Performance evaluation risk and return of mutual funds @ uti secureties project report mba finance

A study on “Performance Evaluation of Mutual Funds with
Reference to risk and return”

CONTENTS

- Executive Summary

- Introduction

- Literature review

- Purpose of the study

- Objectives

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EXECUTIVE SUMMARY

UTI securities ltd. (UTISEL) has been working as an independent

professional entity for providing financial intermediary and advisory services to

corporate institutional and retail clientele. This project emphasis on, “The

Performance of Mutual Funds with reference to Risk and Returns”, conducted at

UTI Securities Ltd. In this project I have analyzed the Mutual Funds Schemes,

particularly the Equity Diversified open ended (growth) schemes and evaluated

the returns and the risk associated with those schemes.

OBJECTIVES OF THE STUDY

 To know the performance of Mutual Fund of different companies.

 To evaluate the returns and the risk associated with mutual funds.

 To evaluate the investment performance of mutual funds with risk

adjustment, by using the theoretical parameters as suggested by

William. Sharpe, Treynor and Jensen.

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LIMITATIONS:

Not single work is an exception to the limitations every work has got its

limitations. The data collection here in this project is strictly confined to the

secondary sources. No primary data was associated with the project. Collecting

historical NAV is very difficult. Selection of the schemes for the study is also a very

difficult task because of the wide variety of schemes. The results of the study are

subjected to inconsistencies arising out of the assumptions made to make the

portfolios comparable viz., sample selection procedure, portfolio proportion

assumption etc.

RESEARCH METHODOLOGY:

Data source:

Secondary data - Reports from UTI securities and other reports

from related websites.

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Introduction

An investment means employment of funds on assets (i.e. securities or mutual
funds or any of the investment avenues) with the aim of earning income as well as
capital appreciation. There are mainly two attributes while investing to any of the
funds i.e. time and risk. There are mainly four objectives, which the investments
activities will carry on. Those are:

 Return from the investment
 Risk involved
 Liquidity
 Hedge against inflation
 Safety
 Convenience

There are many alternatives investment avenues which are open to the
investors to suit their needs and nature .The selection of investment alternatives
depends up on the required level of return and the risk tolerance level. These
alternatives range from financial securities to traditional non-securities investment.

Following are the various investment alternatives.

Negotiable and fixed income securities

 Equity shares
 Preference share
 Debentures
 Bonds
 Indira vikas patra &Kisan Vikas patra
 Government securities
 Money market securities (i.e. treasury bill, commercial paper,
certificate of Deposit etc)

Non-negotiable securities

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 Bank deposit
 Post office deposit
 NBFC deposit
 Tax saving schemes
 Public provident fund scheme
 National saving scheme
 Life insurance
 Mutual funds
 Real estate

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LITERATURE REVIEW

Introduction to Mutual Funds

What is a Mutual Fund?

Like most developed and developing countries the mutual fund cult has been

catching on in India. There are various reasons for this. Mutual funds make it easy

and less costly for investors to satisfy their need for capital growth, income and/or

income preservation.

And in addition to this a mutual fund brings the benefits of diversification and

money management to the individual investor, providing an opportunity for financial

success that was once available only to a select few.

Understanding Mutual funds is easy as it's such a simple concept: a mutual

fund is a company that pools the money of many investors -- its shareholders -- to

invest in a variety of different securities. Investments may be in stocks, bonds, money

market securities or some combination of these. Those securities are professionally

managed on behalf of the shareholders, and each investor holds a pro rata share of the

portfolio -- entitled to any profits when the securities are sold, but subject to any

losses in value as well.

For the individual investor, mutual funds provide the benefit of having someone else

manage your investments and diversify your money over many different securities

that may not be available or affordable to you otherwise. Today, minimum investment

requirements on many funds are low enough that even the smallest investor can get

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started in mutual funds.

A mutual fund, by its very nature, is diversified that is, its assets are invested in many

different securities. Beyond that, there are many different types of mutual funds with

different objectives and levels of growth potential, furthering your chances to

diversify.

Evolution:

In most of the countries, mutual funds have emerged as strong rivals to
banking industry in mobilizing savings funds. The reason that may attributed to
same is that in the banking sector there are many restrictions for investment in
the capital market, there as the mutual funds have been a free access to these
markets which in other words have given then an upper hand in the matter of
operations. Consequently, the returns from mutual funds investment are higher
compared to the returns out of savings in banks in an ideal market condition.
Thus, he mutual funds i8ndusty has witnessed a tremendous growth in countries
like Mexico and South Africa.

Mutual Funds can be broadly classified under 3 heads namely

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a) Investment Trust

b) Holding companies

c) Finance Companies

Out of the above the investment trust got a boost because of good public
response and today we have in India Unit Trust of India that was constituted on
similar lines with the unit trust in the U.S.A.

The unit trusts are open-ended schemes where the investor can buy and sell
‘Unit’ at his only will and wish. The other advantage of unit Trust is that even a
small investor can hold shares of many companies and enjoy the returns arising
lot of the investment.

The unit trust of India was constituted under the unit Trust of India act,
1963 and became operational in the year 1964 with the basic objectives of
mobilizing savings through the sale of units and investing them in corporate
securities with the idea of maximizing yield from them and capital appreciation
with inbuilt liquidity. The unit trust of India still commands a good position
among mutual fund in India and approximately 90% of the investments in
mutual fund are in the schemes floated by unit trust of India.

The unit trust of India has many highlights in its performance so far. The
monopoly of unit trust of India was brought to an end with the entry of public
sector mutual funds in the year 1987. Canara bank, State Bank of India, Punjab
National Bank and Indian bank floated the premier mutual funds that came into
being during 1987.

DEFINITIONS:

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The reason for increased response towards mutual funds world over is on
account of investment analyst, who takes investment decisions based on research.
The concept of the lower risk carried on by the investor as the funds are diverted
with professional body of investment analyst, who take investment decisions based
on research. The concept of mutual fund has been defined in various ways.

According to SEBI (Mutual Fund) regulatins1993, “Mutual fund means
a fund established in the form of trust by sponsor to raise moneys 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”.

However in the Indian context it is safe to define “Mutual Fund as trusts
accepting savings from the investors and invest the same as per the objectives
incorporated in the trust deed to manage diversified portfolio which in turn
assure reasonable returns to the investors.”

Why invest in Mutual Funds.
Investing in mutual has various benefits which makes it an ideal investment
avenue. Following are some of the primary benefits.

Professional investment management
One of the primary benefits of mutual funds is that an investor has access to
professional management. A good investment manager is certainly worth the fees you
will pay. Good mutual fund managers with an excellent research team can do a better
job of monitoring the companies they have chosen to invest in than you can, unless
you have time to spend on researching the companies you select for your portfolio.
That is because Mutual funds hire full-time, high-level investment professionals.
Funds can afford to do so as they manage large pools of money. The managers have
real-time access to crucial market information and are able to execute trades on the
largest and most cost-effective scale. When you buy a mutual fund, the primary asset
you are buying is the manager, who will be controlling which assets are chosen to
meet the funds' stated investment objectives.

Diversification

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A crucial element in investing is asset allocation. It plays a very big part in the
success of any portfolio. However, small investors do not have enough money to
properly allocate their assets. By pooling your funds with others, you can quickly
benefit from greater diversification. Mutual funds invest in a broad range of securities.
This limits investment risk by reducing the effect of a possible decline in the value of
any one security. Mutual fund unit-holders can benefit from diversification techniques
usually available only to investors wealthy enough to buy significant positions in a
wide variety of securities.

Low Cost
A mutual fund let's you participate in a diversified portfolio for as little as
Rs.5,000, and sometimes less. And with a no-load fund, you pay little or no sales
charges to own them.

Convenience and Flexibility
Investing in mutual funds has it’s own convenience. While you own just one
security rather than many, you still enjoy the benefits of a diversified portfolio and a
wide range of services. Fund managers decide what securities to trade, collect the
interest payments and see that your dividends on portfolio securities are received and
your rights exercised. It also uses the services of a high quality custodian and
registrar. Another big advantage is that you can move your funds easily from one fund
to another within a mutual fund family. This allows you to easily rebalance your
portfolio to respond to significant fund management or economic changes.

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Liquidity
In open-ended schemes, you can get your money back promptly at net asset
value related prices from the mutual fund itself.

Transparency
Regulations for mutual funds have made the industry very transparent. You
can track the investments that have been made on you behalf and the specific
investments made by the mutual fund scheme to see where your money is going. In
addition to this, you get regular information on the value of your investment.

Variety
There is no shortage of variety when investing in mutual funds. You can find a
mutual fund that matches just about any investing strategy you select. There are funds
that focus on blue-chip stocks, technology stocks, bonds or a mix of stocks and bonds.
The greatest challenge can be sorting through the variety and picking the best for you.

Mutual fund route offers several important advantages.

 The popular saying, “don’t keep all the egg in one basket” is quite
appropriate in the case of instruments, if an investor wishes to maximize
his returns, he should invest in a variety of securities available across the
market. However, a small investor with his limited savings can not
acquire a number of securities of different companies and industries.
Thus, the investor gets a proportion of the average market. This specific
character of mutual fund investment avenues further, the modern portfolio
they states that, diversification reduces the risk and improves the scope
for higher returns.
 Professionals who have knowledge and experience in security analysis
and portfolio management manage the corpus amount mobilized by the
mutual funds under various schemes. Research is continuous process in
mutual funds, where they identify the under valued and high yielding
securities and make will-timed purchases and sales. An investor of a
mutual fund schemes may gain out its professional management. The

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investor can save his cost and time in identifying the securities; he can
share the benefits of reach and management costs of the funds with other
investor.
 Mutual funds are floating different schemes with variety investment
objectives. This creates an opportunity among investors to choose the
schemes based on their objective, motivations, and requirements.
 In addition to the above advantages, the Indian mutual funds are
specifically offering the following benefits to the investors.

 In the case of investment in equity shares or debentures, the allotment
would be based on lost or proportional. Whereas, almost all the
mutual funds promise assure allotment to all investors to the extent of
amount subscribed by them. This reduces the investor’s time.
 Mutual funds offer certain tax incentives to the investors and
additional tax benefits for investing in tax planning schemes.

The presence of the Mutual fund institutions in the economy offers certain
advantages to the economy-

 Mutual funds are the financial intermediaries, which mobilize the savings
from surplus units and transfer them to the capital and money market by
investing in a variety of financial instruments.
 Mutual funs with support of their professional managers, carefully
analyses the prospects of new companies and new industries if the
prospects are good, subscribe large amounts to he equity and debt capital
of newly established companies.
 Mutual funds as institutional investors, with their professional expertise in
the stock trading. The increased participation of professional rational
investment reduces the undesirable speculation in the capital market.

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Classification of Mutual Fund Schemes

Any mutual fund has an objective of earning income for the investor’s
and/ or getting increased value of their investments. To achieve these objectives
mutual funds adopt different strategies and accordingly offer different schemes
of investments. On this basis the simplest way to categorize schemes would be
to group these into

Operational classification highlights the two main types of schemes, i.e., open-
ended and close-ended which are offered by the mutual funds.

Portfolio classification projects the combination of investment instruments and
investment avenues available to mutual funds to manage their funds. Any portfolio
scheme can be either open ended or close ended

A. Operational Classification or on Structural basis:

Open Ended Schemes:

As the name implies the size of the scheme (Fund) is open – i.e., not
specified or pre-determined. Entry to the fund is always open to the investor
who can subscribe at any time. Such fund stands ready to buy or sell its
securities at any time. It implies that the capitalization of the fund is constantly
changing as investors sell or buy their shares. Further, the shares or units are
normally not traded on the stock exchange but are repurchased by the fund at
announced rates. Open-ended schemes have comparatively better liquidity
despite the fact that these are not listed. The reason is that investor can any time
approach mutual fund for sale of such units. No intermediaries are required.
Moreover, the realizable amount is certain since repurchase is at a price based
on declared net asset value (NAV). No minute-to-minute fluctuations in rates
haunt the investors. The portfolio mix of such schemes has to be investments,
which are actively traded in the market. Otherwise, it will not be possible to
calculate NAV. This is the reason that generally open-ended schemes are Equity
Based.

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Moreover, desiring frequently traded securities, open-ended schemes
hardly have in their portfolio shares of comparatively new and smaller
companies since these are not generally traded. In such funds, option to reinvest
its dividend is also available. Since there is always a possibility of withdrawals,
the management of such funds becomes more tedious as managers have to work
from crisis to crisis. Crisis may be on two fronts, one is, that unexpected
withdrawals require funds to maintain a high level of cash available every time
implying thereby idle cash. Fund managers have to face questions like ‘ what to
sell’. He could very well have to sell his most liquid assets. Second, by virtue of
this situation such funds may fail to grab favorable opportunities. Further, to
match quick cash payments, funds cannot have matching realization from their
portfolio due to intricacies of the stock market. Thus, success of the open-ended
schemes to a great extent depends on the efficiency of the capital market. The
holders of the shares in the fund can resell them to issuing Mutual Fund
Company at any time They receive in turn the net asset value (NAV) of the
shares at the time of resale. Such mutual funds companies place their funds in
the secondary securities market. They do not participate in new issue markets
to pension funds or life insurance investment companies. Can sell an unlimited
number of shares and thus keep going larger. The open end mutual funds by or
sell their own share.

These companies ell new shares at NAV plus a loading or management
fee and redeem scheme at NAV. UTI’S Unit scheme, 1964 and CANCIGO
and CANGICT are few examples of such funds. The minimum corpus for and
open-ended fund is fifty crores a per SEBI guidelines.

(b) Close Ended Schemes:

Such schemes have a definite period after which their shares/units can be
redeemed. Unlike open-ended funds, these funds have fixed capitalization, i.e.,
their corpus normally does not change throughout its life period. Close ended
fund units trade among the investors in the secondary market since these are to
be quoted on the stock exchanges. Their price is determined on the basis of
demand and supply in the market. Their liquidity depends on the efficiency and

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understanding of the engage broker. Their price is free to deviate from NAV,
i.e., there is every possibility that the market price may be above or below its
NAV. If one takes into account the issue expenses, conceptually close ended
fund units cannot be traded at a premium or over NAV because the price of a
package of investments, i.e., cannot exceed the sum of the prices of the
investments constituting the package. Whatever premium exists that may exist
only on account of speculative activities. In India as per SEBI (MF) Regulations
every mutual fund is free to launch any or both types of schemes. Close– ended
mutual funds are different form the open-ended mutual fund. Close-ended and
investment company has definite target amount for the funds and can not sell
more shares after its initial offering. Its growth in terms of numbers is limited.
Its shares are issued like together company’s new issue listed and quoted at
stock ex change. That minimum corpus for Close-ended fund is Rs20 crores.
Close-ended funds changed funds the secondary market acquisition of corporate
securities.

There is no necessary relationship between the price of close-ended
mutual fund share and its NAV. Its shares may les per the current NAV per
share, per more,(at a premium) as per less(at discount). Investor’s doubts about
the abilities of the funds management lack of sales effort (brokers earn less
commission of close ended schemes then open ended schemes) risk ness of the
fund.

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B. Portfolio classification of mutual funds.

These are specific mutual funds, which are structured for feeding a
particular invests able purpose. The objective of funds provide fixed return for
those who design safety

Equity (Stock) Funds:

Equity Funds are those that invest primarily in stock. The actual portfolio
holing, trading style, portfolio turnover, etc, are widely depending on the fund’s
investment objectives and manager’s style.

Aggressive Growth:

These funds are also called capital Appreciation fund. Having an investment
objective of maximum capital gains, with minimal or no concern for dividends or
income. These funds tend to be some of the most volatile, with share price rise that
can be thrilling and drop that can be frightening. Not only do the portfolios holding
them be volatile, but many aggressive growth funds magnify the volatility by using
borrowed money (leverage) to increase the size of the position held. Some funds in
this category growth funds fall into the aggressive growth area.

Aggressive growth funds purchase shares of stock in smaller companies, which
have a chance to grow at a faster pace than more “mature” companies. Of course,
there is also greater risk involved with investing in less established companies.
Aggressive growth funds are usually recommended for the investors who seek long-
term capital appreciation and will not need access to money for at least ten years.

Balanced:

Funds invest in a mix of common stock and corporate bonds. The weighting of
going piece of the mix depends on the fund manager’s perceptions of where the
markets and economy are going. Some preferred stock and convertible securities are
commonly allowed, as are cash equivalents such and Treasury Bills, CDs, and
commercial paper.

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Global:

It is Similar to international, but with the option of investing anywhere
globally including the U.S.

Growth:

The goal for these funds is long-term growth of capital. Growth funds own
shares of medium to large companies, and could include such familiar “blue chip”
names as IBM and GENERAL ELECTRIC. Normally, these established companies
will grow at a moderate pace, and will pay regular dividends to owner of its shares. If
mutual fund is the owner the fund will collect these dividend and pass them to mutual
funds shareholders once are more per year. While capital appreciation is major
objective of these type of fund income derived from dividends is secondary objectives
investments are typically in long – growth stocks, with a lower portfolio turnover then
the aggressive growths funds. Dividends yield tend to be low.

Growth and income:

Despite the name, fund in this category are typically more interested in growth
than income with typical dividend rates on the portfolios in the 1% range. The usual
portfolio is Blue Chip stock, with some income enhancing securities like convertible
preferred stocks are bonds thrown in to the mix.

Index:

Unlike traditional stock funds, which are managed actively by a portfolio
manager based on analysis of economic and market movements, index funds are
passively managed. A passively managed fund buys and holds securities selected to
represent its unmanaged target index, such as standard and poor 500 index.

Sector:

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Concentrates investments on a narrow market sector like Health care, internal
stocks, bio technology, and so on. Sector funds tend to be volatile as industry groups
fall into and out of favor; portfolios are diversified only within industry group.

Real estate funds:

Real estate funds are of close-ended type. The funds are named so because
primary investment is real estate ventures.

Bond funds:

Bond funds are objective of safety. Bond funds are liquid prices of funds
fluctuates with changing interest rates.

C. Geographical Classification of Mutual Funds

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National boundaries provide territorial restrictions on the sale and
purchase of mutual funds units or share, as is the case in commodity trade or
service in view of the, Mutual funds which operate with in the nation
boundaries are different form those which are meant for subscription of
foreigners or the countries national living out side its share. The classification is
of broadly tow types.

1) Domestic Mutual Funds

2) Offshore Mutual Funds

Domestic Mutual Funds

Domestic Mutual Funds are the saving schemes, which are open for
mobilizing saving of the nationals with in the country. All the Mutual fund
schemes in vogue in the country vis-à-vis, UTI, GIC Mutual Fund, LIC Mutual
Fund, SBI Mutual fund, CAN Bank Mutual Fund, PNBMF and BOIMF are the
domestic schemes.

Offshore Mutual Funds

The basic objective of opening offshore Mutual fund scheme is to attract
foreign capital for investment purposes in the country of the issuing company.
Offshore Mutual Funds thus facilitate cross border fund flow, which is a direct
route for getting foreign currency without political strings or domination on the
issue country.

From investment point of view too, offshore Mutual funds open up
domestic capital market to the international investor and global portfolio
investments.

The major point of difference between offshore Mutual funds and
Domestic Mutual funds is the currency and country risk for the global investors
as the source of funds from am broad because of high risk in a higher return in
the invested funds can be expected. Like domestic mutual funds, the offshore

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Mutual funds can also be functionally classified into Close-ended or Open-
ended funds.

The Major Offshore Mutual Funds opened so far have been close-ended
schemes providing redemption of the units for individual investors only at the
end of the period specified in the scheme. UTIs India funds 1986, India growth
fund, SBIs India Magnum, Can Bank’s Indo-Swiss Himalayan fund, 1990 and
Common wealth equity fund are all close-ended offshore funds.

Characteristics of Mutual Fund Schemes

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The following are mutual fund scheme characteristics of the Indian
mutual fund schemes.

 Assurance of minimum returns:

Mutual funds in general do not assure any minimum returns to their
investors. Returns are paid to the investors, commensurate with the returns
earned by the fund on the portfolio, as portfolio consists of various securities,
whose returns are subject to market risks. Contrary to this, the Indian mutual
fund schemes launched during 1987 to 1990 assured specific returns while
marketing their schemes.

I n 1991, SEBI together with the union ministry of finance ordered the
mutual funds not assume minimum returns. Recently, SEBI has formulated of
policy that, mutual funds with a track record ;of 5 years will be allowed to offer
fixed returns. SEBI shall prescribe the returns to be assured from time to time.
However, no fund will be allowed to offer fixed return for more than 1 year.

 Multiple Option

Most of the mutual fund schemes are offering different option to the
investor under one scheme. For example growth oriented scheme may offer
option of either regular income plan, dividend shall be distributed to the
investor, and under second dividend will be re-invested and the total amount at
the time of redemption.

 Immediate monthly income.
 Deferred monthly income.
 Accumulated income and benefits under section 80 1 of the
income act.
 Growth with capital gain.

 Lock in period

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Mutual fund schemes offer documents that contain a clause of lock in
period ranging from one year to 3 years. Till the completion of the minimum
period, the investors are neither allowed to trade the units on the stock exchange
nor avail repurchased facility.

 Liquidity

a) Open-ended mutual funds offer the facility of repurchase, and the close-
ended schemes are also offering repurchase after a minimum period of two to
three year.

b) Mutual funds units can be pledged or mortgaged in favor of commercial
banks or financial institutions, and can obtain a loan according to the rules and
regulations of the bank or financial institution.

c) Mutual fund can be transferred in favors of any individuals.

PURPOSE OF THE STUDY

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The purpose of the study is to know the returns and the risk associated with

the Mutual Fund’s Equity Diversified schemes and to find out which best scheme to

recommend.

SCOPE OF THE STUDY

 The present study includes 4 years average returns of the mutual funds, which

have the total corpus (mass, quantity, amount,) value, of more than 10000

crores.

 For my study I have scanned all the mutual funds companies and have taken

only those schemes which are having the corpus value of more than 400 crores

and age of the fund is more than 3 years.

 This study covers only equity diversified schemes which are subject to more

fluctuating risks and returns.

 Since the number and nature of stocks, the proportion of stocks in the portfolio

and the relative ness of portfolio to the index considered, differs, the portfolios

are averaged at 0.5 for these factors for variance determination.

 To evaluate the performance of the Mutual Fund schemes, Sharpe’s index,

Treynor’s index and Jensen’s Alpha measures are applied.

OBJECTIVES OF THE STUDY

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 To know the performance of Mutual Fund of different companies.

 To evaluate the returns and the risk associated with mutual funds.

 To evaluate the investment performance of mutual funds with risk

adjustment, by using the theoretical parameters as suggested by William.

Sharpe, Treynor and Jensen.

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CONTENTS

- Organization Profile

- Date Collection Methods

- Measuring Tools

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ORGANIZATION PROFILE

UTI SECURITIES LTD., (UTISEL) was incorporated on June 28, 1994 by

Unit Trust of India as its 100% subsidiary and on the repealing of the UTI Act, the

capital was now held by the Administrator of the Specified Undertaking of Unit Trust

of India (ASUUTI), on April 17, 2006 the entire share capital of the company was

transferred from SUUTI to Securities Trading Corporation Of India Ltd. [STCI] and

its nominees. UTISEL has been working as an independent professional entity for

providing financial intermediary and advisory services to corporate institutional and

retail clientele. The Company has built up a reputation for transparent and fair

execution of transactions, which have been well received and appreciated by its

clientele. The staff at UTI Securities strives to maintain the quality of services offered

to its clients at the highest degree.

The Company has grown from an institutional brokerage house to a full-

fledged financial intermediary having nationwide presence in major cities with

branches and franchisees to service a wide range of clients. We are committed to

gradually enhancing our network in the near future.

The Company has also invested in the joint-venture company with Standard

Chartered Bank viz. Standard Chartered UTI Securities (P) Ltd. that is engaged in

primary dealership and Government securities. The Company has started Commodity

Trading through its subsidiary, UTISEC COMMODITIES LIMITED, which provides

facility of commodity trading on NCDEX and MCX.

Mission and Vision:

To emerge as one of the leading providers of stock brokerage, investment banking and

related services, at par with the best in the world".

Management profile:

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Mr. Dipankar Basu: Chairman

Mr. Dipankar Basu was appointed as Chairman and Director on the Board of UTI

Securities Limited at the Meeting of the Board of Directors held on April 17, 2006.

Mr. Basu is the non-executive Chairman of Securities Trading Corporation of

India Limited and Rain Calcining Limited. Mr. Basu brings with him long experience

and specialized knowledge of financial markets in India. He has been the Chairman of

State Bank of India until August 1995. While acting as the Chairman, Mr. Dipankar

Basu served as a Member on the Boards of number of SBI subsidiaries including

those engaged in investment banking and fund management. He has been a Board

member of number of companies engaged in both financial and non-financial

businesses.

Even after retirement in 1995, Mr. Basu has been actively engaged in wide spectrum

of functions including being a member of the Disinvestment Commission set up to

advise the Government of India on public sector disinvestments. He has also been a

member of the Narsimhan Committee on Banking Sector Reforms.

Mr. Gopalakrishnan Narayanan: Director

Mr. Gopalakrishnan Narayanan, currently the Managing Director of Securities

Trading Corporation of India Limited has been appointed as an Additional Director on

the Board of our Company with effect from April 17, 2006.

Being qualified as BSc and CAIIB, Mr. Narayanan brings with him more than 36

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years of experience and knowledge. He joined Bank of India in 1970. Large part of

Mr. Narayanan’s career was in International Treasury and Foreign Exchange related

areas. He has had two stints of Overseas Assignments at Tokyo and Jersey Branches

of Bank of India.

Mr. Narayanan has attended number of trainings conducted by in-house training

college, Bankers Training College of Reserve Bank of India in Treasury and Forex

related areas. He has been a regular guest faculty on Treasury & Forex related

subjects in in-house training colleges & Bankers Training College of Reserve Bank of

India.

Dr. D C Anjaria: Director

An MBA in finance from the IIM (A), he has had 20 years of experience with

Citibank N.A. in India and overseas. He worked as Chief of Staff with Citicorp

Investment Bank in Paris, France. In 1988, Dr. Anjaria joined the Unit Trust of India

to establish and head UTI Institute of Capital Markets, a unique specialised training

and research institution. Currently he runs an independent consulting operation-

International Financial Solutions Pvt. Ltd. to advise clients in areas including

corporate strategy, financial risk management and use of derivative products.

Shri A Rama Mohan Rao: Managing Director

Chartered Accountant by profession, Shri Rao is the Managing Director of the

Company since July 2002. He has worked with UTI for a period of 22 years in

various functional areas of marketing, accounting, operations, Investments and Fund

BABASAB PATIL
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Management in different capacities.

He worked as Branch Manager at UTI Branches, as Functional Head in International

Finance and Investment Department and also as one of the Chief Investment Officers

for UTI schemes. He has represented as one of the Indian Delegates at the Asia

Oceania Regional Meeting for Investment Managers held at Singapore in 2002. At

UTISEL he is responsible for the overall management and performance of the

Company.

Products and services:

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committed to help you do just that. We deliver State-of-the-art Tools, excellent

Customer Care, Affordable Pricing and Innovative Technology so you can follow

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Intra-day Trading:

Execute Margin Orders upto 3 to 4 times your available funds. The same is available

for select group of stocks listed on NSE & BSE.

ANST: Sell shares before you receive the same in your demat account. You can avail

of this facility 1st and 2nd day after the buy order date.

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Derivative:

With a Derivative-approved Usec trade account, you can pursue a wide range of

Futures & Options trading strategies with speed and ease. We deliver the support,

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At Usectrade, we offer access to more than 1000 mutual fund schemes from leading

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paperwork, you get the dual benefit of a risk cover and savings. What's more, we shall

send you regular reminders about your premium payments due.

Bonds

Fixed income securities can help reduce your risk within an investment

portfolio while providing a steady stream of income over time. Currently you can

choose to invest online in GOI Bonds. If you are looking to diversify your portfolio,

possibly improve your tax efficiency and/or reducing your risk exposure, you may

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strategy

Research:

Charting Tools - Get a combined view of stocks, rapid price changes and volume

increases with this pre-trade analytic tool. Enables you to do technical market analysis

of stocks on price, volume, market cap and P/E for NSE/BSE Benchmark against

Domestic as well as International Indices.

Sector Watch - You can access sector-wise information to track sectors and individual

scrips within the sector, which makes analysis easy for you.

Corporate Infohub - We provide you with exhaustive company information, detailed

financials and ratios. And we also allow you to evaluate financials across peer

companies. Our extensive database covers more than 4000 companies.

Newsroom - View live market news from the most reliable sources on equity, debt,

politics and general events. You even have access to live news analysis, market

commentary and happening stocks.

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Customer Service & Other Value Added Services

Online Query Resolution - With our "Quick Mail" tool you can resolve all your

problems online.

Online Ledger - View your Digital Contract Note, summary of your transactions

using Online "Bills & Accounts"

My Inbox - Maintain records of all Important notifications related to your account

SMS Alerts - Set Price based Alerts for Stocks of your choice

Dedicated Customer Care Centre & State-of- the-art Phone-2-Trade Desk

Interactive Demo - A step-by-step guide to enable you to navigate through the

process of Investing Online on our website Usectrade.com

Subscription to Mailers - Subscribe to our Inhouse Research Reports covering our

entire Product Bouquet

Investment Banking and Advisory Services

Investment Banking is one of the prime focus areas of the company and we provide

value added, customized solutions to our clients. Leveraging on the knowledge,

expertise and experience of our professionals, we offer services that range from

managing public issues, debt and equity placements, corporate advisory services and

financial consultancy to facilitating mergers and acquisitions.

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The Investment Banking Team's business philosophy emphasizes:-

• Long-term relationship with clients.

• A strong research-based advice.

• Innovative solutions and speedy execution.

• Ethical and transparent conduct of business.
It has always been the endeavor of UTI Securities to bring all the market
constituents together in a mutually beneficial relationship.

Equity capital Markets
The Issue Management group focuses on public issues, open offers and buy
back issues. Our proximity to large institutions gives us an added advantage in placing
large equity issues. This division is supported by a nationwide network comprising of
12 branches, 15 franchisees and sub-brokers across the country for retail distribution.
Within a short span, UTISEL has already been recognized as one of the leading
merchant bankers in India.
UTI Securities has consistently provided professional guidance and expert
services. Over the years, it has developed strong relationships with institutional
investors and other market intermediaries, enabling it to structure and successfully
place a wide array of Capital Market products that meet the requirements of the
issuer, investor and the market.

The Equity Capital Markets group offers the following services:

• Initial Public Offerings

• Rights Issues

• Buy-Back

• Underwriting

• Open Offers

• Delisting of Securities

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• Private Equity

The Equity Capital Markets group seamlessly draws on the expertise provided by the

Equity Research and Equity Sales teams on all the public offerings.

We have been associated with a number of issues in different capacities as

Lead Managers, Co Managers, Syndicate/Sub-syndicate Members, etc. in the past.

We successfully lead managed recently the public issue of Four Soft Ltd., a software

products company, with an issue size aggregating Rs. 200 million. We were also

involved as a syndicate member in the issue of Indraprastha Gas Ltd. where we

procured over 12,000 applications.

Our Clients:

We are currently lead managing the issues of SMS Pharmaceuticals, a bulk drugs

manufacturer; Glenmark Laboratories Ltd. which is in formulations segment;

Vivimed Labs Ltd., manufacturer of pharmaceutical ingredients catering to the

personal care industry and Crew BOS Products Ltd., a fashion accessories

manufacturer. The size of the said issues ranges from Rs. 150 million to Rs. 500

million. We are also Lead Managing Rights Issue of Varun Shipping Company Ltd of

Rs.130 -150 Crores. We also pursue Buyback/Delisting offers amongst others.

We are aiming at making further inroads by securing mandates of premier companies

in the Pharmaceutical, Textiles, Information Technology, Hospitality, Banking and

Housing Finance industries amongst others.

Private Equity

The Private Equity Group arranges equity placement through the off-market

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route using its privileged relationships with various Venture Capital and Strategic &

Portfolio Equity investor who operate from within the country as well as from abroad.

The Private Equity group assists companies seeking capital infusions in the form of

seed capital, venture capital, angel investment, strategic investment, and mezzanine

financing from the private equity marketplace.

The private equity group identifies start –up, later stage projects for investing

in well-managed companies, which are placed to grow rapidly and to take advantage

of the favourable economic conditions existing within the space with a clearly defined

business model. Private Equity Group has followed the philosophy of being a multi-

sector player, as it believes that in the Indian context it ensures an optimum balance of

risk and return to its investors. Private Equity Group has demonstrated its industry

expertise in different sectors by backing diverse sectors like Pharma, Power,

Entertainment, Information Technology etc.

The Private Equity division has been successful in arranging pre IPO funding

from venture capitalists/Private Equity investors. Recently we have done the

placement for Four Soft Ltd. and Glenmark Laboratories Ltd. aggregating Rs. 140

million.

Data Collection:

Data source:

Secondary data - Reports from UTI securities and other reports

from related websites.

Measuring tools and Techniques:

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Techniques of analysis:

1. Return:

Return on a typical investment consists of two components. The basic is the
periodic cash receipts (or income) on the investment, either in the form of interest or
dividends. The second component is the change in the price of the assets-commonly
called the capital gain or loss. This element of return is the difference between the
purchase price and the price at which the assets can be or is sold; therefore, it can be
a gain or a loss.

The return has been calculated as under:

NAVt – NAVt-1

Portfolio return: Rit =---------------------------------

NAV t-1

Where Rit is the difference between Net Asset Values for two consecutive days
dividend by the NAV of the preceding day.

M.indt – M.indt-1

Market return: Rmt =--------------------------------

M.indt-1

Where Rmt is the difference between market indices of two consecutive days
dividend by the market index for the preceding day

2. Risk :

Risk is neither good nor bad. Risk in holding securities is generally associated
with the possibility that realized returns will be less than expected returns. The
difference between the required rate of returns on mutual fund investment and the

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risk free return is the risk premium. Risk can be measured in terms of Beta &
standard deviations.

 Standard deviation:

It is used to measure the variation in individual returns from the average
expected returns over a certain period. Standard deviation is used in the concept of
risk of a portfolio of investments. Higher standard deviation means a greater
fluctuation in expected return.

SD = n ∑X2 – (∑X)2
n (n-1)

 Beta :

Beta measures the systematic risk and shows how prices of securities respond
to the market forces. It is calculated by relating the return on a security with return
for the market. By convention, market will have beta 1.0.Mutual fund is said to be
volatile, more volatile or less volatile. If beta is grater than 1 the stock is said to be
riskier than market. If beta is less than 1, the indication is that stock is less risky in
comparison to market. If beta is zero then the risk is the same as that of the market.
Negative beta is rare.

ß = Covar / (SD)2

Where, Covariance (covar) is the average of the products of deviations for
each data point pair. And, covar is calculated as:

Covar = 1/n Σ(xi –µ x)(yi - µy)

Where, x = scheme returns.

y = market returns.

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µ = mean.

β = nΣxy - (Σx)( Σy)

nΣx2-(Σx) 2

Where, n = number of years

X = rolling returns of the BSE index

Y = rolling returns of the schemes

3. Sharpe index

Sharpe index measures risk premium of a portfolio, relative to the total
amount of risk in the portfolio. Sharpe index summarizes the risk and return of a
portfolio in a single measure that categorizes the performance of funds on the risk-
adjusted basis. The larger the Sharpe’s index the portfolio over performs the market
and vise versa.

Formula to calculate Sharpe’s measure is:

RP - Rf
St =
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SD

Where,

st = Sharpe’s index

Rp= portfolio return

Rf= Risk free rate of return (5%)
SD= Standard Deviation of the port folio

4. Treynor’s Index

Treynor’s model is on the concept of the characteristics straight line. The
characteristics line has drawn a relationship between the market return and a specific
portfolio without taking into consideration any direct adjustment for risk. It is also
known as reward to volatility ratio and is defined as:

The formula for Treynor’s Index is:

Portfolio avg return (Rp) – risk-free rate of interest (Rf)

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Treynor index (Tn) =

Beta coefficient of portfolio (Bp)

Rp -Rf

Tn =

Bp

It measures portfolio risk in terms of beta, which is weighted average of
individual security beta. The ratio is investors, for who the fund represents only a
fraction of their total assets. The higher the ratio better is the performance.

5. Alpha

The size of the alpha exhibits the stock’s unsystematic return and its average
return independent of market return. If the fund produces the expected return at the
level of risk assumed, the fund would have an alpha equal to zero. A positive alpha
indicates that the manager produced return greater than expected for the risk taken.
Alpha is calculated by comparing the fund’s actual performance with the risk-
adjusted expected return.

Where Rp = portfolio return

Rf = Risk free rate of return (5%)

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Rm = average market return

-
α =(Rp Rf) - Beta (Rm- Rf)

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CONTENTS

- Methodology

- Results & Discussion with Charts & Graphs

- Conclusion

- Bibliography

Methodology

The following table shows the list of AMC in India & the corpus value
of individual AMC in the month of October and November 2006.

S.No Mutual Fund AUM AUM Increase/ Change
31/01/2007 31/12/2006 %
Decrease
1. LIC Mutual Fund 16480.90 12458.88 4022.02 32.28
2. UTI Mutual Fund 41622.51 37789.97 3832.54 10.14
3. Benchmark Mutual Fund 8951.09 5659.42 3291.67 58.16
4. Reliance Mutual Fund 34636.90 3152.28 3064.62 9.71
5. Kotak Mahindra Mutual Fund 13542.09 10938.29 2603.8 23.80

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6. Pru ICICI Mutual Fund 35232.16 32664.03 2568.13 7.86
7. DSP Merrill Lynch Mutual Fund 14277.26 11781.10 2559.16 21.84
8. HDFC Mutual Fund 29555.13 27552.96 2002.17 7.27
9. PRINCIPAL Mutual Fund 11887.17 10050.54 1836.63 18.27
10. Deutsche Mutual Fund 6138.66 5155.57 982.72 19.06
11. Birla Mutual Fund 17474.97 16821.57 653.2 3.88
12. HSBC Mutual Fund 10312.24 9691.28 620.95 6.41
13. JM Mutual Fund 4664.6 4097.05 567.55 13.85
14. SBI Mutual Fund 15961.26 15496.18 465.09 3.00
15. ABN AMRO Mutual Fund 5738.67 5335.14 403.53 7.56
16. Fidelity Mutual Fund 5786.05 5399.96 386.09 7.15
17. Standard Chartered Mutual Fund 12894.13 12541.59 352.54 2.81
18. ING Vysya Mutual Fund 3834.43 35781.17 256.26 7.16
19. DBS Chola Mutual Fund 2145.33 1938.74 206.59 10.66
20. Morgan Stanley Mutual Fund 3026.44 2864.58 161.87 5.65
21. Tata Mutual Fund 12521.86 12472.36 47.51 0.38
22. Sahara Mutual Fund 203.33 160.94 42.39 26.34
23. Sundaram Mutual Fund 6854.99 6818.87 36.12 0.53
24. Escorts Mutual Fund 127.70 123.18 4.52 3.67
25. Quantum Mutual Fund 55.15 51.51 3.65 7.09
26. BOB Mutual Fund 150.21 165.49 -15.28 -9.23
27. Taurus Mutual Fund 258.29 275.92 -17.63 -6.39
28. Franklin Templeton Investments 23832.70 23920.26 -87.57 -.037
29. Canbank Mutual Fund 2304.91 2737.86 -332.85 -12.62

The AMC which have the AUM of more than 10,000Crs

1st STEP:

The selection of AMCs for analysis is on the basis of AUM value of individual
AMC. From all the AMCs, the fund, which have the AUM of more than 10,000crs
only those AMCs are taken for the study.

The following table shows the list of AMCs, which have the AUM of more
than 10,000Crs in the month of December 2006 and January 2007, & the % change in
the values in a month also are shown.

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S. No AMC AUM AUM Absolute %Change
31/01/2007 31/12/2006 change

1. UTI Mutual Fund 41622.51 37789.97 3832.54 10.14

2. Pru ICICI Mutual Fund 35232.16 32664.03 2568.13 7.86

3. Reliance Mutual Fund 34636.90 3152.28 3064.62 9.71

4. HDFC Mutual Fund 29555.13 27552.96 2002.17 7.27

5. Franklin Templeton Investments 23832.70 23920.26 -87.57 -.037

6. Birla Mutual Fund 17474.97 16821.57 653.2 3.88

7. LIC Mutual Fund 16480.90 12458.88 4022.02 32.28

8. SBI Mutual Fund 15961.26 15496.18 465.09 3.00

9. DSP Merrill Lynch Mutual Fund 14277.26 11781.10 2559.16 21.84

10. Kotak Mahindra Mutual Fund 13542.09 10938.29 2603.8 23.80

11. Standard Chartered Mutual Fund 12894.13 12541.59 352.54 2.81

12. Tata Mutual Fund 12521.86 12472.36 47.51 0.38

13. PRINCIPAL Mutual Fund 11887.17 10050.54 1836.63 18.27

14. HSBC Mutual Fund 10312.24 9691.28 620.95 6.41

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2nd STEP

Equity diversified Schemes:

There are varieties of schemes offered by the AMCs. Equity diversified is one of

the schemes offered by the AMC. The selection criteria of schemes are totally based

on the fund size and age of the fund. The scheme, which has the corpus value of more

than 400crs and the age of the fund, is more then 3yrs only those funds are qualified

for the analysis.

Equity Diversified Fund diversifies their portfolio evenly across stocks and

industry sectors. The returns from them tend to be moderately high over a long-term

horizon but since the prices of equity shares fluctuate on the stock markets, the net

asset value is subject to these fluctuations. These funds suit investors who have

moderate risk appetite. In a diversified fund, the risk of down-side is mitigated by the

breadth of variety of stocks in the portfolio. Since the portfolio is diversified, the

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under-performance in some stocks or sectors in which the fund has invested is

balanced by the superior performance of other stocks or sectors

The following are the equity-diversified schemes in the selected funds
at the current date.1/02/2007
Tables for fund size and fund age
UTI Mutual Fund

S. No Scheme Name Fund Size Date of Fund Fund
Inception Age Class
1. UTI Master Plus 91(G) 863.52 31/12/1991 15.16 ED

2. UTI Index Select Equity (G) 216.36 12/05/97 9.58 ED
3. UTI Mastergrowth 93 (G) 346.95 18/01/93 14.08 ED
4. UTI Large Cap (G) 25.53 07/04/04 2.83 ED
5. UTI Mastershare (G) 1,828. 19/09/1986 20.33 ED
6. UTI Equity Fund (G) 1,451.73 18/05/92 14.75 ED
7. UTI Growth & Value Fund (G) 151.96 28/10/99 7.33 ED
8. UTI Leadership Equity Fund (G) 1,027.84 30/01/06 1.08 ED
9. UTI Dividend Yield Fund (G) 516.88 03/05/05 1.91 ED
10 UTI India Advantage Equity (G) 55.84 05/02/00 7 ED
.
11 UTI Dynamic Fund (G) 128.27 12/09/03 3.41 ED
.
12 UTI Master Value Fund (G) 647.68 9.08 ED
. 01/06/98
13 UTI Mid Cap (G) 80.70 07/04/04 2.83 ED
.
14 UTI Opportunities Fund (G) 497.79 1.58 ED
. BABASAB PATIL 20/07/05
15 UTI Contra Fund (G) -46- 640.04 0.91 ED
. 22/03/06
16 UTI Wealth Builder Fund (G) 905.02 07/09/06 0.41 ED
.


S. No Scheme Name Fund Date of Age of Fund
Size inception the fund class
1. Pru ICICI Infrastructure (G) 1,562.32 1.5 ED
16/08/05
2. Pru ICICI Dynamic Plan (G) 1,533.33 18/10/2002 4.33 ED

3. Pru ICICI Services Indus. (G) 424.02 1.25 ED
18/11/05
4. Pru ICICI Growth (G) 406.88 19/06/98 8.66 ED

5. Pru ICICI Emerging S.T.A.R.(G) 933.66 2.75 ED
05/10/04
6. Pru ICICI Discovery Fund (G) 908.60 2.58 ED
23/07/04
7. Pru ICICI Fusion Fund (G) 634.15 27/02/06 ED
(1)
8. Pru ICICI Power (G) 1,025.49 ED
05/10/01(5.33)

Prudential ICICI Mutual Fund

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Size inception the class
fund
1. Reliance RSF – Equity (G) 160.50 10/05/05 1.75 ED

2. Reliance NRI Equity Fund 121.23 01/11/04 2.25 ED
(G)

3. Reliance Equity Opp. Fund 2,214.79 07/03/05 1.58 ED
(G)

4. Reliance Vision Fund (G) 2,415.31 07/09/95 11.58 ED

5. Reliance Growth Fund (G) 3,243.92 08/09/95 10.5 ED

6. Reliance Equity Fund (G) 4,455.25 07/03/06 0.58 ED

Reliance Mutual Fund

HDFC Mutual Fund
S. No Scheme Name Fund Date of Age of the Fund
Size inception fund class
1. HDFC Growth Fund (G) 379.40 11/09/00 6.41 ED

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2. HDFC Core & Satellite Fund 646.03 10/09/04 1.41 ED
(G)
3. HDFC Top 200 Fund G) 1,621.10 19/08/96 10.5 ED
S. No SchemeEquity Fund (G)
4. HDFC Name 3,907.14 08/12/94 of Age
Fund Date 12.5 ofEDFund
5. HDFC Premier Multi-Cap (G) 673.81 21/03/05 1.91
Size (crs.) inception the fund
ED
class
1. Franklin India Opportunity. (G) 687.15 19/02/2000 7 ED
6. HDFC Capital Builder Fund (G) 657.84 16/12/93 13.16 ED
2. Franklin India Growth Fund 25.06 07/02/2000 7 ED
7. HDFC Long Term Equity Fund 1,478.01 27/01/06 1.08 ED
(G)
3. Franklin India Prima Plus (G) 878.70 28/09/94 12.41 ED

4. Franklin India Blue chip (G) 2575.97 30/11/1993 13.25 ED

5. Franklin (I) Flexi Cap (G) 3,364.79 09/02/05 2 ED

6. Franklin (I) Smaller Co's (G) 1,211.47 14/12/05 1.16 ED

7. Templeton (I) Equity Income(G) 1,749.86 20/04/06 0.83 ED

Franklin Templeton Mutual Funds

Birla Mutual Fund

1. 396.18 08/09/2006 0.42 ED
Birla Long Term Adv. Fund (G)

2. Birla Infrastructure Fund (G) 474.08 24/02/2006 1 ED

3. Birla India GenNext Fund (G) 159.40 12/07/2005 1.58 ED

4. Birla India Opportunities (G) 83.17 25/08/2003 3.5 ED

5. Birla Advantage Fund (G) 475.06 24/02/95 12 ED

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6. Birla Midcap Fund (G) 228.43 01/10/02 4.33 ED

7. Birla Top 100 Fund (G) 440.00 28/09/05 1.42 ED

8. Birla Equity Fund (G) 506.37 08/27/98 7.77 ED

9. Birla Frontline Equity (G) 124.74 30/08/2002 4.5 ED

v. Birla Dividend Yield Plus (G) 415.89 02/07/03 3.32

LIC Mutual Fund

1. 99.28 10/08/94 12.5 ED
1. LIC MF Growth Fund

2. 82.93 11/01/93 14.08 ED
2. LIC MF Equity Fund (G)

SBI Mutual Fund

1. Magnum Global Fund (G) 954.15 22/09/199 12.42 ED
4
2. Magnum Midcap Fund (G) 427.81 17/03/05 1.91 ED

3. Magnum Contra Fund (G) 1,448.78 31/07/99 7.57 ED

4. SBI Magnum Equity Fund (D) 265.98 1/01/1991 16.03 ED

5. Magnum Comma Fund (G 457.58 25/07/05 1.58 ED

6. Magnum Multiplier Plus (G) 745.07 01/03/93 13.91 ED

7. Magnum Multicap Fund (G) 1,079.18 16/09/05 1.41 ED

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8. Magnum Emerging Businesses 267.94 17/09/04 2.41 ED
(G)
9. Magnum NRI Fund - FA Plan (G) 13.64 13/01/04 3.08 ED

10 SBI Arbitrage Oppor. Fund (G) 214.38 15/09/06 0.41
.
11 SBI Blue Chip Fund (G) 1,936.34 20/01/06 1.08
.

DSP Merrill Lynch Mutual Fund

1. DSP-ML Small & MidCap- Inst 54.59 29/09/06 0.41 ED
(G)
2. DSP-ML Small & Mid Cap Fund 1,389.79 29/09/06 0.41 ED
(G)

3. DSP-ML Opportunities (G) 1,356.20 18/04/00 6.83 ED

4. DSP-ML Equity Fund 695.41 07/04/97 9.83 ED

5. DSP-ML Top 100 Equity (G) 299.47 21/02/03 4 ED

6. DSP-ML India T.I.G.E.R. (G) 1,481.34 25/05/04 2.75 ED

Kotak Mutual Fund


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1. Kotak Lifestyle Fund (G) 384.15 22/02/06 1 ED

2. Kotak 30 (G) 432.01 22/12/98 8.16 ED

3. Kotak Opportunities Fund (G) 224.26 25/08/04 2.5 ED

4. Kotak Global India Scheme (G) 111.85 16/01/04 3.08 ED

5. Kotak Contra (G) 143.59 01/07/05 1.58 ED

Standard Chartered Mutual Fund

1. StanChart Imperial Equity (G) 251.16 21/02/06 1 ED

2. StanChart Classic Equity (G) 372.11 14/07/05 3.16 ED

3. StanChart Premier Equity (G) 161.21 26/09/05 2.83 ED

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Tata Mutual Fund

S. No Scheme Name Fund Size Date of Age of the Fund
inception fund class
1. Tata Infrastructure Fund (G) 1,187.91 22/12/04 2.16 ED

2. Tata Select Equity Fund (G) 106.38 24/05/96 10.75 ED

3. Tata Pure Equity Fund (G) 292.23 07/05/98 8.75 ED

4. Tata Equity Opp. Fund (G) 440.12 30/03/93 13.96 ED

5. Tata Service Industries (G) 181.46 10/05/05 1.75 ED

6. Tata Equity P/E Fund (G) 84.53 15/06/04 2.66 ED

7. Tata Growth Fund (G) 33.29 15/06/94 12.66 ED

8. Tata Mid Cap Fund (G) 154.51 15/06/05 1.66 ED

9. Tata Dividend Yield Fund (G) 146.18 27/10/04 2.33 ED

10 Tata Contra Fund (G) 201.42 25/10/05 1.33 ED
.

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Principal Mutual Fund

1. Principal Large Cap Fund 251.90 19/10/05 1.33 ED
(G)
2. Principal Resurgent IEF 260.89 30/06/00 6.66 ED
(G)
3. Principal Growth Fund 260.03 25/10/00 6.33 ED
(G)
4. Principal Junior Cap Fund 71.00 08/06/05 1.66 ED
(G)
5. Principal Focussed Adv. 60.31 22/02/05 2 ED
(G)
6. Principal Global Oppor 436.71 19/03/04 2.91 ED
(G)
7. Principal Infra & Serv Ind 266.92 07/02/06 1 ED
(G)
8. Principal Dividend Yield 139.01 22/09/04 2.41 ED
(G)

HSBC Mutual Fund

1. HSBC India Opportunities (G) 607.88 13/02/04 3 ED

2. HSBC Equity Fund (G) 936.53 03/12/02 4.16 ED

3. HSBC Midcap Equity Fund (G) 311.51 03/05/05 1.75 ED

4. HSBC Advantage India Fund (G 1,216.90 27/01/06 1.08 ED

4 Step:

Absolute returns:

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The selected funds returns from date of launch to date of
inception

DOI
Scheme Name 1yr 2yr 3yr 4yr
NAV
()
1. UTI Master Plus 91(G) 62.79 13.8 98.8 120.5 309.2
2. UTI Mastershare (G) 33.08 7.8 66.8 110.4 --
3. UTI Equity Fund (G) 30.86 -2.2 64.9 121.3 313.5
4. UTI Master Value Fund (G) 27.23 -5.4 44.2 90.5 389.1
5. Pru ICICI Dynamic Plan 63.59 23.4 143.4 258.5 --
(G)
6. Pru ICICI Growth (G) 89.80 14.5 105.9 160.5 354.2
7. Pru ICICI Power (G) 78.11 15.6 116.6 191.0 559.2
8. Reliance Vision Fund (G) 171.46 13.7 100.3 185.8 795.4
9. Reliance Growth Fund (G) 259.81 17.1 124.8 267.3 982.5
10. HDFC Top 200 Fund G) 105.32 12.3 104.4 178.8 553.7
11. HDFC Equity Fund (G) 144.18 15.3 119.8 197.9 554.2
12. HDFC Capital Builder Fund 59.74 2.5 69.4 184.2 444.6
(G)
13. Franklin India Opportunity. 24.20 16.9 124.5 193.0 376.4
(G)
14. Franklin India Prima Plus 133.87 21.5 116.1 170.3 469.2
(G)
15. Franklin India Blue chip (G) 124.12 13.2 99.3 144.9 449.7
16. Birla Advantage Fund (G) 120.87 10.3 91.0 155.9 368.9
17. Birla Dividend Yield Plus 40.07 -2.6 45.0 98.7 --
(G)

18. Magnum Global Fund (G) 41.40 17.3 148.9 380.9 770.8
19. Magnum Contra Fund (G) 35.71 15.1 133.6 334.2 790.3
20. Magnum Multiplier Plus 50.92 11.2 139.8 260.9 544.9
(G)

21. DSP-ML Opportunities (G) 52.64 11.9 102.8 178.5 562.9
22. DSP-ML Equity Fund 37.47 16.0 112.3 205.2 541.5
23. Kotak 30 (G) 65.64 12.1 106.9 176.2 471.0
24. Tata Equity Opp. Fund (G) 55.55 5.8 101.0 180.1
25. HSBC India Opportunities 27.13 21.6 109.7 198.8 --
(G)
26. HSBC Equity Fund (G) 68.72 16.7 91.1 164.3 --

By observing the absolute returns of the schemes we find that Reliance

Growth Fund (G) is the one which is giving the good returns from the date of launch.

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5th STEP:
METHODOLOGY
 Returns

Scheme Names DOI Annualized returns (%) 4 yrs
NAV Avg Rtn
(28/02/07
)
1 yr 2yr 3yr 4yr
1. UTI Master Plus 91(G) 62.79 13.8 41.0 30.2 32.6 29.4
2. UTI Mastershare (G) 33.08 7.8 29.2 28.1 -- 21.7
3. UTI Equity Fund (G) 30.86 -2.2 28.4 30.3 32.8 22.33
4. UTI Master Value Fund (G) 27.23 -5.4 20.1 24.0 37.4 19.03
5. Pru ICICI Dynamic Plan (G) 62.25 52.5 57.2 41.8 52.5 51
6. Pru ICICI Growth (G) 89.80 14.5 43.5 37.6 35.3 32.73
7. Pru ICICI Power (G) 78.11 15.6 47.2 42.8 45.8 37.85

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8. Reliance Vision Fund (G) 171.46 13.7 41.5 41.9 55.0 38.03
9. Reliance Growth Fund (G) 259.81 17.1 49.9 54.3 61.0 45.58
10. HDFC Top 200 Fund G) 105.32 12.3 43.0 40.7 45.6 35.4
11. HDFC Equity Fund (G) 144.18 15.3 48.3 43.9 45.6 38.28
12. HDFC Capital Builder Fund (G) 59.74 2.5 30.2 41.6 40.3 28.65
13. Franklin India Opportunity. (G) 24.20 16.9 49.8 43.1 36.6 36.6
14. Franklin India Prima Plus (G) 133.87 21.5 47.0 39.3 41.6 37.35
15. Franklin India Blue chip (G) 124.12 13.2 41.2 34.8 40.6 32.45
16. Birla Advantage Fund (G) 120.87 10.3 38.2 36.8 36.2 30.38
17. Birla Dividend Yield Plus (G) 40.07 -2.6 20.4 25.7 -- 14.5
18. Birla Equity Fund(G) 175.05 16.4 49.1 50.0 46.1 40.4
19. Magnum Global Fund (G) 41.40 17.3 57.8 68.8 54.2 49.53
20. Magnum Contra Fund (G) 35.71 15.1 52.8 63.1 54.8 46.45
21. Magnum Multiplier Plus (G) 50.92 11.2 54.9 53.4 45.2 41.18
22. DSP-ML Opportunities (G) 52.64 11.9 42.4 40.7 46.0 35.25
23. DSP-ML Equity Fund 37.47 16.0 45.7 45.1 45.0 37.95
24. Kotak 30 (G) 65.64 12.1 43.8 40.3 41.7 34.48
25. Tata Equity Opp. Fund (G) 55.55 5.8 41.8 41.0 -- 29.53
26. HSBC India Opportunities (G) 27.13 21.6 44.8 44.0 -- 36.8
27. HSBC Equity Fund (G) 68.72 16.7 38.2 38.3 -- 31.07

Market Return

Market Return 1 yr 2yr 3yr 4yr Avg rtrn
Sensex 22.60 43.50 35.00 30.80 32.98

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Risk

 Standard Deviation:

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Scheme Names DOI Annualized Returns (%) 4 yr (SD)
NAV Avg
1 yr 2 yr 3 yr 4 yr
1. UTI Master Plus 62.79 13.8 41.0 30.2 32.6 29.4 11.38
91(G)
2. UTI Mastershare 33.08 7.8 29.2 28.1 -- 21.7 12.05
(G)
3. UTI Equity Fund 30.86 -2.2 28.4 30.3 32.8 22.33 16.45
(G)
4. UTI Master Value 27.23 -5.4 20.1 24.0 37.4 19.03 17.89
Fund (G)
5. Pru ICICI Dynamic Plan 62.25 52.5 57.2 41.8 52.5 51 6.52
(G)
6. Pru ICICI Growth (G) 89.80 14.5 43.5 37.6 35.3 32.73 12.63
7. Pru ICICI Power 78.11 15.6 47.2 42.8 45.8 37.85 14.95
(G)
8. Reliance Vision Fund 171.4 13.7 41.5 41.9 55.0 38.03 17.39
(G)
6
9. Reliance Growth Fund 259.8 17.1 49.9 54.3 61.0 45.58 19.52
(G)
1
10. HDFC Top 200 Fund G) 105.3 12.3 43.0 40.7 45.6 35.4 15.53
2
11. HDFC Equity Fund (G) 144.1 15.3 48.3 43.9 45.6 38.28 15.42
8
12. HDFC Capital Builder 59.74 2.5 30.2 41.6 40.3 28.65 18.16
Fund (G)
13. Franklin India 24.20 16.9 49.8 43.1 36.6 36.6 14.20
Opportunity. (G)
14. Franklin India Prima 133.8 21.5 47.0 39.3 41.6 37.35 11.05
Plus (G)
7
15. Franklin India Blue 124.1 13.2 41.2 34.8 40.6 32.45 13.15
chip (G)
2
16. Birla Advantage Fund 120.8 10.3 38.2 36.8 36.2 30.38 13.41
(G)
7
17. Birla Dividend Yield 40.07 -2.6 20.4 25.7 -- 14.5 15.04
Plus (G)
18. Birla Equity Fund(G) 175.0 16.4 49.1 50.0 46.1 40.4 16.09
5
19. Magnum Global Fund 41.40 17.3 57.8 68.8 54.2 49.53 22.36
(G)
20. Magnum Contra Fund 35.71 15.1 52.8 63.1 54.8 46.45 21.37
(G)
21. Magnum Multiplier Plus 50.92 11.2 54.9 53.4 45.2 41.18 20.43
(G)

22. DSP-ML Opportunities 52.64 11.9 42.4 40.7 46.0 35.25 15.72
(G)
23. DSP-ML Equity Fund 37.47 16.0 45.7 45.1 45.0 37.95 14.64
24. Kotak 30 (G) 65.64 12.1 43.8 40.3 41.7 34.48 14.99
25. Tata Equity Opp. Fund 55.55
BABASAB 5.8PATIL
41.8 41.0 -- 29.53 20.56
(G)
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26. HSBC India 27.13 21.6 44.8 44.0 -- 36.8 13.17
Opportunities (G)
27. HSBC Equity Fund (G) 68.72 16.7 38.2 38.3 -- 31.07 12.44


SD = n ∑X2 – (∑X)2
n (n-1)

It is used to measure the variation in individual returns from the average
expected returns over a certain period. Standard deviation is used in the
concept of risk of a portfolio of investments. Higher standard deviation means
a greater fluctuation in expected return.

 BETA:

S.No Scheme Names 4 Years avg
Beta
Returns
1. UTI Master Plus 91(G) 29.4 0.45974
2. UTI Mastershare (G) 21.7 0.5195
3. UTI Equity Fund (G) 22.33 0.51445
4. UTI Master Value Fund (G) 19.03 0.38752
5. Pru ICICI Dynamic Plan (G) 51 0.04588
6. Pru ICICI Growth (G) 32.73 0.50621
7. Pru ICICI Power (G) 37.85 0.53133

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8. Reliance Vision Fund (G)
38.03
0.42884
9. Reliance Growth Fund (G) 45.58 0.53642
1 HDFC Top 200 Fund G)
35.4 0.50859
0.
1 HDFC Equity Fund (G)
38.28 0.55997
1.
1 HDFC Capital Builder Fund (G)
28.65 0.47609
2.
1 Franklin India Opportunity. (G)
36.6 0.58826
3.
1 Franklin India Prima Plus (G)
37.35 0.43023
4.
1 Franklin India Blue chip (G)
32.45 0.46015
5.
1 Birla Advantage Fund (G)
30.38 0.48017
6.
1 Birla Dividend Yield Plus (G)
14.5 0.57688
7.
1 Birla Equity Fund(G)
40.4 0.57362
8.
1 Magnum Global Fund (G)
49.53 0.74307
9.
2 Magnum Contra Fund (G)
46.45 0.67269
0.
2 Magnum Multiplier Plus (G)
41.18 0.77797
1.
2 DSP-ML Opportunities (G)
35.25 0.50358
2.
2 DSP-ML Equity Fund
37.95 0.50899
3.
2 Kotak 30 (G)
34.48 0.53857
4.
2 Tata Equity Opp. Fund (G) 29.53 0.87693

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2 HSBC India Opportunities (G)
36.8 0.56432
6.
2 HSBC Equity Fund (G)
31.07 0.52537
7.

ß = Covar / σm2

Where, Covariance (covar) is the average of the products of deviations for
each data point pair. And, covar is calculated as:

Covar = 1/n Σ(xi –µ x)(yi - µy)

σm2 = Market Variance

Beta describes the relationship between the stock’s return and the index returns. it
describes the risk in the portfolio with comparing market risk as 1 .

If beta =1

One percent changes in market index return causes exactly one percent change in
the stock returns. it indicates that the stock moves in tandem with the market .

If Beta <1

Then the stock is less volatile compared to the market.

If Beta >1

Then the stock is more volatile compared to the market. The stock value

With more then 1 beta value is considered to be risky.

If Beta –ve: native Beta indicates that the stock returns moves in the opposite
direction to the market return.

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Returns and risk for the top 10 companies having the highest
portfolio returns (Rp).

Scheme Names DOI nav 5 yrs SD Beta
Avg
Rtrn
1. Pru ICICI Dynamic Plan 62.25 51
6.52 0.05
(G)
2. Magnum Global Fund (G) 41.40 49.53 22.36 0.74
3. Magnum Contra Fund (G) 35.71 46.45 21.37 0.67
4. Reliance Growth Fund (G) 259.81 45.58 19.52 0.54
5. Magnum Multiplier Plus 50.92 41.18
20.43 0.78
(G)
6. Birla Equity Fund(G) 175.05 40.4 16.09 0.57
7. HDFC Equity Fund (G) 144.18 38.28 15.42 0.56
8. Reliance Vision Fund (G) 171.46 38.03 17.39 0.43
9. DSP-ML Equity Fund 37.47 37.95 14.64 0.51
10. Pru ICICI Power (G) 78.11 37.85 14.95 0.53

Sharpe’s Index:
Sharpe’s index measures the risk premium of the portfolio relative to the total
amt of risk in the portfolio. This risk premium is the difference between the

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portfolio’s average rate of return and the risk less rate of return. The index assigns the
highest values to assets that have best risk-adjusted average rate of returns.

4 Yr
DOI NAV Avg
Scheme Names 28/02/07 Rtrn Rf Sd(σ) St
Rp
1. Pru ICICI Dynamic Plan 62.25 51 7.06
5 6.52
(G)
2. Magnum Global Fund (G) 41.40 49.53 5 22.36 1.99
3. Magnum Contra Fund (G) 35.71 46.45 5 21.37 1.94
4. Reliance Growth Fund 259.81 45.58 2.08
5 19.52
(G)
5. Magnum Multiplier Plus 50.92 41.18 1.77
5 20.43
(G)
6. Birla Equity Fund(G) 175.05 40.4 5 16.09 2.20
7. HDFC Equity Fund (G) 144.18 38.28 5 15.42 2.16
8. Reliance Vision Fund (G) 171.46 38.03 5 17.39 1.90
9. DSP-ML Equity Fund 37.47 37.95 5 14.64 2.25
10. Pru ICICI Power (G) 78.11 37.85 5 14.95 2.20

Rp - Rf
St = Sd(σ)

Where,
Rp = Average portfolio returns
Rf = Risk free rate of rate (5%)
Sd(σ) = Standard Deviation (Risk) of returns

Treynor’s Index:
Treynor’s index sums up the risk and return of the portfolio in a

single number, while categorizing the performance of the portfolio.

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Performance evaluation risk and return of mutual funds @ uti secureties project report mba finance

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