Performance evaluation of Index funds

Under Guidance of:

Mr.S.Raja,

Associate Professor,

PGDM, ESB.By:

P.Mounika,

2nd PGDM,

ESB.

REVIEW OF LITERATURE

SAPAR & NARAYAN (2003):

Examined the performance of Indian Mutual funds

through various Financial tools.

Sample of 269 schemes out of 433.

58 schemes were able to satisfy investor’s

expectations by giving excess returns over expected

returns.

RAO D. N(2006):

He studied the financial performance of

selected open ended schemes.

Analyzed that:

Growth Plans have generated higher returns

than Dividend Plans with higher risk.

NEED OF THE STUDY

In the present market, it is noticed that number

of schemes have been floated.

It is difficult for Average Investor to evaluate

the performance.

It is also significant to know which fund is

performing well.

PROJECT TITLE

“A COMPARITIVE STUDY ON PERFORMANCE

EVALUATION OF SELECTED INDEX SCHEMES

WITH REFERENCE IN SBI MUTUAL FUND AT

BANGALORE FOR A PERIOD OF 5 YEARS

2009-2014”

OBJECTIVES

Evaluate performance of INDEX Funds in

terms of their RISK and RETURN.

To Suggest appropriate fund.

SCOPE

Study is carried on particularly selected Index Mutual

funds like :

SBI Magnum Index fund, Tata Index fund nifty plan,

LIC Nomura Index nifty plan, Franklin Index, UTI Nifty

Index fund, HDFC Index nifty plan, ICICI Pru spice plan and

Quantum index fund.

The study is limited to Index funds. So, it is not applicable

to other funds.

LIMITATIONS

Used past information which may not be the

exact indicator of future performance.

Limited to only Index schemes.

Study was conducted for a specified time

period

INDUSTRY PROFILE

Started in 1963 with the formation of Unit Trust of India.

SEBI starts regulating from 1993 which defined the

structure of Mutual fund and AMC.

o First Phase(1964 – 1987):

First scheme – UTI scheme

o Second Phase (1987 – 1993):

Entry of Public sector funds

o Third Phase (1993 – 2003):

Entry of Private sector funds

o Fourth Phase (since February 2003)

FACILITIES TO INVESTORS

Re-purchase facilities

Re-issue facility

Roll over

Lateral shifting

Dividend sweep facility

ASSETS UNDER MANAGEMENT

COMPANY PROFILE

SBI Fund management pvt. Ltd was established in 1987.

It is a joint venture between SBI and AMUNDI.

The fund manages over Rs.72, 000 crores of assets and has a diverse profile

of investors actively parking their investments across 38 active schemes.

Objective is to pool investments from small investors.

VISION:

To have consistent track record of returns.

SERVICES:

1)Mutual Funds

2)Portfolio Management and Advisory services

3)Offshore Funds

MUTUAL FUND OPERATION

STRUCTURE OF MUTUAL FUND

RESEARCH TYPE:

Exploratory Research

SOURCE:

Secondary source -

• sbimf.com

• Moneycontrol.com

• Factsheets

FINANCIAL TOOLS USED:

• Standard deviation

• Beta

• Sharpe ratio

• Treynor ratio

DATA ANALYSIS

Average Fund Return

FUND AVERAGE RETURN

SBI 14.03

Tata 13.97

LIC 13.49

Franklin 14.23

UTI 14.04

HDFC 13.54

ICICI 15.80

Quantum 14.96

12

12.5

13

13.5

14

14.5

15

15.5

16

SBI Tata LIC Franklin UTI HDFC ICICI Quantum

Graph showing Average Returns

Average Returns

BETA VALUES

FUND BETA VALUES

SBI 0.977

TATA 0.97

LIC 0.890

FRANKLIN 0.98

UTI 0.97

HDFC 0.93

ICICI 0.98

QUANTUM 0.97

BETA VALUES

0.84

0.86

0.88

0.9

0.92

0.94

0.96

0.98

1

SBI TATA LIC FRANKLIN UTI HDFC ICICI QUANTUM

BETA

STANDARD DEVIATION

FUND STANDARD DEVIATION

SBI 16.53

TATA 16.40

LIC 15.07

FRANKLIN 16.72

UTI 16.52

HDFC 15.81

ICICI 16.70

QUANTUM 16.41

14

14.5

15

15.5

16

16.5

17

SBI TATA LIC FRANKLIN UTI HDFC ICICI QUANTUM

STANDARD DEVIATION

STANDARD DEVIATION

RISK ADJUSTED RETURN

FUND RISK ADJ. RETURN

SBI 4.24

TATA 4.26

LIC 4.47

FRANKLIN 4.25

UTI 6.22

HDFC 4.28

ICICI 4.73

QUANTUM 4.55

RISK ADJUSTED RETURN

3.9

4

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

SBI TATA LIC FRANKLIN UTI HDFC ICICI QUANTUM

RISK ADJ. RETURN

SHARPE RATIO

FUND SHARPE RATIO RANK

SBI 0.36 4

TATA 0.36 4

LIC 0.36 4

FRANKLIN 0.372 3

UTI 0.36 4

HDFC 0.35 5

ICICI 0.46 1

QUANTUM 0.42 2

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

SBI TATA LIC FRANKLIN UTI HDFC ICICI QUANTUM

SHARPE RATIO

SHARPE RATIO

TREYNOR RATIO

FUND TREYNOR RATIO RANK

SBI 6.17 5

TATA 6.15 7

LIC 6.16 6

FRANKLIN 6.35 3

UTI 6.22 4

HDFC 5.95 8

ICICI 7.95 1

QUANTUM 7.17 2

0

1

2

3

4

5

6

7

8

9

SBI TATA LIC FRANKLIN UTI HDFC ICICI QUANTUM

TREYNOR RATIO

TREYNOR RATIO

Findings:

• In terms of average returns, ICICI fund is performing well

with 15.80

• The beta of all companies are closer to benchmark i.e., 1.

This indicates all are defensive in nature.

• When compared with others, the Standard Deviation of LIC

is comparatively low.

• According to Sharpe and Treynor ratio ICICI Pru spice plan

has performed very well when compared with other funds

Suggestions

Investors can go ahead in investing in ICICI Pru spice

plan and Quantum Index fund to acquire better returns

SBI AMC has to revise its fund portfolio to increase

fund returns and to provide investors a secure

investment

Mutual fund companies should take more efforts on

spreading awareness about Index schemes

Educate investors by conducting awareness program

especially in rural areas

CONCLUSION

All funds are performing well, but ICICI have

performed better than others.

Investors should be very carefull at the time of

investing.

If proper information regarding schemes are

provided then there is a chance of increase in

investors investment.