comparitive study of mutual funds by jizhen1947

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									                      A

               PROJECT REPORT

                     ON

  PERFORMANCE EVALUATION OF SECTORAL
            MUTUAL FUND.


AT KOTAK MAHINDRA MUTUAL FUND.

             BY: Mohamed Abdi Ali
              Reg/No: 62544022.

   Punjab Technical University(PTU)
                Jalandhar.

  MASTER OF BUSINESS ADMINSTRATION(MBA)




     Smart ICBM Mehidipatnam Hyderabad
                2006 – 2008
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                            ACKNOWLEDGEMENT

The project on ““PERFORMANCE EVALUATOIN                         OF SECTORAL
MUTUAL FUNDS’’” would not have seen the light of the day without the
following people and their priceless support and cooperation. Hence I extend my
gratitude to all of them.


Fist I would like to thank almighty allah for enabling me to complete this project
work.


I would like to thank KOTAK MAHINDRA GROUP for giving me an opportunity
of learning and contributing through this project.


As a student of ICBM, Hyderabad I would first of all like to express my gratitude
to Mr. Jaydeep for assigning me such a worthwhile topic “PERFORMANCE
EVALUATOIN OF SECTORAL MUTUAL FUNDS’ to work upon in KOTAK
MAHINDRA GROUP.


During the actual project work, Mrs. Safora akhter (Project Guide) who set the
ball rolling for my project. She has been a source of inspiration through his
constant guidance; personal interest; encouragement and help. I convey my
sincere thanks to her. In spite of her busy schedule she always found time to
guide me through the project. I am also grateful to her for reposing confidence in
my abilities and giving me the freedom to work on my project. Without her
invaluable help I would not have been able to do justice to the project.


The project couldn‟t have been completed without timely and vital help of my
parents, Special thanks to Mrs. Nimo Ismail and Mr. Abdi Mohamed               for
their support guidance, keen interest, cooperation, inspiration, and of course
moral support through my project session.

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                                       Mohamed Abdi Ali


                            INDEX
      Content                               Pg.no.


  1. Executive Summary                       5


  2. Company Profile                         8


  3. Introduction                           15


  4. The Study                               36


  5. Data Analysis                           66


  6. Observations and Inferences             68


  7. Limitation of Study                     69


  8. Conclusion                              70


  9. Recommendations                         72


  10. Bibliography                           74




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Table                                              Page No.



  1. Assets under management                          25

  2. Snapshot of Mutual funds scheme                  31

  3. Fund ranking on the basis of Total Risk          65

  4. Fund Ranking on the basis of Sharp Ratio         66
                                               2
  5. Fund ranking on the basis of beta and R          67




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EXECUTIVE SUMMARY:-

The project titled “Comparative Analysis Of Sectoral Mutual Funds”
being carried out for KOTAK MAHINDRA GROUP. Today an investor is
interested in tracking the value of his investments, whether he invests directly in
the market or indirectly through Mutual Funds. This dynamic change has taken
place because of a number of reasons. With globalization and the growing
competition in the investments opportunity available he would have to make
guided and rational decisions on whether he gets an acceptable return on his
investments in the funds selected by him, or if he needs to switch to another
fund.


In order to achieve such an end the investor has to understand the basis of
appropriate preference measurement for the fund, and acquire the basic
knowledge of the different measures of evaluating the performance of the fund.
Only then would he be in a position to judge correctly whether his fund is
performing well or not, and make the right decision.


This project t is undertaken to help the investors in tracking the performance of
their investments in Sectoral Mutual Funds and has been carried out with the
objective of giving performance analysis of Sectoral Mutual Fund.


The methodology for carrying out the project was very simple that is through
secondary data obtained through various mediums like fact sheet of the funds,
the Internet, Business magazines, Newspaper, etc. the analysis of Sectoral Funds
has been done with respect to its various parameters. Technology Sectors have
performed well over the years. FMCG and PHARMA sectors are catching up.
Though not much representation was there for banking sector, Reliance Banking
Fund Did not perform well. I hope KOTAK, hyderabad will recognize this as well
as take more references from this project report.


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             CHAPTR 1 :- OBJECTIVE




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 1.1   PURPOSE :-

 To study and analyse the performance of open ended, sectoral
 mutual funds (growth).




 1.2 OBJECTIVES:-


  1. Finding out the values of various performance measures for
     some sectoral mutual funds.

  2. To know various funds’ involved in various Sectoral Mutual
     Funds.

  3. To know the future of Sectoral Mutual Funds in India.

  4. To evaluate the performance of mutual funds by calculating
     their returns and risks


  5. To rank the funds of selected AMC’s according to sharpe’s,
     treynor’s and jensen’s performance measures.

  6. To measure the performance based on various indeces.




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    CHAPTR 2 :- COMPANY PROFILE




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                    CH NO. 5: INDUSTRY PROFILE

Our Corporate Identity




Kotak Mahindra Bank
At Kotak Mahindra Bank, we address the entire spectrum of financial needs for
individuals and corporates. We have the products, the experience, the
infrastructure and most importantly the commitment to deliver pragmatic, end-
to-end solutions that really work.


Kotak Mahindra Old Mutual Life Insurance Ltd.
Kotak Mahindra Old Mutual Life Insurance is a 76:24 joint venture between
Kotak Mahindra Bank Ltd. and Old Mutual plc. Kotak Mahindra Old Mutual Life
Insurance is one of the fastest growing insurance companies in India and has
shown remarkable growth since its inception in 2004.
Old Mutual, a company with 160 years experience in life insurance, is an
international financial services group listed on the London Stock Exchange and
included in the FTSE 100 list of companies, with assets under management worth
$ 400 Billion as on 30th June, 2006. For customers, this joint venture translates
into a company that combines international expertise with the understanding of
the local market.
Every child is different. Each has their own set of dreams and aspirations. As a
parent you would like to provide your child with all the building blocks that could
develop his or her potential to the fullest. This could mean extra coaching or


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tuition for talented children, special training or equipment for natural athletes or
professional training for born singers.
CORNERSTONES OF STRAREGY:-


   1. Focus on retail segment.


   2. Build a strong pan-India network managed by experienced professionals,
       build presence across both metros and class A/B town.


   3. Build full-service capabilities leveraging the network-offer the entire
       gamut of financial services, backed by strong transaction processing and
       high volume handling capability.


   4. Established a high degree of customer ownership and top-of-mind recall in
       the local markets- ensures steady customer traffic and repeat business.


   5. Build a trusted brand; ensure high visibility


ACHIVEMENTS:-

    Largest independent distributor for financial products


    Amongst the top 5 stock brokers


    Largest network of branches and business associates


    Amongst top 10 investment Bankers.


    Ranking 4rd in retail procurement in equity IPOs.


    Ranking 8th in Merchant Banking services.


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MISSION OF KOTAK:-

To be a leading, preferred service provider to our customer, and to achieve this
leadership position by building an innovative, enterprising, and technology
driven organization which will set the highest standards of service and business
ethics.


STOCK BROKING SERVICES:-


It is an undisputed fact that the stock market is unpredictable and yet enjoys a
high success rate as a wealth management and wealth accumulation option. The
difference between unpredictability and a safety anchor in the market is provided
by in-depth knowledge of market functioning and changing trends, planning with
foresight and choosing one & risqué; s options with care. This is what Kotak
provide in their Stock Broking services.


Kotak offer services that are beyond just a medium for buying and selling stocks
and shares. Instead Kotak provide services which are multi dimensional and
multi-focused in their scope. There are several advantages in utilizing their Stock
Broking services, which are the reasons why it is one of the best in the country.


Kotak offers trading on a vast platform; National Stock Exchange, Bombay Stock
Exchange and Hyderabad Stock Exchange. More importantly, Kotak makes
trading safe to the maximum possible extent, by accounting for several risk
factors and planning accordingly. Kotak is assisted in this task by their in-depth
research, constant feedback and sound advisory facilities.




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DISTRIBUTION OF FINANCIAL PRODUCTS:-


The paradigm shift from pure selling to knowledge based selling drives the
business today. With their wide portfolio offerings, they occupy all segments in
the retail financial services industry.


A 1600 team of highly qualified and dedicated professionals drawn from the best
of academic and professional backgrounds are committed to maintaining high
levels of client service delivery. This has propelled their to a position among the
top distributors for equity and debt issues with an estimated market share of 15%
in terms of applications mobilized, besides being established as the leading
procurer in all public issues.


To further tap the immense growth potential in the capital markets they
enhanced the scope of their retail brand, Kotak – the Finapolis, thereby
providing planning and advisory services to the mass affluent. Here they
understand the customer needs and lifestyle in the context of present earnings
and provide adequate advisory services that will necessarily help in creating
wealth. Judicious planning that is customized to meet the future needs of the
customer deliver a service that is exemplary. The market-savvy and the ignorant
investors, both find this service very satisfactory.


The edge that they have over competition is their portfolio of offerings and their
professional expertise. The investment planning for each customer is done with
an unbiased attitude so that the service is truly customized.


Their monthly magazine, Finapolis, provides up-dated market information on
market trends, investment options, opinions etc. Thus empowering the investor

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to base every financial move on rational thought and prudent analysis and
embark on the path to wealth creation.


ADVISORY SERVICES:-

Under their retail brand „Kotak – the Finapolis', they deliver advisory services to
a cross-section of customers. The service is backed by a team of dedicated and
expert professionals with varied experience and background in handling
investment portfolios. They are continually engaged in designing the right
investment portfolio for each customer according to individual needs and budget
considerations with a comprehensive support system that focuses on trading
customers' portfolios and providing valuable inputs, monitoring and managing
the portfolio through varied technological initiatives. This is made possible by the
expertise they have gained in the business over the years. Another venture
towards being investor-friendly is the circulation of a monthly magazine called
„Kotak - the Finapolis'. Covering the latest of market news, trends, investment
schemes and research-based opinions from experts in various financial fields.


PRIVATE CLIENT GROUP:-


This specialized division was set up to cater to the HIGH NET WORTH
INDIVIDUAL and institutional clients keeping in mind that they require a
different kind of financial planning and management that will augment not just
existing finances but there lifestyle as well. Here they follow a hard-nosed
business approach with the soft touch of dedicated customer care and
personalized attention.


For this purpose they offer a comprehensive and personalized service that
encompasses planning and protection of finances, planning of business needs
and retirement needs and the host of other services, all provided on a one-to-one
basis.


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                Kotak at a Glance


    TRANSACTION                                     CORPORATE
     PROCESSING                                      FINANCE
       GROUP                                          GROUP

                    TECHNOLOGY RESOURCE
                           GROUP



   IT ENABLED                                              FINANCIAL
     SERVICE                                               PRODUCTS
                              E BUSINESS
      GROUP                                                DISTRIBUTION
                                                             GROUP


                          SUPPORT

     HR & Admn.                      SA&FC
     STRATEGIC PLANNING,             COMPLIANCE, LEGAL &
     CORPORATE AFFAIRS,                SECRETARIAL
     TRAINING & DEVELOPMENT          FINANCE & ACCOUNTS
     CORPORATE QUALITY




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       CHAPTR 3 :- INTRODUCTION




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Introduction

Mutual Funds: An overview
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is invested by the fund
manager in different types of securities depending upon the objective of the
scheme. These could range from shares to debentures to money market
instruments. The income earned through these investments and the capital
appreciations realized by the scheme are shared by its unit holders in proportion
to the number of units owned by them (pro rata). 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 portfolio at a relatively low cost. Anybody
with an investible surplus of as little as a few thousand rupees can invest in
Mutual Funds. Each Mutual Fund scheme has a defined investment objective and
strategy.
A mutual fund is the ideal investment vehicle for today‟s complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by global events
occurring in faraway places. A typical individual is unlikely to have the
knowledge, skills, inclination and time to keep track of events, understand their
implications and act speedily. An individual also finds it difficult to keep track of
ownership of his assets, investments, brokerage dues and bank transactions etc.



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A mutual fund is the answer to all these situations. It appoints professionally
qualified and experienced staff that manages each of these functions on a full
time basis. The large pool of money collected in the fund allows it to hire such
staff at a very low cost to each investor. In effect, the mutual fund vehicle exploits
economies of scale in all three areas - research, investments and transaction
processing. While the concept of individuals coming together to invest money
collectively is not new, the mutual fund in its present form is a 20th century
phenomenon. In fact, mutual funds gained popularity only after the Second


World War. Globally, there are thousands of firms offering tens of thousands of
mutual funds with different investment objectives. Today, mutual funds
collectively manage almost as much as or more money as compared to banks.
A draft offer document is to be prepared at the time of launching the fund.
Typically, it pre specifies the investment objectives of the fund, the risk
associated, the costs involved in the process and the broad rules for entry into
and exit from the fund and other areas of operation. In India, as in most
countries, these sponsors need approval from a regulator, SEBI (Securities
exchange Board of India) in our case. SEBI looks at track records of the sponsor
and its financial strength in granting approval to the fund for commencing
operations.
A sponsor then hires an asset management company to invest the funds
according to the investment objective. It also hires another entity to be the
custodian of the assets of the fund and perhaps a third one to handle registry
work for the unit holders (subscribers) of the fund.
In the Indian context, the sponsors promote the Asset Management Company
also, in which it holds a majority stake. In many cases a sponsor can hold a 100%
stake in the Asset Management Company (AMC). E.g. Birla Global Finance is the
sponsor of the Birla Sun Life Asset Management Company Ltd., which has floated
different mutual funds schemes and also acts as an asset manager for the funds
collected under the schemes




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History of Mutual Fund in India:
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 the.
The history of mutual funds in India can be broadly divided into four distinct
phases
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was
set up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked
from the RBI and the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first scheme launched
by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of
assets under management


Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI
Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec
87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund
(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in
December 1990.
At the end of 1993, the mutual fund industry had assets under management of
Rs.47,004 crores.




Third Phase – 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund families.

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Also, 1993 was the year in which the first Mutual Fund Regulations came into
being, under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (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 and revised 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.


Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI
was bifurcated into two separate entities. One is the Specified Undertaking of the
Unit Trust of India with assets under management of Rs.29,835 crores as at the
end of January 2003, representing broadly, the assets of US 64 scheme, assured
return and certain other schemes. The Specified Undertaking of Unit Trust of
India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund
Regulations.
The second is the UTI Mutual Fund Ltd, 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. As at the end
of March, 2006, there were 29 funds.


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The graph indicates the growth of assets over the years.
Note:
Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified
Undertaking of the Unit Trust of India effective from February 2003. The Assets
under management of the Specified Undertaking of the Unit Trust of India has
therefore been excluded from the total assets of the industry as a whole from
February 2003 onwards.


GROWTH IN ASSETS UNDER MANAGEMENT




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Future Scenario
The asset base will continue to grow at an annual rate of about 30 to 35 % over
the next few years as investor‟s shift their assets from banks and other traditional
avenues. Some of the older public and private sector players will either close shop
or be taken over.
Out of ten public sector players five will sell out, close down or merge with
stronger players in three to four years. In the private sector this trend has already
started with two mergers and one takeover. Here too some of them will down
their shutters in the near future to come.
But this does not mean there is no room for other players. The market will
witness a flurry of new players entering the arena. There will be a large number of
offers from various asset management companies in the time to come. Some big
names like Fidelity, Principal, Old Mutual etc. are looking at Indian market
seriously. One important reason for it is that most major players already have
presence here and hence these big names would hardly like to get left behind.
The mutual fund industry is awaiting the introduction of derivatives in India as
this would enable it to hedge its risk and this in turn would be reflected in it‟s Net
Asset Value (NAV).
SEBI is working out the norms for enabling the existing mutual fund schemes to
trade in derivatives. Importantly, many market players have called on the
Regulator to initiate the process immediately, so that the mutual funds can
implement the changes that are required to trade in Derivatives.


Recent trends in mutual fund industry
The most important trend in the mutual fund industry is the aggressive
expansion of the foreign owned mutual fund companies and the decline of the
companies floated by nationalized banks and smaller private sector players.
Many nationalized banks got into the mutual fund business in the early nineties
and got off to a good start due to the stock market boom prevailing then. These
banks did not really understand the mutual fund business and they just viewed it


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as another kind of banking activity. Few hired specialized staff and generally
chose to transfer staff from the parent organizations. The performance of most of
the schemes floated by these funds was not good. Some schemes had offered
guaranteed returns and their parent organizations had to bail out these AMCs by
paying large amounts of money as the difference between the guaranteed and
actual returns. The service levels were also very bad. Most of these AMCs have
not been able to retain staff, float new schemes etc. and it is doubtful whether,
barring a few exceptions, they have serious plans of continuing the activity in a
major way. The experience of some of the AMCs floated by private sector Indian
companies was also very similar. They quickly realized that the AMC business is a
business, which makes money in the long term and requires deep-pocketed
support in the intermediate years. Some have sold out to foreign owned
companies, some have merged with others and there is general restructuring
going on.
The foreign owned companies have deep pockets and have come in here with the
expectation of a long haul. They can be credited with introducing many new
practices such as new product innovation, sharp improvement in service
standards and disclosure, usage of technology, broker education and support etc.
In fact, they have forced the industry to upgrade itself and service levels of
organizations like UTI have improved dramatically in the last few years in
response to the competition provided by these.




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List of Members:
A) Bank Sponsored
  1. Joint Ventures - Predominantly Indian
    a. SBI Funds Management Private Ltd.


  2. Others
    a. BOB Asset Management Co. Ltd.
    b. Canbank Investment Management Services Ltd.
    c. UTI Asset Management Co. Private Ltd.


B) Institutions
    a. Jeevan Bima Sahayog Asset Management Co. Ltd.


C) Private Sector


  1. Indian
    a. Benchmark Asset Management Co. Private Ltd.
    b. Cholamandalam Asset Management Co. Ltd.
    c. Credit Capital Asset Management Co. Ltd.
    d. Escorts Asset Management Ltd.
    e. J. M. Financial Asset Management Private Ltd.
   f. Kotak Mahindra Asset Management Co. Ltd.
    g. Quantum Asset Management Co. Private Ltd.
    h. Reliance Capital Asset Management Ltd.
    i. Sahara Asset Management Co. Private Ltd
    j. Sundaram Asset Management Co. Ltd.
    k. Tata Asset Management Ltd.




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 2. Joint Ventures - Predominantly Indian
   a. Birla Sun Life Asset Management Co. Ltd.


b. DSP Merrill Lynch Fund Managers Ltd.
   c. HDFC Asset Management Co. Ltd.
   d. Prudential ICICI Asset Management Co. Ltd.


 3. Joint Ventures - Predominantly Foreign
   a. ABN AMRO Asset Management (India) Ltd.
   b. Deutsche Asset Management (India) Private Ltd.
   c. Fidelity Fund Management Private Ltd.
   d. Franklin Templeton Asset Management (India) Private Ltd.
   e. HSBC Asset Management (India) Private Ltd.
   f. ING Investment Management (India) Private Ltd.
   g. Morgan Stanley Investment Management Private Ltd.
   h. Principal Pnb Asset Management Co. Private Ltd.
   i. Standard Chartered Asset Management Co. Private Ltd.




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TABLE-1
Assets Under Management (AUM) as at the end of Jun-2007 (Rs in
Lakhs)
                                                 Average AUM For
                              AUM
                                                 The Month
Mutual Fund Name              Excluding          Excluding
                                         Fund Of            Fund Of
                              Fund Of            Fund Of
                                         Funds              Funds
                              Funds              Funds
1. ABN AMRO Mutual Fund       362896.22 11839.62 402399.53 11792.14
2. Benchmark Mutual Fund      104407.77 0        0          0
3. Birla Sun Life Mutual Fund 1460946.02 2072.44 1734914.79 2051.1
4. BOB Mutual Fund            16184.32   0       0          0
5. Canbank Mutual Fund        284147.27 0        350592.38 0
6. DBS Chola Mutual Fund      247516.44 0        0          0
7. Deutsche Mutual Fund       505248.34 0        566548.8   0
8. DSP Merrill Lynch Mutual
                                   1107408.01 0            0            0
Fund
9. Escorts Mutual Fund             10760.06     0          0            0
10. Fidelity Mutual Fund           470409.9     10732.08   460857.8     8302.2
11. Franklin Templeton Mutual
                                   2164985.13 35661.26     2121472.48 35749.74
Fund
12. HDFC Mutual Fund               2439111.46   0          2472159.05   0
13. HSBC Mutual Fund               1045085.93   0          1071051.1    0
14. ING Vysya Mutual Fund          364524.15    11788.98   0            0
15. JM Financial Mutual Fund       310496.57    0          0            0
16. Kotak Mahindra Mutual Fund     1032562.74   67677.37   1112345.59   69948.17
17. LIC Mutual Fund                755647.55    0          0            0
18. Morgan Stanley Mutual Fund     240711.5     0          229917.2     0
19. PRINCIPAL Mutual Fund          1003815.7    0          0            0
20. Prudential ICICI Mutual Fund   3014261.75   3800.11    0            0
21. Quantum Mutual Fund            2529.69      0          0            0
22. Reliance Mutual Fund           2631444.23   0          0            0
23. Sahara Mutual Fund             18753.11     0          18261.66     0
24. SBI Mutual Fund                1363424.34   0          1305504.46   0
25. Standard Chartered Mutual
                                   955098.38    2036.64    0            0
Fund
26. Sundaram BNP Paribas
                                   493751.48    0          488223.06    0
Mutual Fund
27. Tata Mutual Fund               1115870.85 0            0           0
28. Taurus Mutual Fund             19978.4     0           18970.8     0
29. UTI Mutual Fund                3011531.54 0            2920166.54 0
Grand Total                        26553508.85 145608.5    15273385.24 127843.35


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Types of Mutual Funds
Mutual fund schemes may be classified on the basis of its structure and its
investment objective.


By Structure:
Open-ended Funds
An open-end fund is one that is available for subscription all through the year.
These do not have a fixed maturity. Investors can conveniently buy and sell units
at Net Asset Value ("NAV") related prices. The key feature of open-end schemes
is liquidity.


Closed-ended Funds
A closed-end fund has a stipulated maturity period which generally ranging from
3 to 15 years. The fund is open for subscription only during a specified period.
Investors can invest in the scheme at the time of the initial public issue and
thereafter they can buy or sell the units of the scheme on the stock exchanges
where they are listed. In order to provide an exit route to the investors, some
close-ended funds give an option of selling back the units to the Mutual Fund
through periodic repurchase at NAV related prices. SEBI Regulations stipulate
that at least one of the two exit routes is provided to the investor.


Interval Funds
Interval funds combine the features of open-ended and close-ended schemes.
They are open for sale or redemption during pre-determined intervals at NAV
related prices.




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By Investment Objective:-


Growth Funds
The aim of growth funds is to provide capital appreciation over the medium to
long- term. Such schemes normally invest a majority of their corpus in equities. It
has been proven that returns from stocks, have outperformed most other kind of
investments held over the long term. Growth schemes are ideal for investors
having a long-term outlook seeking growth over a period of time.




Income Funds
The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds, corporate
debentures and Government securities. Income Funds are ideal for capital
stability and regular income.


Balanced Funds
The aim of balanced funds is to provide both growth and regular income. Such
schemes periodically distribute a part of their earning and invest both in equities
and fixed income securities in the proportion indicated in their offer documents.
In a rising stock market, the NAV of these schemes may not normally keep pace,
or fall equally when the market falls. These are ideal for investors looking for a
combination of income and moderate growth.


Money Market Funds
The aim of money market funds is to provide easy liquidity, preservation of
capital and moderate income. These schemes generally invest in safer short-term
instruments such as treasury bills, certificates of deposit, commercial paper and
inter-bank call money. Returns on these schemes may fluctuate depending upon



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the interest rates prevailing in the market. These are ideal for Corporate and
individual investors as a means to park their surplus funds for short periods.


Load Funds
A Load Fund is one that charges a commission for entry or exit. That is, each time
you buy or sell units in the fund, a commission will be payable. Typically entry
and exit loads range from 1% to 2%. It could be worth paying the load, if the fund
has a good performance history.


No-Load Funds
A No-Load Fund is one that does not charge a commission for entry or exit. That
is, no commission is payable on purchase or sale of units in the fund. The
advantage of a no load fund is that the entire corpus is put to work.


Other Schemes:-


Tax Saving Schemes
These schemes offer tax rebates to the investors under specific provisions of the
Indian Income Tax laws as the Government offers tax incentives for investment
in specified avenues. Investments made in Equity Linked Savings Schemes
(ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax
Act, 1961. The Act also provides opportunities to investors to save capital gains
u/s 54EA and 54EB by investing in Mutual Funds, provided the capital asset has
been sold prior to April 1, 2000 and the amount is invested before September 30,
2000.




Smart ICBM                               28
Special Schemes
      Industry Specific Schemes
Industry Specific Schemes invest only in the industries specified in the offer
document. The investment of these funds is limited to specific industries like
InfoTech, FMCG, and Pharmaceuticals etc.




      Index Schemes
Index Funds attempt to replicate the performance of a particular index such as
the BSE Sensex or the NSE 50


      Sectoral Schemes
Sectoral Funds are those, which invest exclusively in a specified industry or a
group of industries or various segments such as 'A' Group shares or initial public
offerings.


      Commodities Funds
Commodities funds specialize in investing in different commodities directly or
through commodities future contracts. Specialized funds may invest in a single
commodity or a commodity group such as edible oil or rains, while diversified
commodity funds will spread their assets over many commodities




Smart ICBM                              29
        RISK HIERARCHY OF MUTUAL FUNDS



        Money                                                             Equity
        Market                                                            Funds
        Funds                            Debt
                                         Funds          Hybrid
                        Gilt                            Funds
                        Funds
                                                                        Aggressive
                                                                        Growth
                                                       Flexible Asset
                                                                        Funds
                                                       allocation
                                                       Funds
                                                                        Growth Funds
                                       High Yield
Risk                                   Debt Funds
                                                                         Diversified
Level                                                                    Equity Funds



                                                                         Index Funds


                                                                        Value
                                       Focused                          Funds
                                       Debt Funds     Growth and
                                                      Income
                                                      funds             Equity Income
                                                                        Funds
                                                      Balanced
                                        Diversified   Funds
                         Gilt Funds     Debt Funds
         Money
         Market Funds
                                      Type of Fund


        Smart ICBM                          30
TABLE 2

                           Snapshot of Mutual Fund Schemes

 Mutual
                                          Investment        Who should
  Fund       Objective        Risk                                     Investment horizon
                                           Portfolio          invest
  Type
                                                             Those who
                                          Treasury Bills,
         Liquidity +                                          park their
                                           Certificate of
          Moderate                                             funds in
 Money                                      Deposits,
          Income +          Negligible                          current       2 days - 3 weeks
 Market                                    Commercial
        Reservation of                                       accounts or
                                           Papers, Call
           Capital                                           short-term
                                             Money
                                                            bank deposits
  Short-                                   Call Money,
   term                                    Commercial
  Funds                                      Papers,         Those with
(Floating    Liquidity +      Little
                                          Treasury Bills,      surplus           3 weeks -
 - short-     Moderate       Interest
                                           CDs, Short-       short-term          3 months
  term)        Income          Rate
                                               term             funds
                                           Government
                                            securities.
 Bond                                  Predominantly
 Funds                                  Debentures,
                           Credit Risk                       Salaried &
               Regular                  Government                           More than 9 - 12
                           & Interest                       conservative
(Floating      Income                    securities,                            months
                            Rate Risk                         investors
 - Long-                                 Corporate
  term)                                    Bonds
                                                             Salaried &
  Gilt        Security &     Interest     Government
                                                            conservative     12 months & more
 Funds         Income       Rate Risk      securities
                                                              investors
                                                              Aggressive
             Long-term
 Equity                                                     investors with
              Capital       High Risk         Stocks                            3 years plus
 Funds                                                      long term out
            Appreciation
                                                                look.
             To generate
             returns that
                                            Portfolio
                  are        NAV varies
 Index                                     indices like      Aggressive
            commensurate with index                                             3 years plus
 Funds                                     BSE, NIFTY        investors.
            with returns of performance
                                               etc
              respective
                indices
                                        Balanced ratio
                             Capital    of equity and
              Growth &
Balanced                   Market Risk debt funds to         Moderate &
               Regular                                                          2 years plus
 Funds                     and Interest ensure higher        Aggressive
               Income
                            Rate Risk     returns at
                                          lower risk



Smart ICBM                                     31
Benefits of Mutual Fund investment


   1. Professional Management:
      Mutual Funds provide the services of experienced and skilled
   professionals, backed by a dedicated investment research team that analyses
   the performance and prospects of companies and selects suitable investments
   to achieve the objectives of the scheme.


   2. Diversification:
      Mutual Funds invest in a number of companies across a broad cross-
   section of industries and sectors. This diversification reduces the risk because
   seldom do all stocks decline at the same time and in the same proportion. You
   achieve this diversification through a Mutual Fund with far less money than
   you can do on your own.


   3. Convenient Administration:
      Investing in a Mutual Fund reduces paperwork and helps you avoid many
   problems such as bad deliveries, delayed payments and follow up with brokers
   and companies. Mutual Funds save your time and make investing easy and
   convenient.


   4. Return Potential:
      Over a medium to long-term, Mutual Funds have the potential to provide a
   higher return as they invest in a diversified basket of selected securities.




Smart ICBM                               32
  5. Low Costs:
     Mutual Funds are a relatively less expensive way to invest compared to
  directly investing in the capital markets because the benefits of scale in
  brokerage, custodial and other fees translate into lower costs for investors.




  6. Liquidity:
     In open-end schemes, the investor gets the money back promptly at net
  asset value related prices from the Mutual Fund. In closed-end schemes, the
  units can be sold on a stock exchange at the prevailing market price or the
  investor can avail of the facility of direct repurchase at NAV related prices by
  the Mutual Fund.


  7. Transparency:
     Investors get regular information on the value of your investment in
  addition to disclosure on the specific investments made by the scheme, the
  proportion invested in each class of assets and the fund manager's investment
  strategy and outlook.


  8. Flexibility:
     Through features such as regular investment plans, regular withdrawal
  plans and dividend reinvestment plans, one can systematically invest or
  withdraw funds according to your needs and convenience.


  9. Affordability:
     Investors individually may lack sufficient funds to invest in high-grade
  stocks. A mutual fund because of its large corpus allows even a small investor
  to take the benefit of its investment strategy.




Smart ICBM                              33
   10. Choice of Schemes:
      Mutual Fund offers a family of schemes to suit your varying needs over a
   lifetime. This offers investors to further diversify their investments.
   11. Well Regulated:
    All Mutual Funds are registered with SEBI and they function within the provisions
   of strict regulations designed to protect the interests of investors. The operations of
   Mutual Funds are regularly monitored by SEBI.


Limitation of Mutual Fund Investment


   1. No Control Over Cost:

   An Investor in mutual fund has no control over the overall costs of investing.
   He pays an investment management fee (which is a percentage of his
   investments) as long as he remains invested in fund, whether the fund value is
   rising or declining. He also has to pay fund distribution costs, which he would
   not incur in direct investing.


   However this only means that there is a cost to obtain the benefits of mutual
   fund services. This cost is often less than the cost of direct investing.

   2. No Tailor-Made Portfolios:

   Investing through mutual funds means delegation of the decision of portfolio
   composition to the fund managers. The very high net worth individuals or
   large corporate investors may find this to be a constraint in achieving their
   objectives.


   However, most mutual fund help investors overcome this constraint by
   offering large no. of schemes within the same fund.




Smart ICBM                                 34
  3. Managing A Portfolio Of Funds:

  Availability of large no. of funds can actually mean too much choice for the
  investors. He may again need advice on how to select a fund to achieve his
  objectives.
  AMFI has taken initiative in this regard by starting a training and certification
  program for prospective Mutual Fund Advisors. SEBI has made this
  certification compulsory for every mutual fund advisor interested in selling
  mutual fund.



  4. Taxes:

  During a typical year, most actively managed mutual funds sell anywhere
  from 20 to 70 percent of the securities in their portfolios. If your fund makes a
  profit on its sales, you will pay taxes on the income you receive, even if you
  reinvest the money you made.

  5. Cost of Churn:

  The portfolio of fund does not remain constant. The extent to which the
  portfolio changes is a function of the style of the individual fund manager i.e.
  whether he is a buy and hold type of manager or one who aggressively churns
  the fund. It is also dependent on the volatility of the fund size i.e. whether the
  fund constantly receives fresh subscriptions and redemptions. Such portfolio
  changes have associated costs of brokerage, custody fees etc. which lowers the
  portfolio return commensurately.




Smart ICBM                              35
             CHAPTR 4 :- THE STUDY




Smart ICBM            36
   Sectoral Mutual Fuds Considered:-

       1. Sectoral-Auto

       2. Sectoral-Bank

       3. Sectoral-Basic

       4. Sectoral-FMCG

       5. Sectoral-Healthcare

       6. Sectoral-Infrastructure

       7. Sectoral-Media and Entertainment

       8. Sectoral-Pharma

       9. Sectoral-Power

      10. Sectoral-Service

       11. Sectoral- Technology




Smart ICBM                     37
1. Sectoral-Auto:-


a) JM Auto Sector Fund:-

Scheme Snapshot                        Asset Allocation     as on 31-May-07
Fund Manager         Sandeep Neema     Particulars          Percentage
Scheme Objective     Equity            Equity Shares        92.22
Scheme Sub-
                     Sectoral-Auto     Call And Other
Objective                                                   7.78
                                       Assets
Scheme Type          Open
Min. Investment(Rs) 5000
Total Assets(Rs./Mn) 98.92
Registrars           Kotak
                     Computershare
                     Pvt Ltd
Launch Date          01-JUN-04

                     as on 31-May-     Asset Allocation     as on 31-May-07
Sector Allocation
                     07                Particulars          Percentage
Sector               % Of Asset        Equity Shares        92.22
Auto                 52.30             Call And Other
                                                            7.78
Auto And Ancillaries 31.18             Assets
Industrial Products 8.74
Call And Other
                     7.78
Assets




b) UTI Thematic Auto Sector Fund

Scheme Snapshot                        Asset Allocation     as on 31-May-07
                     Chandraprakash    Particulars          Percentage
Fund Manager
                     Padiyar
Scheme Objective     Equity            Equity Shares        97.60
Scheme Sub-Objective Sectoral-Auto     Net Current Assets   2.40
Scheme Type          Open
Min. Investment(Rs) 5000
Total Assets(Rs./Mn) 875.69
Registrars           UTI ISL Ltd.
Launch Date          09-MAR-04




Smart ICBM                            38
Sector Allocation      as on 31-May-07    Asset Allocation     as on 31-May-07
Sector                 % Of Asset         Particulars          Percentage
Auto                   68.45              Equity Shares        97.60
Auto And Ancillaries   19.56              Net Current Assets   2.40
Industrial Products    6.52
Unclassified           3.07
Net Current Assets     2.40


2. Sectoral- Bank:-

a) UTI Banking Sector Fund

Scheme Snapshot                           Asset Allocation     as on 31-May-07
Fund Manager           Gautami Desai      Particulars          Percentage
Scheme Objective       Equity             Equity Shares        93.59
Scheme Sub-
                       Sectoral-Bank      Net Current Assets   6.41
Objective
Scheme Type            Open
Min. Investment(Rs)    5000
Total Assets(Rs./Mn)   742.18
Registrars             UTI ISL Ltd.
Launch Date            09-MAR-04

Sector Allocation      as on 31-May-07    Asset Allocation     as on 31-May-07
Sector                 % Of Asset         Particulars          Percentage
Banks                  81.43              Equity Shares        93.59
Finance                12.16              Net Current Assets   6.41
Net Current Assets     6.41




Smart ICBM                               39
b) Reliance Banking Fund

Scheme Snapshot                           Asset Allocation     as on 30-Jun-07
Fund Manager           Sunil Singhania    Particulars          Percentage
Scheme Objective       Equity             Equity Shares        92.39
Scheme Sub-Objective   Sectoral-Bank
                                          Cash And Other
Scheme Type            Open                                    7.61
                                          Assets
Min. Investment(Rs)    25000
Total Assets(Rs./Mn)   1126.4
Registrars             Kotak
                       Consultants
                       Limited
Launch Date            08-MAY-03


Sector Allocation as on 30-Jun-07         Asset Allocation     as on 30-Jun-07
                                          Particulars          Percentage
Sector                % Of Asset
                                          Equity Shares        92.39
Banks                 72.40
                                          Cash And Other
Call And Other Assets 27.60               Assets
                                                               7.61



3. Sectoral-Basic:-

UTI Petrol Fund

Scheme Snapshot                           Asset Allocation     as on 31-May-07
Fund Manager           Gautami Desai      Particulars          Percentage
Scheme Objective       Equity             Equity Shares        98.59
Scheme Sub-Objective   Sectoral-Basic
                                          Net Current Assets   1.41
Scheme Type            Open
Min. Investment(Rs)    5000
Total Assets(Rs./Mn)   1931.21
Registrars             UTI Investor
                       Services Ltd.
Launch Date            27-MAY-99


Sector Allocation      as on 31-May-07    Asset Allocation     as on 31-May-07
Sector                 % Of Asset         Particulars          Percentage
Petroleum Products     51.39              Equity Shares        98.59
Oil                    21.89              Net Current Assets   1.41
Gas                    21.58
Chemicals              3.74
Net Current Assets     1.41



Smart ICBM                               40
4. Sectoral-FMCG:-

a) Franklin FMCG Fund

Scheme Snapshot                        Asset Allocation         as on 30-Jun-07
                     K N Siva          Particulars              Percentage
Fund Manager         Subramanian,Anil Equity Shares             96.65
                     Prabhudas
                                       Other Current Assets     3.35
Scheme Objective     Equity
Scheme Sub-Objective Sectoral-FMCG
Scheme Type          Open
Min. Investment(Rs) 5000
Total Assets(Rs./Mn) 364.76
Registrars           Franklin
                     Templeton Asset
                     Management
                     (India) Pvt. Ltd.
Launch Date          15-MAR-99


Sector Allocation     as on 31-Mar-07    Asset Allocation       as on 30-Jun-07
Sector                % Of Asset         Particulars            Percentage
FMCG                  97.62              Equity Shares          96.65
Cash & Other Assets   2.38               Other Current Assets   3.35



b) Magnum Sector Funds Umbrella - FMCG Fund

            Scheme Snapshot               Asset Allocation   as on 31-May-07
                     Sanjay Sinha and    Particulars       Percentage
Fund Manager
                     Nimesh Chandan      Equity Shares                   92.74
Scheme Objective     Equity
                                         Cash And Other
Scheme Sub-Objective Sectoral-FMCG                                        7.26
                                         Assets
Scheme Type          Open
Min. Investment(Rs) 2000
Total Assets(Rs./Mn) 122.5
Registrars           Computer Age
                     Management
                     Services Pvt.Ltd.
Launch Date          04-JUN-99




Smart ICBM                              41
  Sector Allocation as on 31-May-07           Asset Allocation     as on 31-May-07
Sector                % Of Asset           Particulars
Consumer Non Durables            65.52                           Percentage
                                           Equity Shares                       92.74
Consumer Durables                17.14
                                           Cash And Other
Cash And Other Assets             7.26     Assets
                                                                                  7.26
Textile Products                  5.22
Retailing                         4.86

c) Prudential ICICI FMCG Fund

Scheme Snapshot                            Asset Allocation as on 30-Jun-07
Fund Manager           Prashant Kothari    Particulars          Percentage
Scheme Objective       Equity              Equity Shares        97.61
Scheme Sub-Objective   Sectoral-FMCG
                                           Call Money / Reverse
Scheme Type            Open                                     3.61
                                           Repos / Cblo
Min. Investment(Rs)    5000
Total Assets(Rs./Mn)   1001.45             Other Current Assets -1.22
Registrars             Computer Age
                       Management
                       Services Pvt.Ltd.
Launch Date            16-FEB-99


                            as on 30-      Asset Allocation     as on 30-Jun-07
Sector Allocation
                            Jun-07         Particulars          Percentage
Sector                      % Of Asset     Equity Shares        97.61
Consumer Non Durables       75.65          Call Money / Reverse
                                                                3.61
Retailing                   20.92          Repos / Cblo
                                           Other Current Assets -1.22
Other Current Assets        -1.22
Call Money / Reverse Repos
                           3.61
/ Cblo
Industrial Products        1.04




Smart ICBM                               42
5. Sectoral- Healthcare:-

a) J M Healthcare Sector Fund

Scheme Snapshot                            Asset Allocation   as on 31-May-07
Fund Manager         Sandeep Neema         Particulars        Percentage
Scheme Objective     Equity                Equity Shares      97.02
                     Sectoral-
Scheme Sub-Objective                       Call And Other
                     Healthcare                               2.98
                                           Assets
Scheme Type          Open
Min. Investment(Rs) 5000
Total Assets(Rs./Mn) 95.9
Registrars           Karvy
                     Computershare
                     Pvt Ltd
Launch Date          01-JUN-04


Sector Allocation       as on 31-May-07    Asset Allocation   as on 31-May-07
Sector                  % Of Asset         Particulars        Percentage
                                           Equity Shares      97.02
Pharmaceuticals         97.02
                                           Call And Other
Call And Other Assets   2.98                                  2.98
                                           Assets

6. Sectoral-Infrastructure

a) Tata Infrastructure Fund

Scheme Snapshot                            Asset Allocation   as on 30-Jun-07
Fund Manager         M Venugopal           Particulars        Percentage
Scheme Objective     Equity                Equity Shares      94.35
                     Sectoral-
Scheme Sub-Objective                       Cash And Other
                     Infrastructure                           5.65
                                           Assets
Scheme Type          Open
Min. Investment(Rs) 5000
Total Assets(Rs./Mn) 7886.28
Registrars           Computer Age
                     Management
                     Services Pvt.Ltd.
Launch Date          25-NOV-04




Smart ICBM                                43
                             as on 30-        Asset Allocation as on 30-Jun-07
   Sector Allocation
                              Jun-07         Particulars       Percentage
Sector                     % Of Asset        Equity Shares                 94.35
Industrial Capital Goods            27.29    Cash And Other
                                                                            5.65
Cement                              16.78    Assets
Construction                        16.49
Power                                 7.00
Cash And Other Assets                 5.65
Industrial Products                   4.81
Non-ferrous Metals                    4.55
Ferrous Metals                        3.96
Petroleum Products                    3.83
Telecommunications -
                                     3.30
service
Consumer Durables                    2.75
Transportation                        1.12
Dredging                              1.11
Oil                                  0.97
Construction Materials               0.40

b) Birla Infrastructure Fund

Scheme Snapshot                              Asset Allocation   as on 30-Jun-07
Fund Manager           Mahesh Patil          Particulars        Percentage
Scheme Objective       Equity                Equity Shares      90.96
Scheme Sub-            Sectoral-             Cash And Other
Objective              Infrastructure                           9.04
                                             Assets
Scheme Type            Open
Min. Investment(Rs)    5000
Total Assets(Rs./Mn)   5495.77
Registrars             Computer Age
                       Management
                       Services Pvt.
                       Ltd.
Launch Date            31-JAN-06




Smart ICBM                               44
Sector Allocation                                as on 30-Jun-07
Sector                                           % Of Asset
Industrial Capital Goods                         27.33
Cash And Other Assets                            9.04
Banks                                            8.11
Industrial Products                              7.67
Auto                                             7.39
Cement                                           6.97
Other Equities                                   6.63
Construction                                     5.55
Telecommunications -service                      4.85
Transportation                                   3.85
Non-ferrous Metals                               3.69
Hotels                                           3.44
Ferrous Metals                                   3.41
Power                                            2.07

c) Can Infrastructure Fund

Scheme Snapshot                           Asset Allocation   as on 30-Jun-07
Fund Manager          Umesh Kamath        Particulars        Percentage
Scheme Objective      Equity              Equity Shares      76.63
Scheme Sub-           Sectoral-
                                          T - Bill           16.69
Objective             Infrastructure
Scheme Type           Open                Current Net
                                                             5.80
Min.                                      Assets
                      5000                G O I Securities   0.89
Investment(Rs)
Total
                      884.65
Assets(Rs./Mn)
Registrars            Computer Age
                      Management
                      Services Limited
Launch Date           11-OCT-05




Smart ICBM                               45
                             as on 30-        Asset Allocation as on 30-Jun-07
   Sector Allocation
                              Jun-07         Particulars        Percentage
Sector                     % Of Asset        Equity Shares                 76.63
Industrial Capital Goods            19.63    T - Bill                      16.69
T - Bill                            16.69    Current Net Assets             5.80
Construction                        11.90    G O I Securities               0.89
Cement                              10.83
Industrial Products                   6.64
Current Net Assets                    5.80
Power                                 5.43
Petroleum Products                    4.79
Gas                                   3.25
Oil                                   2.73
Telecom Equipment                     2.45
Transportation                        2.10
Finance                               1.49
Engineering                           1.46
Telecommunications -
                                      1.41
service
Banks                                 1.31
Chemicals                            0.90
G O I Securities                     0.89
Consumer Durables                    0.32

7. Sectoral Media and Entertainment:-

Reliance Media and Entertainment Fund

Scheme Snapshot                              Asset Allocation   as on 30-Jun-07
Fund Manager         Sailesh Raj Bhan        Particulars        Percentage
Scheme Objective     Equity                  Equity Shares      94.76
                     Sectoral-Media
Scheme Sub-                                  Cash And Other
                     and                                        5.24
Objective                                    Assets
                     Entertainment
Scheme Type          Open
Min. Investment(Rs) 10000
Total Assets(Rs./Mn) 336.8
Registrars           Karvy
                     Consultants
                     Limited
Launch Date          16-SEP-04




Smart ICBM                               46
8.Sectoral-Pharma:-

a) Magnum Sector Funds Umbrella - Pharma Fund und

            Scheme Snapshot             Asset Allocation as on 30-Jun-07
                     Sanjay Sinha and  Particulars        Percentage
Fund Manager
                     Nimesh Chandan    Equity Shares                 98.18
Scheme Objective     Equity
                                       Net Current Assets             1.82
Scheme Sub-Objective Sectoral-Pharma
Scheme Type          Open
Min. Investment(Rs) 2000
Total Assets(Rs./Mn) 673.8
Registrars           Computer Age
                     Management
                     Services Pvt.Ltd.
Launch Date          04-JUN-99

         Sector Allocation      as on 30-Jun-07        Asset Allocation       as on 30-Jun-07
Sector                         % Of Asset          Particulars            Percentage
Pharmaceuticals                             83.20 Equity Shares                             98.18
                                                  Net Current Assets                         1.82
Healthcare Services                         12.00
Fertilisers And Pesticides                   2.98
Cash And Other Assets                        1.82


b) Franklin Pharma Fund

Scheme Snapshot                                Asset Allocation           as on 30-Jun-07
Fund Manager                 Satish Ramanathan Particulars                Percentage
Scheme Objective             Equity            Equity Shares              94.12
Scheme Sub-Objective         Sectoral-Pharma
                                               Other Current Assets       5.88
Scheme Type                  Open
Min. Investment(Rs)          5000
Total Assets(Rs./Mn)         636.72
Registrars                   Franklin
                             Templeton Asset
                             Management
                             (India) Pvt. Ltd.
Launch Date                  15-MAR-99


                             as on 31-Dec-         Asset Allocation       as on 30-Jun-07
Sector Allocation
                             04                    Particulars            Percentage
Sector                       % Of Asset            Equity Shares          94.12
Pharmaceuticals              93.14                 Other Current
                                                                          5.88
Other Current                                      Assets
                             6.86
Assets




Smart ICBM                                        47
c) UTI Pharma and Healthcare Fund

Scheme Snapshot                        Asset Allocation         as on 31-May-07
Fund Manager           Sanjay Dongre   Particulars              Percentage
Scheme Objective       Equity          Equity Shares            99.00
Scheme Sub-Objective   Sectoral-Pharma
                                       Net Current Assets       1.00
Scheme Type            Open
Min. Investment(Rs)    5000
Total Assets(Rs./Mn)   854.8
Registrars             UTI Investor
                       Services Ltd.
Launch Date            27-MAY-99

Sector Allocation      as on 31-May-07     Asset Allocation     as on 31-May-07
Sector                 % Of Asset          Particulars          Percentage
Pharmaceuticals        99.00               Equity Shares        99.00
Net Current Assets     1.00                Net Current Assets   1.00


d) Reliance Pharma Fund

Scheme Snapshot                            Asset Allocation     as on 30-Jun-07
Fund Manager           Sailesh Raj Bhan    Particulars          Percentage
Scheme Objective       Equity              Equity Shares        94.87
Scheme Sub-Objective   Sectoral-Pharma
                                           Cash And Other
Scheme Type            Open                                     5.13
                                           Assets
Min. Investment(Rs)    10000
Total Assets(Rs./Mn)   1077.1
Registrars             Kotak
                       Consultants
                       Limited
Launch Date            10-MAY-04

9. Sectoral-Power:-

Reliance Diversified Power Sector Fund

Scheme Snapshot                            Asset Allocation     as on 30-Jun-07
Fund Manager           Sunil B Singhania   Particulars          Percentage
Scheme Objective       Equity              Equity Shares        92.21
Scheme Sub-Objective   Sectoral-Power
                                           Debt And Cash And
Scheme Type            Open                                     7.79
                                           Other Assets
Min. Investment(Rs)    10000
Total Assets(Rs./Mn)   5534.2
Registrars             Kotak Consultants
                       Limited
Launch Date            29-MAR-04




Smart ICBM                               48
                      as on 30-Jun-         Asset Allocation   as on 30-Jun-07
Sector Allocation
                      04                    Particulars        Percentage
Sector                % Of Asset            Equity Shares      92.21
Treasury Bills        40.77                 Debt And Cash
                                                               7.79
Engineering           22.68                 And Other Assets
Call And Other Assets 12.14
Bonds                 10.40
Public Sector Units
                      7.02
Bonds
Steel                 4.04
Cement                1.75
Diversified           0.40
Power Equipments      0.19

10.Sectoral-Service:-

a) Prudential ICICI Services Industries Fund

Scheme Snapshot                             Asset Allocation   as on 30-Jun-07
Fund Manager            Deven Sangoi        Particulars        Percentage
Scheme Objective        Equity              Equity Shares      89.10
Scheme Sub-             Sectoral-           Call Money /
Objective               Services            Reverse Repos /    8.90
Scheme Type             Open                Cblo
Min. Investment(Rs)     5000
                                            Other Current
Total Assets(Rs./Mn)    3518.08                                0.97
                                            Assets
Registrars              Computer Age
                        Management          Term Deposits      0.56
                        Services            Futures            0.47
                        Pvt.Ltd.
Launch Date             13-OCT-05

                              as on 30-   Asset Allocation as on 30-Jun-07
    Sector Allocation
                               Jun-07    Particulars          Percentage
Sector                       % Of Asset  Equity Shares                   89.10
I T - Software                      16.12Call Money / Reverse
                                                                          8.90
Banks                               12.44Repos / Cblo
                                         Other Current Assets             0.97
Auto And Ancillaries                 9.35
                                         Term Deposits                    0.56
Call Money / Reverse Repos
                                    8.90 Futures                          0.47
/ Cblo
Transportation                       5.41
Industrial Capital Goods             5.38
Construction                         4.91


Smart ICBM                              49
Finance                           4.74
Hotels                            4.53
Pesticides                        4.49
Pharmaceuticals                   4.37
Textiles Products                 4.29
Retailing                         3.64
Power                             2.34
Media And Entertainment           1.99
Industrial Products               1.86
Consumer Durables                 1.65
Telecommunications -service       1.59
Other Current Assets              0.97
Term Deposits                     0.56
Futures                           0.47
Gas                               0.00

b) Tata Service Industries Fund

Scheme Snapshot                          Asset Allocation   as on 30-Jun-07
Fund Manager         M Venugopal         Particulars        Percentage
Scheme Objective     Equity              Equity Shares      97.08
Scheme Sub-          Sectoral-           Cash And Other
Objective            Services                               2.82
                                         Assets
Scheme Type          Open
                                         Debt               0.10
Min. Investment(Rs) 5000
Total Assets(Rs./Mn) 1716.22
Registrars           Kotak
                     Computershare
                     Private Limited
Launch Date          09-FEB-05


Sector Allocation                               as on 30-Jun-07
Sector                                          % Of Asset
I T - Software                                  33.67
Hotels                                          24.68
Media And Entertainment                         11.78
Construction                                    10.10
Retailing                                       6.35
Telecommunications -service                     5.99
Cash And Other Assets                           2.82
Banks                                           1.40
Dredging                                        1.24

Smart ICBM                           50
Textile Products                                1.10
Finance                                         0.75
Debt                                            0.10

11.Sectoral- Technology:-
a) Franklin Infotech Fund

Scheme Snapshot                          Asset Allocation    as on 30-Jun-07
Fund Manager           S.Chellappa       Particulars         Percentage
Scheme Objective       Equity            Equity Shares       99.26
Scheme Sub-
                       Sectoral-TMT      Other Current
Objective                                                    0.74
                                         Assets
Scheme Type            Open
                                         Unlisted Equities   0.00
Min. Investment(Rs)    5000
Total Assets(Rs./Mn)   1452.29
Registrars             Franklin
                       Templeton
                       Asset
                       Management
                       (India) Pvt.
                       Ltd.
Launch Date            22-JUL-98

                       as on 31-Mar-     Asset Allocation    as on 30-Jun-07
Sector Allocation
                       00                Particulars         Percentage
Sector                 % Of Asset        Equity Shares       99.26
IT                     83.85             Other Current
                                                             0.74
Cash And Other                           Assets
                       16.11             Unlisted Equities   0.00
Assets

b) Birla Sun Life New Millennium

Scheme Snapshot                          Asset Allocation    as on 30-Jun-07
                     Mahesh Patil,       Particulars         Percentage
Fund Manager
                     Nimesh Chandan      Equity Shares       90.48
Scheme Objective     Equity
                                         Cash And Other
Scheme Sub-Objective Sectoral-TMT                            9.52
                                         Assets
Scheme Type          Open
Min. Investment(Rs) 5000
Total Assets(Rs./Mn) 850.34
Registrars           Computer Age
                     Management
                     Services Pvt.Ltd.
Launch Date          15-DEC-99



Smart ICBM                             51
                           as on 30-          Asset Allocation       as on 30-Jun-07
Sector Allocation
                           Jun-07             Particulars            Percentage
Sector                     % Of Asset         Equity Shares          90.48
I T - Software             71.31              Cash And Other
                                                                     9.52
Telecommunications -                          Assets
                        12.86
service
Cash And Other Assets   9.52
Media And Entertainment 6.32
c) Kotak Technology Plan

Scheme Snapshot                               Asset Allocation       as on 30-Jun-07
Fund Manager           Sajit Pisharodi        Particulars            Percentage
Scheme Objective       Equity                 Equity Shares          95.73
Scheme Sub-Objective   Sectoral-TMT
                                              Collateral Borrowing
Scheme Type            Open
                                              And Lending            4.59
Min. Investment(Rs)    5000
                                              Obligation
Total Assets(Rs./Mn)   436.03
Registrars             Computer Age           Term Deposits          1.15
                       Management             Unlisted Equities      0.00
                       Services Pvt.Ltd.      Net Current Assets /
                                                                     -1.46
Launch Date            21-MAR-00              Liabilities


                                 as on 30-    Asset Allocation       as on 30-Jun-07
Sector Allocation
                                 Jun-07       Particulars            Percentage
Sector                           % Of Asset   Equity Shares          95.73
I T - Software                   93.91        Collateral Borrowing
                                              And Lending            4.59
Net Current Assets / Liabilities -1.46
                                              Obligation
Collateral Borrowing And                      Term Deposits          1.15
                                 4.59
Lending Obligation
                                              Unlisted Equities      0.00
Telecommunications -service 1.82              Net Current Assets /
Term Deposits                    1.15                                -1.46
                                              Liabilities

d) Magnum Sector Funds Umbrella - IT Fund
Scheme Snapshot                        Asset Allocation              as on 30-Jun-07
                     Sanjay Sinha and  Particulars                   Percentage
Fund Manager
                     Nimesh Chandan    Equity Shares                 95.19
Scheme Objective     Equity
                                       Net Current Assets            4.81
Scheme Sub-Objective Sectoral-TMT
Scheme Type          Open
Min. Investment(Rs) 2000
Total Assets(Rs./Mn) 564.5
Registrars           Computer Age
                     Management
                     Services Pvt.Ltd.
Launch Date          04-JUN-99


Smart ICBM                                52
                        as on 30-Jun-    Asset Allocation     as on 30-Jun-07
Sector Allocation
                        07               Particulars          Percentage
Sector                  % Of Asset       Equity Shares        95.19
IT                      75.22            Net Current Assets   4.81
Service                 6.69
Net Current Assets      4.81
Telecom                 3.08
Media And
                        3.05
Entertainment
Consumer Goods          2.31
Pharmaceuticals         1.17
Others                  3.67

e) UTI Software Fund

Scheme Snapshot                          Asset Allocation     as on 30-Jun-07
Fund Manager           Sanjay Dongre     Particulars          Percentage
Scheme Objective       Equity            Equity Shares        98.93
Scheme Sub-Objective   Sectoral-TMT
                                         Net Current Assets   1.07
Scheme Type            Open
Min. Investment(Rs)    5000
Total Assets(Rs./Mn)   1149.73
Registrars             UTI Investor
                       Services Ltd.
Launch Date            27-MAY-99

                        as on 30-Jun-    Asset Allocation     as on 30-Jun-07
Sector Allocation
                        07               Particulars          Percentage
Sector                  % Of Asset       Equity Shares        98.93
I T - Software          94.43            Net Current Assets   1.07
Media And
                        4.50
Entertainment
Net Current Assets      1.07
f) UTI Services Sector Fund
Scheme Snapshot                          Asset Allocation     as on 30-Jun-07
Fund Manager           Gautami Desai     Particulars          Percentage
Scheme Objective       Equity            Equity Shares        98.37
Scheme Sub-Objective   Sectoral-TMT
                                         Net Current Assets   1.63
Scheme Type            Open
Min. Investment(Rs)    5000              Unlisted Equities    0.00
Total Assets(Rs./Mn)   1933
Registrars             UTI Investor
                       Services Ltd.
Launch Date            27-MAY-99



Smart ICBM                              53
                           as on 30-       Asset Allocation     as on 30-Jun-07
Sector Allocation
                           Jun-07          Particulars          Percentage
Sector                     % Of Asset      Equity Shares        98.37
I T - Software             28.35           Net Current Assets   1.63
Banks                      14.26           Unlisted Equities    0.00
Textile Products           9.94
Hotels                     7.35
Telecommunications -
                           6.92
service
Construction               6.71
Power                      4.61
Industrial Capital Goods   4.12
Finance                    4.05
Transportation             3.86
Media And Entertainment    3.22
Gas                        2.97
Courier                    2.02
Net Current Assets         1.63
Unclassified               0.00



g) Prudential ICICI Technology Fund

Scheme Snapshot                            Asset Allocation as on 30-Jun-07
Fund Manager           Deven Sangoi        Particulars          Percentage
Scheme Objective       Equity              Equity Shares        91.89
Scheme Sub-Objective   Sectoral-TMT
                                           Call Money / Reverse
Scheme Type            Open                                     7.22
                                           Repos / Cblo
Min. Investment(Rs)    5000
Total Assets(Rs./Mn)   1046.92             Other Current Assets 0.88
Registrars             Computer Age
                       Management
                       Services Pvt.Ltd.
Launch Date            05-FEB-00




Smart ICBM                              54
                         as on 30-         Asset Allocation      as on 30-Jun-07
Sector Allocation
                         Jun-07            Particulars           Percentage
Sector                   % Of Asset        Equity Shares         91.89
I T - Software           64.73             Call Money /
Media And Entertainment 11.80              Reverse Repos /       7.22
                                           Cblo
Pharmaceuticals          10.57
                                           Other Current
Call Money / Reverse                                             0.88
                         7.22              Assets
Repos / Cblo
Industrial Capital Goods 2.31
Telecommunications -
                         2.24
service
Other Current Assets     0.88
Consultancy Services     0.25

i) DSP Merrill Lynch Technology.com Fund

Scheme Snapshot                            Asset Allocation      as on 30-Jun-07
Fund Manager           Apoorva Shah        Particulars           Percentage
Scheme Objective       Equity              Equity Shares         98.76
Scheme Sub-Objective   Sectoral-TMT
                                           Net Receivables /
Scheme Type            Open                                      0.85
                                           Payables
Min. Investment(Rs)    1000
Total Assets(Rs./Mn)   256.65              Cblo / Reverse Repo
                                                                 0.39
Registrars             Computer Age        Investments
                       Management
                       Services Pvt.Ltd.
Launch Date            18-MAY-00


                             as on 30-     Asset Allocation      as on 30-Jun-07
Sector Allocation
                             Jun-07        Particulars           Percentage
Sector                       % Of Asset    Equity Shares         98.76
I T - Software               69.56         Net Receivables /
                                                                 0.85
Media And Entertainment      10.59         Payables
                                           Cblo / Reverse Repo
Telecommunications -                                             0.39
                             10.45         Investments
service
Industrial Capital Goods     4.53
Computer Hardware            3.19
Net Receivables / Payables   0.85
Internet Service Provider    0.43
Cblo / Reverse Repo
                             0.39
Investments




Smart ICBM                                55
Conceptual background of the study:-

With a plethora of schemes to choose from, the retail investor faces problems in
selecting funds. Factors such as investment strategy and management style are
qualitative, but the funds record is an important indicator too. Though past
performance alone can not be indicative of future performance, it is, frankly, the
only quantitative way to judge how good a fund is at present. Therefore, there is a
need to correctly assess the past performance of different mutual funds.
Worldwide, good mutual fund companies over are known by their AMCs and this
fame is directly linked to their superior stock selection skills. For mutual funds to
grow, AMCs must be held accountable for their selection of stocks. In other
words, there must be some performance indicator that will reveal the quality of
stock selection of various AMCs.
Return alone should not be considered as the basis of measurement of the
performance of a mutual fund scheme, it should also include the risk taken by the
fund manager because different funds will have different levels of risk attached to
them. For evaluating the performance of selected Sectoral Mutual Fund schemes
risk-return relation models have been used like:

Ø The Treynor Measure

Ø The Sharpe Measure

Ø Jenson Model

Ø Fama Model

The Treynor Measure
Developed by Jack Treynor, this performance measure evaluates funds on the
basis of Treynor's Index. This Index is a ratio of return generated by the fund
over and above risk free rate of return (generally taken to be the return on
securities backed by the government, as there is no credit risk associated), during
a given period and systematic risk associated with it (beta). Symbolically, it can
be represented as:
Treynor's Index (Ti) = (Ri - Rf)/Bi.
Where, Ri represents return on fund, Rf is risk free rate of return and
Bi is beta of the fund.
All risk-averse investors would like to maximize this value. While a high and
positive Treynor's Index shows a superior risk-adjusted performance of a fund, a
low and negative Treynor's Index is an indication of unfavorable performance.

The Sharpe Measure
In this model, performance of a fund is evaluated on the basis of Sharpe Ratio,
which is a ratio of returns generated by the fund over and above risk free rate of
return and the total risk associated with it. According to Sharpe, it is the total risk


Smart ICBM                                56
of the fund that the investors are concerned about. So, the model evaluates funds
on the basis of reward per unit of total risk. Symbolically, it can be written as:
Sharpe Index (Si) = (Ri - Rf)/Si
Where, Si is standard deviation of the fund.
While a high and positive Sharpe Ratio shows a superior risk-adjusted
performance of a fund, a low and negative Sharpe Ratio is an indication of
unfavorable performance.

Comparison of Sharpe and Treynor
Sharpe and Treynor measures are similar in a way, since they both divide the risk
premium by a numerical risk measure. The total risk is appropriate when we are
evaluating the risk return relationship for well-diversified portfolios. On the other
hand, the systematic risk is the relevant measure of risk when we are evaluating
less than fully diversified portfolios or individual stocks. For a well-diversified
portfolio the total risk is equal to systematic risk. Rankings based on total risk
(Sharpe measure) and systematic risk (Treynor measure) should be identical for a
well-diversified portfolio, as the total risk is reduced to systematic risk.
Therefore, a poorly diversified fund that ranks higher on Treynor measure,
compared with another fund that is highly diversified, will rank lower on Sharpe
Measure.

Jenson Model
Jenson's model proposes another risk adjusted performance measure. This
measure was developed by Michael Jenson and is sometimes referred to as the
Differential Return 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 (Ri) can be calculated
as:-
Ri = Rf + Bi (Rm - Rf)
Where, Rm is average market return during the given period. After
calculating it, alpha can be obtained by subtracting required return
from the actual return of the fund.
Higher alpha represents superior performance of the fund and vice versa.
Limitation of this model is that it considers only systematic risk not the entire
risk associated with the fund and an ordinary investor can not mitigate
unsystematic risk, as his knowledge of market is primitive.

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.



Smart ICBM                               57
The net selectivity represents the stock selection skill of the fund manager, as it
is the excess return over and above the return required to compensate for the
total risk taken by the fund manager. Higher value of which indicates that fund
manager has earned returns well above the return commensurate with the level
of risk taken by him.
Required return can be calculated as:-
Ri = Rf + Si/Sm*(Rm - Rf)
Where, Sm is standard deviation of market returns. The net selectivity is
then calculated by subtracting this required return from the actual return of the
fund.
Among the above performance measures, two models namely, Treynor
measure and Jenson model use systematic risk based on the premise
that the unsystematic risk is diversifiable. These models are suitable
for large investors like institutional investors with high risk taking capacities
as they do not face paucity of funds and can invest in a number of options to
dilute some risks. For them, a portfolio can be spread across a number of stocks
and sectors. However, Sharpe measure and Fama model that consider
the entire risk associated with fund are suitable for small investors, as
the ordinary investor lacks the necessary skill and resources to diversified.
Moreover, the selection of the fund on the basis of superior stock selection ability
of the fund manager will also help in safeguarding the money invested to a great
extent. The investment in funds that have generated big returns at higher levels
of risks leaves the money all the more prone to risks of all kinds that may exceed
the individual investors' risk appetite.



BETA
Beta measures a stock's volatility, the degree to which its price fluctuates in
relation to the overall market. In other words, it gives a sense of the
stock's market risk compared to the greater market. Beta is used also to compare
a stock's market risk to that of other stocks. Investment analysts use the Greek
letter 'ß' to represent beta.

This measure is calculated using regression analysis. A beta of 1 indicates that
the security's price tends to move with the market. A beta greater than 1 indicates
that the security's price tends to be more volatile than the market, and a beta less
than 1 means it tends to be less volatile than the market.

β=      rim ×  i ×  m
     ________________________


                 2
                  m
Smart ICBM                               58
rim    is correlation coefficient between market returns and fund returns.

i    is standard deviation of fund returns.(Si)

 m is standard deviation of market returns.(Sm)
m
 2
       is market variance.


Coefficient of Determination ( R 2 ) --- a measure of reliability of Beta

Beta depends on the index used to calculate it. It can happen that the index bears
no correlation with the movements in the fund. Due to this reason, it is essential
to take a look at statistical value called Coefficient of Determination along with
Beta. It shows how reliable the beta number is. It varies between zero and one.
Value of 1 indicates perfect correlation with the indx. Thus, an If ( R 2 ) =0.64 it
implies that 64% of the variation in the portfolio returns is due to variations in
the market returns. Mathematically it is the square of correlation coefficient(R).




           n {( x  x m ean)  ( y  y m ean)}
R=       -----------------------------------------------

            (x  x    m ean   ) 2   ( y  y m ean) 2

Where X and Y are returns on the portfolio and returns on the market
respectively.
Beta and ( R 2 ) should thus be used together when examining a fund‟s risk profile.

NET ASSET VALUE (NAV)

NAV per unit of a scheme on a day is the net market value of the securities held
by the total no. of the units of the scheme on the particular day. It is actually the
value of of net asset per unit. Since the market value of securities changes
everyday, NAV of a fund also varies on a day to day basis. NAV‟s for open ended
schemes are required to be disclosed a daily basis(business day).

Smart ICBM                                       59
                  Net Assets of the scheme
NAV =            ___________________

                 No. of units outstanding


Where,
Numerator= Market value of investment+receivables+other Accrued Income
+Other Assets- Accrued Expenses-Other Payables-Other Liabilities.

Standard Deviation- a measure of Total Risk
Standard Deviation is the most common statistical measure of judging a fund‟s
volatility and risk. It measures a fund‟s total risk i.e. sum of systematic risk and
unsystematic risk. Mathematically it gives a „quality rating‟ of an avg. The SD of
an avg. is the amt. By which the no. that go in to an avg. deviate from that avg. It
tells us how closely an avg. represents the underlying avg. But one thing thing to
be kept in mind is that a high Standard Deviation may be a measure of volatility,
but it does not necessarily mean that such a fund is worse than one with a low
Standard Deviation. If the first fund is a much higher performer than the second
one, the deviation will not matter much.




                     1
  SD=
                     n
                        ( xi  x m ean) 2
 (x  x m ean) 2 gives the square of the sum of differences of each value in the
       i

sample from the mean of the sample of „n‟ element.

Note: - For this project following tools have been used:-

          Standard Deviation
          Beta
          Sharp Ratio
          R-Square




Smart ICBM                                   60
Methodology

Sapling Design

Sampling method use is non probabilistic judgmental sampling. The Mutual
Fund Scheme for the study have been selected based on following 3 criteria

1        Type of the scheme                    Open-ended Sectoral
                                               Funds(growth)
2        Minimum Assets Under Mgmt.            Rs. 100 Crore
3        Inception Date                        Prior to 1st April, 2003

Growth option for all the selected sheme has been considered.


Sample Size

The sample size of this study is 4 sectors. There were 11 sectors but following 7
could not qualify:-

    1.   Auto Sector
    2.   Basic
    3.   Infrastructure.
    4.   Health Care
    5.   Media
    6.   Power
    7.   Service




Smart ICBM                               61
  Research Design

     1. Benchmark Index

     For this study the 50 shares market index S&P CNX NIFTY has been used
     as the market index.

     2. Period of study

     Period of study has been taken as 3 years starting from 1st April,2004 to
     21st July 2007.

     3. Risk Free Rate Of Return

     Risk free rate of return refers to that minimum return on an investment
     that has no risk of loosing the investment over which it is earned. For this
     purpose of this study risk free rate of return is represented by 91 days
     Treasury bill of 5.32%.




Smart ICBM                             62
CHAPTR 5 :- DATA ANALYSIS




Smart ICBM     63
  Data Collection

  Following is a description of the sources & methodology followed to
  collect the data required.

     1. NAV

     For the study NAVs of the funds have been taken at every weekend
     i.e. the NAVs on Friday during the period of the study have been
     considered.
     NAV data have been taken from the website www.myris.com and in
     some cases the websites of the respective funds.

     2. Benchmark Index

     The data is sourced from the website of National Stock Exchange.
     www.nse-india.com

     3. Selection of the Schemes

     Details pertaining to the type of the scheme, Assets under
     management and Launch date were sourced from the websites
     www.valueresearchonline.com.




Smart ICBM                         64
      TABLE 3: Fund ranking on the basis of Total Risk(Standard Deviation of
      weekly returns)

Sr. No.   Scheme Name                     Sector            Standard
                                                            Deviation

1         FranklinFMCG                    FMCG              6.19

2         UTI software                    TECH.             6.41

3         Magnum FMCG                     FMCG              6.54

4         Franklin InfoTech.              TECH.             6.58

5         Birla Sunlife new millennium    TECH.             6.75

6         DSPML Technology                TECH.             6.75

7         Kotak Tech                      TECH              6.89

8         Franklin Pharma                 PHARMA            6.96

9         UTI Pharma & Healthcare         PHARMA            7.12

10        Magnum IT                       TECH.             7.30

11        Prudential ICICI FMCG           FMCG              7.31

12        Prudential ICICI Technology     TECH.             7.59

13        Magnum Pharma                   PHARMA            7.87

14        Reliance Banking                BANKING           7.90




Smart ICBM                               65
      TABLE 4: Fund ranking on the basis of Sharp Ratio

Sr. No.   Scheme Name                     Sector          Sharp Ratio


          S&P CNX NIFTY                                   5.8077

1         Birla Sunlife new millennium    TECH            .50

2         DSPML Technology                TECH.           .49

3         Franklin InfoTech.              TECH.           .49

4         Prudential ICICI FMCG           FMCG.           .49

5         Magnum IT                       TECH.           .48

6         UTI Software                    TECH.           .48

7         Magnum Pharma                   PHARMA          .47

8         Franklin FMCG                   FMCG            .44

9         Prudential ICICI Technology     TECH.           .43

10        Magnum FMCG                     FMCG            .42

11        Kotak                           TECH.           .40

12        Franklin Pharma                 PHARMA          .32

13        Reliance Banking                BANKING         .31

14        UTI Pharma & Healthcare         PHARMA          .29




Smart ICBM                               66
      Table 5:- Fund ranking on the basis of Beta and R-square

Sr. No.        Scheme Name         Sector      Beta              R2

               S&P CNX NIFTY       -           1.0000            1.0000

1              Franklin            TECH        .92               .96
               InfoTech
2              Kotak Tech          TECH        .92               .89

3              Magnum IT           TECH        .90               .75

4              Magnum Pharma       PHARMA      .89               .78

5              UTI Pharma &        PHARMA      .89               .95
               Healthcare
6              UTI Software        TECH        .87               .91

7              Franklin Pharma     PHARMA      .86               .94

8              Prudential ICICI    TECH        .84               .60
               Tech
9              DSPML               TECH        .84               .76
               Technology
10             Birla Sunlife New   TECH        .81               .72
               Millennium
11             Reliance Banking    BANKING     .73               .76

12             Prudential ICICI    FMCG        .72               .57
               FMCG
13             Franklin FMCG       FMCG        .71               .77

14             Magnum FMCG         FMCG        .61               .52




Smart ICBM                             67
     OBSERVATIONS AND INFERENCES

     Total Risk (Standard Deviation)

All 14 funds are having high standard deviation as compared to
market. It is between 6 to 8 for all sectoral funds qualified. Franklin
FMCG and UTI Software are the best among all with standard
deviation of 6.19 and 6.41
Reliance banking and Magnum Pharma are bad performers among
all with standard deviation of 7.90 and 7.87.


     Systematic Risk(Beta) and Coefficient of Determination( R 2 )

  None of the schemes have beta greater than 1(i.e. market beta)
suggesting that all these funds were holding a portfolio which was less
risky as compared with the market portfolio. Still they have generated
returns greater than the benchmark index‟s rate of return. This shows
a good performance.
Avg. beta for the group works out to .82214 and 9 schemes have beta
value greater than this.
3 schemes have beta greater than 0.9 making them riskier in the
group but still lesser risky than market portfolio.
Franklin Infotech and Kotak tech have performed well on this
parameter. They both were having beta as .92. But Franklin Infotech is
having greater ( R 2 ) Kotak tech i.e. Franklin is having .96 where as
Kotak‟s ( R 2 ) is .89
FMCG sector has performed worst in this parameter. Magnum
FMCG, Franklin FMCG, Prudential ICICI FMCG have performed
badly. Their ( R 2 ) is .52,.77,.57 respectively.
This shows that apart from these schemes having higher risk as
inferred previously by the high values of standard deviation of their
returns, they show a low value of data implying that the variations in
their returns are largely not explainable by the variations in the
market returns.




Smart ICBM                        68
Limitation of study

  1. The analysis is based on historical data and thus indicates the
     past performance which may not always be indicative of the
     future performance.

  2. Different schemes consider different market indices as their
     benchmarks, but for the purpose of uniformity in the study all
     schemes have to be compared against same benchmark index.

  3. Weekly NAVs have been considered for the study. Daily NAVs
     would have given more precise result for the study.

  4. Sharpe ratio (in its simplest forms) that the relationship
     between risk and return is linear and remain linear throughout
     its entire range. Various research works conducted in this
     regard show that the relationship is not as simple as Capital
     Market theory would suggest. This is an inherent weakness of
     capital Asset Pricing Model.

  5. The time period considered by the study is only three years; a
     larger period could have ensured coverage of a full market cycle,
     thus giving a more real picture of the performance of the
     schemes.




Smart ICBM                       69
             CONCLUTION




Smart ICBM       70
     Conclusion
     Good Performers.

     Following 6 schemes have scored well on all parameters.

        1.   Franklin Infotech
        2.   UTI Software
        3.   Birla Sunlife
        4.   Franklin FMCG
        5.   DSPML Technology
        6.   Karvy Tech

     Technology sector is the best performer among all the
     compared sectors.


     Non Performers

      Our schemes which can be identified as non performing on the
basis of the parameters considered in the study are :-
          1. Prudential ICICI Tech.
          2. Reliance Banking
          3. Magnum FMCG
          4. Prudential ICICI-FMCG
          5. Franklin Pharma\
          6. UTI Pharma.




Smart ICBM                       71
     RECOMMENDATIONS




Smart ICBM   72
    RECOMMENDATIONS


       1. Technology sectoral funds have performed well on all
          parameters, hence it is good bet for investments.



       2. FMCG and Pharma are avg. performers. Still they can be
          good for long run.



       3. In Banking Sector Reliance was only fund which qualified
          but it was worst performer in all parameters.



       4. Kotak should keep Mutual Fund Awareness Programme‟s
          on regular basis for investors and clients as future belongs
          to mutual fund in India specially Sectoral Mutual Funds.




Smart ICBM                       73
        BIBLIOGRAPHY




Smart ICBM   74
BIBLIOGRAPHY



  FINANCIAL MANAGEMENT … I M PANDY


  MUTUAL FUND
  PRODUCT AND SERVICES---- TAXMAN

  AMFI COURSE BOOK

  investment analysis and portfolio management

  www.njindiainvest.com


  www.moneycontrol.com

  www.amfiindia.com


  www.kotak.com


  www.valueresearch.com




Smart ICBM                 75

								
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