CHAPTER-1

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INTRODUCTION
A Mutual Fund is a trust that pools the savings of a number of investors who share 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. A Mutual Fund is a body corporate registered with the Securities and Exchange Board of India (SEBI) that pools up the money from individual/corporate investors and invests the same on behalf of the investors/unit holders, in Equity shares, Government securities, Bonds, Call Money Markets etc, and distributes the profits. In the other words, a Mutual Fund allows investors to indirectly take a position in a basket of assets. Mutual Fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread among a wide cross-section of industries and sectors thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at same time. The investors in proportion to their investments share the profits or losses. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A Mutual Fund is required to be registered with Securities Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.

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EXECUTIVE SUMMARY

The project has been carried out at “Share Khan Ltd” with the title “Comparative Analysis of Selected Mutual Fund”. The main function of having analysis of Mutual fund is to pinpoint the strong points and weaknesses of mutual fund schemes For this I have taken the following parameters: Analyzing Mutual Fund using:Beta: - By comparing Mutual Fund on the basis of beta we come to know how volatile a particular Mutual Fund as related to stock market . Standard Deviation: - The standard deviation of a fund measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return. Sharpe Ratio: - Sharpe ratio is used to measure risk-adjusted performance. It tells us whether a portfolio‟s return are due to smart investment decision or a result of excess risk. The schemes selected for project are: 1. Equity Diversified 2. Tax saver funds Thus concluded from the project that from the above schemes tax saver schemes has a better performance than the equity funds as the risk observed in tax saver funds are less than the equity funds risk and they are giving comparatively better returns than the equity funds.

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OBJECTIVES OF STUDY

 

To measure the risk & return associated with the mutual funds. To compare the mutual fund schemes on the basis of various parameters.

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Comparisons of mutual funds are done by using following measures:  Beta  Standard Deviation  Sharpe Index Page | 5 .  In analytical research the researcher has to use the facts already available. descriptive and quantitative research where the comparison between the different mutual fund scheme is made on the basis of risk. Methodology Used: Descriptive Analytical Research  Under this type the researcher has to use the facts and information already available and analyze them to make evaluation of the market. It is analytical. Beta etc. Books and websites.  Data also included value of risk measuring instruments like Standard Deviation.  Data has been collected from the Fact sheet of the various mutual fund schemes and used those datas for the research.RESEARCH METHODOLOGY    Research Methodology is a very organized and systematic medium through which a particular case or problem can be solved. volatility and return. and analyze these to make the critical evaluation data of the material. For data collection purpose the secondary source was used like mutual fund factsheet. In fact sheet past returns were given of different funds.

it can be written as: Sharpe Index (Si) = (Ri . Symbolically.Rf)/Si Where. The standard deviation of a fund measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return. While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund. Page | 6 .Beta Beta is useful statistical measure. and a beta less than 1 indicates less volatility than the benchmark. A beta greater than 1 indicates greater volatility than the overall market. it is the total risk of the fund that the investors are concerned about. A fund with a beta very close to 1 means the fund's performance closely matches the index or benchmark. Si is standard deviation of the fund. which determines the volatility. a low and negative Sharpe Ratio is an indication of unfavorable performance. Standard Deviation The standard deviation essentially reports a fund's volatility. According to Sharpe. So. of a fund in comparison to that of its index or benchmark. performance of a fund is evaluated on the basis of Sharpe Ratio. the model evaluates funds on the basis of reward per unit of total risk. or risk. A security that is volatile is also considered higher risk because its performance may change quickly in either direction at any moment. which is a ratio of returns generated by the fund over and above risk free rate of return and the total risk associated with it. which indicates the tendency of the returns to rise or fall drastically in a short period of time. Sharpe Index In this model.

LIMITATIONS OF THE STUDY     The project is unable to analyze each and every scheme of mutual funds. Time is the critical factor limiting the study.  The scope of the project is mainly concentrated on the different categories of the mutual funds such as equity schemes and equity linked savings schemes etc. Selection of the schemes for the study is also a very difficult task because of the wide variety of schemes. Page | 7 . The Schemes were categorized and selected on evaluating their performance and relative risk.SCOPE OF THE STUDY  The funds are selected to which Share khan is advisor. All the data‟s were not available in the websites.

Chapter 2:

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Literature Review CONCEPTUAL STUDY
Since 1990 there has been a tremendous growth in the investment in international mutual funds. This growth is likely to continue as domestic stock market cools down and more U.S. investors seek higher returns as well as the diversification benefits of foreign assets. Investors are also attracted to international funds in the belief that such funds earn abnormally high returns because of the previous relative inefficiency in those markets. This study examines the annual riskadjusted returns using Sharpe‟s Index for ten portfolios of international mutual funds for the period September 2000 through September 2006. The international funds were analyzed by combining the funds into individual portfolios based on sector, geographic and company size. The benchmarks for comparison were the U.S. mutual fund performance reported by Morningstar. The risk-adjusted returns were then determined and compared to each other and to the U.S. market. During this period, nine out of ten of the international mutual fund portfolios outperformed the U.S. market. The portfolio that contained all International Mutual Funds (IMF) significantly outperformed on a risk-adjusted basis the fund that was made up of all of the U.S. stock mutual funds, (All U.S. Stock Funds- USSF). Additionally, the Foreign Small Value (FSV) portfolio, Foreign Small Growth (FSG) portfolio, Emerging Markets (EM) portfolio, Latin America (LA) portfolio, and the Pacific Asia without Japan (PA-J) portfolio all had average annual returns (not adjusted for risk) that exceeded USMF‟s returns by more than 10 percent.

In the aftermath of the 1997 Asian crisis and the 1998 Russian debacle, investors began to question the benefits of international diversification and in particular investing in emerging markets. After a short period of lower investing rates, investors returned strongly to international mutual fund investments. The market responded. As of 2005, almost one-half of the total net asset value of mutual funds is in non-U.S. funds. Most economists believe that the recent trend for investors to increase the holding of international stocks and mutual funds will continue. There are of course advantages and also unique risks for investors to include non-U.S. mutual funds in their portfolios. Many of the best-known brands in the U.S. are actually owned by foreign firms. The majority of these firms are focused on maximizing shareholder value. There are a large number of firms, and of course their stocks domiciled outside of the U.S., that have
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extraordinary growth and earning potential. New technologies, advancements in transportation, communication and political changes have created a global economy where currencies are merging and borders are more transparent. With the globalization of the world, competition will be more formidable, which will provide more equity opportunities. Companies outside the U.S. dominate major industries in the world. Worldwide economic expansion has sparked growth of many foreign companies making them increasingly attractive with large cash holdings and aggressive expansion plans. Investing in international markets provides greater investment diversification that may reduce the overall portfolio risk. Markets of the world are not perfectly correlated and do not move in lockstep. A downturn in one country‟s economy may be offset by a rise in another.

Including non-U.S. stocks in domestic portfolios does result in an increase in the standard deviation of the portfolio. Though, the higher risk is usually associated with a higher portfolio return. There is evidence that foreign markets are more volatile and emerging markets are especially instable. However, volatility measures upward movement as well as downward. Foreign governments can change quickly and with the change in power there can be a disruption in the business environment. Currency risk is a concern. Changes in the exchange rate with respect to the dollar can impact valuations and returns. Evaluation of the performance of mutual fund managers is a topic of considerable interest to practitioners and academics alike. To date, most mutual fund performance evaluations have been fairly simplistic: how has a fund performed relative to "the market"? The Standard & Poor's 500 Stock Index is usually used as a proxy for the market, despite the fact that it accounts for only about 70% of the capitalization of the U.S. stock market and is dominated by corporations with gigantic market capitalizations. The decision is normally based on historical returns without any further analysis of relevant risks. When risk is considered, if at all, it is generally in the context of comparing the return of a fund to its peer group; for example, a small cap growth fund is compared with other small cap growth funds or relevant Exchange Traded Funds (such as I Shares Russell 2000 growth index, IWO or I Shares S&P Small Cap 600/BARRA Growth (IJT)) or some official benchmark index. This method also ignores extremely different risk/return profiles of funds. Sharpe‟s Reward to Variability ration (R/V), a useful measure of performance is utilized in this empirical study of mutual funds. The numerator shows the difference between
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the fund‟s average annual return and the risk free interest rate; it is thus the reward provided for investor for bearing risk. The denominator measures the standard deviation of the annual rate of return; it shows the amount of risk actually borne. The ratio is thus the reward per unit of variability and the purpose of this study is to quantify this reward to variability ratio, which is also known as risk-adjusted performance, of international mutual funds relative to U.S. mutual funds for the period 2000 to 2005. This study examines the R/V ratios for ten portfolios made up of foreign mutual funds. The international portfolios were formed by combining funds into individual portfolios based on sector, geographics and company size. The benchmark for comparison was the U.S. mutual fund performance reported by Morningstar

Investors have a large array of mutual funds to select from to form their investment portfolio. Mutual fund offerings have grown in numbers and many funds are very specialized. There are over 10,000 mutual funds; the majority concentrates on specific industries, firm size, geography or growth expectations (risk). Investors may not fully take advantage of possible portfolio risk reduction and higher returns if they exclude international mutual funds from their portfolio. This study shows that performance can be evaluated with a simple, yet theoretically meaningful measure that considers both average return and risk. During the study period, foreign mutual funds appear to have more volatility and higher risk but have outperformed U.S. mutual funds in nominal and risk-adjusted terms. Predicting in advance which mutual funds would outperform is difficult and the cost of selecting the "wrong" mutual fund is very high. Investors have to keep in mind that sound investment decision-making combines the science of quantitative analysis with the art of qualitative judgment and reason.

Literature on mutual fund performance evaluation is enormous. A few research studies that have influenced the preparation of this paper substantially are discussed in this section. Sharpe, William F. (1966) suggested a measure for the evaluation of portfolio performance .Drawing on results obtained in the field of portfolio analysis, economist Jack L. Treynor has suggested a new predictor of mutual fund performance, one that differs from virtually all those used previously by incorporating the volatility of a fund's return in a simple yet meaning full manner .Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio performance (Jensen‟s alpha) that estimates how much a manager‟s forecasting ability contributes to fund‟s returns. As indicated
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. Jensen‟s measure. evaluated performance of Indian mutual funds in a bear market through relative performance index. At the same time. In this paper.This paper measures the performance of various mutual funds with both unconditional and conditional form of CAPM. risk-return analysis. etc. there do seem to be periods where certain index funds appear to depart from the discipline of indexation. Sharpe‟s ratio. Bijan Roy. Then after excluding funds whose returns are less than risk-free returns. In this paper. Sharpe‟s measure . K..The consistency and level of tracking errors obtained by some well-run index fund suggests that it is possible to attain low levels of tracking error under Indian conditions. The methodology is based on the combination of discrete and continuous multi-criteria decision aid methods for mutual fund selection and composition.Narayan Rao. The study used 269 openended schemes (out of total schemes of 433) for computing relative performance index. tracking error of index funds in India is measured . where the portfolio is leveraged to have the benchmark index‟s standard deviation. et al. Treynor‟s ratio.. Risk from the lower partial moment is measured by taking into account only those states in which return is below a pre-specified “target rate” like risk-free rate.(2002) measured mutual fund performance using lower partial moment. UTADIS multi-criteria decision aid method is employed in order to develop mutual fund‟s Page | 12 . al. The effect of incorporating lagged information variables into the evaluation of mutual fund managers‟ performance is examined in the Indian context.Mazuy model and Henriksson-Merton model. causing alphas to shift towards right and reducing the number of negative timing coefficients. and Fama‟s measure. the e SDAR of a fund portfolio is the excess return of the portfolio over the return of the benchmark index.by Stat man (2000). developed a multi-criteria methodology and applied it to the Greek market of equity mutual funds. conducted an empirical study on conditional performance of Indian mutual funds. al. The results of performance measures suggest that most of mutual fund schemes in the sample of 58were able to satisfy investor‟s expectations by giving excess returns over expected returns based on both premium for systematic risk and total risk. et. According to Fernandez (2003) evaluated index fund implementation in India. studied construction of mutual fund portfolios. This paper uses a technique called conditional performance evaluation on a sample of eighty-nine Indian mutual fund schemes . Treynor.S. 58 schemes are finally used for further analysis. measures of evaluating portfolio performance based on lower partial moment are developed. The results suggest that the use of conditioning lagged information variables improves the performance of mutual fund schemes. Mishra. Pendaraki et al.

above all. This approach allows defining mutual fund performance indexes that can take into account several inputs and thus consider different risk measures and.de Finetti”. Dorsoduro 3825/E. and Jagannathan and Korajczyk (1986). This circle Page | 13 .performance models. Jensen (1968). Henriksson (1984). His portfolio theory shows that an investor has a choice of combinations of return and variance depending on the percentage of wealth invested in various combinations of risky assets. Italy and Dipartimento di Matematica Applicata. The remaining pages of this chapter are devoted to a review of the studies related to this topic. This has led to the conclusion that long-term individual mutual fund performance can best be described as random. His rule recommends the portfolio with the highest return is not the one with the lowest variance of returns and that there is a rate at which an investor can increase return by increasing variance.” In this paper they present a model which can be used to evaluate the performance of mutual funds. 30123 Venezia. Piazzale Europa. According to Antonella Basso and Stefanie Funari of Dipartimento di Matematica Applicata “B. Goal programming model is employed to determine proportion of selected mutual funds in the final portfolios. the investment costs (subscription costs and redemption fees). securities which give the maximum expected returns. Henriksson and Merton (1981). These studies have generally concluded that mutual fund managed can not consistently time the market or select under-priced securities. This is the cornerstone of portfolio theory as we know it. Chang and Lewellen (1984). This model applies an operational research methodology. He claims that rational investors consider higher expected return as good and high variability of those returns as bad. he says that the decision rule should be to diversify among all securities. he shows that a plot of all possible combinations of wealth divided among possible combinations of securities will result in a circle. Very few studies have attempted to explain the flow of money into and out of mutual funds. to name but a few. which allows to measure the relative efficiency of decision making units. From this. 34127 Trieste. According to Treynor and Mazuy (1966). Università di Trieste. 1. From this simple construct. According to Harry Markowitz (1952)‟ a theory about how investors should select securities for their investment portfolio given beliefs about future performance. Kon and Jen (1979). Università Ca' Foscari di Venezia. called data envelopment analysis (DEA). Italy respectively discussed in this paper about “A data envelopment analysis approach to measure the mutual fund performance.

This could result from their common dependence on general economic activity. The market as a whole is considered the point of tangency between the SML and the efficient frontier this is the foundation for the Capital Asset Pricing Model (CAPM). The rational model shows that the estimation errors of rational but imperfectly informed small. individual investors can give rise to average discounts. whereas the SML uses the systematic risk termed beta.mill be plotted on an xy grid with return planed on one axis and risk. The notion that investors desire to maximize return for a given risk gives rise to some combinations of securities dominating others in terms of risk and return characteristic. According to William Sharpe (1964)' and John Lintner (1965) show that the theory implies that the rates of return from efficient combinations of risky assets move together perfectly (will be perfectly correlated). According to Swaminnthan and Bhaskaran (1994)' made on attempt to focus on the implications of individual investor behavior for the pricing of close-ended funds and small firms. noisy rational expectations model of closed-end funds and compare its predictions to that of a model of investor sentiment. Therefore. Investor only needs to be concerned with systematic risk [beta]. Thus gave birth to the "Security Market Line" (SML). Beta 1s defined as the covariance between a security (or portfolio of securities) and the market as a whole. not the total risk proposed by Markowitz. The CML uses the variance of returns. in a model of investor sentiment. as measured by variance on the other axis. discounts cannot track time variation in expected returns induced by mean reversion in small investor estimation errors. Page | 14 . it shows that investors can mvtde their wealth between the risk free asset and a portfolio of the risky assets. If this is so. diversification among risky assets enables investors to escape from all risks except the risk resulting from changes in economic activity. In contrast. discounts can track time variation in expected returns induced by mean reversion is small investor sentiment. only the responsiveness of an asset return to changes in economic activity is relevant in assessing its risk. However. divided by the variance of the market. Their empirical tests examine the time series implications of the two models. The difference between the Capital Market Line (CML) and SML is the measure of risk used for the horizontal axis. This implies that discounts can forecast stock returns either if they are a proxy of investor sentiment or if they are a proxy of some fundamental factor. they developed a two security. Specifically. These dominant portfolios are said to lie on the "efficient frontier" When an asset with no risk is added as an investment option.

Page | 15 .The results indicate that discounts forecast small firm returns. They also show that the forecasting power of discounts is not related to that of any known fundamental forecasting variable. This evidence provides support for the investor sentiment explanation of the pricing of closed-end Funds and small firms. and suggests that there may be sentiment related variation in small firm expected returns.

the 'Share Mania' in India begun. the brokers who thrived out of Civil War in 1874. in1865. Its history dates back to nearly200 years ago. prices fluctuate within minutes and are determined by the demand and supply of stocks at a given time.The Securities and Exchange Board of India (SEBI) is the authorized body. found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. thus. Stock market is a place where securities are bought and sold. The number of brokers increased to about 200 to 250. there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. which regulates the operations of stock exchanges. However. reflecting the performance of the country‟s economic state of health. Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs.The past performances in the capital markets especially the securities scam by „Hasrshad Mehta‟ has led to tightening of the operations by SEBI. At the end of the American Civil War. HISTORY OF THE STOCK BROKING INDUSTRY Indian Stock Markets are one of the oldest in Asia. In addition the international trading and investment exposure has made it imperative to better operational efficiency. With the view to improve. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839. It is exposed to a high degree of volatility. In 1887. 87). discipline and bring greater transparency in this sector. they formally established in Page | 16 .EVOLUTION OF STOCK BROKERAGE INTRODUCTION Stock exchanges to some extent play an important role as indicators. a disastrous slump began (for example. The1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. The earliest records of security dealings in India are meager and obscure.In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped. constant efforts are being made and to a certain extent improvements have been made. banks and other financial institutions . Stock brokers are the ones who buys and sells securities on behalf of individuals and institutions for some commission . at the end of the American Civil War.

Mumbai (The Stock Exchange). Hyderabad. Ludhiana. gradually with the passage of time number of exchanges were increased and at currently it reached to the figure of 24 stock exchanges Development An important early event in the development of the stock market in India was the formation of the Native Share and Stock Brokers‟ Association at Bombay in 1875. This was followed by the formation of associations /exchanges in Ahmedabad (1894). Mumbai(the National Stock Exchange or NSE). Chennai. Bhubaneswar. they are subject to governmental supervision and control.Kanpur. the Stock Exchange at Bombay was consolidated. the central government introduced a legislation called the Securities Contracts (Regulation) Act. and Rajkot. Guwahati. popularly called the Bombay Stock Exchange. Thus in the same way. varied or rescinded only with the prior approval of the government. so on and so forth have to be approved by the government.Bombay. Page | 17 . the "Native Share and Stock Brokers' Association" (which is alternatively known as "The Stock Exchange"). Thus. The rules of a recognized stock exchanges relating to the managerial powers of the governing body. the precursor of the present-day Bombay Stock Exchange. Calcutta (1908). Jaipur. 1956. As of January 2002 there were23 stock exchanges recognized by the central Government. These rules can be amended. Patna.While the recognized stock exchanges have been accorded a privileged position. IN addition. In 1895. accounting for the bulk of the business done on the Indian stock market . In order to check such aberrations and promote a more orderly development of the stock market. Coimbatore. and Madras (1937). suspension. Of course. Mangalore. Mumbai (OTC Exchange of India). Pune. and re-admission of its members. the Stock Exchange acquired a premise in the same street and it was inaugurated in1899. Calcutta. Delhi. it is mandatory on the part of stock exchanges to seek government recognition. Mumbai (The Inter-connected Stock Exchange of India).(the Madras stock Exchanges ). a large number of ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times subsequently. Indore. Bangalore. appointment of authorized representatives and clerks. Cochin. expulsion. admission. They are located at Ahemdabad. the principle bourses are the National Stock Exchange and The Bombay Stock Exchange. Baroda. Under this legislation.

It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. popularly known as "BSE" was established in 1875as "The Native Share and Stock Brokers Association". Subsequently it launched the Capital Market Segment in November 1994 as a trading platform for equities and the Futures and Options Segment in June 2000 for various derivative instruments. three SEBI nominees.NSE has been able to take the stock market to the doorsteps of the investors. NSE (NATIONAL STOCK EXCHANGE) NSE was incorporated in 1992 and was given recognition as a stock exchange in April 1993. The standards set by the exchange in terms of market Page | 18 . even older than the Tokyo Stock Exchange. It started operations in June 1994. screen-based. It is the oldest one in Asia. with a high degree of transparency and equal access to investors irrespective of geographical location. six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer. while providing an efficient and transparent market for trading insecurities. It provides a nation-wide. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. which decides the policies and regulates the affairs of the Exchange. It also strives to educate and enlighten the investors by conducting investor education program and making available to them necessary informative inputs. The high level of information dissemination through on-line system has helped in integrating retail investors on a nation-wide basis. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualised and corporate entity. which was established in 1878.The Exchange. It has evolved over the years into its present status as the premier Stock Exchange in the country.BSE (BOMBAY STOCK EXCHANGE) The Stock Exchange. of India under the Securities Contracts (Regulation) Act. debt and derivatives upholds the interests of the investors and ensures redressal of their grievances whether against the companies or its own member-brokers. A Governing Board having 20 directors is the apex body. Mumbai. automated trading system. with trading on the Wholesale Debt Market Segment. who are from the broking community (one third of them retire ever year by rotation). 1956. The Governing Board consists of 9elected directors.

technology and service standards have become industry benchmarks and are being replicated by other market participants. technology. It has been playing a leading role as a change agent in transforming the Indian Capital Markets to its present form. Page | 19 . clearing and settlement and investor service.practices. infrastructure. The Indian Capital Markets are a far cry from what they used to be a decade ago in terms of market practices. Within a very short span of time. risk management. NSE has been able to achieve all the objectives for which it was set up. Products.

The joint ownership of the fund is thus “Mutual”. This pool of money is invested in accordance with a stated objective. Each share holder participants in the gain or loss of the fund. the fund belongs to all investors. professionally managed basket of securities at a relatively low cost. debentures and other securities.MUTUAL FUND CONCEPT Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal.Diversification reduces the risk because all stocks may not move in the same direction in the proportion at the same time. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Investment in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced . i. The money thus collected is then invested in capital market instrument such as shares. bonds and other securities. Page | 20 . Mutual fund issues units to the investors in accordance with quantum of money invested by them.e. A Mutual Fund is an investment tool that allows small investors access to a well diversified portfolio of equities. Units are issued and can be redeemed as needed. Investors of mutual funds are known as unit holders. The fund‟s Net Asset value (NAV) is determined each day.

They became popular during the 1920s. After the stock market crash of 1929. First Index Investment Trust.] The first mutual fund outside the Netherlands was the Foreign & Colonial Government Trust. open-end funds accounted for only 5% of the industry's $27 billion in total assets. headed by John Bogle. is now part of the MFS family of funds. The Securities Act of 1933 requires that all investments sold to the public. was formed in 1976 by The Vanguard Group. The Revenue Act of 1936 established guidelines for the taxation of mutual funds. the Massachusetts Investors Trust. including mutual funds. It is now the Foreign & Colonial Investment Trust and trades on the London stock exchange. 1924. this act also created the Securities and Exchange Commission. which is the principal regulator of mutual funds. closed-end funds remained more popular than open-end funds throughout the 1920s. the mutual fund industry began to grow again. which was established in London in 1868. Congress passed a series of acts regulating the securities markets in general and mutual funds in particular. This fund. When confidence in the stock market returned in the 1950s. The Securities and Exchange Act of 1934 requires that issuers of securities. there were approximately 360 funds with $48 billion in assets. By 1970. The first retail index fund. be registered with the Securities and Exchange Commission and that they provide prospective investors with a prospectus that discloses essential facts about the investment. while the Investment Company Act of 1940 governs their structure. The introduction of money market funds in the high interest rate environment of the late 1970s boosted industry growth dramatically. Mutual funds were introduced into the United States in the 1890s. These early funds were generally of the closed-end type with a fixed number of shares which often traded at prices above the value of the portfolio. including mutual funds. report regularly to their investors. However. By 1929. The first open-end mutual fund with redeemable shares was established on March 21.Evolution of Mutual Funds The first mutual funds were established in Europe. it is now called the Page | 21 . One researcher credits a Dutch merchant with creating the first mutual fund in 1774.

the mutual fund industry was involved in a scandal involving unequal treatment of fund shareholders. household finances. with more than $100 billion in assets as of January 31.000 mutual funds of all types in the United States with combined assets of $13. 2011. The scandal was initially discovered by then-New York State Attorney General Eliot Spitzer and resulted in significantly increased regulation of the industry. Mutual funds play an important role in U. there were over 15. which is a practice prohibited by fund policy. sector. Mutual funds are now the preferred investment option in certain types of fast-growing retirement plans.S. At the end of 2010. Page | 22 .1 trillion.7 trillion on the same date.Vanguard 500 Index Fund and is one of the world's largest mutual funds. specifically in 401(k) and other defined contribution plans and in individual retirement accounts (IRAs). all of which surged in popularity in the 1980s. In 2003. international and target date funds) and wider distribution of fund shares. Some fund management companies allowed favored investors to engage in late trading. or market timing. At the end of 2010. Roughly half of assets in 401(k) plans and individual retirement accounts were invested in mutual funds. Among the new distribution channels were retirement plans. which is illegal. Their role in retirement planning is particularly significant. as a result of three factors: a bull market for both stocks and bonds. they accounted for 23% of household financial assets. Total mutual fund assets fell in 2008 as a result of the credit crisis of 2008. Fund industry growth continued into the 1980s and 1990s. new product introductions (including tax-exempt bond. The ICI reports that worldwide mutual fund assets were $24. according to the Investment Company Institute (ICI). a national trade association of investment companies in the United States.

Then a host of other government-controlled Indian financial companies came up with their own funds. both qualities wise as well as quantity wise. 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. This market was made open to private players in 1993. the Assets Under Management (AUM) was Rs67 billion. Each phase is briefly described as under. 1540 billion. 470 billion in March 1993 and till April 2004. These included State Bank of India. History of Mutual Funds in India The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. when the Government of India launched Unit Trust of India (UTI).MUTUAL FUNDS IN INDIA The first introduction of a mutual fund in India occurred in 1963. which later merged with Franklin Templeton. Until 1987. At the end of 1988 UTI had Rs. UTI enjoyed a monopoly in the Indian mutual fund market. as a result of the historic constitutional amendments brought forward by the then Congress-led government under the existing regime of Liberalization. Before. but it accelerated from the year 1987 when non-UTI players entered the Industry.6. Page | 23 .700 crores of assets under management. Privatization and Globalization (LPG). and Punjab National Bank. The private sector entry to the fund family raised the Aum to Rs. The first private sector fund to operate in India was Kothari Pioneer. First Phase – 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. Indian mutual fund industry had seen a dramatic improvement. The first scheme launched by UTI was Unit Scheme 1964. Though the growth was slow. at the initiative of the Government of India and Reserve Bank. The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. In the past decade. the monopoly of the market had seen an ending phase. Canara Bank. it reached the height if Rs.

which manage assets of Rs.153108 crores under 421 schemes. the mutual fund industry had assets under management of Rs. SBI Mutual Fund was the first non. 835 crores as at the end of January 2003. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. assured return and certain other schemes. there were 33 mutual funds with total assets of Rs. Page | 24 . 21. AMC. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. Consolidation and growth. PNB. As at the end of January 2003. trustee. BOB and LIC. The second is the UTI Mutual Fund Ltd. Indian Bank Mutual Fund (Nov 89).29.47. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. As at the end of September.The structure of mutual fund is discussed in detail. the assets of US 64 scheme.UTI. Punjab National Bank Mutual Fund (Aug 89).004 crores.At the end of 1993. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. representing broadly.Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non. Bank of Baroda Mutual Fund (Oct 92). public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). and is regulated by SEBI . except UTI were to be registered and governed. under which all mutual funds. sponsored by SBI.805 crores. 2004.UTI Mutual Fund established in June 1987 followed by Canara bank Mutual Fund (Dec 87). Third Phase – 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being. STRUCTURE OF MUTUAL FUNDS Every Mutual fund will comprise a sponsor. Bank of India (Jun 90). It is registered with SEBI and functions under the Mutual Fund Regulations. Fourth Phase – since February 2003 In February 2003. 1. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. there were 29 funds. custodian and registrar.

the AMC and custodians. It launches new schemes. • Trustee The trustee monitors the operations of the various schemes and safeguards investor interests. The custodian maintains custody of the securities in which the scheme invests (as distinct from the registrar who tracks the investment by investors in the scheme). manages them. The trustees can also review the AMC‟s operations and transactions. including the fund manager. such as rights. • Asset management company . It is typically a financial institution. for which it relies on banks or financial institutions that are designated custodians. including contracts with various agencies such as custodians and registrars.The AMC seeks to multiply the invested money in the fund in line with the scheme's investment objective. investment house or even an individual that contributes at least 40 per cent to the net worth of the asset management company (AMC) . It should have a net worth of at least Rs 10 crore. bank. and employs the fund management team. • Custodian . The sponsor appoints the AMC and the trustees review its operations.A Mutual funds needs to store and record transactions.The custodian also follows up on various corporate actions.• Sponsor The company that sets up the MF is called the sponsor. The AMC is a key player in the MF game and does everything to make the most of your investment.The sponsor initiates the fund's activities by appointing the trustees. bonus and dividends declared by investor companies. Page | 25 .

account statements. dispatch of certificates. Their services include processing initial public offerings. TYPES OF MUTUAL FUNDS Page | 26 .• R&t agents Registrars and transfer agents (R&T agents) handle all paperwork involving investor servicing. annual reports and dividend warrants.

Entry to the fund is always open to the investor who can subscribe at any time. No minute-to-minute fluctuations in rates haunt the investors . This is the reason that generally open-ended schemes are Equity Based . by virtue of this situation such funds may fail to grab favorable opportunities. They do not participate in new issue markets to pension funds or life insurance Page | 27 . Further. Further. the realizable amount is certain since repurchase is at a price based on declared net asset value (NAV).e. that unexpected withdrawals require funds to maintain a high level of cash available every time implying thereby idle cash. The reason is that investor can any time approach mutual fund for sale of such units. the shares or units are normally not traded on the stock exchange but are repurchased by the fund at announced rates . Thus. Crisis may be on two fronts. success of the open-ended schemes to a great extent depends on the efficiency of the capital market. it will not be possible to calculate NAV.Openended schemes have comparatively better liquidity despite the fact that these are not listed. to match quick cash payments. the management of such funds becomes more tedious as managers have to work from crisis to crisis. Second. desiring frequently traded securities. not specified or pre-determined.. one is. Such mutual funds companies place their funds in the secondary securities market. In such funds. 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. which are actively traded in the market.Moreover. Fund managers have to face questions like „what to sell‟. No intermediaries are required. He could very well have to sell his most liquid assets. funds cannot have matching realization from their portfolio due to intricacies of the stock market.BY STRUCTURE a) Open Ended Schemes: As the name implies the size of the scheme (Fund) is open – i. It implies that the capitalization of the fund is constantly changing as investors sell or buy their shares. option to reinvest its dividend is also available.The portfolio mix of such schemes has to be investments. Otherwise. Such fund stands ready to buy or sell its securities at any time. open-ended schemes hardly have in their portfolio shares of comparatively new and smaller companies since these are not generally traded. Moreover. Since there is always a possibility of withdrawals.

Their price is free to deviate from NAV. Its shares are issued like together company‟s new issue listed and quoted at stock exchange..investment companies. Its shares may les per the current NAV per share. The open end mutual funds by or sell their own share. There is no necessary relationship between the price of close-ended mutual fund share and its NAV. That minimum corpus for Close-ended fund is Rs20 crores. UTI‟S Unit scheme. b) Close Ended Schemes: Such schemes have a definite period after which their shares/units can be redeemed. Their liquidity depends on the efficiency and understanding of the engage broker. Can sell an unlimited number of shares and thus keep going larger. The minimum corpus for and openended fund is fifty crores a per SEBI guidelines. i. Close– ended mutual funds are different form the openended mutual fund. 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. 1964 and CANCIGO and CANGICT are few examples of such funds. c) Interval Funds: Page | 28 . Close-ended and investment company has definite target amount for the funds and cannot sell more shares after its initial offering. i. Close ended fund units trade among the investors in the secondary market since these are to be quoted on the stock exchanges.e. i. Its growth in terms of numbers is limited. In India as per SEBI (MF) Regulations every mutual fund is free to launch any or both types of schemes.. Whatever premium exists that may exist only on account of speculative activities. Unlike open-ended funds. their corpus normally does not change throughout its life period. conceptually close ended fund units cannot be traded at a premium or over NAV because the price of a package of investments. If one takes into account the issue expenses.e.(at a premium) as per less(at discount). per more. there is every possibility that the market price may be above or below its NAV.e. cannot exceed the sum of the prices of the investments constituting the package. Their price is determined on the basis of demand and supply in the market.. Close-ended funds changed funds the secondary market acquisition of corporate securities. these funds have fixed capitalization. These companies‟ ell new shares at NAV plus a loading or management fee and redeem scheme at NAV.

Balanced Funds: The aim of balanced funds is to provide both growth and regular income. These schemes generally invest in safer short-term instruments such as treasury bills. Money Market Funds The aim of money market funds is to provide easy liquidity. It has been proven that returns from stocks. corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income. certificates of deposit. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. BY INVESTMENT OBJECTIVE: Growth Funds: The aim of growth funds is to provide capital appreciation over the medium to long. Such schemes generally invest in fixed income securities such as bonds. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. They are open for sale or redemption during pre-determined intervals at NAV related prices. preservation of capital and moderate income.Interval funds combine the features of open-ended and close-ended schemes. In a rising stock market. commercial paper and interbank call money. Page | 29 . or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth. have outperformed most other kind of investments held over the long term. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. Such schemes normally invest a majority of their corpus in equities. the NAV of these schemes may not normally keep pace. Income Funds: The aim of income funds is to provide regular and steady income to investors.term.

Load Funds: A Load Fund is one that charges a commission for entry or exit. 2000. 1961. and Pharmaceuticals etc. OTHER SCHEMES: Tax Saving Schemes: These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in Specified avenues. It could be worth paying the load. The investment of these funds is limited to specific industries like InfoTech. FMCG. Typically entry and exit loads range from 1% to 2%. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act. No-Load Funds: A No-Load Fund is one that does not charge a commission for entry or exit. each time you buy or sell units in the fund. a commission will be payable. no commission is payable on purchase or sale of units in the fund. if the fund has a good performance history. That is. Industry Specific Schemes: Industry Specific Schemes invest only in the industries specified in the offer document.These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. Index Schemes: Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. That is. The advantage of a no load fund is that the entire corpus is put to work. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds. 2000 and the amount is invested before September 30. provided the capital asset has been sold prior to April 1. Sectoral Schemes: Page | 30 .

delayed payments and follow up with brokers and companies. Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries. Diversification: Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. Return Potential: Over a medium to long-term. which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings. the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund. BENEFITS OF MUTUAL FUND INVESTMENT Professional Management: Mutual Funds provide the services of experienced and skilled professionals backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. custodial and other fees translate into lower costs for investors. Liquidity: In open-end schemes.Sectoral Funds are those. Mutual Funds save your time and make investing easy and convenient. In closed-end schemes. Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. Page | 31 . This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own. Low Costs: Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage. the investor gets the money back promptly at net asset value related prices from the Mutual Fund.

Affordability: Investors individually may lack sufficient funds to invest in high-grade stocks. Flexibility: Through features such as regular investment plans. which he would not incur in direct investing. He also has to pay fund distribution costs. regular withdrawal plans and dividend reinvestment plans. This cost is often less than the cost of direct investing.Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme. of schemes within the same fund. No Tailor-Made Portfolios: Investing through mutual funds means delegation of the decision of portfolio composition to the fund managers. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy. Page | 32 . you can systematically invest or withdraw funds according to your needs and convenience. most mutual funds help investors overcome this constraint by offering large no. Choice of Schemes: Mutual Funds offer a family of schemes to suit your varying needs over a lifetime. However this only means that there is a cost to obtain the benefits of mutual fund services. He pays an investment management fee (which is a percentage of his investments) as long as he remains invested in fund. The very high net worth individuals or large corporate investors may find this to be a constraint in achieving their objectives. LIMITATION OF MUTUAL FUND INVESTMENT No Control over Cost: An Investor in mutual fund has no control over the overall costs of investing. However. whether the fund value is rising or declining. the proportion invested in each class of assets and the fund manager's investment strategy and outlook.

He may again need advice on how to select a fund to achieve his objectives. even if you reinvest the money you made. you will pay taxes on the income you receive. whether he is a buy and hold type of manager or one who aggressively churns the fund. If your fund makes a profit on its sales. The extent to which the portfolio changes is a function of the style of the individual fund manager i. AMFI has taken initiative in this regard by starting a training and certification program for prospective Mutual Fund Advisors. most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios.Managing A Portfolio Of Funds: Availability of large no. Page | 33 . of funds can actually mean too much choice for the investors.e.  Taxes: During a typical year.  Cost of Churn: The portfolio of fund does not remain constant. SEBI has made this certification compulsory for every mutual fund advisor interested in selling mutual fund.

Chapter 3: Page | 34 .

is a brokerage firm which is established on 8th February 2000 and now it is having all the rights of SSKI. and Derivatives. Sharekhan offers its customers a wide range of equity related services including trade execution on BSE. 2000. Investment advice. With their research expertise. telephone and retail outlets. It is the retail broking arm of the Mumbai-based SSKI [SHRIPAL SHEWANTILAL KANTILAL ISWARNATH LIMITED] Group. the content-rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best-of-breed technology and superior market information. Known for its jargon-free. The Company's online trading and investment site . etc. Page | 35 .sharekhan. Depository services. equities. online trading. margin funding. investor friendly language and high quality research. This site gives access to superior content and transaction facility to retail customers across the country. Commodities. NSE. Sharekhan Ltd. It is first brokerage Company to go online. continues to remain the largest shareholder. etc.Sharekhan.was also launched on Feb 8. SSKI which is established in 1930 is the parent company of Sharekhan ltd. With a legacy of more than 80 years in the stock markets. It has one of the largest networks in the country with 1200+ share shops in 400 cities and India‟s premier online trading portal www. Sharekhan was established by Morakhia family in 1999-2000 and Morakhia family. depository.an Internet platform. The company provides equity based products (research. customer commitment and superior technology. derivatives. the SSKI group ventured into institutional broking and corporate finance over a decade ago. They provide trade execution services through multiple channels . The company was awarded the 2005 Most Preferred Stock Broking Brand by Awaaz Consumer Vote. they provide investors with end-to-end solutions in investments. Presently SSKI is one of the leading players in institutional broking and corporate finance activities.).com.www.COMPANY PROFILE About the Company: Sharekhan is one of the top retail brokerage houses in India with a strong online trading platform.com .

mutual funds and IPOs. Sharekhan is also about focus. SSKI Corporate Finance Private Limited (SSKI) is a leading India-based investment bank with strong research-driven focus. One can also access other market related details such as board meetings. And these beliefs are reflected in everything Sharekhan does for us! Sharekhan is a part of the SSKI group. a veteran equities solutions company has over 8 decades of experience in the Indian stock markets.500 companies for indepth information. Sharekhan's expertise lies in stocks and that's what he talks about with authority. Sharekhan's lineage and relationship with SSKI Group provide it a unique position to understand and leverage the growth of the financial services sector. details about more than 1. The common thread of empowerment is what Sharekhan's all about.making it among the most significant players raising equity in the Indian market. we'll find a common thread. Their team members are widely respected for their commitment to transactions and their specialized knowledge in their areas of strength. Sharekhan's management team is one of the strongest in the sector and has positioned Sharekhan to take advantage of the growing consumer demand for financial services products in India through investments in research. one that helps us make informed decisions and simplifies investing in stocks. buying/selling by mutual funds and much more.Sharekhan has one of the best states of art web portal providing fundamental and statistical information across equity. The team has completed over US$5 billion worth of deals in the last 5 years . result announcements. pan-Indian branch network and an outstanding technology platform. So when he says that investing in stocks should not be confused with trading in stocks or a portfolio-based strategy is better than betting on a single horse.500 mutual fund schemes and IPO data. SSKI. it is something that is spoken with years of focused learning and experience in the‟ stock markets. an Indian financial Page | 36 . We look forward to providing strategic counsel to Sharekhan's management as they continue their expansion for the benefit of all shareholders. Further. Director . If we experience their language. FII transactions. presentation style. Sharekhan does not claim expertise in too many things. "Sharekhan has always believed in collaborating with like-minded Corporate into forming strategic associations for mutual benefit relationships" says Jaideep Arora. One can surf across 5. content or for that matter the online trading facility.Sharekhan Limited.

services power house. with strong presence in Retail equities Institutional equities Investment banking. It is having the branch at Dynamic house. Child care hospital. We have been given the centre at Navrangpura road. In Ahmedabad. Navrangpura road and over 40 franchisees in Ahmedabad. Page | 37 . opp. Ahmedabad.

EDUCATION.sharekhan. it has been providing institutional individual investors. Technology With its online trading account one can buy and sell with an internet connection. One can get access to its powerful online trading tools that will help him take complete control over his investment in shares. Accessibility Sharekhan provides ADVICE. TOOLS AND EXECUTION services for investors. These services are accessible through its centers across the country over the internet (through the website www.com) as well as over the Voice Tool. REASON TO CHOOSE SHAREKHAN LIMITED Experience SSKI has more than eight decades of trust and credibility in the Indian stock market. SSKI won the for 2004' award. VISION:  To be the best retail brokering Brand in the retail business of stock market. Ever since it launched Sharekhan as its retail broking division in February 2000. In the Asia Money broker's poll held recently.MISSION:  To educate and empower the individual investor to make better investment decisions through quality advice and superior service. Page | 38 .

sharekhan. billing. Its analysts constantly track the pulse of the market and provide timely investment advice to its clients in the form of daily research emails. printed reports and SMS on their mobile phone. online chat. demat and other queries.com.Customer Service Sharekhan limited‟s customer service team will assist one for any help that one may require relating to transactions. email or live chat on www. Its customer service can be contacted via a toll-free number. Investment Advice Sharekhan has dedicated research teams of more than 30 people for fundamental and technical researches. Page | 39 .

PROVIDE DIFFERENT PRODUCT AS FOLLOWS  Share online & offline  Derivatives  Mutual fund online  Commodities online  IPO online  Portfolio Management Services  Insurance  Fixed deposits  Advisory products  Currency trading Page | 40 .PRODUCT AND SERVICES SHAREKHAN LTD.

Trade anywhere:-enjoy the ease of trading from any part of the world in a completely secure environment. Real-time portfolio tracking:-benefit from real-time information for investment and current portfolio value. BENEFIT I. which get executed as soon as the markets opens. Timey advice:-make informed decisions with expert advice. Page | 41 . II. Instant credit and transfer:-instant transfer of funds from bank account of the choice to Sharekhan trading account. Sharekhan provide two different accounts: 1) Classic account 2) Trade Tiger CLASSIC ACCOUNT: The Classic Account enables customers to trade online on the NSE and the BSE. V. VII. This account is suitable for the retail investors. bank and de-mat account with digital contracts removers all paperwork. IV. VI. The life time registration charge for this account is 750 rupees.Share Online Sharekhan provide online facilities. Dial n Trade:-call toll free number (1-800-22-7050) to place orders through telebrokers. In this account Shown the maximum script are 25 in the terminal and the technical chart are not shown in this account. After-hour orders:-place order after market hours. invest in IPO and Mutual Funds and access all the research and transaction reports through Sharekhan‟s website. III. investment calls and live market commentary. Freedom from paperwork:-Integrated trading.

Mutual Funds.30 am  Integration of: Online trading + Bank + Demat account  Instant cash transfer facility against purchase & sale of shares  IPO investments  Instant order and trade confirmations by e-mail  Single screen interface for cash and derivatives TRADE TIGER: Trade tiger is a next-generation online trading product that brings the power of broker‟s terminal to customer pc. o Automatic funds transfer with phone banking (for Citibank and HDFC bank customers) o Simple and Secure Interactive Voice Response based system for authentication o Get the trusted. etc Page | 42 . Band. o After hours order placement facility between 8. NCDEX. RSI. Trade tiger is an internet –based application available on a CD. It is session to capitalize on intra-day price movement. IPOs   Multiple Market Watch available on Single Screen Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with various Studies  Graph Studies include Average. which provides everything a trader needs on one screen. MCX.Features:  Online trading account for investing in Equities and Derivatives  Free trading through Phone (Dial-n-Trade) o Two dedicated numbers for placing your orders with your cell phone or landline. MACD.00 am and 9.Bollinger. professional advice of our telebrokers. Key Features: A single platform for multiple exchange BSE & NSE (Cash & F&O). Know Sure Thing.

Merits of Offline Trading:  Low brokerage  Less margin  Flexibility in credit period  Customized advice Demerits of Offline Trading:  Problems in getting in touch with the broker  Limited clientele Page | 43 . Horizontal. Market Summary.  Apply studies such as Vertical. Ticker. Retracement & Free lines User can save his own defined screen as well as graph template. Even the internet has not spared trading in shares and still the conventional system of offline trading continues in today‟s world. Action Watch. the same is the situation in trading in shares. saving the layout for future use   User-defined alert settings on an input Stock Price trigger Tools available to gauge market such as Tick Query. Option Premium Calculator. Span Calculator  Shortcut key for FAST access to order placements & reports ADVANTAGES:      Live Streaming Quotes Access all Trading Calls Advanced Charting features Create your own technical rules for trading A Single Trading Screen for all segments Share Offline: As the internet has taken over the physical trade. Trend. that is.

Commodities Online Commodities are agreements to buy and sell virtually anything except. made on the trading screen of stock exchange. crude oil.dollar exchange rate. Commodity Page | 44 . index. Derivatives Derivatives are financial contracts whose value/price is depends on the behavior of price of one or more basic underling assets. bond. gold and agricultural products. cotton. for some reason. These contracts are legally binding agreement. coffee etc. Problem of attention from the broker due to load  Reliance on the broker‟s information  Customer has to believe what the broker says  Broker Might not give the best price  Reconciliation of account and cash settlements  Paperwork  Geographical Restriction Dial-n-trade Sharekhan provides complete trading facility like they are giving Toll free numbers the phone trading facility as an alternative of net trading where a customer can call “n” number of times. sugar. interest rate. The primary commodities that are traded are oil. soybean. The assets can be share. buy or sell an asset in future. rupee. onions. Toll Free numbers: 1800-22-7500 1800-22-7050 Local number : 079-30307600 (chargeable) Exposure: For Intraday = 10 times For Delivery = 04 times Sharekhan is also providing the Margin on DP balance.

bonds and money market instruments. Trading in commodity derivative provides unique market opportunities for a wider section of participants like: investor.derivatives comprise of raw materials and products that can be traded on special commodity exchanges across the country. manufactures planters. Commodities expands customer investing horizon from investing in a metal company to trading in the metal itself. While trading commodities through an exchange. life insurance provides your family with a sum of money should something happen to you. life insurance acts as a flexible money-saving scheme. hedgers. The fundamentals for commodities are quite simple: price is a function of demand and supply. To know more. or other entity reimbursement or financial protection against possible future losses or damages. arbitragers. read the Key Benefits of Life Insurance. company. Most openend mutual funds stand ready to buy back (redeem) its shares at their current net asset value. 1) MCX 2) NCDEX Insurance Insurance is a policy from a large Financial Institution that offers a person. which empowers you to accumulate wealth-to buy a new car. exporters and importers. It protects your family from financial crises. traders. no insurance costs. Sharekhan trades on two major commodity exchanges in India. Customer can trade in commodities at nominal costs and carry the investment in paper from as customer want. Page | 45 . get your children married and even retire comfortably. Mutual Funds Mutual Fund is an investment company that pools money from shareholders and invests in a variety of securities. In addition to serving as a protective cover. no storage charges and complete security when customer trade though an exchange. Sharekhan provides commodity facility. such as stocks. Life insurance ensures that your family will receive financial support in your absence Put simply. Life insurance also triples up as an ideal tax-saving scheme. there are no transportation charges.

the customer has to feel only the bid price and the quantity for which he/she wants to buy the stock. young companies. Talks to Sharekhan specialists and they‟ll help customer choose a PMS plan that suits customer „ risk taking appetite‟ and „expectation from the market‟. There are two types of PMS in Sharekhan Limited A) PRO PRIME B) PROTECH Page | 46 . From a company prospective. Most open-end mutual funds continuously offer new shares to investors. or sometimes companies which have been around for many years but are finally deciding to go public. the first sale of stock by a company to the public. relax and see customer money grow without worrying about the ups and downs at the stock market. directly from the company at the price of their choice (In book build IPO's). Initial Public offering(IPO) Initial Public Offering. IPO gives a chance to buy shares of a company. IPO help them to identify their real value which is decided by millions of investor once their shares are listed in stock exchanges.which depends on the total market value of the fund's investment portfolio at the time of redemption. Portfolio Management Services Sharekhan unfolds for customer an enable of PMS to choose from that helps customer sit back. IPOs are often used as a way for a young company to gain necessary market capital. From an investor point of view. IPOs are often risky investments. Sharekhan provides to their customer the Online IPO facility. Many a times there is a big difference between the price at which companies decides for its shares and the price on which investor are willing to buy share and that gives a good listing gain for shares allocated to the investor in IPO. but often have the potential for significant gains. Companies offering an IPO are sometimes new. In this facility. IPO's also provide funds for their future growth or for paying their previous borrowings.

and the location where the deposit is made. the duration set in place for the deposit. The ProPrime line is designed for varying risk-return profiles and investment. Individuals. The most unusual characteristic of a fixed deposit is that the funds cannot be withdrawn for a specified period of time. fixed deposits carry duration of five years. Ideal for investors looking at steady and superior returns with low to medium risk appetite. according to the terms and conditions that govern the account. Currency Trading  Currency trading means to trade in currency of different countries and price varies because of supply and demand. The actual amount of the fixed rate can be influenced by such factors at the type of currency involved in the deposit. and even non-profit organizations that wish to set aside funds and limit their access to the funds for a period of time often find that fixed deposits are a simple way to accomplish this goal. Page | 47 . the monies in the account will earn a fixed rate of interest regardless of any fluctuations in interest rates that apply to other types of accounts. The Protech lines of products are designed around various risk/reward/volatility profiles for different kinds of investment needs. As an added benefit. The money placed on deposit earns a fixed rate of interest. Fixed Deposits Fixed deposits are loan arrangements where a specific amount of funds is placed on deposit under the name of the account holder.PROPRIME (FUNDAMENTAL):ProPrime uses in-depth independent fundamental research through primary analysis in highquality companies. corporate entities. The portfolio will mostly have large capitalization stocks based on sectors & themes that have medium to long term growth potential. PROTECH (TECHNICAL):Protech uses the knowledge of technical analysis and the power of derivatives market to identify trading opportunities in the market. During that time. In most cases. the money remains in the account and cannot be withdrawn for any reason. This portfolio consists of a blend of quality blue chip and growth stocks ensuring a balanced portfolio with relatively medium risk profile.

So they make reverse position or it is also known as hedging.     So by this way people minimize their risk with the help of currency trading. So it can be dangerous for people who have import-export business. Online currency trading is not given because individual investors still not prefer currency trading. Currency trading is not much useful to individual investors. Sharekhan is providing offline currency trading to interested customers. Page | 48 .  Currency trading is mostly done by large companies or by people who is import-export business. In price of currency there is always fluctuation.

Chapter 4: Page | 49 .

2980457 18.23475729 9.67 5334.0522 Beta 1.29 5638.49 41.56574 1.58695 56.718131074 -8.771921854 -7.62546054 36.727806 7.35839 172.031375105 -1.04593 1.711339726 0.034994478 Page | 50 .21 5202.866089274 -3.57 FUND RETURN(Y) -11.79 39.6033 732.53105 0.028771093 -2.268109 6.4394 128.833051516 13.816315851 66.74180671 1.03 5370.17 44.388237 72.02 43.96 45.33823 53.3428 10.750111 10.Data Analysis & Interpretation DSP BLACK ROCK TIGER (G) PERIOD Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Total NAV 50.42 43.1765 32.978412468 17.655752097 0.14511516 -14.316491897 0.23 36.500684369 17.686671162 7.487987418 -1.26 5531.365205 84.90425 88.05837 7.53 33.7941 620.725718 45.11455751 BSE Index 6191.5 5855.24 39.51 5550.30223306 X*Y 117.863089732 -1.775267382 -9.03 45.53 5795.8557729 647.09356449 86.73 4598.313665878 6.853115201 -2.351363 0.52293578 -9.26027 292.82818 2.7 5062.17 4995.65 MARKET RETURN(X) -10.25119396 224.139707 61.32150688 -5.71309 23.360639 -3.19159 0.097011053 4.506024096 2.012931 3.07798277 -0.10565256 -20.192426244 0.84 39.418762912 -4.97 44.16 5686.24 40.113713896 -1.14 4831.9953119 107.89100761 8.395001 66.19711658 -7.46365 81.

11455751 95.64991658 5.953484369 18.774306877 4.9289086 -0.139471162 8.DSP BLACK ROCK TIGER (G) PERIOD Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL NAV 50.863089732 -1.23 36.79 39.9294721 Page | 51 .506024096 2.413289274 1.52122368 35.84 39.823965119 2.42 43.315889732 0.17 44.686671162 7.96 45.56503405 5.316491897 0.866089274 -3.49 41.758634969 0.863691897 2.8904631 0.53707492 17.660913896 0.113713896 -1.500684369 17.24 39.771921854 -7.53 33.24 40.57 FUND RETURN(Y) Y-Y' 9.03 45.44397613 347.65285256 ( ) -11.56600527 58.645226244 1.050499912 39.07013578 -7.32150688 -5.97 44.706769394 2.224721854 6.001695455 16.041175904 4.192426244 0.10565256 -20.19711658 -7.1352215 78.52293578 -9.02 43.00095750 700.

642 Sharpe measures= =-1.30 ( ) =700.11 Y‟= ∑X=-14.5472 Rate of return (fund) = Rate of return (market) = β= ( ( √ ( ) ( )( ) ) =1.93 =-1.034 = =7. =9% ΣY=-20.38 Page | 52 .DSP BLACK ROCK TIGER (G) N=number of observation YF= risk free return Y‟= average return of funds X‟= average return of market β= beta = standard deviation N=13.

53348 -24.25 12.5 47.74645104 Page | 53 .7331 -1.444182558 48.67256 1.41089 439.284534224 39.293329855 48.14033 86.94684 2.1975 625.323943209 5560.25 -3.47 9.279323754 5833.1454407 5326.108615 10.60699 190.51403 24.991729 78.43 -8.95325812 4943.4494 105.41366761 468.75 -2.84602 2.17137 171.15 -12.84543 31.55178 86.16 6134.15 -3.9867 1.0003 9.5853 104.HDFC INDEX FUND (G) PERIOD Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL FUND S&P CNX MNC MARKET NAV RETURN(Y) INDEX RETURN(X) 53.060191 77.460075292 5749.0486 3.741332213 5001 -8.7896071 5199.08201 2.75 9.832785 88.755019471 41.384521633 49.425785482 4832.462396 7.48499 154.43323314 -11.25 -1.8 -9.4 1.6 7.234 BETA 0.20504138 5505.05 -9.735 -10.20258 18.3 -4.135727129 50.826964621 43.5707 10.1151559 X*Y 104.5 -1.869755364 52.7073 1199.1429 10.10585 2.1844 -3.1962 -94.56920227 47.24696389 46.9 -10.59 -2.53 20.959226 8.085663 10.13182 11.333492 60.18594 87.08 -3.06925 2.556299 8.89 13.1533 -13.851182056 5487.039 147.885815308 5647.248350267 5333.622009569 4624.1881 87.129239 76.154769046 46.45 -5.299417432 44.5117 88.

425785482 -5.13440375 0.1151559 87.512507088 3.45699246 22.43 52.366019304 6.6446871 0.886252213 21.393270267 10.460075292 -3.1454407 -9.095285544 7.730196 Page | 54 .7331 48.468863209 2.95325812 -12.248350267 9.766929569 14.735 46.000884103 ( ) -10.8 39.59 43.741332213 20.604995292 2.570705482 4.996102056 7.2903607 8.7061395 0.19297396 475.53 46.622009569 13.47 49.4668602 1189.349961384 2.279323754 -1.42177789 5.6036114 127.80833812 -11.9867 47.45 44.851182056 -8.72361752 214.20504138 -3.7896071 -11.4722447 73.740895308 1.08 48.16 47.984423416 62.HDFC INDEX FUND (G) PERIOD NAV Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL 53.323943209 1.1844 50.15 41.89 FUND RETURN(Y) Y-Y' 9.885815308 -2.727742571 102.

855 Rate of return (fund) = Rate of return (market) = β= ( ( √ ( ) ( )( ) ) =0.95 =-0.HDFC INDEX FUND (G) N=number of observation YF= risk free return Y‟= average return of funds X‟= average return of market β= beta = standard deviation N=13.99 Sharpe measures= Page | 55 . =9% ΣY=-11.11 Y‟= ∑X=-13.746 = =9.41 ( ) =1189.73 =-0.

24696389 132.15 -3.72 0.14033 86.11887 191.75 9.56920227 141.88 -0.06925 2.57 -3.46615 86.98204 0.76693 4.445973178 5560.29 -9.22 5.444182558 140.097530292 5505.75 -9.86274 86.667351129 4624.76506 11.0003 9.98 -9.306102436 5833.75 -2.05 -9.05376 8.85 -5.486601 1.24614 0.114524941 5749.9 -10.31742 32.384521633 143.755019471 121.5 -1.911 105.992535 44.154769046 134.78056 59.25998 24.832785 88.ICICI FUND (G) PERIOD Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL FUND S&P CNX MNC MARKET NAV RETURN(Y) INDEX RETURN(X) 151.784993695 5326.84602 2.36631 171.465707028 5487.471216 5.73 13.25 -3.5853 82.25 12.82673052 5199.290716734 4832.826964621 127.22206 10.738756 33.06 -0.299417432 130.5 137.6 7.135727129 140.859509298 4943.41366761 581.3 -4.991729 78.316537 82.93 6.982785 0.03 6134.81969 39.6258 625.1785 -13.284534224 114.293329855 141.39 -2.25 -1.897493 0.91 2.085663 10.055396 1.7218 BETA 0.462396 7.67256 1.43323314 -11.93108549 Page | 56 .333492 60.869755364 126.216883 85.17975 -3.55770308 X*Y 93.437978003 5333.4 1.48499 154.20258 18.272649936 5001 -8.947360923 5647.7073 575.

82673052 14.4463395 Page | 57 .195102436 2.91 140.836360923 -0.556973178 0.58884407 22.ICICI FUND (G) PERIOD NAV Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL 151.208530292 -3.17917694 70.947360923 1.00070308 67.114524941 3.39 141.401716734 -5.03 137.000869701 44.28558625 0.88 134.98 126.424165476 3.021162074 2.272649936 8.306102436 7.548978003 6.029490702 5.437978003 2.29 132.465707028 0.5527247 565.445973178 1.06 127.55770308 -0.54219184 70.667351129 4.097530292 8.37996955 6.497288859 51.72 141.784993695 6.93 143.22 121.423292972 -9.290716734 8.85 130.37222144 0.76949907 9.73 FUND RETURN(Y) Y-Y' ( ) -9.673993695 -9.778351129 13.57 140.71573052 -11.83263952 216.75 114.383649936 -0.003524941 -2.859509298 0.

86 =-1.889 Rate of return (fund) = Rate of return (market) = β= ( ( √ ( ) ( )( ) ) =0.44 =-0.44 Sharpe measures= Page | 58 .55 Y‟= ∑X=-13.ICICI FUND (G) N=number of observation YF= risk free return Y‟= average return of funds X‟= average return of market β= beta = standard deviation N=13. =9% ΣY=-11.41 ( ) =565.931 = =6.

40354 113.19247 83.26198 6.0436 104.85150957 18197.81455165 Page | 59 .793487222 -1.25 83.22 9.09 18327.44049 0.355406326 16453.4 -2.734016951 7.9459 Beta 0.76 -10.15782 66.604644774 16123.942541662 1.08 89.26198 16.46 -8.834207882 -7.1228 7.112826207 -16.422501 2.896848138 7.51363 0.22 96.82976941 X*Y 108.594479 36.15475 15.76243 63.92 -4.337131036 17705.96 FUND RETURN(Y) -10.932782303 15454.77939 70.76 -1.01 7.75189112 19445.036053 53.444592642 4.629622 3.9 87.57 93.197663 23.441974289 16676.787919 57.18543 53.19729 -1.2 -3.306236008 18845.146380492 16863.590416565 18503.91 97.865584 1.35928393 -0.85 89.7072 15.81281 1.724 541.773468 1.22076092 -5.85775625 BSE MARKET Sensex RETURN(X) 20509.36957 50.464 32.572905 82.08200213 -3.1344 0.87895 59.57 90.84719 69.374987 40.75 -8.7946 17.0993862 19135.87 1.9312 3.81 95.365863831 -1.286821705 -14.97 89.79883 2.714507715 0.529425 10.6924 386.04 97.52891 4.TATA PURE EQUITY FUND (G) PERIOD NAV Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Total 106.428088 11.28 -3.3 9.09777 442.09 97.83062 79.45 95.172598231 -6.63591802 17823.96 -1.

935487222 95.964882 Page | 60 .0450353 -0.09 -5.57 -0.97 -6.428821705 -14.94000213 83.81 0.030598231 89.0866197 78.365863831 2.64086695 6.08200213 -5.976207882 87.22076092 -9.2836253 7.01175625 369.04 7.25 -7.22 1.078760921 90.172598231 -0.48637702 35.21728393 89.85775625 ( ) 82.96 7.57 -10.00093625 27.697407358 93.592016951 97.85 -3.58918826 71.856507715 97.734016951 -4.28938099 0.7150607 35.942541662 -0.714507715 8.4377289 3.793487222 1.35928393 -5.507863831 96.91 -1.9 4.834207882 5.08 -1.896848138 -2.74611079 0.TATA PURE EQUITY FUND (G) PERIOD Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL FUND NAV RETURN(Y) Y-Y' 106.2200516 0.4238999 21.286821705 8.754848138 89.444592642 0.45 95.800541662 97.

814 = =5.96 =-1.142 Rate of return (fund) = Rate of return (market) = β= ( ( √ ( ) ( )( ) ) =0.83 Page | 61 .82 ( ) =369.TATA PURE EQUITY FUND (G) N=number of observation YF= risk free return Y‟= average return of funds X‟= average return of market β= beta = standard deviation N=13. =9% ΣY=-14.85 Y‟= ∑X=-16.55 Sharpe measures= =-1.

39863 91.398186 6.83 8.293666027 2378.875640025 Page | 62 .631019595 10.3326 32.589041096 2099.19756 0.BIRLA SUNLIFE TAX RELIEF-96 (G) PERIOD Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Total FUND MARKET NAV RETURN(Y) Bse 200 RETURN(X) 12.27 -1.032002 6.28 -7.701357466 2185.5987055 2270.178890877 2363.9863 626.35104 180.89 -7.86 -3.208835341 2028.821699468 11.886938 0.50548 53.2911 21.39794 88.96 -8.94971 -15.08 -8.229822379 9.98816 31.591883867 10.05 -10.36 2533.560744 4.80821 77.65 0.08 3.69 8.93066 4.315787 74.2 0.74 -2.2868 13.91072 74.89 -5.706768 19.68 -0.396542926 8.516209 21.715939424 11.534094 39.48 -2.4302957 -22.47 13.98703 2.82238 0.34253 -0.624297705 11.7753 613.58 6.65950507 9.539944904 2061.7837 108.3728 112.92 -2.14900859 X*Y 110.878954 12.67464216 558.319013 6.945900254 2256.6 9.42 -5.76 -5.5648122 10.22 -10.44444 63.03 -9.29502 27.65 -2.936507937 1953.9 11.18 7.1854 62.57574 29.11288 6.96902 73.276777747 9.5 2301.2309 BETA 0.40609337 10.9517 3.1859 64.25 69.333333333 2314.30504 128.603448276 1850.490759754 2155.513122934 9.13733 72.

76 9.255869393 26.05 10.5 8.85662119 15.193759754 -6.881890877 -0.90044828 11.96 9.936507937 -5.92 11.42 11.5987055 -5.589041096 -22.18 11.28 8.74 10.BIRLA SUNLIFE TAX RELIEF-96 (G) PERIOD NAV Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL 12.539944904 -2.14900859 Y-Y' -8.996666027 1.490759754 -7.208835341 3.7279868 38.541513271 0.293666027 0.8369449 -0.635209 100.2 10.9399996 3.178890877 -2.97514038 38.6 FUND RETURN(Y) -10.2920411 ( ) 79.03633333 -6.945900254 -8.98686243 80.24290025 -6.89 9.5101921 -0.8957055 -3.36 11.13357637 15.333333333 -7.21349675 127.97380358 46.74381561 0.08 9.83 10.701357466 7.4940865 Page | 63 .23350794 -3.99835747 8.01000859 575.603448276 9.797 10.50583534 5.

875 = =6.14 Y‟= ∑X=-15.67 ( ) =575.49 =-1.55 Page | 64 .703 Rate of return (fund) = Rate of return (market) = β= ( ( √ ( ) ( )( ) ) =0.92 Sharpe measures= =-1. =9% ΣY=-22.BIRLA SUNLIFE TAX RELIEF-96 (G) N=number of observation YF= risk free return Y‟= average return of funds X‟= average return of market β= beta = standard deviation N=13.

033362 0.718255897 3978.598187813 3597.430338305 -3.88 186.107107107 -4.03087 118.5 211.002899377 -0.9 -2.74088 50.35 -1.12838 80.00799 2.652048621 4522.9 5.95 4424.058084 7.52 200.70505 50.31276 0.024133479 9.12521 31.38057 181.25 -9.509707 0.070563 23.338823529 -5.771177354 -6.39467 29.05 209.3 -0.930694701 4615.186625985 4038.95 0.07184 68.65366 92.05 -2.08437 79.4 210.971068408 3811.51097 18.75731 0.8028 71.946327684 1.2113 16.93355 -15.055155 0.78 199.53128 0.40255 76.29 212.0706 9.056601 2.6 -10.51283 0.0173588 -0.010532025 4626.207469 35.45 8.10057 12.85 13.15 -4.868782804 -7.75 -5.670772 0.5508 366.234852043 -0.005807 0.48342714 X*Y 88.241005523 4492.88 FUND RETURN(Y) -8.601836668 4082.789026348 0.234572006 S&P CNX MARKET 500 RETURN(X) 4940.7356 BETA 0.26563753 4.38 195.114801 33.9 212.485755321 4215.39 212.92 201.47021 -0.895536 1.756370498 Page | 65 .781333 76.289819376 8.52 202.3973 636.447338 4.145383 81.668833048 4424.79 194.35 -8.21535 24.FRANKLIN INDIA TAX SHIELD (G) PERIOD NAV Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL 219.89064401 474.45041945 4247.2655 109.

26563753 4.554485051 28.059608225 0.467327684 1.019649443 28.52 200.93180382 14.234572006 Y-Y' -7.244147957 -0.88 186.771177354 -6.218395164 2.250177354 ( ) 63.0173588 -0.7455693 Page | 66 .38 195.310026348 0.002899377 -0.52234432 85.05 209.FRANKLIN INDIA TAX SHIELD (G) PERIOD NAV Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL 219.789026348 0.74463753 5.024133479 9.868782804 -7.946327684 1.59878092 43.4 210.196025765 0.9 212.628107107 -3.5 211.234852043 -0.39 212.18083045 0.79 194.477704426 90.4963588 0.78 199.88 FUND RETURN(Y) -8.338823529 -5.810819376 9.92 201.29 212.22378084 6.951338305 -2.140176471 -5.52 202.481899377 0.56578107 -0.430338305 -3.007572006 363.545133479 9.19637982 0.107107107 -4.347782804 -6.289819376 8.

50 =-1. =9% ΣY=-6.234 Y‟= ∑X=-15.FRANKLIN INDIA TAX SHIELD (G) N=number of observation YF= risk free return Y‟= average return of funds X‟= average return of market β= beta = standard deviation N=13.74 =-0.756 = =5.479 Rate of return (fund) = Rate of return (market) = β= ( ( √ ( ) ( )( ) ) =0.89 ( ) =363.72 Sharpe measures= Page | 67 .

04685 44.781333 76.829541 75.05 -2.82827 -0.0942 BETA 0.12521 31.HDFC TAX SAVER (G) PERIOD NAV Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL 249.1488 105.035518 2.9 235.598187813 3597.276274 21.44 235.70006 75.836695689 -8.33411 25.38057 181.54 FUND RETURN(Y) -8.4646 404.128782888 6.83435 21.85 13.45041945 4247.95 4424.390176089 -4.862569 12.002008 0.236692786 4492.8028 73.207469 35.28435035 -13.76163 138.598782239 10.718255897 3978.158841 1.6 -10.732630487 -0.9 -2.317315 1.06 227.75125 16.6683 109.2113 16.925985661 4615.186625985 4038.702707656 1.67 218.056023 7.27 231.46791 40.45 233.711666952 -2.08437 79.25 -9.48342714 X*Y 89.65366 92.530992132 -6.75876 17.81915134 MARKET S&PCNX500 RETURN(X) 4940.627916861 1.601836668 4082.95054 3.017604122 -1.0838 61.9 5.55862 59.14 208.95 0.27 232.92629 1.35 -8.48 213.00799 2.67322 0.485755321 4215.89314 4.24086 4.3 -0.033362 0.35 -1.205123393 3.7679 -15.781773574 Page | 68 .25 8.971068408 3811.72 212.447338 4.8 202.010532025 4626.15 -4.44 215.2776 636.89104031 499.650113 3.75 -5.668833048 4424.652048621 4522.01 192.588291978 -4.

205123393 1.399024713 60.76236 -0.HDFC TAX SAVER (G) PERIOD NAV Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL 249.14 208.10476371 28.765707656 1.54 FUND RETURN(Y) Y-Y' ( ) -8.327176089 -4.37880508 12.593992132 -6.080604122 -1.535782239 10.9 235.564916861 1.34735035 -13.226304311 -8.627916861 0.81915134 56.128782888 3.598782239 3.72 212.711666952 7.588291978 7.44 215.815549822 0.836695689 0.06 227.00015133 389.50175604 128.67 218.31913106 7.328913512 0.44 235.142123393 3.27 231.304445845 21.50210615 1.065782888 6.27 232.051213641 58.525291978 -4.732630487 2.530992132 4.01 192.63001935 9.390176089 5.795630487 -0.28435035 11.8 202.30621539 4.4043043 Page | 69 .017604122 2.48 213.702707656 7.45 233.648666952 -2.

89 ( ) =389.77 Page | 70 .40 =-1.69 Sharpe measures= =-1. =9% ΣY==-13.781 = =5.HDFC TAX SAVER (G) N=number of observation YF= risk free return Y‟= average return of funds X‟= average return of market β= beta = standard deviation N=13.819 Y‟= ∑X=-15.063 Rate of return (fund) = Rate of return (market) = β= ( ( √ ( ) ( )( ) ) =0.

87 -1.028771093 5638.378939 72.04593 1.421786173 4.30599 67.851341572 5531.177904 17.51 5550.73502904 -14.69 55.53 49.3 56.04 54.35839 172.14 6.180478821 -7.41829954 8.3026195 531.51 60.638888889 -0.4477 17.371245359 -7.214736084 1.569172 0.71309 23.141594485 -4.360639 5370.852738424 Page | 71 .49807 115.711339726 5686.52688 74.7 -2.07 60.19036 -1.988721 0.84634 88.16 -2.05837 7.53 54.622262 1.27 58.17 -8.534243 0.487987418 4995.008458 64.46365 81.3428 10.132012652 -3.309715004 5334.2408 -14.35262 0.03 -10.16 0.418762912 4598.6306 29.7941 101.5 -3.1971 620.1132 107.29 -1.93 55.724782 7.031375105 5795.14511516 X*Y 104.73 -9.35797 67.83 59.26499 23.23475729 5855.16458 8.351363 0.08120116 -5.4764 51.75 58.715353 45.29 FUND RETURN(Y) -10.281453 9.18988588 MARKET BSE 100 RETURN(X) 6191.00237 24.833051516 5202.730919599 -0.160493827 0.SBI MAGNUM TAX GAIN SCHEME (G) PERIOD NAV Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 TOTAL 65.71642022 5062.92144 141.77099284 4831.1609 BETA 0.57 52.65 13.48189 1.949552637 10.53 9.55242 28.21 -4.3588 477.26 59.56574 1.137823 58.83879 0.

32729954 9.447847147 27.26 59.638888889 -0.93 55.949552637 10.160493827 0.82371698 18.305736084 2.069493827 1.53 54.72552131 86.27 58.04 54.51 60.282804701 3.669213827 5.18988588 461.29 FUND RETURN(Y) Y-Y' 8.990201164 -4.371245359 -7.223012652 2.730919599 -0.141594485 -4.07 60.050594485 3.719754641 6.69 55.53 49.132012652 -3.41829954 8.SBI MAGNUM TAX GAIN SCHEME (G) PERIOD NAV Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 65.78848896 36.006885878 ( ) -10.518046743 42.83 59.180478821 -7.88842845 139.421786173 4.271478821 6.214736084 1.57 52.547888889 0.3 56.08120116 -5.8549629 TOTAL -14.73502904 80.858552637 11.82602904 0.319391025 0.821919599 0.75 58.67226 Page | 72 .59672406 4.60969362 14.941785251 4.8748489 0.

67 =-1.SBI MAGNUM TAX GAIN SCHEME (G) N=number of observation YF= risk free return Y‟= average return of funds X‟= average return of market β= beta = standard deviation N=13.20 =-1.63 Sharpe measures= Page | 73 .852 = =6.189 Y‟= ∑X=-14.09 Rate of return (fund) = Rate of return (market) = β= ( ( √ ( ) ( )( ) ) =0.30 ( ) =461. =9% ΣY=-14.

Chapter 5: Page | 74 .

Page | 75 . thus we can see this fund has given negative Sharpe ratio which means a risk. The fund return will fluctuate more than the market return. the fund is more volatile from the market returns. HDFC INDEX FUND (G) Beta=0. The fund return will fluctuate less than the market return.642 Sharpe ratio= -1. In this fund we can see fund is fluctuating more.e.95 Sharpe ratio= -0.less asset would perform better from this.38 From the above findings we can see that the beta is more than 1.746 Standard deviation=9. i. And the standard deviation is a bit more as compared to other schemes which mean the fund involves more risk than others. The Sharpe ratio which measures the risk-adjusted performance.FINDINGS From the study we found that: EQUITY SCHEMES DSP BLACK ROCK TRADE TIGER (G) Beta=1. i.e.99 From the above findings we can see that the beta is less than 1. risk is more also returns are not up to the mark overall the fund is not performing well. And the standard deviation is high as compared to other schemes which mean the fund involves a lot more risk than others. the fund is less volatile from the market returns.034 Standard deviation=7.

e.83 From the above findings we can see that the beta is less than 1.e.86 Sharpe ratio= -1. The fund return will fluctuate less than the market return but closer to 1 means can move with market. i. TATA PURE EQUITY (G) Beta=0. the fund is less volatile from the market returns. thus we can see this fund has given negative Sharpe ratio which means a risk. And the standard deviation is less as compared to all other above schemes which mean the fund involves a very few risk than others.less asset would perform better from this. i.44 From the above findings we can see that the beta is less than 1. And the standard deviation is less as compared to other two above schemes which mean the fund involves a less risk than others. here we can see this fund has given negative Sharpe ratio which means a risk. The fund return will fluctuate less than the market return but a bit closer to 1 means can move with market. the fund is less volatile from the market returns. The Sharpe ratio which measures the risk-adjusted performance.less asset would perform better from this.The Sharpe ratio which measures the risk-adjusted performance. Page | 76 .55 Sharpe ratio= -1. Thus we can say the fund is not performing much good or bad but moderate. ICICI FUND (G) Beta=0. but carries high risk also getting good returns.931 Standard deviation=6. But if we look to the fund it is performing well in the market as fluctuation is less.814 Standard deviation=5.

50 Sharpe ratio= -1. but carries high risk also getting better returns from all other schemes.875 Standard deviation=6. The fund return will fluctuate less than the market return. Page | 77 .55 From the above findings we can see that the beta is less than 1. But if we look to the fund it is performing well in the market as fluctuation is less. So we can say that the fund is less volatile.less asset would perform better from this. FRANKLIN INDIA TAX SHIELD (G) Beta=0.less asset would perform better from this.756 Standard deviation=5. And the standard deviation is high as compared to other schemes which mean the fund involves a lot more risk than others. the fund is less volatile from the market returns. The fund return will fluctuate less than the market return. less risk is involved though may be due to some reason it is not performing well. thus we can see this fund has given negative Sharpe ratio which means a risk.72 From the above findings we can see that the beta is less than 1.92 Sharpe ratio= -1. the fund is less volatile from the market returns.e. i.The Sharpe ratio which measures the risk-adjusted performance. TAX SAVER SCHEMES BIRLA SUNLIFE TAX RELIEF-96 (G) Beta=0. here we can see this fund has given negative Sharpe ratio which means a risk.e. The Sharpe ratio which measures the risk-adjusted performance. i.

Page | 78 . here we can see this fund has given negative Sharpe ratio which means a risk. And the standard deviation is less as compared to all other above schemes which mean the fund involves a very few risk than others. The fund return will fluctuate less than the market return. i. here we can see this fund has given negative Sharpe ratio which means a risk.e. less risk is involved but it is not performing well in the market. The Sharpe ratio which measures the risk-adjusted performance. i.781 Standard deviation=5. HDFC TAX SAVER (G) Beta=0. SBI MAGNUM TAX GAIN SCHEME (G) Beta=0.852 Standard deviation=6.63 From the above findings we can see that the beta is less than 1.e. less risk is involved but the performance of the fund is very bad. The Sharpe ratio which measures the risk-adjusted performance.20 Sharpe ratio= -1.77 From the above findings we can see that the beta is less than 1. So we can say that the fund is less volatile.And the standard deviation is less as compared to all other above schemes which mean the fund involves a very few risk than others.69 Sharpe ratio= -1. The fund return will fluctuate less than the market return but closer to 1 means can move with market.less asset would perform better from this. the fund is less volatile from the market returns. So we can say that the fund is less volatile. the fund is less volatile from the market returns.less asset would perform better from this.

here we can see this fund has given negative Sharpe ratio which means a risk. Page | 79 .less asset would perform better from this. Thus we can say the fund is not performing much good or bad but moderate as the risk is high and fluctuation is less. more as compared to above schemes which mean the fund The Sharpe ratio which measures the risk-adjusted performance.And the standard deviation is involves a high risk than others.

So the investor should choose HDFC Index Fund (G) compare to other as higher risk is involved in this fund and investor can expect higher returns. amount of risk involved in the fund and the performance of all the schemes we can say that Birla Sun Life Tax Relief (G) is better from all the funds which has been taken in the study.SUGGESTIONS In the equity schemes which we have taken we can say that by the fluctuations in the market return. amount of risk involved in the fund and performance of all the schemes we can say that if an investor is aggressive in nature or expecting high return then the investor should have to take high risk as in equity if the risk is high then the returns would be more. Page | 80 . An investor who is conservative in nature means doesn‟t want to take too much risk but expecting of high returns and also that to some relaxation from tax should invest in Birla Sun Life Tax Relief (G) and investor with aggressive nature as always they want to take high risk for high returns should invest in HDFC Index Fund (G). In the tax saver schemes also we can say that by the fluctuation in the market return.

Page | 81 . Therefore investors before investing in any Mutual Fund schemes they should study the risk and return relation. By comparing the above mentioned schemes I came to know the risk and return relation between the specified schemes. The fund collects this money from investors through various schemes. then only the investors should go for Mutual Fund schemes.CONCLUSION In order to study the concept of mutual fund we should note that a mutual fund is a trust that pools the money of several investors and manages investments on behalf. Each scheme is differentiated by its objectives of investments or in other words a broadly defined purpose of how the collected money is going to be involved. And if the risk and returns is been matched with their planning.

Tata McGraw-Hill Publication.. www.amfindia. 2009..com 6.moneycontrol.1995. Security analysis and portfolio management.com 5. 3. Chandra. Sixth Edition.com Page | 82 . www. 4. www. Investment Analysis and Portfolio Management.E. PHI Publication. New Delhi. New Delhi. Security Analysis and Portfolio Management. Ronald J and Fisher. Jordan.BIBLIOGRAPHY 1. 2009. Dorling Kindersley (India) pvt ltd. S. Kevin.nseindia. D. P. 2.