Project

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CHAPTER: 1
INDUSTRY AND COMPANY PROFILE
TKM INSTITUTE OF MANAGEMENT 1

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1.1 Mutual Fund-Industry Profile
A Mutual fund is simply 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 pooled money into specific
securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares
(or portions) of the mutual fund and become a shareholder of the fund. Mutual funds are one
of the best investments ever created because they are very cost efficient and very easy to
invest in. 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.
1.1.1 Organisation of a Mutual Fund
There are many entities involved and the diagram below illustrates the
organizational set up of a mutual fund
A) Fund Sponsor: A 'sponsor' is a person who, acting alone or in combination with another
corporate body, establishes a MF. In order to register with SEBI as a MF, the sponsor should
have a sound financial track record of over five years, and integrity in all his business
transactions. Following its registration, in accordance with SEBI Regulations, the sponsor
forms a trust, appoints a Board of Trustees and an AMC as a fund manager. Further, a
custodian is appointed to carry out the custodial services for the schemes of the fund. The

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sponsor should contribute at least 40% of the net worth of the AMC (provided that any
person who holds 40 % or more of the net worth of an asset management company should be
deemed to be a sponsor and would be required to fulfil the eligibility criteria specified in the
SEBI regulations)
B) Trustees: The MF can either be managed by the Board of Trustees, which is a body of
individuals, or by a Trust Company, which is a corporate body. Most of the funds in India are
managed by a Board of Trustees. The trustees are appointed with the approval of SEBI. Two
thirds of trustees are independent persons and are not associated with sponsors or be
associated with them in any manner whatsoever. The trustees, being the primary guardians of
the unit holders' funds and assets, have to be persons of high repute and integrity. The
Trustees, however, do not directly manage the portfolio of MF. It is managed by the AMC as
per the defined objectives, in accordance with trust deed and SEBI (MF)
C) Asset Management Company: The AMC, appointed by the sponsor or the Trustees and
approved by SEBI, acts like the investment manager of the Trust. The AMC should have at
least a net worth of Rs. 10 crore. It functions under the supervision of its Board of Directors,
Trustees and the SEBI. In the name of the Trust, AMC floats and manages different
investment 'schemes' as per the SEBI Regulations and the Investment Management
agreement signed with the Trustees. The regulations require non-interfering relationship
between the fund sponsors, trustees, custodians and AMC.
D) Custodians. A custodian is appointed for safe keeping the securities and participating in
the clearing system through approved depository. Custodian also records information on
stock splits and other corporate actions. No custodian in which the sponsor or its associate
holds 50 % or more of the voting rights of the share capital of the custodian or where 50 % or
more of the directors of the custodian represent the interest of the sponsor or its associates
should act as custodian for a mutual fund constituted by the same sponsor or any of its
associate or subsidiary company.
E) Registrar and Transfer agent: Registrar and transfer agent maintains record of the unit
holders’ account. A fund may choose to hire an independent .Party registered with SEBI to

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provide such services or carryout these activities in-house. If the work relating to the transfer
of units is processed in-house, the charges at competitive market rates may be debited to the
scheme. The registrar and transfer agent forms the most vital interface between the unit
holder and mutual fund. Most of the communication between these two parties takes place
through registrar and transfer agent.
F) Distributors/Agents: To send their products across the length and breadth of the country,
mutual funds take the services of distributors/agents. Distributors comprise of banks, non-
banking financial companies and other distribution companies.
1.1.2 History of Mutual Fund
The concept of mutual fund is not new. At the very dawn of commercial
history. Egyptians and Phoenicians were selling shares in vessel and caravans in order to
spread risk to these perilous ventures. Much in later in 1822 the society general de belgique
was formed, which embodied the modern concept of risk sharing. The foreign and colonial
government trust of London in 1868 was the real pioneer in the field of modern day concept
of mutual funds. Later in1873, the Scottish American trust was established by Robert
Fleming at Dundee. In England the early institution were created under legal form, known as
the old English trust. People who had experience in large trust estates were appointed as
trustee and capital was entrusted to them for purchasing securities. British investment trusts
was successful and are still popular with unit trusts.
Although in 19 th century many British investment trusts invested in

American stocks, the first American investment trust was closed-end Boston personal
property trust created in 1893. It was not until the 1920s that US has experienced a boom in
close-end investment trusts.
The great bull market of 1920s and 1980s provide fertile for mutual funds. In
their first incarnations and heydays, mutual fund plays a central role in the robust stock
market of 1920s. the first mutual fund, the Massachusetts investor trust was launched in
Boston in 1924. After the 1929 the stock market crash, the close-end investment was known
as evil trusts “that manipulate the stock market and had a hand in causing the great crash of
1929. These changes added to the flourish of securities regulation that took place in 1930s,
which created securities exchange commission (SEC). The SEC recommended the passage of

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legislation. Which materialized in 1940? The investment company act of 1940 provides rules
and regulation for establishing and management of mutual funds.
Since 1940, the growth of open-end mutual funds has been dramatic. The
growth of close-end mutual funds has been slower and more erratic but they continue to exist.
However economist says that from 1984 to 1990, there has been a rebirth in popularity of
close-end mutual funds.
Mutual fund assets in United States fell by 2.0% in the first quarter while
assets of other countries collectively rose by 2.5%. the strength in fund assets outside the
united states reflected weakness of US dollar which slide lower against most currencies.
Measured in local currencies, fund assets declined over first quarter in majority of countries
including nine of largest.
World wide equity fund assets measured in US dollars dropped to 4.2% in the
first quarter, most of the stock market came under selling pressure during the quarter, which
many European and several Asia-Pacific exchanges posting doubt digit losses. In contrast
bond fund assets rose to 5.7% paced by strength in Europe and the Americas. Money market
funds assets roses slightly as sizable gains in Europe offset declines in the United States and
the Asia-Pacific region. Balanced/ mixed fund recorded a small decline in assets Net sales of
mutual funds $13 billion in the first quarter of 2003, down from $153 billion in the fourth
quarter of 2002. The decline largely resulted from a net outflow of $56 billion from money
market funds, which reversed a $117 billion net inflow in the previous quarter. in the low
interest rate environment in the United states, the net flow from US money market was $69
billion. Several Asia- pacific countries also experienced net outflow from money market
funds.
While European countries collectively saw strong net inflows. Equity funds
posted a small outflow of $14 in the first quarter, with weakness evident in United States,
Canada and most European countries. In contrast Asia-pacific countries checked out a small
net inflow. Balanced/mixed funds experienced a small net outflow
Net sales at bond funds were a robust $87 billion in the first quarter of 2003
and represented 3.6% of assets of those 27 countries reported net flow data. The first quarter
pace if maintained for a full year would far outstrip net sales in 2001, a year of strong
inflows. The strength in net sales was widespread with 22 countries experiencing inflow to
bond funds. At the end of first quarter of 2003, assets of equity funds represented 36% of all

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worldwide mutual fund assets. The assets share of money market funds was 29% while that
of bond fund was 24%. In that 59% of world wide assets were in the Americans at the end of
first quarter of 2003, 31% were in Europe and 10% in Africa and Asia/Pacific. The number of
mutual funds world wide stood at 53150 at the end of the first quarter of 2003. By type of
fund, 43% were equity funds, 22% were bond funds, 21% were balanced/mixed funds and
9% were money market funds.
Mutual fund assets were growing fast and consumer bank deposits were
slowly, that Americans belief by turn of 21st century, individuals were more money in mutual
fund than banking saving deposits.
At present, US mutual fund industry spread over 30,000 funds, commanding

investment to tune of 25% of the household income and having 50 million share holders
accounts. The mutual fund industry in US now occupies premier position in the financial
sector while banking and insurance lag behind. The mutual fund industry serves about 50
million investors. Japan tops around number 0f mutual funds with around 5,400 funds were
US has only 3,400 funds command four times higher assets than Japan. The UK has 1,40
mutual funds, were as France have 1,000 old fund rank second in assets formation next to
US.
The growing popularity of US is basically due to good returned compared to

the stock market returns and low risk factor. The return of mutual fund much higher than the
return of S&P 500 index. In Canada during 1920s many close-end investment companies
were organized. They were generally known as investment trusts. The first mutual fund to
issue to the public in Canada was Canadian investment fund in 1932. The two other funds are
now amongst the giants of mutual funds in Canada. Subsequently 100 of mutual funds both
open and close-end have been developed and have been expanded in many countries in
Europe, the Far East and Latin America.
Mutual fund/unit trusts are popular financial intermediaries in many countries.

In the US, mutual funds are second largest financial institution, after the banking sector
whose assets were worth $2161.4 billion at the end of 1994. In December 1995, the European
community issued directives to co-ordinate laws, regulations and administrative provision
relating to mutual funds. This is popularity known as under taking for collective investment
in transferable securities. The directive established a common regulatory scheme for
investment policies, public disclosure, structure and control. These policy changes have

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encouraged the growth of mutual fund all over the globe. Countries in Asia-Pacific area like
Hong Kong, Thailand, Singapore and Korea have also entered this field with a big bang.
1.1.3 The Mutual fund industry in India
In India mutual fund concept took root on 1960s, after a century-old history
elsewhere in the world. Reacting to the needs for a more active mobilization of house hold
saving to provide investible resources to the industry, the idea of first mutual fund in India
was born out of the far-sighted version of Shri. T. Krishanamachari, the finance minister. He
wrote to the prime minister Pandit Nehru outlining the need for an institution, which would
serve as the conduit for these resources to the Indian capital market. The RBI was entrusted
to create there special institution. The idea of mutual fund took shape on 1963 with the
setting up of enactment of Unit Trust of India (UTI) by farming an act titled the UTI act.1963
to operate both as a financial institution and investment trust.
A) First phase (1964-1987):-
The UTI was set up by reserve bank of India and functioned under the
regulatory and administrative control of the reserve bank of India. In 1978, UTI was de-
linked from RBI and the Industrial development bank of India took over the regulatory and
administrative control in place of RBI. At the end of 1988, UTI had 6,700 crores of assets
under management.
B) Second phase (1987-1993):-
The second phase witnessed the broadening of the base of the industry on
account of entry of mutual funds sponsored by commercial banks and public sector financial
institutions. Followed by the government decision to permit nationalized banks to set up
mutual funds, the State Bank of India (1987), Life Insurance Corporation (1989), General
Insurance Corporation(1991), Canara Bank(1987), Indian Bank(1990), Bank of India(1990)
and Punjab national Bank(1990) set up the mutual funds sponsored to the public sector banks.
During this period, the total assets of industry grew to about 61,000 crores with the total
number of schemes increasing about 167 by the end of 1994.
C) Third phase (1993-2003):-

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Entry of private sector funds. A new era began in Indian mutual fund industry
with the entry of private sector funds in 1993, giving Indian investors a wide choice of fund
families. The phase also signalled the intensification of completion. Kothari Pioneer mutual
fund was first private sector fund to be established in association with a foreign fund. The
opening up of the market to private players saw international players like Morgan Stanley,
Jardine Fleming, JP Morgan, George Soros and capital international entering market. The
Assets under management by the end of January 31, march 2005 increased to $34.927mn
from $23.260mn in March 1995.
The number of mutual fund houses went on increasing with many foreign
mutual funds setting up funds in India. The industry has also witnessed several mergers and
acquisitions. As at the end of January2003. There were 33 mutual funds with total assets
worth Rs1, 21,805 crores. The Unit Trust of India with Rs 44,541 crores of assets under
management, what head of the mutual funds.
D) Fourth phase (since February 2003):-
In February 2003. Following the repeal of Unit trust of India Act, 1963, UTI
was bifurcated into two separates entities. One is specified undertaking of Unit trust of India
with assets under management to tune of 29,835 crores as at the end of January 2003,
representing broadly assets of US 64 scheme, assured returns and certain other schemes. The
specified under taking of Unit Trust of India and does not come under the purview of mutual
fund regulations.
The second is the UTI mutual fund Ltd. Sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and function under the mutual fund regulations. With the
bifurcation of the erstwhile UTI, which had in march 2000 more than Rs 76,000 crores assets
under management and with the setting up of a UTI mutual fund, conforming to the SEBI
mutual fund regulation and win recent mergers taking place among different private sector
funds, the mutual fund industry has entered its current phase of consolidation and growth. As
at the end of October 21, 2003 there were 31 funds which mange the assets worth Rs
1,26,726 crores under 386 schemes. It still continues to be the largest player in domestic
mutual fund industry with an asset under management (AUM) of Rs 23,500 crores as on
march 31, 2005.

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1.1.4 Major mutual fund companies in India
A) 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
B) GIC Mutual Fund
GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a

Government of India undertaking and the four Public Sector General Insurance Companies,
viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The
Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted
as a Trust in accordance with the provisions of the Indian Trusts Act, 1882
C) LIC Mutual Fund
Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989.
It contributed Rs. 2 Crores 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 LIC
D) 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
E) Can bank Mutual Fund
Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank
acting as the sponsor. Canbank Investment Management Services Ltd. incorporated on March
2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai. ,

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F) Morgan Stanley Mutual Fund
Morgan Stanley is a worldwide financial services company and its leading in

the market in securities, investment management and credit services. Morgan Stanley
Investment Management (MISM) was established in the year 1975. It provides customized
asset management services and products to governments, corporations, pension funds and
non-profit organisations.
G) Franklin Templeton Mutual Fund
The group, Franklin Templeton Investments is a California (USA) based

company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest
financial services groups in the world. Investors can buy or sell the Mutual Fund through
their financial advisor or through mail or through their website.
H) Standard Charted Mutual Fund
Standard Chartered Mutual Fund was set up 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
I) Reliance Mutual Fund
Reliance Mutual Fund (RMF) 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 Capital 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
J) Unit Trust of India Mutual Fund
UTI Asset Management Company Private Limited, established in Jan 14, 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.20000 Crore. The
sponsors of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB),

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State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of
UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds,
Equity Funds ,etc
K) Kotak Mahindra Mutual Fund
Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of

KMBL. It is presently having more than 1,99,818 investors in its various schemes. KMAMC
started 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
dedicated gilt scheme investing only in government securities
L) TATA Mutual Fund
Tata Mutual Fund (TMF) 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 Asset Management Limited and its Tata Trustee Company Pvt.
Limited. Tata Asset Management Limited's is one of the fastest in the country with more than
Rs. 7,703 crores (as on April 30, 2005) of AUM
M) 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 cr. approximately.
Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35
Schemes out of which 15 have already yielded 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.
N) Sahara Mutual Fund
Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial
Corporation Ltd. as the sponsor. Sahara Asset 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.

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O) Prudential ICICI 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 13th of October, 1993 with two sponsors, Prudential Plc. and ICICI Ltd. The
Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI
Asset Management Company Limited
P) ING Vysha 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 incorporated on April 6, 1998.
Q) HSBC Mutual Fund
HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and
Capital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual
Fund acts as the Trustee Company of HSBC Mutual Fund.
R) 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
S) 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 organisation evolved in 1871 and is being
represented in Canada. Birla Sun Life Mutual Fund follows a conservative long-term
approach to investment. Recently it crossed AUM of Rs. 10,000 crores.
1.2 Company Profile: Religare Securities Ltd
Religare is a financial services company in India, offering a wide range of

financial products and services targeted at retail investors, high net worth individuals and
corporate and institutional clients. Religare is promoted by the promoters of Ranbaxy
Laboratories Limited. Religare operate from six regional offices and 25 sub-regional offices

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and have a presence in 330 cities and towns controlling 979 locations which are managed
either directly by Religare or by our Business Associates all over India, the company has a
representative office in London. While the majority of Religare offices provide the full
complement of its services yet it has dedicated offices for investment banking, institutional
brokerage, portfolio management services and priority client services. The main features of
religare include:
• Pan India footprint
• Powerful research and analytics supported by a pool of highly skilled research

analysts
• Single window for all investments needs through unique customer relationship
number
• Ethical business practices
• Offline /Online delivery models
Religare has divided its product and service offering under three broad client
interface categories.“Retail Spectrum”, “Wealth Spectrum” and “Institutional Spectrum” as
per following details
Equity and Commodity Trading

Personal Financial Services
Distribution of mutual funds
Distribution of insurance
Distribution of savings products
Personal Credit
Personal loan services
Loans against shares
Online Investment
Wealth Advisory Services
Portfolio Management Services
International Equity

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Priority Client Equity Services

Arts Initiative Institutional Equity Broking
Investment Banking
Merchant Banking
Transaction Advisory Services
Retail Spectrum covers equity brokerage services, commodity brokerage

services, personal financial services (financial planning for the retail investor, including the
distribution of mutual funds, savings products, life insurance and initial public offerings
(“IPOs”)) and personal credit (personal loans services(“PLS”) and loans against shares
(“LAS”). Historically, the services offered in this spectrum have been the most substantial
part of Religare business. Religare Retail Spectrum services in India are being offered
through a network of 979 business locations spread across 330 cities and towns and also
through Religare online platform, www.religareonline.com, which is being developed as an
integrated portal to offer financial and other services. Religare business locations include
intermediaries, or Religare “Business Associates”, who deliver a standard quality of service
offering on the basis of a pre-determined revenue sharing ratio for the business generated
through them. Religare Retail Spectrum focuses on clients who keep less than Rs. 2.5 million
on a continuing basis, in the form of either equity trading account margin, mutual fund
investment, portfolio management investments or insurance premiums paid up. We have also
increased Religare local commodity locations (or “Mandis”) to 38 as of March 31, 2007in
order to expand Religare retail commodity brokerage services.
Wealth Spectrum covers products and services which are geared

to service high net worth individuals and provide wealth advisory services (on an asset
allocation model), PMS (discretionary equity investments), priority client equity services
(non-discretionary equity trading services), art initiatives (an art fund which we intend shortly
to launch as an investment diversification product) and international equity investment
advisory services. Religare has entered into an exclusive arrangement with Wall Street
Electronica, Inc., a New York broker-dealer, to give Indian clients access through us to U.S.
markets. Religare Wealth Spectrum focuses on clients who keep at least Rs. 2.5 million on a
continuing basis or more in the form of equity trading account margins, mutual fund
investments, portfolio management investment or insurance premiums paid up.

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Institutional Spectrum covers products and services which cater under one
service offering to corporate and institutional clients, including domestic mutual funds, FIIs,
banks and corporate customers. The Institutional Spectrum provides services to the
institutional investor community through institutional brokerage and investment banking
services. We also link corporate clients with a transaction advisory group, which consists of
account managers through whom institutional clients are able to access the full range of
Religare services.
1.2.1 Religare –Product Offerings
Religare is driven by ethical and dynamic process for wealth creation. REL through
Religare Securities Limited , Religare Finvest Limited , Religare Commodities Limited and
Religare Insurance Advisory Services Limited provides integrated financial services to its
corporate , retail and wealth management clients. Religare operations are managed by highly
skilled professionals who subscribe to Religare philosophy and are spread across its country
wide branches .
A. Equity trading
Trading in equities with Religare truly empowers you for your investment
needs . Religare ensures you have a superlative trading experience through high
quality service. Religare also has one of the largest retail networks , with its presence
in more than 1460 locations across more than 450 towns and cities. This means one
can walk into any of these branches and connect to Religare’s highly skilled and
dedicated relationship managers to get the best services.
B. Commodity trading
RCL, an effort of the Religare Group was initiated to spearhead Exchange

based commodity trading.RCL is not only a trade facilitator but also caters to the
unique needs of exchange based commodity trading

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C. Personal financial service
Religare ‘s personal financial advisory services cater to the financial

needs of individuals by advising them on various financial plans . Religare’s personal
financial advisors , also called financial planners or financial consultants , use their
knowledge of investments , tax laws , and insurance to recommend financial options
to individuals in accordance with the individual’s short term and long term goals
.Some of the issues that planners address are general investments , retirement and tax
planning .
D. Institutional brocking service
The mission of this division is to institutionalize and implement a process

driven approach to cater the needs of leading corporate houses and institutions . The
division would like to be seen as a one stop investment gateway and knowledge
repository for its client servicing their unique and sophisticated needs .The division is
structured as a separate SBU and is housed out of Mumbai, manned by a small yet
fleet footed and extremely skilled group of top notch professionals drawn from the
best in the industry.
The key highlights of Religare’s service platter are:
Highly skilled, dedicated dealing, research and sales teams .
Dealing capabilities on the NSE, BSE and in the cash and derivatives segment.
In-depth detailed and insightful coverage of more than 70 stocks
E. Investment banking
Religare provide innovative, integrated and best fit solutions to our

corporate customers. It is our continuous endeavour to provide value enhancement
through diverse financial solutions on an ongoing basis, through offerings like
corporate debt, private equity, IPO, ECB, FCCB, GDR/ADR etc.

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F. Portfolio management service
Religare offers PMS to address varying investments preferences . As a focused

services , PMS pays attention to details , and portfolio’s are customized to suit the
unique requirements of investors . Religare PMS currently extends five portfolio
management schemes –Panther, Tortoise, Elephant, Caterpillar, and Leo. Each
scheme is designed keeping in mind the varying tastes, objectives and risk tolerance
of our investors.
G.Mutual fund dealing
Religare offers mutual fund trading also. Through religare trading platforms we
. can buy or sell mutual fund units of all listed asset management companies
1.2.2 VISION
To build Religare as a globally trusted brand in the financial services domain and
. . Present it as the “Investment Gateway of India”
1.2.3 MISSION
To provide financial care driven by the core values of diligence and transparency.
1.2.4 Joint Ventures of Religare
A.Vistar Religare
Religare Enterprise Limited and Vistar Entertainment Ventures Private Limited

launched India’s first ever film fund – Vistar Religare Film Fund for the film /media
business.
B.Religare Aegon

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Religare AEGON AMC -50:50 joint ventures between REL and AEGON , Religare
has proposed to form Religare AEGON Asset Management Company Private Limited to
offer mutual fund products to the Indian consumers. AEGON, headquartered in Netherlands,
is one of the world’s largest life insurance and pension companies, and a strong provider of
investment products. The group is present in United states, United kingdom ,
Canada ,China ,Hungary ,Poland , Spain and Taiwan .
C.Religare Macquarie
50:50 joint ventures with Macquarie for wealth management business. Religare
Macquarie Wealth Management Limited ,India’s first wealth management joint venture will
offer Wealth management services to the Indian customers under the brand, Religare
Macquarie private wealth Macquarie Private Wealth , a division of Macquarie Group is one
of the largest financial advisory services in Australia . In Australia and New Zealand,
Macquarie is a market leader in investment and financial services .In Asia, it offers a full
range of investments ,financial market and advisory products and services. In Europe , the
Middle East , Africa and the Americans , it focuses on niche opportunities to deliver value to
clients.

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CHAPTER: 2
LITERATURE REVIEW
Mutual Funds
Invest in a mutual fund, you are buying shares (or portions) of the mutual fund and
become a shareholder of the fund. Mutual funds are one of the best investments ever created
because they are very cost efficient and very easy to invest in. 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 A Mutual fund is simply
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 pooled money into specific securities (usually stocks or bonds).
When you funds is diversification.

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“Fund operated by an investment company that raises money from shareholders and
invests it in stocks, bonds, options, commodities or money market”
“Mutual funds are pools of money that are managed by an investment company. They
offer investors a variety of goals, depending on the fund and its investment charter. Some
funds, for example, seek to generate income on a regular basis. Others seek to preserve an
investor's money...”
A mutual fund is a professionally-managed firm 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 fund's 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 per unit (NAV), is calculated daily based on the total value of the fund divided by
the number of shares currently issued and outstanding. Legally known as an "open-end
company" under the Investment Company Act of 1940 (the primary regulatory statute
governing investment companies).
Mutual Funds over the years have gained immensely in their popularity. Apart from
the many advantages that investing in mutual funds provide like diversification, professional
management, the ease of investment process has proved to be a major enabling factor.
However, with the introduction of innovative products, the world of mutual funds nowadays
has a lot to offer to its investors. With the introduction of diverse options, investors needs to
choose a mutual fund that meets his risk acceptance and his risk capacity levels and has
similar investment objectives as the investor.
With the plethora of schemes available in the Indian markets, an investors

needs to evaluate and consider various factors before making an investment decision. Since
not everyone has the time or inclination to a closed market, and has started integrating with
the world markets, external factors which are complex in nature affect invest and do the
analysis himself, the job is best left to a professional. Since Indian economy is no more us
too. Factors such as an increase in short-term US interest rates, the hike in crude prices, or
any major happening in Asian market have a deep impact on the Indian stock market.
Although it is not possible for an individual investor to understand Indian companies and
investing in such an environment, the process can become fairly time consuming. Mutual

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funds (whose fund managers are paid to understand these issues and whose Asset
Management Company invests in research) provide an option of investing without getting
lost in the complexities.
Most importantly, mutual funds provide risk diversification: diversification of a

portfolio is amongst the primary tenets of portfolio structuring, and a necessary one to reduce
the level of risk assumed by the portfolio holder. Most of us are not necessarily well qualified
to apply the theories of portfolio structuring to our holdings and hence would be better off
leaving that to a professional. Mutual funds represent one such option.
Lastly, Evaluate past performance, look for stability and although past
performance is no guarantee of future performance, it is a useful way to assess how well or
badly a fund has performed in comparison to its stated objectives and peer group. A good
way to do this would be to identify the five best performing funds (within your selected
investment objectives) over various periods, say 3 months, 6 months, one year, two years and
three years. Shortlist funds that appear in the top 5 in each of these time horizons as they
would have thus demonstrated their ability to be not only good but also, consistent performer
Worldwide, good mutual fund companies over are known by their AMCs and this
fame is directly linked to their superior stock selection skills. For mutual funds to grow,
AMCs must be held accountable for their selection of stocks. In other words, there must be
some performance indicator that will reveal the quality of stock selection of various AMCs.
Return alone should not be considered as the basis of measurement of the

performance of a mutual fund scheme, it should also include the risk taken by the fund
manager because different funds will have different levels of risk attached to them. Risk
associated with a fund, in a general, can be defined as variability or fluctuations in the returns
generated by it. The higher the fluctuations in the returns of a fund during a given period,
higher will be the risk associated with it. These fluctuations in the returns generated by a fund
are resultant of two guiding forces. First, general market fluctuations, which affect all the
securities present in the market, called market risk or systematic risk and second, fluctuations
due to specific securities present in the portfolio of the fund, called unsystematic risk. The
Total Risk of a given fund is sum of these two and is measured in terms of standard deviation
of returns of the fund. Systematic risk, on the other hand, is measured in terms of Beta, which
represents fluctuations in the NAV of the fund vis-à-vis market. The more responsive the
NAV of a mutual fund is to the changes in the market; higher will be its beta. Beta is

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calculated by relating the returns on a mutual fund with the returns in the market. While
unsystematic risk can be diversified through investments in a number of instruments,
systematic risk cannot.
2.1 Classification of mutual fund
Mutual funds are classified in to five categories. They are:
2.1.1 Operational classification
A. Open-ended mutual funds:
SEBI regulation defines open-ended schemes as “A scheme of mutual funds,

which offer units for sale or has any outstanding and redeemable units and one that does not
specify any duration for redemption or repurchase of units”. Open-end mutual funds are open
through out the year for investment and redemption. The units are bought and sold directly by
the fund. Therefore there is more certainty and transparency..
B. Close-end mutual funds:
close ended mutual funds have definite period after which their share/units are
redeemed. The units are offered to investors through public issues and after the date of
closure, the entry to the investors will be closed. Close-ended mutual funds are generally
traded among the investors in the secondary market since they are to be quoted on stock
exchanges.
2.1.2 Portfolio classification
Mutual funds differ with respect to their instruments. Therefore different

mutual funds are designed to meet the needs of investors.
A. Growth oriented funds or equity oriented funds: The objective of such funds is to
provide capital appreciation to their investors and accordingly a sub stain portion of
corpus is invested in high growth equity share and other equity related instruments. The
scheme may or may not declare dividends. This is a high risk investment fund with high

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capital gain potential and low current income assurance. The fund is ideal for investors
having a long term outlook seeking growth over a period of time.
B. Income/debt oriented funds: The main objective of this fund is to provide regular income
to the investors in the form of dividends. The dividends may be cumulative or non-
cumulative on a quarterly, half yearly or yearly basis. The corpus of scheme is invested
in fixed income securities like debentures, bonds, money market instruments etc. and a
relatively lower percentage ai share. Such funds are less risky compared to equity
schemes.
C. Balanced funds or income and growth oriented funds: These funds aim at disturbing both
income and capital appreciation to their investors. Technically the corpus of this scheme
is invested equally in high growth equity shares and in fixed income earning debentures.
But after the budget 1999 these funds are investing more than 51% in equity and rest in
debt to make returns tax-free in the hands of investors. These funds are also affected
because of fluctuations in share prices in stock market. However NAVs of such funds
are likely to be less volatile compared to pure equity funds.
D. Bond funds: Bond funds are more liquid, diversified and conservative investment with
modest capital gains. These funds are expected to be very secure with a steady income.
Bond funds carry low risk and provide fixed return for those who desire safety.
E. Stock funds: Such funds are established for those who are willing to accept significant
risk in the hope of very high return. These are called common stock funds. The assets
held in the fund are entirely the common stock of diversified of industrial corporations.
Such funds are best suited for the risk takers who are interested in capital growth rather
than regular income
F. Index fund: These funds invest only in those shares, which are included in the market
indices and in exactly the same proposition whenever market index goes up, the value of
such index fund also goes up. Conversely when the market index comes down the value
of such index fund also goes down. Necessary disclosure in this regard are made in the
offer document of mutual fund scheme. They are also exchange-traded index funds
launched by the mutual funds, which are traded on the stock exchanges.
G. Industry funds: the funds invest resources particularly in industries with growth potential
like cement, steel, jute, power, real estate. These funds carry high risks and gains as the

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performance of these funds is directly exposed to a specific sector. While these funds
may deliver high returns, they are more risky compared to diversified funds. Investors
need to watch on the performance of these sectors/ industries and must exit at an
appropriate time. They may also seek the advice of expert.
H. Tax relief funds: This is popularly known as equity linked savings schemes. These are
essentially close-ended schemes. The investment would be high in equity shares. The
investor can claim deduction or rebate in the income tax to extent of his investment in
the fund, subject to the provision of income Tax Act, 1961. Tax relief funds are listed on
stock exchanges. There would be minimum lock in the period of three years and scheme
shall not provide any type of liquidity during this period.
I. Leveraged funds: leveraged funds or borrowed funds are used in order to increase the
size of the value of portfolio and benefited the shareholders through gains exceeding the
cost of the borrowed funds. Funds are generally unused in speculative and risky
investments.
J. Real estate funds: Real estate funds are closed end type. The fund is name so because
primary investment in real estate ventures. Such funds are of various types depending up
on real estate transaction.
K. Money market mutual funds: These funds are generally invested in money market
instruments such as treasury bills, certificate of deposits, commercial papers, bill
discounting. These are regulated on the basics of specified guidelines laid down by
reserve bank of India. Return on these schemes fluctuates to a much lesser extent
compared to other funds. These funds are appropriate for corporate and individual
investors as a mean to park their surplus fund for short periods.
L. Assets management mutual funds: these are also called assets management companies
(AMCs). These funds have special characteristics of dealing with assets other than
securities. These funds can acquire various assets and give them on a lease basis to
needy lease.
M. Liquid funds: These funds invest in short term debt securities with high liquidity. In
these type of funds, profitability plays second fiddle, liquidity assumes priority.
N. Gilt fund: These funds invest exclusively in government securities. Government

securities have no default risk. NAVs of these schemes also fluctuate due to change in

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the interest rates and other economic factors as in the case with income or debt oriented
scheme.
O. Load or non load funds: A load fund is one that charges a percentage of NAV for entry
or exit. That is each time one buys or sells unit in the fund a charge will be payable. This
charge is used by mutual funds for marketing and distribution expenses. The investors
should take loads in to consideration while making investment as these affect their
yields/returns. However the investors should also consider performance track record
service standards of mutual fund, which are more important. Efficient funds may yield
higher returns in spite of loads.
A non load funs is one that does not charge for entry and exit. It means that investors can
enter the fund/scheme at NAV purchase or sale of units.
If there was no load , investors will be able to buy and sell their units at NAV.
However if there is an entry load, new investors will pay a price higher than the NAV, to a
extent of the load. Similarly investors who exit take away a sum that is lower than the NAV,
to an extend of the load.
P. Systematic investment plan: Here an investor is given an option of preparing a

predetermined number of post-dated cheques in favours of the fund. He will receive
units on the date of the cheque at the existing NAV.
Q. Systematic withdrawal plan: The systematic withdrawal plan allow the investors the
facility to withdraw predetermined amount/units from his fund at a predetermined
interval. The investors unit will be redeemed at existing NAV as on the day.
R. Retirement pension plan: some schemes are linked with retirement pension. Individuals
participate in these plans for themselves while corporate entitles do for their employees.
S. Insurance plan: Some schemes launched by UTI and LIC offer insurance cover to
investors.
2.1.3 Geographical classification
On the basics of geographical limits, mutual funds schemes can be classified as

domestic and off-shore mutual funds

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A. Domestic mutual funds: Domestic mutual funds scheme mobilize the savings of the
country’s citizens. However NRIs and foreign investors can invest in these schemes. All
the schemes in vogue in the country are domestic mutual fund schemes.
B. Off- shore mutual funds: These funds enable NRIs and international investors to
participate in Indian capital market. Further these funds are governed by the rules and
procedures laid down for the purpose of approving and monitoring their performance by
the department of economic affairs. Ministry of finance and the directions of RBI.
2.1.4 Structural classification
From the point of view of financial market structure, mutual funds can be divided in
two categories a) capital market mutual funds and b) money market mutual funds. Mutual
funds generally invest the pooled resources in capital money market instrument where as
money market mutual funds instrument.
2.1.5 Classification by investment objective
A. Equity Schemes
These schemes have the primary objective of investing in shares of companies, Equity
fund aim to generate high returns over the medium to long term through investment in the
stock markets an subscribing to public issues. These schemes invest 75% to 90% of their
corpus in equity shares. Considering the nature of investments, these schemes normally carry
a high risk, which is compensated with the potential for higher returns, possible from stock
markets As superior growth is the primary objective, these schemes are sometimes also
referred to as Growth schemes.
A. Debt Schemes
These schemes have the primary objective of investing in fixed income securities.
Investments would normally include debentures, bonds, securities, government securities etc.
Investments would he either by subscribing to fixed income instruments issued by the lender
or purchase from the debt segment of the stock markets. Debt scheme aim to generate regular
over the medium to long term through investment in fixed income securities. As most of their
debt investments would be listed and hence liquid, they attempt to achieve better returns by
regularly trading these investments and profiting from changes in market interest rates. These
schemes invest over 75% to 90% oft their corpus in debt securities with the balance invested

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into equities. Considering the nature of investments, these schemes normally carry a low risk,
which is commenced with regular returns.
B. Balanced Schemes
These schemes are combination of equity and debt funds having the primary objective
of investing in equities and fixed income investments in almost equal proportion. Investments
would normally include equities, fully convertible bonds, debentures, bonds, securities,
government securities etc,
C. Money Market or Liquid Fund
These funds also income Hinds and their aim is to provide easy liquidity, preservation
of capital and moderate income. These schemes invest exclusively in safer short-term,
instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank
call money, government securities, etc. Returns on these schemes fluctuate much less
compared to other funds. These funds are appropriate for corporate and individual investors
as a means to park their surplus funds for short periods.
D. Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive
index, S&P NSH 50 index (Nifty), etc. These schemes invest in the securities in the same
weight age comprising of an index. NAVs of such schemes would rise of fall in accordance
with the rise in the index, through not exactly by the same percentage due to some factors
known as “tracking error” in technical terms. Necessary disclosures in [his regard arc made in
the offer document of the mutual fund scheme. There are also exchange traded index funds
launched by the mutual funds, which are traded on the stock exchanges.
E. Tax Saving Schemes
These schemes offer tax rebates to the investors under specific provisions of the
Indian Income Tax laws, as the Government officer's tax incentives for investment in
specified avenues. Investments made in Equity Savings Schemes (ELSS) and Pension
Schemes are allowed as deduction under Section 88 of the Indian Income Tax Act, 1961.
2.2 Portfolio evaluation of mutual funds

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Portfolio evaluation is the final step of portfolio management. Portfolio analysis,

selection and revision are undertaken with the objective of maximising returns and
minimizing risk. Portfolio evaluation is the stage where we examine to what extent the
objective has been achieved. Through portfolio evaluation the investor tries to find out how
well the portfolio has performed. The portfolio of securities held by an investor is the result
of his investment decisions. Portfolio evaluation is really a study of the impact of such
decisions. Without portfolio evaluation portfolio management would be incomplete.
Investment may be carried out by individuals by their own. The funds available
with individual investors may not be large enough to create a well diversified portfolio of
securities. Moreover , the time ,skill and other resources at disposal of individual investors
may not be sufficient to manage the portfolio professionally. Institutional investors such as
mutual funds and investment companies are better equipped to create and manage well
diversified portfolio in a professional fashion. Hence, small investors may prefer to entrust
their funds with mutual funds or investment companies to avail the benefits of their
professional service and there by achieve maximum return with minimum risk and effort.
Evaluation is an appraisal of performance, Whether the investment actively is carried

out by individual investors themselves or through mutual funds and investment companies,
different situation arise where evaluation of performance becomes imperative. These
situations are discussed below:
A. Self evaluation
Where individuals investors undertake the investment actively on their own ,the
investment decisions are taken by them. They construct and manage their own portfolio of
securities. In such a situation, an investor would like to evaluate the performance of his
portfolio in order to identify the mistakes committed by him, This self evaluation will enable
him to improve his skills and achieve better performance in future.
B. Evaluation of portfolio managers

A mutual fund or investment company usually creates different portfolios with
different objectives aimed at different sets of investors. Each such portfolio may be entrusted
to different professional portfolio managers who are responsible for the investment decisions
regarding the portfolio entrusted to each of them. In such a situation the organization would

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like to evaluate the performance of each portfolio so as to compare the performance of

different portfolio managers.
C. Evaluation of mutual funds

In India, at present, there are many mutual funds as also investment companies
operating both in the public sector as well as in the private sector. These compete with each
other for mobilizing the investment funds with individual investors and other organizations
by offering attractive returns, minimum risk, high safety and prompt liquidity. Investors and
organizations desirous of placing their funds with these mutual funds would like to know the
comparative performance of each so as to select the best mutual fund or investment company.
For this, evaluation of the performance of mutual funds and portfolios becomes necessary.
2.2.1 Evaluation perspective

A portfolio comprises several individual securities .In the building up of the
portfolio several transactions of purchase and sale of securities take place. Thus, several
transactions in several securities are needed to create and revise a portfolio of securities.
Hence, the evaluation may be carried out from different perspective or viewpoints such as a
transactions view, security view or portfolio view.
A. Transaction view
An investor may attempt to evaluate every transaction of purchase and sale of
securities, whenever a security is bought or sold, and the transaction is evaluated as regards
its correctness and profitability
B. Security view
Each security included in portfolio has been purchased at a particular price. At the
end of the holding period , the market price of the security may be higher or lower than its
cost price or purchase price. Further, during the holding period, interest or dividend might
have been received in respect of the security. Thus , it may be possible to evaluate the
profitability of holding each security separately. This is evaluation from the security
viewpoint.
C. Portfolio view

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A portfolio is not a simple aggregation of a random group of securities. It is a

combination of carefully selected securities, combined in a specific way so as to reduce the
risk of investment to the minimum. An investor may attempt to evaluate the performance of
the portfolio as a whole without examining the performance of individual securities within
the portfolio. This is evaluation from the portfolio view.
Though evaluation may be attempted at transactional level or security level, such

evaluation would be incomplete, inadequate and often misleading .Investment is an actively
involving risk. Proper evaluation of the investment activity must, therefore, consider return
along with risk involved .But risk is the best defined at the portfolio level and not at the
security or transactional level. Hence ,the best perspective for evaluation is the portfolio
view.
2.2.2 Meaning of portfolio evaluation

Portfolio evaluation refers to the evaluation of the performance of the portfolio. It
is essentially the process of comparing the return earned on a portfolio with the return earned
on one or more other portfolios or on benchmark portfolio. Portfolio evaluation essentially
comprises of two functions. Performance measurement and performance evaluation.
Performance measurement is an accounting function which measures the return earned on a
portfolio during the holding period or the investment period. Performance evaluation , on the
other hand, addresses such issues as whether the performance was superior or inferior
,whether the performance was due to skill or luck, etc.
While evaluating the performance of a portfolio, the return earned on the portfolio
has to be evaluated in the context of the risk associated with that portfolio. One approach
would be to group portfolios into equivalent risk classes and then compare returns of
portfolios within each risk category. An alternative approach would be to specifically adjust
the return for the riskiness of the portfolio by developing risk adjusted return measures and
use these for evaluating portfolios among different risk levels
Literature on mutual fund performance evaluation is enormous. A few research

studies that have influenced the preparation of this paper substantially are discussed in this
section. Sharpe, William F. (1966) suggested a measure for the evaluation of portfolio
performance. Drawing on results obtained in the field of portfolio analysis, economist Jack L.

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Treynor has suggested a new predictor of mutual fund performance, one that differs from
virtually all those used previously by incorporating the volatility of a fund's return in a simple
yet meaningful manner.
The first step in portfolio evaluation is calculation of rate of return earned over
the holding period. Return may be defined to include changes in the value of the portfolio
over the holding period plus any other income earned over the period.
In the case of mutual funds the rate of return earned by different mutual funds
or mutual fund schemes may be calculated and compared with the rate of return earned by
representative stock market index which can be used as benchmark for comparative
evaluation. The mutual funds may also be ranked in descending order of their rates of return.
But such a straight forward rates of return comparison may be incomplete and sometimes
even misleading. The differential return earned by mutual funds could be due entirely to the
differential risk exposure of funds. Hence the returns have to be adjusted for risk before
making any comparison.
2.2.3 Means of Portfolio Evaluation
Evaluation of mutual fund is basically based on risk adjusted returns. One

obvious method of adjusting for risk is to look at the reward per unit of risk. We know that
investment in shares is risky. Risk free rate of interest is the return that an investor can earn
on riskless security., i.e. without bearing any risk. The return earned over and above the risk
free return is the risk premium per unit of risk. Thus, the reward per unit of risk for different
portfolios or mutual funds may be calculated and the funds may be ranked in descending
order of the ratio. A higher ratio indicates better performance.
In order to determine the risk-adjusted returns of investment portfolios, several

eminent authors have worked since 1960s to develop composite performance indices to
evaluate a portfolio by comparing alternative portfolios within a particular risk class. The
most important and widely used measures of performance are:
A) The Sharpe Measure
In this model, performance of a fund is evaluated on the basis of Sharpe Ratio,

which is a ratio of returns generated by the fund over and above risk free rate of return and
the total risk associated with it. According to Sharpe, it is the total risk of the fund that the

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investors are concerned about. So, the model evaluates funds on the basis of reward per unit
of total risk. Symbolically, it can be written as:
Sharpe Index (Si) = (Ri - Rf)/Si
Where, Si is standard deviation of the fund.
While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund,
a low and negative Sharpe Ratio is an indication of unfavourable performance.
B) The Treynor Measure
Developed by Jack Treynor, this performance measure evaluates funds on the

basis of Treynor's Index. This Index is a ratio of return generated by the fund over and above
risk free rate of return (generally taken to be the return on securities backed by the
government, as there is no credit risk associated), during a given period and systematic risk
associated with it (beta). Symbolically, it can be represented as:
Treynor's Index (Ti) = (Ri - Rf)/Bi.
Where, Ri represents return on fund, Rf is risk free rate of return and Bi is beta of the fund.
All risk-averse investors would like to maximize this value. While a high and
positive Treynor's Index shows a superior risk-adjusted performance of a fund, a low and
negative Treynor's Index is an indication of unfavourable performance.
Comparison of Sharpe and Treynor
Sharpe and Treynor measures are similar in a way, since they both divide the risk
premium by a numerical risk measure. The total risk is appropriate when we are evaluating
the risk return relationship for well-diversified portfolios. On the other hand, the systematic
risk is the relevant measure of risk when we are evaluating less than fully diversified
portfolios or individual stocks. For a well-diversified portfolio the total risk is equal to
systematic risk. Rankings based on total risk (Sharpe measure) and systematic risk (Treynor
measure) should be identical for a well-diversified portfolio, as the total risk is reduced to
systematic risk. Therefore, a poorly diversified fund that ranks higher on Treynor measure,
compared with another fund that is highly diversified, will rank lower on Sharpe Measure.
C) Jenson Model
Jenson's model proposes another risk adjusted performance measure. This measure
was developed by Michael Jenson and is sometimes referred to as the Differential Return

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Method. This measure involves evaluation of the returns that the fund has generated vs. the
returns actually expected out of the fund given the level of its systematic risk. The surplus
between the two returns is called Alpha, which measures the performance of a fund compared
with the actual returns over the period. Required return of a fund at a given level of risk (Bi)
can be calculated as:
Ri = Rf + Bi (Rm - Rf)
Where, Rm is average market return during the given period. After calculating it, alpha can
be obtained by subtracting required return from the actual return of the fund.
Higher alpha represents superior performance of the fund and vice versa. Limitation
of this model is that it considers only systematic risk not the entire risk associated with the
fund and an ordinary investor cannot mitigate unsystematic risk, as his knowledge of market
is primitive.
D) Fama Model
The Eugene Fama model is an extension of Jenson model. This model compares the
performance, measured in terms of returns, of a fund with the required return commensurate
with the total risk associated with it. The difference between these two is taken as a measure
of the performance of the fund and is called net selectivity.
The net selectivity represents the stock selection skill of the fund manager, as it is
the excess return over and above the return required to compensate for the total risk taken by
the fund manager. Higher value of which indicates that fund manager has earned returns well
above the return commensurate with the level of risk taken by him.
Required return can be calculated as: Ri = Rf + Si/Sm*(Rm - Rf)
Where, Sm is standard deviation of market returns. The net selectivity is then calculated by
subtracting this required return from the actual return of the fund.
Among the above performance measures, two models namely, Treynor measure and
Jenson model use systematic risk based on the premise that the unsystematic risk is
diversifiable. These models are suitable for large investors like institutional investors with
high risk taking capacities as they do not face paucity of funds and can invest in a number of
options to dilute some risks. For them, a portfolio can be spread across a number of stocks
and sectors. However, Sharpe measure and Fama model that consider the entire risk
associated with fund are suitable for small investors, as the ordinary investor lacks the
necessary skill and resources to diversified. Moreover, the selection of the fund on the basis

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of superior stock selection ability of the fund manager will also help in safeguarding the
money invested to a great extent. The investment in funds that have generated big returns at
higher levels of risks leaves the money all the more prone to risks of all kinds that may
exceed the individual investors' risk appetite.
Above four methods available for performance evaluation, this study is based on two
methods. Namely Sharpe ratio and Treynor ratio. This is because now a days most of the
researchers use Sharpe and Traynor ratios for evaluation. The other two are irrelevant for the
time being.

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CHAPTER: 3
METHODOLOGY
3.1 Objective of the study
1. To study the performance of 5 mutual funds in India in the recent past.
2. To evaluate the performance of mutual funds through Sharpe and Treynor ratios

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3. To compare the performance with bench mark index of BSE Sensex
4. To suggest suitable mutual funds according to investor characteristics
5. To apply basic statistical concepts to project return and risks of mutual funds
3.2 Scope of the study
Mutual Fund industry today, with about 34 players and more than five
hundred schemes, is one of the most preferred investment avenues in India. However, with a
plethora of schemes to choose from, the retail investor faces problems in selecting funds.
Factors such as investment strategy and management style are qualitative, but the funds
record is an important indicator too. Though past performance alone can not be indicative of
future performance, it is, frankly, the only quantitative way to judge how good a fund is at
present. Therefore, there is a need to correctly assess the past performance of different mutual
funds.
3.3 Methodology of the study
The methodology used is that evaluating the performance of mutual funds in

India and compare with the benchmark index BSE Sensex. For this I take returns of five
mutual funds, namely TATA Equity PE,DSP Blackrock TaxSaver, Franklin India Prima
Plus, HDFC Prudence and Sundaram BNP Paribas SMILE. In the case of Tata equity PE,
Franklin India Prima Plus, and HDFC Prudence I take returns for the last five years(2006-
2010),For Sundaram BNP Paribas SMILE I take returns for the last 4 years(2007-2010) and
for DSPBR TaxSaver, I take returns for the last 3 years(2008-2010).Then it is compared with
the Sharpe and treynor measures of the benchmark index BSE Sensex. Then apply basic
statistical concepts like expected returns, standard deviation and variance, correlation
coefficient and covariance
3.4 Limitations of study
1) Only 5 mutual funds are included for the portfolio evaluation of mutual funds in this study.
So the findings and suggestions are only based on the 5 mutual funds included in this study.
2) The study is fully based on secondary data got from the research department of religare
securities. So there is chance of personal bias from the researchers of that organisation

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3) Basic statistical concepts is based on chances .the chances applied are purely assumptions
and not the real chances of the company
4) This study is trying to evaluate the performance on the basis of Sharpe and treynor ratios.
there are other methods also available for mutual fund evaluation.

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CHAPTER: 4
ANALYSIS AND INTERPRETATIONS
4.1 Tata Equity PE
The fund seeks to provide capital appreciation by investing 70 per cent of the total
assets in stocks having a trailing P/E ratio less than that of the BSE Sensex at the time of
investment With bold allocations to Metals, Energy and Financials, it delivered a return of 84
per cent (category average: 59%). The fund’s strategy is unique: To invest at least 70 per cent
of its net assets in stocks that have a trailing P/E less than that of the Sensex at the time of
investment. At first blush it would appear that the portfolio would naturally be value based.

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Not necessarily. Simply because the fund managers gravitate towards low PE stocks does not
translate into them offloading when it goes up. Moreover, they have a free hand with the
balance 30 per cent. The fund’s diverse portfolio won’t see too much of aggression with
individual stock bets, though strong sector exposures have been the norm. Neither do they
deliberately gravitate towards any market cap. Given its mandate to invest in undervalued
companies, preferably those with a price earning ratio is lower than that of its benchmark
index (the Sensex).Now TATA equity PE has taken its time to prove its worth. Those who
had invested at the time which it has launched in June 2004 had their share of disappointment
in the initial years .but those who take patience to allow the fund to come to terms with the
market are reaping the rewards now
Table 4.1A Portfolio of TATA Equity PE
No Sectors %of Holding

1 Financial services 7.9
2 Automobiles 6.8
3 Pharma 6.6
4 Energy 13
5 Consumer goods 13.4
6 IT 13.9
7 Industrial manufacturing 2.7
8 Services 2.5
9 Cement 2.2
10 Fertilisers 1.7
11 Telecom 1.7
12 Construction .9
13 Metals 10.5
4.1.1 Portfolio Overview of Tata Equity PE
In the portfolio of Tata Equity PE ,IT and Consumer goods holds major share by holding
13.9% and 13.4% respectively. It also gives importance to metals by investing 10.5%.Sectors
like financial services, automobiles, and pharma holds 7.9%,6.8% and 6.6% respectively.
And minor investments in other sectors. It is an equity fund so major investments are in the
category of equity shares. So the risk is little high compared to other schemes. In this fund the
top 5 stock holdings are Mphasis, Cadila health, Hindustan zinc, First source sol and voltas
Given its bias to undervalued securities ,it is but natural for this fund to have a
mid cap orientation .Nearly 80% of the funds portfolio thus comprises of mid and small cap
stocks .most of which have been acquired at least a year back. Unlike most other funds of the
industry today that have been betting on energy and infrastructure space since the revival of
the markets. Tata equity PE shows a clear inclination for information technology and

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consumer goods sectors. At their peak information technology stocks accounted for nearly a
quarter of the funds portfolio in august -September 2009.
Currently the funds exposure to the information technology is nearly 14%.Some of

the interesting IT picks ,that have yielded generous returns for the fund in the last few months
include Mphasis,patni computers and NIIT Technologies. It is however surprising to see that
the funds continuous to hold a small percentage of Tanla Solutions –which it had invested
into about a couple of years ago-for not only this stock had been badly bruised in the
meltdown but it continues to struggle to revive to its premeltdown levels. Apart from IT,
some of its other good picks that have nearly doubled in the current rally include Hindustan
Zinc ,Exide industries,GAIL,Gujrat cements and Shree cements which it had invested in the
down turn. Also some of its timely picks around May-June this year like Cadila Health
care ,Castrol India and eClerx have reaped extremely handsome returns in the last few
months.
However ,not all its calls can be termed timely. Its decision to exit from blue chips
such as State bank of India, Infosys and HDFC Bank in the current year do come as a
surprise, especially after having held onto them for nearly a year
4.1.2 Portfolio Evaluation of Tata Equity PE
For evaluating the performance of Tata Equity PE, We select returns from the last
five years.
Chart 4.1A Returns of TATA Equity PE
2005 2006 2007 2008 2009
Table 4.1B calculation of standard deviation
Year Return: Tata Equity PE(X) 2

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. X
2009 103.59 10730
2008 -53.84 2899
2007 83.60 6989
2006 29.03 843
2005 39.97 1597
TOTAL ∑X =202.35 ∑X² =23058
Standard Deviation = N∑X2-(∑X)²N²
S.D = 5*23058-(202.35)²5²
=54.53
Table 4.1C calculation of risk free return for 5 years
Year Risk free return
2006 6.25
2007 8.25
2008 9.50
2009 7.00
2010 6.50
Total 37.5
For calculating risk free return we select average of reserve bank’s fixed interest rates
Risk free return for 5 years = 37.5/5
= 7.5
Table 4.1D Statistical Measures
Particulars Value
Average return 40.47
Risk free return 7.5%
BETA 1.03

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Standard Deviation 54.53
A..Sharpe ratio of TATA Equity PE
Sharp ratio = rp – rf
σp
where rp = return of the portfolio
rf = risk free return
σp= standard deviation of the portfolio
For calculating Sharpe ratio of TATA Equity PE we take return of the portfolio (rp) as the
average return for the last five years(2005 - 2009)
Sharpe ratio 40.47-7.5
54.53 = .60
B. Treynor ratio of TATA Equity PE
Treynor ratio = rp – rf
βp

βp = beta of the portfolio
For calculating Treynor ratio of TATA Equity PE, we take return of the portfolio (rp) as the
average return for the last five years(2005 - 2009)

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Treynor ratio = 40.47-7.5
1.03 =32
Reward to variability ratio of Tata equity PE is .60. It shows the funds strong
performance in the last five years. So this fund is very favourable among mutual fund
investors. According to the Sharpe ratio is concerned the fund shows high quality risk
adjusted performance because the Sharpe ratio is positive and high level
Reward to volatility ratio is also favourable in the case of Tata equity PE. The
funds Traynor ratio for the last five years is 32.Traynor ratio is also positive and in a high
level. It shows funds superior risk adjusted performance.
Tata equity is an equity oriented fund. So funds major part of investment in

equities. So it got opportunity to become part of the previous rallies. Its major problem is that
its risk quotient is little high because of the high equity exposure. But its previous
performance shows that the funds are capable to overcome this risk quotient.

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4.2 DSP Blackrock Tax Saver
DSP Blackrock tax saver has completed about three years of in the mutual fund
industry. Launched in December 2006 the fund has however already made its mark as a
reasonable performer in both the bull and bear phases of the market in such a short span of
time. The scheme seeks to generate medium to long-term capital appreciation from a
diversified portfolio that is substantially constituted of equity and equity related securities
Table 4.2A Portfolio of DSPBR Txasaver

2 Automobiles 3.6
3 FMCG 12.7
4 Energy 13.2
6 IT 7.9
7 Health care 11.8
8 Services 5.2
9 Textiles 1.8
10 Chemicals 3.9
11 Diversified 4.0
12 Construction 5.9
13 Metals 4.5
14 Engineering 6.2
4.2.1 Portfolio Overview of DSP Blackrock Tax Saver
The fund’s top holding in financial services with an investment of 14.3%the other
major holdings include FMCG(12.7?%), Health care(11.8), energy(13.2),and IT with 7.9% of
investment. The top five companies are reliance industries, Infosys,SBI,HDFC Bank and ITC
Like many other diversified equity schemes DSP Blackrock TaxSaver has multi cap
composition with prominent names such as Reliance industries, Infosys,SBI,HDFC
Bank,ITC,TCS,L&T,Bhel,ICICI Bank and others forming part of its portfolio. In line with its
other popular schemes from the DSP Blackrock basket, TaxSaver is highly diversified with

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nearly 80 stocks in the portfolio. Given such an extensive diversification and its moderate
asset size of about Rs 775 crore, the fund exposure to a particular stock is less than 5%.
While this definitely reduce the stock specific risk of the portfolio. It rises the
workload for the fund manager who now needs to keep in touch with 80 stocks and develop
in their respective sectors .DSP Blackrock is however well known in the market for its
diversification skills and has not disappointed its investors so far. While the fund was
launched at the peak of the bull run most of the stocks in the portfolio were picked up in
2008and by mid 2009 at reasonable valuation. It has thus made healthy profits on investments
in RIL,Infosys,HDFC Bank,Dr Reddys Laboratories,REC,Shree renuka sugars,P&G ,Jindal
steel and power and ICICIBank among others.
At the same time ,stocks that are yet to yield decent returns include
SBI,Voltas,Piramel Health care and Cairn India among others. Some of the funds recent
picks include CESC,Kajaria ceramics,Heidelberg cement India Ltd,Hindustan zinc OCL
India. To roughly gauge the fund’s profitable holding today, if one were to consider the
closing stock prices as of end of January 2010,80% of the fund ‘s holding is estimated to be
in green light now.
4.2.2 Portfolio Evaluation of DSP Blackrock Tax Saver
For evaluating the performance of DSP Blackrock Tax Saver , We select returns from
the last three years.
Chart 4.2A Returns of DSPBR Taxsaver
2007 2008 2009
Table 4.2B Calculation of standard deviation
Year Return: DSPBR(X) 2

. X
2009 84.22 7093
2008 -56.08 3144
2007 81 6561
TOTAL ∑X =109.14 ∑X² =16798

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S.D = 3*16798-(109.14)²3²
. =65.39
Table 4.2C Calculation of risk free return for 3 years
2008 9.50
2009 7.00
2010 6.50
Total 31.25
Risk free return for 4 years = 23/3
= 7.66
Particulars Value
BETA .96
A. Sharpe ratio of DSPBR TaxSaver

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σp
For calculating Sharpe ratio of DSPBR TaxSaver we take return of the portfolio (rp) as the
average return for the last Three years(2007 - 2009)
Sharpe ratio = 36.38-7.66
65.39 = .44
B Treynor ratio of DSPBR Tax saver
βp

For calculating Treynor ratio of DSPBR Tax saver, we take return of the portfolio (rp) as the
average return for the last Three years(2007 - 2009)
.96 = 29.91
DSPBR TaxSaver’s reward to variability ratio is .63 .The funds reward to variability
is satisfied level in this case of DSP Blackrock tax saver. So funds performance is superior as
compared with Sharpe ratio. This is mainly because of the funds equity exposure. The
Treynor ratio of this fund is 29.91 .According to the Traynor ratio the fund shows reasonable

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performance since its inception.. The funds Traynor ratio shows that the risk adjusted
performance is so well till now except in the crisis year.
The fund start its operation in 2007. It is an equity linked saving scheme. Its
equity exposure helps to reap high returns in the previous two rallies. The important thing is
that the fund manages to minimize it loss in the recession time also.
4.3 Franklin India Prima Plus
Launched in September 1994 by Kothari pioneer ,which was acquired by Franklin

Templeton Asset Management Company .Franklin India Prima Plus is one of the oldest funds
in India. The scheme aims to provide growth of capital and regular dividend from a portfolio
of equity, debt and money market instruments and focussing on wealth creating companies
across all sectors and market cap ranges.
Table 4.3A Portfolio of Franklin India Prima Plus

2 Automobiles 5.1
3 Pharma 2.4

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4 Energy 14.3
6 IT 5.7
8 Services 1.8
9 Cement 2.6
10 Telecom 5.2
11 Media 4.8
12 Construction 3.4
13 Metals 2.7
4.3.1 Portfolio Overview of Franklin India Prima Plus
Financial sector is the leading sector in the portfolio of Franklin

India(25.2%).Energy and consumer goods holds 14.3% and 10% respectively. Other major
sectors include industrial manufacturing(7.5),IT(5.7),Telecom(5.2) Automobiles (5.1) and
Media 4.8).Top 5 stock holdings include HDFC bank (5.3),Bharati airtel(5.2),kotak mahindra
(4.3),Infosys (4.2) and Nestle India (3.7)
With over 17000 crore of Asset Under Management the fund is diversified
with an average of 60 stocks in its portfolio at any given time. While the fund has favoured
financial services companies for quite some times now, it is now gradually begun to built up
the portfolio of energy stocks since October 2008. The move into the energy stocks considers
a clear shift from the consumer goods scrips that has dominated the fund’s portfolio since
2005.It is probably this extensive exposure in the defensive consumer goods category that
saved the fund in the meltdown but also stunted its growth in 2007.That consumer goods is
Prima Plus’s favourite is also reflected from the fact that even today the sector accounts for
nearly 11% of its portfolio. Though this share has come down from over 15%until July
2009.Some of the other sectors that have caught the fund’s fancy include automobiles whose
share in the portfolio surged from 1.5 % in June 2009 to about 5%as on September 2009
An interesting fact about this fund is that unlike other diversified equity
schemes which had drastically truncated their equity exposure during the meltdown ,Prima
plus continued to remain invested in equities to the tune of 90% -95% of its AUM and yet
managed to perform better than those which had escaped to the shelter of cash. While the
fund has a decent portfolio with well recognized stocks ,its calls like exiting HDFC,L&T and
Hero Honda in march 2009 after holding them for a fairly long time may have cost the fund
dearly in the calendar year. While it did add back Hero Honda in July 2009,the stock had

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already witnessed a decent run-up during the period it was absent from the fund. The fund
has also exited Shree cements and Axis bank in May 2009and once again both these stocks
turned out to be blockbuster hits of the current rally.
4.3.2 Portfolio Evaluation of Franklin India Prima Plus
For evaluating the performance of Franklin India, We select returns from the last 5 years.
Chart 4.3A Returns of Franklin India Prima Plus
2005 2006 2007 2008 2009
Year Return: Franklin India (X) 2

. X
2009 73.10 5343
2008 -47.71 2276
2007 54.90 3014
2006 49.36 2436
2005 47.61 2266
TOTAL ∑X =177.26 ∑X² =15335
S.D = 5*15335-(177.26)²5² .
. =42.54
2006 6.25
2007 8.25
2008 9.50
2009 7.00

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2010 6.50
Total 37.5
= 7.5
Particulars Value
Average Return 35.45
BETA .90
A. Sharpe ratio of Franklin India Prima Plus
σp
For calculating Sharpe ratio of Franklin India Prima Plus we take return of the portfolio (rp)
as the average return for the last Five years(2005 - 2009)

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42.54 = .65
B. Treynor ratio of Franklin India Prima plus
βp
For calculating Treynor ratio of Franklin India Prima plus , we take return of the portfolio
(rp) as the average return for the last five years(2005 - 2009)
.90 =31.05
Franklin India performed well in last five years. It’s reward to variability ratio is .
65.Franklin India’s major share is in financial sector. It help them to earn good returns in the
current rally. Franklin India’s reward to volatility ratio is 31.05. so it is well performed to
overcome systematic risk also. Till the meltdown Franklin India is an average performer. In
meltdown the fund is got success in minimizing losses as compared by BSE Sensex. But in
current bull run it become failure to earn benefits up to BSE Sensex. The funds performance
record aptly substantiates its tendency to do well in down turns than rallies

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4.4 HDFC Prudence Fund
HDFC Prudence is a balanced fund. Yet its returns ,particularly in the recent
past ,have surpassed even those of a broader market indices-the Sensex and the nifty.HDFC
Prudence was launched in January 1994.It is one of the oldest equity oriented hybrid fund of
the country today. Its humungous asset size of over Rs 3200crore also makes it the largest
and the most popular schemes in the category of balanced funds. The scheme seeks periodic
returns and long-term capital appreciation from a balanced portfolio of debt and equity.
Table 4.4A Portfolio of HDFC Prudence Fund

2 Automobiles 3.6
3 Pharma 9.2
4 Energy 5.1
6 IT 4.1
8 Services 1.8
9 Paper 0.4
10 Metals 0.6
11 Chemicals 3.3
12 Construction 4.1
13 Media 6.5
14 Textiles 2.1
15 Miscellaneous 0.7
4.4.1 Portfolio Overview of HDFC Prudence Fund
In the portfolio of HDFC Prudence the highest holding sector is financial

services(17.9). Then followed by pharma (9.2)consumer goods(8.9),media (6.5),energy (5.1)
etc. The highest holding companies are ONGC(3.6),SBI (3.5)LIC Housing(3.3),Bank of
Baroda(2.9) and Pidlite Industries(2.4). With its 75% of assets invested in equity, the fund is
extremely well diversified and on average holds 55-60 stocks in the portfolio. And within the
equity portfolio the fund has a clear bias towards mid and small cap stocks that account for

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more than half of its equity portfolio. While the fund has been holding many of its stocks for
over a couple of years now, churning the portfolio occasionally ,some of its recent
acquisitions have turned out to be multi baggers.
Its recent picks like Lupin,Punj Lioyd,Simplex infrastructure ,CRISIL,Maharashtra seamless

and Biocon during march –may 2009 have more than doubled till date. As far as its long
term investment is concerned ,it is benefitting mainly from the returns on some of the large
cap blue chip companies it had pick early. These include stock like SBI,Bank of
baroda,TCS,P&G,Crompton Greaves and sun pharma among others. Initial investment in
each of these stocks date back to early2007 and even beyond.At the same time ,some of its
long term mid and small cap acquisitions like ISMT,Indo Rama synthetics ,Uniphos
Enterprises ,Himatsingka Seide and Ahmednagar Forgings ,among others, have fallen off
grace since the time they were accumulated about two and half years ago
In terms of sector oriented compositions, financial services and pharmaceuticals have been
dominating the funds portfolio since 2008.In fact pharmaceuticals sector especially in the mid
cap space, has attracted attention of many fund managers in the last few months. As far as the
funds debt compositions is concerned, the fund mostly invests in high rate papers those with
AA+ or AAA rating and sovereign papers.
4.4.2 Portfolio Evaluation of HDFC Prudence Fund
For evaluating the performance of HDFC Prudence , We select returns from the last 5 years
Chart 4.4A Returns of HDFC Prudence
2005 2006 2007 2008 2009
Year Return: HDFC Prudence 2

(X) . X
2009 84.84 7198
2008 -42.00 1764
2007 43.00 1849
2006 33.00 1089

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2005 47.00 2209

TOTAL ∑X =165.84 ∑X² =14109
S.D = 5*14109-(165.84)²5²
.
. =41.49
2006 6.25
2007 8.25
2008 9.50
2009 7.00
2010 6.50
Total 37.5
= 7.5
Particulars Value
BETA 1.07

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A. Sharpe ratio of HDFC Prudence
σp
For calculating Sharpe ratio of HDFC Prudence we take return of the portfolio (rp) as the
average return for the last Five years (2005 - 2009)
Sharpe ratio =33.16-7.5
41.49 = .61
B Treynor ratio of HDFC Prudence
βp
For calculating Treynor ratio of HDFC Prudence, we take return of the portfolio (rp) as the
average return for the last five years (2005 - 2009)

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1.07 =23.98
HDFC Prudence is a balanced fund. It’s reward to variability ratio is .61.As far as a
balance fund is concerned its Sharpe ratio is very high. It shows the superior performance of
the fund. It’s reward to volatility ratio is 23.98. when compared to other funds it’s beta(un is
little high. because of the balanced nature of this fund.. so the reward to volatility ratio is little
low. But a balance fund is concerned HDFC Prudence outperformed in last five years
4.5 Sundaram BNP Paribas SMILE
Sundaram BNP Paribas SMILE has rewarded many of its investors who chose to
stay with the funds irrespective of market conditions .SMILE(Small and Medium Indian
Leading Equities Fund),as the name suggests invest in small and mid caps stocks and has
emerged as one of the leading funds in this category during its five year long performance
history. The scheme aims to achieve capital appreciation by investing at least 65 per cent of
its assets in diversified stocks that are generally termed as 'small and mid caps'. Small and
midcaps are defined as any equity stock whose market capitalization is equal to or lower than
the market capitalization of the largest market capitalization stock in CNX Midcap 200 index.
With this offering you can be sure of ample diversification amongst sectors as well as stocks.
Over the past one year, the number of stocks has averaged at 50, which is a considerable
change from its earlier days when it touched 96. While around 40 per cent of its investment
universe comprises of stocks that have been held in the portfolio for less than six months,
there are a number of stocks which have been held for considerable lengths of time. It’s
worth noting that in most stocks it offloads positions completely before buying them afresh.

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Table 4.5A Portfolio of Sundaram BNP Paribas SMILE

1 Financial services 11,9
2 Automobiles 10.
3 Pharma 7.7
4 Energy 8.5
6 IT 8.9
8 Services 7.0
9 Cement 1,0
10 Textiles 1.3
11 Media 1.0
12 Construction 4.6
13 Metals 12.
14 Fertilisers 1.2
15 Industrial capital goods 2.4
16 Miscellaneous .9
4.5.1 Portfolio Overview of Sundaram BNP Paribas SMILE
In the portfolio of Sundaram BNP SMILE consumer goods is the leading sector
with 12.1%of investment. Then it is followed by metals and financial services with 12%and
11.9% respectively. The other sectors include automobiles(10),Information Technology
(8.9),Energy(8.5) ,Pharma(7.7),Services (7) and Industrial Manufacturing(6.3). top stock
holders are Polaris software(3.9),Ashok Leyland(3.2),Sree Renuka Sugars(3.2),Bajaj
Auto(2.9) and Sesa Goa(2.8)
For a fund managing about 560 crore of assets Sundaram BNP Paribas SMILE is
extensively diversified and with over 60 stocks in its portfolio at any given point of time. But
what is even more interesting is the fund’s strategy to churn the portfolio aggressively each
month. So aggressive is the churning that the fund ,on an average ,does not hold a stock for
more than six months in a row. Most of the stocks that the fund currently holds have been
acquired around and after July 2009.
An analysis of the fund’s portfolio clearly reveals an inclination to trade rather

than hold the investments for the long term. And this fund applied this strategy uniformly to
both large and mid cap stocks in the portfolio. Thus unlike many other funds that prefer to
stay invested in individual blue chip counters and trade the mid caps, SMILE has no such
biases and all the stocks in its portfolio are available for trade at all times

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While one can argue that such an aggressive churning allows the fund manager to
participate in the market momentum, another school of thought reckons that such frequent
trades may result in missing out on multi baggers that usually arise from long term
holding .More over such a frequent churning also raises the cost of managing the portfolio.
For instance one of SMILE’s investments ,Punjab National Bank in November 2008 would
have more than doubled today had it not exited the fund within three months in February
2009.Similarly, the fund made an early exit from Axis bank in may 2009 after investing at an
extremely lucrative valuation in March 2009.This stocks again has more than doubled since
then. Nevertheless the same strategy has also helped the fund in minimizing its losses in
stocks, such as India cements and Paramount communications where a timely exit did help.
4.5.2 Portfolio Evaluation of Sundaram BNP Paribas SMILE
For evaluating the performance of Sundaram BNP Paribas SMILE, We select returns from
the last 4 years
Chart 4.5A Returns of Sundaram BNP Paribas SMILE
2006 2007 2008 2009
Table 4.5B Calculation of standard deviation
Year Return: Sundaram BNP 2

SMILE (X) . X
2009 120.44 14505
2008 -57.62 3320
2007 81.17 6588
2006 30.92 956
TOTAL ∑X =174.91 ∑X² =25369

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S.D = 4*25369-(174.91)²4² = .66.55
2007 8.25
2008 9.50
2009 7.00
2010 6.50
Total 31.25
= 7.81
Particulars Value
BETA 1.18
A. Sharpe ratio of Sundaram BNP Paribas SMILE
σp
For calculating Sharpe ratio of Sundaram BNP Paribas SMILE we take return of the portfolio
(rp) as the average return for the last Four years (2006 - 2009)

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66.55 = .54
B Treynor ratio of Sundaram BNP Paribas SMILE
βp
For calculating Treynor ratio of Sundaram BNP Paribas SMILE, we take return of the
portfolio (rp) as the average return for the last four years (2006- 2009)
Treynor ratio =43.72-7.81
1.18 =30.43
The reward to volatility ratio of Sundaram BNP SMILE is .66. it shows fund’s
superior and high performance. Its major investments in small and mid cap companies. It
increases the total risk of the portfolio. But its Sharpe ratio indicates the strong management
of assets by the fund managers. In the current year its return is above 100%.its reward to
volatility ratio is also good. Its Treynor ratio is 30.43.Given its midcap orientation Sundaram
BNP SMILE has done exceptionally wee during in last five years
5.6 Comparison between Sharpe and Treynor ratios of Mutual funds
TABLE 4.6A Sharpe and Treynor ratios
NAME Sharpe Ratio Treynor Ratio

Tata Equity PE .60 32

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DSP Blackrock .44 29.91

Franklin India .65 31.05
HDFC Prudence .61 23.98
Sundaram BNP SMILE .54 30.43
In the case of Tata equity ,its Sharpe and treynor ratios are in proportionate level
because it is a well diversified portfolio. In the case of DSP Blackrock its treynor ratio is little
lower proportionate with its Sharpe measure. It shows the fund’s high systematic risk.
Franklin India shows a moderate performance when we compare its Sharpe ratio is equally
proportionate with treynor measure. HDFC prudence shows that its systematic risk is little
higher. It is because of the less diversified portfolio of HDFC prudence. Sundaram shows
relatively proportionate performance in Sharpe and treynor measure. Rankings based on total
risk (Sharpe measure) and systematic risk (Treynor measure) should be identical for a well-
diversified portfolio, as the total risk is reduced to systematic risk. Therefore, a poorly
diversified fund that ranks higher on Treynor measure, compared with another fund that is
highly diversified, will rank lower on Sharpe Measure..
4.7 Market Analysis of BSE Sensex
For evaluating the mutual funds performance we have to calculate the Sharpe ratio
of the market index to be used. In India the benchmark index is the BSE Sensex.
4.7.1 Standard Deviation of BSE Sensex

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Standard deviation for BSE Sensex for five years is for portfolio performance
comparison of Tata Equity PE,HDFC Prudence and Franklin India prima plus. Standard
deviation for four years is for Sundaram BNP SMILE and three years for DSPBR
TaxSaver)
Table 4.7A Standard Deviation of BSE Sensex for 5 Years
Year Return On Market 2

Index(X) X
2009 81 6561
2008 -52 2704
2007 43 1849
2006 47 2209
2005 47 2209
TOTAL ∑X=166 ∑X² =15532
S.D = 5*15532-(166)²5²
=44.76
Table 4.7B Standard Deviation of BSE Sensex for 4 Years

Index(X) X
2009 81 6561
2008 -52 2704
2007 43 1849
2006 47 2209
TOTAL ∑X= 119 ∑X² =13323

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S.D = 4*13323-(119)²4²
. =49.45
Table 4.7C Standard Deviation for 3 Years

Index(X) X
2009 81 6561
2008 -52 2704
2007 43 1849
TOTAL ∑X= 72 ∑X² =11114
S.D = 3*11114-(72)²3²
=55.93
4.7.2 Sharpe Ratio of BSE Sensex
Sharpe ratio for BSE Sensex for five years is for portfolio performance comparison
of Tata Equity PE,HDFC Prudence and Franklin India prima plus. Sharpe ratio for four years
is for Sundaram BNP SMILE and three years for DSPBR TaxSaver)
A. Sharpe ratio of BSE Sensex for 5 years
σp

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For calculating Sharpe ratio of BSE sensex we take return of the portfolio (rp) as the
average return for the last Four years (2006 - 2009)
44.76 = .57
B. Sharpe ratio of BSE Sensex for 4 years
σp
For calculating Sharpe ratio of BSE Sensex we take return of the portfolio (rp) as the
average return for the last Four years (2006 - 2009)
49.45 = .45
C.Sharpe ratio of BSE Sensex for 3 years

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σp
For calculating Sharpe ratio of BSE sensex we take return of the portfolio (rp) as the
average return for the last three years (2008 - 2009)
Sharpe ratio = 24-7.5
55.93 = .29
4.7.3 Comparison of Mutual Fund Ratios with Market Index
Table 4.7D Sharpe ratios of mutual funds and BSE Sensex
Mutual Funds Sharpe Ratio Sharpe Ratio Of Sensex
Tata Equity PE .60 .57
DSP Blackrock .44 .29
Franklin India .65 .57
HDFC Prudence .61 .57
Sundaram BNP SMILE .54 .45
In this study all the mutual funds show that their reward to variability ratio is
more than the reward to variability of the benchmark index i.e. ,BSE Sensex. It shows the
better performance of the Indian mutual fund industry. In this study the funds like Tata equity
PE, HDFC prudence shows reasonable performance when compared with benchmark index.
These funds are managed by big corporate in India.

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Funds like Franklin India, and Sundaram BNP SMILE are also give well satisfied
results to their investors.DSP Blackrock give more than 100 % returns to their investors. the
main reason behind this is that the fund’s inception is in 2007.so it got opportunity to became
a part of two big rallies in Indian stock market. So HDFC prudence performance is very
superior because it is a balanced fund. So all mutual funds involved in this study are
performed very well when we compared with the benchmark index of BSE Sensex
4.8 Statistical Tools used for predicting Portfolio Returns
Investor’s assessment of return on a portfolio of Tata equity pe under three different

scenarios is as follows. If the return on a portfolio is expected to be r1 with a chance of p1, r2
with a chance of p2……and rn with a chance of pn then the overall assessment of investors is
based on the expected value of returns, which is computed as follows
Expected return=p1r1+p2r2+…………….+pnrn
4.8.1 Expected Returns
Table 4.8A TATA EQUITY PE

Scenario CHANCES(p) RETURN(r) p*r
1 .25 103.59 25.9
2 .50 -53.84 -26.9
3 .25 83.60 20.9
Expected return (∑p*r) = 19.9
Table 4.8B DSPBR TAXSAVER

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1 .25 84.22 21.05
2 .50 -56.08 -28.04
3 .25 81 20.25
Table 4.8C FRANKLIN INDIA PRIMA PLUS

1 .25 73.10 18.27
2 .50 -47.71 -23.85
3 .25 54.90 13.72
Table 4.8D HDFC PRUDENCE

1 .25 84.84 21.21
2 .50 -42.00 -21.00
3 .25 43.00 10.75
Table 4.8E SUNDRAM BNP PARIBAS

1 .25 120.44 30.11
2 .50 -57.62 -28.81
3 .25 81.17 20.2

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4.8.2 Standard deviation and Variance
Standard deviation is calculated to measure the average magnitude of the deviation in returns
of deviation of returns from the expected value. The squire of standard deviation is called
variance. Variance is the average value of the squares of deviations of the observed values
from the expected value.
Table 4.8F TATA EQUITY PE

Scenario Chances(p) Return(r) Deviation (Deviation)² P*(r-Ex)²
(r-Ex)
1 .25 103.59 83.69 7004 1751
2 .50 -53.84 -73.74 5337 2668
3 .25 83.60 63.7 4047 1014
Ex=19.9
Variance=∑ P*(r-Ex) ² =5433
Standard deviation = variance = 73
Table 4.8G DSPBR TAXSAVER

(r-Ex)
1 .25 84.22 70.96 5035 1258
2 .50 -56.08 -69.34 4808 2404
3 .25 81 67.74 4588 1147
Ex=13.26

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Table 4.8H FRANKLIN INDIA PRIMA PLUS

(r-Ex)
1 .25 73.10 64.96 4219 1055
2 .50 -47.71 -55.85 3119 1559
3 .25 54.90 46.76 2186 546
Ex=8.14
Table 4.8I HDFC PRUDENCE

(r-Ex)
1 .25 84.84 73.88 5458 1364
2 .50 -42.00 -52.96 2804 1402
3 .25 43.00 32.04 1026 256
Ex=10.96
Table 4.8J SUNDARAM BNP SMILE

(r-Ex)
1 .25 120.44 99.19 9838 2459

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2 .50 -57.62 -78.87 6220 3110

3 .25 81.17 59.92 3590 897
Ex=21.25
4.8.3 Covariance of mutual funds

Covariance of mutual funds is nothing but the average value of the product of deviation s
from respective expected return
Table 4.8K TATA EQUITY AND DSP BLACKROCK
Scenario Chance Return(tata) Return(DSP Deviation Deviation Product P*( rx-

) rx-ex* ex* ry-
P Rx rx-ex ry-ey ry-ey ey)
Ry
1 .25 103.59 84.22 83.69 70.96 5938 1484
2 .50 -53.84 -56.08 -73.74 -69.34 5113 2556
3 .25 83.60 81 63.7 67.74 4315 1078
Covariance= p1(rx1-Ex)(ry1-Ey)+p2(rx2-Ex)(ry2-Ey)+…………..+pn(rxn-Ex)(ryn-Ey)
Covariance = 5118
Table 4.8L TATA EQUITY AND FRANKLIN INDIA
Scenario Chance Return(tata) Return(FRANKLIN Deviation Deviation Product P*( rx

INDIA) rx-ex* -ex*
P Rx rx-ex ry-ey ry-ey ry-ey)
Ry
1 .25 103.59 73.10 83.69 64.96 5436 1359
2 .50 -53.84 -47.71 -73.74 -55.85 4118 2059

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3 .25 83.60 54.90 63.7 46.76 2978 744
Covariance = 4162
Table 4.8M TATA EQUITY AND HDFC PRUDENCE
Scenario Chance Return(tata) Return(HDFC) Deviation Deviation Product P*( rx-

rx-ex* ex* ry-
P Rx Ry rx-ex ry-ey ry-ey ey)
1 .25 103.59 84.84 83.69 73.88 6183 1545
2 .50 -53.84 -42.00 -73.74 -52.96 3905 1952
3 .25 83.60 43.00 63.7 32.04 2040 510
Covariance = 4007
Table 4.8N TATA EQUITY AND SUNDARAM BNP PARIBAS
scenario Chance Return(tata) Return(SUNDARAM) Deviation Deviation Product P*( r

rx-ex* x-
P Rx Ry rx-ex ry-ey ry-ey ex*
ry-
ey)
1 .25 103.59 120.44 83.69 99.19 8301 2075
2 .50 -53.84 -57.62 -73.74 -78.87 5815 2907
3 .25 83.60 81.17 63.7 59.92 3816 954

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Covariance = 5936
Table 4.8O FRANKLIN INDIA AND DSP BLACKROCK
scenario Chance Return(FRANKLIN Return(DSP Deviation Deviation Product P*( rx

INDIA) ) rx-ex* -ex*
P rx-ex ry-ey ry-ey ry-ey)
Rx Ry
1 .25 73.10 84.22 64.96 70.96 4609 1152
2 .50 -47.71 -56.08 -55.85 -69.34 3872 1936
3 .25 54.90 81 46.76 67.74 3167 791
Covariance = 3879
Table 4.8P HDFC PRUDENCE AND DSP BLACKROCK
Scenario Chance Return(HDFC) Return(DSP Deviation Deviation Product P*( rx-

) rx-ex* ex* ry-
P Rx rx-ex ry-ey ry-ey ey)
Ry
1 .25 84.84 84.22 73.88 70.96 5242 1310
2 .50 -42.00 -56.08 -52.96 -69.34 3672 1836
3 .25 43.00 81 32.04 67.74 2170 542
Covariance = 3688

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Table 4.8Q SUNDARAM BNP AND DSP BLACKROCK
scenario Chance Return(SUNDARAM) Return(DSP Deviation Deviation Product P*( r

) rx-ex* x-
P Rx rx-ex ry-ey ry-ey ex*
ry ry-
ey)
1 .25 120.44 84.22 99.19 70.96 7038 1759
2 .50 -57.62 -56.08 -78.87 -69.34 5468 2734
3 .25 81.17 81 59.92 67.74 4058 1014
Covariance = 5507
Table 4.8R FRANKLIN INDIA AND HDFC PRUDENCE
scenario Chance Return(FRANKLIN Return(HDFC) Deviation Deviation Product P*( r

INDIA) rx-ex* x-
P ry rx-ex ry-ey ry-ey ex*
Rx ry-
ey)
1 .25 73.10 84.84 64.96 73.88 4799 1199
2 .50 -47.71 -42.00 -55.85 -52.96 2957 1478
3 .25 54.90 43.00 46.76 32.04 1498 374
Covariance= p1 (rx1-Ex)(ry1-Ey)+p2(rx2-Ex)(ry2-Ey)+…………..+pn(rxn-Ex)(ryn-Ey)
Covariance = 305

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Table 4.8S FRANKLIN INDIA AND SUNDARAM BNP PARIBAS
Scenari Chanc Return(FRANKLI Return(SUNDARA Deviatio Deviatio Produc P*(

o e N INDIA) M) n n t rx- rx-
ex* ry- ex*
P Rx Ry rx-ex ry-ey ey ry-
ey)
1 .25 73.10 120.44 64.96 99.19 6443 161

0
2 .50 -47.71 -57.62 -55.85 -78.87 4404 220

2
3 .25 54.90 81.17 46.76 59.92 2801 700
Covariance= p1 (rx1-Ex) (ry1-Ey) +p2 (rx2-Ex) (ry2-Ey) +…………..+pn (rxn-Ex)(ryn-Ey)
Covariance = 4512
Table 4.8T HDFC PRUDENCE AND SUNDARAM BNP PARIBAS
Scenari Chanc Return(HDFC Return(SUNDARAM Deviatio Deviatio Produc P*(

o e ) ) n n t rx- rx-
ex* ry- ex*
P Rx Ry rx-ex ry-ey ey ry-
ey)
1 .25 84.84 120.44 73.88 99.19 7328 183

2
2 .50 -42.00 -57.62 -52.96 -78.87 4176 208

8
3 .25 43.00 81.17 32.04 59.92 1919 500
Covariance =4400
4.8.4 Correlation Coefficient

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The correlation coefficient measures how large the covariance is in relation to the variability
in individual returns.
Correlation coefficient= σxy/σxσy
A .Tata Equity and DSP BR Taxsaver
Correlation coefficient = 5118/(73*69)
= 5118/5037 =1.02
B .Tata Equity and Franklin India prima plus
= 4162/4088 =1.02
C .Tata Equity and HDFC Prudence
= 4007/4015 =1.00
D .Tata Equity and Sundaram BNP Paribas
Correlation coefficient= 5936/(73*80)
= 6585/5840 =1.02
E .Franklin India and DSP BR taxsaver
= 3879/3864 =1.0
F .HDFC Prudence and DSP BR taxsaver
= 3688/3795 =.97
G .Sundaram BNP Paribas and DSP BR taxsaver

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= 5507/5520 =1.0
H .Franklin India and HDFC Prudence
= 3051/3080 =.99
I .Franklin India and Sundaram BNP Paribas
= 4512/4424 =1.0
J. HDFC Prudence and Sundaram BNP Paribas
Correlation coefficient = 4400/(55*79) =

. = 4400/4345 =1.01
Table 4.8U Comparison of correlation coefficient
No Mutual funds Correlation coefficient

1 Tata equity and DSPBR TaxSaver 1.02
2 Tata equity and Franklin India prima plus 1.02
3 Tata equity and HDFC Prudence 1.00
4 Tata equity and Sundaram BNP SMILE 1.02
5 Franklin India and DSPBR Taxsaver 1.00
6 HDFC Prudence and DSPBR TaxSaver .97
7 Sundaram BNP SMILE and DSPBR 1.00
8 Franklin India and HDFC Prudence .99
9 Franklin India and Sundaram BNP SMILE 1.02
10 HDFC and Sundaram BNP SMILE 1.01

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When the correlation is positive, it indicates that the portfolios are move in the same
direction and correlation is 1 or above 1 indicates that the association between returns are
perfect and if it is less than 1 the correlation between returns are imperfect. This study
reveals that all mutual funds are move in the same direction because the correlation is
positive. But the association between HDFC Prudence and DSPBR TaxSaver and Franklin
India and HDFC Prudence is not perfect because its correlation coefficient are less than one
CHAPTER: 5
FINDINGS

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5.1 General Findings
1) Mutual fund performance are positively correlated with the performance of the share
market. It reveals that mutual fund performance are highly depends on stock market
performance
2) Mutual fund investments are profitable avenues in the long run. When compared with
share market, mutual funds are give adequate returns to its investors. Through mutual funds
people got high quality services from fund managers which are not available in the case of
direct investment.
3) All mutual funds were failed to give positive returns to investors in the current recession
periods .This is mainly because of the adverse impact from share market. But some funds
could won to minimise the impact of losses to investors
5.2 Special Findings
1) Tata Equity PE
Tata equity PE an equity fund turned out to be a big beneficiary generating nearly 84% in the
year 2007. The Sensex and the nifty had grossed humble returns of about 43% and 55%
respectively while the average of the category of diversified equity schemes was just 59%.In
the current calendar year the revival rally helps the fund to compensate the last years fall
already. In this year it has given over 100% returns while the Sensex and Nifty trail far
behind at about 81% and 76%,respectively.

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2) DSP Black Rock Tax Saver
Having debuted at the peak of the bull run DSP Blackrock delivered a smashing 84%
returns in 2007 against 57% returns by S&P Nifty 500.Its performance belittled not only the
Sensex and Nifty returns of about 43 and 50%respectively but also the average returns of
about 59%by the category of equity linked tax saving schemes. but the funds performance is
not very well in 2008.But in 2009 the fund picked up its pace once again. the fund gained
around 84% while the Sensex and nifty gained only 81 and 76% respectively. How ever it fall
short of beating S&P CNX 500 which returned about 89% last year.
3) Franklin India Prima Plus
One of the top performing schemes before the dotcom bust ,Franklin India Prima Plus has
been an average performer thereafter ,until the meltdown of 2008 turned the wheel of fortune
in its favour once again. By restricting its absolute fall to about 48% against 52% of the Nifty
and Sensex ,the fund indeed witnessed a huge turn around. The funds performance in the
current bull run cannot be termed outstanding either with 73% returns since January this year.
It is trailing S&P CNX nifty at 74% and 68% respectively. The funds performance record
aptly substantiates its tendency to do well in downturns that rallies.
4) HDFC Prudence Fund
Despite the blend of both debt and equity ,HDFC Prudence has displayed a great ability to
beat the equity market returns handsomely in its over a decade of long performance history.
Thus despite being benchmarked to Crisil balance index the fund’s performance so far has
inevitably raised its benchmark to an equity index like Sensex and nifty. The funds strong
come back in the current calendar year. Since January this year the fund has delivered 84%
returns ,which is as good as the average of the category of diversified equity schemes. The
Sensex and nifty have returned about 81 and 76% respectively, during this period. But this
fund fail 42% during 2008 against average decline about 41% by the category of balance
funds
5) Sundaram BNP Paribas SMILE
Sundaram BNP Paribas SMILE has done exceptionally well during market rallies and has
performed at par with its benchmark index BSE Sensex. In the down turn. Considering

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Sundaram BNP Paribas SMILE’s investment strategy it was quite obvious that the fund had
to face the heat of the meltdown, more aggressively than the broader market indices, in the
following year. The fund even managed to outperform the average returns of 84% by the
category of diversified equity schemes.
CHAPTER: 6
SUGGESTIONS

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6.1 Suggestions
1) Mutual fund investments are provided huge returns in the current rally of stock market, So
those who wish to reap returns with minimum risk, Mutual fund is the most suitable avenue
for them
2) Invest in equity funds demands a lot of patience and those who can afford this time lag are
bound to be rewarded. There are not many equity oriented funds in the country today. And
those that exist have minuscule asset under management. However over the last couple of
years equity funds prove that it is a worthwhile avenue.
3) Investors are expected to do a lot more home work while choosing an ELSS than other
diversified equity schemes as option to exit at will is absent in the case of former. This puts
the spotlight on the funds portfolio as there is direct correlation between the funds
performance and its portfolio selection.
4) In balanced funds high equity exposure definitely raises its risk quotient. How ever the
equity risk is compensated by the exposure of high quality debt instruments. Those who are
seeking an investment opportunity in equities with 3-5 years horizon can consider balanced
funds

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5) Funds investing in small and mid cap companies definitely carry higher risk as compared
to multi cap funds that balance investments between large and mid cap stocks. So small and
mid cap stocks are suitable to people who are willing to take more risks and are patient
enough to ride the wave across market cycles
6.2 CONCLUSION
Investment in stock market is highly common in these days. Stock market investment are one
of the most preferred investment avenues. When compared with other investments stock
market investments are highly risky. This brings the importance of mutual funds. “do not put
all eggs in one basket” is the basic logic behind mutual fund investment. When compared to
stock market, in mutual fund we got high quality service from our fund managers at a lower
cost. This study reveals the correlation of mutual fund and share market. Like any other
investment there is performance evaluation in mutual fund also. This study trying to evaluate
the performance of 5 top mutual funds in India. This shows how the performance is
correlated with risk. Today the importance of mutual fund is growing. AMC’s in the country
now managing 800000 crore as asset under management. So performance evaluation is
highly required in mutual funds in now a days

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CHAPTER: 7
BIBLIOGRAPHY

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7.1 Books
a) Security analysis and portfolio management, S. Kevin 2009
b) Portfolio management. Samir k barua,jr varmav raghunathan tata mcgrill 1996
7.2 Websites
a) Mutualfundsofindia.com
b) Valuereserchonline.com
c) Economictimes.com
d) Icraonline.com

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INDUSTRY AND COMPANY PROFILE

TKM INSTITUTE OF MANAGEMENT 1

1.1 Mutual Fund-Industry Profile

A Mutual fund is simply a financial intermediary that allows a group of investors to

1.1.1 Organisation of a Mutual Fund

TKM INSTITUTE OF MANAGEMENT 2

TKM INSTITUTE OF MANAGEMENT 3

1.1.2 History of Mutual Fund

Although in 19 th century many British investment trusts invested in

TKM INSTITUTE OF MANAGEMENT 4

TKM INSTITUTE OF MANAGEMENT 5

At present, US mutual fund industry spread over 30,000 funds, commanding

The growing popularity of US is basically due to good returned compared to

Mutual fund/unit trusts are popular financial intermediaries in many countries.

TKM INSTITUTE OF MANAGEMENT 6

1.1.3 The Mutual fund industry in India

A) First phase (1964-1987):-

B) Second phase (1987-1993):-

C) Third phase (1993-2003):-

TKM INSTITUTE OF MANAGEMENT 7

D) Fourth phase (since February 2003):-

TKM INSTITUTE OF MANAGEMENT 8

1.1.4 Major mutual fund companies in India

A) ABN AMRO Mutual Fund

B) GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a

C) LIC Mutual Fund

D) Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment &

E) Can bank Mutual Fund

TKM INSTITUTE OF MANAGEMENT 9

F) Morgan Stanley Mutual Fund

Morgan Stanley is a worldwide financial services company and its leading in

G) Franklin Templeton Mutual Fund

The group, Franklin Templeton Investments is a California (USA) based

H) Standard Charted Mutual Fund

I) Reliance Mutual Fund

J) Unit Trust of India Mutual Fund

TKM INSTITUTE OF MANAGEMENT 10

K) Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of

L) TATA Mutual Fund

M) State Bank of India Mutual Fund

N) Sahara Mutual Fund

TKM INSTITUTE OF MANAGEMENT 11

O) Prudential ICICI Mutual Fund

P) ING Vysha Mutual Fund

Q) HSBC Mutual Fund

R) HDFC Mutual Fund

S) Birla Sun Life Mutual Fund

1.2 Company Profile: Religare Securities Ltd

Religare is a financial services company in India, offering a wide range of

TKM INSTITUTE OF MANAGEMENT 12

• Pan India footprint

• Powerful research and analytics supported by a pool of highly skilled research

• Ethical business practices

• Offline /Online delivery models

Equity and Commodity Trading

TKM INSTITUTE OF MANAGEMENT 13

Priority Client Equity Services

Retail Spectrum covers equity brokerage services, commodity brokerage

Wealth Spectrum covers products and services which are geared