Comparative Analysis of Mutual Fund with Special

Reference to HDFC & ICICI Prudential

TRAINING REPORT

Submitted By:-

JYOTI DAHIYA
University Roll No.6300192
Batch 2015 – 2018

In Partial Fulfillment of
Bachelor of Business Administration
(IIFSB)
with
Maharishi Dayanand University
Rohtak

SatyugDarshan Institute of Engineering and Technology

BhupaniLalpur Road, Village Bhupani
Faridabad - 121002, NCR, Haryana, India

November 2016
 DECLARATION

I, Jyoti Dahiya hereby declare that this report is the record of authentic work
carried out by me during the period from 15 th July 2016 to 12th Nov 2016and
has not been submitted to any other University or Institute for the award of
any degree / diploma etc.

(Signature)
JYOTI DAHIYA
Date: 18/11/2016
 BONAFIDE CERTIFICATE

This is to certify that Jyoti Dahiya of SatyugDarshan Institute of

Engineering and Technologyhas successfully completed the project work
titled “Comparative Analysis of Mutual Fund with Special Reference to
HDFC & ICICI Prudential” in partial fulfillment of requirement for the
completion of Bachelor in Business Administration (BBA IIFSB) course as
prescribed by the MaharshiDayanand University, Rohtak, (HARYANA).

This project report is the record of authentic work carried out by her during the period from
15th July to 12 November 2016. She has worked under my guidance.

(Signature)
Mr. Vijay Kumar
Assistant Professor, BBA Department
Project Guide (Internal)
Date:
Counter signed by

(Signature)
Mr. Ravi Bakshi
Department Coordinator (BBA Department)
Date:
CERTIFICATE
 INDEX

S.NO PARTICULARS PAGE NO.

1. INTRODUCION OF MUTUL FUND

2. COMPANY PROFILE

3. RESEARCH METHODOLOGY

4. DATA PROCESSING AND ANALYSIS

5.
FINDINGS

6. CONCLUSION

7. RECOMMENDATIONS

8. BIBLIOGRAPHY
 INTRODUCTION OF MUTUAL FUND

The first introduction of a mutual fund in India occurred in 1963, when the Government of
India launched Unit Trust of India (UTI). Until 1987, UTI enjoyed a monopoly in the
Indian mutual fund market. Then a host of other government-controlled Indian financial
companies came up with their own funds. These included State Bank of India, Canara
Bank, and Punjab National Bank. This market was made open to private players in 1993, as
a result of the historic constitutional amendments brought forward by the then Congress-
led government under the existing regime
of Liberalization, Privatization and Globalization (LPG). The first private sector fund to
operate in India was Kothari Pioneer, which later merged with Franklin Templeton.
CONCEPT OF MUTUAL FUND:
A mutual fund is a common pool of money into which investors place their contributions
that are to be invested in accordance with a stated objective. The ownership of the fund is
thus joint or “mutual”; the fund belongs to all investors. A single investor’s ownership of
the fund is in the same proportion as the amount of the contribution made by him or her
bears to the total amount of the fund.
Mutual Funds are trusts, which accept savings from investors and invest the same in
diversified financial instruments in terms of objectives set out in the trusts deed with the
view to reduce the risk and maximize the income and capital appreciation for distribution
for the members. A Mutual Fund is a corporation and the fund manager’s interest is to
professionally manage the funds provided by the investors and provide a return on them
after deducting reasonable management fees.
DEFINITION:
“A mutual fund is an investment that pools your money with the money of an unlimited
number of other investors. In return, you and the other investors each own shares of the
fund. The fund's assets are invested according to an investment objective into the fund's
portfolio of investments. Aggressive growth funds seek long-term capital growth by
investing primarily in stocks of fast-growing smaller companies or market segments.
Aggressive growth funds are also called capital appreciation funds”.
Historical Aspect
Mutual fund firstly was established in 1822 in the form of Society General De Belguique.
It mainly gains the progress in Switzerland & little in franc and Germany in its initial days.
The first investment trust “The foreign and colonial govt. trust” Was founded in London in
1868.
Why Select Mutual Fund?

The risk return trade-off indicates that if investor is willing to take higher risk then
correspondingly he can expect higher returns and vise versa if he pertains to lower risk
instruments, which would be satisfied by lower returns. For example, if an investors opt
for bank FD, which provide moderate return with minimal risk. But as he moves ahead to
invest in capital protected funds and the profit-bonds that give out more return which is
slightly higher as compared to the bank deposits but the risk involved also increases in the
same proportion.
Thus investors choose mutual funds as their primary means of investing, as Mutual funds
provide professional management, diversification, convenience and liquidity. That doesn’t
mean mutual fund investments risk free.
This is because the money that is pooled in are not invested only in debts funds which are
less riskier but are also invested in the stock markets which involves a higher risk but can
expect higher returns. Hedge fund involves a very high risk since it is mostly traded in the
derivatives market which is considered very volatile.
 RETURN RISK MATRIX
HIGHIER RISK HIGHER RISK
MODERATE RETURNS HIGHIER RETURNS

Venture
Capital Equity

Bank FD Mutual
Funds
Postal
Savings
LOWER RISK LOWER RISK
LOWER RETURNS HIGIER RETURNS

ADVANTAGES OF MUTUAL FUNDS

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

1. Portfolio Diversification:
Each investor in the fund is a part owner of all the fund’s assets, thus enabling him to hold
a diversified investment portfolio even with a small amount of investment that would
otherwise require big capital.

2. Professional Management:
Even if an investor has a big amount of capital available to him, he benefits from the
professional management skills brought in by the fund in the management of the investor’s
portfolio. The investment management skills, along with the needed research into available
investment options, ensure a much better return than what an investor can manage on his
own. Few investors have the skill and resources of their own to succeed in today’s fast
moving, global and sophisticated markets.

3. Reduction/Diversification Of Risk:
When an investor invests directly, all the risk of potential loss is his own, whether he places
a deposit with a company or a bank, or he buys a share or debenture on his own or in any
other from. While investing in the pool of funds with investors, the potential losses are also
shared with other investors. The risk reduction is one of the most important benefits of a
collective investment vehicle like the mutual fund.

4. Reduction Of Transaction Costs:

What is true of risk as also true of the transaction costs. The investor bears all the costs of
investing such as brokerage or custody of securities. When going through a fund, he has
the benefit of economies of scale; the funds pay lesser costs because of larger volumes, a
benefit passed on to its investors.

5. Liquidity:
Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When
they invest in the units of a fund, they can generally cash their investments any time, by
selling their units to the fund if open-ended, or selling them in the market if the fund is
close-end. Liquidity of investment is clearly a big benefit.

6. Convenience And Flexibility:

Mutual fund management companies offer many investor services that a direct market
investor cannot get. Investors can easily transfer their holding from one scheme to the
other; get updated market information and so on.

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

8. Well Regulated:
All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds
are regularly monitored by SEBI.

TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial
position, risk tolerance and return expectations etc. thus mutual funds has Variety of
flavors, Being a collection of many stocks, an investors can go for picking a mutual fund
might be easy. There are over hundreds of mutual funds scheme to choose from. It is easier
to think of mutual funds in categories, mentioned below.
 TYPES OF MUTUAL
FUNDS

BY INVESTMENT
BY STRUCTURE BY NATURE OTHER SCHEMES
OBJECTIVE

Open - Ended Tax Saving

Equity Fund Growth Schemes
Schemes Schemes

Close - Ended
Debt Funds Income Schemes Index Schemes
Schemes

Sector Specific
Interval Schemes Balanced Funds Balanced Schemes
Schemes

Money Market
Schemes

A). BY STRUCTURE

1. Open - Ended Schemes:

An open-end fund is one that is available for subscription all through the year. These do not
have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value
("NAV") related prices. The key feature of open-end schemes is liquidity.

2. Close - Ended Schemes:

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can invest
in the scheme at the time of the initial public issue and thereafter they can buy or sell the
units of the scheme on the stock exchanges where they are listed. In order to provide an
exit route to the investors, some close-ended funds give an option of selling back the units
to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations
stipulate that at least one of the two exit routes is provided to the investor.
3. Interval Schemes:
Interval Schemes are that scheme, which combines the features of open-ended and close-
ended schemes. The units may be traded on the stock exchange or may be open for sale or
redemption during pre-determined intervals at NAV related prices.

B). BY NATURE
1. Equity Fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of
the fund may vary different for different schemes and the fund manager’s outlook on
different stocks. The Equity Funds are sub-classified depending upon their investment
objective, as follows:
 Diversified Equity Funds
 Mid-Cap Funds
 Sector Specific Funds
 Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high on the
risk-return matrix.

2. Debt Funds:
The objective of these Funds is to invest in debt papers. Government authorities, private
companies, banks and financial institutions are some of the major issuers of debt papers.
By investing in debt instruments, these funds ensure low risk and provide stable income to
the investors. Debt funds are further classified as:
 Gilt Funds: Invest their corpus in securities issued by Government, popularly
known as Government of India debt papers. These Funds carry zero Default risk but
are associated with Interest Rate risk. These schemes are safer as they invest in
papers backed by Government.
  Income Funds: Invest a major portion into various debt instruments such as bonds,
corporate debentures and Government securities.

 MIPs: Invests maximum of their total corpus in debt instruments while they take
minimum exposure in equities. It gets benefit of both equity and debt market. These
scheme ranks slightly high on the risk-return matrix when compared with other debt
schemes.
 Short Term Plans (STPs): Meant for investment horizon for three to six months.
These funds primarily invest in short term papers like Certificate of Deposits (CDs)
and Commercial Papers (CPs). Some portion of the corpus is also invested in
corporate debentures.

 Liquid Funds: Also known as Money Market Schemes, These funds provides easy
liquidity and preservation of capital. These schemes invest in short-term
instruments like Treasury Bills, inter-bank call money market, CPs and CDs. These
funds are meant for short-term cash management of corporate houses and are meant
for an investment horizon of 1day to 3 months. These schemes rank low on risk-
return matrix and are considered to be the safest amongst all categories of mutual
funds.

3. Balanced Funds:
As the name suggest they, are a mix of both equity and debt funds. They invest in both
equities and fixed income securities, which are in line with pre-defined investment
objective of the scheme. These schemes aim to provide investors with the best of both the
worlds. Equity part provides growth and the debt part provides stability in returns.

Further the mutual funds can be broadly classified on the basis of investment parameter
viz,
Each category of funds is backed by an investment philosophy, which is pre-defined in the
objectives of the fund. The investor can align his own investment needs with the funds
objective and invest accordingly.
C). BY INVESTMENT OBJECTIVE:
Growth Schemes:
Growth Schemes are also known as equity schemes. The aim of these schemes is to
provide capital appreciation over medium to long term. These schemes normally invest a
major part of their fund in equities and are willing to bear short-term decline in value for
possible future appreciation.

Income Schemes:
Income Schemes are also known as debt schemes. The aim of these schemes is to provide
regular and steady income to investors. These schemes generally invest in fixed income
securities such as bonds and corporate debentures. Capital appreciation in such schemes
may be limited.

Balanced Schemes:
Balanced Schemes aim to provide both growth and income by periodically distributing a
part of the income and capital gains they earn. These schemes invest in both shares and
fixed income securities, in the proportion indicated in their offer documents (normally
50:50).

OTHER SCHEMES
Tax Saving Schemes:
Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time
to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked
Savings Scheme (ELSS) are eligible for rebate.

Index Schemes:
Index schemes attempt to replicate the performance of a particular index such as the BSE
Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that
constitute the index. The percentage of each stock to the total holding will be identical to
the stocks index weightage. And hence, the returns from such schemes would be more or
less equivalent to those of the Index.
Sector Specific Schemes:
These are the funds/schemes which invest in the securities of only those sectors or
industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving
Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent
on the performance of the respective sectors/industries. While these funds may give higher
returns, they are more risky compared to diversified funds. Investors need to keep a watch
on the performance of those sectors/industries and must exit at an appropriate time.

NET ASSET VALUE (NAV):

Since each owner is a part owner of a mutual fund, it is necessary to establish the value of
his part. In other words, each share or unit that an investor holds needs to be assigned a
value. Since the units held by investor evidence the ownership of the fund’s assets, the
value of the total assets of the fund when divided by the total number of units issued by the
mutual fund gives us the value of one unit. This is generally called the Net Asset Value
(NAV) of one unit or one share. The value of an investor’s part ownership is thus
determined by the NAV of the number of units held.

Calculation of NAV:

Let us see an example. If the value of a fund’s assets stands at Rs. 100 and it has 10
investors who have bought 10 units each, the total numbers of units issued are 100, and the
value of one unit is Rs. 10.00 (1000/100). If a single investor in fact owns 3 units, the value
of his ownership of the fund will be Rs. 30.00(1000/100*3). Note that the value of the
fund’s investments will keep fluctuating with the market-price movements, causing the Net
Asset Value also to fluctuate. For example, if the value of our fund’s asset increased from
Rs. 1000 to 1200, the value of our investors holding of 3 units will now be (1200/100*3)
Rs. 36. The investment value can go up or down, depending on the markets value of the
fund’s assets.
 SELECTION PARAMETERS FOR MUTUAL FUND

Your objective:
The first point to note before investing in a fund is to find out whether your objective
matches with the scheme. It is necessary, as any conflict would directly affect your
prospective returns. Similarly, you should pick schemes that meet your specific needs.
Examples: pension plans, children’s plans, sector-specific schemes, etc.

Your risk capacity and capability:

This dictates the choice of schemes. Those with no risk tolerance should go for debt
schemes, as they are relatively safer. Aggressive investors can go for equity investments.
Investors that are even more aggressive can try schemes that invest in specific industry or
sectors.

Fund Manager’s and scheme track record:

Since you are giving your hard earned money to someone to manage it, it is imperative that
he manages it well. It is also essential that the fund house you choose has excellent track
record. It also should be professional and maintain high transparency in operations. Look at
the performance of the scheme against relevant market benchmarks and its competitors.
Look at the performance of a longer period, as it will give you how the scheme fared in
different market conditions.

Cost factor:
Though the AMC fee is regulated, you should look at the expense ratio of the fund before
investing. This is because the money is deducted from your investments. A higher entry
load or exit load also will eat into your returns. A higher expense ratio can be justified only
by superlative returns. It is very crucial in a debt fund, as it will devour a few percentages
from your modest returns.
Also, Morningstar rates mutual funds. Each year end, many financial publications list the
year's best performing mutual funds. Naturally, very eager investors will rush out to
purchase shares of last year's top performers. That's a big mistake. Remember, changing
market conditions make it rare that last year's top performer repeats that ranking for the
current year. Mutual fund investors would be well advised to consider the fund prospectus,
the fund manager, and the current market conditions. Never rely on last year's top
performers.

MUTUAL FUNDS DISTRIBUTION CHANNELS

Investors have varied investment objectives and can be classified as aggressive, moderate
and conservative, depending on their risk profile. For each of these categories, asset
management companies (AMCs) devise different types of fund schemes, and it is
important for investors to buy those that match their investment goals.

Funds are bought and sold through distribution channels, which play a significant role in
explaining to the investors the various schemes available, their investment style, costs and
expenses. There are two types of distribution channels-direct and indirect. In case of the
former, the investors buy units directly from the fund AMC, whereas indirect channels
include the involvement of agents. Let us consider these distribution channels in detail.

Direct channel

This is good for investors who do not need the advisory services of agents and are well-
versed with the fundamentals of the fund industry. The channel provides the benefit of low
cost, which significantly enhances the returns in the long run.

Indirect channel

This channel is widely prevalent in the fund industry. It involves the use of agents, who act
as intermediaries between the fund and the investor. These agents are not exclusive
for mutual funds and can deal in multiple financial instruments. They have an in-depth
knowledge about the functioning of financial instruments and are in a position to act as
financial advisers. Here are some of the players in the indirect distribution channels.
a) Independent financial advisers (IFA): These are individuals trained by AMCs for selling
their products. Some IFAs are professionally qualified CFPs (certified financial planners).
They help investors in choosing the right fund schemes and assist them in financial
planning. IFAs manage their costs through the commissions that they earn by selling funds.

b) Organized distributors: They are the backbone of the indirect distribution channel. They
have the infrastructure and resources for managing administrative paperwork, purchases
and redemptions. These distributors cater to the diverse nature of the investor community
and the vast geographic spread of the country by establishing offices in rural and semi
urban locations.

c) Banks: They use their network to sell mutual funds. Their existing customer base serves
as a captive prospective investor base for marketing funds. Banks also handle wealth
management for their clients and manage portfolios where mutual funds are one of the
asset classes. The players in the indirect channel assist investors in buying and redeeming
fund units.

They try to understand the risk profile of investors and suggest fund schemes that best suits
their objectives. The indirect channel should be preferred over the direct channel when
investors want to seek expert advice on the risk-return mix or need help in understanding
the features of the financial securities in which the fund invests as well as other important
attributes of mutual funds, such as benchmarking and tax treatment.

Indian Scenario of Mutual Fund

The origin of mutual fund industry in India iswith the introduction of the concept of by
UTI in the year 1963. Through the growth was slow, but it accelerated from the year 1987
when non-UTI players entered in industry. The mutual fund industry goes through four
phases:-
  First phase 1964-87 (Establishment of UTI).
 Second phase 1987-93 (Entry of public sector funds).
 Third phase 1993-2003 (Entry of a private sector funds).
 Fourth phase since feb.2003 (Bifurcated of UTI).

In the first phase, UTI was established in 1963 by an act of parliament. In 1978 it was
delinked from RBI & the IDBI took over the control of UTI. In second phase, SBI entered
as first non-UTI mutual fund provider then it was followed by can bank (Dec. 87). PNB
(Aug 89) & LIC in 1989. In third phase, the private sector entered in it. The Erstwhile
Kothari pioneer (now merged with Franklin Templeton) was first registered in July 1993 in
mutual fund. In revised registration of SEBI I n 1993 the industry functions under SEBI.
And the fourth phase had bitter experience for UTI. It was bifurcated into two separate
entities. One is the specified under taking of UTI with AUM of 29,835cr. The second is
UTI mutual fund ltd. Sponsored by SBI, PNB, BOB and LIC& it is registered with SEBI.
 INTRODUCTION

HDFC Asset Management Company Limited (AMC): An Overview

HDFC Asset Management Company Ltd (AMC) was established under the Companies
Act, 1956, on December 10, 1999, and was approved to act as an Asset Management
Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000. The
registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg,
169, Backbay Reclamation, Churchgate, Mumbai 400 020. For investment management the
trustee has appointed the HDFC Asset Management Company Limited. It manages the
Mutual Funds. The paid up capital of the AMC is Rs. 25.161 crore 1.The present equity
shareholding pattern of the AMC is shown in table:-

Equity Shareholding Pattern of HDFC Mutual Fund

Particulars % of the paid up equity capital
Housing Development Finance Corporation Limited 60
Standard Life Investments Limited 40
Source: Annual Reports of HDFC mutual funds

It can be observed from the table that HDFC is the bigger partner of the AMC having a
share of 60percent while Standard Life Investment limited has share of 40percent2. To
consolidate its business HDFC Asset Management Company took over Zurich Insurance
Company (ZIC), the sponsor of Zurich India MF. The AMC entered into an agreement with
ZIC to acquire the said business, subject to necessary regulatory approvals. After getting
necessary clearance, the following schemes as shown in below mentioned table were
acquired by HDFC mutual funds on June 19, 2003. The schemes were than rechristened as
can be observed from table. It is evident from the table that in total 8 schemes were
acquired by HDFC Mutual Fund.
 New name of Zurich Mutual Funds
Former Name New Name
Zurich India Equity Fund HDFC Equity Fund
Zurich India Prudence Fund HDFC Prudence Fund
Zurich India Capital Builder Fund HDFC Capital Builder Fund
Zurich India TaxSaver Fund HDFC TaxSaver
Zurich India Top 200 Fund HDFC Top 200 Fund
Zurich India High Interest Fund HDFC High Interest Fund
Zurich India Liquidity Fund HDFC Cash Management Fund
Zurich India Sovereign Gilt Fund HDFC Sovereign Gilt Fund*
Source: Annual Reports of HDFC Mutual Funds
*HDFC Sovereign Gilt Fund has been wound up in March 2006

The AMC at present managing 24 open-ended schemes and 13 closed ended Schemes of
the HDFC Mutual Fund. Besides managing schemes the AMC is also providing portfolio
management / advisory services and such activities which 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 8, 2006 to act as a Portfolio
Manager under the SEBI (Portfolio Managers) Regulations, 1993. The Certificate of
Registration is valid from January 1, 2007 to December 31, 2009.

An Overview of Sponsor and Trustee of Company

The HDFC Mutual Fund is being constituted as a trust in accordance with the provisions of
the Indian Trusts Act, 1882, as per the terms of the trust deed dated June 8, 2000 with
Housing Development Finance Corporation Limited (HDFC) and Standard Life
Investments Limited as the Sponsors and HDFC Trustee Company Limited, as the Trustee.
The Trust Deed has been registered under the Indian Registration Act, 1908. It is registered
with SEBI, under registration code MF / 044 / 00 / 6 on June 30, 2000.
Sponsors
The sponsors of HDFC Mutual Fund are Housing Development Finance Corporation
Limited and Standard Life Investments Limited. Both have contributed sum of Rs. one
lakh each to the trustee in the corpus of the Fund.

Housing Development Finance Corporation Limited (HDFC)

HDFC was incorporated in 1977 as the first specialized Mortgage Company in India. It is a
premier housing finance company in India. It provides financial assistance to corporate,
individuals, and developers for the purchase or setting 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 is the prime
activity of HDFC. It has a client base of around 10 lakh borrowers, around 10 lakh
depositors, over 1, 23,000 shareholders and 50,000 deposit agents, as at March 31, 2009.
The Company has a total asset size of Rs. 96,993 crore as at March 31, 2009 and
cumulative approvals and disbursements of housing loans of Rs. 237,450 crore and Rs.
191,806 crore respectively as at March 31, 20094. It has raised funds from international
agencies such as the World Bank, IFC (Washington), USAID, DEG, ADB and KfW,
international syndicated loans, domestic term loans from banks and insurance companies,
bonds and deposits. It has received the highest rating for its deposits program for the
fourteenth 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. Beside housing
business it has launched HDFC standard life insurance company, which was first insurance
company to be granted certificate in 2000.
 Standard Life Investments Limited

Standard Life Investments Limited is wholly owned subsidiary of Standard Life

Investments (Holdings) Limited, which in turn is a wholly owned subsidiary of Standard
Life plc. It is the investment management company of standard life. It has global assets
under management of approximately US$ 169 billion as at March 31, 2009 and is one of
the world's largest investment company5. It invests money on behalf of five million
institutional and retail clients throughout the world. The company has its operation in USA,
UK, Canada, Korea, Ireland and Australia making it a truly global investment company.
The Trustee
The function of the trustee is performed by the HDFC Trustee Company Limited (the
"Trustee"). Its prime function is to ensure that the working of the AMC is being carried out
in accordance with the "SEBI (MF) Regulations". It also reviews the activities carried on
by the AMC. After having a comprehensive discussion about the establishment of HDFC
mutual funds, its organizational structure we will have a look at the sample funds chosen
for the purpose of study. The following sample funds were chosen taking consideration
about their duration of operation and their investment objectives. Attempts has been made
that equal number of observation is taken to find out the result of empirical analysis.
 ICICI Prudential Mutual Fund

The mutual fund of ICICI is a joint venture with prudential PLC. Of America, one of the
largest life insurance companies in the USA. Prudential ICICI mutual fund was set on 13th
of Oct. 1993 with two sponsors.

ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial
institution, in 1994. Four years later, when the company offered ICICI Bank's shares to the
public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank offered
made an equity offering in the form of ADRs on the New York Stock Exchange (NYSE),
thereby becoming the first Indian company and the first bank or financial institution from
non-Japan Asia to be listed on the NYSE. In the next year, it acquired the Bank of Madura
Limited in an all-stock amalgamation. Later in the year and the next fiscal year, the bank
made secondary market sales to institutional investors.

ICICI Prudential Asset Management Company enjoys the strong parentage of Prudential
plc, one of UK's largest players in the insurance & fund management sectors and ICICI
Bank, a well-known and trusted name in financial services in India.
ICICI Prudential Asset Management Company, in a span of just over eight years, has
forged a position of pre-eminence in the Indian Mutual Fund industry as one of the
largest asset management companies in the country with average assets under management
of Rs. 83,069.89 Crore (as of April 30, 2010).
The Company manages a comprehensive range of schemes to meet the varying investment
needs of its investors spread across 230 cities in the country.
At inception – May 1998 As on April 30, 2010
Average Assets Under Management Rs. 160 Crores Rs. 83069.89 Crores
Number of Funds Managed 2 40
Sponsors

Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02 dated June 4,
2002, has accorded its approval in recognizing ICICI Bank Ltd. as a co-sponsor consequent
to the merger of ICICI Ltd. with ICICI Bank Ltd.

ICICI Bank is India's second-largest bank with total assets of Rs. 3,997.95 billion (US$
100 billion) at March 31, 2008 and profit after tax of Rs. 41.58 billion for the year ended
March 31, 2008. ICICI Bank is second amongst all the companies listed on the Indian
stock exchanges in terms of free float market capitalization Free float holding excludes all
promoter holdings, strategic investments and cross holdings among public sector entities.

The Bank has a network of about 1,308 branches and 3,950 ATMs in India and presence in
18 countries. ICICI Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and through its
specialised subsidiaries and affiliates in the areas of investment banking, life and non-life
insurance, venture capital and asset management.

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches
in Unites States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International
Finance Centre and representative offices in United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established
branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National
Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed
on the New York Stock Exchange (NYSE). (Source: Overview at www.icicibank.com).
Headquartered in London, Prudential plc and its affiliated companies together constitute
one of the world's leading financial services groups. Prudential provides insurance and
financial services in a number of markets around the world, including in Asia, the US, the
UK, Europe and the Middle East.

Founded in 1848, the company has £249 billion in funds under management (as of 31
December 2008) and more than 21 million customers worldwide. Prudential has been
writing life insurance in the United Kingdom for 160 years and has had the largest long-
term fund in the United Kingdom, for over a century. In the United Kingdom, Prudential is
a leading retirement savings and income solutions and life assurance provider. M&G is
Prudential's fund management business in the United Kingdom and Europe, with almost
£140 billion in funds under management (as of 31 December 2008).

In the United States, Jackson National Life, which we acquired in 1986, is one of the
largest life insurance companies providing retirement savings and income solutions. In
Asia, Prudential is the leading Europe-based life insurer in terms of market coverage and
number of top three ranking positions. It is also one of the largest and most successful fund
managers in Asia with more top five market rankings than any other regional player.

Today, Prudential has life insurance and fund management operations spanning 13 diverse
markets in Asia. Prudential plc is incorporated and with its principal place of business in
the United Kingdom. It is not affiliated in any manner with Prudential Financial, Inc., a
company whose principal place of business is in the United States.

Other Players in Mutual Fund

 Bank of Baroda mutual fund (BOB MF) 30OCT. 1992.
 Benchmark mutual funds (June 12, 2001).
 Birla Sun life MF (1871).
 Chola mutual fund (3 Jan. 1997).
 Can bank mutual fund (Dec. 19, 1987).
 LIC mutual fund (19th June, 1989).
 RESEARCH METHODOLOGY

Objectives
.
 To analysis which provides better returns from HDFC &ICICI.
 To analyze the concept and parameters of mutual fund.
 To know the level of satisfaction on investment (in HDFC or ICICI).

 To know people behavior regarding risk factor involved in mutual fund.

Need of the study

 The need of study arises for learning the variables available that distinguish the
mutual fund of two companies.
 To know the risk & return associated with mutual fund.
 To chose best company for mutual investment between HDFC & ICICI.

 To project mutual fund as the ‘productive avenue for investing activities.

Research Methodology:
Defining Research Problem

In this study, we will do a comparative analysis of Mutual fund of HDFC & ICICI
Prudential Mutual Fund. Also we will observe the satisfaction level of customers towards
HDFC and ICICI Prudential.

Research Design:

The whole study would base on exploratory research. The study is based upon findings,
inquires and other information to make critical evaluation of material.

Sampling Design:

Various methods are available for choosing the sample out of population and I will take
deliberate sampling technique for my study.
.
Data Collection and Sources:

Data collection can be broadly classified into two categories:

1. Primary Data: Primary data is that data which is collected for first time and happen
to be original in character. To collect primary data, we have used structured
questionnaire.
2. Secondary Data: Secondary data is that data which has already been used
somewhere and readily available. Few source of collecting data are as follows:
 Books
 Journals & Magazines
 Websites
 Official statistics
 Government Reports
 DATA PROCESSING AND ANALYSIS

1. Do you invest in mutual fund?

YES 100

NO 0

120
100
100

80
YES
60
NO
40

20

Interpretation:-

All the candidates who are asked to fill the questionnaire have invested in mutual fund.
2. With which company do you have invested in mutual funds?

HDFC 65
ICICI 35
Reliance 0
SBI 0
LIC 0
Kotak Mahindra 0
Others 0

70 65

60
HDFC
50 ICICI
Reliance
40 35
SBI
30 LIC

20 Kotak Mahindra
Others
10
0 0 0 0 0
0

Interpretation:

Out of 100 candidates up to 65have invested in mutual fund with HDFC & 35 have invested with
ICICI. There is no investor who have invested in mutual fund with any another company.
3. What is your age?

60
60

50

40 15-25
25-35
30
35-45
20 More than 45
20
12
10 8

Interpretation:

60 investors are of age between 35-45. 20 are of age more than 45. 12 are of between of 25-35. 8 are of
15-25. This data shows that many investors are of middle age & there are less investors of young age in
mutual fund.
4. What is your income? (Yearly based)

1 lakh 0

2-4 lakh 10

4-5 lakh 20

More than 5 70

70
70

60

50
1 lakh
40 2-4 lakh

30 4-5 lakh
20 More than 5
20
10
10
0
0

Interpretation:

Up to 70 investors have income more than 5 lakh. 20 have between 4-5 lakh.10 investors have income
between 2-4 lakh & there is no investor who have income up to 1akh.
5. From where you come to know about this company’s mutual fund schemes?

Family & relatives 35

Friends & peers 40

Company employee 15

Others 10

40
40
35
35

30 Family & relatives

25
Friends & peers
20
15 Company employee
15
10
10 Others

Interpretation:

Many investors (up to 40) have been come to know about the company to be invested by their friends
& peers.35 have been known by their family & relatives .15have been come to know by company
employees & 10 by others. This means many have come to know by their friends & peers.
6. What is the time duration of your investment?

0-1 year 15

1-2 year 35

2-4year 30

more than 4 20

35
35
30
30
25
0-1 year
20
20 1-2 year
15
15 2-4year
more than 4
10
5
0

Interpretation:

15 investors have time of investment less than one year. 20 have time duration of their investment
between of 1-2 year. 30 have between 2-4 year & 35 have more than 4 years.
So, we can say that 35 investors have more experience than others.
7. Are you satisfied by service of the company’s employees / people’s behavior?

Highly satisfied 15

Satisfied 35

Neutral 30

Dissatisfied 15

Highly Dissatisfied 5

35
35
30
30 Highly satisfied

25 Satisfied
20
15 15 Neutral
15

10 Dissatisfied
5
5 Highly Dissatisfied

Interpretation:

Out of 100 investors 15 are highly satisfied. 35 are satisfied. 30 are neutral towards employee
behavior of a company. 15 are dissatisfied. 5 are highly dissatisfied. We say that many people are
satisfied by employee behavior.
8. What is your risk profile?

70 65

60

50
Innovator
40
Moderate
30 Risk adverse
20
20 15

10

0
Innovator Moderate Risk adverse

Interpretation:

20% investors are innovator means they like to take risk for more returns. 15% are moderate towards
risk means they are indifferent towards risk. 65% are risk adverse means they mainly try to avoid risk.
9. What you feel about the company norms, documentation & formalities?

Highly Satisfied 15

Satisfied 25

Neutral 40

Dissatisfied 15

Highly dissatisfied 5

5% Highly Satisfied
15%
15%
Satisfied

Neutral
25%
Dissatisfied

40% Highly
Dissatisfied

Interpretation:

15% investors are highly satisfied by company’s documentation policy (filling up the forms etc.). 25%
are satisfied, 40% never cares about it or are moderate towards it , 15% are dissatisfied by it & 5% are
highly dissatisfied.
 9. What you say which provides better returns?

HDFC 68

ICICI 32

70 68

60

50

40 HDFC
32
ICICI
30

20

10

Interpretation:

According to collected data 68 investors thinks that HDFC provides better returns where as 32 to think
that ICICI provides better returns.
11. Would you like to exchange your investment with one another between
HDFC & ICICI?

Yes 15

No 85

90 , 85
80

70

60

50 Yes
No
40

30

20 15
10

Interpretation:

15 investors said that they would like to change their investment with each another between HDFC &
ICICI. But 85 investors say that they are ok with their companies and they wouldn’t like to exchange
their investment.
 FINDINGS

 Investors have more faith HDFC’s mutual fund.

 As the age increases investors are much satisfied, see more risk & become more risk
adverse.
 Old people &Widows prefer lower risk.
 Investors are not highly satisfied by company rules & employee behavior.
 Investors think that HDFC provides better returns than ICICI.
 CONCLUSION

To conclude we can say that mutual fund is a very much profitable tool for investment because of its
low cost of acquiring fund, tax benefit, and diversification of profits & reduction of risk. Many
investors who have invested in mutual fund have invested with HDFC and them also thinks that it
provides better returns than ICICI .There is also an affect of age on mutual fund investors like; old
people & widows want regular returns than capital appreciation. Companies can adopt new techniques
to attract more & more investors. In my study I was suppose to do comparative analyses the mutual
fund of HDFC &ICICI and I had found that people consider HDFC better than ICICI. But ICICI have
also respondents and it can increase its investors by improving itself in some terms.
 To conclude we can say mutual fund is a best investment vehicle for old & widow, as well as to
those who want regular returns on their investment.
 Mutual fund is also better and preferable for those who want their capital appreciation.
 Both the companies are doing considerable achievements in mutual fund industry.
 There are also so many competitors involved those affects on both companies.
 SUGGESTIONS

 ICICI bank should try to provide better returns to its investors as compare to HDFC.
 Both companies should try to invest in better securities for better profits.
 Both companies should try to satisfy their customer by better customer service or by
improving customer relationship management.
 Companies should try to make people initiative towards risk.
 Investors should be made fully aware of the concept of mutual fund & all the terms and
conditions.
 It should more emphasize in advertising, as it is the most
Powerful tool to position ant brand in the mindsets of customers
 BIBLIOGRAPHY

 Websites:-
www.wiki.answers.com
www.hdfc.com
www.icici.com
www.google.com
www.slideshare.net
www.nse-india.com
 QUESTIONNIARE

Annexure

Name ________________________ Age _________

Adress_____________________________________
Pin ___________ Sex _________ Phone _________

1. Do you invest in mutual fund?

Yes No .

2. With which company do you have invested in mutual funds?

HDFC ICICI

Reliance LIC

SBI Kotak Mahindra

Others
Please specify

3. What is your age?

15-25 25-35

35-45 above 45 .

4. What is your income? (Yearly based)

1 lakh 2 - 4lakh

4-5 lakh more than 5

5. From where you come to know about this company’s mutual fund schemes?

Family members & relatives

Friends & peers

Company’emplooyes

Others
 Please specify .

6. What is the time duration of your investment?

0-1 year 1-2 year

2-4year more than 4 .

7. Are you satisfied by service of the company’s employees / people’s behavior?

Highly satisfied

Satisfied

Neutral

Dissatisfied

Highly dissatisfied .

8. What is your risk profile?

Innovator

Moderator

Risk adverse

9. What you feel about the company norms, documentation & formalities?

Highly satisfied

Satisfied

Neutral

Dissatisfied

Highly dissatisfied

10. What you say which provides better returns?

 HDFC ICICI

11. Would you like to exchange your investment with one another between HDFC & ICICI?

YESNO