Study of Equity Mutual fund advisory by analyzing

the selection of funds by

Anand Rathi Wealth Management Company

CHANDNI JAIN
MM1820126
SBS-FINANCE
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 AGENDA
• INTRODUCTION
• COMPANY OVERVIEW
• RESEARCH PROBLEM
• OBJECTIVES
• RESEARCH METHODOLOGY
• DATA ANALYSIS, INTERPRETATION AND FINDINGS
• RECOMMENDATIONS
• CONCLUSION
• BIBLIOGRAPHY

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 INTRODUCTION
Types of Equity Funds
• Large Cap Funds: Diversified Funds that as per SEBI norms are Large cap as
well as funds that have been investing 65% or more of their assets on an
average in large cap companies.

• Mid Cap Funds: Diversified Funds that as per SEBI norms are Mid
Cap as well as funds that have been investing 65% or more of their assets
on an average in Mid Cap companies.

• Small Cap Funds: Diversified Funds that as per SEBI norms are Small Cap
as well as funds that have been investing 65% or more of their assets on
an average in small cap companies.

• Multi Cap Funds: Equity funds that invest across market capitalisation,
which is in large-cap, mid-cap and small-cap stocks, are called multi-cap
funds.

• Focus Funds: Diversified Funds that have been classified as Focused Funds
by SEBI (no market cap bias but maximum no. of stocks cannot exceed 30).
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 COMPANY OVERVIEW
• Anand Rathi was established in 1994 by Mr. Anand Rathi and Mr.
Pradeep Gupta.

• AR Wealth has an AUM of around 17000 crores with 208

Relationship Managers.( Jan 31, 2018)

• AR Wealth manages wealth of around 4000 families.

• Private Wealth segment deals with HNI and ultra HNI segment.

• Digital Wealth deals with emerging HNI segment.

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 RESEARCH PROBLEM

This project is taken on to assess:

• How Anand Rathi Wealth, a company which grows from 4000 crores of
AUM to 17000+ crores within 4 years, advises on Equity Mutual Fund
selection.

• How Anand Rathi selects a basket of funds while ensuring that the
selected funds give an optimum risk-return as per their individual risk
profiling with a view to creating an Alpha in their Wealth Performance.

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 OBJECTIVES
PRIMARY OBJECTIVE

•To understand the Equity mutual fund advisory in Anand Rathi Wealth
Management Co by analyzing their selection of basket of funds.

SECONDARY OBJECTIVE

•To track the wealth performance of Anand Rathi by comparing Anand Rathi’s
wealth performance with that of Nifty.

•To analyse the Alpha creation of 4% p.a. over and above Nifty depending upon
the wealth strategy as choosen by the investor.

•To study the selection of basket of funds and the rationale for the selection.
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 RESEARCH METHODOLOGY
Research Method
• An explorative study
• An comparison on the performance of the selected schemes with the
benchmark index is done in order to see whether the scheme is
outperforming or underperforming the benchmark.

Data Collection Methods

• Secondary data: Secondary data were collected from books,
journals, websites and company’s report.

Tool for analysis: Standard Deviation

Comparative analysis

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 DATA ANALYSIS, INTERPRETATION AND
FINDINGS
• Risk Profiler shows your level of risk tolerance and suggests which investment option
may suit you best.

• WHY 4% ALPHA?
As per AR philosophy, the Government estimated inflation is 7% but actual inflation is
12%. This is because, Government estimated 7% includes 50% of the expenditure on
food which is actually not true. The data below shows the need is actually 14% return
which covers the inflation of 12%.

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 CATEGORIZATION OF MUTUAL FUNDS
• Funds with similar investment mandate are categorized to have a
comparison. The below 5 categories are recommended for
investing-

• Out of the total universe of 457 open ended equity schemes, 411
schemes meet the filtering criteria mentioned previously.

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Of these 411, 125 schemes fall in our defined category, the remaining 286
schemes are eliminated for reasons mentioned below:

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• Mutual Fund selection at Anand Rathi consist of the following steps:

• In any management activity, monitoring is a key element.

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• In any management activity, monitoring is a key element.
• The recommended mutual funds are tracked on a quarterly basis to
ensure the funds selected are leading us to our desired objective.

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WEALTH STRATEGY PERFORMANCE

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ANALYSIS OF SELECTED FUNDS

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1. On performance basis, it has consistently been in the top quartile across all
time frames. In the recent 4 quarters it has outperformed the Nifty 50 Index
in 2 out of 4 quarters. On a monthly rolling return basis, it has
outperformed the Nifty 50 Index 67% of the times over the last 3 years.

18.00% 16.70%
16.00% 14.80%
13.60% 13.50%
14.00%

12.00% 11.10%
10.50%
10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
1 yr 3 yrs 5 yrs

Reliance Large Cap Nifty 50

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2. The fund has been a consistent performer. The fund has outperformed
the benchmark in 3 of the last 4 quarters. On a rolling return basis, the
fund has beaten the benchmark 88% of times over the last 3 years.

18.00%
16.50% 16.30%
16.00%

14.00% 13.50%

12.00% 11.40%11.10%
10.50%
10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
1 yr 3 yrs 5 yrs

Mirae Asset Large Cap Fund Nifty 50

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3. The fund is a top quartile fund. On performance basis, the fund has been
in top 2 quartiles across all time frames in last 5 years. On a monthly
rolling basis, it has outperformed the Nifty 50 Index 67% of the times
over the last 3 years.

18.00% 16.80%
16.40%
16.00%

14.00% 13.50%

12.00% 11.40%
11.10%
10.50%
10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
1 yr 3 yrs 5 yrs

Kotak Standard Multi Cap Nifty 50

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4. On performance basis, the fund has been in the top quartile across time
frames ending 28 December 2018. Also, on a monthly rolling return basis,
it has outperformed its benchmark 92% of the times over the last 3 years.

25.00%

20%
20.00%
16.80%

15.00%
12.10%
10.60%
10.00%

5.00%
2.30%

0.00%
1 yr 3 yrs 5 yrs

-5.00%
-5%
-10.00%

Canara Robeco Emerging Equities Nifty Midcap 100

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5. On performance basis, the fund has been in the top two quartile across
time frames ending 31 December 2018. Also, on a monthly rolling return
basis, it has outperformed its benchmark 96% of the times over the last
3 years.

20.00%
17.80%
15.30%
15.00%
12.10%
10.60%
10.00%

5.00%

0.00%
1 yr 3 yrs 5 yrs

-5.00%
-5%
-6.10%
-10.00%

L&T Midcap Fund Nifty Midcap 100

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6. The fund is a second quartile fund. On performance basis, the fund has
outperformed its benchmark in 3 out of 4 quarters in last 1 year. On a
monthly rolling basis, it has outperformed the benchmark 54% of the
times.

18% 17%

16% 15.30%

14% 13.50%

12% 11.10%
10.50%
10%

8% 7%

6%

4%

2%

0%
1 yr 3 yrs 5 yrs

SBI Focused Equity Fund Nifty 50

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OVERALL PERFORMANCE ANALYSIS

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 RECOMMENDATIONS

• The company should take steps to increase the number of clients so as to

flourish more in the industry.

• The company is required to take steps in order to popularize the digital

sector which has been a new innovation in the company.

• The company should conduct more seminars in order to make people aware
of its thought process and its strategy towards selection of funds.

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 CONCLUSION
• Anand Rathi Wealth Management Co. has made a risk profiling structure in
order to understand the nature of the investors towards risk.

• The company has a thought process of its own towards the selection and
elimination of funds which it follows in order to achieve desired 4% or
more returns, over and above Alpha.

• In the funds selected by the company, it is seen that they are performing
above the benchmark which has made the company to flourish.

• Since inception, the Anand Rathi recommended basket has given 48.8%
times better return than Nifty, which validate its growth in AUM of 4000
crores to 17,000+ crores in just 4 years( 2014-2018).

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 BIBLIOGRAPHY

Referred Websites:

• www.buisnessstanderd.com
• www.economicstimes.com
• www.wikipedia.com
• www.ibef.com
• https://www.mutualfundssahihai.com/en
• https://www.amfiindia.com
• https://www.ijser.org/researchpaper/A-STUDY-ON-MUTUAL-FUNDS-IN-
INDIA.pdf
• www.rathi.com

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Comments?
Questions?
Suggestions?

Thank You

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