1

CERTIFICATE
To whomsoever it may concern

This is to certify that MR. BHOSALE SHUBHAM RAVIUDAY has worked and duly
completed his project work for the degree of B.Com. (Accounting and Finance) under the
faculty of Commerce in Changu Kana Thakur Arts, Commerce and Science College, New
Panvel in the subject of project work and his project is entitled “STUDY OF MUTUAL
FUNDS OF HDFC BANK” under my supervision.

I further certify that the entire work has been done by the learner under my guidance and no
part of it has been submitted previously for any degree or diploma of any University.

It is his own work and facts reported by his personal findings and investigations.

Seal of
DR. NILESH KOLI
The
Name and Signature of Guiding Teacher
College

Date of submission:

2
 DECLARATION BY LEARNER

I the undersigned MR. BHOSALE SHUBHAM RAVIUDAY hereby, declare that the work
embodied in this project world titled “STUDY OF MUTUAL FUNDS OF HDFC BANK”
forms my own contribution to research work carried out under the guidance of DR. NILESH
KOLI is a result of my own contribution to research work and has not been previously
submitted to any other University for any other degree/diploma ton this or any other
University.

Wherever references have been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.

I, hereby further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Mr. Bhosale Shubham Raviuday

Name and signature of the learner

Certified by

Dr. Nilesh Koli

Name and signature of guiding teacher

3
ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimension in
completion of this project.
I take this opportunity to thank University of Mumbai & Changu Kana Thakur College,
New Panvel (Autonomous) for giving me the chance to this project.
I would like to thank my Principal …………, for providing the necessary facilities required
for completion of this project.
I take this opportunity to thank our coordinator and project guide Dr. Nilesh .E. Koli. for his
moral support and guidance that made this project successful.
I would like to thank my college library, for having provided various reference books and
magazines related to project.
Lastly, I would like to thank each and every person who directly or indirectly helped me in
the completion of project especially my parents and peers who supported me throughout the
project.

4
 INDEX

CHAPTER TITLE PAGE

NO.

1 1.1 Introduction 8

1.2 Meaning of Mutual Fund 9

1.3 Development of Mutual Fund 9

1.4 Worldwide Role of Mutual Fund 11

1.5 Origin of Mutual Fund 13

1.6 History of Mutual Fund 14

1.7 Growth of Mutual Fund in India 17

1.8 Types of Mutual Funds 18

1.9 Advantages and Disadvantages of Mutual 18

Fund

1.10 Mutual Fund and Capital Market 21

1.11 Role of SEBI 21

1.12 Role Of AMFI (Association Mutual Fund in 22

India)

1.13 SEBI Guideline of Mutual Fund 25

1.14 Introduction of HDFC Mutual Fund 26

2 Research Methodology

2.1 Introduction 27

2.2 Objectives of Study 28

5
 2.3 Hypothesis Testing 28

2.4 Scope of Study 28

2.5 Limitations 29

2.5 Need for Study 29

2.7 Secondary Data 30

2.8 Data Analysis Technique 31

3 3.1 Review of Literature 36

4 Recent Trends in Mutual Funds

4.1 Introduction 53

4.2 Mutual Fund Industry AUM Rises 5.7% in 53

2022

4.3 Recent Trend in HDFC Mutual Funds 54

5 Data Analysis & Interpretation

5.1 Introduction 56

5.2 HDFC Asset Management Company Limited 56

(AMC): An Overview

5.3 History Of HDFC Asset Management 58

Company Limited (AMC)

5.4 An Overview of Sponsor and Trustee of 59

Company

5.5 5 Steps to Invest in HDFC Mutual Fund 61

6
 5.6 Overview Of Selected Three Schemes 61

5.7 Top 10 HDFC Mutual Funds to Invest 65

5.8 Comparison of SBI Equity Hybrid Fund & 72

HDFC Hybrid Equity Fund

6 Conclusion 75

7 Suggestions 76

8 Bibliography 77

7
 Chapter No. 1: Introduction

1.1

The Indian monetary framework in light of four essential parts like Monetary Market,
Monetary Establishments, Monetary Assistance, Monetary Instruments. All are assume
significant part for smooth exercise for the exchange of the assets and assignment of the
assets. The fundamental point of the Indian monetary framework is that giving the
proficiently administrations to the capital market. The Indian capital market has been
expanding massively during the subsequent age changes. The original changes began in 1991
the idea of LPG. (Progression, privatization, Globalization)

The following 1997 second era changes was begun, still the it’s going on, its incorporate
changes of modern venture, changes of monetary strategy, changes of ex-pixie strategy,
changes of public area, changes of monetary area, changes of unfamiliar speculation through
the institutional financial backers, changes banking areas. The financial improvement model
embraced by India in the post-freedom period has been portrayed by blended economy in
with the public area assuming an overwhelming part and the exercises in confidential modern
area control estimates starved structure time to time. The most recent twenty years have been
an exceptional development in the geological inclusion and the monetary spread of our
monetary framework.

The saved of the financial framework has been a main consideration in advancing monetary
intermediation in the economy and in the development of monetary reserve funds with
moderate progression of financial strategies, there has been a fast development of capital
market, currency market and monetary administrations industry including shipper banking,
renting and investment, renting, enlist buying. Steady with the development of monetary area
and second era changes its need to completion of the monetary area. Its additionally need to
offering the effective support to the financial backer generally assuming the financial backers
are supply modest quantity, there of view the shared asset play crucial for better support of
the little financial backers. The principal vision for the examination for this study is to
examine the presentation of five star appraised shared reserves, given the heaviness of
chance, return, and resources under administration, net resources esteem, book worth and cost
profit proportion.

8
1.2

MUTUAL FUND

Mutual fund is a cash pool formed by a trust that contributes the reserve funds of various
financial backers who share a common monetary objective, such as capital appreciation and
profit acquisition. The money collected in this manner is then invested in capital market
instruments such as offers, debentures, and unfamiliar market. Investors put money aside and
receive units based on the unit value, which we referred to as the NAV (net resources
esteem). Shared reserve is the most affordable investment for the average person because it
provides an excellent opportunity to invest in a diverse portfolio. The executives, great
examination group, expertly oversaw Indian stock as well as the unfamiliar market, the main
point of the asset supervisor is to take the scrip that has been underestimated and will rise in
the future, then store chief rat the stock. The primary focus of the store is on risk-return
compromise, in which the gamble is limited while the return is increased through portfolio
diversification. The shared asset unit's most well-known features are its low expenses. Then I
notice how the exchanges will be done or how the shared store will function.

1.3

DEVELOPMENT OF MUTUAL FUND INDUSTRY

The history of common subsidisers can be traced back to the nineteenth century, when it was
introduced in Europe, specifically Extraordinary England. In 1868, Robert Fleming
established the Unfamiliar and frontier venture trust, which vowed to deal with the funds of
Scotland's rich classes by dissipating the venture over various stocks. This venture trust and
other speculation trusts that were later established in England and the United States
resembled the current close - ended mutual fund. The primary common asset in the United
States, Massachusetts financial backer's trust, was established in Walk 1924. This was the
open - finished shared reserve.

9
The 1929 financial exchange crash, the early-twentieth-century economic crisis, and the
outbreak of WWll slowed the development of the shared asset industry. During the 1950s and
1960s, advancements in products and administrations increased the prevalence of common
assets. The primary global stock shared reserve was presented in the United States in 1940.
The primary duty-free civil security subsidises appeared in 1976, and the main currency
market common assets were created in 1979. The most recent additions are the global
security warehouse in 1986 and the arm assets in 1990. This industry experienced significant
growth in the 1980s and 1990s, when there was a significant increase in the number of
common assets, plans, resources, and investors. In the United States, the common asset
industry enrolled in s ten - overlay development in the 1980s. Since around 1996, shared
store resources have outperformed bank stores. The common asset industry and the financial
business are essentially competitors in terms of size.

A Shared asset is a type of Speculation Organization that collects resources from financial
backers and invests them in stocks, securities, or currency market instruments. According to
K. Geert Rouwenhost in the Starting points shared assets, speculation organisation ideas
originated in Europe in the late 1770s, when "a Dutch Trader and Representative Welcomed
memberships from financial backer with restricted implies." The emergence of "venture
pooling" in Britain during the 1800s brought the concept closer to American shores. The
order of two English Regulations, the Business entities Demonstration of 1867 and 1867,
allowed financial backers to share in the benefits of a speculation venture while limiting
financial backer obligation to how much venture capital was committed to the venture.
Perhaps most notably, the English asset model established an immediate connection with
U.S. Protections markets, assisting in financing the recovery of the post-World War II U.S.
economy. The Scottish American Venture Trust, founded on February 1, 1873 by store
pioneer Robert Fleming, invested in the financial capability of the United States, primarily
through American railroad bonds. Many different trusts followed that designated interest in
America, but it was the late 1800s and mid 1900s that prompted the presentation of the asset
contributing idea on American shores. Nov, 1925. This numerous assets were open - finished
with a reclamation highlight. They essentially had all of the components of a decent current
mutual fund, for example, sound venture strategies and limitations, open end ness, self -
exchanging highlights, a broadcasted portfolio, basic capital design, magnificent and
proficient asset the executives and enhancement, and so on.... As a result, they are revered
fantastic - guardians of current assets. Before these assets, all of the underlying speculation

10
firms were closed - finished firms. As a result, one could argue that "The Mutual Fund is an
American Creation," despite the fact that the basic concept of enhancement and expert asset
management were chosen by the United States from Britain Venture Organizations.

Because of their selective nature, open - ended Mutual Funds quickly became extremely well
known. By 1929, the United States had 19 open - finished common subsidises with total
resources of $140 million. However, the 1929 stock exchange crash, followed by the 1930
economic crisis, destroyed the US monetary market as well as the shared asset industry. This
necessitated stricter guidelines for mutual funds and financial areas Following that, in order
to protect the premium of ordinary financial backers, the United States Government passed
various Acts, including the Protections Act 1933, the Protections Trade Act 1934, and the
speculation Organization Act 1940. A board of trustees known as the Public Panel of
Speculation Organization (Presently, Venture Organization Establishment) was also formed
to collaborate with the Government Administrative Organization and stay informed about
changes in Mutual Fund Legislation. As a result of these measures, the Shared Asset industry
began to expand rapidly, and the absolute net resources of the Common Supports industry
increased from $ 448 million in 1940 to $ 2.5 billion in 1950. Between 1940 and 1951, the
number of investor records increased from 296000 to over 1,000,000. "As a result of renewed
interest in the mutual fund industry, they grew at an 18% annual compound rate, peaking in
the late 1960s."

1.4

WORLDWIDE ROLE OF MUTUAL FUND

ORGANIZATION STRUCTURE OF MUTUAL FUND
Mutual Funds have association structure according to there Security Trade Leading body of
India rule, Security Trade Leading body in India determined power and obligation of legal
director and asset the board associations. The pretensions and is to controlling, to advanced,
to manage, to shielded the fiscal backers right and productive swapping of units. exertion of
participated store start with fiscal backers get a good deal on collective fund, than
participated asset administrator taking care of the means and crucial adventure on scrip.
According to the targets of specific plan administrator chose scrips. Unit worth will turn out

11
to be high when reserve administrator enterprise strategy produce the profit from capital
request. Unit return relies upon store return and complete capital request. Likewise
influences global capital request, liquidity and eventually financial arrangement. Beneath
the map demonstrates how the commerce was passing to fiscal backers to acquire returns.
collective fund chief having high liability within return and how to limit the adventure. At the
point when asset furnished exceptional yield with high adventure, fiscal backers draw in to
contribute further asset for same plan. The Mutual Fund association according to the SEBI
development and vital arrangement is needed for sooth exercises of the association an
fulfilled the pining targets. Move specialist and caretaker assume part for dematerialization
of the asset and unit holders hold the record explanation, still custodianship of the unit is on
specific Resource The directors Organization. Overseer holds all the asset units on
dematerialization form002E supervisor speculation strategy produce the profit from capital
market. Unit return relies upon store return and proficient capital market. Likewise influences
global capital market, liquidity and finally monetary arrangement. Beneath the chart
demonstrates how the interaction was happening to financial backers to acquire returns.
Mutual fund chief having high liability within return and how to limit the gamble. At the
point when asset furnished exceptional yield with high gamble, financial backers draw in to
contribute more asset for same plan. The Mutual Fund association according to the SEBI
development and vital arrangement is required for sooth exercises of the organization an
accomplished the craving targets. Move specialist and caretaker assume part for
dematerialization of the asset and unit holders hold the record explanation, however
guardianship of the unit is on specific Resource The executives Organization. Overseer holds
all the asset units on dematerialization form.

12
Sponsor had decided the responsibility of custodian when investor to buy the fund and to
vend the unit. operation forms, sale slip and other requests entered by transfer agent, middle
men between investors and means operation companies.

1.5

ORIGIN OF MUTUAL FUND

Mutual funds have been around since the nineteenth century, when they were introduced in
Europe, particularly in the United Kingdom. In 1968, Robert Fleming established the first
investment trust, the Foreign and Colonial Investment Trust, which promised to manage the

13
finances of Scotland's moneyed classes by spreading the investment across a variety of
stocks. This investment trust, as well as others established later in the UK and the US,
resembled today's closed-ended mutual funds.

Massachusetts Investor's Trust was the first mutual fund established in the United States in
March 1924. This was the case with the open-ended mutual fund. The 1929 stock market
crash, the Great Depression, and the outbreak of World War II slowed the mutual fund
industry's pace; however, product and service innovations increased mutual fund popularity
in the 1990s and 1960s. The first international stock mutual fund was established in the
United States in 1940. The first tax-exempt municipal bond funds debuted in 1976, followed
by the first money market mutual funds in 1979. The international bond fund was established
in 1986, followed by the arm funds in 1990. The number of mutual funds, schemes, assets,
and shareholders increased significantly in the 1980s and 1990s, resulting in significant
growth in this industry. In the United States, the mutual fund industry reached a ten-year
high.

1.6

HISTORY OF MUTUAL FUND IN INDIA:

For a developed economy, a vibrant financial market with wide participation is crucial. The
Government of India and Reserve Bank of India took the initiative to establish India's first
mutual fund, Unit Trust of India (UTI), with the broad goal of "encouraging saving and
investment as well as participation in the income, profits, and gains accruing to the
Corporation from the acquisition, holding, management, and disposal of securities."

The MF Industry has expanded tremendously in recent years. The development of mutual
funds in India can be roughly divided into the following five phases:

1) FIRST PHASE – 1964-1987

2) SECOND PHASE – 1987-1993
3) THIRD PHASE – 1993-2003
4) FOURTH PHASE – 2003-2014
5) FIFTH (CURRENT) PHASE – SINCE MAY 2014

14
FIRST PHASE – 1967-1987

In India, the first mutual fund company, UTI, was established in 1963 by a parliamentary act,
and it operated under the administrative and regulatory oversight of the Reserve Bank of
India (RBI). The Industrial Development Bank of India (IDBI) replaced the RBI as the
regulatory and administrative authority over UTI in 1987 after it was delinked from the RBI.
Unit Scheme 1964 (US '64) was UTI's initial programme. UTI had Rs. 6,700 crores in assets
under management at the end of 1988. (AUM).

SECOND PHASE – 1987-1993 – ENTRY OF PUBLIC SECTOR MUTUAL FUNDS

The establishment of public sector mutual funds by public sector banks, the Life Insurance
Corporation of India (LIC), and the General Insurance Corporation of India was promoted in
the year 1987. (GIC). The first "non-UTI" mutual fund was launched by SBI in June 1987.
This was followed by Canbank in December 1987, Punjab National Bank in August 1989,
and Indian Bank in September 1989. (Nov. 1989). Whereas GIC had started its mutual fund
in December 1990, LIC had established its mutual fund in June 1889. The MF sector had
assets under management totalling Rs. 47,004 crores by the end of 1993.

THIRD PHASE – 1993-2003 – ENTRY OF PRIVATE SECTOR MUTUAL FUNDS

With the foundation of SEBI in April 1992 to protect the interests of investors in the
securities market, to encourage its growth, and to regulate it, the Indian securities market
gained more significance.

The first set of SEBI Mutual Fund Regulations, which apply to all mutual funds with the
exception of UTI, were established in 1993. The first private sector MF registered in July
1993 was the former Kothari Pioneer, which has since amalgamated with Franklin Templeton
MF. A new era in the Indian mutual fund industry began in 1993 with the arrival of private
sector funds, allowing Indian investors a greater selection of mutual fund products.In 1996, a
comprehensive set of restrictions, the SEBI (Mutual Fund) Regulations, 1996, which are still
in effect, replaced the original SEBI MF Regulation.

Over time, more mutual funds were established in India thanks to numerous international
donors. Around this time, the mutual fund sector also saw a number of mergers and
acquisitions. There were 33 MFs as of the end of January 2003, with a combined AUM of Rs.
1,21,805 crores, of which UTI alone held Rs. 44,541 crores.

15
FOURTH PHASE – SINCE FEBRUARY 2003 – APRIL 2014

Once the Unit Trust of India Act of 1963 was repealed in February 2003, UTI was divided
into the Specified Undertaking of the Unit Trust of India (SUUTI) and the UTI Mutual Fund,
which operates in accordance with the SEBI MF Rules. The former UTI was split into two,
and a number of private sector fund mergers occurred, ushering in the MF sector's fourth
phase of consolidation.

2009 saw a global financial crisis that caused stock markets all around the world, including
India, to collapse. The majority of investors who entered the capital market at its peak lost
money, which seriously weakened their faith in MF products. The Indian MF Industry had
already been negatively impacted by the global financial crisis and the SEBI's elimination of
Entry Load. For more than two years, the industry struggled to recover and transform itself in
an effort to maintain its economic viability, as evidenced by the slow growth in MF Industry
AUM from 2010 to 2013.

FIFTH (CURRENT) PHASE – SINCE MAY 2014

In order to "re-energize" the Indian mutual fund industry and increase MFs penetration, SEBI
introduced several progressive measures in September 2012. These measures were made in
response to the low penetration of MFs, particularly in tier 2 and tier 3 cities, and the need for
greater alignment of the interests of various stakeholders. After the worldwide meltdown,
things started to turn around thanks to the measures, and things dramatically got better once
the new government was established at the centre. Since May 2014, the sector has
experienced consistent inflows, growth in AUM, and an increase in the number of investor
folios (accounts).

 The industry's AUM first surpassed the milestone of Rs. 10 Trillion (Rs. 10
Lakh Crore) on May 31, 2014, and in just under three years, it had expanded
more than twofold. In August 2017, it first surpassed Rs. 20 Trillion (Rs. Lakh
Crore). In November 2020, the AUM size first surpassed Rs. 30 trillion (Rs.
30 Lakh Crore).
 The whole size of the Indian MF Industry increased more than five times in
just ten years, from Rs. 7.60 trillion as of December 31, 2012, to Rs. 39.89
trillion as of December 31, 2022..

16
  During the course of five years, the AUM of the MF Industry increased nearly
twofold, from Rs. 21.27 trillion as of December 31, 2017, to Rs. 39.89 trillion
as of December 31, 2022.
 The number of investor folios increased from 6.65 crore as of December 31,
2017, to 14.11 crore as of December 31, 2022, a more than 2-fold rise in just 5
years.
 In the five years since December 2017, 12.44 lakh new folios have been
added on average per month.

The regulatory actions made by SEBI to re-energize the MF Industry in September 2012 and
the assistance from mutual fund distribution in growing the retail base have both had the dual
effects of increasing the size of the sector.

The last mile connection between investors and MF distributors has been greatly needed,
especially in smaller towns. This connection not only enables investors to invest in suitable
schemes but also assists investors in maintaining their course during periods of market
volatility, allowing investors to reap the rewards of mutual fund investing.

Systematic Investment Plans (SIP) have become increasingly popular over the years thanks in
large part to MF distributors. The number of SIP accounts surpassed the one billion milestone
in April 2016, and as of December 31, 2022, there are 6.12 billion SIP accounts overall.

1.7

GROWTH OF MUTUAL FUNDS IN INDIA:

In 1970, there were 10.7 million stockholders holding shares in 361 funds with a 47.6 Billion
Dollar total asset value. Beginning in 1970, investors' uncertainty about the profitability of
mutual funds was compounded by inflation, rising interest rates, and a stagnant stock market.
Since demands and interests were always changing, Mutual Funds saw the necessity to offer
new types of mutual funds. Investors. The 1970s saw the introduction of "no load" funds,
which do not charge sales commissions. The biggest and most prosperous no-load fund
family is called Vanguard Funds, which John Bogle launched in 1977.

17
1.8

TYPES OF MUTUAL FUNDS:

Mutual Funds come in many varieties, designed to meet different investor goals. Mutual
Funds can be broadly classified based on –

1. Organisation Structure – Open ended, Close ended, Interval

2. Management of Portfolio – Actively or Passively
3. Investment Objective – Growth, Income, Liquidity
4. Underlying Portfolio – Equity, Debt, Hybrid, Money market
instruments, Multi Asset
5. Thematic / solution oriented – Tax saving, Retirement benefit, Child
welfare, Arbitrage
6. Exchange Traded Funds
7. Overseas funds
8. Fund of funds

1.9

ADVANTAGES OF MUTUAL FUNDS:

Fund managers have a research team to assist them in achieving their objectives, and mutual
funds are created to offer investors the most benefits. Assets Management Company offers a
variety of sector funds that call for careful preparation in order to maximise market return and
strategic investment.

1) Portfolio Diversification
Investors can maintain a varied investment portfolio by using mutual funds, which
invest in a well-diversified portfolio of securities (whether the amount of investment
is big or small).

2) Skilled Management
The investor earns larger returns than he could manage on his own thanks to the fund
manager's extensive research and superior investment management skills.

18
3) Reduced Risk

Investors can create a varied portfolio of securities with just a little investment in a
mutual fund. In comparison to investing in just two or three stocks, a diverse portfolio
offers reduced risk.

4) Transactions are competitively priced

Due to economies of scale, mutual funds pay lower transaction costs (benefits of larger
volumes). These benefits are distributed to investors.

5) Liquidity

While mutual fund units are much more liquid than individual shares, an investor might
not be able to swiftly and easily sell some of his holdings.

6) Scheme Choice

Investors have access to a number of plans from mutual funds with a range of investing
goals. Individuals have the option to invest in a plan that connects their personal financial
aspirations with the investing objectives of the plan. Transparency Investors can get the
most recent information on markets and schemes from funds. The regulator mandates that
investors be informed of all relevant information.

7) Flexibility
Mutual Funds also provide investors with convenience and flexibility. Investors can
switch from a debts scheme to an equity scheme and vice versa. Most open-end
schemes also provide investors with the option of making systematic (at regular
intervals) investments and withdrawals.

19
 8) Safety
The mutual fund industry is part of a well-regulated investment environment in which
the regulators protects investors’ interests. All funds are required to register with
SEBI, and complete transparency is mandated.

DISADVANTAGES OF MUTUAL FUNDS:

Becoming a mutual fund investor, however, has drawbacks as well. Here's a closer look at a
few of those issues.

1) High sales charges and expense ratios

if you aren't paying attention to sales charges and expense ratios for mutual funds. They
might become out of control. When investing in funds with expense ratios over 1.50%, which
are regarded as being on the higher cost end, exercise extreme caution. Be cautious when
paying advertising or general sales costs. There are several reliable fund businesses that don't
charge sales commissions. Overall investment returns are lowered by fees.

2) Management Misconduct

If your management is abusing their authority, churning, turnover, and window dressing may
occur. This includes irrational trading and very frequent replacement.

3) Ineffective taxation

Whether they like it or not, investors are forced to accept capital gains distributions from
mutual funds. Investors frequently get distributions from the fund that are an uncontrollable
tax event because of the turnover, redemptions, gains, and losses in security holdings during
the year.

20
4) Negligent Trade Execution

You will receive the same closing price NAV for your purchase or sell on the mutual fund if
you execute your deal before the deadline for same-day NAV. Mutual funds offered a poor
execution approach for investors seeking faster execution times, perhaps due to short
investment horizons, day trading, or market timing.

1.10

MUTUAL FUND & CAPITAL MARKET

Indian Institute of Capital Market's (IICM) primary goals are to train and create experts for
the Indian and other emerging nations' securities markets, as well as to serve as a hub for
raising investor awareness through research and specialised consultation services.

The primary market, which the mutual fund industry refers to as the NFO New Fund Offer, is
concerned with issue management. According to the mutual fund industry, the primary is
known as the NFO New Fund Offer. All Asset Management Companies (AMCs) are issuing
all of the funds through the NFO, and each NFO came with specific investment objectives,
style of investment, and allocation criteria. The secondary market, which we discussed with
relation to mutual funds, is the other area of the capital market. In the secondary market,
investors sell their units when the market is in a bullish phase. As opposed to when a bear
stage investor buys or spends some time waiting for a sale.

1.11

ROLE OF SEBI
A mutual fund may lend and borrow securities in accordance with the framework relating to
short selling and securities lending and borrowing specified by the Board. A mutual fund may
enter into short selling transactions on a recognised stock exchange, subject to the framework
relating to short selling and securities lending and borrowing specified by the Board. An
index fund scheme is a mutual fund scheme that invests in securities in the same proportion
as an index of securities. As long as an index 13 fraud scheme is involved, the investment and
advising fees cannot be more than 0.75% of the average weekly net assets.

"Provided moreover that the entire expenses of the scheme, including investment and
advisory fees, shall not exceed one and half percent (1.5%) of the weekly average net assets
in the event of an index fund scheme." Every mutual fund must purchase and sell assets based

21
on deliveries, and must always accept delivery of the relevant securities upon acquisition and
always deliver the securities upon sale. In addition, a mutual fund may engage in derivatives
transactions on a recognised stock exchange within the parameters established by the Board.
"Provided that a mutual fund may engage in short selling of securities in accordance with the
framework relating to short selling and securities lending and borrowing specified by the
Board."

1.12

ROLE OF AMFI (ASSOCIATION MUTUAL FUND IN INDIA)

The Association of Mutual Funds in India (AMFI) is committed to the growth of the
Indian mutual fund industry along professional, ethical, and moral lines. It also works to raise
and maintain standards in all areas with the goal of safeguarding and advancing the interests
of mutual funds and the people who own their units.

Under the direction of Shri B. G. Daga, a former executive director of Unit Trust of India, the
AMFI Working Group on Best Practices for Sales and Marketing of Mutual Funds includes
Shri Vivek Reddy of Pioneer ITI, Shri Alok Vajpeyi of DSP Merrill Lynch, Shri Nikhil
Khattau of Sun F & C, and Shri Chandrashekhar Sathe. Previously employed by Kotak
Mahindra Mutual Fund, they proposed the creation of standards and a code of conduct for
intermediaries. Shri B. G. Daga and Shri Vivek Reddy successfully carried out this task.

All of the participants in the mutual fund sector are regulated by the AMFI. It follows SEBI's
instructions and ensures that the laws and regulations are applied correctly, balancing
industry advancement with the protection of each participant's interests. Due to the mutual
fund industry's reliance on online platforms, AMFI also makes sure that these platforms offer
simple access and investment, as well as the safety and security of each investor's identity and
investment. By ensuring transparency at every stage of the transaction, AMFI promotes
accountability in the sector. After a thorough examination and debate of the numerous rules
and regulations that require periodic updating, it is given the duty of ensuring that business
practises are adhered to by all parties participating in a trade.

The AMFI makes sure that the likelihood of fraud is decreased and the mutual fund business
operates by keeping the highest standards set by SEBI and AMFI jointly through the issuance
of ARN and raising investor awareness.

22
Following are the Top 10 Asset Management Companies under India in
2023

SR.NO. AMC Average AMU(in Rs)(As of

the end of the last quarter)
1 SBI Mutual Fund Rs 647064.29 Cr
2 HDFC Mutual Fund Rs 432084.97 Cr
3 ICICI Prudential Mutual Fund Rs 468258.02 Cr
4 Nippon India Mutual Fund Rs 283060.97 Cr
5 Axis Mutual Fund Rs 260335.18 Cr
6 DSP BlackRock Mutual Fund Rs 107873.94 Cr
7 Kotak Mutual Fund Rs 284617.8 Cr
8 Tata Mutual Fund Rs 86396.95 Cr
9 Aditya Birla Sun Life Mutual Fund Rs 295804.91 Cr
10 L&T Mutual Fund Rs 75591.56 Cr

TAX PLANNING AND MUTUAL FUND:

Indian investors use tax-saving mutual fund programmes simply because it allows them to
save money. Under Section 88 of the Income Tax Act, tax-saving mutual funds and equity-
23
linked savings systems (ELSS) are eligible for a number of tax exemptions. One of the
reasons why Indian investors increase their portfolio using tax-saving mutual fund plans is
because of this. One of the significant categories of mutual funds available to investors in
India is tax-saving mutual fund programmes. There are numerous businesses in India that
provide tax-saving mutual fund schemes.

NISM (National Institute of Securities Market)

A subsection of NISM is the national stock exchange. A branch of the national stock
exchange was established to handle operations connected to the securities and capital
markets. Here the national institute market has six types of securities markets.

1) Investors

2) Regulation

3) Intermediaries

4. Opinion marketplace

5) Knowledge Creation

6) Issuer

Six different types of schools were organised by NISM.

1. School of Regulatory Studies and Supervision

2. School of Certificate of Intermediaries (SCI); and (SRSS)
3. School of Corporate Government, number three (SCG)
4. Investor Education and Financial Literacy School (SIEFL)
5. Securities Education School (SSE)
6. School of Securities Research and Information (SSIR)

NICM (National Institute of Capital Market)

The National Institute of Capital Market is one of the seven subsidiaries of the National Stock
Exchange, which is essential for the expansion of the capital market. The institution offered
courses in capital market transactions. seminar and workshop on trading operations'
transparency create trading and market research technologies.

24
1.13

SEBI GUIDELINE OF MUTUAL FUND

1996 SEBI Regulation Act

Establishing a Mutual Fund: In India, mutual funds serve as vehicles for trust investments.
According to SEBI regulations, some requirements must be followed in order to establish a
mutual fund. According to the Indian Trust Act of 1982, the trustee corporation is represented
by a board of directors as the trustee sponsor of the mutual fund. The AMC and custodians
are chosen by the board of directors. With respect to the agreement, the trustee board reached
out to AMC and the custodian. Each scheme begins with the public being invited to invest in
it via offer documents.

The scheme may be available for additional unit sales and repurchases depending on its
specific goals. Additionally, depending on those goals, the scheme may be terminated after a
specific time period.

1) The sponsor must file a mutual fund registration with SEBI.

2) The body corporate must have a solid track record and a general reputation for fairness and
integrity in all of its commercial dealings in order to qualify to be a sponsor.

Sound track recording methods

 Possessing a positive net worth in the five years prior to the application for
registration
 The body corporate operating in the financial services industry for at least five years.
 Why Making a profit in three of the five years prior, including the fifth year; net
worth in the most recent year greater than its contribution to the AMC's capital.

1) The sponsor must own at least 40% of the AMC's net worth.

2) No party that is ineligible to be a sponsor may own 40% or more of the AMC's net
worth.

3) The trustees, AMC, and custodian must all be chosen by the sponsor.

4) SEBI must approve the trust agreement and the trustees' nomination.

25
 5) No AMC, its executives, or personnel may be appointed as mutual fund trustees.

6) The sponsor shall not own more than two thirds of the company.

7) Only an independent trustee can be appointed as trustee of more than one mutual fund,
such appointment can be done only with the prior agreement of the fund of which the
person is already working as a trustees.

1.14

INTRODUCTION OF HDFC MUTUAL FUND

One of the most well-known fund firms in India was established on December 10, 1999, as
HDFC Asset Management Company Ltd. The company offers a large selection of mutual
funds and works with some of the best fund managers, who make sure that your hard-earned
money is put in the proper strategies. Whether you're looking for growth funds, income
funds, or even retirement funds, HDFC AMC Ltd. has it all. With the July 2000 launch of its
initial scheme, HDFC Mutual Fund has made a commitment to offering consistent fund
performance throughout all of its plan variations.

26
 Chapter No. 2: Research Methodology

2.1

INTRODUCTION

The current study looks at the mutual fund research at HDFC Bank. In the following
Chapters, a study of the literature on the mutual funds offered by the HDFC Bank is
conducted with the goal of creating a strong theoretical framework for the investigation.

Academics, researchers, and financial analysts have been interested in mutual funds primarily
since 1986. Many papers have been published in periodicals like Capital Market, Business
India, etc., financial publications like Economic Times, Business Line, and Financial
Express, as well as professional and research journals. There is a tonne of literature on the
performance assessment of mutual funds.

Several studies have been conducted in India and overseas to periodically assess the
performance of mutual fund schemes. In the chapter that follows, a few research papers that
had a significant impact on the creation of the thesis are discussed.

2.2

OBJECTIVES OF THE STUDY

There are several parties involved in mutual funds, including the sponsor, trustees, AMCs,
custodians, and investors who serve as beneficiaries.

The goal of the current thesis is to evaluate the performance of mutual funds and, in
particular, the effect that portfolio diversification has on the risk potential of mutual funds in
order to gain a general understanding of the current performance trends of the Indian mutual
fund industry and investor preferences.

It was deemed vital to comprehend mutual fund preferences in relation to age, education,
gender, marital status, occupation, and income levels with regard to risk tolerance, return
expectations, term of investment, and investment affecting factors, etc.

27
The following are the study's goals:

1) To research the current patterns in the expansion of Indian mutual funds.

2) To evaluate the effectiveness of chosen strategies based on effectiveness.

3) To determine whether there is equality of means by assessing the performance of

the chosen HDFC Balance Fund plans and comparing it to the benchmark (returns).

4) To examine the long-term performance, compare the risk and return of the Balance
Fund, Flexi Cap Fund, and Tax Saver funds over a five-year period.

5) To determine whether the chosen factors and investors' perceptions of mutual funds
are related in any way.

6) To Research the Top 10 HDFC Fund Mutual Funds.

2.3

HYPOTHESIS TESTING

The following secondary data are examined:

For specific schemes, "high risk yields high profits" applies.
Mutual Fund and BSE SENSEX provide equal opportunities. "Students exam is used to
determine mean equality."
Comparison of three carefully chosen systems over a five-year period.
"The respondents' demographic characteristics, including age, education, gender, occupation,
and income, are related to or associated with their preferences for mutual funds."

2.4
SCOPE OF THE STUDY

In India, the mutual fund business is expanding quickly as a result of the government's policy
liberalization. In total, India has 46 mutual fund houses, 38 of which are private sector AMCs
and the remaining two are public sector and UTI AMCs. Indian, foreign, joint venture, and
mostly Indian joint venture are the private sector mutual funds. As a result, UTI and publicly
sponsored mutual funds are up against stiff competition.

28
Another factor contributing to the fierce rivalry in the mutual fund sector is the entry of
banking and insurance organizations. The risk and returns vary because private sector mutual
funds provide a wide range of programs with various structures and objectives. Mutual fund
performance can be assessed in a variety of ways, including risk-return, risk-adjusted return,
and return from alternative investments.
In India, expansion of the mutual fund sector is anticipated both this year and in the years to
come. As opposed to 1.86 crore households having an annual income of Rs. 10 lakh, it is
predicted that there will be roughly 1.88 crore registered mutual fund investors in India by
2022.
The Economic Growth Study further indicated that the projected 11% growth in nominal
GDP between FY 2021 and FY 2025 will boost the mutual fund industry. The growth of the
mutual funds sector in India is anticipated to be aided by "economic growth," the expansion
of the middle class, and increased savings.

2.5
LIMITATIONS

1) A variety of websites, journals, and books are used to gather the secondary material. Some
differences from the original data can show up. Certain schemes' information wasn't available
for extended periods of time, so it wasn't included in the study.
2) A few strategies have been taken into account.
3) Since the creation of schemes is not consistent, not all of them are included in the project.
4) Investors who made investments through registrars and AMC branches provided the
primary data, which might not fully represent the population. Any study having a bearing on
attitude, incomplete, inaccurate information and non response to some questions couldn't be
prevented although greatest care is taken so as to eliminate such problems.

2.6
NEED FOR THE STUDY

29
For small investors, mutual funds are one of the most popular investing options since they
provide an affordable way to invest in a professionally managed, diversified portfolio. A
mutual fund is a type of trust that combines the savings of many investors who have similar
financial objectives.
Mutual funds have grown to be investors' preferred long-term investment vehicle during the
past ten years.
The rapid growth of foreign-owned mutual fund companies and the decline of those
established by nationalized banks and tiny private-sector participants are the latest trends in
the mutual fund industry.
One of the most important catalysts for producing significant investment growth in the capital
market has been the expansion and development of various mutual fund products in the
Indian capital market.
It has become crucial in this situation to closely monitor and assess mutual funds. The need
for and scope of mutual fund operations have grown significantly as a result of the focus on
raising domestic savings and improving the development of investment through markets. As
a result, it is critical to view mutual funds' contributions to the transformation of the Indian
economy as more than just financial intermediaries because they are a key factor in fostering
an equity culture.
Studying the mutual fund business in India's performance became important in this aspect as
well. The performance of the mutual fund scheme is determined by the risk-return
relationship.
Since risk and return are inversely proportional, offering the highest return possible on an
investment while maintaining an acceptable degree of risk helps distinguish between those
who do better and those who lag behind.

2.7
SECONDARY DATA
The study includes an evaluation of the performance of various mutual funds, scheme by
scheme. Data about the performance of the funds was obtained from secondary sources,
including information from websites run by other mutual funds and AMFI,
mutualfundsindia.com, moneycomtrol.com, BSE.com, valuereaserch.com, and ici.org.

30
2.8
DATA ANALYSIS TECHNIQUES

 The three crucial mutual fund measures are primarily used in the data analysis. These
are what they are:
1) Sharpe
2) Treynor 
3) Jensen Measurements

 A number of statistical formulas, including Standard deviation, beta, and R-squared,

can determine the risk attached to the schemes.

 Study of % changes in mutual fund gross mobilization.

 Trend analysis using percentage changes for AUM.

 The significance of the means of mutual funds compared to the BSE SENSEX is
examined using a statistical method like the t test.

 To determine the relationship or association between the socio-demographic

characteristics and the preferences of mutual funds, "one way ANOVAs" and "chi
square tests" are utilised.

 The fund Sharpe ratio and the BSE SENSEX are compared using the Relative
Performance Index (RPI) algorithm.

 Risk Free Rate of Return

31
The risk-free return, which is calculated to be 5.75 percent annually, is believed to be the
average return offered by 90-day Treasury bills issued by the Government of India between
2007 and 2012.

 Sharpe Measures
The Sharpe Ratio is the most popular metric that integrates risk and reward into a
single indicator. The Sharpe Ratio is calculated by dividing the fund's excess return
over a risk-free return, which is typically the rate on a 90-day Treasury bill or an SBI
fixed deposit.

Sharpe’s ratio = (Ri-Rf) /Si

Where,
Si is standard deviation of the fund
Ri is return on investment,
Rf is risk free rate of interest.

 Treynor Measure
The Treynor ratio and the Sharpe ratio are comparable. Instead of contrasting the
fund's risk-adjusted performance with the risk-free return, it does so with the
comparable index.
Treynor’s ratio= (Ri -Rf) / Bi

Where,
Ri represents return on fund,
Rf is risk free rate of return and
Bi is beta of the fund.

 Jensen Measure

This is the difference between a fund's expected performance and its actual
performance, as determined by beta.

32
 Jensen’s measures =Fund returns – [risk free rate + Beta of fund (Bench mark
return – Risk free return)].

 Compound Annual Growth Rate

It is useful for comparing two different investment returns and for computing the
annual compound return on an investment.

Compounded Annual Growth Rate = (End value/Start value) ^ (1/Periods -1) -1

 Mutual Funds Returns

Returns are calculated through the following formula

Mutual funds Returns = (Current NAV – Previous NAV) / Previous NAV ∗ 100

 BSE SENSEX Returns

Returns analysis for BSE SENSEX is calculated through:

BSE SENSEX returns = (Closing valve – Opening valve)/Opening valve ∗ 100

 Standard Deviation

Investors can use standard deviation as a mathematical foundation for their

investment choices. The amount of variance from the mean is shown by the standard

33
 deviation, which is a measure of variety or diversity. The square root of a data set's
variance yields the data set's standard deviation.
σ=√1N∑Ni=1(Xi−μ) 2

 Beta

Beta quantifies systematic risk and demonstrates how fund values react to market
factors. The Capital Asset Pricing Model (CAPM), a model that determines an asset's
expected return based on its beta and anticipated market returns, uses beta. Beta, a
measure of how sensitive a scheme's return is to market return, is used to quantify
systematic risk. A strategy is deemed defensive if its beta value is less than one and
aggressive if it is more than one. The Beta Formula is:

r = return on fund

 R-Squared

The correlation between a mutual fund strategy and its benchmark index determines
the beta. The connection between a fund's beta and its benchmark index is measured
by a statistic known as "R-squared," which is something investors should take into
account in addition to a fund's beta. For a better understanding of a fund's risk, the
beta and R-squared must be viewed together.

 Student’s T test

Calculating the significance of observed differences between the means of two

samples is frequently done using the t-test. Scalar variables like length, width, and

34
 other similar variables are typically tested using the t-test. It is assumed that there is
no discernible difference between the means.

 Relative Performance Index

The RPI is used to calculate the funds return in comparison with the BSE SENSEX
return.

RPI=Average return on fund/Average Return on BSE

 One way ANOVA

Using variances, a one-way analysis of variance can be used to simultaneously assess the
equality of three or more means. By dividing the between-group variance by the within-group
variance, the F statistic is calculated. where n is the number of possible outcomes.

35
 Chapter No. 3 : Review Of Literature

3.1

INTRODUCTION

One kind of review article is a narrative or literature review. A literature review is an

academic essay that summaries the most recent research on a subject, including both
substantive discoveries and theoretical and methodological advancements. Reviews of the
literature are secondary sources that don't present new or unique experimental work. Such
reviews, which are most frequently seen in academic publications and are distinct from book
reviews, which may also appear in the same publication, are most frequently connected with
academically oriented literature. The foundation of research in almost every academic
discipline is a literature review. A peer-reviewed journal article presenting new research may
contain a narrow-scope literature review to place the study within the body of the pertinent
literature and to give the reader perspective. In such a scenario, the review of the work is
typically written before the technique and outcomes sections.

A literature review may also be written as part of graduate and post-graduate student
assignments, such as when a thesis, dissertation, or journal article is being written.
Furthermore typical in a study proposal or prospectus are literature reviews (the document
that is approved before a student formally begins a dissertation or thesis).

Jack Treynor (1965) Reward to volatility measure, often known as average excess return on
the portfolio, is a tool created by Jack Treynor in 1965 for assessing the performance of
mutual funds. The reward to variability measure introduced by Sharpe in 1966, which is the
portfolio's average excess return divided by its standard deviation, comes next.

Sharpe (1966) created a composite performance evaluation metric and imported 11 out of 34
funds' superior performance from 1944 to 1963.

36
Michael C. Jensen (1967) An empirical research of 115 Mutual Funds during the years 1954
to 1964 was done by Michael C. Jensen in 1967. The findings show that these funds are
unable to outperform a purchase the market and hold strategy because they are unable to
accurately predict securities prices. The analysis disregarded the free gross management
costs. There was little evidence that any one fund could do considerably better than what
investors would have predicted based solely on chance.

Jensen (1968) When transaction costs were considered, Mutual Funds did not appear to
achieve abnormal performance, according to a classic research by Jensen (1968) that used an
absolute measure of performance based on the Capital Asset Pricing Model.

Carlsen (1970) In assessing risk-adjusted performance, Carlsen (1970) stressed that the
results reached from return estimates depend on the time period, fund type, and benchmark of
choice. Using annual data for 82 common stock funds for the 1948–1967 years, Carlsen
effectively reconstructed the Jensen and Shape results. The findings ran counter to both the
Sharpe and Jensen measures.

Fama (1972) In order to assess the investment performance of managed portfolios, Fama
(1972) established a technique and proposed that the overall performance might be divided
into many elements.

John McDonald (1974) investigated the connection between the fund objectives' reported
risks and returns. According to the study's findings, on the whole, fund managers appeared to
maintain their portfolios within the specified risk. Some of the funds in the lower-risk group
were riskier than some of the funds in the highest-risk group.

James R.F. Guy (1978) By using Sharpe and Jensen indicators, James R.F. Guy (1978)
assessed the risk-adjusted performance of UK investment trusts. According to the study's
findings, no trust had demonstrated greater performance to that of the London Stock
Exchange Index.

37
Henriksson (1984) Mutual fund managers were reportedly unable to implement an
investment plan that correctly timed the return on the market portfolio, according to
Henriksson (1984). Once more, Henriksson (1984) draws the firm conclusion that the
market's signals cause the funds market risk exposures to fluctuate. The fund managers,
however, failed to correctly time the market.

Grinblatt and Titman (1989) According to Grinblatt and Titman (1989), some mutual funds
routinely generate abnormal returns by selecting assets that provide positive excess returns.

Richard A. Ippolito (1989) According to Richard A. Ippolito (1989), mutual funds overall
provide better returns. Yet expenditures and load charges counterbalance these. The efficient
market hypothesis is characterised by this.

Ariff and Johnson (1990) In a significant study conducted in Singapore, Ariff and Johnson
(1990) discovered that the performance of Singapore unit trusts varied widely from market
performance, with around half of the funds outperforming the market on a risk-adjusted basis
and the other half underperforming it.

Cole and IP (1993) In 1993, Cole and IP looked into the effectiveness of Australian equity
trusts. A lack of overall positive excess risk-adjusted returns was shown to be a problem for
portfolio managers, according to the study.

Vincent A. Warther (1995) came to the conclusion that aggregate security returns are
substantially linked with concurrent unexpected cash flows into MFs but unrelated to
concurrent expected flows in his study titled "Aggregate Mutual Fund Flows and Security
Returns." According to the analysis, there was an unanticipated influx of 1 percent of all
stock fund assets, or 5.7 percent more in the stock price index. The returns of the securities
held by the funds are associated with the flow of funds, but not with the returns of other kinds
of assets. According to the study, there is evidence of both a positive relationship between

38
flows and subsequent returns as well as a negative relationship between subsequent flows and
returns.

A descriptive analysis of the concept of mutual funds, management of mutual funds,

accounting & disclosure rules, mutual fund schemes, etc. was contained in Bansal's book
"Mutual Fund Management & Working" from 1996.

Gawahati University researchers Sujit Sudhakar and Amritpal Singh examined "Investment
in Equity and Mutual Funds" in 1996. The study sought to highlight three aspects of
investment choice: income generation, capital growth, and tax advantages.

The largest population of the survey was mainly urban investing in corporate script’s and
Mutual Funds. The period chosen was 1992-94. It is gathered that the major investors of
Mutual Funds are salaried & self employed people. This was presumably due to tax
concessions. The self employed professionally qualified practicing persons have a higher
investible surplus and they could take the risk of investing in stock market. It was found that
investors are very much conscious of diversification of their portfolios and they preferred
combination of Mutual Funds and equity shares.

Another interesting conclusion is that after 1985, the majority of investors started to show
interest in capital market products. Also, UTI and SBI Mutual Fund plans were selected by
80% of the respondents. In that region of the country, the investing public has not proven to
be a big fan of other mutual funds. Another significant result was that first-generation middle
class investors tend to stick onto their portfolios for substantially longer periods of time for
tax benefits and capital growth.

Sadhak’s book (1997) The book "Mutual Funds in India, Marketing tactics and investment
practises" by Sadhak (1997) is quite analytical and stimulating. This book was written after
extensive investigation, making it very helpful to scholars. For the first time, an attempt is
made to present mutual fund marketing methods.

Verma’s book (1997) The "Guide to Mutual Funds & Investment Portfolios of Indian
Mutual Funds with some Statistical Data Guidelines to the Investors in Scheme Selection,
etc." The "Urban Saving survey" conducted by the National Council of Applied Economic

39
Research (NCAER) found that households in each group believed saving for the future was
desirable regardless of occupation, educational attainment, or age achieved. It was shown that
the urge to plan ahead for emergencies was a key driver of retirement savings. According to
the survey "Survey of Indian Investors" carried out by NCEAR and the regulatory body SEBI
in 2000, safety and liquidity were the main factors influencing the choice of an investment
instrument.

K. Pendaraki (2001) researched how mutual fund portfolios are built, created a multi-criteria
technique, and used it to analyse the Greek equity mutual fund market. The methodology for
choosing and composing mutual funds is based on the integration of discrete and continuous
multi-criteria decision aid systems. The multi-criteria decision aid approach UTADIS is used
to create the performance models for mutual funds. The percentage of chosen Mutual Funds
in the final portfolios is decided using a goal programming methodology.

Michael K. Berkowitz and Yehuda Katouritz (2002) In their article from 2002, Michael K.
Berkowitz and Yehuda Katouritz investigated the connection between the performance of
mutual funds and changes in their fees. The research made a distinction between high- and
low-quality funds and added to the ongoing debate about independent directors' oversight of
the fee-setting procedures used by the funds. They discovered a good correlation between
fees & performance for high calibre managers. In contrast, there is a bad correlation between
fees and performance for lower quality managers. Because they have a decreased chance of
surviving, underperforming managers have an incentive to extract shorter advantages from
investors, according to the authors.

S.Narayan Rao (2003) evaluated performance of Indian Mutual Funds in a bear market
through relative performance index, risk return analysis, Treynor’s ratio, Sharpe’s ratio,
Jensen’s measure, and Fama’s measure. The study used 269 open-ended schemes (out of total
schemes of 433) for computing relative performance index. Then after excluding funds
whose returns are less than risk- free returns, 58 schemes are finally used for further analysis.
The results of performance measures suggest that most of Mutual Fund schemes in the
sample of 58 were able to satisfy investor’s expectations by giving excess returns over
expected returns based on both premium for systematic risk and total risk.

40
Bijan Roy & Saikat Sovan Deb (2003) Indian MF managers' contributions to better
performance were examined by Bijan Roy and Saikat Sovan Deb in their 2003 study,
"Conditional alpha & performance persistence for Indian Mutual Funds Empirical data." The
study discovered that, on average, Indian fund managers just take advantage of the
opportunities presented by the available economic knowledge and make no additional
contributions. The article emphasises that the fund on average turns negative when the beta is
conditioned to lag economic information factors. Interest rates, dividend yields, the term
structure yield spread, and a dummy are the information variables employed in the study. The
authors also looked at cross-sectional regressions of future excess returns on a measure of
past fund performance to see if there was any evidence of persistence in the performance of
the IMF. They used both conditional and unconditional measures of performance as a proxy
for part-fund performance. The findings showed that conditional metrics of prior performance
significantly predict future fund returns.

Nalini Prava Tripathy(2005) An Empirical Assessment of Indian Fund Managers' Market

Timing Capabilities on Equity Linked Savings Scheme by Nalini Prava Tripathy studied the
market timing skills of Indian Fund Managers using two models, one by Treynor and Mazuy
and the other by Henriksson and Merton. The findings showed that Indian fund managers
struggle to appropriately time the market. Out of the 31 schemes, only one showed the fund
manager's ability to predict market movements.

Zakri Y. Bello (2005) In order to compare disparities in asset holding characteristics,

portfolio diversity levels, and the varying effects of diversification on investment
performance, Zakri Y. Bello matched a sample of socially responsible stock mutual funds to
conventional funds of equal net assets. According to the study, none of these characteristics
significantly distinguish conventional funds from socially conscious investments. Also, there
is no difference between the two groups in the impact of diversity on investment
performance. During the study period, neither group outperformed the Domini 400 Social
Index or the S & P 500.

41
D.N. Rao (2005) In his study "Investment styles and performance of equity MFs in India,"
D.N. Rao divided 419 open ended equity MF schemes into six categories. He then examined
the performance of a subset of those schemes from 1 April 2005 to 31 March 2006 in relation
to the two dominant categories, and he tested the hypothesis that the performance differences
are statistically significant. Sharp ratio, risk per unit return, and monthly compounded mean
return are the factors used for examining financial performance.

When the financial results of 21 open ended equity dividend plans were compared, it was
shown that 17 growth plans offered higher risks and higher returns than dividend plans. One
dividend plan outperformed a growth plan, while three growth plans and dividend plans
produced returns that were equal. Also, it was discovered that, of the 21 growth plans given
by AMC, 4 of them had higher coefficients of variation (risk per unit) than the equivalent
dividend plans, and 13 of them had higher coefficients of variation than the growth plans
themselves. Three growth and dividend plans have nearly identical risk and return on units.

The Sharpe ratios of growth plans and their corresponding dividend plans were compared,
and the results showed that 18 of the 21 growth plans had better risk-adjusted excess returns,
underscoring the fact that growth plans are more likely to reward investors more for the
additional risk they are taking. Finally, the moderate Pearson's correlation coefficient
between the two plans showed that there are statistically significant differences between
equity growth funds and equity dividend funds in terms of returns.

S. Anand and V. Murugaiah (2006) analyzed the elements and sources of investment
performance in the study "Analysis of Components of Investment Performance - An
Empirical Research of Mutual Funds in India" in order to link it to particular actions taken by
Indian fund managers. The author also made an effort to pinpoint the portion of the observed
return that may be attributed to having the capacity to choose the best assets at a particular
risk level. Here, Fama's technique is used for this aim. The study, which analysed the
performance of mutual funds based on 113 chosen schemes with exposure to more than 90%
of corpus to equities stocks of 25 fund houses, covered the time period between April 1999
and March 2003. The empirical findings presented here show that the Mutual Funds were
unable to make up for the extra risk that the Investors assumed by investing in the Mutual
Funds.

42
The study came to the conclusion that, in times when the funds were producing good returns,
the selectivity skills of the fund managers had a greater impact on the performance of the
funds than the other elements did.

Sharad Panwar and R. Madhumathi (2006) In their 2006 paper titled "Characteristics and
Performance Evaluation of Selected Mutual Funds in India," Sharad Panwar and R.
Madhumathi examined a sample of public and private sector sponsored funds with a range of
net assets to examine the variations in asset holding characteristics, portfolio diversification,
and variable effects of diversification on investment performance from may 2002 to may
2005. According to the study's findings, public sector-sponsored funds and private sector-
sponsored funds do not significantly differ in terms of mean returns percent; however, they
do differ significantly in terms of average standard deviation, average variance, and average
co-efficient of variation. In terms of excess standard deviation adjusted returns as a
performance metric, it is also discovered that there is no statistically significant difference
between sponsorship classes.

For the study period, there was a significant difference between public and private sector
sponsored mutual funds when residual variance (RV) was utilised as a measure of MF
portfolio diversification characteristics. When residual variance is employed as a measure of
portfolio diversification and excess standard deviation adjusted returns as a performance
metric, the model developed to examine the influence of diversification on fund performance
discovered a significant difference among sponsorship classes.

D.N. Rao (2006) examined four step models for choosing the best equity fund and presented
them in the context of equity mutual funds in Saudi Arabia in his paper titled "4 Step Model
to Evaluate Performance of Mutual Funds in Saudi Arabia." The study found that the
majority of the funds invested in Arab stocks had been around for less than a year, and that
the GCC stock markets' volatility had contributed to the relatively weak performance of these
funds. Only the recovery of these funds was possible with the recovery of the GCC and other
Arab markets, the study found. The performance of the six types of Saudi Arabian equities
mutual funds examined above was most consistent with those invested in Asian and
European stocks. Given the forecast for the Asian economies, particularly China and India, as

43
well as the recently developing economies of Brazil and Russia, funds invested in their
companies are anticipated to continue doing well in the foreseeable future.

Ajay Khorana, Peter Tufano and Lei Wedgein (2007) Board structure, mergers, and
shareholders' wealth is a study conducted by Ajay Khorana, Peter Tufano, and Lei Wedgein
in 2007. In order to comprehend the function and efficiency of fund boards, a study of the
mutual fund sector examined mutual fund mergers that occurred between 1999 and 2001. The
study discovered that while most fund mergers across families benefit the target shareholders,
the target fund directors incur costs. These mergers are more likely to occur when funds do
poorly and their boards have a higher proportion of independent tributes, indicating that more
independent boards are less inclined to initiate across-family mergers when funds perform
poorly. The study found that, as opposed to the SEC's required level of independence of 75%,
the effect is most obvious when all of the fund directors are independent.

Karoui, Aymen and Meier, Iwan (1997) In their 2008 study, "Performance and
characteristics of Mutual Fund," Karoui, Aymen and Meier, Iwan used Carhart's (1997) four-
factor asset pricing model to examine the performance and portfolio characteristics of 828
recently formed U.S. equity mutual funds. According to the analysis, throughout the first
three years, newly launched U.S. stock mutual funds outperformed their rivals by 0.12
percent each month. Yet, this higher risk-adjusted performance, as calculated using Carhart's
(1997) 4 factor model, displayed clear patterns. Over one to three years, the number of funds
that began to outperform older funds significantly decreased. These findings revealed that
risk-taking, rather than necessarily higher managerial ability, played a role in the initially
favourable outcome. Examining the results further demonstrated that the fund's returns began
to show bigger standard deviations and increased unsystematic risk, which were not
consistent with the risk exposure to the four Carhart model components.

Paramita Mukherjee & Suchismita (2008) Does the Stock Market in India Move with
Asia? by Paramita Mukherjee and Suchismita Bose, 2008 If the Indian stock market moves
with other markets in Asia and the US in a period of capital market reforms and the sustained
interest of foreign investors in that market, then "A Multivariate Co-integration Vector Auto

44
regression Method" should be used. The research found that while there is unmistakable
information leadership from the U.S. market to all Asian markets, the U.S. indexes do not
uniquely influence the integration of Asian markets, while Japan is found to play a unique
role in the integration of Asian markets. This was accomplished by using techniques of co-
integration, vector auto regression, vector error correction models, and Granger causality.
Information from most of the main Asian markets is thought to influence and be influenced
by the U.S. market. Major stock index gains in the United States, Japan, and other Asian
markets, including Hong Kong, South Korea, and Singapore, have unquestionably been the
driving forces behind the recent rise in Indian stocks. More significantly, it is believed that
stock returns in large Asian markets are significantly influenced by results on the Indian
market.

Sowmya Guha, Deb & Ashok Banerjee (2009) In their 2009 article titled "Downside Risk
Analysis of Indian Equity MFs," Sowmya Guha, Deb, and Ashok Banerjee Using a VAR
metric, a value at risk method promoted downside risk loans of Indian equity mutual funds.
To predict the VAR of a sample of equity mutual funds in India on a rolling basis, three
parametric models—random walk, moving average, exponentially weighted moving average,
and one nonparametric model—were used. Actual changes in NAV reported by the funds
were compared with the estimated VAR after the fact. According to the findings, there is a
considerable negative risk for an investor in equity mutual funds throughout the study period
in question. Two well-known back testing techniques were used in the study to test the
models' robustness as well The framework-based models' statistical testing revealed that the
moving average and random walk models typically overestimated the VAR and had a
downward bias. Although the EWMA and historical simulation methods occasionally provide
unduly conservative estimates of VAR, they are generally free from that bias. The researchers
have made a case for the Indian investing industry as a whole to adopt VAR-based risk
management solutions.

Soumya Guha Deb, Ashok Banerjee and B.B. Chakrabarti (2009) In their 2009 study,
Soumya Guha Deb, Ashok Banerjee, and B.B. Chakrabarti used quadratic optimization of an
asset class factor model put forth by William Sharpe and analysis of the relative performance
of the funds with respect to their style benchmarks to "Return Based Style Analysis (RBSA)

45
to evaluate equity Mutual Funds in India." The analysis discovered that, on average, from
January 2000 to June 2005, the mutual funds had positive monthly returns. In terms of returns
generated, the ELSS funds lagged behind the Growth funds or all funds combined. The
growth funds' or all funds' average returns were not only favourable but also noteworthy.
Moreover, the volatility (standard deviation) of the ELSS funds was slightly higher than that
of the Growth funds.

Dr. Kavita Chavali (2009) An empirical study titled "Investment performance of equity-
linked saving programmes" was completed by Dr. Kavita Chavali in 2009. Equity linked
saving schemes were compared to other conventional tax-saving plans, their risk and return
were examined, and efforts were made to understand the level of mutual fund awareness
among the balanced class as well as the various factors that influenced individual investors to
invest in equity linked saving plans. The research was conducted using a diversified ELSS
portfolio composed of five sectors. The study's findings were based on a comparison between
ELSS funds and its benchmark, the S&P CNX Nifty, in terms of return, risk (SD Beta, Alpha,
and Sharpe ratio).

By examining the questionnaire that the investors filled out, the study is furthered. The study
demonstrated that performance of ELSS is influenced by a variety of qualitative factors,
including reputation and performance of the fund house, credentials and experience of the
fund manager, and other funds handled by him. It also demonstrated that ELSS can be taken
into account for investing due to the benefits of tax savings and high returns, but the investor
must make the decision that best suits their risk tolerance.

Dr. Hitesh S. Viramgami (2009) In his study titled "Resource mobilisation by Indian Mutual
Fund industry," Dr. Hitesh S. Viramgami (2009) attempted to assess all resources mobilised
by the Mutual Funds industry during an eight-year period (2001-2007). According to a study
titled "Resource mobilisation by Indian Mutual Fund Industry," liquid/MM Schemes, growth
schemes, ELSS, and income funds offered by the private sector accounted for 70% of the
resources mobilised, while the public sector's share of mutual funds decreased to 8.81%
during the study period. The protection of investors should be of the utmost significance and

46
should not be compromised after their investments, according to the author, in order for
mutual funds to mobilise resources in an orderly manner..

Suppa-Aim and Teerapan (2010)'s thesis, "Mutual Fund performance in emerging markets:
the case of Thailand," specifically examines mutual funds in one of the developing nations,
Thailand, using a larger dataset than previous research; it takes into account the country's
distinct investment policy and taxation system. In order to determine whether any fund
features can help to explain fund performance, the authors closely examined how fund
managers operate and the method they employ while managing their portfolios. The study
investigated how liquidity affected both performance and performance indicators. Suppa-Aim
and Teerapan (2010)'s thesis, "Mutual Fund performance in emerging markets: the case of
Thailand," specifically examines mutual funds in one of the developing nations, Thailand,
using a larger dataset than previous research; it takes into account the country's distinct
investment policy and taxation system. In order to determine whether any fund features can
help to explain fund performance, the authors closely examined how fund managers operate
and the method they employ while managing their portfolios. The study investigated how
liquidity affected both performance and performance indicators.

According to the outcome in this situation, mutual fund managers do not provide value added
to investors since they lack selectivity and timing skills. The majority of fund managers in
Thailand make significant investments in small and growth stocks. Flexible fund managers,
in contrast, are more active and dynamically change their portfolios in response to economic
facts. The performance of general mutual funds has remained consistent. This data, despite
coming primarily from funds that continue to perform poorly, is statistically and
economically significant. Although it is particular to investment policy and the data is not
economically significant, size, age, and fund family also have explanatory power in terms of
fund performance. In general, net cash flows have no bearing on a fund's performance.

The study also discovered that funds that have a higher percentage of illiquid assets in their
portfolios perform better, which shows that mutual funds have a premium for liquidity. As a
result, a model that incorporates one liquidity factor and is liquidity-augmented is suggested.
According to the model's results, our liquidity factor, as determined by the stock turnover
ratio, has a strong ability to explain fund performance, especially in low liquidity portfolios.
Yet, while there is still evidence of a liquidity premium, our liquidity factor cannot fully

47
account for the liquidity premium in mutual funds. The report also discusses the policy
ramifications of Thailand's implementation of the tax-benefit funds plan.

The study discovered that tax-benefit funds outperform general funds considerably, and this
finding held true even after controlling for other fund features. Although the managers of tax-
benefit funds are more passive than managers of general funds, they nonetheless follow the
same general fund managers' approach. Tax-benefit funds include slightly more illiquid
stocks as part of their underlying assets and are more susceptible to cash flows. As a result,
the greater performance of tax benefit funds can be attributed not just to the liquidity
premium but also to the superior skill of the fund managers and the long-term constraints that
enable them to lower nondiscretionary trading costs in these funds.

Dr. Susheel Kumar Mehta (2010) In the study titled "SBI vs. UTI - a comparison of
performance of Mutual Funds schemes," Dr. Susheel Kumar Mehta (2010). has examined the
performance of 10 mutual funds from UTI and 10 from SBI. According to the study's
findings, preference for UTI and SBI mutual funds was higher in 2007–2008. SBI's
performance was strong compared to 2006–07 in both years. Mutual Funds from both
businesses have inconsistent returns. Risk is seen to be consistent. The least hazardous UTI
money market mutual funds dividend and SBI magnum income plus fund-saving plan growth
are discovered to be among the chosen UTI & SBI schemes UTI's strategies were more
defensive than SBI's. The most aggressive and differentiating schemes, respectively, were
SBI Magnum Comma Fund - Dividend and UTI Money Market Mutual Funds Daily
Dividend. The best tactic was to be aggressive. Throughout both years, SBI's mega comma
fund dividend has performed quite well.

All of the chosen schemes had poor performances in 2006–07, which led to the same
preference. based on risk-adjusted measurements from Sharpe, Treynor & Jensen as of
market. Only one of the chosen UTI schemes did better than the market in 2007–2008, and
that was the master value fund growth option, which was followed by MEF–G and MBF–G.
SBI-MCF dividend, followed by MEF-G and MBF-G, performed better than the market,
though. When it comes to superior stock picking, none of the portfolio managers chosen—
UTI & SBI—exhibited expertise in 2006–2007. Managers of SBI MCF - Deruct first
demonstrated some exceptional stock selecting abilities in 2007–2008.

48
Dr.V. Rama Devi and Nooney Serien Kumar (2010) Performance evaluation is a topic
covered by Dr.V. Rama Devi and Nooney Serien Kumar (2010) in their article. A comparison
of Indian and foreign equities mutual funds looked at how well they performed, comparing
them based on risk-return parameters as well as Sharpe, Treynor, and Jensen's risk-adjusted
measures. They also looked at how well they performed overall. The researchers have chosen
the following categories of Indian and foreign equity funds. Index funds, tax-saving funds,
and technology funds for diversified Indian equities investments. Foreign equities diversified
funds, including technology, tax-saving, and index funds. 40 IEDFS, 18 IEIFS, 16 IETSF,
and 5 IETFS were used for the study. They came to the conclusion that the international
investment styles of the Foreign Equity Funds greatly differ from one another. Even Indian
equity mutual funds differ greatly from one another in terms of the type of investments they
make.

The paper also stated that the Mutual Funds industry's enormous success is attributable to the
fact that it has done more than any other financial industry to offer reliable products tailored
to meet real financial needs and responsibly market those products, despite the fact that it
cannot be denied that market pressures and rapid change are difficult. The writers emphasised
that the mutual fund sector must retain long-term health and investor protection must be
maintained for its future success. It cannot be kept in a box by out-of-date thinking or
projected business methods.

Lakshmi N. (2010) discovered that MF help those people including to invest but lack the
newline technical investment ability in her research work named "performance of the Indian
MF business a study with special reference to growth schemes." Between 1997 and 2006, the
industry's funds mobilised grew by 57 percent and AUM by 14 percent. Examination of the
seven newline schemes' performance should show that, in terms of absolute returns, every
sample plan beat the newline market without providing sufficient returns to cover the overall
newline risk. Newline underperformance of sample schemes was seen across all three risk
adjective performance indicators. The consensus among investors and fund managers was
that investing in MFs was less hazardous The primary factor for selecting MF groups was
goodwill. Investors were just slightly dissatisfied with the industry's performance and
offerings.

49
Ms.Nidhi Walia, Dr (Ms) Ravi Kiran (2010) In their 2010 study, "Efficient Market
Hypothesis, Price Volatility, and Performance of Mutual Funds," Ms. Nidhi Walia and Dr.
(Ms.) Ravi Kiran examined the operations of mutual fund companies to see whether mutual
fund managers may outperform by forecasting market movements. The goal of this study was
to ascertain whether factors like demographics (age, gender), investment patterns, and risk
tolerance could be used singly or in combination to distinguish between levels of men and
women's investment decisions and risk tolerance, as well as to develop some guidelines for
investment managers to design their investment schemes taking these viewpoints of
individuals into consideration.

According to the study, mutual fund companies have a duty to investors to deliver the best
returns possible by effectively utilising market timing and desired diversity. Portfolio
management for mutual funds is a really dynamic decision-making process where effective
fund managers are expected to conduct ongoing evaluation and monitoring. The operational
effectiveness of Mutual Fund managers has greatly increased because to deregulation and
ever-improving technologies, yet the gap between investors' perceptions of risk is growing.

The study's findings confirm the Efficient Market Hypothesis (EMH), which leads to the
conclusion that stock market movements are random and mutual fund managers are unable to
recognise comparable patterns in market movements. The conclusion is that the modern
investor is an experienced, well-groomed individual. Despite the amazing expansion of the
security market and the availability of high-quality Initial Public Offerings (IPOs), individual
investors still favour investments that fit their risk tolerance. Risk adverse persons, for
instance, opt for PPF, NSC, and life insurance policies, as well as fixed deposits with banks
and the post office. The majority of investors are observed to use some source and reference
groups for making judgements, therefore instances of blind investing are rare.

Sanjay Kumar Mishra and Manoj Kumar (2011) In their work "How Mutual Fund
Investors Objective and Subjective Knowledge Impacts Their Information Search and
Processing Behavior," Sanjay Kumar Mishra and Manoj Kumar (2011) made an effort to
demonstrate how Contrary to common perception, an empirical study on 268 Mutual Funds
found no differences in information search and information-processing behaviour between
people' subjective knowledge (SK) and their objective knowledge (OK), which is what is
actually kept in memory (MF). Investors claim there is no difference between OK and SK in

50
terms of how they affect the breadth and depth of information search and information
processing. According to the study, OK and SK have a considerable favorable impact on the
breadth and depth of information search and information-processing behavior, but there is no
discernible difference between how they affect behavior. The argument put forth is that
although while MF investors may engage in self-deception (also known as faux expertise)
and report having a high level of knowledge (or high SK), the effect of SK on real investment
behavior is similar to that of OK.

Sathya Swaroop Debasish In the article "Investigating Performance of Equity-based Mutual

Fund Schemes in Indian Scenario" by Sathya Swaroop Debasish, Mutual Funds claimed that
the performance of their products had become more complex in order to take into account
both return and risk measurements while giving proper consideration to investment goals.
The goal of the research was to examine the performance of a few Mutual Fund schemes
using models and metrics for the risk-return relationship. For the period of April 1996 to
March 2009, 23 plans offered by six private sector mutual funds and three public sector
mutual funds were examined (13 years). Mean return, beta risk, coefficient of determination,
Sharpe ratio, Treynor ratio, and Jensen Alpha have all been taken into consideration when
doing the analysis. According to the overall analysis, the best performing mutual funds are
Franklin Templeton and UTI, while BSL, HDFC, and LIC Mutual Funds perform poorly and
below average when compared to risk-return relationship models.

Deepak Aggrawal (2011) In his paper "Measuring Performance of Indian Mutual Funds,"
Deepak Aggrawal  discussed the liberalisation of the economy and the growth of the Indian
capital market. Both primary and secondary markets have undergone structural changes since
the 1992 creation of the Indian Capital Market and economic liberalisation. Mutual funds are
one of the major drivers of capital flows into emerging nations and a significant factor in the
globalisation of financial markets. The allocation of their investments and their investment
methods are little understood, despite their significance in emerging markets.

An overview of mutual fund activity in emerging markets was presented in this article. Their
size and asset allocation were described. Using empirical investigations on its valuation, the
paper analyses the pricing mechanism used by the Indian mutual fund industry. The data is
also examined at the levels of the fund manager and the fund investor. The study found that

51
people's saving and investing behaviors and, on the flip side, the trust and loyalty of the fund
manager and rewards both have an impact on the performance of the MF business in India.

Zhi Da, Pengjie GAO, and Ravi Jagannathan (2011) In their article "Impatient Trading,
Liquidity Provision, and Stock Selection by Mutual Funds," Zhi Da, Pengjie GAO, and Ravi
Jagannathan (2011) demonstrated how the ability of a Mutual Fund to select stocks can be
broken down into different parts, including liquidity-absorbing impatient trading and liquidity
provision. The study demonstrated that among funds trading in equities more susceptible to
information events, historical performance more accurately forecasts future performance.
Future gains from past winners are risk-adjusted after-fee excess returns of 35 basis points
per month. Impatient trading accounts for the majority of that superior performance. The
research also claims that liquidity provision is more crucial for younger income funds while
impatient trading is more crucial for growth-oriented funds.

52
 Chapter No. 4: Recent Trends in Mutual Funds

4.1

INTRODUCTION

A literature review or narrative review is a sort of review article that was covered in the
previous chapter. We will discuss recent trends in the mutual fund industry in this chapter.
The development of the industry as well as recent trends in HDFC Mutual Funds are
discussed.

4.2

Mutual Fund Industry AUM Rises 5.7% in 2022

The mutual fund sector's asset base increased by Rs 2.2 lakh crore in 2022 because to a
steady monthly rise in SIP (Systematic Investment Plan) flows. Data from the Association
of Mutual Fund Industry (AMFI) showed on Tuesday that the Asset Under Management
(AUM) of the mutual fund industry increased by 5.7% or Rs 2.2 lakh crore to a total of Rs
39.88 lakh crore in 2022. This was far less than the asset's gain of around 22%, or an
increase of nearly Rs 7 lakh crore, to Rs 37.72 lakh crore in 2021.

"Due to stock market uncertainties and shifting interest rate scenarios that affected the
overall economic environment, the industry grew more slowly in 2022. Naturally,
investors have adjusted their investments to include equity, debt, and hybrid plans,
according to Gopal Kavalireddi, Head of Research at FYERS. And a surge in the stock
markets served as the key support for the expansion of the 42-player mutual fund market
in 2021.

The advanced SIP flows, which reached Rs 13,000 crore for the second time in a row in
November, are mostly to blame for the growth in asset base in 2022. Also, according to
Akhil Chaturvedi, Chief Business Officer of Motilal Ostwal AMC, industry association
Amfi has significantly contributed to raising awareness of mutual funds among retail
investors.

SIP inflows averaged more than Rs 12,500 crore per month throughout the calendar year,
assisting investors in staying in the stock market and reaping the rewards of rupee cost
53
averaging. The consistent influx raises the possibility of durability in domestic inflows,
which have provided a potent counterbalance to selling by FPIs (Foreign Portfolio
Investors).

Moreover, Chaturvedi predicted that monthly SIPs will average around Rs 14,000 crore in
2023, maintaining the present run rate of input. Net inflows into all mutual funds totaled
Rs 71,443 crore in 2022, with positive inflows into equity schemes ($1.61 lakh crore),
index funds and ETFs ($1.65 lakh crore), and negative inflows into debt schemes ($1 lakh
crore) (Rs 2.5 lakh crore). According to estimates, there were 14.11 crore investors at the
end of the year. A total of 2.6 crore folios were added in 2021. Inflows into equity
programmes was Rs. 1.61 lakh crore in 2018 compared to Rs. 96,700 crore in 2021.

From March 2021, the schemes have continuously had net inflows; before to this, the
equity schemes had experienced outflows due to the Covid epidemic for eight straight
months.

This increase in flows into equity-oriented schemes in 2022 is due to a greater

understanding of equities and their capacity to generate wealth over a longer period of
time. "Retail investors are maturing, which is why equity inflows have been steady. 2022
was a turbulent year. Consumers have taken advantage of correctional possibilities to
average down and keep adding money, according to Radhika Gupta, MD and CEO of
Edelweiss AMC. Future analysts anticipate that retail participation from millennial
investors and economic growth will be the main factors driving the asset base's rise in
2023.

4.3

Recent Trend in HDFC Mutual Funds

The largest actively managed equities mutual fund in India at the moment is HDFC Mutual
Fund. It is a top-performing asset management company (AMC) in the nation. As of
March 31 2022, the company was in charge of assets of Rs. 4,32,084.97 crores.

 The revenue from operators has a CAGR of 17.41% during the previous five years.
 Operational income was up 20.08%.
 21.35% was the profit before taxes.

54
  The net profit was 21.07%.
 AUM was 25.86%, or assets under management.
 AUM for active equity was 32.27%.

Via 210 locations located in more than 200 Indian cities, the company provided service to
more than 75000 empanelled distribution partners.

55
 Chapter No. 5: Data Analysis & Interpretation

5.1

INTRODUCTION
The influence of deregulation on the Indian mutual fund business was covered in the
preceding chapter. The chapter also discusses the industry's different problems and
difficulties, the regulatory framework for the sector, and the function of mutual funds in the
mobilisation of household sector savings. The study of HDFC Asset Management Company
Ltd. (AMC), sponsors, trustees, and how to invest in HDFC Mutual Fund are all covered in
this chapter. The following three schemes have been chosen.

HDFC Flexi Cap Fund (HFCF)

HDFC Balanced Funds (HBF)

Tax Saver HDFC (HTS)

To learn about these funds' market performance and diversification in relation to one another.
as well as the top 10 mutual funds.

56
5.2

HDFC Asset Management Company Limited (AMC): An Overview

HDFC Asset Management Company Ltd (AMC) was established 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. With a total AUM of Rs.
407553 Crore as of March 31 2022, HDFC Asset Management Company Limited (HDFC
AMC) is the investment manager for HDFC Mutual Fund, the largest mutual fund in India.
Equities, Fixed Income, and Other asset classes are all included in the asset class mix at
HDFC Asset Management.

Shareholding Pattern – HDFC Asset Management Company Ltd.

Holder’s Name No of Shares % Share Holding

No of Shares 213300202 100%

Promoters 112179830 52.59%

Foreign Institutions 15538523 7.28%

N Bank Mutual Funds 4435985 2.08%

Others 3516768 1.65%

General Public 23343146 10.94%

Financial Institutions 19707645 9.24%

Foreign Promoter 34578305 16.21%

57
5.3

HISTORY OF HDFC ASSET MANAGEMENT COMPANY LIMITED

(AMC):

The investment manager for HDFC Mutual Fund (HDFC MF), the biggest mutual fund in
India with a total AUM of Rs. 407553 Crore as of March 31, 2022, is HDFC Asset
Management Company Limited (HDFC AMC). Equities, Fixed Income, and Other Asset
Classes are all represented in the asset class mix of HDFC AMC. Together with a diverse
distribution network made up of banks, independent financial advisors, and national
distributors, it has a nationwide network of branches. Home Development Financing
Corporation Limited's subsidiary is the Company. As of March 31, 2022, the company had
228 branches serving over 75,000 empanelled distribution partners. Home Development
Financing Corporation Ltd, the holding company, owned 52.60% of the equity share capital
of the corporation as of March 31, 2022. The Business is a joint venture between Standard
Life Investments Limited (SLI) and Housing Development Financing Corporation Limited
(HDFC). One of the top housing finance businesses in India is HDFC. With its presence in
home finance, banking, life and non-life insurance, asset management, real estate funds, and
education finance, the HDFC group has become a well-known financial behemoth in India.
As of June 30, 2018, the market capitalizations of the listed companies in the HDFC group
were US$46.87 billion (Rs. 3209.38 billion), US$80.19 billion (Rs. 5490.74 billion),
US$13.41 billion (Rs. 918.01 billion), and US$3.25 billion (Rs. 222.47 billion), respectively.
These companies include HDFC Limited, HDFC Bank Limited, HDFC Standard Life
Insurance Company Limited, and GRUH Finance Limited. One of the largest investment
firms in the world, Standard Life Aberdeen pic (often known as "Standard Life Aberdeen")
was formed in 2017 after the merger of Standard Life plc and Aberdeen Asset Management
PLC. As of December 31, 2017, SLI, which operates under the name Aberdeen Standard
Investments, managed 575.7 billion (Rs. 49666.50 billion) in assets, ranking it among the top
active managers in Europe. The market capitalization of Standard Life Aberdeen, which is
traded on the London Stock Exchange, was 9.70 billion (Rs. 876.72 billion) as of June 30th,
2018. Customers have access to a wide range of alternatives for income and wealth building
through the company's savings and investment products across a variety of asset classes. As
of March 31, 2019, the company offered 147 schemes, of which 115 were debt-oriented

58
(including 72 fixed maturity plans, or "FMPs") and 22 were equity-oriented. A total of 7
additional schemes and 3 liquid schemes (including exchange-traded schemes and funds of
fund schemes). This diverse product mix gives them the adaptability to function effectively
through different market cycles, cater to a wide range of clients from individuals to
institutions, address market fluctuations, reduce concentration risk in a particular asset class,
and work with diverse sets of distribution partners that help to expand its reach. The company
also offers portfolio management, segregated account services, discretionary non-
discretionary services, and consulting services to domestic and international institutions,
family offices, domestic corporations, trusts, and high net worth individuals (HNIs).

5.4

AN OVERVIEW OF SPONSOR AND TRUSTEE OF COMPANY

According to the terms of the trust deed signed on June 8, 2000, the HDFC Mutual Fund is
being established as a trust in accordance with the Indian Trusts Act, 1882, with Standard
Life Investments Limited and Housing Development Financial Corporation Limited (HDFC)
serving as the Sponsors and HDFC Trustee Company Limited serving as the Trustee. The
Indian Registration Act of 1908 has been used to register the Trust Deed. It was registered
with SEBI on June 30, 2003, with registration code MF/ 044/00/6.

SPONSORS

The sponsors of HDFC Mutual Fund are Housing Development Finance Corporation Limited
and Abrdn Investments Limited.

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

(HDFC LTD.)

The first specialised mortgage company in India, HDFC, was founded in 1977. It is India's
top housing finance company. It offers financial support to businesses, people, and
developers for the purchase or construction of residential real estate. Additionally, it offers
training, consulting, and services linked to real estate, such as property identification, sales,

59
and valuation. The main activity of HDFC in these areas is house finance. On of March 31,
2009, it had a clientele of over 10 lakh debtors, approximately 10 lakh depositors, over 1,
23,000 stockholders, and 50,000 deposit agents. As of March 31, 2009, the Company had
assets totaling Rs. 96,993 crore, and as of that date, it had approved and disbursed housing
loans totaling Rs. 237,450 crore and Rs. 191,806 crore, respectively4. International
syndicated loans, local term loans from banks and insurance companies, bonds and deposits,
as well as funding from organisations like the World Bank, IFC (Washington), USAID, DEG,
ADB, and KFW have all been used to raise money for it. For the fifteenth year in a row, it
has obtained the highest grade for its deposits programme. On October 23, 2000, the
Insurance Regulatory and Development Authority issued a Certificate of Registration to
HDFC Standard Life Insurance Company Limited, promoted by HDFC, allowing it to
conduct life insurance business in India. This made it the first private life insurance company
in the country. Together with the housing industry, it also established HDFC Standard Life
Insurance Company, the first insurance provider to receive a certificate in 2000.

ABRDN INVESTMENTS LIMITED

Investments Limited By Abrdn With investments in stocks, multi-asset, fixed income,

liquidity, sovereign wealth funds, real estate, and private markets, it is the biggest active asset
manager in the UK. The company's name was changed from Standard Life Aberdeen to
Abrdn in July 2021. The company's registered office is located in Edinburgh at 1 George
Street. Standard Life Investments (Holdings) Limited, which is in turn a wholly owned
subsidiary of Standard Life plc, is the parent company of Abrdn Investments Limited. It is the
Standard Life Investment Management Company. It is one of the largest investment
companies in the world, with roughly US$ 169 billion in assets under administration as of
March 31, 20095.

THE TRUSTEE

The HDFC Trustee Company Limited (the "Trustee") handles the trustee's duties. Its main
responsibility is to make sure that the AMC operates in compliance with the "SEBI (MF)
Regulation." In addition, it examines the AMC's actions.

60
Mehernosh Behram Kapadia, Dindayal Jalan, Vimal Bhandari, and Vedanthachari Srinivas
Rangan are the directors of HDFC Trustee Company Ltd.

We will look at several example funds and take into account their time of operation and their
investment objectives after having a thorough talk on the establishment of HDFC mutual
funds and its organisational structure. To determine the outcome of an empirical analysis,
efforts have been undertaken to collect an equal number of observations.

5.5

5 STEPS TO INVEST IN HDFC MUTUAL FUND

Step 1: Access your Demat Account online.

Step 2: Look for the HDFC Mutual Fund programme you want to invest in.

Step 3: Choose the best option based on your unique requirements and risk tolerance.

Step 4: Decide whether to make a lump sum investment or a systematic investing plan.

Step 5: Enter the amount you'd like to invest and click the "Invest Now" button to continue
with the payment method.

The investing procedure on the demat account is now complete. Your demat account will
display the HDFC Mutual Fund once your money has been successfully debited. In about 3 to
4 business days. If you picked the SIP option, the desired amount will be taken out each
month beginning on the day you made the initial payment.

5.6

OVERVIEW OF SELECTED THREE SCHEMES

HDFC BALANCE FUND

The debut of this plan occurred in August 2000. The Scheme's main goal is to provide capital
appreciation. Additionally, it tries to make money by investing in a portfolio made up of
stock, debt, and money market securities. For long-term investors who want both current

61
income and capital appreciation, the HDFC Balance Fund is a good option. With a balance
exposure to debt and money market securities, the mutual fund invests in equity and equity-
related instruments.

Types of Scheme Open Ended

Objective Capital Appreciation along with generation
of income from a combined portfolio of
equity and equity related and debts and
money instruments
Minimum Application Amount Rs 5000, Additional purchase at Rs. 1000/-,
Repurchase at Rs. 500/-
Benchmark CRISIL Balanced Fund – Aggressive Index
Schemes Dividend and Growth types

HDFC Balance Fund Key Highlights

1) Current NAV: The HDFC Balance Fund's current Net Asset Value as of February 15,
2023, is Rs. 324.62 for its Regular plan's Growth choice.

2) Returns: It has trailing returns of 6.49% in the first year, 17.29% in the third year, 11.02%
in the fifth year, and 17.9% in the last year (since launch). As opposed to this, category
returns for the same time period are: 0.47% (1 year), 11.05% (3 years), and 7.31%. (5 years).

3) Fund size: As of September 30, 2022, the HDFC Balance fund had assets under
management of Rs. 47230.12 crore.

4) Expense Ratio: As of August 31, 2022, the expense ratio for the fund's Regular plan is
1.54%.

5) Exit Load: For units valued at more than 15% of the investment, 1% will be changed for
redemption within a year. This is the exit load for the HDFC Balanced Advantage Fund.

62
HDFC FLEXI CAP FUND

A Flexi Cap mutual fund programme from HDFC Mutual Fund is HDFC Flexi Cap Fund.
Launched on August 12, 1994, this fund has been around for 28 years. The medium-sized
fund in its category, HDFC Flexi Cap Fund-Growth, with assets under management (AUM)
as of 31/12/2022 totaling 31,969 Crores. The expense ratio for the fund is 1.65%, which is
more than what the majority of comparable Flexi Cap funds charge.

Type of Scheme Open Ended

Objective To generate capital appreciation from a
portfolio, predominantly invested in equity
related instruments.
Benchmark Nifty 500 TRI
Exit Load 1% if redeemed within 1 year

 The last year's growth returns for the HDFC Flexi Cap Fund are 13.99%. It has
generated returns of 18.35% on average per year since start. Every three years, the
fund has doubled the amount invested in it.
 The HDFC Flexi Cap Fund-Growth scheme's ability to consistently provide returns is
comparable to that of the majority of funds in its category. Its capacity to limit losses
in a declining market is superior to average.
 The financial, energy, technology, healthcare, and capital goods sectors are where the
fund has the majority of its investments
 Compared to other funds in the category, it has acquired less exposure to the financial
and energy industries.
 ICICI Bank Ltd., HDFC Bank Ltd., Infosys Ltd., State Bank of India, and HCL
Technologies Ltd. are the fund's top 5 holdings.

HDFC TAX SAVER FUND

63
Investors who expect larger profits but also want to save money on their taxes in addition to
investing for at least three years. In addition, these investors need to be prepared for a three-
year lock-in period and the potential for modest losses on their assets.

Investment goal and benchmark: The fund's investment goal is to "produce capital
appreciation from a portfolio, comprising mostly of equities & linked instrument." It is
compared to the NIFTY 500 Total Return Index as a benchmark.

Asset Allocation and Portfolio Composition: The fund's asset allocation consists mostly of
equities, with a debt component of zero percent and cash and cash equivalents of 4.33%. The
top 3 sectors make up about 53.56% of the assets, compared to the top 10 equity holdings,
which make up about 58.16%. The fund invests across market capitalizations and primarily
adheres to a blend-oriented approach of investing, with about 0.0% of its assets going to
gigantic and big size corporations, 0.0% to mid cap companies, and 0.0% to small cap
companies.

64
Tax Implications: Short-term Capital Gains Tax - STCG is not applicable on ELSS schemes
because of their 3-year lock-in period. Section 80c of the Indian Income Tax Act permits tax
deductions for investments made in ELSS plans.

COMPARISON OF THIS THREE FUNDS

Fund Category Expenses NAV AUM(Cr.) Returns Returns

Name Ratio Since Last 5
inception Years (%)
(%)
HDFC Hybrid- 1.52 323.66 51,161 16.8 12.04
Balance Balance 11/9/2000
Fund Advantage
Fund
HDFC Equity- 1.65 1138.08 31,969 18.4 13.38
Flexi Fund Flexi Cap 01/01/1995
Fund
HDFC Equity- 1.82 811.37 9,859 17.8 12.08
Tax Saver ELSS 31/03/1996

5.7

TOP 10 HDFC MUTUAL FUNDS TO INVEST

Here are the top 10 HDFC mutual fund investment options you can look at that have provided
high returns to investors-

HDFC Small Cap Fund

HDFC Small Cap Fund Direct-Growth, an equity mutual fund scheme with an AUM of Rs.
11753 crores, is managed by Chirag Setalvad. The scheme's annualised return performance

65
for the previous year, the previous three years, and from its inception has been 3.21%,
85.12%, and 395.55%, respectively. The minimum investment via lump sum is Rs 5000,
whereas the minimum SIP investment in HDFC Small Cap Fund Direct-Growth is Rs 300.

 Average AUM: Rs 11753 crores;

 Category: Equity: Small Cap;
 Scheme Type: Equity Growth;
 Fund Type: Open-Ended;
 NAV-Rs78.837 as of 23 Jul 2022;
 Chirag Setalvad is the fund manager.
 SIP (Minimum Amount): 300 Indian Rupees
 SIP Frequency: Monthly
 Minimum Investment Amount lumpsum: INR. 5,000/- and any amount after that

1-year CAGR Returns- +3.21%

3-year CAGR Returns- +22.76%

5-year CAGR Returns- 14.59

HDFC Large and Mid-Cap Fund

HDFC Large and Mid-Cap Fund Direct-Growth is an Equity mutual fund scheme managed
by Mr Gopal Agrawal With an AUM of 5,817.02 Crores, the HDFC Large and Mid Cap
Fund Direct-Growth scheme's return performance during the past year, three years, and since
the scheme's debut is respectively 10.94%, 69.74%, and 183.97%. For HDFC Large and Mid-
Cap Fund Direct-Growth, the minimum SIP investment is $300, while the minimum lump
sum investment is $5,000.

 Category: Equity: Large & mid- Cap

 Scheme Type: Equity Growth
 Fund Type: Open-ended
 NAV ₹190.052 as on 23 Jul 2022
 Average AUM: ₹5,817.02 Crores
 Fund Manager: Mr Gopal Agarwal

66
  SIP (Minimum Amount): INR 300/- 
 SIP Frequency: Monthly
 Minimum Investment Amount lumpsum: INR. 5,000/- and any amount after that

1-year CAGR Returns- +10.94%

3-year CAGR Returns- +19.27%

5-year Annualized Returns- +19.27%

HDFC Mid-Cap Opportunities

The HDFC Mid-Cap Opportunities Direct Plan-Growth has given an annualized return of
22.51% in the last three years and 12.19% in the last five years. With an AUM of 29,095.04
Crores, the scheme's return performance during the past year, three years, and since its debut
is 8.66%, 83.95%, and 425.61%, respectively. The minimum investment amount via lump
sum is 5000, whereas the minimum SIP investment amount for HDFC Mid-Cap
Opportunities Direct Plan-Growth is 300.

 Category: Equity: 
 Scheme Type: Equity-Mid cap
 Fund Type: Open-ended
 NAV is ₹98.810 as on 23 Jul 2022
 Avg AUM: ₹5,817.02 Crores
 Fund Manager: Mr Gopal Agarwal
 SIP (Minimum Amount): INR 300/- 
 SIP Frequency: Monthly
 Minimum Investment Amount lumpsum: INR. 5,000/- and any amount after that

1-year CAGR Returns- +10.94%

3-year CAGR Returns- +19.27%

5-year Annualized Returns- 12.19%

67
HDFC Hybrid Equity Fund

HDFC Hybrid Equity Fund Direct Plan is a Hybrid mutual fund scheme from HDFC Mutual
Fund and is managed by Chirag Setalvad.With an AUM of 17,191.96 crores, the fund has
returned 6.21% over the past year, 50.31% for the past three years, and 189.16% since the
scheme's inception. For HDFC Small Cap Fund Direct-Growth, the minimum SIP investment
is $300, while the minimum lump sum investment is $5,000.

 Category: Aggressive Hybrid  

 Scheme Type: Hybrid Growth
 Fund Type: Open-ended
 NAV ₹83.732 as on 23 Jul 2022
 Avg AUM: ₹17,191.96 Crores
 Fund Manager: Mr Chirag Setalvad
 SIP (Minimum Amount): INR 300/- 
 SIP Frequency: Monthly
 Minimum Investment Amount lumpsum: INR. 5,000/- and any amount after that.

1-year CAGR Returns- +6.21%

3-year CAGR Returns- +14.54%

5-year Annualized Returns- 10.57

HDFC Equity Saving Fund

HDFC Equity Savings Direct Plan-Growth is a Hybrid mutual fund scheme managed by
multiple fund managers, including Krishan Kumar Daga, Anil Bamboli, Arun Agarwal and
Srinivasan Ramamurthy With an AUM of 2,502.00 Crores, the fund has generated returns of
5.33% over the past year, 33.98% for the past three years, and 149.07% since the scheme's
inception. The minimum investment amount via lump sum is 5000, whereas the minimum
SIP investment amount for the HDFC Equity Savings Direct Plan-Growth is 300.

68
  Category: Hybrid  
 Scheme Type: Hybrid -Equity Savings
 Fund Type: Open-ended
 NAV ₹52.433 as on 23 Jul 2022
 Avg AUM: ₹2,502.00 Crores
 Fund Manager: Krishan Kumar Daga, Anil Bamboli, Arun Agarwal and Srinivasan
Ramamurthy
 SIP (Minimum Amount): INR 300/- 
 SIP Frequency: Monthly
 Minimum Investment Amount- lumpsum: INR. 5,000/- and any amount after that

1-year CAGR Returns- +5.33%

3-year CAGR Returns- +10.23%

5-year Annualized Returns- 8.39%

HDFC Multi-Asset Fund

HDFC Multi Asset Fund Direct-Growth is a Hybrid mutual fund scheme managed by
fund managers Krishan Kumar Daga, Anil Bamboli, Arun Agarwal and Srinivasan
Ramamurthy. With an AUM of 1,476.10 Crores, the scheme's return performance for the
last year, the past three years, and the last sixteen years is 6.95%, 54.14%, and 165.54%,
respectively. For HDFC Multi Asset Fund Direct-Growth, the minimum SIP investment
is $300, while the minimum lump sum investment is $5,000.

 Category: Hybrid  

 Scheme Type: Hybrid -Multi-asset allocation

 Fund Type: Open-ended
 NAV ₹50.849 as on 23 Jul 2022
 Avg AUM: ₹1,476.10 Crores
 Fund Manager: Krishan Kumar Daga, Anil Bamboli, Arun Agarwal, Srinivasan
Ramamurthy 

69
  SIP (Minimum Amount): INR 300/- 
 SIP Frequency: Monthly
 Minimum Investment Amount -lumpsum: INR. 5,000/- and any amount after that

1-year CAGR Returns- +6.95%

3-year CAGR Returns- +15.50%

5-year Annualized Returns- +10.58%

HDFC Index Fund

HDFC Index Fund Nifty 50 Plan Direct-Growth is an Equity mutual fund managed by fund
managers Krishan Kumar Daga and Arun Agarwal. With an AUM of 5,940.60 Crores, the
fund's return performance during the last year, the past three years, and the scheme's start is
6.75%, 50.91%, and 207.02%, respectively. For HDFC Index Fund Nifty 50 Plan Direct-
Growth, the minimum SIP investment is $300, while the minimum lump sum investment is
$5,000.

 Category: Equity  
 Scheme Type: large Cap
 Fund Type: Open-ended
 NAV ₹157.744 as on 23 Jul 2022
 Avg AUM: ₹5,940.60 Crores
 Fund Manager: Krishan Kumar Daga and Arun Agarwal
 SIP (Minimum Amount): INR 300/- 
 SIP Frequency: Monthly
 Minimum Investment Amount lumpsum: INR. 5,000/- and any amount after that

 1-year CAGR Returns- +6.75%

3-year CAGR Returns- +14.69%

5-year Annualized Returns- +12.02%

70
HDFC Credit Risk Debt Fund

HDFC Credit Risk Debt Fund Direct-Growth is a Debt mutual fund scheme managed by fund
manager Shobhit Mehrotra. AUM for the fund is 8,576.32 crores. The scheme's return
performance for the past year, the past three years, and since its start totals 106.11 percent.
The minimum investment amount via lump sum is 5000, whereas the minimum SIP
investment amount for HDFC Credit Risk Debt Fund Direct-Growth is 300.Category: Debt  

 Scheme Type: Credit Risk

 Fund Type: Open-ended
 NAV ₹20.632 as on 23 Jul 2022
 Avg AUM: ₹8,576.32 Crores
 Fund Manager: Shobhit Mehrotra
 SIP (Minimum Amount): INR 300/- 
 SIP Frequency: Monthly
 Minimum Investment Amount lumpsum: INR. 5,000/- and any amount after that

1-year CAGR Returns- +4.02%

3-year CAGR Returns- +8.03%

5-year Annualized Returns- +7.50%

HDFC Index Fund

HDFC Index S&P BSE Sensex Direct Plan-Growth is an Equity mutual fund scheme
managed by fund managers Krishan Kumar Daga and Arun Agarwal. With an AUM of
3,390.39 Crores, the fund has returned 7.18% over the past year, 50.97% over the past three
years, and 215.50% since the scheme's debut. The minimum investment amount via lump
sum is 5000, whereas the minimum SIP investment amount for the HDFC Index S&P BSE
Sensex Direct Plan-Growth is 300.

 Category: Equity

71
  Scheme Type: Large Cap
 Fund Type: Open-ended
 NAV ₹516.271 as on 23 Jul 2022
 Avg AUM: ₹3,390.39 Crores
 Fund Manager: Krishan Kumar Daga and Arun Agarwal
 SIP (Minimum Amount): INR 300/- 
 SIP Frequency: Monthly
 Minimum Investment Amount lumpsum: INR. 5,000/- and any amount after that

1-year CAGR Returns- +7.18%

3-year CAGR Returns- +14.70%

5-year Annualized Returns- +12.75%

HDFC Hybrid Debt Fund

HDFC Hybrid Debt Fund Direct-Growth is a Hybrid mutual fund scheme managed by fund
managers Shobhit Mehrotra and Srinivasan Ramamurthy. The fund's AUM is 2,628.79
crores, and its return performance over the past year, three years, and since the scheme's
debut is 4.72%, 30.25%, and 136.22%, respectively. The minimum investment amount via
lump sum is 5000, whereas the minimum SIP investment amount for the HDFC Equity
Savings Direct Plan-Growth is 300.

 Category: Hybrid  
 Scheme Type: conservative Hybrid
 Fund Type: Open-ended
 NAV ₹62.538 as on 23 Jul 2022
 Avg AUM: ₹2,628.79 Crores
 Fund Manager: Shobhit Mehrotra and Srinivasan Ramamurthy
 SIP (Minimum Amount): INR 300/- 
 SIP Frequency: Monthly
 Minimum Investment Amount lumpsum: INR. 5,000/- and any amount after that

72
1-year CAGR Returns- +4.72%

3-year CAGR Returns- +9.20%

5-year Annualized Returns- 6.96%

5.8

Comparison of SBI Equity Hybrid Fund & HDFC Hybrid Equity Fund

The Balanced Fund-equity category includes both the HDFC Hybrid Equity Fund and the
SBI Equity Hybrid Fund. These schemes make use of both equity and debt instruments to
invest their acquired capital. The percentage of equity investments in the entire Portfolio,
however, is higher than 65%. These programmes are suitable for investors who desire
exposure to equity investments but do not have a high risk tolerance. While being balanced
funds, the HDFC Hybrid Equity Fund and the SBI Equity Hybrid Fund have different returns,
AUM, and other important factors. So, we shall examine how the two methods differ in this
essay.

SBI Equity Hybrid Fund vs HDFC Hybrid Equity Fund

Despite belonging to the same category, the HDFC Hybrid Equity Fund and the SBI Equity
Hybrid Equity Fund have some variances. The Fundamentals Section, the Performance
Section, and the Annual Performance Section are organised into four sections to help us
better understand the distinctions between the two schemes.

Basics Section

The basics portion includes the Scheme Category, Current NAV, Fincash Rating, and other
relevant components. The first thing to note is that both schemes fall under the same category
Hybrid Balanced – Equity as the scheme category. The HDFC Hybrid Equity Fund is rated as
a 5-Star Scheme by Fincash Ratings, while the SBI Equity Hybrid Fund is rated as a 4-Star
Scheme. When comparing the NAVs of the two schemes, the HDFC Hybrid Equity Fund
comes out on top. As of March 22, 2018, the NAV of the SBI Equity Hybrid Fund was
73
around INR 121, and the NAV of the HDFC Balanced Fund was approximately INR 142.
This is a comparison summary table for the basics part..

Parameters HDFC Hybrid Equity SBI Equity Hybrid Fund

Fund
NAV Rs 85.499 Rs 202.042
Net Assets (Cr) Rs 18,830 on 31st Jan 23 Rs 55,611 on 31st Jan 23
Launch Date 6 April 2005 19 Jan 2005
Rating 2 Star 4 Star
Category Hybrid Hybrid
Sub Cat. Hybrid Equity Hybrid Equity
Risk Moderately High Moderately High
Expense Ratio 1.77 1.61
Sharp Ratio 0.08 -0.37
Information Ratio 0 -0.57
Alpha Ratio 0 -2.56
Benchmark Not Available Not Available
Exit Load 0-1 Years (1%),1 Year and 0-12 Months (1%),12
above (NIL) Months and above (NIL)

Performance Section

The Compounded Annual Growth Rate (CAGR) returns at various time intervals are
compared in the performance section. The returns are compared over a variety of time
frames, such as one month, six months, three years, and so on. There is not much of a
difference between the returns produced by the two systems, as seen in the performance
comparison section. The returns of HDFC Hybrid Equity Fund, however, are frequently
larger than those of SBI Equity Hybrid Fund. The part on performance comparison is
summarised in the table below.

74
 Parameters HDFC Hybrid Equity SBI Equity Hybrid Fund
Fund
1 Month -0.6% -1.3%
3 Month 0.2% -2.6%
6 Month 4% -1.6%
1 Year 8.7% 1.4%
3 Year 15.4% 10.3%
5 Year 10.7% 10.2%
Since Launch 15.3% 14.6%

Yearly Performance Section

Yearly Performance contrasts the profits produced by the two strategies over a specific year.
The comparison of annual performance shows that SBI Equity Hybrid Fund performs better
in some years while HDFC Hybrid Equity Fund performs better in others. The comparison of
the annual performance segment is shown in the table below.

Parameters HDFC Hybrid Fund SBI Equity Hybrid Fund

2022 8.9% 2.3%
2021 25.7% 23.6%
2020 13.4% 12.9%
2019 7.5% 13.5%
2018 -2.8% -0.1%

Chapter No. 6: Conclusion

The following judgement is made in light of the information presented. Mutual fund
investments are made for a variety of purposes, such as schooling, marriage, home building,
retirement preparation, and tax minimization. The respondents' top two reasons for investing

75
in mutual funds were retirement planning (48.33%) and financing the education of their
children (56.33%). Tax preparation came in third on respondents' lists of priorities. Children's
education was given top priority by businesspeople (68.7%), secondly by professionals
(58.8%), and finally by the salaried class (53.7%). The paid class (41.3%) and retirees
(45.5%) were the groups most likely to marry their offspring: professionals (50%), followed
by the salaried class. Salary earners (44.6%), followed by businesspeople (36.1%) and
professionals (29.4%) favoured house construction. Retirees (47.1%), paid workers (43.8%),
and businesspeople (42.2%) valued tax planning the most Respondents prioritised children's
education (56.3%), retirement planning (48.3%), and tax preparation (40%) based on the
relationship between educational background and financial goal. In the relationship between
monthly income and savings goal, a clear pattern has emerged. When income increases, tax
preparation becomes increasingly crucial. The majority of respondents placed a high priority
on retirement planning, then on the education of their children.

We can see that individuals under the age of 40 prioritised their children's education, while
those between the ages of 40 and 60 prioritised retirement planning for mutual fund
investments when we look at the relationship between age and purpose of savings.

76
 Chapter No. 7: Suggestions

1. As seen by the 100% growth over the previous five years, HDFC Mutual Fund has an
opportunity here. Thus, we need to move in this path.

2. Many foreign asset management companies (AMCs), including Fidelity Investments,

located in the United States and with more than $1 trillion in assets under
management globally, are vying for market share in India. One of their problems is
this, and HDFC Mutual Fund should strive to lead all Indian mutual funds in this
regard.

77
 Chapter No. 8: Bibliography

1) https://en.wikipedia.org/wiki/Housing_Development_Finance_Corporation
2) https://www.hdfcfund.com/
3) https://www.moneycontrol.com/mutualfundindia/
4) https://www.creditmantri.com/
5) https://www.google.com/

78