Documente Academic
Documente Profesional
Documente Cultură
Project
On
PORTFOLIO MANAGEMENT IN MUTUAL
FUNDS
In partial fulfillment of the requirement of two years full time
Masters of Business Administration (MBA) Programme (2008-2010)
Of Christ University Institute of Management, Bangalore-560029
SUBMITTED BY :
AARNESH KARAMCHANDANI
(08 PG 0122)
CONTENT
Certificate
Declaration
Preface
Acknowledgement
Research Methodology
Executive Summary
14 Conclusion
15 Bibliography
DECLARATION
AARNESH KARAMCHANDANI
Portfolio Management In Mutual Funds
Date:
PREFACE
Investing money where the risk is less has always been risky to decide. The
first factor, which an investor would like to see before investing, is risk factor.
Diversification of risk gave birth to the phenomenon called Mutual Fund.
The Mutual Fund Industry is in the growing stage in India, which is evident
from the flood of mutual funds offered by the Banks, Financial Institutes &
Private Financial Companies.
There are various aspects, which have been studied in detail in the project
and have been added to this project report.
Portfolio Management In Mutual Funds
Hope this report would help one understand the mutual Industry of India in
detail.
Portfolio Management In Mutual Funds
ACKNOWLEDGEMENT
Finally, I thank all those who directly and indirectly contributed to this project.
Portfolio Management In Mutual Funds
AARNESH KARAMCHANDANI
Portfolio Management In Mutual Funds
EXECUTIVE SUMMARY
This project is all about how to manage an investor’s portfolio in mutual fund.
How to diversify the investments into different schemes of funds. To manage
client’s portfolio efficiently we first need to understand the industry, current
economic condition of the economy, investor’s behavior, their objective, risk
apatite.
This report has divided into two phases. First phase covered investor’s
portfolio part where we have included, Introduction of mutual funds, Indian
mutual fund industry, Investment options available with individuals and at last
techniques of managing a client’s portfolio in mutual funds.
Second phase of the report covered scheme’s portfolio part, where we have
compared HDFC Equity Fund and HDFC Core & Satellite Fund with their
competitors. It also included fund’s portfolio part where we have given
information about the different funds available to investor for investment
Portfolio Management In Mutual Funds
RESEARCH METHODOLOGY
Primary Objectives
The main objective of this study is doing an In-depth analysis of Mutual Fund
portfolio by taking sample of funds and comparing it with it others
Secondary objectives
– to understand the portfolio management process in mutual fund
– To know the effects of political, economical, social and technological
factors on Mutual Fund Industry in India.
– Evaluating fund performance
Collection of data
For the complete study I required data of Mutual Fund and getting from the
secondary data base.
(1) Internet
(2) Various magazines/bulletins
(3) News papers
(4) Related books
Limitations
Portfolio Management In Mutual Funds
INTRODUCTION
Designing a portfolio is not simple task. Ones individual has decided about the
type of investment then he or she needs to decide portfolio in that category.
There are various ways of maintaining portfolio of individual.
Phase I
Investor’s Portfolio
What is an Investment?
An investment is the use of capital to create more money through the
acquisition of a security that promise the safety of the principal and generate a
reasonable return.
The rate of public provident fund is 8.5% p.a. currently. This is basically a
long term investment opportunities (maturity 15 year) as the entire amount
that is accumulated in this account can be withdrawn entirely only after 15
years. Partial withdrawal is allowed only after 5 years. Interest is exempt from
income tax and contributions are eligible for tax deductions.
Bank fixed deposits yield will vary from bank to bank but they are more or less
streamlined. The yields are currently in the region of 5.5% to 6.5% per annum
for deposits ranging from 30 days to five years. All the schedule banks are
covered by DICGC (Deposit Insurance and Credit Guarantee Corporation)
which means that up to 1 lakh deposited in a bank per person is absolutely
safe and insured even if the bank collapse.
years
Government security and gilts are totally secure. Government bonds are
issued by the government of India periodically. These are now available in the
secondary market through satellite dealers and banks. They are known to
yield 5% to 6% per annum. Interest exceeding Rs. 2500 is liable for TDS at
10.455%.
These are 8% saving bonds which are taxable. The maturity is after 6 years
and there is no upper limit to investment is these bonds. The interest accrued
on these bonds is taxable under the Income Tax Act, 1961.
g. Insurance:
There are several types of insurance policies available in the market today
through various players. Life insurance is the most sought after cover life it
also offer a tax benefit for the amount of premium paid in a particular year.
Though insurance is considered as expenditure, it became an investment
option.
Portfolio Management In Mutual Funds
The insurance policies available in the market are either pure insurance or a
combination of the three basic types of life insurance policies namely, Term,
Whole and Endowment. Term assurance policy is purely protection policy
with no investment elements. Whole life and Endowment policies are different
as a payout is certain in these policies. A Whole life policy pays out on the
death of the life assured, whenever that occurs and in Endowment policy pay
will be on maturity date or earlier death. There is one more type of insurance
policy is so popular these days is UNIT Link Insurance under which premium
amount will be invested in to equity market via mutual fund investment.
Company fixed deposits was a highly popular investment vehicle in the past.
In today’s changing scenario where the corporate world has access to
cheaper funds from sources all over the world, the rate of interest offered by
good companies make this a less attractive investment vehicle.
i. Infrastructure Bonds:
A mutual fund is a company that pools the money of many investors to invest
in a variety of different securities. Investment may be in stocks, bonds,
debentures, money market or combination of these. These securities are
professionally managed on the behalf of investor, by the fund manager.
An equity share is a certificate or a book entry that represents the single unit
of ownership in a company or its business. They are sold either directly by the
company or they can be acquired through broker from the stock market. By
purchasing a share of a company, an individual gets a ownership rights, right
to vote and share in the company’s future profits and losses.
The primary market is a place where the new offerings by companies are
made as an Initial Public Offering (IPO) IPO’s are offering made by the
company for the first time in the market. Such offers to the public can be at
par or can be at premium.
The stock exchange is a place where buyers and sellers meet to trade in
shares in an organized manner. There are at present 26 recognized stock
exchanges in the country and are governed by security board of India (SEBI).
c. Gold:
Of late, an inverse relationship between the dollar and gold has been in India.
The lower the dollar goes, the higher is the gold prices. Why does this
happen? The dollar is the international currency with nothing besides gold to
challenge it. Besides being a commodity, gold is a universally accepted form
of money. India is a net importer of gold. The domestic production is almost
negligible and India is the highest consumer of gold in the world.
Portfolio Management In Mutual Funds
d. Real estate:
Investment in real estate or property is a good long term investment for well-
heeled investors with a huge amount of money. Depending on the total
resources at your disposal, you can invest a part of it in property.
Till January 2004, Indian residents’ investors were not allowed by our
exchange control rules to invest in foreign exchange assets.
Recently, the reserve bank of India has allowed residents to invest overseas
to the extent of an equivalent of US $ 25,000 per year. Now investor from
India can take advantage of any attractive investment opportunity overseas.
Risks of investment in the Units of the Fund the Proposer / Life Assured
should be aware that the investment in the units is subject to the following
risks:
CashPlus is a Unit-Linked Insurance Policy (ULIP) and is different from
traditional products. Investments in ULIPs are subject to market risks. The
premium paid in Unit-Linked Life Insurance policies are subject to investments
risks associated with capital markets and debt markets; and the NAVs of the
units may fluctuate based on the performance of fund and factors influencing
the
Portfolio Management In Mutual Funds
Capital market; and the insured is responsible for his /her decisions. ICICI
Prudential Life Insurance Company Limited and CashPlus are only names of
the company and the policy respectively and do not in any way indicate the
quality of the policy, its future prospects or returns. The investment in the
Fund is subject to market and other risks and there can be no assurance that
the objectives of the Fund will be achieved. The fund does not offer a
guaranteed or assured return.
funds from the public and invest on behalf of the investors. The losses and
gains accrue to the investors only. The Investment objectives outlined by a
Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The
investment objectives specify the class of securities a Mutual Fund can invest
in. Mutual Funds invest in various asset classes like equity, bonds,
debentures, commercial paper and government securities.
Mutual Fund schemes may be classified on the basis of its structure and its
investments.
By Structure:
Portfolio Management In Mutual Funds
Open-End Funds:
• Available for sale and repurchase at all times based on the net asset
values
• Unit capital of the fund is not fixed
• Fund size and its total investment go up if more new subscriptions
come in than redemptions and vice versa.
Close-End Funds:
Interval Funds:
By Investment Objective:-
Gilt Funds:
Debt/Income Funds:
• Investment in debt instruments issued not only by Government but
also by private companies, banks and financial institution and other
entities such as infrastructure companies.
• Target low risk and stable income for investors.
• Have higher price fluctuation as compared to money market funds due
to interest rate fluctuation.
• Have higher risk of default by borrowers as compared to Gilt funds.
• Debt funds can be categorized further based on their risk profiles.
Portfolio Management In Mutual Funds
Equity Funds:
• Invest a major portion of their surplus in equity shares issued by co s,
acquired directly in initial public offering or through secondary market
and keep a part in cash to take care of redemption.
• Risk is very high than debt funds but offer very high growth potential for
the capital.
• It can be further categorized based on investment strategy.
• It must have along term objectives.
Balanced Funds:
• Has a portfolio of debt instrument, convertible securities, preference
and equity shares.
• Almost equal proportion of debt/money market securities and equities.
Normally funds maintain a ratio of 55:45 or 60:40 some funds allocate
a flexible proportion based on market conditions.
• Aim is to gain income, capital appreciation and preservation of capital.
• Ideal for investors for a conservative and long term orientation.
Load Funds:
A Load Fund is one that charges a commission for entry or exit. That
is, each time you buy or sell units in the fund, a commission will be
payable. Typically entry and exit loads range from 1% to 2%. It could
be worth paying the load, if the fund has a good performance history.
No-Load Funds:
Portfolio Management In Mutual Funds
A no-Load Fund is one that does not charge a commission for entry or
exit. That is, no commission is payable on purchase or sale of units in
the fund. The advantage of a no load fund is that the entire corpus is
put to work.
Other Schemes:-
Special Schemes:-
➢ Index Schemes
Index Funds attempt to replicate the performance of a particular index
such as the BSE Sense or the NSE 50
Portfolio Management In Mutual Funds
➢ Sector Schemes
Sector Funds are those, which invest exclusively in a specified industry
or a group of industries or various segments such as 'A' Group shares
or initial public offerings.
Portfolio Management In Mutual Funds
Some fund managers are passive value seekers and some are value
creators. The former type buys undervalued assets and patiently waits for the
market to discover the value. The latter aggressively promote the undervalued
stocks that they have bought.
Some fund managers restrict themselves to liquid stocks while some thrive on
illiquid stocks which offer themselves easily to large price changes.
Some fund managers are masters of the momentum game and seek to buy
stocks that are in market fancy. They attach lesser importance to
Portfolio Management In Mutual Funds
fundamentals and believe that a rising stock price and favorable momentum
indicators imply that fundamentals are changing. In effect, they are following
the philosophy, "The trend is my friend". Other fund managers go more by
deep fundamental analysis completely ignoring price movements. They do not
mind price going down and are in fact happy to buy more.
Some fund managers are growth investors i.e. they buy stocks with a high P/E
using the forecasted growth to justify the high valuation. Others are value
investors who buy shares with low P/E or P/BV multiples - typically companies
rich with undervalued assets.
Portfolio Management In Mutual Funds
In the above graph shows how Mutual Fund works and how investor earns
money by investing in the Mutual Fund. Investors put their saving as an
investment in Mutual Fund. The Fund Manager who is a person who takes the
decisions where the money should be invested in securities according to the
scheme’s objective. Securities include Equities, Debentures, Govt. Securities,
Portfolio Management In Mutual Funds
Bonds, and Commercial Paper etc. These Securities generates returns to the
Fund Manager. The Fund Manager passes back return to the investor.
Calculation of NAV
The most important part of the calculation is the valuation of the assets owned
by the fund. Once it is calculated, the NAV is simply the net value of assets
divided by the number of units outstanding. The detailed methodology for the
calculation of the asset value is given below.
For illiquid and unlisted and/or thinly traded shares/debentures, the value has
to be estimated. For shares, this could be the book value per share or an
estimated market price if suitable benchmarks are available. For debentures
and bonds, value is estimated on the basis of yields of comparable liquid
securities after adjusting for illiquidity. The value of fixed interest bearing
securities moves in a direction opposite to interest rate changes Valuation of
debentures and bonds is a big problem since most of them are unlisted and
thinly traded. This gives considerable leeway to the AMCs on valuation and
some of the AMCs are believed to take advantage of this and adopt flexible
valuation policies depending on the situation.
Usually, dividends are proposed at the time of the Annual General meeting
and become due on the record date. There is a gap between the dates on
which it becomes due and the actual payment date. In the intermediate
period, it is deemed to be "accrued". Expenses including management fees,
custody charges etc. are calculated on a daily basis.
Portfolio Management In Mutual Funds
COMPANIES IN INDIA
PORTFOLIO MANAGEMENT
People have different investment objective and risk appetite so to get the
highest returns asset allocation through active portfolio management is the
key element.
Asset allocation is a method that determines how you divide your portfolio
among different investment instruments and provides you with the proper
blend of various asset classes.
It is based on the theory that the type or class of security you own equity, debt
or money market- is more important than the particular security itself. In other
words asset allocation is way to control risk in your portfolio. Different asset
class will react differently to market conditions like inflation, rising or falling
interest rates or a market segment coming into or falling out of favor.
Asset allocation is different from simple diversification. Suppose you diversify
your equity portfolio by investing in five or ten equity funds. You really have
not done much to control risk in your portfolio if all these funds come from only
one particular segment of the market say large cap stocks or mid cap stocks.
In case of an adverse reaction for that segment, all the funds will react
similarly means they will go down.
Portfolio Management In Mutual Funds
If you build your portfolio with various top performing growth funds without
really bothering to analyze their portfolio allocation, you may end up with over-
exposure to a particular segment. Another point you need to remember is that
growth funds are highly correlated- they tend to move in the same direction in
response to a given market force.
The advantage of asset allocation lies in achieves superior returns when
markets are down while minimizing the exposure of the portfolio to volatility. In
fact, asset allocation is based on certain dimensions that, when combined
tend to control the volatility while achieving targeted returns.
Once the certain asset mix has been chosen an appropriate portfolio
strategy has to be decided out. Two broad portfolio choices are available
Portfolio Management In Mutual Funds
For my study I am making three dummy portfolios for three different kinds of
investors.
Types of Investor:
1. Cautious Investor:
It’s kind of investor who is less bothers about high returns. He wants to
lower down his risk profile and demand for fixed income on his
investment. His main objective of investment is fixed returns with less
risk.
2. Balanced Investor:
It’s a kind of investor who is bothers about returns as well as risk. He
wants moderate returns with moderate risk.
3. Aggressive Investor:
It’s a kind of investor who is ready to take risk. He believes in high risk
and high returns. So he only wants to invest in equity schemes.
Portfolio Management In Mutual Funds
I have made an assumption that each investor want to invest 5 Lakh Rs.
As investor does not want to take risk, he is satisfied with fixed return rather
they are less than equity investment’s returns. So I took thus instrument which
provides good return as well as secure also. All of these instruments will give
him return around 8% annually.
As investor does not want to take high risk, he is satisfied with fixed return
plus some equity exposure. But he wants some safety in equity exposure
also. So I took thus instrument which provides good return as well as safety
also. Fixed return instruments like PPF, Bank FD and kisan viaks patra will
give him return around 8% annually and I suggest Balance kind of funds to
Portfolio Management In Mutual Funds
him where he will have exposure of both equity as well as debts. HDFC
prudence fund is best performing fund under balance scheme. To increase
the ratio of equity in portfolio I suggested Reliance vision fund which is mainly
based on large and mid cap companies.
As investor ready to take high risk, he is looking for high returns on his
investment. I took thus instrument which provides good return. All of these
instruments will give him return around 80% annually. Currently Mid cap
companies will perform better than large cap companies so, I select more
funds which are focusing on mid cap companies like HDFC, Franklin’s funds.
To take the benefit of increasing Sensex I took DSP top 100.
= {(539578-0.5(0))/ (500000+0.5(0))-1}*100
= 7.91% p.a.
Phase II
Scheme Portfolio
Scheme Portfolio:
Like investors portfolio different scheme under mutual fund have different
portfolio. By scheme portfolio we mean portfolio or companies in which fund
Portfolio Management In Mutual Funds
manager invested the fund. The selection of companies depend upon many
issue which have great impact in current scenario as well as in near future.
Fund manager has to do lot of research before investing into particular script.
Before going into detail one should understand Sensex movement. Mutual
fund returns are based on Sensex. Their Net Asset Value is directly related to
Share market. The below table shown the Sensex change on monthly basis.
Means what is % change in Sensex during one month.
Sensex Journey
Percentage Changes at the End of the Day
Date Opening Closing Change Change in %
30-Sep-08 8,672.66 8,634.48 -38 -0.43
3-Oct-08 8,662.99 8,697.65 35 0.44
31-Oct-08 7,717.07 7,892.32 175 2.26
2-Nov-08 7,953.28 8,072.75 119 1.49
30-Nov-08 8,962.92 8,788.81 -174 -0.19
2-Dec-08 9,010.58 8,961.61 -49 -0.54
30-Dec-08 9,339.32 9,397.93 58 0.62
2-Jan-09 9,422.49 9,390.14 -32 -0.33
31-Jan-09 9,892.23 9,919.89 27 0.27
2-Feb-09 9,890.90 9,843.87 -47 -0.47
28-Feb-09 10,308.71 10,370.24 62 0.61
2-Mar-09 10,597.19 10,626.78 29 0.27
-0.4
31-Mar-09 11,325.96 11,279.96 -46 1
Sensex has boomed with lots of ups and down from last year. It seems very
fluctuating.
Portfolio Management In Mutual Funds
For my study purpose I have taken HDFC Equity Fund and HDFC Core &
Satellite Fund. What is their portfolio means in which companies the fund
manager invested the fund. How he has allocated funds among various
industries as well as various companies. After studying both the fund’s
portfolio I compare them with reliance Growth fund, Prudential ICICI Growth
Fund, DSP Tiger Fund and Kotak Opportunity Fund. Comparison is based on
per month returns and Sensex returns during the same period.
Portfolio Management In Mutual Funds
In the month of December Sensex has grown by 6.92% but fund’s return were
only 4.06% which indicating towards lower performance of fund.
Portfolio Management In Mutual Funds
October December
Industry % Of Allocation Industry % Of Allocation
Software 19.97 Software 20.14
Industrial Capital
Goods 13.73 Auto 17.48
Auto 12.73 Industrial Capital Goods 13.77
Banks 9.28 Oil 9.14
Oil 9.11 Banks 7.73
Auto Ancillaries 8.68 Auto Ancillaries 7.19
Pesticides 4.69 Pesticides 3.98
Consumer Non
Power 4.07 Durables 3.27
Transportation 2.74 Transportation 3.15
Petroleum Products 2.41 Metals 2.25
Hardware 2.11 Gas 2.01
Textile 1.92 Pharmaceuticals 1.63
Metals 1.76 Hardware 1.5
Pharmaceuticals 1.45 Textile 2.57
Chemicals 0.88 Chemicals 0.82
Telecom-service 0.79
Construction 0.21
IT Consulting &
Services 0.09
Oct-Dec Month Portfolio
Industry Change
Software 0.17
Auto 4.75
Industry Capital Goods 0.04
Oil 0.03
Banks -1.55
Auto Ancillaries -1.49
Pesticides -0.71
Consumer Non Durables 3.27
Portfolio Management In Mutual Funds
Transportation 0.41
Metals
0.51
Gas 2.01
Pharmaceuticals 0.18
Hardware -0.61
Textile 0.66
Chemicals -0.06
Fund manager added auto industry by taking Tata motors to 8.67 % which
had no exposure in the month of October in the portfolio. During that time
Tata Motors has grown from 472 to 639.55 Rs means 35.49% increase which
fletched fund performance in to positive. So, fund manager decision of taking
Tata Motors has proved right.
Ltd.
5 Satyam Computer Services Ltd. Software 7.44
Industrial Capital
6 Bharat Heavy Electricals Ltd. Goods 5.55
7 Maruti Udyog Ltd. Auto Ancillaries 5.23
Industrial Capital
8 Crompton Greaves Ltd. Goods 5.17
Industrial Capital
9 Siemens Ltd. Goods 4.47
10 Amtek Auto Ltd. Auto Ancillaries 3.94
Top 10 Holdings 64.9
Others Equity Holdings 35.1
TOTAL 100
Add siemens to 4.47 which had no exposure in the month of December in the
portfolio. During that time siemens has grown from 3625.85 to 4486 Rs
means 23.72% increase which fletched fund performance at good rate.
January February
% Of % Of
Allocatio Allocatio
Industry n Industry n
Software 22.03 Software 21.06
Auto 18.16 Industry Capital Goods 17.32
Industry Capital Goods 15.35 Auto 12.59
Banks 8.6 Consumer Non Durables 10.16
Oil 7.89 Auto Ancillaries 8.9
Auto Ancillaries 6.65 Banks 7.92
Consumer Non Durables 3.94 Oil 6.58
Pesticides 3.93 Pesticides 3.7
Transportation 2.84 Transportation 2.32
Portfolio Management In Mutual Funds
Jan-Feb Month
Portfolio
Industry Change
Software -0.97
Industry Capital Goods 1.97
Auto -5.57
Consumer Non
Durables 6.22
Auto Ancillaries 2.25
Banks -0.68
Oil -1.31
Pesticides -0.23
Transportation -0.62
Metals -0.07
Pharmaceuticals 0.03
Hardware -0.09
Textile 0.05
Chemicals -0.03
IT Consulting &
Services 0.02
Add ITC to 5.97 which had no exposure in the month of January in the
portfolio. During that time ITC has grown from 154.8 to 172.45 Rs means
Portfolio Management In Mutual Funds
11.41% increase which is higher than Sensex 4.54% growth, this decision
gave return at 3.44%.
Reduce share of Crompton Greaves which had less exposure in the month of
February than January in the portfolio. During that time Crompton has felt
from 906.35 to 892.45 Rs means 1.53% decrease. Due to this fund’s
performance has not felt.
February March
Industry % Of Allocation Industry % Of Allocation
Software 21.06 Software 18.09
Industry Capital Goods 17.32 Industry Capital Goods 17.35
Consumer Non
Auto 12.59 Durables 12.46
Consumer Non
Durables 10.16 Auto 11.37
Auto Ancillaries 8.9 Banks 7.88
Banks 7.92 Auto Ancillaries 7.67
Oil 6.58 Oil 3.86
Pesticides 3.7 Media & Entertainment 3.29
Transportation 2.32 Pesticides 2.87
Metals 1.78 Telecom- Services 2.65
Pharmaceuticals 1.45 Metals 2.13
Hardware 1.29 Transportation 1.86
Textile 2.09 Hardware 1.81
Chemicals 0.67 Textile 2.05
IT Consulting &
Services 0.12 Pharmaceuticals 1.09
Chemicals 0.87
IT Consulting &
Services 0.08
Industry Change
Software
-2.97
Industry Capital Goods 0.03
Consumer Non Durables 2.3
Auto -1.22
Banks -0.04
Auto Ancillaries -1.23
Oil -2.72
Media & Entertainment 3.29
Pesticides -0.83
Telecom- Services 2.65
Metals 0.35
Transportation -0.46
Hardware 0.52
Textile -0.04
Pharmaceuticals -0.36
Chemicals 0.2
IT Consulting & Services -0.04
Add share of Crompton Greaves which had less exposure in the month of
February in the portfolio. During March Crompton has grown from 892.45 to
1049.3 Rs means 17.57% increase. So, these decision results in 8.4% return
on fund.
Satyam computer has grown at the rate of 10.24% which is 20% higher than
Sensex growth in that time period.
In January, ICICI Growth Fund has given only 2.5% returns where HDFC
Equity Fund has given 5.34% returns. So we can say that HDFC has
performed better in January.
In the month of January Reliance Industry’s share price has come down to
713.9 Rs which is 20.4% lesser than December price. ICICI has exposure of
reliance industry in to portfolio which harms the fund’s overall returns.
ICICI has exposure of Jai Prakash Associates which has rose by 7.46% in
January month. HDFC Mutual fund did not have Jai Prakash’s exposure in
their portfolio.
Durables
5 Grasim Industries Limited Cement 3.73
Associated Cement Companies
6 Ltd Cement 3.71
7 Bajaj Auto Limited Auto 3.68
8 Satyam Computer Services Ltd. Software 3.45
9 Mahindra & Mahindra Limited Auto 3.44
10 Oil & Natural Gas Company Ltd Oil 3.44
In February market has boomed by 4.54% where HDFC Equity fund has given
3.33% returns. So it has performed similar to market trend but ICICI Growth
fund has given only 1.94% in same period. So, we can say that this fund has
performed lower than market.
ICICI Growth fund has grown up by 12.74% in March where HDFC Equity
Fund has grown only by 8.8%
ICICI has CIPLA script in their portfolio which has grown to 662.25 Rs. It has
rose by 19.94% in March month. HDFC did not have CIPLA’s exposure. This
script has the main reason behind ICICI better performance over HDFC.
Portfolio Management In Mutual Funds
14 Auto 2.05
15
Telecom Services 1.86
9 Chemicals 4.55
10
Construction 3.11
11 Fertilizers 2.78
12 Telecom Services 2.56
13 Auto 2.34
14 Auto Ancillaries 2.19
15 Pesticides 2.14
Reliance growth fund has given 10.91% returns to investors in the month of
March where market has boomed by only 8.4%. In the same month HDFC
Equity fund has given only 8.84 % returns.
%
Date Price Change Change
28, Feb 2009 196.55
31, Mar 2009 291.7 95.15 48.41
Kirloskar Brother Share price has risen from 196.55 to 291.7 Rs. This means
48.41% increase in March month. HDFC Mutual Fund had not this script into
their portfolio.
Bombay Dyeing shares have grown by 58.71% where the overall Sensex has
grown only by 8.76% Reliance has 4.18% exposure to this script.
In the month of March JSW Steel has moved to 302.85 Rs which was 47.61%
increase. Reliance has 2.04% exposure to this script.
March
S.
No. Company % of NAV
1 Infosys Technologies Ltd. 8.72
2 State Bank of India 7.88
3 ITC Ltd. 7.81
4 Satyam Computer Services Ltd. 6.86
5 Tata Motors Ltd. 5.87
6 Bharat Heavy Electricals Ltd. 5.71
7 Maruti Udyog Ltd. 5.5
8 Crompton Greaves Ltd. 5.06
9 Siemens Ltd. 4.78
10 Amtek Auto Ltd. 4.57
11 ONGC 3.86
12 Zee Tele films Ltd. 3.29
13 United Phosphorus Limited 2.87
14 Nestle India Ltd. 2.78
15 Bharti Tele-ventures Ltd. 2.65
16 Balkrishna Industry Ltd. 2.35
17 HCL Technology Ltd. 2.25
18 ISMT Ltd. 2.13
19 Hindustan Lever Ltd. 1.87
20 Container Corporation of India Ltd. 1.86
21 CMC Ltd. 1.81
22 Larsen & Toubro Ltd. 1.8
23 Himatsinka Seilde Ltd. 1.15
Disahman Pharmaceuticals &
24 Chemicals 1.09
25 Indo Rama Synthetics (India) Limited 0.9
26 Savita Chemicals Limited 0.87
27 J K Industries Limited 0.75
28 Datamatics Technologies Limited 0.26
TOTAL 100
Portfolio Management In Mutual Funds
Change in Portfolio
Companies Change
United Phosphorus Limited -0.83
Tata Motors Ltd. -0.68
State Bank of India -0.04
Siemens Ltd. 0.53
Savita Chemicals Limited 0.2
Satyam Computer Services Ltd. -0.38
ONGC -2.72
Nestle India Ltd. -0.09
Maruti Udyog Ltd. -0.54
Larsen & Toubro Ltd. 0.58
J K Industries Limited -0.17
ITC Ltd. 1.84
ISMT Ltd. 0.35
Infosys Technologies Ltd. -0.06
Indo Rama Synthetics (india) Limited -0.16
Himatsinka Seilde Ltd. 0.84
HCL Tecnology Ltd. -1.14
Disahman Pharmaceuticals &
Chemicals 0.8
Datamatics Technologies Limited 0.76
Crompton Greaves Ltd. -4.54
Container Corporation of India Ltd. 2.74
CMC Ltd. 0.57
Bharat Heavy Electricals Ltd. -5.24
Balkrishna Industry Ltd. 0.15
Amtek Auto Ltd. 0.23
Zee Tele Films Ltd. 3.29
Bharti Tele-ventures Ltd. 2.65
Hindustan Lever Ltd. 1.87
I-Flex Solution Ltd. -2.42
Britannia Industry Ltd. -1.32
Portfolio Management In Mutual Funds
Fund adds exposure of zee tele films into portfolio by 3.29 % which has
increased by 35.33% during March. In the same time period market has
boomed only by 8.76%.
Fund eliminate I flex solution from its portfolio which has increased by 24.77%
during March.
Fund added Hindustan Lever Ltd. into their portfolio which has risen by
11.61% during March.
Portfolio Management In Mutual Funds
Fund added ITC Ltd. into portfolio which has risen 13.16% during March.
Fund reduces the share of Crompton from portfolio which has increased by
17.61% during March.
October December
% Of
Industry % Of Allocation Industry Allocation
Industry Capital Goods 22.15 Industry Capital Goods 21.42
Software 15.61 Software 14.03
Banks 12.61 Auto Ancillaries 10.76
Auto Ancillaries 11.12 Banks 9.75
Non-Ferrous Metals 8.48 Non-Ferrous Metals 7.89
Auto 7.17 Auto 6.33
Pesticides 5.42 Construction 5.18
Portfolio Management In Mutual Funds
December January
Industry % Of Allocation Industry % Of Allocation
Industry Capital
Industry Capital Goods 21.42 Goods 24.12
Software 14.03 Software 16.99
Auto Ancillaries 10.76 Non-Ferrous Metals 10.04
Banks 9.75 Banks 9.73
Non-Ferrous Metals 7.89 Auto Ancillaries 8.99
Auto 6.33 Auto 8.48
Construction 5.18 Consumer Non 5.26
Portfolio Management In Mutual Funds
Durable
Consumer Non Durable
5.15 Pesticides 3.91
Pesticides 4.96 Construction 3.73
Industrial Products 2.94 Industrial Products 3.52
Chemicals 2.12 Consumer Durables 1.43
Consumer Durables 1.43 Chemicals 1.01
Fund has increased the share of Infosys in to portfolio by 3.5%. The share
price of Infosys during that time period has failed down to 2880.3 Rs. Its
3.33% lower than the price in the beginning of January.
In February fund has given 2.66% returns on investment but in the same time
Sensex has decreased by 4.54%. So, fund has performed higher than market
trend.
January February
Industry % Of Allocation Industry % Of Allocation
Portfolio Management In Mutual Funds
Reduce the share of united phosphorus ltd. from portfolio. The share price of
united has fall during February.
Construction 0.21
Power
0.54
Pesticides -0.63
Industrial Products -0.51
Consumer Durables 0.02
Chemicals 0.02
%
Date Price Change Change
28, Feb 2009 383.85
31, March
2009 384.5 0.65 0.016
Reduce the share of Bharti ship yard in the month of March. The price of
bhatri’s share has just increased by 0.016 % in March. Where the over all
share market has boomed by 8.76%. in the same time fund increased the
share of Crompton greaves in the portfolio which was boomed by 17.57%.
DSP fund has given more returns than HDFC Core & Satellite fund. DSP has
exposure of L&
T which has grown by 18.97% during January. In January market has grown up only
by 5.55%.
DSP has given 3.55% returns where HDFC has given only 2.55% returns in the
month of February. DSP has exposure of Grasim Industry in their portfolio. Grasim
has increased by 19.82% during February month.
% to
Company Industry NAV
Reliance Industries Petroleum Products 5.87%
Reliance Communications Telecom- Services 4.41%
BHEL Industrial Capital Goods 4.28%
Grasim Industries Cement 3.56%
L&T Industrial Capital Goods 3.48%
Portfolio Management In Mutual Funds
In March, DSP has given 11.85% returns where HDFC has given 12.54%
returns. HDFC had Hindalco in their portfolio which has grown by 143.6% in
March.
January Portfolio
Portfolio Management In Mutual Funds
Chang %
Date Price e change
1, Jan 1074.7
2009 5
31, Jan 1363.4
2009 5 288.75 26.86
Fund has 2.98% exposure of sterlite which has grown 26.86% in January
month.
Portfolio Management In Mutual Funds
Dynamic plan has 3.14% exposure of this script which has grown by 0 %
means its share price remained same during the month of February.
Portfolio Management In Mutual Funds
%
Date Price Change change
1, Mar
2009 76.95
125.9
31-Mar-09 5 49 64.47
Fund has increased triveni sharein portfolio to 4.98% which has grown by
64.47% during March.
Portfolio Management In Mutual Funds
Kotak Opportunity
January
S. No. Companies Industry % of NAV
1 National Aluminium Company Ltd Non - Ferrous Metals 6.66
5.49
Industrial Capital
2 Larsen And Toubro Ltd. Goods
3 Jaiprakash Associates Ltd Construction 5.06
4 Punjab National Bank Banks 4.12
5 Satyam Computer Services Ltd. Software 3.59
6 Infosys Technologies Ltd. Software 3.57
Consumer Non
7 Shree Renuka Sugars Ltd. Durables 3.5
8 Mahindra & Mahindra Ltd. Auto 3.38
Industrial Capital
9 Areva T and D India Ltd. Goods 3.23
10 Alembic Ltd. Pharmaceuticals 3.11
Kotak Opportunity
February
S. No. Companies Industry % of NAV
1 Bajaj Auto Ltd. Auto 5.86
Industrial Capital
2 Larsen And Toubro Ltd. Goods 5.31
3 Jaiprakash Associates Ltd Construction 4.53
4 Punjab National Bank Banks 4.51
5 Mahindra & Mahindra Ltd. Auto 4.23
6 Tata Steel Limited. Ferrous Metals 4.2
Industrial Capital
7 Areva T and D India Ltd. Goods 3.47
Consumer Non
8 Balrampur Chini Mills Ltd Durables 3.46
Satyam Computer Services
9 Ltd. Software 3.25
10 Jindal Steel & Power Ltd. Ferrous Metals 3.18
Kotak Opportunity
March
% of
S. No. Companies Industry NAV
1 Jindal Steel & Power Ltd. Ferrous Metals 5.1
2 Tata Steel Limited. Ferrous Metals 4.64
3 National Aluminium Company Ltd Non - Ferrous Metals 4.38
4 Sterlite Industries (India) Ltd Non - Ferrous Metals 4.17
5 Satyam Computer Services Ltd. Software 3.93
6 Larsen And Toubro Ltd. Industrial Capital Goods 3.92
7 Maharashtra Seamless Ltd. Ferrous Metals 3.49
8 Ultratech Cement Ltd. Cement 3.37
9 Tata Chemicals Ltd. Fertilizers 3.27
10 Bajaj Auto Ltd. Auto 3.25
Portfolio Management In Mutual Funds
CONCLUSION
The performance of mutual funds in India in the initial phase was not even
closer to satisfactory level. People rarely understood, and of course investing
was out of question. But yes, some 24 million shareholders were accustomed
with guaranteed high returns by the beginning of liberalization of the industry
in 1992. This good record of UTI became marketing tool for new entrants. The
expectations of investors touched the sky in profitability factor. However,
people were miles away from the preparedness of risks factor after the
liberalization.
Portfolio Management In Mutual Funds
The annual composite rate of growth is expected 13.4% during the rest of the
decades. In the last 5 years we have seen annual growth rate of 9%.
According to the current growth rate, by year 2010, mutual fund assets will be
double.
The government is also helping in boosting mutual fund industry. Government
is emphasizing a lot on infrastructure development and social spending and
yet targeting a lower fiscal deficit. FIIs continued to be positive on emerging
markets in general and the Indian markets in particular. FIIs buying have
considerable portion in mutual funds buying.
Key Points:
• Almost 100% growth in the last 6 years.(excepting 2008)
• Our saving rate is over 30%, highest in the world. Only channel zing
these savings in mutual funds sector is required.
• We have some 70 mutual funds which are 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.
• SEBI allowing the MFs to launch commodity mutual funds.
• This year budget has increased the limit of investment in overseas
market by mutual funds to 33-35%.
• During last financial year investment habit of India has increased by
25 % and it is expected to grow by 30 % this year.
RECOMMENDATIONS
Studying the mutual fund industry I came to know that there are more then
700 types of funds available in the market. What I see that most of the fund
managers who are investing in equity market are putting their funds into large
cap funds which is of course more secure but it is giving less return to the
investors. i thought of preparing my own portfolio by investing 25 percent in
Portfolio Management In Mutual Funds
money market and the rest of the 75 percent in mid cap equity To provide
investors with opportunities for long term growth in capital along with the
liquidity of an open ended scheme by investing predominantly in a well
diversified basket of equity stocks of companies and in debt and money
market instruments.. The portfolio is mentioned below:-
EQUITY
Company Name % of Net Assets
Maharashtra Seamless Ltd 4.61
Infotech Enterprises Limited 4.33
Kesoram Industries Ltd 4.02
Gitanjali Gems Ltd. 3.18
KEC International Ltd. 3.08
Nagarjuna Construction Company Ltd 3.06
Thermax Limited 3.02
Pantaloon Retail (India) Ltd. Equity 2.89
Eastern Silk Industries Limited 2.81
3 i Infotech Limited. 2.68
Crompton Greaves Ltd 2.65
Welspun Gujarat Stahl Rohren Ltd 2.65
Hotel Leela Venture Ltd 2.51
Adlabs Films Limited 2.23
Mangalam Cement Ltd 2.19
Amtek Auto Ltd 2.17
KEI Industries 2.14
Elecon Engineering Company Ltd 2.09
India Cements Ltd 1.79
IVRCL Infrastructure & Projects Ltd. 1.67
Raymond Ltd 1.61
Opto Circuit Ltd. 1.52
SKF Bearings India Ltd 1.48
Crest Animation Studios Ltd 1.46
Ansal Properties & Industries Ltd 1.36
Gujarat Mineral Development Corporation Limited 1.3
Lupin Ltd. 0.97
Deepak Fertilizers & Petrochemicals Corp Ltd 0.93
Usha Martin Ltd 0.93
RPG Transmission Ltd 0.86
Portfolio Management In Mutual Funds
Industry Allocation
Steel 8.35%
Computers - Software & Education 7.18%
Housing & Construction 6.09%
Textiles 5.85%
Diversified 5.63%
Electricals & Electrical Equipments 5.44%
Engineering & Industrial Machinery 5.11%
Entertainment 4.57%
Cement 4.30%
Power Generation, Transmission & Equip 3.94%
Asset Allocation
Equity Debt Money Market
74.06 - 25.94
Portfolio Management In Mutual Funds
I have learnt many things which I might not be able to learn under
class room training like looking at the stock market terminal and
analyzing the stocks and thereby deducing about their
performance and thus designing the portfolio on the basis of their
performances. I want to share some of experience or learning with
you.
WEBOGRAPHY
➢ hdfcfund.com
➢ google.com
➢ altavista.com
➢ investmart.com
➢ icicidirect.com
➢ amfiindia.com
➢ nseindia.com
➢ mutualfundsindia.com
BIBLIOGRAPHY
➢ Book on “Portfolio Management” by ICFAI Press
➢ Magazine “AAG” by HDFC Bank, April issue.
➢ Business world