A PROJECT REPORT

ON

“A COMPARATIVE ANALYSIS OF
MUTUAL FUNDS”
(WITH SPECIAL REFERENCE TO UTI AND HDFC FUND HOUSE)

Submitted in partial fulfillment for

Bachelor of Commerce (Honors)

Programme of

UNIVERSITY OF DELHI

NEW DELHI

Batch

Submitted by: -

BCom Honors (Three Year Programme)

Batch -

Enrolment No-

Department of Commerce

SHAHEED BHAGAT SINGH COLLEGE

 ACKNOWLEDGEMENT

About my Project ‘A Comparative Analysis of Mutual Fund’ I would like to thank each and

everyone who offered help, guideline, and support whenever required.

I would like to express gratitude to Professor Zehra Zulfikar for her support and guidance in

the Project work. I am extremely grateful to her for providing me with valuable guidance

advice, support, timely suggestions and pedagogy she offered. I deem it my privilege to have

carried out my project work under her real and able leadership.

I would also like to express my heartfelt thanks to my family and friends who helped me

throughout the period of the project.

 INDEX

1. ACKNOWLEDGEMENT

2. CERTIFICATE

3. DECLARATION

4. NEED FOR STUDY

5. INTRODUCTION TO MUTUAL FUND

6. COMPANY PROFILE

a. HDFC MUTUAL FUND

b. UTI MUTUAL FUND

7. A COMPARATIVE ANALYSIS

8. LITERATURE REVIEW

9. RESEARCH METHADLOGY

8. CONCLUSION

9. BIBLIOGRAPHY
 CERTIFICATE

This is to certify that Mr. a student of Shaheed Bhagat Singh College of the University of
Delhi has completed the project work on “A COMPARATIVE ANALYSIS OF MUTUAL
FUNDS” under my guidance and supervision.

I certify that this is an original work and is not copied from any source.

Signature of Guide

Name of Project Guide

Date-
 DECLARATION

I hereby declare that this Project Report entitled “A COMPARATIVE ANALYSIS OF MUTUAL
FUNDS” with reference UTI Mutual Fund and HDFC mutual funds submitted in the partial fulfillment
of the requirement of Bachelor of Commerce Honors (BCOM hons) of UNIVERSITY OF DELHI is
based on secondary data found by me in websites providing analytical data in mutual funds and
newsletters of various fund houses. Data has also been collected from Economic Times Wealth.

DATE: 14 March 2017

 NEED FOR STUDY

The main purpose of doing this project was to know about mutual funds and its
functioning. This help to know about the mutual fund's industry right from its inception
stage growth and future

It also helps in understanding different schemes of mutual funds. Because my study

depends upon prominent mutual funds in India and their schemes like equity income and
balanced as well as returns associated with those schemes

OBJECTIVES

 To give a brief idea about the benefit available from mutual funds investment
 To give an idea about the types of schemes available
 To discuss the market trend of mutual funds
 To study some of the mutual fund's schemes
 To examine some mutual fund companies and their schemes
 To provide a comparison of top funds of few AMC

LIMITATIONS

 The lack of information sources for analysis part

 Though I tried to collect some primary data, they were too inadequate for the
purpose of the study
 Time and money were critical factors limiting the study
INTRODUCTION TO MUTUAL FUND AND VARIOUS

ASPECTS.

A mutual fund is a trust that pools the savings of some investors who share a common financial goal.

This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is

thus “Mutual,” i.e. the fund belongs to all investors. The money thus collected is then invested in

capital market instruments such as shares, debentures and other securities. The income earned through

these investments and the capital appreciations realized are shared by its unit holders in proportion the

number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common

man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at

a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a well-

diversified portfolio of equities, bonds, and other securities. Each shareholder participates in the gain or

loss of the fund. Units are issued and can be redeemed as needed. The fund's Net Asset value (NAV) is

determined each day.

Investments in securities are spread across a wide cross-section of industries and sectors, and thus the

risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction

in the same proportion at the same time. Mutual fund issues units to the investors in accordance with

quantum of money invested by them. Investors of mutual funds are known as unit holders.
When an investor subscribes for the units of a mutual fund, he becomes part owner of

the assets of the fund in the same proportion as his contribution amount put up with the

corpus (the total sum of the fund). Mutual Fund investor is also known as a mutual

fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments (such as

shares, debentures, etc.) is reflected in the Net Asset Value (NAV) of the scheme. NAV is

defined as the market value of the Mutual Fund scheme's assets net of its liabilities.

NAV of a scheme is calculated by dividing the market value of scheme's assets by

the total number of units issued to the investors.

 ADVANTAGES OF MUTUAL FUND

 Portfolio Diversification

 Professional management

 Reduction / Diversification of Risk

 Liquidity

 Flexibility & Convenience

 Reduction in Transaction cost

 Safety of regulated environment

 Choice of schemes

 Transparency

DISADVANTAGE OF MUTUAL FUND

 No control over Cost in the Hands of an Investor


 No tailor-made Portfolios

 Managing a Portfolio Funds

 Difficulty in selecting a Suitable Fund Scheme
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

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. Though the

growth was slow, it accelerated from the year 1987 when non-UTI players entered the

Industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement, both

qualities wise as well as quantity wise. Before, the monopoly of the market had seen an

ending phase; the Assets Under Management (AUM) was Rs67 billion. The private

sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till

April 2004; it reached the height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutual

fund industry can be broadly put into four phases according to the development of the

sector. Each phase is briefly described as under.

First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament 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)

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. As at the end of January 2003, there were 33

mutual funds with total assets of Rs. 1,21,805 crores.

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 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. consolidation and growth. As at

the end of September 2004, there were 29 funds, which manage assets of Rs.153108 crores

under 421 schemes.

CATEGORIES OF MUTUAL
FUNDS
 Mutual funds can be classified as follow:

Based on their structure:

 Open-ended funds: Investors can buy and sell the units from the fund, at any point

of time.

 Close-ended funds: These funds raise money from investors only once. Therefore,

after the offer period, fresh investments can not be made into the fund. If the fund is

listed on stocks, exchange the units can be traded like stocks (E.g., Morgan Stanley

Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided

liquidity window on a periodic basis such as monthly or weekly. Redemption of units

can be made at specified intervals. Therefore, such funds have relatively low liquidity.

Based on their investment objective:

Equity funds: These funds invest in equities and equity related instruments. With

fluctuating share prices, such funds show volatile performance, even losses. However,

short-term fluctuations in the market, generally smoothen out in the long term, thereby

offering higher returns at relatively lower volatility. At the same time, such funds can

yield high capital appreciation as, historically, equities have outperformed all asset

classes in the long term. Hence, investment in equity funds should be considered for at

least 3-5 years. It can be further classified as:

 i) Index funds- In this case, a key stock market index, like BSE Sensex or Nifty is

tracked. Their portfolio mirrors the benchmark index both regarding composition and

individual stock weightings.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading

across different sectors and stocks.

iii|) Dividend yield funds- it is similar to the diversified equity funds except that they

invest in companies offering high dividend yields.

iv) Thematic funds- Invest 100% of the assets in sectors which are related to

some theme.

e.g. -An infrastructure fund invests in power, construction cements sectors, etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking

industry fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides a tax benefit to the investors.

Balanced fund: Their investment portfolio includes both debt and equity. As a result, on
the risk-return ladder, they fall between equity and debt funds. Balanced funds are the typical

mutual fund's vehicle for investors who prefer spreading their risk across various instruments.

Following are balanced funds classes:

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

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

Debt fund: They invest only in debt instruments, and are a good option for investors

averse to the idea of taking the risk associated with equities. Therefore, they invest

exclusively in fixed-income instruments like bonds, debentures, Government of India

securities; and money market instruments such as certificates of deposit (CD),

commercial paper (CP) and call money.

i) Liquid funds- These funds invest 100% in money market instruments, a significant

portion being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and

T-bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt

instruments which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to

mispricing between the cash market and derivatives market. Funds are allocated to

equities, derivatives and money markets. A Higher proportion (around 75%) is put in

money markets, in the absence of arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government

securities.
vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in

long-term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an

exposure of 10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with

that of the fund.

NET ASSET VALUE (NAV):

Since each owner is a part owner of a mutual fund, it is necessary to establish the value of

his part. In other words, each share or unit that an investor holds needs to be assigned a

value. Since the units held by investor evidence the ownership of the fund’s assets, the value

of the total assets of the fund when divided by the total number of units issued by the mutual

fund gives us the value of one unit. This is called the Net Asset Value (NAV) of one unit or

one share. The value of an investor’s part ownership is thus determined by the NAV of the

number of units held.

Calculation of NAV: Let us see an example. If the value of a fund’s assets stands at Rs 100

and it has 10 investors who have bought 10 units each, the total numbers of units issued are

100, and the value of one unit is Rs. 10.00 (1000/100). If a single investor, in fact, owns 3

units, the value of his ownership of the fund will be Rs. 30.00(1000/100*3). Note that the

value of the fund’s investments will keep fluctuating with the market price movements,

causing the Net Asset Value also to fluctuate. For example, if the value of our fund’s asset

increased from Rs. 1000 to 1200, the value of our investors holding of 3 units will now be

(1200/100*3) Rs. 36. The investment value can go up or down, depending on the markets

value of the fund’s assets.

 Company Profile

HDFC Mutual Fund

HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act,
1956, on December 10, 1999, and was approved to act as an Asset Management Company for
the HDFC Mutual Fund by Securities and Exchange Board of India (SEBI) vide its letter dated July
3, 2000.
The registered office of the AMC is situated at “HDFC House,” 2nd Floor, H. T. Parekh Marg, 165-
166, Backbay Reclamation, Churchgate, Mumbai - 400 020. The Company Identification
Number(CIN) is U65991MH1999PLC123027. .
PRODUCT LABELLING
Hdfc Mutual Fund house provides the following main funds:-

 HDFC Growth fund open-ended scheme

 HDFC Equity open-ended scheme
 HDFC Capital Builder Fund open-ended scheme
 HDFC TOP 200 open-ended scheme
 HDFC Core and Satellite open-ended scheme
 HDFC Premier multi-cap fund open-ended scheme
 HDFC Large Cap Fund open-ended scheme
 HDFC Index Fund – Nifty Plan Open-ended Index Linked
 HDFC Index Fund – SENSEX Plan Open-ended Index Linked Scheme
 HDFC Index Fund – SENSEX Plus Plan Open-ended Index Linked Scheme
 HFDC Long term advantage fund
 HDFC Tax saving fund
 HDFC Balanced Fund
 HDFC Prudence Fund
 HDFC Dynamic PE Ratio Fund of Funds
 HDFC Mid-cap Opportunity Fund
 HDFC Small & Mid cap fund
 HDFC Equity Saving Plan
 HDFC Arbitrage Fund
 HDFC Infrastructure Fund
ACHIEVEMENTS OF HDFC MUTUAL FUND

 Won Star Fund House of the Year in IRCA Mutual Funds Awards 2011
 Won Best Equity fund house in Morning Star India Awards 2011
 Won the Debt Mutual Fund House of the Year in CRISIL Mutual Funds Awards 2011
 Won the Equity Mutual Fund House of the Year in CRISIL Mutual Funds Awards 2011
 Won the Mutual Fund House of the Year in CRISIL Mutual Funds Awards 2011

TOP HDFC MUTUAL FUNDS IN INDIA

1. HDFC PRUDENCE FUND (IN BALANCED SECTION)

2. HDFC MONTHLY INCOME PLAN - LONG TERM PLAN (DEBT SECTION)

 3. HDFC RETIREMENT SAVING FUND – EQUITY PLAN (RETIREMENT CATEGORY LOW RISK)

4. HDFC DYNAMIC PE FUND OF FUNDS (FUND OF FUNDS CATEGORY)

ASSET UNDER MANAGEMENT (QUARTER SEPT 2016-DEC 2016)

 COMPANY PROFILE
UTI MUTUAL FUNDS

UTI Mutual Fund is promoted by the four of the largest Public Sector Financial Institutions
as sponsors, viz., State Bank of India, Life Insurance Corporation of India, Bank of Baroda
and Punjab National Bank with each of them presently holding an 18.5% stake in the paid up
capital of UTI AMC. T Rowe Price Group Inc (TRP Group) through its wholly owned
subsidiary T Rowe Price International Ltd. (TRP) has acquired a 26% stake in UTI Asset
Management Company Limited (UTI AMC).

VISION

To be the most preferred Mutual Fund

MISSION

To make UTI Mutual Fund:

 The most trusted brand that is admired by all stakeholders
 The largest and most efficient wealth manager with global presence
 The best-in-class customer service provider
 The most preferred employer
 The most innovative and best wealth creator
 A socially responsible organization known for best corporate governance
PRODUCT LABELLING
UTI mutual fund AMC offers the following funds

1. EQUITY

2. BALANCED

3. ETF
 4. DEBT

UTI AMC TOP PERFORMING FUNDS

1. UTI BALANCED FUND

2. UTI DUAL ADVANTAGE FTF SERIES II-III
UTI DUAL ADVANTAGE FTF SERIES II-IV
UTI DUAL ADVANTAGE FTF SERIES II-I

3. UTI GILD ADVANTAGE FUND- LONG TERM

 4. UTI CAPITAL PROTECTION ORIENTED SCHEME

5. UTI-CCP ADVANTAGE FUND

UTI RETIREMENT BENEFIT PENSION FUND

ASSET UNDER MANAGEMENT (SEPT 2016- DEC 2016)

ACHIEVEMENTS OF UTI MUTAL FUND AMC

 Won Star Fund House of the Year In ICRA mutual fund awards 2012
 Winner of customer & brand loyalty in 2012
 Won best large cap Equity Fund at Morningstar India Fund Awards 2013
 UTI Short Term Income Fund winner of Business World's survey of the Best
Performing Mutual Funds in the Debt: Short Term category
 COMPARISON OF FUNDS

Funds selected for comparison

1. HDFC Prudence Fund

2. HDFC monthly installment plan – long term plan
3. HDFC retirement saving fund – equity plan
4. UTI dual advantage FTF Series II – III
5. UTI Balanced Fund

Comparison on the basis of Net Annual Value (NAV)

INTERPRETATION

Hdfc retirement saving fund is the best performing fund of the lot as on 14 th March 2017 with
a NAV of 134.04. It's if followed by HDFC prudence fund and UTI balanced fund with
NAVs of 130.74 and 125.68 respectively. The worst performing funds are an UTI dual
advantage and hdfc mip with NAVs of 116.86 and 114.87 respectively.
Comparison on the basis of fact sheet

Interpretation
 HDFC Prudence Fund, Hdfc retirement fund, and UTI Balanced are more equity oriented
while Hdfc MIP and UTI Dual advantage are more debt oriented

 By top 5 sectors holding UTI dual advantage is the least diverse followed by HDFC
retirement fund. The other three funds are relatively diverse

 All the funds have significant holding in the financial service sector

 Only Hdfc prudence funds invests IT sector, and only UTI dual advantage invest in other
mutual funds

 UTI funds have the highest PE ratio. A high portfolio PE would indicate that the scheme
mostly holds stocks that are quoting a valuation premium. This indicates a preference for
growth-oriented businesses

 HDFC funds have relatively less PE ratio. If the PE of the mutual fund is on the lower side, it
signifies a value-conscious approach

 The expense ratio of Hdfc prudence and Uti balanced fund are relatively higher than the other
funds
 LITERATURE REVIEW

1. Name of research paper = A study on investors’ attitude towards mutual funds as

an investment option

Author = Dr. Binod Kumar Singh

ISSN 2249-5908
Publishing year = March 2012

Abstract In this paper, the structure of the mutual fund, operations of the mutual fund,
the comparison between investment in the mutual fund and bank and calculation of
NAV, etc. have been considered. In this paper, the impacts of various demographic
factors on investors’ attitude towards mutual fund have been studied. For measuring
various phenomena and analyzing the collected data effectively and efficiently for
drawing sound conclusions, Chi-square test has been used, and for analyzing the
various factors responsible for investment in mutual funds, ranking was done on the
basis of weighted scores and scoring was also done on the basis of scale

2. Name of research paper = Comparative study of mutual funds of select Indian

companies

Author = Mr. Sunil M. Adhav, Dr. Pratap M.Chauhan

ISSN 2394-1537
Publishing year = February 2015

Abstract India’s mutual fund market has witnessed phenomenal growth over the last
decade. The consistency in the performance of mutual funds has been a major factor
that has attracted many investors. The present research is an attempt to study focus on
mutual fund schemes of selected Indian companies comprising Equity, Debt and
Hybrid Schemes. The total of 390 schemes comprising of 178 equity mutual funds, 138
debt schemes and 74 hybrid schemes are selected for the study. The performance of
selected Indian companies’ mutual fund is analyzed with the help of Return, risk
(standard Deviation), and Sharpe ratio
3. Name of research paper = A study of mutual funds in India

Author = Ms. Shalini Goyal, Ms. Dauly Bansal

ISSN 2229-5518
Year of publishing = May 2013

Abstract This paper focus on the entire journey of mutual fund industry in India. Its
origin, its fall and rise throughout all these years and tried to predict what the future
may hold for the Mutual Fund Investors in the long run. A mutual fund also called an
investment company is an investment vehicle which pools the money of many
investors. The fund's manager uses the money collected to purchase securities such as
stocks and bonds. The securities purchased are referred to as the fund's portfolio.
Restrictions on competing products may have acted as a catalyst for the development of
money market and (short-term) bond funds. This study was conducted to analyze and
compare the performance of different types of mutual funds in India and concluded that
equity funds outperform income funds. This study further finds that equity fund
managers possess significant market timing ability and institutions funds managers can
time their investments, but brokers operated funds did not show market timing ability.
Further, it has been found empirically that fund managers can time their investments
with the conditions in the market and possesses significant timing ability

4. Name of research paper = Investor’s preferences towards Mutual Fund and Future
Investments

Author = Y Prabhavathi, N T Krishna Kishore

ISSN 2250-3153
Year of publishing = November 2013

Abstract- The advent of Mutual Funds changed the way the world invested their
money. The start of Mutual Funds gave an opportunity to the common man to hope of
high returns from their investments when compared to other traditional sources of
investment. The main focus of the study is to understand the attitude, awareness, and
preferences of mutual fund investors. Most of the respondents preferred systematic
investment plans and got their source of information primarily from banks and financial
advisors. Investors preferred mutual funds mainly for professional fund management
and better returns and assessed funds primarily through Net Asset Values and past
performance.
 RESEARCH METHODOLOGY

1. Research Design

a. Problem defining: - In a competitive market various mutual funds are working in the
Indian market. It is necessary to know mutual fund as the performance of the mutual
fund decides the future of Mutual Fund Company. In my study, I have compared
returns of 5 years of the two mutual funds that are HDFC Mutual funds & UTI Mutual
funds.

b. Types of Research: - This research is qualitative and analytical in nature. Qualitative

research talks about the quality of the research work & analytical research are
concerned with determining the validity of hypothesis based on analysis of facts
collected.

c. Data Collection Design:-

1. Sources of Data

a. Primary Data: - Primary data is used to a minimum extent due to irrelevance and
inadequacy of data so obtained for efficacy in comparative analysis of mutual
funds

b. Secondary Data: - I have collected secondary data from mutual funds books,
various research papers, and various mutual fund websites. Economic times
wealth was also used for selection of best performing mutual funds for the
comparison

2. Data Interpretation: - Data Interpretation is the way in which we analyze the whole
collected data & try to give it in simple words that are understandable and
presentable
 Conclusion

Mutual Fund Industry now represents perhaps most appropriate opportunity for most
Investors. The financial market is most sophisticated and complex. Investors need to be
required knowledge to invest in the mutual fund industry. Mutual fund industry also gives
good returns if the markets are high and you can also suffer losses if the market does not do
well or while investing fund manager makes some mistakes during the investment of Mutual
Funds. Mutual Fund Returns are compared on the basis of performance of the stock market.
If the stock market does well then the fund in which you have invested will also do well. As
the markets are diversified, the loss is minimal. In my above research, I had compared UTI
mutual fund & HDFC Mutual Fund. I had compared five years returns which Both the
Mutual Funds have given good returns after a specified period. Hdfc has better performing
fund that suits the need of different users and provides a comparative better return. Hence I
would recommend Hdfc funds over UTI funds
 BIBLIOGRAPHY

Research paper
 A study on investors’ attitude towards mutual funds as an investment option
 Comparative study of mutual funds of select Indian companies
 A study of mutual funds in India
 Investor’s preferences towards Mutual Fund and Future Investments

Websites
 http://economictimes.indiatimes.com
 www.mutualfundindia.com
 www.google.co.in
 Ijser.org
 Ijstm.com
 Ijsrp.org
 www.hdfcfund.com
 www.utimf.com
 https://www.amfiindia.com/
 learn.dspblackrock.com

Newspaper
 Economic Times Wealth