MARKETTING RESEARCH PROJECT

COMAPANY : HDFC MUTUAL FUND

HDFC MUTUAL FUND 1

 PROJECT REPORT ON
A
MARKET BASED COMPARATIVE ANALYSIS
OF HDFC MUTUAL FUND WITH
OTHER MUTUAL FUND
IN CITY OF BARIELLY

A REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF MBA PROGRAM

SUBMITTED TO SUBMITTED BY :

Mr. Harshit Agarwal AMIT KUMAR SAXENA

Faculty of FIMT MBA 3rd sem

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 DECLARATION

I hereby declare that the project entitled A MARKET BASED

COMPARITIVE ANALYSIS OF HDFC MUTUAL FUND WITH
OTHER MUTUAL FUND IN CITY OF BARIELLY conducted at
HDFC MUTUAL FUND, has been prepared by me during the
academic year under the able guidance of my project mentor

I also declare that this project is the result of my effort and has not been
submitted to any other University or Institution for the award of any
degree, or personal favors whatsoever. All the details and analysis
provided in the report hold true to the best of my knowledge.

AMIT KUMAR SAXENA

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 CERTIFICATE BY GUIDE

This is to certify that the following student is submitting the project report
titled A market based comparative analysis of hdfc mtual fund with other
mutual fund in the city of Barielly. It is the original and bonafide work
submitted in partial fulfillment of the requirement for the award of MBA
program.

AMIT KUMAR SAXENA

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 ACKNOWLEDGEMENT

In the course of this project I got an insight into the mutual

fund industry, came to know a lot about the basic working of an asset
management company, understood how the mutual funds of different
fund houses are compared, learnt various computations and overall got a
preview of what a job in the mutual fund industry would entail.
First and foremost I am very proud to be a student of MBA and
am most grateful for having been given the chance to work with a reputed
company like HDFC MUTUAL FUND at the beginning of my career.
My training guide, Mr Manish srivastava Manager is the person
who has played a key role in the development of me as a person, in the
completion of this project and in being educated about the mutual fund
industry in general. Without the knowledge, attention and time that he has
bestowed on me, this project would simply have been impossible. He is
truly an inspiration for me and drove me towards working harder than my
expectations which simply made me more ready for the corporate life. He
truly gave me the corporate exposure I had thought of.
My acknowledgement would be incomplete if I didnt thank
my team mates. During the course of this SIP we have developed a

camaraderie which was very healthy and enjoyable. I am grateful for

everyones support and help when needed. Without them this training
would not have been the same.

AMIT KUMAR SAXENA

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 EXECUTIVE SUMMARY
The significant outcome of the government policy of
liberalization in industrial and financial sector has been the development
of new financial instruments. These new instruments are expected to
impart greater competitiveness flexibility and efficiency to the financial
sector. Growth and development of various mutual fund products in
Indian capital market has proved to be one of the most catalytic
instruments in generating momentous investment growth in the capital
market. There is a substantial growth in the mutual fund market due to a
high level of precision in the design and marketing of variety of mutual
fund products by banks and other financial institution providing growth,
liquidity and return.
In this context, prioritization, preference building and close
monitoring of mutual funds are essentials for fund managers to make this
the strongest and most preferred instrument in Indian capital market for
the coming years. With the decline in the bank interest rates, frequent
fluctuations in the secondary market and the inherent attitude of Indian
small investors to avoid risk, it is important on the part of fund managers
and mutual fund product designers to combine various elements of
liquidity, return and security in making mutual fund products the best
possible alternative for the small investors in Indian market.
There are various parameters which an investor should
consider before investing in mutual funds. The comparative analysis
between two mutual fund will help the investor to take appropriate
decision before investing in mutual funds.

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 TABLE OF CONTENTS

DECLARATION

CERTIFICATE BY GUIDE

ACKNOWLEDGEMENT

EXECUTIVE SUMMARY

TOPICS # PG NO.

1. INTRODUCTION 11

2. ORGANISATION OF MUTUAL FUND 14

3. CHARACTERISTICS OF MUTUAL FUND 15

4. OBJECTIVES OF MUTUAL FUND 15

5. STRUCTURE OF MUTUAL FUND 16

6. INVESTOR PROFILE 19

7. FACTORS IMPACTING THE INDUSTRY 21

8. OPPURTUNITIES & THREATS 23

9. BENEFITS OF MUTUAL FUND 25

10. CATEGORIES OF MUTUAL FUND 29

11. THE WAY TO INVEST IN MUTUAL FUND 34

12. LEGAL FRAMEWORK OF SEBI 36

13. REGULATORY OF MUTUAL FUND 37

14. MUTUAL FUND IN INDIA AT A GLANCE 39

15. COMPANY DETAIL 43

16. COMPETITOR ANALYSIS 55

17. COMPARATIVE ANALYSIS BETWEEN HDFC & TATA 59

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18. FUTURE GROWTH DRIVERS 64

19. RESEARCH ANALYSIS 66

20. QUESTIONNAIRE 70

21. LIMITATIONS 75

22. CONCLUSION 75

23. SUGGESTIONS 76

24. GLOSSARY 78

25. BIBLIOGRAPHY 79

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 PART - A
INDUSTRY OVERVIEW

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 INTRODUCTION

A Mutual Fund is a trust that pools the savings of a number of investors

who share a common financial goal. The money thus collected is then
invested in capital market instruments such as shares, debentures and
other securities. The income earned through these investments and the
capital appreciations realized are shared by its unit holders in proportion
to the number of units owned by them. Thus a Mutual Fund is the most
suitable investment for the common man as it offers an opportunity to
invest in a diversified, professionally managed basket of securities at a
relatively low cost.

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The flow chart below describes broadly the working of a Mutual Fund.

A Mutual Fund is a body corporate registered with the Securities and

Exchange Board of India (SEBI) that pools up the money from
individual/corporate investors and invests the same on behalf of the
investors/unit holders, in Equity shares, Government securities, Bonds,
Call Money Markets etc, and distributes the profits. In the other words, a
Mutual Fund allows investors to indirectly take a position in a basket of
assets.

Mutual Fund is a mechanism for pooling the resources by issuing

units to the investors and investing funds in securities in accordance
with objectives as disclosed in offer document. Investments in securities
are spread among a wide cross-section of industries and sectors thus the
risk is reduced. Diversification reduces the risk because all stocks may

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not move in the same direction in the same proportion at same time.
Investors of mutual funds are known as unit holders.
The investors in proportion to their investments share the profits or
losses. The mutual funds normally come out with a number of schemes
with different investment objectives which are launched from time to
time. A Mutual Fund is required to be registered with Securities

Exchange Board of India (SEBI) which regulates securities markets

before it can collect funds from the public.

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 ORGANISATION OF A MUTUAL FUND:-

There are many entities involved and the diagram below illustrates the
organizational set up of a Mutual Fund:

Mutual Funds diversify their risk by holding a portfolio of instead of

only one asset. This is because by holding all your money in just one
asset, the entire fortunes of your portfolio depend on this one asset. By
creating a portfolio of a variety of assets, this risk is substantially
reduced.
Mutual Fund investments are not totally risk free. In fact,
investing in Mutual Funds contains the same risk as investing in the
markets, the only difference being that due to professional management
of funds the controllable risks are substantially reduced. A very
important risk involved in Mutual Fund investments is the market risk.
However, the company specific risks are largely eliminated due to
professional fund management.

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CHARACTERISTICS OF A MUTUAL FUND:-

A Mutual Fund actually belongs to the investors who have pooled

their funds. The ownership of the mutual fund is in the hands of
the Investors.

A Mutual Fund is managed by investment professional and other

Service providers, who earns a fee for their services, from the
funds.

The pool of Funds is invested in a portfolio of marketable

investments.

The value of the portfolio is updated every day.

The investors share in the fund is denominated by units. The

value of the units changes with change in the portfolio value,
every day. The value of one unit of investment is called net asset
value (NAV).

The investment portfolio of the mutual fund is created according

to the stated Investment objectives of the Fund.

OBJECTIVES OF A MUTUAL FUND:-

To Provide an opportunity for lower income groups to acquire

without much difficulty, property in the form of shares.

To Cater mainly of the need of individual investors, whose means

are small?

To Manage investors portfolio that provides regular income,

growth, Safety, liquidity, tax advantage, professional management
and diversification.

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 STRUCTURE OF A MUTUAL FUND:-

THE STRUCTURE CONSISTS OF:

SPONSOR :
Sponsor is the person who acting alone or in combination with another
body corporate establishes a mutual fund. Sponsor must contribute at
least 40% of the net worth of the Investment managed and meet the
eligibility criteria prescribed under the Securities and Exchange Board of
India (Mutual Fund) Regulations, 1996. The sponsor is not responsible or
liable for any loss or shortfall resulting from the operation of the Schemes
beyond the initial contribution made by it towards setting up of the
Mutual Fund.

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TRUST:
The Mutual Fund is constituted as a trust in accordance with the
provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed
is registered under the Indian Registration Act, 1908.

TRUSTEE:
Trustee is usually a company (corporate body) or a Board of
Trustees (body of individuals). The main responsibility of the Trustee is
to safeguard the interest of the unit holders and ensure that the AMC
functions in the interest of investors and in accordance with the Securities
and Exchange Board of India (Mutual Funds) Regulations, 1996, the
provisions of the Trust Deed and the Offer Documents of the respective
Schemes. At least 2/3rd directors of the Trustee are independent directors
who are not associated with the Sponsor in any manner.

ASSET MANAGEMENT COMPANY (AMC):

The AMC is appointed by the Trustee as the Investment Manager
of the Mutual Fund. The AMC is required to be approved by the
Securities and Exchange Board of India (SEBI) to act as an asset
management company of the Mutual Fund. At least 50% of the directors
of the AMC are independent directors who are not associated with the
Sponsor in any manner. The AMC must have a net worth of at least 10
cores at all times.

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REGISTRAR AND TRANSFER AGENT:
The AMC if so authorized by the Trust Deed appoints the Registrar
and Transfer Agent to the Mutual Fund. The Registrar processes the
application form, redemption requests and dispatches account statements
to the unit holders. The Registrar and Transfer agent also handles
communications with investors and updates investor records.

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 INVESTORS PROFILE:

An investor normally prioritizes his investment needs before

undertaking an investment. So different goals will be allocated to
different proportions of the total disposable amount. Investments for
specific goals normally find their way into the debt market as risk
reduction is of prime importance, this is the area for the risk-averse
investors and here, Mutual Funds are generally the best option. One can
avail of the benefits of better returns with added benefits of anytime
liquidity by investing in open-ended debt funds at lower risk, this risk of
default by any company that one has chosen to invest in, can be
minimized by investing in Mutual Funds, as the fund managers analyze
the companies financials more minutely than an individual can do as
they have the expertise to do so.
Moving up the risk spectrum, there are people who
would like to take some risk and invest in equity funds/capital market.
However, since their appetite for risk is also limited, they would rather
have some exposure to debt as well. For these investors, balanced funds
provide an easy route of investment, armed with expertise of investment
techniques, they can invest in equity as well as good quality debt
thereby reducing risks and providing the investor with better returns
than he could otherwise manage. Since they can reshuffle their portfolio
as per market conditions, they are likely to generate moderate returns
even in pessimistic market conditions.
Next comes the risk takers, risk takers by their nature,
would not be averse to investing in high-risk avenues. Capital markets
find their fancy more often than not, because they have historically

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generated better returns than any other avenue, provided, the money was
judiciously invested. Though the risk associated is generally on the
higher side of the spectrum, the return-potential compensates for the risk
attached.

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 FACTORS IMPACTING THE INDUSTRY:

PEST Analysis:

Political Factors:
a) Government Regulation: SEBI regulates the industry and every
decision taken by them impact the industry very quickly.
b) Stable constituency: The mutual fund industry can take long term
decision if the government is stable.
c) Fiscal policy: tax structure plays a very important role in the
growth of the industry .If the tax structure will be high than there
will be less savings and investment. We have seen the interest rate
reducing continuously which boost the industry to sell products
which are better than the FDs, PF, NSC and KVPs.
Economic factors:
d) Market performance: The last five years witnessed a sharp rise in
the markets. The mutual fund industry basically works parallel with
the markets. Suppose, if the markets always be on downside, then
the investors will not be so comfortable to invest. This will reduce
the market size drastically.
e) Global Standards: As the industry will grow better, India being a
global economy, the MF industry has to match to the global mature
MF markets. They have to give due emphasis on product
innovation, cost reduction and penetration.
f) Inflation: price rise affects interest rate and reduces the chances of
investment.

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Social factors:
g) Consumer behavior : this is very unpredictable and based on
sentiments gets changed very frequently, which sometimes makes
selling of products difficult.
h) Income: The rich people are in bigger cities, so the mutual fund
industry is much more concentrated there.

Technological factors:
This is the era of information technology and due to net banking,
online transaction, online RTGS, clearing system helps the industry a lot.

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 OPPORTUNITIES AND THREATS:-

a) Real Estate sector boom : The Real estate has always been one of
the preferred investment avenues for the Indian investor. And what
better way for the smaller investors to participate in this boom than
to have a real estate mutual fund. AMC has to come up with the
structured products in this segment and should take competitive
advantage.

b) Penetration to Rural markets : The industry has to take themselves

to the local and rural markets to increase the market size. Also, the
cost of setting up business in bigger cities is huge compare to
smaller cities. This will reduce the AMC business cost.

c) Concentration of Corporate Investors : Mutual funds have become

overly attractive to corporate investors because of higher returns
than bank deposits and ability to distribute capital gains tax.
Corporate investors account for more than 55% of the AUM (by
value).It is clear that the lack of growth in funds under
management in India is because of the absence of long term
investors.Corporate investors take profits frequently resulting in
destruction in the compound growth in funds under management.
Distributors are forced to pass on more commissions to companies,
while fund companies are compelled to offer funds with wafer thin
margins.

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d) Retail investors lose out in the sense that they continue to pay
higher expenses.

e) Higher Returns of Alternative Debt Instruments: Government

guaranteed schemes provide risk free returns at competitive rates of
returns. This is why mutual funds have difficulty competing retail
business.

f) Huge scope for expansion: There are only 33 AMC which is very
small figure compared to the mature markets.

g) Distribution : One of the major factors impacting the growth of

mutual fund industry is the absence of any regulation in
distribution of mutual funds. Mutual fund investors need
distributors who are able to inform them about the efficacy of
distribution product for a particular risk profile and stage in life
cycle. Lack of distributor awareness and the absence of any
disclosures from distributors make misselling of Mutual Fund
products commonplace.

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 BENEFITS OF MUTUAL FUND

There are numerous benefits of investing in mutual funds and one of the
key reasons for its phenomenal success in the developed markets like US
and UK is the range of benefits they offer, which are unmatched by most
other investment avenues. We have explained the key benefits in this
section. The benefits have been broadly split into universal benefits,
applicable to all schemes and benefits applicable specifically to open-
ended schemes.

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1. AFFORDABILITY
A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc.
depending upon the investment objective of the scheme. An investor can
buy in to a portfolio of equities, which would otherwise be extremely
expensive. Each unit holder thus gets an exposure to such portfolios with
an investment as modest as Rs.500/-. This amount today would get you
less than quarter of an Infosys share! Thus it would be affordable for an
investor to build a portfolio of investments through a mutual fund rather
than investing directly in the stock market.

2. DIVERSIFICATION
The nuclear weapon in your arsenal for your fight against Risk. It simply
means that you must spread your investment across different securities
(stocks, bonds, money market instruments, real estate, fixed deposits etc.)
and different sectors (auto, textile, information technology etc.). This kind
of a diversification may add to the stability of your returns, for example
during one period of time equities might under perform but bonds and
money market instruments might do well enough to offset the effect of a
slump in the equity markets. Similarly the information technology sector
might be faring poorly but the auto and textile sectors might do well and
may protect your principal investment as well as help you meet your
return objectives.

3. VARIETY
Mutual funds offer a tremendous variety of schemes. This variety is
beneficial in two ways: first, it offers different types of schemes to

HDFC MUTUAL FUND 25

investors with different needs and risk appetites; Secondly, it offers an
opportunity to an investor to invest sums across a variety of schemes,
both debt and equity. For example, an investor can invest his money in a
Growth Fund (equity scheme) and Income Fund (debt scheme) depending
on his risk appetite and thus create a balanced portfolio easily or simply
just buy a Balanced Scheme.

4. PROFESSIONAL MANAGEMENT
Qualified investment professionals who seek to maximize returns and
minimize risk monitor investor's money. When you buy in to a mutual
fund, you are handing your money to an investment professional that has
experience in making investment decisions. It is the Fund Manager's job
to (a) find the best securities for the fund, given the fund's stated
investment objectives; and (b) keep track of investments and changes in
market conditions and adjust the mix of the portfolio, as and when
required.

5. TAX BENEFITS
Any income distributed after March 31, 2002 will be subject to tax in the
assessment of all Unit holders. However, as a measure of concession to
Unit holders of open-ended equity-oriented funds, income distributions
for the year ending March 31, 2003, will be taxed at a confessional rate of
10.5%. In case of Individuals and Hindu Undivided Families a deduction
upto Rs. 9,000 from the Total Income will be admissible in respect of
income from investments specified in Section 80L, including income
from Units of the Mutual Fund. Units of the schemes are not subject to
Wealth-Tax and Gift-Tax.

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6. REGULATIONS
Securities Exchange Board of India (SEBI), the mutual funds regulator
has clearly defined rules, which govern mutual funds. These rules relate
to the formation, administration and management of mutual funds and
also prescribe disclosure and accounting requirements. Such a high level
of regulation seeks to protect the interest of investors.

7. CONVENTIONAL ADMINISTRATION
Investing in a Mutual Fund reduces paperwork and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with
brokers and companies. Mutual Funds save your time and make
investing easy and convenient. Return Potential Over a medium to long-
term; Mutual Funds have the potential to provide a higher return as they
invest in a diversified basket of selected securities.

8. LIQUIDITY
In open-ended mutual funds, you can redeem all or part of your units any
time you wish. Some schemes do have a lock-in period where an investor
cannot return the units until the completion of such a lock-in period.

9. CONVENIENCE
An investor can purchase or sell fund units directly from a fund, through
a broker or a financial planner. The investor may opt for a Systematic
Investment Plan (SIP) or a Systematic Withdrawal Advantage Plan
(SWAP). In addition to this an investor receives account statements and
portfolios of the schemes.

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 CATEGORIES OF MUTUAL FUNDS:

Mutual Fund can be classified as follows:-

Based on the Structure:-

1. OPEN-ENDED MUTUAL FUNDS:

The holders of the shares in the Fund can resell them to the issuing
Mutual Fund company at the time. They receive in turn the net assets

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 value (NAV) of the shares at the time of re-sale. Such Mutual Fund
Companies place their funds in the secondary securities market. They
do not participate in new issue market as do pension funds or life
insurance companies. Thus they influence market price of corporate
securities. Open-end investment companies can sell an unlimited
number of Shares and thus keep going larger. The open-end Mutual
Fund Company Buys or sells their shares. These companies sell new
shares NAV plus a Loading or management fees and redeem shares at
NAV.In other words, the target amount and the period both are
indefinite in such funds.

2. CLOSED-ENDED MUTUAL FUNDS:-

A closedend Fund is open for sale to investors for a specific period,

after which further sales are closed. Any further transaction for
buying the units or repurchasing them, Happen in the secondary
markets, where closed end Funds are listed. Therefore new investors
buy from the existing investors, and existing investors can liquidate
their units by selling them to other willing buyers. In a closed end
Funds, thus the pool of funds can technically be kept constant.

The asset management company (AMC) however, can buy out the
units from the investors, in the secondary markets, thus reducing the
amount of funds held by outside investors. The price at which units can
be sold or redeemed Depends on the market prices, which are
fundamentally linked to the NAV. Investors in closed end Funds receive
either certificates or Depository receipts, for their holdings in a closed
end mutual Fund.

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Based on their investment objective:

1. EQUITY FUNDS: These funds invest in equities and equity related

instruments. With fluctuating share prices, such funds show volatile
performance, even losses. However, short term fluctuations in the market,
generally smoothens out in the long term, thereby offering higher returns
at relatively lower volatility. At the same time, such funds can yield great
capital appreciation as, historically, equities have outperformed all asset
classes in the long term. Hence, investment in equity funds should be
considered for a period of at least 3-5 years. It can be further classified as:
i) Index funds- In this case a key stock market index, like BSE
Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index
both in terms of composition and individual stock weightages.
ii) Equity diversified funds- 100% of the capital is invested in equities
spreading across different sectors and stocks.
iii) Dividend Yield funds- It is similar to the equity diversified funds
except that they invest in companies offering high yield dividends.

iv) Thematic funds- Invest 100% of the assets in sectors which

are related through some theme.
e.g. -An infrastructure fund invests in power, construction, cements
sectors etc.
v) Sector funds- Invest 100% of the capital in a specific sector.
e.g. - A banking sector fund will invest in banking stocks.
vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the
investors.

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2. BALANCED FUNDS: Their investment portfolio includes both debt
and equity. As a result, on the risk-return ladder, they fall between equity
and debt funds. Balanced funds are the ideal mutual funds vehicle for
investors who prefer spreading their risk across various instruments.
Following are balanced funds classes:
i) Debt-oriented funds -Investment below 65% in equities.
ii) Equity-oriented funds -Invest at least 65% in equities, remaining in
debt.

3. DEBT FUND: They invest only in debt instruments, and are a good
option for investors averse to idea of taking risk associated with equities.
Therefore, they invest exclusively in fixed-income instruments like
bonds, debentures, Government of India securities; and money market
instruments such as certificates of deposit (CD), commercial paper (CP)
and call money. Put your money into any of these debt funds depending
on your investment horizon and needs.
i) Liquid funds- These funds invest 100% in money market instruments,
a large portion being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government
securities of and T-bills.
iii) Floating rate funds - Invest in short-term debt papers. Floaters invest
in debt instruments which have variable coupon rate.

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iv) Arbitrage fund- They generate income through arbitrage
opportunities due to mis-pricing between cash market and derivatives
market. Funds are allocated to equities, derivatives and
money markets. Higher proportion (around 75%) is put in money
markets, in the absence of arbitrage opportunities.
v) Gilt funds LT- They invest 100% of their portfolio in long-term
government securities.
vi) Income funds LT- Typically, such funds invest a major portion of the
portfolio in long-term debt papers.
vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt
and an exposure of 10%-30% to equities.
viii) FMPs- fixed monthly plans invest in debt papers whose maturity is
in line with that of the fund.

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 THE WAY TO INVEST IN MUTUAL FUND

Mutual funds normally come out with an advertisement in newspapers

publishing the date of launch of the new schemes. Investors can also
contact the agents and distributors of mutual funds who are spread all
over the country for necessary information and application forms. Forms
can be deposited with mutual funds through the agents and distributors
who provide such services. Now days, the post offices and banks also
distribute the units of mutual funds. However, the investors may please
note that the mutual funds schemes being marketed by banks and post
offices should not be taken as their own schemes and no assurance of
returns is given by them. The only role of banks and post offices is to
help in. distribution of mutual funds schemes to the investors. Investors
should not be carried away by commission/gifts given by
agents/distributors for investing in a particular scheme. On the other hand
they must consider the track record of the mutual fund and should take
objective decision.

ONE TIME INVESTMENT

The amount that has to be invested in onetime is known as Onetime

Investment. The investor has to pay the whole amount at once. The
minimum amount is Rs. 5000 and maximum is as per the investors
Choice. This investment is generally preferred for the business man who
Are able to pay at one time.

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SYSTEMATIC INVESTMENT PLAN (SIP)

The amount that has to be invested through same monthly installment is

known as Systematic Investment Plan. The investor has to pay the
minimum amount Rs.1000 monthly for all equity and balanced schemes
like that for 6months. And Rs.500 monthly for Tax Saver scheme like that
for 12 months. The minimum amount that the investor has to invest is
Rs6000 and maximum as per their choice. This type of investment is
generally preferred for the salaried people.

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 LEGAL FRAME WORK OF SEBI & AMFI

REGULATORY ASPECTS OF MUTUAL FUNDS:

In the year 1992, Securities and exchange Board of India (SEBI) Act was
passed. The objectives of SEBI are to protect the interest of investors in
securities and to promote the development of and to regulate the
securities market.
SEBI formulates policies and regulates the mutual funds to protect
the interest of the investors.

GUIDELINES OF SEBI & AMFI

Mutual funds are regulated by the SEBI (mutual Fund) Regulations,

1996.
SEBI is the regulator of all funds, except offshore funds.
Bank-sponsored mutual funds are jointly regulated by SEBI and RBI.
The bank-sponsored fund cannot provide a guarantee without RBI
Permission.
RBI regulates money and government securities markets, in which
mutual Funds are invested.
Listed mutual funds are subject to the listing regulations of stock
exchange.
Since the AMC and Trustee Company are companies, the Department
of Company affairs regulate them. They have to send periodic reports
to the ROC (Register of Companies) and the CLB (Company Law
Board) is the appellate authority.
HDFC MUTUAL FUND 35
 Investors cannot sue the trust, as they are the same as the trust and
cant sue themselves.
UTI does not have a separate sponsor and AMC.
UTI is governed by the UTI Act, 1963 and is voluntarily under SEBI
Regulations.
UTI can borrow as well as lend also engage in other financial services
activities.
Only NISM (AMFI) certified agents can sell Mutual Fund units.
Mutual Funds Company is required to update the NAV of the scheme
on the NISM (AMFI) website on a daily basis in case of open-ended
scheme.

REGULATORY OF MUTUAL FUND IN INDIA

SEBI
The capital market regulates the mutual funds in India. SEBI requires all
mutual funds to be registered with them. SEBI issues guidelines for all
mutual funds operations-investment, accounts, expenses etc. Recently, it
has been decided that Money Market Mutual Funds of registered mutual
funds will be regulated by SEBI through (Mutual Fund) Regulations
1996.

RBI

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RBI, a supervisor of the Banks owned Mutual Funds-As banks in India
come under the regulatory Jurisdiction of RBI, banks owned funds to be

under supervision of RBI and SEBI. RBI has supervisory responsibility

over all entities that operate in the money markets.

MINISTRY OF FINANCE (MOF)

Ministry of Finance ultimately supervises both the RBI and the SEBI and
plays the role of apex authority for any major disputes over SEBI
guidelines.

COMPANY LOW BOARD

Registrar of companies is called Company Low Board. AMCs of Mutual
Funds are companies registered under the companies Act 1956 and
therefore answerable to regulatory authorities empowered by the
Companies Act.

STOCK EXCHANGE
Stock Exchanges are Self-regulatory organizations supervised by SEBI.
Many closed ended funds of AMCs are listed as stock exchanges and are
traded like shares.

OFFICE OF THE PUBLIC TRUSTEE

Mutual Fund being public trust is governed by the Indian Trust Act 1882.
The Board of trustee or the Trustees Company is accountable to the office
of public trustee, which in turn reports to the Charity commissioner.

HDFC MUTUAL FUND 37

 MUTUAL FUNDS IN INDIA AT A GLANCE

The mutual fund industry in India started in 1963 with the

formation of Unit Trust of India, at the initiative of the Government of
India and Reserve Bank of india. The history of mutual funds in India can
be broadly divided into four distinct phases :-

Ph
as
e-I

-II
ase
Ph

Phases of Mutual
Fund Industry in
India

Ph
as
IV e-
se- III
a
Ph

HDFC MUTUAL FUND 38

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of

Parliament. It was set up by the Reserve Bank of India and functioned
under the Regulatory and administrative control of the Reserve Bank of
India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and

administrative control in place of RBI. The first scheme launched by UTI

was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of
assets under management.

Second Phase 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by
public sector banks and Life Insurance Corporation of India (LIC) and
General Insurance Corporation of India (GIC). SBI Mutual Fund was the
first non- UTI Mutual Fund established in June 1987 followed by
Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund
(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90),
> Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in
June 1989 while GIC had set up its mutual fund in December 1990. At
the end of 1993, the mutual fund industry had assets under management
of Rs.47,004 crores.

Third Phase 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the
Indian mutual fund industry, giving the Indian investors a wider choice of
HDFC MUTUAL FUND 39
fund families. Also, 1993 was the year in which the first Mutual Fund
Regulations came into being, under which all mutual funds, except UTI
were to be registered and governed. The erstwhile Kothari Pioneer (now
merged with Franklin Templeton) was the first private sector mutual fund
registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a

more comprehensive and revised Mutual Fund Regulations in 1996. The
industry now functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with

many foreign mutual funds setting up funds in India and also the industry
has witnessed several mergers and acquisitions. As at the end of January
2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.
The Unit Trust of India with Rs.44,541 crores of assets under
management was way ahead of other mutual funds.

Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the Specified
Undertaking of the Unit Trust of India with assets under management of
Rs.29,835 crores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes.
The Specified Undertaking of Unit Trust of India, functioning
under an administrator and under the rules framed by Government of

HDFC MUTUAL FUND 40

India and does not come under the purview of the Mutual Fund
Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI,
PNB, BOB and LIC. It is registered with SEBI and functions under the
Mutual Fund Regulations. With the bifurcation of the erstwhile UTI
which had in March 2000 more than Rs.76,000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming
to the SEBI Mutual Fund Regulations, and with recent mergers taking

place among different private sector funds, the mutual fund industry has
entered its current phase of consolidation and growth. As at the end of
September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421 schemes.
The graph indicates the growth of assets over the years.

Note :

HDFC MUTUAL FUND 41

Erstwhile UTI was bifurcated into UTI Mutual fund and the Specified
Undertaking of the Unit Trust of India effective from February 2003. The
Assets under management of the Specified Undertaking of the Unit Trust
of India has thereof been executed from the total assets of the industry as
a whole from February 2003 onwards.

PART B
COMPANY DETAIL

HDFC MUTUAL FUND 42

 MAN WITH A MISSION

If ever there was a man with a mission it was

Hasmukhbhai Parekh, Founder and Chairman-
Emeritus, of HDFC Group who left this earthly
abode on November 18, 1994. Born in a
traditional banking family in Surat, Gujarat, Mr.
Parekh started his financial career at Harkisandass
Lukhmidass a leading stock broking firm. The
firm closed down in the late seventies, but, long
before that, he went on to become a towering
figure on the Indian financial scene.
In 1956 he began his lifelong financial affair with the economic world, as
General Manager of the newly-formed Industrial Credit and Investment
Corporation of India (ICICI). He rose to become Chairman and continued
so till his retirement in 1972. At the ripe age of 60, Hasmukhbhai started
his second dynamic life, even more illustrious than his first. His vision
for mortgage finance for housing gave birth to the Housing Development

HDFC MUTUAL FUND 43

Finance Corporation it was a trend-setter for housing finance in the
whole Asian continent.
He was also a writer in his own right. There are over 200 published
articles by him...

In 1992, the Government of India

honoured him with the Padma Bhushan
Award. The London School of
Economics & Political Science
conferred on him an Honorary
Fellowship.

Mr. H.T. PAREKH is conferred the

He was one of the Founder Members of
PadmaBhushan by the Government
of India in the year 1992.
the Centre for Advancement of
Philanthropy, and its Chairman till 1993.
He took active interest in the Bombay Community Public Trust, designed
specifically to serve the needs of the citys underprivileged citizens.
When Mr. Deepak Parekh took over as Chairman from Hasmukhbhai, he
said: Taking over from H.T. Parekh is a formidable task; his vision
brought about not only an institution, but an entire concept which has
proved itself to be of lasting importance.
Today we are the largest residential mortgage finance institution in India,
with a net worth of Rs. 2,703 cores as of March 31, 2006 and an asset
base of over Rs. 22,000 cores. We also aim to increase the flow of
resources to the housing sector by integrating the housing finance sector
with the overall domestic financial markets.

HDFC MUTUAL FUND 44

Over a span of 25 years, HDFC has become the pioneer in housing
finance in India and made it possible for over two million Families to
own their homes, through housing loans worth over Rs. 42,000 cores.

ABOUT COMPANY HDFC :-

VISION STATEMENT :-

HDFC MUTUAL FUND 45

ORGANISATION STRUCTURE:-

The HDFC AMC has the below given organisational structure and the
different functional department are headed by different people.

Managing Director
Mr. Milind Barve

CIO-ED CFO
Mr. Prashant Jain Mr. Rahul Bhandari

Head Operations Head Client Servicing

Mr. Suresh Babu Mr. John Mathews

Head Compliance Head Sales

Mr. Yezdi Khariwala Mr. Kiran Kaushik

Head PMS Head HR

Mr. Pankaj Chopra Mr. Alok
HDFC MUTUAL FUNDSheopurkar 46
LINE OF BUSINESS :

PMS
HDFC AMC
Mutua
l Fund

Corporat
Retail e
Business

HDFC MUTUAL FUND 47

HDFC ASSET MANAGEMENT COMPANY LIMITED
(AMC)

Internal Structure & processes:

Management Team:
HDFC Trustee company Limited: a company incorporated under the
Companies Act, 1956 is the Trustee to the Mutual Fund vide the Trust
deed dated June 8, 2000, as amended from time to time. HDFC Trustee
Company Limited is a wholly owned subsidiary of HDFC Limited.

HDFC Asset Management Company Ltd (AMC) was incorporated under

the Companies Act, 1956, on December 10, 1999, and was approved to
act as an Asset Management Company for the HDFC Mutual Fund by
SEBI vide its letter dated July 3, 2000. The registered office of the AMC
is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Backbay
Reclamation, Churchgate, Mumbai-400020. In terms of the Investment
Management Agreement, the Trustee has appointed the HDFC Asset

HDFC MUTUAL FUND 48

Management Company Limited to manage the Mutual Fund. The paid up
capital of the AMC is Rs. 45.161crore.

The present equity shareholding pattern of the AMC is as follows :

Particulars % of the paid up equity capital

HDFC Limited 60
Standard Life Investments Limited 40

Company Ltd.
Standard Life
HDFC Ltd.
Management
Investments
60.0% Asset
HDFC 40.0%

HDFC Mutual Fund

HDFC Asset Management Company (AMC) is the first

AMC in India to have been assigned the CRISIL Fund House Level 1
rating. This is its highest Fund Governance and Process Quality Rating
which reflects the highest governance levels and fund management
practices at HDFC AMC It is the only fund house to have been assigned

HDFC MUTUAL FUND 49

this rating for two years in succession. Over the past, we have won a
number of awards and accolades for our Performance.
HDFC Mutual Fund is one of the largest mutual funds
and well-established fund house in the country with consistent and above
average fund performance across categories since its incorporation on
December 10, 1999.
While our past experience does make us a veteran, but
when it comes to investments, we have never believed that the experience
is enough. The single most important factor that drives HDFC Mutual
Fund is its belief to give the investor the chance to profitably invest in the
financial market, without constantly worrying about the market swings.

To realize this belief, HDFC Mutual Fund has set up

the infrastructure required to conduct all the fundamental research and
back it up with effective analysis. Our strong emphasis on managing and
controlling portfolio risk avoids chasing the latest fads and trends.

INTERNAL ANALYSIS OF HDFC AMC

HDFC has grown in leaps and bounds after taking Zurich in 2003 , now it
is the third largest private company in Asset management company. In
Barielly, HDFC has nearly 20% of the total AUM and according to the
CAMS report, in AUM under CAMS we have 35% market share and we
do gross sales of 70% every month.

HDFC AMC has 4% market of the total asset management business.

The pie-chart shows the market share of the other AMCs and of HDFC.

STRENGTHS AND WEAKNESSES :

HDFC MUTUAL FUND 50
STRENGTHS:

a) Wide range of products: The AMC has got good number of

differentiated products in the entire asset class.

b) Consistent performance: The funds have given consistent

performance over 10 years.

c) Experienced team: HDFC has fund managers with rich

experience whose consistent performance has made this
AMC CRISIL level one fund house.
d) Strong Compliance: The AMC has very strong compliance
of industry set rules to protect the interest of the investors.

e) Risk management team: AMC has a separate risk

management team which constantly monitor the risk
exposure related to different fund management.

WEAKNESSES:

a) Restrictive reach: HDFC business is more concentrated on

urban areas. HDFC has very limited offices.

b) Less Aggressive in Marketing and execution: HDFC does

match the aggressiveness required in the industry and are
slow in execution.

HDFC MUTUAL FUND 51

 ACHIEVEMENT AND AWARDS

HDFC Prudence fund has been ranked ICRA-MFR 1, and Has Been
awarded the Gold Award for Best Performance in the category of
Open Ended Balanced Scheme for one year Period Ending Dec 31,
2005.

HDFC Tax saver fund has been ranked ICRA-MFR 1, and Has Been
Silver award for Second Best Performance in the category of Open
Ended Equity Linked Saving Scheme(ELSS) for Three year Period
Ending Dec 31, 2005.

HDFC MIP~LTP has been ranked ICRA-MFR 1, and Has been

awarded the Gold Award For Best Performance in the category of
Open Ended Marginal Equity Scheme for one year Period Ending
Dec 31, 2005.

HDFC PROVIDES:-

Personalized Service
We believe in providing a personalized service enabling individual
attention to achieve your investment goal.

Professional Advice
We provide professional advice on equity and debt portfolio with an
objective to provide consistent long-term return while taking calculated

HDFC MUTUAL FUND 52

market risk. Our approach helps you to build a proper mix of portfolio,
not just to promote one individual product. Hence your long term
objectives are best served.

Long-term Relationship
We believe steady wealth creation requires long-term vision, it cant be
achieved in a short span of time. To achieve this one needs to take
advantage of short-term market opportunity while not loosing sight of
long term objective. Hence we partner all our clients in their objective of
achieving their long-term Vision.

Access to Research Reports

Through us, you will have access to certain research work of CRISIL, so
that you will benefit from the expert knowledge of economists and
analysts of one of the leading financial research and rating company of
India. This third party research gives you a comfort of getting unbiased
advice to make a proper decision for your investment.

Transparency & Confidentiality

Through email you will get a regular portfolio statement from us. You
will also be given a web access to view at your convenience the details of
your investments and its performance. Access to your portfolio is
restricted to you and our monitoring system enables us to detect any
unauthorized access to your investments.

Flexibility

HDFC MUTUAL FUND 53

To facilitate smooth dealing and consistent attention, all our clients will
be serviced by their respective relationship executive. This allows us to
provide tailor made advice to achieve your investment objective.

Hassle Free Investment

Our relationship person will provide you with a customized service at
your convenience. We take care of all the administrative aspects of your
investments including submission of application forms to fund houses
along with monthly reporting on overall state of your investments and
performance of your portfolio.

Mutual funds are all the rage today simply because people have
realized the symbiotic relationship that an investor shares with the asset
management companies as compared to the ever volatile and ruthless world
of SENSEX.

COMPETITOR ANALYSIS:-

Tata Mutual Fund :-

Tata Asset Management Private Limited is very old house
and is well placed in the market.
Tata Mutual Fund has AUM of Rs.25894 Crores.

Size and Growth:

Tata MF opened its office in Barielly three years ago. Since than it has done
good business. Tata have brand advantage in Barielly, as investors trust

HDFC MUTUAL FUND 54

TATA group. Barielly which is a market of over Rs 500cr, Tata MF has
nearly 10-12% of the market share there.

Internal Structure & processes:

Tata Mutual Fund has been constituted as a trust on 9 th May 1995 in
accordance with the provisions of the Indian Trusts Act, 1882 with Tata Sons
Limited (TSL) and Tata Investment Corporation Limited (TICL) as the
sponsers and the settlers. The Mutual Fund was registered with SEBI on 30th
Tata Mutual Fund (TMF) has been constituted as a Trust in accordance with
the provisions of the Indians Trusts Act, 1882 and is registered as a Trust
under The Indian Registration Act, 1908. TMF was registered with Securities
& Exchange Board of India (SEBI) and commenced operation by

launching its first scheme on 30th August 1995. Tata Sons Limited (TSL) and
Tata Investment Corporation Ltd (TICL) are the Sponsers and the Settlors.

Share Holding Pattern Of Tata Asset Management Ltd (TAML)

HDFC MUTUAL FUND 55

 Ltd.
Tata sons
Tata Investment
Ltd.
Management
Corporation Ltd
67.91% Asset
Tata 32.09%

Tata Mutual Fund

Board Of Directors:-

Board Of Tata Trustee Company Private Limited

Mr. S.M. Datta (Chairman)
Mr. I. Hussain (Director)
Mr. J.N. Godrej (Director)
Mr. Nowroze J.N. Vazifdar (Director)

Board Of Directors Of Tata Asset Managment Limited:-

Mr. F.K. Kavarana (Chairman)
Mr. Ved Prakash Chaturvedi (Managing Director)
Mr. A.R. Gandhi (Director)
Mr. M.L. Apte (Director)
Mr. A. Hasib (Director)

Line of Business:

HDFC MUTUAL FUND 56

 Tata Mutual Fund

Mutual fund Portfolio

business management

Strengths & Weaknesses:-

Strengths:
a) Trusted Parent company: Tata Asset Management Ltd is a part of
the Tata group, one of India's largest and most respected industrial
groups.
b) High payout structure: They pay more incentive and brokerage to
there distributors in comparison of other AMCs, which gives them
some edge to attract the distributors to sell the product.

Weaknesses:
a) Focussed on one product: At Barielly, Tata MF is focussed on
only one product that is Tata Infrastructure Fund which some how
narrows their product diversification.
b) Lack of Aggression: The team in Barielly lack aggression and
activeness, they do not push there products too much in the
markets. Products get sold of there brand presence.
c) Services: The AMC is not giving good service and the response
time is slow.

Projected Future Strategy:

HDFC MUTUAL FUND 57

To meet the competition, Tata mutual fund will have to expand there
business and penetration by increasing the number of branches and
manpower.

Distributor/Business model:
The distributor model is divided into two parts that is IFAs and Banks and
national distributors. Then the IFAs are categorised in two categories i.e.
preferred and basic. Preferred gets 2.25% brokerage and basic gets
2.10%. For making preferred partner there is no such set of rule. Also,
Tata has scheme specific brokerage structure like in Tata infrastructure
they pay 3.00%,in some schemes 2.25% and in some 1.75%.

Products (NFOs/schemes):
Tata has not got so good wide range of products in all categories and
maximum AUM of there is concentrated in debt the maximum part is in
debt.
No. of schemes 98
No. of schemes including 375
options
Equity Schemes 37
Debt Schemes 291
Short term debt Schemes 14
Equity & Debt 7
Money Market 0
Gilt Fund 26

From the there pattern they are more cashing business on the
infrastructure theme. Till now they have two infrastructure based funds
HDFC MUTUAL FUND 58
and one NFO is running which is also Infrastructure based fund.
Recently, they had also filed offer document with SEBI for there Tata
small and Mid cap Infrastructure fund.

Comparative Analysis of HDFC AMC with TATA:-

i) Infrastructure :-

SCHEME HDFC TATA

INFRASTRUCTURE INFRASTRUCTURE
FUND CLASS Equity diversified Equity diversified

Average mkt. cap. 92600.69 22080.00

(in Crores)
Inception date AUG. 2010 AUG. 2010

From the following data we can analyise that HDFC MUTUAL FUND
has fared better than TATA MUTUAL FUND ..

HDFC MUTUAL FUND 59

 ii) SWOT analysis of HDFC AMC with Tata AMC.

SWOT Analysis of HDFC Asset Management Company Ltd.

HDFC MUTUAL FUND 60

SWOT Analysis of Tata Asset Management Ltd

HDFC MUTUAL FUND 61

iii) Additional Services Offered By HDFC Mutual Funds:-

HDFC MF Online, which enables you to transact online on

https://investor.hdfcfund.com/mfonline/ 24 hours a day, 7 days
a week, 365 days a year. On HDFC MF Online, you can
Purchase.
Redeem.
Switch.
View Account Details.
View Port Folio Valuation.
Download Account Statements........Online !!

The Services offered in HDFCMF Online:-

eDocs : HDFC Mutual Fund Offers you the
convenience of recieving documents by email at no
additional cost to you.
ePayouts: Save your time and experience the
convenience of receiving your dividend and
redemption payout(s), if any, directly into your bank
account. This facility can be opted by selecting
RBI's National Electronic Fund Transfer (NEFT) or
Electronic Clearing Service (ECS*). NEFT and ECS
facilitates faster, reliable and trouble free credit of
redemption/dividend into your bank account. It is
also one of the safest mode of payment as it
eliminates possibilities of fraudulent encashment of
redemption / dividend instruments or any possible
loss while in postal transit to you.

HDFCMF Mobile, Now transacting with mobile can also be

done. HDFC offer the facility transacting using the mobile
phone anywhere and anytime. On HDFCMF Mobile, you can
Purchase.
Redeem.
Switch.

View Account Details.

View Port Folio Valuation.

HDFC MUTUAL FUND 62

 Request for Account Statements.
Check NAV.

NEFT Facility (National Electronic Fund Transfer) : This is a

facility introduced by the Reserve Bank of India (RBI). NEFT
is a nation wide electronic funds transfer system to move funds
from any bank branch in any part of country to any other bank
branch in another part of the country.

Who will benefit from this service?

This payout channel will be particularly beneficial to all such

investors whose mandated bank account is not in the list of
banks with whom we presently have a direct credit
arrangement for crediting their dividend / redemption
proceeds. This service will also benefit all such investors at
locations where a HDFC Mutual Fund Investor Service Centre
(ISC) / a HDFC Bank branch, is not present and such locations
are covered by the RBI for payments through the NEFT mode.

What are the advantages of NEFT over the current payout

mode?
Investors whose current payments are settled through a
demand draft (DD) / Pay Order (PO) for their dividend /
redemption payouts are the prime beneficiaries. Such DDs /
POs are then dispatched to the investor, which would take a
couple of days to reach. In comparison, through NEFT the
beneficiary gets the credit usually on the same day or the next
day depending on the time of settlement. This makes payment
settlement faster, safer and risk free.

So by above data we can analyise that HDFC GROWTH FUND is better

for investor who look for high dividends.

THE FUTURE GROWTH DRIVERS:-

HDFC MUTUAL FUND 63

 Higher GDP Growth.

India's huge financial spread Investment System.

Systematic investment planning ratio which is projected to double

by 2010 2011.

Fast paced urbanization rise from 28 to 40% by 2020.

Growing working class population and Middle class expanding by

30 40 million every year.

Upward migration of household income levels.

Fast economic Development.

Increasing disposable Income with the service sector.

Cheaper (declining interest rates) & easier finance Schemes.

Increasing dispensable income of rural agriculture sector.

Govt. policy promotes tax investment & planning Sec 80 C.

Increasing level of FDI in country.

Emergence of India as BPO and IT hub.

Equity markets have been buoyant over the past few months
primarily on the back of expected good corporate performance, strong
global liquidity and strong flows to emerging markets. The rush of
players into the mutual fund industry during the last decade could be
attributed to low entry barriers, both regulatory and competitive, and the
desire of the existing financial players to broad-base their activities in the
financial sector. The last few years also highlights the emergence of the
mutual fund industry as a major force in Indian financial markets. With

the total Assets Under Management (AUM) increasing from Rs.1,13,005

cr in March 2000 to Rs. 7,94,486 Cr in Jan 2010, the industry's growth

HDFC MUTUAL FUND 64

has been nothing but exceptional. And if size is the measure of
dominance, the Indian mutual fund industry can now boast of that.
So lets now take a look at the overall growth of the mutual fund industry
in the last decade.

To sum it up, we can enumerate that the host of things which

suggest that the mutual fund industry is all set to enter a period of high
growth are:
A robust economy,
fledgling stock market,
increasing awareness and acceptance of mutual funds among
investors,
strong domestic currency,
and healthy corporate performances.

HDFC MUTUAL FUND 65

 RESEARCH ANALYSIS

MARKETING RESEARCH-
The process of systematically gathering, analyzing and interpreting
data pertaining to the company's market, customers and
competitors, with the goal of improving marketing decisions.

Objective of the study-

The primary objective of this study is to analyze the marketing
performance of the two leading Sectorial Mutual Fund schemes of HDFC
and TATA on the basis of various marketing parameters, which will be
discussed later in the following sections of the report. This will help in
the following ways:
A complete and comprehensive marketing analysis can be made
before making a decision to invest in a particular Mutual Fund
scheme.
An in-depth and complete approach towards managing a portfolio
of investments can be made by analyzing the funds on the basis of
these marketing parameters.
This study will also give us a brief overview of the quality and
consistency of the fund management in keeping up with the various
expectations and hopes that the mutual fund investors have in the
Asset Management Company (AMC).
It also helps us to compare the individual fund performance with
the performance of the overall market, including the Bombay Stock
Exchange (BSE), and National Stock Exchange (NSE).

HDFC MUTUAL FUND 66

 It also helps us to study the risk-return trade-off i.e. whether the
hand-in-hand relationship between Risk and Return holds true in
case of Mutual funds or not.

Rationale of choosing these funds-

The above chosen funds have had a market presence of at least
three years. Also the government of India has a large interest in
Indian growth story which is in complete without have a much
impetus in infrastructure sector. Hence, with this fact we can have a
fair idea of their acceptability in the market. The basic rationale of
choosing these funds is to have and present a brief idea of the
current mutual funds market and to understand the latest trends in
the market.

RESEARCH DESIGN-
Research design is commonly known as BLUE PRINT OF THE
RESEARCH. A plan of what data to gather, from whom, how and when
to collect the data, and how to analyze the data obtained.
I have choosed survey method of research design for collecting primary
data and descriptive metod for secondary data.

Research Methodology (Survey & descriptive method)

The project report is made precisely keeping in mind the Asset

management market of Barielly. Therefore, I had done primary as well as
secondary data collection to facilitate my findings. In primary data
collection, I have made a questionnaire relating to sales. The sample size
is 40 persons which include individual ARNs, Distribution house RMs,
Banking staffs and some customers. The data was collected and the

HDFC MUTUAL FUND 67

collated to give a brief idea about which AMC is good in products, sales
and services. The questionnaire also shows some traits like dependability,
trust and suitability of the AMCs in context to the various requirements of
the distributors. The secondary data was collected from the abyss of
different websites and online articles of experts. The raw data was then
compiled and analysed using different tools.

SAMPLING- Market research involves the collection of data to

obtain insight and knowledge into the needs and wants of
customers and the structure and dynamics of a market. In
nearly all cases, it would be very costly and time-
consuming to collect data from the entire population of a
market. Accordingly, in market research, extensive use is
made of sampling from which, through careful design and
analysis, Marketers can draw information about the market.

SAMPLE SIZE-
Sample size used in the research is 40, which includes
Individual ARMs
Distribution RMs
Banking Staff
Some Customer

HDFC MUTUAL FUND 68

Data Collection -
This data was collected from the following sources:
Questionnaire
Magazines
Journal
Internet
Key information memorandum of various schemes

Primary Data collection:

The primary data is basically consisting of Products (offerings,

innovation and fund performance), Services (response time, reliability,
premium services) and Distribution (brokerages and incentives).

Secondary data collection:

It is collected from different websites; this project is made of more of
secondary data collection.

HDFC MUTUAL FUND 69

 QUESTIONAIRE

Q 1) : Among the following which mutual fund house is the better fund house in the
terms of products?

a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( )

Q 2) : Out of the following which fund house gives you and your customer better
satisfaction in the terms of sales support?

a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( )

HDFC MUTUAL FUND 70

Q 3): Among the following which mutual fund house gives you premium services and
after sales services ?

a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( )

Q 4): Which mutual fund is having more effective strategy regarding the distribution
services in terms of brokerage and incentives?

a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( )

HDFC MUTUAL FUND 71

Q 5): Which mutual fund is more aggressive & innovative in terms of marketing and
sales i.e. coming with the NFO and new products ?

a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( )

Q 6) Which fund house is better in the terms of fund performance in long and short
run?

a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( )

HDFC MUTUAL FUND 72

Q 7) Which fund houses employee you feel more comfortable discussing your sales
activities?

a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( )

Q 8) Which fund house is more reliable to work with:

a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( )

HDFC MUTUAL FUND 73

Q 9): Which of the following fund house gives you quick response to your queries?

a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( )

Q 10): Which of the following fund house you feel overall good to work with?

a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( )

Suggestions (if any) :

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 LIMITATIONS:-

This research Measure the past not the future.

Research Report findings does not makes decisions. Market

research provides information upon which decisions are

made.

This research survey is limited to a particular city only

which is Barielly

Respondents can be biased due to their likes and dislikes.

CONCLUSION:-

HDFC Equity Fund has a ability to spot the sector trends & it has
delivered handsomely. In Current status it emerged as the third best-
performing diversified equity fund. Though it need to work hard in
increasing its market share.

SUGGESTIONS TO HDFC MUTUAL FUND:

HDFC MUTUAL FUND 75

1. An aggressive advertising campaigning should be there to encourage
more people to invest.
2. There is a great potential for the mutual fund because the people are
ready to invest in the mutual fund as there is a positive responses.
3. People are preferred to invest in the long term savings when only
they have enough of surplus. They are least concerned about the
others advice.
4. The people of barielly have enough purchasing power supported by
EXPORTERS Mutual Fund Companies should take this fact
positively at the time of designing promotional scheme.
5. HDFC MF is doing comparatively very less marketing in MF
industry in compare to other players. Due to this other player are
getting the advantage. Thus it should try to increase the marketing
and advertising related activities time to time or at least at the time
of new NFOs, at the time when they are declaring dividends or at
the peak time (i.e. January - March) last quarter of financial year
when people are searching for investing instruments.
6. A very small part of market has been covered by HDFC MF. It can
increase the circle of its business in small and rural areas of every
state and cities of India where they can find a huge business.
7. To uproot the investment level the company should give training
programme to financial agents who approach the investor for the
investments. And they should be aware of all the benefits of the
mutual Funds.

HDFC MUTUAL FUND 76

8. Company should undertake the Campaign, Road shows,
Advertisement and other type of Publicity for the effective
awareness of different schemes that are available in the market.

9. The company should arrange seminars and presentations, giving

detail idea about securities and benefits of investment in mutual
fund.

HDFC MUTUAL FUND 77

 GLOSSARY

SHORT FORMS
AMC Asset Management Company.
AMFI Association of Mutual Fund of India.
AUM Asset under Management.
BSE Bombay Stock Exchange.
FII Foreign Institute of Investor. FII can invest in Mutual
Funds.They invest through the Non-resident rupee account.
GILT Government of India Linked Treasury. These Funds
are those that invest only in government securities.
IPO Initial Public Offer.
IRP Investor Risk Profile.
MIP Monthly Investment Plan.
MTM Market to Market.
NAR Net Amount at Risk.
NAV Net Asset Value.
NSE National Stock Exchange.
OD Offer Document is the most important source of
information the investors. Abridged version of the OD
is called as Information Memorandum (KIM).
PAR VALUE It is said as face value.
SAR Sum at Risk
SIP Systematic Investment Plan
SWP Systematic Withdrawal Plan
WDM Wholesale Debt Market

HDFC MUTUAL FUND 78

 BIBLIOGRAPHY

1. RESEARCH METHODOLGY C.R.Kothari

2. MARKETTING MANAGEMENT Philp Kotlar

3. www.hdfcfund.com

4. www.google.com

5. www.investsmartindia.com

6. www.amfiindia.com

7. www.mutualfundsindia.com

8. www.valueresearchonline.com

9. www.investopedia.com

10.www.tatamutual.com

11.www.wikepedia.org

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