TREASURY MANAGEMENT PROJECT

Mutual fund analysis

18B109- GAURAV PATOLE

18B114- JYOTI GUPTA
18B115- KARTHIK JS
18B124- SACHIN SEBASTIAN
18B140- VINAY RAM N
 INDEX

Introduction...........................................................................................................,,..............................3
Advantages and risk in various schemes…………………………............................
……………………………………………………..……………………………..4
Mutual fund portfolio analysis….…………………………………………………………………….
………………………..…..…8
Funds analysis &
recommendation………………………………………………………………………………………
….…………………………………12
 Introduction
This report is focussed on the financial performance analysis and comparison of various
mutual funds schemes available in India and to propose a recommendation that is a best fit to
“Best Bank ltd”. In this report we will compare various funds in various schemes based on
various ratios and other parameters and derive inferences. Our primary objective remains to
find a better mutual fund that fits the requirement of Best Bank ltd.

In this research paper, the researcher took only two schemes and four banks taken as sample.
The aim is to evaluate, compare and rank the financial performance of the mutual fund
schemes. The data collected from the secondary source (i.e. fact sheets of the company ,News
paper, journals, periodicals etc. publishes the several data, Some private organization,
research brochures, universities published material).All the data used for analysis is taken
from the period June-2008 to the period May-2009,Mainly the Net Asset Value collected
from the website(http://www.amfiindia.com). This research finding will be useful to the
investors and the mutual fund company, in the investors‟ point of view that the investors can
understand that financial performance of the selected schemes of selected banks, in the same
way the mutual fund organization can benefit with this research findings by understand the
acceptance level of the mutual fund schemes. There is a necessary to include the constrains in
this research work is only taken two schemes and four banks. So there is a scope that to do
further research in the same concept by collecting data from more than two schemes and
more than four banks

Types of Mutual fund schemes available in India:

The mutual funds schemes in India can be classified upon the following basis, that is
 Asset Class
 Risk
 Investment Plans
 Structure
 Specialized Mutual Funds
Mutual Funds based Asset Plans:
1. The first type of Asset Plans is the Equity funds; this mutual fund is built upon the equity
class and as such their prices depend on the prices of the shares. They come with higher
growth in share price the risk taken by the investor also rises. That is the investor has a higher
risk of losing money.
2. The second type of Asset Plan is the Debt funds; debt funds choose from fixed income
securities like bonds, securities and treasury bills – Fixed Maturity Plans (FMPs), Gilt Fund,
Liquid Funds, Short Term Plans, Long Term Bonds and Monthly Income Plans among others
– with fixed interest rate and maturity date. An investor is only suggested to go for this type
of mutual funds only if he is passive and risk-free investor. In which case he can’t expect
much returns.
3. The third type of plan is the Hybrid Funds; it is essentially a mix of Equity funds and the
Debt funds. There by it reduces the risk from the equity funds and increases the returns of
debt class. The ratio between the equity and the debt class can be either fixed or variable.
Mutual Funds based on Structure:
1. The Open-Ended Funds don’t have any constraints in a time period or number of units they
can invest into– an investor can trade funds at their convenience and enter and exit when they
like at the current NAV (Net Asset Value). Therefore, its unit capital changes constantly with
new entries and exits. An open-ended fund may also decide to stop taking in new investors if
they do not want to (or cannot manage large funds).
2. In the Close-Ended funds the unit capital to invest is fixed beforehand, and hence they
cannot sell a more than a pre-agreed number of units. Some funds also come with an NFO
period, wherein there is a deadline to buy units. It has a specific maturity tenure and fund
managers are open to any fund size, however large. SEBI mandates that the investors must be
given either a repurchase option or listing on stock exchanges to exit the scheme.
3. The Interval Funds has traits of both open-ended and closed-ended funds. Interval funds
can be purchased or exited only at specific intervals (decided by the fund house) and are
closed the rest of the time. No transactions will be permitted for at least 2 years. This is
suitable for those who want to save a lump sum for an immediate goal (3-12 months).

Mutual Fund Types Based on Investment Goals:

1. Growth funds usually put a huge portion of the investors amount in shares and growth
sectors, suitable for investors (mostly Millennials and youngsters) who have a surplus of idle
money to be distributed in riskier plans expecting possibly high returns or are positive about
the scheme.
2. Income Funds belongs to the family of debt mutual funds that distribute their money in a
mix of bonds, certificate of deposits and securities among others. It is usually helmed by
skilled fund managers who keep the portfolio in tandem with the rate fluctuations without
compromising on the portfolio’s creditworthiness, Income Funds have historically earned
investors better returns than deposits and are best suited for risk-averse individuals from a 2-3
years perspective.
3. Liquid Funds like Income Funds, belongs to the debt fund category as they invest in debt
instruments and money market with a tenure of up to 91 days. The maximum sum allowed to
invest is Rs 10 lakhs. One feature that differentiates Liquid Funds from other debt funds is
how the Net Asset Value is calculated – NAV of liquid funds are calculated for 365 days
(including Sundays) while for others, only business days are calculated.
4. Tax-Saving Funds or the ELSS or Equity Linked Saving Scheme is gaining popularity as it
serves investors the double benefit of building wealth as well as save on taxes – all in the
lowest lock-in period of only 3 years. Investing predominantly in equity (and related
products), it has been known to earn you non-taxed returns from 14-16%. This is best-suited
for long-term and salaried investors.
5. Aggressive Growth Funds are on the slightly on the riskier side when choosing where to
invest in, Aggressive Growth Fund is designed to make steep monetary gains. Though they
are susceptible to market volatility, you may choose one as per the beta (the tool to gauge the
fund’s movement in comparison with the market).
6. If protecting your principal is our priority, then Capital Protection Funds can serve the
purpose while earning relatively smaller returns (12% at best). The fund manager will invest
a portion of your money in bonds or CDs and the rest in equities. You will not incur any loss.
However, you need a least 3 years (closed-ended) to safeguard your money and the returns
are taxable.
7. Fixed Maturity Fund Investors choose as the FY ends to take advantage of triple
indexation, thereby bringing down tax burden. If uncomfortable with the debt market trends
and related risks, Fixed Maturity Plans (FMP) – investing in bonds, securities, money market
etc. – present a great opportunity. As a close-ended plan, FMP functions on a fixed maturity
period, which could range from 1 month to 5 years (like FDs). The Fund Manager makes sure
to put the money in an investment with the same tenure, to reap accrual interest at the time of
FMP maturity.

Mutual Fund Types Based on Risks

1. Very Low-Risk Funds: Liquid Funds and Ultra Short-term Funds (1 month to 1 year) are
not risky at all, and understandably their returns are low (6% at best). Investors choose this to
fulfill their short-term financial goals and to keep their money safe until then.
2. Low-Risk Funds: In the event of rupee depreciation or unexpected national crisis, investors
are unsure about investing in riskier funds. In such cases, fund managers recommend putting
money in either one or a combination of liquid, ultra-short-term or arbitrage funds. Returns
could be 6-8%, but the investors are free to switch when valuations become more stable.
3. Medium-risk Funds: Here, the risk factor is of medium level as the fund manager invests a
portion in debt and the rest in equity funds. The NAV is not that volatile due to the debt
component, and the average returns could be 9-12%.
d. High-risk Funds are suitable for investors with no risk aversion and aiming for huge
returns in the form of interest and dividends, High-risk Mutual Funds need active fund
management. Regular performance reviews are mandatory as they are susceptible market
volatility. You can expect 15% returns, though most high-risk funds generally provide 20%
returns (and up to 30% at best).
Specialized Mutual Fund Types
1. Sector Funds are the funds Investing solely in one specific sector, theme-based mutual
funds. As these funds invest only in specific sectors with only a few stocks, the risk factor is
on the higher side. One must be constantly aware of the various sector-related trends and
news, and in case of any decline, just exit immediately. However, sector funds also deliver
great returns. Some areas of banking, IT and pharma have witnessed huge and consistent
growth in recent past and are predicted to be promising in future as well.
2. Index Funds Suited best for passive investors, index funds put money in an index. It is not
managed by a fund manager. An index fund simply identifies stocks and their corresponding
ratio in the market index and put the money in similar proportion in similar stocks. Even if
they cannot outdo the market (which is the reason why they are not popular in India), they
play it safe by mimicking the index performance.
3. Funds of Funds is a diversified mutual fund investment portfolio that offers a slew of
benefits, and ‘Funds of Funds’ aka multi-manager mutual funds are made to exploit this to
the tilt – by putting their money in diverse fund categories. In short, buying one fund that
invests in many funds rather than investing in several achieves diversification as well as saves
on costs.
4. Emerging market Funds is to invest in developing markets is considered a steep bet and it
has undergone negative returns too. India itself a dynamic and emerging market and investors
to earn high returns from the domestic stock market, they are prone to fall prey to market
volatilities. However, in a longer-term perspective, it is evident that emerging economies will
contribute to the majority of global growth in the coming decade as their economic growth
rate is way superior to that of the US or the UK.
5. International/ Foreign Funds are favoured by investors looking to spread their investment
to other countries, Foreign Mutual Funds can get investors good returns even when the Indian
Stock Markets do fare well. An investor can employ a hybrid approach (say, 60% in domestic
equities and the rest in overseas funds) or a feeder approach (getting local funds to place them
in foreign stocks) or a theme-based allocation (ex. Gold Mining).
6. Real Estate Funds in-spite of the real estate boom in India, many are wary about investing
in such projects due to multiple risks. Real Estate Fund can be a perfect alternative as the
investor is only an indirect participant by putting their money in established real estate
companies/trusts rather than projects. A long-term investment, it negates risks and legal
hassles when it comes to purchasing a property as well as provide liquidity to some extent.
7. Commodity-focused Stock Funds are Ideal for investors with sufficient risk-appetite and
looking to diversify their portfolio, commodity-focused stock funds give a chance to dabble
in multiple and diverse trades. Returns are not periodic and are either based on the
performance of the stock company or the commodity itself. Gold is the only commodity in
which mutual funds can invest directly in India. The rest purchase fund units or shares from
commodity businesses.
8. Market Neutral Funds are for investors seeking protection from unfavourable market
tendencies while sustaining good returns, Market-neutral Funds are created to meet the
purpose (like a hedge fund). With better risk-adaptability, these funds give high returns and
even small investors can outstrip the market without stretching the portfolio limits.

9. Inverse/leveraged Funds are different from the usual funds, While a regular index fund
moves in tandem with the benchmark index, the returns of an inverse index fund shift in the
opposite direction. Simply put, it is nothing but selling your shares when the stock goes
down, only to buy them back at an even lesser cost (to hold until the price goes up again).
10. Asset Allocation Funds are created by combining debt, equity and even gold in an
optimum ratio, because of which this is a greatly flexible fund. Based on a pre-set formula or
fund manager’s inferences on the basis of the current market trends, Asset Allocation Funds
can regulate the equity-debt distribution. It is almost like Hybrid Funds but requires great
expertise in choosing and allocation of the bonds and stocks from the fund manager.

Advantages of Investing in Mutual Funds:

Professional Management: Mutual fund professionals manage your hard-earned money

with their skills and experience. They have a qualified research team that assists them by
analysing the performance and potential of various corporations. In addition to that, they find
suitable investment offers for their clients. Fund managers are qualified to manage your funds
in such a manner that they yield higher returns on investment(s). Professional management is
a continuous process and it takes much time to add value to your investment(s).

Diversification: Diversification makes your investment an intelligent investment. It

minimizes the risk by investing your money in different mutual funds investment vehicles.
Obviously, chances are very slim that all the stocks will decline simultaneously. Sector funds
let your investment spread across a solo industry so that there is less diversification.

More Choices: The biggest advantage of investing in a fund is that it offers a wide range of
schemes that match with your long-term expectations. Whenever a new phase begins in your
life, you just need to have a discussion with your financial advisor(s) and work on your
portfolio to suit your present situation.
Affordability: At times, your investment goal or your capital doesn’t let you invest in the
shares of a big company. Generally, mutual funds deal with buying and selling of securities
in a large amount that allows investors to get the advantage for a low trading course. Thanks
to the minimum fund requirement, even the smallest investor can give mutual funds a shot.

Tax Benefits of Mutual Funds: You get tax benefits if you invest for a period of one year or
more in capital gains. Mutual-funds investments also make you eligible for the benefits of the
tax deduction.

Liquidity: Open-end funds make you eligible to redeem total or partial investment anytime
you want to, and you can receive the present value for your shares. Funds give you more
liquidity as compared most of the investments in the shares, bonds, and deposits. This follows
a standardized process and it makes the process efficient and smooth. Because of that, you
get your money as soon as possible.

Averaging Rupee-Cost: Irrespective of the investments’ unit price, you make an investment
in a particular rupee amount at frequent intervals with averaging rupee-cost. Resulting, you
are able to buy more units when the prices are less; fewer units when the prices are high.
Averaging rupee-cost enables you to maintain your investment discipline by frequent
investments. It also prevents you from making any unpredictable investment.

Ensures Transparency: Various esteemed publications and rating agencies review the
performance of the funds, which makes it easier for investors to compare one fund to another.
It is beneficial for you as a shareholder, as it provides you with latest updates, including
funds’ holdings, managers’ strategy etc.

Regulations: As per the regulations by The Securities and Exchange Board of India (SEBI),
all the mutual funds corporations are required to register with SEBI, as they are obliged to
adhere to the strict regulations formulated to safeguard investors. The overall trading
operations are monitored by the SEBI on a regular basis.

Disadvantages of Mutual Funds:

Besides a plethora of advantages of mutual funds in India, there are some disadvantages also.
The drawbacks of investing in mutual funds are as follows:

Cost to Manage Mutual Funds: Fund manager and market analysts’ salary usually comes
from the investors. The overall fund management charge is the key parameters to take into
consideration while choosing a fund. Higher management fees do not guarantee a better
performance of the funds.

Lock-in Periods: Many mutual fund plans come loaded with long-term lock-in periods. The
lock-in period can range between 5 and 8 years. It can be an expensive affair to exit such
funds before their maturity. Interest for investors cannot be earned from this share in cash.

Dilution: While branching out averages the risks of loss, it can also reduce the profits.
Therefore, you must not invest in over 7-9 mutual funds at one time. As mentioned above, the
potential and benefits of mutual funds can certainly take priority over the disadvantages, if
the investors make a well-informed and wise decision. Nevertheless, the investors might not
have time, patience, or knowledge to analyse and research different mutual funds. If an
individual-wishes to invest in mutual fund plans, s/he must go through this page to get his/her
head clear of all the doubts about mutual funds.

Types of risks associated with mutual funds

People always look for means to make money. One of these ways is through investment. But
no investment comes risk-free. Though mutual fund offers wider diversification along with
value-for-money to its investors, there are some risks associated with mutual funds
investment. Risks arise in mutual funds as MF invests in various financial instruments such
as government securities, corporate bonds, debt, and many more. In addition to this, the cost
of such instruments keeps changing owing to various factors such as change in rate of
interest, inflation, supply-demand, etc.

Because of the price volatility or fluctuation, the Net Asset Value (NAV) of the individual
drops resulting in losses. Simply put, NAV is typically the market of all the MFs an
individual has invested in per unit after nullifying the liabilities. Therefore, it becomes
important to determine the risk profile and invest in the best and suitable fund.

Various risks that are associated with MFs are as follows:

Market Risks: Mutual Funds always come with a tag line ‘Mutual Funds are subject to
Market Risks’.

The market risks are basically the risks that may result in losses for an individual investing in
mutual funds due to its poor performance in the stock market. There are certain factors
affecting the market. Some of the factors are – recession, inflation, natural disaster,
fluctuation of the rates of interest, and political unrest. Market risk is also referred to as
systematic risk. Diversification of the portfolio of the investor does not help in such cases.
The only thing that the investor can do is waiting for the storm to calm.

Concentration Risk: Concentration usually means to focus on one thing. Investing a huge
sum of money of the investment in one specific fund is not a good bet. Profits and returns
will be huge (if lucky), but there will be more of losses. The best way to reduce this risk is by
diversification of the portfolio of the investor. Concentration and huge investment in one
sector is also loaded with risks. The more divers the investor’s portfolio, the lesser the risk is.

Interest Rate Risk: Changes in the rate of interest depend on the credit available with the
lenders and the demand from the borrowers. These two are inversely proportional to each
other. Escalation in the rates of interest during the tenure of investment may result in a
decrease in the cost of securities.

For instance, an investor decides to put Rs. 100 with an interest rate of 5% for x years. If the
rate of interest changes because of the changes in economy becomes 6%, the investor will no
longer be able to get back Rs. 100 s/he invested owing to the fact that the rate of interest is
fixed. The only choice left is reducing the bond’s market value. If the rate of interest comes
down to 4% on the other hand, the bond can be sold at the price above the invested amount.

Liquidity Risk: Liquidity risk refers to the difficulty to redeem the investment without
incurring any loss in the value of instrument. It can also happen when the seller is not able to
find a buyer for that security.
Like ELSS, in mutual funds, the lock-in period may result in liquidity risk. The investors
cannot do anything during the lock-in period. In another case, ETFs – Exchange-traded Funds
may suffer from this risk.

Sometimes because of the lack of buyers in the stock market, the investors may not be able to
redeem their investments when they need them the most. The best means to avoid this is to
have a diverse portfolio and make fund selection diligently.

Credit Risk: Credit risk typically means that the one who issues the scheme is not able to
pay what was promised as the interest. Generally, the rating of the agencies that handle
investments depends on these criteria. Hence, the investor will always see that a company
with higher rating will pay lesser and vice-versa.

Mutual funds, specifically debt funds, also come loaded with credit risks. In debt funds, the
manager has to slot in only investment-grade securities. But there are cases where these
might earn a high return; the fund manager might include lower credit-rates securities.

This would boost the credit risk of the portfolio. Before the investor invests in debt funds,
they must look for credit ratings of the portfolio composition.
 Bu
siness structure of mutual funds:
Mutual fund portfolio analysis:

Mutual funds are an easy and tension free way of investment and it automatically diversifies the
investments. A mutual fund is an investment only in debt or only in equity or mix of debts and equity
and ratio depending on the scheme. They provide with benefits such as professional approach,
benefits of scale and convenience. Further investing in mutual fund will have advantage of getting
professional management services, at a lower cost, which otherwise was not possible at all. In case
of open ended mutual fund scheme, mutual fund is giving an assurance to investor that mutual fund
will give support of secondary market. There is an absolute transparency about investment
performance to investors. On real time basis, investors are informed about performance of
investment. In mutual funds also, we can select among the following types of portfolios:

 Equity Schemes
 Debt Schemes
 Balanced Schemes
 Sector Specific Schemes

We have fund portfolios for different risk profiles and financial situations. The below portfolios
covers almost the entire spectrum of investing population, ranging from aggressive investors who
are willing to live with volatility to conservative investors who want reasonable growth with minimal
risk.

As a first step, banks must know their risk appetite, because this will determine the asset allocation
and the type of funds that fit the profile. If the market volatility does not bother then the investment
tenure is more than 8-10 years, go for the Wealth Maximiser portfolio that invests entirely in equity
funds and has a decidedly mid- and small-cap orientation. These funds have given spectacular
returns
in recent years, but also carry high risks.

Not everyone is comfortable with high returns that accompany high risks. Those seeking
comparatively stable but lower returns should go for the Stable Wealth portfolio that adopts a
balanced approach and puts only 60-65% in equities. However, if the thought of losing money is
completely unacceptable to you, go for the conservative Wealth Secure portfolio where the equity
allocation is just 20-25% of the corpus. There’s no point in taking risks to earn high returns if it gives
you sleepless nights and ruins your personal life.

We have a tax saving fund portfolio because the ELSS category is an ideal way to save tax for equity
investors. There is a 3-year lock-in period, which actually works in favour of the investor by keeping
him invested even during periods of high volatility

Firms/individual can neither be tempted to get out when markets shoot up, nor lose his nerve and
redeem when stocks prices head southwards. In some cases, the three-year locking period of ELSS
funds actually inculcates investing discipline in individuals. They realise the benefits of taking a long
term perspective.

Most investors/banks are familiar with the advantages and convenience of investing in mutual funds
through SIPs. But we can’t expect this to be a foolproof safeguard against losses. SIP only reduce the
risk—they do not remove it altogether. An equity fund portfolio will certainly slip into the red if the
markets recede. 

Therefore, the returns from these portfolios will depend, in a large measure, on the investing
discipline of the individual/firms. Domestic investors are pouring money into equity funds, and SIPs
worth Rs 6,000 crore flow in every month. But this can quickly change if markets witness a sharp
decline. 

Wealth Maximiser portfolio is for aggressive investors who don’t mind taking risks:

This portfolio has been designed for investors who want high returns even if it means taking high
risks. It has two mid-cap funds, one small-cap fund and one multi-cap fund. The SBI Small and
Midcap Fund has consistently topped the small-cap category in recent years. It has risen 66% in the
past one year. The Mirae Asset Emerging Bluechip is another winner, topping the mid-cap category
with over 23% returns in the past three years.

But though mid- and small-cap funds have given spectacular returns in the past one year, the road
ahead could be quite bumpy. The mid-cap and small-cap stocks are looking overvalued and this is
why some funds in this category have stopped accepting new investments and others are taking only
SIPs under some conditions. 

A two multi-cap funds brings stability to Wealth Maximiser. The multi-cap DSP BlackRock
Opportunities Fund and the ELSS scheme Axis Long-term Equity Fund have nearly 70% invested in
large-caps. These funds will not be as volatile as the mid- and small-cap schemes. 
Volatility is inherent to stocks. It is here that the SIP approach proves beneficial for investors. Even if
the market corrects and the funds slip, the investor stands to benefit because he can get more units
with the same SIP sum. Still, only investors who have the stomach for volatility should go for this
portfolio. They should also be prepared to remain invested for at least 5-7 years to earn good
returns from this portfolio.
Wealth Builder portfolio: Cautiously optimistic on markets 

Small- and mid-cap funds might have zoomed, but even large-cap funds have not done badly. The
large-cap category rose 26% in the past one year, though the returns have not been very high in the
past 3-5 years. Even so, this portfolio of large-cap equity funds has the potential to churn out decent
returns for the long-term investor.

We have chosen funds that score high on consistency and the risk-reward matrix. The Franklin India
Flexi cap Fund, for instance, has a standard deviation of less than 12, which makes it among the most
consistent performers in its category.

The other funds in the portfolio have an equally impressive track record. The Aditya Birla Sun Life
Frontline Equity has consistently outperformed both the benchmark and the category average by a
wide margin. The Kotak Select Focus is another fund that has delivered consistent returns.

Will these large-cap funds be able to generate alpha for the portfolio? The Motilal Oswal MoST
Focused Multicap 35 fund is best positioned to do that. This multi-cap fund earned more than 35% in
the past one year and has delivered SIP returns of over 23% in the past three years. The ELSS scheme
in the portfolio could also chip in here. The Tata Tax Savings Fund has 44% of its corpus invested in
mid-cap and small-cap stocks. 
Wealth Builder: Cautiously aggressive portfolio with large-cap orientation. 

Stable Wealth: Get the best of both worlds 

Stable Wealth is for investors who want a balanced mix of debt and equity.Even though they might
be optimistic, not everyone is willing to bet big on the stock markets. The Stable Wealth portfolio is
designed to give investors reasonable growth without too much risk. It has three equity-oriented
balanced schemes, one ELSS fund and one short-term debt fund. All three balanced funds have
impressive credentials. They have outperformed the category and their benchmarks. 
Balanced funds divide their corpus between debt and equity, giving investors the best of both
worlds. The equity portion generates returns when markets are doing well, and the debt portion acts
as a cushion when equities are headed southwards.
The best part of a balanced fund is that although nearly 40% of the corpus is in debt, it gets the same
tax treatment as an equity fund. So, 40% of the corpus in debt effectively earns tax-free returns for
the investor.

The ELSS fund in the portfolio, IDFC Tax Advantage, is an equity fund. It has ranked among the top-
performing ELSS funds in recent years. The debt fund in Stable Wealth lends stability to the portfolio.
The Franklin India Short Term Income Fund has been a consistent performer, generating nearly
double-digit SIP returns in the past five years. That makes it a better option than bank deposits and
other fixed income instruments.

Stable Wealth: Balanced portfolio with lower exposure to equity

Wealth Secure: When safety is paramount
Wealth Secure is designed for investors who don’t want to risk their money in stocks. 

Another caveat is needed here. Though debt funds are not as volatile as equity schemes, it is a
misconception that they can’t lose money. Debt funds are sensitive to interest rate movements and
will lose money if interest rates go up. Long-term debt funds have lost 1.5% in the past six months.
Their one-year returns are only 2.6%, which is less than what a savings bank account offers.  

For the same reason, we have included only short-term debt funds in the portfolio. These funds are
less volatile and focus on earning from interest accruals than on capital gains. The Baroda Pioneer
Short-term Bond Fund and the Franklin India Low Duration Fund have generated almost 9% returns
in the past one year. The hybrid scheme in the portfolio, ICICI Prudential Child Care Plan is a
consistent outperformer, while the ELSS fund, Aditya Birla Sun Life Tax Relief 96 provides the
necessary tinge of equity to the fund. 

Wealth Secure
Conservative allocation with very low exposure to equity.  
Income Generator: Regular income in the golden years
Income Generator is for retirees looking for a monthly income from their investments. 

But the real benefit comes from the tax advantage that debt funds have over fixed deposits. The
income from bank deposits is fully taxable. In debt funds, the gain is only a thin sliver of the
redemption proceeds. A big part of the redemption is the principal amount which is not taxable. It
keeps getting better as years go by.

After three years, gains are treated as long-term capital gains and taxed at a lower rate of 20% after
indexation. Retirees should consider parking their retirement corpus in a good debt fund and then
start systematic withdrawal plans to get a monthly income. The Income Generator portfolio does
exactly this.
Income Generator: Meant for investors who are looking for regular income in retirement. 

Analysis:
We are now going to understand the risk and return profile along with other parameters like sharpe
ratio, R sq, alpha, beta etc for few top schemes.

1.HDFC Top 100 Fund Growth:

Based on the latest data we have done the analysis on HDFC Top 100 fund growth scheme and we
have depicted our analysis in the pictorial form as it is easy to grasp and understand various
intricacies of each fund. The scheme has a long-term approach to investing that entails taking high-
conviction bets and sticking to them if they underperform in short- term. This has yielded
satisfactory results to this fund. The fund has positive attributes such as a supremely skilled
manager, a robust process, and a stable and competitive team remaining intact.

2.Franklin India Ultra Short Bond Fund Retail Growth:

This scheme focuses on underpriced money market instruments and bonds, seeking to add value by
identifying securities that have improving or strong credit fundamentals. Thus, the fund typically has
a relatively more credit-sensitive portfolio than a typical peer. The fund’s appeal is its low price tag, a
deviation from some other offerings from the fund house. Its expense ratio of .37% makes it among
the least expensive funds in its category.

3.HDFC Equity Fund Growth:

This fund has an unwavering focus on the long term aand willingness to back conviction bets are its
USP. The valuation-conscious approach may cause the fund to lag peers in momentum-driven
markets. The fund may also lag peers from its multi-cap category who may increase allocation to
mid/small cap stock when they hit a purple patch.

4.Franklin India Prima Fund Growth:

Mid/small cap stocks witnessed one of their strongest rallies in recent times in 2017. Expectedly,
many small/mid cap funds managed to capitalise on that. Such markets typically create an
environment where generating returns in small/mid-cap funds appears to be a cake walk—but it’s
not! Extreme volatility tags along with this segment naturally, and factors such as constrained
liquidity, limited coverage, and poor disclosures make investing in them a tricky proposition. Such
risks are apparent during market downturns, and that is a litmus test for any fund in this segment.
They invest in beaten up stocks or out-of-favour growth companies, especially when the company is
affected by external factors rather than deteriorating fundamentals.

5.Aditya Birla Sun life Frontline Equity Fund Growth:

This fund stands out on many fronts and the prominent among them is the consistency of its return
to investors. The fund largely in stocks chosen from the index and it is loosely aligned with the
portfolio’s sector weights with those of the benchmark index. The YoY return has been consistent
over the past 10 years.
Having analysed the five top funds currently in the markets, we have few recommendations.
The five funds that we have analysed are:
1.HDFC Top 100 fund growth
2.Franklin India Ultra Short Bond Fund Retail Growth
3.HDFC Equity Fund Growth
4.Franklin India Prima Fund Growth
5.Aditya Birla Sun life Frontline Equity Fund Growth
If the company Best Bank ltd is looking at short time investment avenues than Franklin India
ultra-short bond fund retail growth is a fund to invest in. If the company is looking at long
time horizon then they can look at HDFC Equity fund growth, HDFC top 100 fund growth
schemes as they provide cushion against any downturn in the economy.