COMPARATIVE ANALYSIS OF OPEN ENDED & CLOSE ENDED SCHEMES AND MUTUALFUND OF

HDFC & ICICI

COMPARATIVE ANALYSIS OF OPEN ENDED &

CLOSE ENDED SCHEMES AND MUTUALFUND OF
HDFC & ICICI

SUBMITTED TO:-
Mr. Anirudh durafe
Lech. Of Financial Institution & services

SUBMITTE
D BY:-
Raghvendra shukla
BATCH- III
PGDM

DECLARATION
 I, Raghvendra shukla here-by declare that the Term paper “COMPARATIVE ANALYSIS OF MUTUAL FUND
OF HDFC & ICICI” for the fulfillment of the requirement of my course from CHIMC is an original work of mine
and the data provided in the study is authentic, to the best of my knowledge.

It is a matter of Great Pleasure for me in submitting the term paper on Comparative an Analysis of Mutual
Fund of HDFC & ICICI For the fulfillment of the requirement of my course from CHIMC, Indore

I am thankful to and owe a deep dept. gratitude to all those who have helped me in preparing this report.
Words seem to be inadequate to express my sincere thanks to Mr. Anirudh durafe for his valuable guidance,
constructive4 criticism, untiring efforts and immense encouragement during the entire course of the study due to
which my efforts have been rewarded.
COMPARATIVE ANALYSIS OF OPEN ENDED & CLOSE ENDED SCHEMES AND MUTUALFUND OF
HDFC & ICICI

Raghvendra shukla
S.NO. Contents Page No.
1 Introduction To 5

Topic
2 Introduction to 09

Companies
3 Review of literature 12
4 Need/Scope of 14

Study
5 0bjective of the 14

study
COMPARATIVE ANALYSIS OF OPEN ENDED & CLOSE ENDED SCHEMES AND MUTUALFUND OF
HDFC & ICICI

Need of the study

 The need of study arises for learning the variables available that distinguish the mutual fund of two
companies.
 To know the risk & return associated with mutual fund.
 To choose best company for mutual investment between HDFC & ICICI.
 To project mutual fund as the ‘productive avenue for investing activities.

Scope of the study

 To make people aware about concept of mutual fund.

 To provide information regarding advantages and demerits of mutual fund.
 To advice where to invest or not to invest.
 To provide information regarding types of mutual fund which is beneficial for whom.

Objectives

.
 To analysis which provides better returns from HDFC &ICICI.
 To analyze the concept and parameters of mutual fund.
 To know how many people are satisfied by their investment (in HDFC or ICICI).
 To know people behavior regarding risk factor involved in mutual fund.
.
 COMPARATIVE ANALYSIS OF OPEN ENDED & CLOSE ENDED SCHEMES AND MUTUALFUND OF
HDFC & ICICI

What is mean by mutual fund?

Mutual funds are pools of money that are managed by

an investment company. They offer investors a variety of
goals, depending on the fund and its investment
charter. Some funds, for example, seek to generate
income on a regular basis. Others seek to preserve an
investor's money. Still others seek to invest in
companies that are growing at a rapid pace. Funds can
impose a sales charge, or load, on investors when they
buy or sell shares. Many funds these days are no load
and impose no sales charge. Mutual funds are
investment companies
regulated by the
Investment Company Act
of 1940. Related: open-end
fund, closed-end fund.

Concept of mutual
funds

A mutual fund is a trust

that pools the savings of
a no. 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 diversified, professionally managed basket of securities at a relatively low cost.

Historical Aspect

Mutual fund firstly was established in 1822 in the form of Society General De Belguique. It mainly gains
the progress in Switzerland & little in franc and Germany in its initial days. The first investment trust “The foreign
and colonial govt. trust” Was founded in London in 1868.

Indian Scenario of Mutual Fund

The origin of mutual fund industry in India is with the introduction of the concept of by UTI in the year
1963. Through the growth was slow, but it accelerated from the year 1987 when non-UTI players entered in
industry. The mutual fund industry goes through four phases:-

 First phase 1964-87 (Establishment of UTI).

 Second phase 1987-93 (Entry of public sector funds).
 Third phase 1993-2003 (Entry of a private sector funds).
 Fourth phase since feb.2003 (Bifurcated of UTI).

In the first phase, UTI was established in 1963 by an act of parliament. In 1978 it was
delinked from RBI & the IDBI took over the control of UTI. In second phase, SBI entered as first non-UTI
mutual fund provider then it was followed by can bank (Dec. 87). PNB (Aug 89) & LIC in 1989. In third
phase, the private sector entered in it. The Erstwhile Kothari pioneer (now merged with Franklin Templeton)
was first registered in July 1993 in mutual fund. In revised registration of SEBI I n 1993 the industry functions
under SEBI. And the fourth phase had bitter experience for UTI. It was bifurcated into two separate entities.
One is the specified under taking of UTI with AUM of 29,835cr. The second is UTI mutual fund ltd.
Sponsored by SBI, PNB, BOB and LIC& it is registered with SEBI.

Advantages of Mutual Funds

 Diversification.
 Professional Management.
 Liquidity (mainly in case of opened mutual funds).
 Regulatory.
 Convenience.
 Low cost.
 Reduction of transaction cost.
 COMPARATIVE ANALYSIS OF OPEN ENDED & CLOSE ENDED SCHEMES AND MUTUALFUND OF
HDFC & ICICI

 Diverse returns.
 Advantages to Industrial concern.
 Tax relief.
 Attract foreign Capital.
 Reduction / Diversification of risk.

Drawbacks of Mutual fund

 No guaranties.
 Fees & Commission.
 Taxes.
 Management Risk.

Comparison between an open-end and a closed-end mutual fund schemes?

Both open-end and closed-end mutual funds comprise a portfolio of securities (such as stocks and bonds) that
is managed by a professional money manager. If you wish to invest in the fund, you buy shares. Basically,
however, that is where the similarities end.

A key difference between the two types of funds is that the number of outstanding shares of an open-end fund
can vary dramatically from day to day, whereas shares of a closed-end fund are fixed in number. An open-end
fund will issue new shares, or repurchase old shares, as needed to meet investor demand, depending on
whether money is being added to the fund or shares are being redeemed. The per share price is determined by
the net value of all assets held by the fund, divided by the number of shares.

As mentioned, a closed-end fund has a fixed number of shares. You don't purchase new shares from the fund;
instead, you purchase existing shares from other investors. Shares are typically traded on an open market
(stock exchange) where they sell at either a premium or a discount, depending on demand.

Open-end funds are by far the most popular among typical investors. With an open-end fund, you can
participate in the markets and have a great deal of flexibility regarding how and when you purchase shares.
Also, you are never required to purchase shares at a premium. Closed-end funds are typically more volatile and
behave more like individual stocks. You need to buy them through a broker, and if you want out (or in), you are
bound by whatever price the market bears.

Open-ended Fund/ Scheme

An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis.
These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset
Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is
liquidity.
An open end mutual fund generally continues to accept investment after the fund is started. As this
happens, the fund can grow larger as more investors buy shares in the fund. The open end fund then takes
those new dollars and buys additional securities. Shares are priced at the end of day by taking the value of
the fund's net asset value divided by the number of shares outstanding. Each share is thus priced at par
 value to the underlying investments in the fund. To "cash-out" of one's investment, the shares are redeemed
by the fund itself, usually after trading is over for the day at the net asset value price for that day.
Occasionally, if management of an open end fund feel cash is flowing into the fund to quickly, they may close
the fund to new investment, but is still classified as an open end fund.

Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units at NAV-related
prices from and to the mutual fund on any business day. These schemes have unlimited capitalization, open-
ended schemes do not have a fixed maturity, there is no cap on the amount you can buy from the fund and the
unit capital can keep growing. These funds are not generally listed on any exchange.

Open-ended schemes are preferred for their liquidity. Such funds can issue and redeem units any time
during the life of a scheme. Hence, unit capital of open-ended funds can fluctuate on a daily basis. The
advantages of

Open-ended funds over close-ended are as follows:

Any time exit option, the issuing company directly takes the responsibility of providing an entry and an exit. This
provides ready liquidity to the investors and avoids reliance on transfer deeds, signature verifications and bad
deliveries. Any time entry option, an open-ended fund allows one to enter the fund at any time and even to
invest at regular intervals.

• Buying and Selling:

Open funds sell and redeem shares at any time directly to shareholders. To make an investment, you
purchase a number of shares through a representative, or if you have an account with the investment firm,
you can buy online, or send a check. The price you pay per share will be based on the fund’s net asset
value as determined by the mutual fund company. Open funds have no time duration, and can be
purchased or redeemed at any time, but not on the stock market.

An open fund issues and redeems shares on demand, whenever investors put money into the fund or take
it out. Since this happens routinely every day, total assets of the fund grow and shrink as money flows in
and out daily. The more investors buy a fund, the more shares there will be. There's no limit to the number
of shares the fund can issue. Nor is the value of each individual share affected by the number outstanding,
because net asset value is determined solely by the change in prices of the stocks or bonds the fund owns,
not the size of the fund itself. Some open-ended funds charge an entry load (i.e., a sales charge), usually a
percentage of the net asset value, which is deducted from the amount invested.

• Advantages:
Open funds are much more flexible and provide instant liquidity as funds sell shares daily. You will
generally get a redemption (sell) request processed promptly, and receive your proceeds by check in 3-4
days. A majority of open mutual funds also allow transferring among various funds of the same “family”
without charging any fees.

Open funds range in risk depending on their investment strategies and objectives, but still provide flexibility
and the benefit of diversified investments, allowing your assets to be allocated among many different types
of holdings. Diversifying your investment is key because your assets are not impacted by the fluctuation
price of only one stock. If a stock in the fund drops in value, it may not impact your total investment as
another holding in the fund may be up. But, if you have all of your assets in that one stock, and it takes a
dive, you’re likely to feel a more considerable loss.

• Risks:
Risk depends on the quality and the kind of portfolio you invest in. One unique risk to open funds is that
they may be subject to inflows at one time or sudden redemptions, which leads to a spurt or a fall in the
portfolio value, thus affecting your returns. Also, some funds invest in certain sectors or industries in which
the value of the in the portfolio can fluctuate due to various market forces, thus affecting the returns of the
fund.
 COMPARATIVE ANALYSIS OF OPEN ENDED & CLOSE ENDED SCHEMES AND MUTUALFUND OF
HDFC & ICICI

Close-ended Fund/ Scheme

a close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription
only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the
time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges
where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an
option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI
Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase
facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly
basis.

A close-ended mutual fund scheme clearly stipulates the maturity period, which could be anywhere between
2 to 15 years of time. You can make investments on a close-ended mutual fund scheme as soon as they are
issued. Later on, you are free to buy or sell close-ended mutual fund scheme units when they are listed on the
stock exchange.

A closed end mutual fund generally accepts investment only during initial setup. After that, shares in the fund
are bought and sold similar to a stock on one of the exchanges. The shares may sell at a discount or a premium
to the underlying securities owned by the fund, depending on the market. To "cash-out", an investor sells the
shares on the exchange at the market price during the trading day. The fund itself is not involved in the day-to-
day sale and purchase of fund shares. Close-ended schemes have fixed maturity periods. Investors can buy
into these funds during the period when these funds are open in the initial issue. After that such schemes
cannot issue new units except in case of bonus or rights issue. However, after the initial issue, you can buy or
sell units of the scheme on the stock exchanges where they are listed. The market price of the units could vary
from the NAV of the scheme due to demand and supply factors, investors’ expectations and other market
factors.

Important details
Once the units are listed on the stock exchange, the market price of the close-ended mutual fund
scheme units could vary depending on factors like:
• The expectations of the unit holders
• Demand for and supply of scheme units
Generally, the units of the close-ended mutual fund schemes are traded on the stock exchange at
a price less than its Net Asset Value or NAV. On nearing maturity, the difference between the
scheme unit's trading price and NAV may narrow significantly.

How a close-ended mutual fund scheme benefits the fund manager?

Liquidity management
since a close-ended mutual fund scheme has a fixed tenure before it matures, the fund manager
does not have to worry about the corpus at his disposal. In an open-ended scheme, the fund
manager will have to deal with inflow and outflow of money on a continual basis, leaving the
person with only a vague idea of how the corpus would look over a certain period of time. In other
words, a close-ended mutual fund scheme benefits a fund manager in terms of efficient liquidity
management.
Security from short-term market fluctuations
Close-ended mutual funds offer a certain security from short-term market fluctuations vis-a-vis the
investments managed by the fund managers. The fixed tenure for maturity allows fund managers
to work with investments on a long-term perspective
Close-ended or closed mutual funds are really financial securities that are traded on the stock market. Similar to
a company, a closed-ended fund issues a fixed number of shares in an initial public offering, which trade on an
exchange. Share prices are determined not by the total net asset value (NAV), but by investor demand. A
sponsor, either a mutual fund company or investment dealer, will raise funds through a process commonly
known as underwriting to create a fund with specific investment objectives. The fund retains an investment
manager to manage the fund assets in the manner specified.
• Buying and Selling:
Unlike standard mutual funds, you cannot simply mail a check and buy closed fund shares at the calculated
net asset value price. Shares are purchased in the open market similar to stocks. Information regarding
prices and net asset values are listed on stock exchanges, however, liquidity is very poor. The time to buy
closed funds is immediately after they are issued. Often the share price drops below the net asset value,
thus selling

At a discount. A minimum investment of as much as $5000 may apply, and unlike the more common open
funds discussed below, there is typically a five-year commitment.

• Advantages:
The prospect of buying closed funds at a discount makes them appealing to experienced investors. The
discount is the difference between the market price of the closed-end fund and its total net asset value. As
the stocks in the fund increase in value, the discount usually decreases and becomes a premium instead.
Savvy investors search for closed-end funds with solid returns that are trading at large discounts and then
bet that the gap between the discount and the underlying asset value will close. So one advantage to
closed-end funds is that you can still enjoy the benefits of professional investment management and a
diversified portfolio of high quality stocks, with the ability to buy at a discount.

• Risks:
Investing in closed-end funds is more appropriate for seasoned investors. Depending on their investment
objective and underlying portfolio, closed-ended funds can be fairly volatile, and their value can fluctuate
drastically. Shares can trade at a hefty discount and deprive you from realizing the true value of your
shares. Since there is no liquidity, investors must buy a fund with a strong portfolio, when units are trading
at a good discount, and the stock market is in position to rise.
 Introduction to Companies
COMPARATIVE ANALYSIS OF OPEN ENDED & CLOSE ENDED SCHEMES AND MUTUALFUND OF
HDFC & ICICI And Review of Literature
 HDFC Mutual Fund

HDFC mutual fund was set up on June 30, 2000 with two sponsors namely Housing
Development Finance Corporation ltd. and Standard Life Insurance ltd. HDFC mutual fund came into
existence on 10 Dec. 1999 and got approval from the SEBI on 3rd July 2000.
Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd,
was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by Reserve
Bank of India (RBI). It was one of the first banks to receive an 'in principle' approval from RBI, for setting up a
bank in the private sector. The bank was incorporated with the name 'HDFC Bank Limited', with its registered
office in Mumbai. The following year, it started its operations as a Scheduled Commercial Bank. Today, the
bank boasts of as many as 1412 branches and over 3275 ATMs across India.

Products and Schemes of HDFC mutual fund

 Equity funds.
 Balanced funds.
 Debt funds.
 Liquid funds.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential PLC. Of

America, one of the largest life insurance companies in the USA. Prudential ICICI mutual fund was set up
on 13th of Oct. 1993 with two sponsors. ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an
Indian financial institution, in 1994. Four years later, when the company offered ICICI Bank's shares to the
public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank offered made an equity offering
in the form of ADRs on the New York Stock Exchange (NYSE), thereby becoming the first Indian company and
the first bank or financial institution from non-Japan Asia to be listed on the NYSE. In the next year, it acquired
the Bank of Madura Limited in an all-stock amalgamation. Later in the year and the next fiscal year, the bank
made secondary market sales to institutional investors

Products and Schemes of HDFC mutual fund

 Equity funds.
 Balanced funds.
 Debt funds.
 Liquid funds.
 Children’s gift fund
COMPARATIVE ANALYSIS OF OPEN ENDED & CLOSE ENDED SCHEMES AND MUTUALFUND OF
HDFC & ICICI

HDFC Bank’s exposure to market risk a function of its trading and asset
And liability management activities and its role as a financial intermediary
In customer-related transactions. HDFC had tried its best in mutual fund sector. It has
grown up its market share in a meanwhile time. The objective of market risk
management is to minimize the impact of losses due to market risks on earning and
equity capital

ICICI Bank is India's second-largest bank with total assets of about Rs. 1
Trillion and a network of about 540 branches and offices and over 1,000
ATMs. ICICI Bank offers a wide range of banking products and financial
Services to corporate and retail customers through a variety of delivery
Channels and through its specialized subsidiaries and affiliates in the areas
Of investment banking, life and non-Banking, venture capital, asset
Management and information technology. ICICI Bank's equity shares are
Listed in India on stock exchanges at Chennai, Muzaffarnagar, Kolkata and
Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange
Of India Limited and its American Depositary Receipts (ADRs) are listed on
The New York Stock Exchange (NYSE).

Other Players in Mutual Fund

 Bank of Baroda mutual fund (BOB MF) 30OCT. 1992.

 Benchmark mutual funds (June 12, 2001).
 Birla Sun life MF (1871).
 Chola mutual fund (3 Jan. 1997).
 Can bank mutual fund (Dec. 19, 1987).
 LIC mutual fund (19th June, 1989).
 Reliance mutual fund (30June, 1995).
 Sahara mutual fund (18 July, 1996).
 GIC (General Insurance Corporation of India). Etc.

COMPANY PROFILE
.