Presentation on Active vs Passive Management of Mutual Funds-Harminder Singh 2017

7/28/2019 Presentation on Active vs Passive Management of Mutual Funds-Harminder Singh 2017

1/26

ACTIVE VS PASSIVE

MANAGEMENTOF

MUTUAL FUNDSEQUITY SCHEMES

Presented By

Harminder Singh

MBA IV A

Roll No 2017


2/26

MUTUAL FUND


3/26


4/26

TYPES OF MUTUAL FUNDS

OPEN ENDED MUTUAL FUNDS

CLOSE ENDED MUTUAL FUNDS


5/26

ACTIVE MANAGEMENT

Active management means holding the

securities on the basis of the forecast about the

future. The portfolio managers varies their cash

position or beta value of the portfolio based on

the market forecast.


6/26

PASSIVE MANAGEMENT

It is a process of holding a well diversified

portfolio for long term with the buy and holdapproach. Passive management refers to the

investors attempt to construct a portfolio that

resembles the overall market return.


7/26

REVIEWS


8/26

Shankar 2007 Active Versus Passive Index Management: A

Performance Comparison of the S&P and the

Russell Indexes

Rampotis 2009 Active vs. Passive Management: New

Evidence from Exchange Traded Funds

Fallon 2009 Active Management vs. Passive Management

in the Colombian Private Pension Open

Mutual Fund Industry


9/26

NEED, SCOPE

ANDOBJECTIVE


10/26


11/26

RESEACH

METHODOLOGY


12/26

Research type Descriptive and Conclusion

Oriented

Data Collection sources

secondary

Tools of Data Analysis SHARPE MODEL

TREYNOR MODEL

JENSON MODEL


13/26

SHARPE MODEL

In this model, performance of a fund is evaluated

on the basis of ratio of return generated by the

fund over and above risk free rate of return. It

takes into consideration the total risk associated

with the fund.


14/26

Sharpe Index = (Ri Rf)/Si

FORMULA OF SHARPE MODEL


15/26

15

TREYNORS MODEL

In this model, performance of a fund is evaluated

on the basis of ratio of returns generated by the

fund over and above risk free rate of return

during a given period. It takes into consideration

the systematic risk associated with the fund.


16/26

16

FORMULA OF TREYNORS MODEL

Treynors Index = (RiRf)/Bi


17/26

JENSONS MODEL

This measure involves evaluation of the fund on

the basis of return generated vs. the returns

actually expected out of the fund at the given

level of its systematic risk. The surplus between

the two returns is used to measure theperformance of a fund which is compared with

the actual returns over the period.


18/26

18

FORMULA OF JENSON MODEL

Jensons Index = Rf +Bi(Rm Rf)


19/26

FINDINGS OF THE STUDY


20/26

GROWTH FUNDS

Parameters TempletonIndia

Reliance

IndiaHDFC Sahara LIC

Annualised

Return20.6 16.1 26.5 9.1 16.4

Sharpes Ratio 2.49 1.85 3.77 0.25 1.69

Treynor's Ratio 11.55 8.1 16.97 0.97 8.23

Jensons Ratio 21.74 16.1 28.17 9.24 16.56


21/26

INDEX FUNDS

Parameters Tata Birla Sunlife

SBI

MagnumFranklin UTI

MasterAnnualised

Return16.5 16.9 17.3 17.2 14.71

Sharpes Ratio 1.40 2.36 1.82 1.59 1.10Treynor's Ratio 9.55 9.67 10.10 10.33 7.89Jensons Ratio 15.56 16.18 16.55 16.18 13.70


22/26


23/26

RECOMMENDATION


24/26

24

Keeping in mind the Indian investors who are basically

risk averse it is safer for them to invest in growth funds

as the return generated by growth funds is much

healthier than the index funds. So, it is clearly evident

that active funds outperforms passive funds, hence

investment in active funds seems to be more suitable

than investment in passive funds.


25/26


26/26

26

QUERIES

Presentation on Active vs Passive Management of Mutual Funds-Harminder Singh 2017

Documents

Transcript of Presentation on Active vs Passive Management of Mutual Funds-Harminder Singh 2017