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A Study On HDFC Mutual Fund IN "HDFC Assets Management Company LTD"
A Study On HDFC Mutual Fund IN "HDFC Assets Management Company LTD"
IN
“HDFC ASSETS MANAGEMENT COMPANY LTD”
Submitted by
1
DECLARATION
I, Badami Kalpesh D. a student of MBA semester iii, here by declare that the project
work presented in this report is my contribution and has been carried out under
BADAMI KALPESH D.
DR.R.S.SHAH
2
PREFACE
“Experience is the best teacher.” This saying is very well applicable in everyone’s
life. Therefore as a student of management it must apply to me also. Then the
question arises that from where we can get this experience. Obviously we must
undergo practical Training. To serve this purpose I had undergone two months
summer training at HDFC assets Management Company limited and as an outcome I
have prepared this project report.
This project report on “mutual fund awareness in retail investors of HDFC assets
Management Company in Surat” is as per syllabus prescribed by Veer Narmad south
Gujarat University for MBA students. This project also deals with various activities of
HDFC assets Management Company limited. The experience of this training will be
useful in my future and findings of this particular project will be Helpful to take
decision regarding to marketing and advertising of mutual fund schemes To HDFC
assets Management Company limited.
3
ACKNOWLEDGEMENT
First of all, I would like to express my sincere gratitude to Mr. Rajan Mehta, Branch
manager of HDFC assets Management Company limited, Surat branch for allowing
me for summer training at HDFC assets Management Company limited.
I heartily feel thanks to Mr. Piyush lal, sales executive who provided me valuable
suggestions and guidance at every stage of my summer training.
I would also like to express my gratitude to Mr. R.s.shah, my project mentor and other
faculty members of GIDC RAJJU SHROFF ROFEL INSTITUTE OF
MANAGEMENT STUDIES, vapi for guide me.
I would like to thank following persons who help me a lot in my summer training.
Mr. Gaurav maheshwari, HDFC assets Management Company limited
Mr. Pinkal shah, HDFC assets Management Company limited.
Mr. Chintan patel, HDFC assets Management Company limited.
Mr. Ritesh jariwala, HDFC assets Management Company limited.
Mr. Utkrash gheewala, HDFC bank, Parle point branch
Mr. Nilesh patel, HDFC bank, Parle point branch.
Mr. Mitesh sampat, HDFC bank, Parle point branch.
I also thank to respondents, who have been helpful and faithful enough to give the
required information, which helped my project to be a great success, which was the
main and important part of my project. I feel happy indeed and it has given me a lot of
pleasure in company.
Last but not the least I would like to extent my deep sense of gratitude to my family,
friends and all whom guided and helped me during my training period.
4
EXECUTIVE
SUMMARY
5
Executive Summary
The report is specially oriented to particular area, though it is representing the strong
base of Investment management-which covers different investment avenues, their
handling contribution, strategy, portfolios, and related risk factors. Mutual funds- how
they are formed, history, scenario, types, trends, myths, distribution, advantages, and
even disadvantages of them.
Tips to effectively sell the mutual funds, to be effective agent, some do’s and don’ts
about mutual funds while investing. Company details and its progress and its
interpretation base for analysis, conclusion, findings, and questionnaire, which helped
a lot in consumer, survey analysis. Asset allocation, accounting, taxation, valuation
and necessary information for generating base for conclusion. And at last but not the
least the collected data from city and their interpretation.
In short all efforts which was made to make this report explains
“WORK IS WORSHIP”
CONTENTS
6
Sr. No. Name of Table Page No.
1 Objectives of Study 5
2 Limitations of study 6
3 Executive summary 8
4 Company details 11
About the Company 12
Sponsors of HDFC Assets Management
13
Company
Management of HDFC Assets Management
14
Company
Offices of HDFC assets management company
17
limited
5 Product details 24
6 Future scenario 32
7 Industry details 33
Introduction 34
History of Mutual Fund Industry 36
Customers Profile of mutual fund industry 40
Positioning Strategy of mutual fund industry
41
7
Research Design 75
Sources of Data 76
Sampling Plan 78
Data Collection Method 80
15 Data analysis and findings 81
16 Findings 92
17 Limitations 95
18 Conclusions 97
19 Recommendations 100
20 Annexure 103
21 Glossary 105
22 List of Table 107
23 List of Graphs 108
24 Bibliography 109
COMPANY
8
DETAILS
HDFC assets Management Company limited launched its scheme HDFC EQUITY
FUND in the year January 1995. Since then it focused on different class of schemes
for many years and launched several innovative products that went to become
bourgeoning categories in the Indian mutual fund industry.
Some of these were HDFC GROWTH FUND, HDFC TOP 200 FUND, and HDFC
BALANCED FUND, HDFC PRUDENCE FUND etc.
9
HDFC assets Management Company limited have offices in 29 cities and currently
manage assets in excess of Rs 36146.67 cores. (May 2007.)
HDFC was incorporated in 1977 as the first specialized Mortgage Company in India.
HDFC provides financial assistance to individuals, corporates and developers for the
purchase or construction of residential housing. It also provides property related
services (e.g. property identification, sales services and valuation), training and
consultancy. Of these activities, housing finance remains the dominant activity.
HDFC has a client base of around 9.5 lack borrowers, around 1 million depositors,
over 91,000 shareholders and 50,000 deposit agents as at March 31, 2007. HDFC has
raised funds from international agencies such as the World Bank, IFC (Washington),
USAID, DEG, ADB and KfW, international syndicated loans, domestic term loans
from banks and insurance companies, bonds and deposits. HDFC has received the
highest rating for its bonds and deposits program for the twelfth year in succession.
HDFC Standard Life Insurance Company Limited, promoted by HDFC was the first
life insurance company in the private sector to be granted a Certificate of Registration
(on October 23, 2000) by the Insurance Regulatory and Development Authority to
transact life insurance business in India.
The Standard Life Assurance Company was established in 1825 and has considerable
experience in global financial markets. The company was present in the Indian life
insurance market from 1847 to 1938 when agencies were set up in Kolkata and
Mumbai. The company re-entered the Indian market in 1995, when an agreement was
signed with HDFC to launch an insurance joint venture. On April 2006, the Board of
The Standard Life Assurance Company recommended that it should demutualise and
Standard Life plc float on the London Stock Exchange. At a Special General Meeting
held in May voting members overwhelmingly voted in favor of this. The Court of
10
Session in Scotland approved this in June and Standard Life plc floated on the London
Stock Exchange on 10 July 2006. Standard Life Investments was launched as an
investment management company in 1998. It is a wholly owned subsidiary of
Standard Life Investments (Holdings) Limited, which in turn is a wholly owned
subsidiary of Standard Life plc. Standard Life Investments is a leading asset
management company, with approximately US$ 269 billion as at March 30, 2007, of
assets under management. The company operates in the UK, Canada, Hong Kong,
China, Korea, Ireland and the USA to ensure it is able to form a truly global
investment view. In order to meet the different needs and risk profiles of its clients,
Standard Life Investments Limited manages a diverse portfolio covering all of the
major markets world-wide, which includes a range of private and public equities,
government and company bonds, property investments and various derivative
instruments.
A company incorporated under the Companies Act, 1956 is the Trustee to the Mutual
Fund vides the Trust deed dated June 8, 2000, as amended from time to time. HDFC
Trustee Company Limited is a wholly owned subsidiary of HDFC Limited.
HDFC assets Management Company limited was incorporated under the Companies
Act, 1956, on December 10, 1999, and were approved to act as an Asset Management
Company for the Mutual Fund by SEBI on July 3, 2000. The registered office of the
HDFC assets Management Company limited is situated at Ramon House, 3rd Floor,
11
H.T. Parekh Marg, 169, Backbay Reclamation, Church gate, Mumbai - 400 020. In
terms of the Investment Management Agreement, the Trustee has appointed HDFC
Asset Management Company Limited to manage the Mutual Fund. The paid up
capital of the HDFC assets Management Company limited is Rs.75.161 crore.
The present share holding pattern of the HDFC Assets management company is as
follows:
% of the paid up share
Particulars
capital
HDFC 50.10
Standard Life Investments
49.90
Limited
The HDFC Assets management company has obtained registration from SEBI vide
Registration No. - PM / INP000000506 dated December 22, 2000 to act as a Portfolio
Manager under the SEBI (Portfolio Managers) Regulations, 1993.
12
In Gujarat HDFC assets Management Company is located at Ahmadabad,
Surat, vadodara, Rajkot.
13
Offices of HDFC ASSETS MANAGEMENT
COMPANY LIMITED
14
Rani Plaza Apartment,
(Patna X-Ray Clinic),
Exhibition Road,
Patna - 800001.
Email:servicespatna@hdfcfund.com
HDFC Mutual Fund - New Delhi
4th Floor, Mohan Dev Bldg., 13,
New Delhi Tolstoy Marg, Connaught Place,
New Delhi - 110001.
Email:servicesdelhi@hdfcfund.com
HDFC Mutual Fund - Goa
A3, First Floor, Krishna Building,
Opp. Education Dept,
Goa
Behind Susheela Building, G.P. Road,
Panaji - 403001.
Email:servicesgoa@hdfcfund.com
Gujarat HDFC Mutual Fund - Ahmadabad
2nd Floor, Megha House,
Besides Gruh House,
Mithakhali Six Roads,
Ahmedabad - 380009.
Email:servicesahmedabad@hdfcfund.com
HDFC Mutual Fund - Rajkot
2nd Floor, Shiv Darshan,
Dr Radha Krishnan Road,
5, Jagnath Plot Corner,
Rajkot - 360001.
Email:servicesrajkot@hdfcfund.com
HDFC Mutual Fund - Surat
U1 - U3, Jolly Plaza,
Opp Athwa Gate Police Station,
Athwa Gate,
Surat - 395001.
Email:servicessurat@hdfcfund.com
HDFC Mutual Fund - Vadodara
15
Upper Ground Floor, Gokulesh,
R C Dutt Road,
Vadodara - 390007.
Email:servicesvadodara@hdfcfund.com
HDFC Mutual Fund – Jamshedpur
Gayatri Enclave,
2nd Floor, "K Road",
Jharkhand
Bistupur,
Jamshedpur - 831001.
Email:servicesjamshedpur@hdfcfund.com
HDFC Mutual Fund – Bangalore
No.114, 1st Floor, Prestige Towers,
99 and 100, Residency Road,
Bangalore - 560025.
Email:servicesbangalore@hdfcfund.com
Karnataka HDFC Mutual Fund – Mangalore
UG -II, 6 and 7, Upper Ground Floor,
Maximus Commercial Complex,
Light House Hill Road, Opp. KMC,
Mangalore - 575001.
Email:servicesmangalore@hdfcfund.com
HDFC Mutual Fund – Kochi
Ground Floor,
Cinema Cum Commercial Complex,
Kerala Behind Ravipuram Bus Stop,
M.G. Road,
Kochi - 682016.
Email:serviceskochi@hdfcfund.com
Madhya HDFC Mutual Fund – Bhopal
Pradesh Ranjit Towers,
Zone II, 8 MP Nagar,
Bhopal - 462011.
Email:servicesbhopal@hdfcfund.com
HDFC Mutual Fund – Indore
16
M1, M2 and M3, Mezzanine Floor,
Sterling Arcade,15 / 3, Race Course Road,
Indore - 452001.
Email:servicesindore@hdfcfund.com
HDFC Mutual Fund – Mumbai
Mistry Bhavan, 1st Flr, 122,
Backbay Reclamation,
Dinsha Vachha Road, Churchgate,
Mumbai - 400020.
Email:servicesmumbai@hdfcfund.com
HDFC Mutual Fund – Nagpur
106-110, Shriram Shyam Towers,
2nd Floor, Next to NIT Building,
Kingsway, Sadar,
Nagpur - 440001.
Maharashtra Email:servicesnagpur@hdfcfund.com
HDFC Mutual Fund – Nashik
G- 1 and G-2, "Suyojit Heights",
Opp. Rajiv Gandhi Bhavan,
Sharanpur Road,
Nashik - 422002.
Email:servicesnashik@hdfcfund.com
HDFC Mutual Fund – Pune
HDFC House, 2nd Floor,
Shivaji Nagar, University Road,
Pune - 411005.
Email:servicespune@hdfcfund.com
HDFC Mutual Fund – Bhubaneswar
2nd Floor, Vinayak 96,
Orissa Janpath,
Bhubaneshwar - 751001.
Email:servicesbhubaneshwar@hdfcfund.com
Punjab HDFC Mutual Fund – Chandigarh
17
SCO 375-376,
Ground Floor, Sector 35-B,
Chandigarh - 160022.
Email:serviceschandigarh@hdfcfund.com
HDFC Mutual Fund – Ludhiana
SCO 122,
Feroze Gandhi Market,
Ludhiana - 141001.
Email:servicesludhiana@hdfcfund.com
HDFC Mutual Fund – Jaipur
Moondhra Bhavan,
3 Ajmer Rd,
Jaipur - 302001.
Email:servicesjaipur@hdfcfund.com
Rajasthan
HDFC Mutual Fund – Jodhpur
Gulab Singh Building,
11, Chopasani Road,
Jodhpur - 342003.
Email:servicesjodhpur@hdfcfund.com
HDFC Mutual Fund – Coimbatore
1371A, Ground Floor,
Nadar Building Trichy Road,
Coimbatore - 641018.
Email:servicescoimbatore@hdfcfund.com
Tamil Nadu
HDFC Mutual Fund – Chennai
ITC Centre, 1st Floor,
760 Anna Salai,
Chennai - 600002.
Email:serviceschennai@hdfcfund.com
Uttar Pradesh HDFC Mutual Fund – Kanpur
1st Floor, 16/80 D,
Behind SBI Main, Civil Lines,
Kanpur - 208001.
Email:serviceskanpur@hdfcfund.com
18
HDFC Mutual Fund – Lucknow
4 Shahnajaf Road,
Lucknow - 226001.
Email:serviceslucknow@hdfcfund.com
HDFC Mutual Fund – Kolkata
Email:serviceskolkata@hdfcfund.com
19
(Fig no 1- office locations of HDFC Assets Management Company)
20
PRODUCT
DETAILS
21
Product Details
22
Investment Options: Dividend and Growth Option
Nature of Scheme: - Open Ended Growth Scheme
Inception Date: -September 11, 2000
23
Investment Objective: - The primary objective of the Scheme is to generate
capital appreciation in the long term through equity investments by investing in a
diversified portfolio of Mid Cap and Large Cap `blue chip` companies.
Investment Options: Dividend Plan, Growth Plan, The Dividend Plan offers
Dividend Payout and Reinvestment Facility.
Nature of Scheme: - Open Ended Growth Scheme
Inception Date: - April 06, 2005
24
Nature of Scheme:- Open Ended income fund
Inception Date: - February 28, 2002
4. HDFC multi yield fund:-
Investment Objective: - The primary objective of the Scheme is to generate
positive returns over medium time frame with low risk of capital loss over
medium time frame.
Investment Options: Growth Plan, Dividend Plan. The Dividend Plan offers
Dividend Payout and Reinvestment Facility.
Nature of Scheme: - Open Ended income fund
Inception Date: - September 17, 2004
25
Inception Date: - April 28, 1997
26
Nature of Scheme: - An open-ended income scheme. Monthly
income is not assured and is subject to availability of
distributable surplus
Inception Date: - December 26, 2003
27
FUTURE
SCENARIO
28
FUTURE SCENARIO
The asset base will continue to grow at an annual rate of about 35 to 40%
over the next five year as investor’s shift their assets from banks and other
traditional avenues. Some of the older public and private sector players
will either close shop or be taken over.
Out of ten public players five will sell out, close down or merge with
stronger player in three to four years. In the private sector this trend has
already started with two mergers and one take over. Here too some of them
will down their shutters in the near future to come.
But this does not mean that there is no room for other players. The
market will witness a flurry of new players entering the areas. There
will be a large no. of offers from various asset management companies
in the time to come, some big names like Principle, SBI, Fidelity, old
mutual etc are looking at Indian market seriously. One important
reason for it is that most major players have presence here and hence
these big names would hardly like to get left behind.
SEBI is working out the norms for enabling the existing mutual fund schemes
to trade in derivatives. Importantly, many market players have called on the
29
Regular to initiate the process immediately, so that the mutual funds can
implement the changes that are required to trade in Derivatives.
INDUSTRY
DETAILS
30
Introduction
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 invested by the fund
manager in different types of securities depending upon the objective of the scheme.
These could range from shares to debentures to money market instruments. The
income earned through these investments and the capital appreciations realized by the
scheme are shared by its unit holders in proportion to the number of units owned by
them. 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 portfolio at a
relatively low cost.
A Mutual Fund is the ideal investment vehicle for today’s complex and
modern financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by global events
occurring in faraway places. A typical individual is unlikely to have the knowledge,
skills, inclination and time to keep track of events, understand their implications and
31
act speedily. An individual also finds it difficult to keep track of ownership of his
assets, investments, brokerage dues and bank transactions etc.
In effect, the Mutual Fund vehicle exploits economies of scale in all three areas -
research, investments and transaction processing. While the concept of individuals
coming together to invest money collectively is not new, the mutual fund in present
form is a 20th century phenomenon. In fact, mutual funds gained popularity only after
the Second World War. Globally, there are thousands of firms offering tens of
thousands of mutual funds with different investment objectives. Today, Mutual Funds
collectively manage almost as much as or more money as compared to banks.
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank of India. The
history of mutual funds in India can be broadly divided into four distinct phases
An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by
the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and
the Industrial Development Bank of India (IDBI) took over the regulatory and
administrative control in place of RBI. The first scheme launched by UTI was Unit
32
Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under
management.
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), and Bank of Baroda
Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had
set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47,
004 crores.
With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund families.
Also, 1993 was the year in which the first Mutual Fund Regulations came into being,
under which all mutual funds, except UTI were to be registered and governed. The
erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private
sector mutual fund registered in July 1993.
33
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed several
mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds
with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541
crores of assets under management was way ahead of other mutual funds.
Forth Phase –
Since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the Specified Undertaking of the
Unit Trust of India with assets under management of Rs.29, 835 crores as at the end
of January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. The Specified Undertaking of Unit Trust of India, functioning
under an administrator and under the rules framed by Government of India and does
not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund Regulations.
With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,
000 crores of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth. As at the end of October 31, 2003, there
were 31 funds, which manage assets of Rs.126726 crores under 386 schemes.
34
The graph indicates the growth of assets over the
years.
35
Customers Profile of mutual fund industry:-
1. While you recommend a financial plan, you also need to understand the
needs and financial objectives of your customer along with his risk tolerance
and his expectations from the investments.
3. Advise your customers to start investing early and regularly to help them
optimize the benefits of the compounding rupee.
4. Help your investors with the procedures and paper work involved in making
an investment.
Treat every customer exclusively. A satisfied customer can give you increased
business through resale and referrals of other prospective customers
36
Positioning Strategy of mutual fund industry:-
Positioning starts with a product. But positioning is not what you do to a product.
Positioning is what you do to the mind of the prospect. That is, you position the
product in the mind of prospect. A company’s differentiating and positioning strategy
must change as the product, market, and competitors change over time. . There
should be no under positioning, over positioning, confused positioning or
doubtful positioning.
Channel of Distribution:-
37
Promotional Tools Employed by various mutual fund
companies:-
Some specific other document help to increase selling product like: -
(1) Banners: -
Banners define brief idea of scheme, it should be very attractive with specific
objective and its related picture in city, and Banners keep in specific places which
very help to do good publicity. It distributes only by AMC’s office.
When any new scheme is launched or any new NFO coming up that times company
make banners before few days. Its helps to good advertising and easy cover to
customer or people.
Any product like Equity, debt and balance, investor should fill up its common
Application forms.
Form define acknowledge slip which give return to customer. Actually 3-time
stamp done in form, one of them is acknowledged slip. These forms are distributed by
Assets Management Company’s office. It is all Assets Management Company’s office
duty to dispatch forms to their customer like agents, brokers, and advisers time to
time.
(3) Broachers:
Broachers include brief history of company. It defines when and where assets
management Company invests investor’s money. This defines performance of each
scheme product and also defines its comparison to last 3 months to more than 5 years.
In end of every month Assets Management Company’s office send Boucher to their
investors, brokers, agents, advisers regularly.
38
NET ASSET VALUE:-
The Net Asset Value or NAV is a term used to describe the value of an entity's
assets less the value of its liabilities. The term is commonly used in relation to
collective investment schemes. It may also be used as a synonym for the book value
of a firm.
NAV covers the company's current asset and liability position. Investors
might expect the company to have large growth prospects, in which case they would
be prepared to pay more for the company than the NAV suggests.
The NAV is usually below the market price because the current values of the
fund’s assets are higher than the historical financial statements used in the NAV
calculation.
3. Capital appreciation in the underlying value of the stocks holds in the portfolio
39
4. Other assets and liabilities
Equity Instruments like shares form only a part of the securities held by
Mutual Funds. Mutual Funds also invest in debt securities, which are
relatively much safer.
The biggest advantage of Mutual Funds is their ability to diversify the risk.
Mutual Funds are there in India since 1964. Mutual Funds market is much
evolved in U.S.A and is there for last 60 years.
Mutual Funds are the best solution for people who want to manage risk and
get good returns.
The size of Mutual Funds market in India is Rs. 107728 crores and that in
U.S.A is many times higher.
30% of investors fall in the income group of investors having monthly income
up to Rs. 10,000/-.
In U.S.A there are more deposits in the mutual funds than in bank deposits.
40
The truth is, as investors we should always pay attention to our mutual funds
and continue to monitor them.
Objectives of Study
Without any aim or objective, no activity can exist, in the same direction of
preparation of this report on HDFC assets Management Company limited. In different
functional areas and research on the “mutual fund awareness in retail investors of
HDFC assets Management Company limited in Surat” is based on the following
objectives: -
2. Whatever we are taught in the classrooms, there is a limitation that book can
only give theoretical concept or knowledge and it has a limited view of
practically. So, the other important objective of this training is to know about
practical aspect and to know how a company actually works in practical
situation.
3. To know the mutual fund awareness level of the retail investors who are invest
in HDFC assets Management Company limited.
41
Limitations of Study
1. Though every one used to be very co-operative but every detail was unable to
be disclosed to me as the officials has to maintain secrets of the company.
4. Because of the limited time period, the survey work was conducted in the
Surat region and the sample size was taken as 100 respondents only.
42
REVIEW OF
LITERATURE
43
MUTUAL FUND
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 invested by the fund
manager in different types of securities depending upon the objective of the scheme.
These could range from shares to debentures to money market instruments. The
income earned in these investments and the capital appreciation realized by the
scheme is shared by its unit holders in proportion to the number of units owned by
them. 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 portfolio at a
relatively low cost. Anybody with an invest able surplus of a few thousand rupees can
invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective
and strategy.
A mutual fund is the ideal investment vehicle for today’s complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by global events
occurring in faraway places. A typical individual is unlikely to have the knowledge,
skills, inclination and time to keep track of events, understand their implications and
act speedily.
44
and other areas of operation. In India, as in most countries, these sponsors need
approval from a regulator, SEBI in our case. SEBI looks at track records of the
sponsor and its financial strength in granting approval to the fund for commencing
operations.
E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset
Management Company Ltd., which has floated different mutual funds schemes and
also acts as an asset manager for the funds collected under the schemes.
As per SEBI regulations, mutual funds can offer guaranteed returns for a
maximum period of one year. In case returns are guaranteed, the name of the
guarantor and how the guarantee would be honored is required to be disclosed in the
offer document.
45
with the funds managers. Taking into consideration the market strategy the funds
managers invest this pool of money into reliable securities. With ups and downs in
market returns are generated and they are passed on to the investors. The above cycle
should be very clear and also effective.
The fund manager while investing on behalf of investors takes into consideration
various factors like time, risk, return, etc. so that he can make proper investment
decision.
Benefits
If mutual funds are emerging as favorite investment vehicle, it is because of the many
advantages they have over other forms and avenues of investing, particularly for the
investors who has limited resources available in terms of capital and ability to carry
out details research and market monitoring. The following are the major advantages
offered by mutual funds to all investors.
PROFESSIONAL EXPERTISE
Fund managers are professionals who track the market on an on going basis. With
their mix of professional qualification and market knowledge, they are better placed
than the average investor to understand the markets.
DIVERSIFICATION
Since a mutual fund scheme invests in number of stocks and/or debentures, the
associated risks are greatly reduced.
LIQUIDITY
46
Investments in mutual funds are completely liquid and can be redeemed at Net Assets
Value (NAV) related price on any working day.
TRANSPARENCY
You will always have access to up-to-date information on the value of your
investment in addition to the complete portfolio of investments, the proportion
allocated to different assets and the fund manager’s investment strategy.
FLEXIBILITY
Through features such as regular investment plans, regular withdrawal plans and
dividend investment plans, you can systematically invest or withdraw funds according
to your needs and convenience.
SEBI REGULATED
All mutual funds are registered with SEBI and function within the provisions and
regulations that protect the interests of investors.
Limitations
NO TAILOR-MADE PORTFOLIOS
47
Investors who invest on there own can build their own portfolios of shares and bonds
and other securities. Investing through funds means he delegates this decision to the
fund managers. The very high-net-worth individuals or large corporate investors may
find this to be a constraint in achieving their objectives. However, most mutual fund
managers help investors overcome this constraint by offering families of funds- a
large number of different schemes – within their own management company. An
investor can choose form different investment plans and construct a portfolio of his
own.
48
Mutual funds offer benefits, which are too significant to miss out. Any investment has
to be judged on the yardstick of return, liquidity and safety. Convenience and tax
efficiency are the other benchmarks relevant in mutual fund investment. In the
wonderful game of financial safety and returns are the tows opposite goals and
investors cannot be nearer to both at the same time. The crux of mutual fund investing
is averaging the risk.
Many investors possibly don’t know that considering returns alone, many mutual
funds have outperformed a host of other investment products. Mutual funds have
historically delivered yields averaging between 9% to 25% over a medium to long
time frame. The duration is important because like wise, mutual funds return taste
bitter with the passage of time. Investors should be prepared to lock in their
investments preferably for 3 years in an income fund and 5 years in an equity funds.
Liquid funds of course, generate returns even in a short term.
Mutual funds face risks based on the investments they hold. For example, a bond fund
faces interest rate risk and income risk. Bond values are inversely related to interest
rates. If interest rates go up, bond values will go down and vice versa. Bond income is
also affected by the changes in interest rates. Bond yields are directly related to
interest rates falling as interest rates fall and rising as interest rates.
Similarly, a sector stock fund is at risk that its price will decline due to developments
in its industry. A stock fund that invests across many industries is more sheltered from
this risk defined as industry risk.
Followings are glossary of some risks to consider when investing in mutual funds.
Country Risk
The possibility that political events (a war, national election), financial problems
(rising inflation, government default), or natural disasters will weaken a country’s
economy and cause investments in that country to decline.
49
Income Risk
The possibility that a fixed-income fund’s dividends will decline as a result of falling
overall interest rates.
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.
Equity Fund
Balance Fund
M IP
Inco me Fund
Sho rt Term
Fund
Liquid Fund
This graph shows risk and return impact on various mutual funds. There is a direct
relationship between risks and return, i.e. schemes with higher risk also have potential
to provide higher returns.
50
There are a wide variety of Mutual Fund schemes that cater to your needs, whatever
your age, financial position, risk tolerance and return expectation. Whether as the
foundation of your investment program or as a supplement, Mutual Fund schemes can
help you meet your financial goals. The different types of Mutual Funds are as
follows:
Diversified Equity Mutual Fund Scheme
A mutual fund scheme that achieves the benefits of diversification by investing in the
stocks of companies across a large number of sectors. As a result, it minimizes the
risk of exposure to a single company or sector.
Sectoral Equity Mutual Fund Scheme
A mutual fund scheme, which focuses on investments in the equity of companies
across a limited number of sectors – usually one to three.
Index Funds
These funds invest in the stocks of companies, which comprise major indices such as
the BSE Sensex or the SandP CNX Nifty in the same weight age as the respective
indices.
Tax Saving Equity Schemes
Schemes investing predominantly in equity which offer tax rebates to investors under
specific provisions of the Income Tax Act, 1961 as the Government offers tax
incentives for investment in specified avenues. E.g. Equity Linked Savings Schemes
(ELSS). Currently rebate u/s 88 can be availed unto a maximum investment of Rs
10,000. A Lock-in of 3 years is mandatory.
Monthly Income Plan Scheme
A mutual fund scheme which aims at providing regular income (not necessarily
monthly, don't get misled by the name) to the unit holder, usually by way of dividend,
with investments predominantly in debt securities (up to 95%) of corporate and the
government, to ensure regularity of returns, and having a smaller component of equity
investments (5% to 15%) to ensure higher return.
Income schemes
Debt oriented schemes investing in fixed income securities such as bonds, corporate
debentures, Government securities and money market instruments.
Floating-Rate Debt Fund
51
A fund comprising of bonds for which the interest rate is adjusted periodically
according to a predator-mined formula, usually linked to an index.
Gilt Funds
These funds invest exclusively in government securities.
Balanced Funds
The aim of balanced funds is to provide both growth and regular income as such
schemes invest both in equities and fixed income securities in the proportion indicated
in their offer documents. They generally invest 40-60% in equity and debt
instruments.
Saving AMC
s
Trus Investmen
t ts
Unit
s Return
Unitholde
s
rs
Registrar
Trust
SEBI
Custodian AMC
Fund Sponsor
Any person or corporate body that establishes the Fund with a net worth of Rs. 10
crores and has paid out consistent returns to its investors for last three years
consistently and registers it with SEBI can be a fund sponsor. The fund sponsor forms
a trust and appoints board of trustees. He appoints Custodian and Asset Management
Company (AMC) either directly or through trust in accordance with SEBI regulations.
SEBI regulations also define that a sponsor must contribute at least 40 % to the net
worth of the asset management company.
52
Trustees
Trust is created through the document called Trust deed that is executed by the fund
sponsor and registered with SEBI. Board of trustees- a body of individuals or a trust
company-a corporate body may manage the trust cum Mutual Fund. These are
protector of unit holders interests.2/3 of the trustees will be individuals and will not be
associated with the sponsors.
53
RESEARCH
METHODOLODY
RESEARCH
54
Purpose of the Research
With liberalization, privatization and globalization there has been a major change in
the Indian Mutual Funds Industry. The momentum is on and one is sure to see similar
hectic activity at the offices of the new entrants especially after the 90’s as private
sector gained entry in the Indian markets.
With the private sector penetration, a large number of schemes have also been
introduced due to which the average consumer has become vary sensitive to the new
schemes coming its way. So to ensure about the various consumer attitudes, a survey
was undertaken.
De facto, to ensure what the “consumer thinks” and “what it thinks the best” we
undertook a consumer survey, to get a clear picture of the future of the Mutual Funds
companies who are busy wooing the customers, with their lucrative schemes, to
survive the rat race and emerge as no.1 in this field.
Research Objective
Research Objectives addresses the purpose of the investigation. It is here that you
layout exactly what is being planned by the proposed research. The Research
Objectives flows naturally from the problem statement, giving the sponsor specific,
concrete, and achievable goals. It is best to list the objectives either in order of
importance or in general terms first, moving to specific terms. Research Objective is
the basis for judging the Research process. It is the final step giving exact definition
of problem.
55
Research Design
Research design describes as a master plan a series of key decisions that serves a
model for conducting a research project. There are the main components of research
design.
Objective of research
Data inputs
Analysis of data collected
The research design was exploratory type and the focus was on getting mutual
fund’s employees views for various products, expectations from market.
Exploratory Research:
Exploratory study goes beyond description and attempts to explain the reasons for the
phenomenon that the descriptive study only observed. The researcher uses theories or
at least hypotheses to account for the forces that caused a certain phenomenon to
occur.
Sources of Data
56
The gathering of data may range from a simple observation at one location to a
grandiose survey of multinational corporations at sites in different parts of the world.
The method selected will largely determine how the data are collected. DATA is the
facts presented to the researcher from the study’s environment. Characteristics of the
data are as follows:
Primary data are collected and gathered for the first time. Primary data are sought for
their proximity to the truth and controls over error. Advantages of primary data are:
57
Someone else collects secondary data. So, it becomes secondary information for the
research. Secondary data have had least one level of interpretation inserted between
the event and its recording. Reasons for using the secondary data are listed below:
Analyzing the requirement of data, it was found that primary data is more important
for achieving Research Objective. Primary data is collected with the help of
interviews.
Sampling Plan
Collecting the required information from the right source is very important. Sources
from which the data are collected differ as per the required of researcher.
Basically there are two types of data collection sources:
1) Sampling Unit:
2) Sample Size:
Though large sample give more reliable results than small samples but increases the
cost, time and non-sampling error. Keeping in view these constraints 100 respondents
were chosen. Attempts have been made to see that samples are chosen from different
areas of Surat.
58
I have taken 100 responds as a sample size for this particular project. The following
table shows area wise distribution of sample size.
AREA SAMPLE
UDHNA 17
MORABHAGAL 3
ADAJAN 15
RANDER ROAD 17
RALWAY STATION
ROAD 5
PARLE POINT 5
GHODDOD ROAD 8
PIPLOD 2
MAJURAGATE 2
RING ROAD 4
BHAGAL 4
KATARGAM 4
VARACHA 2
CITY LIGHT ROAD 6
NANPURA 2
PANDESARA 1
VED ROAD 1
PAL 1
BHESTAN 1
TOTAL 100
“This step involves making a very specific plan about how you will conduct
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Following types of measurement scales were used in the questionnaire.
Simple category scale: - (Q-2, Q-4, Q-8, Q-9)
Multiple choice single response scales: - (Q-6)
Multiple choice multiple response scale:-(Q-1, Q-3, Q-5, Q-7)
DATA ANALYSIS
AND
60
FINDINGS
61
11
86 100
EQUITY/M.F.
POST OFFICE
F.D.
OTHERS
94
Interpretation: -
From the above charts we can interpret that awareness of equity/mutual fund, post
office (NSC, KVP, and PPF), fixed deposits is more compare to others like GOVT
ISSUED Instrument, GOVT Backed Instrument, Real Estate, gold etc. so HDFC
assets Management Company needs to focus more on those investors who are more
invest in KVP, NSC, PPF and fixed deposits.
YES NO
97 3
62
120
97
100
NO OF PEOPLE 80
60 Series1
40
20
3
0
YES NO
PREFERNCE
From the above chart it is getting clear that now a days people are like to invest their
money in mutual fund of different assets management company, out of 100 people
sampled 97 are investing in the mutual fund.
63
R ESPON SE
100
86
80
NO OF PEOPLE
60
R ESPON SE
40 27
20
6
0
E Q U ITY DEBT L IQ U ID
S C H EM ES
From the above chart it is getting clear that from 100 peoples sample 86(72.27%)
people are invest in equity assets class and 27(22.69%) people choose to invests in
debt class but only just 6(5.04%) peoples choose to invests in liquid class.
YES NO TOTAL
56 44 100
64
60 56
50 44
NO OF PEOPLE
40
30 Series1
20
10
0
YES NO
PREFERNCE
From the above chart it is getting clear that out of 100 people sampled, 56
peoples are invest in HDFC assets management company and 44 peoples
are not invests in HDFC assets management company.
NO OF
SCHEMES OF HDFC INVESTOERS
EQUITY FUND 43
CAPITAL BUILDER FUND 2
PRUDENCE FUND 17
TAX SAVER FUND 35
CORE AND SATELITE FUND 3
TOP 200 FUND 16
BALANCED FUND 1
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GROWTH FUND 16
OTHERS FUND 5
NO OF INVESTOERS
16 5
1 43
16
3 2
35 17
From the above chart we can see that in HDFC assets Management Company’s
EQUITY FUND maximum number (43) of people are invest. In TAX SAVER FUND
35 number of people invests. In both TOP 200 FUND and GROWTH FUND 16
numbers of people are invests but in BALANCED FUND, CAPITAL BUILDER
FUND, CORE AND SATELITE FUND only 1,2 and 3 people are invest so investors
are not invested in these 3 schemes. In PRUDENCE FUND 17 numbers of people are
invested.
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NOOFPEOPLE
48
50
45
40
35
30
25
20 NOOFPEOPLE
15
8
10
5 0
0
DISTRIBUTOR ONLINE
MEDIUMS
From the above chart it’s getting cleared that most of the peoples (48) are invest by
bank and only 8 peoples are invest by distributors. Nobody invests through online. So
here HDFC assets Management Company has to provide facility by which investors
invest their money with out any middle man in mutual fund schemes through online.
Notes: - here out of 100 responds, 44 responds are not invest in HDFC assets
Management Company. These responds are not considered in these questions.
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Q-7 why do you prefer investing in HDFC assets
Management company limited?
1 EXCELLENT
44 43 CUSTOMER
SERVICE
PROVIDER
CONSISTANT
15
RETURN
OTHERS
From the above pie - chart it can be seen that majority of the people that is 44 peoples
give first rank to consistent return and 43 peoples invest in HDFC assets management
company because HDFC assets management company is a better fund house and 15
peoples believes that HDFC assets Management Company provides EXCELLENT
CUSTOMER SERVICE.
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Company limited?
RESPONSE
60 53
50
NO OF PEOPLE
40
30 RESPONSE
20
10 3
0
OPEN ENDED CLOSE ENDED
TYPES OF SCHEMES
From the above chart it is getting clear that most of peoples (53) prefer to invest in
OPEN ENDED equity schemes and only just 3 peoples want to invest in CLOSE
ENDED equity schemes of HDFC assets Management Company.
Notes: - here out of 100 responds, 44 responds are not invest in HDFC assets
Management Company. These responds are not considered in these questions.
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AWARENESS OF NFO NUMBER PERCENTAGE
YES 58 58%
NO 42 42%
TOTAL 100 100%
NUMBER
42
YES
NO
58
(Fig no 17: - Define awareness level about on going NFO of HDFC assets
Management Company.)
The above pie - chart shows that around 58% people aware of on going new fund
offer of HDFC assets Management Company and only 42% people are unaware from
on going new fund offer of HDFC assets management company.
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FINDINGS
FINDINGS
71
Out of the total respondent almost 30% said that they invest in fixed deposit
and Insurance. Where as 34% said that they invest in Shares and mutual funds,
where as 32% says that they invest in post office schemes.
97% of the investor was found who is invested their savings in different
schemes of mutual fund.
It is found that awareness level about Mutual Funds is 97% in Surat city of
Gujarat.
Out of the total respondent 72.27% are investing in equity schemes. Where as
remaining 22.69% prefer debt and 5.04% prefer to invest in liquid schemes.
HDFC assets Management Company are also highly popular for their
consistent return and 43 responds believes that HDFC assets Management
Company is better fund house. While only just 15 responds believes that
HDFC assets Management Company provides EXCELLENT CUSTOMER
SERVICE.
Out of the total respondents almost 48 responds are investing through bank,
only 8 responds investing their money by distributor and nobody invested by
online.
72
The 58% of the respondent were aware about the ongoing NFO of HDFC
assets management company and 42% were not aware about the ongoing NFO
of HDFC assets management company.
73
LIMITATIONS
74
LIMITATIONS OF RESEARCH
Some of the people, out of various sectors that I had visited for study, did not
give me cooperative response.
Due to small market and time limit I could take only 100 responses.
75
CONCLUSIONS
76
CONCLUSIONS
The investors prefer investing more in banks and post office, which shows that
investors want security, and assured returns.
Others than Banks and post office the next preference of investors who go for
risky preposition in shares and Mutual Funds. That is basically due to
misconception that Mutual Fund Companies usually invest in equity market,
which shakes trust of people in Mutual Fund.
As the investor prefers safe investment and want consistent return, they invest
in debt schemes (22.69%).
The investors prefer HDFC assets Management Company more because of the
tax benefit and consistent return.
Mutual funds are also preferred because of the cost effectiveness and higher
income by investing in equity schemes.
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The banks mostly make the investments through the agent’s followed.
RECOMMENDATION
78
Recommendations
The company should try to make aware people about their different schemes
through the road show; seminars and presentation that it is not just equity
based schemes but also debt and liquid or balanced schemes also promoted by
company. Company has to put hoardings, banners, pamphlets in that area
where peoples can watch easily.
The customers should be made aware that if the time frame of the investment
is more than 3 years Equity option is the best tool for investing in mutual fund
by this investors getting good and high returns for their investments.
79
None of responds invest their money in different schemes of company
By Online, so company has opportunity to launch online services for their distributors
and retail investors.
Company’s core and satellite fund, balanced fund, capital builder fund are
preferred by very few investors because this schemes not perform well so
company has to think about their companies in which they invest investor’s
money so they have to change portfolio of investments.
Most of the people still preferred to invest in post office schemes and fixed
deposits so company has to focus on these investors.
ANNEXURE
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Questionnaire
NAME: -
ADDRESS: -
81
2) Do you invest in mutual funds?
Yes No
82
Open-ended Close ended
Yes No
GLOSSARY
Sale Price
The price you pay when you invest in a scheme. Also called Offer Price. It
May include a sales load.
Repurchase Price
The price at which a close-ended scheme repurchases its units and it may
Include a back-end load. This is also called Bid Price.
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Redemption Price
The price at which open-ended schemes repurchase their units and close-
Ended schemes redeem their units on maturity. These prices are NAV
Related.
Expense Ratio:
The Expenses of a scheme include management fees and all the fees associated with
the scheme's daily operations. Expense Ratio refers to the annual percentage of fund's
assets that is paid out in expenses and can affect the performance of the scheme.
Exit Load:
It is the load charged by the fund when one redeems the units from the fund. It
reduces the price of the units to less than the NAV and is expressed as a percentage of
NAV.
Face Value:
The original issue price of one unit of a scheme, generally Rs 10.
Lock-in period:
The cooling period after investment in fresh units during which the investor
Cannot redeem the units.
No Load:
It refers to the fund that does not charge any load for buying or selling its units, i.e.
the investor can transact at the NAV.
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LIST OF TABLE
85
Define awareness level about on going NFO of HDFC
12 90
assets management company.
86
LIST OF GRAPH
87
BIBLIOGRAPHY
Books
Websites
www.hdfcfund.com
www.amfiindia.com
www.valuereserchonline.com
www.moneycontrol.com
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CERTIFICATE
This is to certify that Mr. Badami Kalpesh D. has satisfactorily completed the project
work entitled, “Mutual fund Awareness in Retail Investors Of HDFC Assets
management company in Surat” Based on the declaration made by the candidate
and my association as a guide for carrying out this work, I recommended this project
report for evaluation as a part of the MBA programmer of Veer Narmad South
Gujarat University.
Place: _______________
Date: (Dr. R. S. Shah)
This project is forwarded for evaluation to the Veer Narmad South Gujarat
University.
Place:
Date: ____________________
Director of GRIMS
(Dr. R. S. Shah)
89