PERFORMANCE ANALYSIS OF DIFFERENT MUTUAL FUND COMPANYS BY USING PORTFOLIO EVALUATION TECHNICS

REPORT SUBMITTED IN PARTIAL FULFILLMENT OF MASTER DEGREE

BY

Sruti Suar(0906286019) Srusti Academy Of Management Page 1

PREFACE
Finance & its functions are the part of economic activity. Finance is very essentially needed for all types of organizations viz; small, medium, large-scale industries & service sector. Hence the role of finance manager & the subject finance accounting gained maximum importance. Liberalization, globalization & privatization created new challengers to entrepreneur & corporate in carrying theyre day to day activities. So,finance is regarded as the life blood of a business organization. Master of Business Administrator is professional course which develop a new body of knowledge & skill set & make as available for those seeking challenging carriers. The goal of the Summer Training is to give a corporate exposure to the students as well as to give them an opportunity to apply theory into the practice. The real business problems are drastically different from class-room case solving. Summer Project aims to providing little insight into working of an organization to a management trainee. Among every stage of knowledge being inculcated in students, practical training in the corporate world plays a significant role in exhibiting and pruning their capabilities. The purpose behind writing a report is to put in to works the practical training that is imparted into me that gives a better and a clear understanding of the experience I got. PERFORMANCE ANALYSIS OF DIFFERENT MUTUAL FUND COMPANYS BY USING PORTFOLIO EVALUATION TECHNICS

ACKNOWLEDGEMENT
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In pursuit of an MBA degree, summer internship is a critical component of the entire process. INDIA INFOLINE has given me the opportunity to gain invaluable experience under the guidance of Mr. Sibajee Meher(Regional Manager,Acharaya Vihar,BBSR). Their continuous support and valuable in hand experience provided me with the conceptual understanding and practical approach needed to work efficiently for this project. I would like to pay my regards and sincere thanks to my in charge Prof. Mr. N.S Nanda(H.O.D , MBA) for Stimulating suggestions and encouragement helped me in all the time of my internship. Last but not the least; I also would like to thank the entire staff of IIFL and all my friends and colleagues who helped whenever I faced any difficult situation. I hope this report, reflecting my learning in the past six weeks, is as beneficial to the organization as it had been to me. Again, I sincerely thank all of them.

SRUTI SUAR

DECLARATION

I, Ms. Sruti Suar hereby declare that this project report is the record of authentic work th th carried out by me during the period from 26 april 2010 to 13 aug 2010 and has not been submitted to any other University or Institute for the award of any degree.

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Signature Name of the Student Date

GUIDE CERTIFICATE
This is to certify that Ms. Sruti Suar of Srusti Academy Of Management, bearing Regd no: 0906286019 has successfully completed the project work titled Performance Analysis Of Different Mutual Fund Companies By using Portfolio Evaluation Technics in partial fulfilment of requirement for the completion of MBA course as prescribed by Biju Pattnaik University Of Technology, Rourkela,Orissa. This project report is the record of authentic work carried out by her th th during the period from 26 april 2010 to 13 aug 2010. She has worked under my guidance.

Signature Name Project Guide (Internal) Date:

Counter signed by Signature Name Vice-Principal Date:

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CHAPTER OUTLINE

While preparing this project report I got the knowledge about various aspects regarding financial decisions made in organisation like INDIA INFOLINE the business world. My project is divided into 5 chapters & they are given as under. 1. Chapter 1 deals with introduction of the mutual fund, need, objective & scope, methodology used and the limitations of the study. 2. Chapter 2 states the mutual fund industry profile and company profile. 3. Chapter 3 deals with review of literature. 4. Chapter 4 basically states the Analysis and interpretation of the Mutual Funds. 5. Chapter 5 deals with the use of findings, conclusion, Suggestions.

CONTENTS:

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CHAPTER : I

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BACKGROUND OF THE STUDY

Today there are plenty of investment avenues open. Some of them include banks deposits, bonds, stocks, mutual fund investments and corporate debentures. Investors may invest money in banks, bonds and corporate debentures where the risk is low and so are the returns. On the contrary, stocks of companies have high risk but the returns are also proportionately high. The recent trends since last year clearly suggest that the average investors have lost money in equities. People have now started opting for portfolio managers who have the expertise in stock markets. There are many institutions in India which provide wealth management services. An average investor has found refuge with the mutual funds. There have been a lot of changes in the mutual fund industry in past few years. Lots of multinational companies have bought their professional expertise to manage funds worldwide. In the past few months there has been consolidation going on in the mutual fund industry. In India now offer a wide range of schemes to choose. Mutual funds are turned to be the most preferred choice worldwide for both small and big investors due to their numerous advantages. It's all about long term financial planning. These benefits mainly include diversification, professional management, potential of returns, efficiency and easy to use. Mutual fund investments carry low risk because of their diversified nature. It is important to understand the benefits of mutual funds before investing the money you really care about. The size of Indian mutual fund industry has grown in recent few years. India can now boast of having dominance in this industry. The total Asset Under Management popularly known as AUM has increased from Rs.1, 01, 565 crores in January 2000 to Rs.5, 67, 601.98 crores in April 2008. According to the Association of Mutual Funds in India, the growth of mutual fund industry has been exceptional. This industry has indeed come a very long way with only 40 players in the market and more than 500 schemes. One of the major factors contributing to the growth of this industry has been the booming stock market with an optimistic domestic economy. Second most important reason for this growth is a favorable regulatory regime which has been enforced by SEBI. This regulatory board has improved the market surveillance to protect the investor's interest. Sruti Suar(0906286019) Srusti Academy Of Management Page 7

NAV is directly proportionately to the bearish trends of the market. Top mutual funds also suffer because of the fluctuations in the market. The pooled money is invested in shares, debentures and treasury bills and thus has high risk involved. Indian mutual funds however reveal this multi- dimensional avenue and all the intricacies in a highly fashionable manner. It provides a lot of scope to understand the scenario and make some thoughtful investments for decent returns. In order to invest in the best mutual funds, it is important to perform a comparative study. It is important to study about the returns given by AMC Mutual Funds and perform a comparative analysis. Remember, every problem has several researches involved in it, each backed by study. Some of the top mutual funds in India are: Reliance Mutual Fund UTI Mutual Fund HDFC Mutual Fund Prudential ICICI Mutual Fund SBI Mutual fund DSP BlackRock Mutual Fund Franklin Templeton Mutual fund

OBJECTIVES OF THE STUDY

1. To know the awareness among the potential investors about the various products and services offered by IIFL. 2. To know the awareness of mutual fund among the people. 3. To measure the performance of various mutual fund companies by using portfolio evaluation techniques such as Sharpe ratio, 4. To see the interest of people in investing in mutual fund. 5. To know the investment behaviour of investors in mutual fund according to the different age group.

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METHODOLOGY OF THE STUDY

Methodology basically means the selection of the various methods and techniques in the research-conducted. The various steps includes: 1. Selection of a representative sample from the general population, which depicts the characteristics of the complete population. 2. Application of various tools and techniques to obtain relevant information related to a case. 3. Collection of relevant data. 4. Analysis and interpretation of the data. 5. Generation of a final report. RESEARCH DESIGN There are 40 mutual fund houses currently operating in India. For the purpose of the research, I have selected top 10 fund houses, from that I have chosen 5 mutual fund houses as mentioned under: SBI Mutual Fund Reliance HDFC mutual fund Franklin Templeton DSP Blackrock mutual fund The following methodology is adopted for evaluation of performance of these selected companies. Step1: Selection of few well-performing schemes of Big Fund Houses of India. Step2: Collection of data i.e. NAVs of 1yr for each scheme of mutual Funds dated st st from 1 sept 2009 to 1 sept 2010. Step3: Calculation of different ratios. Step3: Analyses ratios and their relevance for evaluating these funds. Step4: Generation of a project report. DATA COLLECTION Data can be collected through the primary sources as well as through the secondary souses. The primary data collection was the most important part of the project. This includes collecting the information through field research. For collecting information, a personal interview was conducted with the help of Sruti Suar(0906286019) Srusti Academy Of Management Page 9

questionnaire and the required information was collected for the respondents. The secondary data collection includes collection of data through secondary sources like from magazines, news papers, internet etc. The NAVs of each scheme was collected from internet. DATA ANALYSIS After collecting the data, data is to be analyzed. The findings and the analysis have been mentioned further in the report.

LIMITATIONS OF THE STUDY

Limited information through secondary research report is basic hindrance in finding out the true results related to investments in mutual fund schemes by an investor. Sample size is limited to 100 only thus sample size does not adequately represent the national market. Market is very demography. Limited time was another constraint. Extreme variability in MARKET. Unawareness among investors is next in the line. The investor does not want to invest in Mutual Funds because of the myth that investment in these funds lead to insensitive returns. They think that market is highly volatile and will not be able to give him the secured returns. The investor also does not want to invest because of the greater risk attached with equity. Rather, he wants to invest in a fixed instrument from where he may be able to get secured returns instead of having unasserted returns.

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CHAPTER : II

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COMPANY PROFILE:
The IIFL (India Infoline) group, comprising the holding company, India Infoline Ltd (NSE: INDIAINFO, BSE: 532636) and its subsidiaries, is one of the leading players in the Indian financial services space. IIFL offers advice and execution platform for the entire range of financial services covering products ranging from Equities and derivatives, Commodities, Wealth management, Asset management, Insurance, Fixed deposits, Loans, Investment Banking, GoI bonds and other small savings instruments. IIFL recently received an in-principle approval for Securities Trading and Clearing memberships from Singapore Exchange (SGX) paving the way for IIFL to become the first Indian brokerage to get a membership of the SGX. IIFL also received membership of the Colombo Stock Exchange becoming the first foreign broker to enter Sri Lanka. IIFL owns and manages the website, www.indiainfoline.com, which is one of Indias leading online destinations for personal finance, stock markets, economy and business and also www.5paisa.com.

A network of over 2,500 business locations spread over more than 500 cities and towns across India facilitates the smooth acquisition and servicing of a large customer base. All offices are connected with the corporate office in Mumbai with cutting edge networking technology. The group caters to a customer base of about a million customers, over a variety of mediums viz. online, over the phone and at each branches. IIFL has been awarded the Best Broker, India by FinanceAsia and the Most improved brokerage, India in the AsiaMoney polls. India Infoline was also adjudged as Fastest Growing Equity Broking House - Large firms by Dun & Bradstreet. A forerunner in the field of equity research, IIFLs research is acknowledged by none other than Forbes as Best of the Web and a must read for investors in Asia. Our research is available not just over the Internet but also on international wire services like Bloomberg, Thomson First Call and Internet Securities where it is amongst one of the most read Indian brokers.

Vision Sruti Suar(0906286019) Srusti Academy Of Management Page 12

Our vision is to be the most respected company in the financial services space.

Mission To become a full-fledged financial services company known for its quality of advice, personalized services and cutting edge technology. Management Team

R Venkataraman
Nirmal Jain Chairman, Executive

Nilesh Vikamsey
Independent , Service

Managing DirectorDirector, India Infoline

Sat Pal Khattar Non Executive , Moneyline credit

Investment

India Infoline Marketing & Services India Infoline Mr.Kranti Sinha Independen Director, INDIA INFOLINE LTD. (NSE: INDIAINFO, BSE: 532636 Bloomberg: IIFL IN) India Infoline (Asia) Pte India Infoline wealth Management India Infoline Realty Commodities Mr Independent Director, India Infoline
Media & Research

India Infoline Housing Finance India Infoline

Distribution nian

Corporation
chartered Accountant

Services

India Infoline Insurance services

India Infoline Insurance Brokers

CORPORATE STRUCTURE

India Infoline Capital Sruti Suar(0906286019) Srusti Academy Of Management India Infoline Venture

(Corporate Overview India Infoline Ltd.)

The above chart does not cover all group companies

India Infoline refers to India Infoline Ltd and its group companies.
India Infoline Media and Research Services Limited India Infoline Commodities Limited India Infoline Marketing & Services India Infoline Investment Services Limited IIFL (Asia) Pte Limited India Infoline.com Distribution Services Ltd. Money Tree Consultancy Services

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India Infoline Media and Research Services Limited: The content services represent a strong support that drives the broking, commodities, mutual fund and portfolio management services businesses. Revenue generation is through the sale of content to financial and media houses, Indian as well as global.

India Infoline Commodities Limited. India Infoline Commodities Pvt Limited is engaged in the business of commodities broking. Their experience in securities broking empowered them with the requisite skills and technologies to allow them to offer commodities broking as a contra-cyclical alternative to equities broking. They enjoy memberships with the MCX and NCDEX, two leading Indian commodities exchanges, and recently acquired membership of DGCX.

India Infoline Marketing & Services: India Infoline Marketing and Services Limited is the holding company of India Infoline Insurance Services Limited and India Infoline Insurance Brokers Limited.

a) India Infoline Insurance Services Limited is a registered Corporate Agent with the Insurance Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICI Prudential Life Insurance Co Limited, which is India's largest private Life Insurance Company. India Infoline was the first corporate agent to get licensed by IRDA in early 2001.

b) India Infoline Insurance Brokers Limited is a newly formed subsidiary which will carry out the business of Insurance broking. We have applied to IRDA for the insurance broking licence and the clearance for the same is awaited. Post the grant of license, we propose to also commence the general insurance distribution business.

India Infoline Investment Services Limited: Consolidated shareholdings of all the subsidiary companies engaged in loans and financing activities under one subsidiary. Recently, Orient Global, a Singapore-based investment institution invested USD 76.7 million for a

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22.5% stake in India Infoline Investment Services. This will help focused expansion and capital raising in the said subsidiaries for various lending businesses like loans against securities, SME financing, distribution of retail loan products, consumer finance business and housing finance business. India Infoline Investment Services Private Limited consists of the following step-down subsidiaries.

a) India Infoline Distribution Company Limited (distribution of retail loan products) b) Moneyline Credit Limited (consumer finance) c) India Infoline Housing Finance Limited (housing finance)

IIFL (Asia) Pte Limited: IIFL (Asia) Pte Limited is wholly owned subsidiary which has been incorporated in Singapore to pursue financial sector activities in other Asian markets. Further to obtaining the necessary regulatory approvals, the company has been initially capitalized at 1 million Singapore dollars.

India Infoline.com Distribution Services Ltd. They have developed a retail distribution infrastructure (Investor Points) to support online presence. This network, spread over 60 locations, is engaged in the distribution of financial products including fixed deposits, GoI Relief bonds, insurance, mutual funds and IPO's. Money Tree Consultancy Services (MTCS) Is a group company of India Infoline Ltd., focusing distribution on Home Loans, Personal Loans, Credit Cards and Non Life Insurance. MTCS extends the distribution reach of financial services providers by using alternate channels like the Internet, telephone, wireless, sales force and events.

History & Milestones

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1995 Commenced operations as an Equity Research firm on 18 October 1995 as Probity Research and Services. 1997 Launched research products of leading Indian companies, key sectors and the economy Client included leading FIIs, banks and companies.

1999 Launched www.indiainfoline.com. 2000 Launched online trading through www.5paisa.com on july. Started distribution of life insurance on december and mutual fund on april. 2001 Became a depository participant of NSDL in September 2001. 2003 Launched proprietary trading platform Trader Terminal for retail customers. 2004 Acquired commodities broking license (march). Launched Portfolio Management Service(august).

2005
th

Maiden IPO and listed on NSE, BSE on may 17

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2006 Acquired membership of DGCX Launches exclusive SMS Value Added Services. Enters into strategic agreement with Saraswat Bank Launches stock trading on cell phones 2007

Commenced institutional equities business under IIFL Formed Singapore subsidiary, IIFL (Asia) Pte Ltd

2008

Launched IIFL Wealth Transitioned to insurance broking model.

2009

Acquired registration for Housing Finance. SEBI in-principle approval for Mutual Fund. Obtained Venture Capital license. Large firms in India by Dun & Bradstreet.

2010

Received in-principle approval for membership of the Singapore Stock Exchange. Received membership of the Colombo Stock Exchange.

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PRODUCT OFFERINGS:Direct Equity and F & O Trading Providing in-house research based advice on selected stocks Structured Products Advise on Portfolio management Services. Portfolio Management Services Products that offer our clients unique risk-reward equations that are customised to their investment objectives Mutual Funds Advisory Research based recommendations on Top Picks in Mutual Funds Insurance Advisory Life & General Insurance Advisory Advise on Investment in Real Estate through Fund structure Real Estate Funds Advise on Investment in Real Estate through Fund structure Art Funds Advise on Investment in Art through Fund structure. Bullion Trading Bullion buying and selling IPO Funding Advising and facilitating financing on select IPOs based on our in-house research Loan Against Securities (Margin Funding ) Provide Overdraft facility against collateral of Shares/ MF units LAS Series (Term Loans) Provide Term Loan facility against collateral of Shares/ MF units Promoter Funding Provide Term Loan facility against collateral of Shares ESOP Funding Provide Term Loan/ Overdraft facility against collateral of Shares to be allotted to Employees.

SERVICES OFFERINGS:
Online BSE and NSE executions. Free access to invest advice from IndiaInfolines Research team. Daily Research Reports and Market Review (Market Mantra). Pre Market Report (Market Mantra by inserting proper dates). Daily trading calls based on Technical Analysis. Personalized Advice Live Market Information. Sruti Suar(0906286019) Srusti Academy Of Management Page 19

Depository Services: De-mat and Re-mat Transactions. Derivatives Trading. Commodities Trading. IPOS & Mutual Funds Distribution. Internet- based Online Trading(TT-Manager).

COMPETITORS:Sharekhan. Angel broking. Motilal Oswal. Karvy share broking. ICICI Direct.

SWOT ANALYSIS

Strengths Original research. Integrated technology platform. One Stop shop. Pan - India distribution network. India Infoline.com and 5paisa.com have developed into brands.

Weaknesses Lack of a banking arm to complete the bank-broker-depository chain. Insignificant presence in institutional segment.

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