“Performance Of Mutual Funds And ItsAwareness

Among The Patrons Present In The Market

At
Stock Holding Corporation of India Ltd. Dehradun”

PALLAVI SHARMA
MB09A09
 OBJECTIVE

To get the insight knowledge about mutual funds.

To know the awareness of mutual funds among different groups of
investors.
To analyze the comparative study between other leading mutual
funds in the funds in the present market.
Study factor responsible for the low investment in mutual funds.
 To evaluate consumer feedback on mutual funds.
Stock Holding Corporation Of India Limited (SHCIL) was promoted by
Public Financial Institutions and insurance majors likes IDBI, UTI, ICICI,
LIC, GIC and its subsidiaries, IFCI and IIBI.SHCIL was incorporated as a
public limited company on July 28, 1986.
SHCIL commenced operations in August 1988 and has been providing
Custodial and related services of international standards for more than a decade.

SHCIL provides depository, post trading, custodial services, securities lending

to institutional and retail investors.

Other auxiliary services provided by SHCIL include Derivatives clearing, PF

Fund accounting, SGL constituent.
SHCIL has also commenced operations on NCDEX (Commodities Exchange
and has emerged as the major player in that realm).
 Mutual Fund

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 then
invested in capital market instruments
such as shares, debentures and other
securities.
The income earned through these
investments and the capital appreciation
realised are shared by its unit holders in
proportion to the number of units owned by
them
 Types of Schemes

 By Structure
Open Ended Schemes
Close Ended Schemes
Interval Schemes
 By Investment Objectives
Growth Schemes
Income Schemes
Balance Schemes
Money Market Schemes
 Special Schemes
Index Schemes
Sector Specific Schemes
Tax Saving Schemes
 VARIOUS CRITERIA TO EVALUATE THE MUTUAL
FUNDS AND THEIR PEER GROUP COMPARISON
P/E Ratio : A valuation ratio of a company's current share price compared to its
per-share earnings(EPS).
Calculated as:

Turnover Ratio
The turnover ratio is the lower of the total sales or total purchases over the period
divided by the average of the net assets. Higher the turnover ratio, greater is the
volume of trading carried out by the fund.

Beta
Beta 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.
Sharpe Ratio
The Sharpe ratio represents the trade off between risk and returns. The Sharpe ratio tells us
whether the returns of a portfolio are due to smart investment decisions or a result of
excess risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance
has been.
Sharpe ratio = (Avg. return –Risk free return) Standard deviation

Expense Ratio
The percentage of the assets that are spent to run a mutual fund(as of the last annual
statement). This includes expenses such as management and advisory fees, overhead costs,
and 12b-1(distribution and advertising) fees.
For example, a mutual fund may have a 10% return per year, which is quite high; however,
if the total expense ratio is 8%, this means that shareholders only receive 2% of the return.
SCHEME OBJECTIVE LOADS RATING
March 2010
Franklin India Aims to achieve growth of Entry Load : 0%. 4-Star Fund
Prima Plus – capital and dividend through a Exit Load: If redeemed bet. ICRA Online
Growth diversified portfolio 0 Year to 1 Year; Exit load MF Rank
is 1%.
Tata Growth Fund Aims to provide a vehicle to Entry Load : 0%. 5-Star Fund
– Growth investors for generation of long Exit Load: If redeemed bet. ICRA Online
term capital appreciation. 0 Days to365Days; Exit MF Rank
load is 1%.
Reliance Growth The primary investment 3-Star Fund
– Growth objective is to achieve long term Entry Load : 0%. ICRA Online
growth of capital by investing in Exit Load: If redeemed bet. MF Rank
equity and equity related 0 Year to 1 Year; Exit load
securities through a research is 1%.
based investment approach
SBI Magnum The Objective of the Scheme is 5-Star Fund
Global Fund 94 – to provide investors with ICRA Online
Growth maximum growth opportunity.
Entry Load : 0%.
Exit Load: If redeemed bet.
0 Year to 1 Year; Exit load
is 1%.

MF
 Schemes assets (Rs in cr)
1220.09 This graph represents the scheme
1798.05 assets of the four major companies.
54.96 SBI The value mentioned in the graph are in
Relian crores.
ce
7681.36 Tata

Annual Returns for 5 years

45

40 This graph stands a symbolic

35
representation of annual returns
30
of the four major companies to
franklin
their customers for the last
25
SBI
5years. This value represents
20
Tata
Scheme Performance (%) as on
15
Reliance Jul 26, 2010.
10

0
6 months 1 year 3 years 5 years
 P/E Ratio From the P/E ratio the stocks in the

Reliance Growth Fund 28.22 Portfolio Tata Growth Fund are earning
highest with less risk than that of other
Tata Growth Fund 19.07
AMcs and the stocks in the portfolio of
28.58 Series 1
SBI Magnum Global
Reliance Growth Fund is earning least
Franklin IndiaPrima Plus 23.51 with same risk.
0 5 10 15 20 25 30

Beta
0.89
0.9
0.88 From the Beta graph the volatility of all
0.86
0.82
0.84 the funds is less volatile than that of the
0.82 0.79
0.78 Beta
0.8
0.78
market because beta of all the funds is
0.76
0.74 less than 1
0.72
 0
-0.09 -0.2 Sharpe
-0.21 Ratio
-0.14
A negative Sharpe ratio indicates that a
k ... I ... Ta Re
Fr
an SB risk-less asset would perform better
-
than the security being analyzed. The

Sharpe Ratio
graph shows that Franklin India Prima

-
Plus has higher risk taking capacity
and higher returns means it has high
risk taking capacity than other AMCs
-

Standard Deviation

Reliance Growth 4.7

The portfolio of SBI MAGNUM GLOBAL

Tata Growth Fund 5
Fund comprises of the volatile stocks hence
Standard Deviation

SBI Magnum Global Fund 5.57

the volatility in their returns is higher than
other AMCs because it has higher standard
Franklin India Prima Plus 4.79
deviation.
4.2 4.4 4.6 4.8 5 5.2 5.4 5.6 5.8
 Limitations of the Study

Time and Cost – The time and cost play an important role where one goes for a particular study.
Both of these factors become constraints especially when a study is conducted at academic
level.

Sample Size – Due to time and cost constraints the large sample was not taken. Since the study
conducted was with a small sample hence the exact picture cannot be revealed and the findings
cannot be generalized.

Choice of Population- The population selected was limited to SCHIL Dehradun.Hence results
would have altered if some other population had been selected.

Inherent Discrepancies in the Questionnaire- The questionnaire might be having some

undetectable errors and limitations, which could shape the responses into a particular fashion.
No pre-test was done before the circulation of the questionnaire.

Bias in Response- The data is entirely based on responses given by respondents which may be
biased one due to their personal bias in replying the questions. They may not be very serious or
interested in replying the questions and make it very lightly, due to which data may not be very
accurate.
 Conclusions
The mutual fund investors prefer more of the equity fund as they want more return on there money. They
avoid going in the debt fund because they can get same amount of return on there banks that is also without
taking any risk.

Usually people preferred to invest in mutual fund during NFO rather than seeing the performance of
mutual fund scheme. Sometimes due to lack of detailed awareness about mutual fund schemes the
investors seek advice of distributors.

Investors feels that the AMC should go for more promotional activities & should try to come up with new
innovative schemes which can easily be understood by the investors.

Even after seeing the market crash in May2009 people still thinks that mutual fund is much reliable way to
invest in stock market. So investors are not going for redemption during crash & were ready to wait. In fact
during the crash time many people were ready to invest in mutual fund.

People will not accept the entry load if the company would any such type loads during NFO because
during NFO the investors were not sure whether the given scheme can really give them better return or not.
 RECOMMENDATIONS

Most vital problem spotted is of ignorance. Investors should be made aware of the benefits.

Mutual funds are offering a large number of benefits which no other single option could offer. But most
of the people are not aware that what mutual funds is? So they should be provided the information. Their
mindset should be changed.

Mutual funds company needs to give the training of the individual financial advisor about the fund
schemes and its objectives.

Before making any investment Financial Advisors should first enquire about the risk tolerance of the
investors/customers.

Younger people aged under 35 will be a key new customer group into the future, so making greater
efforts with younger customers who show some interest in investing should pay off.