A

REPORT ON

PERFORMANCE EVALUATION OF
SELECTED MUTUAL FUNDS
With reference to

INDIA INFOLINE SECURITIES PVT. LTD.

VISAKHAPATNAM

Submitted by
VELAGALA. B.A.PRABHAVATHI
Regd No: (111254802003)

INTRODUCTION
Money has time value in any business venture it
has got substantial returns.
Risks and returns are related. The higher risk
greater than the return is expected to be.
Ideally an investor should have a mix of both
equity and debt investments in their portfolio.
Historically equity instruments have generated a
higher rate of return over their debt counter parts,
providing a perfect hedge against inflation.

WHAT IS A MUTUAL FUND

Mutual fund is a mechanism for pooling the resources by
issuing units to the investors and investing funds in
securities in accordance with objectives as disclosed in
offer document.
Investments in securities are spread across a wide
cross-section of industries and sectors and thus the risk
is reduced.
Diversification reduces the risk because all stocks may
not move in the same direction in the same proportion at
the same time.

OBJECTIVES OF THE STUDY

To evaluate the performance of 5 selected equity funds using

Risk & Return trade off function.

This pertains to computing the returns of the 5 selected large cap funds
namely,

ICICI growth plan

FRAKLIN INDIA blue chip fund
UTI master share fund
KOTAK 30
BIRLA advantage fund

To know the risk associated in the funds with the help of Beta and Standard
deviation
To evaluate the performance of the funds with the help of Sharpe ratio,
Treynor ratio and Jensen ratio.

To analyze the sector wise allocation of Investments of the 5

selected large cap equity funds.
2.1. To have an insight of the portfolio composition and classify the
portfolio in lieu of sectoral weightage.
2.2 To compare the sectoral allocation of the assets between funds for
the period of January-June2011

NEED FOR THE STUDY

Performance Evaluation is the most important concept
among different steps in portfolio management. Its
importance has been widely felt among potential
educated investors as well as investment advisors.
The investors are risk averse and tend to avoid risk; at
the same time they try to increase their return.
The present study on evaluation of the performance of 5
selected equity oriented mutual funds is useful to both
investors as well as investment advisors also.

SCOPE OF THE STUDY

This study will mainly concentrate on how the
equity funds are performing in different market
situations.
This study brings out how the performance of
the equity fund in terms of the risk adjusted
performance measures and also these studies
will analyze the portfolio composition of various
equity fund schemes and also sectoral
composition in their respective portfolios.

METHODOLOGY
Primary Data:
Collecting information from the head of each department
and from the staff working in those departments.
Watching the operations of mutual fund trading live.
Interacting with the customers, Operators at the computer
terminal and clients trading at IISPL.
Secondary Data:
Collecting data from the website of BSE, NSE and AMFI
Collecting information through Internet and also from the
website www.indiainfoline.com.
Referring the topics in textbooks about the mutual funds,
about their return & risk and matters relating to mutual
fund operations.

LIMITATIONS OF THE STUDY

The study is limited to only 5 funds because of

the lack of sufficient data and time.
In some cases volatility and risk adjusted
performance may not give the appropriate
results.
The past performance of the mutual funds is
not necessarily an indicator of future
performance of schemes.
The study is completely based on information
given by Asset Management Company.

INDUSTRY PROFILE
GROWTH OF MUTUAL FUND INDUSTRY IN INDIA:
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 .
This has led to emergence of mutual funds as the most
preferred investment vehicle. The Indian Mutual Fund
Industry has been growing but it is still not big enough to
make its pressures felt.
The history of mutual funds in India can be broadly
divided into four distinct phases.

MUTUAL FUND COMPANIES IN

INDIA:
The concept of mutual funds in India dates back
to the year 1963.
The era between 1963 and 1987 marked the
existence of only one mutual fund company in
India with Rs. 67bn assets under management
(AUM), by the end of its monopoly era, the Unit
Trust of India (UTI). By the end of the 80s
decade, few other mutual fund companies in
India took their position in mutual fund market.

THE OBJECTIVES OF AMFI:

The Association of Mutual Funds of India works with 30
registered AMCs of the country. It has certain defined
objectives which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:
This mutual fund association of India maintains a high
professional and ethical standard in all areas of
operation of the industry.
It also recommends and promotes the top class business
practices and code of conduct which is followed by
members and related people engaged in the activities of
mutual fund and asset management.

REGULATORY ASPECTS
Schemes of a Mutual Fund:
The asset management company shall launch no
scheme unless the trustees approve such scheme and a
copy of the offer document has been filed with the
Board.
Every mutual fund shall along with the offer document of
each scheme pay filing fees.
The mutual fund and asset management company shall
be liable to refund the application money to the
applicants,-

COMPANY PROFILE
HISTORICAL BACKGROUND OF IISPL
India Infoline securities pvt Ltd (IISPL) is a company with
its head office its head office located in Mumbai.
The main branch office of India infoline securities pvt ltd
is at Delhi. India infoline was incorporated in October
1995 as a probity research of securities private limited as
a independent provider of information analysis and
research covering India businesses, financial markets
and economy for institution a customers.

INDIA INFOLINE SECURITIES

PVT.LTD.:
India Infoline Securities Pvt. Ltd is listed on both
the leading stock exchanges in India, viz. the
Stock Exchange, Mumbai (BSE) and the
National Stock Exchange (NSE).
VISION:
Our vision is to be the most respected company
in the financial services space.

FUNCTIONS OF IISPL :
IISPL provides stock trading services to clients ad
members.
IISPL provides complete automated system both in trading
and settlement process.
IISPL enables clients to trade both in NSE and BSE.
IISPL converts the paper shares into electronic shares
through De-Mat process.
IISPL provides market information to its clients regularly
thus enabling them to trade in profitable stocks.

THEORETICAL FRAMEWORK
INTRODUCTION MUTUAL FUNDS:

A mutual fund is the ideal investment vehicle for todays complex

and modern financial scenario.
CONCEPT OF MUTUAL FUNDS:
A Mutual Fund is a trust that pools the savings of a number of
investors who share a common financial goal.
STRUCTURE OR ORGANISATION OF A MUTUAL FUND :
The SEBI (Mutual Funds) Regulations 1996 a mutual fund as a fund
established in the form of a trust by a sponsor to raise monies by the
trustees through the sale of units to the public under one (or) more
schemes for investing in securities with the regulations.

PLANS UNDER MUTUAL FUNDS:

GROWTH PLAN
Less than one year - short term capital gains.
More than one year - long term capital gains.
DIVIDEND PLAN
Dividend pay-out
Dividend re-investment
MEANING OF CAPS:
SMALL CAP:
Small cap refers to stock with a market capitalization of less than $2billions.
MID CAP:
Mid cap refers to stock with a market capitalization of between $2billion to
$10billion

DATA ANALYSIS &

INTREPREATIONS
PRU ICICI GROWTH PLAN returns
from the period JAN- JUNE: 2011.
Table 16&17

FUND RETURNS (%)

MONTH
% of fund returns from
the last

JAN

FEB

MAR

APR

MAY

JUNE

1 YEAR

65.46

59.4
6

82.83

108.4
3

62.93

54.03

3 YEARS

55.35

55.5
8

64.92

67.00

53.43

48.43

5 YEARS

25.89

27.4
6

35.53

36.90

31.43

32.29

SINCE INCEPTION

29.41

29.4
1

31.06

31.73

28.98

28.29

FEATURES OF THIS FUND: The fund is an open-ended equity fund.

The main objective of this fund is long term investment
of funds for capital appreciation.
The investment pattern is equity an equity related
instrument up to 95% and debt, money market and cash
up to 5%.
The benchmark index is S&P CNX NIFTY.
Returns of the fund from 1st year to since inception are
seen to fluctuate by monthly basis.
All (1 yr, 3yrs, 5yrs) funds are changing an increasing
trend and slightly decreased in the months of May and
June 2011.

BIRLA ADVANTAGE FUND returns from the period

JAN-JUNE:2011

Table 24&25

FUND RETURNS (%)

% of fund returns from the last

JAN

FEB

MAR

APR

MAY

JUNE

1 YEAR

57.71

55.40

76.30

80.26

48.30

40.79

3 YEARS

61.18

61.80

70.50

68.96

53.53

47.58

5 YEARS

25.19

27.30

35.90

37.27

32.55

33.48

SINCE INCEPTION

23.30

23.40

24.50

24.31

24.63

24.01

FEATURES OF THIS FUND: The fund is an open-ended equity fund.

The main aim is to achieve long term growth of
capital at relatively moderate levels of risk
through a diversified research based investment
approach.
This gives the priority to the sum industry sector
lick software, consumer non-durables and
banks.
The benchmark index is BSE SENSEX.
One year, fund returns are highly fluctuated in a
monthly base.

FINDINGS
The objective of Pru ICICI growth plan is Aim to achieve
a high degree of capital appreciation through investments
in smaller and faster growing companies.
The standard deviation of ICICI fund is showing
consistent deviation from its mean.
The Beta of the fund is matching with the market value,
so the fund is at par with the market movements.
The primary objective of Franklin India Mutual Fund is To
provide medium to long term capital appreciation.

SUGGESTIONS
AMCs (Asset Management Company) conduct
interactive sessions, so that the prospective investments
in Fixed Deposits can be canalized into mutual funds.
A strong equity research team would help the AMCs to
achieve their investment objectives
AMC also conduct some workshops about mutual funds
to the fund managers
Increased Advertisement by AMCs would help and
improve investor awareness about mutual fund schemes

CONCLUSION
As the interest rates are in a declining regime, all the
investors medium, small and large scale will be looking
for a best investment avenue.
Thus, it was considered that mutual funds are a best
investment option, which will give periodical returns with
moderate risk.
Mutual Fund is a trust that pools the savings of large no.
of investors, who share a common financial goal.
Mutual Funds pool together the funds from investors by
selling units and invest them in different types of
securities.