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PORTFOLIO MANAGEMENT SERVICES IN MUTUAL FUNDS
St. Francis Institute of Management and Research Page 1
SUMMER PROJECT REPORT
PORTFOLIO MANAGEMENT SERVICES IN MUTUAL FUNDS
Prepared for the Mumbai University in the partial fulfillment of the
requirement for the award of the degree in
MASTERS OF MANAGEMENT STUDIES
Submitted By:
Name: BINU PAUL VILLAN
Roll No.: 68 Year: 2012
Under the guidance of
DR. S. P. DAS
SFIMAR
St Francis Institute of Management and Research, Mt. Poinsur,
S.V.P Road, Borivali (W) Mumbai.
Batch 2011-2013
PORTFOLIO MANAGEMENT SERVICES IN MUTUAL FUNDS
St. Francis Institute of Management and Research Page 2
DECLARATION
I hereby declare that the following project report titled "Portfolio Management
Services in Mutual Funds" is an authentic work done by me.
This is to declare that all the work indulged in the completion of this work such as
research, data collection, analysis is a profound and honest work of mine.
Binu Paul Villan Dr. S. P Das Student Project Guide
Date:
Place: Mumbai
PORTFOLIO MANAGEMENT SERVICES IN MUTUAL FUNDS
St. Francis Institute of Management and Research Page 3
ACKNOWLEDGEMENT
This project bears imprint of all those who have directly or indirectly helped and extended their
kind support in completing this project.
I would like to express my sincere gratitude to Mr. Sanjay Tari and Ms. Swapnila Shet, Director
at Acensure Financial Solutions Pvt. Ltd for giving me this opportunity to undergo this lucrative
project and for their encouraging and kind support throughout the project.
I am extremely thankful and obliged to Dr. S. P. Das (Project Guide) for practical tips,
encouragement to take on challenging assignments and constant guidance since inception, till
the completion of the project.
I would also thank Acensure Financial Solutions Pvt. Ltd employees and customers, whom I
met during the course of this project, for their support and for providing valuable information,
which helped me, complete this project successfully.
This project report is a collective effort of all and I sincerely remember and acknowledge all of
them for their excellent help and assistance throughout the project.
BINU PAUL VILLAN
PORTFOLIO MANAGEMENT SERVICES IN MUTUAL FUNDS
St. Francis Institute of Management and Research Page 4
EXECUTIVE SUMMARY
Investing money where the risk is less has always been risky to decide. The first factor, which
an investor would like to see before investing, is risk factor. Diversification of risk gave birth
to the phenomenon called Mutual Fund.
The Mutual Fund Industry is in the growing stage in India, which is evident from the flood of
mutual funds offered by the Banks, Financial Institutes & Private Financial Companies.
As a part of my study curriculum it is necessary to conduct a grand project. It provides me an
opportunity to understand the particular topic in depth and which leads to that topic.
My Project topic is Portfolio Management services in Mutual Funds which give special emphasis
on creation of Portfolio’s, Portfolio revision and Comparison of Mutual Funds with various
Performance measures.
In Portfolio Management it is very important to manage investor’s portfolio efficiently. By
efficient we mean which reduces the risk of investor and increases return on the other hand.
This project is all about how to manage an Investor’s portfolio in mutual fund. How to
diversify the investments into different schemes of funds
My First Phases covers mutual fund industry, current economic condition of the economy, brief
introduction to portfolio Management services, investor’s behavior and types, their objective, risk
appetite.
My Second Phase covers creation of Portfolio’s as per different type of Investor, Portfolio
revision and Comparison of Mutual Funds with various Performance measures.
PORTFOLIO MANAGEMENT SERVICES IN MUTUAL FUNDS
St. Francis Institute of Management and Research Page 5
TABLE OF CONTENTS
SR. NO PARTICULARS
PAGE NO
1 Introduction to Acensure Financial Solutions Pvt. Ltd 1
1.1 Organization chart 2
1.2 Products & Services 3
2 Need for the study 5
3 Objectives of the study 6
4 Research methodology 7
4.1 Research Design 7
4.2 Data collection method 7 4.3 Sample design 7
4.4 Null Hypothesis 7
5 5.1 Introduction to Mutual Funds 8
5.2 History of Mutual Funds 9
5.3 Organization of mutual funds 11
5.4 Types of Mutual funds 11
5.5 Fund Management 13
6 Introduction to Portfolio Management Services 14
6.1 Phases of Portfolio Management 14
6.2 Types of Portfolio Management 16
6.3 Managing Portfolio 17
6.4 Investor Types 18
6.5 SEBI Guidelines for PMS 20
7 Data Analysis 21
7.1 Interpretation 24
8 Portfolio creation 25
8.1 Aggressive Portfolio 25
8.2 Conservative Portfolio 26
8.3 Balanced Portfolio 27
9 Portfolio revision 28
9.1 Constant Rupee Plan 29
9.2 Constant Ratio Plan 35
9.3 Variable Plan 40
9.4 Calculation of returns 46
10 Mutual fund comparison & Rankings 47
11 Limitations & Future Scope 56
12 Findings & Suggestions 57
13 My Learning 58
14 Conclusion 59 15 References 60
PORTFOLIO MANAGEMENT SERVICES IN MUTUAL FUNDS
St. Francis Institute of Management and Research Page 6
LIST OF TABLES
SR. NO PARTICULARS PAGE NO
1 Aggressive Investor Portfolio 25
2 Conservative Investor Portfolio 26
3 Balanced Investor Portfolio 27
4 Portfolio Revision As Per Constant Rupee Plan 29
4.1 Portfolio as on May 2nd
2012 29
4.2 Revised Portfolio as on May 15th
2012 30
4.3 Revised Portfolio as on May 31th 2012 31
4.4 Revised Portfolio as on June 15th 2012 32
4.5 Portfolio as on June 29th
2012 34
4.6 Calculation of returns as per Constant rupee plan 34
5 Portfolio revision as per Constant ratio plan 35
5.1 Portfolio as on 2nd May 2012 35
5.2 Revised Portfolio as on may 15th 2012 36
5.3 Revised Portfolio as on May 31st 2012 37
5.4 Revised Portfolio as on June 15th 2012 38
5.5 Portfolio as on June 29th 2012 39
5.6 Calculation of Returns as Per Constant Ratio Plan 39
6 Portfolio Revision as per Variable plan 40
6.1 Portfolio as on 2nd May 2012 40
6.2 Revised Portfolio as on May 15th
2012 41
6.3 Revised Portfolio as on May 31th 2012 42
6.4 Revised Portfolio as on June 15th 2012 43
6.5 Portfolio as on June 29th
2012 45
6. 6.6 Calculation of returns as per Variable plan 45
7 Calculation of Portfolio Returns 46
8 Sharpe ratio 52
9 Treynor ratio 53 10 Standard Deviation 54
11 Rankings as per Sharpe ratio & Treynor Ratio 55
12 Rankings as per Standard deviation 55
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St. Francis Institute of Management and Research Page 7
LIST OF FIGURES
SR. NO PARTICULARS
PAGE NO
1 Corporate Logo 1
1.1 Information on department 2
1.2 Products &services 3
2 Mutual fund 8
2.1 History of mutual fund 10
2.2 Organization of a Mutual fund 11
2.3 Types of mutual funds 11
2.4 Types of Portfolio Management 16
3 3.1 Aggressive Investor Portfolio 19
3.2 Conservative Investor Portfolio 19
3.3 Balanced Investor Portfolio 19
4 4.1 Demographics 21
4.2 Age group 21
4.3 Monthly income 22
4.4 Expected liquidation period 22
4.5 Expected return 22
4.6 Decrease in Portfolio 23
4.7 Portfolio Allocation 23
4.8 Capital or Return preference 23
5 5.1 HDFC Top 200 return Performance 50
5.2 ICICI Prudential Focused Bluechip Equity Fund Return 50
5.3 DSP Blackrock Small and Midcap Fund Return 50
5.4 Franklin India Bluechip Return 51
5.5 Reliance Banking Fund Return 51
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St. Francis Institute of Management and Research Page 8
1. COMPANY PROFILE
Fig 1: Company Logo
Acensure is an integrated financial services group offering a wide range of services to a
significant clientele that includes Corporate, HNI’s and Retail Investors.
We have grown since inception and still growing in the financial field and the minds of our
clients. The value of integrity, team work, innovation, performance and partnership shape our
vision and drive us to our purpose. We are steadily but surely ascending the finance market.
AFFILIATIONS:
LIC the No.1 Life Insurer of India.
United India one of the topmost in Non-life Insurance Sector
iFAST financial Singapore’s No.1 Integrated Wealth Management platform
Karvy Stock Broking Ltd. – the No.1 Broking firm in India
Disha Direct – The Pioneers in the Second Home Segments
Apollo Munich – the topmost in Health Insurance Sector
Star health - the topmost in Health Insurance Sector
Bajaj Allianz – No.1 In Motor Insurance Sector
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1.1 ORGANIZATION CHART
Fig 1.1: information on department
Credentials In Different Hues
Member Million Dollar Round Table (MDRT)– USA (Since last 5 years)
Member Chairman’s Club(CM) of LIC (since last 6 years)
Member Chartered Insurance Institute (CII)-UK(Since last 5 years)
Member Indian Financial Planners Association(IFPA)—Life Member
ACENSURE FINANCIAL SOLUTIONS PVT. LTD
Administration
Dept
Looks after the accounts of the clients and checks the account
Marketing
Dept
They pass the entry regarding collection of
premium. and also update the clients
database.
Backoffice
They bring new clients for the company and
conduct customer Relationship
Management activity
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St. Francis Institute of Management and Research Page 10
1.2 PRODUCT & SERVICES
Life Insurance Solutions
Mutual Funds
Fig 1.2 Products &services
Advisors For All The Below Mentioned Products
Investment and Advisory services
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Non-Life Insurance Products
Specialised Services for NRI’s
Thorough Market Research Support to clients
IPO’s, Bonds, Company FD’s
Real Estate (1st Homes, 2nd Homes, Plots etc)
Loans (Home, Personal, Project etc….)
Holiday homes and Recreation Resorts
Share Trading and Broking
Projected Goals:
Making Acensure into Rs.5000 crores Group by 2020.
Setting up of 100+ offices.
Acquiring Corporate Broking License.
Investing in Real Estate in the form of Second Homes, Resorts And Holiday Homes.
And Creating an Earning Platform
Contact Details
Acensure Financial Solution Pvt Ltd
Mr. Sanjay Tari
No. 2, Sheetal Apartment, Kulupwadi, Borivali,( East)
Telephone +(91)-(22)-65350012
Mobile +(91)9821788989, 9870766657
Fax No +(91)-(22)-28846086
Website www.acensurefinance.com
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2. NEED FOR THE STUDY
Portfolio management services is becoming a rapidly growing area serving a broad array of
investors both individual and institutional-with investment portfolios ranging in asset size from
thousands to cores of rupees.
Increased market volatility- risk and return parameters of financial assets are continuously
changing so your assets in the portfolio should be properly managed.
Portfolio’s created by portfolio manager should be as per investor’s behavior and their objective, risk
appetite. Portfolio creation is important and it should be as per investor class otherwise it would not
fulfill its financial needs
Portfolio revision is another vital aspect in an investor’s Portfolio because continuous revision is
needed to gain higher returns with manageable risk.
Acensure Financial Solutions Pvt. Ltd. is mainly into insurance and has started mutual funds and
has a tie up with IFAST Financial for PMS in mutual funds. CRM activity was conducted in order
to know the customer perception about Portfolio management Service.
Therefore a Detailed study on Portfolio management services in mutual funds specially focusing
on portfolio creation of different types of investor on the basis of risk, Portfolio revision and
mutual fund comparison.
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3. OBJECTIVES OF THE STUDY
Primary objectives
The main objective of this study is doing an In-depth analysis of Mutual Fund
Portfolio by taking sample of funds and comparing it with it others
Secondary objectives
To understand the concept of portfolio management and its relation to Mutual funds.
To evaluate and create a portfolio’s consisting the best mutual fund schemes which will earn
highest possible returns and will minimize the risk.
To understand the process Portfolio revision using different types of plans
Also to analyze the performance of mutual fund schemes on the basis of various parameters.
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4. RESEARCH METHODOLOGY
4.1 RESEARCH DESIGN
Exploratory Research & Analytical Research
Quantitative research
4.2 DATA COLLECTION METHOD
Primary data: The study was conducted through a Survey and involved, interviewing different age
group of people through the Survey, falling under three distinct Age – Brackets, being:
22- 35
35 – 50
Above 50
The information gives us an overall understanding of the respondent’s investment profile and
helps us to understand what investment mix and which mutual fund will be appropriate, or
inappropriate, in helping to achieve his financial goals.
Secondary data:
For data collection purpose the secondary source was used like mutual fund factsheet, books, websites
This data was used To Create Portfolio’s as per Investor type, Portfolio revision and comparison of
mutual funds schemes
1.3 SAMPLE DESIGN
Sample Size: 100 Samples
Type of sample: Convenience sampling
The sample size consist of clients of Acensure
customers taken Insurance policy and mutual funds
customers having PMS a/c
4.4 NULL HYPOTHESIS
Passive Management gives more return compared to Active Management.
Passive Management has better approach compared to Active Management
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5.1 INTRODUCTION TO MUTUAL FUND
A mutual fund is just the connecting bridge or a financial intermediary that allows a group of
investors to pool their money together with a predetermined investment objective. The mutual
fund will have a fund manager who is responsible for investing the gathered money into
specific securities (stocks or bonds). When you invest in a mutual fund, you are buying units or
portions of the mutual fund and thus on investing becomes a shareholder or unit holder of the
fund.
Mutual funds are considered as one of the best available investments as compare to others they
are very cost efficient and also easy to invest in, thus by pooling money together in a mutual
fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to
do it on their own. But the biggest advantage to mutual funds is diversification, by minimizing
risk & maximizing returns.
Fig 2 Mutual fund
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5.1 HISTORY OF MUTUAL FUNDS
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank of India. The history of mutual funds in
India can be broadly divided into four distinct phases
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. 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
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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, 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.
The graph indicates the growth of assets over the years.
Fig 2.1 History of mutual fund
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5.2 ORGANIZATION OF A MUTUAL FUND
Fig 2.2 Organization structure
5.3 TYPES OF MUTUAL FUNDS
Fig 2.3 Types
Types of Mutual Fund
By Structure
Open ended Close ended
Interval
By Investment Objective
Equity
Debt
Balanced
Money MarketSchemes
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1. Equity fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the fund
may vary different for different schemes and the fund manager’s outlook on different stocks. The
Equity Funds are sub-classified depending upon their investment objective, as follows:
Diversified Equity Funds
Mid-Cap Funds
Sector Specific Funds
Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-
return matrix.
2. Debt funds:
. By investing in debt instruments, these funds ensure low risk and provide stable income to the
investors. Debt funds are further classified as:
Gilt Funds
Income Funds
MIP.
Short Term Plans (STP)
Liquid Funds:
3. Balanced funds:
They invest in both equities and fixed income securities, which are in line with pre-defined
investment objective of the scheme. These schemes aim to provide investors with the best of both
the worlds. Equity part provides growth and the debt part provides stability in returns.
Further the mutual funds can be broadly classified on the basis of investment parameter viz,
By investment objective:
Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these schemes
is to provide capital appreciation over medium to long term.
Income Schemes: Income Schemes are also known as debt schemes. The aim of these schemes is
to provide regular and steady income to investors. These schemes generally invest in fixed income
securities such as bonds and corporate debentures.
Balanced Schemes: Balanced Schemes aim to provide both growth and income by periodically
distributing a part of the income and capital gains they earn. These schemes invest in both shares
and fixed income securities, in the proportion indicated in their offer documents (normally 50:50).
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Money Market Schemes: Money Market Schemes aim 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.
Other schemes
Tax Saving Schemes:
Index Schemes:
Sector Specific Schemes
5.4 FUND MANAGEMENT
Actively managed funds:
Mutual Fund managers are professionals. They are considered professionals because of their
knowledge and experience. Managers are hired to actively manage mutual fund portfolios.
Instead of seeking to track market performance, active fund management tries to beat it. To do
this, fund managers "actively" buy and sell individual securities. For an actively managed fund,
the corresponding index can be used as a performance benchmark.
Actively managed fund styles:
Fund styles usually fall within the following three categories.
Fund Styles:
Value: The manager invests in stocks believed to be currently undervalued by the market.
Growth: The manager selects stocks they believe have a strong potential for beating the market.
Blend: The manager looks for a combination of both growth and value stocks.
Passively Managed Funds:
Passively managed mutual funds are an easily understood, relatively safe approach to investing in
broad segments of the market. They are used by less experienced investors as well as
sophisticated institutional investors with large portfolios.
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6 PORTFOLIO MANAGEMENT SERVICES
What is Portfolio Management?
Portfolio Management Services, called, as PMS are the advisory services provided by corporate
financial intermediaries. It enables investors to promote and protect their investments that help
them to generate higher returns. It devotes sufficient time in reshuffling the investments on hand
in line with the changing dynamics. It provides the skill and expertise to steer through these
complex, volatile and dynamic times. It is a choice of selecting and revising spectrum of
securities to it with the characteristics of an investor. It prevents holding of stocks of depreciating-
value. It acts as a financial intermediary and is subject to regulatory control of SEBI.
6.1 PHASES OF PORTFOLIO MANAGEMENT
Security Analysis
Portfolio Analysis
Portfolio Selection
Portfolio Revision
Portfolio Evaluation
Security Analysis
(a) Fundamental analysis: This analysis concentrates on the fundamental factors
Affecting the company such as EPS (Earning per share) of the company, the dividend
Payout ratio, competition faced by the company, market share, quality of management
Etc.
(b) Technical analysis: The past movement in the prices of shares is studied to identify
trends and patterns and then tries to predict the future price movement. Current
market price is compared with the future predicted price to determine the mispricing.
Technical analysis concentrates on price movements and ignores the fundamentals of
the shares.
(c) Efficient market hypothesis: This is comparatively more recent approach. This
approach holds that market prices instantaneously and fully reflect all relevant
available information. It means that the market prices will always be equal to the
Intrinsic value.
Portfolio Analysis
A portfolio is a group of securities held together as investment. It is an attempt to
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spread the risk all over. The return & risk of each portfolio has to be calculated
Mathematically and expressed quantitatively. Portfolio analysis phase of portfolio
Management consists of identifying the range of possible portfolios that can be
constituted from a given set of securities and calculating their risk for further
analysis.
Portfolio Selection
The goal of portfolio construction is to generate a portfolio that provides the highest
returns at a given level of risk. Harry Markowitzh portfolio theory provides both the
conceptual framework and the analytical tools for determining the optimal portfolio
in a disciplined and objective way.
Portfolio Revision
The investor/portfolio manager has to constantly monitor the portfolio to ensure that
it continues to be optimal. As the economy and financial markets are highly volatile
dynamic changes take place almost daily. As time passes securities which were once
attractive may cease to be so. New securities with anticipation of high returns and
low risk may emerge.
Portfolio Evaluation
Portfolio evaluation is the process, which is concerned with assessing the
performance of the portfolio over a selected period of time in terms of return & risk.
The evaluation provides the necessary feedback for better designing of portfolio the
next time around.
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6.2 TYPES OF PORTFOLIO MANAGEMENT
Fig: 2.4 Types
The Discretionary portfolio management services (DPMS):
In this type of services, the client parts with his money in favor of manager, who in return,
handles all the paper work, makes all the decisions and gives a good return on the investment
and for this he charges a certain fees
The Non-discretionary portfolio management services:
The manager function as a counselor, but the investor is free to accept or reject the manager’s
advice; the manager for a services charge also undertakes the paper work. The manager
concentrates on stock market instruments with a portfolio tailor made to the risk taking ability
of the investor
Types of Portfolio Management
Discretionary portfolio management services
Non-discretionary portfolio management
services
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6.3 MANAGING PORTFOLIO
ASSET ALLOCATION
The process of dividing a portfolio among major asset categories such as bonds, stocks or
cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. The ideal
asset allocation differs based on the risk tolerance of the investor.
To help determine which securities, asset classes and subclasses are optimal for
your portfolio; let's define some briefly:
Large-cap stock -These are shares issued by large companies with a market capitalization
generally greater than $10 billion.
Mid-cap stock - These are issued by mid-sized companies with a market cap generally between
$2 billion and $10 billion.
Small-cap stocks – These represent smaller-sized companies with a market cap of less than $2
billion. These types of equities tend to have the highest risk due to lower liquidity.
International securities These types of assets are issued by foreign companies and listed on a
foreign exchange. International securities allow an investor to diversify outside of his or her
country, but they also have exposure to country risk - the risk that a country will not be able to
honor its financial commitments.
Emerging markets – This category represents securities from the financial markets of a
developing country. Although investments in emerging markets offer a higher potential return,
there is also higher risk, often due to political instability, country risk and lower liquidity.
Money market - Money market securities are debt securities that are extremely liquid
investments with maturities of less than one year. Treasury bills make up the majority of these
types of securities.
Real-estate investment trusts (REITs) REITs trade similarly to equities, except the
underlying asset is a share of a pool of mortgages or properties, rather than ownership of a
company
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6.4 INVESTOR TYPES
There are many different types of investors in the stock market, investors can be classified into
the following types: Aggressive, Conservative, and Balanced
Aggressive Investor
Aggressive investors tend to concentrate on equity investments such as individual stocks and
mutual funds. They are open to more risk, willing to see large short term swings in market
performance on an annualized basis. They aim for large growth in the market.
Balanced investors
Balanced investors will have a time horizon of 5 to 10 years and choose to diversify across both
aggressive growth-oriented investments and more conservative interest-earning investments.
They emphasize income over growth. Balanced investors are medium risk investors.
Conservative Investor
Conservative investors have a 2 to 5 year time horizon, typically because they are nearing
retirement or have a short-term need for their investment. They prefer a higher level of income
than does the stable investor. Conservative investors are low to medium risk investors.
Low High Risk
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Fig 3.1: Conservative Portfolio
Fig 3.2 Aggressive portfolio
Fig3.3: Balanced portfolio
70%
20%10%
Conservative Portfolio
Fixed Income Securities
Equities
Cash and equivalents
15%
80%
5%
Aggressive Portfolio
Fixed Income Securities
Equities
Cash and equivalents
55%35%
10%
Balanced Portfolio
Fixed Income Securities
Equities
Cash and equivalents
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6.6 SEBI GUIDELINE FOR PMS
For investment in listed securities, an investor is required to open a Demat account in his/her
own name
Minimum investment amount of clients for such schemes to Rs 25 lakh from the earlier Rs 5
lakh.
Portfolio manager will not be allowed to hold the unlisted securities, besides the listed
securities, belonging to the portfolio account, in its own name on behalf of its clients.
Portfolio manager cannot offer/ promise indicative or guaranteed returns to clients.
The portfolio manager is required to have a minimum net worth of Rs. 2 crore.
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7 DATA ANALYSIS
The data collected through the Profiler provided for an Analysis of an Individual’s Risk – taking
capacity through the Risk – Analyzer. The Questionnaire, after being administered on the
Respondents categorizes each of them on the basis of their risk – taking, as Investors of the
following classes: Conservative, Balanced, and Aggressive
1. Demographic Analysis: The data of 100 respondents included 70 males and 30 females.
Fig 4.1 Demographics
2. Age Group
Fig 4.2 Age group
3. Income level Between 3,00,000 to 30,00,000
4. .What percentage of monthly income can be invested?
70%
30%
Demographic Analysis
males
females
40%
30%
30%Age
18 to 35
36 to 50
Above50
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Fig 4.3: Monthly Income
5. When do you expect to liquidate your investment?
Fig 4.4 expected liquidation period
5. What is your expected rate of return from your investments
Fig 4.5: expected return
10%
60%
10%
20%
0%
0 to 10%
11% to 20%
21% to 30%
More than 30%
I currently have no income
0
20
40
60
80
less than 1yr 1 to 2yrs 3 to 5yrs 5 yrs and above
Series1 5 10 70 15
per
iod
0
20
40
60
6%p.a 10%-15 % p.a more than 15% p.a
Series1
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6. I would start to worry about my investments if my portfolio value falls
Fig 4.6: Decrease in Portfolio
7. Maximum allocation in your current portfolio pertains to
Fig 4.7: Portfolio Allocation
8. I prefer to keep capital safe rather than have high return
Fig 4.8: capital or return preference
Less than 5% p.a
5%-10% p. a 10%-20% p.a 20%-30% p. a More than 30%
p. a
Series1 10 30 40 15 5
0
5
10
15
20
25
30
35
40
45
10%
15%
45%
25%
5%Savings and fixed deposits
Bonds
Equities
Mutual Funds
0102030405060
Strongly agree
Neutral Strongly disagree
Series1 60 10 30
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7.1 INTERPRETATION
Out of 100 respondents 70 were male and 30 female with Income level between 3 lakhs to
30,00,000 Lakhs
60% of the respondents prefer investing monthly 11% to 20%
70% of the respondents are ready to liquidate their investments with range of 3 to 5years
45% of the investor’s portfolio consist of Equities
Age Group of 22 to 35 young working class with limited liability prefers to take higher risk and
get higher returns of 15% and more. They belong to Aggressive class of Investors. Equity funds
are most preferred by them.
Age group of 36 to 50 is those respondents who have dependents on them emphasize income
over growth. They are medium risk investors. They prefer to keep capital safe rather than having
high return. They belong to balanced class of Investors.
Age groups of 50 and above are those respondents nearing retirement or have a short-term need
for their investment. They are low to medium risk investors. They prefer a higher level of income
than does the stable investor. They belong to Conservative class of investors. Debt Funds are
most preferred by them.
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8 PORTFOLIO CREATION
8.1 AGGRESSIVE INVESTOR PORTFOLIO (80%EQUITY AND 20%DEBT) Table 1
SCHEME NAME NATURE RETURNS BETA Rs
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
PHARMA – GROWTH
EQUITY 23.09 1.01 400000
SBI MAGNUM SECTOR
FUNDS UMBRELLA - EMERG
BUSS FUND – GROWTH
EQUITY 22.73 1.03 200000
BIRLA SUN LIFE MNC FUND
– GROWTH
EQUITY 24.28 0.74 600000
RELIANCE PHARMA FUND –
GROWTH
EQUITY 29.65 0.91 800000
EQUITY 2000000
SUNDARAM BOND SAVER -
INSTITUTIONAL PLAN –
GROWTH
DEBT 9.41 1.17 125000
RELIANCE MONTHLY
INCOME PLAN – GROWTH
DEBT 9.40 1.14 125000
SAHARA SHORT TERM
BOND FUND – GROWTH
DEBT 9.24 1.03 125000
HDFC MONTHLY INCOME
PLAN - LONG TERM PLAN –
GROWTH
DEBT 9.14 1.28 125000
DEBT
TOTAL PORTFOLIO 25,00,000
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8.2 CONSERVATIVE INVESTOR PORTFOLIO (80% DEBT 20% EQUITY)
Table 1.2
SCHEME NAME NATURE RETURNS BETA Rs
ICICI PRUDENTIAL
TECHNOLOGY FUND –
GROWTH
EQUITY 26.03 0.88 200000
FRANKLIN INFOTECH
FUND – GROWTH
EQUITY 20.18 0.89 50000
HDFC MID-CAP
OPPORTUNITIES FUND –
GROWTH
EQUITY 21.10 0.80 100000
RELIGARE MID N SMALL
CAP FUND – GROWTH
EQUITY
21.35
0.80
150000
EQUITY
HDFC MULTIPLE YIELD
FUND - PLAN 2005 –
GROWTH
DEBT 10.86 0.45 400000
HDFC MULTIPLE YIELD
FUND - GROWTH
DEBT
10.33
0.69
400000
SBI MAGNUM CHILDREN
BENEFIT PLAN
DEBT 9.39 0.76 400000
TEMPLETON INDIA STIP -
IP – GROWTH
DEBT 8.40 0.72 400000
UTI CRTS 81 – GROWTH DEBT 11.21 0.86 400000
DEBT 20,00,000
TOTAL PORTFOLIO 25,00,000
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8.3 BALANCED INVESTOR PORTFOLIO (50% DEBT 50% EQUITY)
Table 3
SCHEME NAME NATURE RETURNS BETA
HDFC MID-CAP
OPPORTUNITIES FUND –
GROWTH
EQUITY 21.10 0.80
200000
RELIANCE EQUITY
OPPORTUNITIES FUND –
GROWTH
EQUITY 20.97 0.86
100000
UTI MNC FUND - GROWTH
EQUITY 22.46 0.71
400000
RELIGARE MID N SMALL CAP
FUND - GROWTH EQUITY 21.35 0.80
300000
EQUITY 1000000
UTI CRTS 81 – GROWTH DEBT 11.21 0.86
250000
HDFC MONTHLY INCOME
PLAN - LONG TERM PLAN -
GROWTH
DEBT 9.14 1.28
250000
UTI SHORT TERM INCOME
FUND - IP – GROWTH
DEBT 8.62 0.83
250000
SBI MAGNUM CHILDREN
BENEFIT PLAN DEBT 9.39 0.76
250000
DEBT 10,00,000
TOTAL PORTFOLIO 25,00,000
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9 PORTFOLIO REVISION
Portfolio revision is done in this Project is done in 3 following ways in order to find out which of
give them higher returns in the span of 2months from May 2nd
2012 to June 30th
2012
Portfolios are revised every 15 days in span of two months
1. Constant Rupee Plan
The objective of this plan is to balance the division between the conservative and aggressive
components of the portfolio in terms of the target value.
The target value could be fixed initially by the investor in a desirable proportion
2. Constant Ratio Plan
In this plan, we maintain a ratio between the aggressive and conservative components of a
portfolio. The initial ratio is FIXED by the investor and could be, say, 1:1 or any other desirable
ratio.
3. Variable Plan
This plan gives more flexibility to the investors to revise the portfolio components.
When share price falls, the investor may shift major component of the conservative and aggressive
components
The desired ratio of investment holding between aggressive and conservative components of a
portfolio, hence, may vary according to the flexibility that an investor wishes to incorporate in the
portfolio revision decision
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9.1 PORTFOLIO REVISION AS PER CONSTANT RUPEE PLAN
In Constant Rupee Plan, as it is an Aggressive Investor its Equity is kept Rs 20, 00,000 and Debt is
Rs 5, 00,000. Every 15th
day it’s revised as per constant rupee plan
PORTFOLIO AS ON MAY 1st 2012
Table 4.1
SCHEME NAME NAV as
on 2nd
May
Returns Market
return
Excess
return
Rank % Rs Units
SBI MAGNUM SECTOR
FUNDS UMBRELLA –
PHARMA – GROWTH
49.57 23.09
19 4.09 2 0.2 400000 8069
SBI MAGNUM SECTOR
FUNDS UMBRELLA –
EMERG BUSS FUND –
GROWTH
46.89
22.73
19 3.73 1 0.1 200000 4265
BIRLA SUN LIFE MNC
FUND – GROWTH
230.02 24.28 19 5.28 3 0.3 600000 2608
RELIANCE PHARMA
FUND – GROWTH
58.386 29.65 19 10.65 4 0.4 800000 13702
EQUITY 10 2000000
SCHEME NAME NAV as
on 2nd
May
Returns Market
return
Excess
return
Rank % Rs Units
SUNDARAM BOND
SAVER –
INSTITUTIONAL PLAN
– GROWTH
34.752 9.41 - - - - 125000 3597
RELIANCE MONTHLY
INCOME PLAN –
GROWTH
23.43
9.40 - - - - 125000
5336
SAHARA SHORT TERM
BOND FUND –
GROWTH
13.06
9.24 - - - - 125000
9572
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HDFC MONTHLY
INCOME PLAN – LONG
TERM PLAN – GROWTH
24.35
9.14 - - - - 125000 5132
DEBT 500000
TOTAL PORTFOLIO 2500000
REVISED PORTFOLIO AS ON MAY 15TH
2012
Table 4.2
SCHEME NAME NAV as
on 15th
May
Rs Increase
Decrease
Revised
on May
15th
New units on
May 15th
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
PHARMA – GROWTH
49.02
395561.83
-1.11%
395561.83
8069.40
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
EMERG BUSS FUND –
GROWTH
45.21
192834.29
-3.58%
191274.17
4230.79
BIRLA SUN LIFE MNC
FUND – GROWTH
223.79
583749.24
-2.71%
583749.24
2608.47
RELIANCE PHARMA
FUND – GROWTH
56.392
772678.38
-3.42%
772678.38
13701.9
EQUITY 1944823 1943263
SUNDARAM BOND
SAVER - INSTITUTIONAL
PLAN – GROWTH
34.98 125820.10 125000 3573.47
RELIANCE MONTHLY
INCOME PLAN –
GROWTH
23.22 123879.64 125000 5383.29
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In constant Rupee Plan the equity and Debt is to be kept constant throughout. Here both equity and
Debt value has fallen so we have sold some of the equity from Scheme giving higher loss of 3.58%
SBI MAGNUM SECTOR FUNDS UMBRELLA – EMERG BUSS FUND – GROWTH and have
maintained the total Debt value 5,00,000.
REVISED PORTFOLIO AS ON MAY 31TH
2012
Table 4.3
SCHEME NAME NAV as on
31h May
Rs Increase/
Decrease
Revised on
May 31th
New units
on May
31th
SBI MAGNUM
SECTOR FUNDS
UMBRELLA -
PHARMA – GROWTH
48.38
390397.42
-1.31
390397.42
8069.40
SBI MAGNUM
SECTOR FUNDS
UMBRELLA - EMERG
BUSS FUND –
GROWTH
44.81
189581.85
-0.88
189581.85
4230.79
BIRLA SUN LIFE
MNC FUND –
GROWTH
221.8
578558.39
-0.89
578558.39
2608.47
RELIANCE PHARMA
FUND – GROWTH
56.33
771828.86
-0.11
774167.84
13743.44
EQUITY 1930366.5 1932705.5
SAHARA SHORT TERM
BOND FUND – GROWTH
13.1
125382.85
125000
9541.98
HDFC MONTHLY
INCOME PLAN - LONG
TERM PLAN – GROWTH
24.03
123357.29
125000
5201.83
DEBT 498439.88 500000
TOTAL PORTFOLIO 2500000
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SUNDARAM BOND
SAVER -
INSTITUTIONAL
PLAN – GROWTH
125000
3558.21
125533.732
3558.21
RELIANCE MONTHLY
INCOME PLAN –
GROWTH
125000
5351.03
125588.613
5351.03
SAHARA SHORT
TERM BOND FUND –
GROWTH
125000
9505.70
125570.342
9505.70
HDFC MONTHLY
INCOME PLAN -
LONG TERM PLAN –
GROWTH
125000
5178.13
126190.969
5178.13
DEBT 500000 502883.656
TOTAL PORTFOLIO 2432705.5
2432705.5
On May31st 2012 even though the portfolio has fallen both equity and Debt have increased as
compared to revised portfolio as May 15th. Some of the Debt scheme have been sold, and is invested in
Equity giving least loss RELIANCE PHARMA FUND – GROWTH
REVISED PORTFOLIO AS ON June 15th
2012
Table 4.4
SCHEME NAME
NAV as
on 15th
June
Rs Increase
(Decrease)
Revised on
June 15th
New
units on
June 15th
SBI MAGNUM
SECTOR FUNDS
UMBRELLA - PHARMA
– GROWTH
47.65
384506.75
-1.51
384506.75
8069.40
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
EMERG BUSS FUND –
GROWTH
45.49
192458.791
1.52
195342.44
4294.18
BIRLA SUN LIFE MNC
FUND – GROWTH
223.8 583775.324 0.90 583775.32 2608.47
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RELIANCE PHARMA
FUND – GROWTH
56.698 779225.43 0.65 779225.43 13743.44
EQUITY 1939966.3 1942849.96
SUNDARAM BOND
SAVER -
INSTITUTIONAL PLAN
– GROWTH
35.28 125533.732 125000 3543.08
RELIANCE MONTHLY
INCOME PLAN –
GROWTH
23.47 125588.61 125000 5325.95
SAHARA SHORT TERM
BOND FUND –
GROWTH
13.21 125570.34 125000 9462.52
HDFC MONTHLY
INCOME PLAN - LONG
TERM PLAN –
GROWTH
24.37 126190.96 125000 5129.25
DEBT
502883.65
500000
TOTAL PORTFOLIO 2432705.50 2442849.96
On June 15th
2012 even though the portfolio has fallen both equity and Debt have increased as
compared to revised portfolio as May 31th.
Some of the Debt scheme have been sold and is invested in Equity giving least loss SBI
MAGNUM SECTOR FUNDS UMBRELLA - EMERG BUSS FUND – GROWTH
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PORTFOLIO AS ON JUNE 29TH
2012
Table 4.5
SCHEME NAME NAV as on 15th
June
Rs
SBI MAGNUM SECTOR FUNDS UMBRELLA -
PHARMA – GROWTH
50.13 404518.862
SBI MAGNUM SECTOR FUNDS UMBRELLA -
EMERG BUSS FUND – GROWTH
46.86 201225.48
BIRLA SUN LIFE MNC FUND – GROWTH 232.85 607381.967
RELIANCE PHARMA FUND – GROWTH 58.478 803688.749
EQUITY
2016815.06
SUNDARAM BOND SAVER - INSTITUTIONAL
PLAN – GROWTH
35.38 125354.308
RELIANCE MONTHLY INCOME PLAN –
GROWTH
23.58 125585.854
SAHARA SHORT TERM BOND FUND – GROWTH 13.26 125473.126
HDFC MONTHLY INCOME PLAN - LONG TERM
PLAN – GROWTH
24.55 125923.26
DEBT
502336.55
TOTAL PORTFOLIO as May 29th
2012 2519152
CALCULATION OF RETURNS AS PER CONSTANT RUPEE PLAN
Table 4.6
PORTFOLIO AS
ON MAY 2ND
2012
PORTFOLIO
AS ON JUNE
29TH
2012
Excess
Returns Returns %
25,00,000 2519152 19,152 0.73%
Opting for Constant Rupee Plan would give return of 0.73% in the span of 2months
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9.2 PORTFOLIO REVISION AS PER CONSTANT RATIO PLAN
In Constant ratio Plan a fixed ratio is kept between Debt and Equity 60% and 40%
Portfolio as on 2nd
May 2012
Table 5.1
SCHEME NAME
NAV as
on 2nd
May
Return Market
return
Excess
return
Rank % Rs Units
SBI MAGNUM
SECTOR FUNDS
UMBRELLA -
PHARMA –
GROWTH
49.57
23.09
19
4.09
2
0.2
300000
6052.05
SBI MAGNUM
SECTOR FUNDS
UMBRELLA -
EMERG BUSS
FUND – GROWTH
46.89
22.73
19
3.73
1
0.1
150000
3198.98
BIRLA SUN LIFE
MNC FUND –
GROWTH
230.02 24.28 19 5.28 3 0.3 450000 1956.35
RELIANCE
PHARMA FUND –
GROWTH
58.386
29.65
19
10.65 4 0.4 600000 10276.4
EQUITY 10 1500000
SUNDARAM BOND
SAVER -
INSTITUTIONAL
PLAN – GROWTH
34.752 250000 7193.83
RELIANCE
MONTHLY
INCOME PLAN –
GROWTH
23.43
250000
10670.0
SAHARA SHORT
TERM BOND FUND
– GROWTH
13.06 250000 19142.4
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HDFC MONTHLY
INCOME PLAN -
LONG TERM PLAN
– GROWTH
24.35 250000 10266.9
DEBT 1000000
1000000
TOTAL
PORTFOLIO
2500000
REVISED PORTFOLIO AS ON MAY 15TH
2012
Table 5.2
SCHEME NAME NAV as on
15th
May
Rs Increase/
decrease
Revised on
May 15th
New units on
May 15th
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
PHARMA – GROWTH
49.02
296671.37
-1.11
589319.41
12022.02
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
EMERG BUSS FUND –
GROWTH
45.21
144625.72
-3.58
147329.85
3258.79
BIRLA SUN LIFE MNC
FUND – GROWTH
223.79 437811.93 -2.71 441989.56 1975.02
RELIANCE PHARMA
FUND – GROWTH
56.392 579508.79 -3.42 294659.71 5225.20
EQUITY 1458617.8 1473298.5
22481.03
SUNDARAM BOND
SAVER - INSTITUTIONAL
PLAN – GROWTH
34.98 251640.19 245549.76 7019.72
RELIANCE MONTHLY
INCOME PLAN –
GROWTH
23.22 247759.28 245549.76 10574.92
SAHARA SHORT TERM
BOND FUND – GROWTH
13.1 250765.70 245549.76 18744.26
HDFC MONTHLY
INCOME PLAN - LONG
TERM PLAN – GROWTH
24.03 246714.58 245549.76 10218.47
DEBT 996879.75 982199.02
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TOTAL PORTFOLIO 2455497.5
2455497.5
As on May 15th
2012 Portfolio has fallen, Debt and equity has fallen. Overall Portfolio has
been revised as Constant ratio Plan, fixed ratio of 60% equity and 40% debt. There Total
portfolio as on May 15th
2012 ie, Rs 24, 55,497.56 is allocated to equity 60% and Debt 40%
REVISED PORTFOLIO AS ON MAY 31st 2012
Table 5.3
SCHEME NAME NAV as
on 31st
May
RS Increase
decrease
Revised on
May 31st
New
units on
May 31st
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
PHARMA – GROWTH
48.38
581625.32
-1.31
146810.42
3034.53
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
EMERG BUSS FUND –
GROWTH
44.81 146026.34 -0.88 440431.27 9828.86
BIRLA SUN LIFE MNC
FUND – GROWTH
221.8 438059.27 -0.89 293620.85 1323.81
RELIANCE PHARMA FUND
– GROWTH
56.33 294335.74 -0.11 587241.69 10425.03
EQUITY 1460046 1468104.2
SUNDARAM BOND SAVER
- INSTITUTIONAL PLAN –
GROWTH
35.13 246602.71 244684.04 6965.10
RELIANCE MONTHLY
INCOME PLAN – GROWTH
23.36 247030.25 244684.04 10474.49
SAHARA SHORT TERM
BOND FUND – GROWTH
13.15 246486.97 244684.04 18607.15
HDFC MONTHLY INCOME
PLAN - LONG TERM PLAN
– GROWTH
24.14 246673.79 244684.04 10136.04
DEBT 986793.72 978736.16
TOTAL PORTFOLIO 2446840.3 2446840.3
As on May 31st 2012 Portfolio has fallen, Debt has increased and equity has fallen. Overall
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Portfolio has been revised as Constant ratio Plan, fixed ratio of 60% equity and 40% debt. There
Total portfolio as on May 31st2012 ie, Rs 2446840.39 is allocated to equity 60% and Debt 40%
REVISED PORTFOLIO AS ON June 15th
2012
Table 5.4
SCHEME NAME
NAV as
on June
15th
Rs Increase/
decrease
Revised on
June 15th
New
units on
June 15th
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
PHARMA – GROWTH
47.65 144595.22 -1.51 147806.2 3101.92
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
EMERG BUSS FUND –
GROWTH
45.49 447114.90 1.52 591225 12996.81
BIRLA SUN LIFE MNC
FUND – GROWTH
223.8 296268.47 0.90 443418.7 1981.32
RELIANCE PHARMA
FUND – GROWTH
56.698 591078.10 0.65 295612.50 5213.81
EQUITY 1479056.6 1478062
SUNDARAM BOND
SAVER - INSTITUTIONAL
PLAN – GROWTH
35.28 245728.80 246343.75 6982.53
RELIANCE MONTHLY
INCOME PLAN – GROWTH
23.47 245836.23 246343.75 10496.11
SAHARA SHORT TERM
BOND FUND – GROWTH
13.21 245800.47 246343.75 18648.28
HDFC MONTHLY
INCOME PLAN - LONG
TERM PLAN – GROWTH
24.37 247015.33 246343.75 10108.48
DEBT 984380.84 985375.01
TOTAL PORTFOLIO 2463437.52 2463437.52
As on June 15th
2012 Portfolio has increased, Debt equity has increased. Overall Portfolio has
been revised as Constant ratio Plan, fixed ratio of 60% equity and 40% debt. There Total
portfolio as on June 15th
2012 ie, Rs 2463437.52is allocated to equity 60% and Debt 40%
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PORTFOLIO AS ON JUNE 29TH
2012
Table 5.5
SCHEME NAME NAV as on
29th June Rs
SBI MAGNUM SECTOR FUNDS UMBRELLA -
PHARMA – GROWTH
50.13 155499.00
SBI MAGNUM SECTOR FUNDS UMBRELLA -
EMERG BUSS FUND – GROWTH
46.86 609030.64
BIRLA SUN LIFE MNC FUND – GROWTH
232.85 461349.67
RELIANCE PHARMA FUND – GROWTH
58.478 304893.08
EQUITY 1530772.39
SUNDARAM BOND SAVER - INSTITUTIONAL
PLAN – GROWTH
35.38 247042.01
RELIANCE MONTHLY INCOME PLAN – GROWTH
23.58 247498.32
SAHARA SHORT TERM BOND FUND – GROWTH
13.26 247276.17
HDFC MONTHLY INCOME PLAN - LONG TERM
PLAN – GROWTH
24.55 248163.28
DEBT 989979.77
TOTAL PORTFOLIO as May 29th
2012 2520752.17
CALCULATION OF RETURNS AS PER CONSTANT RATIO PLAN
Table 5.6
PORTFOLIO AS
ON MAY 2ND
2012
PORTFOLIO
AS ON JUNE
29TH
2012
Excess
Returns Returns %
25,00,000 2520752.17 20752.17
0.83%
Opting for Constant Ratio Plan would give return of 0.83% in the span of 2month
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9.3 PORTFOLIO REVISION AS PER VARIABLE PLAN
A s p e r Va r i ab l e P l an , t h e r a t i o s a r e v a r i ed wh en ev e r t h e r e is a change in the
economic or market index. As on May 2nd
, Portfolio is divided into 60% equity 40% debt. In
Equity, Schemes are allocated on basis of comparing its returns with market returns. Scheme giving
higher returns are given more weightage
PORTFOLIO AS ON 2ND MAY 2012
Table 6.1
SCHEME NAME NAV as
on 2nd
May
Return Market
return
Excess
return
Rank % Rs Units
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
PHARMA – GROWTH
49.57
23.09 19 4.09 2 0.2 300000 6052.05
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
EMERG BUSS FUND –
GROWTH
46.89 22.73 19 3.73 1 0.1 150000 3198.98
BIRLA SUN LIFE MNC
FUND – GROWTH
230.02 24.28 19 5.28 3 0.3 450000 1956.35
RELIANCE PHARMA FUND
– GROWTH
58.386 29.65 19 10.65 4 0.4 600000 10276.4
EQUITY 10 1500000
SUNDARAM BOND SAVER
- INSTITUTIONAL PLAN –
GROWTH
34.752 250000 7193.83
RELIANCE MONTHLY
INCOME PLAN – GROWTH
23.43 250000 10670
SAHARA SHORT TERM
BOND FUND – GROWTH
13.06 250000 19142
HDFC MONTHLY INCOME
PLAN - LONG TERM PLAN
– GROWTH
24.35 250000 10266
DEBT 10,00,000
TOTAL PORTFOLIO 25,00,000
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REVISED PORTFOLIO AS ON MAY 15TH
2012
Table 6.2
SCHEME NAME NAV as
on 15th
May
RS Increase/
decrease
Revised
on May
15th
New
units
on
May
15th
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
PHARMA – GROWTH
49.02 296671.4 -1.11 40% 491099.51 10018.35
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
EMERG BUSS FUND –
GROWTH
45.21 144625.7 -3.58 10% 122774.88 2715.658
BIRLA SUN LIFE MNC
FUND – GROWTH
223.79 437811.9 -2.71 30% 368324.63 1645.849
RELIANCE PHARMA
FUND – GROWTH
56.392 579508.8 -3.42 20% 245549.76 4354.337
EQUITY 1458618 1227749
SUNDARAM BOND
SAVER -
INSTITUTIONAL PLAN
– GROWTH
34.98 251640.2 306937.2 8774.648
RELIANCE MONTHLY
INCOME PLAN –
GROWTH
23.22 247759.3 306937.2 13218.66
SAHARA SHORT TERM
BOND FUND –
GROWTH
13.1 250765.7 306937.2 23430.32
HDFC MONTHLY
INCOME PLAN - LONG
TERM PLAN –
GROWTH
24.03
246714.6
306937.2 12773.08
DEBT
996879.8 1227749
TOTAL PORTFOLIO 2455498
2455498
As on May 15th
2012 Portfolio has fallen, Debt has fallen by 0.31% and equity has fallen by
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2.75%. Therefore Overall Portfolio has been revised given equal allocation of Portfolio to Debt
and equity. There Total portfolio as on May 15th
2012 ie, 50% Debt Rs 1227749 and 40% equity
Rs 12, 27,749
REVISED PORTFOLIO AS ON MAY 31st 2012
Table 6.3
SCHEME NAME
NAV as
on 31st
May
RS Increase
decrease
rank Revised
on May
31st
New units
on May
31st
SBI MAGNUM
SECTOR FUNDS
UMBRELLA -
PHARMA –
GROWTH
48.38 484687.8 -0.01 0.1 98007.91 2025.79
SBI MAGNUM
SECTOR FUNDS
UMBRELLA -
EMERG BUSS
FUND – GROWTH 44.81 121688.6 -0.01 0.2 196015.82 4374.38
BIRLA SUN LIFE
MNC FUND –
GROWTH 221.8 365049.4 -0.01 0.3 294023.73 1325.63
RELIANCE
PHARMA FUND –
GROWTH 56.33 245279.8 0.00 0.4 392031.63 6959.55
EQUITY 1216706 980079.08
SUNDARAM
BOND SAVER -
INSTITUTIONAL
PLAN – GROWTH 35.13 308253.4 367529.66 10462
RELIANCE
MONTHLY
INCOME PLAN –
GROWTH 23.36 308787.8 367529.66 15733.3
SAHARA SHORT
TERM BOND
FUND – GROWTH 13.15 308108.7 367529.66 27949
HDFC
MONTHLY
INCOME PLAN - 24.14 308342.2 367529.66 15224.9
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LONG TERM
PLAN – GROWTH
DEBT 1233492 1470118
TOTAL
PORTFOLIO
2450198 2450198
As on May 31st 2012 overall Portfolio has fallen, Debt has increased by 0.004% and equity has
fallen by 0.89%. Therefore Overall Portfolio has been revised given more allocation of
Portfolio to Debt 70% and equity 30%. There Total portfolio as on May 31st 2012 ie, 70% Debt
Rs 1470118.63 and 40% equity Rs 980079.08.\
REVISED PORTFOLIO AS ON JUNE 15th 2012
Table 6.4
SCHEME NAME
NAV as
on15th
June
Rs Increase
decrease
Revised on
May 31st
New units
on 15th
June
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
PHARMA – GROWTH
47.65 96529.08 -1.51 0.1 147923.1 3104.37
SBI MAGNUM SECTOR
FUNDS UMBRELLA -
EMERG BUSS FUND –
GROWTH
45.49 198990.4 1.52 0.4 591692.3 13007.1
BIRLA SUN LIFE MNC
FUND – GROWTH
223.8 296675 0.90 0.3 443769.2 1982.88
RELIANCE PHARMA FUND
– GROWTH
56.698 394592.7 0.65 0.2 295846.1 5217.93
EQUITY 986787.2 1479231
SUNDARAM BOND SAVER
- INSTITUTIONAL PLAN –
GROWTH
35.28 369099 246538.4 6988.05
RELIANCE MONTHLY
INCOME PLAN – GROWTH
23.47 369260.3 246538.4 10504.4
SAHARA SHORT TERM
BOND FUND – GROWTH
13.21 369206.6 246538.4 18663
HDFC MONTHLY
INCOME PLAN - LONG
24.37 371031.4 246538.4 10116.5
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TERM PLAN – GROWTH
DEBT 1478597 986153.8
TOTAL PORTFOLIO 2465384 2465384
As on June 15th 2012 overall Portfolio has increased, Debt has increased by 0.68% and equity
has increased by 0.57%. Therefore Overall Portfolio has been revised given more allocation of
Portfolio to equity 60% and Debt40% because equity is giving more returns than Debt.. There
Total portfolio as on May 31st 2012 ie Rs 24, 65,384, 40% Debt Rs 986153.8 and 60% equity
Rs 1479230.67
\
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PORTFOLIO AS ON JUNE 29TH
2012
Table 6.5
SCHEME NAME NAV as on 15th
June
Rs
SBI MAGNUM SECTOR FUNDS UMBRELLA –
PHARMA – GROWTH
50.13 155621.90
SBI MAGNUM SECTOR FUNDS UMBRELLA –
EMERG BUSS FUND – GROWTH
46.86 609511.98
BIRLA SUN LIFE MNC FUND – GROWTH 232.85 461714.29
RELIANCE PHARMA FUND – GROWTH 58.478 305134.05
EQUITY 1531982.21
SUNDARAM BOND SAVER – INSTITUTIONAL
PLAN – GROWTH
35.38 247237.25
RELIANCE MONTHLY INCOME PLAN –
GROWTH
23.58 247693.93
SAHARA SHORT TERM BOND FUND – GROWTH 13.26 247471.60
HDFC MONTHLY INCOME PLAN – LONG TERM
PLAN – GROWTH
24.55 248359.41
DEBT 990762.19
TOTAL PORTFOLIO as May 29th
2012 2522744.40
CALCULATION OF RETURNS AS PER VARIABLE PLAN
Table 6.6
PORTFOLIO AS
ON MAY 2ND
2012
PORTFOLIO
AS ON JUNE
29TH
2012
Excess
Returns Returns %
25,00,000 2522744.40
22744.40
0.90%
Opting for Variable would give return of 0.90% in the span of 2months
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9.4 CALCULATION OF PORTFOLIO RETURNS
Table 7
PLAN NAME RETURNS RANKINGS
CONSTANT RUPEE 0.73% 3
CONSTANT RATIO 0.83% 2
VARIABLE PLAN 0.90% 1
Variable Plan gives highest returns of 0.90% compared to other two plans in span of 2months
2nd
May 2012 to 29th
June2012 because in variable plan continous revision is done according to
market Fluctuation.
Therefore Null hypothesis of the project has been proved wrong through analysis done above.
Here in variable plan active management style is adopted where continous revision is required
to get higher returns. of 0.90%.
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10 MUTUAL FUND COMPARISON
The Five mutual funds taken for comparison are open ended funds and equity in nature.
HDFC TOP 200 – GROWTH
Objective: To generate long term capital appreciation by investing in a portfolio of equities and
equity linked instruments drawn from the BSE 200 Index.
Type of Scheme Open Ended
Nature Equity
Option Growth
Inception Date Sep 11, 1996
Face Value (Rs/Unit) 10
MEAN STANDARD
DEVIATION SHARPE TREYNOR BETA
0.38 3.64 0.08 0.31 0.87
ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND - INSTITUTIONAL -
GROWTH
Objective: Seeks to generate long-term capital appreciation and income distribution to unit holders
from a portfolio that is invested in equity and equity related securities of about 20 companies
belonging to the large cap
Type of Scheme Open Ended
Nature Equity
Option Growth
Inception Date May 23, 2008
Face Value (Rs/Unit) 10
Minimum Investment (Rs) 10000000
Exit Load If redeemed bet. 0 Year to 1 Year; Exit load is 1%.
MEAN STANDARD
DEVIATION
SHARPE TREYNOR BETA
0.44 3.62 0.09 0.38 0.87
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DSP BLACKROCK SMALL AND MIDCAP FUND - GROWTH
Objective: The primary investment objective is to seek to generate long term capital appreciation
from a portfolio that is substantially constituted of equity related securities
FRANKLIN INDIA BLUECHIP - GROWTH
Objective: Aims to achieve a high degree of capital appreciation through investments is well-
established, large size blue chip companies
Type of Scheme Open Ended
Nature Equity
Option Growth
Inception Date Nov 14, 2006
Face Value (Rs/Unit) 10
Minimum Investment (Rs) 5000
Exit Load If redeemed bet. 0 Months to 12 Months; Exit load is 1%
Fund Manager Anup Maheshwari, Apoorva Shah .
Mean Standard
Deviation SHARPE TREYNOR BETA
0.49 3.74 0.10 0.44 0.87
Type of Scheme Open Ended
Nature Equity
Option Growth
Inception Date May 26, 2003
Face Value (Rs/Unit) 10
Minimum Investment (Rs) 5000
Exit Load If redeemed bet. 0 Months to 12 Months; Exit load is 1%
Fund Manager Sanjay Parekh , Shrey Loonkar, Sunil Singhania .
MEAN STANDARD
DEVIATION SHARPE TREYNOR BETA
0.36 3.40 0.07 0.31 0.81
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RELIANCE BANKING FUND – GROWTH
Objective: The primary investment objective of the Scheme is to seek to generate continuous
returns by actively investing in equity and equity related or fixed income securities of
companies in the banking sector.
Type of Scheme Open Ended
Nature Equity
Option Growth
Inception Date May 26, 2003
Face Value (Rs/Unit) 10
Minimum Investment (Rs) 5000
Exit Load If redeemed bet. 0 Months to 12 Months; Exit load is
1%
Fund Manager Sanjay Parekh , Shrey Loonkar, Sunil Singhania .
Mean Standard
Deviation SHARPE TREYNOR BETA
0.52 4.63 0.09 0.49 0.84
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RETURNS OF 5 MUTUAL FUNDS
HDFC TOP 200 – GROWTH
Fig 5.1
ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY FUND
Fig 5.2
DSP BLACKROCK SMALL AND MIDCAP FUND - GROWTH
Fig 5.3
1 Month 3 Months 6 Months 1 Year 3 Years 5 YearsSince
Inception
RETURNS 3.45 -0.82 13.36 -6.97 10.19 10.37 20.67
-10-505
10152025
1 Month 3 Months 6 Months 1 Year 3 YearsSince
Inception
RETURNS 3.46 -0.42 8.66 -3.06 14.12 12.89
-5
0
5
10
15
1 Month 3 Months6
Months1 Year 3 Years 5years
Since Inception
RETURNS 0.43 -1 18.11 -6.36 16.44 7.21 9.21
-10
-5
0
5
10
15
20
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FRANKLIN INDIA BLUECHIP – GROWTH
Fig 5.4
RELIANCE BANKING FUND – GROWTH
Fig 5.5
1 Month 3 Months6
Months1 Year 3 Years 5years
Since Inception
RETURNS 6.7 4.22 28.35 -5.84 16.08 15.93 28.22
-10
-5
0
5
10
15
20
25
30
35
1 Month 3 Months 6 Months 1 Year 3 Years 5yearsSince
Inception
RETURNS 5.14 0.26 12.06 -2.09 10.73 8.02 22.44
-5
0
5
10
15
20
25
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SHARPE RATIO
Table 8
SCHEMES 2011-2012
HDFC TOP 200 – GROWTH
0.08
ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY
FUND - INSTITUTIONAL I – GROWTH
0.09
DSP BLACKROCK SMALL AND MIDCAP FUND –
GROWTH
0.10
FRANKLIN INDIA BLUECHIP – GROWTH
0.07
RELIANCE BANKING FUND – GROWTH
0.09
The above table shows the Sharpe ratio of various schemes for the financial year 2011-12,
Sharpe ratio is a measure of the excess return per unit of risk in an investment asset of a trading
strategy. The Sharpe ratio is used to characterize how well the return of an asset compensates
the investor for the risk taken.
Among them, DSP BLACKROCK SMALL AND MIDCAP FUND – GROWTH was
considered as the best one with a ratio of 0.10. The least performance was shown by
FRANKLIN INDIA BLUECHIP – GROWTH which has a ratio of 0.07.
The performance of all selected mutual fund schemes was really low during the financial year
2011-2012.
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TREYNOR RATIO
Table 9
SCHEMES 2011-2012
HDFC TOP 200 – GROWTH
0.31
ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY
FUND - INSTITUTIONAL I – GROWTH
0.38
DSP BLACKROCK SMALL AND MIDCAP FUND –
GROWTH
0.44
FRANKLIN INDIA BLUECHIP – GROWTH
0.31
RELIANCE BANKING FUND – GROWTH
0.49
Treynor’s ratio measures the fund’s performance in relation to the market’s performance. The
table shows the Treynor’s ratio of selected mutual fund schemes for financial year 2011-12.
Among them RELIANCE BANKING FUND – GROWTH was top performing fund with a
maximum Treynor ratio of 0.49. It means that the scheme has a better risk adjusted performance
as compared to other schemes.
The least performing fund was HDFC TOP 200 – GROWTH and FRANKLIN INDIA
BLUECHIP – GROWTH with Treynor ratio of 0.31 which shows that the fund is having a
low risk adjusted performance.
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STANDARD DEVIATION
Table 9
SCHEMES 2011-2012
HDFC TOP 200 – GROWTH
3.64
ICICI PRUDENTIAL FOCUSED BLUECHIP EQUITY
FUND - INSTITUTIONAL I – GROWTH
3.62
DSP BLACKROCK SMALL AND MIDCAP FUND –
GROWTH
3.74
FRANKLIN INDIA BLUECHIP – GROWTH
3.40
RELIANCE BANKING FUND – GROWTH
4.63
Standard Deviation of a fund depicts, that how much the returns of the fund have deviated from
the mean level. The higher the value of standard deviation, the greater will be the volatility in
the fund's returns. In financial year 2011-12 , RELIANCE BANKING FUND – GROWTH
had standard deviation of 4.63% meaning that the fund's return fluctuated in either direction
(up or down) by 4.63% from its average return ,whereas FRANKLIN INDIA BLUECHIP –
GROWTH showed minimum deviation of 3.40%.
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RANKINGS Table 10
RANK SHARPE RATIO TREYNOR RATIO
1
DSP BLACKROCK SMALL AND
MIDCAP FUND – GROWTH
RELIANCE BANKING FUND –
GROWTH
2
ICICI PRUDENTIAL FOCUSED
BLUECHIP EQUITY FUND –
INSTITUTIONAL I – GROWTH
DSP BLACKROCK SMALL AND
MIDCAP FUND – GROWTH
3
RELIANCE BANKING FUND –
GROWTH
ICICI PRUDENTIAL FOCUSED
BLUECHIP EQUITY FUND –
INSTITUTIONAL I – GROWTH
4 HDFC TOP 200 – GROWTH
HDFC TOP 200 – GROWTH
5
FRANKLIN INDIA BLUECHIP –
GROWTH
FRANKLIN INDIA BLUECHIP –
GROWTH
Table 11
Rank STANDARD DEVIATION
1 RELIANCE BANKING FUND – GROWTH
2
DSP BLACKROCK SMALL AND MIDCAP FUND –
GROWTH
3 HDFC TOP 200 – GROWTH
4
ICICI PRUDENTIAL FOCUSED BLUECHIP
EQUITY FUND - INSTITUTIONAL I – GROWTH
5 FRANKLIN INDIA BLUECHIP – GROWTH
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LIMITATION TO THE STUDY
Although the report has been made on the relevant facts and figures but certain problems have
been faced, which are as follows: -
The respondents were sometimes biased while answering the questions
The study only covers the particular area of Borivali and Dahisar
The time constraint was one of the major problems.
To get an insight in the process of portfolio allocation and deployment of funds by
Fund manager is difficult.
The portfolio of mutual fund investments can change according to the market Conditions. This
project is carried out and evaluated on the basis of the market conditions from 1st May 2012 to
31st June 2012
SCOPE OF THE STUDY
Portfolio including other Financial Assets.
Portfolio Managers should try to bring in untapped market of age group of 22 to 35 age as this
group is wide and also earn high income with limited Liability
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FINDINGS
Active Management of funds are far better approach than passive management of Funds because
Portfolio’s are continuously checked and revised to take into account the effect market fluctuations
on Investors Portfolio and take appropriate measure.
Variable plan in portfolio revision gives higher returns in short term period
Beta is useful tool in measuring risk in mutual funds.
Less affordable by Middle class Investor as minimum investment needed is 25 lakhs.
Sharpe and Treynor ratio are mostly preferred to ascertain the risk and values of investment
Portfolio Diversification is necessary in order to manage the risk
Portfolio created as per Investor class and risk is more preferable.
SUGGESTIONS
Portfolio managers should reanalyze their portfolios as similar funds of different companies
have better performance than their competitors.
Before investing the past performance of several years should be considered and consistency
should be checked rather going for higher returns in recent period
Active management style should be adopted for short term period
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MY LEARNING
I have learnt many things analyzing the stocks and thereby deducing about their performance and
thus designing the portfolio on the basis of their performances.
Revising Portfolio as per different types of plans
Comparison of mutual funds with performance measures
I learnt about mutual funds as well as other products like Life insurance, Health Insurance, IPO
and transactions and some financial services offered by Acensure Financial Solutions Pvt. Ltd
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CONCLUSION
After studying & analyzing different portfolio’s the following conclusions can be made:
Winning with stocks means performing at least as well as a major market index over the long
haul. If one can sidestep the common investor mistakes, then one has taken the first and
biggest step in the right direction.
Portfolio Management services in mutual funds reduces risk without sacrificing returns.
PMS involves a proper investment decision with regards to what to buy and sell. It involves
proper money management. It is also known as Investment Management
If you wish to reap substantial benefits from your various investments & want your small pile
of investment to grow, the right portfolio management service (PMS) is a prerequisite for it
Diversified stock portfolios have offered superior long term inflation protection.
To understand stock funds, one needs to be familiar with the characteristics of the different
types of companies they hold.
PMS could end up being a well paying affair if you get this one right. So if you are ready to
put your nest egg & step into this world, put each step with a fine-toothed comb.
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REFERENCES
WEBLIOGRAPHY
http://www.amfiindia.com/showhtml.aspx?page=mfconcept
http://finance.wikia.com/wiki/Portfolio_Management_Services_-
_a_customized_investing_option_for_HNI_individuals
http://www.mbaknol.com/investment-management/portfolio-investment-process/
http://www.mutualfundsindia.com/
http://www.valueresearchonline.com/
http://www.moneycontrol.com/mf/portfolio/portupmore.php
BIBLIOGRAPHY
Mutual funds in India by Nalini Prava Tripathy
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ANNEXURE
What is your current age?
18 to 35 years old
35 to50 years old
Above 50 years old
What percentage of monthly income can be invested?
0 to 10%
11% to 20%
21% to 30%
More than 30%
I currently have no income
When do you expect to liquidate your investment?
Less than 1 year
1 to 2 years
3 to 5 years
6 to 7 years
More than 7 years
In order to achieve high returns I am willing to choose high risk investments.
Strongly agree
Neutral
Strongly disagree
What is your expected rate of return from your investments?
Potential return of 6% per annum
Potential return of 10% to 15% p. a
Potential return of more than 15% per annum
I would start to worry about my investments if my portfolio value falls
Less than 5% per annum
5%-10% per annum
10%-20% per annum
20%-30% per annum
More than 30% per annum
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Maximum allocation in your current portfolio pertains to
Savings and fixed deposits
Bonds
Equities
Mutual Funds
Derivatives options, swaps and futures
I prefer to keep capital safe rather than have high returns
Strongly agree
Neutral
Strongly disagree