Name: Probal Sarkar Enrollment No.

: 10BSPHH010896

Mobile No.: 8017494214 E-mail id: probal1984@gmail.com

SUMMER INTERNSHIP PROGRAM

Project Proposal

I. Project Proposed: A comparative study of debt based mutual funds

II. Description of Project in brief: The study focuses on the year wise performance of
debt based mutual fund. These funds invests a primary part (65% & above) in long &
short term debt funds while a secondary portion in the equity market. So the funds are
basically associated will comparatively low risk and return than the equity based
mutual funds. The fund managers according to the economic condition of the market
decide on the exact amount of fund to be invested in equity ranging from 0-35%.
Sometimes often to minimize the risk the fund managers also make investment in call
money market also. Generally the annual rate of return in good debt based mutual fun
ranges from 10-13%.
The debt based mutual funds can be classified according to lock-in period and
also according to mode of receiving the return of profit. The funds with a certain lock
–in- period usually 3 years are called closed ended mutual funds and that without any
lock-in period are called open ended mutual funds. The funds also have certain
options for the investor as growth option or dividend option which can be again
payout or reinvested. In case of growth option the share of profit by the investor is
retained by the fund and used as further investment. It results in increment in the
NAV of the said fund thus results in profit for investor. In case of dividend payout
option the share of profit is paid back to the investor in the form of cash. In case of
dividend reinvestment option the share of profit of the investor i.e. dividend is used to
purchase addition units of the same fund as a reinvestment.
In the study all types of the above mentioned debt based mutual fund will be
covered so that we can understand whether there any difference exists due to the
 nature or type of the fund. In order to fulfill this intention to cover various types of
debt based mutual funds and keeping in mind the limited scope of our study the top
10 funds which is currently being traded in the Indian market will be considered for
the purpose. The data in relation to the performance parameter will be collected at a
specific time interval of 1 year since inception of the said mutual fund. Since the date
of inception of the said fund every year on 1st April the NAV will be recorded and
accordingly the rate of return for the said year will be calculated for each of them.
Also other data directly linked with the performance of the mutual fund for the
said year will be collected and the required performance parameter for calculating the
risk associated with the fund will be calculated like Standard Deviation, Sharpe ratio,
P/E Ratio, P/B Ratio, Portfolio Turnover, R-Squared, Alpha and Expense Ratio.
The following data will then be used to run a regression analysis with NAV as
independent variable and the other parameters as independent variables to develop a
linear regression model and develop the interdependence relation between the various
parameters related to each of the top 10 debt based mutual funds. So that the exact
effect of variance in the NAV of the funds can be explained by the parameters and
may well be used for tentative prediction in the future.
This project will be of good value to the organization as they can use the result
obtained from the project for future prediction and accordingly suggest the client
whether to invest or not on any particular debt based mutual fund. Also how much to
invest, when to invest and which fund to invest according to the prospect of the fund,
the risk taking ability of the investor and the expected rate of return in the future.

III. Objective of the Project: The objective of the report is to give the performance of
Top Debt based Mutual Funds traded in India and to analyze various risks and returns
associated with them. This evaluation can be done on the basis of parameters like
NAV, AUM, Beta, Standard deviation, Sharpe ratio, P/E Ratio, P/B Ratio, Portfolio
Turnover, R-Squared, Alpha and Expense Ratio. The research also intends to bring in
the new trends in the mutual fund industry and to give a futuristic insight to it along
with guidance to investors for better CRM initiative by the organization.
IV. Methodology: Collecting all the performance related data of top 10 debt based
mutual funds like NAV, AUM, Beta, Standard deviation, Sharpe ratio, P/E Ratio, P/B
Ratio, Portfolio Turnover, R-Squared, Alpha ,Expense Ratio etc. Then comparing and
analyzing them to find the annual rate of return of those funds since inception along
with degree of risk undertaken by the investors. Also using linear multiple regression
method in SPSS to find out the individual partial effect of various parameters on the
NAV of each of debt based mutual fund.

IV. Schedule: 25th March- Selection of top 10 debt based mutual fund
8th April- Collection of data related to performance of the mutual funds
15th April- Interim Project Report Submission.
29th April- Performance Analysis of the mutual funds
13th May- Development of regression model for the mutual funds
18th May- Final Project Report Submission

V. Limitations of the Study: 1) The study is confined only to the top 10 debt based
mutual funds currently traded in the Indian market.
2) The study will consider the NAV and other parameters only at specific time
interval of 1 year, i.e. 1st April every year. So the information regarding any other
changes in between will not reflect through the study.
3) The study will be limited to only parameters considered to be important to the
performance of the mutual funds. So the effect of other minor factors is considered to
remain same and neglected for measurement purpose.
4) The impact of external factors common to all will be observed through the change
in NAV of the funds but will not be considered for measurement purpose.
 VI. References: www.bloomberg.com, www.justtrade.in, www.moneycontrol.com, E
Mridula and Priya Raju book on “Mutual Fund industry in India”, “Investment
Styles and Performance of Equity Mutual Funds in India” by D N Rao,
“Investment India” magazine by Bajaj Capital Publication, Dalal Street Investment
Journal volume no- 25 “Time to go for Mutual Funds”.

Faculty Guide Name: Surajit Ghosh Dastidar

Company Guide Name: Uday Shekhar Indu

Date: 18.03.11 Probal Sarkar

(Signature of the student)