A Summer Project Report

On

Analysis of Risk And Return In Mutual Fund Industry

At

Motilal Oswal Financial Services Ltd.

SUBMITTED BY

HITESH B. MAHAJAN
MBA-II (FINANCE)
(BATCH 2018-20)

UNDER THE GUIDANCE OF

DR. SHILPA KANKONKAR

Submitted to

Savitribai Phule Pune University

In partial fulfilment of the requirement for the award of Degree of
Master in Business Administration (MBA)

Dr. D. Y. Patil Pratishtan’s

Dr. D. Y. Patil Institute of Management Studies
Akurdi, Pune-411044
CERTIFICATE
 DECLARATION
I hereby declare that the report entitled Analysis of Risk and Return in Mutual
Fund Industry is based on my learning at Motilal Oswal Financial Services Ltd.

I further declare that this project report is submitted as per requirement of MBA
curriculum, is my original work and based on my findings during the work.

This project report would not be submitted in any other institute for any award of
any other degree, diploma, fellowship, or other similar titles or prices.

This project report would not be submitted for any other degree in further and no
other person will be allowed to copy from this project.

If I found to be guilty of not fulfilling any of the above promises, my submission

can be declared invalid and college has the right to reject the project.

Date:

Place: Hitesh Mahajan

 ACKNOWLEDGEMENT

I would like to offer my sincere gratitude to Dr.D. Y. Patil Institute of

Management Studies,Akurdi for opening an opportunity for me to work at
practical end. I would also like to express my gratitude towards Motilal Oswal
Financial Services Ltd. for providing me opportunity to experience working
environment and do this internship project. I am grateful to my project guide Mr.
Shivshankar Bind for his valuable guidance throughout this project.

I am thankful to Dr. Shilpa Kankonkar for guiding me throughout the

project and providing right direction to my work during project period.

I will always remain in debt to my family, friends for their constant moral
supports and advice, which has helped me in every way of life.

Hitesh B. Mahajan
 INDEX

Sr No Detailed Contents Page No

1 Executive Summary

2 Introduction

3 Objectives
Scope &Limitations

4 Industry / sector profile

Introduction

5 COMPANY PROFILE
Company history
Vision mission
Achievements accolades, Ratings
Global presence
Other details
Services / Product profile

6 Literature review

7 Research methodology

8 Data analysis and Data interpretation

9 Observations /Findings

10 Suggestions/ Recommendations

11 Conclusions

12 Contribution to Host Organization

13 Limitations

APPENDIX
I Bibliography
II Annexure - data from company/media
 Chapter 1
EXECUTIVE SUMMARY

The topic selected for the project work is “Analysis of risk and return in mutual
fund industry” at Motilal Oswal Financial Services Ltd. I did an internship at
Motilal Oswal Financial services Ltd. in Pune. This internship project is a part of
my 2-years Master of Business Administration Program at Dr. D. Y. Patil Institute
of Management Studies, Akurdi.

This project is the result of Descriptive study of Mutual Funds in India. A Mutual
Fund is a trust that pools the savings of a number of investors who share a common
financial goal. It throws the light on how Mutual funds really work, how much risk
involved in it and how they diversify themselves. Investing involves risk of loss of
principal and is more concerned on the return of investment. This total risk,
measured by standard deviation, can be divided into two parts: Unsystematic risk,
systematic risk. Unsystematic risk is also called diversifiable risk. Systematic risk
may be called non-diversifiable risk, unavoidable risk or market risk and can be
measured by Beta.

The main objective of the study is to understand risk and return in various mutual
fund schemes. The Indian capital market has been increasing tremendously during
last few years. With the reforms of economy, reforms of industrial policy, reforms
of public sector and reforms of financial sector, the economy has been opened up
and many developments have been taking place in the Indian money market and
capital market. In order to help the small investors, mutual fund industry has come
to occupy an important place. This study helps me to understand how the
companies diversify themselves in different sectors and in different companies to
maximize the return and to minimize the risk involved in it. It also taught me how
to take every experience in the right sprit & learn from each one.
Finally, I shall consider all my hard work worthwhile, if this endeavour of mine is
able to satisfy all those concerned & proves useful to any one or for any study in
the future.

CHAPTER 2
INTRODUCTION

OVERVIEW OF MUTUAL FUND INDUSTRY IN INDIA

Prudent investing requires information of key financial concepts and an

understanding of your investment profile and how these works together to affect
investing decisions and results. "Saving" and "investing" are often used
interchangeably. However, there are differences between the two. Saving refers to
funds kept for making specific purchases in the relatively near future (usually three
years or less) and for emergencies. Preservation of the principal and liquidity of the
funds (ease of converting to cash) are essential aspects of savings. Consequently,
savings generally yield a low rate of return and do not maintain purchasing power.
Investing, on the other hand, focuses on increasing net worth and achieving long-
term financial goals. Investing involves risk (of loss of principal) and is to be
considered only after you have adequate savings and have done proper risk
management. In short, investing is more concerned on the return of investment,
while savings is on the return of capital. All investments involve some element of
risk because the future value of an investment is uncertain.

Risk, simply stated, is the possibility that the actual return on an investment will
vary from the anticipated return or that the initial principal will decline in value.
Risk implies the possibility of loss on your investment.

Mutual Fund is a fund, managed by an investment company with the financial

objective of generating high Rate of Returns or an investment vehicle managed by
finance professionals that raise capital by selling shares (called units) in a chosen
and balanced set of securities to the public.
A mutual fund is a type of investment fund. An investment fund is a collection of
investments, such as stocks, bonds or other funds. Unlike most other types of
investment funds, mutual funds are “open-ended,” which means as more people
invest, the fund issues new units or shares. A mutual fund typically focuses on
specific types of investments. For example, a fund may invest mainly in
government bonds, stocks from large companies or stocks from certain countries.
Some funds may invest in a mix of stocks and bonds, or other mutual funds. These
asset management or investment management companies collects money from the
investors and invests those money in different Stocks, Bonds and other financial
securities in a diversified manner. Before investing they carry out thorough
research and detailed analysis on the market conditions and market trends of stock
and bond prices. These things help the fund managers to speculate properly in the
right direction.

FIGURE 1.1 CONCEPT OF MUTUAL FUND (PROCEDURE)

A BRIEF ON MUTUAL FUNDS

Mutual fund is the pool of the money, based on the trust who invests the savings of
a number of investors who shares a common financial goal, like the capital
appreciation and dividend earning. The money thus collect is then invested in
capital market instruments such as shares, debenture, and foreign market. Investors
invest money and get the units as per the unit value which we called as NAV (net
assets value). Mutual fund is the most suitable investment for the common man as
it offers an opportunity to invest in diversified portfolio management, good
research team, professionally managed Indian stock as well as the foreign market,
the main aim of the fund manager is to taking the scrip that have under value and
future will rising, then fund manager sell out the stock. Fund manager
concentration on risk – return trade off, where minimize the risk and maximize the
return through diversification of the portfolio. The most common features of the
mutual fund unit are low cost.

OBJECTIVES OF THE STUDY:

The following are the objectives of the proposed research

Primary objectives:

1) To evaluate the performance of selected equity mutual fund schemes.

2) To evaluate the performance of selected debt mutual fund schemes.
3) To evaluate the performance of selected hybrid mutual fund schemes.

Secondary objective:

1) To study mutual fund transactions and the back office process.

2) To study the measures of risk and return in mutual fund.
SCOPE OF THE STUDY:

For the study, I have chosen active funds belonging to growth, income, balanced
and tax-saving schemes were selected for the present study. For this study we have
taken into account the period of study is five years from 2007 to 2011. Moreover,
the rationale for selecting the study period of 5-years due to two reasons: Firstly,
during this period, the stock market witnessed high volatility and was of great
interest for the study, as such selected to find-out whether the funds have been able
to surpass the market performance even under down-market conditions. In
addition, the five years were long enough to capture different market phases and to
draw meaningful conclusions.

LIMITATIONS OF THE PROJECT:

1. Mutual fund schemes are subject to market risk and market is very volatile. Thus to
predict risk and return is very difficult.

2. The project is unable to analyse each and every scheme of MOSL to create awareness
about risk and return amongst investors. The risk and return profile of each scheme can
change according to the market conditions.

3. Time constraints: Due to shortage or less availability of time it may it may be possible
that not all the related and concerned aspects may be covered in the project.

WHY I HAVE CHOSEN THIS COMPANY?

Motilal Oswal Financial Services Ltd. is the most trusted broking company in all over India and
Motilal Oswal Services Ltd. is a diversified financial services firm offering a range of financial
products and services. This company is the oldest one in the sector established in 1987 and
growing rapidly. Thus, I believe this well-established company would give me an opportunity to
learn new concepts in share market and financial market.

WHY I HAVE CHOSEN THIS TOPIC?

I selected this topic because I am interested to know how and what are the measures to evaluate
the performance of mutual fund scheme in respect of the risk bearing capacity of the investors.
Besides, it allowed me to enhance my analytical skills and also understand current market
scenario.

INDUSTRY PROFILE/ SECTOR PROFILE:

The mutual fund industry in India started in 1963 with the formation of Unit Trust
of India (UTI) at the initiative of the Reserve Bank of India (RBI) and the
Government of India. The objective then was to attract small investors and
introduce them to market investments. Since then, the history of mutual funds in
India can be broadly divided into six distinct phases.

Phase I (1964-87): Growth Of UTI:

In 1963, UTI was established by an Act of Parliament. As it was the only entity
offering mutual funds in India, it had a monopoly. Operationally, UTI was set up
by the Reserve Bank of India (RBI), but was later delinked from the RBI. The first
scheme, and for long one of the largest launched by UTI, was Unit Scheme 1964.

Later in the 1970s and 80s, UTI started innovating and offering different schemes
to suit the needs of different classes of investors. Unit Linked Insurance Plan
(ULIP) was launched in 1971. The first Indian offshore fund, India Fund was
launched in August 1986. In absolute terms, the investible funds corpus of UTI
was about Rs 600 crores in 1984. By 1987-88, the assets under management
(AUM) of UTI had grown 10 times to Rs 6,700 crores.

Phase II (1987-93): Entry of Public Sector Funds:

The year 1987 marked the entry of other public sector mutual funds. With the
opening up of the economy, many public sector banks and institutions were
allowed to establish mutual funds. The State Bank of India established the first
non-UTI Mutual Fund, SBI Mutual Fund in November 1987. This was followed by
Canbank Mutual Fund,LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India
Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. From 1987-88 to 1992-93,
the AUM increased from Rs 6,700 crores to Rs 47,004 crores, nearly seven times.
During this period, investors showed a marked interest in mutual funds, allocating
a larger part of their savings to investments in the funds.

Phase III (1993-96): Emergence of Private Funds:

A new era in the mutual fund industry began in 1993 with the permission granted
for the entry of private sector funds. This gave the Indian investors a broader
choice of 'fund families' and increasing competition to the existing public sector
funds. Quite significantly foreign fund management companies were also allowed
to operate mutual funds, most of them coming into India through their joint
ventures with Indian promoters.

The private funds have brought in with them latest product innovations, investment
management techniques and investor-servicing technologies. During the year
1993-94, five private sector fund houses launched their schemes followed by six
others in 1994-95.

Phase IV (1996-99): Growth And SEBI Regulation:

Since 1996, the mutual fund industry scaled newer heights in terms of mobilization
of funds and number of players. Deregulation and liberalization of the Indian
economy had introduced competition and provided impetus to the growth of the
industry.

A comprehensive set of regulations for all mutual funds operating in India was
introduced with SEBI (Mutual Fund) Regulations, 1996. These regulations set
uniform standards for all funds. Erstwhile UTI voluntarily adopted SEBI
guidelines for its new schemes. Similarly, the budget of the Union government in
1999 took a big step in exempting all mutual fund dividends from income tax in
the hands of the investors. During this phase, both SEBI and Association of Mutual
Funds of India (AMFI) launched Investor Awareness Programme aimed at
educating the investors about investing through MFs.

Phase V (1999-2004): Emergence of a Large and Uniform Industry:

The year 1999 marked the beginning of a new phase in the history of the mutual
fund industry in India, a phase of significant growth in terms of both amount
mobilized from investors and assets under management. In February 2003, the UTI
Act was repealed. UTI no longer has a special legal status as a trust established by
an act of Parliament. Instead, it has adopted the same structure as any other fund in
India - a trust and an AMC.

UTI Mutual Fund is the present name of the erstwhile Unit Trust of India (UTI).
While UTI functioned under a separate law of the Indian Parliament earlier, UTI
Mutual Fund is now under the SEBI's (Mutual Funds) Regulations, 1996 like all
other mutual funds in India.

The emergence of a uniform industry with the same structure, operations and
regulations make it easier for distributors and investors to deal with any fund
house. Between 1999 and 2005 the size of the industry has doubled in terms of
AUM which have gone from above Rs 68,000 crores to over Rs 1,50,000 crores.

Phase VI (From 2004 Onwards): Consolidation and Growth:

The industry has lately witnessed a spate of mergers and acquisitions, most recent
ones being the acquisition of schemes of Allianz Mutual Fund by Birla Sun Life,
PNB Mutual Fund by Principal, among others. At the same time, more
international players continue to enter India including Fidelity, one of the largest
funds in the world.
 COMPANY PROFILE

Motilal Oswal Financial Services Ltd

Type Financial services

Industry Finance

Founded Mumbai, India, 1987

Headquarters Motilal Oswal Tower, Prabhadevi, Mumbai

Key people Motilal Oswal, Ramdeo Agrawal

Services Wealth Management,

Retail Broking & Distribution,
Commodity Broking,
Asset Management,
Institutional Broking,
Private Equity &
Investment Banking Services

Services Wealth Management,

Retail Broking & Distribution,
Commodity Broking,
Asset Management,
Institutional Broking,
Private Equity &

Parent Motilal Oswal Financial Services Ltd

Subsidiaries Motilal Oswal Securities Ltd,

Motilal Oswal Investment Services,
Motilal Oswal Investment Advisors Pvt Ltd,
Motilal Oswal Private Equity Advisors Pvt Ltd,
Motilal Oswal Asset Management Co. Ltd,

Website www.motilaloswal.com
1.1 Company History:

Motilal Oswal Securities Ltd. (MOSL) was founded in 1987 as a small sub-broking
unit, with just two people running the show. Focus on customer-first attitude,
ethical and transparent business practices, respect for professionalism, research-
based value investing and implementation of cutting-edge technology have enabled
us to blossom into an over 3300 member. Today we are a well-diversified financial
services firm offering a range of financial products and services such as Private
Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset
Management, Investment Banking, Private Equity, Commodity Broking, Currency
Broking and Home Finance

The company was formed in 1987 by Motilal Oswal and Ramdeo Agrawal after
they acquired membership on the BSE. Motilal was elected director and joined on
both the Governing Board of the Bombay Stock Exchange in 1998.Motilal Oswal
Securities is of Central Depository Services limited (CDSIL) in 2000. The
company started offering derivatives products and advisory services on both BSE
as well as NSE2001.In 2006 the company entered private equity & investment
banking business. In the same year. Motilal Oswal group acquired south India
brokerage firm peninsular capital markets. In January 2010 Motilal Oswal financial
Services (through its subsidiary Motilal Oswal Securities and Exchange board of
India (SEBI) to set up a mutual fund business in equity.

Research is the solid foundation on which Motilal Oswal Securities’ advice is

based. Almost 10% of revenue is invested on equity research and we hire and train
the best resources to become our advisors. At present, we have 30 research analysts
researching over 239 companies across 20 sectors. From a fundamental, technical
and derivatives research perspective, Motilal Oswal’s research reports have
received wide coverage in the media. Our consistent efforts towards quality equity
research have reflected in an increase in the ratings and rankings across various
categories in the Asia Money Brokers Poll over the years.

1.2 Our Vision :

To become a well-respected global financial services company by assisting
investors create wealth in stock markets worldwide.

1.3 Our Mission :

 Developing and implementing superior risk management and investment
strategic to offer sustainable and stable return to our shareholders.
 Leveraging technology to service customers quickly and conveniently.
 Understanding the needs of customers and offering them superior
products and services.

1.4 Companies Value

 Customers

At Motilal Oswal, we strive hard to connect with our customers beyond

transactions and help them achieve their personal goals. What makes this
approach possible is a set of robust technologies through which our
customers can not only transact conveniently from various platforms, but
also have easy access to all our products & services. They are now better
equipped to get in touch with us.

 Speed

One of the fastest trade execution platform that provides faster transaction
times across various services. Pay-outs are processed within 15 minutes.
  Accuracy

High Data Accuracy across various touch points.

 Reliability

High uptime of various services across all lines of business. Timely

execution of all processes to ensure information reaches the customers as
required.

 Convenience

Easy access to applications and services on your mobile along with the
internet.

 Knowledge First

Research Reports are available on the Internet.

 Access

Secured access to all information.

 Security

Tie-up with the best service providers to ensure highest grades of

information security protection. Complete compliance with various
regulatory bodies.

1.3 Awards and Achievements

 Motilal Oswal Real Estate Investment Advisors wins the " Best Real Estate
Fund of the Year - Domestic" at the CNBC - AWAAZ Real Estate Awards
2016 -17
  Motilal Oswal Financial Services Ltd wins Banking Frontiers FINNOVITI
Awards 2017 for its Watch App

 Motilal Oswal Securities won 2 awards at recently held CNBC TV18

Financial Advisory Awards 2016 : Awarded for the 5th time as Best Equity
Broker-National & Awarded as Best Institution for Financial Education &
Inclusion by Special Jury.

 Motilal Oswal Wealth Management Ltd participated in the CNBC TV18

Financial Advisory Awards 2014 – 15; and in the very first year of its
participation has been adjudged Best Performing National Financial Advisor
(Wealth distribution category).

 Motilal Oswal Securities Ltd. wins the “Best Research as Research

Showcase Partner” at RESEARCHBYTES IC AWARDS 2014. The winners
were selected from a poll of over 1500 Fund Managers/Analysts!.

 Motilal Oswal Securities received two awards for its equity research in IT
and commodity (forex) segments at India's Best Market Analyst Awards
2014, India's biggest Financial Market Awards called as ZEE Business
Awards 2014.

 Motilal Oswal Securities won the Best Performing Equity Broker (National)
Award at CNBC TV18 Financial Advisor Awards 2013 held in Mumbai.

 Motilal Oswal Financial Services Ltd.’s Analyst Mr. Jinesh Gandhi won the
Best Market Analyst Award for the categories Equity-Auto at ‘India`s Best
Market Analyst Awards 2013 organized by Zee Business.

1.4 Financial Services / Services profile:

Motilal Oswal Financial Services Ltd (MOFSL) is the holding company of Motilal
Oswal Group - a well-diversified financial services group focused on wealth
creation through knowledge. The group was founded by Motilal Oswal and
Ramdeo Arawak over 28 years back (in 1987) as a small sub-broking unit and
today we are a multi-faceted financial services company with a presence in over
500 cities through 2000+ business locations ably managed by a team of more than
2400 employees.

Our network of business locations coupled with people across business units and a
diverse range of financial expertise; works synergistically to provide a whole host
of products and services across retail broking & financial products distribution,
institutional broking, private wealth management, investment banking, private
equity (growth capital and real estate), asset management and home finance. All
these businesses are headquartered in a single location at Motilal Oswal Tower
(Mumbai).

CHAPTER -
LITERATURE REVIEW
It is bound to adapt the rich books, journals, periodicals, reports, etc. to measure with quantity of
collections. Lots of books and websites are referred for the study. The previous research papers
are also be used as a guideline in preparing and designing the research work.

Ravidram and Rao Narayan carried out the performance evaluation of Indian mutual fund
industry using risk-return analysis, Treynor’s Ratio, Jenson’s ratio and Sharpe’s ratio. They
collected monthly closing NAV from AMFI for the period of Sept. 98 to April 02 of selected
open-ended schemes. After analysis of relative measures, most of the schemes were able to
satisfy investor’s expectation by giving excess returns over excepted returns.

Dr. N.K. Sathya Pal Sharma published a research report titled “Analysis of risk and return
relationship of equity mutual fund in India” in International Journal of Advancements in
Research and Technology. He used Capital Asset Pricing Model to calculate expected rate of
return for a scheme, given it’s risk. The first task in this report is to calculate risk associated with
schemes. This is denoted by beta in CAPM model. The overall analysis finds that ICICI
Prudential – Direct(G) and Reliance banking fund – Direct(G) have been the best performers
while HDFC growth fund –Direct(G) was an average performer and DHFL Pramerica large cap
equity (G) was the worst performer which gave below expected returns.

Dr. V. Rathnamani and R. Nandini in their research paper “A study on performance of equity
mutual funds with special reference to large cap and mid cap mutual funds” published in IOSR
Journal of Business and Management used statistical tools like standard deviation, beta, alpha
and R-squared. Among the selected large cap schemes, SBI Blue chip fund ranked first based on
various parameters like return, beta and Sharpe ratio while in mid cap schemes Franklin India
Smaller Companies Fund ranked first.

Madhumati and Panwal used selected public and private sector funds of varied net asset to
evaluate the differences in characteristics of asset held, portfolio diversification on investment
performance for the period May 02 to May 05. The study found that public sector sponsored
funds do not differ significantly from private sector sponsored funds in terms of return
percentage.

Bilal Ahmad and Khurshid Butt in their research paper “Risk and Return Analysis inMutual
Fund Industry in India” selected a sample of 40 schemes and gathered data of five years from
2007 to 2012. From analysis, it was concluded that whole sample schemes have delivered higher
returns than the market at a risk, which was even, less than the risk of market portfolio. On the
other hand, two or three schemes have also been found to underperform the market portfolio.

NISM – series-V-B: Mutual Fund foundation workbook is referred to

  Know the basics of mutual funds, their role and structure, different kinds of mutual fund
schemes and their features.
 Know how specified schemes are to be evaluated.
 Know mutual fund transaction and KYC requirements for investors.

Investment Analysis and Portfolio Management by Prasanna Chandra( Third edition) is

referred to understand standard deviation as the principal measure of risk and how to do
spreadsheet analysis in Excel.

CHAPTER –

RESEARCH METHODOLOGY

Data sources:
Secondary data is taken from AMFI and Yahoo Finance websites as a basis of analysis in this
research. I have selected each mutual fund scheme of Motilal Oswal Securities Ltd. from equity
and debt and other two schemes on the basis of same CRISIL rating and having Rs. 1500 Cr
Asset Under Management. Monthly data about the closing Net Asset Value of the selected
schemes has collected from www.yahoofinance.com and www.moneycontrol.com. I have taken
NIFTY MID CAP 50 as a benchmark for equity schemes and data for the same is collected from
www.nseindia.com.

Time Period of the Study:

A period of 5 years from January 1st 2014 to January 31st 2019 have been taken up for the
purpose of the study.

Sample Design:
An equity and debt scheme of Motilal Oswal Securities Ltd. having asset under management of
about Rs. 1500 Cr and CRISIL rating of 4 are compared with the schemes of same AUM and
CRISIL rating.

Sr. no. Type of fund Name of Scheme

1 Equity mid cap
2 Equity mid cap
3 Equity mid cap
4 Debt liquid fund
5 Debt liquid fund
6 Debt liquid fund
Statistical tools used:
Motilal Oswal mid cap 30 fund(G)
ICICI Prudential mid cap fund(G)
Axis mid cap fund(G)
Motilal Oswal liquid fund(G)
TATA liquid fund(G)
Axis liquid fund(G)

1) Standard Deviation
2) Beta
3) Sharpe ratio
4) Treynor ratio

CHAPTER –

THEORETICAL BACKGROUND

Understanding mutual fund:

Mutual fund is a trust that pools money from a group of investors (sharing common financial
goals) and invest the money thus collected into asset classes that match the stated investment
objectives of the scheme. Since the stated investment objectives of a mutual fund scheme
generally form the basis for an investor's decision to contribute money to the pool, a mutual fund
cannot deviate from its stated objectives at any point of time.

A fund manager, who using his investment management skills and necessary research works
ensures much better return than what an investor can manage on his own, manages every Mutual
Fund. The capital appreciation and other incomes earned from these investments are passed on to
the investors (also known as unit holders) in proportion of the number of units they own. When
an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the
fund in the same proportion as his contribution amount put up with the corpus (the total amount
of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder.

How does a mutual fund works?

Advantages of mutual fund:

1. Professional Management

Fund manager undergoes through various research works and has better investment management
skills, which ensure higher returns to the investor than what he can manage on his own.

2. Less Risk

Investors acquire a diversified portfolio of securities even with a small investment in a Mutual
Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities.

3. Low Transaction Costs

Due to the economies of scale (benefits of larger volumes), mutual funds pay lesser transaction
costs. These benefits are passed on to the investors.
4. Liquidity

An investor may not be able to sell some of the shares held by him very easily and quickly,
whereas units of a mutual fund are liquid.

5. Safety

Mutual Fund industry is part of a well-regulated investment environment where the interests of
the investors are protected by the regulator. All funds are registered with SEBI and complete
transparency is forced.

6. Portfolio Diversification:

Mutual Funds invest in a well-diversified portfolio of securities that enables investor to hold a
diversified investment portfolio (whether the amount of investment is big or small). There a lot
of schemes in the mutual fund market in India i.e. 44 Asset management companies each may
holding almost more than 50 schemes.

Disadvantages of mutual fund:

1. Costs Control Not in the Hands of an Investor:

Investor has to pay investment management fees and fund distribution costs as a percentage
of the value of his investments (as long as he holds the units), irrespective of the performance
of the fund.

2. Difficulty in Selecting a Suitable Fund Scheme:

Many investors find it difficult to select one option from the plethora of funds/schemes/plans
available. For this, they may have to take advice from financial planners in order to invest in
the right fund to achieve their objectives.

3. No Customized Portfolio:

The portfolio of securities in which a fund invests is a decision taken by the fund manager.
Investors have no right to interfere in the decision making process of a fund manager, which
some investors find as a constraint in achieving their financial objectives.
Net Asset Value (NAV):

The net asset value of the fund is the cumulative market value of the assets fund net of its
liabilities. In other words, if the fund is dissolved or liquidated by selling off all the assets in the
fund, the shareholders would collectively own this amount. This gives rise to the concept of net
asset value per unit, which is the value represented by the ownership of one unit in the fund.

It is calculated simply by dividing the net asset value of the fund by the number of units.
However, most people refer loosely to the NAV per unit as NAV, ignoring the “per unit”. We
also abide by the same convention.

Calculation of Net Asset Value:

The most important part of the calculation is the valuation of the assets owned by the fund. Once
it is calculated, the NAV is simply the net value of assets divided by the number of the units
outstanding. The detailed methodology for the calculation of the net asset value is given below:

NAV = Market value of investments + Current assets and other assets + Accrued
income -Current liabilities and other liabilities - Accrued expense

Risk:

Every type of investment, including mutual funds, involves risk. Risk refers to the possibility
that you will lose money (both principal and any earnings) or fail to make money on an
investment. A fund's investment objective and its holdings are influential factors in determining
how risky a fund is. Risk and potential return are related. This is the risk/return trade-off. Higher
risks are usually taken with the expectation of higher returns at the cost of increased volatility.
While a fund with higher risk has the potential for higher return, it also has the greater potential
for losses or negative returns.

Return:

The annual return on an investment, expressed as a percentage of the total amount invested also
called rate of return or the yield of a fixed income security. The interaction of mutual funds flows
and security returns in emerging markets.

Measures of return:
Simple return:

Whatever the nature of a mutual fund scheme, its value is reflected in the NAV. Suppose you
invested in a scheme, when its NAV was Rs.12. Later, you found that the NAV has grown to
Rs.15. How much is your return? The Simple Return can be calculated with the following
formula: i.e. 25%

( Later value−Initial value )∗100

initial value

( Rs 15−Rs 12 )∗100
Rs 12

Models used:

Beta:

A high beta is good or bad depending on the state of the market. If the market sentiments are
bullish, i.e., the market is seeing a rise in general, then a high beta stock is better and if the
market sentiment is bearish then low beta is preferred.

A beta of one indicates that the security's price will move with the market. A beta is less than
one means that the security will be less volatile than the market. A beta greater than 1 indicates
that the security's price will be more volatile than the market.

Standard deviation:

Standard deviation is a statistical measurement that shows how much variation there is from the
arithmetic mean (simple average). Investors describe standard deviation as the volatility of past
mutual fund returns.

In simple terms, a greater standard deviation indicates higher volatility, which means the mutual
fund's performance fluctuated high above the average but also significantly below it. Therefore,
many investors use the terms volatility and standard deviation interchangeably.

σ ¿ √∑ ¿ ¿ ¿

Where,

σ = Standard deviation

X = each value in dataset

 Xb=mean of all values in dataset

N = number of values in dataset

Sharpe ratio:

The Sharpe ratio or Sharpe index or Sharpe measure or reward-to-variability ratio is a measure of
the excess return (or Risk Premium) per unit of risk in an investment asset or a trading strategy,
named after William Forsyth Sharpe. Since its revision by the original author in 1994, it is
defined as:

Rp−Rf E(Rp−Rf )
S= σ
=
√ var ( Rp−Rf )
Where
Rp = return of portfolio
Rf = return on a benchmark asset or risk free rate of return
E[Rp − Rf] = expected value of the excess of the return over the benchmark return
σ = standard deviation of the asset.
The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance is.

Treynor ratio:

Treynor ratio also known as the reward to volatility ratio, is a performance metric for
determining how much excess return is generated for each unit of risk taken by a portfolio.

Rp−Rf
T¿ β

Where,

Rp = return of portfolio
Rf = return on a benchmark asset or risk free rate of return
Β = beta of portfolio
A higher Treynor ratio means a portfolio is more suitable investment.

Mutual fund Transactions and its process:

 In case of mutual fund, either investment let it be a direct investment in form of lump sum or a
systematic investment plans, even the other transaction like additional investment, systematic
transfer, so it is as like a set of documentation processing in highly essential in a disciplined way.
For any HP schemes two types of common application are available it’s for debt and equity
skills, whereas for SIP, ATP, trigger stock plus and likely options and organized way they are to
be attached. Almost all forms are alike i.e. in a sequential and organized way they do carry all
information about the investors in brief. Some of them are as per the KYC (Know Your
Customer):

 Name (block letters)

 Father’s or guardian’s name (if minor)

 DOB (of all applicants) maximum 3

 PAN no. (of all applicants)

 Status (individual or firm)

 Income level

 Occupation (service, profession, business)

 Address for communication

 Mobile No. (If SMS facility required)

 Email ID (for paperless trading) same schemes alert some addition unit as against this option

towards respective cost saving

 Payment details (instrument no., date, amount, DD charges, types (SB), ORC code, HICR no,

payment made (NEFT) , BCS or cheques)

 Nomination details (with % age holding)

 Acknowledgement scheme (to be returned to investor after stamping).

All application must be attached with PA, front copy (duly attested by the advisor) or the
receiving organization authorized personnel, with respective seal and signature as being very
brief (whereas, subsequent transaction for any investment where PAN is already being provided).

The duly filled application with its attachment and the payment instrument has to be submitted
by the proper service providing center (CAMS or MUTUAL FUNDS services authorized
windows) before 3 pm of any the working days or a proper login under time stamping and issue
of acknowledgment as against as a token of acceptance.

Same days NAV (Net Asset Value) will be affective for all transactions logged on before 3 pm
and SMS or mail message to this affect will be communicated within 2 days investors will be
issued SOA (Statement of Account) for the redemption also for size procedural followed with it.

A small example of mutual fund transaction receipt:

 CHAPTER –
DATA ANALYSIS AND DATA INTERPRETATION

PART A:
1) Analysis of equity mutual fund schemes:

1) Motilal Oswal midcap 30 Fund (G) :

NIFTY
midcap
Closing Risk free 50
Date NAV Return return Close Return
01-02-2014 10.0726 5.525 2131.2
01-03-2014 10.7327 6.5534 5.525 2168.5 1.7502
01-04-2014 10.7693 0.3410 5.525 2465.15 13.6800
01-05-2014 12.3451 14.6323 5.525 2525.35 2.4421
01-06-2014 13.9723 13.1809 5.525 3049.3 20.7476
01-07-2014 13.9217 -0.3621 5.525 3380.25 10.8533
01-08-2014 14.4186 3.5692 5.525 3150.45 -6.7983
01-09-2014 15.4012 6.8148 5.525 3131.4 -0.6047
01-10-2014 15.6550 1.6479 5.525 3127.5 -0.1245
01-11-2014 16.6139 6.1252 5.525 3293.3 5.3014
01-12-2014 17.4681 5.1415 5.525 3418.35 3.7971
01-01-2015 18.5684 6.2989 5.525 3363.45 -1.6060
01-02-2015 19.1608 3.1904 5.525 3488.15 3.7075
01-03-2015 19.4655 1.5902 5.525 3440.55 -1.3646
01-04-2015 18.6298 -4.2932 5.525 3373.65 -1.9445
01-05-2015 20.1960 8.4069 5.525 3254.5 -3.5318
01-06-2015 20.2265 0.1510 5.525 3371.95 3.6088
01-07-2015 21.2701 5.1596 5.525 3212.45 -4.7302
01-08-2015 20.2848 -4.6323 5.525 3443.65 7.1970
01-09-2015 20.3297 0.2213 5.525 3136.85 -8.9091
01-10-2015 20.0880 -1.1889 5.525 3201.35 2.0562
01-11-2015 20.0404 -0.2370 5.525 3307.3 3.3095
01-12-2015 20.3468 1.5289 5.525 3406.15 2.9888
01-01-2016 19.4264 -4.5236 5.525 3415.2 0.2657
01-02-2016 17.9089 -7.8115 5.525 3093.25 -9.4270
01-03-2016 19.0768 6.5213 5.525 2720.75 -12.042
01-04-2016 19.6576 3.0445 5.525 3200.6 17.6367
01-05-2016 19.8828 1.1456 5.525 3318.1 3.6712
01-06-2016 21.0373 5.8065 5.525 3376.3 1.7540
01-07-2016 22.5231 7.0627 5.525 3492.9 3.4535
01-08-2016 23.0921 2.5263 5.525 3683.25 5.4496
01-09-2016 23.4577 1.5832 5.525 3889.35 5.5956
01-10-2016 23.8925 1.8535 5.525 3959.65 1.8075
01-11-2016 22.1563 -7.2667 5.525 4099.5 3.5319
01-12-2016 21.4014 -3.4072 5.525 3750.1 -8.5230
01-01-2017 22.5271 5.2599 5.525 3662.3 -2.3413
01-02-2017 23.3195 3.5175 5.525 3866.5 5.5757
01-03-2017 24.2406 3.9499 5.525 4187.25 8.2956
01-04-2017 25.6127 5.6603 5.525 4383.65 4.6904
01-05-2017 24.7910 -3.2082 5.525 4658.35 6.2665
01-06-2017 24.9446 0.6196 5.525 4487.35 -3.6708
01-07-2017 25.5230 2.3187 5.525 4519.75 0.7220
01-08-2017 25.2513 -1.0645 5.525 4792.65 6.0379
01-09-2017 25.1599 -0.3620 5.525 4707.7 -1.7725
01-10-2017 25.4965 1.3378 5.525 4687.5 -0.4291
01-11-2017 26.7443 4.8940 5.525 5123.65 9.3045
01-12-2017 27.9896 4.6563 5.525 5212.2 1.7283
01-01-2018 25.9580 -7.2584 5.525 5540.15 6.2920
 Return
20.

15.

10.

5.

0.

-5.

-10....

Return or Standard Sharpe ratio Treynor Beta Alpha

mean deviation ratio
2.1424 4.7425 -0.7132 -31.718 0.1066 -3.0331

 The graph shows the returns calculated for the scheme on monthly basis for period 2014-
2018.
 Closing value of NAV is taken for the calculation of returns and risk, which includes
beta, alpha, standard deviation, Sharpe ratio and Treynor ratio.
 Standard deviation of benchmark index i.e. NIFTY MID-CAP 50 is 6.4157

INTERPRETATION:

 The average return or mean calculated for the fund is 2.1424%.

 Standard deviation indicates how much has fund return differed from benchmark return.
Here, standard deviation is 4.7425, which is less than benchmark S. D. This shows that
fund return did not differ from the benchmark to a greater extent. In other words, this
fund is less volatile during the period 2014-2018.
 Beta value is the measure of volatility and greater the beta value greater is the risk. Here,
beta is 0.1066 which shows the risk associated with the scheme is less.
 Sharpe ratio is used to calculate risk-adjusted return of scheme. Higher the value better is
its risk-adjusted return. Here, it is -0.7132, which indicates fund has negative return
during the specified period, and risk free return is more than fund return.

2) ICICI Prudential midcap Fund (G):

Date Closin Return Risk free return NIFTY midcap 50 Return

 g NAV Close
01-01-2014 35.47 5.525 2131.2
6.54073
01-02-2014 37.79 8 5.525 2168.5 1.75019
13.6799
01-03-2014 40.1 6.11272 5.525 2465.15 6
5.61097
01-04-2014 42.35 3 5.525 2525.35 2.44205
16.4108 20.7476
01-05-2014 49.3 7 5.525 3049.3 2
10.9533 10.8533
01-06-2014 54.7 5 5.525 3380.25 1
01-07-2014 56.17 2.68738 5.525 3150.45 -6.79832
4.11251
01-08-2014 58.48 9 5.525 3131.4 -0.60468
3.77906
01-09-2014 60.69 8 5.525 3127.5 -0.12454
3.64146
01-10-2014 62.9 2 5.525 3293.3 5.30136
7.48807 3.79710
01-11-2014 67.61 4 5.525 3418.35 5
01-12-2014 67.81 0.29581 5.525 3363.45 -1.60604
5.88409 3.70750
01-01-2015 71.8 5 5.525 3488.15 1
01-02-2015 71.4 -0.5571 5.525 3440.55 -1.36462
-
01-03-2015 69.71 2.36695 5.525 3373.65 -1.94446
-
01-04-2015 68.13 2.26654 5.525 3254.5 -3.53178
4.05108 3.60884
01-05-2015 70.89 2 5.525 3371.95 8
-
01-06-2015 69.5 1.96078 5.525 3212.45 -4.7302
7.64028 7.19699
01-07-2015 74.81 5 5.525 3443.65 8
-
01-08-2015 70.68 5.52065 5.525 3136.85 -8.90915
- 2.05620
01-09-2015 69.53 1.62705 5.525 3201.35 3
-
01-10-2015 68.96 0.81979 5.525 3307.3 3.30954
3.16125 2.98883
01-11-2015 71.14 3 5.525 3406.15 8
0.16868 0.26569
01-12-2015 71.26 6 5.525 3415.2 7
01-01-2016 64.27 - 5.525 3093.25 -9.42697
 9.80916
-
01-02-2016 59.12 8.01307 5.525 2720.75 -12.0424
10.3349 17.6366
01-03-2016 65.23 2 5.525 3200.6 8
3.67118
01-04-2016 66.87 2.51418 5.525 3318.1 7
- 1.75401
01-05-2016 66.82 0.07478 5.525 3376.3 4
6.80934
01-06-2016 71.37 3 5.525 3492.9 3.45348
4.96006 5.44962
01-07-2016 74.91 8 5.525 3683.25 9
2.13589 5.59560
01-08-2016 76.51 4 5.525 3889.35 4
1.15017 1.80749
01-09-2016 77.39 2 5.525 3959.65 5
3.91523
01-10-2016 80.42 3 5.525 4099.5 3.53188
01-11-2016 75.58 -6.0184 5.525 3750.1 -8.52299
-
01-12-2016 74.7 1.16434 5.525 3662.3 -2.34127
4.40428
01-01-2017 77.99 5 5.525 3866.5 5.57573
6.91114 8.29561
01-02-2017 83.38 1 5.525 4187.25 6
4.13768 4.69042
01-03-2017 86.83 9 5.525 4383.65 7
3.92720 6.26647
01-04-2017 90.24 9 5.525 4658.35 2
01-05-2017 88.29 -2.1609 5.525 4487.35 -3.67083
1.01936 0.72202
01-06-2017 89.19 9 5.525 4519.75 8
3.49814 6.03794
01-07-2017 92.31 5 5.525 4792.65 2
0.09750
01-08-2017 92.4 2 5.525 4707.7 -1.7725
0.77922
01-09-2017 93.12 2 5.525 4687.5 -0.42909
100.7 9.30453
01-10-2017 2 8.16151 5.525 5123.65 1
102.4 1.69777 1.72826
01-11-2017 3 5 5.525 5212.2 6
106.7 4.21751 6.29196
01-12-2017 5 4 5.525 5540.15 3
104.1 - 0.39800
01-01-2018 8 2.40749 5.525 5562.2 5
 102.7 - 0.10607
01-02-2018 1 1.41102 5.525 5568.1 3
01-03-2018 98.49 - 5.525 5590.56 0.40336
4.10866 9
01-04-2018 104.2 5.85846 5.525 5595 0.07942
6 7
01-05-2018 99.87 - 5.525 5605.2 0.18230
4.21063 6
01-06-2018 94.52 - 5.525 5615.45 0.18286
5.35697 6
01-07-2018 98.03 3.71350 5.525 5638.48 0.41011
2 9
01-08-2018 99.44 1.43833 5.525 5651.12 0.22417
8 4
01-09-2018 91.14 - 5.525 5650.23 -0.01575
8.34674
01-10-2018 90.42 - 5.525 5660.78 0.18671
0.78999 8
01-11-2018 93.31 3.19619 5.525 5674.56 0.24342
6 9
01-12-2018 95.24 2.06837 5.525 5686.56 0.21147
4

20
Return
15

10

0
... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...
/ 1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/ /1/
1 -5 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10

-10

-15

Return or Standard Sharpe ratio Treynor ratio Beta Alpha

mean deviation
1.8049 4.9123 -0.7572 -5.3756 0.6920 -1.1670

 The graph shows the returns calculated for the scheme on monthly basis for period 2014-
2018.
  Closing value of NAV is taken for the calculation of returns and risk, which includes
beta, alpha, standard deviation, Sharpe ratio and Treynor ratio.
 Standard deviation of benchmark index i.e. NIFTY MID-CAP 50 is 6.4157

INTERPRETATION:

 The average return or mean calculated for the fund is 1.8049%.

 Standard deviation indicates how much has fund return differed from benchmark return.
Here, standard deviation is 4.9123, which is less than benchmark S. D. This shows that
fund return did not differ from the benchmark to a greater extent. In other words, this
fund is less volatile during the period 2014-2018.
 Beta value is the measure of volatility and greater the beta value greater is the risk. Here,
beta is 0.6920 that shows the risk associated with the scheme is less.
 Sharpe ratio is used to calculate risk-adjusted return of scheme. Higher the value better is
its risk-adjusted return. Here, it is -0.7572, which indicates fund has negative return
during the specified period, and risk free return is more than fund return.
3) Axis midcap Fund (G):

Closin NIFTY midcap 50 Return

Date g NAV Return Risk free return Close
01-01-2014 13.13 5.525 2131.2
01-02-2014 13.68 4.18888 5.525 2168.5 1.75019
11.5497 13.6799
01-03-2014 15.26 1 5.525 2465.15 6
2.16251
01-04-2014 15.59 6 5.525 2525.35 2.44205
20.7476
01-05-2014 18.29 17.3188 5.525 3049.3 2
11.8097 10.8533
01-06-2014 20.45 3 5.525 3380.25 1
01-07-2014 20.06 -1.9071 5.525 3150.45 -6.79832
4.28714
01-08-2014 20.92 4 5.525 3131.4 -0.60468
5.16252
01-09-2014 22 4 5.525 3127.5 -0.12454
3.36363
01-10-2014 22.74 6 5.525 3293.3 5.30136
5.62884 3.79710
01-11-2014 24.02 8 5.525 3418.35 5
3.41382
01-12-2014 24.84 2 5.525 3363.45 -1.60604
1.73107 3.70750
01-01-2015 25.27 9 5.525 3488.15 1
01-02-2015 25.22 -0.19787 5.525 3440.55 -1.36462
01-03-2015 25.07 -0.59476 5.525 3373.65 -1.94446
01-04-2015 24.66 -1.63542 5.525 3254.5 -3.53178
4.29845 3.60884
01-05-2015 25.72 5 5.525 3371.95 8
01-06-2015 25.7 -0.07775 5.525 3212.45 -4.7302
7.04279 7.19699
01-07-2015 27.51 7 5.525 3443.65 8
01-08-2015 25.93 -5.74337 5.525 3136.85 -8.90915
2.05620
01-09-2015 25.74 -0.73274 5.525 3201.35 3
01-10-2015 25.31 -1.67056 5.525 3307.3 3.30954
2.98883
01-11-2015 25.05 -1.02726 5.525 3406.15 8
0.26569
01-12-2015 25.05 0 5.525 3415.2 7
01-01-2016 23.76 -5.1497 5.525 3093.25 -9.42697
01-02-2016 21.07 -11.3215 5.525 2720.75 -12.0424
9.49216 17.6366
01-03-2016 23.07 9 5.525 3200.6 8
4.33463 3.67118
01-04-2016 24.07 4 5.525 3318.1 7
1.37100 1.75401
01-05-2016 24.4 1 5.525 3376.3 4
3.11475
01-06-2016 25.16 4 5.525 3492.9 3.45348
4.53099 5.44962
01-07-2016 26.3 8 5.525 3683.25 9
2.16730 5.59560
01-08-2016 26.87 8 5.525 3889.35 4
1.80749
01-09-2016 26.84 -0.11165 5.525 3959.65 5
1.37853
01-10-2016 27.21 6 5.525 4099.5 3.53188
01-11-2016 24.8 -8.85704 5.525 3750.1 -8.52299
01-12-2016 24.27 -2.13709 5.525 3662.3 -2.34127
4.65595
01-01-2017 25.4 4 5.525 3866.5 5.57573
4.01574 8.29561
01-02-2017 26.42 8 5.525 4187.25 6
5.26116 4.69042
01-03-2017 27.81 2 5.525 4383.65 7
3.41604 6.26647
01-04-2017 28.76 1 5.525 4658.35 2
01-05-2017 28.38 -1.32128 5.525 4487.35 -3.67083
3.45314 0.72202
01-06-2017 29.36 3 5.525 4519.75 8
01-07-2017 30.52 3.95095 5.525 4792.65 6.03794
 2
0.62253
01-08-2017 30.71 9 5.525 4707.7 -1.7725
01-09-2017 30.67 -0.13025 5.525 4687.5 -0.42909
4.92337 9.30453
01-10-2017 32.18 8 5.525 5123.65 1
3.23182 1.72826
01-11-2017 33.22 4 5.525 5212.2 6
3.73268 6.29196
01-12-2017 34.46 5 5.525 5540.15 3
0.39800
01-01-2018 33.31 -3.3372 5.525 5562.2 5
0.54038 0.10607
01-02-2018 33.49 1 5.525 5568.1 3
0.40336
01-03-2018 33.38 -0.32846 5.525 5590.56 9
7.27980
01-04-2018 35.81 8 5.525 5595 0.07942
0.18230
01-05-2018 35.31 -1.39626 5.525 5605.2 6
0.18286
01-06-2018 34 -3.71 5.525 5615.45 6
5.55882 0.41011
01-07-2018 35.89 1 5.525 5638.48 9
0.22417
01-08-2018 38.18 6.38061 5.525 5651.12 4
01-09-2018 34.37 -9.97905 5.525 5650.23 -0.01575
0.18671
01-10-2018 33.68 -2.00756 5.525 5660.78 8
2.49406 0.24342
01-11-2018 34.52 2 5.525 5674.56 9
3.33139
01-12-2018 35.67 6 5.525 5686.56 0.21147
 20

15
Return
10

0
. . . . .
014 014 014 1/.. 015 015 015 1/.. 016 016 016 1/.. 017 017 017 1/.. 018 018 018 1/..
2 2 2 / 2 2 2 / 2 2 2 / 2 2 2 / 2 2 2 /
1/ -5 1/ 1/ 10 /1/ /1/ /1/ 10 /1/ /1/ /1/ 10 /1/ /1/ /1/ 10 /1/ /1/ /1/ 10
1/ 4/ 7/ 1 4 7 1 4 7 1 4 7 1 4 7
-10

-15

Return or Standard Sharpe ratio Treynor ratio Beta Alpha

mean deviation
1.8274 4.9591 -0.7456 -5.3273 0.6940 -1.1369

 The graph shows the returns calculated for the scheme on monthly basis for period 2014-
2018.
 Standard deviation of benchmark index i.e. NIFTY MID-CAP 50 is 6.4157

INTERPRETATION:

 The average return or mean calculated for the fund is 1.8274%.

 Standard deviation indicates how much has fund return differed from benchmark return.
Here, standard deviation is 4.9591, which is less than benchmark S. D. This shows that
fund return did not differ from the benchmark to a greater extent. In other words, this
fund is less volatile during the period 2014-2018.
 Beta value is the measure of volatility and greater the beta value greater is the risk. Here,
beta is 0.6940 that shows the risk associated with the scheme is less.
 Sharpe ratio is used to calculate risk-adjusted return of scheme. Higher the value better is
its risk-adjusted return. Here, it is -0.7456, which indicates fund has negative return
during the specified period, and risk free return is more than fund return.

2) Analysis of Debt mutual fund schemes:

1) Motilal Oswal liquid fund (G):

Closing T-bill return or risk
Date NAV Return free return
01-01-2014 34.4822 0.450542
01-02-2014 34.7099 0.660338 0.450542
01-03-2014 34.9956 0.823114 0.450542
01-04-2014 35.2593 0.753518 0.450542
01-05-2014 35.5245 0.752148 0.450542
01-06-2014 35.7768 0.710203 0.450542
01-07-2014 36.0371 0.727578 0.450542
01-08-2014 36.2966 0.720086 0.450542
01-09-2014 36.5549 0.71164 0.450542
01-10-2014 36.8273 0.745181 0.450542
01-11-2014 37.085 0.699747 0.450542
01-12-2014 37.354 0.725363 0.450542
01-01-2015 37.6225 0.718801 0.450542
01-02-2015 37.8646 0.643498 0.450542
01-03-2015 38.1571 0.772489 0.450542
01-04-2015 38.4259 0.704453 0.450542
01-05-2015 38.6989 0.710453 0.450542
01-06-2015 38.9603 0.675477 0.450542
01-07-2015 39.2249 0.67915 0.450542
01-08-2015 39.4839 0.660292 0.450542
01-09-2015 39.7404 0.649632 0.450542
01-10-2015 39.9975 0.646956 0.450542
01-11-2015 40.2447 0.618039 0.450542
01-12-2015 40.5057 0.648528 0.450542
01-01-2016 40.7628 0.634723 0.450542
01-02-2016 41.0111 0.609141 0.450542
01-03-2016 41.3281 0.772954 0.450542
01-04-2016 41.6054 0.670977 0.450542
01-05-2016 41.8834 0.668182 0.450542
01-06-2016 42.1459 0.626742 0.450542
01-07-2016 42.409 0.624258 0.450542
01-08-2016 42.6628 0.598458 0.450542
01-09-2016 42.9046 0.566765 0.450542
01-10-2016 43.1548 0.583159 0.450542
01-11-2016 43.3988 0.565406 0.450542
01-12-2016 43.6402 0.556241 0.450542
01-01-2017 43.8856 0.562323 0.450542
01-02-2017 44.1068 0.504035 0.450542
01-03-2017 44.3644 0.584035 0.450542
01-04-2017 44.6036 0.539173 0.450542
01-05-2017 44.8551 0.563854 0.450542
01-06-2017 45.0979 0.541301 0.450542
01-07-2017 45.3525 0.564552 0.450542
01-08-2017 45.6013 0.548587 0.450542
 01-09-2017 45.8412 0.526088 0.450542
01-10-2017 46.0867 0.53554 0.450542
01-11-2017 46.3235 0.513819 0.450542
01-12-2017 46.5744 0.541626 0.450542
01-01-2018 46.8344 0.558242 0.450542
01-02-2018 47.0707 0.504548 0.450542
01-03-2018 47.3759 0.648382 0.450542
01-04-2018 47.6413 0.5602 0.450542
01-05-2018 47.9183 0.58143 0.450542
01-06-2018 48.2145 0.618133 0.450542
01-07-2018 48.5139 0.620977 0.450542
01-08-2018 48.81 0.610341 0.450542
01-09-2018 49.099 0.592088 0.450542
01-10-2018 49.4111 0.635652 0.450542
01-11-2018 49.7178 0.620715 0.450542
0.9
0.8
Return
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8
01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01
1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2 1/2
1/ 4/ 7/ 10/ 1/ 4/ 7/ 10/ 1/ 4/ 7/ 10/ 1/ 4/ 7/ 10/ 1/ 4/ 7/ 10/

Return or Standard Sharpe ratio Treynor ratio Beta

mean deviation
0.6327 0.1060 1.7183 0.4480 0.4067

 The graph shows the returns calculated for the scheme on monthly basis for period 2014-
2018.
 Standard deviation of benchmark index i.e. 91 days T-bill is zero.

INTERPRETATION:

 The average return or mean calculated for the fund is 0.6327%.

 Standard deviation indicates how much has fund return differed from benchmark return.
Here, standard deviation is 0.1060, which is greater than benchmark S. D. This shows
 that fund return differed from the benchmark to a smaller extent. In other words, this fund
is less volatile during the period 2014-2018.
 Beta value is the measure of volatility and greater the beta value greater is the risk. Here,
beta is 0.4067 that shows the risk associated with the scheme is less.
 Sharpe ratio is used to calculate risk-adjusted return of scheme. Higher the value better is
its risk-adjusted return. Here, it is 1.7183, which indicates fund has positive return during
the specified period.

2) TATA liquid fund (G):

Closing T-bill return or risk
Date NAV Return free return
1988.7
01-01-2014 8 0.450542
0.66975
01-02-2014 2002.1 5 0.450542
2018.4 0.81664
01-03-2014 5 1 0.450542
2033.7 0.75850
01-04-2014 6 6 0.450542
2049.0 0.75131
01-05-2014 4 9 0.450542
2063.5 0.70911
01-06-2014 7 4 0.450542
2078.4 0.72301
01-07-2014 9 5 0.450542
2093.4 0.72023
01-08-2014 6 3 0.450542
2108.3 0.70983
01-09-2014 2 5 0.450542
2123.8
01-10-2014 8 0.73802 0.450542
0.69778
01-11-2014 2138.7 3 0.450542
2153.9 0.71164
01-12-2014 2 6 0.450542
2169.3 0.71544
01-01-2015 3 7 0.450542
01-02-2015 2183.2 0.64305 0.450542
 8 3
0.76581
01-03-2015 2200 9 0.450542
2215.5
01-04-2015 3 0.70591 0.450542
2231.1 0.70501
01-05-2015 5 7 0.450542
2246.0 0.66782
01-06-2015 5 4 0.450542
2261.2 0.67674
01-07-2015 5 1 0.450542
0.65229
01-08-2015 2276 4 0.450542
2290.4 0.63664
01-09-2015 9 3 0.450542
01-10-2015 2305.1 0.63786 0.450542
2319.1 0.60950
01-11-2015 5 9 0.450542
2333.8 0.63429
01-12-2015 6 3 0.450542
2348.4 0.62385
01-01-2016 2 1 0.450542
2362.5 0.60296
01-02-2016 8 5 0.450542
2380.4 0.75764
01-03-2016 8 2 0.450542
2396.3 0.66667
01-04-2016 5 7 0.450542
2412.1 0.66099
01-05-2016 9 9 0.450542
2427.3 0.62889
01-06-2016 6 6 0.450542
2442.4 0.62206
01-07-2016 6 9 0.450542
2456.9 0.59325
01-08-2016 5 4 0.450542
2470.8
01-09-2016 8 0.56696 0.450542
2485.0 0.57429
01-10-2016 7 7 0.450542
2498.9 0.55973
01-11-2016 8 9 0.450542
2512.4 0.53861
01-12-2016 4 8 0.450542
2526.5
01-01-2017 5 0.56161 0.450542
01-02-2017 2539.3 0.50543 0.450542
 2 3
2553.7 0.56983
01-03-2017 9 6 0.450542
2567.3
01-04-2017 1 0.52941 0.450542
2581.4 0.55232
01-05-2017 9 6 0.450542
0.53496
01-06-2017 2595.3 5 0.450542
2609.7 0.55754
01-07-2017 7 5 0.450542
0.54525
01-08-2017 2624 8 0.450542
2637.8 0.52706
01-09-2017 3 1 0.450542
0.53718
01-10-2017 2652 1 0.450542
2665.7 0.51998
01-11-2017 9 6 0.450542
0.54430
01-12-2017 2680.3 4 0.450542
2695.1 0.55255
01-01-2018 1 2 0.450542
2708.6 0.50238
01-02-2018 5 4 0.450542
2726.9 0.67524
01-03-2018 4 6 0.450542
2742.3
01-04-2018 8 0.5662 0.450542
2758.1 0.57504
01-05-2018 5 9 0.450542
2775.4 0.62723
01-06-2018 5 4 0.450542
2792.5 0.61684
01-07-2018 7 1 0.450542
2809.2 0.59873
01-08-2018 9 1 0.450542
2825.5 0.57808
01-09-2018 3 2 0.450542
2843.5 0.63704
01-10-2018 3 9 0.450542
2861.3 0.62563
01-11-2018 2 2 0.450542
2879.4
01-12-2018 4 0.63327 0.450542
 Return
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
14 14 14 14 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18
/ 2 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
0
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1/ 4/ 7/ 10/ 1/ 4/ 7/ 10/ 1/ 4/ 7/ 10/ 1/ 4/ 7/ 10/ 1/ 4/ 7/ 10/

Return or Standard Sharpe ratio Treynor ratio Beta

mean deviation
0.6292 0.1046 1.7081 1.9968 0.0894

 The graph shows the returns calculated for the scheme on monthly basis for period 2014-
2018.
 Standard deviation of benchmark index i.e. 91 days T-bill is zero.

INTERPRETATION:

 The average return or mean calculated for the fund is 0.6292%.

 Standard deviation indicates how much has fund return differed from benchmark return.
Here, standard deviation is 0.1046, which is greater than benchmark S. D. This shows
that fund return differed from the benchmark to a smaller extent. In other words, this fund
is less volatile during the period 2014-2018.
 Beta value is the measure of volatility and greater the beta value greater is the risk. Here,
beta is 0.0894 that shows the risk associated with the scheme is very less.
 Sharpe ratio is used to calculate risk-adjusted return of scheme. Higher the value better is
its risk-adjusted return. Here, it is 1.7081, which indicates fund has positive return during
the specified period.

3) Axis liquid fund (G):

Closing T-bill return or

Date NAV Return risk free return
01-01-2014 1400.4 0.450542
01-02-2014 1409.63 0.659096 0.450542
01-03-2014 1421.03 0.808725 0.450542
01-04-2014 1431.81 0.758607 0.450542
01-05-2014 1442.55 0.750099 0.450542
01-06-2014 1452.78 0.709159 0.450542
01-07-2014 1463.31 0.724819 0.450542
01-08-2014 1473.85 0.720279 0.450542
01-09-2014 1484.33 0.711062 0.450542
01-10-2014 1495.27 0.737037 0.450542
01-11-2014 1505.73 0.699537 0.450542
01-12-2014 1516.5 0.715269 0.450542
01-01-2015 1527.32 0.713481 0.450542
01-02-2015 1537.1 0.640339 0.450542
01-03-2015 1548.8 0.761178 0.450542
01-04-2015 1559.73 0.705703 0.450542
01-05-2015 1570.76 0.707176 0.450542
01-06-2015 1581.27 0.669103 0.450542
01-07-2015 1591.96 0.676035 0.450542
01-08-2015 1602.39 0.655171 0.450542
01-09-2015 1612.52 0.632181 0.450542
01-10-2015 1622.89 0.643092 0.450542
01-11-2015 1632.78 0.609408 0.450542
01-12-2015 1643.19 0.637558 0.450542
01-01-2016 1653.51 0.628051 0.450542
01-02-2016 1663.49 0.603563 0.450542
01-03-2016 1675.94 0.748424 0.450542
01-04-2016 1687.18 0.670675 0.450542
01-05-2016 1698.35 0.662047 0.450542
01-06-2016 1708.98 0.625902 0.450542
01-07-2016 1719.54 0.617916 0.450542
01-08-2016 1729.69 0.590268 0.450542
01-09-2016 1739.43 0.563113 0.450542
01-10-2016 1749.38 0.572024 0.450542
01-11-2016 1759.21 0.561911 0.450542
01-12-2016 1768.75 0.542291 0.450542
01-01-2017 1778.73 0.564239 0.450542
01-02-2017 1787.74 0.506542 0.450542
01-03-2017 1798.02 0.575029 0.450542
01-04-2017 1807.65 0.535589 0.450542
01-05-2017 1817.63 0.552097 0.450542
01-06-2017 1827.39 0.536964 0.450542
01-07-2017 1837.59 0.55817 0.450542
01-08-2017 1847.62 0.545825 0.450542
 01-09-2017 1857.39 0.528789 0.450542
01-10-2017 1867.44 0.541078 0.450542
01-11-2017 1877.19 0.522105 0.450542
01-12-2017 1887.48 0.548162 0.450542
01-01-2018 1897.95 0.554706 0.450542

Return
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

Return or Standard Sharpe ratio Treynor ratio Beta

mean deviation
0.6354 0.1084 1.7049 0.4127 0.4479

 Standard deviation of benchmark index i.e. 91 days T-bill is zero.

INTERPRETATION:

 Standard deviation indicates how much has fund return differed from benchmark return.
Here, standard deviation is 0.1084, which is greater than benchmark S. D. This shows
that fund return differed from the benchmark to a smaller extent. In other words, this fund
is less volatile during the period 2014-2018.
 Beta value is the measure of volatility and greater the beta value greater is the risk. Here,
beta is 0.4479 that shows the risk associated with the scheme is very less.
 Sharpe ratio is used to calculate risk-adjusted return of scheme. Higher the value better is
its risk-adjusted return. Here, it is 1.7049, which indicates fund has positive return during
the specified period.

PART B:

Sr. Name of Mutual Return Standard Sharpe Treynor Beta Ranking

no. Fund or Deviation ratio ratio
mean
1 Motilal Oswal 2.1424 4.7425 -0.7132 -31.718 0.1066 1
midcap 30 fund (G)
2 ICICI Prudential 1.8049 4.9123 -0.7572 -5.3756 0.6920 2
midcap fund (G)
3 Axis midcap fund 1.8274 4.9591 -0.7456 -5.3273 0.6940 3
(G)
4 Motilal Oswal 0.6327 0.1060 1.7183 0.4480 0.4067 2
liquid fund(G)
5 TATA liquid fund 0.6292 0.1046 1.7081 1.9968 0.0894 1
(G)
6 Axis liquid fund 0.6354 0.1084 1.7049 0.4127 0.4479 3
(G)
 Above table shows mean, standard deviation, Sharpe ratio, Treynor ratio and beta of all
the selected schemes. Ranking is given accounding to standard deviation and beta value.
Thus, amongst equity schemes, Motilal Oswal midcap 30 (G) fund has lowest S.D. and
beta. Hence, it is high performing fund in equity category.
 In debt schemes, TATA liquid fund (G) is high performing as it has low S.D. and beta
value while Axis liquid fund (G) is low performing fund.
CHAPTER –

FINDINGS