Chapter 1

Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI)
1.1 Trend Analysis

Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will happen in the future. Trend analysis is also helpful because moving with trends not against them and leads to profit for an investor. It predicts a trend like a bull market run and rides that trend until data suggests a trend reversal from it. E.g. I would like to say Bull to bear market
Methods of Trend Analysis Time-series graphs Mapping trend results
1.2 Mutual Fund (MF)

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The fund manager money collects the money from indifferent types of securities depending upon the particular scheme. These could range from the shares to debentures and to the money market instruments. The income earned through this investments and the capital appreciations realized by these scheme are shared a by the unit holders in the number of units owned by proportional (pro rata). Thus a MF is a most suitable investment for the common people as it offers an opportunity to invest in a diversified area, relatively low cost. The people with an investible surplus of as little as a few 000s rupees can invest in MFs. Each MF scheme has a defined investment strategy and objective.
Presidency Business School
Page 1
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) A MF is the only investment vehicle for todays complex and modern financial current Scenario. Markets for equity shares, bonds, real estate, other fixed income instrument and derivatives A common man is unlikely to have the knowledge, skills and time to keep track of each event, understand their implications and also finds it difficult to keep track of ownership of his/her assets, investments, brokerage dues and bank transactions etc. The answer to all these situations MF appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. The large pool of money collected in the fund allows it to hire staffs at a very low cost to each investor. In effect, the mutual fund vehicle exploits economies of scale in all three broad areas are: Research, Investments and Transaction processing
In fact, MF gained popularity only after the 2nd World War. Globally, there are 000s of firms offering 10s of 000s of MFs with the different investment objectives. Today, MFs collectively manage almost as much as more money compared to the banks. A draft offer document is to be prepared at the time of launching the fund. Typically, it prespecifies the investment objectives of the fund, the risk associated, the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. In India and most countries, these sponsors need approval from a regulator, i.e SEBI. SEBI looks at track records of the sponsor and its financial strengthen in granting approval to the fund for commencing operations.
Page 2
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) A sponsor then hires an asset management company to invest the funds according to the investment goal. It also hires another entity to be the custodian of the assets of the fund and perhaps a 3rd one to handle registry work for the unit holders (subscribers) of the fund. In the Indian context, the sponsors promote the Asset Management Company also, in which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the AMC.
E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset Management Company Ltd., which has floated different mutual funds schemes and also acts as an asset manager for the funds collected under the schemes.
1. 3 Characteristics of a Mutual Fund

The pool of funds is invested in a portfolio of marketable securities. In case of mutual fund the contributors and the beneficiaries of the funds are the same class of people namely the investors. Investment professionals manage mutual funds and other service providers, who earn a fee for their services provided, from the fund. A mutual fund belongs to those who have contributed to that fund and thus, the ownership of the fund lies in the hands of the investors. Generally the investment portfolio of the mutual fund is created according to the objective of the fund. The investors share in the fund is represented by units just like shares in case of share capital of a company. The unit value depends upon the value of the portfolio held by the fund. Hence, the value changes almost every day and it is called the Net Asset Value. E.g.:- A sector like IT sector, oil sector etc Presidency Business School Page 3
1.4 HISTORY OF MUTUAL FUND INDUSTRY

The history of mutual funds in India can be broadly divided into 4 distinct phases, they are as follows:1.4.1 1st Phase 1964-87
It was set up by the RBI and functioned under the Regulatory and administrative control of the RBI. UTI was established on 1963 by an Act of Parliament. The first scheme launched by UTI was Unit Scheme 1964. In 1978 UTI was de-linked from the RBI and the IDBI took over the regulatory and administrative control in place of RBI. At the end of 1988 UTI had Rs.6, 700crores of assets under management.
1.4.2
2nd Phase 1987-1993 (Entry of Public Sector Funds)
In 1987 the entry of non- UTI, public sector mutual funds set up by public sector banks and LIC and GIC. SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by 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 established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores.
1.4.3
3rd Phase 1993-2003 (Entry of Private Sector Funds)
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. Presidency Business School Page 4
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 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 M & A as at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The UTI with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.
1.4.4
4th Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into 2 separate entities. 1. The Specified undertaking of the UTI with assets under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. 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.
2. The UTI Mutual Fund, 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 assets under management 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.
Page 5
1.5 MUTUAL FUND STRUCTURE
Unit Holders
Trustees
The Mutua Fund Custodian
Sponsor s
AMC
Transfer agent
SEBI
1.5.1 Sponsor: Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. Sponsor must and should contribute at least 40% of the net worth of the Investment Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund.
Page 6
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 1.5.2 Trust: The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908.
1.5.3 Trustee: Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main responsibility of the Trustee is to safeguard the interest of the unit holders and ensure that the AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. The provisions of the Trust Deed and the offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner.
1.5.4 AMC: The AMC is appointed by Trustee as the Investment Manager of the Mutual Fund. The AMC is required to be approved by the SEBI to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of at least 10 crores at all times.
1.5.5 Registrar and Transfer Agent: The Registrar processes the application form, redemption requests and dispatches account statements to the unit holders.
Page 7
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar and Transfer agent also handles communications with investors and update the investor records.
1.6 Types of Mutual Fund Schemes

1. by Structure Open- Ended Schemes Close- Ended Schemes Interval Schemes
2. by Investment Objective
Growth Schemes Income Schemes Balanced Schemes Money Market Schemes
3. Other Schemes

Tax Saving Schemes

Special Schemes Index Schemes Sector Specific Schemes
Page 8
1.6.1 by Structure:
A) Open ended Schemes The units offered by these schemes are available for sale and repurchase on any business day at the NAV based prices. Hence, the unit capital of the schemes keeps changing everyday. Such schemes thus offer very high liquidity to the investors and are becoming increasingly popular in the place like India. Please note that an open-ended fund is NOT obliged to keep selling/issuing new units at all times, and may stop issuing further subscription to the new investors. On the other hand, an open-ended fund rarely denies to its investor the facility to redeem the existing units. B) Closed ended Schemes The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed number of units. These schemes are launched with an initial public offer (IPO) with a stated maturity period after which the units are fully redeemed at the NAV linked prices. In the interim, investors can buy or sell units on stock exchanges where they are listed. Unlike the openended schemes, the unit capital in closed-ended schemes usually remains unchanged. After an initial closed period, the scheme may offer the direct repurchase facility to investors. Closed-ended schemes are usually more illiquid as compared to open-ended schemes and hence trade at a discount to the NAV. Thus discount tends towards the NAV closer to the maturity date of the scheme.
C) Interval Schemes: These schemes combine the features of open-ended and closed-ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during the predetermined intervals at NAV based prices.
Page 9
1.6.2 by investment objective:A) Income Schemes: These schemes invest in money markets, bonds and debentures of corporate with medium and long-term maturities. These schemes primarily target the current income instead of capital appreciation. They therefore distribute a substantial part of their distributable surplus to investor by way of the dividend distribution. Such schemes usually declare quarterly dividends and are suitable for the conservative investors who have medium to long term investment horizon and they are looking for regular income through dividend or steady capital appreciation. HDFC Income Fund, HDFC Short Term Plan and HDFC Fixed Investment Plans are examples of bond schemes. B) Equity Oriented Schemes: These schemes, also commonly called Growth Schemes, seek to invest in a majority of their funds in equities and the small portion in money market instruments. Such schemes have the potential to deliver superior returns over the long term period. However, because they invest in equities and these schemes are exposed to fluctuations in value especially in the short term. Equity schemes are hence not suitable for the investors seeking regular income or needing to use their investments in the short-term period. Hence the investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as: Index funds: In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index both in terms of composition and individual stock weightings. Equity diversified funds: 100% of the capital is invested in equities spreading across different sectors and stocks. Dividend yield funds: It is similar to the equity diversified funds except that they invest in companies offering high dividend yields. Presidency Business School Page 10
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) Thematic funds: Invest 100% of the assets in sectors which are related through some theme. Ex: An infrastructure fund invests in power, construction, cements sector etc.
C) Balanced Funds The investment portfolio includes both debt and equity. As a result, the risk- return ladder, they fall between the equity and debt funds. Balanced funds are the ideal mutual funds vehicle for the investors who prefer spreading their risk across the various instruments. Following are balance funds classes as follows: Debt- oriented funds: Investment below 65% in equities. Equity-oriented funds: Invest at least 65% in equities, remaining in debt. Debt Fund: They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixedincome instruments like bonds, debentured, government of India securities and money market instruments such as Certificates of Deposit (CD), Commercial Paper (CP), And Call Money or Notice Money. Put your money into any of these debt funds depending on your investment horizon and needs. Liquid funds: These funds invest 100% in money market instruments, a large portion being invested in call money market. Gilt funds: They invest 100% of their portfolio in government securities of and T-Bills. Floating rate funds: Invest in short-term debt papers. Floaters invest in debt instruments which have variable coupon rate. Arbitrage fund: They generate income through arbitrage opportunities due to mis-pricing between cash market and derivatives market. Funds are allocated to equities, derivatives and
Page 11
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities. Income funds LT: Typically, such funds invest a major portion of the portfolio in long-term debt papers. MIPs: Monthly income plans have an exposure of 70%-90% to debt and an exposure of 10%30% to equities. FMPs: Fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.
D) Money Market Schemes These schemes invest in short term instruments such as like commercial paper (CP), certificates of deposit (COD), treasury bills (T-Bill) and overnight money or call money. The schemes are least volatile of all the types of schemes because of their investments in money market instrument with short-term maturities. These schemes have become popular with institutional investors and high net worth for individuals having short-term surplus funds.
Page 12
1.6.3 Other Schemes:

A) Tax saving schemes: Investors (individuals and HUFs) are being encouraged to invest in equity markets through Equity Linked Savings Scheme (ELSS) by offering them a tax rebates. Units purchased cannot be assigned / transferred/ pledged / redeemed / switched out until completion of 3 years from the date of allotment of the respective Units. The Scheme is subject to SEBI (Mutual Funds) Regulations, in 1996 the notifications issued by the Ministry of Finance (Department of Economic Affairs), Government of India regarding ELSS. Subject to the conditions and limitations, as prescribed under the Section 88 of the Incometax Act, 1961, subscriptions to the Units not exceeding Rs.10,000 would be eligible to a deduction, from the income tax, of an amount equal to 20% of amount subscribed. HDFC Tax Plan 2000 is such a fund.
B) Special Schemes: i) Index Schemes: The primary purpose of an Index is to serve as a measure the performance of the market as a whole, or a specific sector of a market. An Index also serves as a relevant benchmark to evaluate the performance of the mutual funds. Some investors are interested in investing in the market in general or investing in any specific fund. Such investors are happy to receive the returns posted by the markets. As it is not the practical to invest in each and every stock in the market for proportion to its size, these investors are comfortable investing in a fund that they believe a good representative for the entire market. Index Funds are launched and managed for such investors.
Page 13
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) ii) Sector Specific Schemes: These schemes restrict their investing to one or more pre-defined sectors, E.g: Technology sector. Since they depend upon the performance of select sectors only, these schemes are unduly more risky than general-purpose schemes. They are suited for informed investors who wish to take the risk on the concerned sector.
1.7 Mutual funds: 1.7.1 Advantages

The benefits on offer are many with good post-tax returns and reasonable safety being the hallmark/benchmark that we normally associate with them. Some of the other major benefits of investing in them are as follows: A) Number of available options Mutual funds invest according to the underlying investment objective as specified at the time of launching the scheme. So, we have equity funds, debt funds, gilt funds and many others that cater into different needs of the investor. The availability of these options makes them a good option to select. While equity funds can be risky as the stock markets by themselves, debt funds offer the kind of security that aimed at the time of making investments. Money market funds offer the liquidity that desired by the big investors who can take surplus funds for very short-term periods. The only factor here is that the fund has to select the risk profile of the investor in mind because the products listed above have their different risks associated with them. So, while equity funds are very good bet for the long term period, they may not find favor with corporate or High Net worth Individuals (HNIs) who have listed in short-term period needs.
Page 14
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) B) Diversification Investments spread across the industries and sectors and so the risk is reduced in all form. Diversification reduces the risk because not all the stocks move in the same direction at the same time. One can achieve this diversification through a Mutual Fund with far less money than one can on his/her own pocket. C) Professional Management Mutual Funds employ the services of skilled professionals who have many years of experience to back them up. They use intensive research techniques to analyze each and every investment option for the potential returns along with their risk levels also to over come up with the figures for performance that determine the suitability of any potential investment. D) Potential of Returns Returns in mutual funds are generally better than any other option in any other avenue over the reasonable period. People can pick their investment horizon and stay put in the chosen fund for the duration period. Equity funds can outperform the most other investments over long periods by placing long-term calls on fundamentally good stocks. The debt funds too will outperform the other options such as banks and other financial institutions. Thus they are affected by the interest rate risk in general, the returns generated are more as they pick securities with different duration that have different yields and able to increase the overall returns.
Page 15
1.7.2 Drawbacks
Mutual funds have their drawbacks and may not be for everyone: No Guarantees: No investment is risk free and the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money. Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy any shares in a Load Fund. Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70% of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you re-invest the money you made. Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the specific fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much as money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.
Page 16
1.8 Current Scenario of Mutual Fund Industry

The impressive growth in the Indian Mutual fund industry in recent years can largely be attributed to various factors such as rising the household savings, comprehensive regulatory framework, favorable tax policies, and introduction of several new products or schemes, investor education campaign and role of distributors. In the last few years, households income levels have grown significantly high, leading to commensurate increase in households savings. Household financial savings (at current prices) registered growth rate of around 17.4% on an average during the period FY04-FY08 as against 11.8% on an average during the period FY99-FY03. The considerable rise in households financial savings, point towards the huge market potential of the Mutual fund industry in India. The Indian Mutual fund industry has witnessed the growth since its inception in 1963. The AUM has surged to Rs 4,173 bn in Mar-09 from just Rs 250 mn in Mar-65. In a span of 10 years (from 1999 to 2009), the industry has registered a CAGR of 22.3% encompassing some shortfalls in AUM due to business cycles. Besides, SEBI has introduced various regulatory measures in order to protect the interest of the small investors that augurs well for the long term growth of Mutual Fund industry. The tax benefits allowed on mutual fund schemes (for example investment made in ELSS is qualified for tax deductions under section 80C of the Income Tax Act) also have helped the mutual funds to evolve as the preferred form of investment among the salaried income earners. Besides, the Indian Mutual fund industry that started with traditional products like equity fund, debt fund and balanced fund has significantly expanded its product portfolio. Today, the industry has introduced an array of products are such as liquid/money market funds, sectorPresidency Business School Page 17
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) specific funds, index funds, gilt funds, capital protection oriented schemes, special category funds, insurance linked funds, exchange traded funds, etc. It also has introduced Gold ETF fund in 2007 with an aim to allow mutual funds to invest in gold related instruments. Further, the industry has launched special schemes to invest in foreign securities also. The wide variety of schemes offered by the Indian Mutual fund industry provides multiple options of investment to the common man people.
1.9 Future Scenario

The asset base will continue to grow at an annual rate of about 30 to 35 % over the next few years as the investors shift their assets from banks and other traditional a venues. Some of the older public and private sector players will either close shop or be taken over by others. Out of ten public sector players five will sell out, close down or merge with stronger players in three to four years. In the private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come. But this does not mean there is no room for other players. The market will witness a flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the future. Some big names like Fidelity, Principal, and Old Mutual etc. are looking at Indian market seriously. One important reason for it is that most major players already have presence here and hence these big names would have hardly liked to get left behind. The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in its NAV. SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have called the Regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade in Derivative markets.
Page 18
2.1 Introduction
Mutual Funds are a topic which is of enormous interest not only to researchers all over the world, but also to investors. A mutual fund as a medium-to-long term investment option is preferred as a suitable investment option by investors. However, with several market entrants the question is the choice of mutual fund. The study focuses on this problem of mutual fund selection by investors. Though the investment objectives define investors preference among fund types (balanced, growth, dividend etc.) the choice of fund based on a sponsors reputation remains to be probed. Indian mutual fund industry has two distinct types of sponsors, public-sector and private-sector. The numbers of funds floated by public sector sponsors are minimal compared to private-sector players. We focus on testing this hypothesis on the mutual fund industry. Although many studies document the investment performance of mutual funds irrespective of whether they are public-sector sponsored or private-sector sponsored, researchers do not investigate the influence the variable effect of diversification on mutual fund performance.
2.2 Review of Literature

2.2.1 CHARACTERISTICS AND PERFORMANCE EVALUATION OF SELECTED MUTUAL FUNDS IN INDIA ( Sharad Panwar and Dr. R. Madhumathi) Literature on mutual fund performance evaluation is enormous. A few research studies that have influenced the preparation of this paper substantially are discussed in this section. Sharpe, William F. (1966) suggested a measure for the evaluation of portfolio performance. Drawing on results obtained in the field of portfolio analysis, economist Jack L. Treynor has suggested a new predictor of mutual fund performance, one that differs from virtually all those
Page 19
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) used previously by incorporating the volatility of a fund's return in a simple yet meaningful manner. Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio performance (Jensens alpha) that estimates how much a managers forecasting ability contributes to funds returns. As indicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the portfolio over the return of the benchmark index, where the portfolio is leveraged to have the benchmark indexs standard deviation. S.Narayan Rao, et. al., evaluated performance of Indian mutual funds in a bear market through relative performance index, risk-return analysis, Treynors ratio, Sharpes ratio, Sharpes measure , Jensens measure, and Famas measure. The study used 269 open-ended schemes (out of total schemes of 433) for computing relative performance index. Then after excluding funds whose returns are less than risk-free returns, 58 schemes are finally used for further analysis. The results of performance measures suggest that most of mutual fund schemes in the sample of 58 were able to satisfy inves tors expectations by giving excess returns over expected returns based on both premium for systematic risk and total risk. Bijan Roy, et. al., conducted an empirical study on conditional performance of Indian mutual funds. This paper uses a technique called conditional performance evaluation on a sample of eighty-nine Indian mutual fund schemes .This paper measures the performance of various mutual funds with both unconditional and conditional form of CAPM, Treynor- Mazuy model and Henriksson-Merton model. The effect of incorporating lagged information variables into the evaluation of mutual fund managers performance is examined in the Indian context. The results suggest that the use of conditioning lagged information variables improves the performance of mutual fund schemes, causing alphas to shift towards right and reducing the number of negative timing coefficients.
Page 20
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) Mishra, et al., (2002) measured mutual fund performance using lower partial moment. In this paper, measures of evaluating portfolio performance based on lower partial moment are developed. Risk from the lower partial moment is measured by taking into account only those states in which return is below a pre-specified target rate like risk-free rate. Kshama Fernandes(2003) evaluated index fund implementation in India. In this paper, tracking error of index funds in India is measured .The consistency and level of tracking errors obtained by some well-run index fund suggests that it is possible to attain low levels of tracking error under Indian conditions. At the same time, there do seem to be periods where certain index funds appear to depart from the discipline of indexation. K. Pendaraki et al. studied construction of mutual fund portfolios, developed a multi-criteria methodology and applied it to the Greek market of equity mutual funds. The methodology is based on the combination of discrete and continuous multi-criteria decision aid methods for mutual fund selection and composition. UTADIS multi-criteria decision aid method is employed in order to develop mutual funds performance models. Goal programming model is employed to determine proportion of selected mutual funds in the final portfolios. Zakri Y.Bello (2005) matched a sample of socially responsible stock mutual funds matched to randomly selected conventional funds of similar net assets to investigate differences in characteristics of assets held, degree of portfolio diversification and variable effects of diversification on investment performance. The study found that socially responsible funds do not differ significantly from conventional funds in terms of any of these attributes. Moreover, the effect of diversification on investment performance is not different between the two groups. Both groups underperformed the Domini 400 Social Index and S & P 500 during the study period.
Page 21
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 2.2.2 Performance Evaluation of Select Indian Mutual Fund Schemes (O P Gupta and Amitabh Gupta) During the past one and a half decade, the Indian mutual fund industry has witnessed a major structural transformation and growth as result of policy initiatives taken by the Government of India to break the monolithic structure of the Industry. Therefore, it becomes important to examine the performance of the industry in the changed environment. This paper aims at evaluating the investment performance of select Indian mutual fund schemes during the recent four years period. The study period is a recent four year period from April 1, 1999 to March 31, 2003. It is during this period that a major structural change has taken place in the Indian mutual fund industry. The study has used the weekly yields on 91 day Treasury bills as a surrogate for the risk free rate of return. The value data collected from Value Research India Pvt. Ltd., while Treasury bill data has been collected from PNB Gilts ltd. The study tests the following hypotheses in respect of performance evaluation of mutual fund schemes: The investment performance of schemes is superior to the relevant benchmark portfolio. The mutual fund schemes are well diversified. There is a relationship between investment objectives of the schemes and their risk characteristics. We have utilized the following six measures to evaluate performance. Rate of Return, Sharpe Ratio, Treynor Ratio, Jensen differential return Measure, Sharpe differential return Measure. We have computed the weekly returns for each of the sample. Weekly returns for the market index viz.
Page 22
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 2.2.3 THE PERFORMANCE OF GLOBAL AND INTERNATIONAL MUTUAL FUNDS (Arnold L. Redman, N.S. Gullett and Herman Manakyan) Friend, Brown, Herman, and Vickers (1962) offered the first empirical analysis of mutual funds performance. Treynor (1965), Sharpe (1966), and Jensen (1968) developed the standard indices to measure risk adjusted mutual fund returns. Grinblatt and Titman (1989b) constructed a positive period weighting measure of fund performance. Numerous studies have tested the mutual fund managers market-timing ability [Treynor and Mazuy (1966), Kon and Jen (1979), Henriksson and Merton (1981), Merton (1981), Henriksson (1984), and Chang and Lewellen (1984)] and the diversification benefits and risk-adjusted performance of funds [Grinblatt and Titman (1989a), Ippolito (1989), Lehman and Modest (1987), and Logue and Rogalski (1989)]. Chang and Lewellen (1985), using a test procedure derived from arbitrage pricing theory, found that mutual fund portfolios did not outperform a passive buy-and-hold portfolio strategy. Ippolito (1989) examined the relation between mutual fund investment performance and other variables such as asset size, expenses, turnover, and load status. Domestic mutual fund riskadjusted returns, net of fees and expenses, were comparable to returns of index funds. However, portfolio turnover was unrelated to fund performance. In 1990, the literature was extended by Cumby and Glen to include international mutual funds. The performance of 15 U. S.-based internationally diversified funds was compared to the Morgan Stanley Index for the U. S., the Morgan Stanley World Index, and to a benchmark combining the world index and Eurocurrency deposits. The time period analyzed was 19821988. Both the Jensen index and the methodology developed by Grinblatt and Titman (1989b) were employed to measure portfolio performance. Cumby and Glen concluded the funds did not outperform the international equity index; however, there was some evidence of the funds outperforming the U.S. index.
Page 23
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) Eun, Kolodny, and Resnick (1991) reported similar findings. The benchmarks used in their study were the Standard and Poors 500 Index, the Morgan Stanley Capital International World Index, and a self-constructed index of U.S. multinational firms. For the period 19771986, the majority of international funds outperformed the U. S. market. However, most failed by outperform the world index. The sample consisted of 19 U. S.-based international funds, and the Sharpe measure was used to assess excess returns. Droms and Walker (1994) used a cross-sectional/time series regression methodology. Four funds were examined over 20 years (1971-1990), and 30 funds were analyzed for a six-year period (1985-1990). The funds were compared to the Standard and Poors 500 Index, the Morgan Stanley Europe, Australia, and Far East Index (EAFE) which proxies non-U. S. stock markets, and the World Index. Applying the Jensen, Sharpe, and Treynor indices of performance, they found that international funds have generally underperformed the U. S. market and the international market. Additionally, their results indicated that portfolio turnover, expense ratios, asset size, load status and fund size are unrelated to fund performance.
2.3 Statement of the Problem Over the last few years the interest rates have been raising and the Net Asset Value (NAV) of Mutual Funds has shown erratic movements. Investment decision making is difficult under such situations. The sensitivity of NAV to extraneous factors like economic, political, legal, social or other with have been under scored over the years. There is a correlation between these factors and the NAV movement. An attempt is made to study the impact of interest rate movement and other economic movement on the NPV of Mutual Funds. This study analysis specified mutual fund schemes and it will help to analyze which scheme is better.
Page 24
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 2.4 Need of the Study This study mainly focuses on the performance of every Mutual Fund Schemes initiated by SBI. To understand the reason for the unanticipated movement of NPV of these Mutual Funds, this study is aimed at identifying the impact of economic factors including interest rate, on the performance of Mutual Funds of SBI.
2.5 Scope and Objective of the Research To evaluate the macro-performance of the Following Mutual Funds of SBI : Equity Schemes Debt/Income Schemes Liquid Schemes Exchange Traded Funds
To rank them in the order of their relative performance. To interpret the performance parameter and extrapolate them into the future.
2.6 Research Methodology The study mainly targets analyzing the performance of various schemes of SBI. It is also done to know the amount of risk associated with each scheme and in contrast to the same also to compare the actual performance of the scheme in yielding returns between for Mar 2009 to Apr 2012. Study in mainly based on Secondary data i.e. the NAV for 3years which has been taken from the website.
Page 25
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 2.7 Hypothesis A hypothesis is an assumption about the population parameter to be tested based on sample information. Here in this report the hypothesis of trend analysis of the performance of specified Mutual funds are subject to market risks and there is no assurance or guarantee that the objective of scheme/ plans could be achieved.
2.8 Operational Definitions of concept Trend Analysis Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will happen in the future.
Net Asset Value-NAV Mutual Funds, NAV per share is computed once a day based on the closing market prices of the securities in the fund's portfolio. All mutual funds' buy and sell orders are processed at the NAV of the trade date. However, investors must wait until the following day to get the trade price. Mutual funds pay out virtually all of their income and capital gains. As a result, changes in NAV are not the best gauge of mutual fund performance, which is best measured by annual total return.
Portfolio risk In risk analysis, it is the risk that a particular combination of projects, assets, units or whatever is in the portfolio will fail to meet the overall objectives of the portfolio because of poor balance of risks within the portfolio.
Page 26
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) Asset Management Company / AMC It is the investment manager for the mutual fund. 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.
2.9 Data Collection NAV: The yearly NAV data of the schemes are collected from www.mutualfundsindia.com, www.amfiindia.com and the data all also collected from www.sbimf.com
2.10 Tools and Techniques Market Analysis Risk Return Analysis Ratio Analysis
Supported by Treynor measure. Sharps measure. Jensens measure.
i) Treynor measure The Treynor ratio (sometimes called the reward-to-volatility ratio or Treynor measure, named after Jack L. Treynor, is a measurement of the returns earned in excess of that which could have been earned on an investment that has no diversifiable risk (e.g., Treasury Bills or a completely diversified portfolio), per each unit of market risk assumed.
Page 27
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) The Treynor ratio relates excess return over the risk-free rate to the additional risk taken; however, systematic risk is used instead of total risk .The higher the Treynor ratio, the better the performance of the portfolio under analysis. Formula:
Where: T=Treynor ratio, ri =Portfolio i's return, rf= Risk free rate Bi= Portfolio i's beta ii) Sharps measure The Sharpe ratio is used to characterize how well the return of an asset compensates the investor for the risk taken, the higher the Sharpe ratio numbers the better. When comparing two assets each with the expected return against the same benchmark with return
, the asset with the higher Sharpe ratio gives more return for the same risk.
Assuming a constant Rf iii) Jensens measure Jensen's alpha (or Jensen's Performance Index, ex-post alpha) is used to determine the abnormal return of a security or portfolio of securities over the theoretical expected return. The security could be any asset, such as stocks, bonds, or derivatives. The theoretical return is predicted by a market model, most commonly the Capital Asset Pricing Model (CAPM)
Page 28
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) model. The market model uses statistical methods to predict the appropriate risk-adjusted return of an asset. The CAPM for instance uses beta as a multiplier. Jensen's alpha = Portfolio Return [Risk Free Rate + Portfolio Beta * (Market Return Risk Free Rate)]
2.11 Limitations of the Study Limitation of access to confidential data, hence the analysis may be biased to an extent. The study is confined to only one Asset Management Company. The study is mainly limited to 10 schemes of SBI Mutual funds. The ranks are assigned on the basis of only three measures of risk. Data is considered for three years.
2.12 Chapter Scheme Chapter 1: INTRODUCTION 1.1 Trend Analysis 1.2 Mutual Fund 1.3 Characteristics of a Mutual Fund 1.4 History of Mutual Fund Industry 1.5 Mutual Fund Structure 1.6 Types of schemes 1.7 Mutual Fund Advantages and Drawbacks 1.8 Current Scenario of Mutual Fund Industry 1.9 Future Scenario Presidency Business School Page 29
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) Chapter 2: REVIEW OF LITERATURE AND DESIGN OF THE STUDY 2.1 Introduction 2.2 Review of Literature 2.3 Statement of the Problem 2.4 Need of the Study 2.5 Scope and Objective of the Research 2.6 Research Methodology 2.7 Hypothesis 2.8 Operational definitions of concept 2.9 Data Collection 2.10 Tools and Techniques 2.11 Limitations of the Study 2.12 Chapter Scheme Chapter 3: PROFILE OF THE COMPANY 3.1 Corporate Profile 3.2 MDs Desk 3.3 CIOs Desk 3.4 Awards Chapter 4: RESULTS, ANALYSES AND DISCUSSIONS Chapter 5: SUMMARY OF FINDINGS, CONCLUSIONS AND SUGGESTIONS 5.1 Summary of Findings 5.2 Conclusions 5.3 Suggestions Appendices References
Page 30
3.1 Corporate Profile
Identity With over 24 years of rich experience in fund management, at SBI Funds Management Pvt. Ltd. bring forward the expertise by consistently delivering value to their investors. It has a strong and proud lineage that traces back to the State Bank of India (SBI) - India's largest bank. They are a Joint Venture between SBI and AMUNDI (France), one of the world's leading fund management companies. With their network of over 222 points of acceptance across India, they deliver value and nurture the trust of their vast and varied family of investors. Excellence has no substitute. And to ensure excellence right from the first stage of product development to the post-investment stage, we are ably guided by our philosophy o f growth through innovation and our stable investment policies. This dedication is what helps our customers achieve their financial objectives.
Vision To be the most preferred and the largest fund house for all asset classes, with a consistent track record of excellent returns and best standards in customer service, product innovation, technology and HR practices.
Page 31
SERVICES
Mutual Funds Investors are the priority. Its mission has been to establish Mutual Funds as a viable investment option to the masses in the country. Working towards it, it developed innovative, need-specific products and educated the investors about the added benefits of investing in capital markets via Mutual Funds. Today, it has been actively managing the investor's assets not only through its investment expertise in domestic mutual funds, but also offshore funds and portfolio management advisory services for institutional investors. This makes it one of the largest investment management firms in India, managing investment mandates of over 4.5 million investors.
Portfolio Management and Advisory Services SBI Funds Management has emerged as one of the largest player in India advising various financial institutions, pension funds, and local and international asset management companies. It has excelled by understanding its investor's requirements and terms of risk / return expectations, based on which it suggest customized asset portfolio recommendations. They also provide an integrated end-to-end customized asset management solution for institutions in terms of advisory service, discretionary and non-discretionary portfolio management services.
Offshore Funds SBI Funds Management has been successfully managing and advising India's dedicated offshore funds since 1988. SBI Funds Management was the 1st bank sponsored asset Presidency Business School Page 32
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) management company fund to launch an offshore fund called 'SBI Resurgent India Opportunities Fund' with an objective to provide its investors with opportunities for long-term growth in capital, through well-researched investments in a diversified basket of stocks of Indian Companies. FUND HOUSE EXPERTISE
Investment Expertise The best investment strategies put together by the best minds, our Fund Managers. With a sharp eye to monitor, gauge and understand the changes in the market, their fund managers and analysts gear up to meet new challenging environments. Their ability to capture the growth potential of Indian securities and manage complex portfolios as well as the drive to deliver optimum results is their forte. With superior securities selection, incisive research, intensive coverage including internal forecasts, active monitoring and regular tracking, its dedicated team ensures minimization of risks while protecting our investor's interest.
Investment Philosophy Growth through innovation, the expert team of experienced and market savvy researchers prepare comprehensive analytical and informative reports on diverse sectors and identify stocks that promise high performance in the future.
Page 33
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) What is innovation? Innovation is the process of turning ideas into concrete plans for progressive growth. They always seek to provide our investors with opportunities for progressive growth through our innovative products, superior stock selection and active portfolio management. Accordingly, they also enhance and optimize asset allocation and stock selection based on internal and external research. Derivatives are used to hedge and rebalance portfolios to keep the risk factors at reasonable levels, The three main phrases, which act as a guiding force for the investment performance, are as follows
1.
Long-term capital appreciation for the investor: Their fund manager's view is not guided by any momentum play but by the objective of generating sustainable performance for the investor.
2.
Superior stock selection: Its team is encouraged to be ahead of the rest of the industry in terms of identifying new ideas & opportunities.
3.
Active fund management: While the performance of all the funds is benchmarked against a specific index, they do not encourage their investment team to replicate the index composition with the fund portfolio.
Optimal Risk Management Risk Management is an inherent part of any business. As one of the core focus areas, each of its strategies is subject to close scrutiny on a continuous basis. Regulatory agencies around the world are placing increasing pressure on institutions to measure and manage risk better. At SBI Funds Management, it follows enterprise wide approach to risk management with a dedicated, experienced and professional risk management team covering significant functions of the organization. Risk Management focuses on:
Page 34

Identifying actual and potential areas of risk Assessing the adequacy of internal controls Proposing risk mitigating measures and Safeguarding investor interest through ongoing analysis and monitoring
Investment Objective Setting benchmarks time and again for our investors. Their objective is to endeavor to outperform its benchmarks through well researched investments in Indian equities. This is achieved by implementing an active management style based on fundamental analysis, leading to the construction of a portfolio. It could be blended, large cap, mid cap, or specific sector oriented - which aims at capturing the growth potential of Indian equities.
INVESTMENT TEAM NavneetMunot Chief Investment Officer ErwanKeraudy VP Investments Fund Managers Equity R. Srinivasan Head Equities SohiniAndani Fund Manager AjitDange Fund Manager Raviprakash Sharma Chief Dealer & Fund Manager Tanmaya Desai(Fund Manager) JayeshShroff Fund Manager Richard DSouza Fund Manager Suchita Shah Fund Manager & Dealer Neeraj Kumar Dealer Saurabh Pant(Fund Manager)
Page 35
Fund Managers - Fixed Income Rajeev Radhakrishnan Head - Fixed Income Ruchit Mehta Fund Manager Portfolio Management Services AashishWakankar Vice President & Senior Fund Manager PMS (Offshore) Dinesh Ahuja Fund Manager
NipaLadiwala Head PMS (Institutional)
AmruthRao Senior Fund Manager PMS (Debt) TRUSTEES
SBI Mutual Fund Trustee Company Private Limited (the Trustee), through its Board of Directors discharge its obligations as Trustee of the SBI Mutual Fund. The Board of Directors of SBI Mutual Fund Trustee Company Private Limited are as under: Shri T.L. Palani Kumar Independent Ms. Sandra Martyres Associate Mr. Krishnamurthy Vijayan Independent Shri C.M. Dixit Independent Ms. BharatiRao Associate Mr. Shriniwas Joshi Independent
Page 36
BOARD OF DIRECTORS AMC Mr. PratipChaudhuri Chairman & Associate Director Mr. Deepak Kumar Chatterjee Managing Director Mrs. MadhuDubhashi Independent Director Mr. Jean-Paul Mazoyer Associate Director Dr. H. K. Pradhan Independent Director Mr. Philippe Batchevitch Alternate Director to Mr. Mazoyer Mr. ShyamalAcharya Associate Director Mr. ShishirJoshipura Independent Director Dr. H. Sadhak Independent Director Mr. Jayesh Gandhi Independent Director
Page 37
3.2 MD's Desk
March 2012 Indian equity markets continued to move upward for the second consecutive month with the benchmark indices S&P CNX Nifty and BSE Sensex marginally gaining 3.6% and 3.25%, respectively in February. BSE Midcap and BSE Small Cap indices too made upward movements, rising 8.77% and 6.14% respectively. All BSE sectoral indices ended higher in February, with BSE Realty emerging as the topmost gainer, up 14.5% on strong buying in realty shares. The markets rose over the month on the back of persistent foreign institutional investor (FII) inflows and firm global cues. FIIs bought equities worth Rs 25,217 crores in February, the highest monthly buying since records and compared to buying of Rs 11,089 crores in January 2012. Positive global cues came in the form of strong US economic data including upbeat US job data and expectations that Eurozone debt crisis may ease. On the domestic front, encouraging corporate earnings and increase in Indias Purchasing Managers' Index (PMI) brought in more gains into the markets. Sentiments were also boosted after monthly inflation eased in January. India's 6.1% GDP growth in Q3 FY11 was the slowest quarterly growth in two-and-a-half years, especially compared with 8.3% growth seen in the year ago period. We are approaching the end of the financial year and would like to remind all our investors who have not yet invested in ELSS funds for saving tax to consider doing the same by 31st
Page 38
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) March, 2012. Magnum Tax gain Scheme, the flagship ELSS fund from SBI Mutual Fund is one of the largest ELSS funds in the industry and is patronized by lakhs of investors and is a useful investment avenue for long term wealth creation besides being helpful in saving tax. You may think of investing through Systematic Investment Plan (SIP) that helps you to create wealth, by investing small sums of money every month, over a period of time reducing the burden of investing in lump sum. We are absolutely committed to providing unparalleled service to our investors and to cater to your information, investment and servicing needs. Please feel free to call at our dedicated customer care numbers 1-800-425-5425 (MTNL/BSNL users only) and 080-26599420 from Monday to Saturday (8am 10pm) or write to us at customer.delight@sbimf.com with your queries. Alternatively you can also visit your nearest Investor Service Centre / Investor Service Desk for any assistance.
3.3 CIO's Desk
March 2012 After a splendid January, equity markets continued their climb against the wall of worries right through February. Despite the persistent Yes/No toggle on the European solution on Greeces bailout and across-the-board demotion of Euro-credits by the rating agencies, the markets supported risky assets as the European Central Bank (ECB) and Bank of Japan (BoJ) signaled continued easing and economic data from the US sustained its positive Presidency Business School Page 39
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) momentum. ECB pumped in 529 billion through second round of Long term Repurchase Operations (LTRO) on top of 489bn it dispensed in December 2011 . The US equities are now at a 10-year high and the emerging markets too are witnessing their own share of global money commitments. The risk-on trade was also evident across commodities including precious metals that rallied smartly during the month. While the deluge of liquidity has ignited a rally in risk assets, the concerns about solvency crisis and impact of deleveraging process on the real economy and financial markets remain.
Economic indicators in India displayed continuation of moderation in the growth momentum:

GDP growth for quarter ending December 2011 at 6.1% y-o-y was lower-than-expected. Weak manufacturing sector growth (0.4% y-o-y) was the key drag. Much of the moderation was underpinned by a plunge in capital goods segment, which remains the most volatile component of Industrial Production (IP).
January inflation fell below 7% for the first time in last two years - much of this was on account of a very favorable base effect but some of this was also on account of moderation in the sequential momentum.
The rupee remained stable after a sharp rally in January. Foreign inflows helped in negating the impact of rising Brent crude prices (up 10% in Feb).
Liquidity in banking system remained extremely tight despite the cut in CRR. We fear a sharp drop in savings rate in the current financial year given the state of government finances, drop in corporate profitability and trends in household investments.
Page 40
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) At the same time, one witnessed incremental positive news on the policy front:
RBI guided on easing monetary policy subject to a favorable inflation scenario and fiscal consolidation. RBI intervention has helped in rupee stabilizing below 50 against the dollar.
PMO addressing the issues faced by the power and infrastructure sector: Withdrawal of Go No Go restrictions pertaining to environmental clearances for large projects
Coal India assigned the responsibility of ensuring coal supplies to power projects that have entered into long term PPAs
Favorable verdicts on Vodafone tax issue and cancellation of 2G telecom license allocations (all the 122 of them - a development that removes any further possibility of ambiguous processes of allocations of national resources).
Several measures to attract foreign flows through equity and debt route Initiatives to garner money through PSU divestment
These initiatives concurred with recently opened investment windows for global money (through Individual exposure directly in Indian debt/ equity markets), and persistence of global risk-on trade. As a result, FIIs were net buyers with net inflow of USD 5.1bn as compared to an inflow of USD 2bn in the previous month. The investment mood, witnessed reversal from a denial-to-disbelief-to-acceptance of the riskon continuum. Indias performance ranking fell to 14th position from 3rd in the previous month. Year to date, India is now the 4th-best performing market. For the second consecutive month, the broad market indices outperformed the narrow market. The small and mid-cap indices outperformed the BSE Sensex by 5.3% (y-o-y) and 2.8% (y-o-y), respectively.
Page 41
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) The earnings season for 3QFY12E has been through. Most of the results have been either in line or better than expectations. This has to be also seen in the backdrop of the thenpersistent slower investment cycle and the interest rate cycle that was at its peak. One can expect some of this weak momentum to continue for one more quarter. However, the positive reflexivity in the policy cycle should start reflecting sooner in earnings revisions which seem to have progressively bottomed since. Going forward, apart from global risk appetite that drives flows and sentiments, the market would critically hinge on four crucial developments State Election Results (which undermine political equations at the Centre going forward), RBI Policy (to initiate the formal rate reversal cycle), FY13E Union Budget (where the market has begun to positively build-in expectations) and Crude oil (a critical lever in Indias fiscal arithmetic). One can expect the curren t momentum on the policy, and interest rate to continue till there is no adverse development on fiscal situation and core inflation. While one enters a month that has such multiple critical developments we remain well balanced to capture positive developments through tactical allocation to sectors sensitive towards interest rate and investment cycle, while retaining our quality bias when it comes to business, managements, and cash flows. Money market rates remained under pressure during the month on account of continuing stress in the system liquidity with LAF borrowings averaging around Rs. 1, 40,000crs. The new SEBI regulations on fair valuation of money market securities which resulted in reduced incremental purchases from Mutual Funds and market expectations of liquidity deficit aggravating further led to short term rates moving up by more than 100bps during the month. The cumulative impact of Forex intervention, currency in circulation, movement of government cash balances and the mismatch between the incremental growth in credit and deposit numbers have overshadowed the liquidity impact of CRR reductions and the Open Markets
Page 42
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) Operations (OMO) by RBI. The 10yr benchmark government bond yields remained in a narrow range due to the continuation of the OMO program and on account of the fag end of the fiscal year borrowing schedule. The macro data announced during the month broadly reinforced the deceleration in growth and the slowdown in inflation momentum. The near term market direction would be determined by the trends in the crude oil prices and the Union Budget stance on the fiscal position. The incremental RBI stance on rates would be governed by these two variables. Short term rates may remain elevated given the tight liquidity and typical March end phenomenon. We expect liquidity situation to improve and short term rates to correct in the next quarter. We recommend investors with risk appetite to invest in Short term fund which are well positioned to take advantage of opportunities at the short end of the curve. Regards, NavneetMunot
3.4 Awards
At SBI Funds Management, we devote considerable resources to gain, maintain and sustain our profitable insights into market movements. The trust reposed on us by millions of investors is a genuine tribute to our expertise in Fund Management and dedication to our singular focus. And this has resulted in various awards and accolades for us from the fund industry, motivating us to do better. Some of the awards won by us are listed below.
Page 43
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 2012 ICRA Mutual Fund Awards 2012 for Various Schemes
2011 Readers Digest Awards 2011 for Trusted Brand in Fund Management Category ICRA Mutual Fund Awards 2011 for Magnum Income Fund - Floating Rate Plan - Long Term Plan
2010 ICRA Mutual Fund Awards 2010 for Magnum Global Fund
2009 ICRA Mutual Funds Awards 2009 for Magnum Tax Gain Scheme 1993 The Lipper India Fund Awards 2009 for Various Schemes
2008 Outlook Money NDTV Profit Awards 2008 The Lipper India Fund Awards 2008 for Magnum Balanced Fund Dividend ICRA Mutual Fund Awards 2008 for Various Schemes
2007 Outlook Money NDTV Profit Awards 2007 CNBC Ahwaz Consumer Awards 2007 The Lipper India Fund Awards 2007 for Various Schemes ICRA Mutual Funds Awards 2007 for Various Schemes CNBC TV18 - CRISIL Mutual Fund of the Year Award 2007 for Various Schemes
Page 44
Analysis and Interpretation

Specified Schemes of SBI in this research used as follows:
Particulars Equity Schemes 1. Magnum Multicap fund 2. Magnum Equity fund 3. SBI blue chip Fund Debt/Income Schemes Open Ended Growth 10/Type of Scheme Scheme Option Face Value(Rs/unit)
4. Magnum Childrens benefit plan 5. Magnum income plus fund saving plan 6. Magnum income fund Liquid Schemes 7. Magnum instacash fund 8. Magnum instacash fund Liquid floater 9. SBI premier liquid fund Exchange trade funds 10. SBI gold exchange traded scheme
Open Ended
Growth
10/-
Open Ended
Growth
10/-
Open Ended
Growth
10/-
[http://www.mutualfundsindia.com] As per the data collected by this above website and calculated returns, expected returns, variance and standard deviation. Further shown NAV figures of Specified funds which is collected and Shown graphically to all specified fund then the calculation part arises.
Page 45
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.1. Table showing the Magnum Multicap fund NAVs
Apr 2009- Mar 2012 29-Apr-09 29-May-09 30-Jun-09 31-Jul-09 31-Aug-09 30-Sep-09 30-Oct-09 30-Nov-09 31-Dec-09 29-Jan-10 26-Feb-10 31-Mar-10 30-Apr-10 31-May-10 30-Jun-10 30-Jul-10 31-Aug-10 30-Sep-10
NAV
11.02 14.1 14.09 15.2 15.48 16.58 15.91 16.98 17.72 16.92 16.79 17.83 17.94 17.12 17.74 18.11 18.07 19.59 29-Oct-10 30-Nov-10 31-Dec-10 31-Jan-11 28-Feb-11 31-Mar-11 29-Apr-11 31-May-11 30-Jun-11 29-Jul-11 30-Aug-11 30-Sep-11 31-Oct-11 30-Nov-11 29-Dec-11 30-Jan-12 27-Feb-12 31-Mar 19.7 19.14 19.45 17.29 16.47 17.66 17.77 17.24 17.37 17.02 15.31 14.94 15.79 14.34 13.5 15.25 16.14 16.43
4.1 Graph Showing the Magnum Multicap fund NAVs

25 20 15 10 5 0 01/Feb/10 01/Feb/11 01/Dec/09 01/Dec/10 01/Aug/09 01/Aug/10 01/Aug/11 01/Dec/11 01/Feb/12 01/Apr/09 01/Apr/10 01/Apr/11 01/Jun/09 01/Jun/10 01/Oct/09 01/Oct/10 01/Jun/11 01/Oct/11 11.02
16.43
Analysis The above table and graph showing the NAVs of per month and it has been increased from 11.02 to 16.43 for the period of 2009-2012. Presidency Business School Page 46
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.1.1 Table showing the calculation of Magnum Multicap Fund NAVs
Expected Return Deviation sq 1766.33 290.89 623.61 893.61 29.89
Year 2009-10 2010-11 2011-12
P1-P0/12 56.75 -2.33 -10.25
Deviation 42.03
Variance
SD
14.72
-17.06 -24.97
Analysis The above table showing the returns which are frequently changed by the months of each year which is in 2009-10 having the 56.75, 2010-11 having the negative value of -2.33 and 2011-12 having the same range in negative value of -10.25. 4.1.1 Graph showing the returns for each year of Magnum Multicap Fund NAVs
60 50 40 30 20 10 0 -10 -20
56.75
-2.33 2009-10 2010-11
-10.25 2011-12
Analysis The above graph showing the each year returns as per calculated but it is increased in 200910, but in 2010-11 and 2011-12 is in negative value because of its NAVs vary in every month.
Page 47
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.1.2 Table showing the Magnum Multicap Fund Return Matrix as on April 13, 2012 Scheme Equity Risk Profile Mean 0.15 S.D 3.75 Beta 0.90 Corln 0.89 1M -0.92 3M 12.56 6M 6.64 1Y -9.96 3Y 14.97 [%] 5Y 1.81
Return per unit of Risk Particular Treynor Sharpe Per(%) 0.06 0.01 Rank 6th 4th
Interest rate for the period of 2009 to 2012 in (%) Bank Rate Interpretation An linked fund, the variance is significant in that the 3 year return is highest at 14.97%. The 3 month return is also in the same range. But the intervening returns are erratic suggesting that the investment is risky to an extent. This can be corroborated by the fact that the standard deviation for the asset at 3.75 is unduly high. Beta at 0.9 indicates that the investment is insulated against undue fluctuations in its return to market return, thereby indicating a lower market risk. The return per unit risk in terms of Treynors Measure and Sharpe Ratio makes it evident that taken together the return is not commensurate to the risk associated with the asset and rank shown in the table of return per unit of risk. 6.23
Page 48
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.2 Table showing the Magnum Equity Fund NAVs
NAV
24.03 31.39 31.25 34.03 34.61 36.52 35.17 37.35 38.81 36.7 37.2 39.77 40.41 39.36 41.55 42.09 42.83 46.44 29-Oct-10 30-Nov-10 31-Dec-10 31-Jan-11 28-Feb-11 31-Mar-11 29-Apr-11 31-May-11 30-Jun-11 29-Jul-11 30-Aug-11 30-Sep-11 31-Oct-11 30-Nov-11 29-Dec-11 30-Jan-12 27-Feb-12 31-Mar 46.35 45 45.92 42.36 40.83 44.02 43.97 43.25 43.72 43.27 40.26 39.36 41.85 38.68 36.9 41.03 42.7 42.72
4.2 Graph showing the Magnum Equity Fund NAVs

50 45 40 35 30 24.03 25 20 15 10 5 0 01/Feb/10 01/Dec/09 01/Dec/10 01/Apr/09 01/Apr/10 01/Aug/09 01/Aug/10 01/Oct/09 01/Oct/10 01/Jun/09 01/Jun/10 42.72 40.83 36.9
01/Feb/11
Analysis The above table and graph showing the NAVs per month and it has been increased from 24.03 to 40.83 for the period of 2009-11, from 2011 it has been decline to 36.9 and again it has increased to 42.72 for the period 2012.
01/Aug/11
01/Dec/11
01/Feb/12
01/Apr/11
01/Oct/11
01/Jun/11
Page 49
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.2.1 Table showing the calculation of Magnum Equity Fund NAVs
Year 2009-10 2010-11 2011-12
P1-Po/12 1.31 0.30 -0.10
Excepted return 0.50
Deviation 0.81 -0.20 -0.61
Deviation sq 0.65 0.04 0.37
Variance
SD
0.35
0.60
Analysis The above table showing that the returns for each year decreasing by 1.31 to 0.30 and negatively it is in -0.10 for 2011-12 4.2.1 Graph showing the returns for each year of Magnum Equity Fund NAVs
-0.1 2011-12
2010-11
0.3
1.31 2009-10
-0.2
0.2
0.4
0.6
0.8
1.2
1.4
Analysis The above graph showing the returns per annum which is increased by 1.31 in 2009-10, linear decline to towards the 2010-11 and negative value in 2011-12
Page 50
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.2.2 Table showing the Magnum Equity Fund Return Matrix as on April 13, 2012 Scheme Equity Risk Profile Mean 0.32 S.D 3.76 Beta 0.88 Corln 0.87 1M -2.48 3M 9.09 6M 4.96 1Y -5.27 3Y 22.52 [%] 5Y 9.12
Interest rate for the period of 2009 to 2012 in (%) Bank Rate 6.23
Interpretation An linked fund, the variance is significant in the long run for 3 year return is highest at 22.52%. The 5 year return is also in the range of 9.12%. But the short run period which is good for 3 months is 9.09% and having risk profile. This can be corroborated by the fact that the standard deviation for the asset at 3.76 is unduly high. Beta at 0.88 indicates that the investment is insulated against undue fluctuations in its return to market return, thereby indicating a lower market risk. The return per unit risk in terms of T reynors Measure and Sharpe Ratio makes it evident that taken together the return is not commensurate to the risk associated with the asset and ranked the measure in above table.
Page 51
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.3 Table showing the SBI blue chip Fund NAVs
NAV
8.74 11.72 11.6 12.54 12.7 13.69 12.77 13.57 14.13 13.47 13.35 14.1 14.25 13.7 14.32 14.4 14.55 15.84 29-Oct-10 30-Nov-10 31-Dec-10 31-Jan-11 28-Feb-11 31-Mar-11 29-Apr-11 31-May-11 30-Jun-11 29-Jul-11 30-Aug-11 30-Sep-11 31-Oct-11 30-Nov-11 29-Dec-11 30-Jan-12 27-Feb-12 31-Mar 16 15.45 15.81 14.07 13.37 14.56 14.62 14.27 14.34 14.15 13.04 12.77 13.44 12.53 11.98 13 13.82 13.78
4.3 Graph showing the SBI blue chip Fund NAVs

18 16 14 12 10 8 6 4 2 0 01/Feb/10 01/Feb/11 01/Dec/09 01/Dec/10 8.74 16 13.37 13.78
Analysis The above table and graph showing the NAVs per month and it has been increased from 8.74 to 16 for the period of 2009-10 and fluctuated frequently in the next year.
01/Aug/11
01/Aug/09
01/Aug/10
01/Dec/11
01/Feb/12
01/Apr/09
01/Apr/10
01/Apr/11
01/Oct/11
01/Oct/09
01/Oct/10
01/Jun/11
01/Jun/09
01/Jun/10
Page 52
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.3.1 Table showing the calculation of SBI blue chip Fund NAVs
Year 2009-10 2010-11 2011-12 P1-P0/12 0.45 0.03 -0.07 0.13 Excepted return Deviation 0.31 -0.11 -0.20 Deviation sq 0.10 0.01 0.04 0.05 0.22 Variance SD
Analysis The above table showing the returns per annum which is decreased by 0.45, 0.03 and -0.07 in the period of 2009-10, 2010-11 and 2011-12 with respectively 4.3.1 Graph showing the returns for each year of SBI blue chip Fund NAVs
0.5 0.4 0.3 0.2 0.1 0 -0.1
0.45
0.03 2009-10 2010-11
-0.07 2011-12
Analysis The graph showing significant difference between in every year by calculating of NAVs of this fund
Page 53
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.3.2 Table showing the SBI blue Chip Fund Return Matrix as on April 13, 2012 Scheme Equity Risk Profile Mean 0.24 S.D 3.79 Beta 0.90 Corln 0.89 1M -2.51 3M 8.12 6M 5.11 1Y -8.65 3Y 16.57 [%] 5Y 4.11
Interpretation An linked fund, the variance is significant in long run for 3 year return is highest at 16.57%. The 3 month return 8.12% for the short run. But the intervening returns are erratic suggesting that the investment is risky to an extent. This can be corroborated by the fact that the standard deviation for the asset at 3.79 is unduly high. Beta at 0.9 indicates that the investment is insulated against undue fluctuations in its return to market return, thereby indicating a lower market risk. The return per unit risk in terms of Treynors Measure and Sharpe Ratio makes it evident that taken together the return is not commensurate to the risk associated with the asset and ranked the fund under treynor and sharpe measures
Page 54
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.4 Table showing the Magnum Childrens benefit plan NAVs
Apr 2009 Mar 2012 29-Apr-09 29-May-09 30-Jun-09 31-Jul-09 31-Aug-09 30-Sep-09 30-Oct-09 30-Nov-09 31-Dec-09 29-Jan-10 26-Feb-10 31-Mar-10 30-Apr-10 31-May-10 30-Jun-10 30-Jul-10 31-Aug-10 30-Sep-10
NAV
18.33 18.77 18.95 19.49 19.58 19.98 19.79 20.21 20.57 20.37 20.39 20.78 21.08 20.86 21.22 21.75 22 22.37 29-Oct-10 30-Nov-10 31-Dec-10 31-Jan-11 28-Feb-11 31-Mar-11 29-Apr-11 31-May-11 30-Jun-11 29-Jul-11 30-Aug-11 30-Sep-11 31-Oct-11 30-Nov-11 29-Dec-11 30-Jan-12 27-Feb-12 31-Mar 22.48 22.41 22.79 22.19 22.04 22.52 22.74 22.7 23.09 23.3 23.08 22.95 23.17 23.14 22.75 23.82 24.21 24.29
4.4 Graph showing the Magnum Childrens benefit plan NAVs

25 20 15 10 5 0 01/Apr/09 01/Jul/09 01/Oct/09 01/Jan/10 01/Apr/10 01/Jul/10 18.33 24.29
01/Oct/10
01/Jan/11
01/Apr/11
01/Jul/11
01/Oct/11
Analysis The above table and graph showing the NAV per month and it has been increased from 18.33 to 24.29 for the period of 2009-12.
01/Jan/12
Page 55
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.4.1 Table showing the calculation of Magnum Childrens benefit plan NAVs
Year 2009-10 2010-11 2011-12 P1-P0/12 0.20 0.12 0.13 0.15 Excepted return Deviation 0.05 -0.03 -0.02 Deviation sq 0.00 0.00 0.00 0.0014 0.04 Variance SD
Analysis The above table showing all positive values in each year which is said to be 0.20 for 2009-10, 0.12 for 2010-11 and 0.13 for 2011-12 4.4.1 Graph showing the returns for each year of Magnum Childrens benefit plan NAVs
0.13 0.2 2009-10 2010-11 2011-12 0.12
Analysis The graph showing the returns per annum and clearly shown under the pie chart for each year
Page 56
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.4.2 Table showing the Magnum Childrens benefit Plan Fund Return Matrix as on April 13, 2012 Scheme Debt/Income Risk Profile Mean 0.16 S.D 0.68 Beta 0.76 Corln 0.75 1M 0.75 3M 3.79 6M 5.95 1Y 7.04 3Y 10.36 [%] 5Y 7.60
Analysis An linked fund, the variance is significant in long run the 3 year return is highest at 10.36% and the 5 year return is also in the range of 7.6%. Where for short run the 6 months is 5.95% good. But the intervening returns are erratic suggesting that the investment is risky to an extent. This can be corroborated by the fact that the standard deviation for the asset at 0.68 is unduly high. Beta at 0.76 indicates that the investment is insulated against undue fluctuations in its return to market return, thereby indicating a lower market risk. The return per unit risk in terms of Treynors Measure and Sharpe Ratio makes it evident that taken together the return is not commensurate to the risk associated with the asset and ranked them in above table.
Page 57
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.5 Table showing the Magnum income plus fund saving plan
Total No. of MONTHS 29-Apr-09 29-May-09 30-Jun-09 31-Jul-09 31-Aug-09 30-Sep-09 30-Oct-09 30-Nov-09 31-Dec-09 29-Jan-10 26-Feb-10 31-Mar-10 30-Apr-10 31-May-10 30-Jun-10 30-Jul-10 31-Aug-10 30-Sep-10
NAV
4.5 Graph showing the Magnum income plus fund saving plan
12.5 12.02 12 11.5 11 10.52 10.5 10 9.5 01/Feb/10 01/Feb/11 01/Dec/09 01/Dec/10 01/Aug/09 01/Aug/10 01/Aug/11 01/Dec/11 01/Feb/12 01/Apr/09 01/Apr/10 01/Apr/11 01/Oct/09 01/Oct/10 01/Oct/11 01/Jun/09 01/Jun/10 01/Jun/11
Analysis The above table and graph showing the NAV per month and it has been increased from 10.52 to 12.02 for the period of 2009-12.
Page 58
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.5.1 Table showing the Calculation of Magnum income plus fund saving plan
Year 2009-10 2010-11 2011-12 P1-P0/12 0.02 0.03 0.06 0.04 Excepted return Deviation -0.02 -0.01 0.02 Deviation sq 0.00 0.00 0.00 0.00 0.02 Variance SD
Analysis The table showing the positive values for every year which is 0.02 for 2009-10, 0.03 for 201011 and 0.06 for 2011-12 4.5.1 Graph showing the returns for each year of Magnum income plus fund saving plan
0.06 0.05 0.04 0.03 0.02 0.01 0 2009-10 2010-11 0.03 0.02
0.06
2011-12
Analysis The graph showing clearly that the each year as been increased the trend to 0.02 to 0.03 for 2009-10 and 0.03 to 0.06 for 2010-11
Page 59
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.5.2 Table showing the Magnum Income Plus Fund Return Matrix as on April 13, 2012 Scheme Debt/Income Risk Profile Mean 0.07 S.D 0.07 Beta 0.01 Corln 0.01 1M 0.84 3M 1.82 6M 3.58 1Y 7.31 3Y 4.64 [%] 5Y 2.71
Return per unit of Risk Particular Treynor Sharpe Per(%) -2.5 -0.46 Rank 2nd 2th
Interpretation An linked fund, the variance is significant in long run the 1 year return is highest at 7.31% and 3 year return is also in the range of 4.64%, where the short run the 6 months is better because having the returns of 3.58%. But the intervening returns are erratic suggesting that the investment is risky to an extent. This can be corroborated by the fact that the standard deviation for the asset at 0.07 is unduly high. Beta at 0.01 indicates that the investment is insulated against undue fluctuations in its return to market return, thereby indicating a lower market risk. The return per unit risk in terms of Treynors Measure and Sharpe Ratio makes it evident that taken together the return is not commensurate to the risk associated with the asset and ranked them in above table.
Page 60
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.6 Table showing the Magnum income fund NAVs
NAV
13.2 13.01 13.13 13.18 13.07 13.23 13.24 13.38 13.35 13.44 13.4 13.57 13.67 13.71 13.78 13.68 13.8 13.87 29-Oct-10 30-Nov-10 31-Dec-10 31-Jan-11 28-Feb-11 31-Mar-11 29-Apr-11 31-May-11 30-Jun-11 29-Jul-11 30-Aug-11 30-Sep-11 31-Oct-11 30-Nov-11 29-Dec-11 30-Jan-12 27-Feb-12 31-Mar 13.89 13.93 14 14.01 14.09 14.21 14.3 14.35 14.5 14.59 14.75 14.78 14.81 14.96 15.2 15.44 15.56 15.59
4.6 Graph showing the Magnum income fund NAVs

16 15.5 15 14.5 14 13.5 13 12.5 12 11.5 01/Feb/10 01/Feb/11 01/Dec/09 01/Dec/10 01/Aug/09 01/Aug/10 01/Aug/11 01/Dec/11 01/Feb/12 01/Apr/09 01/Apr/10 01/Apr/11 01/Jun/09 01/Jun/10 01/Oct/09 01/Oct/10 01/Jun/11 01/Oct/11 13.2
15.59
Analysis The above table and graph showing the NAVs per month and it has been increased from 13.2 to 15.59 for the period of 2009-12. Presidency Business School Page 61
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.6.1 Table showing the Calculation of Magnum income Fund NAVs
Excepted return Deviation sq 0.00 0.00 0.00 0.001 0.03
Year 2009-10 2010-11 2011-12
P1-P0/12 0.03 0.05 0.11
Deviation -0.03
Variance
SD
0.06
-0.02 0.05
Analysis The above table showing the increased values in the each year for the returns which is calculated as been figure out that 0.03, 0.05 and 0.11 for 2009, 2010 and 2011 with respectively. 4.6.1 Graph showing the returns for each year of Magnum income Fund NAVs
0.12
0.11
0.1
0.08
0.06
0.05
0.04
0.03
0.02
0 2009-10 2010-11 2011-12
Analysis The graph showing the increased trend from the 2009-10 to 2011-12
Page 62
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4.6.2 Table showing the Magnum Income Fund Return Matrix as on April 13, 2012 Scheme Debt/Income Risk Profile Mean 0.12 S.D 0.62 Beta 1.43 Corln 1.42 1M 0.77 3M 1.56 6M 6.04 1Y 9.68 3Y 6.39 [%] 5Y 5.56
Analysis An linked fund, the variance is significant in long run the 1 year return is highest at 9.68% and 3 year return is also in the range of 6.39%. But the intervening returns are erratic suggesting that the investment is risky to an extent. This can be corroborated by the fact that the standard deviation for the asset at 0.62 is unduly high. Beta at 1.43 indicates that the investment is insulated against undue fluctuations in its return to market return, thereby indicating a lower market risk. The return per unit risk in terms of Treynors Measure and Sharpe Ratio makes it evident that taken together the return is not commensurate to the risk associated with the asset and ranked them in above table.
Page 63
4.7 Table showing the Magnum instacash fund NAVs

NAV
4.7 Graph showing the Magnum instacash fund NAVs

25 20 15 10 5 0 01/Feb/10 01/Feb/11 01/Dec/09 01/Dec/10 19.73 23.75
Analysis
01/Aug/11
01/Aug/09
01/Aug/10
01/Dec/11
01/Feb/12
01/Apr/09
01/Apr/10
01/Apr/11
01/Oct/11
01/Oct/09
01/Oct/10
01/Jun/11
01/Jun/09
01/Jun/10
Page 64
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) The above table and graph showing the NAVs per month and it has been increased from 19.73 to 23.75 for the period of 2009-12. 4.7.1 Table showing the Calculation of Magnum instacash fund NAVs
Year 2009-10 2010-11 2011-12 P1-P0/12 0.058 0.104 0.153 0.105 Excepted return Deviation -0.047 -0.001 0.047 Deviation sq 0.002 0.000 0.002 0.001 0.038 Variance SD
Analysis
The above table showing the returns per year as 0.058, 0.104 and 0.153 for the 2009-10, 2010-11 and 2011-12 respectively
4.7.1 Graph showing the returns for each year of Magnum instacash fund NAVs
2011-12
0.153
2010-11
0.104
2009-10
0.058
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
Analysis
Page 65
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) The graph showing the increased trend for the returns in every month which shows the growth by each year
4.7.2 Table showing the Magnum Instacash Fund Return Matrix as on April 13, 2012 Scheme Liquid Risk Profile Mean 0.09 S.D 0.03 Beta 0.48 Corln 0.48 1M 0.68 3M 1.71 6M 3.50 1Y 6.99 3Y 5.10 [%] 5Y 5.56
Return per unit of Risk Particular Treynor Sharpe Per(%) -0.03 -0.43 Rank 3rd 3rd
Analysis An linked fund, the variance is significant in long run the 1 year return is highest at 6.99% and 5 year return is also in the range of 5.56%, where the short run for 6 months 3.50% also better. But the intervening returns are erratic suggesting that the investment is risky to an extent. This can be corroborated by the fact that the standard deviation for the asset at 0.03 is unduly high. Beta at 0.48 indicates that the investment is insulated against undue fluctuations in its return to market return, thereby indicating a lower market risk. The return per unit risk in
Page 66
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) terms of Treynors Measure and Sharpe Ratio make s it evident that taken together the return is not commensurate to the risk associated with the asset and ranked them in above table.
4.8 Table showing the Magnum instacash fund Liquid floater NAVs
NAV
4.8 Graph showing the Magnum instacash fund Liquid floater NAVs
20 18 16 14 12 10 8 6 4 2 0 18.48 15.28
01/Feb/10
01/Feb/11
01/Dec/09
01/Dec/10
01/Aug/11
01/Aug/09
01/Aug/10
01/Dec/11
01/Feb/12
01/Apr/09
01/Apr/10
01/Apr/11
01/Oct/11
01/Oct/09
01/Oct/10
01/Jun/11
01/Jun/09
01/Jun/10
Page 67
Analysis The above table and graph showing the NAVs per month and it has been increased from 15.28 to 18.48 for the period of 2009-12. 4.8.1 Table showing the Calculation of Magnum instacash fund Liquid floater NAVs
Year 2009-10 2010-11 2011-12 P1-P0/12 0.047 0.084 0.120 0.084 Excepted return Deviation -0.037 0.001 0.036 Deviation sq 0.001 0.000 0.001 0.001 0.030 Variance SD
Analysis The above table showing the increased values shown in every month which is resulted as per year as 0.047, 0.084 and 0.120 for the period of 2009, 2010 and 2011 with respectively 4.8.1 Graph showing the returns for each year of Magnum instacash fund Liquid floater NAVs
Page 68
0.12 0.1 0.084 0.08 0.06 0.04 0.02 0 2009-10 2010-11 0.047
0.12
2011-12
Analysis The graph showing the increased trend value by every year for the period of 2009-12
4.8.2 Table showing the Magnum Liquid Floater Fund Return Matrix as on April 13, 2012 Scheme Liquid Risk Profile Mean 0.12 S.D 0.04 Beta 0.68 Corln 0.68 1M 0.82 3M 2.36 6M 4.65 1Y 9.18 3Y 6.74 [%] 5Y 7.35
Interest rate for the period of 2009 to 2012 in (%) Presidency Business School Page 69
Bank Rate
6.23
Analysis An linked fund, the variance is significant in long run the 1 year return is highest at 9.18%,5 and 3 year return is also in the range of 7.35% and 6.74% with respectively, were as for short run 6 months is 4.65% still it will give good yield. But the intervening returns are erratic suggesting that the investment is risky to an extent. This can be corroborated by the fact that the standard deviation for the asset at 0.04 is unduly low. Beta at 0.68 indicates that the investment is insulated against undue fluctuations in its return to market return, thereby indicating a lower market risk. The return per unit risk in terms of Treynors Measure and Sharpe Ratio makes it evident that taken together the return is not commensurate to the risk associated with the asset and ranked them in above table.
4. 9 Table showing the SBI premier liquid fund NAVs

Total No. of MONTHS NAV 29-Apr-09 14.1 29-May-09 14.16 30-Jun-09 14.21 31-Jul-09 14.26 31-Aug-09 14.31 30-Sep-09 14.35 30-Oct-09 14.39 30-Nov-09 14.44 31-Dec-09 14.48 29-Jan-10 14.53 26-Feb-10 14.57 31-Mar-10 14.62 30-Apr-10 14.68 31-May-10 14.74 30-Jun-10 14.8
29-Oct-10 30-Nov-10 31-Dec-10 31-Jan-11 28-Feb-11 31-Mar-11 29-Apr-11 31-May-11 30-Jun-11 29-Jul-11 30-Aug-11 30-Sep-11 31-Oct-11 30-Nov-11 29-Dec-11
15.09 15.18 15.27 15.37 15.47 15.58 15.69 15.8 15.91 16.03 16.15 16.26 16.38 16.5 16.63
Page 70
30-Jul-10 31-Aug-10 30-Sep-10 14.87 14.94 15.01 30-Jan-12 27-Feb-12 31-Mar 16.76 16.89 17.03
4. 9 Graph showing the SBI premier liquid fund NAVs

18 16 14 12 10 8 6 4 2 0 01/Feb/10 01/Feb/11 01/Dec/09 01/Dec/10 14.1 17.03
Analysis The above table and graph showing the NAVs per month and it has been increased from 14.1 to 17.03 for the period of 2009-12. 4. 9.1 Table showing the Calculation of SBI premier liquid fund NAVs
Excepted return Deviation sq 0.001 0.000 0.001 0.001 0.028
Year 2009-10 2010-11 2011-12
P1-P0/12 0.043 0.075 0.112
Deviation -0.033
01/Aug/11
01/Aug/09
01/Aug/10
Varriance
01/Dec/11
01/Feb/12
01/Apr/09
01/Apr/10
01/Apr/11
01/Oct/11
01/Oct/09
01/Oct/10
01/Jun/11
01/Jun/09
01/Jun/10
SD
0.077
-0.002 0.035
Analysis The above table showing the increased values in every month which is frequently increased in every year as 0.043, 0.075 and 0.112 for 2009-10, 2010-11 and 2011-12 with respectively.
Page 71
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) 4. 9.1 Graph showing the returns for the each year of SBI premier liquid fund NAVs
2011-12
0.112
2010-11
0.075
2009-10
0.043
0.02
0.04
0.06
0.08
0.1
0.12
Analysis The graph showing the trend values for the year 2009- 2012
4.9.2 Table showing the SBI Premier Liquid Fund Return Matrix as on April 13, 2012 Scheme Liquid Risk Profile Mean 0.12 S.D 0.04 Beta 0.57 Corln 0.02 1M 0.88 3M 2.44 6M 4.79 1Y 9.37 3Y 6.70 [%] 5Y 7.18
Return per unit of Risk Particular Treynor Per(%) 0.34 Rank 10th
Page 72
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) Sharpe 0.34 9th
Analysis An linked fund, the variance is significant in long run the 1 year return is highest at 9.37%, 5 and 3 year return is also in the range of 7.18% and 6.70% with respectively, were as for the short run 6 months is 4.79%. But the intervening returns are erratic suggesting that the investment is risky to an extent. This can be corroborated by the fact that the standard deviation for the asset at 0.04 is unduly low. Beta at 0.57 indicates that the investment is insulated against undue fluctuations in its return to market return, thereby indicating a lower market risk. The return per unit risk in terms of Treynors Measure and Sharpe Ratio makes it evident that taken together the return is not commensurate to the risk associated with the asset and ranked them in above table.
4.10 Table showing the SBI gold exchange traded scheme NAVs
Apr 2009- Mar 2012 29-Apr-09 29-May-09 30-Jun-09 31-Jul-09 31-Aug-09 30-Sep-09 30-Oct-09 30-Nov-09 31-Dec-09
NAV
13.37 15.09 14.77 14.87 15.29 15.79 16.07 17.79 16.81 29-Oct-10 30-Nov-10 31-Dec-10 31-Jan-11 28-Feb-11 31-Mar-11 29-Apr-11 31-May-11 30-Jun-11 19.32 20.51 20.45 19.83 20.58 20.63 21.9 22.28 21.7
Page 73
29-Jan-10 26-Feb-10 31-Mar-10 30-Apr-10 31-May-10 30-Jun-10 30-Jul-10 31-Aug-10 30-Sep-10 16.36 16.74 16.39 17.06 18.36 18.79 17.65 18.9 19.14 29-Jul-11 30-Aug-11 30-Sep-11 31-Oct-11 30-Nov-11 29-Dec-11 30-Jan-12 27-Feb-12 31-Mar 22.9 26.41 25.54 26.86 28.4 26.22 27.85 28.18 27.84
4.10 Graph showing the SBI gold exchange traded scheme NAVs
30 25 20 15 10 5 0 01/Feb/10 01/Feb/11 13.37 17.65 26.41 27.84
01/Aug/11
01/Dec/09
01/Dec/10
01/Aug/09
01/Aug/10
Analysis The above table and graph showing the NAVs per month and it has been increased from 13.37 to 17.65 for the period of 2009-10, from 2010 it has been again increased to 26.41 and 27.84 for the period 2012. 4.10.1 Table showing the calculation of SBI gold exchange traded scheme NAVs
Excepted return 0.300 Deviation sq 0.037 0.000 0.038 0.025 0.16
Year 2009-10 2010-11 2011-12
P1-P0/12 0.108 0.298 0.495
Deviation -0.192 -0.003 0.195
01/Dec/11
Variance
01/Feb/12
01/Apr/09
01/Apr/10
01/Apr/11
01/Oct/11
01/Oct/09
01/Oct/10
01/Jun/11
01/Jun/09
01/Jun/10
SD
Analysis
Page 74
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) The Above table showing the returns per annum for 2009-10, 2010-11 and 2011-12 is 0.108, 0.298 and 0.495 with respectively
4.10.1 Graph showing the returns for each year of SBI gold exchange traded scheme
0.495 0.5 0.4 0.3 0.2 0.1 0 2009-10 2010-11 2011-12 0.108 0.298
Analysis The graph showing the increased trend value in every year which is good
4.10.2 Table showing the SBI Gold ETS Fund Return Matrix as on April 13, 2012 Scheme ETS Risk Profile Mean S.D Beta Corln 1M 2.53 3M 3.42 6M 6.13 1Y NA 3Y NA [%] 5Y NA
Page 75
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) -3.38 3.21 0.40 0.94
Return per unit of Risk Particular Treynor Sharpe Per(%) -8.7 -1.08 Rank 1st 1st
Interest rate for the period of 2009 to 2012 in (%) Bank Rate Analysis An linked fund, the variance is significant in long run is not applicable, were as for short run the 6 month return is highest at 6.13% and 3 month return is also in the range of 3.42%. But the intervening returns are erratic suggesting that the investment is risky to an extent. This can be corroborated by the fact that the standard deviation for the asset at 3.21 is unduly high. Beta at 0.40 indicates that the investment is insulated against undue fluctuations in its return to market return, thereby indicating a lower market risk. The return per unit risk in terms of Treynors Measure and Sharpe Ratio makes it evident that taken together the return is not commensurate to the risk associated with the asset and ranked them in above table 6.23
4.11 Table showing the ratio analysis of SBI Particulars Dividend Per Share Operating Profit Per Share (Rs) Net Operating Mar 09 29 230.04 1179.45 Mar 10 30 229.63 1353.15 Mar 11 30 255.39 1504.34 Page 76
Investment Valuation Ratios
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) Profit Per Share (Rs) Interest Spread 4.34 3.82 10.54 13.91 1038.76 8.52 3.82 4.12 8.55 12.74 1023.40 8.39 4.1
Net Profit Margin 12.03 Profitability Adjusted Return 15.74 Ratios on Net Worth (%) Return on Assets Including 912.73 Revaluations Interest income / 8.88 Total Funds Net Interest income / Total 3.79 Management Funds Efficiency Non Interest Ratios income / Total 0.11 Funds Interest Expended 5.09 / Total Funds Current Ratio 0.04 Leverage Ratios Quick Ratio 5.74 Foot Note: www.moneycontrol.com/financials/sbi/ratios/SBI
0.1 4.69 0.04 9.07
0.09 4.29 0.04 8.5
Interpretation
The above table showing the ratio analysis for sbimf balance sheet for the invest valuation ratios on trend value its net operating profit per share is 1179.45,1353.15 and 1504.34. The profitability ratio like return on assets including revaluations is 912.73, 1038.76 and 1023.40. The leverage ratio is constant for ever year but quick ratio is having 5.74, 9.07 and 8.5 for the period of 2009, 2010 and 2011
Page 77
5.1 Summary of Findings

The main objective and the study entitled was to Trend analysis of the performance of specified mutual funds of SBI by considering the risk factor and finding the scheme which has performed well. From this research following are the main findings. The following are the main findings from the study:
The Magnum Multicap fund of NAVs which is having the expected return is 14.72 and standard deviation is 29.89 by considering the NAV calculation so it is best to invest in this scheme because having low risk with high returns.
The Magnum Equity Fund of NAVs which is having the expected return is 0.50 and standard deviation is 0.60 by considering the NAV calculation so it is very good to take returns for the customers who are investing in this scheme.
The SBI blue chip fund of NAVs which is having the expected return is 0.13 and standard deviation is 0.22 by considering the NAV calculation so it is risky but having the fair performance in every situation.
The Magnum childrens benefit plan NAVs which is having the expected return is 0.15 and standard deviation is about the 0.04 by considering this the investors are having advantages towards the scheme.
The Magnum income plus fund of NAVs which is having the expected return is 0.04 and standard deviation is 0.02 by considering this it is too risky but having the steady yields as per the calculation.
The Magnum income fund also as same as Magnum income plus fund. The Magnum instacash fund of NAVs which is having the expected return is 0.10 and standard deviation is 0.038 by considering this the investors are having the risky position and this can also invest but only for long run period.
Page 78
Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI) The Magnum liquid floater also same as above. The SBI premier liquid fund of NAVs which is having the expected return is 0.077 and standard deviation is 0.028 by considering this the investors are in very huge because it is good in long run period. The SBI gold exchange trade fund of NAVs which is having the expected return is 0.300 and standard deviation is 0.16 by considering this the investors have huge profits on their investment.
Page 79
5.2 CONCLUSION
In the past, Indian Mutual Fund Industry has grown by leap and bounds. It has registered a whopping growth of 44% in less than a year. There is a huge inflow of Funds from retail investors to the Mutual Funds Industry and the incremental investment has been directed towards equity growth schemes (major portion). It depends on individual risk. More the risk more will be the return. The performance of the Equity growth funds has been evaluated in terms of average returns. The result of the equity growth fund schemes indicated that all the schemes earned slightly higher returns in comparison with the market return. From the above analysis it can be concluded that global scheme funds are best suited for the investment as it out performed the bench mark. Diversified and sectors schemes performed well in the market compared with the risk and return. There is no much of volatility in the above said schemes compared to the market Beta. Diversified schemes funds are having high rewards to volatility ratio.
Page 80
5.3 SUGGESTIONS
It depends on investors ability to take risk and invest in funds: however researcher would like to make the following recommendations. The financial advisor should be more skilled before suggesting any investor to go into different schemes depending on their needs and wants.
Right measures could be adopted to minimise those risks which cannot be avoided.
It is advisable for the company to promote more equity (Growth) plans to investors to invest, because these plans could do well compared to other plans.
The company should understand the fluctuations of market and act accordingly to maintain a balance between the risk & return.
There should be change in the strategy when the circumstances need those changes.
As compared to Debt & Equity Schemes, Growth has an average returns and it can be maintained in the same flow with a slight beneficiary measures.
The risks can only be minimised, no risk can be completely avoided. Steps can be taken to only minimise the risk.
Page 81
5.4 POLICY IMPLICATIONS & SCOPE FOR FURTHER STUDY

This research is more concentrated on the funds which had a higher NAV and all were related to Growth Schemes. This study will give a chance to compare the future returns using the Net Asset Value on the future dates. The data drawn to this analysis was the present data which would give a broader picture of how the funds performed and how it will perform in the future. This will give the researcher the scope to further carry on the analysis in the future dates. If any analysis done on Debt or Equity Schemes of SBI Mutual Funds for the period I have taken, it would be easy for the researcher to understand the growth funds and the conclusion can be easily drawn based on the analysis already done. This research was based on limited funds. There is scope to add some more funds where the risk and the returns factor would change according to the market movement. Risk can be computed using various other tools and techniques. This analysis was done with only beta and its standard deviation. Using some other tools would give a different result which also leads to the scope of knowing how various tools vary. This research can be mostly used by Investment Researchers & Brokers who are dealing with mutual fund schemes. There are various researches done on the performance of mutual funds, but in frequent interval the data used will change according to the market returns and NAV. This report will be a base for those who continue their research from the year 2012 onwards. This will give continuity for the future study.
Page 82
REFERENCES
Books Gordon K Nataraj, Finanacial markets and Services, 3 rd edition, Himalaya publications. Pathak, The Indian financial system, 3rd edition, McGraw Publishers. Prasanna Chandra,investment analysis and portfolio management, 4th edition, Mc Graw Hill publishers Preeti Singh, Financial system and services, 3rd edition, McGraw Publishers S P Guptha Indian Statistics 4th edition, Himalaya publications. Journals Characteristics and performance evaluation of selected mutual Funds in india ( Sharad Panwar and Dr. R. Madhumathi) The Performance of Global And International Mutual Funds (Arnold L. Redman, N.S. Gullett and Herman Manakyan) Performance Evaluation of Select Indian Mutual Fund Schemes (O P Gupta and Amitabh Gupta) Newspapers and Magazines Economics times and Mint Websites NAVs of SBI viewed on 13/04/2012 in the website http://www.mutualfundsindia.com
Market returns viewed on 16/04/2012 in the website of http://www.moneycontrol.com/sbimf
State Bank of India Balance Sheet ratios viewed on 19/04/2010 in the in the website of http://www.moneycontrol.com/financials/sbi/ratios/SBI
Page 83

Chapter 1

Încărcat de

Informații document

Descriere originală:

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Chapter 1

Încărcat de

Drepturi de autor:

Formate disponibile

Trend Analysis of the Performance of Specified Mutual Funds of State Bank of India (SBI)

1.1 Trend Analysis

Methods of Trend Analysis Time-series graphs Mapping trend results

1.2 Mutual Fund (MF)

Presidency Business School

Presidency Business School

1. 3 Characteristics of a Mutual Fund

1.4 HISTORY OF MUTUAL FUND INDUSTRY

2nd Phase 1987-1993 (Entry of Public Sector Funds)

3rd Phase 1993-2003 (Entry of Private Sector Funds)

4th Phase since February 2003

Presidency Business School

1.5 MUTUAL FUND STRUCTURE

Presidency Business School

Presidency Business School

1.6 Types of Mutual Fund Schemes

Tax Saving Schemes

Presidency Business School

Presidency Business School

Presidency Business School

Presidency Business School

1.6.3 Other Schemes:

Presidency Business School

1.7 Mutual funds: 1.7.1 Advantages

Presidency Business School

Presidency Business School

Presidency Business School

1.8 Current Scenario of Mutual Fund Industry

1.9 Future Scenario

Presidency Business School

2.2 Review of Literature

Presidency Business School

Presidency Business School

Presidency Business School

Presidency Business School

Presidency Business School

Presidency Business School

Presidency Business School

Presidency Business School

Supported by Treynor measure. Sharps measure. Jensens measure.

Presidency Business School

Presidency Business School

Presidency Business School

3.1 Corporate Profile

Presidency Business School

Presidency Business School

Presidency Business School

Presidency Business School

NipaLadiwala Head PMS (Institutional)

AmruthRao Senior Fund Manager PMS (Debt) TRUSTEES

Presidency Business School

Presidency Business School

3.2 MD's Desk

Presidency Business School

3.3 CIO's Desk

Economic indicators in India displayed continuation of moderation in the growth momentum:

Presidency Business School

Presidency Business School

Presidency Business School

Presidency Business School

Presidency Business School

Analysis and Interpretation

Presidency Business School