A STUDY ON PERFORMANCE OF MUTUAL FUND SCHEMES IN THE FRAME WORK OF RISK AND RETURNS at Data Monitor

Chapter 1: Introduction
Introduction to the study: A mutual fund is a scheme in which several people invest their money for a common financial cause. The collected money invests in the capital market and the money, which they earned, is divided based on the number of units, which they hold. The mutual fund industry started in India in a small way with the UTI Act creating what was effectively a small savings division within the RBI. Over a period of 25 years this grew fairly successfully and gave investors a good return, and therefore in 1989, as the next logical step, public sector banks and financial institutions were allowed to float mutual funds and their success emboldened the government to allow the private sector to foray into this area. The advantages of mutual fund are professional management, diversification, and economies of scale, simplicity, and liquidity. The disadvantages of mutual fund are high costs, overdiversification, possible tax consequences, and the inability of management to guarantee a superior return. The biggest problems with mutual funds are their costs and fees it include Purchase fee, Redemption fee, Exchange fee, Management fee, Account fee & Transaction Costs. There are some loads which add to the cost of mutual fund. Load is a type of commission depending on the type of funds. Mutual funds are easy to buy and sell. You can either buy them directly from the fund company or through a third party. Before investing in any funds one should consider some factor like objective, risk, Fund Managers and scheme track record, Cost factor etc. A code of conduct and registration structure for mutual fund intermediaries, which were subsequently mandated by SEBI. In addition, this year AMFI was involved in a number of developments and enhancements to the regulatory framework.

Chapter 2: Conceptual Framework & Literature Review

CONCEPTUAL FRAMEWORK What is a Mutual Fund? A mutual fund is just the connecting bridge or a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the gathered money into specific securities (stocks or bonds). When you invest in a mutual fund, you are buying units or portions of the mutual fund and thus on investing becomes a shareholder or unit holder of the fund. Mutual funds are considered as one of the best available investments as compare to others they are very cost efficient and also easy to invest in, thus by pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification, by minimizing risk & maximizing returns. Concept of Mutual Funds A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund. Diversification Diversification is nothing but spreading out your money across available or different types of investments. By choosing to diversify respective investment holdings reduces risk tremendously up to certain extent.

Mutual Fund Operation Flow Chart The most basic level of diversification is to buy multiple stocks rather than just one stock. Mutual funds are set up to buy many stocks. Beyond that, you can diversify even more by purchasing different kinds of stocks, then adding bonds, then international, and so on. It could take you weeks to buy all these investments, but if you purchased a few mutual funds you could be done in a few hours because mutual funds automatically diversify in a predetermined category of investments (i.e. - growth companies, emerging or mid size companies, low-grade corporate bonds, etc). Types of Mutual Funds Schemes in India Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc. thus mutual funds has Variety of flavors, Being a collection of many stocks, an investors can go for picking a mutual fund might be easy. There are over hundreds of mutual funds scheme to choose from. It is easier to think of mutual funds in categories, mentioned below.

Overview of existing schemes existed in mutual fund category: BY STRUCTURE 1. Open - Ended Schemes: An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. 2. Close - Ended Schemes: These schemes have a pre-specified maturity period. One can invest directly in the scheme at the time of the initial issue. Depending on the structure of the scheme there are two exit options available to an investor after the initial offer period closes. Investors can transact (buy or sell) the units of the scheme on the stock exchanges where they are listed. The market price at the stock exchanges could vary from the net asset value (NAV) of the scheme on account of demand and supply situation, expectations of unit holder and other market factors. Alternatively some closeended schemes provide an additional option of selling the units directly to the Mutual Fund through periodic repurchase at the schemes NAV; however one cannot buy units and can only sell units during the liquidity window. SEBI Regulations ensure that at least one of the two exit routes is provided to the investor. 3. Interval Schemes: Interval Schemes are that scheme, which combines the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices.

The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly he can expect higher returns and vise versa if he pertains to lower risk instruments, which would be satisfied by lower returns. For example, if an investors opt for bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest in capital protected funds and the profit-bonds that give out more return which is slightly higher as compared to the bank deposits but the risk involved also increases in the same proportion. Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide professional management, diversification, convenience and liquidity. That doesnt mean mutual fund investments risk free. This is because the money that is pooled in are not invested only in debts funds which are less riskier but are also invested in the stock markets which involves a higher risk but can expect higher returns. Hedge fund involves a very high risk since it is mostly traded in the derivatives market which is considered very volatile.

Overview of existing schemes existed in mutual fund category: BY NATURE 1. Equity fund: These funds invest a maximum part of their corpus into equities holdings. The structure of the fund may vary different for different schemes and the fund managers outlook on different stocks. The Equity Funds are sub-classified depending upon their investment objective, as follows:

Diversified Equity Funds Mid-Cap Funds Sector Specific Funds Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high on the riskreturn matrix. 2. Debt funds: The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are further classified as:

Gilt Funds: Invest their corpus in securities issued by Government, popularly known as Government of India debt papers. These Funds carry zero Default risk but are associated with Interest Rate risk. These schemes are safer as they invest in papers backed by Government.

Income Funds: Invest a major portion into various debt instruments such as bonds, corporate debentures and Government securities.

MIPs: Invests maximum of their total corpus in debt instruments while they take minimum exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly high on the risk-return matrix when compared with other debt schemes.

Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in corporate debentures.

Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity and preservation of capital. These schemes invest in short-term instruments like Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds.

3. Balanced funds: As the name suggest they, are a mix of both equity and debt funds. They invest in both equities and fixed income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to provide investors with the best of both the worlds. Equity part provides growth and the debt part provides stability in returns. Further the mutual funds can be broadly classified on the basis of investment parameter viz, Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives of the fund. The investor can align his own investment needs with the funds objective and invest accordingly. By investment objective:

Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these schemes is to provide capital appreciation over medium to long term. These schemes normally invest a major part of their fund in equities and are willing to bear short-term decline in value for possible future appreciation.

Income Schemes: Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular and steady income to investors. These schemes generally invest in fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited.

Balanced Schemes: Balanced Schemes aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. These schemes invest in both shares and fixed income securities, in the proportion indicated in their offer documents (normally 50:50).

Money Market Schemes: Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank call money.

Other schemes

Tax Saving Schemes:

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate.

Index Schemes:

Index schemes attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the

index. The percentage of each stock to the total holding will be identical to the stocks index weight age. And hence, the returns from such schemes would be more or less equivalent to those of the Index.

Sector Specific Schemes:

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 funds 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.

Types of returns There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:

Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution.

If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution.

If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit. Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more shares.

Pros & cons of investing in mutual funds: For investments in mutual fund, one must keep in mind about the Pros and cons of investments in mutual fund. Advantages of Investing Mutual Funds:

Professional Management - The basic advantage of funds is that, they are professional managed, by well qualified professional. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is considered to be relatively less expensive way to make and monitor their investments.

Diversification - Purchasing units in a mutual fund instead of buying individual stocks or bonds, the investors risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others.

Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus help to reducing transaction costs, and help to bring down the average cost of the unit for their investors.

Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate their holdings as and when they want.

Simplicity - Investments in mutual fund is considered to be easy, compare to other available instruments in the market, and the minimum investment is small. Most AMC also have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis.

Disadvantages of Investing Mutual Funds:

Professional Management- Some funds doesnt perform in neither the market, as their management is not dynamic enough to explore the available opportunity in the market,

thus many investors debate over whether or not the so-called professionals are any better than mutual fund or investor himself, for picking up stocks.

Costs The biggest source of AMC income, is generally from the entry & exit load which they charge from an investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of jargon.

Dilution - Because funds have small holdings across different companies, high returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money.

UNDERSTANDING MUTUAL FUND Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invest the money thus collected into asset classes that match the stated investment objectives of the scheme. Since the stated investment objectives of a mutual fund scheme generally forms the basis for an investor's decision to contribute money to the pool, a mutual fund can not deviate from its stated objectives at any point of time.

Every Mutual Fund is managed by a fund manager, who using his investment management skills and necessary research works ensures much better return than what an investor can manage on his own. The capital appreciation and other incomes earned from these investments are passed on to the investors (also known as unit holders) in proportion of the number of units they own.

When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors. For example: A. If the market value of the assets of a fund is Rs. 100,000 B. The total number of units issued to the investors is equal to 10,000. C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00 D. Now if an investor 'X' owns 5 units of this scheme E. Then his total contribution to the fund is Rs. 50 (i.e. Number of units held multiplied by the NAV of the scheme) ADVANTAGES OF MUTUAL FUND S.No. Advantage 1. Portfolio Diversification Professional Management Particulars Mutual Funds invest in a well-diversified portfolio of securities which enables investor to hold a diversified investment portfolio (whether the amount of investment is big or small). Fund manager undergoes through various research works and has better investment management skills which ensure higher returns to the investor than what he can manage on his own. Investors acquire a diversified portfolio of securities even with a small 3. 4. Less Risk Low investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities. Due to the economies of scale (benefits of larger volumes), mutual

2.

Transaction Costs 5. Liquidity

funds pay lesser transaction costs. These benefits are passed on to the investors. An investor may not be able to sell some of the shares held by him very easily and quickly, whereas units of a mutual fund are far more liquid. >Mutual funds provide investors with various schemes with different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. These schemes further have different plans/options Funds provide investors with updated information pertaining to the

6.

Choice Schemes

of

7.

Transparency

markets and the schemes. All material facts are disclosed to investors as required by the regulator. Investors also benefit from the convenience and flexibility offered by Mutual Funds. Investors can switch their holdings from a debt scheme

8.

Flexibility

to an equity scheme and vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes. Mutual Fund industry is part of a well-regulated investment environment where the interests of the investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.

9.

Safety

DISADVANTAGES OF MUTUAL FUND

S.No. Disadvantage Costs 1.

Particulars

Control Investor has to pay investment management fees and fund distribution the units), irrespective of the performance of the fund. The portfolio of securities in which a fund invests is a decision taken by

Not in the Hands costs as a percentage of the value of his investments (as long as he holds of an Investor No

2.

Customized the fund manager. Investors have no right to interfere in the decision making process of a fund manager, which some investors find as a constraint in achieving their financial objectives. in Many investors find it difficult to select one option from the plethora of a funds/schemes/plans available. For this, they may have to take advice Fund from financial planners in order to invest in the right fund to achieve their objectives.

Portfolios Difficulty

3.

Selecting Suitable Scheme

TYPES OF MUTUAL FUNDS Open-end Funds | Closed-end Funds Open-end Funds Funds that can sell and purchase units at any point in time are classified as Open-end Funds. The fund size (corpus) of an open-end fund is variable (keeps changing) because of continuous selling (to investors) and repurchases (from the investors) by the fund. An open-end fund is not required to keep selling new units to the investors at all times but is required to always repurchase, when an investor wants to sell his units. The NAV of an open-end fund is calculated every day.

Closed-end Funds

Funds that can sell a fixed number of units only during the New Fund Offer (NFO) period are known as Closed-end Funds. The corpus of a Closed-end Fund remains unchanged at all times. After the closure of the offer, buying and redemption of units by the investors directly from the Funds is not allowed. However, to protect the interests of the investors, SEBI provides investors with two avenues to liquidate their positions. Load Funds | No-load Funds Load Funds Mutual Funds incur various expenses on marketing, distribution, advertising, portfolio churning, fund manager's salary etc. Many funds recover these expenses from the investors in the form of load. These funds are known as Load Funds. No-load Funds All those funds that do not charge any of the above mentioned loads are known as No-load Funds. Tax-exempt Funds | Non-Tax-exempt Funds Tax-exempt Funds Funds that invest in securities free from tax are known as Tax-exempt Funds. All open-end equity oriented funds are exempt from distribution tax (tax for distributing income to investors). Long term capital gains and dividend income in the hands of investors are tax-free. Non-Tax-exempt Funds Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In India, all funds, except open-end equity oriented funds are liable to pay tax on distribution income. Profits arising out of sale of units by an investor within 12 months of purchase are categorized as short-term capital gains, which are taxable. Sale of units of an equity oriented fund is subject to Securities Transaction Tax (STT). STT is deducted from the redemption proceeds to an investor.

BROAD MUTUAL FUND TYPES

1. Equity Funds Equity funds are considered to be the more risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor

looking to invest in an equity fund should invest for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk bracket.

2. Debt / Income Funds Funds that invest in medium to long-term debt instruments issued by private companies, banks, financial institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. In order to ensure regular income to investors, debt (or income) funds distribute large fraction of their surplus to investors. Although debt securities are generally less risky than equities, they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. To minimize the risk of default, debt funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of "Investment Grade". Debt funds that target high returns are more risky.

3. Gilt Funds

Also known as Government Securities in India, Gilt Funds invest in government papers (named dated securities) having medium to long term maturity period. Issued by the Government of India, these investments have little credit risk (risk of default) and provide safety of principal to the investors. However, like all debt funds, gilt funds too are exposed to interest rate risk. Interest rates and prices of debt securities are inversely related and any change in the interest rates results in a change in the NAV of debt/gilt funds in an opposite direction.

4. Money Market / Liquid Funds Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments. These securities are highly liquid and provide safety of investment, thus making money market / liquid funds the safest investment option when

compared with other mutual fund types. However, even money market / liquid funds are exposed to the interest rate risk. The typical investment options for liquid funds include Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit (issued by banks).

5. Hybrid Funds As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities, debts and money market securities. Hybrid funds have an equal proportion of debt and equity in their portfolio.

6. Commodity Funds Those funds that focus on investing in different commodities (like metals, food grains, crude oil etc.) or commodity companies or commodity futures contracts are termed as Commodity Funds. A commodity fund that invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity fund that invests in all available commodities is a diversified commodity fund and bears less risk than a specialized commodity fund. "Precious Metals Fund" and Gold Funds (that invest in gold, gold futures or shares of gold mines) are common examples of commodity funds.

7. Real Estate Funds Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of housing finance companies, are known as Specialized Real Estate Funds. The objective of these funds may be to generate regular income for investors or capital appreciation.

8. Exchange Traded Funds (ETF)

Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock at index linked prices. The biggest advantage offered by these funds is that they offer diversification, flexibility of holding a

single share (tradable at index linked prices) at the same time. Recently introduced in India, these funds are quite popular abroad.

9. Fund of Funds Mutual funds that do not invest in financial or physical assets, but do invest in other mutual fund schemes offered by different AMCs, are known as Fund of Funds. Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non financial assets. Fund of Funds provide investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment, which further helps in diversification of risks. However, the expenses of Fund of Funds are quite high on account of compounding expenses of investments into different mutual fund schemes.

Risk Heirarchy of Different Mutual Funds Thus, different mutual fund schemes are exposed to different levels of risk and investors should know the level of risks associated with these schemes before investing. The graphical representation hereunder provides a clearer picture of the relationship between mutual funds and levels of risk associated with these funds:

Chapter 3: Company Profile Data Monitor

Datamonitor is an international company providing market intelligence, data analysis and opinion via a worldwide network of in-house analysts. According to the organization's website in 2011, Datamonitor assists over 6000 of the worlds leading corporations in making strategic and operational decisions. The company uses audited methodologies to deliver their advice across the major industrial sectors. Datamonitor is a division of Informa plc (FTSE: INF), a United Kingdom-based publisher and conference company. In the guidance of Data Monitor Financial research team this project was undertaken to compare and risk and return performance of Mutual Funds considering various Banks.

Kotak Mahindra: Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporates. The group has a net worth of Rs.7,911 crore and employs around 20,000 employees across its various businesses, servicing around 7 million customer accounts through a distribution network of 1,716 branches, franchisees and satellite offices across more than 470 cities and towns in India and offices in New York, California,San Francisco, London, Dubai, Mauritius and Singapore. Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary

of KMBL, is the Asset Manager for Kotak Mahindra Mutual Fund (KMMF). KMAMC started operations in December 1998 and has over 10 Lac investors in various schemes. KMMF offers schemes catering to investors with varying risk - return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities. Kotak Mahindra Bank: Facilities and Customer Care The facilities of Kotak Mahindra Bank are wide spread. It's banking sector acts as a central platform for customer relationships across the entire Kotak Mahindra group's various businesses. The bank marks its presence in the commercial vehicles, retail finance, corporate banking and treasury and housing finance segments. It offers you several facilities like personal banking, commercial banking, insurance and investment banking. Apart from traditional facilities like deposits accounts, savings account, current account, term deposits, personal loans, home loans the bank has spread its wing in the investment services by providing its customer facilities like Demat, mutual fund and insurance. The bank has also opted for net banking, mobile banking and phone banking for convenience of its customers. SBI The evolution of State Bank of India can be traced back to the first decade of the 19th century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806. The bank was redesigned as the Bank of Bengal, three years later, on 2 January 1809. It was the first ever jointstock bank of the British India, established under the sponsorship of the Government of Bengal. Subsequently, the Bank of Bombay (established on 15 April 1840) and the Bank of Madras (established on 1 July 1843) followed the Bank of Bengal. These three banks dominated the modern banking scenario in India, until when they were amalgamated to form the Imperial Bank of India, on 27 January 1921. An important turning point in the history of State Bank of India is the launch of the first Five Year Plan of independent India, in 1951. The Plan aimed at serving the Indian economy in general and the rural sector of the country, in particular. Until the Plan, the commercial banks of the country, including the Imperial Bank of India, confined their services to the urban sector. Moreover, they were not equipped to respond to the growing needs of the economic revival

taking shape in the rural areas of the country. Therefore, in order to serve the economy as a whole and rural sector in particular, the All India Rural Credit Survey Committee recommended the formation of a state-partnered and state-sponsored bank. The All India Rural Credit Survey Committee proposed the take over of the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. Subsequently, an Act was passed in the Parliament of India in May 1955. As a result, the State Bank of India (SBI) was established on 1 July 1955. This resulted in making the State Bank of India more powerful, because as much as a quarter of the resources of the Indian banking system were controlled directly by the State. Later on, the State Bank of India (Subsidiary Banks) Act was passed in 1959. The Act enabled the State Bank of India to make the eight former State-associated banks as its subsidiaries. The State Bank of India emerged as a pacesetter, with its operations carried out by the 480 offices comprising branches, sub offices and three Local Head Offices, inherited from the Imperial Bank. Instead of serving as mere repositories of the community's savings and lending to creditworthy parties, the State Bank of India catered to the needs of the customers, by banking purposefully. The bank served the heterogeneous financial needs of the planned economic development. Branches The corporate center of SBI is located in Mumbai. In order to cater to different functions, there are several other establishments in and outside Mumbai, apart from the corporate center. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices, located at major cities throughout India. It is recorded that SBI has about 10000 branches, well networked to cater to its customers throughout India. ATM Services SBI provides easy access to money to its customers through more than 8500 ATMs in India. The Bank also facilitates the free transaction of money at the ATMs of State Bank Group, which includes the ATMs of State Bank of India as well as the Associate Banks State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, etc. You may also transact

money through SBI Commercial and International Bank Ltd by using the State Bank ATM-cumDebit (Cash Plus) card. Subsidiaries The State Bank Group includes a network of eight banking subsidiaries and several non-banking subsidiaries. Through the establishments, it offers various services including merchant banking services, fund management, factoring services, primary dealership in government securities, credit cards and insurance. The eight banking subsidiaries are:

State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of India (SBI) State Bank of Indore (SBIR) State Bank of Mysore (SBM) State Bank of Patiala (SBP) State Bank of Saurashtra (SBS) State Bank of Travancore (SBT)

Products And Services Personal Banking

SBI Term Deposits SBI Loan For Pensioners SBI Recurring Deposits Loan Against Mortgage Of Property SBI Housing Loan Loan Against Shares & Debentures SBI Car Loan Rent Plus Scheme SBI Educational Loan Medi-Plus Scheme

Other Services

Agriculture/Rural Banking NRI Services ATM Services Demat Services Corporate Banking Internet Banking Mobile Banking International Banking Safe Deposit Locker RBIEFT E-Pay E-Rail SBI Vishwa Yatra Foreign Travel Card Broking Services Gift Cheques

ICICI Bank: ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial institution, in 1994. Four years later, when the company offered ICICI Bank's shares to the public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank offered made an equity offering in the form of ADRs on the New York Stock Exchange (NYSE), thereby becoming the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. In the next year, it acquired the Bank of Madura Limited in an all-

stock amalgamation. Later in the year and the next fiscal year, the bank made secondary market sales to institutional investors. With a change in the corporate structure and the budding competition in the Indian Banking industry, the management of both ICICI and ICICI Bank were of the opinion that a merger between the two entities would prove to be an essential step. It was in 2001 that the Boards of Directors of ICICI and ICICI Bank sanctioned the amalgamation of ICICI and two of its whollyowned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. In the following year, the merger was approved by its shareholders, the High Court of Gujarat at Ahmedabad as well as the High Court of Judicature at Mumbai and the Reserve Bank of India. Present Scenario ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited. Overseas, its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). As of December 31, 2008, ICICI is India's secondlargest bank, boasting an asset value of Rs. 3,744.10 billion and profit after tax Rs. 30.14 billion, for the nine months, that ended on December 31, 2008. Branches & ATMs ICICI Bank has a wide network both in Indian and abroad. In India alone, the bank has 1,420 branches and about 4,644 ATMs. Talking about foreign countries, ICICI Bank has made its presence felt in 18 countries - United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The Bank proudly holds its subsidiaries in the United Kingdom, Russia and Canada out of which, the UK subsidiary has established branches in Belgium and Germany. Products & Services Personal Banking

Deposits

Loans Cards Investments Insurance Demat Services Wealth Management

NRI Banking

Money Transfer Bank Accounts Investments Property Solutions Insurance Loans

Business Banking

Corporate Net Banking Cash Management Trade Services FXOnline SME Services Online Taxes Custodial Services

HDFC Bank Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd, was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by Reserve Bank of India (RBI). It was one of the first banks to receive an 'in principle' approval from RBI, for setting up a bank in the private sector. The bank was incorporated with the name 'HDFC Bank Limited', with its registered office in Mumbai. The following year, it started its operations as a Scheduled Commercial Bank. Today, the bank boasts of as many as 1412 branches and over 3275 ATMs across India. Amalgamations In 2002, HDFC Bank witnessed its merger with Times Bank Limited (a private sector bank promoted by Bennett, Coleman & Co. / Times Group). With this, HDFC and Times became the first two private banks in the New Generation Private Sector Banks to have gone through a merger. In 2008, RBI approved the amalgamation of Centurion Bank of Punjab with HDFC Bank. With this, the Deposits of the merged entity became Rs. 1,22,000 crore, while the Advances were Rs. 89,000 crore and Balance Sheet size was Rs. 1,63,000 crore. Tech-Savvy HDFC Bank has always prided itself on a highly automated environment, be it in terms of information technology or communication systems. All the braches of the bank boast of online connectivity with the other, ensuring speedy funds transfer for the clients. At the same time, the bank's branch network and Automated Teller Machines (ATMs) allow multi-branch access to retail clients. The bank makes use of its up-to-date technology, along with market position and expertise, to create a competitive advantage and build market share. Capital Structure At present, HDFC Bank boasts of an authorized capital of Rs 550 crore (Rs5.5 billion), of this the paid-up amount is Rs 424.6 crore (Rs.4.2 billion). In terms of equity share, the HDFC Group holds 19.4%. Foreign Institutional Investors (FIIs) have around 28% of the equity and about 17.6% is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). The bank has about 570,000 shareholders. Its shares find a listing on the Stock

Exchange, Mumbai and National Stock Exchange, while its American Depository Shares are listed on the New York Stock Exchange (NYSE), under the symbol 'HDB'. Products & Services Personal Banking

Savings Accounts Salary Accounts Current Accounts Fixed Deposits Demat Account Safe Deposit Lockers Loans Credit Cards Debit Cards Prepaid Cards Investments & Insurance Forex Services Payment Services NetBanking InstaAlerts MobileBanking InstaQuery

ATM PhoneBanking

NRI Banking

Rupee Savings Accounts Rupee Current Accounts Rupee Fixed Deposits Foreign Currency Deposits Accounts for Returning Indians Quickremit (North America, UK, Europe, Southeast Asia) IndiaLink (Middle East, Africa) Cheque LockBox Telegraphic / Wire Transfer Funds Transfer through Cheques / DDs / TCs Mutual Funds Private Banking Portfolio Investment Schemes Loans Payment Services NetBanking InstaAlerts MobileBanking

InstaQuery ATM PhoneBanking

Chapter 3: RESEARCH METHODOLOGY

Need for the study: In India very little work has been done to investigate fund managers forecasting abilities. Active fund managers are expected to reward higher return. If the fund manager feels that market on the whole overvalued, then he would get out the market. Hence the present study has the objective of finding out. The performance of mutual fund schemes in the frame work of risk and returns. Objectives of the study: 1. To understand the basic concepts of mutual funds and its benefits as an investment avenue. 2. To understand the importance of mutual funds in investing money 3. To analyze the performance of different mutual funds on the basis of various parameters 4. To analyze the alternative investment options for investing money 5. To analyze the risk, return, volatility of mutual funds. Scope of the study: This study covers Equity linked schemes of Kotak Mahindra gold scheme, SBI Gold scheme, ICICI gold scheme, HDFC gold scheme in which share khan is a distributor and this study covers only open ended type schemes only and the study covers the period of past one year only i.e. 2011 to 2012. Because of the non availability of data I restricted my research to 1 Year. Data collection The methodology followed for the collecting information are using two sources of data namely Primary data Secondary data

Primary data: the data collected first hand by the researcher concerned with the research problem refers to the primary data.

Secondary data The information available at various sources made for some other purpose but facilitating the study undertaken is called as secondary data.

Limitations of the study: 1. Time constraint 2. The data collected from the respondents may not be reliable. So the fluctuations in the result might occur.

Chapter 4: Data Analysis and Interpretation

STATE BANK OF INDIA STOCK PRICES AS ON 2011 Month 11-Mar 11-Apr 11May 11-Jun 11-Jul 11-Aug 11-Sep 11-Oct 11-Nov 11-Dec 12-Jan 12-Feb 12-Mar 12-Apr Open price 2072 2074.99 2205 2228 2173 2306.9 2680 2575 2650 2842 2675 2750 2785.5 2785.79 High price 2115 2299 2260 2239.65 2310 2990 2842.5 2848 2840.99 2869.5 2759.99 2820 2800.05 2860 Low price 2036 2053.31 2096 2165.01 2133 2239.99 2551.25 2550 2650 2631.02 2670.56 2700 2655 2730.01 Close price 2053.31 2196.82 2227.44 2176.25 2298.99 2647.81 2572.1 2645.58 2814.37 2672.48 2756.82 2809.67 2785.79 2851.44 No.of Shares 13175 19239 24318 19666 43026 97735 84834 50305 42094 35273 19468 16662 26290 27395 No. Trades 1744 2173 2986 2593 2985 9977 9994 8299 5738 5762 3738 3193 4097 5116 of Total Turnover (Rs.) 27275812 41268355 53410797 43387959 94043075 2.56E+08 2.27E+08 1.32E+08 1.17E+08 96921997 52840213 46062704 71751265 76873782

Interpretation: 1. Over the Period SBI has a steady increase in the closing Price and has reached its peak in the month April 2012.

DETEMINATION OF RISK AND RETURNS (2011) YEAR 1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 1-Feb 1-Mar 1-Apr BSE-500 7,437.26 7,427.14 7,233.85 7,265.32 7,111.31 6,487.22 6,385.76 6,763.26 6,117.00 5,778.68 6,549.31 6,857.28 6,759.63 6698.51 SBI 2053.31 2196.82 2227.44 2176.25 2298.99 2647.81 2572.1 2645.58 2814.37 2672.48 2756.82 2809.67 2785.79 2851.44 INDEX RETURNS 0.001363 0.02672 -0.00433 0.021657 0.096203 0.015888 -0.05582 0.10565 0.058546 -0.11767 -0.04491 0.014446 0.009124 SBI RETURNS -0.06533 -0.01375 0.023522 -0.05339 -0.13174 0.029435 -0.02777 -0.05997 0.053093 -0.03059 -0.01881 0.008572 -0.02302

INDEX VARIANCE

SBI VARIANCE

COVARIANCE

BETA

SDX

SDY

ALPHA

0.003611

0.002315

-0.00063
UNSYSTEMATIC RISK

-0.17504
TOTAL RISK

0.06009 2

0.04811 6

-0.289

SYSTEMATIC RISK

RETURNS

0.000111

0.291311

0.291421

-0.31

Risk Free Rate is 0.18. Treynor Ratio = (Average Return of the Portfolio Average Return of the Risk free rate)/ Beta

= ( -0.31- 0.18) / -0.17 = 2.882 Sharpe Measure = (Average Return of the Portfolio Average Return of the Risk free rate)/S.D. = (-0.31-0.18)/ 0.04811 = -10.185 Jensen Measure = Portfolio Return [Risk Free Rate + Portfolio Beta * (Market Return Risk Free Rate)] = -0.31-(0.18-0.17504*(0.126-0.18)) = -0.499 Interpretation:
1.

The overall risk of the mutual fund as measured by the standard deviation of the

total returns of the fund returns for the period from 1st march 2011 to 1st April 2012 is 0.048.
2.

The systematic Risk of the Mutual fund as given by the coefficient for the

period from 1st March 2011 to 1st April 2012 is -0.17504

3.

Treynors Measure for the fund for the period from 1st March 2011 to 1st April

2012 is 2.882 which indicates that for every one unit change in the beta there will be 2.882 unit charge in the returns.
4.

Sharpes Measure for the fund for the period from 1st March 2011 to 1st April

2012 is -10.185 which indicates that for every one unit change in the standard deviation there will be -10.185 units change in the returns.
5.

Jensens Measure for the fund for the period 1st March 2011 to 1st April 2012 is

-0.499. ICICI BANK STOCK PRICES AS ON 2011

Month 11-Mar 11-Apr 11May 11-Jun 11-Jul 11-Aug 11-Sep 11-Oct 11-Nov 11-Dec 12-Jan 12-Feb 12-Mar 12-Apr

Open Price 2050 2102 2200.1 2245 2024 2251.51 2700 2553 2699 2855 2681 2780 2760 2737.25

High Price Low 2300 2227.99 2577 2499 2398 2840 2861.5 2900 2890 3000 2800 2845 2824.5 2890 Price 2002 2003 2150.01 1940 2024 2251.51 2500 2326 2652.25 2650 2661 2700 2680 2737.25

Close Price 2099.99 2227.99 2235 2180.25 2300 2650 2556.4 2674 2855 2672.66 2740.1 2819 2754 2848

No.of Shares 540 789 3733 793 852 2461 1907 1979 6355 1853 885 1610 1895 1914

No. Trades 33 68 95 73 96 148 116 172 293 270 192 237 198 199

of Total Turnover (Rs.) 1110744 1657788 8308646 1757661 1906890 6422179 5176998 5205589 17563659 5165723 2422425 4456818 5167633 5385136

Interpretation: 1. The closing price of ICICI bank is increasing over the years and it is highest at December 2011. 2. The present closing price of the ICICI bank is good compare to previous price.

DETEMINATION OF RISK AND RETURNS (2011) YEAR 1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 1-Feb 1-Mar 1-Apr BSE500 7,437.26 7,427.14 7,233.85 7,265.32 7,111.31 6,487.22 6,385.76 6,763.26 6,117.00 5,778.68 6,549.31 6,857.28 6,759.63 6698.51 ICICI 2099.99 2227.99 2235 2180.25 2300 2650 2556.4 2674 2855 2672.66 2740.1 2819 2754 2848 INDEX RETURNS 0.001363 0.02672 -0.00433 0.021657 0.096203 0.015888 -0.05582 0.10565 0.058546 -0.11767 -0.04491 0.014446 0.009124 ICICI RETURNS -0.05745 -0.00314 0.025112 -0.05207 -0.13208 0.036614 -0.04398 -0.0634 0.068224 -0.02461 -0.02799 0.023602 -0.03301

INDEX VARIANCE 0.003611 SYSTEMATIC RISK 0.000075896117 Risk Free Rate is 0.18.

ICICI VARIANCE 0.002739

COVARIANCE BETA -0.00052

SDX

SDY 0.05233

ALPHA -0.2626

-0.14498 0.06009 TOTAL RISK 0.265418

UNSYSTEMATIC RISK 0.265342

2 6 RETURNS -0.28

Treynor Ratio = (Average Return of the Portfolio Average Return of the Risk free rate)/ Beta = ( -0.28- 0.18) / -0.144 = 3.194 Sharpe Measure = (Average Return of the Portfolio Average Return of the Risk free rate)/S.D. = (-0.28-0.18)/ 0.052336 = -8.789

Jensen Measure = Portfolio Return [Risk Free Rate + Portfolio Beta * (Market Return Risk Free Rate)] = -0.28-(0.18-0.14498*(0.12-0.18)) = 0.0006 Interpretation:
1.

The overall risk of the mutual fund as measured by the standard deviation of the

total returns of the fund returns for the period from 1st march 2011 to 1st April 2012 is 0.05233.
2.

The systematic Risk of the Mutual fund as given by the coefficient for the

period from 1st March 2011 to 1st April 2012 is -0.14458

3.

Treynors Measure for the fund for the period from 1st March 2011 to 1st April

2012 is 3.194 which indicates that for every one unit change in the beta there will be 3.194 unit charge in the returns.
4.

Sharpes Measure for the fund for the period from 1st March 2011 to 1st April

2012 is -8. Which indicates that for every one unit change in the standard deviation there will be -8.789 units change in the returns?
5.

Jensens Measure for the fund for the period 1st March 2011 to 1st April 2012 is

-0.0006.

KOTAK MAHENDHRA STOCK PRICES AS ON 2011 Month 11-Mar 11-Apr 11May 11-Jun 11-Jul Open Price 2023 2015 2218 2190 2128 High Price 2059.99 2160 2218 2198.9 2268 Low Price 1945 2015 2100 2130 2088 Close Price 2014.8 2151.88 2185.63 2136.75 2258.33 No. Shares 11206 12216 21875 12580 15447 of No. Trades 1233 1331 2149 1700 1876 of Total Turnover (Rs.) 22726519 25598512 47232721 27202624 33782235

11-Aug 11-Sep 11-Oct 11-Nov 11-Dec 12-Jan 12-Feb 12-Mar 12-Apr

2257 2625 2525 2624 2800.55 2635 2711.01 2698 2683.5

2758.45 2782 2747 2808 2818.99 2722 2775 2761 2799.15

2230 2480 2485 2621 2580 2616.25 2647.5 2605 2666.6

2594.64 2513.11 2616.13 2782.44 2610.83 2719 2740.68 2685.02 2769.71

48648 60491 40416 30521 18702 19053 10549 20610 19379

4490 5669 4839 3395 2618 1743 1700 2030 2743

1.23E+08 1.58E+08 1.04E+08 83373390 50710854 50782373 28568780 54857454 53065023

Interpretation: The closing price of Kotak Mahindra is fluctuating every month and it is high at November 2011. The present closing price of the Kotak Mahindra is 2769.71

DETEMINATION OF RISK AND RETURNS (2011) YEAR 1-Mar 1-Apr 1-May BSE-500 7,437.26 7,427.14 7,233.85 KOTAK MAHINDRA 2014.8 2151.88 2185.63 INDEX RETURNS 0.001363 0.02672 -0.00433 KOTAK RETURNS -0.0637 -0.01544 0.022876 MAHINDRA

1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 1-Feb 1-Mar 1-Apr

7,265.32 7,111.31 6,487.22 6,385.76 6,763.26 6,117.00 5,778.68 6,549.31 6,857.28 6,759.63 6698.51

2136.75 2258.33 2594.64 2513.11 2616.13 2782.44 2610.83 2719 2740.68 2685.02 2769.71

0.021657 0.096203 0.015888 -0.05582 0.10565 0.058546 -0.11767 -0.04491 0.014446 0.009124

-0.05384 -0.12962 0.032442 -0.03938 -0.05977 0.06573 -0.03978 -0.00791 0.02073 -0.03058

INDEX VARIANCE

KOTAK MAHINDRA VARIANCE

COVARIANCE

BETA

SDX

SDY

ALPHA

0.003611

0.002599

-0.00046

-0.12823 0.060092

0.050976

-0.27461

SYSTEMATIC RISK 0.000059 Risk Free Rate is 0.18.

UNSYSTEMATIC RISK 0.277211

TOTAL RISK 0.27727

RETURNS -0.29

Treynor Ratio = (Average Return of the Portfolio Average Return of the Risk free rate)/ Beta = ( -0.29- 0.18) / -0.128 = 3.67 Sharpe Measure = (Average Return of the Portfolio Average Return of the Risk free rate)/S.D. = (-0.29-0.18)/ -0.2746 = 1.711 Jensen Measure = Portfolio Return [Risk Free Rate + Portfolio Beta * (Market Return Risk Free Rate)] = -0.29-(0.18-0.12823*(0.12-0.18)) = 0.0009 Interpretation:

1.

The overall risk of the mutual fund as measured by the standard deviation of the

total returns of the fund returns for the period from 1st march 2011 to 1st April 2012 is 0.048.
2.

The systematic Risk of the Mutual fund as given by the coefficient for the

period from 1st March 2011 to 1st April 2012 is -0.12823

3.

Treynors Measure for the fund for the period from 1st March 2011 to 1st April

2012 is 3.67 which indicates that for every one unit change in the beta there will be 3.67 unit charge in the returns.
4.

Sharpes Measure for the fund for the period from 1st March 2011 to 1st April

2012 is 1.711 which indicates that for every one unit change in the standard deviation there will be 1.711 units change in the returns.
5.

Jensens Measure for the fund for the period 1st March 2011 to 1st April 2012 is

0.0009

HDFC BANK STOCK PRICES AS ON 2011 Month 11-Mar 11-Apr 11May 11-Jun 11-Jul 11-Aug 11-Sep 11-Oct 11-Nov 11-Dec 12-Jan 12-Feb 12-Mar 12-Apr Open Price 2062 2085 2247.99 2220 2189 2278 2684.4 2600.1 2650 2845 2670 2760 2786 2800 High Price 2099.95 2245 2260 2300 2310.14 2895 2834.8 2705 2920 2876.95 2759.96 2814.97 2799.96 2928 Low Price 2040 2060.15 2151.5 2155.1 1925 2278 2505 2547 2650 2636 2650 2714.9 2710 2730 Close Price 2075 2198.23 2221.38 2187.71 2284.57 2644.99 2575.99 2651.09 2826.6 2659.49 2757.3 2794.85 2755.96 2877.57 No. Shares 3299 8155 8923 6067 11617 21639 23909 21384 25493 9871 6319 7842 5305 7414 of No. Trades 583 916 756 617 874 2375 2321 1727 1933 1324 1131 1176 1086 1272 of Total Turnover (Rs.) 6846955 17581235 19693719 13427763 26109882 56386906 63903095 56238876 70851414 27308863 17116458 21619660 14568210 20739077

Interpretation:

The closing price of HDFC bank over the years fluctuating and in the month April it is at 2877 which has rapid increase from the previous year. DETEMINATION OF RISK AND RETURNS (2011) YEAR 1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 1-Feb 1-Mar 1-Apr BSE-500 7,437.26 7,427.14 7,233.85 7,265.32 7,111.31 6,487.22 6,385.76 6,763.26 6,117.00 5,778.68 6,549.31 6,857.28 6,759.63 6698.51 HDFC 2075 2198.23 2221.38 2187.71 2284.57 2644.99 2575.99 2651.09 2826.6 2659.49 2757.3 2794.85 2755.96 2877.57 INDEX RETURNS 0.001363 0.02672 -0.00433 0.021657 0.096203 0.015888 -0.05582 0.10565 0.058546 -0.11767 -0.04491 0.014446 0.009124 HDFC RETURNS -0.05606 -0.01042 0.015391 -0.0424 -0.13627 0.026786 -0.02833 -0.06209 0.062835 -0.03547 -0.01344 0.014111 -0.04226

INDEX VARIANCE 0.003611

HDFC VARIANCE 0.002444

COVARIANCE BETA -0.00059 -0.16457 TOTAL RISK 0.282792

SDX 0.060092 RETURNS -0.3

SDY 0.049432

ALPHA 0.28025

SYSTEMATIC RISK 0.000097

UNSYSTEMATIC RISK 0.282695

Risk Free Rate is 0.18. Treynor Ratio = (Average Return of the Portfolio Average Return of the Risk free rate)/ Beta = ( -0.31- 0.18) / -0.164 = 2.987 Sharpe Measure = (Average Return of the Portfolio Average Return of the Risk free rate)/S.D.

= (-0.31-0.18)/ -0.28025 = 1.748 Jensen Measure = Portfolio Return [Risk Free Rate + Portfolio Beta * (Market Return Risk Free Rate)] = -0.31-(0.18-0.16457*(0.12-0.18)) = 0.0002 Interpretation:
1.

The overall risk of the mutual fund as measured by the standard deviation of the

total returns of the fund returns for the period from 1st march 2011 to 1st April 2012 is 0.049.
2.

The systematic Risk of the Mutual fund as given by the coefficient for the

period from 1st March 2011 to 1st April 2012 is -0.16457

3.

Treynors Measure for the fund for the period from 1st March 2011 to 1st April

2012 is 2.987 which indicates that for every one unit change in the beta there will be 2.987 unit charge in the returns.
4.

Sharpes Measure for the fund for the period from 1st March 2011 to 1st April

2012 is 1.748 which indicates that for every one unit change in the standard deviation there will be 1.748 units change in the returns.
5.

Jensens Measure for the fund for the period 1st March 2011 to 1st April 2012 is

0.0002. Findings: 1. Kotak Mahindra Gold Scheme Average Returns Market Average Return Standard Deviation Beta -0.29 0.12 0.050976 -0.12823

a. The average return of the fund is lower than that of the average market return which indicates that the fund is not performing well as compared to the market b. The standard deviation of 0.0509 indicates the amount of risk involved in investing in the fund. c. The funds beta of -0.12823 is relatively lower than that of the market index which gives the idea that the proportionate change in the fund resulting from the change in the market index is relatively low.

2. SBI Gold Scheme Average Returns Market Average Return Standard Deviation Beta -0.31 0.126 0.048116 -0.17504

a. The average return of the fund is lower than that of the average market return which indicates that the fund is not performing well as compared to the market b. The standard deviation of 0.04816 indicates the amount of risk involved in investing in the fund. c. The funds beta of -0.17504 is relatively lower than that of the market index which gives the idea that the proportionate change in the fund resulting from the change in the market index is relatively low. 3. ICICI Gold Scheme Average Returns Market Average Return Standard Deviation Beta -0.28 0.12 0.052336 -0.14498

a. The average return of the fund is lower than that of the average market return which indicates that the fund is not performing well as compared to the market b. The standard deviation of 0.052336 indicates the amount of risk involved in investing in the fund. c. The funds beta of -0.14498 is relatively lower than that of the market index which gives the idea that the proportionate change in the fund resulting from the change in the market index is relatively low.

4. HDFC Gold Scheme Average Returns Market Average Return Standard Deviation Beta -0.31 0.12 0.049432 -0.16457

a. The average return of the fund is lower than that of the average market return which indicates that the fund is not performing well as compared to the market b. The standard deviation of 0.049432 indicates the amount of risk involved in investing in the fund. c. The funds beta of -0.16457 is relatively lower than that of the market index which gives the idea that the proportionate change in the fund resulting from the change in the market index is relatively low.

Treynors Index Name Kotak Mahindra Gold Scheme SBI Gold Scheme ICICI Gold Scheme Value 3.67 2.882 3.194 Rankings 1 4 2

HDFC Gold Scheme

2.987

Out of these 4, Kotak Mahindra Gold scheme has high Treynors value . This implies that Kotak Mahindra Gold Scheme has been the most profitable when the relative risks involved in the investments have been taken into account. Sharpes Index Name Kotak Mahindra Gold Scheme SBI Gold Scheme ICICI Gold Scheme HDFC Gold Scheme Value 1.711 -10.185 -8.789 1.748 Rankings 2 4 3 1

From the above Sharpes risk, compared to other Gold Schemes HDFC gold scheme is giving more return for the same risk.

Jensens Index Name Kotak Mahindra Gold Scheme SBI Gold Scheme ICICI Gold Scheme HDFC Gold Scheme Value 0.0009 -0.499 0.0006 0.0002 Rankings 1 4 2 3

Jensens alpha is used to determine the abnormal return of a security or a portfolio. From the above table it is understood that kotak Mahindra Gold scheme has high expected returns with less risky assets.

Suggestions: 1. The investors who are ready to take risk can invest in Kotak Mahindra Gold Scheme are suggested to invest because the risk is less and the returns are more.

2. The investors who are not much interested in taking risk can invest in HDFC gold scheme because it is giving high returns with a given risk. 3. The investor can also invest in ICICI gold scheme which is 2 position in the category of low risk- more returns and more returns- with a given risk. 4. Investors are not suggested to invest in SBI Gold scheme which is highly volatile.

Conclusion: The study on performance of mutual fund schemes in the frame work of risk and returns was undertaken with an objective of understanding the basic concepts of mutual funds and its benefits as an investment avenue and to understand the importance of mutual funds in investing money. It was also taken up with and objective of analyzing the performance of different mutual fund schemes on the basis of Various parameters and to analyze the alternative investment options for investing money. The study covers Equity linked schemes of Kotak Mahindra gold scheme, SBI Gold scheme, ICICI gold scheme, HDFC gold scheme in which share khan is a distributor. The study was done using the closing and opening prices of above schemes, Trenoys index, sharpen index and Jensens index. The entire study is based on the secondary data only. The study is done at Hyderabad for a period of 60days. The study had few limitations which were taken care of. The financial information obtained was analyzed using the appropriate techniques and it was found that that the Kotak Mahindra Gold Scheme has been the most profitable when the relative risks involved in the investments have been taken into account and HDFC gold scheme is giving more return for the same risk.

It is suggested to the investors who are ready to take risk can invest in Kotak Mahindra Gold Scheme are suggested to invest because the risk is less and the returns are more and to invest ICICI gold scheme which is No. 2 position in the category of low risk- more returns and more returns- with a given risk.

Bibliography:
1. S.Kelvin, Security analysis and portfolio management, 1st edition, phi-

learning publications, 2009.

2. Bhat Sudhindra, Security analysis and portfolio management, 1st

edition, excel books, 2007.

3. Rohini singh, Security analysis and portfolio management, 1st edition,

Excel Books, 2009

4. M. Ranganatham, R. Madhumathi, Security analysis and portfolio

management, 2nd edition, Pearson publications, 2012. Websites:

1. www.investopedia.com 2. www.managementparadise.com 3. www.wikipedia.com 4. www.iloveindia.com 5. www.icicibank.com 6. www.kotak.com 7. www.hdfc.com 8. www.sbi.co.in

Appendix SBI Opening and Closing Price Index

Sprea Total d Spread Turnove High- Closer (Rs.) Low Open 684695 5 59.95 13 175812 184.8 35 5 113.23 196937 19 108.5 -26.61 134277 63 144.9 -32.29 261098 385.1 82 4 95.57 563869 06 617 366.99 639030 95 329.8 108.41 562388 76 158 50.99 708514 14 270 176.6 273088 240.9 63 5 185.51 171164 109.9 58 6 87.3 216196 100.0 60 7 34.85 145682 10 89.96 -30.04 207390 77 198 77.57

Month 11Mar 11Apr 11May 11Jun 11-Jul 11Aug 11Sep 11Oct 11Nov 11Dec 12-Jan 12Feb 12Mar 12Apr

Open Price

High Low Close Price Price Price 2099.9 2062 5 2040 2075 2060.1 2198.2 2085 2245 5 3 2247. 2221.3 99 2260 2151.5 8 2187.7 2220 2300 2155.1 1 2310.1 2284.5 2189 4 1925 7 2644.9 2278 2895 2278 9 2684. 2575.9 4 2834.8 2505 9 2600. 2651.0 1 2705 2547 9 2650 2845 2670 2760 2786 2800 2920 2876.9 5 2759.9 6 2814.9 7 2799.9 6 2928 2650 2636 2650 2714.9 2710 2730 2826.6 2659.4 9 2757.3 2794.8 5 2755.9 6 2877.5 7

No.of Shar es 3299 8155 8923 6067 1161 7 2163 9 2390 9 2138 4 2549 3 9871 6319 7842 5305 7414

No. of Trade s 583 916 756 617 874 2375 2321 1727 1933 1324 1131 1176 1086 1272

HDFC opening and closing price index

Sprea Total d Turnov Higher (Rs.) Low 684695 5 59.95 175812 184.8 35 5 196937 19 108.5 134277 63 144.9 261098 385.1 82 4 563869 06 617 639030 95 562388 76 708514 14 273088 63 171164 58 216196 60 145682 10 329.8 158 270 240.9 5 109.9 6 100.0 7 89.96 Sprea d CloseOpen 13 113.2 3 -26.61 -32.29 95.57 366.9 9 108.4 1 50.99 176.6 185.5 1 87.3 34.85 -30.04

Open High Low Close Month Price Price Price Price 112099. Mar 2062 95 2040 2075 2060. 2198. 11-Apr 2085 2245 15 23 112247. 2151. 2221. May 99 2260 5 38 2155. 2187. 11-Jun 2220 2300 1 71 2310. 2284. 11-Jul 2189 14 1925 57 112644. Aug 2278 2895 2278 99 11Sep 11-Oct 11Nov 11Dec 12-Jan 12Feb 12Mar 2684. 4 2600. 1 2650 2845 2670 2760 2786 2834. 8 2705 2920 2876. 95 2759. 96 2814. 97 2799. 96 2505 2547 2650 2636 2650 2714. 9 2710 2575. 99 2651. 09 2826. 6 2659. 49 2757. 3 2794. 85 2755. 96

No.of Share s 3299 8155 8923 6067 11617 21639 23909 21384 25493 9871 6319 7842 5305

No. of Trade s 583 916 756 617 874 2375 2321 1727 1933 1324 1131 1176 1086

ICICI opening and closing price index

Sprea d HighLow 298 224.9 9 426.9 9 Sprea d CloseOpen 49.99 125.9 9 34.9

Month 11Mar 11-Apr 11May

Open Price 2050 2102 2200. 1

High Price 2300 2227. 99 2577

Low Price

No.of No. of Total Close Share Trade Turnov Price s s er (Rs.) 2099. 111074 2002 99 540 33 4 2227. 165778 2003 99 789 68 8 2150. 830864 01 2235 3733 95 6

11-Jun 11-Jul 11Aug 11Sep 11-Oct 11Nov 11Dec 12-Jan 12Feb 12Mar 12-Apr

2245 2024 2251. 51 2700 2553 2699 2855 2681 2780 2760 2737. 25

2499 2398 2840 2861. 5 2900 2890 3000 2800 2845 2824. 5 2890

1940 2024 2251. 51 2500 2326 2652. 25 2650 2661 2700 2680 2737. 25

2180. 25 2300 2650 2556. 4 2674 2855 2672. 66 2740. 1 2819 2754 2848

793 852 2461 1907 1979 6355 1853 885 1610 1895 1914

73 96 148 116 172 293 270 192 237 198 199

175766 1 190689 0 642217 9 517699 8 520558 9 175636 59 516572 3 242242 5 445681 8 516763 3 538513 6

559 374 588.4 9 361.5 574 237.7 5 350 139 145 144.5 152.7 5

-64.75 276 398.4 9 -143.6 121 156 182.3 4 59.1 39 -6 110.7 5

Kotak Mahindra Opening and closing price index

Sprea Total d Turnov Higher (Rs.) Low 227265 114.9 19 9 255985 12 145 472327 21 118 272026 24 68.9 337822 35 180 1.23E+ 528.4 08 5 1.58E+ 08 1.04E+ 08 302 262 Sprea d CloseOpen -8.2 136.8 8 -32.37 -53.25 130.3 3 337.6 4 111.8 9 91.13

Open High Low Close Month Price Price Price Price 112059. 2014. Mar 2023 99 1945 8 2151. 11-Apr 2015 2160 2015 88 112185. May 2218 2218 2100 63 2198. 2136. 11-Jun 2190 9 2130 75 2258. 11-Jul 2128 2268 2088 33 112758. 2594. Aug 2257 45 2230 64 11Sep 11-Oct 2625 2525 2782 2747 2480 2485 2513. 11 2616. 13

No.of Share s 11206 12216 21875 12580 15447 48648 60491 40416

No. of Trade s 1233 1331 2149 1700 1876 4490 5669 4839

11Nov 11Dec 12-Jan 12Feb 12Mar 12-Apr

2624 2800. 55 2635 2711. 01 2698 2683. 5

2808 2818. 99 2722 2775 2761 2799. 15

2621 2580 2616. 25 2647. 5 2605 2666. 6

2782. 44 2610. 83 2719 2740. 68 2685. 02 2769. 71

30521 18702 19053 10549 20610 19379

3395 2618 1743 1700 2030 2743

833733 90 507108 54 507823 73 285687 80 548574 54 530650 23

187 238.9 9 105.7 5 127.5 156 132.5 5

158.4 4 189.7 2 84 29.67 -12.98 86.21