“The Analysis and Comparative Study of SBI and HDFC Mutual Fund� Index Contents sl.no
Particulars
Page no.
1
Executive summary
02-06
2
Industry analysis Company analysis.
07-08
3 4
3.1)
Way to Gain investment co.ltd.
09-10
3.2)
HDFC MF.
11-13
3.3)
.SBI MF
14-19
Introduction to the topic. 4.1) back ground
20 20
a. Mutual fund concept.
20
b. Schemes according to maturity period
20-21
c. Schemes according to investment objective
21-24
d. Benefits of mutual funds
25-27
e. History of mutual fund 4.2) important variables
27-32 33
a) risk measurements
33-36
b) return measurements
37-39
c) performance measures/ratio
40-40
d) related terms
41- 48
4.3) importance of the project
49
4.4) objectives
50-51
5
Analysis
52-67
6
Findings
68-69
7
Conclusions
70
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund”
8
Suggestions
71
9
Bibliography
72
1)
Executive summary
“The Analysis and Comparative Study of SBI and HDFC Mutual Fund” Name of the Company, where the project is undertaken: “WAY TO GAIN INVESTMENT CONSULTANCY (P) LTD” P.B Road, Opposite Canara bank, Achyutha Complex, Dharwad.
a) Back ground of the project Mutual fund is a very hot concept in two tier cities because these cities are growing at a faster rate. And at the equal rate the standard of living also increasing, people getting higher exposures in their jobs means they are getting higher salaries that’s why they are now looking new investment opportunities. There for This project report is written in such away that the reader of the project get clear understanding of concept i.e. the mutual fund concept, types of mutual funds in India, explains the pros and cons of the concept and the four phases of mutual fund industry in India. b) Variables
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund” In the project the risk, return and performance measurements are calculated for making analysis and comparison of two mutual fund schemes. The calculations are done in excel sheet then it is turned to word document the followings are the measures for the risk and return calculations.
Risk measurements Standard deviation. Beta. R squire. Alpha. c) Significance of the project •
This project involves evaluating the performance of two mutual fund scheme.
•
States the advantages and disadvantages to invest in the mutual fund.
•
This project will helps the company (i.e. “way to gain”) to recommend the good scheme in selected two mutual fund schemes.
•
In this project risk, return and performance measures are calculated, so that it will be easy to recommend better scheme.
Main Objective: “Evaluating the Performance of SBI and HDFC Mutual Fund Scheme” Sub Objectives of the study: Babasabpatilfreepptmba.com
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund”
•
Comprehensive study of mutual fund concept
•
Applying the various parameters to measure and evaluate the risk and the respective returns of selected mutual fund schemes.
•
Recommending good mutual fund scheme to invest and earn more returns on selected mutual fund schemes.
Methodology: The study is generally exploratory in nature, as it studies the performances of two mutual fund schemes based on the performance measures. Methods of Performance measure/ratio; Treynor measure/ratio Sharpe measure/ratio Jensen measure/ratio
Sources of Data: The data (i.e. NAV) for the study has been downloaded from the internet (i.e. websites of the mutual funds) and is converted to returns and used for the study which formed the primary data for the study. Research Tools: The research has been done by using the following statistical techniques Average Standard Deviation Variance Babasabpatilfreepptmba.com
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund� Co-variance Correlation Beta Systematic and Unsystematic Risk measure Measure of Alpha
Analysis and findings In the analysis part I have calculated risk, return and performance measures of the two schemes and the same is compared with each other. 1) Here between our chosen scheme Magnum Equity Fund-Growth is having higher average return of
0.1234 as compare to that of HDFC Equity Fund-Growth which is
having only 0.09177 so it is obvious to conclude that Magnum Equity Fund-Growth is on an average performing well in terms of Average Daily Returns. 2) In the above case the Magnum Equity Fund-Growth is having 1.998246472 as a Standard deviation as compare to that of HDFC Equity Fund-Growth which is having Standard Deviation of 1.714523761 so here we can conclude that Magnum Equity FundGrowth is having more fluctuation so there will be higher risk. 3) Here one more thing we can observe that both the scheme having perfect positive correlation. But Magnum Equity Fund-Growth is having 0.938181407 which is more as compare to that of HDFC Equity Fund-Growth which is having 0.874566887. 4) Variance of the Magnum Equity Fund-Growth is 4.096683202 and 3.459706829 is for HDFC Equity Fund-Growth means HDFC Equity Fund-Growth is consistent compare to the Magnum Equity Fund-Growth.
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund� 5) So it should be noted that HDFC Equity Fund-Growth having less risk and less return as compare to Magnum Equity Fund-Growth which is having high risk and high return. 6) Performance ratios show the excess return of the schemes over and above risk free rate of return and here we can see that Magnum Equity Fund-Growth is comparatively having good excess return than the HDFC Equity Fund-Growth.
Conclusions: In the conclusion part I have compared the two schemes with each other and suggested that which schemes is having high risk compare to other scheme. 1) From the project report we can conclude that Magnum Equity Fund-Growth is having high risk with high returns and also performing good compare to HDFC Equity FundGrowth 2) HDFC Equity Fund-Growth is having less risk and less return compare to Magnum Equity Fund-Growth.
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund” 3) Here from the calculations we can conclude that the one may get approximately 30 to 35% returns from the Magnum Equity Fund-Growth. Where as investing in HDFC Equity Fund-Growth he may get 24 to 28% returns. 4) At present both schemes are underperforming means not meeting the investor’s expectations. 5) Magnum Equity Fund-Growth is more volatile than that of HDFC Equity FundGrowth.
Suggestions: •
Here I would like to suggest, the company i.e. Way to Gain also consider the risk returns and performance measurements to its unit holder when they come to investment into their company.
•
From this project report it is clear that who wants to take higher risk and higher return they can go for Magnum Equity Fund-Growth
•
Who wants a less risk and less return they can invest in HDFC Equity FundGrowth
•
Here I also suggest the company to make some awareness campaign because many people who are interested in earnings through this investment companies don’t know the concept only.
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund”
2)
Industry analysis
Mutual fund industry today is a booming investment sector with more than 30 players. And these players bring plenty of schemes to there investor. Some of them gained the trust of there investors, and still some gained the mutual fund awards from the industry. Between these healthy competitions the investors are getting some good investment schemes. However with a plethora of schemes to choose from, the investor faces many problems that is he will get struck in thinking that should I take more risk or should I invest in some other investment sector for ex. In Banking.
World wide good mutual companies over are known by their AMC’s and this fame is directly linked to their superior stocks selection skill. For mutual fund to grow, AMC’s must be held accountable for their selection of stocks. In other words there must be some performance indicator that will reveal th equality of stock selection of various AMC’s
We have seen that many of the mutual fund schemes are giving good returns to its investors, here we should not assume that the good return giving schemes are better to invest, because return alone should not be consider as the basis of measuring of the performance of a mutual fund sachem. It should also include the risk taken by the fund manager, because as we know that the fund manager invest the pooled fund into securities in this securities there are many companies like large cap companies small cap companies and mid cap companies while investing into these share market the fund manager has to study the companies and invest, if he invest in high risk yielding companies then there will be very risk in investing into such type of fund. Babasabpatilfreepptmba.com
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund�
Risk associated with a fund, in a general, can be defined as variability or fluctuations in the returns generated by it. The higher the fluctuation in the returns of a fund during a given period, higher will be the risk associated with it. These fluctuations in the returns generated by a fund are result of two guiding forces. First, general market fluctuations, which affect all the securities, present in the market, called market risk or systematic risk and second, fluctuations due to specific securities present In the portfolio of the fund, called unsystematic risk.
The total risk of a given fund is sum of these two and is measured in terms of standard deviation of returns of the fund. Systematic risk, on the other hand, is measured in terms of BETA, which represents fluctuations in the NAV of the fund visa versa market. Beta is calculated by relating the returns on a mutual fund with the returns in the market. While unsystematic risk can be diversified through investments in a number of instruments, by using risk return relationship, we try to assess the competitive strength of the mutual funds visa versa one another in a better way.
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund”
3)
Company Analysis
3.1 WAY TO GAIN P.B. Road, Opp. Canara Bank, Achuta Complex, Dharwad. Brief History: The company is founded by N.S. Kongi, Ishwar Yenagi and Ningappa Yenagi with a share of 40%, 40% and 20% respectively. Company was established on April 2006. It was Ishwar Yenagi at first who initiated this initiative to establish the company with a dealership certificate of AMFI in hand. So he involved two more persons to build this company i.e., N.S. Kongi, Ningappa Yenagi. So it is a collective effort from all the three personalities to venture into this Way to Gain. The company is mainly dealing into Mutual Funds of all AMC’s. Organizational structure: Babasabpatilfreepptmba.com
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund”
DIRECTORS
N.S. KONGI
ISHWAR YENAGI
NINGAPPA YENAGI
BACK OFFICER HEMA MARKETING OFFICER Shashidar ASSISTANT ABDUL
ASSISTANT Mahantesh
Service offered by the Company: The company is mainly into Mutual Fund which forms the chunk of its revenue. And as a subsidiary business they provide stock broking of equities. And this broking is fraternized from Kotak Securities. Babasabpatilfreepptmba.com
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund”
Charges and Commissions: As per SEBI regulations an AMFI qualified agents can charge upto 2% on the investment into Mutual Fund. And usually this 2% is paid by AMC’s of the respective Mutual Fund Companies. Service Promotions: Marketing and Promotional activities of the company are done by circulating pamphlets and also through local News Paper advertisements. Targeted Segment The company and its operations are confined to the region of Hubli-Dharwad, Haveri and Belgaum. Sales and Profitability of the Company Way to Gain is making approximately 30 lac revenue from sale of Mutual Funds for every month. Competitors Way to gain is growing at a faster rate in the twine city but at the same time facing many competitors like Karvey, geojit, SHCIL, HDFC bank, ICICI bank, and many more.
In the next pages I have written introduction of the two selected AMC and their respective other products. Babasabpatilfreepptmba.com
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund�
3.2 HDFC Trustee Company Limited: A company incorporated under the Companies Act, 1956 is the Trustee to the Mutual Fund vides the Trust deed dated June 8, 2000, as amended from time to time. HDFC Trustee Company Limited is a wholly owned subsidiary of HDFC Limited. HDFC Asset Management Company Limited (AMC): It was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the Mutual Fund by SEBI on July 3, 2000. The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020. In terms of the Investment Management Agreement, the Trustee has appointed HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 75.161 crore. Products: Open Ended HDFC Arbitrage Fund HDFC Balanced Fund HDFC Capital Builder Fund HDFC Cash Management Fund - Call Plan HDFC Cash Management Fund - Savings Plan Babasabpatilfreepptmba.com
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund” HDFC Cash Management Fund - Savings Plus Plan HDFC Children's Gift Fund Investment Plan HDFC Children's Gift Fund Savings Plan HDFC Core & Satellite Fund HDFC Equity Fund HDFC Floating Rate Income Fund Long Term Plan HDFC Floating Rate Income Fund Short Term Plan HDFC Gilt Fund Long Term Plan HDFC Gilt Fund Short Term Plan “HDFC Growth Fund” HDFC High Interest Fund HDFC High Interest Fund - Short Term Plan HDFC Income Fund HDFC Index Fund Nifty Plan HDFC Index Fund SENSEX Plan
HDFC Index Fund SENSEX Plus Plan HDFC Liquid Fund HDFC Liquid Fund Premium Plan HDFC Liquid Fund Premium Plus Plan HDFC Long Term Advantage Fund HDFC MF Monthly Income Plan - Long Term Plan HDFC MF Monthly Income Plan - Short Term Plan HDFC Multiple Yield Fund HDFC Multiple Yield Fund Plan 2005 HDFC Premier Multi Cap Fund HDFC Prudence Fund Babasabpatilfreepptmba.com
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund” HDFC Short Term Plan HDFC TaxSaver HDFC Top 200 Fund Close Ended
HDFC Long Term Equity Fund HDFC Quarterly Interval Fund Awards & Accolades: The Annual CNBC – TV 18 – BNP Paribas Awards 2004. The Outlook Money Awards 2004. The CRISIL Best Fund Awards 2003. The ICRA Online Mutual Fund Awards 2004.
Selected Scheme in HDFC Mutual Fund
Mutual Fund Scheme Name Scheme Type Scheme Category
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HDFC Mutual Fund HDFC Equity Fund Open Ended Growth
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund”
Latest Net Asset Value Scheme NAV Net Asset Repurchase Sale Name HDFC
Value
Price
Price
Date
Equity
Fund-Growth
171.0
Plan 167.296 167.296 6 11-Apr-08 Latest Assets Under Management (AUM Rs in Lacs) Average AUM Scheme NAV Name For The Month HDFC Equity Fund-Growth
As At The End Of
Plan
Mar-08
189583.2
Minimum Investment; For new investors: Rs.5000 and in multiples of Rs.100 thereafter For existing investors: Rs. 1000 and in multiples of Rs. 100 thereafter
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund” Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil.
Exit
3.3
Load:
Nil.
SBI MUTUAL FUND;
SBI Mutual Fund is India’s largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation. The fund traces its lineage to SBI - India’s largest banking enterprise. The institution has grown immensely since its inception and today it is India's largest bank, patronized by over 80% of the top corporate houses of the country. SBI Mutual Fund is a joint venture between the State Bank of India and Society General Asset Management, one of the world’s leading fund management companies that manages over US$ 330 Billion worldwide. In eighteen years of operation, the fund has launched thirty-two schemes and successfully redeemed fifteen of them. In the process it has rewarded it’s investors handsomely with consistently high returns.
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund” A total of over 3.5 million investors have reposed their faith in the wealth generation expertise of the Mutual Fund.
Schemes of the Mutual fund have consistently
outperformed benchmark indices and have emerged as the preferred investment for millions of investors and HNI’s.
Today, the fund manages over Rs. 16500 crores of assets and has a diverse profile of investors actively parking their investments across 30 active schemes. The fund serves this vast family of investors by reaching out to them through network of 100 collection branches, 26 investor service centers, 28 investor service desks and 52 districts organize.
SBI MUTUAL FUND PRODUCTS Equity scheme
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund� The investments of these schemes will predominantly be in the stock markets and endeavor will be to provide investors the opportunity to benefit from the higher returns which stock markets can provide. However they are also exposed to the volatility and attendant risks of stock markets and hence should be chosen only by such investors who have high risk taking capacities and are willing to think long term. Equity Funds include diversified Equity Funds, Sectoral Funds and Index Funds. Diversified Equity Funds invest in various stocks across different sectors while sectoral funds which are specialized Equity Funds restrict their investments only to shares of a particular sector and hence, are riskier than Diversified Equity Funds. Index Funds invest passively only in the stocks of a particular index and the performance of such funds move with the movements of the index. Magnum COMMA Fund Magnum Equity Fund-growth Magnum Global Fund Magnum Index Fund Magnum MidCap Fund Magnum Multicap Fund Magnum Sector Funds Umbrella MSFU - FMCG Fund MSFU - Emerging Businesses Fund MSFU - IT Fund MSFU - Pharma Fund MSFU - Contra Fund Magnum Multiplier Plus 1993 SBI Arbitrage Opportunities Fund SBI Blue chip Fund SBI Infrastructure Fund - Series I SBI Magnum Tax gain Scheme 1993 Babasabpatilfreepptmba.com
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund” SBI ONE India Fund
Selected Scheme in SBI Mutual Fund
Mutual Fund Launch Date Minimum Subscription Amount
SBI Mutual Fund 29-Oct-93 1000 an open ended equity scheme, the objective of the scheme is to provide the investor long-term capital appreciation
Objective of Scheme
by
investing
in
high
growth
companies along with the liquidity of an openended scheme through investments primarily in equities and the balance in debt and money market instruments.
Scheme Category Scheme Name Scheme Type
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Growth Magnum Equity Fund – Growth Open Ended
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund” Latest Net Asset Value Scheme NAV Name Magnum Equity
Net Asset Value
Date
32.77
11-Apr-08
Fund-
Growth
Latest Assets Under Management (AUM Rs in Lacs) Scheme NAV Name Magnum Equity Fund- Growth
Average AUM For The Month 7243.69
DEBT FUNDS SCHEMES Debt Funds invest only in debt instruments such as Corporate Bonds, Government Securities and Money Market instruments either completely avoiding any investments in the stock markets as in Income Funds or Gilt Funds or having a small exposure to equities as in Monthly Income Plans or Children's Plan. Hence they are safer than equity funds. At the same time the expected returns from debt funds would be lower. Such investments are advisable for the risk-averse investor and as a part of the investment portfolio for other investors. Magnum Children’s Benefit Plan Babasabpatilfreepptmba.com
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund� Magnum Gilt Fund Magnum Gilt Fund (Long Term) Magnum Gilt Fund (Short Term) Magnum Income Fund Magnum Income Plus Fund Magnum Income Plus Fund (Saving Plan) Magnum Income Plus Fund (Investment Plan) Magnum Insta Cash Fund Magnum InstaCash Fund -Liquid Floater Plan Magnum Institutional Income Fund Magnum Monthly Income Plan Magnum Monthly Income Plan Floater Magnum NRI Investment Fund SBI Debt Fund Series SDFS 15 Months Fund SDFS 90 Days Fund SDFS 13 Months Fund SDFS 18 Months Fund SDFS 24 Months Fund SDFS 60 Days Fund SDFS 180 Days Fund SBI Premier Liquid Fund Balance funds scheme Magnum Balanced Fund invests in a mix of equity and debt investments. Hence they are less risky than equity funds, but at the same time provide commensurately lower returns. They provide a good investment opportunity to investors who do not wish to be completely exposed to equity markets, but is looking for higher returns than those provided by debt funds.
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund” Magnum Balanced Fund Magnum NRI Investment Fund Flexi Asset Plan
SBI Mutual FUNDS AWARDS LIPPER AWARD
THE LIPPER INDIA FUND AWARDS 2008
ICRA
MUTUAL FUND AWARDS 2008
OUTLOOK MONEY
NDTV PROFIT AWARDS
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund” LIPPER AWARDS
THE LIPPER INDIA FUNDS AWARDS 2007
CNBC TV18 – CRISIL
MUTUAL FUND OF THE YEAR AWARD 2007
CNBC
AWAZ CONSUMER AWARDS 2006
LIPPER AWARDS
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“The Analysis and Comparative Study of SBI and HDFC Mutual Fund”
THE LIPPER INDIA FUND AWARDS 2006
ICRA
MUTUAL FUND AWARDS 2005
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4)
Introduction to project
4.1 Background of the project topic
4.1.a Mutual Fund Concept
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 then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. 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 basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund
4.1.b Schemes according to Maturity Period: A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.
Open-ended Fund/ Scheme: An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity.
Close-ended Fund/ Scheme: A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. 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 the units 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 i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis. 4.1.c Schemes according to Investment Objective: A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or closeended schemes as described earlier. Such schemes may be classified mainly as follows: Growth / Equity Oriented Scheme: The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.
Income / Debt Oriented Scheme: 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, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations. Balanced Fund The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds. Money Market or Liquid Fund These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.
Gilt Fund: These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. Index Funds: Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. Sector specific funds/schemes: These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.
Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme. Fund of Funds (FoF) scheme: A scheme that invests primarily in other schemes of the same mutual fund or other mutual funds is known as a FoF scheme. An FoF scheme enables the investors to achieve greater diversification through one scheme. It spreads risks across a greater universe.
Load or no-load Fund: A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If the entry as well as exit load charged is 1%, then the investors who buy would be required to pay Rs.10.10 and those who offer their units for repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns. However, the investors should also consider the performance track record and service standards of the mutual fund which are more important. Efficient funds may give higher returns in spite of loads.
4.1.d Benefits of mutual funds 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 benefits of its investment strategy. Convenient administration: Investment in mutual fund reduces paper work and helps in avoiding many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual fund saves time and makes investing easy and convenient.
Diversification: Mutual funds invest in 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. 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.
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. Low costs: Mutual funds are a relatively less expensive way to invest capital markets because the benefits of scale in brokerage, custodial and other fees transaction into lower costs for investors 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. 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. Choice of scheme: Mutual funds offer a family of schemes to suit your varying needs over a lifetime.
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 managers investment strategy and outlook Well regulated: All mutual funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interest of investors. The operations of mutual funds are regularly monitored by SEBI.
4.1.e History of Mutual Fund Industry The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 bn in March 1993 and till April 2004; it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be
intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling. The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. First Phase - 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management. Second Phase - 1987-1993 (Entry of Public Sector Funds) Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under management. Third Phase - 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now
merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds. Fourth Phase - since February 2003 This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
Some facts for the growth of mutual funds in India 100% growth in the last 6 years. Our saving rate is over 23%, highest in the world. Only chanalising these savings in mutual funds sector is required. We have approximately 29 mutual funds which is much less than US having more than 800. There is a big scope for expansion. 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'A' class cities. Soon they will find scope in the growing cities. Mutual fund can penetrate rurals like the Indian insurance industry with simple and limited products. SEBI allowing the MF's to launch commodity mutual funds. Emphasis on better corporate governance. Trying to curb the late trading practices. Introduction of Financial Planners who can provide need based advice.
CHART SHOWING FUNCTIONING OF MUTUAL FUNDS IN INDIA
Asset Management Company: It is a company set up primarily for managing the investment of mutual funds and makes investment decisions in accordance with the scheme objectives, deed of Trust and other provisions of the Investment Management Agreement. For Tata Mutual Fund, Tata Asset Management Limited is the Asset Management Company.
GROWTH IN ASSETS UNDER MANAGEMENT
SEBI Regulations: Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 or such other SEBI (MF) Regulations as may be in force from time to time and would include Circulars, Guidelines etc., unless specifically mentioned to the contrary.
4.2. Variables in the project topic In the project the risk and return measurements are calculated for making comparison between two sector funds the calculations are done in excel sheet then it is turned to word document the followings are the measures for the risk and return calculations. 4.2. A. Risk measurements 1) Standard deviation. 2) Beta. 3) R squire. 4) Alpha. Standard deviation The square root of the variance in a series. It shows how the data are spread out. A measure of the dispersion of a set of data from its mean. The more spread apart the data is, the higher the deviation. In finance, standard deviation is applied to the annual rate of return of an investment to measure the investment’s volatility (risk). A volatile stock would have a high standard deviation. In mutual funds the standard deviation tells us how much the return on the fund is deviating from the expected normal returns. Standard deviation can also be calculated as the square root of the variance. To determine how well a fund is maximizing the return received for its volatility, you can compare the fund to another with a similar investment strategy and
similar returns. The fund with the lower standard deviation would. Be more optimal because it is maximizing the return received for the amount of risk acquired Formula for calculating standard deviation
BETA Beta describes the relationship between the securities return and the index. A measure of the volatility or systematic risk of a security or a portfolio in comparison to the market as a whole is known as "beta coefficient". While standard deviation determines the volatility of a fund according to the disparity of its returns over a period of time, beta another useful statistical measure, 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. If, for example, a fund has a beta of 1.05 in relation to the S&P 500, the fund has been moving 5% more than the index. Therefore, if the S&P 500 increased 15%, the fund would be expected to increase 15.75%. On the other hand, a fund with a beta of 2.4 would be expected to move 2.4 times more than its corresponding index. So if the S&P 500 moved 10%, the fund would be expected to rise 24%, and, if the S&P 500 declined 10%, the fund would be expected to lose 24%. Investors expecting the market to be bullish may choose funds exhibiting high betas, which increase investors' chances of beating the market. If an investor expects the market to be bearish in the near future, the funds that have betas less than 1 are a good choice because they would be expected to
decline less in value than the index. For example, if a fund had a beta of 0.5 and the S&P 500 declined 6%, the fund would be expected to decline only 3%.
Formula for Beta calculation
R-
Square The R-squared of a fund advises investors if the beta of a mutual fund is measured
against an appropriate benchmark. Measuring the correlation of a fund's movements to that of an index, R-squared describes the level of association between the fund's volatility and market risk, or more specifically, the degree to which a fund's volatility is a result of the day-to-day fluctuations experienced by the overall market. R-squared values range between 0 and 100, where 0 represents the least correlation and 100 represents full correlation. If a fund's beta has an R-squared value that is close to 100, the beta of the fund should be trusted. On the other hand, an R-squared value that is close to 0 indicates that the beta is not particularly useful because the fund is being compared against an inappropriate benchmark. For example, a bond fund was judged against the S&P 500, the R-squared value would be very low. A bond index such as the Lehman Brothers Aggregate Bond Index would be a much more appropriate benchmark for a bond fund, so the resulting Rsquared value would be higher. Obviously the risks apparent in the stock market are different than the risks associated with the bond market. Therefore, if the beta for a bond were calculated using a stock index, the beta would not be trustworthy.
An inappropriate benchmark will skew more than just beta. Alpha is calculated using beta, so if the R-squared value of a fund is low, it is also wise not to trust the figure given for alpha. We'll go through an example in the next section. Alpha coefficient: It is the excess return of the fund above risk adjusted market return, given its level of risk as measured by beta. An investment with a positive alpha indicates that the fund has performed better than expected, given its beta. And a negative alpha indicates that the fund has under performed. 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 underperformed for the amount of extra, fund-specific risk that the fund's investors undertook. Calculation of Alpha Alpha = Excess Return - ((Beta x (Benchmark - RFR)) Benchmark = Total Return of Benchmark Index RFR = Risk free return or Treasury bill
4. 2. B. RETURN ANALYSES OF MUTUAL FUNDS The various methods for measuring mutual fund returns are as follows. 1. Percentage change in NAV 2. Simple total returns. 3. ROI or Total return with dividend re- investment.
1) Percentage change in NAV Percentage change in NAV is an absolute measure of return, which finds the NAV appreciation between two points of time, as a percentage. Calculation is as follows (Absolute change in NAV/NAV at the beginning)*100 In case the period is not equal to one year then there will be change calculation. Converting a return value for a period other than one year, into a value for 1 year is called
as annualisation. In order to annualize a rate, we find out what the return would be for a year, if the return behaved for a year, in the same manner it did, for any other fractional period. Calculation is as follows (End period NAV/beginning period NAV)-1)*12/n*100 Pros and cons of the method: This method is simple and very easy to calculate and understand. However, examining return over a single period may not provide an indication of long term returns. An important limitation also is that this method is more useful for computing returns on growth options of mutual fund schemes. It may not be suitable for computing returns on schemes with dividend distributions or withdrawal plans.
2) Simple total returns It is customary to represent return as percent per annum. This makes it easier to compare the returns from various investment options, for a standard holding period. The investment in a mutual fund can choose to keep his investment for a period of time, not necessarily 1 year. Therefore, if the holding period is different from 1 year, we have to normalize the computation shown above, as % p.a.
The total return method takes into account the dividends distributed by the mutual fund, and adds it to the NAV appreciation, to arrive at returns. Calculation is as follows
(End period NAV- beginning period NAV)+dividend received) /beginning period NAV)*100
This return is called the simple annualized return from investing in mutual fund.
Pros and cons of the method The total return method takes into account the dividend distributions and is therefore comparable across various kinds of mutual fund classes. The most important limitation of this method is that it does not take into account the re – investment of dividends received at the intervening period.
3. Total return with dividend re- investment This method is also called the return of investment (ROI) method. In this method, we assume that dividend are re- invested into the scheme as soon as they are received at the then prevailing NAV (ex-dividend NAV).
Total returns with reinvestment are calculated as: (Value of the holding at the end of the period/value of the holdings at the beginning of the period)-1)* 100 Value of holding at the beginning of the period = number of units at the beginning * beginning NAV. Value of holding at the end of the period = number of units at the end * end NAV.
Number of units reinvested = dividends/ ex dividend NAV. This methodology of computing returns is widely used by many mutual fund tracking agencies.
SEBI regulations regarding reporting of returns by mutual funds A return earned by a mutual fund scheme is a very important indicator used by mutual funds in their publicity literature and advertisements. In order to ensure uniformity and comparability across funds, SEBI has stipulated some norms for return data that is published by mutual funds. These are. 1. Mutual funds can only use standard return computations such as annual dividend on face value, annual yield on purchase price, and annual compounded rate of return. 2. If the scheme has been in existence for over a year, compounded annual yield is the accepted method of calculating return. 3. return calculations for funds with payouts should assume that dividend are reinvested at the ex- dividend NAV 4. Return should be shown for the past 1,3 and 5 years of the scheme, or since inception, which ever is lower. 5. For funds in existence for less than one year, total returns should be shown, and such returns should not be annualize or compounded.
4.2. C. PERFORMANCE MEASURES/RATIO Treynor Measure/ Ratio; According to Jack Treynor, systematic risk or beta is the appropriate measure of risk, as suggested by Capital Asset Pricing Model CAPM. The Treynormeasure of portfolio performance relates the excess return on a portfolio to the portfolio beta.
Treynor Measure=
Excess Return on Portfolio (Fund) Beta of Portfolio (Fund)
=Avg. Rate of Return on Fund – Avg. Rate of Return on a Risk-Free Investment Beta of Fund
Sharpe Measure/ Ratio; The Sharpe Measure is similar to the Treynor Measure except that it employs Standard Deviation, not beta, as the measure of risk. Thus Sharpe Measure
=
Excess Return on Portfolio (Fund) Standard Deviation of Portfolio (Fund)
=
Avg. Rate of Return on Fund – Avg. Rate of Return on a Risk-Free Investment Standard Deviation of Portfolio (Fund)
Jensen Measure/ Ratio: Like the Trynor Measure, the Jensen Measure or Jensen’s Alpha is based on CAPM. It reflects the difference between the return actually earned on a portfolio (Fund) and the return portfolio was suppose to earn, given its beta as per CAPM. Jensen Measure is Jensen Measure =
Avg. Return on Fund–[Risk Free Return + Fund Beta
(Avg.Market Return – Risk Free Return)] 4.2. D. Some more related terms Annual Return:
The percentage of change in net asset value over a year's time, assuming reinvestment of distribution such as dividend payment and bonuses. Annualized Return: This is the hypothetical rate of return, if the fund achieved it over a year's time, would produce the same cumulative total return if the fund performed consistently over the entire period. A total return is expressed in a percentage and tells you how much money you have earned or lost on an investment over time, assuming that all dividends and capital gains are reinvested. Benchmark: A parameter against which a scheme can be compared. For example, the performance of a scheme can be benchmarked against an appropriate index. Capital Appreciation: As the value of the securities in a portfolio increases, a fund's Net Asset Value (NAV) increases, meaning that the value of your investment rises. If you sell units at a higher price than you paid for them, you make a profit, or capital gain. If you sell units at a lower price than you paid for them, you'll have a capital loss.
Compounding:
When you deposit money in a bank, it earns interest. When that interest also begins to earn interest, the result is compound interest. Compounding occurs if bond income or dividends from stocks or mutual funds are reinvested. Because of compounding, money has the potential to grow much faster. Entry Load: Load on purchases/ switch-out of units. Equity Schemes: Schemes where more than 50% of the investments are made in the equity shares of various companies. The objective is to provide capital appreciation over a period of time. Expense Ratio: It is the percentage of fund's value that is paid as expenses. Expenses include management fees and all the other fees associated with the fund's daily operations. Exit Load: Load that is charged on redemptions i.e. during the exit of the fund. Fund Category: It is a type of scheme which the mutual fund company invests its corpus in a particular category. It could be a growth, debt, balanced, gilt or liquid scheme Fund Family:
It is the AMC which manages the various types of funds. Fund Management Costs: It is the charge levied by an AMC on the investors for managing their funds. Fund Manager: The person who makes all the final decisions regarding investments of a scheme, i.e. the person who makes all the investment decisions. Investment Objective: The identification of attributes associated with an investment or investment strategy, designed to isolate and compare risks, define acceptable levels of risk, and match investments with personal goals. Information Ratio: It measures average return in excess of benchmark portfolio divided by the standard deviation of this excess return. Load: A charge that is levied as a percentage of NAV at the time of entry into the Scheme/Plans or at the time of exiting from the Scheme/Plans.
No-Load Scheme:
A Scheme where there is no initial Entry or Exit Load. Mutual Funds: An investment company/trust that pools money from unitholders and invests that money into a variety of securities, including stocks, bonds, and money-market instruments in line with the funds objective. NAV: Net Asset Value: NAV is the value of the fund which is obtained by the following formula Market/Fair Value of Scheme's investments (+) Receivables (+) Accrued Income (+) Other Assets (-) Accrued Expenses (-) Payables (-) Other Liabilities NAV = Number of Units outstanding
NAV Change: The difference between today's closing net asset value (NAV) and the previous day's closing net asset value (NAV). NAV %Change: The percentage change between today's closing net asset value (NAV) and the previous day's closing net asset value (NAV)
Net Worth:
A person's net worth is equal to the total value of all possessions, such as a house, stocks, bonds, and other securities, minus all outstanding debts, such as mortgage and revolving credit lines. Net Yield: Rate of return on a security net of out-of-pocket costs associated with its purchase, such as commissions or markups. Offer Document Or Prospectus: The official document issued by mutual funds prior to the launch of a fund describing the characteristics of the proposed fund to all its prospective investors. It contains all the information required as per the Securities and Exchange Board of India, such as investment objective and policies, services, and fees. Individual investors are encouraged to read and understand the fund's prospectus. Risk Adjusted Returns%: Generally, the expected returns from an investment are dependent on the risk involved in the investment. For the purpose of comparing returns from investments involving varying levels of risk, the returns are adjusted for the level of risk before comparison. Such returns (reduced for the level of risk involved) are called risk-adjusted returns.
Sale Price:
The price at which a fund offers to sell one unit of its scheme to investors. This NAV is grossed up with the entry load applicable, if any. Sales Charge: Fee on the purchase of new shares of a mutual fund. A sales charge is similar to paying a premium for a security in that the customer must pay a higher offering price. Sometimes, it is called a load. Scheme: It is a fund or plan where the money contributed by the unit holders are maintained and managed and the profit/loss from the scheme accrue only to the unit holders. A mutual fund can launch more than one scheme. Sharpe Ratio: The Sharpe ratio measures the risk-adjusted return of a fund. Simply put, the ratio measures the variability of ' excess returns' (defined by returns of the fund over the 'risk free return). Mathematically, the formula takes a fund's return in excess of a risk-free investment and divides this by the standard deviation of the returns. Higher the Sharpe ratio better is the fund. Spread: The difference between the rates at which money is deposited in a financial institution and the higher rates at which the money is lent out. Also, the difference between the bid and ask price for a security. Total Return%:
Return on an investment, taking into account capital appreciation, dividends or interest, and individual tax considerations adjusted for present value and expressed on an annual basis. Unit: Unit representing a share in the assets of the corresponding plan of the Scheme. Unit Holder: A person who holds Unit(s) under any plan of the Scheme. Valuation: Calculating the market value of the assets of a mutual fund scheme at any point of time. Volatility: In investing, volatility refers to the ups and downs of the price of an investment. Greater the ups and downs, more volatile the investment is. Volatility Measures: Volatility measures the variability of historical returns. Relative Volatility, Beta, and R2 compare a portfolio's total return to those of a relevant market, represented by the benchmark index. Standard Deviation is calculated independent of an index.
Yield:
The percentage of return an investor receives based on the amount invested or on the current market value of holdings. Yield Curve: The relationship at a given point in time between yields on a group of fixedincome securities with varying maturities -- commonly, Treasury bills, notes, and bonds. The curve typically slopes upward since longer maturities normally have higher yields, although it can be flat or even inverted. Yield to Maturity: Used to determine the rate of return an investor will receive if a long-term, interest-bearing investment, such as a bond is held to its maturity date. It takes into account purchase price, redemption value, time to maturity, coupon yield and the time between interest payments.
4.3 Importance of the project
I. Mutual fund is very hot subject in two tier cities like Hubli-Dharwad so one should first understand the concept roughly before investing. This project report helps the reader about mutual fund concept and the related terms involved in it. II. In this project report I have calculated the risk measures that is BETA, Standard Deviation, Alpha and R-Square, by this an investor come to know the concepts, and even they can also calculate using the spread sheet.
III. In this report I have analyze the mutual fund schemes i.e. Magnum Equity FundGrowth and HDFC Equity Fund-Growth and also stated the advantages and disadvantages of investing in the mutual fund. IV. This project helps the company i.e. “way to gain� to recommend the good scheme to its valued customers.
V. In this project I have calculated the returns of two mutual fund schemes i.e. Magnum Equity Fund-Growth and HDFC Equity Fund-Growth, so that reader can also understand the way of calculating returns.
VI. This project report helps the investor to understand the investment opportunities in the mutual fund industry.
4.4 Objectives
Main Objective: “Evaluating the Performance of SBI and HDFC Mutual Fund Scheme” Sub Objectives of the study: •
Comprehensive study of mutual fund concept
•
Applying the various parameters to measure and evaluate the risk and the respective returns of selected mutual fund schemes.
•
Recommending good mutual fund scheme to invest and earn more returns on selected mutual fund schemes.
Type of the Study The study is generally exploratory in nature, as it studies the performances of two mutual fund schemes i.e. HDFC Equity Fund-Growth Plan and Magnum Equity FundGrowth based on the performance measures. Sources of Data The data (i.e. NAV) for the study has been downloaded from the internet (i.e. websites of the mutual funds) and is converted to returns and used for the study which formed the primary data for the study.
Research Tools The research has been done by using the following statistical techniques; •
Average
•
Standard Deviation
•
Variance
•
Co-variance
•
Correlation
•
Compounded return
•
Beta
•
Systematic and Unsystematic Risk measure
•
Measure of Alpha
Plan of Analysis •
One year annualized returns are calculated based on the daily returns
•
S&P CNX NIFTY index is benchmark index and the risk free return is calculated using NAV’s of respective schemes.
•
All the above mentioned Statistical measures are calculated to get the results.
Limitations of the Study The following are the limitations of the study: •
As many statistical tools are used, the limitations of these subjects cannot be denied.
5)
•
Each evaluation measure or variable has its own drawbacks.
•
There are very few funds available as the industry hasn’t expanded considerably.
Analysis of the study In analysis part I have shown the calculations of Risk, Returns
and Performance Measures of both the schemes i.e. Megnum Equity Fund-Growth and HDFC Equity Fund-Growth.
Following are the Returns calculations of Megnum Equity FundGrowth and HDFC Equity Fund-Growth.
Percentage change in NAV
(For period equals to one year) Fund name: Magnum Equity Fund-Growth NAV as on 1st mar 2007
--------------------------------- 26.56
NAV as on 3rd mar 2008
---------------------------------- 35.16
Formula Absolute change in NAV NAV at the beginning
=
8.6
100
26.56 = 32.38
Fund name: HDFC Equity Fund-Growth NAV as on 1st mar 2007
--------------------------------- 143.68
NAV as on 3rd mar 2008
---------------------------------- 180.72
37.04 143.68 =
25.78
100
Percentage change in NAV (For period not equals to one year)
Fund name: Magnum Equity Fund-Growth NAV as on 2nd jan 2007
--------------------------------- 27.87
NAV as on 31st mar 2008 ---------------------------------- 33.05
Formula (End period NAV/beginning period NAV)-1)*12/n*100
(33.05/27.87)-1)*12/15*100 =14.86
Fund name: HDFC Equity Fund-Growth NAV as on 2nd jan 2007
----------------------------------- 147.29
NAV as on 31st mar 2008 ----------------------------------165.79
(165.79/147.29)-1*12/15*100 = 10.05
The following are the NAVs of SBI Magnum Equity FundGrowth and HDFC Equity Fund-Growth and there respective returns.
HDFC Date 2-Apr-
Index 4379.3
SBI
HDFC
Index Returns
SBI Returns
Returns
07 3-Apr-
7 4448.1
25.6
136.747
07 4-Apr-
2 4499.9
25.84
137.879
1.569860505
0.9375 1.12229102
0.827806094
07 5-Apr-
1 4522.5
26.13 26.32
140.005 141.044
1.164312114 0.502232267
2 0.72713356
1.541931694 0.742116353
07 9-Apr-
1
3 2.31762917
07 10-Apr-
4632.8 4638.4
26.93
144.217
2.438690019
9 0.37133308
2.249652591
07
1
27.03
144.475
0.121093075
6 -
0.178897079
11-Apr-
4655.8
07
8
12-Apr-
4616.3
07 13-Apr-
5 4721.8
26.83
143.395
-0.84903391
1
-0.849104223
07 16-Apr-
2 4837.5
27.22
146.359
2.284705449
1.45359672 2.31447465
2.067017678
07
3
27.85
149.17
2.45053814
1 -
1.920619846
0.22197558 26.97
144.623
0.376637684
3 -
0.102439868
0.51909529
17-Apr-
0.28725314
07
4803.3
27.77
148.129
-0.707592511
2 -
-0.6978615
18-Apr-
4835.4
07 19-Apr-
2 4818.6
27.74
148.283
0.668706931
8
0.103963437
07 20-Apr-
1 4923.4
27.59
147.674
-0.347643018
-0.5407354
-0.410701159
07
7
28.05
149.697
2.176146233
1.66727075 -
1.369909395
23-Apr-
4931.0
07 24-Apr-
8 4999.5
27.99
149.685
0.154565784
3 1.82207931
-0.008016193
07 25-Apr-
2
28.5
151.082
1.387931244
4 0.31578947
0.933293249
07 26-Apr-
5030.3 5043.0
28.59
151.556
0.615659103
4 0.24484085
0.313736911
07 27-Apr-
3 4929.1
28.66 28.25
151.758 150.19
0.253066418 -2.258166221
3 -
0.133284067 -1.033223949
07
5
0.10803024
0.21390374
1.43056524
8 0.67256637
30-Apr-
4934.4
07 3-May-
6 5010.4
28.44
151.16
0.107726484
2 1.47679324
0.645848592
07
4
28.86
153.169
1.539783482
9 -
1.329055306
4-May-
0.76230076
07
4970
7-May-
4962.5
07
2
28.64
151.523
-0.807114744
2 -
-1.074629984
0.45391061 28.51
151.31
-0.150503018
8-May-
5 -
-0.140572718
0.70150824
07
4921.3
9-May-
4924.0
07
8
28.31
150.17
-0.830626375
3 -
-0.753420131
0.24726245 28.24
150.135
0.056489139
10-May- 4908.9
1 -
-0.023306919
0.60198300
07 9 11-May- 4920.8
28.07
149.399
-0.306453185
3 0.35625222
-0.490225464
07 8 14-May- 4990.5
28.17
149.984
0.242208682
7 0.81647142
0.391568886
07 5 15-May- 4973.6
28.4
152.086
1.415803677
4 0.59859154
1.401482825
07 5 16-May- 5034.7
28.57
152.673
-0.33864003
9 1.22506125
0.385965835
07 9 17-May-
28.92
154.307
1.229278297
3 0.76071922
1.070261277
07
29.14
155.085
1.174031092
5 -
0.5041897
5093.9
18-May-
0.54907343
07 5087.8 21-May- 5143.8
28.98
154.665
-0.119751075
9 0.65562456
-0.270819228
07 1 22-May- 5164.5
29.17 29.4
156.184 156.702
1.100868745 0.403786298
9 0.78848131
0.982122652 0.331660093
07
8
6 -
23-May- 5126.0 07
7
0.91836734 29.13
156.262
-0.745655988
24-May- 5076.2
7 -
-0.280787737
0.54926192
07 1 25-May- 5128.4
28.97
155.368
-0.972674973
9 0.48325854
-0.572116061
07 2 28-May- 5138.5
29.11
156.35
1.028523249
3 0.68704912
0.632047783
07 6 29-May- 5182.8
29.31
158.641
0.197721715
4 1.16001364
1.465302207
07
29.65
160.17
0.862303836
7 -
0.963811373
7
30-May- 5130.2
1.01180438
07 3 31-May- 5185.9
29.35
159.282
-1.015653489
4 0.85178875
-0.554410938
07 1-Jun-
5 5188.5
29.6
161.281
1.086111149
6 0.47297297
1.255006843
07
8
29.74
161.903
0.050713948
3 -
0.385662291
4-Jun-
5152.3
07 5-Jun-
6 5173.6
29.59
160.884
-0.698071534
7 0.43933761
-0.629389202
07
1
29.72
161.656
0.412432361
4 -
0.479848835
6-Jun-
5069.9
07
9
7-Jun-
5047.7
07
1
8-Jun-
5007.8
07 11-Jun-
7 5008.5
0.50437121
1.68236877 29.22
159.352
-2.002856806
5 -
-1.425248676
0.92402464 28.95
158.5
-0.439448599
1 -
-0.534665395
1.13989637 28.62 28.54
157.927 158.852
-0.789268797 0.01437737
3 -
-0.361514196 0.585713653
0.27952480 07
9
8 -
12-Jun-
5021.2
0.31534688
07
8
13-Jun-
4971.7
07 14-Jun-
6 5042.3
28.25
157.546
-0.986202721
8 1.73451327
-0.755924559
07 15-Jun-
8
28.74
159.777
1.420422547
4 0.66109951
1.416094347
07
5044.9
28.93
159.936
0.0499764
3 -
0.099513697
18-Jun-
5015.4
07 19-Jun-
5 5096.7
28.74
159.064
-0.583757854
1 1.46137787
-0.545218087
07 20-Jun-
2 5138.2
29.16
160.965
1.620392986
1 1.26886145
1.195116431
07 21-Jun-
6 5160.9
29.53
162.679
0.815033983
4 1.59160176
1.064827758
07
4
30
163.951
0.441394558
1 -
0.781907929
22-Jun-
5142.3
07 25-Jun-
8 5151.2
29.84
163.004
-0.35962441
3 0.10053619
-0.577611603
07 26-Jun-
6 5183.0
29.87
163.479
0.172682688
3 0.26782725
0.291403892
07
7
29.95
164.292
0.617518821
1 -
0.497311581
27-Jun-
5156.7
07 28-Jun-
7 5179.9
29.9
163.61
-0.507421277
8 0.80267558
-0.415114552
07 29-Jun-
1 5223.8
30.14
163.509
0.448730504
5 1.55938951
-0.061732168
07 2-Jul-07
2 5218.3
30.61 30.67
165.313 166.647
0.847698126 -0.105286936
6 0.19601437
1.103303182 0.806954081
28.45
158.746
0.253364719
2 -
-0.066728779
0.70298769
0.65675769
0.53333333
0.16694490
2
4 1.27160091
3-Jul-07
5271.3 5273.4
31.06
167.92
1.015269282
3 0.28976175
0.763890139
4-Jul-07
2 5267.3
31.15
167.161
0.040217783
1
-0.452000953
5-Jul-07
3 5304.8
31.07
166.71
-0.115484828
-0.25682183 0.93337624
-0.269799774
6-Jul-07
4 5346.6
31.36
167.913
0.712125498
7 0.41454081
0.721612381
9-Jul-07
4
31.49
169.806
0.787959675
6 -
1.127369531
10-Jul-
5331.1
07
4
11-Jul-
5308.2
07 12-Jul-
7 5379.6
31.26
169.53
-0.428988922
7 1.50351887
0.200957503
07 13-Jul-
6 5450.5
31.73
171.572
1.344882608
4 1.73337535
1.204506577
07 16-Jul-
7 5462.0
32.28
171.953
1.318113041
5
0.222064206
07
1
32.35
171.714
0.209886305
0.21685254 -
-0.138991469
17-Jul-
5443.8
07 18-Jul-
4 5447.2
32.1
170.313
-0.33266142
7 0.65420560
-0.815891541
07 19-Jul-
3 5522.9
32.31
170.129
0.06227222
7 1.57845868
-0.10803638
07 20-Jul-
5 5527.7
32.82
172.024
1.390064308
2 0.12187690
1.113860659
07 23-Jul-
4 5592.2
32.86
172.56
0.086729013
4 1.70419963
0.31158443
07 24-Jul-
6 5593.9
33.42
174.41
1.167203957
5
1.072090867
07
6
33.42
174.391
0.030399159
0
-0.010893871
0.47634169 31.34
169.19
-0.289901695
6 -
-0.362766922
0.25526483
0.77279752
25-Jul-
5555.1
1.07719928
07
6
26-Jul-
5592.8
07 27-Jul-
1 5381.9
32.98
173.457
0.677748256
1
0.28619003
07 30-Jul-
7 5375.7
31.88
168.741
-3.769840206
-3.33535476 0.15683814
-2.718829451
07 31-Jul-
4 5483.2
31.93
168.101
-0.11575687
3 2.34888819
-0.379279487
07
5
32.68
172.325
1.99991071
3 -
2.512775058
1-Aug-
5261.6
07 2-Aug-
9 5274.7
31.53
165.817
-4.040669311
8 1.17348556
-3.776584941
07 3-Aug-
6 5330.2
31.9
167.251
0.248399279
9 1.00313479
0.864808795
07
3
32.22
169.181
1.051611827
6 -
1.153954236
6-Aug-
5255.0
07 7-Aug-
8 5276.7
31.8
167.657
-1.409882876
5 0.56603773
-0.900810375
07 8-Aug-
6 5406.5
31.98
168.455
0.412553187
6 1.75109443
0.475971776
07
1
32.54
171.664
2.458895231
4 -
1.904959782
9-Aug-
5335.1
07
4
10-Aug-
5250.5
07 13-Aug-
1 5299.3
31.42
166.582
-1.586275149
9 1.33672819
-1.137105485
07 14-Aug-
4 5295.2
31.84 31.7
167.491 167.411
0.930004895 -0.076802017
9 -
0.545677204 -0.04776376
33.06
172.962
-0.693605246
2 -
-0.819423021
0.24198427
3.51897184
1.30353817
1.44437615 32.07
168.498
-1.320075243
2 -
-1.844300494
2.02681633
0.43969849 07
7
2 -
16-Aug-
5063.4
3.78548895
07
2
17-Aug-
4978.7
07 20-Aug-
3
29.93
158.649
-1.672584933
9 2.27196792
-1.380004849
07 21-Aug-
5101.1 4938.5
30.61
161.45
2.457855718
5
1.765532717
07 22-Aug-
1 5033.6
29.65
155.995
-3.187351748
-3.13622999 2.05733558
-3.378755033
07
4
30.26
157.769
1.926289508
2 -
1.137215936
23-Aug-
4987.6
07 24-Aug-
3 5078.7
30.1
156.451
-0.91405027
6 1.82724252
-0.835398589
07 27-Aug-
7 5215.1
30.65
158.572
1.827320792
5 2.67536704
1.355696033
07 28-Aug-
1 5237.0
31.47
163.29
2.684508257
7 0.47664442
2.975304593
07 29-Aug-
1 5283.8
31.62
164.074
0.419933616
3 0.37950664
0.480127381
07 30-Aug-
1 5348.6
31.74
164.406
0.893639691
1 0.50409577
0.202347721
07 31-Aug-
4 5411.2
31.9
165.742
1.226955549
8 1.63009404
0.81262241
07 3-Sep-
9 5424.3
32.42
168.827
1.171325795
4 0.95619987
1.86132664
07 4-Sep-
3 5430.4
32.73
170.663
0.24097766
7
1.087503776
07 5-Sep-
9 5426.3
32.73
170.669
0.113562412
0
0.003515701
07 6-Sep-
7 5478.1
32.55 32.78
170.547 171.931
-0.075867924 0.954597641
-0.54995417 0.70660522
-0.071483398 0.811506506
30.5
160.869
-4.378435849
9 -
-3.907747997
1.86885245
0.52875082
07
7
3 -
7-Sep-
5467.1
0.64063453
07 10-Sep-
3 5470.4
32.57
172.113
-0.201527152
3 0.76757752
0.105856419
07
6
32.82
172.496
0.060909472
5 -
0.222528223
11-Sep-
5457.3
07 12-Sep-
5 5457.1
32.81
171.558
-0.239650779
6 0.64004876
-0.543780725
07 13-Sep-
2 5496.0
33.02
171.156
-0.0042145
6 0.99939430
-0.234323086
07
7
33.35
171.692
0.713746445
6 -
0.313164598
14-Sep-
5483.0
07 17-Sep-
9 5454.7
33.18
170.646
-0.236168753
7 0.39180229
-0.609230482
07 18-Sep-
4 5517.3
33.31
170.482
-0.517044221
1
-0.096105388
07 19-Sep-
3 5743.3
33.67
172.737
1.147442408
1.08075653 2.49480249
1.322720287
07 20-Sep-
2 5761.7
34.51
176.388
4.096002958
5 0.89829035
2.113617812
07 21-Sep-
7
34.82
177.417
0.321242766
1 1.49339460
0.583373019
07 24-Sep-
5871 5985.9
35.34
178.491
1.895771612
1 1.64119977
0.605353489
07
1
35.92
179.893
1.957247488
4 -
0.785473777
25-Sep-
5993.9
07 26-Sep-
9 5995.9
35.68
179.563
0.134983653
8 0.02802690
-0.18344238
07 27-Sep-
4 6068.8
35.69
180.001
0.032532587
6 0.02801905
0.24392553
07 28-Sep-
3 6094.1
35.7 36.1
180.955 182.838
1.215655927 0.416554756
3 1.12044817
0.529997056 1.040590202
0.03046922
0.50974512
0.66815144
07 1-Oct-
1 6151.8
9 1.16343490
07 3-Oct-
8 6323.9
36.52
184.165
0.94796451
3 2.54654983
0.725779105
07 4-Oct-
9 6321.3
37.45
186.076
2.797681359
6 0.93457943
1.037656449
07 5-Oct-
8 6293.7
37.8
185.771
-0.041271413
9 0.23809523
-0.16391152
07
1
37.89
186.045
-0.437720877
8 -
0.147493419
8-Oct-
6171.4
07 9-Oct-
6 6465.3
37.39
182.428
-1.942415523
6 3.39663011
-1.944153296
07 10-Oct-
3 6603.9
38.66
187.386
4.761758158
5 3.10398344
2.717784551
07 11-Oct-
1 6705.1
39.86
189.828
2.14343274
5 1.43000501
1.303192341
07
3
40.43
193.137
1.532728338
8 -
1.743156963
1.31960939
12-Oct-
1.95399455
07 15-Oct-
6587.9 6881.8
39.64
189.764
-1.748362821
8
-1.746428701
07
2
40.76
195.809
4.461512773
2.82542886 -
3.185535718
16-Oct-
6878.9
07 17-Oct-
2 6746.9
40.75
195.696
-0.042140015
7
-0.057709298
07
9
39.75
192.444
-1.917888273
-2.45398773 -
-1.661761099
18-Oct-
6494.7
07
4
19-Oct-
6330.0
07 22-Oct-
3 6292.5
36.65
181.373
-2.536052252
2
-2.490255638
07
5
36.64
181.983
-0.5920983
-0.02728513
0.336323488
0.02453385
3.97484276 38.17
186.005
-3.738704222
7 -
-3.34590842
3.98218496
23-Oct-
6644.4
6.33187772
07 24-Oct-
8
38.96
191.226
5.592804189
9 0.28234086
5.079045845
07 25-Oct-
6671.7 6760.6
39.07
193.973
0.40966336
2 1.10058868
1.436520138
07 26-Oct-
3
39.5
197.384
1.332943628
7 2.96202531
1.758492161
07 29-Oct-
6922.5 7169.6
40.67
203.727
2.394303489
6 2.85222522
3.213533012
07 30-Oct-
7 7124.5
41.83
209.357
3.570530878
7 0.21515658
2.763502138
07 31-Oct-
8
41.92
208.164
-0.628899238
6 1.33587786
-0.569840034
07
7163.3
42.48
210.3
0.543470633
3 -
1.026114025
1-Nov-
7121.9
07 2-Nov-
6 7202.0
42.16
209.25
-0.577108316
9 0.71157495
-0.499286733
07
1
42.46
211.374
1.12398834
3 -
1.015053763
5-Nov-
7098.6
07
7
6-Nov-
7024.9
07
1
7-Nov-
7021.1
07
2
8-Nov-
6919.6
07
5
9-Nov-
6876.5
07 12-Nov-
1 6820.5
0.75329566
0.68299576 42.17
208.297
-1.434877208
1 -
-1.455713569
0.71140621 41.87
205.49
-1.039067882
3 -
-1.347595021
0.52543587 41.65
204.624
-0.053950869
3 -
-0.4214317
1.20048019 41.15
201.741
-1.44521102
2 -
-1.408925639
0.68043742 40.87 40.47
199.968 203.629
-0.623441937 -0.814512013
4 -
-0.878849614 1.830792927
0.97871299 07 13-Nov-
6915.5
2 1.70496664
07 14-Nov-
6 7209.9
41.16
209.762
1.393739462
2 2.62390670
3.011849982
07 15-Nov-
9 7178.7
42.24
210.78
4.257500477
6 0.11837121
0.485311925
07
1
42.29
210.356
-0.433842488
2 -
-0.201157605
16-Nov-
7172.3
07 19-Nov-
1 7173.2
42.15
212.453
-0.089152508
9 2.15895610
0.996881477
07
7
43.06
209.097
0.013384809
9 -
-1.579643498
20-Nov-
7019.3
07
6
21-Nov-
6752.4
07 22-Nov-
1 6701.8
41.1
199.733
-3.80305327
1 0.34063260
-0.515520402
07 23-Nov-
1 6810.1
41.24
201.546
-0.74936208
3 2.76430649
0.907711795
07 26-Nov-
6 6959.6
42.38
204.862
1.616727421
9 2.90231241
1.64528197
07
1
43.61
204.038
2.194515254
2 -
-0.402221984
27-Nov-
6918.9
07
2
28-Nov-
6821.0
07
4
29-Nov-
6841.7
07 30-Nov-
5 6997.6
0.33104752
1.02183000 42.62
200.768
-2.145604445
5 -
-3.983318747
3.56640075
0.57326301 43.36
201.956
-0.584659198
3 -
-1.020398161
0.27675276 43.24
201.59
-1.414671654
8 -
-0.181227594
0.57816836 42.99 43.96
206.176 207.921
0.303619389 2.277925969
3 2.25633868
2.27491443 0.846364271
07 3-Dec-
3 1.75159235
7121.7
07 4-Dec-
4 7113.6
44.73
207.709
1.774036813
7
-0.101961803
07 5-Dec-
4 7212.8
45.52
211.803
-0.11373625
1.76615247 0.81282952
1.971026773
07
2
45.89
212.077
1.394222929
5 -
0.129365495
6-Dec-
7230.6
07 7-Dec-
3 7254.4
45.78
213.228
0.246921454
9
0.542727406
07
5
45.77
213.451
0.329431875
-0.0218436 -
0.104582888
10-Dec-
7237.8
07 11-Dec-
5 7403.7
45.58
216.943
-0.228825066
4 1.27248793
1.635972659
07 12-Dec-
7 7479.0
46.16
218.36
2.292393459
3
0.653166961
07
8
46.76
217.747
1.017184488
1.29982669 -
-0.280729071
0.23970363
0.41511907
13-Dec-
0.85543199
07
7356.2
46.36
216.845
-1.642982827
3 -
-0.414242217
14-Dec-
7343.6
07
1
17-Dec-
7014.8
07
7
18-Dec-
6972.7
07 19-Dec-
5 6984.1
43.69
209.843
-0.600438782
5 0.11444266
0.215385497
07 20-Dec-
1 7002.7
43.74
210.041
0.162919938
4 0.45724737
0.094356257
07 24-Dec-
2 7268.1
43.94 45.15
214.741 217.682
0.266462012 3.790812713
1 2.75375512
2.237658362 1.369556815
0.04314063 46.34
209.757
-0.171148147
8 -
-3.268694229
4.72593871 44.15
209.392
-4.476544915
4 -
-0.174010879
1.04190260
07 26-Dec-
8 7379.0
1 2.48062015
07 27-Dec-
2 7392.0
46.27
218.797
1.525003508
5
0.512215066
07 28-Dec-
6
45.94
219.857
0.176717233
-0.7132051 1.54549412
0.484467337
07 31-Dec-
7389.9 7461.4
46.65
223.324
-0.029220542
3 1.26473740
1.576934098
07
8
47.24
217.45
0.968619332
6 -
-2.630259175
7468.4
0.04233700
1-Jan-08 9 7511.0
47.22
224.592
0.09394919
3 2.13892418
3.284433203
2-Jan-08 6
48.23
226.239
0.569994738
5 -
0.733329771
7510.0
0.53908355
3-Jan-08 2 7626.4
47.97
225.043
-0.013846248
8
-0.528644487
4-Jan-08 1
48.49
227.097
1.549796139
1.08401084 -
0.912714459
7632.2 7-Jan-08 6
0.26809651 48.36
227.613
0.076707127
7642.8 8-Jan-08 9
0.227215683
0.99255583 47.88
225.209
0.139277226
7623.6 9-Jan-08 4
5 1 -
-1.056178689
0.48036758 47.65
223.089
-0.251868076
6 -
-0.941347815
10-Jan-
7483.8
2.37145855
08 11-Jan-
1 7536.2
46.52
220.013
-1.834163208
2 0.08598452
-1.378821905
08 14-Jan-
3 7544.5
46.56
221.852
0.700445361
3 1.31013745
0.835859699
08 15-Jan-
3 7383.3
47.17 46.23
221.851 219.711
0.110134643 -2.135984614
7 -
-0.000450751 -0.964611383
1.99279202 08
8
9 -
16-Jan-
7215.0
2.18472853
08 17-Jan-
8 7187.6
45.22
217.617
-2.279443832
1
-0.953070169
08
4
45.39
217.003
-0.380314563
0.37593985 -
-0.282147075
18-Jan-
6934.9
08
5
21-Jan-
6331.4
08
4
22-Jan-
5955.2
08 23-Jan-
2 6325.6
36.63
181.808
-5.942092162
7 6.41550641
-6.132121744
08
6
38.98
192.228
6.220425106
6 -
5.731320954
24-Jan-
6119.0
08 25-Jan-
7
37.52
186.269
-3.265904269
8 7.30277185
-3.099964625
08
6544.4
40.26
195.274
6.950892864
5 -
4.834406155
28-Jan-
6411.6
08 29-Jan-
1 6419.7
39.7
193.408
-2.029063016
8 0.15113350
-0.955580364
08
4
39.76
192.123
0.126801225
1 -
-0.664398577
30-Jan-
6282.1
08 31-Jan-
5 6245.4
38.91
189.907
-2.143233215
2 0.33410434
-1.153427752
08 1-Feb-
5 6465.4
39.04 38.69
188.42 191.075
-0.584194901 3.522724543
3 -
-0.783014844 1.409086084
08
6
4.73672615 43.24
207.764
-3.515618478
1 -
-4.257544827
11.3320999 38.34
193.685
-8.702441979
1 -
-6.776438652
4.46009389
3.74551051
1.39095876
2.13782696
0.89651639
3 2.61049366
4-Feb-
6647.2
08 5-Feb-
8 6672.0
39.7
195.54
2.81217423
8 1.38539042
2.336778752
08
7
40.25
194.906
0.372934494
8 -
-0.324230337
6-Feb-
6475.7
08
4
7-Feb-
6245.4
08
8
8-Feb-
6229.7
08
3
11-Feb-
5909.3
08
5
12-Feb-
5886.5
08 13-Feb-
3 5998.7
35.1
175.403
-0.386167683
6 0.68376068
-0.980580332
08 14-Feb-
6 6330.7
35.34
177.861
1.906556154
4 5.37634408
1.401344333
08 15-Feb-
3 6453.5
37.24
186.056
5.533977022
6 1.55746509
4.6075306
08 18-Feb-
5 6421.9
37.82
188.816
1.940060625
1
1.483424345
08
1
37.82
188.985
-0.490272796
0 -
0.089505127
19-Feb-
6426.6
08
6
20-Feb-
6272.8
08 21-Feb-
8 6318.3
3.10559006 39
190.044
-2.942565051
2 -
-2.494535828
3.28205128 37.72
185.194
-3.555732627
2 -
-2.55204058
1.32555673 37.22
183.235
-0.252182378
4 -
-1.057809648
5.45405695 35.19
177.14
-5.142758996
9 -
-3.326329577
0.25575447
0.15864621 37.76
188.963
0.073965534
9 -
-0.011641136
3.52224576 36.43 36.67
184.9 185.551
-2.392844806 0.724069327
3 0.65879769
-2.15015638 0.352082207
08
4 -
22-Feb-
6219.6
1.66348513
08 25-Feb-
6 6329.1
36.06
183.174
-1.561179431
8 1.58069883
-1.281049415
08 26-Feb-
3 6413.5
36.63
184.251
1.760064055
5 1.82910182
0.587965541
08 27-Feb-
5 6411.5
37.3
186.915
1.333832612
9 0.64343163
1.445853754
08
3
37.54
186.959
-0.031495817
5 -
0.023540112
28-Feb-
6431.8
08
7
29-Feb-
6356.9
08 3-Mar-
2 6027.6
36.91
187.594
-1.165290965
4
-0.346355301
08
9
35.16
180.716
-5.179080435
-4.74126253 -
-3.666428564
4-Mar-
5919.6
08 5-Mar-
9 5989.2
34.27
176.827
-1.791731161
2 0.20426028
-2.151995396
08
3
34.34
178.118
1.174723676
6 -
0.730092124
7-Mar-
5806.9
08 10-Mar-
5 5842.0
33.3
173.18
-3.043463016
8
-2.772319474
08 11-Mar-
2 5921.7
33.28
171.579
0.603931496
-0.06006006 3.39543269
-0.924471648
08 12-Mar-
1 5929.1
34.41
175.113
1.364082971
2 0.14530659
2.05969262
08
2
34.46
172.954
0.125132774
7 -
-1.232918173
13-Mar-
5626.8
08 14-Mar-
2 5775.5
0.05327650 37.52
188.246
0.317240971
5 -
0.688386224
1.62579957
2.53128555
3.02853814
6.38421358 32.26 32.97
165.452 167.99
-5.098564374 2.643589097
1 2.20086794
-4.337569527 1.533979644
08
7
8 -
17-Mar-
5481.2
5.82347588
08
2
18-Mar-
5517.5
08 19-Mar-
9 5567.4
30.91
158.694
0.663538409
8 0.54998382
0.18497358
08 24-Mar-
3 5611.1
31.08
157.98
0.903292923
4 0.12870012
-0.449922492
08 25-Mar-
7 5936.9
31.12
158.076
0.785640771
9 5.49485861
0.060767186
08
2
32.83
166.059
5.805384617
2 -
5.050102482
26-Mar-
5877.7
08 27-Mar-
2
32.67
165.856
-0.997150037
3 0.48974594
-0.122245708
08 28-Mar-
5879.4 6015.4
32.83
166.306
0.028582512
4 3.86841303
0.271319699
08
7
34.1
171.142
2.314351805
7 -
2.90789268
31-Mar-
5762.8
08
8
31.05
158.401
-5.096466669
7 -
-5.708077862
0.45088566
0.48735912
3.07917888 33.05
165.788
-4.199006894
6
-3.128396302
Following are the risk measures of SBI Magnum Equity FundGrowth and HDFC Equity Fund-Growth.
BETA CORRL VAR
SBI 0.964116814 0.938181407 4.096683202
%
HDFC 0.750390035 0.874566887 3.459706829
%
COVAR Std. Dev Systematic
3.834309858 1.998246472
2.984316853 1.998246472
Risk Unsystematic
0.938182321
7
0.874568384
4 12.5431
Risk RSQ ALPHA
0.061817679 0.880184353 -0.001728715
6.18176793
0.125431616 0.76486724 -0.005654814
6
93.8182320
87.4568
Following are the PERFORMANCE MEASURES of SBI Magnum Equity Fund-Growth and HDFC Equity Fund-Growth.
Treynor Ratio; Formula Treynor Measure=
Excess Return on Portfolio (Fund) Beta of Portfolio (Fund)
=Avg. Rate of Return on Fund – Avg. Rate of Return on a Risk-Free Investment Beta of Fund SBI Magnum Equity Fund-Growth:-
=
0.123454698 – 0.08 0.964116814
=
0.0450 or 4.50%
HDFC Equity Fund-Growth:=
0.091777762 – 0.08 0.750390035
=
0.0156 or 1.56%
Sharpe Measure/ Ratio;
Formula; Sharpe Measure
=
Excess Return on Portfolio (Fund) Standard Deviation of Portfolio (Fund)
=Avg. Rate of Return on Fund – Avg. Rate of Return on a Risk-Free Investment Standard Deviation of Portfolio (Fund)
SBI Magnum Equity Fund-Growth:-
=
0.123454698 – 0.08 1.998246472
=
0.02174 or 2.174%
HDFC Equity Fund-Growth:-
=
0.091777762 – 0.08 1.714523761
=
0.00686 or 0.68%
Jensen Measure/ Ratio; Formula; Jensen Measure = Avg. Return on Fund–[Risk Free Return + Fund Beta(Avg.Market Return – Risk Free Return)]
SBI Magnum Equity Fund-Growth:= 0.123454698 - (0.08 + 0.964116814 (0.129842578 - 0.08) = 0.123454698 - (1.044116814(0.049842578) = 0.123454698 - 0.05204147374 = 0.07141322426 or 7.14 %
HDFC Equity Fund-Growth:= 0.091777762 - (0.08 + 0.750390035 (0.049842578) = 0.091777762 - (0.830390035(0.049842578) = 0.091777762 - 0.04138878008 = 0.05038898192 or 5.038898192 %
6)
Findings
Following table shows the findings of the project report. Magnum Equity Fund- HDFC Equity 1) returns calculations Growth % Change in NAV (for period equals to one year) 32.38 % Change in NAV (for period not equals to one
Fund-Growth 25.78
year)
14.86
10.05
2) risk calculations BETA CORRL VAR COVAR Std. Dev Systematic Risk Unsystematic Risk RSQ ALPHA
0.964116814 0.938181407 4.096683202 3.834309858 1.998246472 0.938182321 0.061817679 0.880184353 -0.001728715
0.750390035 0.874566887 3.459706829 2.984316853 1.714523761 0.874568384 0.125431616 0.76486724 -0.005654814
Treynor Measure/ Ratio
4.50%
1.56%
Sharpe Measure/ Ratio
2.1746%
0.68%
Jensen Measure/ Ratio
7.14%
5.039%
3)performance measures
Findings 1) Here between our chosen scheme Magnum Equity Fund-Growth is having higher average return of
0.1234 as compare to that of HDFC Equity Fund-Growth which is
having only 0.09177 so it is obvious to conclude that Magnum Equity Fund-Growth is on an average performing well in terms of Average Daily Returns. 2) In the above case the Magnum Equity Fund-Growth is having 1.998246472 as a Standard deviation as compare to that of HDFC Equity Fund-Growth which is having Standard Deviation of 1.714523761 so here we can conclude that Magnum Equity FundGrowth is having more fluctuation so there will be higher risk. 3) Here one more thing we can observe that both the scheme having perfect positive correlation. But Magnum Equity Fund-Growth is having 0.938181407 which is more as compare to that of HDFC Equity Fund-Growth which is having 0.874566887. 4) Variance of the Magnum Equity Fund-Growth is 4.096683202 and 3.459706829 is for HDFC Equity Fund-Growth means HDFC Equity Fund-Growth is consistent compare to the Magnum Equity Fund-Growth. 5) Even Beta value of the HDFC Equity Fund-Growth is less i.e. 0.750390035 as compare to that of Magnum Equity Fund-Growth which is 0.964116814 so we can say that the HDFC Equity Fund-Growth is less varying with that of the Magnum Equity Fund-Growth. 6) Here Magnum Equity Fund-Growth and HDFC Equity Fund-Growth is under performed means unable to meet the investor expectations and alpha of both the schemes are -0.001728715 and -0.005654814
7) As stated above R-Square ranges from 0-100 so here HDFC Equity Fund-Growth is having only 0.76486724 i.e.76.486724% that of the Magnum Equity Fund-Growth which is
having
0.880184353
i.e.88.0184353%
8) So it should be noted that HDFC Equity Fund-Growth having less risk and less return as compare to Magnum Equity Fund-Growth which is having high risk and high return. 9) Performance ratios show the excess return of the schemes over and above risk free rate of return and here we can see that Magnum Equity Fund-Growth is comparatively having good excess return than the HDFC Equity Fund-Growth.
7)
Conclusions of the project report
1) From the project report we can conclude that Magnum Equity Fund-Growth is having high risk with high returns and also performing good compare to HDFC Equity FundGrowth 2) HDFC Equity Fund-Growth is having less risk and less return compare to Magnum Equity Fund-Growth. 3) Here from the calculations we can conclude that the one may get approximately 30 to 35% returns from the Magnum Equity Fund-Growth. Where as investing in HDFC Equity Fund-Growth he may get 24 to 28% returns.
4) At present both schemes are underperforming means not meeting the investor’s expectations. 5) Magnum Equity Fund-Growth is more volatile than that of HDFC Equity FundGrowth.
8)
Suggestions of the project report •
Here I would like to suggest, the company i.e. Way to Gain also consider the risk returns and performance measurements to its unit holder when they come to investment into their company.
•
From this project report it is clear that who wants to take higher risk and higher return they can go for Magnum Equity Fund-Growth
•
Who wants a less risk and less return they can invest in HDFC Equity FundGrowth
•
Here I also suggest the company to make some awareness campaign because many people who are interested in earnings through this investment companies don’t know the concept only.
•
As we know that Dharwad- Hubli is of many villages so the company should go for awareness campaign.
•
As company is growing rapidly, so I suggest the company to hire some marketing officers to increase the company revenue.
9)
Bibliography
Web sites:www.amfiindia.com www.google.com www.mutualfundsindia.com www.bseindia.com www.nseindia.com www.ask.com www.sbimf.com www.hdfcfund.com News papers:Business line Business standard Mutual Fund Insight Books:Investment analysis and portfolio management ---Prasanna chandra
I