COMPARATIVE ANALYSIS OF MUTUAL FUNDS
MUTUAL FUND OPERATION FLOW CHART
TYPES OF MUTUAL FUNDS SCHEMES
According to Maturity Period
Open Ended Close Ended
According to Investment Objective Growth/Equity Oriented Scheme Income / Debt Oriented Schemes Balanced Scheme
INSTRUMENTS OF INVESTMENT
EQUITY CONVERTIBLE DEBENTURES FIXED INCOME SECURITIES SHORT TERM SECURITIES
Facilities Provided by Mutual Funds to the Investors
Systematic Investment Plan (SIP) Systematic Withdrawal Plan (SWP) Systematic Transfer Plan (STP) Dividend Transfer Plan (DTP) Auto debit facility and Electronic Clearing Service (ECS) Switching
INTRODUCTION TO THE ORGANIZATION
Retail broking arm of the Mumbai based SSKI group. Established in 1922 Share khan's ground network includes over 700+ Share shops in 130+ cities in India. SSKI group ventured into institutional broking and corporate finance 18 years ago.
OBJECTIVES OF THE STUDY
The present study focuses on the comparative analysis of mutual funds schemes performance. To evaluate the schemes on the basis of risk and return by calculating Beta, Alpha, Standard Deviation.
TYPE OF RESEARCH -- Descriptive cum Analytical research
has been used because the researcher has no control over the variables. He can only report what has happened or what is happening. . In Analytical Research, the researcher has to use facts and information already available and make an analysis on the basis of these only.
The data has been collected from the secondary sources i.e. -- Fact sheets -- Annual Reports -- Offer Documents NAVs of selected schemes and closing values of S&P CNX 500 have been noted from www.amfindia.com and Mutual Fund House’s Personal Sites.
SAMPLE & SAMPLING TECHNIQUE
SAMPLE SIZE: 7 Schemes of 4 Mutual Fund Companies namely Franklin Templeton, Reliance, HDFC and ICICI Prudential has been selected. SAMPLING TECHNIQUE: In the present study Convenience Sampling technique has been used.
DATA ANALYSIS AND FINDINGS
The following parameters have been chosen for comparison: Fund Objective Fund Style Fund Details History Portfolio Characteristics Sectoral Allocation Portfolio Concentration Performance Analysis
Following Test’s have been applied:
BETA ALPHA STANDARD DEVIATION
A Beta is a measure of risk. It compares a mutual fund’s volatility with that of a benchmark. If the beta of the stock is 1, it means that the returns in the stock are highly correlated to the benchmark index. If Beta is greater than 1, it means the stock is more volatile. If Beta is less than 1, than the stock is less volatile.
COMPARATIVE ANALYSIS (BETA)
LARGE CAP FUND
0.96 0.94 0.92 0.9 0.88 0.86 0.84 Franklin HDFC PRU ICICI Reliance India TOP 200 Growth Vision Bluechip BETA
MID CAP FUND
1 0.98 0.96 0.94 0.92 0.9 0.88 0.86 0.84
F ranklin Prim a
H C DF C apital Builder
R eliance Growth
Alpha is a financial term describing that part of an investor’s return that is due to the skills of the investment manager, as distinct from the return of the market as a whole. αi < rf: the manager or firm has destroyed value αi = rf: the manager or firm has neither created nor destroyed value αi > rf: the manager or firm has created value
LARGE CAP FUNDS
5 4 .5 4 3 .5 3 2 .5 2 1 .5 1 0 .5 0
AL H P A
F nk ra lin H F D C P U IC I R lia R IC e nce India T OP 2 0 G 0 row th V ion is B chip lue
MID CAP FUNDS
6 5 4 3 2 1 0 -1 -2 -3 F n lin ra k P rim a H F DC Cp l a ita B ild r u e R lia c e n e G row th A P A L H
The total risk of a given fund is measured in terms of standard deviation. It tells us how much the values have deviated from the mean of the values.
LARGE CAP FUNDS
26 25.5 25 24.5 24 23.5 23 22.5 22 21.5
S TANDARD DEVIATION
F ranklin HDF TOP PRU IC I Reliance C IC India 200 Growth Vis ion Bluechip
MID CAP FUNDS
29 28 27 26 25 24 23 22 F ranklin HDF Reliance C Prim a C apital Growth Builder
S TANDARD DEVIATION
ICICI PRU--This fund has an aggressive stock-picking style, but with a careful eye on risk control. -The fund has a great exposure to banking and software sector stocks. FRANKLIN TEMPLETON— - Franklin India Blue-chip fund is one of the biggest diversified equity funds and is one of the most preferred large cap funds. - One of the astonishing features of the fund’s investment style is the buy-and hold-strategy.
RELIANCE -High returns can be expected from this fund but its aggressiveness does not make it apt for conservative investors. HDFC -The fund's exposure to large-cap stocks is a cushion in the falling markets. It has not been a top performer as some of the other mid-cap funds, but quite a consistent one -This fund is a good bet for those wanting to invest in mid-caps but not willing to take too much of a risk.
Best option consider by the investors when it comes to investing their money in Mutual Funds. This industry is growing at a good pace. Money Invested in Mutual Funds is safe. Investors who are looking for very high instant returns, mutual funds are not recommended; they are meant for investors committed to patient investing.
Following suggestions can be made so that the mutual fund houses can design their schemes in such a manner that it can improve their performance as compared to other AMC’s. A thorough analysis should be done while selecting the securities for a particular portfolio. Fundamental security analysis should also be done i.e. the relationship between a security’s return and economy wide events.