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Evaluate the statement:
“Mutual funds could beat market volatility .”
Identify two mutual funds that have been
able to beat market volatility
PGDBM Batch-6
Group -4
Presented By: Enrolment No.
Alpha Nayak E13CC1079751
Anupriya Singh E13CC1078654
Karishma Biswal E13CC1081714
Smruti Ranjita Suar E13CC1079865
Subhasantak Mohanty E13CC1081206
Sujnani Kumari Gupta E13CC1080945
Agenda
1. Introduction
2. Mutual Fund
3. Market Volatility
4. How mutual funds can beat market volatility to a large extent?
5. Criteria considered while selecting the two mutual funds
6. Two mutual funds that have been able to beat market volatility
7. ICICI Prudential Focussed Blue chip &
8. Its Graphical Representation
9. Franklin India Blue chip &
10. Its Graphical Representation
11. Conclusion
Introduction
 The Indian Mutual fund industry has witnessed considerable growth since its inception in 1963.
 The assets under management (AUM) have surged to Rs. 4,173bn in Mar-09 from just
Rs. 250mn in Mar-65. In a span of 10 years (from 1999 to 2009), the industry has registered a
CAGR of 22.3%, albeit encompassing some shortfalls in AUM due to business cycles.
 The impressive growth in the Indian Mutual fund industry in recent years can largely be
attributed to various factors such as rising household savings, comprehensive regulatory
framework, favourable tax policies, introduction of several new products, investor education
campaign and role of distributors.
 Besides, SEBI has introduced various regulatory measures in order to protect the interest of
small investors that augurs well for the long term growth of the industry.
Source: www.dnb.co.in/BFSISectorInIndia/MFund5.asp
 Mutual funds are trusts that pools funds from public and invest in capital market in terms of
shares, bonds, debentures etc.
 A mutual fund collects savings from small investors that are invested in capital market
instruments such as government and corporate securities. The income earned through these
investments in the form of interest & dividends along with capital gains realised are shared by
unit holders in proportion to the units owned by them. Any appreciation or depreciation in value
of investments is reflected in net asset value (NAV) of the concerned scheme.
Source: www.dnb.co.in/bfsisectorinindia/MFund2.asp
Investment area for
Mutual Funds
 MFs invest in a mostly three type of companies, they are the companies
with,
 Large market capitalisation (Large cap)
 Medium market capitalisation (Mid cap)
 Small market capitalization (Small cap)
Market Volatility
 Market volatility means statistical measure of the market to rise or fall sharply
in short period of time.
 If the prices of a stock in a market fluctuate rapidly in a short time span, it is
termed to have high market volatility. If the prices of a stock fluctuate slowly
in a longer time span, it is termed to have low market volatility.
 Volatility is typically measured by the standard deviation of the return of an
investment. Standard deviation is a statistical concept that denotes the
amount of variation or deviation that might be expected.
 For example, it would be possible to see the Standard & Poor's BSE Sensex
Index have a standard deviation of about 15%, while a more stable
investment, such as a certificate of deposit (CD), will typically have a
standard deviation of zero because the return never varies.
Source: www.investopedia.com/articles/02/051502.asp
How Mutual Fund can
beat market volatility?
There are aplenty of processes for that matter, few of which are listed below:
 Expert management of funds.
 Investing in the stocks of large cap companies thereby subsiding the market
fluctuations unlike the stocks of mid cap and small cap companies.
 Benefit of diversification leading to reduced risk.
 Ability to track performance transparently.
Source: www.investopedia.com/articles/basics/03/040403.asp
Criteria considered while
selecting the two Mutual Funds
 Performance: Ability to deliver higher than benchmark returns consistently.
 Resilience: Ability to withstand market downturns better than its
benchmarks.
 Investment-worthy: Their recent performances have not caused any
concern, keeping them investment worthy.
Two mutual funds that have
been able to beat market
volatility
Two funds that have stood the test of times; bull markets, bear markets
and global market crisis and yet, continue to perform and produce
results are :
 ICICI Prudential Focussed Bluechip
 Franklin India Bluechip
ICICI Prudential Focussed
Blue chip
 The fund was launched on 23 May 2008.
 The fund has constantly outperformed its benchmark S&P CNX Nifty from 1
October 2008 till 30 June 2011 that is 11 times out of 12 on a quarter-on-
quarter (q-o-q) basis.
 The fund has a greater average outperformance of 5.39% in bear market
conditions than the average outperformance of 1.04% in the bull market
conditions.
 The fund outperformed all 40 large cap funds belonging to the same period
over 1 year and 3 years.
 The fund has an expense ratio of 1.83% as on 31 October 2011.
Source: www.fundsupermart.co.in/main/research/viewHTML.tpl?articleNo=920
Graphical
Representation
Source: www.valueresearchonline.com/funds/fundperformance.asp?schemecode=7517
Franklin India Blue chip
Fund
 Franklin India Blue Chip Fund was launched in 1 December 1993
 The fund has outperformed its benchmark BSE Sensex 40 times out of 70 on a
quarter -on- quarter (q-o-q) basis since 1 February 1994
 The fund has a slightly greater average outperformance of 7.02% in bear market
conditions than the average outperformance of 6.08% in bull market conditions
 The fund consistently outperformed all 40 large cap funds belonging to the same
category in 1 year, 3 years, 5 years, 10 years and since inception
 The fund carries an expense ratio of 1.83%
Source: www.fundsupermart.co.in/main/research
Graphical
Representation
Source: www.valueresearchonline.com/funds/fundperformance.asp?schemecode=114
Conclusion
 Its because of the fund’s (read mutual fund manager’s) vision for value that
has made it an outperformer each time.
 Moreover, mutual funds not only offer investment solutions in practically any
market condition, but also, for any investment time frame, and for any type of
investor.
 Hence, it would not be wrong to say that, mutual funds have the potential to
offer higher-than-market returns at lower-than-market risk.
And, as Fred Schwed Jr. says it in his book “Where Are The Customer's Yachts?”
“Speculation is an effort, probably unsuccessful, to turn a little money into a lot.
Investment is an effort, which should be successful, to prevent a lot of money from
becoming a little.”
ET_mod3 FINAL

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ET_mod3 FINAL

  • 1. Evaluate the statement: “Mutual funds could beat market volatility .” Identify two mutual funds that have been able to beat market volatility PGDBM Batch-6 Group -4 Presented By: Enrolment No. Alpha Nayak E13CC1079751 Anupriya Singh E13CC1078654 Karishma Biswal E13CC1081714 Smruti Ranjita Suar E13CC1079865 Subhasantak Mohanty E13CC1081206 Sujnani Kumari Gupta E13CC1080945
  • 2. Agenda 1. Introduction 2. Mutual Fund 3. Market Volatility 4. How mutual funds can beat market volatility to a large extent? 5. Criteria considered while selecting the two mutual funds 6. Two mutual funds that have been able to beat market volatility 7. ICICI Prudential Focussed Blue chip & 8. Its Graphical Representation 9. Franklin India Blue chip & 10. Its Graphical Representation 11. Conclusion
  • 3. Introduction  The Indian Mutual fund industry has witnessed considerable growth since its inception in 1963.  The assets under management (AUM) have surged to Rs. 4,173bn in Mar-09 from just Rs. 250mn in Mar-65. In a span of 10 years (from 1999 to 2009), the industry has registered a CAGR of 22.3%, albeit encompassing some shortfalls in AUM due to business cycles.  The impressive growth in the Indian Mutual fund industry in recent years can largely be attributed to various factors such as rising household savings, comprehensive regulatory framework, favourable tax policies, introduction of several new products, investor education campaign and role of distributors.  Besides, SEBI has introduced various regulatory measures in order to protect the interest of small investors that augurs well for the long term growth of the industry. Source: www.dnb.co.in/BFSISectorInIndia/MFund5.asp  Mutual funds are trusts that pools funds from public and invest in capital market in terms of shares, bonds, debentures etc.  A mutual fund collects savings from small investors that are invested in capital market instruments such as government and corporate securities. The income earned through these investments in the form of interest & dividends along with capital gains realised are shared by unit holders in proportion to the units owned by them. Any appreciation or depreciation in value of investments is reflected in net asset value (NAV) of the concerned scheme. Source: www.dnb.co.in/bfsisectorinindia/MFund2.asp
  • 4. Investment area for Mutual Funds  MFs invest in a mostly three type of companies, they are the companies with,  Large market capitalisation (Large cap)  Medium market capitalisation (Mid cap)  Small market capitalization (Small cap)
  • 5. Market Volatility  Market volatility means statistical measure of the market to rise or fall sharply in short period of time.  If the prices of a stock in a market fluctuate rapidly in a short time span, it is termed to have high market volatility. If the prices of a stock fluctuate slowly in a longer time span, it is termed to have low market volatility.  Volatility is typically measured by the standard deviation of the return of an investment. Standard deviation is a statistical concept that denotes the amount of variation or deviation that might be expected.  For example, it would be possible to see the Standard & Poor's BSE Sensex Index have a standard deviation of about 15%, while a more stable investment, such as a certificate of deposit (CD), will typically have a standard deviation of zero because the return never varies. Source: www.investopedia.com/articles/02/051502.asp
  • 6. How Mutual Fund can beat market volatility? There are aplenty of processes for that matter, few of which are listed below:  Expert management of funds.  Investing in the stocks of large cap companies thereby subsiding the market fluctuations unlike the stocks of mid cap and small cap companies.  Benefit of diversification leading to reduced risk.  Ability to track performance transparently. Source: www.investopedia.com/articles/basics/03/040403.asp
  • 7. Criteria considered while selecting the two Mutual Funds  Performance: Ability to deliver higher than benchmark returns consistently.  Resilience: Ability to withstand market downturns better than its benchmarks.  Investment-worthy: Their recent performances have not caused any concern, keeping them investment worthy.
  • 8. Two mutual funds that have been able to beat market volatility Two funds that have stood the test of times; bull markets, bear markets and global market crisis and yet, continue to perform and produce results are :  ICICI Prudential Focussed Bluechip  Franklin India Bluechip
  • 9. ICICI Prudential Focussed Blue chip  The fund was launched on 23 May 2008.  The fund has constantly outperformed its benchmark S&P CNX Nifty from 1 October 2008 till 30 June 2011 that is 11 times out of 12 on a quarter-on- quarter (q-o-q) basis.  The fund has a greater average outperformance of 5.39% in bear market conditions than the average outperformance of 1.04% in the bull market conditions.  The fund outperformed all 40 large cap funds belonging to the same period over 1 year and 3 years.  The fund has an expense ratio of 1.83% as on 31 October 2011. Source: www.fundsupermart.co.in/main/research/viewHTML.tpl?articleNo=920
  • 11. Franklin India Blue chip Fund  Franklin India Blue Chip Fund was launched in 1 December 1993  The fund has outperformed its benchmark BSE Sensex 40 times out of 70 on a quarter -on- quarter (q-o-q) basis since 1 February 1994  The fund has a slightly greater average outperformance of 7.02% in bear market conditions than the average outperformance of 6.08% in bull market conditions  The fund consistently outperformed all 40 large cap funds belonging to the same category in 1 year, 3 years, 5 years, 10 years and since inception  The fund carries an expense ratio of 1.83% Source: www.fundsupermart.co.in/main/research
  • 13. Conclusion  Its because of the fund’s (read mutual fund manager’s) vision for value that has made it an outperformer each time.  Moreover, mutual funds not only offer investment solutions in practically any market condition, but also, for any investment time frame, and for any type of investor.  Hence, it would not be wrong to say that, mutual funds have the potential to offer higher-than-market returns at lower-than-market risk. And, as Fred Schwed Jr. says it in his book “Where Are The Customer's Yachts?” “Speculation is an effort, probably unsuccessful, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little.”