Performance evaluation of mid and small cap funds in india


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Performance evaluation of mid and small cap funds in India.This project was done in SBI Mutual Funds.

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Performance evaluation of mid and small cap funds in india

  1. 1. Performance Evaluation of MidN Small Cap Funds in IndiaPresented ByAmandeepBansalCUN120550005
  2. 2. Where To Invest?? We always think, where should weinvest our money in financialmarket….
  3. 3. Concept of Mutual Funds A mutual fund is a professional-managed firm of collectiveinvestments that pools money frommany investors and invest it in stocks,bonds etc. Mutual Funds have a fund managerwho invests the money on behalf ofthe investors by buying/selling stocks,bonds etc.
  4. 4. Why Investor prefer MutualFunds? They can buy their shares directly frommarket But this require spending time to find out theperformance of the company whose share isbeing purchased, understanding the futurebusiness prospects of the company, findingout the track record of the promoters and thedividend, bonus issue, history of thecompany. It’s here to do research beforeinvesting. However investors prefer the mutual fundroute. Besides this, in this LOW RISK &HIGH RETURN.
  5. 5. Working of Mutual Funds
  6. 6.  Two Methods- Lump sum or one time paymentmethod Systematic investment plan(SIP).
  7. 7. Advantages of Mutual Funds Portfolio diversification Professional Management Liquidity Affordability Variety Tax Benefits
  8. 8. Disadvantages of MutualFunds No Tailor-made-Portfolios No control over costs Managing a Portfolio of funds
  9. 9. Company Profile An act was passed in Parliament in May 1955 and theState Bank of India was constituted on 1 July 1955. State Bank of India is a multinational banking andfinancial services company based in India. It is a government-owned corporation with itsheadquarters in Mumbai. As of December 2012, it had assets of US$501 billionand 15,003 branches, including 157 foreign offices,making it the largest banking and financial servicescompany in India by assets State Bank of India is the largest state-owned bankingand financial services company in India, by almostevery parameter - revenues, profits, assets, marketcapitalization, etc.
  10. 10. SBI Mutual Funds SBI mutual fund was setup on June 29th,1987 and incorporated on Feb 7th, 1992. SBI Funds Management Pvt. Ltd. is a jointventure between State bank of India andSociete Generale Asset Management ofFrance. They offer Mutual Fund products in EquityFunds, Index Funds, Balanced Funds, DebtFunds, etc. The assets under management are Rs.5490544.40 crores as of 31 March 2013. Today the fund house manages over Rs28500 crores of assets and has a diverseprofile of investors actively parking theirinvestments across 36 active schemes.
  11. 11.  SBI Mutual Fund presents a widerange of schemes that provide strongfundamentals for the investments.These schemes have helped createwealth for lakhs of investors. SBI Mutual Fund is one of thecountry’s premier fund houses withover 24 years of rich experience infund management.
  12. 12.  In 24 years of operation, the fund haslaunched 38 schemes and successfullyredeemed 15 of them and in the process, hasrewarded the investors with consistentreturns. SBI Mutual is the first bank sponsored fund tolaunch an offshore fund- Resurgent Indiaopportunities fund. SBI Funds Management Pvt. Ltd. Serves itsvast family of investors through a network ofover 130 points of acceptance, 28 InvestorServices Centers, 46 Investor Service Desksand 56 District Organizers.
  13. 13. Competitors of SBI Mutual Funds UTI Mutual Fund ICICI Mutual Fund Reliance Mutual Fund HDFC Mutual Fund Birla Sun Life Mutual Fund Kotak Mutual Fund LIC Mutual Fund Sundaram Mutual Fund
  14. 14. Role and Duties My Role in SBI Bank is to convince thepeople to invest in Mutual FundSchemes of SBI. By telling them the advantages ofinvesting in mutual funds. Public Dealing. We also conduct seminars in number ofplaces like civil Hospital, Govt GirlsSchool, Lala Lajpat Rai EngineeringCollege Moga to spread the awearnessabout the mutual funds among theinvestors. I have done 300 SIPs during myinternship.
  15. 15. Market Capitalization Market Cap is a way to use the stockprice to determine the value of thecompany, and how likely it is to grow. Market Cap is calculated bymultiplying the stock price by thenumber of shares of stock thecompany has issued. Investors use market cap to divide thestock market into atleast threecategoriesSmall CapMid Cap
  16. 16. Objective of the Study To find out the best mid cap and small cap funds in India onthe basis of various risk adjusted measures and returns sothat each and every aspect is studied about the mid andsmall cap funds in India so that the investor should invest inthe best one. Evaluating the mid and small cap funds of top 12 companieson the basis of a number of parameters. Only those companies are taken for evaluation that havehigher Assets Under Management out of the list of 45companies. The top 12 funds are evaluated on the basis of 1 year, 3 year,5 year, 7 year and the return since inception. Funds are compared on basis of beta (systematic risk),standard deviation, Alpha, sharpe ratio and R squared arecompared taking different funds. Lastly the fund with highest ranking in different parameters ischosen out to be the best fund.
  17. 17. Need of the Study The need of present study of mutual funds cater toreduce the past research gap and also to update theperformance of mutual funds in the current scenario. Inthis study, an attempt has been made to evaluate theperformance of open-ended equity schemes of publicsector, private sector, banks and other financialinstitutions. There are 40 to 50 mid and small cap funds inIndia. This study helps the investors to identify thebest mid and small cap funds in India out of theseexisting funds.
  18. 18. Research MethodologyDATA COLLECTION As because of the lack of time, only secondarydata is taken for this study and on the basis of thisdata all evaluation work has been done.TOOLS FOR EVALUATING PERFORMANCE The tools which are taken for evaluating theperformance are risk adjusted measures andreturns of the mid and small cap funds.BetaStandard Deviation
  19. 19. AlphaR-SquaredSharpe RatioExpense RatioReturns & AUM
  20. 20. SchemesThe Mutual Fund schemes that I have taken to find out the best midand small cap fund in India are- SBI Magnum Global Sahara Wealth Plus Fixed Pricing Birla Sun Life Dividend Yield Plus Religare Mid N Small Cap ICICI Prudential Discovery Reg L&T Mid cap HDFC Mid cap Opportunities UTI Mid cap Relaince Equity Opportunities SBI Magnum Midcap SBI Emerging Business Kotak Emerging Equity
  21. 21. Findings of the Study On the basis of Beta the best Mid n Small Cap fund is:-SBI MAGNUM GLOBAL FUND On the basis of Standard Deviation the best Mid n Small Cap fundis:-SBI MAGNUM GLOBAL On the basis of Sharpe Ratio the best Mid n Small Cap fund is:-SBI EMERGING BUSINESS FUND On the basis of R-Squared the best Mid n Small Cap fund is:-RELIANCE EQUITY OPPORTUNITIES FUND On the basis of Expense Ratio the best Mid n Small Cap fund is:-SBI EMERGING BUSINESS FUND On the basis of Alpha the best Mid n Small Cap fund is:-SBI EMERGING BUSINESS FUND
  22. 22.  On the basis of 1 Year Return the best Mid n Small Cap fund is:-SBI EMERGING BUSINESS FUND On the basis of 3 Year Return the best Mid n Small Cap fund is:-SBI EMERGING BUSINESS FUND On the basis of 5 Year Return the best Mid n Small Cap fund is:-ICICI PRUDENTIAL DISCOVERY REG On the basis of 7 Year Return the best Mid n Small Cap fund is:-RELIANCE EQUITY OPPORTUNITIES On the basis of Return Since Inception the best Mid n Small Capfund is:-BIRLA SUN LIFE DIVIDEND YIELD PLUS On the basis of AUM the best Mid n Small Cap fund is:-HDFC MUTUAL FUND
  23. 23. Limitations of the study Time Constrait: Due to shortage or lessavailability of time I have not calculatedthe various risk adjusted measures andreturns of the various Mid and Small capfunds in India. Rather I have taken thesecondary data so this study relies onthe accuracy of data. Secondly only those schemes of variousAMC’s are taken which are among top12 in the AUM as on 31 March 2013because of it, many other mid and smallcap funds are not evaluated.
  24. 24. Conclusion SBI Emerging Business fund is thebest mid and small cap fund in Indiaas it has topped in the 5 parameterswhich are chosen for the purpose ofevaluation. SBI Magnum Global Fund andReliance Equity Opportunities fundboth are at second place.
  25. 25. Recommendations SBI Emerging Business Fund is the best fundto invest as it is ranked 1 in Small and MidCap category by CRISIL. If you are alreadyinvested in this scheme, you may continue tostay invested. This fund shows very fruitfulresults from the past years. As far as risk measures are concerned, thescheme has done very well in terms ofSharpe and Alpha. It registered Sharpe as0.07% (1/39) and Alpha as 0.05% (3/39). Itseems to be less risky while compared topeers as it generated 0.75% of StandardDeviation for last one-year period.
  26. 26. References
  27. 27. Thank You...