Comparative Study Between Ulip & Elss

1.
INTRODUCTION
1.1 INTRODUCTION
Investors are confronted with the problem of choosing the best investment
opportunities in the financial market in order to earn higher return for their
investments. The complexities of financial market can be dealt with certain
intuitions with sound technical back ground. A small investor cannot afford to
invest sizeable amount to maintain their position in fact with market conditions. A
mutual fund foresees market conditions and invests substantial funds collected
from the pool of investors.
Whatever be the type of investor there is a mutual fund that fits everyone.
It is important to understand that each mutual fund has different risks and
rewards. In general, the higher the potential return, higher the risk of loss.
Although some funds are less risky than others, all funds have some level of risk-
it's never possible to diversify away all risk. This is a fact for all investments.
Each fund has a predetermined investment objective that tailors the fund's
assets, sectors of investments, and investment strategies.
All mutual funds are varying based on their asset classes. For example,
while equity funds that invest in fast-growing companies are known as growth
funds, equity funds that invest only in companies of the same sector or region are
known as specialty funds. Hence Mutual Funds have their own risk and return
potential.
There are a number of investment options available in the economy. But

there are some investment options available that provides both saving benefit
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and return benefits particularly tax benefits. Hence it becomes necessary to
study the investment option which gives maximum benefits to the investor
1.2 STATEMENT OF PROBLEM
Mutual funds could not survive in the early years of inception and went
dark. The initiation made by the government results in the development of Mutual
fund growth in the economy. At the same time the products by Insurance
companies prevail as a good investment option for the investors from the early
periods. Hence the growth of economy made opportunity available to the
investors. The government of India encouraged public sector mutual Funds, set
up public sector Banks and Insurance Corporation. It was not sufficient to
mobilize potential investment and it promoted the private sector Mutual Funds in
1993. Hence there are dozens of leading Mutual funds and Insurance
Companies in the economy. Therefore it is worth while to measure the
performance and benefits to the investors. Such comparison will bring to light any
loopholes in the present system and to offer such suggestions based on such
comparison.
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2. COMPANY PROFILE
HDFC STANDARD LIFE INSURANCE
HDFC and Standard Life first came together for a possible joint venture, to
enter the Life Insurance market, in January 1995. It was clear from the outset
that both companies shared similar values and beliefs and a strong relationship
quickly formed. In October 1995 the companies signed a 3-year joint venture
agreement.
Around this time Standard Life purchased a 5% stake in HDFC, further

strengthening the relationship. The next three years were filled with uncertainty,
due to changes in government and ongoing delays in getting the IRDA
(Insurance Regulatory and Development authority) Act passed in parliament.
Despite this both companies remained firmly committed to the venture.
In October 1998, the joint venture agreement was renewed and additional
resource made available. Around this time Standard Life purchased 2% of
Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also
started to use the services of the HDFC Treasury department to advise them
upon their investments in India.
Towards the end of 1999, the opening of the market looked very promising
and both companies agreed the time was right to move the operation to the next
level. Therefore, in January 2000 an expert team from the UK joined a hand
picked team from HDFC to form the core project team, based in Mumbai.
Around this time Standard Life purchased a further 5% stake in HDFC and
a 5% stake in HDFC Bank. In a further development Standard Life agreed to
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participate in the Asset Management Company promoted by HDFC to enter the
mutual fund market. The Mutual Fund was launched on 20th July 2000
2.1 STATEMENT OF OBJECTIVES
Following are the objectives of the study:
► To find the awareness among the customers about investment

alternatives.
► To indicate the Schemes which provides higher returns to the Investors
and also tax benefits.
► To compare the performance of ELSS with ULIP.
► To find the reasons which influence the decision of investors to choose a
particular investment.
► To identify the drawbacks in promoting products of HDFC Mutual Funds
2.2 HYPOTHESIS
1) There is no significant relationship between nature of investment and

choice of schemes.
2) There is no significant relationship between reasons to influence decision
of investors and range of income.
3) There is no significant relationship among awareness of customers and
qualification of respondents.
4) There is no significant relationship between drawbacks in promoting
products and choice of investment.
5) There is no significance relationship between the range of income and risk
taking capacity.
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3.
THEORETICAL
FRAMEWORK
MUTUAL FUNDS
A mutual fund is a pool of money, collected from investors and is invested

according to certain investment objectives.
A mutual fund is created when investors put their money together. It is
therefore a pool of the investor’s funds. The most important characteristic of a
mutual fund is that the contributors and the beneficiaries of the fund are the same
class of people, namely the investors. The term mutual means that investors
contribute to the pool and also benefit from the pool.
A mutual fund’s business is to invest the funds thus collected, according to
wishes of the investors who created the pool.
CHARACTERISTICS OF MUTUAL FUND

• A mutual fund belongs to the investors who have pooled their funds. The
ownership of the mutual fund is in the hands of the investors.
• Investment professionals and other service providers, who earn a fee for
their services, from the fund, manage the mutual fund.
• The pool of funds invested in a portfolio of marketable investments. The
value of the portfolio is updated everyday.
• The investor’s share in the fund is denominated by “units”. The value of
the units changes with change in the portfolio’s value, everyday. The value
of one unit of investment is called as the Net Asset Value (NAV).
The common retort to the oft-asked question by anxious investors, of the
best way to save tax, is to invest in Post Office savings schemes, or perhaps a
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regular investment in a public provident, or to buy insurance policies or Equity
Linked Saving Schemes.
ELSS holds the advantage of being the equity-based tax saving
instrument in the country today and offers tax deduction on investments up to
Rs.100000, under Section 80C of the Income Tax Act.
EQUITY LINKED SAVING SCHEME
Equity Linked Saving Schemes (ELSS) is similar to the normal equity

diversified schemes that invest across the board and market segments. Features
that differentiate ELSS from an open-ended equity diversified scheme are tax
saving benefit (deductions under Sec 80C) and a lock-in period of three years,
which are explained hereunder. Also, one can invest in these schemes in small
amounts through a Systematic Investment Plan and begin with a small fund size
to add to this expense (i.e.) of investing in an ELSS is similar to any other equity
scheme.
ELSS
Tax Benefit: Saves from short- Better Return than

Up to Rs.1 lakh, term volatility: Lock that of other savings
u/s Sec 80C
Tax in of 3 years instruments and
similar to other equity
schemes
Benefit:
Until FY 05, Sec 88 of Income Tax Act had fixed an overall ceiling of
Rs.100000 for investments in the tax saving instruments, including a cap of
Rs.10000 for investment in ELSS. The investors would get a rebate based on his
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taxable income. In FY 05 the budget has scrapped Sec 88 and replaced it with
Sec 80C. under this section, investments up to Rs.100000 are eligible for
deduction from Gross Taxable Income and the ceiling on investments in ELSS is
removed. These investments deducted from the Gross Total Income, hence
reducing the taxable income.
Illustration:
Particulars Rupees(till 05) Rupees (after 05)
Gross Total Income 4,00,000 4,00,000
(-) Deductions Nil 1,00,000
Taxable Income 4,00,000 3,00,000
Advantages of Lock-in-period
 The close-ended nature of the scheme gives the investment team an

opportunity to take decisions without the pressures of dealing with constant
fund cash flow considerations.
 This would also help to focus on long-term opportunities in mid-cap

and small-cap companies that are strategically placed to take advantage of
the robust economic growth in India and of the global outsourcing trend.
 Since the fund would remain with the fund manager for a long duration,
it would give him more flexibility with regards to the illiquid nature of mid-cap
space. Therefore, the Fund is likely to perform better than an open-ended
scheme.
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ELSS VS ULIP
ULIPs basically works like a mutual fund with a life cover thrown in. they
invest the premium in market-linked instruments like stocks, corporate bonds and
government securities. Investments in ULIPs attract Tax benefit under Section
80C.
A tax –saving fund is a diversified equity fund. It works like an open-ended
diversified equity fund that invests predominantly in the stock market to generate
growth by way of capital appreciation for investors.
The only difference between an equity fund and taking a tax saving fund is
that the latter has a 3-year lock-in tax benefits under Section 80C. To that end
there is a common ground between tax-saving funds and ULIPs in the shape of
Section 80C tax benefits.
RETURN ASPECTS
The reason why ULIP returns are on the lower side compared to tax-
saving funds is due to the higher expenses charged by them. The expenses take
their toll on the ‘investible surplus’ which reduces to the extent of expenses.
For example, mortality charges as well as the commission paid to agents

are factored into the ULIP expenses. While mortality charges are unique to
ULIPs as compared to tax-saving funds, commissions form a part of tax-saving
funds as well.
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Tax-saving funds offer is the option of staying invested in the scheme
during maturity. But ULIP do not give the option of staying invested. The investor
has to necessarily collect the maturity proceeds.
Life Total
Age Insurance EPF(Rs) PPF / NSC ELSS Deduction
Premium(Rs) u/s 80C
25-35 10% 20% 20% 50-60% 1,00,000
35-40 10% 30% 25% 35-40% 1,00,000
45-55 10% 35% 30% 25-30% 1,00,000
>55 10% 0 65% 20-25% 1,00,000
TAX ASPECTS
Income Tax Provision Impacting Investment in Mutual Funds:
Investors receive two types of incomes from investment in Mutual Funds,

namely, Dividends declared from time to time by the mutual fund and Capital
Gains arising out of redemption of mutual fund units. Both these incomes are
subject to the provisions of the Income Tax Act, 1961.
The following are the Tax provisions, applicable after the Finance Act 2006-
07:
 Dividends from mutual funds for the year 2006-07 are tax-free in the
hands of investors.
 In case of mutual fund scheme with more than 50% in debt, a dividend
distribution tax of 10% plus surcharge has to be paid by the mutual funds.
 In case of mutual funds scheme with more than 50% in equity, the
dividend distribution tax is not to be paid
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INVESTMENT IN ELSS:
Investment in specific Equity Saving Schemes, as notified by the

Government of India, are eligible for tax rebate under Section 88, up to a
maximum limit of Rs.10000 on the investment. The rebate is available according
to the taxable income of the investor.
Taxable Income Available IT Rebate Maximum Amount of

Rebate
Up to Rs.10,00,000 30% of the investments Rs.3000
made
> 1.00 lakh < 1.5 lakh 20% of the investments Rs.2000
made
> 1.5 lakh 15% of the investments Rs.1500
made
Investors whose taxable income exceeds Rs.5 lakh are not eligible for any
tax rebates under Section 88.
A mutual fund which is registered under the SEBI (mutual Fund)

Regulation, 1996 is fully exempt from paying tax on its incomes, under section 10
(23D) of the IT Act. Since it is only a pass through entity, income is not taxed in
the hands of the mutual fund.
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4. RESEARCH METHODOLOGY
INTRODUCTION
Research methodology is a systematic way that solves the research

problem. It may be understood as a science of studying how research is done
scientifically. It is, we study the various steps that are generally adopted by a
researcher in studying the research problem along with the logic behind them. It
is necessary for the researcher to know not only the research methods or
techniques but also methodology. Researcher need to know how to develop the
tests, how to calculate the mean , how to apply research techniques which are
relevant and which not the knowledge of research methodology provides tools to
take things objectively.
4.1 RESEARCH DESIGN
Research design is a plan of action that guides the entire research. There
are four types of research design
a) Exploratory research design
b) Descriptive research design
c) Diagnostic research study
d) Experimental research design
The researcher has adopted Descriptive Research design.
4.2 SAMPLE SIZE

The sample size for the study is 120. It is derived from the universe of
250.
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4.3 SAMPLING METHOD
The sample design used by the researcher in this study is Systematic

Sampling Method. The list of investors in Equity Linked Saving Scheme given by
HDFC Mutual Funds were assigned with numbers. The even numbers have been
chosen as samples.
4.4 PRE-TESTING
Pre-testing as it is known is a method which has to be followed strictly.

Once questionnaire is drafted it should be field tested before finalizing. The
responses are studied to determine the need for restructuring the questionnaire.
Pre-testing was done on a group of 15 respondents. With the result of the pre-
testing the researcher has reframed some of the questions.
4.5 PERIOD OF STUDY
The period of study is from JANUVARY 2007 to APRIL 2007.
4.6 SOURCES OF DATA
a. Primary Data:
Primary data are generally information gather or generated the researcher

for the purposes of the project immediately at hand. When the data are collected
for the first time, the responsibility rests with the researcher to analyze as well.
Primary data has been collected through a structured questionnaire.

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b. Secondary Data:
Data that has already been collected for some other purpose, perhaps
processed and subsequently stored, are termed Secondary Data. The main
types of secondary data: Documentary, surveys and those from multiple sources.
Researcher has used all the types of secondary data to solve the problem.The
secondary data for the study has been extracted from text-books, offer
documents, magazines and through websites.
The data that have taken for the study is collected from source are:
• Published information and other report of HDFC Mutual fund.

• Other published material of mutual fund
• Records and information available with the fund manager.
• Data and information available with SEBI.
• Article and information published in various journals.
• Other information necessary for the study has been obtained from various
books, journals etc.
4.7 QUESTIONNAIRE DESIGN
Quite often questionnaire is considered as the heart of survey operation.

Hence it should be very carefully constructed. A questionnaire was prepared with
the combinations of various type of questions which have been listed below. The
number of questions used under each type are 2 Yes/No questions, 11 closed
ended questions, 2 open ended questions and 1 Scaling/Ranking question.
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4.8 STATISTICAL TOOLS
The various statistical tools used by the researcher for data analysis in this study
are:
PERCENTAGE ANALYSIS
Percentage refers to a special kind of ratio in making comparison between

two or more data and to describe relations between the data. Percentage can
also be used to compare the relative terms, the distribution of two or more series
of data. The formula used here is given below:
Percentage (%) = No. of respondents
Total no. of respondents
WEIGHTED AVERAGE
Weighted average means assigning weight standards for the relative

importance of relative item. The weight stands for the relative Importance for
different items.
Weighted average method = ( X1W1+X2W2+X3W3+…….)

N
STEPS:
1. Multiply the weights with variable X and obtain the value ΣWX
2. Divide the total by the sum of weight ΣW
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CHI-SQUARE TEST:
Chi-square test is an important test among the several tests of

significance developed by statisticians. It is a statistical measure used in the
context of sampling analysis for comparing a variance to a theoretical variance.
The Chi-square is one of the most popular statistical inference procedures
today. With the help of Chi-square test we can find out whether two or more
attributes associated or not.
In order to test whether or not the attributes are associated we can take
null hypothesis that there is no association in the attribute under the study or the
attributes are independent.
If the calculated value of Chi-square test is greater than the table value at
a certain level of significance (generally 5%), we say from results that the
attributes are not associated.
The formula used here is given below:
n
χ² = Σ (O – E )²
i=1 E
Where O = Observed frequency from the cell.

E = Expected frequency from the cell.
E = Row Total* Column Total
Grand Total
Degrees of freedom = (r-1)(c-1)
Where r = Number of rows in the column.

c = Number of columns in the table.
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ANALYSIS OF VARIANCE (ANOVA)
ANOVA is essentially a procedure for testing the difference among

different groups of data for homogeneity.
ANOVA consists in splitting the variance for analytical purpose. Hence, it
is a method of analyzing the variance to which a response is subject into its
various components corresponding to various sources of variation.
Correction Factor = (T)²

n
Total sum of Squares = ΣX²ij – (T)²
n
Where i = 1,2,3,….
j = 1,2,3,…
Between Sum of Square = Σ (Tj)² - (T)²

nj n
Where j =1,2,3,….
Error Sum of Squares = Total Sum of Squares – Between Sum of Squares.
= ΣXij² - Σ (T)²
nj
where i = 1,2,3,…
j = 1,2,3,…
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SHARPE’S RATIO:
William F.Sharpe (1966) devised an index of portfolio performance measure. He
assumes that a small investor invests fully in the mutual fund and does not hold
any portfolio to eliminate unsystematic risk and hence demands a premium for
the total risk.
Sp = Rp – Rf
σp
Where Sp = Sharpe’s Ratio,
Rp = portfolio return,
Rf = risk free return, and
σp = standard deviation of portfolio returns.
The Sp for benchmark portfolio is Rm - Rf/ σm
where σm = standard deviation of market returns.
If Sp of the mutual fund scheme is greater than that of the market portfolio,
the fund has out performed the market.
TREYNOR’S RATIO:
In Treynor’s measure, the risk measure of standard deviation, namely total
risk of the portfolio is replaced by market risk, measured by Beta, which is not
diversifiable. The can be set out as
Tn = Rn-Rf
βn
Where
Tn = Treynor’s measure of evaluation.
Rn = Return on the portfolio,
Rf = risk free rate
βn = Beta of the portfolio as a measure of systematic risk.
The Sharpe’s measure relates a portfolio’s excess return to total risk (as
measured by the standard deviation), while the Trenyor measure relates a
portfolio’s excess return to non-diversifiable or systematic risk (as measured by
the beta coefficient).
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4.9 SCOPE OF THE STUDY
HDFC has various operations like Banking, Insurance, and Mutual Funds
etc. The scope of this study is restricted to Mutual Fund investors only. It is
confined to customers of HDFC Standard life insurance, mutual funds and
concentrates only on the comparison of ELSS and ULIP.
4.10 LIMITATIONS OF THE STUDY
 The edifice of this study entirely stands up on the pillars of information
supplied by the respondents.
 Limitations applicable to questionnaire method of research may be applicable
to this study also, such as biased answer, memory access variations, in co-
operative and doubtful approach.
 The time for the study was very short.
 Secondary data available for comparative analysis is only for the period of
2005-2007.
 Due to various factors associated, the information provided by customers has
its own bias.

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5. DATA ANALYSIS AND INTERPRETATION
The data, after collection, has to be processed and analysed in

accordance with the outline laid down for the purpose at the time of developing
the research plan. This is essential for a scientific study and for ensuring that we
have all relevant data for making contemplated comparisons analysis.
Technically speaking, processing implies editing, coding, classification and
tabulation of collected data, so that they are amenable to analysis.
The term ‘analysis’ refers to the computation of certain measures along

with searching for patterns of relationship that exist among data groups-thus, “ in
the process of analysis, relationships or differences supporting or conflicting with
original or new hypothesis should be subjected to statistical tests of significance
to determine with that validity data can be said to indicate any conclusions.
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TABLE-1
AGE OF RESPONDENTS
AGE NO.OF RESPONDENTS PERCENTAGE

20-30 26 21.67
31-40 34 28.33
41-50 39 32.5
>50 21 17.5
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 32.5% are in the age group of 41-50,
28.33 % of are in the age group of 31-40, 21.67 % of respondents are in the age
group 0f 20-30 and 17.5 % 0f respondents are in the age group of above 50.
CHART1
AGE OF RESPONDENTS
40
35
30
25
20
32.5
15 28.33
10 21.67
17.5
5
20-30 31-40 41-50 >50

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TABLE-2
EDUCATION LEVEL OF RESPONDENTS
QUALIFICATION NO OF RESPONDENTS PERCENTAGE

SSLC 8 6.67
+2 20 16.67
GRADUATION 54 45
POST GRADUATION 38 31.67
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 45% of respondents are Graduates,
31.67 % of respondents are Post Graduates,16.67% of respondents are +2 and
6.67 % of respondents are SSLC.
CHART2
EDUCATION LEVEL OF RESPONDENTS
50
45
40
30 31.67
20
16.67
10
6.67
0
SSLC HSC GRADUATION POST GRADUATION
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TABLE-3
OCCUPATION OF RESPONDENTS
OCCUPATION NO OF RESPONDENTS PERCENTAGE

IT 25 20.83
MANUFACTURING(PVT) 18 15
SELF EMPLOYMENT 24 20
GOVT SECTOR 13 10.83
OTHERS 40 33.33
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 20.83% of respondents are from IT
sector, 15 % of respondents are from Manufacturing & private sector, 20 % of
respondents are from Self Employment, 10.83 % of respondents are from Govt
Sector and 33.33% are from Others category.
CHART 3
NATURE OF OCCUPATION
40
20
33.33
20.83 20
15 10.83
0
IT SELF- OTHERS
EMP
IT MANUFAC SELF-EMP GOVT OTHERS

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TABLE -4
MONTHLY INCOME OF RESPONDENTS
MONTHLY INCOME NO OF RESPONDENTS PERCENTAGE

BELOW 20000 56 46.67
20-50000 38 31.67
50-80000 14 11.67
ABOVE 80000 12 10
TOTAL 120 100
INFERENCE:
From the above table , it is clear that 46.67 % of the respondents have
income level of below Rs.20000 per month, 31.67 % of the respondents have
income level between 20 to 50000 per month, 11.67 %of the respondents have
income level between 50 to 80000 and 10 % of the respondents have income
level above 80000 per month.
CHART 4
MONTHLY INCOME OF RESPONDENTS
10
11.67
46.67
31.67
<20000 20-50000 50-80000 80000<

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TABLE-5
AVENUES OF INVESTMENT
OPTIONS NO OF RESPONDENTS PERCENTAGE

MUTUAL FUNDS 22 18.33
INSURANCE 24 20
SHARES 22 18.33
DEPOSITS 19 15.83
REAL ESTATE 10 8.33
OTHERS 23 19.16
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 20 % of respondents preferred
Insurance, 19.16 % for others, 18.33 % of the respondents invested in Mutual
Funds, 18.33 % for shares, 15.83 for deposits and 8.33 % for Real Estate.
CHART 5
AVENUES OF INVESTMENT
30
25
20 18.33 20 19.16
18.33
15 15.83
10 8.33
5
0
MU FUNDS INSUR SHARES
DEPOSITS R.ESTATE OTHERS
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TABLE-6
REASONS FOR INVESTMENT
REASONS NO OF RESPONDENTS PERCENTAGE

RISK FREE 20 16.67
HIGH RETURN 32 26.67
SECURE 22 18.33
BETTER MARGIN 28 23.33
INTEREST 18 15
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 26.67 % of the respondents opt for
High return, 23.33 % opt for Better margin,18.33 % of the respondents opt for
Secure 16.67 % of the respondents opt for Risk free investment and 15 % opt for
Interest.
CHART 6
REASONS FOR INVESTMENT
30
25
20
15
26.67
23.33
10 18.33
16.67 15
5
0
RSK FREE HI RETURN SECURE BET.MARG INTEREST
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TABLE-7
AWARENESS OF TAX SAVING SCHEMES
OPTIONS NO.OF RESPONDENTS PERCENTAGE

YES 87 72.5
NO 33 27.5
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 72.5 % of the respondents are aware
of Tax saving schemes and 27.5 % of the respondents are not aware of Tax
saving schemes.
CHART 7
AWRENESS OF TAX SAVING SCHEMES
NO
28% YES
72%
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TABLE-8
SCHEME PREFERRED BY INVESTORS IN TERMS OF TAX SAVINGS
OPINION NO OF RESPONDENTS PERCENTAGE

ELSS 38 31.67
ULIP 23 19.16
OTHERS 37 30.83
NIL 22 18.33
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 31.67 % of the respondents consider
that ELSS is better Tax saving scheme, 30.83 % of respondents consider Others,
19.16 % of respondents consider ULIP as better Tax saving scheme and 18.33%
of respondents consider Nil.
CHART 8
SCHEME PREFERRED BY INVESTORS IN TERMS OF TAX

SAVING SCHEMES
40
31.67 30.83
30
20 19.16 18.33
10
ELSS ULIP OTHERS NIL

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TABLE – 9
REASONS FOR CHOOSING PARTICULAR INVESTMENT
SCHEMES NO OF RESPONDENTS PERCENTAGE

TAX BENEFIT 29 24.16
FUTURE
28 23.333
EXPECTATIONS
PERFORMANCE 14 11.67
LIQUIDITY 23 19.16
SAVING THE SURPLUS 26 21.67
TOTAL 120 100
INFERENCE:
From the above table it is clear that 24.16 % of respondents have chosen
a particular investment for the purpose of Tax Benefit, 23.33% of respondents
opt because of Future Expectations, 21.67 % of respondents have chosen for the
purpose of saving their surplus, 19.16 % on the basis of Liquidity and 11.67 % of
respondents choose in terms of Performance.
CHART 9
REASONS FOR SELECTING INVESTMENT
30
20
24.16 23.33 19.16 21.67
10 11.67
3-D Column 1
0
TAX BEN FUTURE EX PERFORM LIQUIDITY SAVING SUR

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TABLE - 10
RISK TAKING CAPACITY OF INVESTORS

HIGH RISK HIGH
42 25
RETURN
MODERATE RISK
57 47.5
MODERATE RETURN
LOW RISK LOW
21 17.5
RETURN
TOTAL 120 100
INFERENCE:
From the above table it is clear that, 47.5 % of the respondents are opt for
Moderate Risk Moderate Return, 25 % of the respondents opt for High Risk High
Return and 17.5 % of respondents opt for Low Risk Low Return.
CHART - 10
RISK TAKING CAPACITY
60
40
20 47.5
25 17.5
0
HIG RISK MED RISK LOW RESK
HIG RISK MED RISK LOW RESK

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TABLE – 11
PREFERRED TENURE OF INVESTMENT
OPTION NO OF RESPONDENTS PERCENTAGE

SHORT TERM 32 26.67
MID TERM 54 45
LONG TERM 34 28.33
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 45 % of the respondents preferred for
Mid term investment, 28.33 % of respondents preferred to Long term investment
and 26.67% of respondents preferred Short term investment.
CHART – 11
PREFERRED TENURE OF INVEST
26.67
28.33
45
SHORT TERM MID TERM LONG TERM

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TABLE-12
LEVEL OF RETURN EXPECTED
OPINION NO OF RESPONDENTS PERECENTAGE

LESS THAN 10 % 11 9.167
11 – 15 % 32 26.67
15 – 20 % 36 30
ABOVE 20 % 41 34.167
TOTAL 120 100
INFERENCE:
From the above table it is clear that 34.167 % of respondents expect

above 20 % of return, 30 % 0frespondents expect 15 – 20 % of returns, 26.67 %
of respondents expect 11- 15 % of returns and 9.167 % of respondents expect
less than 10 % of return.
CHART - 12
LEVEL OF RETURN EXPECTED
35 34.16
30
30 26.67
25
20
15
10 9.167
5
0
<10 % Return 10- 15% Return 15-20% Return >20% Return

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TABLE – 13
SATISFACATION TOWARDS PERFORMANCE OF TAX SAVING SCHEME

YES 83 69.17
NO 37 30.83
TOTAL 120 100
INFERENCE:
From the above table it is clear that 69.17% of respondents are satisfied
with the performance of Tax Saving Scheme and 30.83 % of the respondents are
not satisfied.
CHART - 13
SATISFACTION TOWARDS PERFORMANCE
30.83
69.17
YES NO
33
TABLE - 14
FACTORS TO BE GIVEN IMPORTANCE BY HDFC

CUSTOMER
17 18.33
SATISFACTION
PRODUCT
29 43.33
PERFORMANCE
CREATING AWRENESS 24 28.33
COMPETING THE
21 9.16
RIVALS
OTHERS 29 24.16
TOTAL 120 100
INFERENCE:
From the above table it is clear that, 43.33 % of respondents are of

opinion that Product performance should be given importance, 28.33 % of
respondents feel that importance should be given to Creating Awareness, 24.16
% of respondents opt for others, 18.33 % of the respondents insist Customer
satisfaction and 9.16 % is on the opinion of competing the rivals.
CHART - 14
FACTORS TO BE GIVEN IMPORTANCE

50
40
30
20 43.33
28.33 24.16
10 18.33
9.16
0
CUS.SAT PRODUCT AWRENESS COMPETING OTHERS
34
TABLE – 15
SATISFACTION LEVEL OF RESPONDENTS

VERY GOOD 22 18.33
GOOD 52 43.33
MEDIUM 34 28.33
BAD 11 9.16
VERY BAD 1 0.83
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 43.33 % of respondents feel HDFC
Mutual Funds is good, 28.33 % of feels that is medium, 18.33 % of respondents
feels that it is very good, 9.16 % of respondents feels it is bad and 0.83 % of
respondents feels it is very bad.
CHART - 15
SATISFACTION LEVEL OF RESPONDENTS
50
43.33
40
30 28.33
20 18.33
10 9.16
0 0.83
VERY GOOD GOOD MEDIUM BAD VERY BAD

35
CALCULATION OF RETURNS FOR HDFC – TAX SAVER (ELSS)

AVERAGE
AVERAGE
DATE NAV SENSEX BENCHMARK
RETURN
RETURN
31/1/2005 63.41 1768.25
31/1/2006 116.56 83.81958682 2585.95 46.24346105
31/1/2007 146.13 25.36890872 3393.1 31.21290048
AVERAGE RETURN 54.59425
RISK 41.33087
SHARPE'S INDEX 1.199932
BETA 219.6366 112.9588755 1.944394
TREYNOR'S INDEX 25.50627
AVE BENCHMARK
38.72818
RETURN
Average Return = Total Return

n
= 83.81+25.36/2
= 54.59
Risk = Standard Deviation (σ) of Average Return

= STDEV (54.59)
= 41.33
Average Benchmark Return = Total Benchmark Return

n
= 46.24+31.21/ 2
= 38.72
Sharpe’s Index = Average Return – Risk Free Rate

Total Risk (σ)
= 54.59 – 5
41.33
=1.19
Beta (β) = Covariance of Average Benchmark Return and Average Return

= Covariance (46.24:31.21, 83.81:25.36)
= 1.94
Treynor’s Index = Average Return – Risk Free Rate

Beta (β)
= 54.29 – 5
1.94
36
= 25.
CALCULATION OF RETURNS OF PRUDENTIAL ICICI – TAX PLAN (ELSS)
AVEARGE AVERAGE
DATE NAV SENSEX
RETURN BENCHMARK RETURN
31/1/2005 44.06 2057.1
31/1/2006 76.27 73.10485701 3001.1 45.88984493
31/1/2007 93.75 22.91857873 4082.7 36.04011862
RISK 35.48706
SHARPES INDEX 1.21204
BETA 123.5803 48.50855413 2.547598
TREYNORS INDEX 16.88325
AVE BENCHMARK
40.96498
RETURN

N
= 73.10+22.91/ 2
= 48.01
Risk = Standard Deviation (σ) of Average Return.

=STDEV(48.01)
= 35.48

n
= 45.88 + 36.04 / 2
= 40.96

Total Risk (σ)
= 48.01- 5
35.48
= 1.21

= Covariance (45.88:36.04, 73.10:22.91)
= 2.54

Beta (β)
= 48.11 - 5
2.54
37
= 16.88
CALCULATION OF RETURNS OF FRANKLIN TEMPLETON TAX SHIELD

(ELSS)
FRANKLIN TEMPLETON MF-TAX SHIELD

AVEARGE AVERAGE BENCHMARK
DATE NAV SENSEX
RETURN RETURN
31/1/2005 65.48 1768.25
31/1/2006 106.32 62.37018937 2585.9 46.24063339
31/1/2007 130.01 22.28179082 3393.1 31.21543757
RISK 28.34678
BETA 150.584 112.8782549 1.334039
AVE BENCHMARK
38.72804
RETURN
n
= 62.37 + 22.28 / 2
= 42.32

= STDEV (42.32)
=28.34

n
= 46.24 + 31.21 / 2
= 38.72

Total Risk (σ)
= 42.32 – 5
28.34
= 1.316

= Covariance (46.24:31.21, 62.37:22.28)
=1.33

Beta (β)
= 42.32 – 5
1.33
= 27.9
38
CALCULATION OF RETURNS OF SUNDARAM BNP PARIBAS TAX SAVER

(ELSS)
DATE NAV SENSEX
RETURN RETURN
31/1/2005 13.3806 868.76
31/1/2006 22.9837 71.7688295 1251.26 44.02827018
31/1/2007 28.5725 24.31636334 1691.45 35.17973882
RISK 33.55396
BETA 104.9712 39.14825357 2.681375
AVE BENCHMARK
39.604
RETURN

n
= 71.76 + 24.31 / 2
= 48.04

= STDEV (48.04)
= 33.55

n
= 44.02 + 35.17
2
=39.604

Total Risk (σ)
= 48.04 – 5
33.5
= 1.28

= Covariance (44.02:35.17,71.76:24.31)
= 2.68

Beta (β)
= 48.04 – 5
2.68
39
= 16.05
CALCULATIONS OF RETIURNS OF BIRLA SUNLIFE – TAX RELIEF (ELSS)

DATE NAV SENSEX
RETURN RETURN
31/1/2005 126.4 868.76
31/1/2006 188.78 49.35126582 1251.26 44.02827018
31/1/2007 150.37 -20.346435 1691.45 35.17973882
RISK 49.28372
BETA 154.1806 39.14825357 3.938377
AVE BENCHMARK
39.604
RETURN

n
= 49.35 + -20.34
= 14.50
Risk = Standard Deviation (σ) of Average Return

= STDEV (14.50)
=49.28

n
= 44.02 + 35.17
= 39.60

Total Risk (σ)
= 14.50 – 5
49.28
= 0.19

= Covariance (44.02:35.17,49.35:-20.34)
= 3.93

Beta (β)
= 14.50 – 5
3.93
= 2.41
40
CALCULATION OF RETURNS OF AVIVA - ULIP

DATE NAV SENSEX
RETURN RETURN
31/1/2005 20.449 1768.25
31/1/2006 25.709 25.72252922 2585.95 46.24346105
31/1/2007 30.295 17.83811117 3393.1 31.21290048
RISK 5.575125
BETA 29.62681 112.9588755 0.26228
AVE BENCHMARK
38.72818
RETURN

n
= 25.72 + 17.83 / 2
= 21.78

= STDEV (21.78)
= 5.57

n
= 46.24 + 31.21
= 38.72

Total Risk (σ)
= 21.78 – 5
5.57
= 3.009

= Covariance (46.24:31.21,25.72:17.83)
= 0.26

Beta (β)
= 21.78 – 5
0.26
=63.97
41
CALCULATIONS OF RETURNS OF MAX NEWYORK LIFE - ULIP

DATE NAV SENSEX
RETURN RETURN
31/1/2005 11.13 2057.6
31/1/2006 15.37 38.0952381 3001.1 45.85439347
31/1/2007 19.32 25.69941444 4082.7 36.04011862
RISK 8.765171
BETA 30.41401 48.15999537 0.63152
AVE BENCHMARK
40.94726
RETURN

N
= 38.09 + 25.69 / 2
= 31.89

= STDEV (31.89)
= 8.76

n
= 45.85 + 36.04
2
= 40.94

Total Risk (σ)
= 31.89 – 5
8.76
= 3.08

= Covariance (45.85:36.04, 38.09:25.69)
=0.63

Beta (β)
= 31.89 – 5
0.63
= 42.59
42
CALCULATION OF RETURNS OF KOTAK – ULIP

DATE NAV SENSEX
RETURN RETURN
31/1/2005 14.365 2057.6
31/1/2006 17.875 24.43438914 3001.1 45.85439347
31/1/2007 22.063 23.42937063 4082.7 36.04011862
RISK 0.710655
BETA 2.465882 48.15999537 0.051202
AVE BENCHMARK
40.94726
RETURN

n
= 24.43 + 23.42 / 2
= 23.93

= STDEV (23.93)
= 0.71

n
= 45.85 + 36.04 / 2
= 40.94

Total Risk (σ)
= 23.93 – 5
0.71
= 26.64

= Covariance (45.85:36.04, 24.43:23.42)
=0.051

Beta (β)
= 23.93 – 5
0.051
= 369.74
43
CALCULATION OF RETURNS FOR ICICI – ULIP
DATE NAV SENSEX
RETURN RETURN
31/1//2005 24.64 868.76
31/1/2006 35.53 44.19642857 1251.26 44.02827018
31/1/2007 47.21 32.87362792 1691.45 35.17973882
RISK 8.006429
BETA 25.04754 39.14825357 0.639812
AVE BENCHMARK
39.604
RETURN

N
= 44.19 + 32.87 / 2
=38.53

= STDEV (38.53)
=8.006

n
= 44.02 + 35.17
2
= 39.60

Total Risk (σ)
= 38.53 – 5
8.006
= 4.188

= Covariance (44.04:35.17,44.19:32.87)
= 0.63

Beta (β)
= 38.33 – 5
0.63
= 52.41
44
CALCULATION OF RETURNS FOR HDFC - ULIP

DATE NAV SENSEX
RETURN RETURN
31/1/2005 25.3679 2057.6
31/1/2006 41.0626 61.86834543 3001.1 45.85439347
31/1/2007 54.2531 32.12290503 4082.7 36.04011862
RISK 21.0332
BETA 72.98248 48.15999537 1.515417
AVE BENCHMARK
40.94726
RETURN

n
= 61.86 + 32.12 / 2
= 46.99

= STDEV (46.99)
= 21.03

n
= 45.85 + 36.04
2
= 40.94

Total Risk (σ)
= 46.99 – 5
21.03
= 1.99

= Covariance (45.85:36.04, 61.86:32.12)
= 1.51

Beta (β)
= 46.99 – 5
1.51
= 27.71
45
TABLE OF SHARPE’S RATIO
RISK
AVERAGE STANDARD SHARPE’S
FUND FREE RANKS
RETURN DEVIATION INDEX
RATE
HDFC 54.59 0.05 41.33 1.19 4
PRUDENTIAL
48.01 0.05 35.48 1.21 3
ICICI
FRANKLIN
42.32 0.05 28.34 1.31 1
TEMPLETON
SUNDARAM
48.026 0.05 33.55 1.28 2
BNP PARIBAS
BIRLA
14.50 0.05 49.28 0.19 5
SUNLIFE
RISK
AVERAGE STANDARD SHARPE’S
ULIP FREE RANKS
RETURN DEVIATION INDEX
RATE
AVIVA 21.78 0.05 5.57 3.009 4
MAX NEW
31.89 0.05 8.76 3.06 3
YORK LIFE
KOTAK 23.93 0.05 0.71 26.64 1
ICICI 38.53 0.05 8.06 4.18 2
HDFC 46.99 0.05 21.03 1.99 5
INFERENCE:
Larger the sharpe index better the fund has performed. Thus in ELSS,
Franklin Templeton ranked as better fund as its index is 1.31. Then, Sundaram
follows as its index is 1.28, then Prudential ICICI as 1.21, HDFC as 1.19 and
Birla Sunlife as 0.19.
In ULIP Kotak ranked as better plan as its index is 26.64, then ICICI
follows to it as its index is 4.18, then Max New York Life ranked as its index is
3.06, AVIVA follows next as 3.009 and then HDFC ranked as its index is 1.99.
The inference shows that sharpe index in ULIP shows higher value than
ELSS. This is because of the ULIP’s lesser risk than ELSS. At the same time the
expenses incurred in ULIP is quite higher than ELSS which may result a different
solution.
46
INFERENCE ON TREYNOR’S INDEX
RISK
AVERAGE TREYNOR’S
FUND BETA FREE RANKS
RETURN INDEX
RATE
HDFC 54.59 1.94 0.05 25.50 2
PRUDENTIAL
48.01 2.54 0.05 16.88 3
ICICI
FRANKLIN
42.32 1.33 0.05 27.97 1
TEMPLETON
SUNDARAM
BNP 48.026 2.68 0.05 16.05 4
PARIBAS
BIRLA
14.50 3.93 0.05 2.41 5
SUNLIFE
RISK
AVERAGE TREYNOR’S
ULIP BETA FREE RANKS
RETURN INDEX
RATE
AVIVA 21.78 0.26 0.05 63.97 2
MAX NEW
31.89 0.63 0.05 42.59 4
YORK
KOTAK 23.93 0.05 0.05 369.74 1
ICICI 38.53 0.63 0.05 52.41 3
HDFC 46.99 1.51 0.05 27.17 5
INFERENCE:
Treynor’s Ratio relates a portfolio’s excess return to non-diversifiable or
systematic risk (as measured by beta coefficient). In case of ELSS Franklin
Templeton holds the first rank, in case of HDFC its portfolio is perfectly
diversified as the two measures gives identical rankings, Prudential ICICI holds
third rank, Sundaram BNP Paribas holds fourth rank and Birla holds the fifth. In
case of ULIP Kotak holds first rank, Aviva holds the second, ICICI holds the third
Max New York Life holds fifth and HDFC holds the fifth rank.
Based on the above calculations as both Sharpe’s and Treynor’s ratio are
considered ELSS portfolios are perfectly diversified
47
WEIGHTED AVERAGE
Weighted Average Method – 1
The following is a weighted average rating method used to find the level of
satisfaction with HDFC mutual funds given by the respondents.
WEIGHTED AVERAGE OF SATISFACTION LEVEL TOWARDS HDFC

MUTUAL FUNDS
No. of
Options Weights (X) (W) (X)
Respondents (X)
Very Good 22 1 22
Good 52 2 104
Medium 34 3 102
Bad 11 4 44
Very Bad 1 5 5
TOTAL 120 277
Xw = ΣWX = 277
ΣW 120
=2.3
Weighted average for the option Good = 2
INFERENCE:
On the average the customers are satisfied with HDFC Mutual Funds.
48
Weighted Average Method – 2
The following weighted average analysis was done to find opinion on

priority about the preferred Investment Alternative.
Rank R1(X1) R2(X2) R3(X3) R4(X4) R5(X5) R6(X6) R7(X7)

Preference
Mutual
19 26 24 21 21 4 5
Funds
Share
21 20 22 22 13 12 10
Market
Bonds 14 15 26 20 19 12 10
Deposits 30 35 13 20 14 4 4
P.O.Savings 10 10 4 14 14 33 35
Insurance 19 10 25 10 24 19 13
Derivatives 8 3 3 14 13 36 43
XW = ΣWX / ΣW
Mutual Funds = (19 x 7) + (26 x 6) + (24 x 5) + (21 x 4) + (21 x 3) + (4 x 2)

+ (5 x 1) / 28
= 569 / 28
= 20.32
Share Market = (21 x 7) + (20 x 6) + (22 x 5) + (22 x 4) + (13 x 3) + (12 x 2)

+ (10 x 1/ 28
= 598 / 28
= 21.35
Bonds = (14 x 7) + (15 x 6) + (26 x 5) + (20 x 4) + (19 x 3) + (12 x 2)

+ (10 x 1) /28
= 489 / 28
= 17.46
Deposits = (30 x 7) + (35 x 6) + (13 x 5) + (20 x 4) + (14 x 3) + (4 x 2)

+ (4 x 1) / 28
= 619 / 28
= 22.10
49
Post Office = (10 x 7) + (10 x 6) + (4 x 5) + (14 x 4) + (14 x 3) + (33 x 2)
Savings + (35 x 1) / 28
= 349 / 28 = 12.46
Insurance = (19 x 7) + (10 x 6) + (25 x 5) + (10 x 4) + (24 x 3) + (19 x 2)

+ (13 x 1) / 28
= 481 / 28
= 17.17
Derivatives = (8 x 7) + (3 x 6) + (3 x 5) + (14 x 4) + (13 x 3) + (36 x 2) +

(43 x 1) / 28
= 299 / 28
= 10.6
Analysis:
To find out the major preference of Investment Alternatives by the respondents.
Investments Weightage Rank

Mutual Funds 20.3 3
Share Market 21.4 2
Bonds 17.5 4
Deposits 22.1 1
Post Office Savings 12.5 6
Insurance 17.2 5
Derivatives 10.6 7
INFERENCE:
From the above table it is clear that Deposits holds the first rank, Share
Market holds second rank, Mutual Funds holds third rank, Bonds holds fourth
rank, Insurance holds fifth rank, Post Office Savings holds sixth rank and
Derivatives holds seventh rank.
50
CHI-SQUARE ANALYSIS
Chi-Square Test-1
Chi-Square test to find the relationship between nature of investment and choice
of schemes.
HYPOTHESIS
Null Hypothesis (Ho):

There is no significant relationship between the nature of investment and choice
of schemes.
Alternate Hypothesis (H1):

There is significant relationship between the nature of investment and choice of
schemes.
Observed Frequencies:
Schemes
ELSS ULIP Others Nil TOTAL
Investment
Mutual
8 3 7 4 22
Fund
Insurance 5 4 9 6 24
Shares 4 4 8 6 22
Deposits 11 3 2 3 19
Real Estate 1 1 6 2 10
Others 7 7 7 2 23
TOTAL 36 22 39 23 120
Expected Frequencies:
6.6 4.03 7.15 3.73

7.2 3.52 7.8 4.6
6.6 4.03 7.15 3.73
5.7 3.48 6.18 3.64
3 1.83 3.25 1.92
6.9 4.22 7.48 4.4
51
X² TABLE:
Oi Ei (Oi – Ei) (Oi – Ei)² (Oi – Ei)² / Ei
8 6.60 1.40 1.96 0.29
3 4.03 -1.03 1.06 0.26
7 7.15 -0.15 0.0225 0.003
4 3.37 0.63 0.40 0.117
5 7.20 -2.20 4.84 0.67
4 3.52 0.48 0.23 0.065
9 7.80 1.20 1.44 0.184
6 4.60 1.40 1.96 0.42
4 6.60 -2.60 6.76 1.02
4 4.03 -0.03 0.0009 0.00022
8 7.15 0.85 0.73 0.101
6 3.37 2.63 6.92 2.052
11 5.70 5.30 28.09 4.93
3 3.48 -0.48 0.23 0.066
2 6.18 4.18 17.47 2.82
3 3.64 -0.64 0.409 0.112
1 3.00 -2.00 4.00 1.33
1 1.83 -0.83 0.68 0.372
6 3.25 2.75 7.56 2.33
2 1.92 0.08 0.0064 0.0033
7 6.90 0.10 0.01 0.0014
7 4.22 2.78 7.73 1.83
7 7.42 -0.42 0.18 0.023
2 4.41 -2.41 5.80 1.315
TOTAL 20.309
Now X² = Σ (Oi-Ei)² / Ei
(i.e.,) Calculated X² = 20.309
Degrees of Freedom = (r-1) (c-1)
= (4-1) (6-1) = 15.
The tabulated value of X² at 15 degrees of 0.05 level of significance is 24.309.
Calculated value = 20.309
Tabulated value = 24.906.
20.309 < 24.906
Calculated value is less than the tabulated value. Hence the Null Hypothesis is
accepted.
INFERENCE:
There is no relationship between nature of investment and choice of
schemes.
52
Chi-Square Test – 2
Chi-Square test to find out the relationship among awareness of

customers and qualification of respondents.
HYPOTHESIS
There is no significant relationship among awareness of customers and

There is significant relationship among awareness of customers and qualification
of respondents.
Qualification SSLC +2 UG PG TOTAL

Awareness
Yes 5 17 39 24 85
No 4 3 15 13 35
TOTAL 9 20 54 37 120
6.375 14.17 38.25 26.20

2.63 5.83 15.75 10.791
X² TABLE
Oi Ei (Oi-Ei) (Oi-Ei)² (Oi-Ei)² / Ei

5 6.38 -1.37 1.88 0.294
17 14.17 2.84 8.06 0.569
39 28.25 0.75 0.56 0.015
24 26.20 -2.2 4.84 0.185
4 2.63 1.37 1.88 0.715
3 5.83 -2.83 8.008 1.373
15 15.75 -0.75 0.56 0.036
13 10.79 2.21 4.88 0.452
TOTAL 3.639
53
Now X² = Σ(Oi-Ei)² / Ei
(i.e.,) Calculated X² = (r-1) (c-1)
=(2-1) (4-1)
= 3.
The tabulated value of X² at 3 degrees of 0.05 level of significance is 7.815.
3.639 < 7.815
The calculated value is less than the tabulated value. Hence the Null Hypothesis
is accepted.
INFERENCE:
There is no significant relationship among awareness of customers and

54
Chi-Square Test – 3
Chi-Square test to find the relationship between drawbacks in promoting

products and choice of investment.
HYPOTHESIS
There is no significant relationship between reasons to influence decision of

investors and range of income.
There is significant relationship between reasons to influence decision of

Preference Risk High Better

Secure Interest TOTAL
Income Free Return Margin
< 20000 8 16 8 13 11 56
20-50000 5 12 7 9 5 38
50-80000 3 2 5 2 2 14
> 80000 3 3 2 3 1 12
TOTAL 19 33 22 27 19 120
8.87 15.4 10.27 12.6 8.87

6.01 10.45 6.97 8.55 6.01
2.22 3.85 2.57 3.15 2.21
1.90 3.3 2.2 2.7 1.90
55
X² TABLE
Oi Ei (Oi-Ei) (Oi-Ei)² (Oi-Ei)² / Ei

8 8.87 -0.87 0.76 0.578
16 15.4 0.6 0.36 0.023
8 10.27 -2.27 5.15 0.501
13 12.6 0.4 0.16 0.012
11 8.87 2.13 4.54 0.511
5 6.02 -1.016 1.03 0.172
12 10.45 1.85 3.42 0.33
7 6.97 0.03 0.0009 0.00013
9 8.55 0.45 0.203 0.024
5 6.02 -1.016 1.32 1.171
3 2.22 0.783 0.613 0.28
2 3.85 -1.85 3.42 0.89
5 2.57 2.43 5.90 2.3
2 3.15 -1.15 1.32 0.42
2 2.22 -0.217 0.047 0.02
3 1.9 1.1 1.21 0.64
3 3.3 -0.3 0.09 0.027
2 2.2 -0.2 0.04 0.018
3 2.7 0.3 0.09 0.033
1 1.9 -0.9 0.81 0.43
TOTAL 8.38
Now X² = Σ (Oi-Ei)² / Ei
(i.e.,) Calculated value X² = 8.38
Degrees of Freedom = (r-1) (c-1)
=(4=1) (5-1)
= 12.
The tabulated value of X² at 12 degrees of 0.05 level of significance is 21.026
Calculated value = 8.38
Tabulated value = 21.026
8.38 < 21.026
Calculated value is less than the tabulated value. Hence the Null Hypothesis is
accepted.
INFERENCE
There is no significant relationship between reasons to influence decision
of investors and range of income
56
ANOVA
The following is an Analysis of variance done to find the relation between

the range of income and risk taking capacity.
HYPOTHESIS
There is no significant relationship between the range of income and risk taking
capacity.
There is significant relationship between the range of income and risk taking
capacity.
X1 X2 X3 X²1 X ²2 X²3
14 29 11 196 841 121
20 14 4 400 196 16
4 8 2 16 64 4
4 8 2 16 64 4
42 59 19 628 1165 145
Step :1: T = Σx ; = 42 + 59 + 19 = 120

Step :2 : CF(correction factor)= T²/n = (120)²/12 = 1200.
Step :3 : Total Sum of Squares (TSS) = Σxi²- CF
= (628 + 1165 + 145) – 1200
= 1938 – 1200
= 738.
Step :4 : Between Sum of Squares (BSS)= [(42)² + (59)² + (19)² ] - CF
4 4 4
= (441 + 870.25 + 90.25 ) – 1200.
= 201.5
Step :5 : Error Sum of Squares (ESS) = TSS - BSS
= 738 – 201.5
= 536.5.
57
Source Degree of Sum of Mean Sum of F ratio

Freedom Squares Squares
BSS 201.5 3 – 1= 2 201.5 / 2 F = 100.75 /
= 100.75 59.61
= 1.69
ESS 536.5 12 – 3 = 9 536.5 / 9
= 59.61
The calculated value F = 1.69

Degree of Freedom r 1 = 2 ; r 2 = 9
Level of Significance = 5 % = 0.05
(i.e.,) Tabulated value F2,9,0.05 = 4.26.
1.69 < 4.26
The calculated value is less than the tabulated value. Hence the Null Hypothesis
is accepted.
INFERENCE
There is no significant relationship between the range of income and risk
taking capacity.
The following is an Analysis of variance done to find the relation between
the range of income and risk taking capacity.
HYPOTHESIS
There is no significant relationship between drawbacks in promoting products
and choice of investment.
There is significant relationship between drawbacks in promoting products and
choice of investment.
X1 X2 X3 X4 X5 X6 X1² X2² X3² X4² X5² X6²

3 3 5 3 - 3 9 9 25 9 - 9
3 9 3 5 3 6 9 81 9 25 9 36
5 3 4 3 4 5 25 9 16 9 16 25
6 2 3 5 - 5 36 4 9 25 - 25
6 7 6 4 2 4 36 49 36 16 4 16
23 24 21 20 9 23 115 152 95 84 29 111
58
Step :1: T = Σx ; =23 + 24 + 21 + 20 + 9 + 23 = 120
Step :2 : CF(correction factor)= T²/n = (120)²/12 = 1200.
Step :3 : Total Sum of Squares (TSS) = Σxi²- CF
= (628 + 1165 + 145) – 1200
= 1938 – 1200
= 738.
Step :4 : Between Sum of Squares (BSS)= [(42)² + (59)² + (19)² ] - CF
4 4 4
= (441 + 870.25 + 90.25 ) – 1200.
= 201.5
Step :5 : Error Sum of Squares (ESS) = TSS - BSS
= 738 – 201.5
= 536.5.
Source Degree of Sum of Mean Sum of F ratio
Freedom Squares Squares
BSS 201.5 3 – 1= 2 201.5 / 2 F = 100.75 /
= 100.75 59.61
= 1.69
ESS 536.5 12 – 3 = 9 536.5 / 9
= 59.61
The calculated value F = 1.69

Degree of Freedom r 1 = 2 ; r 2 = 9
Level of Significance = 5 % = 0.05
(i.e.,) Tabulated value F2,9,0.05 = 4.26.
6. FINDINGS OF THE STUDY
 It is found that 72.5% of the investors in ELSS were male.
 Most of the respondents monthly income is less than Rs.20000. [46.67%]
 33 % of the respondent’s are fall under Other’s category and then from IT
sector 20.83 % and Self employment 20 %.
59
 Among the respondents, 45% of the respondents have completed their under
graduation.
 20% of the respondents invest in Insurance normally.
 It is found that the majority of the respondents who invested in mutual funds
are under the age group between 41-50. (32.5%)
 Most of the respondents have been influenced by the high return to choose a
particular investment.
 Majority of the respondents are aware of tax saving schemes.
 Among all respondents, it is found that 31.67% of the respondents consider

Equity linked saving scheme to be performing better.
 It is found that, 24.16% of the respondents have chosen the investment for
the purpose of tax saving while 23.33% of the respondents have chosen in
anticipation of future expectations.
 47.5% of the respondents are willing to take only moderate risk with respect
to their investment.
 It is found that 34.17% of the respondents expect more than 20% of return.
 Among it is found that 45% of the respondents prefer to go for mid-term

investments.(i.e.) 3 years to 5 years.
 69.17 % of the respondents are satisfied with the performance of tax saving
scheme.
60
 Majority of the respondents have chosen deposits as the preferred avenue of

investment.
 43.33 % of respondents are of opinion that product performance should be

given more importance.
 Among the respondents 43.33 % of respondents feel HDFC Mutual Funds is

Good, while 28.33% of the respondents have medium satisfaction towards
HDFC Mutual Funds.
 There is no relationship between nature of investment and choice of

schemes.
 There is no significant relationship between drawbacks in promoting products

and choice of investment.
 There is no significant relationship between the range of income and risk

taking capacity.
 There is no significant relationship between reasons to influence decision of

 Sharpe’s index in ULIP shows higher value than ELSS. This is because of the
ULIP’s lesser risk than ELSS. At the same time the expenses incurred in
ULIP is quite higher than ELSS which may result a different solution.
 Larger the Sharpe’s index better the fund has performed. Thus in ELSS,
Franklin Templeton ranked as better fund as its index is 1.31. Then,
Sundaram follows as its index is 1.28, then Prudential ICICI as 1.21, HDFC
as 1.19 and Birla Sunlife as 0.19.
61
 HDFC’s portfolio is perfectly diversified as the two measures Sharpe’s index
and Treynor’s index gives identical rankings.
 ELSS Franklin Templeton holds the first rank, in case of HDFC holds second
rank, Prudential ICICI holds third rank, Sundaram BNP Paribas holds fourth
rank and Birla holds the fifth as per Treynor’s ratio.
7. SUGGESTIONS AND RECOMMENDATIONS
 From the analysis it is found that most of the respondents were under the
age group 41 to 50 and are coming under the income level of below
Rs.20000 per month. So the company has to concentrate the above said
income levels and attract the age group of 41 to 50.
62
 Majority of the respondents is in the opinion that HDFC should give more
importance on product performance. Hence the company should
concentrate more on product performance.
 Most of the respondents are influenced by high return. Hence the

company should make awareness among the people about its return
earning capacity.
 Investors are considering ELSS as the better tax saving scheme. So the
company should make necessary arrangements to make more advantage
on this.
 Most of the respondents are willing to take moderate risk, preferring mid
term investment and expecting more than 20 % of returns. Hence the
company should act accordingly.
 The company satisfies the customers and at the same time it should
improve its relationship towards its customers.
8. CONCLUSION
The study is based on the primary data specially collected for the purpose
of creating a deeper understanding of the changing habits of investment
preferences of investors with regard to the current and future scenario of
63
investments. Special attention has been given bring to out the concerns of
investors towards Equity Linked Saving Scheme.
The major strands of the analysis may now brought together in order to
derive a broad picture about factors that influence the investor to go for a
particular investment, expectations of investors in terms of return from their
investment and to understand the needs of the investors.
Examination of the perception of investors towards ELSS and its actual

performance is a major part of this study. From the study it was found that ELSS
had a high preference towards the available tax saving instruments, followed by
Unit Linked Insurance Plan.
This study identifies the scenario of Tax Saving Schemes and the
investors risk willingness, expectations in the form of return expected from their
investment and the basic needs of the investors. The observations from the study
will be useful for HDFC which leads to customer satisfaction and in turn it may
generate revenue to the company.
BIBLIOGRAPHY
BOOKS REFERRED:
Punithavathy Pandian, “Security Analysis and Portfolio Management”, 3 rd edition,

Vikas Publishing House Pvt Ltd, New Delhi, 2001.
64
V.K.Bhalla, “Investment Management” ,11th edition Sulthanchand and company

Ltd, New Delhi, 2004.
A.Singaravelu and R.Senapathy, “Quantitative Methods in Business”,3rd edition,

Meenakshi Agency,Chennai,edition 2004.
Kothari C.R., “Research Methodology”, 10th edition, Wishwa Prakashan

Publucations,2000.
JOURNALS:
Business Line,
Economic Times,
Dalal Street.
e REFERENCES:
www.hdfcfunds.com
www.hdfcinsurance.com
www.icicidirect.com
www.bseindia.com
www.crisilindia.com
www.amfi.com
www.valueresearch.com
QUESTIONNAIRE
1) Name :
Address :
Phone :
Gender : Male Female
Age : 20-30 31-40 41-50 ABOVE 50
Qualification: SSLC +2 UG PG
65
2) NATURE OF OCCUPATION:
IT Manufacturing Self Employment Govt Sector
Others
3) YOUR INCOME RANGE: (per month)

Below Rs.20000 Rs.20-50000 Rs. 50-80000
Above Rs.80000
4) WHERE DO YOU INVEST NORMALLY

Mutual Funds Insurance Shares Deposits
Real Estate Others
5) REASON FOR THE ABOVE INVESTMENT

Risk Free High Return Secure Better Margin Interest.
6) ARE YOU AWARE OF TAX SAVING SCHEMES

Yes No
7) WHICH TAX SAVING INVESTMENT YOU CONSIDER BETTER

ELSS ULIP Others Nil
66
8) REASONS FOR CHOOSING A PARTICULAR INVESTMENT
OPTION
Tax Benefit Future Expectations Performance
Liquidity /Flexibility Just to save my surplus
9) MENTION YOUR RISK TAKING CAPACITY

High risk High return
Moderate risk Moderate return
Low risk Low return.
10) MENTION YOUR PREFERRED TENURE OF INVESTMENT

Short term (within 3 years)
Mid term (3 years – 5 years)
Long term. (Above 5 years)
11) WHAT IS THE LEVEL OF RETURN EXPECTED IN PERCENTAGE

IN A YEAR FROM YOUR INVESTMENT
Less than 10 % 11 - 15 % 15 – 20 % Above 20 %
12) ARE YOU SATISFIED WITH THE PERFORMANCE OF TAX

SAVINGS SCHEME
Yes No
67
13) RANK YOUR PREFERRED INVESTMENT ALTERNATIVE
S.NO PARTICULARS RANK

1 Mutual Funds
2 Share Market
3 Bonds
4 Deposits
5 Post Office Savings
6 Insurance
7 Derivatives
14) WHICH AREA DO YOU FEEL THAT HDFC MUTUAL FUND

SHOULD GIVE MORE IMPORTANCE
Customer Satisfaction Product Performance
Creating Awareness Competing the rivals Others
15) SATISFICATION LEVEL WITH HDFC MUTUAL FUNDS

Very Good Good Medium Bad Very bad
16) SUGGESTIONS:

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1.

There are a number of investment options available in the economy. But

1.2 STATEMENT OF PROBLEM

HDFC STANDARD LIFE INSURANCE

Around this time Standard Life purchased a 5% stake in HDFC, further

2.1 STATEMENT OF OBJECTIVES

Following are the objectives of the study:

► To find the awareness among the customers about investment

1) There is no significant relationship between nature of investment and

A mutual fund is a pool of money, collected from investors and is invested

CHARACTERISTICS OF MUTUAL FUND

EQUITY LINKED SAVING SCHEME

Equity Linked Saving Schemes (ELSS) is similar to the normal equity

Tax Benefit: Saves from short- Better Return than

 The close-ended nature of the scheme gives the investment team an

 This would also help to focus on long-term opportunities in mid-cap

For example, mortality charges as well as the commission paid to agents

Income Tax Provision Impacting Investment in Mutual Funds:

Investors receive two types of incomes from investment in Mutual Funds,

Investment in specific Equity Saving Schemes, as notified by the

Taxable Income Available IT Rebate Maximum Amount of

A mutual fund which is registered under the SEBI (mutual Fund)

Research methodology is a systematic way that solves the research

4.1 RESEARCH DESIGN

4.2 SAMPLE SIZE

4.3 SAMPLING METHOD

The sample design used by the researcher in this study is Systematic

Pre-testing as it is known is a method which has to be followed strictly.

4.5 PERIOD OF STUDY

The period of study is from JANUVARY 2007 to APRIL 2007.

4.6 SOURCES OF DATA

Primary data are generally information gather or generated the researcher

Primary data has been collected through a structured questionnaire.

• Published information and other report of HDFC Mutual fund.

4.7 QUESTIONNAIRE DESIGN

Quite often questionnaire is considered as the heart of survey operation.

4.8 STATISTICAL TOOLS

Percentage refers to a special kind of ratio in making comparison between

Percentage (%) = No. of respondents

Total no. of respondents

Weighted average means assigning weight standards for the relative

Weighted average method = ( X1W1+X2W2+X3W3+…….)

Chi-square test is an important test among the several tests of

Where O = Observed frequency from the cell.

Where r = Number of rows in the column.

ANALYSIS OF VARIANCE (ANOVA)

ANOVA is essentially a procedure for testing the difference among

Correction Factor = (T)²

Between Sum of Square = Σ (Tj)² - (T)²

Error Sum of Squares = Total Sum of Squares – Between Sum of Squares.

4.9 SCOPE OF THE STUDY

4.10 LIMITATIONS OF THE STUDY

 The edifice of this study entirely stands up on the pillars of information

supplied by the respondents.

 Limitations applicable to questionnaire method of research may be applicable

operative and doubtful approach.

 The time for the study was very short.

 Due to various factors associated, the information provided by customers has

its own bias.

5. DATA ANALYSIS AND INTERPRETATION

The data, after collection, has to be processed and analysed in

The term ‘analysis’ refers to the computation of certain measures along

AGE NO.OF RESPONDENTS PERCENTAGE

20-30 31-40 41-50 >50

Comparative Study Between Ulip & Elss

Comparative Study Between Ulip & Elss