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"Comparative Analysis of Mutual Funds Schemes -A Study on Top 5 Midcap

Equity Funds"

Conference Paper · February 2022

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“Comparative Analysis of Mutual Funds Schemes - A Study on Top 5 Midcap
Equity Funds”
Subham Gupta, IV M.Com

(Financial Analysis)

Department of Commerce(PG)

Kristu Jayanti College (Autonomous), Bengaluru, 560077

ABSTRACT
Generally, when an investor decides to study an investment options readily available in today’s
confusing, complex and risky environment, he thoroughly evaluates all the investment options.
While evaluating such multiple options, he naturally considered several factors like past
performance of the options under study, risks adjusted returns from the invested plan, share in
the portfolio policy, fund house, black returns i.e. percentage of interest/ dividends and
consistent rate of returns on investment, to mention a few. In the word of Warrant Buffett,
“Risk comes from not knowing what you are doing”. If at all, an investor decides to follow all
these options for his investment, quite strictly, preferable he would come to a rational conclusion
of an option of mutual funds. However when an investor decides to opt for mutual funds, he
proceeds with the assumptions that the performance of mutual funds is relatively good, the return
on mutual funds is better as compared to the returns on fixed deposits with bank or post offices.
The performance of mutual funds is good because of proper portfolio and risk management and
it is linked and dependent on stock market.

Keywords: Mutual Funds, Share Market, Performance, Return Risk.

 INTRODUCTION
A mutual fund is a trust that pools the savings of the number of investors who share a common
financial goals and investment may be in shares, debt, equity, money market securities or a
combination of these. Those securities are professionally managed on behalf of the unit holders
and each investor holds a pro-data share of the portfolio, that is, entitled to profits as well as
losses. Income earned through these investment and the capital appreciation realized is shared by
its unit holders in proportion to the number of unit owned by them. A mutual funds is the most
suitable investment scope for common people as it offers an opportunity to invest in a
diversified, professionally managed basket of securities as a relatively lower cost.

Mutual funds has emerged as a tool for ensuring one’s financial well being. Mutual funds have
not only contributed to the india’s growth story , but also helped the families tap into the success
of the Indian story. The main reason the number of mutual funds retails investor remain small is
that nine out of 10 people with incomes in india do not know the mutual funds are still exists.
Although one people are aware of mutual funds investment opportunities, the number who
decided to invest in mutual funds to as many as one in five peoples. Thus the participation of
mutual funds in the transformation of Indian economy has made it critical to view their services
not only as a financial intermediary but also plays an significant role in spreading equity culture.

This relation between risk returns determine the performance of the mutual funds schemes. As
risk in commensurate with return, therefore, providing maximum returns on the investment made
within the acceptable associated risk levels helps in demarcating the better performance from the
laggards.
 REVIEW OF LITERATURE

1. Dr. Sandeep Bansal, Deepak Garg and Sanjeev K Saini(2012), have studied impact on
Sharpe’s ratio and Treynor’s ratio on selected mutual funds schemes. This paper
examines the performance of the selected mutual funds schemes, that the risk profile of
the aggregate mutual funds universe can be accurately compared by a simple market
index that offers comparative monthly liquidity, returns, systematic and unsystematic risk
and complete fund analysis by using the special reference of Sharpe’s ratio and Treynor’s
ratio.

2. Dr. K Vernia and Dr. A. Kishore Kumar ( Jan 2014), conducted research on comparative
performance analysis of selected Indian mutual funds schemes. This study analysis the
performance of Indian owned mutual funds and compares their performance. The
performance of this funds were analyzed using a five year NAV’s and portfolio
allocation. Findings of the study reveals that mutual funds outperformed, naïve
investment. Mutual funds as a medium to long term investment options are preferred as a
suitable investment options by investor.

3. Jack Treynor(1965) developed a methodology for performance evaluation of a mutual

fund that is referred to as reward to volatility measures, which is defined as excess returns
on the portfolio. This is followed by sharpe (1966) reward to variability measures, which
is average excess return on the portfolio dividend by the standard deviation of the
portfolio.

4. Dr. Ashok Khurana and Kavita Panjwai (Nov 2010), have analyzed hybrid mutual funds,
mutual funds returns can be compared using arithmetic mean and compounded annual
growth rate. Risk can be analyzed by finding out standard deviation beta while,
performance analysis is based on risk return adjustments. Based on the quantitative study
conducted company a fund is chosen as the best fund in the balanced growth fund
schemes.
 STATEMENT OF PROBLEM

Midcap mutual funds are usually invested in mid-sized companies generally to keep up with
moderate risk against the investment or an addition in diversified portfolio. Further, there is a
need to compare the average returns and performance of the selected top 5 midcap equity funds
and also to analyze the risk and returns risk of the schemes. Therefore the study is conducted to
understand the comparative performance analysis of the midcap equity funds ( HDFC midcap
opportunity fund, L&T midcap fund, UTI midcap fund, SBI magnum midcap fund, Birla Sunlife
midcap fund) in the market over the period of 5 years. Mutual funds are among the most popular
investment in the market. Many people buy them because of their comparative returns. Few of
them prefer mutual funds as they are easy to buy or sell. However, other cite that mutual funds
can spread risk. A high risk involved in the mutual funds investment is the market risk. When the
market is doldrums, most of the equity funds will also experience a downturn. However the
company specific risk are largely eliminated due to the professional fund management. This
study reveals fact about the performance of the midcap equity funds.

OBJECTIVES OF THE STUDY

The research study was conducted with following objectives:

A) To compare average returns of selected top 5 midcap equity mutual funds

schemes.
B) To analyze the risk and returns risk rate of the schemes.
C) To study the performance of growth schemes of the selected mutual funds.
 RESEARCH METHODOLOGY

To examine the mutual funds schemes performance, 5 schemes were selected as a random basis.
NAV of different schemes have been used in this study for the period of 5 years i.e. 2012 to
2016. Stock market has been used for market portfolio. The study was mainly secondary data
based.

A) Net Asset Value(NAV):

Net Asset Value is the rate at which the mutual fund unit is brought or sold. It is the value of the
fund’s investment. For mutual funds, net asset value per share generally represents, the funds
market price, subject to possible sales or redemption charge.

B) Risk:

Risk is the uncertainty or variability of the income/ capital appreciation or loss or both. The two
major types of risk are a) systematic risk b) unsystematic risk. Systematic risk are the market
problem, tax policy or any other government policy, inflation risk or interest rate risk and
financial risk. The unsystematic risk are mismanagement, wrong financial policy, defective
marketing etc.

SOURCES OF DATA:

The sources of data comprises a secondary data. Secondary data was collected from various
sources such as: the websites, books and journals.

STATISTICAL TOOLS USED:

The simple statistical tools and techniques used in this study are NAV(Trend Analysis), Mean,
Standard Deviation, Beta, Sharpe’s measures and Treynor’s measures.
 DATA ANALYSIS AND INTERPRETATION

SHOWING THE RETURN OF HDFC MID CAP OPPORTUNITY FUND:

NAME OF THE
FUND YEAR 2012 2013 2014 2015 2016

HDFC MID
CAP RETURNS 40 10 76 9 10.8
OPPORTUNIT
Y
FUND
UTI MIDCAP
FUND RETURNS 41.8 9 89.6 6 2.9

L&T MIDCAP
FUND RETURNS 38.1 4.9 80.8 9.9 8.7

SBI MAGNUM
MIDCAP FUND RETURNS 48.3 12.3 71.1 14.3 4.7

BIRLA
SUNLIFE RETURNS 37.1 -2.8 71.9 10 5
MIDCAP FUND
 CHART SHOWING THE RETURNS OF HDFC MIDCAP OPPRTUNITIES FUND:

5 MIDCAP PERFOMANACE ANALYSIS

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

YEAR RETURNS RETURNS RETURNS RETURNS RETURNS

NAME OF HDFC MID CAP UTI MIDCAP L&T MIDCAP FUND SBI MAGNUM BIRLA
THE FUND OPPORTUNITY FUND MIDCAP FUND SUNLIFE
FUND MIDCAP
FUND

Series1 Series2 Series3 Series4 Series5

HDFC MIDCAP OPPORTUNITY FUND INFERENCE:

The table and chart reflects the returns of HDFC Midcap Opportunities Fund. The returns of the
fund are high during the period 2012 to 2014. It indicates in the year of 2012, the returns were
40% and in 2014 it drastically rise upto 76%.

UTI MIDCAP FUND:

However, in the year 2012, the returns have been 41.8% and in the year 2013, it dropped to 9%,
whereas in 2014 there was a drastically change in the returns i.e. 89%.

L&T MIDCAP FUND:

It indicates in the year 2012, the returns have been 38.1% and in the year 2013, it have dropped
to 4.9%. However, the year 2014 its reflected an improvement in the returns i.e. 80.8%.
SBI MAGNUM MIDCAP FUND:

It indicates that in the year 2012, the returns have been 48.3% and in the year 2013, it was
dropped to 12.3%. However, the year 2014 reflected an improvement in the returns, i.e. 71.1%.

BIRLA SUNLIFE MIDCAP FUND:

It indicates that in the year 2012, the returns have been 37.1% and in the year 2013, it was
dropped to negatively -2.8%. However, the year 2014 reflected and improvement in the returns,
i.e. 71.9%.

COMPARISON OF BETA VALUES OF SELECTED TOP 5 MIDCAP EQUITY FUNDS:

SHOWING BETA VALUES OF SELECTED MIDCAP EQUITY FUNDS:

NAME OF THE SCHEME BETA VALUES

HDFC MIDCAP OPPORTUNITY 0.76

FUND
L&T MIDCAP FUND 0.78

UTI MIDCAP FUND 0.84

SBI MAGNUM MIDCAP FUND 0.76

BIRLA SUNLIFE MIDCAP FUND 0.81

ANALYSIS:

The beta values indicates systematic risk of security or a portfolio in comparison to the market as
a whole. If the beta value of the security is less than 1, then the security is not extremely risky.
CHART SHOWING THE BETA VALUES OF SELECTED MIDCAP EQUITY FUND:

BETA VALUES

0.84
0.82
0.8
0.78
0.76
0.74
0.72

HDFC MIDCAP L&T MIDCAP UTI MIDCAP SBI MAGNUM BIRLA SUNLIFE
OPPORTUNITY FUND FUND MIDCAP FUND MIDCAP FUND
FUND

COMPARISON OF SHARPE’S VALUES OF SELECTED TOP 5 MIDCAP EQUITY FUNDS:

SHOWING SHARPE’S VALUES OF SELECTED MIDCAP EQUITY FUNDS:

NAME OF THE FUND SHARPE’S VALUE

HDFC MIDCAP OPPORTUNITIES 0.728

FUND
L&T MIDCAP FUND 0.694

UTI MIDCAP FUND 0.641

SBI MAGNUM MIDCAP FUND 0.843

BIRLA SNLIFE MIDCAP FUND 0.590

 CHART SHOWING THE SHARPE’S VALUES OF SELECTED MIDCAP EQUITY FUND:

Sharpe's Values
1

0.8

0.6

0.4

0.2

HDFC MIDCAP OPPORTUNITIES FUND L&T MIDCAP FUND

UTI MIDCAP FUND SBI MAGNUM MIDCAP FUND
BIRLA SNLIFE MIDCAP FUND

INFERENCE:

The Sharpe ratio is a risk adjusted measures of returns that is used to evaluate the performance of
mutual fund. The ratio helps us make to performance of one mutual fund comparable with
another mutual fund by making and adjustment for risk.
COMPARISON OF TREYNOR’S VALUES OF SELECTED TOP 5 MIDCAP EQUITY
FUNDS:

SHOWING TREYNOR’S VALUES OF SELECTED MIDCAP EQUITY FUNDS:

NAME OF THE FUND TREYNOR’S

VALUE
HDFC MIDCAP OPPORTUNITY FUND 28.86

L& T MIDCAP FUND 28.55

UTI MIDCAP FUND 28.16

SBI MAGNUM MIDCAP FUND 31.49

BIRLA SUNLIFE MIDCAP FUND 22.26

CHART SHOWING THE TREYNOR’S VALUES OF SELECTED MIDCAP EQUITY FUND:

TREYNOR’S VALUE
35

30

25

20

15

10

0
HDFC MIDCAP L& T MIDCAP UTI MIDCAP SBI MAGNUM BIRLA SUNLIFE
OPPORTUNITY FUND FUND MIDCAP FUND MIDCAP FUND
FUND

INFERENCE:

The Treynor’s measures helps us to realize the risk adjusted measures of different mutual funds.
If the treynor’s value is high for a particular mutual fund, it is understood that investing in
particular mutual fund will be appropriate.
 FINDINGS

Findings based on Objective 1: To compare average returns of selected top five midcap
equityfund schemes:

 The mean value is calculated in order to find the average return of the selected mutual
funds. SBI Magnum midcap fund is having the highest mean value (30.14%) and BIRLA
SUNLIFE midcap fund is having ( 24.24) is having the lowest mean values.

Findings based on Objective 2: To study the portfolio composition of the selected top five
midcap equity funds:

 Major portion of the mutual funds corpus is invested in banking and financial services
sector and engineering and capital goods carrier.

Findings based on Objective 3: To analyze the risk and return rate of the schemes:

 The return of the top five midcap equity funds declared its highest in the year 2014
(HDFC midcap Opportunity fund -76%,L&T midcap fund – 80.8%, UTI midcap fund –
89.6% SBI Magnum midcap fund – 71.1%, Birla Sunlife midcap fund – 71.9%).
 UTI Midcap Fund has the highest returns among the selected equity funds (89.6%).

Findings based on Objective 4: To study the performance of growth scheme of selected

mutualfunds.

 According to the Sharpe measurement the risk adjusted performance for the midcap
equity fund is highest for SBI Magnum midcap fund, which is followed by HDFC
Midcap fund Opportunity fund, L&T midcap fund, UTI midcap fund and Birla Sunlife
midcap fund.

 According to the growth % calculations of NAV, it is understood that all the selected
equity funds have an incredible growth in net asset value when compared with the bse
year (2012)
 CONCLUSION

It is expected that this study is effective enough in creating awareness in investor with regards to
investment activities in mutual funds. The varieties of schemes in mutual funds offer the investor
with a broad range of investment options. The investors may choose the suitable scheme based
on their risk bearing ability and interest. Further, the investment in mutual funds also provides
funds also provides the investors with superior returns. This study helps us to understand the top
five midcap equity funds. Various measurements are made in this study to get a clear knowledge
on the risk involved in the selected schemes. The study also helps to realize the risk adjusted
performance of the schemes, which can benefit an investor in choosing the finest of the available
schemes.

The below information will justify this final results :

 Sharpe Measurement – Ranked First

 Treynor Measurement – Ranked First
 Highest growth % in NAV among the selected mutual funds.

BIBLOGRAPHY

BOOKS:

Chandra Prasanna (2012) Investment Analysis and Portfolio Management 4th edition, New
Delhi: Tata McGraw- Hill Publishing Company.

Mishra Biswadeep (2012), A study on mutual fund in india – growth, development and
performance, New Delhi:Lambert Academic Publishing.

WEBSITES:

https://www.moneycontrol.com

https://economictimes.indiatimes.com

https://in.finance.yahoo.com

https://www.valueresearchonline.com

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