Escolar Documentos
Profissional Documentos
Cultura Documentos
[w.r.t. Fast Moving Consumer Goods (FMCG), Pharmaceutical, Infrastructure, Power and Technology]
BACHELOR OF BUSINESS ADMINISTRATION TO VEER NARMAD SOUTH GUJARAT UNIVERSITY, SURAT Submitted By PRAJAPATI HARESHKUMAR.V T.Y.B.B.A (Semester -VI) Roll No: - 222 [FINANCE] Under the guidance of Mr. Nilesh Patel [LECTURER] Submitted To I/C PRINCIPAL PROF.V.B.SHAH INSTITUTE OF MANAGEMENT, AMROLI (SURAT) MARCH 2011
DECLARATION
PROF. V.B. SHAH INSTITUTE OF MANAGEMENT & R.V. PATEL COLLEGE OF COMMERCE, AMROLI
I HARESHKUMAR V. PRAJAPATI hear by declare that the project report entitled ANALYSIS OF SECTORAL MUTUAL FUNDS under the guidance of Mr. Nilesh Patel submitted in partial fulfillment of the requirement for the degree of Bachelor of Business Administration to Veer Narmad South Gujarat University, Surat is my original workresearch study - carried out during 06st January 2011 to 6st March 2011 and not submitted for the award of any other degree or other similar titles or prizes to any other institution or university by any other person.
ACKNOWLEDGEMENT
I take this opportunity and express my gratitude and thanks to all my supporters who helped and guided me during the completion of my project work.
I would also like to express my sincere thanks to my college for exposing me to such field experience. I would also thanks Mr. Mahendra V. Soni, the co-ordinator for giving me this opportunity for project work.
I am very happy to express my sincere thanks to my project guide Mr. Nilesh Patel, for supporting and guiding me during the tenure of my project work and sparing his valuable time for me.
I also express my gratitude to Mr. Tejas Nayak, the branch manager of Tejas Investment Pvt. Ltd, Amroli brach and other staff members for providing me all necessary guidance and information pertaining to my project.
Last but not the least, I thank the entire faculty member and friends who directly or indirectly helped me in completion my project work.
PROF. V.B. SHAH INSTITUTE OF MANAGEMENT & R.V. PATEL COLLEGE OF COMMERCE, AMROLI
Signature
I/C Principal
EXECUTIVE SUMMARY
This study has been undertaken to evaluate the performance of the Indian sectoral mutual funds with comparison to the Indian stock market that is BSE Index for the purpose for this study, different sectoral mutual funds based random sector were selected as the sample. The data, which is the quarterly NAVs of the funds and the average closing of the BSE Index, were collected for a period of 5 Year starting from 1st January 2006 to 31st December 2010.
Different statistical tools were used on the data obtained to get the Average Return, Standard Deviation (S.D), Fund Beta () and co-relation coefficient(r) were calculated.
These variables of the funds were compared with the same variables of the market to assess how the different sectoral mutual funds have performed against the market return.
All the funds were classified into sector basis of their average returns, standard deviation, fund beta and co-relation co-efficient. These have similar properties or not.
All the mutual funds gave similar returns with respect to the market expect for certain time period which was during the late 2007 and early 2008. There is a positive correlation with the absolute returns of the market and the mutual funds over a period of time. The study showed that the standard deviation of the funds were high during the boom period in comparison with the market and were comparatively lower when the recessionary trend started. The fund Beta also shows that there is a significant risk between the fund returns and the market returns of selected sectoral mutual funds.
CHAPTORS NUMBER
CH-1 1.1 1.2 1.3 1.4
SUBJECTS
INTRODUCTION About Topics Importance of Topics Importance of study Benefits of study To organization To my self Company profile INDUSTRY PROFILE Introduction of sectoral mutual funds Meaning of sectors FMCG sectors Pharmaceutical sectors Infrastructure sectors Power sectors Technology sectors RESEARCH METHODOLOGY Objectives of study Problems of statement Benefit of study Research design Sampling Research tools Limitation of study THEORETICAL FRAMEWORK Introduction of mutual funds History of mutual funds in India Phases of mutual funds in India What is mutual fund? Structure of mutual funds Types of mutual funds Advantages of mutual funds Frequently used terms in mutual funds DATA ANALYSIS AND INTERPRETATION FINDING, SUGGESTION AND CONCLUSION Finding Suggestion Conclusion BIBLIOGRAPHY ANNEXURE
PAGES NUMBERS
01 02 03 04 05 05 05 06 08 09 10 11 13 15 17 18 19 20 21 21 22 23 24 25 26 27 30 32 34 35 37 43 45 48 77 78 79 80 81 82
1.5
1.4.1 1.4.2
CH-2 2.1 2.2 2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 Ch-3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 Ch-4 4.1 ... 4.2 4.3 4.4 4.5 ... 4.6 4.7 4.8 CH-5 CH-6 6.1 ... 6.2 ... 6.3 ...
1.5)
ABOUT TOPICS IMPORTANCE OF TOPICS IMPORTANCE OF STUDY BENEFITS OF STUDY 1.4.1) TO ORGANIZATION 1.4.2) TO MY SELF COMPANY PROFILE
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.
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.
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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.
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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.
Financial Services
IPO Trading
Mutual Funds
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.
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1. 2. 3. 4. 5. 6.
BSE Cash Trading. NSE Cash Trading. NSE Future and Option. Commodities Markets trading. (MCX) IPO Trading. 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:
Bases of Investment
Personality Development
1) 2) 3) 4)
Bases of Investment. Fundamental and Technical Analysis. Personality Development. Courses on Portfolio Management.
The company was formed in 2004 and has been in operation since there.
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2.1) 2.2)
INTRO DUCATIO OF SECTORAL MUTUAL FUNDS MEANING OF SECTORS 2.2.1) FMCG SECTORS 2.2.2) PHARMACEUTICAL SECTORS 2.2.3) INFRASTRUCTURE SECTORS 2.2.4) POWER SECTORS 2.2.5) TECHNOLOGY SECTORS
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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.
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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) 2) 3) 4) 5) FAST MOVING CONSUMER GOODS (FMCG) Sector PHARMACEUTICAL Sector INFRASTRUCTURE Sector POWER Sector TECHNOLOGY Sector
So here I would like to give brief idea about each of selected Sector;
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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);
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.
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SWOT Analysis of FMCG Sector Strengths: 1. Low operational costs 2. Presence of established distribution networks in both urban and rural areas 3. Presence of well-known brands in FMCG sector Weaknesses: 1. Lower scope of investing in technology and achieving economies of scale, especially in small sectors 2. Low exports levels 3. "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 market 2. Rising income levels, i.e. increase in purchasing power of consumers 3. Large domestic market- a population of over one billion. 4. Export potential 5. High consumer goods spending Threats: 1. Removal of import restrictions resulting in replacing of domestic brands 2. Slowdown in rural demand Tax 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.
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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.
Cost effective technology Strong and well-developed manufacturing base Clinical research and trials Knowledge based, low- cost manpower in science & technology High-quality formulations and drugs High standards of purity Future growth driver Excellent clinical trial centers
Weaknesses:
1. 2. 3. 4. 5.
Low Indian share in world pharmaceutical market (about 2%) Lack of strategic planning Fragmented capacities Low R&D investments Low healthcare expenditure
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Opportunities:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Incredible export potential Increasing health consciousness New innovative therapeutic products Globalization Drug delivery system management Increased incomes Production of generic drugs Contract manufacturing Clinical trials & research Drug molecules
Threats:
1. 2. 3. 4. 5.
Small number of discoveries Competition from MNCs Transformation of process patent to product patent (TRIPS) Outdated Sales and marketing methods 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.
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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 follow 1. 2. 3. 4. Institutional infrastructure Industrial infrastructure Social infrastructure Cultural, sports and recreational infrastructure
The various factors responsible for the upswing in the India Infrastructure investments are:
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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.
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OBJECTIVES OF STUDY PROBLEMS OF STAMENT BENEFIT OF STUDY RESEARCH DESIGN SAMPLING RESEARCH TOOLS LIMITATION OF STUDY
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A study on Analysis of Sectoral Mutual Funds (With respect of Fast Moving Consumer Goods (FMCG), Pharmaceutical, Infrastructure, Power, and Technology)
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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,
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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) 2) 3) 4) 5) FAST MOVING CONSUMER GOODS (FMCG) Sector PHARMACEUTICAL Sector INFRASTRUCTURE Sector POWER Sector TECHNOLOGY Sector
Sampling plan:
Non probability sampling plan Rule of thumb approach
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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.
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INTRODUCTION OF MUTUAL FUNDS HISTORY OF MUTUAL FUNDS IN INDIA PHASES OF MUTUAL FUNDS IN INDIA WHAT IS MUTUAL FUND? STRUCTURE OF MUTUAL FUNDS TYPES OF MUTUAL FUNDS ADVANTAGES OF MUTUAL FUNDS FREQUANTILY USED TERMS IN MUTUAL FUNDS
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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
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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.
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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:
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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.
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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.
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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
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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.
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Investors
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.
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Fund Manager
Market/Sales
Mutual Fund
Market/Sale s Distributor
Schemes
Investor
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.
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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.
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Mutual Fund
Close Ended
Open Ended
Income Fund
Growth Fund
Balance Fund
Specialized Fund
Money Market
Taxation Fund
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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.
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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.
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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 Halfyearly 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.
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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
47
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 interbank 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.
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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.
49
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.
50
4.8)
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
51
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: -
Rs. 10,000/17,000/2,000/29,000/-
Assets Investment (M.V) Other assets Issue Exp. Not W/o Total
Rs. 25,000/3,500/500/29,000/-
NAV =
52
2) Sale Price Is 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 Price Is 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 Load Is a charge collected by a scheme when it buys back the units from the unit holders.
53
54
Fund Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Entry Load Exit Load Load Comments
Open-Ended Growth 77.59 (Dec-31-2010) Rs.5000 N.A. N.A. Mar 30, 1999 N.A. Prashant Kothari / Mrinal Singh N.A. N.A. 1.00% Exit 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) Year 2010 2009 2008 2007 2006 Qtr 1 4.6 -0.7 -12 -7.1 21.9 Qtr 2 Qtr 3 Qtr 4 Annual 15.6 12.3 -0.8 31.7 23.4 13.9 12.2 48.8 -8.8 4.9 -11.8 -27.7 9.9 10.5 11.3 24.6 -12.9 7.2 -1.5 14.7 (Source: moneycontro.com/mutual fund/detail view)
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Quarter Q1 Q2 Q3 Q4 Security 21.9 -12.9 7.2 -1.5 14.7 Sensex 6.28876 -1.6216 5.53868 1.6468 137.724 39.5485 20.9186 2.62959 39.8785 30.677 -2.4702 2.71195 75.567 479.61 166.41 51.84 2.25 700.11
11.8526 196.051
S.D
56
STANDARD DEVIATION RETURN (S.D) 31.7000 1.7106 48.8000 5.8512 -27.7000 2.9576 24.6000 3.0405 14.7000 3.1798 18.4200 3.3479
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.
57
Fund Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Entry Load Exit Load Load Comments
MPI016
Open-Ended Dividend 77.59 (Dec-31-2010) Rs.5000 Rs.1.20 (Feb-11-2010) N.A. Mar 30, 1999 N.A. Prashant Kothari / Mrinal Singh N.A. N.A. 1.00% Exit 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) Year 2010 2009 2008 2007 2006 Qtr 1 -4.1 -8.2 -24.4 -8.6 9.8 Qtr 2 Qtr 3 Qtr 4 Annual 16 12.3 -4.1 20.1 20.1 19 12.1 43 -12.5 -12.4 -16.3 -65.6 10.9 4.1 23.3 29.7 -17.2 16.6 4.2 13.4 (Source: moneycontro.com/mutual fund/detail view)
STANDARD DEVIATION RETURN (S.D) 20.1000 1.7106 43.0000 5.8512 -65.6000 2.9576 29.7000 3.0405 13.4000 3.1798 8.1200 3.3479
58
Fund Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Notes Entry Load Exit Load Load Comments
MSB009
Open-Ended Dividend 32.92 (Jan-31-2011) Rs.2000 Rs.6.00 (Mar-03-2006) N.A. Jul 31, 1999 BSE FMCG Sector Sohini Andani N.A. N.A. N.A. 1.00% Exit Load 1% if units are redeemed / switched-out within 1 year from the date of allotment.
Quarterly NAV (Net Assets value) Year 2010 2009 2008 2007 2006 Qtr 1 9.2 2.4 -19.7 -9.7 16.5 Qtr 2 14.3 19.8 -6.3 8.6 -12.4 Qtr 3 17.2 18.4 0.9 9.3 2.7 Qtr 4 -1.1 -0.2 -10.4 19.6 -1 Annual 39.6 40.4 -35.5 27.8 5.8
STANDARD DEVIATION RETURN (S.D) 39.6000 1.7106 40.4000 5.8512 -35.5000 2.9576 27.8000 3.0405 5.8000 3.1798 15.6200 3.3479
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SCHEME
AVERAGE STANDARD BETA RETURN DEVIATION () (S.D) 18.4200 8.1200 15.6200 14.0533 3.3479 3.3479 3.3479 3.3479 2.1777 2.3032 2.3814 2.2874
Franklin FMCG Fund (G) ICICI Pru FMCG Fund (D) SBI Magnum FMCG Fund AVERAGE
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.
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Open-Ended Growth 543.71 (Dec-31-2010) Rs.5000 N.A. N.A. May 26, 2004 BSE Healthcare Sector Sailesh Raj Bhan N.A. N.A. 1.00% Exit load - 1% if redeemed/switched out on or before completion of 1 yrs from the date of allotment.
Qtr 2 Qtr 3 Qtr 4 Annual 8.7 0.9 6.6 27.2 33 40.9 -0.2 68.3 0.6 3.4 -10.6 -35.7 31.2 -2.7 18.5 42.7 -23.2 21.9 4.9 17.2 (Source: moneycontro.com/mutual fund/detail view)
STANDARD DEVIATION RETURN (S.D) 27.2000 1.7106 68.3000 3.0405 -35.7000 2.9576 42.7000 5.8512 17.2000 3.1798 23.9400 3.3479
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MKP005
Fund
Open-Ended Growth 152.53 (Jan-31-2011) Rs.5000 N.A. N.A. Mar 31, 1999 N.A. Anand Radhakrishnan N.A. N.A. 1.00% Exit Load 1% if units are redeemed / switched-out within 1 year from the date of allotment.
Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Entry Load Exit Load Load Comments
STANDARD DEVIATION RETURN (S.D) 30.3000 1.7106 88.0000 5.8512 -28.1000 2.9576 8.2000 3.0405 17.0000 3.1798 23.0800 3.3479
62
Fund Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Entry Load Exit Load Load Comments
MSB008
Open-Ended Dividend 38.28 (Jan-31-2011) Rs.2000 Rs.3.90 (Dec-31-2004) N.A. Jul 31, 1999 BSE Healthcare Sector Sohini Andani N.A. N.A. 1.00% Exit Load 1% if units are redeemed / switched-out within 1 year from the date of allotment.
STANDARD DEVIATION RETURN (S.D) 23.8000 58.7000 -58.6000 7.7000 11.0000 1.7106 3.0405 2.9576 3.0405 3.1798
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AVERAGE
8.5200
2.7858
1.9390
0.4183
Fund Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Entry Load Exit Load Load Comments
MUT031
Open-Ended Growth 87.94 (Dec-31-2010) Rs.5000 N.A. N.A. Jun 26, 1999 N.A. Lalit Nambiar / Anoop Bhaskar N.A. N.A. 1.00% Exit Load 1% if redeemed within 1 Year from the date of allotment.
Qtr 2 Qtr 3 Qtr 4 Annual 8.9 1.4 9.9 32 18.2 25.1 -0.2 41.8 9.8 -0.4 -18.4 -24.5 13.4 -6.5 -6.5 -4 -22.2 13.5 4.8 10.2 (Source: moneycontro.com/mutual fund/detail view)
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STANDARD DEVIATION RETURN (S.D) 32.0000 1.7106 41.8000 5.8512 -24.5000 2.9576 -4.0000 3.0405 10.2000 3.1798 11.1000 3.3479
SCHEME
AVERAGE STANDARD BETA RETURN DEVIATION () (S.D) 23.0800 23.9400 8.5200 11.1000 3.3479 3.3479 2.7858 3.3479 1.7019 2.1871 1.9390 1.2902
Franklin Pharma Fund (G) Reliance Pharma Fund (G) SBI Magnum Pharma Fund (D) UTI Pharma & Healthcare Fund (G) AVERAGE
16.6600
3.2074
1.7796
0.3727
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.
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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.
Fund Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes
MCC081
Open-Ended Growth 36.76 (Jan-31-2011) Rs.5000 N.A. N.A. Sep 06, 2007 S&P CNX Nifty Bajrang Kumar Bafna L&T Infrastructure Fund, a close ended scheme has been converted into an open ended equity scheme with effect from September 27, 2010. N.A. 1.00% Exit load of 1% if redeemed within 1 year from the date of allotment.
Annual 4 62 -79.9
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STANDARD DEVIATION RETURN (S.D) 4.0000 1.7106 62.5000 5.8512 -79.9000 2.9576 -4.4667 3.5064
Fund Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Entry Load Exit Load Load Comments
MBA057
Open-Ended Growth 32.82 (Jan-31-2011) Rs.5000 N.A. N.A. Feb 18, 2010 BSE 100 Prateek Agrawal N.A. N.A. 1.00% Exit Load 1% if redeemed within 1year from the date of allotment.
Year 2010
Qtr 1 0.8
Qtr 2 -2.1
Qtr 3 9.2
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MBO046
Fund
Open-Ended Growth 33.31 (Nov-30-2010) Rs.5000 N.A. N.A. May 31, 2010 CNX 100 Dipak Acharya N.A. N.A. 1.00% Exit load: 1% if redeemed on or before 365 Days from the date of allotment.
Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Entry Load Exit Load Load Comments
Year
Qtr 1
Qtr 2
68
Qtr 3
Qtr 4 Annual
(Source: moneycontro.com/mutual fund/detail view) STANDARD DEVIATION RETURN (S.D) 2.5000 1.8082 2.5000 1.8082 CO-RELATION COEFFICIENT (r) 0.8829 0.8829
MPI028
Fund
Open-Ended Growth 156.27 (Feb-28-2011) Rs.5000 N.A. N.A. Nov 09, 2005 S&P CNX Nifty Anand Shah N.A. 0.00% 1.00% Exit 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.
Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Entry Load Exit Load Load Comments
69
Qtr 2 Qtr 3 Qtr 4 Annual 4.2 9.7 -5.8 9.5 55.5 14.5 3.8 71.1 -19.8 -4 -20.6 -75 30.4 23.7 30.7 75.3 -18.8 13.4 13.5 33.4 (Source: moneycontro.com/mutual fund/detail view)
STANDARD DEVIATION RETURN (S.D) 9.5000 71.1000 -75.0000 75.3000 33.4000 22.8600 1.7106 5.8512 2.9576 3.0405 3.1798 3.3479
SCHEME
AVERAGE STANDARD RETURN DEVIATION (S.D) -4.4667 0.9 2.5000 22.8600 3.5064 1.7106 1.8082 3.3479
BETA ()
L&T Infrastructure Fund (G) Bharti AXA Focused Infrastructure Fund (G) Baroda Pioneer Infrastructure Fund (G) Canara Robeco Infrastructure (G) AVERAGE
5.4483
2.5933
3.1646
0.8808
70
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.
Fund
Open-Ended Growth 648.95 (Dec-31-2010) Rs.5000 N.A. N.A. Oct 05, 2001 S&P CNX Nifty Mrinal Singh / Sanjay Parekh N.A. N.A. 1.00% Exit 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
Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Entry Load Exit Load Load Comments
71
Quarterly NAV (Net Assets value) Year 2010 2009 2008 2007 2006 Qtr 1 1.6 -0.9 -28.7 -6.4 25 Qtr 2 2.7 42 -16.2 20.5 -12.2 Qtr 3 15.4 18.6 -0.7 10.3 16.9 Qtr 4 Annual -0.9 18.8 6.3 66 -22.8 -68.4 24.2 48.6 12.9 42.6
STANDARD DEVIATION RETURN (S.D) 18.8000 1.7106 66.0000 5.8512 -68.4000 2.9576 48.6000 3.0405 42.6000 3.1798 21.5200 3.3479
MES033
Fund
Open-Ended Growth 1.71 (Jan-31-2011) Rs.5000 N.A. N.A. Sep 23, 2008 BSE Power Index Jagveer Singh Fauzdar N.A. N.A. 1.00% Exit Load 1% if units are redeemed / switched-out within 2 year from the date of allotment.
Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Entry Load Exit Load Load Comments
72
Qtr 1 -3 2
Qtr 2 Qtr 3 Qtr 4 Annual 2.5 5.8 -5.7 -0.4 43.5 7.8 6.8 60.1 (Source: moneycontro.com/mutual fund/detail view)
STANDARD DEVIATION RETURN (S.D) -0.4000 60.1000 29.8500 1.7106 5.8512 3.7809
MRC055
Fund
Open-Ended Growth 4,606.89 (Dec-31-2010) Rs.5000 N.A. N.A. Apr 15, 2004 BSE Power Index Sunil Singhania N.A. N.A. 1.00% Exit load - 1% if redeemed/switched out on or before completion of 1 yrs from the date of allotment.
Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Exit Load Load Comments
73
Qtr 2 Qtr 3 Qtr 4 Annual 2.7 7.2 -6.7 3.3 55 16.4 -0.2 68.7 -16.5 1 -21.2 -60.3 31.7 25.7 43.6 94.5 -21.4 21.6 22.8 54 (Source: moneycontro.com/mutual fund/detail view)
STANDARD DEVIATION RETURN (S.D) 3.3000 68.7000 -60.3000 94.5000 54.0000 32.0400 1.7106 5.8512 2.9576 3.0405 3.1798 3.3479
MFI052
Fund
Open-Ended Dividend 5.06 (Dec-31-2010) Rs.5000 Rs.2.00 (Aug-02-2010) N.A. May 27, 2008 S&P CNX Nifty A. N. Sridhar N.A. N.A. 1.00%
Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes Entry Load Exit Load
74
ANALYSIS OF SECTORAL MUTUAL FUNDS Load Comments Exit Load 1% if units are redeemed / switched-out within 36 months from the date of allotment
Qtr 2 Qtr 3 Qtr 4 Annual 2.6 11.9 -7.2 4.7 61.7 14.5 4.9 76.9 -7.1 -8.2 -21.3 -36.6 (Source: moneycontro.com/mutual fund/detail view)
STANDARD DEVIATION RETURN (S.D) 4.5000 76.9000 -36.6000 14.9333 1.7106 5.8512 2.9098 3.4905
SCHEME
AVERAGE STANDARD BETA RETURN DEVIATION () (S.D) 21.5200 29.8500 3.3479 3.7809 3.4037 2.2887
ICICI Pru Power (G) Escorts Power and Energy Fund (G)
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ANALYSIS OF SECTORAL MUTUAL FUNDS Reliance Diversified Power Sector Fund - Retail Plan (G) Sahara Power & Natural Resources Fund (D) AVERAGE 32.0400 14.9333 3.3479 3.4905 4.0268 3.2265 0.8772 0.8976
24.5858
3.4918
3.2364
0.8855
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)
MTA066
Fund
Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date
76
ANALYSIS OF SECTORAL MUTUAL FUNDS Benchmark Fund Manager Notes Entry Load Exit Load Load Comments BSE Sensitive Index Bhupinder Sethi N.A. N.A. 1.00% Exit load - 1% if redeemed/switched out on or before expiry of 365 days from the date of allotment.
Qtr 4 Annual 5 7.2 -0.2 76.7 -21.9 -61.5 15.2 -12.5 9.4 31.9
STANDARD DEVIATION RETURN (S.D) 7.2000 1.7106 76.7000 5.8512 -61.5000 2.9576 -12.8000 3.0405 31.9000 3.1798 8.3000 3.3479
Fund Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes
MPI014
Open-Ended Dividend 228.22 (Dec-31-2010) Rs.5000 N.A. N.A. Jan 28, 2000 BSE Teck Deven Sangoi / Mrinal Singh N.A.
77
ANALYSIS OF SECTORAL MUTUAL FUNDS Entry Load Exit Load Load Comments N.A. 1.00% Exit 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) Year 2010 2009 2008 2007 2006 Qtr 1 2.4 -6.2 -27.4 -2.3 11.1 Qtr 2 Qtr 3 Qtr 4 Annual 3.4 13.7 12.8 32.3 43.2 33.5 12.7 83.2 -3.7 -19.3 -32.7 -83.1 16 -9.7 12.3 16.3 -18 13.6 37.5 44.2 (Source: moneycontro.com/mutual fund/detail view)
STANDARD DEVIATION RETURN (S.D) 32.3000 1.7106 83.2000 5.8512 -83.1000 2.9576 16.3000 3.0405 44.2000 3.1798 18.5800 3.3479
Fund Type Investment Plan Asset Size (Rs cr) Minimum Investment Last Dividend Bonus Launch Date Benchmark Fund Manager Notes
MDS012
Open-Ended Dividend 69.62 (Jan-31-2011) Rs.5000 Rs.10.00 (Jan-04-2008) N.A. Apr 18, 2000 BSE Teck Apoorva Shah / Aseem Gupta N.A.
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ANALYSIS OF SECTORAL MUTUAL FUNDS Entry Load Exit Load Load Comments N.A. 1.00% Exit Load 1% if redeemed within 12 months from the date of allotment.
Qtr 2 Qtr 3 Qtr 4 Annual 2.6 7.1 0.1 11.3 48.5 36.8 7.2 83.3 -4.2 -13.9 -29.1 -96.3 20.6 2.3 22.2 50.9 -17.1 16.7 29.6 41.8 (Source: moneycontro.com/mutual fund/detail view)
STANDARD DEVIATION RETURN (S.D) 11.3000 1.7106 83.3000 5.8512 -96.3000 2.9576 50.9000 3.0405 41.8000 3.1798 18.2000 3.3479
SCHEME
BETA ()
Tata Life Sciences & Technology Fund (D) ICICI Pru Technology Fund
2.0579 2.1021
79
ANALYSIS OF SECTORAL MUTUAL FUNDS (D) 18.2000 3.3479 2.6455 0.6907 DSP BlackRock Technology.Com - Regular Plan (D) AVERAGE AVERAGE STANDARD BETA () CO-RELATION RETURN DEVIATION COEFFICIENT (S.D) (r)
AVERAGE
15.0267
3.3479
2.2685
0.5569
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.
80
ANALYSIS OF SECTORAL MUTUAL FUNDS FMCG INFRATRUCTURE PHARMACEUTICAL POWER TECHNOLOGY SCHEME
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 ()
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ANALYSIS OF SECTORAL MUTUAL FUNDS L&T Infrastructure Fund (G) Reliance Diversified Power Sector Fund - Retail Plan (G) Canara Robeco Infrastructure (G) ICICI Pru Power (G) Sahara Power & Natural Resources Fund (D) Bharti AXA Focused Infrastructure Fund (G) DSP BlackRock Technology.Com - Regular Plan (D) SBI Magnum FMCG Fund ICICI Pru FMCG Fund (D) Escorts Power and Energy Fund (G) -4.4667 32.0400 22.8600 21.5200 14.9333 0.9 18.2000 3.5064 3.3479 3.3479 3.3479 3.4905 1.7106 3.3479 4.0577 4.0268 3.7203 3.4037 3.2265 2.8314 2.6455 0.9411 0.8772 0.8763 0.9350 0.8976 0.8231 0.6907
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)
SCHEME AVERAGE STANDARD BETA RETURN DEVIATION () CO-RELATION COEFFICIENT (r)
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ANALYSIS OF SECTORAL MUTUAL FUNDS L&T Infrastructure Fund (G) ICICI Pru Power (G) Sahara Power & Natural Resources Fund (D) Baroda Pioneer Infrastructure Fund (G) Reliance Diversified Power Sector Fund - Retail Plan (G) Canara Robeco Infrastructure (G) Escorts Power and Energy Fund (G) SBI Magnum FMCG Fund Bharti AXA Focused Infrastructure Fund (G) Franklin FMCG Fund (G) -4.4667 21.5200 14.9333 2.5000 32.0400 22.8600 29.8500 15.6200 0.9 18.4200 3.5064s 3.3479 3.4905 1.8082 3.3479 3.3479 3.7809 3.3479 1.7106 3.3479 4.0577 3.4037 3.2265 2.0489 4.0268 3.7203 2.2887 2.3814 2.8314 2.1777 0.9411 0.9350 0.8976 0.8829 0.8772 0.8763 0.8322 0.8233 0.8231 0.8051
Interpretation:Here, the researcher has taken Top 10 Sector wise Mutual Funds Scheme of Corelation 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.
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FINDING
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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
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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
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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.
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BIBLIOGRAPHY
Books
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Wed Site: -
ANNEXURE
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Month
Open
High
Low
Close
Return
Quarter
Quarterly return
6-Jan 6-Feb 6-Mar 6-Apr 6-May 6-Jun 6-Jul 6-Aug 6-Sep 6-Oct 6-Nov 6-Dec
9,422.49 9,959.24 10,368.75 11,342.96 12,103.78 10,472.46 10,616.97 10,737.50 11,699.57 12,473.79 12,992.62 13,729.67
9,945.19 10,422.65 11,356.95 12,102.00 12,671.11 10,626.84 10,940.45 11,794.43 12,485.17 13,075.85 13,799.08 14,035.30
9,158.44 9,713.51 10,344.26 11,008.43 9,826.91 8,799.01 9,875.35 10,645.99 11,444.18 12,178.83 12,937.30 12,801.65
9,919.89 5.5540 10,370.24 4.5399 11,279.96 8.7724 12,042.56 6.7607 10,398.61 -13.6512 10,609.25 2.0257 10,743.88 1.2690 11,699.05 8.8904 12,454.42 6.4567 12,961.90 4.0747 13,696.31 5.6659 13,786.91 0.6615
Q1
6.2888
Q2
-1.6216
Q3
5.5387
Q4
3.4674
For the year 2007:Month Open High Low Close Return Quarter Quarterly return
7-Jan 7-Feb 7-Mar 7-Apr 7-May 7-Jun 7-Jul 7-Aug 7-Sep 7-Oct 7-Nov 7-Dec
13,827.77 14,124.36 13,013.74 12,811.93 13,987.77 14,610.28 14,685.16 15,344.02 15,401.99 17,356.99 20,130.23 19,547.09
14,325.92 14,723.88 13,386.95 14,383.72 14,576.37 14,683.36 15,868.85 15,542.40 17,361.47 20,238.16 20,204.21 20,498.11
13,303.22 12,800.91 12,316.10 12,425.52 13,554.34 13,946.99 14,638.88 13,779.88 15,323.05 17,144.58 18,182.83 18,886.40
14,090.92 12,938.09 13,072.10 13,872.37 14,544.46 14,650.51 15,550.99 15,318.60 17,291.10 19,837.99 19,363.19 20,286.99
2.2051 -8.1814 1.0358 6.1220 4.8448 0.7291 6.1464 -1.4944 12.8765 14.7295 -2.3934 4.7709
Q1
-1.6468
Q2
3.8986
Q3
5.8428
Q4
5.7023
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ANALYSIS OF SECTORAL MUTUAL FUNDS For the year 2008:Month Open High Low Close Return Quarter Quarterly return
8-Jan 8-Feb 8-Mar 8-Apr 8-May 8-Jun 8-Jul 8-Aug 8-Sep 8-Oct 8-Nov 8-Dec
20,325.27 17,820.67 17,227.56 15,771.72 17,560.15 16,591.46 13,480.02 14,064.26 14,412.99 13,006.72 10,209.37 9,162.94
21,206.77 18,895.34 17,227.56 17,480.74 17,735.70 16,632.72 15,130.09 15,579.78 15,107.01 13,203.86 10,945.41 10,188.54
15,332.42 16,457.74 14,677.24 15,297.96 16,196.02 13,405.54 12,514.02 14,002.43 12,153.55 7,697.39 8,316.39 8,467.43
17,648.71 17,578.72 15,644.44 17,287.31 16,415.57 13,461.60 14,355.75 14,564.53 12,860.43 9,788.06 9,092.72 9,647.31
-13.0048 -0.3966 -11.0035 10.5013 -5.0427 -17.9949 6.6422 1.4543 -11.7003 -23.8901 -7.1040 6.0993
Q1
-8.1350
Q2
-4.1788
Q3
-1.2013
Q4
-8.2983
For the year 2009:Month Open High Low Close Return Quarter Quarterly return
9-Jan 9-Feb 9-Mar 9-Apr 9-May 9-Jun 9-Jul 9-Aug 9-Sep 9-Oct 9-Nov 9-Dec
9,720.55 9,340.37 8,762.88 9,745.77 11,635.24 14,746.51 14,506.43 15,694.78 15,691.27 17,186.20 15,838.63 16,947.46
10,469.72 9,724.87 10,127.09 11,492.10 14,930.54 15,600.30 15,732.81 16,002.46 17,142.52 17,493.17 17,290.48 17,530.94
8,631.60 8,619.22 8,047.17 9,546.29 11,621.30 14,016.95 13,219.99 14,684.45 15,356.72 15,805.20 15,330.56 16,577.78
9,424.24 8,891.61 9,708.50 11,403.25 14,625.25 14,493.84 15,670.31 15,666.64 17,126.84 15,896.28 16,926.22 17,464.81
-2.3123 -5.6517 9.1872 17.4564 28.2551 -0.8985 8.1170 -0.0234 9.3204 -7.1850 6.4791 3.1820
Q1
0.4077
Q2
14.9376
Q3
5.8047
Q4
0.8254
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ANALYSIS OF SECTORAL MUTUAL FUNDS For the year 2010:Month 10-Jan 10-Feb 10-Mar 10-Apr 10-May 10-Jun 10-Jul 10-Aug 10-Sep 10-Oct 10-Nov 10-Dec Open 17,473.45 16,339.32 16,438.45 17,555.04 17,536.86 16,942.82 17,679.34 17,911.31 18,027.12 20,094.10 20,272.49 19,529.99 High 17,790.33 16,669.25 17,793.01 18,047.86 17,536.86 17,919.62 18,237.56 18,475.27 20,267.98 20,854.55 21,108.64 20,552.03 Low 15,982.08 15,651.99 16,438.45 17,276.80 15,960.15 16,318.39 17,395.58 17,819.99 18,027.12 19,768.96 18,954.82 19,074.57 Close 16,357.96 16,429.55 17,527.77 17,558.71 16,944.63 17,700.90 17,868.29 17,971.12 20,069.12 20,032.34 19,521.25 20,509.09 Return -6.3376 0.4376 6.6844 0.1765 -3.4973 4.4632 0.9457 0.5755 11.6743 -0.1833 -2.5513 5.0603 Quarter Quarterly return
Q1
0.2615
Q2
0.3808
Q3
4.3985
Q4
0.7752
Qtr 2 Qtr 3 Qtr 4 Annual 0.3808 4.39848 0.77525 5.81602 14.9376 5.80469 0.82538 21.97542 -4.1788 -1.2013 -8.2983 -21.8134 3.89864 5.84285 5.70234 13.79703 -1.6216 5.53868 1.6468 11.85264 (Sources: - bseindia.com/about/bseannual_archives.asp)
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