7. growth fund schemes (HDFC&SBI) (H0)4 There is

7.
CHAPTER -7 RESULT AND DISCUSSIONS

7.1 Over all returns of schemes

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7.2 Comparison of actual returns with Benchmark

7.3 Power of compounding in mutual fund

7.4 Recent trends of Indian mutual fund

 

 RESULT AND DISCUSSIONS

Sometimes it is seen that over analysis and careful
decisions could not pay much because according to one equity researcher who is
known as eastern Warren Buffet   none
other than Mr Ram Devo Agarwal predict about 2018 and say that whole market is
function of two things one is price what everybody pay to buy FM units and
second is future value what you get at the maturity and this is not certain
because everybody perceive differently. This is quite correct in context of Indian
MF since 2010 to 2017 behavior of market is changes rapidly with change in
Global conditions and effect of these changes seen in every schemes of MF

Hypothesis testing is one of method of testing the result
of schemes and hypothesis work on sample data from a big data as per objectives
of my research the following   
hypothesis are taken for testing

Hypothesis

(H0)1 There is no difference between growth fund scheme
and balance fund schemes of the both mutual fund houses ( HDFC&SBI)

(H1)2 Growth fund scheme of same house is better than balance
fund scheme of same mutual fund house

(H1) 3 Balance fund schemes (HDFC&SBI) are better
than growth fund schemes (HDFC&SBI) (H0)4 There is no difference in
perception of investors about private mutual fund house(HDFC) and public mutual
fund house(SBI)

(H1)5 Investors are more interested towards public mutual
fund house (SBI)

(H1) 6 Investors are more interested towards private
mutual fund house (HDFC)

 These hypotheses
are test to achieve under given objectives

Objectives

To compare growth fund scheme and balance fund scheme of
HDFC mutual fund and SBI mutual fund.

To know the investors perception about private mutual
fund house (HDFC) and public sector mutual fund house (SBI).

 

And used known test usually used to test mutual fund

Alpha, Beta 

Ratios Shapere, Trenyor ,Jeanses

For testing of

(H0)4: use the secondary data

(H1)5: use the secondary data

(H1)6 we used primary data collected by questionnaire in
Delhi and Meerut

 

            Discussion (Hypothesis Testing)

(Ho) 1 this is first null hypothesis of my study and it
is rejected because by using all measure like Sharpe Trenyor and Jeanses ratio
it found during years of study balance fund and growth fund both gives
different result. In long horizon period growth fund gives better returns

(H1)2 is accepted because in case of HDF growth fund
performs better than HDFC balance fund

(H1)3  is accepted
because in short run balance funds of both the hoses are performing better than
growth fund of both the houses

( H0) 4 is rejected 
because study shows after interview of cities chosen for study give very
clear picture that  even after silver
jubilee of  LPG people of tire two city
like Meerut  still believing on only
Public sector mutual fund  and other
financial product of same sectors .And 
case quite reverse in case of metro like Delhi

(H1) 5 is accepted because   large number of people shows their interest
only in SBI mutual funds or other financial product of same bank

(H1) 6 is accepted in case of Delhi where people show the
greater interest in HDFC mutual funds

RESULTS & DISCUSSION II

Investor first thinks about the risk than saving pattern.

Once investor   put
their money in any scheme they are hoping to get return from day first.

Major holding is still in hand of big investor than
retailer.

Mutual Fund is still dominated by mega city like Delhi.

Due to conservativeness of   Indians most of the investor focus on Debt
related schemes.

Despite being too much of awareness by electronic media
still people of tire two cities like Meerut are not much aware about the mutual
fund.

There are some suggestions based on our study for batter
investing, for·
investors that they should keep their investment for long time keeping in mind
the level of risk involves and saving pattern investors first look over the
risk factor because they are investing for the maximum returns. Once they
invested in mutual fund they need returns and if it is not giving proper
returns to them again it is affecting the interest of the investors to invest in
MF. There is need to work on ground level in tier two cities because there is
huge potential but is still untapped. Expert people go for make people aware
about financial product hold small gathering and show the documentary and
return back to their home this is merely not possible .we should go and talk to
them after knowing their future financial need things will surely improved like
metro.

The findings show that mutual funds as an investment
option have displayed tremendous growth potential when the markets are
optimistic and when wise choices are made. They have performed much better than
traditional investment options in the long term and thus help investor beat
inflation to some extent. It is of paramount importance that investors do not
make a rash decision simply by looking at the return figures generated by an
individual fund, But  investor belong to
tire two cities are not aware about good news about mutual fund and stock
market but news of scandal and miss happening reach very fast to them.

: It is observed that even though mutual fund industry
seems to grow in India the growth is concentrated both with respect to investor
category and place. It is dominated by Institutional investors, Mega cities and
debt oriented schemes leaving huge scope for growth. But large segment of
investor are still outside the umbrella of the industry. The reach of the fund
houses to different segments of investors is still a key challenge. One
possible solution could be increasing financial knowledge and awareness to stimulate
investors in mutual fund investment. This will attract investors towards mutual
fund investment. The limited distribution network and investor service can be
enhanced for wider reach beyond large cities. 

Discussion:  2015
year is better for Indian mutual fund industry despite being many ups and down
in stock market net flow remain constant. In other words flow of money into
formal sector could not break .Recent report by CRICIL in December 2015 last
average asset flow under the asset management company grew by 21% in same
period if we talk in terms of Rupee it is 13.39 Trillion increased.  This is story of last three years (2013,
2014, 2015) you may call it NDA era. In same period the   flow fund increase in formal system that is
why in 2015-16 ten top performer mutual funds see the cash flow 80% and growth
of SIP in same period became astronomically as high as by % it is 63%.

In same period of 2014 to 2017 we see due to uncertainty
of   land acquisition bill and export
duty on gold   play big role to reduce the
return of that mutual fund having these two items in its portfolio and we
observe by my study that these items having more % in SBI equity fund and
balance fund.

In same period HDFC asset management company do better to
do R&D and put their money into auto and pharmacy like  companies and in midcap go for more equity
than debt so there looks the fear of losing principal but end of day these fund
perform better than traditional mutual fund house like SBI

In November 2015, the 7-year (2010 to 2016) average
return yielded by Indian mutual funds across all fund Schemes types and
portfolio is about 10.2%. Equity-oriented schemes have returned 13.8% and debt
schemes only 7.9%

 

 

 

 

7.1
Over all returns of schemes

 

 

Top Performing Balanced Funds ( 2010 to 2017)

MF Scheme Name

 

Returns %

 

Launch

3 years

5 years

10 years

since

Risk Grade

Return grade

HDFC Balanced Fund

11-sep-00

16

19

16

17

Below Average

Above average

Birla Sun life Balanced 95 fund

10-feb-95

16

19

14

21

Average

Above average

L&T Produce Fund

31-jan-11

17

20

N/A

15

Below Average

Above average

ICIC Prudential Balanced Fund

03-nov-99

16

20
 

13

15

Below Average

Above average

SBI magnum Balanced Fund

31-dec-95

15

20

12

16

Below Average

average

TATA Balanced Fund – Regular plan

8-oct-95

15

19

14

17

Average

Above average

 Source: www.valueresearch.com Table 7.1.1

The ups and down in mid-cap stocks cannot managed to
washout this fund, which has been bearing at. good rating since 2010 to till
date and these funds are made up  to very
diversified portfolio having ¾ part of growing mid cap and only little part
of1/4   being in large and reputed
companies. Large companies work as safety cover and mid Cap Company’s work as
accelerator things go well from both the side The fund uses this flexibility in
a very better manner. The style is growth at a reasonable price. The fund
select companies that are growing at around 15-20 %, with good cash-inflow and
acceptable return on Equity.

The fund holding different rating see the good time
during last three years and commutate growth is as high as 30% and ordinary
funds earn about 10% which is higher than fixed income security and some contra
fund do not perform better but this could not affect much and trailing way
behind sense of respective benchmark

 Some fund has not shown better result
in respect of its fixed reference mark in 2015 but it bounce back quickly in
next year and also crossed .The asset under management Rs 14 k Cr in current
year and size is irrelevant in 2016 so far and up and down is not big worry it
shows more frequently positive and negative results is routine story is good
year due demonization of most the investment go in formal sector

2017 is also better year Moody and S given good
rating to PSU s after 14 years so far

As per objectives of balance funds these funds are for
moderate risk and return

Stake of all funds of HDFC belong to good and great
companies having good track records

 

Graph
7.1.1

Observations from the figure given above

·        
For one year investment period unrated perform
(22.5%) better than rated fund (11.90%)

·        
For two year investment period unrated perform
(21.5%) better than rated fund (11.70%)

·        
For three year investment period unrated perform
(17.60%) better than rated fund (10.70%)

 

 

 

 

 

 

7.2
Comparison of actual returns with Benchmark

 

 

Return for select
schemes and Benchmark values (Figures in percentage)

 
Year

Market
Return (CNX Nifty) Asset Management

BSL Index
Fund

DSPBR Top
100 Equity Fund

Fund ING Large
Cap Eq. Fund

Kotak-50
Growth Fund

TATA Index
Fund Sensex-B

Average

0.84

0.86

1.10

0.80

0.97

0.84

2016-17

0.40

0.64

0.50

0.84

1.01

0.73

2015-16

-0.26

-0.71

0.26

-0.09

-0.06

-0.61

2014-15

0.63

1.01

0.73

0.66

0.55

1.02

2013-14

5.51

5.03

5.31

5.30

5.14

5.01

2012-13

-3.97

-3.09

-2.83

-3.91

-3.73

-3.13

2011-12

2.70

2.29

2.62

2.02

2.91

1.99

  Table 7.1.2   Source: Compiled from NAV records of
respective AMCs.

 

 

 

 

 

Graph 7.1.2

The result from graph given above

·        
For one year period marginal difference in terms
of percentage return (13%, 10%, and 11%) from bench mark to actual return

·        
For Three years period significant difference in
terms of percentage return (19%, 17%, and 14%) from bench mark to actual return

·        
For five years period significant difference in
terms of percentage return (13%, 10%and,9%) from bench mark to actual return

·        
For seven years period significant difference in
terms of percentage return (16%, 11%, and 11%) from bench mark to actual return

·        
For ten year period marginal difference in terms
of percentage return (17%, 14%, and 12%)

Comparative
Balance Sheet of HDFC bank and SBI bank

 

 

 

HDFC BANK
Mar-17

SBI
Mar-17

HDFC BANK/
SBI

High

Rs

1,478

294

502.2%

Low

Rs

1,043

167

626.1%

Income per share (Unadj.)

Rs

285.9

289.0

98.9%

Earnings per share (Unadj.)

Rs

59.5

0.3

19,676.4%

Cash flow per share (Unadj.)

Rs

156.5

34.6

452.4%

Dividends per share (Unadj.)

Rs

11.00

2.60

423.1%

Avg
Dividend yield

%

0.9

1.1

77.3%

Book value per share (Unadj.)

Rs

358.2

272.4

131.5%

Shares outstanding ()

m

2,562.55

7,974.33

32.1%

Bonus/Rights/Conversions

ESOP

OI

Avg Price / Income ratio

x

4.4

0.8

552.8%

Avg
P/E ratio

x

21.2

761.8

2.8%

Avg
P/CF ratio

x

16.8

3.0

562.0%

Avg
Price/Bookvalue ratio

x

3.5

0.8

415.9%

Dividend payout

%

18.5

859.5

2.2%

Source: Company Annual Reports, Regulatory Filings,

 

 

 

Capital adequacy ratio

%

14.6

13.6

107.3%

Net NPAs

%

0.3

3.7

8.9%

 

CASH FLOW

From Operations

Rs m

172,816

774,060

22.3%

From Investments

Rs m

-11,477

-28,321

40.5%

From Financial Activity

Rs m

-58,930

-41,965

140.4%

Net Cash flow

Rs m

102,409

703,774

14.6%

SHARE HOLDING

Indian Promoters

%

22.6

58.6

38.6%

 

Foreign collaborators

%

0.0

0.0

 

Indian inst/Mutual

%

9.9

20.9

47.4%

 

FIIs

%

34.1

9.7

351.5%

 

ADR/GDR

%

17.0

2.1

809.5%

 

Free float

%

16.4

8.7

188.5%

 

Shareholders

 

415,166

855,889

48.5%

 

 

Source: Company Annual Reports, Regulatory Filings,

 

These tables gives very clear picture of performance
Schemes of SBI mutual fund house and HDFC mutual fund house as figures tells
the true story.

FY 16-17 HDFC invested huge amount in equity Rs 1,478 Cr
While in same period SBI invested only Rs.294 Cr and by percentage HDFC to SBI
is 502.2%

This means more aggressive strategy is  followed by HDFC than its rival PSU SBI so
this very clear rule of security if you invest more naturally lose more and
gain more. While SBI used defensive strategy and play very safely that is why
in same period SBI could not gain much

As figure …of balance sheet shows that SBI is sitting on
sovereign debt of 75000 Cr rupees and amount become bigger after adding
interest .That is why SBI AMC is handy to take more risk in comparison to HDFC
AMC.

By observations of balance sheet of SBI   and HDFC the size of NPA is only 0.3% while
in same period the size of NPA for SBI is larger by percentage and this is 3.7%
This is also very key factor to determine the strength of organization .If NPA
goes beyond manageable limit. Organization cannot run smoothly and this the
vital reason SBI funds are not performing well. SBI is busy to clean its
balance sheet Critical analysis of financial statements gives much information
about the HDFC and SBI PSU sectors are running by non professionals and by
directive polices and customers are not been given proper attentions. And
always run on the mercy of ministers and outdated technology. Some points are
very important in case of PSU s .these organization get attention when these
are in verse of collapse in other words only bailout packages are given. While
private sectors are very aggressive to invest in right time in right way .This
is the difference between functioning of both the organizations and this is
reflected in these financial statements.

 

 

Graph 7.1.3

 

7.3
Power of compounding in mutual fund

Figure 7.1.1

 

 Compounding
results

 

 

Growth
of Rs 1 00,000 @ 10%

years

5

10

15

20

Rs
one lakh grows to( Rs

1.61

2.59

4.18

6.73

Compounding
effect( Rs in lakh)

.61

.98

1.58

2.55

 

Table 7.1.3

By investing Rs 100,000 for 20 years give you only return
seven time while compounding make it 17 times so start early a small amount
give you better result once all time great Einstein said compounding has great
power this is very wonderful concept which makes mutual fund most attractive
option of investment as result of this compounding this is seen that first
three years it look simple but after three years it begin to show real power
result go on multiplying.

Power of compounding on investment of ?1 lakh a year
for 5 years

Year

Opening balance (?)

Investment (?)

10% interest (?)

Closing balanced (?)

1

1,00,000

10,000

1,10,000

2

1,10,000

1,00,000

21,000

2,31,000

3

2,31,000

1,00,000

33,100

3,64,100

4

3,64,100

1,00,000

46,400

5,10,500

5

5,10,500

1,00,000

61,000

6,71,500

Total investment:?5,00,000 | Value after 5
years: ?6,71,500 | Interest earned: ?1,71,500

 

If there was no compounding interest, your total
investment of ?5 lakh would have earned you ?50,000 at 10% interest. The difference made by
compounding is worth ?1, 21,500 in the above
example. That’s almost 2.5 times more that you have earned.

 

 

 

 

7.4
Recent trends of Indian mutual fund

 As per  reports and
prediction the future of mutual fund in India is going to better each day if I
talk about most tuff year for the investment globally is 2015 despite being
variability in stock market weak performance of global economy both factor
could not check inflow of huge money into Indian mutual fund industry.

Recent
report by CRISIL: In last quarter of December 2015 asset under management grew
21% to Rs 13.39 Trillion this threefold as comparison to last financial year.
The best performing mutual funds houses increase by little marginally by 1%
that is exiting 79% and now it is 80%

                SIP (Growth) = 63%

                SIP (book value) increase to
40%

 

SIP growth (2014-2017)

 

 Graph 7.1.4

Some
mutual fund included real estate and gold in their portfolio have not perform
well in same year