CERTIFICATE

This is to certify that the study presented by Rahul R Todur to the University of
Mumbai in part completion of the three year part time degree of Masters in
Financial Management under the title of “ Comparative Study of Mutual Funds
in India with reference to HDFC mutual fund & SBI Mutual Fund” has been
done under my guidance.

To the best of my knowledge this project is in the nature of original work that
has not been submitted for any degree of this university or any other University.

Signature of the Candidate

Rahul R Todur

Forwarded through the Research Guide

Signature of the Guide

Prof: Sameer Salunkhe

1
 Acknowledgement

The success of my project work is a combination of joint efforts of many people. It is

my duty to acknowledge with gratitude the help rendered to me by those individuals who
provided me with valuable information and who were the grinding force, motivation &
inspiration during the successful completion of this project.

First, I extend all my sincere regards and gratitude to my Guide Prof. Mr. Sameer
Salunkhe, GNIMS, for her constant guidance, advice, support and pedagogy she offered. I
deem it my privileged to have carried out my project work under her sincere and able
guidance.

Second, I extend all my sincere regards and gratitude to our director Dr. Bigyan P
Verma, course coordinator Prof. (Ms. Jyotinder Kaur) and all the concern Professors and staff
of my college for providing with all the facilities required.

Third, I would like to express my sincere thanks to my colleagues in my office and

my fellow students in my class for their constant help, support and guidance throughout the
project.

Fourth, I would also like to express my sincere thanks to my family members, without
their support I won’t be able to complete my project.

Last but not least, I would like to sincere thanks to all those people who have left
unmentioned here, but have helped me directly or indirectly by their contribution to give me a
sharp and rewarding insight about the successful completion of this project.

RAHUL TODUR

2
 INDEX

SR NO TOPICS PAGE NO

1 Executive Summary 5–6

2 Objective of study of Mutual Funds 7

3 Introduction of Mutual Funds 8 – 23

4 HDFC Mutual Fund 24 – 30

5 SBI Mutual Fund 31 – 39

6 Literature Review 40 – 42

7 Research Methodology 43

8 Data collection (Primary Data) 44 – 46

9 Finding & Suggestion 47 - 55

10 Bibliography 56

Conclusion
11 57

3
 EXECUTIVE SUMMARY

A Mutual fund is a scheme in which several people invest their money for a financial
clause. The collected money is invested in Capital markets & the money which they earned,
is divided based on the number of units which they hold.

The Mutual fund Industry was started in India in a small way with the UTI creating what
was effectively a small savings division within the RBI. This was fairly successful for the
next 25 years as it gave investors good returns. Due to this RBI gave a go ahead to Public
sector banks & financial institution to start Mutual Funds in India and their success gave way
to Private sector Mutual Funds.

The advantages of Mutual Funds are Portfolio Diversification, Liquidity, Professional

Management, Ease of Companies, Less Risk, Low Transaction cost, Transparency, Safety.

The Disadvantages of Mutual Funds are Cost, Index Does Better, Fees, No Control over
Investments, Profitability of High returns reduced significantly, and Personal Tax situation is
not considered.

Mutual Funds have to follow specific rules and regulation which are prescribed by the
SEBI. AMFI is the apex body of all the Asset Management companies and is registered with
the SEBI. Association of Mutual Funds India has brought down the Indian Mutual Fund
Industry to a professional and healthy market with ethical lines enhancing.

There are many types of mutual funds in India. You can classify on the basis of BY
STRUCTURE (Open Ended Schemes , Close-Ended Schemes & Interval schemes) , BY
NATURE (Equity Fund, Debt Fund , Balanced Fund ) , BY INVESTMENT OBJECTIVE
(Growth Schemes , Income Schemes , Balanced Schemes & Money Market Schemes) ,
OTHER SCHEMES (Tax Saving Schemes , Index Schemes , Sector Specific).

Mutual Funds are very easy to buy and sell. You can buy mutual funds directly from
company or a broker. Before Investing in Mutual Funds one has to look at all the factors like
performance of the mutual funds from last 5 years , the returns given by mutual funds from
last 5 years & the company’s net worth has to be considered.

There are two types of Mutual Funds in India Public Sector Mutual Fund & private sector
mutual Fund. In Public Sector Mutual Funds there are UTI Mutual Fund , State bank of India
Mutual Funds , Bank of Baroda Mutual Funds & In Private sector Mutual Funds there are
4
Birla Sun Life Mutual , HDFC Mutual Fund , ICICI Prudential Mutual Fund , Reliance
Mutual Fund etc. .

The Most trend of Mutual Funds is the aggressive expansion of Mutual Funds. Nowadays
there is lot of Competition within the Mutual Fund as there are lot of private sector & Public
sector mutual funds have entered the industry.

Returns Comparison has been done between two Mutual Fund Companies like HDFC
Mutual Fund & SBI Mutual Fund. In this comparison we had taken both small & midcap
companies. In which markets they have invested the investors’ money and how the returns
for the 5 years has been done. It gives you an Idea how you can and where you can invest.

“Mutual Funds are Subject to Market Risk, Please read the offer document before
Investing"

5
 Objective of the Study of Mutual Funds

The objective of the study is to analyses, in detail the growth pattern of the mutual funds
industry in India and to evaluate performance of different schemes floated by most preferred
Mutual Funds in public fund in public and private sector.

The Main Objectives of this project.

 To Study about the Mutual Funds in India

 To Study about returns of the Mutual Funds
 To give an idea about the schemes available
 To study market trends in mutual funds.

Many individuals own mutual funds today. Indeed mutual fund industry is very big. It
comprises of many investors financial assets, whether for retirement or taxable saving
purposes. To a large extent, mutual funds are investment vehicle for the majority of
households in India.

The overall study of my study on this project is to know which companies provide better
returns HDFC Mutual funds & SBI Mutual Funds and also calculate their returns from last 5
years. We have to examine carefully all the possibility while calculating the returns. I am
doing my Project on “Small & Midcap companies”. We have to make comparison so it is
very useful for investors to make a decision.

6
 Comparative Study of Mutual Funds in India
(Reference to HDFC Mutual Fund & SBI Mutual Fund)

Introduction of Mutual Fund

Mutual fund is the pool of the money, based on the trust who invests the savings of a number
of investors who shares a common financial goal, like the capital appreciation and dividend
earning. The money thus collect is then invested in capital market instruments such as shares,
debenture, and foreign market. Investors invest money and get the units as per the unit value
which we called as NAV (net assets value).

Mutual fund is the most suitable investment for the common man as it offers an opportunity
to invest in diversified portfolio management, good research team, professionally managed
Indian stock as well as the foreign market, the main aim of the fund manager is to taking the
scrip that have under value and future will rising, then fund manager sell out the stock. Fund
manager concentration on risk – return trade off, where minimize the risk and maximize the
return through diversification of the portfolio. The most common features of the mutual fund
unit are low cost.

Most open-end Mutual funds continuously offer new shares to investors. It is also known as
open ended investment company. It is different from close ended companies.

Investment in securities are spread across a wide cross section of industries and sectors thus
the risk is reduced. Diversification reduces the risk because not all stocks may move in the
same direction in same proportion at same time. Mutual funds issues units to the investors in
accordance with quantum of money invested by them. Investors of Mutual funds are known
as “unit holders”. The profits and losses are shared by the investor in proportion to their
investment. The mutual fund comes out with different schemes that varies from time to time.

7
 Definition of Mutual Fund

“A mutual fund is a pool of money from numerous investors who wish to save or make
money just like you. Investing in a mutual fund can be a lot easier than buying and selling
individual stocks and bonds on your own. Investors can sell their shares when they want.”

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

8
Advantages of Mutual Funds.

 Portfolio Diversification:-Investing in a diversified portfolio can be very expensive.

The nice thing about mutual funds that they allow anyone to hold a diversified
portfolio. The reason why investors invest in a diversified portfolio is because it
increases the expected returns while minimizing the risk.
 Liquidity: - Another nice advantage to mutual funds is that the assets are liquid. In
financial language, liquidity basically refers to converting your assets to cash with
relative ease. Mutual funds are considered liquid assets since there is high demand for
many of the funds in the marketplace.
 Professional Management: - Mutual funds do not require a great deal of time or
knowledge from the Investor because they are managed by professional managers.
They can be a big help to inexperienced investor who is looking to maximize their
financial goals.
 Ease of Companies: - Mutual funds are also convenient because they are easy to
compare. This is because many mutual fund dealer allow the investor to compare the
funds on metrics such as level of risk, return price. Because Information is easily
available, the Investor is able to make wise decisions.
 Less Risk: - Investors acquire a diversified portfolio of securities even with a small
investment in a mutual fund. The risk in diversified portfolio is lesser than investing
in 2 or 3 securities.
 Low Transaction cost: - Due to Economies of scale mutual funds pay lesser
transaction cost. The benefits are passed on to investors.
 Transparency: - Funds provide investors with updated information pertaining to
market & schemes. All material facts are disclosed to the investor as required by
regulator.
 Safety: - Mutual funds industry is a part of well-regulated investment envoirment
where interest of the investors is protected by the regulators. All funds are registered
with SEBI & complete transparency is followed.

9
Disadvantages of Mutual Funds

 Cost:-The downside of mutual funds is that they have a high cost associated with
them in relation to the returns they produce. This is because investors are not only
charged for the price of the fund but they will often face additional fees. Depending
on the fund, commission charges can be significant. You will need to pay fee that will
go towards the fund manager.
 Index Does Better: - In some cases, the stock Index may outperform the mutual fund.
However this is not always the case as it depends in large part on the mutual fund the
investor has invested in, as well as the skill set of fund manager. Therefore, it is a
good idea to do your research before investing in fund. It is historical data indicates
that is consistently underperformed compared to an index, then it is not wise
investment.
 Fees:-The fees that are charged will depend on the type of mutual fund purchased. If a
fund is risker and more aggressive, the management fee will tend to be higher. In
addition, the investor will also be required to pay taxes, transaction fees as well as
other costs related to maintaining the fund.
 No Control over Investments: - You have absolutely no control over what the Fund
manager Des with you money. You can’t advise him on how your money is to be
invested. You only sit back and hope for the best.
 Profitability of High returns reduced significantly : - A mutual fund contains a
diversified basket of securities. If a single security outperforms by a significant
margin the impact will be limited. Don’t Expect your Investment to grow and give
you profit Overnight. There will also be downward fall in the limits of the fund.
 Personal Tax situation is not considered: - When you Invest in a Mutual Fund,
your money is pooled together with others and your personal tax situation is not
considered while making Investment decisions. The most you can do is to choose
between growth fund.

10
History of Mutual Funds

Unit Trust of India was the first mutual fund set up in India in the year 1963. In early
1990s, Government allowed public sector banks and institutions to set up mutual funds. In the
year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of
SEBI are – to protect the interest of investors in securities and to promote the development of
and to regulate the securities market.

As far as mutual funds are concerned, SEBI formulates policies and regulates the
mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual
funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to
enter the capital market. The regulations were fully revised in 1996 and have been amended
thereafter from time to time.

There are four Phases in which Mutual funds have evolved.

FIRST PHASE - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by
the Reserve Bank of India and functioned under the Regulatory and administrative control of
the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in
place of RBI. The first scheme launched by UTI was Unit Scheme 1964.

SECOND PHASE - 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks
and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India
(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987
followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),
Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund
(Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund
in December 1990.

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THIRD PHASE - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year
in which the first Mutual Fund Regulations came into being, under which all mutual funds,
except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged
with Franklin Templeton) was the first private sector mutual fund registered in July 1993.The
1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations 1996.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.

FOURTH 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 grow.

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 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 organization. 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 Director.

Association of Mutual Funds India has brought down the Indian Mutual Fund Industry
to a professional and healthy market with ethical lines enhancing.

The Objectives of Association of Mutual Funds in India.

The Association of Mutual Fund of India with 30 registered AMCs of the country. It has
certain defined objectives with the guidelines of its board of directors. The objectives are as
follows.

 The mutual fund association of India maintains 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 including agencies connected or involved in the field of
capital markets and financial services.
 To interact with the Securities and Exchange Board of India (SEBI) and to represent
to SEBI on all matters concerning the mutual fund industry.
 To represent to the Government, Reserve Bank of India and other bodies on all
matters relating to the Mutual Fund Industry.
 To undertake nationwide investor awareness programme so as to promote proper
understanding of the concept and working of mutual funds.
 To Dessisimate information on Mutual Fund Industry and to undertake studies and
research directly and/or in association with other bodies.
 To regulate conduct of distributors including disciplinary actions (cancellation of
ARN) for violation of code of conduct.
 To protect Interest of Investor / Unit holder.

13
 Types of Mutual Funds Schemes in India

TYPES OF MUTUAL FUNDS

BY STRUCTURE BY NATURE BY INVESTMENT OTHER

SCHEMES OBJECTIVE

Open Ended Schemes Equity Fund Growth Scheme Tax

Close Ended Schemes Debt Fund Income Scheme Index Schemes

Interval Schemes Balanced Fund Balanced Scheme Sector Specific

Money Market Scheme

A) BY STRUCTURE

 Open-Ended - This scheme allows investors to buy or sell units at any point in time.
This does not have a fixed maturity date. Investors can conveniently buy & sell units
at Net Asset Value related Prices. The key feature of Open Ended scheme is liquidity.

 Closed-Ended - A closed-end fund has a fixed number of shares outstanding and

operates for a fixed duration (generally ranging from 3 to 15 years). The fund would
be open for subscription only during a specified period and there is an even balance of
buyers and sellers, so someone would have to be selling in order for you to be able to
buy it. Closed-end funds are also listed on the stock exchange so it is traded just like
other stocks on an exchange or over the counter. Usually the redemption is also
specified which means that they terminate on specified dates when the investors can
redeem their units.

 Interval – Interval schemes combine the features of open-ended and close-ended

funds. The units may be traded on the stock exchange or may be open for sale or
redemption during pre-determined intervals at NAV-related prices. Fixed maturity
plans, or, FMPs are examples of these types of schemes.

14
B) BY NATURE

 Equity Fund - Equities are a popular mutual fund category amongst retail investors.
They invest the funds into Equity holdings. The structure of the fund may vary
different for different schemes and the fund manager’s outlook on different stocks.
These funds are sub- classified depending on Investment objective such as
a) Diversified Equity Funds
b) Mid-Cap Funds
c) Sector Specific Funds
d) Tax Savings Funds (ELSS)

 Debt Funds - Debt funds are mutual funds that invest in fixed income securities like
bonds and treasury bills. Gilt fund, monthly income plans (MIPs), short term plans
(STPs), liquid funds, and fixed maturity plans (FMPs) are some of the investment
options in debt funds. Apart from these categories, debt funds include various funds
investing in short term, medium term and long term bonds.

 Balanced Funds - This scheme allows investors to enjoy growth and income at
regular intervals. Funds are invested in both equities and fixed income securities; the
proportion is pre-determined and disclosed in the scheme related offer document.
These are ideal for the cautiously aggressive investors.

C) BY INVESTMENT OBJECTIVE

 Growth Schemes - Growth Schemes are also known as equity schemes. The aim of
these schemes is to provide capital appreciation over medium to long term. These
schemes normally invest a major part of funds in Equities & look for capital
appreciation.

 Income Scheme - Income Scheme are also known as debt schemes. The aim of the
scheme is to provide regular and steady income to the investor. These Schemes invest
in fixed income securities such as bonds & corporate debentures. In such schemes
capital appreciation may be limited.

15
  Balance Scheme - This scheme allows investors to enjoy growth and income at
regular intervals. Funds are invested in both equities and fixed income securities; the
proportion is pre-determined and disclosed in the scheme related offer document.
These are ideal for the cautiously aggressive investors.

 Money Market scheme - This is ideal for investors looking to utilize their surplus
funds in short term instruments while awaiting better options. These schemes invest in
short-term instruments such as treasury bills, certificate of Deposit, commercial paper
& Intercompany call money and seek to provide reasonable returns for the investors.

D) OTHER SCHEMES

 Tax Saving Schemes – As the name suggests, this scheme offers tax benefits to its
investors. The funds are invested in equities thereby offering long-term growth
opportunities. Tax saving mutual funds (called Equity Linked Savings Schemes)
has a 3-year lock-in period.

 Index Schemes - - Index schemes is a widely popular concept in the west. These
follow a passive investment strategy where your investments replicate the
movements of benchmark indices like Nifty, Sensex, etc.

 Sector Specific Schemes –Sectoral funds are invested in a specific sectors like
infrastructure, IT, pharmaceuticals, etc. or segments of the capital market like large
caps, mid-caps, etc. This scheme provides a relatively high risk-high return
opportunity within the equity space.

16
Comparison between FD, Bonds and Mutual Fund- features

Characteristics FD'S Bonds Mutual Funds

Accessibility Low Low High
Tenor Fixed(Medium) Fixed(Long) No Lock-in
Min.Investment Rs 1000 Rs 5000 Rs 5000
Dividend Tax-
Tax Benefits None 80L , 88 Free
Liquidity Low Very Low Very High
Convenience Medium Tedious Very High
Transparency None None Very High

Organization of Mutual Funds.

17
 The graph indicates the growth of assets under management over the years.

GROWTH IN ASSETS UNDER MANAGEMENT

Mutual Funds in India

The mutual fund industry in India began in 1963 with the formation of the Unit Trust of India
(UTI) as an initiative of the Government of India and the Reserve Bank of India. Much later,
in 1987, SBI Mutual Fund became the first non-UTI mutual fund in India.

The year 1963 heralded a new era of Mutual funds in India. His was marked by the entry of
private companies in the sector. After the Securities and Exchange Board of India (SEBI) Act
was passed in 1992, the SEBI Mutual Fund Regulations came into being in 1996. Since then,
the Mutual fund companies have continued to grow exponentially with foreign institutions
setting shop in India, through joint ventures and acquisitions.

As the industry expanded, a non-profit organization, the Association of Mutual Funds in

India (AMFI), was established on 1995. Its objective is to promote healthy and ethical
marketing practices in the Indian mutual fund Industry. SEBI has made AMFI certification
mandatory for all those engaged in selling or marketing mutual fund products.

18
Major Mutual Fund Companies in India

Public Sector Mutual Funds

 Bank of Baroda Mutual Fund

 State Bank of India Mutual Fund
 LIC Mutual Fund
 UTI Mutual Fund
 Canara Bank Mutual Fund

Private Sector Mutual Fund

 ABN AMRO Mutual Fund

 Birla Sun Life Mutual Fund
 HDFC Mutual Fund
 HSBC Mutual Fund
 ICICI Prudential Mutual Fund
 Tata Mutual Fund
 Standard Chartered Mutual Fund
 Morgan Stanley Mutual Fund
 Alliance Capital Mutual Fund
 Franklin Templeton Mutual Fund
 Reliance Mutual Fund
 DSP Blackrock Mutual Fund

These above are the Various Mutual Funds in India which has given a good return.

19
 Regulatory Body of Mutual Funds in India

As far as Mutual funds are concerned, SEBI (Securities & Exchange Board of India)
formulates policies and regulates the mutual funds to protect the interest of the investor.

In January 1993, SEBI prescribed registration of mutual funds integrity in business

transactions and financial soundness while granting permission. This would curb excessive
growth of mutual funds and protect investor’s interest by registering only the sound
promoters with proven track record & financial strength.

The offer documents of schemes launched by mutual funds and the scheme particulars are
required to be vetted by SEBI. A standard format for mutual fund prospectuses is being
formulated.

Mutual funds have been required to adhere to a code of advertisement.

SEBI has introduced a change in the Securities Control and Regulations Act governing the
mutual funds. The mutual funds which have been in the market for at least five years are
allowed to assure a maximum return of 12 per cent only, for one year.

The current SEBI guidelines on mutual funds prescribe a minimum start-up of Rs.50 crore
for an open-ended scheme, and Rs.20 crore for closed-ended scheme, failing which
application money has to be refunded. AMFI (Association of Mutual Funds in India) have
appealed to regulatory authority of India for scrapping the minimum requirement

Also, 50% of the directors of AMC must be independent. All mutual funds are required to be
registered with SEBI before they launch any scheme.

The transparent and well understood declaration or Net Asset Values (NAVs) of mutual fund
schemes is an important issue in providing investors with information as to the performance
of the fund. SEBI has warned some mutual funds earlier of unhealthy market

Trustees shall immediately report to the Board of any special developments in the mutual
fund.

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 Net Asset Value (NAV)

The Net Asset Value (NAV) of a mutual fund is the price at which the units of a mutual fund
are bought and sold. It is the market value of the fund after deducting its liabilities. The value
of all units of a mutual fund portfolio are calculated on a daily basis, from this all expenses
are then subtracted. The result is then divided by the total number of units the resultant value
is the NAV. NAV is also sometimes referred to as Net Book Value or book Value.

NAV indicates the market value of the units in a fund. So, it helps an investor keep track of
the performance about the mutual fund. An investor can calculate the actual increase in the
value of their investment by determining the percentage increase in the mutual fund NAV.
NAV, therefore, gives accurate information about the performance about the mutual fund.

Calculation of NAV

Mutual fund assets usually fall under two categories – securities & cash. Securities, here,
include both bonds and stocks. Therefore, the total asset value of a fund will include its
stocks, cash and bonds at market value. Dividends and interest accrued and liquid assets are
also included in total assets

The formula for calculating NAV:

NAV of a mutual funds = (Assets of the fund – Liabilities of the fund)

Number of outstanding units of the fund

The mutual fund itself and/or certain accounting firms calculate the NAV of a mutual fund.
Since, mutual funds depend on stock markets, they are usually declared after the closing
hours of the exchange.

All Mutual Funds are required to publish their NAV at every business day as per SEBI
guidelines.

NAV is obtained after subtracting the expense ratio of a fund. This expense ratio is the total
of all expenses made by the mutual fund annually, including the operating expenses and the
management fees, distribution and marketing fees, transfer agent fees, custodian fees and
audit fees.

21
Example of calculation of NAV

As an example, assume there are two investors X and Y who have invested in a mutual fund
which decided to issue out units at Rs 1/-

X invests Rs 100/- and Y invests Rs 200/-.

The total corpus of the mutual fund will be Rs 100 + Rs 200 = Rs 300/- and X will get 100
units and Y will get 200 units.

Now suppose the mutual fund manager invests smartly over a year and makes the investment
grow and the corpus becomes Rs 800/-.

The NAV will be calculated as

NAV of a mutual funds = (Assets of the fund – Liabilities of the fund)

Number of outstanding units of the fund

= [Rs 800/- 0] / 300 = 2.67

= The NAV is 2.67.

= So X’s value of investments will be 100 units * 2.67 = Rs 267/- and

= Y’s value of investments will be 200 units * 2.67 = Rs 534/-.

As per the regulator SEBI’s guidelines, all mutual funds are required to publish the NAV of
their schemes at least once a week and in two leading newspapers.

22
 HDFC Mutual Fund

HDFC Mutual Fund has been constituted as a trust in accordance with the provisions of the
Indian Trusts Act, 1882, as per the terms of the trust deed dated June 8, 2000 with Housing
Development Finance Corporation Limited (HDFC) and Standard Life Investments Limited
as the Sponsors / Settlers and HDFC Trustee Company Limited, as the Trustee. The Trust
Deed has been registered under the Indian Registration Act, 1908. The Mutual Fund has been
registered with SEBI, under registration code MF/044/00/6 on June 30, 2000.

HDFC Asset Management Company Limited (AMC)

HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies
Act, 1956, on December 10, 1999, and was approved to act as an Asset Management
Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000.

In terms of the Investment management Agreement, the trustee has appointed HDFC
Asset Management Company Limited to manage the mutual funds. As per the terms of the
Investment Management Agreement, the AMC will conduct the operations of the Mutual
Fund and manage assets of the schemes, including the schemes launched from time to time.

Funds Managed by HDFC Mutual Fund.

 Equity Fund
 Balanced Funds
 Income Fund

Achievement of HDFC

 HDFC Asset Management company (AMC) is the first AMC in India to have been
assigned the CRISIL Fund House -1 rating.
 This is the highest fund governance and process quality rating which reflect the highest
governance levels and fund management practices at HDFC AMC.
 It is only fund house to have been assigned this rating for 2 years in succession.

23
Investment Objective

To provide long-term capital appreciation by investing predominantly in Small-Cap and Mid-

Cap companies

Current Expense Ratio 2.50% On the first 100 crores daily net assets
(Effective Date 28th June 2014) On the next 300 crores daily net assets 2.25%
On the next 300 crores daily net assets 2.00%
On the balance of the net assets 1.75%

NAV NAV
Plan Date Date Amount
Direct Dividend 12-Sep-
Plan 16 22.578
12-Sep-
Direct Growth Plan 16 31.231
12-Sep-
Dividend Plan 16 21.617
12-Sep-
Growth Plan 16 30.179

Product Labelling

The product is suitable for investors who are seeking:

 The product is suitable for investors who are seeking:

 Investment predominantly in equity and equity related instruments of Small-Cap and

Mid-Cap companies
 Investors should consult their financial advisers if in doubt about whether the product
is suitable for them.

24
  Investors understand that their principal will be at moderately high risk.

Comparing Returns of HDFC Mutual Fund for Last 5 years

Investment Info

Investment Objective: The investment objective of the scheme is to generate long-term

capital growth from an actively managed portfolio of equity and equity-related securities
including equity derivatives.

As per the above chart you can see HDFC Mutual Fund is open ended. Its average asset size
is 859.76 crores. HDFC Introduced small and midcap growth fund in 2008. Since then it has
given good returns.

25
Performance of the Different Mutual Funds

Portfolio Holdings of the HDFC Mutual Funds

26
Asset under Management Movement

The Below graph shows the Variation in the assets under management

Asset Allocation of Mutual Funds

The below diagram shows how much Equity has contributed to the Mutual Funds

Top Sector holding & Percentage allocation

Sector Name Percentage allocation

Financial Services 20.08 %

Pharma 13.28 %

Consumer Goods 11.02 %

Industrial Manufacturing 9.85 %

Construction 8.74 %

27
Market Capitalization

From the above table you can see that market capitalization of midcap fund is 46.24% more
as compared to Large cap 26.81% and small cap 22.80%.

HDFC Mutual Fund NAV

The mutual fund NAV denotes a price at which units of a mutual fund can be bought or sold.
The market value of a fund’s holdings, less expenses is the net asset value. Per unit NAV is
calculated by dividing the net asset value of the mutual fund schemes by the number of units
outstanding on the valuation date.

The below NAV calculation shows the returns of HDFC Mutual Funds with the help of the
graph

HFDC Small & Midcap Fund Growth

28
Performance Analysis of HDFC Mutual Fund

Fund Performance as per different years

All returns are compounded annualized for a period greater than 1 year, and absolute for a
period of 1 year or less. Performance and SIP returns as of 21/09/2016. Statistical ratios are
for a period of 3-year as of 21/09/2016. SIP purchases are assumed to be on the 1st of every
month. Expense ratio is as disclosed at monthly frequency

29
 SBI Mutual Fund

The SBI mutual fund Private Ltd is a joint venture between “The state bank of India” and
Societe Generale Asset management (France).The fund manages over Rs 42,100 crore of
assets and has a diverse profile of Investors actively parking their investments across 38
active schemes.

At SBI Mutual Fund we know that every investor has unique financial goals and requires a
different sets of products. Which is why we have a wide range of schemes that fulfills every
kind of Investors requirements. Each scheme is managed by devising a different strategy
which is reflective of the investors profile and carries with different risks and rewards.

Vision: - “To be the most preferred and the largest fund house for all asset classes, with a
consistent track record of excellent returns and best standards in customer service, product
innovation, technology and HR practices.”

SBI Funds Management has emerged as one of the largest player in India advising various
financial institutions, pension funds, and local and international asset management
companies.

SBI Funds makes one of the largest investment management firms in India, managing
investment mandates of over 5.4 million investors.

EQUITY FUNDS & SCHEMES

The Primary objective of the equity asset class is to provide capital growth / appreciation by
Investing in the equity & equity related instrument companies over medium and long term.

There are range of Schemes available which fulfill Every Kind of Investors Requirements.
Each Scheme Provides different strategy which is reflective of the investors profile and
carries with it different risks and rewards.

1) Equity Schemes
2) Debt/Income Schemes
3) Liquid Scheme.
4) Hybrid Schemes.
5) Fixed Maturity Plans
6) Exchange Traded Schemes

30
We would be looking at only Equity Schemes. Below are the Equity Schemes.

Equity / Growth Funds

1) SBI Magnum Equity Fund

2) SBI Magnum Global Fund
3) SBI Blue chip Fund
4) SBI Magnum Multicap Fund
5) SBI Magnum Multiplier Fund
6) SBI Small and Midcap Fund
7) SBI Magnum Midcap Fund
8) SBO Emerging Businesses Fund

Sectoral Funds

1) SBI Contra Fund

2) SBI FMCG Fund
3) SBI IT Fund
4) SBI Pharma Fund
5) SBI Banking & Financial services Fund

Thematic Funds

1) SBI Magnum COMMA FUND

2) SBI Infrastructure Fund
3) SBI PSU FUND

ELSS Fund

1) SBI Magnum Tax Gain Scheme 1993

2) SBI Tax Advantage Fund – Series 1
3) SBI Tax Advantage Fund – Series 2
4) SBI Tax Advantage Fund - Series 3

31
 Index Fund

1) SBI Index Nifty Fund

Market Neutral Strategy

1) SBI Arbitrage Opportunities fund

But we will be only comparing the Funds in SBI Small and Midcap Funds.

SBI Small & Midcap Fund is an open ended equity scheme and primarily invests in
Small and Midcap equity and Equity related securities of the companies in the small and
midcap segments. The Portfolio will comprise of maximum of 30 stock.

This Product is suitable to the Investors who are seeking.

 Long term capital appreciation.

 Investment in diversified portfolio of predominantly in equity and equity- related
securities of small & midcap companies

 Investors Should Consult their financial advisers if in doubt about whether the product
is suitable for them

32
Objectives of the Schemes

The scheme seeks to generate income and long term capital appreciation by investing
in a diversified portfolio of predominantly in equity and equity related securities of small &
midcap companies. There can be no assurance the investment objective of the scheme will be
realized.

Asset Allocation

Normal Allocation (% of Net

Instrument Risk Profile
Assets)

Minimum Maximum

Equity and equity related Instruments 90% 100% High

Debt & Money Market Securities* 0% 10% Low to

Medium

 Investment in Asset Backed securities (Securitized Debt) will not exceed 10% of the net
assets of the scheme. The scheme will not invest in foreign securitized Debt.

Date of Inception 09/09/2009

Minimum
Rs. 5000/- and in multiples of Rs. 1/- there after
Application

Entry Load N.A.

For exit within 1 year from the date of allotment - 1%;

Exit Load
For exit after 1 year from the date of allotment - Nil

Monthly - Minimum Rs. 1000 & in multiples of Rs. 1 thereafter for

minimum six months or minimum Rs. 500 & in multiples of Rs. 1
SIP thereafter for minimum on year
Quarterly - Minimum Rs. 1500 & in multiples of Rs. 1 thereafter for
minimum one year.

33
Comparing Returns of SBI Mutual Fund for 5 years

Investment Info

Investment Objective: The Scheme seeks to generate income and long-term capital
appreciation by investing in a diversified portfolio of predominantly equity and equity related
securities of companies identified as industry leaders. However, there can be no assurance
that the investment objective of the Scheme will be realized and the Scheme does not assure
or guarantee any returns.

As per the above chart you can see SBI Mutual Fund is open ended. Its average asset size is
753.50 crores. SBI introduced small and midcap growth fund in 2009. Since then it has given
good returns.

Performance of the SBI Mutual Fund

34
Portfolio Holding of the SBI Mutual Fund

Asset Under market Movement

35
Assets allocation done in Various Companies

Top Sector Holding & Asset Portfolio

Sector Name Percentage

Consumer Goods 21.57 %

Chemicals 17.45 %

Industrial Manufacturing 13.85 %

Services 10.64 %

Automobile 10.07 %

Market Capitalization

36
From the above table you can see that market capitalization of small cap fund is 45.66% more
as compared to small cap 44.03%

SBI Mutual Fund NAV.

The mutual fund NAV denotes a price at which units of a mutual fund can be bought or
sold. The market value of a fund’s holdings, less expenses is the net asset value. Per unit
NAV is calculated by dividing the net asset value of the mutual fund schemes by the number
of units outstanding on the valuation date.

Fund SBI Small & Midcap Fund

37
Performance Analysis of SBI Mutual

Performance of the fund on last 5 years

All returns are compounded annualized for a period greater than 1 year, and absolute for a
period of 1 year or less. Performance and SIP returns as of 21/09/2016. Statistical ratios are
for a period of 3-year as of 21/09/2016. SIP purchases are assumed to be on the 1st of every
month. Expense ratio is as disclosed at monthly frequency

38
 LITERATURE REVIEW

1) Name of the Book: - Mutual Funds in India

Author: - D. V. Ingle

ISBN no – 9788177083323

Publishing year: - 2013

Abstract - This book provides an in-depth account of the functioning of mutual fund
industry in India. The Author D.V. Ingle has described everything about Mutual Funds in
India and why it is useful for small investors who cannot directly invest in stock market. And
also when the Mutual funds were created. This Book describes the journey of Mutual Funds
in India.

2) Name of the Research Paper:-Comparative study of mutual funds of select Indian

companies

Author: - Mr. Sunil M. Adhav / Dr Pratap M Chauhan

ISSN NO: - 2394-1537

Publishing year: - 2015

Abstract: - India’s mutual fund market has witnessed phenomenal growth over the last
decade. The consistency in the performance of mutual funds has been a major factor that has
attracted many investors. The present research is an attempt to study comparative
performance of mutual funds of selected Indian companies. The study focus on mutual fund
schemes of selected Indian companies comprising Equity, Debt and Hybrid Schemes. The
total of 390 schemes comprising of 178 equity mutual funds, 138 debt schemes and 74 hybrid
schemes are selected for the study. The performance of selected Indian companies’ mutual
fund is analyzed with the help of Return, risk. Selected Mutual Fund are compared with their
respective bench mark.

39
 3) Name of the Research Paper:-A Study of Mutual Funds in India

Author: - MS Shalini Goyal / MS Dauli Bansal

ISSN NO: - 2229 – 5518

Publishing year: - 2013

Abstract: - This paper helps us to understand the study of the mutual funds in India. This
paper also says where and how we should invest mutual fund 7 why it dangerous to directly
invest in stock market as you might have to face loss. Investing in mutual funds helps you to
diversify your risk .This study was conducted to analyse and compare different types of
mutual funds in India.

4) Name of the Research Paper:- Investor’s preferences towards Mutual Fund and Future
Investments:

Author: - Y Prabhavathi, N T Krishna Kishore

ISSN NO: - 2250-3153

Publishing year: - 2013

Abstract: - The advent of Mutual Funds changed the way the world invested their money. The
start of Mutual Funds gave an opportunity to the common man to hope of high returns from
their investments when compared to other traditional sources of investment. The main focus
of the study is to understand the attitude, awareness and preferences of mutual fund investors.
Most of the respondents prefer systematic investment plans and got their source of
information primarily from banks and financial advisors. Investors preferred mutual funds
mainly for professional fund management and better returns and assessed funds mainly
through Net Asset Values and past performance.

40
5) Name of the Research Paper: - A Study on Indian Mutual Funds Equity Diversified
growth Schemes and their performance evaluation.

Author: - Dr. D.S.Chaubey

ISSN NO: - 2249-1619

Publishing year: - 2011

Abstract: - Indian Mutual Fund industry has experienced tremendous growth due to
infrastructure and also supported by high saving of funds. After liberalization and
globalization of Indian economy, market witness huge crowd towards the option of investing
in mutual funds but investment in a particular funds needs a lot of specification like-
investor’s objectives, cost, availability of funds, risk & return factors etc. and thus invite
fundamental study for better future and growth. This paper aims to know how the
performance of mutual funds is assessed and ranked after analyzing the NAV and their
respective returns so as to measure investment avenues.

6) Name of the Research paper: - Investor awareness and Perception about mutual
Funds.

Author: - Simran Saini / DR Bimal Anjum

ISSN NO: - 2231 5780

Publishing Year: - 2011

Abstract: - Indian Mutual Fund has gained popularity in last few years. The present study
analyses the mutual fund investments in relation to investor’s behavior. Investors’ opinion
and perception has been studied relating to various issues like type of mutual fund scheme,
main objective behind investing in mutual fund scheme, role of financial advisors and
brokers, investors’ opinion relating to factors that attract them to invest in mutual funds,
sources of information, deficiencies in the services provided by the mutual fund managers,
challenges before the Indian mutual fund industry.

41
 RESEARCH METHODOLOGY

1) Research Design:-

a) Problem Defining :- In a competitive market there are multiple mutual funds working in
the Indian market. It is necessary to know mutual fund as the performance of the mutual fund
decides the future of Mutual Fund Company. In my study I have compared returns of 5 years
of the two mutual funds that is HDFC Mutual funds & SBI Mutual funds.

b) Types of Research: - This research is qualitative and analytical in nature. Qualitative

research talks about the quality of the research work & analytical research is concerned with
determining validity of hypothesis based on analysis of facts collected.

c) Data Collection Design:-

1) Sources of Data

Primary Data: - I have used questionnaire as primary source for collecting data for
my study.

Secondary Data:- I have collected secondary data from various mutual funds books ,
from various mutual fund websites.

2) Sampling: - It represents the whole population. It is a process of choosing samples

from whole populations. I have chosen some people who have invested in Mutual funds.

3) Sampling Size: - It represents how many candidates you have chosen to fill up your
questionnaire. I had chosen sample of 50 candidates.

4) Sampling Technique: - Questionnaire sampling is something that is sent to the

candidates who want to invest in mutual funds. By Questionnaire you can understand peoples
taste & preferences so it is easy to convince.

5) Data Interpretation: - Data Interpretation is that in which we analyses the whole

collected data & try to give it in simple words that is understandable.

42
 DATA COLLECTION

Primary Data

QUESTIONAIRE

A Study of preferences of the investors for Investment in mutual funds

1) Personal Details

a) Name:-
b) Address:-
c) Age:-
d) Phone

2) Educational Qualification

Graduation/PG Under Graduate Others

3) Occupation

Govt Servant Pvt Sector Business Others

4) What is your Monthly family Income Approximately?

Rs 15001 to Rs 30000 &

Upto to Rs 10000 Rs 10001 to 20000 Rs 20001to 30000 Above
15000

5) What Kind of Investment you

prefer most?

a) Saving account b) Fixed deposit c) Insurance d) Mutual Fund

e) Post office-NSE f)Shares/Debentures g) Gold/Silver h) Real Estate
I) PPF j) PF

6) While Investing your Money, which factor you prefer most?

Company
Liquidity Low Risk High Reputation
Return

43
7) Have you ever Invested Money in Mutual Fund

yes No

a) Where do find yourself as Mutual Fund Investor

Totally Ignorant [ ]
Partial Knowledge of Mutual funds [ ]
Aware only of specific schemes in which you invested [ ]
Fully Aware [ ]

b) In Which kind of Mutual Fund you would like to Invest

Public [ ] Private [ ]

c) How do come to know about Mutual fund

d) Financial
a) Advertisement b) Peer Group c) banks Advisor

8) What Future of the Mutual Funds allure you most

Diversification [ ]
Better Return and safety [ ]
Reduction In Risk and transaction cost [ ]
Regular Income [ ]
Tax benefit [ ]

9) Which Mutual Fund scheme have you used?

Open-ended Close-ended
Liquid fund Mid- Cap
Regular Income
Growth fund fund
Long-Cap Sector fund

10) If not Invested in Mutual Fund Than

why?

Not aware of MF Higher risk Not any specific reason

44
11) In which Mutual Fund have you
Invested?

a. SBI MF [ ]
b. UTI [ ]
c. HDFC MF [ ]
d. Reliance [ ]
e. ICICI prudential
funds [ ]
f. JM mutual fund [ ]
g. Other. Specify [ ]

12) When you invest in Mutual Funds which mode of investment will you prefer?

a. One Time Investment b. Systematic Investment Plan (SIP)

45
 FINDINGS & SUGGESTION

1) Educational Qualification

This Graph shows 90% the Educational Qualification of the Investor have completed
graduation.

2) Occupation

This Graph shows 85% of the occupation of the investors are working in private sector
whereas 10% of investors are working in government sectors. .

46
3) What is your Monthly family income approximately?

This graph shows 42.1% of monthly income of investors is above 30000 & above whereas
26.3% of the investors have monthly income of 20001 to 30000 & 15001 to 20000.

4) What Kind of Investment you prefer the most?

This graph shows 42.1% Investors prefer to deposit their money in provident fund whereas
21.1% deposit their money in fixed deposit and 15.8% of them invest their money in saving
account

47
5) While investing your Money, which factor you prefer most?

This graph shows 42.1% of Investors look for low risk whereas 31.6% of investors look for
high return and 21.1% of the Investors look for Liquidity.

6) Have you ever Invested Money in Mutual Fund?

This graph shows 57.9% of investors who are investing have said yes whereas 42.1% of them
have said no.

48
7) Where do find find yourself as Mutual Fund Investor?

This graph shows the 47.1 % of Investors who have a partial knowledge about mutual fund.
Whereas 23.5% of the investor are totally ignorant or aware of only specific schemes.

a) In Which kind of Mutual Fund you would like to Invest?

This graph shows the 52.9% of Investors who would like to invest in public companies
whereas 47.1% of the investor would like to invest in private companies.

49
b) How did you come to know about Mutual fund?

This graph shows us the 55.6% of Investors who come to know about mutual funds through
peer group whereas 2202% of the investor come to know from advertisement & financial
adviser.

c) What Future of the Mutual Funds allure you most?

This graph shows the 44.4% of investors who invest in mutual funds so that their risk get
diversified whereas 33..3% of the investor look for better returns and safety and 16.7% of the
investor look for regular income.

50
8) Which Mutual Fund scheme have you used?

This graph shows the 33.3 % of Investors want to Invest in Growth funds & sector funds
while only 20% want to invest in small & midcap funds.

9) In which Mutual Fund have you invested?

This graph shows the 35.7 % of Investors want to invest in ICICI prudential funds whereas
only 28.6% of the investor want to invest in HDFC Mutual Fund

51
10) When you invest in Mutual Funds which mode of investment will you prefer?

This shows the percentage of investors who are willing to Invest in Systematic Investment
Plan (SIP) that is 85.7% than one type of investment.

52
 SUGGESTION

Suggestion to the Mutual Fund Investors

 Understand the purpose of investment: The first point to analyze before investing in a
fund is to find out whether objective matches with the scheme. If there is a mismatch in
the scheme the investors would be affected with the probable returns. For example the
schemes that invest in large cap stocks is not suitable for conservative Investors. He
should first try to invest in small & midcap funds. Similarly he should pick up schemes
that will specify his investment. Examples pension plans, Children’s plan sector specific
schemes. These are the schemes from where he can invest for the future.

 Low Risk Tolerance: - The Investors with low risk tolerance should invest in small &
midcap schemes as they are relatively safer when compared to schemes like equity.
Aggressive investors can go for equity investments and can opt for schemes that invest
in specific industry or sector

 Track record:-. Investors should go through schemes track record, performance against
relevant market benchmarks and its competitors.

 Period of Investment: - To get good returns on their Investments the investor should
hold their returns for longer periods that is for 3 years to 5 years in order the schemes to
generate good returns.

 Cost Factors:-Though the AMC is regulated, one should look at the expense ratio of the
fund before investing. This is because money is deducted from the returns. A higher
entry load or exit load will eat into the returns. So you have to look at the cost factors
before investing.

 Points to be considered while departing from the scheme : Investor should sell or
redeem or repurchase the proceeds within 10 days of redemption or repurchase. Most
funds charge exit load when the period of exit is less than 6 months. You should sell
your funds when one fund is taken over by other fund. You may also Exit when your
expenses on your scheme has increased.

53
 Diversification: - The most the amount the Investors invest, the greater is the ability to
afford diversification amount different asset classes and investment styles. Asset
allocation is the way in which one gives weightage to each asset classes. Each Asset
class has its own characteristic in terms of fluctuation.

 Continuous Monitoring: - Investors should continuously monitor their portfolio and

revise by updating according to market position, that their returns can be maximized.

 Other factors to be considered while investing - Investors should look for top
performing assets and focus on funds latest performance. A common mistake nowadays
investors do is they buy latest schemes which has no pervious history as they give good
returns. One should look at the NAV while buying the funds so that good NAV can give
you good returns.

 Starting small for Small time investor: - First time mutual fund investors are advised
to go small on their investments. Investors should invest in small & midcap companies
and wait for the returns and once they are satisfied they should go for diversification of
the funds.

 Taxing Saving Funds: - When markets are up it is advisable to invest in tax saver,
which are giving good returns compared too many other schemes.

54
 BIBLOGRAPHY

Website

 www,sbimf.com
 www.hdfcmf.com
 www.amfiindia.com
 www.mutualfundsindia.com
 www.research gate.com
 Books on Mutual Funds in India (D. V. Ingle)

55
 CONCLUSION

Mutual Fund Industry now represents perhaps most appropriate opportunity for most
Investors. The financial market is most sophisticated and complex. Investors need required
knowledge to invest in the mutual fund industry. Mutual fund industry also gives good
returns if the markets are high and you can also suffer losses if the market does not do well or
while investing fund manager makes some mistakes during investment of Mutual Funds.

Mutual Fund Returns are compared on the basis of performance of the stock market. If the
stock market do well than the fund in which you have invested will also do well. As the
markets are diversified the loss is minimal.

In my above research I had compared SBI mutual fund & HDFC Mutual fund. I had
compared 5 years returns which Both the Mutual Funds have given good returns after a
specified period.

Since Inception SBI mutual fund has given good returns of 20 % where as HDFC mutual
fund has given a return of only 14 %.

But still Investors prefer to invest their money in Private mutual funds in the long run as they
feel that they would get good returns.

But looking at both the Mutual Funds three year ratio SBI Mutual Fund has given a good
return of 42 % where as HDFC has given a return of 25%.

“So as per my suggestion it is best for Investor to invest in SBI mutual fund as it has
given good returns”.

56