Task 2

Analysis of the performance of mutual funds of public and private sector

Introduction: Mutual fund is a trust that pools the saving of various investors who share a
common financial goal. This collected money is then invested in different securities. It is an
investment scheme that collects money from other individuals who share a common goal and
invest their money in other assets to grow. Every individual is not a financial expert and has no
time and interest to learn. Still, they want to invest their money, so mutual funds come up with a
better solution for them; the mutual fund is managed by a fund manager who is an expert in this
field. He invests a pool of money in different portfolios based on records, current performance,
and future expectations. Equity, debt, and money-market instruments are broad classifications of
asset classes. Diversification reduces the risk because all stocks might not move in the same
direction in the same proportion at an equivalent time. When the investors subscribe for the units
of a mutual fund, he becomes part-owner of the fund's assets within the same proportion as his
contribution amount put up with the total amount of the fund.

Methodology: An analysis has been done using the following parameters:

(i) Annualized returns of past years
(ii) Standard deviation
(iii) Beta
Annualized returns of past years: It determines the return over the time
Standard deviation: It shows the historical volatility
Beta: It measures the systematic risk
For analysis purpose, we have taken some public and private mutual funds-
Public sector mutual funds are SBI blue-chip, UTI equity, SBI magnum, LIC, Baroda Pioneer
Mutual fund, etc.
Private sector mutual funds are ICICI Prudential midcap fund, Birla sun life, L&T, Reliance,
Edelweiss, etc.

1. Large-cap funds:

Comparison of compounded annual growth rate (CAGR)

Year Franklin L&T Equity SBI blue- ICICI UTI equity
India blue- Fund chip fund Prudential fund
chip fund
1Y 0.21 0.23 0.19 0.30 0.17
2Y 0.18 0.22 0.20 0.20 0.19
5Y 0.14 0.15 0.16 0.16 0.17

Comparison of Standard deviation

Year Franklin L&T Equity SBI blue- ICICI UTI equity
India blue- Fund chip fund Prudential fund
chip fund
1Y 0.20 0.18 0.21 0.19 0.21
2Y 0.25 0.22 0.23 0.22 0.24
5Y 0.34 0.27 0.27 0.28 0.31

Comparison of Beta
Year Franklin L&T Equity SBI blue- ICICI UTI equity
India blue- Fund chip fund Prudential fund
chip fund
1Y 1 1 1 1 1
2Y 0.96 1.03 0.90 0.97 0.98
5Y 0.90 0.80 0.69 0.81 0.95

Franklin India Blue-chip fund: In comparison to the risk and return to last two years, and five
years as compared to last one year, return is more in comparison to risk. In the 3 rd and 5th years,
the risk is increased in comparison to the 1st year, so investment in the initial stage is beneficial.

L&T Equity fund: Return is more in comparison to the risk. Investment in this fund in the mid-
term is beneficial, and if the fund holds for a longer or shorter period, it may not be beneficial.

SBI Blue-chip fund: Return is more in last one year in comparison to the last 5Year and lasts
five years. Investment for a shorter period in this fund is more beneficial.

ICICI Prudential: Return is more in a short period than risk. So, investment for a short period
in this fund is beneficial, and if the fund holds for a longer period, the return may reduce.
UTI Equity fund: In the 3rdand 5th years, the risk is increased in comparison to the 1st year,
and the return is going to be decreased. So, it is found out that the investment in this fund in the
short term is more beneficial

2. Mid-cap Funds

Comparison of Compounded annual growth rate (CAGR)

Year ICICI Sundaram Birla Sunlife L&T Mid SBI
Prudential mid cap Mid cap cap Magnum
mid cap Mid cap
1Y 0.38 0.43 0.40 0.43 0.31
2Y 0.32 0.36 0.31 0.36 0.31
5Y 0.21 0.23 0.20 0.24 0.26

Comparison of Standard deviation

Year ICICI Sundaram Birla Sunlife L&T Mid SBI
Prudential mid cap Mid cap cap Magnum
mid cap Mid cap
1Y 0.18 0.19 0.19 0.17 0.16
2Y 0.19 0.18 0.19 0.17 0.18
5Y 0.23 0.23 0.22 0.21 0.21

Comparison of Beta
Year ICICI Sundaram Birla Sunlife L&T Mid SBI
Prudential mid cap Mid cap cap Magnum
mid cap Mid cap
1Y 0.99 0.98 1 1 0.99
2Y 1.08 1.17 0.99 0.91 1.09
5Y 0.91 0.91 0.91 1.19 1.19

ICICI Prudential mid cap: On comparing last five year and three years with last one year
return is more as compared to risk in this fund so it is beneficial to invest for mid-term is
beneficial in this fund.

Sundaram Mid-cap: Risk in 1st and 5th year is higher as compare to 3rd year, so, fund in the mid-
term is more beneficial if the fund holds for short-term and long-term the return may be reduced

Birla Sunlife Mid-cap: In comparison to the relation of risk and return to last 1 year and 5 years
as comparison to last 3 years, I analyze that the return is more in comparison to risk. So, it is
found out that the investment in this fund in the mid-term is more beneficial if the fund holds for
short-term and long-term the return may be reduced.

L&T Cap: Return is more in last one year and last three year in comparison to last five years. So
investment in short-term is beneficial in this fund.
SBI Magnum Mid-Cap: Return is higher in last 5years as compared to last one and three years,
it is beneficial to invest for long term in this fund.

3. Small-cap Funds

Comparison of Compounded annual growth rate (CAGR)

Year Reliance DSP black Edelweiss Mirae Asset Kotak equity
Small cap rock small-cap emerging
blue chip
1Y 0.42 0.47 0.33 0.48 0.45
2Y 0.39 0.35 0.33 0.38 0.38
5Y 0.28 0.23 0.25 0.29 0.24

Comparison of Standard deviation

Year Reliance DSP black Edelweiss Mirae Asset Kotak equity
Small cap rock small-cap emerging
blue chip
1Y 0.19 0.18 0.17 0.18 0.16
2Y 0.16 0.19 0.19 0.19 0.18
5Y 0.21 0.23 0.23 0.23 0.21

Comparison of Beta
Year Reliance DSP black Edelweiss Mirae Asset Kotak equity
Small cap rock small-cap emerging
blue chip
1Y 1 1 1 1 1
2Y 1.22 1.05 1.16 0.97 1.06
5Y 1.23 0.92 0.91 0.92 1.23

Reliance Small-cap: In 1st and 5th year risk return is lower than 3rd year, it is beneficial to invest
for mid-term in this fund.

DSP black rock: In the 1st and 5th years the risk is changed in comparison to 3rd years and the
return is going to be increased. Investment for mid-term is beneficial in this fund.

Edelweiss Small-cap: In comparison to relation of the risk and return to last one and five year as
compared to last three-year, return is more in comparison to risk. So, investment for mid-term is
beneficial.

Mirae Asset emerging Blue-chip: In last three- and five-years risk is higher than last one year,
so it is beneficial to investment for short term in this fund.

Kotak Equity: Risk is higher in last one and third year in comparison to last five years. So,
investment in long-term is beneficial in this fund.
Conclusion:
We can say that the public sector mutual has better return and less risk in large-cap funds also
large-cap fund is beneficial for shorter period and return reduces as holding period increases.
People can hold this fund for long-term that is minimum three years.
Public and private sectors have comparatively equal return in mid-cap funds, in mid-cap funds
investment for long term is beneficial.
In small-cap fund private sector mutual fund has better return than public sector, small-cap funds
are beneficial for mid-term investment, these are riskier in shorter period and longer period as
compared to mid-term.
At last, it has been found out that the unawareness of the investment factors of the Mutual Fund
in the different time perspective the investor can invest for wrong period and the opportunity to
earn return cannot be achieved.