Analysis of Sectoral Mutual Funds

ANALYSIS OF SECTORAL MUTUAL FUNDS

ANALYSIS OF SECTORAL MUTUAL FUNDS

1.1) ABOUT TOPICS1.2) IMPORTANCE OF TOPICS1.3) IMPORTANCE OF STUDY1.4) BENEFITS OF STUDY1.4.1) TO ORGANIZATION1.4.2) TO MY SELF1.5) COMPANY PROFILE

1.1) ABOUT TOPICS: The researcher has taken five sectoral mutual funds to understand the risks and return with respect to BSE index. Sectoral mutual funds has the different schemes available in the market for investors may invest their money into the different sectoral wise and get maximum returns out of it, here the investor has the number of option to invest their money into different sectoral wise so that researcher has to analysis the which sector gave the maximum return as compare to selected mutual funds schemes. Hence the researcher has to compare different sectoral mutual funds with the return of BSE index returns. In order to get a clear understanding as to what is the underlying concept of mutual fund let us see the following example.

In a cooperative housing society that has 100 apartments, a security guard is to be appointed. You find out that a good security guard costs Rs 2000 per month. Now for a single household to pay Rs 2000/- every month, it would be a heavy burden.

Now if all the households got together and shared the cost then it would make a better economic decision. Because all the residents of the housing society have the same need and therefore it makes sense to pool together.

For this act of pooling together you approach the residents welfare association (RWA). All the 100 flat owners contribute Rs 20 per month and ask (RWA) to appoint a security guard. Now it is the RWAs responsibility to ensure that the security guard is doing his job effectively. They also monitor his performance. If the RWA is unhappy with the security guard they can change the guard. The members keep contributing. If one flat owner sells his flat and moves out of the society, another flat owner takes his place and starts contributing.

Now in a mutual fund structure there is a trust, which is like the members of the co-operative society. The asset management company is something like the RWA who is responsible for getting the right kind of security guard and monitoring whether he is doing the right kind of job or not. And lastly the security guard is the investment.

1.2) IMPORTANCE OF TOPICS: This study helps to researcher to get practical knowledge and implement into the real situation. It is also helps to find out the where the investor may invest their money with minimum risk and maximum return. Importance of topics is the investor may invest different sector but which sector give maximum return with minimum risk but there is no possible without taking risk any investor cannot get return out of it. The main objective is that the whether the investors get more return as compare to BSE index.

Researcher gets clear understanding of from where the investor gets maximum return.Organization gets the current data related to topics.This study helps to an investor to find out their investment target.This study also helps in find out the return of Mutual funds with comparison of return of BSE index which gives maximum return with less risk.

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 appreciation realized by the scheme is 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.

1.3) IMPORTANCE OF STUDY: This study will help to organization for future expansion. This study helps to find out the scope from where the investor may invest their money and can get maximum return out of it. It helps in making an investment in Sector wise Mutual Funds. Organization get current data related to Sectoral Mutual Funds. This study helps me to understand investment in different Sector wise Mutual Fund. It helps me to understand how to find correlation between risks and return associate with Secoral Mutual funds and BSE index.

1.4) BENEFITS OF STUDY:

1.4.1) TO ORGANIZATION:-

This study will help to organization for future expansion. This study helps to find out the scope from where the investor may invest their money and can get maximum return out of it. It helps in making an investment in Sector wise Mutual Funds. Organization get current data related to Sectoral Mutual Funds.

1.4.2) TO MYSELF:-

This study helps me to understand investment in different Sector wise Mutual Fund. It helps me to understand how to find correlation between risks and return associate with Secoral Mutual funds and BSE index. To get deep knowledge in specialization subject and have practical knowledge out of it. Comparison between Theoretical knowledge obtained in BBA and to get Experience of Business life.

1.5) COMPANY PROFILE:

TEJAS INVESTMENT

Tejas investment is a subsidiary company of sharp education and trading pvt.ltd. It is completely manage by Mr. Tejas Nayak. Who himself is the chairman and managing director of tejas investment. Who has 7 years of experience in the field of stock market analysis. The chairman and managing director of sharp education training put. Ltd. is Mr. Aditya Srinivas. The company provides wide range of financial services including.

BSECash TradingNSECash Trading

Commodities Markets Trading (MCX)Financial Services

NSE Future &Option

Mutual FundsIPO Trading

[Financial Services Provided by TEJAS Investment] Our vision: To be a listed company in the next five years that is 2015. Our mission: To be a number one company in the field of providing quality education and guidance.

1. BSE Cash Trading.2. NSE Cash Trading.3. NSE Future and Option.4. Commodities Markets trading. (MCX)5. IPO Trading.6. Mutual Funds.

The company has made significant progress in the last 6 year of operation and has been able to achieve very good growth. The company has recently also entered into portfolio management service and provides advisory base services based on the requirement of the clients. This includes portfolio creation, portfolio restructuring and portfolio management. The company is actively engaged in business diversification and has entered the most promising sector that is the education sector. The company provides stock market related short-term courses like:

Short term cources by Tejas

Bases of InvestmentFundamental and Technical AnalysisPersonality DevelopmentCourses on Portfolio Management

1) Bases of Investment.2) Fundamental and Technical Analysis.3) Personality Development.4) Courses on Portfolio Management.

The company was formed in 2004 and has been in operation since there.

2.1) INTRO DUCATIO OF SECTORAL MUTUAL FUNDS2.2) MEANING OF SECTORS2.2.1) FMCG SECTORS2.2.2) PHARMACEUTICAL SECTORS2.2.3) INFRASTRUCTURE SECTORS2.2.4) POWER SECTORS2.2.5) TECHNOLOGY SECTORS

2.1) INTRODUCTION OF SECTOR MUTUAL FUNDS: There are several different ways one can diversify a portfolio, such as the different categories of the Morningstar style box, which contain several different asset classes. But another common way to diversify is between the various sectors of the economy. This is usually accomplished with mutual funds that concentrate in one of the major sectors, such as natural resources or utilities. This article will examine the nature and composition of sector funds and the advantages and disadvantages that they present to investors.

WHAT IS A SECTOR FUND?

As the name implies, a sector fund is a mutual fund that invests in a specific sector of the economy, such as energy or utilities. Sector funds come in many different flavors and can vary substantially in market capitalization, investment objective (i.e. growth and/or income) and class of securities within the portfolio. Sector funds do not fall into a particular category in the Morningstar style box, such as large-cap value or mid-cap growth.

2.2) MEANING OF SECTOR: The manufacturer of the some products is come together and establishes of homogeneous groups and this group is called an industry which is particular sector. There are many companies or scrip that manufacturer the same products provide services are comes and specified under the particular name that is called sector. E.G. HLL specified under the FMCG sector, Infosys, Wipro under the IT sector. There are many sectors in which many types of scrip are listed. Few sectors among these are as follows. Software Sector Banking Sector FMCG Sector Power Sector Garment Sector Automobile Sector Cement Sector Petrochemicals Sector Telecommunication Sector Pharmaceutical Sector Shipping Sector Agriculture Sector Steel Sector Fertilizer Sector

In all sector number of scrip are listed so it is easier to find out any particular scrip from the market.

From the above sector I have select five sectors out of it for preparing my project report and enhancing my knowledge pertaining to Sectoral Mutual Funds.

These are my selected Sectoral Mutual Funds are as below: 1) FAST MOVING CONSUMER GOODS (FMCG) Sector2) PHARMACEUTICAL Sector3) INFRASTRUCTURE Sector4) POWER Sector5) TECHNOLOGY Sector So here I would like to give brief idea about each of selected Sector;2.2.1) FAST MOVING CONSUMER GOODS (FMCG) Sector:

WHAT ARE FMCGS?

We regularly talk about things like butter, potato chips, toothpastes, razors, household care products, packaged food and beverages, etc. But do we know under which category these things come? They are called FMCGs. FMCG is an acronym for Fast Moving Consumer Goods, which refer to things that we buy from local supermarkets on daily basis, the things that have high turnover and are relatively cheaper.FMCG Products and Categories:-

Personal Care, Oral Care, Hair Care, Skin Care, Personal Wash (soaps);

Cosmetics and toiletries, deodorants, perfumes, feminine hygiene, paper products;

Household care fabric wash including laundry soaps and synthetic detergents; household cleaners, such as dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito repellents, metal polish and furniture polish; Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods.

FMCG companies maintain intense distribution network. Companies spend a large portion of their budget on maintaining distribution networks. New entrants who wish to bring their products in the national level need to invest huge sums of money on promoting brands. Manufacturing can be outsourced. A recent phenomenon in the sector was entry of multinationals and cheaper imports. Also the market is more pressurized with presence of local players in rural areas and state brands.

SWOT Analysis of FMCG Sector

Strengths:1. Low operational costs2. Presence of established distribution networks in both urban and rural areas3. Presence of well-known brands in FMCG sector

Weaknesses:1. Lower scope of investing in technology and achieving economies of scale, especially in small sectors2. Low exports levels3. "Me-too" products, which illegally mimic the labels of the established brands. These products narrow the scope of FMCG products in rural and semi-urban market.

Opportunities:

1. Untapped rural market2. Rising income levels, i.e. increase in purchasing power of consumers3. Large domestic market- a population of over one billion.4. Export potential5. High consumer goods spending

Threats: 1. Removal of import restrictions resulting in replacing of domestic brands2. Slowdown in rural demandTax and regulatory structure

Sector Outlook

FMCG is the fourth largest sector in the Indian Economy with a total market size of Rs. 60,000 cores. FMCG sector generates 5% of total factory employment in the country and is creating employment for three million people, especially in small towns and rural India.

2.2.2) PHARMACEUTICAL Sector: Accounting for two percent of the world's pharmaceutical market, the Indian pharmaceutical sector has an estimated market value of about US $8 billion. It's at 4th rank in terms of total pharmaceutical production and 13th in terms of value. It is growing at an average rate of 7.2 % and is expected to grow to US $ 12 billion by 2010.

Over the last two years the pharmaceutical market value has increased to about US $ 355 million because of the launch of new products. According to an estimate, 3900 new generic products have been launched in the past two years. These have been by and large launched by big brands in the pharmacy sector. And in the year 2005 Indian pharmaceutical companies captured around 70% of the domestic market. As in the present scenario, only a few people can afford costly drugs, which have increased price sensitivity in the pharmaceutical market. Now the companies are trying to capture the market by introducing high quality and low price medicines and drugs.

SWOT Analysis of pharmacy SectorStrengths:1. Cost effective technology 2. Strong and well-developed manufacturing base 3. Clinical research and trials 4. Knowledge based, low- cost manpower in science & technology 5. High-quality formulations and drugs 6. High standards of purity 7. Future growth driver 8. Excellent clinical trial centers Weaknesses:1. Low Indian share in world pharmaceutical market (about 2%) 2. Lack of strategic planning 3. Fragmented capacities 4. Low R&D investments 5. Low healthcare expenditure Opportunities:1. Incredible export potential 2. Increasing health consciousness 3. New innovative therapeutic products 4. Globalization 5. Drug delivery system management 6. Increased incomes 7. Production of generic drugs 8. Contract manufacturing 9. Clinical trials & research 10. Drug molecules

Threats:1. Small number of discoveries 2. Competition from MNCs 3. Transformation of process patent to product patent (TRIPS) 4. Outdated Sales and marketing methods 5. Non-tariff barriers imposed by developed countries

Over view The Indian pharmaceutical industry, which is now meeting over 95% of the country's pharmaceutical needs, was almost non-existent before 1970. With the compound annual growth of 19.8% the industry has grown from Rs.4 billion in 1970 to Rs.290 billion in 2003. The pharmacy sector has shown tremendous growth over the years. About 250 Indian pharmaceutical companies hold 70% of the market share with top players controlling about 7% of the market share.

2.2.3) INFRASTRUCTURE Sector: Infrastructure is the basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function. The term typically refers to the technical structures that support a society, such as roads, water supply, sewers, power grids, telecommunications, and so forth. Viewed functionally, infrastructure facilitates the production of goods and services; for example, roads enable the transport of raw materials to a factory, and also for the distribution of finished products to markets. In some contexts, the term may also include basic social services such as schools and hospitals. In military parlance, the term refers to the buildings and permanent installations necessary for the support, redeployment, and operation of military forces. There are two types of infrastructure are available that are as below;"Hard" and soft" infrastructure Hard infrastructure refers to the large physical networks necessary for the functioning of a modern industrial nation, Are as follow1. Transportation infrastructure2. Energy infrastructure3. Water management infrastructure4. Communications infrastructure5. Solid waste management Soft infrastructure refers to all the institutions which are required to maintain the economic, health and cultural/social standards of a country, such as the financial system, the education system, and the health care system, the system of government and law enforcement, as well as emergency services, are as follow1. Institutional infrastructure2. Industrial infrastructure3. Social infrastructure4. Cultural, sports and recreational infrastructure

The various factors responsible for the upswing in the India Infrastructure investments are:

The increasing demand in residential, commercial and industrial properties Growth in hospitality or hotel industry Development of Special Economic Zones (SEZ) Increased living standards of people with higher disposable incomes Development of IT and ITES industry. The Government of India is also liberalizing by providing more funds for infrastructure developments all across the country and relaxing the economic policies. The various acts by the GOI in this regard are: Indian Transfer Of Property Act Indian Registration Act, 1908. Indian Urban Land (Ceiling And Regulation) Act, 1976 Stamp Duty Rent Control Acts Property Tax Foreign Exchange Regulation Act, 1973

Besides the GOI interest in the realty sector other investments demanding mention are NRI Investments. NRI investment in infrastructure segment in India have increased manifold. Special NRI cities are being developed around, major cities in India like Noida, Bangalore, Mumbai, Pune, Kolkata etc.

A major chunk of the Foreign Direct Investments (FDI's) presently goes into the Indian realty sector. Steps have been taken to manage and further promote real estate investment in India. An Indian Real Estate Investment Trust (REIT) is being formed that will facilitate fast and easy liquidation of investments in the real estate market in India. The Indian realty market is flooded with Initial Public Offer (IPO) by various real estate and infrastructure development groups. This is opening further avenues for investments in real estate in India.

2.2.4) POWER Sector: The electrical power industry provides the production and delivery of electrical power often known as power, or electricity, in sufficient quantities to areas that need electricity through a grid connection. The grid distributes electrical energy to customers. Electric power is generated by central power stations or by distributed generation. Many households and businesses need access to electricity, especially in developed nations, the demand being scarcer in developing nations. Demand for electricity is derived from the requirement for electricity in order to operate domestic appliances, office equipment, industrial machinery and provide sufficient energy for both domestic and commercial lighting, heating, cooking and industrial processes. Because of this aspect of the industry, it is viewed as a public utility as infrastructure. When India became independent in 1947, the country had a power generating capacity of 1,362 MW. Generation and distribution of electrical power was carried out primarily by private utility companies. Notable amongst them and still in existence is Calcutta Electric. Power was available only in a few urban centers; rural areas and villages did not have electricity. After 1947, all new power generation, transmission and distribution in the rural sector and the urban centers (which was not served by private utilities) came under the purview of State and Central government agencies. State Electricity Boards (SEBs) were formed in all the states. National Thermal Power Corporation (NTPC), National Hydro-electric Power Corporation (NHPC) and Power Grid Corporation Limited (PGCL) were formed by the government to assist in meeting the increasing demand for electricity throughout the country. The electricity sector is in the 'concurrent list', meaning that both, State and Central governments participate in the sector's development. The Ministry of Power in the Central government formulates the policies for the power sector. The Central Electricity Authority (CEA) was established as a statutory authority to develop a 2nd National Power Policy and also to function as a regulatory authority. As per government guidelines, all power projects above a certain capacity have to obtain techno-economic clearance from CEA before they can be implemented. A new Ministry of Non-Conventional Energy Sources has also been formed to focus on renewable energy sources to augment the generation capacity of electrical power. The Public sector units (PSUs) provided a vital service to the nation in the post-independence era. From the few transmission and distribution networks existing at the time of independence, in few urban centers, the PSUs have established networks covering the entire length and breadth of the country. Besides, massive rural electrification programs have boosted agricultural production in a big way. Today, India is self-sufficient in food grains primarily because of this. 2.2.5) TECHNOLOGY Sector: The Indian information technology (IT) industry has played a key role in putting India on the global map. The wheel was invented circa 4000 BC, and has become one of the world's most famous, and most useful technologies. This wheel is on display in The National Museum of Iran, in Tehran. The history of technology is the history of the invention of tools and techniques, and is similar in many ways to the history of humanity. Background knowledge has enabled people to create new things, and conversely, many scientific endeavors have become possible through technologies which assist humans to travel to places we could not otherwise go, and probe the nature of the universe in more detail than our natural senses allow. Technological artifacts are products of an economy, a force for economic growth, and a large part of everyday life. Technological innovations affect, and are affected by, a society's cultural The Indian information technology sector continues to be one of the sunshine sectors of the Indian economy showing rapid growth and promise. According to a report prepared by McKinsey for NASSCOM called 'Perspective 2020: Transform Business, Transform India' released in May 2009, the exports component of the Indian industry is expected to reach US$ 175 billion in revenue by 2020. The domestic component will contribute US$ 50 billion in revenue by 2020. Together, the export and domestic markets are likely to bring in US$ 225 billion in revenue, as new opportunities emerge in areas such as public sector and healthcare and as geographies including Brazil, Russia, China and Japan opt for greater outsourcing.

3.1) OBJECTIVES OF STUDY3.2) PROBLEMS OF STAMENT3.3) BENEFIT OF STUDY3.4) RESEARCH DESIGN3.5) SAMPLING3.6) RESEARCH TOOLS3.7) LIMITATION OF STUDY

3.1) OBJECTIVE OF STUDY: This study will help to organization for future expansion. This study helps to find out the scope from where the investor may invest their money and can get maximum return out of it. It helps in making an investment in Sector wise Mutual Funds. Organization get current data related to Sectoral Mutual Funds. This study helps me to understand investment in different Sector wise Mutual Fund. It helps me to understand how to find correlation between risks and return associate with Secoral Mutual funds and BSE index. To get deep knowledge in specialization subject and have practical knowledge of it. Comparison between Theoretical knowledge obtained in BBA and to get Experience of Business life.

3.2) PROBLEMS OF STATEMENT:

A study on Analysis of Sectoral Mutual Funds (With respect of Fast Moving Consumer Goods (FMCG), Pharmaceutical, Infrastructure, Power, and Technology)

3.3) BENEFIT OF STUDY:

To know the risks and return associated with investing in different sectoral Mutual Fund. To ascertain the investors awareness about various different sector of investment. To know the different investment scenario in sectoral Mutual funds scheme. To know the objective behind their investment. Either for short period of time or for perpetual. It also help to find out the Co-relation coefficient associated with it. This study helps to an investor to make the right investment in right sectoral Mutual Funds. This study also helps to find out the volatility with respect to BSE index return.

3.4) RESEARCH DESIGN: According to Kerlinger,Research design is the plan, structure and strategy of investigation conceived so as to obtain answers to research question and to control the variance. The definition consists of three important terms Plan, structure and strategy. Plan is an outline of the research scheme on which the researcher is to work. Structure of the research is more specific outline or the scheme and strategy shows how the research will be carried out, specifying the methods to be used in the collection and analyses of data.

Types of research design:1) Exploratory Research 2) Descriptive design 3) Causal design

Exploratory Research:- Exploratory Research is considered suitable for the topics, it would try to discover a relationship between return of sectoral mutual funds with respect to BSE index return. E.g. in a business where sales are reducing since last few months, the management may conduct a study to find out what could be the possible explanations sales might have declined on account of number of factors like deterioration in the quality of product, increased competition,

3.5) SAMPLING: Sampling is the process of drawing a sample from a large population is called sampling.

Probability sampling. Non probability sampling

Population: All the sectoral mutual funds in India.

Sample: Drawing a sample unit from the entire population is called sample. I have selected five sectors of mutual funds those are as mention below;1) FAST MOVING CONSUMER GOODS (FMCG) Sector2) PHARMACEUTICAL Sector3) INFRASTRUCTURE Sector4) POWER Sector5) TECHNOLOGY Sector

Sampling plan: Non probability sampling plan Rule of thumb approach

3.6) RESEARCH TOOLS:

Appropriate Statistical tools like Correlation Co-efficient (r), Standard deviation (S.D) and Beta () will be used to analyze the data to quantify analyze the relationship between Mutual funds return and BSE index return. Standard deviation (S.D) is used to analyze volatility. Beta () is used to analyze the risks and return associated with the particular investment.

3.7) LIMITATION OF STUDY:

As the data available to me has been taken from the secondary sources (like internet). It is not sure that collected data are accurate and complete. Because of the time limitation, it may be possible that some important data are left out. The data which are very useful for the analysis are lacking in this Project or contract that are still in negotiation or any kind of deal which is in-process. Here that is ignored. Due to lack of experience and knowledge of the sectoral mutual funds it cant be said that the projection has been made totally correct and accurate. As the time available was very less, so analysis has been done only of five sectors. This may led to misinterpretation of the industry. Todays stock market is totally running on the investors perception so the conclusion derived on the basis of analysis would not viable in long run.

4.1) INTRODUCTION OF MUTUAL FUNDS4.2) HISTORY OF MUTUAL FUNDS IN INDIA4.3) PHASES OF MUTUAL FUNDS IN INDIA4.4) WHAT IS MUTUAL FUND?4.5) STRUCTURE OF MUTUAL FUNDS4.6) TYPES OF MUTUAL FUNDS4.7) ADVANTAGES OF MUTUAL FUNDS4.8) FREQUANTILY USED TERMS IN MUTUAL FUNDS

4.1) INTRODUCTION OF MUTUAL FUND 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 appreciation 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 todays 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.

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 scheme.

DEFINITION OF MUTUAL FUND?

Mutual funds are investment companies whose job is to handle their investors money by reinvesting it into stocks, bonds, government securities or a combination of two things

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 then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

4.2) HISTORY OF MUTUAL FUNDS IN INDIA: The end of millennium marks 36 years of existence of mutual funds in this country. The ride through these 36 years is not been smooth. Investor opinion is still divided. While some are for mutual funds others are against it.

UTI commenced its operations from July 1964. The impetus for establishing a formal institution came from the desire to increase the propensity of the middle and lower groups to save and to invest. UTI came into existence during a period marked by great political and economic uncertainty in India. With war on the borders and economic turmoil that depressed the financial market, entrepreneurs were hesitant to enter the capital market.

The already existing companies found it difficult to raise fresh capital, as investors did not respond adequately to new issues. Earnest efforts were required to canalize savings of the community into productive uses in order to speed up the process of industrial growth.

The Finance Minister, T.T. Krishnamachari set up the idea of a unit trust that would be "open to any person or institution to purchase the units offered by the trust. However, this institution as we see it, is intended to cater to the needs of individual investors, and even among them as far as possible, to those whose means are small"

His ideas took the form of the Unit Trust of India, an intermediary that would help fulfill the twin objectives of mobilizing retail savings and investing those savings in the capital market and passing on the benefits so accrued to the small investors.

UTI commenced its operations from July 1964 "with a view to encouraging savings and investment and participation in the income, profits and gains accruing to the Corporation from the acquisition, holding, management and disposal of securities." Different provisions of the UTI Act laid down the structure of management, scope of business, powers and functions of the Trust as well as accounting, disclosures and regulatory requirements for the Trust. One thing is certain - the fund industry is here to stay. The industry was one-entity show till 1986 when the UTI monopoly was broken when SBI and Canbank mutual fund entered the area. This was followed by the entry of others like BOI, LIC, GIC, etc. sponsored by public sector banks. Starting with an asset base of Rs 0.25 in 1964 the industry has grown at a compounded average growth rate of 26.34% to its current size of Rs 1130. The period 1986-1993 can be termed as the period of public sector mutual funds (PMFs). From one player in 1985 the number increased to 8 in 1993. The party did not last long. When the private sector made its debate in 1993-94, the stock market was booming.

The opening up of the asset management business to private sector in 1993 saw international players like Morgan Stanley, Jardine Fleming, JP Morgan, George Soros and Capital International along with the period of 1994-96 was one of the worst in the history of Indian Mutual Funds.

4.3) PHASES OF MUTUAL FUND IN INDIA(1964-2000)

The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under.

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 cores of assets under management.

SECOND PHASE - 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS) Entry of non-UTI mutual funds. SBI Mutual Fund was the first 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 in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under management.

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 cores. The Unit Trust of India with Rs.44,541 cores of assets under management was way ahead of other mutual funds.

FOURTH PHASE - SINCE FEBRUARY 2003 This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29, 835 cores (as on January 2003). 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 cores of AUM 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 September, 2004, there were 29 funds, which manage assets of Rs.153108 cores under 421 schemes.

FIFTH PHASE V. GROWTH AND CONSOLIDATION - 2004 ONWARDS The industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players.

4.4) WHAT IS MUTUAL FUND?

Investors

Profit/Loss from portfolio of investmentsInvest/pool their money

Mutual Fund Co.(Pool of money)

Investing a number of stocks/bondsProfit/Loss from individual of investments

Market(Fluctuates)

A Mutual Fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc.

4.5) STRUCTURE OF MUTUAL FUND

SEBI

DistributorMarket/SalesMarket/SalesOperationsTrusteeSponsorInvestorSchemesMutual FundFund ManagerAMC

1) Sponsor: Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund. 2) Trust: The Sponsor constitutes the Mutual Fund as a trust in accordance with the provisions of the Indian Trusts Act, 1882. The trust deed is registered under the Indian Registration Act, 1908.

3) Trustee: Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main responsibility of the Trustee is to safeguard the interest of the unit holders and inter alia ensure that the AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner.

4) Asset Management Company (AMC): The Trustee as the Investment Manager of the Mutual Fund appoints the AMC. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of at least 10 core at all times.

5) Registrar and Transfer Agent: The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form, redemption requests and dispatches account statements to the unit holders. The Registrar and Transfer agent also handles communications with investors and updates investor records. 4.6) TYPES OF MUTUAL FUNDS

On the basis of Execution and OperationOn the basis of yield and investment patternMutual Fund In the investment market, one can find a variety of investors with different needs, objectives and risk talking capacities.

Open - EndedClose - EndedIncome Fund

Growth Fund

Balance Fund

Specialized Fund

Money Market

Taxation Fund

A. On the basis of Execution and Operation

1) Close-ended Funds: The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed number of units. These schemes are launched with an initial public offer (IPO) with a stated maturity period after which the units are fully redeemed at NAV linked prices. In the interim, investors can buy or sell units on the stock exchanges where they are listed. Unlike open-ended schemes, the unit capital in closed-ended schemes usually remains unchanged. After an initial closed period, the scheme may offer direct repurchase facility to the investors. Closed-ended schemes are usually more illiquid as compared to open-ended schemes and hence trade at a discount to the NAV. This discount tends towards the NAV closer to the maturity date of the scheme.

Features: The period and/or the target amount of the fund are definite and fixed beforehand. Once the period is over and/or the target is reached, the door is closed for the investors. They cannot purchase any more units. These units are publicly traded through stock exchange and generally, there is no repurchase facility by the fund. The main objective of this fund is capital appreciation. The whole fund is available for the entire duration of the scheme and there will not be any redemption demands before its maturity. At the time of redemption, the entire investment pertaining to a closed-end scheme is liquidated and the proceeds are distributed among the unit holders.

2) 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.

Features: There is complete flexibility with regard to one's investment or disinvestment. These units are not publicly traded but the Fund is ready to repurchase them and resell them at any time. The investor is offered install liquidity in the sense that the unit can be sold on any working day to the Fund. The main objective of this fund is income generation. The inventors get dividend, right or bonuses as rewards for their investment. Generally, the listed prices are close to their Net Asset Value. The Fund fixes a different price for their purchases and sales.

B. On the basis of yield and investment pattern

1) 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.

Features: The investor is assured of regular income at periodic intervals, says Half- yearly or years and so on. The main objective of this type fund is to declare regular dividends and not capital appreciation. The pattern of investment is oriented towards high and fixed income yielding securities like debentures, bonds etc. This is best suited to the old and retired people who may not have any regular income. It concerns itself with short run gains only.

2) 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.

Features: The Growth oriented fund aims at meeting the investors' need for capital appreciation. The Investment strategy therefore, conforms to the Fund objective by investing the fund predominantly on equities with high growth potential. The Fund tries to get capital appreciation by taking much risk and investing on risk bearing equities and high growth equity shares. The Fund may declare dividend, but its principal objective is only capital appreciation. This is best suited to salaried and business people who have high risk bearing capacity and ability to defer liquidity. They can accumulate wealth for future needs.

3) Balance 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.

4) Specialized Funds:

1) Index schemes: The primary purpose of an Index is to serve as a measure of the performance of the market as a whole, or a specific sector of the market. An Index also serves as a relevant benchmark to evaluate the performance of mutual funds. Some investors are interested in investing in the market in general rather than investing in any specific fund. Such investors are happy to receive the returns posted by the markets. As it is not practical to invest in each and every stock in the market in proportion to its size, these investors are comfortable investing in a fund that they believe is a good representative of the entire market. Index Funds are launched and managed for such investors. An example to such a fund is the HDFC Index Fund.

5) Tax Saving schemes: Investors (individuals and Hindu Undivided Families HUFs) are being encouraged to invest in equity markets through Equity Linked Savings Scheme (ELSS) by offering them a tax rebate. Units purchased cannot be assigned / transferred/ pledged / redeemed / switched out until completion of 3 years from the date of allotment of the respective Units.

6) 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 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.

4.7) Advantages of Mutual Fund:- Mutual funds serve as a link between the saving public and the capital markets. They mobilize savings from the investors and bring them to borrowers in the capital markets. Today mutual funds are fast emerging as the favorite investment vehicle because of the many advantages they have over other forms and avenues of investing. The major advantages offered by mutual funds to all investors are:

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.

5. Low Cost:- 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:- You get regular information on the value of your investment in addition to disclosure on the specific investments made by your 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, you 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 stock. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy.

10. Choice of schemes:- Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

11. Well Regulated:- All Mutual Funds are registered with SEBI and they function within the provision of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.

4.8) FREQUENTLY USED TERMS

1) Net Asset Value (NAV): Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.The NAV Calculated as following way: -

NAV =

It also be calculated as: - Unit Capital + Reserves The dividend paid on Units under the Dividend Plan and distribution tax (if applicable, as per the prevalent tax provisions) on the amount of Dividend distributed shall be deducted in computing the NAV of the Units under the Dividend Plan each time Dividend is declared and till it is distributed. Consequently once the Dividend is distributed under the Dividend Plan, the NAV of the Units under the Dividend Plan will always remain lower than the NAV of the Units under the Growth Plan. The income earned / accrued and profits realized attributable to the Units under the Growth Plan shall remain invested and shall be deemed to have been invested in the Growth Plan to the exclusiveness of the Units under the Dividend Plan, and would be reflected in the NAV of the Units under the Growth Plan.

Net Asset Value shall be calculated as of the close of every Business Day. Calculation of the Schemes Net Asset Value will be subject to such rules or regulations that SEBI may issue from time to time and will be subject to audit on an annual basis. The computation and disclosure of the Net Asset Value and the repurchase price shall be in conformance with SEBI (MF) Regulations, 1996.

Example: A scheme with 1,000 units has the following items in its balance sheet.

Unit capital Rs.10,000/-, Investment at market value Rs.25,000/-, Other assets Rs.35,000/-, Other liabilities Rs.2,000/-, Issue expenses not written off Rs.500/- & Reserves Rs.17,000/-. What would be its NAV? A good starting point would be to put down the numbers in a tabular form to ensure that all items are treated properly: -

LiabilitiesRs.AssetsRs.

Unit Capital10,000/-Investment (M.V)25,000/-

Reserve17,000/-Other assets3,500/-

Other Liabilities2,000/-Issue Exp. Not W/o500/-

Total29,000/-Total29,000/-

NAV =

2) Sale PriceIs the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load.

3) Repurchase Price Is the price at which a close-ended scheme repurchases its units and it may include a back-end load. This is also called Bid Price.

4) Redemption PriceIs the price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related.

5) Sales Load Is a charge collected by a scheme when it sells the units. Also called, Front-end load. Schemes that do not charge a load are called No Load schemes.

6) Repurchase or Back-end LoadIs a charge collected by a scheme when it buys back the units from the unit holders.

5.1) PERFORMANCE OF MUTUAL FUNDS UNDER FMCG SECTOR

Franklin FMCG fund (G)

Fund TypeOpen-Ended

Investment PlanGrowth

Asset Size (Rs cr)77.59 (Dec-31-2010)

Minimum InvestmentRs.5000

Last DividendN.A.

BonusN.A.

Launch DateMar 30, 1999

BenchmarkN.A.

Fund Manager Prashant Kothari / Mrinal Singh

NotesN.A.

Entry LoadN.A.

Exit Load1.00%

Load CommentsExit Load 1% if units are redeemed / switched-out for a period of up to 1 year from the date of allotment.

Quarterly NAV (Net Assets value)YearQtr 1Qtr 2Qtr 3Qtr 4Annual

20104.615.612.3-0.831.7

2009-0.723.413.912.248.8

2008-12-8.84.9-11.8-27.7

2007-7.19.910.511.324.6

200621.9-12.97.2-1.514.7

(Source: moneycontro.com/mutual fund/detail view)QuarterSecuritySensex

Q121.96.28876137.72439.5485479.613.325611.05962

Q2-12.9-1.621620.91862.62959166.41-4.5847621.02002

Q37.25.5386839.878530.67751.842.575526.633303

Q4-1.51.6468-2.47022.711952.25-1.316361.732804

14.711.8526196.05175.567700.11040.4457

For the year 2006

S.DR

=

YEARRETURNSTANDARD DEVIATION(S.D)BETA ()CO-RELATION COEFFICIENT (r)

201031.70001.71061.24160.3305

200948.80005.85121.25530.8557

2008-27.70002.95762.15410.9175

200724.60003.04052.46700.9785

200614.70003.17983.77030.9433

AVERAGE18.42003.34792.17770.8051

Interpretation:- Here, Franklin FMCG fund (G) has an average return of 18.42 which is good for the view point of investment. Standard Deviation (S.D) is higher in the year 2009 has 5.8512. And an average is 3.3479 which mean it is highly volatile with comparison of BSE index. Beta () is higher in the year 2006 has 3.7703. And an average is 2.1777 that are more than 1 which mean risks and return is higher. Co-relation Co-efficient is higher in the year 2007 has 0.9785. And an average is 0.8051 which is near to 1 that mean the positive relation between Mutual funds return and BSE index return. ICICI Pru FMCF Fund (D)

Top of FormBottom of FormFund Type Open-Ended

Investment PlanDividend



Last DividendRs.1.20 (Feb-11-2010)

BonusN.A.


BenchmarkN.A.

Fund Manager Prashant Kothari / Mrinal Singh

NotesN.A.

Entry LoadN.A.

Exit Load1.00%



2010-4.11612.3-4.120.1

2009-8.220.11912.143

2008-24.4-12.5-12.4-16.3-65.6

2007-8.610.94.123.329.7

20069.8-17.216.64.213.4

(Source: moneycontro.com/mutual fund/detail view)


201020.10001.71062.28270.4236

200943.00005.85121.32130.6804

2008-65.60002.95761.23320.7475

200729.70003.04053.00280.7917

200613.40003.17983.67590.9239

AVERAGE8.12003.34792.30320.7134

SBI Magnum FMCF Fund



Asset Size (Rs cr)32.92 (Jan-31-2011)


Last DividendRs.6.00 (Mar-03-2006)

BonusN.A.

Launch DateJul 31, 1999

BenchmarkBSE FMCG Sector

Fund Manager Sohini Andani

NotesN.A.

NotesN.A.

Entry LoadN.A.

Exit Load1.00%

Load CommentsExit Load 1% if units are redeemed / switched-out within 1 year from the date of allotment.


20109.214.317.2-1.139.6

20092.419.818.4-0.240.4

2008-19.7-6.30.9-10.4-35.5

2007-9.78.69.319.627.8

200616.5-12.42.7-15.8



201039.60001.71062.14220.5260

200940.40005.85121.32490.8556

2008-35.50002.95762.23530.8881

200727.80003.04053.23760.9328

20065.80003.17982.96680.9143

AVERAGE15.62003.34792.38140.8233

SCHEMEAVERAGE RETURNSTANDARD DEVIATION(S.D) BETA ()CO-RELATION COEFFICIENT (r)

Franklin FMCG Fund (G)18.42003.34792.17770.8051

ICICI Pru FMCG Fund (D)8.12003.34792.30320.7134

SBI Magnum FMCG Fund15.62003.34792.38140.8233

AVERAGE14.05333.34792.28740.7806

PERFORMANCE OF MUTUAL FUNDS UNDER FMCG SECTOR

Interpretation:- Researcher has taken an average return, Standard deviation, Beta and Co-relation Co-efficient of FMCG Sectors funds to know the risks and return associate with it. Here, Standard Deviation is 3.3479 which mean the FMCG funds have a higher volatile with comparison of BSE index return. Average Beta of FMCG funds is 2.2874. Which is more than 1 that is risks is higher. Average Co-relation Coefficient of FMCG funds are 0. 7806. This is near to 1 which means that positive correlation between return of FMCG funds and BSE index.

5.2) PERFORMANCE OF MUTUAL FUNDS UNDER PHARMACEUTICAL SECTOR

Reliance PHARMA Fund (G)Top of FormBottom of FormFund Type Open-Ended




Last DividendN.A.

BonusN.A.

Launch DateMay 26, 2004

BenchmarkBSE Healthcare Sector

Fund Manager Sailesh Raj Bhan

NotesN.A.

Entry LoadN.A.

Exit Load1.00%

Load CommentsExit load - 1% if redeemed/switched out on or before completion of 1 yrs from the date of allotment.

Quarterly NAV (Net Assets value)

YearQtr 1Qtr 2Qtr 3Qtr 4Annual

2010118.70.96.627.2

2009-5.43340.9-0.268.3

2008-29.10.63.4-10.6-35.7

2007-4.331.2-2.718.542.7

200613.6-23.221.94.917.2

(Source: moneycontro.com/mutual fund/detail view)YEARRETURNSTANDARD DEVIATION(S.D)BETA ()CO-RELATION COEFFICIENT (r)

201027.20001.7106-2.0748-0.9477

200968.30003.04052.57590.7478

2008-35.70002.95763.52720.8168

200742.70005.85121.92420.3932

200617.20003.17984.98320.9334

AVERAGE23.94003.34792.18710.3887

Franklin PHARMA fund (G)





Last DividendN.A.

BonusN.A.


BenchmarkN.A.

Fund Manager Anand Radhakrishnan

NotesN.A.

Entry LoadN.A.

Exit Load1.00%



2010137.33.96.130.3

2009-0.837.531.619.788

2008-13.34.81.2-20.8-28.1

2007-1.911.9-11.8108.2

200617-21.614.96.717



201030.30001.7106-1.3665-0.6955

200988.00005.85122.01590.8056

2008-28.10002.95763.03120.8581

20078.20003.04050.25200.0799

200617.00003.17984.57700.9443

AVERAGE23.08003.34791.70190.3985

SBI Magnum PHARMA Fund (D)





Last DividendRs.3.90 (Dec-31-2004)

BonusN.A.

Launch DateJul 31, 1999

BenchmarkBSE Healthcare Sector

Fund Manager Sohini Andani

NotesN.A.

Entry LoadN.A.

Exit Load1.00%



20104.89.8-0.39.523.8

2009-11.143.826.2-0.258.7

2008-276.7-10.5-27.8-58.6

2007-7.212.9-9.711.77.7

200610-1814.94.111



201023.80001.7106-2.0140-0.8367

200958.70003.04053.49900.9477

2008-58.60002.95763.29780.6903

20077.70003.04051.23400.3600

200611.00003.17983.67800.9300

AVERAGE8.52002.78581.93900.4183

UTI PHARMA Fund (G)





Last DividendN.A.

BonusN.A.

Launch DateJun 26, 1999

BenchmarkN.A.

Fund Manager Lalit Nambiar / Anoop Bhaskar

NotesN.A.

Entry LoadN.A.

Exit Load1.00%

Load CommentsExit Load 1% if redeemed within 1 Year from the date of allotment.



201011.88.91.49.932

2009-1.318.225.1-0.241.8

2008-15.59.8-0.4-18.4-24.5

2007-4.413.4-6.5-6.5-4

200614.1-22.213.54.810.2



201032.00001.7106-2.2402-0.9701

200941.80005.85121.36720.6975

2008-24.50002.95762.99240.7726

2007-4.00003.0405-0.0476-0.0173

200610.20003.17984.37930.9437

AVERAGE11.10003.34791.29020.2853

PERFORMANCE OF MUTUAL FUNDS UNDER PHARMA SECTOR


Franklin Pharma Fund (G) 23.08003.34791.70190.3985

Reliance Pharma Fund (G)23.94003.34792.18710.3887

SBI Magnum Pharma Fund (D)8.52002.78581.93900.4183

UTI Pharma & Healthcare Fund (G)11.10003.34791.29020.2853

AVERAGE16.66003.20741.77960.3727

Interpretation:- Researcher has taken an average of Pharmaceutical Sectors funds to know the risks and return associate with it. Here, Average Standard Deviation is 3.2074 which mean the Pharmaceutical funds have a higher volatile with comparison of BSE index return. Average Beta of Pharmaceutical funds 1.7796. Which is more than 1 that is risks is higher. Average Co-relation Coefficient of funds is 0. 3727. This is near to 1 which means that positive correlation between return of Pharmaceutical funds and BSE index.

5.3) PERFORMANCE OF MUTUAL FUNDS UNDER INFRASTRUCTURE SECTOR

L&T INFRASTRUCTURE Fund (G)





Last DividendN.A.

BonusN.A.

Launch DateSep 06, 2007

BenchmarkS&P CNX Nifty

Fund Manager Bajrang Kumar Bafna

NotesL&T Infrastructure Fund, a close ended scheme has been converted into an open ended equity scheme with effect from September 27, 2010.

Entry LoadN.A.

Exit Load1.00%

Load CommentsExit load of 1% if redeemed within 1 year from the date of allotment.



20100.10.39.1-5.54

2009-10.363.711.6-2.562

2008-32.8-17.11.9-31.9-79.9



20104.00001.71062.57050.8417

200962.50005.85124.88690.9913

2008-79.90002.95764.71560.9902

AVERAGE-4.46673.50644.05770.9411

Bharti AXA Focused INFRASTRUCTURE Fund (G)





Last DividendN.A.

BonusN.A.

Launch DateFeb 18, 2010

BenchmarkBSE 100

Fund Manager Prateek Agrawal

NotesN.A.

Entry LoadN.A.

Exit Load1.00%

Load CommentsExit Load 1% if redeemed within 1year from the date of allotment.


20100.8-2.19.2-70.9



20100.90001.71062.83140.8231

AVERAGE0.90001.71062.83140.8231

Baroda Pioneer INFRASTRUCTURE Fund (G)



Asset Size (Rs cr)33.31 (Nov-30-2010)


Last DividendN.A.

BonusN.A.


BenchmarkCNX 100

Fund Manager Dipak Acharya

NotesN.A.

Entry LoadN.A.

Exit Load1.00%

Load CommentsExit load: 1% if redeemed on or before 365 Days from the date of allotment.


2010-0.16.3-3.92.5


20102.50001.80822.04890.8829

AVERAGE2.50001.80822.04890.8829

Canara Robeco INFRASTRUCTURE Fund (G)



Asset Size (Rs cr)156.27 (Feb-28-2011)


Last DividendN.A.

BonusN.A.

Launch DateNov 09, 2005


Fund Manager Anand Shah

NotesN.A.

Entry Load0.00%

Exit Load1.00%

Load CommentsExit load 1% if redeemed/switched out within 1 year from the date of allotment. For all investments in SIP/STP exit load 1%, if redeemed/switched out within 2 year from the date of allotment.



20101.44.29.7-5.89.5

2009-2.755.514.53.871.1

2008-30.6-19.8-4-20.6-75

2007-9.530.423.730.775.3

200625.3-18.813.413.533.4



20109.50001.71062.24880.6888

200971.10005.85123.83100.9905

2008-75.00002.95762.81290.8739

200775.30003.04055.08340.9316

200633.40003.17984.62530.8966

AVERAGE22.86003.34793.72030.8763

PERFORMANCE OF MUTUAL FUNDS UNDER INFRASTRUCTURE SECTOR


L&T Infrastructure Fund (G) -4.46673.50644.05770.9411

Bharti AXA Focused Infrastructure Fund (G)0.91.71062.83140.8231

Baroda Pioneer Infrastructure Fund (G)2.50001.80822.04890.8829

Canara Robeco Infrastructure (G) 22.86003.34793.72030.8763

AVERAGE5.44832.59333.16460.8808

Interpretation:- Researcher has taken an average of Infrastructure Sectors funds to know the risks and return associate with it. Here, Average Standard Deviation is 2.5933 which mean the Infrastructure funds have a higher volatile with comparison of BSE index return. Average Beta of Infrastructure funds 3.1646. Which is more than 1 that is risks is higher. Average Co-relation Coefficient of funds is 0.8808. This is near to 1 which means that positive correlation between return of Infrastructure funds and BSE index.

5.4) PERFORMANCE OF MUTUAL FUNDS UNDER POWER SECTOR

ICICI Pru POWER (G)Top of FormBottom of FormFund Type Open-Ended




Last DividendN.A.

BonusN.A.

Launch DateOct 05, 2001


Fund Manager Mrinal Singh / Sanjay Parekh

NotesN.A.

Entry LoadN.A.

Exit Load1.00%

Load CommentsExit Load 1% if units are redeemed / switched-out within 1 year from the date of allotment. Exit Load of 1% for SIP/STP if units are redeemed / switched-out within 2 year from the date of allotment.


20101.62.715.4-0.918.8

2009-0.94218.66.366

2008-28.7-16.2-0.7-22.8-68.4

2007-6.420.510.324.248.6

200625-12.216.912.942.6



201018.80001.71063.51580.9525

200966.00005.85122.75720.9904

2008-68.40002.95763.37830.9561

200748.60003.04053.27240.8391

200642.60003.17984.09490.9372

AVERAGE21.52003.34793.40370.9350

Escorts POWER and Energy Fund (G)





Last DividendN.A.

BonusN.A.

Launch DateSep 23, 2008

BenchmarkBSE Power Index

Fund Manager Jagveer Singh Fauzdar

NotesN.A.

Entry LoadN.A.

Exit Load1.00%




2010-32.55.8-5.7-0.4

2009243.57.86.860.1



2010-0.40001.71061.86610.7079

200960.10005.85122.71140.9565

AVERAGE29.85003.78092.28870.8322

Reliance Diversified POWER sector fund Retail Plan (G)



Asset Size (Rs cr)4,606.89 (Dec-31-2010)


Last DividendN.A.

BonusN.A.

Launch DateApr 15, 2004

BenchmarkBSE Power Index

Fund Manager Sunil Singhania

NotesN.A.

N.A.

Exit Load1.00%

Load CommentsExit load - 1% if redeemed/switched out on or before completion of 1 yrs from the date of allotment.



20100.12.77.2-6.73.3

2009-2.55516.4-0.268.7

2008-23.6-16.51-21.2-60.3

2007-6.531.725.743.694.5

200631-21.421.622.854


20103.30001.71061.94210.6601

200968.70005.85123.92970.9987

2008-60.30002.95763.05300.9380

200794.50003.04055.60120.9182

200654.00003.17985.60810.8711

AVERAGE32.04003.34794.02680.8772

Sahara POWER & Natural Resources Fund (D)





Last DividendRs.2.00 (Aug-02-2010)

BonusN.A.



Fund Manager A. N. Sridhar

NotesN.A.

Entry LoadN.A.

Exit Load1.00%

Load CommentsExit Load 1% if units are redeemed / switched-out within 36 months from the date of allotment



2010-2.82.611.9-7.24.7

2009-4.261.714.54.976.9

2008--7.1-8.2-21.3-36.6



20104.50001.71063.45810.8304

200976.90005.85124.27670.9852

2008-36.60002.90981.94470.8773

AVERAGE14.93333.49053.22650.8976

PERFORMANCE OF MUTUAL FUNDS UNDER POWER SECTOR


ICICI Pru Power (G) 21.52003.34793.40370.9350

Escorts Power and Energy Fund (G)29.85003.78092.28870.8322

Reliance Diversified Power Sector Fund - Retail Plan (G)32.04003.34794.02680.8772

Sahara Power & Natural Resources Fund (D)14.93333.49053.22650.8976

AVERAGE24.58583.49183.23640.8855

Interpretation:- Researcher has taken an average of Power Sectors funds to know the risks and return associate with it. Here, Average Standard Deviation is 3.4918 which mean the Power funds have a higher volatile with comparison of BSE index return. Average Beta of Power funds 3.2364. Which is more than 1 that is risks is higher. Average Co-relation Coefficient of funds is 0.8855. This is near to 1 which means that positive correlation between return of Power funds and BSE index.

5.5) PERFORMANCE OF MUTUAL FUNDS UNDER TECHNOLOGY SECTOR

Tata Life Sciences & Technology Fund (D)





Last DividendRs.2.00 (Aug-20-2010)

BonusN.A.

Launch Date

BenchmarkBSE Sensitive Index

Fund Manager Bhupinder Sethi

NotesN.A.

Entry LoadN.A.

Exit Load1.00%

Load CommentsExit load - 1% if redeemed/switched out on or before expiry of 365 days from the date of allotment.


20101.32.8-1.957.2

20091.554.321.1-0.276.7

2008-29.7-2.2-7.7-21.9-61.5

2007-5.2-5.3-17.515.2-12.5

200619.6-15.418.39.431.9



20107.20001.7106-1.1571-0.7889

200976.70005.85123.74360.9984

2008-61.50002.95763.04110.8208

2007-12.80003.04050.44560.1154

200631.90003.17984.21660.9540

AVERAGE8.30003.34792.05790.4199

ICICI Pru Technology Fund (D)





Last DividendN.A.

BonusN.A.

Launch DateJan 28, 2000

BenchmarkBSE Teck

Fund Manager Deven Sangoi / Mrinal Singh

NotesN.A.

Entry LoadN.A.

Exit Load1.00%



20102.43.413.712.832.3

2009-6.243.233.512.783.2

2008-27.4-3.7-19.3-32.7-83.1

2007-2.316-9.712.316.3

200611.1-1813.637.544.2



201032.30001.71062.14790.7070

200983.20005.85122.85250.8743

2008-83.10002.95762.27860.6153

200716.30003.04050.63300.1834

200644.20003.17982.59860.4198

AVERAGE18.58003.34792.10210.5600

DSP BlackRock Technology.Com Regular Plan (D)





Last DividendRs.10.00 (Jan-04-2008)

BonusN.A.

Launch DateApr 18, 2000

BenchmarkBSE Teck

Fund Manager Apoorva Shah / Aseem Gupta

NotesN.A.

Entry LoadN.A.

Exit Load1.00%

Load CommentsExit Load 1% if redeemed within 12 months from the date of allotment.



20101.52.67.10.111.3

2009-9.248.536.87.283.3

2008-49.1-4.2-13.9-29.1-96.3

20075.820.62.322.250.9

200612.6-17.116.729.641.8



201011.30001.71061.38910.9061

200983.30005.85123.52440.8982

2008-96.30002.95764.28700.7478

200750.90003.04050.95260.3298

200641.80003.17983.07450.5718

AVERAGE18.20003.34792.64550.6907

PERFORMANCE OF MUTUAL FUNDS UNDER TECHNOLOGY SECTOR

SCHEMEAVERAGE RETURNSTANDARD DEVIATION(S.D)BETA ()CO-RELATION COEFFICIENT (r)

Tata Life Sciences & Technology Fund (D)8.30003.34792.05790.4199

ICICI Pru Technology Fund (D)18.58003.34792.10210.5600

DSP BlackRock Technology.Com - Regular Plan (D)18.20003.34792.64550.6907

AVERAGE15.02673.34792.26850.5569

Interpretation:- Researcher has taken an average of Technology Sectors funds to know the risks and return associate with it. Here, Average Standard Deviation is 3.3479 which mean the Technology funds have a higher volatile with comparison of BSE index return. Average Beta of Technology funds 2.2685. Which is more than 1 that is risks is higher. Average Co-relation Coefficient of funds is 0.5569. This is near to 1 which means that positive correlation between return of Technology funds and BSE index.

ANALYSIS OF EACH SECTOR BY TAKING THEIR AVERAGE

AVERAGE AVERAGE RETURNSTANDARD DEVIATION(S.D) BETA ()CO-RELATION COEFFICIENT (r)

FMCG14.05333.34792.28740.7806

INFRATRUCTURE5.44832.59333.16460.8808

PHARMACEUTICAL 16.66003.20741.77960.3727

POWER24.58583.49183.23640.8855

TECHNOLOGY15.02673.34792.26850.5569

Interpretation:-

Here, Researcher has compare all the five sectors by taking their average Standard Deviation of Infrastructure sector is less that is 2.5933 as compare to all four sectors and power sector is higher that is 3.4918. This shows the volatile in return with respect to BSE index. Beta of pharmaceutical sector is less that is 1.7796 and power sector shows the higher beta that mean the higher risks associate with power sector as compare to all five selected sectors. Co-relation co-efficient of pharmaceutical sector is less that is 0.3727 and power sector shows the higher Co-relation co-efficient that is 0.8855.

PERFORMANCE OF TOP 10 SECTORAL MUTUAL FUNDS UNDER THE CONSIDERATION OF FUND BETA ()

SCHEMEAVERAGE RETURNSTANDARD DEVIATION BETA ()CO-RELATION COEFFICIENT (r)

L&T Infrastructure Fund (G) -4.46673.50644.05770.9411



ICICI Pru Power (G) 21.52003.34793.40370.9350



DSP BlackRock Technology.Com - Regular Plan (D)18.20003.34792.64550.6907


ICICI Pru FMCG Fund (D)8.12003.34792.30320.7134


Interpretation:- Here, the researcher has taken Top 10 Sector wise Mutual Funds Scheme Fund Beta () to know the risk associate with Mutual Funds. Here, the L&T Infrastructure Fund (G) has a highest Beta i.e. 4.0577 which show the risk is higher in investing this fund as compare to other mutual funds. Escorts Power and Energy Fund (G) has a lowest Beta i.e. 2.2887 which show the risk is there but as compare to all the sachems risk is less.

PERFORMANCE OF TOP 10 SECTORAL MUTUAL FUNDS UNDER THE CONSIDERATION OF CO-RELATION CO-EFFICIENT (r)

SCHEMEAVERAGE RETURNSTANDARD DEVIATION BETA ()CO-RELATION COEFFICIENT (r)

L&T Infrastructure Fund (G) -4.46673.5064s4.05770.9411

ICICI Pru Power (G) 21.52003.34793.40370.9350


Baroda Pioneer Infrastructure Fund (G)2.50001.80822.04890.8829






Franklin FMCG Fund (G)18.42003.34792.17770.8051

Interpretation:- Here, the researcher has taken Top 10 Sector wise Mutual Funds Scheme of Co-relation Co-efficient (r) to know relation between the return of Mutual Funds and return of BSE index. Here, the L&T Infrastructure Fund (G) has a highest Co-relation Co-efficient i.e. 0.9411which is near to 1 and show the positive relationship between the return of BSE index and return of Mutual Funds. Franklin FMCG Fund (G) has a lowest Co-relation Co-efficient i.e. 08051 which is also near to 1 which shows the positive relationship between the return of BSE index and return of Mutual Funds.

6.1) FINDING6.2) SUGGESTION6.3) CONCLUSION

FINDING

Due to lack of awareness about investing in different Sectoral Mutual Funds they are not investing in it. Hence, it is necessary to educate them by arranging some educational seminar to show them how to invest in Mutual Funds? What is the liquidity? What is the risk covered in Mutual Funds?

Most of people know only UTI Mutual Funds. Hence, it is necessary to increase advertisement effort for private Mutual Funds and Public Mutual Funds.

Many of the people dont know the different schemes available at market for investing their money into the different Mutual Funds.

The Indian Mutual Funds retail market, which at present is growing at around 30%, is estimated to reach US$ 300 Billion by 2015.

Private sector Asset Management Companies (AMCs) account for majority of Mutual Funds sales in India (around 84%)

SUGGESTION

After completing my training in sectoral mutual fund. Researcher can rightly say that Mutual Fund is the right investment option to get good return out of it.

People who want high return in short period they should invest in different secortal Mutual Funds, but for the same they should be ready to take high risk also.

Investors who want less risk exposure and who want stable income should invest in Mutual Funds.

Sectoral investment weightage given by Mutual Funds (Fund Manger) gives a forecasting of which sector would be up coming, so investors should take an investment decision on the basis of sectoral weightage given by Fund Manager.

During my winter training, researcher found out that an investor have mindset that it one sector gives higher return, but after fortnight this sectors doesnt gives higher return even though an investors invest in this particular sectors that kinds of mindset investors researcher would suggest that they may go for another sectors for investment.

During my winter training, researcher found that the certain government norms as well as the economic condition of country affecting the investors.

CONCLUSION

Researcher has found the risks and return with comparison of BSE index.

Researcher has found the co-relation co-efficient between Mutual Funds returns and BSE index returns.

Researcher has also found the Beta, so he might come to know what is risks involved in the sources of investment are?

Researcher has found the Standard Deviation of securities to know the volatility with comparison of BSE index.

Many of the people investing their money into the different sources of Mutual Funds because of expanded their wealth as long time.

Researcher would come at my conclusion that if an individual can invest their money into the different Mutual Funds then he \ she may reduce risks and earned handsome amount of returns out of it.

In Mutual Funds, we know there is a lower risk so that there are less chances that investor make a loss. Even if the market is down then the loss is also less than direct investment in Sensex, but the return associated with Mutual Funds is also less as compare to direct investing in sensex.

BIBLIOGRAPHY

Books

Name of books :- Investment management

Edition :-4th

Author :-V.K.Bhalla

Wed Site: - www.Moneycontrol.com www.Bseindia.com www.Mutualfundsindia.com www.Capitalmarket.com

http://www.moneycontrol.com/mutual-funds/nav/

http://www.moneycontrol.com/mutual-funds/detail-view/

http://www.bseindia.com/stockinfo/indices_main.aspx

http://www.mutualfundsindia.com/nav_view.asp?scheme=KP016

ANNEXUREMonthOpenHighLowCloseReturnQuarterQuarterly return

6-Jan9,422.499,945.199,158.449,919.895.5540

6-Feb9,959.2410,422.659,713.5110,370.244.5399

6-Mar10,368.7511,356.9510,344.2611,279.968.7724Q16.2888

6-Apr11,342.9612,102.0011,008.4312,042.566.7607

6-May12,103.7812,671.119,826.9110,398.61-13.6512

6-Jun10,472.4610,626.848,799.0110,609.252.0257Q2-1.6216

6-Jul10,616.9710,940.459,875.3510,743.881.2690

6-Aug10,737.5011,794.4310,645.9911,699.058.8904

6-Sep11,699.5712,485.1711,444.1812,454.426.4567Q35.5387

6-Oct12,473.7913,075.8512,178.8312,961.904.0747

6-Nov12,992.6213,799.0812,937.3013,696.315.6659

6-Dec13,729.6714,035.3012,801.6513,786.910.6615Q43.4674

SENSEX QUARTERLY RETURN For the year 2006:-

For the year 2007:-MonthOpenHighLowCloseReturnQuarterQuarterly return

7-Jan13,827.7714,325.9213,303.2214,090.922.2051

7-Feb14,124.3614,723.8812,800.9112,938.09-8.1814

7-Mar13,013.7413,386.9512,316.1013,072.101.0358Q1-1.6468

7-Apr12,811.9314,383.7212,425.5213,872.376.1220

7-May13,987.7714,57

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