Risk and return of mutual funds

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INTRODUCTION

Mutual fund is a lent for a return medium for investors who blend their future provision in manifold portfolio of securities with the objective of attractive returns and appreciation in their value. Mutual Fund is a concerning service alliance that accepts money from shareowners, invests it attempts to make it large, earns gains on it, and agrees to pay the shareowners cash on claim for the present value of their manifold. The person manages these savings in such a way that it reduces the risk and uniform return is guaranteed.

Mutual funds are defined by the SEBI, as a fund established in the form of an assign to under more than one schemes for investing in impudence, including money market instruments. So, a mutual fund is a special type of institution, a trust or a manifold company which acts as an investment entrepreneur channelizes the savings of large number of people to the allied securities in such a way that investors get uniform returns, capital improvement and a low risk.

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Mutual Fund is finance Investment Company that has a very fluid capital reserve. It is an exceptional in that at any time it can sell and can buy back any of its due shares at NAV. A Mutual Fund is also called as an open end investment company, which possess the securities of several business associations and gets profit on the shares that they holds. A closed end investment company differs from an open end investment company in that the limited number of shares and the price of the shares may swing above and below the NAV. The gain earned on a mutual fund is allocated to their respective shareowners. It is hoped that lose on one holding made up by a gain on another. The owners of mutual funds shares thus gain the advantage of variety, which might ordinarily be beyond their means.

In fact to many people, buying mutual funds is the meaning of investment for them. Its better to invest money in mutual funds, instead of simply letting money waste away in savings accounts. The money thus accumulate is then invested in capital market instruments such as securities, shares, debentures and other. Investments in securities are spread across a wide cross-section of sectors and industries and thus the risk is diminished. Assortment reduces the risk because all stocks may not move in the same direction in the same relative amount at the same time. Mutual fund issues units to the investors in conformity with quantum of money invested by them. Investors of mutual funds are known as unit holders.

When a unit of a mutual fund is consent by investors, then he becomes the part owner of the assets of the fund in the same relative amount as his beneficiation amount put up with the compilation (the total amount of the fund). The market value of the Mutual Fund scheme's assets net of its liabilities is called NAV. NAV of a scheme is equal to the market value of scheme's assets by the total number of units issued to the investors.

Why Mutual Fund?

There are various investment promenades available to an investor such as real estate, bank deposits, post office deposits, shares, etc. There are many reasons because of which investors prefer mutual funds.

Buying shares directly from the market is one of the ways of investing. But mutual funds requires time to spend to find out the performance of the company whose share is being purchased, understanding the future business outlook of the company, finding out the track record of the dividend, bonus issue history of the company etc. Many investors find it full of burden and time consuming to pore over so much of information, get access to so much of details before investing in the shares.

Therefore, investors prefer to invest their money through the mutual fund route. They invest in a mutual fund scheme which in turn takes the responsibility of investing in shares and stocks after due analysis and research. The investor need not have to bother for the research of the hundreds of stocks, they can leaves it on the mutual fund and there professional fund management team.

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Another reason for investors to prefer mutual funds is because mutual funds offer diversification. An investor's money is invested by the mutual fund in a variety of shares, bonds and other securities thus diversifying the investor's portfolio across different companies and sectors. This diversification helps in reducing the overall risks of the portfolio. It is not expensive to invest in a mutual fund since, the minimum investment amount in mutual fund units is fairly low (Rs. 500 or so). These are the some of the reasons because of which mutual funds have gained in popularity over the years.

DIFFERENT MODES OF RECEIVING THE INCOME EARNED FROM MUTUAL FUND INVESTMENTS

Mutual Funds offer three methods of receiving income:

Growth Plan

In this plan, dividend is neither declared nor paid out to the investor but is built into the value of the NAV. In other words, the NAV increases over time due to such incomes and the investor realizes only the capital appreciation on redemption of his investment.

Income Plan

In this plan, dividends are paid-out to the investor. In other words, the NAV only reflects the capital appreciation or depreciation in market price of the underlying portfolio.

Dividend Re-investment Plan

In this case, dividend is declared but not paid out to the investor, instead, it is reinvested back into the scheme at the then prevailing NAV. In other words, the investor is given additional units and not cash as dividend.

RISKS ASSOCIATED WITH MUTUAL FUNDS:-

Investing in Mutual Funds, as with any security, does not come without risk. One of the most basic economic principles is that risk and reward are directly correlated. In other words, the greater the potential risk the greater the potential return. The types of risk commonly associated with Mutual Funds are:

Risks

Every investment entails risk. Mutual funds too are not risk free investments. Even funds investing in government bonds (sovereign paper) are susceptible to some kind of risk. Before investing in mutual funds one must completely understand the risk associated with the particular scheme.

Risk is a measure of the possibility that the investor will not receive an expected return on his investment. Generally risk and reward move hand in hand. The greater the risk that an investment may lose money, the greater is its potential for providing a substantial return. Following are the common types of risk associated with the Mutual Funds:

Returns

There are three primary ways that mutual funds provide returns, or increases in value, for shareholders. These are

  1. Dividends,
  2. Capital gains, and
  3. Increase in net asset value

IMPORTANT CHARACTERISTICS OF A MUTUAL FUND

A Mutual Fund actually belongs to the investors who have pooled their Funds. The ownership of the mutual fund is in the hands of the Investors.

A Mutual Fund is managed by investment professional and other

Service providers, who earns a fee for their services, from the funds.

The pool of Funds is invested in a portfolio of marketable investments.

The value of the portfolio is updated every day.

The investor's share in the fund is denominated by “units”. The value of the units changes with change in the portfolio value, every day. The value of one unit of investment is called net asset value (NAV).

The investment portfolio of the mutual fund is created according to the stated Investment objectives of the Fund.

NEED OF THE STUDY

The main aim of the project is to project Mutual Fund as a better avenue for investment on a long-term or short-term basis. Mutual Fund is a productive package for an investor with limited finances, this project creates an awareness that the Mutual Fund is a worthy investment practice. Mutual Fund is a globally proven instrument. Mutual Funds are ”Unit Trust” as it is called in some parts of the world has a long and successful history, of late Mutual Funds have become a hot favourite of millions of people all over the world.

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The driving force of Mutual Funds is the ‘safety of the principal' guaranteed, plus the added advantage of capital appreciation together with the income earned in the form of dividend or interest. The various schemes of Mutual Funds provide the investor with a wide range of investment options according to his risk bearing capacities and interest besides. Mutual Funds offers an investor to invest even a small amount of money, each Mutual Fund has a defined investment objective and strategy. Mutual Funds schemes are managed by respective asset managed companies sponsored by financial institutions, banks, private companies or international firms. A Mutual Fund is the ideal investment vehicle for today's modern and complex financial scenario.

The study is basically made to analyze the various open-ended equity schemes of different Asset Management Companies to highlight the diversity of investment that Mutual Fund offer. Therefore, through the study one would understand how a common man could efficiently convert a pittance into great penny by wisely investing into the right scheme according to his risk taking abilities.

OBJECTIVES OF THE STUDY

  1. To provide the basic knowledge of Mutual funds and how to measure their performances.
  2. To compare the schemes based on Sharpe's ratio, Treynor's
  3. Ratio, b Co-efficient, Returns and shows which scheme is best for the investor based on their risk profile.
  4. To help an investor make a right choice of investment, while considering the inherent risk factors.
  5. To understand the recent trends in Mutual Funds world.

Company Profile

Bajaj Capital's Mission Statement

The focus of our organisation is to be the most useful, reliable and efficient provider of Financial Services. It is our continuous endeavour to be a trustworthy advisor to our clients, helping them achieve their financial goals.

Bajaj Capital Limited

About Us

The Bajaj Capital Group is one of India's premier Investment Advisory and Financial Planning companies. We are also SEBI-approved Category I Merchant Bankers, we offer personalised Investment Advisory and Financial Planning services to individual investors, corporate houses, institutional investors, Non-Resident Indians (NRIs) and High Net worth Clients, among others. As one of India's largest distributors of financial products, we offer a wide range of investment products such as mutual funds, life and general insurance, bonds, post office schemes, etc. offered by reputed public and private and government organisations.

Company Profile

Bajaj Capital is one of India's leading Financial Services companies offering Free Advice on Investments, Insurance, Tax Saving, Retirement Planning, Financial Planning, Children's Future Planning and other services. We also have a wide range of products and services for Corporates, High Networth Individuals, and NRIs… all under one roof.

At Bajaj Capital, we believe in dreaming big. Dreams inspire us to excel. They ignite hope and kindle in us the passion to stretch our limits. We also believe that nothing can or should stop us from realising our dreams… and financial constraints should be the last thing to stop anyone.

Wide range of services

We offer a comprehensive range of services including financial planning and investment advice, and the entire gamut of financial instruments and investment products of almost all major companies, both public and private. In addition, we also provide investment assistance by helping you complete all the formalities, and help you keep regular track of your investments. These services and products are delivered through our network of 134 Bajaj Capital Investment Centres located all over the country. We are also a SEBI-approved Category I Merchant Banker. We raise resources for over 1,000 top institutions and corporate houses every year, and offer specialised services to Non Resident Indian (NRIs) and High Net worth Clients.

ORGANIZATIONAL STRUCTURE

RESEARCH METHODOLOGY

The Methodology involves randomly selecting Open-Ended equity schemes of different fund houses of the country. The data collected for this project is basically from two sources, they are:-

  1. Primary sources: The monthly fact sheets of different fund houses and research reports from banks.
  2. Secondary sources: Collection of data from Internet and Books.

Statistical Tools

Usually the returns derived are only considered for choosing the best scheme. But it is only half of the consideration for choosing the best scheme. The risk should also be considered in choosing the suitable and best scheme. Therefore, what matters a lot, is the risk adjusted returns. There are several measures to measure the performance of the scheme and rate it. Each of these measures uses past performance data.

The various statistical tools are as follows:-

The Treynor Measure

This performance measure evaluates funds on the basis of Treynor's Index. This Index is a ratio of return generated by the fund over and above risk free rate of return during a given period and systematic risk associated with it (beta).

Treynor's Index (Ti) = (Rp - Rf)/β.

Where,

Rp- SCHEME/FUND RETURN

Rm- MARKET RETURN

Rf- RISK FREE RATE OF RETURN

β is beta of the fund.

All risk-averse investors would like to maximize this value. While a high and positive Treynor's Index shows a superior risk-adjusted performance of a fund, a low and negative Treynor's Index is an indication of unfavorable performance.

The Sharpe Measure

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

Sharpe Index (Si) = (Rp - Rf)/σ

Where,

Rp- SCHEME/FUND RETURN

Rm- MARKET RETURN

Rf- RISK FREE RATE OF RETURN

While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund, a low and negative Sharpe Ratio is an indication of unfavourable performance.

Comparison of Sharpe and Treynor

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

Standard Deviation

Standard Deviation evaluates the volatility of the fund. It measures the consistency of the returns.Volatility is often a direct indicator of the risks taken by the fund.

Beta

Beta indicates the level of volatility associated with the fund as compared to the benchmark. Therefore, the success of Beta is heavily dependent on the correlation between a fund and its benchmark.

If a beta that is greater than 1 means that the fund is more volatile than the benchmark, while a beta of less than 1 means that the fund is less volatile than the index. A fund with a beta very close to 1 means the fund's performance closely matches the index or benchmark.

Formulae

Standard Deviation = √∑( X-‾X) )2 /N

Beta = n∑XY - ∑X ∑Y

n∑X2 - (∑X)2

Sharpe Ratio = Rp - Rf

σ

Treyner's Ratio = Rp - Rf

β

DATA ANALYSIS AND INTERPRETATION

HDFC TOP 200-G

Objective:To generate long term capital appreciation from a portfolio of equity and equity-linked instruments primarily drawn from the companies in BSE 200 index.

YEAR

Rp

Rf

Rm

Rm-Rf

Rp-Rf

X2

XY

 

D2

X

Y

Last 1 Year

13.20

7.37

7.33

-0.04

5.83

0.0016

-0.23

0.89

0.79

Last 3 Year

14.68

7.37

3.42

-3.95

7.31

15.60

-28.87

-3.02

9.12

Last 5 Year

15.63

7.37

8.57

1.20

8.26

1.44

9.91

2.13

4.53

TOTAL

∑X= -2.79

∑Y=21.40

∑X2=17.04

∑XY=-19.19

0

∑D2=14.44

Rp- SCHEME/FUND RETURN

Rm- MARKET RETURN

Rf- RISK FREE RATE OF RETURN

CALCULATION OF ARITHIMATIC MEAN:

=∑X/N

= -2.79/3 = -0.93

CALCULATION OF STANDARD DEVIATION (σ):

= √ S()2/ N

= √14.44/3 = 2.19

CALCULATION OF BETA CO-FFICIENT (β):

= N(SXY) - SXSY/ N (SX2) - (SX) 2

= 3(-19.19)-(-2.79)(21.40)/3(17.04)-(7.78) = 0.049

CALCULATION OF TREYNOR'S RATIO:

= (Rp - Rf) / β

= (21.40)/0.049 = 436.73

CALCULATION OF SHARPE'S RATIO:

= (Rp - Rf) / σ

= (21.40)/2.19 = 9.77

INTERPRETATION

* Since last 1year, HDFC TOP 200 GROWTH fund return is 13.20 as compared to the market return 7.33 and the risk free rate of return 7.37%.

* Since last 3years, HDFC TOP 200 GROWTH fund return is 14.68 as compared to the market return 3.42 and the risk free rate of return 7.37%.

* Since last 5 years, HDFC TOP 200 GROWTH fund return is 15.63 as compared to the market return 8.57 and the risk free rate of return 7.37%.

DSPBR TOP 100 EQT REG-G

Objective: To generate capital appreciation from a portfolio that is substantially constituted of equity and equity related securities of 100 largest corporate by market capitalisation listed in India.

YEAR

Rp

Rf

Rm

Rm-Rf

Rp-Rf

X2

XY

 

D2

X

Y

Last 1 Year

9.26

7.37

7.33

-0.04

1.89

0.0016

-0.075

0.89

0.79

Last 3 Year

9.78

7.37

3.42

-3.95

2.41

15.60

-9.51

-3.02

9.12

Last 5 Year

13.85

7.37

8.57

1.20

6.48

1.44

7.77

2.13

4.53

TOTAL

∑X= -2.79

∑Y=10.78

∑X2=17.04

∑XY= -1.81

0

∑D2=14.44

Rp- SCHEME/FUND RETURN

Rm- MARKET RETURN

Rf- RISK FREE RATE OF RETURN

CALCULATION OF ARITHIMATIC MEAN:

=∑X/N

= -2.79/3 = -0.93

CALCULATION OF STANDARD DEVIATION (σ):

= √ S()2 / N

= √14.44/3 = 2.19

CALCULATION OF BETA CO-FFICIENT (β):

= N(SXY) - SXSY/ N (SX2) - (SX) 2

= 3(-1.81)-(-2.79)(10.78)/3(17.04)-(7.78) = 0.56

CALCULATION OF TREYNOR'S RATIO:

= (Rp - Rf) / β

= 10.78/0.56 =19.25

CALCULATION OF SHARPE'S RATIO:

= (Rp - Rf) / σ

= (10.78)/2.19 = 4.92

INTERPRETATION

* Since last 1 year, DSPBR TOP 100 Equity REG-G fund return is 9.26 as compared to the market return 7.33 and the risk free rate of return 7.37%.

* Since last 3 years, , DSPBR TOP 100 EQUITY REG-G fund return is 9.78 as compared to the market return 3.42 and the risk free rate of return 7.37%.

* Since last 5 years, DSPBR TOP 100 EQUITY REG-G fund return is 13.85 as compared to the market return

RELIANCE VISION-G

Objectives: The primary investment objective of the scheme is to achieve long-term growth of capital by investment in equity and equity-related securities through a research-based investment approach.

YEAR

Rp

Rf

Rm

Rm-Rf

Rp-Rf

X2

XY

 

D2

X

Y

Last 1 Year

6.36

7.37

7.33

-0.04

-1.01

0.0016

0.04

0.89

0.79

Last 3 Year

7.91

7.37

3.42

-3.95

0.54

15.60

-2.13

-3.02

9.12

Last 5 Year

9.73

7.37

8.57

1.20

2.36

1.44

2.83

2.13

4.53

TOTAL

∑X= -2.79

∑Y= 1.89

∑X2=17.04

∑XY=0.74

0

∑D2=14.44

Rp- SCHEME/FUND RETURN

Rm- MARKET RETURN

Rf- RISK FREE RATE OF RETURN

CALCULATION OF ARITHIMATIC MEAN:

=∑X/N

= -2.79/3 =-0.93

CALCULATION OF STANDARD DEVIATION (σ):

= √ S()2/ N

= √14.44/3 = 2.19

CALCULATION OF BETA CO-FFICIENT (β):

= N (SXY) - SXSY/ N (SX2) - (SX) 2

= 3(0.74)-(-2.79)(1.89)/3(17.04)-(7.78) = 0.172

CALCULATION OF TREYNOR'S RATIO:

= (Rp - Rf) / β

= 1.89/0.172 = 10.98

CALCULATION OF SHARPE'S RATIO:

= (Rp - Rf) / σ

= 1.89/2.19 = 0.86

INTERPRETATION

* Since last 1 year, RELIANCE VISION-G fund return is 6.36 as compared to the market return 7.33 and the risk free rate of return 7.37%.

* Since last 3 years, RELIANCE VISION-G fund return is 7.91 as compared to the market return 3.42 and the risk free rate of return 7.37%.

* Since last 5 years, RELIANCE VISION-G fund return is 9.73 as compared to the market return 8.57 and the risk free rate of return 7.37%.

IDFC PREMIER EQUITY PLAN A-G

Objectives: The scheme aims to generate long-term capital growth from an actively managed portfolio of predominantly equity and equity related instruments. It would invest in small and medium size businesses with good long term potential, which are available at cheap valuations.

YEAR

Rp

Rf

Rm

Rm-Rf

Rp-Rf

X2

XY

 

D2

X

Y

Last 1 Year

10.48

7.37

7.33

-0.04

3.11

0.0016

-0.124

0.89

0.79

Last 3 Year

14.46

7.37

3.42

-3.95

7.09

15.60

-28.00

-3.02

9.12

Last 5 Year

18.51

7.37

8.57

1.20

11.14

1.44

13.36

2.13

4.53

TOTAL

∑X=-2.79

∑Y=21.34

∑X2=17.04

XY=-14.76

0

∑D2=14.44

Rp- SCHEME/FUND RETURN

Rm- MARKET RETURN

Rf- RISK FREE RATE OF RETURN

CALCULATION OF ARITHIMATIC MEAN:

=∑X/N

= -2.79/3 = -0.93

CALCULATION OF STANDARD DEVIATION (σ):

= √ S()2/ N

= √14.44/3 = 2.19

CALCULATION OF BETA CO-FFICIENT (β):

= N (SXY) - SXSY/ N (SX2) - (SX) 2

=3(-14.76)-(-2.79)(21.34)/3(17.04)-(7.78) = 0.35

CALCULATION OF TREYNOR'S RATIO:

= (Rp - Rf) / β

= 21.34/0.35 = 60.97

CALCULATION OF SHARPE'S RATIO:

= (Rp - Rf) / σ

= 21.34/2.19 = 9.74

INTERPRETATION

Since last 1 year, IDFC PREMIER EQUITY PLAN A-G fund return is 10.48 as compared to the market return 7.33 and the risk free rate of return 7.37%.

Since last 3 years, IDFC PREMIER EQUITY PLAN A-G fund return is 14.46 as compared to the market return 3.42 and the risk free rate of return 7.37%.

Since last 5 years, IDFC PREMIER EQUITY PLAN A-G fund return is 18.51 as compared to the market return 8.57 and the risk free rate of return 7.37%.

BIRLA SUN LIFE FRONTLINE EQUITY-G

Objectives: The scheme aims to generate long-term capital growth, income generation and distribution of dividend. It would target the same sectoral weights as BSE 200, subject to flexibility of selecting stocks within a particular sector.

YEAR

Rp

Rf

Rm

Rm-Rf

Rp-Rf

X2

XY

 

D2

X

Y

Last 1 Year

7.27

7.37

7.33

-0.04

-0.10

0.0016

0.004

-3.10

9.61

Last 3 Year

10.22

7.37

3.42

-3.95

2.85

15.60

-11.25

3.9

15.21

Last 5 Year

15.10

7.37

8.57

1.20

7.73

1.44

9.27

-0.8

0.64

TOTAL

∑X=-2.79

∑Y= 10.48

∑X2= 17.04

∑XY=-1.97

0

∑D2= 25.46

Rp- SCHEME/FUND RETURN

Rm- MARKET RETURN

Rf- RISK FREE RATE OF RETURN

CALCULATION OF ARITHIMATIC MEAN:

=∑X/N

= -2.79/3 = -0.93

CALCULATION OF STANDARD DEVIATION (σ):

= √ S()2/ N

= √25.46/3 = 2.91

CALCULATION OF BETA CO-FFICIENT (β):

= N (SXY) - SXSY/ N (SX2) - (SX) 2

=3(-1.97)-(-2.97)(10.48)/3(17.04)-(7.78) = 0.58

CALCULATION OF TREYNOR'S RATIO:

= (Rp - Rf) / β

= 10.48/0.58 = 18.06

CALCULATION OF SHARPE'S RATIO:

= (Rp - Rf) / σ

= 10.48/2.91 = 3.60

INTERPRETATION

Since last 1 year, BIRLA SUN LIFE FRONTLINE EQUITY-G fund return is 7.27 as compared to the market return 7.33 and the risk free rate of return 7.37%.

Since last 1 year, BIRLA SUN LIFE FRONTLINE EQUITY-G fund return is 10.22 as compared to the market return 3.42 and the risk free rate of return 7.37%.

Since last 1 year, BIRLA SUN LIFE FRONTLINE EQUITY-G fund return is 15.10 as compared to the market return 8.57 and the risk free rate of return 7.37%.

OBSERVATIONS

The following observations are done from the analysis of the schemes:

AMC COMPANIES

STATISTICAL

TOOLS

HDFC TOP 200

DSPBR TOP 100 EQT REG-G

RELIANCE VISION-G

IDFC PREMIER EQUITY PLAN A-G

BIRLA SUN LIFE FRONTLINE EQUITY-G

Last 1 year return

13.20

9.26

6.36

10.48

7.27

Last 3 year return

14.68

9.78

7.91

14.46

10.22

Last 5 year return

15.63

13.85

9.73

18.51

15.10

STANDARD DEVIATION (σ)

2.19

2.19

2.19

2.19

2.91

BETA CO-FFICIENT (β)

0.049

0.56

0.172

0.35

0.58

TREYNOR'S RATIO

436.73

19.25

10.98

60.97

18.06

SHARPE'S RATIO

9.77

4.92

0.86

9.74

3.60

TREYNOR'S RATIO GRAPH

As we know, higher the Treynor's ratio good is the fund performance. Therefore, we can see from the graph, among other five funds HDFC TOP 200's Treynor's ratio is the highest, therefore its performance is the best, followed by IDFCPREMIER EQUITY, DSPBR TOP 100 EQUITY,BIRLA SUNLIFE FRONTLINE EQUITY-G and the least performance is given by RELIANCE VISION-G.

SHARPE'S RATIO GRAPH

As we know, higher the Sharpe's ratio good is the fund performance. Therefore, we can see from the graph, among other five funds HDFC TOP 200's Sharpe's ratio is the highest, therefore its performance is the best, followed by IDFCPREMIER EQUITY, DSPBR TOP 100 EQUITY,BIRLA SUNLIFE FRONTLINE EQUITY-G and the least performance is given by RELIANCE VISION-G.

FINDINGS

After the analysis and interpretation of the above data, the following findings have been done, on the basis of the Beta value, Treynor's ratio (higher the ratio, good the fund's performance), Sharpe's ratio (higher the ratio, good the fund's performance).

HDFC TOP 200-G

This fund is an open ended equity scheme.

Fund is an equity diversified fund.

As the Beta value of this fund (0.049), which is very less than 1, so the fund is less volatile, low risk and high return compared to other funds.

Treynor's ratio of the fund (436.73), which is the highest among the other fund schemes, which shows the scheme's performance is best among others.

Sharpe's ratio of the fund (9.77), which is the highest among the other fund schemes, which shows the scheme's performance is the best among others.

Fund gives higher return with low risk.

DSPBR TOP 100 EQT REG-G

This is an open ended equity scheme.

Fund is an equity diversified fund.

As the Beta value of this fund(0.56), which is less than 1,so the fund is less volatile, low risk and less return than HDFC TOP 200-G and IDFC PREMIER EQUITY PLAN A-G, but the scheme gives average returns.

Treynor's ratio of the fund (19.25), which is the third highest among the other fund schemes, which shows the scheme's performance is good among others excluding HDFC TOP 200-G and IDFC PREMIER EQUITY PLAN A-G .

Sharpe's ratio of the fund (4.92), which is the third highest among the other fund schemes, which shows the scheme's performance is good among others except HDFC TOP 200-G and IDFC PREMIER EQUITY PLAN A-G .

Fund gives good return with average risk.

RELIANCE VISION-G

This is an open ended equity scheme.

Fund is an equity diversified fund.

As the beta value of this fund (0.172), which is less than 1, so the fund is less volatile, low risk and the very low returns as compared to the others schemes.

Treynor's ratio of the fund (10.98), which is the least among the other fund schemes, which shows the scheme's performance is worst among others.

Sharpe's ratio of the fund (0.86), which is the least among the other fund schemes, which shows the scheme's performance is worst as compared to remaining others funds.

Fund gives very low returns with low risk.

IDFC PREMIER EQUITY PLAN A-G

This is an open ended equity scheme.

* Fund is an equity diversified fund.

As the beta value of this fund (0.35), this is less than 1, so the fund is less volatile, with low risk and good returns.

* Treynor's ratio of the fund (60.97), which is the second highest among the other fund schemes, which shows the scheme's performance, is good among others.

Sharpe's ratio of the fund (9.74), which is also the second highest among the other fund schemes, which shows the scheme's performance is good as compared to remaining others funds.

Fund gives good returns with low risk.

BIRLA SUN LIFE FRONTLINE EQUITY-G

This is an open ended equity scheme.

As the beta value of this fund (0.58), this is less than 1, so the fund is less volatile, with low risk and below average returns.

* Treynor's ratio of the fund (18.06), which is the second last among the other fund schemes, which shows the scheme's performance, is below average among others.

Sharpe's ratio of the fund (3.60), which is also the second last among the other fund schemes, which shows the scheme's performance is below average as compared to remaining others funds.

Fund gives below average returns with average risk.

SUGGESTIONS

Following are the suggestions for the funds, to enhance their performances,

The fund companies should have to concentrate on the condition of the market, so according to that, they set their benchmark and invest in different sectors accordingly.

The fund companies should work on to reduce the beta value of their schemes, due to which return increases.

The fund companies should select the innovative way for constructing a good portfolio and find the good areas of investing funds.

The fund companies should have a clear objective, which makes easier for the investors to match their objectives with the schemes objectives.

CONCLUSION

This has been noticed that all the schemes are equity diversified funds.

As we have seen that, the HDFC TOP 200-G schemes have low risk and higher returns, and give higher performances as there Treynor's and the Sharpe's ratios are higher.

We can compare HDFC TOP 200-G to that of the IDFC TOP 100 EQUITY REG-G, which have higher return with lower risks, but HDFC gives greater returns as compared to IDFC when invested for 1 year and 3 years and IDFC gives greater returns when invested for 5 years.

RELIANCE VISION-G is not suggested to the investors because the scheme has very low return with average risk.

We can compare DSPBR TOP 100 EQT REG-G to that of the BIRLA SUN LIFE FRONTLINE EQUITY-G, which have average return with low risk, but BIRLA gives higher returns as compared to the DSPBR for the 3 years and for 5 years and DSPBR gives greater returns when invested for 1 year.

But the Sharpe's and the Treynor's ratio's are higher for the DSPBR TOP 100 EQT REG-G, therefore, according to the ratios DSPBR has better performance than the BIRLA.