A Research Project Report On

“The Study and Performance Of HDFC Mutual Fund Company”
Submitted in partial fulfillment of requirement for the degree of “ Master of Business Administration” (Marketing)
(Session 2005-2007)

Directorate of Distance Education, Guru Jambheshwar University of Science & Technology,
Hissar (India)
Supervised by: Vaibhav Kohli Dy. Manager HDCF Bank

Submitted by: Amit Sharma Enrollment No. 05061113001

A Research Project Report On

“The Study and Performance Of HDFC Mutual Fund Company”
Submitted in partial fulfillment of requirement for the degree of “ Master of Business Administration” (Marketing)
(Session 2005-2007)

Research Supervisor: Mr. Vaibhav Kohli, Dy. Manager, HDFC Bank, Ambala.

Submitted by: Amit Sharma Enrollment No. 05061113001 M.B.A. (Marketing) {Semester- IV}

Directorate of Distance Education, Guru Jambheshwar University of Science & Technology,
Hissar (India)


This is to certified that the Mr. Amit Sharma has completed his Research Project entitled “The Study and Performance of HDFC

Mutual Fund Company” Under my Supervision, his Research is ready and fit for submission in partial fulfillment Requirement of Master’s Degree M.B.A. (Marketing).

This is to also certified that the Research Project is the original Work of the candidate and having own findings and conclusions.

Dated: Vaibhav Kohli Dy. Manager, HDFC Bank, Ambala.

I solemnly declare that the work done by me is original and no copy of it has been submitted to any other university for an award of any other degree.05061113001 GJU of Science & Technology.DECLARATION This is to be certified that I. Submitted By: Amit Sharma Roll No. studying in MBA IV semester. 05061113001. Hissar . student of GJU of Science & Technology. Amit Sharma. have submitted a research project on title “The Study and Performance Of HDFC Mutual Fund Company ” as assigned by the University for the partial fulfillment of degree of MBA (Marketing) . Roll no.

Rajan Gupta. Ambala. Chief Investment Agent (AMFI) Certified. Thakraal . Karvy investments Ltd. IPO’s. The other persons to whom I am thankful are Mr. S. Roll No.B. Dy.Acknowledgement The research project report titled “The Study and Performance of HDFC Mutual Fund Company” is completed under the great guidance of my research supervisor Mr. Submitted by: Amit Sharma. Since Mr. Cholamandalam. Manager. Manager Sales.Semester) . Mr. Kohli have more than Six years of experience of Marketing of financial Products as he have to deal in Mutual funds. I am also thankful to Branch Manager Mr. Karan Thappar. K. Development Bank Of Singapore (DBS). Loans etc. Vaibhav Kohli.A. 05061113001 M. Mr. Ambala. Saving Accounts. Branch Manager. Ambala. who also help me in this project and providing me necessary documents. Vikas Sethi.. HDFC Bank. His valuable attention helped me a lot to complete such a complicated task. Ambala. (IV .

a bond fund would mainly buy debt instruments such as debentures. Thus. the problems face by marketing professionals with same industry. warrants etc. its concepts. selling strategies. an equity fund would buy mainly equity assets – ordinary shares. preference shares. A mutual fund uses the money collected from investors to buy those assets which are specifically permitted by its stated investment objective. in other words we can say that a mutual fund is a common pool of money into which investors place their contributions that are to be invested in accordance with a stated objective. or government securities. and the choice of common man/investor while investing in mutual Funds. bonds. The ownership of the fund is thus joint or “Mutual”. A single investor’s ownership of the fund is in the same proportion as the amount of the contribution made by him or her bears to the total amount of the fund. It is .The Concept and role of Mutual Fund Introduction: This study is about the mutual funds. the fund belongs to all investors. Basically Mutual Fund is a fundamental property of money and its investment.

The term unit holder is includes the mutual fund account holder of closed-and fund shareholder. When an investor subscribers to a mutual fund.total contributions of all investors put together.S.A. Through out this we have the term unit holder to denote the mutual fund investor.) a mutual fund is constituted as an investment company and an investor “buys into the fund” meaning he buys the shares of the fund. However whether the investor gets fund shares or units is only a matter of legal distinction. he or she buys a part of the assets or the pool of funds that are outstanding at that time. In any case. a mutual fund is constituted as a trust and the investor subscribes to the “units” issued by the fund. a mutual fund share holder or unit holder is a part owner of the funds assets. in which case the purchase makes the investor a part owner of the company and its assets. in line with the common Indian usage of the term. . It is no different from buying “shares” of a joint stock company. In fact. in the United States of America (U. In India. which is where the term Unit Trust comes from.

Since the units held by an investor evidence the ownership of the fund’s assets. In other words. . the value of the total assets of the fund when divided by the total number of unit issued by the mutual fund gives us the value of one unit this is generally called the Net Asset Value (NAV) of one unit or one share. it is necessary to establish the value of his/her part. The value of an investor’s part ownership is thus determined by the NAV of the number of units held. each share or unit that an investor holds needs to be assigned a value.Since each owner is a part owner of a mutual fund.

of the particular fund.Talking about Mutual Fund deeplyA mutual fund is a professionally managed investment company that combines the money of many individuals and invests this "pooled" money in a wide variety of different securities. or other securities depending on the investment objective. or goal. Bonds. Professional money managers (Portfolio Manager’s) take this pool of money and invest it in a wide variety of Stocks. It is by pooling the money of many individuals that mutual funds are able to provide the diversification and money management (along with many other advantages) that were once reserved only for the wealthy. . It is the investment objective of the fund that guides the manager in selecting the various securities for the fund.

it is known as a capital gain. some more often. If the fund has invested in bonds or dividend-paying stocks.e. This is one of the ways you can profit with mutual funds.. there are a number of different kinds of mutual funds. Since different investors have different objectives. income funds. it must pass the dividends or interest earned on to its shareholders. Like capital gains. Another way is through capital gains. and many others. some funds may provide monthly income while others seek long-term capital appreciation. . i. Most funds distribute their capital gains to shareholders at least annually. Mutual funds can be classified according to their investment objective. growth funds. Some of the classifications include money market funds.It is the investment objective of the fund that also guides the investor on which funds to invest in. When you invest in a fund you hope that the value will rise and you can eventually sell your shares for a profit. When a fund sells a security for a higher price than it originally paid for it. The last way to profit with mutual funds is with dividends or interest. balanced funds. this is done at least annually.

There are Open –End or Closed-End funds and There are load or no-load funds. The resulting figure is known as the Net Asset Value or NAV. This total is divided by the number of shares outstanding. An open-end fund is a mutual fund that continuously issues new shares as . you buy shares in that fund. The NAV will change daily depending on how well the underlying securities of the fund perform. To determine the price of those shares. mutual funds are generally classified according to the investment objective of the fund. each day the fund adds up the total value of the securities held in its portfolio. The NAV of most funds is listed in most Daily Newspapers. To find out the value of your holdings. They are also classified according to how they are bought and sold. you simply multiply the number of shares you own by the net asset value. As stated above.When you invest your money in a mutual fund. If the securities held by the fund go up in value so will the value of your shares.

the value of his ownership of the fund will be Rs.000 and it has 10 investors who have bought 10 units each. Let us see an example. the total numbers of units issued are 100.30 (1. Note that the value of the fund’s investment will keep fluctuating with the market price moments causing the Net Asset Value also to fluctuate. If a single investor in fact owns 3 units. The majority of mutual funds on the market today are open-end funds and are the type we are concerned with in this tutorial.000/100*3 units). If the value of a fund’s assets stands at Rs. For example.needed and buys them back when investors wish to sell.10 (1. . The buy and sell price is based on the net asset value of the fund.000/100). and the value of one unit is Rs. 1. There is no limit to how many shares an open-end fund can sell.

the value of our investor’s holding of 3 units will now be ( to 1. Today’s Scenario: Mutual funds now represent perhaps the most appropriate investment opportunity for the most investors. depending on the market value of fund’s assets. It is no wonder then that in the birthplace of mutual funds – In .1.if the value of our fund’s assets increased from Rs. the investment value can go up or down. As financial markets become more sophisticated and complex.200/100*3) Rs. investors need a financial intermediary who provides the required knowledge and professional expertise on successful investing.

mutual funds are still a new financial intermediary in India. Hence. Mutual Funds are for every one. Despite the expected continuing growth in the industry. and how they function differently from other intermediaries such as the banks. you will get a flavor of what mutual funds are and how they can help you . as you read on. We have started witnessing the phenomenon of more savings now being entrusted to the funds than to the banks. The Indian mutual fund industry has already started opening up many of the exciting investment opportunities to Indian investors. the investment advisors and even the fund employees acquire better knowledge of what mutual funds are.S. the mutual fund agents/distributors. as it shown that more funds being collected under mutual fund management then deposited with banks. what they can do for investors and what they cannot. millions of investors are investing and the money advantages they offer.the U. it is important that the investors. –the Mutual fund industry has already overtaken the Banking Industry. Around the world.A.

With an objective to make the investor aware of functioning of mutual funds. The investor should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investor may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decision. an attempt has been made to provide information in question-answer format which may help the investors in taking investment. Like all investments they also carry certain risk. But before that here are some basics of investing. Mutual funds also offer good investment opportunities to the investors. Different investment avenues are available to investors.achieve your financial goals. .

The Term “Mutual Fund”: Basically 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. Investors of Mutual Funds are Known as Unit holders. Investments in Securities (SHARE Market) are spread across a wide cross-Section of Industries and sectors and thus the risk is reduced. Mutual Fund issues units to the investors in accordance with quantum of money invested by them. . Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time(Since Share market is Volatile).

A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities Markets before it can collect funds from the public. . Offer Document etc. And also to get final approval from Associate of Mutual Fund Of India(AMFI) e. its Fund Manager’s Portfolio.g. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time and required minimum investment depends on type of Fund. In case of Mutual Fund Company it should be registered with NBFC (Non Banking Financial Corporation) by depositing approximately 20 Million of Rupees.The profits or losses are shared by the investors in proportion to their Investments.

Mutual funds Invest basically in three types of Asset Classes: -Stocks: Stocks represent ownership or equity in a company. popularly known as shares. certificate of deposits and inter-bank call money. . financial institutions or Government agencies for the particular period say three to ten years -Money market instruments: These include short-term debt instruments such as treasury bills. Government (depending on Stake Division) -Bonds: These represent debt which are borrowed by companies. Stock holder may be the owners-founder of company. FII. Sleeping partners. the masses.Investment of Funds Broadly.

and Government securities. -Income scheme: These schemes invest in fixed income instruments such as bonds issued by corporate and financial institutions. Investment Non-Resident Indians (NRI’ s) point . treasury bills and short-term bonds.The Various types of Mutual funds: Mutual Funds Can be classified based on their objectives as: -Sector equity schemes: companies in a specific sector. -Hybrid schemes: These schemes invest in a mix of shares and fixed income instruments. -Money market schemes: These schemes invest in short-term instruments such as certificate of deposit. These schemes invest in share of -Diversified equity schemes: These schemes invest in a mix of shares of companies across different sectors of the economy.

The limit should one invest in debt or equity oriented schemes An investor should take into account his risk taking capacity. age factor. the schemes invest in different type of securities as disclosed in the offer documents and offer different returns and risks. number of units applied for and such other information as required in the application form. The fill-up processor of application form of a mutual fund scheme An investor must mention clearly his name. Investors may also consult financial experts before taking decisions. address.of view Non-Resident Indians can also invest in Mutual Funds. Necessary details in this respect are in the offer documents of the Schemes. Agents and distributors may also help in this regard. financial position. He must give his bank account number so as to avoid any fraudulent encashment of any cheque/draft issued by the mutual fund at a later date for the purpose of dividend or repurchase. As already mentioned. etc. Any changes in the .

The Setup of the Mutual Fund A Mutual Fund is set up in the form of a trust. they should not be associated with the sponsors. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i. Assets Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities of various schemes of the fund in its custody.address.e. bank account number . asset management Company (AMC) and custodian. Also. They monitor the performance and compliance of SEBI regulations by the Mutual Fund. The trustees of the mutual fund hold its property for the benefit of the Unit holders. etc at a later date should be informed to the mutual fund immediately. The trustees are vested with the general power of superintendence and direction over AMC. All mutual funds are required to be registered . which has sponsor. 50% of the directors AMC must be independent. trustees.

Unit Trust of India(UTI) is not registered with SEBI (as on January 15. We have explained the key benefits in this section. depending upon the investment objective of the scheme. applicable to all schemes and benefits applicable specifically to openended schemes. The benefits have been broadly split into universal benefits. which are unmatched by most other investment avenues. i. An investor can buy in to a portfolio of equities. 2002) Benefits of Mutual Funds 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. etc.e. which would otherwise be extremely expensive. Each unit holder thus gets an exposure to such portfolios with . However. shares. bonds. Universal Benefits -Affordability A mutual fund invests in a portfolio of assets.with SEBI before they launch any scheme.

500/-. It simply means that you must spread your investment across different securities (stocks. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal investment ass well as help you meet your return objectives.) and different sectors (auto. -Variety . real estate.). information technology etc. money market instruments. 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. textile. 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. -Diversification The nuclear weapon in your arsenal for your fight against Risk. This kind of a diversification may add to the stability of your returns. fixed deposits etc. bonds.an investment as modest as Rs.

both debt and equity. This variety is beneficial in two ways: first. given the fund’s stated investment objectives. When you buy in to a mutual fund. For example. and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio. -Tax Benefits . It is the Fund Manager’s job to (a) find the best securities for the fund. it offers different types of schemes to investors with different needs and risk appetites. you are handling your money to an investment professional who has experience in making investment decisions. 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. it offers an opportunity to an investor to invest sums across a variety of schemes. -Professional Management Qualified investment professionals who seek to maximize returns and minimize risk monitor investor’s money. secondly.Mutual funds offer a tremendous variety of schemes. as and when required.

as a measure of concession to Unit holders of open-ended equity-oriented funds. and sometimes less. They will provide you personal assistance in buying and selling your fund units. In case of individuals and Hindu Undivided Families a deduction upon Rs. -Low Cost A mutual fund let's you participate in a diversified portfolio for as little as Rs. income distributions for the year ending March 31. you pay little or no sales charges to own them. 9.Any income distributed after March 31. 2002 will be subject to tax in the assessment of all Unit holders.000/-.000 from the Total Income will be admissible in respect of income from investment specified in Section 80L.5. However. And with a no-load fund. Our Customer service centers are at your service and our Marketing team would be eager to hear your comments on . Units of the schemes are not subject to Wealth-Tax and Gift-Tax. including income from Units of the Mutual Fund. -Personal Service One call puts you in touch with a specialist who can provide you with information you can use to make your own investment choices. provide fund information and answer questions about your account status.5%. will be taxed at a concessional rate of 10. 2003.

the mutual funds regulator hasclearly defined rules. -Open-ended Fund/Scheme An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis.our schemes. These rules relates to the formation. -Regulations Securities and Exchange Board of India (“SEBI”). These schemes do not have a . What are the different types of mutual fund schemes? Schemes according to Maturity Period A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period. Such a high level of regulation seeks to protect the interest of investors. administration and management of mutual funds and also prescribe disclosure and accounting requirements. which govern mutual funds.

fixed maturity period. . -Close-ended Fund/Scheme A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. The key feature of open-end schemes is liquidity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed.

e. These mutual funds schemes disclose NAV generally on weekly basis.In order to provide an exit route to the investors. or balanced scheme considering its investment objective. some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. Such schemes may be classified mainly as follows: -Growth/Equity Oriented Scheme . either repurchase facility or through listing on stock exchanges. Such schemes may be open-ended or close-ended schemes as described earlier. Schemes according to investment objective A scheme can also be classified as growth scheme. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i. income scheme.

These schemes provide different options to the investors like dividend option.The aim of growth funds is to provide capital appreciation over the medium to long-term. Such schemes normally invest a major part of their corpus in equities. corporate debentures. The mutual funds also allow the investors to change the options at a later date. capital appreciation. Such funds have comparatively high risks. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. . Government securities and money market instrument because of fluctuations in equity markets. -Income/Debt Oriented Scheme The aim of income funds is to provide regular and steady income to investors. and the investors may choose an option depending on their preferences. etc. Such schemes generally invest in fixed income securities such as bonds. The investors must indicate the option in the application form. However.

long term investors may not bother about these fluctuations. However. If the interest rates fall. NAVs of such funds are likely to increase in the short run and vice versa. These funds are not affected because of fluctuations in equity markets. The NAVs of such funds are affected because of change in interest rates in the country. However. -Balanced Fund The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. opportunities of capital appreciation are also limited in such funds. Such funds are less risky compared to equity schemes. The NAVs of such funds are affected because of change in interest rates in the country.opportunities of capital appreciation are also limited in such funds. These are appropriate for . long term investors may not bother about these fluctuations. If the interest rates fall NAVs of such funds are likely to increase in the short run and vice versa. However.

These funds are also affected because of fluctuations in share prices in the stock markets.. Returns on these schemes fluctuate much less compared to other funds.investors looking for moderate growth. -Gilt Fund . preservation of capital and moderate income. certificates of deposit. These schemes invest exclusively in safer short-term instruments such as treasury bills. They generally invests 40 – 60% in equity and debt instruments. government securities. etc. However. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. -Money Market or Liquid Fund these funds are also income funds and their aim is to provide easy liquidity. commercial paper and inter-bank call money. NAV’s of such funds are likely to be less volatile compared to pure equity funds.

.These funds invest exclusively in Government securities. . Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. These are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. Government securities have no default risk. S&P NSE 50 index (Nifty). these schemes invest in the securities in the same weight age comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index. -Index Funds Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index. though not exactly by the same percentage due to some factors known as “tracking error” in technical terms. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. etc.

e. They may also seek advice of an expert.g. Fast Moving Consumer Goods (FMCG). These schemes are growth oriented and invest pre-dominantly in equities. they are more risky compared to diversified funds. The returns in these funds are dependent on the performance of the respective sectors/industries. Equity Linked Savings Schemes (ELSS).g. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. e. . Pension schemes launched by the mutual funds also offer tax benefits. 1961 as the Government offers tax incentives for investment in specified avenues. What is Tax Saving Schemes? These schemes offers tax rebates to the investors under specific provisions of the Income Tax Act. Petroleum stocks. Pharmaceuticals. etc. Software. Their growth opportunities and risks associated are like any equity-oriented scheme. While these funds may give higher returns.What are sector specific funds/schemes? These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents.

A no-load fund is one that does not charge for entry or exit. This charge is used by the mutual fund for marketing and distribution expenses.9.10.10 and those who offer their units for repurchase to the mutual fund will get only Rs. each time one buys or sells units in the fund. a charge will be payable.10. . Efficient funds may give higher returns in spite of loads. That is. However. then the investors who buy would be required to pay Rs. the investors should also consider the performance track record and service standards of the mutual fund which are more important.90 per unit. if the entry as well as exit load charged is 1%. The investors should take the loads into consideration while making investment as these affect their yields/returns. Suppose the NAV per unit is Rs.What is a load or no-load Fund? A Load Fund is one that charges a percentage of NAV for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.

It may include sales load. The sale or repurchase/redemption price The price or NAV a unit holder is charged while investing in an openended scheme is called sales price. Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unit holders. It may include exit load. Any charge in the load will be applicable only to prospective investments and not to the original investments. if applicable. In case of imposition of fresh loads or increase in existing loads. the mutual funds are required to amend their offer documents so that the new investors are aware of loads at the time of investments. .The Load structure beyond the level in the offer documents: Mutual funds cannot increase the load beyond the level mentioned in the offer document. if applicable.

Investors should carefully read the offer document whether return is assured for the entire period of the scheme or only for a certain period. he can invest higher or lower percentage of the fund in equity or debt instruments compared to what is disclosed in the offer document. to protect the NAV. It can be done on a short term basis on defensive considerations i.e.An assured return scheme Assured return schemes are those schemes that assure a specific return to the unit holders irrespective of performance of the scheme. Hence the fund managers are . Mutual fund change the asset allocation while deploying funds of investors Considering the market trends. any prudent fund managers can change the asset allocation i. A scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or AMC and this is required to be disclosed in the offer document.e.

Forms can be deposited with mutual funds through the agents and distributions who provide such services. 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.allowed certain flexibility in altering the asset allocation considering the interest of the investors. In case the mutual fund wants to change the asset allocation on a permanent basis. Investors can also contact the agents and distributions of mutual funds who are spread all over the country for necessary information and application forms. Now days. the post offices and banks also distribute the units of mutual funds. . However. they are required to inform the unit holders and giving them option to exit the scheme at prevailing NAV without any load. How to invest in a scheme of a mutual fund? Mutual funds normally come out with an advertisement in newspapers publishing the date of launch of the new schemes.

should carefully read the offer document. performance of other schemes launched by the mutual fund in the past. initial issue expenses and recurring expenses to be charged to the scheme. sponsor’s track record. An investor. pending litigations and . SEBI has prescribed minimum disclosures in the offer document. risk factors. before investing in a scheme. The application form for subscription to a scheme is an integral part of the offer document. which contains very useful information.What should an investor look into an offer document? An abridged offer document. educational qualification and work experience of key personnel including fund managers. Due care must be given to portions relating to main features of the scheme. entry or exit loads. is required to be given to the prospective investor by the mutual fund.

. the investors would get wither a demat account statement or unit certificates as these are traded in the stock exchanges. In case of open-ended schemes. etc.penalties imposed. When will the investor get certificate or statement of account after investing in a mutual fund? Mutual funds are required to dispatch certificates or statements of accounts with in six weeks from the date of closure of the initial subscription of the scheme. In case of close-ended schemes. a statement of account is issued by the mutual fund with in 30 days from the date of closure of initial public offer of the scheme. The procedure of repurchase is mentioned in the offer document.

Asset Management Company is liable to pay interest as specified by SEBI from time to time (15% at present) Can a mutual fund change the nature of the scheme . In case of failure to dispatch the redemption/repurchase proceeds with in the stipulated time period. transfer of units is required to be done with in thirty days from the date of lodgment of certificates with the mutual fund.How long will it take for transfer of units after purchase from stock markets in case of close-ended schemes? According to SEBI Regulations. As a unit holder. how much time will it take to receive dividends/repurchase proceeds? A mutual fund is required to dispatch to the unit holders the dividend warrants with in thirty days of the declaration of the dividend and the redemption or repurchase proceeds with in ten working days from the date of redemption or repurchase request made by the unit holder.

How will an investor come to know about the changes? If any.from the one specified in the offer document? Yes. At present. . offer documents are required to be revised and updated at least once in two years. structure.g. In the meantime. However. investment pattern. can be carried out unless a written communication is sent to each unit holder and an advertisement is given in one English daily having nationwide circulation and in a newspaper published in the language of the region where the head office of the mutual fund is situated. known as fundamental attributes of the scheme e. many mutual funds send quarterly newsletters to their investors. no change in the nature or terms of the scheme. The mutual funds are required to inform any material changes to their unit holders. which may occur in the mutual fund? There may be changes from time to time in a mutual fund. new investors are informed about the material changes by way of addendum to the offer document till the time offer document is revised and reprinted. Apart from it. etc.

Some mutual funds send the portfolios to their unit holders.e. The scheme portfolio shows investment made in each security i. money market instruments. All mutual funds are also required to put their NAVs on the web site of Association of Mutual Funds in India (AMFI) and thus the investors can access NAVs of all mutual funds at one place. debentures. government securities. The NAVs of mutual funds are required to be published in newspapers.How to know the performance of a mutual fund scheme? The performance of a scheme is reflected in its Net Asset Value (NAV) Which is disclosed on daily basis in case of open-ended schemes and on weekly basis in case of close-ended schemes. etc. and . How to know where the mutual fund scheme has invested money mobilized from the investors? The mutual funds are required to disclose full portfolios of all of their schemes on half-yearly basis which are published in the newspapers. The NAVs are also available on the web sites of mutual funds. equity.

Is there any difference between investing in a mutual fund and in an initial public offering (IPO) of a company? Yes. Some of the mutual funds send newsletters to the unit holders on quarterly basis which also contain portfolios of the schemes. market value and % to NAV. in the case of mutual funds.their quantity. the par . These portfolio statements also required to disclose illiquid securities in the portfolio. etc. IPO’s of companies may open at lower or higher price than the issue price depending on market sentiment and perception of investors. investment made in rated and unrated debt securities. there is a difference. However. non-performing assets (NPAs).

The concept Net Asset Value (NAV) of a scheme The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV). Since market value of securities changes every day.value of the units may not rise or fall immediately after allotment. Net Asset Value is the market value of the securities held by the scheme. Mutual funds invest the money collected from the investors in securities markets. In simple words. NAV of a scheme also varies on day to day . A mutual fund scheme takes some time to make investment in securities. NAV of the scheme depends on the value of securities in which the funds have been deployed.

The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. then the NAV per unit of the fund is Rs. If scheme in the same category of different mutual funds are available. NAV is required to be disclosed by the mutual funds on a regular basis – daily or weekly – depending on the type of scheme. should one choose a scheme with lower NAV? Some of the investors have the tendency to prefer a scheme that is . 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. For example. 10 each to the investors. if the market value of securities of a mutual fund scheme is Rs.20.basis.

Investors may please note that in case of mutual funds schemes.. service standards. professional management. they prefer a new scheme which is issuing units at Rs. Sometimes. 10 whereas the existing schemes in the same category are available at much higher NAVs. Lower or higher NAVs of similar type schemes of different mutual funds have no relevance.available at lower NAV compared to the one available at higher NAV. How to choose a scheme for investment from a number of schemes available? . On the other hand. investors should choose a scheme based on its merit considering performance track record of the mutual fund. etc.

apart from looking into past returns. They may also compare the performance with other schemes having similar investment objectives. this is one of the important factors for making investment decision. the investors must read the offer document of the mutual fund scheme very carefully. the investors should also see the quality of debt instruments which is reflected in their rating. Is the higher net worth of the sponsor a guarantee for . On the other hand. Though past performance of a scheme is not an indicator of its future performance and good performance in the past may or may not be sustained in the future. They may also look into the past track record of performance of the scheme or other scheme of the same mutual fund.As already mentioned. These companies do not come under the purview of SEBI. Are the companies having names like mutual benefit the same as mutual funds schemes? Investors should not assume some companies having the name “mutual benefit” as mutual funds. In case of debt oriented schemes. mutual funds can mobilize funds from the investors by launching schemes only after getting registered with SEBI as mutual funds.

the mutual funds pay a sum based on prevailing NAV after adjustment of expenses. higher net worth of the sponsor does not mean that the scheme would give better returns or the sponsor would compensate in case the NAV falls.better returns? In the offer document of any mutual fund scheme. Benefits of open-ended Schemes . However. what happens to money invested? In case of winding up of a scheme. financial performance including the net worth of the sponsor for a period of three years is required to be given. If mutual fund scheme is wound up. The only purpose is that the investors should know the track record of the company which has sponsored the mutual fund. Unit holders are entitled to receive a report on winding up from the mutual funds which gives all necessary details.

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.

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 arious schemes. This flexibility gives the investor a convenient way to change the mix of his portfolio over time.

Open-ended mutual funds disclose their Net Asset Value (NAV) daily and the entire portfolio monthly. This level of transparency, where the investor himself sees the underlying assets bought with his money, is unmatched by any other financial instruments. Thus the investor is in the know of the quality of the portfolio and can invest future or redeem depending on the kind of the portfolio that has been constructed by the investment manager.

The selling strategies for Mutual fund in India
The country like India which proves to be a total Liberalized after the year of 1991. In that time most of economies from America, Europe, and other Asian Countries wish to enter in Indian Market to Invest Eagerly as they seems a better plate form for better returns. As we learnt India is having population of more than one Billion and increasing day by day. The Indian masses is having more then 26 per cent people are still living below the line of poverty. The good factor is that the present population is very educated. So we can say that it is easy to describe the concept of mutual Fund to them. Since mutual fund needs a lot of advertisement.

Basically Mutual Fund need a lot of attention towards the Public time to Time. So the Factor is that the concept of Mutual fund is a fundamental part of financial sector which is presently known as service sector. According to experts more than fourty percentage of share of Indian revenue is from service sector so one can say that in near future the first preference will be given to service sector.

This sector consists of lots of selling guts, torts, analyses of financial behavior and the investments behavior.

The marketing and selling of mutual funds consists of the following as below.

• • • • • • • • • •

Advertisement Sales promotions Personal selling Marketing of new products (MF) Tele calling (Marketing) Cold calling Exhibition cum sale Issue of dividend warrants time to time Time to time communication between all channel partners After sale service

For example a particular swimming pool may be very good. In the financial sector. They interact telephonically with the courier company for a short while. We can provide standardized offerings of such services. There are different degrees of consumer participation. Even courier services have low consumer involvement. consumer is expected to fill in a pay in slip while depositing cash. Here the consumer’s presence is necessary. and tender the cash across the counter. and the service personnel render the whole service. The procedures are well defined. may complain about the quality of the swimming pool itself. But the bank staff does the . the participation is limited. but a person whose experience with the swimming coach is not good. say in a bank branch. Consumers rarely see their infrastructure. There is low participation in restaurants and air flights.Consumer participation greatly influences the perception of services. and get back duly stamped acknowledgement.

But in a health club or business management school there is higher level of consumer participation.g. But consumers gain benefits on account of such participation. . A consumer must master telephone banking or mobile banking before getting its benefits. Even internet banking is a participative process requiring effort on the part of the consumer. Because of high degree of participation. They are very happy when the service provider tries to solve the problem. organizations design customized offerings for the consumers. utility bills can be paid through internet from anywhere. They take active part in a weight reduction programmed. They hold themselves responsible if the results are not satisfactory.major portion of work. Consumer participation is also an educative process. e..

For example. what should be advertised? There are no tangible characteristics that can be discussed. the . Instead. and other physical dimensions. style. since mutual fund is a part of service sector and there is competitor in the market. Since services are experiential in nature. But if an attorney wants to promote his/her services. sales promotion. Service firms have several meaning of promoting their firm. on promoting a particular brand of automobile an advertiser can discuss petrol mileage. promoting a service is more complex than promoting a good. and personal selling are the major components. comfort.Advertisement is very necessary for MF: Advertisement for mutual fund is utter necessary. Advertising.

the basic characteristics of services have implications for communication strategy.adviser must use intangible cues and thoughts to convey a message. in hospitality industry. stickers. The creativity is found to be an essential aspect of advertising. The professionals are supposed to take into consideration the following facts while advertising. posters. the difference is that consumers of services are less likely to purchase without information than those of goods. the intangible service offer is made tangible and represented in the promotional material and. pamphlets. First. the consumer of services will prefer personal sources to impersonal sources of information. . Second. This would help them in making possible creativity besides optimizing the advertisement budget Advertising for the mutual fund having offer document (OD). And third. customers decide to buy or not to buy on the strength of the description and representation of the service offer in the promotional material. For example. It is now established that there are clear differences in information usage between goods and services. brochures. which increases the importance of professional excellence in making the advertising process productive. broadcasting advertisement. Advertising is a paid form of persuasive promotion. hoardings.

there could be a variety of objectives to promote or advertise the service.Advertising Objectives: Although. Target Audience to be specified. it needs a well knowledge about the various products as well and the awareness of market behavior. investments behavior of common man as well the richest one. . Sales Promotion and Personal Selling In mutual fund industry. • Should be able to use indirect selling techniques (creating derived demand or act as a buying consultant). but the basic objectives of it are as follows: • Make a strong impression of competency. Normally a investor invest in mutual fund not in hundred and even thousands. consumer behavior. Packaging and customization. • • • Manager to maintain a fine image by positive word of mouth. honesty and sincerity (professional orientation to service transaction so as to win buyer’s confidence in seller’s abilities to deliver the service). some times investment ratio crosses the lakhs of rupees. In mutual fund salesmanship is necessary because the buying of or investing in that industry is very risky from investor point of view.

There are various channels from which mutual fund is sold example • • • • • Mutual fund company Corporate agent Branch head Area manager/territory manager Senior sales executive . One can oblise the invester by the giving of proven track record (NAV) of that particular mutual fund. Talking about the hierarchy of mutual fund industry (HDFC).).So it all depends on salesmanship. sales promotion tools and the guts of salesman (sales executive etc. Besides this the education also matters from salesman point of view. If the sales executive is a MBA graduate then he/she can sell mutual fund more easily then any other. the sales promotion consist of advertisement as well oral communication between sales executive and potential buyer or investor.

Besides this the presentation given by senior officials vice president. pamphlet. Managing Director to . Marketing of products (MF) Basically marketing of mutual fund comprises of the initial step of launching any new mutual fund into market. It consists of way of talking.• • • • Sales executive Business associates Channel partners or direct selling agent Free lancer As we talk earlier a perfect salesman should have the knowledge and guts to sell the complicated and a product which is also know as concept selling. projector/laptop. brochures and the most important the presentation (Powerpoint slides) given by sales executives on a computer. In this process NAV report. communication skills and the most important the process of opening sales till the closing of sale (taking DD or Cheque). The whole process is also known as personal selling.

the FII.. Since through this process new investors are generated as well the old one or deactivated client is welcomed through that channel Cold calling . in this process telephonic calls are made to the potential buyer/investor not only from selling point of view but also to tell him/her the initial investments. call center etc.. Tele calling (Marketing) As name suggest telemarketing which means marketing through the means of telephone. in this process yellow pages white pages. price. although the most of the work of marketing is formally done by the advertisement campaign (TRP) of paid advertisement on television channels. business associates and previous units holders etc. English newspaper etc. telephone directories prove to be very helpful tool. mobile. loads type etc.. daily vernacular. The cold calling consists of marketing or selling the product directly to the . product.

and other Asian countries. So we can say that it is the part of after sale service Time to time communication between all channel partners . Exhibition cum sale Exhibition cum sale is the kind of selling torts of selling mutual funds. In some cases the cold calling is converted into successful sale due to tale calling or other links. premium hotels. business meetings. If company not paid dividend/interest to unit holder time to time then it will loose its present as well future investors. face to face talk etc. business exhibitions etc. Besides this the image of company also fade into market.potential investor... Cold calling is the root of selling of mutual funds. The exhibition cum sales as names suggests is a exhibition in which the various kind of knowledge given to people who come to attend the exhibition and then that communication converts into successful sale.. This concept is taken from the European. US. These kind of exhibition are normally held at Co Federation of Indian Industry (CII). Which is go through by meeting. Issue of dividend warrants time to time Issue of dividend is a integral and very important part of mutual fund industry.

recipt.). Example (not receiving acknowledgement.. In after sale service recovery management also take part when somebody (investor) complaint regarding any problem. Whether it is MD of the company or business associate. letters through courier/post). . In the process of communication unit holder/investor is asked about any problem he/she faced this communication is normally held by mailers (e-mail.It is the important part of selling strategies of mutual fund company that their should be maintainance of well communication between the hierarchy of the all members of distribution for mutual fund. warrant etc. After sale service After sale service is that in which any executive of the company communicate to its unit holders. It is also necessary to communicate to the unit holder (in case of single unit holder also).

The Name of Mutual Fund Companies other than HDFC which proves to be hard competitor of it.Besides the HDFC Mutual Fund there are more than twenty Five Companies. The Names of Companies Listed till date are as follows: • • • • • • • • • • • • • • • ABN AMRO. AIG GLOBAL Investment Bank Of Baroda Benchmark Birla Sunlife MF Canara Robeco DBS Cholamadalam DSP Merrill Lynch Deutshe Escorts Fidelity Franklin Templeton HSBC ICICI Prudential ING .

Reliance SBI Sahara Standard Chartered Sundaram BNP Paribas TATA Taurus.• • • • • • • • • • • • • J P Morgan Kotak Mahindra Lotus India Optimix Principal Quantum. .

HDFC Mutual Fund Products Schemes: Equity Funds • • HDFC Growth Fund HDFC Long Term Advantage Fund (formerly HDFC levy Plan 2000) • • • • • • • HDFC Index Fund HDFC Equity Fund HDFC Capital Builder Fund HDFC Tax Saver HDFC Top 200 Fund HDFC Core and Satellite Fund HDFC Premier Multi-Cap Fund .

Balanced Funds • • • • HDFC Children’s Gift Fund Investment Plan HDFC Children’s Gift Fund Savings Plan HDFC Balanced Fund HDFC Prudence Fund Debt Funds • • • • • • • • • • • • • HDFC Income Fund HDFC Liquid Fund HDFC Gilt Fund Short Term Plan HDFC Gilt Fund Long Term Plan HDFC Short Term Plan HDFC Floating Rate Income Fund Short Term Plan HDFC Floating Rate Income Fund Long Term Plan HDFC Liquid Fund – PREMIUM PLAN HDFC Liquid Fund – PREMIUM PLUS PLAN HDFC Short Term Plan – PREMIUM PLAN HDFC Short Term Plan – PREMIUM PLUS PLAN HDFC Income Fund Premium Plan HDFC Income Fund Premium Plus Plan .

• • • • • • • • • • • HDFC High Interest Fund HDFC High Interest Fund – Short Term Plan HDFC Sovereign Gilt Fund – Savings Plan HDFC Sovereign Gilt Fund – Investment Plan HDFC Sovereign Gilt Fund – Provident Plan HDFC Cash Management Fund – Savings Plan HDFC Cash Management Fund – Call Plan HDFC MF Monthly Income Plan – Short Term Plan HDFC MF Monthly Income Plan – Long Term Plan HDFC Cash Management Fund – Savings Plus Plan HDFC Multiple Yield Fund .

100 thereof. . The only condition is that the amount to be invested should be minimum of Rs. STP. Every month an amount you choose in invested in a mutual fund scheme of your choice.Value Added Services • • • SIP (Systematic Investment Plan) STP (Systematic Transfer Plan) SWAP (Systematic Withdrawal Advantage Plan) The Most of the Features of HDFC Mutual Fund having various Facilities are with that Company are(SIP. 1. It is possible the investor will be amazed to learn about the many benefits of investing through HDFC MF SIP.SWAP) The description is as follows Systematic Investment Plan The HDFC MF Systematic Investment Plan (SIP) is similar to a Recurring Deposit.000 and multiples of Rs.

25% which means one can switch or transfer into any mutual fund on a very low charges (load).25%. Systematic Withdrawal Advantage Plan In systematic Withdrawal Advantage Plan (SWAP) the investor having option to quit from the mutual fund scheme automatically after the specific period of time for example if one mutual fund is close-ended and that mutual fund is for three years then after completion of tenure the amount (NAV) of the mutual fund automatically credited to the unit holder. In that case if switching occurs after a limited or said period of times then the loads (expenses) are very nominal say 0. .Systematic Transfer Plan In systematic Transfer Plan a unit holder’s (Mutual fund holder’s) Mutual funds are systematically transfer (switch) into a well performing mutual fund. If investor wishes to switch into another fund then the load is approximately 2. Although he/she have also another option to reinvest that amount into any of mutual fund. In case of openended scheme the investor having option to get refund of (NAV) of his/her amount of units to be credited into bank account.

5% in case of Fixed deposit and Recurring deposits. so people of ambala considered the mutual funds as their selected preference to be invest with. Now the properties are touching the higher value ever. As far as concern with mutual fund one can say that the facility of switching of funds made easier the investment point of view of common man. The various types of funds are prove to be a choice (various types) according to age factor. In last I would like to say that the coming time in future will be the time of . The mutual fund is a product which is sold in a great volume after any financial product loan.The finding and conclusions From that project report what I have find and conclude is that the mutual fund industry is happening to be a very famous among the population of Indian (Specially Ambala) Now the people know that bank will return them approximately 3.5% interest rate on savings and not more than 9.

Prentice – Hall of India. P. Cundiff W.selling of mutual funds after the number of Fast Moving Consumer Goods (FMCG). Norman (Sales Management. daily needs and durable goods Sector. book for AMFI certification) • The Economics Times (Delhi edition) . Edward. Govoni A. Financial Mutual Fund) AMFI (Association of Mutual Funds in India. M. low price edition) • • • • • Newsletter (HDFC Mutual Fund) Newsletter (UTI Mutual Fund) House journal (Morgan Stenley) Financial Reports (J. C. Bibliography • • • Kotler Philip (Marketing Management) D. Richard. Anjaria (Mumbai edition) Still R.

org/tranning/product www.morganstanly.com www.amfi.hdfcbank.com/porfolio www.com/portfolio www.indiainfoline.us .sharekhan.• The Financial Express (Mumbai edition) Portals and Websites • • • • • • www.google.com/mutualfund www.

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