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COMPARATIVE ANALYSIS OF MUTUALFUND OF HDFC & ICICI
SUBMITTED TO:Mr. Kamaljeet Singh Lech. Of Research Methodology
SUBMITTED BY:Miss. Parneet Kaur Roll. No. 95202239175 MBA
This is to certify that Miss. Parneet Kaur has done the Minor Research Project entitled “Comparative analysis of mutual fund of HDFC & ICIC” under my supervision for the degree of Master of Business Administration. The work done by her is a sole effort and has not been submitted as or its part for any other degree.
Mr. Kamaljeet Singh (Lecturer) Arayabhatta Institute of Management (Barnala)
I, PARNEET KAUR here-by declare that the project report “COMPARATIVE ANALYSIS OF MUTUAL FUND OF HDFC & ICICI” for the fulfillment of the requirement of my course from AIM is an original work of mine and the data provided in the study is authentic, to the best of my knowledge.
This study has not been submitted to any other Institution or University for award of any other degree.
HOWEVER, I ACCEPT THE SOLE RESPONSIBILITY OF ANY POSSIBLE ERROR OR OMISSION
Parneet Kaur Roll.No.95202239175
Words seem to be inadequate to express my sincere thanks to Mr. I am thankful to and owe a deep dept gratitude to all those who have helped me in preparing this report. I want to thank all who have supported me and gave their timely guidance. Parneet Kaur 4 . Also not to be forgotten are the Lecturers of MBA who contributed their ideas and suggestions. Barnala. untiring efforts and immense encouragement during the entire course of the study due to which my efforts have been rewarded. Last but not least I am very grateful to all those who helped me in one-way or the other way at every stage of my work. constructive4 criticism.It is a matter of Great Pleasure for me in submitting the project report on Comparative an Analysis of Mutual Fund of HDFC & ICICI For the fulfillment of the requirement of my course from AIM. Kamaljeet Singh for his valuable guidance. I am highly obliged to those who had helped me to procure primary data to complete my project.
mutual funds are a major financial asset for numerous investors. learn just how popular mutual funds have become and consider why investors have chosen to put so much money into funds.I have mainly focused up on the study that which company‟s mutual investments are mostly preferable by investors. Clearly.To a large extent. I have also considered other alternatives . Contents Page No. 5 . as every study needs.comprises the bulk of many investors financial assets. the mutual fund industry which reached $3. Indeed.64 trillion in assets by 2009.I had also reviewed the types of mutual funds.PREFACE Many individuals own mutual funds today. Today investors are becoming rational & they see all the parameters before investing . I‟d adopted an objective view of over all situation that examines both sides of the issue situated in HDFC &ICICI. I have consider the role of mutual fund in today‟s investing environment. defining terms and discussing the mechanics about how funds work. structure of mutual funds and their current scenario.Of course. and in many ways they play the dominant role in today‟s investing world for millions of house holds. I have also told about the basics of mutual funds. In the introductory chapter. mutual funds are the investment vehicle for the majority of house holds in the India.NO. S. The over all objective of my study on this project is to know which company provides better investment opportunities from HDFC & ICICI and make the investors to be able to take better decisions . whether for retirement or taxable savings purposes .
1 2 3 4 5 6 7 8 9 10 11 Introduction To Topic Introduction to Companies Review of literature Need/Scope of Study 0bjective of the study Research Methodology Analysis Findings Limitations Recommendations Conclusion 21 7 11 14 16 16 18 43 43 43 44 46 12 Bibliography 13 Annexure 48 6 .
Introduction to Topic 7 .
in Equity shares. a Mutual Fund allows investors to indirectly take a position in a basket of assets. The flow chart below describes broadly the working of a Mutual Fund. ORGANISATION OF A MUTUAL FUND:- 8 . Investors of mutual funds are known as unit holders. professionally managed basket of securities at a relatively low cost. Call Money Markets etc.INTRODUCTION A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. 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. 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. debentures and other securities. The money thus collected is then invested in capital market instruments such as shares. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. Bonds. In the other words. and distributes the profits. Investments insecurities are spread among a wide cross-section of industries and sectors thus the risk is reduced. 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. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. The investors in proportion to their investments share the profits or losses. Government securities. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at same time. 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.
The investment portfolio of the mutual fund is created according to the stated Investment objectives of the Fund. 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. The investor‟s share in the fund is denominated by “units”. 9 . investing in Mutual Funds contains the same risk as investing in the markets. 1996. In fact. the entire fortunes of your portfolio depend on this one asset. The value of one unit of investment is called net asset value (NAV). The ownership of the mutual fund is in the hands of the Investors. 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. who earn a fee for their services. from the funds. However. this risk is substantially reduced. The pool of Funds is invested in a portfolio of marketable investments.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. CHARACTERISTICS OF A MUTUAL FUND: A Mutual Fund actually belongs to the investors who have pooled their funds. The value of the portfolio is updated every day. THE STRUCTURE CONSITS OF: SPONSOR : Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. This is because by holding all your money in just one asset. every day. By creating a portfolio of a variety of assets. A very important risk involved in Mutual Fund investments is the market risk. the only difference being that due to professional management of funds the controllable risks are substantially reduced. A Mutual Fund is managed by investment professional and other Service providers. Mutual Fund investments are not totally risk free. the company specific risks are largely eliminated due to professional fund management. The Value of the units changes with change in the portfolio value.
TRUSTEE: Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals).TRUST: The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act. 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. The trust deed is registered under the Indian Registration Act.1996. redemption requests and dispatches account statements to the unit holders. 1908. 1882 by the Sponsor. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner. the provisions of the Trust Deed and the Offer Documents of the respective Schemes. So different goals will be allocated to different proportions of the total disposable 10 . 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. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. 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. The Registrar processes the application form. ASSET MANAGEMENT COMPANY (AMC): The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. INVESTORS PROFILE: An investor normally prioritizes his investment needs before undertaking an investment. The Registrar and Transfer agent also handles communications with investors and updates investor records.
since their appetite for risk is also limited. balanced funds provide an easy route of investment. Next comes the risk takers. the return-potential compensates for the risk attached. Since they can reshuffle their portfolio as per market conditions. NSC and KVPs Economic factors: 11 . Investments for specific goals normally find their way into the debt market as risk reduction is of prime importance. would not be averse to investing in high-risk avenues. However. they are likely to generate moderate returns even in pessimistic market conditions. We have seen the interest rate reducing continuously which boost the industry to sell products which are better than the FDs. armed with expertise of investment techniques. this is the area for the risk-averse investors and here. 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. the money was judiciously invested. because they have historically generated better returns than any other avenue. they would rather have some exposure to debt as well. Mutual Funds are generally the best option. Moving up the risk spectrum. c) Fiscal policy: tax structure plays a very important role in the growth of the industry . provided.If the tax structure will be high than there will be less savings and investment. risk takers by their nature. b) Stable constituency: The mutual fund industry can take long term decision if the government is stable. For these investors. there are people who would like to take some risk and invest in equity funds/capital market. 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. Capital markets find their fancy more often than not. 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. 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. PF.amount. Though the risk associated is generally on the higher side of the spectrum.
the cost of setting up business in bigger cities is huge compare to smaller cities. clearing system helps the industry a lot. online transaction. while fund companies are compelled to offer funds with wafer thin margins. India being a global economy. 12 . They have to give due emphasis on product innovation. h) Income: The rich people are in bigger cities. The mutual fund industry basically works parallel with the markets. Distributors are forced to pass on more commissions to companies. Technological factors: This is the era of information technology and due to net banking. Social factors: g) Consumer behavior: this is very unpredictable and based on sentiments gets changed very frequently. And what better way for the smaller investors to participate in this boom than to have a real estate mutual fund. which sometimes makes selling of products difficult. e) Global Standards: As the industry will grow better. so the mutual fund industry is much more concentrated there. Suppose. if the markets always be on downside.d) Market performance: The last five years witnessed a sharp rise in the markets.It is clear that the lack of growth in funds under management in India is because of the absence of long term investors. This will reduce the AMC business cost. the MF industry has to match to the global mature MF markets. online RTGS. Corporate investors take profits frequently resulting in destruction in the compound growth in funds under management. OPPORTUNITIES AND THREATS:a) Real Estate sector boom: The Real estate has always been one of the preferred investment avenues for the Indian investor. AMC has to come up with the structured products in this segment and should take competitive advantage. Corporate investors account for more than 55% of the AUM (by value). cost reduction and penetration. Also. b) Penetration to Rural markets: The industry has to take themselves to the local and rural markets to increase the market size. This will reduce the market size drastically. 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. then the investors will not be so comfortable to invest. f) Inflation: price rise affects interest rate and reduces the chances of investment. d) Retail investors lose out in the sense that they continue to pay higher expenses.
Similarly the information technology sector might be faring 13 . for example during one period of time equities might underperform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs.) and different sectors (auto. This is why mutual funds have difficulty competing retail business. We have explained the key benefits in this section. depending upon the investment objective of the scheme. The benefits have been broadly split into universal benefits.500/-. 2. 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 lifecycle. information technology etc.This kind of a diversification may add to the stability of your returns. which are unmatched by most other investment avenues. DIVERSIFICATION The nuclear weapon in your arsenal for your fight against Risk. real estate. which would otherwise be extremely expensive. i. g) Distribution: One of the major factors impacting the growth of mutual fund industry is the absence of any regulation in distribution of mutual funds. shares. bonds. textile. It simply means that you must spread your investment across different securities (stocks. 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. fixed deposits etc. applicable to all schemes and benefits applicable specifically to open-ended schemes. Lack of distributor awareness and the absence of any disclosures from distributors make misspelling of MF products commonplace. f) Huge scope for expansion: There are only 33 AMC which is very small figure compared to the mature markets. etc. bonds. money market instruments.e) Higher Returns of Alternative Debt Instruments: Government guaranteed schemes provide risk free returns at competitive rates of returns. AFFORDABILITY A mutual fund invests in a portfolio of assets. An investor can buy in to a portfolio of equities.e.). 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. 1.
you are handing your money to an investment professional that has experience in making investment decisions. will be taxed at a confessional rate of 10.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. 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. administration and management of mutual funds and also prescribe disclosure and accounting requirements. both debt and equity. income distributions for the year ending March 31. 2002 will be subject to tax in the assessment of all Unit holders. it offers different types of schemes to investors with different needs and risk appetites. as and when required.5%. This variety is beneficial in two ways: first. as a measure of concession to Unit holders of open-ended equity-oriented funds. It is the Fund Manager's job to (a) find the best securities for the fund. REGULATIONS Securities Exchange Board of India (“SEBI”). Secondly. Units of the schemes are not subject to Wealth-Tax and Gift-Tax. These rules relate to the formation. 5. 6. 9. which govern mutual funds. Mutual Funds save your time and make investing easy and convenient. CONVENTIONAL ADMINISTRATION Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries. including income from Units of the Mutual Fund. delayed payments and follow up with brokers and companies. TAX BENEFITS Any income distributed after March 31. However. When you buy in to a mutual fund. PROFESSIONAL MANAGEMENT Qualified investment professionals who seek to maximize returns and minimize risk monitor investor's money. 2003. 7. VARIETY Mutual funds offer a tremendous variety of schemes. and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio. 3. the mutual funds regulator has clearly defined rules. In case of Individuals and Hindu Undivided Families a deduction unto Rs. 4. given the fund's stated investment objectives. 14 . Such a high level of regulation seeks to protect the interest of investors. Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.000 from the Total Income will be admissible in respect of income from investments specified in Section 80L. it offers an opportunity to an investor to invest sums across a variety of schemes. Return Potential Over a medium to long-term.
In a closed end Funds. LIQUIDITY In open-ended mutual funds.8. 9. They do not participate in new issue market as do pension funds or life insurance companies. The price at which units can be sold or redeemed Depends on the market prices. and existing investors can liquidate their units by selling them to other willing buyers. where closed end Funds are listed. for their holdings in a closed end mutual Fund. CATEGORIES OF MUTUAL FUNDS: Mutual Fund can be classified as follows:Based on the Structure:1. can buy out the units from the investors. thus reducing the amount of funds held by outside investors. 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. CONVENIENCE An investor can purchase or sell fund units directly from a fund. The asset management company (AMC) however. In addition to this an investor receives account statements and portfolios of the schemes. The investor may opt for a Systematic Investment Plan (“SIP”) or a Systematic Withdrawal Advantage Plan (“SWAP”). Based on their investment objective: 15 . the target amount and the period both are indefinite in such funds. in the secondary markets. 2. you can redeem all or part of your units any time you wish. Any further transaction for buying the units or repurchasing them. linked to the NAV. OPEN-ENDED MUTUAL FUNDS: The holders of the shares in the Fund can resell them to the issuing Mutual Fund company at the time. In other words. thus the pool of funds can technically be kept constant. which are fundamentally. Thus they influence market price of corporate securities. through a broker or a financial planner. Happen in the secondary markets. after which further sales are closed. Therefore new investors buy from the existing investors. Such Mutual Fund Companies place their funds in the secondary securities market. These companies sell new shares NAV plus a Loading or management fees and redeem shares at NAV. They receive in turn the net assets value (NAV) of the shares at the time of re-sale. Some schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period. Investors in closed end Funds receive either certificates or Depository receipts. CLOSED-ENDED MUTUAL FUNDS:A closed end Fund is open for sale to investors for a specific period.
2.1. commercial paper (CP) and call money. investment inequity funds should be considered for a period of at least 3-5 years. e. thereby offering higher returns at relatively lower volatility.Invest at least 65% in equities. such funds can yield great capital appreciation as.In this case a key stock market index. on the risk-return ladder. 16 . Following are balanced funds classes: i) Debt-oriented funds -Investment below 65% in equities. like BSE. Therefore. Their portfolio mirrors the benchmark indexboth in terms of composition and individual stock weightages. -An infrastructure fund invests in power. debentures. iii) Dividend Yield funds.100% of the capital is invested in equities spreading across different sectors and stocks. generally smoothens out in the long term. they invest exclusively in fixed-income instruments like bonds. BALANCED FUNDS: Their investment portfolio includes both debt and equity. Hence.Invest 100% of the assets in sectors which are related through some theme. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. EQUITY FUNDS: These funds invest in equities and equity related instruments. equities have outperformed all asset classes in the long term. As a result. It can be further classified as: i) Index funds. even losses. Sensex or Nifty is tracked. Government of India securities. construction. ii) Equity-oriented funds . vi) ELSS. With fluctuating share prices.g. 3. they fall between equity and debt funds. short term fluctuations in the market.It is similar to the equity diversified funds except that they invest in companies offering high yield dividends. iv)Thematic funds.A banking sector fund will invest in banking stocks. .Equity Linked Saving Scheme provides tax benefit to the investors. DEBT FUND: They invest only in debt instruments. and money market instruments such as certificates of deposit (CD). such funds show volatile performance.g. cements sectors etc. ii) Equity diversified funds. and are a good option for investors averse to idea of taking risk associated with equities. remaining in debt. e. historically. At the same time. v) Sector funds. However.Invest 100% of the capital in a specific sector.
ii) Gilt funds ST. Now days.Put your money into any of these debt funds depending on your investment horizon and needs. vi)Income funds LT. Funds are allocated to equities. the post offices and banks also distribute the units of mutual funds.Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities. such funds invest a major portion of the portfolio in long-term debt papers. Floaters invest in debt instruments which have variable coupon rate. in the absence of arbitrage opportunities. v) Gilt funds LT. i) Liquid funds. Forms can be deposited with mutual funds through the agents and distributors who provide such services. Investors can also contact the agents and distributors of mutual funds who are spread all over the country for necessary information and application forms.fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.They generate income through arbitrage opportunities due to mispricing between cash market and derivatives market.These funds invest 100% in money market instruments. However. a large portion being invested in call money market.Typically.Invest in short-term debt papers. vii) MIPs. viii) FMPs. On the other hand they must consider the track record of the mutual fund and should take objective decision. ONE TIME INVESTMENT 17 . iii) Floating rate funds . THE WAY TO INVEST IN MUTUAL FUND Mutual funds normally come out with an advertisement in news papers publishing the date of launch of the new schemes. iv) Arbitrage fund.They invest 100% of their portfolio in long-term government securities. derivatives and money markets.They invest 100% of their portfolio in government securities of and Tbills. The only role of banks and post offices is to help in. distribution of mutual funds schemes to the investors. Higher proportion (around 75%) is put in money markets. 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. Investors should not be carried away by commission/gifts given by agents/distributors for investing in a particular scheme.
The minimum amount is Rs. Related: openend fund. Still others seek to invest in companies that are growing at a rapid pace. 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. closed-end fund. professionally managed basket of securities at a relatively low cost. What is mean by mutual fund? Mutual funds are pools of money that are managed by an investment company. 18 . Some funds. Thus a mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in diversified. The money thus collected is then invested in capital market instruments such as shares. seek to generate income on a regular basis. The investor has to pay the minimum amount Rs. depending on the fund and its investment charter. The minimum amount that the investor has to invest isRs6000 and maximum as per their choice. The investor has to pay the whole amount at once.500 monthly for Tax Saver scheme like that for 12 months. They offer investors a variety of goals. This investment is generally preferred for the business man who Are able to pay at one time. who share a common financial goal. 5000 and maximum is as per the investor‟s Choice. SYSTEMATIC INVESTMENT PLAN (SIP) The amount that has to be invested through same monthly installment is known as Systematic Investment Plan. Mutual funds are investment companies regulated by the Investment Company Act of 1940. or load. Concept of mutual funds A mutual fund is a trust that pools the savings of a no.1000 monthly for all equity and balanced schemes like that for 6months.The amount that has to be invested in onetime is known as One time Investment. And Rs. debentures and other securities. of investors. Others seek to preserve an investor's money. for example. on investors when they buy or sell shares. This type of investment is generally preferred for the salaried people. Many funds these days are no load and impose no sales charge. Funds can impose a sales charge.
Second phase 1987-93 (Entry of public sector funds). It was bifurcated into two separate entities. Fourth phase since feb. Third phase 1993-2003 (Entry of a private sector funds). The mutual fund industry goes through four phases: First phase 1964-87 (Establishment of UTI). PNB.Historical Aspect Mutual fund firstly was established in 1822 in the form of Society General De Belguique. And the fourth phase had bitter experience for UTI. In third phase. One is the specified under taking of UTI with AUM of 29. The Erstwhile Kothari pioneer (now merged with Franklin Templeton) was first registered in July 1993 in mutual fund. Sponsored by SBI. In 1978 it was delinked from RBI & the IDBI took over the control of UTI. but it accelerated from the year 1987 when non-UTI players entered in industry. In second phase. Types of Mutual Fund 19 .2003 (Bifurcated of UTI). The first investment trust “The foreign and colonial govt. SBI entered as first non-UTI mutual fund provider then it was followed by can bank (Dec. UTI was established in 1963 by an act of parliament. trust” Was founded in London in 1868. In the first phase. 87). BOB and LIC& it is registered with SEBI. In revised registration of SEBI I n 1993 the industry functions under SEBI. the private sector entered in it. The second is UTI mutual fund ltd.835cr. Indian Scenario of Mutual Fund The origin of mutual fund industry in India is with the introduction of the concept of by UTI in the year 1963. Through the growth was slow. PNB (Aug 89) & LIC in 1989. It mainly gains the progress in Switzerland & little in franc and Germany in its initial days.
Tax relief. Attract foreign Capital. Low cost. Diverse returns. Reduction / Diversification of risk. Liquidity (mainly in case of opened mutual funds). Reduction of transaction cost. Convenience. Professional Management. Advantages to Industrial concern. 20 . Regulatory.Structure Investment objective Growth Special schemes Open Ended Industry specific Specific Index schemes Close Income Internal Balanced Sector schemes Money Market Advantages of Mutual Funds Diversification.
Fees & Commission.Drawbacks of Mutual fund No guaranties. Management Risk. Taxes. 21 .
Introduction to Companies
HDFC Mutual Fund HDFC mutual fund was set up on June 30, 2000 with two sponsors namely Housing Development Finance Corporation ltd. and Standard Life Insurance ltd. HDFC mutual fund came into existence on 10 Dec. 1999 and got approval from the SEBI on 3rd July 2000. Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd, was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by Reserve Bank of India (RBI). It was one of the first banks to receive an 'in principle' approval from RBI, for setting up a bank in the private sector. The bank was incorporated with the name 'HDFC Bank Limited', with its registered office in Mumbai. The following year, it started its operations as a Scheduled Commercial Bank. Today, the bank boasts of as many as 1412 branches and over 3275 ATMs across India. Products and Schemes of HDFC mutual fund Equity funds. Balanced funds. Debt funds. Liquid funds.
Prudential ICICI Mutual Fund
The mutual fund of ICICI is a joint venture with Prudential PLC. Of America, one of the largest life insurance companies in the USA. Prudential ICICI mutual fund was set up on 13th of Oct. 1993 with two sponsors. ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial institution, in 1994. Four years later, when the company offered ICICI Bank's shares to the public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank offered made an equity offering in the form of ADRs on the New York Stock Exchange (NYSE), thereby becoming the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. In the next year, it acquired the Bank of Madura Limited in an all-stock amalgamation. Later in the year and the next fiscal year, the bank made secondary market sales to institutional investors
Products and Schemes of HDFC mutual fund Equity funds. Balanced funds. Debt funds. Liquid funds. Children‟s gift fund 23
Other Players in Mutual Fund
Bank of Baroda mutual fund (BOB MF) 30OCT. 1992. Benchmark mutual funds (June 12, 2001). Birla Sun life MF (1871). Chola mutual fund (3 Jan. 1997). Can bank mutual fund (Dec. 19, 1987). LIC mutual fund (19th June, 1989). Reliance mutual fund (30June, 1995). Sahara mutual fund (18 July, 1996). GIC (General Insurance Corporation of India). Etc.
Review of Literature 25 .
venture capital. It has grown up its market share in a meanwhile time. ICICI Bank's equity shares are listed in India on stock exchanges at Chennai. the Stock Exchange. life and non-Banking . HDFC had tried its best in mutual fund sector. 1 trillion and a network of about 540 branches and offices and over 1. Source:. HDFC Bank‟s exposure to market risk a function of its trading and asset and liability management activities and its role as a financial intermediary in customer-related transactions.com 26 . Kolkata and Vadodara. Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). The objective of market risk management is to minimize the impact of losses due to market risks on earning and equity capital. asset management and information technology.sribd.artclenich.COMPANY PROFILE ICICI Bank is India's second-largest bank with total assets of about Rs.www. Muzaffarnagar.com www.000 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking.
Need of study Scope of study Objectives of study 27 .
To know people behavior regarding risk factor involved in mutual fund. To provide information regarding types of mutual fund which is beneficial for whom. Scope of the study To make people aware about concept of mutual fund.Need of the study The need of study arises for learning the variables available that distinguish the mutual fund of two companies. To project mutual fund as the „productive avenue for investing activities. 28 . Objectives . To analyze the concept and parameters of mutual fund. To advice where to invest or not to invest. To chose best company for mutual investment between HDFC & ICICI. To provide information regarding advantages and demerits of mutual fund. To analysis which provides better returns from HDFC &ICICI. . To know the risk & return associated with mutual fund. To know how many people are satisfied by their investment (in HDFC or ICICI).
Research Methodology 29 .
Sampling = It represents whole population. Literature Survey: I have used newspapers. Problem Defining: In a competitive situation with multiple mutual funds operating in Indian market. It is the processes of choosing a sample from whole population . D. The methodology adopted in this study is explained below: Research Design A. B. Research Methodology:It is the way to systematically solve a problem. One can also define research as a scientific and systematic search for pertinent information on a specific topic. C. II. Qualitative research is that talk about the quality of the subject to be researched and Descriptive research is one that describes things as exists in present. In this study my focus is upon performance of investors regarding HDFC &ICICI. This is my problem to be studied for research. 30 . Data collection Design: I.Research refers to search for knowledge.I have choose a sample of high class & middle class people who have invested in mutual funds as a sample. magazines related to business & finance & apart from websites. it is necessary to know about the performance of different mutual funds as the performance of mutual fund decides about the future of Mutual Fund Company. Type of research: The research is qualitative & descriptive in nature. It is an art of scientific investigation. Sources of data = Primary Sources – I have used questionnaire as primary source for collecting data for my study. Secondary sources – I had collected my secondary data from websites & journals.
VI. Data Interpretation = Data interpretation is that in which we analysis the whole collected data & tries to give it in simple words to be understandable. I had chosen sample of 100 candidates. column chart. Sampling Techniques = Deliberate & Convenience Sampling. V. Sampling Size = It represents that how many candidates you‟ve chosen to be filled up your questionnaire or candidates upon whom you can study.III. cylinder chart. cone chart) and hypothesis tests (chi-square one sample Ttest etc.) IV. 31 . Tools = I have used some charts (Pie chart.
Analysis 32 .
YES NO 100 0 120 100 80 60 40 20 0 YES NO 100 Interpretation:All the candidates who are asked to fill the questionnaire have invested in mutual fund. 33 .1. Do you invest in mutual fund? .
2. With which company do you have invested in mutual funds? HDFC ICICI Reliance SBI LIC Kotak Mahindra Others 65 35 0 0 0 0 0 70 60 50 40 30 20 10 65 HDFC ICICI Reliance SBI LIC Kotak Mahindra 35 Others 0 0 0 0 0 0 Interpretation: Out of 100 candidates up to 65have invested in mutual fund with HDFC & 35 have invested with ICICI. 34 . There is no investor who have invested in mutual fund with any another company.
a.0 -15.VAR00001 Observed N HDFC 65 Expected N 50. 0 cells (.0%) have expected frequencies less than 5.000a 1 .0.0 ICICI 35 Total 100 50. 9. Sig.003 35 .0 Residual 15. The minimum expected cell frequency is 50.0 Test Statistics VAR00001 Chi-Square df Asymp.
8 are of 15-25. This data shows that many investors are of middle age & there are less investors of young age in mutual fund. What is your age? . 12 are of between of 25-35. 8 15-25 25-35 35-45 More than 45 12 60 20 60 60 50 40 30 20 20 12 10 0 8 15-25 25-35 35-45 More than 45 Interpretation: 60 investors are of age between 35-45. 36 . 20 are of age more than 45.3.
80000 .08000 One-Sample Test Test Value = 0 95% Confidence Interval of the Difference t VAR00001 36.92000 Lower 2.One-Sample Statistics N VAR00001 100 Mean Std.500 df 99 Sig. (2-tailed) . Error Mean 2.9200 .000 Mean Difference 2.0787 37 . Deviation Std.7613 Upper 3.
What is your income? (Yearly based) 1 lakh 2-4 lakh 4-5 lakh More than 5 0 10 20 70 70 60 50 70 1 lakh 40 2-4 lakh 4-5 lakh More than 5 30 20 10 0 0 10 20 Interpretation: Up to 70 investors have income more than 5 lakh. 20 have between 4-5 lakh.4. 38 .10 investors have income between 2-4 lakh & there is no investor who have income up to 1akh.
Sig.0 Test Statistics VAR00001 Chi-Square df Asymp.0 Residual -17. The minimum expected cell frequency is 25. a.0 25. 68.VAR00001 Observed N 1 lakh 2-4 lakh 4-5 lakh more than 5 Total 8 12 60 20 100 Expected N 25.0 25.0 -13.000 39 .320a 3 .0 35. 0 cells (.0%) have expected frequencies less than 5.0 25.0.0 -5.
15have been come to know by company employees & 10 by others. From where you come to know about this company’s mutual fund schemes? Family & relatives Friends & peers Company employee Others 35 40 15 10 40 40 35 35 30 Family & relatives Friends & peers 25 20 15 15 10 10 5 0 Company employee Others Interpretation: Many investors (up to 40) have been come to know about the company to be invested by their friends & peers.5.35 have been known by their family & relatives . 40 . This means many have come to know by their friends & peers.
0 15.0 41 .0 25.0 25.0 25.0 -15.0 Residual 10.0 -10.0 -10.0 -15.0 25.0 25.0 VAR00001 Observed N Family & relatives friends & peers Company employee Others Total 35 40 15 10 100 Expected N 25.0 15.0 Residual 10.0 25.VAR00001 Observed N Family & relatives friends & peers Company employee Others Total 35 40 15 10 100 Expected N 25.
30 have between 2-4 year & 35 have more than 4 years. So.6. 20 have time duration of their investment between of 1-2 year. What is the time duration of your investment? 0-1 year 1-2 year 2-4year more than 4 15 35 30 20 35 35 30 30 25 20 15 10 5 0 15 20 0-1 year 1-2 year 2-4year more than 4 Interpretation: 15 investors have time of investment less than one year. we can say that 35 investors have more experience than others. 42 .
019 43 .0 25. Sig.0 25.0.0 10. The minimum expected cell frequency is 25.0 Residual -10. 0 cells (.0 -5.0 5.0 25. 10.000a 3 . a.0%) have expected frequencies less than 5.VAR00001 Observed N 0-1 year 1-2 year 2-4 year more than 4 Total 15 35 30 20 100 Expected N 25.0 Test Statistics VAR00001 Chi-Square df Asymp.
30 are neutral towards employee behavior of a company. Are you satisfied by service of the company’s employees / people’s behavior? Highly satisfied Satisfied Neutral Dissatisfied Highly Dissatisfied 15 35 30 15 5 35 35 30 30 25 20 15 15 10 5 5 0 Highly Dissatisfied Dissatisfied Highly satisfied Satisfied 15 Neutral Interpretation: Out of 100 investors 15 are highly satisfied.7. 44 . We say that many people are satisfied by employee behavior. 35 are satisfied. 15 are dissatisfied. 5 are highly dissatisfied.
0 20.VAR00002 Observed N highly satisfied satisfied neutral dissatisfied highly dissatisfied Total 15 35 30 15 5 100 Expected N 20.0 -15.000a 4 . The minimum expected cell frequency is 20. 45 . 30.0 15.0 -5.0 20.0 10. Sig.000 a.0 20.0%) have expected frequencies less than 5.0. 0 cells (.0 20.0 Residual -5.0 Test Statistics VAR00002 Chi-Square df Asymp.
46 . 65% are risk adverse means they mainly try to avoid risk. 15% are moderate towards risk means they are indifferent towards risk.8. What is your risk profile? Innovator Moderate Risk adverse 20 65 15 70 60 50 40 30 20 20 10 0 Innovator 65 Innovator Moderate Risk adverse 15 Moderate Risk adverse Interpretation: 20% investors are innovator means they like to take risk for more returns.
a.0%) have expected frequencies less than 5.3 Test Statistics VAR00002 Chi-Square df Asymp. The minimum expected cell frequency is 33.500a 2 .3 Residual -13. 45.VAR00002 Observed N innovator 20 moderate 65 risk adverse 15 Total 100 Expected N 33. 0 cells (.3 -18.3 33. Sig.7 33.000 47 .3 31.3.
9. 25% are satisfied. 15% are dissatisfied by it & 5% are highly dissatisfied. 48 . What you feel about the company norms.). documentation & formalities? Highly Satisfied Satisfied Neutral Dissatisfied Highly dissatisfied 15 25 40 15 5 5% 15% 15% Highly Satisfied Satisfied Neutral 25% Dissatisfied 40% Highly Dissatisfied Interpretation: 15% investors are highly satisfied by company‟s documentation policy (filling up the forms etc. 40% never cares about it or are moderate towards it .
Sig.0 20.VAR00002 Observed N highly satisfied satisfied neutral dissatisfied highly dissatisfied Total 15 25 40 15 5 100 Expected N 20.000 a.0.0 -15.0 20. 49 .0 5.0 Test Statistics VAR00002 Chi-Square df Asymp.0 Residual -5.0 20.000a 4 .0 20.0%) have expected frequencies less than 5.0 20. 0 cells (. 35.0 -5. The minimum expected cell frequency is 20.
10. 50 . What you say which provides better returns? HDFC 68 ICICI 32 70 60 50 40 68 32 30 20 10 0 HDFC ICICI Interpretation: According to collected data 68 investors thinks that HDFC provides better returns where as 32 to think that ICICI provides better returns.
0 Residual 18.0 ICICI 32 Total 100 50. 0 cells (. 12. a.000 51 .0 Test Statistics VAR00001 Chi-Square df Asymp. Sig.0%) have expected frequencies less than 5. The minimum expected cell frequency is 50.0.VAR00001 Observed N HDFC 68 Expected N 50.0 -18.960a 1 .
But 85 investors say that they are ok with their companies and they wouldn‟t like to exchange their investment. 85 Yes No Interpretation: 15 investors said that they would like to change their investment with each another between HDFC & ICICI. Would you like to exchange your investment with one another between HDFC & ICICI? Yes No 15 85 90 80 70 60 50 40 30 20 10 0 15 .11. 52 .
0 Residual -35.000 a.0%) have expected frequencies less than 5. 53 . The minimum expected cell frequency is 50.0. 0 cells (.0 35. Sig.0 No 85 50.000a 1 . 49.0 Total 100 Test Statistics VAR00001 Chi-Square df Asymp.VAR00001 Observed N Yes 15 Expected N 50.
Findings Limitations Recommendations Conclusion 54 .
It should more emphasize in advertising. Investors are not highly satisfied by company rules & employee behavior. Investors should be made fully aware of the concept of mutual fund & all the terms and conditions. it is very difficult to construct right information from them.In my study I have found some limitations. Reliability: .There are some limitations of my study. those are as Following: Sample limitation: . Both companies should try to invest in better securities for better profits.The data collected by me is not much reliable because many investors chosen by me have invested in HDFC.In my research I have founded following things: Investors have more faith HDFC‟s mutual fund.Investors chosen for study are not fully aware of all the terms and conditions related to mutual fund . Old people &Widows prefer lower risk. For that I can suggest both companies following suggestions or areas of improvement: ICICI bank should try to provide better returns to its investors as compare to HDFC.So. Investors think that HDFC provides better returns than ICICI. as it is the most Powerful tool to position ant brand in the mindsets of customers 55 . see more risk & become more risk adverse.I had the shortage of time because of that I was not able to do my study in a good manner.which sample is taken by me is very small in size to Compare mutual fund of two companies. Awareness: . Recommendations / Suggestions: . Both companies should try to satisfy their customer by better customer service or by improving customer relationship management. Limitations: .All the parameters have not been taken. Companies should try to make people initiative towards risk. As the age increases investors are much satisfied. Time limitation: . Parameters: .Findings: .
Both the companies are doing considerable achievements in mutual fund industry. tax benefit. Mutual fund is also better and preferable for those who want their capital appreciation. To conclude we can say mutual fund is a best investment vehicle for old & widow. But ICICI have also respondents and it can increase its investors by improving itself in some terms.To conclude we can say that mutual fund is a very much profitable tool for investment because of its low cost of acquiring fund.Conclusion: . 56 . and diversification of profits & reduction of risk. Many investors who have invested in mutual fund have invested with HDFC and them also thinks that it provides better returns than ICICI . Companies can adopt new techniques to attract more & more investors.There is also an affect of age on mutual fund investors like. old people & widows want regular returns than capital appreciation. There are also so many competitors involved those affects on both companies. as well as to those who want regular returns on their investment. In my study I was suppose to do comparative analyses the mutual fund of HDFC &ICICI and I had found that people consider HDFC better than ICICI.
Bibliography 57 .
com www.com 58 . New Delhi.answers.scribd.com www.hdfc.icici.Bibliography: Books:C.2007.R.com www.wiki.com www.Kothari.google. Vikas Publishing house Pvt. ICICI and HDFC Brochure .Ltd. Research Methodology. Websites:www.
Annexure 59 .
Do you invest in mutual fund? Yes No . What is your income? (Yearly based) 1 lakh 4-5 lakh 2 . 2.4lakh more than 5 5.Annexure Name ________________________ Age _________ Adress_____________________________________ Pin ___________ Sex _________ Phone _________ 1. 60 . From where you come to know about this company‟s mutual fund schemes? Family members & relatives Friends & peers Company‟emplooyes Others Please specify . What is your age? 15-25 35-45 25-35 above 45 . 4. With which company do you have invested in mutual funds? HDFC Reliance SBI ICICI LIC Kotak Mahindra Others Please specify 3.
documentation & formalities? Highly satisfied Satisfied Neutral Dissatisfied Highly dissatisfied 61 . Moderator Risk adverse 9. What is the time duration of your investment? 0-1 year 2-4year 1-2 year more than 4 .6. What is your risk profile? Innovator . 7. What you feel about the company norms. Are you satisfied by service of the company‟s employees / people‟s behavior? Highly satisfied Satisfied Neutral Dissatisfied Highly dissatisfied 8.
What you say which provides better returns? HDFC ICICI 11.10. Would you like to exchange your investment with one another between HDFC & ICICI? YES NO 62 .
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