You are on page 1of 86


Submitted in partial fulfillment for the degree of Bachelor of Business Administration Submitted to University of Rajasthan, Jaipur, Rajasthan

Session: - 2010-2011

Supervised By: Ms. Payal Sharma

Submitted By:Kishor Kumawat B.B.A. Part-III

Seth Gyaniram Bansidhar Podar CollegeRambilas Podar road, Nawalgarh, Rajasthan


I do hereby declare that the project entitled PORTFOLIO ANALYSIS OF

HDFC-MUTUAL FUND submitted as a part of the requirement for the partial

fulfillment of batchlarof Business Administration. It is an original piece of work done by me under the guidance of Mr. Nipun Kumar.




Someone has rightly said that practical knowledge is far better than classroom teaching. During the course of this project I actually realized how true it is when I analyzed the Insurance Industry. This project

enabled us to know about the Human value and investors needs and competitors activities in the real world Insurance. The subject of our study is PORTFOLIO ANALYSIS OF MUTUAL FUNDS for which I did a detailed study of features of Insurance offered by different Companys followed by a market research in order to know the investing patterns and concerns of the investors thereby identifying the potential customers for these products. The report contains at first, the brief introduction about the company, the products and services being offered by the Future Generally, comparative analysis of different products offered by different Companys in Insurance Industry and then the findings and analysis of the research on the basis of which final suggestions and conclusion has been drawn..

If words are considered to be signs of gratitude then let these words Convey the very same my sincere gratitude to HDFC BANK for providing me with an opportunity to work with BANK and giving Necessary directions on doing this project to the best of my abilities.

I am highly indebted to Mr. Nipun Kumar, Sales Manager and Company project guide, who has provided me with the necessary information and also for the support extended out to me in the Completion of this report and his valuable suggestion and comments On bringing out this report in the best way possible.

I also thank Ms. Payal Sharma, Prof. of Management, who has sincerely supported me with the valuable insights into the completion of this project.

I am grateful to all faculty members of SETH G.B. PODAR COLLEGE and my Teachers who have helped me in the successful completion of this project.

Life has always been an uncertain thing. To be secure against unpleasant possibilities, always requires the utmost resourcefulness and foresight on the part of man. To pray or to pay for protection is the spirit of the humanity. Man has been accustomed to pray God for protection and security from time immemorial. In modern days Insurance Companies want him to pay for protection and security. The insurance man says "God helps those who help themselves"; probably he is correct. Too many people in this country are not in employment; and work for too many no longer guarantees income security. Several millions are part-time, self employed and Low-earning workers living under pitiable circumstances where there is no security cover against risk. Further the inherent changing employment risks, the prospect of continual change in the work place with its attendant threats of unemployment and low pay especially after the adoption of New Economic Policy and the imminent life cycle risks - a new source of insecurity which includes the changing demands of family life, separation, divorce and elderly dependents are tormenting the society. Risk has become central to one's life. It is within this background life insurance policy has been introduced by the insurance companies covering risks at various levels. Life insurance coverage is against disablement or in the event of death of the insured, economic support for the dependents. It is a measure of social security to livelihood for the insured or dependents. This is to make the right to life meaningful, worth living and right to livelihood a means for sustenance. Therefore, it goes without saying that an appropriate life insurance policy within the paying capacity and means of the insured to pay premium is one of the social security measures envisaged under the Indian Constitution. Hence, right to social security, protection of the family, economic empowerment to

the poor and disadvantaged are integral part of the right to life and dignity of the person guaranteed in the constitution. Man finds his security in income (money) which enables him to buy food, clothing, shelter and other necessities of life. A person has to earn income not only for himself but also for his dependents, viz., wife and children. He has to provide legally for his family needs, and so he has to keep aside something regularly for a rainy day and for his old age. This fundamental need for security for self and dependents proved to be the mother of invention of the institution of life insurance.

Table of Content
S.N. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Particulars Abstract of the Report Introduction Portfolio Analysis WHY HDFC IS BETTER ? MUTUAL FUNDS Mutual Fund Portfolio Construction How do Mutual Funds Earn Money? Research Methodology Limitations of the Study Data Analysis Finding & Suggestion Page no. 10-12 13-23 24-26 27-55 56-61 62-67 68-71 72-74 75-82 83-84

11. 12. 13.

Recommendation Conclusion Bibliography

85 86 87


The report basically deals with Mutual funds. It would enable the reader to get an insight into the world of Mutual Funds. It gives a general overview of Mutual Funds giving the definition, the objectives, characteristics, benefits, types and the risk involved in Mutual Funds.


This report contains the different investment strategies taken by the investors (mainly small investors) and the trends of investment in different investment instruments. Project focused on findings of risk tolerance of investors and the time horizon they want to remain invested n the market. The project extended to find out the instrument in which different investor is now investing evaluating the projecting risk in the instrument.

To understand the trend of the investor I have gone through an already taken field survey, based on investment strategy questionnaire. The result of the survey depicts a clear picture of current investment trend in Indian market. The analysis shows that the age groups of 18-30 years are more adaptable to the high risk where as the age group of 41-50 are the safe players. Annual income and the disposable income also played a major role in the investment strategies in the investors mind. Results reveal that most investors first priority to invest is the Tax Savings


Investing in equities requires time, knowledge and constant monitoring of the market. For those who need an expert to help to manage their investments, portfolio analysis service (PAS) comes as an answer. The business of portfolio analysis has never been an easy one. Juggling the limited choices at hand with the twin requirements of adequate safety and sizeable returns is a task fraught with complexities. Given the unpredictable nature of the market it requires solid experience and strong research to make the right decision. In the end it boils down to make the right move in the right direction at the right time. Thats where the expert comes in. The term portfolio analysis in common practice refers to selection of securities and their continuous shifting in a way that the holder gets maximum returns at minimum possible risk. Portfolio analysis /management services are merchant banking activities recognized by SEBI and these activities can be rendered by SEBI authorized portfolio managers or discretionary portfolio managers. A portfolio manager by the virtue of his knowledge, background and experience helps his clients to make investment in profitable avenues. A portfolio manager has to comply with the provisions of the SEBI (portfolio managers) rules and regulations, 1993. The project also shows the factors that one considers for making an investment decision and briefs about the information related to asset allocation.


I have chosen this project of Mutual Funds because I have of the interest in
investments especially in mutual funds besides I have specially chosen HDFC MUTUAL FUNDS as my interest area because of the following reasons:

FINANCIAL EXPERTISE: As a joint venture of leading financial services groups. HDFC Mutual Funds has the financial expertise required to manage your investments safely and efficiently. RANGE OF SOLUTIONS: It has a range of individual and group solutions, which can be easily customized to specific needs. Its group solutions have been designed to offer you complete flexibility combined with a low charging structure. STRONG ETHICAL VALUES: HDFC is an ethical and Cultural Organization. False selling or false commitment with the customers is not allowed.


HDFC was awarded No-1 Private Investment Company In 2004 by the World Class Magazine Business World. Integrity, Innovation and Customer Care.



Stock exchange operations are peculiar in nature and most of the Investors feel insecure in managing their investment on the stock market because it is difficult for an individual to identify companies which have growth prospects for investment. Further due to volatile nature of the markets, it requires constant reshuffling of portfolios to capitalize on the growth opportunities. Even after identifying the growth oriented companies and their securities, the trading practices are also complicated, making it a difficult task for investors to trade in all the exchange and follow up on post trading formalities.

Investors choose to hold groups of securities rather than single security that offer the greater expected returns. They believe that a combination of securities held together will give a beneficial result if they are grouped in a manner to secure higher return after taking into consideration the risk element. That is why professional investment advice through portfolio management service can help the investors to make an intelligent and informed choice between alternative investments opportunities without the worry of post trading hassles.



Portfolio analysis in common parlance refers to the selection of securities and their continuous shifting in the portfolio to optimize returns to suit the objectives of an investor. This however requires financial expertise in selecting the right mix of securities in changing market conditions to get the best out of the stock market. In India, as well as in a number of western countries, portfolio analysis/management service has assumed the role of a specialized service now a days and a number of professional merchant bankers compete aggressively to provide the best to high net worth clients, who have little time to manage their investments. The idea is catching on with the boom in the capital market and an increasing number of people are inclined to make profits out of their hard-earned savings. Portfolio analysis and management service is one of the merchant banking activities recognized by Securities and Exchange Board of India (SEBI). The service can be rendered either by merchant bankers or portfolio managers or discretionary portfolio analysiss as defined in clause (e) and (f) of Rule 2 of Securities and Exchange Board of India(Portfolio Managers)Rules, 1993 and their functioning are guided by the SEBI. According to the definitions as contained in the above clauses, a portfolio manager means any person who is pursuant to contract or arrangement with a client, advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise) the management or administration of a portfolio of securities or the funds of the client, as the case may be. A merchant banker acting as a Portfolio Manager shall also be bound by the rules and regulations as applicable to the portfolio manager. Realizing the importance of portfolio management services, the SEBI has laid down certain guidelines for the proper and professional conduct of portfolio management services. As per guidelines only recognized merchant bankers registered with SEBI are authorized to offer these services.


Portfolio analysis or investment helps investors in effective and efficient management of their investment to achieve this goal. The rapid growth of capital markets in India has opened up new investment avenues for investors.


Portfolio analysis is an art of putting money in fairly safe, quite profitable and reasonably in liquid form. An investors attempt to find the best combination of risk and return is the first and usually the foremost goal. In choosing among different investment opportunities the following aspects risk management should be considered: a) The selection of a level or risk and return that reflects the investors tolerance for risk and desire for return, i.e. personal preferences. b) The management of investment alternatives to expand the set of opportunities available at the investors acceptable risk level. The very risk-averse investor might choose to invest in mutual funds. The more risktolerant investor might choose shares, if they offer higher returns. Portfolio analysis in India is still in its infancy. An investor has to choose a portfolio according to his preferences. The first preference normally goes to the necessities and comforts like purchasing a house or domestic appliances. His second preference goes to some contractual obligations such as life insurance or provident funds. The third preference goes to make a provision for savings required for making day to day payments. The next preference goes to short term investments such as UTI units and post office deposits which provide easy liquidity. The last choice goes to investment in company shares and debentures. There are number of choices and decisions to be taken on the basis of the attributes of risk, return and tax benefits from these shares and debentures. The final decision is taken on the basis of alternatives, attributes and investor preferences.



Portfolio analysis is a process encompassing many activities of investment in assets and securities. It is a dynamic and flexible concept and involves regular and systematic analysis, judgment and action. The objective of this service is to help the unknown and investors with the expertise of professionals in investment portfolio analysis. It involves construction of a portfolio based upon the investors objectives, constraints, preferences for risk and returns and tax liability. The portfolio is reviewed and adjusted from time to time in tune with the market conditions. The evaluation of portfolio is to be done in terms of targets set for risk and returns. The changes in the portfolio are to be effected to meet the changing condition. Portfolio construction refers to the allocation of surplus funds in hand among a variety of financial assets open for investment. Portfolio analysis theory concerns itself with the principles governing such allocation. The modern view of investment is oriented more go towards the assembly of proper combination of individual securities to form investment portfolio. A combination of securities held together will give a beneficial result if they grouped in a manner to secure higher returns after taking into consideration the risk elements. The modern theory of portfolio analysis is of the view that by diversification risk can be reduced. Diversification can be made by the investor either by having a large number of shares of companies in different regions, in different industries or those producing different types of product lines. Modern theory believes in the perspective of combination of securities under constraints of risk and returns.



The major objectives of portfolio analysis are summarized as below:-

1) SECURITY/SAFETY OF PRINICPAL: Security not only involves keeping the principal sum intact but also keeping intact its purchasing power intact.

2) STABILITY OF INCOME: So as to facilitate planning more accurately and systematically the reinvestment consumption of income.

3) CAPITAL GROWTH: This can be attained by reinvesting in growth securities or through purchase of growth securities.

4) MARKETABILITY: i.e. is the case with which a security can be bought or sold. This is essential for providing flexibility to investment portfolio.

5) LIQUIDITY I.E NEARNESS TO MONEY: It is desirable to investor so as to take advantage of attractive opportunities upcoming in the market.



Portfolio analysis is on-going process involving the following basic tasks: Identification of the investors objectives, constraints and preferences. Strategies are to be developed and implemented in tune with investment policy formulated. Review and monitoring of the performance of the portfolio. Finally the evaluation of the portfolio





HDFC Asset Management Company Limited was awarded NDTV Profit Business Leadership Award 2009 in the Mutual Funds Category for the period April 1, 2008 to March 31, 2009 from amongst six nominees in the category. NDTV Profit Business Leadership Awards have been instituted to honor organization excellence and promise to acknowledge the best, the brightest and the most dynamic of Indian organizations that have emerged as leaders in their respective verticals and are taking India to economic superpower status. The objective of the Awards is to salute men and women who fuel Indias journey to the forefront of the World Economy. Grand Thornton India is the Business Process Advisors to the Awards instituted by NDTV Profit.



Integrity Innovation Customer centric. People care. Team work.





Equity / Growth Fund Invest primarily in equity and equity related instruments Debt/ Income Fund Invest in money market and debt instruments and provide optimum balance of yield.

Children's Gift Fund Children's Gift Fund

Quarterly Interval Fund The primary objective of the Scheme is to generate regular income through investment.

Fixed Maturity Plan Invest primarily in Debt / Money Market Instruments and Government Securities... Exchange Traded Funds Invest primarily in equity and equity related instruments

Liquid Funds Provide high level of liquidity by investing in money market and debt instruments.



1. Investment returns: investment returns and business growth provided by HDFC is validated by Bajaj Capital report. HDFC pacify the need of invertors up to healthy level and make the strong relationship with them.

2. Financial Background and Experience: HDFC existing in the market since 1977. It has a very handsome experience in the field of finance because it completely involved in finance Sector only where as the others are running in many other field also like Reliance (Petroleum, Textile, Telecom etc.)

3. Ethics and Values: HDFC is an ethical and cultural organization which prevents the false selling and prohibits the false commitment to the customer.

4. Sales Force: Properly trend licensed and Educated People are the strength of the company. So that they could give the best customer service.

5. Huge branch network HDFC is having 450 branches in all over the country.

6. Online accessibility: It makes the process faster and make the customer delighted.


Analyzing elements of a firm's product mix to determine the optimum allocation of its resources. Two most common measures used in a portfolio analysis are market growth rate and relative market share.


Portfolio analysis is broadly carried out for each asset at two levels:

risk appetite of an investor. Some of the investors may prefer to play safe and accept low profits rather than invest in risky assets generating high returns. are calculated through the average and compound return methods. An average return is simply the arithmetic average of returns from individual assets. However, compound return is the arithmetic mean that considers the cumulative effect on overall returns. The next step in portfolio analysis involves determining dispersion of returns. It is the measure of volatility or standard deviation of returns for a particular asset. Simply put, dispersion refers is the difference between the real interest rate and the calculated average return. Measuring the recovery period after a negative market cycle is equally


Several specialized portfolio analysis softwares are available in the market to ease the task for an investor. These application tools can analyze and predict future trends for almost every investment asset . They provide essential data for decision making on the allocation of assets, calculation of risks and attainment of investment objectives. It is still advisable to hire professional experts for highly sophisticated portfolio compositions as they can offer direct assistance to help their clients earn good returns.


In financial terms, portfolio analysis is a study of the performance of specific portfolios under different circumstances. It includes the efforts made to achieve the best trade-off between risk tolerance and returns. The analysis of portfolio can be conducted either by a professional or an investor who may utilize specialized software to do so.

Portfolio analysis involves quantifying the operational and financial impact of the portfolio. It is vital to evaluate the functioning of investments and timing the returns effectively. The analysis of a portfolio extends to all classes of investments such as bonds, equities, indexes, commodities, funds, options and securities. Portfolio analysis gains importance because each asset class has peculiar risk factors and returns associated with it. Hence, the composition of a portfolio impacts the rate of return on the overall investment.



Nowadays, bank rates have fallen down and are generally below the inflation rate. Therefore, keeping large amounts of money in bank is not a wise option, as in real terms the value of money decreases over a period of time. One of the options is to invest the money in stock market. But a common investor is not informed and competent enough to understand the intricacies of stock market. This is where mutual funds come to the rescue. Mutual Fund is an instrument of investing money.

A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. Also, one doesn't have to figure out which stocks or bonds to buy. But the biggest advantage of mutual funds is diversification.

Diversification means spreading out money across many different types of investments. When one investment is down another might be up. Diversification of investment holdings reduces the risk tremendously. Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions.



A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.

You can make money from a mutual fund in three ways:

1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of the income it receives over the year to fund owners in the form of a distribution. 2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution. 3) If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit. Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more shares.



A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.


The flow chart below describes broadly the working of a mutual fund:


Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Investors of mutual funds are known as unit holders. The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.



The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Reserve Bank & Government of India. The objective then was to attract the small investors and introduce them to market investments. Since then,

The history of mutual fund in India can be broadly divided in to six distinct phases.


In 1963, UTI was established by an Act of Parliament. As it was the only entity offering mutual funds in India, it was monopoly. Operationally, UTI was set up by the Reserve Bank of India, but was later de-linked from the RBI. The first scheme and for long one of the largest number of investors in any single investment scheme. It was also at least partially the first open end scheme in the country.


1987 marked the entry of public sector mutual funds. With the opening of the economy, many public sector banks financial institutions were allowed to establish mutual fund. State Bank of India established the first non-UTI mutual. Fund- SBI mutual fund in Nov 1987. this was followed by can bank Mutual fund , LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund & PNB Mutual Fund. These funds helped in enlarging the investor community & investible funds. From 1987-88 to 1992-93, the assets under management increased from Rs. 6700 cr. To Rs. 47004 Cr. nearly seven times.

During this period, investor showed a marked interest in mutual funds, allocating a larger part of their savings to investment in the funds. UTI was still the largest segment of the industry, with about 80% market share.



A new era in the mutual fund industry began in 1993 with the permission granted for the entry of private sector funds. This gave the Indian investors a broader choice of fund families and increasing competition to the existing public sector funds. Quite significantly, foreign fund management companies were also allowed to operate mutual funds, most of them coming into India through their joint ventures with Indian promoters. These private funds have brought in with them the latest product innovations, investment management techniques and investor-servicing technology that make the Indian mutual fund industry today a vibrant and growing financial intermediary.


Since 1996, the mutual fund industry in India saw tighter regulation and higher growth. It scaled new heights in terms of mobilization of funds & no. of players. Deregulation & liberalization of Indian economy had introduce competition provide impetus to the growth of the industry. Finally most investors small or large started showing interest in mutual funds.










The major development in the fund industry has been the creation of a level playing field for all mutual funds operating in India. This happened in February 2003, when the UTI Act was repealed. UTI has no longer legal status as a trust established by Act of Parliament. Instead, it has also adopted the same structure as any other fund in India- a Trust and an Asset Management Company. UTI Mutual Fund is present name of the erstwhile Unit trust of India. While UTI functioned under separate law of Indian Parliament earlier, UTI Mutual Fund is now under the SEBIs Regulation, 1996 like all other Mutual Funds in India. UTI Mutual Fund is still the largest player in the Indian fund industry. All SEBI compliant schemes of the erstwhile UTI are under its charge. All new schemes offered by UTI Mutual Fund are SEBI approved. Other schemes of erstwhile UTI have been paced with a special undertaking administered by the Government of India. These schemes are being gradually wound up.

Phase 6 -From 2004 Onwards: Consolidation & Growth

The industry has lately witnessed a spate of mergers & acquisitions, most recent ones being the acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund by Principal & PNB Mutual Fund by Principal. At the same time, more international players continue to enter India, Including Fidelity, one of the largest fund in world. The stage is set now for growth through consolidation and entry of new international and private sector players. At the end of March 2006, there were 29 Funds.



A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund. SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme. However, Unit Trust of India (UTI) is not registered with SEBI (as on January 15, 2002).


Mutual Fund Custodian:

A trust company, bank or similar financial institution responsible for holding and safeguarding the securities owned within a mutual fund. A mutual fund's custodian may also act as the mutual funds transfer agent, maintaining records of shareholder transactions and balances. Also refers to as a "mutual fund corporation". Since a mutual fund is essentially a large pool of funds from many different investors, it requires a third-party custodian to hold and safeguard the securities that are mutually owned by all the fund's investors. This structure mitigates the risk of dishonest activity by separating the fund managers from the physical securities and investor records. Sponsor: Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. Sponsor must contribute atleast 40% of the net worth of the Investment Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund. Trust:

The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908.


Trustee: Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main responsibility of the Trustee is to safeguard the interest of the unit holders and ensure that the AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes.

Asset Management Company (AMC): The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. The AMC must have a net worth of at least 10 crore at all times.

Registrar and Transfer Agent : The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form, redemption requests and dispatches account statements to the unit holders. The Registrar and Transfer agent also handles communications with investors and updates investor records.



If mutual fund is emerging as the favorite investment vehicle, it is because of the many advantages it has over other forms and avenues of investing, particularly for the investor who has limited resources available in terms of capital and ability to carry out detailed research and market monitoring. The following are the major advantages offered by mutual funds to all investors: 1. Professional Management: Even if the investor has a big amount of capital available to him, he benefits from the professional management skills brought in by the fund in the management of the investors portfolio. The investment skills, along with the needed research into available investment options, ensure a much better return than what an investor can manage on his own. Few investors have the skills and resources of their own to succeed in todays fastmoving, global and sophisticated markets. 2. Reduction/Diversification of Risk: An investor in a mutual fund acquires a diversified portfolio, no matter how small his investment. Diversification reduces the risk of loss, as compared to investing directly in one or two shares or debentures or other instruments. When an investor invests directly, all the risk of potential loss is his own. While investing in the pool of funds with other investors, any loss in one or two securities is also shared by other investors. This risk reduction is one of the most important benefits of a collective investment vehicle like mutual fund.


3. Reduction in Transaction Costs: What is true of risk is also true of the transaction costs. A direct investor bears all the costs of investing such as brokerage or custody of securities. When going through a fund, he has the benefit of economies of scale; the funds pay lesser costs because of larger benefits passed on to its investors. 4. Liquidity: Often investors hold shares or bonds they cannot directly, easily and quickly sell. Investment in mutual fund, on the other hand, is more liquid. An investor can liquidate the investment by selling the units to the fund if it is an open-ended fund, or by selling the units in the stock market if the fund is a closed-ended fund, since closed-end funds have to be listed on a stock exchange, in any case, the investor in a closed-ended fund receives the sale proceeds at the end of a period specified by the mutual fund or the stock exchange. 5. Flexibility: Mutual fund management companies offer many investor services that a direct market investor cannot get. Within the same fund family, investors can easily transfer/switch their holdings from one scheme to another. They can also invest or withdraw their money as regular investors in most open-ended schemes. 6. Convenience: Mutual fund investment process has been made further more convenient with the facility offered by funds for investors to buy or sell their units through the internet or email or using other communication means. 7. Regulated Operations: Mutual fund industry is well regulated; all funds are registered with SEBI, which lays down rules to protect the investors. Thus, investors also benefit from the safety of a regulated investment environment. 8. Higher Returns: As these funds are well managed and well diversified, they tend to perform better than market over longer period of time; there is potential for the unit holders to get better returns compared to fixed income avenues over longer period of time. 9. Tax Benefits: Mutual funds enjoy tax benefits on the incomes received by them as well as on capital gains. The unit holders also enjoy certain tax benefit on the income earned, the capital gains made, and on amount invested in certain types of funds.



While the benefits of investing through mutual funds far outweigh the disadvantages, an investor and his advisor will do well to be aware of a few shortcomings of using the mutual fund as an investment vehicle. 1. No Control over Costs: An investor in a mutual fund has any control over the overall cost of investing. He pays investment management fees as long as he remains with fund, albeit in return for the professional management and research. Fees are usually payable as a percentage of the value of his investments, whether the fund value is rising or declining. A mutual fund investor also pays fund distribution cost, which he would not incur in direct investing. However, this shortcoming only means that there is a cost to obtain the benefits of mutual fund services, and this cost is often less than the cost of direct investing by the investors. Besides, the regulators have prescribed a ceiling on the maximum expenses that the fund managers can charge to the schemes, thus limiting the investors expense of investing through mutual funds. 2. No Tailor-made Portfolios: Investors who invest on their own can build their own portfolios of shares, bonds and other securities. Investing through funds means that he delegates this decision to the fund managers. High-net-worth individuals or large corporate investors may find this to be a constraint in achieving their objectives. However, most mutual funds help investor overcome this constraint by offering families of schemes a large number of different schemes within the same fund. In each schemes there are various plans and options. An investor can choose from different investment

schemes/plans/options and construct an investment portfolio that meets his investment objectives. 3. Managing a Portfolio of Funds: Availability of a large number of options from mutual funds can actually mean too much choice for the investor. He may again need advice on how to select a fund to achieve his objectives, quite similar to the situation when he has to select individual shares or bonds to invest in. Fortunately, India now has a large number of AMFI registered and tested fund distributors and financial planners who are capable of guiding the investors.



We cannot overemphasize the importance of having a well balanced and diversified mutual fund portfolio. But what does this exactly mean? A total investment of between $5000 and $6000 could make your portfolio fairly diversified. Even the mutual funds themselves can be diversified in a variety of investments. The mutual funds that are better diversified tend to do better than the non-diversified funds. The same is true with your overall portfolio. In short, diversification provides insurance.


PORTFOLIO - TOP 10 HOLDINGs COMPANY EQUITY & EQUITY RELATED Banks Consumer Non-Durables Software Industrial Goods Pharmaceuticals Oil Petroleum Products Media & Entertainment Auto Ancillaries Fertilisers TOTAL TOP-10 EQUITY HOLDINGS Gas Chemicals Construction PROJECT Power Paper PRODUCT Ferrous Metals Telecom Services Industrial Products Engineering Finance TOTAL EQUITY & EQUITY RELATED HOLDINGS Short Term Deposits as margin for Futures & Options Cash Margin Other Cash, Cash Equivalents and Net Current Assets GRAND TOTAL Net Assets (Rs. In Lakhs) % TO NAV 6.22 6.01 5.74 5.52 5.23 5.14 4.77 4.18 3.93 3.89 50.63 3.54 3.09 2.68 2.06 0.97 0.81 0.68 0.66 0.42 0.35 96.08 0.78 0.08 3.06 100 1,27,541.18

INTERPRETATION- The above table shows the allocation of funds collected by a fund manager in different sectors at different %. Here 50% of funds are invested in Top 10 holdings, so that the risk is minimized and returns are obviously high and the remaining amount is invested in other sectors as required to get the best returns on time according to the set of investments.



DATE Sept 30'09 Mar 31'09 Mar 30'07 Mar 31'05 sept 11'00 PERIOD Last 6 Months 1 Year 3 Year 5 Year Inception NAV/UNIT(Rs) RETURNS-% 68.47 38.73 45.46 24.17 10 8.82 92.38 17.87 25.24 23.39

INTERPRETATION- Above graph shows that the NAV on September 2000 was Rs 10 per unit and the return rate was 23.39% it has been increasing yearly with a continuous growth and till Sept 09 it has reached to 68.47 Rs per unit and return rate shows a constant growth for last 10 years.


DATE Sept 30'09 Mar 31'09 Mar 30'07 Mar 31'05 Mar 31'00 Jan 01'95

PERIOD Last 6 Months 1 Year 3 Year 5 Year 10 Year Inception

NAV/UNIT(Rs) RETURNS-% 211.82 108.85 142.6 66.83 24.89 10 11.54 117.06 18.29 28.71 25.22 23.04

INTERPRETATION- As HDFC provides effective results investments in Equity has increased since Jan01 1995 to Sept 30 2009.


DATE Sept 30'09 Mar 31'09 Mar 30'07 Mar 31'05 Mar 31'00 Oct 11'96

PERIOD Last 6 Months 1 Year 3 Year 5 Year 10 Year Inception

NAV/UNIT(Rs) RETURNS-% 171.76 92.55 104.5 52.3 21.55 10 6.96 98.51 20.65 28.55 23.89 25.95

INTERPRETATION- From Oct 11 1996 to Sept 30 2009 HDFCs TOP 200 FUND has given effective performance.


DATE Sept 30'09 Mar 31'09 Mar 30'07 Mar 31'05 July 17'02

PERIOD Last 6 Months 1 Year 3 Year 5 Year Inception

NAV/UNIT(Rs) 143.33 82.68 120.32 61.5 32.16

RETURNS-% 1.61 76.16 6.56 18.81 21.64

INTERPRETATION- As hdfc implements effective portfolio management strategies and efficient research techniques, it has succeded in increasing its NAV in case of Index funds also.


DATE Sept 30'09 Mar 31'09 Mar 30'07 April 06'05

PERIOD Last 6 Months 1 Year 3 Year Inception

NAV/UNIT(Rs) RETURNS-% 23.25 11.99 17.63 10 4.72 87.95 11.08 19.06

INTERPRETATION- As HDFC ltd. provides effective services to its customers, there is a rise in 2007-09 in its customers and multi cap funds gave a record NAV in mutual funds.


DATE Sept 30'09 Mar 31'09 Mar 30'07 Mar 31'05 Sept 11'00 PERIOD Last 6 Months 1 Year 3 Year 5 Year Inception NAV/UNIT(Rs) RETURNS-% 41.44 25.93 29.18 19.96 10 13.89 81.96 17.35 18.76 17.63

INTERPRETATION- HDFC balanced funds has constantly shown significant returns throughout September 2000 to September 2009.


DATE Sept 30'09 Mar 31'09 Mar 30'07 Mar 31'05 Mar 31'00 Feb 01'94

PERIOD Last 6 Months 1 Year 3 Year 5 Year 10 Year Inception

NAV/UNIT(Rs) RETURNS-% 161.18 91.47 110.13 59.26 20.54 10 12.95 99.02 18.2 23.15 24.37 21.57

INTERPRETATION- From Feb. 01 94 till Sept 30 09 prudence fund has given stable returns which shows minimum risk and its useful for customers which propose minimum risk and constant returns.


DATE Sept 30'09 Mar 31'09 Mar 30'07 Mar 31'05 Mar 31'00 Mar 31'96

PERIOD Last 6 Months 1 Year 3 Year 5 Year 10 Year Inception

NAV/UNIT(Rs) RETURNS-% 183.3 97.06 133.88 67.55 41.56 10 12.21 111.9 15.36 24.93 23.57 32.57

INTERPRETATION- As the above analysis gives the clear idea that most of the Investors prefer Tax saver fund of hdfc due to tax saving factor benefit provided by hdfc mutual fund investments has good results over other investments.




NAV/UNIT(Rs) RETURNS-% 30.3 29.21 24.31 32.14 14.34 10 2.83 6.67 8.6 6.13 8.07 9.19

Sept 29'09 Last 6 Months Mar 31'09 1 Year Mar 30'07 3 Year Mar 31'05 5 Year Mar 31'00 10 Year April 28'97 Inception

INTERPRETATION- Investments in high interest funds have increased at a rapid pace because of hdfcs strategies of allocation of funds in AAA rated sectors like banks and other industries, it helps in getting high interest.



AMC A Company formed under the Companies Act and registered with SEBI to manage investors funds collected through different schemes. The trustee delegates the task of floating schemes and managing the collected money to a company of professionals, usually experts who are known for smart stock picks. This is an Asset Management Company (AMC). AMC charges a fee for the services it renders to the MF trust. Thus, the AMC acts as the investment manager of the trust under the broad supervision and direction of the trustees. Unit

A unit in a mutual fund scheme means one share in the assets of a particular scheme. So, a person holding units in a scheme is referred to, as a unit holder. Net Asset Value (NAV)

The performance of a particular scheme of a Mutual Fund is denoted by Net Asset Value (NAV). Mutual Funds invest the money collected from the investors in securities markets. In simple words, NAV is the market value of the securities held by the scheme. Since market value of the securities changes every day, NAV of a scheme also varies on a day-to-day basis. The NAV per unit is the market value of the securities of a scheme divided by the total number of units of the scheme on any particular date. For e.g., if the market value of securities of a mutual fund scheme is Rs. 300 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs. 30. NAV is required to be disclosed by the mutual funds on a regular basis-daily or weekly-depending on the type of scheme. Sale Price

It is the price you pay when you invest in a scheme. It is also called as Offer Price. It may include a Sales or Entry Load.


Repurchase Price

It is the price at which an investor sells back the units to the Mutual Fund. This price is NAV related and may include the exit load. When an investor chooses to withdraw money from his investment in an open-ended fund at any point of time, the units are sold at NAV (after deduction of the Exit Load, if any) to the fund. When a close-ended fund completes tenure, it is redeemed at the prevailing NAV and investors are paid the proceeds thereof. It is also called as Bid Price.

Redemption Price

It is the price at which open-ended schemes repurchase their units and closeended schemes redeem their units on maturity. Such prices are NAV related.

Statement of Account

A Statement of Account is a document that serves as a record of transactions between the fund and the investor. It contains details of the investor with the various transactions executed during he period, i.e., sales, repurchase, switchover in, switch-over out. The Statement of Account is issued every time any transaction takes place.



Load is a charge collected by a mutual fund on units. It is of three types.

Entry Load: When a charge is collected at the time of entering into a scheme it is called as entry load or front end load or sales load. The entry load percentage is added to the NA at the time of allotment of units.

Exit Load: An Exit load or Back-end load or repurchase load is a charge that is collected at the time of redeeming or for transfer between schemes. (Switch). The exit load percentage is deducted from the NAV at the time of redemption or transfer between schemes.

Contingent Deferred Sales Load (CDSL): The load amounts charged to units when recovered at various period of time is called as deferred load. This load reduces the redemption proceeds paid out to the outgoing investors. Depending on how many years the investor stays with the fund, some funds may charge different mounts of loads to the investor- the longer the investor stays with the fund, lesser is the amount of exit load charged to him. This is called Contingent the Deferred Sales Charge (CDSC) and Contingent Deferred Sales Load (CDSL).


Equity Funds:
Funds that invest in stocks represent the largest category of mutual funds. Generally, the investment objective of this class of funds is long-term capital growth with some income. There are, however, many different types of equity funds because there are many different types of equities. A great way to understand the universe of equity funds is to use a style box, an example of which is below.

The idea is to classify funds based on both the size of the companies invested in and the investment style of the manager. The term value refers to a style of investing that looks for high quality companies that are out of favor with the market. These companies are characterized by low P/E and price-to-book ratios and high dividend yields. The opposite of value is growth, which refers to companies that have had (and are expected to continue to have) strong growth in earnings, sales and cash flow. A compromise between value and growth is blend, which simply refers to companies that are neither value nor growth stocks and are classified as being somewhere in the middle.

For example, a mutual fund that invests in large-cap companies that are in strong financial shape but have recently seen their share prices fall would be placed in the upper left quadrant of the style box (large and value). The opposite of this would be a fund that invests in startup technology companies with excellent growth prospects. Such a mutual fund would reside in the bottom right quadrant (small and growth).



Steps One - Identify your investment needs. Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, level of income and expenses among many other factors. Therefore, the first step is to assess your needs. Begin by asking yourself these questions: 1. What are my investment objectives and needs? Probable Answers: I need regular income or need to buy a home or finance a wedding or educate my children or a combination of all these needs. 2. How much risk I am willing to take? Probable Answers: I can only take a minimum amount of risk or I am willing to accept the fact that my investment value may fluctuate or that there may be a short-term loss in order to achieve a long-term potential gain. 3. What are my cash flow requirements? Probable Answers: I need a regular cash flow or I need a lump sum amount to meet a specific need after a certain period or I don't require a current cash flow but I want to build my assets for the future. By going through such an exercise, you will know what you want out of your investment and can set the foundation for a sound Mutual Fund investment strategy.


Step Two - Choose the right Mutual Fund. Once you have a clear strategy in mind, you have to choose which Mutual Fund and scheme you want to invest in. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some factors to evaluate before choosing a particular Mutual Fund are:

1) The track record of performance over the last few years in relation to the appropriate yardstick and similar funds in the same category. 2) How well the Mutual Fund is organized to provide efficient, prompt and personalized service. 3) Degree of transparency as reflected in frequency and quality of their communications.

Step Three - Select the ideal mix of Schemes. Investing in just one Mutual Fund scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals. The following tables could prove useful in selecting a combination of schemes that satisfy your needs.


Money Market Schemes Income Schemes 5% 10-15%

Balanced Schemes

10-20 %

Growth Schemes

60-70 %

Money Market Schemes 10 %

Income Schemes

20 %

Balanced Schemes

40-50 %

Growth Schemes

30-40 %

Money Market Schemes 10 %

Income Schemes

50-60 %

Balanced Schemes

20-30 %

Growth Schemes

10 %


Step Four - Invest regularly For most of us, the approach that works best is to invest a fixed amount at specific intervals, say every month. By investing a fixed sum every month, you buy fewer units when the price is higher and more units when the price is low, thus bringing down your average cost per unit. This is called rupee cost averaging and is a disciplined investment strategy followed by investors all over the world. With many open-ended schemes offering systematic investment plans, this regular investing habit is made easy for you.

Step Five - Keep your taxes in mind If you are in a high tax bracket and have utilized fully the exemptions under section 80L of the Income Tax Act, investing in growth funds that do not pay dividends might be more tax efficient and improve your post-tax return. If you are in a low tax bracket and have not utilized fully the exemptions available under Section 80L of the Income Tax Act, selecting funds paying regular income could be more tax efficient. Further, there are other benefits available for investment in Mutual Funds under the provisions of the prevailing tax laws. You may therefore, consult your tax advisor or Chartered Accountant for specific advice.

Step Six - Start early It is desirable to start investing early and stick to a regular investment plan. If you start now, you will make more than if you wait and invest later. The power of compounding lets you earn income on income and your money multiplies at the compounded rate of return.

Step Seven - The final step All you need to do now is to get a touch with a Mutual Fund or your agent/broker and start investing. Reap the rewards in the years to come. Mutual Funds are suitable for every kind of investor - whether starting a career or retiring, conservative or risk-taking, growth oriented or income seeking.


Mutual Fund Risk:

Risk Every type of investment, including mutual funds, involves risk. Risk refers to the possibility that you will lose money (both principal and any earnings) or fail to make money on an investment. A fund's investment objective and its holdings are influential factors in determining how risky a fund is. Reading the prospectus will help you to understand the risk associated with that particular fund. Generally speaking, risk and potential return are related. This is the risk/return trade-off. Higher risks are usually taken with the expectation of higher returns at the cost of increased volatility. While a fund with higher risk has the potential for higher return, it also has the greater potential for losses or negative returns. The school of thought when investing in mutual funds suggests that the longer your investment time horizon is the less affected you should be by shortterm volatility. Therefore, the shorter your investment time horizon, the more concerned you should be with short-term volatility and higher risk. Following is a glossary of some risks to consider when investing in mutual funds.

Call Risk: - The possibility that falling interest rates will cause a bond issuer to redeemor callits high-yielding bond before the bond's maturity date.

Country Risk: - The possibility that political events (a war, national elections), financial problems (rising inflation, government default), or natural disasters (an earthquake, a poor harvest) will weaken a country's economy and cause investments in that country to decline.


Credit Risk: - The possibility that a bond issuer will fail to repay interest and principal in a timely manner. Also called default risk.

Currency Risk: - The possibility that returns could be reduced for Americans investing in foreign securities because of a rise in the value of the U.S. dollar against foreign currencies. Also called exchange-rate risk.

Income Risk: - The possibility that a fixed-income fund's dividends will decline as a result of falling overall interest rates.

Industry Risk: - The possibility that a group of stocks in a single industry will decline in price due to developments in that industry.

Inflation Risk: - The possibility that increases in the cost of living will reduce or eliminate a fund's real inflation-adjusted returns.

Interest Rate Risk: - The possibility that a bond fund will decline in value because of an increase in interest rates.

Manager Risk: - The possibility that an actively managed mutual fund's investment adviser will fail to execute the fund's investment strategy effectively resulting in the failure of stated objectives.

Market Risk: - The possibility that stock fund or bond fund prices overall will decline over short or even extended periods. Stock and bond markets tend to move in cycles, with periods when prices rise and other periods when prices fall.

Principal Risk: - The possibility that an investment will go down in value, or "lose money," from the original or invested amount.


How do mutual funds earn money?

A mutual fund is a means of investing that enables individuals to share the risks of investing with other investors. All contributors to the fund experience an equal share of gains and losses for each dollar invested. A mutual fund owns the securities of several corporations. A mutual fund pools money from hundreds and thousands of investors to construct a portfolio of stocks, bonds, real estate, or other securities, according to the kind of investments the mutual fund trades. Investors purchase shares in the mutual fund as if it was an individual security. Fund managers hired by the mutual fund company are paid to invest the money that the investors have placed in the fund. Heeding the adage "Don't put all your eggs in one basket", the holders of mutual fund shares are able to gain the advantage of diversification which might be beyond their financial means individually.



Like other countries, India has a legal framework within which mutual funds must be constituted. Unlike in the UK, where two distinct structurestrust and corporate- are allowed with separate regulations, depending on their nature- open end or closed end, in India, open end and closed end funds are constituted along one unique structure- as unit trusts. A mutual fund in India is allowed to issue open-end and closed-end schemes under a common legal structure. Therefore, a mutual fund may have several different schemes (open and closed-end) under it i.e.; under one unit trust, at any point of time. However, like the USA; all the funds and their open end and closed end schemes are governed by the same regulations and the regulatory body, the SEBI. The structure that is required to be followed by mutual fund in India is laid down under SEBI (mutual fund) Regulations, 1996.

Some facts of the growth of mutual funds in India

100% growth in the last 6 years. Numbers of foreign AMCs are in the queue to enter the Indian markets like Fidelity Investments, US based, with over US$1trillion assets under management worldwide.

Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual funds sector is required.

We have approximately 29 mutual funds which are much less than US having more than 800. There is a big scope for expansion.

'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'A' class cities. Soon they will find scope in the growing cities.


Mutual fund can penetrate rural areas like the Indian insurance industry with simple and limited products.

SEBI allowing the MF's to launch commodity mutual funds. Emphasis on better corporate governance. Trying to curb the late trading practices. Introduction of Financial Planners who can provide need based advice.


Performance of Mutual Fund Industry from 1965 To 2008

The number of Indians putting their money on mutual fund investments is steadily increasing. More and more people are being lured by the prospect of handsome profits that investments in mutual funds carry for the investors. In recent years, many mutual fund companies have sprung up in India. Now the investors have lots of mutual fund



By December 2004, Indian mutual fund industry reached Rs.1, 50,537 crore. It is estimated that by 2010 March-end, the total assets of all scheduled commercial banks should be Rs. 40, 90,000 crore. The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 years we have seen annual growth rate of 9%. According to the current growth rate, by year 2010, mutual fund assets will be double.

In the Indian economy Mutual funds have grown faster than any other investment instrument.

The table show net capitalization in Mutual fund sector during 2004 to 2009.



Banksponsored mutual funds 1033.4 4526.2 706.5 5364.9 3032.0

FIsponsored mutual funds 861.5 786.8 -3383.5 2111.9 4226.1

Private sector mutual funds 12122.2 41509.8 7933.1 41581 76687


2004-05 2005-06 2006-07 2007-08 2008-09

-9434.1 1049.9 -2467.2 3423.8 7326.1

4583.0 47872.7 2788.9 52481.6 91271.2




1. Social Fabric: Indian society is represented by skewed income patterns. Rural India is far from investible surplus. Whatever surplus a rural native may have, he is not well informed about investible avenues and mutual funds. Most of the residents of rural area are unaware of stock market and economics. Mutual funds awareness has a long way to go. 2. Government Players: Private sector entities are aggressive in marketing and reach more people with efforts. Indian mutual fund industry was with UTI and then with public sector funds. It is a well known worldwide fact that government owned entities lack in profit orientation because of excessive job security provided to the employees and ownerships [i.e. governments] profit motive absence. Management of these state owned funds mostly vested with these ex-bank managers and government account officials. They came on transfers or on deputation from the sponsor banks. They did not have adequate specialized skills to manage funds. Their performance was dismal in most cases and the industry faced investor confidence crises for some years. UTIs US-64 burst also added to the fears. 3. Protected Stock Market Environment: Indian stock market was protected for several years. Reach and visibility was much less to attract visitors. Physical shares, manual trust based systems, absence of foreign capital flows, a scam per decade are some more reasons for investors slow and cautious approach towards stock related [including mutual funds] investments. 4. Regulatory Environment: It improved slowly over the years and is now attracting more investors. Slow growth is comparative. Compared to developed countries. Per se India has progressed well. More than organic growth in mutual funds industry is witnessed. No specific blames to be attributed to either government players or regulators. In fact every entity has added to the progress.


Research Methodology
WHAT IS RESEARCH? Research can be defined as the search for knowledge or as any systematic investigation to establish facts. The primary purpose for applied research (as opposed to basic research) is discovering, interpreting, and the development of methods and systems for the advancement of human knowledge on a wide variety of scientific matters of our world and the universe. Research can use the scientific method, but need not do so

TYPES OF RESEARCH--Generally, research is understood to follow a certain structural process. Though step order may vary depending on the subject matter and researcher, the following steps are usually part of most formal research, both basic and applied:

Formation of the topic Hypothesis Conceptual definitions Operational definition Gathering of data Analysis of data Test, revising of hypothesis Conclusion, iteration if necessary

Research can also fall into two distinct types:

Primary research (collection of data that does not already exist) Secondary research (summary, collation and/or synthesis of existing research)

In social sciences and later in other disciplines, the following two research methods can be applied, depending on the properties of the subject matter and on the objective of the research:

Qualitative research (understanding of human behavior and the reasons that govern such behavior) Quantitative research (systematic empirical investigation of quantitative properties and phenomena and their relationships)

Research is often conducted using the hourglass model Structure of Research [1]. The hourglass model starts with a broad spectrum for research, focusing in on the required information through the methodology of the project (like the neck of the hourglass), then expands the research in the form of discussion and results.



2.1 Primary Data

This data is generated specifically for the purpose of working out the project. This data means the first hand information, which is collected various sources schedules and formally informal information. 1) Information relating to the project was collected during formal & informal discussions with the Branch Head. 2) Queries arising in due course of the project brought into the notice of concerned Authority and necessary explanation and solution are adapted.

2.2 Secondary Data

Data used in the comparative study is secondary data. In other word comparative study is based on secondary data. Data is collected from Factsheet other required information through internet.

Factsheet: It is the monthly report of all schemes of Mutual Fund Company. It involves data

like Investment Performance, Portfolio & Asset Allocation, Investment Objectives, Entry & Exit Load, AUM and much important information.


2.3 Population HDFC MUTUAL FUND AURANGABAD Branch has one Branch Head, one operation consultant regarding the various schemes, two peons and twenty distributors who work for HDFC across the city having about Crores of investments.

Data Collection



Market Share of Mutual Fund companies in India

0% 0% 0% 0% 9% 0% 4% 2% 6% 0% 10% 1% 0% 2% 3% 0% 0% 1% 1% 4%

11% 16% 2% 0% 2% 0% 0% 1% 4% 3% 0% AI G Global I nvestment Group Mutual Fund Benchmark Mutual Fund Birla Sun Life Mutual Fund DBS Chola Mutual Fund DSP BlackRock Mutual Fund Escorts Mutual Fund Fortis Mutual Fund HDFC Mutual Fund I CI CI Prudential Mutual Fund I NG Mutual Fund JPMorgan Mutual Fund LI C Mutual Fund Mirae Asset Mutual Fund Principal Mutual Fund Reliance Mutual Fund SBI Mutual Fund Tata Mutual Fund UTI Mutual Fund Baroda Pioneer Mutual Fund Bharti AXA Mutual Fund Canara Robeco Mutual Fund Deutsche Mutual Fund Edelweiss Mutual Fund Fidelity Mutual Fund Franklin Templaton Mutual Fund HSBC Mutual Fund I DFC Mutual Fund JM Financial Mutual Fund Kotak Mahindra Mutual Fund Lotus I ndia Mutual Fund Morgan Stanley Mutual Fund Quantum Mutual Fund Sahara Mutual Fund Sundaram BNP Paribas Mutual Fund Taurus Mutual Fund 2% 1% 1% 10%



So though the study aims to achieve the above mentioned Objective in full earnest and accuracy, it may be hampered due to certain limitation. Some of the limitations are as follows: To cover the various section for the society. Respondents may not be present and may have to re-contacted or replaced by others. Getting accurate response form the respondents due to their inherent problem is difficult. Limited response from client. There is a time limitation it is not possible to study whole thing I covered some special aspect as well as some topics. Generally company does not allow outsider to conduct any study or search work in the organization. Therefore to get the e project done in company it was very difficult. Due to confidentially some important information, which is important for the project, could not collect. The study is based on the secondary data. So secondary data may or may not reliable.


Key Highlights of Market Share of HDFC Mutual fund.

(A) Scaling up infrastructure to support growth

1. Distribution network more than doubled in last one year to reach 78 branches and 18K financial advisors 2. Investor folios grew by 65% during the year to 1.9 million 3. Multi Channel non-polarized distribution network

B) Superior fund performance 69% of AUM is in top quartile of performance, based on one year returns C) Recognized and awarded Mutual Fund House of the Year by CNBC TV18Crisil D) Branches (Nos.) Financial Advisors (000) Investor Folios (Mn)

E) 5th largest in India with 6.8% share in average domestic AUM in Mar08 up from 5.8% share in end of period (EOP) AUM in Mar07

1. Achieved 89% growth in last one year 2.2nd highest AUM growth amongst top 7 players
3. Only AMC to show positive month on month growth in average AUM in Mar08


F) Total AUM (EOP) grew 4 times in 3 years to Rs. 45,247 Cr. in Apr08

1. Includes offshore equity AUM of Rs. 2,543 Cr. in Apr08 2. Equity AUM grew 5 times in 3 years to Rs. 10,838 Cr. in Apr08

G) Offering 92 Mutual Fund schemes including 2 offshore funds 1. Product portfolio strengthened through launch of new funds

2.4 Equity NFOs launched collecting Rs. 2,700 Cr.

3. Focus on high margin fixed income funds


1. Awareness of Life Insurance.
Response Yes No No. of Respondents 100 0 %age 100% 0%


Yes No


From the above chart it is clear that all the respondents are aware of Life Insurance i.e. 100%.


2. To which age group you belong. ANS. (A) 20-30 (B) 30-40 (C) 40-50 (D) 50+

Age group

5% 15% 41% 20-30 30-40 40-50 50+


Interpretation - As the survey conducted in the South Ext.,Noida & Gurgaon, Out of 100 respondents 41 were of age group of 20-30. 39 were from the age group 30-40. 15 were from the age group 40-50. And 5 were 50 plus. People of age group 20-30 were keener to know and share the views on such a survey especially about banking sector. People from age group 30-40 were not so much interested in solving the questionnaire, only after a kind request they responded us. People from the age group 40-50 and 50+ avoided us in most of the cases.


3. With which Bank you are associated with: ANS. (A) HDFC (B) ICICI (C) STN. CHT. (D) OTHERS

Share of different banks in market



HDFC ICICI Stn.Cht. Others



Interpretation-In the survey 43 out of 100 respondents are associated with ICICI bank, 28 are associated with Other banks especially government sector banks, 15 are associated with Standard Chartered Bank, and 14 are associated with HDFC bank. ICICI has the highest market potential of 43%. HDFC has the market share of 14%. Standard Chartered has the market share of 15%. Others have 28% of market share in saving account. 76

4. What is your annual income? ANS. (A) 0-2LAKH (B) 2-5LAKH (C) 5-10LAKH (D) 10+

Annual income of different respondent

37 o-2lakhs 2-5lakhs 5-10lakhs 10+lakhs


Interpretation-Through the survey it is being found that 57 out of 100 are from the income group of 2-5 lakhs, 37 are from 5-10 lakhs, 3 are 0 to 2 lakh, and 3 are above 10 lakh.


5. What is your occupation?


occupation of customers

11 20

Govt.emp Pvt.emp Bussiness Profession


Interpretation-61 out of 100 are in private employee, 20 are in government occupation, 11 are in self profession, and only 8 persons are from business. Here in Delhi about 61% of total employed population is involved in private sector, 20% are government employee, 11% are in self profession, 8% are in business. Majority of people are in corporate sector or any other private sector.


6. How much percent of income you save?

ANS. (A) 10-20% (B) 20-30% (C) 30-40% (D) 0-10%

%age of income saved

10 - 20 % 20 - 30 % 30 - 40 % 0-10%

Interpretation- 60 out of 100 respondent save 10-20% of their total income, 38 save 20-30% of their total income, only 2 people save 30-40% but no one was in the group of 0-10%. Most of the people opt for saving 10-20% of their income. About 38% people also save 20-30% of their income in which females dominates. Interestingly no one opted for 0-10%, i.e. everyone wants to save a fare share of their income. And only 2% wants to save more than 30% of their total income.


7. Which of these do you prefer to invest in?


Interpretation - Out of 100 respondents asked, 42% said that they prefer Ulips if given a chance to choose between Ulips and Mutual Funds and 58% said that they will prefer Mutual Fund.


8. Which of this do you think is better investment?


Interpretation - 43 out of 100 respondents like to invest in the equity market. 34 like the insurance sector to invest. 13 like to invest in Mutual Fund. Only 10 like to invest in Unit linked insurance plan. Thus it may be said that from the peoples point of view, the most profitable investment is equity market and after that they like to invest in the insurance such as life insurance etc.



From the above study, it is clear that all the respondents are aware of Life Insurance i.e. 100%. Majority of the respondent (52%) says that the most important reason in mind while taking the life insurance policy is tax benefit as there life insurance policy is exempted from tax.

Majority of the respondents are aware of Money Back, Endowment, Children and Pension plans. The age group 20-30 were more in number .the second most investor in more in age group 30-40.The least were in the age group of above 45 years . In occupation group the most of the group were private employees and the least

were associated with business. In Income group between 2 t0 5lakh more in numbers .The second most 5 to 10 lakh. And least were above 10 lakh.


Companies should look forward for more interactions with customers by arranging the annual meeting. According to the key findings in the survey the companies should see and emphasize more on the hassle free claims. Younger people aged under 35 will be a key new customer group into the future, so making greater efforts with younger customers who show some interest in investing should pay off. Companies should illustrate the most successful products through local newspaper Encouraging the young people for the insurance particularly the 3 year premium products would be more beneficial for the companies Companies should focused more on the following services: o Claim settlement o Pending documents, etc The agents should update their knowledge about the products and services day to day. The agents should have the knowledge about the competitors product also. Companies should focus more on the rural market by personal selling and advertisement. Companies should concentrate the age group of 18- 30, who are considered as a prospect to take insurance policies. Only few respondents feel that ULIP is a good investment so I suggest the companies to conduct the camp to ensure the respondents opinion.


1. As a branch head of HDFC, he should directly contact to the investors because the company is earning less profits due to the middlemen like the distributors and various banks and financial institution. 2. A special team would require for this purpose. 3. The company should also encourage the young investors by giving proper advertisement and by doing road shows and campaigns. 4. There are around 35 mutual funds in India, and there are among top 5 mutual funds in terms of market share in India. They are Birla Sun Life M.F., Reliance Mutual Fund, and ICICI Prudential Mutual Fund & HDFC Mutual Fund. Company should maintain their relations with other funds also operating in India. 5. Investors need the ability to recognize when reports are made say on CNBC that a particular mutual fund has gained 25% over the past 12 months it does not mean that CNBC endorses that particular fund. 6. Portfolio managers are often seen on TV and radio programs talking of how well their funds are doing but a portfolio manager's appearance on a show does not necessarily reflect the shows recommendation for that fund. 7. Company should also focus on its marketing aspects.


1. While working with HDFC MUTUAL FUNDS it was concluded that the company provides the best types of funds to its investors. 2. The company provides the best customer relationships with its investors.

3. Every facility like net connects and mobile facilities are given to its investors. 4. The investors are directly in touch of the company.

5. The company marketing tactics are also excellent. 6. Every weekend it keeps a meeting with the distributors and investors regarding any new NFO or any queries of the distributors and investors. 7. Companys solvency position is good it shows that company has sufficient liquid assets. 8. The distributor who receives brokerage is also in sufficient amount. 9. Investors are well treated. 10. Goods relations are there between investors and distributors.


BIBLIOGRAPHY Magazines Business World Fund Fact Sheet