risk and return analysis of selected schemes of birla sun life mutual fund

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RISK AND RETURN ANALYSIS OF SELECTED SCHEMES OF BIRLA SUN LIFE MUTUAL FUND

• Student Name : RAMALINGAM.J

• Faculty Guide : professor, V.Vanaja.

• Organization : Birla Sun Life Mutual Fund

• Organizational Guide: Mr.G.Cholai

20/04/2015Department of Management Studies Sri

Ramakrishna Engineering College Project

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Chapter 2

• ORGANISATION PROFILE Birla Sun Life Asset Management Company Ltd.

(BSLAMC), the investment manager of Birla Sun Life Mutual Fund, is a joint venture between the Aditya Birla Group and the Sun Life Financial Inc. of Canada. The joint venture brings together the Aditya Birla Group's experience in the Indian market and Sun Life's global experience.



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HISTORY OF THE ORGANISATION

It was Established in 1994, Birla Sun Life Mutual fund has emerged as one of India's leading flagships of Mutual Funds business managing assets of a large investor base.

They are solutions offer a range of investment options, including diversified and sector specific equity schemes, fund of fund schemes, hybrid and monthly income funds, a wide range of debt and treasury products and offshore funds.



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MANAGEMENT Chief executive officer-Mr. ABalasubramanian

Co-Chief Investment Officer- Mr. Mahesh Patil

Chief Operation Officer - Ms. Keerti Gupta

Head - Finance and Accounts - Mr. Parag Joglekar

Head-Compliance & Risk Management - Ms. Rama Vasantharajan

Head Legal, Compliance and Secretarial - Mr. Rajiv Joshi

Head Marketing - Ms. Molly Kapoor

Head – Business Development - Mr. Bhavdeep Bhatt

Head - Institutional Sales - Mr. Anil Shyam

Co-Head - Retail Sales and Distribution - Mr. Sidharth Damani

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Department of Management Studies Sri Ramakrishna Engineering College Project

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ORGANISATION STRUCTURE



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PRODUCT PROFILE AND MARKET POTENTIAL

There are 4 types of products:

1.wealth creation solutions-27 funds

2.Tax savings solutions-2 funds

3.Regular income solutions-4 funds

4.Savings solutions-17 funds



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Cont….

20/04/2015 Department of Management Studies Sri Ramakrishna Engineering College Project

(BLUE) investors understand that their principal will be at low risk.

(yellow) investors understand theat their principal will be at medium risk

(BROWN) investors understand that their principal will be at high risk

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COMPETITIVE STRENGTH OF THE COMPANY

SWOT Analysis

Strength

1. Has Network of 600 branches and advisors spread over 1500 towns in India having over 130,000 advisors2. Backed By Aditya Birla Brand and Sun Life financial services3. Emphasis on Customer Satisfaction through Transparent Functioning

4. Strong Capital BaseWeakness

1. Low Presence in Rural Market2. Lesser advertising as compared to competitors

Opportunity

1. Growing potential in the Rural Market 2. Alignment with Government Schemes3. Better awareness amongst people for getting insurance

Threats

1. Economic crisis and economic instability2. Entry of new NBFCs in the sector



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DESCRIPTION OF VARIOUS FUNCTIONAL AREAS

• Aditya Birla Financial Services

• Birla Sun Life Mutual Fund

• Finance and Accounts

• Compliance & Risk Management

• Legal, Compliance and Secretarial

• Marketing

• Business Development

• Institutional Sales

• Retail Sales and Distribution20/04/2015


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Chapter 3

• MACRO-MICRO ECONOMIC ANALYSIS

MACRO ANALYSIS:

Birla sun life mutual fund company operated in 26 countries all over the world.

17% contribute the Indian economic growth



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MICRO ANALYSIS

• In Indian level the Birla sun life mutual fund company 4th place.

• 12062 Billion .

20/04/2015 Department of Management Studies Sri Ramakrishna Engineering College Project

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Chapter 1

INTRODUCTION OF THE STUDY• The assessment of investors' risk tolerance by investment

firms is a crucial issue both for regulators and for the industry.• The accurate identification of the client's risk attitude allows

solid relationships to be built and avoids the clients’ mistrust induced by BIRAL SUN LIFE downturn.



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REVIEW OF LITERATURE

Sapar & Narayan(2003) evaluates the performance of 269 open ended schemes of mutual funds in a

bear market using relative performance index, risk-return analysis, Treynor's ratio, Sharp's ratio, Sharp's measure, Jensen's measure, and Fama's. The results obtained advocate that most of the mutual fund schemes in the sample outperformed the investor's expectations by giving excess return over expected return based on premium for systematic risk and total risk.

Sapar, Narayan Rao and Madava, Ravindran, “Performance Evaluation of Indian Mutual Funds”. Available at SSRN: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=433100



http://papers.ssrn.com/sol3/papers.cfm?abstract_id=433100

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=433100


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Cont….

Kalpesh P Prajapati and Mahesh K Patel (2012)

Evaluated the performance of Indian mutual funds using relative performance index, risk-return analysis, Treynor's ratio, Sharp's ratio, Sharp's measure, Jensen's measure, and Fama's measure. The data used is daily closing NAVs from 1st January 2007 to 31st December, 2011 and concluded that most of the mutual funds have given positive return during the period of study.

Kalpesh P Prajapati and Mahesh K Patel (2012), Comparative Study On Performance Evaluation Of Mutual Fund Schemes Of Indian Companies, Researchers world, Journal of Arts, Science & CommerceVol–III, Issue3(3), July 2012, pp. 47-59

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Cont….

• Ramesh Chander (2002)

a study on “Performance Appraisal of Mutual Funds in India” appraised the performance of mutual funds in India as suggested by Sharpe, Treynor and Jenson. The study also examined the portfolio management practices of mutual fund managers with respect to portfolio construction, portfolio management, portfolio evaluation and disclosure practices.

Ramesh Chander “Performance Appraisal of Mutual Funds in India” Excel Books, New Delhi (2002).

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STATEMENT OF THE PROBLEM

In the current economic scenario interest rates are falling and fluctuation in the share market has put investors in confusion. One finds it difficult to take decision on investment. This is primarily, because investments are risky in nature and investors have to consider various factors before investing in investment avenues. Mutual funds are considered as the most sutable investment avenue for a common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Therefore the study aims their risk & return and evaluation about mutual fund schemes in Birla Sun Life

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OBJECTIVES OF THE STUDY

• To analysis the mutual funds schemes on the basis of risk- return parameters.

• To appraise performance of mutual funds on the basis of risk adjusted measures as suggested by Sharpe, Treynor and Jensen



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SCOPE OF THE STUDY

The project primarily deals with the analysis of risk & return evaluation of Birla Sun Life mutual funds as on 01/01/2012 to 31/12/2014. This study confines as how mutual fund is good investment avenue for investors. The present study focused on NAV of the sample units.



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METHODOLOGY

The whole study can be termed as evaluative study. It is also a desk research.

Method of data collection

Secondary data has been collected from websites of the

companies and from the fact sheet of the schemes.



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Tool used for analysis

• Alpha• Beta• Correlation• STD• Sharpe Ratio• Jensen• Treynor Ratio




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ANALYSIS AND INTERPRETATION

WEALTH CREATION SOLUTION:

The return of Birla Sun Life Mutual Fund, Wealth Creation Solution ranges from 14.02 to 4.69; risk ranges from 0.15 to -0.13; correlation ranges from 0.04 to -0.01; standard deviation ranges from 1.23 to 0.32.

The Birla Sun Life Mutual Fund, Wealth Creation Solution Sharpe Ratio ranges from -0.01 to 0.16; Treynor Ratio ranges from -12.25 to 45.92; Jenson Ratio ranges from 0.01 to 0.14.

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Cont….

TAX SAVINGS SOLUTIONS:

The return of Birla Sun Life Mutual Fund, Tax Savings Solutions value is 11.72 and 11.52; Risk and Correlation is 0; Standard Deviation is 0.88.

The Birla Sun Life Mutual Fund, Tax Savings Solutions Sharpe Ratio is 0.10; Treynor Ratio ranges from -268.3 to -25.17; Jenson Ratio ranges from 0.11 to 0.12.

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Cont….

• REGULAR INCOME SOLUTIONS:

The return of Birla Sun Life Mutual Fund, Regular Income Solutions ranges from 4.30 to 6.34; risk ranges from 0.01 to 0.001; correlation ranges from 0.02 to 0.004; standard deviation ranges from 0.21 to 0.32.

The Birla Sun Life Mutual Fund, Regular Income Solutions of Sharpe Ratio ranges from 0.09 to 0.13; Treynor Ratio ranges from 2.81 to 13.33; Jenson Ratio ranges from 0.04 to 0.06.

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Cont….

SAVINGS SOLUTIONS:

The return of Birla Sun Life Mutual Fund, Savings Solution ranges from 4.44 to 2.71; risk ranges from 0.001 to -0.007; correlation ranges from 0.082 to -0.023; standard deviation ranges from 0.399 to 0.037.

The Birla Sun Life Mutual Fund, Regular Income Solutions of Sharpe Ratio ranges from 0.01 to 0.43; Treynor Ratio ranges from -6.40 to 13.71; Jenson Ratio ranges from 0.03 to 0.04.

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RECOMMENDATION

1. Birla Sun Life has to review their portfolio frequently to maximize the wealth of the investors. (Data support)

2. Birla Sun Life has to invest in firms, which are having good offers and high Growth opportunities such as shares listed in Group A.

3. The awareness of mutual fund & its various schemes should be increased among the people by proper advertising, promotion and conducting investors meet.

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Thank You

20/04/2015

risk and return analysis of selected schemes of birla sun life mutual fund

Data & Analytics

fund of fund schemes

life asset management

life mutual fund student

organisation profile

investment manager of

offshore funds

aditya birla brand

aditya birla groups