Projects: COMPARATIVE ANALYSIS OF MUTUAL FUND ON THE BASIS OF ALPHA, BETA AND STANDARD DEVIATION

COMPARATIVE ANALYSIS OF MUTUAL FUND ON THE BASIS OF ALPHA, BETA AND STANDARD DEVIATION

PROJECT GUIDE:

(PROF – )

SUBMITTED BY:

NAM: ()

(MFM) ROLL NO.

BATCH: (2009 - 2012)

IES MANAGEMENT COLLEGE AND RESEARCH CENTRE

UNIVERSITY OF MUMBAI

DECLARATION

I hereby declare that this report submitted in partial fulfillment of the requirement of the award for the marks of master of MFM management to IES Management College is my original work and not submitted for award for award of any degree or diploma fellowship or for similar titles or prizes.

I further certify that I have no objection and grant the rights to IES Management college to publish any chapter / project if they deem fit the journals/Magazine and newspapers etc without my permission.

Place : Mumbai

Date : 15/10/2011

Name :

Class : Master of Financial Management

Roll No : MFM-09-25

CERTIFICATE

This is to certify that project titled MUTUAL FUND has been submitted by Mr. towards partial fulfillment of the requirements of the MFM degree course 2009-2012 and has been carried out by him under the guidance of

Mrs. at the IES Management College and Research Centre affiliated to the University of Mumbai.

The matter presented in this report has not been submitted for any other purpose in this Institute.

Guide: Director:

Place : Mumbai Place : Mumbai

Date :15/10/2011 Date : 15/10/2011

ACKNOWLEDGEMENT

I take this opportunity to express my deepest gratitude to all those people, without those spontaneous support, guidance, encouragement and understanding, this project would never had reached completion.

Mere words of gratitude will never suffice to their valuable guidance, patience and faith shown in my work.

I would also like to avail this opportunity to express my sincere thanks and profound gratitude to my project guide Prof .Devaki Nadkarni, whose valuable knowledge and guidance have me complete this project successfully.

I acknowledge the timely help extended by all my colleagues and all the unmentioned names from the concerned field.

INDEX

SR. NO.	PARTICULARS	PAGE NO.
1	EXECUTIVE SUMMARY	6
2	RESEARCH OBJECTIVE:	7
3	ABOUT THE COMPANY	9
4	THE SUBSIDIARIES OF INDIA INFO LINE LTD ARE:	12
5	INTRODUCTION TO MUTUAL FUND	15
6	ORGANIZATION OF A MUTUAL FUND	17
7	MAJOR MUTUAL FUND COMPANIES IN INDIA	18
8	KOTAK MAHINDRA ASSTE MANAGEMENT COMPANY	20
9	BENEFITS OF MUTUAL FUND INVESTMENT	27
10	LIMITATION OF MUTUAL FUND INVESTMENT	29
11	HISTORY OF MUTUAL FUND:	31
12	EMERGING ISSUES IN MUTUAL FUND	36
13	MUTUAL FUND BEST PRCTICES	38
14	COMPARATIVE STUDY OF MUTUAL FUNDS ON THE BASES OF ALPHA, BETA AND STANDARD DEVIATION:	40
15	CONCLUSION:	68
16	BIBLIOGRAPHY:	70

EXECUTIVE SUMMARY

The project has been carried out the title “Comparative Analysis of Mutual Fund on the basis of Alpha, Beta and Standard Deviation”.

The main function of having analysis of Mutual fund is to pinpoint the strong points and weaknesses of mutual fund schemes.

For this I have taken the following parameters: Analyzing Mutual Fund using:-

1) Alpha: - I came to know how particulars Mutual Fund schemes performed related to what it was expected to do.

2) Beta:- By comparing Mutual Fund on the basis of beta we come to know how volatile a particular Mutual Fund as related to stock market is.

3) Standard Deviation:- The standard deviation of a fund measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return.

4) Schemes selected for project:-

o Equity Diversified

o Balanced Fund

o Debt fund

o Liquid fund

RESEARCH OBJECTIVE:

To evaluate investment performance of selected mutual funds in terms of risk and return. Also to analyze the performance of mutual fund schemes on the basis of various parameters. Primarily to understand the basic concepts of Mutual fund and its benefits as an investment avenue.

Secondly, to compare and evaluate the performance of different schemes of mutual fund companies on the basis of risk, return and volatility

SCOPE OF PROJECT:

The Schemes were categorized and selected on evaluating their performance and relative risk. The scope of the project is mainly concentrated on the different categories of the mutual funds such as equity schemes, debt funds, balanced funds and liquid fund.

RESEARCH METHODOLGY:

Research Methodology is a very organized and systematic medium through which a particular case or problem can be solved. It is analytical, descriptive and quantitative research where the comparison between the different mutual fund schemes is made on the basis of risk, volatility and return.

FINDINGS AND ANALYSIS:

The collection of information is based on the secondary probe. The information has been collected through various books, and internet.

An attempt has been made to evaluate the performance of the selected mutual fund schemes. Performance of mutual fund schemes has been evaluated by using the following performance measures.

(a) Risk

(b) Standard Deviation.

LIMITATIONS:

To get an insight in the process of risk and return and deployment of funds by fund manager is difficult.

The project is unable to analyze each and every scheme of mutual funds to create awareness about risk and return. The risk and return of mutual fund schemes can change according to the market conditions

ABOUT THE COMPANY

INDIA INFOLINE:

INDIA INFOLINE is a one-stop financial services shop, most respected for quality of its advice, personalized service and cutting-edge technology.

VISION is “to be the most respected company in the financial services space.” India Infoline Ltd:

Ø India Infoline Ltd is listed on both the leading stock exchanges in India, viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). The India Infoline group, comprising the holding company, India Infoline Ltd and its subsidiaries, straddles the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings instruments to loan products and Investment banking. India Infoline also owns and manages the websites, www.indiainfoline.com and www.5paisa.com.

India Info line Ltd, being a listed entity, is regulated by SEBI (Securities and
Exchange Board of India). It undertakes equities research which is acknowledged by none other than Forbes as 'Best of the Web' and '…a must read for investors in Asia'.

India Infoline's research is available not just over the internet but also on international wire services like Bloomberg , Thomson First Call and Internet Securities where it is amongst the most read Indian brokers.

Its various subsidiaries are in different lines of business and hence are governed by different regulators.

Geographical presence

IIL has pan-India presence across 94 cities. It started off with major branches in metros and now it is focusing on Tier II and III cities. In Q1-FY11 the company opened 56 branches, taking the total number of branches to 233 branches. Almost 50%of the revenue comes from centers in Maharashtra and Delhi.

FOLLOWED BY OTHER REGIONS.

THE SUBSIDIARIES OF INDIA INFO LINE LTD ARE:

India Infoline Securities Pvt Ltd:

India Infoline Securities Pvt. Ltd is a 100% subsidiary of India Infoline Ltd, which
is engaged in the businesses of Equities broking and Portfolio Management Services. It holds memberships of both the leading stock exchanges of India viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE.

India Infoline Commodities Pvt Ltd:

India Infoline Commodities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is engaged in the business of commodities broking. They have memberships with the MCX and NCDEX, two leading Indian commodities exchanges, and has recently acquired membership of DGCX.

India Infoline Distribution Co Ltd (IILD):

India Infoline Distribution Co Ltd is a 100% subsidiary of India Infoline Ltd and
is engaged in the business of distribution of Mutual Funds, IPOs, Fixed Deposits and other small savings products. It is one of the largest 'vendor-independent' distribution houses and has a wide pan-India footprint of over 232 branches coupled with a huge number of 'feet-on-street', which help source and service customers across the length and breadth of India.

Mortgages & Loans:

IILD has also entered the business of distribution of mortgages and loan products during the year 2005-2006.

India Infoline Insurance Services Ltd:

India Infoline Insurance Services Ltd is also a 100% subsidiary of India Infoline Ltd and is a registered Corporate Agent with the Insurance Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICI Prudential Life Insurance Co Ltd, which is India's largest private Life Insurance Company

India Infoline Investment Services Ltd:

India Infoline Investment Service Ltd is also a 100% subsidiary of India Infoline Ltd. It has an NBFC licence from the Reserve Bank of India (RBI) and offers marginfunding facility to the broking customers.

Management of India infoline:

Ø Mr. Nirmal Jain

Nirmal Jain is the founder and Chairman of India Info line Ltd. He holds an MBA degree from IIM Ahmedabad, and is a Chartered Accountant and a Cost Accountant. He has had an impeccable professional and academic track record. He then joined hands with two local brokers to set up their equity research division Inquire, in 1994. His work set new standards for equity research in India. In 1995, he founded his own independent financial research company, now known as India Info line Ltd.

Ø Mr. R Venkataraman

Venkataraman is the co-promoter and Executive Director of India Infoline Ltd.
He holds a B.Tech degree in Electronics and Electrical Communications Engineering from IIT Kharagpur and an MBA degree from IIM Bangalore. He has held senior managerial positions in various divisions of ICICI Limited, including ICICI Securities Limited, their investment banking joint venture with J P Morgan of USA and with BZW and Taib Capital Corporation Limited. He has also held the position of Assistant Vice President with G E Capital Services India Limited in their private equity division.

The Board of Directors

Apart from Nirmal Jain and R Venkataraman, the Board of Directors of India Infoline comprises:

Ø Mr Sat Pal Khattar (Non Executive Director)

Ø Mr Sanjiv Ahuja (Independent Director)

Ø Mr Nilesh Vikamsey (Independent Director)

Ø Mr Kranti Sinha (Independent Director)

INTRODUCTION TO MUTUAL FUND

A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme.

These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciation realized by the scheme are shared by its unit holders in proportion to the number of units owned by them (pro rata).

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 portfolio at a relatively low cost. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds.

Each Mutual Fund scheme has a defined investment objective and strategy

mutual fund is the ideal investment vehicle for today’s complex and modern financial scenario. Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. Price changes in these assets are driven by global events occurring in faraway places.

A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc.

Draft offer document is to be prepared at the time of launching the fund.
Typically, it pre specifies the investment objectives of the fund, the risk associated, the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. In India, as in most countries, these sponsors need approval from a regulator, SEBI (Securities exchange Board of India) in our case. SEBI looks at track
records of the sponsor and its financial strength in granting approval to the fund for commencing operations.

A sponsor then hires an asset management company to invest the funds according to the investment objective. It also hires another entity to be the custodian of the assets of the fund and perhaps a third one to handle registry work for the unit holders (subscribers) of the fund.

In the Indian context, the sponsors promote the Asset Management Company
also, in which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset Management Company (AMC). E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset Management Company Ltd., which has floated different mutual funds schemes and also acts as an asset manager for the funds collected under the schemes.

ORGANIZATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund

Organization of a Mutual Fund

A Mutual Fund is set up in the form of trust, which has sponsor, trustees,
asset management company (AMC), and custodian. The trust is established by
sponsor or more than one sponsor who is like a promoter of company. The trustee of mutual fund holds its property for the benefit of unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who registered with SEBI, holds the securities of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI regulations by mutual fund.

SEBI regulations required that at least two thirds of the directors of trustee
company or board of trustees must be independent i.e. they should not be
associated with sponsors. Also, 50% of the directors of the AMC must be
independent. All mutual funds are required to be registered with SEBI before they launch their schemes.

MAJOR MUTUAL FUND COMPANIES IN INDIA

ABN AMRO MUTUAL FUND

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee(India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

BIRLA SUN LIFE MUTUAL FUND

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed a AUM of Rs.10, 000 crores.

BANK OF BARODA MUTUAL FUND

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Assets Management Company Limited is the AUM of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian.

HDFC MUTUAL FUND

HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely
Housing Development Finance Corporation Limited and Standard Life Investments
Limited.

ING VYSYA MUTUAL FUND

ING Yysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was on corporaed on April 6, 1998.

PRUDENTIAL ICICI MUTUAL FUND

The mutual fund of ICICI is a joint venture with Prudential Plc. Of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13 October, 1993 with two sponsors, Prudential Plc. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22 June, 1993.

SAHARA MUTUAL FUND

Sahara Mutual Fund was setup on July 18, 1996 with Sahara India financial Corporation Ltd. as the sponsor. Sahara Assets Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid up capital of the AMC stands at Rs.25.8 crore.

STATE BANK OF INDIA MUTUAL FUND

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshore fund, the India Magnum Fund with a corpus of Rs.225 crore approximately. Today it is the largest Bank sponsored Mutual Fund in India. They already launched 35 schemes out of which 15 have already yield handsome returns to investors. State Bank of India Mutual Fund has more than Rs.5, 500 crores as AUM. Now it has an investor base of over 8 lakhs spread over 18 schemes.

TATA MUTUAL FUND

TATA Mutual Fund is a Trust under the Indian Trust Act, 1882. the sponsors for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. the investment manger is Tata management Limited is one of the fastest in the country with more than Rs.7,703 Crore(as on 2005) of AUM.

KOTAK MAHINDRA ASSET MANAGEMENT COMPANY

Kotak Mahindra Asset Management Company is a subsidiary of KMBL. It is presently having more than 1, 99,818 investors in its various schemes. KMAMC stared its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk return profiles. It was the first company to launch to dedicated gilt scheme investing only in government securities.

UNIT TRUST OF INDIA MUTUAL FUND

UTI Asset Management Company Private Limited, established in Jan 24, 2003
manages the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI Asset Management Company presently manages a corpus of over Rs.20, 000 crore. The sponsors of UTI Mutual Fund are Bank of Baroda, Punjab National Bank, State Bank of India, and Life Insurance Corporation of India. The schemes of UTI Mutual Fund are Liquid Funds, assets Management Funds, Index Funds and Balanced Funds.

RELIANCE MUTUAL FUND

Reliance Mutual Fund was established as trust under Indian Trusts Act, 1882.The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various schemes under which, units are issued to the public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.

STANDARD CHARTERED MUTUAL FUND

Standard Chartered Mutual Fund was setup on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd is the AMC which was incorporated with SEBI on December 20, 1999.

FRANKLIN TEMPLETON MUTUAL FUND

The group, Franklin Templeton investment is a California based company with a global AUM of US $409.2(as on 2005). It is one of the largest financial service group in the world. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. They have open end Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end tax saving schemes, Open end income and liquid schemes, Closed end Income schemes and Open end Fund of Funds schemes to offer.

MORGAN STANLEY MUTUAL FUND

Morgan Stanley is a world wide financial services company and its leading in the
market in securities, investment management and credit services. Morgan Stanley investment management was established in the year 1975. it provides customized asset management services and products to governments, corporations, pension funds and non profit organizations. Its services are also extending to high net worth individuals and retail investors. In India it is known as Morgan Stanley investment management Private Ltd. and its AMC is Morgan Stanley Mutual Fund. This is the first closed end diversified equity scheme serving the needs of Indian retail investors focusing on the long term capital appreciation.

ESCORT MUTUAL FUNDS

Escort Mutual Funds was set up on April 15^th, 1996 with Escorts Finance Ltd. as its sponsor. The Trustee Company is Escorts Investments Trust Ltd.. its AMC was incorporated on Dec1st, 95 with the name Escorts Asset Management Ltd.

ALLAINCE CAPITAL MUTUAL FUND

Allaince Capital Mutual Fund was set up on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsor. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India Pvt. Ltd. with the corporate office in Mumbai.

BENCHMARK MUTUAL FUND

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsor and Benchmark Trustee Company Pvt. Ltd. as the trustee Company. incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Assets Management Company Pvt. Ltd. is the AMC.

CAN BANK MUTUAL FUND

Can Bank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canara bank investment Management Service Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai.

CHOLA MUTUAL FUND

Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.

LIC MUTUAL FUND

Life Insurance Corporation on India setup LIC Mutual Fund on 19^th June 1989. It
contributed Rs.2 crore towards the corpus of the Fund. LIC Mutual Fund was constituted as a trust in accordance with the provisions of the Indian trust Act, 1882. The Company started its bsiness on 29^th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd. as the Investment Managers for mutual fund.

GIC MUTUAL FUND

GIC Mutual Fund, sponsored by General Insurance Corporation of India, a government of India undertaking and the four Public Sector General Insurance Companies, viz. National Insurance Co. Ltd, the New India Assurance Co. Ltd. the Oriental Insurance Co. Ltd and United India Insurance Co. Ltd and is constituted as a Trust in Accordance with the provisions of the Indian Trusts Act, 1882.

Types of Mutual Funds

Mutual fund schemes may be classified on the basis of its structure and its investment objective.

By Structure:

Open-ended Funds

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

Closed-ended Funds

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

Interval Funds

Interval funds combine the features of open-ended and close-ended schemes.
They are open for sale or redemption during pre-determined intervals at NAV related prices.

By Investment Objective:

Growth Funds:

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time

Income Funds:

The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds, corporate
debentures and Government securities. Income Funds are ideal for capital stability and regular income.

Balanced Funds:

The aim of balanced funds is to provide both growth and regular income. Such
schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.

Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and interbank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods.

Load Funds:

A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history.

No-Load Funds:

A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work.

Other Schemes:

Tax Saving Schemes:

These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30, 2000.

Special Schemes:

Industry Specific Schemes:

Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG, Pharmaceuticals etc.

Index Schemes:

Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50.

Sectoral Schemes:

Sectoral Funds are those, which invest exclusively in a specified industry or a
group of industries or various segments such as 'A' Group shares or initial public offerings.

BENEFITS OF MUTUAL FUND INVESTMENT

Professional Management:

Mutual Funds provide the services of experienced and skilled professionals,
backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme.

Diversification:

Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.

Convenient Administration:

Investing in a Mutual Fund reduces paperwork and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient.

Return Potential:

Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.

Low Costs:

Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.

Liquidity:

In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund.

Transparency:

You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook.

Flexibility:

Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.

Affordability :

Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy.

Choice of Schemes

Mutual Funds offer a family of schemes to suit your varying needs over a
lifetime.

Well Regulated

All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.

LIMITATION OF MUTUAL FUND INVESTMENT

1. No Control Over Cost:

An Investor in mutual fund has no control over the overall costs of investing. He pays an investment management fee (which is a percentage of his investments) as long as he remains invested in fund, whether the fund value is rising or declining. He also has to pay fund distribution costs, which he would not incur in direct investing.

However this only means that there is a cost to obtain the benefits of mutual fund services. This cost is often less than the cost of direct investing.

2. No Tailor-Made Portfolios:

Investing through mutual funds means delegation of the decision of portfolio composition to the fund managers. The very high net worth individuals or large corporate investors may find this to be a constraint in achieving their objectives.

However, most mutual funds help investors overcome this constraint by offering large no. of schemes within the same fund.

3. Managing A Portfolio Of Funds:

Availability of large no. of funds can actually mean too much choice for the
investors. He may again need advice on how to select a fund to achieve his objectives. AMFI has taken initiative in this regard by starting a training and certification program for prospective Mutual Fund Advisors. SEBI has made this certification compulsory for every mutual fund advisor interested in selling mutual fund.

a. Taxes:

During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.

b. Cost of Churn:

The portfolio of fund does not remain constant. The extent to which the portfolio changes is a function of the style of the individual fund manager i.e. whether he is a buy and hold type of manager or one who aggressively churns the fund. It is also dependent on the volatility of the fund size i.e. whether the fund constantly receives fresh subscriptions and redemptions. Such portfolio changes have associated costs of brokerage, custody fees etc. that lowers the portfolio return commensurately.

Net Asset Value (NAV)

The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, this is the amount that the shareholders would collectively own. This gives rise to the concept of net asset value per unit, which is the value, represented by the ownership of one unit in the fund. It is calculated simply by dividing the net asset value of the fund by the number of units. However, most people refer loosely to the NAV per unit as NAV, ignoring the "per unit". We also abide by the same convention.

Calculation of NAV

The most important part of the calculation is the valuation of the assets owned by the fund. Once it is calculated, the NAV is simply the net value of assets divided by the number of units outstanding. The detailed methodology for the calculation of the asset value is given below.

Asset value is equal to

Sum of market value of shares/debentures

+ Liquid assets/cash held, if any

+ Dividends/interest accrued Amount due on unpaid assets Expenses accrued but not paid

HISTORY OF MUTUAL FUND:

Mutual Funds in India (1964-2000)

The end of millennium marks 36 years of existence of mutual funds in this country. The ride through these 36 years is not been smooth. Investor opinion is still divided. While some are for mutual funds others are against it.

UTI commenced its operations from July 1964 .The impetus for establishing a
formal institution came from the desire to increase the propensity of the middle and lower groups to save and to invest. UTI came into existence during a period marked by great political and economic uncertainty in India. With war on the borders and economic turmoil that depressed the financial market, entrepreneurs were hesitant to enter capital market.

UTI commenced its operations from July 1964 "with a view to encouraging savings and investment and participation in the income, profits and gains accruing to the Corporation from the acquisition, holding, management and disposal of securities." Different provisions of the UTI Act laid down the structure of management, scope of business, powers and functions of the Trust as well as accounting, disclosures and regulatory requirements for the Trust.

The opening up of the asset management business to private sector in 1993 saw international players like Morgan Stanley, Jardine Fleming, JP Morgan, George Soros and Capital International along with the host of domestic players join the party. But for the equity funds, the period of 1994-96 was one of the worst in the history of Indian Mutual Funds.

1999-2000 Year of the funds

Mutual funds have been around for a long period of time to be precise for 36 yrs but the year 1999 saw immense future potential and developments in this sector. This year signaled the year of resurgence of mutual funds and the regaining of investor confidence in these MF’s. This time around all the participants are involved in the revival of the funds the AMC’s, the unit holders, the other related parties. However the sole factor that gave lifr to the revival of the funds was the Union Budget. The budget brought about a large number of changes in one stroke. An insight of the Union Budget on mutual funds taxation benefits is provided later.

It provided centrestage to the mutual funds, made them more attractive and
provides acceptability among the investors. The Union Budget exempted mutual fund dividend given out by equity-oriented schemes from tax, both at the hands of the investor as well as the mutual fund. No longer were the mutual funds interested in selling the concept of mutual funds they wanted to talk business which would mean to increase asset base, and to get asset base and investor base they had to be fully armed with a whole lot of schemes for every investor .So new schemes for new IPO’s were inevitable. The quest to attract investors extended beyond just new schemes. The funds started to regulate themselves and were all out on winning the trust and confidence of the investors under the aegis of the Association of Mutual Funds of India (AMFI)

One cam say that the industry is moving from infancy to adolescence, the industry is maturing and the investors and funds are frankly and openly discussing difficulties opportunities and compulsions.

Future Scenario

The asset base will continue to grow at an annual rate of about 30 to 35 % over
the next few years as investor’s shift their assets from banks and other traditional avenues. Some of the older public and private sector players will either close shop or be taken over.

Out of ten public sector players five will sell out, close down or merge with stronger players in three to four years. In the private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come.

But this does not mean there is no room for other players. The market will witness a flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the time to come. Some big names like Fidelity, Principal, Old Mutual etc. are looking at Indian market seriously. One important reason for it is that most major players already have presence here and hence these big names would hardly like to get left behind.

The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in it’s Net Asset Value (NAV).

SEBI is working out the norms for enabling the existing mutual fund schemes to
trade in derivatives. Importantly, many market players have called on the Regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade in Derivatives.

GROWTH IN ASSETS UNDER MANAGEMENT

RECENT TRENDS IN MUTUAL FUND INDUSTRY :

The most important trend in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by nationalized banks and smaller private sector players. Many nationalized banks got into the mutual fund business in the early nineties and got off to a good start due to the stock market boom prevailing then. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity.

Few hired specialized staff and generally chose to transfer staff from the parent organizations. The performance of most of the schemes floated by these funds was not good. Some schemes had offered guaranteed returns and their parent organizations had to bail out these AMC’s by paying large amounts of money as the difference between the guaranteed and actual returns. The service levels were also very bad.

Most of these AMC’s have not been able to retain staff, float new schemes etc. and it is doubtful whether, barring a few exceptions, they have serious plans of continuing the activity in a major way. The experience of some of the AMC’s floated by private sector Indian companies was also very similar. They quickly realized that the AMC business is a business, which makes money in the long term and requires deep-pocketed support in the intermediate years.

Some have sold out to foreign owned companies, some have merged with others and there is general restructuring going on. The foreign owned companies have deep pockets and have come in here with the expectation of a long haul. They can be credited with introducing many new practices such as new product innovation, sharp improvement in service standards and disclosure, usage of technology, broker education and support etc. In fact, they have forced the industry to upgrade itself and service levels of organizations like UTI have improved dramatically in the last few years in response to the competition provided by these.

WHY SHOULD INVESTORS INVEST IN MUTUAL FUND?

An investor avails of the service of experienced and skilled professionals who are backed by a dedicated of companies and selects suitable investments to achieve the objectives of the schemes.

 Mutual funds invest in a number of companies across a broad cross- section of industries and sectors. This diversification reduces the risk because seldom do all the stocks decline at the same time and in the same proportion. The investors achieve this diversification through a mutual fund with far less money than you can do on our own.

 Investing in a mutual fund reduces paperwork and helps an investor avoid many problems such as bad deliveries, delayed payments and unnecessary follow.

EMERGING ISSUES IN MUTUAL FUND

 Rating of Mutual Fund Schemes:

Total returns has been the criteria for measuring the performance of mutual fund. Therefore, CRISIL has development a composite performance ranking which measures performance for each of the open- ended schemes. According to CRISIL, this measures is applicable only to those schemes, which are at least two years old and disclose 100% of their portfolios.

 Changes in Mutual Fund due to the Advent of Net:

As per SEBI regulations, bond funds and equity funds can charge a maximum of 2.25% and 2.5% as administrative fees, respectively. Mutual Funds could bring down their administrative costs to 0.75%, if trading is done online and consequently improves the return potential of their schemes. Mutual Funds could provide better advise or servise to their investors through the Net.

 New Norms on NPA Classification:

The Malegan committee has made important recommendations regarding norms on classification of NPAs in debt securities and norms for valuation of liquid securities in a mutual fund schemes. The committee has recommended that debt securities held by mutual fund in their portfolio can be classified as NPA, if the principal or interest is not received for six months. The mutual funds will have to disclose the NPAs to unit holders in a half-yearly basis.

 INFLUENCE OF TECHNOLOGY:

A majority of the mutual fund have their own websites providing basic information relating to the schemes. Mutual Fund have begun to use electronic fund transfer method top remit their dividends and redemption proceeds. However, the most significant influence of technology is seen in servicing investors. So technology can bridge the gap between investor education and products positioning.

 PRODUCT INNOVATION:

Product innovation is an emerging feature in the mutual fund industry in India. Most of the products offered by mutual fund can be divided among three classes of cash funds, income funds and equity funds. The year 2002 was different in that the products offered were far more innovative. Templeton India launched a debt fund that would invest predominantly in floating rate bonds.

 INDICES FOR MUTUAL FUNDS:

The AMFI has recently launched four indices for gilt funds and another set of indices for balanced funds, bond funds, monthly income plans and liquid funds. The indices, which have been developed and will be maintained by ICICI securities and finance companied and CRISIL.com, respectively, will be mandated for use by mutual funds to enable the comparison of performance.

 FUNDS OF FUNDS:

The SEBI may soon permit mutual funds to float a new category of funds called “funds of funds”, which will invest in other mutual fund schemes. These scheme will enable people to invest in different mutual funds schemes through a single find

MUTUAL FUND BEST PRCTICES

THE PRACTICE OF “RESTFUL” Risk- Reward Relationship:

A clear and direct relationship of risk with reward has to be developed and the concept instilled in the mind of the investor, and this is the basis of all classification of Mutual Fund.

Ease of Business:

The business of Mutual Fund is not an easy one. It is easy only for the ones who have either been in the business for a long time, or for the people, institutions which have been in the investment space for a long time and are willing to experiment and learn from their mistake, and can be flexible.

Service:

The service provision ought to be flawless, for after all, Mutual Fund is a service,
and the only way the number of customers can be increased and the existing ones retained is by providing a higher level of service, thereby increasing customer satisfaction.

Trust / Transparency:

A high level of transparency has to be built into the system of processes and investments in Mutual Fund. This is of vital importance as the terms “Transparency” and “Trust”, in the case of Mutual Funds is synonyms. Trust in the firm would come only with transparency. And with Trust would come more business.

Fairness to Investors:

This, of course, is an offshoot of the previous point that we made. No business
can survive unless it is fair to the customer. However, what is important here is that it has to be made evidently clear that the firm is actually being fair to its customers. Modesty doesn’t help, and this has to be told to your customers so that they actually notice.

The objective of the investment have to be always kept in mind while marketing Mutual Fund, for if there is a deviation, its utility is lost, or the customers remain unsatisfied.

Liquidity:

This has again and again highlighted, for it the basic premise that most investors invest in Mutual Fund only because of the high level of liquidity. There has to be a good market development for your issue, so that there is a ready market available for them.

COMPARATIVE STUDY OF MUTUAL FUNDS ON THE BASES OF ALPHA, BETA AND STANDARD DEVIATION

ALPHA:-

Measures how much if any of the extra risk helped the fund outperform its
corresponding benchmark. Using beta, alpha's computation compares the fund's performance to that of the benchmark's risk-adjusted returns and establishes if the fund's returns outperformed the market's, given the same amount of risk. For example, if a fund has an alpha of 1, it means that the fund outperformed the benchmark by 1%. Negative alphas are bad in that they indicate that the fund under performed for the amount of extra, fund-specific risk that the fund's investors undertook.

BETA :-

Beta is useful statistical measure, which determines the volatility, or risk, of a fund in comparison to that of its index or benchmark. A fund with a beta very close to 1 means the fund's performance closely matches the index or benchmark. A beta greater than 1 indicates greater volatility than the overall market, and a beta less than 1 indicates less volatility than the benchmark.

STANDARD DEVIATION :-

The standard deviation essentially reports a fund's volatility, which indicates the
tendency of the returns to rise or fall drastically in a short period of time. A security that is volatile is also considered higher risk because its performance may change quickly in either direction at any moment. The standard deviation of a fund measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return.

SENSEX RETURNS:

MONTH SENSEX RETURNS

Ø March -0.14

Ø April 0.14

Ø May 0.02

Ø June -0.17

Ø July 0.11

CALCULATION OF RETURNS ON MUTUAL FUND SCHEMES: BALANCE

FUND:

Ø TATA BALANCED FUND (GROWTH)

Ø PRU ICICI FUND (GROWTH)

Ø HDFC PRUDENCE FUND (GROWTH)

TATA BALANCED FUND

DATE NAV DATE NAV DATE NAV DATE NAV DATE NAV
RETURN RETURN RETURN RETURN RETURN
(%) (%) (%) (%) (%)
1-Mar -1.30% 2-Apr -1.94 3-May 1.16% 1-Jun 0.09% 2-Jul 0.34%
2-Mar -3.23% 3-Apr 0.74% 4-May -0.39% 4-Jun -0.49% 3-Jul 0.74%
5-Mar 1.10% 4-Apr 1.06% 7-May -0.23% 5-Jun 0.62% 4-Jul 0.17%
6-Mar 1.10% 5-Apr 0.55% 8-May -0.44% 6-Jun -1.10% 5-Jul -0.27%
7-Mar -0.91% 9-Apr 1.64% 9-May 0.07% 7-Jun -0.09% 6-Jul 0.52%
8-Mar 2.36% 10-Apr 0.28% 10-May 0.01% 8-Jun -0.59% 9-Jul 0.45%
9-Mar -0.84% 11-Apr 0.50% 11-May 0.26% 11-Jun -0.22% 10-Jul -0.39%
12-Mar 0.80% 12-Apr -0.13% 14-May 0.83% 12-Jun -0.11% 11-Jul 0.14%
13-Mar 0.82% 13-Apr 1.52% 15-May 0.08% 13-Jun -0.45% 12-Jul 1.17%
14-Mar -1.96% 16-Apr 1.74% 16-May 1.19% 14-Jun 1.18% 13-Jul 0.83%
16-Mar -0.60% 17-Apr -0.47% 17-May 0.83% 15-Jun 0.04% 16-Jul 0.17%
19-Mar 1.33% 18-Apr 0.01% 18-May -0.05% 18-Jun -0.25% 17-Jul -0.68%
20-Mar 0.24% 19-Apr 0.06% 21-May 0.59% 19-Jun 1.11% 19-Jul 0.83%
21-Mar 0.93% 20-Apr 1.08% 22-May 0.24% 20-Jun 0.75% 20-Jul 0.07%
22-Mar 1.87% 23-Apr 0.10% 23-May -0.28% 21-Jun 0.70% 23-Jul 0.94%
23-Mar 0.31% 24-Apr 0.81% 24-May -0.62% 22-Jun -0.23% 24-Jul 0.14%
26-Mar -0.41% 25-Apr 0.16% 25-May 0.55% 25-Jun 0.31% 25-Jul -0.75%
28-Mar -1.17% 26-Arp -0.13% 28-May 0.37% 26-Jun 0.48% 26-Jul -0.09%
27-Apr -0.78% 29-May 0.71% 27-Jun -0.31% 27-Jul 2.66%
30-Apr 0.61% 30-May -0.47% 28-Jun 0.29% 30-Jul 0.01%
31-May 0.79% 29-Jun 0.95% 31-Jul 1.67%

TOTAL 0.44% TOTAL -1.85% TOTAL 5.20% TOTAL 2.68% TOTAL 8.67%
Avg. Avg. - Avg. Avg. Avg.
RETURNS 0.02% RETURNS 0.092325 RETURNS 0.25% RETURNS 0.13% RETURNS 0.41%

PRU ICICI BALANCED FUND

DATE NAV DATE NAV DATE NAV DATE NAV DATE NAV

RETURN RETURN RETURN RETURN RETURN

(%) (%) (%) (%) (%)

1-Mar 1.05% 2-Apr -1.92% 3-May 1.03% 1-Jun 0.16% 2-Jul 0.02%

2-Mar -1.66 3-Apr 0.80% 4-May -0.74% 4-Jun -0.60% 3-Jul 0.90%

5-Mar -3.23% 4-Apr 0.64% 7-May -0.34% 5-Jun 0.55% 4-Jul -0.22%

6-Mar 1.44% 5-Apr 0.39% 8-May -0.60% 6-Jun -1.62% 5-Jul -0.08%

7-Mar -0.86% 9-Apr 1.57% 9-May 0.09% 7-Jun -0.06% 6-Jul 0.14%

8-Mar 2.54% 10-Apr -0.12% 10-May 0.09% 8-Jun -0.56% 9-Jul 0.57%

9-Mar -0.70% 11-Apr 0.42% 11-May 0.55% 11-Jun 0.03% 10-Jul -0.30%

12-Mar 0.34% 12-Apr -0.47% 14-May 1.15% 12-Jun -0.20% 11-Jul 0.30%

13-Mar 0.76% 13-Apr 1.96% 15-May 0.17% 13-Jun -0.59% 12-Jul 0.97%

14-Mar -2.11% 16-Apr 1.20% 16-May 0.79% 14-Jun 1.27% 13-Jul 0.59%

16-Mar 0.00% 17-Apr -0.66% 17-May 0.79% 15-Jun 0.03% 16-Jul -0.21%

19-Mar 1.11% 18-Apr 0.38% 18-May -0.17% 18-Jun -0.34% 17-Jul -0.16%

20-Mar 0.76% 19-Apr -0.12% 21-May 1.01% 19-Jun 0.92% 19-Jul 0.83%

21-Mar 0.70% 20-Apr 1.24% 22-May 0.06% 20-Jun 0.78% 20-Jul 0%

22-Mar 1.71% 23-Apr 0.03% 23-May -0.39% 21-Jun 0.22% 23-Jul 0.69%

23-Mar -0.15% 24-Apr 0.66% 24-May -0.58% 22-Jun -0.47% 24-Jul 0.21%

26-Mar -0.59% 25-Apr 0.37% 25-May 0.59% 25-Jun -0.06% 25-Jul -0.92%

28-Mar -1.31% 26-Apr -0.23% 28-May 0.83% 26-Jun 0.36% 26-Jul -0.18%

27-Apr -1.33% 29-May 0.55% 27-Jun -0.17% 27-Jul -2.70%

30-Apr 0.03% 30-May -0.79% 28-Jun 0.19% 30-Jul -0.24%

31-May 0.41% 29-Jun 0.85% 31-Jul 1.61%

TOTAL -0.20% TOTAL 4.84% TOTAL 4.50% TOTAL 0.69% TOTAL 1.90%

Avg. Avg. Avg. Avg. Avg.

RETURNS 0.25% RETURNS 0.24% RETURNS 0.21% RETURNS 0.03% RETURNS 0.09%

HDFC PRUDENCE FUND

DATE NAV DATE NAV DATE NAV DATE NAV DATE NAV

RETURN RETURN RETURN RETURN RETURN

(%) (%) (%) (%) (%)

1-Mar 0.15% 2-Apr -1.50% 3-May 0.79% 1-Jun 0.71% 2-Jul 0.72%

2-Mar -1.05% 3-Apr 0.52% 4-May -0.57% 4-Jun -0.57% 3-Jul 0.67%

5-Mar -3.39% 4-Apr 0.75% 7-May -0.12% 5-Jun 0.72% 4-Jul -0.51%

6-Mar 0.09% 5-Apr 0.61% 8-May -0.59% 6-Jun -0.88% 5-Jul -0.34%

7-Mar -1.34% 9-Apr 1.49% 9-May 0.22% 7-Jun -0.11% 6-Jul 0.28%

8-Mar 1.91% 10-Apr 0.55% 10-May -0.01% 8-Jun -0.36% 9-Jul 0.75%

9-Mar -0.19% 11-Apr 0.83% 11-May 0.48% 11-Jun 0.15% 10-Jul -0.24%

12-Mar 0.66% 12-Apr -0.47% 14-May 1.37% 12-Jun -0.66% 11-Jul -0.06%

13-Mar 0.29% 13-Apr 0.97% 15-May 0.30% 13-Jun -0.15% 12-Jul 1.17%

14-Mar -1.42% 16-Apr 1.50% 16-May 0.62% 14-Jun 1.17% 13-Jul 0.28%

16-Mar -0.14% 17-Apr -0.73% 17-May 0.11% 15-Jun 0.16% 16-Jul 0.66%

19-Mar 0.68% 18-Apr 0.09% 18-May -0.30% 18-Jun -0.24% 17-Jul -0.65%

20-Mar 0.72% 19-Apr 0.01% 21-May 0.57% 19-Jun 0.69% 19-Jul 1.02%

21-Mar 0.98% 20-Apr 0.45% 22-May 0.24% 20-Jun 1.12% 20-Jul 0.13%

23-Mar -0.24% 23-Apr 0.13% 23-May 0.01% 21-Jun 0.41% 23-Jul 0.57%

26-Mar -0.31% 24-Apr 0.24% 24-May -0.85% 22-Jun -0.32% 24-Jul -0.07%

28-Mar -1.18% 25-Apr 0.55% 25-May 0.37% 25-Jun 0.21% 25-Jul -0.42%

26-Apr -0.26% 28-May 1.21% 26-Jun 0.37% 26-Jul 0.19%

27-Apr -0.41% 29-May 0.33% 27-Jun 0.11% 27-Jul -1.49%

30-Apr 0.81% 30-May -0.42% 28-Jun -0.09% 30-Jul -0.04%

31-May 0.88% 29-Jun 0.71% 31-Jul 1.73%

TOTAL -3.78% TOTAL 6.13% TOTAL 4.64% TOTAL 3.15% TOTAL 4.35%

Avg. Avg. Avg. Avg. Avg.

RETURNS -0.22% RETURNS 0.31% RETURNS 0.22% RETURNS 0.15% RETURNS 0.21%

CALCULATION OF RETURNS ON MUTUAL FUND SCHEMES:

Sensex (Sm-Sm)* (Sm-mean)* (Mm-mean)*

Month Returns tata bal (Sm-mean) (Mm-mean) (Mm-Mm) (Sm-mean) (Mm-mean)

March -0.14 0.02 -0.132 -0.1240 0.016368 0.0004 0.015376

April 0.14 -0.09 0.148 -0.2340 -0.034632 0.0081 0.054756

May 0.02 0.25 0.028 0.1060 0.002968 0.0625 0.011236

June -0.17 0.13 -0.162 -0.0140 0.002268 0.0169 0.000196

July 0.11 0.41 0.118 0.2660 0.031388 0.1681 0.070756

TOTAL -0.04 0.72 0.01836 0.256 0.030525

mean -0.008 0.144

BETA 0.01836/ 0.08028 ALPHA 0.1458296

0.2286996 Standard Deviation 0.030525

PRU

Month	sensex returns	ICICI	(Sm-mean)	(Tm-mean)	*(Sm-Sm)(Tm-Tm)**	*(Tm-mean)(tm-mean)**	*(Tm-mean)(tm-mean)**
March	-0.14	0.25	-0.132	0.086	-0.011352	0.007396	0.007396
April	0.14	0.24	0.148	0.076	0.011248	0.005776	0.005776
May	0.02	0.21	0.028	0.046	0.001288	0.002116	0.002116
June	-0.17	0.03	-0.162	-0.134	0.021708	0.017956	0.017956
July	0.11	0.09	0.118	-0.074	-0.008732	0.005476	0.005476
TOTAL	-0.04	0.82	0.01416
MEAN	-0.008	0.164
BETA 0.01416/ 0.08028 ALPHA 0.174
0.1654111 Standard Deviation 0.006

sensex HDFC (Sm- (Mm- (Sm-Sm)*(Tm- (Tm-mean)*(tm-

Mon

MAG (Mm-

Month sensex returns BAL (Sm-mean)mean) (Sm-Sm)*(Tm-Tm) (Tm-mean)*(tm-mean)

March -0.14 -0.04 -0.132 -0.186 -0.186 0.034596

April 0.14 0.32 0.148 0.174 0.174 0.030276

May 0.02 0.23 0.028 0.084 0.084 0.007056

June -0.17 0.08 -0.162 -0.066 -0.066 0.004356

July 0.11 0.14 0.118 -0.006 -0.006 0.013924

TOTAL -0.04 0.73 0.012

MEAN -0.008 0.146

BETA 0.012/ 0.08028 ALPHA 0.1522422

0.149476831 Standard Deviation 0.0137

March -0.14 -0.22 -0.132 -0.354 0.046728 0.125316

April 0.14 0.31 0.148 0.176 0.026048 0.030976

May 0.02 0.22 0.028 0.086 0.002408 0.007396

June -0.17 0.15 -0.162 0.016 -0.002592 0.000256

July 0.11 0.21 0.118 0.076 0.008968 0.005776

TOTAL -0.04 0.67

MEAN -0.008 0.134

BETA 0.08156/ 0.08028 ALPHA 0.142127554

1.015944195 Standard Deviation 0.0524

BETA 0.10202/ 0.08028 ALPHA 0.218166418

1.270802192 Standard Deviation 0.0185

SCHEMES BETA ALPHA S.D.

TATA 0.2286996 0.146 0.031

PRU ICICI 0.174 0.165 0.006

HDFC 1.314365517 0.142 0.0524

MAG BAL 0.132383266 0.152 0.0137

JM BAL 1.24 0.218 0.0185

INTERPRETATION BETA:

This indicates that HDFC Schemes in balance fund has given return with par with SENSEX. The highest volatility shown in balance fund is by JM Morgan Balance fund. And the least volatility is been shown by Magnum Balance Fund.

Alpha:

Alpha of JM Morgan is the highest, this indicate that with the given risk the fund
has given good return. It indicate that JM Morgan strategy is that, it takes comparatively more risk but at the same time it gives good return. The less return is given by TATA Balance Fund.

Standard Deviation:

Standard Deviation indicate volatility in the performance. From the Balance Fund it indicates that HDFC has high volatility in its portfolio.

Investors who do not want to take much risk normally go for Balanced Funds in Balance Fund also investors who are risk averse can go for Pru ICICI as has less beta that is it is less volatile but at the same time it is giving good returns.

EQUITY FUND:

· Reliance Vision Fund

· Magnum Multicap Fund

· Birla Midcap Fund

CALCULATION OF RETURNS ON MUTUAL FUND SCHEMES:

EQUITY DIVERSIFIED

RELIANCE VISION FUND - (G)

DATE NAV DATE NAV DATE NAV DATE NAV DATE NAV

RETURN RETURN RETURN RETURN RETURN

(%) (%) (%) (%) (%)

1-Mar 1.25% 2-Apr 2.36% 3-May 1.94% 1-Jun 0.54% 2-Jul 0.85%

2-Mar -2.32% 3-Apr 1.09% 4-May -0.21% 4-Jun -0.93% 3-Jul 0.50%

5-Mar -4.74% 4-Apr 0.84% 7-May -0.34% 5-Jun -0.18% 4-Jul 0.62%

6-Mar 1.31% 5-Apr 0.87% 8-May -0.78% 6-Jun -1.18% 5-Jul -0.18%

7-Mar -0.97% 9-Apr 2.30% 9-May 0.42% 7-Jun -0.12% 6-Jul 0.70%

8-Mar 3.96% 10-Apr 0.48% 10-May 0.01% 8-Jun -0.70% 9-Jul 1.19%

9-Mar -1.29% 11-Apr 0.15% 11-May 0.80% 11-Jun 0.22% 10-Jul -0.55%

12-Mar 0.17% 12-Apr 0.06% 14-May 1.00% 12-Jun -0.27% 11-Jul -0.19%

13-Mar 1.10% 13-Apr 1.98% 15-May 0.21% 13-Jun -0.55% 12-Jul 1.78%

14-Mar -2.52% 16-Apr 1.28% 16-May 1.04% 14-Jun 1.29% 13-Jul 0.39%

16-Mar -0.66% 17-Apr 0.83% 17-May 1.34% 15-Jun 0.13% 16-Jul 0.39%

19-Mar 1.52% 18-Apr 0.35% 18-May -0.26% 18-Jun 0.24% 17-Jul -0.71%

20-Mar 0.77% 19-Apr 0.11% 21-May 0.63% 19-Jun 1.68% 19-Jul 1.49%

21-Mar 0.67% 20-Apr 1.32% 22-May 0.74% 20-Jun 1.27% 20-Jul 0.02%

22-Mar 2.14% 23-Apr 0.23% 23-May -0.84% 21-Jun 0.45% 23-Jul 0.49%

23-Mar -0.03% 24-Apr 1.02% 24-May 0.31% 22-Jun 0.07% 24-Jul 0.02%

26-Mar -1.11% 25-Apr 0.68% 25-May 0.32% 25-Jun 0.39% 25-Jul -0.79%

28-Mar -1.52% 26-Apr 0.69% 28-May 0.72% 26-Jun 0.18% 26-Jul 0.36%

27-Apr 1.41% 29-May 0.96% 27-Jun -0.27% 27-Jul -2.42%

30-Apr 1.00% 30-May -0.52% 28-Jun 0.70% 30-Jul 0.19%

31-May 1.02% 29-Jun 0.71% 31-Jul 1.54%

TOTAL -2.27% TOTAL 9.73% TOTAL 8.51% TOTAL 3.67% TOTAL 5.69%

Avg. Avg. Avg. Avg. Avg.

RETURNS -0.13% RETURNS 0.49% RETURNS 0.41% RETURNS 0.17% RETURNS 0.27%

MAGNUM MULTICAP FUND (G)

BIRLA MIDCAP FUND (G)

DATE NAV DATE NAV DATE NAV DATE NAV DATE NAV

RETURN RETURN RETURN RETURN RETURN

(%) (%) (%) (%) (%)

1-Mar 0.21% 2-Apr -1.48%3-May 0.51% 1-Jun -0.08% 2-Jul 1.24%

2-Mar -0.96% 3-Apr 0.52% 4-May 0.43% 4-Jun -0.70% 3-Jul 0.66%

5-Mar -4.75% 4-Apr 1.05% 7-May -0.29% 5-Jun 0.48% 4-Jul 0.98%

6-Mar 0.29% 5-Apr 0.64% 8-May -0.38% 6-Jun -0.84% 5-Jul -0.01%

7-Mar -1.49% 9-Apr 1.72% 9-May 0.24% 7-Jun -0.18% 6-Jul 0.30%

8-Mar 2.37% 10-Apr 1.14% 10-May0.59% 8-Jun -0.49% 9-Jul 1.00%

9-Mar -0.61% 11-Apr 0.84% 11-May 1.33% 11-Jun -0.18% 10-Jul -0.63%

12-Mar 0.50% 12-Apr -0.26%14-May1.75% 12-Jun -0.61% 11-Jul 0.64%

13-Mar 0.87% 13-Apr 1.29% 15-May 0.37% 13-Jun -0.49% 12-Jul 1.47%

14-Mar -1.67% 16-Apr 1.66% 16-May 1.64% 14-Jun 1.19% 13-Jul 1.40%

16-Mar -0.57% 17-Apr 0.00% 17-May 0.27% 15-Jun 0.44% 16-Jul 1.10%

19-Mar 0.78% 18-Apr 0.36% 18-May0.11% 18-Jun 0.07% 17-Jul -0.76%

20-Mar 0.82% 19-Apr 0.27% 21-May 1.31% 19-Jun 1.03% 19-Jul 0.91%

21-Mar 0.39% 20-Apr 0.49% 22-May 0.16% 20-Jun 1.69% 20-Jul -0.35%

22-Mar 1.29% 23-Apr -0.16% 23-May -0.48% 21-Jun 0.62% 23-Jul 0.55%

23-Mar 0.32% 24-Apr 1.66% 24-May -0.70% 22-Jun -0.40% 24-Jul -0.25%

26-Mar -0.52% 25-Apr 0.77% 25-May 0.47% 25-Jun 0.21% 25-Jul -0.85%

28-Mar -1.44% 26-Apr -0.32% 28-May 1.24% 26-Jun 0.26% 26-Jul 1.02%

27-Apr -0.68% 29-May 0.35% 27-Jun 0.00% 27-Jul -2.74%

30-Apr 0.88% 30-May -0.41% 28-Jun 0.66% 30-Jul 0.60%

31-May 1.11% 29-Jun 0.95% 31-Jul 1.44%

TOTAL -4.17% TOTAL 10.39% TOTAL 9.62% TOTAL 3.63% TOTAL 7.72%

Avg. Avg. Avg. Avg. Avg.

RETURNS -0.23% RETURNS0.52% RETURNS 0.46% RETURNS0.17% RETURNS0.37%

EQUITY DIVERSIFIED

BETA 0.08578/ 0.08028 ALPHA 0.181

1.068510214 Standard Deviation 0.0161

sensex Birla (Sm- (Bm- (Sm-Sm)*(Tm- (Tm-mean)*(tm-

Month returns Mid mean) mean) Tm) mean)

March -0.14 -0.23 -0.132 -0.488 0.064416 0.017424

April 0.14 0.52 0.148 0.262 0.038776 0.021904

May 0.02 0.46 0.028 0.202 0.005656 0.000784

June -0.17 0.17 -0.162 -0.088 0.014256 0.026244

July 0.11 0.37 0.118 0.112 0.013216 0.013924

TOTAL -0.04 1.29 0.13632

MEAN -0.008 0.258

BETA 0.13632/0.08028 ALPHA 0.272

1.698056801 Standard Deviation 0.0952

sensex Fran Ind (Sm- (Bm- (Sm-Sm)*(Tm- (Tm-mean)*(tm-

Month returns Opp mean) mean) Tm) mean)

March -0.14 -0.03 -0.132 -0.31 0.04092 0.0961

April 0.14 0.41 0.148 0.13 0.01924 0.0169

May 0.02 0.73 0.028 0.45 0.0126 0.2025

June -0.17 0.14 -0.162 -0.14 0.02268 0.0196

July 0.11 0.15 0.118 -0.13 -0.01534 0.0169

TOTAL -0.04 1.4 0.0801

MEAN -0.008 0.28

BETA 0.0801/0.08028 ALPHA 0.288

0.997757848 Standard Deviation 0.087

SCHEMES BETA ALPHA S.D.

DSP ML Eq 1.09 0.241 0.036

Rel VIS 1.31 0.252 0.057

Mag Mul 1.07 0.181 0.016

Birla Mid 1.698 0.272 0.095

Fran Ind

Opp 0.998 0.288 0.087

INTERPRETATION
BETA:

Beta of Birla Midcap Equity Scheme is the highest, this indicate that the risk profile of Birla Mutual Fund for Equity schemes is more. In equity schemes all the above mention schemes have shown volatility as compared to SENSEX.

But Franklin India Opportunies Fund has shown less volatility as compared to other Equity Mutual Fund.

ALPHA:

The highest return is given by Franklin India Opportunies Fund. But the risk taken by this fund is less. Magnum Multicap fund has shown volatility at par with SENSEX but among the Equity Schemes this fund has given less returns.

STANDARD DEVIATION:

Birla and Franklin Equity Mutual Fund has shown more deviation in its Movement. Therefore these fund has shown more volatility in its performance.

For investors who invest in Equity Fund for getting more returns as compared to other schemes, thereofore in order to get more returns they have to take more risks. Investors who donot want to take risk but want to get more returns can go for Franklin India Opportunies Fund

GILT FUND:

· MAGNUM GILT FUND(SHORT TERM)

· HDFC GILT LONG TERM PLAN

· PRU ICICI GILT FUND(INVESTMENT)

· BIRLA GILT PLUS REGULAR FUND

CALCULATION OF RETURNS ON MUTUAL FUND SCHEMES:

MAGNUM GILT FUND - SHORT TERM

DATE NAV DATE NAV DATE NAV DATE NAV DATE NAV

RETURN RETURN RETURN RETURN RETURN

(%) (%) (%) (%) (%)

1-Mar 0.00% 2-Apr 0.07% 3-May 0.07% 1-Jun 0.07% 2-Jul 0.07%

2-Mar 0.02% 3-Apr 0.02% 4-May 0.02% 4-Jun 0.09% 3-Jul 0.07%

5-Mar 0.06% 4-Apr 0.02% 7-May 0.07% 5-Jun 0.03% 4-Jul 0.10%

6-Mar 0.02% 5-Apr 0.02% 8-May 0.02% 6-Jun 0.03% 5-Jul 0.18%

7-Mar 0.02% 9-Apr 0.08% 9-May 0.02% 7-Jun 0.03% 6-Jul 0.16%

8-Mar 0.02% 10-Apr 0.02% 10-May 0.02% 8-Jun 0.03% 9-Jul 0.32%

9-Mar 0.02% 11-Apr 0.02% 11-May 0.02% 11-Jun 0.08% 10-Jul 0.02%

12-Mar 0.11% 12-Apr 0.02% 14-May 0.07% 12-Jun 0.03% 11-Jul 0.02%

13-Mar 0.02% 13-Apr 0.02% 15-May 0.02% 13-Jun 0.03% 12-Jul 0.02%

14-Mar 0.02% 16-Apr 0.07% 16-May 0.02% 14-Jun 0.03% 13-Jul 0.02%

16-Mar 0.04% 17-Apr 0.02% 17-May 0.04% 15-Jun 0.03% 16-Jul 0.07%

19-Mar 0.07% 18-Apr 0.02% 18-May 0.04% 18-Jun 0.08% 17-Jul 0.02%

20-Mar 0.02% 19-Apr 0.02% 21-May 0.09% 19-Jun 0.03% 19-Jul 0.05%

21-Mar 0.02% 20-Apr 0.03% 22-May 0.04% 20-Jun 0.03% 20-Jul 0.01%

22-Mar 0.02% 23-Apr 0.08% 23-May 0.04% 21-Jun 0.03% 23-Jul 0.18%

23-Mar 0.02% 24-Apr 0.02% 24-May 0.04% 22-Jun 0.03% 24-Jul 0.02%

26-Mar 0.07% 25-Apr 0.02% 25-May 0.04% 25-Jun 0.08% 25-Jul 0.02%

28-Mar 0.04% 26-Apr 0.02% 28-May 0.20% 26-Jun 0.03% 26-Jul 0.02%

27-Apr 0.02% 29-May 0.02% 27-Jun 0.03% 27-Jul 0.01%

30-Apr 0.07% 30-May 0.02% 28-Jun 0.09% 30-Jul 0.04%

31-May 0.03% 29-Jun 0.03% 31-Jul 0.01%

TOTAL 0.61% TOTAL 0.68% TOTAL 0.95% TOTAL 0.94% TOTAL 1.43%

Avg. Avg. Avg. Avg. Avg.

RETURNS 0.03% RETURNS 0.03% RETURNS 0.05% RETURNS 0.04% RETURNS 0.07%

HDFC GILT FUND LONG TERM PLAN

DATE NAV DATE NAV DATE NAV DATE NAV DATE NAV

RETURN RETURN RETURN RETURN RETURN

(%) (%) (%) (%) (%)

1-Mar 0.26% 2-Apr 0.06% 3-May 0.13% 1-Jun 0.06% 2-Jul 0.19%

2-Mar -0.06% 3-Apr -0.90% 4-May -0.03% 4-Jun -0.01% 3-Jul 0.03%

5-Mar -0.02% 4-Apr 0.09% 7-May 0.10% 5-Jun -0.07% 4-Jul 0.16%

6-Mar 0.09% 5-Apr -0.18% 8-May 0.16% 6-Jun -0.21% 5-Jul 0.17%

7-Mar 0.08% 9-Apr 0.37% 9-May 0.12% 7-Jun 0.16% 6-Jul -0.09%

8-Mar -0.33% 10-Apr0.39% 10-May-0.23% 8-Jun -0.25% 9-Jul 0.29%

9-Mar -0.02% 11-Apr-0.14% 11-May 0.00% 11-Jun -0.92% 10-Jul -0.07%

12-Mar 0.34% 12-Apr -0.11% 14-May 0.15% 12-Jun 0.03% 11-Jul -0.03%

13-Mar -0.12%13-Apr -0.10% 15-May 0.15% 13-Jun -0.17% 12-Jul 0.04%

14-Mar -0.06%16-Apr -0.06% 16-May 0.08% 14-Jun 0.58% 13-Jul -0.02%

16-Mar -0.30%17-Apr 0.13% 17-May -0.03%15-Jun 0.34% 16-Jul 0.06%

19-Mar 0.06% 18-Apr 0.17% 18-May -0.06%18-Jun 0.48% 17-Jul 0.12%

20-Mar -0.20%19-Apr 0.08% 21-May 0.23% 19-Jun -0.10% 19-Jul 0.06%

21-Mar 0.10% 20-Apr 0.04% 22-May -0.05%20-Jun -0.08% 20-Jul 0.12%

22-Mar 0.53% 23-Apr -0.08% 23-May -0.05% 21-Jun 0.06% 23-Jul 0.59%

23-Mar 0.04% 24-Apr 0.55% 24-May -0.02% 22-Jun 0.04% 24-Jul -0.20%

26-Mar -0.23%25-Apr 0.03% 25-May 0.18% 25-Jun 0.07% 25-Jul -0.26%

28-Mar 0.13% 26-Apr -0.29% 28-May 0.38% 26-Jun -0.06% 26-Jul 0.12%

27-Apr -0.29%29-May-0.06% 27-Jun -0.09% 27-Jul -0.26%

30-Apr -0.01%30-May-0.04% 28-Jun 0.16% 30-Jul 0.30%

31-May0.16% 29-Jun 0.02% 31-Jul -0.51%

TOTAL 0.29% TOTAL -0.25% TOTAL 1.27% TOTAL 0.04% TOTAL 0.81%

Avg. Avg. Avg. Avg. Avg.

RETURNS 0.02% RETURNS -0.01% RETURNS 0.06% RETURNS 0.00% RETURNS 0.04%

PRU ICICI GILT FUND (INVESTMENT) -

DATE NAV DATE NAV DATE NAV DATE NAV DATE NAV

RETURN RETURN RETURN RETURN RETURN

(%) (%) (%) (%) (%)

1-Mar 0.04% 1-Mar 0.04% 3-May 0.09% 1-Jun -0.04%2-Jul 0.31%

2-Mar -0.04%2-Mar -0.09%4-May - 0.05% 4-Jun -0.05%3-Jul 0.34%

5-Mar 0.02% 5-Mar 0.01% 7-May - 0.05% 5-Jun -0.02%4-Jul 0.11%

6-Mar 0.00% 6-Mar 0.22% 8-May 0.09% 6-Jun 0.01% 5-Jul 0.09%

7-Mar 0.02% 7-Mar 0.07% 9-May 0.02% 7-Jun 0.00% 6-Jul 0.47%

8-Mar 0.00% 8-Mar 0.01% 10-May -0.09%8-Jun -0.09%9-Jul 0.40%

9-Mar 0.03% 9-Mar 0.02% 11-May 0.01% 11-Jun 0.14% 10-Jul 0.04%

12-Mar 0.03% 12-Mar -0.04%14-May 0.17% 12-Jun 0.10% 11-Jul 0.07%

13-Mar 0.00% 13-Mar 0.07% 15-May 0.06% 13-Jun -0.05% 12-Jul -0.08%

14-Mar -0.02%14-Mar0.06% 16-May 0.05% 14-Jun -0.05%13-Jul 0.17%

16-Mar 0.05% 16-Mar 0.00% 17-May -0.04%15-Jun 0.10% 16-Jul 0.34%

19-Mar 0.07% 19-Mar 0.08% 18-May 0.00% 18-Jun 0.24% 17-Jul 0.15%

20-Mar 0.08% 20-Mar 0.04% 21-May 0.08% 19-Jun -0.05%19-Jul 0.14%

21-Mar 0.17% 21-Mar 0.08% 22-May -0.01%20-Jun 0.01% 20-Jul 0.46%

22-Mar 0.03% 22-Mar 0.27% 23-May 0.05% 21-Jun 0.02% 23-Jul -0.17%

23-Mar -0.05%23-Mar 0.07%24-May -0.05%22-Jun -0.01% 24-Jul -0.27%

26-Mar 0.07% 26-Mar -0.17%25-May 0.11% 25-Jun -0.04%25-Jul 0.14%

28-Mar 28-Mar -0.07%28-May 0.15% 26-Jun 0.06% 26-Jul -0.28%

30-Apr -0.03%29-May-0.05% 27-Jun -0.12% 27-Jul 0.53%

30-May -0.06% 28-Jun 0.13% 30-Jul -0.49%

31-May 0.10% 29-Jun -0.02% 31-Jul

TOTAL 0.50% TOTAL 0.64% TOTAL 0.58% TOTAL 0.27% TOTAL 2.47%

Avg. Avg. Avg. Avg. Avg.

RETURNS 0.03% RETURNS 0.03% RETURNS 0.03% RETURNS 0.01% RETURNS 0.12%

BIRLA GILT PLUS - REGULAR

DATE NAV DATE NAV DATE NAV DATE NAV DATE NAV

RETURN RETURN RETURN RETURN RETURN

(%) (%) (%) (%) (%)

1-Mar 0.04% 2-Apr 0.00% 3-May 0.08% 1-Jun 0.00% 2-Jul 0.29%

2-Mar -0.03%3-Apr -0.01%4-May 0.01% 4-Jun -0.04%3-Jul 0.07%

5-Mar -0.03%4-Apr 0.02% 7-May 0.06% 5-Jun 0.04% 4-Jul 0.47%

6-Mar 0.10% 5-Apr 0.01% 8-May 0.05% 6-Jun -0.19%5-Jul 0.39%

7-Mar 0.01% 9-Apr 0.11% 9-May 0.03% 7-Jun 0.12% 6-Jul 0.03%

8-Mar -0.15%10-Apr 0.03% 10-May -0.03%8-Jun -0.19% 9-Jul 0.54%

9-Mar -0.01%11-Apr -0.03%11-May -0.01%11-Jun -0.09%10-Jul -0.03%

12-Mar 0.08% 12-Apr -0.02%14-May 0.12% 12-Jun -0.01%11-Jul -0.04%

13-Mar -0.02%13-Apr 0.02% 15-May 0.15% 13-Jun -0.03%12-Jul 0.10%

14-Mar 0.02% 16-Apr 0.03% 16-May 0.07% 14-Jun 0.04% 13-Jul -0.08%

16-Mar 0.00% 17-Apr 0.07% 17-May -0.05%15-Jun 0.05% 16-Jul 0.15%

19-Mar 0.05% 18-Apr 0.02% 18-May -0.10%18-Jun 0.12% 17-Jul 0.33%

20-Mar -0.05%19-Apr 0.09% 21-May 0.23% 19-Jun -0.05%19-Jul 0.05%

21-Mar 0.03% 20-Apr 0.03% 22-May -0.04%20-Jun -0.02%20-Jul 0.12%

22-Mar 0.13% 23-Apr 0.04% 23-May 0.00% 21-Jun 0.03% 23-Jul 0.51%

23-Mar 0.02% 24-Apr 0.75% 24-May -0.02%22-Jun 0.00% 24-Jul -0.13%

26-Mar 0.02% 25-Apr 0.08% 25-May 0.05% 25-Jun 0.12% 25-Jul -0.11%

28-Mar 0.04% 26-Apr -0.26%28-May 0.07% 26-Jun -0.10%26-Jul 0.16%

30-Mar 0.03% 27-Apr -0.17%29-May -0.03%27-Jun -0.10%27-Jul -0.13%

30-Apr -0.04%30-May-0.01%28-Jun 0.22% 30-Jul 0.17%

31-May 0.04%29-Jun 0.01% 31-Jul -0.04%

TOTAL 0.28% TOTAL 0.77% TOTAL 0.67% TOTAL -0.07% TOTAL 2.82%

Avg. Avg. Avg. Avg. Avg.

RETURNS 0.01% RETURNS 0.04% RETURNS 0.03% RETURNS 0.00% RETURNS 0.13%

HDFC LIQUID FUND

PRU ICICI LIQUID

MAGNUM INST. CASH

INTERPRETATION:

BETA

In Liquid most of the schemes has shown more volatility except HDFC Liquid
Fund and JM Basic Fund. All other funds has been volatile as compared to SENSEX.

ALPHA . As the nature of Liquid Fund is to provide easy liquidly to investors, therefore the return accepted from this type of fund is also less. Among these funds Magnum Instacash has given less returns as compared to other funds.

STANDARD DEVIATION

Among the above mentioned schemes Pru ICICI has shown more volatility in its portfolio. But Magnum Insta cash has shown no deviation in its portfolio.

Therefore for short term investors HDFC Liquid Fund is suitable as it has given
returns and at the same time in has not shown much volatility as compared to SENSEX
returns.

Remember to pack the following investment gems in your luggage as you set forth on your financial journey. These guideposts reinforce and expand the key points covered throughout Building Your Mutual Fund Portfolio.

Ø Diversify for investment success: Develop a solid plan based on your age, time horizon, liquidity needs, income and risk tolerance. Stick with it until your circumstances change.

Ø Periodically rebalance your holdings to your original asset allocation
benchmark: By doing this, you will wind up selling shares in expensive funds and reinvesting in cheaper ones.

Ø Invest as much as you can in stock funds: As a rough rule, try to hold a
percentage at least equal to “100 minus your age” in stocks. Senior citizens might consider 110 minus their ages to avoid growing too conservative.

Ø Don’t hop from fund to fund: Traders often lag the long-range returns of thestock and bonds markets.

Ø Set your sights on building wealth slowly: Get rich quick schemes often

Ø backfire. People who amass fortunes through speculation frequently also learn how itfeels to get poor quickly.

Ø Keep it simple: Basic investment plans often work best on the quest for wealth.

Ø Avoid gimmicks: Don’t invest in anything you don’t understand. Pain vanilla

funds survive the test of time better than faddish peers that make use of derivatives and other arcane strategies.

Ø Do your home work before starting out: Never buy or sell Mutual Funds solely on the basis of tips. If a suggestion seems to have merit, do your own analysis.

Ø Focus on risk, return and cost when evaluating funds: Keep in mind that a
fund’s risk and expenses are easier to predict than its return.

Ø Judge past performance with a grain of salt: Historic returns don’t always
predict future results, especially if a fund’s management or investment style has changed recently.

Ø Don’t neglect the prospectus: You’ll find the guts of this document in the
“financial - highlights”. Look for past expense rations, portfolio turnovers, total annual returns and year to year changes in assets.

Ø Consider hiring a stockbroker or financial planner if you need help with your portfolio: Just make sure the individual is competent and will your needs. The more you understand about investment risks, return and costs, better you can evaluate the kind of jobs your advisor is doing.

Ø Don’t overlook estate planning in your investment game plan: A living trust has important advantage over a will.

Ø Make sure your Mutual Fund accounts are titled correctly: Individual, joint,
custodial and trust account are four common alternatives. The manners of titling takes precedence over any instructions in your heirs know about your accounts.

Ø Take advantage of fund company service: Telephone reps often can furnish answers to your questions.

Ø Let time work for you: At 10 percent annually - the long run average return on stocks your money doubles every 7.3 years, quadruples every 14.6 years and expands tenfold every 24.2 years.

Ø Emphasize time over market timing: Buy good stock funds and stay with them for the long haul. Even professional have trouble predicting the market’s next move.

Ø Invest regularly: It’s been demonstrated that you can do well over the long haul even if you invest money each year at or near the market’s annual peak.

Ø Recognize that the risk of being in stock decreases as your holding period
lengthens: Known as time diversification, it works because the good years far outweigh the bad over lengthy period. On average, seven out of every ten years are winners in the stock market.

Ø Save as much of your paycheck as you can: The older you get and the higher your income, the larger the percentage you should strive to set aside.

Ø Consider painless and efficient automatic investment plans, as offered by
many fund companies. Your monthly investment go straight into your chosen fund from either a bank account or your paycheck.

Ø Pay attention to what T-bills yield relative to stocks: by dividing the yield on
the former by the yield on the latter, when 91 days T-bills yield more than twice the sensex 30’s yield, it could signal that stocks have become overpriced.

Ø Conversely, recognize the excellent value offered by stocks any time the T- bills /stock yield ration is considerably below 2. At the extreme, stock market condition could be highly favorable when both numbers are about equal.

Ø Don’t expect good or bad times to last forever. Stocks can stay overvalued or undervalued for surprisingly long stretches, but bull markets always come to an end, and o do bear markets.

Ø Use standard deviation instead of beta to evaluate a mutual fund’ risk: The
former is a pure, unbiased measure of volatility, which is not tied to a particular stock-price index as is beta. Standard deviation measures the extent to which returns bob up and down around their average.

Ø Examine your fund’s composite PE ratio: The average price earnings ratio for all the stocks it holds. If a fund’s PE is well above that of the sensex 30’s, it faces greater possible losses in a correction or bear market.

Ø Remember that volatile funds might not be so bad when held in appropriate
proportions within a broad portfolio. Combining funds that rise and fall at different times could result in an overall smoother ride.

Ø Combine funds that follow the growth and value stock picking styles: as one
style normally is out of favour when the other is in. your portfolio’s fluctuations will be less erratic if you include investments from both camps.

Ø Don’t give up stock funds, even if you’re retired: A 65 year old retiree can
expect to live another 20 years or so. If you need income, take your dividends in cash. If that’s insufficient, make systematic withdrawals from a diversified portfolio.

Ø But don’t set up a systematic withdrawal plan without forst calculating how
long your capital will last: given your expected return and withdrawal rate. Considering the impact of taxes and inflation, you risk depleting your nest egg if your annual withdrawal rate exceeds about 6 percent.

Ø Stay away from funds that are not members of reputable families: Unless you know the manager has an excellent record. In particular, avoid tiny funds those with assts less than 400 million unless they are promising members of an established group.

Ø Don’t assume that laggard funds will bounce back: Long term losers have

perennially poor performance records, along with outsized expenses, a small and declining asset base, high portfolio turnover and, sometimes, legal problems.

Ø Don’t look to your nest egg for thrills and excitement: Some times, relatively dull investments, such as index funds, are best.

Ø Keep in minds that about 70 percent of actively managed funds under
perform the market: because operating expenses, transaction costs and cash holdings lower returns. This represents the main argument in favor of index funds.

Ø Favor index funds for a meaningful “core ”portion of your stock allocation:
say 25 to 50 percent or so. With these portfolios you need not worry that a fund manager might jump ship. With a passive approach, it doesn’t matter so much who’s in control.

Ø Beware of gimmicks when shopping for an index fund: Avoid “enhanced”
index portfolios that claim they can outperform the sensex or other benchmarks. Plain vanilla products with rock bottom costs are best.

Ø Include small cap and international funds in your portfolio for better risk
adjusted performance: Younger investors with long time horizons should take a significant stake in these categories.

Ø Look beyond a fund’s name to its actual investment policies and portfolio

holdings.

Ø Avoid small stock portfolios with assets greater than 20,000 million or so
unless you’re convinced the management is exceptionally talented.

Ø Keep in mind that small stocks move in cycles of five to seven years, during
which they either outperform or underperform the large blue chips.

Ø Conversely, do take bigger positions in small stocks when they’re cheap:
Small companies represent excellent value when the PE of any funds approximates that of the sensex.

Ø Don’t hesitate to venture abroad: International investing is a great way to round out a portfolio, since about two-thirds of world stock market values exist outside India.

Ø Lean to international rather than global funds for your over-seas exposure:
The former invest exclusively in foreign markets, whereas the latter have stakes in stateside stocks as well. With international funds, you can fine tune your overseas exposure more precisely.

Ø Check the foreign weightings of your domestic stock funds: which could hold up to 15 percent or more of their assets in non- Indian issues to try to improve performance. You may already have more international exposure than you think.

Ø Maintain modest stake in emerging stock markets: as well if you have a
lengthy investment horizon. Developing nations offer exciting long term growth potential.

Ø Don’t expect international diversification to reduce your portfolio’s volatility
all the time: Normally, it works reasonably well, but during a global panic, all the world’s major stock exchanges could tumble together.

CONCLUSION:

In order to study the concept of mutual fund we should note that a mutual fund is a trust that pools the money of several investors and manages investments on behalf. The fund collects this money from investors through various schemes. Each schemes is differentiated by its objectives of investments or in other words a broadly defined purpose of how the collected money is going to be involved.

Investors invest in mutual fund due to following advantages: they have professional management, diversification, convenient administration, return potential, low cost, liquidity. By comparing the above mentioned schemes I came to know the risk and return relation between the specified schemes.

From ALPHA I came to know how Mutual Fund schemes performed and get highest return with the low risk factor .ALPHA of JM Morgan ,Reliance Vision Fund and Birla Midcap funds is highest and low risk , as a result investor get good return from this schemes

BETA helps me to analyzing high volatility in market as result investor get low return with high risk. BETA indicates that HDFC Schemes, JM Morgan and Magnum Balance Funds are less volatility in the sensex because this schemes provide easy liquidly to investor and return accepts from this fund is also less.

The standard deviation helps to understand the volatility of market. Investor can averse the risk of their existing investment. It also help to measuring the degree to which the fund fluctuates in relation to its mean return but investor get more returns as compare to other schemes. A Birla and Franklin Equity fund has less risk but get more return to investor.

Therefore investors before investing in any Mutual Fund schemes they should study the risk and return relation. And if the risk and returns is been matched with their planning, then only the investors should go for Mutual Fund schemes.

According to me investor needs to focus on risk, return and value of his schemes and keep in mind that fund’s risk and expenses are easier to analysis for good returns.

BIBLIOGRAPHY:

· www.indiainfoline.com

· www.amfiindia.com

· www.mutualfunds.com

· www.investopidia.com

· MUTUAL FUNDS IN INDIA