CHAPTER-1

EXECUTIVE SUMMARY
Primary investment objective of any individual or organisation is to maximize the returns and minimizing Market risk and Credit risk through diversification. Mutual Funds (MF) have become one of the most attractive ways for the average person to invest their money. It is said that Bank investment is the first priority of people to invest their savings and the second place is for investment in Mutual Funds and other avenues. A Mutual Fund pools resources from thousands of investors and then diversifies its investment into many different holdings such as stocks, bonds, or Government securities in order to provide high relative safety and returns. The Project is a “FINANCE PROJECT” which tries to explain in layman’s language about the history, growth, & pros and cons of investing in Mutual Funds and the second part of it deals with the analysis of risk and returns of Equity scheme, Tax saver fund scheme, Balanced fund, Liquid fund, Capital builder fund, Gilt fund, Floating rate income fund, Prudence fund and short term plan fund provided by HDFC Mutual Fund in comparison with the benchmark of S&P CNX indices. The main objective of the project was to get an Overview of Mutual Fund Industry, its set up, its working and to find out the risks and returns of selected HDFC Mutual Fund Schemes comparison with the benchmark of S&P CNX indices”. The project includes a brief idea about the growth of MF industry (History), the broad idea about the organization and concept of MF and SEBI Guidelines on Mutual Funds. There are many improvements pending in the field and it has to happen as soon as possible so as to call the MF industry as an Organized and well-developed sector.

PG DEPARTMENT OF MANAGEMENT STUDIES, ATRIA INSTITUTE OF TECHNOLOGY, BANGALORE.

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The past performance of MF is not necessarily indicative of future performance of the scheme and no AMC guarantees Returns and or safety of Principal. Analysis is done by calculating standard deviation, beta calculation. Findings: The HDFC Balanced Fund has not given stable returns to the investors. The beta of the fund is 0.47546. The Standard Deviation of the fund is 0.85433. The HDFC Floating rate Income Fund has given stable returns for the investors. The beta of the fund is 0.00187. The Standard Deviation of the fund is 0.02186. The HDFC Equity Fund has not given stable returns to the investors. The beta of the fund is 0.69971. The Standard Deviation of the fund is 1.1237. The Liquid Fund has given below average returns for the investors in this period. It is moderate riskier because the beta of the fund is 0.00148. The Standard Deviation of the fund is 0.01953. Recommendations: HDFC Floating rate Income Fund has a beta of 0.00187 hence the scheme is less volatile than the market. The scheme should generate reasonable returns while maintaining safety and providing investor superior liquidity. The standard deviation of the HDFC Liquid Fund Short Term Plan Funds is high, so the company should try to reduce the risk involved by reducing the standard deviation of the fund. The HDFC Liquid Fund & Short Term Plan Funds beta is 0.00148, 0.00383 so it means these schemes are less volatile. So the companies should harness on it by excessively advertising its benefits and in turn invite investors to invest whose risk appetite is less. Conclusions: In the above selected schemes of HDFC Mutual Fund all nine Schemes are defensive assets and the Gift Fund has negative beta. The scheme which contains beta is less than one is called defensive asset.

PG DEPARTMENT OF MANAGEMENT STUDIES, ATRIA INSTITUTE OF TECHNOLOGY, BANGALORE.

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CHAPTER-2

A.INTRODUCTION TO MUTUAL FUNDS
Mutual Funds - The Concept A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

PG DEPARTMENT OF MANAGEMENT STUDIES, ATRIA INSTITUTE OF TECHNOLOGY, BANGALORE.

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The following simple diagram clearly shows the working of a mutual fund: Funds – Organization There Mutual are many entities involved and the diagrams illustrate the organizational set up of a mutual fund: PG DEPARTMENT OF MANAGEMENT STUDIES. 4 . BANGALORE. ATRIA INSTITUTE OF TECHNOLOGY.

3. In a mutual fund. both debt and equity. as and when required. it offers different types of schemes to investors with different needs and risk appetites. secondly. which would otherwise be extremely expensive.500/-. 2. PG DEPARTMENT OF MANAGEMENT STUDIES. ATRIA INSTITUTE OF TECHNOLOGY. textile. Affordability:A mutual fund invests in a portfolio of assets. etc. fixed deposits etc.Advantages of Mutual Funds 1. This kind of a diversification may add to the stability of investor’s returns. 4.e. This variety is beneficial in two ways: first. so as to offset any underperformance by any one sector or instrument and help investor meet his investment objective.). For example. i. bonds. BANGALORE. 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. shares. Variety:Mutual funds offer a whole variety of schemes. real estate. It is then the Fund Manager's job to (a) find the best securities for the fund. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs. bonds. An investor can buy in to a portfolio of equities. it offers an opportunity to an investor to invest sums across a variety of schemes. and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio. an investor can invest his money in a debt scheme and a equity scheme depending on his risk appetite to create a balanced portfolio easily or simply just buy a Balanced Scheme. stocks. IT. etc. 5 . Professional Management:Qualified investment professionals seek to maximize returns and minimize risk monitor investor's money. Diversification:It means that investor must spread his investment across different securities (money market instruments. investor’s are handing their money with an investment professional who has experience in making investment decisions.) and different sectors (banking. depending upon the investment objective of the scheme. given the fund's stated investment objectives.

which are linked to the fund's prevailing NAV (net asset value). Liquidity:Investor’s are free to take their money out of open-ended mutual funds whenever they want. Regulations:Securities and Exchange Board of India ("SEBI"). ATRIA INSTITUTE OF TECHNOLOGY. are not insured against losses. and it is possible (although extremely unlikely) that investor’s could even lose their entire investment. although regulated by the government. no questions asked. administration and management of mutual funds and also prescribe disclosure and accounting requirements. but investor should also be aware of the drawbacks associated with mutual funds. 6 . That means that despite the risk-reducing diversification benefits provided by mutual funds.5. credit unions. Other advantages:  Return Potential  Low Costs  Transparency  Flexibility  Tax benefits Disadvantages of Mutual Funds There are certainly some benefits to mutual fund investing. which govern mutual funds. not mutual funds. 7. losses can occur. 6. 1. BANGALORE. These rules relate to the formation. The Federal Deposit Insurance Corporation (FDIC) only insures against certain losses at banks. the Capital Markets regulator has clearly defined rules. and savings and loans. within three to five working days of investor putting their request. Most open-ended funds mail investor redemption proceeds. No Insurance:Mutual funds. PG DEPARTMENT OF MANAGEMENT STUDIES. Such a high level of regulation seeks to protect the interest of investors.

4. unlike stock investments. By holding a large number of different investments. 3. In fact. the mutual fund itself would not double in value because that security is only one small part of the fund's holdings. Poor Performance:Returns on a mutual fund are by no means guaranteed.2. For example. and redemption fees. In addition.5% per year). Investor’s also should remember that investor’s are trusting someone else with their money when they invest in a mutual fund. Some of these expenses are charged on an ongoing basis. on average.0% to 1. 7 . it can also be a disadvantage due to dilution. BANGALORE. ATRIA INSTITUTE OF TECHNOLOGY. Loss of Control:The managers of mutual funds make all of the decisions about which securities to buy and sell and when to do so. for which a commission is paid only when you buy and sell. some mutual funds charge high sales commissions. like the S&P 500. Dilution:Although diversification reduces the amount of risk involved in investing in mutual funds. mutual funds tend to do neither exceptionally well nor exceptionally poorly. if a single security held by a mutual fund doubles in value. 5. the tax consequences of a decision by the manager to buy or sell an asset at a certain time might not be optimal for investor’s. PG DEPARTMENT OF MANAGEMENT STUDIES. And some funds buy and trade shares so often that the transaction costs add up significantly. around 75% of all mutual funds fail to beat the major market indexes. Fees and Expenses:Most mutual funds charge management and operating fees that pay for the fund's management expenses (usually around 1. For example. and a growing number of critics now question whether or not professional money managers have better stock-picking capabilities than the average investor. 12b-1 fees. This can make it difficult for investor’s when they trying to manage their portfolio.

8.6. If a mutual fund has $5 billion to invest and is only able to invest an average of $50 million in each. Size:Some mutual funds are too big to find enough good investments. 7. most mutual funds (called open-ended funds) cannot be bought or sold in the middle of the trading day. Investor’s can only buy and sell them at the end of the day. given that there are strict rules about how much of a single company a fund may own. Inefficiency of Cash Reserves:Mutual funds usually maintain large cash reserves as protection against a large number of simultaneous withdrawals. the fund might be forced to lower its standards when selecting companies to invest in. after they've calculated the current value of their holdings. ATRIA INSTITUTE OF TECHNOLOGY. Trading Limitations:Although mutual funds are highly liquid in general. as a result. BANGALORE. it means that some of the fund's money is invested in cash instead of assets. Although this provides investors with liquidity. then it needs to find at least 100 such companies to invest in. This is especially true of funds that focus on small companies. 8 . which tends to lower the investor's potential return. PG DEPARTMENT OF MANAGEMENT STUDIES.

S.000 in assets (with around 200 shareholders). was created in 1893 for the faculty and staff of Harvard University. In response to the stock market crash. By the end of the 1960s there were around 270 funds with $48 billion in assets. the Massachusetts Investors Trust grew from $50. BANGALORE. In PG DEPARTMENT OF MANAGEMENT STUDIES. The first pooled fund in the U. The stock market crash of 1929 slowed the growth of mutual funds. It was called the “Massachusetts Investors Trust”.S. 1924 the first official mutual fund was born. Bogle opened the first retail index fund called the First Index Investment Trust. Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. With renewed confidence in the stock market.000 in assets in 1924 to $392. today totaling around $7 trillion (with approximately 83 million individual investors) according to the Investment Company Institute. It is now called the Vanguard 500 Index fund. Securities and Exchange Commission) helped create the Investment Company Act of 1940.S.INDUSTRY PROFILE HISTORY OF MUTUAL FUNDS: When three Boston securities executives pooled their money together in 1924 to create the first mutual fund. 9 . In 1976. which provides the guidelines that all funds must comply with today. ATRIA INSTITUTE OF TECHNOLOGY. In contrast. they had no idea how popular mutual funds would become. there are over 10. On March 21st. These laws require that a fund be registered with the SEC and provide prospective investors with a prospectus. John C.000 mutual funds in the U. The SEC (U. mutual funds began to blossom. The idea of pooling money together for investing purposes started in Europe in the mid-1800s. After one year.

which is popularly known as US-64. Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) are came in to existence.  The UTI was setup by the Reserve Bank of India (RBI) and functioned under the Regulatory and Administrative control of the RBI.6700/.  Can Bank Mutual Fund in December 1987.  In the year 1987. ATRIA INSTITUTE OF TECHNOLOGY.  State Bank of India Mutual Fund was the first non-UTI Mutual Fund. Second phase (1987-1993)  Entry of Public Sector Funds. UTI was de-linked from RBI.November of 2000 it became the largest mutual fund ever with $100 billion in assets.  SBI Mutual Fund in June 1987.  LIC Mutual Fund in June 1989.  Indian Bank Mutual Fund in November 1989.Crores of Assets Under Management. History of Indian Mutual Fund Industry The history of Mutual Funds in India can be broadly divided into 4 Phases: 1.  The First scheme in the history of mutual funds was UNIT SCHEME-64. public sector Mutual Funds setup by public sector banks. BANGALORE. PG DEPARTMENT OF MANAGEMENT STUDIES. The Industrial Development Bank of India (IDBI) took over the Regulatory and Administrative control.  In 1978.  The following are the non-UTI Mutual Funds at initial stages. First phase (1964-1987)  The Unit Trust of India (UTI) was established in the year 1963 by passing an Act in the Parliament.  At the end of the year 1988. 2.  Punjab National Bank Mutual Fund in August 1989. UTI had Rs. 10 .

3.  Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations. Open-ended schemes Close-ended schemes TOTAL PG DEPARTMENT OF MANAGEMENT STUDIES. the first Mutual Fund Regulations came into existence.Crores. the 1993 Securities Exchange Board of India (SEBI) Mutual Funds mutual funds except UTI were to be registered and governed. BANGALORE.  Bank of Baroda Mutual Fund in October 1992. Bank of India Mutual Fund in June 1990. 004/. with many foreign mutual In this time. Of Assets Under management was way ahead of all other Mutual Funds.  &Acquisitions. In 1993.190 funds setting up funds in India. The following was the status at end of February 2003: (Source – AMFI website) Number of schemes 321 51 372 Amount (in Crores) 82. under which all The Erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the In 1996.  first private sector Mutual Fund Registered in July 1993. 541/.   Third phase (1993-2003) Entry of Private Sector Funds .a wide choice to Indian Mutual Fund investors.  GIC Mutual Fund in December 1990. 11 . At the end of 1993. the entire Mutual Fund Industry had Assets Under Management of Rs.Crores.693 4497 87. the Mutual Fund industry has witnessed several Mergers  The UTI with Rs.  The number of Mutual Fund houses went on increasing.44. ATRIA INSTITUTE OF TECHNOLOGY.47.

confirming to the SEBI Mutual Fund Regulations and with recent mergers PG DEPARTMENT OF MANAGEMENT STUDIES. 12 . ATRIA INSTITUTE OF TECHNOLOGY.  Following the repeal of the UTI Act in February 2003. 835/. Fourth phase (since 2003 February) 2 separate entities.  UTI is functioning under an Administrator and under the Rules framed by the Government of India and does not come under the purview of the Mutual Fund Regulations.Crores as at the end of January 2003.29. Bank of Baroda and Life Insurance Corporation of India. BANGALORE. it was (UTI) bifurcated into  One is the specified undertaking of the UTI with asset under management of Rs.  The UTI Mutual Funds Limited is registered with SEBI and functions under the Mutual Funds Regulations. with the setting up of a UTI Mutual Fund.  With the bifurcation of the Erstwhile UTI.The diagram below shows the three segments and some players in each segment: 4.  The second is the UTI Mutual Funds Limited. sponsored by State Bank of India. Punjab National Bank.

the Mutual Fund Industry has entered its current phases of consolidation and growth.998 10. 13 . there were 29 funds. the status of Mutual fund Industry was: No.64.918  At the end of March 2006.57. BANGALORE. of schemes Open-ended schemes Close-ended schemes TOTAL 414 46 460 (Source – AMFI website) Amount (in crores) 1. which manage assets of Rs.999 71.Crores under 421 different schemes.taking place among different private sector funds.  At the end of September 2004.499 PG DEPARTMENT OF MANAGEMENT STUDIES.500 2. the status of Mutual fund Industry was: Open-ended schemes Close-ended schemes TOTAL No.920 1.75.153108/. of schemes 414 46 460 (Source – AMFI website) Amount (in crores) 1.85. ATRIA INSTITUTE OF TECHNOLOGY.  At the end of July 2005.

AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with Securities Exchange Board of India (SEBI). BANGALORE. the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry. a need for Mutual Fund Association in India was generated to function as a non-profit organization. Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. Till date all the AMCs are that have launched mutual fund schemes are its members. ATRIA INSTITUTE OF TECHNOLOGY. The objectives of Association of Mutual Funds in India The Association of Mutual Funds of India works with 30 registered AMCs of the country. The objectives are as follows:  This Mutual Fund Association of India maintains high professional and ethical standards in all areas of operation of the industry  It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of Mutual Fund and Asset Management. It functions under the supervision and guidelines of its Board of Directors. The agencies who are by any means connected or involved in the field of capital markets and financial services also involved in this code of conduct of the association.ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI) With the increase in Mutual Fund players in India. PG DEPARTMENT OF MANAGEMENT STUDIES.  Associations of Mutual Fund of India do represent the Government of India. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August 1995. 14 . It has certain defined objectives which juxtaposes the guidelines of its Board of Directors. It follows the principal of both protecting and promoting the interest of mutual funds as well as their unit holders.  AMFI interacts with SEBI and works according to SEBIs guidelines in the Mutual Fund industry.

 Credit Capital Asset Management Co.  JM Financial Mutual Fund  Kotak Mahindra Asset Management Co. BANGALORE.  BOB Asset Management Co. Ltd.  At last but not the least Association of Mutual Fund of India also disseminate information on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies. 15 . Pvt. The sponsors of Association of Mutual Funds in India Bank Sponsored  SBI Fund Management Ltd. Ltd. Ltd. Ltd. Ltd. Ltd.  Canbank Investment Management Services Ltd. Pvt.  AMFI undertakes all India awareness programme for investors in order to promote proper understanding of the concept and working of Mutual Funds. PG DEPARTMENT OF MANAGEMENT STUDIES.  Cholamandalam Asset Management Co.  Reliance Capital Asset Management Ltd.  Jeevan Bima Sahayog Asset Management Co.  Escorts Asset Management Ltd.  Sahara Asset Management Co. ATRIA INSTITUTE OF TECHNOLOGY.  Tata Asset Management Private Ltd. Institutions  GIC Asset Management Co. Ltd  Sundaram Asset Management Company Ltd. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry. Private Sector Indian: Benchmark Asset Management Co.  UTI Asset Management Company Pvt. Ltd. Ltd. It develops a team of well qualified and trained Agent distributors.

 Principal Asset Management Co. ATRIA INSTITUTE OF TECHNOLOGY. Ltd. Ltd. Ltd.Predominantly India Joint Ventures: Birla Sun Life Asset Management Co. BANGALORE. One is on the monthly basis and the other is quarterly. (India) Pvt. Predominantly Foreign Joint Ventures: ABN AMRO Asset Management (I) Ltd. Ltd.  ING Investment Management (India) Pvt. Pvt.  DSP Merrill Lynch Fund Managers Limited  HDFC Asset Management Company Ltd. 16 .  Fidelity Fund Management Private Limited  Franklin Templeton Asset Mgmt. These publications are of great support for the investors to get intimation of the know how of their parked money. Ltd. Ltd. Association of Mutual Funds in India Publications: AMFI publishes mainly two types of bulletin.  HSBC Asset Management (India) Private Ltd.  Deutsche Asset Management (India) Pvt.  Alliance Capital Asset Management (India) Pvt. Ltd.  Morgan Stanley Investment Management Pvt. PG DEPARTMENT OF MANAGEMENT STUDIES.

BANGALORE. The Mutual Funds have been permitted to invest only in transferable securities in the money and capital markets or any privately placed debentures or securities debt. Restrictions have also been placed on them to ensure that investments under an individual scheme. 1996 SEBI announced the amended Mutual Fund Regulations on December 9. imparting a greater degree of flexibility and promoting innovation.1. SEBI issued guidelines in the year 1991 and comprehensive set of regulations relating to the organization and management of Mutual Funds in 1993. do not exceed five per cent and investment in all the schemes put together does not exceed 10 per cent of the corpus.SEBI REGULATIONS ON MUTUAL FUNDS The Government brought Mutual Funds in the Securities market under the regulatory framework of the Securities and Exchange board of India (SEBI) in the year 1993. investment objectives and valuation policies. TYPES OF MUTUAL FUND SCHEMES PG DEPARTMENT OF MANAGEMENT STUDIES. Investments under all the schemes cannot exceed 15 per cent of the funds in the shares and debentures of a single company. 1996 covering Registration of Mutual Funds. Constitution and Management of Mutual funds and Operation of Trustees. The revision has been carried out with the objective of improving investor protection. Constitution and Management of Asset Management Companies (AMCs) and custodian schemes of MFs.1993) The regulations bar Mutual Funds from options trading. inspection and audit. 17 . short selling and carrying forward transactions in securities. SEBI REGULATIONS. SEBI REGULATIONS 1993 (20. ATRIA INSTITUTE OF TECHNOLOGY. general obligations.

On the other hand. and may stop issuing further subscription to new investors. the unit capital of the schemes keeps changing each day. ATRIA INSTITUTE OF TECHNOLOGY. an open-ended fund rarely denies to its investor the facility to redeem existing units.Ended Schemes  Interval Schemes By Investment Objective       Growth/Equity Schemes General Purpose Income/Debt Funds Money Market Guilt Funds Balanced Schemes Tax Saving Schemes Special Schemes:   . risk tolerance and return expectations etc.Ended Schemes  Close . Please note that an open-ended fund is NOT obliged to keep selling/issuing new units at all times. Sector Specific Schemes Index Schemes Other Schemes   PG DEPARTMENT OF MANAGEMENT STUDIES. 18 . The table below gives an overview into the existing types of schemes in the Industry.Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position. Such schemes thus offer very high liquidity to investors and are becoming increasingly popular in India. Hence. BANGALORE. Open Ended Schemes The units offered by these schemes are available for sale and repurchase on any business day at NAV based prices. By Structure  Open .

In the interim. 19 . the scheme may offer direct repurchase facility to the investors. investors can buy or sell units on the stock exchanges where they are generally listed.Close Ended Schemes The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed number of units. Interval Schemes These schemes combine the features of open-ended and Close-ended schemes. BANGALORE. because they invest in equities. these schemes are exposed to fluctuations in value especially in the short term. seek to invest a majority of their funds in equities and a small portion in money market instruments. They may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV based prices. Close-ended schemes are usually more illiquid as compared to open-ended schemes and hence trade at a discount to the NAV. also commonly called Growth Schemes. However. the unit capital in Close-ended schemes usually remains unchanged. Such schemes have the potential to deliver superior returns over the long term. These schemes are launched with New Fund Offer (NFO) with a stated maturity period after which the units are fully redeemed at NAV linked prices. Unlike open-ended schemes. PG DEPARTMENT OF MANAGEMENT STUDIES. This discount tends towards the NAV closer to the maturity date of the scheme. ATRIA INSTITUTE OF TECHNOLOGY. After an initial closed period. Growth/Equity Schemes These schemes.

However. These schemes usually declare quarterly dividends and are suitable for conservative investors who have medium to long-term investment horizon and are looking for regular income through dividend or steady capital appreciation. political as well as economic.Equity schemes are hence not suitable for investors seeking regular income or needing to use their investments in the short-term. These schemes are ideal for conservative investors or those who are not in a position to take higher equity risks. ATRIA INSTITUTE OF TECHNOLOGY. While they are exposed to equity price risks. They thus have a diversified portfolio of companies across a large spectrum of industries. These schemes invest in money markets. diversified general-purpose equity funds seek to reduce the sector or stock specific risks through diversification. 20 . bonds and debentures of corporate companies with medium and long-term maturities. invest in debt securities such as corporate bonds. a substantial part of the distributable surplus is given back to the investor by way of dividend distribution. also commonly known as Income Schemes. debentures and government securities. Hence. The prices of these schemes tend to be more stable compared with equity schemes and most of the returns to the investors are generated through dividends or steady capital appreciation. General Purpose Equity Schemes The investment objectives of general-purpose equity schemes do not restrict them to invest in specific industries or sectors. Income /Debt Schemes These schemes. as compared to the money market schemes they do have a higher price fluctuation risk and compared to a Gilt fund they have a higher credit risk. PG DEPARTMENT OF MANAGEMENT STUDIES. They are ideal for investors who have a long-term investment horizon. These schemes primarily target current income instead of capital appreciation. They mainly have market risk exposure. The NAV prices of equity fund fluctuates with market value of the underlying stock which are influenced by external factors such as social. BANGALORE.

Units purchased cannot be assigned / transferred/ pledged / PG DEPARTMENT OF MANAGEMENT STUDIES. long-term orientation. Balanced Schemes These schemes are also commonly called balanced schemes. the investor usually does not have to worry about credit risk since Government Debt is generally credit risk free. where the value of the securities changes in relation to the market scenario. balanced schemes seek to attain the objective of income and moderate capital appreciation. By investing in a mix of this nature. certificates of deposit ("CD"). Hence. BANGALORE. ATRIA INSTITUTE OF TECHNOLOGY. The investor is open to Interest risk. Such schemes are ideal for investors with a conservative. treasury bills ("T-Bill") and overnight money ("Call").Money Market Schemes These schemes invest in short term instruments such as commercial paper ("CP"). These schemes have become popular with institutional investors and high net-worth individuals having short-term surplus funds Gilt Funds These primarily invest in Government Debt. The schemes are the least volatile of all the types of schemes because of their investments in money market instrument with short-term maturities. These invest in both equities as well as debt. Tax Saving Schemes Investors (individuals and Hindu Undivided Families (‘HUFs’)) are being encouraged to invest in equity markets through Equity Linked Savings Scheme ("ELSS") by offering them a tax rebate. 21 .

1. Comparison Of Mutual Funds With Other Products/ Investment Opportunities: The mutual fund sector operates under stricter regulations as compared to most other investment avenues. It also serves as a relevant benchmark to evaluate the performance of mutual funds. these investors are comfortable investing in a fund that they believe is a good representative of the entire market. Special Schemes Sector Specific Equity Schemes: These schemes restrict their investing to one or more pre-defined sectors.g. e.out until completion of 3 years from the date of allotment of the respective Units. The exemption under section 80 C of IT act is also applicable to other eligible schemes. The Scheme is subject to Securities & Exchange Board of India (Mutual Funds) Regulations. Some investors are interested in investing in the market in general rather than investing in any specific fund. 1961. 22 . Such investors are happy to receive the returns posted by the markets.redeemed / switched . Index Funds are launched and managed for such investors. As it is not practical to invest in each and every stock in the market in proportion to its size. or a specific sector of the market. ATRIA INSTITUTE OF TECHNOLOGY. Index schemes: An Index is used as a measure of performance of the market as a whole. subscriptions to the Units not exceeding Rs. They depend upon the performance of these select sectors only and are hence inherently more risky than general-purpose equity schemes. Subject to such conditions and limitations. Ideally suited for informed investors who wish to take a view and risk on the concerned sector. 1996 and the notifications issued by the Ministry of Finance (Department of Economic Affairs). Apart from the tax efficiency and legal comfort how do mutual PG DEPARTMENT OF MANAGEMENT STUDIES. as prescribed under Section 80 C of the Income-tax Act. technology sector. 00. BANGALORE. Government of India regarding ELSS. 000 would be fully tax exempt from income tax.

the liquidity provider is the scheme itself (for open-end schemes) or the market (in the case of closed-end schemes). Life Insurance 1. A corollary of such linkage between mobilization and investment is that the gains and losses from the mutual fund scheme entirely flow through to the investors. unless a named guarantor assures a return or. if the investment is in a serial gilt scheme. The basic value at which fixed deposits are encashed is not subject to market risk. subject only to the default risk of the borrower. If securities have gained in value during the period. Mutual fund schemes also have the   PG DEPARTMENT OF MANAGEMENT STUDIES. there is no such direct correlation between a company’s fixed deposit mobilization. 3. then the investor can even earn a return that is higher than what she anticipated when she invested. Company Fixed Deposits. 4. there can be no certainty of yield. Company Fixed Deposits versus Mutual Funds Fixed deposits are unsecured borrowings by the company accepting the deposits? Credit rating of the fixed deposit program is an indication of the inherent default risk in the investment moneys of investors in a mutual fund scheme are invested by the AMC in specific investments under that scheme. the value at which units of a scheme are redeemed entirely depends on the market. On the other hand. but subject to some differences:  The provider of liquidity in the case of fixed deposits is the borrowing company. Bank Fixed Deposits. the return under a fixed deposit is certain. she could also end up with a loss. 5. Bonds and Debentures. On the other hand. Conversely. Both fixed deposits and mutual funds offer liquidity. and the avenues where these resources are deployed. 23 . ATRIA INSTITUTE OF TECHNOLOGY. Therefore. Equity. In mutual funds. These investments are held and managed in-trust for the benefit of scheme’s investors. 2. BANGALORE. However. to a lesser extent. Early encashment of fixed deposits is always subject to a penalty charged by the company that accepted the fixed deposit.funds compare with other products? Here the investment in Mutual Funds is compared with: 1.

generally liquidity is through a listing in the market. However. However. Further. held by the depositor in the same capacity and right. it PG DEPARTMENT OF MANAGEMENT STUDIES. bonds and debentures are transferable securities an investor may have an early encashment option from the issuer (for instance through a “put” option). bank deposits up to Rs 1. the Government as well as Reserve Bank of India (RBI) tries to ensure that banks do not fail. then despite the exit load. Bonds and Debentures versus Mutual Funds As in the case of fixed deposits. 3. 2. Further. bank deposits too are subject to default risk. 24 .option of charging a penalty on “early” redemption of units (by way of an ‘exit load’). In this respect. unlike fixed deposits. The major difference is that banks are more stringently regulated than are companies. If the NAV has appreciated adequately. credit rating of the bond / debenture is an indication of the inherent default risk in the investment. the investor could earn a capital gain on her investment. ATRIA INSTITUTE OF TECHNOLOGY. then the liquidity remains on paper. BANGALORE. 00. given the political and economic impact of bank defaults. It is possible for an astute investor to earn attractive returns by directly investing in  the debt market. Implications of this are:  If the security does not get traded in the market. They even operate under stricter requirements regarding Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR). an open-end scheme offering continuous sale / re-purchase option is superior. Given the market realities in India. 000 are protected by the Deposit Insurance and Credit Guarantee Corporation (DICGC).000 is for all the deposits in all the branches of a bank. This aspect is similar to a MF scheme.While the above are causes for comfort. at times. The monetary ceiling of Rs 100. so long as the bank has paid the required insurance premium of 5 paise per annum for every Rs 100 of deposits. The value that the investor would realize in an early exit is subject to market risk. Bank Fixed Deposits versus Mutual Funds Bank fixed deposits are similar to company fixed deposits. and actively managing the positions. it is difficult for most investors to actively manage their debt portfolio. The investor could have a capital gain or a capital loss.

is difficult to execute trades in the debt market even when the transaction size is as high as Rs 1 crore. For instance. 5. But investment in an open-end mutual fund eliminates this direct risk of not being able to sell the investment in the market. Life Insurance versus Mutual Funds Life insurance is a hedge against risk – and not really an investment option. So. Another benefit of equity mutual fund schemes is that they give investors the benefit of portfolio diversification through a small investment. investment in a debt scheme would be beneficial. An unsecured bond / debenture are for all practical purposes like a fixed deposit. you are effectively paid for getting insured! Such opportunities are not sustainable in the long run. PG DEPARTMENT OF MANAGEMENT STUDIES. 25 . The AMC is however in a better position to handle the situation. as far as access to assets is concerned. In this respect. An indirect risk remains. if there is a default. BANGALORE. it would be wrong to compare life insurance against any other financial product. Occasionally on account of market inefficiencies or mis-pricing of products in India. ATRIA INSTITUTE OF TECHNOLOGY. life insurance products have offered a return that is higher than a comparable “safe” fixed return security – thus. 4. The investment in mutual fund scheme is held by a Custodian for the benefit of all investors in that scheme. Equity versus Mutual Funds Investment in both equity and mutual funds are subject to market risk. Thus. an investor can take an exposure to the index by investing a mere Rs 5. An investor holding an equity security that is not traded in the market place has a problem in realizing value from it. the securities that relate to a scheme are ringfenced for the benefit of its investors. because the scheme has to realize its investments to pay investors. Debt securities could be backed by a hypothecation or mortgage of identified fixed and / or current assets (secured bonds / debentures).000 in an index fund. the identified assets become available for meeting redemption requirements. In such a case.

26 . Subsidiaries and Associates HDFC Bank        HDFC Mutual Fund HDFC Standard Life Insurance Company HDFC Realty HDFC Chubb General Insurance Company Ltd. These reflects the efficiency by which HDFC manage their asset bases of Rs. BANGALORE. HDFC was promoted with an initial share capital of Rs. HDFC has ‘AAA’ rating by CRISIL and ICRA for seven consecutive years. Billion. Intelenet Global Services Ltd. COMPANY PROFILE History: HDFC was incorporated in 1977 with the primary objective of meeting a social need – that of promoting home ownership by providing long-term finance to households for their housing needs.100 million. ATRIA INSTITUTE OF TECHNOLOGY.B. Credit Information Bureau (India) Limited Other Companies Co-Promoted by HDFC: PG DEPARTMENT OF MANAGEMENT STUDIES. HDFC’s 120 offices have serviced customers in over 2400 cities/towns.21450 Cr.

HDFC Developers Ltd. 3rd Floor. H. ATRIA INSTITUTE OF TECHNOLOGY. GRUH Finance Ltd.• • • • • • • HDFC Trustee Company Ltd. 27 . Ltd. 169.T. The company is rated nine times “AAA” by CRISIL & ICRA. HDFC Holdings Ltd. The present equity shareholding pattern of the AMC is as follows: Particulars % of the paid up equity capital PG DEPARTMENT OF MANAGEMENT STUDIES. Parekh Marg. 1956. HDFC is known to its large customer and with its strong brand name. Backbay Reclamation. including the schemes launched from time to time. the AMC will conduct the operations of the Mutual Fund and manage assets of the schemes. The company is also rated the second best employer after INFOSYS.400 020. Churchgate. Mumbai . The registered office of the AMC is situated at Ramon House. on December 10. HDFC Investments Ltd. HDFC Asset Management Company Ltd (AMC) / HDFC Mutual Fund: HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act. 1999. Home Loan Services India Pvt. 2000. The service provided by the company is better than any other finance corporation. As per the terms of the Investment Management Agreement. HDFC Ventures Trustee Company Ltd. BANGALORE. and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated June 30.

HDFC Multiple Yield Fund (HMYF). HDFC Liquid Fund (HLF). HDFC Core & Satellite Fund (HCSF). HDFC Gilt Fund (HGILT). HDFC Short Term Plan (HSTP). HDFC Growth Fund (HGF). The AMC had entered into an agreement with ZIC to acquire the said business. HDFC Equity Fund (HEF). the Sponsor of Zurich India Mutual Fund. HDFC High Interest Fund (HHIF). HDFC Floating Rate Income Fund (HFRIF). ATRIA INSTITUTE OF TECHNOLOGY. HDFC Cash Management Fund (HCMF). 2003. following a review of its overall strategy. HDFC Income Fund (HIF). HDFC Children's Gift Fund (HDFC CGF). HDFC Balanced Fund (HBF). HDFC Premier Multi-Cap PG DEPARTMENT OF MANAGEMENT STUDIES. HDFC Index Fund. HDFC Capital Builder Fund (HCBF). HDFC Long Term Advantage Fund (HLTAF). 28 . HDFC Top 200 Fund (HT200). BANGALORE. subject to necessary regulatory approvals. the following Schemes of Zurich India Mutual Fund have migrated to HDFC Mutual Fund on June 19.Housing Development Finance Corporation Limited Standard Life Investments Limited 60 40 Zurich Insurance Company (ZIC). These Schemes have been renamed as follows: Former Name New Name Zurich India Equity Fund HDFC Equity Fund Zurich India Prudence Fund HDFC Prudence Fund Zurich India Capital Builder Fund HDFC Capital Builder Fund Zurich India TaxSaver Fund HDFC TaxSaver Zurich India Top 200 Fund HDFC Top 200 Fund Zurich India High Interest Fund HDFC High Interest Fund Zurich India Liquidity Fund HDFC Cash Management Fund Zurich India Sovereign Gilt Fund HDFC Sovereign Gilt Fund* *HDFC Sovereign Gilt Fund has been wound up in March 2006 The AMC is managing 24 open-ended schemes of the Mutual Fund viz. had decided to divest its Asset Management business in India. HDFC MF Monthly Income Plan (HMIP). HDFC TaxSaver (HTS). HDFC Prudence Fund (HPF). On obtaining the regulatory approvals.

The AMC is also providing portfolio management / advisory services and such activities are not in conflict with the activities of the Mutual Fund. To help distributors to advise and service their clients better. 2006 to act as a Portfolio Manager under the SEBI (Portfolio Managers) Regulations. The Certificate of Registration is valid from January 1.PM / INP000000506 dated December 8. HDFC Multiple Yield Fund . 29 . HDFC Mid-Cap Opportunities Fund.Fund (HPMCF).Series V and HDFC Fixed Maturity Plans .Series VI. HDFC Fixed Maturity Plans . HDFC Quarterly Interval Fund (HQIF) and HDFC Arbitrage Fund (HAF). HDFC Fixed Maturity Plans Series III. We at HDFC Mutual Fund recognize our distributors as the most important link between our investors and us.Series IV. The AMC is also managing 8 closed ended Schemes of the HDFC Mutual Fund viz. 2009. . 1993. HDFC Long Term Equity Fund. ATRIA INSTITUTE OF TECHNOLOGY. The AMC has renewed its registration from SEBI vide Registration No. we. BANGALORE. HDFC Mutual Fund is one of the largest mutual funds in India with an investor base of over 25 lakh which is serviced primarily by our vide network of distributors. PG DEPARTMENT OF MANAGEMENT STUDIES. Plan 2005 (HMYF-Plan 2005). HDFC Fixed Maturity Plans . HDFC Fixed Maturity Plans . HDFC Fixed Maturity Plans.Series II. 2007 to December 31. together with our registrar (CAMS) offer a range of facilities to them.

B.  To study the different Schemes provided by the origination. Balanced fund. Analysis is done on the Risk and Returns of selected schemes provided by the organizations. A. STATEMENT OF THE PROBLEM: “The project deals with the Overview of Mutual Industry in India and evaluation study of Risk and Returns of selected HDFC Mutual Fund Schemes comparison with the benchmark of S&P CNX indices”. Gilt fund.  To study the Scheme returns with respect to Benchmark of S&P CNX Nifty index.  To study the performance of different schemes. BANGALORE. C. OBJECTIVES OF THE STUDY:  To study Mutual Fund Industry in India.  To study the Risk involved in different Schemes. Capital builder fund. Floating rate income fund. Where it is useful to the investors to mobilize the savings in the respective schemes provided by the Company.CHAPTER-3 DESIGN OF THE STUDY INTRODUCTION: A detail study is done on Equity scheme. ATRIA INSTITUTE OF TECHNOLOGY. NEED FOR THE STUDY: PG DEPARTMENT OF MANAGEMENT STUDIES. Prudence fund and short term plan fund provided by HDFC Mutual Fund. Liquid fund. 30 . Tax saver fund scheme.

 The study covers only the open-ended funds. Tax saver fund scheme. Prudence fund and short term plan fund provided by HDFC Mutual Fund. RESEARCH DESIGN: A Research design is a method and procedure for acquiring information needed to solve the problem. Balanced fund. Floating rate income fund. Liquid fund. F. D. The performance of different schemes however helps the prospective investors to choose the good schemes that suit their objective.  The study covers the period of past forty days from 1st December2007 to 10th January2008. Capital builder fund. Prudence fund and short term plan fund provided by HDFC Mutual Fund. LIMITATIONS OF THE STUDY:  The study was limited only to Equity scheme. SCOPE OF THE STUDY:  The study was limited to just finding the risk and returns associated with the schemes. BANGALORE. ATRIA INSTITUTE OF TECHNOLOGY.  The study covers the Equity scheme.  Time duration for the study was very short as it was restricted to just six weeks. Gilt fund. Liquid fund. Capital builder fund. Balanced fund. Gilt fund. Floating rate income fund. 31 .The evaluation study of risk and returns of selected HDFC Schemes is useful to know the performance of schemes and it helps the investors to invest in Mutual Fund schemes. A research design is the basic plan that helps in the data collection or PG DEPARTMENT OF MANAGEMENT STUDIES. E.  The study was limited to the extent of just finding the risks and returns of each schemes of the fund. Tax saver fund scheme.

On NAV basis it reflects the return generated by the fund manager on NAV. BANGALORE. B = NAV at the beginning of the period. On price basis it reflects the return to investors by way of market or repurchase price Rate of Return for a period: R= ((A-B)/B)*100 Where. It specifies the type of information to be collected the sources and data collection procedure. A = NAV at the end of the period of the period. Prudence fund and short term plan fund provided by HDFC Mutual Fund to know the benefits to the investors. ATRIA INSTITUTE OF TECHNOLOGY. Tax saver fund scheme. 32 . In other words. Floating rate income fund. Net Asset Value (NAV): The net asset value of the fund is the cumulative market value of the assets fund of its liabilities. Liquid fund. It is calculated on NAV basis or price basis. METHOD OF RESEARCH DESIGN USED UNDER STUDY IS: DESCRIPTIVE RESEARCH: Descriptive research is study of existing facts to come to a conclusion. In this research an attempt has been made to analyze the past performance of the Equity scheme. G. THE THEORITICAL CONCEPT I. Capital builder fund. RATE OF RETURN: The compounded annual return on a mutual fund scheme represents the return to investors from a scheme since the date of issue.analysis. The study is done on selected schemes provided by the companies to know the companies performance for the past forty days and to know the risk and returns of the funds. by selling off all the PG DEPARTMENT OF MANAGEMENT STUDIES. Balanced fund. Gilt fund. if the fund is dissolved or liquidated.

ATRIA INSTITUTE OF TECHNOLOGY. represented by the ownership of one unit in the fund. 2. either common to all securities or specific to a particular security. this is the amount that the shareholders would collectively own. BANGALORE. Market /Fair value of scheme’s investments + Receivables + Accrued Income + Other Assets – Accrued Expenses – Payables – Other Liabilities NAV = -----------------------------------------------------------------------------------------Number of Units Outstanding II. before investing his/her investible wealth in the security. The NAV shall be calculated in accordance with the following formula. It is calculated simply by dividing the net asset value of the fund by the number of units. However. most people refer loosely to the NAV per unit as NAV. Investor in general would like to analyze the risk factors and a through knowledge of a risk helps him to plan his portfolio in such a manner so as to minimize risk associated with the investment. which is the value. The systematic risk. analyzes the risk associated with a particular security. Computation of Net Asset Value The Net Asset Value (NAV) of the units will be determined as of every working day and for such other days as may be required for the purpose of transaction of units. We also abide by the same convention. 33 .assets in the fund. Risk consists of two components: 1. or such other formula as may be prescribed by SEBI from time to time. RISK: The dictionary meaning of risk is the possibility of loss or injury. Any rational investor. ignoring the “per unit”. The actual return he receives from a security may vary from his expected return and the risk is expressed in term of variability of return. The down side of risk may be caused by several factors. This gives rise to the concept of net asset value per unit. PG DEPARTMENT OF MANAGEMENT STUDIES. The unsystematic risk.

unique and related to a particular industry or company. political situations and the sociological changes affect the security market. Market Risk B. The systematic risk affects the market as a whole. Systematic Risk: The systematic risk affects the entire market. Business Risk B.The systematic risk is caused by the factors external to a particular company and uncontrollable by the company. ATRIA INSTITUTE OF TECHNOLOGY. The investor cannot avoid them. BANGALORE. and company to company. changes in the customer preference. Purchasing Power Risk. Broadly. The statistical tools used to quantify risk are: PG DEPARTMENT OF MANAGEMENT STUDIES. 34 . These factors are beyond the control of the corporate and the investor. They have to be analyzed separately for each industry and firm. In case of unsystematic risk the factors are specific. unsystematic risk can be classified into: A. and labour problems. economic and managerial efficiency. technological change in the production process. Measurements cannot be assured of cent percent accuracy because risk is caused by numerous factors such as social. Financial Risk Risk Measurement: Understanding the nature of risk is not adequate unless the investor or analyst is capable of expressing it in some quantitative terms. The economic conditions. Unsystematic Risk: The unsystematic risk is unique and peculiar to a firm or an industry. The nature and magnitude of the above-mentioned factors differ from industry to industry. political. availability of raw material. This is subdivided into: A. Interest Rate Risk C. Unsystematic Risk stems from managerial inefficiency.

2) Beta: Beta describes the relationship between the securities return and the index returns. BANGALORE. A volatile stock would have a high standard deviation. Standard deviation can also be calculated as the square root of the variance. d = Deviations from actual mean. N = Number of observations. β = Beta of the fund. the higher the deviation. standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility (risk). Y = Weekly return of the Index.  Beta = + 1. 35 .1) Standard Deviation: σ = Standard Deviation. b) In finance. the standard deviation tells us how much the return on the fund is deviating from the expected normal returns. In mutual funds.0 PG DEPARTMENT OF MANAGEMENT STUDIES. a) A measure of the dispersion of a set of data from its mean. The more spread apart the data is. ATRIA INSTITUTE OF TECHNOLOGY. X = Weekly return of NAV. N = Number of Observations.

It indicates that the security moves in tandem with the market.  Beta = + 0. BANGALORE.0 One percent change in the market index return causes 2 percent change in the security return.5 percent change in the security return. H. Newspapers. Announcements and publishing’s by the company. PG DEPARTMENT OF MANAGEMENT STUDIES.5 One percent change in the market index return causes 0. The security return is more volatile.  Negative Beta Negative beta value indicates that the security return moves in the opposite direction to the market return.METHODOLOGY OF DATA COLLECTION: SOURCES OF DATA: PRIMARY DATA used for the study:   Discussions with company officials Informal discussions with Financial Advisors SECONDARY DATA used for the study:    Internet sources. The security is less volatile compared to the market.  Beta = + 2. When there is a decline of 10% in the market return. The security with more than 1 beta value is considered to be risky. ATRIA INSTITUTE OF TECHNOLOGY. if the market return declines by 10% and vice-versa. the security with beta of 2 would give a negative return of 20%.One percent change in market index returns causes exactly one percent change in the security return. A security with a negative beta of -1 would provide a return of 10%. 36 .

40% 21.921 207. long term fund Capital Builder Fund and Balanced schemes provided by HDFC Mutual Fund.20% 197.28.74 7133.04% 16.46% 163.CONCEPTUAL DESIGN: Sample unit: Equity. Sample size: Forty days NAV of the Schemes.11% -447.10.75 6984.08 7356. Gilt fund prudence fund.64 7212.709 211.41.17. Sampling Procedure: Direct.54% 9.11 7002.741 Returns .69% 32.87% .943 218.72 7268.77 7479.87 6972.61 7014.08% PG DEPARTMENT OF MANAGEMENT STUDIES.843 210.451 216.00% 24.32% .392 209.82 7230.72% -164.228 213.65% -60.27% 10.10% 12. ATRIA INSTITUTE OF TECHNOLOGY. Income Tax saver.42% -326. BANGALORE.803 212.18 Returns 16.845 209.20 7343.88% 229.94% -22.07% .60% 65.757 209.71% 111.85 7403.77% Total Index Returns 7121.041 214. CHAPTER-4 ANALYSIS & INTERPRETATION OF DATA The table showing the daily returns of S&P CNX Nifty Index and HDFC equity fund Date 03-Dec-07 04-Dec-07 05-Dec-07 06-Dec-07 07-Dec-07 10-Dec-07 11-Dec-07 12-Dec-07 13-Dec-07 14-Dec-07 17-Dec-07 18-Dec-07 19-Dec-07 20-Dec-07 24-Dec-07 Net Asset Value 207.24% 101.360 217.44% 223.94% 54.45 7237.63 7254.077 213. 37 .30% -17.747 216.65% 379.29% 26.

03 8.41 -3.65 -0.33 X*Y -0.88% 7379.90 7461.06 7511.17 0.63 0.11 0.24 1.94.22 0.92% 96.33% .70 0.68 0.68 0.24 1.65 -0.17 1.02 3.03 0.03 0.04 0.16 0.43 0.64 0.01 1.13 0. BANGALORE.06 7389.857 223.089 220.10 1.18 -0.97 0.27% 22.09 2.45% 157.07 14.29 1.05% 153.324 224.23 0.72% -105.797 219.86% 91.02 2.79 1.41 -3.54 0.89 7623.37 2.78% 73.64 7483.37 d -0.29 0.03 1.50% 17.11 0.41 7632.013 136.66 0.97 0.67% 13.02 -1.02 7392.592 226.22% 48.88 0.63% 7.93% -25.239 225.48 7468.75 0.13 0.26-Dec-07 27-Dec-07 28-Dec-07 31-Dec-07 01-Jan-08 02-Jan-08 03-Jan-08 04-Jan-08 07-Jan-08 08-Jan-08 09-Jan-08 10-Jan-08 217.28 -0.02 7626.26 1.682 218.48 -0.62% .01 3.25 0.27 -0.02 0.64 -0.49 7511.04 0.46 0.52.05 0.10 1.043 227. 38 .26 7642.64 0.36 0.10 0.00% -0.86% 9.69% 56.67% -2.08 0.17 -4.09 2.10 1.88 Y 0. ATRIA INSTITUTE OF TECHNOLOGY.48 2.81 152.19 0.27 -0.39% 57.42% The table showing the calculations of Beta and Standard deviation of HDFC equity fund X -0.209 223.33 -0.09 PG DEPARTMENT OF MANAGEMENT STUDIES.10 1.28 -0.07 14.54 0.96% 51.22 0.19% -183.60 0.01 2.03 2.13% -137.03 0.53 Y2 0.097 227.17 10.05 5.17 0.37 d2 0.23 2.06 0.03 20.613 225.27 3.01 5.

23 -1.02 0.05 0.36 54.82 0.06 -0.15 0.1237 β = 0.which means the scheme’s returns vary with the index to the extent of 1.97 0.53 0.09 0.24 2.57 0.82 0.32 0. The Standard Deviation of the scheme is 1.51 0.00 1.49 0.28 0.03 0.0.09 -0.81 ΣXY = 38.13 5.58 0.01 1.36 0.82 34.94 -1.42 0.38 5.91 0.89 1.23 54.48 1.94 0.01 0.79 N ΣX Σd Σd² ΣY ΣY² = = = = = = 26 5.13 0. 39 .53 0.58 0.73 -0.08 0.82 5.01 0.00 2.53 0.32 0.73 -0. ATRIA INSTITUTE OF TECHNOLOGY.14 -0. PG DEPARTMENT OF MANAGEMENT STUDIES.23 0.81 0.54 0.25 -1.94 -1.38 5.23 2.05 1.1237.06 3.00 0.00 1.1237. For One percent change in the market index causes 0.12 0.40 0.26 0.91 0.02 -0.90 34.57 0.69971 Inference: As the β is less than 1 it can be said that the scheme is less risky.69971 percent change in the scheme return.23 -1.83 5.51 0.54 0.03 0.06 -0.83 0. The scheme is less volatile compared to the market.53 38.18 -0.79 σ = 1.48 1. BANGALORE.57 0.

11 7002.45 7237.The table showing the daily returns of S&P CNX Nifty Index and HDFC tax saver fund Date Net Asset Value Returns .20% .24% 101.234 20-Dec-07 195.94% .88% 229.817 04-Dec-07 198.61 7014.440 19-Dec-07 195.51% 223.22.16% 46.559 05-Dec-07 201.11% -447.93% Total Index Returns 7121.82 7230.54% 2.660 14-Dec-07 203.21% 154.74 7133.08 7356.2 7343.27% .557 12-Dec-07 204.064 06-Dec-07 201.65% 379.00% 24.08% 152.69% 32. BANGALORE.797 10-Dec-07 201.9.70% 7.64 7212.77 7479.04% 16.14% 21.31.949 11-Dec-07 204.18 7379.283 24-Dec-07 199.17.992 13-Dec-07 203. ATRIA INSTITUTE OF TECHNOLOGY.29% 26.64.83% .50% 03-Dec-07 198.72 7268.993 07-Dec-07 201.85 7403.98% 126.63 7254.56% .02 Returns 16.16% -352.229 17-Dec-07 196.71% 111.87 6972.53% 129.064 18-Dec-07 195. 40 .98% .735 PG DEPARTMENT OF MANAGEMENT STUDIES.21.642 26-Dec-07 202.72% -164.10.12.65% .60.75 6984.30% .

10 0.29 0.03 -0.02 7626.662 02-Jan-08 207.11 0.08 0.32 -0.33 -0.78 0.08 1.11 0.23 d -0.71% 88.03 20.19% -183.51% 61.43 0.69.00% .06 7389.05 0.01 PG DEPARTMENT OF MANAGEMENT STUDIES.01 -0.02 0.42% The table showing the calculations of Beta and Standard deviation of HDFC tax saver fund X -0. 41 .37 2.21 0.13 1.59 0.01 0.05 5.07 0.89 7623.90 7461.67 0.03 0.11 -0.29 1.21 -0.13 1.23 2.08 0.02 1.53 -0.65.25% .70 0.01 0.65% 7392.08 1.23 1.36 0.03 2.00 4.55 -0.03 Y2 0.02 -1.46 -0.583 08-Jan-08 207.60% .79 1.16 0.33 0.01 0.0.18 -0.81% 22.04 0.11 0.65 -0.17 1.67% .41 7632.48 -0.49% .32 -0.031 31-Dec-07 204.86% 9.17 -4.03 2.67% 13.29 0.21 -0.06 7511.04 12.92% 96.53 0.64 -0.7.22 1.10 0. BANGALORE.222 09-Jan-08 205.03 1.40 0.93% .25 0.98 2.40 0.39% 57.00 X*Y -0.08% -126.48 7468.71% 67.21 -3.575 28-Dec-07 203.21 -3.63% 7.78.604 10-Jan-08 203 .115 07-Jan-08 208. ATRIA INSTITUTE OF TECHNOLOGY.53 -0.01 1.96 0.36 -0.19 -0.23 d2 0.23 0.03 0.26 7642.42 0.46% 100.23 1.55 -0.02 2.27-Dec-07 202.07 14.01 8.65 -0.46 -0.10 0.81 17.26 0.11 0.26 0.26 1.89% 22.03 2.02 1.05% 153.2.04 15.60 0.283 04-Jan-08 208.25.731 03-Jan-08 206.49 7511.46 2.06 0.284 01-Jan-08 205.05 Y 0.27 3.64 7483.

25 -1.36 0.06735.67 1.81 ΣXY σ β = 37.43 0. ATRIA INSTITUTE OF TECHNOLOGY.89 0.57 0.67 1.60 0.6899 percent change in the scheme return.70 0.08 0.6899 Inference: As the β is less than 1 it can be said that the scheme is less risky.05 0.61 1.09 0.62 0.65 -0.46 1.02 0.0.54 = 1.00 1.22 -0.23 29.94 0.27 2.81 0.06735 = 0.01 -0.49 0.89 0.81 0.23 0.02 -0.14 -0.01 0.23 0.78 -1.01 0. 42 .60 29.06 0.00 1.97 0.54 N ΣX Σd Σd² ΣY ΣY² = = = = = = 26 2.23 54.54 0.01 -0.65 -0.83 5. BANGALORE.38 0. The scheme is less volatile compared to the market.36 0.06 3. The Standard Deviation of the scheme is 1.32 0.81 5.23 0. For One percent change in the market index causes 0.32 37. Which means the scheme’s returns vary with the index to the extent of 1.62 0.27 2.78 -1.70 0.09 0.57 0.00 2.06735? PG DEPARTMENT OF MANAGEMENT STUDIES.01 0.22 -0.20 2.36 54.79 0.23 2.

43 .18 7379.200 40.256 40.20 7343.92% PG DEPARTMENT OF MANAGEMENT STUDIES.82 7230.64% 111.24% 101.108 39.75 6984.757 40.170 39.65% .08% 152.177 39.64% 26.64 7212.508 38.22.93% 97.17.05% 17.30% .946 40.38% Total Index Returns 7121.164.66% 21.82% 40.194 39.The table showing the daily returns of S&P CNX Nifty Index and HDFC balanced fund Date 03-Dec-07 04-Dec-07 05-Dec-07 06-Dec-07 07-Dec-07 10-Dec-07 11-Dec-07 12-Dec-07 13-Dec-07 14-Dec-07 17-Dec-07 18-Dec-07 19-Dec-07 20-Dec-07 24-Dec-07 26-Dec-07 27-Dec-07 28-Dec-07 Net Asset Value 38.65% 379.72 7268.69% 32.2.156 39.11 7002.70% 143.85 7403.47% 54.08 7356.44% .60.326 39.72% .11% -447.71% 111.77 7479.02 7392.100 39.29% 26.04% 16.24.05% 2.88% 229.165 40.50% 17.61 7014.67% .533 39.08% -286.55% 64.63 7254. ATRIA INSTITUTE OF TECHNOLOGY.97% 9.254 39. BANGALORE.43% 13.90 Returns 16.640 39.281 39.648 Returns 34.87 6972.06 7389.28% 119.15% 104.94% .00% 24.74 7133.45 7237.

25 0.36 0.11 0.11 0.23 0.06 -0.29 1.41 1.53 0.05% 153.69% .05 0.95 0.65% 66.15% -102.87% .14 0.87 0.00 0.979 41.45 1.09 0.94 0.93% -25.44 1.81 96.67% 13.41 7632.03 0.002 52. 44 .06 -0.06 0.63% 7.01 X*Y 0.87 0.79 1.00 0.135 41.02 0.34 1.25 0.06 7511.428 41.33 0.77% 71.27 0.24 0.97 0.00% -0.22 0.70 0.28 0.26 1.42 0.48 7468.17 1.04 0.64 7483.02 -0.60 0.40 -2.01 2.53 0.07 12.07 14.48 -0.06 1.27 0.11 0.19% -183.03 0.97 0.82.89 7623.55 0.39% 57.70 0.841 41. ATRIA INSTITUTE OF TECHNOLOGY.862 41.31-Dec-07 01-Jan-08 02-Jan-08 03-Jan-08 04-Jan-08 07-Jan-08 08-Jan-08 09-Jan-08 10-Jan-08 40.04 0.32 0.03 0.495 41.64 1.44 1.03 0.86% 9.03 5.02 0.25 0.02 0.27 3.07 0.01 0.17 -4.19 0.67 d 0.06 1.67 d2 0.10 1.18 0.45 Y 0.21 -0.03 1.18 0.16 8.49 7511.47 1.81% 107.04 0.83 -0.26 7642.02 7626.02 -1.14 0.682 41.90 -0. BANGALORE.37 2.32.06 1.34 1.05 5.30 0.51 0.09 Y2 0.42% The table showing the calculations of Beta and Standard deviation of HDFC balanced fund X 0.11 0.40 -2.579 41.12 1.13 -0.53 0.16.10 1.25% .03 0.03 2.94% 24.06 PG DEPARTMENT OF MANAGEMENT STUDIES.19 0.55 0.97 0.18 -0.83% 7461.64 1.23 2.06 0.21 -0.64 -0.04 0.16 0.33 -0.03 20.

ATRIA INSTITUTE OF TECHNOLOGY.14 -0.06 0.51 0.03 1.81 ΣXY σ β = 26.47546 percent change in the scheme return.23 0.1.83 -0.38 20.02 0.81 0.03 6.54 0.85433 = 0.54 5.08 0.16 -1.57 0.08 0.09 -0.00 1.00 2.71 -0.16 -1.00 1.47546 Inference: As the β is less than 1 it can be said that the scheme is less risky.36 0.03 -0. The standard deviation of the scheme is 0.85433 which means there is almost no variation in the returns with the index. PG DEPARTMENT OF MANAGEMENT STUDIES. BANGALORE.17 0.38 1.04 1.33 -0.06 3.01 0.84 = 0.33 -0.25 0. The scheme is less volatile compared to the market.89 26.38 6.71 -0.03 6.12 0.08 0.32 0.06 20.84 N ΣX Σd Σd² ΣY ΣY² = = = = = = 26 6.23 54.54 0.62 0.83 5.83 -0. 45 .38 1. For One percent change in the market index causes 0.68 0.25 0.36 54.25 -1.11 0.

29% 26.08 7356.7236 15.85 7403.29% 2.88% 229.18 7379.94% -22.29% 6.51% 2.17% 6.06 Returns 16.6954 15.92% 96.45 7237.63 7254.82 7230.17% 2.36% 2.65% 379.7449 15.00% 24.74 7133.665 15.67% -2.61 7014.29% 2.7023 15.9 7461.49 7511.87 6972.92% 2.30% -17.77 7479.23% 2.48 7468.692 15.6989 15.2 7343.The table showing the daily returns of S&P CNX Nifty Index and HDFC liquid fund Date 03-Dec-07 04-Dec-07 05-Dec-07 06-Dec-07 07-Dec-07 10-Dec-07 11-Dec-07 12-Dec-07 13-Dec-07 14-Dec-07 17-Dec-07 18-Dec-07 19-Dec-07 20-Dec-07 24-Dec-07 26-Dec-07 27-Dec-07 28-Dec-07 31-Dec-07 01-Jan-08 02-Jan-08 Net Asset Value 15.23% 2.11% 2.03% 4.71% 111. ATRIA INSTITUTE OF TECHNOLOGY.23% 2.6684 15.28% 2.6721 15.17% 6.6754 15.6885 15.7521 15.763 15.24% 101.08% 152.65% -60.69% 32.42% 9.7378 15.11% -447.11 7002.7162 15.64 7212.06 7389.7485 15.75 6984.7127 15.72% -164.04% 16.86% 9.09% Total Index Returns 7121.7666 15.62% 2.39% 57.19% 2.7699 Returns 2. 46 .02 7392. BANGALORE.6788 15.17% 2.7198 15.50% 17.72 7268.00% PG DEPARTMENT OF MANAGEMENT STUDIES.

02 0.16 0.37 2.01 PG DEPARTMENT OF MANAGEMENT STUDIES.02 0.53 0.64 7483.00 0.02 0.29 1.79 1.01 0.02 7626.03 0.02 0.41 7632.07 0.09 0.02 0.17 -4.06 0.00 0.00 0.09 0.01 0.05 0. BANGALORE.93% -25.05 0.03 0.00 0.27 3.00 0. 47 .00 0.81 -0.02 0.02 0.07 0.07 14.00 0.00 0.00 0.00 0.02 0.02 0.02 0.30 -0.16% 6.34 0.02 d 0.05 5.00 0.23 2.02 0. ATRIA INSTITUTE OF TECHNOLOGY.02 -0.97 0.18 -0.06 0.07 0.11 0.00 0.02 0.00 -0.04 0.09 0.7735 15.02 0.11 0.00 0.03-Jan-08 04-Jan-08 07-Jan-08 08-Jan-08 09-Jan-08 10-Jan-08 15.36 0.00 0.7936 15.7769 15.05% 153.63% 7.04 0.03 0.32 X*Y 0.25 0.00 0.64 -0.07 0.02 0.00 0.02 0.02 -1.34% 7511.02 0.7973 2.34% 2.28% 2.07 0.00 Y 0.02 0.94 0.70 0.03% 2.17 1.00 0.7869 15.23 0.02 0.00 0.33 -0.26 1.06 0.02 0.48 -0.00 0.07 0.03 20.02 d2 0.02 0.00 0.00 0.03 1.19% -183.26 7642.02 0.01 0.67% 13.03 2.22% 2.00 0.05 0.03 0.02 0.00 0.89 7623.42% The table showing the calculations of Beta and Standard deviation of HDFC liquid fund X 0.01 0.00 0.02 0.57 Y2 0.01 0.02 0.02 0.01 0.01 -0.33 0.02 0.02 0.7901 15.60 0.02 0.

02 0.00148 Inference: As the β is less than 1 it can be said that the scheme is less risky.54 0.00 0.81 0.00 2. PG DEPARTMENT OF MANAGEMENT STUDIES.01953 which means there is almost no variation in the returns with the index.25 = 0.00 0.01 0.02 0.06 3.03 0.25 -1. The standard deviation of the scheme is 0.02 0. The scheme is less volatile compared to the market.23 54.00 0.02 0.02 0.00 0. BANGALORE.00 -0.02 0.81 ΣXY σ β = 0.02 0.36 54.01953 = 0. 48 .23 0.02 0. ATRIA INSTITUTE OF TECHNOLOGY.02 0.00 0.06 0.08 0.84 0.00 0.04 0.00148 percent change in the scheme return.25 N ΣX Σd Σd² ΣY ΣY² = = = = = = 26 0.00 0. For One percent change in the market index causes 0.04 0.02 0.84 0.0.06 0.36 0.00 0.04 5.83 5.84 0.00 1.02 0.84 0.01 -0.14 -0.

92% 96.89.07% 1.43% 117.08% 152.18 7379.369 104.00% 24.00% 6.77 7479.16% 3.75 6984.90% 187.50% 120.29% 26.69% 32.72% -164. 49 .64 7212.63 7254.227 100.07% 2.225 Returns 41.636 101.37% 1.958 105.65% -60.24% 101.284 103.82 7230.538 107.778 101.45 7237.02 7392.51% 115.88% 229.9 7461.49 Returns 16.06% 134.594 99.87% 9.663 99.572 102.50% 17.123 106. ATRIA INSTITUTE OF TECHNOLOGY.04% 16.60% 64.85 7403.86% 9.2 7343.917 104.61 7014.11 7002.26% 112.02% . BANGALORE.558 99.872 102.67% -2.87 6972.80% Total Index Returns 7121.92% 2.21% 280.48 7468.468 103.74 7133.11% -447.220 100.94% -22.48% PG DEPARTMENT OF MANAGEMENT STUDIES.72 7268.24% 58.08 7356.702 104.797 101.06 7389.39% -352.570 104.71% 111.The table showing the daily returns of S&P CNX Nifty Index and HDFC capital builder fund Date 03-Dec-07 04-Dec-07 05-Dec-07 06-Dec-07 07-Dec-07 10-Dec-07 11-Dec-07 12-Dec-07 13-Dec-07 14-Dec-07 17-Dec-07 18-Dec-07 19-Dec-07 20-Dec-07 24-Dec-07 26-Dec-07 27-Dec-07 28-Dec-07 31-Dec-07 01-Jan-08 Net Asset Value 100.30% -17.65% 379.

07 -0.06 0.17 -0.64 1.27 3.03 -0.974 107.03 1.00 7.89 -0.02 0.03 0.64 1.11 0.05% 153.09 0.35 0.76 1.42 1.33 0.01 0. 50 .64 -0.18 -0.81 0.15 -0.19 0.02 2.23 0.52 -0.42 1.15 -0.02 7626.76% 7511.79 1.26 1.65 2.37 0.89 7623.63% 7.97 0.41 7632.17 -4.86% 55.05 5.25 0.79 0.12 1.16.70 0.01 0.30 0. BANGALORE.12 1.24 d2 0.20 1.00 0.45 1.376 108.41% .744 124.81 57.32 X*Y 0.09 0.06 -0.18% 0.13 2.33 -3.85 -0.33 -0.31 1.53 -0. ATRIA INSTITUTE OF TECHNOLOGY.70% -125.02 2.26 7642.29 1.94 0.00 0.57 Y2 0.20 1.34 1.33 -0.71 PG DEPARTMENT OF MANAGEMENT STUDIES.75% -162.17 -0.03 0.81 1.974 108.00% -0.11 0.17 1.02 0.10 1.76 0.89 3.36 0.19% -183.50 0.28 0.09 0.87 -0.37 2.559 108.35 0.39 0.31 1.67% 13.03 1.55 Y 0.06 15.53 0.00% -104.33 -0.54 0.60 0.24 d 0.03 2.11 12.06 7511.07 1.59 1.17 1.42 1.33 0.42% The table showing the calculations of Beta and Standard deviation of HDFC capital builder fund X 0.00 0.26 1.03 0.01 -0.04 0.64 7483.477 104.52 -0.87 -0.23 2.07 14.89 -0.48 -0.81 1.93% -25.01 10.02-Jan-08 03-Jan-08 04-Jan-08 07-Jan-08 08-Jan-08 09-Jan-08 10-Jan-08 108.33 -3.16 0.00 0.06 0.11 0.59 1.833 106.07 -0.02 -1.03 20.

23167 = 0.54 0. BANGALORE.26 5.00 1.56 = 1.01 0.00 -0. ATRIA INSTITUTE OF TECHNOLOGY.63 4.15 0.62 = = = = = = 0.36 54.00 2. The standard deviation of the scheme is 1.99 41.26 -1.06 3.03 0. For One percent change in the market index causes 0.65 40.17 0.00 -1. 51 .55 0.32 2.81 = 41. PG DEPARTMENT OF MANAGEMENT STUDIES.23167 which means there is almost no variation in the returns with the index.30 0.17 0.75582 0.56 Inference: As the β is less than 1 it can be said that the scheme is less risky.08 0.58 2.02 0.55 0.62 N ΣX Σd Σd² ΣY ΣY² -0.85 0.10 1.36 0.26 26 4.26 -1.62 40.00 -1.23 54.23 ΣXY σ β 0.81 0.62 4.14 -0.-0.75582 percent change in the scheme return. The scheme is less volatile compared to the market.25 -1.83 5.00 1.05 -1.00 0.63 4.05 -1.

72% -164.0423 13.94% -22.11% -447.0636 13.0659 13.65% 379.75 6984.0862 13.82 7230.69% 32.72 7268.0986 13.2 7343.0367 13.85 7403.1049 13.61 7014.1223 13.108 13.04% 3.37% 3.81% 2.87 6972.86% 9.24% 101.02 7392.00% 24. BANGALORE.73% 2.22% 2.22% 2.9 7461.07% 2.0456 13.22% 2.88% 229.92% 96.63 7254.08% 152.18 7379.04% 16.1122 13.22% 7.71% 111.77 7479.1317 Returns 2.1276 13.30% 1.45 7237.06 7389.0606 13.12% Total Index Returns 7121.20% 7.0686 13.50% 17.76% 2.0579 13.48 7468.20% 2.29% 9.74 7133.07% 2.00% PG DEPARTMENT OF MANAGEMENT STUDIES.08 7356.64 7212.48% 4.29% 26.30% -17.67% -2.49 7511.53% 2.11 7002.0394 13. 52 .0485 13.The table showing the daily returns of S&P CNX Nifty Index and HDFC floating rate income fund long term Date 03-Dec-07 04-Dec-07 05-Dec-07 06-Dec-07 07-Dec-07 10-Dec-07 11-Dec-07 12-Dec-07 13-Dec-07 14-Dec-07 17-Dec-07 18-Dec-07 19-Dec-07 20-Dec-07 24-Dec-07 26-Dec-07 27-Dec-07 28-Dec-07 31-Dec-07 01-Jan-08 02-Jan-08 Net Asset Value 13.07% 6.0832 13.65% -60.0803 13.70% 4. ATRIA INSTITUTE OF TECHNOLOGY.06 Returns 16.39% 57.0774 13.

60 0.02 0.30 -0.00 0.01 0.09 0.02 0.07 0.17 1.33 -0.28% 7.67% 13.00 0.89 7623.08 0.02 -0.26 1.00 0.00 0.33 0.41 7632.01 0.1379 13.05% 153.03 0.1509 13.00 0.11 0.09 0.00 0.05 0.54 Y2 0.1479 13.02 0.00 0.02 0.1349 13.01 0.00 0.02 0.02 0.37 2. ATRIA INSTITUTE OF TECHNOLOGY.64 -0.02 0.03 2.04 0.01 -0.02 0.11 0.07 0.17 -4.154 13.23 2.48 -0.02 0.08 0.00 0.81 -0.28% 2.00 0.00 0.02 0.01 0.02 0.07 0.02 0.02 0.09 0.03 0.03 0.03 20.36 X*Y 0.00 1.05 0.00 2.36% 7511.05 0.02 0.93% -25.00 0.00 0.00 0.07 0.02 0.02 0.00 0.36 0.03-Jan-08 04-Jan-08 07-Jan-08 08-Jan-08 09-Jan-08 10-Jan-08 13.02 0.00 0.02 0.00 0.04 0.02 0.57 0.26 7642.42% The table showing the calculations of Beta and Standard deviation of HDFC floating rate income fund long term X 0.06 0.29 1.01 0.02 0.01 0.32 0. BANGALORE.02 0.94 0.04 0.03 0.02 0.97 0.02 0.18 -0.70 0.79 1.64 7483.61% 2. 53 .1571 2.03 0.02 0.02 7626.36% 2.05 5.01 0.00 Y 0.27 3.63% 7.00 0.00 0.02 0.36 0.03 0.02 0.00 0.02 d2 0.19% -183.00 0.07 0.07 14.03 1.02 0.03 0.25 0.53 0.07 0.00 0.00 0.03 0.44% 2.00 0.04 PG DEPARTMENT OF MANAGEMENT STUDIES.02 -1.16 0.02 d 0.00 -0.03 0.03 0.23 0.00 0.

0.08 0.02 0.02 0.02 0.92

0.08 0.02 0.02 0.02 0.92

0.01 0.00 0.00 0.00 0.04

0.08 0.14 -0.25 -1.83 5.23

0.01 0.02 0.06 3.36 54.81

0.01 0.00 -0.01 -0.04 0.29

N ΣX Σd Σd² ΣY ΣY²

= = = = = =

26 0.92 0.92 0.04 5.23 54.81

ΣXY σ β

= 0.29 = 0.02186 = 0.00187

Inference: As the β is less than 1 it can be said that the scheme is less risky. For One percent change in the market index causes 0.00187 percent change in the scheme return. The scheme is less volatile compared to the market. The standard deviation of the scheme is 0.02186 which means there is almost no variation in the returns with the index.

PG DEPARTMENT OF MANAGEMENT STUDIES, ATRIA INSTITUTE OF TECHNOLOGY, BANGALORE.

54

The table showing the daily returns of S&P CNX Nifty Index and HDFC prudence fund

Date 03-Dec-07 04-Dec-07 05-Dec-07 06-Dec-07 07-Dec-07 10-Dec-07 11-Dec-07 12-Dec-07 13-Dec-07 14-Dec-07 17-Dec-07 18-Dec-07 19-Dec-07 20-Dec-07 24-Dec-07 26-Dec-07 27-Dec-07 28-Dec-07 31-Dec-07 01-Jan-08 02-Jan-08 03-Jan-08

Net Asset Value 152.673 153.402 156.148 156.622 156.732 157.195 158.877 160.152 160.141 159.945 156.061 156.169 155.83 155.553 157.346 159.298 159.741 160.687 162.849 164.064 165.475 166.03

Returns 47.75% 179.01% 30.36% 7.02% 29.54% 107.00% 80.25% -0.69% -12.24% -242.83% 6.92% -21.71% -17.78% 115.27% 124.06% 27.81% 59.22% 134.55% 74.61% 86.00% 33.54%

Total Index Returns 7121.74 7133.64 7212.82 7230.63 7254.45 7237.85 7403.77 7479.08 7356.2 7343.61 7014.87 6972.75 6984.11 7002.72 7268.18 7379.02 7392.06 7389.9 7461.48 7468.49 7511.06 7511.02

Returns 16.71% 111.00% 24.69% 32.94% -22.88% 229.24% 101.72% -164.30% -17.11% -447.65% -60.04% 16.29% 26.65% 379.08% 152.50% 17.67% -2.92% 96.86% 9.39% 57.00% -0.05%

PG DEPARTMENT OF MANAGEMENT STUDIES, ATRIA INSTITUTE OF TECHNOLOGY, BANGALORE.

55

04-Jan-08 07-Jan-08 08-Jan-08 09-Jan-08 10-Jan-08

166.484 166.365 163.751 162.846 161.108

27.34% -7.15% -157.12% -55.27% -106.73%

7626.41 7632.26 7642.89 7623.64 7483.81

153.63% 7.67% 13.93% -25.19% -183.42%

The table showing the calculations of Beta and Standard deviation of HDFC prudence fund

X 0.48 1.79 0.30 0.07 0.30 1.07 0.80 -0.01 -0.12 -2.43 0.07 -0.22 -0.18 1.15 1.24 0.28 0.59 1.35 0.75 0.86 0.34 0.27

d 0.48 1.79 0.30 0.07 0.30 1.07 0.80 -0.01 -0.12 -2.43 0.07 -0.22 -0.18 1.15 1.24 0.28 0.59 1.35 0.75 0.86 0.34 0.27

d2 0.23 3.20 0.09 0.00 0.09 1.14 0.64 0.00 0.01 5.90 0.00 0.05 0.03 1.33 1.54 0.08 0.35 1.81 0.56 0.74 0.11 0.07

Y 0.17 1.11 0.25 0.33 -0.23 2.29 1.02 -1.64 -0.17 -4.48 -0.60 0.16 0.27 3.79 1.53 0.18 -0.03 0.97 0.09 0.57 0.00 1.54

Y2 0.03 1.23 0.06 0.11 0.05 5.26 1.03 2.70 0.03 20.04 0.36 0.03 0.07 14.37 2.33 0.03 0.00 0.94 0.01 0.32 0.00 2.36

X*Y 0.08 1.99 0.07 0.02 -0.07 2.45 0.82 0.01 0.02 10.87 -0.04 -0.04 -0.05 4.37 1.89 0.05 -0.02 1.30 0.07 0.49 0.00 0.42

PG DEPARTMENT OF MANAGEMENT STUDIES, ATRIA INSTITUTE OF TECHNOLOGY, BANGALORE.

56

23 0.01 0.55 -1.02 0.08 0.57 -0.01 2.57 -0.22 0.91 0.23 54. 57 . BANGALORE. PG DEPARTMENT OF MANAGEMENT STUDIES.59 = 0.49 5.07 5.83 5.47416 Inference: As the β is less than 1 it can be said that the scheme is less risky. The scheme is less volatile compared to the market.14 -0.81 -0.07 -1. For One percent change in the market index causes 0.89337 which means there is almost no variation in the returns with the index.96 26.49 -0.14 21. The standard deviation of the scheme is 0.49 21.91 5.01 -0.49 0.36 54.55 -1.06 3. ATRIA INSTITUTE OF TECHNOLOGY.-0.25 -1.07 -1.47416 percent change in the scheme return.31 1.89337 = 0.47 0.14 1.81 ΣXY σ β = 26.59 N ΣX Σd Σd² ΣY ΣY² = = = = = = 26 5.07 5.

50% 17. 58 .96% -0.14% 0. BANGALORE.87 6972.72% .3771 16.447.92% 96.46% 35.08 7356.3632 16.41% 38.17% 33.00% 0.82 7230.4796 16.4964 16.4082 16.79% 13.8168 16.05% 153.29% 26.8182 16.06 7389.58 16.53% 7.6354 16.22.7496 16.83% 10.71% 2.43% -16.04% 16.60.63% 7.85 7403.00% 24.6838 16.69% 32.30% .65% .79% 8.18 7379.2 7343.49 7511.41 7632.4477 16.9 7461.3311 16.31% 7.65% 379.51% 14.74 7133.11 7002.4258 16.08% 152.4923 16.81% 39.93% .8338 Returns 5.94% .64 7212.61 7014.34% 10.77 7479.3401 16.67% .5219 16.11% .71% 111.89 7623.6995 16.4218 16.4692 16.63 7254.33% 10.86% 9.02 7626.39% 57.48 7468.26 7642.24% 101. ATRIA INSTITUTE OF TECHNOLOGY.75 6984.02 7392.64% 2.2.25.72 7268.49% 15.49% 11.64 Returns 16.88% 229.4652 16.67% 13.05% 7.7119 16.4081 16.44% 40.11% Total Index Returns 7121.19% PG DEPARTMENT OF MANAGEMENT STUDIES.164.4069 16.45 7237.14% 8.29% -8.17.06 7511.3952 16.43% 6.The table showing the daily returns of S&P CNX Nifty Index and HDFC gilt fund Date 03-Dec-07 04-Dec-07 05-Dec-07 06-Dec-07 07-Dec-07 10-Dec-07 11-Dec-07 12-Dec-07 13-Dec-07 14-Dec-07 17-Dec-07 18-Dec-07 19-Dec-07 20-Dec-07 24-Dec-07 26-Dec-07 27-Dec-07 28-Dec-07 31-Dec-07 01-Jan-08 02-Jan-08 03-Jan-08 04-Jan-08 07-Jan-08 08-Jan-08 09-Jan-08 Net Asset Value 16.

03 20.07 0.36 0.03 0.01 0.07 -0.35 0.00 0.11 0.32 0. 59 .14 0.01 0.53 0.61 0.18 -0.08 0.17 0.00 0.08 0.06 0.17 0.23 0.02 0.02 0.39 0.00 0.42% The table showing the calculations of Beta and Standard deviation of HDFC gilt fund X 0.39 0.01 d2 0.27 3.08 0.00 0.183.03 0.17 -4.54 0.16 0.13 0.04 -0.25 0.01 d 0.01 0.19% 7483.01 0.11 0.00 0.48 -0.10-Jan-08 16.02 0.03 0.33 -0.57 0.11 0.00 1.00 0.02 0.07 -0.01 0.14 -0.02 0.70 0.60 0.09 0.11 0.01 0.9368 61.05 5.08 0.11 0.01 0.01 0.06 0.35 0.15 0.03 0.03 -0.08 0.15 0.39 0.08 0.14 Y2 0.02 0.97 0.02 0.60 -0.36 0.17 0.01 0.16 0.02 0.04 0.00 Y 0. BANGALORE.11 0.33 0.03 0.13 0.29 1.64 -0.06 0.08 0.12 0.41 -0.94 0.00 0.07 14.41 -0.04 0.81 .00 0.07 0.06 0.08 -0.37 2.02 0.06 0.33 0.29 0.39 0.11 0.01 0.17 1.23 2.16 0.26 1.02 X*Y 0.08 0.02 -1.06 0.02 0.03 1.01 0.01 0.04 0.01 0.33 0.02 -0.32 0.14 0.00 PG DEPARTMENT OF MANAGEMENT STUDIES.01 0.02 0.79 1.11 0.01 0.03 2.15 0. ATRIA INSTITUTE OF TECHNOLOGY.00 2.08 -0.04 0.11 0.

61 3.01320 Inference: The beta of the scheme is negative.0.36 54. This means that the scheme is moving in the opposite direction to that of the market.81 ΣXY σ β = = = 0.10 0. PG DEPARTMENT OF MANAGEMENT STUDIES.83 5. If the market declines by 1 percent then the scheme gains by 0.81 -0.06 3.01 0.03000 0.37 1. ATRIA INSTITUTE OF TECHNOLOGY.12 0. BANGALORE.03 N ΣX Σd Σd² ΣY ΣY² = = = = = = 26 3. The standard deviation of the scheme is 0.16994 -0. 60 .23 0.65 1.61 3.0132 percent.10 0. which means the fund does not have much variation in the returns.65 0.03 -1.23 54.65 0.16994.26 5.26 -0.65 3.25 -1.

ATRIA INSTITUTE OF TECHNOLOGY.39% 57.77 7479.44% 2.84% 10.94% .0.05% 153.29% 26.74 7133.3487 14.11% -447.3103 14.13% 0.11 7002. BANGALORE.15% 2.41 7632.3584 14.3123 14.48 7468.64 7212.00% 24.3615 14.63 7254.87 6972.88% 229.07% 2.94% 2.3698 14.4139 14.2.2934 14.18 7379.24% 101.50% 17.30% .The table showing the daily returns of S&P CNX Nifty Index and HDFC short term plan fund Date 03-Dec-07 04-Dec-07 05-Dec-07 06-Dec-07 07-Dec-07 10-Dec-07 11-Dec-07 12-Dec-07 13-Dec-07 14-Dec-07 17-Dec-07 18-Dec-07 19-Dec-07 20-Dec-07 24-Dec-07 26-Dec-07 27-Dec-07 28-Dec-07 31-Dec-07 01-Jan-08 02-Jan-08 03-Jan-08 04-Jan-08 07-Jan-08 Net Asset Value 14.63% 7.22.3261 14.45 7237. 61 .2965 14.86% 9.17% 2.52% 7.3888 14.88% 6.3118 14.06 7511.49% 6.17.4170 14.59% 2.00% .78% 13.82 7230.4211 14.60.3104 14.96% 6.3331 14.20 7343.65% .08% 152.26 Returns 16.02 7392.71% 111.2875 14.61 7014.2897 14.3095 14.4039 14.22% 10.85 7403.61% 1.07% 0.90 7461.67% PG DEPARTMENT OF MANAGEMENT STUDIES.72 7268.3217 14.3001 14.08 7356.04% 16.57% 3.06 7389.96% Total Index Returns 7121.4369 Returns 1.76% 2.44% 10.72% -164.92% 96.67% .65% 379.75 6984.69% 32.02 7626.3296 14.98% -1.54% 2.16% 5.49 7511.

00 -0.53 0.48 -0.23 0.26 1.11 0.54 0.06 0.01 -0.01 0.07 0.02 0.07 14.02% 7642.03 0.17 -4.25 0.01 -0.10 0.37 2.33 -0.07 0.00 0.02 0.00 0.4409 14.00 0.00 0.33 0.02 0.07 0.04 0.41 0.03 2.02 -1.08-Jan-08 09-Jan-08 10-Jan-08 14.01 -0.00 0.03 0.00 0.13 0.00 Y 0.03 20.11 0.07 0.4373 14.00 0.57 0.02 0.29 -0.02 0.07 0.01 0.00 0.03 0.00 1.01 0.04 0.02 0.02 X*Y 0.02 0.00 0.03 0.02 0.25.18 -0.29 1.02 0.07 0.11 0.03 0.23 2.00 0.79 1.11 0.00 0.04 0.05 5.60 0.03 0.02 0.01 0.06 0.01 0.13 0.03 1.00 0.02 0.89 7623.00 0.03 0.36 0.00 PG DEPARTMENT OF MANAGEMENT STUDIES.14 Y2 0.00 0.17 1.00 0.00 0.02 0.01 0.00 0.32 0.03 0.01 0.00 0.01 0.00 d2 0.16 0.00 0. 62 .06 0. ATRIA INSTITUTE OF TECHNOLOGY.09 0.00 0.11 0.01 0.64 -0.10 0.4467 0.36 0.19% -183.97 0.00 0.27 3.93% .00 0.01 0.00 0.03 0.02 0.02 0.03 0.02 0.02 0.07 0.94 0.13 0.00 2.64 7483. BANGALORE.03 0.02 0.10 0.00 0.03 0.70 0.02 0.00 0.08 0.81 13.42% The table showing the calculations of Beta and Standard deviation of HDFC short term plan fund X 0.07 0.00 0.00 d 0.28% 2.02 0.11 0.00 0.01 0.49% 4.03 0.

02 0.08 5.04 1.02 0.11 0.36 54.81 -0.03725 which means there is almost no variation in the returns with the index.0. 63 . ATRIA INSTITUTE OF TECHNOLOGY.43 N ΣX Σd Σd² ΣY ΣY² = = = = = = 26 1.23 0.03725 = 0.43 = 0.00383 percent change in the scheme return.83 5.07 0.11 0.25 -1.06 3. BANGALORE. PG DEPARTMENT OF MANAGEMENT STUDIES.11 1.11 0. The scheme is less volatile compared to the market.00 0. The standard deviation of the scheme is 0.08 -0.00 0.01 -0.04 1.00383 Inference: As the β is less than 1 it can be said that the scheme is less risky.81 ΣXY σ β = 0. For One percent change in the market index causes 0.23 54.

00383.01953.  The HDFC Equity Fund has not given stable returns to the investors.1237.01320 (Negative beta).85433.  The Short Term Plan Fund has given fewer returns to the investors.00187. The Standard Deviation of the fund is 1.CHAPTER-5 SUMMARY OF FINDINGS The research project was done about HDFC Companies and the data collected for the project was for a period of forty days i.  The Gilt Fund has given stable returns for the investors. The Standard Deviation of the fund is 0. The Standard Deviation of the fund is 0. It is moderate riskier because the beta of the fund is 0.00148. The Standard Deviation of the fund is 0. It has very low risk & the beta of the fund is -0. from 10 th Dec 2007 to 20th Jan 2008.16994. PG DEPARTMENT OF MANAGEMENT STUDIES.  The HDFC Floating rate Income Fund has given stable returns for the investors.  The Liquid Fund has given below average returns for the investors in this period. The beta of the fund is 0. And on the collected data. The Standard Deviation of the fund is 0. study was done and the following were the findings:  The HDFC Balanced Fund has not given stable returns to the investors.03725. The beta of the fund is 0. ATRIA INSTITUTE OF TECHNOLOGY.69971. The beta of the scheme is 0. BANGALORE. The Standard Deviation of the fund is 0.02186. The beta of the fund is 0.e. 64 .47546.

The Standard Deviation of the fund is 0. BANGALORE. The HDFC Tax saver Fund has not given stable returns to the investors. The Standard Deviation of the fund is 1.75582. 65 .  PG DEPARTMENT OF MANAGEMENT STUDIES.06735. The Standard Deviation of the fund is 1. It has very low risk & the beta of the fund is 0.6899. The beta of the fund is 0. The Prudence Fund has not given stable returns for the investors.47416.  The Capital Builder Fund has given fewer returns to the investors. The beta of the scheme is 0.23167. ATRIA INSTITUTE OF TECHNOLOGY.89337.

CHAPTER-6 RECOMMENDATIONS & CONCLUSIONS RECOMMENDATIONS:  The Beta of HDFC Balanced Fund is 0. The company should educate the HNIs.00187 hence the scheme is less volatile than the market. Therefore the Company should try to reduce the high risk associated with HDFC Balanced Fund by wisely selecting the portfolio for investments and thereby reducing the risks. The scheme should generate reasonable returns while maintaining safety and providing investor superior liquidity. it describes the volatility attached with this particular scheme the company’s fund managers should take necessary steps to in the interests of the investors so as not to expose their investments to such magnitude of volatility. PG DEPARTMENT OF MANAGEMENT STUDIES.00148.  HDFC Floating rate Income Fund has a beta of 0.00383 so it means these schemes are less volatile. BANGALORE. so the company should try to reduce the risk involved by reducing the standard deviation of the fund. Although it is not beating the index it is giving consistent returns are possible.  The HDFC Liquid Fund & Short Term Plan Funds beta is 0. Banks. So the companies should harness on it by excessively advertising its benefits and in turn invite investors to invest whose risk appetite is less. 66 . Corporates.  The standard deviation of the HDFC Liquid Fund Short Term Plan Funds is high.47546. 0.e. Since HDFC Balanced Fund has very high Beta i. ATRIA INSTITUTE OF TECHNOLOGY. and other cooperative societies about the merits of this product and try to induce them to invest.

BANGALORE. HDFC Equity Fund.  The standard deviation of the HDFC Balanced Fund. The HDFC Gilt Fund has the negative betas -0.00148 and 0. 0.00383.0132 that means the fund is less volatile than the market but its inconsistency in movement with the market is a major concern.0132 has given stable returns to the investors. hence can be said the schemes are volatile compared to the market. The scheme which contains beta is less than one is called defensive asset. The beta of the fund is negative which means the fund moves in the opposite direction to that of the market. PG DEPARTMENT OF MANAGEMENT STUDIES. CONCLUSIONS: From the findings it can be concluded that:  In the above selected schemes of HDFC Mutual Fund all nine Schemes are defensive assets and the Gift Fund has negative beta. Tax saver Plan fund Capital fund are high which means the returns of these funds have varied from the average return of the respective funds.00187. ATRIA INSTITUTE OF TECHNOLOGY. It is better to maintain the beta at same level and advertise more to encourage investing in the schemes. The HDFC Gilt Fund has given stable returns the beta of the funds are  -0. 67 .  The beta of HDFC Floating rate Income Fund HDFC Liquid Fund Short Term Plan Funds Are 0.

BANGALORE. ATRIA INSTITUTE OF TECHNOLOGY.PG DEPARTMENT OF MANAGEMENT STUDIES. 68 .

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