CHAPTER 1

INTRODUCTION

1.1 Industry Review

A mutual fund is an investment company that pools money from shareholders and invests in a diversified portfolio of securities. The most common type of mutual fund is open-ended, that is, it offers to buy and sell its shares continually. A mutual fund is under a legal obligation to redeem shares at their net asset value (NAV). The net asset value is determined each day by dividing the value of the portfolio by the number of shares outstanding. An investment adviser affiliated with the fund usually creates and manages it. Mutual fund shareholders pay for the services of the funds adviser through an advisory or management fee, which is contractually established. This fee is commonly specified as some percentage of a funds net assets and covers the costs of both management and non-management services provided by the adviser. One way that some funds charge fees is by carrying a sales premium (load) that is added to the net asset value of a share, so the purchase price is greater than the value of the share. Shares are usually redeemed at net asset value unless the fund carries a redemption fee (back-end load). Fund that charge no sales premium or redemption fee are called no-load funds. Mutual funds have a wide variety of objectives, ranging from preservation of capital and short-term investment (as with money market funds), to investment in particular sectors and countries, to use of particular investment strategies. Many mutual funds belong to large fund complexes rather than standing alone. Mutual fund complexes offer a variety of investment niches linked together in an attempt to provide a comprehensive menu of choices for investors. Over the last 30 years, the mutual fund industry has grown tremendously, increasing in size more than 100-fold to nearly $7 trillion. Mutual funds have come to be an increasing share of total financial assets because mutual funds offer important advantages to many investors: Diversification. Mutual funds typically hold anywhere from 50 to 200 different stocks. This type of diversification diminishes the risk of a few investments adversely effecting overall returns. Continuous, professional management. Skilled professionals whose compensation is linked to the performance of the fund manage mutual funds. Economies of scale. Mutual funds incur proportionately lower trading commissions than do individuals. Lower transaction costs can translate into better investment performance. Shareholder services. Mutual fund complexes offer automatic investment plans, retirement plans, record keeping for tax purposes, and systematic withdrawal plans, and they allow investors to make exchanges or switches between funds over the telephone. Mutual funds also allow the automatic reinvestment of income dividends and capital gains distributions into additional shares.

Liquidity. Mutual funds are very liquid financial instruments since they can be easily purchased or sold with no significant price impact. Redemptions technically have no direct effect on the net asset value at which they were executed. Redemptions might have an indirect effect if there were massive and forced portfolio liquidations before the redemption orders were executed. This indirect effect is expected to be rare. Mutual funds typically offer more liquidity than individual stocks, bonds, or closed-end portfolios.

This paper reviews how the mutual fund industry has grown, what changes it has gone through, how competitive it has been, how competition in the industry has affected investors in mutual funds, and what implications industry competitiveness has for the taxation of capital gains distributed by mutual funds to investors.

Phases of Growth
The Indian mutual industry has come a long way since the inception of UTI in 1963.According to AMFI, the evolution of the industry can be classified broadly into four phases, which mark its transition from a period when UTI ruled the roost to a period of competition and increased awareness among investors.

i) First Phase (1964-87) UTI all the way

This phase begin with the inception of the Unit Trust of India (UTI). It remained the only mutual fund player in the country till 1987. UTI started its operation in July 1964 with a view to encouraging savings and investments and participation in income, profits and gains accruing to the corporation from acquisition, holding, management and disposal of securities. In short, it was set up by Indian government with a view to augment small savings in the country and to channelize these savings to the capital markets. UTI witnessed a slow and steady growth over the 1970s and the 1980s and by the end of 1988 it had an AUM of Rs.67bn. It still continues to be the largest player in the domestic mutual fund industry with an AUM of Rs. 23,500 cr as on March 31, 2008.

ii) Second Phase (1987-1993) Enter Public Sector Mutual Funds

Public sector mutual funds set up by public sector banks, Life insurance Corporation of India (LIC) and the General insurance Corporation of India (GIC) entered in the market in 1987. The first non mutual fund was the SBI Mutual Fund established in June 1987, followed by Canbank Mutual Fund in December 1987, Punjab National Bank Mutual Fund in August 1989, India Bank Mutual Fund in Nov 1989, Bank of India Mutual Fund in June 1990 and Bank of Baroda Mutual Fund in Oct 1992. LIC set up its mutual Fund in Jun e 1989 while GIC established its Mutual Fund in Dec 1990. During this period, the total asset of the industry grew to about Rs. 610bn with the total number of schemes increasing to about 167 by the end of 1994.
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iii) Third Phase of (1993-2003) Private players enter the scene

This phase marked the entry of private sector funds. The phase also signaled the intensification of competition. Both domestic and foreign players entered the market, offering a wide variety of schemes to investors. Kothari Pioneer Mutual Fund was the first private sector fund to establish in association with the foreign fund. Private players like Morgan Stanley, Jardine Fleming, JP Morgan, George Soros and Capital International entering the market. The total AUM by the end of Jan 31, 2003 increased to $ 34,927mn from $23,260mn in March 1995 with a CAGR of 6.92%.

iv) Fourth Phase (since Feb 2003) UTIs restructuring and beyond
In Feb 2003 UTI ACT 1963 was replaced and UTI was bifurcated into two separate entities: Specified undertaking of Unit Trust of India, which is still under the Govt. of India and the UTI Mutual Fund Ltd. This was done in the wake of the sever payment crisis that UTI suffered on account of its assured return schemes of US-64 that finally resulted in an adverse impact on the India capital markets. US-64 was the first scheme launched by UTI with a significant equity exposure and the returns of which were not linked to the market. However, the industry has overcome that shock and is hoped to have learnt its lesson.

1.2 Company Profile

Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporates. The group has a net worth of Rs.7,911 crores and employs around 20,000 employees across its various businesses, servicing around 7 million customer accounts through a distribution network of 1,716 branches, franchisees and satellite offices across more than 470 cities and towns in India and offices in New York, California, San Francisco, London, Dubai, Mauritius and Singapore.

Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of KMBL, is the Asset Manager for Kotak Mahindra Mutual Fund (KMMF). KMAMC started operations in December 1998 and has over 10 Lac investors in various schemes. KMMF offers schemes catering to investors with varying risk - return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities.

Kotak Mahindra Bank Limited.

Established in 1985, the Kotak Mahindra group has been one of India's reputed financial organizations. In February 2003, Kotak Mahindra Finance Ltd, the group's flagship company was given the license to carry on banking business by the Reserve Bank of India (RBI). This approval creates banking history since Kotak Mahindra Finance Ltd. is the first non-banking finance company in India to convert itself in to a bank as Kotak Mahindra Bank Ltd. The Bank offers comprehensive business solutions that include Trade Services, Cash Management Service and Credit facilities, keeping in mind the needs of the business community. Kotak Mahindra Bank has over 212 branches spread across 124 locations in the country offering both traditional banking products and investment advisory services. The Bank has the products, the experience, the infrastructure and most importantly the commitment to deliver pragmatic, end-to-end solutions that really work.

Awards
OUTLOOK MONEY NDTV PROFIT AWARDS, 2009 ICRA AWARDS, 2009 NDTV AWARDS, 2006 LIPPER FUND AWARDS, 2006 ICRA AWARDS, 2006 ICRA MIFR 1 (December 2004 & December 2005) OUTLOOK MONEY BEST WEALTH CREATOR DEBT 2003 CRISIL BEST FUND AWARD 2003

1.3 SWOT Analysis

A type of fundamental analysis of the health of a company by examining its Strengths(S), Weakness(W), Opportunity(O), and any Threat(T) or dangers it might be exposed to.

I.

STRENGTHS Brand strategy: as opposed to some of its competitors (e.g. HSBC), Kotak Mutual Fund operates a multi-brand strategy. The company operates under numerous well-known brand names, which allows the company to appeal to many different segments of the market. Economies of Scale: The easiest way to understand economies of scale is by thinking about volume discounts; in many stores, the more of one product you buy, the cheaper that product becomes. For example, when you buy a dozen donuts, the price per donut is usually cheaper than buying a single one. This also occurs in the purchase and sale of securities. If you buy only one security at a time, the transaction fees will be relatively large. Mutual funds are able to take advantage of their buying and selling size and thereby reduce transaction costs for investors. When you buy a mutual fund, you are able to diversify without the numerous commission charges. Imagine if you had to buy the 10-20 stocks needed for diversification. The commission charges alone would eat up a good chunk of your savings. Add to this the fact that you would have to pay more transaction fees every time you wanted to modify your portfolio - as you can see the costs begin to add up. With mutual funds, you can make transactions on a much larger scale for less money. Divisibility: Many investors don't have the exact sums of money to buy round lots of securities. One to two hundred dollars is usually not enough to buy a round lot of a stock, especially after deducting commissions. Investors can purchase mutual funds in smaller denominations. Smaller denominations of mutual funds provide mutual fund investors the ability to make periodic investments through monthly purchase plans. So, rather than having to wait until you have enough money to buy higher-cost investments, you can get in right away with mutual funds.

Distribution channel strategy: Reliance is continuously improving the distribution of its products. Its online and Internet-based access offers a combination of excellent growth prospects and its retail direct business also saw growth of 27% in 2002 and 15% in 2003. Various sources of income: Reliance has many sources of income throughout the group, and this diversity within the group makes the company more flexible and resistant to economic and environmental changes. Large pool of installed capacities. Experienced managers for large number of Generics. Large pool of skilled and knowledgeable manpower. Increasing liberalization of government policies.

II.

WEAKNESS Emerging markets: since there is more investment demand in the United States, Japan and the rest of Asia, Reliance should concentrate on these markets, especially in view of low global interest rates. Mutual funds are like many other investments without a guaranteed return: there is always the possibility that the value of your mutual fund will depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds experience price fluctuations along with the stocks that make up the fund. When deciding on a particular fund to buy, you need to research the risks involved just because a professional manager is looking after the fund, that doesnt mean the performance will be stellar. Fees: In mutual funds, the fees are classified into two categories: shareholder fees and annual operating fees. The shareholder fees, in the forms of loads and redemption fees are paid directly by shareholders purchasing or selling the funds. The annual fund operating fees are charged as an annual percentage usually ranging from 1-3%. These fees are assessed to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesnt make money, these fees only magnify losses. Insufficient funds are available for investment in new plant or product development. All available security, including personal assets and guarantees, is already pledged for existing borrowings. Poor credit control leads to unpredictable cash flow.

III.

OPPORTUNITIES Potential markets: The Indian rural market has great potential. All the major market leaders consider the segments and real markets for their products. A senior official in a one of the leading company says foray into rural India already started and there has been realization that the rural market is both price and quantity conscious. Entry of MNCs: Due to multinationals are entering into market job opportunities are increasing day by day. Also India Mutual Fund majors are tie up with other financial institutions. Deterioration in competitors performance, or the insolvency of a competitor. The development of new distribution channels (e.g. the internet). Improved supply arrangements, such as just-in-time supply or outsourcing noncore activities.

IV.

THREATS Increased Competition: With intense competition by so many local players causing headache to the current marketers. In addition to this though multinational brands are not yet established but still they will soon hit the mark. Almost 60 to 70% of the revenue is spending on the management and services. Hedge funds: sometimes referred to as hot money, are also causing a threat for mutual funds have gained worldwide notoriety for bringing the markets down. Be it a crash in the currency, stock or bond market, usually a hedge fund prominently figures somewhere in the picture. Creeping over-reliance on one distributor or group of distributors. Lenders reducing credit lines or increasing charges. A rent review threatening to increase costs, or the expiry of a lease.

1.3 Competitor Analysis

We have many competitors in the Mutual Fund Industry in India. Here are some of the competitors that exist in the Indian market.

KOTAK MAHINDRA MUTUAL FUND

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of Kotak Mahindra Bank Limited (KMBL). It is presently having more than 1,99,800 investors in its various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk return profiles. It was the first company to launch dedicated gilt scheme investing only in government securities.

HDFC MUTUAL FUND

HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated June 30, 2000. HDFC Mutual Fund was setup with two sponsors namely Housing Development Finance Corporation Limited and Standard Life Investments Limited.

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 UNIT TRUST OF INDIA (UTI) MUTUAL FUND

UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crores. The sponsors of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds.

PRUDENTIAL ICICI MUTUAL FUND

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of October, 1993 with two sponsors, Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22nd of June, 1993.

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 RELAINCE MUTUAL FUND

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.

BIRLA SUN LIFE MUTUAL FUND

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000 crores.

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 HSBC MUTUAL FUND

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor.

ING Vysya MUTUAL FUND

ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya & ING. The AMC, ING Investment Management Pvt. Ltd. was incorporated on April 6, 1998.

STANDARD CHARTERED MUTUAL FUND

Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20, 1999.

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CHAPTER 2

CONCEPTUAL DISCUSSION

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Concept of Mutual Fund

Individuals or institutions when have surplus money, i.e. savings, would like to invest with the common and logical motive of growing money by getting returns on the investments. There are various avenues to park money towards fulfillment of your objective of return on investment. One can invest money either where you can get assured returns & hence the risk is low but returns also are low compared to the high risk investments. The other way is through investing in shares i.e. equity market. Generally the returns on equity investments are higher than debt investment but risk also is higher. To get good returns one really needs to understand the economy and performance of companies where you are investing money. For a common man it may be cumbersome while managing own profession, job or business. Hence the concept of mutual fund has evolved to manage the funds i.e. on behalf of the investor; fund managers will be taking decisions to maximize the investors returns. A Mutual fund is a common pool of money into which investors place their contributions that are to be invested in accordance with a stated objective. The ownership of the fund is thus joint or mutual; the fund belongs to all investors. A single investors ownership of the fund is in the same proportion as the amount of the contribution made by him bears to the total amount of the fund. A mutual fund uses the money collected from investors to buy those assets, which are specifically permitted by its stated investment objective. Thus, an equity fund would buy mainly equity assets-ordinary shares, preference shares, warrants, etc. a bond fund would mainly buy debt instruments, such as debentures, bonds, or government securities. It is these assets, which are owned by the investors in the proportion of their investments. The flow chart below describes broadly the working of a mutual fund:

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Players in the Mutual Fund Industry

The players in the Indian Mutual Funds Industry are similar to some extent to the players in other financial services industry. The players are as follows: SEBI The Securities Exchange Board of India (SEBI) is the regulatory authority for all the mutual funds sponsored by the public/private sector banks, financial institutions, private sector companies, non- banking finance companies and foreign institutional investors. SEBI has laid down the rules and regulations regarding the obligations of the entities involves in a mutual fund, its establishment and launch of different schemes, investments and valuation, financial reporting, conduct and operations of mutual funds. Asset Management Company (AMC) Its role is highly significant in the mutual funds operation. They are the fund managers i.e. they invest the investors money in various securities after proper research and analysis. They also look after the administrative functions of a mutual fund for which they charge management fee.

Intermediaries They act as a link between the mutual fund companies and the investors. The intermediaries include brokers, sub- brokers, and investment houses. The other intermediary- registrar and transfer agents perform activities, which are associated with maintaining records concerning units already issued or to be issued by the company. The registrar also performs other activities such as dividend payment, investor grievance, etc. Investors Investors subscribe to the units issued by the mutual funds in the hope of getting a return commensurate with the risk involved. SEBI protects the interest of the investors through the guidelines laid down under SEBI (Disclosure and Investor Protection) Guidelines, 2000. The mutual fund investor mainly includes individual, HUF, corporate and trusts.

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Types of Mutual Fund

There are many types of mutual funds available to the investor. However, these different types of funds can be grouped into certain classifications for better understanding.

Mutual Fund Classification

By Structure

1. Open-ended Funds
An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices. Hence, the unit capital of the schemes keeps changing each day. Such schemes thus offer very high liquidity to investors and are becoming increasingly popular in India. Please note that an open-ended fund is NOT obliged to keep selling/issuing new units at all times, and may stop issuing further subscription to new investors. On the other hand, an open-ended fund rarely denies to its investor the facility to redeem existing units.

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2. Closed-ended Funds
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor. Closed-ended schemes are usually more illiquid as compared to open-ended schemes and hence trade at a discount to the NAV. This discount tends towards the NAV closer to the maturity date of the scheme.

3. Interval Funds
Interval funds combine the features of open-ended and close-ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV based prices.

By Investment Objective 1. Growth Funds

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time.

2. Income Funds
The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income.

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3. Balanced Funds
The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.

4. Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer shortterm instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods.

5. Gilt Funds
These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and economic factors as is the case with income or debt oriented schemes.

6. Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE sensitive index, S&P NSE 50 index(Nifty).These schemes invest in the securities in the same weight age comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as Tracking Error in technical terms. Necessary disclosure in this regard is made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges.

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 On the basis of Load

1. Load Funds
A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history.

2. No-Load Funds
A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work.

Other Schemes

1. Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30, 2000.

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Investment Plans
The term investment plans generally refers to the portfolio flexibility that the funds to investors offering different ways to invest or reinvest. The different investment plans are an important consideration in the investment decision, because they determine the level of flexibility available to the investor. Also, the investment plan offered by a fund allows the investors freedom with respect to investing one time or at regular intervals, making transfers to different schemes within the same fund family, or receiving income at specified intervals or accumulating distributions. These are some of the investment plans offered by mutual funds in India:

Systematic Investment Plan (SIP): These require the investor to invest a fixed sum periodically, thereby letting the investor save in a disciplined and phased manner. The mode of investment could be though direct debit to the investors salary or bank account. A modified version of SIP is the Voluntary Accumulation Plan (VAP) that allows the investor flexibility with respect to the amount and frequency of investment. Systematic Withdrawal Plan (SWP): Such plans allows the investor to make systematic withdrawals from his fund investment account on a periodic basis, thereby providing the same benefit as regular income. The investor must withdraw a specific minimum amount with the facility to have withdrawal amounts sent to his residence by a cheque or credited directly into the bank account. The amount withdrawn is treated as redemption of units at the applicable NAV as specified in the offer document. The investor is usually required to maintain a minimum balance in his fund account under this plan. Systematic Transfer Plan (STP): These plans allow the investor to transfer on a periodic basis a specified amount from one scheme to another with the same fund family- meaning two schemes managed by the same AMC and belonging to the same mutual fund. A transfer will be treated as redemption of units from the scheme from which the transfer is made, and as investment in units of the scheme into which the transfer is made. Such redemption or investment will be at the applicable NAV for the respective schemes as specified in the offer document. The investor is usually required to maintain a minimum balance in his fund account under this plan for which the transfer is made.

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Options Offered to Investors

Dividend Option: The investor can choose to receive a part of the profits of the mutual fund at some intervals before their redemption. This option is Dividend Option. Investors who choose dividend option can again have 2 sub options: Dividend Payout Option: Investors who choose the dividend payout option on their investments will receive dividends as and when such dividends are declared by the scheme. Dividends are paid out to the investors in the form of warrants or are directly credited to the investors bank account. Dividend Re-investment Option: Investors who opt for the dividend reinvestment option do not take the amount of dividend out of the scheme. They re-invest the dividends that are declared by the mutual funds back into the mutual funds itself, at a NAV that is prevalent immediately after the declaration of dividend or the NAV at the time of re-investment. This NAV is known as ex-div NAV.

Growth Option: The investors who do not want to receive any part of profits of the mutual fund before its redemption. Rather they want to retain the profits made in the pool and want their returns to grow by being compounded. Whenever they need to get some money or profits back, they would sell a part of their units. This is Growth Option.

Investor Earning Opportunities:

Dividend Payout Dividend Change in NAV Yes Yes

Dividend Reinvestment Yes Yes

Growth Option No Yes

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Schemes Offered by Kotak Mutual Fund

Different people have different investment needs. The ability to take risks while investing in financial products varies accordingly. Kotak offers wide range of Mutual Fund Schemes, which span across the risk-reward spectrum. Kotak 30 Kotak Opportunities Kotak Tax Saver Kotak Mid-Cap Kotak Balance Kotak Lifestyle Kotak Contra Kotak Equity FOF Kotak Select Focus Fund Kotak Emerging Equity Scheme Kotak Equity Arbitrage Fund

Kotak 30
Kotak 30 is an open-ended equity growth scheme that invests predominantly in large cap stocks that are diversified across sectors and form a significant proportion of total market capitalization. The investment objective of the scheme is to generate capital appreciation from a portfolio of predominantly equity and equity related securities. The scheme generally invests in 30 stocks but has flexibility to go up to 39 companies. These companies may or may not be the same that constitute the BSE Sensitive Index or the NSE Fifty (S&P CNX Nifty) index. The scheme does offers some flavour of mid-caps (maximum exposure up to 20%) to potentially enhance returns. Investment Objective To generate capital appreciation from a portfolio of predominantly equity and equity related securities. The portfolio will generally comprise of equity and equity related instruments of around 30 companies which may go up to 39 companies but will not exceed 39 at any point in time, and that these companies may or may not be the same which constitute the BSE Sensitive Index or the NSE Nifty (S&P CNX Nifty) index. Review and rebalancing will be conducted if the investment in companies exceed above 39. To reduce the risk of the portfolio, the scheme may also use various derivate and hedging products from time to time, in the manner permitted by SEBI. It is the investment managers belief that having a portfolio constituting a greater number of investments does not necessarily result in either superior returns or significant reduction in risk. There is no assurance that the investment objective of the scheme will be achieved.
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Risk Factors The portfolio of Kotak 30 will comprise predominantly of Equity and Equity Related Instruments and there would be moderate to High risk on account of price fluctuations and volatility. Since this is not a sector scheme and plans to invest generally in up to 30 scrips but not exceeding 39 stocks, the Concentration and Sector Risks are low. The liquidity risk is also expected to be low. Some investment may also be made in equity based derivatives such as options and future, in which case, the risks associated with such derivatives would be also applicable. Fund Features Type of Scheme Nature Option Inception Date Face Value (Rs/Unit) Fund Size Rs. Cr. in Open Ended Equity Growth Dec 22, 1998 10 684.07 as on Apr 30, 2008 SIP STP SWP Expense ratio(%) Portfolio Turnover Ratio(%) 2.24 Fund Manager Krishna Sanghvi, Sanjib Guha .

131.26

Last Dividend 10 % as on Dec 31, 2001 Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load Exit Load 5000 Daily Daily Amount Bet. 0 to 49999999 then Entry load is 2.25%. and Amount greater than 50000000 then Entry load is 0%. If redeemed bet. 0 Months to 6 Months; Exit load is 1%.

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 Kotak Opportunities
Kotak Opportunities is a diversified, equity, open-ended scheme that has a flexibility to invest across market capitalization and sectors. As markets evolve & grow, new opportunities of growth keep emerging. The investment strategy is to make strategic use of debt and money market securities. The scheme invests at least 60% in large cap stocks and up to 40% in mid cap stocks. Investment Objective The investment objective of the scheme is to generate capital appreciation from a diversified portfolio of equity and equity related securities. The Scheme will invest in a mix of large and mid cap stocks from various sectors, which look promising, based on the growth pattern in the economy. For the purpose of determining mid-cap stocks, the market capitalization of companies will be considered. The growth dynamics of the economy are changing rapidly with new and different sectors emerging as growth leaders. The scheme will endeavour to capture the growth in various new sectors that will drive the economy at various points of time. There is no assurance that the investment objective of the scheme will be achieved. Risk Factors The portfolio of Kotak Opportunities will comprise predominantly of Equity and Equity Related Instruments and there would be moderate to High risk on account of price fluctuations and volatility. The Scheme has the flexibility to perform up to 35% in money market instruments and debt securities, and if there is a sharp upward movement in the market, the Scheme can under perform the benchmark index.

Fund Features Type of Scheme Nature Option Inception Date Face Value (Rs/Unit) Fund Size Rs. Cr. in Open Ended Equity Growth Oct 25, 2005 10 463.48 as on Apr 30, 2008 Fund Manager SIP STP SWP Expense ratio(%) Portfolio Turnover Ratio(%)
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Krishna Sanghvi

2.31

84.31

Last Dividend NA Declared Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load Exit Load 500 Daily Daily Amount Bet. 0 to 49999999 then Entry load is 2.25%. & Amount greater than 50000000 then Entry load is 0%. If redeemed after 0 Year; Exit load is 0%. Exit Load is 0%.

Offer Document
When an AMC or a Fund Sponsor wishes to launch a new mutual fund scheme, they are required to formulate the details of the schemes and register it with SEBI before announcing the scheme and inviting the investors to subscribe to the fund. Launch of a new mutual fund scheme is called a New Fund Offer (NFO). The document containing the details of the new fund offer that the AMC or the Sponsor prepares and circulates to the prospective investors is called the Offer Document. Offer Document issued by mutual funds serve the same purpose of inviting investors and giving them the information about the new fund offer. The offer document of the closed-end fund is issued only once at the time of issue, as the units are normally not re-purchasable for investors. But, the open-end fund could issue and repurchase units on an ongoing basis. This means that the offer document of the open-end funds is valid for all the time, until amended, though it will be first issued at the time of launch of the scheme. SEBI requires the offer document of the open-end fund to be revised every two years. For Common Application Form and Systematic Investment Plan refer to Appendix.

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Key Information of Kotak 30 and Kotak Opportunities

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Recent Trends in the Mutual Fund Industry

1. Funds betting on Natural Resources Since Indian regulations do not permit mutual funds to invest directly in commodities, fund houses go for schemes that invest in stocks of mining companies. At least five funds, keen on investing in natural resources, are set to hit the market, as per documents filed with the stock market regulator SEBI. There are two funds from ING and one each from Mirae Asset Management, Tata AMC and HSBC MF.

2. Systematic Transfer Plans lower Volatility Risk Systematic Transfer Plan (STP) helps in reaching the financial goals by investing a fixed sum in the chosen fund for a pre-determined number of installments. STP offers an investor the security of a liquid fund while trying to enhance returns by investing a part of the funds in equity. This helps mitigate any risk arising from volatility or improve the funds returns in a boom. Thus, an investor can match his risk appetite with that of the equity scheme. Most fund houses are already offering this STP facility to investors. In the first week of May, JP Morgan AMC launched Optimiser Systematic transfer plan, wherein investors can invest a lump sum in JP Morgan India Liquid Fund or JP Morgan India Liquid Plus Fund through STP. An amount predetermined by the investor would be transferred periodically (daily, weekly, monthly or quarterly) from this fund to any of the existing equity schemes managed by JP Morgan Mutual Fund. STP is definitely going to gain ground as aspirations, possibilities and opportunities increase among the youth. However, fund managers feel, STP is yet to be promoted in India to its full extent. Investors need to be adequately informed about it.

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3. Mutual Fund industry to tap Entertainment space To cash the bullish growth of the entertainment & media industry in the country financial institutions are rolling out a slew of mutual funds focusing on these spaces. Many of the funds will cover a wide range of areas within the entertainment arena such as retail, shopping malls, mobile content providers, lifestyle beyond the conventional media like television, film, print advertising and multiplex. Global media giants like Viacom, Walt Disney, BBC, J C Decaux and Astro are already in the country or looking at it. The industry has already witnessed deals such as Walt Disney-UTV, Blackstone-Eenadu and Adlabs-ADAG (Anil Dhirubhai Ambani Group). 4. Brand name works for Mutual Funds A brand image is very important for mutual funds and investors base their decisions on known and dependable brands. Brand-building exercises are mostly taken up by foreign players and big industrial houses which have deep pockets, while fund houses with lower corpus can only attract investors by showing good performance. Fund mobilisation trend in mutual funds space suggests that brand play an important role in helping fund houses attract investors initially although in the long term it boils down to the performance of the schemes. Country's MF industry holds immense potential for the existing as well as the new players entering or those envisaging an entry into the space, but firms with a strong brand presence definitely has a competitive advantage. 5. Mutual Fund Industrys AUM advances by 7.33% in April The asset base of the industry has grown by 7.33% to Rs. 567601.98 Crores. Compared to the last month, April has been great for the mutual fund industry as 28 AMCs out of 34 posted positive growth in their AAUM. Reliance Mutual Fund has topped the chart with an AAUM of Rs 96,386.40 Crores. ICICI Prudential MF and UTI MF continue to be at the second and third position respectively.

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6. Kotak Mahindra Mutual Fund launches Sensex ETF Kotak Mahindra Asset Management Company has announced the launch of an exchange traded fund which will focus on the stocks that comprise the BSE SENSEX. Kotak Mahindra Asset Management Company has announced the launch of an exchange traded fund which will focus on the stocks that comprise the BSE SENSEX. The fund is open for subscription from May 07, 2008 till May 16, 2008. The units will be listed on BSE to provide liquidity through secondary market. Each unit of the Kotak Sensex ETF will be approximately equal to 1/100th of the value of BSE SENSEX. The minimum investment amount during the New Fund Offer is Rs 10,000 and in multiples of Rs 1,000.

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Growth of Mutual Funds in India

The Indian Mutual Fund has passed through three phases. The first phase was between 1964 and 1987 and the only player was the Unit Trust of India, which had a total asset of Rs. 6,700 crores at the end of 1988. The second phase is between 1987 and 1993 during which period 8 Funds were established (6 by banks and one each by LIC and GIC). The total assets under management had grown to 61,028 crores at the end of 1994 and the number of schemes was 167. The third phase began with the entry of private and foreign sectors in the Mutual Fund industry in 1993. Kothari Pioneer Mutual Fund was the first Fund to be established by the private sector in association with a foreign Fund. As at the end of financial year 2000(31st march) 32 Funds were functioning with Rs. 1, 13,005 crores as total assets under management. As on august end 2000, there were 33 Funds with 391 schemes and assets under management with Rs 1, 02,849 crores. The securities and Exchange Board of India (SEBI) came out with comprehensive regulation in 1993 which defined the structure of Mutual Fund and Asset Management Companies for the first time. Several private sectors Mutual Funds were launched in 1993 and 1994. The share of the private players has risen rapidly since then. Currently there are 34 Mutual Fund organizations in India managing 1,02,000 crores.

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CHAPTER-3

RESEARCH METHODOLOGY

32

3.1 Objectives of the study

For every problem there is a research. As all the researches are based on some and my study is also based upon some objective and these are as follows: To give a brief idea about the benefits available from Mutual Fund investment. To give an idea of the types of schemes available. To discuss about the market trends of Mutual Fund investment. To study some of the Mutual Fund schemes and analyse them. Observe the Fund Management Process of Mutual Funds. Explore the recent developments in the Mutual Funds in India. To understand the risk profile of the customers. To give an idea about the regulations of Mutual Funds.

Purpose
The main purpose of doing this project was to know about mutual funds and its functioning. This helps to know in details about mutual fund industry right from its inspection stage, growth and future prospects. It also helps in understanding different schemes of mutual funds. Because my study depends upon prominent funds in India and their schemes like equity, income, balance as well as the returns associated with those schemes. The project study was done to ascertain the asset allocation, entry load, exit load, associated with the mutual funds. Ultimately this would help in understanding the benefits of mutual funds to investors.

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3.2 Significance of the Study

Wealth creation over the years has changed its avenues and area of interest for the investors in India. The prototype investment where the post offices and typically the scheduled banks through savings and fixed deposits have changed and with the awareness of finance, Mutual Fund has become an excellent route to create wealth for the public at large. Mutual Fund is a pool of money is invested in accordance with the common objective stated before the investment to the investors. Here is the concept of mutual fund which is suitable for the common man as it offers an opportunity to invest and diversified professionally managed basket of securities comparatively at low costs. The investors pool their money to the fund manager and fund manager invest the money in the securities and after generating returns passed back to the investors. The Mutual Fund has a structure which is regulated by SEBI and the Association of Mutual Funds of India (AMFI) plays an advisory role for the mutual funds. There are lot of entries involved in between Unit Holders and SEBI which includes Sponsors, Trustees, Asset Management Company (AMC), Mutual Fund, Transfer agents and Custodian. Basically there are only two types of mutual fund in the industry. Open Ended Close Ended Open ended funds are those where investors sell and repurchases units at all times, commonly known as Unit trusts in UK and Mutual Funds in USA. Close ended funds are generally fixed as it makes a one-time sale of fixed number of units, known as Investment trusts in UK and Investment Company in USA. The Mutual Funds have been divided into more sub-categories like Load and NoLoad funds, Tax exempt and non-tax exempt and many others. The diversification has been broadened with the revolution and mutual fund has become a major investment destination by yielding more returns. Mutual Fund as a investment destination is gaining momentum and in future mutual fund must emerge as a strong capital appreciation tool for the purpose of financial planning.

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3.3 Collection and Techniques of Data Analysis

Net Asset Value

Net Asset Value (NAV) represents a fund's per share market value. This is the price at which investors buy (bid price) fund shares from a fund company and sell them (redemption price) to a fund company. Dividing the total value of all the cash and securities in a funds portfolio, less any liabilities, by the number of shares outstanding, derives it. The NAV computation is undertaken once at the end of each trading day based on the closing market prices of the portfolio's securities. NAV: Net Assets of the Scheme/ Number of Units Outstanding Or (Market Value of Investment + Receivables + Other Accrued Income + Other Assets Accrued Expenses Other Payables Other Liabilities)/Number of Units Outstanding on the Valuation Date For the purpose of NAV calculation, the day on which NAV is calculated by a fund is known as the Valuation Date. NAV of all schemes must be calculated and published at least every Wednesday for Closed-end schemes and daily for Openend schemes. The days NAV must be posted on AMFI website by 8:00 p.m. that day. This applies to both Open-end & Closed-end schemes.

The funds NAV is affected by these 4 factors: Purchase & Sale of investment securities Valuation of all investment securities held Other assets & liabilities Units sold or redeemed

35

Pricing Of Units Although NAV per unit defines the fair value of the investors holding in the fund, the fund may not repurchase the investors units at the same price as NAV. There can be entry or exit loads. The Sale price is NAV + Entry Load and the Repurchase price is NAV Exit Load. SEBI requires that fund must ensure that repurchase price is not lower than 93% of NAV (95% in the case of a closed-end fund). On the other side, the fund may sell new units at a price that is different from the NAV, but the sale price cannot be higher than 107% of NAV. Also, the difference between the repurchase price and the sale price of the unit is not permitted to exceed 7% of the sale price. Sale Price: Applicable NAV * (1 + Entry Load) Repurchase Price: Applicable NAV * (1 Exit Load)

Measurement of Mutual Fund Performance

Standard Deviation Standard Deviation allows you to evaluate the volatility of the fund. Volatility is often a direct indicator of the risks taken by the fund. The standard deviation of a fund measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return, the average return of a fund over a period of time. A security that is volatile is also considered higher risk because its performance may change quickly in either direction at any moment. A fund that has a consistent four-year return of 3%, for example, would have a mean, or average, of 3%. The standard deviation for this fund would then be zero because the fund's return in any given year does not differ from its four-year mean of 3%. On the other hand, a fund that in each of the last four years returned -5%, 17%, 2% and 30% will have a mean return of 11%. The fund will also exhibit a high standard deviation because each year the return of the fund differs from the mean return. This fund is therefore more risky because it fluctuates widely between negative and positive returns within a short period.

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Beta Beta is a fairly commonly used measure of risk. It basically indicates the level of volatility associated with the fund as compared to the benchmark. So quite naturally the success of Beta is heavily dependent on the correlation between a fund and its benchmark. A beta that is greater than one means that the fund is more volatile than the benchmark, while a beta of less than one means that the fund is less volatile than the index. A fund with a beta very close to 1 means the fund's performance closely matches the index or benchmark. If, for example, a fund has a beta of 1.03 in relation to the BSE Sensex, the fund has been moving 3% more than the index. Therefore, if the BSE Sensex increased 10%, the fund would be expected to increase 10.30%.

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R-Squared The R-squared of a fund advises investors if the beta of a mutual fund is measured against an appropriate benchmark. Measuring the correlation of a fund's movements to that of an index, R-squared describes the level of association between the fund's volatility and market risk, or more specifically, the degree to which a fund's volatility is a result of the day-today fluctuations experienced by the overall market. R-squared values range between 0 and 1, where 0 represents no correlation and 1 represents full correlation. If a fund's beta has an R-squared value that is close to 1, the beta of the fund should be trusted. On the other hand, an Rsquared value that is less than 0.5 indicates that the beta is not particularly useful because the fund is being compared against an inappropriate benchmark.

Each dot represents a funds return plotted against the market returns in the same period. The line is the beta of the returns. While the beta is the same in both, it is far more Representative in the left graph than in the right graph. SOURCE: http://equitymaster.com

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Alpha Alpha = (Fund return-Risk free return) - Funds beta *(Benchmark returnrisk free return). Alpha is the difference between the returns one would expect from a fund, given its beta, and the return it actually produces. An alpha of -1.0 means the fund produced a return 1% higher than its beta would predict. An alpha of 1.0 means the fund produced a return 1% lower. If a fund returns more than its beta then it has a positive alpha and if it returns less than it has a negative alpha. Once the beta of a fund is known, alpha compares the fund's performance to that of the benchmark's risk-adjusted returns. It allows you to ascertain if the fund's returns outperformed the market's, given the same amount of risk. The higher a funds risk level, the greater the returns it must generate in order to produce a high alpha.

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Comparison of Investment Products

Investors tend to constantly compare one form of investment with another. There are 2 kinds of comparisons possible among different investment options.

1. By Nature of Investment: Investor look for the Best returns on different options. However, to determine which option is better, the comparison should be made in terms of other benefits that the investor ought to look for in any investment.

Return Equity FI Bonds Corporate Debentures Company Fixed Deposits Banks Deposits PPF Life Insurance Gold Real Estate Mutual Funds High Moderate Moderate Moderate

Safety Convenience Low High Moderate Low

Volatility High Moderate Moderate Low

Liquidity High Moderate Low Low

Low Moderate Low Moderate High High

High High High High Moderate High

Low Low Low Moderate High Moderate

High Moderate Low Moderate Low High

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2. By Performance: The comparison on the basis of performance highlights the flexibility offered by mutual funds from the investors perceptive. An investor can choose from a wide variety of funds to suit his risk tolerance, investment horizon & investment objective.

Equity

Investment Objective Capital Appreciation Income

Risk Tolerance High

Investment Horizon Long Term

FI Bonds

Low

Medium-Long Term Medium-Long Term Medium

Corporate Debentures Company Deposits

Income

High-MediumLow High-MediumLow Generally Low Low Low Low Low

Fixed Income

Bank Deposits PPF Life Insurance Gold Real Estate Mutual Funds

Income Income Risk Cover Inflation Hedge Inflation Hedge Capital Income

Flexible-All Times Long Term Long Term Long Term Long Term Flexible-All Times

Growth, High-MediumLow

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RISK RETURN GRID

Risk Tolerance/Return Expected Focus Suitable Products Benefits offered by MFs

Low

Debt

Bank/ Company FD, Liquidity, Better PostDebt based Funds Tax returns

Medium

Partially Debt, Balanced Funds, Partially Equity Some Diversified Equity Funds and some debt Funds, Mix of shares and Fixed Deposits Equity Capital Market, Equity Funds (Diversified as well as Sectoral)

Liquidity, Better PostTax returns, Better Management, Diversification

High

Diversification, Expertise in stock picking, Liquidity, Tax free dividends

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BANKS V/S MUTUAL FUNDS

BANKS Low High MUTUAL FUNDS Better Low

Returns Administrative Expenses Risk Investment Options Network Liquidity Quality of Assets Interest calculation

Low Less High penetration At a cost Not transparent Minimum balance between 10th & 30th. of every month Maximum Rs.1 lakh on deposits

Moderate More Low but improving Better Transparent Everyday

Guarantee

None

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CHAPTER-4 FINDINGS AND ANALYSIS

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FUND ANALYSIS (On the basis of NAV) Fund DSPML T.I.G.E.R. Reg Tata Infrastructure Magnum Contra Kotak Opportunities UTI Infrastructure Magnum Multiplier Plus Reliance Growth Sundaram BNP Paribas Select Midcap Reg HDFC Top 200 BoB Growth Principal Child Benefit Magnum Balanced HDFC Prudence Birla Sun Life Income ICICI Prudential Long-... Kotak Flexi Debt Sundaram BNP Paribas S... DWS Investment Opportunity DSPML Equity Fund ICICI Prudential Dynamic Kotak 30 DSPML Top 100 Equity Reg Magnum Equity Category Equity: Diversified Equity: Diversified Equity: Diversified Equity: Diversified Equity: Diversified Equity: Diversified Equity: Diversified Equity: Diversified Equity: Diversified Equity: Diversified Hybrid: Equity-oriented Hybrid: Equity-oriented Hybrid: Equity-oriented Debt: Medium-term Debt: Medium-term Debt: Medium-term Equity: Diversified Equity: Diversified Equity: Diversified Equity: Diversified Equity: Diversified Equity: Diversified Equity: Diversified Rating 3 Year Return 45.64 45.31 44.80 43.72 43.18 43.05 42.00 41.06 39.65 38.55 36.93 31.37 29.27 8.37 7.54 7.47 44.86 44.10 43.39 42.69 42.68 42.55 42.23

Source: http://amfiindia.com (on 8th May, 2008)

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Funds which have been compared are:

Kotak
Category Equity Fund Scheme Debt Fund Scheme ELSS Tax Saver Monthly Income Plan Cash Fund Fund Kotak 30 Growth Kotak Bond Short Term Kotak Tax Saver Scheme Growth Kotak Income Plus Kotak Liquid Instrument

HDFC
Category Equity Fund Scheme Debt Fund Scheme ELSS Tax Saver Monthly Income Plan Cash Fund Fund HDFC Equity Fund- Growth HDFC HI Short Term HDFC Tax Saver Scheme- Growth HDFC MIP- Short Term HDFC Liquid

UTI
Category Equity Fund Scheme Debt Fund Scheme ELSS Tax Saver Monthly Income Plan Cash Fund Fund UTI Equity Fund- Growth UTI Short Term Income Regular UTI ETSP- Growth UTI- MIS UTI Liquid Cash Instrument

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 ICICI
Category Equity Fund Scheme Debt Fund Scheme ELSS Tax Saver Monthly Income Plan Cash Fund Fund ICICI Prudential Dynamic Plan- Growth ICICI Prudential Short Term ICICI Prudential Tax Plan ICICI Prudential MIP ICICI Prudential Liquid

Reliance
Category Equity Fund Scheme Debt Fund Scheme ELSS Tax Saver Monthly Income Plan Cash Fund Fund Reliance Growth Reliance Short Term Reliance Tax Saver Reliance MIP Reliance Liquid Cash

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Equity Fund Scheme

1. 2. 3. 4. 5. Kotak 30- Growth HDFC Equity Fund- Growth UTI Equity Fund- Growth ICICI Prudential Dynamic Plan- Growth Reliance Growth

Standard Deviation Kotak HDFC UTI ICICI Reliance 25.48 23.61 23.06 25.10 27.93

Sharpe Ratio 1.39 1.34 1.06 1.43 1.29

Treynor Ratio 3.09 2.65 2.13 1.95 2.97

Beta

R Square

Alpha

.96 .91 .88 .87 .98

.88 .92 .89 .77 .76

4.98 2.75 -3.28 7.78 4.74

Note: The data is collected on 8th May, 2008

Findings

Kotak HDFC UTI ICICI Reliance

Standard Deviation 4 2 1 3 5

Sharpe Ratio 2 3 5 1 4

Treynor Ratio 1 3 4 5 2

Beta 4 3 2 1 5

R Square 3 1 2 4 5

Alpha 2 4 5 1 3

Total 16 16 19 15 24

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Analysis
The analysis suggests that in case of standard deviation which is desired to be low so that the fund can perform better, UTI stands out with rank 1 (23.06) & following UTI is HDFC (23.61) which suggest that these funds are stable in their returns . As the desired level of Beta is low so that the fund return is stable but this is contradiction statement because beta shows the volatility of the stock or fund lower beta means that funds returns are stable but in todays competitive world there is a quote Higher the risk higher the return if we go by this we need to have a high value of beta. this also depends upon the risk appetitive of the investor if he is aggressive investor he would want his fund beta to be high but the case is entirely different in case of risk averse investor but as these funds are managed by professionals so we would be giving 1st rank to that fund which has lowest beta value . In this case also ICICI Prudential Dynamic Plan has lowest beta (.87) among these funds which is followed by UTI Equity Fund- Growth (.88). But beta of 1 is preferable because of the returns it is considered safe for the value of 1 in this analysis almost most of the funds have beta of less than 1 which means that these funds are managed in keeping the people risk at a manageable level, which help investors to earn safe returns. As we have to do the analysis we have to take one stand so in this case, according to me 1st rank should be given to that beta value which is lowest. If two funds have same beta value then R-square value is used with the beta which show how reliable the beta number is higher R-square value is preferred. Also, one of the important advantages of the mutual fund is that the investor can enjoy the benefits of diversification of portfolio. Further, well diversified portfolio diversifies the risk of the portfolio. Diversification can be measured with the help of coefficient of diversification (R Square). So, higher R Square means a well diversified portfolio. So, HDFC Equity Growth fund has the maximum R Square (.92) followed by UTI Equity Growth fund (.89). But the analysis cant be done on these three parameters. Standard deviation measures total risk and this is the case with a single portfolio so we have also considered ratios which are quite important for mutual funds analysis like Sharpe ratio & Treynor ratio. Sharpe ratio represents this trade-off between risk and returns. A higher Sharpe ratio is therefore better as it represents a higher return generated per unit of risk. Sharpe ratio provides an unbiased look into fund's performance. This is because they are based solely on quantitative measures. Both the Treynor Ratio and the Sharpe Ratio

49

provide measures for ranking the relative performance of various portfolios, on a riskadjusted basis. So, in these two ratios higher value is preferred for the fund selection. In the case of Sharpe ratio ICICI Prudential Growth fund (1.43) stands out clear with 1st rank, followed by Kotak 30 Growth fund (1.39). In case of Treynor ratio, Kotak 30 Growth fund (3.09) value is higher so it has been given the 1st rank among the others which is followed by Reliance Equity fund (2.97). Alpha indicates the superior performance of the fund. If the alpha is positive the fund has performed better and if the alpha is negative the fund has not performed upto the benchmark. When Alpha is considered, ICICI Prudential Dynamic Growth Plan (7.78) is the best followed by Kotak-30 Growth fund (4.98). Thus, ICICI Prudential Dynamic Growth Plan is the best Equity fund for the investor for investment purpose. It is the best fund as far as Alpha, Beta & Sharpe ratio is concerned. Though R Square is not so convincing which means that the fund is not so diversified. It stands at 3rd position in Standard Deviation after UTI Equity Growth fund & HDFC Equity Growth fund and last when Treynor ratio is considered. But when we combine all the 6 parameters which are considered to measure the performance of a Mutual Fund, ICICI Prudential Dynamic Growth Plan is the best Equity Fund when compared with rest of the Equity funds.

50

Debt Fund Scheme

1. 2. 3. 4. 5. Kotak Bond Short Term HDFC HI Short Term UTI Short Term Income Regular ICICI Prudential Short Term Reliance Short Term

Standard Sharpe Treynor Deviation Ratio Ratio .59 5.30 3.42 Kotak .52 7.10 3.11 HDFC .66 2.53 2.87 UTI .85 3.01 2.56 ICICI .54 6.55 2.98 Reliance th Note: The data is collected on 8 May, 2008

Beta .48 .42 .51 .62 .46

R Square .55 .54 .49 .44 .59

Alpha 2.27 2.95 .77 1.45 2.72

Findings

Standard Deviation 3 Kotak 1 HDFC 4 UTI 5 ICICI Reliance 2

Sharpe Ratio 3 1 5 4 2

Treynor Ratio 1 2 4 5 3

Beta 3 1 4 5 2

R Square 2 3 4 5 1

Alpha 3 1 5 4 2

Total 15 9 26 28 12

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Analysis
The analysis suggests that in case of standard deviation which is desired to be low so that the fund can perform better, HDFC HI Short Term stands out with rank 1 (.52) & following HDFC HI is Reliance Short Term fund (.54) which suggest that these funds are stable in their returns & also are less risky. As the desired level of Beta is low so that the fund return is stable but this is contradiction statement because beta shows the volatility of the stock or fund lower beta means that funds returns are stable but in todays competitive world there is a quote Higher the risk higher the return if we go by this we need to have a high value of beta. this also depends upon the risk appetitive of the investor if he is aggressive investor he would want his fund beta to be high but the case is entirely different in case of risk averse investor but as these funds are managed by professionals so we would be giving 1st rank to that fund which has lowest beta value . In this case also HDFC HI Short Term has lowest beta (.42) among these funds which is followed by Reliance Short Term fund (.46). But beta of 1 is preferable because of the returns it is considered safe for the value of 1 in this analysis almost most of the funds have beta of less than 1 which means that these funds are managed in keeping the people risk at a manageable level, which help investors to earn safe returns. As we have to do the analysis we have to take one stand so in this case, according to me 1st rank should be given to that beta value which is lowest. If two funds have same beta value then R-square value is used with the beta which show how reliable the beta number is higher R-square value is preferred. Also, one of the important advantages of the mutual fund is that the investor can enjoy the benefits of diversification of portfolio. Further, well diversified portfolio diversifies the risk of the portfolio. Diversification can be measured with the help of coefficient of diversification (R Square). So, higher R Square means a well diversified portfolio. So, Reliance Short Term fund has the maximum R Square (.59) followed by Kotak Bond Short Term (.55). HDFC HI Short term fund is on the 3rd place (.54). But the analysis cant be done on these three parameters. Standard deviation measures total risk and this is the case with a single portfolio so we have also considered ratios which are quite important for mutual funds analysis like Sharpe ratio & Treynor ratio. Sharpe ratio represents this trade-off between risk and returns. A higher Sharpe ratio is therefore better as it represents a higher return generated per unit of risk. Sharpe ratio provides an unbiased look into fund's performance. This is because they are
52

based solely on quantitative measures. Both the Treynor Ratio and the Sharpe Ratio provide measures for ranking the relative performance of various portfolios, on a riskadjusted basis. So, in these two ratios higher value is preferred for the fund selection. In the case of Sharpe ratio HDFC HI Short Term fund (7.10) stands out clear with 1st rank, followed by Reliance Short Term fund (6.55). In case of Treynor ratio, Kotak Bond Short Term fund (3.42) value is higher so it has been given the 1st rank among the others which is followed by HDFC HI Short Term fund (3.11). Alpha indicates the superior performance of the fund. If the alpha is positive the fund has performed better and if the alpha is negative the fund has not performed upto the benchmark. When Alpha is considered, HDFC HI Short Term fund (2.95) is the best followed by Reliance Short Term fund (2.72). Thus, HDFC HI Short Term fund is the best Debt fund when compared with the other funds of Kotak, ICICI, UTI & Reliance. It has the smallest Standard Deviation & also the smallest Beta when compared with all the funds. This shows the fund is less risky and will give good returns to its investors. When taken R Square into consideration, this fund stands at the 3rd position after Kotak Bond Short Term & Reliance Short Term. This shows that the fund is less diversified. The fund is the best performer as far as Sharpe ratio is concerned and is the 2nd best when Treynor ratio is considered. The fund is a good performer as it has the highest Alpha. So, if a person wants to invest in Debt for a short term then he can go in for HDFC HI Short Term fund.

53

ELSS Tax Saver Fund

1. 2. 3. 4. 5. Kotak Tax Saver Scheme- Growth HDFC Tax Saver Scheme- Growth UTI ETSP- Growth ICICI Prudential Tax Plan Reliance Tax Saver

Standard Deviation Kotak HDFC UTI ICICI Reliance 25.65 25.22 24.49 29.02 27.54

Sharpe Ratio .76 1.05 .91 .90 .86

Treynor Ratio 1.41 1.93 1.94 1.80 1.62

Beta

R Square

Alpha

.96 .92 .96 .94 1.03

.78 .84 .86 .66 .61

-4.55 -3.11 -7.11 -4.04 -5.32

Note: The data is collected on 8th May, 2008

Findings

Standard Deviation Kotak HDFC UTI ICICI Reliance 3 2 1 5 4

Sharpe Ratio 5 1 2 3 4

Treynor Ratio 5 2 1 3 4

Beta 3.5 1 3.5 2 5

R Square 3 2 1 4 5

Alpha 3 1 5 2 4

Total 22.5 9 13.5 19 26

54

Analysis
The analysis suggests that in case of standard deviation which is desired to be low so that the fund can perform better, UTI ETSP- Growth fund stands out with rank 1 (24.49) followed by HDFC Tax Saver Scheme- Growth fund (25.22) which suggest that these funds are stable in their returns & also are less risky. As the desired level of Beta is low so that the fund return is stable but this is contradiction statement because beta shows the volatility of the stock or fund lower beta means that funds returns are stable but in todays competitive world there is a quote Higher the risk higher the return if we go by this we need to have a high value of beta. this also depends upon the risk appetitive of the investor if he is aggressive investor he would want his fund beta to be high but the case is entirely different in case of risk averse investor but as these funds are managed by professionals so we would be giving 1st rank to that fund which has lowest beta value . In this case also HDFC Tax Saver Scheme Fund has lowest beta (.92) among these funds which is followed by ICICI Prudential Tax Plan (.94). But beta of 1 is preferable because of the returns it is considered safe for the value of 1 in this analysis almost most of the funds have beta of less than 1 which means that these funds are managed in keeping the people risk at a manageable level, which help investors to earn safe returns and in this case beta is approximately equal to 1. As we have to do the analysis we have to take one stand so in this case, according to me 1st rank should be given to that beta value which is lowest. If two funds have same beta value then R-square value is used with the beta which show how reliable the beta number is higher R-square value is preferred. Also, one of the important advantages of the mutual fund is that the investor can enjoy the benefits of diversification of portfolio. Further, well diversified portfolio diversifies the risk of the portfolio. Diversification can be measured with the help of coefficient of diversification (R Square). So, higher R Square means a well diversified portfolio. So, UTI ETSP-Growth fund has the maximum R Square (.86) followed by HDFC Tax Saver Scheme- Growth Fund (.84) But the analysis cant be done on these three parameters. Standard deviation measures total risk and this is the case with a single portfolio so we have also considered ratios which are quite important for mutual funds analysis like Sharpe ratio & Treynor ratio. Sharpe ratio represents this trade-off between risk and returns. A higher Sharpe ratio is therefore better as it represents a higher return generated per unit of risk. Sharpe ratio provides an unbiased look into fund's performance. This is because they are based solely on quantitative measures. Both the Treynor Ratio and the Sharpe Ratio
55

provide measures for ranking the relative performance of various portfolios, on a riskadjusted basis. So, in these two ratios higher value is preferred for the fund selection. In case of Sharpe Ratio, an HDFC Tax Saver Scheme- Growth fund (1.05) stand out clear with 1st rank, followed by UTI ETSP Growth fund (.91) & just next is ICICI Prudential Tax Plan (.90). In case of Treynor ratio, it is the just the opposite of Sharpe Ratio, UTI ETSP Growth fund (1.94) value is higher so it has been given the 1st rank among the others which is followed by HDFC Tax Saver Scheme fund (1.93). Alpha indicates the superior performance of the fund. If the alpha is positive the fund has performed better and if the alpha is negative the fund has not performed upto the benchmark. When Alpha is considered, all the funds have a negative figure which means that all the funds are not performing good. But, when compared among these 5 funds HDFC Tax Saver Scheme (-3.11) is the best followed by ICICI Prudential Tax Plan (-4.04). Thus, HDFC Tax Saver Scheme is the best Tax Saver Fund. It stands 2nd in case of Standard Deviation after UTI ETSP Growth Fund and is the best fund when Beta is compared followed by ICICI Prudential Tax Plan. As far as R Square is considered it stands at 2nd position after UTI ETSP Growth Fund. It is again the best when we consider the Sharpe Ratio. Though all the funds are showing a negative figure when alpha is compared but again it is the best as far as these 5 funds are compared. So, if we keep all the 6 parameters in mind the investor should be advised to invest in HDFC Tax Saver Scheme.

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Monthly Income Plans (MIP)

1. 2. 3. 4. 5. Kotak Income Plus HDFC MIP- Short Term UTI- MIS ICICI Prudential MIP Reliance MIP

Standard Deviation Kotak HDFC UTI ICICI 5.63 4.24 4.18 4.48

Sharpe Ratio .28 -.07 .76 .47

Treynor Ratio 4.04 2.97 3.65 4.71

Beta .20 .17 .22 .18 .15

R Square .69 .81 .55 .71 .63

Alpha 2.70 1.67 2.34 3.13 2.02

5.50 -.25 3.03 Reliance th Note: The data is collected on 8 May, 2008

Findings

Kotak HDFC UTI ICICI Reliance

Standard Deviation 5 2 1 3 4

Sharpe Ratio 3 4 1 2 5

Treynor Ratio 2 5 3 1 4

Beta 4 2 5 3 1

R Square 3 1 5 2 4

Alpha 2 5 3 1 4

Total 19 19 18 12 22

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Analysis
The analysis suggests that in case of standard deviation which is desired to be low so that the fund can perform better, UTI stands out with rank 1 (4.18) & following UTI is HDFC (4.24) which suggest that these funds are stable in their returns. As the desired level of Beta is low so that the fund return is stable but this is contradiction statement because beta shows the volatility of the stock or fund lower beta means that funds returns are stable but in todays competitive world there is a quote Higher the risk higher the return if we go by this we need to have a high value of beta. this also depends upon the risk appetitive of the investor if he is aggressive investor he would want his fund beta to be high but the case is entirely different in case of risk averse investor but as these funds are managed by professionals so we would be giving 1st rank to that fund which has lowest beta value . In this case also Reliance MIP has lowest beta (.87) among these funds which is followed by HDFC MIP- Short term (.88). But beta of 1 is preferable because of the returns it is considered safe for the value of 1 in this analysis almost most of the funds have beta of less than 1 which means that these funds are managed in keeping the people risk at a manageable level, which help investors to earn safe returns. As we have to do the analysis we have to take one stand so in this case, according to me 1st rank should be given to that beta value which is lowest. If two funds have same beta value then R-square value is used with the beta which show how reliable the beta number is higher R-square value is preferred. Also, one of the important advantages of the mutual fund is that the investor can enjoy the benefits of diversification of portfolio. Further, well diversified portfolio diversifies the risk of the portfolio. Diversification can be measured with the help of coefficient of diversification (R Square). So, higher R Square means a well diversified portfolio. So, HDFC MIP- short Term fund has the maximum R Square (.81) followed by ICICI Prudential MIP fund (.71). But the analysis cant be done on these two parameters. Standard deviation measures total risk and this is the case with a single portfolio so we have also considered ratios which are quite important for mutual funds analysis like Sharpe ratio & Treynor ratio. Sharpe ratio represents this trade-off between risk and returns. A higher Sharpe ratio is therefore better as it represents a higher return generated per unit of risk. Sharpe ratio provides an unbiased look into fund's performance. This is because they are based solely on quantitative measures. Both the Treynor Ratio and the Sharpe Ratio provide measures for ranking the relative performance of various portfolios, on a riskadjusted basis. So, in these two ratios higher value is preferred for the fund selection.

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In the case of Sharpe ratio UTI MIP fund (.76) stands out clear with 1st rank, followed by ICICI Prudential MIP fund (.47). HDFC MIP & Reliance MIP have negative Sharpe ratio. In case of Treynor ratio, ICICI Prudential MIP (4.71) value is higher so it has been given the 1st rank among the others which is followed by Kotak Income Plus fund (4.04). Alpha indicates the superior performance of the fund. If the alpha is positive the fund has performed better and if the alpha is negative the fund has not performed upto the benchmark. In case of Alpha ICICI MIP (3.13) is the best fund followed by Kotak Income Plus (2.70) & UTI MIS (2.34) in the third place. ICICI Prudential MIP is recommended to the investors. ICICI is the 3rd highest in standard deviation after UTI MIS fund and HDFC MIP fund. It is also 3rd as far as beta of the fund is considered after Reliance MIP & HDFC MIP- Short Term. It is 2nd best in Sharpe ratio after UTI MIS and it is the best in Treynor ratio followed by Kotak Income plus. ICICI Prudential MIP should be considered by the investors. Also ICICI Prudential MIP is the best fund when Alpha is considered. But, if the investor wants to take less risk then he can go in for HDFC MIP- Short Term fund as this fund is 2md best in both Standard Deviation & Beta. But, after considering all the 6 parameters ICICI Prudential MIP is the best fund.

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Cash Funds
1. 2. 3. 4. 5. Kotak Liquid Instrument HDFC Liquid UTI Liquid Cash Instrument ICICI Prudential Liquid Reliance Liquid Cash

Standard Deviation Kotak HDFC UTI ICICI Reliance .12 .15 .15 .14 .38

Sharpe Ratio 17.20 16.91 16.40 15.91 1.44

Treynor Ratio 169.89 154.23 152.66 157.78 121.79

Beta .10 .13 .09 .15 .30

R Square .20 .23 .10 .33 .17

Alpha 1.84 2.24 1.98 1.98 .03

Note: The data is collected on 8th May, 2008

Findings

Kotak HDFC UTI ICICI Reliance

Standard Deviation 1 3.5 3.5 2 5

Sharpe Ratio 1 2 3 4 5

Treynor Ratio 1 3 4 2 5

Beta 2 3 1 4 5

R Square 3 2 5 1 4

Alpha 4 1 2.5 2.5 5

Total 12 14.5 19 15.5 29

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Analysis
The analysis suggests that in case of standard deviation which is desired to be low so that the fund can perform better, Kotak Liquid Instrument stands out with rank 1 (.12) & ICICI Prudential Liquid (.14) which suggest that these funds are stable in their returns. HDFC Liquid & UTI Liquid Cash Instrument shares the 3rd position as they both have the same standard deviation. As the desired level of Beta is low so that the fund return is stable but this is contradiction statement because beta shows the volatility of the stock or fund lower beta means that funds returns are stable but in todays competitive world there is a quote Higher the risk higher the return if we go by this we need to have a high value of beta. this also depends upon the risk appetitive of the investor if he is aggressive investor he would want his fund beta to be high but the case is entirely different in case of risk averse investor but as these funds are managed by professionals so we would be giving 1st rank to that fund which has lowest beta value . In this case also UTI Liquid Cash Instrument has lowest beta (.09) among these funds which is followed by Kotak Liquid Instrument (.10). But beta of 1 is preferable because of the returns it is considered safe for the value of 1 in this analysis almost most of the funds have beta of less than 1 which means that these funds are managed in keeping the people risk at a manageable level, which help investors to earn safe returns. But in this case, beta of all the funds is much below than 1. As we have to do the analysis we have to take one stand so in this case, according to me 1st rank should be given to that beta value which is lowest. If two funds have same beta value then R-square value is used with the beta which show how reliable the beta number is higher R-square value is preferred. Also, one of the important advantages of the mutual fund is that the investor can enjoy the benefits of diversification of portfolio. Further, well diversified portfolio diversifies the risk of the portfolio. Diversification can be measured with the help of coefficient of diversification (R Square). So, higher R Square means a well diversified portfolio. So, ICICI Liquid Cash Instrument fund has the maximum R Square (.33) followed by HDFC Liquid fund (.23). But the analysis cant be done on these two parameters. Standard deviation measures total risk and this is the case with a single portfolio so we have also considered ratios which are quite important for mutual funds analysis like Sharpe ratio & Treynor ratio. Sharpe ratio represents this trade-off between risk and returns. A higher Sharpe ratio is therefore better as it represents a higher return generated per unit of risk. Sharpe ratio provides an unbiased look into fund's performance. This is because they are based solely on quantitative measures. Both the Treynor Ratio and the Sharpe Ratio
61

provide measures for ranking the relative performance of various portfolios, on a riskadjusted basis. So, in these two ratios higher value is preferred for the fund selection. In the case of Sharpe ratio Kotak Liquid Instrument fund (17.20) stands out clear with 1st rank, followed by HDFC Liquid fund (16.91). In case of Treynor ratio, Kotak Liquid Instrument fund (169.89) value is higher so it has been given the 1st rank among the others which is followed by ICICI Prudential Liquid fund (157.78). Alpha indicates the superior performance of the fund. If the alpha is positive the fund has performed better and if the alpha is negative the fund has not performed upto the benchmark. When Alpha is considered, HDFC Liquid fund (2.24) followed by UTI Liquid Cash Instrument (1.98) & ICICI Prudential Liquid fund (1.98) each. Kotak Liquid Instrument fund is recommended to all the investors as it has the least standard deviation i.e. the risk is least as compared to all other mutual funds. Beta is also 2nd lowest just after UTI Liquid Cash Instrument and is also very close as it has the beta of (.10) and UTI Liquid Cash instrument has of (.09). When compared the Sharpe ratio & the Treynor ratio, Kotak Liquid Instrument has the highest ratio. Though it is the 3rd best in R Square i.e. it is less diversified as compared to ICICI Prudential Liquid & HDFC Liquid. Keeping in mind all the 6 parameters, Kotak Liquid instrument fund is the best Cash Fund when compared with rest of the cash funds.

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CHAPTER-5 CONCLUSIONS AND SUGGESTIONS

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CONCLUSION

After analyzing the mutual funds under 5 categories like Equity based, Debt based, ELSS Tax Saving, Monthly Income Plans & Cash funds under 6 parameters like Standard deviation, Beta, Alpha, R Squared, Treynor Ratio & Sharpe Ratio, I have come to a conclusion that there are different funds which are performing best under different categories. No fund is the best in all the categories.

Category Equity Fund Scheme Debt Fund Scheme ELSS Tax Saver Monthly Income Plan Cash Fund

Fund ICICI Prudential Dynamic Plan- Growth HDFC HI- Short Term HDFC Tax Saver Scheme ICICI Prudential MIP Kotak Liquid Instrument

So, it can be seen that ICICI Prudential is the best in Equity Fund Scheme & Monthly Income Plan but HDFC is the best in Debt Fund Scheme & ELSS Tax Saver Scheme. Kotak is the best in Cash Fund & when the NAV of past 3 years is compared T.I.G.E.R. fund is the best fund with a NAV of 45.64 and among these 5 funds Kotak Opportunities is the best fund with an NAV of 43.72 of the past 3 years.

Investors have added to their portfolios well-managed diversified equity funds with proven track records over longer time frames. On the basis of the performance of diversified equity funds and how domestic markets are placed, risk-taking investors would do well, who hold a larger portion of their portfolio in actively managed diversified equity funds.

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SUGGESTIONS

Diversify One should diversify the investments between a few funds (the actual number depends entirely on the amount of investment). This strategy ensures that the portfolio is not dependent on the performance of one single fund. However, one needs to avoid over-diversification as that would achieve nothing. Investor can also plan like one mutual fund of diversified equity plan, second mutual fund of balanced type and third one you can plan of debt type etc. In this manner the money will get diversified, risk is reduced and the investor will get excellent profit.

For Example: Rs 20,000 per month, it would be wise to opt for a maximum of three funds. Consider well rated large-cap funds, mid-cap funds and a balanced fund. The latter would provide the debt component and reduce the portfolio's downside risk.

Dont just judge a fund by its NAV Never judge a fund on the basis of its NAV. Also have a look at the Standard Deviation, Beta, Alpha, R Squared, Treynor & Sharpe Ratios & also its performance in the bear and the bull phase, and then invest in it. Only judging a fund by its NAV, is irrelevant while selecting the fund as it is the percentage gain or loss that matters. Also look for past returns, dividend etc. the mutual fund has declared. If the investor has chosen equity or stock market related mutual fund, then he may go for SIP (Systematic Investment Plan) method. A risk adverse investor should avoid investing in the Sectoral funds.

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 New Fund Offer (NFO), a marketing device AMCs use NFOs to create excitement and push their funds. These schemes are launched because they are easy avenues to capture management fees and increase the fund house's asset base. These schemes are usually just clones of existing schemes, but with new peppy names flaunted to attract investors. It is important for investors to understand that NFOs are merely marketing devices. There are a number of existing funds that have proved their mettle and investors should opt for them because they have a track record.

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Appendix

Common Application Form

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68

Systematic Investment Plan

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Bibliography

http://amfiindia.com http://mutualfundindia.com http://valueresearchonline.com http://investopedia.com AMFI Workbook TREYNOR J.: How to Rate Management of Investment Funds, Harvard Business Review, 1965/1

SHARPE W.: Asset Allocation: Management style and Performance Measurement. The Journal of Portfolio Management, Winter 1992 Newspapers ( Economic Times , Business Line) Magazines ( Business World) Lynch, A. and D. Musto, (2002), How Investors Interpret Past Fund Returns

Brown, Stephen J. and William N. Goetzmann, 1995, \Performance Persistence," Journal of Finance, Volume 50 (2), pp. 679-698.

Elton, Edwin J., Martin J. Gruber, and Christopher R. Blake, 1996, The
persistence of risk adjusted mutual fund performance, Journal of Business 69, 133157.

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