FINAL PROJECT REPORT

On
A study on Mutual Funds In HDFC

(GENERAL PROJECT)
Dissertation submitted to University of Mumbai in Partial Fulfilment for
the award of Master of Management Studies in (Finance)

By

RITESH S. LOKE
ROLL NO. ARMIET/MMS 18/RL 71

Under the Guidance of

Prof. ADITI AUDDY

ALAMURI RATNAMALA INSTITUTE OF ENGINEERING AND

TECHNOLOGY

UNIVERSITY OF MUMBAIMARCH

2019-20

1
 CERTIFICATE

This is to certify that MISS. RITESH SUHAS LOKE is a bonafide

student of our Institute and the dissertation entitled “A study on Mutual
Fund In HDFC” submitted by him is in partial fulfillment for the award of
the Degree of MASTER OF MANAGEMENT STUDIES IN
MARKETING by the University Of Mumbai during the Academic Year
2019-20120.

Place:
Date:
Signature.

Guide’s Certificate

2
This is to certify that the Dissertation entitled A study on Mutual Fund in HDFC
is a bonafide record of independent research work done by MR.
RITESH SUHAS LOKE under my supervision during Academic year
2019-2020, submitted to the University of Mumbai in partial
fulfillment for the award of the Degree of MASTER OF
MANAGEMENT STUDIES IN MARKETING

Place :

Date:

___________________________

Signature of Project Guide

Place:

Date:

3
 DECLARATION

I MR. RITESH SUHAS LOKE hereby declare that the dissertation entitled A
study on Mutual Fund in HDFC submitted to the University of Mumbai in
partial fulfillment for the award of the Degree of MASTER OF
MANAGEMENT STUDIES IN MARKETING is an original work and that
the dissertation has not previously formed the basis for the award of any other
degree, Diploma, Associate ship, Fellowship or other title.

PLACE: _______________ MISS. RITESH SUHAS LOKE

DATE: ________________ SIGNATURE

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 ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my

guide Prof. Aditi for his exemplary guidance, monitoring and constant
encouragement throughout the course of this project. The blessing, help and
guidance given by him time to time shall carry me a long way in the journey of life
on which I am about to embark.

I would like to thank all teaching and non-teaching staff that had help me doing
my project.

Lastly, I thank almighty, my parents and friends for their constant encouragement
without which this project would not be possible.

PLACE: _______________ MISS. RITESH S LOKE

DATE: ________________ SIGNATURE

EXECUTIVE SUMMARY

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 Mutual funds pool money from different investors and invest in different
investment sources like stocks, shares, bonds etc. A professional fund manager
manages these and returns are paid in form of dividends. Some schemes assured
fixed returns that are less in risk and some offer dividends based on the market
fluctuations and prices. Mutual funds have to be subscribed in units and the
purchase or sale is dependent on NAV (Net Asset Value), taking into consideration

the exit and entry load factors into account.

This project undertaken deals with customer perception with regard to mutual
funds that is the schemes they prefer, the plans they are opting, the reasons behind
such selections and also this project dealt with different investment options, which
people prefer along with and apart from mutual funds. Like postal saving schemes,
recurring deposits, bonds, and shares. The findings from this project is that most of
the people are hesitant in going for new age investments like mutual funds and
prefer to avert risks by investing in less riskier investment options like recurring
deposits and so. Also people going for investment in mutual funds are not going for
high-risk portfolios and schemes but want to go for medium risk elements.

TABLE OF CONTENTS

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 CONTENTS PAGE NUMBER

Chapter 1:

1.1 Introduction of Mutual Fund 9

1.2 Concept of Mutual Fund 10

1.3 History of Mutual Fund 11

1.4 Types of Mutual Fund 14

1.5 Process of Mutual Fund 17

1.6 Rights of Unit Holder 18

1.7 Benefits of Mutual Funds 23

1.8 Disadvantages 26

Chapter 2: Company Profile

3.1 Company Profile 34

3.2 Product & services 36

Chapter 3: Need of Project

Chapter 4: Research Methodology

4.1 Objective 38

5.2 Limitation of study 38

Chapter 5: Literature Review 40

Chapter 6: Data Analysis & Interpretation

7

6.1 Investment Philosophy 41

 CHAPTER 1

Introduction

Mutual fund

A mutual fund is a professionally managed investment fund that pools money from
many investors to purchase securities. These investors may be retail or institutional
to purchase securities. These investors may be retail or institutional in nature.

Mutual funds have advantages and disadvantages compared to direct investing on

individual securities. The primary advantages of mutual funds are that they provide
economies of scale, a higher level of diversification, they provide liquidity, and
they and managed by professional investors. On the negative side, investors in a
mutual fund must pay various fees and expenses.

Primary structure of mutual fund include open- end fund, unit investment trusts
and closed end fund. Exchange- traded funds (ETFs) are open-end funds or unit
investment trusts that trade on an exchange. Some close ended funds also resemble
exchange traded funds as they are traded on stock exchanges to improve their
liquidity.

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Concept of Mutual fund

Mutual fund is a vehicle mobilizes money from investors, to invest in different

markets and securities, in line with the investment objectives agreed upon, between
the mutual fund and investors. In other words, through investment Funds, a small
investors. In other words, through investment funds, small investors can avail of
professional fund management serve by an Asset management company.

1. Investors with common financial objectives pool their money.

2. Investors on a proportionate basis, get mutual fund units for contribute to
pool
3. The money collected from investors is invested into shares, debentures or
interest other securities by manager.
4. The fund manager realizes gain or losses, and collects dividend or income.
5. Any capital gains or losses from such investments are passed on to investors
in proportion of the number of units held by them.

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History of Mutual fund

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 RBI. The history of
Mutual fund in India can be broadly divided into four phases.

A. FIRST PHASE (1964-87) MONOPOLY OF UTI

Act of parliament established Unit Trust of India (UTI) pn 1963. It was set up by
the RBI and functioned under Regulatory and administrative control of the Reserve
Bank of India. In 1978 UTI was de-linked from RBI and the Industrial
Development Bank of India (IDBI) took over regulatory and administrative control
in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the
end of 1988 UTI had Rs.6, 700 cores of Asset under management.

B. SECOND PHASE- (1987- 93) ENTRY BANKS FINANCIAL

INSTITUTIONS

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

10
established in June 1987 followed by Many banks. LIC established its mutual fund
in June 1989 while GIC had set up its mutual funds in December 1990.

And the end of 1993, the Mutual funds industry had asset under management of
Rs. 47,004 cores

C. THIRD PHASE- (1993- 2003) ENTRY OF PRIVATE SECTOR

With the entry of private sector funds in 1993, a new era started on 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 onto being
under which all Mutual fund Regulations came into being, under which all Mutual
funds except UTI were to be registered and governed under the SEBI. Pioneer was
first private sector Mutual funds registered in July 1993.

The 1993 SEBI Regulations were substituted by a more comprehensive and revised
Mutual Funds in 1996. The industry now under SEBI Regulations 1996.

The number of Mutual funds 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 the end of January 2003.

D. PHASE FOUR - 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 Asset under management of Rs. 29, 835 cores as at the end of

11
January 2003. The specified undertaking of unit trust of India, functioning under an
administrator and under the purview of the Mutual funds regulations.

The second is the UTI Mutual Funds Ltd sponsored by SBI, PNB, and BOB &
LIC. It is registered with SEBI and functions under the Mutual funds regulations.
With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.
76,000 cores of Asset under management and with the setting up of a UTI Mutual
Funds, conforming to the SEBI Mutual Funds industry his entered its current phase
of consolidation and growth.

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TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of its structure and its
Investments.

By Structure:

1. Open-ended Funds

An open-end fund is one that is available for subscription all through the year.
These do not have a fixed maturity. Investors can conveniently buy and sell units
At Net Asset Value ("NAV") related prices. The key feature of open-end schemes
Is liquidity.

2. Closed-ended Funds

A closed-end fund has a stipulated maturity period which generally ranging from
3 to 15 years. The fund is open for subscription only during a specified period.
Investors can invest in the scheme at the time of the initial public issue and
Thereafter they can buy or sell the units of the scheme on the stock exchanges
Where they are listed. In order to provide an exit route to the investors, some
Close-ended funds give an option of selling back the units to the Mutual Fund
through periodic repurchase at NAV related prices. SEBI Regulations stipulate
that at least one of the two exit routes is provided to the investor.
Interval Funds
Interval funds combine the features of open-ended and close-ended schemes.
They are open for sale or redemption during pre-determined intervals at NAV
related prices.
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By Investment Objective:

1. Income Funds

The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds,

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corporate debentures and government securities. Income Funds are ideal for
capital stability and regular income.

2. Balanced Funds
The aim of balanced funds is to provide both growth and regular income. Such
schemes periodically distribute a part of their earning and invest both in equities
and fixed income securities in the proportion indicated in their offer documents. In
a rising stock market, the NAV of these schemes may not normally keep pace, or
fall equally when the market falls. These are ideal for investors looking for a
combination of income and moderate growth.

3. Growth Funds

The aim of growth funds is to provide capital appreciation over the medium to
long-term. Such schemes normally invest a majority of their corpus in equities. It
has been proven that returns from stocks, have outperformed most other kind of
investments held over the long term. Growth schemes are ideal for investors
having a long-term outlook seeking growth over a period of time.

4. Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of

capital and moderate income. These schemes generally invest in safer short-term
instruments such as treasury bills, certificates of deposit, commercial paper
and inter-bank call money. Returns on these schemes may fluctuate depending
upon the interest rates prevailing in the market. These are ideal for Corporate
and individual investors as a means to park their surplus funds for short periods.

5. Load Funds:

A Load Fund is one that charges a commission for entry or exit. That is, each
time you buy or sell units in the fund, a commission will be payable. Typically
entry and exit loads range from 1% to 2%. It could be worth paying the load, if
the fund has a good performance history.

6. No-Load Funds:
A no-Load Fund is one that does not charge a commission for entry or exit. That

14
is, no commission is payable on purchase or sale of units in the fund. The
Advantage of a no load fund is that the entire corpus is put to work.

Other Schemes:
Tax saving Schemes
These schemes offer tax rebates to the investors under specific provisions of the
Indian Income Tax laws as the Government offers tax incentives for investment
in specified avenues. Investments made in Equity Linked Savings Schemes
(ELSS) and pension Schemes are allowed as deduction u/s 88 of the Income
Tax Act, 1961. The Act also provides opportunities to investors to save capital
gains u/s 54EA by investing in Mutual Funds, provided the capital asset has been
sold prior to April 1, 2000 and the amount is invested before September 30,
2000.
1. Special Schemes:-

A. Industry Specific Schemes

Industry Specific Schemes invest only in the industries specified in the

offer document. The investment of these funds is limited to specific
industries like InfoTech, FMCG and Pharmaceuticals etc.

B. Index Schemes

Index Funds attempt to replicate the performance of a particular index

such as the BSE Sense or the NSE 50

C. Sectorial Schemes

Sect oral Funds are those, which invest exclusively in a specified industry
or a group of industries or various segments such as 'A' Group shares or
initial public offerings.

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Process of MUTUL FUND

In the above graph shows how Mutual Funds work and how investors earn money
by investing in the Mutual Funds. Investors put their saving as an investment in
mutual funds. The Fund Manager who is a person who takes the decisions where
the money should be invested in securities according the scheme’s objectives.
Securities include Equities, Debenture, Gov. Securities, Bonds and Commercial
Paper etc. These securities generate returns to the fund manager. The Fund
Manager passes back to the investors.

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Rights of a Mutual Fund Unit Holer

Knowing about some investment mistakes people can make.

1. Investing without a clear plan of action: Many people neglect to take

the time to think about their needs and long-term financial goals before
investing. Unfortunately, this often results in falling short of their
expectations. You should decide whether you are interested in rice
stability, growth, or a combination of these.

2. Meddling with your account too often: You should have clear
understanding of your investments so that you are comfortable with their
Behaviour. If you keep transferring investments in response to downturns in
prices, you may miss the upturns as well. Even in the investment field, the
“tortoise” that is more patient, may win over the “hare”. While past
performance does not necessarily guarantee future performance, your
understanding of the behavior of various investments over a time can help
prevent you from becoming short-sighted about your long-term goals.

3. Losing sight of inflation: While may be aware of the fact that the cost of
goods and services are rising; people tend to forget the impact of inflation
will have on investment in long-term. The value of Rs.100 in 1980 was
Down to Rs. 26 in 1995. This means that the buying power of rupee has
decreased, you can not buy as much for Rs.100 now that you could back
in 1980. (Consumer price index for urban non-manual employees has
grown by 9.35% per annum between 1980-81 and 1994-95. Source: RBI
Report on Currency and Finance).

4. Investing too little too late: People do not “pay themselves first”. Most
People these days have too many bills to pay every month, and planning
for your future often takes a backseat. Regardless of age or income, if you
do not place long-term investing among your top priorities, you may not be
able to meet your financial goals. The sooner you start, the less you have
to save every month to reach your financial goals.

5. Do not put all your eggs into one basket, diversify: When it comes to
investing, most of us do not appreciate the importance of diversification.
While we know that we should not “put all our eggs in one basket”, we

17
often relate this concept to stocks and bonds.

Why should one invest in mutual funds……?

· One can avail of the benefits of better returns with added

benefits of anytime liquidity by investing in open-ended debt
funds at lower risk.
· One can minimize his risk by investing in mutual funds as the
mutual fund managers analyze the companies’ financials more
minutely than an individual can do as they have the expertise to
do so. They can manage the maturity of their portfolio by
investing in instruments of varied maturity profile.
· Moreover, mutual funds are better placed to absorb the
fluctuations in the prices of the securities as a result of interest
rate variation and one can benefits from any such price
movement.
· Liquid funds offer liquidity as well as better return than banks and
so attract investors. Many funds provide anytime withdrawal
enabling a big investor to take maximum benefits.
· Apart from liquidity, the funds provide very good post-tax returns
on year-to-year basis. Even some of the debt funds have
generated superior returns at relatively low level of risk. On an
average debt funds have posted returns over 10 percent over
one year horizon. In nutshell we can say that these funds have
delivered more than what one expects of debt avenues such as
post office schemes or bank fixed deposits.
· Mutual funds specialize in identification of stocks through
dedicated experts in the field and this enable them to pick
stocks at the right movement. Sector funds provide an edge and
generate good returns if the particular sector is doing well.
· The benefits listed so far are essentially for the small retail
investor but the industry can attract investments from institutional
and big investors as well.

Moving up in the risk spectrum, there are many people who

would like to take some risk and invest in equity funds/capital

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market. However, since their appetite for risk is also limited, they
would rather have some exposure to debt as well. For these
investors, balanced funds provide an easy route of investment.
Armed with the expertise of investment techniques, they can
invest in equity as well as in good quality debt thereby reducing
risk and providing the investor with better returns than he could
otherwise manage.
· Next problem is that of our funds or money. A single person can’t
invest in multiple high-priced stocks for the sole reason that his
pockets are not likely to be deep enough. This limits him from
diversifying his portfolio as well as benefiting from multiple
investments.
· Investing through MF route enables an investor to invest in many
good stocks and reap benefits even through a small investment.
This not only diversifies the portfolio and helps in generating
returns from a number of sectors but reduces the risk as well.
Through identification of the right fund might not be an easy task,
a good investment consultants and counselors will can investors
take informed decision.
· Investing in just one Mutual Fund scheme may not meet all
investment needs. One might consider investing in a
combination of schemes to achieve your specific goals. Here is
the risk, return grid that shows how and where an investor can
invest according to his risk, returns appetite. An investor can see
different kinds of funds where in he can get maximum benefit
with utmost care.

Common investment mistakes that people can make

19
Knowing about some investment mistakes people can make.

1. Investing without a clear plan of action: Many people neglect to take

the time to think about their needs and long-term financial goals before
investing. Unfortunately, this often results in falling short of their
expectations. You should decide whether you are interested in rice
stability, growth, or a combination of these. Determine your investment
goals. Then, depending on your age and your tolerance for risk, select
mutual fund with objective similar to yours.

2. Meddling with your account too often: You should have clear
understanding of your investments so that you are comfortable with their
behavior. If you keep transferring investments in response to downturns in
prices, you may miss the upturns as well. Even in the investment field, the
“tortoise” that is more patient, may win over the “hare”. While past
performance does not necessarily guarantee future performance, your
understanding of the behavior of various investments over a time can help
prevent you from becoming shortsighted about your long-term goals.

3. Losing sight of inflation: While may be aware of the fact that the cost of
goods and services are rising; people tend to forget the impact of inflation
will have on investment in long-term. The value of Rs.100 in 1980 was
down to Rs. 26 in 1995. This means that the buying power of rupee has
decreased, you cannot buy as much for Rs.100 now that you could back
in 1980. (Consumer price index for urban non-manual employees has
grown by 9.35% per annum between 1980-81 and 1994-95. Source: RBI
report on Currency and Finance).You has to keep in mind that will eat
into your savings faster than you can imagine.

4. Investing too little too late: People do not “pay themselves first”. Most
people these days have too many bills to pay every month, and planning
for your future often takes a backseat. Regardless of age or income, if you
do not place long-term investing among your top priorities, you may not be
able to meet your financial goals. The sooner you start, the less you have
to save every month to reach your financial goals.

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5. Do not put all your eggs into one basket, diversify: When it comes to
Investing, most of us do not appreciate the importance of diversification.
While we know that we should not “put all our eggs in one basket”, we
Often relate this concept to stocks and bonds. Take the time to discuss the
Importance of diversifying investments among different assets categories
and industries. When you spread your holdings around, you do not have
to rely on the success of just one investment.

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BENEFITS OF MUTUAL FUND

Mutual funds serve as a link between the saving public and the capital markets.
They mobilize savings from the investors and bring them to borrowers in the
capital markets. Today mutual funds are fast emerging as the favorite investment
vehicle because of the many advantages they have over other forms and
avenues of investing. The major advantages offered by mutual funds to all
investors are:

Professional Management
Mutual Funds provide the services of experienced and skilled professionals,
backed by a dedicated investment research team that analyses the performance
and prospects of companies and selects suitable investments to achieve the
objectives of the scheme.

Diversification

Mutual Funds invest in a number of companies across a broad cross-section of

industries and sectors. This diversification reduces the risk because seldom do
all stocks decline at the same time and in the same proportion. You achieve this
diversification through a Mutual Fund with far less money than you can do on
your own.

Variety

Mutual funds offer a tremendous variety of schemes. This variety is beneficial in

two ways: first, it offers different types of schemes to investors with different
needs and risk appetites; secondly it offers an opportunity to investors to
invest sums across a variety of schemes, both debt and equity. For example, an
investor can invest his money in a Growth Fund (equity scheme) and Income
Fund (Debt scheme) depending on his risk appetite and thus creates balanced
portfolio easily or simply just buys a Balanced scheme.

Convenient Administration

Investing in a Mutual Fund reduces paperwork and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with brokers
and companies. Mutual Funds save your time and make investing easy and

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convenient.

Return Potential

Over a medium to long-term, Mutual Funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.

Low Cost

Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage,
custodial and other fees translate into lower costs for investors.

Liquidity

In open-end schemes, the investor gets the money back promptly at net asset
value related prices from the Mutual Fund. In closed-end schemes, the units can
be sold on a stock exchange at the prevailing market price or the investor can
avail of the facility of direct repurchase at NAV related prices by the Mutual Fund.

Transparency

You get regular information on the value of your investment in addition to

disclosure on the specific investments made by your scheme, the proportion
invested in each class of assets and the fund manager's investment strategy and
outlook.

Flexibility

Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans, you can systematically invest or withdraw funds
according to your needs and convenience.

Affordability

Investors individually may lack sufficient funds to invest in high-grade stock. A

mutual fund because of its large corpus allows even a small investor to take the
benefit of its investment strategy.

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Choice of schemes

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

Regulations

All Mutual Funds are registered with SEBI and they function within the provision
of strict regulations designed to protect the interests of investors. The operations
of Mutual Funds are regularly monitored by SEBI.

Tax Benefits

Any income distributed after March 31, 2002 will be subject to tax in assessment
of all unit holders. However, as a measure of concession to unit holders of open-
ended equity-oriented funds, income distributions for the year ending March
31, 2003, will be taxed at a concessional rate of 10.5%.
In case of Individuals and Hindu Undivided Families a deduction up to Rs 9000
from the Total income will be admissible in respect of income from investments
specified in Section 80L, including income from units of the Mutual Fund. Units of
the schemes are not subject to Wealth-Tax and Gift-Tax.

DRAWBACKS OF INVESTING IN MUTUAL FUNDS

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Potential loss

Unlike a bank deposit, the investment in a mutual fund could fall in value, as the
fund is nothing but a portfolio of different securities. Apart from a few assured
returns schemes, the fund does not guarantee any minimum percentage of
return.

The Diversification Penalty

While diversification reduces the risk of loss from holding a single security, it also
limits the larger gains if a single security increases dramatically in value. Also,
diversification does not protect the unit holders totally from an overall decline in
the market.

No tailor made portfolio

Mutual fund portfolios are created and marked by AMCs, in to which investors
invest. They cannot made tailor made portfolio.

MUTUAL FUND REGULATION

There was no uniform regulation of the mutual funds industry till a few years ago.
The UTI was regulated by a special Act of Parliament while funds promoted by
public sector banks were subject to RBI Guidelines of July 1989. The Securities
& Exchange Board of India (SEBI) was formed in 1993 as a capital market
regulator. One of its responsibilities was to regulate the mutual fund industry and
it came up with comprehensive regulations for the industry in 1993. The rules for
the formation, administration and management of mutual funds in India were
clearly lay down. Regulations also prescribed disclosure requirements.
The regulations were thoroughly reviewed and re-notified in December 1996. The
revised guidelines tighten the accounting and disclosure requirements in line with
recommendations of The Expert Committee on Accounting Policies, Net Asset
Values and Pricing of Mutual Funds. The SEBI (Mutual Funds) Regulations, 1996
have been further amended in 1997, 1998 and 1999. Today, all mutual funds are
regulated by SEBI. Efforts have been made to bring UTI schemes under SEBI's

25
ambit with the result that all schemes, with the exception of Unit 64, are now
regulated by the capital market regulator.

Some facts for the growth of mutual funds in India

 100% growth in the last 6 years.

 Number of foreign AMC's are in the queue to enter the Indian markets like
Fidelity Investments, US based, with over US$1trillion assets under
management worldwide.
 Our saving rate is over 23%, highest in the world. Only channelizing these
savings in mutual funds sector is required.
 We have approximately 29 mutual funds which is much less than US
having more than 800. There is a big scope for expansion.
 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds
are concentrating on the 'A' class cities. Soon they will find scope in the
growing cities.
 Mutual fund can penetrate rural like the Indian insurance industry with
simple and limited products.
 SEBI allowing the MF's to launch commodity mutual funds.
 Emphasis on better corporate governance.
 Trying to curb the late trading practices.

Mutual funds are regulated by the SEBI (Mutual Fund) regulations, 1996. SEBI is
the regulator of all funds, except offshore funds. Bank sponsored mutual finds
are jointly regulated by SEBI and RBI permission. If there is a bank sponsored
find, it cannot provide a guarantee without RBI permission. RBI regulates money
and govt. securities in which mutual fund invest. Listed mutual funds are subject
to the listing regulations of stock exchanges. Since the AMC and trustee co, are
Co.’s they are regulated by the Legal and Regulatory Framework
department of co affairs, they have to send
periodic report to the roc and the co law board is the appellate authority.
Investors cannot sue the trust, as they are the same as the trust and cant sure
themselves. UTI is governed by the UTI act, 1963 and is voluntarily under SEBI
regulations. UTI can borrow as well as lend and also engage in other financial
services activities. SROs are the second tier in the regulatory structure; SROs
cannot do any legislation on their own. All stock exchanges are SROs. AMFI is

26
an industry association of mutual funds. AMFI is not yet a SEBI registered SRO.
AMFI has created code for mutual funds. AMFI aims at increasing investor
awareness about mutual funds, encouraging best practices and bringing about
high standards of professional behavior in the industry.

Association of Mutual Funds in India (AMFI)

With the increase in mutual fund players in India, a need for mutual fund
association in India was generated to function as a non-profit organisation.
Association of Mutual Funds in India (AMFI) was incorporated on 22nd August,
1995.
AMFI is an apex body of all Asset Management Companies (AMC) which has
been registered with SEBI. Till date all the AMCs are that have launched mutual
fund schemes are its members. It functions under the supervision and guidelines
of its Board of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund
Industry to a professional and healthy market with ethical lines enhancing and
maintaining standards. It follows the principle of both protecting and promoting
the interests of mutual funds as well as their unit holders.
The objectives of Association of Mutual Funds in India
The Association of Mutual Funds of India works with 30 registered AMCs of the
country. It has certain defined objectives which juxtaposes the guidelines of its
Board of Directors. The objectives are as follows:
This mutual fund association of India maintains a high professional and ethical
standards in all areas of operation of the industry.
It also recommends and promotes the top class business practices and code of
conduct which is followed by members and related people engaged in the
activities of mutual fund and asset management. The agencies who are by any
means connected or involved in the field of capital markets and financial services
also involved in this code of conduct of the association.

AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual
fund industry.
Association of Mutual Fund of India do represent the Government of India, the
Reserve Bank of India and other related bodies on matters relating to the Mutual
Fund Industry.
It develops a team of well-qualified and trained Agent distributors. It implements

27
a programme of training and certification for all intermediaries and other engaged
in the mutual fund industry.
AMFI undertakes all India awareness programme for investors in order to
promote proper understanding of the concept and working of mutual funds.
At last but not the least association of mutual fund of India also disseminate
information’s on Mutual Fund Industry and undertakes studies and research
either directly or in association with other bodies.

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 CHAPTER 2

Company profile

Housing Development Finance Corporation is an Indian financial company based

in Mumbai founded in 1977.

It is major provider of finance in India. It has a presence on banking, life insurance

and general insurance, asset management, venture capital, realty, education,
deposits and education loans.

Having net income of US $3.2 billion (2019). Total assets are US$ 96 billion
(2019). Equity of company is US$ 17 billion (2019)

History

HDFC was promoted by the industrial credit and investment corporation of India.
In 2000, HDFC asset Management Company launched its mutual fund schemes. In
same year, IRDA granted registration to HDFC Standard life insurance as first
private sector in India.

29
Product and services

Mortgage - The Company provides housing finance to individual and corporate

for purchase / contribution of residential house. The average loan profile amounts
to INR 2.18 million which was lasts for about 13 year and cover approx. 65% of
actual property value.

Life insurance - The Company has been providing life insurance since the year
2000, through its subsidiary HDFC standard Life insurance Company limited. It
offers 33 individual products and 8 group products. It had market share of 4.6% of
life insurance business in India as per 30 September 2013.

General insurance - The Company offers following products

1. Motor, health, travel, home and personal accident in retail segment which
accounts for 47%
2. Property, marine, aviation and liability insurance

Mutual fund - HDFC provides mutual fund services through its subsidiary HDFC
Asset Management Company limited.

A. HDFC EQUITY FUNDS

1. HDFC housing opportunities Fund

2. HDFC Equity Fund
3. HDFC Top 100 fund
4. HDFC Mid- cap Opportunities Fund
5. HDFC Tax saver Fund

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B.HDFC DEBT/INCOME FUNDS

1. HDFC Gilt Fund

2. HDFC Corporate Bond Fund
3. HDFC short- term debt Fund
4. HDFC credit risk debt fund
5. HDFC dynamic debt fund

C. HDFC LIQUID FUND

1. HDFC money market fund

2. HDFC Overnight fund
3. HDFC liquid fund premium plan
4. HDFC liquid fund

D. HDFC EXCHANGE TRADED FUNDS

1. HDFC Gold ETF

2. HDFC Nifty 50 ETF
3. HDFC Sensex ETF

CHAPTER 3
Need of Project

Everyone has financial goals that are unique to them and their financial needs.
People may want to own a home, a bigger car or fund their child education or need
financial protection. Goals maybe mix of short term, mid- term and long - term

31
goals. Goals decide amount of savings people need to create and how can they
invest to attain the desired goal amount.

Investments in traditional instruments might not live up to expectations. This is

why investment in mutual funds can be beneficial. Whatever people's goal might
be, there are mutual funds instruments can be beneficial. The Mutual Funds basket
has something for every investor. If investors can take huge risk sp there are
different types of mutual funds in market. Investors can use different kinds of
Mutual funds with different investment objectives to reach their goals. Choosing
right mutual is the first step of investment.

Mutual funds to create a diversified investment portfolio that meets long- term and
short - term goals. Mutual fund also offer asset allocation funds that can mirror
investor's life - stage and progressive reduce the exposure to volatile assets and
move to more stable options as investors grow old

All in all, there are varieties of mutual funds to choose as per investment objective.

CHAPTER 4
Research Methodology

Objectives

 To examine the penetration of mutual funds among Indian investors.

32
  Finally to assess the perception of investors towards mutual fund scheme
 To define and maintain high professional and ethical standards in all areas of
operation of Mutual Funds industry.
 To interact with the Securities and exchange board of India (SEBI) and to
represent to SEBI on all matters concerning the Mutual Funds industry.
 To represent to the Government, Reserve Bank of India and other bodies on
all matters relating to mutual fund industries.
 To undertake nationwide investor awareness program so as to promote
proper understanding of the concept and working of Mutual Funds.

Limitation of Study
There is no activity without limitation

1. Though everyone used to be very co- operation but every detail was unable
to be disclosed to us as the officials has to maintain secrecy of the company.

2. Is is difficult to cover all the function of study.

3. It is very difficult to evaluate the accuracy of secondary data. Before using

secondary data.

4. In this rapidly changing turbulent era the suggestions and recommendations

drawn out today might prove inadequate or improper tomorrow; this is likely
to limits effectiveness.
5. Desired information may be unavailable or out of date.

33
 CHAPTER 5
Literature Review

Dr.S. Vasantha, Uma Maheswari and K.Subashini, (Sep 2013)

Evaluating the Performance of some selected open ended equity diversified

Mutual fund in Indian mutual fund Industry. The main objective of this research
paper is to evaluate the performance of selective open ended equity diversified
Mutual fund in the Indian equity market. For the purpose of conducting this study
HDFC top 200 fund(g).Reliance top 200(g).ICICI Prudential top 200(g). Canara
Robeco equity diversified fund(g).Birla Sun Life frontline equity (g) mutual funds
have been studied over the period of 60 months data which is from January 2008 to
December 2012.The analysis has been made on the basis of Sharpe ratio, Treynor
ratio and Jenson .

34
 Dr. K. Mallikarjuna Rao and H. Ranjeeta Rani, (Jul 2013) have studied Risk
Adjusted Performance Evaluation of Selected Balanced Mutual Fund Schemes in
India. In this paper, an attempt has been made to study the performance of selected
balanced schemes of mutual funds based on risk-return relationship models and
various measures. Balanced schemes of mutual funds are the ones which are
mostly preferred by Indian investors because of their balanced portfolio in equity
and debt. A total of 10 schemes offered by various mutual funds have been studied
over the time period April, 2010 to March, 2013 (3 years).

Sowmiya. G, (Jan 2014), has studied Performance Evaluation of Mutual Funds in

India. The objectives of this are to know the basic concepts and terminologies of
the mutual funds in public limited companies and private limited companies. To
analyze performance and growth of selected mutual funds schemes with their NAV
and their returns. To identify the return variance and to provide suggestions based
on the analysis.

35
36
 CHAPTER 6
Data Analysis & Interpretation

INVESTMENT PHILOSOPHY

Equity-oriented schemes

Company’s position as India’s leading asset management company is supported by

a strong brand, good distribution network, experienced team and sound track
record over the long term. Equity-oriented schemes constituted 48.1% of our total
AUM as of March 31, 2019. We are medium to long-term investors in equities and
our investments are driven by fundamental research with a medium to long-term
view. Our investment philosophy for equity-oriented investments is based on the
belief that over time stock prices reflect their intrinsic values. Thus, our research
efforts are predominantly focussed on bottom up research keeping in mind the
economic outlook and macro-economic conditions. The focus of research effort is
on understanding the businesses, the key drivers, forming a view on the key drivers
and understanding the risks taking into account both quantitative (financial
analysis, industry prospects, etc.) and qualitative.

1. HDFC EQUITY FUND

Dividend
Individual/ Dividend
HUF (Rs) per Others (Rs)
NAV Date Fund Name NAV Amount Unit per Unit
01-11-
2019 HDFC Equity Fund 50.446 4.5 4.5
01-11-
2019 HDFC Equity Fund 54.364 4.5 4.5
01-11-
2019 HDFC Equity Fund 667.671 1.5 1.5
01-11-
2019 HDFC Equity Fund 704.081 1.5 1.5

37
As per the table of HDFC Equity fund we can see that NAV amount is higher i.e
investor can get high rate of NAV in this investment but the dividend is very low as
per CRICIL rating it is on below average. Investors invest in this fund to get
growth and highest returns. It is open ended mutual fund scheme.

2. HDFC GROWTH OPPORTUNITY FUNDS

Dividend
Individual/ Dividend
NAV HUF (Rs) per Others (Rs)
NAV Date Fund Name Amount Unit per Unit
01-11- HDFC Growth
2019 Opportunities Fund 19.298 0.31 0.31
01-11- HDFC Growth
2019 Opportunities Fund 22.462 0.31 0.31
01-11- HDFC Growth
2019 Opportunities Fund 114.883 0 0
01-11- HDFC Growth
2019 Opportunities Fund 116.196 0 0

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.

3. HDFC MID CAP OPPORTUNITY FUNDS

Dividend
Individual/ Dividend
NAV HUF (Rs) per Others (Rs)
NAV Date Fund Name Amount Unit per Unit
01-11- HDFC Mid-Cap
2019 Opportunities Fund 26.816 2 2
01-11- HDFC Mid-Cap
2019 Opportunities Fund 33.209 2 2
01-11- HDFC Mid-Cap
2019 Opportunities Fund 53.019 2.75 2.75

38
 01-11- HDFC Mid-Cap
2019 Opportunities Fund 56.18 2.75 2.75

Investment objective is 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

4. HDFC CAPITAL BUILDER VALUE FUND

Dividend
Individual/ Dividend
NAV HUF (Rs) per Others (Rs)
NAV Date Fund Name Amount Unit per Unit
01-11- HDFC Capital Builder Value
2019 Fund 24.307 0.05 0.05
01-11- HDFC Capital Builder Value
2019 Fund 26.461 0.05 0.05
01-11- HDFC Capital Builder Value
2019 Fund 283.116 0.05 0.05
01-11- HDFC Capital Builder Value
2019 Fund 300.547 0.05 0.05

The primary objective of the Scheme is to generate capital appreciation through

equity investment in companies whose shares
are quoting at prices below their true value.

Debt schemes

Investments in fixed income securities are guided by our investment philosophy of

Safety, Liquidity and Returns (SLR), generally in that order. Our fixed income
schemes constituted 50.7% of our total AUM as of March 31, 2019. Our fixed
income schemes invest in securities including corporate bonds, municipal bonds,
mortgage-backed securities, asset-backed securities, money market instruments,
etc. All investments are done in line with the Scheme Information Documents
(SID) and in SEBI approved instruments. Our Credit Risk Assessment framework
generally lays emphasis on Four C’s of Credit - Character of Management,
Capacity to Pay, Collateral pledged to secure debt and Covenants of debt, wherever

39
applicable. Further, we have an internal framework to determine absolute and
relative investment exposure limits for individual credits. We intend to follow
approach of disciplined investing by prudently selecting securities and managing
duration keeping in mind our medium term view on interest rates and the yield
curve. We also evaluate and monitor global and local macroeconomic variables
such as growth, inflation currency and liquidity.

1.HDFC INCOME FUND

Dividend
Individual/ Dividend
NAV HUF (Rs) per Others (Rs)
NAV Date Fund Name Amount Unit per Unit
01-11-
2019 HDFC Income Fund 11.1633 0.2217 0.2054
01-11-
2019 HDFC Income Fund 11.8385 0.2217 0.2054
01-11-
2019 HDFC Income Fund 42.503 0.444 0.444
01-11-
2019 HDFC Income Fund 44.707 0.444 0.444
01-11-
2019 HDFC Income Fund 13.4025 0 0
01-11-
2019 HDFC Income Fund 14.1381 0 0

The primary objective of the Scheme is to optimize returns while maintaining a

balance of safety, yield and liquidity.

2.HDFC FLOATING RATE DEBT FUND

40
 Dividend Dividend
Individual/ Others
NAV NAV HUF (Rs) per (Rs) per
Date Fund Name Amount Unit Unit
10-05- HDFC Floating Rate Debt
2019 Fund 10.0809 0 0 0%
10-05- HDFC Floating Rate Debt
2019 Fund 10.1483 0 0 0%
10-05- HDFC Floating Rate Debt
2019 Fund 10.1682 0 0 0%
10-05- HDFC Floating Rate Debt
2019 Fund 31.6659 0 0 0%
01-11- HDFC Floating Rate Debt
2019 Fund 10.0809 0 0 0%
01-11- HDFC Floating Rate Debt
2019 Fund 10.1493 0 0 0%
01-11- HDFC Floating Rate Debt
2019 Fund 10.1581 0 0 0%
01-11- HDFC Floating Rate Debt
2019 Fund 34.4069 0 0 0%
01-11- HDFC Floating Rate Debt
2019 Fund 10.0809 0 0 0%
01-11- HDFC Floating Rate Debt
2019 Fund 10.1492 0 0 0%
01-11- HDFC Floating Rate Debt
2019 Fund 10.1579 0 0 0%
01-11- HDFC Floating Rate Debt
2019 Fund 34.1657 0 0 0%

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.
Investment Options: Dividend Plan, Growth Plan. The Dividend Plan offers
Reinvestment Facility only
Nature of Scheme: - An open-ended income scheme.
Performance of HDFC Floating Rate Income Fund Long Term Plan (G):-

41
Not Ranked by CRISIL(Ranking by CRISIL)

Investment Risk Management

The risk management function is an integral part of our investment process.

Company’s investment and risk management team is responsible for conducting
pre-trade and post-trade monitoring. Pre-trade monitoring includes regulatory and
internal limit adherence, volume weighted average price (“VWAP”) analysis and
trade allocation review. Post-trade monitoring process includes the analysis of
performance attribution, factor model based risks, stress tests, value at risk
(“VaR”), sector and stock concentration risks and peer group analysis, and is
supported by robust technology platforms. Further, we have internal dealing room
controls that are reviewed by independent forensic auditors. We maintain biometric
access controls, call recording and video surveillance technologies, a cell phone
deposit policy and a dealer (equity dealing room) rotation policy. We continuously
enhance our investment risk management capabilities to ensure regulatory and
market compliance, and develop techniques to continue tracking our portfolios.

A. Schemes are classified as follows

Equity Oriented- 22 Schemes

Liquid/ Money Market - 3 Schemes

Debt Oriented - 115 Schemes

Others- 7 Schemes

Company have a proven track record of delivering consistent performance across

most of these products. Prudent strategies and active asset management under the
supervision of our experienced fund managers continue to drive our achievements.
As a result, we have steadily gained and established market share across debt and
equity.

CASE STUDY

42
All of us want our kids to have a successful career and a joyful life but successful
career does not come with ease. We all know there is a huge competition and to
ensure successful career, we need to provide quality education to our children.
While
we do our best to give our children the best food, clothing etc. then why not give
them the best education. After all education is the path to success which will make
the child financially independent.
Having similar thought in mind, one of our clients Mr. X &Mrs Y wanted to secure
the
future of their child, by planning for his education and marriage.
Let's take up their case and see how proper planning can help one plan for their
child's education and marriage

Personal Details
Mr. X a 30 year old married individual and his wife whose age was 27 years had a
3
year old Daughter. Mr. X was earning Rs 40,000 per month while his wife was
earning Rs 25,000 per month, thus having a total family income of Rs 65,000 per
month. As their expenses were around Rs 42,000 per month, they could have a
surplus of around Rs 23,000 on a monthly basis.

He had the following assets as depicted in the table below.

43
So, you can see that Mr. X & Mrs Y had total assets worth Rs 35 lakhs, of which
Fixed Deposit comprises of more than 40% of his total assets. They had small
amount of investment physical gold which was mostly in the form of gold
ornaments
of Mrs Y. They also had their individual EPF, PPF and Cash in Bank accounts. The
Cash in Bank was mainly kept for contingency purpose.
However Mr. X & Mrs Y did not have any liabilities.

And here was Mr. X & Mrs Y's Financial Objectives!

They were very concerned about their Daughter's future. So they wanted to plan
for
his graduation at the age of 18 years' worth Rs 9 lakhs, post-graduation at the age
of
21 years' worth Rs 15 lakhs and marriage at the age of 22 years' worth Rs 12 lakhs.

44
 (Note: Inflation considered at 7% per annum and investment return considered at
12% per annum, Interest rate is according to SBI Loan Scheme)
Mr. X & Mrs Y needed to make a total investment of Rs 35674 per month to
achieve
just these goals, while they had a surplus of Rs 23,000 per month. They wanted to
know how they can plan for their child's goals.

Suggestions & Findings

We recommended them the following:

1. Accommodation Goal: As they already pay rent of 12000 per month for
accommodation now they have to pay 15144 for EMI purpose so in near future
they own their flat.

2. Graduation Goal: Since Graduation is the highest priority goal, we advised

them to a start a SIP of Rs 4970 per month. SIP was advised across Equity,
Debt & Gold in the allocation of 80%, 10% and 10% respectively for 15 years

3. Post-Graduation Goal: Post-Graduation is the next priority goal, but the

amount required for this goal was very high. If they were to start a SIP of such a
high amount, they would have sacrificed on all other financial goals. So, we
advised them to start a SIP of Rs 4000 per month and increase it by 25% after

45
every 3 years. They could easily do so as their salaries would increase in future
and they can easily increase their investment amount for this goal as well. SIP
was advised across Equity, Debt & Gold in the allocation of 80%, 10% and 10%
respectively for 18 years.

4. Marriage Goal: Marriage was the least priority goal among these 3 goals and it
was difficult for them to start a SIP for this goal immediately. So we advised
them to start a SIP of Rs. 12000 per month after 7 years and increase it by 20%
after every 3 years. SIP was advised across Equity, Debt & Gold in the
allocation of 80%, 10% and 10% respectively for 15 years.

5. Other Financial Goals: After planning for the child goals, their total investment
is just Rs 12114 per month while they had surplus of Rs 23,000 per month. So
they can still invest Rs 10886 (Rs 23,000 - Rs 12114) for other financial goals
such as retirement, vacation or any other financial goal they might have.
We did not utilize any of their current assets as cash in bank was kept for
contingency purpose, physical gold was mostly gold ornaments and EPF & PPF
account can be dedicated to other financial goals such as retirement.
Even though Mr. X & Mrs.Y thought their surplus amount is insufficient to fund
for their child goals leaving aside all other goals, but proper planning helped
them not only to plan for their child goals but also plan for other financial goals.
Amount received as bonus at every year is utilized for other luxury need like this
year this amount is utilized in purchasing a car.
Loan amount is 1500000 as 1500000 down payments are done by FD
withdrawal.

CONCLUDING REMARKS

46
 A. 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.
B.The biggest advantage of Mutual Funds is their ability to diversify the risk.

B. 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.

C. Mutual Funds are the best solution for people who want to manage risk and
get good returns.

D. The size of Mutual Funds market in India is Rs. 107728 crores and that in
U.S.A is many times higher.

E. According to the SEBI - NCAER Survey of Indian Investors about 15

million or
8.7% of the households have invested in Mutual Funds and there are nearly
23 million unit holders in India.

F. 30% of investors fall in the income group of investors having monthly

income up to Rs. 10,000/-.

G. In U.S.A there are more deposits in the Mutual Funds than in bank deposits.

H. The truth is, as investors we should always pay attention to our Mutual Funds
and continue to monitor them.

BIBLOGRAPHY
BOOKS:

47
FINANCIAL MARKETS AND SERVICES (GORDON NATARAJAN)
NISM WORKBOOK

WEBSITES:

www.google.co.in/
www.hdfcfund.com/
www.sebi.com/
www.nseindia.in/
www.moneycontrol.com/

NEWSPAPERS, MAGAZINES, JOURNALS:

ECONOMIC TIMES
BUSINESS LINE
BUSINESS TODAY
HDFCAMCE Annual report 2019

48