Вы находитесь на странице: 1из 48

S.

SOMAIYA COLLEGE OF ARTS, SCIENCE & COMMERCE


VIDYAVIHAR (EAST), MUMBAI - 400077

PROJECT ON:
STUDY OF MUTUAL FUND IN INDIA WITH REFERNCE TO HDFC
MUTUAL FUND

MASTERS OF COMMERCE
(BANKING & FINANCE)
PART 1 (SEM)
(2015-2016)

Submitted:
In Partial Fulfillment of the requirements
For the Award of the Degree of
MASTERS OF COMMERCE
(BANKING & FINANCE)
BY
KHUSHBU V PESHAVARIA
ROLL NO : 46
1 | Page

DECLARATION

I KHUSHBU V PESHAVARIA student of class Mcom (BANKING &


FINANCE) PART 1 (SEM-1), ROLL NO 46, academic year 2015-2016 Studying
at S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE,
hereby declare that the work done on the project Entitle STUDY OF MUTUAL
FUND IN INDIA WITH REFERANCE TO HDFC LTD is true and original
and any Reference used in this project is duly acknowledged.

DATE:

PLACE: MUMBAI
SIGNATURE OF STUDENT
(KHUSHBU V PESHAVARIA)

2 | Page

3 | Page

CERTIFICATE
This is to certify that MISS KHUSHBU V PESHAVARIA, studying in Mcom (BANKING &
FINANCE) PART 1 (SEM-1), ROLL NO. 46, academic year 2015-2016 at S.K.SOMAIYA
COLLEGE OF ARTS, SCIENCE & COMMERCE has completed the project on STUDY
OF MUTUAL FUND IN INDIA WITH REFERANCE TO HDFC LTD under the guidance
of Proff. BOSCO PETER

The information submitted herein is true and original to the best of my


knowledge.

____________________

___________________

Proff. BOSCO PETER

DR SANGEETA KOHLI

[PROJECT GUIDE]

[PRINCIPAL]

____________________

___________________

EXTERNAL EXAMINER

MR RAVIKANT
[CO-ORDINATOR]

DECLARATION BY GUIDE

4 | Page

I, the undersigned Prof.


KHUSHBU

__________________________________ has guided

V PESHAVRIA

, ROLL NO : 46

for her project. She has

completed the project on STUDY OF MUTUAL FUND IN INDIA WITH


REFERANCE TO HDFC LTD successfully.
I, hereby declare that information provided in this project is true as per the
best of my knowledge.

(Prof. ___________________)
Project Guide

ACKNOWLEDGEMENT
It gives me immense pleasure to present a project on Study of mutual fund with
reference to HDFC LTD As a M.com student it is a great honor to undergo a
5 | Page

project work at an post graduate level and I would like to thank the University of
Mumbai for giving me such a golden opportunity.
I am eternally grateful to almighty god for giving me the spirit to put in my best
effort towards my project. I owe my sincere gratitude to DR. SANGEETA
KOHLI, the principal of our college. I am also thankful to my project guide MR
BOSCO PETER for his valuable guidance and for providing an insight to the
subject.
I am also obliged to the library staff of S.K.Somaiya College for the numerous
books made me available for the handy reference.
Although, I have taken every care to check mistake and misprint yet it is difficult
to claim perfection. Any error, omission and suggestion brought to my notice, will
be thankfully acknowledged by me.

Index
SR NO. CHAPTER NAME
1 MUTUAL FUND OVER VIEW
1.1 INTRODUCTION
1.2 MF AS INVESTMENT PLATFORM

PAGE NO
7
8
9
6 | Page

1.3 ADVANTAGE OF MF
1.4 DISADVANTAGES OF MF

11
12

2 CATEGORIES OF MUTUAL FUND


2.1 CATEGORIES OF MF
2.2 INVESTMENT STRATEGY
2.3 DISTRIBUTION CHANNEL

13
14
18
18

ORGANIZATION STRUCTURE & REGULATORY


3 AUTHORITY OF MF
3.1 ORGANIZATION STRUCTURE OF MF
3.2 REGULATORY AUTHORITY OF MF

19
20
22

4 HDFC AMC COMPANY OVERVIEW


4.1 HDFC COMPANY PROFILE
4.2 HDFC COMPANY OVERVIEW

28
29
30

5 HDFC MF PRODUCTS
5.1 PRODUCTS OF HDFC MUTUAL FUND
5.2 AUM OF HDFC VS OTHER COMPANIES
5.3 HDFC GROWTH FUND PORTFOLIO
ANAYLSIS
5.4 TYPES OF RISK ASSOCIATED WITH MF

34
35
37

CONCLUSION
BIBLOGRAPHY

41
45
46

7 | Page

Chapter no:1
MUTUAL FUND OVERVIEW

1.1 INTRODUCTION TO MUTUAL FUND


An investment vehicle that is made up of a pool of funds collected from many investors for
the purpose of investing in securities such as stocks, bonds, money market instruments and
similar assets. Mutual funds are operated by money managers, who invest the fund's capital
and attempt to produce capital gains and income for the fund's investors. A mutual fund's

8 | Page

portfolio is structured and maintained to match the investment objectives stated in its
prospectus.
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 benefits to investors in
buying units of mutual funds come primarily from diversification, professional money
management, and tax benefits.
Schemes in a mutual fund are managed by a professional investment manager (called a Fund
Manager) who has many years of relevant experience and is hence likely to manage the
investments better than an individual investor. Normally, different Fund Managers manage
schemes investing in different asset classes, i.e. equity schemes and debt schemes (bonds,
debentures) are usually managed by separate Fund Managers.
A mutual fund is normally formed as a Trust and is governed by a Board of Trustees see
diagram below. The Trustees in turn appoint an investment advisor to manage the various
schemes launched by the mutual fund. This investment advisor is called an Asset
Management Company (AMC). The AMC is responsible for marketing and selling the
schemes, investing the funds collected by it and servicing the investors. The AMC is
responsible to the Trustees and has to take their approval for all major actions taken in
connection with the mutual fund. To help the AMC in its daily activities, it appoints
specialists in different areas - a Registrar & Transfer (R&T) Agent , a Custodian and one or
more Banks.

1.2 MUTUAL FUND AN INVESTMENT PLATFORM

Mutual fund is an investment company that pools money from small investors and invests
in a variety of securities, such as stocks, bonds and money market instruments. Most open-end
Mutual funds stand ready to buy back (redeem) its shares at their current net asset value, which
depends on the total market value of the fund's investment portfolio at the time of
9 | Page

redemption. Most open-end Mutual funds continuously offer new shares to investors. It is also
known as an open-end investment company, to differentiate it from a closed-end investment
company.
Mutual funds invest pooled cash of many investors to meet the fund's stated investment
objective. Mutual funds stand ready to sell and redeem their shares at any time at the funds

PROFIT/LOSS FORM
PORTFOLIO OF
INVESTMENT

INVEST IN VARIETY
OF STOCKS/BONDS

PROFIT/LOSS FROM
INDIVIDUAL

MARKET (FLUCTUATIONS)

INVEST THEIR
MONEY

MUTUAL FUND SHEMES

INVESTOR

current net asset value: total fund assets divided by shares outstanding.

In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to
the investors and investing funds in securities in accordance with objectives as disclosed in
offer document.
Investments in securities are spread across a wide cross-section of industries and sectors
and thus the risk is reduced. Diversification reduces the risk because not all stocks may move
in the same direction in the same proportion at the same time. Mutual fund issues units t o the
investors in accordance with quantum of money invested by them. Investors of Mutual fund
are known as unit holders. The profits or losses are shared by the investors in proportion to their

10 | P a g e

investments. The Mutual funds normally come out with a number of schemes with different
investment objectives which are launched from time to time.

In India, A Mutual fund is required to be registered with Securities and Exchange Boa rd
of India (SEBI) which regulates securities markets before it can collect funds from the public.
In Short , a Mutual fund is a

common pool of money in to which investors with

common investment objective place their contributions that are to be invested in accordance
with the state d investment objective of the scheme. The investment manager would invest the
money collected from the investor in to assets that are defined/ permitted by the stated
objective of the scheme. For example, a n equity fund would invest equity and equity
related instruments and a debt fund would invest in bonds, debentures, gilts etc. Mutual fund is
a suitable investment for the common ma n a s it offers an Oporto unity to invest in a
diversified, professionally managed basket of securities at a relatively low cost.

1.3 ADVANTAGES OF MUTUAL FUND


S.
No Advantage
.

Particulars

11 | P a g e

1.

Mutual Funds invest in a well-diversified portfolio of securities which


Portfolio
enables investor to hold a diversified investment portfolio (whether the
Diversification
amount of investment is big or small).

2.

Professional
Management

Fund manager undergoes through various research works and has better
investment management skills which ensure higher returns to the
investor than what he can manage on his own.

3.

Less Risk

Investors acquire a diversified portfolio of securities even with a small


investment in a Mutual Fund. The risk in a diversified portfolio is lesser
than investing in merely 2 or 3 securities.

4.

Low
Transaction
Costs

Due to the economies of scale (benefits of larger volumes), mutual


funds pay lesser transaction costs. These benefits are passed on to the
investors.

5.

Liquidity

An investor may not be able to sell some of the shares held by him very
easily and quickly, whereas units of a mutual fund are far more liquid.
Mutual funds provide investors with various schemes with different
of investment objectives. Investors have the option of investing in a
scheme having a correlation between its investment objectives and their
own financial goals. These schemes further have different plans/options

6.

Choice
Schemes

7.

Transparency

Funds provide investors with updated information pertaining to the


markets and the schemes. All material facts are disclosed to investors as
required by the regulator.

Flexibility

Investors also benefit from the convenience and flexibility offered by


Mutual Funds. Investors can switch their holdings from a debt scheme
to an equity scheme and vice-versa. Option of systematic (at regular
intervals) investment and withdrawal is also offered to the investors in
most open-end schemes.

Safety

Mutual Fund industry is part of a well-regulated investment


environment where the interests of the investors are protected by the
regulator. All funds are registered with SEBI and complete transparency
is forced.

8.

9.

12 | P a g e

1.4 DISADVANTAGE OF INVESTING IN MUTUAL FUNDS


S.
No Disadvantage
.

Particulars

1.

Costs Control
Not in the
Hands of an
Investor

Investor has to pay investment management fees and fund


distribution costs as a percentage of the value of his investments (as
long as he holds the units), irrespective of the performance of the
fund.

2.

No
Customized
Portfolios

The portfolio of securities in which a fund invests is a decision taken


by the fund manager. Investors have no right to interfere in the
decision making process of a fund manager, which some investors
find as a constraint in achieving their financial objectives.

3.

Difficulty
in
Selecting
a
Suitable Fund
Scheme

Many investors find it difficult to select one option from the plethora
of funds/schemes/plans available. For this, they may have to take
advice from financial planners in order to invest in the right fund to
achieve their objectives.

13 | P a g e

CHAPTER : 2
CATEGORIES OF MUTUAL FUND

2.1 CATEGORIES OF MUTUAL FUND

14 | P a g e

B
S
D
O
T
E
R

H
I

S
U
C
U
E

T
T

R
R

Figure:1.2

Mutual funds can be classified as follow:


Based on their structure:
Open-ended funds: Investors can buy and sell the units from the fund, at any point of
time.
Close-ended funds: These funds raise money from investors only once. Therefore, after
the offer period, fresh investments cannot be made into the fund. If the fund is listed on a
stocks exchange, the units can be traded like stocks (E.g., Morgan Stanley Growth Fund).
Recently, most of the New Fund Offers of close-ended funds provided liquidity window
on a periodic basis such as monthly or weekly. Redemption of units can be made during
specified intervals. Therefore, such funds have relatively low liquidity.

2. BASED ON INVESTMENT OBJECTIVE

15 | P a g e

EQUITY FUNDS

BALANCE
D FUNDS

INDEX FUNDS

DEBT FUNDS

LIQUID
DEBT
GUILT FUNDS

DEVIDEND
EQUITY
EQUITY

INCOME

THEMANTIC

FMPS FUNDS

SECTOR FUND

FLOATING

ELSS

ARBITAGE

Mutual funds can be classified as follow:


Based on their investment objective:

Equity funds:

These funds invest in equities and equity related instruments. With

fluctuating share prices, such funds show volatile performance, even losses. However,
short term fluctuations in the market, generally smoothens out in the long term, thereby
offering higher returns at relatively lower volatility. At the same time, such funds can
yield great capital appreciation as, historically, equities have outperformed all asset
classes in the long term. Hence, investment in equity funds should be considered for a
period of at least 3-5 years. It can be further classified as:
1. Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked.
Their

portfolio mirrors the benchmark index in terms of both composition and individual stock

weightages.
16 | P a g e

2. Equity diversified funds- 100% of the capital is invested in equities spreading across
different sectors and stocks.
3. Dividend yield funds- it is similar to the equity-diversified funds except that they invest in
companies offering high dividend yields.
4. Thematic funds- Invest 100% of the assets in sectors which are related through some theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.
5. Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will
invest in banking stocks.
6. ELSS- Equity Linked Saving Scheme provides tax benefit to the investors
.
Balanced fund: Their investment portfolio includes both debt and equity. As a result, on
the risk-return ladder, they fall between equity and debt funds. Balanced funds are the
ideal mutual funds vehicle for investors who prefer spreading their risk across various
instruments. Following are balanced funds classes:
1

Debt-oriented funds -Investment below 65% in equities.

Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investors
averse to idea of taking risk associated with equities. Therefore, they invest exclusively in
fixed-income instruments like bonds, debentures, Government of India securities; and
money market instruments such as certificates of deposit (CD), commercial paper (CP)
and call money. Put your money into any of these debt funds depending on your
investment horizon and needs.
1.

Liquid funds- These funds invest 100% in money market instruments, a large portion
being invested in call money market.

17 | P a g e

2. Gilt funds ST- They invest 100% of their portfolio in government securities of and Tbills.
3.

Floating rate funds - Invest in short-term debt papers. Floaters invest in debt
instruments, which have variable coupon rate.

4.

Arbitrage fund- They generate income through arbitrage opportunities due to misspricing between cash market and derivatives market. Funds are allocated to equities,
derivatives and money markets. Higher proportion (around 75%) is put in money
markets, in the absence of arbitrage opportunities.

5. Gilt funds LT- They invest 100% of their portfolio in long-term government securities.
6.

Income funds LT- Typically, such funds invest a major portion of the portfolio in longterm debt papers.

7.

MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of
10%-30% to equities.

8.

FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of
the fund.

How are funds different in terms of their risk profile:


Equity Funds

High level of return, but has a high level of risk too

Debt funds

Returns comparatively less risky than equity funds

Liquid

and

Money Provide stable but low level of return

Market funds

1.2

INVESTMENT STRATEGIES

1. Systematic Investment Plan: Under this, a fixed sum is invested each month on a fixed date
of a month. Payment is made through post-dated cheques or direct debit facilities. The investor
gets fewer units when the NAV is high and more units when the NAV is low. This is called as the
benefit of Rupee Cost Averaging (RCA)
18 | P a g e

2. Systematic Transfer Plan: Under this, an investor invest in debt-oriented fund and give
instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual
fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he
can withdraw a fixed amount each month.

2.3 DISTRIBUTION CHANNELS:


Mutual funds posses a very strong distribution channel so that the ultimate customers doesnt
face any difficulty in the final procurement. The various parties involved in distribution of
mutual funds are:
1. Direct marketing by the AMCs: the forms could be obtained from the AMCs directly. The
investors can approach to the AMCs for the forms. some of the top AMCs of India are;
Reliance ,Birla Sunlife, Tata, SBI magnum, Kotak Mahindra, HDFC, Sundaram, ICICI, Mirae
Assets, Canara Robeco, Lotus India, LIC, UTI etc. whereas foreign AMCs include: Standard
Chartered, Franklin Templeton, Fidelity, JP Morgan, HSBC, DSP Merill Lynch, etc.
2. Broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker
to popularize their funds. AMCs can enjoy the advantage of large network of these brokers and
sub brokers.
3. Individual agents, Banks, NBFC: investors can procure the funds through individual agents,
independent brokers, banks and several non- banking financial corporations too, whichever he
finds convenient for him.

19 | P a g e

CHAPTER NO:3
ORGANIZATION STRUCTURE &
REGULATORY
AUTHORITY OF MUTUAL FUND

3.1 ORGANISATION STRUCTURE OF MUTUAL FUND:

20 | P a g e

THE STRUCTURE CONSISTS OF:


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

21 | P a g e

Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The
main responsibility of the Trustee is to safeguard the interest of the unit holders and ensure that
the AMC functions in the interest of investors and in accordance with the Securities and
Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed
and the Offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee are
independent directors who are not associated with the Sponsor in any manner.
ASSET MANAGEMENT COMPANY (AMC)
The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC
is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an
asset management company of the Mutual Fund. At least 50% of the directors of the AMC are
independent directors who are not associated with the Sponsor in any manner. The AMC must
have a net worth of at least 10 cores at all times.
REGISTRAR AND TRANSFER AGENT
The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the
Mutual Fund. The Registrar processes the application form, redemption requests and dispatches
account statements to the unit holders. The Registrar and Transfer agent also handles
communications with investors and updates investor records.

3.2 REGULATORY AUTHORITY OF MUTUAL FUND


22 | P a g e

3.2.1 Role of SEBI (securities exchange board of India)


There was no uniform regulation of the mutual funds industry till a few years ago. The UTI was
regulated by a special Act of Parliament while funds promoted by public sector banks were
subject to RBI Guidelines of July 1989. The Securities & Exchange Board of India (SEBI) was
formed in 1993 as a capital market regulator. One of its responsibilities was to regulate the
mutual fund industry and it came up with comprehensive regulations for the industry in 1993.
The rules for the formation, administration and management of mutual funds in India were
clearly laid down. Regulations also prescribed disclosure requirements.
The regulations were thoroughly reviewed and re-notified in December 1996. The revised
guidelines tighten the accounting and disclosure requirements in line with recommendations of
The Expert Committee on Accounting Policies, Net Asset Values and Pricing of Mutual Funds.
The SEBI (Mutual Funds) Regulations, 1996 have been further amended in 1997, 1998 and
1999. Today, all mutual funds are regulated by SEBI. Efforts have been made to bring UTI
schemes under SEBI's ambit with the result that all schemes, with the exception of Unit 64, are
now regulated by the capital market regulator.

3.2.2 SEBI Guideline of Mutual Fund


SEBI Regulation Act 1996
Establishment of a Mutual Fund:
In India mutual fund play the role as investment with trust, some of the formalities laid down by
the SEBI to be establishment for setting up a mutual fund. As the part of trustee sponsor the
mutual fund, under the Indian Trust Act, 1882, under the trustee company are represented by a
board of directors. Board of Directors is appoints the AMC and custodians. The board of trustees
made relevant agreement with AMC and custodian. The launch of each scheme involves inviting
the public to invest in it, through an offer documents.

23 | P a g e

Depending on the particular objective of scheme, it may open for further sale and repurchase of
units, again in accordance with the particular of the scheme, the scheme may be wound up after
the particular time period.

1. The sponsor has to register the mutual fund with SEBI


2. To be eligible to be a sponsor, the body corporate should have a sound track record and a
general reputation of fairness and integrity in all his business transactions.

3.2.3 Role of AMFI (Association Mutual Fund in India)


AMFI, the apex body of all the registered asset management companies was incorporated on
August 22, 1995 as a nonprofit organization. All the asset management companies that have
launched mutual fund schemes are its members. One of the objectives of AMFI is to promote
investors' interest by defining and maintaining high ethical and professional standards in the
mutual fund industry. The AMFI code of ethics sets out the standards of good practices to be
followed by the asset management companies in their operations and in their dealings with
investors, intermediaries and public. AMFI code has been drawn up to encourage adherence
to standards higher than those prescribed by the regulations for the benefits of investors in
the mutual fund industry.
The members of Asset Management Companies (AMC) have always carried out the
responsibility of introducing new mutual fund schemes under the governance and guidelines
of its Board of Directors. Association of Mutual Funds in India has played a significant role
in creating a healthy and professional market for mutual funds. It has elevated the standard of
the mutual fund investment patterns by introducing more beneficiary schemes to attract more
investors. The Association of Mutual Funds is also the main governing body of all Asset
Management Companies (AMC). The Association of Mutual Funds in India (AMFI) has
24 | P a g e

been registered with the Securities and Exchange Board of India (SEBI). The main principle
religiously followed by AMFI is to protect and promote the mutual funds along with the
investors or shareholders.

The Association of Mutual Funds in India (AMFI) is dedicated to developing the Indian
Mutual Fund Industry on professional, healthy and ethical lines and to enhance and maintain
standards in all areas with a view to protecting and promoting the interests of mutual funds and
their unit holders.
AMFI working group on Best Practices for sales and marketing of Mutual Funds under the
Chairmanship of Shri B. G. Daga, Former Executive Director of Unit Trust of India with Shri
Vivek Reddy of Pioneer ITI, Shri Alok Vajpeyi of DSP Merrill Lynch, Shri Nikhil Khattau of
Sun F & C and Shri Chandrashekhar Sathe, Formerly of Kotak Mahindra Mutual Fund has
suggested formulation of guidelines and code of conduct for intermediaries and this work has
been ably done by a sub-group consisting of Shri B. G. Daga and Shri Vivek Reddy.

3.2.4 Objectives of AMFI:

To define and maintain high professional and ethical standards in all areas of operation of
mutual fund industry.

To recommend and promote best business practices and code of conduct to be followed
by members and others engaged in the activities of mutual fund and asset management including
agencies connected or involved in the field of capital markets and financial services.

To interact with the Securities and Exchange Board of India (SEBI) and to represent to
SEBI on all matters concerning the mutual fund industry.

25 | P a g e

To represent to the Government, Reserve Bank of India and other bodies on all matters
relating to the Mutual Fund Industry.

To develop a cadre of well trained Agent distributors and to implement a programme of


training and certification for all intermediaries and others engaged in the industry.

To undertake nation wide investor awareness programme so as to promote proper


understanding of the concept and working of mutual funds.

To disseminate information on Mutual Fund Industry and to undertake studies and


research directly and/or in association with other bodies.

To take regulate conduct of distributors including disciplinary actions (cancellation of


ARN) for violations of Code of Conduct.

To protect the interest of investors/unit holders.

3.2.5 Code of conduct of AMFI for Mutual Fund:


With an aim to check the flow of illicit money into mutual funds and safeguard the interest of
investors, industry body AMFI has revised its code of conduct guidelines for the fund houses and
distributors.
In a 27-point revised code of conduct document for MF intermediaries, the Association of
Mutual Funds in India (AMFI) has added fresh directives to protect investors from potential
frauds, insisted on Know Your Distributor norms.

26 | P a g e

It has asked intermediaries to provide all documents of its investors in terms of the Anti Money
Laundering/ Combating Financing of Terrorism requirements.
The AMFI has also asked the intermediaries to ensure that the investors address and contact
details filled in the mutual fund application form are their own, and not of any third party, so that
the investors are protected from any potential fraudulent activities.
Wherever the required information is not available in the application form, intermediary have
been asked to make reasonable efforts to obtain accurate and updated information from the
investor.
Intermediaries should abstain from filling wrong/ incorrect information or information of their
own or of their employees, officials or agents as the investors address and contact details in the
application form, even if requested by the investor to do so, the revised code says.
The industry body, which also acts as a self-regulatory organisation, has also asked
intermediaries to abstain from tampering with the application forms submitted by investors,
including by inserting, deleting or modifying any information in the form provided by the
investor.
AMFI had last revised the code of conduct for MF intermediaries in September 2009. Mutual
fund intermediaries were governed by AMFI Guidelines and Norms for Intermediaries, drafted in
2002.
The entities working in mutual fund segment have also been asked to provide their cooperation
and support to AMCs (Asset Management Companies), AMFI, regulatory authorities and
applicable due diligence agencies in relation to the activities of the intermediary or any
regulatory requirement.
AMFI has directed intermediaries to maintain the requisite documentation in respect of the
Advisory or Execution Only services provided by them to the investors.
Do not indulge in fraudulent or unfair trade practices of any kind while selling units of Schemes
of any mutual fund, AMFI has told the intermediaries.
27 | P a g e

Selling of units of schemes of any mutual fund by any intermediary directly or indirectly by
making false or misleading statement, concealing or omitting material facts of the scheme,
concealing the associated risk factors of the schemes or not taking reasonable care to ensure
suitability of the scheme to the investor will be construed as fraudulent/ unfair trade practice, it
said.

3.2.6 Important aspects of AMFI:

AMFI provides professionalism and a proper balance in the mutual fund industry.

It promotes the highly-efficient business practices as well as the code of conduct in


the mutual fund industry among its members and those who are involved in mutualfund
investments.

AMFI is registered with SEBI and follows its suggestions while executing its
activities.

AMFI also represents the Government of India, the Reserve Bank of India and other
related higher authority bodies in the mutual fund operations.

It also provides training programs to hone the skills of those who are involved in
mutual fund investments and also develops a team of efficient and skilled agents.

AMFI also carries out various campaigns and awareness programs to inform the
individuals about the basic concept of mutual fund investments.

28 | P a g e

CHAPTER NO: 4
HDFC AMC COMPANY OVERVIEW

29 | P a g e

4.1 HDFC COMPANY PROFILE


HDFC Mutual Fund
Key Information
Mutual Fund

HDFC Mutual Fund

Setup Date

Jun-30-2000

Incorporation Date

Dec-10-1999

Sponsor

Housing Development Finance Corporation Limited, Standard Life Investments Limited

Trustee

HDFC Trustee Company Limited

Chairman

N.A

CEO / MD

Mr. Milind Barve

CIO

Mr. Prashant Jain

Compliance Officer

Mr. Yezdi Khariwala

Investor Service Officer

Mr. John Mathews

Assets Managed

Rs. 170837.65 crore (Sep-30-2015)

Other Details
Auditors

M/s. Deloitte Haskins & Sells (HDFC Mutual Fund) / M/s Haribhakti & Co. (HDFC AMC)

Custodians

HDFC Bank Limited & Citibank N.A

Registrars

Computer Age Management Services Ltd.

Address

HUL House, 2nd Floor, H.T. Parekh Marg, 165-166, Backbay Reclamation, Churchgate,
Mumbai 400020

Telephone Nos.

6631 6333

Fax Nos.

2282 1144

E-mail

cliser@hdfcfund.com

30 | P a g e

4.2 HDFC COMPANY OVERVIEW


HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies
Act,1956, on December 10, 1999, and was approved to act as an Asset Management Company
for the HDFC Mutual Fund by Securities and Exchange Board of India (SEBI) vide its letter
dated July 3, 2000.

The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169,
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.

The present share holding pattern of the AMC is as follows:


Particulars

% of the paid up capital

Housing Development Finance Corporation Limited

50.10

Standard Life Investments Limited

49.90

31 | P a g e

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.
On obtaining the regulatory approvals, the Schemes of Zurich India Mutual Fund has now
migrated to HDFC Mutual Fund on June 19, 2003.
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.
Board of Directors
The Board of Directors of the HDFC Asset Management Company Limited (AMC) consists of
the following eminent persons.

Mr. Deepak S. Parekh

Chairman of the board

Mr. N. Keith Skeoch

CEO of Standard Life Investments Ltd.

Mr. Keki M. Mistry

Associate director

Mr. James Aird

Investment director

Mr. P. M. Thampi

Independent director

Mr. Humayun Dhanrajgir

Independent director

Dr. Deepak B. Phatak

Independent director

32 | P a g e

Mr. Hoshang S. Billimoria

Independent director

Mr. Rajeshwar Raj Bajaaj

Independent director

Mr. Vijay Merchant

Independent director

Ms. Renu S. Karnad

Joint managing director

Mr. Milind Barve

Managing director

Mr. Deepak Parekh, the Chairman of the Board, is associated with HDFC Ltd. in his capacity
as its Executive Chairman.
Mr. Parekh joined HDFC Ltd. in a senior management position in 1978. He was inducted as
Wholetime Director of HDFC Ltd. in 1985 and was appointed as the Executive Chairman in
1993.

Mr. N. Keith Skeoch is associated with Standard Life Investments Limited as its Chief
Executive and is responsible for all company business and investment operations within
Standard Life Investments Limited.

Mr. Keki M. Mistry is an associate director on the Board. He is the Vice-Chairman &
Managing Director of Housing Development Finance Corporation Limited (HDFC Ltd.) He is
with HDFC Ltd. since 1981 and was appointed as the Executive Director of HDFC Ltd. in
1993. He was appointed as the Deputy Managing Director in 1999, Managing Director in 2000
and Vice Chairman & Managing Director in 2007.
33 | P a g e

SPONSORS
HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC):
HDFC was incorporated in 1977 as the first specialized 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.
STANDARD LIFE INVESTMENTS LIMITED
The Standard Life Assurance Company was established in 1825 and has considerable experience
in global financial markets. In 1998, Standard Life Investments Limited became the dedicated

34 | P a g e

investment management company of the Standard Life Group and is owned 100% by The
Standard Life Assurance Company.
With global assets under management of approximately US$186.45 billion as at March 31, 2005,
Standard Life Investments Limited is one of the world's major investment companies and is
responsible for investing money on behalf of five million retail and institutional clients
worldwide. With its headquarters in Edinburgh, Standard Life Investments Limited has an
extensive and developing global presence with operations in the United Kingdom, Ireland,
Canada, USA, China, Korea and Hong Kong. In order to meet the different needs and risk
profiles of its clients, Standard Life Investments Limited manages a diverse portfolio covering all
of the major markets world-wide, which includes a range of private and public equities,
government and company bonds, property investments and various derivative instruments. The
company's current holdings in UK equities account for approximately 2% of the market
capitalization of the London Stock Exchange.

Chapter no:5
HDFC MUTUAL FUND PRODUCTS

35 | P a g e

5.1 HDFC MUTUAL FUND PRODUCTS


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


36 | P a g e

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

HDFC Balanced Fund

HDFC Prudence Fund

Debt Funds

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


37 | P a g e

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

5.2 COMPARISION OF AUM OF HDFC WITH OTHER MUTUAL FUND


COMAPNY
Assets under management (Rs.Cr)
Mutual Funds

June 2015

September 2015

Change

%
Change

HDFC Mutual Fund

165,013

170,838

5,824

3.53

ICICI Prudential Mutual Fund

155,522

164,629

9,106

5.86

Reliance Mutual Fund

144,693

152,919

8,226

5.69

Birla Sun Life Mutual Fund

125,502

133,404

7,901

6.30

UTI Mutual Fund

92,730

104,077

11,347

12.24

SBI Mutual Fund

83,693

88,628

4,935

5.90

Franklin Templeton Mutual Fund

74,312

77,328

3,016

4.06

IDFC Mutual Fund

54,498

56,774

2,276

4.18

Kotak Mahindra Mutual Fund

48,077

56,511

8,434

17.54

DSP BlackRock Mutual Fund

36,036

37,339

1,302

3.61

Axis Mutual Fund

28,365

31,789

3,425

12.07

38 | P a g e

Tata Mutual Fund

28,045

28,857

812

2.90

Deutsche Mutual Fund

20,720

25,329

4,609

22.24

L&T Mutual Fund

22,213

24,280

2,067

9.31

Sundaram Mutual Fund

20,996

22,124

1,128

5.37

Religare Invesco Mutual Fund

19,519

21,594

2,075

10.63

JM Financial Mutual Fund

11,676

15,858

4,182

35.82

JPMorgan Mutual Fund

14,684

12,455

-2,229

-15.18

LIC NOMURA Mutual Fund

11,133

11,157

24

0.21

Baroda Pioneer Mutual Fund

7,225

9,532

2,307

31.93

HSBC Mutual Fund

7,880

7,843

-37

-0.47

Canara Robeco Mutual Fund

7,078

7,213

135

1.90

Goldman Sachs Mutual Fund

7,775

7,132

-643

-8.26

IDBI Mutual Fund

5,556

7,016

1,460

26.27

PRINCIPAL Mutual Fund

6,479

6,624

144

2.23

Indiabulls Mutual Fund

3,691

5,196

1,505

40.77

Taurus Mutual Fund

4,188

4,656

468

11.18

BNP Paribas Mutual Fund

4,138

4,638

499

12.07

Motilal Oswal Mutual Fund

2,744

3,928

1,185

43.18

BOI AXA Mutual Fund

2,332

2,881

549

23.54

Union KBC Mutual Fund

2,675

2,672

-3

-0.12

Mirae Asset Mutual Fund

1,981

2,427

446

22.50

Pramerica Mutual Fund

2,125

2,366

241

11.33

Edelweiss Mutual Fund

1,148

1,573

424

36.95

Peerless Mutual Fund

854

860

0.77

Quantum Mutual Fund

594

612

18

3.03

PPFAS Mutual Fund

592

604

12

2.06

IIFL Mutual Fund

399

412

13

3.21

Escorts Mutual Fund

279

300

21

7.47

Sahara Mutual Fund

134

124

-10

-7.66

Shriram Mutual Fund

33

35

4.66

1,227,327

1,314,532

87,204

6.63

Total

39 | P a g e

HDFC Mutual Fund Advantages


There are many advantages in investing HDFC mutual funds. The following are some of the
advantages,
Affordability The HDFC mutual funds are available in smaller units which make it more
affordable.
Flexibility The HDFC mutual fund offers systematic withdrawal plans, dividend reinvestment,
systematic investment plans which give more flexibility.
Liquidity The HDFC mutual fund offers open ended schemes in which you can withdraw the
money at any point of time.
Professional Management Based on extensive research and experience the expert fund
managers analyze the options in HDFC mutual funds.
Diversification The risk factor is low in HDFC mutual funds as the investment is done across
different stocks and industries.
Low Costs The custodial fee, brokerage charges are low for HDFC mutual funds.
Potential Return The HDFC mutual fund managers have access to statistics and information
from leading analysts and economists around the world. Because of this, the investors of HDFC
mutual funds gain potential returns.
Regulated for Investor Protection The HDFC mutual fund sector is regulated to protect the
interests of investors.
You can view the performance of the HDFC mutual funds at a glance at the HDFC bank website.
The details of analyzed funds are presented in the form of fact sheets. These fact sheets are
updated on a monthly basis. The HDFC mutual funds can be buy and sell online from the HDFC
bank website. You can also visit your nearest HDFC bank branch to invest in HDFC mutual
funds.

40 | P a g e

Once you register for HDFC mutual funds, your HDFC bank savings account will be linked to
investment services. You can perform three type of transactions purchase, redeem and switch.
You can view all your holdings online. Once any transaction is performed no cancellation is
encouraged.
The various kinds of mutual funds provided by the bank are:
HDFC Mid Cap Opportunities Fund: Closed end fund which invests in small as well as mid
cap stocks.
HDFC Infrastructure Fund: Closed end equity mutual fund which invests in stocks of the
infrastructure companies.
HDFC Long Term Equity Fund: Closed end equity mutual fund and has a maturity period of
5 years. This fund has diversified stocks for risk minimization.
HDCF Index Fund Nifty Plan: This is an index fund and tracks nifty. The scheme is open
ended and the expense ratio is 1%.
HDFC Index Fund Sensex Plus Plan: 80-90% of the asset in this fund is invested in Sensex
stocks and the rest is invested outside Sensex.
HDFC Index Fund Sensex Plan: This plan passively tracks the Sensex.
HDFC Tax Saver (ELSS): Open-ended scheme with a lock-in period of 3 years and provides
benefits of tax saving.
HDFC Prudence Fund: Open-ended fund where the allocation in equity and debt depends on
the market condition.
HDFC Arbitrage Fund: An arbitrage fund where arbitrage opportunities are exploited
between the derivatives and spot market.
HDFC Premier Multi Cap Fund: This is a fund which is growth oriented and investments are
made in the mid cap and large cap blue chip companies.
HDFC Capital Builder Fund: This is a fund which is actively managed and the assets are
invested in companies which are strong and are below the fair value.
HDCF Equity Fund: Open ended fund where the investments are made companies which are
expected to outperform their peers.
HDFC Long Term Advantage Fund (ELSS): Investments are done in equity and instruments
related to equity. This fund is closed ended with a lock-in period of 3 years.
41 | P a g e

HDFC Balanced Fund: It is a balanced open-ended fund where investments are made in
equity and debt.
HDFC Core and Satellite Fund: Open-ended fund investing in stocks which are performing
below the true value.
HDFC Top 200 Fund: This fund invests in the equities and instruments linked with equity but
are drawn from the companies listed in the BSE 200 Index.
HDFC Growth Fund: Open-ended fund and invests primarily in equities and instruments
linked with equity.

5.3 HDFC Growth Fund Portfolio Analysis


Sectoral Allocation of Assets(%)
Banks

16.37

Pharmaceuticals

10.39

Media & Entertainment

8.48

Consumer Non Durables

7.94

Petroleum Products

7.72

Industrial Capital Goods

6.60

Telecom - Services

5.30

42 | P a g e

Auto Ancillaries

5.30

Finance

3.42

Software

3.31

Chemicals

2.41

Fertilisers

2.24

Ferrous Metals

1.92

Construction

1.48

Transportation

1.24

Oil

1.12

Construction Project

0.85

Paper Products

0.85

Industrial Products

0.21

Engineering

0.18

Cash,Cash Equivalents and Net


Current Assets

12.67

TOTAL

100

43 | P a g e

It requires a lot of research and constant watch on the capital market for a fund manager to
analyze the portfolio of the particular fund. I took the secondary data from the fund review of the
article corner from The Business Line web site. I comprehended the analysis and concluded my
view as stated below.
HDFC Growth Fund invests in stocks across market capitalisations. Despite a large-cap bias, mid
and small cap stocks account for 28 per cent of the portfolio. The fund has managed to
consistently beat its benchmark Sensex over one-, three- and five-year periods.
In the latest portfolio, the fund has invested in as many as 52 stocks across 18 different sectors
making it a fairly diversified portfolio. This may indicate net inflows into the fund.
Sector Moves: There is a fair bit of stability in terms of top sector holdings in the portfolio.
Banks (16.39 per cent) and pharmaceuticals (10.37 per cent) sectors continue to be the top two
sector holdings, although exposures have been a bit reduced.
Banks and consumer non-durables also figure among top holdings in the fund, and have seen
increased exposures over the September-February period. While capital goods and banks have
done well in the past year, they have been among the worst hit in the recent meltdown.
44 | P a g e

The respective sector indices were beaten down by over 25 per cent in the last couple of months.
Construction and predictably, software exposures have been pared in the six-month period.
Interestingly, media and entertainment (8.48 per cent), which were not part of the portfolio six
months ago is now in the top ten sector holdings for the fund. The power sector has been exited,
while telecom services and auto ancillaries exposures have been increased substantially.
Stock Moves: Most stocks are those whose prices have fallen during September-February,
include stocks such as Zee Entertainment, HT Media and Dr Reddy's Labs.
The fund has also taken profit booking opportunities, with several stocks whose prices rose
between 60-105 per cent have been exited. These include, Axis Bank, Hanung Toys and Tata
Power. Other high-profile exits include DLF, HPCL, Ranbaxy Labs, and Punj Lloyd.
Reliance Industries, SBI, ONGC and BHEL are the stocks retained by the fund during the period
and are among the fund's top holdings.

5.4 Types of risks associated with mutual fund investments


As we know that mutual funds offer a variety of schemes, it is also considered to be a diversified
investment vehicle which means that to a large extent because of its feature of diversification it
reduces your risk, but remember it does not eliminate your risk completely which means that if
you decide to invest in equity market or in debt market through mutual funds the risk associated
with those markets still remain with you. Maybe the impact of that through the mutual fund is
much less then as compared to if you were to invest directly in those. If you talk about equity
funds there are certain risks equated with equity markets, for example there are macroeconomic
risks. As we know that stocks prices are always sensitive to what is happening in economies, be
it local economy, be it international economies, how is the currency doing, what is happening to
the interest rate, where is the inflation, how are the companies performing, all these factors have
an impact on the stock prices. So as long as the economy is doing very well that would reflect in
the stock prices and that would reflect in your Net Asset Value ( NAV ). So always remember
that macroeconomic factors will have an impact on your investments there. Second risk is the
liquidity risk. There are always going to be some stocks in the portfolio which may not be that
liquid and also it depends on the nature of fund that you are invested in. For example, if you are
invested in a large cap stock there there is no problem of liquidity because all these large cap
stocks are quite liquid, but if you are invested in a small cap fund the liquidity is going to be an
45 | P a g e

issue and there is also a risk of volatility. We know that equity market by nature is volatile. So
whenever you invest in equity funds keep at the back of your mind that you may have to face
volatility from time to time and be prepared for that. If you talk about debt funds, debt funds
again there is a risk of interest rate. There is an inverse relationship between interest rates and the
bond prices which means that every time the interest rate goes down there are certain types of
debt funds which will do very well and there are certain types of funds that will not do very well.
So always keep an eye on emerging interest rate scenario. There is also a risk of credit risk. What
is that credit risk? When you invest in a bond fund the money is ultimately invested in some
securities. Every security is actually rated. Make sure that when you invest in a fund, the fund
has invested in higher grade investment securities because the company can default in terms of
paying interest or principal or both. The third risk as in the equity market there is also a risk of
liquidity. Even though there is a secondary debt market, but it is not having that much of a depth
today so there can always be some securities in the fund which the fund may find difficult to
liquidate.

46 | P a g e

CONCLUSIONS:

Mutual fund has become one of the important sources for investing. It is quite likely that a more
efficient portfolio can be constructed directly from funds. Thus, the two-step process of choosing
an asset allocation based on the information about benchmark indexes and then choosing funds
in each category may be one of the best realistically attainable approaches. To use this approach
to portfolio selection effectively, investors would benefit from estimates of future asset returns,
risks and correlations, as well as from fund managements disclosure of future asset exposures
and appropriate benchmarks.
It has been a great opportunity for me to get a first experience of Mutual Funds. My study is to
get the feel of how the work is carried out in relation to funds portfolio aspect. I got an
opportunity in relation to the documentation and also the portfolio analysis that have been
carrying out in facilitating the investor and the fund manager.

47 | P a g e

BIBLOGRAPHY
Books:
1. Security Analysis and Portfolio Management (sixth Edition 1995) by Donald E.
Fisher and Ronald J. Jordan. Publication: Pearson education.
2. The Indian Financial System (second edition) by Bharati V. Pathak. Published by
Dorling Kindersley (India) Pvt. Ltd., licensees of Pearson Education in South
Asia.
Websites

www.hdfcfund.com

www.amfiindia.com

www.moneycontrol.com

www.sebi.gov.in

www.bseindia.com

www.nseindia.com

www.mutualfundsindia.com

www.valueresearch.com

www.indiainfoline.com

www.in.finance.yahoo.com

48 | P a g e