A STUDY ON PERFORMANCE EVALUATION OF JM MUTUAL

FUND IN MOTILAL OSWAL LTD., SALEM, WITH REFERENCE

TO SHAREKHAN

Summer Project Report

Submitted
By
V. RAJARAJESWARI
09/EP1733
Under The Guidance Of
Mr. P. KAMALA KANNAN, B.Com, M.B.A., D.B.F., M. Phil.
Submitted in Partial fulfillment of the requirement for the degree of
M.B.A.

M.B.A.Department
VYSYA INSTITUTE OF MANAGEMENT STUDIES
SALEM – 103
MAY – 2011

1
Mrs. G. Padmavathi, M.B.A., M.Phil.
Head of Department,
Department Of Master of Business Administration
Vysya institute of management studies
Salem – 103

CERTIFICATE
This is to certify that the project work done by V. Rajarajeswari, MBA student of
Vysya institute of management studies, Salem – 103, bearing registration number
09/EP1733 has done the project work entitled “A study on Performance Evaluation of
JM Mutual Fund in Motilal Oswal Ltd., Salem” is in partial fulfillment of the
requirement for the degree of Master of Business Administration has worked under my
guidance and to the best of my knowledge is her original work.

Place: Salem Mrs. G. Padmavathi

Date: (Head of Department)

2
Mr. P. Kamala Kannan
Department of Master of Business Administration,
Vysya institute of management studies,
Salem – 103

CERTIFICATE

This is to certify that the work done by V. RAJARAJESWARI entitled “A study

on Performance Evaluation of JM Mutual Fund in Motilal Oswal Ltd., Salem,
with reference to Sharekhan” is in partial fulfillment of the requirement for the
degree of Master of Business Administration has worked under my guidance
and to the best of my knowledge is her original work.

Place: Salem P. Kamala kannan

Date: (Faculty Guide)

3
 DECLARATION

I, V. RAJARAJESWARI , student of M.B.A. department, Vysya institute of

management studies, Salem – 103, would like to declare that this project titled
“A study on Performance Evaluation of JM Mutual Fund in Motilal Oswal Ltd.,
Salem, with reference to Sharekhan” submitted in partial fulfillment of the
requirement for the degree of MASTER OF BUSINESS ADMINSTRATION,
is my original work.

Place: Salem V. RAJARAJESWARI

Date:

4
 ACKNOWLEDGEMENT

My sincere thanks to our Principal Dr. Mr. Venkatesh for providing all the required
facilities, for completing the project work.
My sincere thanks to Mrs. G. Padmavathi, Head of Department, Department of
Master of Business Administration, for providing all the required facilities, for completing
the project work.

My heartfelt thanks to Mr. P. Kamala Kannan, Faculty, Department of Master of

Business Administration, for guiding me to successfully finish the project.

I am indebted to Mr. Pandiyan, Terirory Manager, Motilal Oswal Ltd., for allowing
me to do the project successfully.

I would like to extend my gratitude to Mr.Jagadheesh, Motilal Oswal Ltd., Salem.

I would be failing in my duty, if I don’t thank my family and my friends., for their
suggestions and continuous support throughout my project work.

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 LIST OF CONTENTS

CHAPTER TABLE OF CONTENTS PAGE NO

NO
List of tables
List of charts
Synopsis
1 Introduction 1

2 Industry profile 2
3 Company profile 6
4 Theoretical framework 11
5 Objectives of the study 24
6 Research methodology 25
6.1 Need of the study 25
6.2 Scope of the study 25
6.3 Type of research 26
6.4 Data collection 26
6.5 Statistical tools 27
6.6 Limitations of the study 29
7 Analysis & Interpretation 30
8 Findings 54
9 Suggestions & Recommendations 57
10 Conclusion 58
Annexure
Bibliography

6
 LIST OF TABLES
TABLE NO PARTICULARS PAGE NO

1 Seasonal Index of JM Balance 31

2 JM Balance fund’s Sector Allocation 33

3 Seasonal Index of JM Basic 36

4 JM Basic fund’s Sector Allocation 38

5 Seasonal Index of JM Income 41

6 JM Income fund’s Sector Allocation 43

7 Seasonal Index of JM Equity 46

8 JM Equity fund’s Sector Allocation 48

9 Sharpe Index of JM Balance, Basic, Income and Equity 50

10 Treynor’s Index of JM Balance, Basic, Income and Equity 51

11 Sharpe Index of Reliance,SBI and JM Mutual Funds 52

12 Treynor’s Index of Reliance,SBI and JM Mutual Funds 53

LIST OF FIGURE
TABLE NO PARTICULARS PAGE
NO

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1 Seasonal Index of JM Balance 32

2 JM Balance fund’s Sector Allocation 34

3 Seasonal Index of JM Basic 37

4 JM Basic fund’s Sector Allocation 39

5 Seasonal Index of JM Income 42

6 JM Income fund’s Sector Allocation 44

7 Seasonal Index of JM Equity 47

8 JM Equity fund’s Sector Allocation 49

CHAPTER 1
INTRODUCTION
8
MUTUAL FUND:
A mutual fund is a trust that pools the savings of a number of investors who share a

common financial goal. The money thus collected is then invested in capital market

instruments such as shares, debentures and other securities. The income earned through these

investments and the capital appreciation realized is share by its unit holders in proportion to

the number of units owned by them. Thus a mutual fund is the most suitable investment for

the common man as it offers an opportunity to invest in a diversified, professionally managed

basket of securities at a relatively low cost. The flow chart below describes broadly the

working of a mutual fund.

The working of the mutual fund is that the investors make their investment to trust

which consist of people who have specialized knowledge in the field of mutual fund, who in

turn invest in money market with great caution so as to enable their investor make great profit

and for this service they charge certain commission.

CHAPTER 2
INDUSTRY PROFILE

9
MUTUAL FUNDS INDUSTRY IN INDIA

The origin of mutual fund industry in India is with the introduction of the concept of

mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from

the year 1987 when non-UTI players entered the industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement,

both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an

ending phase; the assets under management (AUM) were Rs. 67bn. The private sector entry

to the fund family raised the AUM to Rs. 470bn in the march 1993 and till April 2004; it

reached the height of 1,540 bn.

Putting the AUM of the Indian mutual funds industry into comparison, the total of it

is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by

the Indian banking industry.

The main reason of its poor growth is that the mutual fund industry in India is new in

the country. Large sections of Indian investors are yet to be intellectuated with the concept.

Hence, it is the prime responsibility of all mutual fund companies, to market the product

correctly abreast of selling.

The mutual fund industry can be broadly put into four phases according to the

development of the sector. Each phase is briefly described as under

FIRST PHASE - 1964-87

10
 Unit 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 cores of assets under management.

SECOND PHASE – 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS)

Entry of non – UTI mutual funds. SBI mutual fund was the first followed by Can

Bank 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

in 1989 and GIC in 1990. The end of 1993 marked Rs. 47,004 as assets under management.

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 come 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

11
acquisitions. As the end of January 2003, there were 33 mutual funds with total assets of

Rs. 1, 21,805 cores. The unit trust of India with Rs. 44,541 cores of assets under management

was way ahead of other mutual funds.

FOURTH PHASE – SINCE FEBRUARY 2003

This phase had better experience for UTI. It was bifurcated into two separate entities.

One is the specified Undertaking of the Unit Trust of India with AUM of Rs. 29,835 cores (as

on January 2003). 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 preview 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 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 cores of AUM 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 cores under 421 schemes.

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ROLE OF SEBI IN MUTUAL FUND HISTORY

Unit Trust of India was the first mutual fund set up in India in the year 1963. In early

1990’s government allowed public sector bank and institutions to set up mutual funds.

In the year 1992, Securities and Exchange Board of India (SEBI) Act was passed. The

objective of SEBI is to protect the interest of investors in securities and to promote the

development and to regulate the securities market.

As far as mutual funds are concerned, SEBI formulates policies and regulate the

mutual funds to protect the interest of the investors. SEBI notified regulation for the mutual

funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to

enter to the capital market. The regulation were fully revised in 1996 and have been

amended thereafter form time to time. SEBI has also issued guidelines to the mutual funds

from time to protect the interest of the investors.

All mutual funds whether promote by public sector or private sector entities including

those promoted by foreign entities are governed by the same ser of regulations. There is no

distinction in regulatory requirements for these mutual funds and all are subject to monitoring

and inspections by SEBI. The risk associated with the schemes launched by the mutual funds

sponsored by these entities is of similar type. It may be mentioned here that Unit Trust of

India (UTI) is not registered with SEBI as a mutual fund (as on January 15, 2002).

CHAPTER 3
13
 COMPANY PROFILE

MOTILAL OSWAL SECURITIES LTD. (MOSL) was founded in 1987 as a small sub-
broking unit, with just two people running the show. Focus on customer-first-attitude, ethical
and transparent business practices, respect for professionalism, research-based value
investing and implementation of cutting-edge technology has enabled them to blossom into
an almost 2000 member team.
Today it is a well diversified financial services firm offering a range of financial
products and services such as Wealth Management , Broking & Distribution , Commodity
Broking, Portfolio Management Services , Institutional Equities, Private Equity , Investment
Banking Services and Principal Strategies.
It has a diversified client base that includes retail customers (including High Net
worth Individuals), mutual funds , foreign institutional investors, financial institutions and
corporate clients. They are headquartered in Mumbai and as of March 31st, 2010, had a
network spread over 584 cities and towns comprising 1,397 Business Locations. As at March
31st, 2010, they had 6, 21,215 registered customers

It is a leading research and advisory based stock broking house of India, with a

dominant position in both institutional equities and wealth management. Their services

include equities, derivatives, e-broking, portfolio management, mutual funds, commodities,

IPO’s and depository services.

In March 2006, AQ Research, a firm that analyses the accuracy of a broker’s research

call, declared Motilal Oswal Securities the best research house for Indian stocks.

Research is the solid foundation on which Motilal Oswal Securities advice is based.

Almost 10% of revenue is invested on equity research and they hire and train the best

resources to become advisors. At present they have 25 equity analysts researching over 26

14
sectors. From a fundamental, technical and derivatives research perspective Motilal Oswal's

research reports have received wide coverage in the media (over a 1000 mention).

The retail business unit provides equity investment solutions to more than 2, 00,000

investors through 1200 Business locations spanning over 377 cities. These solutions are

provided by a force of over 2000 employees and over 808 Business Associates. They provide

advice-based broking (equities and derivatives), portfolio management services (PMS), e-

Broking, depository services, commodities trading, IPO and mutual fund investment advisory

services.

The organization finds its strength in its team of young, talented and confident

individuals. Qualified professionals carry out different functions under the able leadership of

its promoters, Mr. Motilal Oswal and Mr. Raamdeo Agrawal. Stringent employee selection

process, focus on continuous training and adoption of best management practices drive the

quest to achieve their Core Purpose and Values.

LIST OF MUTUAL FUNDS THAT MOTILAL OSWAL SECURITIES Ltd DEAL

WITH:

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ABN AMRO Mutual fund
Alliance Capital Mutual Fund
Benchmark Mutual Fund
Birla Sun Life Mutual Fund
BOB Mutual Fund
Can Bank Mutual Fund
Chola Mutual Fund
Deutsche Mutual Fund
DSP Merrill Lynch Mutual Fund
Escorts Mutual Fund
Fidelity Mutual Fund
Franklin Templeton Mutual Fund
GIC Mutual Fund
HSBC Mutual Fund
HDFC Mutual Fund
ING Vysya Mutual Fund
JM Financial Mutual
Fund
Kotak Mahindra Mutual
Fund
LIC Mutual Fund
Morgan Stanley Mutual
Fund
PRINCIPAL Mutual Fund
Prudential ICICI Mutual
Fund
Reliance Mutual Fund
Sahara Mutual Fund
SBI Mutual Fund
Standard Chartered Mutual
Fund
Sundaram Mutual Fund
Tata Mutual Fund
Taurus Mutual Fund
UTI Mutual Fund
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JM FINANCIAL MUTUAL FUND-A PROFILE

HISTORY

JM Financial mutual Fund is one of India’s first private sector mutual funds-an

integral part of the first wave commenced operation in 1933-94. Today, thee are among the

top ten mutual funds in the country, ranked by assets managed, and enjoy a superior

performance record. They are one of the many successful companies that have emerged out

of JM Group’s strong foundation in financial service.

JM Group’s origins can be traced back to the 1950s when the Company family began

to get involved in India’s then nascent capital markets. On September 15,1973, J.M. Financial

and Investment Consultancy Service were Jointly founded by Nimesh N.Kampani,

Naveenchandra Company and Mahendra Company. Under the leadership of Chairman

Nimesh.N Company the JM group has played a stellar and multi-faceted role in the

development of India’s capital markets. Apart from helping companies raise finance, JM has

also been instrumental in educating a burgeoning and prospering middle class about the

advantages of investing in blue chip companies. In 1999, they commenced a joint venture

with Morgan Stanley Dean Witter, that today spans investment banking, broking, fixed

income and retail distribution. Today, JM Financial Mutual Fund offers a bouquet of funds

that caters to the diverse needs of both its institutional and individual investors.

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VISION

To manage risk effectively while generating top quartile returns across all product

categories. Believes that to cultivate investor loyalty, they must provide a safe haven for their

investments.

Focuses on helping their investors realize their investment goals through prudent

advice, judicious fund management, impeccable research, and strong system of managing risk

scientifically.

Genuinely strives to be their investors’ friend in the new world of risk.

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 CHAPTER 4
THEORITICAL FRAMEWORK

What Is Mutual Fund?

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

ADVANTAGES OF MUTUAL FUNDS

The advantages of investing in a Mutual Fund are:

 Diversification: The best mutual funds design their portfolios so individual

investments will react differently to the same economic conditions. For example,

economic conditions like a rise in interest rates may cause certain securities in a

diversified portfolio to decrease in value. Other securities in the portfolio will

respond to the same economic conditions by increasing in value. When a portfolio is

balanced in this way, the value of the overall portfolio should gradually increase over

time, even if some securities lose value.

 Professional Management: Most mutual founds pay topflight professionals to

manage their investments. These managers decide what securities the fund will buy

and sell.

19
 Regulatory oversight: Mutual funds are subject to many government regulations

that protect investors from fraud.

 Liquidity: It’s easy to get your money out of a mutual fund. Write a check, make a

call, and you’ve got the cash.

 Convenience: You can usually buy mutual fund shares by mail, phone, or over the

Internet.

 Low cost: Mutual fund expenses are often no more than 1.5 percent of your

investment. Expenses for Index Funds are less than that, because index funds are not

actively managed. Instead, they automatically buy stock in companies that are listed

on a specific index.

 Transparency

 Flexibility

 Choice of schemes

 Tax benefits

 Well regulated

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DRAWBACKS OF MUTUAL FUNDS

Mutual funds have their drawbacks and may not be for everyone:

No Guarantees: No investment is risk free. If the entire stock market declines in value, the

value of mutual fund shares will go down as well, no matter how balanced the portfolio.

Investors encounter fewer risks when they invest in mutual funds than when they buy and sell

stocks on their own. However, anyone who invests through a mutual fund runs the risk of

losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-day

expenses. Some funds also charge sales commissions or “loads” to compensate brokers,

financial consultants, or financial planners. Even if you don’t use a broker or other financial

adviser, you will pay a sales commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to

70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you

will pay taxes on the income you receive, even if you reinvest the money you made.

Management risk: When you invest in a mutual fund, you depend on the fund’s manager to

make the right decisions regarding the fund’s portfolio. If the manager does not perform as

well as you had hoped, you might not make as much money on your investment as you

expected. Of course, if you invest in Index Funds, you forego management risk, because

these funds do not employ managers.

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 TYPES OF MUTUAL FUND:

I. SCHEMES ACCORDING TO MATURITY PERIOD

A mutual fund scheme can be classified into open-ended scheme of close-ended

scheme depending on its maturity period.

OPEN-ENDED FUND/SCHEME

An open-ended fund or scheme is one that is available for subscription and repurchase

on a continuous basis. These schemes do not have a fixed maturity period. Investors can

conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared

on a daily basis. The key feature of open-end schemes is liquidity.

CLOSE-ENDED FUND/SCHEME

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The

fund is open for subscription only during a specified period at the time of launch of the

scheme. Investors can can invest in the scheme at the time of the initial public issue and

thereafter they can buy or sell the units of the scheme on the stock exchanges where the units

are listed. In order to provide an exit route to the investors, some close-ended funds give an

option of selling back the units to the mutual fund through periodic repurchase at NAV

related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided

to the investor i.e. either repurchase facility or through listing on stock exchanges. These

mutual fund schemes disclose NAV generally on weekly basis.

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II. SCHEMES ACCORDING TO INVESTMENT OBJECTIVE

A scheme can also be classified as growth scheme, income scheme, or balanced

scheme considering its investment objective. Such schemes may be open-ended or close-

ended schemes as described earlier. Such schemes may be classified mainly as follows.

GROWTH/EQUITY ORIENTED SCHEME

The aim of growth funds is to provide capital appreciation over the medium to long

term. Such schemes normally invest a major part of their corpus in equities. Such funds

have comparatively high risks. These schemes provide different options to the investors like

dividend option, capital appreciation, etc. and the investors may choose an option depending

on their preferences. The investors must indicate the option in the application form. The

mutual funds also allow the investors to change the options at a later date. Growth schemes

are good for investors having a long-term outlook seeking appreciation over a period of time.

INCOME/DEBT ORIENTED SCHEME

The aim of income funds is to provide regular and steady income to investors. Such

schemes generally invest in fixed income securities such as bonds, corporate debentures,

Government securities and money market instruments. Such funds; are less risky compared

to equity schemes. These funds are not affected because of fluctuations in equity markets.

However, opportunities of capital appreciation are also limited in such funds. The NAVs of

such funds are likely to increase in the short run and vice versa. However, long term

investors may not bother about these fluctuations.

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BALANCED FUND

The aim of balanced funds is to provide both growth and regular income as such

schemes invest both in equities and fixed; income securities in the proportion indicated in

their offer documents. These are appropriate for investors looking for moderate growth.

They generally invest 40-60% in equity and debt instruments. These funds are also affected

because of fluctuations in share prices in the stock markets. However, NAVs of such funds

are likely to be less volatile compared to pure equity funds.

MONEY MARKET OR LIQUID FUND

These funds are also income funds and their aim is to provide easy liquidity,

preservation of capital and moderate income. These schemes invest exclusively in safer

short-term instruments such as treasury bills, certificates of deposit, commercial paper and

inter-bank call money, government securities, etc. Returns on these schemes fluctuate much

less compared to other funds. These funds are appropriate for corporate and individual

investors as a means to park their surplus funds for short periods.

GILT FUND

These funds invest exclusively in government securities. Government securities have

no default risk. NAVs of these schemes also fluctuate due to change in interest rates and

other economic factors as is the case with income or debt oriented schemes.

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INDEX FUNDS

Index Funds replicate the portfolio of a particular index such as the BSE Sensitive

index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same

weight age comprising of an index. NAVs of such schemes would rise or fall in accordance

with the rise or fall in the index, though not exactly by the same percentage due to some

factors known as “tracking error” in technical terms. Necessary disclosures in this regard are

made in the offer document of the mutual fund scheme.

There are also exchange traded index funds launched by the mutual funds which are traded

on the stock exchanges.

SECTOR SPECIFIC FUND/SCHEME

These are the funds/schemes which invest in the securities of only those sectors or

industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving

Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent

on the performance of the respective sectors/industries. While these founds may give higher

returns, they are more risky compared to diversified funds. Investors need to keep a watch on

the performance of those sectors/industries and must exit at an appropriate time. They may

also seek advice of an expert.

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TAX SAVINGS SCHEMES

These schemes offer tax rebates to the investors under specific provisions of the

Income Tax Act, 1961 as the Government offers tax incentives for investment in specified

avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the

mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-

dominantly in equities. Their growth opportunities and risks associated and are like any

equity oriented scheme.

FUND OF FUNDS (FoF) SCHEME

A scheme that invests primarily in other schemes of the same mutual fund or other

mutual funds is known as a FoF scheme. An FoF scheme enables the investors to achieve

greater universe.

LOAD OR NO – LOAD FUND

A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each

time one buys or sells units in the fund, a charge will be payable. This charge is used by the

mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If

the entry as well as exit load charged is 1%, then the investors who buy would be required to

pay Rs.10.10 and those who offer their units for repurchase to the mutual fund will get only

Rs.9.90 per unit. The investors should take the loads into consideration while making

investment as these affect their yields/returns. However, the investors should also consider

the performance track record and service standards of the mutual fund which are more

important.

26
A no-load fund is one that does not charge for entry or exit. It means the investors can enter

the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.

ENTRY LOAD AND EXIT LOAD

The Entry load is the premium charged on the NAV on entry in the scheme.The Exit

load is the discount charged on NAV on exit from the scheme.

The impact of the loads on the re-issue price & re-purchase price is calculated as

under,

Sales Purchase = Applicable NAV x (1 + Sales Charge)

Re-Purchase Price = Applicable NAV x (1 + exit load)

SALES OR RE – PURCHASE/REDEMPTION PRICE

The price or NAV a unit holder is charged while investing in an open-ended scheme

is called sales price. It may include sales load, if applicable. Re-Purchase or Redemption

price is the price or NAV at which an open – ended scheme purchases or redeems its units

from the unit holders. It may include exit load, if applicable.

Who can invest in Mutual Funds

 Residents

 Resident Individuals / HUF

 Indian companies

 Partnership Firms

 Indian Trusts / Charitable Institutions

 Insurance Companies

 Banks

27
Non Residents

 NRI’s & Persons of Indian Origin

 Overseas Corporate Bodies (OCBs)

Foreign Entities

 FII’s registered with SEBI

 Foreign citizens / entities cannot invest in MF

Mutual Funds incur the following expenses in carrying out its Operations

 Investment Management fee to the AMC

 Custodian’s fee

 Trustees fee

 R&T Agent’s fee

 Marketing & distribution expenses

 Brokerage and transaction costs

 Audit Fee, Legal fee.

 Costs related to funds transfer

 Costs related to investor communication

 Cost of warrants etc

 Costs of mandatory providing account statements and cheques/ advertising and

communication

28
Expenses that cannot be charged

 Penalties and fines for infraction of laws.

 Interest on delayed payments to unit holders.

 Legal, marketing and publication expenses not attributable to any scheme.

 Expenses on investment and general management.

 Expenses on general administration, corporate advertising and infrastructure costs.

 Expenses on fixed assets and software development expenses.

 Such other costs as may be prohibited by SEBI.

Sources of Income

 Interest

 Dividend

 Profit from sale of investments

 Other income

 Extra-ordinary income

29
MUTUAL FUNDS – TERMS:

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme minus its liabilities.

The per unit NAV is the net asset value of the scheme divided by the number of units

outstanding on the Valuation Date.

Sale Price

It is the price paid when one invest in a scheme. Also called Offer Price. It may

include a sales load.

Repurchase Price

It is the price at which a close-ended scheme repurchases its units and it may include a

back-end load. This is also called Bid Price.

Redemption Price

It is the price at which open-ended schemes repurchase their units and close ended

schemes redeem their units on maturity. Such prices are NAV related.

Sales Load

It is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’

load. Schemes that do not charge a load are called ‘No Load’ schemes.

Repurchase or ‘Back-End’ Load

It is a charge collected by a scheme when it buys back the units from the unit holders.

30
DISTRIBUTION OF INCOME EARMED FROM MUTUAL FUND INVESTMENTS

The income earned by the investment of the scheme, net of recurring expenses,

subject to a maximum ceiling of 2.5% in equity schemes and 2.25%in debt schemes, is shared

by way of dividends or capital gains by the unit holder of the scheme proportionately.

Capital Gain: Capital gain is the profit which you earn if you sell the units at a high NAV

than the original cost. Units held for more than 12 month and sold thereafter will attract

Long Term Capital Gains while units that are held for less than 12 month will attract Short

Term Capital Gains tax.

Dividend: When a fund makes a profit on its investment, this profit may be in form of

dividends. You can either invest your dividend in the fund or receive it in the form of cash.

But Mutual Funds only invest in stock markets. And it does not want to be exposed to the

volatility of the stock markets.

NET ASSET VALUE (NAV) OF A SCHEME

In simple words, Net Asset Value is the market value of the securities held by the

scheme. Since market value is the market value of securities changes every day, NAV of a

scheme also varies on day to day basis. The NAV per unit is the market value of securities of

a scheme divided by the total number of units of the scheme on any particular date. For

example, if the market value of securities of a mutual fund scheme is Rs.200 lakhs and the

mutual fund has issued 10lakhs units of Rs. 10 each to the investors, then the NAV per unit of

the fund is Rs. 20. NAV is required to be disclosed by the mutual fund on a regular basis –

daily or weekly – depending on the type of scheme.

31
 CHAPTER 5

OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVE:

• To evaluate the performance of Mutual Fund Schemes of JM financial Mutual

Fund.

SECONDARY OBJECTIVE:

• To analyze the various fund’s Sector Allocation.

• To compare the Performance of JM Mutual Fund with the Performance of

Reliance and SBI mutual funds.

• To help the company to know the performance of JM Mutual Fund and make
necessary suggestions.

32
 CHAPTER 6

RESEARCH METHODOLOGY

6.1 NEED FOR THE STUDY

The project study was done to ascertain the Sector allocation, Funds Objective and
Features associated with the mutual funds. This research enables the company to review the
performance of JM Mutual Fund by analyzing the NAV for 5yrs. Ultimately this would help
in understanding the pros and cons of mutual funds to investors and General Public.

6.2 SCOPE OF THE STUDY

• In this project the scope is limited to one mutual fund in the mutual fund industry.

• Analysis of the fund is depending on their schemes like equity, income, basic and
balance. But there are so many other schemes in mutual fund industry like specialized
(banking, infrastructure, pharmacy) funds, index funds, etc.

• In this project 4 schemes of JM Mutual Fund are analyzed for over 5 years from 1 st
April 2005 to 31st March 2010.

• The performance of JM Balanced Fund is compared with the performance of

Reliance Balanced Fund and SBI Balanced Fund.

33
 6.3 TYPE OF RESEARCH

Research Design:

Research Design is a blueprint or framework for conducting the marketing research project. It
specifies the details of the procedures necessary for obtaining the information needed to
structure and solve marketing research problems. The research design used in this study is
Analytical Research.

Analytical Research: It is that type of research, where the researcher uses the facts or
information which is already available and makes a critical evaluation of the material.

6.4 TOOLS FOR DATA COLLECTION

Data Collection and Analysis: Data can be collected in two ways:

Primary data : Primary data are those, which are collected a fresh and for the first time, and

thus happen to be original in character.

Secondary data: Secondary data are those which have already been collected by someone else

and which have already been passed through the statistical process. Secondary data either be

published data or unpublished data.

34
Source of data: Source of this research is secondary data. The secondary data is collected

from the internet, magazines, journals and news papers.

6.5 STATISTICAL TOOLS

Tools of Analysis: The result of the analysis has been presented with the help of

percentages, ratios, graphs and charts.

1) THE SHARPE MEASURE

In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is a
ratio of returns generated by the fund over and above risk free rate of return and the total risk
associated with it. According to Sharpe, it is the total risk of the fund that the investors are
concerned about. So, the model evaluates funds on the basis of reward per unit of total risk.

Sharpe Index S.I. = (Ri - Rf)/S.D.

Where, S.D. is standard deviation of the fund.

While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund,
a low and negative Sharpe Ratio is an indication of unfavorable performance.

2) THE TREYNOR MEASURE

Developed by Jack Treynor, this performance measure evaluates funds on the basis of
Treynor's Index. This Index is a ratio of return generated by the fund over and above risk free
rate of return (generally taken to be the return on securities backed by the government, as

35
there is no credit risk associated), during a given period and systematic risk associated with it
(beta).

Treynor's Index T.I. = (Ri - Rf)/β

Where, Ri represents return on fund, Rf is risk free rate of return and β is beta of the fund.

All risk-averse investors would like to maximize this value. 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.

3) SEASONAL INDEX

General Average = (QA1 + QA2 + QA3 + QA4) / 4

Seasonal Index = (Quarterly Average /General Average) *100

36
 6.6 LIMITATIONS OF THE STUDY

 This analysis is based on historical data and hence past performance may not always
be the indicative of future performance.

 The time constraint was one of the major problems, a larger period could have
ensured coverage of a full market cycle; thus giving a more real picture of the
performance of the scheme.

 The study is limited to the different schemes available under one mutual fund
selected.

37
 CHAPTER 7

ANALYSIS AND INTERPRETATION

JM BALANCED

Fund Objective:

The scheme aims at steady current income as well as long term growth of capital from
a balanced portfolio of debt and equity.

Fund Features:
Scheme Particulars
Type Open Ended
Nature Equity & Debt (Equity: 72.19%, Debt: 19.13%, Cash: 8.68%)
Option Growth
Inception Date Apr 1, 1995
Face Value 10
Fund Size (Rs.Crore) 19.86 as on Apr 30, 2010
Fund Manager Sanjay Kumar Chhabaria .
SIP NA
STP NA
Expense ratio(%) 2.5
Portfolio Turnover Ratio(%) 1.9

38
Last Divdend Declared 40
Minimum Investment (Rs) 1000
Purchase Redemptions Daily
NAV Calculation Daily
Entry Load Entry Load is 0%.
Exit Load If redeemed bet. 0 Days to 365 Days; Exit load is 1%.

Table no. 1 SEASONAL INDEX OF JM BALANCE

1st 2nd 3rd 4th General

Year
Quarter Quarter Quarter Quarter Average

2005-2006 13.04 14.52 15.61 18.29 15.365

2006-2007 19.84 19.57 22.26 22.92 21.1475

2007-2008 23.74 27.54 31.62 28.49 27.8475

2008-2009 24.25 20.95 14.31 13.02 18.1325

2009-2010 17.89 20.29 21.17 21.02 20.0925

Total 98.76 102.87 104.97 103.74

Quarterly Average 19.752 20.574 20.994 20.748

SEASONAL
128.5519037 97.28809552 75.38917318 103.2624113
INDEX

INTERPRETATION:

The NAV of this scheme from 1st April 2005 to March 31st 2010 on Quarterly basis is
taken for analysis. The NAV which is calculated for every Quarter implies that is 129%
increase in the 1st quarter compared to other quarters.
39
Chart no. 1 SEASONAL INDEX OF JM BALANCE

40
TOP INDUSTRY ALLOCATION OF JM BALANCE May 28th, 2010

Table no. 2 JM BALANCE FUND’S SECTOR ALLOCATION (%)

SECTOR FUNDS
Auto & Auto Ancillaries 10.77

Banks 29.18

Construction and Infrastructure 8.73

Current Assets 8.68

Fertilizers, Pesticides & Agrochemicals 8.57

FMCG 2.68

Miscellaneous 4.07

Non Ferrous metals 5.42

Petroleum, Gas and petrochemical products 8.54

Telecom Services 4.06

Utilities - Gas, Power 9.3

INTERPRETATION:

Major part of the investment has been made in Banks, Auto & Auto Ancillaries ,
Construction and Infrastructure and Utilities - Gas, Power which constitute nearly 60% of
the total investment and the remaining 40% has been made in Current Assets, Fertilizers,
Pesticides & Agrochemical, FMCG, Miscellaneous, Non Ferrous metals, Petroleum, Gas and
petrochemical products and Telecom Services. The performance of the scheme mainly
depends on the sector of the Investment of the Mutual Fund.

41
Chart no. 2 JM BALANCE FUND’S SECTOR ALLOCATION (%)

42
 JM BASIC

Fund Objective:

The scheme aims to invest in energy and petrochemical sector. It shall have the mandate to
invest in Oil & Gas, Petrochemicals, Power Generation &Distribution, and Electrical
Equipment Suppliers

Fund Features
Scheme Particulars
Type Open Ended
Nature Equity (Equity: 96.51%, Debt: 0%, Cash: 3.49%)
Option Growth
Inception Date Jun 2, 1997
Face Value 10
Fund Size (Rs.Crore) 476.11 as on May 31, 2010
Fund Manager Asit Bhandarkar.
SIP NA
STP NA
Expense ratio (%) 2.23
Portfolio Turnover Ratio (%) 1.54
Last Divdend Declared 10
Minimum Investment (Rs) 5000
Purchase Redemptions Daily
NAV Calculation Daily
Entry Load Entry Load is 0%.
Exit Load If redeemed bet. 0 Days to 365 Days; Exit load is 1%.

Table no. 3 SEASONAL INDEX OF JM BASIC

43
 General
1st 2nd 3rd 4th
Year Average
Quarter Quarter Quarter Quarter
Total

2005-2006 10.52 11.1 12.25 14.96 12.2075

2006-2007 15.76 15.02 17.68 19.2 16.915

2007-2008 21.49 27.07 34.25 31.52 28.5825

2008-2009 26.12 21.05 10.33 8.2 16.425

2009-2010 13.53 16.77 18.07 18.11 16.62

Total 87.42 91.01 92.58 91.99

Quarterly Average 17.484 18.202 18.516 18.398

SEASONAL INDEX 143.223 107.609 64.7808974 110.698

INTERPRETATION:

The NAV of this scheme from 1st April 2005 to March 31st 2010 on Quarterly basis is
taken for analysis. The NAV which is calculated for every Quarter implies that is 143%
increase in the 1st quarter compared to other quarters.

44
Chart no.3 SEASONAL INDEX OF JM BASIC

45
TOP INDUSTRY ALLOCATION OF JM BASIC May 28th, 2010

Table no. 4 JM BASIC FUND’S SECTOR ALLOCATION (%)

Sector Funds

Construction and Infrastructure 8.65

Construction materials 4.04

Current Assets 3.49

Engineering and Capital Goods 17.50

Fertilizers, Pesticides & Agrochemicals 2.75

Miscellaneous 7.47

Petroleum, Gas and petrochemical products 5.32

Power & Control equipment Manufacturer 11.99

Power Generation 7.54

Power Transmission 12.23

Steel and Ferrous Metal 4.57

Transportation, Supply Chain and Logistics Services 5.05

Utilities - Gas, Power 9.43

INTERPRETATION:

Major part of the investment has been made in Engineering and Capital Goods, Power
& Control equipment Manufacturer, Power Transmission The performance of the scheme
mainly depends on the sector of the Investment of the Mutual Fund.

46
Chart no. 4 JM BASIC FUND’S SECTOR ALLOCATION (%)

47
 JM INCOME

Fund Objective:

To generate regular income, primarily through investments in fi xed income securities so as

to make monthly, quarterly and annual dividend distribution, declare bonus in the growth
option. The Fund would also aim to achieve capital appreciation through investing a portion
of its assets in equity and equity related securities.

Fund Features

Scheme Particulars

Type Open Ended

Nature Debt (Equity: 0%, Debt: 21.55%, Cash: 78.45%)

Option Growth

Inception Date 1-Apr-95

Face Value 10

Fund Size (Rs.Crore) 13.17 as on May 31, 2010

Fund Manager Girish Hisaria, Shalini Tibrewala .

SIP NA

STP NA

Expense ratio(%) 2.25

Portfolio Turnover Ratio(%) NA

Last Divdend Declared NA

Minimum Investment (Rs) 5000

Purchase Redemptions Daily

NAV Calculation Daily

Entry Load Entry Load is 0%.

Exit Load Exit Load is 0%.

48
Table no. 5 SEASONAL INDEX OF JM INCOME

1st 2nd 3rd 4th General

Year
Quarter Quarter Quarter Quarter Average

2005-2006 27.11 27.36 27.66 27.71 27.46

2006-2007 27.86 28.04 28.4 28.63 28.2325

2007-2008 28.94 29.2 29.81 31.04 29.7475

2008-2009 28.36 28.58 29.03 29.12 28.7725

2009-2010 28.35 28.05 27.95 28.12 28.1175

TOTAL 140.62 141.23 142.85 144.62

Quarterly Average 28.124 28.246 28.57 28.924

SEASONAL INDEX 102.4180626 100.048 96.0417 102.868

INTERPRETATION:

The NAV of this scheme from 1st April 2005 to March 31st 2010 on Quarterly basis is
taken for analysis. The NAV which is calculated for every Quarter implies that is 102%
increase in both the 1st quarter and the 4th quarter compared to other quarters.

49
Chart no. 5 SEASONAL INDEX OF JM INCOME

50
TOP INDUSTRY ALLOCATION OF JM INCOME May 28th, 2010

Table no.6 JM INCOME FUND’S SECTOR ALLOCATION (%)

Sector Funds

Banks 38.89

Current Assets 49.96

NBFC 11.15

INTERPRETATION:

Major part of the investment has been made in Current assets and banks which
constitute nearly 90% of the total investment and the remaining 10% has been made in
NBFC. The performance of the scheme mainly depends on the sector of the Investment of the
Mutual Fund.

51
Chart no.6 JM INCOME FUND’S SECTOR ALLOCATION (%)

JM EQUITY

52
Fund Objective:

To provide optimum capital growth and appreciation.

Fund Features:

Scheme Particulars

Type Open Ended

Nature Equity (Equity: 83.83%, Debt: 0%, Cash: 16.17%)

Option Growth

Inception Date 1-Apr-95

Face Value 10

Fund Size (Rs.Crore) 40.44 as on May 31, 2010

Fund Manager Sanjay Kumar Chhabaria .

SIP NA

STP NA

Expense ratio(%) 2.5

Portfolio Turnover Ratio(%) 0.88

Last Divdend Declared NA

Minimum Investment (Rs) 5000

Purchase Redemptions Daily

NAV Calculation Daily

Entry Load Entry Load is 0%.

Exit Load If redeemed bet. 0 Days to 365 Days; Exit load is 1%

Table no. 7 SEASONAL INDEX OF JM EQUITY

53
 1st 2nd 3rd 4th General
Year
Quarter Quarter Quarter Quarter Average

2005-2006 19.38 23.59 25.41 29.61 24.4975

2006-2007 31.6 31.82 37.17 36.73 34.33

2007-2008 36.74 43.43 52.83 46.77 44.9425

2008-2009 40.34 33.41 21.9 19.17 28.705

2009-2010 27.49 33.13 35.28 34.58 32.62

TOTAL 155.55 165.38 172.59 166.86

Quarterly
31.11 33.076 34.518 33.372
Average

SEASONAL
126.993 96.3472 76.8048 102.305
INDEX

INTERPRETATION:

The NAV of this scheme from 1st April 2005 to March 31st 2010 on Quarterly basis is
taken for analysis. The NAV which is calculated for every Quarter implies that is 127%
increase in the 1st quarter and decreased in next two quarters.

Chart no.7 SEASONAL INDEX OF JM EQUITY

54
TOP INDUSTRY ALLOCATION OF JM EQUITY May 28th, 2010

Table no. 8 JM EQUITY FUND’S SECTOR ALLOCATION (%)

55
 Sector Funds

Auto & Auto Ancillaries 5.44

Banks 5.84

Construction and Infrastructure 14.98

Construction materials 3.47

Current Assets 16.17

Engineering and Capital Goods 6.74

FMCG 4.9

Miscellaneous 4.93

Non Ferrous metals 2.81

Petroleum, Gas and petrochemical products 9.4

Power & Control equipment Manufacturer 5.24

Software and Consultancy Services 6.05

Telecom Services 5.35

Utilities - Gas, Power 8.69

INTERPRETATION:

Major part of the investment has been made in Construction and Infrastructure, Current
Assets.The performance of the scheme mainly depends on the sector of the Investment of the
Mutual Fund.

56
Chart no. 8 JM EQUITY FUND’S SECTOR ALLOCATION (%)

57
 COMPARISONS WITHIN JM FUNDS

SHARPE INDEX:

S.I. = (Ri - Rf)/S.D.

Ri represents return on fund, Rf is risk free rate of return, S.D. is standard deviation of the
fund.

Table no.9 Sharpe Index of JM Balance, Basic, Income and Equity

Schemes Ri Rf S.D. S.I. RANK

Balance 9.18 10.03 4.73 -0.18 II.

Basic 13.05 14.61 7.81 -0.2 III.

Income 7.18 7.38 0.48 -0.42 IV.

Equity 8.54 9.47 6.19 -0.15 I.

INTERPRETATION:

Sharpe index of Balance, Basic, Income and Equity funds are -0.18, -0.2, -0.42 and -0.15
respectively.

As per the Sharpe Ratio, among the 4 schemes of JM mutual fund, JM Equity ranks 1st while
Balance, Basic and Income ranks 2nd, 3rd and 4th respectively.

58
TREYNOR'S INDEX:

T.I. = (Ri - Rf)/β

Where, Ri represents return on fund, Rf is risk free rate of return and β is beta of the fund.

Table no.10 Treynor’s Index of JM Balance, Basic, Income and Equity

Schemes Ri Rf β T.I. RANK

Balance 9.18 10.03 1.14 -0.76 IV.

Basic 13.05 14.61 1.25 -1.26 III.

Income 7.18 7.38 3.21 -0.06 I.

Equity 8.54 9.47 1.03 -0.15 II.

INTERPRETATION:

Treynor’s index of Balance, Basic, Income and Equity funds are -0.76, -1.26, -0.06 and
-0.15 respectively.

As per the Treynor’s Ratio, among the 4 schemes of JM mutual fund, JM Income ranks 1st
whereas Equity, Basic and Balance ranks 2nd, 3rd and 4th respectively.

59
 SBI vs. RELIANCE vs. JM MUTUAL FUND

SHARPE INDEX:

Table no.11 Sharpe Index of SBI, Reliance and JM Mutual Funds

Mutual Ri Rf S.D. S.I. RANK

Funds

SBI 15.15 15.32 4.35 -0.04 II.

Reliance 15.86 16.31 4.08 -0.11 I.

JM 9.18 10.03 4.73 -0.18 III.

INTERPRETATION:

Sharpe index of SBI, Reliance and JM mutual funds are -0.11, -0.04, -0.18 respectively.
Reliance Mutual Fund ranks 1st ,while SBI and JM Mutual Funds ranks 2nd and 3rd
respectively.

60
TREYNOR’S INDEX:

Table no.12 Treynor’s Index of SBI, Reliance and JM Mutual Funds

Mutual Ri Rf β T.I. RANK

Funds

SBI 15.15 15.32 1.08 -0.42 II.

Reliance 15.86 16.31 1.05 -0.16 I.

JM 9.18 10.03 1.14 -0.76 III.

INTERPRETATION:

Treynor index of SBI, Reliance and JM mutual funds are -0.42, -0.16, -0.76 respectively.

Reliance Mutual Fund shows a better performance with rank 1 in comparison with SBI and
JM Mutual Fund.

61
 CHAPTER 8

FINDINGS

1) From the evaluation done in the previous chapter we can conclude that even though the

overall % of the seasonal index is 400, there is decrease in % of NAV at the end of 3rd

Quarter when comparing 5 years date i.e. from April 1st 2005 to March 31st 2010.

SEASONAL INDEX OF THE SCHEMES

QUARTER JM BALANCE JM BASIC JM INCOME JM EQUITY

1ST 128.5519037 143.223 102.4180626 126.993

2ND 97.28809552 107.609 100.048 96.3472

3RD 75.38917318 64.7808974 96.0417 76.8048

4TH 103.2624113 110.698 102.868 102.305

TOTAL 404.4915837 426.3108974 401.3757626 402.45

The above table shows that the four schemes which are selected for the analysis on quarterly

basis has earned a maximum return at the end of the 1ST Quarter and at the end of the 4th

Quarter.

62
2) According to the Mutual Fund Market, the 3rd year performance of the scheme shows the

positive result. When the overall performance of NAV of each scheme is compared for 5

years the result obtained is as follows,

NAV & PERFOMANCE

Fund 1st Year 2nd Year 3rd Year 4th Year 5th Year Total

JM
61.46 84.59 111.39 72.53 80.37 410.34
BALANCE

JM BASIC 48.83 67.66 114.33 65.7 66.48 363

JM
109.84 112.93 118.99 115.09 112.47 569.32
INCOME

JM EQUITY 97.99 137.32 179.77 114.82 130.48 660.38

3) The performance of the scheme mainly depends on the sector of Investment made by the
Mutual Fund scheme. JM Balance’s major part of the investment has been made in Banks,
Auto & Auto Ancillaries , Construction and Infrastructure and Utilities - Gas, Power which
constitute nearly 60% of the total investment and the remaining 40% has been made in
Current Assets, Fertilizers, Pesticides & Agrochemical, FMCG, Miscellaneous, Non Ferrous
metals, Petroleum, Gas and petrochemical products and Telecom Services. The performance
of the scheme mainly depends on the sector of the Investment of the Mutual Fund.

4) JM Basic’s maximum investment has been made in Engineering and Capital Goods, Power
& Control equipment Manufacturer, Power Transmission The performance of the scheme
mainly depends on the sector of the Investment of the Mutual Fund.

63
5) JM Income’s major investment has been made in Current assets and banks which
constitute nearly 90% of the total investment and the remaining 10% has been made in
NBFC. The performance of the scheme mainly depends on the sector of the Investment of the
Mutual Fund.

7) JM Equity’s maximum investment has been made in Construction and Infrastructure,

Current Assets. The performance of the scheme mainly depends on the sector of the
Investment of the Mutual Fund.

8) JM Equity showed a better performance with Sharpe Index of -0.15.

9) JM Income showed a better performance with Treynor’s Index of -0.06, when compared
to JM Equity, JM Balance and JMBasic

10) Reliance Mutual Fund performed better than SBI and JM Mutual Funds with Sharpe
Index of -0.11.

11) Reliance Mutual Fund performed better than SBI and JM Mutual Funds with Treynor’s
Index of -0.16.

64
 CHAPTER 9

SUGGESTIONS

1. As the Sharpe ratio of JM mutual fund shows a negative indication of unfavorable

performance of the mutual fund, the overall operation of mutual fund can be
improved.

2. Funds can be invested in profitable sectors as the performance of the scheme mainly
depends on the sector of Investment made by the Mutual Fund scheme.

3. Funds can be well diversified across the spectrum of exchange listed stocks and bonds
which will yield a guaranteed return in addition to being invested in money markets
and real estates.

4. Low minimum initial investments are more advantageous. This is suggested for
building asset bases over a long period with small regular investments.

5. Mutual funds draw good results despite market volatility. In that way, NAV gives you
a clear impact of high returns over 5 years.

6. By comparing Reliance, JM and SBI Mutual Funds, it is better to invest in Reliance

Mutual Fund.

65
 CHAPTER 10

CONCLUSION

Investing in JM financial Mutual Fund and its schemes may lead the investors to High
Risk, Lower Return. But JM must be credited with the appreciation, encouragement and
knowledge given to many small investors. The JM Financial Mutual Fund must grow more
and more as a groomed tree to provide shadows and to protect the investors of the society
and for the growth of the economy of the country.

BIBLIOGRAHY

66
BOOKS:
Kothari, C.R., Research Methodology, New Delhi, Vikas publishing
house private limited, 2003.

WEBSITES:
www.mutualfundindia.com
www.amfiindia.com
www.nseindia.com
www.moneycontrol.com

67