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tandard Deviation for the fund’ exce return ( .D.) σi=√ 5.254467
= 2.292262
hort Term Depo it a margin for Future & Option Ca h margin / Earmarked ca h
for Future & Option Other Ca h,Ca h Equivalent and Net Current A et Net A
et
Ta le:3.24 ectoral Allocation of A et (%) Bank Pharmaceutical Media & Entert
ainment Con umer Non Dura le Petroleum Product Indu trial Capital Good Teleco
m - ervice Auto Ancillarie Finance oftware Chemical Fertili er Ferrou Met
al Con truction Tran portation 16.37 10.39 8.48 7.94 7.72 6.60 5.30 5.30 3.42 3
.31 2.41 2.24 1.92 1.48 1.24
Oil Con truction Project Paper Product Indu trial Product Engineering Ca h,Ca
h Equivalent and Net Current A et TOTAL
1.12 0.85 0.85 0.21 0.18 12.67 100
Figure:3.8
Ta le:3.25 HDFC Growth Fund Date (NAV a at evaluation date 30-June-09, R . 57.2
19 Per unit) Period NAV Per Unit (R .) Return (%) ^ Benchmark Return (%) en e
x
Decem er 30, 2008 June 30, 2008 June 30, 2006 June 30, 2004 June 30, 1999 eptem
er 11, 2000
La t ix month (182 day ) La t 1 Year (365 day ) La t 3 Year (1096 day ) La t
5 Year (1826 day ) La t 10 Year (3653 day ) ince Inception (3214 day )
41.697 53.472 36.034 16.439 N.A 10
37.23 7.01 16.65 28.31 N.A. 21.91
49.17 7.67 10.95 24.74 13.34 13.65
Figrure:3.9
HDFC Growth Fund - Analy i
It require a lot of re earch and con tant watch on the capital market for a fun
d manager to analyze the portfolio of the particular fund. I took the econdary
data from the fund review of the article corner from The Bu ine Line we ite.
I comprehended the analy i and concluded my view a tated elow. HDFC Growth
Fund inve t in tock acro market capitali ation . De pite a large-cap ia ,
mid and mall cap tock account for 28 per cent of the portfolio. The fund ha
managed to con i tently eat it enchmark en ex over one-, three- and five-yea
r period . In the late t portfolio, the fund ha inve ted in a many a 52 tock
acro 18 different ector making it a fairly diver ified portfolio. Thi may
indicate net inflow into the fund. ector Move : There i a fair it of ta il
ity in term of top ector holding in the portfolio. Bank (16.39 per cent) and
pharmaceutical (10.37 per cent) ector continue to e the top two ector hold
ing , although expo ure have een a it reduced. Bank and con umer non-dura le
al o figure among top holding in the fund, and have een increa ed expo ure
over the eptem er-Fe ruary period. While capital good and ank have done well
in the pa t year, they have een among the wor t hit in the recent meltdown. Th
e re pective ector indice were eaten down y over 25 per cent in the la t cou
ple of month . Con truction and predicta ly, oftware expo ure have een pared
in the ix-month period. Intere tingly, media and entertainment (8.48 per cent),
which were not part of the portfolio ix month ago i now in the top ten ecto
r holding for the fund. The power ector ha een exited, while telecom ervice
and auto ancillarie expo ure have een increa ed u tantially. tock Move :
Mo t tock are tho e who e price have fallen during eptem er-Fe ruary, inclu
de tock uch a Zee Entertainment, HT Media and Dr Reddy La . The fund ha
al o taken profit ooking opportunitie , with everal tock who e price ro e
etween 60-105 per cent have een exited. The e include, Axi Bank, Hanung Toy a
nd Tata Power. Other high-profile exit include DLF, HPCL, Ran axy La , and Pun
j Lloyd. Reliance Indu trie , BI, ONGC and BHEL are the tock retained y the
fund during the period and are among the fund top holding .
3.4 FINDING
A far a analy i i concerned, we found out that the HDFC Growth Fund wa amon
g
the e t performer fund. Although all the fund are affected y the glo al melt
down, (rece ion) till HDFC Growth Fund ha etter performed comparing to other
fund for it y tematic and un y tematic ri k. It offer advantage of diver i
fication, market timing, and electivity. In the compari on of ample of fund ,
HDFC Growth fund i found highly diver ified fund and ecau e of high diver ific
ation, it ha reduced the total ri k of portfolio.
Further, other fund were found very poor in diver ification, market timing, and
electivity. Although HDFC Top 200 Fund and Equity Fund performed etter in term
of return ut the e uffered y the y tematic ri k (market volatility) and l
ack of diver ification. For the further clarification, we too tudied the portfo
lio of HDFC Growth fund.
One of the finding that I came acro i that generally, a good model of a et
cla e
i the one that can explain a large portion of the variance of return on the a
et and there were ome tock in the fund portfolio, which were not aligned wi
th trategy of the fund portfolio. The optimal ituation involve the election
that proceed from en i le a umption , i carefully and logically con tructed,
and i roadly con i tent with the data while collecting the tock for the por
tfolio. The portfolio wa howing con tructive outcome in long time horizon and
the re ult can e improved y making the minor change in fund portfolio.
Hence, the portfolio theory teache u that inve tment choice are made on the
a i
of expected ri k and return and the e expectation can e ati fied y having r
ight mix of a et .
3.5 RECOMMENDATION :
Con idering the a ove analy i , it can e noted that the three growth oriented m
utual fund (HDFC Equity Fund, HDFC Growth Fund and HDFC Top 200 fund) have perf
ormed etter than their enchmark indicator . Other fund uch a HDFC Capital B
uilder Fund, HDFC Long term Advantage Fund did not perform well even ome perfor
med negatively. Though HDFC Equity Fund, HDFC Growth Fund and HDFC Top 200 fund
have performed etter than the enchmark of their y tematic ri k (volatility)
ut with re pect to total ri k the fund have not outperformed the Market Index. G
rowth oriented mutual fund are expected to offer the advantage of Diver ificat
ion, Market timing and electivity. In the ample, HDFC Equity Fund, HDFC Growth
Fund and HDFC Top 200 fund i found to e diver ified fund and ecau e of high
diver ification, it ha reduced total ri k of the portfolio. Wherea , other are
low diver ified and ecau e of low diver ification their total ri k i found to
e very high. Further, the fund manager of the e under performing fund are fo
und to e poor in term of their a ility of market timing and electivity.
The fund manager of HDFC Equity Fund, HDFC Growth Fund and HDFC Top 200
fund can improve the return to the inve tor y increa ing the y tematic ri k
of the portfolio, which in turn can e done y identifying highly volatile hare
. Alternatively, the e can take advantage y diver ification, which goe to red
uce the ri k if the ame return i given to the inve tor at a reduced ri k level
, the compen ation for ri k might eem adequate. The fund manager of HDFC Capita
l Builder Fund, HDFC Long term Advantage Fund can earn etter return y adoptin
g the marketing timing trategy and electing the under priced ecuritie .
The fund manager can divide all ecuritie into everal a et cla e and trie
to
con truct an efficient portfolio a ed on expected return , ri k, and correlatio
n of indexe repre enting the e a et cla e . The inve tment hould e done in
the ench mark indexe to get an “efficient” portfolio in uch a way that no other
com ination of the e indexe would re ult in a portfolio with a higher return fo
r a given level of
ri k. It hould e empha ized, however, that thi i not a fully efficient portf
olio ecau e information a out correlation among individual ecuritie within a
n index and acro the indexe i lo t in the tran ition from individual ecurit
ie to the enchmark that repre ent them.
The e mea ure are more u eful to inve tor who are putting their money into one
diver ified fund and are a le to u e leverage or inve t in the ri k-free a et.
When the inve tor i inve ting in the different fund , the fund’ marginal contri
ution to the portfolio’ ri k and return i more important than it individual ec
urity characteri tic . To con truct an efficient portfolio, an inve tor mu t tak
e account of the correlation among the eing con idered. It i not advi a le to
apply ju t procedure or approach for all ituation at lea t when it come to i
nve tment though the u ed mea ure are highly relia le in the tudie done on
imilar vein . Even at thi juncture it would till e recommended that in tead o
f going ahead only on the a i of ri k and return, other indicator like new pr
oject , ector impact, individual entiment a out companie etc e ide ‘common
en e and intuition’ may al o e looked into.
3.6 CONCLU ION :
Mutual fund ha ecome one of the important ource for inve ting. It i quite l
ikely that a more efficient portfolio can e con tructed directly from fund . Th
u , the two- tep proce of choo ing an a et allocation a ed on the informatio
n a out enchmark indexe and then choo ing fund in each category may e one of
the e t reali tically attaina le approache . To u e thi approach to portfolio
election effectively, inve tor would enefit from e timate of future a et r
eturn , ri k and correlation , a well a from fund management’ di clo ure of fu
ture a et expo ure and appropriate enchmark . It ha een a great opportunity
for me to get a fir t experience of Mutual Fund . My tudy i to get the feel o
f how the work i carried out in relation to fund’ portfolio a pect. I got an opp
ortunity in relation to the documentation and al o the portfolio analy i that h
ave een carrying out in facilitating the inve tor and the fund manager.
REFERENCE
Book :
1. ecurity Analy i and Portfolio Management ( ixth Edition 1995) y Donald
E. Fi her and Ronald J. Jordan. Pu lication: Pear on education. 2. The Indian Fi
nancial y tem ( econd edition) y Bharati V. Pathak. Pu li hed y Dorling Kinde
r ley (India) Pvt. Ltd., licen ee of Pear on Education in outh A ia. 3. ecuri
ty Analy i and Portfolio Management y Khan and Jain. Magazine : • • Money Outlook
(May &June 2009) Bu ine world (May & June 2009)
We ite
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iainfoline.com www.in.finance.yahoo.com www.inve ting. u ine week.com www. u in
e line.com