SUMMER INTERNSHIP PROJECT REPORT

ON

PERFORMANCE EVALUATION OF SELECTED EQUITY

BASED MUTUAL FUNDS IN INDIA

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS OF MBA

PROGRAM OF SCHOOL OF MANAGEMENT, GD GOENKA UNIVERSITY,
GURGAON

ACADEMIC SESSION
2019-2020

UNDER THE GUIDANCE OF:

DR. KISHORE KUMAR MORYA
MBA, ASSOCIATE PROFESSOR

SUBMITTED BY:
VIDUSHI MAHESHWARI
ENROLMENT NO: 1920010201103

GD GOENKA UNIVERSITY
SOHNA ROAD, GURGAON – 122103, HARYANA, INDIA

I
 DECLARATION

I Vidushi Maheshwari student of School of Management, GD Goenka University from MBA

batch 2019-2021 hereby declare that the study entitled “PERFORMANCE EVALYUATION OF

SELECTED EQUITY BASED MUTUAL FUNDS IN INDIA” in the context of ‘VFN GROUP”
being submitted by me in the partial fulfilment of the requirement of MBA programme, is my
actual work and this has not been submitted elsewhere. The study was conducted at Finance
Department, for VFN GROUP PVT LTD.

The work is carried out by me under the guidance of DR. Kishore Kumar Morya, Mr. Ali
Hussain and Mr. Vikas Gupta.

Name: Vidushi Maheshwari

Roll No: 1920010301103

Specialization: Finance
Batch: MBA (2019-2020)

II
 ACKNOWLEDGEMENT

The project work of studying Performance Evaluation of Selected Equity Based Mutual Funds
in India was successfully completed under the esteemed guidance of Mr. Ali Hussain and
Mr. Vikas Gupta.

I want to place my sincere thanks to one and all , which at different occasion have helped me,
without all these well wishers this work of mine could not have been accomplished.

I would like to express my gratitude towards all the employees of VFN GROUP who gave
and guided me in various aspects.

I would also like to thanks Dr. Kishore Kumar Morya for giving me suggestions,
motivation and cooperation throughout the tenure of my Internship Programme.

I am also grateful to my family and my kind friends whose prayers, affection and support are
always a source of encouragement. Their suggestions and supply of information were really
very valuable and helpful to me. Their continuous encouragement and support helped me for
completing this project successfully.

III
 CERTIFICATE FROM GUIDE

This is to certify that Vidushi Maheshwari student of GD Goenka University, Gurugram

Haryana has worked with VFN Group for an Internship project on "Performance evaluation
of selected equity based mutual funds in India "From July 1, 2020 to August 30, 2020

Vidushi Maheshwari has successfully completed her Internship and we wish her all the best
in future endeavour.

IV
 ABSTRACT/EXECUTIVE SUMMARY

In this project, the performance evaluation of Indian Equity Mutual Funds is carried out
through relative performance index, Risk-return analysis, Treynor’s ratio, Sharpe ’s ratio,
Sharp’s measure, Jensen’s measure. The data used is monthly annualised returns. The source
of data is website of Association of Mutual Funds in India (AMFI) and money control. Study
period is August2020. We started with a sample of large cap, mid cap and small cap equity
based mutual funds for computing relative performance index.

This project provides an opportunity to determine and express the application of our
knowledge, skills that are needed in financial session. This project helps in analysing the
problem faced in the selection of mutual fund schemes and method used to evaluate them

V
 TABLE OF CONTENTS
DECLARATION 6
ACKNOWLEDGEMENT 6
CERTIFICATE FROM GUIDE 6
EXECUTIVE SUMMARY 6
CHAPTER PARTICULARS PAGE NO.

1 INTRODUCTION MUTUAL FUND INDUSTRY IN

INDIAN MARKET 9-15
1.1 MUTUAL FUNDS
1.2 WHY MUTUAL FUND
1.3 MUTUAL FUND BENEFITS
1.4 MUTUAL FUND DEMERITS

2 COMPANY PROFILE 16-18

3 INTRODUCTION MUTUAL FUND INDUSTRY IN
INDIAN MARKET 19-27
3.1 GROWTH OF MUTUAL FUND INDUSTRY
3.2 TYPES OF MUTUAL FUND SCHEMES IN INDIA
3.3 SELECTION CRITERIA OF MUTUAL FUND
3.4 TYPES OF RETURNS ON MUTUAL FUND

4 EQUITY FUNDS
28-31
4.1 EQUITY FUND- IDEAL INVESTMENT TOOL
4.2 MARKET CAPITALIZATION- BASED
CATEGORIZATION
4.3 SELECTION OF LUMP SUM VS. SIP INVESTMENT

5 IMPORTANCE/ NEED OF STUDY 32

6 OBJECTIVES OF THE STUDY
33
6.1 OBJECTIVES
6.2 LIMITATIONS

6
 7 DATA AND METHODOLOGY
34-35
7.1 RESEARCH DESIGN
7.2 SOURCE OF DATA
7.3 DATA SELECTION METHOD (SAMPLING)

8 ANALYSIS AND INTERPRETATION

36-50
8.1 ANALYSIS OF MUTUAL FUND PERFORMANCE
8.2 LARGE CAP FUND INTERPRETATION
8.3 MID CAP FUND INTERPRETATION
8.4 SMALL CAP FUND INTERPRETATION
8.5 ANALYSIS

9 CONCLUSION AND SUGGESTIONS

51
9.1 CONCLUSION

52
REFERENCES
APPENDICES

7
 LIST OF TABLES
Table No. Table Page No.
1 List of Selected Schemes 32
2 Risk Ratios of Large cap Funds 36
3 Large cap Funds Annualised Returns 39
4 Mid cap Funds Ratio analysis 41
5 Mid cap Funds Annualised Returns 44
6 Small cap Funds Ratio analysis 45
7 Small cap Funds Annualised Returns 48

………………………………………………………………………………….

LIST OF FIGURES AND CHARTS

Figure No. Figure Page No.
1 Working of Mutual Fund 7
2 Types of Mutual Funds 18
3 Large Cap, Standard Deviation 36
4 Large Cap, Beta 37
5 Large Cap, Sharpe Ratio 38
6 Large Cap, Treynor's Ratio 38
7 Large Cap Jenson's Alpha 39
8 Mid Cap Standard Deviation 41
9 Mid Cap, Beta 42
10 Mid Cap, Sharpe Ratio 43
11 Mid Cap, Jensen's Alpha 43
12 Small Cap, Standard Deviation 45
13 Small Cap, Beta 46
14 Small Cap, Sharpe Ratio 47
15 Small Cap, Treynor's Ratio 47
16 Small Cap Jenson's Alpha 48
………………………………………………………………………………….

8
CHAPTER 1

INTRODUCTION

Future is uncertain no one realizes what will occur in future yet everybody needs to be
protected from future uncertain occasions. Financial security is considered as one of the most
significant factor for each individual’s life. Investment is done to apportion cash in the future
with the desire of getting some advantages at the time of these uncertain events.

It includes the choices like, where to invest, when to invest and how much amount to be
invested. General public is influenced to invest in capital market yet there are number of
issues associated with it. It is hard to comprehend the complexities associated with the
financial exchange activity and it difficult to pass judgment on the fluctuating stock price.

Mutual Fund is a source which assists with assembling cash from speculators to invest in
various Financial instruments with the objective of investment settled upon between the
investors(speculators) and the financial specialists when speculators access to mutual fund
based financial market, they are benefited by the professional and expert fund management
service advice offered by Asset management service provider. They deliver an ideal measure
of an ideal impact.

The essential function of a Mutual Fund is to help the speculators in procuring return on
wealth maximization and low risk. Mutual Fund looks for an opportunity to assemble the
funds from every possible speculator. The funds that are raised from speculators at last
benefits the government organizations and other ventures, legitimately or by implication to
bring funds to put up in different venture or pay different costs.

1.1 MUTUAL FUNDS

Mutual Fund firms gather money from willing speculators and further invest these funds in
the capital market like debentures, shares and other financial securities. In the share market,
mutual funds investment is entitled for different market hazards however with a decent
amount of benefits.

9
The schemes of mutual fund depend on all or a portion of the accompanying condition:

 Long term performance and short term performance

 Stability in returns

 Performance during dynamic and uptight(irascible) stages

 Fund Managers execution with the funds affairs

The above stated points focuses are lucidity, securitization bargains are ideal to the pre tax-
claims period.

The Mutual Fund is enlisted as one of the financial (monetary) instruments in the capital
market; here the project report is based on comparative analysis of Equity based mutual fund
with the help of various ratio0s and annualized returns. The principle motivation behind the
research is to recognize ideal Equity fund (large cap, mid cap and small cap) to invest
speculation funds. Exploration need on account of the capital market because it is highly
volatile.

SEBI (Mutual Funds) Regulations 1993, define Mutual Fund as follows “a fund established
in the form of a trust by a sponsor to raise monies by the trustees through the sale of units to
the public under one or more schemes for investing in securities in accordance with these
regulations”.

Frank Reilly defines, Mutual Funds “as financial intermediaries which bring a wide variety of
securities within the reach of the most modest investors”.

1.2 WHY MUTUAL FUNDS?

Mutual funds permit the speculators to invest their funds fo an diversified determination of
protections, overseen by a professional fund advisor. Regardless of whether the goal is
financial profits or accommodation, mutual funds offer numerous advantages to its
speculator.

10
The risk return trade off demonstrates that speculator is ready to face higher challenge, at that
point correspondingly he can expect better yields(returns) and vice versa on the chance that
he relates to take lower risk, which would yield lower returns. For instance, if a speculator
choose bank FD, which furnish moderate return at lower risk associated with it. However, as
he pushes forward to put resources into capital market which that give out more return, higher
than the bank returns. The risk associated with the capital market is also proportionally higher
than the bank.

Accordingly speculators pick mutual fund as their essential methods for investing, it give
proficient management, diversification and liquidity. That doesn't mean mutual funds are risk
free investments as the mutual fund market is highly volatile.

Accordingly a Mutual Fund is the most appropriate venture for the average person as it offers
a chance to invest funds in the diversified and professionally managed securities at a
moderately low cost. The flow chart below shows that working of mutual funds:

Speculators
Pays back to Pool their money with

Returns Fund Advisor

Creates Invest in
Capital Market
(securities)

Figure 1 Working of Mutual Funds

1.3 MUTUAL FUND BENEFITS

11
The major benefits offered by mutual funds to all speculators are as follows:

1. Portfolio Diversification:

Every speculator in the mutual fund is a partial owner of all the assets associated with that
fund, subsequently it empowers the speculator to hold diversified portfolio investment
despite with a modest(small) amount of investment, where as another types of investment
require enormous capital.

2. Professional Management:

Regardless of whether a speculator has a large amount of capital accessible to him, he gets
benefits by the expert administration skills acquired by the fund in the administration of
the speculator's portfolio. These skills alongside the required investigation into accessible
investment alternatives, guarantee an improved return than what a speculator can oversee
all alone. Few speculators have the skills as well as the funds of their own to prevail in the
present dynamic and sophisticated market.

3. Reduction/Diversification Of Risk:

At the point when a speculator contributes legitimately, all the potential misfortune risk is
his own, regardless of whether he invest in an organization or a bank, or he purchases an
share or debenture all alone or in some other from. While putting resources into the pool of
funds with financial specialists, the potential misfortunes are additionally imparted
(diversified) to different speculators. The diversification of risk is one of the most
significant advantages of investing in these funds.

4. Reduction of Transaction Costs:

The speculator bears all the expenses of investing, for example, financier or authority of
protections. While experiencing the fund, he has the advantage of economies of scale; the
funds with larger volumes pay the less expenses, an advantage gave to its speculators.

5. Choice of Schemes:

12
 Mutual Funds offer a group of plans and schemes with a diversified portfolio to suit your
changing needs over a lifetime.

6. Tax Benefits:

Any salary appropriated after March 31, 2002 will be liable to burden in the evaluation of
all Unit holders. Notwithstanding, as a proportion of concession to Unit holders of equity
based funds, pay dissemination for the closing year March 31, 2003, will be charged at a
concessional pace of 10.5%.

In the situation of Individuals and Hindu Undivided Families, in section 80L, the deducion
upto Rs. 9,000 is allowed from the Total Income in regards to the investment income.
including the income from the Mutual Fund units. Units of the plans are not dependent
upon Wealth-Tax and Gift-Tax.

7. Transparency:

You get customary data on the estimation of your interest notwithstanding divulgence on
the particular schemes of investments made by your plan, the extent put resources into
each class of advantages and the reserve supervisor's speculation procedure and
standpoint.

8. Well Regulated:

All the Mutual Funds are enlisted with SEBI and they work inside the arrangements of
strict guidelines intended to ensure the premiums of speculators. The tasks of Mutual
Funds are normally observed by SEBI.

9. Convenience And Flexibility:

The Mutual Fund organizations offer numerous speculator benefits that an immediate
market financial specialist can't get. Financial specialists can undoubtedly move their
holding from one plan to the next; get refreshed market data, etc.

10. Liquidity:

One of the biggest advantage is liquidity of investment. Frequently, financial specialists

hold offers or bonds they can't legitimately, effectively and rapidly sell. At the point when

13
 they put resources into the units of a reserve, they can easily en-cash the money by
offering their units to the funds market.

1.4 MUTUAL FUNDS DEMERITS

1. No Control over Costs:

The overall cost of investing is beyond the control of the mutual fund speculator. The
speculator bears administration charges as long as he remains with the fund. Expenses are
paid indeed in the event when the investments value declines. A speculator also bears the
expense of distribution that is not incurred in direct investing. However, this inadequacy
implies that some expenses have to be done to get mutual fund services.

2. No Tailor-Made Portfolio:
Investors who invest on their own can build their own portfolios of shares and bonds and
other securities. Investing through fund means he delegates this decision to the fund
managers. The very-high-net-worth individuals or large corporate investors may find this to
be a constraint in achieving their objectives. However, most mutual fund managers help
investors overcome this constraint by offering families of funds- a large number of different
schemes- within their own management company. An investor can choose from different
investment plans and constructs a portfolio to his choice.

3. Managing A Portfolio Of Funds:

Availability of a large number of funds can actually mean too much choice for the investor.
He may again need advice on how to select a fund to achieve his objectives, quite similar to
the situation when he has individual shares or bonds to select.

4. The Wisdom Of Professional Management:

That's right, this is not an advantage. The average mutual fund manager is no better at picking
stocks than the average nonprofessional, but charges fees.

5. Dilution:

14
Mutual funds generally have such small holdings of so many different stocks that insanely
great performance by a fund's top holdings still doesn't make much of a difference in a
Mutual Funds total performance.

15
CHAPTER 2

COMPANY PROFILE

VFN is one of the oldest and a renowned Financial Advisory Firm in Delhi. VFN Group
offers all types of Financial Products under one roof. The Management team has more than
20 years of experience in financial sector. The Firm is well equipped to provide scientific
updated technology based portfolio advice to all its clients

MISSION:
To create long term value by empowering individual investors through superior financial
services supported by culture based on highest level of teamwork, efficiency and integrity.

VISION:
 To provide best value for money to investors through innovative products.
 Trading/Investments Strategies
 State of the art technology and personalized service.

CUSTOMER PROMISE:
They are passionate about their customers success and promise to deliver exceptional service
with every meeting, interaction and dealing. They strive to offer simple, straightforward,
friendly and trustworthy service.

16
CULTURE:
VFN has created a client centric culture, our culture is expressed in the Values & vision that
exemplify our core ideology and guide us the path to win the confidence of our clients. It
believes that the way to serve the client in most appropriate manner comes only through
teamwork, and continuous process improvement. Its Values act as a compass to guide our
thoughts and actions while our vision serve as the mainstay that uphold us as an organization.

VFN believe that honest and periodic client feedback enriches our relationships. Our
feedback sessions are one-on-one basis. Our weekly Executive Roundtable is a client forum
that stimulates new thinking and thought leadership. It also enables us to share best practices
and connect with industry experts. This exercise helps us to address common client problems,
share insights, shape new focus areas and strategies, and strengthen our client relationships.

VFN offers the right skills and services for such an approach. Our expanding list of service
offerings allows us to assist our clients with a broad range of solutions. We often start work
with a client in one domain and end up developing the relationship to cover others. This
proven customer engagement model, where we start small, deliver value, enlarge business
scope, and gradually break through other areas, provides us with growth and long-term
revenue visibility.

VFN GROUP OFFERS:

1. FINANCIAL PLANNING:
Financial engagements are typically multifaceted, solving for specific digital marketing
challenges while building ongoing client capabilities. In addition to defining new roles and
responsibilities and helping develop employees’ skills, we address technology infrastructure
issues and identify its potential partners.

VFN works with clients to integrate the flow of the customer experience across channels
(e.g., face-to-face, telephone), opening up new lead sources, supporting sales for smaller-
value transactions, and creating new models for service. It continuously provides new and
practical perspectives on the evolving.

17
2. TAX PLANNING:
Tax planning is the analysis of a financial situation or plan from a tax perspective. The
purpose of tax planning is to ensure tax efficiency. Through tax planning, all elements of the
financial plan work together in the most tax-efficient manner possible.

3. MUTUAL FUND:
A mutual fund is a company that pools money from many investors and invests the money in
securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual
fund are known as its portfolio. Investors buy shares in mutual funds.

18
CHAPTER 3
INTRODUCTION TO MUTUAL FUND INDUSTRY IN INDIAN MARKET

3.1 INTRODUCTION

The Indian mutual funds industry is witnessing a rapid growth as a result of infrastructural
development, increase in personal financial assets, and rise in foreign participation. With the
growing risk appetite, rising income, and increasing awareness, mutual funds in India are
becoming a preferred investment option compared to other investment vehicles like Fixed
Deposits (FDs) and postal savings that are considered safe but give comparatively low
returns, according to “Indian Mutual Fund Industry”.

3.2 GROWTH OF MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at
the initiative of the Government of India and Reserve Bank. The history of mutual funds in
India can be broadly divided into four distinct phases

FIRST PHASE – 1964-87: Unit Trust of India (UTI) was established on 1963 by an Act of
Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory
and administrative control of the Reserve Bank of India. 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. The first scheme launched by UTI was Unit Scheme
1964. At the end of 1988 UTI hadRs.6,700 crores of assets under management.

SECOND PHASE – 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS): 1987 marked the
entry of non- UTI, public sector mutual funds set up by public sector banks and Life
Insurance Corporation of India (LIC) and General Insurance Corporation of India(GIC). SBI
Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can
bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank

19
Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). It
disestablished its mutual fund in June 1989 while GIC had set up its mutual fund in
December1990. At the end of 1993, the mutual fund industry had assets under management
of Rs.47, 004 crores.

THIRD PHASE – 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS): With the entry of
private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the
Indian investors a wider choice of fund families. Also, 1993 was the year in which the first
Mutual Fund Regulations came into being, under which all mutual funds, excepted were to be
registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin
Templeton) was the first private sector mutual fund registered in July 1993.

FOURTH PHASE – 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS): The number of

mutual fund houses went on increasing, with many foreign mutual funds setting up funds in
India and also the industry has witnessed several mergers and acquisitions. As at the end of
January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit
Trust of India with Rs. 44, 541 crores of assets under management was way ahead of other
mutual funds.

FIFTH PHASE – 2004 onwards (GROWTH AND CONSOLIDATION): The industry has
also witnessed several mergers and acquisitions recently, examples of which are acquisition
of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB
Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund
players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were
29 funds as at the end of March 2006. This is a continuing phase of growth of the industry
through consolidation and entry of new international and private sector players.

3.3 TYPES OF MUTUAL FUND SCHEMES IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,
risk tolerance and return expectations etc. thus mutual funds has Variety of flavors, Being a
collection of many stocks, an investors can go for picking a mutual fund might be easy. There

20
 are over hundreds of mutual funds scheme to choose from. It is easier to think of mutual
funds in categories, mentioned below:

Types Of Mutual Funds

On the Basis of On the Basis of

On the Basis of Nature Other Schemes
Structure Investment Objective

Open - Ended Tax Saving

Equity Fund Growth Schemes
Schemes Schemes

Close - Ended
Debt Funds Income Schemes Index Schemes
Schemes

Sector Specific
Interval Schemes Balanced Funds Balanced Schemes
Schemes

Money Market
Schemes

Figure 2: Types of Mutual Fund

1. ON THE BASIS OF STRUCTURE:

 Open - Ended Schemes:

An open-end fund is one that is available for subscription all through the year. These do not
have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value
("NAV") related prices. The key feature of open-end schemes is liquidity.

 Close - Ended Schemes:

21
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can invest
in the scheme at the time of the initial public issue and thereafter they can buy or sell the
units of the scheme on the stock exchanges where they are listed. In order to provide an exit
route to the investors, some close-ended funds give an option of selling back the units to the
Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate
that at least one of the two exit routes is provided to the investor.

 Interval Schemes:

Interval Schemes are that scheme, which combines the features of open-ended and close-
ended schemes. The units may be traded on the stock exchange or may be open for sale or
redemption during pre-determined intervals at NAV related prices.

2. ON THE BASIS OF NATURE:

 Equity Fund:

These funds invest a maximum part of their corpus into equities holdings. The structure of the
fund may vary different for different schemes and the fund manager’s outlook on different
stocks. The Equity Funds are sub-classified depending upon their investment objective, as
follows:

Diversified Equity Funds

Mid-Cap Funds

Sector Specific Funds

Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high on the
risk-return matrix.

22
 Debt Funds:

The objective of these Funds is to invest in debt papers. Government authorities, private
companies, banks and financial institutions are some of the major issuers of debt papers. By
investing in debt instruments, these funds ensure low risk and provide stable income to the
investors. Debt funds are further classified as Income fund, gift fund, Maximum Investment
Plans, short Term Plans and liquid Funds.

 Balanced Funds:

As the name suggest they, are a mix of both equity and debt funds. They invest in both
equities and fixed income securities, which are in line with pre-defined investment objective
of the scheme. These schemes aim to provide investors with the best of both the worlds.
Equity part provides growth and the debt part provides stability in returns.

3. ON THE BASIS OF INVESTMENT OBJECTIVE:

 Growth Schemes:

Growth Schemes are also known as equity schemes. The aim of these schemes is to provide
capital appreciation over medium to long term. These schemes normally invest a major part
of their fund in equities and are willing to bear short-term decline in value for possible future
appreciation.

 Income Schemes:

Income Schemes are also known as debt schemes. The aim of these schemes is to provide
regular and steady income to investors. These schemes generally invest in fixed income
securities such as bonds and corporate debentures. Capital appreciation in such schemes may
be limited.

23
 Balanced Schemes:

Balanced Schemes aim to provide both growth and income by periodically distributing a part
of the income and capital gains they earn. These schemes invest in both shares and fixed
income securities, in the proportion indicated in their offer documents (normally 50:50).

 Money Market Schemes:

Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate
income. These schemes generally invest in safer, short-term instruments, such as treasury
bills, certificates of deposit, commercial paper and inter-bank call money.

4. OTHER SCHEMES

 Tax Saving Schemes:

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to
time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings
Scheme (ELSS) are eligible for rebate.

 Index Schemes:

Index schemes attempt to replicate the performance of a particular index such as the BSE
Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that
constitute the index. The percentage of each stock to the total holding will be identical to the
stocks index weightage. And hence, the returns from such schemes would be more or less
equivalent to those of the Index.

 Sector Specific Schemes:

24
These are the funds/schemes which invest in the securities of only those sectors or industries
as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer
Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the
performance of the respective sectors/industries. While these funds may give higher returns,
they are more risky compared to diversified funds. Investors need to keep a watch on the
performance of those sectors/industries and must exit at an appropriate time.

3.4 SELECTION CRITERIA OF MUTUAL FUND

 Your Goal:

The principal highlight note before investing in any scheme of mutual fund is to check if
your goal of investing the resource matches with the selected schemes. It is essential, as
any contention would straightforwardly influence your desired returns. Thus, you should
choose the schemes wisely that meet your particular needs. The needs can be child
education planning, retirement planning, sector specific schemes and so on.

 Your Willingness to Take Risk:

This directs the selection of schemes. If an speculator is not willing to take the risk ought
to go for debt plans, as they are moderately more secured plans but it gives less returns as
compared to equity plans. Aggressive speculators can choose equity plan. if an speculator
is willing to take more risk they can select the schemes related to specific industry or
sector for investment.

 Fund Manager's and Track Record of the Schemes:

Since you are investing your money and giving it to somebody to oversee it, it is basic
that he oversees and manages it well. It is important check the past track record of the
selected fund house has incredible history. It additionally ought to be professional and
keep up high transparency in the activities. Compare the performance associated with the

25
 schemes with its competitor and relevant market benchmarks. Also take a look at its long
term performance in the dynamic market condition.

 Expenditure Determination:

In spite of the fact that the AMC charge is regulated, before investing in the scheme,
review the expense ratio of the fund. This is on the grounds that the cash is deducted from
speculator's investment. The burden of higher entry or exit load additionally will also
minimise the value of expected returns. High expense ratio can be supported distinctly by
standout returns.

Additionally, Morningstar rates shared assets. At the ending of every year, numerous
financial publications generate the list of the best performing Mutual funds of the year.
Normally, excited speculators will surge out to buy schemes of top performers. That
might end up as a severe mistake. Keep in mind; dynamic economic factors make it
uncommon that top performing schemes of the last year rehashes that positioning for the
current year. Mutual fund speculators would be encouraged to think about the fund
outline and relate it with the current economic situations in the market.

3.5 TYPES OF RETURNS ON MUTUAL FUND

There are three ways, where the total returns provided by mutual funds can be enjoyed by
investors:

 Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly
all income it receives over the year to fund owners in the form of a distribution.

 If the fund sells securities that have increased in price, the fund has a capital gain. Most
funds also pass on these gains to investors in a distribution.

 If fund holdings increase in price but are not sold by the fund manager, the fund's shares
increase in price. You can then sell your mutual fund shares for a profit. Funds will also

26
usually give you a choice either to receive a check for distributions or to reinvest the
earnings and get more shares.

27
CHAPTER 4

EQUITY FUNDS

4.1 EQUITY FUNDS- IDEAL INVESTMENT TOOL

An equity fund is one of the types of mutual fund plan that invests transcendentally in equity
stocks.

In the context of Indian system, as per current SEBI Mutual Fund Regulations, an equity
mutual fund scheme must contribute at least 65% of the plan advantage in equities and its
related instruments.

According to the Indian Tax regime system, these equity funds have certain tax benefits
associated, for instance, there is no frequency of long term capital gains charge (tax) on
equity funds which are adhered for held for one year atleast from the date of possession.
According to current rules of Income Tax, an Equity Oriented Fund simply means the mutual
funds plans where the speculator invests the funds in Equity shares schemes in the domestic
organizations to the degree of over 65% of the total proceeds or the absolute continues of
such funds.

An Equity Fund can be effectively overseen or latently managed. These funds are mainly
arranged by organization in accordance with capacity, the investment trend of the equity
holding in the portfolio.

The capacity of these equity funds subsidize is controlled by a market capitalization, while
the investment pattern, imitated in the equity holdings of the funds, is likewise used to
arrange equity based mutual funds. Equity based mutual funds are further classified by
whether they are investing in domestic companies or worldwide. These can be wide market,
local or single-nation funds.

Some forte equity funds target business segments, for example, medical services, real estates
and goods and are known as Sectoral Funds.

28
IDEAL INVESTMENT TOOL

From multiple points of view, equity fund plans are considered as an ideal investment for
speculators that are not too experienced in investing in financial market or don't have a
enormous capital amount to invest. Equity funds are considered as rational investment for
these people.

The traits that make Equity funds the most valuable and appropriate for low investment
speculators as it reduces the risk associated with the investment schemes of portfolio
diversification and the moderately limited quantity of capital needed to obtain the equity
funds shares. A huge capital would be required by a speculator to accomplish a comparative
level of reduction in risk e through enhancement and diversification of direct stock holding
portfolios. Pooling little speculators' capital permits an equity fund to expand and diversify
adequately without troubling every speculator with enormous capital prerequisites.

The cost of these equity fund plans depends upon the Net Asset Value (NAV) after
subtracting its liabilities. A greater diversification of funds implies that there is more positive
impact of an individual investment unfavourable movement in price in the portfolio and
equity fund's share price.

4.2 MARKET CAPITALIZATION-BASED CATEGORIZATION

The equity funds are overseen by qualified and skilful professional portfolio advisors, and
their previous track record of advising is concerned with PUBLIC record. Federal
government has regulated the rule of Transparency and reporting obligations on equity funds.

Some equity funds plans choose to put resources into organizations with explicit market
capitalizations only. Some of the categories are listed below:

 Large Cap Equity Funds

29
Large cap funds ordinarily contribute at least 80% of their portion of total assets in equity
shares of top hundred companies (large cap). These plans are viewed as more steady and
stable than the mid-cap funds or small cap funds plans and dominate their industry. Large cap
companies usually provide sustainable returns in its time span. These companies are less
volatile and hold up better in recession. Therefore investing in large cap involves low risk.

 Mid-Cap Equity Funds

Mid cap equity funds normally contribute around 65% of their portion of total assets in equity
shares on the organization ranked between 101-250 as per market capitalization (mid size
companies). These plans generally offer preferable returns over the enormous top plans of
large cap companies but on the other hand these plans are more volatile as compared to large
cap plans. Mid cap plans are less riskier as compared to small cap plans.

 Small Cap Equity Funds

Small cap equity funds usually contribute around 65% of their portion of total assets in equity
shares on the organization ranked at 251 and below placed organizations as per market
capitalization (small cap companies). Small cap companies have relatively small market
capitalization, generally less than Rs.100 crores. This is a tremendous rundown and over 95%
of all organizations in India come under this category. These plans generally offer
extraordinary returns than the large cap plans and mid-cap plans but on the other hand these
plans are highly volatile in nature and therefore more riskier as compared to large cap and
mid cap

 Diversified funds

Diversified funds are also known as multi cap equity funds. These funds normally contribute
around 65% of their portion of total assets in equity shares on the organization of falls under
large cap, mid-cap and small cap in different ratios without focusing on the size and sector.
In these plans, the portfolio manager keeps a track on rebalancing the portfolio to coordinate
the volatile market conditions and focuses on the objective of investment in the schemes.

30
Diversified plans are for the speculators needs exposure and do not want to restrict them to
specific sector and schemes. It helps in preventing them from uncertain events that arises due
to economic conditions that can a affect some sectors and therefore it reduces the risk.

4.3 SELECTION OF LUMP SUM VS. SIP INVESTMENT

At the point when you take decision to invest, aside from different decisions, a central issue
looked by you is selecting an option between a lump sum investment plan and SIP investment
plan.

Lump sum investment plans implies that speculator is willing to invest the complete amount
of in the beginning. For instance, if a speculator is willing to purchase units worth Rs. 1
Lakh, at that point speculator can debit his/her bank account with the transaction of Rs 1
Lakh to purchase the units. Whereas under a Systematic Investment Plan commonly known
as SIP, the speculator has to invest fixed amount of cash at fixed interval of period.

Both the lump sum and SIP investing plans has some advantages and disadvantages. A lump
sum speculator is obliged to invest at the ideal time to acquire positive and valuable returns.
The risk associated with lump sum investment is that if the speculator does not invest at the
right time, the profits or the returns associated with the schemes can be unsatisfactory or he
may even book misfortunes. SIP investing can reduce the level of risk by permitting you to
invest a fixed sum spread over a fixed interval of time span.

This shows that SIP investing plans are less risky and adaptable. SIP investing plan
additionally give the advantage of Rupee Cost Averaging (RCA) where the normal expense
of buying a unit decreases with time and the speculator is defended from the volatile market
conditions.

31
CHAPTER 5
IMPORTANCE/ NEED OF THE STUDY

There are so many investment avenues. So that investors does not know which avenues
provides best return. The performance of these funds can be judged with respects to
investors’ expectation. Investors have to define his expectations in relation to certain
indicators on what is possible to achieve or moderate this with comparable investment
alternatives available in the market. These indicators of performance can acts against
investors fund performance. It is very important to select the right benchmark to evaluate a
fund’s performance.

So the problem arises that in which scheme they should invest according to their preferences

As per the financial rule of “Do not put all the eggs in one basket” speculator’s portfolio are
most diversified. So that risk should be minimized. If an individual do not have knowledge of
how to get maximum return with minimum risk or vice-versa then they should be invest in
mutual fund. There are so many funds and schemes are available in mutual fund market.
Speculator must know that how much risk they can take. Speculator can analyse the risk
associated with the schemes by comparing the risk ratio (i.e. standard deviation and beta).
Based on their research and analysis, they can choose schemes. Problem is that whether the
chosen scheme provides the best return as compare to the market and other schemes. For that
certain models are available like Sharpe’s model, Treynor’s model and Jenson’s model.
These models are suggested to analyse which schemes provide best return.

32
CHAPTER 6

OBJECTIVES OF THE STUDY

6.1 OBJECTIVES

 To give a brief idea about the benefits available from Mutual fund investment

 To give an idea about all types of schemes available

 To understand the selection parameters of mutual fund

 To understand how the mutual fund industry and its functioning

 To study and analyse popular mutual fund schemes available in Large cap, mid cap and
small cap equity funds.

6.2 LIMITATIONS

 The study is based on the selected prominent equity based mutual fund that are
categorised under large cap, mid cap and small cap.

 The study has been conducted for limited time period.

33
CHAPTER 7

DATA AND METHODOLOGY

The design of this study is purely quantitative i.e. the data is taken from the web source. To
obtain the defined objective of the study, various ratios like Sharpe ratio, Treynor’s ratio,
Jenson alpha and beta are compared. Firstly, 5 prominent mutual funds from Indian market
for large cap, midcap and small cap each .are selected. Then the required data is collected
from the web source. And lastly then data is compared on the basis of risk and return
associated with the selected schemes and the best scheme out of selected scheme is identified.

7.1 SOURCE OF DATA

While conducting a research data collection is considered as an important. The type of data,
quantity of data or quality of data that is collected always varies in different researches with
respect to the objectives of the project or a research.

The research is done on the secondary data of two months. Here the ratios are collected on
ending month of August, 2020 and ratios are collected on the date, August7, 2020. The data
is collected from money control website.

7.2 DATA SELECTION

In the research, the data published in the money control website is used. Out of four
categories of mutual fund, the equity based mutual fund direct growth plans are selected as
they are considered as a ideal investment tool. Then out of all the schemes present in equity
based mutual fund five prominent schemes from large cap, mid cap and small cap. Here we
used the method of convenient sampling.

Convenient sampling is one of the main types to non probability sampling method. In this
method convenience sample is make up of samples that are easy to reach.

34
List of schemes are given below:

Schemes Name
Large Cap

Canara Robeco Blue-chip Equity Fund

Axis Blue-chip Fund

Edelweiss Large Cap Fund

ICICI Prudential Blue-chip Equity Fund

SBI Blue- chip Fund

Mid Cap

DSP Midcap Fund

INVESCO India Midcap Fund

Axis Midcap Fund

Edelweiss Midcap Fund

Kotak Emerging Equity Fund

Small Cap

SBI Small Cap Fund

Nippon India Small Cap Fund

Axis Small Cap Fund

Kotak Small Cap Fund

HDFC Small Cap Fund

35
CHAPTER 9

ANALYSIS AND INTERPRETATION

8.1 ANALYSIS OF MUTUAL FUND PERFORMANCE

Mutual fund performance can be analyzed through performance measurement ratios which
are use in portfolio analysis. We here are using Treynor, Sharpe, and Jensen ratio to evaluate
mutual funds and rank accordingly. Composite portfolio performance measures have the
flexibility of combining risk and return performance into a single value. The most commonly
used composite measures are: Treynor, Sharpe and Jensen measures. While Treynor
measures only the systematic risk summarized by beta, Sharpe concentrates on total risk of
the mutual fund.

8.2 LARGE CAP FUND

36
 Table 1: Risk Ratios of Large Cap

Schemes Standard Beta (β) Sharpe Ratio Treynor’s Jensen’s Alpha

Name Deviation (σ) Ratio

Lowe the σ, Lowe the β, Higher the Higher the Positive shows
lower the lower the Sharpe better the Treynor’s better outerperformed
volatility volatility performance in the performance Negative shows
terms of total risk in terms of Underperformed
systematic risk
Canara Robeco 18.28 0.89 0.31 0.06 4.04
Blue-chip Equity
Fund
Axis Blue-chip 17.07 0.8 0.37 0.08 3.89
Fund

Edelweiss Large 18.71 0.89 0.17 0.04 0.6

Cap Fund
ICICI 19.43 0.92 0.08 0.02 -1.17
Prudential Blue-
chip Equity
Fund
SBI Blue- chip 19.73 0.95 0.02 -1.42 -1.51
Fund

Interpretation

Standard Deviation (σ)

20
19.5
19
18.5
18
17.5
17
16.5
16
15.5
Canara Axis Blue-chip Edelweiss ICICI SBI Blue- chip
Robeco Blue- Fund Large Cap Prudential Fund
chip Equity Fund Blue-chip
Fund Equity Fund

37
 Figure 3: Large Cap Standard Deviation

Higher standard Deviation means a greater fluctuation in expected return. The most volatile
fund is SBI Blue-chip Fund as it is having the standard deviation of 19.73, which is followed
by ICICI Prudential Blue-chip Fund Inst19. 43. It indicates that out of the selected schemes
the most risky fund is SBI Blue-chip Fund top100. As the standard deviation is considered
as an unsystematic risk, it cannot be minimized through diversification. It is beyond the
control of speculators.

Axis mid cap fund has a standard deviation of 17.07 which falls below the average. It is less
volatile fund among the selected fund hence it is least risky large cap fund.

Beta (β)
1

0.95

0.9

0.85

0.8

0.75

0.7
Canara Robeco Axis Blue-chip Edelweiss ICICI Prudential SBI Blue- chip
Blue-chip Fund Large Cap Fund Blue-chip Fund
Equity Fund Equity Fund

Figure 4: Large Cap Beta

Beta of the Index is always being 1 (with itself). Beta of a risk free investment is zero. Higher
the Beta value, the higher the degree of correlation with the market index. The statement
regarding risk is supported by the calculation of beta. Again SBI Blue-chip Fund and ICICI
Prudential Blue-chip Fund proved the most risky schemes as they are having maximum of
beta (0.95 and 0.92 respectively). Least risky scheme is Axis Midcap Fund in terms of Beta
as it has ratio of 0.8. Beta is a systematic risk that can be minimized through diversification.

38
 Sharpe Ratio
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Canara Robeco Axis Blue-chip Edelweiss ICICI Prudential SBI Blue- chip
Blue-chip Fund Large Cap Fund Blue-chip Fund
Equity Fund Equity Fund

Figure 5: Large Cap, Sharpe Ratio

Sharpe ratio reflects the additional return over the Risk-Free return per unit of its variability.
In terms of returns, the scheme i.e. Axis Midcap Fund Inst I is having maximum returns per
unit of risk (0.37) followed by Canara Robeco Blue-chip equity Fund Direct Growth (0.18).
Least return provider is the fund which is having the maximum risk in terms of standard.
deviation and beta, i.e. SBI Blue-chip Fund and ICICI Prudential Blue-chip Fund Fund with
the ratio of 0.02 and 0.08 respectively.

Treynor’s Ratio
0.2
0
Canara Robeco Axis Blue-chip Edelweiss ICICI Prudential SBI Blue- chip
-0.2
Blue-chip Fund Large Cap Fund Blue-chip Fund
-0.4 Equity Fund Equity Fund
-0.6
-0.8
-1
-1.2
-1.4
-1.6

Figure 6: Large Cap, Treynor's Ratio

39
 As per Treynor ratio Axis Small Large Fund Schemes is a highest ratio with 0.08 as compare
to other selected schemes. It shows the grater skills in managing the investment. SBI Large
Cap Fund is showing negative ratio (-1.42) which shows poor skills in managing the
investment.

Jensen’s Alpha
5

0
Canara Robeco Axis Blue-chip Edelweiss Large ICICI Prudential SBI Blue- chip
-1 Blue-chip Fund Cap Fund Blue-chip Fund
Equity Fund Equity Fund
-2

Figure 7: Large Cap, Jensen's Alpha

We have analyzed that alpha of Canara Robeco Blue-chip equity Fund is very high i.e. 4.04 as
compared to other selected funds and it stands on first rank. It is followed by Axis Blue-chip
fund with the ratio of 3.89. Edelweiss Large cap Fund also carries positive values of alpha
which indicates that fund manager is able to select a good fund.
We have also analyzed that alpha of ICICI Prudential Blue-chip funds and SBI Blue-chip fund
has negative ratios. This may be due to its lower return.

Finally we want to conclude that according to Jensens’s alpha, the value of alpha not only
depends on the return of the fund but also on the risk associated with that fund. Value of
alpha should be always positive.

Table 2: Annualized Return as on 7th September 2020

Schemes Name 1 Years 3 Years 5 Years

40
Canara Robeco Blue-chip 15.44% 9.11% 2.42%
Equity Fund

Axis Blue-chip Fund 8.59% 10.08% 8.93%

Edelweiss Large Cap Fund 5.51% 6.02% 9.11%

ICICI Prudential Blue-chip 2.60% 3.27% 9.45%

Equity Fund

SBI Blue chip fund 3.51% 2.70% 8.93%

Table no.2 explores the returns of selected funds over a period of time for different periods.
In terms of one year returns, Canara Robeco Blue chip Equity Fund stood at number one with
the maximum returns of 15.44%. It is followed by Axis Blue chip Fund with the returns of
8.59%. SBI Blue chip Fund has given the least returns 3.51% among the selected schemes.
In long run i.e. for the period of five years ICICI Prudential Blue chip Fund has performed
well among the selected scheme

8.3 MID CAP

41
 Table 3: Risk Ratios of Mid Cap

Schemes Name Standard Beta (β) Sharpe Ratio Jensen’s Alpha

Deviation
(σ)
Lowe the σ, Lowe the β, lower Higher the Sharpe Positive shows
lower the the volatility better the outerperformed
volatility performance in Negative shows
terms of total risk Underperformed

DSP Midcap Fund 17.43 0.78 0.14 5.97

Invesco India Midcap 18.34 0.82 0.18 6.18

Fund

Axis Midcap Fund 15.78 0.68 0.45 10.22

Edelweiss Midcap Fund 18.99 0.86 0.02 4.18

Kotak Emerging 17.44 0.79 0.02 3.39

Equity Fund

Interpretation

Standard Deviation (σ)

20
18
16
14
12
10
8
6
4
2
0
DSP Midcap Invesco India Axis Midcap Edelweiss Kotak Emerging
Fund Midcap Fund Fund Midcap Fund Equity Fund
Direct Growth

Figure 8: Mid Cap Standard Deviation

42
The most volatile fund is Edelweiss Midcap Fund as it is having the standard deviation of
18.99, which is followed by INVESCO India Midcap Fund Inst18.34. It indicates that out of
the selected schemes the most risky fund is Edelweiss Midcap Fund top 200. As the standard
deviation is an unsystematic risk, it cannot be minimized through diversification. It is beyond
the control of speculators.
Axis mid cap fund has a standard deviation of 15.78 which falls below the average. It is less
volatile fund among the selected fund hence t is least risky small cap fund.

Beta (β)
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
DSP Midcap Invesco India Axis Midcap Edelweiss Kotak Emerging
Fund Midcap Fund Fund Midcap Fund Equity Fund
Direct Growth

Figure 9: Mid Cap, Beta

Again Edelweiss Midcap Fund and INVESCO Midcap Fund proved the most risky schemes
as they are having maximum of beta (0.86 and 0.82 respectively). Least risky scheme is Axis
Midcap Fund in terms of Standard Deviation. Beta is a systematic risk that can be minimized
through diversification.

43
 Sharpe Ratio
0.5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
DSP Midcap Invesco India Axis Midcap Edelweiss Kotak
Fund Midcap Fund Fund Midcap Fund Emerging
Direct Growth Equity Fund

Figure 10: Mid Cap, Sharpe Ratio

Axis Midcap Fund Inst I is having maximum returns per unit of risk (0.45). Followed by
INVESCO India Midcap Fund Direct Growth (0.18) and DSP Midcap Fund (0.14). Least
return provider is the fund which is having the maximum risk in terms of std. deviation and
beta, i.e. Kotak Emerging Equity Fund and Edelweiss Midcap Fund with the ratio of .02.

Jensen’s Alpha
12

10

0
DSP Midcap Invesco India Axis Midcap Edelweiss Kotak Emerging
Fund Midcap Fund Fund Midcap Fund Equity Fund
Direct Growth

Figure 11: Mid Cap, Jensen's Alpha

We have analyzed that alpha of Axis Midcap Fund is very high i.e. 10.22% as compared to
other selected funds and it stands on first rank. The other schemes also carry positive values of
alpha which indicates that fund manager is able to select a good fund.
We have also analyzed that alpha Kotak Emerging Fund is lower as compared to other

44
schemes. This may be due to its lower return.

Table 4: Annualized Return as on 7th September 2020

Schemes Name 1 Year 3 Years 5 Years

DSP Midcap Fund 19.15% 5.34% 12.6%

Invesco India Midcap Fund Direct 16.79% 6.62% 11.72%

Growth

Axis Midcap Fund 18.71% 11.01% 12.14%

Edelweiss Midcap Fund 15.58% 3.58% 9.61%

Kotak Emerging Equity Fund 13.24% 3.41% 11.45%

Table no. 4 explores the returns of selected funds over a period of time for different periods.
In terms of one year returns, DSP Midcap Fund stood at number one with the maximum
returns of 19.15%. It is followed by Axis Midcap Fund with the returns of 18.71%. Kotak
Emerging Equity Fund has given the least returns 13.24% among the selected schemes. In
long run i.e. for the period of five years DSP Midcap Fund has performed well among the
selected scheme Small Cap.

8.4 SMALL CAP

45
 Table 5: Risk Ratios

Schemes Names Standard Beta (β) Sharpe Treynor’s Jensen’s

Deviation Ratio Ratio Alpha
(σ)
Lowe the σ, Lowe the β, Higher the Higher the Positive shows
lower the lower the Sharpe better Treynor’s better outerperformed
volatility volatility the the performance Negative shows
performance in in terms of Underperformed
terms of total systematic risk
risk

SBI Small Cap Fund 16.92 0.77 0.26 0.06 7.81

Nippon India Small Cap 19.48 0.8 -0.02 -0.01 9.17

Fund

Axis Small Cap Fund 15.96 0.6 0.32 0.08 12.21

Kotak Small Cap Fund 17.13 0.69 -0.05 -0.01 7.33

HDFC Small Cap Fund 17.6 0.71 -0.13 -0.03 6.28

INTERPRETATION

Standard Deviation (σ)

25

20

15

10

0
SBI Small Cap Nippon India Axis Small Cap Kotak Small HDFC Small Cap
Fund Small Cap Fund Fund Cap Fund Fund

Figure 12: Small Cap, Standard Deviation

46
The most volatile fund is Nippon India Small cap Fund as it is having the standard deviation
of 19.48, which is followed by Kotak Small cap Fund, and SBI Small cap Fund with 0.77. It
indicates that out of the selected schemes the most risky fund is Nippon India Small cap
Fund. It is beyond the control of Speculators and it cannot be minimised through
diversification.

Axis small cap fund has a standard deviation of 0.6 which falls below the average. It is less
volatile fund among the selected fund hence t is least risky small cap fund.

Beta (β)
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
SBI Small Cap Nippon India Axis Small Cap Kotak Small HDFC Small
Fund Small Cap Fund Fund Cap Fund Cap Fund

Figure 13: Small Cap, Beta

The statement regarding risk is supported by the calculation of beta. Again Nippon India
Small cap Fund proved the most risky schemes as they are having maximum of beta as 0.8.
Least risky scheme is Axis Small cap Fund in terms of Beta with 0.6. Beta is a systematic risk
that can be minimized through diversification.

47
 Sharpe Ratio
0.35
0.32
0.3
0.25 0.26
0.2
0.15
0.1
0.05
0
-0.02
-0.05 SBI Small Cap Nippon India Axis Small Cap Kotak Small
-0.05 HDFC Small
-0.1 Fund Small Cap Fund Fund Cap Fund Cap Fund
-0.13
-0.15
-0.2

Figure 14: Small Cap, Sharpe Ratio

In terms of returns, the scheme i.e. Axis Midcap Fund Inst I is having maximum returns per
unit of risk (0.32). It is followed by SBI Small cap Fund Direct Growth (0.0.26). The rest are
below zero. Least return provider is the HDFC Small cap Fund with ratio of (-0.13) followed
by Kotak Small cap fund with ratio of (-.0.01) each.

Treynor’s Ratio
14
12
10
8
6
Treynor’s Ratio
4
2
0
SBI Small Nippon Axis Small Kotak HDFC
Cap Fund India Small Cap Fund Small Cap Small Cap
Cap Fund Fund Fund

Figure 15: Small Cap, Treynor's Ratio

As per Treynor ratio Axis Small Cap Fund Schemes is a highest ratio with 0.08 as compare
to other selected schemes. It shows the grater skills in managing the investment. SBI Small

48
Cap Fund is also showing positive ratio (0.06) which shows better skills in managing the
investment.

Jensen’s Alpha
14
12
10
8
6
Jensen’s Alpha
4
2
0
SBI Small Nippon Axis Small Kotak HDFC
Cap Fund India Small Cap Fund Small Cap Small Cap
Cap Fund Fund Fund

Figure 16: Small Cap Jenson's Alpha

We have analyzed that alpha of Axis Small cap Fund is very high i.e. 12.21 as compared to
other selected funds and it stands on first rank. The other schemes also carry positive values of
alpha which indicates that fund manager is able to select a good fund.
We have also analyzed that alpha of HDFC Small cap Fund is lower as compared to other
schemes. This may be due to its lower return.

49
 Table 6: Annualized Return as on 7th September 2020

Schemes Name 1 Year 3 Years 5 Years

SBI Small Cap Fund 20.89% 8.32% 15.03%

Nippon India Small Cap Fund 18.68% 1.66% 11.46%

Axis Small Cap Fund 14.56% 9.69% 12.78%

Kotak Small Cap Fund 20.81% 3.02% 16.52%

HDFC Small Cap Fund 2.74% 1.34% 9.95%

Table no. 6 explores the returns of selected funds over a period of time for different periods.
In terms of one year returns, SBI Small cap Fund stood at number one with the maximum
returns of 20.89%. It is followed by Kotak Small cap Fund with the returns of 18.768%. Axis
Small cap Fund has given the least returns 14.56% among the selected schemes. In long run
i.e. for the period of five years Kotak Small cap Fund has performed well among the selected
scheme.

50
CHAPTER 9

CONCLUSION AND SUGGESTION

10.1 CONCLUSION

Mutual Fund industry is one of the most exceptionally growing industry in money market. It
is appropriate for all the speculators who are willing to invest their fund, whether they are
risk takers or risk adverse. It also gives numerous choices of returns which depend on the risk
associated with the Funds schemes. The speculator can be salaried employee, businessman
and so on. It is not required for the speculators to be the master of equity market; these
mutual funds can also fulfil their needs. Financial experts invests in diversified portfolio to
reduce their risk, exceptional returns are also possible in diversified portfolio with low risk in
mutual funds.

The performance of the schemes is evaluated through estimation of ratios like Treynor's ratio,
Sharpe ratio and Jensen's alpha. The speculator or the fund manager uses these ratios to select
the most appropriate scheme that gives better returns with minimum risk and invest in best
diversified portfolios.

Mutual funds are good option of investment if taken care of above ratios. Each investor
participates proportionally in the gain or loss of the fund. Axis Blue-chip Fund and Canara
Robeco Blue-chip Equity Fund have performed better than the rest so these two funds are
suitable for investment in large Investment. Axis Mid cap Fund and Invesco India Mid Cap
Fund can be considered alongside DSP, Edelweiss and Kotak in case of Midcap. And Axis
and SBI Funds are suggested for investment in Small Cap. These should be selected carefully
as risk is linked with them. Also considering risk ratios make investment safer so they should
not be ignored.

51
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https://groww.in/mutual-funds/category/best-large-cap-mutual-funds

https://groww.in/p/equity-funds/#Investment_Strategy-based_Categorization

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