A Project on Comparative Analysis of Hdfc Mutual Fund With Other Mutual Funds in the City of...

HDFC MUTUAL FUND 1 | Page

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KOUSTUV BUSINESS SCHOOL BHUBANESWAR

June`2009

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CERTIFICATE BY GUIDE

This is to certify that the following student is submitting the project report

titled “ A Comparative study on the performance between two sectorial

funds in Jamshedpur. It is the original and bonafide work submitted in

partial fulfillment of the requirement for the award of PGDM program.

Prof. GOPAL PRUSETH

(Project Guide) KBS, Bhubaneswar


ACKNOWLEDGEMENT

In the course of this project I got an insight into the mutual fund industry, came to know a lot about the basic working of an asset management company, understood how the mutual funds of different fund houses are compared, learnt various computations and overall got a preview of what a job in the mutual fund industry would entail. First and foremost I am very proud to be a student of Koustuv Business School, Bhubaneswar and am most grateful for having been given the chance to work with a reputed company like HDFC MUTUAL FUND at the beginning of my career. I would fail to do my duty if I didn’t take this opportunity to thank my faculty guide, Prof. Gopal Sir for his timely help and guidance. I would like to thank him whole heartedly for making me work harder so as to gain a more in depth knowledge of the subject which I am sure will help me a lot in the long run as well. I would say that this project wouldn’t have been the same without his support, guidance, encouragement and constant demand for improvement. My company guide, Mr. Shailesh Kumar Bansal, Manager is another person who has played a key role in the development of me as a person, in the completion of this project and in being educated about the mutual fund industry in general. Without the knowledge, attention and time that he has bestowed on me, this project would simply have been impossible. He is truly an inspiration for me and drove me towards working harder than my expectations which simply made me more ready for the corporate life. He truly gave me the corporate exposure I had thought of. My acknowledgement would be incomplete if I didn’t thank my team mates. During the course of this SIP we have developed a camaraderie which was very healthy and enjoyable. I am grateful for everyone’s support and help when needed. Without them this training would not have been the same. GOPAL KUMAR AGARWAL


EXECUTIVE SUMMARY

The significant outcome of the government policy of

liberalization in industrial and financial sector has been the development

of new financial instruments. These new instruments are expected to

impart greater competitiveness flexibility and efficiency to the financial

sector. Growth and development of various mutual fund products in

Indian capital market has proved to be one of the most catalytic

instruments in generating momentous investment growth in the capital

market. There is a substantial growth in the mutual fund market due to a

high level of precision in the design and marketing of variety of mutual

fund products by banks and other financial institution providing growth,

liquidity and return.

In this context, prioritization, preference building and close

monitoring of mutual funds are essentials for fund managers to make

this the strongest and most preferred instrument in Indian capital

market for the coming years. With the decline in the bank interest rates,

frequent fluctuations in the secondary market and the inherent attitude

of Indian small investors to avoid risk, it is important on the part of fund

managers and mutual fund product designers to combine various

elements of liquidity, return and security in making mutual fund

products the best possible alternative for the small investors in Indian

market.

There are various parameters which an investor should

consider before investing in mutual funds. The comparative analysis

between two mutual fund will help the investor to take appropriate

decision before investing in mutual funds.


TABLE OF CONTENTS

DECLARATION

CERTIFICATE BY GUIDE

ACKNOWLEDGEMENT

EXECUTIVE SUMMARY

TOPICS # PG NO.

1. INTRODUCTION 10

2. ORGANISATION OF MUTUAL FUND 12

3. CHARACTERISTICS OF MUTUAL FUND 13

4. OBJECTIVES OF MUTUAL FUND 14

5. STRUCTURE OF MUTUAL FUND 14

6. INVESTOR PROFILE 17

7. FACTORS IMPACTING THE INDUSTRY 18

8. OPPURTUNITIES & THREATS 20

9. BENEFITS OF MUTUAL FUND 22

10. CATEGORIES OF MUTUAL FUND 26

11. THE WAY TO INVEST IN MUTUAL FUND 31

12. LEGAL FRAMEWORK OF SEBI 32

13. REGULATORY OF MUTUAL FUND 34

14. MUTUAL FUND IN INDIA AT A GLANCE 37

15. COMPANY DETAIL 42

16. COMPETITOR ANALYSIS 57

17. COMPARATIVE ANALYSIS BETWEEN HDFC & TATA 62


18. FUTURE GROWTH DRIVERS 68

19. FINANCIAL ANALYSES 71

20. CONCLUSION 74

21. SUGGESTIONS 75

22. GLOSSARY 77

23. BIBLIOGRAPHY 78

24. QUESTIONAIRE 79


PART A

INDUSTRY OVERVIEW


INTRODUCTION

A Mutual Fund is a trust that pools the savings of a number of investors

who share a common financial goal. The money thus collected is then

invested in capital market instruments such as shares, debentures and

other securities. The income earned through these investments and the

capital appreciations realized are shared by its unit holders in

proportion to the number of units owned by them. Thus a Mutual Fund

is the most suitable investment for the common man as it offers an

opportunity to invest in a diversified, professionally managed basket of

securities at a relatively low cost.

The flow chart below describes broadly the working of a Mutual Fund.


A Mutual Fund is a body corporate registered with the

Securities and Exchange Board of India (SEBI) that pools up the money

from individual/corporate investors and invests the same on behalf of

the investors/unit holders, in Equity shares, Government securities,

Bonds, Call Money Markets etc, and distributes the profits. In the other

words, a Mutual Fund allows investors to indirectly take a position in a

basket of assets.

Mutual Fund is a mechanism for pooling the resources by issuing

units to the investors and investing funds in securities in accordance

with objectives as disclosed in offer document. Investments in

securities are spread among a wide cross-section of industries and

sectors thus the risk is reduced. Diversification reduces the risk because

all stocks may not move in the same direction in the same proportion

at same time. Investors of mutual funds are known as unit holders.

The investors in proportion to their investments share the profits

or losses. The mutual funds normally come out with a number of

schemes with different investment objectives which are launched from

time to time. A Mutual Fund is required to be registered with Securities

Exchange Board of India (SEBI) which regulates securities markets

before it can collect funds from the public.


ORGANISATION OF A MUTUAL FUND:-

There are many entities involved and the diagram below illustrates the

organizational set up of a Mutual Fund:

Mutual Funds diversify their risk by holding a portfolio of instead of

only one asset. This is because by holding all your money in just one

asset, the entire fortunes of your portfolio depend on this one asset. By

creating a portfolio of a variety of assets, this risk is substantially

reduced.

Mutual Fund investments are not totally risk free. In fact,

investing in Mutual Funds contains the same risk as investing in the

markets, the only difference being that due to professional

management of funds the controllable risks are substantially reduced.

A very important risk involved in Mutual Fund investments is the

market risk. However, the company specific risks are largely eliminated

due to professional fund management.


CHARACTERISTICS OF A MUTUAL FUND:-

A Mutual Fund actually belongs to the investors who have pooled

their funds. The ownership of the mutual fund is in the hands of

the Investors.

A Mutual Fund is managed by investment professional and other Service providers, who earns a fee for their services, from the funds.

The pool of Funds is invested in a portfolio of marketable investments.

The value of the portfolio is updated every day.

The investor’s share in the fund is denominated by “units”. The value of the units changes with change in the portfolio value, every day. The value of one unit of investment is called net asset value (NAV).

The investment portfolio of the mutual fund is created according to the stated Investment objectives of the Fund.


OBJECTIVES OF A MUTUAL FUND:-

To Provide an opportunity for lower income groups to acquire

without much difficulty, property in the form of shares.

To Cater mainly of the need of individual investors, whose means

are small?

To Manage investors portfolio that provides regular income,

growth, Safety, liquidity, tax advantage, professional

management and diversification.

STRUCTURE OF A MUTUAL FUND:-

THE STRUCTURE CONSISTS OF:


SPONSOR :

Sponsor is the person who acting alone or in combination with another

body corporate establishes a mutual fund. Sponsor must contribute at

least 40% of the net worth of the Investment managed and meet the

eligibility criteria prescribed under the Securities and Exchange Board of

India (Mutual Fund) Regulations, 1996. The sponsor is not responsible or

liable for any loss or shortfall resulting from the operation of the

Schemes beyond the initial contribution made by it towards setting up of

the Mutual Fund.

TRUST:

The Mutual Fund is constituted as a trust in accordance with the

provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed

is registered under the Indian Registration Act, 1908.

TRUSTEE:

Trustee is usually a company (corporate body) or a Board of Trustees

(body of individuals). The main responsibility of the Trustee is to

safeguard the interest of the unit holders and ensure that the AMC

functions in the interest of investors and in accordance with the

Securities and Exchange Board of India (Mutual Funds) Regulations,

1996, the provisions of the Trust Deed and the Offer Documents of the

respective Schemes. At least 2/3rd directors of the Trustee are

independent directors who are not associated with the Sponsor in any

manner.


ASSET MANAGEMENT COMPANY (AMC):

The AMC is appointed by the Trustee as the Investment Manager of the

Mutual Fund. The AMC is required to be approved by the Securities and

Exchange Board of India (SEBI) to act as an asset management company

of the Mutual Fund. At least 50% of the directors of the AMC are

independent directors who are not associated with the Sponsor in any

manner. The AMC must have a net worth of at least 10 cores at all times.

REGISTRAR AND TRANSFER AGENT:

The AMC if so authorized by the Trust Deed appoints the Registrar and

Transfer Agent to the Mutual Fund. The Registrar processes the

application form, redemption requests and dispatches account

statements to the unit holders. The Registrar and Transfer agent also

handles communications with investors and updates investor records.


INVESTORS PROFILE:

An investor normally prioritizes his investment needs before

undertaking an investment. So different goals will be allocated to

different proportions of the total disposable amount. Investments for

specific goals normally find their way into the debt market as risk

reduction is of prime importance, this is the area for the risk-averse

investors and here, Mutual Funds are generally the best option. One

can avail of the benefits of better returns with added benefits of

anytime liquidity by investing in open-ended debt funds at lower risk,

this risk of default by any company that one has chosen to invest in,

can be minimized by investing in Mutual Funds as the fund managers

analyze the companies financials more minutely than an individual can

do as they have the expertise to do so.

Moving up the risk spectrum, there are people who

would like to take some risk and invest in equity funds/capital market.

However, since their appetite for risk is also limited, they would rather

have some exposure to debt as well. For these investors, balanced

funds provide an easy route of investment, armed with expertise of

investment techniques, they can invest in equity as well as good quality

debt thereby reducing risks and providing the investor with better

returns than he could otherwise manage. Since they can reshuffle their

portfolio as per market conditions, they are likely to generate

moderate returns even in pessimistic market conditions.


Next comes the risk takers, risk takers by their nature, would

not be averse to investing in high-risk avenues. Capital markets find

their fancy more often than not, because they have historically

generated better returns than any other avenue, provided, the money

was judiciously invested. Though the risk associated is generally on the

higher side of the spectrum, the return-potential compensates for the

risk attached.

FACTORS IMPACTING THE INDUSTRY:

PEST Analysis:

Political Factors:

a) Government Regulation: SEBI regulates the industry and every

decision taken by them impact the industry very quickly.

b) Stable constituency: The mutual fund industry can take long term

decision if the government is stable.

c) Fiscal policy: tax structure plays a very important role in the

growth of the industry .If the tax structure will be high than there

will be less savings and investment. We have seen the interest

rate reducing continuously which boost the industry to sell

products which are better than the FDs, PF, NSC and KVPs.


Economic factors:

d) Market performance: The last five years witnessed a sharp rise in

the markets. The mutual fund industry basically works parallel

with the markets. Suppose, if the markets always be on downside,

then the investors will not be so comfortable to invest. This will

reduce the market size drastically.

e) Global Standards: As the industry will grow better, India being a

global economy, the MF industry has to match to the global

mature MF markets. They have to give due emphasis on product

innovation, cost reduction and penetration.

f) Inflation: price rise affects interest rate and reduces the chances

of investment.

Social factors:

g) Consumer behaviour: this is very unpredictable and based on

sentiments gets changed very frequently, which sometimes makes

selling of products difficult.

h) Income: The rich people are in bigger cities, so the mutual fund

industry is much more concentrated there.

Technological factors:

This is the era of information technology and due to net banking,

online transaction, online RTGS, clearing system helps the industry a lot.


OPPORTUNITIES AND THREATS:-

a) Real Estate sector boom: The Real estate has always been one of

the preferred investment avenues for the Indian investor. And

what better way for the smaller investors to participate in this

boom than to have a real estate mutual fund. AMC has to come

up with the structured products in this segment and should take

competitive advantage.

b) Penetration to Rural markets: The industry has to take themselves

to the local and rural markets to increase the market size. Also,

the cost of setting up business in bigger cities is huge compare to

smaller cities. This will reduce the AMC business cost.

c) Concentration of Corporate Investors: Mutual funds have become

overly attractive to corporate investors because of higher returns

than bank deposits and ability to distribute capital gains tax.

Corporate investors account for more than 55% of the AUM (by

value).It is clear that the lack of growth in funds under

management in India is because of the absence of long term

investors.Corporate investors take profits frequently resulting in

destruction in the compound growth in funds under management.

Distributors are forced to pass on more commissions to

companies, while fund companies are compelled to offer funds

with wafer thin margins.


d) Retail investors lose out in the sense that they continue to pay

higher expenses.

e) Higher Returns of Alternative Debt Instruments: Government

guaranteed schemes provide risk free returns at competitive rates

of returns. This is why mutual funds have difficulty competing

retail business.

f) Huge scope for expansion: There are only 33 AMC which is very

small figure compared to the mature markets.

g) Distribution: One of the major factors impacting the growth of

mutual fund industry is the absence of any regulation in

distribution of mutualfunds.Mutual fund investors need

distributors who are able to inform them about the efficacy of

distribution product for a particular risk profile and stage in life

cycle. Lack of distributor awareness and the absence of any

disclosures from distributors make misselling of MF products

commonplace.


BENEFITS OF MUTUAL FUND

There are numerous benefits of investing in mutual funds and one of the

key reasons for its phenomenal success in the developed markets like US

and UK is the range of benefits they offer, which are unmatched by most

other investment avenues. We have explained the key benefits in this

section. The benefits have been broadly split into universal benefits,

applicable to all schemes and benefits applicable specifically to open-

ended schemes.


1. AFFORDABILITY

A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc.

depending upon the investment objective of the scheme. An investor

can buy in to a portfolio of equities, which would otherwise be

extremely expensive. Each unit holder thus gets an exposure to such

portfolios with an investment as modest as Rs.500/-. This amount today

would get you less than quarter of an Infosys share! Thus it would be

affordable for an investor to build a portfolio of investments through a

mutual fund rather than investing directly in the stock market.

2. DIVERSIFICATION

The nuclear weapon in your arsenal for your fight against Risk. It simply

means that you must spread your investment across different securities

(stocks, bonds, money market instruments, real estate, fixed deposits

etc.) and different sectors (auto, textile, information technology etc.).

This kind of a diversification may add to the stability of your returns, for

example during one period of time equities might under perform but

bonds and money market instruments might do well enough to offset

the effect of a slump in the equity markets. Similarly the information

technology sector might be faring poorly but the auto and textile sectors

might do well and may protect your principal investment as well as help

you meet your return objectives.

3. VARIETY

Mutual funds offer a tremendous variety of schemes. This variety is

beneficial in two ways: first, it offers different types of schemes to


investors with different needs and risk appetites; Secondly, it offers an

opportunity to an investor to invest sums across a variety of schemes,

both debt and equity. For example, an investor can invest his money in a

Growth Fund (equity scheme) and Income Fund (debt scheme)

depending on his risk appetite and thus create a balanced portfolio

easily or simply just buy a Balanced Scheme.

4. PROFESSIONAL MANAGEMENT

Qualified investment professionals who seek to maximize returns and

minimize risk monitor investor's money. When you buy in to a mutual

fund, you are handing your money to an investment professional that

has experience in making investment decisions. It is the Fund Manager's

job to (a) find the best securities for the fund, given the fund's stated

investment objectives; and (b) keep track of investments and changes in

market conditions and adjust the mix of the portfolio, as and when

required.

5. TAX BENEFITS

Any income distributed after March 31, 2002 will be subject to tax in the

assessment of all Unit holders. However, as a measure of concession to

Unit holders of open-ended equity-oriented funds, income distributions

for the year ending March 31, 2003, will be taxed at a confessional rate

of 10.5%. In case of Individuals and Hindu Undivided Families a

deduction unto Rs. 9,000 from the Total Income will be admissible in

respect of income from investments specified in Section 80L, including


income from Units of the Mutual Fund. Units of the schemes are not

subject to Wealth-Tax and Gift-Tax.

6. REGULATIONS

Securities Exchange Board of India (“SEBI”), the mutual funds regulator

has clearly defined rules, which govern mutual funds. These rules relate

to the formation, administration and management of mutual funds and

also prescribe disclosure and accounting requirements. Such a high level

of regulation seeks to protect the interest of investors.

7. CONVENTIONAL ADMINISTRATION

Investing in a Mutual Fund reduces paperwork and helps you avoid

many problems such as bad deliveries, delayed payments and follow up

with brokers and companies. Mutual Funds save your time and make

investing easy and convenient. Return Potential Over a medium to long-

term; Mutual Funds have the potential to provide a higher return as they

invest in a diversified basket of selected securities.

8. LIQUIDITY

In open-ended mutual funds, you can redeem all or part of your units

any time you wish. Some schemes do have a lock-in period where an

investor cannot return the units until the completion of such a lock-in

period.


9. CONVENIENCE

An investor can purchase or sell fund units directly from a fund, through

a broker or a financial planner. The investor may opt for a Systematic

Investment Plan (“SIP”) or a Systematic Withdrawal Advantage Plan

(“SWAP”). In addition to this an investor receives account statements

and portfolios of the schemes.

CATEGORIES OF MUTUAL FUNDS:


Mutual Fund can be classified as follows:-

Based on the Structure:-

1. OPEN-ENDED MUTUAL FUNDS:

The holders of the shares in the Fund can resell them to the issuing

Mutual Fund company at the time. They receive in turn the net

assets value (NAV) of the shares at the time of re-sale. Such Mutual

Fund Companies place their funds in the secondary securities

market. They do not participate in new issue market as do pension

funds or life insurance companies. Thus they influence market price

of corporate securities. Open-end investment companies can sell an

unlimited number of Shares and thus keep going larger. The open-

end Mutual Fund Company Buys or sells their shares. These

companies sell new shares NAV plus a Loading or management fees

and redeem shares at NAV.In other words, the target amount and

the period both are indefinite in such funds.

2. CLOSED-ENDED MUTUAL FUNDS:-

A closed–end Fund is open for sale to investors for a specific period,

after which further sales are closed. Any further transaction for

buying the units or repurchasing them, Happen in the secondary

markets, where closed end Funds are listed. Therefore new

investors buy from the existing investors, and existing investors can

liquidate their units by selling them to other willing buyers. In a

closed end Funds, thus the pool of funds can technically be kept

constant.


The asset management company (AMC) however, can buy out the

units from the investors, in the secondary markets, thus reducing

the amount of funds held by outside investors. The price at which

units can be sold or redeemed Depends on the market prices, which

are fundamentally linked to the NAV. Investors in closed end Funds

receive either certificates or Depository receipts, for their holdings

in a closed end mutual Fund.

Based on their investment objective:

1. EQUITY FUNDS: These funds invest in equities and equity related

instruments. With fluctuating share prices, such funds show volatile

performance, even losses. However, short term fluctuations in the

market, generally smoothens out in the long term, thereby offering

higher returns at relatively lower volatility. At the same time, such funds

can yield great capital appreciation as, historically, equities have

outperformed all asset classes in the long term. Hence, investment in

equity funds should be considered for a period of at least 3-5 years. It

can be further classified as:

i) Index funds- In this case a key stock market index, like BSE

Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index

both in terms of composition and individual stock weightages.

ii) Equity diversified funds- 100% of the capital is invested in equities

spreading across different sectors and stocks.


iii) Dividend Yield funds- It is similar to the equity diversified funds

except that they invest in companies offering high yield dividends.

iv) Thematic funds- Invest 100% of the assets in sectors which

are related through some theme.

e.g. -An infrastructure fund invests in power, construction, cements

sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector.

e.g. - A banking sector fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the

investors.

2. BALANCED FUNDS: Their investment portfolio includes both debt

and equity. As a result, on the risk-return ladder, they fall between

equity and debt funds. Balanced funds are the ideal mutual funds vehicle

for investors who prefer spreading their risk across various instruments.

Following are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining

in debt.

3. DEBT FUND: They invest only in debt instruments, and are a good

option for investors averse to idea of taking risk associated with equities.

Therefore, they invest exclusively in fixed-income instruments like

bonds, debentures, Government of India securities; and money market

instruments such as certificates of deposit (CD), commercial paper (CP)


and call money. Put your money into any of these debt funds depending

on your investment horizon and needs.

i) Liquid funds- These funds invest 100% in money market

instruments, a large portion being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government

securities of and T-bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters

invest in debt instruments which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage

opportunities due to mis-pricing between cash market and derivatives

market. Funds are allocated to equities, derivatives and

money markets. Higher proportion (around 75%) is put in money

markets, in the absence of arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term

government securities.

vi) Income funds LT- Typically, such funds invest a major portion of

the portfolio in long-term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt

and an exposure of 10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is

in line with that of the fund.


THE WAY TO INVEST IN MUTUAL FUND

Mutual funds normally come out with an advertisement in newspapers

publishing the date of launch of the new schemes. Investors can also

contact the agents and distributors of mutual funds who are spread all

over the country for necessary information and application forms. Forms

can be deposited with mutual funds through the agents and distributors

who provide such services. Now days, the post offices and banks also

distribute the units of mutual funds. However, the investors may please

note that the mutual funds schemes being marketed by banks and post

offices should not be taken as their own schemes and no assurance of

returns is given by them. The only role of banks and post offices is to

help in. distribution of mutual funds schemes to the investors. Investors

should not be carried away by commission/gifts given by

agents/distributors for investing in a particular scheme. On the other

hand they must consider the track record of the mutual fund and should

take objective decision.

ONE TIME INVESTMENT

The amount that has to be invested in onetime is known as Onetime

Investment. The investor has to pay the whole amount at once. The

minimum amount is Rs. 5000 and maximum is as per the investor’s

Choice. This investment is generally preferred for the business man who

Are able to pay at one time.


SYSTEMATIC INVESTMENT PLAN (SIP)

The amount that has to be invested through same monthly installment is

known as Systematic Investment Plan. The investor has to pay the

minimum amount Rs.1000 monthly for all equity and balanced schemes

like that for 6months. And Rs.500 monthly for Tax Saver scheme like that

for 12 months. The minimum amount that the investor has to invest is

Rs6000 and maximum as per their choice. This type of investment is

generally preferred for the salaried people.

LEGAL FRAME WORK OF SEBI & AMFI

REGULATORY ASPECTS OF MUTUAL FUNDS:

In the year 1992, Securities and exchange Board of India (SEBI) Act was

passed. The objectives of SEBI are – to protect the interest of investors

in securities and to promote the development of and to regulate the

securities market.

SEBI formulates policies and regulates the mutual funds to protect

the interest of the investors.


GUIDELINES OF SEBI & AMFI

Mutual funds are regulated by the SEBI (mutual Fund) Regulations,

1996.

SEBI is the regulator of all funds, except offshore funds.

Bank-sponsored mutual funds are jointly regulated by SEBI and RBI.

The bank-sponsored fund cannot provide a guarantee without RBI

Permission.

RBI regulates money and government securities markets, in which

mutual Funds are invested.

Listed mutual funds are subject to the listing regulations of stock

exchange.

Since the AMC and Trustee Company are companies, the Department

of Company affairs regulate them. They have to send periodic reports

to the ROC (Register of Companies) and the CLB (Company Law

Board) is the appellate authority.

Investors cannot sue the trust, as they are the same as the trust and

can’t sue themselves.

UTI does not have a separate sponsor and AMC.

UTI is governed by the UTI Act, 1963 and is voluntarily under SEBI

Regulations.

UTI can borrow as well as lend also engage in other financial services

activities.

Only AMFI certified agents can sell Mutual Fund units.

Mutual Funds Company is required to update the NAV of the scheme

on the AMFI website on a daily basis in case of open-ended scheme.


REGULATORY OF MUTUAL FUND IN INDIA

SEBI

The capital market regulates the mutual funds in India. SEBI requires all

mutual funds to be registered with them. SEBI issues guidelines for all

mutual funds operations-investment, accounts, expenses etc. Recently,

it has been decided that Money Market Mutual Funds of registered

mutual funds will be regulated by SEBI through (Mutual Fund)

Regulations 1996.

RBI

RBI, a supervisor of the Banks owned Mutual Funds-As banks in India

come under the regulatory Jurisdiction of RBI, banks owned funds to be

under supervision of RBI and SEBI. RBI has supervisory responsibility

over all entities that operate in the money markets.

MINISTRY OF FINANCE (MOF)

Ministry of Finance ultimately supervises both the RBI and the SEBI and

plays the role of apex authority for any major disputes over SEBI

guidelines.


COMPANY LOW BOARD

Registrar of companies is called Company Low Board. AMCs of Mutual

Funds are companies registered under the companies Act 1956 and

therefore answerable to regulatory authorities empowered by the

Companies Act.

STOCK EXCHANGE

Stock Exchanges are Self-regulatory organizations supervised by SEBI.

Many closed ended funds of AMCs are listed as stock exchanges and are

traded like shares.

OFFICE OF THE PUBLIC TRUSTEE

Mutual Fund being public trust is governed by the Indian Trust Act 1882.

The Board of trustee or the Trustees Company is accountable to the

office of public trustee, which in turn reports to the Charity

commissioner.


RISK V/S. RETURN:


MUTUAL FUNDS IN INDIA AT A GLANCE

The mutual fund industry in India started in 1963 with the

formation of Unit Trust of India, at the initiative of the Government of

India and Reserve Bank the. The history of mutual funds in India can be

broadly divided into four distinct phases :-

Phases of Mutual Fund Industry in India

Phase-III Phase-IV

Phase-I Phase-II


First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of

Parliament. It was set up by the Reserve Bank of India and functioned

under the Regulatory and administrative control of the Reserve Bank of

India. In 1978 UTI was de-linked from the RBI and the Industrial

Development Bank of India (IDBI) took over the regulatory and

administrative control in place of RBI. The first scheme launched by UTI

was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of

assets under management.

Second Phase – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by

public sector banks and Life Insurance Corporation of India (LIC) and

General Insurance Corporation of India (GIC). SBI Mutual Fund was the

first non- UTI Mutual Fund established in June 1987 followed by

Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug

89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of

Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June

1989 while GIC had set up its mutual fund in December 1990. At the end

of 1993, the mutual fund industry had assets under management of

Rs.47,004 crores.


Third Phase – 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the

Indian mutual fund industry, giving the Indian investors a wider choice of

fund families. Also, 1993 was the year in which the first Mutual Fund

Regulations came into being, under which all mutual funds, except UTI

were to be registered and governed. The erstwhile Kothari Pioneer (now

merged with Franklin Templeton) was the first private sector mutual

fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a

more comprehensive and revised Mutual Fund Regulations in 1996. The

industry now functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with

many foreign mutual funds setting up funds in India and also the

industry has witnessed several mergers and acquisitions. As at the end

of January 2003, there were 33 mutual funds with total assets of Rs.

1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets

under management was way ahead of other mutual funds.


Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963

UTI was bifurcated into two separate entities. One is the Specified

Undertaking of the Unit Trust of India with assets under management of

Rs.29,835 crores as at the end of January 2003, representing broadly,

the assets of US 64 scheme, assured return and certain other schemes.

The Specified Undertaking of Unit Trust of India, functioning

under an administrator and under the rules framed by Government of

India and does not come under the purview of the Mutual Fund

Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI,

PNB, BOB and LIC. It is registered with SEBI and functions under the

Mutual Fund Regulations. With the bifurcation of the erstwhile UTI

which had in March 2000 more than Rs.76,000 crores of assets under

management and with the setting up of a UTI Mutual Fund, conforming

to the SEBI Mutual Fund Regulations, and with recent mergers taking

place among different private sector funds, the mutual fund industry has

entered its current phase of consolidation and growth. As at the end of

September, 2004, there were 29 funds, which manage assets of

Rs.153108 crores under 421 schemes.


The graph indicates the growth of assets over the years.

Note

Erstwhile UTI was bifurcated into UTI Mutual fund and the Specified

Undertaking of the Unit Trust of India effective from February 2003. The

Assets under management of the Specified Undertaking of the Unit Trust

of India has thereof been executed from the total assets of the industry

as a whole from February 2003 onwards.


PART B

COMPANY DETAIL


MAN WITH A MISSION

If ever there was a man with a mission it was

Hasmukhbhai Parekh, Founder and Chairman-

Emeritus, of HDFC Group who left this earthly

abode on November 18, 1994. Born in a

traditional banking family in Surat, Gujarat, Mr.

Parekh started his financial career at

Harkisandass Lukhmidass – a leading stock

broking firm. The firm closed down in the late

seventies, but, long before that, he went on to become a towering figure

on the Indian financial scene.

In 1956 he began his lifelong financial affair with the economic world, as

General .

Manager of the newly-formed Industrial Credit and Investment

Corporation of India (ICICI). He rose to become Chairman and continued

so till his retirement in 1972. At the ripe age of 60, Hasmukhbhai started

his second dynamic life, even more illustrious than his first. His vision for

mortgage finance for housing gave birth to the Housing Development

Finance Corporation – it was a trend-setter for housing finance in the

whole Asian continent.

He was also a writer in his own right. There are over 200 published

articles by him...


In 1992, the Government of India honoured him with the Padma

Bhushan Award. The London School of Economics & Political Science

conferred on him an Honorary

Fellowship.

He was one of the Founder Members

of the Centre for Advancement of

Philanthropy, and it’s Chairman till

1993.

He took active interest in the Bombay

Community Public Trust, designed

specifically to serve the needs of the

city’s underprivileged citizens.

When Mr. Deepak Parekh took over as

Chairman from Hasmukhbhai, he said:

“Taking over from H.T. Parekh is a formidable task; his vision… brought

about not only an institution, but an entire concept which has proved

itself to be of lasting importance.”

Today we are the largest residential mortgage finance institution in

India, with a net worth of Rs. 2,703 crores as of March 31, 2006 and an

asset base of over Rs. 22,000 crores. We also aim to increase the flow of

resources to the housing sector by integrating the housing finance sector

with the overall domestic financial markets.

Over a span of 25 years, HDFC has become the pioneer in housing

finance in India and made it possible for over two million Families to

own their homes, through housing loans worth over Rs. 42,000 crores.

Mr. H.T. PAREKH is conferred the

PadmaBhushan by the Government

of India in the year 1992.


ABOUT COMPANY HDFC :-

VISION STATEMENT :-


ORGANISATION STRUCTURE:-

The HDFC AMC has the below given organisational structure and the

different functional department are headed by different people.

Managing Director Mr. Milind Barve

CIO-ED Mr. Prashant Jain

CFO Mr. Rahul Bhandari

Head Operations Mr. Suresh Babu

Head Client Servicing Mr. John Mathews

Head Compliance Mr. Yezdi Khariwala

Head Sales Mr. Kiran Kaushik

Head PMS Mr. Pankaj Chopra

Head HR Mr. Alok Sheopurkar


LINE OF BUSINESS :

HDFC AMC

PMS

Mutual Fund

Corporate Business

Retail


HDFC ASSET MANAGEMENT COMPANY LIMITED (AMC)

Internal Structure & processes:

Management Team:

HDFC Trustee company Limited: a company incorporated under the

Companies Act, 1956 is the Trustee to the Mutual Fund vide the Trust

deed dated June 8, 2000, as amended from time to time. HDFC Trustee

Company Limited is a wholly owned subsidiary of HDFC Limited.

HDFC Asset Management Company Ltd (AMC) was incorporated under

the Companies Act, 1956, on December 10, 1999, and was approved to

act as an Asset Management Company for the HDFC Mutual Fund by

SEBI vide its letter dated July 3, 2000. The registered office of the AMC is

situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Backbay

Reclamation, Churchgate, Mumbai-400020. In terms of the Investment

Management Agreement, the Trustee has appointed the HDFC Asset

Management Company Limited to manage the Mutual Fund. The paid

up capital of the AMC is Rs. 45.161crore.

The present equity shareholding pattern of the AMC is as follows :

Particulars % of the paid up equity capital

HDFC Limited 60

Standard Life Investments Limited

40


HDFC Asset Management Company (AMC) is the first

AMC in India to have been assigned the ‘CRISIL Fund House Level – 1’

rating. This is its highest Fund Governance and Process Quality Rating

which reflects the highest governance levels and fund management

practices at HDFC AMC It is the only fund house to have been assigned

this rating for two years in succession. Over the past, we have won a

number of awards and accolades for our Performance.

HDFC Mutual Fund is one of the largest

mutual funds and well-established fund house in the country with

consistent and above average fund performance across categories since

its incorporation on December 10, 1999.

HDFC Ltd.

60.0%

Standard Life Investments

40.0%

HDFC Asset

Management

Company Ltd.

HDFC Mutual Fund


While our past experience does make us a veteran, but when it comes to

investments, we have never believed that the experience is enough. The

single most important factor that drives HDFC Mutual Fund is its belief

to give the investor the chance to profitably invest in the financial

market, without constantly worrying about the market swings. To realize

this belief, HDFC Mutual Fund has set up the infrastructure required to

conduct all the fundamental research and back it up with effective

analysis. Our strong emphasis on managing and controlling portfolio risk

avoids chasing the latest “fads” and trends.

INTERNAL ANALYSIS OF HDFC AMC

HDFC has grown in leaps and bounds after taking Zurich in 2003 , now it

is the third largest private company in Asset management company. In

Jamshedpur, HDFC has nearly 20% of the total AUM and according to the

CAMS report, in AUM under CAMS we have 35% market share and we

do gross sales of 70% every month.

The below given graph depicts the same.

AUM Growth Rate

March. 2003 6482 -------

March. 2004 14985 131.18

March. 2005 15010 0.17

March. 2006 21550 43.57

March. 2007 28358 31.59

March. 2008 46291 63.24

March. 2009 57956 25.19


DFC AMC has 4% market of the total asset management business.

The pie-chart shows the market share of the other AMCs and of HDFC.

4%

5%

8%

50%

28%

5%

OTHERS (29)UTIHDFC Mutual Fund Prudential ICICI Mutual Fund Reliance Mutual Fund Grand Total


STRENGTHS AND WEAKNESSES :

STRENGTHS:

a) Wide range of products: The AMC has got good number of

differentiated products in the entire asset class.

b) Consistent performance: The funds have given consistent

performance over 10 years.

c) Experienced team: HDFC has fund managers with rich

experience whose consistent performance has made this

AMC CRISIL level one fund house.

d) Strong Compliance: The AMC has very strong compliance of

industry set rules to protect the interest of the investors.

e) Risk management team: AMC has a separate risk

management team which constantly monitor the risk

exposure related to different fund management.

WEAKNESSES:

a) Restrictive reach: HDFC business is more concentrated on

urban areas. HDFC has very limited offices.

b) Less Aggressive in Marketing and execution: HDFC does

match the aggressiveness required in the industry and are

slow in execution.


HDFC MUTUAL FUND AT A GLANCE

Name of Unit : HDFC MUTUAL FUND

Address : Gayatri Enclave, 2nd Floor, "K" Road, Bistupur, Jamshedpur - 831001. Form of Organization : Private Sector

Contact Number : Tel. : 18002336767 (Toll-free) Telefax : 0657 – 2249730/ 2249691

Establishment year : 2007

Sponsors : Housing Development Finance

Corporation Limited (HDFC),

Standard Life Investments Limited.

Management :Trustee.

HDFC Asset Management Company Limited

(AMC).

Working Hours : 9.30 am to 5.30 p.m

Web site : www.hdfcfund.com


ACHIEVEMENT AND AWARDS

“HDFC Prudence fund” has been ranked ICRA-MFR 1, and Has Been

awarded the Gold Award for ‘Best Performance’ in the category of

“Open Ended Balanced Scheme” for one year Period Ending Dec 31,

2005.

“HDFC Tax saver fund” has been ranked ICRA-MFR 1, and Has Been

Silver award for “Second Best Performance” in the category of “Open

Ended Equity Linked Saving Scheme(ELSS)” for Three year Period

Ending Dec 31, 2005.

“HDFC MIP~LTP” has been ranked ICRA-MFR 1, and Has been

awarded the Gold Award For “Best Performance” in the category of

“Open Ended Marginal Equity Scheme” for one year Period Ending

Dec 31, 2005.


HDFC PROVIDES:-

Personalized Service

We believe in providing a personalized service enabling individual

attention to achieve your investment goal.

Professional Advice

We provide professional advice on equity and debt portfolio with an

objective to provide consistent long-term return while taking calculated

market risk. Our approach helps you to build a proper mix of portfolio,

not just to promote one individual product. Hence your long term

objectives are best served.

Long-term Relationship

We believe steady wealth creation requires long-term vision, it can’t be

achieved in a short span of time. To achieve this one needs to take

advantage of short-term market opportunity while not loosing sight of

long term objective. Hence we partner all our clients in their objective of

achieving their long-term Vision.

Access to Research Reports

Through us, you will have access to certain research work of CRISIL, so

that you will benefit from the expert knowledge of economists and

analysts of one of the leading financial research and rating company of

India. This third party research gives you a comfort of getting unbiased

advice to make a proper decision for your investment.


Transparency & Confidentiality

Through email you will get a regular portfolio statement from us. You

will also be given a web access to view at your convenience the details of

your investments and its performance. Access to your portfolio is

restricted to you and our monitoring system enables us to detect any

unauthorized access to your investments.

Flexibility

To facilitate smooth dealing and consistent attention, all our clients will

be serviced by their respective relationship executive. This allows us to

provide tailor made advice to achieve your investment objective.

Hassle Free Investment

Our relationship person will provide you with a customized service at

your convenience. We take care of all the administrative aspects of your

investments including submission of application forms to fund houses

along with monthly reporting on overall state of your investments and

performance of your portfolio.

Mutual funds are all the rage today simply because people have

realized the symbiotic relationship that an investor shares with the asset

management companies as compared to the ever volatile and ruthless

world of SENSEX.


COMPETITOR ANALYSIS:-

Tata Mutual Fund :-

Tata Asset Management Private Limited is very old house

and is well placed in the market.

Tata Mutual Fund has AUM of Rs.21304 Crores.

Size and Growth:

Tata MF opened its office in Jamshedpur four years ago. Since than it has

done good business. Tata have brand advantage in Jamshedpur, as

investors trust TATA group. Jamshedpur which is a market of Rs 1300cr,

Tata MF has nearly 10-12% of the market share of Jamshedpur. In

Jharkhand they have four offices.

Internal Structure & processes:

Tata Mutual Fund has been constituted as a trust on 9th May 1995 in

accordance with the provisions of the Indian Trusts Act, 1882 with Tata

Sons Limited (TSL) and Tata Investment Corporation Limited (TICL) as the

sponsers and the settlers. The Mutual Fund was registered with SEBI on 30th

Tata Mutual Fund (TMF) has been constituted as a Trust in accordance with

the provisions of the Indians Trusts Act, 1882 and is registered as a Trust

under The Indian Registration Act, 1908. TMF was registered with Securities

& Exchange Board of India (SEBI) and commenced operation by launching


its first scheme on 30th August 1995. Tata Sons Limited(TSL) and Tata

Investment Corporation Ltd (TICL) are the Sponsers and the Settlors.

Share Holding Pattern Of Tata Asset Management Ltd (TAML)

Board Of Directors:-

Board Of Tata Trustee Company Private Limited

Mr. S.M. Datta (Chairman)

Mr. I. Hussain (Director)

Mr. J.N. Godrej (Director)

Mr. Nowroze J.N. Vazifdar (Director)

Tata sons Ltd.

67.91%

Tata Investment Corporation

Ltd 32.09%

Tata Asset

Management

Ltd.

Tata Mutual Fund


Board Of Directors Of Tata Asset Managment Limited:-

Mr. F.K. Kavarana (Chairman)

Mr. Ved Prakash Chaturvedi (Managing Director)

Mr. A.R. Gandhi (Director)

Mr. M.L. Apte (Director)

Mr. A. Hasib (Director)

Line of Business:

Strengths & Weaknesses:-

Strengths:

a) Trusted Parent company: Tata Asset Management Ltd is a part of

the Tata group, one of India's largest and most respected

industrial groups. Jamshedpur is the home ground for Tata MF

and they enjoy great support and trust.

Tata Mutual Fund

Mutual fund

business

Portfolio

management


b) High payout structure: They pay more incentive and brokerage to

there distributors in comparison of other AMCs, which gives them

some edge to attract the distributors to sell the product.

Weaknesses:

a) Focussed on one product: At Jamshedpur, Tata MF is focussed on

only one product that is Tata Infrastructure Fund which some how

narrows their product diversification.

b) Lack of Aggression: The team in Jamshedpur lack aggression and

activeness, they do not push there products too much in the

markets. Products get sold of there brand presence.

c) Services: The AMC is not giving good service and the response

time is slow.

Projected Future Strategy:

To meet the competition, Tata mutual fund will have to expand there

business and penetration by increasing the number of branches and

manpower.

Distributor/Business model:

The distributor model is divided into two parts that is IFAs and Banks and

national distributors. Then the IFAs are categorised in two categories i.e.

preferred and basic. Preferred gets 2.25% brokerage and basic gets

2.10%. For making preferred partner there is no such set of rule. Also,

Tata has scheme specific brokerage structure like in Tata infrastructure

they pay 3.00%,in some schemes 2.25% and in some 1.75%.


Products (NFOs/schemes):

Tata has not got so good wide range of products in all categories and

maximum AUM of there is concentrated in debt the maximum part is in

debt.

No. of schemes

98

No. of schemes including options

375

Equity Schemes 37

Debt Schemes 291

Short term debt Schemes 14

Equity & Debt 7

Money Market 0

Gilt Fund 26

From the there pattern they are more cashing business on the

infrastructure theme. Till now they have two infrastructure based funds

and one NFO is running which is also Infrastructure based fund.

Recently, they had also filed offer document with SEBI for there Tata

small and Mid cap Infrastructure fund.


Comparative Analysis of HDFC AMC with TATA:-

i) Infrastructure :-

SCHEME HDFC

INFRASTRUCTURE

TATA

INFRASTRUCTURE

FUND CLASS Equity diversified Equity diversified

Average mkt. cap.

(in Crores)

75406.10 21304.00

Inception date MAY. 2009 MAY. 2009

From the following data we can analyise that HDFC MUTUAL FUND has

fared better than TATA MUTUAL FUND ..

ii) SWOT analysis of HDFC AMC with Tata AMC.


SWOT Analysis of HDFC Asset Management Company Ltd.

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SWOT Analysis of Tata Asset Management Ltd

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document without a watermark .

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iii) Additional Services Offered By HDFC Mutual Funds:-

HDFCMFOnline, which enables you to transact online on

https://investor.hdfcfund.com/mfonline/ 24 hours a day, 7 days a week, 365 days a year. On HDFCMFOnline, you can

Purchase. Redeem. Switch. View Account Details. View Port Folio Valuation. Download Account Statements........Online !!

The Services offered in HDFCMF Online:-

eDocs : HDFC Mutual Fund Offers you the convenience of recieving documents by email at no additional cost to you.

ePayouts: Save your time and experience the convenience of receiving your dividend and redemption payout(s), if any, directly into your bank account. This facility can be opted by selecting RBI's National Electronic Fund Transfer (NEFT) or Electronic Clearing Service (ECS*). NEFT and ECS facilitates faster, reliable and trouble free credit of redemption/dividend into your bank account. It is also one of the safest mode of payment as it eliminates possibilities of fraudulent encashment of redemption / dividend instruments or any possible loss while in postal transit to you.

HDFCMF Mobile, Now transacting with mobile can also be done. HDFC offer the facility transacting using the mobile

phone anywhere and anytime. On HDFCMF Mobile, you can Purchase. Redeem. Switch.

https://investor.hdfcfund.com/mfonline/


View Account Details. View Port Folio Valuation. Request for Account Statements. Check NAV.

NEFT Facility (National Electronic Fund Transfer) : This is a

facility introduced by the Reserve Bank of India (RBI). NEFT is a nation wide electronic funds transfer system to move funds from any bank branch in any part of country to any other bank branch in another part of the country. Who will benefit from this service? This payout channel will be particularly beneficial to all such investors whose mandated bank account is not in the list of banks with whom we presently have a direct credit arrangement for crediting their dividend / redemption proceeds. This service will also benefit all such investors at locations where a HDFC Mutual Fund Investor Service Centre (ISC) / a HDFC Bank branch, is not present and such locations are covered by the RBI for payments through the NEFT mode. What are the advantages of NEFT over the current payout mode? Investors whose current payments are settled through a demand draft (DD) / Pay Order (PO) for their dividend / redemption payouts are the prime beneficiaries. Such DD’s / PO’s are then dispatched to the investor, which would take a couple of days to reach. In comparison, through NEFT the beneficiary gets the credit usually on the same day or the next day depending on the time of settlement. This makes payment settlement faster, safer and risk free.


iv) NAV Performance:

NAV OF HDFC GROWTH FUND is Rs. NAV 58.91 ,

Date is 2nd July, 2009.

NAV OF TATA GROWTH FUND is Rs. 31.4833,


& NAV OF HDFC EQUITY FUND is Rs. NAV 177.86 ,


NAV OF TATA PURE GROWTH FUND is Rs. 72.34


v) Dividend History:

HDFC GROWTH FUND current dividend is 25.02

TATA GROWTH FUND current dividend is 14.04

&

HDFC EQUITY FUND current dividend is 35.702

TATA EQUITY FUND current dividend is 28.6397

So by above data we can analyise that HDFC GROWTH

FUND is better for investor who look for high dividends.


THE FUTURE GROWTH DRIVERS:-

Higher GDP Growth.

India's huge financial spread Investment System.

Systematic investment planning ratio which is projected to double by 2009– 2010.

Fast paced urbanization rise from 28 to 40% by 2020.

Growing working class population and Middle class expanding by 30 – 40 million every year.

Upward migration of household income levels.

Fast economic Development.

Increasing disposable Income with the service sector.

Cheaper (declining interest rates) & easier finance Schemes.

Increasing dispensable income of rural agriculture sector.

Govt. policy promotes tax investment & planning Sec 80 C.

Increasing level of FDI in country.

Emergence of India as BPO and IT hub.


Equity markets have been buoyant over the past few months

primarily on the back of expected good corporate performance, strong

global liquidity and strong flows to emerging markets. The rush of

players into the mutual fund industry during the last decade could be

attributed to low entry barriers, both regulatory and competitive, and

the desire of the existing financial players to broad-base their activities

in the financial sector. The last few years also highlights the emergence

of the mutual fund industry as a major force in Indian financial markets.

With the total Assets Under Management (AUM) increasing from

Rs.1,13,005 cr in March 2000 to Rs. 565469 Cr in Feb. 2008, the

industry's growth has been nothing but exceptional. And if size is the

measure of dominance, the Indian mutual fund industry can now boast

of that.

So lets now take a look at the overall growth of the mutual fund

industry in the last decade.


To sum it up, we can enumerate that the host of

things which suggest that the mutual fund industry is all set to enter a

period of high growth are:

A robust economy,

fledgling stock market,

increasing awareness and acceptance of mutual funds among

investors,

strong domestic currency,

and healthy corporate performances.


FINANCIAL ANALYSIS

Objective of the study-

The primary objective of this study is to analyze the financial

performance of the two leading Sectorial Mutual Fund schemes of HDFC

and TATA on the basis of various financial parameters, which will be

discussed later in the following sections of the report. This will help in

the following ways:

A complete and comprehensive financial analysis can be made

before making a decision to invest in a particular Mutual Fund

scheme.

An in-depth and complete approach towards managing a portfolio

of investments can be made by analyzing the funds on the basis of

these financial parameters.

This study will also give us a brief overview of the quality and

consistency of the fund management in keeping up with the

various expectations and hopes that the mutual fund investors

have in the Asset Management Company (AMC).

It also helps us to compare the individual fund performance with

the performance of the overall market, including the Bombay

Stock Exchange (BSE), and National Stock Exchange (NSE).

It also helps us to study the risk-return trade-off i.e. whether the

hand-in-hand relationship between Risk and Return holds true in

case of Mutual funds or not.


Rationale of choosing these funds-

The above chosen funds have had a market presence of at least three

years. Also the government of India has a large interest in Indian growth

story which is in complete without have a much impetus in

infrastructure sector. Hence, with this fact we can have a fair idea of

their acceptability in the market. The basic rationale of choosing these

funds is to have and present a brief idea of the current mutual funds

market and to understand the latest trends in the market.

Data Collection -

All the data used for the study was secondary data. This data was

collected from the following sources:

Funds Fact Sheets

Magazines

Journal

Internet

Key information memorandum of various schemes

Methodology

The project report is made precisely keeping in mind the Asset

management business in Jamshedpur. Therefore, I had done primary

as well as secondary data collection to facilitate my findings. In

primary data collection, I have made a questionnaire relating to sales,

services and distribution services of the Asset management company.

The sample size is 40 persons which include individual ARNs,


Distribution house RMs, Banking staffs and some customers. The data

was collected and the collated to give a brief idea about which AMC is

good in products, sales and services. The questionnaire also shows

some traits like dependability, trust and suitability of the AMCs in

context to the various requirements of the distributors. The

secondary data was collected from the abyss of different websites

and online articles of experts. The raw data was then compiled and

analysed using different tools.

Primary Data collection:

The primary data is basically consisting of Products (offerings,

innovation and fund performance), Services (response time,

reliability, premium services) and Distribution (brokerages and

incentives).

Secondary data collection:

It is collected from different websites; this project is made of more of

secondary data collection.


CONCLUSION:-

HDFC Equity Fund has a ability to spot the sector trends & it has

delivered handsomely. In Current status it emerged as the third best-

performing diversified equity fund.


SUGGESTIONS TO HDFC MUTUAL FUND:

1. An aggressive advertising campaigning should be there to

encourage more people to invest.

2. As some of the people think that mutual fund is risky so the

company should show people the advantages of the mutual fund

and how it is better than the other investment avenues.

3. There is a great potential for the mutual fund because the people

are ready to invest in the mutual fund as there is a positive

responses.

4. Now a days people are investing in more of an equity fund because

it gives high return as compare to other mutual fund schemes.

5. People are preferred to invest in the long term savings when only

they have enough of surplus. They are least concerned about the

other’s advice.

6. The people of Rajkot have enough purchasing power supported by

N.R.I. Mutual Fund Companies should take this fact positively at the

time of designing promotional scheme.

7. HDFC MF is doing comparatively very less marketing in MF industry

in compare to other players. Due to this other player are getting the

advantage. Thus it should try to increase the marketing

and advertising related activities time to time or at least at the time

of new NFO’s, at the time when they are declaring dividends or at

the peak time (i.e. January - March) last quarter of financial year

when people are searching for investing instruments.


8. A very small part market has been cover by HDFC MF. It can

increase the circle of its business in small and rural areas of every

state and cities of India where they an find a huge business.

9. To uproot the investment level the company should give training

programme to financial agents who approach the investor for the

investments. And they should be aware of all the benefits of the

mutual Funds.

10. Company should undertake the Campaign, Road shows,

Advertisement and other type of Publicity for the effective

awareness of different schemes that are available in the market.

11. The company should arrange seminars and presentations, giving

detail idea about securities and benefits of investment in mutual

fund.


GLOSSARY

SHORT FORMS

AMC – Asset Management Company.

AMFI – Association of Mutual Fund of India.

AUM – Asset under Management.

BSE – Bombay Stock Exchange.

FII – Foreign Institute of Investor. FII can invest in Mutual

Funds.They invest through the Non-resident rupeeaccount.

GILT – Government of India Linked Treasury. These Funds are

those that invest only in government securities.

IPO – Initial Public Offer.

IRP – Investor Risk Profile.

MIP – Monthly Investment Plan.

MTM – Market to Market.

NAR – Net Amount at Risk.

NAV – Net Asset Value.

NSE – National Stock Exchange.

OD – Offer Document is the most important source of information

for the investors. Abridged version of the OD is called as

Key Information Memorandum (KIM).

PAR VALUE –It is said as face value.

SAR – Sum at Risk

SIP – Systematic Investment Plan

SWP – Systematic Withdrawal Plan

WDM – Wholesale Debt Market


BIBLIOGRAPHY

1. www.investsmartindia.com

2. www.amfiindia.com

3. www.mutualfundsindia.com

4. www.valueresearchonline.com

5. www.investopedia.com

6. www.bcg.com

7. www.tatamutual.com

8. www.google.com

9. www.hdfcfund.com

10. www.wikepedia.org

http://www.investsmartindia.com/

http://www.amfiindia.com/

http://www.mutualfundsindia.com/

http://www.valueresearchonline.com/

http://www.valueresearchonline.com/

http://www.bcg.com/

http://www.tatamutual.com/

http://www.google.com/

http://www.hdfcfund.com/

http://www.wikepedia.org/


QUESTIONAIRE

Q 1) : Among the following which mutual fund house is the better fund house in the terms of products? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 2) : Out of the following which fund house gives you and your customer better satisfaction in the terms of sales support? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 3): Among the following which mutual fund house gives you premium services and after sales services ? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 4): Which mutual fund is having more effective strategy regarding the distribution services in terms of brokerage and incentives? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 5): Which mutual fund is more aggressive & innovative in terms of marketing and sales i.e. coming with the NFO and new products ? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 6) Which fund house is better in the terms of fund performance in long and short run? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 7) Which fund house’s employee you feel more comfortable discussing your sales activities? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( )


Q 8) Which fund house is more reliable to work with: a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 9): Which of the following fund house gives you quick response to your queries? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 10): Which of the following fund house you feel overall good to work with? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Any Suggestions:

A Project on Comparative Analysis of Hdfc Mutual Fund With Other Mutual Funds in the City of...

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Transcript of A Project on Comparative Analysis of Hdfc Mutual Fund With Other Mutual Funds in the City of...