Project Report on

A Comparison Between Franklin Build India

Fund (Direct) and SBI Infrastructure Fund (Direct)

Submitted for the degree of

Bachelor of Commerce
University of Kalyani

Author
JIT SAHA
Dwijendralal College, Krishnanagar, Nadia
B. Com. 6th Semester
Roll No:

Supervisor
Dr. Archan Nandi
Assistant Professor
Dwijendralal College, Krishnanagar, Nadia

1
 Certificate

Dr. Archan Nandi

Assistant Professor
Department of Commerce
Dwijendralal College, Krishnanagar, Nadia

This is to certify that the Project Work titled “A Comparison Between Franklin Build India

Fund (Direct) and SBI Infrastructure Fund (Direct)” is an original project work conducted by

Jit Saha , a student of [Link]. (Honours) 6th Semester, under my supervision for the purpose

of the degree of Bachelor of Commerce.

___________________________________
(Dr. Archan Nandi)
Project Supervisor
_________________________________
Countersigned by the H.O.D.
Department of Commerce
Dwijendralal College
Krishnanagar, Nadia

2
 Declaration

I do hereby declare that the Project Work titled “A Comparison Between Franklin Build India

Fund (Direct) and SBI Infrastructure Fund (Direct)” is conducted by me under the

Supervision of Dr. Archan Nandi, Assistant Professor, Department of Commerce,

Dwijendralal College and is submitted for the purpose of the degree of Bachelor of

Commerce in the year 2023.

___________________________________
(Your Name)
Candidate
_________________________________
Countersigned by the H.O.D.
Department of Commerce
Dwijendralal College
Krishnanagar, Nadia

3
 Acknowledgements

I am grateful to my project supervisor Dr. Archan Nandi for helping me to complete

the project work in time. It was a good experience to work with him.

I am also grateful to all the teachers of my college. I have learned a lot from all of

them during the project work.

I am grateful the librarian of the college, for allowing to access to books and internet

facility as and when it was required. Without this, this study would not have been possible.

I also extend my gratitude to my fellow classmates, that all helped me in my study,

data collection, and throughout the process. What I have got my friends in invaluable in my

opinion.

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Index Page no.

Title Page 1
Certificate 2
Declaration 3
Acknowledgements 4
Index of Contents 5
Index of Tables 6
Index of Figures 7
Sl. No. Content Page No.
1 INTRODUCTION 8
1.1 Framework of the Project 8
1.2 Objectives of the Project 9
1.3 Feasibility of the Project 9
2 CONCEPTUAL FRAMEWORK 10
2.1 Theoretical Aspect 10
2.2 Literature Review 11
3 DATA AND METHODOLOGY 14
3.1 Data and Data Sources 14
3.2 Methodology 14
3.3 Definition of terms used 15
4 ANALYSIS 17
4.1 Technical Analysis 17
4.1.a Comparison Tables 17
4.1.b Comparison Graphs 20
4.2 Risk Analysis using different Ratios 22
5 CONCLUSION AND RECOMMENDATIONS 25
5.1 Summarization 25
5.2 Conclusion 26
5.3 Recommendations 27
REFERENCES 28

5
Index of Tables:

Table No. Title Page No.

1 Basic Information relating to the selected schemes 17

2 NAV Details of the selected mutual fund schemes 18

3 Performance Returns as on Jun 23, 18 19

4 Detailed Portfolio Performance of the selected mutual fund 19

schemes

5 Comparison of Sharpe Ratio 22

6 Comparison of Sortion Ratio 23

7 Comparison of Beta 23

8 Comparison of Alpha 23

6
Index of Figures

Figure No. Name of the Figure Page No.

1 Growth of a hypothetical investment of rupees 10,000, 1 month 20

2 Growth of a hypothetical investment of rupees 10,000, 3 21

months

3 Growth of a hypothetical investment of rupees 10,000, 6 21

months

4 Growth of a hypothetical investment of rupees 10,000, 1 year 21

5 Growth of a hypothetical investment of rupees 10,000, 2 years 22

7
 INTRODUCTION

1. Introduction:

The present time is a time where the small domestic investors are aware of the fact

that they should invest their savings in such a way that it can earn a return a return higher

than the rate generated by the conventional investment avenues like bank deposits or post

office savings certificates. In this context mutual fund nowadays is a very important and

dominant part of the avenues where the investment of the household investors goes.

But obviously not all the investors are aware that how they should choose between

different fund available in the market, and how they should compare between different

competing funds. Here comes the necessity of the methods, techniques and tools available for

this purpose. In this present study we will attempt to compare two of such funds.

1.1. Framework of the project:

The project is attempting to compare two different mutual Fund schemes namely

Franklin Build India Fund (Direct) and SBI Infrastructure Fund (Direct).

Both the funds are working in the infrastructure sector of the economy. Both the funds

are floated by fund houses of a high repute, and both the funds have a steady investor base.

People wanting to invest in Infrastructure sector funds give their first preference to these two
8
funds in general. So the question is, how should an investor make an investment decision if

he wants to invest in either of these two funds? In the current project, it is attempted to decide

which one is a better investment option among these two funds.

1.2. Objectives of the Study:

The objectives of the current study are:

1. To understand how the selected mutual fund schemes work in a latest timeframe so

that it would be easier to take an investment decision; and

2. To compare the selected mutual fund schemes on different criteria to find out the best

investment avenue among these two.

1.3. Feasibility of the study:

The project study is undertaken because of the following reasons:

1. Mutual funds are nowadays very popular among the investors, and so it is certain that

the topic is very relevant at the present time.

2. It is comparatively easier to collect the necessary data to undergo this projected study.

There are different sources of data related to mutual funds available over the web

those maintain the categorical data that is suitable to perform the study.

3. Mutual funds are within our syllabus. So an in-depth study in this area goes hand-to

hand with the curriculum of the university.

4. The collection of the data necessary to conduct the study does not involve much

problems. It is not very time consuming and at the same time does not involve a

significant amount of cash expenditure at the same time.

9
 So, based on the above reasons, the topic is selected for the project work. It is duly

approved by the project supervisor as well.

CONCEPTUAL FRAMEWORK

2.1. Theoretical Aspects:

Definition: A mutual fund is a professionally-managed investment scheme, usually

run by an asset management company that brings together a group of people and invests their

money in stocks, bonds and other securities.

Description: As an investor, one can buy mutual fund 'units', which basically

represent the investors share of holdings in a particular scheme. These units can be purchased

or redeemed as needed at the fund's current net asset value (NAV). These NAVs keep

fluctuating, according to the fund's holdings. So, each investor participates proportionally in

the gain or loss of the fund.

All the mutual funds are registered with SEBI. They function within the provisions of

strict regulation created to protect the interests of the investor.

The biggest advantage of investing through a mutual fund is that it gives small

investors access to professionally-managed, diversified portfolios of equities, bonds and other

securities, which would be quite difficult to create with a small amount of capital.

10
2.2 Literature Review:

Review of some of the studies is presented in the following discussion: -

Jayadev (1996) evaluated the performance of two growth-oriented mutual funds

namely Master gain and Magnum express by using monthly returns. Jensen, Sharpe and

Treynor measures have been applied in the study and the pointed out that according

to Jensen and Treynor measure Mastergain have performed better and the performance of

Magnum was poor according to all three measures.

Afza and Rauf (2009) in their study of open-ended Pakistani mutual funds’

performance using the quarterly data for the period of 1996-2006. The study measures the

fund performance by using Sharpe ratio with the help of pooled time-series and cross

sectional data and also focused on different attributes such as fund size, expenses, age,

turnover and liquidity. The results found significant impact on fund performance.

Debasish (2009) studied the performance of selected schemes of mutual funds

based on risk and return models and measures. The study covered the period from April

1996 to March 2005 (nine years). The study revealed that Franklin Templeton and UTI

11
were the best performers and Birla Sun life, HDFC and LIC mutual funds showed poor

performance.

Ali, Naseem and Rehman (2010) intheir study examined the performance of 10

mutual funds in which 5 were conventional and 5 were Islamic for the period from 2006

to 2008 by using Sharpe and Treynor measures. The results found that the funds of

Pakistan were able to add more value either conventional or Islamic. The study also found

that some of the funds were underperformed, so these funds were facing diversification

problems during the study period.

Garg (2011) examined the performance of top ten mutual funds that was

selected on the basis of previous years return. The study analysed the performance on

the basis of return, standard deviation, beta as well as Treynor, Jensen and Sharpe indices.

The study also used Charhart’s four-factor model for analyse the performance of mutual

funds. The results revealed that Reliance Regular Saving Scheme Fund had achieved the

highest final score and Canara Robecco Infra had achieved the lowest final score in the

one-year category.

Sondhi and Jain (2010) examined the market risk and investment performance of

equity mutual funds in India. The study used a sample of 36 equity fund for a period of 3

years. The study examined whether high beta of funds have actually produced high returns

over the study period. The study also examined that open-ended or close ended categories,

size of fund and the ownership pattern significantly affect risk-adjusted investment

performance of equity fund. The results of the study confirmed with the empirical evidence
12
produced by Fama (1992) that high beta funds (market risks) may not necessarily produced

high returns. The study revealed that the category, size and ownership have been

significantly determinant of the performance of mutual funds during the study period.

Prabakaran and Jayabal (2010) evaluated the performance of mutual fund

schemes. The study conducted a sample of 23 schemes were chosen as per the priority

given by the respondents in Dharmapuri district covered a period from April 2002 to

March 2007. The study used the methodology of Sharpe, Jensen and Fama for the

performance evaluation of mutual funds. The results of the study found that 13 schemes out

of 23 schemes selected had superior performance than the benchmark portfolio in terms of

Sharpe ratio, 13 schemes had superior performance of Treynor ratio and 14 schemes had

superior performance according to Jensen Measure. The Fama’s measure in the study that

the returns out of diversification were less. Thus the India Mutual funds were not properly

diversified.

13
 DATA AND METHODOLOGY

3.1. Data and Data sources:

The data are collected in order to perform the project study are secondary data.

Various websites are consulted in order to obtain the data, which are

i. www. [Link]

ii. [Link]

iii. [Link]

iv. [Link]

v. [Link]

3.2. Methodology:

The comparison between the two selected mutual fund schemes is done using two

different ways. These are as follows:

i. Using technical analysis, i.e. charts and tables

14
 ii. Using sophisticated ratios which are widely used in order to determine the

performance of the mutual fund schemes.

The first method, which is the charts etc. are prepared using the web tools as provided

in the website of MoneyControl.

The second method, that is the sophisticated ratios are also collected as it is from

different web sources. As those are obtained as already computed, there was no specific need

to re-compute those ratios. The ratios used in this study are the following:

i. Sharpe Ratio;

ii. Sortino Ratio;

iii. Beta; and

iv. Jensen’s Alpha

3.3. Definition of Terms Used:

i. Sharpe Ratio: It is expressed as the excess return per unit of risk, where risk is

measured by the standard deviation of the rate of return. Thus both the systematic and

unsystematic risk faced by a fund is included in the formula. The ratio is defined as:

S p=¿

ii. Sortino Ratio: The Sortino ratio is a variation of the Sharpe ratio that differentiates

harmful volatility from total overall volatility by using the asset's standard deviation of

negative asset returns, called downside deviation. The Sortino ratio takes the asset's return

and subtracts the risk-free rate, and then divides that amount by the asset's downside

deviation. The ratio was named after Frank A. Sortino.

It is calculated as below:

15
 Sortino Ratio = ¿ R>−R f /σ d

iii. Beta: The Systematic risk is the part of total risk which is influenced by the

changes in the overall market. It indicates the relationship between the scheme’s return and

the market return. This is caused by the external factors which are not under the control of the

fund manager and hence, should be borne by all the fund managers. Beta is obtained by

applying the CAPM version of the market model. The estimated version of CAPM is:

R pt =α + βmt R mt +e pt

iv. Alpha: This measure involves evaluation of the returns that the fund has generated

versus the return actually expected out of the fund given the level of its systematic risk. The

surplus between the two returns is called alpha (α) which measures the performance of a fund

compared with the actual return over the period. Higher value of α means superior

performance of the fund and vice-versa.

It is the regression of excess fund return with excess market return given by Jensen

(1968). It is expressed as:

R pt −Rf =α + β ( R m−Rf ) +e i

16
 ANALYSIS

The analysis part of the study is sub-divided into two parts namely Technical Analysis

using figures and tables and Ratio Analysis.

The Technical Analysis part is further sub-divided into two sub-parts. The first part

deals with fund related information. Here the two selected mutual fund schemes have been

compared in four different stages namely basic Information relating to the selected schemes,

NAV Details of the selected mutual fund schemes, Performance Returns as on Jun 23, 2018;

and Detailed Portfolio Performance of the selected mutual fund schemes.

The second part of the technical analysis is a comparison between the growth of a

hypothetical investment of rupees 10,000 for the two different funds. This is done using the

web tool presented in the website of MoneyControl.

The analysis as par the first part of the project is presented below:

4.1. Technical Analysis:

17
4.1.a. Comparison Tables:

Basic information relating to the two selected mutual fund schemes are presented in table 1
below:

Table 1: Basic Information relating to the selected schemes

Scheme Franklin Build India Fund - Direct (G) SBI Infrastructure Fund – Direct (G)
Fund Class Thematic – Infrastructure Thematic – Infrastructure
Fund Type Open-Ended Open-Ended
Scheme Asset 972.82 601.49
Rs in cr As on Mar-31-2018 As on Mar-31-2018
Inception Date Aug 10, 2009 Jan 05, 0007
Last Dividend ` 2.250 ` 1.700
Benchmark S&P CNX 500 NIFTYInfrastructure
Minimum
Rs.5000 Rs.5000
Investment
Franklin Templeton Asset Mgmt. SBI Funds Management Private
AMC/Fund
(India) Pvt. Ltd. Limited

AMC Asset 103,152.07 217,649.24

Rs in cr As on Mar-31-2018 As on Mar-31-2018

It is evident form the Table 1 that the Franklin Build India Fund (Direct) has more

scheme assets than the SBI Infrastructure Fund (Direct). On the contrary, it is evident that the

Asset Management Company (AMC) of the SBI Infrastructure Fund (Direct) has more assets

than that of Franklin Build India Fund (Direct). So, apparently both the funds operate in a

bigger scale.

Detailed Net Asset value of the selected mutual fund schemes are presented in Table 2 below:

Table 2: NAV Details of the selected mutual fund schemes

18
 NAV Details Franklin Build India Fund - Direct(G) SBI Infrastructure Fund – Direct (G)
Latest NAV 22.64300 13.12590
Rs/Units Jun-22-2018 Jun-22-2018
27.480 17.651
52 week high
Dec 29, 17 Jan 09, 18
22.089 13.084
52 week low
May 21, 18 Jun 21, 18

Return based performance of the two selected mutual fund schemes are presented in

table 3 below:

Table 3: Performance Returns as on Jun 23, 17

* Returns over 1 year are Annualised

Franklin Build India Fund - Direct (G) SBI Infrastructure Fund – Direct (G)
3 Months 0.70% -2.90%
6 Months -17.20% -24.50%
1 Year -3.60% -9.40%
2 Years 18.60% 11.90%
3 Years 12.50% 10.70%
5 Years 56.70% 19.50%

The investment portfolio related information of the selected mutual fund schemes are

presented in Table 4 below:

Table 4: Detailed Portfolio Performance of the selected mutual fund schemes

Franklin Build India Fund - Direct (G) SBI Infrastructure Fund – Direct (G)
Top 5 SBI, Larsen,
holdings HDFC Bank, Bharti Airtel,
19
 Axis Bank, Elgi Equipments,
ICICI Bank, JMC Projects,
Bharti Airtel MCX India
Weightage to
top 5 42.26% 35.14%
holdings
Banking/Finance, Engineering,
Top 3
Oil & Gas, Cement,
Sectors
Telecom Telecom
Weightage
to 58.46% 62.75%
top 3 sectors

4.1.b. Comparison Graphs:

In the next part of the analysis, the comparison between the growth of a hypothetical

investment of rupees 10,000 for the two different funds have been performed. This is done

for different time frames in order to obtain a detailed comparison. The time frames used for

the purpose are comparison are:

i. One Month;

ii. Three Months;

iii. Six Months;

iv. One year; and

v. Two years.

The growth of a hypothetical investment of rupees 10,000 for 1 month is presented in

Figure 1 below:

20
 Figure 1: Growth of a hypothetical investment of rupees 10,000, 1 month

The growth of a hypothetical investment of rupees 10,000 for 3 months is presented in

Figure 2 below:

Figure 2: Growth of a hypothetical investment of rupees 10,000, 3 months

The growth of a hypothetical investment of rupees 10,000 for 6 months is presented in figure

3 below:

Figure 3: Growth of a hypothetical investment of rupees 10,000, six months

21
The growth of a hypothetical investment of rupees 10,000 for 1 year is presented in Figure 4

below:

Figure 4: growth of a hypothetical investment of rupees 10,000

The growth of a hypothetical investment of rupees 10,000 for 2 years is presented in Figure 5

below:

Figure 5: growth of a hypothetical investment of rupees 10,000, 2 years.

4.2. Risk Analysis using different Ratios:

At the next part of the analysis, four previous selected ratios have been used. The data

related to the ratios are collected for various mutual fund related websites as previously

mentioned; and the data collected as previously computed. The information is presented

below:

Table 5: Comparison of Sharpe Ratio:

22
 Fund Name Sharpe Ratio Ranking

Franklin Build India Fund (Direct) 0.31 2

SBI Infrastructure Fund (Direct) 0.32 1

Category 0.26 ---

From table 5, it is seen that The SBI Infrastructure Fund (Direct) has secured a better

Sharpe Ratio.

Table 6: Comparison of Sortino Ratio:

Fund Name Sortino Ratio Ranking

Franklin Build India Fund (Direct) 0.53 2

SBI Infrastructure Fund (Direct) 0.58 1

Category 0.41 --

From table 6, it is seen that The SBI Infrastructure Fund (Direct) has secured a better

Sortino Ratio.

Table 7: Comparison based on Beta:

Fund Name Beta Ranking

Franklin Build India Fund (Direct) 0.82 1

SBI Infrastructure Fund (Direct) 0.84 2

Category 0.87 --

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 From table 7, it is seen that The Franklin Build India Fund (Direct) has secured a

better Beta.

Table 8: Comparison based on Alpha:

Fund Name Alpha Ranking

Franklin Build India Fund (Direct) 7.12 2

SBI Infrastructure Fund (Direct) 7.44 1

Category 6.75 --

From table 8, it is seen that The SBI Infrastructure Fund (Direct) has secured a better

Alpha.

24
 CONCLUSION AND RECOMMENDATIONS

This part of the project study deals with the summarization of the analysis and

findings as per the part four of the project report. It also provides some recommendation to

the target audience of the project, as well as the general investors of mutual funds.

5.1. Summarization:

From the study we have found a lot of information. Let us summarize the findings at

the first step.

From Table 1, we see that the Franklin Build India (Direct) Fund is a bigger scale

fund than the SBI Infrastructure Fund. But SBI Infrastructure Fund surpasses Franklin Build

India when the comparison between the AMC Assets takes place.

The Table 2 reveals that the Franklin Build India is having a higher NAV than that of

the SBI Infrastructure Fund.

25
 From the Table 3, it can be noticed that the Franklin Build India has performed better

in all the cases over the SBI Infrastructure fund; for 3 months, 6 months, 1 year, 2 years, 3

years and 5 years.

From the table 4, it can be seen that both the funds are having almost different

holding, excluding Bharti Airtel which is the only one similar holding in the top five of these

two funds. Franklin Build India Fund puts a higher weight on its top five holding that that of

SBI Infrastructure Fund. It is also very clear from Table four that the top three sectors of

investment are totally different for both the funds, and SBI Infrastructure Fund puts a higher

weight on its top three sectors than that of ICICI Prudential Banking and Financial Services

Fund.

When we compare the growth of a hypothetical investment of rupees 10,000 for the

two different funds, we see that the funds go hand-to-hand for the first month. For three

months’ period, we see that the Franklin Build India Fund has performed comparatively

better. But in the long run, say one year or two years, it appears that SBI Infrastructure fund

has performed somehow better than that of Franklin Build India Fund.

From the table 7, Table 8, Table 9 and Table 10, representing Sharpe Ratio, Sortino

Ratio, Beta and Alpha respectively, it is very clear that the SBI Infrastructure Fund has

performed better as per Sharpe ratio, Sortino Ratio and Alpha, but Franklin Build India Fund

has secured a better Beta measure.

5.2. Conclusion:

From the study, we may conclude that:

26
 a. Both the Infrastructure sector funds are big funds at their own right. One is having a

higher fund asset and the other is having a higher AMC Assets.

b. Franklin Build India has secured a higher NAV value over the SBI Infrastructure

Fund.

c. Franklin Build India Fund has performed better in the shorter period, but for any

comparatively longer time frame, SBI Infrastructure Fund is a better performer.

d. Though both the funds are comparatively less volatile than the market (as the value of

beta is less than one on both the cases) Franklin Build India Fund is better in

systematic risk (Beta) management.

e. Both the funds have outperformed their benchmark indices, as the value of Alpha is

more that unity in both the cases. Still, SBI Infrastructure Fund has performed better

in this criterion.

f. Other measures of risk-adjusted performance of mutual funds like Sharpe Ratio and

Sortino ratio yields that the SBI Infrastructure Fund is a superior performer than the

Reliance banking Fund.

5.3. Recommendations:

From the study it can be recommended that:

If the investors are intended to invest in a mutual fund scheme working in the

infrastructure sector, then he or she may frame the investment strategy like:

27
 Overall, for a long-time investment, stable return, capital protection and shield against

risk, the SBI Infrastructure Fund is a better investment avenue over the Franklin Build India

Fund.

But, for a short term gain related motive, the Franklin Build India Fund may yield a

higher rate of return for a period of holding less than three months.

REFERENCES:

Ali, Rizwan., Naseem, Muhammad Akram and Rehman, Ramiz Ur (2010). Performance

Evaluation of Mutual Funds. Social Science Research Network Online Publication

10 May, Available at SSRN: [Link]

Afza, Talat and Rauf, Ali (2009). Performance Evaluation of Pakistani Mutual Fund.

Pakistani Economic and Social Review, 47(2), 199-214

Debasish, Sathya Swaroop (2009). Investigating Performance of Equity-based Mutual

FundSchemes in Indian Scenario. KCA Journal of Business Management, 2(2), 1-

15.

Garg, Sanjay (2011). A Study on Performance Evaluation of Selected Indian Mutual

28
 Funds. International Journal of Innovation Creativity and Management (IJICM),

1(1), 1-10.

Jayadev, M (1996). Mutual Fund Performance: An Analysis of Monthly Returns. Finance

India, 10 (1), 73-84.

Kundu, Abhijit (2009). Stock Selection Performance of Mutual Funds Managers in India:

An Empirical Study. Journal of Business and Economic Issues, 1(1) 59-73.

Prabakaran, G and Jayabal, G (2010). Performance Evaluation of Mutual Fund Schemes in

India: An Empirical Study. Finance India, 24 (4), 1347-1363.

Sondhi, H.J and Jain, P.K (2010). Market Risk and Investment Performance of Equity

Mutual Funds in India: Some Empirical Evidence. Finance India, XXIV (2), 443-
464.

Shanmugham, R and Zabiulla (2011). Stock Selection Strategies of Equity Mutual

Fund Schemes in India. Middle Eastern Finance and Economics, ISSN 1450-2889,

Issue 11, 19-28.

Websites:

www. [Link]

[Link]

[Link]

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[Link]

[Link]

30