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A COMPARATIVE STUDY OF ULIPs WITH

MUTUAL FUNDS AT
IDBI FEDERAL LIFE INSURANCE CO.
LTD
INTRODUCTION TO THE STUDY
Investment means purchasing of an asset with the intention to gain
income from it.
ULIP gives investors the benefits of both insurance and investment under a
single integrated plan.
MF is a trust that pools the savings of investors who share a common
financial goal is known as mutual fund.
The topic helps in understanding the relationship between ULIPs and
Mutual Funds and the working mechanism of both the investment
products.
It gives a holistic approach to study the risk involved in both the
investments and thereby the returns that they generate.
ABOUT THE COMPANY
IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, Federal
Bank, and Ageas.
Vision: To be the leading provider of wealth management, protection and
retirement solutions that meets the needs of the customers and adds
value to their lives.
Mission: To be transparent in the way we deal with our customers and to
act with integrity. To invest in and build quality human capital in order to
achieve our mission.
Commenced operations in 2008, IDBI Federal was able to achieve
breakeven within just 5 years. the Companys passion for innovation and
growth helped it achieve this feat.
Network of 2, 964 branches of IDBI Bank and Federal Bank.
As on March 31, 2015, the company has issued nearly 7.88 lakh
policies with a sum assured of over Rs. 41,856 crore.
Assets under management of 4,087 crore and a robust capital base of
over 800 crores, as on March 31, 2015.
Types of channels are Banca channel, Agency channel, Direct
marketing channel, online channel.
It offers 16 products including 4 ULIP products.
OBJECTIVE OF THE STUDY
To study the working mechanism of select two ULIP products of IDBI
Federal Life Insurance Co. ltd. and two Mutual fund products of HDFC
Mutual fund.
To study the performance of select two ULIP products of IDBI Federal
Life Insurance Co Ltd and two mutual fund products of HDFC Mutual
fund.
To analyze and examine the risk and return relationship between
Mutual Funds & ULIPs and also comparing with the index.
METHODOLOGY
Primary Data:
Guide and Expert Interviews.

Secondary Data:
Business magazines, Editorials, Business Newspapers, Internet surfing,
Library, and Bibliographies, Wealth trends of IDBI Federal and
competitors, NAV graph reports, Company website, Journals
Tools and Techniques:
CAGR (Compounded Annual Growth Rate)
IRR (Internal Rate of Return)
Sample variance, Standard deviation, Covariance, Correlation
Holding period returns of Net Asset Values
ANALYSIS AND INTERPRETATION
WORKING MECHANISM:
Working mechanism of select two ULIP products of IDBI Federal and
two products of HDFC Mutual fund is studied.
IDBI FEDERAL GROWTH INSURANCE PLAN
IDBI FEDERAL SUVIDHA GROWTH
HDFC EQUITY FUND
HDFC MID-CAP OPPORTUNITIES FUND
PERFORMANCE ANALYSIS:
Benefit illustration of IDBI FEDERAL WEALTHSURANCE GROWTH
INSURANCE PLAN
The policy has sum assured of Rs. 5, 00, 000 with PT=15 years, PPT=15
years and annual premium of Rs. 50, 000
The allocation of premium is 70% in equity growth fund and 30% in
mid-cap fund.
CAGR@4%= 4.57%, CAGR@8%= 6.87
Actual Performance: 2008-2015

EQUITY FUND
IDBI Federal Life Insurance Co CNX HDFC Mutual fund
Ltd
11.44% 8.7% 16.04%

MID-CAP FUND

IDBI Federal Life Insurance Co CNX HDFC Mutual fund


Ltd

12.91% 11.05% 21.34%


RISK AND RETURN ANALYSIS:
Holding period returns are calculated using CAGR for the NAV values
of equity and mid-cap funds of ULIP and mutual funds of IDBI FEDERAL
and HDFC mutual fund and compared with CNX index.
(Nov 2014- May 2015)
ULIP MUTUAL FUNDS

EQUITY MID-CAP EQUITY MID CAP


Sample 8.983292 13.17612 Sample 9.174272 9.774177
Variance Variance
Standard 2.997214 3.629892
Standard 3.028906 3.126368
Deviation
Deviation
Covariance 8.871042 10.41457 Covariance 8.573146 9.451592
Correlation 0.987747 0.929756 Correlation 0.94459 0.979685
CONCLUSION AND
RECOMMENDATIONS
CONCLUSION:
HDFC Mutual funds actual performance is better than IDBI Federal in both
equity and mutual funds.
In equity fund ULIP is more reliable thereby less risk and is moving closely
with the index. In mid-cap fund mutual fund is more reliable so less risk and
is moving closely with the index.
If investors invest money after in-depth study of equity market then they
can go for mutual funds.
If you feel that you cannot pay the regular investment and need a
relaxation time in your investment plan then ULIP is best.
If the investor seek the importance of life insurance cover with
expectations of good returns on the investment made then ULIPs would be a
good option.
RECOMMENDATIONS:
People belonging to the middle class segment who are interested in
investment but they are not aware of such options, so more awareness
should be there, as main target customer are the middle class peoples.
Insurance companies should create more awareness about ULIPs and
grow their market share with good funds.
Insurance companies should go for innovating strategies and bring
more products and improve the distribution channels as per the area of
sales.