Portfolio management and Mutual fund analysis


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Portfolio management and Mutual fund analysis

  1. 1. A Project Report On Portfolio management and Mutual fund analysis Submitted by Sweti Kejariwal At IDBI Bank From 1 June, 2013 to 31 July, 2013 Under the Guidance of CA ShilpaBhide Mr ……….. fund manager PUMBA IDBI Bank In partial fulfilment for the award of the degree of MASTERS IN BUSINESS ADMINISTRATION FINANCE Department of Management Sciences (PUMBA) University of Pune (2012-2014)
  3. 3. 2 Department of Management Sciences (PUMBA) University of Pune (2012-2014) Department of Management Sciences (PUMBA) University of Pune CERTIFICATE This is to certify that the Summer Project report titled “Portfolio Management and Mutual Fund analysis”carried out by Sweti Kejariwal atIDBI Bankhas beensubmitted by 2nd yearMBA++ Finance, student of The Department of Management Sciences (PUMBA), University of Pune, towards the partial fulfilment of the requirement for the award of the Masters in Business Administration (MBA) and the same has been satisfactorily carried out under the guidance of CA ShilpaBhideduring the academic year. CA ShilpaBhideDr. (Capt.) C. M. Chitale Project Guide External Prof. and HOD PUMBA Examiner PUMBA
  4. 4. 3 ACKNOWLEDGEMENT I am delighted to have undertaken the equity analysis project at the IDBI Bank. I take immense pleasure in submitting the final project report which is a reflection of my work for the past two months at IDBI Bank. I am grateful to my guides Mrs……… at IDBI Bank whose scholarly guidance, constant encouragement and untiring patience have been the pillars of my success in this effort. I would also take this opportunity to thank my mentor CA ShipaBhidewhose constant motivation helped me to finish the project efficiently. I would also like to express my gratitude to our Dr. (Capt.) C. M. Chitale, Head of the Department, PUMBA. Last but not the least, I am thankful to all those who have directly or indirectly extended their support to me. Without their help this project could not have been completed. - Sweti Kejariwal
  5. 5. 4 Preface Theprojecton “portfolio management and mutual fund analysis” wascarriedoutinIDBIbankF.CRoadBranch.TheintentionbehindtakingoverthisprojectwithIDBIbankwasto primarily understandtheroleofbanksinprovidinginvestmentsolutionsandadvicestoitscustomers.Theprojectwascarriedo utfortheperiodoftwomonthsi.e.fromJune1,2013toJuly31,2013.Theprojectwasdonebyanalyzingthediffere ntinvestmentoptionsavailableandtocomparethemwiththemutualfundinvestments.Forthepurposeofanalyzi ngtheinvestmentpatternandselectingeffectiveandbeneficialschemesofmutualfundsdifferentavailablesche meswerethoroughly*analyzedandthenaidealportfolioofthoseinvestmentoptionsavailablewasmade. Finallytheidealportfoliowascreatedtounderstandtheimportanceofportfoliomanagementandtoeasetheselect ionofdifferentmutualfundschemesandtheweightagetobegiventothem.
  6. 6. 5 SR.NO. PARTICULARS PAGE NO. 1. Company’s Profile 6 2. Objective 7 3. Theoretical background 7 4. Portfolio management 10 5. History of mutual fund 12 6. Mutual fund 20 7. Measures of risk 22 8. Research Methodology 26 9. Data analysis 35 10. Findings 37 11. Limitations 38 12. Conclusion 39
  7. 7. 6 Company’s profile IDBI Bank Ltd. is today one of India's largest commercial Banks. For over 40 years, IDBI Bank has essayed a key nation-building role, first as the apex Development Financial Institution (DFI) (July 1, 1964 to September 30, 2004) in the realm of industry and thereafter as a full-service commercial Bank (October 1, 2004 onwards). As a DFI, the erstwhile IDBI stretched its canvas beyond mere project financing to cover an array of services that contributed towards balanced geographical spread of industries, development of identified backward areas, emergence of a new spirit of enterprise and evolution of a deep and vibrant capital market. On October 1, 2004, the erstwhile IDBI Bank converted into a Banking company (as Industrial Development Bank of India Limited) to undertake the entire gamut of Banking activities while continuing to play its secular DFI role. Post the mergers of the erstwhile IDBI Bank with its parent company (IDBI Ltd.) on April 2, 2005 (appointed date: October 1, 2004) and the subsequent merger of the erstwhile United Western Bank Ltd. with IDBI Bank on October 3, 2006, the tech-savvy, new generation Bank with majority Government shareholding today touches the lives of millions of Indians through an array of corporate, retail, SME and Agri products and services. Headquartered in Mumbai, IDBI Bank today rides on the back of a robust business strategy, a highly competent and dedicated workforce and a state- of-the-art information technology platform, to structure and deliver personalised and innovative Banking services and customised financial solutions to its clients across various delivery channels As on March 31, 2013 IDBI Bank has a balance sheet of Rs. 3,22,769 crore and business size (deposits plus advances) of Rs 4,23,423 crore. As an Universal Bank, IDBI Bank, besides its core banking and project finance domain, has an established presence in associated financial sector businesses like Capital Market, Investment Banking and Mutual Fund Business. Going forward, IDBI Bank is strongly committed to work towards emerging as the 'Bank of choice' and 'the most valued financial conglomerate', besides generating wealth and value to all its stakeholders.
  8. 8. 7 Objectives o PrimarilytounderstandthebasicconceptsofPortfoliomanagementandMutual funds anditsbenefitsasaninvestmentavenue. o Secondly,tocompareandevaluatetheperformanceofdifferentequitymutualf und schemesofdifferentcompaniesonthebasisofrisk,returnandvolatility. o Thirdly,tosuggesttheschemeswhichareoutperformersandlaggards. o Finallytocreateanidealportfolioinwhichriskwillbedistributedtowardsdiffer ent schemesandwillearnhigherrateofreturn. THEREOTICAL BACKGROUND INVESTMENT OPTIONS: Investment options are savingsformanimportantpartoftheeconomyofanynation.Withthesavingsinveste dinvarious options available to the people, the money acts as the driver forgrowth of the country.Indianfinancialscenetoopresentsaplethoraofavenuestotheinvestors.Thou ghcertainlynotthebestordeepestofmarketsintheworld,ithasreasonableoptionsfor anordinarymantoinvesthissavings.Letusexamineseveralofthem. Banks Banks are consideredasthesafestofalloptions,bankshavebeentherootsofthefinancialsyste msin India.Promotedasthemeanstosocialdevelopment,banksinIndiahaveindeedplay edan importantroleintheruralupliftment.Foranordinarypersonthough,theyhaveacted asthe safestinvestmentavenuewhereinapersondepositsmoneyandearnsinterestonit.T
  9. 9. 8 hetwomain modes of investment inbanks, savings accounts and Fixed deposits have beeneffectivelyusedbyoneandall.However,todaytheinterestratestructureinthec ountryisheadedsouthwards,keepinginlinewithglobaltrends.Withthebanksoffer inglittleabove9 percentintheirfixeddepositsforoneyear,theyieldshavecomedownsubstantiallyi nrecenttimes.Addtothis,theinflationarypressuresineconomyandyouhaveapositi onwherethe savingsarenotearning.Theinflationiscreepingup,toalmost8percentattimes,andt hismeansthatthevalueofmoneysavedgoesdowninsteadofgoingup.Thiseffective lymarsanychanceofgainingfromtheinvestmentsinbanks. Post office Justlikebanks,postofficesinIndiahaveawidenetwork.Spreadacrossthenation,th eyoffer financialassistanceaswellasservingthebasicrequirementsofcommunication.A mongall savingoptions,Postofficeschemeshavebeenofferingthehighestrates.Addedtoiti sthefactthattheinvestmentsaresafewiththedepartmentbeingaGovernmentofInd iaentity.Sothetwobasicandmostsoughtforfeatures,thoseofreturnsafetyandquan tumofreturns werebeinghandsomelytakencareof.Thoughcertainlynotthemostefficientsyste msintermsofservicestandardsandliquidity,thesehavestillmanagedtoattractthea ttentionofsmall,retailinvestors.However,withthegovernmentannouncingitsint entionofreducingthe interest rates insmall savings options, this avenue is expected to lose some of theinvestors.PublicProvidentFundsactasoptionstosaveforthepostretirementpe riodformostpeopleandhavebeenconsideredgoodoptionlargelyduetothefactthat returnswerehigherthanmostotheroptionsandalsohelpedpeoplegainfromtaxben efitsundervarioussections.Thisoptiontooislikelytolosesomeofitssheenonacco untofreductionintheratesoffered. Company Fixed Deposits Anotheroft- usedroutetoinvesthasbeenthefixeddepositschemesfloatedbycompanies. Companies have used fixed deposit schemes as a means of mobilizing funds
  10. 10. 9 for their operationsandhavepaidinterestonthem.Thesaferacompanyisrated,thelesserthe return offeredhasbeenthethumbrule.However,thereareseveralpotentialroadblocksint hese.Firstofall,thedangeroffinancialpositionofthecompanynotbeingunderstoo dbythe investorlurks.Theinvestorsrelyonintermediarieswhomoreoftenthannot,dontre vealthe entiretruth.Secondly,liquidityisamajorproblemwiththeamountbeingreceived monthsaftertheduedates.Prematureredemptionisgenerallynotentertainedwitho utcutsinthereturnsoffered andthough they presentareasonableoptionto counterinterestraterisk(especiallywhentheeconomyisheadedforalowinterestre gime),thesafetyofprincipal amounthasbeenfoundlacking.ManycasesliketheKuberGroupandDCMGroupf iascoeshaveresultedinlowconfidenceinthisoption. Theoptionsdiscussedaboveareessentiallyfortherisk- averse,peoplewhothinkofsafety andthenquantumofreturn,inthatorder.Forthebrave,itisdabblinginthestockmark et.Stock marketsprovide an option to invest in a high risk, high return game. While the potentialreturnismuchmorethan10- 11percentanyoftheoptionsdiscussedabovecan generally generate, the risk isundoubtedly of the highest order. But then, the general principleofencounteringgreaterrisksanduncertaintywhenoneseekshigherretur nsholds true.However,asenticingasitmightappear,peoplegenerallyarecluelessastohowt hestockmarketfunctionsandintheprocesscanendangerthehard-earnedmoney. Forthosewhoarenotadeptatunderstandingthestockmarket,thetaskofgenerating superior returnsatsimilarlevelsofriskisarduoustosaytheleast.ThisiswhereMutualFunds comeintopicture.
  11. 11. 10 Portfolio Management Aninvestorconsideringinsecuritiesisfacedwiththeproblemofchoosingfrom amongalarge number of securities. His choice depends upon the risk return characteristics ofindividual securities.Hewouldattempttochoosethemostdesirablesecuritiesandliketoalloc atehisfundsoverthisgroupofsecurities.Againheisfacedwithproblemofdeciding whichsecuritiestoholdandhowmuchtoinvestineach.Theinvestorfacesaninfinit enumberofpossibleportfoliosorgroupsofsecurities.Theriskandreturncharacteri sticsof portfolios differ from those of individualsecurities combining to form a portfolio. Theinvestor tries to choose the optimal portfoliotakinginto consideration the risk returncharacteristicsofallpossibleportfolios. Phases of portfolio management Security Analysis Portfolio Analysis Portfolio Selection Portfolio Revision Portfolio evaluation o Security Analysis 1. Fundamental Analysis: This analysis concentrates on thefundamentalfactorsaffectingthecompanysuchasEPS(Earningpershar e)ofthecompany,thedividend payoutratio,competitionfacedbythecompany,marketshare,qualityofma
  12. 12. 11 nagementetc. 2. Technical Analysis: Thepastmovementinthepricesofsharesisstudiedtoidentify trends and patterns and then tries to predict the future price movement. Currentmarketpriceiscomparedwiththefuturepredictedpricetodetermin ethemispricing. Technicalanalysisconcentratesonpricemovementsandignoresthefunda mentalsof theshares. 3. Efficient market hypothesis: This is comparatively more recent approach.This approach holds that market prices instantaneously and fully reflect all relevantavailable information.Itmeansthatthemarketpriceswillalwaysbeequalthe intrinsic value. o Portfolio Analysis Aportfolioisagroupofsecuritiesheldtogetherasinvestment.Itisanattempttosprea d theriskallover.Thereturn&riskofeachportfolio hastobecalculatedmathematically andexpressedquantitatively.Portfolioanalysisphaseofportfolio management consists ofidentifying the range of possible portfolios that can be constituted from a given set ofsecurities and calculating their risk for further analysis. o Portfolio Selection Thegoalofportfolioconstructionistogenerateaportfoliothatprovidesthehighestr eturnsatagivenlevelofrisk.HarryMarkowitzportfoliotheoryprovidesboththeco nceptualframeworkandtheanalyticaltoolsfordeterminingtheoptimalportfolio inadisciplinedandobjectiveway. o Portfolio Revision Theinvestor/portfoliomanagerhastoconstantlymonitortheportfoliotoensuretha titcontinuestobeoptimal.Astheeconomyandfinancialmarketsarehighlyvolatile dynamicchangestakeplacealmostdaily.Astimepassessecuritieswhichwereonce attractivemayceasetobeso.Newsecuritieswithanticipationofhighreturnsand lowriskmayemerge.
  13. 13. 12 o Portfolio evaluation Portfolio evaluation is the process, which is concerned with assessing the performanceoftheportfoliooveraselectedperiodoftimeintermsofreturn&risk. Theevaluationprovidesthenecessaryfeedbackforbetterdesigningofportfoliothe nexttimearound. s History of Mutual Fund The first mutual funds were established in Europe. One researcher credits a Dutch merchant with creating the first mutual fund in 1774. The first mutual fund outside the Netherlands was the Foreign & Colonial Government Trust, which was established in London in 1868. It is now the Foreign & Colonial Investment Trust and trades on the London stock exchange. Mutual funds were introduced into the United States in the 1890s. They became popular during the 1920s. These early funds were generally of the closed-end type with a fixed number of shares which often traded at prices above the value of the portfolio. The first open-end mutual fund with redeemable shares was established on March 21, 1924. This fund, the Massachusetts Investors Trust, is now part of the MFS family of funds. However, closed-end funds remained more popular than open-end funds throughout the 1920s. By 1929, open-end funds accounted for only 5% of the industry's $27 billion in total assets. After the stock market crash of 1929, Congress passed a series of acts regulating the securities markets in general and mutual funds in particular. The Securities Act of 1933 requires that all investments sold to the public, including mutual funds, be registered with the Securities and Exchange Commission and that they provide prospective investors with a prospectus that discloses essential facts about the investment. The Securities and Exchange Act of 1934 requires that issuers of securities, including mutual funds, report regularly to their investors; this act also created the Securities and Exchange Commission, which is the principal regulator of mutual funds. The Revenue Act of 1936 established guidelines
  14. 14. 13 for the taxation of mutual funds, while the Investment Company Act of 1940 governs their structure. When confidence in the stock market returned in the 1950s, the mutual fund industry began to grow again. By 1970, there were approximately 360 funds with $48 billion in assets. The introduction of money market funds in the high interest rate environment of the late 1970s boosted industry growth dramatically. The first retail index fund, First Index Investment Trust, was formed in 1976 by The Vanguard Group, headed by John Bogle; it is now called the Vanguard 500 Index Fund and is one of the world's largest mutual funds, with more than $100 billion in assets as of January 31, 2011. Fund industry growth continued into the 1980s and 1990s, as a result of three factors: a bull market for both stocks and bonds, new product introductions (including tax-exempt bond, sector, international and target date funds) and wider distribution of fund shares. Among the new distribution channels were retirement plans. Mutual funds are now the preferred investment option in certain types of fast-growing retirement plans, specifically in 401(k) and other defined contribution plans and in individual retirement accounts (IRAs), all of which surged in popularity in the 1980s. Total mutual fund assets fell in 2008 as a result of the credit crisis of 2008. In 2003, the mutual fund industry was involved in a scandal involving unequal treatment of fund shareholders. Some fund management companies allowed favored investors to engage in late trading, which is illegal, or market timing, which is a practice prohibited by fund policy. The scandal was initially discovered by then-New York State Attorney General Eliot Spitzer and resulted in significantly increased regulation of the industry. At the end of 2011, there were over 14,000 mutual funds in the United States with combined assets of $13 trillion, according to the Investment Company Institute (ICI), a trade association of investment companies in the United States. The ICI reports that worldwide mutual fund assets were $23.8 trillion on the same date. Mutual funds play an important role in U.S. household finances and retirement planning. At the end of 2011, funds accounted for 23% of household financial assets. Their role in retirement planning is particularly significant. Roughly half of assets in 401(k) plans and individual retirement accounts were invested in mutual funds
  15. 15. 14 Mutual Fund 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 realised are 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: There are many entities involved and the diagram below illustrates the
  16. 16. 15 organizational set up of a mutual fund: MutualFundsareessentiallyinvestmentvehicleswhere peoplewith similarinvestmentobjectivecometogethertopooltheirmoneyandtheninvestacco rdingly.Eachunitofanyschemerepresentstheproportionofpoolownedbytheunit holder(investor).Appreciationor reductioninvalueofinvestmentsisreflectedinnetassetvalue(NAV)oftheconcern edscheme,whichisdeclaredbythefundfromtimetotime.Mutualfundschemesare managedbyrespectiveAssetManagementCompanies(AMC).Differentbusines sgroups/financialinstitutions/bankshavesponsoredtheseAMCs,eitheraloneori ncollaborationwithreputedinternational firms. Several international fundslike Alliance and Templeton are alsooperatingindependentlyinIndia.ManymoreinternationalMutualFundgiant sareexpectedtocomeintoIndianmarketsinthenearfuture. Thebenefitsonofferaremanywithgoodpost- taxreturnsandreasonablesafetybeingthehallmarkthatwenormallyassociatewith them.Someoftheothermajorbenefitsofinvestinginthemare: The advantages of investing in a Mutual Fund are:  Professional Management Diversification Potential of returns Flexible, Affordable and a Low Cost affair  Liquidity  Transparency well regulated
  17. 17. 16 Professional management MutualFundsemploytheservicesofskilledprofessionalswhohaveyearsofexperi encetobackthemup.Theyuseintensiveresearchtechniquestoanalyzeeachinvest mentoptionforthe potentialofreturns along with their risk levels to come up with the figures forperformancethatdeterminethesuitabilityofanypotentialinvestment. Diversification Investmentsarespreadacrossawidecross- sectionofindustriesandsectorsandsotheriskis reduced.Diversificationreducestheriskbecauseallstocksdontmoveinthesamedi rectionatthesametime.OnecanachievethisdiversificationthroughaMutualFund withfarlessmoneythanonecanonhisown. Potential of Returns Returnsinthemutualfundsaregenerallybetterthananyotheroptioninanyotherave nue overareasonableperiodoftime.Peoplecanpicktheirinvestmenthorizonandstayp utinthechosenfundfortheduration.Equityfundscanoutperformmostotherinvest mentsoverlongperiodsbyplacinglong- termcallsonfundamentallygoodstocks.Thedebtfundstoowilloutperformothero ptionssuchasbanks.Thoughtheyareaffectedbytheinterestrateriskingeneral,ther eturnsgeneratedaremoreastheypicksecuritieswithdifferentdurationthat havedifferentyieldsandsoareabletoincreasetheoverallreturnsfromtheportfolio. Flexible, Affordable and a Low Cost affair MutualFundsofferarelativelylessexpensivewaytoinvestwhencomparedtoother avenues suchascapitalmarketoperations.Thefeeintermsofbrokerages,custodialfeesand othermanagementfeesaresubstantiallylowerthanotheroptionsandaredirectlylin kedtothe performanceofthescheme.Investmentinmutualfundsalsooffersalotofflexibility withfeatures such as regularinvestmentplans, regular withdrawal plans and dividendreinvestment plans enablingsystematicinvestment or withdrawal of funds. Even
  18. 18. 17 theinvestors,whocouldotherwisenotenterstockmarketswithlowinvestiblefund s,canbenefit fromaportfoliocomprisingofhigh- pricedstocksbecausetheyarepurchasedfrompooledfunds. Ashasbeendiscussed, mutualfunds offer severalbenefitsthatareunmatchedbyother investmentoptions.Postliberalization,theindustryhasbeengrowingatarapidpac eandhascrossedRs.100000croresizeintermsofitsassetsundermanagement.How ever,duetothe lowkeyinvestorawareness,theinflowundertheindustryisyettoovertaketheinflo wsinbanks.Risinginflation,fallinginterestratesandavolatileequitymarketmake adeadly cocktail for the investor for whom mutual funds offer a route out of the impasse. The investmentsinmutualfundsarenotwithoutrisksbecausethesameforcessuchasreg ulatory frameworks,governmentpolicies,interestratestructures,performanceofcompan iesetc.that rattletheequityanddebtmarkets,actonmutualfundstoo.Butitistheskilloftheman agingrisksthatinvestmentmanagersseektoimplementinordertostriveandgenera tesuperiorreturnsthanotherwisepossiblethatmakesthemabetteroptionthanman yothers. Liquidity Fixeddepositswithcompaniesorinbanksareusuallynotwithdrawnprematurebec ausethereisapenalclauseattachedtoit.Theinvestorscanwithdraworredeemmone yattheNet AssetValuerelatedpricesintheopen-endschemes.Inclosed- endschemes,theunitscanbetransactedattheprevailingmarketpriceonastockexc hange.Mutualfundsalsoprovidethe facilityofdirectrepurchaseatNAVrelatedprices.Themarketpricesoftheseschem esaredependentontheNAVsoffundsandmaytradeatmorethanNAV(knownasPr emium)or lessthanNAV(knownasDiscount)dependingontheexpectedfuturetrendofNAV whichin turnislinkedtogeneralmarketconditions.Bullishmarketmayresultinschemestra dingatPremiumwhileinbearishmarketsthefundsusuallytradeatDiscount.Thism eansthatthemoneycanbewithdrawn anytime,withoutmuchreductioninyield.Somemutualfundshowever,chargeexit loadsforwithdrawalwithinaperiod. Besidestheseimportantfeatures,mutualfundsalsoofferseveralotherkeytraits.Im portantamongthemare:
  19. 19. 18 Transparency Being under a regulatory framework, mutual funds have to disclose their holdings, investment patternandalltheinformationthatcanbeconsideredasmaterial,beforeallinvestors .Thismeansthattheinvestmentstrategy,outlooksofthemarketandschemerelated detailsare disclosed withreasonablefrequency to ensurethat transparency exists in the system.ThisisunlikeanyotherinvestmentoptioninIndiawheretheinvestorknows nothingasnothingisdisclosed. Well Regulated Unlikethecompanyfixeddeposits,wherethereislittlecontrolwiththeinvestment being consideredasunsecureddebtfromthelegalpointofview,theMutualFundindustry isvery wellregulated.Allinvestmentshavetobeaccountedfor,decisionsjudiciouslytake n.SEBI actsasatruewatchdoginthiscaseandcanimposepenaltiesontheAMCsatfault.The regulations,designedtoprotecttheinvestors interestsarealsoimplementedeffectively. Riskinvolved in investing in Mutual Funds MutualFundsdonotprovideassuredreturns.Theirreturnsarelinkedtotheir performance. They investinshares,debenturesanddeposits.Alltheseinvestmentsinvolveanelement ofrisk. The unitvalue may vary depending upon the performance of the company andcompanies may defaultin payment of interest / principal on their debentures / bonds / deposits.Besidesthis,thegovernmentmaycomeupwithnewregulations,whichm ayaffect aparticularindustryorclassofindustries.Allthesefactorsinfluencetheperforman ceof Mutual fund.
  20. 20. 19 Net Asset Value(NAV): NAV 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. Sale price: It is the price investor pay when he invests in a scheme.it is also called offer price. It may include a sales load (entry load). Repurchase price: This 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. Redemption price: This 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. Sales load: Sales load is a charge collected by a scheme when it sells the unit. It is also called, „front-end load or entry load. Schemes that do not charge a load are called „no load‟ schemes. Measurement of risk Riskreferstothepossibilitythattheactualoutcomeofaninvestmentwilldiff erfromthe expectedoutcome.Inotherwordswecansaythatriskreferstovariabilityordispersi on.Ifanyinvestmentissaidtoinvariableitmeansthatitistotallyriskfree.Whenever wecalculate the mean reutru of an investment, we also need to calculate the variability in the returns.
  21. 21. 20 Standard deviation: Standard deviation is a representive of the risk associated with a given security(stocks, bonds, property, etc.), or the risk of a portfolio of securities. Risk is an important factor in determing how to efficiently manage a portfolio of investments because it determines the variation in returns on the asset and/or portfolio and gives investors a mathematical basis for investment decisions. The overall concept of risk is tha as it increases, the expected return on the asset will increase as a result of the risk premium earned. In other words, investors should expect a higher return on an investment when said investment carries a higher level of risk. For example, you have a choice between two stocks. Stock A historically returns 5% to investors with a standard deviation of 10%, stock B historically returns 6% to investors and carries a standard deviation of 20%. On the basis of risk and return, stock A is the acceptable choice because earning an extra 1% with stock B is not worth double the amount of risk as stock A. in other words, stock B is more likely to lose money for the investor more often than stock A will under the same circumstances, and will only return 1% more than stock A. Beta: Beta is a measure of the volatility, or systematic risk, of a security or a portfolio, in comparison to the market as a whole. Think of beta as the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market. Many utilities stocks have a beta of less than 1. Conversely, most high-tech Nasdaq-based stock shave a beta of greater than 1, offering the possibility of a higher rate of return, but also posing more risk. Essentially, beta expresses the fundamental tradeoff between minimizing risk and maximizing return. Let's give an illustration: Say a company has a beta of 2; this means it is two times as volatile as the overall market. If we expect the market to provide a return of 10% on an investment, then we would expect the company to return 20%. On the other hand, if the market were to decline and provide a return of -6%, investors in that company could expect a return of -12% (a loss of 12%). If a
  22. 22. 21 stock had a beta of 0.5, we would expect it to be half as volatile as the market; a market return of 10% would mean a 5% gain for the company. Alpha: Alpha is often described to the value that a portfolio manager adds to or subtracts from an investments return. Alpha is measured in direct relationship to the investment‟s benchmark. A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%. For both portfolio managers and investors, more alpha is always better. R-Squared (R2 ): The R-Squared measure reveals what percentage of a fund‟s movements can be related to movements in its benchmark index. An R- Squared of 100 would mean that all of the fund‟s movements are perfectly explained by its benchmark; Index funds normally achieve this ideal. A high R-squared means the beta on a fund is actually a useful measurement. A low R-squared means ignore the beta. Sharpe ratio: Sharpe Ratio is a risk-to-reward measure developed by Nobel Laureate William Sharpe. The calculation for Sharpe Ratio is a risk-adjusted measure, which can be used by an investor to see how well a mutual fund has performed based upon its risk level. An investor can compare similar funds and look for the one with the higher Sharpe Ratio, which would indicate the better risk-adjusted performance. Using the Sharpe Ratio, an investor can gain an expectation as to how well the return of a particular mutual fund compensates the investor for the risk taken. Treynor ratio: It is developedbyJackTreynor.Thisperformancemeasureevaluatesfundsonthebasis of Treynor'sIndex.ThisIndexisaratioofreturngeneratedbythefundoverandabove riskfreerateofreturn(generallytakentobethereturnonsecuritiesbackedbythe government, as there isno credit risk associated), during a given period
  23. 23. 22 andsystematicriskassociatedwithit(beta).Symbolically,itcanberepresentedas: Treynor‟sIndex (Ti) = (Ri-Rf)/Bi Where, Ri represents return on fund, Rf represents Risk free Rate of Return & Bi represents Beta of the fund. Allrisk- averseinvestorswouldliketomaximizethisvalue.Whileahighandpositive Treynor'sIndexshowsasuperiorrisk- adjustedperformanceofafund,alowand negativeTreynor'sIndexisanindicationofunfavorableperformance. Jenson Model Jenson‟s model proposes another risk adjusted performance measure. This measure was developed by Micheal Jenson and is sometimes referredtoastheDifferential Return Method.Thismeasureinvolvesevaluationofthereturnsthatthefundhas generatedvs.thereturnsactuallyexpectedout of thefund giventhelevelof its systematicrisk.ThesurplusbetweenthetworeturnsiscalledAlpha,whichmeasure s theperformanceofafundcomparedwiththeactualreturnsovertheperiod.Require d returnofafundatagivenlevelofrisk(Bi)canbecalculatedas: Ri=Rf+Bi(Rm-Rf) Where,Rmisaveragemarketreturnduringthegivenperiod.Aftercalculatin git, alphacanbeobtainedbysubtractingrequiredreturnfromtheactualreturnofthe fund. Higheralpharepresentssuperiorperformanceofthefundandviceversa.Li mitation ofthismodelisthatitconsidersonlysystematicrisknottheentireriskassociated withthefundandanordinary investorcannotmitigateunsystematicrisk, ashis knowledgeofmarketisprimitive. Turnover: In an investment portfolio, turnover refers to the number of shares traded in a given period.Expressed as a percentage, it tells us what portion of the securities (stocks, bonds or both) in a fund's portfolio are bought and sold during the course of a year.
  24. 24. 23 The four major reasons investors should be concerned about turnover include: There is an abundance of research that shows that buy-and-hold fund managers (low turnover) outperform their colleagues who trade frequently (high turnover). One of the reasons for this is that the former spend less on trading commissions than the latter. Trading costs are coming down, but they can still represent a significant fund expense. Trading costs are not included in a fund's expense ratio. Thus, transaction costs are often ignored by investors because they are buried as a dollar figure, as opposed to a percentage of assets, in a fund's Statement of Additional Information (SAI). It is likely that only a tiny fraction of mutual fund investors are even aware of this document, let alone familiar with its content. The greater the number of trades, the more often the manager has to be making the right decision. A high volume of trading places a lot of pressure on managers to avoid making mistakes in investing judgments. A high level of fund trading activity generally occasions a higher-than- average amount ofcapital gains. Mutual funds must pay out these gains as dividends to fund shareholders, which are then subject to capital gains taxes. For investors in taxable funds, i.e., not in tax-deferred accounts, high portfolio-turnover funds are not tax efficient. A low portfolio turnover rate is a very positive fund investment quality. However, it must be remembered that the nature or investing style of a fund can impose certain "structural" features on portfolio management that influence its trading activities: Small-cap stock, international and growth funds tend to have higher turnover rates. These funds are more transaction intensive as the manager‟s maneuver for competitive advantages. Index funds should have low turnover rates, no matter what their category. Trading is a natural function of bond funds, which puts their turnover rates way up on the scale. Funds that carry only a small number of securities in their portfolios oftentimes reflect high turnover rates because of the impact of a single trade on a major holding. Whatever the category of mutual fund being considered, the lower the
  25. 25. 24 portfolio turnover percentage the better. While this measurement may vary from year to year, a fund's trading activity is within the control of the manager and should consistently fall, historically, within a reasonable range. Research Objective Toevaluateinvestmentperformanceofselectedmutualfundsintermsofriskan d return. Toevaluateandcreateanidealportfolioconsistingthebestmutualfundscheme s whichwillearnhighestpossiblereturnsandwillminimizetherisk. Basically to understand the concept of portfolio management and its relation to mutual fund. Toanalyzetheperformanceofmutualfundschemesonthebasisofvarious parameters. Scope of Project ThefundsareselectedtowhichIDBIBankisadvisor.TheSchemeswerecategori zed andselectedonevaluatingtheirperformanceandrelativerisk. Thescopeoftheprojectismainlyconcentratedonthedifferentcategoriesofthe mutualfundssuchasequityschemes,debtfunds,balancedfundsandequitylinke d savingsschemesetc. The ideal portfolio is created by analyzing the risk pattern of the schemes and distributingtheoverallrisktoearnmaximumreturns. Research Methodology ResearchMethodologyisaveryorganizedandsystematicmediumthroughwhic ha particularcaseorproblemcanbesolved. Itisanalytical,descriptiveandquantitativeresearchwherethecomparisonbetwe en thedifferentmutualfundschemesismadeonthebasisofrisk,volatilityandreturn. Fordatacollectionpurposethesecondarysourcewasusedlikemutualfundfactsh eet, books,websitesandIDBIbankmutualfundrecovers.
  26. 26. 25 Findings and Analysis Thecollectionofinformationisbasedonthesecondaryprobe. Theinformationhasbeencollectedthroughvariousbooks,studiesandannualrep orts of variousinstitutionslike Reliance,IDBI, ICICI,and HDFC etc.Inadditionvarious journals,magazines,articles,books,publisheddocumentshavealsobeenconsid ered intheprojectwork. Anattempthasbeenmadetoevaluatetheperformanceoftheselectedmutualfund schemes. Performance of mutual fund schemes has been evaluated by using the following performance measures (a) Risk (b) S.D. (c) Beta (d) Jensenalpha(e) SharpeRatio. Limitations Togetaninsightintheprocessofportfolioallocationanddeploymentoffunds by fundmanagerisdifficult. Theprojectisunabletoanalyseseachandeveryschemeofmutualfundstocreat ethe idealportfolio. The portfolio of mutual fund investments can change according to the market conditions. This project is carried out and evaluated on the basis of the market conditionsfrom1stJuneto31stJuly2013. Conclusion Outofthedifferentschemesthathasbeencomparednoneoftheschemeisbetteron all thefrontslikerisk,volatilityandthereturns. Mutualfundinvestmentsarenotshortterminvestmentavenuesbuttheyaremoreof a longterminvestmentavenue.
  27. 27. 26 Data Analysis Prudential ICICI balanced fund: Schemes Objectives: The scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio that is investing in equities and related securities as well as fixed income and money market securities. The approximate allocation to equity would be in the range of 60-80 per cent with a minimum of 51 per cent, and the approximate debt allocation is 40-49 per cent, with a minimum of 20 per cent. Composition: Equity:65.85 Debt:32.96 Cash:1.19 Analysis: Standard deviation:11.90 Sharpe ratio:0.18 Beta:0.78 Alpha:3.60 R-Squared:0.87 Trailing returns: 1 week 1 month 3 month 1 year 2 year 3year 5 year 3.15 -3.29 -3.17 10.30 8.40 7.92 9.60
  28. 28. 27 HDFC BALANCED FUND Schemes Objectives:The scheme seeks to generate capital appreciation with current income from a combined portfolio of equity and debt instruments. Under normal circumstances the scheme would take 60 % exposure to equity instruments while the balance would be allocated to debt instruments Composition: Equity:70.18 Debt:28.90 Cash:0.92 Analysis: Standard deviation:12.68 Sharpe ratio:-0.09 Beta:0.80 Alpha:0.41 R-Squared:0.81 Trailing returns: 1 week 1 month 3 month 1 year 2 year 3year 5 year -0.07 -5.27 -8.61 -1.54 1.94 3.46 11.23
  29. 29. 28 ICICI prudential top 100 reg Schemes Objectives:The scheme seeks to generate long term capital appreciation by investing predominantly in equities that is 95% in equities while the rest would be invested in debt and money market instruments. Composition: Equity:95.53 Debt:8.12 Cash:-3.65 Analysis: Standard deviation:18.15 Sharpe ratio:-0.03 Beta:0.94 Alpha:1.46 R-Squared:0.96 Trailing returns: 1 week 1 month 3 month 1 year 2 year 3year 5 year -0.01 -4.02 -6.81 4.06 8.62 3.51 7.89
  30. 30. 29 Kotak balance Schemes Objectives:The scheme seeks to exploit the capital appreciation of equity and the stable returns of debt by investing a substantial amount in debt and money market instruments. It aims to minimize the risk that arises out of even the most carefully picked equity stocks. Composition: Equity:66.71 Debt:40.37 Cash:-7.08 Analysis: Standard deviation:12.09 Sharpe ratio:-0.12 Beta:0.81 Alpha:0.09 R-Squared:0.91 Trailing returns: 1 week 1 month 3 month 1 year 2 year 3year 5 year
  31. 31. 30 -2.17 -4.99 -7.99 3.56 7.47 2.04 7.13 Franklin India Bluechip: Schemes Objectives:The scheme seeks aggressive growth and aims to provide medium to long term capital appreciation through investment in shares of quality companies and by focusing on well-established large sized companies. Composition: Equity: 91.82 Debt: 0.02 Cash: 8.16 Analysis: Standard deviation: 15.79 Sharpe ratio: -0.12 Beta: 0.81 Alpha: -0.16 R-Squared: 0.96 Trailing returns: 1 week 1 month 3 month 1 year 2 year 3year 5 year
  32. 32. 31 -0.62 -7.34 -11.75 -0.01 3.40 1.39 8.95 Axis Equity: Schemes Objectives:The scheme aims to generate regular long term capital growth from a diversified and actively managed portfolio of equity and equity related securities. Composition: Equity: 89.17 Debt: 1.64 Cash: 9.19 Analysis: Standard deviation: 16.68 Sharpe ratio: -0.03 Beta: 0.86 Alpha: 1.27 R-Squared: 0.96 Trailing returns:
  33. 33. 32 1 week 1 month 3 month 1 year 2 year 3year 5 year -0.83 -6.10 -8.32 11.20 9.14 2.91 - Birla sun life MIP: Schemes Objectives:The scheme primarily seeks regular monthly income and also aims at capital growth with a predominant exposure to debt and money market instruments. The fund invests in a mix of high quality fixed income securities and a small portion in equities (a maximum of 15%). Composition: Equity: 13.10 Debt: 75.74 Cash: 11.17 Analysis: Standard deviation: 3.85 Sharpe ratio: 0.01 Beta: 0.70 Alpha: 0.48 R-Squared: 0.75 Trailing returns:
  34. 34. 33 1 week 1 month 3 month 1 year 2 year 3year 5 year -0.36 -2.25 -3.90 4.76 6.51 5.63 8.60 Reliance Liquidity: Schemes Objectives:The scheme seeks to provide optimal return consistent with moderate level of risk and high liquidity. The fund would invest in money market instruments. Composition: Equity: 0 Debt: 111.30 Cash: -11.30 Analysis: Standard deviation: 0.19 Sharpe ratio: 11.85 Beta: 0.08 Alpha: 2.10 R-Squared: 0.09 Trailing returns: 1 week 1 month 3 month 1 year 2 year 3year 5 year
  35. 35. 34 0.22 0.80 1.99 8.70 9.26 8.84 7.72 UTI Top 100 Schemes Objectives:The scheme aims to provide long term capital appreciation / dividend distribution be investing at least 65 per cent of assets in equity and equity related instruments of top 100 stocks by market capitalization listed on BSE. Rest of the assets will be invested in other equities or money & debt market securities. Composition: Equity: 90.89 Debt: 1.52 Cash: 7.59 Analysis: Standard deviation: 14.87 Sharpe ratio: -0.09 Beta: 0.75 Alpha: 0.21 R-Squared: 0.91 Trailing returns:
  36. 36. 35 1 week 1 month 3 month 1 year 2 year 3year 5 year -1.73 -7.28 -8.88 1.27 4.44 1.53 - IDEAL PORTFOLIO Fund Name P/E Ratio P/B Ratio Top5 holdings(%) Axis equity 30.62 4.80 33.35 Birla sun life MIP 28.67 3.99 3.37 Franklin Indian Bluechip 17.64 2.97 32.47 ICICI prubal red 23.91 4.20 16.10 HDFC Balanced 15.62 3.37 13.26 ICICI Pru top 100 reg 16.00 2.66 34.14 Kotak balance 17.77 3.96 17.90 Reliance Liquidity - - - UTI Top 100 31.03 5.47 32.37 Fund Name Category Risk grade Return grade Rating Axis equity equity Below avg Above avg **** Birla sun life MIP Hybrid Below avg Above avg ****
  37. 37. 36 Franklin Indian Bluechip Equity Below avg High ***** ICICI prubal red Hybrid Below avg Avg **** HDFC Balanced Hybrid Below avg High **** ICICI Pru top 100 reg Equity Avg Above avg **** Kotak balance Hybrid Avg Avg *** Reliance Liquidity Debt Below avg Above avg **** UTI Top 100 Equity Low Avg **** The ground rules of mutual fund investing Mosesgavetohisfollowers10commandmentsthatweretobefollowedtilletern ity.The worldofinvestmentstoohasseveralgroundrulesmeantforinvestorswhoarenovicesinth eirownrightandwishtoenterthemyriadworldofinvestments.Thesecomeinhandyfor thereiseverypossibilityoflosingwhatonehasifduecareisnottaken. 1. Assessyourself:Self- assessmentofone‟sneeds;expectationsandriskprofileisofprime importancefailingwhich;onewillmakemoremistakesinputtingmoneyin rightplacesthanotherwise.Oneshouldidentifythedegreeofriskbearingcapacityo ne has and also clearlystate the expectations from the investments. Irrationalexpectationswillonlybringpain. 2. Trytounderstandwherethemoneyisgoing:Itisimportanttoidentifythenatureo finvestmentandtoknowifoneiscompatiblewiththeinvestment.Onecanlosesubst antiallyifonepicksthewrongkindofmutualfund.Inordertoavoidanyconfusioniti sbettertogothroughtheliteraturesuchasofferdocumentandfact sheetsthatmutualfundcompaniesprovideontheirfunds.
  38. 38. 37 3. Don'trushinpickingfunds,thinkfirst:onefirsthastodecidewhathewantsthem oneyforanditisthisinvestmentgoalthatshouldbetheguidinglightforallinvestme ntsdone.Itisthusimportanttoknowtherisksassociatedwiththefundandalignitwit hthequantumofriskoneiswillingtotake.Oneshouldtakealookattheportfolioofth efundsforthepurpose.Excessiveexposuretoanyspecificsectorshouldbeavoided ,asitwillonlyaddtotheriskoftheentireportfolio.Mutualfunds investwithacertainideologysuchasthe"ValuePrinciple"or"GrowthPhilosophy" .Bothhavetheirshareofcriticsbutbothphilosophiesworkforinvestorsofdifferent kinds.Identifyingtheproposedinvestmentphilosophyofthefundwillgiveaninsig htintothekindofrisksthatitshallbetakinginfuture. 4. Don’tput all the eggsin one basket: This old age adage is of utmost importance.Nomatterwhattheriskprofileofapersonis,itisalwaysadvisabletodiv ersifytherisksassociated.Soputtingone‟smoneyindifferentassetclassesis generally the best optionasit averages the risks in each category. Thus, eveninvestorsofequityshouldbejudiciousandinvestsomeportionoftheinvestm entin debt.Diversificationeveninanyparticularassetclass(suchasequity,debt)isgood. Not all fund managers have the sameacumen of fund management and withidentificationofthebestmanbeingatoughtask,itisgoodtoplacemoneyinthe handsofseveralfundmanagers.Thismightreducethemaximumreturnpossible,b utwillalsoreducetherisks. 5. Beregular:Investingshouldbeahabitandnotanexerciseundertakenatone‟swish es,ifonehastoreallybenefitfromthem.Aswesaidearlier,sinceitisextremely difficulttoknowwhentoenterorexitthemarket,itisimportanttobeatthemarketbyb eingsystematic.ThebasicphilosophyofRupeecostaveragingwouldsuggestthatif oneinvestsregularlythroughtheupsanddownsofthemarket,hewouldstandabette rchanceofgeneratingmorereturnsthanthemarketfortheentireduration.The SIPs(SystematicInvestmentPlans)offeredbyallfundshelpsinbeingsystematic. Allthatoneneedstodoistogivepost- datedchequestothefundandthereafteronewillnotbeharriedlater.TheAutomatici nvestmentPlansofferedbysomefundsgoesastepfurther,astheamountcanbedirect ly/electronicallytransferredfromtheaccountoftheinvestor. 6. Doyourhomework:Itisimportantforallinvestorstoresearchtheavenuesavailabl
  39. 39. 38 e tothem irrespective of the investor category they belong to. This isimportantbecauseaninformedinvestorisinabetterdecisiontomakerightdecisi ons. Havingidentifiedtherisksassociatedwiththeinvestmentisimportantandsoonesho uldtrytoknowallaspectsassociatedwithit.Askingtheintermediariesisoneofthew aystotakecareoftheproblem. 7. Find the right funds: Finding funds that do not charge much fees is ofimportance,asthefeechargedultimatelygoesfromthepocketoftheinvestor.Thi sisevenmoreimportantfordebtfundsasthereturnsfromthesefundsarenotmuch.F undsthatchargemorewillreducetheyieldtotheinvestor.Findingtherightfundsis importantandoneshouldalsousethesefundsfortaxefficiency.Investorsofequitys houldkeepinmindthatalldividendsarecurrentlytax-freeinIndiaandsotheirtax liabilitiescanbereducedifthedividendpayoutoptionisused.Investorsofdebtwill bechargedataxondividenddistributionandsocaneasilyavoidthepayoutoptions. 8. Keeptrackofyourinvestments:Findingtherightfundisimportantbutevenmorei mportantistokeeptrackofthewaytheyareperforminginthemarket.Ifthemarketis beginningtoenterabearishphase,theninvestorsofequitytoowillbenefitbyswitchi ngtodebtfundsasthelossescanbeminimized.Onecanalwaysswitch backtoequityiftheequitymarketstartstoshowsomebuoyancy. 9. Knowwhentosellyourmutualfunds:Knowingwhentoexitafundtooisofutmost importance. One shouldbookprofitsimmediatelywhenenoughhasbeenearnedi.e.theinitialexpe ctationfromthefundhasbeenmetwith.Otherfactorslikenon- performance,hikeinfeechargedandchangeinanybasicattributeofthefundetc.ares omeofthereasonsfortoexit. Investmentsinmutualfundstooarenotrisk- freeandsoinvestmentswarrantsomecautionandcarefulattentionoftheinvestor.Investi nginmutualfundscanbeadiceybusinessforpeoplewhodonotremembertofollowtheser ulesdiligently,aspeoplearelikelytocommitmistakesbybeingignorantoradventurouse noughtotakerisksmorethanwhattheycan absorb.Thisisthereasonwhypeoplewoulddowelltoremembertheserulesbeforetheyse touttoinvesttheirhard-earnedmoney.
  40. 40. 39 Limitations: Thisreportgives aninsightaboutmutualfunds andmutualfundschemesbutwithfew limitationsasfollows: Thebigquestionishowtojudgeamutualfundbeforeinvesting?Itisimportantforan investortoconsiderafund‟sperformanceoverseveralyears. Thereportonlyanalysesequitymutualfundschemesofonlysomefundsandtherear earound42AMCsofferingwiderangeofschemebuttoanalyzethemisatedious task. Thisinformationismainlyregardingofthosemutualfundswerecollectedtowhich IDBI is an advisor. Differentfundmanagersadoptdifferentstrategiestoimproveperformance.While one fundmanagermayhaveinvestedinspeculativestocksmayoveraperiod,anotheron e who haveinvested in speculative stocks may have struck gold in that year to outperformtheformerbyalongway. Lack ofproperknowledgeandawarenessaboutadvantagesanddisadvant agesassociatedwithvariousschemesamongtheinvestor. Usuallythereisatendencyamonginvestorstoignoretheconsistencyofreturnsover aperiodoftimerathertheyfocusonabsolutereturnsgeneratedintheshortterm. Conclusion: Afterstudying&analyzingdifferentmutualfundschemesthefollowingconclusio nscanbemade: Winning withstocksmeansperformingatleastaswellasamajormarketindexoverthelongha ul.Ifonecansidestepthecommoninvestormistakes,thenonehas
  41. 41. 40 takenthefirstandbiggeststepintherightdirection. Diversified stock portfolios have offered superior long term inflation protection. Equitiesareespeciallyimportanttodaywithpeoplelivinglongerandretiringearly. Tounderstandstockfunds,oneneedstobefamiliarwiththecharacteristicsofthe differenttypesofcompaniestheyhold. Portfoliomanagershavedoneafairlygoodjobingeneratingpositivereturns.Itmay leadtogaininvestors‟confidence.Thusoverallgoodperformanceofthefundsisa signofdevelopmentinneweraincapitalmarket. Onthebasisoftheanalysistheperformanceoftheschemesduringthestudyperiod can be concluded to be good. Thosewhowanttoeliminatetheriskelementbutstillwanttoreapabetterthenit wouldbeadvisabletogofordebtorarbitrageschemeswhichensurebothsafetyandr eturns. SothefutureofmutualfundsinIndiaisbright,becauseitmeetsinvestorsneedsperfectly .ThiswillgiveboosttoIndianinvestorsandwillattractforeigninvestorsalso.Itwilllea dtothegrowthofstronginstitutionalframeworkthatcansupportthecapitalmarketsint helongrun.