Professional Documents
Culture Documents
A Study On HDFC Mutual Fund
A Study On HDFC Mutual Fund
A Study On HDFC Mutual Fund
IN
HDFC ASSETS MANAGEMENT COMPANY LTD
Submitted by
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
supervision of DIRECTOR DR.R.S.SHAH of GIDC
RAJJU
SHROFF
DATE: -
SIGNATURE (student)
BADAMI KALPESH D.
PLACE: -
SIGNATURE (guide)
DR.R.S.SHAH
PREFACE
Experience is the best teacher. This saying is very well applicable in everyones 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.
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
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.
Place: - Surat.
Badami Kalpesh. B.
EXECUTIVE
SUMMARY
Executive Summary
The entire report is an unforgettable journey of support, knowledge, experience,
dedication, perfection, and patience. For me it is all about to understand a customer
and market of mutual fund industry.
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 dos and donts
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.
1
2
3
4
Name of Table
Objectives of Study
Limitations of study
Executive summary
Company details
5
6
7
9
10
11
12
13
14
limited
Product details
Future scenario
Industry details
Introduction
History of Mutual Fund Industry
Customers Profile of mutual fund industry
Positioning Strategy of mutual fund industry
Promotional Tools Employed by various mutual
fund companies
Facts About Mutual Fund
Mutual fund
Introduction to Mutual Fund
Mutual Fund Cycle
Critical view about Mutual Fund
Why Investor Needs Mutual Fund
Mutual Fund Risk
Types of Mutual Fund
Structure of Mutual Fund
Other various assets management companies details
Regulatory Aspects
Research
Purpose of the Research
Research Objective
Research Methodology
Page No.
5
6
8
11
12
13
14
17
24
32
33
34
36
40
41
42
45
46
47
49
50
54
55
58
60
64
67
71
72
73
74
15
16
17
18
19
Research Design
Sources of Data
Sampling Plan
Data Collection Method
Data analysis and findings
Findings
Limitations
Conclusions
Recommendations
75
76
78
80
81
92
95
97
100
20
Annexure
103
21
22
23
24
Glossary
List of Table
List of Graphs
Bibliography
105
107
108
109
COMPANY
8
DETAILS
About the Company: An HDFC asset Management Company limited is well-established fund house. HDFC
Assets Management Company limited is sponsored by Housing Development Finance
Corporation Limited (HDFC) and Standard life investments limited.
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.
HDFC assets Management Company limited have offices in 29 cities and currently
manage assets in excess of Rs 36146.67 cores. (May 2007.)
Sponsors of HDFC Assets Management Company:Housing Development Finance Corporation Limited (HDFC)
HDFC was incorporated in 1977 as the first specialized Mortgage Company in India.
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.
Standard Life Investments Limited
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.
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
HDFC
Standard Life Investments
Limited
capital
50.10
49.90
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.
The HDFC Assets management company is also providing portfolio management /
advisory services and such activities are not in conflict with the activities of the
Mutual Fund
13
Andhra Pradesh
Email:serviceshyderabad@hdfcfund.com
HDFC Mutual Fund - Visakhapatnam
Ground Floor, Saigopal Arcade,
Opp Waltair Club,
Waltair Main Road, Siripuram,
Visakhapatnam - 530003.
Email:servicesvizag@hdfcfund.com
Bihar
14
Goa
Gujarat
Karnataka
Kerala
Madhya
Pradesh
Ranjit Towers,
Zone II, 8 MP Nagar,
Bhopal - 462011.
Email:servicesbhopal@hdfcfund.com
HDFC Mutual Fund Indore
16
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,
Janpath,
Orissa
Bhubaneshwar - 751001.
Email:servicesbhubaneshwar@hdfcfund.com
Punjab
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.
Rajasthan
Email:servicesjaipur@hdfcfund.com
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.
Tamil Nadu
Email:servicescoimbatore@hdfcfund.com
HDFC Mutual Fund Chennai
ITC Centre, 1st Floor,
760 Anna Salai,
Chennai - 600002.
Email:serviceschennai@hdfcfund.com
Uttar Pradesh
18
19
20
PRODUCT
DETAILS
21
Product Details
EQUITY
BALANCED
DEBT
HDFC Equity Fund: Investment Objective: The investment objective of the Scheme
Is to achieve capital appreciation.
Investment Options: Dividend and Growth Option
2.
HDFC growth fund: Investment Objective: - The primary investment objective of the Scheme is to
generate long term capital appreciation from a portfolio that is invested predominantly
in equity and equity related instruments.
22
4. HDFC mid cape opportunity fund; Investment Objective: - To generate long-term capital appreciation from a
portfolio that is substantially constituted of equity and equity related securities of
small and Mid-Cap companies.
23
7. HDFC premier multicape fund: Investment Objective: - The primary objective of the Scheme is to generate
capital appreciation in the long term through equity investments by investing in a
diversified portfolio of Mid Cap and Large Cap `blue chip` companies.
Investment Options: Dividend Plan, Growth Plan, The Dividend Plan offers
Dividend Payout and Reinvestment Facility.
24
Investment Objective: - The primary objective of the HDFC Short Term Plan is
to generate regular income through investment in debt securities and money market
instruments.
Investment Options: Growth Plan, Dividend Plan. The Dividend Plan offers
Dividend Payout and Reinvestment Facility.
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.
25
26
5. HDFC Floating Rate Income Fund Long Term Plan: Investment Objective: - The primary objective of the Scheme is to generate
regular income through investment in a portfolio comprising substantially of floating
rate debt / money market instruments, fixed rate debt / money market instruments
swapped for floating rate returns, and fixed rate debt securities and money market
instruments.
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 investors 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.
29
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 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.
Anybody with an investible surplus of as little as 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 todays 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,
31
skills, inclination and time to keep track of events, understand their implications and
act speedily. An individual also finds it difficult to keep track of ownership of his
assets, investments, brokerage dues and bank transactions etc.
A Mutual Fund is the answer to all these situations. It appoints professionally
qualified and experienced staff that manages each of these functions on a full time
basis. The large pool of money collected in the fund allows it to hire such staff at a
very low cost to each investor.
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.
Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under
management.
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
35
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.
2.
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.
36
Treat every customer exclusively. A satisfied customer can give you increased business
through resale and referrals of other prospective customers
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 companys 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:In Every asset Management Companys distribution channel played very important
roles.
Here assets management companies have distributors like
Consultants
Agents
Distributors
Advisers
Broker
37
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 AMCs 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.
(2)
Application Form:
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 Companys office. It is all Assets Management Companys office
duty to dispatch forms to their
time.
(3)
Broachers:
Broachers include brief history of company. It defines when and where assets
management Company invests investors 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 Companys 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
funds assets are higher than the historical financial statements used in the NAV
calculation.
40
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: -
1.
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
Though every one used to be very co-operative but every detail was unable to
3.
Because of the limited time period, the survey work was conducted in the
Surat region and the sample size was taken as 100 respondents only.
5.
drawn out today might prove inadequate or improper tomorrow; this is likely to limit
its effectiveness.
42
REVIEW OF
LITERATURE
43
MUTUAL FUND
Introduction to Mutual Fund
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. 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 todays 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.
A mutual fund is answer to all these situations. It appoints professionally
qualified and experienced staff that manages each of these functions on a fulltime
basis. The large pool of money collected in the fund allows it to hire such staff at a
very low cost to each investor. In fact, the mutual fund vehicle exploits economies of
scale in all three areas research, investment and transaction processing.
A draft offer document is to be prepared at the time of launching the fund.
Typically, it pre specifies the investment objective of the fund, the risk associated, the
cost involved in the process and the broad rules for entry into and exit from the fund
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.
A sponsor then hires an asset management company to invest the funds
according to the investment objective. It also hires another entity to be the custodian
of the assets of the fund and perhaps a third one to handle registry work for the unit
holders of the fund. In the Indian context, the sponsors promote the Asset
Management Company also, in which it holds a majority stake. In many cases a
sponsor can hold a 100% stake in the Asset Management Company (AMC).
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.
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.
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.
When compared to direct investments in the capital market, mutual funds cost less.
This is due to savings in brokerage costs, demat costs, depository costs etc.
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 managers 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
Any investor in a mutual fund has no 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 payable even in declining stage.
A mutual fund investor also pays fund distribution costs, 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.
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.
MANAGING A PORTFOLIO OF FUNDS
Availability of a large number of 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.
ENTRY AND EXIT COST
Mutual funds are a victim of their own success. When a large body like a fund invests
in shares, the concentrated buying and selling often results in adverse price movement
i.e. at the time of buying, the fund ends up paying a high price and by selling it
realizes a lower price. For obvious reasons, this problem is even more severe for
funds investing in small capitalization stocks. However, given the large size of debt
market, excluding UTI, most debt funds do not face this problem.
CHANGE OF INDEX COMPOSITION
The indices changing over the world to reflect changing market conditions. There is
an inherent survivorship bias in this process, with the bad stocks bided out and
replaced by emerging blue chips. This is a severe problem in India with the sensex
having being changing twice in last 5 years, with each change being quite substantial.
Another reason for change index composition is Mergers and Acquisitions. The
weight age of the shares of a particular company in the index changes if it acquires a
large company not a part of the index.
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 dont 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.
Country Risk
The possibility that political events (a war, national election), financial problems
(rising inflation, government default), or natural disasters will weaken a countrys
economy and cause investments in that country to decline.
49
Income Risk
The possibility that a fixed-income funds 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.
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.
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.
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.
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.
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
s
Trus
t
Unit
s
Unitholde
rs
Investmen
ts
Return
s
Registrar
SEBI
Trust
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
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 can be described as an out line of a research project working or a
pattern. In a research design there are series of prior decision that together provide a
master plan for completing a research project. Research design is proved to be a
bridge between what has been established and what is to be done in conduct of the
studies. Research design should be compressive and it should provide which
method to be used and what work to be done.
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
The research design was exploratory type and the focus was on getting mutual
funds 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 studys environment. Characteristics of the
data are as follows:
There are two kinds of data that can be collected for research purpose. Based on the
requirement in the research appropriate data is collected. Both the kinds of data are
shown below in the figure:
Error: Reference source not found
They usually can specify the operational definitions used and can eliminate, or at
least monitor and record the extraneous influences on the data as they are gathered.
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:
Secondary data may be used as the sole basis for a research study, since
In many research situations one cannot conduct primary research
Because of physical, legal, or cost influences.
Analyzing the requirement of data, it was found that primary data is more important
for achieving Research Objective.
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:
The sampling unit primarily consisted of investors like businessman, professionals,
salaried employees and others. The sample unit is taken from the Surat city of Gujarat
region.
2) Sample Size:
Though large sample give more reliable results than small samples but increases the
cost, time and non-sampling error. Keeping in view these constraints 100 respondents
were chosen. Attempts have been made to see that samples are chosen from different
areas of Surat.
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
UDHNA
MORABHAGAL
ADAJAN
RANDER ROAD
RALWAY STATION ROAD
PARLE POINT
GHODDOD ROAD
PIPLOD
MAJURAGATE
RING ROAD
BHAGAL
KATARGAM
VARACHA
CITY LIGHT ROAD
NANPURA
PANDESARA
VED ROAD
PAL
BHESTAN
TOTAL
SAMPLE
17
3
15
17
5
5
8
2
2
4
4
4
2
6
2
1
1
1
1
100
59
DATA ANALYSIS
AND
60
FINDINGS
INVESTMENT AVANUES
EQUITY/MUTUAL FUND
POST OFFICE
F.D.
OTHERS
FREQUENCY
100
94
86
11
61
PERCENTAGE(%)
34.36
32.30
29.55
3.79
NO
3
62
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.
TYPES OF SCHEMES
EQUITY
DEBT
LIQUID
RESPONSE PERCENTAGE
86
72.27%
27
22.69%
6
5.04%
63
YES
56
NO
44
64
TOTAL
100
INVESTOERS
43
2
17
35
3
16
1
65
GROWTH FUND
OTHERS FUND
16
5
MEDIUM OF INVESTMENT
DISTRIBUTOR
BANK
ONLINE
66
NO OF PEOPLE
8
48
0
67
PREFENCE CRITERIA
BETTER FUND HOUSE
EXCELLENT CUSTOMER SERVICE
PROVIDER
CONSISTANT RETURN
OTHERS
NUMBER
43
15
44
1
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.
68
Company limited?
TYPES OF SCHEMES
OPEN ENDED
CLOSE ENDED
RESPONSE
53
3
69
AWARENESS OF NFO
YES
NO
TOTAL
NUMBER
58
42
100
PERCENTAGE
58%
42%
100%
(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.
70
FINDINGS
FINDINGS
Almost 56% are investing in HDFC assets management companys schemes.
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.
53 respondents prefer to invest in a open ended schemes of HDFC assets
management company, where as remaining only 3 respondents prefer to invest in a
close ended of HDFC assets management company.
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.
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.
72
73
LIMITATIONS
LIMITATIONS OF RESEARCH
74
city of Gujarat region only and therefore findings and suggestions given on the basis
of this research and cannot be considered for the entire Mutual Fund Industry of India.
Some of the people, out of various sectors that I had visited for study, did not
Due to small market and time limit I could take only 100 responses.
75
CONCLUSIONS
76
CONCLUSIONS
companies.
The investors prefer investing more in banks and post office, which shows that
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.
The awareness level about HDFC assets Management Company is moderate but
still the awareness should be created because 44% peoples still not invest in HDFC
assets Management Company.
As the investor prefers safe investment and want consistent return, they invest in
The investors prefer HDFC assets Management Company more because of the
Mutual funds are also preferred because of the cost effectiveness and higher
The banks mostly make the investments through the agents followed.
knowledgeable class of the region prefers Mutual Funds less compare to service class.
77
RECOMMENDATION
S
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
Companys 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 investors 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
80
Questionnaire
NAME: ADDRESS: -
(R)
(M)
No
81
Equity
Debt
Liquid
No
Bank
Online
Close ended
82
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.
Redemption Price
The price at which open-ended schemes repurchase their units and closeEnded schemes redeem their units on maturity. These prices are NAV
Related.
83
A charge collected by a scheme when it buys backs the units from the unit
Holders.
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.
84
LIST OF TABLE
Sr. No.
Name of Table
Page No.
17
2
3
4
5
6
64
79
82
83
84
7
8
9
10
11
12
company
Define scheme in which investors invest in HDFC
assets management company
Define medium choose by investors for invest in HDFC
assets management company
Define PREFENCE CRITERIA of investors
Define type of product /schemes investors prefer for
investments.
Define awareness level about on going NFO of HDFC
assets management company.
85
85
86
87
88
89
90
LIST OF GRAPH
Sr. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Name of Graph
Office locations of HDFC Assets Management
Company
Different Types of Products
Growth of Asset Over The year
Types of customers
Mutual Fund Cycle
Risk Return in Mutual Fund
Structure Of Mutual Fund
Classification Of Data
Define investments avenues
Define investments in mutual fund
Define schemes preferred by investors
Define invest in HDFC assets management company
Define scheme in which investors invest in HDFC
assets management company
Define medium choose by investors for invest in HDFC
assets management company
Define Preference criteria of investors
Define type of product /schemes investors prefer for
investments.
Define awareness level about on going NFO of HDFC
assets management company.
86
Page No.
22
24
39
40
49
56
60
76
82
83
84
85
86
87
88
89
90
BIBLIOGRAPHY
Books
Websites
www.hdfcfund.com
www.amfiindia.com
www.valuereserchonline.com
www.moneycontrol.com
87
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)
88