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A COMPARATIVE STUDY ON SELECTED DEBT SCHEMES WITH SPECIAL

REFERENCE TO BIRLASUNLIFE

By

A.M.DIVYAVARSHINI

(REG. NO. 211411631023)

Of

PANIMALAR ENGINEERING COLLEGE

A PROJECT REPORT

Submitted to the

FACULTY OF MANAGEMENT STUDIES

In partial fulfilment of the requirements

for the award of the degree

of

MASTER OF BUSINESS ADMINISTRATION

JUNE 2013
PANIMALAR ENGINEERING COLLEGE

(A CHRISTIAN MINORITY INSTITUTION)

JAISAKTHI EDUCATIONAL TRUST


BANGALORE TRUNK ROAD
VARADARAJAPURAM, NASARATHPETTAI,
POONAMALLEE, CHENNAI - 600123.

DEPARTMENT OF MANAGEMENT STUDIES

CERTIFICATE

This is to certify that this project report titled A COMPARATIVE STUDY ON


SELECTED DEBT SCHEMES WITH SPECIAL REFERENCE TO
BIRLASUNLIFE is the bonafide work of A.M.DIVYAVARSHINI who carried out the
research under my supervision. Certified further, that to the best of my knowledge the work
reported herein does not form part of any other project report or dissertation on the basis of
which a degree or award was conferred on earlier occasion on this or any other candidate.

Internal Guide Head of the Department

Internal Examiner External Examiner


ACKNOWLEDGEMENT

My sincere thanks to Our Honorable Founder and Chairman Dr.JEPPIAAR,


M.A., B.L., Ph.D. for his sincere endeavor in educating me in his premier institution. I would
like to express my deep gratitude to Our Beloved Secretary and Correspondent Dr
P.CHINNADURAI, M.A., Ph.D and I express my sincere thanks to Our Directors Mrs.
C.VIJAYA RAJESHWARI and Mr. C.SAKTHIKUMAR, M.E., M.Phil, and Mrs.
SARANYA SREE SAKTHIKUMAR, B.E., for providing me with the necessary facilities
for completion of this project.

I also express my gratitude to our Principal DR.K. MANI, M.E., Ph.D, who helped
me in completing the project.

I would also like to acknowledge with thanks the support received from Head of the
department Dr .V. MAHALAKSHMI, M.L., MBA, Ph.D. and other teaching staffs which
has been helpful for the successful completion of the project

I would like to thank Dr.P.RAMAN M.Com, M.Phil, M.B.A,Phd, for his valuable
guidance, ideas, inspiration and encouragement for the successful completion of the project. I
also like to thank all the staff members of the Department of Management Studies for their
support and guidance at every stage of this project.

I also express my deep gratitude and thanks to MR. HASSAN ALLI the Relationship
Manager of BIRLASUNLIFE MUTUAL FUND COMPANY who gave this opportunity
and guidance for the completion of this project work.

A.M.DIVYAVARSHINI
ABSTRACT

The title of this project clearly states that the purpose of the study is A
comparative study on selected debt schemes with special reference to
Birlasunlife. The objective of my study is to evaluate the performance of the
selected mutual funds and to make comparison among the selected mutual funds. To
analyze and understand the progressive trends in the mutual funds and suggest a few
corrective measures to show that mutual funds are worthy investment practice. The
financial tools used in the analysis are Mean Returns, Standard Deviation (Risk), Beta
(Risk), Sharpe Ratio, Treynor Ratio, Jensen Ratio. The research design that is being
adopted for the study is analytical research. Based on the beta values it is inferred that
all the schemes that are being studied are either a defensive security or have negative
beta value which are contrary to the market movements. As per the sharpe ratio ICICI
performs better in dynamic bond fund, Reliance in the income fund category and
Birlasunlife stands out in the gilt fund category. According to treynor ratio Reliance
seems to perform well in all the three categories that is dynamic bond fund, income
fund and gilt fund category. On the other hand the jenson ratio states that HDFC had a
better performance in income fund and gilt fund category while Birlasunlife stands
out in the dynamic bond fund category. The fund that yields a maximum amount of
return and has large amount of corpus is considered to be the better performing fund.
The fund managers have to concentrate on the selection of the securities so that they
may except a better returns in upcoming years. The investors have to analyze the risk
and return of the securities before they make their investments.
TABLE OF CONTENTS

1.INTRODUCTION

1.1 Introduction
1.2 Industry Profile
1.3 Company Profile

2.DEVELOPMENT OF MAIN THEME

2.1 Need of the study


2.2 Scope of the study
2.3 Objectives of the study
2.4 Limitations of the study
2.5 Review of literature

3.RESULTS OF THE STUDY

3.1 Research methodology


3.2 Analysis and Interpretation
3.3 Findings
3.4 Suggestions
3.5 Conclusions

4.APPENDIX

5.REFERNCES

LIST OF TABLES
S.No. TITLES Page No.

3:2:1 PERFORMANCE ANALYSIS-SHARPE RATIO 42

3:2:1.1 TABLE STATING PERFORMANCE OF DYNAMIC BOND FUND 42

3:2:1.2 TABLE STATING PERFORMANCE OF INCOME FUND 44

3:2:1.3 TABLE STATING PERFORMANCE OF GILT FUND 46

3:2:2 PERFORMANCE ANALYSIS-TREYNOR RATIO 48

3:2:2.1 TABLE STATING PERFORMANCE OF DYNAMIC BOND FUND 48

3:2:2.2 TABLE STATING PERFORMANCE OF INCOME FUND 50

3:2:2.3 TABLE STATING PERFORMANCE OF GILT FUND 52

3:2:3 PERFORMANCE ANALYSIS-JENSEN RATIO 54

3:2:3.1 TABLE STATING PERFORMANCE OF DYNAMIC BOND FUND 54

3:2:3.2 TABLE STATING PERFORMANCE OF INCOME FUND 56

3:2:3.3 TABLE STATING PERFORMANCE OF GILT FUND 58

3:2:4 RETURN AND RISK OF SCHEMES AND COMPANIES 60

3:2:5 RETURN AND RISK OF SCHEMES AND COMPANIES 62

LIST OF CHARTS
S.No. TITLES Page No.

3:2:1.1 CHART SHOWING PERFORMANCE OF DYNAMIC BOND 43


FUND

3:2:1.2 CHART SHOWING PERFORMANCE OF INCOME FUND 45

3:2:1.3 CHART SHOWING PERFORMANCE OF GILT FUND 47

3:2:2.1 CHART SHOWING PERFORMANCE OF DYNAMIC BOND 49


FUND

3:2:2.2 CHART SHOWING PERFORMANCE OF INCOME FUND 51

3:2:2.3 CHART SHOWING PERFORMANCE OF GILT FUND 53

3:2:3.1 CHART SHOWING PERFORMANCE OF DYNAMIC BOND 55


FUND

3:2:3.2 CHART SHOWING PERFORMANCE OF INCOME FUND 57

3:2:3.3 CHART SHOWING PERFORMANCE OF GILT FUND 59


CHAPTER -1
INTRODUCTION

1.1INTRODUCTION:
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 invested by the fund manager in different
types of securities depending upon the objective of the scheme.
These could range from shares to debentures to money market instruments. The
income earned through these investments and the capital appreciations realized by the scheme
are shared by its unit holders in proportion to the number of units owned by them (pro rata).
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 portfolio at a relatively low
cost. Anybody with an investible surplus of as little as a few thousand rupees can invest in
Mutual funds.
Each Mutual fund scheme has a defined investment objective and strategy. Mutual fund
is the ideal investment vehicle for todays complex and modern financial scenario. Markets
for equity shares, bonds and other fixed income instruments, real estate, derivatives and other
assets have become mature and information driven. Price changes in these assets are driven by
global events occurring in faraway places.
Typical individual is unlikely to have the knowledge, skills, inclination and time to
keep track of events, understand their implications and act speedily. An individual also finds
it difficult to keep track of ownership of his assets, investments, brokerage dues and
bank transactions etc.
Draft offer document is to be prepared at the time of launching the fund. Typically, it
pre specifies the investment objectives of the fund, the risk associated, the costs involved in
the process and the broad rules for entry into and exit from the fund and other areas of
operation. In India, as in most countries, these sponsors need approval from a regulator, SEBI
(Securities exchange Board of India) in our case. SEBI looks at track records of the sponsor
and its financial strength in granting approval to the fund for commencing operations.
A sponsor then hires an asset management company to invest the funds according to
the investment objective. It also hires another entity to be the custodian of the assets of the
fund and perhaps a third one to handle registry work for the unit holders (subscribers) of the
fund.
In the Indian context, the sponsors promote the Asset Management Company also, in
which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset
Management Company (AMC).
For example Birla Global Finance is the sponsor of the Birla Sun Life Asset
Management Company Ltd., which has floated different mutual funds schemes and also acts
as an asset manager for the funds collected under the schemes.
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 Mutual funds.
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 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.
The most important trend in the mutual fund industry is the aggressive expansion of
the foreign owned mutual fund companies and the decline of the companies floated by
nationalized banks and smaller private sector players.
HDFC Mutual fund, Reliance Mutual fund, ICICI Prudential Mutual fund, Birla Sun
Life Mutual fund and UTI Mutual fund are the top five mutual fund company in India based
on AMC ranking.

1.2. INDUSTRY PROFILE:


ABOUT MUTUAL FUNDS:
A mutual fund is a professionally-managed form of collective investments that pools
money from many investors and invests it in stocks, bonds, short-term money market
instruments, and/or other securities. In a mutual fund, the fund manager, who is also known
as the portfolio manager, trades the funds underlying securities, realizing capital gains or
losses, and collects the dividend or interest income. The investment proceeds are then passed
along to the individual investors. The value of a share of the mutual fund, known as the Net
Asset Value (NAV), is calculated daily based on the total value of the fund divided by the
number of shares currently issued and outstanding.
According to FRANK REILLY defines mutual funds as financial intermediaries which
bring a wide variety of securities within the reach of the most modest of investors.

HISTORY OF MUTUAL FUND:


Phases of the Indian Mutual Fund industry
First Phase 1964-87 (Established Unit Trust of India (UTI)).
Second Phase 1987-1993 (Entry of Public Sector Funds).
Third Phase 1993-2003 (Entry of Private Sector Funds).
Fourth Phase since February 2003 (Growth Phase).
During the various phases the Assets Under Management (AUM) has been increased from
Rs. 67 billion in 1963 to 6899 billion Rupees as in July 2009.

Mutual Funds in India (1964-2000)


The end of millennium marks 36 years of existence of mutual funds in this country.
The ride through these 36 years is not been smooth. Investor opinion is still divided. While
some are for mutual funds others are against it.
UTI commenced its operations from July 1964 .The impetus for establishing a formal
institution came from the desire to increase the propensity of the middle and lower groups to
save and to invest. UTI came into existence during a period marked by great political and
economic uncertainty in India. With war on the borders and economic turmoil that depressed
the financial market, entrepreneurs were hesitant to enter capital market.
UTI commenced its operations from July 1964 "with a view to encouraging savings
and investment and participation in the income, profits and gains accruing to the Corporation
from the acquisition, holding, management and disposal of securities." Different provisions of
the UTI Act laid down the structure of management, scope of business, powers and functions
of the Trust as well as accounting, disclosures and regulatory requirements for the Trust.
The opening up of the asset management business to private sector in 1993 saw
international players like Morgan Stanley, Jardine Fleming, JP Morgan, George Soros and
Capital International along with the host of domestic players join the party. But for the equity
funds, the period of 1994-96 was one of the worst in the history of Indian Mutual Funds.

1999-2000 Year of the funds


Mutual funds have been around for a long period of time to be precise for 36 yrs but
the year 1999 saw immense future potential and developments in this sector. This year
signaled the year of resurgence of mutual funds and the regaining of investor confidence in
these MFs. This time around all the participants are involved in the revival of the funds the
AMCs, the unit holders, the other related parties. However the sole factor that gave life to the
revival of the funds was the Union Budget. The budget brought about a large number of changes
in one stroke. An insight of the Union Budget on mutual funds taxation benefits is provided later.
It provided centre stage to the mutual funds, made them more attractive and provides
acceptability among the investors. The Union Budget exempted mutual fund dividend given
out by equity-oriented schemes from tax, both at the hands of the investor as well as the mutual
fund. No longer were the mutual funds interested in selling the concept of mutual funds they
wanted to talk business which would mean to increase asset base, and to get asset base and
investor base they had to be fully armed with a whole lot of schemes for every investor .So
new schemes for new IPOs were inevitable. The quest to attract investors extended beyond
just new schemes. The funds started to regulate themselves and were all out on winning the
trust and confidence of the investors under the aegis of the Association of Mutual Funds of India
(AMFI).

Future Scenario
The asset base will continue to grow at an annual rate of about 30 to 35 % over the
next few years as investors shift their assets from banks and other traditional avenues. Some
of the older public and private sector players will either close shop or be taken over.Out of ten
public sector players five will sell out, close down or merge with stronger players in three to
four years. In the private sector this trend has already started with two mergers and one
takeover. Here too some of them will down their shutters in the near future to come.
But this does not mean there is no room for other players. The market will witness a
flurry of new players entering the arena. There will be a large number of offers from various
asset management companies in the time to come. Some big names like Fidelity, Principal, old
Mutual etc. are looking at Indian market seriously. One important reason for it is that most
major players already have presence here and hence these big names would hardly like to get
left behind. The mutual fund industry is awaiting the introduction of derivatives in India
as this would enable it to hedge its risk and this in turn would be reflected in its Net
Asset Value (NAV).
SEBI is working out the norms for enabling the existing mutual fund schemes to trade
in derivatives. Importantly, many market players have called on the Regulator to initiate the
process immediately, so that the mutual funds can implement the changes that are required to
trade in Derivatives.

ORGANIZATION OF A MUTUAL FUND:


A Mutual Fund is set up in the form of trust, which has sponsor, trustees, Asset
Management Company (AMC), and custodian. The trust is established by sponsor or more than
one sponsor who is like a promoter of company. The trustee of mutual fund holds its property
for the benefit of unit holders. Asset Management Company (AMC) approved by SEBI
manages the funds by making investments in various types of securities. Custodian, who
registered with SEBI, holds the securities of the fund in its custody. The trustees are vested with
the general power of superintendence and direction over AMC. They monitor the performance
and compliance of SEBI regulations by mutual fund.
SEBI regulations required that at least two thirds of the directors of trustee company or
board of trustees must be independent i.e. they should not be associated with sponsors. Also,
50% of the directors of the AMC must be independent. All mutual funds are required to be
registered with SEBI before they launch their schemes.

MAJOR MUTUAL FUND COMPANIES IN INDIA


HDFC MUTUAL FUND
HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely Housing
Development Finance Corporation Limited and Standard Life Investments Limited.
RELIANCE MUTUAL FUND
Reliance Mutual Fund was established as trust under Indian Trusts Act, 1882.The
sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the
Trustee. It was registered on June 30, 1995 as Reliance Mutual Fund which was changed on
March 11, 2004. Reliance Mutual Fund was formed for launching of various schemes under
which, units are issued to the public with a view to contribute to the capital market and to
provide investors the opportunities to make investments in diversified securities.
ICICI PRUDENTIAL MUTUAL FUND
The mutual fund of ICICI is a joint venture with Prudential Plc. Of America, one of
the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup
on 13 October, 1993 with two sponsors, Prudential Plc. and the AMC is Prudential ICICI
Asset Management Company Limited incorporated on 22 June, 1993.
BIRLA SUN LIFE MUTUAL FUND
Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life
Financial. Sun Life Financial is a global organization evolved in 1871 and is
being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart
from India. Birla Sun life Mutual Fund follows a conservative long-term approach
to investment. Recently it crossed a AUM of Rs.10,000 crores.
UNIT TRUST OF INDIA MUTUAL FUND
UTI Asset Management Company Private Limited, established in Jan 24,
2003 manages the UTI Mutual Fund with the support of UTI Trustee Company Private
Limited. UTI Asset Management Company presently manages a corpus of over Rs.20, 000
crore. The sponsors of UTI Mutual Fund are Bank of Baroda, Punjab National Bank, State
Bank of India, and Life Insurance Corporation of India. The schemes of UTI Mutual Fund are
Liquid Funds, assets Management Funds, Index Funds and Balanced funds.
ABN AMRO MUTUAL FUND
ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee
(India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India)
Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN
AMRO Mutual Fund.
ING VYSYA MUTUAL FUND
ING Vysya Mutual Fund was setup on February 11, 1999 with the same named
Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING
Investment Management (India) Pvt. Ltd. was on corporated on April 6, 1998.
SAHARA MUTUAL FUND
Sahara Mutual Fund was setup on July 18, 1996 with Sahara India financial
Corporation Ltd. as the sponsor. Sahara Assets Management Company Private
Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid
up capital of the AMC stands at Rs.25.8 crore.
STATE BANK OF INDIA MUTUAL FUND
State Bank of India Mutual Fund is the first Bank sponsored Mutual fund to launch
offshore fund, the India Magnum Fund with a corpus of Rs.225 crore approximately.
Today it is the largest Bank sponsored Mutual Fund in India. They already launched 35
schemes out of which 15 have already yield handsome returns to investors. State Bank of
India Mutual Fund has more than Rs.5, 500 crores as AUM. Now it has an investor base of
over 8 lakhs spread over 18 schemes.
TATA MUTUAL FUND
TATA Mutual Fund is a Trust under the Indian Trust Act, 1882. The sponsors for Tata
Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. the investment
manager is Tata management Limited is one of the fastest in the country with more than
Rs.7,703 crore(as on 2005) of AUM.
KOTAK MAHINDRA ASSET MANAGEMENT COMPANY
Kotak Mahindra Asset Management Company is a subsidiary of KMBL. It is
presently having more than 1, 99,818 investors in its various schemes. KMAMC stared its
operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to
investors with varying risk return profiles. It was the first company to launch to dedicated
gilt scheme investing only in government securities.
STANDARD CHARTERED MUTUAL FUND
Standard Chartered Mutual Fund was setup on March 13, 2000 sponsored by Standard
Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard
Chartered Asset Management Company Pvt. Ltd is the AMC which was incorporated with
SEBI on December 20, 1999.

BENCHMARK MUTUAL FUND


Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services
Pvt. Ltd. as the sponsor and Benchmark Trustee Company Pvt. Ltd. as the trustee Company.
It was incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Assets
Management Company Pvt. Ltd. is the AMC.
CAN BANK MUTUAL FUND
Can Bank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as
the sponsor. Canara bank investment Management Service Ltd. incorporated on March 2, 1993
is the AMC. The Corporate Office of the AMC is in Mumbai.
CHOLA MUTUAL FUND
Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance
Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee
Company and AMC is Cholamandalam AMC Limited.
LIC MUTUAL FUND
Life Insurance Corporation on India setup LIC Mutual Fund on 19 th June 1989.
It contributed Rs.2 crore towards the corpus of the Fund. LIC Mutual Fund was constituted as a
trust in accordance with the provisions of the Indian trust Act, 1882. The Company started its
business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima
Sahayog Asset Management Company Ltd. as the Investment Managers for mutual fund.

Types of Mutual Funds


Mutual fund schemes may be classified on the basis of
Its structure
Its investment objective.
By Structure:
Open-ended Funds:
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.
Closed-ended Funds:
A closed-end fund has a stipulated maturity period which generally ranging from 3 to
15 years. The fund is open for subscription only during a specified period. Investors 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 they 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.
Interval Funds:
Interval funds combine the features of open-ended and close-ended schemes. They are
open for sale or redemption during pre-determined intervals at NAV related prices.
By Investment Objective:
Growth Funds:
The aim of growth funds is to provide capital appreciation over the medium to long-
term. Such schemes normally invest a majority of their corpus in equities. It has been proven
that returns from stocks, have outperformed most other kind of investments held over the long
term. Growth schemes are ideal for investors having a long-term outlook seeking growth over
a period of time.
Income Funds:
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 and
Government securities. Income Funds are ideal for capital stability and regular income.
Balanced Funds:
The aim of balanced funds is to provide both growth and regular income.
Such schemes periodically distribute a part of their earning and invest both in equities and
fixed income securities in the proportion indicated in their offer documents. In a rising stock
market, the NAV of these schemes may not normally keep pace, or fall equally when the
market falls. These are ideal for investors looking for a combination of income and moderate
growth.
Money Market Funds:
The aim of money market funds is 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 interbank call money. Returns on
these schemes may fluctuate depending upon the interest rates prevailing in the market. These
are ideal for Corporate and individual investors as a means to park their surplus funds for short
periods.
Load Funds:
A Load Fund is one that charges a commission for entry or exit. That is, each time you
buy or sell units in the fund, a commission will be payable. Typically entry and exit loads
range from 1% to 2%. It could be worth paying the load, if the fund has a good performance
history.
No-Load Funds:
A No-Load Fund is one that does not charge a commission for entry or exit. That is,
no commission is payable on purchase or sale of units in the fund. The advantage of a no load
fund is that the entire corpus is put to work.
Other Schemes:
Tax Saving Schemes:
These schemes offer tax rebates to the investors under specific provisions of the Indian
Income Tax laws as the Government offers tax incentives for investment in specified avenues.
Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are
allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities
to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided
the capital asset has been sold prior to April 1, 2000 and the amount is invested before
September 30, 2000.
Special Schemes:
Industry Specific Schemes:
Industry Specific Schemes invest only in the industries specified in the
offer document. The investment of these funds is limited to specific industries like
InfoTech, FMCG, and Pharmaceuticals etc.
Index Schemes:
Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex
or the NSE 50.
Sectoral Schemes:
Sectoral Funds are those, which invest exclusively in a specified industry or a group
of industries or various segments such as 'A' Group shares or initial public offerings.
BENEFITS OF MUTUAL FUND INVESTMENT
Professional Management:
Mutual Funds provide the services of experienced and skilled professionals, backed
by a dedicated investment research team that analyses the performance and prospects of
companies and selects suitable investments to achieve the objectives of the scheme.
Diversification:
Mutual Funds invest in a number of companies across a broad cross-section of
industries and sectors. This diversification reduces the risk because seldom do all stocks
decline at the same time and in the same proportion. You achieve this diversification through
a Mutual Fund with far less money than you can do on your own.
Convenient Administration:
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems
such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual
Funds save your time and make investing easy and convenient.
Return Potential:
Over a medium to long-term, Mutual Funds have the potential to provide a
higher return as they invest in a diversified basket of selected securities.
Low Costs:
Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage, custodial and other
fees translate into lower costs for investors.
Liquidity:
In open-end schemes, the investor gets the money back promptly at net asset value
related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock
exchange at the prevailing market price or the investor can avail of the facility of direct
repurchase at NAV related prices by the Mutual Fund.
Transparency:
You get regular information on the value of your investment in addition to disclosure
on the specific investments made by your scheme, the proportion invested in each class of
assets and the fund manager's investment strategy and outlook.
Flexibility:
Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans, you can systematically invest or withdraw funds according to
your needs and convenience.
Affordability:
Investors individually may lack sufficient funds to invest in high-grade stocks.
A mutual fund because of its large corpus allows even a small investor to take the benefit of its
investment strategy.
Choice of Schemes:
Mutual Funds offer a family of schemes to suit your varying needs over a life time.
Well Regulated:
All Mutual Funds are registered with SEBI and they function within the provisions of
strict regulations designed to protect the interests of investors. The operations of Mutual Funds
are regularly monitored by SEBI.
LIMITATION OF MUTUAL FUND INVESTMENT
No Control over Cost:
An Investor in mutual fund has no control over the overall costs of investing. He pays
an investment management fee (which is a percentage of his investments) as long as he
remains invested in fund, whether the fund value is rising or declining. He also has to pay
fund distribution costs, which he would not incur in direct investing.
However this only means that there is a cost to obtain the benefits of mutual
fund services. This cost is often less than the cost of direct investing.
No Tailor-Made Portfolios:
Investing through mutual funds means delegation of the decision of
portfolio composition to the fund managers. The very high net worth individuals or large
corporate investors may find this to be a constraint in achieving their objectives.
However, most mutual funds help investors overcome this constraint by offering large
no. of schemes within the same fund.
Managing a Portfolio of Funds:
Availability of large no. of funds can actually mean too much choice for the investors.
He may again need advice on how to select a fund to achieve his objectives. AMFI has taken
initiative in this regard by starting a training and certification program for prospective Mutual
Fund Advisors. SEBI has made this certification compulsory for every mutual fund advisor
interested in selling mutual 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.
Cost of Churn:
The portfolio of fund does not remain constant. The extent to which the portfolio
changes is a function of the style of the individual fund manager i.e. whether he is a buy and
hold type of manager or one who aggressively churns the fund. It is also dependent on the
volatility of the fund size i.e. whether the fund constantly receives fresh subscriptions and
redemptions.
RECENT TRENDS IN MUTUAL FUND INDUSTRY
The most important trend in the mutual fund industry is the aggressive expansion of
the foreign owned mutual fund companies and the decline of the companies floated
by nationalized banks and smaller private sector players. Many nationalized banks got into
the mutual fund business in the early nineties and got off to a good start due to the stock
market boom prevailing then. These banks did not really understand the mutual fund business
and they just viewed it as another kind of banking activity.
Few hired specialized staff and generally chose to transfer staff from the parent
organizations. The performance of most of the schemes floated by these funds was not good.
Some schemes had offered guaranteed returns and their parent organizations had to bail out
these AMCs by paying large amounts of money as the difference between the guaranteed and
actual returns. The service levels were also very bad.
Most of these AMCs have not been able to retain staff, float new schemes etc. and it
is doubtful whether, barring a few exceptions, they have serious plans of continuing
the activity in a major way. The experience of some of the AMCs floated by private
sector Indian companies was also very similar. They quickly realized that the AMC business
is a business, which makes money in the long term and requires deep-pocketed support in the
intermediate years.
Some have sold out to foreign owned companies, some have merged with others and
there is general restructuring going on. The foreign owned companies have deep pockets and
have come in here with the expectation of a long haul. They can be credited with introducing
many new practices such as new product innovation, sharp improvement in service standards
and disclosure, usage of technology, broker education and support etc. In fact, they have
forced the industry to upgrade itself and service levels of organizations like UTI have
improved dramatically in the last few years in response to the competition provided by these.
WHY SHOULD INVESTORS INVEST IN MUTUAL FUND?
An investor avails of the service of experienced and skilled professionals who
are backed by a dedicated of companies and selects suitable investments to achieve
the objectives of the schemes.
Mutual funds invest in a number of companies across a broad cross-section of
industries and sectors. This diversification reduces the risk because seldom do all the stocks
decline at the same time and in the same proportion. The investors achieve this diversification
through a mutual fund with far less money than you can do on our own.
Investing in a mutual fund reduces paperwork and helps an investor
avoid many problems such as bad deliveries, delayed payments and unnecessary follow.

EMERGING ISSUES IN MUTUAL FUND


Rating of Mutual Fund Schemes:
Total returns have been the criteria for measuring the performance of mutual fund.
Therefore, CRISIL has development a composite performance ranking which
measures performance for each of the open-ended schemes. According to CRISIL, this
measure is applicable only to those schemes, which are at least two years old and disclose
100% of their portfolios.
Changes in Mutual Fund due to the Advent of Net:
As per SEBI regulations, bond funds and equity funds can charge a maximum of 2.25%
and 2.5% as administrative fees, respectively. Mutual Funds could bring down their
administrative costs to 0.75%, if trading is done online and consequently improves the return
potential of their schemes. Mutual Funds could provide better advice or service to their
investors through the Net.
New Norms on NPA Classification:
The Malegan committee has made important recommendations regarding norms on
classification of NPAs in debt securities and norms for valuation of liquid securities in a
mutual fund schemes. The committee has recommended that debt securities held by mutual
fund in their portfolio can be classified as NPA, if the principal or interest is not received for
six months. The mutual funds will have to disclose the NPAs to unit holders in a half-yearly
basis.
INFLUENCE OF TECHNOLOGY:
A majority of the mutual fund have their own websites providing basic information
relating to the schemes. Mutual Fund has begun to use electronic fund transfer method top
remit their dividends and redemption proceeds. However, the most significant influence of
technology is seen in servicing investors. So technology can bridge the gap between investor
education and products positioning.

PRODUCT INNOVATION:
Product innovation is an emerging feature in the mutual fund industry in India. Most of
the products offered by mutual fund can be divided among three classes of cash funds,
income funds and equity funds. The year 2002 was different in that the products offered were
far more innovative. Templeton India launched a debt fund that would invest predominantly in
floating rate bonds.
INDICES FOR MUTUAL FUNDS:
The AMFI has recently launched four indices for gilt funds and another set of indices
for balanced funds, bond funds, monthly income plans and liquid funds. The indices, which
have been developed and will be maintained by ICICI securities and finance companied and
CRISIL.com, respectively, will be mandated for use by mutual funds to enable the comparison
of performance.
FUNDS OF FUNDS:

The SEBI may soon permit mutual funds to float a new category of funds called funds
of funds, which will invest in other mutual fund schemes. These schemes will enable people
to invest in different mutual funds schemes through a single fund.
DEBT SCHEMES

Definition of 'Debt Fund'


An investment pool, such as a mutual fund or exchange-traded fund, in which core
holdings are fixed income investments. A debt fund may invest in short-term or long-term
bonds, securitized products, money market instruments or floating rate debt. The fee ratios on
debt funds are lower, on average, than equity funds because the overall management costs are
lower.

ADVANTAGES OF INVESTING IN DEBT MUTUAL FUND SCHEMES

The debt route:


In an environment where investors seek to achieve an asset allocation between debt and
equity, that suits their requirements, investing in debt mutual fund schemes as a part of their
debt allocation would offer investors many advantages. For starters, debt funds offer a
superior risk-adjusted proposition along with tax benefits.

While fixed deposits might appeal to conservative investors, in a growing economy like
India, inflation is a fact of life, which eats into the returns earned on investments. From an
inflation-adjusted perspective, fixed income mutual funds compare very favorably to fixed
deposits.

"The fact is that debt funds are viable alternatives to other debt oriented products is not
widely understood by the investing populace. Most investors still concentrate on the 'mutual
fund' part of the asset and miss the significance of the underlying fixed income nature of the
product. While the tax advantages are just one part, the sheer variety of products available for
every risk, return and liquidity requirement is in itself a significant advantage," says Rajiv
Shastri, head, business development and strategic initiatives, Lotus India AMC.

Added advantage:
In the investment world, it is not an either/or scenario between debt and equity. Basic
principle of sound investing postulates a diversified portfolio. Though debt funds often may
just be the difference between being able to retain the profits and loosing it all in the next
round of volatility. The main advantage of debt funds is relatively lower risk and steady
income additional to liquidity of investments, professional fund management expertise at low
costs besides diversification of portfolio to have a balanced risk return profile.
"FDs generally have a lock-in-period wherein in a pre-mature withdrawal by an investor
would mean a monetary penalty that would be charged to the investor. Moreover, debt funds
could generate better yields during economic growth, dependent on the kind of scheme
chosen by the investor. A fund invests in range of securities leading to diversification of risk,
an important parameter for an investor. Also, certain funds offer regular income schemes
where the interest payment is given to investor for his investment at regular intervals. A
facility not available with FDs," says Puneet Srivastav, fund manager debt, Sahara Mutual
Funds.

Debt funds also tend to perform better in periods of economic slowdown. Analysts believe
that debt should be looked upon as an effective hedge against equity market volatility, which
lends stability in terms of value and income to a portfolio. Some hybrid debt schemes take
exposure in equities allowing investors participate in the stock markets as well.

The options
Debt funds have a fairly wide range of schemes offering something for all types of investors.
Liquid fund, Liquid plus funds, Short term income funds, GILT funds, income funds and
hybrid funds are some of the more popular categories
DIFFERENT TYPES OF DEBT FUNDS:

A debt mutual fund scheme invests in debt papers like government bonds, fixed deposits, and
approved private deposits and so on. By investing in debt instruments, these funds ensure low
risk and provide stable income to the investors. The different types of debt funds are:

1. GILT FUNDS:

They invest their corpus in securities issued by the government. These funds carry zero
default risk but are associated with interest rate risk. So, there could be a possibility that the
debt funds lose some part of their net asset value (NAV) also. But these schemes are safer as
they invest in papers backed by government.

2. INCOME FUNDS

This fund category invests majorly in debt instruments with the aim of generating regular and
steady income for the investors. They invest a major portion in various debt instruments such
as bonds, corporate debentures and government securities.

3. MONTHLY INCOME PLANS (MIP)

They invest most of their corpus in debt instruments and minimum in equities. They get the
benefits of both equity and debt market. These schemes rank slightly high on the risk-return
matrix. These try to give you a monthly income in the form of dividends, which is of course
not guaranteed. These funds are for investors, who have a big corpus initially, and would like
to generate a monthly income for themselves with low to moderate risk.

4. SHORT TERM PLANS (STPS)

These funds are for those with an investment horizon of 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.

5. LIQUID FUNDS

They are also known as money market schemes. These provide easy liquidity and
preservation of capital. These schemes invest in short-term instruments like Treasury Bills,
inter-bank call money market, Commercial papers (CPs) and Commercial deposits (CDs)
and are meant for an investment horizon of one day to three months. This basket of
investments is suitable for people who do not want take risky position in their portfolio. The
returns, however, are not as high as compared to high-risk investments .This is a better option
for people who put their money in the saving accounts because of their transaction
requirements.

6. Fixed Maturity Plans: A closed-end fund that invests in debt and money market
instruments of the same maturity as the stated maturity of the plan. The focus of a fixed
maturity plan is to provide a stream of income through interest payments, while exposing the
investor to a lower level of risk.
7. Floating Rate Funds: An open-end fund that invests in structural debt and money market
instruments whose income is linked with the interest rate scenario in the market for example
if market rate of interest goes up then these instruments will provide extra returns than the
earlier expected.
8. Monthly Income Plans: This is an open-ended debt scheme which invests majorly in debt
instruments along with some part of their investments in equity space so that able to provide
better return than a 100% debt funds. These types of funds are suitable for investor who
wants to have better returns than a pure debt fund.
Portfolio of a Debt Scheme:

Portfolio of a debt fund invests in Money Market instruments like:

Treasury bills.
Certificate of Deposits.
Commercial Papers.
Reverse Repo and Repo.

Treasury bills:

Treasury Bills are the most marketable of all the money market instruments. It is issued by
the Government. The Government sells the bills to the public to raise money. At the maturity
period, the holder receives the face value of the T-bill. They are issued with initial maturities
of 28, 90, or 182 days. The government security dealers sell the T-Bill, so that investors can
purchase directly, or by auction. Income earned from a T-Bill is exempt from all the state and
local taxes

Certificates of Deposit:

A Certificate of Deposit, or CD, is a time deposit with a bank. Time deposits may not be
withdrawn on demand. The principal and the interest amount are paid only at the end of the
fixed term of the CD. Short term CDs are highly marketable.

Commercial Papers:

Large companies often issue their own short-term unsecured debt notes rather than borrow
directly from banks. These notes are called commercial paper. The maturity of a commercial
paper ranges up to 270 days. Most often, commercial papers are issued with maturities of
less than 1 or 2 months.

Reverse Repo and Repo:


Repurchase agreements, also called repo or RP are used by dealers in Government
Securities, as a form of short-term, usually overnight borrowing. The investors buy the
government securities from the dealers on an overnight basis, with an agreement to buy back
those securities the next day at a slightly higher price. The increase in price is considered as
the interest. Thus the dealer takes out a 1 day loan and the security serve as collateral. Repos
are considered very safe in form of credit risk because the loans are backed by the
Government securities. A reverse repo is the mirror image of a repo. Here, the dealer finds
an investor holding Government securities and buys them, agreeing to sell them back at the
specified higher price on a future date.

1.3 COMPANY PROFILE:


Birla Sun Life Asset Management Company Limited (BSLAMC), the investment
manager of Birla Sun life Mutual Fund, is a joint venture between the Aditya Birla Group
and Sun Life Financial Services, leading international financial services organization. The
joint venture brings together the Aditya Birla Group's experience in the Indian market and
Sun Life's global experience.

Birla Sun Life Mutual fund has established in 1994, emerged as one of India's leading
flagships of Mutual Funds business managing assets of a large investor base. Their solutions
offer a range of investment options, including diversified and sector specific equity schemes,
fund of fund schemes, hybrid and monthly income funds, a wide range of debt and treasury
products and offshore funds.
Birla Sun Life Asset Management Company has one of the largest team of research
analysts in the industry, dedicated to tracking down the best companies to invest in.
BSLAMC strives to provide transparent, ethical and research-based investments and wealth
management services.

Heritage
The Aditya Birla Group
The Aditya Birla Group is one of India's largest business houses. Global in vision,
rooted in Indian values, the Group is driven by a performance ethic pegged on value creation
for its multiple stakeholders.
The Group operates in 26 countries India, UK, Germany, Hungary, Brazil, Italy,
France, Luxembourg, Switzerland, Australia, USA, Canada, Egypt, China, Thailand, Laos,
Indonesia, Philippines, UAE, Singapore, Myanmar, Bangladesh, Vietnam, Malaysia, Bahrain
and Korea.
A US $29 billion corporation in the League of Fortune 500, the Aditya Birla Group is
anchored by an extraordinary work force of 130,000 employees, belonging to 40 different
nationalities. Over 60 per cent of its revenues flow from its operations across the world.

The Aditya Birla Group is a dominant player in all its areas of operations viz;
Aluminum, Copper, Cement, Viscose Staple Fiber, Carbon Black, Viscose Filament Yarn,
Fertilizers, Insulators, Sponge Iron, Chemicals, Branded Apparels, Insurance, Mutual Funds,
Software and Telecom.
The Group has strategic joint ventures with global majors such as Sun Life (Canada),
AT&T (USA), the Tata Group and NGK Insulators (Japan), and has ventured into the BPO
sector with the acquisition of Trans Works, a leading ITES/BPO company.

Sun Life Financial


Sun Life Financial Inc is a leading international financial services organization
providing a diverse range of wealth accumulation and protection products and services to
individuals and corporate customers. Chartered in 1865, Sun Life Financial Inc and its
partners today have operations in key markets worldwide, including Canada, the United
States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and
Bermuda.

Track record
With a proven track record of 17 years, birlasunlife mutual fund has been a catalyst
towards the growth of the private sector asset management business.

VISION:
To be the most trusted name in investment and wealth management, to be the preferred
employer in the industry and to be a catalyst for growth and excellence of the asset management
business in India.

MISSION:
To consistently pursue investors wealth optimization by:
Achieving superior and consistent investment results.
Creating a conductive environment to hone and retain talent.
Providing customer delight.
Institutionalizing system-approach in all aspects of functioning.
Upholding highest standards of ethical values at all times.
CHAPTER -2
DEVELOPMENT
OF MAIN THEME

2.1 NEED OF THE STUDY:


To identify the type of schemes mostly preferred to the investors. This analysis
intimates the strength of the selected debt scheme of birlasunlife with other selected AMC.
The investor can able to identify the scheme which suits him the best in accordance with
investment objective, liquidity and safety. The investor can able to analyse his scheme for
better investment before investing. As there is wide variety of debt schemes provided, this
project also identifies which AMCs debt schemes are more profitable provided with best
NAV and ranking.

2.2 SCOPE OF THE STUDY:


The schemes was categorized and selected on evaluating their performance and
relative risk.

The scope of the project is mainly concentrated on knowing the potential strength of
the debt scheme.

The subject matter relates to comparison of debt schemes of mutual funds based on
three measures that are Sharpe measures, Treynor measures and Jensen measures.

It allows finding the better debt schemes which is preferably less risky and ranked
among AMCs.
2.3 OBJECTIVES OF THE STUDY:

Primary Objective:

To study and compare the selected mutual funds in debt schemes.

Secondary Objective:

1. To evaluate the performance of the selected mutual funds.


2. To make comparison among the selected mutual funds.
3. To analyze and understand the progressive trends in the mutual funds.
4. To suggest few corrective measures to show that mutual funds are worthy investment
practice.
2.4 LIMITATIONS OF THE STUDY:

The data collection here in this project is strictly confined to the secondary sources.
No primary data was associated with the project.
Collecting historical NAV, returns is very difficult
Selection of the schemes for the study is also a very difficult task because of the wide
variety of schemes.
The scope of the study was limited, as only a few AMCs and schemes were chosen for
the study.

It was tried very harder to include the best of information from published and
unpublished sources available on internet, but some of the data required for the
detailed study were not available freely.

The time frame for the study is limited only to four years (2009- 2012).

The study is limited to only top 5 AMCs.


2.5 REVIEW OF LITERATURE:

Reddy B.S Srinivasalu, Mutual Fund houses turn to debt schemes as interest
rates rise, Aug.2011. In this article author conveys that redemption pressures are mounting
on equity mutual fund (MF) schemes in the wake of rising volatility in the equity market,
though they have not reached alarming proportions yet. Besides, many fund houses are
witnessing shift of money from equity schemes to debt schemes in line with the rising interest
rate scenario.
Aman & Tiwari Dheeraj Investing in debt mutual fund schemes offer many
advantages, Nov 25, 2007. Author suggest that With the economy surging ahead at a
consistent pace and the stock markets reveling in the India growth story, it appears that
anything you put your hands on is turning into gold. However, analysts advise that as an
investor it is pertinent to have a mix of investment instruments in your portfolio so as to
avoid any risk. What investor missed despite being a risk-averse investor were other
alternatives such as debt funds, which could have worked for him both ways securing
returns whilst at the same time getting the tax advantage.
Agrawal Deepak and Patidar Deepak, A comparative study of debt based
mutual fund of RELIANCE and HDFC. This article provides an overview of mutual fund
activity in emerging markets. It describes about their size and their asset allocation. All fund
managers are not successful in the formation of the portfolio and so the study also focuses on
the empirically testing on the basis of fund manager performance and analyzing data at the
fund-manager and fund-investor levels. The study revealed that the performance is affected
by the saving and investment habits of the people and at the second side the confidence and
loyalty of the fund Manager and rewards- affects the performance of the MF industry in
India.
Bodla and Sunit Emerging Trends of Mutual Funds in India: A Study Across
Category and Type of schemes 2007. In his study examines the growth of Indian mutual
fund industry in terms of increase in number of schemes and funds mobilized. The analysis
has been carried across nature, type and sector of the schemes. The result shows that the total
schemes have grown to above 1200 and the total purchases during 2006 crossed Rs. 3.5 lakh
crores. The private sector funds and joint ventures have outperformed the public sector funds.
Tetsuya Kamiyama Indias Mutual Fund Industry 2007. In this study author
provided an overview of the assets managed within Indias mutual fund market, both now and
in the past, and of the legal framework for mutual funds, and then discussed the current
situation and recent trends in financial products, distribution channels and asset management
companies.
Rakesh Mohan Recent Trends in the Indian Debt Market and Current
Initiatives. In this study author suggest that the first such significant change is the
prohibition of RBIs subscription to Government securities in the primary market effective
April 1, 2006, as mandated by the Fiscal Responsibility and Budget Management (FRBM)
Act. Second, as a consequence of the recommendations of the Twelfth Finance Commission,
the role of the Central Government as a financial intermediary for State Governments is
effectively ending, although there will be some transitional arrangements. Thus State
Governments' borrowing will be more and more market determined. Third, the economy is
estimated to be growing at 8.1 per cent this year with modest inflation and if similar
conditions prevail, we can expect growth and inflation next year to also be on a similar path.
This development has reemphasized the fact that bond financing has to supplement traditional
bank financing to take care of the growing credit needs of the economy and that resource
allocation has to be more efficient.
Jensen 1967 derived a risk-adjusted measure of portfolio performance (Jensens
alpha) that estimates how much a managers forecasting ability contributes to funds returns.
Sharpe, William (1994) suggested the Sharp- Ratio technique for the measurement for the
performance measurement of the MF. Berkowitz et.al,(1997), supports the argument& states
that, past fund performance influences individual investment decisions along with implying
strong incentives for managers increase the performance of Mutual funds.
Mishra, Rehman 2000 measured MF performance using lower partial moment Risk
from the lower partial moment is measured by taking into account only those states in which
return is below a pre-specified target rate like risk-free rate. Brealey and Mayers (2002)
supported Quality of Earnings as a key performance measure. Earnings can be manipulated
by adopting different accounting policies. Further supported by Grahm et al. (2002), analyst
rely on the primarily data, reported cash flows and the use of the accounting conservations in
evaluating companies. Ramasamy et al, (2003), agreed that three elements consistent past
performance, size of funds & cost of transaction effects the performance.
Roy & Deb 2003 used conditional performance evaluation on a sample of 89 Indian
MF schemes measuring with both unconditional and conditional form of CAPM model.
The results suggest that the use of conditioning lagged information variables improves the
performance of mutual fund schemes, causing alphas to shift towards right and reducing the
number of negative timing coefficients. Rao, Ravindran (2003) evaluated performance in a
bear market through Relative Performance Management index & risk return analysis.
Panwar et.al 2005 uses Residual Variance (RV) as the measure of MF portfolio
diversification. RV has a direct impact on shape fund performance measure. Kacperczyk et.al
(2005) demonstrated that unabsorbed information creates values for some funds.
Return gap helps to predict future fund performance & investors should use additional
measures to evaluate the performance.
Agrawal 2006 analyzes the Indian Mutual Fund Industry pricing mechanism with
empirical studies on its valuation. The study revealed that the performance is affected saving
and investment habits of the people.
CHAPTER -3
RESULTS OF THE
STUDY

3.1 RESEARCH METHODOLOGY:


RESEARCH DESIGN:
According to KERLINGER the plan, structure and strategy of investigation
conceived so as to obtain data to research questions and to control variance.
The design of the study is ANALYTICAL. The data that is being used are facts and
information that are already available in the fund fact sheet and various related websites for
the purpose of analysis.

Data Collection:

Nature of Data:
Secondary data is used in this study.

Source of Data:
Secondary Data are collected from various sources such as the company, books,
journals, and related websites.

Tools:

The financial measures being used for analysis are:

STATISTICAL TOOLS:

Mean Returns
Standard Deviation (Risk)

PERFORMANCE TOOLS:
Beta (Risk)
Sharpe Ratio
Treynor Ratio

Mean Returns:
Returns are basically the percent change of the market value of scrip over time.
Return on a typical investment consists of two components. The basic component is the
periodic cash receipts (or income) on the investment, either in the form of interest or
dividends. The second component is the change in the price of the asset commonly called
the capital gain or loss. This element of return is the difference between the purchase price
and the price at which the asset can be or is sold; therefore, it can be a gain or a loss.

The return has been calculated as under:

Return: R = (Pt Pt-1)/Pt-1

Where, R is the difference between prices for two consecutive days divided by the
price of the preceding day

Market Return: Rmt = (M.Indt-M.Indt-1)/M.Indt-1

Where, Rmt is the difference between markets indices of two consecutive days divided
by market index for the preceding day.

Risk on securities

Risk on securities has two parts.

Total risk = systematic risk + unsystematic risk.


Unsystematic risk: Investors can eliminate unsystematic risk when they invest their
wealth in a well diversified market portfolio. They can be controlled.
Systematic risk: Arises on account of the economy-wide uncertainties and the
tendency of individual securities to more together with change in the market. They
cannot be controlled.
It is also known as market risk.
Capital asset pricing model (CAPM) is used to find systematic risk of securities.

Standard Deviation: Measure of Total Risk:


It is used to measure the variation in individual returns from the average expected
return over a certain period. Standard deviation is used in the concept of risk of scrip. Higher
standard deviation means a greater fluctuation in expected return. The standard
deviation for the monthly returns are calculated and annualized by multiplying with square
root of twelve.

= ( X X )/N

= (x-xbar) 2/ N

Where, x is the sample means,

N is the total number of the observation or sample size.

Beta: Measure of Systematic Risk:


The market or systematic risk of a security is measured in terms of its sensitivity to
the market movements. This sensitivity is referred to the securitys .
j = COVjm/varm = j m CORjm/m2 = j CORjm/m
where, j- of security,

j- Standard Deviation of return of security,

m- Standard Deviation of return of market portfolio,

CORjm- Correlation Co-efficient between return of security, j and


Market portfolio, m.

The expected return on the share of a company depends on its beta. If value is high
the expected return will also be high.

significance:

A beta of 1.0 indicates average level of risk.


A security with a beta value greater than 1 is referred to as an aggressive security.
That is, the securities return fluctuates more than that of the market portfolio.
A security with a beta value less than 1 is referred to as a defensive security.
A beta that is actually less than zero a negative Beta is typical of issues that move
contrary to the general market, going down in bull markets and rising in bear
markets.
A Beta of .5 implies that the security return moves only half as much as the market
does ad a zero means no risk.

Sharpe Ratio:
The Sharpe ratio is a risk-adjusted measure of return that is often used to evaluate
the performance of scrip.

Sharpe Ratio = (Rp Rf) / p

Where, Rp Average Annualized Return of the Scrip


Rf Risk free rate of return

p is standard deviation of the Scrip

The Sharpe ratio is used to measure reward to variability, in terms of total risk taken
by the investor. The higher standard deviation in the scrip indicates the portfolio is not
perfectly diversified. Standard values for the Sharpe ratio would be between 0.5 and 3. A
ratio of 1 or better is considered good, 2 and better is very good, and 3 and better is
considered excellent. Sharpe ratios shown above would be compared along with their
appropriate indices Sharpe ratio.

Treynor Ratio:

Treynor ratio is a risk-adjusted measure of return based on systematic risk. It is similar to


the Sharpe ratio with the difference being that it used beta as the measurement of volatility.
The Treynor ratio is calculated as follows:

Treynor Ratio = (Rp Rf)/ p

Where, Rp Average Annualized return of the Scrip

Rf Risk free Rate

p Systematic Risk of the Scrip

Treynor Ratio evaluates the performance with respect to the systematic risk. Just like
the rule for interpreting the Sharpe ratio, the higher the number the better. Like the Sharpe
ratio, the Treynor Ratio (sometimes called reward-to-variability-ratio) also relates excess
return to risk; but systematic risk instead of total risk is used. The higher the ratio better is the
performance under analysis.

Jensen Ratio:

The treynor and sharpe indexes provide measures for ranking the relative
performances of various port folios, on a risk- adjusted basis. Jensen attempts to construct a
measure of absolute performance on a risk-adjusted basis,(i.e.)a definite standard against
which performance of various funds can be measured. This standard is based on measuring
the port folio managers predictive ability (i.e.) his ability to earn returns through successful
prediction of security prices which are higher than those which we could expect given the
level of riskiness of his portfolio

Jensen = Rf+(Rm-Rf)

Where, Rf Risk free Rate.

p Systematic Risk of the Scrip.

Rm average return on market portfolio.

Here a positive value represents average superior extra return accuring to that
particular portfolio. Zero indicates neutral performance, and a negative value indicates
inferior performance.

3.2 DATA ANALYSIS AND INTERPRETATION

COMPARISION OF DEBT SCHEMES:


The top 5 Indian Asset Management companys debt schemes are compared.
Selection of AMCs: The top 5 AMCs based on CRISIL rating are being chosen for
comparison by analyzing the corpus of the AMCs. The company which holds the highest
corpus is considered as the top AMC. According to Association of Mutual Funds in India, the
top 5 AMCs in India Based on the Asset under Management (AUM) are:
1. Reliance Mutual Fund.
2. HDFC Mutual Fund.
3. ICICI Prudential Mutual Fund.
4. Birla Sun Life Mutual Fund
5. UTI Mutual Fund.

SELECTION OF SCHEMES: The debt schemes of AMCs can be grouped into various
categories based on their investment objective. The selected schemes are dynamic bond fund,
income plus, gilt plus schemes. They are being selected based on the long term, medium term
and short term fund basis.

DYNAMIC BOND FUND:


Income solution that aims to generate optimal returns through active management by
capturing positive price and credit spread movements.

INCOME PLUS:
A fund that invest in a combination of bonds and government securities of varying
maturities from time to time with an aim to optimize returns.

GILT PLUS:

The fund that aims to generate income and capital appreciation by investing
exclusively in government securities.

3:2:1. PERFORMANCE ANALYSIS- SHARPE RATIO:


TABLE No.3:2:1.1. TABLE STATING THE PERFORMANCE OF DYNAMIC BOND
FUND:
COMPANY 2009 2010 2011 2012

BSL 3.049722 3.176503 9.304249 7.993502


RELIANCE -0.71429 6.180952 3.967048 8.975524

ICICI 0.30212 8.005474 12.69267 7.585008

UTI 0.970226 8.57931 3.591212

Source: Collected and compiled from data sheet.

Findings:
The Sharpe ratio is a risk-adjusted measure of return that is often used to evaluate the
performance of script. The ratio helps to compare the performance of one script with that of
another script by making an adjustment for risk. The above table shows the sharpe ratio for
the dynamic bond fund for the period of four years 2009 to 2012. From the above table it
states that during the year 2009 Reliance alone had a negative sharpe ratio. The ratio of 3 or
more is considered to be excellent in case of sharpe ratio. From the above table it intimates
that the Birlasunlife performance is excellent as its ratio is more than 3 (from 2012-2009).In
the year 2011 it has performed better as compared to other years. In the year 2010 it has a
quiet slag in its performance but that doesnt majorly affected the scheme.

Inference:
It is inferred that the comparative performance of the study, ICICI dynamic bond has
a better performance for the past four years, UTI and Reliance had a poor performance.
CHART No.3:2:1.1. CHART SHOWING THE PERFORMANCE OF DYNAMIC
BONDFUND

14

12

10

8
2009
2010
6 2011
2012
4

2
0.3

0
12.6

BSL RELI ICICI UTI


3
3.1
9.3
7.9

6.1
3.9
8.9

7.5

0.97
8.5
3.5
-0.7

-2
TABLE No.3:2:1.2. TABLE STATING THE PERFORMANCE OF INCOME FUND
COMPANY 2009 2010 2011 2012

BSL -0.11593 1.821184 4.878056 9.511392

RELIANCE -0.08811 2.334225 2.709317 12.97472

ICICI 0.040369 1.080446 1.8051 3.63401

HDFC 0.106325 2.746479 2.699782 4.965611

Source: Collected and compiled from data sheet.

Findings:
Sharpe ratio evaluates the performance of schemes. The above table intimates that
Birla sunlife income fund shows a drastic performance. Though Reliance shows a negative
value in the year 2009 but it is found to be rising till the year 2011, and during 2012 it
showed a very good performance as compared to 2009. Whereas ICICI shows a consistent
performance, and HDFC shows a clear cut performance for the years. The above table
represents that Birlasunlife is being performing well, as the ratios are increasing without any
slag in the performance from the year 2009-2012. In the year 2009 it shows negative value
which intimates that the performance is not up to the standard, but in the later years it shows
better ratio which implies its steady growth in its performance.

Inference:
From the above table it implies that reliance shows better performance when
compared to all the other four AMCs for the past four years and ICICI showed poor
performance.
CHART No.3:2:1.2. CHART SHOWING THE PERFORMANCE OF INCOME FUND

14

12

10

8
2009
2010
6 2011
2012
4

2
0.04

0.1

0
12.9

1.08

BSL RELI ICICI HDFC


1.8
4.8
9.5

2.3
2.7

1.8
3.6

2.7
2.6
4.9
-0.08
-0.11

-2

TABLE No.3:2:1.3. TABLE STATING THE PERFORMANCE OF GILT FUND


COMPANY 2009 2010 2011 2012

BSL 5.280916 2.192523 9.372289 39.55366

RELIANCE -0.42271 -0.50685 4.906818 5.793684

ICICI -0.12749 2.002903 1.440989 4.487596

HDFC -0.41956 2.516194 2.017484 2.691628

UTI -0.44201 1.667009 5.751254 2.791332

Source: Collected and compiled from data sheet.

Findings:
From the study the sharpe ratio which indicates the performance of the schemes, Birla
sunlife shows a consistent performance during the years and it is the AMC which shows a
better performance as compared to other AMCs. Reliance, ICICI and UTI showed a
consistent performance. While HDFC shows a constant performance for the calculated years.
In the above given table, it indicates that Birla sunlife gilt fund performs excellent as
compared with other four AMCs for the past 4 years. The Birla sunlife shows excellent
performance for the year 2009-2012, though its ratio declines in the year 2010 it shows a
steady growth in the year 2011 and in the year 2012 it as very high performance.

Inference:
From the above table it is inferred that Birlasunlife performed well and UTI had poor
performance.
CHART No.3:2:1.3. CHART SHOWING THE PERFORMANCE OF GILT FUND

40

35

30

25
2009
20
2010
2011
15 2012

10
2.5

5
1.6
2

0
BSL RELI ICICI HDFC UTI
39.5
5.2
2.1
9.3

4.9
5.7

1.4
4.4

2
2.6

5.7
2.7
-0.12
-0.4

-0.41

-0.44
-0.5

-5
3:2:2. PERFORMANCE ANALYSIS- TREYNOR RATIO:
TABLE No.3:2:2.1. TABLE STATING THE PERFORMANCE OF DYNAMIC BOND
FUND
COMPANY 2009 2010 2011 2012

BSL 6.906723 7.648684 19.25335 7.235948

RELIANCE 3.25 15.09302 5.759468 54.61702

ICICI -0.52532 18.72049 -30.7296 3.509275

UTI 2.959633 23.53514 -6.71445

Source: Collected and compiled from data sheet.


Findings:
Treynor is called as reward to volatility ratio, it considers portfolio beta as a measure
of risk, and this beta designates the market risk of the given portfolio. The dynamic bond
fund, according to treynor ratio intimates the schemes better performance. The Birlasunlife
shows a consistence raising performance but it showed a fall in its performance value in the
year 2012. The Reliance and UTI shows a uneven spread of performance during the four
years. The ICICI shows an ebb and flow performance for the calculated years. According to
treynor ratio the higher the ratio higher the performance of the scheme. As per the above table
Birlasunlife dynamic fund shows good performance and in the year 2011 it shows a drastic
higher performance. But in the year 2012 the performance seems to be down as compared to
2011 and 2010.

Inference:
The chart also implies that reliance performs excellent when compared to the other 3
funds as it contains higher ratio.
CHART No.3:2:2.1. CHART SHOWING THE PERFORMANCE OF DYNAMIC
BOND FUND

60

50

40

30

20 2009
2010
5.7

3.5

10
3.2

2.9 2011
0 2012
6.9
7.6
19.2
7.2

15

54.6

BSL REL ICICI UTI


18.7

23.5
-0.5

-10
-6.7

-20

-30
-30.7

-40
TABLE No.3:2:2.2. TABLE STATING THE PERFORMANCE OF INCOME FUND
COMPANY 2009 2010 2011 2012

BSL -1.65817 2.446025 5.548204 -12.0504

RELIANCE -0.98333 2.215736 2.473724 6.873512

ICICI 0.190424 0.927116 1.65098 2.463808

HDFC 0.501613 -68.8235 2.473453 2.401313

Source: Collected and compiled from data sheet.

Findings:
Birlasunlife income fund shows a consistence performance in the year, but its
performance value has been reduced in the year 2012. Reliance and ICICI showed a
consistent performance in the years. HDFC intimates that it showed a better performance in
the year 2009, but it has a fallen performance value in the year 2010 and it has been showed a
constant performance. From the above table it intimates clearly that Birlasunlife is not up to
the standard as it shows a negative value which indicates the fund performance is not good
for the year 2012. In the year 2011 and 2010 the fund performs better when compared to
other years.

Inference:
As per treynor ratio compared with other selected AMCs reliance income fund
performs good as it contains higher ratio value.
CHART No.3:2:2.2. CHART SHOWING THE PERFORMANCE OF INCOME FUND

6.8
5.5

10

2.47
0.92
2.4

2.4

2.4

2.4
2.2

0.19

1.6

0.5
0
BSL RELI ICICI Category 4
-0.98
-1.6

-10
-12

-20
2009
2010
-30 2011
2012
-40

-50

-60

-70
-68.8
TABLE No.3:2:2.3. TABLE STATING THE PERFORMANCE OF GILT FUND
COMPANY 2009 2010 2011 2012

BSL -17.295 16.36744 56.98352 -810.85

RELIANCE -6.07005 1.021746 123.3714 12.45249

ICICI -1.25806 -74.3431 10.02335 6.746869

HDFC -6.0343 4.503623 7.885 4.133571

UTI -3.01869 3.40979 -44.5722 5.863315

Source: Collected and compiled from data sheet.

Findings:
The gilt fund of Birla sunlife intimates that it had a consistent performance in the year
(2009-2011) but in the year 2012 its performance value has been fallen down. Reliance and
HDFC shows ebb and flow performance value. ICICI showed a negative value in the year
2009 but it has raised its performance value better. UTI showed a consistent performance for
the years, though it shows ups and downs in its performance value. Treynor indicates higher
the ratio results better performance. Here the table indicates that Birlasunlife shows a drastic
negative ratio which implies the performance is not at up to the standard for year the 2012 as
the ratio has declined when compared to the other years.

Inference:
The table also implies that when compared to other AMCs reliance performs
excellent as it contains higher ratio and HDFC has a lesser ratio comparatively.
CHART No.3:2:2.3. CHART SHOWING THE PERFORMANCE OF GILT FUND
123.3

200
56.9

10.02
16.3

12.4

6.74

5.86
4.13
1.02

7.8
4.5

3.4

0
BSL RELI ICICI HDFC UTI
-1.25

-3.01
-6.07

-6.03
-17.2

-44.5
-74.3

-200
2009
2010
-400
2011
2012
-600

-800
-810

-1000
3:2:3. PERFORMANCE ANALYSIS JENSON RATIO:
TABLE No.3:2:3.1. TABLE STATING THE PERFORMANCE OF DYNAMIC BOND
FUND
COMPANY 2009 2010 2011 2012

BSL 0.374 0.165 0.522 1.04

RELIANCE 0.134 0.126 0.787 0.657

ICICI 0.029 0.118 0.31 1.473

UTI 0.194 0.489 -0.047

Source: Collected and compiled from data sheet.

Findings:
According to the above table Birlasunlife has a constant rising in its management
performance. Reliance, ICICI and UTI also showed a constant performance for the year, but
on the whole ICICI showed a batter management performance as compared to other AMCs.
Positive value represents superior performance of management talent, zero indicates neutral
performance of management talent and negative value represents inferior performance of
management talent. From the above table Birlasunlife has a neutral performance as its ratios
are more than zero.

Inference:
The table also represents, ICICI dynamic bond has the superior performance of
management talent as compared to other AMCs.

CHART No.3:2:3.1. CHART SHOWING THE PERFORMANCE OF DYNAMIC


BOND FUND

1.4

1.2

0.8
2009
2010
0.6 2011
2012
0.4
0.19
0.16

0.13
0.12

0.11

0.2
0.02

0
0.37

1.04

0.65

0.31
1.4

BSL RELI ICICI UTI


0.52

0.78

0.48
-0.05

-0.2
TABLE No.3:2:3.2. TABLE STATING THE PERFORMANCE OF INCOME FUND
COMPANY 2009 2010 2011 2012

BSL 0.386 0.206 0.806 0.222

RELIANCE 0.439 0.282 1.093 1.126

ICICI 0.993 0.388 1.532 1.967

HDFC 0.725 0.086 1.063 2.055

Source: Collected and compiled from data sheet.

Findings:
From the above table it intimates that Birlasunlife income fund shows a better
management performance for the calculated years. Reliance and ICICI income fund has a
consent management performance value. HDFC has showed a better consistent performance
as a whole as compared to other AMCs. The above table represents that there is no inferior
performance in the income fund and also it implies that Birlasunlife has a less management
performance as compared to other AMCs and the ratio is not up to the standard.

Inference:
The table also states that HDFC shows superior performance as compared to other
AMCs.
CHART No.3:2:3.2. CHART SHOWING THE PERFORMANCE OF INCOME FUND

2.5 2.06
1.97

2
1.53

1.5 2009
1.13
1.09

1.06

2010
0.99

2011
0.81

1 2012
0.73
0.44

0.39
0.39

0.28

0.5
0.22
0.21

0.09

0
BSL RELI ICICI HDFC
TABLE No.3:2:3.3. TABLE STATING THE PERFORMANCE OF GILT FUND
COMPANY 2009 2010 2011 2012

BSL 0.124 0.284 0.49 0.596

RELIANCE -1.358 -4.466 0.351 1.57

ICICI -1.821 0.211 0.428 1.763

HDFC -1.285 0.638 0.498 2.448

UTI -0.263 0.666 0.319 1.484

Source: Collected and compiled from data sheet.

Findings:
From the above table it intimates that Birlasunlife has a better consistent performance
from the year 2009-2012 as compared with other AMCs. Though reliance, ICICI and UTI
has a negative value in the year 2009, it has raised its value in the year 2012 which indicates
its better performance value. HDFC also shows a negative value in the year 2009 but it has
showed a drastic performance in the upcoming years, and also shows a best management
performance value as the whole. From the above table it represents that Birlasunlife shows
better management performance as its ratios are more than 0 which indicates neutral
performance management talent.

Inference:

The table also implies that HDFC shows better management performance as
compared to other AMCs and reliance seems to have poor management during the year
2010.
CHART No.3:2:3.3. CHART SHOWING THE PERFORMANCE OF GILT FUND

2.45
3

1.76
1.57

1.48
2

0.67
0.64
0.49

0.43
0.6

0.35

0.32
0.5
1
0.28

0.21
0.12

0
2009
BSL RELI ICICI HDFC UTI
2010

-0.26
-1
2011
2012
-1.29
-1.36

-2
-1.82

-3

-4
-4.47

-5

3:2:4.RETURN AND RISK OF SCHEMES AND COMPANIES


SCHEMES Risk Return
( X- X ) 2 ( X )
DYNAMIC BOND FUNDS

Birlasunlife dynamic bond fund 0.441632271 1.98625

Reliance dynamic bond fund 1.03924909 1.615625

ICICI prudential dynamic bond fund 0.779604016 1.496875

UTI dynamic bond fund 0.904147489 1.8475

INCOME PLUS

Birlasunlife income plus 1.095741758 1.285

Reliance income 0.999979687 1.2975

ICICI prudential income growth 0.823487961 1.315625

HDFC income fund growth 0.719950085 1.485

GILT PLUS

Birlasunlife gilt plus 0.404666143 1.53125

Reliance gilt securities long term 2.593067079 -0.345

ICICI prudential gilt investment 1.066900263 1.149375

HDFC gilt fund 1.761668576 0.810625

UTI gilt advantage 2.032870027 0.699375

Source: Collected and compiled from data sheet.

Findings:
There are three types of risk takers, risk lovers, risk neutrals and risk averse. Risk
lovers are those who are ready to take more risk for getting maximum returns. Risks averse
are those who do not want to take risk. Higher the risk involved higher will be the return. In
the above table, Birlasunlife dynamic bond gives higher return with low risk involved as
compared with other AMCs dynamic bond. In the next category, income plus HDFC income
fund gives higher return with low risk. In the other category, Brilasunlife gilt plus gives more
returns.

Inference:

From the above table it is inferred that UTI gilt advantage has the minimal risk
involved and Birlasunlife dynamic bond has the maximum amount of risk.

3:2:5.CALCULATION OF BETA VALUES

SCHEMES 2009 2010 2011 2012


DYNAMIC BOND FUNDS

Birlasunlife dynamic bond fund 0.208 0.152 0.101 0.306

Reliance dynamic bond fund -0.04 0.086 0.301 0.047

ICICI prudential dynamic bond fund -0.158 0.065 -0.057 0.549

UTI dynamic bond fund - 0.218 0.074 -0.353

INCOME PLUS

Birlasunlife income plus 0.251 0.239 0.313 -0.187

Reliance income 0.3 0.394 0.529 0.336

ICICI prudential income growth 0.919 0.606 0.855 0.854

HDFC income fund growth 0.62 -0.017 0.501 0.914

GILT PLUS

Birlasunlife gilt plus -0.04 0.086 0.025 -0.002

Reliance gilt securities long term 0.414 -3.403 0.007 0.221

ICICI prudential gilt investment 0.62 -0.017 0.068 0.29

HDFC gilt fund 0.379 0.276 0.12 0.56

UTI gilt advantage 0.956 0.286 -0.036 0.368

Source: Collected and compiled from data sheet.

Findings:
The beta value implies the systematic risk of schemes. Generally the beta value
greater than 1 indicates average level of risk, and the value less than 1 indicates defensive
security and the negative value intimates contrary to general market (falling in bull market
and rising in bear market). The above table indicates that there were no aggressive securities
in the analyzed securities.

Inference:
From the above table it is being inferred that most of the securities are defensive
securities except a few which have negative beta value.

3.3 SUMMARY OF FINDINGS:

Based on the beta values it is inferred that all the schemes that are being studied are
either a defensive security or have negative beta value which are contrary to the
market movements.
Based on the risk and return it is inferred that UTI gilt advantage has the minimal risk
involved and Birlasunlife dynamic bond has the maximum amount of risk.

As per the sharpe ratio ICICI prudential dynamic bond fund performs better in
dynamic bond fund, Reliance income in the income fund category and Birlasunlife
gilt plus stands out in the gilt fund category.
According to treynor ratio Reliance dynamic bond fund, Reliance income, Reliance
gilt securities long term seems to perform well in all the three categories that is
dynamic bond fund, income fund and gilt fund category.
On the other hand the jenson ratio states that HDFC income fund growth, HDFC gilt
fund had a better performance in income fund and gilt fund category while
Birlasunlife dynamic bond fund stands out in the dynamic bond fund category.

3.4SUGGESTIONS:

Based on the sharpe ratio for Birla dynamic bond, it states that till 2011 they had an
increasing returns for the funds. But during 2012 they had 2% fall in their returns (from 9.30
to 7.99). The fund manager has to concentrate on the securities that they have invested in the
year 2012 and select a better security that gives a good return to the fund.

The treynor ratio for Birlasunlife states that they had consistent growth in the fund
returns till the year 2011. But during the year 2012 they had a sudden fall in the fund returns.
It is suggested that fund manager to make sure of the securities that they select and make the
investment in well rated securities.

The performance of gilt fund based on the treynor ratio shows that the performance of
the fund was very poor. The fund had a negative returns, the fund manager must make a
proper analysis of the market so as to find out the better performing securities and invest in
them.

Based on the Jensen ratio the performance of income fund, the fund manager has to
put in some efforts to find out proper performing securities in the market on which they can
make their investment so that the fund may have proper returns in the future.

Based on the Jensen ratio analysis of brila sunlife gilt fund it shows that the fund
returns are being improvised every year (2009-2012). The fund manager has to concentrate
on the selection of securities so that they may expect better returns in upcoming years.

3.5CONCLUSION:

The financial tools used in the analysis are Mean Returns, Standard Deviation (Risk),
Beta (Risk), Sharpe Ratio, Treynor Ratio, Jensen Ratio. The research design that is being
adopted for the study is analytical research. Based on the beta values it is inferred that all the
schemes that are being studied are either a defensive security or have negative beta value
which are contrary to the market movements. As per the sharpe ratio ICICI performs better in
dynamic bond fund, Reliance in the income fund category and Birlasunlife stands out in the
gilt fund category. According to treynor ratio Reliance seems to perform well in all the three
categories that is dynamic bond fund, income fund and gilt fund category. On the other hand
the jenson ratio states that HDFC had a better performance in income fund and gilt fund
category while Birlasunlife stands out in the dynamic bond fund category. The fund that
yields a maximum amount of return and has large amount of corpus is considered to be the
better performing fund. The fund managers have to concentrate on the selection of the
securities so that they may except a better returns in upcoming years. The investors have to
analyze the risk and return of the securities before they make their investments.

From the analysis made using sharpe ratio brilasunlife seems to be poor as compared
with other AMCs and the gilt fund scheme is well performed and maintained in last 4 years.
By analysis made using teynor, states brilasunlife need to be concentrated and performed well
for best returns in the selected schemes for the upcoming years and Jensen ratios implies ,
brilasunlife has performed well in gilt scheme as compared with other AMCs as the same it
should be improved in other schemes also.
CHAPTER -5
REFERENCES

5. REFERENCES FOR THE PROJECT:

BOOKS & JOURNALS:


Punithavathy Pandian, Security analysis and portfolio management, Vikas
Publishing House Pvt Ltd.
C.R.Kothari, Research methodology methods & techniques, New age
International(p)ltd publishers.
Jayadev M, Performance Evaluation of Portfolio Managers: An Empirical
Evidence on Indian Mutual Funds, Applied Finance Vol.5, No.2, July.1998

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