COMPARATIVE STUDY OF SELECTED LARGE CAP EQUITY MUTUAL FUNDS Dr. Sunil M. Adhav 1, Mr. Anoop Waghmare 2 1 Manangement, MAEER s MIT School of Management, Pune (India) 2 Management, MAEER s MIT School of Management, Pune (India) ABSTRACT India s mutual fund market has witnessed phenomenal growth over the last decade. The consistency in the performance of mutual funds has been a major factor that has attracted many investors. The present research is an attempt to study comparative performance of selected mutual funds. The study focus on selected mutual fund schemes of selected Indian companies comprising Equity Schemes. The total 29 equity mutual funds are selected for the study. The performance of selected mutual funds is analyzed with the help of Return, risk (standard Deviation), and Sharpe ratio. The average annual return for the large cap equity mutual fund is for the selected mutual funds. The average annual return is highest percent for ICICI Prudential Focused Blue-chip Equity Fund - Regular Plan whereas average annual return is lowest percent for Religare Invesco AGILE Fund. The standard deviation is highest for HDFC Top 200 Fund whereas standard deviation is lowest for Religare Invesco AGILE Fund for the period 2009-14.The Sharpe ratio signifying the performance of mutual fund is highest for ICICI Prudential Focused Blue-chip Equity Fund - Regular Plan whereas it is lowest for Sundaram Select Focus Fund - Regular Plan for the period 2009-14 Thus it is concluded that some Equity mutual funds have performed better than others and generated better returns for the investors during 2009-10 to 2013-14. Keywords: Mutual Fund, Performance, Return, Standard Deviation, Sharpe Ratio, I INTRODUCTION Mutual fund is a vital link between the retail/small investors and the capital market by mobilizing the funds from innumerable investors across the country and thereafter investing the same in capital market in most scientific way so as to maximize the return on investment. India s mutual fund market has witnessed phenomenal growth over the last decade. The fund mobilization by mutual funds in India has been on the increase since their inception in 1964. Initialization of the policy of liberalization and reforms in the financial sector has brought about a sea change in income, consumption, savings and investment pattern of average household in India. Presently about 25 % of the total investment in the capital market in India has been made by the small investors, who total up to about 5 crores in number either directly or through mutual funds. The Indian equity market has 302 P a g e
gained significantly during the recent years and mutual funds are not left far behind. Both the avenues have created wealth for the investors. But the equity market has been attracted much more attention than the mutual fund market. The consistency in the performance of mutual funds has been a major factor that has attracted many investors. Mutual fund industry in India is in its growth phase and possesses a tremendous scope for development which is evident from the international comparison. The growth of mutual fund will be consistent in the near future as mutual fund investment is still a favorite option for the retail investors. The most crucial issue which needs to be investigated is the performance of mutual funds. This will help mutual fund companies, investors, researchers and policy makers to get an idea of the performance of mutual funds in India. II REVIEW OF LITERATURE The review of some of the literature related to the performance of mutual fund is shown below. 1. Anand and Murugaiah (1)evaluate the performance of mutual funds of 113 selected schemes and reveal the fact that the mutual funds were not able to compensate the investors for the additional risk that they have taken by investing in the mutual funds. 2. Gupta (2)in his study examined the performance of 73 mutual fund schemes and shows that sample schemes performed poorer than the risk free assets but better than market. Further, out of 73 schemes 54.8 per cent outperformed the relevant benchmark in Sharpe ratio but this ratio was 36.98 per cent in case of Treynor. 3. Gupta and Gupta (3)evaluated the performance of 57 equity mutual funds from 1999 to 2003. Risk and return analysis of sample schemes showed that schemes on an average performed poorer than the risk free assets. 4. Inder and Vohra (4) in their study evaluates the long run performance of the selected index fund schemes and conclude that index funds are just the follower of market. They try to capture market sentiments, good as well as bad, and thus perform as the market performs. 5. Prajapati and Patel (5) evaluated the performance of Indian mutual funds using risk-return analysis and concluded that most of the mutual funds have given positive return during the period of study. 6. Raju and Rao (6)in their study indicated that performance of income schemes was much better than that of growth schemes. They suggested that manager of the schemes should redesign the investment pattern by identifying the likely phases in the market well in advance and emerging stocks on a continuous basis. 7. Sapar &Madava (7) evaluates the performance of 269 open ended schemes of mutual funds in a bear market using risk-return analysis observe that most of the mutual fund schemes in the sample outperformed the investor's expectations by giving excess return over expected return based on premium for systematic risk and total risk. 8. Sharpe (8) developed model of portfolio performance evaluation and used total risk in place of systematic risk. According to this model it may be said that the return is not the only factor in evaluating mutual fund performance; the element of risk also apparently influences mutual fund performance. 303 P a g e
III OBJECTIVES OF RESEARCH The following are objectives of the study: 1. To assess the volatility of performance of selected large cap equity mutual fund schemes using standard deviation. 2. To compare the performance of selectedlarge cap equity mutual fund schemes using Sharpe ratio. IV RESEARCH METHODOLOGY The present research is an attempt to study comparative performance of selectedlarge cap equitymutual funds of selected Indian companies. The study focus onselectedlarge cap equity mutual fund schemes. The total 29large cap equity mutual fund schemes are selected for the study. The Asset management companies selected for the study are Birla Sun Life, Deutsche, DSP BlackRock, Franklin Templeton, HDFC, ICICI Prudential, IDFC, Kotak Mahindra, L&T, Reliance, Religare Invesco, SBI, Sundaram, Tata and UTI mutual fund. large cap equitymutual funds include UTI Mastershare Fund, SBI Magnum Equity Fund, UTI Equity Fund, Franklin India Blue chip Fund, HDFC Large Cap Fund - Regular Plan, HDFC Top 200 Fund,Tata Pure Equity Fund - Plan A, ICICI Prudential Top 100 Fund - Regular Plan, Kotak 50, UTI Nifty Index Fund,Franklin India Index Fund - NSE Nifty Plan,SBI Nifty Index Fund,ICICI Prudential Index Fund - Regular Plan,HDFC Index Fund - Sensex Plus Plan,HDFC Index Fund - Nifty Plan,HDFC Index Fund - Sensex Plan, Sundaram Select Focus Fund - Regular Plan, Birla Sun Life Index Fund, DWS Alpha Equity Fund, DSP BlackRock Top 100 Equity Fund - Regular Plan,L&T Equity Fund, UTI Opportunities Fund, UTI Leadership Equity Fund, IDFC Imperial Equity Fund - Regular Plan,IDFC Equity Fund - Regular Plan,L&T India Large Cap Fund, Religare Invesco AGILE Fund,Reliance Quant Plus Fund - Retail Plan, ICICI Prudential Focused Blue-chip Equity Fund - Regular Plan. The performance of mutual funds is compared with respect to annual return, standard deviation and Sharpe ratio for the last five years (2009-10 -2013-14). For the purpose of the studythe data has been collected from secondary sources which include AMFI reports on mutual fund and RBI Bulletin. The required data relating to mutual funds has been collected from the websites of AMFI, mutualfundindia, valueresearch, mornigstar etc. The benchmark market returns like 91 day T-bill have been taken from respective website. V DISCUSSION AND ANALYSIS The performance of selected large cap equity mutual fund schemes are analyzed with the help of Return, risk (standard Deviation), and Sharpe ratio. The benchmark used for the study of equity schemes is 91day T-bill. The average return for 91 day T-bill is 7.054 percent.equity mutual fund is one of the basic and traditional types of mutual fund. The large cap mutual fund is the sub type of equity mutual fund. Following table shows performance of large cap equity mutual funds Table 1.1: Performance ofselected large cap equity mutual funds 304 P a g e
Fund/Year UTI Mastershare Fund 2009-10 2010-11 2011-12 2012-13 2013-14 74.16 18.47-19.72 25.07 5.9 Average return 20.78 SD 34.41 Sharpe Ratio 0.3988 SBI Magnum Equity Fund 87.94 18.32-19.71 29.89 5.54 24.40 40.02 0.4334 UTI Equity Fund 85.17 20.5-19.09 32.15 7.56 25.26 38.53 0.4724 Franklin India Bluechip Fund 84.49 22.96-18.25 26.79 4.08 24.01 38.24 0.4435 HDFC Large Cap Fund - Regular Plan 81.76 20.63-29.16 35.51 4.54 22.66 40.85 0.3819 HDFC Top 200 26.34 Fund 94.46 25.05-24.3 32.43 4.05 43.99 0.4384 Tata Pure Equity 22.27 Fund - Plan A 77.18 18.95-21.22 28.47 7.96 35.92 0.4236 ICICI Prudential Top 100 Fund - Regular Plan 74.61 17.54-20.33 32.83 11.38 23.21 34.65 0.4662 Kotak 50 66.71 16.29-18.46 23.41 4.26 18.44 31.31 0.3637 UTI Nifty Index Fund 73.8 17.73-24.83 28.32 6.86 20.38 35.88 0.3713 Franklin India Index Fund - NSE Nifty Plan 75.32 17.98-24.4 27.65 6.87 20.68 36.28 0.3757 SBI Nifty Index 20.53 Fund 74.74 17.99-24.61 28.36 6.19 36.23 0.3721 ICICI Prudential Index Fund - Regular Plan 75.57 18.73-23.62 26.5 7.95 21.03 35.97 0.3885 HDFC Index Fund - Sensex Plus Plan 80.6 19.13-20.63 28.53 6.04 22.73 37.26 0.4208 HDFC Index Fund - Nifty Plan 70.43 16.87-24.84 27.59 7.44 19.50 34.56 0.3601 HDFC Index Fund - Sensex Plan 75.06 17.56-25.17 26.53 10.06 20.81 36.11 0.3809 Sundaram Select Focus Fund - Regular Plan 65.52 12.53-23.67 21.64 3.64 15.93 32.49 0.2732 Birla Sun Life Index Fund 75.49 17.57-25.4 26.98 7.21 20.37 36.60 0.3638 305 P a g e
DWS Alpha Equity Fund 65.17 16.79-26.17 22.52 8.96 17.45 32.70 0.3180 DSP Black Rock Top 100 Equity Fund - Regular Plan 77.13 16.8-19.85 30.29 2.23 21.32 36.31 0.3928 L&T Equity Fund 86.14 26.91-20.96 25.98 5.45 24.70 39.49 0.4470 UTI Opportunities 27.61 Fund 97.62 19.4-12.11 27.28 5.85 41.89 0.4906 UTI Leadership Equity Fund 68.94 13.47-23.98 30.59 7.42 19.29 34.06 0.3592 IDFC Imperial Equity Fund - Regular Plan 66.9 16.47-20.57 20.79 2.85 17.29 32.08 0.3190 IDFC Equity Fund - Regular Plan 74.04 18.52-23.34 27.43 8.02 20.93 35.34 0.3928 L&T India Large Cap Fund 91.01 27.21-21.18 23.6 7.44 25.62 41.24 0.4501 Religare Invesco AGILE Fund 47.92 14.71-16.51 21.41 7.4 14.99 23.32 0.3401 Reliance Quant Plus Fund - Retail Plan 76.55 25.4-25.16 28.52 6.08 22.28 37.10 0.4103 ICICI Prudential Focused Bluechip Equity Fund - Regular Plan 91.19 27.07-16.41 26.79 10.21 27.77 39.64 0.5227 Average large cap equity funds 21.67 36.29 0.40 Source: Compiled by authors Table 1.1 shows the performance of selected large cap equity mutual fund for selected Indian mutual fund companies for the year 2009-10 to 2013-14. The table 1.1 shows the return for the last five years, average return, and Standard Deviation (SD) and Sharpe ratio for the selected large cap mutual fundschemes of selected Indian mutual fund companies. The annual return for equity mutual fund is largest at 97.62 percent for UTI Opportunities Fund whereas annual return is lowest at 47.92 percent for Religare Invesco AGILE Fund in the year 2009-10. Similarly the annual return is largest at 27.21for L&T India Large Cap Fund, 35.51 percent for HDFC Large Cap Fund - Regular Plan and 11.38 percent for ICICI Prudential Top 100 Fund - Regular Plan in the year 2010-11, 2012-13 and 306 P a g e
2013-14 respectively. The annual return is lowest at 12.53 percent for Sundaram Select Focus Fund - Regular Plan, 20.79 percent for IDFC Imperial Equity Fund - Regular Plan and 2.23 percent for DSP BlackRock Top 100 Equity Fund - Regular Plan in the year 2010-11, 2012-13 and 2013-14 respectively. The annual return is negative for the year 2011-12. The average annual return for the large cap equity mutual fund is 21.67 percent for the selected mutual funds. The average annual return is highest at 27.77 percent for ICICI Prudential Focused Blue-chip Equity Fund - Regular Plan whereas average annual return is lowest at 14.99 percent for Religare Invesco AGILE Fund. The average standard deviation is 36.29 for the large cap equity mutual fund. The standard deviation is highest at 43.99 for HDFC Top 200 Fund whereas standard deviation is lowest at 23.32 for Religare Invesco AGILE Fund for the period 2009-14. The Sharpe ratio signifying the performance of mutual fund is highest at 0.5227 for ICICI Prudential Focused Blue-chip Equity Fund - Regular Plan whereas it is lowest at 0.2732 for Sundaram Select Focus Fund - Regular Plan for the period 2009-14. The average Sharpe ratio is 0.40 for the selected large cap equity mutual funds of selected Indian companies. VI CONCLUSION The Study concluded that during 2009-10 to 2013-14 period. The average annual return for the large cap equity mutual fund is 21.67 percent for the selected mutual funds. The average annual return is highest at 27.77 percent for ICICI Prudential Focused Blue-chip Equity Fund - Regular Plan whereas average annual return is lowest at 14.99 percent for Religare Invesco AGILE Fund.The average standard deviation is 36.29 for the large cap equity mutual fund. The standard deviation is highest at 43.99 for HDFC Top 200 Fund whereas standard deviation is lowest at 23.32 for Religare Invesco AGILE Fundfor the period 2009-14.The Sharpe ratio signifying the performance of mutual fund is highest at 0.5227 for ICICI Prudential Focused Blue-chip Equity Fund - Regular Plan whereas it is lowest at 0.2732 for Sundaram Select Focus Fund - Regular Plan for the period 2009-14. The average Sharpe ratio is 0.40 for the large cap equity mutual funds of selected Indian companies.thus it is concluded that according Sharpe ratio during last 5 years the performance of ICICI Prudential Focused Blue-chip Equity Fund - Regular Plan large cap equity mutual fund is superior. REFERENCES [1]. Anand S. and Murugaiah V., "Analysis of Components of Investment Performance- An Empirical Performance of Mutual Funds in India", http://papers.ssrn.com/sol3/papers.cfm?abstract_id=961999, 2008 [2]. Gupta, Amitabh, Mutual Fund in India: A Study of Investment Management, Finance India, Vol 15, No. 2, 2001, pp. 631-637. [3]. Gupta, O.P. and Gupta, Amitabh, Performance Evaluation of Select Indian Mutual Fund Schemes: An Empirical Study, The ICFAI Journal of Applied Finance, Vol. 10, No. 12, 2004, pp. 81-98. [4]. Inder S. and Vohra S., Mutual Fund Performance: An Analysis of Index Funds, International Journal of Research In Commerce & Management, volume no. 3, issue no. 9, 2012, pp. 143-146. 307 P a g e
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