INTRODUCTION:

INTRODUCTION TO MUTUAL FUNDS:

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 appreciations realized are shared by its unit holders in
proportion to the number of units owned by them. Thus a Mutual Fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, -professionally managed basket of securities at a relatively low cost. The flow
chart below describes broadly the working of a mutual fund:


Mutual Fund Operation Flow Chart




The benefits that can be accrued from Mutual Funds are
The schemes could be added to the portfolio with online updates for monitoring
the performance of your investments in Mutual Funds.
The comprehensive search, which gets you the fund matching your criteria.
The comparison of various schemes of different Mutual Funds based on the
critical and most sought after investment criteria.
The analysis of different schemes and the outlook for the same.
List of new launches in the market provided continuously.
Basically, Mutual funds are trusts that are formed to mobilize the savings from the people
and pool them together to invest within the securities markets. The main advantage of
mutual funds is that it is professionally managed.
The general idea is for investors to contribute small amounts into units in the various
schemes, which in turn is deployed in the various markets. This way, any investor who is
not in a position to directly invest in the markets can take advantage of this route.
UTI was the first mutual funds set up in India in the year1963. The UTI is the oldest of
Indian mutual funds, having entered the arena with the launch of the Unit Scheme - 64 in
1964, hence the alphanumeric name.
It was only in 1998 that other public sector banks were allowed to enter into the
segment which was followed by a whole range of Asset Management companies
including almost all the leading international portfolio managers including Merrill Lynch,
Templeton, and Prudential among others.
There are several different ways one can diversify a portfolio, such as the different
categories of the Morningstar style box which contain several different asset classes. But
another common way to diversify is between the various sectors of the economy.
This is usually accomplished with mutual funds that concentrate in one of the major
sectors, such as natural resources or utilities. This article will examine the nature and
composition of sector funds and the advantages and disadvantages that they present to
investors.

When an investor subscribes for the units of a mutual fund, he becomes part owner
of the assets of the fund in the same proportion as his contribution amount put up
with the corpus (the total amount of the fund). Mutual Fund investor is also known
as a mutual fund shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments
(such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the
scheme. NAV is defined as the market value of the Mutual Fund scheme's assets
net of its liabilities. NAV of a scheme is calculated by dividing the market value of
scheme's assets by the total number of units issued to the investors

















INDUSTRY PROFILE
Introduction

COMMIDITY MARKET
India has a deep ingrained knowledge in commodity trading (and particularly forward trading in
commodities), especially in the interior heartland. For last 40 years or so, such forward (futures)
trading was banned in the country for a variety of reasons and it is being revived now. The ban
has meant that two generations have lost touch with the trading skills and the related knowledge
levels in the commodity space. Fortunately much of the skill sets have migrated to stock
exchanges.
In these intervening years, some regional exchanges specializing in specific commodities, where
the bans were lifted, have carried on the baton. Also large informal trading, primarily by the
speculative segment of the universe of market participants has remained. This has led to a
mindset in the common man in the country that commodity exchanges are purely speculative in
nature. The hedging and price discovery functions that they perform are largely ignored today
by the cross section of the population.
Our endeavor is to reach to the producers, end-users, and even the retail investors, at a grassroots
level. Education and awareness has a key role to play in achieving this vision.
Commodity Futures Trading is being carried out by Ventura Commodities Pvt. Ltd. with
two exchanges viz.,
NCDEX - National Commodity and Derivatives Exchange Ltd.
MCX Multi Commodity Exchange.
The number of commodities as of date available with MCX and NCDEX is more than 50, which
includes precious metals, energy (crude oil , brent ), oilseeds, pulses, grains, spices, base metals
and other agro commodities.There are specific trading lots or trading units and specific delivery
lots and delivery units for each commodity with both the exchanges. Each commodity also has
different contracts available like 3 months / 4 months etc. The Quotation or the price available in
the trading screen for each commodity varies for specific base quantities like, 20 Kgs., 100 Kgs.,
10 Kgs., 100 gms.,etc. Similarly the tick size also varies commodity wise.
You could take up position, Long or Short i.e., Buy or Sell Commodities for the
minimum contract size specified.
Multiple contracts could be placed at a given point of time within the exercisable limit
or order size stipulated.
Similar to Stocks, Commodities too have a Daily Price Band, thus various Upper
Circuits and Lower Circuits are possible.
Your view could work out for an Intra Day Trading, Short Term, Medium Term or Long
Term outlook.
Trades in Commodities could be with the perspective of squaring off for differentials or
for taking/giving Delivery too.
Hedging could be done, Arbitrage between both the exchanges, Calendar Spread etc. are
some of the trading strategies.
Features:
1. Upfront Initial Margin is required before client places his order for trade.
2. The initial margins are in the band of 4 - 10% of the traded value of the commodities.
3. There is also a MTM levied based on the volatility and an Exposure Margin.
4. Any client interested in trading has to necessarily go by the minimum trading units for
that particular commodity.
5. The timings have been so devised by the exchanges that there are two sessions.
NCDEX & MCX - Monday to Friday : 10.00 AM to 5.00 PM (For all Commodities)
and 5.00 PM to 11.30 PM(For specific Commodities) ; Saturday - 10.00 AM to 2.00
PM (All Commodities)
6. The Trading activities are almost similar in line with the F&O Derivatives under
Securities (Equity).
7. Your Market price, brokerage , transaction charges , service tax and stamp duty forms
the part of your contract note.
8. Delivery of commodities are done based on the Sellers Option, Delivery by
Matching etc., depending on the exchange stipulations. You need to maintain a Demat
Account with NSDL and CDSL in case you are going in for Delivery. Similarly Local
Sales Tax and Central Sales Tax registration is also required at the stage of Selling.
9. Generally all contracts expire on the 15th of the contract month for MCX and all
contracts expire on the 20th of the contract month for NCDEX.
Benefits to our Clients
Ventura Commodities Pvt. Ltd. offer you the facility to trade at two major
commodity exchanges of the country.
o Multi Commodity Exchange of India Ltd (MCX)
o National Commodity and Derivative Exchange, Mumbai (NCDEX)
Membership in multiple exchanges gives clients the added advantage of
arbitrage.
Ventura also equips you with reliable research, based on technical and fundamental
study of all major commodities.Trained professionals manning the terminals
educate the clients on arriving at the best price for them. Ventura Securities Ltd.
Ltd is also among the leaders in the equity and financial derivatives segment.
We also provide you with Daily Technical Research, Daily Pointer (Commodity
Newswire), SMS facility, Client site preview, Weekly Research Reports and
various trading calls and strategies.
Large numbers across the country participate in the futures market through Venturas
rapidly expanding online trading terminal network extending to even remote areas. Local,
national and international agri-information is disseminated through large branch network.
Seminars, free in house literature and interactive site sessions raise awareness levels on the
futures market. Consequently, large numbers of informed participants enter the trading
process resulting in increased volumes and market efficiency.
About Ventura
Ventura Securities Ltd. (Ventura) commenced operations in 1994 as a stock broking house.
On its journey from then to now, Ventura has seen the capital markets mature and investors'
requirements become more diverse. It has kept up with the times and today, it offers a
whole range of investment products and services.

Ventura has a 25,000 sq ft head office a Vikhroli, Mumbai which houses its corporate
office and all operations

Our registered office is strategically situated in the Central Business District of Mumbai

We have set up branches in select metros and have business partners across the length
and breadth of the country

We have been appointed as a national level distributor for all mutual funds

We have been enlisted as a corporate agency for life insurance

We are a corporate member of both the BSE and the NSE. This enables us to trade in
equities, derivatives, currency products and offer depository services

Ventura Commodities Pvt. Ltd., an associate company, is a trading member of MCX
and NCDEX

We have in-house, customized and ready to use software to enable seamless processes
and flawless execution

We adhere to a well-defined risk management system and settlement mechanism
thereby enabling fully compliant operations
Directors:
Sajid Malik, Director is a member of the Institute of Chartered Accountants of India. He
has more than fifteen years of varied experience in corporate advisory structured finance
and private equity transaction. He has an international exposure to developed markets in
Europe, US and the Far East and has been personally involved in international equity
offerings and cross border acquisitions. He is the CEO of Genesys International Limited, a
company focused on outsourcing of GIS and engineering design services. He is a non-
executive director of Ventura Securities Limited.
Hemant Majethia, Director is a member of the Institute of Chartered Accountants of India.
He has more than fifteen years of experience in capital markets intermediation, equity
research. Mr. Majethia is the CEO of Ventura Securities Limited and is responsible for the
day to day operations and is responsible for creating an all India network of sub-brokers and
creating the distribution strength of Ventura Securities Limited. He has been instrumental in
establishing broking centers and branches for Ventura Securities Limited across the
country. It was his vision to create an all India network of brokers relationship and build
the distribution strength of Ventura.
Juzer Gabajiwala, Director is a member of the Institute of Chartered Accountants of India
and The Institute of Company Secretaries of India. He has more than fifteen years
experience in the field of finance and investment, having exposure to the industrial segment
prior to entering the capital markets. Mr. Gabajiwala is responsible for setting up the entire
Mutual Fund distribution business at Ventura and a network for PAN India operation. Mr.
Gabajiwala is also responsible for setting up the wealth management business and the NRI
desk.

THE MAJOR MUTUAL FUND COMPANYS :
ABN AMRO Mutual Fund: ABN AMRO Mutual Fund was setup on April 15,
2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The
AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on
November 4, 2003. Deutsche Bank a G is the custodian of ABN AMRO Mutual
Fund
Birla Sun Life Mutual Fund: Birla Sun Life Mutual Fund is the joint venture of
Aditya Birla Group and Sun Life Financial. Sun Life Financial is a global
organization evolved in 1871 and is being represented in Canada, the US, the
Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual
Fund follows a conservative long-term approach to investment. Recently it crossed
AUM of Rs. 10,000 crores.Bank of Baroda Mutual Fund (BOB Mutual Fund):
Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992
under the sponsorship of Bank of Baroda. BOB Asset Management Company
Limited is the AMC of BOB Mutual Fund and was incorporated on November 5,
1992. Deutsche Bank AG is the custodian
HDFC Mutual Fund: HDFC Mutual Fund was setup on June 30, 2000 with two
sponsorers namely Housing Development Finance Corporation Limited and
Standard Life Investments.

COMPANY PROFILE

Introduction

Commodity Market: India has a deep ingrained knowledge in commodity trading (and
particularly forward trading in commodities), especially in the interior heartland. For last 40 years
or so, such forward (futures) trading was banned in the country for a variety of reasons and it is
being revived now. The ban has meant that two generations have lost touch with the trading skills
and the related knowledge levels in the commodity space. Fortunately much of the skill sets have
migrated to stock exchanges. In these intervening years, some regional exchanges specializing in
specific commodities, where the bans were lifted, have carried on the baton. Also large informal
trading, primarily by the speculative segment of the universe of market participants has remained.
This has led to a mindset in the common man in the country that commodity exchanges are purely
speculative in nature. The hedging and price discovery functions that they perform are largely
ignored today by the cross section of the population. Our endeavor is to reach to the producers,
end-users, and even the retail investors, at a grassroots level. Education and awareness has a key
role to play in achieving this vision.
Commodity Futures Trading is being carried out by Ventura Commodities Pvt. Ltd. with two
exchanges viz.,

Bank Account Details: MCX - HDFC Bank Client A/c 0600340016130, Fort Branch
NCDEX ICICI Bank Client A/c 000405014489, Nariman Point Branch
About Ventura PROMOTERS Sajid Malik, Director, is a member of the Institute of Chartered
Accountants of India and a graduate from Bombay University and has nearly fifteen years of
varied experience in corporate advisory structured finance and private equity transaction. He has
an international exposure to developed markets in Europe, US and the Far East and has been
personally involved in international equity offerings and cross border acquisitions. He is the CEO
of Genesys International, a company focused on outsourcing of GIS and engineering design
services. He is a non-executive director of Ventura Securities. Hemant Majethia, Director is
member of the Institute of Chartered Accountant of India and a graduate from Bombay University
and has nearly fifteen years of experience in the capital markets intermediation, equity research
and has a wide cross section of market relationships. Mr. Majethia is the CEO of Ventura
Securities. It was his vision to create an all India network of brokers relationship and build the
distribution strength of Ventura. TRACK to RECORD In a short time span we have achieved
substantial success in its core business activity.
Features:
Upfront Initial Margin is required before client places his order for trade.
The initial margins are in the band of 4 - 10% of the traded value of the commodities.
There is also a MTM levied based on the volatility and an Exposure Margin.
Any client interested in trading has to necessarily go by the minimum trading units
for that particular commodity.
The timings have been so devised by the exchanges that there are two sessions.
NCDEX & MCX - Monday to Friday : 10.00 AM to 5.00 PM (For all
Commodities)and 5.00PM to11.30 PM(For specific Commodities) ; Saturday -
10.00 AM to 2.00 PM (All Commodities)
The Trading activities are almost similar in line with the F&O Derivatives under
Securities (Equity).
Your Market price, brokerage , transaction charges , service tax and stamp duty
forms the part of your contract note.
Delivery of commodities are done based on the Sellers Option, Delivery by
Matching etc., depending on the exchange stipulations. You need to maintain a
Demat Account with NSDL and CDSL in case you are going in for Delivery.
Similarly Local Sales Tax and Central Sales Tax registration is also required at the
stage of Selling.
Generally all contracts expire on the 15th of the contract month for MCX and all
contracts expire on the 20th of the contract month for NCDEX.




Ventura Advantage

Benefits to our Clients
Ventura Commodities Pvt. Ltd. offer you the facility to trade at two major
commodity exchanges of the country.
o Multi Commodity Exchange of India Ltd (MCX)
o National Commodity and Derivative Exchange, Mumbai (NCDEX)
Membership in multiple exchanges gives clients the added advantage of
arbitrage.
Ventura also equips you with reliable research, based on technical and fundamental
study of all major commodities.Trained professionals manning the terminals educate
the clients on arriving at the best price for them. Ventura Securities Ltd. Ltd is also
among the leaders in the equity and financial derivatives segment.
We also provide you with Daily Technical Research, Daily Pointer (Commodity
Newswire), SMS facility, Client site preview, Weekly Research Reports and various
trading calls and strategies.
Large numbers across the country participate in the futures market through Venturas rapidly
expanding online trading terminal network extending to even remote areas. Local, national
and international agri-information is disseminated through large branch network.
Seminars, free in house literature and interactive site sessions raise awareness levels on the
futures market. Consequently, large numbers of informed participants enter the trading
process resulting in increased volumes and market efficiency.
Methodology
Expense Analysis
The Fund Analyzer offers information on over 18,000 mutual funds, Exchange Traded
Funds (ETFs), and Exchange Traded Notes (ETNs). Data is not currently available for
closed-end funds or offshore funds. Please read our disclaimer.


How the Fund Analyzer Expense Analysis Works
The Fund Analyzer uses a rigorous calculation methodology to estimate the value of the
funds and impact of fees and expenses on your investment.Based on the funds you select
and the investment amount you enter, the Fund Analyzer will assess a funds front-end
load schedule and deduct the appropriate load from your investment. The Analyzer then
calculates returns and deducts expenses on a daily basis through each holding period
from one to twenty years. It calculates contingent deferred sales charges (CDSCs)
automatically. It also handles convertible shares, such as Class B shares.
The Analyzer assumes that the funds are redeemed in full at the end of each year.
The results are displayed on the Chart Details area of the tool. For example, the results
calculated for year 7 assume that the fund was held through year 7 and then redeemed at
the end of that year. The values displayed in the Report Summary and Chart Details
portions of the Expense Analysis reflect the deduction of all fees and expenses.
Verified Results
Broker Village is FINRA Investor Educations primary provider for online tool auditing
services. Broker Village provides share class analytics and consulting services to fund
firms, brokerage firms and regulators. They conducted an independent audit of this tool
to refine and verify the calculation methodology and accuracy. The goal was to ensure
that it applies appropriate industry practices, accounting standards and SEC
requirements.







RESEARCH METHODOLOGY:
Research methodology is a way to find out the result of a given problem on a specific
matter or problem that is also referred as research problem. In methodology uses different criteria
for solving searching the given research problem. Different sources use different type of methods
for solving the problem. If we think about the world methodology, it is the way of searching or
solving the research problem. (Industrial research institute 2010)
According to Goddard & Melville (2004), answering unanswered questions exploring which
currently not exit is a research. The advanced learners dictionary current English lays down the
meaning of research as careful investigation or inquiry especial through search for new facts in
any branch of knowledge.Redmen &Mory (2009) define research as a systemized effort to gain
new knowledge.
In research methodology, research always tries search the given questions systematically
in our own way and out all the answered tell conclusion. If research does not work systematically
on problem three worlds be less possibility.
RESEARCH METHODOLOGY

Data collection Data
analysis
Primary source of data collection
Secondary source of data collection
Secondary source of data collection: In this method, the present project work is
depending on secondary sources of information gathering.
1. DATA COLLECTION
In the present project work the data has been collected from readily available
source that is secondary data like websites newspapers and magazines the sample size
taken for study 5 companies
THE WEB SITE VISITED
o www.amfi.com.
o money.rediff.com.
o investorword.com
o bluechipindia.co.in
2. DATA ANALYSIS
The present project work as been analyzed using time series analysis with
graphical presentation the formula applied in the calculation or as follows
FOR MUTUAL FUNDS NAV RETURNS
1. AVG RETURNS = ri/n
2. RISK RETURNS = -1
NEED AND IMPORTANCE OF STUDY
A small investor is the one who is able to correctly plan & decide in which
profitable & safe instrument to invest. To lock up ones hard earned money in a savings
banks account is not enough to counter the monster of inflation. Using simple concepts
of diversification, power of compound interest, stable returns & limited exposure to
equity investment, one can maximize his returns on investments & multiply ones
savings.
Investment is a serious proposition one has to look into various factors before
deciding on the instruments in which to invest. To save is not enough. One must invest
wisely & get maximum returns. One must plan investment in such a way that his
investment objectives are satisfied. A sound investment is one which gives the investor
reasonable returns with a proper profitable management.

OBJECTIVES
1. PRIMARY OBJECTIVE
The main objective of this study is to know about the current Banking
sector mutual funds available in Ventura security pvt ltd in Hyderabad in
India
2. SECONDARY OBJECTIVE
To know the process of measuring the performance of different schemes
of banking sector mutual funds.
To know how to evaluate the performance of different schemes
To suggest the investor about which mutual fund should be invest in better
sector.
To help an investor to make a right choice of investment.
STUDY OF SCOPE
At the present trend in mutual funds investor are investing in different sectors
.It is a good advantage for the investors and also benefit for the investors and investor
can reduce risk in mutual fund.
In the sectorial funds we have diversified companies and sectors funds of bank .the
investor must choose and invest the funds in the different sectors and the companies the
finance manager as to suggest the investor there is no relationship between the funds.
You can invest in any funds.
Now a days good scope is there for the mutual funds .the financial managers
as to decide whether he as to invest in share stock, bonds and sectors to get the more
benefits for funds to invest in good profitability sector.
Then the financial manager can reduce the risk from the investors. The scope
of study is confirmed to the sectorial funds available in India mutual fund market.

Data Sources
The information on the Fee/Discount Report on the Fund Analyzer is provided by
the Mutual Fund Profile Service, a product of the National Securities Clearing
Corporation (NSCC). NSCC is a subsidiary of the Deposit Trust & Clearing Corporatoin
(DTCC). Information in the Mutual Fund Profile Service (MFPS) is entered and
maintained by each mutual fund company. Because the MFPS does not necessarily
contain the full text of the fund's name or the fund's symbol, FINRA has contracted with
a third party data provider (Morningstar) to provide these additional pieces of
information. All other information is displayed as entered by the fund's adviser into
MFPS.
Visit the DTCC Web site.
Participating Funds
The MFPS is primarily designed for U.S. mutual funds sold to retail investors. As a result
information on offshore mutual funds, certain mutual fund institutional share classes,
ETFs, and ETNs may not be available through this service. Additionally not all fund
families participate in this NSCC service. The Fund Analyzer will indicate when
information has not been provided and users are encouraged to review the prospectus
and/or contact the fund for information.
Obtaining Data Feeds from NSCC
The Mutual Fund Profile Service data displayed through this tool, as well as a number of
additional operational data items, are available as a data feed from NSCC. Please contact
us for more information or contact NSCC directly.
Your comments and questions are welcome. We hope you find our Fund
Analyzer helpful. If you have any questions or ideas about how we can improve this tool,
The CRSP Mutual Fund Database was created in 3 stages.The original CRSP Mutual
Fund Database contained open-end mutual fund data beginning December 1961 through
December 1995. The database was developed by Mark M. Carhart for his 1995
dissertation submitted to the Graduate School of Business entitled, Survivor Bias and
Persistence in Mutual Fund Performance, to fill a need for lacking data coverage.
Funding of the original project was provided by Eugene F. Fama and the Center for
Research in Security Prices.The Center for Research in Security Prices continued Mr.
Carharts work after his graduation. Historical data in the database were collected from
printed sources, including the Fund Scope Monthly Investment Company Magazine, the
Investment Dealers Digest Mutual Fund Guide, Investors Mutual Fund Guide, the
United and Babson Mutual Fund Selector, and the Wiesenberger Investment Companies
Annual Volumes.
The data were compiled into an annual list of active mutual fund names and attributes,
along with organizational history such as name changes, mergers, and liquidations.
Monthly returns were calculated back to January 1962. Funds that were not in the
Wiesenberger Investment Companies Annual Volumes or other printed materials were
added, although instances of this were rare. As the last step in this second stage, the data
were checked against original and secondary sources for any unusual entries and
typographical errors.
Beginning with the December 2007 iteration of the database, current and historical data
back to August of 1998 are provided electronically by Lipper and Thomson Reuters. New
fund style data items have been added to the original database.
SAMPLE DESIGN:
The CRSP Mutual Fund Database is designed to facilitate research on the historical
performance of open-ended mutual funds by using survivor-bias-free data.
The CRSP Survivor-Bias-Free US Mutual Fund Database includes a history of each
mutual funds name, investment style, fee structure, holdings, and asset allocation. Also
included are monthly total returns, monthly total net assets, monthly/daily net asset
values, and dividends. Additionally, schedules of rear and front load fees, asset class
codes, and management company contact information are provided. All data items are for
publicly traded open-end mutual funds and begin at varying times between 1962 and
2008 depending on availability. The database is updated quarterly and distributed with a
monthly lag. It is delivered in ASCII and SAS formats and as a CRSPAccess database for
use with our Windows interface, Sift.


TOOLS FOR ANALYSIS:
Mutual fund analysis does not need to be as complex as most financial media sources and
some investment advisers often communicate. There are hundreds of data points to
research and analyze. However you only need to know the best things to research and
analyze and to ignore the others.
Here's what to analyze when doing mutual fund research:
1. Expense Ratio
Mutual funds do not run themselves. They need to be managed and this manage not
free! The expenses to operate a mutual fund can be as involved as a corporation. But
all you need to know is that higher expenses do not always translate into higher
mutual fund returns. In fact, lower expenses usually translate into higher returns,
especially over long periods of time.
But what expense ratio is high? Which is best? When doing your research, keep in
mind average expense ratios for mutual funds. Here are a few examples:
Large-Cap Stock Funds: 1.25%
Mid-Cap Stock Funds: 1.35%
Small-Cap Stock Funds: 1.40%
Foreign Stock Funds: 1.50%
S&P 500 IndexFunds: 0.15%
Bond Funds: 0.90%
Never buy a mutual fund with expense ratios higher than these! Notice that the
average expenses change by fund category. The fundamental reason for this is that
research costs for portfolio management are higher for certain niche areas, such as
small-cap stocks and foreign stocks, where information is not as readily available
compared to large domestic companies. Also index funds are passively managed.
Therefore costs can be kept extremely low.
2. Manager Tenure (For Actively-Managed Funds)
Manager Tenure refers to the amount of time, usually measured in years, a mutual
fund manager or management team has been managing a particular mutual fund.
Manager tenure is most important to know when investing in actively-managed
mutual funds. Managers of actively-managed funds are actively trying to outperform
a particular benchmark, such as the S&P 500; whereas the manager of a passively-
managed fund is only investing in the same securities as the benchmark.
When looking at a mutual fund's historic performance, be sure to confirm the
manager or management team has been managing the fund for the time frame you
are reviewing. For example, if you are attracted to the 5-year return of a mutual fund
but the manager tenure is only one year, the 5-year return is not meaningful in
making the decision to buy this fund.
3. Number of Holdings
A mutual fund's holdings represent the securities (stocks or bonds) held in the
fund. All of the underlying holdings combine to form a single portfolio. Imagine a
bucket filled with rocks. The bucket is the mutual fund and each rock is a single
stock or bond holding. The sum of all rocks (stocks or bonds) equals the total
number of holdings.
In general, mutual funds have an ideal range for total number of holdings and this
range depends upon the category or type of fund. For example, index funds and
some bond funds are expected to have a large number of holdings, often in the
hundreds or even thousands of stocks or bonds. For most other funds, there are
disadvantages to having too few or too many holdings.
Typically, if a fund only has 20 or 30 holdings, volatility and risk can be
significantly high because there are less holdings with larger impact on the
performance of the mutual fund. Conversely, if a fund has 400 or 500 holdings, it is
so large that its performance is likely to be similar to an index, such as the S&P 500.
In this case, an investor may as well just buy one of the best S&P 500 index
funds rather than hold a large-cap stock fund with hundreds of holdings.The fund
with very little holdings is like the small boat at sea that can move quickly but is also
vulnerable to the occasional large waves. However the fund with too many holdings
is so big it may not be harmed as much by shifting waters but it can't move away
from a glacier that can rip it's hull and sink like the Titanic.
Look for a fund with at least 50 holdings but less than 200. This may assure the "just
right" size that is not too small or too large. Remember the apples-to-apples rule and
look at the averages for a given category of mutual fund. If the fund you are
analyzing is much lower or higher in total number of holdings than its respective
category average, you may want to dig deeper to see if this fund is good for you.
Also, you will want to see if the fund you are analyzing fits with the other funds in
your portfolio. A fund with only 20 holdings can be risky on its own, but it may
work as one part of a diversified mix of mutual funds within your own portfolio.
4. Long-term Performance
When researching and analyzing investments, especially mutual funds, it is best to
look at long-term performance, which can be considered a period of 10 or more
years. However, "long-term" is often loosely used in reference to periods that are not
short-term, such as one year or less. This is because 1-year periods do not reveal
enough information about a mutual fund's performance or a fund manager's ability to
manage an investment portfolio through a full market cycle, which includes
recessionary periods as well as growth and it includes a bull market and bear market.
A full market cycle is usually 3 to 5 years. This is why it is important to analyze
performance for the 3-year, 5-year and 10-year returns of a mutual fund. You want
to know how the fund did through both the ups and the downs of the market.
Often a long-term investor employs a buy and hold strategy, where mutual funds are
selected and purchased but not significantly changed for up to several years or more.
This strategy has also been affectionately labeled the lazy portfolio strategy.
A long-term investor can afford to take more market risk with their investments.
Therefore, if they don't mind taking high relative risk, they may choose to build
anaggressive portfolio of mutual funds.
5. Turnover Ratio
The Turnover Ratio of a mutual fund is a measurement that expresses the percentage
of a particular fund's holdings that have been replaced (turned over) during the
previous year. For example, if a mutual fund invests in 100 different stocks and 50
of them are replaced during one year, the turnover ratio would be 50%.
A low turnover ratio indicates a buy and hold strategy for actively-managed mutual
fundsbut it is naturally inherent to passively-managed funds, such as index funds
andExchange Traded Funds (ETFs). In general, and all other things being equal, a
fund with higher relative turnover will have higher trading costs (Expense Ratio) and
higher tax costs, than a fund with lower turnover. In summary, lower turnover
generally translates into higher net returns.
Some mutual fund types or categories of funds such as bond funds and small-cap
stock funds, will naturally have high relative turnover (up to 100% or more) while
other fund types, such as index funds, will have lower relative turnover (less than
10%) compared to other fund categories.
Generally, for all types of mutual funds, a low turnover ratio is less than 20% to 30%
and a high turnover is above 50%. The best way to determine ideal turnover for a
given mutual fund type is to make an "apples to apples" comparison to other funds in
the same category average. For example, if the average small-cap stock fund has a
turnover ratio of 90%, you may choose to seek small-cap funds with turnovers
significantly below that average mark.


LIMITATIONS

The study is only depending on historical data which can be sometimes
inaccurate. On the basis of these historical data, one cannot interpret the results.

The period of study is limited to 45 days which is not sufficient to observe the
total available options.

On the basis of only 1 month limited historical data we cannot suggest the
investors regarding any investment.