A STUDY ON THE PERFORMANCE OF MUTUAL FUNDS TRADED IN GEOJIT BNP PARIBAS FINANCIAL SERVICES LIMITED, COCHIN.
A Project Report submitted in partial fulfilment of the requirements for the MBA (Full time) Degree of the Mahatma Gandhi University
Submitted by Madhav Manmohan Reg No: 23594 Batch 2010-2012
ALBERTIAN INSTITUTE OF MANAGEMENT (UNIT OF ST.ALBERTS COLLEGE) Banerji Road, Cochin-682018 June-July 2012
DECLARATION
I hereby declare that the project Study entitled “A STUDY ON THE PERFORMANCE OF MUTUAL FUND TRADED IN GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD” is a record of bona fide work done by me in GEOJIT BNP PARIBAS ,COCHIN HNI (HK) BRANCH, during June –July 2012 under the supervision of Mr. Jomon V.Y, Branch Manager, Cochin HNI(HK) Branch and Mr.Sajeev C.S, Albertian Institute of Management, and that no part of this Report has formed the basis for award of any degree, diploma, associate ship, fellowship or any other similar title or recognition in any other institution.
Cochin 01-08-2012
Madhav Manmohan
ACKNOWLEDGEMENT
First of all I thank the Almighty for His mercy and love that kept me in good health and helped me to complete the organization study successfully. At the very outset I express my heartfelt gratitude to our Director Dr. George Sleeba and my guide Mr.Sajeev C.S, faculty, Albertian Institute of Management I express my sincere thanks to Mr.Jomon V.Y, Branch Manager, Geojit BNP Paribas Cochin HNI (HK), for the permission and guidance for this project. I am bound to extend a very hearty thanks to all the department heads and the employees of Geojit BNP Paribas Financial Services Ltd. I sincerely thank my parents, relatives and friends for their encouragement and support during the project. Last, but not the least, I express my gratitude to everyone who has directly and indirectly helped me for completing the project on time and thereby making my venture a grand success.
INDEX
CHAPTERS
CONTENT
PAGE NO:
1
INTRODUCTION 1.1 Introduction to the study 1.2 Statement of problem 1.3 Scope of the study 1.4 Objectives of the study 1.5 Industry Profile 1.6 Company Profile 1.7 Literature Review 1.8 Performance measures of mutual funds
1 2-3 4 4 4 5-9 10-16 17-34 35-37
2
3
DESIGN OF STUDY 2.1 Research methodology 2.2 Research design 2.3 Sources of data 2.4 Sampling Plan 2.5 Tools of Analysis 2.6 Data analysis and interpretation 2.7 Overview of report 2.8 Limitations of study FINDINGS AND SUGGESTIONS
38 39 40 40 41 41 42-80 81 82 83-86
4
CONCLUSION
87-88
5
APPENDIX AND BIBLIOGRAPHY
90-129
Sl.no
List Of Tables
Page no
2.1
Risk and return of balanced fund
45
2.2
Performance of balanced fund schemes based on Sharpe ratio
46
2.3
Performance of balanced fund schemes based on Treynor’s ratio
48
2.4
Performance of balanced fund schemes based on Jensen alpha ratio
50
2.5
Performance of balanced fund schemes based on Fama decomposition measure
52
2.6
Risk and return of equity fund
54
2.7
Performance of equity fund schemes based on Sharpe ratio
56
2.8
Performance of equity fund schemes based on Treynor’s ratio
58
2.9
Performance of equity fund schemes based on Jensen alpha ratio
60
2.10
Performance of equity fund schemes based on Fama decomposition measure
62
2.11
Risk and return of gilt fund
64
2.12
Performance of gilt fund schemes based on Sharpe ratio
66
2.13
Performance of gilt fund schemes based on Treynor’s ratio
68
2.14
Performance of gilt fund schemes based on Jensen alpha ratio
70
2.15
Performance of gilt fund schemes based on Fama decomposition measure
72
2.16
Sharpe ratio of market index
74
2.17
Treynor ratio of market index
78
Sl.no 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.16.1 2.16.2 2.16.3 2.17 2.17.1 2.17.2
List of Charts And Graphs Risk and return of balanced fund Performance of balanced fund schemes based on Sharpe ratio Performance of balanced fund schemes based on Treynor’s ratio Performance of balanced fund schemes based on Jensen alpha ratio Performance of balanced fund schemes based on Fama decomposition measure Risk and return of equity fund Performance of equity fund schemes based on Sharpe ratio Performance of equity fund schemes based on Treynor’s ratio Performance of equity fund schemes based on Jensen alpha ratio Performance of equity fund schemes based on Fama decomposition measure Risk and return of gilt fund Performance of gilt fund schemes based on Sharpe ratio Performance of gilt fund schemes based on Treynor’s ratio Performance of gilt fund schemes based on Jensen alpha ratio Performance of gilt fund schemes based on Fama decomposition measure Sharpe ratio of market index Comparison of Sharpe ratio of market index and balanced fund Comparison of Sharpe ratio of market index and equity fund Comparison of Sharpe ratio of market index and gilt fund Treynor ratio of market index Comparison of Treynor ratio of market index and balanced fund Comparison of Treynor ratio of market index and equity fund
Page no 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 74 75 76 77 78 79 80
ABSTRACT
A Mutual fund is simply financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. “Fund operated by an investment company that raises money from the shareholders and invests it in stocks, bonds, options, commodities or money market”. International mutual funds are key contributors to the globalization of financial markets and one of the main sources of capital flows to emerging economies. This article provides an overview of mutual fund activity in emerging markets. Geojit BNP Paribas Financial Services Ltd. is listed on both the leading stock exchanges in India, viz. The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). Geojit BNP Paribas Financial Services Ltd. straddles the entire financial services space with offerings ranging from equity research, equities and derivatives trading, commodities trading, portfolio management services, mutual funds, life insurance, fixed deposits, gold bonds and other small savings instruments to loan products and investment banking. The main objectives of the study is “identification of the best mutual fund scheme floated in the category of equity funds, debit funds, balanced funds, equity diversified funds, and tax planning, based on their past performance with special reference to Geojit BNP Paribas Financial Services Ltd, Cochin. From the study, it can be concluded, among the fund categories of equity, debt balance and gilt funds, only five companies has been selected in each scheme.
