Mutual funds case study

1. “A Study on Risk-Return profile of mutual funds in
India with special reference to VISVESVARAYA
TECHNOLOGICAL UNIVERSITY,
BELAGAVI
INTERNAL GUIDE
EXTERNAL GUIDE
2018-20

2. MUTUAL FUND INDUSTRY
Mutual fund is the pool of the money, based on the trust who invests the savings of a number of investors who
shares a common financial goal, like the capital appreciation and dividend earning. The money thus collect is
then invested in capital market instruments such as shares, debenture, and foreign market. Investors invest
money and get the units as per the unit value which we called as NAV (net assets value).
SBI MUTUAL FUNDS
SBI mutual fund is one of the largest mutual funds in the country with an investor base of over 4.6 million. With
over 20 years of rich experience in fund management. SBI mutual fund brings forward its expertise consistently
delivering value to its investors.
SBI mutual fund was set up on June 29th 1987 and incorporated on February 7th 1992. It is a result of joint
venture between state bank of India and Society General Asset Management of France. This is a bank sponsored
mutual fund and has a base of 3.5million investors. Over the years it has carved a niche for itself through
prudent investment decisions and consistent wealth creation for its customers. They offer mutual fund products
in Equity funds, index funds, debt funds, etc.

3. Nature of business:
A mutual fund is an open-end professionally managed investment fund that pools money from many investors to
purchase securities.
Vision and mission:
Vision: Be the most trusted and respected asset manager.
Mission: Ethical, responsive and innovative partner in investment solutions.
Products and Services
• Debt
• Equity
• Hybrid
Major players:
• Axis Asset Management Company Ltd.:
• HDFC Asset Management Company Limited:
• Aditya Birla Sun Life AMC Limited
• Kotak Mahindra Asset Management Company Limited (KMAMCL)
• ICICI Prudential Asset Management Company Limited

4. MCKINSEY’S 7-S FRAME WORK
• STRATEGY: -Each and every investor has unique financial goals that requires a different set of products. Based on
the investors profile each scheme is managed and carries with different risk and rewards.
• STRUCTURE: - SBI mutual fund follows line organization structure
• SKILLS: - The company employees must to know the new technical skills like online business, & management
information system skills etc. and how to adopted that skills in the organization and employees must to know
the human & ethical skills its necessary because it tells us how to behave with the customer in corporate word.
• STYLE: -Style includes Leadership style of top management and overall controlling or operating style of the
organization. They follow autocratic style of leadership.
• STAFF: - Staff includes the organization approaches to recruitment, selection and specialization. The staffing
procedure mainly includes how the organization has to look into its people, their backgrounds, and competencies.
• SYSTEM: -
• Purchase system
• Redemption system
• SHARED VALUES: - Teamwork, Customer focus, Embracing change etc.,

5. SWOT ANALYSIS OF SBI MUTUAL FUNDS
STRENGTHS
• Service
• Wide range
• Brand image
WEAKNESS
• Less publicity
• Lack of advanced technology
• Less reach to investors
OPPORTUNITIES
• the interest rates offered by bank deposits, PPF, NSC have been declining.
• Positive media support is also required and SBI mutual funds need to be media friendly.
• Increase in the development of technology and penetration of smart phones and internet in the country.
THREATS
• Increased Competition
• On going recession
• Economic and political insteability

6. A Study On Risk-Return Profile Of Mutual Funds In India With Special Reference To SBI Mutual Funds
Pvt. Ltd, Bangalore.
Introduction:
When ever you started invest in mutual funds, you would have heard “Mutual funds are subjected to risk” Of
course mutual funds have more rapid growth in the past few years and the funding source has extremely
increased, but there are little bit of risks which investors should be aware of it! For example, due to the COVID-
19 Crisis, the mutual fund sector funds as decline now, because of knowing that the mutual fund investment
moving up, everyone of us want to invest in these schemes and as well in another hand feel these options fare
better over investing in government securities like fixed deposits or risky investments like stocks.
Need for the study: -
Investor's focuses there investment decision depend upon lenders thinking towards risk and return of each of the
funds investment. Planning and guiding plays an crucial role in facilitating an investor in evaluating process. For
encouraging an investor for investment, performance appraisal is need, hence the study is focuses at “Risk and
return analysis of selected mutual funds with special reference to SBI mutual funds.

7. Review of literature: -
Dr.Ajay Kumar patel (2016) : The journalist sight to inspects the performance of mutual fund. The source collected for 3
years from 6 mutual funds are inspected using statistical tools. The 2 mutual funds are collected from each investment
sectors likely all equity funds, hybrid-equity funds & Hybrid debt fund . The result indicates that hybrid equity fund have
more return in comparision with all other schemes & hybrid debt has less total risk in comparsion with all schemes . By
calculating ANOVAit is identified that mutual fund return comparatively differentiate across different invest sectors.
Idhayajothi & Dr. O.T.V Latasri (2014): The Nippon mutual fund is Performance well based on CAGR as compare
to other mutual funds. Its financial analysis is also good after Franklin FMCG. The investor's those who want to take
high risk and return will help to invest in Reliance Banking meanwhile it's beta is more compare to other mutual funds.
The investor's those who don't want to take risk and the fund should grow in safe, for them Franklin is best to invest.
SBI & nippon both have good CAGR and Sharpe ratio, But nippon have less Beta as compare to SBI, so nippon is the
best to invest.
Objective of the study: -
 Compare the different returns of mutual funds in terms of risk return instruments.
 Evaluate the performance of mutual funds from various investment sectors.
 To inspect whether the differences in Mutual Funds return maybe due to Investment sectors or other factors.

8. Research methodology: -
 Monthly NAV’s calculation of ten mutual funds and Market index for comparison are needed for the report.
 The report is deploy on secondary data which has to be collected from websites of mutual fund companies like amfillindia, online,
mfcafé, moneycontrol, sbimf etc.
 Monthly NAV’s of mutual fund schemes and it is calculated for 5 years, for analysing the comparison of mutual funds.
Tools: -
To analyse the performance of mutual funds, the following tools and techniques have been used:
* Mean
* Standard deviation
* Beta
* Sharpe ratio
* Treynor ration
* Jensen ratio
Limitations of the study: -
 In the current era only focuses on selected mutual funds, which help this study will not effect to all mutual fund
schemes.
 Returns which are calculated in the report may be guaranteed in future and investors may examine other aspects as

9. Data analysis and interpretation
1. Risk measurement: -
According to the above table reveals that all SBI Mutual Fund schemes of diversified funds have lower value of beta
with the standard Nifty 50. This indicates that all the investment will be less volatile than the market. But a few
schemes closer to market Beta. Lower the value of Beta lesser the risk associated with it and returns. The safest scheme
with least risk with highest return to invest in SBI Focused Equity Fund.
Name of the scheme average return Standard Deviation Beta
SBI Focused Equity Fund 0.0930 0.678 0.121
SBI Large & Midcap Fund 0.056 0.308 0.256
SBI Savings Fund 0.074 0.586 0.137
SBI Equity Hybrid Fund 0.081 0.553 0.147
SBI Bluechip Fund 0.060 0.223 0.333
SBI Debt Hybrid Fund 0.073 0.540 0.149
SBI Long Term Equity Fund 0.031 0.071 0.444
SBI Contra Fund 0.010 0.153 -0.317
SBI Short Term Debt 0.087 0.612 0.131
SBI Magnum Comma Fund 0.010 0.338 0.237
Nifty 50 0.084 0.096 1

10. 2. Sharpe ratio: -
Sharpe ratio is used to calculate the average return beyond the total risk. Higher ratio indicates better return and
lower ratio indicates lesser return. Higher ratio indicates that the fund giving better return beyond the risk
premium. If the fund is giving higher ratio that indicates fund is performing better than the expectations. Among
these 10 funds SBI Focused Equity Fund is giving higher ratio than other mutual fund schemes.
Name of the scheme Sharpe ratio Rank
SBI Focused Equity Fund 0.2993509 1
SBI Large & Midcap Fund -0.128189 7
SBI Savings Fund 0.134733075 4
SBI Equity Hybrid Fund 0.202126 3
SBI Bluechip Fund -0.0671 6
SBI Debt Hybrid Fund 0.1131288 5
SBI Long Term Equity Fund -0.640214 8
SBI Contra Fund -1.18427 10
SBI Short Term Debt 0.2695304 2
SBI Magnum Comma Fund -1.119746 9

11. 3. Treynor ratio: -
Treynor ratio is used to calculate the average return beyond the systamatic risk. Higher ratio indicates better return and lower
ratio indicates lesser return. Higher ratio indicates that the fund giving better return beyond the risk premium. If the fund is
giving higher ratio that indicates fund is performing better than the expectations. Among these 10 funds SBI Focused Equity
Fund is giving higher ratio than other mutual fund schemes.
Name of the scheme Treynor ratio Rank
SBI Focused Equity Fund 0.0608618 1
SBI Large & Midcap Fund -0.020346 7
SBI Savings Fund 0.02321848 4
SBI Equity Hybrid Fund 0.0350596 3
SBI Bluechip Fund -0.01049 6
SBI Debt Hybrid Fund 0.019957 5
SBI Long Term Equity Fund -0.097344 8
SBI Contra Fund -0.243554 9
SBI Short Term Debt 0.052896 2
SBI Magnum Comma Fund -0.278473 10

12. 4. Jenson ratio: -
This report is used to find out the difference between actual and expected returns on the portfolio. Positive ratio
shows that the fund is giving higher the expected return and the negative ratio shows that the fund is giving
lesser than the expected return. Here among these all funds are giving more than the expected return except SBI
Contra Fund . Comparing these 10 mutual funds SBI Focused Equity Fund is performing better than other 9
funds.
Name of the scheme Jenson ratio Rank
SBI Focused Equity Fund 0.0538733 1
SBI Large & Midcap Fund 0.0200194 7
SBI Savings Fund 0.040033656 3
SBI Equity Hybrid Fund 0.040033656 4
SBI Bluechip Fund 0.022289 8
SBI Debt Hybrid Fund 0.0380044 5
SBI Long Term Equity Fund 0.0018693 9
SBI Contra Fund -0.008898 10
SBI Short Term Debt 0.0515257 2
SBI Magnum Comma Fund -0.006529 6

13. • Findings and Suggestions
Findings: -
Investor should be very careful while making investment. While investing, investor must consider both return and risk
involved in the scheme. Therefore, while investing, investors should carefully evaluate and analyse the market and
other factors.
 Based on the study it is analysed that the investor can invest in SBI Focused Equity Fund and SBI Short Term Debt
schemes based on their ability to invest.
 All selected funds are showing Beta value less than 1, which means that the funds are less volatile than the
market.
 The higher Sharpe and Janson measure value shows the better performance.
 Investment is less risky when compare to investment in individual shares.
Suggestions: -
 If investor wants to get more return than the market, they have to take more risk. They should invest in SBI Long
Equity Fund. Whereas if they want to take less risk than they should invest in SBI Focused Equity Fund.
 Standard deviation and Beta measures risk of the scheme but while investing standard deviation should be given
more preference as it calculates both systematic and unsystematic risk.
 Risk and returns are travels in same direction, if investor wants more return, he should take more risk and invest in
more riskier funds, and if he wants less return he can invest in less riskier funds.

14. Conclusion: -
As I have selected 10 mutual fund schemes from SBI mutual fund company. In SBI Focused Equity Fund and SBI
Short Term Debt fund is performing better than other 8 mutual fund schemes. But SBI Focused Equity Fund is also
performing better that holds First rank in all the tools calculated like Sharpe ratio, Treynor ratio, Jenson ratio . So, I
would prefer investor to invest in the SBI Focused Equity Fund.
LEARNING EXPERIENCE
WORKING EXPERIENCE IN THE ORGANISATION
Internship at this SBI mutual fund gave me practical knowledge. Also, I improved my communication. As a part of my
internship I got the knowledge about various funds like equity funds, debt funds and hybrid funds. During the
internship I have to sit in 2 branches of SBI to approach the customer to do the investment. The internship programme
helped me to understand the functioning of the organization. And also, I learnt how to approach customers in the bank
to invest in mutual funds. And also I learnt about the performance of the funds, diversity of the funds etc
Since every week I had to inform my guide about what I learnt, I also learn to prepare reports. I would conclude saying
that, Internship gave me Practical exposure to the functionality of the organization.

15. THANK YOU