Beruflich Dokumente
Kultur Dokumente
SUBMITTED BY
(Makwana Rajnikant M.)
MBA Sem-III
Guided by
( Mr.Pragnesh Patel)
ACADEMIC YEAR
2005-2007
SUBMITTED TO
JAYSUKHLAL VADHAR INSTUTUTE OF MANAGEMENT STUDIES(JVIMS)
`BIPIN T. VADHAR COLLEGE OF MANAGEMENT
JAMNAGAR
AFFILIATED TO
SAURASHTRA UNIVERSITY
RAJKOT
Guided by
ACADEMIC YEAR
2005-2007
SUBMITTED TO
JAYSUKHLA VADHAR INSTUTUTE OF MANAGEMENT STUDIES(JVIMS)
BIPIN T. VADHAR COLLEGE OF MANAGEMENT
JAMNAGAR
AFFILIATED TO
SAURASHTRA UNIVERSITY
RAJKOT
CERTIFICATE
The student has shown immense interest in the subject and the study was
carried out with total devotion.
________________
___________________
(Mr. Pragnesh Patel)
Mr.Vijay H. Vyas
(Dy. Director)
During his/her tenure of two months project at our organization he/she was
found to be sincere, enthusiastic, hard working, and very much dedicated to
his/her work.
I also declare that this project report is my own preparation and not copied
from anywhere else.
(Signature)
Makwana Rajnikant M.
Roll No : 33
I would also like to thank HDFC bank Staff for their wonderful support &
inspirable guiding.
I also would like to thank Mr. John Mathew, Director (i/c) ,Mrs. Meeta Vora,
Faculty for Human Resource, Mrs., Niharika Bajeja , Faculty - Marketing &
Economics , Miss Rupal Rupani , Faculty - Marketing , Mr. Dharmesh
Raval , Placement Officer & Faculty - Accouting & Finance.
Last but not the least I am indebted to my PARENTS who provided me their
time, support and inspiration needed to prepare this report.
Date: -
Place: -
Signature
Rajnikant M. Makwana
CONTENTS
1 Executive Summary
2 Introduction
(a) Company Details
(b) Industry Details
(c) Competitors Details
(d) Regulatory Environment Details
3 Organizational Study
(a) Marketing department study
(b) Operation department study
(c) Financial department study
(d) Human resource department study
4 Bibliography
HDFC Asset Management Company Limited
A Joint Venture With Standard Life Investment
Executive Summary
I had also done project work during my training. The title of the project is –
_____________________________________________________
Both primary and secondary source of data were used to collect the data.
Questionnaire was the main tool to collect primary source of data directly from
customers. Secondary source of data was collected from magazines like
HDFC Mutual fund review, Fact Sheets of various AMC’s, and websites.
More details about the project is given in the later part of the report.
INTRODUCTION
The Indian financial market is one of the fastest growing emerging markets of
the world, thanks to the new economic policy - liberalization, deregulation and
measures of restructuring - which has dismantled entry barriers in the
financial markets, allowed the entry of new players and created an
environment for efficient allocation of resources. The major investors in the
markets are the Individual Investors, Corporate Sectors, Charitable Trusts,
etc.
The individual investors are now aware about of the other sources of the
investment avenues rather than the traditional investment avenue. They are
aware about the modern investment avenues.
One of the important investment avenues in the financial market is the ‘Mutual
Fund’. Through out the world, Mutual Funds have played a significant role as
far as an investment is concerned. Mutual Funds play a pivotal role in
transforming savings into investments and thereby improving financial health
of a country. One way to measure this role is to analyze performance of
mutual fund schemes. Also understanding of mutual fund structure and
advantages etc. is very important. A Mutual Fund is the ideal instrument
vehicle for today’s complex and modern financial scenario. Mutual funds offer
many benefits to the small investors such as Diversification, liquidity, low
transaction cost, low risk, transparency, more options and more schemes,
professional management, flexibility, convenience to switch and many more.
Other than Mutual Funds, Bank Deposits, Post Office Schemes, RBI Relief
Bond, Public Provident Fund, Unit Trust of India, Life Insurance, and Equity
are the investment avenues where generally investors invest their savings.
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 SEBI vide its
letter dated June 30, 2000.
The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T.
Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020.
As per the terms of the Investment Management Agreement, the AMC will
conduct the operations of the Mutual Fund and manage assets of the
schemes, including the schemes launched from time to time.
Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund,
following a review of its overall strategy, had decided to divest its Asset
Management business in India. The AMC had entered into an agreement with
ZIC to acquire the said business, subject to necessary regulatory approvals.
2005
Asiamoney Best Domestic Commercial Bank
Awards
Asiamoney Best Cash Management Bank - India .
Awards
The Asian Banker Retail Banking Risk Management Award in India for
Excellence 2004
Hong Kong-based Best Bank – India
Finance Asia
magazine
The Asian Banker Retail Banking Risk Management Award for 2004
Excellence
Hong Kong-based "Best Bank in India"
Finance Asia
magazine
Asiamoney Best Domestic Commercial Bank Best Cash
Awards Management Bank - India.
Economic Times "Company of the Year" Award for Corporate
Awards Excellence 2004-05.
Table : 1 Awards Achieved By HDFC BANK As Per the year
2005.
MAN WITH A MISSION
If ever there was a man with a mission it was Hasmukhbhai Parekh, Founder
and Chairman-Emeritus,of HDFC Group who left this earthly abode on
November 18, 1994. Born in a traditional banking family in Surat, Gujarat, Mr.
Parekh started his financial career at Harkisandass Lukhmidass – a leading
stock broking firm. The firm closed down in the late seventies, but, long before
that, he went on to become a towering figure on the Indian financial scene.
In 1956 he began his lifelong financial affair with the economic world, as
General
Manager of the newly-formed Industrial Credit and Investment Corporation of
India (ICICI). He rose to become Chairman and continued so till his retirement
in 1972.
At the ripe age of 60, Hasmukhbhai started his second dynamic life, even
more illustrious than his first. His vision for mortgage finance for housing
gave birth to the Housing Development Finance Corporation – it was a
trend-setter for housing finance in the whole Asian continent.
He was also a writer in his own right. There are over 200 published articles by
him, full of incisive comments on finance and economics.
In 1992, the Government of India honoured him with the Padma Bhushan
Award. The London School of Economics & Political Science conferred on
him an Honorary Fellowship.
He was one of the Founder Members of the Centre for Advancement of
Philanthropy, and its Chairman till 1993.
He took active interest in the Bombay Community Public Trust, designed
specifically to serve the needs of the city’s underprivileged citizens.
When Mr. Deepak Parekh took over as Chairman from Hasmukhbhai, he said:
“Taking over from H.T. Parekh is a formidable task; his vision… brought about
not only an institution,
but an entire concept which has proved itself to be of lasting importance.”
Background
HDFC was incorporated in 1977 with the primary objective of meeting a social
need – that of promoting home ownership by providing long-term finance to
households for their housing needs. HDFC was promoted with an initial share
capital of Rs. 100 million.
Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the
country through the provision of housing finance in a systematic and
professional manner, and to promote home ownership. Another objective is to
increase the flow of resources to the housing sector by integrating the housing
finance sector with the overall domestic financial markets...
Organizational Goals
HDFC’s main goals are to
a) Develop close relationships with individual households,
b) Maintain its position as the premier housing finance institution in the
country,
c) Transform ideas into viable and creative solutions,
d) Provide consistently high returns to shareholders, and
e) To grow through diversification by leveraging off the existing client
base.
Organizational Culture & Values
HDFC group have an open and informal culture. HDFC value integrity,
commitment, teamwork and excellence in customer service. HDFC adopt a
policy of "Learning By Doing" which encourages decision making as well as
learning from doing.
In HDFC they continue to grow rapidly in spite of the competitive market
scenario, young professionals opting to make a career with HDFC, today will
find more challenging and exciting opportunities to contribute and grow with
HDFC.
Board of Directors
Mr. D S Parekh - Chairman Mr. D N Ghosh
Mr. Keshub Mahindra - Vice Chairman Dr. S A Dave
Ms. Renu S. Karnad - Executive Mr. S Venkitaramanan
Director
Mr. K M Mistry - Managing Director Dr. Ram S Tarneja
Mr. Shirish B Patel Mr. N M Munjee
Mr. B S Mehta Mr. D M Satwalekar
Mr. D M Sukthankar
Table : 2 Top Authorities Of HDFC.
HDFC has a staff strength of 1029, which includes professionals from the
fields of finance, law, accountancy, engineering and marketing.
HDFC Bank
Profile
The Housing Development Finance Corporation Limited (HDFC) was amongst
the first to receive an 'in principle' approval from the Reserve Bank of India
(RBI) to set up a bank in the private sector, as part of the RBI's liberalisation
of the Indian Banking Industry in 1994. The bank was incorporated in August
1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai,
India. HDFC Bank commenced operations as a Scheduled Commercial Bank
in January 1995.
Business Focus
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to
build sound customer franchises across distinct businesses so as to be the
preferred provider of banking services for target retail and wholesale customer
segments, and to achieve healthy growth in profitability, consistent with the
bank's risk appetite. The bank is committed to maintain the highest level of
ethical standards, professional integrity, corporate governance and regulatory
compliance. HDFC Bank's business philosophy is based on four core values -
Operational Excellence, Customer Focus, Product Leadership and People.
Business
HDFC Bank offers a wide range of commercial and transactional banking
services and treasury products to wholesale and retail customers.
The Standard Life Assurance Company was established in 1825 and has
considerable experience in global financial markets. In 1998, Standard Life
Investments Limited became the dedicated investment management company
of the Standard Life Group and is owned 100% by The Standard Life
Assurance Company. With global assets under management of approximately
US$186.45 billion as at March 31, 2005, Standard Life Investments Limited is
one of the world's major investment companies and is responsible for
investing money on behalf of five million retail and institutional clients
worldwide. With its headquarters in Edinburgh, Standard Life Investments
Limited has an extensive and developing global presence with operations in
the United Kingdom, Ireland, Canada, USA, China, Korea and Hong Kong. In
order to meet the different needs and risk profiles of its clients, Standard Life
Investments Limited manages a diverse portfolio covering all of the major
markets world-wide, which includes a range of private and public equities,
government and company bonds, property investments and various derivative
instruments. The company's current holdings in UK equities account for
approximately 2% of the market capitalization of the London Stock Exchange.
Respect Yourself
HDFC Standard Life Insurance Company Ltd. is one of India’s leading private
life insurance companies, which offers a range of individual and group
insurance solutions. It is a joint venture between Housing Development
Finance Corporation Limited (HDFC Ltd.), India’s leading housing finance
institution and The Standard Life Assurance Company, a leading provider of
financial services from the United Kingdom. Both the promoters are well
known for their ethical dealings and financial strength and are thus committed
to being a long-term player in the life insurance industry – all important factors
to consider when choosing your insurer.
Vision
'The most successful and admired life insurance company, which means that
we are the most trusted company, the easiest to deal with, offer the best
value for money, and set the standards in the industry'.
Values
Values that we observe while we work: Integrity, InnovationCustomer centric,
People Care “One for all and all for one”, Team work, Joy and Simplicity
Residence
The pages of this site are prepared in the United Kingdom for the information
of residents in countries in which Standard Life Investments Group products
may be sold. The information on our site does not constitute an offer or
solicitation to sell units or shares in any of the funds referred to on this site, by
anyone in any jurisdiction in which such offer, solicitation or distribution would
be unlawful or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
Company details and regulation
While Standard Life Investments Limited has taken all reasonable care to
ensure that the information contained within the pages of this site is accurate,
current, complete, fit for its intended purpose and compliant with the relevant
United Kingdom legislation and regulations as at the date of issue, errors or
omissions may occur due to circumstances which are beyond our control.
If you are in any doubt as to the accuracy and currency of any information
contained within the pages of this site, or if you require any further
information, you may wish to contact us directly or take independent financial
advice.
Standard Life Investments Limited accepts no responsibility for information
contained in any other sites which can be accessed by hypertext link from
these pages or for these sites not being available at all times. Please note that
when you click on any external site hypertext link you will leave the Standard
Life Investments site.
Standard Life Investments Limited reserves the right to suspend or withdraw
access to the pages of this site without notice at any time and accepts no
responsibility for these pages not being available at all times.
Please remember that past performance is not necessarily a guide to future
performance. The value of units and shares and the income from them can go
down as well as up and investors may not get back the amount originally
invested. Exchange rate changes may cause the value of overseas
investments to rise or fall. For further details on any of the funds or products
mentioned, please read the relevant offering document or prospectus.
You may invest in a stocks and shares ISA if you are 18 or over, resident and
ordinarily resident in the UK or qualifying for ISA tax benefits as a Crown
employee serving overseas (or the spouse of such a person). The tax reliefs
on ISAs and PEPs may be altered in future and their value to you depends on
your own financial circumstances. The tax treatment of UK pension funds may
be subject to change in future.
The presence or absence of a CAT-standard cannot predict whether an ISA
will prove to be a good, bad or suitable investment. A CAT standard ISA has
not received Government or regulatory approval of any kind, nor is your
money or your investment return guaranteed by the Government or regulator
in any way. The adherence to a CAT standard is warranted by Standard Life
Savings Limited and does not carry certification by any other body.
By accessing these pages you shall be deemed to have accepted and agreed
to be bound by the terms of this Important Legal Information page which shall
be governed by the Law of Scotland.
The prices, which are shown are for information purposes only. They are not
the prices at which the shares or investment products can be bought or sold.
Investment products involving accumulation units or shares have income
distributions automatically re-invested. Other investments have income
distributions paid to the investor and this will be reflected in the price
Institutional investors based outside of Europe, North America and Asia can
access some specialist investment services outlined below. If you are
interested in any of these products or services please contact us to ascertain
your eligibility.
Strength
Weakness
Opportunities
• Day by day increasing knowledge about Mutual Fund.
• Only instrument with proper corporate governance and
• Compare high risk with lower risk.
• Rural market is totally untapped.
Threat
• Presence of nationalized player like UTI and many more.
• Increase in competition and competitor.
In Summary…
HDFC has always believed in the enduring business advantage of “doing the
right thing” - having a well-defined purpose, adhering to our core values and
giving back to the society - thereby gaining in terms of not only customer
loyalty and employee satisfaction but also profitability.
In this context, HDFC was among the first Indian corporates to join the Global
Compact - an international initiative that brings companies together with UN
agencies, labour and civil society to support universal environmental and
social principles. HDFC remains wholly committed to the Global Compact and
strives to further its cause by upholding its ten principles in the areas of
human rights, labour, the environment and anti-corruption.
As our Chairman, Mr. Deepak Parekh quoted the following words of John
Wesley, the 18th century evangelist, while accepting The Economic Times
Corporate Citizen Award won by HDFC for the year 2003-04:
“Do all the good you can,
by all the means you can,
in all the ways you can,
in all the places you can,
at all the times you can,
to all the people you can,
as long as ever you can.”
Industry Detail
MUTUAL FUND SECTOR AND FINANCIAL MARKET OVERVIEW
Direct investors in the stock markets realized that the key to successful
investing in the capital markets lay in building a diversified portfolio, which in
turn required substantial capital. Besides, selecting securities with growth and
income potential from the capital market involved careful research and
monitoring of the market, which was not possible for all investors. Under
similar circumstances in other countries, mutual funds had emerged as
professional intermediaries. Besides providing the expertise in stock market
investing, these funds allow investing in small amounts and yet holding a
diversified portfolio to limit risk, while providing the potential for income and
growth that is associated with the debt and equity instruments. In India, Unit
Trust of India occupied this place as the only capital markets intermediary
from 1964 until late 1987, when the Government started allowing other
sponsors also to set up mutual funds. With some ups and downs, this new
class of intermediary institutions has emerged, in India as elsewhere, as a
good alternative to direct investing in capital markets.
Mutual Funds serve as a link between the saving public and the capital
markets, as they mobilize savings from investors and bring them to borrowers
in the capital markets. By the very nature of their activities, and by virtue of
being knowledgeable and informed investors, they influence the stock
markets and play an active role in promoting good corporate governance,
investor protection and the health of capital markets. Mutual funds have
imparted much needed liquidity into the financial system and challenged the
hitherto dominant role of banking and financial institutions in the capital
markets.
Invest in number
Of Stocks & Bonds
Profit / Loss From
Individual Investment
Mutual fund is a mechanism for pooling the resources by issuing units to the
investors and investing funds in securities in accordance with objectives as
disclosed
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. The history of mutual funds in India can be broadly divided into four
distinct phases.
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 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.
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. As at the end of September 2004, there were 29
funds, which manage assets of Rs.153108 crores under 421 schemes.
Sponsor
Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of
the net worth of the Investment Managed and meet the eligibility criteria
prescribed under the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996.The Sponsor is not responsible or liable for any loss or
shortfall resulting from the operation of the Schemes beyond the initial
contribution made by it towards setting up of the Mutual Fund.
Trust
The Mutual Fund is constituted as a trust in accordance with the provisions of
the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under
the Indian Registration Act, 1908.
Trustee
Trustee is usually a company (corporate body) or a Board of Trustees (body
of individuals). The main responsibility of the Trustee is to safeguard the
interest of the unit holders and inter alia ensure that the AMC functions in the
interest of investors and in accordance with the Securities and Exchange
Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust
Deed and the Offer Documents of the respective Schemes. At least 2/3rd
directors of the Trustee are independent directors who are not associated with
the Sponsor in any manner.
The AMC if so authorized by the Trust Deed appoints the Registrar and
Transfer Agent to the Mutual Fund. The Registrar processes the application
form, redemption requests and dispatches account statements to the unit
holders. The Registrar and Transfer agent also handles communications with
investors and updates investor records.
VISION
Vision
To be a dominant player in the Indian mutual fund
space, recognized for its high levels of ethical and
professional conduct and a commitment towards
enhancing investor interests.
Industry Details
The Indian economy is on the path of progress and the projection of GDP
growth rate in Budget-2006 is around 8.1%. The financial system has a strong
impact on GDP growth rate. The Indian financial system is divided into two
parts organized and unorganized.
Financial institutions being the important part of financial system in India help
to realize the opportunities for savings and real investment in the economy.
The FIs help in growth of economy, boosting the investment in various sectors
of economy and also the growth of GDP and per capita income.
The Investment Options
In India the investor has wide variety of investment options available to him.
Economic well being in the long run depends significantly on how wisely he
invests. Every investment options has two main aspects i.e. risk and return.
The investor has the choice of investment in capital markets of the country
and also in financial institution of the country like Banks and Insurance
companies. The various tools of investment available to investor are as
follows -:
The investor can invest in any of the above investment tool depending on his
investment objective and need. Generally in India the investor prefer to invest
in banks and in post office savings account. But in last few years the trend
have changed and investors are moving towards capital markets.
Investment Attributes
1) Risk
The rate of return from investments like equity shares, real estate, etc vary
rather widely. The risk of an investment refers to the variability of its rate of
return. Bank deposits, post office savings, investment in debt market are less
risky and have fixed return.
2) Rate of Return
The rate of return is an very important aspect of the investment tool. The rate
of return is high in equity markets and it is low in post office savings and bank
deposits. It means the more risky the instrument the more the return will be.
3) Tax Benefits
Some investments provide tax benefits, other does not. Tax benefits are of
three kinds: Initial tax benefit, Continuing tax benefit and Terminal tax benefit.
Initial tax benefit refers to the relief enjoyed at the time of making the
investment. Continuing tax benefit represents the tax shield associated with
the periodic returns from the investment e.g. Insurance, bank interest, etc.
Terminal tax benefit refers to relief from taxation when an investment is
realized or liquidated.
4) Liquidity
An investment is highly liquid if:
a) It can be transacted quickly
b) The transaction cost is low
c) The price change between two successive transactions is negligible
The liquidity of market may be judged in terms of its depth, breadth, and
resilience. Depth refers to the existence of buy as well as sell orders around
the current market price. Breadth implies the presence of such orders in
substantial volume. Resilience means that new orders emerge in response to
price changes. High marketability is desirable characteristics and low
marketability is an undesirable characteristic
5) Convenience
Convenience broadly refers to the ease with which the investment can be
made and looked after. Convenience can be judged by ready availability of
investment and easy monitoring of investment. The degree of convenience
associated with investments varies widely. On one hand there is deposit in
savings bank account that can be readily available and does not require
maintenance effort. On the other hand is purchase of real estate that may
involve a lot of procedural and legal hassles at the time of acquisition and a
great deal of maintenance effort subsequently.
Table 3 : AUM Of All Mutual Funds In India For The Month Of Mar – Apr.
Mutual Fund Name AUM Equity & Debt & Equity Debt
Balance MIP % %
ABN AMRO Mutual Fund 1580.36 464.589. 1115.92 29.39 70.61
Alliance Capital Mutual Fund 1431.46 589.48 841.98 41.18 58.82
Birla Sun Life Mutual Fund 10049.66 1668.77 8380.89 16.61 83.39
Canbank Mutual Fund 1565.19 224.35 1340.84 14.33 85.67
Chola Mutual Fund 1004.62 232.63 771.99 23.16 76.84
Deutsche Mutual Fund 2366.72 96.57 2270.15 4.08 95.92
DSP Merrill Lynch Mutual Fund 6472.80 1462.33 5010.47 22.59 77.41
Fidelity Mutual Fund 1628.06 1628.06 0.00 100.00 0.00
Franklin Templeton Mutual Fund 16704.74 6965.36 9739.38 41.70 58.30
HDFC Mutual Fund 15707.82 6126.04 9581.78 39.00 61.00
HSBC Mutual Fund 7250.63 1987.93 5262.70 27.42 72.58
ING Vysya Mutual Fund 2072.86 337.25 1735.62 16.27 83.73
JM Financial Mutual Fund 3780.83 85.52 3694.51 2.26 97.74
Kotak Mahindra Mutual Fund 6501.52 1065.12 5436.41 16.38 83.62
LIC Mutual Fund 2959.15 277.46 2681.69 9.38 90.62
PRINCIPAL Mutual Fund 6264.96 1682.48 4582.48 26.86 73.14
Prudential ICICI Mutual Fund 17095.89 2169.46 14926.44 12.69 87.31
Reliance Mutual Fund 9907.89 4226.40 5681.49 42.66 57.34
Sahara Mutual Fund 565.50 25.74 539.76 455 95.45
SBI Mutual Fund 7189.35 2311.54 4877.81 32.15 67.85
Standard Charted Mutual Fund 7636.86 0.00 7636.86 0.00 100.0
0
Sundaram Mutual Fund 2035.21 997.91 1037.31 49.03 50.97
Tata Mutual Fund 8713.95 2629.09 6084.86 30.17 69.83
Taurus Mutual Fund 170.76 157.53 13.23 92.25 7.75
UTI Mutual Fund 21975.57 8791.81 13183.77 40.01 59.99
Table 4 : % Changes in Equity & Debt as per the AUM Changes.
Competitors
Profile
Competitors Profile
Other than AMC operating in India some other competitors are there who are
looking for to increase their market share. There are as follows:
In the debt sector it always aims at the "risk adjusted returns" based on the
investors risk tolerance. The following four steps are worked upon while
investing:
• Manage the schemes on a "Portfolio basis".
• Active management of interest rate risk.
• Credit risk management by following the conservative approach.
• Continuous monitoring.
Partnership firms, corporates and even trusts & societies, duly
registered under the applicable laws, can invest in SBI Mutual
Funds.
Franklin Templeton
Investments.
Prudential ICICI Pvt.
19% Ltd.
HDFC MF
25%
AMFI
This Association conducts AMFI exam. Initially the Association gave rights of
conducting the exam to Bombay Stock Exchange (BSE) and National Stock
Exchange (NSE). Then rights were also give the UTI (Unit Trust of India).
Corporate distributors are also given rights to conduct exam. It is compulsory
for a person to clear AMFI exam in order to become advisor in Mutual Fund.
SEBI
Securities and Exchange Board of India (SEBI), the capital market regulator
has clearly defined rules which govern mutual funds. These rules relate to the
formation, administration, and management of mutual funds and also
prescribe disclosure and accounting requirements. Such a high level of
regulation seeks to protect the interest of investors.
All Mutual Fund schemes are registered with SEBI and they follow the rules
and regulation as prescribed by SEBI. It registers every mutual fund scheme
in order to protect the interest of investors.
RBI
Reserve Bank of India was the regulator of Mutual Fund before SEBI. It
regulated mutual fund initially and there were only few schemes in the market.
But now with coming of SEBI, it has now become the main regulator of the
Mutual Fund. RBI now only governs the Bank Sponsored Mutual Fund.
Every asset management company for each scheme shall keep and
maintain proper books of accounts, records and documents, for each
scheme so as to explain its transactions and to disclose at any point of time
the financial position of each scheme and in particular give a true and fair
view of the state of affairs of the fund and intimate to the Board the place
where such books of accounts, records and documents are maintained.
The financial year for all the schemes shall end as of March 31 of each
year. Every mutual fund or the asset management company shall prepare in
respect of each financial year an annual report and annual statement of
accounts of the schemes and the fund as specified in Eleventh Schedule.
Every mutual fund shall have the annual statement of accounts audited
by an auditor who is not in any way associated with the auditor of the asset
management company.
The offer document and advertisement materials shall not be misleading
or contain any statement or opinion, which are incorrect or false.
The price at which the units may be subscribed or sold and the price at
which such units may at any time be repurchased by the mutual fund shall
be made available to the investors
SEBI Regulations Act, 1996, guides the formations and operations of Mutual
Funds. A Mutual Fund comprises of four separate entities i.e Sponsor, Mutual
Fund Trust, AMC and Custodian.
Sponsor
Sponsor can be any person, acting alone or in a combination with another
corporate body, establishes the Mutual Funds and get it registered with SEBI.
Board of Trustees
Board of Trustees manages Mutual Fund and the sponsor executed the trust
deeds. Mutual Funds raise money through sale of units under one or more
schemes for investing in securities. As per SEBI Regulations, 1996 half of
trustees should be independent persons and they should not be employees of
AMC. As a trustee of Mutual Fund, he cannot be appointed as a trustee of
another Mutual Fund, until and unless he is an independent person or has
permission from Mutual Fund where his is a trustee. Trustee have right to
appoint custodian and supervise their activities. For e.g. In Reliance Capital
Mutual Fund the Trustee is Reliance Capital Trustee Co. Limited.
Asset Management Company
AMC is appointed by the trustees to float the schemes and manage the funds
raised by selling units under the scheme. They are to act as per SEBI
guidelines like they should be registered under the SEBI. Also the net worth of
the AMC should be in cash and all assets should be in the name of AMC. The
director of AMC should be a person of reputed high standing and at least
have five years experience in relevant field. AMC are required to disclose
scheme particulars and base of calculation of NAV.
Custodian
As per SEBI Regulations Mutual Funds shall have a custodian who is not any
way associated with the AMC. It carry outs the activity of safekeeping the
securities or participating, in any clearing system. The custodian should not
be associated with AMC or act as a sponsor or trustee of any Mutual Fund.
For e.g. In Reliance Capital Mutual Fund the Custodian is Deutsche Bank AG.
1) MARKETING DEPARTMENT
2) OPERATION DEPARTMENT
3) FINANCE DEPARTMENT
4) HUMAN RESOURCE DEPARTMENT
MARKETING DEPARTMENT
Marketing scenario
The last few years have seen an increased attention to mutual funds across
all genres of investors’ big or small, individuals or corporate. The growing
awareness of the advantages that mutual funds offer over other investments
avenues have been better communicated and more understood
A mutual fund is the ideal investment vehicle for today’s complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature
and information driven. Price changes in these assets are driven by global
events occurring in faraway places. A typical individual is unlikely to have the
knowledge, skills, inclination and time to keep track of events, understand
their implications and act speedily.
Market Segmentation
Target Market
HDFC Asset mangament company is a joint venture of HDFC BANK(50.10%)
and Standard Life Investment Limited(49.90%).The joint venture was formed
with the key objective of providing the Indian investor mutual fund products to
suit a variety of investment needs.
HDFCAsset Management Company, have variety of scheme both open ended
and close ended scheme. Both have different objective and different target
market. Equity Mutual Fund Scheme has target market of person who wants
to take high risk and also expect high return. Balanced scheme have target
market of person who wants to take moderate risk and expect average return
and Debt scheme have target market of person who wants to take less risk.
Close-ended scheme have target market of person who wants long-term
equity investment.
Customers’ profile
HDFC Asset Management Company, have variety scheme and each scheme
have different customer profile.
For Equity related scheme customer profile is young generation, for liquid
scheme customer profile is business man who wants to utilize their money in
effective manner for shorter period, in SIP (Systematic Investment Plan)
customer basically are serviced person who invest regularly and want to earn
more than average return. Thus, HDFC Asset Management Company, have
introduced variety of scheme to suit need of variety of customer.
Positioning strategy
“Positioning is the act of designing the company’s offering and image to
occupy a distinctive place in the target market’s mind.”
There are numerous benefits of investing in mutual funds and one of the key
reasons for its phenomenal success in the developed markets like US and UK
is the range of benefits they offer, which are unmatched by most other
investment avenues. The benefits have been broadly split into universal
benefits, applicable to all schemes and benefits applicable specifically to
open-ended schemes.
Affordability
Diversification
The nuclear weapon in your arsenal for your fight against Risk. It simply
means that you must spread your investment across different securities
(stocks, bonds, money market instruments, real estate, fixed deposits etc.)
and different sectors (auto, textile, information technology etc.). This kind of a
diversification may add to the stability of your returns, for example during one
period of time equities might under perform but bonds and money market
instruments might do well enough to offset the effect of a slump in the equity
markets. Similarly the information technology sector might be faring poorly but
the auto and textile sectors might do well and may protect your principal
investment as well as help you meet your return objectives.
Variety
Professional Management
Tax Benefits
Any income distributed after March 31, 2002 will be subject to tax in the
assessment of all Unit holders. However, as a measure of concession to Unit
holders of open-ended equity-oriented funds, income distributions for the year
ending March 31, 2003, will be taxed at a concessional rate of 10.5%.
In case of Individuals and Hindu Undivided Families a deduction upto Rs.
9,000 from the Total Income will be admissible in respect of income from
investments specified in Section 80L, including income from Units of the
Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-
Tax.
Regulations
Securities Exchange Board of India (“SEBI”), the mutual funds regulator has
clearly defined rules, which govern mutual funds. These rules relate to the
formation, administration and management of mutual funds and also prescribe
disclosure and accounting requirements. Such a high level of regulation seeks
to protect the interest of investors.
The funds are managed in huge volume and so the control on expenses
cannot be exercised, as there is lot of formalities and administrative expenses
attached. Though the limit of incurring expenses is predetermined but still it
cannot be kept in control.
There is no tailor made portfolio available to any individual. The products and
scheme that is designed by the fund managers is on their philosophy and is
floated in the market with a common goal. No individual can have their own
portfolio maintained separately from the other investors.
Delay in redemption:
The redemption of the funds though have liquidity in 24-hours to 3 days takes
formal application of redemption as well as needs time for redemption. This
becomes cumbersome for the investors.
Non-availability of loans:
Mutual funds are not accepted as security against loan. The investor can not
deposit the mutual funds against taking any kind of bank loans though they
may be his assets.
Risk
Market Risk
Sometimes prices and yields of all securities rise and fall. Broad outside
influences affecting the market in general lead to this. This is true, may it be
big corporations or smaller mid-sized companies. This is known as Market
Risk. A Systematic Investment Plan (“SIP”) that works on the concept of
Rupee Cost Averaging (“RCA”) might help mitigate this risk.
Credit Risk
The debt servicing ability (may it be interest payments or repayment of
principal) of a company through its cash flows determines the Credit Risk
faced by you. This credit risk is measured by independent rating agencies like
CRISIL who rate companies and their paper. A ‘AAA’ rating is considered the
safest whereas a ‘D’ rating is considered poor credit quality. A well-diversified
portfolio might help mitigate this risk.
Inflation Risk
Things you hear people talk about:
“Rs. 100 today is worth more than Rs. 100 tomorrow.”
“Remember the time when a bus ride costed 50 paise?”
“Mehangai Ka Jamana Hai.”
The root cause, Inflation. Inflation is the loss of purchasing power over time. A
lot of times people make conservative investment decisions to protect their
capital but end up with a sum of money that can buy less than what the
principal could at the time of the investment. This happens when inflation
grows faster than the return on your investment. A well-diversified portfolio
with some investment in equities.
Tax Benefit of Mutual Funds
Mutual fund enjoys the following tax benefits-:
Investment Objective
General Purpose
The investment objectives of general-purpose equity schemes do not restrict
them to invest in specific industries or sectors. They thus have a diversified
portfolio of companies across a large spectrum of industries. While they are
exposed to equity price risks, diversified general-purpose equity funds seek to
reduce the sector or stock specific risks through diversification. They mainly
have market risk exposure. HDFC Growth Fund is a general-purpose equity
scheme.
Sector Specific
These schemes restrict their investing to one or more pre-defined sectors,
e.g. technology sector. Since they depend upon the performance of select
sectors only, these schemes are inherently more risky than general-purpose
schemes. They are suited for informed investors who wish to take a view and
risk on the concerned sector.
Special Schemes
Index schemes
Income Schemes
These schemes invest in money markets, bonds and debentures of
corporates with medium and long-term maturities. These schemes primarily
target current income instead of capital appreciation. They therefore distribute
a substantial part of their distributable surplus to the investor by way of
dividend distribution. Such schemes usually declare quarterly dividends and
are suitable for conservative investors who have medium to long term
investment horizon and are looking for regular income through dividend or
steady capital appreciation. HDFC Income Fund, HDFC Short Term Plan and
HDFC Fixed Investment Plans are examples of bond schemes.
Gilt Funds
This scheme primarily invests in Government Debt. Hence the investor
usually does not have to worry about credit risk since Government Debt is
generally credit risk free. HDFC Gilt Fund is an example of such a scheme.
Hybrid Schemes
These schemes are commonly known as balanced schemes. These schemes
invest in both equities as well as debt. By investing in a mix of this nature,
balanced schemes seek to attain the objective of income and moderate
capital appreciation and are ideal for investors with a conservative, long-term
orientation. HDFC Balanced Fund and HDFC Children’s Gift Fund are
examples of hybrid schemes.
Constitution
Open-ended Schemes
The units offered by these schemes are available for sale and repurchase on
any business day at NAV based prices. Hence, the unit capital of the
schemes keeps changing each day. Such schemes thus offer very high
liquidity to investors and are becoming increasingly popular in India. Please
note that an open-ended fund is NOT obliged to keep selling/issuing new units
at all times, and may stop issuing further subscription to new investors. On the
other hand, an open-ended fund rarely denies to its investor the facility to
redeem existing units.
Interval Schemes
These schemes combine the features of open-ended and closed-ended
schemes. They may be traded on the stock exchange or may be open for sale
or redemption during pre-determined intervals at NAV based prices.
The investor profile is changing and they are now becoming more
mature and educated and also aware what’s happening in the markets.
Investor will invest in mutual fund if only they know where their money
is going to be invested and also the risk is low.
Every year more and more player are entering into mutual fund market.
Currently there are 38 player and more than 600 schemes in the
market. So the mutual fund market itself has become competitive.
Mutual Fund is a fast growing market and they are giving tough
competition to banks deposits and Insurance companies. So the
industry is expected to perform better and bring some new schemes in
the market.
The product offered by various AMC is almost same so the AMC are
forced to focus on services provided to the investors.
The AMC has to strengthen their marketing department as competition
has increased.
Direct dealing with investor rather through additional channel of brokers
will provide better advice and investment objective can be properly
communicated.
Product Portfolio
Investment Strategy
If you are a person who broadly falls into the Investment Growth category you
might be interested in looking at an Aggressive portfolio. On the other hand if
you are leaning towards an interest income with minimal risk investments you
might look at a Conservative asset allocation. Someone who wants a bit of
steady income as well as asset growth might go in for a moderate or a
balanced asset allocation.
AGGRESSIVE PORTFOLIO
MODERATE PORTFOLIO
CONSERVATIVE PORTFOLIO
Chart 4 : Chart On Aggressive, Conservative & Moderate Portfolio
Another way to ascertain the right asset allocation is by looking at your life
cycle. The basis of this theory lies in the simple maxim that younger people
with secure jobs will normally opt for higher returns and take higher risks
compared to older retired people. One must remember that these are only
indicative strategies and will probably have to be fine-tuned to meet your
individual needs.
Equity Funds
Balanced Funds
HDFC Children's Gift Fund Investment Plan
HDFC Children's Gift Fund Savings Plan
HDFC Balanced Fund
HDFC Prudence Fund
Debt Funds
Distribution channel
INDIVIDUAL AGENTS
Use of agents has been the most widely prevalent practice for
distribution of funds over the years. By definition an agent act on behalf of
principal in this case of mutual funds. An agent is essentially a broker
between the fund and the investor. In India we also have the unique system
where by a broker has a number of sub broker working under him. The vast
sub broker network ensures a large geographic coverage then otherwise.
DISTRIBUTION COMPANIES
DIRECT MARKETING
Direct marketing means that the mutual funds sell their own products
without any use of intermediateries. Usually, this take the form of the sales
officer and employees of the AMC who approach the investor and accept their
contribution directly. However in India, independent agents may really be
created as a direct marketing channel in a sense that they do not form a well
knit independent and organized a single entity and act more like fund
employees. Others channel like distribution companies or banks or even
stockbrokers are clearly distinct and independent intermediaries.
Pricing Policy
HDFC Asset Management Company is service Provider Company so
there is Entry Load and Exit Load for each scheme.
Promotional Tools
Innovative practices
Relationship Manager for all client base more than 5 lacs. Relationship
marketing is based on the premise that important accounts need focused and
continuous attention. Relationship marketing helps to judge which segments
and which specific customers will respond profitably to relationship
management.
Operations
Department
Location Details
HDFC AMC is located at Yagnik road which is in the heart of the city where
service is easily available for all customer and easy access compare with
other place that available in city. Location has major impact on success or
failure of operation. Advantages of this type of location are that service cost
and distribution cost is minimum comparison with other place.
The major investor service centers of HDFC MUTUAL FUND are as below.
Layout details
There is a plan of all the act of planning & optimum arrangement of planning
including flow of man & material and customer, operating equipment, storage
space, material handling equipments and all other supporting services along
with the design of best structure to contain all these facilities.
Planning and control
Maintenance
HDFC AMC is the service sector industry so all work is carried out with the
help of computer System. There is contract given to service provider and
other maintenance is done by staff itself.
Procurement
Store Management
HDFC AMC is the service sector industry so storage is only for files and fact
sheet and other document that published by AMC.
Financial
Department
Acquisition of Funds
&
Utilization of Funds
Table : 7 AUM Report of all HDFC Schemes At the End Of MAY - 2006
2364974.92 2358013.95
HDFC Mutual Fund 0 0
Human
Resource
Department
HUMAN RESOURCE DEPARTMENT
Manpower planning is needed with respect to persons who can work as sub-
broker for the companies. Companies focus on Advisors of Mutual Fund
product and ELSS schemes of HDFC AMC and focused on Insurance Advisor
and post office agent, Tax consultants and CAs for making sub-broker.
The upper level members like zonal managers, regional managers, branch
managers and senior executives are recruited by publishing recruitment
advertisement in leading national level newspaper. The qualified applicant are
then called for interview and selected.
The regional manager has authority to select lower level employee like peon,
marketing executives, financial accountant etc. by approval of zonal manager.
Step 1: Prospecting
Identify as many
prospective
candidates as
possible from multiple
sources.
Step 2:Attracting talent
Be prepared to talk
passionately about
the opportunities of
this career.
The successful candidates of the AMFI Exam are given the product training.
The primary purpose is to become quite conversant with the product that one
sells. In other words, product knowledge is very important for any advisor.
Product knowledge is not just about knowing the broad terms and conditions
of the various schemes of mutual fund. The advisors are explained about the
schemes, the terms related with it, the benefits it provides to investor. This
training is aimed at making the advisors fully equipped with the companies’
product information. This training is aimed at making the advisors experts in
selling the mutual fund products.
This gives the advisors a systematic framework, which they can follow so as
to attract the customers and be effective in their work. Later the agents are
trained on products, need analyses and how to deliver the message to the
market.
Performance Appraisal
PRIMARY OBJECTIVE:
Comparison of open-ended & close ended fund & find best out of
these.
SECONDARY OBJECTIVE:
Secondary data about Mutual Fund have been collected from the fact
sheets of various AMC. Information is also gathered from various
Mutual
Fund Reviews, books, magazines and websites.
SAMPLING PLAN
Collecting the required information from the right source is very
important. Sources from which the data are collected differ as per the
required of researcher.
Basically there are two types of data collection sources:
1) Sampling Unit:
The sampling unit primarily consisted of investors like
businessman, professionals, salaried employees and others. The
sample unit is taken from the Rajkot city of Saurashtra region.
I. Sample Size:
Though large sample give more reliable results than small
samples but increases the cost, time and non-sampling error.
Keeping in view these constraints 100 respondents were chosen.
Attempts have been made to see that samples are chosen from
different strata.
1) Observation Method
This is very first method is data collection. Also this method is
very simple to be performed. It includes both human means of
perception and recording, which might be termed manual, and
non-human means and mechanical. Personal observations,
which are been seen or hear as specified in study, are carried out
manually.
2) Survey Method
This is second best method used for data collection method. This
method includes the survey that being done on the sample that
are taken randomly from the huge population. It includes each
and every minute information that is to be collected and needed
for research undertaken. Interview method is a part of survey
method.
3) Questionnaire
This method is one of the important data collection methods
wherein the formally designed questions are asked to the sample
population.
In context of this project study
Monthly Income Plans (MIP) are suitable for conservative investors who along
with an exposure to debt do not mind a small exposure to equities. These
funds aim to provide consistency in returns by investing a major part of their
portfolio in debt market instruments with a small exposure to equities. A
typical MIP would have an exposure of 80%-85% to debt and money market
instruments and an exposure of 10%-15% to equities. Thus an MIP would be
suitable for conservative investors who along with protection of capital seek
some capital appreciation as MIPs have an exposure to equities.
There were lot of expectations from the mid-term credit and monetary policy in
terms of the Repo rate cut which serves as the benchmark short-term rate
and is on a higher side as compared to the global standards. RBI did not
initiate any rate cuts, which failed to gather any momentum in the debt
markets. However RBI has also signaled that rate cuts can be initiated outside
the purview of the policy, which would help to bring some cheer to the debt
markets going ahead. Any movement in the interest rates would have an
impact on the long-term papers more as compared to the short-term papers
and as the portfolio component of an MIP has a nil or some exposure to the
long term papers would not be impacted much by adverse movements in the
interest rates.
MIPs were not lucrative two years back when the equity markets were
on a downward spiral but now as we are witnessing a bull run in the equity
markets a MIPs would be an attractive option as compared to the income and
gilt funds due to their exposure to equities. For one-year period top performing
MIPs have given a return ranging between 8%-20% and for the six-month
period the return has been in the range of 6%-13%. Though MIPs have an
objective to provide regular income there is a caveat that they may not be
able to give dividends in case there is no distributable surplus.
Introduction:
HDFC MIP LT had a festive beginning in December 2003 when MIPs were
the flavour of the season. It started as the fourth largest fund with a handsome
corpus of nearly 650 crore. It did not disappoint its investors and returned 2.06
per cent in the first quarter of 2004 to comprehensively beat the 0.87 per cent
gain of an average peer. This saw its popularity soar, with the fund's corpus
rising to nearly Rs 1,550 crore within six months of the launch. Currently, it's
the second largest MIP managing around Rs 771 crore.
A high equity exposure led by mid- and small-cap stocks, active duration
management and exposure to lower rated papers have resulted into above
average volatility for the fund. Expenses are high as well.
FT (FRANKLIN TEMPLETON) India MIP:
The fund's reason for success is adroit management of both the equity and
debt portfolios. On the debt side, the fund has benefited immensely by playing
its maturity card aggressively-normally, it keeps average maturity more than
an average peer. During its early life, the fund managed to reap heavy profits
by taking longer interest calls. For instance, between January 2001 and
March 2004, when yields were sliding, its average maturity of debt holdings
on an average was 3.97 years. Now, the fund has adjusted its average
maturity by bringing it down to 2.4 years as on December 31, 2005. Still, that's
more than its average peers'.
On the equity side, the fund makes optimum use of its mandate to invest up to
20 per cent of the assets in equities. In the last two years, the fund has
cashed in on the equity markets rally by allocating an average 18.65 per cent
of its corpus to equities. A combination of high maturity and equity exposure
has, though, resulted into above average volatility for the fund. As a risk
control measure, the fund has always maintained a concentration of large-
caps. Within that, it has distributed and diversified its portfolio over 25-35
stocks across various sectors.
The fund has also done a good job in keeping the expenses under control.
The expense ratio, which used to remain 2 per cent till February last year, has
dropped to 1.89 per cent as on September 30, 2005.
SBI MIP
UTI MIP
The fund started off with an equity-free portfolio in October 2000, though it
could have invested up to 15 per cent of the corpus in them. It adopted a
cautious approach to duration management as well. This resulted in an MIP
which lacked any returns firepower but was perfect for the normal MIP
investor whose priority was capital preservation. Soon, this fund's low volatility
and reasonable returns made it one of the more popular options in the
category. It continues to enjoy that reputation till date.
The fund wears a different look today. It changed tack during the start of 2005
by pushing its average maturity higher than an average peer for the first time
in its life. The fund also decided to exploit its under utilized equity mandate-
since the start of 2005, it has invested nearly 14 per cent of its assets in
equities. Exposure to relatively risky mid- and small-cap stocks too has been
close to 39 per cent of the equity portfolio since then. Though the recent
changes have increased the volatility of the fund, it's still one of the lowest in
the category. This new approach has resulted in good returns for investors-
the fund has generated category beating gains of 9.13 per cent till November-
end this year.
The fund has tried to minimize risk by keeping cash and diversifying the equity
portfolio in a number of stocks. Over the years, though expenses have
increased, it's still less than the average peers. A change of strategy has
worked well for the fund so far. But will it live up to its reputation of a capital
preserver with this approach? Nonetheless, UTI MIP is one of the better
options in the MIP category.
Asset
% Min % Max %
Allocation
Equity 19.44 0 20
FT India MIP-G
Asset Min
% Max %
Allocation %
Equity 24.46 0 25
SBI MIP
Asset
% Min % Max %
Allocation
Equity 14.31 0 15
Debt 70.02 0 85
Others 15.67 0 85
Repurchase Sale
NAME NAV NAV Date
price Price
SBI Magnum Monthly
13-Jun-
Income Plan - Dividend 10.3762 10.3243 10.3762
2006
(Annually )
SBI Magnum Monthly 13-Jun-
15.6461 15.5679 15.6461
Income Plan - Growth 2006
SBI Magnum Monthly
13-Jun-
Income Plan-Floater- 10.0355 10.0355 10.0355
2006
Dividend-(Annual)
SBI Magnum Monthly
10.0243 10.0243 10.0243 06
Income Plan-Floater-Growth
UTI MIP
Asset
% Min % Max %
Allocation
Equity 19.06 0 20
Debt 74.50 0 100
Others 6.44 0 100
Debt Weightings
FT India MIP-G
SBI MIP
The Above tables indicate the debt weightings of the funds. HDFC LT
MIP having holding of 33.57% of bonds & 20.96% in securitiesed debt & FT
India MIP having holding of 55.95% of bonds & 12.36% in securitiesed debt.
SBI MIP having mixture of all the instruments. And from the above tables we
can say that SBI MIP & Templeton MIP having more holdings of bonds
around 67% as compare to other funds. So from the above table it is clear
that HDFC long term MIP & SBI MIP is more diversified.
Fundamentals of Schemes
Market Capitalization
Fund P/E Ratio
(In Cr.)
HDFC MIP Long Term
28.92 7000.75
G
FT India MIP-G 31.63 13802.20
SBI MIP 26.39 5900.75
UTI MIP 36.50 2679.25
PE ratio:
It is the ratio of the share price of a company to its earnings per share (EPS).
EPS is the profit that a company makes on a per share basis. So, if EPS is
one, the PE ratio will reflect the price that an investor will pay for this one
rupee of the company's profits. Because of this relation with a company's
profits this ratio is also called the earning multiple.
Some shares have higher PE ratio and some lower. Higher PE ratio signifies
that investor expectation from these shares is higher. This is because the
growth in share price is expected to follow earnings growth. So, if investors
are willing to pay more for a share, it is because they are expecting faster
growth of profits. These stocks are often referred to as growth stocks.
Here from the above table it is clear that investor’s expectations are higher in
the case of FT India MIP, UTI MIP & SBI MIP. As compare to this three in
HDFC LT MIP & SBI MIP investor having lower expectations.
Fund Performance
1 6
1 Year 3 Year 5 Year Since
YTD Month Month
Fund Return Retur Return Inceptio
% Retur Return
% n% % n
n% %
HDFC MIP
Long Term 2.27 1.17 9.24 18.22 -- -- 13.83
G
FT India
1.33 0.90 4.30 10.18 12.77 12.59 12.59
MIP-G
SBI MIP 2.70 1.20 5.20 11.90 10.80 10.57 10.86
NAV
Period Best Period Worst Period
4.03 (28/10/2005 - -4.41 (16/04/2004 -
Month
28/11/2005) 17/05/2005)
7.87 (29/06/2005 - -3.49 (13/04/2004 -
Quarter
28/09/2005) 14/07/2005)
20.89 (25/01/2005 - 5.44 (13/01/2004 -
Year
25/05/2006) 12/01/2006)
FT India MIP-G
NAV
Period Best Period Worst Period
-3.38 (16/04/2004 -
Month 3.78 (17/09/2003 - 17/10/2004)
17/05/2005)
-2.17 (13/04/2004 -
Quarter 7.99 (18/07/2004 - 17/10/2005)
14/07/2005)
21.72 (14/02/2004 - 5.92 (13/01/2005 -
Year
16/02/2005) 12/01/2006)
SBI MIP
NAV
Period Best Period Worst Period
2.70 (17/09/2004 - -2.56 (16/04/2005 -
Month
17/10/2005) 17/05/2005)
6.22 (18/07/2004 - -1.96 (16/02/2005 -
Quarter
17/10/2004) 17/05/2005)
14.98 (02/01/2004 - 3.33 (13/01/2005 -
Year
02/01/2005) 12/01/2006)
UTI MIP
NAV
Period Best Period Worst Period
2.96 (20/06/2005 - -1.84 (28/09/2005 -
Month
20/07/2005) 28/10/2005)
6.53 (20/06/2005 - -2.20 (23/04/2004 -
Quarter
19/09/2005) 23/07/2004)
13.87 (24/01/2005 - 3.96 (23/04/2004 -
Year
24/01/2006) 25/04/2005)
The above tables clearly indicate the best period & worst period of a
particular scheme. HDFC LT MIP lunched in Dec- 2004. At the beginning of the
fund it gives worst returns in 2006 than after giving best results in 2006.& it also
gives around 28% best returns yearly. From the table it clearly shows that in
2005-06 period all the MIP giving the worst returns.
Year To Year Returns of Schemes from Its Inception Date
UTI MIP
FT India MIP-G
Rating & Risk Modern Portfolio Stat Volatility Measures
Fund
R-Squared 0.05 Mean 0.26
Rating
Fund Risk Above Standard
Alpha 0.18 0.49
Grade Average Deviation
Fund
Above Sharpe
Return Beta 0.09 0.35
Average Ratio
Grade
SBI MIP
Rating & Risk Modern Portfolio Stat Volatility Measures
Fund
R-Squared 0.05 Mean 0.29
Rating
Fund Risk Standard
Average Alpha 0.15 0.45
Grade Deviation
Fund
Sharpe
Return Average Beta 0.09 0.42
Ratio
Grade
UTI MIP
Rating & Risk Modern Portfolio Stat Volatility Measures
Fund
R-Squared 0.05 Mean 0.25
Rating
Fund Risk Standard
Average Alpha 0.20 0.48
Grade Deviation
Fund
Above Sharpe
Return Beta 0.09 0.39
Average Ratio
Grade
The above tables indicate the risk & return aggregates in all the fund. The
HDFC LT MIP has been rated 5 star while FT India MIP & SBI MIP has been
rated 4 star And other fund are rated 3 star.so it is clear that HDFC LT MIP is
good enough than other funds. And other most important point is that the risk
grade in the fund is above average but fund return grade is high while other
funds risk grade is average & below average in UTI MIP but the return grade is
also an average. But in HDFC LT MIP return grade is high.
Beta:
Beta, which represents fluctuations in the NAV of the fund vis-à-vis market. The
more responsive the NAV of a mutual fund is to the changes in the market;
higher will be its beta. Beta is calculated by relating the returns on a mutual fund
with the returns in the market. Here, HDFC LT MIP having higher the beta at 0.10
& and than Franklin Templeton MIP & UTI MIP having 0.07 beta value than
comes SBI at the value 0.06, 0.02 & 0.04. So it indicate that HDFC’s & Franklin
Templeton’s NAV are more responsive to the changes in the market.
Alpha :
Alpha tells you whether that fund has produced returns justifying the risks it is
taking by comparing its actual return to the one 'predicted' by the beta. Say, a
fund can be expected to earn—based on its beta—a return of 16 per cent in a
given year. However, it actually fetches you 20 per cent. Then the alpha of the
fund is simply 20-16 = 4, that is, 4.
Thus, a passive fund has an alpha of zero and an active fund's alpha is a
measure of what the fund manager's activity has contributed to the fund's
returns. On the whole a positive alpha implies that a fund has performed better
than expected, given its level of risk. So higher the alpha better are returns.
Here from the above tables it is clear that HDFC LT MIP having higher alpha at
0.29 than comes UTI MIP at 0.18 alpha than comes FT India MIP at 0.16 alpha.
So HDFC LT MIP having higher the alpha better is returns.
Performance of Fund
Average
Fund Expense Sharp Average
Fund Yield to
Style Ratio Ratio Maturity
Maturity
FT India MIP-G 1.93 0.38 2.45 Years 8%
HDFC MIP Long
2.00 0.46 1.60 Years --
Term G
SBI MIP 2.25 0.36 1.45 Years 9%
UTI MIP 2.49 0.37 0.34 Years 6%
The above table shows performance of the all funds. It clearly indicates the
Expense ratio, Sharp ratio, Fund Style & performance Turn Over ratio.
Fund Style:
The collection of a number of stocks in a fund's portfolio gives it a distinct style.
By understanding the characteristics of this portfolio we can conclude how the
fund will behave. One way of doing this is by looking at individual parameters
such as the fund's P/E ratio, P/B ratio, market capitalization etc. The problem
with these measures is that they are absolute. In order to get an idea of what
they mean, we need to draw a comparison. This requires that we have more
numbers on hand so that an appropriate comparison can be made. But so many
numbers can make things more complicated.
Apart from market cap, equity fund style also tells you whether the fund's focus is
on growth or value oriented stocks or a combination of both (which we call
blend). In the growth investing style, the fund manager scouts for companies with
potential of growing faster than others. This optimism is reflected in the premium
valuations commanded by these companies' market price. On the other hand, a
value investor buys into stocks, which are undervalued and have the hidden
potential for turning around but are usually ignored by the market.
From the above table it is clear that HDFC LT MIP, FT India MIP, SBI MIP & UTI
MIP Fund having medium market capitalization & also Medium growth potential.
Expense ratio:
Expense ratio is the percentage of total assets that are spent to run a mutual
fund. As returns from bond funds tend to be similar, expenses become an
important factor while comparing bond funds.
A wise man once said: ''There is no free lunch on Wall Street.'' This holds true for
investing in a mutual fund too. Like a doctor who charges you for his service,
mutual funds too charge a fee for managing your money. This involves the fund
management fee, agent commissions, registrar fees, and selling and promoting
expenses. All this falls under a single basket called expense ratio or annual
recurring expenses that is disclosed every March and September and is
expressed as a percentage of the fund's average weekly net assets. The
Securities & Exchange Board of India has stipulated a limit that a fund can
charge. Equity funds can charge a maximum of 2.6 per cent, whereas a debt
fund can charge 2.29 per cent of the average weekly net assets.
Sharp ratio:
The Sharpe ratio is a single number which represents both the risk, and return
inherent in a fund. As is widely accepted, high returns are generally associated
with a high degree of volatility. The Sharpe ratio represents the trade off between
risk and returns. At the same time, it also factors in the desire to generate
returns, which are higher than risk-free returns.
Sharp ratio is the returns generated over the risk free rate, per unit of risk. A
higher the Sharp ratio is therefore better as it represents a higher generated per
unit of risk. Here HDFC LT MIP having higher Sharp ratio as compare to other
fund & also lower the expense ratio more benefited to investors so here expense
ratio is also some what lower as compare to other fund. And fund style is a
diagram representing asset allocation. Only UTI MIP & SBI MIP investing in small
companies while others asset allocation is from mid cap companies.