22-09-2014, 11:21 AM
COMPARATIVE STUDY ON PERFORMANCE EVALUATION OF MUTUAL FUND SCHEMES OF ICICI & HDFC PROJECT REPORT
ICICI & HDFC.doc (Size: 237 KB / Downloads: 51)
ABSTRACT
In this paper the performance evaluation of Indian mutual funds is carried out through relative
performance index, risk-return analysis, Treynor's ratio, Sharp's ratio, Sharp's measure, Jensen's measure, and Fama 's measure. The data used is daily closing NAVs. The source of data is website of Association of Mutual Funds in India (AMFI). The study period is 1st January 2007 to 31stDecember, 2011. The results of performance measures suggest that most of the mutual fund have given positive return during 2007 to 2011.
INTRODUCTION
Mutual Funds have become a widely popular and effective way for investors to participate in financial markets in an easy, low-cost fashion, while muting risk characteristics by spreading the investment across different types of securities, also known as diversification. It can play a central role in an individual's investment strategy. They offer the potential for capital growth and income through investment performance, dividends and distributions under the guidance of a portfolio manager who makes investment decisions on behalf of mutual fund unit holders. Over the past decade, mutual funds have increasingly become the investor’s vehicle of choice for long-term investment. It becomes pertinent to study the performance of the mutual fund. The relation between risk-return determines the performance of a mutual fund scheme. As risk is commensurate with return, therefore, providing maximum return on the investment made within the acceptable associated risk level helps in segregating the better performers from the laggards. Many asset management companies are working in India, so it is necessary to study the performance of it which may be useful for the investors to select the right mutual fund
History of Mutual Funds in India
The first Indian mutual fund was set up in 1963, when the Government of India created the Unit Trust of India (UTI). Until 1987, UTI enjoyed a monopoly in the Indian mutual fund market and sold a range of mutual funds through a network of financial intermediaries. At the end of 1988 UTI had Rs. 6,700 crores of assets under management.[1] In 1987, theGovernment of India permitted public sector banks and the Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) to enter the mutual fund industry. The State Bank of India's SBI Mutual Fund was the first such mutual fund to be established in 1987. Canara Bank set up Canbank Mutual Fund shortly after in the same year, followed by funds from Punjab National Bank and Indian Bank in 1989, Bank of India in 1990 and Bank of Baroda in 1992. The LICestablished its mutual fund in 1989 and the GIC in 1990. At the end of 1993, the mutual fund industry had assets under management of Rs. 47,004 crores.[2] in 1993, with the creation of SEBI and better regulation, transparency and liberalisation of capital markets (which included the creation of the NSE and the NSDL), the private sector was allowed to enter the mutual fund industry. Kothari Pioneer Mutual Fund (now merged into Franklin Templeton Investments) was the first private sector mutual fund to be registered in July 1993. In the following years, international giants in the industry as well as Indian corporates and industrial families setting up their own mutual funds, purchasing existing fund companies or merging with them. At the end of January 2003, there were 33 mutual funds with assets totalling Rs. 1,21,805 crores. The UTI still led the pack with Rs. 44,541 crores worth of assets. In February 2003, faced with financial mismanagement, opaque bookkeeping and huge, growing liabilities at the UTI, the Government of India suspended redemptions, guaranteed the assets, unveiled a comprehensive suite of reforms and repealed the Unit Trust of India Act 1963.[3] The UTI was split into two parts.[4] One was called the "Specified Undertaking of the Unit Trust of India" with Rs. 29,835 crores of assets largely belonging to the UTI's Unit 64 fund. The fund was rumoured to own property, commodities and a whole range of unconventional and often undocumented assets. The fund would attract millions of investors by promising generous annual dividends that were far in excess of the returns on its actual portfolio.[5] This Specified Undertaking of Unit Trust of India, functioned under an administrator appointed by Government of India, outside of SEBI's purview, until it was eventually liquidated in 2008. TheGovernment asked the SBI, PNB, BOB and LIC to step in as sponsors of the second part, now called UTI Mutual Fund (in addition to being sponsors of their own mutual funds) under SEBI's regulation. As of 30 June 2013, the Indian mutual fund industry manages assets worth approximately Rs.847,000 crores
Mutual funds are under tapped market in India (section appears subjective and requires review)
Despite being available in the market for over two decades now with assets under management equaling Rs 7,81,71,152 Lakhs (as of 28 February 2010),[8] less than 10% of Indian households have invested in mutual funds. A recent report on Mutual Fund Investments in India published by research and analytics firm, Boston Analytics, suggests investors are holding back from putting their money into mutual funds due to their perceived high risk and a lack of information on how mutual funds work.[9] This report is based on a survey of approximately 10,000 respondents in 15 Indian cities and towns as of March 2010. There are 46 Mutual Funds as of June 2013.
The primary reason for not investing appears to be correlated with city size. Among respondents with a high savings rate, close to 40% of those who live in metros and Tier I cities considered such investments to be very risky, whereas 33% of those in Tier II cities said they did not know how or where to invest in such assets
ICICI Bank
From Wikipedia, the free encyclopedia
ICICI Bank is an Indian multinational banking and financial services company headquartered in Mumbai. It is the second largest bank in India by assets and by market capitalzation, as of 2014. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries in the areas ofinvestment banking, life, non-life insurance, venture capital and asset management. The Bank has a network of 3,539 branches and 11,162[2][3]ATMs in India, and has a presence in 19 countries.[4][5]
ICICI Bank is one of the Big Four banks of India, along with State Bank of India,Punjab National Bank and Bank of Baroda. The bank has subsidiaries in the United Kingdom, Russia, and Canada; branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre; and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The company's UK subsidiary has also established branches in Belgium and Germany.[6]
In March 2013, Operation Red Spider showed high-ranking officials and some employees of ICICI Bank involved in money laundering. After a governmentinquiry, ICICI Bank suspended 18 employees and faced penalties from theReserve Bank of India in relation to the activity.[7][8][9][10][11]
Corporate history
ICICI Bank was established by the Industrial Credit and Investment Corporation of India (ICICI), an Indian financial institution, as a wholly owned subsidiary in 1955. The parent company was formed in 1955 as a joint-venture of the World Bank, India's public-sector banks and public-sector insurance companies to provide project financing to Indian industry.[12][13] The bank was initially known as the Industrial Credit and Investment Corporation of India Bank, before it changed its name to the abbreviated ICICI Bank. The parent company was later merged with the bank.
ICICI Bank launched internet banking operations in 1998.[14]
ICICI's shareholding in ICICI Bank was reduced to 46 percent, through a public offering of shares in India in 1998, followed by an equity offering in the form of American Depositary Receipts on the NYSE in 2000. ICICI Bank acquired the Bank of Madura Limited in an all-stock deal in 2001 and sold additional stakes to institutional investors during 2001-02.
In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group, offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.[15]
In 2000, ICICI Bank became the first Indian bank to list on the New York Stock Exchange with its five million American depository shares issue generating a demand book 13 times the offer size.
In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002 and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002.[16]
In 2008, following the 2008 financial crisis, customers rushed to ICICI ATMs and branches in some locations due to rumours of adverse financial position of ICICI Bank. The Reserve Bank of India issued a clarification on the financial strength of ICICI Bank to dispel the rumours.[17]
Corporate Social Responsibility programmes for Elementary Education
• Read to Lead Phase I: Read to Lead is an initiative of ICICI Bank to facilitate access to elementary education for underprivileged children in the age group of 3–14 years including girls and tribal children from the remote rural areas. The Read to Lead initiative supports partner NGOs to design and implement programmes that mobilise parent and community involvement in education, strengthen schools and enable children to enter and complete formal elementary education. Read to Lead has reached out to 100,000 children across 14 states of Andhra Pradesh, Bihar, Delhi, Gujarat, Haryana, Jharkhand, Karnataka, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Tripura, Uttar Pradesh and West Bengal.[29]
Inhuman debt recovery methods
A few years after its rise to prominence in the banking sector, ICICI bank faced allegations on the recovery methods it used against loan payment defaulters. A number of cases were filed against the bank and its employees for using "brutal measures" to recover the money. Most of the allegations were that the bank was using goons to recover the credit card payments and that these "recovery agents" exhibited inappropriate and in some cases, inhuman behavior. Incidents were reported wherein the defaulters were put to "public shame" by the recovery agents.
The bank also faced allegations of inappropriate behavior in recovering its loans. These allegations started initially when the "recovery agents" and bank employees started threatening the defaulters. In some cases, notes written by the bank's employees asking the defaulters to "sell everything in the house including family members", were found. Such charges faced by the bank rose to a peak when suicide cases were reported wherein the suicide notes spoke of the Bank's recovery methods as the cause of the suicide. This led to a lot of legal battles and the bank paying huge compensations