Analysis of Mutual Funds

1 Alliance Business School
Report
On
“To study and analyse the mutual fund schemes
from HSBC Asset Management (India) Pvt. Ltd.”
Prepared by:
Bayed Samar J.
Registration No:
07PG011
Under the Guidance of Prof. Chowdari Prasad
In partial fulfillment of the Course: Students Internship Programme (SIP) In
Term – IV of the Post Graduate Programme in Management (Batch: 2007 –
2009)
Bangalore
HSBC Asset Management (India) Private Limited

Post Graduate Programme
Post Graduate Diploma in Management: 2007-09

Term – IV: Students Internship Programme (SIP)
Declaration
This is to declare that the Report entitled “To study and analyse the mutual fund schemes
from HSBC Asset Management (India) Pvt Ltd” has been made for the partial fulfillment of
the Course: Students Internship Programme (SIP) in Term – IV (Batch: 2007-2009) by me at
HSBC Asset Management (India) Pvt Ltd under the guidance of Prof. Chowdari Prasad.
I confirm that this Report truly represents my work undertaken as a part of my Students
Internship Programme (SIP). This work is not a replication of work done previously by any other
person. I also confirm that the contents of the report and the views contained therein have been
discussed and deliberated with the Faculty Guide.
Signature of the Student :

Name of the Student : BAYED SAMAR J.
Registration No : 07PG011
Date :

Post Graduate Program in Management
Certificate
This is to certify that MR. BAYED SAMAR J. has completed the Report
entitled “To study and analyse the mutual fund schemes from HSBC
Asset Management (India) Pvt Ltd” under my guidance for the partial
fulfillment of the Course: Students Internship Program (SIP) in Term – IV of
the Post Graduate Program in Management (Batch: 2007– 2009).
Signature of Faculty Guide:
Name of the faculty Guide: PROF. CHOWDARI PRASAD
Date:

ACKNOWLEDGEMENT
I take this opportunity to express my deep and sincere sense of gratitude to Prof.Chowdari
Prasad, Prof. in finance and Registrar, Alliance Business School and to Mr. Naveen, Associate
Vice President, Sales, HSBC Asset Management (India) Pvt Ltd. for their effective guidance,
encouragement and stimulating discussions. Being more than a guide, their inestimable help and
creative criticism have paved way to successful completion of the project. I would also like to
extend my thanks to Mr. Christopher Almeida, Head of Investments and Mr. Jyotish Varghese,
Branch Manager and also Ms. Jyothi Kaushik and various others members at Trans Financial
Corporation for their active support and sincere cooperation without which this project would not
have materialized.

Table of Content
Page no.
1. Executive Summary 7
2. Introduction 8
2.1 Industry overview 9
2.1.1 Brazil 9
2.1.2 Russia 11
2.1.3 India 13
2.1.4 China 21
2.2 Company overview 22
2.2.1 Company’s History 22
2.2.2 Management 23
2.2.3 Sponsors and Trustees 24
2.2.4 Investment philosophy and Process 26
3. Project Profile 32
4. Objective of the study 33
5. Observations 34
6. Analysis 36
6.1 Comparison between HEF, HAIF and HDF 36
6.1.1 HSBC Equity Fund 36
6.1.2 HSBC Advantage India Fund 36
6.1.3 HSBC Dynamic Fund 37

6.2 Analysis of HEF, with three similar schemes offered by other fund
houses 48
6.2.1 HSBC Equity Fund 50
6.2.2 HDFC Equity Fund 52
6.2.3 DWS Alpha Equity Fund 53
6.2.4 Reliance Equity Fund 54
7. Findings 65
7.1 Trend in mutual fund i.e. Sales and Redemptions from 1997- 07 65
7.2 Strategy for selection of a stock 66
7.3 Money market instruments used by AMC 66
7.4 Key parameters that help in selection of Mutual Fund scheme 70
7.5 Rise in AUM and change in investment objectives 70
7.6 Other important findings 71
7.7 Work done at the organisation 71
8. Recommendations and Conclusion 72
REFERENCE 74
ANNEXURE

1. Executive Summary
Mutual Fund industry is fast growing in developing countries like India. Here in this report
attempt is made to study the asset allocation of various mutual fund scheme and return that they
have given in the past. Statistical tool like average, standard deviation, median, Skewness etc are
used for purpose of analysis. Important parameters like Beta, R-squared and Expense ratio are
taken to analyse and compare the scheme internally. Report also gives a clear idea about the
number of various classes of schemes launched, sales made by such scheme in rupee and
redemption from 1997-98 to 2007-2008. Interfund comparison of HSBC Equity Fund, HDFC
Equity Fund, DWS Alpha Equity Fund and Reliance Equity Fund is done taking into
consideration data of their net asset value per unit (NAV/unit) from 1st October 2007 to 31st
March 2008 that is 6 months.
To make the report broader a brief analysis of global market is also covered by including
scenario in Brazil, Russia and China.
In this report one can also find the trend in Asset Under Management in India and shift in
outlook of people towards private Asset Management Company. It also contains the analysis that
shows a change in investment objective of people from 2003 onwards. Report contains data and
information from genuine sources and can be of great help to researchers, academician or
Corporates.
2. Introduction

Mutual funds are investment companies that pool money from investors at large and offer to sell
and buy back its shares on a continuous basis and use the capital thus raised to invest in securities
of different companies. At the beginning of this millennium, mutual funds out numbered all the
listed securities in New York Stock Exchange. Mutual funds have an upper hand in terms of
diversity and liquidity at lower cost in comparison to bonds and stocks. The popularity of mutual
funds may be relatively new but not their origin which dates back to 18th century. Holland saw
the origination of mutual funds in 1774 as investment trusts before spreading to Anglo-Saxon
countries in its current form by 1868.
We will discuss now as to what are mutual funds before going on to seeing the advantages of
mutual funds. Mutual funds are investment companies that pool money from investors at large
and offer to sell and buy back its shares on a continuous basis and use the capital thus raised to
invest in securities of different companies. The stocks these mutual funds have are very fluid and
are used for buying or redeeming and/or selling shares at a net asset value. Mutual funds posses
shares of several companies and receive dividends in lieu of them and the earnings are distributed
among the share holders.
A Brief of How Mutual Funds Work
Mutual funds can be either or both of open ended and closed ended investment companies
depending on their fund management pattern. An open-end fund offers to sell its shares (units)
continuously to investors either in retail or in bulk without a limit on the number as opposed to a
closed-end fund. Closed end funds have limited number of shares.
Mutual funds have diversified investments spread in calculated proportions amongst securities of
various economic sectors. Mutual funds get their earnings in two ways. First is the most organic
way, which is the dividend they get on the securities they hold. Second is by the redemption of
their shares by investors will be at a discount to the current NAVs (net asset values).
Are Mutual Funds Risk Free and what are the Advantages?

One must not forget the fundamentals of investment that no investment is insulated from risk.
Then it becomes interesting to answer why mutual funds are so popular. To begin with, we can
say mutual funds are relatively risk free in the way they invest and manage the funds. The
investment from the pool is well diversified across securities and shares from various sectors.
The fundamental understanding behind this is not all corporations and sectors fail to perform at a
time. And in the event of a security of a corporation or a whole sector doing badly then the
possible losses from that would be balanced by the returns from other shares.
This logic has seen the mutual funds to be perceived as risk free investments in the market. Yes,
this is not entirely untrue if one takes a look at performances of various mutual funds. This
relative freedom from risk is in addition to a couple of advantages mutual funds carry with them.
So, if you are a retail investor and planning an investment in securities, you will certainly want to
consider the advantages of investing in mutual funds.
• Lowest per unit investment in almost all the cases
• Your investment will be diversified
• Your investment will be managed by professional money managers
2.1 Industry overview
To give a specific approach to the overview we will take a look at the mutual fund industry in
BRIC countries on four parameters namely total asset under management and growth of the
sector.
2.1.1 Brazil.
The GDP in term of Rs. was 2,14,273.9 crore in 2005 while it was around Rs. 2,55,882.1 crore in
2007 which shows a steep growth in GDP. For any economy which grows at this rate its
necessary that people keep pumping their income in the capital market so as to maintain the
growth. In such a market mutual funds are considered organisations which help the common
people to enter the market with minimum risk.
Table 2.1.1.1 Socio-economic data, (%)
Period GDP Population GDP per capita

1961-70 6.17 2.89 3.19

1971-80 8.63 2.44 6.04
1981-90 1.57 2.14 -0.56
1991-00 2.64 1.57 1.06
Source: FGV and IBGE
As you can see from the table above that GDP growth has fallen in the 1990s drastically which
can be blamed primarily on the lack in growth in population and thus investments. During this
decade most of the population was in the aging bracket.
Brazil Mutual Fund Industry may grow at 20% in 2008 as forecast by Bloomberg. Brazil's
mutual fund industry may expand at a slower pace of about 20 percent this year as higher interest
rates curb investments in equity, said Alfredo Setubal, president of the National Investment Bank
Association.
The mutual fund industry grew 23 percent in 2007, ending the year with 1.16 trillion reais ($710
billion) in assets. Growth may be slower this year as the stock market is expected to expand less
because of higher interest rates, Setubal said. Monetary policy makers raised the benchmark
interest rate twice this year to 12.25 percent from a record low of 11.25 percent.
Three companies went public for the first time this year, and another 11 have filed with the
securities regulator to sell shares, said the banking association known as Anbid. The number of
IPOs might be higher in the second half of the year as the investors become less risk averse, said
Luiz Chrysostomo, a partner at Neo Investimentos, which manages about 1.3 billion reais in
assets.
2.1.2 Russia.
Russian mutual funds date back to 1996, but it was only in the 2000s, with the recovery of the
Russian stock market from the 1998 crisis, that these funds were given a major boost. High
returns on Russian stocks — on average, over 40% a year after 1998 — contributed to the rapid
expansion of the industry. While in 2001 there were 35 management companies offering 55

funds, at the end of 2006 investors could choose from among 587 funds and 282 management
companies. During the same period, the assets under management increased from US$30 million
to US$16 billion, or 0.5% of Russian GDP (for comparison, in the US this ratio is about 70%).
Thus, the mutual fund industry demonstrates an impressive rate of growth, but still accounts for
only a small segment of the Russian financial market.
What Restrains Growth?
What is holding back the development of the asset management industry in Russia? One reason
is the poor state of financial education in the country. During Soviet times, knowledge about
financial investment was considered to be part of a market economy that was irrelevant in a
country where the state assumed major risks connected with wages and pensions. A lack of
organizational failures and impressive yields since 1998 helped to attract new private investors to
mutual funds, yet even now they account for a mere 2% of Russia's population — its most
dynamic and educated groups. Oddly enough, the numerous slumps in the Russian stock market
have played a positive role disabusing investors of the notion that easy money can be made
through mutual funds and making them more risk-conscious. Another restraining factor is that
the Russian equity market is not highly developed. In spite of the impressive dynamics, a limited
number of stocks is regularly traded, with the bulk of liquidity coming from a few blue chips like
Gazprom and RAO UES. Moreover, liquid stocks are concentrated in several sectors of the
economy, mainly extraction industries. As a result, mutual funds can hardly form a truly
diversified portfolio and their returns are largely determined by Russia's country risk and other
factors that are hard to quantify. Until recently, legislation effectively banned Russian funds from
including foreign assets and derivatives in their portfolios. At the end of 2006 only 23% of the
Russian mutual funds were of the open type; that is, marking their price to the market daily. The
remaining funds invest a large part of their portfolio into second-tier stocks, real estate and other
illiquid assets. The choice of strategies is also limited: large funds usually hold a portfolio close
to the market index whereas small ones actively rebalance their portfolios trying to time the
market. In recent years, we have seen many index and sector funds emerging, but their portfolios
may turn out to be very different from what their names suggest.

Qualified Assessment Needed
In the current environment, it is very important to have a qualified independent assessment of the
performance of mutual funds, which would guide investors and give funds proper incentives for
composing their portfolios. In the developed financial markets such assessment is provided by
rating agencies, which divide funds into categories in line with their actual (not formally
declared) investment strategy and rate them relative to other funds in the same category. A fund's
performance should be adjusted for risk, since funds can easily outperform the market index with
an aggressive strategy when the market is growing. Unfortunately, until now Russia has had no
fund rating system meeting these requirements. The mutual funds are usually divided into three
broad categories: equity, bond and mixed funds, even though such a breakdown does not
adequately reflect the investment risks. As a rule, funds are rated according to raw returns, or at
best according to the Sharpe ratio (i.e. return per unit of total risk) or Jensen's alpha (i.e. the
component of a fund's return unrelated to the market index). However, given the specifics of the
Russian financial market, these measures do not always reflect the true added value that a fund
provides to investors. A new classification and rating system is needed to evaluate the
performance of Russian funds properly. To further understand the investment in Russian Mutual
Fund Industry we will take a look at the chart on the next page
Fig 2.1.2.1 Investors in thousands

Source: The Newsletter About Reforming Economies, Beyond Transition, World Bank,
2007
2.1.3 India.
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank .The history of mutual funds in India can
be broadly divided into four distinct phases
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the
Reserve Bank of India and functioned under the Regulatory and administrative control of the
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The
first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700
crores of assets under management.

Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and
Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).
SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by
Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank
Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in
which the first Mutual Fund Regulations came into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual
Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting
up funds in India and also the industry has witnessed several mergers and acquisitions. As at the
end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The
Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other
mutual funds.
Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets
under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of
Unit Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management
and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations,
and with recent mergers taking place among different private sector funds, the mutual fund
industry has entered its current phase of consolidation and growth.
The chart below shows that the Asset Under Management (AUM), in India has shown a steep
rise since past 5 years form 2003.
Fig 2.1.3.1 Asset Under Management in Indian market March 1965 to March 2008

Source: AMFI, 4th July 2008.
Mutual fund industry in India is regulated by the body called Association of Mutual Funds in
India. It has the following objective:
• 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.

• 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 other engaged in the industry.
• To undertake nationwide 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.
Under this strict regulatory body mutual fund schemes are becoming quite popular in
India. The tables followings in the next page explain Sales, Redemption and Launch of
various Mutual Fund scheme in India in various year.
Fig 2.1.3.2 Sales in Rs. crore, 1997-98 to 2007-08

The chart shown above depicts the trend of sales in various type of Mutual Fund Scheme in India
since 1997-98 till 2007-2008. Y-axis shows the amount in Rs crore and X-axis shows years. It
can be easily seen here that while income scheme has found huge following Balanced Fund and
ELSS schemes are finding difficulties in attracting the investment. This trend says that majority
of the investors treat mutual fund as source of regular additional income rather than looking at it
as a long term investment, with intention of having a capital gain.
Fig 2.1.3.3 Redemption in Rs. crores, 1997-98 to 2007-08

Here the amount of redemption in Rs crore is shown in various schemes on Y-axis and years on
X-axis. We can see that redemption from income scheme went high in 2003-2004 and lowered
down during the same period in growth schemes which shows that people have cultivated a
positive attitude towards market and their willingness to stay with the fund for a considerable
period also went up.
Fig 2.1.3.4 Number of schemes launched, 1997-98 to 2007-2008

In this chart number of new schemes launched is shown on Y-axis and years in which they are
launched as shown on X-axis. As shown above ELSS and Balanced schemes are launched in a
very small numbers as compared to Growth and Income schemes. This makes it clear that these
schemes were not finding much favor from Indian investors who are more willing to invest for
regular income or capital gain, at a more-than-average risk appetite.
2.1.4 China.
China Merchants Bank accepts the consignment of the mutual fund management institution to
safe keep the fund assets for the interest of the fund owners, and to supervise the routine

investment operation of the fund management institution. The custodian opens independent
account for fund assets, performs clearing and transferring upon instructions from the
management institution, safe keeps the entrusted fund assets, and supervises fund operations
within its authority prescribed by pertinent state laws and mutual fund contracts. All services are
subjected to proper charges. In short one of its target clients is Mutual Fund Companies. China’s
mutual fund industry is blossoming amid bullish equity markets that have climbed to new
heights. But more importantly, the country’s city dwellers are more willing than before to invest
their hard-earned money. Asset management companies in China have little problem selling their
newly launched funds to the public. In November alone, seven funds were launched, four of
which managed to raise more than 10 billion Yuan (RM4.8bil). Beijing-based Harvest Fund
Management Co Ltd, which launched the Jiashi Strategic Growth Fund early, last month,
collected 40 billion Yuan (RM19bil) in just one day – the biggest amount in China’s fund
management history. Given the overwhelming response from the investing public, Harvest Fund
Management shortened the sale period to just one day. Harvest Fund Management is China’s
leading asset Management Company, in which Deutsche Asset Management (a subsidiary of
Deutsche Bank AG) holds a 19.5% stake, with an option of increasing it to 49%. For the entire
year, nearly 350 billion Yuan (RM166bil) were pumped into the 65 mutual funds that were
launched. A quarterly survey done by The People’s Bank of China (PBOC) shows the people’s
willingness to save has dropped in the urban areas – something that is quite unusual given that
the Chinese are mostly hard savers. A record 18.5% of the 20,000 respondents to the central
bank’s survey said they would either invest their savings in the stock market directly or via
mutual funds, instead of putting them in the banks. Citigroup’s head of China Strategy, Xue Lan,
pointed out that the deposits in banks were earning 0.75% to 2.07% returns year. “After
deducting interest income tax of 20% and considering under-reported CPI (consumer price
index) of 1.8%, Chinese depositors are actually earning negative returns on their bank savings,”
Xue said. “People need alternatives to hedge their inflation risks,” she noted, adding there was a
surge of retail interest in the domestic stock markets. Like many equity markets in Asia, China’s
two exchanges are charging up to new peaks after being in the doldrums for five years. The
Shanghai and Shenzhen exchanges now have a combined market capitalisation of more than
eight trillion Yuan (RM3.8 trillion), which is an increase of 2.5 times compared with a year ago.
The total net asset value of mutual funds also ballooned to 700 billion Yuan (RM333bil) – a

historical level in China – as share prices soar. According to the China Securities Regulatory
Commission (CSRC), institutional funds currently account for about 30% of the market
capitalisation compared with only 5% five years ago. In comparison, it had taken the United
States nearly 30 years to see institution fund participation reaching 25%.
2.2 Company overview
The HSBC Group is one of the largest banking and financial services organisations in the world.
The Group has around 10,000 offices in 83 countries and territories in Europe, the Asia-Pacific
region, the Americas, the Middle East and Africa, serves over 128 million customers and has
assets of US$ 2,354 billion as at 31 December 2007.
2.2.1 Company’s History.
HSBC Global Asset Management draws upon a long history of serving clients of the HSBC
Group, tracing its roots back to the foundation of the Hongkong and Shanghai Banking
Corporation in 1865. The HSBC Group has identified asset management as a key constituent of
the HSBC Group’s wealth management strategy and at HSBC Investments; we have been
dedicated to managing assets on behalf of our clients for more than 30 years. In 1994 the HSBC
Group recognised the increasingly global nature of financial markets, would create the need for a
credible global asset management organisation to ensure delivery of the best possible solutions
for clients. In response, the separate regional asset management businesses of HSBC were
unified to create a single powerful investment manager aimed at delivering global investment
capabilities combined with significant local expertise. In 2001, following the integration of CCF
and its investment businesses into HSBC, a new global strategy was launched for asset
management. The strategy aimed to create a core proprietary global investment management
business – HSBC Asset Management, operating alongside a series of Specialist investment
businesses, namely: Sinopia for quantitative and structured products, HSBC Specialist
Investments for property and infrastructure investments, and HSBC Multimanager for best-in-
class ‘open architecture’ investments and HSBC Alternative Investments for single-manager
hedge fund strategies. In 2004, following a strong period of growth in HSBC’s investment

businesses, a new strategy was announced for the investment businesses of HSBC. The strategy
is intended to position HSBC for market leadership in the provision of investment solutions that
meet client needs and involved a reorganisation of HSBC’s investment businesses including
HSBC Asset Management and HSBC Investment Management, leading to the creation of: HSBC
Investments. In 2008, HSBC Investments is re-named to HSBC Global Asset Management. The
name change is more closely to align it with Global Banking and Markets (the new name for
Corporate, Investment Banking and Markets).
2.2.2 Management.
Table 2.2.2.1 Name of the board of directors
Name Designation
Sanjay Prakash Director & Chief Executive Officer - HSBC

Asset Management (India) Private Limited
Naina Lal Kidwai Chairman of the Board of Directors
Ayaz Ebrahim Director
Nawshir Khurody Director
Vithal Palekar Director
Jagjit Lal Pasricha Director
Ms. Naina Lal Kidwai, Mr. Ayaz Ebrahim and Mr. Sanjay Prakash are associated with the
Sponsor. Mr. Nawshir Khurody, Mr. Vithal Palekar and Mr. Jagjit Lal Pasricha are independent
Directors. Thus, 3 out of the 6 Directors are independent Directors.
Key personnel
Table 2.2.2.2 Name of key personnel and their Designation
Name Designation
Sanjay Prakash Chief Executive Officer
Suyash Choudhary VP & Fund Manager, Fixed Income
Venkatesh Iyer Chief Operating Officer
Jitendra Sriram V P & Fund Manager, Equities
Mihir Vora Sr. VP & Head of Fund Management, Equities
Sanjay Vaid Vice President, Dealing

Chandresh Shah VP & Head of Risk Management

Nilang Mehta VP and Fund Manager, Equities
Shailendra Jhingan VP & Head of Fund Management, Fixed
Income
Alok Kumar Sahoo VP & Fund Manager, Fixed Income
K. Sriram VP & Head of Finance & Customer Services
R. Srinivasan VP & Head of Operations
Dhimant Shah VP & Fund Manager, Equities
Deepali Naair VP & Head-Product Strategy & Development
O.V. Ravi VP & Head of Compliance
Gaurav Mehrotra Associate VP, Investment Management
Niren Parekh Associate VP, Investment Management
Amresh Mishra Associate VP, Investment Management
Aditya Khemani Associate VP, Investment Management
2.2.3 Sponsors & Trustees.
The Sponsor of HSBC Mutual Fund is HSBC Securities and Capital Markets (India) Private
Limited (HSCI), a member of the HSBC Group.
HSCI is one of the largest banking and financial services organisations, in the world.
Headquartered in London, HSBC operates through long-established businesses in five regions:
Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. Through its global
network of some 10,000 offices in 83 countries and territories, HSBC provides a comprehensive
range of financial services to personal, commercial, corporate, institutional and investment and
private banking clients.
HSCI offers integrated investment banking services, securities and corporate finance & advisory.
HSCI is a member of The Bombay Stock Exchange Limited and National Stock Exchange
(capital and derivative market segments) and is also a category I merchant banker and
underwriter registered with Securities and Exchange Board of India.
Equities: HSCI is primarily an institutional stockbroker, with a client base spanning foreign
institutional investors, Indian financial institutions, mutual funds and select retail clients. The

business is backed by comprehensive research covering around 62 of India's largest, actively

traded securities across 13 industry groups.
Global Investment Banking: HSCI provides public and private sector corporate and government
clients with strategic and financial advice in the areas of mergers and acquisitions, primary and
secondary market funding, privatisations, structured financial solutions and project export
finance.
HSCI holds 100% of the paid up equity share capital of the ISIN.
Trustees of HSBC Mutual Fund.
Table 2.2.3.1 Name of Trustees
Name Designation
N P Gidwani Chairman of the Board of Trustees
Dr. Rudolf Apenbrink Trustee
Nasser Munjee Trustee
Manu Tandon Trustee
Mehli Mistri Trustee
Dilip J Thakkar Trustee
2.2.4 Investment Philosophy & Process
Our investment process is the result of our belief in the applicability of business cycles as well as
a combination of top-down macro-economic analysis and bottom-up securities research.
Fig 2.2.4.1 Investment Philosophy

Source: HSBC Asset Management (India) Pvt Ltd
2.2.4.1 Investment Philosophy & Process / Equity Process
HSBC Global Asset Management possesses substantial experience and expertise in

managing equities-based portfolios.
Investment Approach - Equity
• Disciplined investment approach - combines global and regional considerations with a

local focus.
• Team approach in investment decision-making - we leverage on the collective expertise
and insight of our experienced team members
• 'Business cycle, relative value' investment style - offers the flexibility to add substantial
value throughout the different stages of economic cycles.
Investment Philosophy and Process - Equity

Our equities investment process uses the fact that economic and business cycles are the
primary determinants of value changes in markets, sectors and stocks.
• A top-down and bottom-up approach is used to invest in equities. We believe that we

need to change our portfolio positioning based on our views on the local and global
business cycle. So the top-down overlay comes from the call of the business cycle – at the
global and local level. This determines our asset allocation and sector calls. The bottom-
up approach comes from stock selection within sectors.
• Time-to-time, when we see a shift in the cycle, we may change our style from pure
growth investing to a blend of growth and value investing, or a bias towards more value
investing if we believe the cycle is turning for the worse. The process thus has a "blend
style" and is not purely growth or value oriented.
Fig: 2.2.4.1.1 Business cycle
• Business fundamentals are keys to stock selection. This involves analysis of companies
on parameters like management, business strategy to deliver earnings growth &
improving capital efficiency, identifiable competitive advantages and financial
performance & strength. We use valuations of different sectors and stocks to determine
the optimal portfolio composition and this is reviewed constantly to take into account new
information and price movements. We monitor absolute and relative valuations (Price /
Earnings per Share, Price/ Book Value per Share etc.) very closely at the market, sector
and stock level. In conjunction with valuations, we also look at growth prospects, capital
efficiency ratios (Return on Capital, Return on Equity etc.) and intangibles like corporate
governance, transparency etc.
• We broadly form our investment universe based on specific investment mandate of each
fund. We currently look at around 250 stocks across sectors.
• Our investment process has strict investment guidelines to ensure that we contain
portfolio risk within specified levels and run a diversified portfolio to deliver consistent
risk adjusted returns to our investors. We have risk control measures and procedures to
achieve the same. We have a team for risk management and measurement independent of
the investments team.
• The risk management team performs analytics and ensures that all risk parameters are
adhered to. Thus we do portfolio performance attribution, measure ex-ante tracking error
etc. We also measure portfolio liquidity risk. This is to ensure adequate liquidity in our
portfolios to take care of large inflows or outflows.
• The objective of all this is to measure and control portfolio risk and to enable consistency
and “true-to-label” portfolio management, in line with stated objectives and positioning.
2.2.4.2 Investment Philosophy & Process - Fixed Income
• They believe that the Fixed Income Market offers a number of attractive investment
opportunities, which we endeavor to capture with a rigorous but flexible investment
process.
• At the same time they, believe that a given level of conviction in our views should result
in the same amount of risk in a portfolio over time i.e. We scale our duration risk and
credit percentage parameter on a six point scale from very bearish to very bullish, which
then translates into a set of numbers. Therefore over different periods of time, if our view
is say "slightly bullish", it would translate into the same level of duration that we would

run in our portfolios. For e.g. over the last 4years since inception we have not changed
these bands, but that does not mean that if we feel that there is a major structural shift in
the market structure, participants and instruments, we would not revisit these levels.
• Their success lies in the belief that product focus is the key to creating excellence across
our entire product range i.e. we launch products which are sustainable over the long term
and time them to market for the benefit of investors.
• And also due analysis is don e based on their belief that Credit and Duration are the key
determinants of performance in a fixed income portfolio e.g. while interest rates were
coming down from 2000-2003, duration played a bigger role than credit, with most of the
return coming from trading the duration of gilts and longer term bonds; however from
2004 to date, as interest rates headed higher, with investor funds essentially concentrated
at the short end of the spectrum, credit calls in terms of identifying new credits,
identifying credit upgrades, going down the credit curve have assumed a larger role in
generation of total return compared to duration calls, with most portfolios being
essentially credit oriented.
• The Curve Positioning and Individual security selection are also drivers of the fixed
income market e.g. while the yield curve might indicate that the 5year point is the best for
positioning, there may not be liquid 5year instruments to implement that call. Hence, one
may need to achieve the same 5yr positioning through a combination of cash and a liquid
10year instrument. Thus curve positioning and individual security selection go hand in
hand and the process is iterative in arriving at the final construction of the portfolio.
• Active management of the above drivers enhances returns and can outperform passive
investing. We do this by running the process on a fortnightly basis and active monitoring
and re-balancing of portfolios on a daily basis to generate relative value.
• And finally one of their strategies includes effective control of risk is an essential element
in the management of fixed income portfolios. This is integral to the HSBC philosophy
and the level of Risk Management is substantially higher than that required by the
regulator. Discretionary investment guidelines go sideways into the investment process
and ensure that portfolios are diversified, liquid and devoid of concentration risk. All risk
wherever possible is monitored online and risk guidelines are framed by the Risk

Management Committee keeping changing market structure, regulations and instrument

innovation in mind, so that the Investment Team is always in line with market.
Investment Process - Fixed Income
The four components in terms of criticality to risk/return performance on a fixed income

portfolio are:
1. Duration
2. Credit
3. Curve Positioning
4. Individual Security Selection
The process is a "Top Down - Bottom Up" approach with a Top Down perspective being
applied to Duration and Credit and a Bottom Up perspective being applied on Curve
Positioning and Individual Security Selection.
Fig 2.2.4.2.1 Investment Approach

3. Project Profile
As project profile we were given four major tasks which are as mentioned below:
• Bringing to light various benefits of investing in Mutual Funds schemes to prospective

customers.
• Advising the client, willing to invest, on suitable scheme for their requirement. For
example Tax Saver fund for those looking for tax benefit and are ready to stay with the
scheme for at least 3 years and Systematic Fund Transfer (STF) to client, who are looking
for high return at lowest risk along with fixed income.
• Making presentations on HSBC Mutual Fund Scheme at various corporate houses.
• Looking for prospective business tie-up with professionals like Chartered Accountants.
The work was assigned to us on target basis. A target of 75 SIP (Systematic Investment Plan) of
Rs.2000 per month, on an average was set by them. Out of many Mutual Fund Schemes offered
by HSBC Mutual Fund we were given three main schemes which are HSBC Equity Fund, HSBC
Advantage India Fund and HSBC Dynamic Fund. Under the 2 month of rigorous programme
three major financial awareness campaigns were carried out. This includes presentations at
companies like Elcoteq, a Finish semiconductor company, Quinnox a Canadian IT company and
TaskTel an office communication provider.
Apart from this we also handled financial planning, which include suggesting ideal asset
allocation depending on present asset allocation of the client. The work that has been carried out
was under the supervision of experienced financial planner.

4. Objective of the Study.
For any economy to grow it is necessary that savings of the masses are converted into
investments. Mutual Fund is one of such a tool which allow amateur person to invest because this
funds are managed by experienced fund managers. It has been predicted that if the investment
becomes 77% of income in various avenues then only we would be able to maintain our GDP
growth rate of 8-9%.
Here the objective of our study is to compare various HSBC scheme. To make the report more
comprehensive the report also contains an extensive detail on schemes from other fund houses
like HDFC, Reliance Mutual Fund and DWS Asset Management. The report will be useful in
drawing out inferences about the sectoral allocation of all this four funds. As we know that the
NAV of any fund depends upon the sector to which it allocate its fund and the performance of
those sector. The report will also throw light on various schemes launched in India during past 10
years that is from 1997 to 2007. The real purpose of this is to get the preference of the Indian
investors when it comes to investment in Mutual Funds.
Putting this in brief we can say that the report has following objectives:
• To study preferred form of Mutual Fund scheme namely Growth, Income, Balanced and
ELSS
• To perform comparative analysis of three HSBC Mutual Fund scheme namely HSBC
Equity Fund, HSBC Advantage India Fund and HSBC Dynamic Fund
• Interfund comparison with HDFC Equity Fund, DWS Alpha Equity Fund and Reliance
Equity Fund
• To examine the effect of sectoral allocation of the fund on its NAV

• Observing the similarity in term of asset allocation amongst this given four funds
5. Observations
This section of the report would contain detail on the various observation made during the course
of our internship programme. The observations that are noted down may be useful in process
improvement and thereby making the operations smoother. The main observations are as follows.
• In advisory business, given high skills, it’s better to enter in face to face conversation
with the customer rather than on phone. This approach helps mainly in building good
rapport with the customer as well as gives the advisor to keep the customer listening. The
most important benefit of this approach is the trust it helps building amongst both the
parties
• The follow up process comes after first conversation with the client; this process can
make or mar the deal. Followed seriously it can lead to smooth closure of the deal
whereas a delay or carelessness in the approach would not lead to closure of the deal
• It also came to light that for any two mutual fund scheme given all or some parameters
like date of inception, NAV at inception, beta and sectoral asset allocation the thing to
look at is the expense ratio of the fund. The fund with high expense ratio will give much
less return than that of the other fund with lesser expense ratio. Where the value of mutual
fund should increase at increasing rate in long run, in fund with high expense ratio value
of the mutual fund increase at a decreasing rate. So in deciding between such two
schemes it is better to invest in the scheme with lesser expense ratio.
• As the programme include working with one of HSBC’s distributor who are in financial
planning also, it is observed from the few visits that are made with financial planner to
the customer that to get accurate information about their asset allocation it is very
necessary that client has trust in the planner. At the same time suggesting suitable product
to the client requires extensive product knowledge. Which means that financial planner

has to have sound knowledge of latest macro and micro economic policies, in-depth
knowledge of the return given by various asset class and above all ability to time the
market so as to deliver maximum return
• After first conversation with the customers it’s observed many of them required a
personal presentation which requires the advisor to go to his/her resident or office and
explain the plan. Such trips consumed a lot of time of the advisor which could have been
used more productively otherwise. If the advisor is new to the city he takes double the
time to reach the place. Time management is required when such a situation arises.

6. Analysis
This portion would be divided in two parts:
• Comparison between HSBC Equity Fund, HSBC Advantage India Fund and HSBC
Dynamic Fund
• Analysis of HSBC Equity Fund, mutual fund Scheme offered by HSBC with three similar
scheme offered by other fund houses.
6.1 Comparison between HEF, HAIF and HDF
HSBC Mutual Fund is operating across India having large number of distributors and a
strong sales team. In the past HSBC Mutual Fund schemes have performed far better than
many schemes available in India. Recently they have come out with NFO of a scheme named
HSBC Emerging market fund which invests mainly in foreign markets namely Russia, Brazil,
South Africa and China.
Now the following pages contain a brief description of the various funds by HSBC that is
namely HSBC Equity Fund, HSBC Advantage India Fund and HSBC Dynamic Fund.
6.1.1 HSBC Equity Fund
HSBC Equity Fund (HEF) seeks to generate long-term capital appreciation by predominantly
investing in a diversified range of large and midsized companies. This ensures that your
money is spread across a variety of stocks and sectors so that risk is controlled
6.1.2 HSBC Advantage India Fund
HSBC Advantage India Fund is an equity fund that seeks to generate long-term capital
growth by investing primarily in themes that play an important role in, and/or benefit from
India’s progress and economic development. It uses a flexi-theme approach in selection of
areas in which to invest. The Fund will look to predominantly invest in one or more themes
that, according to the Fund Manager, will drive India’s growth story at a given point in time.

The Fund Manager will be flexible in changing the theme based on changing market
conditions & economic factors.
What are the Focus areas for the Fund’s portfolio?
The Fund will look to focus predominantly on one or more themes (at any given point in time)
that, in the view of the Fund Manager, are important for India’s economic development. Key
focus areas are:
a) Infrastructure
b) Consumption
c) Outsourcing
d) Global competitiveness
e) Reforms
6.1.3 HSBC Dynamic Fund
HSBC Dynamic Fund (HDF), a fund that seeks to capitalise on the potential upside in equity
markets, and yet attempts to limit the downside risk by the active use of money market
instruments and derivatives. The fund aims to normally invest in equity but can react quickly to a
negative market by moving 100% of its assets into money market instruments, fixed income
securities and derivatives with an aim to limit the downside risk, in the event that the fund
manager is bearish on the market.
To better understand all the three schemes let us now put the important facts about the scheme
into a table which makes our reference easy. The table is given on the next page.
Table 6.1 Fund facts, HSBC Equity Fund, HSBC Advantage India and HSBC Dynamic Fund

Fund Options Date of Minimum Mode of Asset Dividend Fund manager

allotment application Holding allocation frequency
amount
HSBC Dividend Rs Declaration
Equity (Payout / 10,000/- of dividend
per 65-100% and its
Fund Reinvestment)
application equity and frequency
and Growth equity will inter-
related alia depend
Single,
securities, upon the
Joint or
10 0-35% distributable Mihir Vora &
Anyone
December money surplus. Jitendra
or
2002 market Dividend Sriram
Survivo
instruments may be
r
(including declared
cash, from time to
money at time at the
call). discretion
of the
Trustees.
HSBC Dividend 23 Rs Single, 65-100% Declaration Mihir Vora

Advantage (Payout / February 10,000/- Joint or equity and of dividend
per Anyone
India Reinvestment) 2006 equity and its
application or
Fund and Growth Survivo related frequency
r securities, will inter-
0-35% debt alia depend
instruments upon the
& money distributable
market surplus.
instruments Dividend
(including may be
cash & declared
money at from time to
call). time at the

discretion
of the
Trustees.
HSBC Dividend 24 Rs Equity and Dividend Jitendra
Dynamic (Payout / September 10,000/- equity Frequency Sriram &
Fund Reinvestment) 2007 per related Declaration Mihir Vora
and Growth application instruments of dividend (for equity
- 0 to and its portion)
100%, and frequency Alok Sahoo
Debt and will inter- (for fixed
Single, money alia depend income
Joint or market upon the portion)
Anyone
instruments distributable
or
Survivo - 0 to surplus.
r 100% Dividend
may be
declared
from time to
time at the
discretion
of the
Trustees.
Here is another table on which helps in comparison.
Table 6.2 Fund facts, HSBC Equity Fund, HSBC Advantage India and HSBC Dynamic Fund
Fund Beta Sharpe ratio Standard R- Portfolio Expense

Deviation squared Turnover Ratio
HSBC Equity 0.7103 -0.4492 1.26% 0.9646 1.45 2.02%
Fund
HSBC 0.7249 -0.4638 1.29% 0.9573 1.22 2.16%
Advantage

India Fund
HSBC 0.5335 -0.4991 0.97 0.9066 4.24 2.24%
Dynamic Fund
Now let us comment on each parameter
Beta:
A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to

the market as a whole is known as Beta. It is also known as "beta coefficient". Beta is
calculated using regression analysis, and you can think of beta as the tendency of a security's
returns to respond to swings in the market. A beta of 1 indicates that the security's price will
move with the market. So a beta of less than 1 means that the security will be less volatile
than the market. A beta of greater than 1 indicates that the security's price will be more
volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more
volatile than the market. Many utilities stocks have a beta of less than 1. Conversely, most
high-tech Nasdaq-based stocks have a beta of greater than 1, offering the possibility of a
higher rate of return, but also posing more risk
Sharpe ratio:
A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted

performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of
the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result
by the standard deviation of the portfolio returns
Standard deviation:
In probability and statistics, the standard deviation is a measure of the dispersion of a set of
values. It can apply to a probability distribution, a random variable, a population or a

multiset. The standard deviation is usually denoted with the letter σ (lowercase sigma). It is
defined as the root-mean-square (RMS) deviation of the values from their mean, or as the
square root of the variance.
R-squared:
A statistical measure that represents the percentage of a fund or security's movements that
can be explained by movements in a benchmark index is called R-squared. For fixed-
income securities, the benchmark is the T-bill. For equities, the benchmark is the S&P 500.
R-squared values range from 0 to 100. And so an R-squared of 100 means that all movements
of a security are completely explained by movements in the index. A high R-squared
(between 85 and 100) indicates the fund's performance patterns have been in line with the
index. A fund with a low R-squared (70 or less) doesn't act much like the index.
A higher R-squared value will indicate a more useful beta figure. For example, if a fund has
an R-squared value of close to 100 but has a beta below 1, it is most likely offering higher
risk-adjusted returns. A low R-squared means you should ignore the beta.
Portfolio Turnover:
A measure of how frequently assets within a fund are bought and sold by the managers is
called portfolio turnover. Portfolio turnover is calculated by taking either the total amount of
new securities purchased or the amount of securities sold - whichever is less - over a
particular period, divided by the total net asset value (NAV) of the fund. The measurement is
usually reported for a 12-month time period. The portfolio turnover measurement should be
considered by an investor before deciding to purchase a given mutual fund or similar
financial instrument. After all, a firm with a high turnover rate will incur more transaction
costs than a fund with a lower rate. Unless the superior asset selection renders benefits that
offset the added transaction costs they cause, a less active trading posture may generate
higher fund returns. In addition, cost conscious fund investors should take note that the
transactional brokerage fee costs are not included in the calculation of a fund's operating
expense ratio and thus represent what can be, in high-turnover portfolios, a significant
additional expense that reduces investment return.

Expense ratio:
A measure of what it costs an investment company to operate a mutual fund. An expense

ratio is determined through an annual calculation, where a fund's operating expenses are
divided by the average dollar value of its assets under management. Operating expenses are
taken out of a fund's assets and lower the return to a fund's investors. Depending on the type
of fund, operating expenses vary widely. The largest component of operating expenses is the
fee paid to a fund's investment manager/advisor. Other costs include recordkeeping, custodial
services, taxes, legal expenses, and accounting and auditing fees. Some funds have a
marketing cost referred to as a 12b-1 fee, which would also be included in operating
expenses. A fund's trading activity, the buying and selling of portfolio securities, is not
included in the calculation of the expense ratio. Costs associated with mutual funds but not
included in operating expenses are loads and redemption fees, which, if they apply, are paid
directly by fund investors. It is also known as "management expense ratio" (MER).
Having defined the parameters we are now ready to note down our analysis of the above
mentioned table
Analysis of the table:
Here we can see that the Beta value is lesser than 1 in all three fund which implies that the
fund has lesser volatility than the capital market. Having known this we can choose the fund
depending upon the situations the market are going through, if we can judge the market to
certain extent. For example: Selecting the fund with Beta value greater than 1 when market
are doing well and are predicted to be doing well in future. Having said that, however we can
say that value of Beta which is lower than 1 or higher than 1 does not say anything about the
fund, because a lot depends upon the market it is operating into. Sharpe ratio that is given in
the table gives the idea about the % of return that is coming because of risk that the manager
is taking. A smaller Sharpe ratio indicates positive things about the fund. Here in all the three
funds Sharpe ratio is negative which means that risky investments are few. Also higher return
of 50% of that the HSBC Equity Fund is giving is due to efficient management with
minimum risk. The main purpose of mutual fund investments is to give high return at lowest
risk. The fund which has high Sharpe ratio is not following the principle on which the
investments are made. Thus in such a scenario it is better to have fund which is having lower
Sharpe ratio with sufficiently high return. At the same time here let us examine R-squared
value. Here all the three value are closer to 100 and hence it shows that the movement of the
unit price is moving in direct proportion with the benchmark index. At the same time this
indicated that value of Beta is highly reliable. Here R-squared value is 0.96, 0.95 and 0.90
this means which are very high. Portfolio turnover our next parameter indicates the time the
portfolio is churned out. Higher the Portfolio turnover ratio, higher the shuffling and vice
versa. In one glance we can know that Portfolio turnover increases the expense ratio because
churning of portfolio comes with additional expenses like fund manager’s commission, and
fee of other professionals and charges.
Going further now let us come to the final stage of intrafund comparison of the HSBC
schemes, which we will be doing using the graphs showing their return over several different
durations. But before we do that let us look at the table below to get an idea about this
various funds and their return in different durations.
Table 6.3 Fund facts, Return on investments
Fund 1 week 1 month 3 months 6 months 1 year 2 years 3 years 5 years

HSBC Equity 4.03 8.72 -18.19 -7.13 31.19 20.84 37.67 54.64
Fund
HSBC 4.30 5.78 -25.55 -12.87 21.82 14.56
Advantage
India Fund
HSBC 3.26 4.66 -19.33 -8.62
Dynamic Fund

Chart for each of this funds are shown below.
HSBC Equity Fund:
Fig 6.1 Return in percentage from HSBC Equity Fund
Source: Value Research Online

From the graph above we can say that the return of the fund has been extremely good in long
run however it has given negative return in 1 month and 3 month.
HSBC Advantage India Fund:
Fig: 6.2 Return in percentage from HSBC Advantage India Fund (%)
Source: Value Research Online
Here too like HSBC Equity Fund we can say that the return that they have given in short run is
negative but in long run it has done well here we can see that at the end of 3rd and 6th month the

cumulative return of the fund is a negative one while it has done extremely in comparison at the
end of the year of its inception. While it has given a weaker performance at the end of 2 years
compared to its performance at the end of first year from its inception.
HSBC Dynamic Fund
Fig 6.3 Returns in percentage HSBC Dynamic Fund (%)
From the figure that we see above we can say that being a very new fund of just 9 months its
long term performance is yet to be seen. However now its giving negative return like any
other mutual fund.
So in brief its been found out that all the three mutual fund scheme of HSBC analysed here is
giving negative return in the first 3 months of its inception, However HSBC Equity Fund is

giving positive return from 6th month. The same is true about HSBC Advantage India Fund. This
makes it clear that mutual funds are investment which intends to give returns in long term. HSBC
Advantage India Fund and HSBC Dynamic Fund are comparatively new than HSBC Equity
Fund. From the table 6.3 following things are clear
• HSBC Equity Fund gave negative return at the end of 3 months while gave positive return
from the end of six months from the date of inception
• Here it is also observed that, while HSBC Equity Fund

and HSBC Advantage India Fund gave positive return from end of six months HSBC
Dynamic Fund still gave negative return
6.2 Analysis of HEF, with three similar schemes offered by other fund houses
In the following pages we will see how the mutual fund industry has changed over a period of
time since 1997-98 to 2007-08. The chart below shows the total asset under management
under the entire mutual fund scheme in India in 1998-99.
Fig 6.4 Allocation of Fund
Source: AMFI

Here the major part of the investment is in equities followed by debt which shows that Indian
market was an extreme having two broad groups of people, one who are extremely risk
taking and other who are highly risk averse or conservative.
Fig 6.5 Asset Under Management (AUM), Rs. crores.
In the chart given above we can see the growth in AUM of various companies in India. While
fund houses like SBI saw a constant increase in the corpus. UTI’s trend line shows a big dip in
the asset that they manage. At the same time we can see that PNB Asset Management which was
a small player in the beginning, become a big player after its tie up with Principal.

Fig 6.5 Net Asset Value of HSBC Equity Fund and HDFC Equity Fund
The chart shows the NAV of HDFC Equity Fund and HSBC Equity Fund here Y-axis
shows NAV in Rs. and X-axis shows date. We can see that NAV of HSBC is quiet higher
that HDFCs NAV the difference is due to inception date of the schemes. But here the
comparison is made because in past few years HDFC has given return of 50-56% which
is in line with the average return that HSBC has been giving since last 6 years. For the
purpose of understanding we will take a look at some of the mutual fund plans which did
well in the Indian market in last few years. For this purpose we will take the scheme’s
NAV for 6 months from 1st October 2007 to 31st March 2008. The schemes that we will
take are as mentioned below.
• HSBC Equity Fund
• HDFC Equity Fund
• Reliance Equity Fund
• DWS Alpha Equity Fund
6.2.1 HSBC Equity Fund.
This is an open-ended diversified equity scheme and aims to generate long term growth
from an actively managed portfolio of equity and equity related securities.
Fig 6.2.1.1 Asset allocation of HSBC Equity Fund

Fig 6.2.1.2 Comparison of HSBC Equity Fund with benchmark index, BSE 200
The NAV movement that is shown above gives a clear picture that fund has outperformed BSE
200 which is its benchmarked index. The margin by which it did this is also very high.The
suggested ideal time horizon for this scheme is minimum 3 years.

6.2.2 HDFC Equity Fund.
This scheme is also open-ended one. It was launched in 1995. Objective of this scheme is
to achieve capital appreciation. Prashant Jain is the fund manager since 2003.
Fig 6.2.2.1 Asset allocation of HDFC Equity Fund
Source: HDFC Asset Management Compny Ltd

Top 10 holding % of the fund is show in the pie chart above.
Fig 6.2.2.2 Comparison of HDFC Equity fund with benchmark index, BSE 100
Source: HDFC Asset Management Company Ltd
Benchmark index for the fund is S&P CNX 500 and we can see here that fund has
outperformed its benchmarked index.
6.2.3 DWS Alpha Equity Fund
An open-ended equity scheme with the objective to generate long-term capital growth by
investing in diversified equity and equity related securities. The fund mainly invest in
only large capitalization companies.
Fig 6.2.3.1 Asset allocation in percentage of DWS Alpha Equity Fund

Given above is the pie chart showing allocation to the top 10 sectors where the fund
manager invests the money or corpus of the fund.
Fig 6.2.3.2 Comparison of NAV of DWS Alpha Equity fund with Benchmark Index.
Here Y-axis shows percentage of Compound Annual Growth Rate and X-axis shows year
eg: At the end of 1 year CAGR % of DWS Alpha Equity Fund was 27.21 % whereas that
of Benchmark Index was 13.37 %.
6.2.4 Reliance Equity Fund
This open-ended scheme has the main objective of generating capital appreciation and
provide long-term growth opportunities by investing in a portfolio constituted of equity
and equity related securities of top 100 companies by market capitalization and of

companies which are available in the derivatives segment from time to time and the
secondary objective is to generate consistent returns by investing in debt and money
market securities.
Fig 6.2.4.1 Asset allocation in percentage of Reliance Equity Fund
The chart shows the allocation of the corpus in various kind of sector. Here we can see
that cement has received the highest percentage of asset allocation which comes to 23.66
% of the total.
After understanding this scheme let us start the final analysis. But before that let us take a
look at the chart which gives various useful data regarding the fund.
Table 6.4 Fund facts, HSBC Equity Fund, HDFC Equity Fund, Reliance Equity Fund and DWS
Alpha Equity Fund
Name of Fund Allotment Benchmar Fund Entry Load Exit Load

Date k Index Manager

HSBC Equity 10th BSE 200 Mihir 2.25% for the 1% if
Fund December Vora and investmet/swi reedemed/switched out
2002 Jiterndra tch in < Rs. 5 at any amout < Rs. 5
Sriram crore, crore within one year
otherwise nil otherwise nil.
HDFC Equity 1st January S&P CNX Prshant 2.25% for the 1% if
Fund 1995 500 Jain investmet/swi reedemed/switched out
tch in < Rs. 5 at any amout < Rs. 5
crore, crore within one year
Reliance Equity 30th March S&P CNX Sunil Retail Plan < Retail plan- For
Fund 2006 Nifty Singhani Rs. 2crore @ subscription of less
a 2.25%, from than Rs. 5 crore per
Rs. 2-5 crore transaction @ 1% if
@1.25%,> reedemed/switched
Rs. 5 crore after completion of 1
nil, year from the date of
Institutional allotment. For
Plan- nil subscription of Rs. 5
crore and above per
purchase transaction,
no exit load shall be
charged, Institutional
Plan: Nil
DWS Alpha October NSE Nifty Nilang 2.25% for the 1% if
Equity Fund 2002 Mehta. investmet/swi reedemed/switched out
tch in < Rs. 5 at any amout < Rs. 5
crore, crore within one year

Taking a brief look at the table now we can start our analysis. This analysis will include
data of 6 month NAV of all the scheme mentioned above and will be done using
statistical measures of average, standard deviation, Skewness and Median etc.
HSBC Equity Fund:
The table below present the various statistics associated with our analysis.
Table 6.5 HSBC Equity Fund’s statistical values, 1st October 2007 to 31st March 2008
Statistical tool Value

Average 77.64101
Standard Deviation 16.86212
Median 72.9925
Skewness 0.875588
Fig 6.2.3.1 Asset allocation in top 10 sectors and individusl companis by HSBC Equity
Fund
As seen here we have Average of the scheme over last six months which comes to
77.64101 at the same time the Standard Deviation of the fund comes to 16.86212 which

indicates high degree of fluctuation. Median is 72.9925 which means it’s the middle value
of the entire spread. Here we will also look at the Skewness which comes to 0.875588
which shows a positive sign because it means that most of the movement in the unit value
were upward. This justifies that asset allocation as mentioned above is idle for any asset
management company. As we can see from the pie charts above here too Banking sector
has received second preference in the investment which comes to 9.55% when we look at
any single sector receiving the investment. Consumer Non Durables rank first while
Petroleum Products comes at 8.78% of total corpus. Oil, Telecom, Software, Auto,
Finance, Industrial Capital Goods follows in that order. The table shown below shows the
three top sector in which the fund has allocated its assets.
Table 6.6 Top three sector in term of asset allocation (%)
Sector Percentage %
Others 34.58
Consumer Non-Durable 9.88
Banks 9.55
HDFC Equity Fund:
The table below present the various statistis associated with our analysis.
Table 6.7 HDFC Equity Fund’s statistical value, 1st October 2007 to 31st March 2008

Average 196.5964
Median 195.405
Skewness -0.21446
The Average of this fund comes to 196.5964 where as Standard Deviation is 17.5873 and
Median comes to 195.405 whereas Skewness here is -0.21446 which means that most of
the time unit value or NAV made a positive movement. Now let us take a look at the asset
allocation of the fund which we have given below in the form of a pie chart depicting
various sectors which are idicated by different colors.
Fig 6.3.2.2 Asset allocation in top 10 companies (%) by HDFC Equity Fund
Here we can see that highest percentage of investment is seen in Pharmaceutical sector
that comes to around 17.9% and thus making the biggest chunk of the pie. Banks ranks
second in drawing investment from the fund. Industrial Capital goods, Consumer
Durables, Media and Entertainment, Auto Ancilliaries, Construaction, Ferrous Metals,
Pesticides follows in that order as leding sectors that got preference of investment in
those funds. Top three sector that receive the investment from this fund are as
mentioned below in the table.
Table 6.8 Top three sectors in term of asset allocation (%)
Sector Percentage %
Pharmaceuticals 17.9
Banks 17.09
Industrial Capital Goods 12.29

Reliance Equity Fund:
Table 6.9 Reliance Equity Fund’s statistical value, 1st October 2007 to 31st March 2008

Average 16.27145
Median 16.315
Skewness -0.22289
Here in the table above there are all the statistics necessary for the analysis. Looking at it
we can say that, as standard deviation is less Reliance Equity Fund is comparitively more
consistent in its performance. Standard Deviation of other funds is very high which comes
to 16 and 17 which shows that the funds are comparitively more vulnerable to the various
changes that take place in the factors that affects the fund. And it has been very much
observed that this fund has given stable return of 50-55% whereas other funds has given
31-32% return on an average. Thus after this analysis it becomes very clear that this fund
has been performing far more better that most other funds. This analysis presents the score
of various statistical tools which is taken on the basis of a broad data of NAV of 6 months.
The table shown below shows us the top three sector which got the preference in
investment.
Sector Percentage %
Telecom-services 23.66
Construction 14.1
Banks 11.87
Fig 6.2.3.4 Asset allocation in top 10 sector by Reliance Equity Fund in (%)

Reliance Equity Fund as we can observe from the chart is having extremely skewed ratio
having approximately 49% of its investment in only three sectors. Which are namely
Cement, Construction and Banking sector. This kind of highly lopsided allocation of asset
is not observed in any of the other three schemes. Only HDFC Equity Fund comes closest
to this scheme which has 44% of the allocation in three sector.
DWS Alpha Equity Fund:
Table 6.11 DWS Alpha Equity Fund’s statistical value, 1st October 2007 to 31st March
2008

Average 79.23
Median 82.21
Skewness -1.19218

Here looking at the Standard Deviation we can say that its lower than HSBC Equity
Fund and DWS Alpha Equity Fund but very high when compared to Reliance Equity
Fund. Skewness of the data comes to a very high number of -1.19218 which means that
more of the schemes NAV saw a negative movement rather than positive one. Now let us
look at the asset allocation.
Fig 6.2.3.5 Asset allocation of DWS Alpha Equity Fund in (%)
The pie-chart here says that the fund has majorly kept a diversified portfolio. With
chemicals ranking second. Difference observed in this fund is the investment
strategy of this fund. Here we can observe that whereas other funds has invested a
big chunk in single sector this fund has invested its major chunk in diversified sector.
Table below shows us the three top sectors in which the fund has invested into.
Sector Percentage %
Diversified 11.7
Chemical 8.98
Finance 8.06
So finally we can put all the important statistical analysis from all the four funds in a
single table
Table 6.13 Various parameters for analysis, 1st December 2007 to 31st March 2008

Fund Average Standard Median Skewness Sector that received

deviation highest investment
and its (%)
HSBC 77.64101 16.86212 72.9925 0.875588 Others 34.58%
Equity
Fund
HDFC 196.5964 17.5873 195.405 -0.21446 Pharmaceuticals
Equity 17.9%
Fund
DWS 79.23 10.30828 82.21 -1.19218 Diversified 11.7%
Alpha
Equity
Fund
Reliance 16.27145 0.834855 16.315 -0.22289 Telecom services
Equity 23.66%
Fund
From the above table it is clear that HSBC Equity Fund is less sensitive than HDFC
Equity Fund as standard deviation for the NAV is lesser while it is far more vulnerable to
macro and micro changes than DWS Alpha Equity Fund and Reliance Equity Fund. At
the same time HSBC Equity Fund is showing positive skewness which means that most
of the time the NAV has seen a positive movement while the other three funds analysed
in the report has seen negative movement most of the times in the six month for which the
data was taken from 1st of October 2007 till 31st March 2006

7.Findings
This section of the report will include the result that we observed through analysis. Here entire
finding will be divided in sections and sub-sections. The headings are as mentioned below.
7.1 Trend in mutual fund ie Sales and Redeemption from 1997 to 2007
7.2 Strategy for selection of a stock
7.3 Money market instruments used by Asset Management Companies
7.4 Key parameters that help in selection of Mutual Fund Scheme
7.5 Rise in Asset Under Management and change in investment preference
7.6 Other important findings
Having mentioned the key headings of the findings we start our findings from the
following pages.
7.1 Trend in mutual fund ie Sales Redeemption from 1997-07
It has been observed that the till 2002 most of the sales that happened was of incom scheme
while people had little trust to invest in ELSS, Growth and Balanced fund. Through this we
found that most of the people preferred mutual fund for having regular income rather than for the
sake of having a capital gain. Till 2002-2003 the sales and redeemption did not have huge

difference, and thus making little impact on the industry. But form 2003 onwards its observed
that reedemption from Income schemes went drastically up thus while the redeemption from
Growth scheme fell, which means that people started taking mutual fund as a avenue of long
term investment.
7.2 Strategy for selection of a stock
To give highest possible return at the lowest risk, HSBC uses many strategy but one of the
strategy is Top-down and Bottom-up approach. Top-down approach helps in selection of a a
particular sector, considering the macroeconomic factors. Bottom-up approach comes after
selection of the sector is done through above metioned process is done. Bottom-up approach
helps zeroing down on a particular stock. HSBC considers 250 companies across the sector they
have decided. HSBC analyses this companies on the basis of return on capital, return on equity,
management and identifiable competitive advantage. Below is the diagramatical representation of
the approach that is discussed

7.3 Money market instruments used by the AMC.
The Money Market is an instrument of the fixed income market. Generally speaking, the term
"fixed income" is synonymous with bonds. In reality, a bond is just one type of fixed income
security. The difference between the money market and the bond market is that the money
market specializes in very short-term debt securities (debt that matures in less than one year).
Money market investments are also called cash investments because of their short maturities, and
their near-liquid nature (almost immediate access upon request).
Money market securities are essentially IOU's issued by governments, financial institutions, and
large corporations. These instruments are very liquid and considered extraordinarily safe.
Because they are extremely conservative, money market securities offer significantly lower
return than most other securities. They are used by this asset management companies to hedge
the risk that they create by investing in the stock market.
Call/ Notice/ Term Money
Call money market is that part of the national money market where the day to day surplus of
funds, of banks and primary dealers, are traded in. Call/ Notice/ term money market ranges
between one day to 15 days borrowing and considered as highly liquid. Other key feature is that
the borrowings are unsecured and the interest rates are very volatile depending on the demand
and supply of the short term surplus/ deficiency amongst the interbank players.
The average daily turnover in the call money market is around Rs. 12000-13000 cr. every day
and the market is active between 9:30 to 2:30 every working day and 9:30to 12:30 every
Saturday.
Repo/ Reverse Repo
It is a transaction in which two parties agree to sell and repurchase the same security. Under such
an agreement the seller sells specified securities with an agreement to repurchase the same at a
mutually decided future date and a price. Similarly, the buyer purchases the securities with an
agreement to resell the same to the seller on an agreed date in future at a predetermined price.
Such a transaction is called a Repo when viewed from the prospective of the seller of securities
(the party acquiring fund) and Reverse Repo when described from the point of view of the
supplier of funds. Thus, whether a given agreement is termed as Repo or a Reverse Repo
depends on which party initiated the transaction.
The lender or buyer in a Repo is entitled to receive compensation for use of funds provided to the
counterparty. Effectively the seller of the security borrows money for a period of time (Repo
period) at a particular rate of interest mutually agreed with the buyer of the security who has lent
the funds to the seller. The rate of interest agreed upon is called the Repo rate. The Repo rate is
negotiated by the counterparties independently of the coupon rate or rates of the underlying
securities and is influenced by overall money market conditions.
The Repo/Reverse Repo transaction can only be done at Mumbai between parties approved by
RBI and in securities as approved by RBI (Treasury Bills, Central/State Govt securities).
Uses of Repo are as follows:
• It helps banks to invest surplus cash

• It helps investor achieve money market returns with sovereign risk.
• It helps borrower to raise funds at better rates
• An SLR surplus and CRR deficit bank can use the Repo deals as a convenient way of
adjusting SLR/CRR positions simultaneously.
• RBI uses Repo and Reverse repo as instruments for liquidity adjustment in the system.
Inter Corporate Deposits
For short term cash management of the rich corporate, the company offers to borrow through
Inter corporate deposits. The company has P1+ credit rating (Highest Rating in its category) for
an amount of Rs. 250 crores.
The company offers two variables of the Inter Corporate Deposits:

Fixed Rate ICD : the quantum/ rates/ term to maturity of the ICD are negotiated by the two
parties at the beginning of the contract and remains same for the entire term of the ICD. As per
the RBI guidelines the minimum period of the ICD is 7 days and can be extended to period of 1
year. The rates are generally linked to Interbank Call Money Market Rates.
Floating Rate ICD: Corporates interested in using the daily volatility of the call money market
are offered Floating Rate ICD which may be benchmarked/ linked to either NSE Overnight Call/
Reuters Overnight Call rates. The Corporates are also given Put/ Call option after 7 days for
managing their funds in the event of uncertainty of availability of idle funds.
Commercial Paper
It is a short term money market instrument comprising of unsecured, negotiable, short term
usance promissory note with fixed maturity, issued at a discount to face value. CPs are issued by
Corporates to impart flexibility in raising working capital resources at market determined rates.
CPs is actively traded in the secondary market since they are issued in the form of Promissory
Notes and are freely transferable in Demat form.
Certificate of Deposit
Certificates of Deposit (“CD”) were introduced in 1989 following the acceptance of the Vaghul
Working Group of Money Market. These are also usance promissory notes issued at a discount to
the face value and transferable in Demat form. They attract stamp duty. CDs are issued by
scheduled commercial banks and it offers them an opportunity to mobilise bulk resources for
better fund management. To the investors they offer better cash management opportunity with
market related yield and high safety.
Bills Rediscounting
The bills rediscounting scheme was introduced by RBI in November 1970 under which all
licensed scheduled commercial banks were eligible to rediscount with RBI genuine trade bills
arising out of sale/ purchase of goods. In November 1981 RBI stopped rediscounting bills but
permitted banks to rediscount the bills with one another as well as with approved financial

institutions. To augment facilities for this activity and also make a larger pool of resources
available, RBI has been progressively enlarging the number of institutions eligible for bills
rediscounting including primary dealers.
7.4 Key parameters
To present the key parameters in a better way, they are shown in the table below.
Table 7.4.1 Parameters and their purpose
Parameter Applicability
Beta A measure of the volatility, or systematic risk, of a security or a portfolio in
comparison to the market as a whole is known as Beta.
Sharpe A ratio developed by Nobel laureate William F. Sharpe to measure risk-
ratio adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free
rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for
a portfolio and dividing the result by the standard deviation of the portfolio
returns
Expense A measure of what it costs an investment company to operate a mutual fund.

ratio
Portfolio A measure of how frequently assets within a fund are bought and sold by the
turnover managers is called portfolio turnover.
R-squared A measure of how closely the NAV of the unit is related to the benchmarked index.
7.5 Trend in AUM of the Asset Management Companies (AMC)

One of the major finding is that UTI has seen a big fall in their AUM from 1st June 2002 it has
constantly fallen till 1st June 2004. The important thing to notice here is that it has seen a very
drastic fall between 1st December 2002 and 1st June 2003. At the same time SBI saw a
tremendous inflow of investment from 1st December 2005 onwards and on 1st December 2007 it
became more than Rs. 49000 crore.
7.6 Other important findings
This section will give an idea about the findings which can come out to be very important in
certain scenarios:
• Performance of HSBC Emerging Markets Fund has been extraordinary initially giving a
return of 172%. As it is launched recently long term performance is yet to be seen
• It came to light that smaller Asset Management Companies can suddenly become major
player through merger. Example: PNB Asset Management Company Pvt Ltd become a
major player having huge Asset Under Management after it merged with Principal Asset
Management Company
• Banking sector remained in top three sector of preference in asset allocation for all funds
analysed in the report.
• Idle time horizon for mutual fund to get substantial return is three years or longer
7.7 Work done at the organisation:
• Direct interaction with clients and explaining them benefits of investing in Mutual Funds
• Conducted corporate campaign and explained various scheme namely HSBC Equity
Fund, HSBC Advantage India Fund and HSBC Dynamic Fund at Elcoteq a Finish
company located in Electronic city, TaskTel India Pvt. Ltd., Quinnox
• Business communication with Chartered Accountants in Bangalore. Manian & Rao was
one of the company with whom two meetings were arranged to work out strategic

partnership, wherein Trans Financial Corporation and Manian & Rao can benefit by
sharing their expertise.
8. Recommendations and Conclusion
This section will include recommendations which are based on the observations that were made
while working with HSBC and its distributor namely Trans Financial Corporation. The
recommendations are made keeping in mind the present problem the company is facing. At the
same time this section also contains recommendations that can help firm from damage or loss of
business in future.
• Taking attrition as a problem, it is hereby recommended that Trans Financial

Corporation make their candidate selection procedure slightly rigorous, eg:
Adopting stress interview. The level of rigor can be adjusted depending upon the
post they are appearing for. Because a candidate going through rigorous selection
procedure is more likely to stay with the firm than those who move in smoothly.
But the process can be successful only if adopted with due care otherwise the
effect can be negative
• It is also recommended that a team of two financial planners should advice a

client. There are two benefits of this approach, client will have benefit of different
views and suggestion from experienced advisors at the same time in case one of
the advisor leave the firm, other will serve as link between the firm and the client,
finally helping to restore the business
• Most importantly its recommended that if one have investment horizon of three
years or longer he should invest only in Equity Fund as all the Equity Fund gives
high return from the third year onward from the date of inception. At the same

time these long term investors should not invest in sector funds where positive
return are not sure even after long investment period of three years, as the
performance of the fund becomes dependent on a single sector.
Putting in brief the fact that though Mutual Funds are subject to market risk but in
long turn, that is after one year or longer they give a substantial return. The equity
globally had been the best performer in comparison of other sort of investments.
Fig 8.1Performance of Equity globally compared to other modes of investments.
From the chart above it becomes clear that equity investment has power of giving
maximum return globally and this power can be tapped through mutual fund.
Throughout the report it has been observed that variation in performance of two
mutual fund schemes having same objective, can easily occur because of
parameters like asset allocation, date of inception, benchmark index of the fund,
fund managers investment style, portfolio turnover and expense ratio.

REFRENCE:
BOOKS:
• Finance For Growth: A World Bank report
• Mutual Fund Insight
• Investment Review (ICICI)
• Fund Fact Sheet
o HSBC Equity Fund
o HSBC Advantage India Fund
o HSBC Dynamic Fund
o HDFC Equity Fund
o Reliance Equity Fund
o DWS Alpha Equity Fund
o SBI Equity Fund
WEBSITES:

• www.fundsavvy.com
• www.bcb.gov.br
• www.bloomberg.com
• www.russiaprofile.org
• www.english.cmbchina.com
• www.amfiindia.com
• www.rbi.org.in
• www.geojit.com
• www.pwc.com
• www.valueresearchonline.com
• www.assetmanagement.hsbc.co.in
• www.hdfcfund.com
• www.dws-india.com
• www.reliancemutual.com


Analysis of Mutual Funds

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Analysis of Mutual Funds

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1 Alliance Business School

HSBC Asset Management (India) Private Limited

Post Graduate Programme

Post Graduate Diploma in Management: 2007-09

Signature of the Student :

HSBC Asset Management (India) Private Limited

Post Graduate Program in Management

Signature of Faculty Guide:

Name of the faculty Guide: PROF. CHOWDARI PRASAD

HSBC Asset Management (India) Private Limited

HSBC Asset Management (India) Private Limited

2.1 Industry overview 9

2.2 Company overview 22

2.2.1 Company’s History 22

2.2.3 Sponsors and Trustees 24

2.2.4 Investment philosophy and Process 26

4. Objective of the study 33

6.1 Comparison between HEF, HAIF and HDF 36

6.1.1 HSBC Equity Fund 36

6.1.2 HSBC Advantage India Fund 36

6.1.3 HSBC Dynamic Fund 37

HSBC Asset Management (India) Private Limited

6.2.1 HSBC Equity Fund 50

6.2.2 HDFC Equity Fund 52

6.2.3 DWS Alpha Equity Fund 53

6.2.4 Reliance Equity Fund 54

7.2 Strategy for selection of a stock 66

7.3 Money market instruments used by AMC 66

7.4 Key parameters that help in selection of Mutual Fund scheme 70

7.5 Rise in AUM and change in investment objectives 70

7.6 Other important findings 71

7.7 Work done at the organisation 71

8. Recommendations and Conclusion 72

HSBC Asset Management (India) Private Limited

HSBC Asset Management (India) Private Limited

A Brief of How Mutual Funds Work

HSBC Asset Management (India) Private Limited

• Your investment will be diversified

• Your investment will be managed by professional money managers

2.1 Industry overview

Table 2.1.1.1 Socio-economic data, (%)

Period GDP Population GDP per capita

HSBC Asset Management (India) Private Limited

1961-70 6.17 2.89 3.19

HSBC Asset Management (India) Private Limited

What Restrains Growth?

HSBC Asset Management (India) Private Limited

Qualified Assessment Needed

Fig 2.1.2.1 Investors in thousands

HSBC Asset Management (India) Private Limited

First Phase – 1964-87

HSBC Asset Management (India) Private Limited

Second Phase – 1987-1993 (Entry of Public Sector Funds)

Third Phase – 1993-2003 (Entry of Private Sector Funds)

Fourth Phase – since February 2003

HSBC Asset Management (India) Private Limited

HSBC Asset Management (India) Private Limited

Source: AMFI, 4th July 2008.

HSBC Asset Management (India) Private Limited

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

• To undertake nationwide investor awareness programme so as to promote proper

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