Mutual Funds Analysis Statistical analysis of Mutual funds on the basis of risk and return VIVEK A ACHARYA ICFAI

BUSINESS SCHOOL

STATISTICAL ANALYSIS PROJECT REPORT ON STASTISTICAL ANALYSIS OF MUTUAL FUNDS ON THE BASIS OF RISK AND RETURN AT BY VIVEK ACHARYA IBS KOLKATA (07BS4671) A Report submitted in the partial fulfillment 0f the requirements of MBA program Submitted to: Faculty Guide: DR KAVI TA SH ASTRI IBS, Kolk ata Company Guide: Mr . Ritesh Kumar r Assitant Manager - Tata AMC 1

STATISTICAL ANALYSIS ACKNOWLEDGEMENT Before I get into thick of the things, I would like to add a few words for the p eople who were part of this project in numerous ways. People who gave unending s upport right from the stage the project idea was conceived. Kolkata) & Mr. Manoj Garg (Vice President, East India) as they remained a constant source of encoura gement & provided professional competent advice during the whole work & my stay in the company. Their helping hand, constructive attitude, & dynamic approach he lped me in shaping this project. Finally, I express my gratefulness to Dr. Kavit a Shastri (Faculty & my project guide) & Prof. Subhashish Chakroberty (SIP Coord inator) for lending me the valuable guidance & wholehearted cooperation which en hanced my practical & theoretical skills. I am highly indebted to all the Relati onship managers and Investment Advisors who were a part of my survey, helped in my endeavor and spurred me to achieve something worthwhile and enduring. I would also like to thank the staffs and officials of Tata Mutual Fund for their co-op eration in providing us with all the information, which were required by us. The success of this project is because of the cooperation of all. I take no credit for this achievement but take the responsibility of any mistakes and inaccuracie s. VIVEK ACHARYA 2 ACKNOWLEDGEMENT ABSTRACT I am deeply grateful to my Organizational guide Mr. Ritesh Kumar (Assistant Mana ger,

STATISTICAL ANALYSIS CONTENTS 1. 2. 3. 4. 5. PROJECT TITLE ACKNOWLEDGWMENT CONTENT ABSTRACT CONCEPT OF MUTUAL FUND a. ORIGIN OF MUTUAL FUND b. ABOUT MUTUAL FUNDS c. ADVANTAGES OF MUTUAL FUNDS 6 7 8 10 1 2 3 4 5 CONTENTS 6. 7. 8. 9. d. TYPES OF MUTUAL FUND SCHEMES COMPANY OVERVIEW MUTUAL FUNDS INDUSTRY IN INDIA STATISTICAL TOOLS INFRASTRUCTURE MUTUAL FUND a. b. c. d. e. a. b. c. d. e. a. b. c. d. e. MARKET CAPITALISATION MEAN & STANDA RD DEVIATION ANALYSIS WITH STATISTICAL TOOLS PORTFOLIO ANALYSIS COMPARISION WITH THE BENCHMARK INDEX MARKET CAPITALISATION MEAN & STANDARD DEVIATION ANALYSIS WI TH STATISTICAL TOOLS PORTFOLIO ANALYSIS COMPARISION WITH THE BENCHMARK INDEX TOT AL FUND SIZE MEAN & STANDARD DEVIATION ANALYSIS WITH STATISTICAL TOOLS PORTFOLIO ANALYSIS COMPARISION WITH THE BENCHMARK INDEX 12 15 18 23 27 28 29 30 33 10. EQUITY MUTUAL FUNDS 40 41 42 44 46 35 11. DEBT MUTUAL FUND 51 52 53 55 56 47 12. RECOMONDATION 13. APPENDIX 14. REFERENCE 59 60 63 3

STATISTICAL ANALYSIS ABSTRACT This project offers a valuable opportunity to take a glimpse of the mutual fund in India. In today’s increasingly competitive and complex world there are large nu mbers of mutual funds claiming to provide maximum return with minimum risk. 1000 schemes available for the investors in India. It is very difficult to select a particular scheme on the basis of their past records. This project will try to a nalyse few popular mutual funds statistically on the basis of the risk involved in each fund and the return of the same. Also an in-depth analysis of their port folio will be done which will give a better view for a fund’s resultant performanc e. This project identifies the key factors that is making a fund perform better then is competitor. The factors identified in this study will help fund manager design their fund’s portfolio and provide optimum return to its investors. Also th e said project will be used by Tata Asset Management Company in the Eastern Zone to train its Relationship Managers in helping them giving an in-depth view abou t their fund. It is become very difficult to select the best mutual fund. There are more than 4 ABSTRACT

STATISTICAL ANALYSIS CONCEPT A Mutual Fund is a trust that pools the savings of a number of investors who sha re a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shar ed by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securi ties at a relatively low cost. The flow chart below describes broadly the workin g of a describes mutual fund: Mutual Fund gets their earnings in two ways: ways:1. First is the most organic w ay, which is the dividend they get on the securities they hold. 2. If the fund s ells securities that have increased in price, the fund has a capital gain. This is reflected in NAV of each unit. 3. Third is by the redemption of their units b y investors will be at discount to the current NAV[net asset value] 5 CONCEPT

STATISTICAL ANALYSIS ORIGIN OF MUTUAL FUND The idea of pooling money together for investing purposes started in Europe in t he mid-1800s. The first pooled fund in the U.S. was created in 1893 for the facu lty and staff of Harvard University. On March 21st, 1924 the first official mutu al fund was born. It was called the Massachusetts Investors Trust. After one yea r, the Massachusetts Investors Trust grew from $50,000 in assets in 1924 to $392 ,000 in assets (with around 200 shareholders). In contrast, there are over 10,00 0 mutual funds in the U.S. today totaling around $7 trillion (with approximately 83 million individual investors) according to the Investment Company Institute. The stock market crash of 1929 slowed the growth of mutual funds. In response t o the stock market crash, Congress passed the Securities Act of 1933 and the Sec urities Exchange Act of 1934. These laws require that a fund be registered with the SEC and provide prospective investors with a prospectus. The SEC (U.S. Secur ities and Exchange Commission) helped create the Investment Company Act of 1940 which provides the guidelines that all funds must comply with today. With renewe d confidence in the stock market, mutual funds began to blossom. By the end of t he 1960s there were around 270 funds with $48 billion in assets. In 1976, John C . Bogle opened the first retail index fund called the First Index Investment Tru st. It is now called the Vanguard 500 Index fund and in November of 2000 it beca me the largest mutual fund ever with $100 billion in assets. One of the largest contributors of mutual fund growth was Individual Retirement Account (IRA) provi sions made in 1981, allowing individuals (including those already in corporate p ension plans) to contribute $2,000 a year. Mutual funds are now popular in emplo yer-sponsored defined contribution retirement plans (401k), IRAs and Roth IRAs. Mutual funds are very popular today, known for ease-of-use, liquidity, and uniqu e diversification capabilities. 6 ORIGIN OF MUTUAL FUND When three Boston securities executives pooled their money together in 1924 to c reate the first mutual fund, they had no idea how popular mutual funds would bec ome.

STATISTICAL ANALYSIS ABOUT MUTUAL FUNDS What Is a Mutual Fund? A mutual fund is a company that invests in a diversified portfolio of securities . People who buy shares of a mutual fund are its owners or shareholders. Their i nvestments provide the money for a mutual fund to buy securities such as stocks and bonds. A mutual fund can make money from its securities in two ways: a secur ity can pay dividends or interest to the fund or a security can rise in value. A fund can also lose money and drop in value. Different Funds, Different Features There are three basic types of mutual funds—stock (also called equity), bond, and money market. Stock mutual funds invest primarily in shares of stock issued by Indian or foreign companies. Bond mutual funds invest primarily in bonds. Money market mutual funds invest mainly in short-term securities issued. 7 ABOUT MUTUAL FUNDS

STATISTICAL ANALYSIS ADVANTAGES OF MUTUAL FUNDS ADVANTAGES OF MUTUAL FUNDS Why Invest in a Mutual Fund? Mutual funds make saving and investing simple, accessible, and affordable. The a dvantages of mutual funds include professional management, diversification, vari ety, liquidity, affordability, convenience, and ease of recordkeeping—as well as s trict government regulation and full disclosure. Professional Management: Even u nder the best of market conditions, it takes an astute, experienced investor to choose investments correctly, and a further commitment of time to continually mo nitor those investments. With mutual funds, experienced professionals manage a p ortfolio of securities for you full-time, and decide which securities to buy and sell based on extensive research. A fund is usually managed by an individual or a team choosing investments that best match the fund’s objectives. As economic co nditions change, the managers often adjust the mix of the fund’s investments to en sure it continues to meet the fund’s objectives. Diversification: Successful inves tors know that diversifying their investments can help reduce the adverse impact of a single investment. Mutual funds introduce diversification to your investme nt portfolio automatically by holding a wide variety of securities. Moreover, si nce you pool your assets with those of other investors, a mutual fund allows you to obtain a more diversified portfolio than you would probably be able to comfo rtably manage on your own—and at a fraction of the cost. In short, funds allow you the opportunity to invest in many markets and sectors. That’s the key benefit of diversification. Variety: Within the broad categories of stock, bond, and money market funds, you can choose among a variety of investment approaches. Today the re are more then 1000 types of mutual fund available for the Indian investors. L ow Costs: Mutual funds usually hold dozens or even hundreds of securities like s tocks and bonds. The primary way you pay for this service is through a fee that is based on the total value of your account. Because the fund industry consists of hundreds of competing firms and thousands of funds, the actual level of fees can vary. But for most investors, mutual funds provide professional management a nd diversification at a fraction of the cost of making such investments independ ently. 8

STATISTICAL ANALYSIS Convenience: You can purchase or sell fund shares directly from a fund or throug h a broker, financial planner, bank or insurance agent, by mail, over the teleph one, and increasingly by personal computer. You can also arrange for automatic r einvestment or periodic distribution of the dividends and capital gains paid by the fund. Funds may offer a wide variety of other services, including monthly or quarterly account statements, tax information, and 24-hour phone and computer a ccess to fund and account information. Protecting Investors: Not only are mutual funds subject to compliance with their self-imposed restrictions and limitation s, they are also highly regulated by the federal government through the U.S. Sec urities and Exchange Commission (SEC). As part of this government regulation, al l funds must meet certain operating standards, observe strict antifraud rules, a nd disclose complete information to current and potential investors. These laws are strictly enforced and designed to protect investors from fraud and abuse. Bu t these laws obviously cannot help you pick the fund that is right for you or pr event a fund from losing money. You can still lose money by investing in a mutua l fund. A mutual fund is not guaranteed or insured by the FDIC or SIPC, even if fund shares are purchased through a bank. 9 ADVANTAGES OF MUTUAL FUNDS Liquidity: Liquidity is the ability to readily access your money in an investmen t. Mutual fund shares are liquid investments that can be sold on any business da y. Mutual funds are required by law to buy, or redeem, shares each business day. The price per share at which you can redeem shares is known as the fund’s net ass et value (NAV). NAV is the current market value of all the fund’s assets, minus li abilities, divided by the total number of outstanding shares.

STATISTICAL ANALYSIS TYPES OF MUTUAL FUNDS SCHEMES By Structure Other Schemes Tax Saving Scheme Open-ended Close ended Interval By investment Objectives Special Schemes Growth Schemes Income Schemes Balanced Schemes Money Market Schemes BY STRUCTURE: Open Ended Schemes: These do not have a fixed maturity. You deal d irectly with the Mutual Fund for your investments and redemptions. The key featu re is liquidity. You can conveniently buy and sell your units at Net Asset Value related prices. Close Ended Schemes: Schemes that have a stipulated maturity pe riod (ranging from 2 to 15 years) are called closed ended schemes. You can inves t directly in the scheme at time of the initial issue and thereafter you can buy and sell the units of the scheme on the stock exchanges where they are listed. The market price of the stock exchange could from the scheme’s NAV on account of d emand and supply situation, unit holders expectation and other market factors. 10 MUTUAL FUNDS SCHEMES Types of Mutual Fund Scheme

STATISTICAL ANALYSIS Interval Schemes: These combine the features of open ended and closed ended sche mes. They may be traded at stock exchange or may be open for sale or redemption during pre determined intervals at NAV related prices. BY INVESTMENT OBJECTIVE: Income Schemes: aim to provide regular and steady income to investors. These sch emes generally invest in fixed income securities such as bonds and corporate deb entures. Capital appreciation in such schemes may be limited. Balanced Schemes: Aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. They invest both in shares and fixed income securities in the proportion indicated in their offer documents. Money market S chemes: Aim to provide easy liquidity, preservation of capital gains and moderat e income. These schemes generally invest in safer, short term instruments such a s treasury bills, certificate of deposits, commercial papers etc. Return on thes e schemes may fluctuate, depending upon the interest rates prevailing in the mar ket. OTHER SCHEMES Tax Saving Schemes: These schemes offer tax rebates to the in vestor under tax law as prescribed from time to time. This is made possible beca use the government offers tax incentives for investment in specified avenues. Fo r example Equity Linked Saving Schemes, and Pension Schemes. Special Schemes: Th is category includes index schemes that attempt to replicate the performance of a particular index such as BSE Sensex or the NSE or industry specific schemes or sectoral schemes. Index Fund Schemes: They are ideal for investors who are sati sfied with a return approximately equal to that of an index. Sectoral Fund: Thes e schemes are ideal for investors who have already decided to invest in a partic ular sector or segment 11 MUTUAL FUNDS SCHEMES Growth Schemes: Aim to provide capital appreciation over the medium to long term . These schemes normally invest a majority of their funds n equities and are wil ling to bear short term decline in value for possible future appreciation. These schemes are not for investors seeking regular income or needing their money bac k in the short term.

STATISTICAL ANALYSIS COMPANY OVERVIEW Backed by one of the most trusted and valued brands in India, Tata Mutual Fund h as earned the trust of lakhs of investors with its consistent performance and wo rld-class service. Tata Mutual Fund manages around Rs. 22,980.76 crores (as on M arch 31, 2008) worth of assets across its varied offerings. Tata Mutual Fund off ers an investment option for everyone, whether you are a businessman or salaried professional, a retired person or housewife, an aggressive investor or a conser vative capital builder. The Tata Asset Management (TAM) philosophy is centered o n seeking consistent, long-term results. Tata Asset Management aims at overall e xcellence, within the framework of transparent and rigorous risk controls. Areas of Business A leading player in the mutual fund arena, TAM offers a wide array of product for institutional and individual investors at various life stages acr oss the risk- reward spectrum. The company offers investment products under thre e main categories for every financial need and under varied market conditions: quity funds Balanced funds Debt funds The core strength of TAM stems not only from its sound systems and processes but also from the quality of its intellectual capital, which is made up of the best and brightest minds. At the same time, the company provides a robust risk manag ement framework with inbuilt controls and balances. The title of the project is “I nvestors Perception About Mutual Fund” This will through light on how investors vi ew our funds as a potential investment with detailed perception. Quantify the re sults of our fund marketing strategy and improve the quality of our investor com munications with valuable investor feedback. 12 COMPANY OVERVIEW

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STATISTICAL ANALYSIS Perception research provides you with actionable feedback from investors who hav e considered investment in our funds. It surveyed up to 200 investors to learn h ow they perceive the value of our funds and what factors influenced their invest ment decision. TATA Mutual fund constantly benchmark our efforts against these t enets of performance: Consistency: It strive to deliver consistent results throu gh our value-based investing methodology, keeping alive the credo of the late do yen of the Tata Group, Mr. J.R.D. Tata, that money received from the people shou ld go back to them several times over. Flexibility: Tata Mutual Fund offers inve stors a broad range of managed investment products in various asset classes and risk parameters, with operational flexibility to suit their varied investment ne eds. Stability: Their commitment to the highest quality of service and integrity is the foundation upon which we build trust with our clients. Service: They off er a wide range of services to assist investors have a fulfilling and rewarding financial planning experience with us. We have designed our services keeping in mind the needs of our investors, giving them a smooth and hassle-free financial planning process. 13 COMPANY OVERVIEW

STATISTICAL ANALYSIS Core Values The Tata Group has always sought to be a value-driven organization. These values continue to direct the Group s growth and businesses. The five core Tata values that underpin the way we do business are: Integrity: We must conduc t our business fairly, with honesty and transparency. Everything we do must stan d the test of public scrutiny. Understanding: We must be caring, show respect, c ompassion and humanity for our colleagues and customers around the world, and al ways work for the benefit of the communities we serve. Excellence: We must const antly strive to achieve the highest possible standards in our day-to-day work an d in the quality of the goods and services we provide. Unity: We must work cohes ively with our colleagues across the Group and with our customers and partners a round the world, building strong relationships based on tolerance, understanding and mutual cooperation. Responsibility: We must continue to be responsible, sen sitive to the countries, communities and environments in which we work, always e nsuring that what comes from the people goes back to the people many times over. 14 COMPANY OVERVIEW

 

STATISTICAL ANALYSIS MUTUAL FUNDS INDUSRY IN INDIA The mutual fund industry in India started in 1963 with the formation of Unit Tru st of India, at the initiative of the Government of India and The Reserve Bank o f India. The history of mutual funds in India can be broadly divided into four d istinct phases Unit Trust of India (UTI) was established on 1963 by an Act of Pa rliament. It was set up by the Reserve Bank of 1964-87 India and functioned unde r the Regulatory and administrative control of the Reserve Bank of India. In 197 8 UTI was de-linked from the RBI and the Industrial Development Bank of India (I DBI) took over the regulatory and administrative control in place of RBI. The fi rst scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6 ,700 crores of assets under management. FIRST PHASE 1987 marked the entry of non- UTI, public sector mutual funds set up by public s ector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of SECOND PHASE India (GIC). SBI Mutual Fund was the first nonUTI Mu tual Fund established in June 1987 followed 1987- 1993 by Canbank Mutual Fund (D ec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC establishe d its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management o f Rs.47,004 crores 15 MUTUAL FUNDS INDUSTRY IN INDIA

STATISTICAL ANALYSIS The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under t he SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also t he industry has witnessed several mergers and acquisitions. As at the end of Jan uary 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. In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI w as bifurcated into two separate entities. One is the Specified Undertaking of th e Unit Trust of India with assets under management of Rs.29,835 crores as at FOR TH PHASE the end of January 2003, representing broadly, the assets of US 64 sche me, assured return and certain 2003 ONWARDS other schemes. The Specified Underta king of Unit Trust of India, functioning under an administrator and under the ru les framed by Government of India and does not come under the purview of the Mut ual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, P NB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 m ore than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with rece nt mergers taking place among different private sector funds, the mutual fund in dustry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes. 16 MUTUAL FUNDS INDUSTRY IN INDIA 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 familie s. Also, 1993 was the year in which the first Mutual Fund Regulations came into THIRD PHASE being, under which all mutual funds, except UTI were to be registere d and governed. The erstwhile Kothari 1993-2003 Pioneer (now merged with Frankli n Templeton) was the first private sector mutual fund registered in July 1993.

STATISTICAL ANALYSIS GROWTH IN ASSET UNDER MANAGERMENT It can be seen that there is constant rise in the mutual fund’s asset under manage ment. For the past four years, the mutual fund industry is rising at the pace of 33% each year. Looking at the current trend we can assume great boost in this s ector. 17 MUTUAL FUNDS INDUSTRY IN INDIA

STATISTICAL ANALYSIS STATISTICAL TOOLS Statistical Tools STATISTICAL TOOLS Mean An average of the sub-period returns, calculated by summing the sub period sub-p eriod returns and dividing by the number of sub sub-periods. This shows the aver age return earned by a fund over particular period of time. It is a good compara tive tool to assess different types of fund. Standard Deviation Standard deviation is a representation of the risk associated with a given secur ity (stocks, bonds, property, etc.), or the risk of a portfolio of securities. R isk is an important factor in determining how to efficiently manage a portfolio of investments because it determines the variation in returns on the asset and/o r portfolio and gives investors a mathematical basis for investment decisions. T he overall concept ors of risk is that as it increases, the expected return on t he asset will increase as a result of the risk premium earned – in other words, in vestors should expect a higher return on an investment when said investment carr ies a higher level of risk vestment where, σ2 denoted tandard deviation i of period, x i number actual return, average return of a ecurity, N i number

The larger the Standard Deviation in a period, the greater ri k the ecurity car rie . 18

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STATISTICAL ANALYSIS Beta A mea ure of the volatility, or y tematic ri k, of a ecurity or a portfolio in compari on to the market a a whole. Al o known a "beta coefficient". Where, ra mea ure the rate of return of the a et, rp mea ure the rate of retu rn of the portfolio of which the a et i a part, Cov(ra,rp) i the covariance b etween the rate of return. Beta i calculated u ing regre ion analy i , and you can think of beta a the t endency of a ecurity' return to re pond to wing in the market. A beta of 1 indicate that the ecurity' price will move with the market. A Beta le than 1 mean , the ecurity will be le volatile than the market. A beta of greater t han 1 indicate that the ecurity' price will be more volatile than the market. For example, if a tock' beta i 1.2, it' theoretically 20% more volatile tha n the market. Many utilitie tock have a beta of le than 1. Conver ely, mo t high-tech Sen ex-ba ed tock have a beta of greater than 1, offering the po i bility of a higher rate of return, but al o po ing more ri k. ri k-adju ted p k-free rate return for a po portfolio retur

R i return from the ecurity Rf i the Ri k free return σ=

tandard deviation

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The Sharpe ratio tell u whether a portfolio' return are due to mart inve tm ent deci ion or a re ult of exce ri k. Thi mea urement i very u eful becau e although one portfolio or fund can reap higher return than it peer , it i

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Sharpe Ratio A ratio developed by Nobel laureate William F. Sharpe to mea ure erformance. The Sharpe ratio i calculated by ubtracting the ri uch a that of the 10-year U.S. Trea ury bond - from the rate of rtfolio and dividing the re ult by the tandard deviation of the n .

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STATISTICAL ANALYSIS only a good inve tment if tho e higher return do not come with too much tment a dditional ri k. The greater a portfolio' Sharpe ratio, the better it ri k ri k -adju ted performance ha been. A variation of the Sharpe ratio i the Sortino r atio, which remove the effect of upward price movement on tandard deviation to mea ure only return again t downward price volatility. Sortino Ratio A ratio developed by Frank A. Sortino to differentiate between good and bad vola tility in the Sharpe ratio. Thi differentiation of upward and downward volati lity allow the calculation to provide a ri k adju ted mea ure of a ecurity or ri k-adju ted fund' performance without penalizing it for upward price change . It it i calculated a follow : , DR i down ide ri k, R i portfolio Return T i Target Return The Sortino rati o i imilar to the Sharpe ratio, except it u e down ide deviation for the deno minator in tead of tandard deviation, the u e of which doe n't di criminate bet ween up and down volatility. P/E ratio The P/E ratio (price-to-earning ratio) of a tock (al o called it "earning ea rning multiple", or imply "multiple", "P/E", or "PE") i a mea ure of the pric e paid for a hare relative to the annual income or profit earned by the firm pe r hare. A higher P/E ratio mean that inve tor are paying more for each unit o f income. It i a ean valuation ratio included in other financial ratio . The r eciprocal of the P/E ratio i known a the earning yield. [1] . 20 STATISTICAL TOOLS

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STATISTICAL ANALYSIS The price per hare (numerator) i the market price of a ingle hare of the to ck. The earning per hare (denominator) i the net income of the company for th e mo t recent 12 month period, divided by number of hare out tanding. The earn ing per hare (EPS) u ed can al o be the "diluted EPS" or the "comprehen ive EP S". The P/E ratio can al o be calculated by dividing the company' market capita lization by it total annual earning . By comparing price and earning per hare for a company, one can analyze the mar ket' tock valuation of a company and it hare relative to the income the com pany i actually generating. Inve tor can u e the P/E ratio to compare the valu e of tock : if one tock ha a P/E twice that of another tock, all thing bein g equal (e pecially the earning growth rate), it i a le attractive inve tmen t. Companie are rarely equal, however, and compari on between indu trie , comp anie , and time period may be mi leading. Treynor Ratio A ratio developed by Jack Treynor that mea ure return earned in exce of that which could have been earned on a ri kle inve tment per each unit of market r i k. The Treynor ratio i calculated a : (Average Return of the Portfolio - Average Return of the Ri k-Free Rate) / Beta of the Portfolio

21 STATISTICAL TOOLS For example, if tock A i trading at $24 and the earning per hare for the mo t recent 12 month period i $3, then tock A ha a P/E ratio of 24/3 or 8. Put a nother way, the purcha er of tock A i paying $8 for every dollar of earning . Companie with lo e (negative earning ) or no profit have an undefined P/E rat io (u ually hown a Not applicable or "N/A"); ometime , however, a negative P/ E ratio may be hown.

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other word , the Treynor ratio i a ri k-adju ted mea ure of return ba ed on tematic ri k. It i imilar to the Sharpe ratio, with the difference being th the Treynor ratio u e beta a the mea urement of volatility. Al o known a t "reward-to-volatility ratio".

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STATISTICAL ANALYSIS Fama A factor model that expand on the capital a et pricing model (CAPM) by adding ize and value factor in addition to the market ri k factor in CAPM. Thi model con ider the fact that value and mall cap tock outperform market on a regu lar ba i . By including the e two additional factor , the model adju t for the outperformance tendency, which i thought to make it a better tool for evaluatin g manager performance. Here r i the portfolio' return rate, Rf i the ri k-free return rate, and Km i the return of the whole tock market. The "three factor" β is analogous to the c lassical β ut not equal to it, since there are now two additional factors to do s ome of the work. SMB and HML stand for "small [Market Capitalization] minus ig" and "high [ ook-to-price ratio] minus low"; they measure the historic excess re turns of small caps over ig caps and "value stocks" over "growth stocks". Fama and French attempted to etter measure market returns and, through research, fou nd that value stocks outperform growth stocks; similarly, small cap stocks tend to outperform large cap stocks. As an evaluation tool, the performance of portfo lios with a large num er of small cap or value stocks would e lower than the CA PM result, as the three factor model adjusts downward for small cap and value ou tperformance. 22 STATISTICAL TOOLS

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STATISTICAL ANALYSIS INFRASTRUCTURE MUTUAL FUNDS INFRASTRUCTURE MUTUAL FUNDS An Infrastructure fund is a managed vehicle through which investors gain exposur e to the underlying characteristics of infrastructure assets. Infrastructure is emerging strongly as an asset class which can e particularly well suited to pen sion funds and other investors with a long-term outlook. Infrastructure assets t end to display comparatively sta le, long-term real return and provide a good ma tch for longdated lia ilities. They invest in private infrastructure companies, ut the fnds themselves can e listed or unlisted. For example, Macquarie has e en investing in infrastructure for more than a decade and now manages over 20 in frastructure funds around the world. Half of these are listed on the stock excha nge, with investors from pension funds and other institutions to retail investor s. The rest are unlisted funds in which the investors are largely pension funds and other institutions. The fund tens to either specialize in one class of infra structure - for example invest only in airport or only in toll-roads – or they inv est across various infrastructure sectors which meet specified investment criter ia. For example The infrastructure assets can include telecommunications and ro adcast infrastructure, utilities, toll road, airport and other transport infrast ructure. Fundamentally, infrastructure assets are distinguished y displaying th e following key characteristics: Provide essential community services Have strat egic competitive advantage Have predicta le long-term cash flow These characteristics lead to the investment enefits outlined elow. Infrastruc ture assets display unique characteristic. Their essential and long-term nature, com ined with strong competitive position, lead to sta le and predicta le consu mer demand and cash generation. These assets tend to have a high fixed capital ase with comparatively low operating costs – on average of etween 10% and 30% of revenue. Along with the long-term operating license and predicta le demand, ofte n in a regulated environment, this allows the manager to forecast cashflows with accuracy. Infrastructure assets have a low correlation to equity markets and ot her asset classes. For the reason, it can provide valua le diversification in an investment 23

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STATISTICAL ANALYSIS By investing in infrastructure through a specialized fund, investors not only ga in access to infrastructure as an asset class, ut they enefit from the experti se that the fund manager can ring to asset selection and management. Infrastruc ture funds are part of a mutual fund category called thematic funds. While secto ral funds invest in particular sectors like, say, information technology, power, metals, oil and gas, etc, thematic funds invests in themes like infrastructure, consumption-led categories like the retail industry and outsourcing companies. Today, there is a huge uzz a out the Great Indian Gold Rush and its three theme s -- infrastructure, consumption and outsourcing. Of these three, infrastructure funds have caught the fancy of a lot of mutual funds; many new funds have een launched in this category in the last couple of years. But there are only five t hat have a sizea le money under management; and these four were launched efore 2006: These funds include: 1.DSP ML TIGER Fund 2. Prudential ICICI Infrastructur e Fund 3. Tata Infrastructure Fund 4. UTI Thematic Infrastructure Fund ~ These a re are open-ended funds; this means you can invest in them whenever you like. We expect some more infrastructure funds to hit the market ut most of them would e close-ended (in open-ended funds, investors are free to sell their units anyt ime; in close-ended funds, investors cannot sell their units for a minimum perio d of time -- this minimum period is decided y the fund).

24 INFRASTRUCTURE MUTUAL FUNDS portfolio. It also provides a good match for the long-dated lia ilities of pensi on funds due its long-life and inflation protected returns. This sta ility in op erating cashflows can reduce the overall volatility of returns for investors and , in our experience; investors are finding this com ination of sustaina le yield s, lower volatility and inflation-linked return increasingly appealing.

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STATISTICAL ANALYSIS DSP Merllynch Tiger Fund Here's a fund suita le for all types of investors. The aggressive ones will like the returns it offers while the conservative ones will find peace in its divers ification. DSP T.I.G.E.R. Fund was launched at a very opportune time when the Se nsex was around 7,500 and the India economy had egun to witness high growth. DS P India T.I.G.E growth. T.I.G.E.R Fund was launched in April 2004. In the past f our years DSP India has performed excellent and has ecome one of the est funds for the investor. DSP T.I.G.E.R. Fund is an open ended fund which can e purcha se or sold anytime when the market is open. Its Market capitalization as at 31/0 3/08 was 19,005.59 cr. Its The road investment mandate, large cap tilt and inte nse diversification should large-cap alleviate all their fears. An acronym for T he Infrastructure Growth and Economic acronym Reforms, the fund focuses on secto rs that are likely to prosper from growth related to economic reforms and infras tructure development. With this as a starting point, the fund manager follows a top top-down approach (for sector selection) efore h resorting to ottom-up sto ck picking. Unlike other infrastructure offerings, its up roader mandate has en a led it to tap into sectors that core infrastructure funds do not - healthcare, FMCG, textiles, consumer non non-dura les. ICICI Prudential Infrastructure Fund ICICI Prudential Infrastructure has protected the downside well while growing at a fast pace. In fact the fund emerged as the fourth est diversified equity fun d in 2006. ICICI Prudential Infrastructure fund was launched in August 2005. It is an open ended fund having market capitalization of Rs. 38,317.95 cr. as at 31 /03/08 Its 31/03/08. last 52 weeks highest NAV was 36.61, while 52 weeks lowest was 18.53. 25 INFRASTRUCTURE MUTUAL FUNDS ~ Infrastructure, as a theme, covers several sectors like power utilities, power equipment and construction companies. Unlike technology sector mutual funds (at companies. est, technology sector funds could uy stocks from telecom and medi a esides the software stocks it traditionally invests in), infrastructure funds are not restricted to a few sectors.

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STATISTICAL ANALYSIS As infrastructure funds go, the fund is structured to exclude technology, FMCG a nd pharmaceutical companies. But eyond this similarity, there exist discerni le characteristics in the fund's portfolio that set it apart from other infrastruc ture ased funds. Tata Infrastructure Fund Tata Infrastructure Fund was launched in Decem er 2004. It is an open ended fund having market capitalization of Rs. 24,081.68 cr. as . at 31/03/08. Its last 52 weeks highest NAV was 45.515 and lowest was 23.1237. The fund achieved this ess entially on the ack of a large s large-cap growth-oriented focus, with some hel p from the mid caps. To some extent one can attri ute this stellar performance t o the sector exposure that most infrastructure funds maintain. But the real clin cher had een the fund manager's a ility to spot sector trends which fund has tr uly augmented the fund's returns. UTI Thematic Infrastructure Fund India’s infrastructure sector is expected to witness huge investments in the comin g years. To enable you to take advantage of this boom, UTI now launches the UTI Infrastructure Advantage Fund. As a 3 year close ended fund it focuses on invest ing in high growth infrastructure sectors such as Airports, Banking, Constructio n, Engineering, Energy, Mining, Ports and Power among others. The category pione er, UTI Infrastructure has been going great guns. A runaway hit in 2005 and an e xemplary success in 2006 & 2007, the fund is on a roll with the future looks jus t as promising. he first infrastructure fund to be launched, it was a classic ex ample of the early bird getting the worm. It found a spot in the top quartile of the category in 2005, generating 57 per cent returns and outdoing the average p eer by a margin 26 INFRASTRUCTURE MUTUAL FUNDS Tata Infrastructure Fund is one of the best fund and highly rated fund. It has r ecently received as a best equity fund award by CRISIL. It is considered as one of the best infrastructure fund. TATA Infrastructure s astute ability to spot se ctor trends has delivered handsomely.

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STATISTICAL ANALYSIS of more than 10 per cent. In 2006, it leapt to the topmost slot with returns of 61.48 per cent UTI Infrastructure fund was launch launched in the year 2005. It is an open ended fund having market capitalization of Rs. 24,247.71 cr. as at 31 /03/08. Despite being a thematic fund, it has a reasonably diversified portfolio of 40 45 stocks. Naturally, 40-45 capital goods, construction and energy domina te the portfolio, but this infrastructure fund also has a significant exposure t o metals and technology. This one makes for a worthy and diversified selection i f you want to bet on the capital diversified expenditure wave sweeping across th e country. MARKET CAPITALIZATION Rs. in Crores 50,000.00 45,000.00 40,000.00 35,000.00 30,000.00 25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00 DSP Merllynch Tiger ICICI Prudential Fund Infrastructure Fund Tata Infrastructure Fund UTI Thematic Infrastructure Fund Source: Value Research The above graph shows that ICICI Prudential Infrastructure Fund has maximum fund under management as compared to other fund houses. It is followed by UTI s Infr astructure fund, Tata Mutual Fund and DSP Merllynch Tiger Fund respectively. 27 MARKET CAPITALISATION Market Capitalization

STATISTICAL ANALYSIS MEAN & STANDARD DEVIATION OF THE FUNDS Calculated value of Mean and Standard Deviation of each types of Infrastructure fund is shown in the chart below: 50 45 40 35 30 25 20 15 10 5 0 43.88 42.74 43.24 41.72 30.26 Mean Standard Deviation 28.68 28.7 29.29 DSP Merllynch Tiger Fund ICICI Prudential Tata Infrastructure Fund Infrastructure Fund UTI Thematic Infrastructure Fund Source: Value Research Mean Calculated above is for the period of past one year. We can see that there is not much difference between the returns of these mutual funds. DSP Merllynch T.I.G.E.R fund has provided maximum return of 4 43.88%, which means that it has ich been most successful fund for the past year. DSP Merllynch T.I.G.E.R fund al so has the lowest standard deviation. It means that it is the least volatile fun d of th above mentioned fund. So, for both high risk the earner and comparativel y low risk earner DSP Tiger fund is better option as it gives earner, highest re turn with least volatility. 28 MEAN & STANDARD DEVIATION

STATISTICAL ANALYSIS ANALYSIS WITH STATISTICAL TOOLS Funds Beta Sharpe Ratio 0.32 0.36 Treynor Ratio 1.20 1.38 Sortino Ratio 0.51 0.5 8 Expense Ratio 1.91% 1.82% DSP Merllynch 0.97 TIGER Fund ICICI Prudential 0.93 Infrastructure Fund Tata Inf rastructure Fund UTI Infrastructure Fund 1.01 0.31 1.19 0.50 1.95% 1.04 0.30 1.10 0.48 2.03% Source: www.mutualfundsindia.com If Beta less than 1 means, the security will be less volatile than the market. A beta of greater than 1 indicates that the security s price will be more volatil e than the market. As seen from the above table UTI Infrastructure Fund is most volatile followed by Tata, DSP and ICICI Prudential respectively. Now if market rise, UTI Infrastructure Fund will rise at faster rate than other fund, but if m arket falls, UTI Infrastructure Fund will fall at faster rate too. The Sharpe ra tio tells us whether a portfolio s returns are due to smart investment decisions or a result of excess risk. The greater a portfolio s Sharpe ratio, the better its risk-adjusted performance has been. ICICI Prudential has highest of Sharpe R atio of 0.36, which explains that the portfolio of ICICI Prudential is better of all. Treynor ratio is a risk-adjusted measure of return based on systematic ris k. Greater the value of Treynor Ratio, better is the fund. Here again ICICI Prud ential Infrastructure fund scores higher than other funds. Expense Ratio allowed by SEBI is 2.5% of the total asset under management. All the above funds mentio ned are below the mentioned ratio. But UTI Infrastructure fund is having maximum expense ratio of 2.03%. Here again ICICI Infrastructure 29 ANALYSIS WITH STATISTICAL TOOLS

 

 

 

STATISTICAL ANALYSIS fund has least expense ratio. The reason might be that it is well established fu nd e house and hence requires comparatively less expense in marketing expenditur e. PORTFOLIO ANALYSIS 25 ICICI Infrastructure Fund 20 Tata Infrastructure Fund UTI Infrastructure Fund 15 10 5 0 Source: Value Research Portfolio of the fund describes compositions of various industries equity shares . Mutual funds have much diversified portfolio as per the requirement of the fun d. Infrastructure fund has majority of its portfolio in industries like Energy, Engineering, Metal, Construction, and Technology Industries. al, 30 PORTFOLIO ANALYSIS DSP Merllynch TIGER Fund

STATISTICAL ANALYSIS We can see here that all fund houses is having maximum investment in Energy Indu stries. The reason is that, energy sector is expected to boost with more private players like Reliance and Adani entering the sector. Critically examining the a bove portfolio, DSP is having is having a very high investment in Financial Serv ices Industries. Financial Services Industry especially Banks have been largely hit by sub-prime crisis. It has result into a high liquidity crisis. Banks like Citibank has closed its large number of branches in India. Citifinancials has sh ut-down number of its operations. Also Banks like ICICI Bank Ltd, Bank of Baroda and State Bank of India has disclosed its large exposure in subprime crisis. DS P Tiger Fund and Tata Infrastructure Fund having large exposure in financial sec tor are not expected to give higher return. Also Metal Industry, especially stee l industry is largely hit due to inflation and export taxes levied by government of India. IT has reduced the profit margin of steel industry and therefore affe cting the earnings from sector. DSP Fund is having investment is the sectors lik e health care and consumer durables where no other fund’s investment is there. Als o, ICICI Pru. Fund is having investment in automobile industry where no other fu nd has its investment. Tata Mutual Fund has about 21% of its Fund in the form of cash. Having high cash ratio doesn’t help in providing higher return, as that per cent of money in not invested. But in the present market scenario where there in a large volatility in the market fund manager might be waiting for the correct period to invest the money. Other fund houses also have large amount of money no t invested. So looking at the above portfolio, ICICI Prudential Infrastructure F und whose investment is well diversified is expected to give higher return with less of risk. 31 PORTFOLIO ANALYSIS

STATISTICAL ANALYSIS RECENT CHANCES IN THE PORTFOLIO Tata Infrastructure Fund Bharti Airtel Ltd Reliance Petroleum Ltd Power Grid Corporation of India Ltd VSNL Siemens Ltd Yes Bank Housing Development Finance Corporation Ltd Gas Author ity of India Ltd Aban Loyd Chiles Offshore Ltd UTI Bank Ltd Reliance Energy ICICI Prudential Infrastructure Fund Oil and Gas Corporation Ltd Gujarat Ambuja Cement Ltd Mahindra & Mahindra Ltd In dia Cement ltd UTI Infrastructure Reliance Industries Infrastructure Ltd HDFC Bank Ltd DSP Merllynch T.IG.E.R. Fund Reliance Industries Infrastructure Ltd Idea cellular Ltd Reliance Energy Source: www.mutualfundsindia.com There has been quite rational move by all the fund houses in including and exclu ding right firm in their portfolio. ICICI Prudential made a huge change in its p ortfolio by introducing 4 new companies and withdrawing from 4 existing companie s. It invested into companies like ONGC, Gujarat Ambuja Cement ltd, India Cement Ltd and Mahindra & Mahindra Ltd, all having huge market potential. It let away with HDFC, GAIL which are at the moment hit by the market factors. Both UTI & DS P Merllynch had similar changes this month with both buying the share of Relianc e Industries Infrastructure Ltd shares and selling Reliance Energy. DSP Merllync h T.I.G.E.R Fund also purchased some shares in Idea Cellular Ltd. It is 32 CHANGES IN PORTFOLIO Fund What’s In?? What’s Out??

STATISTICAL ANALYSIS expected that Idea Cellular is expected to do well in the recent future; hence i t might be a good move. Tata Infrastructure also did a positive move by investin g into Bharti Airtel and Reliance Petroleum which is expected to do well. Bharti Airtel is expected to merge with MTN of South Africa. This merger is expected t o benefit Bharti Airtel by giving global markets. Hence it’ll help its shareholder . Comparison with the Benchmark The above shown graph describes the movement of the selected infrastructure fund s with the benchmark. Here the benchmark chosen in BSE Sensex. The data selected for the above graph is for the past1 year. 33 COMPARISION WITH THE BENCHMARK INDEX COMPARISION WITH THE BENCHMARK INDEX

STATISTICAL ANALYSIS But when Sensex crashed in the January ’08 we saw a steep fall in all the funds. T he fall was more the 100% to the Sensex. Thereafter, there was change in the hig h performer with ICICI Infrastructure fund out performing other infrastructure f unds. It can be seen in the graph that ICICi Infrastructure performing best foll owed by Tata Mutual Fund, UTI Infrastructure Fund and DSP Merllynch Fund. 34 COMPARISION WITH THE BENCHMARK INDEX It can be seen that when the BSE Sensex was on the rise, all the funds were perf orming extremely well. The return is well above 100%. It can be seen that Tata I nfrastructure Fund was performing extremely well till Dec 07. It had provided ma ximum return as compared to other fund houses and was rated best fund of the yea r by CRISIL and ICRA.

STATISTICAL ANALYSIS EQUITY FUNDS The Equity Funds, also known as Stock Fund, is a fund that invests in equities / stocks. These funds are generally held in stock or cash unlike securities or bo nds. This may be done by means of a mutual fund or exchange traded fund. The mai n objective of investing in an equity fund is to have long-term growth via capit al appreciation apart from dividends and interest as sources of revenue. Explici t equity funds may have their focus on specific market sector and also include c ertain amount of risk. The Equity Funds are either via the mutual funds or by an y other pooled investment vehicle. These vehicles have their prices quoted, list ed and publicized. The mutual funds are generally under the management of renown ed fund management firms. Under these types of holdings, the investors can have diversified funds with the help and services of skilled professionals known as f und managers. These fund managers are in charge of these funds. Each equity fund can be distinguished from the other. For example, a fund can be growth specific or and another can value specific. These funds can be invested only in securities from one or more countries. Fund managed by the fund managers are actively managed and the Index Fund reflects the specific market indices. D ifferent types of Equity Funds are available based on the motive of investment. For instance, if you need to investment in equities for growth, the Stock Funds are best suited to you. Need Income invest in Bond Funds Need Safety of Principa l amount invest in Government Bond Funds Need Immediate Liquidity invest in Mone y Market Funds 35 ABOUT EQUITY FUND The term Equity Investment refers to the buying and holding of stocks in the sto ck market by individuals & companies, then expecting income from dividends and c apital gains when there is a rise in the stock value. It also refers to the acqu irement of ownership / equity participation in a start-up company or a private c ompany. When you invest in a start-up company, the investment is termed as Ventu re Capital and is likely to be at a higher risk than the on-going concerns.

STATISTICAL ANALYSIS Need Tax Relief invest in Municipal Funds Need Maximizing Current Income invest in Corporate Bond Funds Type of Funds 1. Index Fund: - An index fund makes the investment in securities in order to re flect the market index. It entails buying and selling of securities in such a wa y that it replicates the composition of the selected index enabling it to track the underlying index performance. These funds have lower investment returns than the other funds, as the turnover of securities in these funds is bare minimum. This in turn results in lower management costs. Though these funds provide low i nvestment returns, they offer the benefit of well-diversified funds. 2. Growth F und: - The investments of Growth Fund are made in stock of companies, which grow at a swift pace. The growth companies re-invest almost their entire profit for R&D (Research and Development) rather than pay dividends. The main objective of Growth Funds is to provide Capital Gains than the regular income. 3. Value Fund: - The Value Fund invests in Value Stock. The companies that are listed under th e Value Stock are generally well established organizations that pay dividends. 4 . Sector Fund / Specialized Fund: - As the very name indicates, the Sector Funds tack a specific sector of the market i.e., one area of the industry. These fund s invest a minimum of 25% of their asset in their area of expertise. These funds offer high appreciation accompanies by a high level of risk factor. The best ex amples of a sector fund are gold funds, technology funds, etc. 5. Income Fund: The Income Fund lays major emphasis on the income rather than the growth. The i nvestments of these funds are made in stock of reputed companies, paying regular dividends, like preferred stocks, utility stocks, etc. The Option Income Funds invest in securities on which options can be written and one earn premium from w riting options. Capital gains can also be earned from trading options at profit. These funds hunt for increasing the total return by adding income generated by the options to appreciation on the securities held. 36 ABOUT EQUITY FUND Listed below are different types of Equity Funds:

STATISTICAL ANALYSIS 6. Balance Fund: - The investment in balance funds is made in stocks for appreci ation and in the bonds for income. It maintains a balance by providing regular i ncome to the fund holder and also increases the capital amount. 7. Asset Allocat ion Fund: - The Asset Allocation Fund distributes the investments between stocks , income bonds, money market instruments, cash, etc in order to acquire stabilit y. The fund managers swap over the share of holdings in each asset category base d on the performance of the group. To identify the methods of best investment, a nalysis has to be done. Two types of analysis can be done for the same Technical Analysis and Fundamental Analysis. The technical analysis involves the study of stock market as a whole whereas the fundamental analysis is based on a collecti on of indicators, which provide vital information from price and volume series. It involves in analyzing the constant information of the stock market with an at tempt to forecast future business and the financial developments. Below listed a re 4 equity funds, which have progressed well and have proved that they will be relevant for some time to come, unless there is a fundamental change in the way they are managed. HDFC Top 200 Fund Reliance Growth Fund SBI Magnum Contra Fund Tata P/E Equity Fund HDFC Top 200 Fund HDFC Top 200 is five-star rated fund by Value Research. It has given very good returns in the past years. Its composition is considered to be very impressive. It was launched way back in the year 1996. As on 30th April 08, its market capitalization was 34,349 cr. It has been graded as below average ri sk and above average return. HDFC as a fund house has been progressing as a good pace but this fund has performed exceptionally well and is expected to do well due to its appropriate composition 37 ABOUT EQUITY FUND

STATISTICAL ANALYSIS Reliance Growth Fund Reliance Growth has not only emerged as the largest mid cap fund but is also the largest equity diversified fund with AUM of over Rs 5,600 crore. The fund has b een able to generate investor interest due to its impressive performance by beat ing its peers by an impressive margin for the past so many years. The fund was l aunched in September 1996. After the 2001 dotcom crash, the fund made a smart co meback in 2002 with a return of 55.75 per cent, the second-best among the 59 fun ds. Since then it maintained a top quartile position for the next four calendar years. In 2007, the fund s investors had a reason to cheer since the fund gave t hem a high return of over 76 per cent in the year consequently taking the fund s rank to 25 among the 162 funds. While the fund s allocation to large-, mid- and small-caps keep oscillating, during the past six months, the exposure to mid-ca p stocks has increased from 43 per cent to over 50 per cent. In the past, the fu nd followed a strategy of buy-and-hold for some stocks, while in some it has gon e for a quick profit taking. It is well known for its smart moves. In February 2 006, the fund maintained highest exposure to technology and basic/engineering. N ow energy and financial services sectors command the highest exposure of the fun d. Over the past one year the fund has also pared its exposure to auto and basic / engineering sectors also. SBI Magnum Contra Fund When the goings great, the fund performs exceptionally and even when the goings not so smooth, Magnum Contra still manages to save face. Magnum Contra has consi stently managed to stay ahead of the curve. The fund outperformed the category i n every quarter since 2003. It emerged as the second and third best fund in 2004 and 2005 and was pretty impressive last year too. It has the third highest risk adjusted return in its category, i.e. for every unit of risk undertaken, the fu nd gives you more bang for your buck. When the market slips, it tends to fall mu ch less than the category average as well. This fund was launched in July ’99. The scheme of the fund is open ended and can be purchased and sold at any point of time. The fund has struck a fine balance between riding on consensus sectors and taking contrarian bets. The end product is a blended portfolio of growth and va lue stocks. While still holding on to its multi-cap orientation, the portfolio h as expanded from 31 odd scripts to 57. 38 ABOUT EQUITY FUND

 

 

 

STATISTICAL ANALYSIS Tata P/E Equity Fund The fund s mandate allows it to minimize the downside risk to a large extent, & that s why the Tata Equity PE fund has performed well at most times. On the face of it, the objective is straightforward - to scout for undervalued companies. B ut what sets Tata Equity PE apart is the specific criterion that helps define un dervalued. It invests in stocks that have a trailing P/E ratio less than that of the Sensex at the time of investment. So, for example, let s take the trailing P/E of the Sensex at 22.67 (April 29, 2006). For an investment to be made on May 2, 2006, the trailing P/E of the stock as on the previous trading day (April 29 , 2006) would be compared with the trailing P/E of the Sensex. On that day, the rolling P/E ratio of Wipro was 36.7 and that of ONGC was 12.99. So ONGC could be included in the portfolio, but not Wipro. Launched in June 2004, this fund obvi ously had a tough time keeping up with its growth-oriented peers. But in the lon ger run, it has paid off. Its year-to-date performance (as on November 30, 2007) of 64.19 per cent puts it way ahead of the category average (45.28 per cent), t he Nifty (45.29 per cent) and the Sensex (40.45 per cent). This could be the res ult of value stocks coming back in vogue. But it also appears that stock picking paid off. Early last year, the fund began stocking up on the ferrous metals sec tor. In April 2006, the fund had a 22.5 per cent allocation to metals while the category average was just 8.33 per cent. When metal stocks were getting hammered , stocks like TISCO and SAIL were picked up at attractive valuations. PSU banks like Bank of Baroda and Indian Overseas Bank were also picked up last year. When the category average to the financials sector was almost 9 per cent (October 20 06), this fund had a 15.27 per cent allocation to it. While it tends to take con centrated sector bets, it does not take huge stock positions. Compared with some other schemes from Tata Mutual Fund, this one has a slightly smaller, but never theless quite large, portfolio of around 40 stocks. A good value fund for one s portfolio. 39 ABOUT EQUITY FUND

 

 

 

 

STATISTICAL ANALYSIS Market Capitalisation The following graph shows the average market capitalization of the above mention ed funds. Market Capitalization 40000 35000 30000 25000 20000 15000 10439 10000 5000 0 HDFC Top 200 Fund Relianc e Growth Fund SBI Magnum Contra Fund Tata P/E Equity Fund 8028 23171 34349 HDFC Top 200 fund has the highest market capitalization as compared to other fun ds. Reliance being the oldest fund has not been able to attract large number of investors. Tata P/E Equity fund has the lowest market capitalization. The reason may be, it is the youngest fund of the lot launched in December 2004. 40 Market EQUITY FUND ABOUT Capitalisation

STATISTICAL ANALYSIS Analysis through Mean & Standard Deviation Let us view the Mean and Standard Deviation of these funds. Standard Deviation 50 40 30 20 10 0 HDFC Top 200 Fund Reliance Growth Fund 23.18 27.59 26.29 38.19 41.03 42.24 37.71 Mean 27.14 SBI Magnum Contra Fund Source: Value Research Tata P/E Equity Fund In the above show chart, we can see SBI Magnum Contra Fund out performing other funds. It has given a average return of 42.24 in the past 1 year followed by Rel iance Growth Fund, HDFC Top 200 Fund and Tata P/E Equity Fund. Tata P/E has lowe st average mean of 37.71. While calculating their standard deviation, we see HDFC Top 200 having least SD of all. It means that HDFC is least volatile fund of the lot. The most volatile fund is Reliance Growth Fund. Tata is also on the higher side with SD of 27.14. So looking at the above chart, we can say that SBI Magnum is better fund as its average return is highest and SD is low, though not lowest. 41 Mean & Standard Deviation

STATISTICAL ANALYSIS Analysis through Statistical Tools Ratios HDFC Top 200 Reliance Fund Growth Fund SBI Magnum Tata P/E Equity Contra Fund Fund Beta 0.90 0.98 0.96 1.01 Sharpe Ratio 1.44 1.29 1.42 1.19 Treynor Ratio 0.97 1.41 1.18 1.28 Sortino Ratio 0.42 0.58 0.48 0.52 P/E Ratio 30.81 37.20 22.45 24.64

Expense Ratio 1.90 1.81 1.92 2.36 Looking at the above given data, we have quite mixed reactions about these funds . Beta of three funds is less than 1. It means that if market falls, there will comparatively small fall in these funds, while if the market rises, there rise w ill also be comparatively less. So we can say that these funds are less risky bu t will also 42 Analysis through statistical tools

STATISTICAL ANALYSIS give less return. Tata P/E equity fund is having beta of more than 1 i.e. 1.01, which means 100% change in market will bring 101% change in the fund. So this is comparatively more risky fund but is expected to give higher return. In the pre sent market scenario where it is very difficult to say if market would rise or f all, it is very hard to say whether a fund should have Beta more than 1 or less than 1. Sharpe Ratio shows smart portfolio’s composition. HDFC Top 200 is having t he highest Sharpe Ratio of 1.44, followed by SBI Magnum Contra Fund, Reliance Gr owth Fund and Tata P/E Equity Fund. Tata P/E is having the least at 1.19 which r efers this fund as high returns but with high risk. Treynor Ratio measures returns earned in excess of that which could have been ea rned on a riskless investment per each unit of market risk. Reliance Growth fund out scores other funds in this ratio with Treynor Ratio equal to 1.41, followed by Tata P/E Equity Fund at 1.28, SBI Magnum Contra Fund at 1.18 and HDFC Top 20 0 at 0.97. The Sortino ratio measures the risk-adjusted return of an investment asset, portfolio or strategy. The ratio is the actual rate of return in excess o f the investor s target rate of return, per unit of downside risk. Here again Re liance Growth is the best performer with Sortiino Rotio of 0.58 followed by Tata P/E Equity Fund at 0.52, SBI Magnum at 0.48 and again the last is HDFC Top 200 fund at 0.42. The P/E ratio (price-to-earnings ratio) of a fund is a measure of the price paid for a fund relative to the annual income or profit earned by the fund per unit. Investor who opts to purchase a fund would prefer low P/E, while a seller would like to sell a fund whose P/E is high. Among the above funds, inv estor would prefer to invest into SBI Magnum and Tata P/E Fund as it has low P/E , i.e. it is not listed at a high price. Reliance Growth and HDFC Top200 is list ed at a high price and hence expensive to purchase for an investor. Expense incu rred by Tata is very high at 2.36% of the fund. The reason might be that it is c omparatively new fund house and needs to incur some advertisement expenses. Also the market capitalization of the fund is comparatively low, hence the ratio mig ht seem to be quite big as compared to other. Reliance Growth fund has lowest ex pense ratio. 43 Analysis through statistical tools

 

STATISTICAL ANALYSIS Portfolio Analysis Now let us have the portfolio analysis of these funds. 30 HDFC Top 200 25 SBI Magnum Contra Reliance 20 Tata 15 10 5 0 Source: Value research The above graph shows the portfolio of the selected fund. From the graph it can be seen that Reliance Growth and SBI Magnum Contra Fund is spread throughout the different sector. Here HDFC Top 200 Fund is having around 20% exposure in the f inancial market. Financial market is on the back side, with the sub prime crisis . For the past 3 sub-prime months Indian financial market is on the back foot. A lso their fourth quarter results are not very impressive. So the return from the HDFC Top 200 fund and Tata P/E return Equity Fund is comparatively lower. 44 Portfolio Analysis

STATISTICAL ANALYSIS Also the exposure of Tata P/E Equity fund is more than 27% in Metal and metal pr oduct. The return from this fund largely depends upon this sector. If any uncert ainty hits this sector, the loss to this fund will be enormous. We can also see that it is only HDFC Top 200 have invested in consumer durables. While Reliance Growth Fund have invested in Textile sector. It should also be noted that Relian ce Growth Fund is having around 20% of the fund in cash which is very large amou nt on which the fund is not earning any return. It might be that the fund manage r would be waiting for the right time to invest in this volatile market. SBI Mag num is having very small portion of the fund in cash so the return will be recei ved on the entire fund, but at the time of bulk return the fund manager might fi nd problem. Recent Change in the Portfolio Funds HDFC Fund Reliance Fund Top Whats In??? 200 -Punj Loyd Ltd -Jai Prakash Associates Growth -Kotak Mahindra Ba nk Ltd Whats Out??? No Change -JSW Steel Limited SBI Magnum -Apollo Tyres Ltd Contra Fund Tata P/E Fund Equity No Change No Changes -Grasim Industries Ltd - Oil & Natural Gas Corp. Ltd We can see that from the previous portfolio there is not much difference in the present portfolio. Reliance Growth bought Kotak Mahendra Bank Ltd to its portfol io which is very smart move. Though there are number of bank’s equity shares loosi ng grip in the market but Kotak Mahendra has performed well in the last few mont hs and the results were also quite satisfying. It also took a rational step by s elling off JSW Steel Ltd, as steel industry is in huge pressure from the governm ent on keeping the price of the product low and also international rise in raw m etal. 45 Portfolio Analysis

STATISTICAL ANALYSIS Tata P/E Equity fund kept itself away from investing in the high volatile market but it sold couple of its shares. One of which was ONGC, the stock which expert suggest is not going to do well. So the move seems to be a rational one from th e Tata Fund House. Comparison with the Benchmark Index Comparison with the Benchmark Index The above given diagram shows the movement of the each fund’s NAV with the Benchma rk. Here benchmark is BSE Sensex. The NAV of past 1 year is taken into study. We see very less gap between the NAV of these funds during the first 5 months. For the next two months when the Sensex was at its peak, two funds namely Tata P/E Equity Fund and Reliance Growth Fund outperformed other funds. nd When the Sense x fall in the mid Jan, highest fall was in Reliance and Tata Equity Fund, but st ill the remained above other funds. It can be seen that Tata P/E Equity Fund out performs the other fund throughout the period. At the end of the period, through out Tata P/E was highest followed by Reliance Growth, HDFC Top 200 and SBI Magnu m Contra Fund. 46

STATISTICAL ANALYSIS Debt Fund An investment pool, such as a mutual fund or exchange-traded fund, in which core holdings are fixed income investments. A debt fund may invest in short-term or long-term bonds, securitized products, money market instruments or floating rate debt. The fee ratios on debt funds are lower, on average, than equity funds bec ause the overall management costs are lower. The main investing objectives of a debt fund will usually be preservation of cap ital and generation of income. Performance against a benchmark is considered to be a secondary consideration to absolute return when investing in a debt fund. A debt fund has lots going for it as an investment. For most, it s the only way to invest in income-generating instruments without having to commit huge sums of money, or stressing out about assorted worries such as transaction costs, stamp duty or lack of liquidity. In fact, many of the most attractive debt instrument s are unavailable directly to the retail investor. Debt itself has the advantage of being much less risky than equities. Equities m ay return more, but their volatility can be distressing. If steady, predictable returns are what you expect, a debt fund will deliver precisely that. That s why it s an essential portfolio component for people who take a keen interest in mo ney management, like 54-year-old housewife "Open-ended debt funds provide regula r income, liquidity and tax advantages minus the sleepless nights of equity." Th ere s also the tax-saving angle. Budget 99 made dividends tax-free in the hands of the investor. Further, investors can claim indexation benefits, which have th e effect of reducing the tax liability on their capital gains arising from the s ale or redemption of units of debt funds. Debt Fund in consideration. Birla Sun Life Income Fund HSBC Income Investment Fu nd Kotal Income Plus Fund Tata Income Fund 47 About Debt Fund

 

 

   

STATISTICAL ANALYSIS Birla Sun Life Income Fund This fund was launched on March 1997. It is the oldest fund of the selected lot. This fund house is considered as the best fund house for the debt based fund. I t has been rated as Five Star Fund from the Value Research. The fund’s investment has been largely diversified with investment in all highly rated funds. Its Asse t Under Management is more than Rs. 275 Cr. It can be seen that the fund has always outperformed the benchmark when the Debt Medium-term index is on the rise. Also when it falls, Birla Sun Life Income Fun d falls at greater pace. HSBC Income Investment Fund HSBC Income Investment Fund (HIF) seeks to generate regular returns by investing in bonds, debentures, government securities and short term instruments like com mercial papers, repos etc. For a time horizon greater than a year and if one see k regular returns, then one can invest in the Investment Plan of HSBC Income Inv estment Fund. 48 About Debt Fund

STATISTICAL ANALYSIS The fund has always outperformed the benchmark index. Kotak Income Plus Fund Kotak Income Plus invests 80% - 100% in debt and money market instruments and 0 - 20% in equity related instruments. The scheme endeavors to provide safety of a debt fund with superior returns of equity product. To ensure safety of a debt f und the scheme invests in top rated debt instruments thereby ensuring good credi t quality and liquidity. It was launched in the year 2003. It can be seen that it has not always outperformed the benchmark index unlike ot her funds. 49 About Debt Fund

STATISTICAL ANALYSIS Tata Income Fund Tata launched the fund way back in 1997. The objective of the scheme is to provi de income distribution and/ or medium to long term capital gains while at all ti mes emphasising the importance of safety and capital appreciation. It is having its investment spread through only 14 debt funds. Here we can see that the Fund has performed better then the benchmark Index, but the performance is not as high as the other funds. 50 About Debt Fund

STATISTICAL ANALYSIS Total Fund Size Fund Size 300 250 200 150 100 50 0 Birla Sun Life Income Fund Source: Mutual Funds Insight in crores 275.45 24.54 29.95 34.69 HSBC Income Investment Plan Kotak Income Plus Tata Income Fund Fund The above given figure shows the net asset of each fund as on 30th April 08. It can be clearly seen that in type of fund that we have selected, Birla Sun Life I ncome Fund leads others with its fund size of more than 250 crs. The fund was la unched 10 years ago and has been able to attract huge amount of investor in thei r fund. The oldest fund of all, HSBC Income Investment Fund has not been able to attract and keep large number of investment. This might be the reason for its f u fund size the lowest of the lot. Tata Mutual fund has also been launched 10 ye ars ago and though its fund size is very small as to Birla Sun Life Income fund it is doing better than other two funds. 51 Total Fund Size

STATISTICAL ANALYSIS Analysis through Mean & Standard Deviation Let us view the Mean and Standard Deviation of these funds. 12 10 8 6 4 2 0 Birla Sun Life Income Fund 2.98 Standard Deviation 7.3 Mean 6.82 5.63 1.77 1.87 6.44 HSBC Income Investment Plan Kotak Income Plus Fund Tata Income Fund Source: Value Research We can see here that Birla Sun Life Income Fund has out performed other fund in out-performed the form of average return. It has provided return more than 10% w h while others are less than 8% of return. So we can say that Birla Fund house h as performed exceptionally well. HSBC Income Investment Fund is giving second hi ghest return at 7.3% while Kotak and Tata fund houses follow them respectively. While looking at the deviation from their mean, we find HSBC Income Investment P lan is having lowest volatility at 1.77% followed by Tata Income Fund at 1.87, B irla Sun Life Income Fund at 2.98 and Kotak Income Plus Fund at 5.63%. Kotak Inc ome Plus Fund is most volatile fund as its Standard Deviation is very high as co mpared to other such schemes. A rational investor will always prefer a fund giving high return with least stan dard deviation. Also in debt fund, the investors are low risk takers and avoid i investing in the funds having Standard Deviation high. So for them Birla Sun Li fe Income Fund will be considered as the optimal plan. 52 Mean & Standard Deviation 10.73

STATISTICAL ANALYSIS Analysis through Statistical Tools Now let us compare these funds on the basis of their statistical Ratios Ratios Birla Sun Life HSBC Income Fund Income Investment Fund Kotal Income Tata Income Plus Fund Fund Beta 1.05 1.07 1.07 1.09 Sharpe Ratio 0.39 0.15 0.27 0.15 Treynor Ratio 0.12 0.04 0.18 0.03 Sortino Ratio 0.76 0.27 0.43 0.24 Expense Ratio 1.50 1.50 2.22 2.25

Beta of all the fund is more than 1 which means if its benchmark quotes increase by 100% all the fund’s NAV will increase by more than 100%. The biggest change wi ll be in Tata Income Fund as its Beta is highest at 1.09. So if the benchmark wi ll be on the rise, Tata will rise at fastest rate of all other fund followed by HSBC and Kotak fund with Birla being the last of the lot. 53 Analysis through Statistical Tools

STATISTICAL ANALYSIS Sharpe ratio concentrates on the composition of the fund. It calculates how smar t the fund is structured. Without a doubt, Birla Fund House tops the ratio follo wed by Kotak Income Plus fund. Both HSBC Income Investment fund and Tata Income fund are having lowest Sharpe Ratio. Here again we see that Tata Income Fund is having highest expense ratio of 2.25 of the total asset. It is having very high expense throughout its entire funds. Even Kotak Income Plus Fund is also having very high expense. Both HSBC Income I nvestment Fund and Birla Sun Life Income Fund is having lowest expense ratio of the lot. So reviewing the above table we can say Birla Sun Life Income Fund is the best o f the lot in almost all the ratios and hence most attractive fund. 54 Analysis through Statistical Tools Sortino Ratio calculated only downward movement of the fund with its benchmark. Higher the ratio better the fund is. Here again Birla Sun Life Income Fund Tops the list with ratio of 0.76. Second place is taken by Kotak Income Fund followed by HSBC and Tata Income Fund respectively.

STATISTICAL ANALYSIS Porfolio Analysis Let us study the composition of the sel selected Funds 100 80 60 Birla Sun Life Income Fund HSBC Income Investment Fund Kotak Income Pl us Fund Tata Income Fund 40 20 0 AAA -20 P1+ GOI Securities AA+ Cash & Money Market A good mutual fund is that fund which is optimally distributed. Here we see HSBC Income Investment Fund having more than 85% of the fund invested in the AAA Rat ed Funds which may not be that much rational. Also its cash in hand is in negati ve. It implies that it has taken money on credit to invest in the m market. In t his case, if there is any large redemption from the investors, in that case the fund manager might not be able to provide timely money to the investors. Birla S un Life Income Fund is having properly diversified portfolio with its investment in all high credit rated funds. We can see that its investment is less in ll th e GOL securities as in these securities risk is very less or we can say, there i s no risk but return is very less which does not help in earning more of a retur n. Its high investment in money market helps the fund in receiving more return f rom the n investment. So it is well balanced fund Looking at the above graph we can see that Kotak Income Plus Fund is slightly more risky as compared to other funds as it is having its investment in th the companies with not the top level of Rating. It is also having investment in the 55 Portfolio Analysis

STATISTICAL ANALYSIS companies with credit rating AA+ which makes it slightly more risky than other f unds. Also it is only Kotak which has invested in AA+ rated companies. Tata Inco me fund is also well diversified fund with its investment in all top credit o ra ted companies. It is having highest investment in GOI securities which makes thi s fund least risky but also reduces the opportunity of earning more from other c ompanies. Movement with the Ben Benchmark Crisil Composite Bond Fund Index Birla Sun Life Income HSBC Income Investment Fu nd Kotak Income Plus Fund Tata Income Fund Source: www.mutualfundsindia.com The above NAV graph has been drawn taken the NAV of the selected funds for the p eriod of past 1 year. The benchmark selected for the formulation for this graph is CRISIL Composite Bond Fund Index. It can be seen in the graph that Kotak Inco me Plus Fund has been most volatile fund and has fluctuated a lot for the past o ne year. For the first three months its for growth was similar to other funds bu t in the month of September we saw a big fall in the NAV of Kotak Income fund. T his fall led to its NAV even below Benchmark. 56 NAV Graph

STATISTICAL ANALYSIS But thereafter for the next 4 months there was a big gain in its NAV. Its NAV wa s highest for that period outperforming all other funds. But it again noticed a major fall, ending the year with lowest NAV for the year. The reason for such vo latility can be its portfolio composition having AA+ rated bond funds. As far as Birla Sun Life Income Fund is concerned, it has constantly provided high return . It can be seen from the graph that when there is an increase in the benchmark index, Birla Fund saw a greater rise, but there was not greater fall when there was a fall in the Benchmark Index. This really makes fund most attractive and de sirable for the investors. It ended the year with staying on the top of the sele cted fund. This is the reason it was accredited with five star rated fund from C RISIL. HSBC Income Investment fund performed fairly well with always staying abo ve the benchmark Index. It has never fallen below the benchmark and this makes t his fund second most preferred fund as there is least volatility and steady grow th. It ended the year with second highest NAV of the selected funds. Tata Income Fund has not performed well. For the most of the period its NAV stayed below th e benchmark index. Though we don’t see much of the volatility in the fund, which m akes it less risky but investor do demand returns at least as that of its benchm ark if not more. But for 9 months its NAV was below CRISIL Composite Bond Fund I ndex. At the end of the year, we saw some upward movement in the NAV ending thir d of the selected funds. 57 NAV Graph

STATISTICAL ANALYSIS My Recommendation to Tata Mutual Fund Tata Mutual Fund is comparatively a young company. It is having best of the pers onals who can take Tata Mutual Funds to great heights. I have following suggesti on which I feel might help them in achieving their desire goals.

58 Recommendations

Tata Mutual funds should diversify their investment throughout the different sec tor and avoid keeping majority funds only in a particular sector. It should redu ce its Expense Ratio which is very high as compared to other fund houses Its cha nges in portfolio compared to previous are very rational but it should also try to reduce its share in the financial sector which is at the downside. Tata Mutua l Fund is not doing very good in the Debt Fund category. It should try to reduce its share from the GOI securities and participate more in the money market.

STATISTICAL ANALYSIS APPENDIX I CRISIL Rating Symbols For Long Term Ratings Investment Grade Ratings AAA (Triple A) Highest Safety AA (Double A) High Safety A Adequate Safety BBB (T riple B) Moderate Safety Instruments rated AAA are judged to offer the highest degree of safety with regard to timely payment of financial obligations. Any ad verse changes in circumstances are most unlikely to affect the payments on the i nstrument Instruments rated AA are judged to offer a high degree of safety wit h regard to timely payment of financial obligations. They differ only marginally in safety from `AAA issues. Instruments rated A are judged to offer an adequ ate degree of safety with regard to timely payment of financial obligations. How ever, changes in circumstances can adversely affect such issues more than those in the higher rating categories. Instruments rated BBB are judged to offer a m oderate safety with regard to timely payment of financial obligations for the pr esent; however, changing circumstances are more likely to lead to a weakened cap acity to pay interest and repay principal than for instruments in higher rating categories. CRISIL Rating Symbols For Short Term Instruments P-1 This rating indicates that the degree of safety regarding timely payment on the instrument is very strong. This rating indicates that the degree of safety regarding timely payment on the instrument is strong; however, the relative degree of safety is lower than that for instruments rated P-1 . This rating indicates that the degree of safety reg arding timely payment on the instrument is adequate; however, the instrument is more vulnerable to the adverse effects of changing circumstances than an instrum ent rated in the two higher categories. This rating indicates that the degree of safety regarding timely payment on the instrument is minimal and it is likely t o be adversely affected by short-term adversity or less favourable conditions. T his rating indicates that the instrument is expected to be in default on maturit y or is in default. P-2 P-3 P-4 P-5 59 Appendix

 

 

   

 

 

   

 

 

 

STATISTICAL ANALYSIS Appendix II Few of the Funds Provided By Tata Mutual Funds Equity fund Tata Pure Equity opportunity fund Equity P/E fund Select equity fund Growth fund Index fu nd Life science & Tech fund Div Yield fund Infrastructure Fund Mid Cap Fund Cont ra Fund Debt Fund Tata Short Term Bond Fund Income Fund Gilt Securities Fund Maturity Fund Income plus Fund Liquid Fund Floating rate Fund- short run Floatin g rate fund- long run Floater Fund Liquidity Management fund Dynamic Bond Fund Balance Scheme Tata Balanced Fund Young Citizens’ Fund Tata Monthly Income Fund Scheme (Debt Fund) Tata MIP Plus

Monthly Income Scheme Fund (Debt Fund) 60 Appendix

STATISTICAL ANALYSIS Appendix III Top Ten Open Ended - Equity: Speciality - One Year Return Return as on 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 Fund Reliance Diversified Power Sector Retail Taurus Libra Taxshield DWS Investm ent Opportunity Reliance Regular Savings Equity ICICI Prudential Infrastructure Inst I DBS Chola Opportunities ICICI Prudential Infrastructure Taurus Discovery Stock Standard Chartered Premier Equity Canara Robeco Infrastructure NAV Returns (%) 66.27 28.46 36.29 23.39 15.16 41.76 28.57 22.94 21.30 20.14 68.96 56.03 54.62 48 .70 45.35 45.05 44.15 41.34 41.06 40.94 61 Appendix

STATISTICAL ANALYSIS Top Ten Open Ended - Debt Fund: Monthly Income - One Year Return Fund NAV 17.24 15.20 17.69 14.78 34.91 27.86 14.32 15.35 29.71 21.44 Returns (%) 28.82 17.78 15.38 14.59 14.21 14.08 13.92 13.61 12.90 12.39 Return as on 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 5/15/2008 DBS Chola MIP Principal MIP Plus Principal MIP LICMF Floater MIP Plan A Birla In come Plus LICMF MIP DWS MIP Plan A HSBC MIP Savings Birla Sun Life Income ING In come Inst The image cannot be display ed. Your computer may not hav e enough memory to ope n the image, or the image may hav e been corrupted. Restart y our com… 62 Appendix

STATISTICAL ANALYSIS References

Khan & Jain www.mutualfundindia.com www.amfiindia.com w .pruiciciamc.com www.principleindia.com www.bobmf.com www.jpmorganmf.com www.hdf cfund.com www.taurusmutualfund.com www.reliancemutual.com www.moneycontrol.com w ww.valueresearchonline.com www.investopedia.com www.wikipedia.com AMFI study mat erial Mutual Fund Insight magazine Capital market magazine 63 References

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