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A COFFEE DAY VENTURE EXECUTIVE SUMMARY

At present scenario there are a wide range of investment alternatives available for the investors. Mutual funds are one of the investment vehicles which mobilize funds from small and retail investors. Investor who finds it difficult to invest directly in the equity share and debt instrument of a company can invest these financial assets through mutual fund. The investor is overwhelmed by the choice offered by the choice offered by the mutual fund companies. The intervention of the regulatory body securities and exchange board of India (SEBI) has made fund operation more transparent and costs are reduced, thereby making mutual fund more attractive to the investors and also it has lunched online terminal for mutual funds and made the investors easier to trade these without any entry load & exit load. Apart from among the above merits, mutual fund are becoming more popular among the investors because they are managed by the highly skilled professionals who have sound knowledge about the securities market and wide experience in undertaking investment and are also good at the online terminal procedure . The risk is also minimized because the funds are invested in diversified portfolio. In spite of reduced risk and low cost, mutual funds have been found wanting on adequate return frontier all over the world. On the other hand mutual funds also given higher returns than the market. The study was conducted at way2wealth brokers private limited, Bangalore. The present study on the online trading of mutual funds & the performance evaluation of mutual funds while these are trading online, by using the performance measure models developed by Treynor, Sharpe and Jenson. Based on the measure the five funds considered study are ranked. The individual funds return are compared with the market returns i.e. the NIFTY returns as a benchmark.

1. INDUSTRY PROFILE INTRODUCTION OF ORIGIN OF INDIAN STOCK MARKET T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 1

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The origin of the stock market in India goes back to the end of the eighteenth century, when long-term negotiable securities were first issued. However, for all practical purpose, the real beginning occurred in the middle of the nineteenth century after the enactment of the old companies act in 1850, which introduced the feature of limited liability and generated investor interest in corporate securities. An important early event in the development of the stock market in India was the formation of the native share and stock brokers association at Bombay in 1875, the precursor of the present day Bombay stock exchange. This was followed by the formation of associations exchange in Ahmadabad (1894), Calcutta (1908), and Madras (1937). Stock exchange means anybody of individuals whether incorporated or not, constituted for the purpose of regulating or controlling the business of buying, selling or dealing in securities. These securities include:

I. Shares, scrips, stocks, bonds, debenture stock or other marketable securities of a like
nature or of any incorporated company or other body corporate

II. Government securities; and III. Rights or interest in securities.


OVERVIEW A stock exchange is a forum for trading in securities representing shares of firms. an exchange provides ways by which financing is raised by sales of shares to outstanding investors .The key regulator governing stock exchanges , brokers, depositories , depository participants, mutual funds , FIIs and other participants in Indian secondary and primary market is the securities and exchange board of India (SEBI) Ltd.

EXCHANGE OF INDIA:
The stock exchange, Mumbai (BSE) and the national stock exchange (NSE) are the countrys two leading exchanges . both the exchanges have switched over from the open outcry trading systems to a fully automated computerized mode of trading known T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 2

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as BOLT (BSE on line trading ) and NEAT (national exchange automated trading ) system . There are 20 other regional exchanges, connected via the inter-connected stock exchanges (ICSE). The BSE and NSE allow nationwide trading via their VSAT systems.

BSE: Bombay stock exchange is the oldest stock exchange in Asia with rich heritage
of over 133 years of existence . What is now popularly known as BSE was established as the native share & stock brokers association in 1875. BSE is the first stock exchange in the country which obtained permanent recognition from the government of India under the securities contacts (regulation) Act (SCRCA) 1956. BSEs pivotal and pre-eminent role in the development of the Indian capital market is widely recognized. BSE has two worlds prominent exchanges, deutsche Borse and Singapore exchange, as its strategic partners. Today, BSE is the top in the number of listed companies and handling SENSEX, is Indias derivatives. worlds 5 th in

of transaction through its electronic trading systems. The BSE Index, first and most popular stock market benchmark index and it

provides an efficient and transparent market for trading in equity, debt instrument and

NSE: NSE was set up by leading institutions to provides a modern, fully automated
screen-based trading systems with national reach. The exchanges have brought about unparalleled transparency, speed efficiency, safety and market integrity. It has set up facilities that serve as a model for the securities industry in the world terms of systems, practices and procedures. NSE is the third largest stock exchanges in the world in terms of the number of trades in equities it is the second fastest growing stock exchanges in the world with a recorded growth of percent. A stock broker is someone who buys and sells stock on the behalf of clients for a predetermined commissions . the stock broker basically works as an coordinating the activities of the buyer and seller on stock exchanges. Along with the trading of stocks, many stock broker indulge in giving advice to the clients as to which stocks, mutual funds , debentures to buy or sell brokers have been trading of stocks and securities for over300 T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 2

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Years, but it was not until 1800, when Americas oldest stock exchange-the Philadelphia stock exchange- was established, that the business of trading in us stocks and securities became organized and regulated.

SECURITY EXCHANGE BOARD OF INDIA (SEBI):


The securities and exchange board 1992. The main objective of the SEBI isTo protect the interest of investors in securities and to promote the development of, and regulate the securities market and for matters connected there with or incidental thereto, thus SEBI is the main body Indian stock exchange. of India was established an April 12, 1992 in

accordance with The provisions of the securities and exchange board of India act

BROKING INSIGHT
The Indian broking industry is one of the oldest trading industries that has been around even before the establishments of the BSE in 1875. Despite passing through a number of changes in the post liberalization period, the industry has found its sustainable growth. with the purpose of gaining a deeper understanding about the role of the Indian stock broking industry in the countrys economy. Booming stock markets and growing retail interest in equity and equity related investments; Indian stock broking firms are on an expansions drive to increase their network into more cities and town to lure clients into stock investments. Having witnessed a high level of consolidation in the last 3-4 years, the domestic stock broking houses could tap the IPO market to raise funds for their expansions, besides merger and acquisitions. Considering the ongoing macroeconomics bullishness in India, more stock broking companies should opt for private or public (or both) funding routes. The stock broking business has come to hog the limelight with increase in FLL inflows, transparency and improved tax regime. The volumes on stocks exchange have grown markedly over the years. T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 2

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And so has the broking industry stands out in between an IT service company and a bank. This is because it provides both service and a trading platform backed by the latest technology.

FINANCIAL MARKET
The financial markets have been classified as cash market, derivatives markets, debt market and commodities market. Cash market, also known as spot is the most sought after amongst investors. Majority of the sample broking firms are dealing in the cash market, followed by derivatives and commodities. 27 percent firm is dealing only in the cash market, whereas 35 percent are into cash and derivatives. Almost 20 percent firms trade in cash, derivatives and commodities market. Firms that are into cash, derivatives and debt are 7 percent. On the other hand, firms into cash and commodities are 3% cash & debt market and commodities alone are 2 percent 4 percent firms trade in all the markets.

TYPES OF BROKER

Full Service Broker

Discount Broker

Direct Access-broker

Broker

Full service Broker A Full service broker can provide a bunch of service such as investments research advice, tax planning and retirement planning. Discount Broker- A discount Broker lets you buy and sell stocks at a low rate but doesnt provide any investment advice. Direct access broker a direct access broker lets you trade directly with the electronic traders tent to use access broker.

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GROWTH The last decade has been exceptionally good for stock markets in India. in the back of wide ranging reforms in regulation and market practice as also the growing participation of foreign institutional investments, stock markets in India have showed phenomenal growth in the early 1990s. The stock market capitalization in mid-2007 is nearly the same size as that of the gross domestic product as compared to about 25 percent of the latter in the early 2000s. Investor base continued to grow from domestic and international markets. The value of share trading witnessed a sharp jump too. Stock markets became intensely technology and process driven giving little scope for manual interventions that has been the source of market abuse in the past. Electronic trading, digital certification, straight through processing, electronic contract notes, online broking have emerged as major trend in technology. Risk management became robust reducing the recurrence of payment defaults. Product expansions took place in a speedy manner .Indian equity market now offer, in addition to trading in equities, opportunity in trading of derivatives in future and options in index and stocks. ETFs are showing Gradual growth. Within five year of introduction of derivatives, Indian stock market now is ranked first in stock future and fourth in index futures. The stock market helps channel savings in our economy. This is the most amusing assumption the lot. At the best of times, the primary market has generated some savings from the public who saluted the spirit of entrepreneurship of several business groups, including the Oswals, the Bhansalis,The Orkay Mehras, the Deepaks and the Ruias.

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2. COMPANY PROFILE 2.1) BACKGROUND OF THE COMPANY Way2wealths legacy dates back to Sivan securities (1984), a premier financial intermediary and business incubator for IT start up firms, spun off its securities broking arm as way2wealth. Launched with aim of making investing simpler, more understandable and profitable for investors, way2wealth has established in itself as one of Indias premier investments consultancy firms. Way2wealth offer an extensive range of products and services under one roof, for the convenience and benefit of our customer, the company having more services, over 1 lakh customer relationships through a team of 750 wey2wealth manager across over 125 easily accessible investment outlets in country. i).PARENT COMPANY Coffee Day Holdings, billion group more popularly known for creating business such as Amalgamated Bean Coffee Trading Company Ltd, (Indias largest Coffee Conglomerate and coffee exporter ), caf coffee day and providing venture capital to companies viz; kshema technologies, mind tree ltd, I-Vega, Tanglin Developments,ittiam etc. ii). THE VISIONRY The visionary behind way2wealth, Mr.V.G.Siddhartha, founded Sivan securities and has been involved in the Indian capital markets since 1984. His business interests spreads across coffee retailing, plantations, real estates, venture capital, and financial services. 2.2) NATURE OF BUSINESS CARRIED Way2wealth securities (p) ltd., investment Consultancy Company, provides broking and financial advisory services in India. It offers trading services in equity, equity derivatives, and commodity derivatives. And currency derivatives. The company provides investments products, including mutual funds and insurance; portfolio management, which includes risk T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 2

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managed investments solutions; and corporate advisory, including treasury management, hedging in commodities and currencies. 2.3 VISION, MISSION & QUALITY POLICY VISION To be amongst most trusted power utility company of the country by providing environment friendly power on most cost effective basis, ensuring prosperity for its stake holders and growth with human face. MISSION

To be the pre-eminent destination for personalized financial solutions helping individual


create wealth. To ensure most cost effective power for sustained growth of India. To continuously upgrade and knowledge and skills of its human resources. To achieve excellence in every activity the company undertakes. QUALITY POLICY To achieve and retain leadership, way2wealth shall aim for complete customer satisfaction, by combining its human and technologies resources, to provide superior quality financial services. In the process, way2wealth will strive to exceed customers expectations. 2.4 PRODUCT / SERVICE PROFILE
PRODUCT PROFILE:

One-stop shop for investments needs &consultancy across products. Personalized service through designated relationship managers. Hassle free and seamless execution for the administrative aspects of your investments process. Excellent back office operation. Proven risk management system. Equipped to institutional and retail

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StructuredFunding MTF, and Mutual funds advisory IPO, Insurance management and Portfolio advisory and Equity, commodity product& Currency derivatives & Proprietary arbitrage derivatives distribution distribution services trading commodities MF W2WWW

i). Equity trading (NSE&BSE): the Indian market is almost wholly dominated by two major stock exchanges- national stock exchange of India ltd. (NSE) and the Bombay stock exchange (BSE). The benchmark indices of two exchanges nifty of NSE and Sensex of BSE are closely followed. The two exchanges also have an F&O (futures and options) segment for trading in equity derivatives including the indices. The major player in the Indian equity market is mutual funds, financial institutions and FIIs representing mainly venture capital funds and private equity Funds.

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ii). Derivatives (NSE): it is a financial instrument that is derived from some other asset, index, event, value or conditions. The derivatives trade enters into an agreement to exchange cash or asset over time based on the underlying assets. iii). Commodities trading (NCDEX&MCX): Commodities derivatives market are amongst the worlds largest financial conceived as a hedging platforms for producers and consumers in the local markets, commodity derivatives trading today has evolved to provide sophisticated investment and risk managed opportunities to various organizations around the world. iv). Currency future trading (NSE&MCX-SX): Participants in India have the choice of trading on either the multi commodities exchange of India (MCX) or national commodities & derivatives exchange limited (NCDEX) on a verity of commodities spanning energy, metals, precious metals and agriculture products. v). Mutual fund: Advising retail individuals, HNIs and corporate treasure, we offer a choice of manual funds spanning all investments objective and asset classes and have a systematic 4step advisory process comprising, background profiling, risk profiling, model portfolio creation, review and Re balancing. vi). Insurance advisory and distribution: The insurance advisory: the insurance advisory services provides clients with timely and actionable information about the impact of current and emerging technologies on the life and annuity and the properly casualty insurance market as well analysis on a firms position. Within the industry. SERVICE PROFILE i). Treasury management W2W advices institutional and wholesale for their investments in various asset classes to help manage yields treasureries and optimize the portfolio yields. a structured methodology is employed for assessment, portfolio modeling, performance measurement and periodic review.

ii). Hedging in commodities and currencies


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W2W has specialized team, with vast experience in domestic and global markets advising corporate and SMEs in their hedging programs. iii). Employee Stock option planning to and advisory: ESOP planning structuring and plan execution are important tasks for corporate planning to issue ESOPs their employees. The company extends comprehensive assistance in the entire process, further; the company assists corporate employees in sourcing ESOPs loans through company tie-ups.

iv). Tax Filling and financial planning to employee


Essentially an employee welfare initiative by corporate. The company assists this initiative by rolling temporary kiosks at work sites during the tax filing season. Corporate employee gets spot advice assistance in filling and submission of other income tax returns through qualified charted accounts. 2.5 AREAS OF OPERATION The investment outlets propagate a unique ambiance of comfort and convenience reflecting, transparency of operation. Way2wealth operates in major parts of India, comprising of164 branches spread across 62+ cities, with 750+wealth managers. Major state are- Andhra Pradesh , Bihar, Chandigarh, Delhi, Goa, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Orissa, Tamil nadu, west Bengal and Uttar Pradesh. 2.6) OWNERSHIP PATTERN The way2wealth stock broking is a private limited, which is ventured by coffee day. The chief executive officer of way2wealth is Mr. M R Shashibhushan, and Mr. Sunil Ramrakhiani is a chief operating officer.

2.7) COMPITITORS INFORMATION

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1. Religare Securities Ltd 2. Motilal Oswal Securities 3. Indian bulls Ltd 4. Kotak securities 5. ICICI direct.com 6.Share khan 7. Reliance Money 8. HDFC securities 9. Indian INFO line 10. Bajaj Capital 11. Angel Broking 12. Geojit Financial Services Ltd

INFRASTRUCTURAL FACILITIES: R&D:


Research W2W has a dedicated team of analysis specializing in commodities and commodities trading. The team comprises analyst from different fields such as economies, agriculture science. Statistics, and finance among other. This diverse manpower mix helps to co to do a multi perspective analysis of all commodities and filter the information as per the duration of the trading call. the team is equipped to serve both institutional and retail clients, the company research , well recognized in the industry is based on primary surveys, interaction with physical markets player, fundamental, derivatives, technical and statistical analysis, giving it sense of completeness. Analysts have access to the latest market data, charts, markets intelligence etc. constantly analyzing the data to facilitate customer trading decision. Company research is aimed not only at the long term trader & investors, but also caters to the needs of short term / intraday trader.

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A COFFEE DAY VENTURE TRADING FACILITIES


Although delivery based traders are a small propositions of the overall volumes, they form a sizeable amount in absolute terms on the exchanges. The company has extensive experience in executing delivery based trades in various commodities including bullion, pulse, food grains and spices. a specialized cell has been set up to help you take advantage of the arbitrage opportunities and facilitate spot market transaction in various commodities the members of this desk also have significant expertise in executing large orders effectively at lowest impact cost.

TRAINING FACILITIES
Excellence in Administration & facilities infrastructure development through arrangement of primarily responsible & for mobilization administration facilities

Management to develop new branches, infrastructure, vendors administration policies for the companys services & manage exciting relationships. A combination of which leads to customer & employee good will and market visibility. Training and knowledge needs- the company have training programs for our business associates and their staff on an ongoing basis to keep them abreast of latest market developments, product innovations etc . Additionally, specific programs are available to help prepare for relevant regulatory certification exams.

2.9) ACHIVEMENTS AND AWARDS


1. Achieved Best Top performer award in card sales for year 2005 2. Corporate Excellence Award, year 2007. 3. Best performer award for vikas Kumar from SIP Company 4. D&B Equity Broking Award for the improving broking house, 2010. 5. HDFC AMC Recognition Award Outstanding Mobilization. 6. Templeton Certificate of Appreciation Outstanding Performance. 7. TATA MF Certificate of Appreciation Outstanding Mobilization 8. Birla Sun Life AMC Certificate of Excellence-Outstanding Mobilization

2.10) WORK FLOW MODEL:

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NSE/ BSE

BROKERS

CLIENT (ONLINE

SUB-BROKERS

DEMAT

BANK

BROKERS

BROKER

NSE
the stock exchange of NSE and BSE, from which the datas will flow to respective brokers, from that it goes to sub broker, and even individual trader through online, clients has to open Demat and bank account which will be given to broker who will submit to the exchange. T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 2

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TRANSACTION CYCLE :

PLACING ORDER

DECUSION TO TRADE

TRADE EXECUTION

TRANSACTION CYCLE

FUNDS / SECURITIES

CLEARING OF TRADES

SETTLEMENT OF TRADE

2.11) FUTURE GROWTH AND PROSPECTS OFWAY 2 WEALTH: Way2wealth, investment advisory firms, is on the lookout for a strategic partner to fuel its growth plans. According to a senior official of the company, it is going in for this strategic divestment to fuel its aggressive growth plan of spreading its networks to tap the new partner in control to drive future growth the investment boom in the markets. The company has close to 500 professional in its rolls and has a strong 50 plus points of presence in the country.

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A COFFEE DAY VENTURE Going forward The company NBFC will be functional to roll out products. company endeavor to become the market leader ,and have recently added to our
existing product offering , investments banking , merchant banking, M&A advisory, PE advisory

To cater to the unique needs of institution, FIs bank etc. will be setting up dedicated
Services, institutional quality desk based out of Mumbai. NRI desk will be set up in foreign location. other business to be added are Real Estate Broking Exclusive tie up for distribution of personal loan

For successful implementation of a strategy large or small the management needs take to account of all seven factors. They are all interdependence, if one element changes then this will affect all the rest. Change in hr systems like internal career plan and management training will have an impact on the organizational culture (management style) and thus will affect the structure, process and finally characteristics competencies of the organization.

3. MCKENSYS 7S FRAME WORK T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 1

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The 7 s model is better known as McKinsey 7-s. This is because the two persons who developed this model, tom peter and Robert waterman, have been consultant at McKinsey & co at the time. They published their 7=s model in their article structure is not organization (1980). and in research work books the art of Japanese management (1981) and in search of excellence(1982).The model starts on premise that An organization is not just structure, but consist seven elements with a complex relation between them;

For successful implementation of a strategy large or small the management needs to take to account of all seven factors. They are all interdependent, if one element changes then this will affect all the rest. A change in HR-systems like internal career plan management training will have an impact on the organizational culture (management style) and thus will affect the structure, process and finally characteristics competencies of the organization.

3.1) STRUCTURE: Organizational structure is relatively more durable under organizational arrangements and relationships. It prescribes the formal relationships among various position and activities. T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 2

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Arrangement about with other members, what roles he is to perform and what rules and procedure exists to guide the various activities performed by member are all part of the organizational structure. There exist formal and informal way of communication in the organization. Head of ofof of CEOof of Finance marketing& HRD operation channel research PMS investing product & risk communicatio management marketing. & n online

VP

Head

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COMPANY STRUCTURE: RELATIONSHIP FUNDAMENT TECHNICAL BRANCH DEALERS AL. ANALYST ANALYST MANAGER AND HEAD MARKET EXECUTIVE

3.2) SKILLS: It is a distinctive capability of personnel of the organization as a whole. They undertake weekly cash course for updating the staff to get to know about different strategy followed by the organization. The training is given to the staff in such a way that the errors committed by him are minimized and accuracy in the execution of order. In addition in addition to this when NSE /BSE comes with new products, proper training is given to the staffs.

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3.3) STYLE: All organization has their own distinctive culture and management style. It includes their dominant values, beliefs and norms which structure refers develop over time. It also entails the way manager interact with their employees and way they spend their time. As in the case of way2wealth the top manager of the company arranges for the meeting with their concerned employees/staff and discussions are made regarding the positions of the stock market and how to go about it. The style of Way 2Wealth is bottom up (i.e.) the information flows from lower level to the upper level (i.e.) the feedback is given by staff to the top manager. 3.4) STRATEGY It is plan of action; an organization prepares in response to or in anticipation of changes in its external environment. Way2weallth advises the clients, by enhancing their profit & by reducing their financial taxation that is tax planning is done. The main strategy is to create long-term wealth and more returns on investment employed for clients and depending on the clients need long-term planning advised by these people through capital market. The new strategy is to go global as soon as possible. 3.5) SYSTEM Every organization has some system / internal process to support and implementation the strategy and run day today affairs. The organization are simplifying and modernizing their process by innovation and use o new technology to make the decisions making process quicker. Way2wealth mainly comprises of two types of system, namely, 1. Order execution system In the case of order execution system, it mainly deals with buying and selling of stocks. The order is been executed only when the buying and selling price matches each other.

In case of buying of the shares function key 1 or + sign used In case of sharing shares function key 2 or - sign is used
The software used by the organization is ODIN, META STOCK& EMTRADE. Page 2

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2. Merit rating systems The shares or stock the company is rated on the basis of earning per share (EPS), market price and the brand value of the company. 3.6) STAFF Staffing is the process of acquiring human recourses for the organization and assuring that they have potential to contribute to the achievements of the organizations goals. It includes selection, placements, training and development of appropriate qualified employee. Total employees 1001-2500. It consist of staffs like Fundamental analyst Technical analyst Dealers Back office Relationship manager Powers and responsible of head of departments 1. As a fundamental analyst, he prepares the balance sheet for the organization. He also works on EPS &P/E ratio. Apart from this, he is entitled to recommend the short, medium and long term investment. 2. As a technical analyst, he works on chart this is akin to an ECG of patient this can tick by tick (seconds) to hours. This can be mainly useful for day trader. He also gives recondition to the investors 3. Dealers are the people who execute the orders. They require speed and knowledge of all the companies and not afford to make mistakes (i.e.) he is suppose to be very active. In case of dealers who handle number of accounts has, to have an idea about their portfolios (i.e.) when to buy and sell their securities

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4. In the case of back office, contacts and billing are made. it also includes pay in and pay outs and preparations of Demat (depository) account. Their main responsibility is to make delivery institutions challan duly signed; otherwise it will go for auction. 5. The relationship manager are said to be high net worth investors (HNI) (i.e.) to get big investors to the organization. They create volume to generate more brokerage at the same time they see that the clients profits also increases. At the same time he also briefs from time to time about the stock market to the fresh investors. 3.7) SHARED VALUES In way2wealth all the members shares some common fundamental ideas or guiding concepts around which the business is built. This may be to make money or to achieve excellence in particular fields. These values and common goals keep the employee working towards the common destination.

4. SWOT ANALYSIS

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4.1) STRENGHTS:

1. Way2wealth has very strong foundation with 25 years of experience, in the


financial service industry.

2. It has 750 wealth managers across the country with a research desk for
fundamental way2wealt 3. Way2wealth online is far more cost effective than offline trading; hence there is no additional cost. 4. One of the largest financial investors of India, comprising many branches in major state of India. 5. Live streaming quotes for all segments. That is equal importance is given to all category of investors. and technical analyst, which has been a great strength of the

6. Way2wealth offers free demat account to the investors


7. Economical trading system with most Competitive brokerage structure. 4.2) WEAKNESSES:

1. Way2wealth has its branches only its branches only in some major states of India; it
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2. Inadequate human resource 3. Growth without direction 4. Loss of corporate control

4.3) OPPORTUNITIES: 1. Widen new market segments. 2. To expand to foreign markets. 3. Attract more people of providing customer centric products. 4. Apply R&D skills in new areas.

4.4) THREATS: 1. Threats from existing stock brokers are who has global presence in the market. 2. Frequent changes in the policy of SEBI may affect the company policy and strategy. 3. Threats from new entrance of stock broking firms with most competitive strategy.

4. Unfavourable economic conditions in the market have a adverse effect on the


investment policy. 5. Execution of risk.

6. LEARNING EXPERIENCE It has been good learning in way2wealth. I have got practical knowledge about what exactly the stock broking firms do and how they trade. In the organization learned about how to T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 1

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advice the clients with regards to their investments decisions, in way 2 wealth I learned how the customers account will be maintained that is the portfolio management, and also got know about the organizational Etiquette which is to be followed in organization. Thus in way2wealth got real practical exposure to stock broking firm and their business, and gained in debt knowledge in broking division. .

CHAPTER -7 DESIGN OF THE STUDY


7.1 GENERAL INTRODUCTION A Mutual fund is a trust that pools savings from a number of investor who share a common financial goal. The money thus collected is then invested in capital market instrument such as shares, debentures, and other securities. The income earned through this investment and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. thus mutual funds is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

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The operations are much more transparent now. An investor has to bear some expenses for investing through mutual funds. The mutual fund industry is started India with the introduction of the concept of mutual fund by UTI in the year 1936. Though the growth was slow, but it accelerated from the year 1987 when non UTI player entered the industry .Till 1986 the unit trust of India mutual fund in India. In 1987 public sector banks and insurance companies were permitted to set up subsidiaries to undertaken mutual fund business. Securities Exchange Board of India (SEBI) formulated the mutual fund regulations in 1993, which for the first time established a comprehensive regulatory framework for the mutual fund industry. Since then several mutual funds have been set up by the private and joint sectors. The growth path of Mutual Fund Investment India is attributed to the high saving pattern in India. This is a healthy status of the MF industry in India when compared to Japan, France and China. The Mutual fund sector in India though has huge potential, yet the limited participation of the rural sector will always act as a deterrent factor. The other hurdles in this regard are lack of awareness, inferior distribution channel and limited banking services in the rural regions. The best instrument of investing money nowadays is the mutual fund. Investing in a stock market has become risky these days due to the high volatility in the market.

The flow chart below describe broadly the working of a Mutual Fund
MUTUAL OPERATION FLOW CHART

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A mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares , debentures and other securities .The income earned through these investments and the capital appreciation realized are shared by the units holders in proportion to the number of units owned by them .The flow chart above describe the working of a mutual fund. CHARACTERISTICS OF MUTUAL FUNDS The ownership is in the hands of the investors who have pooled in their funds. It is managed by a team of investment professionals and other service providers. The pool of funds is invested in a portfolio of marketable investments. The investors share is denominated by units whose value is called as Net Asset Value (NAV) which changes every day.

The investment portfolio is created according to the stated investment objectives of the
fund.

ORGANISATION OF A MUTUAL FUND There are many entities involved in a mutual fund organization and the diagram below illustrates the organizational set up.

Sponsor

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The sponsor of a mutual fund is like the promoter of a company .The sponsor may be bank, financial institution, or a financial services company. It may be Indian or foreign. The sponsor is responsible for setting up and establishing the mutual fund .the sponsor is the settle of the mutual fund trust. The sponsor delegates the trustee function to the trustees. Trustees A trust is notional entity that cannot in its own name, so, the trust enters into contracts in the name of trustees .appointed by the sponsor, and the trustees can be either individual or a corporate body (a trustee company). Asset Management Company The asset management company (AMC), also referred to as the investment manager, is a separate company appointed by the trustees to run the mutual fund .the AMC should have a certificate from SEBI to act as designing the schemes, launching schemes investments and interacting with the investors. In return for its services, the AMC is compensates in the form of investment management and advisory fees. Mutual fund The mutual fund is constituted as a trust under the Indian trust act, 1881, and registered with SEBI; the beneficiaries of the trust are the investors who invest in various schemes of the mutual fund. Custodian The custodian handles the investment back office operation of a mutual fund .It look after the receipt and delivery of securities, collection of income distribution of dividends, and segregation of the assets between schemes. Registrars and Transfer Agents The registrars and transfer agents handle investors related services such as issuing units, redeeming units,

SEBI GUIDELINES FOR MUTUAL FUNDS


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Mutual fund shall be established in the form of trusts under Indian Trust Act
and will be authorized for business by SEBI. Mutual funds shall be operated only by Established Asset Management Companys setup for the purpose. At least 50% of the board of AMC must be independent directors with no interest in the sponsoring organization.

The minimum net worth to be maintained at all times is prescribed at Rs 5 crore. SEBI
vested with powers to withdraw authorization given to AMC in case investor interests are not taken care of business activity. MUTUAL FUNDS AS AN INSTRUMENT FOR INVESTMENT Diversification It means that investor must spread his investment across different securities .Individual investor can scarcely achieve such diversification. Liquidity Unit or share of mutual fund can be traded in the secondary market or sold back at the notified repurchase price. Assured allotment Investors are assured of allotment when they apply for the unit or shares of mutual fund. Small Investments The minimum investment ranges from Rs 1000 to Rs 5000. No other avenue of investments offers such a wide range of choice for such an affordable sum. Tax advantage They dont have to pay tax on their interests and dividend income as well as capital gains. Secondly dividends distributed by mutual funds are tax exempt in the hands recipient. TYPES OF MUTUAL FUND SCHEMES T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 2

A COFFEE DAY VENTURE a) Based on Structure


open -Ended Schemes Close- Ended schemes Interval Schemes b) Based on Objectives Growth/Equity schemes Income/debt funds Money market Balanced schemes C) Other Schemes Tax savings special schemes 1. Sector specific schemes 2. Index schemes Open-ended FUND/Scheme The unit offered by these schemes are available for sale and repurchase on any business day at NAV based prices. Hence, the unit capital of the scheme keeps changing each day. such schemes thus offer very high liquidity to investors and are becoming increasingly popular in India .Please note that an open ended fund is NOT obliged to keep selling /issuing new units at all times , and may stop issuing further subscription to new investors. On the other hand, an open-ended fund rarely denies to its investors, the facility to redeem existing units. Close Ended Schemes The close-ended funds have a fixed maturity period. The first time investments are made when the close end schemes is kept open for a limited period. Once closed, the units are listed on a stock exchange. These schemes are lunched with new fund Offer (NFO) with a stated maturity period after which the units are fully redeemed at NAV linked prices. In the interim, investors can buy or sell units on the stock exchanges where they are generally listed. Unlike T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 1

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open-ended schemes, the unit capital in close ended schemes may offer direct repurchase facility to the investors. Close-ended schemes are usually more liquid as compared to openended schemes and hence trade at a discount to the NAV .this discount tends towards the NAV closer to the maturity date of the scheme. Interval Schemes These schemes combine the features of open ended and close ended schemes .They may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV based prices. Growth/Equity Schemes These schemes, also commonly called growth schemes, seek to invest a majority of their funds in equities and a small portion in money market instrument. Such schemes have the potential to deliver superior returns over the long term. However, because they invest in equities these schemes are exposed to fluctuations in value especially in the short term. Equity schemes are hence not suitable for investors seeking regular income or needing to use their investment horizon. the NAV prices of equity fund fluctuates with market value of the underlying stock which are influenced by external factors such as social ,political as well as economic Income/Debt Schemes These schemes, also commonly known as income schemes, invest in debt securities such as corporate bonds, debentures and government securities. The prices of these schemes tend to be more stable compared with equity schemes and most of the returns to the investors are generated through dividends or steady capital appreciation .these schemes are ideal for conservative investors or those who are not in a take higher equity risks however, as compared to the money market they have a higher price fluctuation risk and compared to guilt fund have a higher credit risk. Money Market Schemes These schemes invest in short term instruments such as commercial paper, certificates of deposits, Treasury bills, and deposit with banks. The schemes are the least volatile of all the T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 2

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types of schemes because of their investments in money market instrument with short-term maturities. These schemes have become popular with institutional investors and high networth individual having short-term surplus funds . Balanced Schemes The aim of balance fund is to provide both growth and regular income as schemes invests both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. such schemes are ideal for investors with a conservative long-term orientation.

Tax savings schemes Investors are being encouraged to invest in equity markets through equity linked savings schemes by offering them a tax rebate. Units purchased cannot be assigned / transferred/pledged/redeemed/ switched-out until completion of 3 years from the date of allotment of the respective units. Sector specific schemes A sector specific schemes invests its corpus in the equity stocks of a given sector such as information technology, telecommunication , these schemes appeal to investors interested in taking a bet on specific sectors. Index schemes index schemes replicate the portfolio of a particular index such as the BSE sensitive index, S&P NSE 50 index (NIFTY), etc these schemes invest in the securities in the same weight age comprising of an index. NAV of such schemes would rise or fall in accordance with the risk or fall in the index. Though not exactly by the same percentage due some as tracking error in technical terms. TRADING OF MUTUAL FUNDS ON STOCK EXCHANGES

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SEBI recently came out with major change in the mutual fund industry by launching a platform to enable buying and redeeming of mutual fund units on the exchange. Investor can now buy or redeem the open ended mutual on NSE through a broker or an online trading account just like one buy and sell stocks. SEBI has introduced trading in open ended mutual fund through the national stock exchange (NSE). Investor can operate for the physical delivery of units and need not have a separate demat account. Further, the investor can operate for the online platform offered by the NSE and BSE or the offline way i.e. through distributor or directly through MF houses. For the facility of holding units in the physical form and transact as they have been doing till date. The regulator is trying to make investment in mutual funds easier and transparent for the investor community. This year two fold change has been bought about. They include the abolishment of the entry load and listing on the mutual fund on the exchange. As we know, that SEBI had earlier abolished initial issue expenses and mutual fund schemes were allowed to recover expenses connected with sales and distribution through entry load only. Further, investors making direct application to the mutual funds were exempted from entry load. The mutual funds advisory committee is also looking at more reforms. The advisory is recommending the asset management companies lower the fund management fees from the present. The fund houses currently charges for the first Rs 100 crore garnered by scheme, and 1 per cent thereafter .it is also recommending net asset value calculation. In the long run, these changes will not only boost the Rs 7.23 trillion Indian mutual fund industries, but also be very beneficial for the investors as it will be a lot more convenient, easy, and transparent and investor friendly.

Objectives
Reduce the paper work and ensuring errors Enable transparency to customers

Provide customer with a single, mutual funds / distributors- independent view of his
portfolio. Advantages

Investors:
T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 2

A COFFEE DAY VENTURE Elimination of paper work: Application forms, cheques, collection
statements, etc.

Faster Execution: Allotment by way of demats credit and investor


gets demat account statement along with other investments.

Convenience: Existing investors can invest through same channel and same point as secondary market.

Members: More products to offer: Now investors can buy mutual fund units
through their Member.

Convenience: Members are accustomed with existing system and can


leverage it by using it for Mutual fund trading.

Increase Customer: Investor who are currently investing in mutual


fund can be introduced to secondary markets. Entry Load and Exit Load The fee paid while entering a mutual fund. Investors dealing directly with the company do not pay any entry load. Large investors bringing 5 crore and more are exempted from the entry load. The entry load on equity fund has been standardized at 2.25 percent .it serves to discourage the frequent buying and selling. Exit load is fee paid while existing a mutual fund. The fee ranges from 4 percent to 0 percent. it is made to discourage the investors from making the withdrawals . The exit load will be waived off if an investor holds an investment for a certain number of 5 years. As per the SEBI circular entry load for the schemes, existing or new, of mutual fund has been removed. The investor would pay the commission upfront to distributors directly. The distributors should disclose the commission, trail or otherwise, received by them for different schemes / mutual funds, which they are distributing or advising the investors. ONLINE TRADING OF MUTUAL FUNDS

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The process of buying and/or selling financial securities, currencies and commodities through the Internet is known as online trading. For the purpose of trading online, investors need to exercise patience as well as use the right proprietary software provided by several brokers. Online trading is an internet based investment activity which does not involve any direct involvement of the broker. There are several leading online trading portals in India along with the online trading platforms of the biggest stock houses like the NSE and BSE. Online investments in mutual funds has picked up after the abolition of entry load by the Securities and Exchange Board of India (SEBI). With an online account, Investor can access their mutual funds online avoiding the need for multiple brokers, multiple bank accounts. There is also no need to call an agent and one of the biggest benefits of online investment is the complete privacy. Investor doesnt share their investment details with anyone. Investor can register and buy mutual funds through broking companies offering online services - just like equity demat accounts. All you need is a one-time registration through the website, which may be free or levy a small transaction fee. Investor can switch between funds, discontinue a systematic investment plan (SIP) at the click of a button, or even get a consolidated statement of all your holdings.

Benefits of Online Trading Transparency: Online trading provides transparency on all the information related to
the time of order placement till the final settlement. Every step of online trading is subject to scrutiny, since this provides transparency to the trading process.

Best prices: Investors, by way of online trading, can get the best quotes for mutual
funds because of high transparency in the system.

Added convenience and liquidity: One can carry out online trading anytime during
business hours. This also helps in providing liquidity to investors.

Low commissions: Investors can make transactions frequently, without the need to
worry about the burden of commissions; thus making day trading and short-term trading more feasible.

Dangers of Online Trading Technology problems: Delays in transactions may be caused due to Internet
connection outages or power failures. T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 2

A COFFEE DAY VENTURE A mentor's absence: As there is no guidance from professionals, online trading may
involve formulation of improper trading strategies which in turn would lead to huge losses

Overtrading: Online traders usually have a long term strategy before investing.
However, the attraction of capitalizing on short term movements might make them buy and sell more often. Since the commission levels in online trading are low, investors are lured into day trading. This takes them away from their well-researched and long term trading strategy, causing great losses in the long run. 7.2 RESEARCH DESIGN The research design is descriptive in nature, the study attempts to analyze and evaluate the existing data system, through the financial data. For the purpose, risk adjusted performance measures suggested by Jenson, Treynor and Sharpe are employed. Here the comparison is done on the various well performed Schemes selected from different fund houses or asset Management companies. The analysis is done on the percentage of return from the period starting from March 09, 2010 to march 08, 2011. 7.3 STATEMENT OF THE PROBLEM The retail investor faces problems in selecting funds. Factor such as investment strategy and management style are qualitative, though past performance alone cannot be indicative of future performance, it is 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. The online trading now made customers convoluted to buy and purchase the mutual funds. The online trading terminal is difficult to understand for the common people. In this study attempt is made to evaluate the performance of equity diversified growth oriented mutual fund schemes of different asset Management Company on the basis monthly return compared with bench mark returns and know the procedure of online trading. 7.4 OBJECTIVES OF THE STUDY a) To compare the performance of various Asset Management Companies offering equity diversified growth oriented schemes. b) To know the price fluctuation of different schemes when these are traded online. T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 1

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c) To know the effect on different schemes after making the mutual funds to trade online.

d) To suggest the investor of the performance of various asset management companies


by ranking them based on the performance measures.

e) To measure and analyze the returns of sampled mutual fund equity diversified
growth oriented schemes and compares them with the market returns. 7.5 SCOPE OF THE STUDY a) The return of the schemes is compared with the bench mark which is nifty index.

b) The sample 5 diversified growth oriented schemes selected for the study represents
the population of equity diversified growth oriented schemes offered by different asset management companies.

c) The performance of the mutual fund schemes are evaluated based on the quarterly
returns for the year starting from 09,March 2010 to 08,March 2011.

d) The study considers only equity diversified growth oriented mutual fund schemes.
7.6 LIMITATIONS OF THE STUDY a) Only FIVE growth oriented mutual funds are compared and analyzed. b) The study is limited to equity diversified growth schemes. c) The major portion of the study is based on the secondary data

7.7 METHODOLOGY OF DATA COLLECTION Source of data


All the data used is secondary in nature. moneycontorl.com. 7.8 SAMPLING PLAN 7.8.1 Sampling Design The data like daily fund NAV and benchmarking indices are considered from various sources like mutualfundsindia.com, nseindia.com,

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Sampling design used is convenience sampling. Five equity diversified growth oriented mutual fund schemes each from different asset management co are selected. 7.8.2 Sample size FIVE diversified growth oriented schemes they are:

1. ICICI Pru growth(Growth) 2. BIRLA Sun life (Growth) 3. Kotak opportunity fund(Growth) 4. HDFC equity Fund(Growth) 5. Sundaram BNP Paribas Growth Fund(Growth) ICICI PRUDENTIAL MUTUAL FUND
ICICI Prudential Asset Management Company Ltd. is a joint venture between ICICI Bank, Indias second largest commercial bank & a well-known and trusted name in the financial services in India, & Prudential Plc, One of the United Kingdoms largest players in the financial services sectors. In a span of just over 12 years, The Company has forged a position of pre-eminence as one of the largest Asset Management Companys in the country, contributing significantly towards the growth of the Indian mutual fund industry. . As an Asset Management Company, We have over 15 years of experience and are currently managing a comprehensive range of schemes of more than 46 Mutual funds and a wide range of PMS Products for our investors, spread across the country. We service this investor base with our own branch network of over 160 branches and a distribution reach of over 42,000 channel partner

BIRLA SUN LIFE MUTUAL FUND


Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment managers of Birla Sun Life Mutual Fund, is a joint venture between the Aditya Birla Group and the Sun T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 2

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Life Financial Services Inc. Of Canada. The joint venture brings together the Aditya Birla Group's experience in the Indian market and Sun Life's global experience. Established in 1994, Birla Sun Life Mutual fund has emerged as one of India's leading flagships of Mutual Funds business managing assets of a large investor base. Our solutions offer a range of investment options, Including diversified and sector specific equity schemes, fund of fund schemes, hybrid and monthly income funds, a wide range of debt and treasury products and offshore funds. Birla Sun Life Asset Management Company has one of the largest team of research analysts in the industry, Dedicated to tracking down the best companies to invest in. BSLAMC strives to provide transparent, Ethical and research-based investments and wealth management services. KOTAK MAHINDRA MUTUAL FUND Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporate. The group has a net worth of Rs.7,911 crore and employs around 20,000 employees across its various businesses, servicing around 7 million customer accounts through a distribution network of 1,716 branches, franchisees and satellite offices across more than 470 cities and towns in India and offices in New York, California,San Francisco, London, Dubai, Mauritius Kotak Mahindra Asset Management Company Limited (KMAMC),a wholly owned subsidiary of KMBL, is the Asset Manager for Kotak Mahindra Mutual Fund (KMMF). KMAMC started operations in December 1998 and has over 10 Lac investors in various schemes. KMMF offers schemes catering to investors with varying risk - return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities SUNDARAM MUTUAL FUNDS

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Sundaram BNP Paribas mutual fund is a joint venture between Sundaram Finance and French banking giant BNP Paribas. Sponsors of the fund are Sundaram Finance Limited and BNP Paribas Asset Management, which is the asset management arm of BNP Paribas. Sundaram Finance is one of India's largest non-banking companies with an asset base in excess of Rs 3,000 crore and annual revenues of over Rs350 crore. BNP Paribas is one of the largest European banks with a total asset base of 1.2 trillion and market capitalization of around 57 billion. Sundaram BNP Paribas Asset Management Company Limited is the fund manager to the mutual fund. BNP Paribas acquired a 49 per cent in the AMC in August, 2006, with Sundaram Finance holding the balance. T. P. Raman is the managing director and CEO of the AMC. Fund management function is headed by N Prasad, chief investment officer. As of end August 2006, the fund has assets of over Rs.5, 808 crore under management.

HDFC MUTUAL FUND


HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000. In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 25.161 crore.

7.9 OPERATIONAL DEFINITIONS


Return can be defined as the amount or rate of proceeds, gain, profit which accrues to an economic agent from an undertaking or enterprise or real/ financial investment. It is a motivating force behind investment, the objective of investors is usually to maximize return.

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a). Return =

Ending NAV- Beginning NAV + Dividend paid during the period Beginning NAV

x100

b) Standard Deviation of return =.

RA-RA*2 N-1

c) Beta =

(RA-RA*) (Rm-Rm*)

RM-RM*2

d) COV (RA, RM)

(RA-RA*) (RM-RM*) (N-1)

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e)

2M(Variance) =

(RM- RM*) (N-1)

Whereas; RA: Return of the portfolio A RM: Return of the market M N : Number of periods

2M: Variance
RM*: Average return of market RA*: Average return of portfolio A

f) Net Asset Value (NAV) In simple words, net asset value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day today basis. It is the current price of every unit of a fund. Formula for the Calculation Net Asset Value (NAV)

Net Asset Value =

Market Value of Investment Page 1

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No. of units Outstanding

7.10 TOOLS & TECHNIQUES a) Performance Measure

Treynor Measure
Sharpe Measure Jenson Measure Mean Standard Deviation Beta Variance

a) Statistical Tools

Treynors Performance Index :


According to him systematic risk or beta is the appropriate measure of risk. He relates the excess of return on a portfolio to the beta i.e. systematic risk

Treynor Measure =

Rp-Rf p

Whereas; Rp: Average rate of return on portfolio Rf: Risk free return

p: Beta of portfolio A
Sharpes performance Index Page 1

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The Sharpes measure is similar to the Treynors measure except that it employs standard deviation and not beta value as the measure of risk.

Sharpe Measure =

Rp Rf p

Whereas; Rp: Average rate of return on portfolio Rf: Risk free return

p : Standard Deviation of Portfolio A Jensons performance Index


It reflects the difference between the return actually earned on portfolio and the return the portfolio was supposed to earn.

Jenson Measure = Rp -

Rf + Rm- Rf

Whereas; Rp: Average rate of return on portfolio Rf: Risk free return Rm: Average return on market portfolio

: Portfolio beta
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Mean

The mean is the mathematical average of a set of numbers .The average is calculated by adding up two or more scores and dividing the total by the number of scores. Mean = Whereas: X: Value in the set N: Number of values in the set Standard Deviation X N

It measures how widely values are dispersed from the average. Dispersion is the difference between the actual value and the average value, The large the difference between the closing price and the average price, the higher the standard deviations will be and the higher the volatility and vice versa.

Standard deviation of return =

RA-RA*2
N-1

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CHAPTER -8 ANALYSIS AND INTERPRETATION OF DATA


ICICI PRU GROWTH (Growth) Fund Name Asset Size (Rs cr) Launch Date Fund Manager : : Open-Ended : : 383.62(31-12-2010) July 09, 1998 Mr. Sanjay Parekh

Objective of the fund To seek to generate long-term capital appreciation from a portfolio that is invested predominantly in equity related securities TABLE NO 1.1 Table showing the schemes returns

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Source: The Historical NAV is retrieved from moneycontrol.com TABLE NO 1.2 Table showing market returns Date S&P CNX S&P CNX Nifty closing 4987.10 5607.85 5903.70 5520.80 Quarterl y Returns -2.68 11.10 5.00 -7.30
X =6.12

Mean (RM*)

( RM RM *)

RMRM*2

(RA-RA) (RM-RM*)

Quarterly Nifty opening 09Mar10 08June10 09June10 08Sep10 09Sep10 08Dec10 09Dec10 08Mar11 TOTAL 5924.25 5608.30 4985.05 5121.05

(Thousands) (Thousands) (RM) 1.53 1.53 1.53 1.53 4.21 9.57 3.47 8.33 17.7241 91.5849 12.0409 69.3889 19.968 85.909 6.450 53.80 166.127

Source: The Historical S&P CNX Nifty is compiled from nseindia.com

Date

Opening

Closing NAV(Rs) 118.36 132.94 139.71 132.63

Quarterly Returns( RA) -2.10 11.62 4.502 -3.45


X=10.52

Mean (RA*) 2.643 2.643 2.643 2.643

(RA RA*)

RA-RA*2

Quarterly NAV(Rs) 09Mar10 08June10 09June10 08Sep10 09Sep10 08Dec10 09Dec10 08Mar11 TOTAL 137.38 133.69 119.09 120.90

4.743 8.977 1.859 6.093

22.49 80.58 3.455 37.12 143.645 Page 1

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TABLE NO 1.3 Table for Performance Measure Calculations Particulars Average Return Beta Risk Treynor Sharpe Jenson ICIC PRU 2.643 0.8710 6.919 -5.9207 0.7453 0.30417 S&P CNX NIFTY 1.53 1 7.937 -6.27 0.7899 0

INTERPRETATION From the above table, ICICI Pru Fund Growth Earned an average return of 2.643 percent as against the market return of 1.53 percent. Beta value indicates that 1 percent decrease in the market portfolio returns results in 0.8710 percent.

Standard deviation(risk) of 7.937 percent indicates the high volatility of market


return

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A COFFEE DAY VENTURE The positive alpha value (jenson ratio) indicates superior performance fund in
comparison to the market. The low variability ratio (Sharpe ratio) indicates that the investor is not able to earn superior returns than the market for the additional risk taken.

The reward to variability ratio (Treynor ratio) is higher than the bench mark.
GRAPH NO 1.1 Chart showing the Growth scheme and market returns of ICICI Pru Growth

KOTAK OPPORTUNITIES FUND (Growth) Fund Name Asset Size (Rs cr) Launch Date Fund Manager : Open-Ended : 936.17 (31-01-2011) : 09-09-2004 : Mr. Krishna Sangavi

Minimum Investment: Rs 5000

Objective of the Fund The Scheme aims to generate capital appreciation from a diversified portfolio of equity and equity related securities. T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 1

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TABLE NO 1.4 Table showing the schemes return Date Quarterly 09Mar10 08June10 09June10 08Sep10 09Sep10 08Dec10 09Dec10 08Mar11 TOTAL X=7.062 301.669 Source: The Historical NAV is retrieved from moneycontrol.com 47.14 43.69 -7.31 1.76 9.07 82.26 49.51 48.56 -1.918 1.76 3.678 13.527 42.35 49.14 16.03 1.76 14.27 203.632 Opening NAV(Rs) 41.99 Closing NAV(Rs) 42.10 Quarterly Mean (RA RA*) RA-RA*2 -1.5 2.25 Returns(RA) (RA*) 0.26 1.76

TABLE NO 1.5 Table showing market returns Date S&P CNX S&P CNX Nifty closing (Thousands) 4987.10 5607.85 Quarterl y Returns (RM) -2.68 11.10 1.53 1.53 4.21 9.57 17.7241 91.5849 6.315 136.56 Mean (RM*) ( RM RM *)

RMRM*2

(RA-RA) (RM-RM*)

Quarterly Nifty opening (Thousands) 09Mar10 08June10 09June10 08Sep10 09Sep10 08Dec10 5608.30 4985.05 5121.05

5903.70

5.00

1.53

3.47

12.0409

12.762

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09Dec10 08Mar11 TOTAL
X =6.12

5924.25

5520.80

-7.30

1.53

8.33

69.3889

75.55 218.557

Source: The Historical S&P CNX Nifty is compiled from nseindia.com

TABLE NO 1.6 Table for Performance Measure Calculations Particulars Average Return Beta Risk Treynor Sharpe Jenson KOTAK Opportunity Fund-Growth 1.76 1.145 10.027 -5.275 0.602 1.07915 1.53 1 7.937 -6.27 -0.7899 0 S&P CNX NIFTY

INTERPRETATION From the above table, Kotak opportunities fund-growth

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percent.

Beta value indicates that 1 percent decrease in the market portfolio returns results in
1.145 percent.

Standard deviation(risk) of 10.027 percent indicates the high volatility of fund in


comparison to the market

The positive alpha value (Jenson ratio) indicates superior performance fund in
comparison to the market. The low variability ratio (Sharpe ratio) indicates that the investor is not able to earn superior returns than the market for the additional risk taken.

The reward to variability ratio (Treynor ratio) is higher than the bench mark
GRAPH NO 1.2 Chart showing the Growth scheme and market returns of Kotak Opportunities Growth

SUNDARAM BNP PARIBAS GROWTH FUND (Growth) Fund Name Asset Size (Rs cr) Launch Date : Open-Ended : 136.73 (31-01-2011) : 24-04-1997 Page 1

Minimum Investment: Rs 2000

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Fund Manager : Mr. J. Venkateshan

Objective of the fund To achieve capital appreciation by investing in a well-diversified basket of equities & equity related instrument mainly large-caps. Date Quarterly 09Mar10 08June10 09June10 08Sep10 09Sep10 08Dec10 09Dec10 08Mar11 TOTAL X=6.763 TABLE NO 1.7 Table showing the schemes return Source: The Historical NAV is retrieved from moneycontrol.com 96.75 88.86 -8.155 1.69 9.845 96.92 98.02 100.25 2.23 1.69 .54 .29 82.90 97.49 14.59 1.69 12.9 166.41 Opening NAV(Rs) 84.09 Closing NAV(Rs) 82.49 Quarterly Mean Returns (RA) -1.902 (RA*) 1.69 3.592 12.902 (RA RA*)

RA-RA*2

TABLE NO 1.8 Table showing market returns Date S&P CNX S&P CNX Nifty closing Quarterly Mean Returns (RM) (RM*) ( RM RMRM *) (RA-RA*) (RM-RM*)

Quarterly Nifty opening

RM* 2

(Thousands) (Thousands) 09Mar10 08June10 T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE 5121.05 4987.10 -2.68 1.53 4.21

17.724 1

15.122

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09June10 08Sep10 09Sep10 08Dec10 09Dec10 08Mar11 TOTAL X=6.12 Source: The Historical S&P CNX Nifty is compiled from nseindia.com 5924.25 5520.80 -7.30 1.53 8.33 5608.30 5903.70 5.00 1.53 3.47 4985.05 5607.85 11.10 1.53 9.57 91.584 9 12.040 9 69.388 9 222.456 82.008 1.873 123.453

TABLE NO 1.9 Table for Performance Measure Calculations Particulars Average Return Beta Risk Treynor Sharpe Jenson INTERPRETATION From the above table, Sundaram BNP Paribas-growth Sundaram BNP Paribas 1.69 1.166 9.6007 -3.67 -5.238 4.317 S&P CNX NIFTY 1.53 1 7.937 -6.27 -0.7899 0

T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE

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A COFFEE DAY VENTURE Earned an average return of 1.69 percent as against the market return of 1.53
percent.

Beta value indicates that 1 percent increase in the market portfolio returns results in
1.166 percent.

Standard deviation(risk) of 9.6007 percent indicates the high volatility of fund in


comparison to the market

The positive alpha value (Jenson ratio) indicates superior performance fund in
comparison to the market. The low variability ratio (Sharpe ratio) indicates that the investor is not able to earn superior returns than the market for the additional risk taken.

The reward to variability ratio (Treynor ratio) is higher than the bench mark.

GRAPH NO 1.3 Chart showing the Growth scheme and market returns Sundaram BNP Paribas Growth

BIRLA SUN Life Equity(Growth ) Fund Name : Open-Ended Page 1

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Asset Size (Rs cr) Launch Date Fund Manager : 1.107(31-12-2010) : 27-08-1998 : Mr. Mahesh Patil

Minimum Investment: Rs 5000

Objective of the fund Long term growth, through a portfolio with a target allocation of 90% equity 10% debt and money market securities. TABLE NO 1.10 Date Quarterly 09Mar10 08June10 09June10 08Sep10 09Sep10 08Dec10 09Dec10 08Mar11 TOTAL Table showing the schemes return Source: The Historical NAV is retrieved from moneycontrol.com X=3.801 356.107 273.59 247.54 -9.52 .950 10.47 109.62 285.74 281.17 -1.599 .950 2.549 6.497 244.56 284.35 16.27 .950 15.32 234.70 Opening NAV(Rs) 247.24 Closing NAV(Rs) 243.89 Quarterly Mean Returns (RA) -1.35 (RA*) .950 2.3 5.29 (RA RA*)

RA-RA*2

TABLE NO 1.11 Table showing market returns Date S&P CNX opening S&P CNX Nifty closing Quarterly Mean ( RM (RMReturns (RM*) RM *) (RM) (RA-RA*) (RM-RM*)

Quarterly Nifty

RM*)2

(Thousands) (Thousands) T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 1

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09Mar10 08June10 09June10 08Sep10 09Sep10 08Dec10 09Dec10 08Mar11 TOTAL X=6.12 252.743 5924.25 5520.80 -7.30 1.53 8.33 69.3889 87.215 5608.30 5903.70 5.00 1.53 3.47 12.0409 8.845 4985.05 5607.85 11.10 1.53 9.57 91.5849 147 5121.05 4987.10 -2.68 1.53 4.21 17.7241 9.685

Source: The Historical S&P CNX Nifty is compiled from nseindia.com

TABLE NO 1.12 Table for Performance Measure Calculations Particulars Average Return Beta Risk Treynor Sharpe Jenson Birla Sun Life 0.950 1.521 10.895 -4.50 0.6290 2.6867 S&P CNX NIFTY 1.53 1 7.937 -6.27 -0.7899 0

INTERPRETATION T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE Page 1

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From the above table, BIRLA SUN Life Equity -growth

Earned an average return of 9.50percent as against the market return of 1.53


percent.

Beta value indicates that 1 percent increase in the market portfolio returns results in
1.521 percent.

Standard deviation(risk) of 10.895 percent indicates the high volatility of fund in


comparison to the market

The positive alpha value (Jenson ratio) indicates superior performance fund in
comparison to the market. The low variability ratio (Sharpe ratio) indicates that the investor is not able to earn superior returns than the market for the additional risk taken.

The reward to variability ratio (Treynor ratio) is higher than the bench ma

GRAPH NO 1.4 Chart showing the Growth scheme and market returns BIRLA SUN Life Growth

HDFC EQUITY FUND (Growth) Fund Name Asset Size (Rs cr) : Open-Ended : 8,288.98 (31-01-2011) Page 1

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Minimum Investment: Rs 5000 Launch Date Fund Manager : 01-01-1995 : Mr. Prashant Jain

Objective of the fund The schemes is aims at providing capital appreciation through investments predominantly in equity oriented securities TABLE NO 1.13 Table showing the schemes return Date Quarterly 09Mar10 08June10 09June10 08Sep10 09Sep10 08Dec10 09Dec10 08Mar11 TOTAL X=18.11 293.07 286.01 268.22 -6.22 4.53 10.75 115.56 285.29 293.81 2.896 4.53 -1.544 2.3839 241.37 284.17 17.732 4.53 13.202 174.29 Opening NAV(Rs) 231.14 Closing NAV(Rs) 239.49 Quarterly Returns 3.612 Mean (RA*) 4.53 (RA RA*) -.918

RA-RA*2
.843

Source: The Historical NAV is retrieved from moneycontrol.com

TABLE NO 1.14 Table showing market returns Date Quarterly S&P CNX Nifty opening (Thousands) S&P CNX Nifty closing (Thousands) Quarterly Returns (RM) Mean (RM*) ( RM RM *)

(RM-

(RA-RA*)

RM*)2 (RM-RM*)

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09Mar10 08June10 09June10 08Sep10 09Sep10 08Dec10 09Dec10 08Mar11 TOTAL X= 6.12 217.38 5924.25 5520.80 -7.30 1.53 8.33 69.3889 89.547 5608.30 5903.70 5.00 1.53 3.47 12.0409 5.357 4985.05 5607.85 11.10 1.53 9.57 91.5849 126.34 5121.05 4987.10 -2.68 1.53 4.21 17.7241 3.864

Source: The Historical S&P CNX Nifty is compiled from nseindia.com

TABLE NO 1.15 Table for Performance Measure Calculations Particulars Average Return Beta Risk Treynor Sharpe HDFC Equity Fund 4.53 1.1397 9.883 -2.869 0.3308 S&P CNX NIFTY 1.53 1 7.937 -6.27 -0.7899

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Jenson 3.876 0

INTERPRETATION From the above table, HDFC EQUITY FUND (Growth)

Earned an average return of 4.53 percent as against the market return of 1.53
percent.

Beta value indicates that 1 percent increase in the market portfolio returns results in
1.1397 percent.

Standard deviation(risk) of 9.883 percent indicates the high volatility of fund in


comparison to the market

The positive alpha value (Jenson ratio) indicates that the performance of the fund is
superior to the market performance.

The high variability ratio (Sharpe ratio) indicates that the investor is can earn
superior returns by taking greater risk than the market

The reward to variability ratio (Treynor ratio) is higher than the bench mark which
indicates its superior performance..

GRAPH NO 1.5 Chart showing the Growth scheme and market returns HDFC Equity Fund Growth

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RANKINGS TABLE NO 1.16 Table showing the performance of the mutual funds schemes using the Treynors ratio SL NO 1 2 3 4 5 FUND NAME ICICI Pru Growth (Growth) Kotak Opportunities Fund (Growth) Sundaram BNP Paribas Growth (Growth) Birla Sun Life Equity(Growth) HDFC Equity Fund (Growth) TREYNORS -5.9207 -5.275 -3.67 -4.50 -2.869 RANK 5 4 3 2 1

TABLE NO 1.17 Table showing the performance of the mutual funds schemes using the Sharpes ratio SL NO 1 2 3 4 5 FUND NAME ICICI Pru Growth (Growth) Kotak Opportunities Fund (Growth) Sundaram BNP Paribas Growth (Growth) Birla Sun Life Equity(Growth) HDFC Equity Fund (Growth) SHARPES 0.7453 0.602 -5.238 0.6290 0.3308 RANK 1 3 2 5 4

TABLE NO 1.18 Table showing the performance of the mutual funds schemes using the Jensons ratio SL NO 1 2 FUND NAME ICICI Pru Growth (Growth) Kotak Opportunities Fund (Growth) JENSONS 0.304 2.687 RANK 5 3 Page 1

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3 4 5 Sundaram BNP Paribas Growth (Growth) Birla Sun Life Equity(Growth) HDFC Equity Fund (Growth) 3.876 1.079 4.317 4 2 1

TABLE NO 1.19 Table showing the performance of the mutual fund schemes using the average of all the three ratios SL NO 1 2 3 4 5 ICICI Pru Growth (Growth) Kotak (Growth) Sundaram BNP Paribas Equity -3.67 -4.50 -2.869 -5.238 0.6290 0.3308 3.876 1.079 4.317 -1.290 -4.2613 0.5929 2 5 1 Growth (Growth) Birla Sun Life (Growth) HDFC Equity Fund (Growth) Opportunities Fund FUND NAME Treynor Sharpes s Ratio -5.9207 -5.275 Ratio 0.7453 0.602 Jensons Average Rank Ratio 0.304 2.687 -1.623 -2.8543 3 4

CHAPTER-9 FINDINGS & CONCLUSION 9.1 FINDINGS OF THE STUDY The findings of the analysis are as follows:

1.The bench mark was done to compare the schemes returns with a benchmark and to
judge whether the scheme is performing above the benchmark or below the benchmark set. The benchmark was done with the S&P CNX NIFTY. It is found that all the mutual fund schemes for the study have performed above the benchmark .the risk free rate is the 91 days treasury bills with 7.8 percent.

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A COFFEE DAY VENTURE 2.According to the Treynors ratio, the best performing mutual fund schemes is
ICICI PRU Growth. The top three performing mutual fund schemes according to him are: I. ICICI PRU Growth

II. Kotak Opportunities Fund (Growth) III. Sundaram BNP Paribas Growth(Growth)
3. According to the Sharpes ratio, the best performing mutual fund schemes is ICICI PRU Growth . The top three performing mutual fund schemes according to him are: I. ICICI PRU Growth

II. Sundaram BNP Paribas (Growth)


III. Birla Sun Life (Growth) 4. According to the Jensons ratio, the top performing mutual fund schemes is HDFC Equity Fund (Growth). The top three performing schemes are I. HDFC Equity Fund (Growth) Sundaram BNP Paribas (Growth) Kotak Opportunities Fund (Growth )

II. III.

5. On the basis of an average ranking the top three performing mutual fund schemes are

I. II. III.

Sundaram BNP Paribas Fund (Growth) Kotak Opportunities Fund (Growth) ICIC Pru Growth Fund (Growth)

6. It is found that at the indicial stage of online trading of mutual funds, the returns were low in all schemes due to newly introduction of online terminal for mutual fund & many of the investors were unaware of the trading pattern of the mutual funds. As per the market, there are some chances that the return may go up. As it is much easier for investors to buy &sells the mutual fund online rather than the older , they can through online more easily than the earlier one & can avail more returns, the risk may also increase with this,

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9.2 CONCLUSION The study has shown performance of the mutual fund schemes selected in the sample by using different performance measure to know about the return & risk before & after introduction of online terminal for mutual fund, from the above analysis it can be conclude that most of the equity diversified mutual fund growth oriented schemes have better in comparison with the market. But return alone should not be considered as the basis of measurement of the performance of mutual fund schemes, it should also include the risk taken by the fund manager because different funds will have different level of risk attached to them. Risk associated with funds, in general, can be different as variability or fluctuations in the returns generated by it. The higher the fluctuations in the returns, higher will be the risk associated with it. and also the return after introduction of online terminal has shown very blow as it was the pioneer stage as many of the investors are not aware of the online terminal ,slowly the returns may go higher once the all the investors come to know about the trading terminal. Investment in mutual funds enable the investors to reap the benefit of diversification , specialized services low cost etc. by investing in mutual funds an investor can optimize his risk and return. An investor is advised to keep revising his portfolio. Some funds give a very high rate of return and the same time they involve high risk as they are now started trading online. so an investor must evaluate both , risk and returns associated with the fund. Sometimes the low

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returns may be due to wrong choice of the stocks in the portfolio. Thus an investors needs to analysis of both risk and return before investing to maximize his earnings. SEBI has been taking various steps to empower the investors in mutual funds by way of more transparency in the loads borne by the investors so that the investor can take informed investment decisions. So the investor should take the foremost advantage of this.

CHAPTER-10 RECOMNDATION AND SUGGESTIONS

A good investment is one which helps an investor to earn a high rate of return with the same risk or a same rate of return at a lower risk. Most of the scheme selected on the sample has performed better than benchmark. There are some sachems with high risk and high return and high return, so an investor must make his investments based on not only the return but also his risk taking ability.

Investor are advised to invest in mutual fund as compared to individual stocks because
they minimize the risk .The risk is reduced due to diversification also they may gain more returns as the online terminal is introduced . The online terminal will widen the reach of mutual fund and also give convenience to mutual fund investors. This will open the doors to one step shop i.e. have a common broker for equities and mutual fund .this initiative also reduce the paper work. Through trading way, investors just need to call the broker or opt for the online broking account. The company should really have to step into global market as early as possible because with the growing market the number of competitor has increased in the domestic market. As it is one of Indias broking company it can go for the largest share in the world by establishing their branches in global market with the sub broker or business associates.

T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE

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CHAPTER-11 APPENDIX

11.1 BIBILOGRAPHY Text Books

1. Prasanna Chandra, Investment Analysis and Portfolio Management, TMH


Publication, second edition.

2. Punithavathy Pandian, Security Analysis and Portfolio Management, Vikas


Publishing House Pvt Ltd.

Website www.way2wealth.com www.nseindia.com www.bseindia.com www.mutualfundsindia.com www.rbi.org.in www.moneycontrol.com www.yahoofinance.com

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1). Return = Ending NAV- Beginning NAV + Dividend paid during the period Beginning NAV =

x100

118.36-120.90 X 100 120.90

= -2.10

2.) Mean =

X N

10.572

4 = 2.643

3.)(RA-RA*)= (-2.10) -2.643 =4.743 4.) RA-RA*2= 4.7432

=22.49 5.) TREYNOR 1.) ICICI

T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE

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A COFFEE DAY VENTURE Rp-Rf p = 2.643-7.8


0.8710 = -5.9207

6.) SHARPE = Rp Rf p =2.643-7.8 6.919 =0.7453

7.) JENSON = Rp (Rf + (Rm- Rf) =2.643-(7.8+ 08719(1.53-7.8) =0.30417

T JOHN INSTITUTE OF TECHNOLOGY, BANGALORE

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