Performance evaluation of selected mutual fund schemes

2. Introduction To The Study
Mutual fund is a vehicle to mobilize money from investors, to invest in different markets and securities
A Small investor can avail of professional fund management services offered by an asset management company.
Its helps investors to build their wealth through professional management of their investible funds.

3. The Mutual Fund Schemes selected for this study are:
 Liquid Fund
1. Icici Prudential Money Market
2. Dsp.Br-Ip
3. Hdfc
4. Sundaram Bnp Paribas
5. Sbi Magnum Insta CF
 Gilt Fund
1. L&T
2. Sbi Magnum
3. Hdfc
4. Templeton India Gov Sec
5. UTI
 Equity Linked Saving Schemes
1. Icici Prudential
2. Canara Robecco
3. Hdfc
4. Sbi Magnum
5. Sundaram Bnp Paribas
 Diversified Equity
1. Franklin India High Growth Companies
2. Icici Prudential Exports and other Services
3. Hdfc Capital Builder
4. Birla Sun life India GenNext
5. Kotak Select Focus Fund

4. 
Profile of Sharekhan Ltd
 Sharekhan Limited is one of the fastest growing financial services.
 Share khan provides trade execution services through multiple channels - an Internet platform,
telephone and retail outlets and is present in 280 cities through a network of 704 locations.
There are 575 branches all over India.

5. Operations of Sharekhan: tablesOperations of Sharekhan.docx
Products Offered by Sharekhan: tablesProducts Offered by Sharekhan.docx

6. 
Objectives of the Study
 To understand the recent trends in Mutual Funds in India.
 To understand how Mutual Fund can be a ‘productive avenue’ for investing activities.
 To compare the equity & debt schemes using Sharpe’s ratio, Treynor’s ratio, Jensen Alpha,
Sortino ratio, Information ratio.
 To suggest investor to make a right choice of investment while considering the inherent risk
factors.

7. 
METHODOLOGY
 Secondary data required for the study is taken from website, fund fact sheets of
various fund houses, research papers, journals and magazines. Wherein
Performance Techniques like Sharpe, Treynor, Jensen’s Alpha, Sortino and
Information Ratios are used.
 Primary data is based on the information collected from the Sharekhan’s
database and other financial intermediaries.

8. Liquid Fund: tablesPE of Liquid Fund.docx
Interpretation
 Among all the above schemes, DSP-BR Liquidity Fund is more volatile in terms of return.
 It’s apparently observed that Sundaram BNP Paribas is the best performer in terms of return generation but it is the
worst performer as per Sharpe Ratio because the return generated by the fund is not at par with risk associated with the
fund.
 The best performer among the funds under the consideration is Hdfc Liquid Fund as its risk premium per unit of total
risk is the highest.
 SBI Magnum Insta Cash Fund is the best performer as per Treynor Ratio and worst performer as per Sharpe Ratio.
The reason for this conflict in ranking is that Sharpe Ratio considers Total risk, whereas Treynor Ratio considers only
systematic risk. Further for determining the systematic risk i.e Beta.
 The Bench Mark Index considered in the study is Total Return Index, which may not be the representative of liquid
market.
 As a result Beta of SBI Magnum Insta Cash Fund is almost equal to zero indicating that the fund returns are not
correlated with the Bench Mark Index.

9.  As there is a limitation in using the Beta values, arrived at using TRI as a bench mark all the performance
measurement tools which are dependent on Beta like Treynor, Jensen Alpha, Information Ratio are not consider.
 Even if we ignore Beta, results of Sharpe and Sortino convey the message that this fund is worst performer.
 When we consider Sharpe and Sortino Ratio. It’s also observed that Icici pru money market fund is ranked as the
best performer as per Sortino Ratio, but average performer as per Sharpe Ratio. It implies that this fund has more
positive volatility than negative volatility.
 Observations are quite opposite when it comes to Hdfc Liquid Fund.
 As per information and Sharpe Ratio Hdfc Liquid Fund is the best performer and all other ratios are rating the fund
as the average performer.
 As a whole it can be concluded that Hdfc Liquid Fund is best performer.

10. 
Equity Linked Saving Schemes: tablesPE of ELSS.docx
Interpretation
 As evident from Standard Deviation and Beta values HDFC TAX SAVER is observed to be most volatile fund.
 Least Volatile fund is ICICI PRU TAX SAVER as observed from its Beta value. However
 When we consider total risk, SBI MAGNUM TAX GAIN is least risky.
 But as observed except Treynor Ratio all other performance measures suggest that SBI MAGNUM TAX GAIN
is the superior performer.
 As per Jensen’s Alpha, ICICI PRU TAX SAVER is ranked 2. But as per Information Ratio it’s ranked as 4.
 As ranking given by Information Ratio it’s more reliable as it considers excess return per unit of excess risk.
 Where Jensen’s Alpha consider only absolute value of excess return.
 SUNDARAM BNP PARIBAS TAX SAVER and HDFC TAX SAVER are observed to be relatively poor
performance but not absolutely poor performance.

11. 
Gilt Fund: tablesPE of Gilt Fund.docx
Interpretation
 It’s observed that TEMPLETON INDIA GOVERNMENT SECURITIES-LTP is more
volatile as suggested by Standard Deviation and Beta.
 It’s also underperforming its peer group in generating return commensurate with the risk as
evident from risk adjusted measure like Sharpe, Treynor, Jensen’s Alpha, Sortino and
Information Ratio.
 HDFC GILT LTP and TEMPLETON INDIA GOVERNMENT SECURITIES-LTP are not
able to meet the expectations of the investors as evident from Jensen’s Alpha and Information
Ratio.
 L&T GILT FUND is observed to be best performer according to the ratings of all ratios.

12. 
Diversified Equity: tablesPE of Diversified Equity.docx
Interpretation
 ICICI PRU EXPORTS AND OTHER SERVICES FUND is the best performer as suggested
by all the measure under the consideration except Information Ratio. As per Information Ratio
it is the worst performer among all.
 Interestingly HDFC CAPITAL BUILDER FUND is the worst performer as per all ratios
except the Information Ratio.
 As per Information Ratio it is the best performer among all.
 However, Information Ratio considers abnormal return generated by the fund manager per unit
of excess risk it can be considered as a superior measure.
 In terms at absolute excess returns the fund manager of ICICI PRU EXPORTS AND
OTHER SERVICES FUND exhibited superior performance among all schemes under
consideration.

13. FINDINGS
Observations at Company:
 The brokerage charges are % based which are higher in comparison to flat fee brokers.
 They charge minimum brokerage of 10 paisa per stock would not let you trade stocks below 20rs.
(If you trade, you will lose majority of your money in brokerage).
 Classic account holders cannot trade commodities.
 Facility to place orders after trading hours is not available.

14. 
Findings of Study
 The schemes selected for the study gave returns in coordination with markets. Some mutual fund schemes are able to beat
the market. That means these schemes are well diversified.
 From the entire 20 schemes, best scheme is HDFC Liquid Fund in Sharpe Ratio as its risk premium per unit of total risk is
the highest but all other ratios are rating the fund as the average performer.
 When we consider Treynor Ratio among all schemes, SBI MAGNUM INSTA CASH FUND is best performer whereas in all
other ratios this scheme stood under below average.
 So, it can be understood that when we consider beta, then this company is showing best performance rather than other ratios.
 When we consider Jensen’s Alpha, among all the schemes ICICI PRU EXPORTS AND OTHER SERVICES FUND is best
performer. From this we can consider that this fund is able to meet the expectations of the investors.
 As we know Sortino Ratio measures the negative deviation of the fund, it’s observed that ICICI PRU MONEY MARKET
FUND is giving higher returns.
 When we consider Information Ratio KOTAK SELECT FOCUS FUND is performing well when compared to other
schemes.

15. 
Conclusion
After studying & analysing different Mutual Fund schemes the following conclusions can be made:
To understand stock funds, one needs to be familiar with the characteristics of the different types of companies
they hold.
Portfolio managers have done a fairly good job in generating positive returns. It may lead to gain investor’s
confidence. Thus over all good performance of the funds is a sign of development in new era in capital market.
On the basis of the analysis the performance of the schemes during the study period can be concluded to be good.
Those who want to eliminate the risk element but still want to reap a better then it would be advisable to go for
debt schemes which ensure both safety and returns.

16. THANK YOU