Project Report On Factors Affecting Investors Preference For Investment in Mutual Funds

A Study on
“Factors Affecting Investors’ Preference for Mutual Funds in India and

Performance Evaluation of Mutual Funds in India”
With
Submitted to the
School of Management studies
University of Hyderabad
In Partial Fulfillment of the
Requirement for the Award of the Degree of
Master of Business Administration
Under the Guidance of
Dr. Chetan Srivastava

Lecturer, School of Management Studies
University of Hyderabad
By
Ankit Singh
08MBMA12
Page | 1
For Getting A Copy Feel Free to Contact
ankitvns2007@gmail.com
MBA 2008-2010
School of Management Studies,
University of Hyderabad,
Gachibowli, Hyderabad,
Andhra Pradesh.
Page | 2
CERTIFICATE
This is to certify that the project work entitled “Factors Affecting Investors’
Preference for Mutual Funds in India and Performance Evaluation of Mutual

Funds in India” has been carried out and submitted by Mr. Ankit Singh under my
guidance in partial fulfillment of his Masters Of Business Administration at
SCHOOL OF MANAGEMENT STUDIES, UNIVERSITY of HYDERABAD.
Date: 21/04/09 Dr. Chetan Srivastava
Faculty Member
School Of Management Studies
University Of Hyderabad
Page | 3
DECLARATION
This to declare that the project title “Factors Affecting Investors Preference for
Mutual Funds in India and Performance Evaluation of Mutual Funds in India” is an
authentic record of my original work carried out under the guidance of Dr. Chetan
Srivastava, Lecturer in Marketing, School of Management Studies, University of
Hyderabad.
The project work has been carried out solely for the purpose of submission in
partial fulfillment of Master of Business Administration at School of Management
Studies, University of Hyderabad.
I further declare that I have not submitted this document to any other School,
University, or Institution in whatever manner.
Date - Ankit Singh
08MBMA12
Page | 4
ACKNOWLEDGEMENTS
First of all I express my gratitude to my project guide Dr. Chetan Srivastava, Lecturer, School
of Management Studies, University of Hyderabad. His able guidance at each step of the project
helped me to broaden my outlook on the project and in successful completion of the project.
I shall always remember his polite way of correction and constant encouragement by asking
various questions.
I would like to express my gratitude to my Project Supervisor, Ms. Nandita Banerjee,
Centre Manager at Reliance Money Lucknow who had spared her valuable time in assisting me
during my project work. It has been a great privilege to work under the supervision of Mr.
Gaurav Nagar, Manager at Reliance Mutual Fund, Lucknow. Their sympathetic, accommodating
and constructive nature remained a constant source of inspiration for me throughout the duration
of this project work.
I convey my regards and special thanks to Dr. V. Venkata Ramana, Professor and Dean,
School of Management Studies, University of Hyderabad for giving me this opportunity for
doing summer internship at Reliance Money.
I would also thank Dr. Mary Jessica and Dr. G.V.R.K. Acharyulu, Faculty, School of
Management Studies, University of Hyderabad, for their guidance and support for the
completion of project work.
I specially thank all the faculty members of the School of Management Studies for
having equipped me with the skills and the ability through their inputs, which assisted me in the
completion of the project.
I am thankful to all the personnel at Reliance Money for their utmost co-operation also I
wish to thank all those people who have directly or indirectly been instrumental in successful
completion of this project work.
Finally, I would like to thank my Parents, Family, Friends, Colleagues and God Almighty
for their unending inspiration and encouragement.
Page | 5
(1) Executive Summary
The report contains the brief description of the Mutual Fund Industry in India. It contains
the findings and analysis of the survey conducted to gather primary data to judge the factors that
influence the investors most before taking decision to make any investment in mutual funds.
Further an attempt has been made to know as to how important the various qualities of a mutual
fund scheme, various qualities of an Asset Management Company (AMC) and importance of
various services provided by the AMCs are to the investor while making investment in a
particular scheme. The attempt has also been made to categorize investors based on various
demographic factors such as age, income, etc. and to present a comparative analysis of the
various demographic factors. The size of the sample is limited to 200 only. More than 33 % of
the investors prefer fixed deposits for making investment. The investors first look for safety of
capital in mutual funds. More than 67 % of the investors first prefer open ended funds. About
half of the total mutual fund investors have invested in equity schemes. The study also reveals
that the investors prefer to take decision regarding the investments on their own. The investors
consider the reputation of the portfolio managers as the least important factor in the selection of
the funds/schemes. The investors consider the reputation of the company as the most important
quality while making selection of a particular fund or scheme. They have given highest
importance to daily disclosure of NAV in case of investor services.
The report also deals with the performance evaluation of Mutual Funds in India vis-a-vis
the Benchmark Index of the funds with the help of Beta (a measure of systematic risk), Standard
Deviation (a measure of total risk), Sharpe Ratio, Treynor‟s Ratio, Jensen Measure (a measure of
fund manager performance), and Fama Measure. For this purpose, 10 similar equity schemes of
10 fund houses have been taken as sample, out of which 9 schemes are open ended and 1 scheme
is closed ended. The top 10 fund houses are selected on the basis of their Assets under
Management (AUM) as on 30th June 2009. More than 75% of corpus of each scheme is invested
in equity stocks. The study covers the period of 36 months from 31st July 2006 to 30th June
2009. The data used is monthly closing NAVs. The source of data is the respective website of a
particular scheme and also the mutualfundsindia.com and amfi.com.
Page | 6
It is evident from the analysis that fund managers were not successful in satisfying the
investors with their performance. Under quarterly analysis only 7 funds out of the 10 funds
selected were able to earn more than market returns and only 6 funds were able to earn more than
the risk free rate.
Under half yearly analysis only 4 funds out of the 10 funds selected were able to earn
more than market returns and only 9 funds were able to earn more than the risk free rate.
Under yearly analysis only 6 funds out of the 10 funds selected were able to earn more
than market returns and only 9 funds were able to earn more than the risk free rate.
Page | 7
(2) Table of Contents
Certificate (i)
Declaration (ii)
Acknowledgements (iii)
1. Executive Summary 1-2
2. Table of Contents 3
3. Company Profile 4-7
4. History of Indian Mutual Funds Industry 8-9
5. Background and Need for Study 10
6. Statement of Problem 10-11
7. Objective of Study 12
8. Testable Hypothesis 13
9. Limitations of Study 13
10. Theoretical Framework 14
11. Literature Review 15-22
12. Research Methodology
(a) Designing of Questionnaire 23-24
(b) Duration of Study 24
(c) Sample Selection 24
13. Data Collection and Analysis 24-35
14. Performance analysis of Mutual Funds 36-56
15. Comparison of Funds on the basis of Index 57-59
16. Overall ranking of Mutual Funds
(a) On the basis of Jensen alpha 60
(b) On the basis of Jensen Alpha 61
(c) On the basis of Total Risk 62
(d) On the basis of Portfolio Diversification 63
17. Findings of the Study 64-65
18. Suggestions 66-67
19. Bibliography and References 68
20. Annexure I-II 69-72
Page | 8
(3) COMPANY PROFILE-
Reliance Capital Ltd is a part of the Reliance - Anil Dhirubhai Ambani (ADA) Group, and is
ranked among the 25 most valuable private companies in India. Reliance Capital is one of India's
leading and fastest growing private sector financial services companies, and ranks among the top
3 private sector financial services and banking groups, in terms of net worth. Reliance Capital
has interests in asset management and mutual funds, life and general insurance, private equity
and proprietary investments, stock broking, depository services, distribution of financial
products, consumer finance and other activities in financial services. The Reliance ADA Group
is one of India's top 2 business houses, and has a market capitalization of over Rs.2,90,000 crore
(US$ 75 billion), net worth in excess of Rs.55,000 crore (US$ 14 billion), cash flows of Rs.
11,000 crore (US$ 2.8 billion) and net profit of Rs. 7,700 crore (US$ 1.9 billion).
Reliance Money-
Reliance Money is a group company of Reliance Capital; one of India's leading and fastest
growing private sector financial services companies, ranking among the top 3 private sector
financial services and banking companies, in terms of net worth. Reliance Capital is a part of the
Reliance ADA Group.
Page | 9
About Reliance Money in brief
Reliance Money is a part of the Reliance Anil Dhirubhai Ambani Group and is promoted by
Reliance capital. The fastest growing private sector financial services company in India ranked
amongst the 3 private sector financial companies in terms of net worth. Reliance Money is a
comprehensive financial solution provider that enables one to carry out trading and investment
activities in a secure, cost-effective and convenient manner. Through Reliance Money, one can
invest in a wide range of asset classes from Equity, Equity and Commodity Derivatives, Mutual
Funds, Insurance products, IPO‟s to availing services of Money transfer and Money changing.
Reliance Money offers the convenience of on-line and off-line transactions through a variety of
means, including its, portal, call & Transact, Transaction Kiosks and at its network of affiliates.
Some key steps of the company are…
“Success is a journey, not destination” if we look for examples to prove this quote then
we can find many but there is none like that of Reliance Money. This company is today known
as the largest financial service provider of India.
Success sutras of Reliance Money-
The success story of the company is driven by 9 success sutras adopted by in namely Trust,
Integrity, Dedication, commitment, Enterprise, Hard work, Home work, Team work play ,
Learning and Innovation, Empathy and Humility and last but not least is it’s Network.
Mission statement:
Mission of the company is to be a leading and preferred service provider to the customers, and
aims to achieve this leadership position by building an innovative, enterprising and technology
driven organization which will set the highest standards of service and business ethics.
Page | 10
Vision of Reliance Money:
To achieve and in market leadership Reliance Money aimed for complete customer satisfaction,
by combining its human and technological resources, to provide world class quality services. In
the process Reliance Money strived to meet and exceed customer‟s satisfaction and set industry
standards.
ORGANIZATION HIERARCHY
RELIANCE MONEY
(Head Office Mumbai)
BRANCH OFFICE
Cluster Head
Business Development
Executives
Centre Manager
Executives
Sales Promoters
Page | 11
PRODUCTS AND SERVICES-
Equity- Reliance Money offers its clients competitively priced Equity broking, PMS and
Portfolio Advisory Services. Trading execution assistance provided to clients.
Mutual Funds- Reliance Money offers dedicated research & expert advice on Mutual Funds.
Life-Insurance- Clients can choose from different plans of almost all Insurance Companies
where they can invest their money. A team of experts will suggest the best Insurance scheme
which suits the client‟s requirement.
General Insurance- Reliance Money assists in areas of Health insurance, Travel insurance,
Home insurance and Motor insurance.
Commodities- Reliance Money is a single platform to trade on both the major commodity
exchanges i.e. NCDEX and MCX. In addition in-house research desk shall provide research
reports on all major commodities which shall enable in getting views for trading and diversify
client‟s holdings. Trade Execution assistance is also provided to clients.
Structured Products, Art Investments- Structured Products is a new class of financial products
for investors apprehensive of increased volatility in stock markets. Specially designed products
could include Equity, Index-linked in nature, Real Estate Funds, Art Funds, Overseas
Investments and Infrastructure Investments.
Tax Planning- Reliance Money‟s wealth management offerings include tax related services like:
Tax Planning & advisory services and filling Tax returns for individuals.
Real Estate Advisory Services- It provides Broking Model for lease/rent and buy/sell of
property, Property Valuation, Real-estate Consulting Corporate earning model, etc.
Offshore Investments- Reliance Money provides a unique opportunity to invest in international
financial markets through the online platform which includes different product ranges.
Page | 12
(4) HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank the. The history of mutual funds in India
can be broadly divided into four distinct phases
First Phase – 1964-87-
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the
Reserve Bank of India and functioned under the Regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The
first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700
crores of assets under management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)-
1987 marked the entry of non- UTI, public sector mutual funds. These were set up by public
sector banks, Life Insurance Corporation of India (LIC) and General Insurance Corporation of
India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987
followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),
Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct
92). LIC 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.
Third Phase – 1993-2003 (Entry of Private Sector Funds)-
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in
which the first Mutual Fund Regulations came into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual
Fund) Regulations 1996.
Page | 13
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and acquisitions. As
at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.
The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of
other mutual funds.
Fourth Phase – since February 2003-
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust of India 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.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of 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. As at the end of
September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes.
Current status of Mutual Funds Industry in India-
At present there are 36 AMCs functioning in India. The total Assets under Management of all
these AMCs as on 31st August, 2009 are Rs. 749,915.52 crores with Reliance Mutual Fund on
the top with Rs. 117,313.78 crores under its management and Quantum Mutual Fund on the
lowest with Rs. 70.33 crores under its management. The total number of schemes under
operation is 3756 with ICICI Prudential Mutual Fund at the top with 323 Schemes and Quantum
Mutual Fund at the lowest with 11 schemes.
Page | 14
(5) BACKGROUND AND NEED FOR THE STUDY- MF is a retail product designed to
target small investors, salaried people and others who are intimidated by the stock market but,
nevertheless, like to reap the benefits of stock market investing. At the retail level, investors are
unique and are a highly heterogeneous group. Hence, designing a general product and expecting
a good response will be futile except the case of UTI monopoly during 1964-1987. But with the
entry of public sector banks and financial institutions in the field and the globalization and
liberalization measures announced by the government led to a paradigm shift in the mind set of
investors and the capital market environment became more unfriendly to retail investors. They
had no other choice but to turn to MFs to reap the benefits of stock market investing. Hence, the
need to be innovative in designing the product was not felt and investors had to choose from
among the limited schemes offered. After the entry of private sector companies into the industry
the competition started growing in the industry.
Currently (as on 31/8/2009) there are 3756 schemes running with 36 AMCs (Source:
Mutualfundsindia.com) with varied objectives and AMCs compete against one another by
launching new products or repositioning old ones. The investors are having a lot of options to
choose from so he is confused in his selection of the product. The choice of investors is affected
by the different features of the scheme, the reputation of the AMCs, various services provided by
the companies to the investors. Unless the MF schemes are tailored to his changing needs, and
unless the AMCs understand the fund selection/switching behavior of the investors, survival of
funds will be difficult in future. With this background an attempt is made in this paper to study
the factors influencing the fund/scheme selection behaviour of Retail Investors.
Over the last few years mutual funds are giving impressive returns, especially Equity
Funds. There is a need to know the returns provided by the individual schemes and the risk levels
at which they are delivered in comparison with the market and the risk free rates. The aim is also
to identify the out-performers. There is a need to evaluate the performance of Indian Mutual
Fund Schemes.
(6) STATEMENT OF PROBLEM- The “expectations” of investors influence the price of the
securities, the volume traded and various other financial operations in actual practice. These
„expectations‟ of investors are influenced by their “perception” and humans generally relate
perception to action. The evidence of prevalence of such a psychological state is seen among MF
investors in India.
Page | 15
For instance, UTI, which is synonymous to mutual funds in India, had a glorious past
and perceived as a safe, high yield investment vehicle with the added tax benefit. Many UTI
account holders have justified their beliefs by staying invested in UTI schemes even after the
1999 bail out and the July 2001 episode of repurchase freeze on US 64 for 6 months. People also
believe that something they own is better than something they do not own. For instance, the
existence of many poor performing funds with investors staying invested with them? In general,
rules for investment, the analysis of investment and discussion of financial behaviour tend to
assume behaviour, which is logical and internally consistent in various ways. Investor behaviour
does not; however, always appear to conform to such expectational norms.
Much of economic and financial theory is based on the notion that individuals act
rationally and consider all available information in the decision making process. However, in the
financial literature, there are no clear models, which explain the influence of “perception” and
“beliefs” on “expectations” and “decision making”. No doubt, reality is so complex that trying to
fit individual investor‟s behaviour into a model is impossible. Investor‟s behaviour may change
from period to period even if the other variables influencing the behaviour are held constant.
However, to a certain extent, the concepts can be borrowed from social psychology where
behavioural patterns, rational and irrational are observed and empirically tested. On the same
lines certain models can be developed to identify the financial behaviour, to the extent of the
availability of the explanatory variables. Such models can help to understand the “why” and
“how?” aspect of investor behaviour, which can have managerial implications for policy makers.
The fund managers manage the portfolio of the mutual funds by undertaking the risk so
they are expected to perform better than the market. The investment strategy and management
style are qualitative but the fund return is the only quantitative indicator to judge the
performance of mutual funds. Return alone should not be considered as the basis of
measurement of the performance of a Mutual Fund scheme, it should also include the risk taken
by the fund manager because different funds will have different levels of risk attached to them.
There must be some performance indicator that will reveal the quality of stock selection of
various AMCs.
Hence, with this background, this study attempts to evaluate the behavioural aspects of
fund selection techniques of individual investors during the period, May 2009 to August 2009
and also attempts to judge the performance of mutual funds using traditional measures.
Page | 16
(7) OBJECTIVES OF STUDY
The investors do not evaluate all possible product attributes while making a choice, but the
marketer‟s search is for identification of “The key buying criteria” or “The key choice criteria”
or “determinant attributes‟ which are defined as certain features of a product offering that are
closely associated with preferences.
The study has the following general objectives-
1. To identify preferred saving avenue among investors and to identify the saving pattern of
investors.
2. To categorize investors as being inclined towards investment products based on certain
parameters such as sex, age, qualifications, occupation, annual income etc.
The study has the following specific objectives-
1. To judge the importance of factors that influences the investors to invest in mutual funds
and to identify the scheme preference of investors.
2. To perceive the preferred communication mode of investors.
3. To identify the information sources influencing the scheme selection decision of
investors.
4. To evaluate fund qualities that would affect the selection of Mutual Funds.
5. To understand the fund sponsor qualities influencing the selection of MFs/Schemes.
6. To evaluate investor related services that would affect the selection of Mutual funds.
7. To compare the performance of the selected funds of different companies with the help
of Sharpe Measure, Treynor Measure and Beta, measures of performance.
8. To examine the degree of correlation that exists between fund and market return.
9. To evaluate the diversification of the Portfolio of the selected funds.
10. To assess the Performance and selectivity skills of fund managers.
Page | 17
(8) TESTABLE HYPOTHESIS- The following hypothesis is made in the study-
1. The investors consider all the qualities of the fund as important in the selection of the
fund/scheme.
2. The investors consider all the qualities of AMC important in the selection of the scheme.
3. The investors consider all the investor services important in the selection of the scheme.
4. The portfolios are well diversified and fund managers are able to generate returns more
than that of the market because of their knowledge and stock selection skills.
(9) LIMITATIONS OF STUDY-
1. Sample size was limited to 200 only out of which only 60 respondents had invested in
Mutual Funds. The sample size may not represent whole market.
2. The study has not been conducted over an extended period of time considering both
market ups and downs. The market state has a significant influence on the buying
patterns and preferences of investors. The study cannot capture such situations.
3. This study is limited to the investors of Lucknow, Varanasi and Kanpur only. Therefore
the inferences cannot be generalized.
4. A few respondents were not able to understand some of the terms of the questionnaire
which may affect the study to a little extent.
5. Only 10 selected equity schemes of top 10 AMCs based on their Assets under
Management as on June 30, 2009 are evaluated for their performance.
6. The performance evaluation of mutual funds is restricted to a period of three years
starting from June 30, 2006 to June 30, 2009 to evaluate the performance of selected
Mutual Funds but not from their inception.
7. The NAVs used in the study are obtained from amfi.com and also from
Mutualfundsindia.com, which in turn is supplied by the members. Members in turn
have not followed any uniform role in the computation of NAV due to the flexibilities
offered under SEBI Regulations.
8. This study excludes the effect of entry and exit loads of the Mutual funds.
9. The dividends if any are assumed to be paid in the end of the study period i.e. either at
the end of the last quarter, or at the end of the last half year, or at the end of the previous
year, as the case may be.
Page | 18
(10) THEORETICAL FRAMEWORK
Mutual Fund industry today is one of the most preferred investment avenues in India. However,
with a large number of schemes to choose from, the retail investor faces problems in selecting
funds. Factors such as investment strategy and management style are qualitative, but the funds
record is an important indicator too. Though past performance alone cannot be indicative of
future performance, it is, frankly, the only quantitative way to judge how good a fund is at
present. Therefore, there is a need to correctly assess the past performance of different Mutual
Funds. There must be some performance indicator that will reveal the quality of stock selection
of various AMCs. The idea behind performance evaluation is to find the returns provided by the
individual schemes and the risk levels at which they are delivered in comparison with the market
and the risk free rates. The aim is also to identify the out-performers. The objective of the study
is to evaluate the performance of Indian Mutual Fund Schemes.
Return alone should not be considered as the basis of measurement of the performance of
a Mutual Fund scheme, it should also include the risk taken by the fund manager because
different funds will have different levels of risk attached to them. Risk associated with a fund, in
a general, can be defined as Variability or fluctuations in the returns generated by it. The higher
the fluctuations in the returns of a fund during a given period, higher will be the risk associated
with it. These fluctuations in the returns generated by a fund are resultant of two guiding forces.
First, general market fluctuations, which affect all the securities, present in the market, called
Market risk or Systematic risk and second, fluctuations due to specific securities present in the
portfolio of the fund, called Unsystematic risk. The Total Risk of a given fund is sum of these
two and is measured in terms of standard deviation of returns of the fund. Systematic risk, on the
other hand, is measured in terms of Beta, which represents fluctuations in the NAV of the fund
vis-a-vis market. The more responsive the NAV of a Mutual Fund is to the changes in the
market; higher will be its beta. Beta is calculated by relating the returns on a Mutual Fund with
the returns in the market. While Unsystematic risk can be diversified through investments in a
number of instruments, systematic risk cannot. In order to determine the risk-adjusted returns of
investment portfolios, several eminent authors have worked since 1960s to develop composite
performance indices to evaluate a portfolio by comparing alternative portfolios within a
particular risk class. These measures are Sharpe Measure, Treynor Measure, Jensen Alpha and
Fama Measure.
Page | 19
(11) LITERATURE REVIEW-
Ippolito (1992) and Bogle (1992) says that fund/scheme selection by investors is based on past
performance of the funds and money flows into winning funds more rapidly than they flow out
of losing funds. Goetzman (1997) states that there is a evidence that investor psychology affects
the fund/scheme selection and switching. Lu Zheng (1998) examined the fund selection ability
of MF investors and found that the investor‟s decisions are based on short-term future
performance and investors use fund specific information in their selection decision.
Madhusudhan V. Jambodekar (1996) conducted a study to assess the awareness of MFs among
investors, to identify the information sources influencing the buyer decision and the factors
influencing the choice of a particular fund. The study revealed that income schemes and open-
ended schemes are preferred over growth schemes and close-ended schemes during the prevalent
market conditions. Investors look for Safety of Principal, Liquidity and Capital Appreciation in
order of importance; Newspapers and Magazines are the first source of information through
which investors get to know about MFs / Schemes and the investor service is the major
differentiating factor in the selection of MFs. Shanmugham (2000) conducted a survey of 201
individual investors to study the information sourcing by investors, their perceptions of various
investment strategy dimensions and the factors motivating share investment decisions, and
reports that among the various factors, psychological and sociological factors dominated the
economic factors in share investment decisions. Sujit Sikidar and Amrit Pal Singh (1996)
carried out a survey with an objective to understand the behavioural aspects of the investors of
the North Eastern region towards equity and mutual funds investment portfolio. The survey
revealed that the salaried and self employed formed the major investors in mutural fund
primarily due to tax concessions. Syama Sunder (1998) conducted a survey to get an insight
into the mutual fund operations of private institutions with special reference to Kothari Pioneer.
The survey revealed that Agents play a vital role in spreading the Mutual Fund culture; open-end
schemes were much preferred then; age and income are the two important determinants in the
selection of the fund/scheme; brand image and return are the prime considerations while
investing in any Mutual Fund. Anjan Chakarabarti and Harsh Rungta (2000) stressed the
importance of brand effect in determining the competitive position of the AMCs. Their study
reveals that brand image factor, though cannot be easily captured by computable performance
measures, influences the investor‟s perception and hence his fund/scheme slection.
Page | 20
SEBI – NCAER Survey (2000) was carried out to estimate the number of households and the
population of individual investors, their economic and demographic profile, portfolio size,
investment preference for equity as well as other savings instruments. This is a unique and
comprehensive study of Indian Investors, for, data was collected from 3,00,0000 geographically
dispersed rural and urban households. Some of the relevant findings of the study are :
Households preference for instruments match their risk perception; Bank Deposit has an appeal
across all income class; 43% of the non-investor households equivalent to around 60 million
households (estimated) apparently lack awareness about stock markets; and, compared with low
income groups, the higher income groups have higher share of investments in Mutual Funds
(MFs) signifying that MFs have still not become truly the investment vehicle for small investors.
Nevertheless, the study predicts that in the next two years (i.e., 2000 hence) the investment of
households in MFs is likely to increase. Sharad Panwar and Dr. R. Madhumathi found that
public-sector sponsored, private-sector Indian sponsored and private-sector foreign sponsored
mutual funds do not differ statistically in terms of portfolio characteristics such as net assets,
common stock%, market capitalization, holdings, Top Ten %. However, there is a statistical
difference between three classes of public-sector sponsored, private-sector Indian sponsored and
private-sector foreign sponsored mutual funds in terms of average standard deviation, average
variance and average coefficient of variation. Portfolio risk characteristics measured through
private-sector Indian sponsored mutual funds seems to have outperformed both Public- sector
sponsored and Private-sector foreign sponsored mutual funds. Residual variance is not linearly
related to investment performance in terms of Jensen‟s alpha and portfolio beta, regardless of the
benchmark index used. The general linear model of analysis of covariance establishes
differences in performance among the three classes of mutual funds in terms of portfolio
diversification. S.Narayan Rao , evaluated performance of Indian mutual funds in a bear market
through relative performance index, risk-return analysis, Treynor‟s ratio, Sharpe‟s ratio, Sharpe‟s
measure , Jensen‟s measure, and Fama‟s 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 investor‟s expectations by giving excess returns over expected returns based
on both premium for systematic risk and total risk
Page | 21
Jayadev (1996) evaluated the performance of 62 mutual funds schemes using NAV data for
varying period between 1987 and 1995. He reported superior performance for bulk (30 out of 44)
of the sample schemes when total risk was considered. However, in terms of systematic risk only
24 out of 44 schemes outperformed the benchmark portfolio. He also found that Indian mutual
funds were not properly diversified. Further, in terms of Fama‟s measure, he did not find
selectivity ability of the fund manager.
Amitab Gupta (2001) in his study, the selected schemes were evaluated with respect to the
broad based BSE National Index to find out whether the schemes were able to beat the market.
The most important and widely used measures of performance are-

(1)  (Beta) Co-efficient (A Measure of Systematic Risk)
(2) Sharpe‟s Measure of Performance
(3) Treynor‟s Measure of Performance
(4) Jensen‟s Measure of Performance
(5) Fama‟s Measure of Performance
(6) Standard Deviation (A Measure of Total Risk)
(7) Co-efficient of Determination: Measure of Diversification
a  (Beta) Co-efficient - The beta is a measure of systematic risk or Non-diversifiable risk.
The beta of a stock measures the sensitivity or volatility of the stock with reference to a broad
based market index, e.g. SENSEX in India. In the case of Mutual Funds it represents fluctuations
in NAV of a Mutual Fund vis-à-vis base market. The more responsive the NAV of a Mutual
Fund is to the changes in the market the higher will be its beta and vice-versa. It is calculated by
relating the returns on a Mutual Fund with the returns in the Market. A beta of 1 indicates that
the security's price will move with the market, and the stock is called unity stock. A beta of less
than 1 means that the security will be less volatile than the market and the stock is called low
beta stock. A beta of greater than 1 indicates that the security's price will be more volatile than
the market and the stock is called high beta stock. In the study it is assumed that the Beta is
consistent during the period of study.
Page | 22
E.g. A beta of 1.2 for a stock would indicate that this stock is 20 per cent riskier than the
Index. Similarly, a beta of 0.9 would indicate that this stock is 10 per cent (100-90) less risky
than the Index. And, of course, a beta of one would mean that the stock is as risky as the stock
market index Beta is calculated using the following formula-
𝑵  𝑿𝒀 −  𝐗 ( 𝐘)
=
𝐍  𝐗𝟐− ( 𝐗)𝟐
Where, X = Market or Index Return, and,

Y = Return on Fund.
 = Beta of the Fund.
N = Number of Periods
b Sharpe’s Measure of Performance - This measure was developed by William Sharpe in
1966. Sharpe Measure measures the risk Premiums of the portfolio (average portfolio return less
risk free return) relative to the total amount of risk in the portfolio (standard deviation of the
portfolio). The Sharpe measure adjusts portfolio performance for total risk rather than market
risk. It is also called reward-to-variability ratio. The Sharpe ratio tells us whether a portfolio's
returns are due to smart investment decisions or a result of excess risk. The higher the Sharpe
ratio for a portfolio, the better the portfolio has performed. major limitation of the Sharpe ratio is
that it is based on the Capital Market Line (CML). The major character of the capital market line
is only the efficient portfolios can be plotted on the CML but not inefficient. Hence it is assumed
that a managed portfolio (mutual fund scheme) is an efficient portfolio.
E.g.- If the portfolio A has an average return of 10% with a standard deviation of 2%, and
portfolio B has an an average return of 12% with a standard deviation of 4%. Also risk free rate
of return is 5%. Then the Sharpe Index for A is equal to 2.5 and for B is equal to 1.75. Therefore
A will be ranked as better portfolio than B, because its Sharpe index is higher than that of
B (2.5 – 1.75) despite the fact that portfolio B had a higher return.
It is calculated using the following formula-
𝒓𝒕− 𝒓∗
𝑺𝒕 =
𝒕
Page | 23
Where, St = Sharpe Index
r* = riskless rate of interest (T - bill)
t = Standard deviations of the returns of portfolio t
𝒓𝒕 = average return on portfolio t
c Treynor’s Measure of Performance - This measure was developed by Jack Treynor in
1965. The Treynor measure is a relative measure of performance for investment managers and
measures the return premium per unit of systematic risk (risk that cannot be diversified) as
measured by the beta or relative volatility of the portfolio. While a high and positive Treynor's
Index shows a superior risk-adjusted performance of a fund, a low and negative Treynor's Index
is an indication of unfavorable performance. It is also called reward-to-volatility ratio.
The major limitation of the Treynor Index is that it can be applied to the schemes with
positive betas during the bull phase of the market. The results will mislead if applied during bear
phase of the market to the schemes with negative betas. The second limitation is it ignores the
reward for unsystematic or unique risk.
E.g.- If the portfolio A has an average return of 10% with a Beta of 0.5, and portfolio B
has an an average return of 12% with a Beta of 1.0. Also risk free rate of return is 5%. Then the
Treynor‟s Index for A is equal to 0.10 and for B is equal to 0.07. Therefore A will be ranked as
better portfolio than B, because its index is higher than that of B (0.10 – 0.07) despite the fact
that portfolio B had a higher return.
𝒓𝒏− 𝒓∗
𝑻𝒏 = 𝜷𝒏
Where, Tn = Treynor‟s Index
r* = riskless rate of interest (T - bill)
n = Beta coefficient of portfolio n
𝒓𝒏 = average return on portfolio n
Page | 24
d Jensen’s Measure of Performance - This measure was developed by Michael Jensen in
1968. This measures the Portfolio Manager‟s predictive ability i.e. his ability to earn returns
through successful prediction of security prices which are higher than those which an ordinary
investor would expect given the level of riskiness of his portfolio and average market return i.e.
the expected (CAPM) returns. It is a measure of absolute performance on a risk adjusted basis.
A positive value for Jensen's alpha means that the fund manager has "beat the market"
with his or her stock picking skills and vice-versa. If it is equal to zero then it indicates neutral
performance by portfolio manager. A positive value of this would indicate that the scheme has
provided a higher return over the CAPM return and lies above Security Market Line (SML) and
a negative value would indicate it has provided a lower than expected returns and lies below
SML. The Jensen model assumes that the portfolio is fully invested and is subjected to the
limitations of CAPM.
Limitation of this model is that it considers only systematic risk not the entire risk
associated with the fund and an ordinary investor cannot mitigate unsystematic risk, as his
knowledge of market is primitive.
𝑹𝒋𝒕 − 𝑹𝑭𝒕 = 𝒋 + 𝒋 (𝑹𝑴𝒕 − 𝑹𝑭𝒕)
Where, 𝑹𝒋𝒕 = Average return on portfolio j for a period t
𝑹𝑭𝒕 = Riskless rate of interest for a period t
𝒋 = Intercept that measures the forecasting ability of the portfolio manager
𝒋 = A measure of systematic risk for Portfolio j
𝑹𝑴𝒕 = Average return of a market portfolio for period t
Page | 25
e Fama’s Measure of Performance - This measure was developed by Eugene Fama in 1972.
This model is an extension of Jenson model. This model compares the performance, measured in
terms of returns, of a fund with the required return commensurate with the total risk associated
with it. The difference between these two is taken as a measure of the performance of the fund
and is called Net Selectivity. The Net Selectivity represents the stock selection skill of the fund
manager, as it is the excess returns over and above the return required to compensate for the total
risk taken by the fund manager.
A positive value for Fama indicates that the fund earned returns higher than expected
returns and lies above Capital Market Line (CML) and a negative value indicates that the fund
earned returns lower than expected returns and will lie below the Capital Market Line (CML).
𝑭𝑷 = 𝐫𝐏 − 𝐫𝐟 𝐏 𝐫𝐦 − 𝐫𝐟
𝐦
Where, FP = Fama‟s Measure for Portfolio,

rP = Portfolio Return,
rf = Risk Free Return,
P = Standard Deviation of the Portfolio Returns
m = Standard Deviation of the Market Returns
rm = Market Return.
The purpose of performance evaluation is that it should be in a position to identify the
mistakes and suggest a direction for the correction. A comparison of Sharpe‟s and Treynor‟s
ratio will help the fund managers to correct their actions from risk angle and comparison of
Jensen‟s and Fama‟s measures will help from return angle.
f Standard Deviation – It measures the absolute dispersion or variability or volatility. It shows
how the values in a series deviate from the mean value of the series. It is also used as a measure
of risk. The greater the Standard Deviation the greater the volatility in the fund returns i.e. the
greater the total risk associated with a particular fund. It is calculated using the following
formula-
 (𝐱 − 𝐱)𝟐
 =
𝐍
Page | 26
Where,  = Standard Deviation,
X = Values of the series,
𝐱 = Mean of the series,
N = Number of items in a series.
(g) Co-efficient of Correlation – The correlation measures the degree of relationship between
two variables. The co-efficient of correlation varies between -1 to +1. The higher the correlation
the greater is the degree of relationship between the variables. The correlation is used in this
study to measure the relationship between the fund returns and market returns. It‟s formula is
similar to that of the Beta. It is as follows-
𝑵  𝑿𝒀 −  𝐗 ( 𝐘)
𝒓= 𝟐 𝟐
𝐍  𝐗 − ( 𝐗)
(h) Co-efficient of Determination – It measures the diversification of the portfolio. It is the

square of the Co-efficient of Correlation.
(i) Returns on Fund - Returns on fund is calculated using the following formula-
𝑵𝑨𝑽𝒕+𝟏 + 𝑫𝒕+𝟏 − 𝑵𝑨𝑽𝒕
𝑹𝒇 =
𝑵𝑨𝑽𝒕
Where, 𝑅𝑓 = Returns on Mutual Fund.
𝑁𝐴𝑉𝑡 = Net Asset Value at the end of the previous Period,
𝑁𝐴𝑉𝑡+1 = Net Asset Value at the end of the current Period,
𝐷𝑡+1 = Dividend received during the current Period.
j Returns on Market Index - Returns on Market Index is calculated using the following
formula-
𝑴𝒕+𝟏 − 𝑴𝒕
𝑹𝒎 =
𝑴𝒕
Where, 𝑅𝑚 = Return on Market Index,
𝑀𝑡+1 = Market Index at the end of Current Period,
𝑀𝑡 = Market Index at the end of Previous Period,
Page | 27
(12) RESEARCH METHODOLOGY
(a) Designing of Questionnaire- To understand the savings preference, investment preference,

scheme preference, time horizon for investment and objectives for investment in Mutual Funds,
and to identify the information sources influencing scheme selection, and the preferred mode of
communication, a questionnaire (ANNEXURE I) was designed and the respondents were asked
to rank their preferences on a ranking scale.
The questionnaire also contains 21 factors that are of varied importance to investors
while taking decision to invest in Mutual Funds. These factors are divided into 3 major groups –
Scheme Qualities, AMC Qualities and Investor Services. The investors were asked to rate the
importance of each of these factors on a 5 point scale ranging from Highly Important (1) to not at
all Important (5). These factors are as follows-
(A) Scheme Qualities-

1. Fund‟s/Scheme‟s performance record
2. Fund‟s/Scheme‟s brand name
3. Scheme‟s portfolio constituents
4. Reputation of scheme(s), portfolio manager(s)
5. Investment/Withdrawal facilities
6. Rating by a rating agency
7. Innovativeness of the Scheme
8. Products with tax benefits
9. Entry and Exit load
10. Safety of capital
(B) AMC Qualities-

1. Private Sector / Public Sector ownership
2. Reputation of the company
3. Range of schemes with different qualities
4. Efficiency of research wing
5. Company‟s expertise in managing money
Page | 28
(C) Investor Services-
1. Disclosure of investment objectives, method and Periodicity of valuation in
advertisement.
2. Disclosure of method periodicity of scheme‟s sales and repurchase in offer document.
3. Announcement of NAV on every trading day
4. Disclosure of deviation of the investments from the expected pattern.
5. Disclosure of investments at regular intervals.
6. Mutual Fund Investors‟ grievance redressal machinery.
(b) Duration of Study- The survey is conducted for a period of two months starting from May
10, 2009 to July 10, 2009. The performance of the Mutual Funds is calculated for a period of
three years starting from July 2006 to June 2009.
(c) Sample Selection- The survey is conducted on 120 investors out of which 60 investors
invested in Mutual Funds. The sample for study includes 29 Government Employees, 26 Private
Sector Employees, 21 Self-Professionals, 27 Businessmen, and 13 Retired Government
Employees so as to get effective results. Out of total 120 respondents, 55 investors invested
through Reliance Money. The survey was conducted in certain areas of Lucknow, Kanpur and
Varanasi only.
For the second part of the study the sample includes 10 similar equity schemes of Top 10
fund houses selected on the basis of their Assets under Management (AUM) as on 30th June
2009. This includes 9 open ended schemes and 1 closed ended scheme. More than 75% of corpus
of each scheme is invested in equity stocks.
(13) Data Collection and Analysis- The report is based on primary as well as secondary data.
For the first part of the study Primary data was collected through the above designed
Questionnaire using telephone calls, e-mails and also personal interviewing the respondents. The
data is analyzed using the correlation analysis, chi-square test and analysis of variance.
For the second part Secondary data is collected from the offer document of the funds, the
websites of respective AMCs, amfiindia.com and MutualFundsindia.com. The data is analyzed
using the Sharpe Measure, Treynor‟s Measure, Jensen Measure, Fama Measure, Standard
Deviation and Correlation Analysis. The profile of the investors is given below-
Page | 29
RESPONSES DURING THE SURVEY
INVESTOR PROFILE NO. OF RESPONDENTS
SEX
Male 136
Female 64
AGE
Below 30 42
30-40 70
40-50 54
50 and above 34
OCCUPATION
Salaried 75
Businessman 47
Professional 41
Retired 37
ANNUAL INCOME
Below 2,00,000 51
2,00,000-3,00,000 77
3,00,000-4,00,000 38
Above 4,00,000 34
ANNUAL SAVINGS
Below 50,000 67
50,000 – 100,000 52
100,000 – 150,000 43
Above 150,000 38
INVESTMENTS
Fixed Deposits 75
Mutual Funds 60
Life Insurance 28
Stock Market 22
Postal Savings 6
Others 9
OBJECTIVE
Liquidity / Safety 21
Growth 16
Returns 12
Tax Benefits 11
TYPE OF FUNDS
Open-Ended Funds 41
Close-Ended Funds 13
Interval-Funds 6
Page | 30
SCHEME PREFERENCE
Equity (Growth) 19
Equity (Dividend) 8
Debt 17
Balanced 10
Sector Specific 6
INFLUENCE OF ENVIRONMENTAL FACTORS
ROUTE NO OF RESPONDENTS
Self – Evaluation 21
Advisors 17
Commercials 13
Friends/Family 9
MODE OF COMMUNICATION FOR RECEIVING UPDATES AND PERFORMANCE
MODE NO OF RESPONDENTS
Personal Communication 21
Internet / e-mail 16
Telephone 14
No Preference 9
Page | 31
Analysis of the Findings- The relationship between important factors has been analyzed with
the help of Chi-Square Test. The following pairs have been analyzed-
1. Income and Savings- The relationship between the savings and investment can be
presented with the help of following table and diagram,
Income / Savings Below 50,000 50,000-100,000 100,000-150,000 Above 150,000

Below 2,00,000 47 4 0 0
2,00,000-3,00,000 19 37 21 0
3,00,000-4,00,000 1 10 17 6
Above 4,00,000 0 1 5 32
50
40
30
20 Below 2,00,000
10
2,00,000-3,00,000
0
3,00,000-4,00,000
Above 4,00,000
Page | 32
2. Savings and Investments-
Investments /
Below 50,000 50,000-100,000 100,000-150,000 Above 150,000
Savings
Fixed Deposits 42 16 9 8
Mutual Funds 13 16 15 16
Life Insurance 5 11 7 5
Stock Market 3 6 7 6
Postal Savings 3 1 2 0
Others 1 2 3 3
45
40
35
30
25
20 Below 50,000
15
10 50,000-100,000
5
0 100,000-150,000
Above 150,000
Page | 33
3. Age and Time Horizon-
Age / Time Below 1 year 1-3 years 3-5 years Above 5 years
Below 30 7 10 13 12
30-40 15 16 25 14
40-50 8 19 12 15
50 and above 6 17 9 2
30
25
20
Below 30
15
30-40
10
40-50
5
0 50 and above
Below 1 1-3 years 3-5 years Above 5
year years
Page | 34
4. Age and Investment-
Age / Investment Fixed Mutual Life Stock Postal

Others
Deposits Funds Insurance Market Savings
Below 30 9 26 2 5 0 0
30-40 25 20 12 11 0 2
40-50 22 12 11 4 2 3
50 and above 19 2 3 2 4 4
30
25
20
15
Below 30
10
5 30-40
0 40-50
50 and above
Page | 35
5. Age and Scheme-
Age / Scheme Equity Equity Sector

Debt Balanced
(Growth) (Dividend) Specific
Below 30 11 2 7 3 3
30-40 6 3 5 4 2
40-50 2 3 4 2 1
50 and above 0 0 1 1 0
12
10
8
6
4 Below 30
2 30-40
0 40-50
50 and above
Page | 36
A. RANKING OF AMC QUALITIES-
NO OF
RANK
AMC QUALITIES RESPONDENTS
(Based on Weighted Average)
1 2 3 4 5
Private Sector / Public Reputation of the
21 16 12 7 4 One
Sector ownership company
Reputation of the Range of schemes with
25 17 11 6 1 Two
company different qualities
Range of schemes with Company‟s expertise in
24 20 9 3 4 Three
different qualities managing money
Efficiency of research Private Sector / Public
13 16 10 12 9 Four
wing Sector ownership
Company‟s expertise in Efficiency of research
19 20 16 4 1 Five
managing money wing
Anova: Single Factor (AMC Qualities)

SUMMARY
Groups Count Sum Average Variance
Column 1 5 60 12 46.5
Column 2 5 60 12 88
Column 3 5 60 12 99.3
Column 4 5 60 12 7.5
Column 5 5 60 12 78.5
ANOVA
Source of Variation SS df MS F P-value F crit
Between Groups 0.64 4 0.16 0.0025 0.99999 2.86608
Within Groups 1279.2 20 63.96
Total 1279.84 24
The F Value is much less than the critical or table value which means that people
consider all the qualities of AMC as important while investing in a fund. Therefore the
hypothesis that investors consider all the qualities of the AMC as important factor while making
investment in mutual funds stands accepted. The difference in the sample is due to random
sampling error.
Page | 37
B. RANKING OF SCHEME QUALITIES
NO OF
RANK
SCHEME QUALITIES RESPONDENTS
1 2 3 4 5
Fund‟s/Scheme‟s
32 21 5 2 0 One Safety of Capital
performance record
Fund‟s/Scheme‟s brand Fund‟s/Scheme‟s
29 15 10 5 1 Two
name performance record
Scheme‟s portfolio
15 12 21 9 3 Three Products with tax benefits
constituents
Fund‟s/Scheme‟s brand
29 14 7 8 2 Four
Entry and Exit load name
Investment/Withdrawal
21 19 11 5 5 Five Entry and Exit load
facilities
Investment/Withdrawal
12 14 9 14 11 Six
Rating by a rating agency facilities
New Features of the Scheme‟s portfolio
13 21 10 6 10 Seven
Scheme constituents
New Features of the
Products with tax benefits 26 24 6 3 1 Eight
Scheme
Reputation of scheme(s),
13 5 11 17 14 Nine Rating by a rating agency
portfolio manager(s)
Reputation of scheme(s),
Safety of Capital 32 18 7 2 1 Ten
portfolio manager(s)
The F Value is much less than the critical value or table value which shows that investors
consider all the qualities of the a scheme as important factor while selecting a particular scheme.
Therefore the hypothesis that, investors consider all the qualities of the scheme important while
selecting a particular scheme stands accepted. The differences in the sample are due to the
random sampling error.
The ANOVA calculation is given on the next page-
Page | 38
Anova: Single Factor (Scheme Qualities)
SUMMARY
Column 1 5 60 12 193.5
Column 2 5 60 12 118
Column 3 5 60 12 45
Column 4 5 60 12 108.5
Column 5 5 61 12.2 57.2
Column 6 5 60 12 4.5
Column 7 5 60 12 31.5
Column 8 5 60 12 144.5
Column 9 5 60 12 20
Column 10 5 60 12 170.5
ANOVA
Between Groups 2036.68 4 509.17 14.9142 7.8E-08 2.57874
Total 3572.98 49
C. RANKING OF INVESTOR SERVICES-
NO OF
RANK
SCHEME QUALITIES RESPONDENTS
1 2 3 4 5
Disclosure of investment
objectives, method and Announcement of NAV
31 23 4 2 0 One
Periodicity of valuation in on every trading day
advertisement
Disclosure of method, Disclosure of investment
periodicity of scheme‟s objectives, method and
27 18 10 4 1 Two
sales and repurchase Periodicity of valuation in
in offer document advertisement
Disclosure of method,
Announcement of NAV periodicity of scheme‟s
32 21 7 0 0 Three
on every trading day sales and repurchase
in offer document
Disclosure of deviation of Mutual Fund Investors‟
the investments from the 19 24 11 2 4 Four grievance redressal
expected pattern machinery
Disclosure of investments Disclosure of investments
18 24 13 3 2 Five
at regular intervals at regular intervals
Mutual Fund Investors‟ Disclosure of deviation of
grievance redressal 20 26 10 1 4 Six the investments from the
machinery expected pattern
Page | 39
Anova: Single Factor (Scheme Qualities)
SUMMARY
Column 1 5 60 12 197.5
Column 2 5 60 12 112.5
Column 3 5 60 12 198.5
Column 4 5 60 12 89.5
Column 5 5 60 12 90.5
Column 6 5 61 12.2 112.2
ANOVA
Between Groups 0.166667 5 0.03333 0.00025 1 2.62065
Total 3202.967 29
The F value is less than the table value which means that the investor consider all the
investor services as important while selecting a particular scheme. Hence the hypothesis that
investor considers all the investor services as important in their fund scheme selection stands
true. The difference in the sample is due to the random sampling error.
Page | 40
(14) PERFORMANCE ANALYSIS OF MUTUAL FUNDS
The performance of Mutual Funds has been measured for a period of three years starting from
July 2006 to June 2009. The funds‟ performance is analyzed and a comparison is made between
the performance of various funds with their respective benchmark index with the help of above
discussed methods on Quarterly, Half-yearly, and Yearly basis in order to present a more
comparative analysis. It is done keeping in mind the different investment periods of the
investors. The funds chosen belong to the top 10 AMCs in India as on 30th June 2009. The
rankings of the AMCs are based on the total AUM under them as on the date. The funds are
selected based on their corpus. More than 75% of the total corpus of each fund is invested in the
equity. The following 10 Equity funds are included in the study –
(1) Birla Sunlife Equity Fund
(2) Templeton India Equity Fund
(3) UTI Equity Fund
(4) SBI Equity Fund
(5) Kotak Emerging Equity Scheme
(6) HDFC Equity Fund
(7) LIC Equity Fund
(8) ICICI Discovery Fund
(9) IDFC Imperial Equity Fund
(10) Reliance Equity Fund
The analysis of the various mutual funds is as follows-
Page | 41
(1) Birla Sunlife Equity Fund - It is a open-ended equity fund. The date of inception is
August 27, 1998 with a NAV of Rs. 10. The Benchmark Index is BSE 200. The primary
investment objective is to provide long term capital appreciation through a portfolio with a target
allocation of 90% in Equity. Its Asset Allocation is 93.70% in Equity, 3.30% in Debt and 3.00%
in Cash and Cash Equivalent at the end of July 2009. The fund size is Rs. 1112.67 crores as on
July 31, 2009. Its results are as follows-
Sharpe Treynor
𝑹𝒑 (%) 𝑹𝒎 (%) 𝑹𝒇 (%) 𝑹𝒑 - 𝑹𝒎 𝑹𝒑 - 𝑹𝒇 𝑹𝒎 - 𝑹𝒇 (m) (𝑺𝒕)m (𝑻𝒏)m
Quarterly Results
6.16 5.12 4.58 1.04 1.58 0.54 22.40 0.02 0.54
Half-Yearly Results
12.65 11.91 4.64 0.74 8.01 7.27 35.33 0.21 7.27
Yearly Results
18.52 13.52 4.51 5.00 14.01 9.01 21.21 0.42 9.01
Where, 𝑹𝒑 = Average Returns for Fund for particular period,
𝑹𝒎 = Average Returns for the Market Index for particular period,
𝑹𝒇 = Risk free Rate of Return (T-Bill),
 = Standard Deviation of the Returns,
r = Correlation of fund returns with market returns,
r2 = Co-efficient of Determination
Sharpe Treynor Jensen Fama

eta ()p (𝒋) (p) (r) (𝒓𝟐)
(𝑺𝒕)p (𝑻𝒏)p (𝑭𝑷)
Quarterly Results
1.07 0.06 1.48 1.00 0.99 24.25 0.991 0.982
Half-Yearly Results
0.98 0.22 8.17 0.89 0.81 35.03 0.991 0.982
Yearly Results
1.30 0.50 10.78 2.29 2.30 27.66 0.999 0.998
Page | 42
(a) Quarterly Analysis- The Beta of fund and the standard deviation of the fund returns is
more than that of the market in relation to risk free rate. This shows that the fund is more
volatile and risky as compared to the market both in terms of Systematic Risk and Total
Risk but it is compensating for that risk by earning 1.04% more than market and also
earning 1.58% more than the Risk-Free rate.
Sharpe ratio and Treynor Ratio for the fund is more than that of the market which
shows that the fund has performed better than the market. The Jensen‟s Alpha and Fama
calculated for the fund is positive which shows that the fund manager has beaten the
market with his stock selection skills. There is a high degree of positive correlation
between the fund returns and market returns and portfolio is well diversified.
(b) Half-Yearly Analysis- The Beta of fund and the standard deviation of the fund returns is
less than that of the market in relation to risk free rate. This shows that the fund is less
risky and volatile as compared to the market both in terms of Systematic Risk and Total
Risk and it is also compensating for the risk by earning 0.74% more than market and
8.01 % more than the Risk-Free rate.
(c) Yearly Analysis- The Beta of fund and the standard deviation of the fund returns is more
than that of the market in relation to risk free rate. This shows that the fund is more risky
and volatile as compared to the market both in terms of Systematic Risk and Total Risk
but it is compensating for that risk by earning 5.00% more than market and also earning
14.01% more than the Risk-Free rate.
Page | 43
(2) Templeton India Equity Fund- It is a diversified open ended equity fund. The date of
inception is May 18, 2006 with a NAV of Rs. 10 per unit. The Benchmark Index is BSE 200.
The primary investment objective is to provide a combination of regular income and long term
capital appreciation by investing primarily in stocks that have a current or potentially attractive
dividend yield. Its Asset Allocation is 93.81% in Equity and 6.19% in Cash and Cash Equivalent
at the end of July 2009. The fund size is Rs. 1175.62 crores as on July 31, 2009. Its results are as
follows-
Sharpe Treynor
Quarterly Results
16.70 5.12 4.58 11.58 12.12 0.54 22.40 0.02 0.54
Half-Yearly Results
34.52 11.91 4.64 22.61 29.88 7.27 35.33 0.21 7.27
Yearly Results
69.37 13.52 4.51 55.85 64.86 9.01 21.21 0.42 9.01

eta ()p (𝒋) (p) (r) (𝒓𝟐)
Quarterly Results
0.91 0.40 13.31 11.62 11.39 30.37 0.672 0.452
Half-Yearly Results
1.17 0.74 25.53 21.37 21.50 40.37 0.737 0.543
Yearly Results
0.53 1.25 122.37 60.08 42.78 52.04 0.216 0.046
Page | 44
(a) Quarterly Analysis- The Beta of fund is less than that of the market and the standard
deviation of the fund returns is more than that of the market. This shows that the fund is
less risky as compared to the market in terms of Systematic Risk but it is more volatile
and risky as compared to the market in terms of Total Risk and it is compensating for the
risk by earning 11.58% more than market and also earning 12.12% more than the Risk-
Free rate.
(b) Half-Yearly Analysis- The Beta of fund and the standard deviation of the fund returns is
more than that of the market. This shows that the fund is more risky and volatile as
compared to the market both in terms of Systematic Risk and Total Risk but it is
compensating for the risk by earning 22.61% more than market and 29.88 % more than
the Risk-Free rate.
(c) Yearly Analysis- The Beta of fund is less than that of the market and the standard
less risky as compared to the market in terms of Systematic Risk but it more volatile and
risky as compared to the market in terms of Total Risk and it is compensating for the risk
by earning 55.85% more than market and also earning 64.86% more than the Risk-Free
rate. Sharpe ratio and Treynor Ratio for the fund is more than that of the market which
market with his stock selection skills. There is a low degree of positive correlation
between the fund returns and market returns and portfolio is not well diversified.
Page | 45
(3) UTI Equity Fund- It is an open ended equity fund. The date of inception is April 20, 1992
with a NAV of Rs. 10 per unit. The Benchmark Index is BSE 100. The principal investment
objective is to provide long term capital appreciation through investing at least 80% of its funds
in equity and equity related instrument with medium to high risk profile and upto 20% in debt
and money market instruments with low to medium risk profile. Its Asset Allocation is 90.68%
in Equity, 2.25% in Debt and 7.07% in Cash and Cash Equivalent at the end of July 2009. The
fund size is Rs. 1629.68 crores as on July 31, 2009. Its results are as follows-
Sharpe Treynor
Quarterly Results
3.32 5.10 4.58 (-1.78) (-1.26) 0.52 21.78 0.02 0.52
Half-Yearly Results
6.55 11.84 4.64 (-5.29) 1.91 7.20 34.62 0.21 7.20
Yearly Results
10.37 13.81 4.51 (-3.44) 5.86 9.30 20.42 0.46 9.30

eta ()p (𝒋) (p) (r) (𝒓𝟐)
Quarterly Results
0.71 -0.08 -1.77 (-1.63) (-1.64) 15.85 0.989 0.978
Half-Yearly Results
0.40 0.09 4.78 (-0.97) (-2.12) 19.47 0.726 0.527
Yearly Results
0.70 0.41 8.37 (-0.65) (-0.65) 14.23 0.999 0.998
Page | 46
(a) Quarterly Analysis- The Beta and the standard deviation of the fund returns is less than
that of the market. This shows that the fund is less risky and volatile as compared to the
market both in terms of Systematic Risk and Total Risk. It is earning 1.78% less than
market and also earning 1.26% less than the Risk-Free rate.
Sharpe ratio and Treynor Ratio for the fund is negative and less than that of the
market which shows that the fund‟s performance is not up to the mark when compared to
the market. The Jensen‟s Alpha and Fama calculated for the fund is negative which
shows that the fund manager has not been able to beat the market with his stock selection
skills. There is a high degree of positive correlation between the fund returns and market
returns and portfolio is well diversified.
(b) Half-Yearly Analysis- The Beta and the standard deviation of the fund returns is less
than that of the market. This shows that the fund is less risky and volatile as compared to
the market both in terms of Systematic Risk and Total Risk. It is earning 5.29% less than
market but is earning 1.91% more than the Risk-Free rate.
Sharpe ratio and Treynor Ratio for the fund is less than that of the market which
shows that the fund‟s performance is not up to the mark when compared to the market.
The Jensen‟s Alpha and Fama calculated for the fund is negative which shows that the
fund manager has not been able to beat the market with his stock selection skills. There is
a high degree of positive correlation between the fund returns and market returns and
portfolio is well diversified.
(c) Yearly Analysis- The Beta and the standard deviation of the fund returns is less than that
of the market. This shows that the fund is less risky and volatile as compared to the
market both in terms of Systematic Risk and Total Risk. It is earning 3.44% less than
market but is earning 5.86% more than the Risk-Free rate.
shows that the fund‟s performance is not up to the mark when compared to the market.
The Jensen‟s Alpha and Fama calculated for the fund is negative which shows that the
fund manager has not been able to beat the market with his stock selection skills. There is
a high degree of positive correlation between the fund returns and market returns and
portfolio is well diversified.
Page | 47
(4) SBI Equity Fund- It is a diversified open ended equity fund. The date of inception is January
1, 1991 with a NAV of Rs. 10 per unit. The Benchmark Index is BSE 100. The primary
investment objective is to provide the investor Long-term capital appreciation by investing in
high growth companies along with the liquidity of an open-ended scheme through investments
primarily in equities and the balance in debt and money market instruments. Its Asset Allocation
is 92.51% in Equity, 1.35% in Debt and 6.14% Cash and Cash Equivalent at the end of July
2009. The fund size is Rs. 370.56 crores as on July 31, 2009. Its results are as follows-
Sharpe Treynor
Quarterly Results
5.80 5.10 4.58 0.70 1.22 0.52 21.78 0.02 0.52
Half-Yearly Results
12.54 11.84 4.64 0.70 7.90 7.20 34.62 0.21 7.20
Yearly Results
16.10 13.81 4.51 2.29 11.59 9.30 20.42 0.46 9.30
r2 = Co-efficient of Determination.

eta ()p (𝒋) (p) (r) (𝒓𝟐)
Quarterly Results
0.99 0.05 1.23 0.71 0.62 25.17 0.907 0.822
Half-Yearly Results
1.03 0.22 7.67 0.48 0.48 35.70 0.995 0.990
Yearly Results
0.87 0.64 13.32 3.50 3.41 17.91 0.996 0.992
Page | 48
(a) Quarterly Analysis- The Beta of fund is less than that of the market and the standard
and risky as compared to the market in terms of Total Risk and it is compensating for the
risk by earning 0.70% more than market and also earning 1.22% more than the Risk-Free
rate.
(b) Half-Yearly Analysis- The Beta and the standard deviation of the fund returns is more
than that of the market. This shows that the fund is more risky and volatile as compared
to the market both in terms of Systematic Risk and Total Risk. It is compensating for the
risk by earning 0.70% more than market but is earning 7.90% more than the Risk-Free
rate.
market both in terms of Systematic Risk and Total Risk. But still it is earning 2.29%
more than market and 11.59% more than the Risk-Free rate.
Page | 49
(5) Kotak Emerging Equity Scheme- It is a diversified close-ended equity fund. The date of
inception is March 30, 2007 with a NAV of Rs. 10. The Benchmark Index is BSE Midcap. The
primary investment objective is to generate long-term capital appreciation from a portfolio of
equity and equity related securities, by investing predominantly in mid and small cap companies.
Its Asset Allocation is 81.77% in Equity and 3.35% in Debt and 14.88% in Cash and Cash
Equivalent at the end of July 2009. The fund size is Rs. 134.09 crores as on July 31, 2009. Its
results are as follows-
Sharpe Treynor
𝑹𝒑 (%) 𝑹𝒎 (%) 𝑹𝒇 (%) 𝑹𝒑 - 𝑹𝒎 𝑹𝒑 – 𝑹𝒇 𝑹𝒎 - 𝑹𝒇 (m) (𝑺𝒕)m (𝑻𝒏)m
Quarterly Results
0.14 3.98 4.58 (-3.84) (-4.44) (-0.60) 33.23 -0.02 (-0.60)
Half-Yearly Results
-1.33 5.49 4.64 (-6.82) (-5.97) 0.85 48.05 0.02 0.85
Yearly Results
-18.62 -11.61 4.51 (-7.01) (-23.13) (-16.12) 5.86 -2.75 (-16.12)

eta ()p (𝒋) (p) (r) (𝒓𝟐)
Quarterly Results
0.74 -0.18 -6.00 (-3.99) (-4.00) 25.05 0.953 0.908
Half-Yearly Results
0.80 -0.15 -7.46 (-6.65) (-6.67) 39.96 0.972 0.945
Yearly Results
0.78 -3.10 -29.65 (-10.56) (-2.65) 7.47 1.000 1.000
Page | 50
market both in terms of Systematic Risk and Total Risk but it is earning 4.44% less than
market and 0.60% less than the Risk-Free rate.
market which shows that the fund‟s performance is not up to the mark with that of the
market. The Jensen‟s Alpha and Fama calculated for the fund is negative which shows
that the fund manager has not been able to beat the market with his stock selection skills.
There is a high degree of positive correlation between the fund returns and market returns
and portfolio is well diversified.
There is a high degree of positive correlation between the fund returns and market returns
(c) Yearly Analysis- The Beta of fund is less than that of the market and the standard
and risky as compared to the market in terms of Total Risk. It is earning 7.01% less than
There is a positive perfect correlation between the fund returns and market returns and
portfolio is highly diversified.
Page | 51
(6) HDFC Equity Fund - It is a open-ended equity fund. The date of inception is January 1,
1995 with a NAV of Rs. 10. The Benchmark Index is S & P CNX 500. The primary investment
objective is to provide capital appreciation through investments predominantly in equity oriented
securities. Its Asset Allocation is 94.74% in Equity and 5.26% in Cash and Cash Equivalent at
the end of July 2009. The fund size is Rs. 4337.71 crores as on July 31, 2009. Its results are as
follows-
Sharpe Treynor
Quarterly Results
5.60 4.82 4.58 0.78 1.02 0.24 21.82 0.01 0.24
Half-Yearly Results
10.66 11.48 4.64 (-0.82) 6.02 6.84 35.19 0.19 6.84
Yearly Results
15.12 12.71 4.51 2.41 10.61 8.20 21.91 0.37 8.20

eta ()p (𝒋) (p) (r) (𝒓𝟐)
Quarterly Results
0.98 0.05 1.04 0.78 0.78 21.80 0.982 0.964
Half-Yearly Results
0.82 0.20 7.34 0.41 0.34 29.31 0.994 0.988
Yearly Results
0.99 0.49 10.72 2.49 2.49 21.87 0.993 0.986
Page | 52
market both in terms of Systematic Risk and Total Risk but still it is earning 0.78% more
than market and 1.02% more than the Risk-Free rate.
market and 6.02% more than the Risk-Free rate.
market both in terms of Systematic Risk and Total Risk. But still it is earning 2.41%
more than market and 10.61% more than the Risk-Free rate.
market with his stock selection skills. There is a positive perfect correlation between the
fund returns and market returns and portfolio is highly diversified.
Page | 53
(7) LIC Equity Fund- It is a open ended equity fund. The date of inception is February 15, 1999
with a NAV of Rs. 10. The Benchmark Index is S & P CNX Nifty. The primary investment
objective is to obtain maximum possible capital growth consistent with reasonable levels of
safety and security by investing the funds mainly in equities and also in debts and other
permitted instruments of capital and money market. Its Asset Allocation is 96.22% in Equity and
3.68% in Cash and Cash Equivalent at the end of July 2009. The fund size is Rs. 103.49 crores as
on July 31, 2009. Its results are as follows-
Sharpe Treynor
Quarterly Results
12.21 4.35 4.58 7.86 7.63 (-0.23) 18.63 -0.01 (-0.23)
Half-Yearly Results
29.70 10.31 4.64 19.39 25.06 5.67 31.21 0.18 5.67
Yearly Results
46.84 12.60 4.51 34.24 42.33 8.09 18.71 0.43 8.09

eta ()p (𝒋) (p) (r) (𝒓𝟐)
Quarterly Results
1.45 0.24 5.26 7.96 8.01 31.34 0.860 0.739
Half-Yearly Results
1.54 0.44 16.27 16.32 14.68 57.09 0.843 0.710
Yearly Results
2.46 0.88 17.20 22.42 21.62 47.94 0.962 0.925
Page | 54
(a) Quarterly Analysis- The Beta and the standard deviation of the fund returns is more than
that of the market. This shows that the fund is more risky and volatile as compared to the
market both in terms of Systematic Risk and Total Risk and it is compensating for the
risk by earning 7.86% more than market and 7.63% more than the Risk-Free rate.
to the market both in terms of Systematic Risk and Total Risk and it is compensating for
the risk by earning 19.39% more than market and 25.06% more than the Risk-Free rate.
(c) Yearly Analysis- The Beta and the standard deviation of the fund returns is more than
market both in terms of Systematic Risk and Total Risk and it is compensating for the
risk by earning 34.24% more than market and 42.33% more than the Risk-Free rate.
market with his stock selection skills. There is a positive perfect correlation between the
fund returns and market returns and portfolio is well diversified.
Page | 55
(8) ICICI Discovery Fund - It is a open-ended equity fund. The date of inception is August 14,
2004 with a NAV of Rs. 10. The Benchmark Index is S & P CNX Nifty. The primary investment
objective is to generate returns through a combination of dividend income and capital
appreciation by investing primarily in a well diversified portfolio of value stocks. Its Asset
Allocation is 79.54% in Equity and 20.46% in Cash and Cash Equivalent at the end of July 2009.
The fund size is Rs. 300.74 crores as on July 31, 2009. Its results are as follows-
Sharpe Treynor
Quarterly Results
4.40 4.35 4.58 0.05 (-0.18) (-0.23) 18.63 -0.01 (-0.23)
Half-Yearly Results
9.07 10.31 4.64 (-1.24) 4.43 5.67 31.21 0.18 5.67
Yearly Results
10.06 12.60 4.51 (-2.54) 5.55 8.09 18.71 0.43 8.09

eta ()p (𝒋) (p) (r) (𝒓𝟐)
Quarterly Results
1.21 -0.01 -0.14 0.10 0.12 24.13 0.940 0.883
Half-Yearly Results
1.03 0.13 4.30 (-1.41) (-1.58) 33.02 0.976 0.952
Yearly Results
0.21 0.30 26.42 3.85 (-2.46) 18.55 0.922 0.850
Page | 56
(a) Quarterly Analysis- The Beta and the standard deviation of the fund returns is more than
market both in terms of Systematic Risk and Total Risk and it is earning 0.05% more
than market and 0.18% less than the Risk-Free rate.
Sharpe ratio and Treynor Ratio for the fund is negative but more than that of the
market which shows that the fund has performed better than the market. The Jensen‟s
Alpha and Fama calculated for the fund is positive which shows that the fund manager
has beaten the market with his stock selection skills. There is a high degree of positive
correlation between the fund returns and market returns and portfolio is well diversified.
to the market both in terms of Systematic Risk and Total Risk and it is earning 1.24% less
Sharpe ratio for the fund is less and Treynor Ratio for the fund is more than that
of the market which shows that the fund has performed better than the market in terms of
systematic risk but not in terms of total risk. The Jensen‟s Alpha and Fama calculated for
the fund is negative which shows that the fund manager has not able to beat the market
with his stock selection skills. There is a high degree of positive correlation between the
fund returns and market returns and portfolio is well diversified.
market both in terms of Systematic Risk and Total Risk and it is earning 2.54% less than
Sharpe ratio for the fund is less and Treynor Ratio for the fund is more than that
of the market which shows that the fund has performed better than the market in terms of
systematic risk but not in terms of total risk. The Jensen‟s Alpha for the fund is positive
but Fama for the fund is negative which again shows that the fund manager has beaten
the market with his stock selection skills in terms of systematic risk not in terms of total
risk. There is a positive perfect correlation between the fund returns and market returns
Page | 57
(9) IDFC Imperial Equity Fund - It is a open-ended equity fund. The date of inception is
March 16, 2006 with a NAV of Rs. 10. The Benchmark Index is S & P CNX Nifty. The primary
investment objective is to seek to generate capital appreciation and/or provide income
distribution from a portfolio of predominantly equity and equity related instruments. Its Asset
Allocation is 83.81% in Equity and 16.19% in Cash and Cash Equivalent at the end of July 2009.
The fund size is Rs. 353.59 crores as on July 31, 2009. Its results are as follows-
Sharpe Treynor
Quarterly Results
5.20 4.35 4.58 0.85 0.62 (-0.23) 18.63 0.01 (-0.23)
Half-Yearly Results
6.52 10.31 4.64 (-3.79) 1.88 5.67 31.21 0.18 5.67
Yearly Results
17.52 12.60 4.51 4.92 13.01 8.09 18.71 0.43 8.09

eta ()p (𝒋) (p) (r) (𝒓𝟐)
Quarterly Results
0.85 0.04 0.72 0.82 0.82 16.06 0.994 0.988
Half-Yearly Results
0.68 0.08 2.76 (-1.98) (-2.48) 23.90 0.890 0.792
Yearly Results
0.65 1.05 20.01 7.75 7.67 12.38 0.985 0.970
Page | 58
the market both in terms of Systematic Risk and Total Risk and it is earning 3.79% less
shows that the fund‟s performance is not up to the mark with market. The Jensen‟s Alpha
and Fama calculated for the fund is negative which shows that the fund manager has not
able to beat the market with his stock selection skills. There is a high degree of positive
for the fund is positive which again shows that the fund manager has beaten the market
with his stock selection skills. There is a positive perfect correlation between the fund
returns and market returns and portfolio is well diversified.
Page | 59
(10) Reliance Equity Fund- It is a diversified open ended equity fund. The date of inception is
March 28, 2006 with a NAV of Rs. 10. The Benchmark Index is S & P CNX Nifty. The primary
investment objective is to seek to generate capital appreciation and provide long-term growth
opportunities by investing in a portfolio constituted of equity and equity related securities of top
100 companies by market capitalization and the secondary objective is to generate consistent
returns by investing in debt and money market securities. Its Asset Allocation is 92.51% in
Equity, 1.35% in Debt and 6.14% Cash and Cash Equivalent at the end of July 2009. The fund
size is Rs. 370.56 crores as on July 31, 2009. Its results are as follows-
Sharpe Treynor
Quarterly Results
4.14 4.35 4.58 (-0.21) (-0.44) (-0.23) 18.63 0.01 (-0.23)
Half-Yearly Results
9.01 10.31 4.64 (-1.3) 4.37 5.67 31.21 0.18 5.67
Yearly Results
12.49 12.60 4.51 (-0.11) 7.98 8.09 18.71 0.43 8.09

eta ()p (𝒋) (p) (r) (𝒓𝟐)
Quarterly Results
0.93 -0.03 -0.47 (-0.23) (-0.22) 17.52 0.980 0.960
Half-Yearly Results
0.83 0.17 5.27 (-0.34) (-0.44) 26.40 0.986 0.972
Yearly Results
0.92 0.45 8.67 0.53 0.38 17.59 0.983 0.966
Page | 60
shows that the fund has not performed better than the market. The Jensen‟s Alpha and
Fama calculated for the fund is negative which shows that the fund manager has not been
the market both in terms of Systematic Risk and Total Risk and it is earning 1.3% less
shows that the fund‟s performance is not up to the mark with market. The Jensen‟s Alpha
and Fama calculated for the fund is negative which shows that the fund manager has not
for the fund is positive which again shows that the fund manager has beaten the market
with his stock selection skills. There is a positive perfect correlation between the fund
returns and market returns and portfolio is well diversified.
Page | 61
(15) COMPARISON OF FUNDS ON BASIS OF INDEX
(1) Base Index- BSE 200- There are two open-ended equity funds having benchmark index
of BSE 200, Birla Sunlife Equity Fund and Templeton India Equity Fund.
The second fund is better than the first one both in terms of systematic risk and
unsystematic risk under quarterly and yearly analysis and first fund is better than the
second one under half yearly analysis.
The first fund has underperformed as compared to the second one both on the Sharpe and
Treynor Measure of Performance under quarterly, half yearly and annual analysis.
The returns of the first fund are highly correlated to the market as compared to the second
fund under quarterly, half yearly and annual analysis.
The portfolio of the first fund is highly diversified as compared to second fund under
quarterly, half yearly and annual analysis.
The Jensen alpha and Fama which are the measures of fund manager‟s performance for
the second fund are more than the first fund under quarterly, half yearly and annual
analysis which shows that the second‟s fund manager has performed better than the first
fund‟s manager in terms of stock picking skills.
(2) Base Index- BSE 100- There are two open-ended equity funds having benchmark index
of BSE 100, UTI Equity Fund and SBI Equity Fund.
The first fund is better than the second one both in terms of systematic risk and
unsystematic risk under quarterly, half-yearly and yearly analysis.
The first fund has underperformed as compared to the second one both on the Sharpe and
Treynor Measure of Performance under quarterly, half yearly and annual analysis.
The returns of the first fund are highly correlated to the market as compared to the second
fund under quarterly and yearly analysis and are less correlated to the market as
compared to the first one under half yearly analysis.
The portfolio of the first fund is highly diversified as compared to second fund under
quarterly and yearly analysis and less diversified under the half-yearly analysis.
Page | 62
The Jensen alpha and Fama which are the measures of fund manager‟s performance for the
second fund are more than the first fund under quarterly, half yearly and annual analysis
which shows that the second‟s fund manager has performed better than the first fund‟s
manager in terms of stock picking skills.
(3) Base Index- S & P CNX Nifty- There are four open-ended equity funds having
benchmark index of S & P CNX Nifty, LIC Equity Fund, ICICI Discovery Fund, IDFC
Imperial Equity Fund and Reliance Equity Fund.
The third fund is best both in terms of systematic risk and total risk followed by the
fourth fund, second fund and first find under quarterly, half yearly and yearly analysis.
The first fund has performed best on the Sharpe Measure under quarterly analysis
followed by third second and fourth fund. It is also best on the Sharpe measure under
half-yearly analysis followed by fourth, second and third fund. The third fund is best on
Sharpe measure under the yearly analysis followed by first, fourth and second fund.
The first fund has performed best on the Treynor measure under quarterly analysis
followed by third, second and fourth fund. It is also best on the Treynor measure under
half-yearly analysis followed by fourth, second and third fund. The second fund is best on
Treynor measure under the yearly analysis followed by third, first and fourth fund.
The returns of the third fund are highly correlated to the market followed by fourth,
second and first fund under quarterly analysis. The returns of the fourth fund are highly
correlated to the market followed by second, third and first fund under half yearly
analysis. The returns of the third fund are highly correlated to the market followed by
fourth, first and second fund under yearly analysis.
The portfolio of the third fund is highly diversified followed by fourth, second and first
fund under quarterly analysis. The portfolio of the fourth fund is highly diversified
followed by second, third and first fund under half yearly analysis. The portfolio of the
third fund is highly diversified followed by fourth, first and second fund under yearly
analysis.
Page | 63
The Jensen alpha and Fama for the first fund is the highest positive followed by third and
second fund under quarterly analysis which shows that fund manager for the first fund has
done the best in terms of stock picking skills. The Jensen alpha for the fourth fund is negative
under quarterly analysis which shows that the fund manager has not been able to beat the
market with the stock selectivity skills. The Jensen alpha and Fama for the first fund is
positive under half yearly analysis which shows that the fund manager has beaten the market
with his stock picking skills. The Jensen alpha and Fama for the second, third and fourth fund
is negative under half-yearly analysis which shows that the fund manager has not been able
to beat the market with his stock selection skills. The Jensen alpha for the first fund is highest
positive under yearly analysis followed by the third, second and fourth fund which shows
that the fund manager for the first fund has performed the best in terms of stock selection
skills. The Fama for the first fund is highest positive under yearly followed by third and
fourth fund which shows that the fund manager for the first fund has performed the best in
terms of stock selection skills whereas the Fama for the second fund is negative which shows
that the fund manager has not been able to beat the market with the stock selectivity skills.
Page | 64
(16) OVERALL RANKING OF TEN MUTUAL FUNDS
(a) ON THE BASIS OF JENSEN ALPHA- The Jensen Alpha measures the performance of the
Fund Manager in terms of his predictive ability and stock selection skills, considering the
systematic risk associated with the fund. On the basis of this measure all the fund can be ranked
as follows-
FUND
RANK
QUARTERLY HALF-YEARLY YEARLY
Templeton India Equity Templeton India Equity Templeton India Equity
1.
Fund Fund Fund
2. LIC Equity Fund LIC Equity Fund LIC Equity Fund
IDFC Imperial Equity
3. Birla Sunlife Equity Fund Birla Sunlife Equity Fund
Fund
4. SBI Equity Fund ICICI Equity Fund
Fund
5. HDFC Equity Fund HDFC Equity Fund SBI Equity Fund
6. SBI Equity Fund Reliance Equity Fund HDFC Equity Fund
7. ICICI Equity Fund UTI Equity Fund Birla Sunlife Equity Fund
8. Reliance Equity Fund ICICI Equity Fund Reliance Equity Fund
9. UTI Equity Fund UTI Equity Fund
Fund
Kotak Emerging Equity Kotak Emerging Equity Kotak Emerging Equity
10.
Scheme Scheme Scheme
It can be seen from the above table in terms of the performance of fund manager in terms
of his predictive ability and stock selection skills, considering the systematic risk associated
with the fund, top performer is Templeton India Equity Fund in quarterly, half yearly and
yearly analysis. The Kotak Emerging Equity Scheme is at the lowest.
Page | 65
(b) ON THE BASIS OF FAMA- The Fama Measures the performance of fund manager in
terms of his predictive ability and stock selection skills considering the total risk associated with
the fund. On the basis of this measure the funds can be ranked as follows-
FUND
RANK
Templeton India Equity Templeton India Equity Templeton India Equity
1.
Fund Fund Fund
2. LIC Equity Fund LIC Equity Fund LIC Equity Fund
3. Birla Sunlife Equity Fund Birla Sunlife Equity Fund
Fund
4. SBI Equity Fund SBI Equity Fund
Fund
5. HDFC Equity Fund HDFC Equity Fund HDFC Equity fund
6. ICICI Equity Fund Reliance Equity Fund Birla Sunlife Equity Fund
7. Reliance Equity Fund ICICI Equity Fund Reliance Equity fund
8. SBI Equity Fund UTI Equity Fund UTI Equity Fund
9. UTI Equity Fund ICICI Equity fund
Fund
Kotak Emerging Equity Kotak Emerging Equity Kotak Emerging Equity
10.
Scheme Scheme Scheme
of his predictive ability and stock selection skills, considering the total risk associated with the
fund, top performer is Templeton India Equity Fund in quarterly, half yearly and yearly analysis.
The Kotak Emerging Equity Scheme is at the lowest.
Page | 66
(c) ON THE BASIS OF TOTAL RISK- The Total Risk is measured with the help of Standard
Deviation. On this basis funds can be ranked as follows-
FUND
RANK
Templeton India Equity
1. LIC Equity Fund LIC Equity Fund
Fund
Templeton India Equity Templeton India Equity
2. LIC Equity Fund
Fund Fund
Kotak Emerging Equity
3. SBI Equity Fund Birla Sunlife Equity Fund
Scheme
4. SBI Equity Fund HDFC Equity fund
Scheme
5. Birla Sunlife Equity Fund Birla Sunlife Equity Fund ICICI Equity Fund
6. ICICI Equity Fund ICICI Equity Fund SBI Equity Fund
7. HDFC Equity Fund HDFC Equity Fund Reliance Equity fund
8. Reliance Equity Fund Reliance Equity Fund UTI Equity Fund
IDFC Imperial Equity IDFC Imperial Equity IDFC Imperial Equity
9.
Fund Fund Fund
10. UTI Equity Fund UTI Equity Fund
Scheme
of his predictive ability and stock selection skills, considering the total risk associated with the
fund, top performer is Templeton India Equity Fund in quarterly, half yearly and yearly analysis.
The Kotak Emerging Equity Scheme is at the lowest.
Page | 67
(d) ON THE BASIS OF PORTFOLIO DIVERSIFICATTION- This is measured with the
help of Coefficient of Determination. On this basis the funds can be ranked as follows-
FUND
RANK
IDFC Imperial Equity Kotak Emerging Equity
1. SBI Equity Fund
Fund Scheme
2. Birla Sunlife Equity Fund HDFC Equity Fund Birla Sunlife Equity Fund
3. UTI Equity Fund Birla Sunlife Equity Fund UTI Equity Fund
4. HDFC Equity Fund Reliance Equity Fund SBI Equity fund
5. Reliance Equity Fund ICICI Equity Fund HDFC Equity Fund
Kotak Emerging Equity Kotak Emerging Equity IDFC Imperial Equity
6.
Scheme Scheme Fund
7. ICICI Equity Fund IDFC Equity Fund Reliance Equity fund
8. SBI Equity Fund LIC Equity Fund LIC Equity Fund
Templeton India Equity
9. LIC Equity Fund ICICI Equity Fund
Fund
Templeton India Equity Templeton India Equity
10. UTI Equity Fund
Fund Fund
It can be seen from the above table in terms of the diversification of the portfolio of the
fund top performer is IDFC Imperial Equity Fund in quarterly ranking; SBI Equity Fund is the
top performer in half yearly ranking, and Kotak Emerging Equity Scheme in yearly ranking. The
Templeton India Equity Fund is the lowest performer in quarterly and annual analysis; UTI
Equity Fund is the lowest performer in half yearly analysis.
Page | 68
(17) FINDINGS OF THE STUDY- The study conducted during May 2009 to July 2009 reveals
the following-
1. Savings Instrument Preference among Individual Investors- The study reveals that
the most preferred investment is Fixed Deposits as it is one of the few investments which
enable an average investor to get reasonable and regular returns along with safety of
capital. The Mutual Funds are on the second and Life Insurance is on the third among 6
choices.
2. Objective of Investment in Mutual Funds- The investors first look for safety in mutual
funds, followed by growth, returns and Tax Benefits.
3. Type of Mutual Fund- More than 67 % of the investors first prefer open ended funds,
less than 23 % of the investors favor close-ended equity funds and only 10 % of the
investors favor Interval funds.
4. Scheme Preference of investors- Out of the 60 respondents 27 have invested in Equity
Schemes (19 in growth schemes and 8 in dividend schemes), 17 in debt schemes, 10 in
balanced schemes and only 6 in sector specific schemes.
5. Preferable Route to Mutual Fund Investing Among Individual Investors- The study
reveals that the scheme decision is made by the respondents on their own and other
factors influencing their decisions are followed by advisors, commercials and the least by
suggestions of friends and family.
6. Preferred Mode of Communication for receiving Updates- The factors are ranked on
the basis of the weighted average. The survey shows that 21 persons used personal visit
to distribution centers to know about the updates, 16 wanted to use internet to know about
the same, 14 preferred to call directly to the office to know about the performance of
mutual funds and rest 9 preferred nothing to know about the updates.
7. Importance of Scheme Qualities- The weighted average is calculated by assigning
weights from 1 to 5 in the order of importance i.e. 5 to Rank 1, 4 to rank 2, 3 to rank 3, 2
to rank 4 and 1 to rank 5. The study reveals that the investors consider the safety of
capital as the most important factor in the selection of their scheme followed by scheme‟s
performance record and tax benefits and they consider the reputation of the portfolio
managers as the least important factor in the selection of fund.
Page | 69
8. Importance of AMC Qualities- The investors consider the reputation of the AMC as the most
important factor affecting their choice of the mutual funds followed by range of different
schemes, company‟s expertise in managing money, ownership of the company and they give least
importance to the efficiency of research wing of the company.
9. Importance of Investor Services- The investors give more importance to daily
disclosure of NAV by the companies followed by disclosure of facts relating to mutual
fund investments and they give least importance to disclosure of deviation of the
investments from the expected pattern which shows that investors focus on the
performance of funds rather than the pattern of investments.
10. Performance Evaluation of Mutual Funds- It is evident from the above analysis that
fund managers were not successful in satisfying the investors with their performance.
Under quarterly analysis only 7 funds out of the 10 funds selected were able to earn more
than market returns and only 6 funds were able to earn more than the risk free rate.
Under half yearly analysis only 4 funds out of the 10 funds selected were able to
earn more than market returns and only 9 funds were able to earn more than the risk free
rate.
Under yearly analysis only 6 funds out of the 10 funds selected were able to earn
more than market returns and only 9 funds were able to earn more than the risk free rate.
Page | 70
(18) SUGGESTIONS- The following suggestions can be given based on the study-
1. Since the investors are highly focused towards liquidity in the schemes more and more
open-ended schemes should be brought into the market by the companies.
2. The investors are also having more interest in Equity schemes, so the companies should
pay more focus on marketing of Equity schemes.
3. The investors prefer Personal visit to know about the updates regarding their Mutual
Funds, so the companies should focus on opening up of service centers in the country to
provide the investors knowledge about the mutual funds.
4. The investors give priority to self evaluation in scheme selection in spite of their less
knowledge about the market so there is a need on the part of the middlemen to win the
confidence of the investors. This will help the middlemen in getting more number of
customers in long term.
5. Out of the total audience of 200 only 60 have invested in Mutual Funds. Thos shows that
there may be less knowledge of mutual funds among the investors regarding the mutual
funds or there may be negative perception regarding mutual funds in the minds of
investors. The AMCs and Sponsors etc. should pay focus on the education of the
investors and try to remove the negativity in the minds of the investors about the mutual
funds.
6. When it comes to the qualities of the fund/scheme the investors prefer safety of capital
invested in mutual funds followed by fund‟s performance record and tax benefits. So the
companies should focus on safety of capital i.e. the company should design balanced
schemes in order to protect the capital invested and the funds should offer tax benefits.
The fund managers should be able to perform well in order to build up the image of the
funds.
7. The qualities of an AMC also affect the scheme selection of investors. The reputation of
the AMCs is highly important factor for the investors affecting their selection of a
particular AMC followed by range of schemes and their expertise in managing money.
Therefore the companies should focus on building up of their brand in the market in order
to gain more customers. This can be done by improving the performance of the funds in
the market and also by offering wide range of schemes in the market to target different
group of investors.
Page | 71
8. The investor services are also important for the investors in their selection of a particular
fund/AMC. The daily NAV disclosure is the most important factor which affects the
choice of the investors followed by disclosure of objectives of investment, method and
periodicity of valuation and Disclosure of method of sale and repurchase in offer
document. So the AMCs should be as transparent as possible and follow the norms
stipulated by SEBI and AMFI in order to gain the confidence of investors and thereby
building up the image in tn the market.
Page | 72
Bibliography and References-
1. Customer Orientation in Designing Mutual Fund Products - An Analytical Approach
to Indian Market Preferences by Dr Tapan K Panda and Dr Nalini Prava Tripathy.
2. An Empirical Study on Factors Influencing the Mutual Fund/Scheme Selection by
Retail Investors by - Ms. T.R. Rajeswari and Prof. V.E. Rama Moorthy.
3. Performance Evaluation of Indian mutual Funds by – Dr. S. Narayan Rao.
4. Analysis of components of investment performance – an empirical study of mutual
funds in India by Dr. S. Anand & Dr. V Murugaiah.
5. What’s the right investment mix for you? Business India, August 2, 2004.
6. Investor Home – Psychology and Behavior finance.
7. Security Analysis and Portfolio Management, by Fisher and Jordan.
8. Mutualfundsindia.com
9. Amfiindia.com
10. Investopedia.com
11. Review of Marketing research Volume-5 by Naresh Malhotra.
Page | 73
Annexure - I
Questionnaire for Study
Page | 74
NAME
E-M AIL
Please tick mark-
I. AGE: Below 30 [ ] 30 – 40 [ ] 40 – 50 [ ] 50 and above []
II. GENDER: Male [ ] Female []
III. INCOME: < 200,000 [ ] 200,000-300,000 [ ] 300.000-400,000 [ ] 400,000 > [ ]
IV. OCCUPATION: Salaried [ ] Businessman [ ] Professional [ ] Retired [ ]
V. QUALIFICATION: Below graduate [ ] Graduate [ ] Above Graduate [ ]
VI. MARITAL STATUS: Married [] Unmarried []
Please fill in-
SAVINGS = Rs / Year
What % of your savings are invested for 5 years and above (approx.)
What % of your savings are invested for 3-5 years (approx.)
What % of your savings are invested for 1-3 years (approx)
What % of your savings are invested for less than one year (approx)
Please rank the choices according to your preferences as indicated in example-
Give Rank 1 to the most preferred option.
Give Rank 2 to the next best option and so on.
EXAMPLE: Which season do you like most?
Rainy [3] Winter [1] Summer [2]
1. Which of the following do you prefer for investment?
[ ] Mutual funds [ ] Fixed Deposits [ ] Life Insurance [ ] Postal Savings
[ ] Stock Market [ ] Others
2. What were the most important factors while selecting a mutual fund scheme?
[ ] Liquidity [ ] Risk factor [ ] Returns [ ] Growth [ ] Tax Benefits
3. Which funds do you prefer for investment?
[ ] Open-Ended Funds [ ] Closed-Ended Funds [ ] Interval Funds
4. Which schemes you are interested to invest in?
[ ] Equity [ ] Debt [ ] Balanced [ ] Sector Specific
5. Which environmental forces influenced you the most to invest in mutual fund?
[ ] Friends/family [ ] Commercials [ ] Advisors [ ] Self-evaluation
Page | 75
6. Which mode of communication do you prefer most for receiving updates and
performance of your scheme/portfolio of mutual fund investment?
[ ] Telephone [ ] Internet/E-mail [ ] Direct Mail [ ] Self-Visit
GIVE MARKS OUT OF 5 TO EACH OF THE ATTRIBUTES FOR THEIR

IMPORTANCE WHILE MAKING A INVESTMENT DECISION.
Give: 1 for Highly Important Factor

Give: 2 for Important
Give: 3 for Moderately Important / Unmarked
Give: 4 for Less Important
Give: 5 for Not at all Important.
4
Please Refer Example- Grade Funds Popularity 

SCHEMES QUALITIES
1. Fund‟s/Scheme‟s performance record 
2. Fund‟s/Scheme‟s brand name 
3. Scheme‟s portfolio constituents 
4. Reputation of scheme(s), portfolio manager(s) 
5. Investment/Withdrawal facilities 
6. Rating by a rating agency 
7. Innovativeness of the Scheme 
8. Products with tax benefits 
9. Entry and Exit load 
10. Safety of capital 
Page | 76
AMC QUALITIES
1. Private Sector / Public Sector ownership 


2. Reputation of the company 

3. Range of schemes with different qualities 

4. Efficiency of research wing 

5. Company‟s expertise in managing money 


INVESTOR SERVICES
1. Disclosure of investment objectives, method and

Periodicity of valuation in advertisement 
2. Disclosure of method periodicity of scheme‟s sales and

repurchase in offer document 
3. Announcement of NAV on every trading day 
4. Disclosure of deviation of the investments from

the expected pattern 
5. Disclosure of investments at regular intervals 
6. Mutual Fund Investors‟ grievance redressal machinery 
Page | 77
Annexure – II
Name, NAV History, Fund Returns, Index History and Index Returns of
Selected Schemes
Page | 78
(1) BIRLA SUNLIFE EQUITY FUND
QUARTERLY ANALYSIS
Fund Market Market
Year Month NAV Div X^2 XY
Returns (Y) Index Returns (X)
2006 Jun 55.64 1271.02

Sep 67.39 21.117901 1495.48 17.659832 311.87 372.9386
Dec 76.87 14.067369 1655.74 10.716292 114.839 150.75
2007 Mar 64.09 10 -3.616495 1556.72 -5.980408 35.7653 21.62812
Jun 76.37 19.160555 1804.81 15.936713 253.979 305.3563
Sep 77.44 10 14.495221 2118.86 17.400724 302.785 252.2273
Dec 98.95 27.776343 2656.52 25.374966 643.889 704.8238
2008 Mar 68.8 -30.46993 1932.41 -27.25784 742.99 830.5446
Jun 57.54 -16.36628 1644.18 -14.91557 222.474 244.1124
Sep 54.31 -5.613486 1555.7 -5.381406 28.9595 30.20845
Dec 42.93 -20.95378 1156.59 -25.65469 658.163 537.5628
2009 Mar 39.85 -7.17447 1140.43 -1.397211 1.9522 10.02425
Jun 64.39 61.580928 1767.09 54.949449 3019.44 3383.838
Sum () 20 74.003868 61.450849 3776.21 4547.601

Average 11.385211 5.1209041
HALF YEARLY ANALYSIS
2006 Jun 55.64 1271.02

Dec 76.87 38.156003 1655.74 30.268603 916.188 1154.929
2007 Jun 76.37 10 12.358527 1804.81 9.0032251 81.0581 111.2666
Dec 98.95 10 42.660731 2656.52 47.191117 2227 2013.208
2008 Jun 57.54 -41.84942 1644.18 -38.10775 1452.2 1594.787
Dec 42.93 -25.39103 1156.59 -29.65551 879.449 752.9841
2009 Jun 64.39 49.988353 1767.09 52.784479 2786.2 2638.609
Sum () 20 75.923163 71.484162 8342.1 8265.783

Average 12.65386
YEARLY ANALYSIS
2006 Jun 55.64 1271.02

2007 Jun 76.37 10 55.23005 1804.81 41.996979 1763.75 2319.495
2008 Jun 57.54 10 -11.56213 1644.18 -8.900106 79.2119 102.9042
2009 Jun 64.39 11.904762 1767.09 7.4754589 55.8825 88.99356
Sum () 20 55.572681 40.572332 1898.84 2511.393

Average 18.524227 13.524111
Page | 79
(2) TEMPLETON INDIA EQUITY INCOME FUND
QUARTERLY ANALYSIS
Fund Market Market
Year Month NAV Div. X^2 XY
2006 Jun 9.52 1271.02

Sep 10.56 10.92437 1495.48 17.659832 311.87 192.9225
Dec 11.82 11.931818 1655.74 10.716292 114.839 127.8648
2007 Mar 11.87 0.4230118 1556.72 -5.980408 35.7653 -2.529783
Jun 12.72 7 66.133109 1804.81 15.936713 253.979 1053.944
Sep 14.71 15.644654 2118.86 17.400724 302.785 272.2283
Dec 16.75 7 61.454793 2656.52 25.374966 643.889 1559.413
2008 Mar 13.14 -21.55224 1932.41 -27.25784 742.99 587.4675
Jun 12.1 7 45.357686 1644.18 -14.91557 222.474 -676.5358
Sep 10.39 -14.13223 1555.7 -5.381406 28.9595 76.05127
Dec 7.59 -26.94899 1156.59 -25.65469 658.163 691.3679
2009 Mar 7.83 3.1620553 1140.43 -1.397211 1.9522 -4.418058
Jun 11.59 48.020434 1767.09 54.949449 3019.44 2638.696
Sum () 21 200.41847 61.450849 6337.11 6516.473

Average 16.701539 5.1209041
2006 Jun 9.52 1271.02

Dec 11.82 24.159664 1655.74 30.268603 916.188 731.2793
2007 Jun 12.72 7 66.835871 1804.81 9.0032251 81.0581 601.7384
Dec 16.75 7 86.713836 2656.52 47.191117 2227 4092.123
2008 Jun 12.1 7 14.029851 1644.18 -38.10775 1452.2 -534.646
Dec 7.59 -37.27273 1156.59 -29.65551 879.449 1105.342
2009 Jun 11.59 52.700922 1767.09 52.784479 2786.2 2781.791
Sum () 21 207.16742 71.484162 8342.1 8777.627

Average 34.527903 11.914027
YEARLY ANALYSIS
2006 Jun 9.52 1271.02

2007 Jun 12.72 7 107.14286 1804.81 41.996979 1763.75 4499.676
2008 Jun 12.1 14 105.18868 1644.18 -8.900106 79.2119 -936.1904
2009 Jun 11.59 -4.214876 1767.09 7.4754589 55.8825 -31.50813
Sum () 21 208.11666 40.572332 1898.84 3563.486

Average 69.37222 13.524111
z
Page | 80
(3) UTI EQUITY FUND
QUARTERLY ANALYSIS
Fund Market Market
2006 Jun 26.52 5382.11

Sep 28.48 2 14.932127 6328.33 17.580837 309.086 262.5193
Dec 30.14 5.8286517 6982.56 10.338114 106.877 60.25727
2007 Mar 28.4 -5.773059 6587.21 -5.661964 32.0578 32.68685
Jun 32.36 13.943662 7605.37 15.45662 238.907 215.5219
Sep 36.9 14.029666 8967.41 17.908925 320.73 251.2562
Dec 44.3 20.054201 11154.4 24.387978 594.773 489.0814
2008 Mar 35.2 -20.54176 8232.82 -26.19204 686.023 538.0307
Jun 30.91 -12.1875 7029.74 -14.61322 213.546 178.0986
Sep 30.29 -2.005823 6691.57 -4.810562 23.1415 9.649138
Dec 24.17 -20.20469 4988.04 -25.45785 648.102 514.368
2009 Mar 23.92 -1.03434 4942.51 -0.912783 0.83317 0.944128
Jun 31.78 1 32.859532 7571.49 53.191192 2829.3 1747.838
Sum () 3 39.900668 61.215244 6003.38 4300.251

Average 3.3250556 5.1012703
2006 Jun 26.52 5382.11

Dec 30.14 2 21.191554 6982.56 29.736479 884.258 630.1622
2007 Jun 32.36 6.6357001 7605.37 8.919508 79.5576 59.18718
Dec 44.3 -0.679852 11154.4 46.664528 2177.58 -31.72496
2008 Jun 30.91 -27.44921 7029.74 -36.97776 1367.35 1015.01
Dec 24.17 3.9792947 4988.04 -29.04375 843.539 -115.5736
2009 Jun 31.78 1 35.622673 7571.49 51.792889 2682.5 1845.001
Sum () 3 39.300159 71.091894 8034.79 3402.062

Average 6.5500266 11.848649
YEARLY ANALYSIS
2006 Jun 26.52 5382.11

2007 Jun 32.36 2 29.562594 7605.37 41.308334 1706.38 1221.182
2008 Jun 30.91 -4.480841 7029.74 -7.568731 57.2857 33.91428
2009 Jun 31.78 1 6.0498221 7571.49 7.7065439 59.3908 46.62322
Sum () 3 31.131576 41.446147 1823.06 1301.719

Average 10.377192 13.815382
Page | 81
(4) SBI EQUITY FUND
QUARTERLY ANALYSIS
Fund Market Market
2006 Jun 25.51 5382.11

Sep 29.02 13.75931 6328.33 17.580837 309.086 241.9002
Dec 27.57 5 12.232943 6982.56 10.338114 106.877 126.4656
2007 Mar 26.56 -3.663402 6587.21 -5.661964 32.0578 20.74205
Jun 30.58 15.135542 7605.37 15.45662 238.907 233.9443
Sep 30.06 -1.700458 8967.41 17.908925 320.73 -30.45337
Dec 41.52 5 54.757152 11154.4 24.387978 594.773 1335.416
2008 Mar 29.06 -30.00963 8232.82 -26.19204 686.023 786.0136
Jun 24.34 -16.24226 7029.74 -14.61322 213.546 237.3517
Sep 23.36 -4.026294 6691.57 -4.810562 23.1415 19.36874
Dec 18.16 -22.26027 4988.04 -25.45785 648.102 566.6988
2009 Mar 18.03 -0.715859 4942.51 -0.912783 0.83317 0.653424
Jun 27.48 52.412646 7571.49 53.191192 2829.3 2787.891
Sum () 10 69.679414 61.215244 6003.38 6325.992

Average 5.8066179 5.1012703
2006 Jun 25.51 5382.11

Dec 27.57 5 27.675421 6982.56 29.736479 884.258 822.9696
2007 Jun 30.58 10.917664 7605.37 8.919508 79.5576 97.38019
Dec 41.52 5 52.125572 11154.4 46.664528 2177.58 2432.415
2008 Jun 24.34 -41.37765 7029.74 -36.97776 1367.35 1530.053
Dec 18.16 -25.3903 4988.04 -29.04375 843.539 737.4296
2009 Jun 27.48 51.321586 7571.49 51.792889 2682.5 2658.093
Sum () 10 75.27229 71.091894 8034.79 8278.341

Average 12.545382 11.848649
YEARLY ANALYSIS
2006 Jun 25.51 5382.11

2007 Jun 30.58 5 39.474716 7605.37 41.308334 1706.38 1630.635
2008 Jun 24.34 5 -4.054938 7029.74 -7.568731 57.2857 30.69073
2009 Jun 27.48 12.900575 7571.49 7.7065439 59.3908 99.41885
Sum () 48.320353 41.446147 1823.06 1760.744

Average 16.106784 13.815382
Page | 82
(5) KOTAK EMERGING EQUITY SCHEME
QUARTERLY ANALYSIS
Fund Market Market
2006 Jun --- --- --- --- --- ---

Sep --- 0 --- --- --- --- ---
Dec --- 0 --- --- --- --- ---
2007 Mar 10.01 0 --- 5384.12 --- --- ---
Jun 11.65 0 16.383616 6527.03 21.227424 450.604 347.782
Sep 12.43 0 6.695279 7422.43 13.718337 188.193 91.8481
Dec 17.02 0 36.92679 9789.49 31.890634 1017.01 1177.619
2008 Mar 11.1 0 -34.78261 6427.82 -34.33958 1179.21 1194.42
Jun 8.61 0 -22.43243 5386.48 -16.20052 262.457 363.417
Sep 7.75 0 -9.988386 4798.29 -10.91975 119.241 109.0706
Dec 5.92 0 -23.6129 3235.05 -32.57911 1061.4 769.2873
2009 Mar 5.49 0 -7.263514 2956.23 -8.618723 74.2824 62.60221
Jun 7.65 0 39.344262 5076.34 71.71668 5143.28 2821.64
Sum () 0 1.2701042 35.895401 9495.68 6937.686

Average 0.1411227 3.9883779
2006 Jun --- --- --- --- --- ---

Dec --- 0 --- --- --- --- ---
2007 Jun 11.65 0 --- 6527.03 --- --- ---
Dec 17.02 0 46.094421 9789.49 49.983836 2498.38 2303.976
2008 Jun 8.61 0 -49.41246 5386.48 -44.97691 2022.92 2222.42
Dec 5.92 0 -31.24274 3235.05 -39.9413 1595.31 1247.876
2009 Jun 7.65 0 29.222973 5076.34 56.916895 3239.53 1663.281
Sum () 0 -5.337803 21.982525 9356.15 7437.552

Average -1.334451 5.4956312
YEARLY ANALYSIS
2006 Jun --- --- --- --- --- ---

2007 Jun 11.65 0 --- 6527.03 --- --- ---
2008 Jun 8.61 0 -26.09442 5386.48 -17.47426 305.35 455.9806
2009 Jun 7.65 0 -11.14983 5076.34 -5.757749 33.1517 64.1979
Sum () 0 -37.24425 -23.23201 338.501 520.1785

Average -18.62212 -11.616
Page | 83
(6) HDFC EQUITY FUND
QUARTERLY ANALYSIS
Fund Market Market
2006 Jun 33.98 2562.5

Sep 39.95 17.569158 2988.25 16.614634 276.046 291.9051
Dec 43.4 8.6357947 3295.05 10.266879 105.409 88.66266
2007 Mar 37.42 -2.258065 3145.35 -4.543178 20.6405 10.25879
Jun 43.38 15.927312 3625.75 15.27334 233.275 243.2632
Sep 47.98 10.603965 4188.55 15.522306 240.942 164.598
Dec 58.61 22.155065 5354.7 27.841377 775.142 616.8275
2008 Mar 38.25 5.5 -25.35404 3825.85 -28.55155 815.191 723.8971
Jun 33.03 -13.64706 3203.35 -16.27089 264.742 222.0498
Sep 33.62 1.7862549 3058.6 -4.518707 20.4187 -8.071563
Dec 25.92 -22.90303 2295.75 -24.94115 622.061 571.228
2009 Mar 21.85 3 -4.128086 2294.85 -0.039203 0.00154 0.161833
Jun 34.71 58.855835 3469.7 51.195067 2620.93 3013.128
Sum () 8.5 67.243106 57.848918 5994.8 5937.909

Average 5.6035921 4.8207432
2006 Jun 33.98 2562.5

Dec 43.4 27.72219 3295.05 28.587317 817.235 792.503
2007 Jun 43.38 11.474654 3625.75 10.036267 100.727 115.1627
Dec 58.61 35.108345 5354.7 47.685306 2273.89 1674.152
2008 Jun 33.03 5.5 -34.26037 3203.35 -40.17685 1614.18 1376.474
Dec 25.92 -21.52589 2295.75 -28.33284 802.75 609.8895
2009 Jun 34.71 3 45.486111 3469.7 51.135794 2614.87 2325.968
Sum () 8.5 64.005049 68.934991 8223.65 6894.149

Average 10.667508 11.489165
YEARLY ANALYSIS
2006 Jun 33.98 2562.5

2007 Jun 43.38 42.377869 3625.75 41.492683 1721.64 1758.371
2008 Jun 33.03 5.5 -11.18027 3203.35 -11.65 135.723 130.2502
2009 Jun 34.71 3 14.168937 3469.7 8.314733 69.1348 117.8109
Sum () 8.5 45.366539 38.157412 1926.5 2006.433

Average 15.12218 12.719137
Page | 84
(7) LIC EQUITY FUND
QUARTERLY ANALYSIS
Fund Market Market
2006 Jun 11.13 3128.2

Sep 18.54 66.576819 3588.4 14.711336 216.423 979.4339
Dec 21.27 2.5 28.209277 3966.4 10.533943 110.964 297.1549
2007 Mar 19.17 -9.873061 3821.55 -3.651926 13.3366 36.05569
Jun 21.39 11.580595 4318.3 12.998652 168.965 150.5321
Sep 25.16 17.625058 5021.35 16.280712 265.062 286.9485
Dec 34.71 5 57.829889 6138.6 22.249993 495.062 1286.715
2008 Mar 22.45 -35.32123 4734.5 -22.87329 523.188 807.9129
Jun 19.08 -15.01114 4040.55 -14.6573 214.837 220.0228
Sep 19.23 0.7861635 3921.2 -2.953806 8.72497 -2.322174
Dec 14.83 -22.88092 2959.15 -24.53458 601.946 561.3737
2009 Mar 14.45 -2.562374 3020.95 2.0884376 4.36157 -5.351357
Jun 21.62 49.619377 4291.1 42.044721 1767.76 2086.233
Sum () 7.5 146.57846 52.236885 4390.63 6704.708

Average 12.214872 4.3530737
2006 Jun 11.13 3128.2

Dec 21.27 2.5 113.56694 3966.4 26.794962 717.97 3043.022
2007 Jun 21.39 0.5641749 4318.3 8.872025 78.7128 5.005374
Dec 34.71 5 85.647499 6138.6 42.153162 1776.89 3610.313
2008 Jun 19.08 -45.03025 4040.55 -34.17799 1168.13 1539.043
Dec 14.83 -22.27463 2959.15 -26.76368 716.295 596.1512
2009 Jun 21.62 45.78557 4291.1 45.011236 2026.01 2060.865
Sum () 7.5 178.2593 61.889714 6484.01 10854.4

Average 29.709883 10.314952
YEARLY ANALYSIS
2006 Jun 11.13 3128.2

2007 Jun 21.39 2.5 114.6451 4318.3 38.044243 1447.36 4361.586
2008 Jun 19.08 5 12.57597 4040.55 -6.431929 41.3697 -80.88775
2009 Jun 21.62 13.312369 4291.1 6.2008885 38.451 82.54852
Sum () 7.5 140.53344 37.813202 1527.19 4363.247

Average 46.844481 12.604401
Page | 85
(8) ICICI DISCOVERY FUND
QUARTERLY ANALYSIS
Fund Market Market
Year Month NAV X^2 XY
2006 Jun 16.76 3128.2

Sep 20.14 20.167064 3588.4 14.711336 216.423 296.6845
Dec 18.76 2 3.0784508 3966.4 10.533943 110.964 32.42822
2007 Mar 16.8 -10.44776 3821.55 -3.651926 13.3366 38.15445
Jun 17.88 2 18.333333 4318.3 12.998652 168.965 238.3086
Sep 18.44 3.1319911 5021.35 16.280712 265.062 50.99105
Dec 22.19 1.2 26.843818 6138.6 22.249993 495.062 597.2747
2008 Mar 15.4 -30.59937 4734.5 -22.87329 523.188 699.9084
Jun 12.91 1.2 -8.376623 4040.55 -14.6573 214.837 122.7787
Sep 11.83 -8.365608 3921.2 -2.953806 8.72497 24.71038
Dec 9.31 -21.30178 2959.15 -24.53458 601.946 522.6301
2009 Mar 8.98 -3.544576 3020.95 2.0884376 4.36157 -7.402625
Jun 13.52 1.2 63.919822 4291.1 42.044721 1767.76 2687.491
Sum () 7.6 52.838767 52.236885 4390.63 5303.958

Average 4.4032306 4.3530737
2006 Jun 16.76 3128.2

Dec 18.76 2 23.866348 3966.4 26.794962 717.97 639.4979
2007 Jun 17.88 2 5.9701493 4318.3 8.872025 78.7128 52.96731
Dec 22.19 1.2 30.816555 6138.6 42.153162 1776.89 1299.015
2008 Jun 12.91 1.2 -36.4128 4040.55 -34.17799 1168.13 1244.516
Dec 9.31 -27.88536 2959.15 -26.76368 716.295 746.3149
2009 Jun 13.52 1.2 58.10956 4291.1 45.011236 2026.01 2615.583
Sum () 7.6 54.464453 61.889714 6484.01 6597.895

Average 9.0774089 10.314952
YEARLY ANALYSIS
2006 Jun 16.76 3128.2

2007 Jun 17.88 4 30.548926 4318.3 38.044243 1447.36 1162.211
2008 Jun 12.91 2.4 -14.3736 4040.55 -6.431929 41.3697 92.44999
2009 Jun 13.52 1.2 14.020139 4291.1 6.2008885 38.451 86.93732
Sum () 7.6 30.195464 37.813202 1527.19 1341.598

Average 10.065155 12.604401
Page | 86
(9) IDFC IMPERIAL EQUITY FUND
QUARTERLY ANALYSIS
Fund Market Market
2006 Jun 9.58 3128.2

Sep 11.02 15.031315 3588.4 14.711336 216.423 221.1307
Dec 11.89 7.8947368 3966.4 10.533943 110.964 83.16271
2007 Mar 11.4 -4.12111 3821.55 -3.651926 13.3366 15.04999
Jun 12.77 12.017544 4318.3 12.998652 168.965 156.2119
Sep 15.16 18.71574 5021.35 16.280712 265.062 304.7056
Dec 18.29 20.646438 6138.6 22.249993 495.062 459.3831
2008 Mar 14.64 -19.95626 4734.5 -22.87329 523.188 456.4654
Jun 11.66 1.5 -10.10929 4040.55 -14.6573 214.837 148.1749
Sep 11.72 0.5145798 3921.2 -2.953806 8.72497 -1.519969
Dec 9.65 -17.66212 2959.15 -24.53458 601.946 433.3326
2009 Mar 9.88 2.3834197 3020.95 2.0884376 4.36157 4.977623
Jun 12.35 1.2 37.145749 4291.1 42.044721 1767.76 1561.783
Sum () 2.7 62.500746 52.236885 4390.63 3842.857

Average 5.2083955 4.3530737
2006 Jun 9.58 3128.2

Dec 11.89 24.112735 3966.4 26.794962 717.97 646.0998
2007 Jun 12.77 7.4011775 4318.3 8.872025 78.7128 65.66343
Dec 18.29 43.226312 6138.6 42.153162 1776.89 1822.126
2008 Jun 11.66 1.5 -28.04811 4040.55 -34.17799 1168.13 958.6281
Dec 9.65 -17.23842 2959.15 -26.76368 716.295 461.3637
2009 Jun 12.35 1.2 9.7165992 4291.1 45.011236 2026.01 437.3561
Sum () 2.7 39.170288 61.889714 6484.01 4391.237

Average 6.5283813 10.314952
YEARLY ANALYSIS
2006 Jun 9.58 3128.2

2007 Jun 12.77 33.298539 4318.3 38.044243 1447.36 1266.818
2008 Jun 11.66 1.5 3.0540329 4040.55 -6.431929 41.3697 -19.64332
2009 Jun 12.35 1.2 16.209262 4291.1 6.2008885 38.451 100.5118
Sum () 2.7 52.561834 37.813202 1527.19 1347.686

Average 17.520611 12.604401
Page | 87
(10) RELIANCE EQUITY FUND
QUARTERLY ANALYSIS
Fund Market Market
2006 Jun 9.46 3128.2

Sep 10.75 0 13.636364 3588.4 14.711336 216.423 200.6091
Dec 11.69 0 8.744186 3966.4 10.533943 110.964 92.11075
2007 Mar 11.04 0 -5.560308 3821.55 -3.651926 13.3366 20.30583
Jun 12.75 0 15.48913 4318.3 12.998652 168.965 201.3378
Sep 14.47 0 13.490196 5021.35 16.280712 265.062 219.63
Dec 17.77 0 22.805805 6138.6 22.249993 495.062 507.429
2008 Mar 13.28 0 -25.2673 4734.5 -22.87329 523.188 577.9465
Jun 11.7 0 -11.89759 4040.55 -14.6573 214.837 174.3866
Sep 11.74 0 0.3418803 3921.2 -2.953806 8.72497 -1.009848
Dec 9.8 0 -16.5247 2959.15 -24.53458 601.946 405.4266
2009 Mar 9.29 0 -5.204082 3020.95 2.0884376 4.36157 -10.8684
Jun 12.98 0 39.720129 4291.1 42.044721 1767.76 1670.022
Sum () 0 49.773705 10.192163 4390.63 4057.326

Average 4.1478087 4.3530737
2006 Jun 9.46 3128.2

Dec 11.69 0 23.572939 3966.4 26.794962 717.97 631.636
2007 Jun 12.75 0 9.0675791 4318.3 8.872025 78.7128 80.44779
Dec 17.77 0 39.372549 6138.6 42.153162 1776.89 1659.677
2008 Jun 11.7 0 -34.15869 4040.55 -34.17799 1168.13 1167.475
Dec 9.8 0 -16.23932 2959.15 -26.76368 716.295 434.6239
2009 Jun 12.98 0 32.44898 4291.1 45.011236 2026.01 1460.569
Sum () 0 54.064036 61.889714 6484.01 5434.429

Average 9.0106726 10.314952
YEARLY ANALYSIS
2006 Jun 9.46 3128.2

2007 Jun 12.75 0 34.778013 4318.3 38.044243 1447.36 1323.103
2008 Jun 11.7 0 -8.235294 4040.55 -6.431929 41.3697 52.96883
2009 Jun 12.98 0 10.940171 4291.1 6.2008885 38.451 67.83878
Sum () 0 37.48289 37.813202 1527.19 1443.911

Average 12.494297 12.604401
Page | 88
Thank You
Page | 89

Project Report On Factors Affecting Investors Preference For Investment in Mutual Funds

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Project Report On Factors Affecting Investors Preference For Investment in Mutual Funds

Uploaded by

Copyright:

Available Formats

A Study on

“Factors Affecting Investors’ Preference for Mutual Funds in India and

School of Management studies

Requirement for the Award of the Degree of

Master of Business Administration

Under the Guidance of

Dr. Chetan Srivastava

Preference for Mutual Funds in India and Performance Evaluation of Mutual

Date: 21/04/09 Dr. Chetan Srivastava

School Of Management Studies

Date - Ankit Singh

and proprietary investments, stock broking, depository services, distribution of financial

Reliance ADA Group.

Some key steps of the company are…

as the largest financial service provider of India.

Success sutras of Reliance Money-

(Head Office Mumbai)

Portfolio Advisory Services. Trading execution assistance provided to clients.

which suits the client‟s requirement.

Home insurance and Motor insurance.

client‟s holdings. Trade Execution assistance is also provided to clients.

Investments and Infrastructure Investments.

property, Property Valuation, Real-estate Consulting Corporate earning model, etc.

Offshore Investments- Reliance Money provides a unique opportunity to invest in international

The study has the following specific objectives-

(9) LIMITATIONS OF STUDY-

The most important and widely used measures of performance are-

Where, X = Market or Index Return, and,

It is calculated using the following formula-

r* = riskless rate of interest (T - bill)

t = Standard deviations of the returns of portfolio t

𝒓𝒕 = average return on portfolio t

It is calculated using the following formula-

Where, Tn = Treynor‟s Index

r* = riskless rate of interest (T - bill)

n = Beta coefficient of portfolio n

𝒓𝒏 = average return on portfolio n

𝑹𝒋𝒕 − 𝑹𝑭𝒕 = 𝒋 + 𝒋 (𝑹𝑴𝒕 − 𝑹𝑭𝒕)

Where, 𝑹𝒋𝒕 = Average return on portfolio j for a period t

𝑹𝑭𝒕 = Riskless rate of interest for a period t

𝒋 = Intercept that measures the forecasting ability of the portfolio manager

𝒋 = A measure of systematic risk for Portfolio j

𝑹𝑴𝒕 = Average return of a market portfolio for period t

Where, FP = Fama‟s Measure for Portfolio,

(h) Co-efficient of Determination – It measures the diversification of the portfolio. It is the

(a) Designing of Questionnaire- To understand the savings preference, investment preference,

(A) Scheme Qualities-

(B) AMC Qualities-

INVESTOR PROFILE NO. OF RESPONDENTS

INFLUENCE OF ENVIRONMENTAL FACTORS

MODE OF COMMUNICATION FOR RECEIVING UPDATES AND PERFORMANCE

Income / Savings Below 50,000 50,000-100,000 100,000-150,000 Above 150,000

Age / Investment Fixed Mutual Life Stock Postal

Age / Scheme Equity Equity Sector

Anova: Single Factor (AMC Qualities)

The ANOVA calculation is given on the next page-

C. RANKING OF INVESTOR SERVICES-

(1) Birla Sunlife Equity Fund

(2) Templeton India Equity Fund

(3) UTI Equity Fund

(4) SBI Equity Fund

(5) Kotak Emerging Equity Scheme

(6) HDFC Equity Fund