Professional Documents
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INTRODUCTION
1.1 Mutual Fund
A mutual fund is just the connecting bridge or a financial intermediary that allows a
group of investors to pool their money together with a predetermined investment
objective. The mutual fund will have a fund manager who is responsible for investing
the gathered money into specific securities (stocks or bonds). When you invest in a
mutual fund, you are buying units or portions of the mutual fund and thus on investing
becomes a shareholder or unit holder of the fund.
Mutual funds are considered as one of the best available investments as compare to
others they are very cost efficient and also easy to invest in, thus by pooling money
together in a mutual fund, investors can purchase stocks or bonds with much lower
trading costs than if they tried to do it on their own. But the biggest advantage to
mutual funds is diversification, by minimizing risk & maximizing returns.
Fig 1.1(A)
1.2 Evolution
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank of India. The history
of mutual funds in India can be broadly divided into four distinct phases
(now merged with Franklin Templeton) was the first private sector mutual fund registered
in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
andrevised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets
of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under
management was way ahead of other mutual funds.
The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of
assets under management and with the setting up of a UTI Mutual Fund, conforming to
the SEBI Mutual Fund Regulations, and with recent mergers taking place among
different private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth.
2004Onwards
The industry has also witnessed several mergers and acquisitions recently, examples of
which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C
Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more
international mutal fund players have entered India like Fidelity, Franklin Templeton
Mutual Fund etc. This is a continuing phase of growth of the industry through
consolidation and entry of new international and private sector players.
From a single-player monopoly in 1964, the Indian mutual fund industry has evolved into
a high-growth and competitive market on the back of favourable economic and
demographic factors. As of August 2012, 44 asset management companies (AMCs) were
operating in India with assets under management (AUM) of INR 6.4 trillion. However,
after several years of persistent growth, the industry witnessed consistent declines of 6.3
percent and 5.1 percent in its AUM during FY11 and FY12, respectively. One of the
reasons could be the changes in regulatory guidelines-example ban on entry load,
stringent KYC norms, guidelines on transaction charges, tightening valuation and
advertisement norms - which were introduced in a short span of time thus giving less
time to the industry to adjust in the new environment.
Fig 1.2(B)
in
particular sector
(e.g. energy
funds),
while
others
might target growth opportunities in general. There are thousands of funds, and
each has its own objectives and focus. The key is for you to find the mutual funds
that most closely match your own particular investment objectives.
Liquidity is the ease with which you can convert your assetswith
relatively low depreciation in valueinto cash. In the case of mutual funds, its as
easy to sell a share of a mutual fund as it is to sell a share of stock (although some
funds charge a fee for redemptions and others you can only redeem at the end of
the trading day, after the current value of the funds holdings has been calculated).
Low Investment Minimums: Most mutual funds will allow you to buy into the
fund with as little $1,000 or $2,000, and some funds even allow a no minimum
initial investment, if you agree to make regular monthly contributions of $50 or
$100. Whatever the case may be, you do not need to be exceptionally wealthy
in order to invest in a mutual fund.
Convenience: When you own a mutual fund, you dont need to worry
about tracking the dozens of different securities in which the fund invests; rather,
all you need to do is to keep track of the funds performance. Its also quite easy
to make monthly contributions to mutual funds and to buy and sell shares in them.
Low Transaction Costs: Mutual funds are able to keep transaction costs that
is, the costs associated with buying and selling securities at a minimum
because they benefit from reduced brokerage commissions for buying and selling
which
usually
includes
one
mutual fund
manager
and
Debt mutual funds: These funds invest in debt instruments to ensure low risk and
provide a stable income to the investors. Government authorities, private companies,
banks and financial institutions are some of the major issuers of debt papers.
Debt funds can be further classified as:
Gilt funds
Income funds
MIPs
Short term plans
Liquid funds
Balanced funds: They invest in both equities and fixed income securities which are
in line with pre-defined investment objective of the scheme. The equity portion
provides growth while debt provides stability in returns. This way, investors get to
taste the best of both worlds.
By investment objective
Growth schemes- Also known as equity schemes, these schemes aim at providing
capital appreciation over medium to long term. These schemes normally invest a
major portion of their fund in equities and are willing to withstand short-term decline
in value for possible future appreciation.
Income schemes - Also known as debt schemes, they generally invest in fixed
income securities such as bonds and corporate debentures. These schemes aim at
providing regular and steady income to investors. However, capital appreciation in
such schemes may be limited.
Index schemes- These schemes attempt to reproduce the performance of a particular
index such as the BSE Sensex or the NSE 50. Their portfolios will consist of only
those stocks that constitute the index. The percentage of each stock to the total
holding will be identical to the stocks index weight age. And hence, the returns from
such schemes would be more or less equivalent to those of the Index.
9
the
equity
markets.
This type of mutual fund has a lock in period of 3 years from the date of investment. This
means if you start a Systematic Investment Plan in an ELSS, then each of your
investments will be locked in for 3 years from the respective investment date. Investors
can exit ELSS by selling it after 3 years.
10
option, investors receive a regular dividend income even during the lock-in
period.
Returns from ELSS schemes are tax-free.
ELSS treatment after the introduction of Direct Tax Code (DTC)
The last draft of the Direct Tax Code (DTC) has excluded ELSS as a tax saving
instrument. This means that your investment in ELSS after the introduction of DTC will
not qualify for tax exemption under Sec 66 (which is a replacement of Sec 80C under
DTC). However, remember that this is only a draft version of the DTC. The mutual fund
industry has been trying hard to include ELSS as a tax saving instrument. The final DTC
may spring a positive surprise.
High inflows into ELSS funds are determined by the performance of the stock market in
general. Also, if an investor gets better tax-adjusted returns from other investment
avenues like debt, he will prefer to go for this, as risk is lower. But over a long term,
ELSS funds are the best tax saving instruments; especially if you are an investor who can
take on high risk. The success of this category of mutual fund depends on the tax
treatment it receives under the DTC.
returns compared to other tax saving instruments. Lets hope the mutual fund industry is
successful in getting ELSS qualified as a tax saving instrument under DTC.
Benefits of ELSS
Money is invested over a longer period as the ELSS funds have a lock-in period
of three years.
Better returns are achieved as the investment in equity is over a long-term and it
prevents from unnecessary withdrawals
Apart from tax savings, the investor receives Capital gains or high returns
Small amount even Rs.500 can be invested in ELS through SIPs
Dividend option in ELSS helps you receive income even during the lock-in
period.
Involves less risk - Investing in ELSS, one cannot run away from equity market
risk as equity market is very volatile and fluctuating. One option to minimize risk
is to invest in Diversified funds and another option is to trust the fund manager for
SIP.
This is an investment in equity markets, and so investing in a good ELSS scheme
can give you better returns compared to other asset classes over the long term
Disadvantages of ELSS
Since ELSS comprises of investments in stock markets, all risks associated with
equity investments pertain to ELSS. If you are a risk-averse investor, it is better to
avoid ELSS.
Premature withdrawal is not possible in ELSS; instruments like PPF and bank
fixed deposits allow withdrawal subject to certain conditions.
12
13
2. Fund Management Charges: This is the recurring charge levied by the mutual
fund. This charge is for the day to day expenses of the mutual fund. The
maximum permissible by SEBI is 2.5% and the industry average is around 2.25%.
This charge is collected by the mutual fund by cancelling equivalent units from
the investors account.
3. Exit Load: This charge is levied by mutual funds when the investor sells the
units. In ELSS plans there is no exit load.
14
CHAPTER-2
2.1 REVIEW OF LITERATURE
1. Dr.chandrakumarmangalam (2011) analyzed ELSS funds to ascertain the ranking
on the basis of risk, return &its volatility. Hence it provides basis for the investors
in choosing the mutual fund scheme.
2. Anand and Murugaiah (2008) examined the components and sources of investment
performance in order to attribute it to specific activities of Indian fund managers.
They also attempted to identify a part of observed return which is due to the ability to
pick up the best securities at given level of risk. For this purpose, Fama's
methodology is adopted here. The study covers the period between April 1999 and
March 2003 and evaluates the performance of mutual funds based on 113 selected
schemes having exposure more than 90percent of corpus to equity stocks of 25 fund
houses. The empirical results reported reveal the fact that the mutual funds were not
able to compensate the investors for the additional risk that they have taken by
investing in the mutual funds. The study concludes that the influence of market factor
was more severe during negative performance of the funds while the impact
selectivity skills of fund managers was more than the other factors on the fund
performance in times of generating positive return by the funds. It can also be
observed from the study that selectivity, expected market risk and market return
factors have shown closer correlation with the fund return.
3. Guha (2008) focused on return-based style analysis of equity mutual funds in India
using quadratic optimization of an asset class factor model proposed by William
Sharpe. The study found the Style Benchmarks of each of its sample of equity
funds as optimum exposure to 11 passive asset class indexes. The study also analyzed
the relative performance of the funds with respect to their style benchmarks. The
results of the study showed that the funds have not been able to beat their style
benchmarks on the average.
4. A study by Agarwal (2007) provides an overview of mutual fund activity in emerging
markets. It describes their size and asset allocation. This paper analyzes the Indian
15
Mutual Fund Industry pricing mechanism with empirical studies on its valuation. It
also analyzes data at both the fund-manager and fund-investor levels.
5. A study by Gupta and Aggarwal (2007) sought to check the performance of mutual
funds operation in India. In this regard, quarterly returns performance of all the
equity-diversified mutual funds during the period from January 2002 to December
2006 was tested. Analysis was carried out with the help of Capital Asset Pricing
Model (CAPM) and Fama-French Model. Amidst contrasting findings from the
application of the two models, the study calls for further research and insights into the
interplay between the performance determinant factor portfolios and their effect on
mutual fund returns.
6. Zakri (2005) matched a sample of socially responsible stock mutual funds to
randomly selected conventional funds of similar net assets to investigate differences
in characteristics of assets held, degree of portfolio diversification and variable
effects of diversification on investment performance. The study found that socially
responsible funds do not differ significantly from conventional funds in terms of any
of these attributes. Moreover, the effect of diversification on investment performance
is not different between the two groups. Both groups underperformed the Domini 400
Social Index and S & P 500 during the study period.
7. Pendaraki, Zopounidis and Doumpous (2005) studied construction of mutual fund
portfolios, developed a multi-criteria methodology and applied it to the Greek market
of equity mutual funds. The methodology is based on the combination of discrete and
continuous multi-criteria decision aid methods for mutual fund selection and
composition. UTADIS multi-criteria decision aid method is employed in order to
develop mutual funds performance models. Goal programming model is employed
to determine proportion of selected mutual funds in the final portfolios.
8. Fernandes (2003) evaluated index fund implementation in India. In this paper,
tracking error of index funds in India is measured. The consistency and level of
tracking errors obtained by some well-run index fund suggests that it is possible to
attain low levels of tracking error under Indian conditions. At the same time, there
16
seems to be periods where certain index funds appear to depart from the discipline of
indexation.
9. Mishra and Mahmud (2002) measured mutual fund performance using lower partial
moment. In this paper, measures of evaluating portfolio performance based on lower
partial moment are developed. Risk from the lower partial moment is measured by
taking into account only those states in which return is below a pre-specified target
rate like risk-free rate.
10. Gupta (2000) has examined the investment performance of Indian mutual funds using
weekly NAV data and found that the schemes showed mixed performance during
1994-1999.
11. Sethu (1999) conducted a study examining 18 open-ended growth schemes during
1985-1999 and found that majority of the funds showed negative returns and no fund
exhibited any ability to time the market.
12. Barua, Raghunathan and Varma (1991) evaluated the performance of Master Share
during the period 1987 to 1991 using Sharpe, Jensen and Treynor measures and
concluded that the fund performed better than the market, but not so well as
compared to the Capital Market Line.
13. Ippolito (1989) concludes that mutual funds on aggregate offer superior returns but
they are offset by expenses and load charges.
14. John and Donald (1974) examined the relationship between the stated fund objectives
and their risks-return attributes and concluded that on an average, the fund managers
appeared to keep their portfolios within the stated risk.
15. Friend, Marshal and Crocket (1970) in their study on mutual funds found that there is
a negative correlation between fund performance and management expense measure.
16. Friends and Vickers (1965) concluded that mutual funds on the whole have not
performed superior to random portfolio.
17
17. Early studies on mutual funds included the several works of Jensen (1968), Sharpe
(1966) and Treynor (1965) who used the capital asset pricing model to compare riskadjusted returns of funds with that of a benchmark market portfolio. The findings of
Sharpe and Jensen demonstrated that mutual funds under perform market indexes and
suggest that the returns were not sufficient to compensate investors for the diverse
mutual fund charges.
18. Friend, Brown, Herman and Vickers (1962) did a systematic study on mutual funds
considering 152 funds with data period of 1953 to1958 and created an index of
Standard and Poors indexes of five securities, with the elements by their
representation in the mutual fund sample.
18
CHAPTER-3
3.RESEARCH METHODOLOGY
19
Return. The returns are computed on the basis of the NAV of the different schemes and
returns in the market index are calculated on basis of NSE Nifty on the respective date.
Beta (): i.e., funds volatility as regard market index measuring the
extent of co-movement of fund with that of the benchmark index.
ii.
ii. Standard Deviation (): i.e., funds volatility or variation from the
average expected return over a certain period.
iii.
For further evaluating the performance of mutual funds, the risk-return relation models
given by Sharpe (1966), Treynor (1965), Jensen (1968) and Fama have been applied.
Sharpe Ratio:
The Sharpe measure provides the reward to volatility trade-off. It is the ratio of the fund
portfolios average excess return divided by the standard deviation of returns and is given
by Equation
Treynor Ratio:
The Treynor measure is similar to the Sharpe ratio, except that it defines reward (average
excess return) as a ratio of the CAPM beta risk. Treynor's performance measure is
20
defined as the risk premium earned per unit of risk taken. Thus, the Treynor ratio is
computed as the average return of the portfolio in excess of the risk-free return divided
by the portfolio's beta. Treynors ratio is given by Equation-
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 unfavorable performance.
Jenson alpha:
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
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)
Higher alpha represents superior performance of the fund and vice versa.
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.
21
Coefficient of Determination
The Coefficient of Determination, also known as R Squared, is interpreted as the
goodness of fit of a regression. The higher the coefficient of determination, the better the
variance that the dependent variable is explained by the independent variable. The
coefficient of determination is the overall measure of the usefulness of a regression. R2
equals the square of the Pearson correlation coefficient between the observed and
modeled (predicted) data values of the dependent variable.
22
Open-Ended
Investment Plan
Dividend
Launch date
Benchmark
369.10 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.0.80 (Aug-07-2012)
Fund Manager
Jinesh Gopani
23
Top holdings: ICICI Bank, TCS, Reliance Industries, HDFC, Kotak Mahindra Bank and
ITC which makes up ~30% of net assets in the fund.
Performance: Moderate towards investment in mid cap and small cap stocks with strong
valuations. The fund has outperformed its peers with fare returns since launch in last
three years.
Open-Ended
Investment Plan
Dividend
Launch date
Benchmark
806.40 (Dec-31-2012)
Rs.3.00 (Mar-08-2013)
24
Open-Ended
Investment Plan
Growth
Launch date
Benchmark
506.80 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
N.A.
Fund Manager
Krishna Sanghavi
Asset allocation (31/12/2012): 97.58% in equities, 2.08% in debt instruments and 0.34%
in cash. In equity ~73% is invested in large cap and ~27% in mid cap and small cap.
Investment style: Mixture of top down approach and bottom up approach.
Top Sectors:
25
Performance: Moderate towards investment in mid cap stocks and diversifies its portfolio
by investing in various sectors. The fund has given consistent returns in bull and bear
phases.
Open-Ended
Investment Plan
Dividend
Launch date
Benchmark
CNX 500
138.50 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.1.50 (Feb-15-2013)
Bonus
N.A.
Fund Manager
Apoorva Shah
26
Open-Ended
Investment Plan
Growth
Launch date
Benchmark
CNX 500
905.20 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
N.A.
Bonus
N.A.
Fund Manager
27
Open-Ended
Investment Plan
Dividend
Launch date
Benchmark
72.70 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.4.00 (Feb-07-2013)
Bonus
N.A.
Fund Manager
28
Open-Ended
Investment Plan
Dividend
Launch date
Benchmark
CNX 500
3,447.60 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.6.00 (Mar-14-2013)
Bonus
N.A.
Fund Manager
29
Open-Ended
Investment Plan
Dividend
Launch date
Benchmark
207.50 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.1.00 (Feb-19-2010)
Bonus
N.A.
Fund Manager
Aditya Khemani
30
Open-Ended
Investment Plan
Growth
Launch date
Benchmark
CNX 500
1,468.00 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.6.00 (Mar-21-2000)
Bonus
N.A.
Fund Manager
Chintan Haria
Asset allocation (31/12/12): 90.5% in equities and 9.5% in cash. In equity ~65% is
invested in large cap and ~35% in mid cap and small cap.
Investment style: Top down approach.
Top Sectors:
31
Top holdings: Cairn India, Infosys, Reliance Industries, ICICI Bank and HDFC Bank
which makes up ~25% of net assets in the fund.
Performance: Moderate towards investment in mid cap stocks and diversifies its portfolio
by investing in various sectors. The fund has given consistent returns in last five years.
Open-Ended
Investment Plan
Growth
Launch date
Benchmark
160.30 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
N.A.
Bonus
N.A.
Fund Manager
Neelotpal Sahai
32
Asset allocation (31/12/12): 95% in equities and 5% in cash. In equity ~57% is invested
in large cap and ~43% in mid cap and small cap.
Investment style: Top down approach.
Top Sectors:
33
Open-Ended
Investment Plan
Dividend
Launch date
Benchmark
CNX 500
422.30 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.3.50 (Feb-08-2008)
Bonus
N.A.
Fund Manager
34
Open-Ended
Investment Plan
Dividend
Launch date
Benchmark
1,202.90 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.1.00 (Mar-18-2013)
Bonus
N.A.
Fund Manager
S. N. Lahiri
35
Open-Ended
Investment Plan
Dividend
Launch date
Benchmark
2,104.50 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.0.70 (Mar-15-2013)
Bonus
N.A.
Fund Manager
Asset allocation (31/12/2012): 99.8% in equities and 0.2% in cash. In equity ~20% is
invested in large cap and ~80% in mid cap and small cap.
Investment style: Bottom up approach.
Top Sectors: Automobile, Engineering, Financial services, Construction and Services
which constitutes around 80% of total portfolio.
36
Top holdings: State Bank of India, Maruti Suzuki India, Eicher Motors, Madras cement,
Sanofi India and Divis Lab which makes up ~30% of net assets in the fund.
Performance: This fund invests is tilted towards investment in mid cap and small cap
stocks which has strong valuation. However, the performance of this fund is affected
when there is rally in large cap stocks and mid cap stocks are range bound.
Open-Ended
Investment Plan
Growth
Launch date
Benchmark
4,788.60 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
N.A.
Bonus
N.A.
Fund Manager
Jayesh Shroff
37
Open-Ended
Investment Plan
Growth
Launch date
Benchmark
1,427.50 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.5.00 (Jan-28-2005)
Bonus
N.A.
Fund Manager
38
Open-Ended
Investment Plan
Dividend
Launch date
Benchmark
130.80 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.1.50 (Dec-03-2012)
Bonus
N.A.
Fund Manager
Pradeep Gokhale
39
Open-Ended
Investment Plan
Dividend
Launch date
Benchmark
45.00 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
Rs.1.00 (Feb-07-2013)
Bonus
N.A.
Fund Manager
Ashish Ranawade
40
Open-Ended
Investment Plan
Growth
Launch date
Benchmark
475.30 (Dec-31-2012)
Minimum Investment
Rs.500
Last Dividend
N.A.
Bonus
N.A.
Fund Manager
Swati Kulkarni
41
Return%
Rank
(mar2012-feb2013)
Axis long term equity fund
12.6
10.1
9.4
11.8
9.7
7.1
15
2.2
18
13.8
9.2
13.4
8.1
12
5.3
17
6.7
16
8.9
10
7.7
13
8.4
11
13.3
7.2
14
42
43
Sharpe ratio
Ranks
-15.35
-14.68
-15.56
10
-15.33
-17.67
18
44
-16.20
13
-14.90
-13.34
-16.23
14
-14.39
-13.26
-16.72
15
-13.47
-16.19
12
-14.82
-17.08
17
-16.76
16
-16.15
11
45
46
Treynor ratio
Rank
-0.70
13
-0.72
15
-0.97
18
-0.49
-0.67
-0.49
-0.66
-0.68
schemes
47
-0.50
-0.67
-0.69
11
-0.68
10
-0.67
-0.73
17
-0.69
12
-0.72
16
-0.54
-0.70
14
48
49
Rank
-0.049
13
-0.057
14
-0.202
17
0.220
-0.019
-0.209
18
0.001
50
-0.021
0.196
-0.020
-0.030
11
-0.022
-0.019
-0.061
16
-0.024
10
-0.060
15
0.131
-0.041
12
51
52
4.6Fama measure:
Fama 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, higher value of which indicates that fund manager has earned returns well
above the return commensurate with the level of risk taken by him.
The fama measure states that high returns are a reward for taking on high risk. So, the
riskier a mutual fund is, more will be the return generated by it.
Table 4.5 Ranking of ELSS Funds by Fama Measure
(Where 1 is highest value and 18 is lowest value)
Fama
Rank
-0.016
10
0.014
0.007
-0.221
16
-0.048
12
-0.225
17
-0.009
-0.731
18
53
-0.207
15
-0.086
13
0.021
0.011
-0.020
11
0.051
0.013
0.037
-0.159
14
0.035
54
55
beta
R2
0.823
0.666
0.905
0.892
0.590
0.428
1.215
0.665
0.769
0.691
1.219
0.725
0.977
0.897
56
1.039
0.898
1.115
0.669
0.891
0.544
1.048
0.912
0.851
0.916
0.904
0.604
0.826
0.918
0.957
0.923
0.791
0.903
1.059
0.789
0.874
0.972
57
shows higher diversification of the schemes portfolio that can easily contain
This shows that these schemes have high diversification and contains market variability
as well.
Whereas, Canara robeco equity tax saver, IDFC tax advantage fund & Reliance tax saver
fund are having low value of
diversification.
58
CHAPTER-5
CONCLUSION & SUGGESTION
As per the study conducted on 18 various ELSS, following conclusions has been drawn:
HSBC tax saver equity fund, Kotak tax saver fund, DSP Blackrock tax saver fund,
HDFC long-term advantage fund & ICICI prudential tax plans are the Mutual
Fund Equity linked saving schemes which are top performers in the market.
The returns offered by these schemes are much higher than those offered by
others considered under the study.
The beta of these funds is more than one which increases the risk on them but the
returns are equally higher.
If we just consider the lower risk factor then Canara robeco equity tax saver &
Franklin tax shield fund will be the one to be considered for investment purpose
but only by the conservative investors because the returns are on the lower side on
these schemes.
As per Sharpe, Treynor & Jensons Alpha measure, the performance of the Funds
like SBI magnum tax gain 93 Gr., Tata tax saving fund & Union KBC tax saver
scheme have not been up to the mark or better than the market performance.
For investors looking for the diversified investment and moderate returns Kotak
tax saver fund, Sundaram tax saver & UTI equity tax saving plan will be a good
choice because these funds are capable of containing the market variability very
well.
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BIBLIOGRAPHY:
Rao, Raghavendra Rentala. (2012) Analytical Study Of Indian Mutual Fund Elss
Schemes With Retrospect To Risk- Return Trade Off Strategies SS international
journal of business and management research (SSIJBMR) Vol 2, issue 6 ISSN
2231-4970
Dr.chandrakumarmangalam Study on ELSS fund and its performance analysis
International journal of human resource management and research (IJHRMR)
Vol.1, issue 2 Dec 2011 43-61
Guha, S. (2008). Performance of Indian Equity Mutual Funds vis-a-vis their Style
Benchmarks. The ICFAI Journal of Applied Finance, 14, 1: 49-81.
61
Websites
www.amfiindia.com
www.mutualfundsindia.com
www.moneycontrol.com
www.financeresearch.net
http://sify.com/finance/mutualfunds/
http://business.mapsofindia.com
http://economictimes.indiatimes.com/Personal_Finance/Mutual_Funds/MF_News/Mutual
_funds_assets_jump_4_pc_in_Dec_add_Rs_16300_cr/articleshow/3926747.cms
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