CHAPTER NO.

1
 INTRODUCTION

The first introduction of a mutual fund in India occurred in 1963, when the
Government of India launched Unit Trust of India (UTI). Until 1987, UTI
enjoyed a monopoly in the Indian mutual fund market. Then a host of other
government-controlled Indian financial companies came up with their own
funds. These included State Bank of India, Canara Bank, and Punjab National
Bank. This market was made open to private players in 1993, as a result of the
historic constitutional amendments brought forward by the then Congress-led
government under the existing regime of Liberalization, Privatization and
Globalization (LPG). The first private sector fund to operate in India was
Kothari Pioneer, which later merged with Franklin Templeton. The main aim of
the UTI was to enable the common investors to participate in the prosperity of
capital market through portfolio management aimed at reasonable return,
liquidity and safety and to contribute to India’s industrial development by
channelizing household savings into corporate investment. By the year 1993,
UTI occupied nearly 80 per cent of the market share and developed manifold in
terms of number of investors, investable funds, reserves with wide marketing
network and efficient leadership. The Chartered Financial Analyst had
commented that Mutual Funds today form 1/10th of the banking industry’s size.
If we compare this an indication in the current interest rate scenario, Mutual
Fund has ample shelf-space to grow into an industry like the banking industry in
India.

CONCEPT OF MUTUAL FUND:

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.

2
A single investor's ownership of the fund is in the same proportion as the
amount of the contribution made by him or her bears to the total amount of the
fund.

Mutual Funds are trusts, which accept savings from investors and invest the
same in diversified financial instruments in terms of objectives set out in the
trusts deed with the view to reduce the risk and maximize the income and
capital appreciation for distribution for theembers. A Mutual Fund is a
corporation and the fund manager's interest is to professionally manage the
funds provided by the investors and provide a return on them after deducting
reasonable management fees.

DEFINITION:
"A mutual fund is an investment that pools your money with the money of an
unlimited number of other investors. In return, you and the other investors each
own shares of the fund. The fund's assets are invested according to an
investment objective into the fund's portfolio of investments. Aggressive growth
funds seek long-term capital growth by investing primarily in stocks of fast-
growing smaller companies or market segments. Aggressive growth funds are
also called capital appreciation funds".

TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as
financial position, risk tolerance and return expectations etc. thus mutual funds
has Variety of flavors, being a collection of many stocks, an investor can go for
picking a mutual fund might be easy. There are over hundreds of mutual funds
scheme to choose from. It is easier to think of mutual funds in categories,
mentioned below.

i. BY STRUCTURE
 Open - Ended Schemes:

3
 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. The key feature of open-end
schemes is liquidity.

 Close - Ended Schemes:

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.

 Interval Schemes:
Interval Schemes are that scheme, which combines the features of open-ended
and close-ended schemes. The units may be traded on the stock exchange or
may be open for sale or redemption during pre-determined intervals at NAV
related prices.

ii. BY NATURE
 Equity Fund:

These funds invest a maximum part of their corpus into equities holdings. The
structure of the fund may vary different for different schemes and the fund
manager's outlook on different stocks. The Equity Funds are sub-classified
depending upon their investment objective, as follows:

4
  Diversified Equity Funds
 Mid-Cap Funds
 Sector Specific Funds
 Tax Savings Funds (ELSS)

 Debt Funds:

The objective of these Funds is to invest in debt papers. Government authorities,

private companies, banks and financial institutions are some of the major issuers
of debt papers. By investing in debt instruments, these funds ensure low risk
and provide stable income to the investors. Debt funds are further classified as:

 Gilt Funds: Invest their corpus in securities issued by Government,

popularly known as Government of India debt papers. These Funds carry
zero Default risk but are associated with Interest Rate risk. These schemes
are safer as they invest in papers backed by Government.
 Income Funds: Invest a major portion into various debt instruments such as
bonds, corporate debentures and Government securities.
 Short Term Plans (STPs): Meant for investment horizon for three to six
months. These funds primarily invest in short term papers like Certificate of
Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus
is also invested in corporate debentures.

 Balanced Funds:

As the name suggest they are a mix of both equity and debt funds. They invest
in both equities and fixed income securities, which are in line with pre-defined
investment objective of the scheme. These schemes aim to provide investors

5
with the best of both the worlds. Equity part provides growth and the debt part
provides stability in returns.

Why Select Mutual Fund?

The risk return trade-off indicates that if investor is willing to take higher risk
then correspondingly he can expect higher returns and vice versa if he pertains
to lower risk instruments, which would be satisfied by lower returns. For
example, if an investors opt for bank FD, which provide moderate return with
minimal risk. But as he moves ahead to invest in capital protected funds and the
profit-bonds that give out more return which is slightly higher as compared to
the bank deposits but the risk involved also increases in the same proportion.

Thus investors choose mutual funds as their primary means of investing, as

Mutual funds provide professional management, diversification, convenience
and liquidity. That doesn't mean mutual fund investments risk free.

This is because the money that is pooled in are not invested only in debts funds
which are less risky but are also invested in the stock markets which involves a
higher risk but can expect higher returns. Hedge fund involves a very high risk
since it is mostly traded in the derivatives market which is considered very
volatile.

6
7
 CHAPTER NO.2

LITERATURE REVIEW

A vast gamut of research has been done on evaluation of Mutual funds. Researchers have
analyzed and appraised Standalone performance of mutual funds, selected mutual funds and
few studies have also been made on comparing the public and private sector mutual fund
schemes in India. Prajapati &Patel (2012) suggest that most of the mutual fund have given

8
positive return during 2007 to 2011.Sharma (2013) analyzed the perception of investors with
regard to factors like liquidity, security, fees, quality, returns and tax benefits. Kanethia
(2010) compared of various mutual fund schemes in India. The application of the Sharpe
index made it feasible to measure performance and then the ranking of the funds. Ranking of
the funds assist an investor to choose the funds and scheme and then decide their portfolio
accordingly. The result of the study shows that private mutual funds are more preferred than
the public mutual funds. Agarwal & Patwa (2014) private sector funds are able to generate
better returns than the public sector funds using Mann-Whitney U-Test. Pandow (2017) the
industry is confronted with numerous challenges like low penetration ratio, similarity of
products, low awareness level lack of interest of retail investors and evolving nature of the
industry. Sapar & Madava (2003) performance measures suggest that most of the mutual fund
schemes in the sample of 58 were able to satisfy investor's expectations by giving excess
returns over expected returns. Fama & French (2008) found that mutual funds produce a
portfolio close to the market portfolio but with high costs of active management that show up
intact as lower returns. They have used Persistence tests and Bootstrap simulations for the
study. Nitzsche Cuthbertson et al (2006) found mutual funds are similar to those for equity
mutual funds and hedge funds. Study suggests that investors should hold low cost index
funds and avoid holding loss making funds. Bayesian approach is used for the study. Jayadev,
(1996) determined that Master gain has performed better according to Jenson and Treynor
measures but on the basis of Sharpe ratio it's performance is not upto the benchmark.
Agrawal (2007) revealed that the performance is affected by the saving and investment
habits, confidence and loyalty of the people. Tomer and Khan (2014) analyzed the problems
and prospects of mutual funds in India. The study says reduction on operational costs, skills
and technology up gradation is required. Sathish and Srinivasan (2016) analyzed value of
beta of the schemes and found lower than one indicating that all the mutual funds are less
risky and less volatile. Siva Kumar et al. (2010) in their study established that the private
sector players hold the greater strength in resource mobilization. Arora (2015) assessed risk –
adjusted performance of Indian mutual fund schemes during the bear period and the boom
period and found that equity oriented mutual fund schemes performed well during the bull
phase.Santhi & Gurunathan (2012) found that all the tax-saving mutual funds are volatile, It
is also observed that most of the schemes give higher return than the benchmark S&P CNX
NIFTY. Vyas, et.al (2016), suggested that for investors the most important intrinsic fund
quality is fund expense ratio and exit load. Panwar & Madhumathi (2006) there is a
significant difference between public sector sponsored mutual funds and private-sector
9
sponsored mutual funds in terms of coefficient of variation (COV), excess standard deviation
adjusted returns (SDAR), residual variance (RV). Rao (2006) Ratnaraju & Madhav (2016)
Goyal (2015) opine that Equity Growth funds provide higher returns than that of Equity
Dividend funds. Most of the literature available focuses only on mutual fund market growth,
future trends and such other issues but very limited literature is available on the ‘Comparative
analysis of Market Returns with its Fund Flows’. Few countries like USA, Europe have
concentrated on the research on mutual fund flows with its relevant market returns, whereas
analysts, academic researchers in countries like India have paid least attention in these areas.
Friend, Brown, Herman, and Vickers (1962) offered the first empirical analysis of mutual
funds’ performance. Treynor (1965), Sharpe (1966), and Jensen (1968) developed the
standard indices to measure risk adjusted mutual fund returns. Grinblatt and Titman (1989)
constructed a positive period weighting measure of fund performance. Numerous studies
have tested the mutual fund manager’s market-timing ability [Treynor and Mazuy (1966),
Kon and Jen (1979), Henriksson and Merton (1981), Merton (1981), Henriksson (1984), and
Chang and Lewellen (1984)] and the diversification benefits and risk-adjusted performance
of funds.

10
CHAPTER NO.3

11
 RESEARCH METHODOLOGY

For the comparative analysis of mutual funds 4 companies have been randomly selected from
each sector and from each of these sectors 5 schemes of similar in nature has been
considered. The study is done for a period of 5 years starting from 2014 to 2018. To calculate
Average Returns Daily Net Asset Value of the mutual fund companies and Annual Average
of these mutual fund companies was calculated. Then, using Average Returns, Standard
Deviation was further calculated for the Average Returns. Standard Deviation and Average
Returns are the two variables used for analysis. Generally, calculation of returns of funds is
done after adjusting the Net Asset Values to dividends, capital gains, right and bonus issue. In
the current study the schemes that are selected for both private and public sector are growth
based, hence they do not have any of the above factors. Risk refers to the amount of
variations in the returns of mutual funds during the given period. To investigate the
performance of mutual funds in India total 16 schemes have been selected as sample as
under:

12
 Sampling

 Objectives of Research
1) To assess the performance of the selected schemes on basis of risk
and return.

2) To compare the performance of sample schemes with the

market performance.

3) To evaluate the performance of selected category of public sector schemes on the

basis of returns.

4) To find out the financial performance of Mutual Funds Scheme

13
 Research Hypothesis
1. H0: There is no difference in returns of public and private sector mutual funds.

H1: There is difference in returns of public and private sector mutual funds.

2. H0: Risk is not the same in public and private sector mutual funds.
H1: Risk is the same in public and private sector mutual funds.

 Objectives of the Study:

The present study has the following objectives.

1. To review the progress of mutual fund industry and the trends in funds mobilization
pattern and Assets Under Management of various mutual funds during the post
deregulation period.

2. To examine the shift in the portfolio investment behavior of the UTI and the other mutual
funds during the post deregulation period.

3. To evaluate the financial performance of selected major schemes of various mutual funds
in the public and private sectors.

4. To analyses the investors’ opinions on mutual fund investments and to compare the level
of satisfaction among the investors of public and private sector mutual funds.

5. To suggest measures for consideration of the policy makers for strengthening of mutual
fund industry.

 Data Sources

14
This study is based on secondary data and the relevant sources of data are books, journals,
magazines, newspapers, brochures and websites of selected mutual funds. Monthly NAV data
on each sample scheme is collected from www.mutualfundsindia.com and
www.moneycontrol.com. BSE Sensex has been taken as a benchmark for analysis of the
results and monthly BSE Sensex data are collected from www.bseindia.com. The risk free
rate is taken as 8.40% which is the interest rate on Post Office Time Deposit Account for 5
years.

 Limitations of The Study

The limitations of the study have been enumerated below.

1. The study is confined only to the Mutual Fund Industry in India. Therefore, it has not
focused on the mutual funds footer countries.
2. The sample size in the case of mutual fund investors has been restricted to 234 as it is
highly difficult to arrange a list of investors spread over different regions and to select
them deciding certain percentage of the Universe.
3. Because of the time and money constraints convenient sampling method has been adopted
to select the respondents. Therefore, all the limitations those are applicable to convenient
sampling are applicable to this study.
4. Only the open-ended mutual fund schemes have been included for measuring the
financial performance as these are actively traded in the stock exchange.
5. Though the techniques used for analyzing the data are traditional, these were more
appropriate as many researchers in India are following at present.

 Data Analysis

The data collected from various sources have been analyzed by using different techniques as
under.

1. Basic statistical techniques like simple percentages, averages, pie diagrams, bar diagrams,
graphs were widely used.

15
2. Statistical formulae like standard deviation, alpha, beta was employed to find the intensity
of risk.

3. Different ratios like a) Rate of return b) Sharpe Ratio c) Treynor Ratio d) Jenson
Differential Return e) Fama Components of investment performance were used to
measure the financial performance of various sample mutual fund schemes.

4. Chi-square test has been employed to test the significance of differences of the opinions,
perceptions of the investors2.

5. Correlation analysis, t-test and ANOVA has been used to know the degree of relation and
significance between inter dependent variables like different investment avenues and
others

 Tools

To analyze the data simple statistical tools like arithmetic mean, percentages, standard
deviation has been used. The financial tools like portfolio beta, Sharpe ratio, Treynor ratio
and Jensen ratio has been selected.

Tools Formulae

Percentage Return (NAV1 – NAV0) ×100/ NAV0

Standard deviation √σ² /N

ß (Beta value) (∑xy − nxy) n

----------------

∑x 2 – nx

Sharpe’s Ratio (Rm –Rf)/σ

Treynor's Ratio (Rm-Rf)/ß

16
Jensen’s Ratio αp = Rp - [Rf + ß p * (Rm – Rf)]

Jp = αp / ß p

CHAPTER NO.4

17
 ANALYSIS OF FINANCIAL DATA

In spite of the apparent opportunities in a country of our size and scope, Mutual Funds in
India have not delivered anywhere close to potential. The corporate-centric focus still rules
the roost in spite the retail-rich demographics of the country. Retail money in the industry
still languishes far behind when compared to the US, where almost 85 percent of the total
assets managed by fund managers come from individual investors (as per 2007 data). The
figures bear testimony to the huge untapped potential in India. And yet,

the state of MFs is enigmatic at best. Competition is firming up too. Banks may soon offer
3.5 percent daily interest on savings account instead of monthly. This could adversely affect
investments in MF liquid schemes. The IRDA has been aggressively promoting ULIPs as one
of the best investment options in recent times. One may argue that the job of a regulator is to
regulate, not to promote schemes. But it does make for a comparison of approaches adopted
by the two regulators. The writing on the wall is obvious. India needs to encourage MF
investments in a big way. And the initiative should be fueled by design, not default. Fund
houses seem rather casual in launching umpteen schemes by the hour, instead of creating
tailored solutions in line with the real investment needs. And the retail market needs to be
addressed through personalized marketing. Therein lies the big opportunity but sadly, we
have not seen due acknowledgement of this fact from the supply-side forces as yet. MFs can
take their cues from the insurance industry in reaching out to the common man by all means.
Despite the monopoly of LIC and its humungous network, the private players took their
campaigns to the remotest corners of India. Distributors seem to be daunted by a common
concern of lack of adequate investor education, impacting all these models, as their success
will depend extensively on the levels of financial literacy among investors. Table 1 is the
summary description of Equity Diversified Mutual fund schemes of 3 each from UTI, Canara
and SBI from Public sector and 3 each from HDFC, Reliance and Franklin from Private

18
Sector. It is seen here that 18 Mutual Fund schemes have been selected out of which there are
9 private sector and 9 public sector schemes Magnum Equity of SBI is the oldest and UTI
opportunities is the latest scheme in the sample that have been taken in this study. Reliance
Regular Saving Equity has maximum corpus under its Asset under management of Rs.2808.2
crores (as on July 31,2010). Minimum investment and exit load are same in all the schemes.
Table 2 shows Performance Analysis of Equity Diversified Mutual Fund Schemes Standard
Deviation and Systematic Risk (Beta) standard deviation of 18 mutual fund schemes.
Magnum Mid cap has highest standard deviation means higher risk followed by Magnum
Emerging Businesses, Canara Robeco Emerging Equities and Canara Robeco Infrastructe
Fund. Franklin India Life Stage lowest standard deviation and the lowest beta. Beta value of
higher than unity implies higher portfolio risk for the schemes than the market portfolio and
vice Magnum Mid cap (1.32), Magnum Emerging Businesses (1.2 Equities (1.21), Canara
Robecco Infrastructute fund (1.17), Reliance Regular Saving equity (1.08), Canara Robeco
Equity Diversified (1.02), HDFC Premier Multi Cap (1.02), HDFC Core & Satellite (1.02)
Magnum Equity (1.01) and Relia be riskier (beta > 1.0) than the market. Remaining 8 mutual
fund schemes had beta in the range of 0.88 to 0.99 except Franklin India Life Stage 20S Plan
(0.70) holding portfolio with least risk among the lot.

19
Sharpe Ratio:

In this model, performance of a fund is evaluated on the basis of Sharpe ratio, which is a ratio
of returns generated by the portfolio over and above risk free rate of return and the total risk
associated with it. According to Sharpe, it is the total risk of the fund that the investors are
concerned about. So, the model evaluates portfolios on the basis of reward per unit of total
risk. Symbolically it can be written as:

It is an excess returns earned over risk free return (Rf) per unit of risk i.e. per unit of Standard
Deviation. Positive value of schemes indicates better performance. Higher positive values of
Sharpe was found in HDFC Growth (0.59), Reliance Equity Sharpe Ratio: Column 3 of Table
2 depicts the value of Sharpe ratio for the Opportunities (0.50), Franklin India Life Stage 205

20
Plan (0.49), Franklin India Flexi Cap (0.49), Templeton India Growth (0.48), Reliance
Regular Saving Equity (0.47), Reliance NRI Equity (0.47) and HDFC Core & Satellite (0.44)
among the Private Sector Mutual Fund Schemes and UTI Dividend Yield (0.58), Magnum
Equity (0.47), Canara Robeco Equity Diversified (0.45), UTI Opportunities (0.42), UTI
Infrastructure Fund (0.37) among Public Sector Mutual Funds. Among the worst performers
Canara Robeco Infrastructure Fund (0.08), Magnum Emerging Businesses (0.18), Magnum
Midcap (0.18), Canara Robeco Emerging Equities (0.23) - Public Sector Mutual funds and
HDFC Premier Multicap (0.36) - Private Sector Mutual Funds.

On the whole Private Sector Mutual Funds led by Reliance outperform the Public Sector
Mutual Funds as per the result shown by Sharpe Ratio.

Treynor Ratio:

Developed by Jack Treynor, this performance measure evaluates funds on the basis of
Treynor’s Index. This index is a ratio of return generated by the fund over and above the risk
free rate of return during a given period and systematic risk associated with it (beta).
Symbolically, it can be represented as:

21
All risk averse investors would like to maximize this value. While a high and positive
Treynor ratio shows a superior risk adjusted performance of a portfolio, a low and negative
Treynor ratio is an indication of unfavorable performance

This measures the excess return earned over risk free return per unit of systematic risk i.e.
beta. The fourth Colum of Table 2 presents the Treynor ratio values for the schemes. Here the
observations were similar to that of Sharpe ratio with Private Sector Mutual Fund schemes
outperforming Public Sector Mutual Fund Schemes except UTI Dividend Yield (21.61)
showing outstanding performance. Among Private Sector Mutual fund schemes top
performers HDFC Growth (21.42), Reliance Equity Opportunities (18.35), Reliance Regular
Saving Equity (18.23), Franklin India Life Stage 20S Plan (18.11), Franklin India Flexi Cap
Fund (18.06), Reliance NRI Equity (17.26), HDFC Core & Satellite (16.09). Among Public
Sector Mutual Fund Schemes UTI Dividend Yield (21.61), Magnum Equity (17.16), UTI
Opportunities (15.59), UTI Infrastructure Fund (13.75), Canara Robeco Equity Diversified
(16.30). Canara Robeco Infrastructure Fund (2.62) was the worst performer mutual fund
scheme.

22
Jensen Ratio (Alpha): The fifth column of Table 2 shows the Jensen Alpha values for 18
selected open ended Mutual fund growth schemes. It is the regression of excess return of the
scheme (dependent variable) with excess return of the market (independent variable). Higher
Alpha value indicates better performance. Among the public sector mutual fund, higher alpha
was found with UTI Dividend Yield (10.45) followed by Canara Robeco Equity Diversified
(7.77), UTI Opportunities (7.41) and Canara Robeco Infrastructure Fund (4.95). While in
Private sector mutual funds higher performance was evidenced in Reliance Regular Saving
Equity (12.67) followed by Templeton India Growth (7.98), Reliance Equity Opportunities
(7.21), HDFC Growth (5.43), HDFC Premier Multicap (4.86) and HDFC Core & Satellite
(4.36). The worst performer was Magnum Mid cap (-8.29), UTI Infrastructure Fund (-4.66) –
Public Sector mutual fund and Franklin India Flexi cap Fund (1.87), Franklin India Life Stage
20S Plan (3.49). Private sector mutual fund schemes showed better performance in
comparison to Public sector mutual fund schemes as per the results shown by Jensen
measure.

23
24
CHAPTER NO.5

25
 CONCLUSION

Indian Mutual Fund Industry, which started its journey in the year 1964 witnessed four
interrelated stages of development and developed manifold in terms of assets, number of
players, schemes, policies, regulations before and after deregulation and became one of the
strong markets in the world. UTI the public sector mutual fund was the dominant player in
terms of number of schemes and funds mobilization till 1997-98 in the mutual fund industry.
This share had been gradually occupied by the private sector mutual funds after deregulation.
The share of resource mobilization by the public sector as a percentage of GDP had been
decreased phenomenally and reached to negative. On the other hand, the percentage of
private sector has an increasing tendency. The combined effect of percentage of both the
public and private sector mutual funds showed decline in tendency in the total resource
mobilization by mutual funds as a percentage of GDP. After deregulation, public sector has
weakened in terms of number of funds and Assets Under Management and has been occupied
by the private sector. Share of Indian mutual fund companies, Joint venture predominantly
Indian companies have increased their asset base manifold. On the other hand, assets of bank
sponsored and institutional mutual funds have decreased. Joint venture mutual funds
predominantly

foreign though increased are lagging behind when compared to Indian and predominantly
Indian mutual funds. Sales and redemptions of private sector Indian mutual funds, Joint
venture predominantly Indian mutual funds, and public sector mutual fund schemes have
increased. Sales and redemptions of private sector joint venture predominantly foreign
category have decreased. As a whole, net sales of private sector Indian mutual funds, Joint
venture predominantly Indian have increased. It is also interesting to note that private
individual investors in the case of number of players, corporate investors in the case of net
assets dominated the industry. Retail players and high net worth investors invested most of
their funds in equity schemes and balanced schemes. Investment in liquid and money market
instruments are dominated by the corporates and banks. The share of investment in bonds and
debentures in the total assets of UTI has decreased. The investment in equity and government
securities in the case of other mutual funds (other than UTI), particularly private sector funds
has also decreased. This has been totally diverted to money market instruments in the case of
UTI and other mutual funds have diverted to bonds, debentures and money market
instruments. The share of investment of UTI in government securities and in equity shares

26
decreased till 2003 but recovered gradually after the bifurcation of UTI. Investments diverted
to money market instruments in the case of other mutual funds are higher than the UTI.
Investment in equity shares by UTI equity schemes has increased and in the case of other
mutual funds (other than UTI) it is constant. Investment in money market instruments in both
the cases has also increased, contrarily share of investment in government securities and
bonds and debentures has decreased. Decrease in the investments of bonds and debentures of
UTI is higher than other mutual funds. UTI bond funds has increased their investment in
money market instruments and equity shares. Where as in the case of other mutual funds
(other than UTI) the investment in money market instruments only decreased. Investment in
government securities and bonds and debentures in the case of UTI bond funds and
investment in bonds and debentures in the case of other mutual funds has also decreased.
Investment in government securities, bonds and debentures by UTI balanced funds has been
increased by decreasing investment in money market instruments. On the other hand,
investment in equity and money market instruments of other mutual funds (other than UTI)
has also increased by reducing the investment in bonds and debentures. UTI which is the
oldest and biggest mutual fund in terms of investors and mobilization of funds had
maintained a dominant share by investing in equity shares, bonds and debentures and in
money market instruments till 2000. This scenario has changed to 2009 and now other mutual
funds particularly private sector have dominated and occupied nearly 90 per cent in all the
above instruments. And it is quite exiting that the share of investment in state and central
government securities is totally dominated by UTI except during the period of bifurcation.
The objective of understanding and evaluating the performance of public and private sector in
the frame work of risk and returns using performance measures such as Treynor Ratio,
Sharpe ratio, Jensen measure, Sharpe differential return measure and Fama’s components of
performance have been well established. The result indicate that public sector sample
schemes have superior performance in respect of risk and returns in comparison with
benchmarks, Treynor, and Sharpe ratios. The result also indicates that private sector sample
schemes, particularly joint venture predominantly foreign, institutions sample schemes
related to public sector have generated excess returns in excess of equilibrium in respect of
Jensen measure. Private sector sample schemes related to joint venture predominantly foreign
have good diversification and higher returns due to selectivity when compared to public
sector sample schemes. And another unique thing noticed is that sample mutual fund schemes
related to joint venture predominantly Indian both in the case of public and private sectors
have earned higher returns with the higher level of total risk. As a whole public sector sample
27
schemes in respect of risk and returns, private sector joint venture predominantly foreign and
public sector institutions sample schemes in respect of diversification and security selection
performed well. There are three types of players in the mutual fund market viz., Government
(UTI), Financial Institutions (Banks, LIC, GIC etc.) and Private Sector. The preference of the
investors to invest in the mutual funds of different sectors is found to be significant. Investors
belonging to urban area, higher educational qualification, salaried and self-employed persons,
higher income group investors have preferred to invest in financial institutions mutual funds.
Investors belonging to lower educational qualification, lower income group have their choice
of preference towards government sector mutual funds. Private sector mutual funds have
been liked by the rural and self-employed investors. Factors like age and sex do not have any
significant influence on the investors preference towards different sectors of mutual funds.
Basically mutual funds offer two types of schemes viz., open-ended schemes and close-ended
schemes. The preference of the investors towards open-ended schemes is found to be
significant. This preference is more significant in the case of investors belonging to young
age group and living in urban areas. Factors like sex, qualification, occupation and income
group do not have any significant influence on the investors preferences towards open-ended
schemes. Mutual funds offer four types of schemes viz., growth schemes, income schemes,
balanced schemes and sectoral schemes. The preference of the investors about different
mutual fund schemes is found to be significant. The preference of the investors towards
income schemes is more significant in the case of investors

belonging to younger age group, rural investors and investors with lower educational
qualification. Growth schemes have been liked by the old age, semi-urban, self-employed and
high income group investors. Sectoral schemes and balanced schemes have been liked by the
young and middle income group investors. Sex has no influence on the investors preference
towards different types of mutual fund schemes. Mutual fund investors have been inspired by
three sources viz., self-inspiration, friends or colleagues, and mutual fund agents. The major
source of inspiration is found to be friends or colleagues. It is more significant in the case of
investors belonging to young age group. Factors like sex, area, qualification, occupation and
income group do not have any significant influence on the investors source of inspiration to
invest in mutual fund schemes. Investors invest in mutual funds for different reasons. It has
been divided under four heads viz., earning income, for further obligations, growth in wealth
and for the tax benefit. The reasons behind investment in mutual funds is found to be
significant. People belonging to young age group, male investors, low income group have

28
significantly preferred to invest in mutual funds for earning income. Investors belonging to
old age group and high income group preferred to invest for growth in wealth. Reason behind
female investors investment in mutual funds is for further obligations. And most of the tax
benefit mutual fund schemes were liked by the 318 urban and high income group people.
Educational qualification has no significant influence on the reason behind investment in
mutual funds. The approximate amount of investment in mutual funds has been divided under
four categories viz., below Rs.10,000/- Rs.10,000/- to Rs.25,000/- Rs.25,000/- to Rs50,000/-
and Rs.50,000/- above. The preference of the investors about the amount of investment in
mutual funds is found to be significant. Investors belonging to younger age group have
medium investment of Rs.10,000/- to Rs.25,000/-. Investors belonging to old age group have
preferred to invest very lower amount. Middle aged people (31 to 50 years) have preferred to
invest very large amount i.e. Rs.50,000/- and above in mutual funds. Factors like sex, area,
qualification, profession do not have any significant influence on the investors preference
towards the amount of investment in mutual funds. Operation of any mutual fund is very
typical job on the part of fund manager, and every mutual fund investor should know how it
has been operated and how the portfolio is managed. Knowledge of the investors about the
mutual fund operation is found to be significant. Investors belonging to younger age group,
urban area and high income group have knowledge about mutual fund operation. Factors like
sex, educational qualification, profession do not have any significant influence on the
knowledge of mutual fund operation. Broadly mutual funds are divided under two different
sectors viz., Private Sector and Public Sector. Comparison of investors satisfaction with the
services of 319 private and public sector mutual funds revealed that there is no significant
difference. This is more open in the investors of private sector. Investors satisfaction with the
services of private sector mutual funds is slightly higher than that of the public sector mutual
fluids. Investors' level of satisfaction in respect of return is not found to be different among
public and private sector mutual funds.

29
CHAPTER NO.6

30
 SUMMARY

The objective of understanding and evaluating the performance of public and private sector in
the frame work of risk and returns using performance measures such as Treynor Ratio,
Sharpe ratio, Jensen measure, Sharpe differential return measure and Fama’s components of
performance has been well established. The results indicate that public sector sample mutual
fund schemes have superior performance in respect of risk and returns in comparison with
bench marks, Treynor and Sharpe ratios. And another unique thing noticed is that sample
mutual fund schemes related to joint venture predominantly Indian both in the case of public
and private sectors have earned higher returns with the higher levels of total risk. The result
also indicates that private sector sample schemes particularly joint venture predominantly
foreign, institutions sample schemes related to public sector have generated excess return in
excess of equilibrium in respect of Jensen measure. And private sector sample schemes
related to joint venture predominantly foreign have good diversification and higher returns
due to selectivity when compared to public sector sample schemes. As a whole Public sector
sample schemes in respect of risk and returns, Private sector joint venture predominantly
foreign and public sector institutions sample schemes in respect of diversification and
security selection have performed well

31
CHAPTER NO.7

32
 REFERENCES

Agrawal, D. (2007). Measuring performance of Indian mutual funds.

Fama, E. F., & French, K. (2008). Mutual fund performance. Journal of Finance, 63(1), 389-
416.

Goyal, M. M. (2015). Performance Evaluation of Top 10 Mutual Funds in India. Indian

Journal of Commerce and Management Studies, 6(1), 51.

Kanethia, D. K. (2010). Comparative Study of Various Mutual Funds Schemes in India.

Amity Global Business Review, 5(1), 60-76.

Nitzsche, D., Cuthbertson, K., & O'Sullivan, N. (2006). Mutual fund performance.

Pandow, B. A. (2017). Performance of Mutual Funds in India.

Prajapati, K. P., & Patel, M. K. (2012). Comparative study on performance evaluation of

mutual fund schemes of Indian companies. Researchers World, 3(3), 47.

Puri, H. (2010). Performance Evaluation of Balanced Mutual Fund Schemes in Indian

Scenario.Paradigm (09718907), 14(2), 1-22.

Rao, D. N. (2006). Investment styles and performance of equity mutual funds in India.

ArifF, Mohammed, Johnson, Lester W., (1990) Security Markets and sock pricing: Evidence
from a Developing Capital Markets in Asia, Longman Singapore Publishing Private Limited,
Singapore.

Avadhani V.A., (2005) Investment and Securities Markets in India, Himalaya Publishing
House, Mumbai.

Barua, Samirk, Raghunadhan, V. Varma, Jayant R., (1994) Portfolio Management. Tata Me.
Graw Hill Publishing Company Ltd., New Delhi.

Bhole, L.M., (1982), Financial Markets and Institutions Growth, Structure Innovations, Tata
Me. Graw Hill Publishing Company Ltd., New Delhi.

33
Chandra Sekhar, Y. (2004) Financial Markets and Services Emerging Trends, TheICFAI
University Press, Hyderabad.

Draper, P., (1989) The Investment Trust Industry in the U.K., Gower Publishing Company
Limited, Vermont.

Farrell, Paul B., (1999), The winning Portfolio — How to choose the best mutual funds,
Vision Books, New Delhi.

Gerald, W, Perrit (1993) Mutual Funds Encyclopedia, Dearborn Financial Publishing,

Chicago.

Gupta Amitabh (2002) Mutual Funds in India, A study of Investment Management.

Anmol Publications Private Limited, New Delhi. Investment Company Institute (2006)
Mutual Funds Fact Book; Industry Trend and Statistics, Washington.

Rajeswar, Ch., (2001) UTI-A- Saga of Crises and Bailouts, The ICFAI University Press,
Hyderabad.

Singh, Jaspal., (2006) Mutual Funds - Growth Performance and Prospects, Deep and Deep
Publications Private Limited, New Delhi.

WEBSITES:

 http://www.mutualfundindia.com

 http://www.nseindia.com

 http://www.bseindia.com

 http://navindia.com

 http://www.sebi.gov.in

 http://business.mapsofindia.com/investment-industry/mutual-fund-investment.html

34
CHAPTER NO.8

35
 ANNEXURE

 Questionnaire
Notes: 1) Information supplied will be used for research purposes only and treated as strictly
confidential. 2) If any question is not applicable to the respondent mark a cross (X) against
the question number in the left and tick (V) for ‘Yes’ in the relevant box.

I. Age: _______ c) Sex: Male [ ] Female [ ]

II. Area which you belong to

i) Urban [ ] ii) Semi-urban [ ] iii) Rural [ ]

III. Education
i) Graduation & above [ ] ii) Pre-University [ ]
iii) S.S.C. [ ] iv) Below S.S.C [ ]

IV. Are you a:

i) Salaried person [ ] ii) Self-employed [ ]
iii) Retired person [ ]

V. Approximate monthly household income (i.e., combined family income)

i) Below 10,000 [ ] ii) 10,000 to 20,000 [ ]
ii) iii) 20,000 to 50,000 [ ] iv) 50,000 and above [ ]

VI. Do you or any member of your family hold.... Yes / No

i) Any equity shares [ ] [ ]

36
 ii) Deposits with Bank, Post office, Public sector companies[ ][ ]
iii) Mutual Fund [ ] [ ]
iv) Chit Fund [ ] [ ]

VII. Who inspired you to invest in Mutual Fund?

a) Self [ ] b) Friends/ Colleagues [ ]
c) MF agents [ ]

VIII. What is the nature of Mutual Fund you have invested?

a) Open-ended [ ] b) Close-ended [ ]

IX. Which type of Mutual Fund investment do you like?

a) Govt. (UTI) [ ] b) Private [ ]

c) Financial Institutions (Bank/ LIC/ GIC etc.) [ ]

X. What is the reason behind investment in Mutual Fund?

a) Income earning [ ] b) For further obligations [ ]
c) Growth in wealth [ ] d) For tax benefit [ ]

XI. Which of the following schemes do you like?

a) Growth [ ] b) Income [ ]
c) Balanced [ ] d) Sectoral Fund [ ]

XII. What is the approximate amount of investment in Mutual Fund?

a) Below Rs 10,000 [ ] b) 10,000 to 25,000 [ ]
c) 25,000 to 50,000 [ ] d) 50,000 and above [ ]

XIII. Are you satisfied with die services of Mutual Fund?

1) Public Sector a) Satisfied [ ] b) Not satisfied [ ]
2) Private Sector a) Satisfied [ ] b) Not satisfied [ ]

XIV. Are you satisfied with the returns on your investment?

37
i) Public Sector a) Satisfied [ ] b) Not satisfied [ ]
ii) Private Sector a) Satisfied [ ] b) Not satisfied [ ]

38