“A STUDY ON

PERFORMANCE ANALYSIS OF SELECTED EQUITY FUNDS

With special reference to

BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITED

KAKINADA
A Project report submitted to

School of Management Studies, JNTUK

In partial fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

MATTAPALLI SAI SURYA

Regd No. 22SM1E0019

Under the Esteemed Guidance of

Shri.B VENKATESWARA RAO

M.B.A, M.COM, S L E T(Ph.d)

Assistant professor

School of Management Studies

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY KAKINADA
Kakinada – 533003(A.P) INDIA
2022-2024
1
 “A STUDY ON

PERFORMANCE ANALYSIS OF SELECTED EQUITY FUNDS

With special reference to

BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITED

A project report submitted to

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY KAKINADA

In partial fulfilment for the award of degree

of MASTER OF BUISNESS ADMINISTRATION

Submitted by
MATTAPALLI SAI SURYA
(Reg no: 22SM1E0019)
Under the Guidance of

Shri.B.VENKATESWARA RAO
MBA, M.Com, S L E T (PH.D)

SCHOOL OF MANAGEMENT STUDIES

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY

KAKINADA – 533001 (A.P),

INDIA 2022-2024

2
 DECLARATION

I MATTAPALLI SAI SURYA student of School of Management Studies,

JNTUK here by solemnly declare that the project report titled “A STUDY ON
PERFORMANCE ANALYSIS SELECTED EQUITY FUND” With special
reference to BAJAJ ALLIANZ LIFE INSURANCE KAKINADA has been
submitted by me as a Main project under the guidance
Shri.B.VENKATESWARA RAO.MBA, M.Com,S L E T(PH.D)D in the partial fulfilment for
the award of the Post Graduate degree of Master of Business
Administration to Jawaharlal Nehru Technological University, Kakinada.

This project work is original and has not been submitted to any other
university for the award of any degree or diploma or published any time
before.

Place: Kakinada MATTAPALLI. SAI SURYA

Date: 22SM1E0019

3
4
14%

5
 School of Management Studies
JAWAHARLAL NEHRU TECHNOLOGICAL
UNIVERSITYKAKINADA Kakinada – 533003(A.P) INDIA

Certificate

This is to certify that the project work entitled A STUDY ON

PERFORMANCE ANALYSIS OF SELECTED EQUITY FUND With
special reference to BAJAJ ALLIANZ LIFE INSURANCE COMPANY ” is a
bonafide work of MATTAPALLI SAI SURYA Reg No:22SM1E0019
submitted in partial fulfilment of the requirement for the award of the Degree
Master of Business Administration by Jawaharlal Nehru Technological
University Kakinada, Kakinada.

Project Guide Director, SMS

External Examiner

6
 ACKNOWLEDGEMENT

I felt it is my duty and privilege to acknowledge all those who have extended their
guidance and warm support in completing my project work. I express my deep sense of
gratitude with profound happiness to the following personalities, who lend the esteemed
encouragement and support in completing the project successfully.

First of all, I would like to express my sincere thanks to Dr. A. KRISHNA MOHAN
B.Tech, M.Tech, MBA, Ph.D. Director In-Charge at School of Management Studies,
JNTU, Kakinada for giving me an opportunity to take up this project.

I take this opportunity to place on record my grateful thanks to my project

guide, Shri.B.VENKATESWARA RAO MBA,M.Com,S L E T(Ph.D) Assistant Professor of
School of Management Studies for his timely guidance and faculty members for their
support throughout the preparation of my project.

I am also thankful to the management and staff of BAJAJ ALLIANZ INSURANCE

COMPANY KAKINADA for their support and cooperation on the scenes of my project
and helped me in completing this project successfully.

Finally, I would like to express my humble gratitude and love to my beloved parents for
their ultimate motivation, support and encouragement. Without which I would not have
finished this work. I also express my sincere thanks to friends and well-wishers too who
helped me in preparing the project work and made me to present it with in time.

PLACE: KAKINADA MATTAPALLI SAI SURYA

DATE: REGD NO. 22SM1E0019

7
 TABLE OF CONTENTS

TOPICS PAGE NO.

CHAPTER 1 01-12
• Introduction
• Need for the study
• Objectives of the study
• Scope of the study
• Limitations of the study

CHAPTER 2 13-29
• Review of Literature
• Research Gap
• Statement of problem
• Methodology of the study

CHAPTER 3 30-41
• Industry profile
• Company profile

CHAPTER 4 42-59
• Data Interpretation & Analysis
CHAPTER 5 60-66
• Findings of study
• Suggestions of study
• Conclusion
• Bibliography

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 CHAPTER 1

INTRODUCTION

NEED FOR THE STUDY

SCOPE OF THE STUDY

OBJECTIVES OF THE STUDY

LIMITATIONS OF THE STUDY

9
 INTRODUCTION

The mutual fund is an investment firm that pools small investors' money and invests in
numerous securities, including inventories, bonds, and money market instruments. Most
open-end reciprocal funds are prepared to buy (rescue) shares from their current net assets
value, which, at the time of restitution, will depend on the full market value of the fund's
investment portfolio. Investors are continually offered new shares by most open-end
mutual funds. It is also called an open-end investment company to distinguish between a
shutdown company and a shutdown investment company.
The mutual funds invest cash pooled by many investors to meet the investment target
stated in the fund. Current net asset assets are always ready to sell and redeem their
shares, total funds divided up by outstanding shares.
Mutual Funds constitute a mechanism for pooling resources in accordance with the
objectives laid down in the offering document by providing units to investors and
investing funds in securities.
Securities investment is spread over a wide range of sectors and industries, reducing risk.
Since not all stocks can move in the same direction at the same time, the risk of
diversification is diminished. In accordance with the amount of money they invest,
mutual funds issue the units to investors. Unit holders are known to be investors of
mutual funds. Investors are shared in proportion to their investment in earnings or losses.
In India, the Securities and Exchange Board of India (SEBI), which regulates securities
markets, needs to be registered with the Indian Mutual Fund before it is able to raising
funds from the public.
In short, a common pool of money for investors is a mutual fund, in line with the
scheme's investment goal, for the purposes of a common investment. The investment
manager would invest in an asset that is defined / permitted for the purpose specified by
the system, the money the investor gains. The Equity Fund, for example, would invest in

10
 equity instruments and the debt fund would invest in bonds, bonds, debentures, gilts, etc.

MUTUAL FUNDS CAN BE CLASSIFIED AS FOLLOW:

By Structure

Open-Ended schemes Close-Ended Interval Schemes

Schemes

11
BASED ON THEIR STRUCTURE:
1. OPEN - ENDED SCHEMES

An open-end fund can be subscribed throughout the year. They are not mature. Investors

may conveniently buy and sell units at Net Asset Value ("NAV") prices. The key feature

of open-end schemes is liquidity.

2. CLOSE - ENDED SCHEMES

A closed-end fund is generally between 3 and 15 years old. It can be subscribed for just a

certain period. At the time of the initial public issue, investors can invest in the scheme

and purchase or sell Scheme units on the stock markets listed.

3. INTERVAL SCHEMES

The interval schemes are a scheme combining open and closed schemes. The units can be

sold at bursaries or sold or redeployed at predetermined intervals at NAV prices.

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 2. BASED ON INVESTMENT OBJECTIVE

EQUITY FUNDS BALANCED FUNDS DEBT FUNDS

LIQUID FUNDS
INDEX FUNDS
DEBT ORIENTED

GUILT FUNDS

DEVIDEND YEILD
EQUITY ORIENTED

INCOME FUNDS
EQUITY DIVERSIFIED

THEMANTIC FUND FMPS FUNDS

SECTOR FUND FLOATING RATE

ELSS ARBITAGE FUNDS

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BASED ON THEIR INVESTMENT OBJECTIVE:

1. FUNDS EQUITY: Investments in equities and instruments relating to equity are

made by such funds. Such funds show volatile performance, including losses, with
fluctuating share prices. However, short-term market fluctuations tend to fluctuate
over the long term with higher returns at comparatively less volatility. Such funds
can also be highly appreciated, given that equities historically have long-term
surpassed all kinds of assets. Accordingly, investment in equity funds should be
considered for at least 3-5 years. It may be further classified as:

2. INDEX - A key inventory index, like BSE Sensex or Nifty, is tracked in this case.
Their portfolio reflects the benchmarks index in terms of composition and stock
weight.

3. FUNDS – 100% of capital is invested in stocks in different sectors and

inventories. In capital production, equity divisive funds are used.

4. DIVIDEND YIELD FOUNDS- Same equity funds except investment in highly

dividend-related enterprises.

5. THEMATIC FUNDS- 100 percent investment in assets related to sectors of

particular interest. E.g. - Investment in electricity, infrastructure, IT, gold etc.

6. SECTOR FUNDS- Investment of 100 percent capital in the industry in question.

For instance - a bank sector fund will invest in banking stocks.

7. ELSS – Investors benefit from taxes through the Equity Linked Savings Scheme.

8. The debt and equity portfolio of a BALANCED FUND. As a consequence, the

risk-return ladder falls between equities and debt funds. Balanced funds are the
perfect means of reciprocal funds for investors who prefer to use different
instruments to spread their risk. The following are the balanced fund classes:

9. Investment in shares of DEBT-ORIENTED FUNDS is below 65%.

10. ORIENTED FUNDS – An investment in debt shares of at least 65 percent.

11. DEBT FUND: Investment in debt instruments is the only way investors can
prevent equity risks. Therefore, they are investing solely in bonds, debentures,
14
 Indian government securities and monetary markets such as deposit certificates,
trade papers, and call money instruments. They also invest exclusively in fixed
revenue instruments. Add your money to one of these debt funds according to
your investment horizon and requirements.

12. LIQUID FUNDS- These funds invest 100% in the money market instruments and
invest a great deal in the cash market in calling.

13. GILT FUNDS ST- 100 percent of their holdings are invested in government and
T-bill securities.

14. FLOATING RATE FUNDS - Short-term debt documents investment. Floaters are
investing in the variable rate of coupon instruments.

15. ARBITRAGE FIND- They generate income from mis-pricing between the market
of cash and derivatives through arbitration opportunities. Equity, derivatives and
monetary markets are assigned funds. In the absence of arbitration opportunities, a
higher proportion (around 75%) is put on monetary markets.

16. GILT FUNDS LT- They invest in long-term public securities at 100 per cent of
their portfolio.

17. INCOME FUNDS LT- Investing typically in long-term debt papers is a large
portion of this portfolio.

18. MIPs - Monthly income schemes have a 70% -90% exposure to debt and an equity
exposure of 10% -30%.

19. FMPs- Monthly fixed schemes investment in debt papers of maturity consistent
with the Fund's maturity.

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 NEED OF THE STUDY
Mutual fund as a better investment avenue in the long- or short-term. The various
schemes of the mutual fund offer investors various investment options and also give the
investor a practical return, according to their risk-bearing capacity and interests. The
study analyzes the different BALIC ULIP FUNDS to highlight the diversity of
investments that are made by Bajaj ulip funds

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 OBJECTIVES OF THE STUDY

 To know about performance of selected equity funds in Bajaj Allianz.

 To identify the selection of fund asset assignment.
 To assess selected equity funds, earn and return greater than risk in bench mark.
 To provide investor benefits and diversification timing and selectivity
 To provide needful suggestions if they necessary.

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 SCOPE OF THE STUDY

 The present study attempt to provide an idea about the performance of selected equity funds.
 The present scope of study is to analyses the varies techniques that is Treynor Jensen, Sharpe find out
portfolio through SD.
 The present study analyses consideration into 10 equity funds.

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 LIMITATIONS OF THE STUDY

 The present study constraints selected equity funds in Bajaj Allianz

 The present study based on secondary data

 The time durations of project not sufficient to analyses total data

 The analyses made based on Jensen ratio, Sharpe ratio & Treynor ratio

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 CHAPTER -2

REVIEW OF LITERATURE

RESEARCH GAP

STATEMENT OF THE PROBLEM

METHODOLOGY OF THE STUDY

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 REVIEW OF LITERATURE

ARTICLE 1:

Study on Performance Evaluation of Mutual Funds: A Study of Selected Diversified Equity

Mutual Funds in India by Dr Vikas Choudhary, and Preeti Sehgal Chawla International
Conference on Business, Law and Corporate Social Responsibility (ICBLCSR'14) Oct 1-2, 2014

Abstract
A mutual fund is a trust that pools the savings of several investors who share a common financial goal.
The money thus collected is then invested in capital market instruments such as shares, debentures, and
other securities. The income earned through these investments and the capital appreciation realized is
shared by its unit holders in proportion to the number of units owned by them. Thus, a mutual fund is
the most suitable investment for the common man as it offers an opportunity to invest in a diversified,
professionally managed basket of securities at a relatively low cost. The mutual fund industry in India
was started in the year 1963 with the formation of Unit Trust of India. This industry was privatized in
the year 1993. The wide variety of schemes floated by these mutual fund companies gave wide
investment choice for the investors. Among wide variety of funds equity diversified fund is considered
as substitute for direct stock market investment. In this research paper an attempt is made to analyse the
performance of the growth-oriented equity diversified schemes based on return and risk evaluation.
The analysis was achieved by assessing various financial tests like Average Return, Sharpe Ratio,
Treynor Ratio, Standard Deviation, Beta and Coefficient of Determination (R2). The data has been
taken from various websites of mutual fund schemes and from amfiindia.com. The analysis depicts that
majority of funds selected for study have outperformed under Sharpe Ratio as well as Treynor Ratio.

Objectives Of the Study

 To study the performance of Selected Diversified Equity Mutual Funds in India.
 To compare the performance of Selected Diversified Equity Mutual Funds in India.

Scope Of Study
 The period of the study is for 8 Years (2005-2013). The study uses a sample of 8 mutual fund
schemes comprising of all equity diversified funds

Research Methodology
A. Scope of Study The period of the study is for 8 Years (2005-2013). The study uses a sample of 8
mutual fund schemes comprising of all equity diversified funds.
B. Sources of Data To gain an overview of the current performance trends of the Indian mutual fund
industry, secondary data have been used and collected from the fact sheets, newspapers, journals,
books, and periodicals. The data were also collected from various websites of AMCs, AMFI,
moneycontrol.com etc. The NAVs of the sample mutual fund schemes have been collected on monthly
basis over a period of eight years. BSE Sensex has been used as a benchmark for performance
evaluation of different schemes and provides the time series data over a fairly long period of time.
Further, the monthly yields on 91- day treasury bills of Government of India have been used as a
surrogate for risk free rate.
21
C. Tools To analyse whether mutual funds under-perform or over perform the market index, the
following statistical methods and techniques have been used:
D. For Risk Analysis Standard deviation (Total Risk), Beta (Systematic Risk) and Coefficient of
Determination were calculated.
E. For Return Analysis Average Return was calculated for analysing return on mutual funds

Conclusion
The study has compared the various equity diversified mutual funds. Summary of results is presented
in different tables. In India, innumerable mutual fund schemes are available to general investors which
generally confound them to pick the best out of them. This study provides some insights on mutual
fund performance so as to assist the common investors in taking the rational investment decisions for
allocating their resources in correct mutual fund scheme. The data employed in the study consisted of
monthly NAVs for the open-ended schemes. The study utilized benchmark portfolios according to the
scheme objective such as BSE Sensex for all growth/equity schemes. The performance of sample
mutual fund schemes has been evaluated in terms of return and risk analysis, and risk adjusted
performance measures such as Sharpe ratio and Treynor ratio. In nut shell, the performance of mutual
fund in terms of Average returns, seventy five percent of the diversified fund schemes have shown
higher and superior returns and remaining have shown inferior returns. In terms of standard deviation,
sixty two percent of the selected schemes are less risky than the market. All the funds have beta less
than one and positive which imply that they were less risky than the market portfolio and in terms of
coefficient of determination (R2), all eight funds were near to one which indicates higher
diversification of portfolio. Seven out of eight funds have shown superior performance under the
Sharpe ratio as well as Treynor Ratio.

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ARTICLE 2

Study On Characteristics and Performance Evaluation of Selected Mutual Funds in IndiaSharad

Panwar and Dr. R. Madhumathi Indian Institute of Technology, Madras.

Abstract
The study used sample of public-sector sponsored & private-sector sponsored mutual funds of varied
net assets to investigate the differences in characteristics of assets held, portfolio diversification, and
variable effects of diversification on investment performance for the period May, 2002 to May,2005.
The study found that public-sector sponsored funds do not differ significantly from private-sector
sponsored funds in terms of mean returns%. However, there is a significant difference between public-
sector sponsored mutual funds and private-sector sponsored mutual funds in terms of average standard
deviation, average variance and average coefficient of variation (COV). The study also found that there
is a statistical difference between sponsorship classes in terms of e SDAR (excess standard deviation
adjusted returns) as a performance measure. When residual variance (RV) is used as the measure of
mutual fund portfolio diversification characteristic, there is a statistical difference between public-
sector sponsored mutual funds and private-sector sponsored mutual funds for the study period. The
model built on testing the impact of diversification on fund performance and found a statistical
difference among sponsorship classes when residual variance is used as a measure of portfolio
diversification and excess standard deviation adjusted returns as a performance measure. RV, however,
has a direct impact on Sharpe fund performance measure.

Scope of the study

There is lot of scope for improvement in the research for evaluating mutual fund performances.
Various other multi-criteria decision models could be tested for evaluating mutual fund performances.
Testing of fund performances in the long run can be done. Extended sample of public-sector sponsored,
privatesector Indian sponsored and private-sector foreign sponsored mutual funds can be taken for
generating results. Portfolio risk through the measure of value at risk (VaR) can also be tested for
differences in mutual fund classes.

Objectives Of the Study

 To identify differences in characteristics of public-sector sponsored & private-sector sponsored
mutual funds
 To find the extent of diversification in the portfolio of securities of public-sector sponsored and
private-sector sponsored mutual funds
 To compare the performance of public-sector sponsored and private-sector sponsored mutual
funds using traditional investment measures

Findings Of the Study

 There is no statistical difference between public-sector sponsored, private-sector Indian
sponsored and private-sector foreign sponsored mutual funds in terms of mean return
percentage.
 There is a statistical difference between public-sector sponsored, private-sector Indian
sponsored and private-sector foreign sponsored mutual funds in terms of average standard
deviation, average variance, and average coefficient of variation (COV)
23
  Public-sector sponsored mutual funds do not differ from private-sector Indian sponsored and
privatesector foreign sponsored mutual funds in terms of portfolio characteristics like net assets
(fund size in crores in Indian rupees), common stock %(common stock investments as
percentage of the fund’s assets),Top ten %(percentage of net assets invested in fund’s top ten
holdings) ,market capitalization(median market capitalization of the companies held by the
fund), holdings (total number of securities held by the mutual fund).

Conclusions
The study found that public-sector sponsored, private-sector Indian sponsored and private-sector
foreign sponsored mutual funds do not differ statistically in terms of portfolio characteristics such as
net assets, common stock%, market capitalization, holdings, Top Ten %. However, there is a statistical
difference between three classes of public-sector sponsored, private-sector Indian sponsored and
private-sector foreign sponsored mutual funds in terms of average standard deviation, average variance,
and average coefficient of variation. Portfolio risk characteristics measured through private-sector
Indian sponsored mutual funds seems to have outperformed both Public- sector sponsored and Private-
sector foreign sponsored mutual funds. Residual variance is not linearly related to investment
performance in terms of Jensen’s alpha and portfolio beta, regardless of the benchmark index used. The
general linear model of analysis of covariance establishes differences in performance among the three
classes of mutual funds in terms of portfolio diversification.

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ARTICLE 3

Study on Measuring Performance of Indian Mutual funds by Deepak Agrawal,

Asst. Professor, (Faculty of Management), LNCT-MER, Sanwar Road, Indore (M.P.)
Abstract
Since the development of the Indian capital Market and deregulations of the economy in 1992 it has come a long
way with lots of ups and downs. There have been structural changes in both primary and secondary markets
since 1992 scandal where the no seduces to the bottom and was bravely survived in ICU. Mutual funds are key
contributors to the globalization of financial markets and one of the main sources of capital flows to emerging
economies. Despite their importance in emerging markets, little is known about their investment allocation and
strategies. This article provides an overview of mutual fund activity in emerging markets. It describes their size,
asset allocation. This paper is a process to analyse the Indian Mutual Fund Industry pricing mechanism with
empirical studies on its valuation. It also analyses data at both the fund-manager and fund-investor levels. The
study revealed that the performance is affected saving and investment habits of the people at the second side the
confidence and loyalty of the fund Manager and rewards affects the performance of the MF industry in India.

Objective of the study

This paper is a process to analyze the Indian Mutual Fund Industry pricing mechanism with empirical studies on
its valuation. It also analyzes data at both the fund-manager and fundinvestor levels.

Scope Of the Study

There is lot of scope for improvement in the research for evaluating mutual fund performances. Various other
multi-criteria decision models could be tested for evaluating mutual fund performances. Although MF market is
too young but in the long run testing of fund performances can be made. Portfolio risk through the measure of
value at risk (VaR) can also be tested for differences in mutual fund classes.
Methodology
Mispricing of the Mutual funds can be evaluated by comparing the return on market and return on stock. During
the pricing period of the return on stock is negative, then it indicates overpricing and if are positive indicates
under pricing. Relative performance measurement is used to measure the performance of the MF with SENSEX.
Step I: Standard Deviation (SD) – It’s significance lies in the fact that sample is free from defects of sampling ,
it measures the absolute dispersion, the greater the SD, greater will be magnitude of the deviation of the values
from their mean. Small SD means high degree of uniformity & homogeneity of a series. The actual mean is
considered for the given Tabulated data . The square of standard deviation of returns gives the Variance.
Coefficient of variation (COV) is found by dividing standard deviation by mean returns.
Step II: Correlation analysis (r) : It deals with the association between two or more variables. It is analysed in 3
steps.
a) To determine whether any relation exists or not.
b) Testing its significance.
c) Establishing cause and effect relationship.
(r ) is always measured in absolute ± 01. If r=+1 , means there is perfect co-relation between variables. If it is r=
-1 there is perfect negative correlation, r =0 there is no relationship between variables.

∑ xy
So, r = ---------------
________ √
∑x 2 *∑y 2
Step III: The Coefficient of Determination (r2 ) : The square of the r is called as The Coefficient of
Determination. Explained variation
r 2 = -------------------------
Total variation

Findings
 Past performance influences the future performance of the funds.
25
  Performance of the funds can be drastically improved by the better incentives to the fund manager.
 High rate of domestic savings and a fast –developing liberalizing economy can elevate the growth of MF
Sector in our country.

Conclusion

There has been a tremendous growth in the mutual fund industry in India, attracting large investments not only
from the domestic investments but also form the foreign investors. Increasing number of Asset based
Management Companies providing opportunity to the investors in the form of safety, hedging and arbitrage.
With the growing middle-class household families with limited risk bearing capacity, it provides better returns
than any other long-term securities. India’s high rate of savings and a rapid-liberalizing economy is expected to
elevate the mutual fund sector to new hikes.

26
ARTICLE 4

A Study on the Performance of Mutual Funds of Indian AMCs by Nandini Seal and Soumya Mukherjee
Management Journal for Advanced Research ISSN (Online): 2583-1747 Volume-2 Issue-6 || December
2022.

ABSTRACT
A mutual fund is a pool of money managed by an Asset Management Company (AMC) that collect funds from
different individuals as well as institutional investors, and invest those funds in various securities, capital assets
such as bonds, real estates, stocks as well as in mutual funds. Most of the Asset Management Companies have
different categories of equity mutual funds depending upon the risk associated with such investments. In this
case, trailing return and rolling return indicate the performance of a mutual fund. However, a long-term investor
has to consider other factors associated with such mutual funds (like asset under management, expenses ratio,
number of stocks, and experience of the management) to finalise the selection of mutual funds.
In this research paper, an attempt has been made to identify the relationship among the performance of selected
equity mutual funds and the parameters considered by the investors for selecting the fund. 't-statistic’ has been
used to identify such relationship.
This research shows that there is no relationship between trailing return of any kinds of Equity mutual funds and
the selected parameters by the investors. However, number of stocks and experience of management have a little
impact on the rolling return of equity large cap mutual funds and Assets under management has a little impact on
rolling return in case of mid-cap mutual fund only.

Objectives Of the Study

 To get an overview of Equity MFs

 To analyse the performance of the top “Equity Large-cap, Mid-cap and Small-cap MFs”
 To identify the relationship between different kinds of return of MFs (viz. trailing return and rolling
return) with different parameters associated with MFs (like Assets under management, expenses ratio,
experience of management, number of stocks involved in MFs).
Limitations Of the Study
 The research work analysed the performance of active funds only, passive funds’ performance
has not been considered.
 The return of direct MFs have been considered only. However, the return of regular MFs have
been ignored for this study.
 The study is limited only for equity MFs. Debt and Hybrid MFs are not considered in the
research.
 As the study is limited only to secondary data, the investors’ perception about the factors
considered for selection of MFs have not been considered.

Findings And Conclusion

Relating to performance of MFs:
1. In case of large cap MF:
Canara Roberto Blue-chip provides the highest trailing return even though Axis Blue-chip Funds has
the maximum assets under its management.
Moreover, Axis Blue-chip Funds has the maximum assets under its management as it’s rolling return
(i.e. measured the lowest fluctuation in return in a year) is the best compared to other funds. It also
influenced by the second least expense ratio, experience of the management and involvement of a
27
 smaller number of stocks.
2. In case of Mid-cap MF:
Quant Midcap Fund provides the highest trailing return even though it is far behind the other funds
regarding assets under management.
Moreover, Axis Midcap and Kotak Emerging Equity Scheme have the maximum assets under its
management in the case of Midcap category. But it has not been used effectively because their
returns are not maximum compare to other funds.
3. In case of Small-cap MF category:
Quant Small Cap MF provides the highest trailing return even though it is far behind the other Funds
regarding assets under management.
For the small cap MFs, Axis small-cap Funds has the lowest rolling return. Due to this, it has
substantial assets under its management compare to other funds. It has also been influenced by the
second least expense ratio, experience of the management and involvement of number of stocks.

28
ARTICLE 5

A Study on Portfolio Management through Mutual Fund by Mr. KC. Narayana, Dr. M. Ganesan
Research Scholar [D14BA502], Department of Management Studies, Bharath University,
Chennai, India

ABSTRACT
Mutual funds have been a significant source of investment in both government and corporate securities. It has
been for decades the monopoly of the state with UTI being the key player, with invested funds exceeding Rs.300
bn. (US$ 10 bn.). The state-owned insurance companies also hold a portfolio of stocks. Presently, numerous
mutual funds exist, including private and foreign companies. Banks – mainly state-owned too have established
Mutual Funds (MFs). Foreign participation in mutual funds and asset management companies is permitted on a
case by case basis.

OBJECTIVES OF THE STUDY

 To study the influence and role of mutual funds in managing a portfolio.

 To analyse the various risk-return characteristics of Mutual funds and attempt to establish a link between
the demographics (age, income, employment status etc), risk tolerance of investors.
 To analyse the performance of Top Mutual Funds in India.
 Understanding the various characteristics of different Mutual funds.
 Understanding the Investment pattern of AMC‟s

Scope Of the Study

 The project covers the financial instruments mobilizing in the Indian Capital market in particular the
Mutual Funds.
 The mutual funds analyzed for their performance are determined over a period of 5 years fluctuations
and returns. The elements taken into consideration for choosing some of the top funds is on the basis of
their respective Sharpe, beta, ratio,
 The project shelves some of the top asset management companies operating in India, segregated on the
basis of their performance over a period of time. Scooping further the project inundates the success ratio
of the funds administered by top AMC‟s
Limitation
 A well-managed portfolio of various individual scripts which is rare would not help to draw a line of
difference between portfolio managed through mutual funds and the former.
 The median used to choose the top AMC‟s and the mutual funds to be analyzed is relative and
personalized and need not be accepted industry wide. Inaccessibility to certain information and data
relating to the project on account of it being confidential.
 Market volatility would affect individual‟s perception which would rather not be likely the way it is
expressed, thus resulting in a very relative data

Findings
 To know the mutual funds’ performance levels in the present market
 To analyse the comparative study between other leading mutual funds in the present market.
 To know the awareness of mutual funds among different groups of investors.
 To evaluate consumer feedback on mutual funds Finding out ways and means to improve on the services
by curvy ltd.
29
  Complete insight knowledge about the mutual funds were mentioned in the project.

Suggestions
 Try to save as much as your budget allows, as more saving leads to more investment that will grow into
bigger capital base.
 Plan your investment over a longer period, keeping in mind your age, your financial targets, your level
of risk aversion your saving pattern and your investment objectives.
 Invest more in stock funds but do keep a reasonable part of your investment in liquid securities as
money market funds, short term bonds etc to meet any contingent situation.
 Do not invest in highly volatile funds.
Conclusion
This report is prepared to get the ideas of mutual fund and various schemes of Karvy. The general concept of the
market study will help the different individuals to invest in different investment tools as per their appetite.
Through research study, it is very much visualized the present market trend opted by the selected number of
people and their perception regarding Mutual Fund. Hence, from this report I conclude that people are keener to
invest in Mutual Fund due to the stability and getting more diversified options.

30
 RESEARCH GAP

Article 1:
Study on Performance Evaluation of Mutual Funds: A Study of Selected Diversified Equity Mutual
Funds in India by Dr Vikas Choudhary, and Preeti Sehgal Chawla International Conference on
Business, Law and Corporate Social Responsibility.

Article 2:
Study On Characteristics and Performance Evaluation of Selected Mutual Funds in India Sharad
Panwar and Dr. R. Madhumathi Indian Institute of Technology, Madras.

Article 3:
Study on Measuring Performance of Indian Mutual funds by Deepak Agrawal, Asst. Professor,
(Faculty of Management), LNCT-MER, Sanwar Road, Indore (M.P.)

Article 4:
A Study on the Performance of Mutual Funds of Indian AMCs by Nandini Seal and Soumya
Mukherjee Management Journal for Advanced Research ISSN (Online): 2583-1747 Volume-2 Issue-6
|| December 2022.

Article 5:
A Study on Portfolio Management through Mutual Fund by Mr. KC. Narayana, Dr. M. Ganesan Research
Scholar [D14BA502], Department of Management Studies, Bharath University, Chennai, India

The above studies doesn’t take single company and not only equity funds. So that the “study of
performance selected equity funds” in fill the gap of research to reveal “performance of selected equity
funds” in Bajaj Allianz Life insurance.

31
 STATEMENT OF THE PROBLEM

The Present study identifies selection of Equity funds schemes difficult to aware to the investors. The
portfolio selection based on the expected returns is also a difficult to understand the investors.

32
 METHODOLOGY OF STUDY

Methodology is a systemic information-gathering procedure for the analysis and

verification of a phenomenon. Two main sources are used to collect information, namely.
1. Primary data
2. Secondary data

METHOD
STUDY

PRIMARY DATA SECONDARY DATA

PRIMARY DATA:

Information gathered by serving, observation or testing from 1st hand sources is which is meant
by “primary data” which refers to the information gained directly from the sources

SECONDARY DATA:

Data that has been obtained by academics and documented in books articles or other publications
is known as “secondary data”. Material from other sources such as face sheets and important
information memorandums, as well as from publications such as in newspapers on websites was used
to supplement the primary data.

All of the information’s for this project comes from secondary sources such as websites
publications and other media.

33
 CHAPTER-3

INDUSTRY PROFILE

COMPANY PROFILE

34
 INDUSTRY PROFILE

Mutual funds are trusts of the public member who wishes to invest in corporate or
business-sector financial assets or assets for the member's mutual benefit. In the interests
of risking and maximizing revenue and appreciation of capital distribution to its members
on a pro-rata basis, the Fund collects the funds from its savings for these members and
invests them in a diverse financial portfolio. They collectively enjoy the benefit of
investment expertise from trust specialists, which no one can enjoy. Therefore, the mutual
fund is a concept of mutual assistance for portfolio investment subscribers and the
administration by experts in the field of these investments. The funds are established in
accordance with the Indian Act.

MUTUAL FUND HISTORY:

In 1963 the mutual fund sector began in India, at the initiative of the Indian government
and the reserve bank with the foundation of the Unit Trust of India. History of mutual
funds can be divided into four phases in India:
Phase One – 1964-1987:
The Unit Trust of India established a parliamentary act in 1963. (UTI). It is established by
the Indian Reserve Bank and is controlled and administered by the Indian Reserve Bank.
Under the 1978 RBI disassociated UTI, RBI has been taken over regulatory and
administrative control by the Industrial Development Bank of India (IDBI). Unit Scheme
was the first scheme of UTI in 1964. At the end of 1988 UTI operated Rs.6,700 asset
crores.
Phase II – Public sector financing entry (1987-1993):
1987 saw the introduction of non-UTI, public sector mutual money created by banks of
the public sector and by LIC and the Indian General Assurance Group (GIC). The SBI
Mutual Fund (Can Mutual Fund), followed by the Punjab Mutual Fund (Aug. 89) and the
Indian Banco Mutual Fund, was the first non UTI mutual fund in June 1987. (Aug. 87).
(Nov. 89). (Oct 92 traduction). In June 1989, LIC established its Mutual Fund, and in
December 1990, GIC created its Mutual Fund. At the end of 1993, 004 cores were
managed for the mutual funds industry.
Phase 3 – Public Sector Financing Input 1993-2003:
The new era of the Indian mutual fund industry began when private-sector funds were
entered in 1993, and Indian investors were given a broader choice. In addition, 1993 had
to be recorded and regulated for all Mutual Fund Regulations except UTI. In July 1993
the first private mutual fund became the former Kothari Pioneer (now fusioned with
Franklin Templeton).

35
Phase IV - February 2003:
In February 2003, after the Trust of India Act of 1963 was abrogated, UTI was divided
into two separate entities. The first is the unit Trust, which operated at the end of January
2003 under R 29, 835 crores and accounted for US 64 assets and guaranteed income. The
Indian Unit Trust is operated by the Government of India's administrative and regulatory
authorities and it does not comply with the rules of the Mutual Fund.
The second is UTI Mutual Fund Ltd., the SBI, PNB, BOB and LIC. It was recorded with
SEBI under the rules of the Mutual Fund. The Mutual Funding industry has entered the
current stage by dividing up the former UTE with 75,000 under management assets by
March 2000, and by setting up UTI's Mutual Fund in accordance with the SEBI Mutual
Fund Regulations and fusing up several private fund investments.

Phase v. Development and sustainability – 2004:

More recently, Birla Sun Life, Sun F&C Mutual Fund and Alliance Mutual Fund have
seen many merger and acquisitions. More actors, such as the Franklin Templeton Mutual
Fund and Fidelity, have also visited India simultaneously. By the end of March 2015,
there were 29 funds. This is an ongoing stage of industry growth in order to consolidate
and create new actors for the international and private sectors.

The Indian Mutual Fund's Avg Industry. The assets under management (AAUM) were
21.25 for Lakh Crore (INR 21.25 trillion):
The average assets under management of Indian Mutual Fund Industry (AAUM) for the
month of March were 21.25 lakh crore. At 20,41 lakh crore on 31 January 2017,
management assets (MAI's) stood.
Total account(s) (or mutual fund feli) were 6.13 (61.3 million) for Mach 31, 2017, while
retail segment maximum investment was 5.65 crore (equity, ELSS, balance) (equity and
equity schemes) (56.5 million).

36
 COMPANY PROFILE
BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITED

Bajaj Allianz Life Insurance Co. Ltd., one of India’s leading private life insurers, is a joint venture
between Bajaj Finserv Limited, one of the most diversified non-banking financial institutions in India,
and Allianz SE, one of world’s leading global insurer and asset manager. We began operations in
August 2001 from our headquarters in Pune, Maharashtra (India).

Bajaj Allianz Life is committed to offer value-packed and innovative products, which are simple to
understand and purchase. They are designed to meet long-term life goals of customers, ranging from
protection, wealth creation to retirement solutions and more. These are backed by a suite of tech-
enabled services and service touchpoints to ensure we are always available for our customers to
manage their Life Goals with us
.
To ensure enhanced customer engagement, we have built an extensive distribution network across the
country. With 510 branches, over 1,17,706 agents (as on 28 February, 2023), along with several
partnerships with key banks, including AXIS, Bandhan, IDFC First amongst others, and a large
network of Corporate Agents, we are present where our customers are.Our digital eco-system is also
built and strengthened over time to ensure we are available, literally, on the palms of our customers.

With innovation and customer-centricity as our guiding values, we have transformed to being one of
the fastest growing life insurers in India. Today, we are the life goals enablers to over 2.47
crore# individuals and have over Rs. 89,701 crore Assets Under Management (as on 28 February,
2023), with a AAA$ Rating that signifies highest degree of safety regarding timely servicing of
financial obligations and Claims Settlement Ratio at 99.02%~ .

Over the last five years, we have disrupted the life insurance industry in several ways, to ensure that
our customers enjoy the several benefits their life insurance policy(ies) provide. From introducing first-
of-their-kinds product features to innovative services for our customers, ICs and partners alike (e.g.
SmartAssist, comprehensive set of services on Whatsapp Business account, QR-code enabled branch
services, etc.), several milestones mark our transformation journey this far.

As a brand, Bajaj Allianz Life has also strengthened the trust quotient it enjoys amongst its
stakeholders and customers. Our endearing campaigns built on deep customer insights and right
marketing analytics have helped build a strong brand recall. We have been recognized thrice for the
mega Plankathon event where we broke records for most number of people performing the abdominal
plank.

Simultaneously All these achievements have been possible due to the passion of over
19K team members working towards enabling life goals of our customers.

37
The Board of Directors of BAJAJ ALLIENZ INSURANCE LTD consists of the following
eminent persons.

 Mr. SANJIV BAJAJ

 Mr. RITU ARORA
 Mr.NIRAJ BAJAJ
 Mr. RANJIT GUPTA
 Mr.SURAJ MEHTA

MAJOR DIFFERENCE BETWEEN THE ULIP FUNDS & MUTUAL FUNDS

THE BASIS ULIP FUNDS MUTUAL FUNDS

Nature Product Combination of life insurance Pure investment option.

and investment facility

Coverage Provides life cover that is a minimum It does not offer a life cover.
ten times the premium amount.

Time period Long term period Either be short, medium, or

long-term

Flexibility Flexibility of choice when switching No such flexibility offered.

between funds.

Returns ULIP returns depend on the type of Mutual fund returns depend on
funds you choose to invest, depending fund allocation in conjunction
on the market performance. with the market performance

Monthly SISO which is systematic in systematic Sip which is simple investment

payment out of fund investment in the balic ulip plan
fund
BALIC ULIP FUND ADVANATGES

 ULIPs are flexible investment products that allow investors to switch between equity and debt
funds for a certain number of times every year. It ensures that investors have the flexibility to
adjust their portfolio as per the market conditions.
38
 ULIP investments are tax-efficient. The premiums paid for a ULIP plan are eligible for a tax
deduction under Section 80C of the Income Tax Act, 1961, subject to provisions stated therein.

 Depending on the market conditions, ULIPs offer relatively higher growth opportunities, ensuring
that investors have a substantial corpus at the end of the policy term.

 ULIP returns are tax-free. However, tax benefits are subject to amendments in the Income Tax Act,
1961, subject to provisions stated therein.

 Along with market-linked growth, ULIPs offer life insurance cover, which guarantees financial
stability to your dependents even in your absence.

Bajaj Allianz General Insurance Company Limited is a joint venture between

Allianz SE, the world’s leading insurer, and Bajaj Finserv Limited. The Company

received the certificate of registration from IRDA on 2nd May 2001 to conduct

general insurance business in India. Bajaj Allianz General Insurance, today, is one
39
of the largest private insurer in the industry with offices in over 1100 towns and

cities. The Company has continuously been expanding its operations to reach out

to its customers. The Company recently changed its brand identity to ‘Caringly

Yours’ to reposition itself in the minds of Indian consumers as a brand that

protects and cares about customer’s financial worries around their most prized

possessions - their health, home & content, vehicles, businesses etc. With this, the

Company not just aims to take its service to the next level, but also seeks to

provide the best customer experience at every touchpoint and make insurance a

pull rather than a push product. Bajaj Allianz General Insurance caters to

individuals across demographics of the country and the corporate sector with its

wide range of products and services that go beyond insurance. The Company is not

only bringing insurance solutions to the customers’ doorstep but also improving

insurance penetration, with its advanced digital and mobile applications. Today

through its digital offices it has reached out to over 1000 new Tier 2 and 3 towns

across India. The Company has a strong focus on customer centricity and aims at

delivering superior value with an excellent and caring experience for the customer.

Today the Company is taking its relationships with the customers beyond

insurance, by offering them a plethora of digitised customer-centric initiatives. The

Company registered strong financial results by posting revenue of ₹ 15,487 crore

in FY 2022-23. The company recorded a net profit of ₹ 1,348 crore. Bajaj Allianz

40
General Insurance also reported a healthy Combined Ratio of 100.5% and

Solvency Ratio of 391% for the period.

MUTUAL FUNDS ADVANTAGES

1) Career Management Expert:

The main benefit of the funding is the professional management of your money (at least
in theory). As investors lack the time or the expertise to manage a portfolio, they buy

41
funds. It's a relatively cost-effective way for a small investor to have a full time manager
invest and monitor a mutual fund.

2) Diversification to reduce risk

Instead of owning individual actions or bonds, the risk is spread by owning shares in a
mutual fund. The idea behind diversification is to invest in a large number of assets, with
gains in others minimizing loss in a particular investment. In other words, the more
inventories and bonds they have, the less one could hurt. Hundreds of different stocks in
various industries are typically owned by large mutual funds.

3) Reinvestment automatic

This arrangement is used to purchase additional stocks rather than distribute dividends or
capital of a mutual fund. On the other hand, it can't always be easy for individual
investors to reinvest their usually frittered dividends.

4) Scale Economies

As a mutual fund buys large quantities of securities and sells them at a time, its cost of
transaction is less than that paid by an individual.

5. simplification

It is easy to purchase a mutual fund! Every bank, quite well, has its own mutual fund line
and the minimum investment is small.

6.Shelter for taxes

Government of India is allowed to launch equity-based tax savings schemes with some
mutual funds. Those who invest in these schemes benefit from the income tax rebate.

42
MUTUAL FUNDS DISSADVANTAGES

1) Professional Administration:

Have you noticed how we qualified "theoretically" the benefit of professional

management? Many investors discuss whether the so-called professionals are better than
you or I pick up stocks or not. Management is by no means infailing and the manager is
still cutting even if the fund loses money. In a subsequent section we will discuss this in
detail.

2) Costs

There are no reciprocal funds just to make your life easier - they all provide for
profit. The MFI is able to handle burial costs under jargon layers. The cost is so complex
that we have spent a whole section on the subject in this tutorial.

3) Dilution

Too much diversification (discussed in our article "Are You Over-Diversified?") is

possible. Since funds have small holdings in so many different companies, high returns
from a few investments often have little impact on the total return. Dilution is also the
result of a successful fund that is too large. When funds are invested in successful funds,
it is often difficult for the manager to find a good investment for all the new money.

4.Taxes

When making decisions regarding your money, the fund managers do not consider your
personal tax situation. For example, when a fund manager sells securities, a capital gain
tax is triggered, which affects how profitable a person is from the sale. The deferment of
the liability for capital gains could have been more profitable for the individual.

Why should we assess the performance of the fund?

An investor needs to gain a basic knowledge of the foundation's different actions to

evaluate the fund's performance and the base of appropriate performance measurement.
This helps him measure his fund's performance and take correct decisions

43
A consultant can measure and evaluate the performance of the funds comparing them and
give an investor the appropriate advice

MEASURING AND EVALUATING MUTUAL FUNDS PERFORMANCE:

PURPOSE OF MEASURING AND EVALUATING

Each investment partner is motivated either by the motto of creating wealth or increasing
wealth or by both. It is therefore very important, with the help of factsheets, newsletters,
websites, journals and professional advisers such as HDFC AMC, to continuously
evaluate the Fund's performance. If investors fail to measure its financial performance,
they can lose it any time. He may confront any of the following problems in this ever-
changing industry:

1. Change of the performance of the funds because of changes in its management/goal.

2. Compared to similar funds, the performance of the funds can decrease.

3. Different costs associated with the fund could be increased.

4. Beta, the associated technical risk measure can also increase.

5. The ratings of the funds may be included in the different lists of independent rating
agencies.

6. It can fuse into another fund or it can be purchased by another fund house.

BUILDING PERFORMANCE:

EQUITY FUNDS: performance of equity funds can be measurable based on the

following: Nav Growth, Total Return; Total Return with Renewal in NAV, Annualized
Returns and Distributions, Computing Total Return, Expenditure, Expense Ratio,
Portfolio Rate, Funds Size, Transaction Costs, cash Flow.

44
DEBT FUND: In addition to NAV Growth, Total Return and Expense Ratio debt funds
can be measured on the basis of: the peer-group comparisons, the income ratio, exposures
to industry and concentraciones.

LIQUID FUNDS: performance can be measured on the basis of highly volatile liquid
funds: Fund yield, in addition to NAV growth, total return and expenditure rate.

CONCEPT OF BENCHMARKING FOR PERFORMANCE EVALUATION:

In accordance with its investment objective, every fund sets its benchmark. The
performance of the funds is measured against the benchmark. If the fund generates a
higher return than the benchmark, it is said that if the fund is equal to the benchmark, then
its correlation is precisely 1.

Financial Plannings for MUTUAL functions: FINANCIAL planning:

Financial planning is required for investors before investing in any mutual fund. Financial
planning is designed to ensure that the investors are able to meet their financial goals in
the right amount of funds at the proper time. It's more than just fiscal planning.

STEPS IN FINANCIAL PLANNINGS ARE:

• Attribution of assets.

• Funds are selected.

• The characteristics of a scheme are studied.

With regard to mutual funds, financial planning involves only large asset allocation,
which leaves funds managers with securities and its management. The fund manager has
to follow closely the objectives set out in the offer document, as the financial plans of
users are chosen accordingly.

Why was the biggest financial identity?

When the latest situation in the Indian financial market is examined, there are a wide
range of options for investment, including common funds, equity, fixed income, company
45
debentures, fixed deposits of companies, bank deposits, PPF, life insurance, gold and real
estate, etc. This is measured in a table format based on these parameters

We can see clearly that mutual funds go beyond all other investment options. It has three
parameters high, while it is moderate at one. We find that stocks provide high rates of
return with high liquidity compared to other options, although they are extremely volatile
and have low security that is not beneficial to people with low risk. Even investment
comfort in stocks is modest.

Now they score better than shares on every level, when it comes to deposits of banks, but
are in the most important parameter deeply lagging, i.e. have little return, so it's not an
option for anyone to risk higher profits. The other high-return is real estate, although it is
highly volatile and safe, even with low liquidity and comfort. Gold is still the favorite for
Indians, but when we see it as an investment option, it definitely doesn't give a really
bright picture. There are moderate returns and liquidity while guaranteeing high security.
Similarly, other investment options do not correspond to the mutual funds and only serve
the needs of a specific customer group. We can simply say that the Mutual Fund is a clear
winner of every option available.

EVALUATING PORTFOLIO PERFORMANCE

The portfolio performance must be continuously evaluated. It is important. In this

process, the following factors are important:

• Instead of short term performance, consider long-term records. This is important since
the long-term record moderates the impact on a fund record which is exceptionally good
or poor in the short term. In addition, the long-term record compensates for the impact of
a fund manager's certain investment style.

• Evaluate similar funds' performance records. The success of a small fund or fund that
focuses on a certain market segment cannot be relegated as evidence of the expected
success of managing a large or large fund.

• Discipline of investment is a key factor as exerting pressure may enable an investment

strategy and a manager to change track.

46
• The aim should be to differentiate between investor skills and luck of the fund managers
and determine the funds with the greatest potential for future success.

HOW TO REDUCE RISK WHILE INVESTING:

Every type of investment we make is risky. In fact, it is purely and exclusively because
we risk parting with our funds at the very start, to return to higher value at a future date.
Self-splitting is a risk. William Sharpe, a well-known economist and Nobel Prize winner,
has attempted to divide the total risk in investment into two parts, a systemic risk and a
non-systemic risk.

SYSTEM RISK

The risk that exists in the system is the systemic risk. Inflation, recession, war, political
conditions and so on are some of the most important examples of systemic risk.

Returns generated by all investment inflation eroded, for example. If the fixed deposit is
8% and the inflation level is 6%, the actual fixed deposit return rate is lowered by 6%.
Equity returns will be decreased by inflation if equity market returns are 18 percent and
inflation remains 6 percent. There is no way to stay away from the risk of inflation since
there is inflation in the system.

In all forms of investment economic cycle, war and political situation have an impact.
These are also available in the system and no way to stay away. It's like walking learning.
Anybody who wants to learn how to walk must first fall; without falling you can't learn to
walk. Likewise, anyone interested in investing has to face a systematic risk first.
Therefore, without a systematic risk, you can never make any investment.

UNSYSTEMATIC RISK

This risk does not apply to all forms of investment and is therefore not included in the
system. Specific form of investment is associated with unsystematic risk. If we invest and
the market drops, then it is only if we have placed a fixed deposit, particularly bank, that
our investment in equity will be affected by bankruptcy, that we lose money placed in that
bank only. Although there is no way to avoid risks, the effects of risk can always be
reduced. Diversification contributes to reducing the consequences of unsystematic risk. If
47
we spread our investment across different asset classes, the impact of non-systematic
risks is reduced.

48
 CHAPTER-4

DATA ANALYSIS & INTERPRETATION

49
 DATA ANALYSIS & INTERPRETATION

MEASURES OF RISK AND RETURN:

In future cash flows, the risk is variability. The distribution of possible outcomes is also
known as uncertainty. There is a risky situation that has an unexpected chance of loss or
outcome. The higher the chance of loss or unforeseen outcome, the higher the risk.

There is uncertainty about the expected return for an investment. For an investor,
assessing a future alternative investment is very important and expects or anticipates a
certain return rate.

The risk management portfolio includes processes which determine, analyze, respond to,
track and control any risk which will prevent the portfolio's business objectives from
being achieved. Those processes should include project risk assessments which have
negative consequences for the portfolio, ensuring the responsible risk mitigation plan is
developed by the project manager.

SIMPLE MEASURE OF RETURNS:

The return on investments from mutual funds includes income (dividends or investment
payments) and capital gains/losses (increase or decrease in the value of a security). This is
calculated by changing the net asset of a fund, which corresponds to the market value of
the securities held in it, by dividing the reinvestment by an original net Asset value in the
income and capital gain distributions into the number of shares in the fund for a specified
period of time.

Rt= (NAVt- NAVt-1)/NAVt-1

Where,

Rt is the return in month t

NAVt is the closing net asset value of the fund on the last trading day of the month

NAVt-1 is the closing net asset value of the fund on the last day of the previous month
50
MEASURE OF RISK

Investors are not only interested in the return of the fund, but also in the risk of these
returns. Risk may therefore be considered as the uncertainty of the anticipated return and
in general variability is equal to uncertainty. There is a correlation between variability and
risk; therefore high returns tend to be high.

Standard deviation:

Simply put, one of the commonest statistical risk measuring parameters is a standard
deviation that determine a fund's volatility (upward & downward). The high standard of a
fund deviation means a high volatility and a small default means a small volatility each
day.

S.D. =√1/T× (Rt-AR) ²

Where,

S.D. is the periodic standard deviation,

R is the average periodic return,

T is the number of observations in the period for which the standard deviation is
being calculated.

Rt is the return in month t

 PORTFOLIO TURNOVER RATIO:

Portfolio turnover refers to the Funds' trade measurement and is calculated by dividing
the Funds' average monthly net assets into a lower number of purchases or sales
(excluding securities with maturities of less than one year). Turnover is only a proportion
of the transaction value of the portfolio and not a percentage of changes in funds'
holdings. Portfolio turnover is the sale and purchase of securities in a fund's portfolio. A
ratio of 100% means therefore that in the last year all its positions were bought and sold.
The sales are important and affect fees and costs for the mutual fund.

51
TOTAL EXPENSES RATIO:

Measure, for instance, total expenditure for managing and functioning a mutual fund.
These are mainly management fees and additional costs, such as corporate fees, legal
fees, auditing fees, etc. The total costs of the fund shall be divorced into an amount equal
to the TER by the total assets of the fund:

Total expense ratio = (Total fund Costs/ Total fund Assets)

MEASURING PORTFOLIO RETURN

RISK ADJUSTED RETURNS

One obvious method of risk adjustment is to examine the price per risk unit. We
know that equity investment is risky. Risk-free interest rate is the return an investor can
get, i.e. without any risk, on risk less security. In addition to the risk-free rate, the return
is the risk premium to bear the risks. If the risk premium is a risk dividend, we get the risk
premium per risk unit. Therefore, the reward per risk unit may be calculated for various
portfolios or mutual funds, ranking the funds in decreasing order. A higher ratio shows
improved performance.

The most important and widely used measures of performance are:

 The Sharpe Measure

 Sharpe Ratio

 Standard deviation

William Scharpe's performance measurement is known as the Sharpe rate

or the Reward-to-Variability ratio. It is the ratio of the premium or premium to the
return or risk variability measured by the standard return deviation. The Sharpe
ratio formula can be specified as:
rp−r𝐹
SHARPE RATIO (SR) =
σp

52
 Where

rp= Realised returned on the portfolio

rf= Risk free rate of return.

σp = Standard deviation of portfolio return.

Portfolio performance may be evaluated using the following metrics in addition to the Sharpe ratio: the
Treynor measure, the Jensen alpha, and the Fema measure.

Calculated by dividing the expected return by the standard deviation of the portfolio's risks,
the Sharpe rat

53
54
55
 CHAPTER-5

FINDINGS OF THE STUDY

SUGGESTIONS FROM THE

STUDY CONCLUSION OF THE

STUDY BIBLIOGRAPHY

56
 FINDINGS

 According to this study the HDFC AMC have a broad categories of mutual funds
they cover the all type of investors and they have introduced innovative ideas and
policies.

 They have given high priority to the customer services and they follow the
systematic standards.

FOR HDFC BALANCED FUND:

 Among the 5 years returns compared with their any stock index there is a slight
difference the stock index returns are lower than the fund returns.
The Sharpe ratio for fund is 0.3419 is greater than the Sharpe ratio for index is
0.3419. It shows fund perform better than the Index.

 In this high priority is given to the bank industry. The assets allocation % is
11.45. After that 9.17% of the assets were put in the pharmaceuticals.

FOR HDFC PRUDENCE FUND

 HDFC Prudence fund was based on the benchmark index of CRISIL
BALANCED FUND INDEX. The fund was well performed when the market was
in upwarding.
Sharpe ratio of portfolio return = 0.4351

In the overall (5years) performance the fund returns was higher than the market index. In
the Sharpe ratio the fund was have higher ratio compare with benchmark index. Higher
ratio was preferable to choose.

FOR HDFC CHILDRENS GIFT FUND:

 This fund Sharpe ratio was higher than the market index in this Sharpe ratio of
portfolio return = 0.2884.

 For those investors who won’t take risk, this fund was suitable.

57
 SUGGESTIONS

Recommendations and Suggestions to AMC’s

1) Brand building:
Brand building is an exercise, which every business enterprise will have. Brand is
the soul of an institution; it survives on it, lives with it and cherishes it.

2) Strength full Strategies:

Every AMC should try to turn into a more modern, a more vibrant, a more
transparent and regulatory compliance institution. It is with this in mind, every
institution should try to come up with verity of different type of products to fill
different investment objectives.

3) Innovation:
MF industry can be classified into three categories like equity, debt and balanced. And
there is also completive in nature. Fund managers are not able to reach niche market. The
products are should be innovative that can meet niche market. Here MF should follow the
FMCG industry innovative strategy.

4) Create the awareness about the mutual funds advantages at ground level.
5) Balanced fund must measure the performace

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 CONCLUSION

The Mutual Fund is a shareholder funding investment program that operates and
is managed professionally in diversified holdings.
Investment plans in mutual funds must be made known to the public. Mutual
funds pool money and invest in diversified securities from many investors. This
diversification significantly reduces the risk of serious financial losses due to
difficulties in a certain business or industry. HDFC Mutual Fund provides
investors with the necessary information concerning investment plans and assists
investors in selecting the type of funds they would like to invest in.
These Mutual Fund's objectives of management and investors are consistent and
transparent. As the competition is tough and heavy, the funds should be assessed
in the most accurate way possible. Therefore it is correctly done by HDFC mutual
funds

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 BIBLIOGRAPHY

1. Security Analysis and Portfolio Management, Author: S.Kevin, 7th printing

Publication: PHI Learning Private Limited.

2. Financial Management: Theory and Practice, Author: Shashi K.Gupta

and Dr.R.K.Sharma, 6th Revised edition, Publication: Kalyani Publishers.

MAGAZINES

Money outlook (April & March 2020)

Business world (April & March 2020)

NEWS PAPERS

Business Line

Economical Times

Company fact

sheets

WEBSITES

www.hdfcfund.com

www.amfiindia.com

www.mutualfundsindia.com

www.investment.com

www.nism.com

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