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PREFACE

“Experience is the best teacher.” This saying is very well applicable in everyone’s life. Therefore as a student of management it must apply to me also. Then the question arises that from where we can get this experience. Obviously we must undergo practical Training. To serve this purpose I had undergone two months summer training at HDFC assets Management Company limited and as an outcome I have prepared this project report. This project report on “mutual fund awareness in retail investors of HDFC assets Management Company in Surat” is as per syllabus prescribed by Veer Narmad south Gujarat University for MBA students. This project also deals with various activities of HDFC assets Management Company limited. The experience of this training will be useful in my future and findings of this particular project will be Helpful to take decision regarding to marketing and advertising of mutual fund schemes To HDFC assets Management Company limited.

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Objectives of Study
Without any aim or objective, no activity can exist, in the same direction of preparation of this report on HDFC assets Management Company limited. In different functional areas & research on the “mutual fund awareness in retail investors of HDFC assets Management Company limited in Surat” is based on the following objectives: -

1. My primary objective is to acquire primary functions of management like Planning, Organizing, Directing and controlling from various functional areas such as Finance, Human Resource, Marketing, and Sales etc. 2. Whatever we are taught in the classrooms, there is a limitation that book can only give theoretical concept or knowledge and it has a limited view of practically. So, the other important objective of this training is to know about practical aspect and to know how a company actually works in practical situation. 3. To know the mutual fund awareness level of the retail investors who are invest in HDFC assets Management Company limited.

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Limitations of Study
There is no activity without any limitations. 1. Though every one used to be very co-operative but every detail was unable to be disclosed to me as the officials has to maintain secrets of the company. 2. It is difficult to cover all the function of the company. 3. The analysis and conclusion made by me as per my limited understanding and there may be something variation in the actual situation. 4. Because of the limited time period, the survey work was conducted in the Surat region and the sample size was taken as 100 respondents only. 5. In this rapidly changing turbulent era the suggestions and recommendations drawn out today might prove inadequate or improper tomorrow; this is likely to limit its effectiveness.

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EXECUTIVE SUMMARY 4 .

valuation and necessary information for generating base for conclusion. The report is specially oriented to particular area. strategy. For me it is all about to understand a customer and market of mutual fund industry. distribution. to be effective agent. some do’s and don’ts about mutual funds while investing. types. Asset allocation. though it is representing the strong base of Investment management-which covers different investment avenues. scenario. portfolios. history. their handling contribution. In short all efforts which was made to make this report explains “WORK IS WORSHIP” 5 . perfection.how they are formed. accounting. and patience. Mutual funds. myths. and related risk factors. Company details and its progress and its interpretation base for analysis. and questionnaire. taxation. which helped a lot in consumer. findings. survey analysis. And at last but not the least the collected data from city and their interpretation. knowledge. trends. Tips to effectively sell the mutual funds. advantages.Executive Summary The entire report is an unforgettable journey of support. dedication. conclusion. experience. and even disadvantages of them.

CONTENTS Sr. 1 2 3 4 Name of Table Objectives of Study Limitations of study Executive summary Company details  About the Company  Sponsors of HDFC Assets Management Company  Management of HDFC Assets Management Company  Offices of HDFC assets management company limited Product details Future scenario Industry details  Introduction  History of Mutual Fund Industry  Customers Profile of mutual fund industry  Positioning Strategy of mutual fund industry  Promotional Tools Employed by various mutual fund companies  Facts About Mutual Fund Mutual fund  Introduction to Mutual Fund  Mutual Fund Cycle  Critical view about Mutual Fund  Why Investor Needs Mutual Fund  Mutual Fund Risk 6 Page No. 5 6 8 11 12 13 14 17 24 32 33 34 36 40 41 42 45 46 47 49 50 54 55 5 6 7 8 . No.

9 10 11 12 13 Types of Mutual Fund Structure of Mutual Fund Other various assets management companies details Regulatory Aspects Research  Purpose of the Research  Research Objective Research Methodology  Research Design  Sources of Data  Sampling Plan  Data Collection Method Data analysis and findings Findings Limitations Conclusions Recommendations Annexure Glossary List of Table List of Graphs Bibliography 58 60 64 67 71 72 73 74 75 76 78 80 81 92 95 97 100 103 105 107 108 109 14 15 16 17 18 19 20 21 22 23 24 7 .

COMPANY DETAILS 8 .

HDFC PRUDENCE FUND etc. Since then it focused on different class of schemes for many years and launched several innovative products that went to become bourgeoning categories in the Indian mutual fund industry.) 9 . HDFC assets Management Company limited have offices in 29 cities and currently manage assets in excess of Rs 36146. HDFC TOP 200 FUND.About the Company: An HDFC asset Management Company limited is well-established fund house. HDFC assets Management Company limited launched its scheme HDFC EQUITY FUND in the year January 1995. (May 2007. and HDFC BALANCED FUND. HDFC Assets Management Company limited is sponsored by Housing Development Finance Corporation Limited (HDFC) and Standard life investments limited.67 cores. Some of these were HDFC GROWTH FUND.

when an agreement was signed with HDFC to launch an insurance joint venture.g. property identification. Standard Life Investments was launched as an 10 .000 deposit agents as at March 31. Of these activities. housing finance remains the dominant activity. The company re-entered the Indian market in 1995. USAID. the Board of The Standard Life Assurance Company recommended that it should demutualise and Standard Life plc float on the London Stock Exchange. On April 2006. promoted by HDFC was the first life insurance company in the private sector to be granted a Certificate of Registration (on October 23.Sponsors of HDFC Assets Management Company:Housing Development Finance Corporation Limited (HDFC) HDFC was incorporated in 1977 as the first specialized Mortgage Company in India. At a Special General Meeting held in May voting members overwhelmingly voted in favor of this. HDFC has received the highest rating for its bonds and deposits program for the twelfth year in succession. training and consultancy. The company was present in the Indian life insurance market from 1847 to 1938 when agencies were set up in Kolkata and Mumbai. HDFC has a client base of around 9. domestic term loans from banks and insurance companies. ADB and KfW. IFC (Washington). bonds and deposits. It also provides property related services (e. over 91. HDFC provides financial assistance to individuals. corporates and developers for the purchase or construction of residential housing.000 shareholders and 50. HDFC Standard Life Insurance Company Limited. The Court of Session in Scotland approved this in June and Standard Life plc floated on the London Stock Exchange on 10 July 2006. Standard Life Investments Limited The Standard Life Assurance Company was established in 1825 and has considerable experience in global financial markets. international syndicated loans. HDFC has raised funds from international agencies such as the World Bank.5 lack borrowers. 2007. DEG. around 1 million depositors. sales services and valuation). 2000) by the Insurance Regulatory and Development Authority to transact life insurance business in India.

HDFC Asset Management Company Limited: HDFC assets Management Company limited was incorporated under the Companies Act. Korea. In terms of the Investment Management Agreement. The company operates in the UK. Ireland and the USA to ensure it is able to form a truly global investment view. Canada. Parekh Marg. property investments and various derivative instruments. Church gate. 11 . 1956.400 020. Standard Life Investments is a leading asset management company. Mumbai .161 crore. government and company bonds. Backbay Reclamation. of assets under management. as amended from time to time.investment management company in 1998. The paid up capital of the HDFC assets Management Company limited is Rs. the Trustee has appointed HDFC Asset Management Company Limited to manage the Mutual Fund. Management of HDFC Assets Management Company:- HDFC Trustee Company Limited: A company incorporated under the Companies Act. on December 10. Hong Kong. HDFC Trustee Company Limited is a wholly owned subsidiary of HDFC Limited. 2000. 2007. which includes a range of private and public equities. 3rd Floor.T. China. with approximately US$ 269 billion as at March 30. 2000. which in turn is a wholly owned subsidiary of Standard Life plc. H.75. In order to meet the different needs and risk profiles of its clients. 1956 is the Trustee to the Mutual Fund vides the Trust deed dated June 8. 1999. and were approved to act as an Asset Management Company for the Mutual Fund by SEBI on July 3. Standard Life Investments Limited manages a diverse portfolio covering all of the major markets world-wide. 169. The registered office of the HDFC assets Management Company limited is situated at Ramon House. It is a wholly owned subsidiary of Standard Life Investments (Holdings) Limited.

90 The HDFC Assets management company is managing 18 open-ended schemes of the Mutual Fund viz. HDFC assets Management Company limited is also managing the respective Plans of HDFC Fixed Investment Plan. HDFC Children's Gift Fund (HDFC CGF). HDFC Short Term Plan (HSTP). HDFC Equity Fund (HEF). HDFC Prudence Fund (HPF).The present share holding pattern of the HDFC Assets management company is as follows: Particulars HDFC Standard Life Investments Limited % of the paid up share capital 50. HDFC Top 200 Fund. HDFC Tax Saver (HTS). HDFC Gilt Fund (HGILT). HDFC Sovereign Gilt Fund (HSGF) and HDFC Cash Management Fund (HCMF). HDFC High Interest Fund (HHIF). HDFC Index Fund. HDFC Liquid Fund (HLF). (HT200). HDFC Growth Fund (HGF). HDFC Capital Builder Fund (HCBF). a closed ended Income Scheme. HDFC Balanced Fund (HBF). HDFC Floating Rate Income Fund (HFRIF). HDFC Income Fund (HIF).10 49. HDFC Tax Plan 2000 (HTP). 12 .

vadodara. 1993.The HDFC Assets management company has obtained registration from SEBI vide Registration No.  HDFC assets Management Company Have 200 and more distributors in Surat.  In Gujarat HDFC assets Management Company is located at Ahmadabad.m.  HDFC assets Management Company is working from 9:30 a.  HDFC assets Management Company Provide account statements to investors according to investor’s requirement. 2000 to act as a Portfolio Manager under the SEBI (Portfolio Managers) Regulations. The HDFC Assets management company is also providing portfolio management / advisory services and such activities are not in conflict with the activities of the Mutual Fund  HDFC assets Management Company’s punch line is “continuing a tradition of trust”. . Rajkot.PM / INP000000506 dated December 22. onwards. Surat. 13 .

 HDFC assets Management Company Provide good services to investors. 14 .

Connaught Place.110001.com Andhra Pradesh 15 . 3rd Floor. 13.com HDFC Mutual Fund . Tolstoy Marg. Church gate Mumbai 400020.Hyderabad 6-3-883/7. New Delhi .530003.800001.Offices of HDFC ASSETS MANAGEMENT COMPANY LIMITED INVESTOR SERVICE CENTRES/ OFFICIAL POINTS OF ACCEPTANCE FOR HDFC MUTUAL FUND HDFC Mutual Fund . Somajiguda.Mumbai * REGISTERED OFFICE Ramon House.Visakhapatnam Ground Floor.500282. H. Waltair Main Road..com HDFC Mutual Fund . Visakhapatnam . 2nd Floor. Email:serviceshyderabad@hdfcfund. (Patna X-Ray Clinic).T Parekh Marg. Siripuram. 169. Saigopal Arcade. Opp Waltair Club.New Delhi New Delhi 4th Floor. Email:servicesdelhi@hdfcfund.Patna Bihar Rani Plaza Apartment. Exhibition Road.com HDFC Mutual Fund . HDFC Mutual Fund . Mohan Dev Bldg. Email:servicespatna@hdfcfund. Email:servicesvizag@hdfcfund. Saphire Square. Backbay Reclamation. Patna . Hyderabad .

Email:servicesahmedabad@hdfcfund. Bangalore .com HDFC Mutual Fund .114. 99 & 100. Krishna Building. Behind Susheela Building.360001. Email:servicesvadodara@hdfcfund. Surat . Bistupur. Jamshedpur . Opp Athwa Gate Police Station. Ahmedabad . "K Road". Email:servicesbangalore@hdfcfund.com HDFC Mutual Fund – Bangalore No. Megha House. Gokulesh. Email:servicesrajkot@hdfcfund.com HDFC Mutual Fund .395001. Panaji .Vadodara Upper Ground Floor. Opp. Dr Radha Krishnan Road.com HDFC Mutual Fund – Jamshedpur Jharkhand Gayatri Enclave.com HDFC Mutual Fund . Jolly Plaza.U3.Goa Goa A3.P.390007. Email:servicessurat@hdfcfund. Mithakhali Six Roads. Rajkot . 5.831001. Road. Email:servicesjamshedpur@hdfcfund. Jagnath Plot Corner. Education Dept. Prestige Towers. 1st Floor.com Gujarat Karnataka 16 . Besides Gruh House. Athwa Gate. R C Dutt Road. G.403001. Residency Road.Ahmadabad 2nd Floor. First Floor. Shiv Darshan.560025. 2nd Floor. Email:servicesgoa@hdfcfund.Rajkot 2nd Floor.Surat U1 .380009.HDFC Mutual Fund . Vadodara .com HDFC Mutual Fund .

Nagpur . 6 & 7. Email:servicesmumbai@hdfcfund.com HDFC Mutual Fund – Indore M1. Next to NIT Building. Email:servicesmangalore@hdfcfund. Upper Ground Floor. Mezzanine Floor. KMC.575001.com HDFC Mutual Fund – Nagpur 106-110. M2 & M3. Zone II.HDFC Mutual Fund – Mangalore UG -II.com HDFC Mutual Fund – Nashik Kerala Madhya Pradesh 17 . Mumbai . Email:serviceskochi@hdfcfund. Mangalore . Dinsha Vachha Road.682016.com Maharashtra HDFC Mutual Fund – Mumbai Mistry Bhavan.com HDFC Mutual Fund – Bhopal Ranjit Towers.462011. Indore .G. Maximus Commercial Complex.15 / 3.452001. Behind Ravipuram Bus Stop. Road. Light House Hill Road. Kingsway. Backbay Reclamation.com HDFC Mutual Fund – Kochi Ground Floor. Cinema Cum Commercial Complex. 1st Flr. Opp. Email:servicesindore@hdfcfund. 122. Email:servicesnagpur@hdfcfund.440001. Email:servicesbhopal@hdfcfund. Kochi . 2nd Floor. Churchgate. M. Shriram Shyam Towers. Sadar. Race Course Road. Sterling Arcade. 8 MP Nagar.400020. Bhopal .

Email:servicesbhubaneshwar@hdfcfund. Email:servicesjodhpur@hdfcfund. Ground Floor.com HDFC Mutual Fund – Jaipur Moondhra Bhavan.com Tamil Nadu HDFC Mutual Fund – Coimbatore 1371A. Coimbatore . University Road.751001.422002. Chopasani Road.141001.com Punjab Rajasthan 18 .com HDFC Mutual Fund – Pune HDFC House. 3 Ajmer Rd. Ludhiana . Feroze Gandhi Market. Nashik . Email:servicescoimbatore@hdfcfund.1 & G-2. Ground Floor. Email:servicesjaipur@hdfcfund. 2nd Floor. Email:servicesnashik@hdfcfund.com HDFC Mutual Fund – Bhubaneswar Orissa 2nd Floor.G. Email:servicespune@hdfcfund. Email:serviceschandigarh@hdfcfund. Chandigarh .160022. Opp. Shivaji Nagar. Sector 35-B.641018.302001. Jaipur .com HDFC Mutual Fund – Jodhpur Gulab Singh Building. Pune . Bhubaneshwar . "Suyojit Heights".com HDFC Mutual Fund – Chandigarh SCO 375-376. 11.342003. Nadar Building Trichy Road. Sharanpur Road. Rajiv Gandhi Bhavan.com HDFC Mutual Fund – Ludhiana SCO 122. Vinayak 96.411005. Email:servicesludhiana@hdfcfund. Janpath. Jodhpur .

226001.com 19 .com HDFC Mutual Fund – Kanpur 1st Floor.com HDFC Mutual Fund – Kolkata West Bengal Menaka Estate. 3 Red Cross Place. Email:serviceskolkata@hdfcfund. Kolkata . 1st Floor. Email:serviceschennai@hdfcfund. 760 Anna Salai. Lucknow . Email:serviceslucknow@hdfcfund.HDFC Mutual Fund – Chennai ITC Centre.700001. Kanpur .600002. 1st Floor. Behind SBI Main.com HDFC Mutual Fund – Lucknow 4 Shahnajaf Road. 16/80 D.208001. Uttar Pradesh Email:serviceskanpur@hdfcfund. Chennai . Civil Lines.

office locations of HDFC Assets Management Company) 20 .(Fig no 1.

PRODUCT DETAILS 21 .

Product Details EQUITY BALANCED DEBT (Fig no 2 .Different Types of Products) EQUITY SCHEMES OF HDFC ASSET MANAGEMENT COMPANY:1. HDFC Equity Fund: Investment Objective: The investment objective of the Scheme Is to achieve capital appreciation.Open Ended Growth Scheme 22 .  Investment Options: Dividend & Growth Option  Nature of Scheme: .

 Inception Date: - January 01, 1995

2. HDFC growth fund: Investment Objective: - The primary investment objective of the Scheme is to generate long term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments.  Investment Options: Dividend & Growth Option  Nature of Scheme: - Open Ended Growth Scheme  Inception Date: -September 11, 2000

3. HDFC Top 200 fund: Investment Objective: - To generate long-term capital appreciation from a portfolio of equity and equity-linked instruments primarily drawn from the companies in BSE 200 index.  Investment Options: Dividend & Growth Option

4. HDFC mid cape opportunity fund; Investment Objective: - To generate long-term capital appreciation from a portfolio that is substantially constituted of equity and equity related securities of small and Mid-Cap companies.  Investment Options: Dividend & Growth Option  Nature of Scheme:- Open Ended Growth Scheme  Inception Date:- May 07, 2007

5. HDFC capital builder fund:-

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 Investment

Objective:

-

To

generate

long-term

capital

appreciation from a portfolio that is substantially constituted of equity and equity related securities of small and Mid-Cap companies.  Investment Options: Dividend & Growth Option  Nature of Scheme:- Open Ended Growth Scheme  Inception Date:- February 01, 1994

6. HDFC core and satellite fund: Investment Objective: - The primary objective of the Scheme is to generate capital appreciation through equity investment in companies whose shares are quoting at prices below their true value.  Investment Options: Dividend & Growth Option  Nature of Scheme:- Open Ended Growth Scheme  Inception Date:- September 17, 2004 7. HDFC premier multicape fund: Investment Objective: - The primary objective of the Scheme is to generate capital appreciation in the long term through equity investments by investing in a diversified portfolio of Mid Cap and Large Cap `blue chip` companies.  Investment Options: Dividend Plan, Growth Plan, The Dividend Plan offers Dividend Payout and Reinvestment Facility.  Nature of Scheme: - Open Ended Growth Scheme  Inception Date: - April 06, 2005

BALANCED SCHEMES OF HDFC ASSET MANAGEMENT COMPANY:1.

HDFC balanced fund: -

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 Investment Objective: - The primary objective of the Scheme is to generate capital appreciation along with current income from a combined portfolio of equity and equity related and debt and money market instruments.  Investment Options: Dividend & Growth Option  Nature of Scheme: - Open Ended balanced fund  Inception Date: - September 11, 2000

2.

HDFC prudence fund: Investment Objective: - The investment objective of the Scheme is to provide periodic returns and capital appreciation over a long period of time, from a judicious mix of equity and debt investments, with the aim to prevent/ minimize any capital erosion  Investment Options: Dividend & Growth Option  Nature of Scheme: - Open Ended balanced fund  Inception Date: - February 01, 1994

3.

HDFC short term plan: Investment Objective: - The primary objective of the HDFC Short Term Plan is to generate regular income through investment in debt securities and money market instruments.  Investment Options: Growth Plan, Dividend Plan. The Dividend Plan offers Dividend Payout and Reinvestment Facility.  Nature of Scheme:- Open Ended income fund  Inception Date: - February 28, 2002

4.

HDFC multi yield fund:25

Open Ended Income Scheme 26 .The primary objective of the Scheme is to generate positive returns over medium time frame with low risk of capital loss over medium time frame.The investment objective of HDFC High Interest Fund is to generate income by investing in a range of debt and money market instruments of various maturity dates with a view to maximizing income while maintaining the optimum balance of yield.The primary objective of the Scheme is to optimize returns while maintaining a balance of safety.Open Ended income fund  Inception Date: . yield and liquidity. The Dividend Plan offers Dividend Payout and Reinvestment Facility. Investment Objective: . safety and liquidity.Open Ended Income Scheme  Inception Date: . Dividend Plan.  Investment Options: Dividend & Growth Option  Nature of Scheme: . 2004 DEBT SCHEMES OF HDFC ASSET MANAGEMENT COMPANY:1.  Investment Options: Growth Plan. HDFC Income Fund:  Investment Objective: . 2000 2.  Nature of Scheme: .September 17. HDFC Income Fund: Investment Objective: .September 11.  Investment Options: Dividend & Growth Option  Nature of Scheme: .

However. Inception Date: . there can be No assurance that the investment objective of the Scheme will be achieved. HDFC MF Monthly Income Plan .Short Term Plan: Investment Objective: . Monthly income is not assured and is subject to availability of distributable surplus  Inception Date:. 1997 3. 2003 4. The secondary objective of the Scheme is to generate long-term capital appreciation by investing a portion of the Scheme’s assets in equity and equity related instruments. HDFC MF Monthly Income Plan .Long Term Plan: Investment Objective: .  Investment Options: Quarterly Dividend Option.The primary objective of Scheme is to generate regular returns through investment primarily in Debt and Money Market Instruments. The Dividend Plan offers Dividend Payout and Reinvestment Facility  Nature of Scheme: . and Growth Plan. However.An open-ended income scheme.April 28.December 26. there can be no assurance that the investment objective of the Scheme will be achieved 27 . The secondary objective of the Scheme is to generate long-term capital appreciation by investing a portion of the Scheme’s assets in equity and equity related instruments. Monthly Dividend Option.The primary objective of Scheme is to generate regular returns through investment primarily in Debt and Money Market Instruments.

 Investment Options: Growth Plan. Quarterly Dividend Option. 2003 5. The Dividend Plan offers Reinvestment Facility only  Nature of Scheme: . Monthly Dividend Option. The Dividend Plan offers Dividend Payout and Reinvestment Facility. fixed rate debt / money market instruments swapped for floating rate returns. 28 .  Nature of Scheme: .The primary objective of the Scheme is to generate regular income through investment in a portfolio comprising substantially of floating rate debt / money market instruments. Monthly income is not assured and is subject to availability of distributable surplus  Inception Date: .An open-ended income scheme.An open-ended income scheme. and fixed rate debt securities and money market instruments.  Investment Options: Dividend Plan. HDFC Floating Rate Income Fund Long Term Plan: Investment Objective: .December 26. Growth Plan.

 Inception Date: .January 16. 2003 FUTURE 29 .

close down or merge with stronger player in three to four years. some big names like Principle. Here too some of them will down their shutters in the near future to come. old mutual etc are looking 30 .  But this does not mean that there is no room for other players.  Out of ten public players five will sell out. Fidelity. Some of the older public and private sector players will either close shop or be taken over. In the private sector this trend has already started with two mergers and one take over. The market will witness a flurry of new players entering the areas. of offers from various asset management companies in the time to come. There will be a large no. SBI.SCENARIO  The asset base will continue to grow at an annual rate of about 35 to 40% over the next five year as investor’s shift their assets from banks and other traditional avenues.

many market players have called on the Regular to initiate the process immediately. so that the mutual funds can implement the changes that are required to trade in Derivatives. Importantly.  The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV).at Indian market seriously. 31 . One important reason for it is that most major players have presence here and hence these big names would hardly like to get left behind.  SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives.

INDUSTRY DETAILS Introduction A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. These could range from shares to debentures to money market instruments. The income earned 32 . The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme.

understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets. inclination and time to keep track of events. Price changes in these assets are driven by global events occurring in faraway places. investments. A typical individual is unlikely to have the knowledge. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. bonds and other fixed income instruments. Each Mutual Fund scheme has a defined investment objective and strategy. A Mutual Fund is the ideal investment vehicle for today’s complex and modern financial scenario. The large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. brokerage dues and bank transactions etc. Markets for equity shares.through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them. It appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. 33 . professionally managed portfolio at a relatively low cost. real estate. derivatives and other assets have become mature and information driven. skills. A Mutual Fund is the answer to all these situations.

investments and transaction processing. Mutual Funds collectively manage almost as much as or more money as compared to banks. Today. the Mutual Fund vehicle exploits economies of scale in all three areas research. there are thousands of firms offering tens of thousands of mutual funds with different investment objectives. History of Mutual Fund Industry 34 . In fact.In effect. mutual funds gained popularity only after the Second World War. the mutual fund in present form is a 20th century phenomenon. Globally. While the concept of individuals coming together to invest money collectively is not new.

The first scheme launched by UTI was Unit Scheme 1964. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI.UTI. At the end of 1988 UTI had Rs. Second Phase – 1987-93 (Entry of Public Sector Funds) 1987 marked the entry of non. Punjab National Bank Mutual Fund (Aug 89).The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). at the initiative of the Government of India and Reserve Bank of India. At the end of 1993.UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87). and Bank of Baroda Mutual Fund (Oct 92).47. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. the mutual fund industry had assets under management of Rs. The history of mutual funds in India can be broadly divided into four distinct phases First phase – 1964-87 (Monopoly of UTI) An Act of Parliament established Unit Trust of India (UTI) on 1963. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. SBI Mutual Fund was the first non. 004 crores. Third Phase – 1993-2003 (Entry of Private Sector Funds) 35 .6. 700 crores of assets under management. Bank of India (Jun 90). Indian Bank Mutual Fund (Nov 89).

giving the Indian investors a wider choice of fund families. a new era started in the Indian mutual fund industry. The number of mutual fund houses went on increasing. 835 crores as at the end of January 2003. 21. with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. The Specified Undertaking of Unit Trust of India.With the entry of private sector funds in 1993. assured return and certain other schemes. under which all mutual funds. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The Unit Trust of India with Rs. 1993 was the year in which the first Mutual Fund Regulations came into being. the assets of US 64 scheme. 1. except UTI were to be registered and governed. Forth Phase – Since February 2003 In February 2003. 541 crores of assets under management was way ahead of other mutual funds.805 crores. 36 . The industry now functions under the SEBI (Mutual Fund) Regulations 1996.29. functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. there were 33 mutual funds with total assets of Rs. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. As at the end of January 2003. representing broadly. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.44. Also.

BOB and LIC. which manage assets of Rs.126726 crores under 386 schemes. 37 . sponsored by SBI. PNB.76. 000 crores of assets under management and with the setting up of a UTI Mutual Fund. 2003. there were 31 funds. and with recent mergers taking place among different private sector funds.The second is the UTI Mutual Fund Ltd. conforming to the SEBI Mutual Fund Regulations. As at the end of October 31. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs. It is registered with SEBI and functions under the Mutual Fund Regulations. the mutual fund industry has entered its current phase of consolidation and growth.

The graph indicates the growth of assets over the years. Growth of Asset Over The year) 38 . (Fig no 3.

2. Help your customers make the right choice 3. Treat every customer exclusively. Honest and straightforward advice is appreciated. Advise your customers to start investing early and regularly to help them optimize the benefits of the compounding rupee.Customers Profile of mutual fund industry:- (Fig no 4. While you recommend a financial plan. Help your investors with the procedures and paper work involved in making an investment. you also need to understand the needs and financial objectives of your customer along with his risk tolerance and his expectations from the investments. A satisfied customer can give you increased business through resale and referrals of other prospective customers 39 . 4.Type of Customer) 1.

There should be no under positioning.Positioning Strategy of mutual fund industry:- Positioning starts with a product. 40 . . market. A company’s differentiating and positioning strategy must change as the product. But positioning is not what you do to a product. That is. you position the product in the mind of prospect. Positioning is what you do to the mind of the prospect. and competitors change over time. confused positioning or doubtful positioning. Channel of Distribution:In Every asset Management Company’s distribution channel played very important roles. Here assets management companies have distributors like  Consultants  Agents  Distributors  Advisers  Broker Their role is very important for Assets Management Company’s Office. over positioning.

Promotional Tools Employed by various mutual fund companies:Some specific other document help to increase selling product like: (1) Banners: Banners define brief idea of scheme. Actually 3-time stamp done in form. Its helps to good advertising & easy cover to customer or people. one of them is acknowledged slip. When any new scheme is launched or any new NFO coming up that times company make banners before few days. It defines when and where assets management Company invests investor’s money. agents. advisers regularly. It distributes only by AMC’s office. brokers. (2) Application Form: Any product like Equity. (3) Broachers: Broachers include brief history of company. 41 . investor should fill up its common Application forms. it should be very attractive with specific objective & its related picture in city. and advisers time to time. This defines performance of each scheme product & also defines its comparison to last 3 months to more than 5 years. Form define acknowledge slip which give return to customer. In end of every month Assets Management Company’s office send Boucher to their investors. and Banners keep in specific places which very help to do good publicity. brokers. These forms are distributed by Assets Management Company’s office. It is all Assets Management Company’s office duty to dispatch forms to their customer like agents. debt and balance.

The term is commonly used in relation to collective investment schemes. There are liabilities of short-term nature. NAV= (market value of investments + other accrued income + other assets – accrued expenses – other payables –other liabilities)/ (no. Investors might expect the company to have large growth prospects.e. Of units outstanding as at the NAV date) 42 . in which case they would be prepared to pay more for the company than the NAV suggests. NAV covers the company's current asset and liability position. The NAV is usually below the market price because the current values of the fund’s assets are higher than the historical financial statements used in the NAV calculation. In MF it is not treated as a liability. FUNDS NET ASSET = ASSET – LIABILITIES NAV = Net Assets Issued Units I. It may also be used as a synonym for the book value of a firm. Investments made on behalf of the investors are assets side of the balance sheet.  CALCULATING NET ASSET VALUE Unit capital is the investor’s subscriptions.NET ASSET VALUE:The Net Asset Value or NAV is a term used to describe the value of an entity's assets less the value of its liabilities.

Capital gains or losses on the sale or purchase of investment Securities. Number of units sold or purchased 43 . 2.THE FACTOR AFFECTING THE NAV ARE AS FOLLOWING : 1. Capital appreciation in the underlying value of the stocks holds in the portfolio 4. Dividend and income earned on the assets 3. Other assets and liabilities 5.

S.S. Mutual Funds market is much evolved in U.  In U.7% of the households have invested in Mutual Funds and there are nearly 23 million unit holders in India.000/-.A is many times higher. which are relatively much safer.  The size of Mutual Funds market in India is Rs.  Mutual Funds are the best solution for people who want to manage risk and get good returns. Mutual Funds also invest in debt securities.  30% of investors fall in the income group of investors having monthly income up to Rs. 10.A there are more deposits in the mutual funds than in bank deposits.S.  The biggest advantage of Mutual Funds is their ability to diversify the risk.  Mutual Funds are there in India since 1964.  According to the SEBI .Facts About Mutual Fund  Equity Instruments like shares form only a part of the securities held by Mutual Funds. 107728 crores and that in U.NCAER Survey of Indian Investors about 15 million or 8.A and is there for last 60 years. 44 .

as investors we should always pay attention to our mutual funds and continue to monitor them. MUTUAL FUND 45 . The truth is.

The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified.Introduction to Mutual Fund A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. skills. bonds and other fixed income instruments. The income earned in these investments and the capital appreciation realized by the scheme is shared by its unit holders in proportion to the number of units owned by them. A typical individual is unlikely to have the knowledge. The large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. professionally managed portfolio at a relatively low cost. the mutual fund vehicle exploits economies of scale in all three areas –research. These could range from shares to debentures to money market instruments. real estate. In fact. understand their implications and act speedily. A mutual fund is answer to all these situations. It appoints professionally qualified and experienced staff that manages each of these functions on a fulltime basis. investment and transaction processing. derivatives and other assets have become mature and information driven. Anybody with an invest able surplus of a few thousand rupees can invest in Mutual Funds. A mutual fund is the ideal investment vehicle for today’s complex and modern financial scenario. Price changes in these assets are driven by global events occurring in faraway places. 46 . Each Mutual Fund scheme has a defined investment objective and strategy. inclination and time to keep track of events. Markets for equity shares.

which has floated different mutual funds schemes and also acts as an asset manager for the funds collected under the schemes. In India.A draft offer document is to be prepared at the time of launching the fund. Birla Global Finance is the sponsor of the Birla Sun Life Asset Management Company Ltd. the risk associated.g. the name of the guarantor and how the guarantee would be honored is required to be disclosed in the offer document.. the cost involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. 47 . As per SEBI regulations. E. these sponsors need approval from a regulator. it pre specifies the investment objective of the fund. in which it holds a majority stake. as in most countries. SEBI looks at track records of the sponsor and its financial strength in granting approval to the fund for commencing operations. the sponsors promote the Asset Management Company also. In case returns are guaranteed. A sponsor then hires an asset management company to invest the funds according to the investment objective. It also hires another entity to be the custodian of the assets of the fund and perhaps a third one to handle registry work for the unit holders of the fund. Typically. In the Indian context. SEBI in our case. In many cases a sponsor can hold a 100% stake in the Asset Management Company (AMC). mutual funds can offer guaranteed returns for a maximum period of one year.

Taking into consideration the market strategy the funds managers invest this pool of money into reliable securities. The fund manager while investing on behalf of investors takes into consideration various factors like time. it can be observed that how the money from the investors flow and they get returns out of it. With ups and downs in market returns are generated and they are passed on to the investors.Mutual Fund Cycle (Fig no 5. etc. so that he can make proper investment decision. investors pool their money with the funds managers. return. With a small amount of fund. risk. 48 . The above cycle should be very clear and also effective.-Mutual Fund Cycle) From the above cycle.

they are better placed than the average investor to understand the markets. the associated risks are greatly reduced.  LIQUIDITY Investments in mutual funds are completely liquid and can be redeemed at Net Assets Value (NAV) related price on any working day. With their mix of professional qualification and market knowledge.  DIVERSIFICATION Since a mutual fund scheme invests in number of stocks and/or debentures. particularly for the investors who has limited resources available in terms of capital and ability to carry out details research and market monitoring. demat costs. depository costs etc. This is due to savings in brokerage costs.  TRANSPARENCY 49 . it is because of the many advantages they have over other forms and avenues of investing.  RELATIVELY LESS EXPENSIVE When compared to direct investments in the capital market.  PROFESSIONAL EXPERTISE Fund managers are professionals who track the market on an on going basis.Critical view about Mutual Fund Benefits If mutual funds are emerging as favorite investment vehicle. The following are the major advantages offered by mutual funds to all investors. mutual funds cost less.

While most investment options provide most of these features. only Mutual Funds provide all of these options. 50 . you can systematically invest or withdraw funds according to your needs and convenience.You will always have access to up-to-date information on the value of your investment in addition to the complete portfolio of investments.  SEBI REGULATED All mutual funds are registered with SEBI and function within the provisions and regulations that protect the interests of investors.  FLEXIBILITY Through features such as regular investment plans. the proportion allocated to different assets and the fund manager’s investment strategy. regular withdrawal plans and dividend investment plans.

albeit in return for the professional management and research. An investor can choose form different investment plans and construct a portfolio of his own. Investing through funds means he delegates this decision to the fund managers. The very high-net-worth individuals or large corporate investors may find this to be a constraint in achieving their objectives. However.a large number of different schemes – within their own management company.  MANAGING A PORTFOLIO OF FUNDS 51 . most mutual fund managers help investors overcome this constraint by offering families of funds. A mutual fund investor also pays fund distribution costs.  NO TAILOR-MADE PORTFOLIOS Investors who invest on there own can build their own portfolios of shares and bonds and other securities.Limitations  NO CONTROL OVER COST Any investor in a mutual fund has no control over the overall cost of investing. this shortcoming only means that there is a cost to obtain the benefits of mutual fund services. He pays investment management fees as long as he remains with fund. Fees are payable even in declining stage. which he would not incur in direct investing. However.

However.e. When a large body like a fund invests in shares. For obvious reasons. with the bad stocks bided out and replaced by emerging blue chips. at the time of buying. the fund ends up paying a high price and by selling it realizes a lower price.Availability of a large number of funds can actually mean too much choice for the investor. most debt funds do not face this problem. Another reason for change index composition is Mergers and Acquisitions. the concentrated buying and selling often results in adverse price movement i. with each change being quite substantial. excluding UTI.  CHANGE OF INDEX COMPOSITION The indices changing over the world to reflect changing market conditions. The weight age of the shares of a particular company in the index changes if it acquires a large company not a part of the index. This is a severe problem in India with the sensex having being changing twice in last 5 years.  ENTRY AND EXIT COST Mutual funds are a victim of their own success. There is an inherent survivorship bias in this process. He may again need advice on how to select a fund to achieve his objectives. 52 . given the large size of debt market. quite similar to the situation when he has to select individual shares or bonds to invest in. this problem is even more severe for funds investing in small capitalization stocks.

which are too significant to miss out. Investors should be prepared to lock in their investments preferably for 3 years in an income fund and 5 years in an equity funds. liquidity and safety. Many investors possibly don’t know that considering returns alone.Why Investor Needs Mutual Fund Mutual funds offer benefits. generate returns even in a short term. Liquid funds of course. many mutual funds have outperformed a host of other investment products. The duration is important because like wise. The crux of mutual fund investing is averaging the risk. In the wonderful game of financial safety and returns are the tows opposite goals and investors cannot be nearer to both at the same time. Any investment has to be judged on the yardstick of return. Mutual funds have historically delivered yields averaging between 9% to 25% over a medium to long time frame. 53 . Convenience and tax efficiency are the other benchmarks relevant in mutual fund investment. mutual funds return taste bitter with the passage of time.

a bond fund faces interest rate risk and income risk. Market Risk  The possibility that stock fund or bond fund prices overall will decline over short or even extended periods. Followings are glossary of some risks to consider when investing in mutual funds. a sector stock fund is at risk that its price will decline due to developments in its industry.Mutual Fund Risk Mutual funds face risks based on the investments they hold. government default). 54 . If interest rates go up. Bond income is also affected by the changes in interest rates. A stock fund that invests across many industries is more sheltered from this risk defined as industry risk. national election). Bond yields are directly related to interest rates falling as interest rates fall and rising as interest rates. For example. bond values will go down and vice versa. Income Risk  The possibility that a fixed-income fund’s dividends will decline as a result of falling overall interest rates.  Country Risk The possibility that political events (a war. with periods when prices rise and other periods when prices fall. Bond values are inversely related to interest rates. Similarly. Stock and bond markets tend to move in cycles. financial problems (rising inflation. or natural disasters will weaken a country’s economy and cause investments in that country to decline.

There is a direct relationship between risks and return.e. 55 . schemes with higher risk also have potential to provide higher returns.Risk Return Reward in Mutual Fund Equity Fund Balance Fund MIP Income Fund Short Term Fund Liquid Fund (Fig no 6: .Risk Return in Mutual Fund) This graph shows risk and return impact on various mutual funds. i.

TYPES OF MUTUAL FUNDS 56 .

whatever your age. it minimizes the risk of exposure to a single company or sector. 1961 as the Government offers tax incentives for investment in specified avenues. 57 . financial position. Currently rebate u/s 88 can be availed unto a maximum investment of Rs 10. A Lock-in of 3 years is mandatory.g. E.Types of Mutual Fund There are a wide variety of Mutual Fund schemes that cater to your needs. which comprise major indices such as the BSE Sensex or the S&P CNX Nifty in the same weight age as the respective indices. Tax Saving Equity Schemes  Schemes investing predominantly in equity which offer tax rebates to investors under specific provisions of the Income Tax Act. which focuses on investments in the equity of companies across a limited number of sectors – usually one to three. Sectoral Equity Mutual Fund Scheme  A mutual fund scheme. Index Funds  These funds invest in the stocks of companies. Whether as the foundation of your investment program or as a supplement. risk tolerance and return expectation. As a result. Mutual Fund schemes can help you meet your financial goals. Equity Linked Savings Schemes (ELSS).000. The different types of Mutual Funds are as follows: Diversified Equity Mutual Fund Scheme  A mutual fund scheme that achieves the benefits of diversification by investing in the stocks of companies across a large number of sectors.

 Monthly Income Plan Scheme A mutual fund scheme which aims at providing regular income (not necessarily monthly. Gilt Funds  These funds invest exclusively in government securities. They generally invest 40-60% in equity and debt instruments. Balanced Funds  The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. Floating-Rate Debt Fund  A fund comprising of bonds for which the interest rate is adjusted periodically according to a predator-mined formula. to ensure regularity of returns. 58 . don't get misled by the name) to the unit holder. and having a smaller component of equity investments (5% to 15%) to ensure higher return. Government securities and money market instruments. with investments predominantly in debt securities (up to 95%) of corporate and the government. usually linked to an index. Income schemes  Debt oriented schemes investing in fixed income securities such as bonds. usually by way of dividend. corporate debentures.

Structure of Mutual Fund) Fund Sponsor Any person or corporate body that establishes the Fund with a net worth of Rs. The fund sponsor forms a trust and appoints board of trustees. He appoints Custodian and Asset Management Company (AMC) either directly or through trust in accordance with SEBI regulations.Structure of Mutual Fund Saving s Unit s AMC Trus t Investmen ts Return s Unitholde rs Registrar Trust Custodian AMC SEBI (Fig no 7 . 10 crores and has paid out consistent returns to its investors for last three years consistently and registers it with SEBI can be a fund sponsor. 59 . SEBI regulations also define that a sponsor must contribute at least 40 % to the net worth of the asset management company.

Board of trustees.  Right to dismiss the assets Management Company. Following are the rights of trustees:  Approve each of the schemes floated by the assets Management Company.  Right to request any necessary information from assets Management Company. These are protector of unit holders interests. 60 .  Furnish to SEBI on a half yearly basis. Following are the obligations of trustees:  Enter in to an investment management agreement with the assets Management Company. a report on the fund’s activities.  Right to take corrective action if they believe that of fund’s business.  Ensure that the fund’s transactions are in accordance with the trust deed.  Ensure that any shortfall in net worth of the assets Management Company is made up.Trustees Trust is created through the document called Trust deed that is executed by the fund sponsor and registered with SEBI.a body of individuals or a trust company-a corporate body may manage the trust cum Mutual Fund.2/3 of the trustees will be individuals and will not be associated with the sponsors.

 Send quarterly reports to trustees. which would affect the interest of unit holder. Ensure that no change in the fundamental attributes of any scheme or the trust or any other change. Asset Management Company This acts as investment manager of the trust under the board supervision and direction of trustees. Following are the obligations of Assets Management Company:  Float investment schemes only after getting approval from the trustees and SEBI. These acts in the interest of holders and reports to the trustees.10 crores at all the times 61 . This will float and manage different investment schemes in the name of trust and in accordance with SEBI regulations.  Must maintain a net worth of at least Rs.  Review the investor complaints received and redressed of the same by assets Management Company. happens with informing to unit holder. In has to be approved and registered with SEBI.  Make the required disclosures to the investors in the area such as calculation of NAV and repurchase price. At least 50% of the directors on the board are independent of the sponsor or the trustees.

 Will not purchase or sale securities through any broker with the brokerage of 5 % or more of the aggregate purchases and sale of securities made by the Mutual Fund in all its schemes. safekeeping of the units and segregating assets and settlements between schemes. deliveries of a fund’s securities are given or received by a 62 . Its responsibilities include receipt and delivery of securities. collecting income-distributing dividends. to ownership of these securities in ‘dematerialized’ form with a Depository. Their charges range between 0. Depository Indian capital markets are moving away from having physical certificates for securities. A fund’s physical securities will continue to be held by a Custodian.  Do not undertake any other activity conflicting with managing the fund. Thus. a mutual fund’s dematerialized securities holdings will be held by a Depository through a Depository Participant.  Indian capital market is moving away from physical certificates for securities to dematerialized form with a depository.2 percent of the net value of the holding.  Custodian is the responsible person for physical handling and safe keeping of the securities. Custodians can service more than one fund.15-0. He holds dematerialized security holdings of Mutual Fund. Thus. Following are the bodies appointed by the trustees/AMC. it takes custody of securities and other assets of mutual fund.  Assets Management Company cannot act as trustees of any other Mutual Fund. Custodian Often an independent organization. He should be independent of the sponsor and registered with SEBI.

custodian or a depository participant. 63 . at the instruction of the AMC. although under the overall direction and responsibility of the Trustees.

BOB Asset Management Co. e. Ltd.M. f. Cholamandalam Asset Management Co. J. Escorts Asset Management Ltd. d. Kotak Mahindra Asset Management Co. Ltd. IL & FS Asset Management Co. Benchmark Asset Management Co. Jeevan Bima Sahayog Asset Management Co. Ltd. Indian a. 2. Foreign a. Ltd. e. B) Institutions a. b. Sundaram Asset Management Company g. Fidelity Asset Management Co.The other various assets management companies’ details are as under: A) Bank sponsored a. SBI Funds Management Ltd. b. d. Ltd. UTI Asset Management Company (P) Ltd. b. Capital Management Ltd. b. Ltd. Reliance Capital Asset Management Ltd. Principal Asset Management Co. c. c. Ltd. Canbank Investment Management Services Ltd. GIC Asset Management Co. C) Private Sector 1. IDBI Principal Asset Management Co. Ltd. 64 . PNB Asset Management Co. d. Ltd. c. Ltd. Ltd.

b. DSP Merrill Lynch Fund Managers Limited d. 4. Ltd. Co. c. Ltd. ING Investment Management (India) Pvt. e. Ltd. Ltd. Birla Sun Life Asset Management Pvt. First India Asset Management Private Ltd. Ltd. Ltd. Templeton Asset Management (India) Pvt.Predominantly Indian a. g. Joint Ventures – Predominantly Foreign a. Morgan Stanley Investment Management Pvt. Joint Ventures . Ltd. 65 . Ltd I. HSBC Asset Management (India) Private Ltd. c.3. Ltd. f. Prudential ICICI Management Co. h. Sun F & C Asset Management (I) Pvt. Alliance Capital Asset Management (India) Pvt. Dundee Investment Management & Research (Pvt. b.) Ltd. Credit Capital Asset Management Co. Deutsche Asset Management (India) Pvt. d.

Regulatory Aspects 66 .

 To represent to the Government. Reserve Bank of India and other bodies on all matters relating to the Mutual Fund Industry.  It’s made to promote mutual fund in the masses and give recommendation in order to uphold the interest of the investor.  To undertake nation wide investor awareness Programme so as to promote proper understanding of the concept and working of mutual funds. 67 .  To develop a cadre of well-trained Agent distributors and to implement a Programme of training and certification for all intermediaries and other engaged in the industry.AMFI (Association of Mutual fund in India)  AMFI not a Self Regulatory Organization (SRO).  To interact with the Securities and Exchange Board of India (SEBI) and to represent to SEBI on all matters concerning the mutual fund industry. Objectives of AMFI: To define and maintain high professional and ethical standards in all areas of operation of mutual fund industry  To recommend and promote best business practices and code of conduct to be followed by members and others engaged in the activities of mutual fund and asset management including agencies connected or involved in the field of capital markets and financial services.

the MOF has also been playing the role of an Appellate Authority for any major disputes over SEBI guidelines on certain specific capital market related guidelines – in particular any cases of insider trading or mergers and acquisitions. It regulated mutual fund initially and there were only few schemes in the market. RBI now only governs Bank Sponsored Mutual Fund. it has now become the main regulator of the Mutual Fund. But now with coming of SEBI. Ministry of Finance The Ministry of Finance. Besides being the ultimate policy making and supervising entity. All Mutual Funds are registered with SEBI and they function within the provision of strict regulations designed to protect the interests of investors. These rules relate to the formation. 68 .SEBI (Security Exchange Board of India) Securities and Exchange Board of India ("SEBI"). RBI (Reserve Bank of India) Reserve bank of India was the regulator of Mutual Fund before SEBI. administration and management of mutual funds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors. the Capital Markets regulator has clearly defined rules. The operations of Mutual Funds are regularly monitored by SEBI. which govern mutual funds. ultimately supervises both the RBI and the SEBI. which is charged with implementing the government policies.

and are therefore answerable to regulatory authorities empowered by the Companies Act. Since mutual fund assets Management Company are companies.Company Law Board Mutual fund Asset Management Companies and corporate trustees are companies registered under the Companies Act. who may demand additional information and documents from the company. 69 . The RoC plays the role of a watchdog with respect to regulatory compliance by companies. The authorities would generally regulate the assets management companies whose shareholders may have recourse to them in specific cases. 1956. the CLB’s role assumes importance. The Company Law Board (CLB) is a body specially constituted by the Central Government for carrying out judicial proceedings with respect to company affairs. All assets management company accounts and records are filed with the Roc. While the CLB guides the DCA. which is part of the Ministry of Law and Justice of the Govt. The primary legal interface for all companies is the Register of Companies (RoC). of India. The DCA forms part of Company Law Board. The Department of Company Affairs in turn supervises roCs. The RoC ensures that the assets management company or the Trustee Company as the case may be is in compliance with all Companies Act provisions. The Company Law Board (CLB) is the apex regulatory authority under the Companies Act. As the members of assets management companies or Trustee companies will usually be the sponsors and their joint venture partners or associates. it is unlikely that mutual fund investors will have anything to do with any of these regulators. another arm of the CLB called the Company Law Bench is the Appellate Authority for corporate offences.

Investors Rights  Proportionate right to beneficial ownership of scheme’s assets  Right to obtain information from trustees  Entitled to receive dividend warrants within 30 days of declaration of dividend  Inspect major documents of the fund  Appointment of the assets management company can be terminated by 75% of the unit holders of the scheme present and voting  Right to approve of changes in fundamental attributes of a close ended scheme (75 % of unit holders should approve) .unless explicitly guaranteed in the offer document  No rights to a prospective investor Investor Obligations  Carefully study the offer document before investing 70 .right to be informed so in open ended schemes so that they can redeem  Right to receive a copy of annual financial statements of fund and periodic transaction statements  75% of the unit holders can resolve to wind up the scheme Legal Limitations to Investors  Unit holders can not sue the trust  Can initiate legal proceedings against trustees  Sponsor of mutual funds have no obligation to meet any shortfall in the assured return .

RESEARCH 71 . Monitor his investment in a scheme by referring financial statements. performance updates and research reports sent by the assets management company.

1 in this field. a survey was undertaken. to survive the rat race & emerge as no. privatization and globalization there has been a major change in the Indian Mutual Funds Industry. 72 . to get a clear picture of the future of the Mutual Funds companies who are busy wooing the customers. With the private sector penetration. with their lucrative schemes. a large number of schemes have also been introduced due to which the average consumer has become vary sensitive to the new schemes coming its way.Purpose of the Research With liberalization. to ensure what the “consumer thinks” & “what it thinks the best” we undertook a consumer survey. De facto. The momentum is on and one is sure to see similar hectic activity at the offices of the new entrants especially after the 90’s as private sector gained entry in the Indian markets. So to ensure about the various consumer attitudes.

It is the final step giving exact definition of problem. The Research Objectives flows naturally from the problem statement. giving the sponsor specific.Research Objective Research Objectives addresses the purpose of the investigation. and achievable goals. concrete. It is here that you layout exactly what is being planned by the proposed research. moving to specific terms. It is best to list the objectives either in order of importance or in general terms first. 73 .  Analyzing mutual fund awareness in retail investors of HDFC assets Management Company in Surat. Research Objective is the basis for judging the Research process.

RESEARCH METHODOLODY 74 .

It describes all the procedures of the research.Research methodology is a systematic plan or schedule or program of the research done. In a research design there are series of prior decision that together provide a master plan for completing a research project.  Objective of research  Data inputs  Analysis of data collected The research design was exploratory type and the focus was on getting mutual fund’s employees views for various products. Research design is proved to be a bridge between what has been established and what is to be done in conduct of the studies. Research design describes as a master plan a series of key decisions that serves a model for conducting a research project. Exploratory Research: Exploratory study goes beyond description and attempts to explain the reasons for the phenomenon that the descriptive study only observed. The researcher uses theories or at least hypotheses to account for the forces that caused a certain phenomenon to occur. expectations from market. Research design should be compressive and it should provide which method to be used and what work to be done. Research Design Research design can be described as an out line of a research project working or a pattern. 75 . There are the main components of research design.

Both the kinds of data are shown below in the figure: Error: Reference source not found   1) Primary data source Primary data are collected and gathered for the first time. Primary data are sought for their proximity to the truth and controls over error. Characteristics of the data are as follows: Data are more metaphorical than real Data are processed by our senses-often limited in comparison to The senses of other living organisms. The method selected will largely determine how the data are collected.  Data classify their verity by closeness to the phenomena There are two kinds of data that can be collected for research purpose. Based on the requirement in the research appropriate data is collected.  Capturing data are said to be trustworthy because they may be Verified.Sources of Data The gathering of data may range from a simple observation at one location to a grandiose survey of multinational corporations at sites in different parts of the world. DATA is the facts presented to the researcher from the study’s environment. Advantages of primary data are: 76 .

or at least monitor and record the extraneous influences on the data as they are gathered. or cost influences. legal. it was found that primary data is more important for achieving Research Objective. it becomes secondary information for the research. So. Analyzing the requirement of data. Reasons for using the secondary data are listed below:  They fill a need for specific reference or citation on some point  Secondary data are an integral part of a larger research study  Secondary data may be used as the sole basis for a research study. Primary data is collected with the help of 77 . Secondary data have had least one level of interpretation inserted between the event and its recording. They usually can specify the operational definitions used and can eliminate. interviews.  Researchers can collect precisely the information they want. 2) Secondary data source Someone else collects secondary data. since In many research situations one cannot conduct primary research Because of physical.

Sampling Plan
Collecting the required information from the right source is very important. Sources from which the data are collected differ as per the required of researcher. Basically there are two types of data collection sources:

1) Sampling Unit:
The sampling unit primarily consisted of investors like businessman, professionals, salaried employees and others. The sample unit is taken from the Surat city of Gujarat region.

2) Sample Size:
Though large sample give more reliable results than small samples but increases the cost, time and non-sampling error. Keeping in view these constraints 100 respondents were chosen. Attempts have been made to see that samples are chosen from different areas of Surat. I have taken 100 responds as a sample size for this particular project.

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The following table shows area wise distribution of sample size. AREA UDHNA MORABHAGAL ADAJAN RANDER ROAD RALWAY STATION ROAD PARLE POINT GHODDOD ROAD PIPLOD MAJURAGATE RING ROAD BHAGAL KATARGAM VARACHA CITY LIGHT ROAD NANPURA PANDESARA VED ROAD PAL BHESTAN TOTAL SAMPLE 17 3 15 17 5 5 8 2 2 4 4 4 2 6 2 1 1 1 1 100

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Data Collection Method
“This step involves making a very specific plan about how you will conduct your research and collect your data.”

1) Surveys & Questionnaires
Survey The means by which quantitative research is conducted. Questionnaire A prepared set of questions designed to generate data necessary for accomplishing the objectives of the research project.

I used survey method for data collection . Information was collected by personal interviews through questionnaire.

Following types of measurement scales were used in the questionnaire.  Simple category scale: - (Q-2, Q-4, Q-8, Q-9)  Multiple choice single response scales: - (Q-6)  Multiple choice multiple response scale:-(Q-1, Q-3, Q-5, Q-7)

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DATA ANALYSIS AND 81 .

OTHERS FREQUENCY 100 94 86 11 PERCENTAGE 34.FINDINGS Q-1 which investment avenues are you aware of? INVESTMENT AVANUES EQUITY/MUTUAL FUND POST OFFICE F.79% 82 .30% 29.55% 3.36% 32.D.

11 86 100 EQUITY/M. OTHERS 94 (Fig no 9: . and PPF). POST OFFICE F. PPF and fixed deposits. GOVT Backed Instrument. fixed deposits is more compare to others like GOVT ISSUED Instrument.D. post office (NSC.F. gold etc. Real Estate.Define investments avenues) Interpretation: From the above charts we can interpret that awareness of equity/mutual fund. Q-2 do you invests in mutual fund? YES 97 NO 3 83 . so HDFC assets Management Company needs to focus more on those investors who are more invest in KVP. NSC. KVP.

in which assets class do you want to invest in Mutual Fund? 84 .120 100 NO OF PEOPLE 80 60 40 20 0 YES PREFERNCE NO Series1 97 3 (Fig no 10: .Define investments in mutual fund) From the above chart it is getting clear that now a days people are like to invest their money in mutual fund of different assets management company. Q-3 If yes. out of 100 people sampled 97 are investing in the mutual fund.

04% RESPONSE 100 80 NO OF PEOPLE 60 RESPONSE 40 20 0 EQUITY DEBT SCHEMES LIQUID 27 6 86 (Fig no 11: .27%) people are invest in equity assets class and 27(22.Define schemes preferred by investors) From the above chart it is getting clear that from 100 peoples sample 86(72.27% 27 22.69% 6 5.TYPES OF SCHEMES EQUITY DEBT LIQUID RESPONSE PERCENTAGE 86 72. 85 .69%) people choose to invests in debt class but only just 6(5.04%) peoples choose to invests in liquid class.

56 peoples are invest in HDFC assets management company and 44 peoples are not invests in HDFC assets management company.Define investment in HDFC assets Management Company) From the above chart it is getting clear that out of 100 people sampled. in which scheme would you invest in HDFC assets 86 .Q-4 Do you invest in HDFC assets management company Limited? YES 56 NO 44 TOTAL 100 60 50 NO OF PEOPLE 40 30 20 10 0 56 44 Series1 YES PREFERNCE NO (Fig no 12: . Q-5 If yes.

In PRUDENCE FUND 17 numbers of people are invested.2 and 3 people are invest so investors are not invested in these 3 schemes. CAPITAL BUILDER FUND. In both TOP 200 FUND and GROWTH FUND 16 numbers of people are invests but in BALANCED FUND. In TAX SAVER FUND 35 number of people invests. 87 . CORE AND SATELITE FUND only 1.Define scheme in which investors invest in HDFC assets Management Company) From the above chart we can see that in HDFC assets Management Company’s EQUITY FUND maximum number (43) of people are invest.Management company limited? NO OF INVESTOERS 43 2 17 35 3 16 1 16 5 SCHEMES OF HDFC EQUITY FUND CAPITAL BUILDER FUND PRUDENCE FUND TAX SAVER FUND CORE AND SATELITE FUND TOP 200 FUND BALANCED FUND GROWTH FUND OTHERS FUND NO OF INVESTOERS 16 5 16 3 1 43 2 35 17 CAPITAL BUILDER FUND TAX SAVER FUND TOP 200 FUND GROWTH FUND EQUITY FUND PRUDENCE FUND CORE AND SATELITE FUND BALANCED FUND OTHERS FUND (Fig no 13: .

88 . So here HDFC assets Management Company has to provide facility by which investors invest their money with out any middle man in mutual fund schemes through online.here out of 100 responds. Notes: .Define mediums choose by investors for invest in HDFC assets management company) From the above chart it’s getting cleared that most of the peoples (48) are invest by bank and only 8 peoples are invest by distributors. These responds are not considered in these questions.Q-6 By which medium you invest in HDFC assets Management company limited? MEDIUM OF INVESTMENT DISTRIBUTOR BANK ONLINE NO OF PEOPLE 8 48 0 NO OF PEOPLE 48 50 45 40 35 30 25 20 15 10 5 0 NO OF PEOPLE 8 0 DISTRIBUTOR MEDIUMS ONLINE (Fig no 14: . 44 responds are not invest in HDFC assets Management Company. Nobody invests through online.

Define Preference criteria of investors) OTHERS From the above pie .chart it can be seen that majority of the people that is 44 peoples give first rank to consistent return and 43 peoples invest in HDFC assets management company because HDFC assets management company is a better fund house and 15 peoples believes that HDFC assets Management Company provides EXCELLENT CUSTOMER SERVICE.Q-7 why do you prefer investing in HDFC assets Management company limited? PREFENCE CRITERIA BETTER FUND HOUSE EXCELLENT CUSTOMER SERVICE PROVIDER CONSISTANT RETURN OTHERS NUMBER 43 15 44 1 NUMBER BETTER FUND HOUSE 1 44 43 EXCELLENT CUSTOMER SERVICE PROVIDER CONSISTANT RETURN 15 (Fig no 15: . 89 .

These responds are not considered in these questions.Q-8 In which type of product /schemes would you prefer while Invested in equity schemes of HDFC assets management Company limited? TYPES OF SCHEMES OPEN ENDED CLOSE ENDED RESPONSE 53 3 RESPONSE 60 NO OF PEOPLE 50 40 30 20 10 0 OPEN ENDED CLOSE ENDED TYPES OF SCHEMES 3 RESPONSE 53 (Fig no 16: . Notes: .here out of 100 responds. 44 responds are not invest in HDFC assets Management Company.Define type of product /schemes investors prefer for investments) From the above chart it is getting clear that most of peoples (53) prefer to invest in OPEN ENDED equity schemes and only just 3 peoples want to invest in CLOSE ENDED equity schemes of HDFC assets Management Company. 90 .

91 .Define awareness level about on going NFO of HDFC assets Management Company.Q-9 do you know about on going new fund offer of HDFC Assets Management company limited? AWARENESS OF NFO YES NO TOTAL NUMBER 58 42 100 PERCENTAGE 58% 42% 100% NUMBER 42 YES NO 58 (Fig no 17: .) The above pie .chart shows that around 58% people aware of on going new fund offer of HDFC assets Management Company and only 42% people are unaware from on going new fund offer of HDFC assets management company.

FINDINGS 92 .

 It is found that awareness level about Mutual Funds is 97% in Surat city of Gujarat. where as remaining only 3 respondents prefer to invest in a close ended of HDFC assets management company.Findings  Almost 56% are investing in HDFC assets management company’s schemes.27% are investing in equity schemes.  HDFC assets Management Company are also highly popular for their consistent return and 43 responds believes that HDFC assets Management Company is better fund house. where as 32% says that they invest in post office schemes.04% prefer to invest in liquid schemes.  Out of the total respondent almost 30% said that they invest in fixed deposit and Insurance.  Out of the total respondent 72.  53 respondents prefer to invest in a open ended schemes of HDFC assets management company. Where as 34% said that they invest in Shares and mutual funds.69% prefer debt and 5.  97% of the investor was found who is invested their savings in different schemes of mutual fund. While only just 15 responds believes that 93 . Where as remaining 22.

 The 58% of the respondent were aware about the ongoing NFO of HDFC assets management company and 42% were not aware about the ongoing NFO of HDFC assets management company. 94 .  Out of the total respondents almost 48 responds are investing through bank.  In HDFC assets Management Company’s EQUITY FUND maximum number (43) of people are invested and In TAX SAVER FUND 35 number of people are invests.HDFC assets Management Company provides EXCELLENT CUSTOMER SERVICE. only 8 responds investing their money by distributor and nobody invested by online.

LIMITATIONS 95 .

Limitations of research  This exploratory research is done focusing on the investment scenario of Surat city of Gujarat region only and therefore findings and suggestions given on the basis of this research and cannot be considered for the entire Mutual Fund Industry of India.  My own inexperience in research area might have affected the study. did not give me cooperative response. out of various sectors that I had visited for study.  Some of the people. 96 .  Due to Time constraint I could not analyze more.  Another limitation is that due to lack of knowledge and education many investors don’t know the basic ideas behind mutual fund.  Due to small market and time limit I could take only 100 responses.

CONCLUSIONS 97 .

That is basically due to misconception that Mutual Fund Companies usually invest in equity market.  The awareness level about HDFC assets Management Company is moderate but still the awareness should be created because 44% peoples still not invest in HDFC assets Management Company.  The investors prefer investing more in banks and post office.  Others than Banks and post office the next preference of investors who go for risky preposition in shares and Mutual Funds. which shakes trust of people in Mutual Fund. and assured returns.  Majority of investors invested in open-ended schemes.Conclusions  Half of the respondents are investing in different schemes of mutual fund companies. 98 . which shows that investors want security.

they invest in debt schemes (22. 99 .  Professional and Business class.69%).  Mutual funds are also preferred because of the cost effectiveness and higher income by investing in equity schemes.  The time frame of the investment by majority of the investors is open-ended schemes in which their money is not locked for 3 to 5 years. which is considered to be the most knowledgeable class of the region prefers Mutual Funds less compare to service class.  The investors prefer HDFC assets Management Company more because of the tax benefit and consistent return.  The banks mostly make the investments through the agent’s followed. As the investor prefers safe investment and want consistent return.

100 .

RECOMMENDATION S Recommendations  The company should try to make aware people about their different schemes through the road show. Company has to put hoardings. pamphlets in that area where peoples can watch easily. banners. 101 . seminars and presentation that it is not just equity based schemes but also debt and liquid or balanced schemes also promoted by company.

 Company’s core and satellite fund. their quality of performance and contribution in sales is maintained.  None of responds invest their money in different schemes of company By Online. 102 .  The company should be conducting special training and motivation Programme for their distributors and also for investors so that they are being motivated to work.  Most of the people still preferred to invest in post office schemes and fixed deposits so company has to focus on these investors.  Company has to provide application forms and other promotional materials to their distributors time to time and company has to maintain better relationship with their distributors by these they can give good contribution in investments. balanced fund. so company has opportunity to launch online services for their distributors and retail investors. The customers should be made aware that if the time frame of the investment is more than 3 years Equity option is the best tool for investing in mutual fund by this investors getting good and high returns for their investments. capital builder fund are preferred by very few investors because this schemes not perform well so company has to think about their companies in which they invest investor’s money so they have to change portfolio of investments.

103 .

ANNEXURE Questionnaire 104 .

NAME: ADDRESS: CONTACT NO: (O) (R) (M) 1) Which investment avenues are you aware of? Equity /Mutual fund Post Office (NSC. in which assets class do you want to invest in mutual funds? Equity Debt Liquid 4) Do you invest in HDFC mutual fund? Yes No 5) If yes. KVP. PPF) Fixed Deposits Others If others please specify 2) Do you invest in mutual funds? Yes No 3) If yes. in which scheme would you invest in HDFC MUTUAL FUND? Equity Capital builder Prudence fund Tax saver Core & satellite Top 200 fund 105 .

Balanced fund Growth Others 6) By which medium do you invest in HDFC mutual fund scheme? Distributor Bank Online 7) Why do you prefer investing in HDFC MF? Better fund house Excellent customer service provider Consistent return Other If other please specify 8) Which type of product/scheme would you prefer while investing in Equity Scheme of HDFC mutual fund? Open-ended Close ended 9) Do you know about on going new fund offers of HDFC AMC? Yes No Remarks if any other please specifies: - Thank you for your time. 106 .

 Redemption Price The price at which open-ended schemes repurchase their units and closeEnded schemes redeem their units on maturity.Glossary  Net Asset Value (NAV) Net Asset Value is the market value of the assets of the scheme minus its liabilities.  Sale Price The price you pay when you invest in a scheme. It May include a sales load. Also called Offer Price. These prices are NAV Related. This is also called Bid Price. 107 . The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.  Repurchase or ‘Back-end’ Load A charge collected by a scheme when it buys backs the units from the unit Holders.  Repurchase Price The price at which a close-ended scheme repurchases its units and it may Include a back-end load.

 Face Value: The original issue price of one unit of a scheme. the investor can transact at the NAV.e.  Lock-in period: The cooling period after investment in fresh units during which the investor Cannot redeem the units.  No Load: It refers to the fund that does not charge any load for buying or selling its units.  Exit Load: It is the load charged by the fund when one redeems the units from the fund. Expense Ratio refers to the annual percentage of fund's assets that is paid out in expenses and can affect the performance of the scheme. It reduces the price of the units to less than the NAV and is expressed as a percentage of NAV. Expense Ratio: The Expenses of a scheme include management fees and all the fees associated with the scheme's daily operations. i. generally Rs 10. 108 .

Define investments avenues Define investments in mutual fund Define schemes preferred by investors Define investment in HDFC assets management company Define scheme in which investors invest in HDFC assets management company Define medium choose by investors for invest in HDFC assets management company Define PREFENCE CRITERIA of investors Define type of product /schemes investors prefer for investments.List of table Sr. Define awareness level about on going NFO of HDFC assets management company. 1 2 3 4 5 6 7 8 9 10 11 12 Name of Table Offices of HDFC assets management company limited Other various assets management companies’ details Area wise distribution of sample size. Page No. 17 64 79 82 83 84 85 86 87 88 89 90 109 . No.

Page No.List of Graph Sr. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Name of Graph Office locations of HDFC Assets Management Company Different Types of Products Growth of Asset Over The year Types of customers Mutual Fund Cycle Risk Return in Mutual Fund Structure Of Mutual Fund Classification Of Data Define investments avenues Define investments in mutual fund Define schemes preferred by investors Define invest in HDFC assets management company Define scheme in which investors invest in HDFC assets management company Define medium choose by investors for invest in HDFC assets management company Define Preference criteria of investors Define type of product /schemes investors prefer for investments. No. 22 24 39 40 49 56 60 76 82 83 84 85 86 87 88 89 90 110 . Define awareness level about on going NFO of HDFC assets management company.

valuereserchonline.moneycontrol.hdfcfund.com  www.amfiindia.Bibliography Books  Cooper and schinder Research Methodology New Delhi Tata McGraw-Hill Ltd 2001  Fact sheet of HDFC assets Management Company limited.com 111 .com  www. Websites  www.com  www.

“Mutual fund Awareness in Retail Investors Of HDFC Assets management company in Surat” Based on the declaration made by the candidate and my association as a guide for carrying out this work. Shah) This project is forwarded for evaluation to the Veer Narmad South Gujarat University. S. Badami Kalpesh D. has satisfactorily completed the project work entitled. S. Shah) 112 . R.CERTIFICATE This is to certify that Mr. I recommended this project report for evaluation as a part of the MBA programmer of Veer Narmad South Gujarat University. Place: Date: _______________ (Dr. R. Place: Date: ____________________ Director of GRIMS (Dr.

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