Mutual Fund Investment Analyst and Portfolio Tracker

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15 Αυγ 2012 (πριν από 5 χρόνια και 2 μέρες)

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Mutual Fund Investment Analyst & Portfolio Tracker


1

1. Abstract


A mutual fund is a form of collective investment that pools money from many investors,
and invests the money in stocks, bonds, short
-
term money market instruments, and/or
other securities. Fund managers who can apply their expertise and dedica
te time to
research investment options professionally manage it.


In the current scenario mutual fund investors face many problems. They gather
information about the various schemes through magazines, periodicals or through the
company website. However the
re is a need for aggregation of all this information at a
single place as most of this information is decentralized. For example the information
about fund A and B that belong to two different companies can be found on their
respective website. However it
would be more useful if all this information is available
with a single login at a centralized location.


The investors very often face difficulties in choosing between two funds as a comparative
study between funds is a tedious process. For example a pers
on can get information about
fund A and fund B however it is difficult to compare these funds based on different
parameters. This process gets further complicated with addition of more funds.


For an investor it is very important to monitor the current val
ue of his investments. It is
essential to know about the worth of his portfolio based on current market situations. This
will help him determine his profit/loss and take necessary actions to book his profit/loss
based on his expectations from his investmen
t.


Investors in mutual fund know the importance of having a diversified portfolio. If an
investor holds multiple funds, there may be significant overlaps in their stock holdings.

For example if two funds A and B have stakes in same stock or sector his i
nvestment will
be highly unbalanced. This will hurt portfolio diversification.


This project seeks to help the investors through a web based application which aims at
solving the above mentioned problems.


Through this application it will be possible to ge
t essential data about the top mutual
funds in the market with a single login. It will be possible to browse through schemes of
various fund companies as shown.


Mutual Fund Investment Analyst & Portfolio Tracker


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Fig

1
: List of Schemes


The decision making process will be simplified using various informa
tion visualization
techniques like charts, graphs and context tree maps. The graphs for various parameters
like NAVs, Dividend history, CAGR, sectored allocation will be given so that comparing
two funds becomes easier. The context Tree Map will be used to

show the map of the
entire mutual fund market. The performance of the various mutual funds can then be
evaluated based on the current market situation. A snapshot of a context tree map is as
shown



Fig 2: Context Treemap


The portfolio Tracker allows us
ers to track their mutual fund schemes. User can create
several portfolios and add / delete instruments in a portfolio. The
tracker is in form of a
virtual buy and sells

whose portfolio worth and returns are based on current market
situations.


Finally, t
he application also facilitates mutual fund portfolio diversification. Tree map
Information Visualization is used to represent the stocks held in different funds owned by
a person. We map the relative holding or weight of a stock in a portfolio to the area

of
that stock's rectangle in the tree map view.


The web application will help the investor invest more systematically and take
appropriate decision for his investments.


Mutual Fund Investment Analyst & Portfolio Tracker


3


2. Existing System


Introduction:


Mutual funds provide professional management, di
versification, convenience and
liquidity. As with all investments, mutual funds are not risk free. It is essential to make an
informed investment decision and choose a mutual fund which is right for depending on
the investor’s goal, investment time frame a
nd risk tolerance.


2.1

Details of Existing System


Information Gathering:


In the existing system the investors gather information about the various schemes through
the fact sheets published by the fund companies. These fact sheets contain information
abo
ut the latest news, dividend declaration, comments from the fund manager and a
snapshot of the various schemes. The investors also refer to the business magazines and
periodicals available in the market. These periodicals are designed to help individuals
m
anage their investments more effectively. They cover strategies for investing in mutual
funds and also address the consumer concerns. Extensive information can also be found
on the company website. The information given on the website is as shown.



Fig
3: Scheme Graphs

The process of Decision Making:

It is found that many
individual

investors

rely

heavily

on

mutual

fund

advertising

and

on

raw

returns

when

making

fund

purchase

decisions.

Financial

advisors

place

greater

importance

on

objective

informatio
n

sources

such

as

comprehensive

data

sources

and

independent

rankings,

and

much

less

importance

on

fund

advertising

and

popular

press

publications.

When

choosing

among

mutual

funds,

the

results

indicate

that

financial

advisors

place

greater

importance

on

p
erformance

relative

to

other

funds

with

similar

style,

fund

objective,

fund

risk,

fund

manager

tenure,

and

fund

manager

reputation,

while

Mutual Fund Investment Analyst & Portfolio Tracker


4

placing

less

importance

on

sales

loads

and

fees.

Some

of

the

fund

characteristics

used

in

the

decision

process

include
s

the

fund

performance

relative

to

other

funds

with

similar

styles,

absolute

performance,

fund

risk

and

fund

manager

reputation

among

others.


Portfolio

Tracker:


In

the

present

scenario

the

investor

tracks

his

investments

covering

stocks,

mutual funds,
in
surance, fixed deposits, bullion and more. This is done using painstaking manual
calculations. The investor has to perform lengthy searches for updated data. Based on the
information obtained he has to update his portfolio. Thus it involves long battles wi
th the
calculators and sheets of paper. In this way the process of finding one’s net worth
becomes a tedious one. The figure below shows a tabular representation of the Reliance
mutual fund maintained by an investor.


Fig

4: Tabular Representation of
Mut
ual Fund by Investor

Portfolio Diversification:

Recently, many people have become reacquainted with the fact that a certain amount of
risk is associated with investments in the stock market. Diversification is a well
-
known
strategy to limit the risk of fin
ancial investments. Diversification aims at investing in a
variety of stocks, preferably from different sectors. By diversifying a portfolio, the risk of
investment is distributed, and losses in one stock or market segment (e.g. The technology
sector) can
potentially be compensated by profits in other market segments. This
principle also holds true for investments in equity mutual funds.

A variety of tools are available to support the investors in the selection of funds for a
portfolio. Most tools and meth
ods mainly utilize performance indicators such as past
performance, expense ratios, fund ratings, etc. and they often use tables of some sort.
These visualizations give people little support in determining how a new fund fits into an
existing fund portfoli
o, and how it overlaps with funds already owned.


Mutual Fund Investment Analyst & Portfolio Tracker


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3. Problem Definition


3.1

Need for the project:


The existing system consists of decentralized information sources like fact sheets,
magazines, periodicals and the fund company website. As a result there

is a need for
aggregation of all this information at a single place. Thus the investor can find all the
information he needs at a centralized location which enables him to save the time and
efforts required in going through the ordeal of browsing the webs
ites of various mutual
funds. Instead he can just browse through a single website and get all the information he
wants through a single login.


The investors very often face difficulties in choosing between two funds, as a
comparative study between funds
is a tedious process. The financial advisors
place

greater

importance

on

performance

relative

to

other

funds

with

similar

style,

fund

objective,

fund

risk,

fund

manager

tenure,

and

fund

manager

reputation,

while

placing

less

importance

on

sales

loads

and

f
ees.

However

cross
-
comparison

between

these

funds

becomes

difficult

due

to

inconsistent

data

formats.

For example a person can get
information about fund A and fund B however it is difficult to compare these funds based
on different parameters. This proces
s gets further complicated with addition of more
funds. As shown below comparing Kotak 30 and HDFC Growth scheme becomes
difficult as information is displayed in an inconsistent manner.


Fig 5: Inconsistent Representation of Data




Mutual Fund Investment Analyst & Portfolio Tracker


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For an investor it is

very important to monitor the current value of his investments. It is
essential to know about the worth of his portfolio based on current market situations. This
will help him determine his profit/loss and take necessary actions to book his profit/loss
ba
sed on his expectations from his investment. All of this, results in a need for an online
portfolio tracker where the user will enter his investments into the system and his net
worth is calculated based on the current Net Asset Value (NAV). It is equally
important
that the portfolio tracker monitors the investor’s returns against benchmarks. If the
Sensex rises by 10% over two months and the fund's NAV rises by 12%, it is said to have
outperformed its benchmark. If the NAV rose by just 8%, it is said to ha
ve
underperformed the benchmark. But if the Sensex drops by 10% over a period of two
months and during that time, the fund's NAV drops by only 6%, then the fund is said to
have outperformed the benchmark.


Investors in mutual fund know the importance of ha
ving a diversified portfolio. If an
investor holds multiple funds, there may be significant overlaps in their stock holdings.

For example if two funds A and B have stakes in same stock or sector his investment will
be highly unbalanced. This will hurt port
folio diversification. It is important that the new
visualization technique helps in determining how a new fund fits into an existing fund
portfolio and how it overlaps with funds already owned.


The classic treemap proposed for the system of portfolio di
versification has a limitation
that is problematic for communicating portfolio diversity. It only shows the stocks
already owned by the investor. It does not support the discovery of unknown parts of the
market.


Fig 6: Mapping of Value of Stock to Treem
ap


Figure above illustrates that the usual suspect, “lack of screen real estate”, is not the
cause of the problem here. The example shows a tiny market consisting of three stocks A,
B, and C. A person has invested two dollars in A, zero in B, and one doll
ar in C. Both
portfolio visualizations, the bar chart and the treemap, have enough screen real estate to
adequately present the data. Yet the bar chart more clearly shows the values and
relationships of
all
data points whereas the classic treemap does not
show B. Portfolio
diversification is as much about the stocks and sectors not invested in as it is about the
stocks and market sectors already invested in. What is needed is a treemap that shows not
only the tree nodes (stocks) already present, but also th
eir context.

Thus there is a need for an application that will help the investor invest more
systematically and take appropriate decisions for his investments.




Mutual Fund Investment Analyst & Portfolio Tracker


7


4. Scope



4.1

Scope of the Project:


The application will be developed to help solve the In
vestors’ Problems by empowering
the Investors with various Data Representation and Information Visualization techniques
that will assist in Cross Comparison between various Mutual Fund Schemes. The
application will also have a Portfolio Tracker for each re
gistered user that will help him
to track his investments on the basis of current profit/loss and sectored diversification.


Applications of our application can be divided into following sections:


1.

Information Pool: Our application will provide users with
comprehensive
information about various Mutual Fund Schemes in the market. The information
will be represented such as to enable best decision
-
making. The representation
will be done using techniques that could be used by a beginner as well as any
seasoned

investor.

2.

Scheme Comparisons: Information is useful if it enables decision
-
making. The
decision making process will be simplified using various Information
Visualization techniques like charts, graphs and context tree maps. The graphs
for various paramete
rs like NAVs, Dividend history, CAGR, sectored allocation
will be given so that comparing two funds becomes easier. The Context Tree
Map will be used to represent the entire mutual fund market. The performance
of the various mutual funds can then be evalua
ted based on the current market
situation.

3.

Portfolio Tracker: The Portfolio Tracker allows users to track their mutual fund
schemes. Users can create several portfolios and add / delete mutual funds in a
portfolio. The tracker is in the form of a virtual b
uy and sell environment that
will project the portfolio worth and returns based on current market situations.



4.2

Assumptions:


1.

Connectivity with AMFI India.

2.

Client machine must have Java Runtime Environment (JRE) installed.


4.3

Limitations:


1.

Maximum nu
mber of users using the service concurrently depends on the
hardware configuration of the server (user in queue shall be notified about busy
server).

2.

Total number of schemes in Fund Database is 25 (5 Mutual Fund Companies * 5
Schemes of each).


Mutual Fund Investment Analyst & Portfolio Tracker


8


4.4

Design

Constraints:


1.

Information regarding various Mutual Funds Schemes, comparisons between
schemes, tips are some of the major features of the application. Hence, the period
for which the application will calculate and maintain the data related to these
featur
es is a constraint.

2.

Connectivity with AMFI India Website for regular data feeds had been identified
as a major design constraint.






































Mutual Fund Investment Analyst & Portfolio Tracker


9

5. Proposed System


5.1

Details of Proposed System


Mutual Funds Investment analyst and P
ortfolio Tracker is a web
-
based application that
provides investors with comprehensive information about various mutual fund schemes
in the market, analyses them using Information Visualization and comparison techniques,
and manages investment portfolios.


The application will be in client
-
server architecture. At the server side, a database of
registered users, mutual fund schemes, NAVs, etc. will be maintained. Programs that will
compare schemes to plot graphs, draw charts, etc. will also be on the server’
s side.


Client will be any investor who logs in to the website. Snapshots of his investments will
be output to him in the form of treemaps that will be loaded as applets.


Users first need to register to take advantage of the functionalities of the appl
ication.
Once registered, he will have access to details about various mutual funds in the market.
This information, plus comparison between funds as have done by the application will
help the investor to take investment decisions. The application will als
o provide the
investor with appropriate tips that will help him to diversify his portfolio.


The Portfolio Tracker will give the investor a comprehensive picture of his investments
that will include the schemes that he as invested in, as well as the profit
/loss that each
scheme is making/suffering respectively. Once the user creates his portfolio, he can add
the schemes that he has invested in. The application will then fetch the respective NAVs
from the database on a daily basis and show how much profit or

loss each scheme is
making or suffering respectively.


















Mutual Fund Investment Analyst & Portfolio Tracker


10

5.2

Navigation
al

Diagram





Fig:

7 Navigational Diagram



Mutual Fund Investment Analyst & Portfolio Tracker


11


6. Hardware

and Software Platform



6.1

Details of Hardware used in System development


Hardware System Requirements



32
-
bit

Processor

800
-
megahertz (MHz) Pentium III
-
compatible or faster
processor; 1
-
gigahertz (GHz) or faster processor
recommended

Memory

512 megabytes (MB) of RAM or more; 768 megabytes
(MB) or more recommended

Hard Disk

Approximately 1 GB of availab
le hard
-
disk space for the
recommended installation; Approximately 2 GB of
available hard
-
disk space for the full installation

Drive

CD
-
ROM or DVD
-
ROM drive

Display

Super VGA (1,024x768) or higher
-
resolution video
adapter and monitor

Other
Devices

Micro
soft Mouse or compatible pointing device

















Mutual Fund Investment Analyst & Portfolio Tracker


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6.2 Software Specification


Software System Requirements



32
-
bit

Operating
System



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J2EE




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no䔠㔮〩


Application

Server

Apache Tomcat 5.5

Database

Server

SQL Server 2005 Express Edition

IDE

(Front End)

Jbuilder, NetBeans, Dreamweaver, JFreeChart

Web
Browser

Internet Explorer
6.0



Mutual Fund Investment Analyst & Portfolio Tracker


13



7. System Design



A)

Use Case Description


I. Use Case Diagram:


Register
Validate Details
<<include>>
Retrieve Schemes
Modify Mutual Funds
Portfolio Tracker
Request Treemaps
Request Tips
Request NFO's
Request Headlines
Verify User
Investor
Request Snapshot
<<include>>
Manage Portfolio
<<extend>>
<<extend>>
<<extend>>
Request News
<<extend>>
<<extend>>
<<extend>>
Login
<<include>>
<<include>>
<<include>>
<<include>>
Request Comparison
<<include>>

Fig 8: Use Case (Investor)



Mutual Fund Investment Analyst & Portfolio Tracker


14





Add Schemes
Enter Tips
Enter Headlines
Enter NFOs
Create Mutual Fund Administrator
Delete Investor
Enter News
<<extend>>
<<extend>>
<<extend>>
Approve Scheme Details
Administrator
Delete Schemes
Approve Scheme Details
Update Schemes
<<include>>
Mutual Fund
Administrator

Fig 9: Use Case (Administrator/Mutual Fund Administrator)






Mutual Fund Investment Analyst & Portfolio Tracker


15

The above use
-
case diagram symbolizes a graphical view of all the actors, use cas
es and
their interactions identified by the system. A use case thus represents a dialog between
various actors and the system. The interaction between them shows all the flow of
information within the system that causes further development in the working

of the
system
.



Scenario

Name:

Registration

Scenario
Description:

User needs to register to use the features of the application

Basic Flow:

Form v
alidation successful, go to Homepage

Alternate Flow:

Form v
alidation unsuccessful, display error message,
reload form

Pre
-
condition:

Form validation successful

Post
-
condition:

User
has been registered,
gets access to
featured of application



Scenario
Name:

Login

Scenario
Description:

User logs on to system. If user is authorized to access the system,
he g
ets logged on, else an error message is displayed

Basic Flow:

Login Id and Password match, go to Homepage

Alternate Flow:

Login Id and Password don’t match, display error message

Pre
-
condition:

No Pre
-
condition

Post
-
condition:

User gets
logged in,
acce
ss to system
, session starts



Scenario
Name:

Scheme snapshots

Scenario
Description:

Scheme snapshots are displayed on request to the user

Basic Flow:

User requests for snapshots, gets the desired results

Alternate Flow:

User requests for snapshots, des
ired information is not available

Pre
-
condition:

User is logged in

Post
-
condition:

Snapshots are displayed



Scenario
Name:

Portfolio Tracker

Scenario
Description:

User tracks his investment using a Portfolio Tracker

Basic Flow:

User adds/ deletes sche
mes, tracks profit/ loss.

Alternate Flow:

No alternate flow.

Pre
-
condition:

User is logged in

Post
-
condition:

Portfolio is shown (Current profit/ loss)



Scenario
Name:

Tree Maps

Scenario
Description:

Tree Maps are used to represent the
total
investmen
t made by the
user (Share of each sector/ script will be shown as a fraction of
the total
investment)

Basic Flow:

Tree Map requested, applet (Tree Map) loaded

Alternate Flow:

Tree Map requested, applet not loaded (appropriate error displayed)

Pre
-
condit
ion:

User is logged in, investment has been made

Post
-
condition:

Applet loaded, investment shown as Tree Map

Mutual Fund Investment Analyst & Portfolio Tracker


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II.
Activity Diagram


Fig 10: Activity Diagram









Mutual Fund Investment Analyst & Portfolio Tracker


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B) Sequence Diagram:




: Investor
: Investor
: GUI
: GUI
: Application
: Application
: Database
: Database
1: Request Page()
2: Send Page()
3: Display Page
4: Login/Register()
5: Verify()
7: Ok
8: Ok
9: Services[Scheme Snapshot/Portfolio Tracker/News]
10: Select service[Scheme Snapshot/Portfolio Tracker/News]
11: Retrive Info()
12: Info
13: Info
14: Output
6: Ok

Fig 11: Sequence Diagram











Mutual Fund Investment Analyst & Portfolio Tracker


18

C) Class Diagram:





Fig 1
2: Class Diagram











Mutual Fund Investment Analyst & Portfolio Tracker


19

8. Introduction to Programming Tools



8.1

Study of Programming Tools:





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J
ava
2

E
nterprise
E
dition, is a programming platform

part of the Java Platform

for
developing and running distributed multi
-
tier architecture Java a
pplications, based largely
on modular software components running on an application server




J2EE Framework


J2EE Framework consists of Enterprise Applications that are distributed systems which
contain cooperating units that exchange information across a
nd between machine
boundaries, usually over a network. J2EE systems implement a Multi
-
tiered application
model using the J2EE components.




Multi
-
tiered application model


I.

Client
-
tier component

II.

Web
-
tier component




J2EE components

I.

Client component: Applicati
on clients and applets that run on the
client machines.

II.

Web component: JSP (Java Server Pages) and Java Servlet that run
on the application server.
















Mutual Fund Investment Analyst & Portfolio Tracker


20


Fig 13: J2EE Client
-
Server
-
Database Model





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The
J
ava
D
evelopm
ent
K
it (JDK) is a Sun product aimed at Java developers. Since the
introduction of Java, it has been by far the most widely used Java SDK.


The primary components of the JDK are a selection of programming tools, including:




javac


The compiler, which conv
erts source code into Java bytecode



jar


The archiver, which packages related class libraries into a single JAR file



javadoc


The documentation generator, which automatically generates
documentation from source code comments



jdb


The debugger


The J
DK also comes with a complete Java Runtime Environment, usually called a private
runtime. It consists of a Java Virtual Machine and all of the class libraries that will be
present in the production environment, as well as additional libraries only useful t
o
developers, such as the internationalization libraries and the IDL libraries.

Also included are wide selections of example programs demonstrating the use of almost
all portions of the Java API. Java IDEs like Jbuilder, NetBeans etc depend upon JDK for
co
mpilation of Java application and also for generation of documentation form source
code comments.









Mutual Fund Investment Analyst & Portfolio Tracker


21





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The
J
ava

R
untime

E
nvironment
, or
JRE
, is a software bundle from Sun Microsystems
that allows a computer system to run a

Java application. Java applications are in
widespread use and necessary to view many Internet pages. Normal computer users can
download the current JRE version by testing their Java Virtual Machine at the Java.com
test page.

The software bundle consists o
f the Java Virtual Machine and the application and
programming interface (API). The API provides a set of standard class libraries. The
virtual machine and API have to be consistent with each other and are therefore bundled
together as the JRE. This can be

considered a virtual computer in which the virtual
machine is the processor and the API is the user interface.




䩢u楬der


JBuilder is an IDE from Borland Corporation. Jbuilder provides a very rich design
interface that allows you to easily drag
-
drop GUI

components like text fields, buttons etc
to your java application or a JSP page. This greatly helps in reducing the development
time of Java application. Manual coding required for creation of GUI is greatly reduced
using JBuilder.





SQL Server 2005


SQ
L Server 2005 express edition is a free to download and redistributable database
management tool from Microsoft. SQL Server 2005 consists of a Graphical Data
management tool called SQL Server Management that helps design databases with ease
and saves a lot

on developmental time. This developmental tool mainly consists of 5
sections



Databases



Security



Server Objects



Replication



Management


Each of the above section has a simple and easy to use GUI for Database Management
activities.






Mutual Fund Investment Analyst & Portfolio Tracker


22






T潭c慴


Tomcat
is a web server that supports servlets and JSPs. Tomcat comes with the Jasper
compiler that compiles JSPs into servlets. Apache Tomcat version 5.5 implements the
Servlet 2.4 and JavaServer Pages 2.0 specifications from the Java Community Process,
and inclu
des many additional features that make it a useful platform for developing and
deploying web applications and web services.Jasper 2 has been redesigned to
significantly improve performance over the original Jasper




































Mutual Fund Investment Analyst & Portfolio Tracker


23


9. Bib
liography



1.

Making Mutual Funds work for you


Investor’s concise guide by AMFI India


2.

The Layman’s Guide to Mutual Funds by HSBC Mutual Funds


3.

Indian Mutual Funds Handbook by Acatos Sylvia


4.

Business Week Guide to Mutual Funds by Laderman Jeffrey M


5.

How Mu
tual Funds work by Fredman Albert I


6.

Individual Investor’s Guide to Top Mutual Funds


7.

Headfirst Series (JSP & Servlets)


8.

Complete Reference (JSP & Servlets)