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JVIMS, JAMNAGAR 1
The Indian financial market is one of the fastest growing emerging markets of
the world, thanks to the new economic policy - liberalization, deregulation and
measures of restructuring - which has dismantled entry barriers in the
financial markets, allowed the entry of new players and created an
environment for efficient allocation of resources. The major investors in the
markets are the Individual Investors, Corporate Sectors, Charitable Trusts,
etc.
The individual investors are now aware about of the other sources of the
investment avenues rather than the traditional investment avenue. They are
aware about the modern investment avenues.
One of the important investment avenues in the financial market is the Mutual
Fund. Through out the world, Mutual Funds have played a significant role as
far as an investment is concerned. Mutual Funds play a pivotal role in
transforming savings into investments and thereby improving financial health
of a country. One way to measure this role is to analyze performance of
mutual fund schemes. Also understanding of mutual fund structure and
advantages etc. is very important. A Mutual Fund is the ideal instrument
vehicle for todays complex and modern financial scenario. Mutual funds offer
many benefits to the small investors such as Diversification, liquidity, low
transaction cost, low risk, transparency, more options and more schemes,
professional management, flexibility, convenience to switch and many more.
Other than Mutual Funds, Bank Deposits, Post Office Schemes, RBI Relief
Bond, Public Provident Fund, Unit Trust of India, Life Insurance, and Equity
are the investment avenues where generally investors invest their savings.
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COMPANY
DETAILS
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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 Finance
Corporation it was a trendsetter
for housing finance in the whole
Asian continent.
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Background and Objective of
HDFC group
Background
HDFC was incorporated in 1977 with the primary objective of meeting a social
need that of promoting home ownership by providing long-term finance to
households for their housing needs. HDFC was promoted with an initial share
capital of Rs. 100 million.
Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the
country through the provision of housing finance in a systematic and
professional manner, and to promote home ownership. Another objective is to
increase the flow of resources to the housing sector by integrating the housing
finance sector with the overall domestic financial markets...
Organizational Goals
HDFCs main goals are to
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Key group Companies and
their business
HDFC Reality
HDFC Bank
HDFC Securities
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HDFC REALTY
Profile
The property market in India abounds with possibilities and potential
but for the large part, it is still highly fragmented and disorganized.
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disbursements amounting to Rs. 225 billion and Rs. 186 billion
respectively.
HDFC Bank
Profile
The Housing Development Finance Corporation
Limited (HDFC) was amongst the first to receive
an 'in principle' approval from the Reserve Bank of
India (RBI) to set up a bank in the private sector,
as part of the RBI's liberalization of the Indian
Banking Industry in 1994. The bank was
incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations as a
Scheduled Commercial Bank in January 1995.
Business Focus
Business
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2. Retail Banking Services
3. Treasury
Vision
'The most successful and admired life insurance company, which means that
we are the most trusted company, the easiest to deal with, offer the best value
for money, and set the standards in the industry'.
Values
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Parentage
HDFC Limited.
HDFC is Indias leading housing finance institution and has helped build more
than 23, 00,000 houses since its incorporation in 1977.
Standard Life has been looking after the financial needs of customers for
more than 180 years. It currently has a customer base of over 7 million
people who rely on the company for their insurance, pension, investment,
banking and health-care needs. Leader in the employee benefit market in
both the UK and Canada. Rated by Standard & Poor as 'strong' with a rating
of A+ and as 'good' with a rating of A1 by Moodys.
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HDFC Mutual Fund
VISION
To be a dominant player in the Indian
mutual fund space recognized for its
high levels of ethical and professional
conduct and a commitment towards
enhancing investor interests.
Sponsors
Housing Development Finance Corporation Limited (HDFC)
The Standard Life Assurance Company
Management
Table 1
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HDFC Chubb General
Insurance Company Limited
HDFC CHUBB
With over one century of experience in the field of
non-life insurance from Chubb and HDFC's expertise
from the financial segment, HDFC Chubb General
Insurance Company Limited has the consumer insight
to make its product range world class and
comprehensive.
HDFC Chubb brings you Insurance solutions that you can rely on. Their
offerings are classified into three categories.
3. Commercial Insurance.
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HDFC LTD
CHUBB Corporation
With more than $30billion in assets, The Chubb Corporation is one of the
worlds largest, financially strongest, non-life insurance companies. It is noted
for its quality service and innovative insurance products geared to meeting the
changing needs of a broad range of customers in diverse markets. Founded
in New York in 1882, Chubb today provides property and casualty insurance
through more than 10,000 employees in 32 countries of North America, South
America and Asia. Chubb also works closely with 5000 independent agents
and brokers worldwide.
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Credit Information Bureau
(INDIA) Limited
Profile
Credit Information Bureau (India) Limited (CIBIL) was incorporated in 2000.
CIBILs aim is to fulfill the need of credit granting institutions for
comprehensive credit information by collecting, collating and disseminating
credit information pertaining to both commercial and consumer borrowers, to
a closed user group of Members. Banks, Financial Institutions, Non Banking
Financial Companies, Housing Finance Companies and Credit Card
Companies use CIBILs services. Data sharing is based on the Principle of
Reciprocity, which means that only Members who have submitted all their
credit data, may access Credit Information Reports from CIBIL. The
relationship between CIBIL and its Members is that of close interdependence.
Integral Solution
The establishment of CIBIL is an effort made by the Government of India and
the Reserve Bank of India to improve the functionality and stability of the
Indian financial system by containing NPAs while improving credit grantors
portfolio quality. CIBIL provides a vital service, which allows its Members to
make informed, objective and faster credit decisions.
MISSION Statement
To be the leader and trendsetter in India, in providing comprehensive credit
information services and related products conforming to global standards,
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while adhering to the best practices in terms of confidentiality, propriety and
fair reporting, with a strong technology orientation and seeking to afford the
highest level of customer satisfaction.
HDFC SECURITIES
Profile
HDFCsec is a brand brought to you by HDFC
Securities Ltd, which has been promoted by the
HDFC Bank & HDFC with the objective of
providing the diverse customer base of the
HDFC Group and other investors a capability to
transact in the Stock Exchanges &other financial
market transactions.
HDFCsec will equip you with the necessary tools to allocate, select and
manage your investments wisely, and also support it with the highest
standards of service, convenience and hassle-free trading tools.
Mission Statement
Mission is to provide our customers with the most useful investment guidance
and investment-related services available in the country. We want to become
a one-stop solution for all your investment needs, one that will help you get
the most out of your money.
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convenience is important. So were here to provide high
quality investment services, in a simple, direct and cost-
effective way to help you achieve your financial goals.
At the national level, HDFC executives have played a key role in formulating
national housing policies and strategies. Recognizing HDFCs expertise, the
Government of India has invited HDFCs executives to join a number of
committees and task forces related to housing finance, urban development
and capital markets.
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INTELENET GLOBAL
Profile
Two leading global investors - HDFC and Barclays - provide the financial
backing Intelenet needs to lead in a global marketplace. HDFC is India's
leading financial services conglomerate, while Barclays is a venerable
financial services group headquartered in the United Kingdom, ranking among
the Top 10 banks in the world based on market capitalization. At the same
time, their combined financial strength provides Intelenet with the ability to
remain on the cutting edge of BPO processes while simultaneously
maintaining corporate growth and achieving the goals and objectives set forth
by our customers.
Mission
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Social Responsibilities
The year 2004-05 saw HDFC making renewed efforts in fulfilling its social
commitment by way of several ongoing as well as new initiatives. The latter
included innovative financing of slum up-gradation and low-income housing
projects, dialoguing with key stakeholders on policy issues, responding to the
tsunami tidal wave disaster and staff volunteering and participation in varied
community development activities.
Chart 1
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SWOT Analysis
Strengths
Well-regained and reputed brand of HDFC.
Experience of Standard Life Investment.
Young and well qualified staff.
Well aware of customer need.
Weakness
Less marketing.
Presence of HDFC MF in very less places.
Comparatively very less staff and very heavy work load.
Opportunities
Day by day increasing knowledge about Mutual Fund.
Only instrument with proper corporate governance and comparatively
high return with lesser risk.
Rural market is totally untapped.
Threats
Presence of nationalized player like UTI and many more.
Increase in competition and competitor.
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INDUSTRY
DETAILS
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Mutual Fund Sector and
Financial Market Overview
Mutual funds are dynamic financial institutions that play a crucial role in an
economy by mobilizing savings and investing them in the capital markets,
thus establishing a link between savings and capital market. Therefore, the
activities of mutual funds have both short and long term impact on the savings
and capital markets and the national economy. They mobilize funds in the
savings market and act as complementary to banks.
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Emergence Of Mutual Fund
Mutual funds now represent perhaps the most appropriate investment
opportunity for most investors. As financial markets become more
sophisticated and complex, investors need a financial intermediary who
provides the required knowledge and professional expertise on successful
investing. It is no wonder then that in the birthplace of mutual funds the
U.S.A. the fund industry has already overtaken the banking industry, more
funds being under mutual fund management than deposited with banks.
The Indian mutual fund industry has already started opening up many of the
exciting investment opportunities to Indian investors. We have started
witnessing the phenomenon of more savings now being entrusted to the funds
than to the banks. Despite the expected continuing growth in the industry,
mutual funds are still a new financial intermediary in India.
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Place of Mutual Funds in
Financial Markets
Indian households started allocating more of their savings to the capital
markets in 1980s, with investments flowing into equity and debt instruments,
besides the conventional mode of bank deposits.
Until 1992, primary market investors were effectively assured good returns, as
the issue price of new equity issues was controlled and low. After introduction
of free pricing of shares, new issue prices were higher and with greater
volatility in the stock markets, many investors who bought highly priced
shares lost money, and withdrew from the markets altogether. Even those
investors who continued as
Direct investors in the stock markets realized that the key to successful
investing in the capital markets lay in building a diversified portfolio, which in
turn required substantial capital. Besides, selecting securities with growth and
income potential from the capital market involved careful research and
monitoring of the market, which was not possible for all investors. Under
similar circumstances in other countries, mutual funds had emerged as
professional intermediaries. Besides providing the expertise in stock market
investing, these funds allow investing in small amounts and yet holding a
diversified portfolio to limit risk, while providing the potential for income and
growth that is associated with the debt and equity instruments. In India, Unit
Trust of India occupied this place as the only capital markets intermediary
from 1964 until late 1987, when the Government started allowing other
sponsors also to set up mutual funds. With some ups and downs, this new
class of intermediary institutions has emerged, in India as elsewhere, as a
good alternative to direct investing in capital markets.
Mutual Funds serve as a link between the saving public and the capital
markets, as they mobilize savings from investors and bring them to borrowers
in the capital markets.
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Concept of Mutual Fund:
Summary
A mutual fund is a common pool of money into which investors place their
contributions that are to be invested in accordance with a stated objective.
The ownership of the fund is thus joint or mutual; the fund belongs to all
investors. He or her bears in the same proportion as the amount of the
contribution make a single investors ownership of the fund to the total amount
of the fund.
A mutual fund uses the money collected from investors to buy those assets,
which are specifically permitted by its stated investment objective. Thus, an
equity fund would buy mainly equity assets ordinary shares, preference
shares, warrants etc. A bond fund would mainly buy debt instruments such as
debentures, bonds, or government securities. It is these assets, which are
owned by the investors in the same proportion as their contribution bears to
the total contributions of all investors put together.
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COMPETITORS
DETAILS
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Mutual Fund Players in
India
A) Bank Sponsored
1. Joint Ventures - Predominantly Indian
a. SBI Funds Management Private Ltd.
2. Others
a. BOB Asset Management Co. Ltd.
b. Can bank Investment Management Services Ltd.
c. UTI Asset Management Co. Private Ltd.
B) Institutions
a. Jeevan Bima Sahayog Asset Management Co. Ltd.
C) Private Sector
1. Indian
a. Benchmark Asset Management Co. Private Ltd.
b. Cholamandalam Asset Management Co. Ltd.
c. Credit Capital Asset Management Co. Ltd.
d. Escorts Asset Management Ltd.
e. J. M. Financial Asset Management Private Ltd.
f. Kotak Mahindra Asset Management Co. Ltd.
g. Reliance Capital Asset Management Ltd.
h. Sahara Asset Management Co. Private Ltd
i. Sundaram Asset Management Co. Ltd.
j. Tata Asset Management Ltd.
2. Joint Ventures - Predominantly Indian
a. Birla Sun Life Asset Management Co. Ltd.
b. DSP Merrill Lynch Fund Managers Ltd.
c. HDFC Asset Management Co. Ltd.
d. Prudential ICICI Asset Management Co. Ltd.
3. Joint Ventures - Predominantly Foreign
a. ABN AMRO Asset Management (India) Ltd.
b. Deutsche Asset Management (India) Private Ltd.
c. Fidelity Fund Management Private Ltd.
d. Franklin Templeton Asset Management (India) Private Ltd.
e. HSBC Asset Management (India) Private Ltd.
f. ING Investment Management (India) Private Ltd.
g. Morgan Stanley Investment Management Private Ltd.
h. Principal Pnb Asset Management Co. Private Ltd.
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i. Standard Chartered Asset Management Co. Private Ltd.
Table 2
AUM OF COMPETITORS
Table 3
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REGULATROY
ENVIRONMENT
DETAILS
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Regulators in India
All Mutual Funds are registered with SEBI and they function within the
provision of strict regulations designed to protect the interests of investors.
The operations of Mutual Funds are regularly monitored by SEBI.
Reserve bank of India was the regulator of Mutual Fund before SEBI. It
regulated mutual fund initially and there were only few schemes in the market.
But now with coming of SEBI, it has now become the main regulator of the
Mutual Fund. RBI now only governs Bank Sponsored Mutual Fund.
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Investors Rights
Proportionate right to beneficial ownership of schemes assets
Right to obtain information from trustees
Entitled to receive dividend warrants within 30 days of
declaration of dividend
Inspect major documents of the fund
Appointment of the AMC can be terminated by 75% of the unit
holders of the scheme present and voting
Right to approve of changes in fundamental attributes of a close
ended scheme (75 % of unit holders should approve) - right to be
informed so in open ended schemes so that they can redeem
Right to receive a copy of annual financial statements of fund
and periodic transaction statements
75% of the unit holders can resolve to wind up the scheme
Investors obligations
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ORGANIZATIONAL
STUDY
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MARKETING
DEPARTMENT
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Marketing Scenario
The last few years have seen an increased attention to mutual funds across
all genres of investors big or small, individuals or corporate. The growing
awareness of the advantages that mutual funds offer over other investments
avenues have been better communicated and more understood
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.
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Market Segmentation
Market segmentation is an effort to increase a companys precision marketing.
A market segment consists of large identifiable group within a market with
similar wants, purchasing power, buying attitudes or buying habits. As HDFC
mutual fund is a service sector industry they introduce different schemes for
different people. Each person is different in nature and each have differ
criteria for investment like risk factor, return, liquidity, tax benefits etc.
Target Market
HDFC Asset Management Company is a joint venture of HDFC BANK
(50.10%) and Standard Life Investment Limited (49.90%). The joint venture
was formed with the key objective of providing the Indian investor mutual fund
products to suit a variety of investment needs.
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Customers Profile
HDFC Asset Management Company, have variety scheme and each scheme
have different customer profile.
For Equity related scheme customer profile is young generation, for liquid
scheme customer profile is business man who wants to utilize their money in
effective manner for shorter period, in SIP (Systematic Investment Plan)
customer basically are serviced person who invest regularly and want to earn
more than average return. Thus, HDFC Asset Management Company, have
introduced variety of scheme to suit need of variety of customer.
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Positioning Strategy
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Product Details
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What is a Mutual Fund?
Invest / Pool
Their Money
Profit / Loss From
Portfolio of Investment
Invest in number
Of Stocks & Bonds
Profit / Loss From
Individual Investment
Figure 1
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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.
JVIMS, JAMNAGAR 39
History of the Indian Mutual
Fund Industry in India
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 the. The history of
mutual funds in India can be broadly divided into four distinct
phases.
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Third Phase 1993-2003 (Entry of Private Sector
Funds)
With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 1993 was the year in which the first Mutual Fund Regulations
came into being, under which all mutual funds, except UTI were to be
registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July
1993.
The 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.
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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.
Chart 2
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Structure of Mutual Fund
Figure 2
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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 Funds)
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.
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 inter alia 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.
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Asset Management Company (AMC)
The Trustee as the Investment Manager of the Mutual Fund appoints the
AMC. 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 crores at all times.
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Benefits of Investing through
Mutual Funds
Figure 3
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Affordability
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 performs 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.
Variety
Mutual funds offer a tremendous variety of schemes. This variety is beneficial
in two ways: first, it offers different types of schemes to investors with different
needs and risk appetites; secondly, it offers an opportunity to 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.
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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.
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 concessional rate of 10.5%.
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.
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Disadvantages of Mutual
Funds
The funds are managed in huge volume and so the control on expenses
cannot be exercised, as there is lot of formalities and administrative expenses
attached. Though the limit of incurring expenses is predetermined but still it
cannot be kept in control.
There is no tailor made portfolio available to any individual. The products and
scheme that is designed by the fund managers is on their philosophy and is
floated in the market with a common goal. No individual can have their own
portfolio maintained separately from the other investors.
Delay in redemption:
The redemption of the funds though has liquidity in 24-hours to 3 days takes
formal application of redemption as well as needs time for redemption. This
becomes cumbersome for the investors.
Non-availability of loans:
Mutual funds are not accepted as security against loan. The investor cannot
deposit the mutual funds against taking any kind of bank loans though they
may be his assets.
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Risk in Investing through
Mutual Fund
Figure 4
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The Risk-Return Trade-off
The most important relationship to understand is the risk-return trade-off.
Higher the risk greater the returns/loss and lower the risk lesser the
returns/loss.
Market Risk
Sometimes prices and yields of all securities rise and fall. Broad outside
influences affecting the market in general lead to this. This is true, may it be
big corporations or smaller mid-sized companies. This is known as Market
Risk. A Systematic Investment Plan (SIP) that works on the concept of
Rupee Cost Averaging (RCA) might help mitigate this risk.
Credit Risk
The debt servicing ability (may it be interest payments or repayment of
principal) of a company through its cash flows determines the Credit Risk
faced by you. This credit risk is measured by independent rating agencies like
CRISIL who rate companies and their paper. An AAA rating is considered the
safest whereas a D rating is considered poor credit quality. A well-diversified
portfolio might help mitigate this risk.
Inflation Risk
Inflation is the loss of purchasing power over time. A lot of times people make
conservative investment decisions to protect their capital but end up with a
sum of money that can buy less than what the principal could at the time of
the investment. This happens when inflation grows faster than the return on
your investment. A well-diversified portfolio with some investment in equities
might help mitigate this risk.
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Interest Rate Risk
In a free market economy interest rates are difficult if not impossible to
predict. Changes in interest rates affect the prices of bonds as well as
equities. If interest rates rise the prices of bonds fall and vice versa. Equity
might be negatively affected as well in a rising interest rate environment. A
well-diversified portfolio might help mitigate this risk.
Liquidity Risk
Liquidity risk arises when it becomes difficult to sell the securities that one has
purchased. Liquidity Risk can be partly mitigated by diversification, staggering
of maturities as well as internal risk controls that lean towards purchase of
liquid securities.
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Types of Schemes in Mutual
Fund
Figure 5
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A. Investment Objective
Schemes can be classified by way of their stated investment objective such
as Growth Fund, Balanced Fund, and Income Fund etc.
Equity schemes are hence not suitable for investors seeking regular income
or needing to use their investments in the short-term. They are ideal for
investors who have a long-term investment horizon. The NAV prices of equity
fund fluctuates with market value of the underlying stock which are influenced
by external factors such as social, political as well as economic.
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Chart 3
A. General Purpose
The investment objectives of general-purpose equity schemes do not restrict
them to invest in specific industries or sectors. They thus have a diversified
portfolio of companies across a large spectrum of industries. While they are
exposed to equity price risks, diversified general-purpose equity funds seek to
reduce the sector or stock specific risks through diversification. They mainly
have market risk exposure. HDFC Growth Fund is a general-purpose equity
scheme.
B. Sector Specific
These schemes restrict their investing to one or more pre-defined sectors,
e.g. technology sector. Since they depend upon the performance of select
sectors only, these schemes are inherently more risky than general-purpose
schemes. They are suited for informed investors who wish to take a view and
risk on the concerned sector.
C. Special Schemes
Index schemes
JVIMS, JAMNAGAR 55
market. Index Funds are launched and managed for such investors. An
example to such a fund is the HDFC Index Fund.
Specialized real estate funds would invest in real estates directly, or may fund
real estate developers or lend to them directly or buy shares of housing
finance companies or may even buy their securitized assets.
JVIMS, JAMNAGAR 56
Debt scheme risk vs. return
Chart 4
JVIMS, JAMNAGAR 57
A. Income Schemes
Similar to the Income scheme but with a shorter maturity than Income
schemes. An example of this scheme is the HDFC Liquid Fund.
D. Gilt Funds
JVIMS, JAMNAGAR 58
Hybrid Schemes
B. Constitution
Schemes can be classified as Closed-ended or Open-ended depending upon
whether they give the investor the option to redeem at any time (open-ended)
or whether the investor has to wait till maturity of the scheme.
The units offered by these schemes are available for sale and repurchase on
any business day at NAV based prices. Hence, the unit capital of the
schemes keeps changing each day. Such schemes thus offer very high
liquidity to investors and are becoming increasingly popular in India. Please
note that an open-ended fund is NOT obliged to keep selling/issuing new units
at all times, and may stop issuing further subscription to new investors. On the
other hand, an open-ended fund rarely denies to its investor the facility to
redeem existing units.
JVIMS, JAMNAGAR 59
Closed ended Schemes
Interval Schemes
JVIMS, JAMNAGAR 60
Product Portfolio
JVIMS, JAMNAGAR 61
Investment Strategy
INVESTMENT PROTECTION VS. INVESTMENT
GROWTH
Investor Investment Investment
Characteristic Growth Protection
Time Horizon Short-term Long-term
Future Income Steady / High Variable / Low
Requirements
Volatility Limit Low High
(Risk Averseness)
Inflation Protection Low Protection High Protection
Needed Needed
Investor take on Mostly Bearish Mostly Bullish
Equity Market
Table 4
If you are a person who broadly falls into the Investment Growth category you
might be interested in looking at an Aggressive portfolio. On the other hand if
you are leaning towards an interest income with minimal risk investments you
might look at a Conservative asset allocation. Someone who wants a bit of
steady income as well as asset growth might go in for a moderate or a
balanced asset allocation.
AGGRESSIVE PORTFOLIO
Chart 5
MODERATE PORTFOLIO
JVIMS, JAMNAGAR 62
Chart 6
CONSERVATIVE PORTFOLIO
Chart 7
Another way to ascertain the right asset allocation is by looking at your life
cycle. The basis of this theory lies in the simple maxim that younger people
with secure jobs will normally opt for higher returns and take higher risks
compared to older retired people. One must remember that these are only
indicative strategies and will probably have to be fine-tuned to meet your
individual needs.
Portfolio Strategy
JVIMS, JAMNAGAR 63
AGE MAIN OBJECTIVES PORTFOLIO STRATEGY
20-29 Aggressive Growth Sow the 50% - Growth Funds
seeds, plan for housing and 30% - Balanced Funds
create a safety cushion 20% - Money Markets / Cash
30-39 Growth Save for housing, 45% - Growth Funds
childrens expenses (present 30% - Balanced Funds
and future education etc.) 05% - Blue Chip Stocks
and safety cushion 20% - Money Markets / Cash
40-49 Growth Childrens expenses 40% - Growth Funds
(present and future education 30% - Balanced Funds
etc.) and safety cushion 10% - Blue Chip Stocks
20% - Money Markets / Cash
50-59 Retirement Save for 30% - Growth Funds
retirement and build on safety 40% - Balanced Funds
cushion 10% - Blue Chip Stocks
20% - Money Markets / Cash
60-69 Safety Preserve investments/ 10% - Balanced Funds
savings and opt for minimal 15% - Income Funds
growth 10% - Blue Chip Stocks
20% - Dividend Stocks
30% - Certificates of Deposits
(Shorter-term)
15% - Money Markets / Cash
70- Safety Preserve investments/ 30% - Income Funds
savings 25% - Dividend Stocks
35% - Certificates of Deposits
(Shorter-term)
10% - Money Markets / Cash
Table 5
JVIMS, JAMNAGAR 64
Equity Funds
Balanced Funds
Debt Funds
JVIMS, JAMNAGAR 65
HDFC Income Fund
HDFC Liquid Fund
HDFC Gilt Fund Short Term Plan
HDFC Gilt Fund Long Term Plan
HDFC Short Term Plan
HDFC Floating Rate Income Fund Short Term Plan
HDFC Floating Rate Income Fund Long Term Plan
HDFC Liquid Fund - PREMIUM PLAN
HDFC Liquid Fund - PREMIUM PLUS PLAN
HDFC Short Term Plan - PREMIUM PLAN
HDFC Short Term Plan - PREMIUM PLUS PLAN
HDFC Income Fund Premium Plan
HDFC Income Fund Premium plus Plan
HDFC High Interest Fund
HDFC High Interest Fund - Short Term Plan
HDFC Sovereign Gilt Fund - Savings Plan
HDFC Sovereign Gilt Fund - Investment Plan
HDFC Sovereign Gilt Fund - Provident Plan
HDFC Cash Management Fund - Savings Plan
HDFC Cash Management Fund - Call Plan
HDFCMF Monthly Income Plan - Short Term Plan
HDFCMF Monthly Income Plan - Long Term Plan
HDFC Cash Management Fund - Savings Plus Plan
HDFC Multiple Yield Fund
HDFC Multiple Yield Fund Plan 2005
JVIMS, JAMNAGAR 66
Chart 7
Distribution channel
JVIMS, JAMNAGAR 67
Individual Agents
Use of agents has been the most widely prevalent practice for
distribution of funds over the years. By definition an agent acts on behalf
of principal in this case of mutual funds. An agent is essentially a broker
between the fund and the investor. In India we also have the unique
system where by a broker has a number of sub brokers working under
him. The vast sub broker network ensures a large geographic coverage
then otherwise.
Distribution Companies
Direct Marketing
JVIMS, JAMNAGAR 68
Direct marketing means that the mutual funds sell their own products
without any use of intermediateries. Usually, this takes the form of the
sales officer and employees of the AMC who approach the investor and
accept their contribution directly. However in India, independent agents
may really be created as a direct marketing channel in a sense that they
do not form a well knit independent and organized a single entity and act
more like fund employees. Others channel like distribution companies or
banks or even stockbrokers are clearly distinct and independent
intermediaries.
Pricing Policy
Table 6
Thus each scheme has different Entry Load and Exit Load.
Promotional Tools
JVIMS, JAMNAGAR 69
The objective of advertising of HDFC AMC is to create awareness about
services and scheme of HDFC among investors and sub-brokers and
increases sub-brokers of HDFC AMC.
Innovative Practices
Relationship Manager for all client base more than 5 lacs. Relationship
marketing is based on the premise that important accounts need focused and
continuous attention. Relationship marketing helps to judge which segments
and which specific customers will respond profitably to relationship
management.
JVIMS, JAMNAGAR 70
OPERATIONS
DEPARTMENT
JVIMS, JAMNAGAR 71
Location Details
HDFC AMC is located at Yagnik road which is in the heart of the city where
service is easily available for all customer and easy access compare with
other place that available in city. Location has major impact on success or
failure of operation. Advantages of this type of location are that service cost
and distribution cost is minimum comparison with other place.
JVIMS, JAMNAGAR 72
The major investor service centers of
HDFC MUTUAL FUND are as below.
JVIMS, JAMNAGAR 73
Layout Details
There is a plan of all the act of planning & optimum arrangement of planning
including flow of man & material and customer, operating equipment, storage
space, material handling equipments and all other supporting services along
with the design of best structure to contain all these facilities.
JVIMS, JAMNAGAR 74
Maintenance
HDFC AMC is the service sector industry so all the work is carried out with
the help of computer System. There is contract given to service provider and
staff itself does other maintenance.
Procurement
HDFC AMC is the service sector industry so procurement is only for
computer machinery and computer stationary and other stationary include
brochures of all the schemes and monthly fact sheet is used in daily work.
Procurement of computer machinery is done through central contract of main
branch and procurement for stationary is done through local stationary
distributor
Store Management
HDFC AMC is the service sector industry so storage is only for files and fact
sheet and other document that published by AMC.
JVIMS, JAMNAGAR 75
FINANCIAL
DEPARTMENT
JVIMS, JAMNAGAR 76
Acquisition of Funds
&
Utilization of Funds
HDFC Asset Management Company is a service sector industry so
acquisition of funds is done by introducing various schemes and utilization of
fund is done by Fund Manager and fund is invested in market and following is
the total AUM (Asset Under Management) and also given % of utilization in
equity and debt.
JVIMS, JAMNAGAR 77
HDFC Cash Management
Fund - Call Plan Growth 3397.31 0 3438.46 0
Option
HDFC Cash Management
130922.49 109881.82
Fund - Savings Plan Daily 0 0
Dividend Option
HDFC Cash Management
Fund - Savings Plan 54090.94 0 53109.16 0
Growth Option
HDFC Cash Management
Fund - Savings Plan 51955.64 0 54077.05 0
Weekly Dividend Option
HDFC Cash Management
Savings Plus Dividend 39576.21 0 41937.17 0
Plan
HDFC Cash Management
Savings Plus Growth 14270.33 0 15070.69 0
Plan
HDFC Children Gift Fund
10131.06 0 10040.36 0
Investment
HDFC Children Gift Fund
6009.48 0 6040.56 0
Savings
HDFCS CORE & SATELLITE
FUND HDFCS CORE & 33363.33 0 33190.64 0
SATELLITE FUND - DIVIDEND
HDFCS CORE & SATELLITE
FUND HDFCS CORE & 20344.35 0 19764.95 0
SATELLITE FUND - GROWTH
HDFC Equity Fund 179864.79 172451.54
0 0
Dividend Plan
HDFC Equity Fund
85925.42 0 81732.37 0
Growth Plan
HDFC Floating Rate
Income Fund-Long Term 10615.43 0 10945.51 0
Plan DIVIDEND
HDFC Floating Rate
Income Fund-Long Term 23219.71 0 23460.81 0
Plan GROWTH
HDFC Floating Rate
Income Fund-Short Term 77092.97 0 79566.73 0
Plan Dividend
HDFC Floating Rate
Income Fund-Short Term 11315.25 0 10054.04 0
Plan Dividend - Daily
HDFC Floating Rate 4593.55 0 4309.17 0
JVIMS, JAMNAGAR 78
Income Fund-Short Term
Plan Dividend - Monthly
HDFC Floating Rate
Income Fund-Short Term 41352.36 0 40895.19 0
Plan Growth
HDFC Gilt Fund-Long
1757.25 0 1776.05 0
Term Dividend
HDFC Gilt Fund-Long
4386.49 0 4587.9 0
Term Growth
HDFC Gilt Fund-Short
290.39 0 281.14 0
Term Dividend
HDFC Gilt Fund-Short
877.8 0 929.13 0
Term Growth
HDFC Growth Fund
18083.17 0 18064.68 0
Dividend Plan
HDFC Growth Fund
12106.39 0 12123.31 0
Growth Plan
HDFC High Interest Fund
4944.97 0 5002.29 0
Growth Plan
HDFC High Interest Fund
118.22 0 119.1 0
Half Yearly Dividend Plan
HDFC High Interest Fund
1485.87 0 1569.07 0
Quarterly Dividend Plan
HDFC High Interest Fund
36.23 0 40.28 0
Yearly Dividend Plan
HDFC High Interest Fund -
Short Term Plan Dividend 5575.07 0 5901.1 0
Option
HDFC High Interest Fund -
Short Term Plan Growth 1731.71 0 1919.08 0
Option
HDFC Income Fund
12679.8 0 12940.41 0
Dividend
HDFC Income Fund
16067.16 0 16442.68 0
Growth
HDFC Income Fund
0 0 0 0
Premium Plan Dividend
HDFC Income Fund
0 0 0 0
Premium Plan Growth
HDFC Income Fund
0 0 0 0
Premium Plus Dividend
HDFC Income Fund
0 0 0.01 0
Premium Plus Growth
HDFC Index Fund-Nifty 445.49 0 441.24 0
JVIMS, JAMNAGAR 79
Plan(FV Rs 10.326)
HDFC Index Fund-Sensex
581.89 0 594.26 0
Plus( FV-Rs32.161)
HDFC Index FundSensex
477.65 0 466.37 0
Plan( FV Rs 32.161)
HDFC Liquid Fund
45079.48 0 42692.99 0
DIVIDEND
HDFC Liquid Fund
2745.5 0 2162.67 0
Dividend - Daily
HDFC Liquid Fund
528.33 0 452.44 0
Dividend - Monthly
HDFC Liquid Fund
30447.49 0 27852.59 0
GROWTH
HDFC Liquid Fund
Premium Plan - Dividend- 15527.11 0 6835.86 0
Daily
HDFC Liquid Fund
Premium Plan - Dividend- 0 0 0 0
Monthly
HDFC Liquid Fund
Premium Plus Plan - 0 0 0 0
Dividend-Daily
HDFC Liquid Fund
PREMIUM PLUS- 34376.46 0 49412.79 0
Dividend
HDFC Liquid Fund
44970.15 0 42239.93 0
PREMIUM PLUS- Growth
HDFC Liquid Fund
7121.82 0 6822.45 0
PREMIUM- Dividend
HDFC Liquid Fund
8485.41 0 8985.3 0
PREMIUM- Growth
HDFC MF Monthly Income
Plan Long Term Plan 37408.25 0 38162.77 0
Growth Option
HDFC MF Monthly Income
Plan Long Term Plan 15724.56 0 15840.77 0
Monthly Dividend Option
HDFC MF Monthly Income
Plan Long Term Plan
25848.35 0 25567.83 0
Quarterly Dividend
Option
HDFC MF Monthly Income
Plan Short Term Plan 25455.85 0 25893.1 0
Growth Option
JVIMS, JAMNAGAR 80
HDFC MF Monthly Income
Plan Short Term Plan 4855.8 0 4928.51 0
Monthly Dividend Option
HDFC MF Monthly Income
Plan Short Term Plan
10083.57 0 10106.27 0
Quarterly Dividend
Option
HDFC MULTIPLE YIELD
HDFC MULTIPLE YIELD - 13356.83 0 13660.44 0
DIVIDEND
HDFC MULTIPLE YIELD
HDFC MULTIPLE YIELD - 42746.02 0 45112.66 0
GROWTH
HDFC Multiple Yield Fund
12806.04 0 14046.78 0
- Plan 2005 Dividend
HDFC Multiple Yield Fund
45516.13 0 45699.21 0
- Plan 2005 Growth
HDFC Premier Multi-Cap
79709.8 0 81862.4 0
Fund Dividend
HDFC Premier Multi-Cap
38533.13 0 39056.86 0
Fund Growth
HDFC Prudence Fund 125069.82
0 123103.3 0
Dividend Plan
HDFC Prudence Fund
39287.52 0 39609.62 0
Growth Plan
HDFC Short Term Plan
2682.58 0 2732.03 0
DIVIDEND
HDFC Short Term Plan
4581.45 0 4668.24 0
GROWTH
HDFC Short Term Plan
0 0 0 0
PREMIUM -Dividend
HDFC Short Term Plan
PREMIUM PLUS 0 0 0 0
-Dividend
HDFC Short Term Plan
0 0 0 0
PREMIUM PLUS -Growth
HDFC Short Term Plan
0 0 0 0
PREMIUM-Growth
HDFC Sovereign Gilt Fund
- Investment Plan 28.59 0 29.65 0
Dividend Option
HDFC Sovereign Gilt Fund
- Investment Plan Growth 39.59 0 39.97 0
Option
JVIMS, JAMNAGAR 81
HDFC Sovereign Gilt Fund
- Provident Plan Dividend 72.53 0 72.56 0
Option
HDFC Sovereign Gilt Fund
- Provident Plan Growth 136.52 0 139.57 0
Option
HDFC Sovereign Gilt Fund
- Savings Plan Dividend 10.49 0 10.55 0
Option
HDFC Sovereign Gilt Fund
- Savings Plan Growth 41.69 0 41.68 0
Option
HDFC Tax saver Dividend
16825.11 0 15754.16 0
Plan
HDFC Tax saver Growth
15502.62 0 14184.14 0
Plan
HDFC Top 200 Fund
69327.15 0 70913.26 0
Dividend Plan
HDFC Top 200 Fund
31010.76 0 29917.44 0
Growth Plan
Close Ended
HDFC LONG TERM
46242.76 0 46038.13 0
EQUITY FUND Dividend
HDFC LONG TERM
99210.33 0 98771.32 0
EQUITY FUND Growth
Table 7
JVIMS, JAMNAGAR 82
HDFC has total AUM (Asset under Management)
21,602.31crores
E q u ity a n d D e b t c o m p o s itio n
E q u it y ( % )
D e b t (%)
E q u it y ( % ) D e b t (%)
48%
52%
Chart 8
JVIMS, JAMNAGAR 83
Financial Performance
(BALANCE SHEET AND P & L)
JVIMS, JAMNAGAR 84
JVIMS, JAMNAGAR 85
JVIMS, JAMNAGAR 86
JVIMS, JAMNAGAR 87
JVIMS, JAMNAGAR 88
JVIMS, JAMNAGAR 89
COMPARATIVE ANALYSIS OF 3
YEARS
RATIO ANALYSIS
Name Formula 2005 2004 2003
N. P. Ratio Net profit/ Sales * 100 50.24 % 46.67 % 30.43 %
Earning per share (EPS) Profit available to equity 10.78 10.02 10.05
shareholder / No. Of equity
JVIMS, JAMNAGAR 90
Table 8
JVIMS, JAMNAGAR 91
HUMAN
RESOURCE
DEPARTMENT
JVIMS, JAMNAGAR 92
Human Resource
Department
Human Resource Management function that helps managers recruits select,
train and develop members for an organization. Obviously, HRM is concerned
with the peoples dimension in organizations
JVIMS, JAMNAGAR 93
Manpower Planning
Human Resource Planning is the processes by which an organization ensures
that it has the right number and kind of people, at the right place, at the right
time, capable of effectively and efficiently competing those tasks that will help
the organization achieve its overall objectives. Human Resource Planning
translates the organizations objectives and plans into the number of workers
meet those objectives. Without a clear-cut planning, estimation of an
organizations human resource need is reduced to mere guesswork
Manpower planning is needed with respect to persons who can work as sub-
broker for the companies. Companies focus on Advisors of Mutual Fund
product and ELSS schemes of HDFC AMC and focused on Insurance Advisor
and post office agent, Tax consultants and CAs for making sub-broker.
JVIMS, JAMNAGAR 94
Recruitment & Selection
The upper level members like zonal managers, regional managers, branch
managers and senior executives are recruited by publishing recruitment
advertisement in leading national level newspaper. The qualified applicant are
then called for interview and selected.
The regional manager has authority to select lower level employee like peon,
marketing executives, financial accountant etc. by approval of zonal manager.
Step 1: Prospecting
Identify as many
prospective
candidates as
possible from multiple
sources.
Step 2: Attracting talent
Be prepared to talk
passionately about
the opportunities of
this career.
Figure 6
JVIMS, JAMNAGAR 95
Step 1: Prospecting
JVIMS, JAMNAGAR 96
Training
The successful candidates of the AMFI Exam are given the product training. The
primary purpose is to become quite conversant with the product that one sells. In
other words, product knowledge is very important for any advisor. Product
knowledge is not just about knowing the broad terms and conditions of the
various schemes of mutual fund. The advisors are explained about the schemes,
the terms related with it, the benefits it provides to investor. This training is aimed
at making the advisors fully equipped with the companies product information.
This training is aimed at making the advisors experts in selling the mutual fund
products.
This gives the advisors a systematic framework, which they can follow so as to
attract the customers and be effective in their work. Later the agents are trained
on products; need analyses and how to deliver the message to the market.
JVIMS, JAMNAGAR 97
Performance Appraisal
Objective of Performance appraisal if for Developmental uses for agents and
financial consultants, for wages, transfer, promotion, for documentation and
for organizational purpose like Human Resource Planning, Job analysis and
for training and development.
JVIMS, JAMNAGAR 98
RESEARCH
JVIMS, JAMNAGAR 99
INTRODUCTION TO RESEARCH
Many marketing writers confuse the term 'market research' with the term
'marketing research', and sometimes these two terms are used
interchangeably. Thus, it is important to differentiate between the two terms.
Marketing research is defined as "the function that brings the consumer,
customer and public to the market through information - information used to
identify and define marketing objectives and problems; generate, refine and
evaluate marketing actions, monitor marketing performance; and improve
understanding of the marketing process". This clearly shows that marketing
research is wide ranging in its concerns. The term 'market research'
according to Adcock et al is "used to define the specialist activities involved in
collecting information directly through the use of questionnaires and other
associated techniques". They then emphasize that "it is useful to consider
market research as a specialist activity which is within the scope of the
marketing research function" and that it is "concerned with collecting primary
information".
HDFC is one of the leading Asset Management Company, which has wide
range of funds to suit variety of investment needs of investors. Facts suggest
that mutual fund industry is a growing industry and there is also increase in
competition. The performance of various funds will decide the preference of
AMC as well as funds offered by the company.
Equity fund is offered by almost all AMC. Equity funds are able to gather large
funds and it constitutes larger part of total Asset under Management of the
company. In such a situation the company needs to compare its own fund
with that of fund offered by other AMC. Such a comparison will guide the
company in making necessary changes in investment style and thus can
improve the performance of the funds. The company also needs to know the
preference of investors for Equity funds.
Any activity done without any objective in a mind cannot turn fruitful. An
objective provides a specific direction to an activity. Objectives may range
form very general to very specific, but they should be clear enough to point
out with reasonable accuracy what researcher wants to achieve through the
study and how it will be helpful to the decision maker in solving problem.
A research design serves as a bridge between what has been established i.e.
the research objective and what is to be done, in conduct of the study to
realize those objectives. If there were no research design, the research would
have only foggy notion about what is to be done. There are numerous specific
designs, which can be classified into three broad categories.
Research design is the conceptual structure within which the research would
be conducted.
In fact, it is the general blueprint for the collection, measurement and analysis
of data.
This data is gathering for the first time for the problem solution. Primary
data has to be collected through well-equipped instruments, as they
are first hand information collected for the research.
1) Sampling Unit:
2) Sample Size:
3) Sampling Method:
Stratified random sampling method of choosing the samples has been
adopted.
There are different types of sample design based on two factors namely: the
representation basis and element selection technique. On the representation
basic, the PROBABILITY SAMPLING OR NON PROBABILITY SAMPLING.
A random sample gives every unit of the population a known and non-zero
probability of being selected. Since random sampling equal probability to
every unit in the population, it is necessary that the selection of the sample
must be free from human judgment.
So the sampling procedure that selected for research is PROBABILITY
sampling.
For the purpose of gathering the data, different fact sheets and brochures are
used.
HDFC AMC was incorporated under the companies Act 1956, on December
10, 1999 and was approved to act as an Asset Management Company for the
Mutual Fund by SEBI on July 3, 2000. 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 AMC is Rs 75.161 crores.
HDFC SNAPSHOT
Table 9
RELIANCE SNAPSHOT
Table 10
FRANKLIN SNAPSHOT
Table 11
Tata Asset Management Ltd. is a part of the Tata group - one of India's
largest and most respected industrial groups. The Tata Group is one of India's
best-known conglomerates in the private sector with a turnover of around US
$ 14.25 billion (equivalent to 2.6 % of India's GDP). Long known for its
adherence to business ethics, it is India's most respected private business
group. With 220,000 employees across 91 companies, it is also India's largest
employer in the private sector
Tata Asset Management Limited, having Rs. 10464.37 crores (as on May 31,
2006) of assets under management.
TATA SNAPSHOT
Table 12
Objective:
The investment objective of the scheme is to achieve capital
appreciation.
Asset allocation:
Table 13
Objective:
The primary investment of objective of the scheme is to
Seek to generate capital appreciation and provide long-term growth
opportunities by investing in portfolio constituted of equity securities and
equity related securities.
Asset allocation:
Table 13
Objective:
An open-end growth scheme with an objective primarily to
provide medium to long-term capital appreciation.
Asset allocation:
Table 14
Objective:
The scheme focuses on capitalizing on opportunities offered by
equity market from time to time with a proactive fund management strategy.
Asset allocation:
Table 14
Table 15
1 Year Return
HDFC equity
fund
50
40 Reliance equity
% of 30 opportunities
fund
Return 20
Franklin India
10 blue chip Fund
0
Scheme Name Tata equity
opportunities
fund
Chart 9
Here the return of HDFC Equity Scheme is more than other equity
scheme because the fund manager has invested the money in only
that shares which offer higher return.
70 HDFC equity
60 fund
50
% of 40 Franklin India
Return 30 blue chip Fund
20
10 Tata equity
0 opportunities
Scheme Name fund
Chart 10
Here the return of HDFC Equity Scheme decreases but they have
maintained the same rank in the market as it was before though the
competitors of the scheme increase.
45
40
35
30 HDFC equity
% of 25 fund
Return 20
15 Franklin India
10 blue chip Fund
5
0
Scheme Name
Chart 11
Table 16
Table 16
Table 17
Table 17
Table 18
NAV COMPARISION
120
100
80
NAV in Rs 60
40
20
0
HDFC Relianc Franklin Tata
Equity e Equity Blue Equity
107.22 19.36 94.31 42.55
Scheme name
Chart 12
Comparison of Scheme
returns with Benchmark
R e la tiv e P e r fo r m a n c e
100
Returns
50
0
Last 1
Last 3
Last 5
Period
Year
year
year
Last 10
inceptio
Year
Since
n
T im e P e rio d
Chart 13
In this fund return against its Benchmark has been very good. In the
last year it has given 90.24 % return and overall return of its
benchmark was 64.16. So the average return of the fund than its
benchmark is almost 30%.
Table 20
R elative P e rfo rm an ce
150
100
Return
50
0
P eriod Las t 1 y ear S inc e
inc eption
T im e P e rio d
Chart 14
In this fund return against its Benchmark has been good. In the
last year it has given 98.39 % return and overall return of its
benchmark was 82 % .So the overall return of the fund than its
benchmark is almost 16 % more.
Table 21
R elative Performance
80
60
Return
40
20 Returns (% )
0
Last 1
Last 3
Last 5
inceptio
years
years
year
Benchmark
Since
n
Return (% )
Tim e Pe riod
Chart 15
In this fund return against its Benchmark has been same only. In
the last year it has given 54.69 % return and overall return of its
benchmark was 54.64 %. And average return of the fund than its
benchmark is almost 14%.
R e la tiv e P e rfo rm a n c e
1 50
Return 1 00
50
0
Last 1
Last 3
Last 5
Period
years
years
inceptio
year
Since
n
T im e P e rio d
Chart 16
In this fund return against its Benchmark has been good. In the
last year it has given 103.79 % return and overall return of its
benchmark was 95.67 %. And the average return of the fund than
its benchmark is almost 18 %.
Findings
Following are the findings of the research-:
3) It is also found that because of higher return the rank of HDFC equity
Fund is gradually increased from rank 15 to rank 6.
4) From top 10 holdings of each equity scheme, it is seen that the major
sector in which each scheme has invested are as follows.
Automobile Sector
Software Sector
Industrial Capital Goods
Construction
Petroleum Industry
Here from the study we can conclude about overall study through some
sorting of products and the most likely invested sector and also the good
performance of the funds among our sample size and asset allocation of
the fund and the overall return of the fund against its benchmark.
2) The last 5-year return of HDFC Equity Scheme is more than any other
Equity Schemes.
3. Data Analysis and interpretation done may not be that strong due to
small sample and random sampling method.
A very small part market has been cover 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.
1 SOCIAL RESPONSIBLITIES 18
2 GROWTH OF ASSETS 42
3 EQUTIY RISK VS RETURN 54
4 DEBT RISK VS RETURN 57
5 AGGRESSIVE PORTFOLIO 62
MODERATE & CONSERVATIVE
6 63
PORTFOLIO
7 RISK VS RETURN INVESTMENT 67
8 EQUITY & DEBT COMPOSITION 83
9 1 YEAR RETURN 115
10 3 YEAR RETURN 116
11 5 YEAR RETURN 117
12 NAV COMPARISION 120
13 HDFC RELATIVE PERFORMANCE 121
14 RELIANCE RELATIVE PERFORMANCE 122
15 FRANKLIN RELATIVE PERFORMANCE 123
16 TATA RELATIVE PERFORMANCE 124
Account Statement:
Statement issued by the mutual fund, in lieu of the unit certificate, giving
details of transactions and holdings of an investor in the different
schemes of the fund.
Adjusted NAV:
The Net Asset Value after adjusting for all changes caused due to
dividend declaration, bonus etc. assuming reinvestment of distributions
made to the investors at the prevailing NAV.
Annual Report:
The yearly record of scheme's performance, and is distributed to
investors and/or shareholders under SEBI regulations.
Applicable NAV:
It is the NAV that will be applied for a transaction depending upon the
cutoff time specified by the Mutual Fund. All investments or redemptions
are processed at that particular NAV. A different NAV holds if received
after the cutoff time.
Asset Allocation:
The distribution of total funds available with the scheme into
instruments of various types such as stocks, bonds etc. based on the
scheme's investment objective as detailed in the offer document.
Capital Gains:
The profit realizations on sale of securities and certain other capital
assets (including units of mutual funds) are called capital gains. The
gains can be classified into long-term, if the investments are held for
more than one year, or short-term, otherwise, and are charged at
different tax rates.
Current Load:
It refers to the load structure applicable currently on any fund. Funds
keep revising the load structures from time to time.
Current Yield:
The ratio of coupon interest to the actual market price, prevailing in the
market, of the bond expressed as a percentage: annual interest/ current
market value = current yield.
Custodian:
SEBI mandates that a Custodian be appointed for safekeeping of a
fund's securities and other assets.
Dividend Payout:
Under the Dividend plan of a scheme there are two options available to
the investor, viz.
Dividend yield:
It refers to the dividend earned per unit in Rupees of a scheme at the
prevailing NAV.
Duration:
This is a tool used to calculate the average holding period of the assets
in a debt scheme, and can help, particularly Modified Duration, in
estimating the sensitivity of a fund to incremental yield movements.
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.
Gilts/Government Securities:
Securities created and issued by the Central Government and/or State
Government, and may include securities unconditionally guaranteed by
the Government. An auction process determines the coupon on these
securities.
Inflation Risk:
The probability of the value of an asset being eroded on account of
inflation.
Lock-in period:
The cooling period after investment in fresh units during which the
investor cannot redeem the units.
Management Fee:
The fees charged to a scheme for investment management of the funds
under the scheme, usually expressed as percentage of assets, and are
subject to limits prescribed by SEBI.
Market Risk:
It refers to the risk posed by the market in itself i.e. the risk that the price
of a security will raise or fall due to changing economic, political, or
market conditions.
Money Market:
It refers to a market for very short-term securities less than a year, such
as Treasury Bills and Call Money make up the bulk of trading in the
money markets.
Offer Document:
It is the official document issued by mutual funds prior to the launch of a
fund describing the characteristics of the proposed scheme/fund to all
its prospective investors. It contains information required by SEBI
pertaining to issues such as investment objective and policies, services,
and fees.
Redemption:
An investor wishing to withdraw his/her investment from a scheme/fund
gives a redemption transaction. The investor is paid a NAV linked price.
Sale Price:
The price at which a fund offers to sell one unit of its scheme to
investors. This NAV is grossed up with the entry load applicable, if any.
Total Return:
Return on investment, calculated after taking into account capital
appreciation, dividends or interest, and individual tax considerations
adjusted for present value and expressed on an annualized basis.
Trustee:
The Trustees comprise the Trust and having an overall supervisory
authority over the AMC. They ensure that the AMC follow the trust
deed, the SEBI regulations and the offer document and the assets of
the funds are held safely.
Yield Curve:
The curve gives the relationship between yields on a group of fixed-
income securities with varying maturities viz. treasury bills, notes, and
bonds. The curve typically slopes upward since longer maturities
normally have higher yields, although it can be flat or even inverted.
Websites
www.hdfcfund.com
www.mutualfundsindia.com
www.amfiindia.com
www.sebi.gov.in
www.valuresearchonline.com
www.moneycontrol.com