A STUDY ON HDFC MUTUAL FUND

IN
HDFC ASSETS MANAGEMENT COMPANY LTD

IN PARTIAL FULFILLMENT OF THE AWARD OF THE

MASTER OF BUSINESS ADMINISTRATION AT
S.V.UNIVERSITY TIRUPATI

Submitted by

Under the valuable guidance of

SALN COLLEGE OF ENGINEERING AND MANAGEMENT

SF-316,CHITTOOR-VELLORE HIGHWAY, PALLURU,CHITTOOR.

DECLARATION
I, Badami Kalpesh D. a student of MBA semester iii, here by declare that the project
work presented in this report is my contribution and has been carried out under
supervision of DIRECTOR DR.R.S.SHAH of GIDC

RAJJU

SHROFF

INSTITUTE OF MANAGEMENT STUDIES.

The objective of the training undertaken is to get specialized knowledge in the

specialized field, which further sharpen the skill and add practicality in the
specialization. This work has not been previously submitted to any other university
for any other examination

DATE: -

SIGNATURE (student)

BADAMI KALPESH D.
PLACE: -

SIGNATURE (guide)

DR.R.S.SHAH

PREFACE
Experience is the best teacher. This saying is very well applicable in everyones life.
Therefore as a student of management it must apply to me also. Then the question
arises that from where we can get this experience. Obviously we must undergo
practical Training. To serve this purpose I had undergone two months summer training
at HDFC assets Management Company limited and as an outcome I have prepared
this project report.

This project report on mutual fund awareness in retail investors of HDFC assets
Management Company in Surat is as per syllabus prescribed by Veer Narmad south
Gujarat University for MBA students. This project also deals with various activities of
HDFC assets Management Company limited. The experience of this training will be
useful in my future and findings of this particular project will be Helpful to take
decision regarding to marketing and advertising of mutual fund schemes To HDFC
assets Management Company limited.

ACKNOWLEDGEMENT
First of all, I would like to express my sincere gratitude to Mr. Rajan Mehta, Branch
manager of HDFC assets Management Company limited, Surat branch for allowing
me for summer training at HDFC assets Management Company limited.
I heartily feel thanks to Mr. Piyush lal, sales executive who provided me valuable
suggestions and guidance at every stage of my summer training.
I would also like to express my gratitude to Mr. R.s.shah, my project mentor and other
faculty

members

of

GIDC

RAJJU

SHROFF

ROFEL

INSTITUTE

OF

MANAGEMENT STUDIES, vapi for guide me.

I would like to thank following persons who help me a lot in my summer training.

Mr. Gaurav maheshwari, HDFC assets Management Company limited

Mr. Pinkal shah, HDFC assets Management Company limited.

Mr. Chintan patel, HDFC assets Management Company limited.

Mr. Ritesh jariwala, HDFC assets Management Company limited.

Mr. Utkrash gheewala, HDFC bank, Parle point branch

Mr. Nilesh patel, HDFC bank, Parle point branch.

Mr. Mitesh sampat, HDFC bank, Parle point branch.

I also thank to respondents, who have been helpful and faithful enough to give the
required information, which helped my project to be a great success, which was the
main and important part of my project. I feel happy indeed and it has given me a lot of
pleasure in company.

Last but not the least I would like to extent my deep sense of gratitude to my family,
friends and all whom guided and helped me during my training period.

Place: - Surat.

Badami Kalpesh. B.

Date: - 9thAugust 2007

4

EXECUTIVE
SUMMARY

Executive Summary
The entire report is an unforgettable journey of support, knowledge, experience,
dedication, perfection, and patience. For me it is all about to understand a customer
and market of mutual fund industry.
The report is specially oriented to particular area, though it is representing the strong
base of Investment management-which covers different investment avenues, their
handling contribution, strategy, portfolios, and related risk factors. Mutual funds- how
they are formed, history, scenario, types, trends, myths, distribution, advantages, and
even disadvantages of them.
Tips to effectively sell the mutual funds, to be effective agent, some dos and donts
about mutual funds while investing. Company details and its progress and its
interpretation base for analysis, conclusion, findings, and questionnaire, which helped
a lot in consumer, survey analysis. Asset allocation, accounting, taxation, valuation
and necessary information for generating base for conclusion. And at last but not the
least the collected data from city and their interpretation.
In short all efforts which was made to make this report explains

WORK IS WORSHIP

CONTENTS
6

Sr. No.
1
2
3
4

Name of Table
Objectives of Study
Limitations of study
Executive summary
Company details

About the Company

Sponsors of HDFC Assets Management

Company

Management of HDFC Assets Management

Company

Offices of HDFC assets management company

5
6
7

9
10
11
12
13

14

limited
Product details
Future scenario
Industry details
Introduction
History of Mutual Fund Industry
Customers Profile of mutual fund industry
Positioning Strategy of mutual fund industry
Promotional Tools Employed by various mutual
fund companies
Facts About Mutual Fund
Mutual fund
Introduction to Mutual Fund
Mutual Fund Cycle
Critical view about Mutual Fund
Why Investor Needs Mutual Fund
Mutual Fund Risk
Types of Mutual Fund
Structure of Mutual Fund
Other various assets management companies details
Regulatory Aspects
Research
Purpose of the Research
Research Objective
Research Methodology

Page No.
5
6
8
11
12
13
14
17
24
32
33
34
36
40
41
42
45
46
47
49
50
54
55
58
60
64
67
71
72
73
74

15
16
17
18
19

Research Design
Sources of Data
Sampling Plan
Data Collection Method
Data analysis and findings
Findings
Limitations
Conclusions
Recommendations

75
76
78
80
81
92
95
97
100

20

Annexure

103

21
22
23
24

Glossary
List of Table
List of Graphs
Bibliography

105
107
108
109

COMPANY
8

DETAILS

About the Company: An HDFC asset Management Company limited is well-established fund house. HDFC
Assets Management Company limited is sponsored by Housing Development Finance
Corporation Limited (HDFC) and Standard life investments limited.
HDFC assets Management Company limited launched its scheme HDFC EQUITY
FUND in the year January 1995. Since then it focused on different class of schemes
for many years and launched several innovative products that went to become
bourgeoning categories in the Indian mutual fund industry.
Some of these were HDFC GROWTH FUND, HDFC TOP 200 FUND, and HDFC
BALANCED FUND, HDFC PRUDENCE FUND etc.

HDFC assets Management Company limited have offices in 29 cities and currently
manage assets in excess of Rs 36146.67 cores. (May 2007.)

Sponsors of HDFC Assets Management Company:Housing Development Finance Corporation Limited (HDFC)
HDFC was incorporated in 1977 as the first specialized Mortgage Company in India.
HDFC provides financial assistance to individuals, corporates and developers for the
purchase or construction of residential housing. It also provides property related
services (e.g. property identification, sales services and valuation), training and
consultancy. Of these activities, housing finance remains the dominant activity. HDFC
has a client base of around 9.5 lack borrowers, around 1 million depositors, over
91,000 shareholders and 50,000 deposit agents as at March 31, 2007. HDFC has
raised funds from international agencies such as the World Bank, IFC (Washington),
USAID, DEG, ADB and KfW, international syndicated loans, domestic term loans
from banks and insurance companies, bonds and deposits. HDFC has received the
highest rating for its bonds and deposits program for the twelfth year in succession.
HDFC Standard Life Insurance Company Limited, promoted by HDFC was the first
life insurance company in the private sector to be granted a Certificate of Registration
(on October 23, 2000) by the Insurance Regulatory and Development Authority to
transact life insurance business in India.
Standard Life Investments Limited
The Standard Life Assurance Company was established in 1825 and has considerable
experience in global financial markets. The company was present in the Indian life
insurance market from 1847 to 1938 when agencies were set up in Kolkata and
Mumbai. The company re-entered the Indian market in 1995, when an agreement was
signed with HDFC to launch an insurance joint venture. On April 2006, the Board of
The Standard Life Assurance Company recommended that it should demutualise and
Standard Life plc float on the London Stock Exchange. At a Special General Meeting
held in May voting members overwhelmingly voted in favor of this. The Court of

10

Session in Scotland approved this in June and Standard Life plc floated on the London
Stock Exchange on 10 July 2006. Standard Life Investments was launched as an
investment management company in 1998. It is a wholly owned subsidiary of
Standard Life Investments (Holdings) Limited, which in turn is a wholly owned
subsidiary of Standard Life plc. Standard Life Investments is a leading asset
management company, with approximately US$ 269 billion as at March 30, 2007, of
assets under management. The company operates in the UK, Canada, Hong Kong,
China, Korea, Ireland and the USA to ensure it is able to form a truly global
investment view. In order to meet the different needs and risk profiles of its clients,
Standard Life Investments Limited manages a diverse portfolio covering all of the
major markets world-wide, which includes a range of private and public equities,
government and company bonds, property investments and various derivative
instruments.

Management of HDFC Assets Management Company:HDFC Trustee Company Limited:

A company incorporated under the Companies Act, 1956 is the Trustee to the Mutual
Fund vides 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 Limited:
HDFC assets Management Company limited was incorporated under the Companies
Act, 1956, on December 10, 1999, and were approved to act as an Asset Management
Company for the Mutual Fund by SEBI on July 3, 2000. The registered office of the
HDFC assets Management Company limited is situated at Ramon House, 3rd Floor,

11

H.T. Parekh Marg, 169, Backbay Reclamation, Church gate, Mumbai - 400 020. In
terms of the Investment Management Agreement, the Trustee has appointed HDFC
Asset Management Company Limited to manage the Mutual Fund. The paid up
capital of the HDFC assets Management Company limited is Rs.75.161 crore.
The present share holding pattern of the HDFC Assets management company is as
follows:
% of the paid up share

Particulars
HDFC
Standard Life Investments
Limited

capital
50.10
49.90

The HDFC Assets management company is managing 18 open-ended schemes of the

Mutual Fund viz. HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF), HDFC
Income Fund (HIF), HDFC Liquid Fund (HLF), HDFC Tax Plan 2000 (HTP), HDFC
Children's Gift Fund (HDFC CGF), HDFC Gilt Fund (HGILT), HDFC Short Term
Plan (HSTP), HDFC Index Fund, HDFC Floating Rate Income Fund (HFRIF), HDFC
Equity Fund (HEF), HDFC Top 200 Fund, (HT200), HDFC Capital Builder Fund
(HCBF), HDFC Tax Saver (HTS), HDFC Prudence Fund (HPF), HDFC High Interest
Fund (HHIF), HDFC Sovereign Gilt Fund (HSGF) and HDFC Cash Management
Fund (HCMF). HDFC assets Management Company limited is also managing the
respective Plans of HDFC Fixed Investment Plan, a closed ended Income Scheme.

The HDFC Assets management company has obtained registration from SEBI vide
Registration No. - PM / INP000000506 dated December 22, 2000 to act as a Portfolio
Manager under the SEBI (Portfolio Managers) Regulations, 1993.
The HDFC Assets management company is also providing portfolio management /
advisory services and such activities are not in conflict with the activities of the
Mutual Fund

HDFC assets Management Companys punch line is continuing a

tradition of trust.
12

In Gujarat HDFC assets Management Company is located at Ahmadabad,

Surat, vadodara, Rajkot.

HDFC assets Management Company is working from 9:30 a.m. onwards.

HDFC assets Management Company Have 200 and more distributors in

Surat.

HDFC assets Management Company Provide account statements to

investors according to investors requirement.

HDFC assets Management Company Provide good services to investors.

13

Offices of HDFC ASSETS MANAGEMENT

COMPANY LIMITED
INVESTOR SERVICE CENTRES/
OFFICIAL POINTS OF ACCEPTANCE FOR HDFC MUTUAL
FUND
HDFC Mutual Fund - Mumbai *
Ramon House, 3rd Floor,
REGISTERED
OFFICE

H.T Parekh Marg, 169,

Backbay Reclamation, Church gate
Mumbai 400020.

HDFC Mutual Fund - Hyderabad

6-3-883/7, 2nd Floor,
Saphire Square, Somajiguda,
Hyderabad - 500282.

Andhra Pradesh

Email:serviceshyderabad@hdfcfund.com
HDFC Mutual Fund - Visakhapatnam
Ground Floor, Saigopal Arcade,
Opp Waltair Club,
Waltair Main Road, Siripuram,
Visakhapatnam - 530003.
Email:servicesvizag@hdfcfund.com

Bihar

HDFC Mutual Fund - Patna

14

Rani Plaza Apartment,

(Patna X-Ray Clinic),
Exhibition Road,
Patna - 800001.
Email:servicespatna@hdfcfund.com
HDFC Mutual Fund - New Delhi
4th Floor, Mohan Dev Bldg., 13,
New Delhi

Tolstoy Marg, Connaught Place,

New Delhi - 110001.
Email:servicesdelhi@hdfcfund.com
HDFC Mutual Fund - Goa
A3, First Floor, Krishna Building,

Goa

Opp. Education Dept,

Behind Susheela Building, G.P. Road,
Panaji - 403001.
Email:servicesgoa@hdfcfund.com

Gujarat

HDFC Mutual Fund - Ahmadabad

2nd Floor, Megha House,
Besides Gruh House,
Mithakhali Six Roads,
Ahmedabad - 380009.
Email:servicesahmedabad@hdfcfund.com
HDFC Mutual Fund - Rajkot
2nd Floor, Shiv Darshan,
Dr Radha Krishnan Road,
5, Jagnath Plot Corner,
Rajkot - 360001.
Email:servicesrajkot@hdfcfund.com
HDFC Mutual Fund - Surat
U1 - U3, Jolly Plaza,
Opp Athwa Gate Police Station,
Athwa Gate,
Surat - 395001.
Email:servicessurat@hdfcfund.com
HDFC Mutual Fund - Vadodara
15

Upper Ground Floor, Gokulesh,

R C Dutt Road,
Vadodara - 390007.
Email:servicesvadodara@hdfcfund.com
HDFC Mutual Fund Jamshedpur
Gayatri Enclave,
Jharkhand

2nd Floor, "K Road",

Bistupur,
Jamshedpur - 831001.
Email:servicesjamshedpur@hdfcfund.com
HDFC Mutual Fund Bangalore
No.114, 1st Floor, Prestige Towers,
99 and 100, Residency Road,
Bangalore - 560025.
Email:servicesbangalore@hdfcfund.com

Karnataka

HDFC Mutual Fund Mangalore

UG -II, 6 and 7, Upper Ground Floor,
Maximus Commercial Complex,
Light House Hill Road, Opp. KMC,
Mangalore - 575001.
Email:servicesmangalore@hdfcfund.com
HDFC Mutual Fund Kochi
Ground Floor,
Cinema Cum Commercial Complex,

Kerala

Behind Ravipuram Bus Stop,

M.G. Road,
Kochi - 682016.
Email:serviceskochi@hdfcfund.com

Madhya

HDFC Mutual Fund Bhopal

Pradesh

Ranjit Towers,
Zone II, 8 MP Nagar,
Bhopal - 462011.
Email:servicesbhopal@hdfcfund.com
HDFC Mutual Fund Indore

16

M1, M2 and M3, Mezzanine Floor,

Sterling Arcade,15 / 3, Race Course Road,
Indore - 452001.
Email:servicesindore@hdfcfund.com
HDFC Mutual Fund Mumbai
Mistry Bhavan, 1st Flr, 122,
Backbay Reclamation,
Dinsha Vachha Road, Churchgate,
Mumbai - 400020.
Email:servicesmumbai@hdfcfund.com
HDFC Mutual Fund Nagpur
106-110, Shriram Shyam Towers,
2nd Floor, Next to NIT Building,
Kingsway, Sadar,
Nagpur - 440001.
Maharashtra

Email:servicesnagpur@hdfcfund.com
HDFC Mutual Fund Nashik
G- 1 and G-2, "Suyojit Heights",
Opp. Rajiv Gandhi Bhavan,
Sharanpur Road,
Nashik - 422002.
Email:servicesnashik@hdfcfund.com
HDFC Mutual Fund Pune
HDFC House, 2nd Floor,
Shivaji Nagar, University Road,
Pune - 411005.
Email:servicespune@hdfcfund.com
HDFC Mutual Fund Bhubaneswar
2nd Floor, Vinayak 96,
Janpath,

Orissa

Bhubaneshwar - 751001.
Email:servicesbhubaneshwar@hdfcfund.com
Punjab

HDFC Mutual Fund Chandigarh

17

SCO 375-376,
Ground Floor, Sector 35-B,
Chandigarh - 160022.
Email:serviceschandigarh@hdfcfund.com
HDFC Mutual Fund Ludhiana
SCO 122,
Feroze Gandhi Market,
Ludhiana - 141001.
Email:servicesludhiana@hdfcfund.com
HDFC Mutual Fund Jaipur
Moondhra Bhavan,
3 Ajmer Rd,
Jaipur - 302001.
Rajasthan

Email:servicesjaipur@hdfcfund.com
HDFC Mutual Fund Jodhpur
Gulab Singh Building,
11, Chopasani Road,
Jodhpur - 342003.
Email:servicesjodhpur@hdfcfund.com
HDFC Mutual Fund Coimbatore
1371A, Ground Floor,
Nadar Building Trichy Road,
Coimbatore - 641018.

Tamil Nadu

Email:servicescoimbatore@hdfcfund.com
HDFC Mutual Fund Chennai
ITC Centre, 1st Floor,
760 Anna Salai,
Chennai - 600002.
Email:serviceschennai@hdfcfund.com

Uttar Pradesh

HDFC Mutual Fund Kanpur

1st Floor, 16/80 D,
Behind SBI Main, Civil Lines,
Kanpur - 208001.
Email:serviceskanpur@hdfcfund.com

18

HDFC Mutual Fund Lucknow

4 Shahnajaf Road,
Lucknow - 226001.
Email:serviceslucknow@hdfcfund.com
HDFC Mutual Fund Kolkata

Menaka Estate, 1st Floor,

West Bengal

3 Red Cross Place,

Kolkata - 700001.
Email:serviceskolkata@hdfcfund.com

19

(Fig no 1- office locations of HDFC Assets Management Company)

20

PRODUCT
DETAILS

21

Product Details

EQUITY

BALANCED

DEBT

(Fig no 2 - Different Types of Products)

EQUITY SCHEMES OF HDFC ASSET MANAGEMENT
COMPANY:1.

HDFC Equity Fund: Investment Objective: The investment objective of the Scheme
Is to achieve capital appreciation.
Investment Options: Dividend and Growth Option

Nature of Scheme: - Open Ended Growth Scheme

Inception Date: - January 01, 1995

2.

HDFC growth fund: Investment Objective: - The primary investment objective of the Scheme is to
generate long term capital appreciation from a portfolio that is invested predominantly
in equity and equity related instruments.
22

 Investment Options: Dividend and Growth Option

Nature of Scheme: - Open Ended Growth Scheme
Inception Date: -September 11, 2000
3.

HDFC Top 200 fund:

Investment Objective: - To generate long-term capital

appreciation from a portfolio of equity and equity-linked instruments primarily drawn

from the companies in BSE 200 index.

Investment Options: Dividend and Growth Option

4. HDFC mid cape opportunity fund; Investment Objective: - To generate long-term capital appreciation from a
portfolio that is substantially constituted of equity and equity related securities of
small and Mid-Cap companies.

Investment Options: Dividend and Growth Option

Nature of Scheme:- Open Ended Growth Scheme
Inception Date:- May 07, 2007
5. HDFC capital builder fund: Investment Objective: - To generate long-term capital appreciation from a
portfolio that is substantially constituted of equity and equity related securities of
small and Mid-Cap companies.

Investment Options: Dividend and Growth Option

Nature of Scheme:- Open Ended Growth Scheme
Inception Date:- February 01, 1994
6. HDFC core and satellite fund: Investment Objective: - The primary objective of the Scheme is to generate
capital appreciation through equity investment in companies whose shares are quoting
at prices below their true value.
Investment Options: Dividend and Growth Option
Nature of Scheme:- Open Ended Growth Scheme
Inception Date:- September 17, 2004

23

7. HDFC premier multicape fund: Investment Objective: - The primary objective of the Scheme is to generate
capital appreciation in the long term through equity investments by investing in a
diversified portfolio of Mid Cap and Large Cap `blue chip` companies.

Investment Options: Dividend Plan, Growth Plan, The Dividend Plan offers
Dividend Payout and Reinvestment Facility.

Nature of Scheme: - Open Ended Growth Scheme

Inception Date: - April 06, 2005
BALANCED SCHEMES OF HDFC ASSET MANAGEMENT
COMPANY:1. HDFC balanced fund: Investment Objective: - The primary objective of the Scheme is to generate
capital appreciation along with current income from a combined portfolio of equity
and equity related and debt and money market instruments.

Investment Options: Dividend and Growth Option

Nature of Scheme: - Open Ended balanced fund
Inception Date: - September 11, 2000
2.

HDFC prudence fund:-

Investment Objective: - The investment objective of the Scheme is to provide

periodic returns and capital appreciation over a long period of time, from a judicious
mix of equity and debt investments, with the aim to prevent/ minimize any capital
erosion

Investment Options: Dividend and Growth Option

Nature of Scheme: - Open Ended balanced fund
Inception Date: - February 01, 1994
3.

HDFC short term plan:-

24

 Investment Objective: - The primary objective of the HDFC Short Term Plan is
to generate regular income through investment in debt securities and money market
instruments.

Investment Options: Growth Plan, Dividend Plan. The Dividend Plan offers
Dividend Payout and Reinvestment Facility.

Nature of Scheme:- Open Ended income fund

Inception Date: - February 28, 2002
4.

HDFC multi yield fund:-

Investment Objective: - The primary objective of the Scheme is to generate

positive returns over medium time frame with low risk of capital loss over medium
time frame.

Investment Options: Growth Plan, Dividend Plan. The Dividend Plan offers
Dividend Payout and Reinvestment Facility.

Nature of Scheme: - Open Ended income fund

Inception Date: - September 17, 2004
DEBT SCHEMES OF HDFC ASSET MANAGEMENT
COMPANY:1. HDFC Income Fund: Investment Objective: - The primary objective of the Scheme is to optimize
returns while maintaining a balance of safety, yield and liquidity.

Investment Options: Dividend and Growth Option

Nature of Scheme: - Open Ended Income Scheme
Inception Date: - September 11, 2000
2. HDFC Income Fund: -

25

 Investment Objective: - The investment objective of HDFC High Interest Fund

is to generate income by investing in a range of debt and money market instruments
of various maturity dates with a view to maximizing income while maintaining the
optimum balance of yield, safety and liquidity.

Investment Options: Dividend and Growth Option

Nature of Scheme: - Open Ended Income Scheme
Inception Date: - April 28, 1997
3. HDFC MF Monthly Income Plan - Short Term Plan: Investment Objective: - The primary objective of Scheme is to generate regular
returns through investment primarily in Debt and Money Market Instruments. The
secondary objective of the Scheme is to generate long-term capital appreciation by
investing a portion of the Schemes assets in equity and equity related instruments.
However, there can be No assurance that the investment objective of the Scheme will
be achieved.

Investment Options: Quarterly Dividend Option, Monthly Dividend Option, and

Growth Plan. The Dividend Plan offers Dividend Payout and Reinvestment Facility

Nature of Scheme: - An open-ended income scheme. Monthly income is not

assured and is subject to availability of distributable surplus

Inception Date:- December 26, 2003

4. HDFC MF Monthly Income Plan - Long Term Plan: Investment Objective: - The primary objective of Scheme is to generate regular
returns through investment primarily in Debt and Money Market Instruments. The
secondary objective of the Scheme is to generate long-term capital appreciation by
investing a portion of the Schemes assets in equity and equity related instruments.
However, there can be no assurance that the investment objective of the Scheme will
be achieved

26

 Investment Options: Growth Plan, Quarterly Dividend Option, Monthly

Dividend Option. The Dividend Plan offers Dividend Payout and Reinvestment
Facility.

Nature of Scheme: - An open-ended income scheme. Monthly income is not

assured and is subject to availability of distributable surplus

Inception Date: - December 26, 2003

5. HDFC Floating Rate Income Fund Long Term Plan: Investment Objective: - The primary objective of the Scheme is to generate
regular income through investment in a portfolio comprising substantially of floating
rate debt / money market instruments, fixed rate debt / money market instruments
swapped for floating rate returns, and fixed rate debt securities and money market
instruments.

Investment Options: Dividend Plan, Growth Plan. The

Reinvestment Facility only

Nature of Scheme: - An open-ended income scheme.

Inception Date: - January 16, 2003

27

Dividend Plan offers

FUTURE
SCENARIO

28

FUTURE SCENARIO

The asset base will continue to grow at an annual rate of about 35 to 40%
over the next five year as investors shift their assets from banks and other traditional
avenues. Some of the older public and private sector players will either close shop or
be taken over.

Out of ten public players five will sell out, close down or merge with stronger player
in three to four years. In the private sector this trend has already started with two
mergers and one take over. Here too some of them will down their shutters in the near
future to come.

But this does not mean that there is no room for other players. The
market will witness a flurry of new players entering the areas. There will be a large
no. of offers from various asset management companies in the time to come, some big
names like Principle, SBI, Fidelity, old mutual etc are looking at Indian market
seriously. One important reason for it is that most major players have presence here
and hence these big names would hardly like to get left behind.

The mutual fund industry is awaiting the introduction of derivatives in India as

this would enable it to hedge its risk and this in turn would be reflected in its Net
Asset Value (NAV).

29

SEBI is working out the norms for enabling the existing mutual fund schemes
to trade in derivatives. Importantly, many market players have called on the Regular
to initiate the process immediately, so that the mutual funds can implement the
changes that are required to trade in Derivatives.

INDUSTRY
DETAILS
30

Introduction

A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is invested by the fund
manager in different types of securities depending upon the objective of the scheme.
These could range from shares to debentures to money market instruments. The
income earned through these investments and the capital appreciations realized by the
scheme are shared by its unit holders in proportion to the number of units owned by
them. Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed portfolio at a
relatively low cost.
Anybody with an investible surplus of as little as a few thousand rupees can
invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective
and strategy.
A Mutual Fund is the ideal investment vehicle for todays complex and
modern financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by global events
occurring in faraway places. A typical individual is unlikely to have the knowledge,

31

skills, inclination and time to keep track of events, understand their implications and
act speedily. An individual also finds it difficult to keep track of ownership of his
assets, investments, brokerage dues and bank transactions etc.
A Mutual Fund is the answer to all these situations. It appoints professionally
qualified and experienced staff that manages each of these functions on a full time
basis. The large pool of money collected in the fund allows it to hire such staff at a
very low cost to each investor.

In effect, the Mutual Fund vehicle exploits economies of scale in all three areas research, investments and transaction processing. While the concept of individuals
coming together to invest money collectively is not new, the mutual fund in present
form is a 20th century phenomenon. In fact, mutual funds gained popularity only after
the Second World War. Globally, there are thousands of firms offering tens of
thousands of mutual funds with different investment objectives. Today, Mutual Funds
collectively manage almost as much as or more money as compared to banks.

History of Mutual Fund Industry

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

First phase 1964-87

(Monopoly of UTI)
An Act of Parliament established Unit Trust of India (UTI) on 1963. 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
32

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

Second Phase 1987-93

(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), and 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 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.

33

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

Forth Phase
Since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI
was bifurcated into two separate entities. One is the Specified Undertaking of the Unit
Trust of India with assets under management of Rs.29, 835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. The Specified Undertaking of Unit Trust of India, functioning
under an administrator and under the rules framed by Government of India and does
not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund Regulations.
With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,
000 crores of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth. As at the end of October 31, 2003, there
were 31 funds, which manage assets of Rs.126726 crores under 386 schemes.

34

The graph indicates the growth of assets over the

years.

(Fig no 3. Growth of Asset Over The year)

35

Customers Profile of mutual fund industry:-

(Fig no 4.Type of Customer)

1.

While you recommend a financial plan, you also need to understand the
needs and financial objectives of your customer along with his risk tolerance and his
expectations from the investments.

2.

Honest and straightforward advice is appreciated. Help your customers make

the right choice

3.

Advise your customers to start investing early and regularly to help them
optimize the benefits of the compounding rupee.

4.

Help your investors with the procedures and paper work involved in making
an investment.

36

Treat every customer exclusively. A satisfied customer can give you increased business
through resale and referrals of other prospective customers

Positioning Strategy of mutual fund industry:-

Positioning starts with a product. But positioning is not what you do to a product.
Positioning is what you do to the mind of the prospect. That is, you position the
product in the mind of prospect. A companys differentiating and positioning strategy
must change as the product, market, and competitors change over time. . There
should be no under positioning, over positioning, confused positioning or
doubtful positioning.

Channel of Distribution:In Every asset Management Companys distribution channel played very important
roles.
Here assets management companies have distributors like

Consultants

Agents

Distributors

Advisers

Broker

Their role is very important for Assets Management Companys Office.

37

Promotional Tools Employed by various mutual fund

companies:Some specific other document help to increase selling product like: (1)

Banners: -

Banners define brief idea of scheme, it should be very attractive with specific
objective and its related picture in city, and Banners keep in specific places which
very help to do good publicity. It distributes only by AMCs office.
When any new scheme is launched or any new NFO coming up that times company
make banners before few days. Its helps to good advertising and easy cover to
customer or people.
(2)

Application Form:
Any product like Equity, debt and balance, investor should fill up its common
Application forms.
Form define acknowledge slip which give return to customer. Actually 3-time

stamp done in form, one of them is acknowledged slip. These forms are distributed by
Assets Management Companys office. It is all Assets Management Companys office
duty to dispatch forms to their

customer like agents, brokers, and advisers time to

time.
(3)

Broachers:

Broachers include brief history of company. It defines when and where assets
management Company invests investors money. This defines performance of each
scheme product and also defines its comparison to last 3 months to more than 5 years.
In end of every month Assets Management Companys office send Boucher to their
investors, brokers, agents, advisers regularly.

38

NET ASSET VALUE:The Net Asset Value or NAV is a term used to describe the value of an entity's
assets less the value of its liabilities. The term is commonly used in relation to
collective investment schemes. It may also be used as a synonym for the book value
of a firm.
NAV covers the company's current asset and liability position. Investors
might expect the company to have large growth prospects, in which case they would
be prepared to pay more for the company than the NAV suggests.
The NAV is usually below the market price because the current values of the
funds assets are higher than the historical financial statements used in the NAV
calculation.

CALCULATING NET ASSET VALUE

Unit capital is the investors subscriptions. In MF it is not treated as a
liability. Investments made on behalf of the investors are assets side of the balance
sheet. There are liabilities of short-term nature.
FUNDS NET ASSET = ASSET LIABILITIES
NAV = Net Assets
Issued Units I.e.
NAV= (market value of investments + other accrued income + other assets accrued
expenses other payables other liabilities)/ (no. Of units outstanding as at the NAV
date)
THE FACTOR AFFECTING THE NAV ARE AS FOLLOWING:
1. Capital gains or losses on the sale or purchase of investment
Securities.
2. Dividend and income earned on the assets
3. Capital appreciation in the underlying value of the stocks holds in the portfolio
39

4. Other assets and liabilities

5. Number of units sold or purchased

Facts About Mutual Fund

Equity Instruments like shares form only a part of the securities held by Mutual
Funds. Mutual Funds also invest in debt securities, which are relatively much safer.
The biggest advantage of Mutual Funds is their ability to diversify the risk.
Mutual Funds are there in India since 1964. Mutual Funds market is much
evolved in U.S.A and is there for last 60 years.
Mutual Funds are the best solution for people who want to manage risk and get
good returns.
The size of Mutual Funds market in India is Rs. 107728 crores and that in U.S.A
is many times higher.
According to the SEBI - NCAER Survey of Indian Investors about 15 million or
8.7% of the households have invested in Mutual Funds and there are nearly 23 million
unit holders in India.
30% of investors fall in the income group of investors having monthly income up
to Rs. 10,000/-.
In U.S.A there are more deposits in the mutual funds than in bank deposits.
The truth is, as investors we should always pay attention to our mutual funds and
continue to monitor them.

40

Objectives of Study

Without any aim or objective, no activity can exist, in the same direction of
preparation of this report on HDFC assets Management Company limited. In different
functional areas and research on the mutual fund awareness in retail investors of
HDFC assets Management Company limited in Surat is based on the following
objectives: -

1.

My primary objective is to acquire primary functions of management like

Planning, Organizing, Directing and controlling from various functional areas such as
Finance, Human Resource, Marketing, and Sales etc.

2.

Whatever we are taught in the classrooms, there is a limitation that book can
only give theoretical concept or knowledge and it has a limited view of practically.
So, the other important objective of this training is to know about practical aspect and
to know how a company actually works in practical situation.

3.

To know the mutual fund awareness level of the retail investors who are invest
in HDFC assets Management Company limited.

41

Limitations of Study

There is no activity without any limitations.

1.

Though every one used to be very co-operative but every detail was unable to

be disclosed to me as the officials has to maintain secrets of the company.

2.

It is difficult to cover all the function of the company.

3.

The analysis and conclusion made by me as per my limited understanding and

there may be something variation in the actual situation.

4.

Because of the limited time period, the survey work was conducted in the

Surat region and the sample size was taken as 100 respondents only.
5.

In this rapidly changing turbulent era the suggestions and recommendations

drawn out today might prove inadequate or improper tomorrow; this is likely to limit
its effectiveness.

42

REVIEW OF
LITERATURE

43

MUTUAL FUND
Introduction to Mutual Fund
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is invested by the fund
manager in different types of securities depending upon the objective of the scheme.
These could range from shares to debentures to money market instruments. The
income earned in these investments and the capital appreciation realized by the
scheme is shared by its unit holders in proportion to the number of units owned by
them. Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed portfolio at a
relatively low cost. Anybody with an invest able surplus of a few thousand rupees can
invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective
and strategy.
A mutual fund is the ideal investment vehicle for todays complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by global events
occurring in faraway places. A typical individual is unlikely to have the knowledge,
skills, inclination and time to keep track of events, understand their implications and
act speedily.
A mutual fund is answer to all these situations. It appoints professionally
qualified and experienced staff that manages each of these functions on a fulltime
basis. The large pool of money collected in the fund allows it to hire such staff at a
very low cost to each investor. In fact, the mutual fund vehicle exploits economies of
scale in all three areas research, investment and transaction processing.
A draft offer document is to be prepared at the time of launching the fund.
Typically, it pre specifies the investment objective of the fund, the risk associated, the
cost involved in the process and the broad rules for entry into and exit from the fund
44

and other areas of operation. In India, as in most countries, these sponsors need
approval from a regulator, SEBI in our case. SEBI looks at track records of the
sponsor and its financial strength in granting approval to the fund for commencing
operations.
A sponsor then hires an asset management company to invest the funds
according to the investment objective. It also hires another entity to be the custodian
of the assets of the fund and perhaps a third one to handle registry work for the unit
holders of the fund. In the Indian context, the sponsors promote the Asset
Management Company also, in which it holds a majority stake. In many cases a
sponsor can hold a 100% stake in the Asset Management Company (AMC).
E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset
Management Company Ltd., which has floated different mutual funds schemes and
also acts as an asset manager for the funds collected under the schemes.
As per SEBI regulations, mutual funds can offer guaranteed returns for a
maximum period of one year. In case returns are guaranteed, the name of the
guarantor and how the guarantee would be honored is required to be disclosed in the
offer document.

Mutual Fund Cycle

(Fig no 5.-Mutual Fund Cycle)

From the above cycle, it can be observed that how the money from the investors flow
and they get returns out of it. With a small amount of fund, investors pool their money
45

with the funds managers. Taking into consideration the market strategy the funds
managers invest this pool of money into reliable securities. With ups and downs in
market returns are generated and they are passed on to the investors. The above cycle
should be very clear and also effective.
The fund manager while investing on behalf of investors takes into consideration
various factors like time, risk, return, etc. so that he can make proper investment
decision.

Critical view about Mutual Fund

Benefits
If mutual funds are emerging as favorite investment vehicle, it is because of the many
advantages they have over other forms and avenues of investing, particularly for the
investors who has limited resources available in terms of capital and ability to carry
out details research and market monitoring. The following are the major advantages
offered by mutual funds to all investors.

PROFESSIONAL EXPERTISE

Fund managers are professionals who track the market on an on going basis. With
their mix of professional qualification and market knowledge, they are better placed
than the average investor to understand the markets.

DIVERSIFICATION

Since a mutual fund scheme invests in number of stocks and/or debentures, the
associated risks are greatly reduced.

RELATIVELY LESS EXPENSIVE

When compared to direct investments in the capital market, mutual funds cost less.
This is due to savings in brokerage costs, demat costs, depository costs etc.

LIQUIDITY

46

Investments in mutual funds are completely liquid and can be redeemed at Net Assets
Value (NAV) related price on any working day.

TRANSPARENCY

You will always have access to up-to-date information on the value of your
investment in addition to the complete portfolio of investments, the proportion
allocated to different assets and the fund managers investment strategy.

FLEXIBILITY

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

SEBI REGULATED

All mutual funds are registered with SEBI and function within the provisions and
regulations that protect the interests of investors.

While most investment options provide most of these features, only

Mutual Funds provide all of these options.

Limitations

NO CONTROL OVER COST

Any investor in a mutual fund has no control over the overall cost of investing. He
pays investment management fees as long as he remains with fund, albeit in return for
the professional management and research. Fees are payable even in declining stage.
A mutual fund investor also pays fund distribution costs, which he would not incur in
direct investing. However, this shortcoming only means that there is a cost to obtain
the benefits of mutual fund services.

NO TAILOR-MADE PORTFOLIOS

47

Investors who invest on there own can build their own portfolios of shares and bonds
and other securities. Investing through funds means he delegates this decision to the
fund managers. The very high-net-worth individuals or large corporate investors may
find this to be a constraint in achieving their objectives. However, most mutual fund
managers help investors overcome this constraint by offering families of funds- a
large number of different schemes within their own management company. An
investor can choose form different investment plans and construct a portfolio of his
own.
MANAGING A PORTFOLIO OF FUNDS
Availability of a large number of funds can actually mean too much choice for the
investor. He may again need advice on how to select a fund to achieve his objectives,
quite similar to the situation when he has to select individual shares or bonds to invest
in.
ENTRY AND EXIT COST
Mutual funds are a victim of their own success. When a large body like a fund invests
in shares, the concentrated buying and selling often results in adverse price movement
i.e. at the time of buying, the fund ends up paying a high price and by selling it
realizes a lower price. For obvious reasons, this problem is even more severe for
funds investing in small capitalization stocks. However, given the large size of debt
market, excluding UTI, most debt funds do not face this problem.
CHANGE OF INDEX COMPOSITION
The indices changing over the world to reflect changing market conditions. There is
an inherent survivorship bias in this process, with the bad stocks bided out and
replaced by emerging blue chips. This is a severe problem in India with the sensex
having being changing twice in last 5 years, with each change being quite substantial.
Another reason for change index composition is Mergers and Acquisitions. The
weight age of the shares of a particular company in the index changes if it acquires a
large company not a part of the index.

Why Investor Needs Mutual Fund

48

Mutual funds offer benefits, which are too significant to miss out. Any investment has
to be judged on the yardstick of return, liquidity and safety. Convenience and tax
efficiency are the other benchmarks relevant in mutual fund investment. In the
wonderful game of financial safety and returns are the tows opposite goals and
investors cannot be nearer to both at the same time. The crux of mutual fund investing
is averaging the risk.
Many investors possibly dont know that considering returns alone, many mutual
funds have outperformed a host of other investment products. Mutual funds have
historically delivered yields averaging between 9% to 25% over a medium to long
time frame. The duration is important because like wise, mutual funds return taste
bitter with the passage of time. Investors should be prepared to lock in their
investments preferably for 3 years in an income fund and 5 years in an equity funds.
Liquid funds of course, generate returns even in a short term.

Mutual Fund Risk

Mutual funds face risks based on the investments they hold. For example, a bond fund
faces interest rate risk and income risk. Bond values are inversely related to interest
rates. If interest rates go up, bond values will go down and vice versa. Bond income is
also affected by the changes in interest rates. Bond yields are directly related to
interest rates falling as interest rates fall and rising as interest rates.
Similarly, a sector stock fund is at risk that its price will decline due to developments
in its industry. A stock fund that invests across many industries is more sheltered from
this risk defined as industry risk.
Followings are glossary of some risks to consider when investing in mutual funds.

Country Risk
The possibility that political events (a war, national election), financial problems
(rising inflation, government default), or natural disasters will weaken a countrys
economy and cause investments in that country to decline.

49

Income Risk
The possibility that a fixed-income funds dividends will decline as a result of falling
overall interest rates.

Market Risk
The possibility that stock fund or bond fund prices overall will decline over short or
even extended periods. Stock and bond markets tend to move in cycles, with periods
when prices rise and other periods when prices fall.

Risk Return Reward in Mutual Fund

(Fig no 6: - Risk Return in Mutual Fund)

This graph shows risk and return impact on various mutual funds. There is a direct
relationship between risks and return, i.e. schemes with higher risk also have potential
to provide higher returns.

Types of Mutual Fund

50

There are a wide variety of Mutual Fund schemes that cater to your needs, whatever
your age, financial position, risk tolerance and return expectation. Whether as the
foundation of your investment program or as a supplement, Mutual Fund schemes can
help you meet your financial goals. The different types of Mutual Funds are as
follows:
Diversified Equity Mutual Fund Scheme

A mutual fund scheme that achieves the benefits of diversification by investing in the
stocks of companies across a large number of sectors. As a result, it minimizes the
risk of exposure to a single company or sector.

Sectoral Equity Mutual Fund Scheme

A mutual fund scheme, which focuses on investments in the equity of companies

across a limited number of sectors usually one to three.

Index Funds

These funds invest in the stocks of companies, which comprise major indices such as
the BSE Sensex or the SandP CNX Nifty in the same weight age as the respective
indices.

Tax Saving Equity Schemes

Schemes investing predominantly in equity which offer tax rebates to investors under
specific provisions of the Income Tax Act, 1961 as the Government offers tax
incentives for investment in specified avenues. E.g. Equity Linked Savings Schemes
(ELSS). Currently rebate u/s 88 can be availed unto a maximum investment of Rs
10,000. A Lock-in of 3 years is mandatory.

Monthly Income Plan Scheme

A mutual fund scheme which aims at providing regular income (not necessarily
monthly, don't get misled by the name) to the unit holder, usually by way of dividend,
with investments predominantly in debt securities (up to 95%) of corporate and the
government, to ensure regularity of returns, and having a smaller component of equity
investments (5% to 15%) to ensure higher return.

Income schemes

Debt oriented schemes investing in fixed income securities such as bonds, corporate
debentures, Government securities and money market instruments.

Floating-Rate Debt Fund

51

A fund comprising of bonds for which the interest rate is adjusted periodically
according to a predator-mined formula, usually linked to an index.

Gilt Funds
These funds invest exclusively in government securities.

Balanced Funds

The aim of balanced funds is to provide both growth and regular income as such
schemes invest both in equities and fixed income securities in the proportion indicated
in their offer documents. They generally invest 40-60% in equity and debt
instruments.

Structure of Mutual Fund

AMC

Saving
s

Trus
t

Unit
s

Unitholde
rs

Investmen
ts
Return
s

Registrar

SEBI

Trust
Custodian

AMC

(Fig no 7 - Structure of Mutual Fund)

Fund Sponsor
Any person or corporate body that establishes the Fund with a net worth of Rs. 10
crores and has paid out consistent returns to its investors for last three years
consistently and registers it with SEBI can be a fund sponsor. The fund sponsor forms
a trust and appoints board of trustees. He appoints Custodian and Asset Management
Company (AMC) either directly or through trust in accordance with SEBI regulations.
SEBI regulations also define that a sponsor must contribute at least 40 % to the net
worth of the asset management company.
52

Trustees
Trust is created through the document called Trust deed that is executed by the fund
sponsor and registered with SEBI. Board of trustees- a body of individuals or a trust
company-a corporate body may manage the trust cum Mutual Fund. These are
protector of unit holders interests.2/3 of the trustees will be individuals and will not be
associated with the sponsors.

53

RESEARCH
METHODOLODY

RESEARCH

54

Purpose of the Research

With liberalization, privatization and globalization there has been a major change in
the Indian Mutual Funds Industry. The momentum is on and one is sure to see similar
hectic activity at the offices of the new entrants especially after the 90s as private
sector gained entry in the Indian markets.
With the private sector penetration, a large number of schemes have also been
introduced due to which the average consumer has become vary sensitive to the new
schemes coming its way. So to ensure about the various consumer attitudes, a survey
was undertaken.
De facto, to ensure what the consumer thinks and what it thinks the best we
undertook a consumer survey, to get a clear picture of the future of the Mutual Funds
companies who are busy wooing the customers, with their lucrative schemes, to
survive the rat race and emerge as no.1 in this field.

Research Objective
Research Objectives addresses the purpose of the investigation. It is here that you
layout exactly what is being planned by the proposed research.

The Research

Objectives flows naturally from the problem statement, giving the sponsor specific,
concrete, and achievable goals. It is best to list the objectives either in order of
importance or in general terms first, moving to specific terms. Research Objective is
the basis for judging the Research process. It is the final step giving exact definition
of problem.

Analyzing mutual fund awareness in retail investors of HDFC

assets Management Company in Surat.
Research methodology is a systematic plan or schedule or program of the research
done. It describes all the procedures of the research.

55

Research Design
Research design can be described as an out line of a research project working or a
pattern. In a research design there are series of prior decision that together provide a
master plan for completing a research project. Research design is proved to be a
bridge between what has been established and what is to be done in conduct of the
studies. Research design should be compressive and it should provide which
method to be used and what work to be done.
Research design describes as a master plan a series of key decisions that serves a
model for conducting a research project. There are the main components of research
design.

Objective of research

Data inputs

Analysis of data collected

The research design was exploratory type and the focus was on getting mutual
funds employees views for various products, expectations from market.

Exploratory Research:
Exploratory study goes beyond description and attempts to explain the reasons for the
phenomenon that the descriptive study only observed. The researcher uses theories or
at least hypotheses to account for the forces that caused a certain phenomenon to
occur.

Sources of Data

56

The gathering of data may range from a simple observation at one location to a
grandiose survey of multinational corporations at sites in different parts of the world.
The method selected will largely determine how the data are collected. DATA is the
facts presented to the researcher from the studys environment. Characteristics of the
data are as follows:

Data are more metaphorical than real

Data are processed by our senses-often limited in comparison to

The senses of other living organisms.

Capturing data are said to be trustworthy because they may be

Verified.

Data classify their verity by closeness to the phenomena

There are two kinds of data that can be collected for research purpose. Based on the
requirement in the research appropriate data is collected. Both the kinds of data are
shown below in the figure:
Error: Reference source not found

1) Primary data source

Primary data are collected and gathered for the first time. Primary data are sought for
their proximity to the truth and controls over error. Advantages of primary data are:

Researchers can collect precisely the information they want.

They usually can specify the operational definitions used and can eliminate, or at

least monitor and record the extraneous influences on the data as they are gathered.

2) Secondary data source

57

Someone else collects secondary data. So, it becomes secondary information for the
research. Secondary data have had least one level of interpretation inserted between
the event and its recording. Reasons for using the secondary data are listed below:

They fill a need for specific reference or citation on some point

Secondary data are an integral part of a larger research study

Secondary data may be used as the sole basis for a research study, since
In many research situations one cannot conduct primary research
Because of physical, legal, or cost influences.

Analyzing the requirement of data, it was found that primary data is more important
for achieving Research Objective.

Primary data is collected with the help of

interviews.

Sampling Plan
Collecting the required information from the right source is very important. Sources
from which the data are collected differ as per the required of researcher.
Basically there are two types of data collection sources:

1) Sampling Unit:
The sampling unit primarily consisted of investors like businessman, professionals,
salaried employees and others. The sample unit is taken from the Surat city of Gujarat
region.

2) Sample Size:
Though large sample give more reliable results than small samples but increases the
cost, time and non-sampling error. Keeping in view these constraints 100 respondents
were chosen. Attempts have been made to see that samples are chosen from different
areas of Surat.

58

I have taken 100 responds as a sample size for this particular project. The following
table shows area wise distribution of sample size.
AREA
UDHNA
MORABHAGAL
ADAJAN
RANDER ROAD
RALWAY STATION ROAD
PARLE POINT
GHODDOD ROAD
PIPLOD
MAJURAGATE
RING ROAD
BHAGAL
KATARGAM
VARACHA
CITY LIGHT ROAD
NANPURA
PANDESARA
VED ROAD
PAL
BHESTAN
TOTAL

SAMPLE
17
3
15
17
5
5
8
2
2
4
4
4
2
6
2
1
1
1
1
100

Data Collection Method

This step involves making a very specific plan about how you will conduct
your research and collect your data.

1) Surveys and Questionnaires

Survey The means by which quantitative research is conducted.
Questionnaire A prepared set of questions designed to generate data
necessary for accomplishing the objectives of the research project.
I used survey method for data collection. Information was collected by
personal interviews through questionnaire.

Following types of measurement scales were used in the questionnaire.

59

 Simple category scale: - (Q-2, Q-4, Q-8, Q-9)

Multiple choice single response scales: - (Q-6)
Multiple choice multiple response scale:-(Q-1, Q-3, Q-5, Q-7)

DATA ANALYSIS
AND
60

FINDINGS

Q-1 which investment avenues are you aware of?

INVESTMENT AVANUES
EQUITY/MUTUAL FUND
POST OFFICE
F.D.
OTHERS

FREQUENCY
100
94
86
11

61

PERCENTAGE(%)
34.36
32.30
29.55
3.79

(Fig no 9: - Define investments avenues)

Interpretation: From the above charts we can interpret that awareness of equity/mutual fund, post
office (NSC, KVP, and PPF), fixed deposits is more compare to others like GOVT
ISSUED Instrument, GOVT Backed Instrument, Real Estate, gold etc. so HDFC
assets Management Company needs to focus more on those investors who are more
invest in KVP, NSC, PPF and fixed deposits.

Q-2 do you invests in mutual fund?

YES
97

NO
3

62

(Fig no 10: - Define investments in mutual fund)

From the above chart it is getting clear that now a days people are like to invest their
money in mutual fund of different assets management company, out of 100 people
sampled 97 are investing in the mutual fund.

Q-3 If yes, in which assets class do you want to invest in

Mutual Fund?

TYPES OF SCHEMES
EQUITY
DEBT
LIQUID

RESPONSE PERCENTAGE
86
72.27%
27
22.69%
6
5.04%

63

(Fig no 11: - Define schemes preferred by investors)

From the above chart it is getting clear that from 100 peoples sample 86(72.27%)
people are invest in equity assets class and 27(22.69%) people choose to invests in
debt class but only just 6(5.04%) peoples choose to invests in liquid class.

Q-4 Do you invest in HDFC assets management company

Limited?

YES
56

NO
44

64

TOTAL
100

(Fig no 12: - Define investment in HDFC assets Management Company)

From the above chart it is getting clear that out of 100 people sampled, 56
peoples are invest in HDFC assets management company and 44 peoples
are not invests in HDFC assets management company.

Q-5 If yes, in which scheme would you invest in HDFC assets

Management company limited?
NO OF
SCHEMES OF HDFC
EQUITY FUND
CAPITAL BUILDER FUND
PRUDENCE FUND
TAX SAVER FUND
CORE AND SATELITE FUND
TOP 200 FUND
BALANCED FUND

INVESTOERS
43
2
17
35
3
16
1

65

GROWTH FUND
OTHERS FUND

16
5

(Fig no 13: - Define scheme in which investors invest in HDFC assets

Management Company)
From the above chart we can see that in HDFC assets Management Companys
EQUITY FUND maximum number (43) of people are invest. In TAX SAVER FUND
35 number of people invests. In both TOP 200 FUND and GROWTH FUND 16
numbers of people are invests but in BALANCED FUND, CAPITAL BUILDER
FUND, CORE AND SATELITE FUND only 1,2 and 3 people are invest so investors
are not invested in these 3 schemes. In PRUDENCE FUND 17 numbers of people are
invested.

Q-6 By which medium you invest in HDFC assets

Management company limited?

MEDIUM OF INVESTMENT
DISTRIBUTOR
BANK
ONLINE

66

NO OF PEOPLE
8
48
0

(Fig no 14: - Define mediums choose by investors for invest in HDFC

assets management company)
From the above chart its getting cleared that most of the peoples (48) are invest by
bank and only 8 peoples are invest by distributors. Nobody invests through online. So
here HDFC assets Management Company has to provide facility by which investors
invest their money with out any middle man in mutual fund schemes through online.
Notes: - here out of 100 responds, 44 responds are not invest in HDFC assets
Management Company. These responds are not considered in these questions.

67

Q-7 why do you prefer investing in HDFC assets

Management company limited?

PREFENCE CRITERIA
BETTER FUND HOUSE
EXCELLENT CUSTOMER SERVICE
PROVIDER
CONSISTANT RETURN
OTHERS

NUMBER
43
15
44
1

(Fig no 15: - Define Preference criteria of investors)

From the above pie - chart it can be seen that majority of the people that is 44 peoples
give first rank to consistent return and 43 peoples invest in HDFC assets management
company because HDFC assets management company is a better fund house and 15
peoples believes that HDFC assets Management Company provides EXCELLENT
CUSTOMER SERVICE.

Q-8 In which type of product /schemes would you prefer while

Invested in equity schemes of HDFC assets management

68

Company limited?

TYPES OF SCHEMES
OPEN ENDED
CLOSE ENDED

RESPONSE
53
3

(Fig no 16: - Define type of product /schemes investors prefer for

investments)
From the above chart it is getting clear that most of peoples (53) prefer to invest in
OPEN ENDED equity schemes and only just 3 peoples want to invest in CLOSE
ENDED equity schemes of HDFC assets Management Company.
Notes: - here out of 100 responds, 44 responds are not invest in HDFC assets
Management Company. These responds are not considered in these questions.

Q-9 do you know about on going new fund offer of HDFC

Assets Management company limited?

69

AWARENESS OF NFO
YES
NO
TOTAL

NUMBER
58
42
100

PERCENTAGE
58%
42%
100%

(Fig no 17: - Define awareness level about on going NFO of HDFC assets
Management Company.)
The above pie - chart shows that around 58% people aware of on going new fund
offer of HDFC assets Management Company and only 42% people are unaware from
on going new fund offer of HDFC assets management company.

70

FINDINGS

FINDINGS
Almost 56% are investing in HDFC assets management companys schemes.

71

 Out of the total respondent almost 30% said that they invest in fixed deposit and
Insurance. Where as 34% said that they invest in Shares and mutual funds, where as
32% says that they invest in post office schemes.
97% of the investor was found who is invested their savings in different
schemes of mutual fund.
53 respondents prefer to invest in a open ended schemes of HDFC assets
management company, where as remaining only 3 respondents prefer to invest in a
close ended of HDFC assets management company.
It is found that awareness level about Mutual Funds is 97% in Surat city of
Gujarat.
Out of the total respondent 72.27% are investing in equity schemes. Where as
remaining 22.69% prefer debt and 5.04% prefer to invest in liquid schemes.
HDFC assets Management Company are also highly popular for their consistent
return and 43 responds believes that HDFC assets Management Company is better
fund house. While only just 15 responds believes that HDFC assets Management
Company provides EXCELLENT CUSTOMER SERVICE.

Out of the total respondents almost 48 responds are investing through bank, only
8 responds investing their money by distributor and nobody invested by online.
The 58% of the respondent were aware about the ongoing NFO of HDFC assets
management company and 42% were not aware about the ongoing NFO of HDFC
assets management company.

72

 In HDFC assets Management Companys EQUITY FUND maximum number

(43) of people are invested and In TAX SAVER FUND 35 number of people are
invests.

73

LIMITATIONS

LIMITATIONS OF RESEARCH

74

This exploratory research is done focusing on the investment scenario of Surat

city of Gujarat region only and therefore findings and suggestions given on the basis
of this research and cannot be considered for the entire Mutual Fund Industry of India.

Some of the people, out of various sectors that I had visited for study, did not

give me cooperative response.

Due to small market and time limit I could take only 100 responses.

Another limitation is that due to lack of knowledge and education many

investors dont know the basic ideas behind mutual fund.

Due to Time constraint I could not analyze more.

My own inexperience in research area might have affected the study.

75

CONCLUSIONS

76

CONCLUSIONS

Half of the respondents are investing in different schemes of mutual fund

companies.

The investors prefer investing more in banks and post office, which shows that

investors want security, and assured returns.

Others than Banks and post office the next preference of investors who go for

risky preposition in shares and Mutual Funds. That is basically due to misconception
that Mutual Fund Companies usually invest in equity market, which shakes trust of
people in Mutual Fund.

Majority of investors invested in open-ended schemes.

The awareness level about HDFC assets Management Company is moderate but

still the awareness should be created because 44% peoples still not invest in HDFC
assets Management Company.

As the investor prefers safe investment and want consistent return, they invest in

debt schemes (22.69%).

The investors prefer HDFC assets Management Company more because of the

tax benefit and consistent return.

Mutual funds are also preferred because of the cost effectiveness and higher

income by investing in equity schemes.

The banks mostly make the investments through the agents followed.

Professional and Business class, which is considered to be the most

knowledgeable class of the region prefers Mutual Funds less compare to service class.

77

The time frame of the investment by majority of the investors is open-ended

schemes in which their money is not locked for 3 to 5 years.

RECOMMENDATION
S

78

Recommendations

The company should try to make aware people about their different schemes
through the road show; seminars and presentation that it is not just equity based
schemes but also debt and liquid or balanced schemes also promoted by company.
Company has to put hoardings, banners, pamphlets in that area where peoples can
watch easily.

The customers should be made aware that if the time frame of the investment
is more than 3 years Equity option is the best tool for investing in mutual fund by this
investors getting good and high returns for their investments.

The company should be conducting special training and motivation

Programme for their distributors and also for investors so that they are being
motivated to work, their quality of performance and contribution in sales is
maintained.

Company has to provide application forms and other promotional materials to

their distributors time to time and company has to maintain better relationship with
their distributors by these they can give good contribution in investments.

None of responds invest their money in different schemes of company

By Online, so company has opportunity to launch online services for their distributors
and retail investors.

79

Companys core and satellite fund, balanced fund, capital builder fund are
preferred by very few investors because this schemes not perform well so company
has to think about their companies in which they invest investors money so they have
to change portfolio of investments.

Most of the people still preferred to invest in post office schemes and fixed
deposits so company has to focus on these investors.

ANNEXURE

80

Questionnaire
NAME: ADDRESS: -

CONTACT NO: (O)

(R)

(M)

1) Which investment avenues are you aware of?

Equity /Mutual fund
Post Office (NSC, KVP, PPF)
Fixed Deposits
Others
If others please specify
2) Do you invest in mutual funds?
Yes

No

3) If yes, in which assets class do you want to invest in mutual funds?

81

Equity

Debt

Liquid

4) Do you invest in HDFC mutual fund?

Yes

No

5) If yes, in which scheme would you invest in HDFC MUTUAL FUND?

Equity
Capital builder
Prudence fund
Tax saver
Core and satellite
Top 200 fund
Balanced fund
Growth
Others
6) By which medium do you invest in HDFC mutual fund scheme?
Distributor

Bank

Online

7) Why do you prefer investing in HDFC MF?

Better fund house
Excellent customer service provider
Consistent return
Other
If other please specify
8) Which type of product/scheme would you prefer while investing in Equity
Scheme of HDFC mutual fund?
Open-ended

Close ended

9) Do you know about on going new fund offers of HDFC AMC?

82

Yes

No

Remarks if any other please specifies: ______________________________________________________________

______________________________________________________________
____________________________________________________________.
Thank you for your time.

GLOSSARY

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme minus its liabilities.
The per unit NAV is the net asset value of the scheme divided by the number of units
outstanding on the Valuation Date.

Sale Price
The price you pay when you invest in a scheme. Also called Offer Price. It
May include a sales load.

Repurchase Price
The price at which a close-ended scheme repurchases its units and it may
Include a back-end load. This is also called Bid Price.

Redemption Price
The price at which open-ended schemes repurchase their units and closeEnded schemes redeem their units on maturity. These prices are NAV
Related.
83

Repurchase or Back-end Load

A charge collected by a scheme when it buys backs the units from the unit
Holders.
Expense Ratio:

The Expenses of a scheme include management fees and all the fees associated with
the scheme's daily operations. Expense Ratio refers to the annual percentage of fund's
assets that is paid out in expenses and can affect the performance of the scheme.

Exit Load:

It is the load charged by the fund when one redeems the units from the fund. It
reduces the price of the units to less than the NAV and is expressed as a percentage of
NAV.

Face Value:
The original issue price of one unit of a scheme, generally Rs 10.

Lock-in period:
The cooling period after investment in fresh units during which the investor
Cannot redeem the units.

No Load:
It refers to the fund that does not charge any load for buying or selling its units, i.e.
the investor can transact at the NAV.

84

LIST OF TABLE

Sr. No.

Name of Table

Page No.

Offices of HDFC assets management company limited

17

2
3
4
5
6

Other various assets management companies details

Area wise distribution of sample size.
Define investments avenues
Define investments in mutual fund
Define schemes preferred by investors
Define investment in HDFC assets management

64
79
82
83
84

7
8
9
10
11
12

company
Define scheme in which investors invest in HDFC
assets management company
Define medium choose by investors for invest in HDFC
assets management company
Define PREFENCE CRITERIA of investors
Define type of product /schemes investors prefer for
investments.
Define awareness level about on going NFO of HDFC
assets management company.

85

85
86
87
88
89
90

LIST OF GRAPH

Sr. No.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Name of Graph
Office locations of HDFC Assets Management
Company
Different Types of Products
Growth of Asset Over The year
Types of customers
Mutual Fund Cycle
Risk Return in Mutual Fund
Structure Of Mutual Fund
Classification Of Data
Define investments avenues
Define investments in mutual fund
Define schemes preferred by investors
Define invest in HDFC assets management company
Define scheme in which investors invest in HDFC
assets management company
Define medium choose by investors for invest in HDFC
assets management company
Define Preference criteria of investors
Define type of product /schemes investors prefer for
investments.
Define awareness level about on going NFO of HDFC
assets management company.

86

Page No.

22
24
39
40
49
56
60
76
82
83
84
85
86
87
88
89
90

BIBLIOGRAPHY

Books

Cooper and schinder Research Methodology New Delhi Tata

McGraw-Hill Ltd 2001

Fact sheet of HDFC assets Management Company limited.

Websites

www.hdfcfund.com

www.amfiindia.com

www.valuereserchonline.com

www.moneycontrol.com

87

CERTIFICATE
This is to certify that Mr. Badami Kalpesh D. has satisfactorily completed the project
work entitled, Mutual fund Awareness in Retail Investors Of HDFC Assets
management company in Surat Based on the declaration made by the candidate
and my association as a guide for carrying out this work, I recommended this project
report for evaluation as a part of the MBA programmer of Veer Narmad South Gujarat
University.

Place:

_______________

Date:

(Dr. R. S. Shah)

This project is forwarded for evaluation to the Veer Narmad South Gujarat University.

Place:
Date:

____________________
Director of GRIMS
(Dr. R. S. Shah)

88