A study on performance evaluation of equity shares & mutual funds

Performance Evaluation of Equity shares & Mutual Funds

INTRODUCTION
1.1 Executive Summary
In the current economic scenario interest rates are falling and fluctuation in the
share market has put investors in confusion. One finds it difficult to take decision on
investment. This is primarily, because of investments are risky in nature and investors
have to consider various factors before investing in investment avenues.
These factors include risk, return, volatility of shares and liquidity. The main
objective of comparing investment in equity shares with mutual fund schemes is to
analyze the performance of mutual funds with their benchmark and comparing them with
equities by using risk, return, beta and alpha as a parameter.
Historical data were taken for calculating risk, return, alpha and beta. Analysis has
done on percentage method for comparing equity shares with mutual fund schemes.
Compare to equities mutual funds are less risky with stable returns and mutual funds
gives the investor a diversified portfolio. Those who have well knowledge in equity
market they can go for equity investments rather than investing in mutual funds because
no control on the expenses made by the fund manager.
The study will guide the new investor who wants to invest in equity and mutual
fund schemes by providing knowledge about how to measure the risk and return of
particular scrip or mutual fund scheme. The study recommends new investors to go for
mutual funds rather than equities, because of high risk and market instability.

1.2 Statement of the Problem:
In the current economic scenario interest rates are falling and fluctuation in the
share market has put investors in confusion. One finds it difficult to take decision on
investment. This is primarily, because investments are risky in nature and investors have
to consider various factors before investing in investment avenues. Therefore the study
aims to compare equity and mutual fund schemes in form their risk, return & liquidity and
also creating awareness about Equity and Mutual Fund Schemes among the investors

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1.3 Objectives of the Study:
Saving money is not enough. Each of us also need to invest one’s savings intelligently in
order to have enough money available for funding the higher education of one’s children,
for buying a house, or for one’s own golden years. But the rapidly growing number of
investment avenues often led to confusion. Objectives of the study are to provide
information to individual investors regarding their risk, and choosing the best investment
options to match their goals and attitude to risk.
1. To compare Equity and Mutual Fund Schemes in respect of their risk & return.
2. Analyzing the performance of equity shares and mutual fund schemes with their
benchmark.
3. Finding the Volatility of shares by using beta.
4. Provide information about pros and cons of investing in Equity and Mutual Funds
portfolio management. The study is limited to compare equity capital and mutual fund
schemes in respect of their risk, return and liquidity. The study covers 5 randomly
selected stocks out of 30 BSE, 50 Sensex companies and 5 randomly selected mutual
fund schemes out of mutual fund industry in India for comparison. The analysis is strictly
based on share price and unit price information. Other company performance indicators
are not considered. It focuses on every month ending closing prices of during the period
from 1st Apr, 2003 to 31st Mar, 2007.

1.4 Scope of the Study
The project primarily deals with equity, derivatives, mutual funds. The scope of
the study of mutual funds is very large but my study is confined to only 4 AMC’s mutual
funds. This study confines as how mutual fund is good investment avenue for investors.
The study considers performance evaluation of mutual fund based on three measures that
are Jensen’s measures, Sharpe’s measures, and Treyor’s measures.

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1.5 Research Methodology
The whole study can be termed as comparative study. It is also a desk research
hence; there is no field work and collection of primary date for this research.
The study centres on comparing equity and mutual fund schemes in respect of
their risk, return and liquidity. However, with the objective and scope of the study in
mind, it was decided to base the study on return series of selected stocks and mutual fund
schemes.
BSE being the premier exchange of India was chosen for selecting stocks. It is
widely accepted that BSE Sensex is the one of the most reliable index of the stock
exchange that reflects present day market condition. Since it is not possible to compare all
the 30 scripts in the index with all Mutual Fund Schemes due to time and resource
constraints, sampling techniques were considered. Randomly selected samples will
facilitate inference of the population, in our case BSE Sensex and mutual fund industry in
India. Hence by stratified random sampling 5 scrip’s out of 30 Sensex and 5 mutual fund
schemes out of whole mutual fund industry were selected.
The initial examination of the composition of index revealed that it is composed
of primarily two types of industries: manufacturing and services in the ratio of 3:2. there
for to give correct picture appropriate weight was assigned to manufacturing industries
and hence three scrip’s from manufacturing and two from service industries were
randomly selected and in case of mutual funds it consists basically large cap, mid cap,
small cap, sectorial funds and contra funds therefore one fund from each area were
selected.
Monthly share price and unit prices of the selected scrip’s and units were
collected from historical data. In order to avoid bias, at least three years monthly data was
decided to be necessary. The reference period is from 1st Apr, 2003 to 31st Mar, 2007.

1.51 SOURCES OF DATA

Meaning of primary data: In primary data collection, you collect the data yourself
using methods such as interviews and questionnaires. The key point here is that the data
you collect is unique to you and your research and, until you publish, no one else has
access to it.
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Primary data: collected through face to face conversation with portfolio managers and
Brokers

Meaning of Secondary data: In research, secondary data is data collected and
possibly processed by people other than the researcher in question. Common sources of
secondary data for social science include censuses, large surveys, and organizational
records. In historical research secondary sources are summaries, collections, and
interpretations of primary sources.

Secondary data: Collected through Reports, Magazines, Publications, Newspapers,
Internet

Sampling technique:
The quality of research output and the validity of its findings depend upon
appropriateness of the sampling design selected for the study. It was needed to apply
inferential statistical analysis; hence probability sampling was chosen to be essential.

Criteria for Selecting Sampling Techniques
 It is intended to generalize the finding based on the sample examination to the
population, therefore, probability sampling adopted in order to have a
representative sample.
 Since the population is heterogeneous stratified random sampling was taken.
 Probability sampling produces high degree of precision compared to non
probability sampling.

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1.52 Sample Design
1. Relative population – 30 BSE sensitivity index companies and mutual fund
industry in India.

2. Sampling frame – list of population, elements from which sample is drawn (see the
annexure).

3. Method of sampling – stratified random sampling. Stratification or division of
population into homogeneous group was done on the basis of industry.

4. Variables – monthly calculated risk and returns were used for comparing equity and
mutual fund schemes.

b. Sample size:
Five companies and five mutual fund schemes were selected.
(Since the population is heterogeneous stratified random sampling was taken).

c. Sample Description
EQUITIES BENCHMARK
ACC LIMITED BSE SENSEX
BHEL BSE SENSEX
HERO HONDA BSE SENSEX
ICICI BANK LIMITED BSE SENSEX
INFOSIS BSE SENSEX

MUTUAL FUNDS BENCHMARK

FRANKLIN INDIA PRIMA FUND BSE 100

PRUDENTIAL ICICI MUTUAL FUND BSE 100 BSE 100

RELIANCE MUTUAL FUND BSE SENSEX

SBI MUTUAL FUND BSE 100 BSE 100

SUNDARAM SMILE FUND BSE 500

f. Limitations of the Study
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The time period for the project was limited to only one and half month and information
provided is limited to the extent of internet and journals.

 Some of the persons were not so responsive.
 Possibility of error in data collection because many of investors may have not
given actual answers of my questionnaire.
 Sample size is limited to 200 visitors of Allegro advisor private limited out of the
120 had invested in Mutual Fund.
 The sample size may not adequately represent the whole market

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THEORITICAL FRAME WORK

2.1 Background of the study:
Introduction to Equity Capital and Mutual Fund
Issue of shares is the most important method of raising capital. Finance raised by
the issue of shares serves as a financial floor to the company’s capital structure. Shares
indicate the ownership or equity interest in the assets of the company. Shares are of
different nominal or face values and of different kinds to attract different kinds of
investors. The maximum amount of capital to be raised by the issue of shares is
mentioned in the memorandum of association.

During 1990-91 and 1991-92, equity accounts for 35 to 39 percent of the total
capital raised respectively. This proportion was reversed in 1992-93, the first year of free
pricing, when the share of equity increased to 62 percent. His share of equity finance
increased to a high of 73.18 percent in 1994-95. However, in 1995-96 there is a rise in the
importance of debt largely due to the high interest rates in the economy and negative
returns from the secondary market.

The mutual fund industry in India started in 1964 with the formation of Unit Trust
of India, at the initiative of the Government of India. The 1993 SEBI Regulations were
substituted by a more comprehensive and revised Mutual Fund Regulations in 1996.

The end of millennium marks 36 years of existence of mutual funds in this
country. The ride through these 36 years is not been smooth. Investor opinion is still
divided. While some are for mutual funds others are against it. UTI commenced its
operations from July 1964.

The impetus for establishing a formal institution came from the desire to increase
the propensity of the middle and lower groups to save and to invest. UTI came in to
existence during a period marked by great political and economic turmoil that depressed
the financial market; entrepreneurs were rather hesitant to enter the capital markets.

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2.2 Concept of Equity Capital and Mutual Fund
The term Equity literally means the stock or ownership of a company. They are
also known as ordinary shares. The rate of dividend on equity shares varies according to
the amount of profit available and the intention of board of directors. In the event of
winding up of the company, equity shares can be refunded only after all other claims,
including those of preference shares for the refund of their capital, have been met.

Equity capital or financing is money raised by a business in exchange for a share
of ownership in the company. Ownership is represented by owning shares of stock
outright or having the right to convert other financial instruments into stock of that private
company. Two key sources of equity capital for new and emerging businesses are angel
investors and venture capital firms.

Equity capital is represented by funds that are raised by a business, in exchange
for a share of ownership in the company. Equity financing allows a business to obtain
funds without incurring debt, or without having to repay a specific amount of money at a
particular time.

The Equity Capital Markets Group (ECM) oversees the Firm's activities in the primary
equity and equity-linked markets, as well as monetization and equity derivatives. It
provides support in the origination of primary market transactions and manages their
structuring, syndication, marketing and distribution.

The world over, it’s been shown that over long tenures, equities–with their risk
premier–have provided approximately 7 percentage points higher returns than risk-free
options. People have to accumulate significant amounts of wealth during their working
years. Right now, a 17-year bond gives you only 5.5 per cent. So, it is imperative that
these people have some exposure to equity.

A mutual fund is a trust that pools the money of many investors – its shareholders
-- to invest in a variety of different securities. Investments may be in stocks, bonds,
money market securities or some combination of these. Those securities are
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professionally managed on behalf of the shareholders, and each investor holds a pro rata
share of the portfolio -- entitled to any profits when the securities are sold, but subject to
any losses in value as well.
A mutual fund is a group of investors operating through a fund manager to
purchase a diverse portfolio of stocks or bonds. There are myriad kinds of mutual funds,
each with its own goals and methodologies. Whether or not a mutual fund is a good
investment is a matter of much public debate, with many claiming they are excellent for
the average person, and others saying they are simply a poor way to invest.
For the individual investor, mutual funds provide the benefit of having someone
else manage your investments, take care of recordkeeping for your account, and diversify
your rupees over many different securities that may not be available or affordable to you
otherwise. Today, minimum investment requirements on many funds are low enough that
even the smallest investor can get started in mutual funds.
A mutual fund, by its very nature, is diversified -- its assets are invested in many
different securities. Beyond that, there are many different types of mutual funds with
different objectives and levels of growth potential, furthering your chances to diversify.
Many critics of mutual funds point out that scarcely over 20% of mutual funds
outperform the Standard and Poor's 500 Index. This means that nearly 80% of the time,
an investor would have been more profitable by simply buying equal shares in all 500 of
the companies currently on the S&P 500.

2.21 Schemes of Mutual funds
Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or close-ended
scheme depending on its maturity period.

Open-ended Scheme:
An open-ended fund or scheme is one that is available for subscription and
repurchase on a continuous basis. These schemes do not have a fixed maturity period.
Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices
which are declared on a daily basis. The key feature of open-end schemes is liquidity.

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Close-ended Scheme:
A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The
fund is open for subscription only during a specified period at the time of launch of the
scheme. 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 the
units 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 i.e. either repurchase facility or through listing on stock
exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

Schemes according to Investment Objective:
A scheme can also be classified as growth scheme, income scheme, or balanced
scheme considering its investment objective. Such schemes may be open-ended or close-
ended schemes as described earlier. Such schemes may be classified mainly as follows:

Growth / Equity Oriented Scheme:
The aim of growth funds is to provide capital appreciation over the medium to
long- term. Such schemes normally invest a major part of their corpus in equities. Such
funds have comparatively high risks. These schemes provide different options to the
investors like dividend option, capital appreciation, etc. and the investors may choose an
option depending on their preferences.

Income / Debt Oriented Scheme:
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, Government securities and money market instruments. Such funds are less
risky compared to equity schemes. These funds are not affected because of fluctuations in
equity markets.

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Balanced Scheme:
The aim of balanced funds is to provide both growth and regular income as such
schemes invest both in equities and fixed income securities in the proportion indicated in
their offer documents. These are appropriate for investors looking for moderate growth.
They generally invest 40-60% in equity and debt instruments. These funds are also
affected because of fluctuations in share prices in the stock markets. However, NAVs of
such funds are likely to be less volatile compared to pure equity funds.

Money Market or Liquid Fund:
These funds are also income funds and their aim is to provide easy liquidity,
preservation of capital and moderate income. These schemes invest exclusively in safer
short-term instruments such as treasury bills, certificates of deposit, commercial paper
and inter-bank call money, government securities, etc. Returns on these schemes fluctuate
much less compared to other funds. These funds are appropriate for corporate and
individual investors as a means to park their surplus funds for short periods.

Gilt Fund:
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 other economic factors as is the case with income or debt oriented schemes.

Index Funds:
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive
index, S&P NSE 50 index (Nifty), etc, these schemes invest in the securities in the same
weightage comprising of an index. NAV’s 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 disclosures in
this regard are made in the offer document of the mutual fund scheme.

Sector Specific Schemes:
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These are the funds/schemes which invest in the securities of only those sectors or
industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast
Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are
dependent on the performance of the respective sectors/industries.

Tax Saving Schemes:
These schemes offer tax rebates to the investors under specific provisions of the
Income Tax Act, 1961 as the Government offers tax incentives for investment in specified
avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the
mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-
dominantly in equities. Their growth opportunities and risks associated are like any equity
oriented scheme.

2.3 Advantages of Equity Capital and Mutual Fund:

Advantages of Equity Capital:
1. High dividend and high value:-
In times of prosperity, the equity shareholders get a very high rate of dividend,
sufficiently higher than that on preference shares. At the same time, their share value will
also go up in the market.

2. Voting rights:-
It is only the equity shareholders who enjoy voting rights on all the policy matters
of the company.

3. Pre-emptive right to new shares:-
Equity shareholders have the pre-emptive right to purchase new shares. Under the
provisions of the companies act, the existing shareholders of the company have a right to
allotment of newly issued shared.

4. Many privileges and rights:-
Equity shareholders enjoy many privileges and rights. For example, they can vote

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at meetings, elect directors, control the directors to run the company efficiently and
profitably, look into the books and records of the company and transfer or sell their
shareholdings.
2.31 Advantages of Mutual Fund:

1. Professional Investment Management:-
By pooling the funds of thousands of investors, mutual funds provide full-time,
high-level professional management that few individual investors can afford to obtain
independently. Such management is vital to achieving results in today's complex markets.
Your fund managers' interests are tied to yours, because their compensation is based not
on sales commissions, but on how well the fund performs.

2. Diversification:-
Mutual funds invest in a broad range of securities. This limits investment risk by
reducing the effect of a possible decline in the value of any one security. Mutual fund
shareowners can benefit from diversification techniques usually available only to
investors wealthy enough to buy significant positions in a wide variety of securities.

3. Low Cost:-
If you tried to create your own diversified portfolio of 50 stocks, you'd need at
least Rs.1, 00,000 and you'd pay thousands of rupees in commissions to assemble your
portfolio. A mutual fund lets you participate in a diversified portfolio for as little as
Rs.10, 000, and sometimes less. And if you buy a no-load fund, you pay or no sale
charges to own them.

4. Convenience and Flexibility:-
You own just one security rather than many, yet enjoy the benefits of a diversified
portfolio and a wide range of services. Fund managers decide what securities to trade, clip
the bond coupons, collect the interest payments and see that your dividends on portfolio
securities are received and your rights exercised.

5. Quick, Personalized Service:-
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Most funds now offer extensive websites with a host of shareholder services for
immediate access to information about your fund account. Or a phone call puts you in
touch with a trained investment specialist at a mutual fund company who can provide
information you can use to make your own investment choices, assist you with buying
and selling your fund shares.

6. Ease of Investing:-
You may open or add to your account and conduct transactions or business with
the fund by mail, telephone or bank wire. You can even arrange for automatic monthly
investments by authorizing electronic fund transfers from your checking account in any
amount and on a date you choose.

7. Total Liquidity, Easy Withdrawal:-
You can easily redeem your shares anytime you need cash by letter, telephone,
bank wire or check, depending on the fund. Your proceeds are usually available within a
day or two.

8. Life Cycle Planning:-
With no-load mutual funds, you can link your investment plans to future
individual and family needs -- and make changes as your life cycles change. You can
invest in growth funds for future college tuition needs, then move to income funds for
retirement, and adjust your investments as your needs change throughout your life.

9. Market Cycle Planning:-
For investors who understand how to actively manage their portfolio, mutual fund
investments can be moved as market conditions change. You can place your funds in
equities when the market is on the upswing and move into money market funds on the
downswing or take any number of steps to ensure that your investments are meeting your
needs in changing market climates.

10. Investor Information:-

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Shareholders receive regular reports from the funds, including details of
transactions on a year-to-date basis. The current net asset value of your shares (the price
at which you may purchase or redeem them) appears in the mutual fund price listings of
daily newspapers. You can also obtain pricing and performance results for the all mutual
funds at this site, or it can be obtained by phone from the fund.
11. Periodic Withdrawals:-
If you want steady monthly income, many funds allow you to arrange for monthly
fixed checks to be sent to you, first by distributing some or all of the income and then, if
necessary, by dipping into your principal.

12. Dividend Options:-
You can receive all dividend payments in cash. Or you can have them reinvested
in the fund free of charge, in which case the dividends are automatically compounded.
This can make a significant contribution to your long-term investment results.

13. Automatic Direct Deposit:-
You can usually arrange to have regular, third-party payments -- such as Social
Security or pension checks -- deposited directly into your fund account. This puts your
money to work immediately, without waiting to clear your checking account, and it saves
you from worrying about checks being lost in the mail.

14. Recordkeeping Service:-
With your own portfolio of stocks and bonds, you would have to do your own
recordkeeping of purchases, sales, dividends, interest, short-term and long term gains and
losses. Mutual funds provide confirmation of your transactions and necessary tax forms to
help you keep track of your investments and tax reporting.

15. Safekeeping:-
When you own shares in a mutual fund, you own securities in many companies
without having to worry about keeping stock certificates in safe deposit boxes or sending
them by registered mail. You don't even have to worry about handling the mutual fund

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stock certificates; the fund maintains your account on its books and sends you periodic
statements keeping track of all your transactions.

16. Retirement and College Plans:-
Mutual funds are well suited to Individual Retirement Accounts and most funds
offer IRA-approved prototype and master plans for individual retirement accounts (IRAs)
and Keogh, 403(b), SEP-IRA and 401(k) retirement plans.

17. Online Services:-
The internet provides a fast, convenient way for investors to access financial
information. A host of services are available to the online investor including direct access
to no-load companies. Visit Company Links to access these Companies.

18. Sweep Accounts:-
With many funds, if you choose not to reinvest your stock or bond fund dividends,
you can arrange to have them swept into your money market fund automatically. You get
all the advantages of both accounts with no extra effort.

19. Asset Management Accounts:-
These master accounts, available from many of the larger fund groups, enable you
to manage all your financial service needs under a single umbrella from unlimited check
writing and automatic bill paying to discount brokerage and credit card accounts.

2.32 Disadvantages of Equity Capital and Mutual Fund
Disadvantages of Equity Capital:

1. No refund of capital:-

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Since equity shares cannot be refunded, excessive issue of such shares may leads
to overcapitalization, particularly when the earning capacity of the company declining.

2. Benefits only in prosperity:-
During the periods of prosperity, the company has to distribute heavy dividends
on these shares.

3. Manipulation of control:-
Since the equity shares have proportionate voting power, the company’s
management may be vitiated by manipulation of votes, clique-formation, abuse of proxy
rights etc.

4. High risk:-
Equity share holders cannot claim dividend as a matter of right, because the
decision to fit the rate of dividend on equity shares is vested in the Board of Directors.
Therefore investors as a class may find equity shares unsafe, unattractive and
unremunerated.

5. Unhealthy Speculation:-
During the period of boom, the market value of shares will go up, which leads to
unhealthy speculation in the stock market.

Disadvantages of Mutual Fund:
There are certainly some benefits to mutual fund investing, but you should also be
aware of the drawbacks associated with mutual funds.

1. No Insurance:-
Mutual funds, although regulated by the government, are not insured against
losses. The Federal Deposit Insurance Corporation (FDIC) only insures against certain
losses at banks, credit unions, and savings and loans, not mutual funds. That means that
despite the risk-reducing diversification benefits provided by mutual funds, losses can
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occur, and it is possible (although extremely unlikely) that you could even lose your
entire investment.

2. Dilution:-
Although diversification reduces the amount of risk involved in investing in
mutual funds, it can also be a disadvantage due to dilution. For example, if a single
security held by a mutual fund doubles in value, the mutual fund itself would not double
in value because that security is only one small part of the fund's holdings. By holding a
large number of different investments, mutual funds tend to do neither exceptionally well
nor exceptionally poorly.

3. Fees and Expenses:-
Most mutual funds charge management and operating fees that pay for the fund's
management expenses (usually around 1.0% to 1.5% per year). In addition, some mutual
funds charge high sales commissions, 12b-1 fees, and redemption fees. And some funds
buy and trade shares so often that the transaction costs add up significantly. Some of these
expenses are charged on an ongoing basis, unlike stock investments, for which a
commission is paid only when you buy and sell (see Investor Guide University: Fees and
Expenses).

4. Poor Performance:-
Returns on a mutual fund are by no means guaranteed. In fact, on average, around
75% of all mutual funds fail to beat the major market indexes, like the S&P 500, and a
growing number of critics now question whether or not professional money managers
have better stock-picking capabilities than the average investor.

5. Loss of Control:-
The managers of mutual funds make all of the decisions about which securities to
buy and sell and when to do so. This can make it difficult for you when trying to manage
your portfolio. For example, the tax consequences of a decision by the manager to buy or
sell an asset at a certain time might not be optimal for you. You also should remember
that you trust someone else with your money when you invest in a mutual fund.

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6. Trading Limitations:-
Although mutual funds are highly liquid in general, most mutual funds (called
open-ended funds) cannot be bought or sold in the middle of the trading day. You can
only buy and sell them at the end of the day, after they've calculated the current value of
their holdings.

7. Size:-
Some mutual funds are too big to find enough good investments. This is
especially true of funds that focus on small companies, given that there are strict rules
about how much of a single company a fund may own. If a mutual fund has $5 billion to
invest and is only able to invest an average of $50 million in each, then it needs to find at
least 100 such companies to invest in as a result, the fund might be forced to lower its
standards when selecting companies to invest in.

8. Inefficiency of Cash Reserves:-
Mutual funds usually maintain large cash reserves as protection against a large
number of simultaneous withdrawals. Although this provides investors with liquidity, it
means that some of the fund's money is invested in cash instead of assets, which tends to
lower the investor's potential return.

9. Different Types:-
The advantages and disadvantages listed above apply to mutual funds in general.
However, there are over 10,000 mutual funds in operation, and these funds vary greatly
according to investment objective, size, strategy, and style. Mutual funds are available for
virtually every investment strategy (e.g. value, growth), every sector (e.g. biotech,
internet), and every country or region of the world. So even the process of selecting a
fund can be tedious.

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PROFILE OF ALLEGRO ADVISORS PVT LTD

3.1 Introduction: Allegro Capital Advisors Put Ltd. One of the oldest and largest
broking firms in the Industry. The company’s offerings include stock broking through the
branch and Internet, Investments in IPO, Mutual funds and Portfolio management service.
Allegro Capital Advisors Pvt. Ltd. has a full-fledged research division involved in Macro
Economic studies, Sect oral research and Company Specific Equity Research combined
with a strong and well networked sales force which helps deliver current and up to date
market information and news. Kotak Securities’ network spans over 112 cities with 351
outlets, with an employee workforce beyond 5100.

The company is also a depository participant with National Securities Depository
Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual
benefit services wherein the investors can avail the company’s brokerage services for
executing the transactions and the depository services for settling them. Allegro Capital
Advisors Pvt. Ltd processes more than 4, 00,000 trades a day which is much higher even
than some of the renowned international brokers.

Allegro Capital Advisors Pvt. Ltd. has over Rs. 3300 crore of Assets Under
Management (AUM) as of 31st March, 2009. The portfolio Management Service
provides top class service, catering to the high end of the market. Portfolio Management
from Allegro Capital Advisors Pvt. Ltd. comes as an answer to those who would like to
grow exponentially on the crest of the stock market, with the backing of an expert. Unlike
many other companies, Allegro Capital Advisors Pvt. Ltd. has a Centralised Risk
Management System and an in-house Research Team which allows it to offer the same
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levels of service to customers across all locations. Allegro Capital Advisors Pvt. Ltd has
been the first in providing many products and services which have now become industry
standards.

• Facility of Margin Finance to the customers
• Investing in IPOs and Mutual Funds on the phone
• SMS alerts before execution of depository transactions
• Mobile application to track portfolios
• Auto Invest - A systematic investing plan in Equities and Mutual funds

MANAGEMENT TEAM

al Kashyap -
Chairman and
CEO
Kunal Kashyap - Chairman and CEO

H.R.I.H.E. HASSAN
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3.2 EQUITY TRADING
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Trading is super-fast, extremely safe and highly secure at Allegro Capital Advisors
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franchisee. There is no fee for opening a DP account with Allegro Capital Advisors Pvt. Ltd.
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However a nominal deposit (refundable) is charged towards services, which are adjusted
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"Mutual Fund" section provides exhaustive information on various mutual fund
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H.R.I.H.E. HASSAN
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Track domestic and international stock indices with "Indices at a Glance". Get
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o ANALYSIS OF DATA & INTERPRETATIONS
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Calculation of Return and Risk of Selected Mutual Fund Schemes and
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their Bench Marks
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1. BSE SENSEX: Calculation of Return and Standard Deviation
M
DATE SCRIP RETURN IN R-R1 (R-R1)2
B
VALUE %
A
31/01/2008 13827.77 -
fr
28/02/2008 14124.36 2.14 3.23 10.46
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31/03/2008 13013.74 -7.86 -6.77 45.83
30/04/2008
m 12811.93 -1.55 -0.46 0.21
31/05/2008
X 13987.77 9.18 10.27 105.47
30/06/2008
L 14610.28 4.46 5.55 30.80
31/07/2008 14685.16 0.51 1.6 2.56
R
H.R.I.H.E. HASSAN
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31/08/2008 15344.02 4.48 5.57 31.02
30/09/2008 15401.99 0.37 1.46 2.13
31/10/2008 17356.99 12.69 13.78 189.88
30/11/2008 20130.23 15.98 17.07 291.38
31/12/2008 19547.09 -2.89 1.8 3.24
31/01/2009 20325.27 3.98 5.07 25.70
29/02/2009 17820.67 -12.32 -11.23 126.11
31/03/2009 17227.56 -3.32 -2.23 4.97
30/04/2009 15771.72 -8.45 -7.36 54.16
31/05/2009 17560.15 11.33 12.42 154.25
30/06/2009 16591.46 -5.51 -4.42 19.53
31/07/2009 13480.02 -18.75 -7.66 311.87
31/08/2009 14064.26 8.34 9.43 88.92
30/09/2009 14412.99 2.47 3.56 12.67
31/10/2009 13006.72 -9.75 -8.66 74.99
30/11/2009 10209.37 -21.50 -20.41 416.56
31/12/2009 9162.94 -10.24 -9.15 83.72
TOTAL -26.21 2086.43

Bench Mark Return and Risk (BSE Sensex)

Return = (P1 /P0 X 100)-100

Where, P1 = Current month price,
P0 = Previous month price
R1 = , where n=number of months.
R1 = -26.21/24
= -1.09

SD= ∑(R-R1)2/n

= 2086.43/24

=9.32

H.R.I.H.E. HASSAN
30


2. BSE 100:
Calculation of Return and Standard Deviation

DATE SCRIP VALUE RETURN IN % R-R1 (R-R1)2
31/01/2008 6999.7
28/02/2008 7163.28 2.34 3.51 12.32
31/03/2008 6553.79 -8.51 -7.34 53.82
30/04/2008 6464.11 -1.37 -0.20 0.04
31/05/2008 7096.51 9.78 10.96 120.03
30/06/2008 7502.26 5.72 6.89 47.47
31/07/2008 7626.47 1.66 2.83 8.00
31/08/2008 7936.68 4.07 5.24 27.46
30/09/2008 7894.18 -0.54 0.64 0.41
31/10/2008 8989.89 13.88 15.05 226.58
30/11/2008 10531.27 17.15 18.32 335.56

H.R.I.H.E. HASSAN
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31/12/2008 10488.02 -0.41 0.76 0.58
31/01/2009 11186.45 6.66 7.83 61.34
29/02/2009 9519.26 -14.90 -13.73 188.54
31/03/2009 9229.75 -3.04 -1.87 3.49
30/04/2009 8295.01 -10.13 -8.95 80.19
31/05/2009 9334.8 12.54 13.71 187.90
30/06/2009 8762.16 -6.13 -4.96 24.62
31/07/2009 7047.26 -19.57 -18.40 338.53
31/08/2009 7352.68 4.33 5.51 30.32
30/09/2009 7552.13 2.71 3.89 15.09
31/10/2009 6761.37 -10.47 -9.30 86.45
30/11/2009 5146.07 -23.89 -22.72 516.09
31/12/2009 4631.07 -10.01 -8.84 78.06
TOTAL -28.14 2442.89

Bench Mark Return and Risk (BSE 100)

Return = (P1 /P0 *100)-100

R1 = -28.14/24
= -1.17
SD= ∑(R-R1)2/n

= 2442.89/24

=10.08

H.R.I.H.E. HASSAN
32


3. BSE 500:
Calculation of Return and Standard Deviation

31/01/2008 5269.98
28/02/2008 5425.12 2.94 4.28 18.33
31/03/2008 4955.28 -8.66 -7.32 53.63
30/04/2008 4877.65 -1.57 -0.23 0.05
31/05/2008 5354.63 9.78 11.12 123.56
30/06/2008 5669.8 5.89 7.22 52.17
31/07/2008 5796.78 2.24 3.58 12.79
31/08/2008 6016.93 3.80 5.13 26.37
30/09/2008 5975.41 -0.69 0.65 0.42
31/10/2008 6792.93 13.68 15.02 225.55
30/11/2008 7880.34 16.01 17.35 300.85
H.R.I.H.E. HASSAN
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31/12/2008 7943.25 0.80 2.14 4.56
31/01/2009 8620.1 8.52 9.86 97.18
29/02/2009 7216.35 -16.28 -14.95 223.43
31/03/2009 6991.67 -3.11 -1.78 3.16
30/04/2009 6197.26 -11.36 -10.03 100.50
31/05/2009 6977.67 12.59 13.93 194.04
30/06/2009 6525.63 -6.48 -5.14 26.43
31/07/2009 5224.8 -19.93 -18.60 345.85
31/08/2009 5441.26 4.14 5.48 30.03
30/09/2009 5588.18 2.70 4.04 16.30
31/10/2009 4942.68 -11.55 -10.21 104.33
30/11/2009 3691.04 -25.32 -23.99 575.33
31/12/2009 3313.97 -10.22 -8.88 78.83

TOTAL -32.09 2613.71

Bench Mark Return and Risk (BSE 500)

Return = (P1 /P0 *100)-100

R1 = -32.09/24
= -1.33
SD= ∑(R-R1)2/n

= 2613.71/24

=10.43

H.R.I.H.E. HASSAN
34


1. Reliance Vision Fund:-

Reliance Vision Fund is large cap open ended growth fund. Its objective is to
achieve long term growth of capital through a research based investment approach.
Monthly risk and return from 30th Apr 2003 to 31st Mar 2007 is calculated below.
Return=P1 /P0 *100
R1 = ∑R/n, = -17.52/24, = -0.73
Where n=number of months.
SD = ∑ (R- R1)2 /n, = 2078.95./24
SD = 9.30

Calculation of Beta
B = [ ∑(Ra –Ra1)(Rm-Rm1)]/∑(Rm-Rm1)2
H.R.I.H.E. HASSAN
35


Where Ra = Return on Company, Ra1= Average return on company
Rm= Return on market, Rm1= Average return on market
= 244.29/2086.44
B = 0.11

Calculation of Alpha
Alpha = (Ra1 - Rm1)*B
= (-0.76-(-1.14)*0.11
=0.04

Calculation of Risk and Return

31/01/2008 184.14
28/02/2008 171.42 -6.91 -6.18 38.17
31/03/2008 169.69 -1.01 -0.28 0.08
30/04/2008 183.8 8.32 9.05 81.81
31/05/2008 200 8.81 9.54 91.08
30/06/2008 207.32 3.66 4.39 19.27
31/07/2008 219.24 5.75 6.48 41.98
31/08/2008 214.28 -2.26 -1.53 2.35
30/09/2008 235.29 9.80 10.53 110.98
31/10/2008 268.3 14.03 14.76 217.84
30/11/2008 264.45 -1.43 -0.71 0.50

H.R.I.H.E. HASSAN
36


31/12/2008 287.66 8.78 9.51 90.38
31/01/2009 246.44 -14.33 -13.60 184.95
29/02/2009 240.47 -2.42 -1.69 2.86
31/03/2009 206.12 -14.28 -13.55 183.73
30/04/2009 221.46 7.44 8.17 66.78
31/05/2009 211.84 -4.34 -3.61 13.06
30/06/2009 172.06 -18.78 -18.05 325.75
31/07/2009 184.29 7.11 7.84 61.43
31/08/2009 186.23 1.05 1.78 3.18
30/09/2009 167.54 -10.04 -9.31 86.60
31/10/2009 133.54 -20.29 -19.56 382.74
30/11/2009 128.82 -3.53 -2.80 7.87
31/12/2009 138.31 7.37 8.10 65.56
TOTAL -17.52 2078.95

Calculation of Beta

Return of return of (Ra-Ra1)(Rm- (Rm-
Date company Ra-Ra1 market Rm-Rm1 Rm1) Rm1)2
28/02/2008
-6.91 -6.15 2.14 3.28 -20.16 10.76
31/03/2008
-1.01 -0.25 -7.86 -6.72 1.67 45.16
30/04/2008
8.32 9.08 -1.55 -0.41 -3.73 0.17
31/05/2008
8.81 9.57 9.18 10.32 98.78 106.49
30/06/2008
3.66 4.42 4.46 5.60 24.76 31.36
31/07/2008
5.75 6.51 0.51 1.65 10.74 2.72
31/08/2008
-2.26 -1.50 4.48 5.62 -8.42 31.58
30/09/2008
9.8 10.56 0.37 1.51 15.94 2.28
31/10/2008
14.03 14.79 12.69 13.83 204.56 191.26
30/11/2008
-1.43 -0.67 15.98 17.12 -11.44 293.08

H.R.I.H.E. HASSAN
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31/12/2008
8.78 9.54 -2.89 -1.75 -16.70 3.06
31/01/2009
-14.33 -13.57 3.98 5.12 -69.46 26.21
29/02/2009
-2.42 -1.66 -12.32 -11.18 18.54 125.00
31/03/2009
-14.28 -13.52 -3.32 -2.18 29.48 4.75
30/04/2009
7.44 8.20 -8.45 -7.31 -59.96 53.44
31/05/2009
-4.34 -3.58 11.33 12.47 -44.62 155.49
30/06/2009
-18.78 -18.02 -5.51 -4.37 78.75 19.10
31/07/2009
7.11 7.87 -18.75 -17.61 -138.62 310.13
31/08/2009
1.05 1.81 8.34 9.48 17.17 89.86
30/09/2009
-10.04 -9.28 2.47 3.61 -33.49 13.03
31/10/2009
-20.29 -19.53 -9.75 -8.61 168.15 74.14
30/11/2009
-3.53 -2.77 -21.5 -20.36 56.36 414.55
31/12/2009
7.37 8.13 -10.24 -9.10 -74.00 82.82
TOTAL
-17.52 -26.21 244.29 2086.44

2. Franklin India Prima Fund:-

Franklin India Prima Fund is mid cap open ended growth fund. Its objective is to achieve
long term growth of capital through a research based investment approach. Monthly risk
and return from 30th Apr 2003 to 31st Mar 2007 is calculated below.
Return=P1 /P0 *100
R1 = ∑R/n, = -64.98/24, = -2.70
SD = ∑ (R- R1)2 /n, = 3044.07/24
SD = 11.26

Calculation of Beta
B = [ ∑(Ra –Ra1)(Rm-Rm1)]/∑(Rm-Rm1)2
H.R.I.H.E. HASSAN
38


= 497.41/2442.98
B = 0.20

= (-2.83-(-1.22)*0.20
= -0.32

Calculation of Risk and Return

31/01/2008 60.23
28/02/2008 54.27 -9.90 -7.19 51.67
31/03/2008 51.93 -4.31 -1.60 2.57
30/04/2008 55.45 6.78 9.49 89.98
31/05/2008 60.52 9.14 11.85 140.44
30/06/2008 63.14 4.33 7.04 49.51
31/07/2008 58.52 -7.32 -4.61 21.25
31/08/2008 58.06 -0.79 1.92 3.69
30/09/2008 62.38 7.44 10.15 102.98
31/10/2008 67 7.41 10.11 102.29

H.R.I.H.E. HASSAN
39


30/11/2008 69.82 4.21 6.92 47.84
31/12/2008 80.02 14.61 17.32 299.86
31/01/2009 64.39 -19.53 -16.83 283.09
29/02/2009 61.44 -4.58 -1.87 3.51
31/03/2009 52.43 -14.66 -11.96 142.98
30/04/2009 55.48 5.82 8.52 72.67
31/05/2009 52.74 -4.94 -2.23 4.98
30/06/2009 37.14 -29.58 -26.87 722.08
31/072009 38.97 4.93 7.63 58.29
31/08/2009 40.31 3.44 6.15 37.77
30/09/2009 35.52 -11.88 -9.18 84.19
31/10/2009 26.14 -26.41 -23.70 561.70
30/11/2009 24.05 -8.00 -5.29 27.96
31/12/2009 26.17 8.81 11.52 132.77
TOTAL -64.98 3044.07

Calculation of Beta

Return of return of (Ra-Ra1)(Rm- (Rm-
28/02/2008
-9.9 -7.07 2.34 3.56 -25.21 12.70
31/03/2008
-4.31 -1.48 -8.51 -7.29 10.82 53.09
30/04/2008
6.78 9.61 -1.37 -0.15 -1.41 0.02
31/05/2008
9.14 11.97 9.78 11.00 131.66 121.08
30/06/2008
4.33 7.16 5.72 6.94 49.68 48.21
31/07/2008
-7.32 -4.49 1.66 2.88 -12.96 8.31
31/08/2008
-0.79 2.04 4.07 5.29 10.77 28.02
30/09/2008
7.44 10.27 -0.54 0.68 7.02 0.47
31/10/2008
7.41 10.24 13.88 15.10 154.59 228.12

H.R.I.H.E. HASSAN
40


30/11/2008
4.21 7.04 17.15 18.37 129.26 337.58
31/12/2008
14.61 17.44 -0.41 0.81 14.18 0.66
31/01/2009
-19.53 -16.70 6.66 7.88 -131.69 62.15
29/02/2009
-4.58 -1.75 -14.9 -13.68 24.00 187.05
31/03/2009
-14.66 -11.83 -3.04 -1.82 21.50 3.30
30/04/2009
5.82 8.65 -10.13 -8.91 -77.00 79.33
31/05/2009
-4.94 -2.11 12.54 13.76 -29.11 189.43
30/06/2009
-29.58 -26.75 -6.13 -4.91 131.27 24.07
31/07/2009
4.93 7.76 -19.57 -18.35 -142.28 336.59
31/08/2009
3.44 6.27 4.33 5.55 34.79 30.84
30/09/2009
-11.88 -9.05 2.71 3.93 -35.62 15.47
31/10/2009
-26.41 -23.58 -10.47 -9.25 218.08 85.50
30/11/2009
-8 -5.17 -23.89 -22.67 117.29 513.77
31/12/2009
8.81 11.64 -10.01 -8.79 -102.23 77.20
TOTAL
-64.98 -28.14 497.41 2442.98

3. Prudential ICICI FMCG Plan
Prudential ICICI FMCG Plan is sector open ended growth fund. Its objective is to achieve
long term growth of capital through a research based investment approach. Monthly risk
and return from 30th Apr 2003 to 31st Mar 2007 is calculated below.
Return=P1 /P0 *100
R1 = ∑R/n, = -19.08/24, = -0.79
SD = ∑ (R- R1)2 /n, = 1466.14/24
SD = 7.81

Calculation of Beta

H.R.I.H.E. HASSAN
41


B = [ ∑(Ra –Ra1)(Rm-Rm1)]/∑(Rm-Rm1)2
= 207.48/2442.98
B = 0.08

= (-0.83-(-1.22)*0.08
= 0.03

Calculation of Return and Risk

31/01/2008 41.61
28/02/2008 39.42 -5.26 -4.47 19.97
31/03/2008 39.07 -0.89 -0.09 0.01
30/04/2008 38.74 -0.84 -0.05 0.00
31/05/2008 41.98 8.36 9.16 83.87
30/06/2008 42.45 1.12 1.91 3.66
31/07/2008 44.05 3.77 4.56 20.83
31/08/2008 44.47 0.95 1.75 3.06

H.R.I.H.E. HASSAN
42


30/09/2008 46.92 5.51 6.30 39.74
31/10/2008 48.61 3.60 4.40 19.33
30/11/2008 48.98 0.76 1.56 2.42
31/12/2008 57.77 17.95 18.74 351.22
31/01/2009 50.32 -12.90 -12.10 146.44
29/02/2009 48.58 -3.46 -2.66 7.09
31/03/2009 46.52 -4.24 -3.45 11.87
30/04/2009 49.96 7.39 8.19 67.07
31/05/2009 47.86 -4.20 -3.41 11.62
30/06/2009 41.01 -14.31 -13.52 182.73
31/07/2009 40.1 -2.22 -1.42 2.03
31/08/2009 41.29 2.97 3.76 14.16
30/09/2009 37.47 -9.25 -8.46 71.52
31/10/2009 29.91 -20.18 -19.38 375.64
30/11/2009 30.66 2.51 3.30 10.91
31/12/2009 31.82 3.78 4.58 20.96
TOTAL -19.08 1466.14

Calculation of Beta

(Ra-Ra1)
Return of return of (Rm- (Rm-
28/02/2008
-5.26 -4.43 2.34 3.56 -15.79 12.70
31/03/2008
-0.89 -0.06 -8.51 -7.29 0.44 53.09
30/04/2008
-0.84 -0.01 -1.37 -0.15 0.00 0.02
31/05/2008
8.36 9.19 9.78 11.00 101.12 121.08
30/06/2008
1.12 1.95 5.72 6.94 13.54 48.21
31/07/2008
3.77 4.60 1.66 2.88 13.26 8.31

H.R.I.H.E. HASSAN
43


31/08/2008
0.95 1.78 4.07 5.29 9.42 28.02
30/09/2008
5.51 6.34 -0.54 0.68 4.33 0.47
31/10/2008
3.6 4.43 13.88 15.10 66.90 228.12
30/11/2008
0.76 1.59 17.15 18.37 29.21 337.58
31/12/2008
17.95 18.78 -0.41 0.81 15.28 0.66
31/01/2009
-12.9 -12.07 6.66 7.88 -95.16 62.15
29/02/2009
-3.46 -2.63 -14.9 -13.68 35.98 187.05
31/03/2009
-4.24 -3.41 -3.04 -1.82 6.20 3.30
30/04/2009
7.39 8.22 -10.13 -8.91 -73.21 79.33
31/05/2009
-4.2 -3.37 12.54 13.76 -46.39 189.43
30/06/2009
-14.31 -13.48 -6.13 -4.91 66.14 24.07
31/07/2009
-2.22 -1.39 -19.57 -18.35 25.51 336.59
31/08/2009
2.97 3.80 4.33 5.55 21.10 30.84
30/09/2009
-9.25 -8.42 2.71 3.93 -33.12 15.47
31/10/2009
-20.18 -19.35 -10.47 -9.25 178.92 85.50
30/11/2009
2.51 3.34 -23.89 -22.67 -75.70 513.77
31/12/2009
3.78 4.61 -10.01 -8.79 -40.50 77.20
TOTAL
-19.08 -28.14 207.48 2442.98

4. Sundaram S.M.I.L.E. Fund
Sundaram S.M.I.L.E. Fund is Mid cap open ended growth fund. Its objective is to achieve
capital appreciation by investing in diversified stocks that are generally termed as 'Small
and Midcaps' and by investing in other equities. Monthly risk and return from 28th Feb
2006 to 31st Mar 2007 is calculated below.
Return=P1 /P0 *100
R1 = ∑R/n, = -11.22/24, = -0.46
SD = ∑ (R- R1)2 /n, = 3331.85./24

H.R.I.H.E. HASSAN
44


SD = 11.78

Calculation of Beta
B = [∑ (Ra –Ra1) (Rm-Rm1)]/∑ (Rm-Rm1)2
= 34.13/2613.17
B = 0.01

= (-0.49-(-1.40))*0.01
=-0.009


31/01/2008 19.29
28/02/2008 17.34 -10.11 -9.64 92.95
31/03/2008 17.07 -1.56 -1.09 1.19
30/04/2008 18.12 6.15 6.62 43.81
31/05/2008 19.33 6.68 7.15 51.06
30/06/2008 20.18 4.40 4.86 23.67
31/07/2008 20.97 3.91 4.38 19.21
H.R.I.H.E. HASSAN
45


31/08/2008 20.82 -0.72 -0.25 0.06
30/09/2008 24.5 17.68 18.14 329.17
31/10/2008 29.17 19.06 19.53 381.38
30/11/2008 30.44 4.35 4.82 23.25
31/12/2008 34.07 11.93 12.39 153.58
31/01/2009 27.07 -20.55 -20.08 403.14
29/02/2009 26.73 -1.26 -0.79 0.62
31/03/2009 22.93 -14.22 -13.75 189.02
30/04/2009 25.58 11.56 12.02 144.59
31/05/2009 24.47 -4.34 -3.87 14.99
30/06/2009 20.06 -18.02 -17.55 308.16
31/07/2009 21.25 5.93 6.40 40.96
31/08/2009 19.13 -9.98 -9.51 90.42
30/09/2009 13.86 -27.55 -27.08 733.37
31/10/2009 12.91 -6.85 -6.39 40.79
30/11/2009 12.55 -2.79 -2.32 5.39
31/12/2009 14.44 15.06 15.53 241.10
TOTAL -11.22 3331.85

Calculation of Beta
Return of return of Rm- (Ra-Ra1)(Rm- (Rm-
Date company Ra-Ra1 market Rm1 Rm1) Rm1)2
28/02/2008
-10.11 -9.62 2.94 4.34 -41.71 18.79
31/03/2008
-1.56 -1.07 -8.66 -7.26 7.79 52.78
30/04/2008
6.15 6.64 -1.57 -0.17 -1.16 0.03
31/05/2008
6.68 7.17 9.78 11.18 80.10 124.89
30/06/2008
4.4 4.89 5.89 7.29 35.61 53.07
31/07/2008
3.91 4.40 2.24 3.64 15.99 13.21
31/08/2008
-0.72 -0.23 3.8 5.20 -1.21 26.99

H.R.I.H.E. HASSAN
46


30/09/2008
17.68 18.17 -0.69 0.71 12.81 0.50
31/10/2008
19.06 19.55 13.68 15.08 294.69 227.26
30/11/2008
4.35 4.84 16.01 17.41 84.20 302.94
31/12/2008
11.93 12.42 0.8 2.20 27.26 4.82
31/01/2009
-20.55 -20.06 8.52 9.92 -198.92 98.31
29/02/2009
-1.26 -0.77 -16.28 -14.88 11.49 221.56
31/03/2009
-14.22 -13.73 -3.11 -1.71 23.55 2.94
30/04/2009
11.56 12.05 -11.36 -9.96 -120.05 99.30
31/05/2009
-4.34 -3.85 12.59 13.99 -53.87 195.59
30/06/2009
-18.02 -17.53 -6.48 -5.08 89.15 25.86
31/07/2009
5.93 6.42 -19.93 -18.53 -118.95 343.54
31/08/2009
-9.98 -9.49 4.14 5.54 -52.54 30.64
30/09/2009
-27.55 -27.06 2.7 4.10 -110.83 16.77
31/10/2009
-6.85 -6.36 -11.55 -10.15 64.61 103.12
30/11/2009
-2.79 -2.30 -25.32 -23.92 55.08 572.40
31/12/2009
15.06 15.55 -10.22 -8.82 -137.21 77.88
TOTAL
-11.22 -32.09 -34.13 2613.17

5. SBI MSFU CONTRA

SBI MSFU CONTRA is open ended growth fund. Its objective is to achieve capital
appreciation by investing in diversified stocks. Monthly risk and return from 31st May
2006 to 31st Mar 2007 is calculated below.
Return=P1 /P0 *100
R1 = ∑R/n, = -14.38/24, = -0.59
SD = ∑ (R- R1)2 /n, = 1424.86/24
H.R.I.H.E. HASSAN
47


SD = 7.70

Calculation of Beta
B = [∑ (Ra –Ra1) (Rm-Rm1)]/∑ (Rm-Rm1)2
= 197.92/2442.98
B = 0.08

= (-0.63-(-1.22))*0.08
=-0.04


31/01/2008 36.15
28/02/2008 33.88 -6.28 -5.68 32.27
31/03/2008 33.84 -0.12 0.48 0.23
30/04/2008 35.82 5.85 6.45 41.60
31/05/2008 37.61 5.00 5.60 31.32
30/06/2008 37.61 0.00 0.60 0.36
31/07/2008 39.35 4.63 5.23 27.30

H.R.I.H.E. HASSAN
48


31/08/2008 39.17 -0.46 0.14 0.02
30/09/2008 43.14 10.14 10.73 115.22
31/10/2008 48.21 11.75 12.35 152.56
30/11/2008 48.59 0.79 1.39 1.92
31/12/2008 52.48 8.01 8.60 74.04
31/01/2009 45.13 -14.01 -13.41 179.73
29/02/2009 45.18 0.11 0.71 0.50
31/03/2009 40.67 -9.98 -9.38 88.05
30/04/2009 42.84 5.34 5.93 35.22
31/05/2009 40.88 -4.58 -3.98 15.81
30/06/2009 35.52 -13.11 -12.51 156.56
31/07/2009 37.08 4.39 4.99 24.91
31/08/2009 37.53 1.21 1.81 3.29
30/09/2009 34.44 -8.23 -7.63 58.28
31/10/2009 28.18 -18.18 -17.58 308.97
30/11/2009 27.03 -4.08 -3.48 12.12
31/12/2009 29.04 7.44 8.04 64.56
TOTAL -14.38 1424.86

Calculation of Beta

Return of return of Rm- (Ra-Ra1)(Rm- (Rm-
Date company Ra-Ra1 market Rm1 Rm1) Rm1)2
28/02/2008
-6.28 -5.65 2.34 3.56 -20.15 12.70
31/03/2008
-0.12 0.51 -8.51 -7.29 -3.68 53.09
30/04/2008
5.85 6.48 -1.37 -0.15 -0.95 0.02
31/05/2008
5 5.63 9.78 11.00 61.90 121.08
30/06/2008
0 0.63 5.72 6.94 4.34 48.21
31/07/2008
4.63 5.26 1.66 2.88 15.15 8.31

H.R.I.H.E. HASSAN
49


31/08/2008
-0.46 0.17 4.07 5.29 0.87 28.02
30/09/2008
10.14 10.77 -0.54 0.68 7.36 0.47
31/10/2008
11.75 12.38 13.88 15.10 186.91 228.12
30/11/2008
0.79 1.42 17.15 18.37 26.00 337.58
31/12/2008
8.01 8.64 -0.41 0.81 7.02 0.66
31/01/2009
-14.01 -13.38 6.66 7.88 -105.52 62.15
29/02/2009
0.11 0.74 -14.9 -13.68 -10.06 187.05
31/03/2009
-9.98 -9.35 -3.04 -1.82 16.99 3.30
30/04/2009
5.34 5.97 -10.13 -8.91 -53.13 79.33
31/05/2009
-4.58 -3.95 12.54 13.76 -54.43 189.43
30/06/2009
-13.11 -12.48 -6.13 -4.91 61.26 24.07
31/07/2009
4.39 5.02 -19.57 -18.35 -92.01 336.59
31/08/2009
1.21 1.84 4.33 5.55 10.19 30.84
30/09/2009
-8.23 -7.60 2.71 3.93 -29.91 15.47
31/10/2009
-18.18 -17.55 -10.47 -9.25 162.32 85.50
30/11/2009
-4.08 -3.45 -23.89 -22.67 78.31 513.77
31/12/2009
7.44 8.07 -10.01 -8.79 -70.87 77.20
TOTAL
-14.38 -28.14 197.92 2442.98

Average risk of selected mutual fund schemes

Mutual Fund Schemes Risk Beta Alpha

Reliance Vision fund 9.30 0.11 0.04
Franklin India prima fund 11.26 0.20 -0.32
Pru icici FMCG sector
7.81 0.08 0.03
fund
Sundaram SMILE fund 11.78 0.01 0.009
SBI Contra Fund 7.70 0.08 .04
Total 64.49

Bench Mark 9.32

H.R.I.H.E. HASSAN
50


Average risk = 64.49/5
=12.89

ANALYSIS:
1. Sundaram SMILE fund has the highest risk factor of 11.78% with 0.01%
a. Beta and 0.009% of alpha.
2. SBI Contra Fund has the lowest risk factor of 7.70% with 0.08% of
beta and 0.04% of alpha.
3. Bench Mark has the risk factor of 9.32%
4. On an average Mutual Fund Schemes have the risk factor of 12.89%
INTERPETATION:
Risk is a major factor influence all type of investors. In the above selected Mutual
Fund Schemes average risk factor is 12.89% even though the risk factor of bench mark is
9.32%; it is very close to average risk. It is showing Mutual Funds are also risky.

Average return of selected mutual fund schemes
Mutual Fund Schemes Return

Reliance Vision fund -0.73

Franklin India prima fund -2.70
Pru icici FMCG sector fund -0.79
Sundaram SMILE fund -0.46

H.R.I.H.E. HASSAN
51


SBI Contra Fund -0.59

Total -5.27

Bench Mark -1.09

AVERAGE RETURN= -5.27/5

= -1.05

ANALYSIS:
1. Sundaram SMILE fund got the lowest negative return of -0.46%
2. Bench Mark return is -1.09%
3. On an average Mutual Fund Schemes have got -1.05% per month.

INTERPETATION:
Return is a major factor influencing factor to all type of investors. In the above
selected Mutual Fund Schemes average return is -1.05%, compared to bench mark return
mutual fund returns are good and it will attract more and more customers.

H.R.I.H.E. HASSAN
52


Calculation of Return and Risk of Selected companies
Calculation of Return and Risk of Bench Mark (BSE SENSEX)
DATE SCRIP RETURN IN R-R1 (R-R1)2
VALUE %
31/01/2008 13827.77 -
28/02/2008 14124.36 2.14 3.23 10.46
31/03/2008 13013.74 -7.86 -6.77 45.83
30/04/2008 12811.93 -1.55 -0.46 0.21
31/05/2008 13987.77 9.18 10.27 105.47
30/06/2008 14610.28 4.46 5.55 30.80
31/07/2008 14685.16 0.51 1.6 2.56
31/08/2008 15344.02 4.48 5.57 31.02
H.R.I.H.E. HASSAN
53


30/09/2008 15401.99 0.37 1.46 2.13
31/10/2008 17356.99 12.69 13.78 189.88
30/11/2008 20130.23 15.98 17.07 291.38
31/12/2008 19547.09 -2.89 1.8 3.24
31/01/2009 20325.27 3.98 5.07 25.70
29/02/2009 17820.67 -12.32 -11.23 126.11
31/03/2009 17227.56 -3.32 -2.23 4.97
30/04/2009 15771.72 -8.45 -7.36 54.16
31/05/2009 17560.15 11.33 12.42 154.25
30/06/2009 16591.46 -5.51 -4.42 19.53
31/07/2009 13480.02 -18.75 -7.66 311.87
31/08/2009 14064.26 8.34 9.43 88.92
30/09/2009 14412.99 2.47 3.56 12.67
31/10/2009 13006.72 -9.75 -8.66 74.99
30/11/2009 10209.37 -21.50 -20.41 416.56
31/12/2009 9162.94 -10.24 -9.15 83.72
TOTAL -26.21 2086.43

Bench Mark Return and Risk (BSE Sensex)

Return = (P1 /P0 *100)-100

R1 = -26.21/24
= -1.09
SD= ∑(R-R1)2/n

= 2086.43/24

H.R.I.H.E. HASSAN
54


=9.32

1. ACC Limited:-

31/01/2008
1099
28/02/2008
1024.9 -6.74 -3.54 12.52
31/03/2008
899 -12.28 -9.08 82.44
30/04/2008
726 -19.24 -16.04 257.25
31/05/2008
841 15.84 19.04 362.71
30/06/2008
860 2.26 5.46 29.85
31/07/2008
940 9.30 12.51 156.42

H.R.I.H.E. HASSAN
55


31/08/2008
1048 11.49 14.69 215.91
30/09/2008
1072 2.29 5.49 30.19
31/10/2008
1230 14.74 17.94 321.97
30/11/2008
1088 -11.54 -8.34 69.56
31/12/2008
1098 0.92 4.12 17.01
31/01/2009
1035 -5.74 -2.53 6.42
29/02/2009
778.8 -24.75 -21.55 464.36
31/03/2009
782 0.41 3.62 13.07
30/04/2009
835 6.78 9.98 99.64
31/05/2009
765 -8.38 -5.18 26.82
30/06/2009
662 -13.46 -10.26 105.26
31/07/2009
527 -20.39 -17.19 295.43
31/08/2009
579 9.87 13.07 170.87
30/09/2009
560 -3.28 -0.08 0.01
31/10/2009
615 9.82 13.03 169.68
30/11/2009
500 -18.70 -15.49 240.08
31/12/2009
419.5 -16.10 -12.90 166.29

TOTAL -76.91 3313.74

Calculation of Beta
Return of Ra- return of (Ra-Ra1)(Rm- (Rm-
Date company Ra1 market Rm-Rm1 Rm1) Rm1)2
28/02/2008
-6.74 -3.40 2.14 3.28 -11.14 10.76
31/03/2008
-12.28 -8.94 -7.86 -6.72 60.06 45.16
30/04/2008
-19.24 -15.90 -1.55 -0.41 6.52 0.17
31/05/2008
15.84 19.18 9.18 10.32 197.96 106.49
30/06/2008
2.26 5.60 4.46 5.60 31.37 31.36
31/07/2008
9.3 12.64 0.51 1.65 20.85 2.72
31/08/2008
11.49 14.83 4.48 5.62 83.35 31.58

H.R.I.H.E. HASSAN
56


30/09/2008
2.29 5.63 0.37 1.51 8.50 2.28
31/10/2008
14.74 18.08 12.69 13.83 250.07 191.26
30/11/2008
-11.54 -8.20 15.98 17.12 -140.34 293.08
31/12/2008
0.92 4.26 -2.89 -1.75 -7.46 3.06
31/01/2009
-5.74 -2.40 3.98 5.12 -12.27 26.21
29/02/2009
-24.75 -21.41 -12.32 -11.18 239.34 125.00
31/03/2009
0.41 3.75 -3.32 -2.18 -8.18 4.75
30/04/2009
6.78 10.12 -8.45 -7.31 -74.00 53.44
31/05/2009
-8.38 -5.04 11.33 12.47 -62.81 155.49
30/06/2009
-13.46 -10.12 -5.51 -4.37 44.22 19.10
31/07/2009
-20.39 -17.05 -18.75 -17.61 300.21 310.13
31/08/2009
9.87 13.21 8.34 9.48 125.25 89.86
30/09/2009
-3.28 0.06 2.47 3.61 0.23 13.03
31/10/2009
9.82 13.16 -9.75 -8.61 -113.34 74.14
30/11/2009
-18.7 -15.36 -21.5 -20.36 312.68 414.55
31/12/2009
-16.1 -12.76 -10.24 -9.10 116.10 82.82
TOTAL
-76.88 -26.21 1367.19 2086.44

Return=P1 /P0 *100
R1 = ∑R/n, = -76.91/24, = -3.20
SD = ∑ (R- R1)2 /n, = 3313.74/24
SD = 11.75

Calculation of Beta
B = [∑ (Ra –Ra1) (Rm-Rm1)]/∑ (Rm-Rm1)2
H.R.I.H.E. HASSAN
57


= 1367.19/2086.44
B = 0.65

= (-3.20-(-1.13))*0.65
= -1.34

Factor Risk Return Beta Alpha
Percentage 11.75 -3.20 0.65 1.34

ANALYSIS:

1. ACC Ltd. has a risk factor of 11.75%
2. Its rate of return on a monthly average is -3.2%
3. Alpha and Beta are 0.65 and 1.34 respectively

INTERPETATION:
Beta of the ACC ltd. is 0.65which is less than one; it shows the less volatility of
scrip with respect to market. Risk of the share is 11.75% and the rate of return is only
-3.2%.

H.R.I.H.E. HASSAN
58


2. BHEL:-

31/01/2008 2302
28/02/2008 2520 9.47 10.39 108.05
31/03/2008 2190 -13.10 -12.17 148.12
30/04/2008 2275 3.88 4.81 23.10
31/05/2008 2510 10.33 11.25 126.66
30/06/2008 1408 -43.90 -42.98 1847.26
31/07/2008 1550 10.09 11.01 121.22
H.R.I.H.E. HASSAN
59

A study on performance evaluation of equity shares & mutual funds

A study on performance evaluation of equity shares & mutual funds

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