Comparative Analysis of Mutual Fund Schemes and Major Investment Avenues

“Comparative Analysis of Mutual Fund Schemes and Major
Investment Avenues”
“submitted towards partial fulfilment of the criteria for award of PGDM by GLIM, Gurgaon”.
Saket Sharma
P171075
PGDM 2017-19
Name of the Company Guide Name of the GLIM Guide

Mr. Atul Jain Dr. Preeti Goyal
Organization
Trans Scan Securities Pvt Ltd.
TABLE OF CONTENTS
Chapter Particulars Page

Number Number
Certificate 2
A Company Profile 3-7
1 Introduction 8–9
1.0 Objectives of the Report 9
1.1 Limitations of the Report 9
1.2 Characteristics of Mutual Funds 9
1.3 Historical development of Mutual Funds 10 - 11
1.4 Types of Mutual Funds 11- 14
1.5 Advantages and Disadvantages of Mutual Funds 15 - 16
1.6 Taxation Policy of Mutual Funds 16
1.7 Risks Associated with Investments 17 - 18
1.8 Industry Analysis and Recent Developments 19 - 23
1.9 Summarized Report of Major Investment Avenues 24 - 25
2 Review of Literature 26
3 Nature of Data and Research Methodology 27 - 28
4 Analysis of Data
4.0 Inter Scheme Comparative Analysis of Mutual Fund’s 29 - 41
4.1 Comparative Analysis of Major Investment Avenues 41 - 44
5.0 Conclusion and Recommendations
5.1 Inter Scheme Comparative Analysis of Mutual Fund’s 45 - 48
5.2 Comparative Analysis of Major Investment Avenues 49 - 50
Bibliography
1
CERTIFICATE
It is certified that Mr. Saket Sharma a Post Graduate student of Great Lakes Institute of
Management, Gurgaon has undergone Summer Internship at Trans Scan Securities Pvt Ltd, from
3rd April 2018 to 10th June 2018.
His/ her project titled “Comparative Analysis of Mutual Funds and Major Investment Avenues”
has been completed to our satisfaction and the present report is a bona fide account of the same.
Signature Signature
Name and Designation of the Industry Guide Name of the Institute Guide
Date: Date:
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A. Company Profile
Executive Summary
Trans Scan Securities Private Ltd is a financial services conglomerate. Founded in 1995 it is
offering a host of services under one roof with its headquarters located in Kolkata, West Bengal
India. Trans Scan Securities is a services oriented broking firm with an active product portfolio
for its clients providing exemplar services with the objective of increasing value for their
customers. The founding directors of the company saw an emerging capital market and built the
foundations of the company by capitalizing the recent development s of the same. Trans Scan
successfully enlisted itself with membership from the capital market segment of National Stock
Exchange of India Ltd and joined the fraternity of becoming one of the few proud founding
members of N.S.E in 1995.
The company generated brokerage worth Rupees 2,93,00,481 (2 crores 93 lakhs 486 Rupees)
from its client pool of 1486 clients in the Financial Year – 2017-18 and is currently at its
Maturity Stage.
Product Portfolio
A company’s product portfolio are the collection of all offerings which are generated by the
company for its pool of clients.
The product portfolio of Trans Scan Securities Pvt Ltd are mentioned as follows:
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Equity - Trans Scan offers its clients investments and trading in equity through National Stock
Exchange (NSE) and Bombay Stock Exchange (BSE). The company prides itself in providing a
range of diversified investment and trading opportunities for their clients with due consideration
to risk and return. The offerings covered in the financial product pertaining to equity are;
Delivery – Delivery trading as per this product portfolio is an investment strategy where the
investor purchases ownership in a company viz-a-viz its shares which are traded in a particular
stock exchange.
Share of Profits- Trans Scan earns 68.3% of its brokerage earned from Delivery making it a top
line product of the firm. The company earned Rupees 2,00,22,650 (2 Crores and 23 thousand
Rupees, Approximately)
Derivation of earnings – The company charges 0.16% as brokerage on the traded amount of its
clients. In Financial Year 2017-18 the company generated trades worth Rupees 10,44,06,19,881
from its clientele.
Intraday – Intraday trading is a short term investment strategy sought after by active traders from
capital markets. Intraday trading generally occurs for short business hours within a one business
day period.
Share of Profits – Trans Scan presently earns Rupees 27,79,836 from its clients giving it a share
of 9.5% of the firm’s share of brokerage earned.
from its clientele.
Derivatives – A derivative is a financial security with its value being derived from an underlying
individual or group of assets. The price of derivatives are determined by fluctuations in price of
the underlying asset. Generally, derivatives are traded with underlying assets including stocks,
bonds, commodities, currencies, interest rates and market indexes.
Share of Profits – Trans Scan presently earns Rupees 55,96,000 from its clients giving it a share
of 19.1% of the firm’s share of brokerage earned.
from its clientele.
Currency – Currency trading is the purchasing and selling of currencies in the foreign exchange
marketplace. This product as an investment tool is usually considered to be a short term strategy
for active traders to earn profits.
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Share of Profits – Trans Scan presently earns Rupees 6,72,191 from its clients giving it a share of
2.3% of the firm’s share of brokerage earned.
clients. In Financial Year 2017-18 the company generated trades worth Rupees 69,83,45,172
from its clientele.
Commodities - Trans Scan Securities provides trading through MCX & NCDEX platforms via
their associate company, Nortel Vincom Private Limited. The company offers trading in a
plethora of commodity oriented option being in Agricultural Commodities / Precious Metals /
Base Metals / Energy products.
Share of Profits – Trans Scan presently earns Rupees 2,20,095 from its clients giving it a share of
0.8% of the firm’s share of brokerage earned.
clients. In Financial Year 2017-18 the company generated trades worth Rupees
4,46,67,83,016 from its clientele.
Depository Services – Trans Scan provides depository services with synergy from NSDL. and
securities in electronic form. The company deals with all types depository related services
including Dematerialization, Rematerialization, Pledge, transfers etc.
Share of Profits – Trans Scan presently earns Rupees 9,804 from its clients giving it a nominal
share of 0.03% in the firm’s net brokerage earned.
Profits % (2017-18)
Demat-Remat 0.03
Currency 2.3
Commodities 0.8
FNO 19.1
Equity Intraday 9.5
Equity Delivery 68.3
0 10 20 30 40 50 60 70 80
Profits (2017-18)
The above horizontal bar graph represents the profit earned from various sources of the
company for the year 2017-18.
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SWOT Analysis of Trans Scan Securities
Strength
 Loyal customer base
The company has more than 1000 unique clients in a financial year with more than 80%
retention rate. The clients initiates multiple trades in a year with high average trade
amount, not only this but the major factor affecting growth in customer base is through
referrals. Thus decreasing customer acquisition costs through repeat customers and word
of mouth marketing
 Human Resource Management
Trans Scan understood the importance of human capital early on and adopted HR policies
to reduce attrition rates. Today more than 80% of employees have been working in the
company for more than 10 years.
 Operational efficiency
The company uses a model similar to assembly line system where each employee is
assigned work which they do repeatedly. This along with high employee retention rate
has created a perfect tool for operational efficiency
 Wide variety of product portfolio
The company provides a variety of product based offerings to its clientele, it covers
financial products ranging from Equities, Commodities, Currencies, Commodities to
Futures and Options for satisfying the investment objectives of their clientele.
Weakness
 Marketing
Lower expenses on advertising causes low awareness amongst investors which may lead
to slower growth of customer base. The company may focus on retaining clients but also
upon expanding their customer base so as to pre-empt any problems which could have
been created if the existing customers switch to competitor brokers.
 Rural Markets
India’s Rural Markets still lack penetration, a customized portfolio sold through
economies of scale in the rural markets may result in a subsequently added cash flow to
the company
Opportunity
 Mutual Funds
At present the penetration of mutual funds in India is a dismal 10% compared to global
average of 55%. But with increasing financial literacy due to favorable environment such
as government initiatives towards digitization and growing GDP the growth forecasts
have been increased from 18% to 20% Annually. Thus this relatively untapped market is
soon going to be a juggernaut in the financial industry.
 Growing Rural Market
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Around 65% of Indian population reside in rural areas, with low penetration of the
financial services industry they may provide for greater opportunities to increase
customer base. This penetration is further facilitated by increasing banking penetration
and digitization.
 Targeting Millennials
This is the largest customer segment of India with associated sustainability for the
upcoming years. Their higher financial literacy compared to previous generations and
their willingness to take higher risk for greater returns makes them an ideal client.
Threat
 Discounted Brokerage Firms
The discounted brokerage firms charging nominal fees when compared to traditional
broking firms are a huge threat. As financial literacy and digitization is increasing it
might serve as a more lucrative option for investors due to less brokerage payable.
 Entry of foreign finance firms in Indian Market
Foreign AMC’s and brokerage firms have also understood the profitability that can be
generated from the Indian Capital Market and are starting to move inwards. This in turn
may lead to higher degree of competition in the market and thus may affect the bottom
line of the company.
 Technology
Technology is a major threat as it will affect how the industry engages its investors, how
the market works as well as how things are presented. Some of the technological tools are
predictive analytics, AI, Algorithmic trading, etc. which possess a slight tendency to
change the stock market.
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1 Introduction
Mutual Fund is an investment tool that absorbs the savings of a significant number of investors
who share a common financial goal (example - 20-30% return in 5 years) from their investments
of money. This money which is collected is further invested by a professional called the fund
manager who specifies in allocating this pool of absorbed finances into different types of
securities depending upon the objective of the respective fund scheme and thus the investor. The
securities mostly range from shares, debentures to money market instruments. The income which
is earned through these investments and the capital appreciations which are realized by the
scheme are then shared by its unit holders with proportion to the number of units owned by them
on a pro rata basis. Thus, making mutual funds one of the most alluring investment opportunities
for a common man as it offers an opportunity to invest in a professionally managed and
diversified portfolio at a relatively lower cost.
Each Mutual Fund scheme has a defined investment objective which can differ from another
making mutual fund’s an ideal investment vehicle for today’s differentiated financial scenario
catering to the various objectives of the investor.
Who owns a Mutual Fund?
A mutual fund is set up in the form of a trust which consists of a Sponsor, Trustees and an Asset
Management Company (AMC). The trust is established by a sponsor or a group of sponsors who
collectively act like a promoter of a company and the said Trust is then registered with the
Securities and Exchange Board of India (SEBI) as a Mutual Fund.
The function of the trustee of the mutual fund is to hold its property for the benefit of unit
holders. An Asset Management Company (AMC) approved by SEBI manages the fund by
making investments in various types of securities.
Who are the regulators of Mutual Funds?
In India, like most countries, the sponsors are required to be granted approval from a regulator,
in our case SEBI (Securities exchange Board of India) plays the role of the regulation hierarchy.
SEBI pursues a keen look at the track records of the sponsor and their financial strength in
granting the required approval to the fund for the commencement of operations.
Externally, the trustees also play a significant role towards regulation by the power of
superintendence and direction over the AMC. They monitor and manage the performance and
compliance of SEBI regulations by the mutual.
What is Net Asset Value?

NAV is the value per share of a mutual fund which an investor owns when he invests in this
investment instrument. NAV is generally calculated at the end of the trading day, based on the
closing prices of the securities in the fund's portfolio.
The formula for calculating NAV of any given scheme is;
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NAV = Value of Assets - Value of Liabilities
Number of units of the scheme outstanding in the market
1.0 Objectives of the Report

 To understand the concept of Mutual funds as an investment instrument
 To analyze the daily performance of major types of mutual fund schemes in India
between, 31st March 2013 to 1st April 2018, by using established mathematical and
statistical tools and techniques
 To compare the quantitative outcomes and provide recommendations
 Evaluate and recommend which mutual funds hold more potential for investors with
relevance to their risk and return profiles
 To understand the major investment avenues available in the Indian financial services
market as an investment tool
 To compare different investment instruments available to investors in the market
1.1 Limitations of the Report

 There was a constraint on time as the time provided to complete the report was 60 days
 The data for the analysis of mutual funds has been selected for a period of 5 Year’s
(31.3.2013-1.04.2018), a larger data set could have improved the accuracy of the
analysis.
1.2 Characteristics of a Mutual Fund:

• A mutual fund belongs to investors who have collectively with similar goals pooled their
funds together to achieve similar objectives
• A mutual fund is managed by professionals with expertise in understanding financial
instruments and their allocation.
• They are usually distributed by service providers who demand a fee for their services,
from the fund
• This pool of fund is invested in a portfolio of marketable investments called a scheme,
where in most situations the value of fund is updated each trading day
• The investor’s share in the fund is denominated by ‘units’. The value of one unit of
investment is called the Net Asset Value, popularly known as NAV.
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1.3 Historical Development of Mutual Fund’s
Phase I - 1964-1987
Unit Trust of India (UTI) was established as an Act of Parliament in 1961. It was set up by the
Reserve Bank of India (RBI) and has been functioning 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 (AUM).
Phase II - 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non-UTI, public sector mutual funds set up by public sector banks and
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.
Phase III - 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 to choose from. 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.
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.
Phase IV - since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets
under management of Rs. 29,835 crores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of
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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, 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.
1.4 Types of Mutual Fund’s
As we delve deeper into the concept of Mutual Funds, we discover a plethora of scheme’s being
offered to the investors in the market with their own specific specializations to satisfy the
investor requirements via offerings projected of the product.
Generally, the types of schemes offered in the market have been divided with parameters of risk
associated with the portfolio, expected return from the portfolio and time horizon of investment
in the scheme.
Some of the major types of mutual funds available in the market have been mentioned below;
As per Maturity Period
Open Ended Mutual Fund

The schemes operating amongst this type of mutual fund can be categorized as schemes which
can be directly purchased from an asset management company. There is no restriction upon the
amount of units the AMC can issue to investors marking for unlimited capitalization. The main
feature of this type of mutual fund is its liquidity and no fixed maturity period whereas the
purchase is determined by Net Asset Value and is calculated upon the value of underlying assets
at the end of every business day, while the value of underlying assets is decided by demand and
supply of the constituents of the portfolio.
Closed Ended Mutual Fund’s

possess limited capitalization, i.e. there is a barrier of entry post a specific net amount being
pooled into the fund. This type of fund also possesses a stipulated time period before which an
investor cannot withdraw their capital from the fund marking for a fixed maturity period and
liquidity as a dependent factor of that. However, unlike open-ended funds, where new units may
be introduced by the AMC’s to meet the demand, in close-ended funds, no new units are issued
by the fund managing company. The units of closed ended fund schemes are generally traded
over an exchange while the fluctuations in the unit price are determined by the demand and
supply of the scheme itself.
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Interval Fund’s
possess attributes of both open ended and close ended funds. Investors of this scheme possess an
advantage of selling their units at specific intervals of time as recorded in the scheme prospectus
back to the fund house or an investor accounting for relatively less fixed maturity periods. The
repurchase price is based on the per unit NAV on a date specified and usually announced in
advance by the fund making the schemes operating under this type as limited liquidity funds.
These types of mutual funds are also bound to limited capitalization where they cannot increase
their share in the market and their value is determined by the demand and supply of the share in
the exchange.
As Per Investment Objective’s
Equity Fund’s
Equity oriented Mutual Fund schemes consists of those types of schemes which possess their
underlying assets as equity shares traded in the capital market. These funds have a proven track
record of the strongest fluctuations of NAV, thus the highest volatility. But, they have also
beaten all other asset classes historically over any long term interval. The strategy when
investing in this type of schemes should be to hold for a longer period of time which shall help
smoothen out towards relatively lower volatility levels and grant higher returns. The ideal period
of holding should be 3-5 Years.
A majority of them are of the following types;
Equity diversified Funds – The portfolio of this type of equity fund consists of diversified
allocation of stocks amongst a variety of sectors
Dividend yield Funds – The preference of selection in this portfolio is to buy stocks of
companies which generally yield high dividends for investors
Index Funds – Portfolio’s for this type of scheme are constructed with similar rules to a selected
benchmark index, the allocation of stocks and weightages are also done considering similar
parameters which makes up for the
Thematic Funds – This schemes allocation of portfolio consists of industries interconnected to
each other, generally with a theme towards allocation. An Infrastructure themed portfolio would
consist of cement, power, real estate, and other related industry stocks
Sectoral Funds – These funds pool the absorbed capital in a specific industry or sector, A
pharmaceutical sector fund would only invest in pharma stocks
International Funds – This type of scheme offers investors to pool their capital into portfolios
offering the advantage of investments occurring in economies outside their home country.
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Debt Fund’s
Debt oriented Mutual Fund’s consist of a portfolio which is governed by risk free or low risk
oriented financial instruments, most of the capital which is pooled in this type of fund is
allocated to fixed income instruments like fixed deposits, government bonds, commercial papers,
etc. They are the least volatile amongst all three type of funds as per investment objective and are
developed for risk averse investors who are looking forward to park their money with no or little
downside risk. There is no ideal time horizon of investment as the fluctuations are tiny and there
is not any particular difference in yearly returns.
Liquid Fund’s – The portfolio of this type of fund invests it’s total accumulated capital in money
market instruments while offering advantages of safety and unlimited liquidity. Money market
instruments include commercial paper, certificates of deposits, T bills, etcetera.
Gilt Fund’s – The pooled capital in this kind of scheme is invested wholly in long term
government securities and Treasury Bills
Arbitrage Fund’s – These kind of funds take advantage of arbitrage opportunities between cash
and derivatives market. These funds are hybrid in nature with the provision of investing a major
proportion in debt markets.
Monthly Income Plan’s – The capital absorbed in these type of funds are invested with an
allocation of 75-90 % in Debt and 25-10% in Equities, thus creating a hybrid fund which helps
diversify risk and returns. They are good for investors seeking a predictable income over specific
intervals, such as monthly or quarterly in nature.
Balanced Funds
These kind of mutual fund schemes can be considered for investors who prefer to diversify their
risk across various financial instruments. They can ideally be said to possess characteristics of
both equity oriented and debt oriented schemes and as a result can be said to belong between
equity and debt funds if compared on a risk/return scale. The usual proportion of Equity and
Debt in these kind of mutual fund schemes are 60:40 whereas, the ideal time horizon of
investment in these kind of funds should be 2-3 years. Generally, there are 2 classes of Balanced
fund schemes;
Type Equity Allocation Debt Allocation

Equity Oriented Balanced Fund >65% <35%
Debt Oriented Balanced Fund <35% >65%
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As per Investment Strategies
Systematic Investment Plan – In this kind of an investment plan, a specific amount of money is
debited from the investor’s account to a mutual fund scheme. The attributes of time-interval and
capital is chosen by the investor from options provided by the AMC. This type of investment
strategy is good for investors who want to create a habit of saving or are a bit conspicuous about
investing in Mutual funds. This strategy can also provide an investor to buy more units when the
NAV is low and reduce purchase of units when NAV is high. Amounting to Rupee Cost
Averaging which can help reduce the short term impact of fluctuations in the market.
Systematic Transfer Plan – In this kind of Investment Plan, the investor posts a request for
redeeming and transferring certain amount of units/capital from pre-owned debt schemes to the
same AMC’s certain equity linked scheme
Systematic Withdrawal Plan – In this kind of investment plan, there is an option of withdrawing
a specific amount of money from the current valuation of the scheme on a pre-decided interval of
time post investment into a mutual fund scheme.
.
A diagram representing the constituents and the inherent components of Mutual Fund
Selection
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1.5 Advantages and Disadvantages of Mutual Funds
There are a variety of favourable and unfavourable components that are commonly associated
with investments in Mutual Funds.
Advantages of Mutual Funds
Diversification of Risk – A single mutual fund can hold securities from hundreds or even
thousands of issuers. This diversification considerably reduces the risk of a serious monetary loss
due to problems in a particular company or industry.
Expert Management – The portfolios are constructed by expert management who are skilled
professionals in their field which pertains to a more scientific and lesser risk oriented selection
towards investment objective.
Liquidity – Mutual fund schemes provide units or shares in a mutual fund to be bought and sold
in any scheme whenever the market is open thus, providing investors with easy access to their
money whenever it is required for them.
Flexibility - Many Asset management companies possess a portfolio of different fund schemes
and allows one to switch between the pool of funds generally at a nominal fee. This enables an
investor to change their portfolio of stocks as and when it suits their personal needs, financial
goals or can be based upon changes in market conditions.
Disadvantages of Mutual Funds
Management and Expense Fees - Fees for fund management services and various administrative
and sales costs can reduce the return on your investment. These are charged, in almost all cases,
whether the fund performs well or not. Also, redeeming your mutual fund investment in the
short-term (generally under an year) could significantly impact your return due to the indirect
costs involved.
No Tailor Made Portfolio’s – An investment in a Mutual Fund scheme provides for one to place
their savings in the hands of a professional manager. The return on one’s investment depends
entirely if not completely upon the fund manager’s skill and judgment. Research suggests that
not every equity linked mutual fund scheme outperforms the market so analysis is required
before investment in Mutual Fund Schemes.
Non-Insured Investment Instrument – Mutual funds do not possess any security over losses
incurred by the investment although being regulated by the government. The Federal Deposit
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Insurance Corporation only insures against certain losses at Credit Unions, Savings, Banks and
Loans but not mutual funds.
Trading Limitations – Even the most liquid mutual fund schemes (Open ended Funds) come with
a drawback claiming no opportunity of transaction during trading hours. Thus, if an investor
wishes to withdraw their money, they have to wait for the trading day to complete to process a
redemption request.
1.6 Taxation of Mutual Funds
Tax liability in case of investment in MFs may occur in the following circumstances;
 Income / Dividend distribution by a scheme
 Gain from the redemption of Mutual Fund units
Fund Type STCG LTCG Dividend

Tax
Tax Rate Holding Tax Rate Holding
Period Period
Equity Funds 15% <= 1 10%** >= 1Year 10%^
Year
Debt Funds As per Tax Slab# <= 3 20% post >= 3 25% $
Years Indexation Years
Balanced 15% <= 1 10%** >= 1Year 10%^
Funds Year
Aggressive
Balanced As per Tax Slab# <= 3 20% post >= 3 25% $
Funds MIP Years Indexation Years
ELSS NA NA 10%** >= 3 10%^
Years
Important Keynotes
LTCG – Long Term Capital Gains
STCG – Short Term Capital Gains
STT is charged on redemption of any equity or balanced scheme at 0.001%
# Added to income and taxed as per income tax slab
** LTCG charged at 10% of income over 1 lakh rupees
^ Dividend Tax 10% +Surcharge 12% + Cess 4% = 11.65%
$ Dividend Tax 25% +Surcharge 12% + Cess 4% = 29.12%
ELSS offer tax deduction up to Rs 150000 via Section 80C of the Income Tax Act 1961
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1.7 Risks Associated with Investments
Every investment avenue comes with many forms of risks attached to it, due to which
understanding the risk-return relationship of any investment avenue becomes prima facie before
seeking any investment opportunity by the investor. Risk-Reward relationship in the simplest of
terminology helps determine the expected favoured reward from the unfavourable risks
undertaken by the investor. The primary fundamentals of finance suggests higher returns come
with higher risk involved whereas lower returns are shared with lower risk involvement of any
given investment opportunity.
The major risks involved for any investment avenue are;
 Market Risk
 Credit Risk
 Inflation Risk
 Liquidity Risk
 Interest Rate Risk
 Political Risk
Market Risk – Market risk, can be suggested as the risk undertaken while investing in any
security, the value of which might decrease during the tenure of the investment leading to
unwanted loss. They are generally conferred by outwardly influence on the financial markets
such as recession and can be understood with similarities to systematic risk.
Credit Risk – Credit risk can be termed as the unpredictability towards failure in payment by the
borrower to previously agreed contractual or debt obligations. In layman’s terms, it refers to the
unexpected probability of the borrower’s inability to pay back the owed principal and interest.
To keep a check on this attribute, an investor can look at the investment opportunity’s credit
rating by credit rating agencies such as CRISIL.
Inflationary Risk – This type of risk can also be renamed as purchasing power risk, where this
factor of risk suggests that the cash flows generated or the performance absorbed from an
investment avenue might not be enough when considered the rate of increase in prices of other
goods and services. It suggests the risk involved due to decreasing purchasing power of money
over an unspecified period of time due to economic factors.
Liquidity Risk – It is the uncertainty associated usually with companies or banks and their
inability to meet usually unforeseen short term financial demands. For investors, a large bid-ask
spread may also call for difficulty in selling investments making the securities unmarketable for
a particular interval of time.
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Interest Rate Risk – Interest rate risk is more often associated with bonds rather than any other
type of investment opportunity. Whenever interest rate rises, the prices of bonds tend to fall and
vice versa. It is due to the simple faction of economic understanding of opportunity cost. An
investor would prefer investing in a bond only if it beats the market interest. If market risk comes
closer or beats the interest rate provided by bonds. It becomes natural for a common investor to
turn tables against purchase of bonds lowering its value.
Political Risk – This type of risk is unpredictable and largely impacts any business venture, bank
or investment opportunity. It is the uncertainty in economic factors which are faced by investors,
businesses and governments alike which political decisions, events or conditions bring with
them. Various regulations and laws have direct impact on businesses and the market as a whole
providing for variations in investment earnings with the probability of short term chaos.
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1.8 Industry Analysis and Recent Trends
Since the first sale in July 1964 by UTI, the mutual fund industry has come a long way, it has
established itself as one of the major investment instruments in the Indian Financial Industry
while growing at an undiminished rate of 25.63% CAGR since inception. Market penetration of
the industry as a whole also seems to be increasing at a steady rate with CAGR of 26.86% over
the last 5 years and no expectation of slowing down.
Since March 2014 with controlled inflation rates and more saving in the pocket of investors, the
industry has also added new accounts at the rate of 9.74% CAGR, showing increased interests of
investors towards this financial instrument.
The industry has also gained significant advantages due to new policies towards digitisation
introduced by the government which further unlocks the ability to mobilise savings of 400
million internet users in the country. Whereas, stability of the economy in the country with
exceptions of demonetisation over the past few years has kept the industry booming.
Industry Analysis
Presently, Mutual fund industry manages assets worth 23 lakh, 3 thousand and 792 crore Rupees,
with the total number of AMC’s operating in the market being 41. The Top 7 AMC’s as per
Assets under Management (AUM) manages 80.8% of all assets managed by the Industry in the
market. (as on 31st March 2018) whereas the bottom 10 manages a nominal share of 0.32% of all
assets held by all mutual fund companies.
The Top 10 AMC’s as per Assets Under Management (AUM) are;
Asset Management Company No of Assets Under Share of

Schemes Held Management Total AUM
(Crores) (Percentage)
ICICI Prudential Mutual Fund 1384 305641.56 13.3%
HDFC Mutual Fund 706 300548.75 13.0%
Aditya Birla Sun Life Mutual Fund 648 247529.12 10.7%
Reliance Mutual Fund 997 244903.32 10.6%
SBI Mutual Fund 521 217649.24 9.4%
UTI Mutual Fund 1379 154939.35 6.7%
Kotak Mahindra Mutual Fund 359 124688.06 5.4%
Franklin Templeton Mutual Fund 248 103081.23 4.5%
DSP Blackrock Mutual Fund 354 85472.36 3.7%
Axis Mutual Fund 238 77325.41 3.4%
19
The mutual fund industry has also been continuously accelerating towards a higher growth rate
with deeper market penetration over the years.
Industry AUM (In Trillion Rupees)

25
20
15
10
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Significant Milestones achieved of the Mutual fund industry over the years are :
 Industry AUM had crossed the milestone of Rupees 10 Trillion in May 2014
 By August 2017, the Assets under management of the industry had increased more than
two folds and crossed Rupees 20 Trillion.
 Industry AUM has grown from Rupees 7.01 Trillion to Rupees 23.03 Trillion in the past
5 years (March 2013-March 2018) signifying an increase of 26.86% CAGR
 Overall the Industry has grown at a whooping 25.23% CAGR since inception being 1965.
Increase in Investor Accounts – Increase in investor account numerically suggests the addition
of new investors over the number of investors in the mutual fund industry. Between, March
2009 and March 2018, investor accounts have been continuously surging at a rate of 9.74%
before which it had generated mildly volatile tendencies falling from a high in March 2009 of 4.8
crore accounts to 3.95 crore accounts probably due to the effect of 2008 financial crisis, and high
inflation rates ranging between 8.32% - 12.11% between FY (2008-2013) leading to lower
saving and investment abilities of the average investor.
For March 2018, investor accounts grew at 7.13 Crores over the previous month.
20
Scheme wise Increase in Investor Accounts – To understand the growth rate of investors
account and their affiliation
towards specific type of
mutual funds. An analysis of
their investments and rate of
growth across debt and equity
schemes have been analysed
which suggests an outcome
similar to the increase in
investor accounts shown
previously. Debt oriented
schemes possessed an
overwhelming growth rate
beating equity schemes till
September 2014. Whereas, since 2016 there has been a sharp rise in the number of equity
accounts over debt accounts. The rate of growth of debt accounts was positive but declining
because of the shift in investor preference towards equity.
Spread of Investor Accounts – Presently the number of accounts held by investors in the mutual
fund industry are 71,347,301 as on March 2018, The number of accounts as per segmentation
between Individual investors, HNI and Institutional Investors are as follows;
Account Holder No of Accounts Share of Total

Retail Investor 6,70,06,424 93.92%
HNI 39,29,796 5.51%
Institutional Investor 4,11,081 0.58%
**HNI – High Net Worth Individuals (Investments of more than 5 Lakh Rupees)
Whereas, the number of Equity, Debt, ETF and Money Market Accounts held by all investors are
as follows,
Type of Scheme Accounts Held Share of Total

Equity Oriented 5,95,74,996 0.84
Debt Oriented 99,88,622 0.14
Money Market 17,83,683 0.03
21
Investor Demographic Spread – Currently, as per the availability of Data, B30 locations seem to
possess a higher tendency towards equity assets with 65% of their composition of AUM coming
Segmented Composition of AUM as per Top 20 States, India
from Equities whereas 36% of T30 assets are seemingly in possession of equity schemes as of
April 2018. T30 locations on the other hand possess a higher composition of Debt and money
market schemes at 64% of total AUM of these locations. The higher concentration of debt
oriented schemes in T30 can be adhered to the presence of institutional investors in these
locations.
Purchase Orientation of Investor’s – Currently,

about 10% of Individual investors choose to invest
directly in a mutual fund scheme, whereas 18.5%
of High Net Worth assets were invested directly.
As of April 2018, 40.5% assets of the mutual fund
industry as a whole had been undertaken directly
making 59.5% of the total market share left out for
distributors. Most of the direct investments
occurred in non-equity oriented schemes where
institutional investors are strong dominators.
22
Recent Trends
The past year has been transformative for the Mutual fund industry due to a variety of reasons,
the most significant of those are;
 Investments of retail investors in equity schemes have increased by 50.49% in
comparison to April 2017 over April 2018.
 Retail investors are holding Rs.12.07 lakh crore in mutual funds as on April 2018, the
increase is a whooping 35.81% over April 2017.
 Retail investors now hold a higher share of Total assets of the Mutual Fund Industry
being 52% in April 2018, when compared with 46.5% in April 2017.
 Banks, Corporations, Foreign Institutional Investors and Indian Institutional Investors
now hold 48% of assets of the industry, most of which are corporates at 90%. The rest
10% are Indian and foreign institutions and banks.
 The proportion of equity-oriented schemes is now 41.3% of total assets of the
industry as on April 2018, increasing from 33.7% in April 2017.
 The share of debt-oriented schemes of industry assets is 34.9% in April 2018, which
has decreased from previously being 41.3% as on April 2017.
23
1.9 Summarized Report of Major Investment Avenue’s
The Investment Instrument’s which are analysed for this report are;
Fixed Deposit’s – This financial instrument is designed for investors who want to avoid volatility
and earn moderate returns over their savings account. They mostly come with a specific lock-in
period and are long term savings instruments. Most FD’s currently offer the advantage of
liquidating investments even before the designated maturity period in case of emergency by
offering a lower rate of interest as a penalty during redemption.
Savings Account – They are the primary financial instrument to park money for a majority of
investors and offer complete liquidity while providing nominal returns to the investor, the rate of
interest which in most scenarios beats the inflation rate of the home economy. In 2011, RBI
lifted the cap on savings account interest rate before which RBI had set it at 4.5% p.a.
Public Provident Funds (PPF) – This financial instrument was introduced by the government of
India in 1968 with an objective to mobilize savings of the citizens. These schemes can be vibrant
for investors looking to build a retirement corpus, create financial savings, and gain deductions
in tax. It is a long term savings instrument.
Bonds – Bonds can be both government or commercial in nature. The fundamentals behind
bonds as a financial instrument is a contract to borrow and repay the borrowed money at a
specific rate of interest and time interval provided beforehand in the contract. Bonds help
provide the borrower with external funds to finance activities requiring expenditure.
Gold – Gold is a soft metal and also serves as a financial instrument which is generally used to
diversify risk of investor’s financial portfolios commonly by future options and derivative
instruments. Investment in gold are prone to volatility and speculation in the market and are
usually termed as good hedging instruments.
Real Estate – Real estate is considered largely an investment instrument where investors
generally invest their money to purchase ownership of land and building as personal assets. This
particular investment avenue usually comes with the benefit of generating rental income, and
income from capital appreciation.
Insurance – These are not direct investment instruments, rather are legal contracts which takes
place between a policy holder and an insurer where the policy holder agrees to pay a fixed
amount of money in exchange of a premium which is to be paid to the beneficiary, upon pre
agreed terms including maturity, as per the terms of the contract.
24
Equity – Equity investments provide the privilege of ownership in business by the purchase of
stocks, they have historically beaten almost every other financial instrument but have also served
to be most volatile to investors. There are a number of parameters which affect the fluctuations
of price of equities and can be regarded relatively safe if kept for a longer time frame to smooth
out the volatility effect. The problem of selection is an important parameter to recognize as there
are more than 5000 stocks listed in BSE alone.
Mutual Funds - Mutual Funds are an investment vehicle that absorbs the savings of a significant
number of investors who share a common financial goal of gaining maximum expected returns
from their investments of money. They are excellent financial instruments as they offer a
plethora of objective based investment options for investors and remain professionally managed
with moderate risks involved.
Debentures – These financial instruments are debt instruments which are not secured by any
physical assets or collateral. It is a medium to long term investment option which is used to
borrow money from creditors at a fixed rate of interest.
25
2.0 Review of Literature
Aman Singhania and Rohit Kumar (2018) in their published newsletter Nifty Fixed Income
Indices - Methodology Document, laid an understanding upon the varieties of fixed income
indices available in India and their constituents which is used further in the report to compare
debt oriented mutual fund’s with their most relevant market index for performance analysis
K. Geert Rouwenhorst (December 12, 2004), in his paper ‘The Origins of Mutual Funds’
traced the emergence of this financial instrument from as early as the second half of the 18th
century in The Netherlands, the development of securitization in the 17th century to the
invention of depository receipts in the 19th century.
Muralidhar Prasad Ayaluru (2016) in his paper Performance Analysis of Mutual Funds:
Selected Reliance Mutual Fund Schemes; laid insight upon a few performance analysis metrics
used for comparing specific mutual fund schemes with the benchmark index
Muralidhar Anand Lokhande (2015) in his paper, A study of investment awareness and
Pattern of Savings and Investment of Rural Investors; tries to identify with regards to certain
parameters the financial literacy and awareness levels of rural markets and their relevant
segments in India
Joseph M.A (2002), in his paper Mutual Funds – concepts and workings; identifies the various
important characteristics required to understand the concept of mutual funds and further delves
deeper into the workings of the financial instrument
P. Deepa, Dr. A. Latha (2015) in their paper Mutual Funds in India: SWOT Analysis,
enlightened the various factors affecting the mutual fund industry, the growth of this particular
business over the previous year’s providing other challenges and opportunities
M.Y Khan, P.K Jain (2013) in their book Financial Management, provided a brief
understanding of Mutual funds and other investment options as an investment avenue to the
investors.
Mr. Alex Tracy (2012.) Title of work: Ratio Analysis Fundamentals, Location: Michigan,
Publisher : AF Publishers
Zvi Bodie, Alex Kane, Alan Marcus, and Pitabas Mohanty (2017) Title of Work:
Investments. Location: India, Publisher: McGraw Hill
26
3.0 Nature of Data and Research Methodology
Research data is defined as an assimilation of recorded factual material commonly retained by

and accepted in the educational committee as necessary to validate research findings; it can also
be described as the composition of facts related to the objectives of the project being developed
by the scholar. The data selected for my project entitled “Comparative Analysis of Mutual Funds
with other investment instruments” has also been modified to comprise of comparing and
analysing different types of mutual funds and related schemes.
For Mutual Fund Inter-Scheme Analysis
Type of Data: The data set which has been selected for the above is quantitative in nature where
historical closing prices of different kinds of mutual fund scheme offered in the market are
selected with their respective relevant benchmark index (S&P BSE Midcap, Small cap, etc).
Mode of Collection of Data: The data for historical prices have been extracted from
BSEindia.com and amfiindia.com and are Secondary in nature.
Methodology: The schemes selected are funds reaping maximum returns in their individual
sectoral domains (LargeCap, MidCap, Sectoral, Etc)while the Assets Under Management of each
scheme analysed has also been considered to be more than 1000 Crores. The selected data
comprises of daily fluctuation in closing prices for a period of 5 years (31st March 2013-1st April
2018). They have further been analysed via mathematical and statistical measures with
inclusions of financial ratios for understanding the data efficiently and for further comparison
purposes. The schemes and investment instruments have been analysed via at least 12 parameters
for understanding measures of risk and return associated with them. The parameters comprise of
methods that help to understand risk and return of the chosen mutual fund schemes.
The chosen parameters are:

Beta, Jenson’s Alpha, Treynor Ratio, Sharpe Ratio, Sortino’s Ratio, Downside Market Returns,
Upside Market Returns, Standard Deviation, 5 Year Returns, Probability of Positive Outcomes,
Expense Ratio, Times Beaten Market Index and R Squared
After the schemes have been analysed with the relevant parameters provided above, the
parameters are ranked in relation to the values obtained of a specific scheme with the value of
each scheme that has been analysed.
The resultant conclusion decides the best investment instrument/scheme amongst the schemes
that have been analysed while increasing the possibility of gaining maximum returns by
decreasing risk potential as per historical data.
27
For Analysis of other Investment Avenues
Type of Data: The data set which has been selected for analysing other investment avenues is
descriptive and quantitative in nature.
Mode of Collection of Data: The data collected is secondary in nature and has been collected
from the websites of various banks, Life insurance corporation, Income Tax India, NSE India,
Cleartax, CAClub and Economic times.
Methodology: The data selected comprises of fluctuations in trends and/or prices for a period of
1-5 Years depending on the volatility of the investment avenue. Some asset classes have further
been analysed via mathematical measures with inclusions for understanding the data efficiently
and for further comparison purposes. The schemes and investment instruments have been
analysed via at least 4 parameters for understanding measures of risk and return associated with
them.
The chosen parameters are:
For Mutual Fund and Equities– Returns (CAGR 5 Years), Liquidity, Risk, Taxation
For Fixed Deposits, Bonds, PPF, Post Office Schemes and Savings Account – Returns (Annual),
Liquidity, Risk, Taxation
For Real Estate – Returns, Liquidity, Taxation
The resultant conclusion decides the best investment instrument/scheme amongst the schemes
that have been analysed as per investment objective and investor profile.
28
4.0 Analysis of Data
Data analysis is the process of inspecting, cleansing, interpreting and modelling data with the
goal of understanding important information and suggesting conclusion’s that shall support
factually proven decision making. It can also be described as a process of systematically
applying statistical and/or logical techniques to describe and illustrate, condense and evaluate
data. Data analysis is done via multiple approaches and encompasses a variety of techniques
related to the project objective making it one of the most important and sensitive tools of
research driven reports valid in every scientific domain.
4.1 Inter Scheme Comparative Analysis of Mutual Fund’s

The selected data comprises of daily fluctuation in closes prices for a period of 5 years (31 st
March 2013-1st April 2018).
The Types of Mutual Fund Schemes analysed are,
 Large Cap Funds
 Mid Cap Funds
 Small Cap Funds
 Balanced Funds
 Equity Linked Savings Scheme
 Sectoral Funds
The schemes which have been analysed are;

Scheme's Analysed Type Type Type
L&T Equity Fund Plan Direct Growth Large Cap
DSP BlackRock Equity Fund Direct Growth Large Cap
HDFC Growth Fund Direct Growth Large Cap
Mirae Asset Emerging Bluechip Fund Direct Growth Midcap
L&T Midcap Fund Direct Growth Midcap
ABSL Pure Value Fund Direct Growth Midcap
Reliance Small Cap Fund Direct Growth Smallcap
Franklin Smaller Companies Fund Direct Growth Smallcap
DSP Small Cap Fund Direct Growth Smallcap
HDFC Balanced Fund Direct Growth Balanced
DSP Equity and Bond Fund Direct Growth Balanced
HDFC Children's Gift Fund Direct Growth Balanced
Axis Long Term Equity Fund Direct Growth ELSS
L&T Tax Saver Fund Direct Growth ELSS
DSP Tax SaverFund Direct Growth ELSS
L&T Infrastructure Fund Direct Growth Thematic
Aditya Birla Sun Life MNC Fund Direct Growth Thematic
Reliance Banking Fund Direct Growth Thematic
29
The data has been analysed via mathematical and statistical measures with inclusions of financial
ratios for understanding the data efficiently and for further comparison purposes.
Beta
Beta is a measure of the volatility, or systematic risk of a security or a portfolio in comparison to

the market index. A beta of greater than 1 generally indicates higher volatility of a scheme with
regards to the market whereas a beta of less than 1 indicates lower volatility compared to market
index.
Formula for Beta(β) = Covariance (Scheme returns, Market returns)/ Variance (Market returns)
Beta (Sensex)
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
As per the above data, it can evidently be seen that Reliance Banking fund (1.21) possesses the
highest Beta amongst all 18 schemes analysed, suggesting the highest volatility in movements
compared to the market index. Whereas, HDFC Children’s fund and Aditya Birla MNC Fund
with their Beta of 0.60 stands out to be the funds with the lowest volatility compared to market
index. All the schemes which have been analysed possess a Beta value between (0.6-1.21) with
15 out of 18 Scheme’s having a Beta value of less than 1 suggesting 83.34% of the schemes
analysed are lesser volatile compared to the market index.
30
Jensen’s Alpha
Jensen’s Alpha helps understand the additional return over the risk-free rate due to non-market
factors. It is generally used to determine the abnormal return of a security or portfolio of
securities over the theoretical expected return. This risk-adjusted parameter considers both the
performance of the market and the volatility of the scheme. A positive Jensen Alpha indicates
that a manager has produced returns above what would be expected at that risk level, and vice
versa for a negative calculation.
Jensen Alpha (α) = (X – Rf) - [Beta*(Y – Rf)]
Where, Rf = Risk-free rate
X = Mean return for the scheme
Y = Mean return for the index
Jensen's Alpha (Sensex)

0.30
0.25
0.20
0.15
0.10
0.05
0.00
Jensen’s Alpha has remained positive for all the selected schemes indicating that all the schemes
have beaten the market and performed better at their respective risk level. The highest Alpha has
been obtained by Reliance Small Cap Fund (0.26) suggesting it has earned the highest abnormal
return over the scheme’s expected return, whereas the lowest Alpha observed is of HDFC
Growth Fund (0.04) and DSP Blackrock Tax Saver Fund (0.04) suggesting the lowest abnormal
return amongst the schemes analysed.
31
Sortino’s Ratio
This statistical measure is an efficiency ratio which is concerned only with downside volatility
(unfavourable volatility) instead of total volatility and is computed by subtracting the return of
the risk-free index from the return of the scheme to determine the risk-adjusted excess return
which is then divided by downside risk of the scheme. A scheme pursuing higher risk is expected
to generate higher returns and Sortino’s Ratio measures how well the manager utilizes that risk,
while not penalizing them for upside volatility (outperformance). A higher Sortino Ratio is better
for relative comparison purposes.
Formula: Annual Return (X) – Annual Return (Rf) / Downside Risk of X
Rf = Risk-free rate
Sortino's Ratio
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
Sortino’s Ratio has been in the range of (0.33-1.53) for all the schemes analyzed. It has been the
lowest for Small Cap funds (Average: 0.34) whereas it has been the highest for Mid Cap Funds
(Average: 1.42) suggesting midcap schemes have realized their risk potential better to generate
profits compared to any other type of scheme amongst all the funds analysed.
Sharpe Ratio
This statistic is computed by subtracting the return of the risk-free rate of return from the return
of the scheme to determine the risk-adjusted excess return. This excess return is then divided by
the standard deviation (Risk) of the scheme. A scheme pursuing risk, is expected to generate
higher returns and Sharpe measures how well the manager generated returns compared to the
risk. In layman’s terms it is the measurement of efficiency of return’s utilizing the relationship
32
between annualized risk-free return and standard deviation. A Higher Sharpe Ratio signifies
greater efficiency of the portfolio when compared to another
Sharpe = Ann Return (x) – Ann Return (Rf) /Standard Deviation of X
Rf = Risk-free rate
X = Mutual fund scheme
Sharpe Ratio
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
Amongst the schemes analysed, the lowest Sharpe ratio is that of HDFC Growth Fund (0.53) and
DSP Blackrock Tax Saver fund (0.53), whereas the Sharpe Value of Reliance Small Cap Fund
(1.79) suggesting better performance. The range of Sharpe lies between (0.53-1.79) within which
all the Large Cap Funds and Equity Linked Savings Schemes have not beaten the 1.0 mark.
Treynor’s Ratio
This Ratio is computed by subtracting the return of the Risk-free Rate of return from the Return
of the Scheme to determine the risk-adjusted return. This excess return is then divided by the
Beta of the portfolio scheme. This is an efficiency ratio which evaluates whether the manager is
being rewarded with additional return for each additional unit of risk being taken where risk is
defined by Beta, where Beta stands for systematic risk of the portfolio.
Formula = Annual Return (X) – Annual Return (Rf) / β (X)
Rf = Risk-free rate
X – Selected Scheme
33
Treynor Ratio
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
In the analysis computed, Treynor ratio has been comparatively lesser when it came to Large
Cap Funds with an average of (0.11) and ELSS Funds with an average of (0.10) it has also been
lowest in the same type of scheme offered being HDFC Growth Fund (0.08) and DSP Tax Saver
Fund (0.08). As per observation, maximum Treynor Ratio has been generated by schemes with
portfolio’s ranging in Small Cap Stocks, that is, Small Cap Funds with Reliance Small Cap
beating every other scheme in this efficiency ratio with a value of 0.37.
Returns (CAGR 5 Year’s)
In this parameter, returns have been Annualized via implementing Capital Annual Growth Rate
to determine the absolute returns earned by the scheme over the period of analysis. Returns are
the amount of money gained over capital invested by the investor’s in any financial instrument.
(Here: Mutual Fund’s)
Formula: (Final NAV/Initial NAV) ^ (1 / No of years) - 1
34
Returns (%)
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
As per analysis, the highest CAGR has been obtained by Reliance Small Cap Mutual Fund
(36.8%) whereas the lowest CAGR obtained has been obtained by HDFC Growth Fund (15.8%)
and DSP Tax Saver fund (15.8%). Small Cap Funds have beaten every other time of scheme in
return’s as per the analysis whereas Large Cap funds have been the laggards when it came to
maximize returns of the investor.
Probability of Positive Outcomes
This ratio helps to determine a random fluctuation with regards to a specified interval, the
chance/probability of the same being positive in nature. (X>0)
Formula: Positive Outcomes (X>0) / Total number of outcomes
Probability (+Ve Daily)

58.0%
56.0%
54.0%
52.0%
50.0%
48.0%
46.0%
35
As per the data analysis, portfolio of DSP Small Cap Fund (57.1%) has historically in the
selected period provided 57.1 times out of 100 (considering daily returns) a positive return when
compared to the total outcomes (Positive and negative) of the scheme. Similarly, Aditya Birla
MNC Fund has provided a probability of 50.7 out of 100 outcomes making it the lowest daily
positive outcome friendly scheme amongst the pool. Whereas, all the schemes have provided
more than 51% positive outcomes suggesting a higher probability of positives over negatives if
given a chance.
Standard Deviation
Standard Deviation is a measure of the average deviations of a return series from its mean. I is
often used as a measure of risk in portfolio analysis. A higher standard deviation generally
implies that there have been large swings or volatility in the fluctuations of price/NAV in the
scheme.
Formula: Standard Deviation = [ ∑ (Xi-X)2] ½ / (N-1)

Or, Square Root of the Variance = √(Var)
Or, Annualized Standard Deviation = SD * √(Ny)
Xi = the ith observation N = the number of observations
X = mean return for series Ny = the number of periods in a year
Standard Deviation
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
As per the provided analysis, Standard Deviation has been in the range of (9.9% - 20.4%) in the
selected schemes. The lowest average standard deviation as per fund types have been of
36
Balanced Fund’s as they constitute of both Equity and Debt instruments reducing volatility.
Whereas all other schemes have shown higher deviation’s when compared.
Upside Market Returns
It is a measure of the manager’s performance in up markets relative to the market itself. The
return for the market for each quarter is considered an up market if it is greater than or equal to
zero. The Upside Market Return’s is calculated by dividing the return of the manager during the
period where the interval chosen for the market extends to being in bullish in nature (Market
return is greater than Zero). A higher UMC signifies greater return in means of comparison
suggesting higher return in bullish periods.
Formula: Returns of X When Market is positive / Returns of the Market Index when Positive
Upside Market Returns

3.00
2.50
2.00
1.50
1.00
0.50
0.00
As per analysis, the range for UMR has been between (1.31-2.40), suggesting 31% to 140%
more returns than the market in bullish quarter’s/up-market quarter’s. Midcap and Small Cap
Funds have clearly outperformed every other fund as provided in the graph above whereas the
biggest gainers have been Midcap schemes (Average).
Downside Market Return
It is a measure of the scheme’s performance in down markets relative to the market itself. The
return for the market for each quarter is considered bearish if it is lesser than or equal to zero.
The Downside Market Return is calculated by dividing the return of the manager during the
37
period where the interval chosen for the market extends to being bearish in nature (Market return
is lesser than Zero). A lower DMR signifies greater performance in periods of negative returns
of the market index.
Formula: Returns of X When Market is positive / Returns of the Market Index when Positive
Downside Market Returns

1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
Except DSP Equity Fund (1.22), L&T Tax Saver Fund (1.22) and Aditya Birla MNC fund (1.22)
all other funds have beaten the market index for every quarter the benchmark index has been
negative in the selected period. DSP Small Cap fund (0.15) has shown the lowest DMR
suggesting in bearish quarters it has outperformed Sensex 30 by avoiding 85% losses compared
to the market index when it gave negative returns while the three schemes with DMR of more
than 1 provided 22% more losses than the market index in bearish quarters. The range of DMCR
in the analysis lies between (0.15-1.22) with 83.34% schemes beating the market when it went
through a bearish quarter.
Times Beaten Market Index
This parameter determines by giving values between 0 to 1, how many times has the scheme
beaten the market index amongst the specified intervals of time. A value of 0 in this parameter
suggests None whereas 1 suggests All. Thus, providing for higher values to be better in
comparison.
Formula: No of Positive Quarter’s (X) / Total No of Quarter’s (X)
38
Times Beaten Market Index
1.20
1.00
0.80
0.60
0.40
0.20
0.00
As per the analysis, HDFC Children’s fund has provided a value of 1, suggesting it has
outperformed the market index in every quarter for the selected period of time. The lowest ratio
(0.69) is shared by L&T Equity Fund, DSP Equity Fund, ABSL Pure Value Fund, Axis Long
Term Equity Fund, L&T Tax Saver Fund, Aditya Birla MNC Fund, L&T Infrastructure fund and
DSP Equity Bond fund suggesting their success in beating the market index only 69/100 times.
The range of outcome is (0.69-1.00) suggesting the schemes have beaten the market between the
range of 69-100% times.
Expense Ratio
The expense ratio in its simplest form is a measure of what it costs an investment company to
operate a mutual fund. The ratio is determined through an annual calculation, where a fund's
operating expenses (Administrative, Management, Advertisement, etc) are divided by the
average value of its assets under management (AUM) An expense ratio of 1% per annum means
that each year 1% of the fund's total assets will be used to cover expenses
39
Expense Ratio
3.00
2.50
2.00
1.50
1.00
0.50
0.00
The expense ratio for selected schemes lie in the range of (1.45% - 2.45%) whereas, the lowest
expense ratio is won by Large Cap Schemes generating an average expense ratio of 1.76%
creating lesser indirect costs for the investor’s to pay to the fund management company.
R Squared
This statistical function is similar to Beta and is a measure of a scheme’s movement in relation to
the market. The R-Squared of a scheme when compared to the benchmark index measures the
relationship between the variance of the scheme return and the variance of the benchmark return.
In other words, the R-Squared measures the percent of a manager’s return patterns that are
“explained” by the market and ranges from 0 to 1.
R Squared (Sensex)
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
40
Amongst the schemes analysed, the lowest R squared value is of Reliance Small Cap and DSP
Small Cap Fund (0.48) indicating the lowest explainable relation to the benchmark index.
Whereas, L&T Equity Fund, Axis Long Term Equity Fund, DSP Tax Saver Fund and HDFC
Growth Fund have provided R squared values of (0.88) respectively signifying the maximum
relation to Sensex 30 amongst the scheme’s analysed. All the schemes analysed are more than
48% similar in movements compared to the benchmark index with the range lying between
(48%-88%). Large Cap funds and Tax Saver funds have provided more relation to the
benchmark index due to the constituents of Sensex 30 being LargeCap stocks.
4.2 Inter Scheme Comparative Analysis of Major Investment Avenues
Indian financial industry hosts of a plethora of Investment instruments for different segments of
investors depending upon their investment objective. For this particular analysis, there has been a
selection of 14 major investment products where most Indian investors prefer to keep their
capital invested.
Fixed Deposits
Particulars Min Max Time Returns Adv to Adv to Pre Mature Nominees
Investment Investment S.Citizen Females Withdrawal
Fixed 1000 None 7 days 4.5%- Yes No Not Yes
Deposits - 20 8.65% Allowed
Years
 Senior Citizen Age should be more than 60 Years

 Senior Citizen FD's generally earn 0.25%-0.75% higher interest rates
 Some banks allow liquidation due to emergency while charging a penalty on interest
rate
 Underlying reasons behind determination of FD Rate changes are RBI monetary policy
such as repo rate, base rate etc
 FD schemes are offered both by banks and Non-Banking financial Corporations
Tax Saving Fixed Deposit’s
There are also a specific type of fixed deposit available in the Indian financial instrument market
which provide advantages of savings upon taxation for the investor.
41
Particulars Investment Time Returns Adv to Adv to Pre Mature Nominees
S.Citizen Females Withdrawal
Tax Saving <100 INR 5 Years 6% - 7.35% Yes No Not Allowed Upto 2
F.D
 Interest Earned on Tax Saving Fixed Deposits are exempt under section 80C upto Rs
1,50,000
 No Loans against FD allowed
 Minimum lock in period of 5 years with no premature withdrawal
 A few notable Tax Saving Fixed Deposit Schemes are: Vijaya Tax Saving FD Scheme,
SBI Tax Saving Scheme, Kotak Tax Saving Scheme
Bond’s
The fundamentals behind bonds as a financial instrument is a contract to borrow and repay the
borrowed money at a specific rate of interest and time interval provided beforehand in the
contract.
Investment Investment S.Citizen Females Withdrawal
Bonds Variable Variable Variable 7.5% Yes Yes Not Yes
- 9.0% Allowed
 Bonds are offered both by companies and the government of India, Bonds offered by
Companies are known as Corporate Bonds and which are offered by Government are
known as Government Bonds
 Sukanya Samriddhi Yojna offers advantages to females under the age of 14 years with
maturity at the age of 21 and current interest rate of 8.1%
 Income from bonds are usually taxed under Income Tax Act and exemptions are
provided via Wealth Tax Act 1957
 Bonds are generally occupied with a lock in period
An Example of a Government Bond is given below;

Investment Investment S.Citizen Female Withdrawal
Govt of 1000 None 7 7.75% Yes No Not Allowed Yes
India Years
 The bond offers advantage to senior citizens as per the below criteria with relevance to
maturity period.
42
 The Age criterion set by the bond are; 60-70 Years - 6 Years, 70-80 Years - 5 Years, 80+
years - 4 years
Public Provident Fund

These schemes were introduced in 1968 by the Govt of India, they are vibrant for investors
desiring to build a retirement corpus, create financial savings, and gain deductions on tax.
Investment Investment S.Citizen Female Withdrawal
PPF 500 150000 15 7.60% Yes No Not Allowed Yes
Years
 Interest is Payable on the 31st March of every year

 Maturity Period can be increased In blocks of 5 Years after 15 years
 Investments can be made in yearly lumpsums or 12 month instalments
 There is no Risk associated with PPF's as they are backed by the Govt of India
 Loan can be taken against PPF on the 3rd and 5th year
Real Estate
This particular investment avenue usually comes with the benefit of generating rental income,
and income from capital appreciation.
Most if not every parameter is variable for this investment option.
Particulars Min Max Time Returns Nominees

Investment Investment
Real Estate Variable Variable Variable 11.20% Yes
*Returns at 11.2% have been calculated as per Indian House price index provided by Knight
Frank’s Global House Price Index as CAGR for years 2013-2018
An example of simple income derived from a Real Estate Investment is mentioned below;
Particulars Investment Selling Price Rent Final CAGR
(2013) (2018) (7500*60) Value
Real Estate
Invest 50,00,000 85,00,000 4,50,000 89,50,000 12.3%
Rental Income earned is judged at 7500 Rupees/month for 60 months.
 Taxation as per Capital Gains Act are charged on this particular investment avenue
 The selling price, rental income and investment price may vary at gargantuan proportions
as per location, economic conditions, microeconomic factors, etcetera
 The availability of buyers when selling and sellers when buying is difficult to understand
or predict.
43
 Some State Governments provide advantage towards Taxation for Females and Senior
Citizens
Gold
Gold is a soft metal and generally serves as a financial instrument to diversify risk of
investor’s financial portfolios commonly by futures, options and derivative instruments.
Particulars Min Max Time Returns Pre Mature

Investment Investment Withdrawal
Gold Variable Variable Variable 5.11%% Allowed
Returns are calculated as CAGR of the value of Gold at 31.3.2013 and 31.3.2018
 If the investment in Gold is sold off before 3 years from purchase. The gains are
added to income from other sources and is taxed as per Income Tax Act of the
Investor.
 If the investment in gold is held for more than 3 years, It is taxed as per Long Term
Capital Gains.
 Gold is commonly used for portfolio hedging purposes by AMC’s and Hedge Funds.
 As per Union Budget 2018, Gold shall soon be treated as a separate Asset Class it has
been announced that Gold Monetization Scheme will be revamped to enable people to
open a Gold Deposit Account in a investor friendly manner.
44
5.0 Conclusions And Recommendations
5.1 Inter Scheme Comparative Analysis of Mutual Funds
For this section, the schemes analysed have been provided individual rankings as per relative
efficiency of their performance measuring financial ratios and statistical tools. The analysis is
purely quantitative in nature.
Further, the selected Mutual fund schemes have been compared to attain conclusions and ranked
in ascending order as per their derived efficiencies, where a Net Ranking of 1 is considered to be
the best performing scheme and a Net Ranking of 18 as the fund scheme with worst individual
performance.
Key Scheme's Analysed Type Type Type

A L&T Equity Fund Plan Direct Growth Large Cap
B DSP BlackRock Equity Fund Direct Growth Large Cap
C HDFC Growth Fund Direct Growth Large Cap
D Mirae Asset Emerging Bluechip Fund Direct Growth Midcap
E L&T Midcap Fund Direct Growth Midcap
F ABSL Pure Value Fund Direct Growth Midcap
G Reliance Small Cap Fund Direct Growth Smallcap
H Franklin Smaller Companies Fund Direct Growth Smallcap
I DSP Small Cap Fund Direct Growth Smallcap
J HDFC Balanced Fund Direct Growth Balanced
K DSP Equity and Bond Fund Direct Growth Balanced
L HDFC Children's Gift Fund Direct Growth Balanced
M Axis Long Term Equity Fund Direct Growth ELSS
N L&T Tax Saver Fund Direct Growth ELSS
O DSP Tax SaverFund Direct Growth ELSS
P L&T Infrastructure Fund Direct Growth Thematic
Q Aditya Birla Sun Life MNC Fund Direct Growth Thematic
R Reliance Banking Fund Direct Growth Thematic
**Due to constraints arising upon data representation and improper formatting in MS Word. The
schemes analysed have been replaced with Alphabets. The key to which is given above.
45
Net Rankings
Below is the table confirming to individual ranking provided of every mutual fund scheme which
has been analysed.
The Rankings provided are based upon overall performance amongst the selected schemes in
Ascending order meaning Rank 1 is relatively the best performing scheme and Rank 18 should
be the worst performing.
Particulars A B C D E F G H I J K L M N O P Q R
Jensen's 16 14 17 1 3 2 4 5 6 9 12 10 15 13 18 8 7 11
Alpha
(Sensex)
Sortino's 9 11 15 16 18 17 2 1 5 4 8 6 10 12 14 7 3 13
Ratio
Sharpe 13 15 18 1 2 3 5 4 7 8 11 9 12 14 17 10 6 16
Ratio
Treynor 13 15 18 1 3 2 5 4 7 8 11 9 12 14 17 10 6 16
Ratio
Beta 11 14 16 8 5 7 9 6 10 3 4 1 12 15 17 13 2 18
(Sensex)
Returns 15 12 18 1 3 2 4 5 6 9 16 11 14 13 17 7 8 10
(%)
Probability 15 12 5 2 7 1 7 3 6 16 10 11 14 13 4 9 18 17
(+ve Daily)
Standard 6 14 12 15 5 10 9 8 17 2 3 1 7 13 11 16 4 18
Deviation
Upside 10 9 15 1 6 2 4 5 3 17 16 18 11 8 14 12 7 13
Market
Returns
Downside 14 17 11 6 8 1 3 7 12 2 5 4 13 18 10 15 16 9
Market
Returns
Times 11 11 7 3 7 3 3 2 11 3 11 1 11 11 7 11 11 7
Beaten
Market
Index
Expense 1 3 10 5 16 18 5 11 15 5 13 16 1 4 11 8 14 9
Ratio
R Squared 4 8 2 18 13 17 12 14 15 5 6 9 3 7 1 11 16 10
(Sensex)
Grand 138 155 164 78 96 85 72 75 120 91 126 106 135 155 158 137 118 167
Total of
Individual
Ranks
Net 13 14 17 3 6 4 1 2 9 5 10 7 11 15 16 12 8 18
Ranking
**Highlighted in Green are the Top 5 Mutual Fund Schemes as per Rankings established post
Analysis of Data; whereas Highlighted in Red are the Bottom 5 Mutual Fund Schemes.
46
Summarised Derivation of Rankings
Below is a summarised table containing concluding values of the data analysed.
Particulars A B C D E F G H I J K L M N O P Q R
Jensen's 0.1 0.1 0.0 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.0 0.1 0.1 0.1
Alpha
(Sensex)
Sortino's 0.7 0.7 0.5 0.4 0.3 0.3 1.5 1.5 1.2 1.3 0.8 1.2 0.7 0.7 0.5 1.0 1.4 0.6
Ratio
Sharpe 0.7 0.7 0.5 1.8 1.8 1.7 1.6 1.6 1.3 1.2 0.9 1.2 0.7 0.7 0.5 1.0 1.3 0.6
Ratio
Treynor 0.1 0.1 0.1 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.1 0.2 0.1 0.1 0.1 0.2 0.3 0.1
Ratio
Beta 0.9 1.0 1.0 0.8 0.7 0.8 0.8 0.7 0.9 0.6 0.7 0.6 0.9 1.0 1.0 0.9 0.6 1.2
(Sensex)
Returns 0.2 0.2 0.2 0.4 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
(%)
Probability 0.5 0.5 0.5 0.6 0.5 0.6 0.5 0.6 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5
(+ve Daily)
Standard 0.1 0.2 0.2 0.2 0.1 0.2 0.1 0.1 0.2 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.1 0.2
Deviation
Upside 1.5 1.6 1.4 2.4 2.1 2.3 2.2 2.1 2.3 1.4 1.4 1.3 1.5 1.6 1.4 1.5 1.6 1.4
Market
Returns
Downside 0.9 1.2 0.7 0.5 0.6 0.1 0.4 0.6 0.8 0.2 0.5 0.5 0.9 1.2 0.7 0.9 1.2 0.7
Market
Returns
Times 0.7 0.7 0.8 0.9 0.8 0.9 0.9 0.9 0.7 0.9 0.7 1.0 0.7 0.7 0.8 0.7 0.7 0.8
Beaten
Market
Index
Expense 1.5 1.7 2.1 2.0 2.4 2.5 2.0 2.2 2.3 2.0 2.2 2.4 1.5 1.9 2.2 2.0 2.2 2.1
Ratio
R Squared 0.9 0.8 0.9 0.5 0.6 0.5 0.6 0.6 0.5 0.8 0.8 0.8 0.9 0.8 0.9 0.6 0.5 0.7
(Sensex)
**Corrected to 1 decimal place for easier interpretation.
47
Conclusions and Recommendations
- A high Jensen’s Alpha can easily be attributed to higher net performance of a mutual
fund scheme as has been suggested from the charts provided above. Jensen’s Alpha has
been ranked in the range of 1-9 for the Top 5 schemes which has been analyzed.
- A higher R squared value has generally provided lower overall performance of the
scheme, it can be said that higher relevance to the market index may provide lower
performance of the scheme, this conclusion may be confined to the 18 selected schemes.
- Top performing schemes (Ranked 1-5) in the analysis have shown higher returns (Ranked
1-9) and higher beta factor(Ranked 3-9) indicating stronger relative volatility provides for
better returns and higher performance of any mutual fund portfolio.
- Schemes which have beaten the Market Index higher number of times, also has provided
greater overall performance. Top 4 schemes have TBI Ranked between 2-7.
- Upside Market Returns and Downside Market Returns show strong relations with the
overall performance of the scheme. For Top Performing Schemes Ranked between 1 to 4,
Upside Market Returns has been ranked in the range 1-5 whereas downside market
returns have been ranked in the range of 1-7.
- Funds with a higher probability of providing positive returns may be considered towards
judging the overall performance of any mutual fund scheme as the relation is confirming.
- Expense Ratios when compared with the overall performance of a mutual fund scheme,
has been concluded as redundant.
- Small Cap Mutual Funds have provided the best performance when compared to other
type of mutual fund schemes. (Average Ranking of 4)
- Mid Cap Mutual Funds are a close second to Small Cap Funds when compared to other
types of Mutual Fund Schemes. (Average Ranking of 4.33)
- The worst performance amongst the selected dataset has been provided by Large Cap
Mutual Fund Schemes (Average Ranking of 14.67)
- Equity Linked Savings Schemes have performed similarly to Large Cap Funds and are
the second worst performer. (Average Ranking of 13.67)
- If an investor is confident towards investing in Large Cap Mutual Fund Schemes, it might
be wiser for them to invest in an ELSS instead due to the tax advantage offered under
Section 80C. Provided, the investor is confident to park their money for a period of 3
years or more.
- A risk neutral investor should consider investing in Balanced funds as their overall
annualized standard deviation is the lowest at an average of 10.5% while providing
comfortable returns at an average of 18.9%.
- Balanced funds beat both ELSS and Large Cap funds comfortably amongst the funds
analyzed; both in returns gained and risks involved.
- An Aggressive investor should consider investing in Mid Cap and Small Cap Funds, they
might share comparatively higher risk but have scored the highest in overall performance
and overall returns when compared with other fund types.
48
5.2 Inter Scheme Comparative Analysis of Mutual Funds and other Investment Options
For this section, there is a summarised report concluding the most important attributes arising
when selecting between a plethora of Investment opportunities available in the Indian Market.
Investment Returns Risk Liquidity Lock In Taxation on

Instrument Period Returns
Fixed Deposits 4.5% - 8.5% Low No Yes Yes, IT Act
Gold 5.11% Low Yes No IT Act, LTCG
Real Estate 11.20% Moderate No No Yes, Capital Gains
PPF 7.60% Low No Yes No
Savings 3.5% - 6.25% Low Yes No Yes, IT Act; Note:

Account 80TTA
Bonds 7% - 9% Low Yes Yes Yes, IT Act, #
Debentures 5.5% - 10.5% Moderate No Yes Yes, IT Act, #
Life Insurance 3.5% - 6% Low No Yes No
Equity 12.05% High Yes No Yes, STCG,

LTCG
Mutual Funds
Debt Funds 6% - 9.5% Low Yes No Yes, IT Act, #
Balanced 17% - 22% Moderate to Yes No Yes, STCG,

Funds High LTCG
Equity 15% - 37% High Yes No Yes, STCG,
Schemes LTCG
ELSS 15% - 19% High No Yes Yes, LTCG, $
** Returns may vary +/- 2-3% as many asset classes have a gargantuan variety of available
options which cannot be easily analysed/understood.
Taxation:
STCG – Short Term Capital Gains, Taxed at 15% on gains
LTCG – Long Term Capital Gains, Taxed at 10% on gains over Rupees 1,00,000
IT Act – Gains are added to ‘Income from other sources’ and taxed as per Income Tax Slab
Section 80TTA – This section suggests tax exemption on earnings up to 10,000 Rupees.
# For Debt instruments – Earnings from redemption after 3 years is taxed at 20% plus indexation
$ For ELSS – Section 80C provides tax exemption for earnings up to Rupees 150000
49
Conclusions and Recommendations
- As per data provided above, Public Provident Fund’s and Life Insurance Policies do not
possess any taxation on income realized from them, but at the same time they carry a
lock-in period providing for inability to draw out money before maturity dates.
- The analysis suggests that Gold has provided the lowest amount of returns (5.11% CAGR
5 years) while also attracting taxation on both long term and short term capital gains.
Even though it is liquid and provides no lock-in period. There are better asset classes to
consider with a similar risk profile.
- Investments in Equity has historically been the harbinger of returns, when compared to
other major asset classes in the country, it has reached its expectations providing for
12.11% (CAGR 5 years) when compared to Sensex 30, being the benchmark index only.
- Equity Linked Mutual Fund schemes have provided the highest return when compared to
other asset classes. Top mutual funds have been considered for returns calculation
providing a (CAGR 5 years) between the range of 15-37% making it the highest grosser
of returns with liquidity and no lock in period whereas the risk potential is seemingly the
highest.
- Balanced Funds and Equity Linked Savings Schemes have provided similar returns while
having slightly differentiated risk profiles. While ELSS provides tax benefit under section
80C, and constraints ones liquidity for 3 years. An investor who prefers to park their
money for a longer period of time and enjoy tax benefits should consider ELSS as an
investment option.
- Real Estate has provided similar returns when compared to the benchmark index, but
significantly lower returns when compared to Mutual Funds. It is always tough to predict
the real estate market as it is tough to predict stocks making it a difficult decision for the
investor.
- A risk averse investor who is comfortable with parking their money for a prolonged
period of time should park their money in PPF’s, Fixed Deposit’s, Life Insurance Policies
and Bond’s while most of these funds also offer tax advantages.
- A risk averse investor who is not comfortable with parking their money for a longer
period of time should consider Savings Account, Debt funds and Gold as an investment
option.
- A risk neutral investor should look forward to invest in Real Estate Assets, Debentures
and Balanced Mutual Funds, while they do none of them offer tax benefit’s balanced
mutual funds have historically offered handsome returns and liquidity when compared
with the other 2 asset classes.
- A risk-taking individual should look forward to invest in Equity Stocks, Equity Mutual
Funds and Equity Linked Savings Schemes. Even though they are considered risky due to
their highly volatile nature. The negative effects often smoothen out in the long run. If an
investor is ready to park their money for more than 3 years, the risk may be minimized
with time.
50
Bibliography
Book with one author:
Mr. Alex Tracy (2012.) Title of work: Ratio Analysis Fundamentals, Location:
Michigan, Publisher : AF Publishers
Book with two authors:
M.Y.Khan, & P.K.Jain. (2014). Title of work: Financial Management. Location:
Delhi, Publisher: McGraw Hill.
Book with multiple authors
Dr. Zvi Bodie, Mr. Alex Kane, Mr. Alan Marcus, and Dr. Pitabas Mohanty (2017).
Title of Work: Investments. Location: India, Publisher: McGraw Hill
Journal article:
Aman Singhania and Rohit Kumar (2018) Understanding Fixed income indices
and related calculations: Nifty Fixed Income Indices - Methodology Document
A publication in press:
Prasad Ayaluru (2016) in his publication ‘Performance Analysis of Mutual
Funds: Selected Reliance Mutual Fund Schemes’, laid insight upon a few
performance analysis metrics used for comparing specific mutual fund schemes
with the benchmark index
A Presented Paper:
Joseph M.A (2002), in his paper Mutual Funds – concepts and workings;
identifies the various important characteristics required to understand the concept
of mutual funds and further delves deeper into the workings of the financial
instrument
K. Geert Rouwenhorst (December 12, 2004), in his paper ‘The Origins of
Mutual Funds’ traced the emergence of this financial instrument from as early as
the second half of the 18th century in The Netherlands, the development of
securitization in the 17th century to the invention of depository receipts in the 19th
century.
Website:
Association of Mutual Funds of India in their multiple newsletter published various
articles upon the mutual fund industry of the country, https://www.amfiindia.com/
51

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“Comparative Analysis of Mutual Fund Schemes and Major

Name of the Company Guide Name of the GLIM Guide

Chapter Particulars Page

A Company Profile 3-7

1.0 Objectives of the Report 9

1.1 Limitations of the Report 9

1.2 Characteristics of Mutual Funds 9

1.3 Historical development of Mutual Funds 10 - 11

1.4 Types of Mutual Funds 11- 14

1.5 Advantages and Disadvantages of Mutual Funds 15 - 16

1.6 Taxation Policy of Mutual Funds 16

1.7 Risks Associated with Investments 17 - 18

1.8 Industry Analysis and Recent Developments 19 - 23

1.9 Summarized Report of Major Investment Avenues 24 - 25

3 Nature of Data and Research Methodology 27 - 28

4.0 Inter Scheme Comparative Analysis of Mutual Fund’s 29 - 41

4.1 Comparative Analysis of Major Investment Avenues 41 - 44

5.0 Conclusion and Recommendations

5.1 Inter Scheme Comparative Analysis of Mutual Fund’s 45 - 48

5.2 Comparative Analysis of Major Investment Avenues 49 - 50

Equity Intraday 9.5

Equity Delivery 68.3

Who are the regulators of Mutual Funds?

What is Net Asset Value?

1.0 Objectives of the Report

1.1 Limitations of the Report

1.2 Characteristics of a Mutual Fund:

Phase II - 1987-1993 (Entry of Public Sector Funds)

Phase III - 1993-2003 (Entry of Private Sector Funds)

Phase IV - since February 2003

1.4 Types of Mutual Fund’s

As per Maturity Period

Open Ended Mutual Fund

Closed Ended Mutual Fund’s

As Per Investment Objective’s

Type Equity Allocation Debt Allocation

Advantages of Mutual Funds

Disadvantages of Mutual Funds

1.6 Taxation of Mutual Funds

Fund Type STCG LTCG Dividend

The major risks involved for any investment avenue are;

Asset Management Company No of Assets Under Share of

Industry AUM (In Trillion Rupees)

Account Holder No of Accounts Share of Total

Type of Scheme Accounts Held Share of Total

Segmented Composition of AUM as per Top 20 States, India

Purchase Orientation of Investor’s – Currently,

Research data is defined as an assimilation of recorded factual material commonly retained by

For Mutual Fund Inter-Scheme Analysis

The chosen parameters are:

The chosen parameters are:

For Real Estate – Returns, Liquidity, Taxation

4.1 Inter Scheme Comparative Analysis of Mutual Fund’s

The schemes which have been analysed are;

Beta is a measure of the volatility, or systematic risk of a security or a portfolio in comparison to

Jensen's Alpha (Sensex)

Returns (CAGR 5 Year’s)

Probability of Positive Outcomes

Probability (+Ve Daily)

Formula: Standard Deviation = [ ∑ (Xi-X)2] ½ / (N-1)

Upside Market Returns

Upside Market Returns

Downside Market Return