Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
ON
GENERAL STUDY OF HDFC MUTUAL FUND
SUBMITTED BY
VISHAL N. NASIT
MBA Sem-III
ACADEMIC YEAR 2006 2008
PROJECT GUIDE
(DR). MITA VORA (assistant professor)
SUBMITTED TO
SAURASHTRA UNIVERSITY, RAJKOT
COLLEGE NAME
MBA education brings its students in direct contact with the real corporate world
through industrial training. The MBA program provides its students with an in depth
study of various managerial activities that are performed in any organization.
Simple language has been used throughout the report. Report is illustrated with figure,
charts and diagrams as and when required.
I guarantee that this project report has not been submitted for the awards to any other
university for degree, diploma or any other such prizes.
Date:
Place: RAJKOT
I convey my deepest gratitude to Mr. Amit Doshi, Mr. Kilol Karia, and Mr. Sandip
Kalola. and all other staff members of HDFC MUTUAL FUND (AMC) and HDFC
BANK who have been very co-operative and helpful in providing vital information
for my project.
This Summer Training has imparted me a professional exposure to the real corporate
world and its general management orientation. By working at HDFC MUTUAL
FUND (AMC), studying different schemes of MUTUAL FUND, knowing the criteria
of making investment, interacting with professional departmental heads and by
preparing this report, it has added a practical touch to my theoretical knowledge.
I avail this opportunity to convey my sincere thanks to Mr. T.D.TIWARI, the director
of R.K. College of Business Management. I am thankful to DR. MITA VORA, my
project guide for recommending me the necessary information for the report. His
instilling support and enthusiasm, expert guidance and insight have lent my project a
unique touch. I also express my sincere gratitude to Mr. Prof (Dr.) T. D. TIWARI,
Director of R.K.C.B.M., for providing us an opportunity to interact with professional
people in the real corporate world. I forward my gratitude for the compulsion of this
most wonderful aspect of our MBA curriculum without which knowledge of
management is incomplete and futile.
At last I am also thankful to my family member and friends who had given me their
constructive advice, educative suggestions, encouragement and co-operation to
prepare this report.
EXECUTIVE SUMMARY
The economy is highly influenced by the Financial System of the country. The Indian
Financial System has been broadly divided into two segments: the organized and
unorganized. An investor has a wide array of investment avenues available. Economic
well being in the long run depends significantly on how wise he invests.
In present financial scenario where the economy is poised to grow at 9% ,as stated by
our finance minister P Chidambaram, and the present bulls run in the capital market
When investors are confronted with an outstanding range of products, form traditional
bank deposits to downright shady money-multiples schemes, it has to be judged on
the yardsticks of returns, liquidity, safety, convenience and tax efficiency. An
important question facing many investors across the country today is whether one
should invest in a bank fixed deposit or in a debt-oriented Mutual Fund. Mutual fund
During the training period and interaction with people it was found that awareness of
Mutual Fund among IFAs was there to a limited extent but there was lot of
misconceptions among them about mutual fund as I had meet few who had lost there
money in UTI scam and others though where aware of mutual fund where not
suggesting this to there clients as they thought it as to be to risky for there clients and
those who where aware where really aggressive to take the opportunity offered by
mutual fund to earn a high return. On the whole if I have to conclude my survey I
would like to say that if we have to create awareness about diversified portfolio,
professional management and SEBI Regulations and benefits it offers to IFAs and
there clients and also we have to clear few misconception which IFAs have, to tap the
huge potential which mutual fund market has to offer
A severe bear market began in the autumn of 1969. People became disillusioned with
stocks and mutual funds. "The market's toast. Itll never get back to where it was!"
was echoed by panicked investors. Unemployment grew; inflation went crazy, and
investors pulled billions back out of the funds. They should have hung in there! Many
funds have risen 9,000% since then.
The 1970's saw a new kind of fund innovation: funds with no sales commission called
"no load" funds. The largest and most successful no load family of funds is the
Vanguard Funds, created by John Boggle in 1977.
At the end of the 1920's there were only 10 mutual funds. At the end of the 1960's
there were 244. Today there are more than 6,500 unique funds and even thousands
more that differ only by their share class (how they are sold, and how their expenses
are charged).
Before we continue with all you need to know about mutual funds, here is something
that merits your attention. Since 1940, no mutual fund has gone bankrupt. You sure
can't say that about banks and savings and loans!
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 equity assets ordinary shares, preference shares, warrants etc. A bond fund
would 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.
When an investor subscribes to a mutual fund, he or she buys a part of the assets or
the pool of funds that are outstanding at that time. It is no different from buying
shares of joint stock Company, in which case the purchase makes the investor a part
owner of the company and its assets. In fact, in the USA, a mutual fund is constituted
as an investment company and an investor buys in to the fund, meaning he buys the
shares of the fund. In India, a mutual fund is constituted as a Trust and the investor
subscribes to the units issued by the fund, which is where the term Unit Trust comes
from. However, whether the investor gets fund shares or units is only a matter of legal
distinction. In any case, a mutual fund shareholder or unit-holder is a part owner of
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned
through these investments and the capital appreciation realized is shared by its unit
holders in proportion to the number of units owned by them. Thus Mutual fund is
most suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost.
Mutual Funds offer benefits, which are too significant to miss out. Any investment
has to be judged on the yardsticks of return, liquidity and safety. Convenience and
Tax efficiency are the other benchmark relevant in Mutual Fund investments. In the
wonderful game of finance safety and return are two opposite goals and investor
cannot be nearer to both at the same time. Mutual Funds are pooled resources that get
invested in a diversified portfolio. The crux of Mutual Fund investing is averaging
the risk. When risk is equalized so are the returns.
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 (source: www.moneycontrol.com). The duration is important because like
wise, Mutual Fund returns taste better with the passage of time. Investor should be
prepared to lock in your investments preferably for 3 years in an income fund and 5
years in an equity fund. Liquid Funds of course, generate returns even in a very short
term.
Performance analysis of several funds shows that depending on the scheme and the
duration returns from funds average between 9% to 25%. Such average may be
misleading, as some would have fared poorly while others would have posted
phenomenally high returns. The burden of intelligent choice therefore rests on
investor. As the market matures and funds develop equal capabilities returns may
however level out.
These schemes, also commonly called Growth Schemes, seek to invest a majority of
their funds in equities and a small portion in money market instruments. Such
schemes have the potential to deliver superior returns over the long term. However,
because they invest in equities, these schemes are exposed to fluctuations in value
especially in the short term. 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.
I. Index Schemes
The primary purpose of an Index is to serve as a measure of the performance of the
market as a whole, or a specific sector of the market. An Index also serves as a
relevant benchmark to evaluate the performance of mutual funds. Some investors are
interested in investing in the market in general rather than investing in any specific
fund. Such investors are happy to receive the returns posted by the markets. As it is
not practical to invest in each and every stock in the market in proportion to its size,
these investors are comfortable investing in a fund that they believe is a good
representative of the entire market. Index Funds are launched and managed for such
investors.
These schemes are commonly called Income Schemes; invest in debt securities such
as corporate bonds, debentures and government securities. The prices of these
schemes tend to be more stable compared with the equity schemes and most of the
returns to the investors are generated through dividends or steady capital appreciation.
These schemes are ideal for conservative investors or those not in a position to take
higher equity risks, such as retired individuals. However, as compared to the money
market schemes they do have a higher price fluctuation risk and compared to a Gilt
fund they have a higher credit risk.
I. Income Schemes
These schemes invest in money markets, bonds and debentures of corporate with
medium and long term maturities. These schemes primarily target current income
instead of capital appreciation. They therefore distribute a substantial part of their
distributable surplus to the investor by way of dividend distribution. Such schemes
usually declare quarterly dividends and are suitable for conservative investors who
have medium to long term investment horizon and are looking for regular income
through dividend or steady capital appreciation.
Liquid Income Schemes
Similar to the Income scheme but with a shorter maturity than Income schemes.
3) HYBRID SCHEMES
These schemes are commonly known as balanced schemes. These schemes invest in
both Equity as well as Debt. By investing in a mix of this nature, balanced schemes
seek to attain the objective of income and moderate capital appreciation and are ideal
for investors with a conservative, long term orientation.
2. AS PER CONSTITUTION
Open-ended schemes do not have a fixed maturity period. Investors can buy or sell
units at NAV-related prices from and to the mutual fund on any business day. These
schemes have unlimited capitalization, open-ended schemes do not have a fixed
maturity, there is no cap on the amount you can buy from the fund and the unit capital
can keep growing. These funds are not generally listed on any exchange.
Close-ended schemes have fixed maturity periods. Investors can buy into these funds
during the period when these funds are open in the initial issue. After that such
schemes can not issue new units except in case of bonus or rights issue. However,
after the initial issue, you can buy or sell units of the scheme on the stock exchanges
where they are listed. The market price of the units could vary from the NAV of the
3) INTERVAL SCHEME
These schemes combine the features of open-ended and close-ended schemes. They
may be traded on the stock exchange or may be open for sale or redemption during
pre-determined intervals at NAV based prices.
SPONSOR
Sponsor is the person who acting alone or in combination with another body corporate
establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of
the Investment managed and meet the eligibility criteria prescribed under the
Securities and Exchange Board of India (Mutual Fund) Regulations, 1996. The
sponsor is not responsible or liable for any loss or shortfall resulting from the
operation of the Schemes beyond the initial contribution made by it towards setting up
of the Mutual Fund.
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.
The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund.
The AMC is required to be approved by the Securities and Exchange Board of India
(SEBI) to act as an asset management company of the Mutual Fund. At least 50% of
the directors of the AMC are independent directors who are not associated with the
Sponsor in any manner. The AMC must have a net worth of at least 10 cores at all
times.
The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer
Agent to the Mutual Fund. The Registrar processes the application form, redemption
requests and dispatches account statements to the unit holders. The Registrar and
Transfer agent also handles communications with investors and updates investor
records.
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 history of
mutual fund in India can be broadly divided into four distinct phases.
Ph
as
e-I
II
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Ph
Phases of Mutual
Fund Industry in
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Ph
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Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set
up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978, UTI was de-linked from
the RBI and the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first scheme launched by
UTI was Unit Scheme in 1964. At the end of 1988 UTI had Rs.6, 700 cores of assets
under management.
1987 marked the entry of non-UTI, public sector mutual funds set up by the 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
At the end of 1993, the mutual fund industry had assets under management of Rs.47,
004 cores.
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 the mutual funds except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first privates sector
mutual fund registered in July 1993.
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 cores
of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations and with the 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 cores under 421 schemes.
Note
Erstwhile UTI was bifurcated into UTI Mutual fund and the Specified Undertaking of
the Unit Trust of India effective from February 2003. The Assets under management
of the Specified Undertaking of the Unit Trust of India has thereof been executed
from the total assets of the industry as a whole from February 2003 onwards.
Mutual funds normally come out with an advertisement in newspapers publishing the
date of launch of the new schemes. Investors can also contact the agents and
distributors of mutual funds who are spread all over the country for necessary
information and application forms. Forms can be deposited with mutual funds through
the agents and distributors who provide such services. Now days, the post offices and
banks also distribute the units of mutual funds. However, the investors may please
note that the mutual funds schemes being marketed by banks and post offices should
not be taken as their own schemes and no assurance of returns is given by them. The
only role of banks and post offices is to help in. distribution of mutual funds schemes
to the investors. Investors should not be carried away by commission/gifts given by
agents/distributors for investing in a particular scheme. On the other hand they must
consider the track record of the mutual fund and should take objective decision.
The amount that has to be invested in onetime is known as Onetime Investment. The
investor has to pay the whole amount at once. The minimum amount is Rs. 5000 and
maximum is as per the investors
Choice. This investment is generally preferred for the business man who
Are able to pay at one time.
The amount that has to be invested through same monthly installment is known as
Systematic Investment Plan. The investor has to pay the minimum amount Rs.1000
monthly for all equity and balanced schemes like that for 6months. And Rs.500
monthly for Tax Saver scheme like that for 12 months. The minimum amount that the
investor has to invest is Rs6000 and maximum as per their choice. This type of
investment is generally preferred for the salaried people.
In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The
objectives of SEBI are to protect the interest of investors in securities and to
promote the development of and to regulate the securities market.
SEBI formulates policies and regulates the mutual funds to protect the interest of the
investors.
Mutual funds are regulated by the SEBI (mutual Fund) Regulations, 1996.
SEBI is the regulator of all funds, except offshore funds.
Bank-sponsored mutual funds are jointly regulated by SEBI and RBI.
The bank-sponsored fund cannot provide a guarantee without RBI Permission.
RBI regulates money and government securities markets, in which mutual Funds
are invested.
Listed mutual funds are subject to the listing regulations of stock exchange.
Since the AMC and Trustee Company are companies, the Department of Company
affairs regulate them. They have to send periodic reports to the ROC (Register of
Companies) and the CLB (Company Law Board) is the appellate authority.
Investors cannot sue the trust, as they are the same as the trust and cant sue
themselves.
UTI does not have a separate sponsor and AMC.
UTI is governed by the UTI Act, 1963 and is voluntarily under SEBI Regulations.
UTI can borrow as well as lend also engage in other financial services activities.
Only AMFI certified agents can sell Mutual Fund units.
Mutual Funds Company is required to update the NAV of the scheme on the
AMFI website on a daily basis in case of open-ended scheme.
RBI
RBI, a supervisor of the Banks owned Mutual Funds-As banks in India come under
the regulatory Jurisdiction of RBI, banks owned funds to be under supervision of RBI
and SEBI. RBI has supervisory responsibility over all entities that operate in the
money markets.
STOCK EXCHANGE
Stock Exchanges are Self-regulatory organizations supervised by SEBI. Many closed
ended funds of AMCs are listed as stock exchanges and are traded like shares.
1. AFFORDABILITY
A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon
the investment objective of the scheme. An investor can buy in to a portfolio of
equities, which would otherwise be extremely expensive. Each unit holder thus gets
an exposure to such portfolios with an investment as modest as Rs.500/-. This amount
today would get you less than quarter of an Infosys share! Thus it would be affordable
for an investor to build a portfolio of investments through a mutual fund rather than
investing directly in the stock market.
3. VARIETY
Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two
ways: first, it offers different types of schemes to investors with different needs and
risk appetites; secondly, it offers an opportunity to an investor to invest sums across a
variety of schemes, both debt and equity. For example, an investor can invest his
money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending
on his risk appetite and thus create a balanced portfolio easily or simply just buy a
Balanced Scheme.
4. PROFESSIONAL MANAGEMENT
Qualified investment professionals who seek to maximize returns and minimize risk
monitor investor's money. When you buy in to a mutual fund, you are handing your
money to an investment professional that has experience in making investment
decisions. It is the Fund Manager's job to (a) find the best securities for the fund,
given the fund's stated investment objectives; and (b) keep track of investments and
changes in market conditions and adjust the mix of the portfolio, as and when
required.
5. TAX BENEFITS
6. REGULATIONS
Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly
defined rules, which govern mutual funds. These rules relate to the formation,
administration and management of mutual funds and also prescribe disclosure and
accounting requirements. Such a high level of regulation seeks to protect the interest
of investors.
7. CONVENTIONAL ADMINISTRATION
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems
such as bad deliveries, delayed payments and follow up with brokers and companies.
Mutual Funds save your time and make investing easy and convenient. Return
Potential Over a medium to long-term; Mutual Funds have the potential to provide a
higher return as they invest in a diversified basket of selected securities.
8. LIQUIDITY
In open-ended mutual funds, you can redeem all or part of your units any time you
wish. Some schemes do have a lock-in period where an investor cannot return the
units until the completion of such a lock-in period.
9. CONVENIENCE
An investor can purchase or sell fund units directly from a fund, through a broker or a
financial planner. The investor may opt for a Systematic Investment Plan (SIP) or a
Systematic Withdrawal Advantage Plan (SWAP). In addition to this an investor
receives account statements and portfolios of the schemes.
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.
i. Standard Chartered Asset Management Co. Private Ltd.
AUM OF COMPETITORS
VISION
BOARD OF DIRECTORS
Mr. D S Parekh - Chairman Mr. D N Ghosh
The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh
Marg, 169, Back bay 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
As per the terms of the Investment Management Agreement, the AMC will conduct
the operations of the Mutual Fund and manage assets of the schemes, including the
schemes launched from time to time.
Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund,
following a review of its overall strategy, had decided to divest its Asset Management
business in India. The AMC had entered into an agreement with ZIC to acquire the
said business, subject to necessary regulatory approvals.
The AMC is managing 2 close ended Income Scheme viz. HDFC Fixed Investment
Plan and HDFC Long Term Equity Fund and 23 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 Long Term Advantage Fund, 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 MF Monthly Income Plan (HMIP),
HDFC Core & Satellite Fund (HSCF), HDFC Multiple Yield Fund (HMYF), HDFC
Premier Multi-Cap Fund (HPM) and HDFC Multiple Yield Fund Plan 2005
(HMY2005).
The AMC is also providing portfolio management / advisory services and such
activities are not in conflict with the activities of the Mutual Fund. The AMC has
renewed its 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 Certificate of Registration is valid from January 1,
2004 to December 31, 2006.
HDFC was incorporated in 1977 as the first specialised housing finance institution in
India. HDFC provides financial assistance to individuals, corporate 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 currently has a client base of over 8, 00,000 borrowers, 12, 00,000 depositors,
92,000 shareholders and 50,000 deposit agents. HDFC raises funds from international
agencies such as the World Bank, IFC (Washington), USAID, CDC, ADB and KFW,
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 ninth 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.
HDFC is India's premier housing finance company and enjoys an impeccable track
record in India as well as in international markets. Since its inception in 1977, the
Corporation has maintained a consistent and healthy growth in its operations to
remain the market leader in mortgages. Its outstanding loan portfolio covers well over
a million dwelling units. HDFC has developed significant expertise in retail mortgage
loans to different market segments and also has a large corporate client base for its
housing related credit facilities. With its experience in the financial markets, a strong
market reputation, large shareholder base and unique consumer franchise, HDFC was
ideally positioned to promote a bank in the Indian environment.
The Standard Life Assurance Company was established in 1825 and has considerable
experience in global financial markets. In 1998, Standard Life Investments Limited
Equity Funds
HDFC Growth Fund
HDFC Long Term Advantage Fund
HDFC Index Fund
HDFC Equity Fund
HDFC Capital Builder Fund
HDFC Tax saver
HDFC Top 200 Fund
HDFC Core & Satellite Fund
HDFC Premier Multi-Cap Fund
HDFC Long Term Equity Fund
HDFC Mid-Cap Opportunity Fund
Balanced Funds
HDFC Children's Gift Fund Investment Plan
HDFC Children's Gift Fund Savings Plan
Management : Trustee.
HDFC Asset Management Company Limited (AMC).
HDFC Prudence fund has been ranked ICRA-MFR 1, and Has Been awarded
the Gold Award for Best Performance in the category of Open Ended Balanced
Scheme for one year Period Ending Dec 31, 2005.
HDFC Tax saver fund has been ranked ICRA-MFR 1, and Has Been Silver
award for Second Best Performance in the category of Open Ended Equity
Linked Saving Scheme(ELSS) for Three year Period Ending Dec 31, 2005.
HDFC MIP~LTP has been ranked ICRA-MFR 1, and Has been awarded the
Gold Award For Best Performance in the category of Open Ended Marginal
Equity Scheme for one year Period Ending Dec 31, 2005.
A process is any activity or group of activities that takes one or more inputs,
transforms and add value to them, and provides one or more output for its customers.
The term operation management refers to the direction and control of the process
that transform inputs into product and services.
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.
The major investor service centres of HDFC MUTUAL FUND are as below.
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.
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.
MARKETING DETAILS
Marketing generally refers as the task of creating, promoting and delivering goods
and services to consumers and business. Marketing managers seeks to influence the
level of timing and composition of demand to meet the organisations objectives.
Marketing people are involved in 10types of entities: goods, services, experiences,
events, persons, places, properties, organization, information and ideas. The
marketing concept rests on four pillars: target market, customer needs, integrated
marketing and profitability.
MARKETINGSCENARIO
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
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 staffs that manages each of these functions on a fulltime basis. Now,
Mutual Fund is new developing market. In fact, the mutual fund vehicle exploits
economies of scale in all three areas research, investment and transaction processing.
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.
So that HDFC Asset management company have introduced variety of scheme like
debt scheme, balanced scheme, equity related scheme and each schemes have option
to invest in SIP (Systematic Investment Plan) which help investor to invest a specific
amount for a continuous period, at regular intervals so that investor has the advantage
of rupee cost averaging and also helps him save compulsorily a fixed amount each
amount.
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
Balanced scheme have target market of person who wants to take moderate risk and
expect average return and Debt scheme have target market of person who wants to
take less risk. Close ended scheme have target market of person who wants long term
equity investment.
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.
POSITIONING STRATEGY
Positioning is the act of designing the companys offering and image to occupy a
distinctive place in the target markets mind.
DISTRIBUTION COMPANIES
Availing of the services of established distribution companies is practice accepted by
mutual fund internationally. This practice evolve with a view to provide the huge
administrative mechanism require supporting a large agent force. Instead of having to
deal with several agents, a fund can interact with distribution a company which has
several employees or sub brokers under it.
DIRECT MARKETING
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 stock brokers are clearly distinct and independent intermediaries.
PRICING POLICY
Thus each scheme has different Entry Load and Exit Load.
PROMOTIONAL TOOLS
The objective of advertising of HDFC AMC is to create awareness about services and
scheme of HDFC among investors and sub-brokers and increase sub-brokers of
HDFC AMC.
Company does give advertisement in media like Newspapers, and Magazines etc.
when in introduce new scheme or mutual fund IPO and through direct marketing they
advertise and create awareness about their services and new schemes. HDFC also do
presentation about various schemes so that investors can know more about their
product and services.
In all business concerns, there is one common element. I.e. HUMAN RESOURCE.
Work force of an Organization is one of the most important inputs of components. It
is said that people are our single most important assets. Because of the unique
importance of HUMAN RESOURCE and its complexity due to ever changing
psychology, behaviour and attitudes of men and women at work, personnel function,
i.e., manpower management function is becoming increasingly specialized. The
personnel function or system can be broadly defined as the management of people at
work- management of managers and management of workers. Personnel function is
particularly interested in personnel relationship and interaction of employees-human
relations.
DEFINITIONS
According to Edward Flippo Personnel management organizing, directing and
controlling of the procurement, development, compensation, integration, maintenance
and separation of human resources to the end that individual, organizational and
societal objectives are accomplished.
Personnel planning are the process by which an organization ensures that is has the
right number and kind of people, at right places, at the right time, capable of
effectively and efficiently completing those tasks that will help the organization
achieve its overall objectives.
MANPOWER PLANNING
Human Resource Planning is the process 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.
INTEGRITY
Integrity is central flature of HDFC culture and hence HDFC AMC is no exception
and the same is expected of the dealings, behaviour and work conduct.
TRUST
Based on principal of trusteeship and HDFC AMC recognizes the immense trust
placed in it by its shareholders, employees and customers base and strives to live by
the standards it has set for itself, the standards that have made it what it is today.
MENTORING
HDFC AMC understands the constant need of guidance and direction to employees.
Every superior acts as a mentor for all employees reporting into him. The mentor acts
like a coach provides constructive feedback which helps the subordinates to sheer
their career in the right direction.
EXCLUSIVE EMPLOYMENT
The employee position is that of full time employed with HDFC AMC. The company
strictly prohibits the employees from seeking employment of any nature with any
other entity. The employees have to take prior approval
from the superior and the Human Resource department before engaging in activities
like addressing seminars, teaching etc. and ensure that this official duties do not suffer
on this account and no monetary benefit is derived there from.
The employee or its relatives should also not be empanelled as an authorized /
unauthorized distributor / agent / broker or in any other similar capacity of any entity
(including HDFC Mutual Fund) engaged in distribution and selling of financial
products.
RECRUITMENT POLICY
Recruitment & Selection
The upper level members like zonal managers, regional managers, branch managers
and senior executives are recruited by publishing recruitment advertisement in leading
RECRUITMENT PROCESS
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.
Step 3:selecting talent
Step 1: Prospecting
It consists of the following steps:
TRAINING
Continuous training and upgrading technical, behavioural and managerial skills is a
way of life in HDFC AMC. HDFC AMC encourages agent or sub-broker to hone their
skills regularly to enable them to face the challenges of the changing requirements of
customers that fit market up and down.
Training needs analysis is done on a regular basis and systematic methodologies are
ensured that skills and capabilities of all agents are constantly upgraded to enable
them to perform in the challenging work. There is special training session at regular
time period in local branch to all financial consultant and agents about new scheme
and to improve their effectiveness.
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.
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.
For Performance Appraisal modern method is used like MBO (Management by
Objectives) and 360 appraisal. But there is some limitation like Hello effect, Bias,
Perception factor, Spill over etc.
FINANCIAL DETAILS
IMPORTANCE OF FINANCE
Finance is regarded as the life blood of a business enterprise. This is because in the
modern money oriented economy. Finance is the one of the basic foundation of all
kind of electronic activity. It is the master key which provides access to the entire
source for being employed in manufacturing and merchandizing activities. It has
rightly been said the business needs money to make more money. However it is also
true that money begets more money, only when it is properly managed. Hence,
efficient management of every business enterprise is closely linked with efficient
management of its finance.
Business finance is that business activity which is concerned with the acquisition and
conservation of capital funds in meeting financial needs and overall objectives of far
business enterprise.
Business finance can broadly be defined as the activity concerned with planning
rising, controlling and administrating of the funds used in the business.
From the various definition of the term business finance given above, it can be
conclude that the term business finance mainly involves, rising of funds and their
effective utilization keeping in view the overall objectives of the firm. This requires
great caution and wisdom on the part of management. The management makes use of
various financial techniques, devices, etc. For administrating the financial affairs of
the firm in the most effective and efficient way. Financial management, therefore,
means the entire gamut of managerial efforts devoted to the management of finance
both its sources and uses of the enterprise.
CURRENT ASSETS,
LOANS
AND ADVANCES
Sundry Debtors 6 5,94,48,534 2,42,20,249
Cash and Bank Balances 7 1,14,77,426 1,01,93,726
Other Current Assets 8 6,027 4,823
Loans and Advances 9 67,95,60,821 31,47,04,320
75,04,92,808 34,91,23,118
Less: CURRENT
LIABILITIES AND
PROVISIONS
Current Liabilities 10 19,97,83,840 17,39,08,663
Rupees(2006) Rupees(2005)
Note: In absence of any information about sales we have calculated N. P. ratio based
on their main income
EQUITY SCHEMES
Investment pattern
The corpus of the Scheme will be invested primarily in equity and equity related
instruments. The Scheme may invest a part of its corpus in debt and money market
instruments, in order to manage its liquidity requirements from time to time, and
under certain circumstances, to protect the interests of the Unit holders. The asset
allocation under the Scheme will be as follows :
SR TYPE OF INSTRUMENTS NORMAL RISK
NO. ALLOCATION PROFILE
(%of net asset)
Investment Objective
The investment objective of the Scheme is to achieve capital appreciation.
Basic Scheme Information
Nature of Scheme Open Ended Growth Scheme
Inception Date Jan 01, 1995
Option/Plan Dividend Option, Growth Option,
Entry Load. In respect of each purchase /
(as a % of the Applicable NAV) switch-in of Units less than Rs. 5 crore
in value, an Entry Load of 2.25% is
payable.
In respect of each purchase /
switch-in of Units equal to or great than
Rs. 5 crore in value, no Entry Load is
payable.
Exit Load. Nil
(as a % of the Applicable NAV)
Investment Pattern
The asset allocation under the Scheme will be as follows:
SR NO. TYPE OF INSTRUMENTS NORMAL RISK
ALLOCATION PROFILE
(%of net asset)
1 Equities & Equities related 80-100 Medium to high
instruments
2 Debt securities, money market 0-100 Low to medium
instruments & cash
Investment in Securitised debt, if undertaken, would not exceed 20% of the net assets
of the scheme. The Scheme may also invest upto 25% of net assets of the Scheme in
derivatives such as Futures & Options and such other derivative instruments as may
be introduced from time to time for the purpose of hedging and portfolio balancing
and other uses as may be permitted under the Regulations.
Investment Strategy & Risk Control
In order to provide long term capital appreciation, the Scheme will invest
predominantly in growth companies. Companies selected under this portfolio would
as far as practicable consist of medium to large sized companies which: are likely
achieved above average growth than the industry; enjoy distinct competitive
advantages, and have superior financial strengths.
The aim will be to build a portfolio, which represents a cross-section of the strong
growth companies in the prevailing market. In order to reduce the risk of volatility,
the Scheme will diversify across major industries and economic sectors.
3. HDFC TAXSAVER
Investment Objective
The investment objective of the Scheme is to achieve long term growth of capital.
Basic Scheme Information
Nature of Scheme Open Ended Equity Linked Saving
Scheme
Inception Date Mar 31, 1996
Option/Plan Dividend Option, Growth Option,
Entry Load. In respect of each purchase / switch-
(as a % of the Applicable NAV) in of Units less than Rs. 5 crore in value,
an Entry Load of 2.25% is payable.
In respect of each purchase / switch-
in of Units equal to or great than Rs. 5
crore in value, no Entry Load is payable.
Exit Load. Nil
(as a % of the Applicable NAV)
Minimum Application Amount Rs.5000 and in multiples of Rs.100
thereof to open an account / folio.
Lock-In-Period 3 yrs
Net Asset Value Periodicity Every Business Day
Redemption Proceeds Normally despatched within 3 Business
days
Investment Pattern
The asset allocation under the Scheme will be as follows:
SR NO. ASSET TYPE (% OF RISK
PORTFOLIO) PROFILE
1 Equities & Equities Minimum 80% Medium to high
related instruments
2 Debt securities, money Minimum 20% Low to medium
market instruments &
cash
The Scheme may also invest up to 25% of net assets of the Scheme in derivatives
such as Futures & Options and such other derivative instruments as may be
introduced from time to time for the purpose of hedging and portfolio balancing and
and other uses as may be permitted under the regulations and guidelines.
The Scheme may also invest a part of its corpus, not exceeding 40% of its net assets,
in overseas markets in Global Depository Receipts (GDRs), ADRs, overseas equity,
bonds and mutual funds and such other instruments as may be allowed under the
Regulations from time to time. The ELSS (Equity Linked Savings Scheme)
guidelines, as applicable, would be adhered to in the management of this Fund. If the
investment in equities and related instruments falls below 80% of the portfolio of the
Scheme at any point in time, it would be endeavoured to review and rebalance the
composition.
Benchmark Index :
S&P CNX 500. HDFC Tax saver, which is benchmarked to S&P CNX 500 Index is
not sponsored, endorsed, sold or promoted by Indian Index Service & Products
Limited (IISL).
Fund Manager : Dhawal Mehta
Investment Objective
The investment objective is to generate long term capital appreciation from a portfolio
of equity and equity linked instruments. The investment portfolio for equity and
equity linked instruments will be primarily drawn from the companies in the BSE 200
Index. Further, the Scheme may also invest in listed companies that would qualify to
be in the top 200 by market capitalisation on the BSE even though they may not be
listed on the BSE This includes participation in large IPOs where in the market
Investment Pattern
The asset allocation under the Scheme will be as follows:
SR NO. ASSET TYPE (% OF PORTFOLIO) RISK
PROFILE
1 Equities & Equities Upto 100% (including use Medium to high
related instruments of derivatives for hedging
and other uses as permitted
by prevailing SEBI
Regulations)
2 Debt securities, money Balance in Debt & Money Low to medium
The Investment in Securitised Debt will not normally exceed 25% of the net assets of
the Scheme.
The Scheme may seek investment opportunity in the ADR / GDR / Foreign Equity
and Debt Securities (max. 25% of net assets). The Scheme may take derivatives
position for hedging and portfolio balancing (max. 20% of the net assets) based on the
opportunities available subject to SEBI Regulations.
Fund Manager
MR. CHIRAG SATELVAD
MR. ANAND LADDHA
BALANCED SCHEMES
Investment Pattern
The Scheme will be invested in equity and equity related instruments as well as in
debt and in money market instruments in normal circumstances. The following table
provides the asset allocation of the Schemes portfolio.
The asset allocation under the Scheme will be as follows:
SR TYPE OF Normal Allocation (% Normal Deviation RISK
NO. INSTRUMENT of Net Assets) (% of Normal PROF
Allocation) ILE
1. Equity & Equity 60 20 Mediu
related m to
instruments high
2. Debt securities & 40 20 Low to
Money Market mediu
instruments) m
The equity and debt portfolios of the Scheme would be managed as per the respective
investment strategies detailed herein. The investment approach would be based on the
concept of economic earning power and cash return on investments
Risk control
The overall portfolio structure would aim to maintain risk at a moderate level. The
Fund Manager would avoid adopting either a very defensive or aggressive posture at
any point in time. Risk will also be controlled through portfolio diversification and a
conscious focus on maintaining adequate levels of liquidity at all points in time.
Macro economic risk will be addressed through a constant review of the business and
economic environment. The AMC may from time to time, review and modify the
Schemes? Investment strategy if such changes are considered to be in the best interest
of Unit holders and appropriate to the existing market situation. Investments in
securities and instruments not specifically mentioned earlier may also be made,
provided they are permitted by SEBI Regulations.
Benchmark Index : CRISIL Balanced Fund Index
Fund Manager : Mr. Tushar Pradhan
STRENGTH
Good Brand Name of the company in all over India.
Flexible products
Expertise in the field of mutual fund
Sound financial resources of the company as well as sponsors.
Strong Communication Network all over the country.
WEAKNESS
Less awareness regarding mutual fund among investors
Yet to build strong distribution network
Cannot tap rural market
OPPORTUNITIES:
Untapped rural market
Lack of competitive products to suit clients investment objective
THREAT
The numbers of players are increasing which further increases the competition.
Product Innovation done by other Asset Management companies and is able to
collect large amounts.
Customer mindsets are still rigid and they mostly prefer traditional pattern of
investments.
This report is prepared to get the basic ideas of mutual fund and various schemes of
HDFC. The general concept of the market study will help the different individuals to
invest in different investment tools as per their appetite. Through research study, it is
very much visualized the present market trend opted by the selected number of people
and their perception regarding Mutual Fund.
Hence, from this report I conclude that people are more keen to invest in Mutual Fund
due to the stability and getting more diversified options.
BIBLIOGRAPHY
BOOKS
MAGAZINES
WEBSITES
www.google.com
www.hdfcfund.com
www.amphiindia.com
www.moneycontrol.com
www.sebi.gov.in
http://www.amfiindia.com/showhtml.asp?page=mfconcept
http://www.amfiindia.com/showhtml.asp?page=mfindustry
http://www.sebi.gov.in/Index.jsp?contentDisp=Department&dep_id=4