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

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

Performance Evaluation of Mutual Funds in India
With
Submitted to the
School of Management studies

University of Hyderabad
In Partial Fulfillment of the
Requirement for the Award of the Degree of
Master of Business Administration
Under the Guidance of
Dr. Chetan Srivastava

Lecturer, School of Management Studies
University of Hyderabad
By
Ankit Singh
08MBMA12
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For Getting A Copy Feel Free to Contact

ankitvns2007@gmail.com
MBA 2008-2010
School of Management Studies,
University of Hyderabad,
Gachibowli, Hyderabad,
Andhra Pradesh.
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CERTIFICATE
This is to certify that
the project work entitled
Factors Affecting Investors
Preference for Mutual Funds in India and Performance Evaluation of Mutual

Funds in India has been carried out and submitted by Mr. Ankit Singh under my
guidance in partial fulfillment of his Masters Of Business Administration at SCHOOL OF
MANAGEMENT STUDIES, UNIVERSITY of HYDERABAD.
Date: 21/04/09
Dr. Chetan Srivastava
Faculty Member
School Of Management Studies
University Of Hyderabad
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DECLARATION
This to declare that the project title Factors Affecting Investors Preference for
Mutual Funds in India and Performance Evaluation of Mutual Funds in India is an
authentic record of my original work carried out under the guidance of Dr. Chetan
Srivastava, Lecturer in Marketing, School of Management Studies, University of
Hyderabad.
The project work has been carried out solely for the purpose of submission in
partial fulfillment of Master of Business Administration at School of Management
Studies, University of Hyderabad.
I further declare that I have not submitted this document to any other School,
University, or Institution in whatever manner.
Date -
Ankit Singh
08MBMA12
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ACKNOWLEDGEMENTS
First of all I express my gratitude to my project guide Dr. Chetan Srivastava, Lecturer, School
of Management Studies, University of Hyderabad. His able guidance at each step of the project
helped me to broaden my outlook on the project and in successful completion of the project. I
shall always remember his polite way of correction and constant encouragement by asking
various questions.
I would like to express my gratitude to my Project Supervisor, Ms. Nandita Banerjee,
Centre Manager at Reliance Money Lucknow who had spared her valuable time in assisting me
during my project work. It has been a great privilege to work under the supervision of Mr.
Gaurav Nagar, Manager at Reliance Mutual Fund, Lucknow. Their sympathetic, accommodating
and constructive nature remained a constant source of inspiration for me throughout the duration
of this project work.
I convey my regards and special thanks to Dr. V. Venkata Ramana, Professor and Dean,
School of Management Studies, University of Hyderabad for giving me this opportunity for
doing summer internship at Reliance Money.
I would also thank Dr. Mary Jessica and Dr. G.V.R.K. Acharyulu, Faculty, School of
Management Studies, University of Hyderabad, for their guidance and support for the
completion of project work.
I specially thank all the faculty members of the School of Management Studies for
having equipped me with the skills and the ability through their inputs, which assisted me in the
completion of the project.
I am thankful to all the personnel at Reliance Money for their utmost co-operation also I
wish to thank all those people who have directly or indirectly been instrumental in successful
completion of this project work.
Finally, I would like to thank my Parents, Family, Friends, Colleagues and God Almighty
for their unending inspiration and encouragement.
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(1) Executive Summary

The report contains the brief description of the Mutual Fund Industry in India. It contains
the findings and analysis of the survey conducted to gather primary data to judge the factors that
influence the investors most before taking decision to make any investment in mutual funds.
Further an attempt has been made to know as to how important the various qualities of a mutual
fund scheme, various qualities of an Asset Management Company (AMC) and importance of
various services provided by the AMCs are to the investor while making investment in a
particular scheme. The attempt has also been made to categorize investors based on various
demographic factors such as age, income, etc. and to present a comparative analysis of the
various demographic factors. The size of the sample is limited to 200 only. More than 33 % of
the investors prefer fixed deposits for making investment. The investors first look for safety of
capital in mutual funds. More than 67 % of the investors first prefer open ended funds. About
half of the total mutual fund investors have invested in equity schemes. The study also reveals
that the investors prefer to take decision regarding the investments on their own. The investors
consider the reputation of the portfolio managers as the least important factor in the selection of
the funds/schemes. The investors consider the reputation of the company as the most important
quality while making selection of a particular fund or scheme. They have given highest
importance to daily disclosure of NAV in case of investor services.
The report also deals with the performance evaluation of Mutual Funds in India vis-a-vis
the Benchmark Index of the funds with the help of Beta (a measure of systematic risk), Standard
Deviation (a measure of total risk), Sharpe Ratio, Treynors Ratio, Jensen Measure (a measure of
fund manager performance), and Fama Measure. For this purpose, 10 similar equity schemes of
10 fund houses have been taken as sample, out of which 9 schemes are open ended and 1 scheme
is closed ended. The top 10 fund houses are selected on the basis of their Assets under
th
Management (AUM) as on 30 June 2009. More than 75% of corpus of each scheme is invested
in equity stocks. The study covers the period of 36 months from 31st July 2006 to 30th June
2009. The data used is monthly closing NAVs. The source of data is the respective website of a
particular scheme and also the mutualfundsindia.com and amfi.com.
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It is evident from the analysis that fund managers were not successful in satisfying the
investors with their performance. Under quarterly analysis only 7 funds out of the 10 funds
selected were able to earn more than market returns and only 6 funds were able to earn more than
the risk free rate.
Under half yearly analysis only 4 funds out of the 10 funds selected were able to earn
more than market returns and only 9 funds were able to earn more than the risk free rate.
Under yearly analysis only 6 funds out of the 10 funds selected were able to earn more
than market returns and only 9 funds were able to earn more than the risk free rate.
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(2) Table of Contents

Certificate
(i)
Declaration
(ii)
Acknowledgements
(iii)
1. Executive Summary
1-2
2. Table of Contents
3. Company Profile
4-7
4. History of Indian Mutual Funds Industry
8-9
5. Background and Need for Study
10
6. Statement of Problem
10-11
7. Objective of Study
12
8. Testable Hypothesis
13
9. Limitations of Study
13
10. Theoretical Framework
14
11. Literature Review
15-22
12. Research Methodology

(a) Designing of Questionnaire
23-24
(b) Duration of Study
24
(c) Sample Selection
24
13. Data Collection and Analysis
24-35
14. Performance analysis of Mutual Funds
36-56
15. Comparison of Funds on the basis of Index
57-59
16. Overall ranking of Mutual Funds

(a) On the basis of Jensen alpha
60
(b) On the basis of Jensen Alpha
61
(c) On the basis of Total Risk
62
(d) On the basis of Portfolio Diversification
63
17. Findings of the Study
64-65
18. Suggestions
66-67
19. Bibliography and References
68
20. Annexure I-II
69-72
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(3) COMPANY PROFILEReliance Capital Ltd is a part of the Reliance - Anil Dhirubhai Ambani (ADA) Group, and is
ranked among the 25 most valuable private companies in India. Reliance Capital is one of India's
leading and fastest growing private sector financial services companies, and ranks among the top
3 private sector financial services and banking groups, in terms of net worth. Reliance Capital
has interests in asset management and mutual funds, life and general insurance, private equity
and proprietary investments, stock broking, depository services, distribution of financial
products, consumer finance and other activities in financial services. The Reliance ADA Group is
one of India's top 2 business houses, and has a market capitalization of over Rs.2,90,000 crore
(US$ 75 billion), net worth in excess of Rs.55,000 crore (US$ 14 billion), cash flows of Rs.
11,000 crore (US$ 2.8 billion) and net profit of Rs. 7,700 crore (US$ 1.9 billion).
Reliance MoneyReliance Money is a group company of Reliance Capital; one of India's leading and fastest
growing private sector financial services companies, ranking among the top 3 private sector
financial services and banking companies, in terms of net worth. Reliance Capital is a part of the
Reliance ADA Group.
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About Reliance Money in brief

Reliance Money is a part of the Reliance Anil Dhirubhai Ambani Group and is promoted by
Reliance capital. The fastest growing private sector financial services company in India ranked
amongst the 3 private sector financial companies in terms of net worth. Reliance Money is a
comprehensive financial solution provider that enables one to carry out trading and investment
activities in a secure, cost-effective and convenient manner. Through Reliance Money, one can
invest in a wide range of asset classes from Equity, Equity and Commodity Derivatives, Mutual
Funds, Insurance products, IPOs to availing services of Money transfer and Money changing.
Reliance Money offers the convenience of on-line and off-line transactions through a variety of
means, including its, portal, call & Transact, Transaction Kiosks and at its network of affiliates.
Some key steps of the company are
Success is a journey, not destination if we look for examples to prove this quote then
we can find many but there is none like that of Reliance Money. This company is today known as
the largest financial service provider of India.
Success sutras of Reliance MoneyThe success story of the company is driven by 9 success sutras adopted by in namely Trust,
Integrity, Dedication, commitment, Enterprise, Hard work, Home work, Team work play ,
Learning and Innovation, Empathy and Humility and last but not least is its Network.
Mission statement:
Mission of the company is to be a leading and preferred service provider to the customers, and
aims to achieve this leadership position by building an innovative, enterprising and technology
driven organization which will set the highest standards of service and business ethics.
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Vision of Reliance Money:

To achieve and in market leadership Reliance Money aimed for complete customer satisfaction,
by combining its human and technological resources, to provide world class quality services. In
the process Reliance Money strived to meet and exceed customers satisfaction and set industry
standards.
ORGANIZATION HIERARCHY
RELIANCE MONEY
(Head Office Mumbai)
BRANCH OFFICE
Cluster Head
Business Development
Executives
Centre Manager
Executives
Sales Promoters
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PRODUCTS AND SERVICESEquity- Reliance Money offers its clients competitively priced Equity broking, PMS and
Portfolio Advisory Services. Trading execution assistance provided to clients.
Mutual Funds- Reliance Money offers dedicated research & expert advice on Mutual Funds.
Life-Insurance- Clients can choose from different plans of almost all Insurance Companies
where they can invest their money. A team of experts will suggest the best Insurance scheme
which suits the clients requirement.
General Insurance- Reliance Money assists in areas of Health insurance, Travel insurance,
Home insurance and Motor insurance.
Commodities- Reliance Money is a single platform to trade on both the major commodity
exchanges i.e. NCDEX and MCX. In addition in-house research desk shall provide research
reports on all major commodities which shall enable in getting views for trading and diversify
clients holdings. Trade Execution assistance is also provided to clients.
Structured Products, Art Investments- Structured Products is a new class of financial products
for investors apprehensive of increased volatility in stock markets. Specially designed products
could include Equity, Index-linked in nature, Real Estate Funds, Art Funds, Overseas
Investments and Infrastructure Investments.
Tax Planning- Reliance Moneys wealth management offerings include tax related services like:
Tax Planning & advisory services and filling Tax returns for individuals.
Real Estate Advisory Services- It provides Broking Model for lease/rent and buy/sell of
property, Property Valuation, Real-estate Consulting Corporate earning model, etc.
Offshore Investments- Reliance Money provides a unique opportunity to invest in international
financial markets through the online platform which includes different product ranges.
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(4) HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank the. The history of mutual funds in India
can be broadly divided into four distinct phases
First Phase 1964-87Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the
Reserve Bank of India and functioned under the Regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The
first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700
crores of assets under management.
Second Phase 1987-1993 (Entry of Public Sector Funds)1987 marked the entry of non- UTI, public sector mutual funds. These were set up by public
sector banks, Life Insurance Corporation of India (LIC) and General Insurance Corporation of
India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987
followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),
Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct
92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in
December 1990. At the end of 1993, the mutual fund industry had assets under management of
Rs.47, 004 crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in
which the first Mutual Fund Regulations came into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual
Fund) Regulations 1996.
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The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and acquisitions. As
at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.
The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of
other mutual funds.
Fourth Phase since February 2003In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets
under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of
Unit Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth. As at the end of
September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes.
Current status of Mutual Funds Industry in IndiaAt present there are 36 AMCs functioning in India. The total Assets under Management of all
st
these AMCs as on 31 August, 2009 are Rs. 749,915.52 crores with Reliance Mutual Fund on
the top with Rs. 117,313.78 crores under its management and Quantum Mutual Fund on the
lowest with Rs. 70.33 crores under its management. The total number of schemes under
operation is 3756 with ICICI Prudential Mutual Fund at the top with 323 Schemes and Quantum
Mutual Fund at the lowest with 11 schemes.
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(5) BACKGROUND AND NEED FOR THE STUDY- MF is a retail product designed to
target small investors, salaried people and others who are intimidated by the stock market but,
nevertheless, like to reap the benefits of stock market investing. At the retail level, investors are
unique and are a highly heterogeneous group. Hence, designing a general product and expecting
a good response will be futile except the case of UTI monopoly during 1964-1987. But with the
entry of public sector banks and financial institutions in the field and the globalization and
liberalization measures announced by the government led to a paradigm shift in the mind set of
investors and the capital market environment became more unfriendly to retail investors. They
had no other choice but to turn to MFs to reap the benefits of stock market investing. Hence, the
need to be innovative in designing the product was not felt and investors had to choose from
among the limited schemes offered. After the entry of private sector companies into the industry
the competition started growing in the industry.
Currently (as on 31/8/2009) there are 3756 schemes running with 36 AMCs (Source:
Mutualfundsindia.com) with varied objectives and AMCs compete against one another by
launching new products or repositioning old ones. The investors are having a lot of options to
choose from so he is confused in his selection of the product. The choice of investors is affected
by the different features of the scheme, the reputation of the AMCs, various services provided by
the companies to the investors. Unless the MF schemes are tailored to his changing needs, and
unless the AMCs understand the fund selection/switching behavior of the investors, survival of
funds will be difficult in future. With this background an attempt is made in this paper to study
the factors influencing the fund/scheme selection behaviour of Retail Investors.
Over the last few years mutual funds are giving impressive returns, especially Equity
Funds. There is a need to know the returns provided by the individual schemes and the risk levels
at which they are delivered in comparison with the market and the risk free rates. The aim is also
to identify the out-performers. There is a need to evaluate the performance of Indian Mutual
Fund Schemes.
(6) STATEMENT OF PROBLEM- The expectations of investors influence the price of the
securities, the volume traded and various other financial operations in actual practice. These
expectations of investors are influenced by their perception and humans generally relate
perception to action. The evidence of prevalence of such a psychological state is seen among MF
investors in India.
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For instance, UTI, which is synonymous to mutual funds in India, had a glorious past
and perceived as a safe, high yield investment vehicle with the added tax benefit. Many UTI
account holders have justified their beliefs by staying invested in UTI schemes even after the
1999 bail out and the July 2001 episode of repurchase freeze on US 64 for 6 months. People also
believe that something they own is better than something they do not own. For instance, the
existence of many poor performing funds with investors staying invested with them? In general,
rules for investment, the analysis of investment and discussion of financial behaviour tend to
assume behaviour, which is logical and internally consistent in various ways. Investor behaviour
does not; however, always appear to conform to such expectational norms.
Much of economic and financial theory is based on the notion that individuals act
rationally and consider all available information in the decision making process. However, in the
financial literature, there are no clear models, which explain the influence of perception and
beliefs on expectations and decision making. No doubt, reality is so complex that trying to
fit individual investors behaviour into a model is impossible. Investors behaviour may change
from period to period even if the other variables influencing the behaviour are held constant.
However, to a certain extent, the concepts can be borrowed from social psychology where
behavioural patterns, rational and irrational are observed and empirically tested. On the same
lines certain models can be developed to identify the financial behaviour, to the extent of the
availability of the explanatory variables. Such models can help to understand the why and
how? aspect of investor behaviour, which can have managerial implications for policy makers.
The fund managers manage the portfolio of the mutual funds by undertaking the risk so
they are expected to perform better than the market. The investment strategy and management
style are qualitative but the fund return is the only quantitative indicator to judge the
performance of mutual funds. Return alone should not be considered as the basis of measurement
of the performance of a Mutual Fund scheme, it should also include the risk taken by the fund
manager because different funds will have different levels of risk attached to them. There must
be some performance indicator that will reveal the quality of stock selection of various AMCs.
Hence, with this background, this study attempts to evaluate the behavioural aspects of
fund selection techniques of individual investors during the period, May 2009 to August 2009
and also attempts to judge the performance of mutual funds using traditional measures.
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(7) OBJECTIVES OF STUDY

The investors do not evaluate all possible product attributes while making a choice, but the
marketers search is for identification of The key buying criteria or The key choice criteria
or determinant attributes which are defined as certain features of a product offering that are
closely associated with preferences.
The study has the following general objectives1. To identify preferred saving avenue among investors and to identify the saving pattern of
investors.
2. To categorize investors as being inclined towards investment products based on certain
parameters such as sex, age, qualifications, occupation, annual income etc.
The study has the following specific objectives1. To judge the importance of factors that influences the investors to invest in mutual funds
and to identify the scheme preference of investors.
2. To perceive the preferred communication mode of investors.
3. To identify the information sources influencing the scheme selection decision of
investors.
4. To evaluate fund qualities that would affect the selection of Mutual Funds.
5. To understand the fund sponsor qualities influencing the selection of MFs/Schemes.
6. To evaluate investor related services that would affect the selection of Mutual funds.
7. To compare the performance of the selected funds of different companies with the help of
Sharpe Measure, Treynor Measure and Beta, measures of performance.
8. To examine the degree of correlation that exists between fund and market return.
9. To evaluate the diversification of the Portfolio of the selected funds.
10. To assess the Performance and selectivity skills of fund managers.
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(8) TESTABLE HYPOTHESIS- The following hypothesis is made in the study1. The investors consider all the qualities of the fund as important in the selection of the
fund/scheme.
2. The investors consider all the qualities of AMC important in the selection of the scheme.
3. The investors consider all the investor services important in the selection of the scheme.
4. The portfolios are well diversified and fund managers are able to generate returns more
than that of the market because of their knowledge and stock selection skills.
(9) LIMITATIONS OF STUDY1. Sample size was limited to 200 only out of which only 60 respondents had invested in
Mutual Funds. The sample size may not represent whole market.
2. The study has not been conducted over an extended period of time considering both
market ups and downs. The market state has a significant influence on the buying patterns
and preferences of investors. The study cannot capture such situations.
3. This study is limited to the investors of Lucknow, Varanasi and Kanpur only. Therefore
the inferences cannot be generalized.
4. A few respondents were not able to understand some of the terms of the questionnaire
which may affect the study to a little extent.
5. Only 10 selected equity schemes of top 10 AMCs based on their Assets under
Management as on June 30, 2009 are evaluated for their performance.
6. The performance evaluation of mutual funds is restricted to a period of three years
starting from June 30, 2006 to June 30, 2009 to evaluate the performance of selected
Mutual Funds but not from their inception.
7. The NAVs used in the study are obtained from amfi.com and also from
Mutualfundsindia.com, which in turn is supplied by the members. Members in turn
have not followed any uniform role in the computation of NAV due to the flexibilities
offered under SEBI Regulations.
8. This study excludes the effect of entry and exit loads of the Mutual funds.
9. The dividends if any are assumed to be paid in the end of the study period i.e. either at
the end of the last quarter, or at the end of the last half year, or at the end of the previous
year, as the case may be.
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(10) THEORETICAL FRAMEWORK

Mutual Fund industry today is one of the most preferred investment avenues in India. However,
with a large number of schemes to choose from, the retail investor faces problems in selecting
funds. Factors such as investment strategy and management style are qualitative, but the funds
record is an important indicator too. Though past performance alone cannot be indicative of
future performance, it is, frankly, the only quantitative way to judge how good a fund is at
present. Therefore, there is a need to correctly assess the past performance of different Mutual
Funds. There must be some performance indicator that will reveal the quality of stock selection
of various AMCs. The idea behind performance evaluation is to find the returns provided by the
individual schemes and the risk levels at which they are delivered in comparison with the market
and the risk free rates. The aim is also to identify the out-performers. The objective of the study
is to evaluate the performance of Indian Mutual Fund Schemes.
Return alone should not be considered as the basis of measurement of the performance of
a Mutual Fund scheme, it should also include the risk taken by the fund manager because
different funds will have different levels of risk attached to them. Risk associated with a fund, in
a general, can be defined as Variability or fluctuations in the returns generated by it. The higher
the fluctuations in the returns of a fund during a given period, higher will be the risk associated
with it. These fluctuations in the returns generated by a fund are resultant of two guiding forces.
First, general market fluctuations, which affect all the securities, present in the market, called
Market risk or Systematic risk and second, fluctuations due to specific securities present in the
portfolio of the fund, called Unsystematic risk. The Total Risk of a given fund is sum of these
two and is measured in terms of standard deviation of returns of the fund. Systematic risk, on the
other hand, is measured in terms of Beta, which represents fluctuations in the NAV of the fund
vis-a-vis market. The more responsive the NAV of a Mutual Fund is to the changes in the market;
higher will be its beta. Beta is calculated by relating the returns on a Mutual Fund with the
returns in the market. While Unsystematic risk can be diversified through investments in a
number of instruments, systematic risk cannot. In order to determine the risk-adjusted returns of
investment portfolios, several eminent authors have worked since 1960s to develop composite
performance indices to evaluate a portfolio by comparing alternative portfolios within a
particular risk class. These measures are Sharpe Measure, Treynor Measure, Jensen Alpha and
Fama Measure.
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(11) LITERATURE REVIEWIppolito (1992) and Bogle (1992) says that fund/scheme selection by investors is based on past
performance of the funds and money flows into winning funds more rapidly than they flow out
of losing funds. Goetzman (1997) states that there is a evidence that investor psychology affects
the fund/scheme selection and switching. Lu Zheng (1998) examined the fund selection ability
of MF investors and found that the investors decisions are based on short-term future
performance and investors use fund specific information in their selection decision.
Madhusudhan V. Jambodekar (1996) conducted a study to assess the awareness of MFs among
investors, to identify the information sources influencing the buyer decision and the factors
influencing the choice of a particular fund. The study revealed that income schemes and openended schemes are preferred over growth schemes and close-ended schemes during the prevalent
market conditions. Investors look for Safety of Principal, Liquidity and Capital Appreciation in
order of importance; Newspapers and Magazines are the first source of information through
which investors get to know about MFs / Schemes and the investor service is the major
differentiating factor in the selection of MFs. Shanmugham (2000) conducted a survey of 201
individual investors to study the information sourcing by investors, their perceptions of various
investment strategy dimensions and the factors motivating share investment decisions, and
reports that among the various factors, psychological and sociological factors dominated the
economic factors in share investment decisions. Sujit Sikidar and Amrit Pal Singh (1996)
carried out a survey with an objective to understand the behavioural aspects of the investors of
the North Eastern region towards equity and mutual funds investment portfolio. The survey
revealed that the salaried and self employed formed the major investors in mutural fund
primarily due to tax concessions. Syama Sunder (1998) conducted a survey to get an insight
into the mutual fund operations of private institutions with special reference to Kothari Pioneer.
The survey revealed that Agents play a vital role in spreading the Mutual Fund culture; open-end
schemes were much preferred then; age and income are the two important determinants in the
selection of the fund/scheme; brand image and return are the prime considerations while
investing in any Mutual Fund. Anjan Chakarabarti and Harsh Rungta (2000) stressed the
importance of brand effect in determining the competitive position of the AMCs. Their study
reveals that brand image factor, though cannot be easily captured by computable performance
measures, influences the investors perception and hence his fund/scheme slection.
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SEBI NCAER Survey (2000) was carried out to estimate the number of households and the
population of individual investors, their economic and demographic profile, portfolio size,
investment preference for equity as well as other savings instruments. This is a unique and
comprehensive study of Indian Investors, for, data was collected from 3,00,0000 geographically
dispersed rural and urban households. Some of the relevant findings of the study are :
Households preference for instruments match their risk perception; Bank Deposit has an appeal
across all income class; 43% of the non-investor households equivalent to around 60 million
households (estimated) apparently lack awareness about stock markets; and, compared with low
income groups, the higher income groups have higher share of investments in Mutual Funds
(MFs) signifying that MFs have still not become truly the investment vehicle for small investors.
Nevertheless, the study predicts that in the next two years (i.e., 2000 hence) the investment of
households in MFs is likely to increase. Sharad Panwar and Dr. R. Madhumathi found that
public-sector sponsored, private-sector Indian sponsored and private-sector foreign sponsored
mutual funds do not differ statistically in terms of portfolio characteristics such as net assets,
common stock%, market capitalization, holdings, Top Ten %. However, there is a statistical
difference between three classes of public-sector sponsored, private-sector Indian sponsored and
private-sector foreign sponsored mutual funds in terms of average standard deviation, average
variance and average coefficient of variation. Portfolio risk characteristics measured through
private-sector Indian sponsored mutual funds seems to have outperformed both Public- sector
sponsored and Private-sector foreign sponsored mutual funds. Residual variance is not linearly
related to investment performance in terms of Jensens alpha and portfolio beta, regardless of the
benchmark index used. The general linear model of analysis of covariance establishes differences
in performance among the three classes of mutual funds in terms of portfolio diversification.
S.Narayan Rao , evaluated performance of Indian mutual funds in a bear market through
relative performance index, risk-return analysis, Treynors ratio, Sharpes ratio, Sharpes
measure , Jensens measure, and Famas measure. The study used 269 open-ended schemes (out
of total schemes of 433) for computing relative performance index. Then after excluding funds
whose returns are less than risk-free returns, 58 schemes are finally used for further analysis. The
results of performance measures suggest that most of mutual fund schemes in the sample of 58
were able to satisfy investors expectations by giving excess returns over expected returns based
on both premium for systematic risk and total risk
Page | 21
Jayadev (1996) evaluated the performance of 62 mutual funds schemes using NAV data for
varying period between 1987 and 1995. He reported superior performance for bulk (30 out of 44)
of the sample schemes when total risk was considered. However, in terms of systematic risk only
24 out of 44 schemes outperformed the benchmark portfolio. He also found that Indian mutual
funds were not properly diversified. Further, in terms of Famas measure, he did not find
selectivity ability of the fund manager.
Amitab Gupta (2001) in his study, the selected schemes were evaluated with respect to the
broad based BSE National Index to find out whether the schemes were able to beat the market.
The most important and widely used measures of performance are(1) (Beta) Co-efficient (A Measure of Systematic Risk)
(2) Sharpes Measure of Performance
(3) Treynors Measure of Performance
(4) Jensens Measure of Performance
(5) Famas Measure of Performance
(6) Standard Deviation (A Measure of Total Risk)
(7) Co-efficient of Determination: Measure of Diversification
a (Beta) Co-efficient - The beta is a measure of systematic risk or Non-diversifiable risk.
The beta of a stock measures the sensitivity or volatility of the stock with reference to a broad
based market index, e.g. SENSEX in India. In the case of Mutual Funds it represents fluctuations
in NAV of a Mutual Fund vis--vis base market. The more responsive the NAV of a Mutual Fund
is to the changes in the market the higher will be its beta and vice-versa. It is calculated by
relating the returns on a Mutual Fund with the returns in the Market. A beta of 1 indicates that the
security's price will move with the market, and the stock is called unity stock. A beta of less than
1 means that the security will be less volatile than the market and the stock is called low beta
stock. A beta of greater than 1 indicates that the security's price will be more volatile than the
market and the stock is called high beta stock. In the study it is assumed that the Beta is
consistent during the period of study.
Page | 22
E.g. A beta of 1.2 for a stock would indicate that this stock is 20 per cent riskier than the
Index. Similarly, a beta of 0.9 would indicate that this stock is 10 per cent (100-90) less risky
than the Index. And, of course, a beta of one would mean that the stock is as risky as the stock
market index Beta is calculated using the following formula =
( ) ( )
Where, X = Market or Index Return, and,

Y = Return on Fund.
= Beta of the Fund.
N = Number of Periods
bSharpes Measure of Performance - This measure was developed by William Sharpe in
1966. Sharpe Measure measures the risk Premiums of the portfolio (average portfolio return less
risk free return) relative to the total amount of risk in the portfolio (standard deviation of the
portfolio). The Sharpe measure adjusts portfolio performance for total risk rather than market
risk. It is also called reward-to-variability ratio. The Sharpe ratio tells us whether a portfolio's
returns are due to smart investment decisions or a result of excess risk. The higher the Sharpe
ratio for a portfolio, the better the portfolio has performed. major limitation of the Sharpe ratio is
that it is based on the Capital Market Line (CML). The major character of the capital market line
is only the efficient portfolios can be plotted on the CML but not inefficient. Hence it is assumed
that a managed portfolio (mutual fund scheme) is an efficient portfolio.
E.g.- If the portfolio A has an average return of 10% with a standard deviation of 2%, and
portfolio B has an an average return of 12% with a standard deviation of 4%. Also risk free rate
of return is 5%. Then the Sharpe Index for A is equal to 2.5 and for B is equal to 1.75. Therefore
A will be ranked as better portfolio than B, because its Sharpe index is higher than that of B (2.5
1.75) despite the fact that portfolio B had a higher return.
It is calculated using the following formula=
Page | 23
Where, St = Sharpe Index

r* = riskless rate of interest (T - bill)
t = Standard deviations of the returns of portfolio t
= average return on portfolio t
cTreynors Measure of Performance - This measure was developed by Jack Treynor in
1965. The Treynor measure is a relative measure of performance for investment managers and
measures the return premium per unit of systematic risk (risk that cannot be diversified) as
measured by the beta or relative volatility of the portfolio. While a high and positive Treynor's
Index shows a superior risk-adjusted performance of a fund, a low and negative Treynor's Index
is an indication of unfavorable performance. It is also called reward-to-volatility ratio.
The major limitation of the Treynor Index is that it can be applied to the schemes with
positive betas during the bull phase of the market. The results will mislead if applied during bear
phase of the market to the schemes with negative betas. The second limitation is it ignores the
reward for unsystematic or unique risk.
E.g.- If the portfolio A has an average return of 10% with a Beta of 0.5, and portfolio B
has an an average return of 12% with a Beta of 1.0. Also risk free rate of return is 5%. Then the
Treynors Index for A is equal to 0.10 and for B is equal to 0.07. Therefore A will be ranked as
better portfolio than B, because its index is higher than that of B (0.10 0.07) despite the fact
that portfolio B had a higher return.
It is calculated using the following formula=
Where, Tn = Treynors Index

r* = riskless rate of interest (T - bill)
n = Beta coefficient of portfolio n
= average return on portfolio n
Page | 24
dJensens Measure of Performance - This measure was developed by Michael Jensen in

1968. This measures the Portfolio Managers predictive ability i.e. his ability to earn returns
through successful prediction of security prices which are higher than those which an ordinary
investor would expect given the level of riskiness of his portfolio and average market return i.e.
the expected (CAPM) returns. It is a measure of absolute performance on a risk adjusted basis.
A positive value for Jensen's alpha means that the fund manager has "beat the market"
with his or her stock picking skills and vice-versa. If it is equal to zero then it indicates neutral
performance by portfolio manager. A positive value of this would indicate that the scheme has
provided a higher return over the CAPM return and lies above Security Market Line (SML) and
a negative value would indicate it has provided a lower than expected returns and lies below
SML. The Jensen model assumes that the portfolio is fully invested and is subjected to the
limitations of CAPM.
Limitation of this model is that it considers only systematic risk not the entire risk
associated with the fund and an ordinary investor cannot mitigate unsystematic risk, as his
knowledge of market is primitive.
It is calculated using the following formula
=+(
Where, = Riskless rate of interest for a period t

= Average return on portfolio j for a period t
= Intercept that measures the forecasting ability of the portfolio manager

= A measure of systematic risk for Portfolio j
= Average return of a market portfolio for period t
Page | 25
eFamas Measure of Performance - This measure was developed by Eugene Fama in 1972.
This model is an extension of Jenson model. This model compares the performance, measured in
terms of returns, of a fund with the required return commensurate with the total risk associated
with it. The difference between these two is taken as a measure of the performance of the fund
and is called Net Selectivity. The Net Selectivity represents the stock selection skill of the fund
manager, as it is the excess returns over and above the return required to compensate for the total
risk taken by the fund manager.
A positive value for Fama indicates that the fund earned returns higher than expected
returns and lies above Capital Market Line (CML) and a negative value indicates that the fund
earned returns lower than expected returns and will lie below the Capital Market Line (CML).
It is calculated using the following formula-
Where, FP = Famas Measure for Portfolio, rP = Portfolio Return,

rf = Risk Free Return,
P = Standard Deviation of the Portfolio Returns
m = Standard Deviation of the Market Returns rm = Market Return.
The purpose of performance evaluation is that it should be in a position to identify the

mistakes and suggest a direction for the correction. A comparison of Sharpes and Treynor s
ratio will help the fund managers to correct their actions from risk angle and comparison of
Jensens and Famas measures will help from return angle.
fStandard Deviation It measures the absolute dispersion or variability or volatility. It shows
how the values in a series deviate from the mean value of the series. It is also used as a measure
of risk. The greater the Standard Deviation the greater the volatility in the fund returns i.e. the
greater the total risk associated with a particular fund. It is calculated using the following
formula
()
Page | 26
Where, = Standard Deviation,

X = Values of the series,
= Mean of the series,
N = Number of items in a series.
(g) Co-efficient of Correlation The correlation measures the degree of relationship between
two variables. The co-efficient of correlation varies between -1 to +1. The higher the correlation
the greater is the degree of relationship between the variables. The correlation is used in this
study to measure the relationship between the fund returns and market returns. It s formula is
similar to that of the Beta. It is as follows=
( ) ( )
(h) Co-efficient of Determination It measures the diversification of the portfolio. It is the

square of the Co-efficient of Correlation.
(i) Returns on Fund - Returns on fund is calculated using the following formula=
Where,= Returns on Mutual Fund.

= Net Asset Value at the end of the previous Period,
+1
+1
= Net Asset Value at the end of the current Period,
= Dividend received during the current Period.
jReturns on Market Index - Returns on Market Index is calculated using the following
formulaWhere,
=+
= Return on Market Index,
+1 = Market Index at the end of

= Market Index at the end of Previous Period,
Current Period,
Page | 27
(12) RESEARCH METHODOLOGY

(a) Designing of Questionnaire- To understand the savings preference, investment preference,
scheme preference, time horizon for investment and objectives for investment in Mutual Funds,
and to identify the information sources influencing scheme selection, and the preferred mode of
communication, a questionnaire (ANNEXURE I) was designed and the respondents were asked
to rank their preferences on a ranking scale.
The questionnaire also contains 21 factors that are of varied importance to investors
while taking decision to invest in Mutual Funds. These factors are divided into 3 major groups
Scheme Qualities, AMC Qualities and Investor Services. The investors were asked to rate the
importance of each of these factors on a 5 point scale ranging from Highly Important (1) to not at
all Important (5). These factors are as follows(A)
Scheme Qualities1. Funds/Schemes performance record

2. Funds/Schemes brand name
3. Schemes portfolio constituents
4. Reputation of scheme(s), portfolio manager(s)
5. Investment/Withdrawal facilities
6. Rating by a rating agency
7. Innovativeness of the Scheme
8. Products with tax benefits
9. Entry and Exit load
10. Safety of capital
(B)
AMC Qualities1. Private Sector / Public Sector ownership

2. Reputation of the company
3. Range of schemes with different qualities
4. Efficiency of research wing
5. Companys expertise in managing money
Page | 28
(C)
Investor Services1. Disclosure of investment objectives, method and Periodicity of valuation in

advertisement.
2. Disclosure of method periodicity of schemes sales and repurchase in offer document.
3. Announcement of NAV on every trading day
4. Disclosure of deviation of the investments from the expected pattern.
5. Disclosure of investments at regular intervals.
6. Mutual Fund Investors grievance redressal machinery.
(b) Duration of Study- The survey is conducted for a period of two months starting from May
10, 2009 to July 10, 2009. The performance of the Mutual Funds is calculated for a period of
three years starting from July 2006 to June 2009.
(c) Sample Selection- The survey is conducted on 120 investors out of which 60 investors
invested in Mutual Funds. The sample for study includes 29 Government Employees, 26 Private
Sector Employees, 21 Self-Professionals, 27 Businessmen, and 13 Retired Government
Employees so as to get effective results. Out of total 120 respondents, 55 investors invested
through Reliance Money. The survey was conducted in certain areas of Lucknow, Kanpur and
Varanasi only.
For the second part of the study the sample includes 10 similar equity schemes of Top 10
fund houses selected on the basis of their Assets under Management (AUM) as on 30
th
June
2009. This includes 9 open ended schemes and 1 closed ended scheme. More than 75% of corpus
of each scheme is invested in equity stocks.
(13) Data Collection and Analysis- The report is based on primary as well as secondary data.
For the first part of the study Primary data was collected through the above designed
Questionnaire using telephone calls, e-mails and also personal interviewing the respondents. The
data is analyzed using the correlation analysis, chi-square test and analysis of variance.
For the second part Secondary data is collected from the offer document of the funds, the
websites of respective AMCs, amfiindia.com and MutualFundsindia.com. The data is analyzed
using the Sharpe Measure, Treynors Measure, Jensen Measure, Fama Measure, Standard
Deviation and Correlation Analysis. The profile of the investors is given below-
Page | 29
RESPONSES DURING THE SURVEY

INVESTOR PROFILE
NO. OF RESPONDENTS
Male
Female
136
64
Below 30
30-40
40-50
50 and above
42
70
54
34
SEX
AGE
OCCUPATION
Salaried
Businessman
Professional
Retired
ANNUAL INCOME
Below 2,00,000
2,00,000-3,00,000
3,00,000-4,00,000
Above 4,00,000
ANNUAL SAVINGS
Below 50,000
50,000 100,000
100,000 150,000
Above 150,000
INVESTMENTS
Fixed Deposits
Mutual Funds
Life Insurance
Stock Market
Postal Savings
Others
OBJECTIVE
Liquidity / Safety
Growth
Returns
Tax Benefits
TYPE OF FUNDS
Open-Ended Funds
Close-Ended Funds
Interval-Funds
75
47
41
37
51
77
38
34
67
52
43
38
75
60
28
22
6
9
21
16
12
11
41
13
6
Page | 30
SCHEME PREFERENCE
Equity (Growth)
Equity (Dividend)
Debt
Balanced
Sector Specific
INFLUENCE OF ENVIRONMENTAL FACTORS
ROUTE
19
8
17
10
6
NO OF RESPONDENTS
Self Evaluation
21
Advisors
17
Commercials
13
Friends/Family
9
MODE OF COMMUNICATION FOR RECEIVING UPDATES AND PERFORMANCE
MODE
Personal Communication
Internet / e-mail
Telephone
No Preference
NO OF RESPONDENTS
21
16
14
9
Page | 31
Analysis of the Findings- The relationship between important factors has been analyzed with
the help of Chi-Square Test. The following pairs have been analyzed1. Income and Savings- The relationship between the savings and investment can be
presented with the help of following table and diagram,
Income / Savings
Below 50,000
50,000-100,000
100,000-150,000
Above 150,000
Below 2,00,000
47
2,00,000-3,00,000
19
37
21
3,00,000-4,00,000
10
17
Above 4,00,000
32
50
40
30
20
10
0
Below 2,00,000
2,00,000-3,00,000
3,00,000-4,00,000
Above 4,00,000
Page | 32
2. Savings and InvestmentsInvestments /

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

Below 30
30-40
40-50
50 and above
30
25
20
15
10
5
0
Fixed
Deposits
9
25
22
19
Mutual
Funds
26
20
12
2
Life
Insurance
2
12
11
3
Stock
Market
5
11
4
2
Postal
Savings
0
0
2
4
Others
0
2
3
4
Below 30
30-40
40-50
50 and above
Page | 35
5. Age and SchemeAge / Scheme
Equity
(Growth)
11
6
2
0
Below 30
30-40
40-50
50 and above
12
10
8
6
4
2
0
Equity
(Dividend)
2
3
3
0
Debt
Balanced
7
5
4
1
3
4
2
1
Sector
Specific
3
2
1
0
Below 30
30-40
40-50
50 and above
Page | 36
A. RANKING OF AMC QUALITIES-
1
21
NO OF
RESPONDENTS
2
3
4
16
12
7
5
4
One
25
17
11
Two
24
20
Three
13
16
10
12
Four
19
20
16
Five
AMC QUALITIES
Private Sector / Public
Sector ownership
Reputation of the
company
Range of schemes with
different qualities
Efficiency of research
wing
Companys expertise in
managing money
RANK
(Based on Weighted Average)
Anova: Single Factor (AMC Qualities)

SUMMARY
Groups Count
Sum
Average
Column 1
5
60
12
Column 2
5
60
12
Column 3
5
60
12
Column 4
5
60
12
Column 5
5
60
12
Reputation of the
company
Range of schemes with
different qualities
Companys expertise in
managing money
Private Sector / Public
Sector ownership
Efficiency of research
wing
Variance
46.5
88
99.3
7.5
78.5
ANOVA
Source of Variation
Between Groups
Within Groups
Total
SS
0.64
1279.2
1279.84
df
4
20
MS
0.16
63.96
F
0.0025
P-value
0.99999
F crit
2.86608
24
The F Value is much less than the critical or table value which means that people consider
all the qualities of AMC as important while investing in a fund. Therefore the hypothesis that
investors consider all the qualities of the AMC as important factor while making investment in
mutual funds stands accepted. The difference in the sample is due to random sampling error.
Page | 37
B. RANKING OF SCHEME QUALITIES
SCHEME QUALITIES
Funds/Schemes
performance record
Funds/Schemes brand
name
Schemes portfolio
constituents
Entry and Exit load
Investment/Withdrawal
facilities
Rating by a rating agency
New Features of the
Scheme
Products with tax benefits
Reputation of scheme(s),
portfolio manager(s)
Safety of Capital
NO OF
RESPONDENTS
1
2
3
4
32 21
5
2
RANK
5
0
One
Safety of Capital
29
15
10
Two
15
12
21
Three
Funds/Schemes
performance record
Products with tax benefits
29
14
Four
21
19
11
Five
12
14
14
11
Six
13
21
10
10
Seven
26
24
Eight
13
11
17
14
Nine
Rating by a rating agency
32
18
Ten
Reputation of scheme(s),
portfolio manager(s)
Funds/Schemes brand
name
Entry and Exit load
Investment/Withdrawal
facilities
Schemes portfolio
constituents
New Features of the
Scheme
The F Value is much less than the critical value or table value which shows that investors
consider all the qualities of the a scheme as important factor while selecting a particular scheme.
Therefore the hypothesis that, investors consider all the qualities of the scheme important while
selecting a particular scheme stands accepted. The differences in the sample are due to the
random sampling error.
The ANOVA calculation is given on the next page-
Page | 38
Anova: Single Factor (Scheme Qualities)

SUMMARY
Groups
Count
Sum
Average
Column 1
5
60
12
Column 2
5
60
12
Column 3
5
60
12
Column 4
5
60
12
Column 5
5
61
12.2
Column 6
5
60
12
Column 7
5
60
12
Column 8
5
60
12
Column 9
5
60
12
Column 10
5
60
12
Variance
193.5
118
45
108.5
57.2
4.5
31.5
144.5
20
170.5
ANOVA
Source of Variation
Between Groups
Within Groups
SS
2036.68
1536.3
Total
df
MS
509.17
34.14
4
45
3572.98
F
14.9142
P-value
7.8E-08
F crit
2.57874
49
C. RANKING OF INVESTOR SERVICES-
SCHEME QUALITIES
1
Disclosure of investment
objectives, method and
Periodicity of valuation in
advertisement
Disclosure of method,
periodicity of schemes
sales and repurchase
in offer document
Announcement of NAV
on every trading day
Disclosure of deviation of
the investments from the
expected pattern
Disclosure of investments
at regular intervals
Mutual Fund Investors
grievance redressal
machinery
NO OF
RESPONDENTS
2
3
4
RANK
5
31
23
One
27
18
10
Two
32
21
Three
19
24
11
Four
18
24
13
Five
20
26
10
Six
Announcement of NAV
on every trading day
Disclosure of investment
objectives, method and
Periodicity of valuation in
advertisement
Disclosure of method,
periodicity of schemes
sales and repurchase
in offer document
Mutual Fund Investors
grievance redressal
machinery
Disclosure of investments
at regular intervals
Disclosure of deviation of
the investments from the
expected pattern
Page | 39
Anova: Single Factor (Scheme Qualities)

SUMMARY
Groups
Count
Sum
Average Variance
Column 1
5
60
12
197.5
Column 2
5
60
12
112.5
Column 3
5
60
12
198.5
Column 4
5
60
12
89.5
Column 5
5
60
12
90.5
Column 6
5
61
12.2
112.2
Source of Variation
Between Groups
Within Groups
SS
0.166667
3202.8
Total
3202.967
ANOVA
df
MS
5 0.03333
24
133.45
F
0.00025
P-value
1
F crit
2.62065
29
The F value is less than the table value which means that the investor consider all the
investor services as important while selecting a particular scheme. Hence the hypothesis that
investor considers all the investor services as important in their fund scheme selection stands
true. The difference in the sample is due to the random sampling error.
Page | 40
(14) PERFORMANCE ANALYSIS OF MUTUAL FUNDS

The performance of Mutual Funds has been measured for a period of three years starting from
July 2006 to June 2009. The funds performance is analyzed and a comparison is made between
the performance of various funds with their respective benchmark index with the help of above
discussed methods on Quarterly, Half-yearly, and Yearly basis in order to present a more
comparative analysis. It is done keeping in mind the different investment periods of the
investors. The funds chosen belong to the top 10 AMCs in India as on 30
th
June 2009. The
rankings of the AMCs are based on the total AUM under them as on the date. The funds are
selected based on their corpus. More than 75% of the total corpus of each fund is invested in the
equity. The following 10 Equity funds are included in the study
(1) Birla Sunlife Equity Fund
(2) Templeton India Equity Fund
(3) UTI Equity Fund
(4) SBI Equity Fund
(5) Kotak Emerging Equity Scheme
(6) HDFC Equity Fund
(7) LIC Equity Fund
(8) ICICI Discovery Fund
(9) IDFC Imperial Equity Fund
(10) Reliance Equity Fund
The analysis of the various mutual funds is as follows-
Page | 41
(1) Birla Sunlife Equity Fund - It is a open-ended equity fund. The date of inception is August
27, 1998 with a NAV of Rs. 10. The Benchmark Index is BSE 200. The primary investment
objective is to provide long term capital appreciation through a portfolio with a target allocation
of 90% in Equity. Its Asset Allocation is 93.70% in Equity, 3.30% in Debt and 3.00% in Cash
and Cash Equivalent at the end of July 2009. The fund size is Rs. 1112.67 crores as on July 31,
2009. Its results are as follows(%)
(%)
6.16
(%)
5.12
( m)
Sharpe
( )m
Treynor
( )m
4.58
Quarterly Results
1.04
1.58
0.54
22.40
0.02
0.54
35.33
0.21
7.27
Yearly Results
14.01
9.01
21.21
0.42
9.01
12.65
11.91
4.64
Half-Yearly Results
0.74
8.01
7.27
18.52
13.52
4.51
5.00
Where,= Average Returns for Fund for particular period,

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

2
eta ()p
Sharpe
( )p
0.91
1.17
0.53
( p)
(r)
( )
0.40
Treynor
Jensen
Fama
( )
( )p
( )
Quarterly Results
13.31
11.62
11.39
30.37
0.672
0.452
0.74
Half-Yearly Results
25.53
21.37
21.50
40.37
0.737
0.543
1.25
Yearly Results
60.08
42.78
52.04
0.216
0.046
122.37
Page | 44
(a) Quarterly Analysis- The Beta of fund is less than that of the market and the standard
deviation of the fund returns is more than that of the market. This shows that the fund is
less risky as compared to the market in terms of Systematic Risk but it is more volatile
and risky as compared to the market in terms of Total Risk and it is compensating for the
risk by earning 11.58% more than market and also earning 12.12% more than the RiskFree rate.
(b) Half-Yearly Analysis- The Beta of fund and the standard deviation of the fund returns is
more than that of the market. This shows that the fund is more risky and volatile as
compared to the market both in terms of Systematic Risk and Total Risk but it is
compensating for the risk by earning 22.61% more than market and 29.88 % more than
the Risk-Free rate.
(c) Yearly Analysis- The Beta of fund is less than that of the market and the standard
less risky as compared to the market in terms of Systematic Risk but it more volatile and
risky as compared to the market in terms of Total Risk and it is compensating for the risk
by earning 55.85% more than market and also earning 64.86% more than the Risk-Free
rate. Sharpe ratio and Treynor Ratio for the fund is more than that of the market which
market with his stock selection skills. There is a low degree of positive correlation
between the fund returns and market returns and portfolio is not well diversified.
Page | 45
(3) UTI Equity Fund- It is an open ended equity fund. The date of inception is April 20, 1992
with a NAV of Rs. 10 per unit. The Benchmark Index is BSE 100. The principal investment
objective is to provide long term capital appreciation through investing at least 80% of its funds
in equity and equity related instrument with medium to high risk profile and upto 20% in debt
and money market instruments with low to medium risk profile. Its Asset Allocation is 90.68% in
Equity, 2.25% in Debt and 7.07% in Cash and Cash Equivalent at the end of July 2009. The fund
size is Rs. 1629.68 crores as on July 31, 2009. Its results are as follows(%)
(%)
(%)
( m)
Sharpe
( )m
Treynor
( )m
21.78
0.02
0.52
3.32
5.10
4.58
Quarterly Results
(-1.78)
(-1.26)
0.52
6.55
11.84
4.64
Half-Yearly Results
(-5.29)
1.91
7.20
34.62
0.21
7.20
4.51
Yearly Results
(-3.44)
5.86
9.30
20.42
0.46
9.30
10.37
13.81

2
eta ()p
Sharpe
( )p
0.71
0.40
0.70
( p)
(r)
( )
-0.08
Treynor
Jensen
Fama
( )
( )p
( )
Quarterly Results
-1.77
(-1.63)
(-1.64)
15.85
0.989
0.978
0.09
Half-Yearly Results
4.78
(-0.97)
(-2.12)
19.47
0.726
0.527
0.41
Yearly Results
(-0.65)
(-0.65)
14.23
0.999
0.998
8.37
Page | 46
(a) Quarterly Analysis- The Beta and the standard deviation of the fund returns is less than
that of the market. This shows that the fund is less risky and volatile as compared to the
market both in terms of Systematic Risk and Total Risk. It is earning 1.78% less than
market and also earning 1.26% less than the Risk-Free rate.
Sharpe ratio and Treynor Ratio for the fund is negative and less than that of the
market which shows that the funds performance is not up to the mark when compared to
the market. The Jensens Alpha and Fama calculated for the fund is negative which
shows that the fund manager has not been able to beat the market with his stock selection
skills. There is a high degree of positive correlation between the fund returns and market
returns and portfolio is well diversified.
(b) Half-Yearly Analysis- The Beta and the standard deviation of the fund returns is less
than that of the market. This shows that the fund is less risky and volatile as compared to
the market both in terms of Systematic Risk and Total Risk. It is earning 5.29% less than
market but is earning 1.91% more than the Risk-Free rate.
Sharpe ratio and Treynor Ratio for the fund is less than that of the market which
shows that the funds performance is not up to the mark when compared to the market.
The Jensens Alpha and Fama calculated for the fund is negative which shows that the
fund manager has not been able to beat the market with his stock selection skills. There is
a high degree of positive correlation between the fund returns and market returns and
portfolio is well diversified.
(c) Yearly Analysis- The Beta and the standard deviation of the fund returns is less than that
of the market. This shows that the fund is less risky and volatile as compared to the
market both in terms of Systematic Risk and Total Risk. It is earning 3.44% less than
market but is earning 5.86% more than the Risk-Free rate.
shows that the funds performance is not up to the mark when compared to the market.
The Jensens Alpha and Fama calculated for the fund is negative which shows that the
fund manager has not been able to beat the market with his stock selection skills. There is
a high degree of positive correlation between the fund returns and market returns and
portfolio is well diversified.
Page | 47
(4) SBI Equity Fund- It is a diversified open ended equity fund. The date of inception is January
1, 1991 with a NAV of Rs. 10 per unit. The Benchmark Index is BSE 100. The primary
investment objective is to provide the investor Long-term capital appreciation by investing in
high growth companies along with the liquidity of an open-ended scheme through investments
primarily in equities and the balance in debt and money market instruments. Its Asset Allocation
is 92.51% in Equity, 1.35% in Debt and 6.14% Cash and Cash Equivalent at the end of July
2009. The fund size is Rs. 370.56 crores as on July 31, 2009. Its results are as follows(%)
(%)
(%)
- -
( m)
Sharpe
( )m
Treynor
( )m
21.78
0.02
0.52
5.80
5.10
4.58
Quarterly Results
0.70
1.22
0.52
12.54
11.84
4.64
Half-Yearly Results
0.70
7.90
7.20
34.62
0.21
7.20
4.51
Yearly Results
2.29
11.59
9.30
20.42
0.46
9.30
16.10
13.81

2
r = Co-efficient of Determination.
eta ()p
Sharpe
( )p
0.99
1.03
0.87
( p)
(r)
( )
0.05
Treynor
Jensen
Fama
( )
( )p
( )
Quarterly Results
1.23
0.71
0.62
25.17
0.907
0.822
0.22
Half-Yearly Results
7.67
0.48
0.48
35.70
0.995
0.990
0.64
Yearly Results
3.50
3.41
17.91
0.996
0.992
13.32
Page | 48
(a) Quarterly Analysis- The Beta of fund is less than that of the market and the standard
and risky as compared to the market in terms of Total Risk and it is compensating for the
risk by earning 0.70% more than market and also earning 1.22% more than the Risk-Free
rate.
(b) Half-Yearly Analysis- The Beta and the standard deviation of the fund returns is more
than that of the market. This shows that the fund is more risky and volatile as compared
to the market both in terms of Systematic Risk and Total Risk. It is compensating for the
risk by earning 0.70% more than market but is earning 7.90% more than the Risk-Free
rate.
market both in terms of Systematic Risk and Total Risk. But still it is earning 2.29% more
than market and 11.59% more than the Risk-Free rate.
Page | 49
(5) Kotak Emerging Equity Scheme- It is a diversified close-ended equity fund. The date of
inception is March 30, 2007 with a NAV of Rs. 10. The Benchmark Index is BSE Midcap. The
primary investment objective is to generate long-term capital appreciation from a portfolio of
equity and equity related securities, by investing predominantly in mid and small cap companies.
Its Asset Allocation is 81.77% in Equity and 3.35% in Debt and 14.88% in Cash and Cash
Equivalent at the end of July 2009. The fund size is Rs. 134.09 crores as on July 31, 2009. Its
results are as follows(%)
(%)
(%)
( m)
Sharpe
( )m
Treynor
( )m
33.23
-0.02
(-0.60)
0.14
3.98
4.58
Quarterly Results
(-3.84)
(-4.44)
(-0.60)
-1.33
5.49
4.64
Half-Yearly Results
(-6.82)
(-5.97)
0.85
48.05
0.02
0.85
4.51
Yearly Results
(-7.01)
(-23.13) (-16.12)
5.86
-2.75
(-16.12)
-18.62
-11.61

2
eta ()p
Sharpe
( )p
0.74
0.80
0.78
( p)
(r)
( )
-0.18
Treynor
Jensen
Fama
( )
( )p
( )
Quarterly Results
-6.00
(-3.99)
(-4.00)
25.05
0.953
0.908
-0.15
Half-Yearly Results
-7.46
(-6.65)
(-6.67)
39.96
0.972
0.945
-3.10
Yearly Results
(-10.56)
(-2.65)
7.47
1.000
1.000
-29.65
Page | 50
market both in terms of Systematic Risk and Total Risk but it is earning 4.44% less than
market and 0.60% less than the Risk-Free rate.
market which shows that the funds performance is not up to the mark with that of the
market. The Jensens Alpha and Fama calculated for the fund is negative which shows
that the fund manager has not been able to beat the market with his stock selection skills.
There is a high degree of positive correlation between the fund returns and market returns
and portfolio is well diversified.
There is a high degree of positive correlation between the fund returns and market returns
(c) Yearly Analysis- The Beta of fund is less than that of the market and the standard
and risky as compared to the market in terms of Total Risk. It is earning 7.01% less than
There is a positive perfect correlation between the fund returns and market returns and
portfolio is highly diversified.
Page | 51
(6) HDFC Equity Fund - It is a open-ended equity fund. The date of inception is January 1,
1995 with a NAV of Rs. 10. The Benchmark Index is S & P CNX 500. The primary investment
objective is to provide capital appreciation through investments predominantly in equity oriented
securities. Its Asset Allocation is 94.74% in Equity and 5.26% in Cash and Cash Equivalent at
the end of July 2009. The fund size is Rs. 4337.71 crores as on July 31, 2009. Its results are as
follows(%)
(%)
5.60
(%)
4.82
( m)
Sharpe
( )m
Treynor
( )m
4.58
Quarterly Results
0.78
1.02
0.24
21.82
0.01
0.24
Half-Yearly Results
(-0.82)
6.02
6.84
35.19
0.19
6.84
Yearly Results
10.61
8.20
21.91
0.37
8.20
10.66
11.48
4.64
15.12
12.71
4.51
2.41

2
eta ()p
Sharpe
( )p
0.98
0.82
0.99
( p)
(r)
( )
0.05
Treynor
Jensen
Fama
( )
( )p
( )
Quarterly Results
1.04
0.78
0.78
21.80
0.982
0.964
0.20
Half-Yearly Results
7.34
0.41
0.34
29.31
0.994
0.988
0.49
Yearly Results
2.49
2.49
21.87
0.993
0.986
10.72
Page | 52
market both in terms of Systematic Risk and Total Risk but still it is earning 0.78% more
market and 6.02% more than the Risk-Free rate.
market both in terms of Systematic Risk and Total Risk. But still it is earning 2.41% more
market with his stock selection skills. There is a positive perfect correlation between the
fund returns and market returns and portfolio is highly diversified.
Page | 53
(7) LIC Equity Fund- It is a open ended equity fund. The date of inception is February 15, 1999
with a NAV of Rs. 10. The Benchmark Index is S & P CNX Nifty. The primary investment
objective is to obtain maximum possible capital growth consistent with reasonable levels of
safety and security by investing the funds mainly in equities and also in debts and other
permitted instruments of capital and money market. Its Asset Allocation is 96.22% in Equity and
3.68% in Cash and Cash Equivalent at the end of July 2009. The fund size is Rs. 103.49 crores as
on July 31, 2009. Its results are as follows(%)
(%)
(%)
( m)
Sharpe
( )m
Treynor
( )m
18.63
-0.01
(-0.23)
12.21
4.35
4.58
Quarterly Results
7.86
7.63
(-0.23)
29.70
10.31
4.64
Half-Yearly Results
19.39
25.06
5.67
31.21
0.18
5.67
4.51
Yearly Results
42.33
8.09
18.71
0.43
8.09
46.84
12.60
34.24

2
eta ()p
Sharpe
( )p
1.45
1.54
2.46
( p)
(r)
( )
0.24
Treynor
Jensen
Fama
( )
( )p
( )
Quarterly Results
5.26
7.96
8.01
31.34
0.860
0.739
0.44
Half-Yearly Results
16.27
16.32
14.68
57.09
0.843
0.710
0.88
Yearly Results
22.42
21.62
47.94
0.962
0.925
17.20
Page | 54
(a) Quarterly Analysis- The Beta and the standard deviation of the fund returns is more than
that of the market. This shows that the fund is more risky and volatile as compared to the
market both in terms of Systematic Risk and Total Risk and it is compensating for the
risk by earning 7.86% more than market and 7.63% more than the Risk-Free rate.
to the market both in terms of Systematic Risk and Total Risk and it is compensating for
the risk by earning 19.39% more than market and 25.06% more than the Risk-Free rate.
(c) Yearly Analysis- The Beta and the standard deviation of the fund returns is more than
market both in terms of Systematic Risk and Total Risk and it is compensating for the
risk by earning 34.24% more than market and 42.33% more than the Risk-Free rate.
market with his stock selection skills. There is a positive perfect correlation between the
fund returns and market returns and portfolio is well diversified.
Page | 55
(8) ICICI Discovery Fund - It is a open-ended equity fund. The date of inception is August 14,
2004 with a NAV of Rs. 10. The Benchmark Index is S & P CNX Nifty. The primary investment
objective is to generate returns through a combination of dividend income and capital
appreciation by investing primarily in a well diversified portfolio of value stocks. Its Asset
Allocation is 79.54% in Equity and 20.46% in Cash and Cash Equivalent at the end of July 2009.
The fund size is Rs. 300.74 crores as on July 31, 2009. Its results are as follows(%)
(%)
4.40
(%)
4.35
4.58
( m)
Sharpe
( )m
Treynor
( )m
18.63
-0.01
(-0.23)
31.21
0.18
5.67
Yearly Results
5.55
8.09
18.71
0.43
8.09
Quarterly Results
0.05
(-0.18)
(-0.23)
9.07
10.31
4.64
Half-Yearly Results
(-1.24)
4.43
5.67
10.06
12.60
4.51
(-2.54)

2
eta ()p
Sharpe
( )p
1.21
1.03
0.21
( p)
(r)
( )
-0.01
Treynor
Jensen
Fama
( )
( )p
( )
Quarterly Results
-0.14
0.10
0.12
24.13
0.940
0.883
0.13
Half-Yearly Results
4.30
(-1.41)
(-1.58)
33.02
0.976
0.952
0.30
Yearly Results
3.85
(-2.46)
18.55
0.922
0.850
26.42
Page | 56
(a) Quarterly Analysis- The Beta and the standard deviation of the fund returns is more than
market both in terms of Systematic Risk and Total Risk and it is earning 0.05% more than
Sharpe ratio and Treynor Ratio for the fund is negative but more than that of the
market which shows that the fund has performed better than the market. The Jensens
Alpha and Fama calculated for the fund is positive which shows that the fund manager
has beaten the market with his stock selection skills. There is a high degree of positive
correlation between the fund returns and market returns and portfolio is well diversified.
to the market both in terms of Systematic Risk and Total Risk and it is earning 1.24% less
Sharpe ratio for the fund is less and Treynor Ratio for the fund is more than that
of the market which shows that the fund has performed better than the market in terms of
systematic risk but not in terms of total risk. The Jensens Alpha and Fama calculated for
the fund is negative which shows that the fund manager has not able to beat the market
with his stock selection skills. There is a high degree of positive correlation between the
fund returns and market returns and portfolio is well diversified.
market both in terms of Systematic Risk and Total Risk and it is earning 2.54% less than
Sharpe ratio for the fund is less and Treynor Ratio for the fund is more than that
of the market which shows that the fund has performed better than the market in terms of
systematic risk but not in terms of total risk. The Jensens Alpha for the fund is positive
but Fama for the fund is negative which again shows that the fund manager has beaten
the market with his stock selection skills in terms of systematic risk not in terms of total
risk. There is a positive perfect correlation between the fund returns and market returns
Page | 57
(9) IDFC Imperial Equity Fund - It is a open-ended equity fund. The date of inception is
March 16, 2006 with a NAV of Rs. 10. The Benchmark Index is S & P CNX Nifty. The primary
investment objective is to seek to generate capital appreciation and/or provide income
distribution from a portfolio of predominantly equity and equity related instruments. Its Asset
Allocation is 83.81% in Equity and 16.19% in Cash and Cash Equivalent at the end of July 2009.
The fund size is Rs. 353.59 crores as on July 31, 2009. Its results are as follows(%)
(%)
5.20
(%)
4.35
4.58
6.52
10.31
4.64
17.52
12.60
4.51
( m)
Sharpe
( )m
Treynor
( )m
18.63
0.01
(-0.23)
Half-Yearly Results
(-3.79)
1.88
5.67
31.21
0.18
5.67
Yearly Results
13.01
8.09
18.71
0.43
8.09
Quarterly Results
0.85
0.62
(-0.23)
4.92

2
eta ()p
Sharpe
( )p
0.85
0.68
0.65
( p)
(r)
( )
0.04
Treynor
Jensen
Fama
( )
( )p
( )
Quarterly Results
0.72
0.82
0.82
16.06
0.994
0.988
0.08
Half-Yearly Results
2.76
(-1.98)
(-2.48)
23.90
0.890
0.792
1.05
Yearly Results
7.75
7.67
12.38
0.985
0.970
20.01
Page | 58
the market both in terms of Systematic Risk and Total Risk and it is earning 3.79% less
shows that the funds performance is not up to the mark with market. The Jensens Alpha
and Fama calculated for the fund is negative which shows that the fund manager has not
able to beat the market with his stock selection skills. There is a high degree of positive
for the fund is positive which again shows that the fund manager has beaten the market
with his stock selection skills. There is a positive perfect correlation between the fund
returns and market returns and portfolio is well diversified.
Page | 59
(10) Reliance Equity Fund- It is a diversified open ended equity fund. The date of inception is
March 28, 2006 with a NAV of Rs. 10. The Benchmark Index is S & P CNX Nifty. The primary
investment objective is to seek to generate capital appreciation and provide long-term growth
opportunities by investing in a portfolio constituted of equity and equity related securities of top
100 companies by market capitalization and the secondary objective is to generate consistent
returns by investing in debt and money market securities. Its Asset Allocation is 92.51% in
Equity, 1.35% in Debt and 6.14% Cash and Cash Equivalent at the end of July 2009. The fund
size is Rs. 370.56 crores as on July 31, 2009. Its results are as follows(%)
(%)
4.14
(%)
4.35
9.01
10.31
12.49
12.60
( m)
Sharpe
( )m
Treynor
( )m
4.58
Quarterly Results
(-0.21)
(-0.44)
(-0.23)
18.63
0.01
(-0.23)
4.64
Half-Yearly Results
(-1.3)
4.37
5.67
31.21
0.18
5.67
4.51
Yearly Results
(-0.11)
7.98
8.09
18.71
0.43
8.09

2
eta ()p
Sharpe
( )p
0.93
0.83
0.92
( p)
(r)
( )
-0.03
Treynor
Jensen
Fama
( )
( )p
( )
Quarterly Results
-0.47
(-0.23)
(-0.22)
17.52
0.980
0.960
0.17
Half-Yearly Results
5.27
(-0.34)
(-0.44)
26.40
0.986
0.972
17.59
0.983
0.966
0.45
8.67
Yearly Results
0.53
0.38
Page | 60
shows that the fund has not performed better than the market. The Jensens Alpha and
Fama calculated for the fund is negative which shows that the fund manager has not been
the market both in terms of Systematic Risk and Total Risk and it is earning 1.3% less
shows that the funds performance is not up to the mark with market. The Jensens Alpha
and Fama calculated for the fund is negative which shows that the fund manager has not
for the fund is positive which again shows that the fund manager has beaten the market
with his stock selection skills. There is a positive perfect correlation between the fund
returns and market returns and portfolio is well diversified.
Page | 61
(15) COMPARISON OF FUNDS ON BASIS OF INDEX

(1) Base Index- BSE 200- There are two open-ended equity funds having benchmark index
of BSE 200, Birla Sunlife Equity Fund and Templeton India Equity Fund.
The second fund is better than the first one both in terms of systematic risk and
unsystematic risk under quarterly and yearly analysis and first fund is better than the
second one under half yearly analysis.
The first fund has underperformed as compared to the second one both on the Sharpe and
Treynor Measure of Performance under quarterly, half yearly and annual analysis. The
returns of the first fund are highly correlated to the market as compared to the second
fund under quarterly, half yearly and annual analysis.
The portfolio of the first fund is highly diversified as compared to second fund under
quarterly, half yearly and annual analysis.
The Jensen alpha and Fama which are the measures of fund managers performance for
the second fund are more than the first fund under quarterly, half yearly and annual
analysis which shows that the seconds fund manager has performed better than the first
funds manager in terms of stock picking skills.
(2) Base Index- BSE 100- There are two open-ended equity funds having benchmark index
of BSE 100, UTI Equity Fund and SBI Equity Fund.
The first fund is better than the second one both in terms of systematic risk and
unsystematic risk under quarterly, half-yearly and yearly analysis.
The first fund has underperformed as compared to the second one both on the Sharpe and
Treynor Measure of Performance under quarterly, half yearly and annual analysis. The
returns of the first fund are highly correlated to the market as compared to the second
fund under quarterly and yearly analysis and are less correlated to the market as
compared to the first one under half yearly analysis.
The portfolio of the first fund is highly diversified as compared to second fund under
quarterly and yearly analysis and less diversified under the half-yearly analysis.
Page | 62
The Jensen alpha and Fama which are the measures of fund managers performance for the
second fund are more than the first fund under quarterly, half yearly and annual analysis
which shows that the seconds fund manager has performed better than the first fund s
manager in terms of stock picking skills.
(3) Base Index- S & P CNX Nifty- There are four open-ended equity funds having
benchmark index of S & P CNX Nifty, LIC Equity Fund, ICICI Discovery Fund, IDFC
Imperial Equity Fund and Reliance Equity Fund.
The third fund is best both in terms of systematic risk and total risk followed by the
fourth fund, second fund and first find under quarterly, half yearly and yearly analysis.
The first fund has performed best on the Sharpe Measure under quarterly analysis
followed by third second and fourth fund. It is also best on the Sharpe measure under
half-yearly analysis followed by fourth, second and third fund. The third fund is best on
Sharpe measure under the yearly analysis followed by first, fourth and second fund. The
first fund has performed best on the Treynor measure under quarterly analysis followed
by third, second and fourth fund. It is also best on the Treynor measure under half-yearly
analysis followed by fourth, second and third fund. The second fund is best on Treynor
measure under the yearly analysis followed by third, first and fourth fund. The returns of
the third fund are highly correlated to the market followed by fourth, second and first
fund under quarterly analysis. The returns of the fourth fund are highly correlated to the
market followed by second, third and first fund under half yearly analysis. The returns of
the third fund are highly correlated to the market followed by fourth, first and second
fund under yearly analysis.
The portfolio of the third fund is highly diversified followed by fourth, second and first
fund under quarterly analysis. The portfolio of the fourth fund is highly diversified
followed by second, third and first fund under half yearly analysis. The portfolio of the
third fund is highly diversified followed by fourth, first and second fund under yearly
analysis.
Page | 63
The Jensen alpha and Fama for the first fund is the highest positive followed by third and
second fund under quarterly analysis which shows that fund manager for the first fund has
done the best in terms of stock picking skills. The Jensen alpha for the fourth fund is negative
under quarterly analysis which shows that the fund manager has not been able to beat the
market with the stock selectivity skills. The Jensen alpha and Fama for the first fund is
positive under half yearly analysis which shows that the fund manager has beaten the market
with his stock picking skills. The Jensen alpha and Fama for the second, third and fourth fund
is negative under half-yearly analysis which shows that the fund manager has not been able
to beat the market with his stock selection skills. The Jensen alpha for the first fund is highest
positive under yearly analysis followed by the third, second and fourth fund which shows
that the fund manager for the first fund has performed the best in terms of stock selection
skills. The Fama for the first fund is highest positive under yearly followed by third and
fourth fund which shows that the fund manager for the first fund has performed the best in
terms of stock selection skills whereas the Fama for the second fund is negative which shows
that the fund manager has not been able to beat the market with the stock selectivity skills.
Page | 64
(16) OVERALL RANKING OF TEN MUTUAL FUNDS

(a) ON THE BASIS OF JENSEN ALPHA- The Jensen Alpha measures the performance of the
Fund Manager in terms of his predictive ability and stock selection skills, considering the
systematic risk associated with the fund. On the basis of this measure all the fund can be ranked
as followsRANK
FUND
QUARTERLY
HALF-YEARLY
YEARLY
1.
Templeton India Equity

Fund

Fund

Fund
2.
LIC Equity Fund
LIC Equity Fund
LIC Equity Fund
3.
Birla Sunlife Equity Fund
IDFC Imperial Equity

Fund
4.

Fund
SBI Equity Fund
ICICI Equity Fund
5.
HDFC Equity Fund
HDFC Equity Fund
SBI Equity Fund
6.
SBI Equity Fund
Reliance Equity Fund
HDFC Equity Fund
7.
ICICI Equity Fund
UTI Equity Fund
8.
ICICI Equity Fund
9.
UTI Equity Fund

Fund
UTI Equity Fund
10.
Kotak Emerging Equity

Scheme

Scheme

Scheme
It can be seen from the above table in terms of the performance of fund manager in terms
of his predictive ability and stock selection skills, considering the systematic risk associated
with the fund, top performer is Templeton India Equity Fund in quarterly, half yearly and
yearly analysis. The Kotak Emerging Equity Scheme is at the lowest.
Page | 65
(b) ON THE BASIS OF FAMA- The Fama Measures the performance of fund manager in
terms of his predictive ability and stock selection skills considering the total risk associated with
the fund. On the basis of this measure the funds can be ranked as followsRANK
FUND
QUARTERLY
HALF-YEARLY
YEARLY
1.

Fund

Fund

Fund
2.
LIC Equity Fund
LIC Equity Fund
LIC Equity Fund
3.

Fund
4.

Fund
SBI Equity Fund
SBI Equity Fund
5.
HDFC Equity Fund
HDFC Equity Fund
HDFC Equity fund
6.
ICICI Equity Fund
7.
ICICI Equity Fund
Reliance Equity fund
8.
SBI Equity Fund
UTI Equity Fund
UTI Equity Fund
9.
UTI Equity Fund

Fund
ICICI Equity fund
10.

Scheme

Scheme

Scheme
of his predictive ability and stock selection skills, considering the total risk associated with the
fund, top performer is Templeton India Equity Fund in quarterly, half yearly and yearly analysis.
The Kotak Emerging Equity Scheme is at the lowest.
Page | 66
(c) ON THE BASIS OF TOTAL RISK- The Total Risk is measured with the help of Standard
Deviation. On this basis funds can be ranked as followsRANK
FUND
QUARTERLY
HALF-YEARLY
YEARLY
1.
LIC Equity Fund
LIC Equity Fund

Fund
2.

Fund

Fund
LIC Equity Fund
3.
SBI Equity Fund

Scheme
4.

Scheme
SBI Equity Fund
HDFC Equity fund
5.
ICICI Equity Fund
6.
ICICI Equity Fund
ICICI Equity Fund
SBI Equity Fund
7.
HDFC Equity Fund
HDFC Equity Fund
8.
UTI Equity Fund
9.

Fund

Fund

Fund
10.
UTI Equity Fund
UTI Equity Fund

Scheme
of his predictive ability and stock selection skills, considering the total risk associated with the
fund, top performer is Templeton India Equity Fund in quarterly, half yearly and yearly analysis.
The Kotak Emerging Equity Scheme is at the lowest.
Page | 67
(d) ON THE BASIS OF PORTFOLIO DIVERSIFICATTION- This is measured with the

help of Coefficient of Determination. On this basis the funds can be ranked as followsRANK
FUND
QUARTERLY
HALF-YEARLY
YEARLY
1.

Fund
SBI Equity Fund

Scheme
2.
HDFC Equity Fund
3.
UTI Equity Fund
UTI Equity Fund
4.
HDFC Equity Fund
SBI Equity fund
5.
ICICI Equity Fund
HDFC Equity Fund
6.

Scheme

Scheme

Fund
7.
ICICI Equity Fund
IDFC Equity Fund
8.
SBI Equity Fund
LIC Equity Fund
LIC Equity Fund
9.
LIC Equity Fund

Fund
ICICI Equity Fund
10.

Fund
UTI Equity Fund

Fund
It can be seen from the above table in terms of the diversification of the portfolio of the
fund top performer is IDFC Imperial Equity Fund in quarterly ranking; SBI Equity Fund is the
top performer in half yearly ranking, and Kotak Emerging Equity Scheme in yearly ranking. The
Templeton India Equity Fund is the lowest performer in quarterly and annual analysis; UTI
Equity Fund is the lowest performer in half yearly analysis.
Page | 68
(17) FINDINGS OF THE STUDY- The study conducted during May 2009 to July 2009 reveals
the following1. Savings Instrument Preference among Individual Investors- The study reveals that
the most preferred investment is Fixed Deposits as it is one of the few investments which
enable an average investor to get reasonable and regular returns along with safety of
capital. The Mutual Funds are on the second and Life Insurance is on the third among 6
choices.
2. Objective of Investment in Mutual Funds- The investors first look for safety in mutual
funds, followed by growth, returns and Tax Benefits.
3. Type of Mutual Fund- More than 67 % of the investors first prefer open ended funds,
less than 23 % of the investors favor close-ended equity funds and only 10 % of the
investors favor Interval funds.
4. Scheme Preference of investors- Out of the 60 respondents 27 have invested in Equity
Schemes (19 in growth schemes and 8 in dividend schemes), 17 in debt schemes, 10 in
balanced schemes and only 6 in sector specific schemes.
5. Preferable Route to Mutual Fund Investing Among Individual Investors- The study
reveals that the scheme decision is made by the respondents on their own and other
factors influencing their decisions are followed by advisors, commercials and the least by
suggestions of friends and family.
6. Preferred Mode of Communication for receiving Updates- The factors are ranked on
the basis of the weighted average. The survey shows that 21 persons used personal visit
to distribution centers to know about the updates, 16 wanted to use internet to know about
the same, 14 preferred to call directly to the office to know about the performance of
mutual funds and rest 9 preferred nothing to know about the updates.
7. Importance of Scheme Qualities- The weighted average is calculated by assigning
weights from 1 to 5 in the order of importance i.e. 5 to Rank 1, 4 to rank 2, 3 to rank 3, 2
to rank 4 and 1 to rank 5. The study reveals that the investors consider the safety of
capital as the most important factor in the selection of their scheme followed by schemes
performance record and tax benefits and they consider the reputation of the portfolio
managers as the least important factor in the selection of fund.
Page | 69
8. Importance of AMC Qualities- The investors consider the reputation of the AMC as the most
important factor affecting their choice of the mutual funds followed by range of different
schemes, companys expertise in managing money, ownership of the company and they give least
importance to the efficiency of research wing of the company.
9. Importance of Investor Services- The investors give more importance to daily
disclosure of NAV by the companies followed by disclosure of facts relating to mutual

fund investments and they give least importance to disclosure of deviation of the
investments from the expected pattern which shows that investors focus on the
performance of funds rather than the pattern of investments.
10. Performance Evaluation of Mutual Funds - It is evident from the above analysis that
fund managers were not successful in satisfying the investors with their performance.
Under quarterly analysis only 7 funds out of the 10 funds selected were able to earn more
than market returns and only 6 funds were able to earn more than the risk free rate.
Under half yearly analysis only 4 funds out of the 10 funds selected were able to
earn more than market returns and only 9 funds were able to earn more than the risk free
rate.
Under yearly analysis only 6 funds out of the 10 funds selected were able to earn
more than market returns and only 9 funds were able to earn more than the risk free rate.
Page | 70
(18) SUGGESTIONS- The following suggestions can be given based on the study1. Since the investors are highly focused towards liquidity in the schemes more and more
open-ended schemes should be brought into the market by the companies.
2. The investors are also having more interest in Equity schemes, so the companies should
pay more focus on marketing of Equity schemes.
3. The investors prefer Personal visit to know about the updates regarding their Mutual
Funds, so the companies should focus on opening up of service centers in the country to
provide the investors knowledge about the mutual funds.
4. The investors give priority to self evaluation in scheme selection in spite of their less
knowledge about the market so there is a need on the part of the middlemen to win the
confidence of the investors. This will help the middlemen in getting more number of
customers in long term.
5. Out of the total audience of 200 only 60 have invested in Mutual Funds. Thos shows that
there may be less knowledge of mutual funds among the investors regarding the mutual
funds or there may be negative perception regarding mutual funds in the minds of
investors. The AMCs and Sponsors etc. should pay focus on the education of the
investors and try to remove the negativity in the minds of the investors about the mutual
funds.
6. When it comes to the qualities of the fund/scheme the investors prefer safety of capital
invested in mutual funds followed by funds performance record and tax benefits. So the
companies should focus on safety of capital i.e. the company should design balanced
schemes in order to protect the capital invested and the funds should offer tax benefits.
The fund managers should be able to perform well in order to build up the image of the
funds.
7. The qualities of an AMC also affect the scheme selection of investors. The reputation of
the AMCs is highly important factor for the investors affecting their selection of a
particular AMC followed by range of schemes and their expertise in managing money.
Therefore the companies should focus on building up of their brand in the market in order
to gain more customers. This can be done by improving the performance of the funds in
the market and also by offering wide range of schemes in the market to target different
group of investors.
Page | 71
8. The investor services are also important for the investors in their selection of a particular
fund/AMC. The daily NAV disclosure is the most important factor which affects the
choice of the investors followed by disclosure of objectives of investment, method and
periodicity of valuation and Disclosure of method of sale and repurchase in offer
document. So the AMCs should be as transparent as possible and follow the norms
stipulated by SEBI and AMFI in order to gain the confidence of investors and thereby
building up the image in tn the market.
Page | 72
Bibliography and References1. Customer Orientation in Designing Mutual Fund Products - An Analytical Approach
to Indian Market Preferences by Dr Tapan K Panda and Dr Nalini Prava Tripathy.
2. An Empirical Study on Factors Influencing the Mutual Fund/Scheme Selection by
Retail Investors by - Ms. T.R. Rajeswari and Prof. V.E. Rama Moorthy.
3. Performance Evaluation of Indian mutual Funds by Dr. S. Narayan Rao.
4. Analysis of components of investment performance an empirical study of mutual
funds in India by Dr. S. Anand & Dr. V Murugaiah.
5. Whats the right investment mix for you? Business India, August 2, 2004.
6. Investor Home Psychology and Behavior finance.
7. Security Analysis and Portfolio Management, by Fisher and Jordan.
8. Mutualfundsindia.com
9. Amfiindia.com
10. Investopedia.com
11. Review of Marketing research Volume-5 by Naresh Malhotra.
Page | 73
Annexure - I
Questionnaire for Study
Page | 74
NAME ______________________________
E-MAIL ___________________________________________
Please tick markI. AGE: Below 30
[ ]
30 40
[ ]
Female
[ ]
II. GENDER:
Male
III. INCOME:
< 200,000 [ ] 200,000-300,000 [ ]
IV. OCCUPATION:
[ ]
40 50
Salaried [ ] Businessman
[ ]
300.000-400,000 [ ] 400,000 > [ ]

[ ]
Professional [ ]
V. QUALIFICATION:
Below graduate [ ]
Graduate [ ]
VI. MARITAL STATUS:
Married
Unmarried
[ ]
50 and above [ ]
Retired [ ]
Above Graduate [ ]
[ ]
Please fill inSAVINGS = Rs ____________ / Year

What % of your savings are invested for 5 years and above __________________ (approx.)
What % of your savings are invested for 3-5 years__________________ (approx.)
What % of your savings are invested for 1-3 years___________________ (approx)

What % of your savings are invested for less than one year________________ (approx)
Please rank the choices according to your preferences as indicated in exampleGive Rank 1 to the most preferred option. Give
Rank 2 to the next best option and so on.
EXAMPLE: Which season do you like most?
Rainy
[3]
Winter
[1]
Summer
1. Which of the following do you prefer for investment?
[ ] Mutual funds
[ ] Fixed Deposits
[ ] Stock Market
[ ] Others
[2]
[ ] Life Insurance
[ ] Postal Savings
2. What were the most important factors while selecting a mutual fund scheme?
[ ] Liquidity [ ] Risk factor
[ ] Returns
[ ] Growth
[ ] Tax Benefits
3. Which funds do you prefer for investment?

[ ] Open-Ended Funds
[ ] Closed-Ended Funds
[ ] Interval Funds
4. Which schemes you are interested to invest in?

[ ] Equity
[ ] Debt
[ ]
Balanced
[ ] Sector Specific
5. Which environmental forces influenced you the most to invest in mutual fund?
[ ] Friends/family
[ ] Commercials
[ ] Advisors
[ ] Self-evaluation
Page | 75
6. Which mode of communication do you prefer most for receiving updates and
performance of your scheme/portfolio of mutual fund investment?
[ ] Telephone
[ ] Internet/E-mail
[ ] Direct Mail
[ ] Self-Visit
GIVE MARKS OUT OF 5 TO EACH OF THE ATTRIBUTES FOR THEIR

IMPORTANCE WHILE MAKING A INVESTMENT DECISION.
Give: 1 for Highly Important Factor
Give: 2 for Important
Give: 3 for Moderately Important / Unmarked
Give: 4 for Less Important
Give: 5 for Not at all Important.
Please Refer Example-
Grade Funds Popularity
SCHEMES QUALITIES
1. Funds/Schemes performance record
2. Funds/Schemes brand name
3. Schemes portfolio constituents
4. Reputation of scheme(s), portfolio manager(s)
5. Investment/Withdrawal facilities
6. Rating by a rating agency
7. Innovativeness of the Scheme
8. Products with tax benefits
9. Entry and Exit load
10 Safety of capital
.
Page | 76
AMC QUALITIES
1. Private Sector / Public Sector ownership
2. Reputation of the company
3. Range of schemes with different qualities
4. Efficiency of research wing
5. Companys expertise in managing money
INVESTOR SERVICES
1. Disclosure of investment objectives, method and
Periodicity of valuation in advertisement
2. Disclosure of method periodicity of schemes sales and
repurchase in offer document

3. Announcement of NAV on every trading day
4. Disclosure of deviation of the investments from

the expected pattern
5. Disclosure of investments at regular intervals
6. Mutual Fund Investors grievance redressal machinery
Page | 77
Annexure II
Name, NAV History, Fund Returns, Index History and Index Returns of
Selected Schemes
Page | 78
(1) BIRLA SUNLIFE EQUITY FUND
Year
Month
NAV
2006
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
55.64
67.39
76.87
64.09
76.37
77.44
98.95
68.8
57.54
54.31
42.93
39.85
64.39
2007
2008
2009
Sum ()
Average
2006
2007
2008
2009
Jun
Dec
Jun
Dec
Jun
Dec
Jun
55.64
76.87
76.37
98.95
57.54
42.93
64.39
Sum ()
Average
2006
2007
2008
2009
Jun
Jun
Jun
Jun
55.64
76.37
57.54
64.39
Sum ()
Average
QUARTERLY ANALYSIS
Div
Fund
Market
Market
Returns (Y)
Index
Returns (X)
XY
17.659832
10.716292
-5.980408
15.936713
17.400724
25.374966
-27.25784
-14.91557
-5.381406
-25.65469
-1.397211
54.949449
311.87
114.839
35.7653
253.979
302.785
643.889
742.99
222.474
28.9595
658.163
1.9522
3019.44
372.9386
150.75
21.62812
305.3563
252.2273
704.8238
830.5446
244.1124
30.20845
537.5628
10.02425
3383.838
74.003868
61.450849
11.385211
5.1209041
HALF YEARLY ANALYSIS
3776.21
4547.601
30.268603
9.0032251
47.191117
-38.10775
-29.65551
52.784479
916.188
81.0581
2227
1452.2
879.449
2786.2
1154.929
111.2666
2013.208
1594.787
752.9841
2638.609
20
75.923163
71.484162
12.65386
YEARLY ANALYSIS
8342.1
8265.783
10
10
55.23005
-11.56213
11.904762
41.996979
-8.900106
7.4754589
1763.75
79.2119
55.8825
2319.495
102.9042
88.99356
20
55.572681
18.524227
40.572332
13.524111
1898.84
2511.393
10
10
20
10
10
21.117901
14.067369
-3.616495
19.160555
14.495221
27.776343
-30.46993
-16.36628
-5.613486
-20.95378
-7.17447
61.580928
1271.02
1495.48
1655.74
1556.72
1804.81
2118.86
2656.52
1932.41
1644.18
1555.7
1156.59
1140.43
1767.09
X^2
38.156003
12.358527
42.660731
-41.84942
-25.39103
49.988353
1271.02
1655.74
1804.81
2656.52
1644.18
1156.59
1767.09
1271.02
1804.81
1644.18
1767.09
Page | 79
(2) TEMPLETON INDIA EQUITY INCOME FUND

QUARTERLY ANALYSIS
Year
Month
NAV
2006
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
9.52
10.56
11.82
11.87
12.72
14.71
16.75
13.14
12.1
10.39
7.59
7.83
11.59
2007
2008
2009
Sum ()
Average
2006
2007
2008
2009
Jun
Dec
Jun
Dec
Jun
Dec
Jun
9.52
11.82
12.72
16.75
12.1
7.59
11.59
Sum ()
Average
2006
2007
2008
2009
Jun
Jun
Jun
Jun
9.52
12.72
12.1
11.59
Sum ()
Average
Div.
7
7
7
21
7
7
7
21
7
14
21
Fund
Returns (Y)
Market
Index
Market
Returns (X)
X^2
XY
10.92437
11.931818
0.4230118
66.133109
15.644654
61.454793
-21.55224
45.357686
-14.13223
-26.94899
3.1620553
48.020434
1271.02
1495.48
1655.74
1556.72
1804.81
2118.86
2656.52
1932.41
1644.18
1555.7
1156.59
1140.43
1767.09
17.659832
10.716292
-5.980408
15.936713
17.400724
25.374966
-27.25784
-14.91557
-5.381406
-25.65469
-1.397211
54.949449
311.87
114.839
35.7653
253.979
302.785
643.889
742.99
222.474
28.9595
658.163
1.9522
3019.44
192.9225
127.8648
-2.529783
1053.944
272.2283
1559.413
587.4675
-676.5358
76.05127
691.3679
-4.418058
2638.696
200.41847
61.450849
16.701539
5.1209041
6337.11
6516.473
30.268603
9.0032251
47.191117
-38.10775
-29.65551
52.784479
916.188
81.0581
2227
1452.2
879.449
2786.2
731.2793
601.7384
4092.123
-534.646
1105.342
2781.791
207.16742
71.484162
34.527903
11.914027
YEARLY ANALYSIS
8342.1
8777.627
41.996979
-8.900106
7.4754589
1763.75
79.2119
55.8825
4499.676
-936.1904
-31.50813
40.572332
13.524111
1898.84
3563.486
24.159664
66.835871
86.713836
14.029851
-37.27273
52.700922
107.14286
105.18868
-4.214876
208.11666
69.37222
1271.02
1655.74
1804.81
2656.52
1644.18
1156.59
1767.09
1271.02
1804.81
1644.18
1767.09
Page | 80
(3) UTI EQUITY FUND
Year
Month
NAV
2006
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
26.52
28.48
30.14
28.4
32.36
36.9
44.3
35.2
30.91
30.29
24.17
23.92
31.78
2007
2008
2009
Sum ()
Average
2006
2007
2008
2009
Jun
Dec
Jun
Dec
Jun
Dec
Jun
26.52
30.14
32.36
44.3
30.91
24.17
31.78
Sum ()
Average
2006
2007
2008
2009
Jun
Jun
Jun
Jun
26.52
32.36
30.91
31.78
Sum ()
Average
QUARTERLY ANALYSIS
Div
Fund
Market
Market
Returns (Y)
Index
Returns (X)
1
3
1
3
2
1
3
14.932127
5.8286517
-5.773059
13.943662
14.029666
20.054201
-20.54176
-12.1875
-2.005823
-20.20469
-1.03434
32.859532
5382.11
6328.33
6982.56
6587.21
7605.37
8967.41
11154.4
8232.82
7029.74
6691.57
4988.04
4942.51
7571.49
X^2
XY
17.580837
10.338114
-5.661964
15.45662
17.908925
24.387978
-26.19204
-14.61322
-4.810562
-25.45785
-0.912783
53.191192
309.086
106.877
32.0578
238.907
320.73
594.773
686.023
213.546
23.1415
648.102
0.83317
2829.3
262.5193
60.25727
32.68685
215.5219
251.2562
489.0814
538.0307
178.0986
9.649138
514.368
0.944128
1747.838
39.900668
61.215244
3.3250556
5.1012703
6003.38
4300.251
29.736479
8.919508
46.664528
-36.97776
-29.04375
51.792889
884.258
79.5576
2177.58
1367.35
843.539
2682.5
630.1622
59.18718
-31.72496
1015.01
-115.5736
1845.001
71.091894
11.848649
8034.79
3402.062
41.308334
-7.568731
7.7065439
1706.38
57.2857
59.3908
1221.182
33.91428
46.62322
41.446147
13.815382
1823.06
1301.719
21.191554
6.6357001
-0.679852
-27.44921
3.9792947
35.622673
5382.11
6982.56
7605.37
11154.4
7029.74
4988.04
7571.49
39.300159
6.5500266
YEARLY ANALYSIS
29.562594
-4.480841
6.0498221
31.131576
10.377192
5382.11
7605.37
7029.74
7571.49
Page | 81
(4) SBI EQUITY FUND
Year
Month
NAV
2006
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
25.51
29.02
27.57
26.56
30.58
30.06
41.52
29.06
24.34
23.36
18.16
18.03
27.48
2007
2008
2009
Sum ()
Average
2006
2007
2008
2009
Jun
Dec
Jun
Dec
Jun
Dec
Jun
25.51
27.57
30.58
41.52
24.34
18.16
27.48
Sum ()
Average
2006
2007
2008
2009
Jun
Jun
Jun
Jun
25.51
30.58
24.34
27.48
Sum ()
Average
QUARTERLY ANALYSIS
Div
Fund
Market
Market
Returns (Y)
Index
Returns (X)
XY
17.580837
10.338114
-5.661964
15.45662
17.908925
24.387978
-26.19204
-14.61322
-4.810562
-25.45785
-0.912783
53.191192
309.086
106.877
32.0578
238.907
320.73
594.773
686.023
213.546
23.1415
648.102
0.83317
2829.3
241.9002
126.4656
20.74205
233.9443
-30.45337
1335.416
786.0136
237.3517
19.36874
566.6988
0.653424
2787.891
69.679414
61.215244
5.8066179
5.1012703
6003.38
6325.992
29.736479
8.919508
46.664528
-36.97776
-29.04375
51.792889
884.258
79.5576
2177.58
1367.35
843.539
2682.5
822.9696
97.38019
2432.415
1530.053
737.4296
2658.093
10
75.27229
71.091894
12.545382
11.848649
YEARLY ANALYSIS
8034.79
8278.341
5
5
39.474716
-4.054938
12.900575
41.308334
-7.568731
7.7065439
1706.38
57.2857
59.3908
1630.635
30.69073
99.41885
41.446147
13.815382
1823.06
1760.744
10
5
5
13.75931
12.232943
-3.663402
15.135542
-1.700458
54.757152
-30.00963
-16.24226
-4.026294
-22.26027
-0.715859
52.412646
5382.11
6328.33
6982.56
6587.21
7605.37
8967.41
11154.4
8232.82
7029.74
6691.57
4988.04
4942.51
7571.49
X^2
27.675421
10.917664
52.125572
-41.37765
-25.3903
51.321586
48.320353
16.106784
5382.11
6982.56
7605.37
11154.4
7029.74
4988.04
7571.49
5382.11
7605.37
7029.74
7571.49
Page | 82
(5) KOTAK EMERGING EQUITY SCHEME
Year
Month
NAV
2006
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
------10.01
11.65
12.43
17.02
11.1
8.61
7.75
5.92
5.49
7.65
2007
2008
2009
Sum ()
Average
2006
2007
2008
2009
Jun
Dec
Jun
Dec
Jun
Dec
Jun
----11.65
17.02
8.61
5.92
7.65
Sum ()
Average
2006
2007
2008
2009
Jun
Jun
Jun
Jun
--11.65
8.61
7.65
Sum ()
Average
QUARTERLY ANALYSIS
Div
Fund
Market
Market
Returns (Y)
Index
Returns (X)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
--------16.383616
6.695279
36.92679
-34.78261
-22.43243
-9.988386
-23.6129
-7.263514
39.344262
------5384.12
6527.03
7422.43
9789.49
6427.82
5386.48
4798.29
3235.05
2956.23
5076.34
--------21.227424
13.718337
31.890634
-34.33958
-16.20052
-10.91975
-32.57911
-8.618723
71.71668
1.2701042
35.895401
0.1411227
3.9883779
------46.094421
-49.41246
-31.24274
29.222973
----6527.03
9789.49
5386.48
3235.05
5076.34
------49.983836
-44.97691
-39.9413
56.916895
-5.337803
21.982525
-1.334451
5.4956312
YEARLY ANALYSIS
------6527.03
-26.09442 5386.48
-11.14983 5076.34
-37.24425
-18.62212
-----17.47426
-5.757749
-23.23201
-11.616
X^2
--------450.604
188.193
1017.01
1179.21
262.457
119.241
1061.4
74.2824
5143.28
9495.68
------2498.38
2022.92
1595.31
3239.53
9356.15
----305.35
33.1517
338.501
XY
--------347.782
91.8481
1177.619
1194.42
363.417
109.0706
769.2873
62.60221
2821.64
6937.686
------2303.976
2222.42
1247.876
1663.281
7437.552
----455.9806
64.1979
520.1785
Page | 83
(6) HDFC EQUITY FUND
Year Month
NAV
2006
33.98
39.95
43.4
37.42
43.38
47.98
58.61
38.25
33.03
33.62
25.92
21.85
34.71
2007
2008
2009
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sum ()
Average
2006
2007
2008
2009
Jun
Dec
Jun
Dec
Jun
Dec
Jun
33.98
43.4
43.38
58.61
33.03
25.92
34.71
Sum ()
Average
2006
2007
2008
2009
Jun
Jun
Jun
Jun
33.98
43.38
33.03
34.71
Sum ()
Average
QUARTERLY ANALYSIS
Div
Fund
Market
Market
Returns (Y) Index Returns (X)
5.5
8.5
5.5
3
8.5
5.5
3
8.5
17.569158
8.6357947
-2.258065
15.927312
10.603965
22.155065
-25.35404
-13.64706
1.7862549
-22.90303
-4.128086
58.855835
2562.5
2988.25
3295.05
3145.35
3625.75
4188.55
5354.7
3825.85
3203.35
3058.6
2295.75
2294.85
3469.7
16.614634
10.266879
-4.543178
15.27334
15.522306
27.841377
-28.55155
-16.27089
-4.518707
-24.94115
-0.039203
51.195067
67.243106
57.848918
5.6035921
4.8207432
27.72219
11.474654
35.108345
-34.26037
-21.52589
45.486111
2562.5
3295.05
3625.75
5354.7
3203.35
2295.75
3469.7
28.587317
10.036267
47.685306
-40.17685
-28.33284
51.135794
64.005049
68.934991
10.667508
11.489165
YEARLY ANALYSIS
2562.5
42.377869 3625.75
-11.18027 3203.35
14.168937 3469.7
45.366539
15.12218
41.492683
-11.65
8.314733
38.157412
12.719137
X^2
XY
276.046
105.409
20.6405
233.275
240.942
775.142
815.191
264.742
20.4187
622.061
0.00154
2620.93
291.9051
88.66266
10.25879
243.2632
164.598
616.8275
723.8971
222.0498
-8.071563
571.228
0.161833
3013.128
5994.8
817.235
100.727
2273.89
1614.18
802.75
2614.87
8223.65
1721.64
135.723
69.1348
1926.5
5937.909
792.503
115.1627
1674.152
1376.474
609.8895
2325.968
6894.149
1758.371
130.2502
117.8109
2006.433
Page | 84
(7) LIC EQUITY FUND
Year
Month
NAV
2006
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
11.13
18.54
21.27
19.17
21.39
25.16
34.71
22.45
19.08
19.23
14.83
14.45
21.62
2007
2008
2009
Sum ()
Average
2006
2007
2008
2009
Jun
Dec
Jun
Dec
Jun
Dec
Jun
11.13
21.27
21.39
34.71
19.08
14.83
21.62
Sum ()
Average
2006
2007
2008
2009
Jun
Jun
Jun
Jun
11.13
21.39
19.08
21.62
Sum ()
Average
QUARTERLY ANALYSIS
Div
Fund
Market
Market
Returns (Y) Index
Returns (X)
2.5
7.5
2.5
5
7.5
2.5
5
7.5
66.576819
28.209277
-9.873061
11.580595
17.625058
57.829889
-35.32123
-15.01114
0.7861635
-22.88092
-2.562374
49.619377
3128.2
3588.4
3966.4
3821.55
4318.3
5021.35
6138.6
4734.5
4040.55
3921.2
2959.15
3020.95
4291.1
14.711336
10.533943
-3.651926
12.998652
16.280712
22.249993
-22.87329
-14.6573
-2.953806
-24.53458
2.0884376
42.044721
146.57846
52.236885
12.214872
4.3530737
113.56694
0.5641749
85.647499
-45.03025
-22.27463
45.78557
3128.2
3966.4
4318.3
6138.6
4040.55
2959.15
4291.1
26.794962
8.872025
42.153162
-34.17799
-26.76368
45.011236
178.2593
61.889714
29.709883
10.314952
YEARLY ANALYSIS
3128.2
114.6451 4318.3
12.57597 4040.55
13.312369 4291.1
140.53344
46.844481
38.044243
-6.431929
6.2008885
37.813202
12.604401
X^2
216.423
110.964
13.3366
168.965
265.062
495.062
523.188
214.837
8.72497
601.946
4.36157
1767.76
4390.63
717.97
78.7128
1776.89
1168.13
716.295
2026.01
6484.01
1447.36
41.3697
38.451
1527.19
XY
979.4339
297.1549
36.05569
150.5321
286.9485
1286.715
807.9129
220.0228
-2.322174
561.3737
-5.351357
2086.233
6704.708
3043.022
5.005374
3610.313
1539.043
596.1512
2060.865
10854.4
4361.586
-80.88775
82.54852
4363.247
Page | 85
(8) ICICI DISCOVERY FUND
Year
Month
NAV
2006
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
16.76
20.14
18.76
16.8
17.88
18.44
22.19
15.4
12.91
11.83
9.31
8.98
13.52
2007
2008
2009
Sum ()
Average
2006
2007
2008
2009
Jun
Dec
Jun
Dec
Jun
Dec
Jun
16.76
18.76
17.88
22.19
12.91
9.31
13.52
Sum ()
Average
2006
2007
2008
2009
Jun
Jun
Jun
Jun
16.76
17.88
12.91
13.52
Sum ()
Average
QUARTERLY ANALYSIS
Fund
Market
Market
Returns (Y)
Index
Returns (X)
2
2
1.2
1.2
1.2
7.6
2
2
1.2
1.2
1.2
7.6
4
2.4
1.2
7.6
20.167064
3.0784508
-10.44776
18.333333
3.1319911
26.843818
-30.59937
-8.376623
-8.365608
-21.30178
-3.544576
63.919822
3128.2
3588.4
3966.4
3821.55
4318.3
5021.35
6138.6
4734.5
4040.55
3921.2
2959.15
3020.95
4291.1
14.711336
10.533943
-3.651926
12.998652
16.280712
22.249993
-22.87329
-14.6573
-2.953806
-24.53458
2.0884376
42.044721
52.838767
52.236885
4.4032306
4.3530737
23.866348
5.9701493
30.816555
-36.4128
-27.88536
58.10956
3128.2
3966.4
4318.3
6138.6
4040.55
2959.15
4291.1
26.794962
8.872025
42.153162
-34.17799
-26.76368
45.011236
54.464453
61.889714
9.0774089
10.314952
YEARLY ANALYSIS
3128.2
30.548926 4318.3
-14.3736 4040.55
14.020139 4291.1
30.195464
10.065155
38.044243
-6.431929
6.2008885
37.813202
12.604401
X^2
XY
216.423
110.964
13.3366
168.965
265.062
495.062
523.188
214.837
8.72497
601.946
4.36157
1767.76
296.6845
32.42822
38.15445
238.3086
50.99105
597.2747
699.9084
122.7787
24.71038
522.6301
-7.402625
2687.491
4390.63
5303.958
717.97
78.7128
1776.89
1168.13
716.295
2026.01
6484.01
1447.36
41.3697
38.451
1527.19
639.4979
52.96731
1299.015
1244.516
746.3149
2615.583
6597.895
1162.211
92.44999
86.93732
1341.598
Page | 86
(9) IDFC IMPERIAL EQUITY FUND
Year
Month
NAV
2006
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
9.58
11.02
11.89
11.4
12.77
15.16
18.29
14.64
11.66
11.72
9.65
9.88
12.35
2007
2008
2009
Sum ()
Average
2006
2007
2008
2009
Jun
Dec
Jun
Dec
Jun
Dec
Jun
9.58
11.89
12.77
18.29
11.66
9.65
12.35
Sum ()
Average
2006
2007
2008
2009
Jun
Jun
Jun
Jun
9.58
12.77
11.66
12.35
Sum ()
Average
QUARTERLY ANALYSIS
Div
Fund
Market
Market
Returns (Y)
Index
Returns (X)
1.5
1.2
2.7
1.5
1.2
2.7
1.5
1.2
2.7
15.031315
7.8947368
-4.12111
12.017544
18.71574
20.646438
-19.95626
-10.10929
0.5145798
-17.66212
2.3834197
37.145749
3128.2
3588.4
3966.4
3821.55
4318.3
5021.35
6138.6
4734.5
4040.55
3921.2
2959.15
3020.95
4291.1
14.711336
10.533943
-3.651926
12.998652
16.280712
22.249993
-22.87329
-14.6573
-2.953806
-24.53458
2.0884376
42.044721
62.500746
52.236885
5.2083955
4.3530737
24.112735
7.4011775
43.226312
-28.04811
-17.23842
9.7165992
3128.2
3966.4
4318.3
6138.6
4040.55
2959.15
4291.1
26.794962
8.872025
42.153162
-34.17799
-26.76368
45.011236
39.170288
61.889714
6.5283813
10.314952
YEARLY ANALYSIS
3128.2
33.298539 4318.3
3.0540329 4040.55
16.209262 4291.1
52.561834
17.520611
38.044243
-6.431929
6.2008885
37.813202
12.604401
X^2
XY
216.423
110.964
13.3366
168.965
265.062
495.062
523.188
214.837
8.72497
601.946
4.36157
1767.76
221.1307
83.16271
15.04999
156.2119
304.7056
459.3831
456.4654
148.1749
-1.519969
433.3326
4.977623
1561.783
4390.63
3842.857
717.97
78.7128
1776.89
1168.13
716.295
2026.01
646.0998
65.66343
1822.126
958.6281
461.3637
437.3561
6484.01
4391.237
1447.36
41.3697
38.451
1266.818
-19.64332
100.5118
1527.19
1347.686
Page | 87
(10) RELIANCE EQUITY FUND
Year
Month
NAV
2006
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
9.46
10.75
11.69
11.04
12.75
14.47
17.77
13.28
11.7
11.74
9.8
9.29
12.98
2007
2008
2009
Sum ()
Average
2006
2007
2008
2009
Jun
Dec
Jun
Dec
Jun
Dec
Jun
9.46
11.69
12.75
17.77
11.7
9.8
12.98
Sum ()
Average
2006
2007
2008
2009
Jun
Jun
Jun
Jun
9.46
12.75
11.7
12.98
Sum ()
Average
QUARTERLY ANALYSIS
Div
Fund
Market
Market
Returns (Y)
Index
Returns (X)
0
0
0
0
0
0
0
0
0
0
0
0
0
13.636364
8.744186
-5.560308
15.48913
13.490196
22.805805
-25.2673
-11.89759
0.3418803
-16.5247
-5.204082
39.720129
3128.2
3588.4
3966.4
3821.55
4318.3
5021.35
6138.6
4734.5
4040.55
3921.2
2959.15
3020.95
4291.1
X^2
XY
14.711336
10.533943
-3.651926
12.998652
16.280712
22.249993
-22.87329
-14.6573
-2.953806
-24.53458
2.0884376
42.044721
216.423
110.964
13.3366
168.965
265.062
495.062
523.188
214.837
8.72497
601.946
4.36157
1767.76
200.6091
92.11075
20.30583
201.3378
219.63
507.429
577.9465
174.3866
-1.009848
405.4266
-10.8684
1670.022
49.773705
10.192163
4.1478087
4.3530737
4390.63
4057.326
3128.2
3966.4
4318.3
6138.6
4040.55
2959.15
4291.1
0
0
0
0
0
0
23.572939
9.0675791
39.372549
-34.15869
-16.23932
32.44898
26.794962
8.872025
42.153162
-34.17799
-26.76368
45.011236
717.97
78.7128
1776.89
1168.13
716.295
2026.01
631.636
80.44779
1659.677
1167.475
434.6239
1460.569
54.064036
61.889714
9.0106726
10.314952
YEARLY ANALYSIS
6484.01
5434.429
0
0
0
34.778013
-8.235294
10.940171
38.044243
-6.431929
6.2008885
1447.36
41.3697
38.451
1323.103
52.96883
67.83878
37.48289
12.494297
37.813202
12.604401
1527.19
1443.911
3128.2
4318.3
4040.55
4291.1
Page | 88
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Project Report On Factors Affecting Investors Preference For Investment in Mutual Funds

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

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A Study on

Factors Affecting Investors Preference for Mutual Funds in India and

School of Management studies

Master of Business Administration

Under the Guidance of

Dr. Chetan Srivastava

For Getting A Copy Feel Free to Contact

the project work entitled

Factors Affecting Investors

Preference for Mutual Funds in India and Performance Evaluation of Mutual

Dr. Chetan Srivastava

(1) Executive Summary

(2) Table of Contents

4. History of Indian Mutual Funds Industry

5. Background and Need for Study

10. Theoretical Framework

11. Literature Review

12. Research Methodology

(b) Duration of Study

(c) Sample Selection

13. Data Collection and Analysis

14. Performance analysis of Mutual Funds

15. Comparison of Funds on the basis of Index

16. Overall ranking of Mutual Funds

(b) On the basis of Jensen Alpha

(c) On the basis of Total Risk

(d) On the basis of Portfolio Diversification

17. Findings of the Study

19. Bibliography and References

20. Annexure I-II

About Reliance Money in brief

Vision of Reliance Money:

(4) HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

(7) OBJECTIVES OF STUDY

(10) THEORETICAL FRAMEWORK

Where, X = Market or Index Return, and,

Where, St = Sharpe Index

Where, Tn = Treynors Index

dJensens Measure of Performance - This measure was developed by Michael Jensen in

Where, = Riskless rate of interest for a period t

= Intercept that measures the forecasting ability of the portfolio manager

= Average return of a market portfolio for period t

Where, FP = Famas Measure for Portfolio, rP = Portfolio Return,

P = Standard Deviation of the Portfolio Returns

m = Standard Deviation of the Market Returns rm = Market Return.

The purpose of performance evaluation is that it should be in a position to identify the

Where, = Standard Deviation,

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

Where,= Returns on Mutual Fund.

= Net Asset Value at the end of the current Period,

= Dividend received during the current Period.

= Return on Market Index,

+1 = Market Index at the end of

(12) RESEARCH METHODOLOGY

Scheme Qualities1. Funds/Schemes performance record

AMC Qualities1. Private Sector / Public Sector ownership

Investor Services1. Disclosure of investment objectives, method and Periodicity of valuation in

RESPONSES DURING THE SURVEY

2. Savings and InvestmentsInvestments /

3. Age and Time HorizonAge / Time

4. Age and InvestmentAge / Investment

5. Age and SchemeAge / Scheme