.4549May-08 141.68 7.9712 3064.70 5.3035Jun-08 121.07 -14.5459 2635.25 -14.0128Jul-08 115.19 -4.8574 2562.50 -2.7606Aug-08 114.65 -0.4696 2562.55 0.0020Sep-08 125.08 9.0962 2807.95 9.5764Oct-08 131.68 5.2726 2988.25 6.4211Nov-08 139.90 6.2418 3114.55 4.2266Dec-08 146.25 4.5441 3280.45 5.3266Jan-09 146.51 0.1750 3295.05 0.4451

As on 1st of every month

Table 3.2: Calculation of Risk, Beta, Trenor, Sharpe and Jensen Measure

for HDFC Tax Saver

Fund Return

(RA)RA-R'A

Return from

Market (RM)



-4.1818 -7.9465 -4.6723 -7.0466 55.9955 49.6543 63.1465-0.7586 -4.5232 -1.1645 -3.5388 16.0068 12.5230 20.45970.8851 -2.8796 1.0189 -1.3554 3.9030 1.8371 8.29217.1680 3.4033 3.4340 1.0597 3.6066 1.1230 11.5824

-12.2794 -16.0440 -18.6395 -21.0138 337.1451 441.5777 257.41060.0981 -3.6666 1.7488 -0.6254 2.2932 0.3912 13.44389.1721 5.4074 8.2893 5.9150 31.9848 34.9875 29.2398

10.0779 6.3132 1.9054 -0.4689 -2.9601 0.2198 39.85668.7232 4.9586 7.3737 4.9994 24.7900 24.9942 24.58750.1520 -3.6126 1.5757 -0.7986 2.8850 0.6377 13.0511

13.1300 9.3653 10.0629 7.6887 72.0069 59.1158 87.709211.7797 8.0150 9.1761 6.8019 54.5172 46.2659 64.24001.5062 -2.2585 -2.0306 -4.4048 9.9483 19.4024 5.10095.8390 2.0744 3.3451 0.9709 2.0140 0.9426 4.30300.6481 -3.1166 -2.9851 -5.3594 16.7029 28.7226 9.71311.6046 -2.1601 -4.7494 -7.1237 15.3876 50.7464 4.6659

10.5507 6.7860 8.6578 6.2836 42.6405 39.4832 46.05022.9427 -0.8219 3.8886 1.5144 -1.2447 2.2933 0.6756

12.6109 8.8462 6.3582 3.9840 35.2430 15.8720 78.25577.8792 4.1145 4.8806 2.5064 10.3126 6.2820 16.92924.6535 0.8888 6.9438 4.5696 4.0614 20.8811 0.7900-6.5832 -10.3479 -9.0677 -11.4420 118.4002 130.9184 107.078912.3622 8.5975 11.5267 9.1525 78.6887 83.7684 73.91704.7878 1.0231 6.6366 4.2624 4.3610 18.1678 1.04686.7076 2.9429 5.1541 2.7799 8.1809 7.7277 8.6606-0.3595 -4.1241 2.8229 0.4487 -1.8505 0.2013 17.008512.9840 9.2193 9.4549 7.0806 65.2786 50.1352 84.99607.9712 4.2065 5.3035 2.9292 12.3219 8.5805 17.6946

-14.5459 -18.3105 -14.0128 -16.3870 300.0550 268.5346 335.2751-4.8574 -8.6220 -2.7606 -5.1349 44.2731 26.3670 74.3393-0.4696 -4.2343 0.0020 -2.3723 10.0450 5.6277 17.92949.0962 5.3316 9.5764 7.2022 38.3987 51.8711 28.42555.2726 1.5079 6.4211 4.0468 6.1023 16.3767 2.27386.2418 2.4772 4.2266 1.8523 4.5885 3.4311 6.13644.5441 0.7795 5.3266 2.9524 2.3012 8.7165 0.60760.1750 -3.5896 0.4451 -1.9292 6.9250 3.7217 12.8854

135.5280 85.4725 1435.3090 1542.0990 1587.7779

N=36∑ RA=135.5280 R'A=3.7647∑ RM=85.4725 R'M=2.3742∑ (RA-R'A)(RM-R'M)= 1435.3090∑ (RM-R'M)²= 1542.0990

∑ (RA-R'A)²= 1587.7779

RF= 8.5%


Initial Value

Rate of Return for Jan 06(Fund) = 40.08 – 41.82 * 100 = -4.1818

41.82

Rate of Return for Jan 06(Market) = 1459.80 -1531.35 * 100 = -4.6723


²M

βA = 0.9308

A= ∑ (RA-R'A)² √ (N-1)

A = 6.7354


βA



A

Sharpe Measure = 0.5463Jensen Measure = R'A-[RF+ βA(R'M-RF)] Jensen Measure = 1.5490INFERENCE



2008 is 6.7354.



The Average Returns of the Market Index – CNX 500 as depicted by Arithmetic

Mean (R'M) for the period from 1 Jan 2006 to 31st Dec 2008 is 2.3742.




3.9534


0.5463.


1.5490.

Graph 3.3: HDFC Tax Saver NAV movement from 2006 to 2008

HDFC TAX SAVER NAV MOVEMENT FROM 2006-08

020406080

100120140160

6-Mar

6-Ju

n

6-Sep

6-Dec

7-Mar

7-Ju

n

7-Sep

7-Dec

8-Mar

8-Ju

n

8-Sep

8-Dec

DATE

NA

V

NAV*

INTERPRETATIONS

1. The NAV of the fund has almost remained constant at around Rs. 40 for about

one year i.e. 2006.

2. Then the increasing rally started, since then expect for small falls for short periods

it has increased continuously.

3. On 31 Dec 2008, its NAV was Rs. 146.51.

Table 4.1: Monthly returns of SBI Magnum Tax gain and BSE 100 Index

SBI MAGNUM TAXGAIN 93

Period NAV* Fund ReturnIndex* (BSE

100)Market Return

Jan-06 27.01 3089.58Feb-06 23.88 -11.5883 2949.32 -4.5398Mar-06 24.26 1.5913 2923.55 -0.8738Apr-06 22.31 -8.0379 2958.54 1.1968May-06 24.07 7.8888 3018.76 2.0355Jun-06 20.02 -16.8259 2543.70 -15.7369Jul-06 20.84 4.0959 2569.34 1.0080Aug-06 23.38 12.1881 2764.75 7.6055Sep-06 26.39 12.8743 2794.35 1.0706Oct-06 27.26 3.2967 3000.40 7.3738Nov-06 28.98 6.3096 3030.30 0.9965Dec-06 28.85 -0.4486 3349.96 10.5488Jan-07 33.39 15.7366 3593.58 7.2723Feb-07 33.58 0.5690 3526.88 -1.8561Mar-07 36.86 9.7677 3617.90 2.5808Apr-07 38.57 4.6392 3491.08 -3.5053May-07 41.09 6.5336 3326.60 -4.7114Jun-07 45.47 10.6595 3608.60 8.4771Jul-07 37.07 -18.4737 3789.70 5.0186Aug-07 41.33 11.4918 4068.27 7.3507Sep-07 46.03 11.3719 4191.65 3.0327Oct-07 47.30 2.7591 4580.23 9.2703Nov-07 44.47 -5.9831 4204.41 -8.2053Dec-07 49.21 10.6589 4660.68 10.8522Jan-08 51.37 4.3894 4964.64 6.5218Feb-08 54.17 5.4507 5243.03 5.6075Mar-08 55.93 3.2490 5421.48 3.4036Apr-08 46.07 -17.6292 5933.04 9.4358May-08 48.89 6.1211 6279.67 5.8424Jun-08 42.53 -13.0088 5418.87 -13.7077Jul-08 40.61 -4.5145 5389.27 -0.5462Aug-08 41.44 2.0438 5419.69 0.5645Sep-08 44.72 7.9151 5935.38 9.5151Oct-08 47.26 5.6798 6342.87 6.8654Nov-08 50.13 6.0728 6619.04 4.3540Dec-08 54.70 9.1163 6948.27 4.9740Jan-09 55.65 1.7367 6999.70 0.7402


Table 4.2: Calculation of Risk, Beta, Trenor, Sharpe and Jensen Measure of SBI Magnum Tax gain

Fund Return

(RA)RA-R'A

Return from

Market (RM)



-11.5883 -14.0243 -4.5398 -7.0351 98.6625 49.4927 196.68151.5913 -0.8447 -0.8738 -3.3691 2.8460 11.3508 0.7136-8.0379 -10.4739 1.1968 -1.2985 13.6004 1.6861 109.70347.8888 5.4528 2.0355 -0.4599 -2.5076 0.2115 29.7333

-16.8259 -19.2619 -15.7369 -18.2323 351.1886 332.4151 371.02244.0959 1.6599 1.0080 -1.4873 -2.4688 2.2122 2.7552

12.1881 9.7521 7.6055 5.1101 49.8344 26.1134 95.103112.8743 10.4382 1.0706 -1.4247 -14.8714 2.0298 108.95683.2967 0.8607 7.3738 4.8785 4.1988 23.7996 0.74086.3096 3.8736 0.9965 -1.4988 -5.8057 2.2464 15.0047-0.4486 -2.8846 10.5488 8.0535 -23.2310 64.8582 8.320915.7366 13.3006 7.2723 4.7770 63.5367 22.8197 176.90470.5690 -1.8670 -1.8561 -4.3514 8.1240 18.9348 3.48569.7677 7.3317 2.5808 0.0854 0.6263 0.0073 53.75394.6392 2.2032 -3.5053 -6.0007 -13.2204 36.0081 4.85396.5336 4.0976 -4.7114 -7.2068 -29.5301 51.9375 16.7900

10.6595 8.2235 8.4771 5.9818 49.1914 35.7819 67.6261-18.4737 -20.9097 5.0186 2.5232 -52.7602 6.3667 437.217011.4918 9.0558 7.3507 4.8554 43.9692 23.5748 82.006711.3719 8.9359 3.0327 0.5374 4.8022 0.2888 79.84972.7591 0.3231 9.2703 6.7750 2.1887 45.9007 0.1044-5.9831 -8.4191 -8.2053 -10.7006 90.0894 114.5027 70.881310.6589 8.2229 10.8522 8.3568 68.7171 69.8369 67.61534.3894 1.9533 6.5218 4.0265 7.8650 16.2124 3.81555.4507 3.0146 5.6075 3.1121 9.3819 9.6853 9.08803.2490 0.8130 3.4036 0.9082 0.7384 0.8249 0.6610

-17.6292 -20.0652 9.4358 6.9405 -139.2619 48.1701 402.61216.1211 3.6851 5.8424 3.3470 12.3342 11.2027 13.5800

-13.0088 -15.4448 -13.7077 -16.2031 250.2531 262.5390 238.5422-4.5145 -6.9505 -0.5462 -3.0416 21.1403 9.2511 48.30912.0438 -0.3922 0.5645 -1.9309 0.7573 3.7283 0.15387.9151 5.4790 9.5151 7.0198 38.4617 49.2775 30.01995.6798 3.2438 6.8654 4.3701 14.1756 19.0979 10.52206.0728 3.6368 4.3540 1.8587 6.7596 3.4547 13.22619.1163 6.6803 4.9740 2.4787 16.5581 6.1437 44.62621.7367 -0.6993 0.7402 -1.7551 1.2273 3.0805 0.4890

87.6966 89.8318 947.5711 1385.0438 2815.4693

N=36

∑ RA=87.6966 R'A=2.4360∑ RM=89.8318 R'M=2.4953∑ (RA-R'A)(RM-R'M)= 947.5711

∑ (RM-R'M)²= 1385.0438

∑ (RA-R'A)²= 2815.4693

RF= 8.5%


Initial Value

Rate of Return for Jan 06(Fund) = 23.88–27.01 * 100 = -11.5883

27.01

Rate of Return for Jan 06(Market) = 2949.32-3089.58 * 100 = -4.5398


²M

βA = 0.6841

A= ∑ (RA-R'A)² √ (N-1)

A = 8.9689


βA



A


Jensen Measure = 0.7020INFERENCE



2008 is 8.9689




Mean (R'M) for the period from 1 Jan 2006 to 31st Dec 2008 is 2.4953


period from 1 Jan 2006 to 31st Dec 2008 is 0.6841


3.4364.


0.2621.


0.7020.

Graph 4.3: SBI Magnum Taxgain 93 NAV movement from 2006 to 2008

SBI MAGNUM TAXGAIN 93 NAV MOVEMENT FROM 2006-08

0

10

20

30

40

50

60

6-Mar

6-Ju

n

6-Sep

6-Dec

7-Mar

7-Ju

n

7-Sep

7-Dec

8-Mar

8-Ju

n

8-Sep

8-Dec

DATE

NA

V

NAV*

INTERPRETATIONS

1. The NAV of the fund has almost remained constant at around Rs. 25 for about

one year i.e. 2006.

2. Then the increasing rally started, since then expect for small falls for short periods

it has increased continuously.

3. During Feb 2008, the NAV reached high of Rs.55.93 during the period.

4. On 31 Dec 2008, its NAV was Rs. 55.65

Table 5.1: Monthly returns of Sundaram Tax Saver 98 and BSE 200 Index

SUNDARAM TAX SAVER 98

Period NAV* Fund ReturnIndex* (BSE 200) Market Return

Jan-06 34.56 769.67Feb-06 32.57 -5.7340 731.89 -4.9086Mar-06 32.91 1.0293 725.49 -0.8744Apr-06 32.41 -1.5117 731.81 0.8711May-06 33.13 2.2041 753.00 2.8956Jun-06 27.52 -16.9238 618.34 -17.8831Jul-06 27.58 0.2264 626.77 1.3633Aug-06 29.99 8.7132 676.66 7.9599Sep-06 30.65 2.2024 684.55 1.1660Oct-06 32.78 6.9611 733.42 7.1390Nov-06 33.08 0.9094 746.92 1.8407Dec-06 36.20 9.4324 818.03 9.5204Jan-07 39.26 8.4559 890.48 8.8566Feb-07 38.47 -2.0177 871.61 -2.1191Mar-07 39.46 2.5724 899.17 3.1620Apr-07 37.56 -4.7965 868.74 -3.3842May-07 36.16 -3.7233 824.95 -5.0406Jun-07 39.23 8.4810 890.28 7.9193Jul-07 40.01 1.9897 921.58 3.5157Aug-07 41.77 4.4007 977.60 6.0787Sep-07 43.51 4.1668 1014.05 3.7285Oct-07 46.14 6.0303 1101.33 8.6071Nov-07 43.71 -5.2660 1009.59 -8.3299Dec-07 49.30 12.7926 1116.68 10.6073Jan-08 52.25 5.9794 1188.78 6.4566Feb-08 55.44 6.1203 1255.05 5.5746Mar-08 57.49 3.6974 1294.92 3.1768Apr-08 65.32 13.6083 1419.57 9.6261May-08 67.58 3.4658 1507.07 6.1638Jun-08 56.83 -15.9160 1297.70 -13.8925Jul-08 57.60 1.3668 1272.80 -1.9188Aug-08 56.34 -2.1924 1274.60 0.1414Sep-08 61.22 8.6546 1399.37 9.7890Oct-08 62.99 2.9027 1498.95 7.1161Nov-08 65.68 4.2684 1564.30 4.3597Dec-08 68.80 4.7464 1649.74 5.4619Jan-09 69.38 0.8390 1655.28 0.3358


Table5.2: Calculation of Risk, Beta, Trenor, Sharpe and Jensen Measure of Sundaram Tax Saver 98

Fund Return

(RA)

RA-R'A Return from

Market

RM-R'M (RA-R'A) (RM-R'M)


(RM)

-5.7340 -7.9044 -4.9086 -7.2720 57.4806 52.8816 62.47961.0293 -1.1411 -0.8744 -3.2378 3.6946 10.4835 1.3021-1.5117 -3.6822 0.8711 -1.4922 5.4947 2.2268 13.55832.2041 0.0337 2.8956 0.5322 0.0179 0.2832 0.0011

-16.9238 -19.0942 -17.8831 -20.2465 386.5907 409.9213 364.58800.2264 -1.9440 1.3633 -1.0001 1.9441 1.0001 3.77938.7132 6.5428 7.9599 5.5965 36.6165 31.3206 42.80792.2024 0.0320 1.1660 -1.1974 -0.0383 1.4337 0.00106.9611 4.7907 7.1390 4.7756 22.8785 22.8065 22.95060.9094 -1.2610 1.8407 -0.5227 0.6591 0.2732 1.59019.4324 7.2620 9.5204 7.1571 51.9745 51.2234 52.73668.4559 6.2854 8.8566 6.4933 40.8130 42.1625 39.5067-2.0177 -4.1881 -2.1191 -4.4825 18.7730 20.0924 17.54012.5724 0.4020 3.1620 0.7986 0.3210 0.6377 0.1616-4.7965 -6.9670 -3.3842 -5.7476 40.0433 33.0350 48.5384-3.7233 -5.8938 -5.0406 -7.4040 43.6375 54.8194 34.73648.4810 6.3105 7.9193 5.5559 35.0607 30.8679 39.82301.9897 -0.1807 3.5157 1.1524 -0.2082 1.3280 0.03274.4007 2.2302 6.0787 3.7153 8.2860 13.8035 4.97394.1668 1.9964 3.7285 1.3651 2.7253 1.8636 3.98556.0303 3.8599 8.6071 6.2437 24.0999 38.9837 14.8986-5.2660 -7.4364 -8.3299 -10.6933 79.5198 114.3468 55.300212.7926 10.6222 10.6073 8.2439 87.5683 67.9619 112.83115.9794 3.8090 6.4566 4.0933 15.5911 16.7548 14.50826.1203 3.9499 5.5746 3.2112 12.6841 10.3121 15.60173.6974 1.5269 3.1768 0.8134 1.2420 0.6616 2.3315

13.6083 11.4379 9.6261 7.2627 83.0701 52.7468 130.82593.4658 1.2953 6.1638 3.8005 4.9229 14.4435 1.6779

-15.9160 -18.0865 -13.8925 -16.2559 294.0116 264.2542 327.11991.3668 -0.8036 -1.9188 -4.2822 3.4413 18.3369 0.6458-2.1924 -4.3628 0.1414 -2.2220 9.6941 4.9371 19.03448.6546 6.4842 9.7890 7.4256 48.1486 55.1392 42.04432.9027 0.7322 7.1161 4.7527 3.4801 22.5880 0.53624.2684 2.0980 4.3597 1.9963 4.1883 3.9854 4.40164.7464 2.5759 5.4619 3.0985 7.9815 9.6006 6.63550.8390 -1.3315 0.3358 -2.0276 2.6996 4.1110 1.7728

78.1352 85.0816 1439.1078 1481.6275 1505.2586

N=36∑ RA=78.1352 R'A=2.1704∑ RM=85.0816 R'M=2.3634∑ (RA-R'A)(RM-R'M)= 1439.1078 ∑ (RM-R'M)²= 1481.6275

∑ (RA-R'A)²= 1505.2586

RF= 8.5%


Initial Value

Rate of Return for Jan 06(Fund) = 32.57–34.56 * 100 =-5.7340

34.56

Rate of Return for Jan 06(Market) = 731.89 - 769.67 * 100 =-4.9086


²M

βA = 0.9713

A= ∑ (RA-R'A)² √ (N-1)

A = 6.5580


βA



A


Jensen Measure =-0.1276 INFERENCE



2008 is 6.5580.




Mean (R'M) for the period from 1 Jan 2006 to 31st Dec 2008 is 2.3634


period from 1 Jan 2006 to 31st Dec 2008 is 0.9713


2.1470.


0.3180

Jensen’s Measure for the fund for the period from 1 Jan 2006 to 31st Dec 2008 is -0.1276

Graph 5.3: Sundaram Tax Saver NAV movement from 2006 to 2008

SUNDARAM TAX SAVER NAV MOVEMENT FROM 2006-08

01020304050607080

6-Mar

6-Ju

n

6-Sep

6-Dec

7-Mar

7-Ju

n

7-Sep

7-Dec

8-Mar

8-Ju

n

8-Sep

8-Dec

DATE

NA

V

NAV*

INTERPRETATIONS

1. The NAV of the fund has steadily increased over the period

2. On 31st Dec 2008 it closed at its high of Rs. 69.38 during the period.

FINDINGS AND SUGGESTION

SUMMARY OF FINDING’S

BIRLA SUNLIFE TAX RELIEF 96;

Average Returns (R'A) 1.4458

Market Average Return ( R'M) 2.3634

Standard Deviation (A) 8.3550

Beta (β) 0.9296

1. The average return of the fund (R’A) is lower than that of the average market

return (R'M) which indicates that the fund is not performing well as compared to

the market.

2. The Standard Deviation of 8.3550 indicates the amount of risk involved in

investing in the fund.

3. The fund’s beta of 0.9296 is relatively lower than that of the market index (1, by

definition), which gives the idea that the proportionate change in the fund

resulting from the change in the market index is relatively low.

FRANKLIN INDIA TAXSHIELD;




Beta (β) 0.8778

4. The average return of the fund (R’A) is higher than that of the average market

return (R'M) which indicates that the fund is performing well as compared to the

market.


investing in the fund. The risk involved in investing in this fund is too high.




HDFC TAX SAVER




Beta (β) 0.9308

7. The average return of the fund (R’A) is higher than that of the average market

return (R'M) which indicates that the fund is performing well as compared to the

market.






SBI MAGNUM TAXGAIN 93




Beta (β) 0.6841

10. The average return of the fund (R’A) is almost equal to the average market return

(R'M).



12. The fund’s beta of 0.6841 is lower than that of the market index (1, by


resulting from the change in the market index is low and the fund is less volatile

compared to the market.

SUNDARAM TAX SAVER 98



Standard Deviation (A) 6.5580.

Beta (β) 0.9713

13. The average return of the fund (R’A) is less than that of the average market return

(R'M).



15. The fund’s beta of 0.9713 is almost equal to that of the market index (1, by


resulting from the change in the market index is almost equal and the fund moves

almost in tandem with the market.

TREYNOR'S INDEX RANKINGS REFRENCEBIRLA SUNLIFE TAX RELIEF 96 1.4638 V Page no.47FRANKLIN INDIA TAXSHIELD 6.1018 I Page no.52HDFC TAX SAVER 3.9534 II Page no.57SBI MAGNUM TAXGAIN 93 3.4364 III Page no.62SUNDARAM TAX SAVER 98 2.1470 IV Page no.67

16. Franklin India Taxshield ranks top among the funds because of the high risk

premium i.e. 5.3562 and low market related risk i.e. 0.8778.

17. Though SBI Magnum Tax gain 93 has low market related risk it has been ranked

third because of low risk premium

SHARPE'S INDEX RANKNGS REFRENCEBIRLA SUNLIFE TAX RELIEF 96 0.1629 V Page no.47FRANKLIN INDIA TAXSHIELD 0.1828 IV Page no.52HDFC TAX SAVER 0.5463 I Page no.57SBI MAGNUM TAXGAIN 93 0.2621 III Page no.62SUNDARAM TAX SAVER 98 0.3180 II Page no.67

18. HDFC Tax Saver fund ranks top among the funds because of the higher return

and less risky.

19. Though Franklin India Taxshield has a high return compared to other funds it is

ranked fifth because of high amount of risk involved in investing in the fund.

JENSEN'S INDEX RANKINGS REFRENCEBIRLA SUNLIFE TAX RELIEF 96 -0.7572 V Page no.48FRANKLIN INDIA TAXSHIELD 3.3466 I Page no.53HDFC TAX SAVER 1.5490 II Page no.57SBI MAGNUM TAXGAIN 93 0.7020 III Page no.63SUNDARAM TAX SAVER 98 -0.1276 IV Page no.68

20. Among the risk adjusted performance of the portfolios Franklin India Tax shield

is the best.

SUGGESTION’S

The investors who are ready to take risk can invest in Franklin India Taxshield

has the risk associated with it is too high and the return is also high. The

predictive ability represented by Jensen’s Index is also quite good and gives an

idea that the fund manager has a good ability of predicting the market and then

investing. So you can have faith in the fund manager.

The investors who are not much interested in taking risk can invest in HDFC Tax

Saver as the risk associated with this fund is less and the returns are also good but

not as high as that of Franklin India Taxshield. As the fund is able to earn high

returns with low risk, we can say that the fund as been managed very well.

The investors can also invest in SBI Magnum Taxgain 93 has it has been ranked

third among all the measures but the returns will be moderate compared to

Franklin and HDFC.

As the Tata Tax Savings Fund is highly volatile, investors are not recommended

invest in this fund.

CONCLUSION

The asset base rose by Rs 58,013 crore in April. March had seen a marginal decline in the

assets under management of the industry.

The mutual fund industry as we have seen has been through testing phase in its evolution.

It has seen a sudden mushrooming of several asset management companies soon after the

opening up of the industry for private players, the debacle of UTI, and its low recovery

and the optimism of the new generation fund mangers who believe that they can indeed

beat the market and diversify away the risk very efficiently. Investors today have to bear

outrageous plans of various AMC’s that they have magic portfolio, which can give tailor

made returns than risks.

In this study an attempt was made to look into the logic behind the claims that these

AMC’s boldly make theoretically with a broad prospective. Broadly various concepts

like the risk-return relationship and various performance evaluation methods were floated

with an intention to facilitate even an ordinary investor with elementary knowledge of

statistics to understand them.

Based on the inferences from the analytical study of the performance of the fund some

suggestions were made to the investor.

The future of the mutual fund industry in India is very bright and is going to be very

preferred investment options for an investor in the coming future. It looks to take over

the other avenues of investment available to the investor due to its high returns and

professional management, which is lowering the risk.

BIBILOGRAPHY

1. Referred by following books

Sl No Book Author Publisher

1 Investment Analysis

and Portfolio

Prasanna Chandra 5th reprint, 2003

Management Tata McGraw-Hill

2 Investment

Management

(Security Analysis

and Portfolio

Management),

V.K.Bhalla 7th Edition,

S.Chand & Co

3 Security Analysis

and Portfolio

Management

Punithavathy

Pandian

2nd Reprint, 2003,

Vikas Publishing

House

4 Investment

Analysis and

Portfolio

Management

Frank K Reilly,

Keith C Brown7th Edition,

Thomson South

Western

2. Website

www.equitymaster.com

www.nseindia.com

www.bseindia.com

www.icicidirect.com

www.Sharekhan.co

http://www.icicidirect.com/

STUDY THE PERFORMANCE OF MUTUAL FUND SCHEMES IN THE FRAMEWORK OF RISK AND RETURN

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