Final Report 3

1.
1 INTRODUCTION
A Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them (pro rata). Thus a Mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual funds. Each Mutual fund scheme has a defined investment objective and strategy. Mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. Price changes in these assets are driven by global events occurring in faraway places. Typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc. Draft offer document is to be prepared at the time of launching the fund. Typically, it pre specifies the investment objectives of the fund, the risk associated, the costs involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. In India, as in most countries, these sponsors need approval from a regulator, SEBI (Securities exchange Board of India) in our case. SEBI looks at track records of the sponsor and its financial strength in granting approval to the fund for commencing operations. A sponsor then hires an asset management company to invest the funds according to the investment objective. It also hires another entity to be the custodian of the assets of the fund and perhaps a third one to handle registry work for the unit holders (subscribers) of the fund.
In the Indian context, the sponsors promote the Asset Management Company also, in which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset Management Company (AMC). For example 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. Thus a Mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of Mutual funds.
The mutual fund industry started in India in a small way with the UTI Act creating what was effectively a small savings division within the RBI. Over a period of 25 years this grew fairly successfully and gave investors a good return, and therefore in 1989, as the next logical step, public sector banks and financial institutions were allowed to float mutual funds and their success emboldened the government to allow the private sector to foray into this area.
The biggest problems with mutual funds are their costs and fees it include Purchase fee, Redemption fee, Exchange fee, Management fee, Account fee & Transaction Costs. There are some loads which add to the cost of mutual fund. Load is a type of commission depending on the type of funds. Mutual funds are easy to buy and sell. You can either buy them directly from the fund company or through a third party. Before investing in any funds one should consider some factor like objective, risk, Fund Managers and scheme track record, Cost factor etc. A code of conduct and registration structure for mutual fund intermediaries, which were subsequently mandated by SEBI. In addition, this year AMFI was involved in a number of developments and enhancements to the regulatory framework. The most important trend in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by nationalized banks and smaller private sector players. HDFC Mutual fund, Reliance Mutual fund, ICICI Prudential Mutual fund, Birla Sun Life Mutual fund and UTI Mutual fund are the top five mutual fund company in India based on AMC ranking.
ABOUT MUTUAL FUNDS: A mutual fund is a professionally-managed form of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. In a mutual fund, the fund manager, who is also known as the portfolio manager, trades the funds underlying securities, realizing capital gains or losses, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the Net Asset Value (NAV), is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding. According to FRANK REILLY defines mutual funds as financial intermediaries which bring a wide variety of securities within the reach of the most modest of investors.
1.2 HISTORY OF MUTUAL FUND: Phases of the Indian Mutual Fund industry First Phase 1964-87 (Established Unit Trust of India (UTI)). Second Phase 1987-1993 (Entry of Public Sector Funds). Third Phase 1993-2003 (Entry of Private Sector Funds). Fourth Phase since February 2003 (Growth Phase). During the various phases the Assets Under Management (AUM) has been increased from Rs. 67 billion in 1963 to 6899 billion Rupees as in July 2009.
Mutual Funds in India (1964-2000) The end of millennium marks 36 years of existence of mutual funds in this country. The ride through these 36 years is not been smooth. Investor opinion is still divided. While some are for mutual funds others are against it. UTI commenced its operations from July 1964 .The impetus for establishing a formal institution came from the desire to increase the propensity of the middle and lower groups to save and to invest. UTI came into existence during a period marked by great political and economic uncertainty in India. With war on the borders and economic turmoil that depressed the financial market, entrepreneurs were hesitant to enter capital market. UTI commenced its operations from July 1964 "with a view to encouraging savings and investment and participation in the income, profits and gains accruing to the Corporation from the acquisition, holding, management and disposal of securities." Different provisions of the UTI Act laid down the structure of management, scope of business, powers and functions of the Trust as well as accounting, disclosures and regulatory requirements for the Trust. The opening up of the asset management business to private sector in 1993 saw international players like Morgan Stanley, Jardine Fleming, JP Morgan, George Soros and Capital International along with the host of domestic players join the party. But for the equity funds, the period of 1994-96 was one of the worst in the history of Indian Mutual Funds.
1999-2000 Year of the funds Mutual funds have been around for a long period of time to be precise for 36 yrs but the year 1999 saw immense future potential and developments in this sector. This year signaled the
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year of resurgence of mutual funds and the regaining of investor confidence in these MFs. This time around all the participants are involved in the revival of the funds the AMCs, the unit holders, the other related parties. However the sole factor that gave life to the revival of the funds was the Union Budget. The budget brought about a large number of changes in one stroke. An insight of the Union Budget on mutual funds taxation benefits is provided later. It provided centre stage to the mutual funds, made them more attractive and provides acceptability among the investors. The Union Budget exempted mutual fund dividend given out by equity-oriented schemes from tax, both at the hands of the investor as well as the mutual fund. No longer were the mutual funds interested in selling the concept of mutual funds they wanted to talk business which would mean to increase asset base, and to get asset base and investor base they had to be fully armed with a whole lot of schemes for every investor .So new schemes for new IPOs were inevitable. The quest to attract investors extended beyond just new schemes. The funds started to regulate themselves and were all out on winning the trust and confidence of the investors under the aegis of the Association of Mutual Funds of India (AMFI). One can say that the industry is moving from infancy to adolescence, the industry is maturing and the investors and funds are frankly and openly discussing difficulties opportunities and compulsions.
Future Scenario: The asset base will continue to grow at an annual rate of about 30 to 35 % over the next few years as investors shift their assets from banks and other traditional avenues. Some of the older public and private sector players will either close shop or be taken over.Out of ten public sector players five will sell out, close down or merge with stronger players in three to four years. In the private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come. But this does not mean there is no room for other players. The market will witness a flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the time to come. Some big names like Fidelity, Principal, old Mutual etc. are looking at Indian market seriously. One important reason for it is that most major players already have presence here and hence these big names would hardly like to get left behind.The
mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV). SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have called on the Regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade in Derivatives.
ORGANIZATION OF A MUTUAL FUND:
ORGANISATION OFA MUTUAL FUND: A mutual fund is set up in the form of trust, which has sponsor, trustees, Asset Management Company (AMC), and custodian. The trust is established by sponsor or more than one sponsor who is like a promoter of company. The trustee of mutual fund holds its property for the benefit of unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who registered with SEBI, holds the securities of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI regulations by mutual fund. SEBI regulations required that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with sponsors. Also, 50%
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of the directors of the AMC must be independent. All mutual funds are required to be registered with SEBI before they launch their schemes.
1.3 MAJOR MUTUAL FUND COMPANIES IN INDIA
HDFC MUTUAL FUND HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely Housing Development Finance Corporation Limited and Standard Life Investments Limited.
RELIANCE MUTUAL FUND Reliance Mutual Fund was established as trust under Indian Trusts Act, 1882.The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various schemes under which, units are issued to the public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.
ICICI PRUDENTIAL MUTUAL FUND The mutual fund of ICICI is a joint venture with Prudential Plc. Of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13 October, 1993 with two sponsors, Prudential Plc. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22 June, 1993.
BIRLA SUN LIFE MUTUAL FUND Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun life Mutual Fund follows a conservative long-term approach to investment.
UNIT TRUST OF INDIA MUTUAL FUND UTI Asset Management Company Private Limited, established in Jan 24, 2003 manages the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. The sponsors of UTI Mutual Fund are Bank of Baroda, Punjab National Bank, State Bank of India, and Life Insurance Corporation of India. The schemes of UTI Mutual Fund are Liquid Funds, assets Management Funds, Index Funds and Balanced funds.
ABN AMRO MUTUAL FUND ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.
ING VYSYA MUTUAL FUND ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was on corporated on April 6, 1998.
SAHARA MUTUAL FUND Sahara Mutual Fund was setup on July 18, 1996 with Sahara India financial Corporation Ltd. as the sponsor. Sahara Assets Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund.
STATE BANK OF INDIA MUTUAL FUND State Bank of India Mutual Fund is the first Bank sponsored Mutual fund to launch offshore fund, the India Magnum Fund with a corpus of Rs.225 crore approximately. Today it is the largest Bank sponsored Mutual Fund in India. They already launched 35 schemes out of which 15 have already yield handsome returns to investors. State Bank of India Mutual Fund has more than Rs.5, 500 crores as AUM. Now it has an investor base of over 8 lakhs spread over 18 schemes.
TATA MUTUAL FUND TATA Mutual Fund is a Trust under the Indian Trust Act, 1882. The sponsors for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. the investment manager is Tata management Limited is one of the fastest in the country with more than Rs.7,703 crore(as on 2005) of AUM.
KOTAK MAHINDRA ASSET MANAGEMENT COMPANY Kotak Mahindra Asset Management Company is a subsidiary of KMBL. KMAMC stared its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk return profiles. It was the first company to launch to dedicated gilt scheme investing only in government securities.
STANDARD CHARTERED MUTUAL FUND Standard Chartered Mutual Fund was setup on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd is the AMC which was incorporated with SEBI on December 20, 1999.
BENCHMARK MUTUAL FUND Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsor and Benchmark Trustee Company Pvt. Ltd. as the trustee Company. It was incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Assets Management Company Pvt. Ltd. is the AMC.
CAN BANK MUTUAL FUND Can Bank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canara bank investment Management Service Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai.
CHOLA MUTUAL FUND Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.
LIC MUTUAL FUND Life Insurance Corporation on India setup LIC Mutual Fund on 19th June 1989. It contributed Rs.2 crore towards the corpus of the Fund. LIC Mutual Fund was constituted as a trust in accordance with the provisions of the Indian trust Act, 1882. The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd. as the Investment Managers for mutual fund.
GIC MUTUAL FUND GIC Mutual Fund, sponsored by General Insurance Corporation of India, a government of India undertaking and the four Public Sector General Insurance Companies, viz. National Insurance Co. Ltd, the New India Assurance Co. Ltd. the Oriental Insurance Co. Ltd and United India Insurance Co. Ltd and is constituted as a Trust in Accordance with the provisions of the Indian Trusts Act, 1882
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1.4 Types of Mutual Funds
Mutual fund schemes may be classified on the basis of Its structure Its investment objective.
1.4.1 BY STRUCTURE: Open-ended Funds: An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. Closed-ended Funds: A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the
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investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.
Interval Funds: Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.
1.4.2BY INVESTEMENT OBJECTIVE: Growth Funds: The aim of growth funds is to provide capital appreciation over the medium to longterm. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. Income Funds: The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income. Balanced Funds: The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth. Money Market Funds: The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and interbank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are
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ideal for Corporate and individual investors as a means to park their surplus funds for short periods.
Load Funds: A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history. No-Load Funds: A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work.
Other Schemes: Tax Saving Schemes: These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30, 2000. Special Schemes: Industry Specific Schemes: Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG, and Pharmaceuticals etc. Index Schemes: Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. Sectoral Schemes: Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings.
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1.5 BENEFITS AND LIMITATIONS OF MUTUAL FUND INVESTMENT
1.5.1 BENEFITS OF MUTUAL FUND INVESTMENT
Professional Management: Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme.
Diversification: Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.
Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient.
Return Potential: Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.
Low Costs: Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.
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Liquidity: In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund.
Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook.
Flexibility: Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.
Affordability: Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy.
Choice of Schemes: Mutual Funds offer a family of schemes to suit your varying needs over a life time.
Well Regulated: All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.
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1.5.2 LIMITATION OF MUTUAL FUND INVESTMENT
No Control over Cost: An Investor in mutual fund has no control over the overall costs of investing. He pays an investment management fee (which is a percentage of his investments) as long as he remains invested in fund, whether the fund value is rising or declining. He also has to pay fund distribution costs, which he would not incur in direct investing. However this only means that there is a cost to obtain the benefits of mutual fund services. This cost is often less than the cost of direct investing.
No Tailor-Made Portfolios: Investing through mutual funds means delegation of the decision of portfolio composition to the fund managers. The very high net worth individuals or large corporate investors may find this to be a constraint in achieving their objectives. However, most mutual funds help investors overcome this constraint by offering large no. of schemes within the same fund.
Managing a Portfolio of Funds: Availability of large no. of funds can actually mean too much choice for the investors. He may again need advice on how to select a fund to achieve his objectives. AMFI has taken initiative in this regard by starting a training and certification program for prospective Mutual Fund Advisors. SEBI has made this certification compulsory for every mutual fund advisor interested in selling mutual fund.
Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.
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Cost of Churn: The portfolio of fund does not remain constant. The extent to which the portfolio changes is a function of the style of the individual fund manager i.e. whether he is a buy and hold type of manager or one who aggressively churns the fund. It is also dependent on the volatility of the fund size i.e. whether the fund constantly receives fresh subscriptions and redemptions.
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1.6 RECENT TRENDS IN MUTUAL FUND INDUSTRY
The most important trend in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by nationalized banks and smaller private sector players. Many nationalized banks got into the mutual fund business in the early nineties and got off to a good start due to the stock market boom prevailing then. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity. Few hired specialized staff and generally chose to transfer staff from the parent organizations. The performance of most of the schemes floated by these funds was not good. Some schemes had offered guaranteed returns and their parent organizations had to bail out these AMCs by paying large amounts of money as the difference between the guaranteed and actual returns. The service levels were also very bad. Most of these AMCs have not been able to retain staff, float new schemes etc. and it is doubtful whether, barring a few exceptions, they have serious plans of continuing the activity in a major way. The experience of some of the AMCs floated by private sector Indian companies was also very similar. They quickly realized that the AMC business is a business, which makes money in the long term and requires deep-pocketed support in the intermediate years. Some have sold out to foreign owned companies, some have merged with others and there is general restructuring going on. The foreign owned companies have deep pockets and have come in here with the expectation of a long haul. They can be credited with introducing many new practices such as new product innovation, sharp improvement in service standards and disclosure, usage of technology, broker education and support etc. In fact, they have forced the industry to upgrade itself and service levels of organizations like UTI have improved dramatically in the last few years in response to the competition provided by these.
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WHY SHOULD INVESTORS INVEST IN MUTUAL FUND? An investor avails of the service of experienced and skilled professionals who are backed by a dedicated of companies and selects suitable investments to achieve the objectives of the schemes. Mutual funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all the stocks decline at the same time and in the same proportion. The investors achieve this diversification through a mutual fund with far less money than you can do on our own. Investing in a mutual fund reduces paperwork and helps an investor avoid many problems
such as bad deliveries, delayed payments and unnecessary follow.
ADVANTAGES OF INVESTING IN DEBT MUTUAL FUND SCHEMES: The debt route: In an environment where investors seek to achieve an asset allocation between debt and equity, that suits their requirements, investing in debt mutual fund schemes as a part of their debt allocation would offer investors many advantages. For starters, debt funds offer a superior riskadjusted proposition along with tax benefits. While fixed deposits might appeal to conservative investors, in a growing economy like India, inflation is a fact of life, which eats into the returns earned on investments. From an inflationadjusted perspective, fixed income mutual funds compare very favourably to fixed deposits. "The fact is that debt funds are viable alternatives to other debt oriented products is not widely understood by the investing populace. Most investors still concentrate on the 'mutual fund' part of the asset and miss the significance of the underlying fixed income nature of the product. While the tax advantages are just one part, the sheer variety of products available for every risk, return and liquidity requirement is in itself a significant advantage," says Rajiv Shastri, head, business development and strategic initiatives, Lotus India AMC. Added advantage: In the investment world, it is not an either/or scenario between debt and equity. Basic principle of sound investing postulates a diversified portfolio. Though debt funds often may just be the
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difference between being able to retain the profits and loosing it all in the next round of volatility. The main advantage of debt funds is relatively lower risk and steady income additional to liquidity of investments, professional fund management expertise at low costs besides diversification of portfolio to have a balanced risk return profile. "FDs generally have a lock-in-period wherein in a pre-mature withdrawal by an investor would mean a monetary penalty that would be charged to the investor. Moreover, debt funds could generate better yields during economic growth, dependent on the kind of scheme chosen by the investor. A fund invests in range of securities leading to diversification of risk, an important parameter for an investor. Also, certain funds offer regular income schemes where the interest payment is given to investor for his investment at regular intervals. A facility not available with FDs," says Puneet Srivastav, fund manger debt, Sahara Mutual Funds. Debt funds also tend to perform better in periods of economic slowdown. Analysts believe that debt should be looked upon as an effective hedge against equity market volatility, which lends stability in terms of value and income to a portfolio. Some hybrid debt schemes take exposure in equities allowing investors participate in the stock markets as well. The options Debt funds have a fairly wide range of schemes offering something for all types of investors. Liquid fund, Liquid plus funds, Short term income funds, GILT funds, income funds and hybrid funds are some of the more popular categories
EMERGING ISSUES IN MUTUAL FUND Rating of Mutual Fund Schemes: Total returns have been the criteria for measuring the performance of mutual fund. Therefore, CRISIL has development a composite performance ranking which measures performance for each of the open-ended schemes. According to CRISIL, this measure is applicable only to those schemes, which are at least two years old and disclose 100% of their portfolios.
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Changes in Mutual Fund due to the Advent of Net: As per SEBI regulations, bond funds and equity funds can charge a maximum of 2.25%
and 2.5% as administrative fees, respectively. Mutual Funds could bring down their administrative costs to 0.75%, if trading is done online and consequently improves the return potential of their schemes. Mutual Funds could provide better advice or service to their investors through the Net.
New Norms on NPA Classification: The Malegan committee has made important recommendations regarding norms on
classification of NPAs in debt securities and norms for valuation of liquid securities in a mutual fund schemes. The committee has recommended that debt securities held by mutual fund in their portfolio can be classified as NPA, if the principal or interest is not received for six months. The mutual funds will have to disclose the NPAs to unit holders in a half-yearly basis.
INFLUENCE OF TECHNOLOGY: A majority of the mutual fund have their own websites providing basic information
relating to the schemes. Mutual Fund has begun to use electronic fund transfer method top remit their dividends and redemption proceeds. However, the most significant influence of technology is seen in servicing investors. So technology can bridge the gap between investor education and products positioning.
PRODUCT INNOVATION: Product innovation is an emerging feature in the mutual fund industry in India. Most of the
products offered by mutual fund can be divided among three classes of cash funds, income funds and equity funds. The year 2002 was different in that the products offered were far more innovative. Templeton India launched a debt fund that would invest predominantly in floating rate bonds.
INDICES FOR MUTUAL FUNDS: The AMFI has recently launched four indices for gilt funds and another set of indices for
balanced funds, bond funds, monthly income plans and liquid funds. The indices, which have
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been developed and will be maintained by ICICI securities and finance companied and CRISIL.com, respectively, will be mandated for use by mutual funds to enable the comparison of performance.
FUNDS OF FUNDS: The SEBI may soon permit mutual funds to float a new category of funds called funds of
funds, which will invest in other mutual fund schemes. These schemes will enable people to invest in different mutual funds schemes through a single fund.
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1.7 COMPANY PROFILE
Birla Sun Life Asset Management Company Limited, the investment manager of Birla Sun life Mutual Fund, is a joint venture between the Aditya Birla Group and Sun Life Financial Services, leading international financial services organization. The joint venture brings together the Aditya Birla Group's experience in the Indian market and Sun Life's global experience Birla Sun Life Mutual fund has established in 1994, emerged as one of India's leading flagships of Mutual Funds business managing assets of a large investor base. Their solutions offer a range of investment options, including diversified and sector specific equity schemes, fund of fund schemes, hybrid and monthly income funds, a wide range of debt and treasury products and offshore funds.
Birla Sun Life Asset Management Company has one of the largest team of research analysts in the industry, dedicated to tracking down the best companies to invest in. BSLAMC strives to provide transparent, ethical and research-based investments and wealth management services.
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The Aditya Birla Group: The Aditya Birla Group is one of India's largest business houses. Global in vision, rooted in Indian values, the Group is driven by a performance ethic pegged on value creation for its multiple stakeholders. The Group operates in 26 countries India, UK, Germany, Hungary, Brazil, Italy, France, Luxembourg, Switzerland, Australia, USA, Canada, Egypt, China, Thailand, Laos, Indonesia, Philippines, UAE, Singapore, Myanmar, Bangladesh, Vietnam, Malaysia, Bahrain and Korea. A US $29 billion corporation in the League of Fortune 500, the Aditya Birla Group is anchored by an extraordinary work force of 130,000 employees, belonging to 40 different nationalities. Over 60 per cent of its revenues flow from its operations across the world.
The Aditya Birla Group is a dominant player in all its areas of operations viz; Aluminium, Copper, Cement, Viscose Staple Fibre, Carbon Black, Viscose Filament Yarn, Fertilisers, Insulators, Sponge Iron, Chemicals, Branded Apparels, Insurance, Mutual Funds, Software and Telecom. The Group has strategic joint ventures with global majors such as Sun Life (Canada), AT&T (USA), the Tata Group and NGK Insulators (Japan), and has ventured into the BPO sector with the acquisition of TransWorks, a leading ITES/BPO company.
Sun Life Financial Sun Life Financial Inc is a leading international financial services organization providing a diverse range of wealth accumulation and protection products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial Inc and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Track record With a proven track record of 17 years, birla sun life mutual fund has been a catalyst towards the growth of the private sector asset management business.
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II REVIEW OF LITERATURE
Reddy B.S Srinivasalu (Aug.2011) Mutual Fund houses turn to debt schemes as interest rates rise In this article author conveys that redemption pressures are mounting on equity mutual fund (MF) schemes in the wake of rising volatility in the equity market, though they have not reached alarming proportions yet. Besides, many fund houses are witnessing shift of money from equity schemes to debt schemes in line with the rising interest rate scenario. Aman & Tiwari Dheeraj,( Nov 25, 2007) Investing in debt mutual fund schemes offer many advantages Author suggest that With the economy surging ahead at a consistent pace and the stock markets reveling in the India growth story, it appears that anything you put your hands on is turning into gold. However, analysts advise that as an investor it is pertinent to have a mix of investment instruments in your portfolio so as to avoid any risk. What investor missed despite being a risk-averse investor were other alternatives such as debt funds, which could have worked for him both ways securing returns whilst at the same time getting the tax advantage. Agrawal Deepak and Patidar Deepak A comparative study of debt based mutual fund of RELIANCE and HDFC This article provides an overview of mutual fund activity in emerging markets. It describes about their size and their asset allocation. All fund managers are not successful in the formation of the portfolio and so the study also focuses on the empirically testing on the basis of fund manager performance and analyzing data at the fund-manager and fund-investor levels. The study reveled that the performance is affected by the saving and investment habits of the people and at the second side the confidence and loyalty of the fund Manager and rewards- affects the performance of the MF industry in India. Bodla and Sunita(2007) Emerging Trends of Mutual Funds in India: A Study Across Category and Type of schemes In this research paper author examined the growth of Indian mutual fund industry in terms of increase in number of schemes and funds mobilized. The analysis has been carried across nature, type and sector of the schemes. The result shows that the
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total schemes have grown to above 1200 and the total purchases during 2006 crossed Rs. 3.5 lakh crores. The private sector funds and joint ventures have outperformed the public sector funds. Tetsuya Kamiyama(2007) Indias Mutual Fund Industry In this study author provided an overview of the assets managed within Indias mutual fund market, both now and in the past, and of the legal framework for mutual funds, and then discussed the current situation and recent trends in financial products, distribution channels and asset management companies. Rakesh Mohan Recent Trends in the Indian Debt Market and Current Initiatives In this study author suggest that the first such significant change is the prohibition of RBIs subscription to Government securities in the primary market effective April 1, 2006, as mandated by the Fiscal Responsibility and Budget Management (FRBM) Act. Second, as a consequence of the recommendations of the Twelfth Finance Commission, the role of the Central Government as a financial intermediary for State Governments is effectively ending, although there will be some transitional arrangements. Thus State Governments' borrowing will be more and more market determined. Third, the economy is estimated to be growing at 8.1 per cent this year with modest inflation and if similar conditions prevail, we can expect growth and inflation next year to also be on a similar path. This development has reemphasized the fact that bond financing has to supplement traditional bank financing to take care of the growing credit needs of the economy and that resource allocation has to be more efficient. Jensen (1967) derived a risk-adjusted measure of portfolio performance (Jensens alpha) that estimates how much a managers forecasting ability contributes to funds returns. Sharpe, William (1994) suggested the Sharp- Ratio technique for the measurement for the performance measurement of the MF. Berkowitz et.al,(1997), supports the argument& states that, past fund performance influences individual investment decisions along with implying strong incentives for managers increase the performance of Mutual funds.
Mishra, Rehman (2000) measured MF performance using lower partial moment Risk from the lower partial moment is measured by taking into account only those states in which
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return is below a pre-specified target rate like risk-free rate. Brealey and Mayers (2002) supported Quality of Earnings as a key performance measure. Earnings can be manipulated by adopting different accounting policies. Further supported by Grahm et al. (2002), analyst rely on the primarily data, reported cash flows and the use of the accounting conservations in evaluating companies. Ramasamy et al, (2003), agreed that three elements consistent past performance, size of funds & cost of transaction effects the performance.
Roy & Deb (2003) used conditional performance evaluation on a sample of 89 Indian MF schemes measuring with both unconditional and conditional form of CAPM model. 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. Rao, Ravindran (2003) evaluated performance in a bear market through Relative Performance Management index & risk return analysis.
Panwar et.al (2005) uses Residual Variance (RV) as the measure of MF portfolio diversification. RV has a direct impact on shape fund performance measure. Kacperczyk et.al (2005) demonstrated that unabsorbed information creates values for some funds. Return gap helps to predict future fund performance & investors should use additional measures to evaluate the performance.
Agrawal (2006) analyze the Indian Mutual Fund Industry pricing mechanism with empirical studies on its valuation. The study revealed that the performance is affected saving and investment habits of the people.
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2.1 FINANCIAL MEASURES The financial measures being used for analysis are: Mean Returns Standard Deviation (Risk) Beta (Risk) Sharpe Ratio Treynor Ratio Jensen ratio
Financial Measures Return Returns are basically the percent change of the market value of scrip over time. Return on a typical investment consists of two components. The basic component is the periodic cash receipts (or income) on the investment, either in the form of interest or dividends. The second component is the change in the price of the asset commonly called the capital gain or loss. This element of return is the difference between the purchase price and the price at which the asset can be or is sold; therefore, it can be a gain or a loss. The return has been calculated as under: Return: R = (Pt Pt-1)/Pt-1 Where, R is the difference between prices for two consecutive days divided by the price of the preceding day Market Return: Rmt = (M.Indt-M.Indt-1)/M.Indt-1 Where, Rmt is the difference between markets indices of two consecutive days divided by market index for the preceding day.
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Risk on securities Risk on securities has two parts. Total risk = systematic risk + unsystematic risk. Unsystematic risk: Investors can eliminate unsystematic risk when they invest their wealth in a well diversified market portfolio. Systematic risk: Arises on account of the economy-wide uncertainties and the tendency of individual securities to more together with change in the market. It is also known as market risk. Capital asset pricing model (CAPM) is used to find systematic risk of securities.
CAPM (Capital Asset Pricing Model): The model explaining the risk return relationship is called the CAPM. It provides that in a well functioning capital market, the risk premium varies in direct proportion to risk. CAPM provides a measure of risk and a method of estimating the markets risk-return line. reflects the systematic risk, which cannot be reduced.
Standard Deviation: Measure of Total Risk: It is used to measure the variation in individual returns from the average expected return over a certain period. Standard deviation is used in the concept of risk of scrip. Higher standard deviation means a greater fluctuation in expected return. The standard deviation for the monthly returns are calculated and annualized by multiplying with square root of twelve. = (X-Xbar)^2/N Where, x is the returns, xbar is the average of x, and N is the total number of the observation or sample size. The standard deviation essentially reports scrips volatility, which indicates the tendency of the returns to rise or fall drastically in a short period of time. A security that is volatile is also considered higher risk because its performance may change quickly in
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either direction at any moment. The standard deviation of scrip measures this risk by measuring the degree to which the scrip fluctuates in relation to its mean return, the average return of scrip over a period of time. Beta: Measure of Systematic Risk The market or systematic risk of a security is measured in terms of its sensitivity to the market movements. This sensitivity is referred to the securitys . Beta is a ratio of the covariance of returns of a security j and the market portfolio m to the variance of return of the market portfolio. j =[(X-Xbar)(Y-Ybar)/(n-1)]/ (X-Xbar)^2/N where j- of security, x is the returns xbar is the average of x N is the total number of the observation or sample size. Y is the benchmark returns of the scheme The expected return on the share of a company depends on its beta. If value is high the expected return will also be high. The estimate of beta would depend on the period of analysis (say 1yr, 3yr or 5 yrs) and the frequency of returns (Eg. daily, weekly or monthly) the analysis should be careful in using reasonable period and time interval. Importance of : The diversifiable risk is of no importance as it has been eliminated. What is important to such an investor is the non-diversifiable risk arising from market wide movements of security prices. This is the most important conclusion of MPT. The real risk ness of the security is its non-diversifiable risk.
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A Beta tells not just how volatile a stock has been, but how volatile it has been relative to the market. An extremely useful characteristic of Beta statistics is that they are so stable through time that is relatively unimportant whether they are calculated from daily, weekly, or monthly data, or whether the historical base in the calculation is one, two, or even five years in length. The modern portfolio theory asserts that the risk premium of any security is directly proportionate to the risk as measured by the beta. Risk premium of a security = beta * risk premium of market. Where, Risk premium of a security is the excess of the expected security return over the risk-free rate of return, and Risk premium of a market is the excess if the expected market returns over the risk-free rate of return. It can also be expressed as: Expected return on security = Risk-free return + beta * risk premium of market. The above relationship, which is basically a simple linear relationship between risk and return, is known as the CAPITAL ASSET PRICING MODEL. It is obvious that higher the value of beta, higher would be the risk of the security and therefore larger would be the return expected by the investors. What the value of signifies? A beta of 1.0 indicates average level of risk. A security with a beta value greater than 1 is referred to as an aggressive security. That is, the securities return fluctuates more than that of the market portfolio. A security with a beta value less than 1 is referred to as a defensive security A beta that is actually less than zero a negative Beta is typical of issues that move contrary to the general market, going down in bull markets and rising in bear markets.
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A Beta of .5 implies that the security return moves only half as much as the market does ad a zero means no risk. Betas have been widely studied and numerous historical analyses have proven that portfolios of stocks with high Betas will continue to exhibit the characteristic of high volatility in the future.
Sharpe Ratio The Sharpe ratio is a risk-adjusted measure of return that is often used to evaluate the performance of scrip. The ratio helps to make the performance of one scrip comparable to that of another scrip by making an adjustment for risk. The risk free rate of return is deducted from the average rate of return to find the risk premium. The risk associated with the fund is calculated by finding the standard deviation of the fund. The risk premium divided by this standard deviation will give Sharpes ratio. Sharpe Ratio = (Rp Rf) / p Rp Return of the Scrip Rf Risk free rate of return p is standard deviation of the Scrip The Sharpe ratio is used to measure reward to variability, in terms of total risk taken by the investor. The higher standard deviation in the scrip indicates the portfolio is not perfectly diversified. Standard values for the Sharpe ratio would be between 0.5 and 3. A ratio of 1 or better is considered good, 2 and better is very good, and 3 and better is considered excellent. Sharpe ratios shown above would be compared along with their appropriate indices Sharpe ratio.
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Treynor Ratio: Treynor ratio is a risk-adjusted measure of return based on systematic risk. It is similar to the Sharpe ratio with the difference being that it used beta as the measurement of volatility. The Treynor ratio is calculated as follows: Treynor Ratio = (Rp Rf)/ p Where, Rp return of the Scrip Rf Risk free Rate p Systematic Risk of the Scrip Treynor Ratio evaluates the performance with respect to the systematic risk. Just like the rule for interpreting the Sharpe ratio, the higher the number the better. Like the Sharpe ratio, the Treynor Ratio (sometimes called reward-to-variability-ratio) also relates excess return to risk; but systematic risk instead of total risk is used. The higher the ratio better is the performance under analysis. A ranking of portfolios based on the Treynor Ratio is only useful if the portfolios under consideration are sub-portfolios of a broader, fully diversified portfolio. If this is not the case, portfolios with identical systematic risk, but different total risk, will be rated the same. But the portfolio with a higher total risk is less diversified and therefore has a higher unsystematic risk which is not priced in the market.
Jensen Ratio: The treynor and sharpe indexes provide measures for ranking the relative performances of various port folios, on a risk- adjusted basis. Jensen attempts to construct a measure of absolute performance on a risk-adjusted basis,(i.e.) a definite standard against which performance of various funds can be measured. This standard is based on measuring the port folio managers predictive ability (i.e.) his ability to earn returns through successful prediction of security prices which are higher than those which we could expect given the level of riskiness of his portfolio
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Jensen = rf+(rm-rf) Where, Rf Risk free Rate. p Systematic Risk of the Scrip. Rm average return on market portfolio. Here a positive value represents average superior extra return accuring to that particular portfolio. Zero indicates neutral performance, and a negative value indicates inferior performance.
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2.2 Definition of 'Debt Fund' An investment pool, such as a mutual fund or exchange-traded fund, in which core holdings are fixed income investments. A debt fund may invest in short-term or long-term bonds, securitized products, money market instruments or floating rate debt. The fee ratios on debt funds are lower, on average, than equity funds because the overall management costs are lower.
2.3 DIFFERENT TYPES OF DEBT FUNDS: A debt mutual fund scheme invests in debt papers like government bonds, fixed deposits, approved private deposits and so on. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. The different types of debt funds are:
1. GILT FUNDS: They invest their corpus in securities issued by the government. These funds carry zero default risk but are associated with interest rate risk. So, there could be a possibility that the debt funds lose some part of their net asset vale (NAV) also. But these schemes are safer as they invest in papers backed by government.
2. INCOME FUNDS This fund category invests majorly in debt instruments with the aim of generating regular and steady income for the investors. They invest a major portion in various debt instruments such as bonds, corporate debentures and government securities.
3. MONTHLY INCOME PLANS (MIP) They invest most of their corpus in debt instruments and minimum in equities. They get the benefits of both equity and debt market. These schemes ranks slightly high on the risk-return matrix. These try to give you a monthly income in the form of dividends, which is of course not
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guaranteed. These funds are for investors, who have a big corpus initially, and would like to generate a monthly income for themselves with low to moderate risk.
4. SHORT TERM PLANS (STPS) These funds are for those with an investment horizon of three to six months. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in corporate.
5. LIQUID FUNDS Also known as money market schemes. These provide easy liquidity and preservation of capital. These schemes invest in short-term instruments like Treasury Bills, inter-bank call money market, Commercial papers (CPs) and Commercial deposits (CDs) and are meant for an investment horizon of one day to three months. This basket of investments is suitable for people who do not want take risky position in their portfolio. The returns, however, are not as high as compared to high-risk investments .This is a better option for people who put their money in the saving accounts because of their transaction requirements.
6. Fixed Maturity Plans: A closed-end fund that invests in debt and money market instruments of the same maturity as the stated maturity of the plan. The focus of a fixed maturity plan is to provide a stream of income through interest payments, while exposing the investor to a lower level of risk.
7. Floating Rate Funds: An open-end fund that invests in structural debt and money market instruments whose income is linked with the interest rate scenario in the market for example if market rate of interest goes up then these instruments will provide extra returns than the earlier expected.
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8. Monthly Income Plans: This is an open-ended debt scheme which invests majorly in debt instruments along with some part of their investments in equity space so that able to provide better return than a 100% debt funds. These types of funds are suitable for investor who wants to have better returns than a pure debt fund.
2.4 PORTFOLIO OF DEBT SCHEMES: Portfolio of a debt fund invests in Money Market instruments like: Treasury bills. Certificate of Deposits. Commercial Papers. Reverse Repo and Repo.
Treasury bills: Treasury Bills are the most marketable of all the money market instruments. It is issued by the Government. The Government sells the bills to the public to raise money. At the maturity period, the holder receives the face value of the T-bill. They are issued with initial maturities of 28, 90, or 182 days. The government security dealers sell the T-Bill, so that investors can purchase directly, or by auction. Income earned from a T-Bill is exempt from all the state and local taxes Certificates of Deposit: A Certificate of Deposit, or CD, is a time deposit with a bank. Time deposits may not be withdrawn on demand. The principal and the interest amount are paid only at the end of the fixed term of the CD. Short term CDs are highly marketable. Commercial Papers: Large companies often issue their own short-term unsecured debt notes rather than borrow directly from banks. These notes are called commercial paper. The maturity of a commercial
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paper ranges up to 270 days. Most often, commercial papers are issued with maturities of less than 1 or 2 months. Reverse Repo and Repo: Repurchase agreements, also called repo or RP are used by dealers in Government Securities, as a form of short-term, usually overnight borrowing. The investors buy the government
securities from the dealers on an overnight basis, with an agreement to buy back those securities the next day at a slightly higher price. The increase in price is considered as the interest. Thus the dealer takes out a 1 day loan and the security serve as collateral. Repos are considered very safe in form of credit risk because the loans are backed by the Government securities. A reverse repo is the mirror image of a repo. Here, the dealer finds an investor holding Government securities and buys them, agreeing to sell them back at the specified higher price on a future date.
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3. RESEARCH METHODOLOGY 3.1 OBJECTIVES:

Primary Objective: Primary objective of the study is to compare the selected mutual funds in debt schemes.
Secondary Objective: To measure the performance of the selected mutual funds. To make comparison among the selected mutual funds. To study, analyze and understand the progressive trends in the mutual funds. To suggest few corrective measures to show that mutual funds are worthy investment practice.
3.2 RESEARCH DESIGN: 1. A research design is the understanding of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. The design of the study is analytical. Because the data collected is analyzed to derive conclusions. The data collected are explorative. The project does not include any research as it is fully based on secondary data which is available in the fact sheets, websites of companies and other websites.
3.3 NEED: To identify the type of schemes mostly preferred to the investors. This analysis intimates the strength of the selected debt scheme of bsl with other selected amc. The investor can able to identify the scheme which suits him the best in accordance with investment objective, liquidity and safety.
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The investor can able to analyse his scheme for better investment before investing. As there is wide variety of debt schemes provided, this project also identifies which amcs debt schemes are more profitable provided with best nav and ranking.
3.4 SCOPE: The schemes was categorized and selected on evaluating their performance and relative risk. The scope of the project is mainly concentrated on knowing the potential strength of the debt scheme. The subject matter relates to comparison of debt schemes of mutual funds based on three measures that are Sharpe measures, Treynor measures and Jensen measures. It allows finding the better debt schemes which is preferably less risky and ranked among amcs.
3.5 LIMITATIONS:
The data collection here in this project is strictly confined to the secondary sources. No primary data was associated with the project. Collecting historical NAV, returns is very difficult Selection of the schemes for the study is also a very difficult task because of the wide variety of schemes. The scope of the study was limited, as only a few AMCs and schemes were chosen for
the study. It was tried very harder to include the best of information from published and unpublished sources available on internet, but some of the data required for the detailed study were not available freely. 3.6 DATA COLLECTION Nature of Data Secondary data is used in this study.
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Source of Data Secondary Data are collected from various sources such as the company, books, and related websites.
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4. DATA ANALYSIS AND INTERPRETATION
4.1 COMPARISION OF DEBT SCHEMES: The top 5 Indian Asset Management companys debt schemes are compared. Selection of AMCs: The top 5 AMCs based on CRISIL rating are being chosen for comparison by analyzing the corpus of the AMCs. The company which holds the highest corpus is
considered as the top AMC. According to Association of Mutual Funds in India, the top 5 AMCs in India Based on the Asset under Management (AUM) are: 1. Reliance Mutual Fund. 2. HDFC Mutual Fund. 3. ICICI Prudential Mutual Fund. 4. Birla Sun Life Mutual Fund 5. UTI Mutual Fund. SELECTION OF SCHEMES: The debt schemes of AMCs can be grouped into various categories based on their investment objective. The selected schemes are dynamic bond fund, income plus, gilt plus schemes. They are being selected based on the long term, medium term and short term fund basis.
DYNAMIC BOND FUND: Income solution that aims to generate optimal returns through active management by capturing positive price and credit spread movements.
INCOME PLUS: A fund that invest in a combination of bonds and government securities of varying maturities from time to time with an aim to optimize returns.
GILT PLUS: The fund that aims to generate income and capital appreciation by investing exclusively in government securities.
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Return and Risk of schemes and companies

schemes Risk sort( x-xbar)^2 DYNAMIC BOND FUNDS
Birla sunlife dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund Uti dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage 0.404666143 2.593067079 1.066900263 1.761668576 2.032870027 1.53125 -0.345 1.149375 0.810625 0.699375 1.095741758 0.999979687 0.823487961 0.719950085 1.285 1.2975 1.315625 1.485 0.441632271 1.03924909 0.779604016 0.904147489 1.98625 1.615625 1.496875 1.8475
Return (xbar)
Higher the risk involved higher will be the return. In the above table, birla sunlife dynamic bond gives higher return with low risk involved as compared with other amcs dynamic bond. In the next category, income plus hdfc income fund gives higher return with low risk. In the other category, brilasunlife gilt plus gives more returns. 43
Calculation of schemes risk based on beta values
SCHEMES DYNAMIC BOND FUNDS Birla sunlife dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund Uti dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage
2012
2011
2010
2009
0.306 0.047 0.549 -0.353
0.101 0.301 -0.057 0.074
0.152 0.086 0.065 0.218
0.208 -0.04 -0.158 -
-0.187 0.336 0.854 0.914
0.313 0.529 0.855 0.501
0.239 0.394 0.606 -0.017
0.251 0.3 0.919 0.62
-0.002 0.221 0.29 0.56 0.368
0.025 0.007 0.068 0.12 -0.036
0.086 -3.403 -0.017 0.276 0.286
-0.04 0.414 0.62 0.379 0.956
The beta value implies the systematic risk of schemes. Generally the beta value greater than 1 indicates average level of risk, and the value less than 1 indicates defensive security and the negative value intimates contrary to general market. Falling in bull market and raising in bear market. In the above chart it intimates. 44
4.2 CALCULATION OF SHARPE RATIO FOR THE YEAR 2012

Sharpe Ratio = (Rp Rf) / p
SCHEMES
RP-RF
SD
SHARPE RATIO
DYNAMIC BOND FUNDS Birla sunlife dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund Uti dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage 1.6217 2.752 1.956592 2.3148 2.4013 0.041 0.475 0.436 0.86 0.773 39.55366 5.793684 4.487596 2.691628 2.791332 2.2542 2.3095 2.104092 2.1948 0.237 0.178 0.579 0.442 9.511392 12.97472 3.63401 4.965611 2.2142 2.567 1.926592 2.3702 0.277 0.286 0.254 0.66 7.993502 8.975524 7.585008 3.591212
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CALCULATION OF SHARPE RATIO FOR THE YEAR
2011
SCHEMES
RP-RF
SD
SHARPE RATIO
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2010
SCHEMES
RP-RF
SD
SHARPE RATIO
DYNAMIC BOND FUNDS Birla sunlife dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund Uti dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage 1.4076 -3.477 1.263832 1.243 1.1048 0.642 6.86 0.631 0.494 0.585 2.192523 -0.50685 2.002903 2.516194 1.667009 0.5846 0.873 0.561832 1.17 0.321 0.374 0.52 0.426 1.821184 2.334225 1.080446 2.746479 1.1626 1.298 1.216832 0.6452 0.366 0.210 0.152 0.665 3.176503 6.180952 8.005474 0.970226
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2009
SCHEMES
RP-RF
SD
SHARPE RATIO
DYNAMIC BOND FUNDS Birla sun life dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage 0.692 -2.513 -0.780 -2.287 -2.765 0.131 5.945 6.118 5.451 6.529 5.280916 -0.42271 -0.12749 -0.41956 -0.44201 -0.416 -0.295 0.175 0.311 3.59 3.348 4.335 2.925 -0.11593 -0.08811 0.040369 0.106325 1.644 -0.130 0.083 0.539 0.182 0.274 3.049722 -0.71429 0.30212
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PERFORMANCE OF DYNAMIC BOND FUND - SHARPE RATIO
14 12 10 9.304249 8 6 4 2 0 bsl -2 -0.71429 reliance icici 0.30212 uti 0.970226 3.049722 3.176503 7.993502 6.180952 3.967048 8.975524 8.005474 7.585008 8.57931 2012 2011 2010 3.591212 2009 12.69267
Inference:
The ratio of 3 or more is considered to be excellent in case of sharpe ratio. From the above chart it intimates that the birla sunlife performance is excellent as its ratio is more than 3 (from 20122009). In the year 2011 it has performed better as compared to other years. In the year 2010 it has a quiet slag in its performance but that doesnt majorly affected the scheme. Comparing all the four schemes ICICI dynamic bond has a better performance for the past four years.
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PERFORMANCE OF INCOME FUND - SHARPE RATIO
14 12.97472 12 10 8 6 4.878056 4 2 0 bsl -0.11593 -2 reliance -0.08811 icici 1.821184 2.709317 2.334225 3.63401 1.8051 1.080446 0.040369 2.699782 2.746479 0.106325 hdfc 4.965611
9.511392 2012 2011 2010 2009
Inference:
The above chart represents that birla sunlife is being performing well, as the ratios are increasing without any slag in the performance from the year 2009-2012. In the year 2009 it shows negative value which intimates that the performance is not up to the standard, but in the later years it shows better ratio which implies its steady growth in its performance. From the above chart it also implies that reliance shows better performance when compared to all the other four amcs for the past four years.
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PERFORMANCE OF GILT FUND SHARPE RATIO
45 40 35 30 25 20 15 10 5 0 -5 bsl 9.372289 5.280916 2.192523 5.793684 4.906818 -0.42271 -0.50685 reliance 4.487596 2012 2011 2010 2009 5.751254 2.516194 2.002903 2.791332 2.691628 1.440989 1.667009 2.017484 -0.44201 icici -0.12749 hdfc -0.41956 uti 39.55366
Inference: In the above given chart, it indicates that birla sunlife gilt fund performs excellent as compared with other four amcs for the past 4 years. The birla sunlife shows excellent performance for the year 2009-2012, though its ratio declines in the year 2010 it shows a steady growth in the year 2011 and in the year 2012 it as very high performance.
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4.3 CALCULATION OF TREYNOR
RATIO FOR THE YEAR 2012
Treynor Ratio = (Rp Rf)/ p
SCHEMES
RP-RF
BETA
TREYNOR RATIO
DYNAMIC BOND FUNDS Birla sunlife dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund Uti dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage 1.6217 2.752 1.956592 2.3148 2.4013 -0.002 0.221 0.29 0.56 0.368 -810.85 12.45249 6.746869 4.133571 5.863315 2.2542 2.3095 2.104092 2.1948 -0.187 0.336 0.854 0.914 -12.0504 6.873512 2.463808 2.401313 2.2142 2.567 1.926592 2.3702 0.306 0.047 0.549 -0.353 7.235948 54.61702 3.509275 -6.71445
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CALCULATION OF TREYNOR RATIO FOR THE YEAR 2011
SCHEMES
RP-RF
BETA
TREYNOR RATIO
DYNAMIC BOND FUNDS Birla sunlife dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund Uti dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage 1.424588 0.8636 0.681588 0.9462 1.8209 0.025 0.007 0.068 0.12 -0.036 56.98352 123.3714 10.02335 7.885 -44.5722 2.2542 1.3086 1.411588 1.2392 0.313 0.529 0.855 0.501 5.548204 2.473724 1.65098 2.473453 2.246588 1.7336 1.751588 1.7416 0.101 0.301 -0.057 0.074 19.25335 5.759468 -30.7296 23.53514
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SCHEMES
RP-RF
BETA
TREYNOR RATIO
DYNAMIC BOND FUNDS Birla sunlife dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund Uti dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage 1.4076 -3.477 1.263832 1.243 1.1048 0.086 -3.403 -0.017 0.276 0.286 16.36744 1.021746 -74.3431 4.503623 3.40979 0.5846 0.873 0.561832 1.17 0.239 0.394 0.606 -0.017 2.446025 2.215736 0.927116 -68.8235 1.1626 1.298 1.216832 0.6452 0.152 0.086 0.065 0.218 7.648684 15.09302 18.72049 2.959633
54

SCHEMES
RP-RF
BETA
TREYNOR RATIO
DYNAMIC BOND FUNDS Birla sun life dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage 0.692 -2.513 -0.780 -2.287 -2.765 -0.04 0.414 0.62 0.379 0.956 -17.295 -6.07005 -1.25806 -6.0343 -3.01869 -0.416 -0.295 0.175 0.311 0.251 0.3 0.919 0.62 -1.65817 -0.98333 0.190424 0.501613 1.644 -0.130 0.083 0.238 -0.04 -0.158 6.906723 3.25 -0.52532
55
PERFORMANCE OF DYNAMIC BOND FUND TREYNOR
RATIO
60 54.61702 50 40 30 20 7.235948 10 0 -10 -20 -30 -40 -30.7296 19.25335 7.648684 23.53514 15.09302 5.759468 3.25 reliance 18.72049 2012 2011 2010 3.509275 -0.52532 icici 2.959633 uti -6.71445 2009
6.906723 bsl
Inference:
According to treynor ratio the higher the ratio higher the performance of the scheme. As per the above chart birla sunlife dynamic fund shows good performance and in the year 2011 it shows a drastic higher performance. But in the year 2012 the performance seems to be down as compared to 2011 and 2010. The chart also implies that reliance performs excellent when compared to the other 3 funds as it contains higher ratio.
56
PERFORMANCE OF INCOME FUND TREYNOR RATIO
120% 100% 80% 60% 40% 20% 0% -20% -40% -60% -80% -100% 2.446025 bsl -1.65817 5.548204 -12.0504 0.501613 -68.8235 reliance icici 2.215736 -0.98333 2.473724 6.873512 0.190424 0.927116 1.65098 2.463808 2009 2.473453 2.401313 hdfc 2010 2011 2012
Inference:
From the above chart it intimates clearly that birla sunlife is not up to the standard as it shows a negative value which indicates the fund performance is not good for the year 2012. In the year 2011 and 2010 the fund performs better when compared to other years. As per treynor ratio compared with other selected amcs reliance income fund performs good as it contains higher ratio value.
57
PERFORMANCE OF GILT FUND TREYNOR RATIO
100% 80% 60% 40% 20% 0% bsl -20% -40% -60% -80% -810.85 -100% -17.295 56.98352 16.36744
123.3714 4.503623 7.885 -6.0343 2009 5.863315 uti 2010 2011 2012 3.40979 -44.5722 -3.01869
10.02335 4.133571 12.45249 6.746869 1.021746 -6.07005 reliance icici hdfc
-1.25806 -74.3431
Inference: Treynor indicates higher the ratio results better performance. Here the chart indicates that birla sunlife shows a drastic negative ratio which implies the performance is not at up to the standard for year the 2012 as the ratio has declined when compared to the other years. The chart also implies that when compared to other amcs reliance performs excellent as it contains higher ratio.
58
4.4 CALCULATION OF JENSEN
RATIO FOR THE YEAR 2012
Jensen = rf+(rm-rf)
SCHEMES
RF+BETA
RM-RF
JENSEN RATIO
DYNAMIC BOND FUNDS Birla sunlife dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund Uti dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage 0.3188 0.579 0.650908 0.8952 0.6928 1.8692 2.712 2.709092 2.7348 2.1427 0.596 1.57 1.763 2.448 1.484 0.1338 0.694 1.214908 1.2492 1.6592 1.622 1.619092 1.6448 0.222 1.126 1.967 2.055 0.6268 0.405 0.909908 -0.0282 1.6592 1.622 1.619092 1.6552 1.04 0.657 1.473 -0.047
59
CALCULATION OF JENSEN RATIO FOR THE YEAR 2011
Jensen = rf+(rm-rf)
SCHEMES
RF+BETA
RM-RF
JENSEN RATIO
60
Jensen = rf+(rm-rf)
SCHEMES
RF+BETA
RM-RF
JENSEN RATIO
DYNAMIC BOND FUNDS Birla sunlife dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund Uti dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage 0.2864 -3.241 0.154168 0.476 0.4588 0.9926 1.378 1.368832 1.34 1.4522 0.284 -4.466 0.211 0.638 0.666 0.4394 0.556 0.777168 0.183 0.4696 0.508 0.498832 0.47 0.206 0.282 0.388 0.086 0.3524 0.248 0.236168 0.3908 0.4696 0.508 0.498832 0.4972 0.165 0.126 0.118 0.194
61
Jensen = rf+(rm-rf)
SCHEMES
RF+BETA
RM-RF
JENSEN RATIO
DYNAMIC BOND FUNDS Birla sun life dynamic bond fund Reliance dynamic bond fund Icici prudential dynamic bond fund INCOME PLUS Birla sunlife income plus Reliance income Icici prudential income growth Hdfc income fund growth GILT PLUS Birla sunlife gilt plus Reliance gilt securities longterm Icici prudential gilt investment Hdfc gilt fund Uti gilt advantage 0.1312 0.604 0.81 0.571 1.116868 0.9418 -2.248 -2.248 -2.25 -0.23587 0.124 -1.358 -1.821 -1.285 -0.263 0.4222 0.49 1.109 0.812 0.9138 0.895 0.895 0.893 0.386 0.439 0.993 0.725 0.4092 0.15 0.032 0.9138 0.895 0.895 0.374 0.134 0.029
62
PERFORMANCE OF DYNAMIC BOND FUND- JENSEN RATIO
1.6 1.4 1.2 1 0.8 0.6 0.522 0.4 0.2 0 bsl -0.2 0.374 0.165 0.134 0.126 reliance icici 0.31 0.118 0.029 uti 0.194 -0.047 1.04 2012 0.787 0.657 0.489 2011 2010 2009 1.473
Inference: Positive value represents superior performance of management talent, zero indicates neutral performance of management talent and negative value represents inferior performance of management talent. From the above chart birla sunlife has a neutral performance as its ratios are more than zero. The chart also represents, icici dynamic bond has the superior performance of management talent as compared to other amcs.
63
PERFORMANCE OF INCOME FUND- JENSEN RATIO
2.5
1.967
2.055
1.5 1.126 1 0.806 0.5 0.386 0.222 0.206 0 bsl reliance icici 0.439 0.282 1.093
1.532
2012 2011
0.993
1.063 0.725
2010 2009
0.388 0.086 hdfc
Inference: The above chart represents that there is no inferior performance in the income fund and also it implies that Birla sunlife has a less management performance as compared to other amcs and the ratio is not up to the standard. The chart also states that Hdfc shows superior performance as compared to other amcs.
64
PERFORMANCE OF GILT FUND- JENSEN RATIO
3 2.448 2 1.57 1 0 bsl -1 -1.358 -2 -3 -4 -4.466 -5 -1.821 0.596 0.49 0.284 0.124 0.351 reliance icici 0.428 0.211 hdfc -1.285 0.638 0.498 1.763 1.484 0.666 0.319 uti -0.263 2012 2011 2010 2009
Inference: From the above chart it represents that birla sunlife shows better management performance as its ratios are more than 0 which indicates neutral performance management talent. The chart also implies that hdfc shows better management performance as compared to other amcs and reliance seems to have poor management during the year 2010.
65
5. FINDINGS, SUGGESTION AND CONCLUSION
FINDINGS:
DYNAMIC BOND FUND: Based on the analysis of sharpe ratio icicis performance is better comparatively. Based on the analysis done on treynor ratio reliance supersedes other funds. Based on the jenson ratio birla sunlife stands first.
INCOME FUND: As per the sharpe ratio reliance stands first when compared with other amcs Based on the treynor ratio reliance ranks first. Jenson ratio represents hdfc has a better management performance when compared to other amcs.
GILT FUND: According to sharpe ratio birla sunlife shows better performance. Based on treynor ratio reliance supersedes other funds. As per Jensen ratio hdfc stands first when compared to other amcs.
SUGGESTIONS:
Based on the sharpe ratio for Birla dynamic bond, it states that till 2011 they had an increasing returns for the funds. But during 2012 they had 2% fall in their returns (from 9.30 to 7.99). The fund manager has to concentrate on the securities that they have invested in the year 2012 and select a better security that gives a good return to the fund.
The treynor ratio for Birla sunlife states that they had consistent growth in the fund returns till the year 2011. But during the year 2012 they had a sudden fall in the fund returns. I
66
would suggest the fund manager to make sure of the securities that they select and make the investment in well rated securities.
The performance of gilt fund based on the treynor ratio shows that the performance of the fund was very poor. The fund had a negative returns, the fund manager must make a proper analysis of the market so as to find out the better performing securities and invest in them.
Based on the Jensen ratio the performance of income fund, the fund manager has to put in some efforts to find out proper performing securities in the market on which they can make their investment so that the fund may have proper returns in the future.
Based on the Jensen ratio analysis of birla sunlife gilt fund it shows that the fund returns are being improvised every year (2009-2012). The fund manager has to concentrate on the selection of securities so that he may expect better returns in upcoming years.
CONCLUSION:
From the analysis made using sharpe ratio birla sunlife seems to be poor as compared with other amcs and the gilt fund scheme is well performed and maintained in last 4 years. By analysis made using teynor, states birla sunlife need to be concentrated and performed well for best returns in the selected schemes for the upcoming years and Jensen ratios implies , birla sunlife has performed well in gilt scheme as compared with other amcs as the same it should be improved in other schemes also.
67
References for the project:
1. Anjaria, D.C., AMFI Workbook, AMFI Mumbai, 2. Singh, Jaspal, Mutual Funds: Growth Performance and Prospectus, Deep and Deep Publication Pvt. Ltd., New Delhi, 2006 3. Pandian, Punithavathy, Security Analysis and Portfolio Management, Vikas Publication House Pvt. Ltd. 4. Sahadevan and Raju MT, (1996), Mutual Funds Data, Interpretation and Analysis, Prentice hall of India. 5. Agarwal P.R. (1996), Mutual funds-A Comprehensive Approach, Orient Law house, Delhi. 6. Khuran, Ajay (1996), Top Management Turnover An Empirical Investigation of Mutual Fund Managers, Journal of Financial Economics, 3. 7. Jayadev M. (1996) Mutual Fund Performance; An Analysis of Monthly Returns, Finance India, Vol. X, No.1, (March), Sadhak H, (1997) Mutual Fund Investment and Market Practices in India, Sage Publication India. 8. Jayadev M. (1998), Performance Evaluation of Portfolio Managers: An Empirical Evidence on Indian Mutual Funds, Applied Finance Vol.5, No.2, July. 9. Gupta, O.P. and Sehagal S. (2000), Investment Performance of Mutual Funds: The Indian Experience, In Indian Capital Markets: Trends and Dimensions edited by UMA Shashikant and Arumugam, Tata McGraw Hill, New Delhi. 10. Rao K.V. and Venkateshwarlu, K. (1998), Market Timing Abilities of Fund ManagersA case Study of Unit Trust of India, A paper presented at the Second Capital Market Conference Organized by UTI Institute Capital Market, Mumbai. 11. Mishra B, (2001), A study of Mutual Funds in India, unpublished Research paper under the aegis of Faculty of Management Studies, University of Delhi.
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BIBLIOGRAPHY:
www.indiainfoline.com www.amfiindia.com www.mutualfunds.com www.investopidia.com MUTUAL FUNDS IN INDIA
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1.

ORGANIZATION OF A MUTUAL FUND:

1.3 MAJOR MUTUAL FUND COMPANIES IN INDIA

1.4 Types of Mutual Funds

1.5 BENEFITS AND LIMITATIONS OF MUTUAL FUND INVESTMENT

1.5.1 BENEFITS OF MUTUAL FUND INVESTMENT

1.5.2 LIMITATION OF MUTUAL FUND INVESTMENT

1.6 RECENT TRENDS IN MUTUAL FUND INDUSTRY

such as bad deliveries, delayed payments and unnecessary follow.

1.7 COMPANY PROFILE

3. RESEARCH METHODOLOGY 3.1 OBJECTIVES:

4. DATA ANALYSIS AND INTERPRETATION

Return and Risk of schemes and companies

Calculation of schemes risk based on beta values

0.306 0.047 0.549 -0.353

0.101 0.301 -0.057 0.074

0.152 0.086 0.065 0.218

0.208 -0.04 -0.158 -

-0.187 0.336 0.854 0.914

0.313 0.529 0.855 0.501

0.239 0.394 0.606 -0.017

0.251 0.3 0.919 0.62

-0.002 0.221 0.29 0.56 0.368

0.025 0.007 0.068 0.12 -0.036

0.086 -3.403 -0.017 0.276 0.286

-0.04 0.414 0.62 0.379 0.956

4.2 CALCULATION OF SHARPE RATIO FOR THE YEAR 2012

CALCULATION OF SHARPE RATIO FOR THE YEAR

Sharpe Ratio = (Rp Rf) / p

CALCULATION OF SHARPE RATIO FOR THE YEAR

Sharpe Ratio = (Rp Rf) / p

CALCULATION OF SHARPE RATIO FOR THE YEAR

Sharpe Ratio = (Rp Rf) / p

PERFORMANCE OF DYNAMIC BOND FUND - SHARPE RATIO

PERFORMANCE OF INCOME FUND - SHARPE RATIO

9.511392 2012 2011 2010 2009

PERFORMANCE OF GILT FUND SHARPE RATIO

4.3 CALCULATION OF TREYNOR

RATIO FOR THE YEAR 2012

Treynor Ratio = (Rp Rf)/ p

CALCULATION OF TREYNOR RATIO FOR THE YEAR 2011

Treynor Ratio = (Rp Rf)/ p

CALCULATION OF TREYNOR RATIO FOR THE YEAR 2010

Treynor Ratio = (Rp Rf)/ p

CALCULATION OF TREYNOR RATIO FOR THE YEAR 2009

Treynor Ratio = (Rp Rf)/ p

PERFORMANCE OF DYNAMIC BOND FUND TREYNOR

PERFORMANCE OF INCOME FUND TREYNOR RATIO

PERFORMANCE OF GILT FUND TREYNOR RATIO

10.02335 4.133571 12.45249 6.746869 1.021746 -6.07005 reliance icici hdfc

4.4 CALCULATION OF JENSEN

RATIO FOR THE YEAR 2012

CALCULATION OF JENSEN RATIO FOR THE YEAR 2011

CALCULATION OF JENSEN RATIO FOR THE YEAR 2010

CALCULATION OF JENSEN RATIO FOR THE YEAR 2009

PERFORMANCE OF DYNAMIC BOND FUND- JENSEN RATIO

PERFORMANCE OF INCOME FUND- JENSEN RATIO

0.388 0.086 hdfc

PERFORMANCE OF GILT FUND- JENSEN RATIO

5. FINDINGS, SUGGESTION AND CONCLUSION

References for the project:

www.indiainfoline.com www.amfiindia.com www.mutualfunds.com www.investopidia.com MUTUAL FUNDS IN INDIA

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