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117
CHAPTER 5
COLLECTION OF SECONDARY DATA
In the Research Methodology, the initial stage of the researcher was to collect
the secondary data of various open-ended equity schemes from the published
data of various Fund Houses or preferably from Association of Mutual Funds
of India. As the research is confined to only open-ended equity schemes, the
NAV of only the open-ended equity schemes were collected for data analysis.
As per the research proposal, the number of schemes was subjected to the
availability of the data for the period of three years. Subject to the availability
of three years of the data, the sample size was of minimum of 30 schemes
with 3 years data. There were approximately 750 daily NAV of each scheme.
The secondary data was a purposive sample. The schemes were spread
across various types of Fund house viz Public Sector, Private Sector and
Multinationals. The secondary data collection was a purposive sample.
The amount of data on Mutual Funds is available considering the fact of
disclosure regulations and the fact that the tasks and performance are
measurable.
118
Accordingly, the Researcher had approached The Association of Mutual
Funds of India (AMFI) for the required research data. AMFI was very co-
operative and had given the required data that is the NAV of all the schemes
upto 30th September, 2006. AMFI had provided the data vide its receipt no 37
dated 10th November, 2006 of all the schemes irrespective whether it was an
income, balanced, index or any other schemes. AMFI had provided all the
NAV data for all the Mutual Funds available on their public domain.
AMFI had provided 17,78,729 records for the NAV details for the period
pertaining to 1st October, 2003 to 30th September, 2006. There was a
considerable delay of more than six months for the Research and therefore, it
was felt necessary that the data for the extended period be taken from AMFI.
However, due to the delay in the Research Analysis, the additional data for
the delayed period was taken from AMFI. It was felt necessary too request
AMFI for the additional data for the extended period 1st October, 2006 to 30th
June, 2007.
The Researcher approached AMFI for the additional data for a further period
of 9 months viz 1st October, 2006 to 30th June, 2007. AMFI then vide its
receipt no 28 dated 27th July, 2007 provided the data for the extended period
of 9 months viz 1st October, 2006 to 30th June, 2007. This time too, AMFI
provided 54,294 records of all the schemes available with AMFI on the public
domain.
119
In all AMFI had provided 18,33,023 records for the period 1st October, 2003 to
30th June, 2007 containing the data of all the Mutual Funds and all the
schemes NAV available with AMFI on the public domain. However, there
were some codes, which could not be interpreted like the Mutual Fund Code,
Scheme Code etc. The other data was provided by AMFI like the Mutual
Fund Master and the Scheme Master, which was available with AMFI for the
research.
Thus the collection of secondary data was done from AMFI, with a continuous
follow-up with AMFI, the required secondary data was procured from AMFI.
AMFI without any reluctance provided the data for the purpose of the
research.
The secondary data viz the NAV of the various Mutual Fund schemes for the
period 1st October, 2003 to 30th June, 2007 was available for the research.
It was proposed in the research proposal that the research is focussed only
on the performance of Open-ended Equity schemes. From the total data
provided by AMFI for the research only the required data viz the NAV of Open
Ended Equity Schemes was required for the research analysis. A list of
existing Open Ended Equity Schemes was downloaded from the AMFI site as
on 3rd August, 2007. The exhaustive list of AMFI contained all the list of the
schemes and the NAV of Open Ended Equity Schemes of all Mutual Funds.
120
The list was thoroughly checked for the required data and only the required
scheme and the option were weeded out of the AMFI list.
The following schemes/options were excluded from the research sample for
the reasons mentioned thereof: -
Exchange Traded Funds
Basically exchange traded funds are open-ended Mutual Funds that are listed
and traded on Stock Exchanges. There are very few Exchange Traded Funds
in India, the most recent being the Gold Exchange Traded funds of the UTI
Mutual Fund. The concept is very new to the Indian markets and there are
not much pleasing response to these schemes. The schemes excluded are :-
121
Table 1 : Exchange Traded Funds not included in the Research Study
Banking Index Benchmark Exchange Traded Scheme (Bank BeES)
Gold Benchmark Exchange Traded Scheme (Gold BeES)
Nifty Benchmark Exchange Traded Scheme (Nifty BeES)
Nifty Junior Benchmark Exchange Traded Scheme (Junior BeES)
Sensex ICICI Prudential Exchange Traded Fund
Kotak Gold ETF
UTI - Gold Exchange Traded Fund
UTI – Sunder
Income Options
Most of the Open Ended Equity schemes had the growth option or the income
option. In the Income options there are regular payouts in the form of
dividends. To the extend of the dividend payout, the NAV of the schemes fall
down on the Ex-date. Thus if the NAV from the first date to the last date is
taken for the analysis, the returns will fall down to the extend of the dividend
payout. Moreover, if we consider the dividend payout, we have to accordingly
fiddle with the data, which was not found appropriate by the Researcher.
Moreover, most of the schemes were having the growth option, which was
found to be very suitable for the research.
122
Index Funds
This research is confined to the actively manage open-ended equity funds.
The index funds are passively managed funds and therefore the Index Funds
have not been considered for this Research Analysis. Index Funds are those
schemes, which invest in the proportion to the benchmark like the Sensex,
Nifty etc. Thus there is no performance on the part of the Fund Manager.
The Fund Manager has to invest his funds only in the proportion of the
Sensex to which the Index Fund is linked. The Marginal difference between
the portfolio of the Index Fund and the Index is known as the tracking error.
In case, the Index fund is linked to the Nifty Sensex then the holding in the
fund will be in the proportion of the shares of the Nifty Sensex.
123
Table 2 : Index Funds not considered in the Research Study
Birla Index Fund
HDFC Index Fund - Nifty Plan
HDFC Index Fund - SENSEX Plus
HDFC Index Fund Sensex Plan
TATA Index Fund - Nifty A
TATA Index Fund - Nifty B
TATA Index Fund - SENSEX A
TATA Index Fund - SENSEX B
Franklin India Index Fund - BSE Plan
Franklin India Index Fund - Nifty Plan
ING Nifty Plus Fund - Growth Option
LICMF Index Fund - Nifty
LICMF Index Fund - Sensex Advantage
LICMF Index Fund - Sensex
Principal Index Fund
Reliance Index Fund - Nifty Plan
Reliance Index Fund - Sensex Plan
SBI Magnum Index Fund
UTI Master Index Fund
UTI Nifty Index Fund
124
Institutional Options
Most of the Mutual Funds have introduced the Institutional Option in many of
their schemes. Apart from the Regular Growth option and Regular Income
option, these institutional options have been introduced for the Institutional
Investors. The expenses charged to these Institutional Option investors are
comparatively less as compared to the Regular Investor. Wherever, Regular
and Institutional options were available in the scheme, the Regular option was
taken for the analysis of the Secondary Data.
Apart form the above Schemes / options, the following schemes were
excluded from the list, as these schemes did not have any options and it was
very difficult to trace the history of the NAV of the past three years.
Table 3 : Schemes with no Option not considered in the Research Study
BOB Diversified Fund
CAN D MAT
CANFORTUNE 94
CANGROWTH PLUS
DSP Merrill Lynch Technology.com Fund
Franklin India Growth Fund
ICICI Technology Fund
125
Kotak MNC
Kotak Tech
LICMF Growth Fund
SBI Magnum Children Benefit Plan - Holding Held for <= 1 Year
SBI MSFU FMCG
SBI MSFU IT
Bonanza Exclusive Growth Scheme
Taurus Discovery Fund
Taurus Star Share
TATA Select Equity Fund
The following schemes even though defined as a growth scheme, were
subsequently not taken for the research, as the Investment objective of the
scheme was not in par with the research.
Table 4 : Schemes not at par with the Investment objective of the Research, not considered for the Research Study
DWS Fixed Term Fund Series 28 - GR
Fidelity International Opportunities Fund
ICICI Prudential Equity & Derivatives Fund - Income Optimiser Plan
On application of all the above filters for the secondary data, finally 192
schemes were short-listed for the collection of the NAV data. This was further
126
subjected for the NAV data for the period of three years viz 1st July, 2004 to
30th June, 2007.
On further analysis on one to one basis, it was observed that for more than
50% of the schemes the relevant data was not available for a period of three
years. The main reason was most of these schemes were launched after 1st
July, 2004 and did not have the NAV data for a period of more than three
years. There were other schemes which were either terminated like the
Principal Equity Fund (No Data after August, 2006) or the scheme was
merged into other schemes to form a new scheme like the UTI Large Cap
Fund and others, which were also excluded from the shortlisted secondary
data.
The following five schemes where taken over by Birla Sun Life Mutual Fund
from Alliance Capital Mutual Fund during September, 2005.
Table 5 : Schemes taken over by Birla Sun Life from Alliance Capital Mutual Fund
Birla Sun Life Buy India Fund-Plan B(Growth)
Birla Sun Life Basic Industries Fund-Plan B(Growth)
Birla Sun Life Equity Fund-Plan B(Growth)
Birla Sun Life Frontline Equity Fund-Plan B(Growth)
Birla Sun Life New Millennium Fund-Plan B(Growth)
127
For these schemes the data for the broken period was taken from Alliance
Capital Mutual Fund from the data provided by AMFI.
The same way the following three schemes which were taken over by UTI
Mutual Fund from IL&FS Mutual Fund during the month of July 2004. The
data for these schemes where taken from IL&FS Mutual Fund for analysis.
Table 6 : Schemes taken over by UTI Mutual Fund from IL&FS Mutual Fund
UTI - DYNAMIC EQUITY FUND-GROWTH
UTI - GROWTH & VALUE FUND-GROWTH
UTI - INDIA ADVANTAGE EQUITY FUND-GROWTH
The data for the period 1st July, 2004 to 30th June, 2007, that is the NAV for 3
years was taken for the research as proposed in the initial research proposal.
However, AMFI had given the NAV data for all the schemes in the Mutual
Fund Industry. The researcher had to extract only the relevant data viz the
NAV of open-ended equity schemes for the period 1st July, 2004 to 30th June,
2007 for the research.
As regards to the UTI Mutual Fund schemes, the data was available from 1st
August, 2005 onwards. On further scrutiny, it was observed that UTI Mutual
Fund schemes did not have any options in many of their equity schemes.
128
They had introduced the Growth option in their equity schemes from 1st
August, 2005 onwards. For the data for the period 1st July, 2004 to 31st July,
2005, the data was taken from the earlier schemes, where there was no
option in the schemes. Out of the 18 such schemes of UTI Mutual Fund, 14
schemes had declared dividend in the intervening period viz 1st July, 2004 to
31st July, 2005. These dividends in the 14 schemes have been factored in the
NAV to ensure that the returns of the schemes are calculated correctly for the
purpose of this research.
Initially, the list of the Open Ended Equity Schemes was short-listed from the
Scheme master provided by AMFI. There were ultimately 78 schemes
considered for the research. The corresponding NAV data for 78 schemes
was extracted for the period 1st July, 2004 to 29th June, 2007 for the purpose
of our research. As 30th June, 2007 being Saturday there was no data
available for the said day. Extensive efforts have been made to synchronize
the data available in the public domain to ensure that the research gives a
correct output for further analysis.
As mentioned above, in the final data extraction only 58,304 records were
taken for the further analysis of the Secondary Data. This secondary data
was put to various analyses for the research.
129
In the research, Bombay Stock Exchange (BSE) SENSEX has been taken as
the benchmark index for categorizing the scheme into a high performing
schemes or low performing schemes. The main idea for taking BSE SENSEX
as the benchmark was that it has a long history and secondly it is the most
recognized and well known index for an investor. Even Nifty is the index of
National Stock Exchange, however the BSE SENSEX is the more prevalent
index in the capital market.
Moreover, the BSE is the oldest stock exchange in ASIA established in the
year 1875. The BSE has a nation wide reach with its presence in 417 cities
and towns in India. The BSE provides an efficient and transparent market for
trading in equity and derivatives. The BSE systems and processes are
designed to safeguard market integrity and enhance transparency in
operations.
The return of the schemes was calculated for the three-year period. Based
on the returns on the schemes, the schemes were grouped into two groups'
viz high performer and low performer with the returns of the BSE Sensex as
the benchmark.
130
Table 7 : List of 78 Open Ended Equity Schemes considered for the Research Study (Period 01.07.2004 to 29.06.2007)
131
Figure 6 : List of High Performer and Low Performer (Open-Ended Equity Scheme vis-à-vis the Benchmark)
RETURNS OF 3 YEARS PERIOD
65.63
65.26
63.72
62.59
60.93
58.43
56.37
55.46
53.92
52.94
52.42
52.34
52.00
51.87
50.96
50.82
49.87
49.82
48.99
48.97
48.96
48.88
48.75
48.71
48.67
48.65
48.33
48.07
47.88
47.86
47.73
47.60
46.77
46.62
45.82
45.52
45.49
45.47
45.02
44.90
44.69
44.42
44.27
44.16
44.07
44.04
44.00
43.45
43.01
42.91
42.75
42.66
42.50
42.43
42.07
41.16
40.67
40.19
39.33
39.17
38.83
38.63
38.31
37.22
37.17
37.08
37.00
36.61
36.34
35.64
32.70
32.63
27.60
27.25
26.35
23.66
23.66
18.26
15.14
0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00
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