chapter iii findings and analysis

8/20/2019 CHAPTER III Findings and Analysis

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CHAPTER III Findings and Analysis

PRODUCT PROFILE (Data Analysis)

Franklin India Opportunities Fund

Scheme o!ecti"e#

Is an open end diversified growth scheme with an objective to generate appreciation by

capitalizing on long – term growth opportunities in the Indian economy.

• Open-ended and ybrid! "#uity-oriented

• $%&- 's. ().(* as on Oct *+ (,

• $et %ssets -'s. /,/.( crore as on 0ep 1,+ (,

This $%od&ct is s&itale 'o% In"esto%s ho a%e seeing#

2ong term capital appreciation.

% fund that takes concentrated stock or sector e3posures based on four themes

Po%t'olio Com$osition 4%s of 15,*5(,6

St%ategy# 7his fund follows the dynamic asset allocation strategy. 8ased on the price-to-book

value ratio of the market+ the fund sharply reduces e#uity e3posure if valuations are high and

raises it aggressively if valuations are low. 'ebalancing is done on a daily basis. Its e#uity

e3posure can range anywhere between 1, and 9, per cent+ with debt making up the residual

position. 7he e#uity position can also be supplemented with derivatives to hedge againstdownside or generate arbitrage returns. 7hus+ this fund:s $%& is unlikely to fall as much as

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peers: in a steep market fall or in an e3tended bear market. &aluation calls also help the fund

decide its large-cap to mid-cap allocations. 7he fund presently has a conservative+ large-cap

oriented portfolio+ with mid-cap e3posure at (, to 1, per cent. In the February portfolio+ the

fund invested 9, per cent of its e#uity assets in large-cap stocks. 7he debt portion is actively

managed for interest rate views.

Risk Measures (%) Mean Std Dev Sharpe Beta JensenAlpha

Fund 16.12 8.57 1.10 0.72 6.43

VR Balanced 10.85 10.99 0.37 - -

Category 15.35 10.69 0.79 0.93 5.02

Rank !t"!n Category 15 25 6 28 10

#u$%er o& &und' !n category 30 30 30 30 30

As on Sep 30, 2015

Trailing Returns (%) YTD 1-Month -Month 1-Year -Year !-Year

Fund 6.70 5.21 1.04 12.17 17.35 13.31

VR Balanced -0.03 6.71 -2.75 5.09 11.36 6.24

Category 4.12 4.89 -0.58 12.12 16.14 9.92

Rank !t"!n Category 13 44 8 29 13 5

#u$%er o& &und' !n category 71 81 77 61 30 26

As on Oct 07, 2015

"er#or$ane& ("e dyna$!c allocat!on) t"oug") "a' orked !n &a*our o& t"e &und o*er

t"ree- and &!*e-year t!$e &ra$e' "en t"e return' ere 20.8 and 15.5 +er cent) re'+ect!*ely.

("e'e ere a"ead o& t"e category a*erage. ,&ter a 'lo 'tart !n!t!ally) !t' +er&or$ance "a'

+!cked u+ &ro$ 2010 *!'- -*!' t"e %enc"$ark. t !n*e't' con'er*at!*ely and '"o' le''

*olat!l!ty.

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08I 8lue ;hip Fund

Scheme o!ecti"e

7he objective of the scheme would be to provide investors with opportunities for long-termgrowth in capital through an active management of investments in a diversified basket of

e#uity stocks of companies whose market capitalization is atleast e#ual to or more than the

least market capitalised stock of 0


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Fund 20.46 12.84 1.07 0.89 9.02

/ B/ 100 12.62 14.13 0.42 - -Category 17.48 14.67 0.74 0.98 5.64



As on Sep 30, 2015

Trailing Returns (%) YTD 1-M -M 1-Y -Y !-Y

Fund 7.91 6.85 -2.25 16.94 22.07 11.87

/ B/ 100 -0.72 8.10 -3.69 5.15 12.96 5.73

Category 2.95 6.85 -2.50 12.77 18.15 9.12

Rank !t"!n Category 14 109 101 41 15 14


As on Oct 07, 2015

Pe%'o%mance# %fter a slightly inconsistent show between (,,* and (,+ the fund has

dramatically improved its performance. It has consistently beaten its benchmark and category

in the last four years. ;urrently+ the -+ 1- and -year returns are ahead of the category by .

per cent+ ?.) per cent and .* per cent+ respectively. Investors can initiate e3posures to the

fund in light of the notable improvement in performance and well-articulated strategy.

@7I "#uity Fund

Scheme o!ecti"e

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7his 0cheme primarily aims at securing for the unit holders capital appreciation by investing

the funds of the scheme in e#uity shares and convertible and non-convertible bonds5

debentures of companies with good growth prospects and money market instruments.

• Open-ended and Equity: Multi Cap• NAV- Rs. 103.13 as on Oct 7 !01"

• Net Assets- Rs. 43"1.0 c#o#e as on Au$ 31 !01"

This $%od&ct is s&itale 'o% in"esto%s ho a%e seeing#

2ong term capital growth

Investment in e#uity instruments of companies with good growth prospects

>oderately igh 2evel

St%ategy! @7I "#uity Fund is one of the oldest funds in the Indian mutual fund space with a

(( year history. 2aunched as @7I >aster gain+ its initial years were nothing to write home

about+ but in the past * years it has emerged as one of the most consistent large-cap funds.

7he ,-year ;%A' of (, per cent is (. per cent ahead of the benchmark and category on an

annual basis. 7he fund has widened its gap over the category in the last five years and movedup to a -star &alue 'esearch ratings this year. From being an inde3-hugger in its initial years+

@7I "#uity Fund has matured to take substantial active calls that have paid off well in recent

years. 7he fund has added a mid-cap flavor to the portfolio with a -odd per cent mid-cap

weight+ to ) per cent higher than its category.

7hough the fund isn:t the largest in its category with an asset size of '1+() crore 4Buly

(,?6+ it has always been e3tremely diversified. It currently holds about *, stocks+ against the

category norm of ?1. % fragmented portfolio makes it difficult for this fund:s stock selectionto generate substantial out-performance+ which is a cause of concern. %lthough this curtails

risks+ but it may also prevent the fund from capitalizing from one or two stock picks that pay

off in a really big way. In recent times+ the fund has remained more defensive than its peers+

with lower weights in market favorites such as financials and metals+ but higher weights in

automobiles+ technology and healthcare stocks.


Fund 18.39 13.61 0.86 0.94 6.67

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/ B/ 100 12.62 14.13 0.42 - -

Category 17.48 14.67 0.74 0.98 5.64



As on Sep 30, 2015


Fund 4.17 7.89 -0.45 13.63 19.75 12.22

/ B/ 100 -0.72 8.10 -3.69 5.15 12.96 5.73

Category 2.95 6.85 -2.50 12.77 18.15 9.12

Rank !t"!n Category 83 26 22 85 33 12


As on Oct 07, 2015

Pe%'o%mance# 7he fund has rarely been a chart-topper+ but has nevertheless created sizeable

wealth for its investors through a slow-and-steady approach. % ,-year return of (, per cent+

a -year return of ).* per cent 4category ( per cent6 and a 1 year return of 9.* per cent

4category .) per cent6 have placed it among the top five funds in all these periods.

7he fund has been particularly good in bear markets+ containing downside to levels far lower

than the inde3 in (,,+ (,,9 and (,. %s a consistent fund that navigates bear markets

really well+ the fund suits a conservative investor to a tee.

Cotak ,

3&


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Scheme o!ecti"e#

Cotak , is an open-ended e#uity scheme. 7he investment objective of the 0cheme is to

generate capital appreciation from a portfolio of predominantly e#uity and e#uity related

securities. 7he portfolio will generally comprise of e#uity < e#uity related instruments of

around , companies which may go upto / companies.

• Open-ended and "#uity! 2arge ;ap

• $%&- 's. *1.)? as on Oct *+ (,

• $et %ssets – 's. (,1., crore as on %ug 1+ (,


long term capital growth

Investment in portfolio of predominantly e#uity < e#uity related securities

St%ategy! Cotak , Fund is a diversified large cap fund which means most of your money

will be invested in giant and large companies. %nd just to give kicker returns the fund has

some e3posure in mid cap companies as well. 2arge cap companies tend to be stable

compared to mid cap and small cap companies. 7he portfolio allocation is /,D in stocks of

large cap companies and ,D in stocks of mid cap companies. he returns in a mutual fund are

absolutely ta3 free+ provided you did not withdraw within year.


Fund 17.43 15.25 0.70 1.08 4.99

C# #!&ty 12.02 13.73 0.39 - -

Category 13.66 13.72 0.51 0.97 1.82



As on Sep 30, 2015

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Fund 6.02 8.32 -1.24 16.24 18.12 9.21

C# #!&ty -1.27 8.18 -3.92 4.14 12.45 5.96

Category 0.69 7.39 -3.47 7.32 14.12 7.14



As on Oct 07, 2015

Pe%'o%mance! Cotak , seeks to generate returns through investments in , to / companies

in the e#uity space. 7his is also the flagship fund of the mutual fund house. %t the end of

%ugust (,( banks were the top sector in the portfolio with a share of * per cent. =etroleum

products+ software and =harma were some of the other areas that had an e3posure of more

than , per cent. 'eliance Industries was the top holding and the company along with Infosys

had an e3posure e#ual to / per cent of the portfolio. 7he portfolio turnover ratio was a high

(,, per cent plus figure. 7he ;$E $ifty was the benchmark inde3 and the fund was an

outperformer over the one and the three year time periods ended Bune (,(. 7here was a

slight consolidation in the portfolio with the share of banks rising to 9 per cent by the end of

February (,1. =etroleum products+ =harma and software were some of the other leading

sectors in the portfolio. 0i3 month later banks still remained the top sector but the share here

was a massive ( per cent. 0oftware+ petroleum products and consumer non durables were

some of the other leading sectors in the portfolio. 7he fund has improved its performance in

recent times but the investor can wait for some more time to see whether this sustains and

then consider it as a part of their portfolio choices.

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I;I;I 8alanced Fund

Scheme o!ecti"e#

7his fund seeks to optimize the risk-adjusted return by distributing assets between both

e#uity and debt markets. In bullish markets e#uity allocation can go upto 9,D. In bearish

markets e#uity allocation can go down to )D. 7his dynamic allocation along with core debt

portfolio reduces the volatility of return.


• $%&- 's. /(.? as on Oct *+ (,

• $et %ssets- 's. (1)1.( crore as on 0ep 1,+ (,


2ong term wealth creation solution

% balanced fund aiming for long term capital appreciation and current income by

investing in e#uity as well as fi3ed income securities.

St%ategy! I;I;I =rudential 8alanced %dvantage is classified as an e#uity-oriented balanced

fund in most places. It seeks to hold at least ) per cent in e#uities+ like most other balanced

funds+ and the rest in debt. 7his fund uses an in-house model+ based on a long-term+ historical

mean =rice to 8ook &alue 4=58&6+ with a view to limit the downside risk during a falling

market+ while aiming to capture the upside in a rising market. 7he fund will have the

fle3ibility to hedge its e#uity positions with derivatives+ and also take on derivative positions

in the inde3. 0imply put+ the fund uses derivative hedging strategies in its e#uity holding. %s

a result of using active hedging strategies+ it is a notch less risky than regular balanced funds+

especially in volatile5down markets. 8ut that also means that in sudden rallying markets+ the

funds hedged positions+ if any+ may place a cap on the returns it can manage. 7he fund is+

therefore+ suitable for investors who are looking for returns higher than debt-oriented funds

and wish to take risks lower than balanced e#uity funds.7he key positive about this fund is its

ability to reduce risks even while being classified as an e#uity fund for ta3 purposes. 7hat

means you have zero capital gains ta3 in the fund if held for more than a year+ while

assuming risks that are a few notches higher than regular debt-oriented funds

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Fund 18.76 11.03 1.09 0.93 8.18

VR Balanced 10.85 10.99 0.37 - -

Category 15.35 10.69 0.79 0.93 5.02



As on Sep 30, 2015


Fund 2.20 5.74 -0.98 11.59 20.22 14.37

VR Balanced -0.03 6.71 -2.75 5.09 11.36 6.24

Category 4.12 4.89 -0.58 12.12 16.14 9.92



As on Oct 07, 2015

Pe%'o%mance! I;I;I =rudential 8alanced %dvantage has built a track record of beating its

benchmark almost all the times on a rolling one-year return basis for the last five years.

owever+ it took a good bit of hit in (,,9. Its higher cash e#uity position at the beginning of

the year did cause some damage. 8ut it managed the market fall in (, much better+ falling

by 9.* per cent+ even as the benchmark fell by over ? per cent.7hat said+ in sharp rallying

markets+ a defensive position could cap returns. In (,? for instance+ the fund delivered

percentage points lower returns than the balanced fund category-average+ suggesting that its

hedging strategy worked against it. It may be fair to position this fund between debt-oriented

funds such as >I=s+ and balanced funds in terms of its risk-return profile.

Franklin India =rima =lus

Scheme o!ecti"e#

4!

https://www.fundsindia.com/products/mutual-fund/scheme/ICICI-Pru-Balanced-Advantage-Fund-Reg-G-?c=1470https://www.fundsindia.com/products/mutual-fund/scheme/ICICI-Pru-Balanced-Advantage-Fund-Reg-G-?c=1470https://www.fundsindia.com/products/mutual-fund/scheme/ICICI-Pru-Balanced-Advantage-Fund-Reg-G-?c=1470


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Is an open end growth scheme with an objective to provide growth of capital plus regular

dividend through a diversified portfolio of e#uities+ fi3ed income securities and money

market instruments.

• Open-ended and "#uity! >ulti ;ap

• $%&- 's. ??.1 as on Oct *+ (,

• $et %ssets- 's. 9(.? crore as on %ug 1+ (,

This $%od&ct is s&itale 'o% In"esto%s ho a%e seeing+#


=rimarily a large cap fund with some allocation to small 5 mid cap stocks.

Po%t'olio Com$osition#

St%ategy# 7he fund usually maintains a fi3ed allocation between large-+ mid- and small-cap

stocks. It tends to be overweight on mid and small caps relative to the category. In recent

months+ it has retained -) per cent of its portfolio in large-cap stocks+ (-1 per cent in

mid caps and the remaining in small caps. 7he fund invests in wealth-creating companies

whose competitive advantages are likely to translate into superior return on capital. In recent

months the fund has pruned small-cap e3posure in the favour of mid caps. 7he fund tends to

lean towards growth rather than value and avoids companies with governance issues.

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Fund 21.79 13.77 1.09 0.93 10.13

C# 500 14.04 14.47 0.50 - -

Category 17.48 14.67 0.74 0.98 5.64



As on Sep 30, 2015


Fund 6.69 6.70 -1.30 20.06 23.54 13.17

C# 500 0.92 8.10 -3.05 8.08 14.52 6.23

Category 2.95 6.85 -2.50 12.77 18.15 9.12

Rank !t"!n Category 28 122 44 12 3 4


As on Oct 07, 2015

Pe%'o%mance# 7he fund has outperformed its category by a margin of ,.) per cent in the

last one year. 7hree-year and -year returns are also ahead of the category by ?.? and 1.* per

cent+ respectively. 7he fund is a consistent benchmark beater+ ahead of its inde3 by over ) per

cent over -+ *- and ,- year time frames. 7he fund has seen relatively few manager changes

in the last / years.

7ata 8alanced Fund

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Scheme o!ecti"e#

7o provide income distribution and 5 or medium to long term capital gains while at all times

emphasizing the importance of capital appreciation.


• $%&- 's. *,.?? as on Oct *+ (,

• $et %ssets- 's. ?)),.9 crore as on 0ep 1,+ (,

This $%od&ct is s&itale 'o% In"esto%s ho a%e seeing#


Investments in predominantly e#uity and e#uity related instruments and sme portion

in fi3ed income securities.

St%ategy# 7he fund retains a roughly *!( e#uity-debt allocation. 7he fund sticks to the

growth-at-reasonable-price approach 4A%'=6 for stock selection. 7he fund mainly buys and

holds stocks where the underlying #uality of business is high. 7he fund does not take market

calls and ensures top e3posures do not e3ceed ?-?. per cent each of assets. 7his makes for a

rather large number of e#uity holdings+ around ),-) stocks. 7his splintered approach

reduces risks as the fund isn:t too reliant on its individual calls to score well in a rising

market. 8ut it can prevent outsize gains in a trending market too. 7he fi3ed income portion

has high allocations to gilts and %%%-rated corporate bonds. 'eturns are managed through

duration calls rather than credit risk.

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Fund 20.33 11.85 1.15 0.97 9.62

VR Balanced 10.85 10.99 0.37 - -

Category 15.35 10.69 0.79 0.93 5.02



As on Sep 30, 2015


Fund 7.66 5.39 -0.52 18.20 21.64 14.41

VR Balanced -0.03 6.71 -2.75 5.09 11.36 6.24

Category 4.12 4.89 -0.58 12.12 16.14 9.92



As on Oct 07, 2015

Pe%'o%mance# 7he fund:s one-year return of /.9 per cent+ three-year return of (* per cent

and five-year return of 9. per cent place it among the top funds in the balanced category.

7he fund has outperformed its category by a good ). per cent+ * per cent and ?.1 per cent in

each of these time frames. 7he ten-year return of /. per cent compares well even to pure

e#uity funds. $ever a poor performer+ the fund has improved its place in the rankings steadily

since (,. 7he fund delivers category outperformance without taking high risks either in the

e#uity or debt

'eliance vision fund

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Scheme O!ecti"e#

7he primary investment objective of the 0cheme is to achieve long term growth of capital by

investing in e#uity and e#uity related securities through a research based investment

approach. owever+ there can be no assurance that the investment objective of the 0cheme

will be realized+ as actual market movements may be at variance with anticipated trends.

• Open-ended and "#uity! >ulti ;ap

• $%&- 's. ?(9.1 as on Oct *+ (,

• $et %ssets- 's. 11/(./ crore as on %ug 1+ (,


2ong term capital growth.

Investment in e#uity and e#uity related instruments through a research based

approach.

St%ategy#It is a large cap fund with appro3imately *,D e3posure in large cap. 2arge cap

stocks "ndeavour to provide stability and li#uidity to the portfolio. %lmost ,D of the

portfolio consists of companies which are potential leaders in their respective sectors with an

aim to provide a solid base to the portfolio. Focus of the fund is on macro understanding of

sector callsG may take large sector deviation in a few sectors. 0tocks in the portfolio are

attractively valued with the potential to provide upside in the ne3t (-9 months. 8acked by

fund management e3pertise and growth oriented strategy+ the fund endeavors to perform well

in the broad market condition.


Fund 17.01 19.55 0.53 1.28 3.51

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/ B/ 100 12.62 14.13 0.42 - -

Category 17.48 14.67 0.74 0.98 5.64



As on Sep 30, 2015


Fund -0.69 6.29 -5.05 11.17 16.71 7.12

/ B/ 100 -0.72 8.10 -3.69 5.15 12.96 5.73

Category 2.95 6.85 -2.50 12.77 18.15 9.12

Rank !t"!n Category 157 150 178 120 62 68


As on Oct 07, 2015

Pe%'o%mance# %dmittedly+ recent years have been rather testing for investors in 'eliance

&ision Fund. 7he fund has had a string of indifferent and poor years that have dented its long-

term track record. Over five years annualised to the end of Buly (,1+ the fund has

underperformed its benchmark inde3 0


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Scheme O!ecti"e#

7he primary objective of the 0cheme is to generate capital appreciation along with current

income from a combined portfolio of e#uity and e#uity related and debt and money market

instruments.


• $%&- 's. ,9.9? as on Oct *+ (,

• $et assets- 's. ??).) crore as on %ug 1+ (,

The $%od&ct is s&itale 'o% in"esto%s ho a%e seeing#

;apital appreciation along with current income over long term.

Investment predominantly in e#uity and e#uity related instruments with balance

e3posure to debt and money market instruments.

St%ategy# 7his fund maintains a more or less steady-state asset allocation between e#uities

and debt. 0ince >arch (,1+ *, to *( per cent of the portfolio has been in e#uities+

irrespective of market conditions. 7he fund avoids buying overvalued assets . 7he key tools

used to achieve this objective are a target margin of safety and effective diversification+ apart

from a penchant for #uality stocks. 7he fund:s e#uity portfolio has higher mid- and small-cap

allocations than most balanced peers. 0ince launch+ within the e#uity portfolio+ the average

large-cap e3posure has been * per cent+ average mid-cap e3posure (* per cent+ with the rest

in small-cap stocks. 7he higher mid5small-cap holdings e3plain the fund:s stellar returns in

every bull run. 7he debt portion is invested mainly in good-#uality bonds+ recently e3tending

duration to take advantage of falling interest rates.


Fund 19.01 11.24 1.09 0.87 8.69

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VR Balanced 10.85 10.99 0.37 - -

Category 15.35 10.69 0.79 0.93 5.02



As on Sep 30, 2015


Fund 3.36 5.45 0.22 13.88 20.33 13.92

VR Balanced -0.03 6.71 -2.75 5.09 11.36 6.24Category 4.12 4.89 -0.58 12.12 16.14 9.92



As on Oct 07, 2015

Pe%'o%mance# % (.* per cent return in the last one year has put the fund () per cent aheadof the benchmark and /.? per cent ahead of its category this year. 7hree-year returns at (1.

per cent and five-year returns at 9.* per cent also trounce the category by 1.? and ?./ per

cent+ respectively. 7he fund:s ten-year record is #uite comparable to pure e#uity funds.

Hespite its aggressive flavour+ the fund has contained downside well in the bear markets of

(, and (,,9+ relative to its peers. 7his is a balanced fund that takes no half measures. ou

won:t regret owning it in any secular bull run.

I;I;I =ru 8lended =lan-%-Hirect

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Scheme O!ecti"e#

7he I;I;I =rudential 8lended =lan+ an open-ended fund+ is an arbitrage product that uses the

differences between the cash and future price of stocks to enter into e#ual but opposite

positions+ simultaneously in both markets+ for the same scrip. 7he fund focuses on earning

the carry cost+ which is nothing but the interest income that is inherent in this difference. It is

a debt product+ that uses the e#uity and e#uity future markets to augment its interest income.

@nder the current 0"8I regulations however derivatives e3posure cannot e3ceed ,D of

%@>. 8lended =lan invests the balance portfolio in short term debt products of high credit

#uality.

• Open-ended and ybrid! %rbitrage

• $%&- 's. ((.11 as on Oct *+ (,

• $et assets- 's. 9). crore as on %ug 1+ (,


2ong term wealth creation solution

%n e#uity oriented fund that aims for growth by investing in e#uity and e#uity

related securities including derivatives and the balance in debt securities.

St%ategy! 7his fund is a blend of e#uity arbitrage opportunities and short term debt

instruments+ and is open for subscription only for a limited period each month. It features two

options!

68lended =lan % - which maintains at least D e3posure to e#uity and e#uity related

securities+ which can be hiked upto *D. 7he fund aims to hedge ,D out of the D e#uity

e3posure and use the D un-hedged portion to participate in I=Os to a limited e3tent. 7he

D e3posure to e#uity classifies =lan % as an e#uity fund and therefore provides 7a3 Free

dividends without being subject to dividend distribution ta3.

(68lended =lan 8 - invests predominantly in short term debt+ limiting its arbitrage e3posure

to less than ,D. In both cases+ the portfolio component not deployed in arbitrage is held in

short term debt instruments

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Fund 6.30 0.43 1.64 8.00 - -

VR Balanced -0.03 6.71 -2.75 5.09 - -Category 6.30 0.49 1.66 8.10 - -

Rank !t"!n Category 17 29 20 21 - -

#u$%er o& &und' !n category 38 38 38 36 - -

Pe%'o%mance# 7hese funds+ popularly known as %rbitrage Funds or Herivative Funds are

recognized for modest and secured returns across the world and are comparatively safer

investment option when compared with e#uity funds. %rbitrage in the financial parlance is the

practice of taking advantage of a state of imbalance between two or more markets i.e. it

involves buying and selling of e#ual #uantities of a security in two different markets with the

e3pectation that a future change in price in one market will be offset by an opposite change in

the other. One of the markets is usually cash or spot+ while the other is derivatives. 7hough it

cannot generate the kind of returns that an e#uity fund can but will not give negative returns

either. %lso being coming under the category of e#uity funds post ta3 returns enhances in

such funds compared to the debt funds. 7here is no denying that such funds provide good

hedge against volatile markets but the concern is that investment opportunities catering to the

mis-pricing of securities in different markets to generate returns may be few and difficult to

spot and would re#uire the fund managers to be very active.

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IDEAL PORTFOLIO

FU,D SCHE-E .EI/HTA/E I,PERCE,TA/E

T0PE

=rudential I;I;I balanced

Fund

8%2%$;"H

08I 8lue ;hip Fund "J@I7

@7I "#uity Fund , "J@I7

Cotak , "J@I7

I;I;I 8alanced Fund 8%2%$;"H

Franklin India =rima =lus , "J@I7

7ata 8alanced Fund 8%2%$;"H

'eliance vision fund "J@I7

HF; 8alanced Fund 8%2%$;"H

I;I;I =ru 8lended =lan-%-

Hirect

( %'8I7'%A"

47he total allocations made in the above fund are made to the total investment amount to be

made by the individual. , percent of the total investment amount is kept aside for li#uidity.6

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FI,DI,/S

The /%o&nd %&les o' -&t&al F&nd In"esting#

>oses gave to his followers , commandments that were to be followed till eternity. 7he

world of investments too has several ground rules meant for investors who are novices in

their own right and wish to enter the myriad world of investments. 7hese come in handy for

there is every possibility of losing what one has if due care is not taken.

1. Assess yo&%sel' ! 0elf-assessment of one s needsG e3pectations and risk profile is of prime

importance failing which+ one will make more mistakes in putting money in right places than

otherwise. One should identify the degree of risk bearing capacity one has and also clearly

state the e3pectations from the investments. Irrational e3pectations will only bring pain.

(. T%y to &nde%stand he%e the money is going ! It is important to identify the nature of

investment and to know if one is compatible with the investment. One can lose substantially

if one picks the wrong kind of mutual fund. In order to avoid any confusion it is better to go

through the literature such as offer document and fact sheets that mutual fund companies

provide on their funds.

11 Don2t %&sh in $icing '&nds3 thin 'i%st# one first has to decide what he wants the money

for and it is this investment goal that should be the guiding light for all investments done. It is

thus important to know the risks associated with the fund and align it with the #uantum of

risk one is willing to take. One should take a look at the portfolio of the funds for the

purpose. "3cessive e3posure to any specific sector should be avoided+ as it will only add to

the risk of the entire portfolio. >utual funds invest with a certain ideology such as the K&alue

=rincipleK or KArowth =hilosophyK. 8oth have their share of critics but both philosophies

work for investors of different kinds. Identifying the proposed investment philosophy of the

fund will give an insight into the kind of risks that it shall be taking in future.

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?1 In"est. Hon t speculate! % common investor is limited in the degree of risk that he is

willing to take. It is thus of key importance that there is thought given to the process of

investment and to the time horizon of the intended investment. One should abstain from

speculating which in other words would mean getting out of one fund and investing in

another with the intention of making #uick money. One would do well to remember that

nobody can perfectly time the market so staying invested is the best option unless there are

compelling reasons to e3it.

1 Don t $&t all the eggs in one aset! 7his old age adage is of utmost importance. $o

matter what the risk profile of a person is+ it is always advisable to diversify the risks

associated. 0o putting one s money in different asset classes is generally the best option as it

averages the risks in each category. 7hus+ even investors of e#uity should be judicious and

invest some portion of the investment in debt. Hiversification even in any particular asset

class 4such as e#uity+ debt6 is good. $ot all fund managers have the same acumen of fund

management and with identification of the best man being a tough task+ it is good to place

money in the hands of several fund managers. 7his might reduce the ma3imum return possible+ but will also reduce the risks.

)1 4e %eg&la%! Investing should be a habit and not an e3ercise undertaken at one s wishes+ if

one has to really benefit from them. %s we said earlier+ since it is e3tremely difficult to know

when to enter or e3it the market+ it is important to beat the market by being systematic. 7he

basic philosophy of 'upee cost averaging would suggest that if one invests regularly through

the ups and downs of the market+ he would stand a better chance of generating more returns

than the market for the entire duration. 7he 0I=s 40ystematic Investment =lans6 offered by all

funds helps in being systematic. %ll that one needs to do is to give post-dated che#ues to the

fund and thereafter one will not be harried later. 7he %utomatic investment =lans offered by

some funds goes a step further+ as the amount can be directly5electronically transferred from

the account of the investor.

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*1 Do yo&% homeo% ! It is important for all investors to research the avenues available to

them irrespective of the investor category they belong to. 7his is important because an

informed investor is in a better decision to make right decisions. aving identified the risks

associated with the investment is important and so one should try to know all aspects

associated with it. %sking the intermediaries is one of the ways to take care of the problem.

9. Find the %ight '&nds! Finding funds that do not charge much fees is of importance+ as the

fee charged ultimately goes from the pocket of the investor. 7his is even more important for

debt funds as the returns from these funds are not much. Funds that charge more will reduce

the yield to the investor. Finding the right funds is important and one should also use these

funds for ta3 efficiency. Investors of e#uity should keep in mind that all dividends are

currently ta3-free in India and so their ta3 liabilities can be reduced if the dividend payout

option is used. Investors of debt will be charged a ta3 on dividend distribution and so can

easily avoid the payout options.

/1 5ee$ t%ac o' yo&% in"estments! Finding the right fund is important but even more

important is to keep track of the way they are performing in the market. If the market is

beginning to enter a bearish phase+ then investors of e#uity too will benefit by switching to

debt funds as the losses can be minimized. One can always switch back to e#uity if the e#uity

market starts to show some buoyancy.

"%


25/28

,1 5no hen to sell yo&% m&t&al '&nds ! Cnowing when to e3it a fund too is of utmost

importance. One should book profits immediately when enough has been earned i.e. the

initial e3pectation from the fund has been met with. Other factors like non-performance+ hike

in fee charged and change in any basic attribute of the fund etc. are some of the reasons for to

e3it.

Investments in mutual funds too are not risk-free and so investments warrant some caution

and careful attention of the investor. Investing in mutual funds can be a dicey business for

people who do not remember to follow these rules diligently+ as people are likely to commit

mistakes by being ignorant or adventurous enough to take risks more than what they can

absorb. 7his is the reason why people would do well to remember these rules before they set

out to invest their hard-earned money.

"7


26/28

CHAPTER I6 Limitations o' the st&dy

7his report gives an insight about mutual funds and mutual fund schemes but with few

limitations as follows!

• 7he big #uestion is how to judge a mutual fund before investingL It is important for an

investor to consider a fund s performance over several years.

• 7he report only analyses e#uity mutual fund schemes of only some funds and there

are around 1? %>;s offering wide range of scheme but to analyze them is a tedioustask.

• 7his information is mainly regarding of those mutual funds were collected to which

08I A'O@= is an advisor.

• Hifferent fund managers adopt different strategies to improve performance. Mhile one

fund manager may have invested in speculative stocks may over a period+ another one

who have invested in speculative stocks may have struck gold in that year to

outperform the former by a long way.

• 2ack of proper knowledge and awareness about advantages and disadvantages

associated with various schemes among the investor.

• @sually there is a tendency among investors to ignore the consistency of returns over

a period of time rather they focus on absolute returns generated in the short term.

CHAPTER 6 S&ggestions 7 Recommendation

Concl&sion

"&


27/28

%fter studying < analyzing different mutual fund schemes the following conclusions can be

made!

• Minning with stocks means performing at least as well as a major market inde3 over

the long haul. If one can sidestep the common investor mistakes+ then one has taken

the first and biggest step in the right direction.

• Hiversified stock portfolios have offered superior long term inflation protection.

"#uities are especially important today with people living longer and retiring early.

• 7o understand stock funds+ one needs to be familiar with the characteristics of the

different types of companies they hold.

• =ortfolio managers have done a fairly good job in generating positive returns. It may

lead to gain investors confidence. 7hus over all good performance of the funds is a

sign of development in new era in capital market.

• On the basis of the analysis the performance of the schemes during the study period

can be concluded to be good.

• 7hose who want to eliminate the risk element but still want to reap a better then it

would be advisable to go for debt or arbitrage schemes which ensures both safety and

returns.

• 0o the future of mutual funds in India is bright+ because it meets investor s needs

perfectly. 7his will give boost to Indian investors and will attract foreign investors

also. It will lead to the growth of strong institutional framework that can support the

capital markets in the long run.

4I4LIO/RAPH0

4oos and maga8ines #

• 'ustagi. '. =. 4(,,96. Investment Analysis and Portfolio Management + (nd "dition+

0ultan ;hand < 0ons.

• Fischer. %nd Bordon 4(,,/ ). Security Analysis and Investment Management + )th

"dition+ =earson "ducation.

"'


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• 0.Cevin. Portfolio Management +?th "dition

F%om the 'olloing esites#

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http!55economictimes.indiatimes.com5icici-prudential-balanced-reg5mfportfolio5schemeid-

)9).cms

http!55economictimes.indiatimes.com5reliance-vision-fund5mffactsheet5schemeid-9(.cms

http!55economictimes.indiatimes.com5franklin-india-prima-plus5mffactsheet5schemeid-

).cms

http!55economictimes.indiatimes.com5principal-dividend-yield5mffactsheet5schemeid-

(?*,.cms

http!55economictimes.indiatimes.com5hdfc-top-(,,-fund5mffactsheet5schemeid-,?.cms

http!55economictimes.indiatimes.com5kotak-ta3-saver5mffactsheet5schemeid-(/1*.cms

http!55economictimes.indiatimes.com5hdfc-e#uity5mffactsheet5schemeid-(/.cms

http!55economictimes.indiatimes.com5hdfc-prudence5mffactsheet5schemeid-),,.cms

http!55bseindia.morningstar.co.in5mutualfunds5f,gbr,)rvi5kotak-balance-fund5fund-

factsheet.asp3

http!55economictimes.indiatimes.com5icici-prudential-blended-plan-a-

reg5mfreturns5schemeid-(*?.cms

www.economicstimes.com

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chapter iii findings and analysis

Documents