Aryabhatta Institute of Management

COMPARATIVE ANALYSIS OF MUTUALFUND OF HDFC & ICICI

SUBMITTED TO:Mr. Kamaljeet Singh Lech. Of Research Methodology

SUBMITTED BY:Miss. Parneet Kaur Roll. No. 95202239175 MBA

CERTIFICATE
This is to certify that Miss. Parneet Kaur has done the Minor Research Project entitled Comparative analysis of mutual fund of HDFC & ICIC under my supervision for the degree of Master of Business Administration. The work done by her is a sole effort and has not been submitted as or its part for any other degree.

Mr. Kamaljeet Singh (Lecturer) Arayabhatta Institute of Management (Barnala)

DECLARATION
I, PARNEET KAUR here-by declare that the project report COMPARATIVE ANALYSIS OF MUTUAL FUND OF HDFC & ICICI for the fulfillment of the requirement of my course from AIM is an original work of mine and the data provided in the study is authentic, to the best of my knowledge.

This study has not been submitted to any other Institution or University for award of any other degree.

HOWEVER, I ACCEPT THE SOLE RESPONSIBILITY OF ANY POSSIBLE ERROR OR OMISSION

Parneet Kaur Roll.No.95202239175

It is a matter of Great Pleasure for me in submitting the project report on Comparative an Analysis of Mutual Fund of HDFC & ICICI For the fulfillment of the requirement of my course from AIM, Barnala. I am thankful to and owe a deep dept gratitude to all those who have helped me in preparing this report. Words seem to be inadequate to express my sincere thanks to Mr. Kamaljeet Singh for his valuable guidance, constructive4 criticism, untiring efforts and immense encouragement during the entire course of the study due to which my efforts have been rewarded. I am highly obliged to those who had helped me to procure primary data to complete my project. Also not to be forgotten are the Lecturers of MBA who contributed their ideas and suggestions. I want to thank all who have supported me and gave their timely guidance. Last but not least I am very grateful to all those who helped me in one-way or the other way at every stage of my work.

Parneet Kaur

PREFACE Many individuals own mutual funds today. Indeed, the mutual fund industry which reached $3.64 trillion in assets by 2009,comprises the bulk of many investors financial assets, whether for retirement or taxable savings purposes .To a large extent, mutual funds are the investment vehicle for the majority of house holds in the India. In the introductory chapter, I have consider the role of mutual fund in todays investing environment, learn just how popular mutual funds have become and consider why investors have chosen to put so much money into funds. Clearly, mutual funds are a major financial asset for numerous investors, and in many ways they play the dominant role in todays investing world for millions of house holds. I have also told about the basics of mutual funds, defining terms and discussing the mechanics about how funds work. I have also considered other alternatives .I have mainly focused up on the study that which companys mutual investments are mostly preferable by investors. Today investors are becoming rational & they see all the parameters before investing .I had also reviewed the types of mutual funds, structure of mutual funds and their current scenario. The over all objective of my study on this project is to know which company provides better investment opportunities from HDFC & ICICI and make the investors to be able to take better decisions .Of course, as every study needs, Id adopted an objective view of over all situation that examines both sides of the issue situated in HDFC &ICICI.

S.NO.

Contents

Page No. 5

1 2 3 4 5 6 7 8 9 10 11

Introduction To Topic Introduction to Companies Review of literature Need/Scope of Study 0bjective of the study Research Methodology Analysis Findings Limitations Recommendations Conclusion 21

7 11 14 16 16 18

43 43 43 44 46

12 Bibliography 13 Annexure

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Introduction to Topic

INTRODUCTION
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. 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 to 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. The flow chart below describes broadly the working of a Mutual Fund.

A Mutual Fund is a body corporate registered with the Securities and Exchange Board of India (SEBI) that pools up the money from individual/corporate investors and invests the same on behalf of the investors/unit holders, in Equity shares, Government securities, Bonds, Call Money Markets etc, and distributes the profits. In the other words, a Mutual Fund allows investors to indirectly take a position in a basket of assets. 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 in offer document. Investments insecurities are spread among a wide cross-section of industries and sectors thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at same time. Investors of mutual funds are known as unit holders. The investors in proportion to their investments share the profits or losses. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A Mutual Fund is required to be registered with Securities Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.

ORGANISATION OF A MUTUAL FUND:-

There are many entities involved and the diagram below illustrates the organizational set up of a Mutual Fund:

Mutual Funds diversify their risk by holding a portfolio of instead of only one asset. This is because by holding all your money in just one asset, the entire fortunes of your portfolio depend on this one asset. By creating a portfolio of a variety of assets, this risk is substantially reduced. Mutual Fund investments are not totally risk free. In fact, investing in Mutual Funds contains the same risk as investing in the markets, the only difference being that due to professional management of funds the controllable risks are substantially reduced. A very important risk involved in Mutual Fund investments is the market risk. However, the company specific risks are largely eliminated due to professional fund management. CHARACTERISTICS OF A MUTUAL FUND: A Mutual Fund actually belongs to the investors who have pooled their funds. The ownership of the mutual fund is in the hands of the Investors. A Mutual Fund is managed by investment professional and other Service providers, who earn a fee for their services, from the funds. The pool of Funds is invested in a portfolio of marketable investments. The value of the portfolio is updated every day. The investors share in the fund is denominated by units. The Value of the units changes with change in the portfolio value, every day. The value of one unit of investment is called net asset value (NAV). The investment portfolio of the mutual fund is created according to the stated Investment objectives of the Fund.

THE STRUCTURE CONSITS OF: 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 Fund) 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 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. ASSET MANAGEMENT COMPANY (AMC): The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of at least 10 cores at all times. REGISTRAR AND TRANSFER AGENT: 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.

INVESTORS PROFILE:
An investor normally prioritizes his investment needs before undertaking an investment. So different goals will be allocated to different proportions of the total disposable 10

amount. Investments for specific goals normally find their way into the debt market as risk reduction is of prime importance, this is the area for the risk-averse investors and here, Mutual Funds are generally the best option. One can avail of the benefits of better returns with added benefits of anytime liquidity by investing in open-ended debt funds at lower risk, this risk of default by any company that one has chosen to invest in, can be minimized by investing in Mutual Funds as the fund managers analyze the companies financials more minutely than an individual can do as they have the expertise to do so. Moving up the risk spectrum, there are people who would like to take some risk and invest in equity funds/capital market. However, since their appetite for risk is also limited, they would rather have some exposure to debt as well. For these investors, balanced funds provide an easy route of investment, armed with expertise of investment techniques, they can invest in equity as well as good quality debt thereby reducing risks and providing the investor with better returns than he could otherwise manage. Since they can reshuffle their portfolio as per market conditions, they are likely to generate moderate returns even in pessimistic market conditions. Next comes the risk takers, risk takers by their nature, would not be averse to investing in high-risk avenues. Capital markets find their fancy more often than not, because they have historically generated better returns than any other avenue, provided, the money was judiciously invested. Though the risk associated is generally on the higher side of the spectrum, the return-potential compensates for the risk attached.

FACTORS IMPACTING THE INDUSTRY: PEST Analysis: Political Factors: a) Government Regulation: SEBI regulates the industry and every decision taken by them impact the industry very quickly. b) Stable constituency: The mutual fund industry can take long term decision if the government is stable. c) Fiscal policy: tax structure plays a very important role in the growth of the industry .If the tax structure will be high than there will be less savings and investment. We have seen the interest rate reducing continuously which boost the industry to sell products which are better than the FDs, PF, NSC and KVPs Economic factors:

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d) Market performance: The last five years witnessed a sharp rise in the markets. The mutual fund industry basically works parallel with the markets. Suppose, if the markets always be on downside, then the investors will not be so comfortable to invest. This will reduce the market size drastically. e) Global Standards: As the industry will grow better, India being a global economy, the MF industry has to match to the global mature MF markets. They have to give due emphasis on product innovation, cost reduction and penetration. f) Inflation: price rise affects interest rate and reduces the chances of investment. Social factors: g) Consumer behavior: this is very unpredictable and based on sentiments gets changed very frequently, which sometimes makes selling of products difficult. h) Income: The rich people are in bigger cities, so the mutual fund industry is much more concentrated there. Technological factors: This is the era of information technology and due to net banking, online transaction, online RTGS, clearing system helps the industry a lot.

OPPORTUNITIES AND THREATS:a) Real Estate sector boom: The Real estate has always been one of the preferred investment avenues for the Indian investor. And what better way for the smaller investors to participate in this boom than to have a real estate mutual fund. AMC has to come up with the structured products in this segment and should take competitive advantage. b) Penetration to Rural markets: The industry has to take themselves to the local and rural markets to increase the market size. Also, the cost of setting up business in bigger cities is huge compare to smaller cities. This will reduce the AMC business cost. c) Concentration of Corporate Investors: Mutual funds have become overly attractive to corporate investors because of higher returns than bank deposits and ability to distribute capital gains tax. Corporate investors account for more than 55% of the AUM (by value).It is clear that the lack of growth in funds under management in India is because of the absence of long term investors. Corporate investors take profits frequently resulting in destruction in the compound growth in funds under management. Distributors are forced to pass on more commissions to companies, while fund companies are compelled to offer funds with wafer thin margins. d) Retail investors lose out in the sense that they continue to pay higher expenses.

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e) Higher Returns of Alternative Debt Instruments: Government guaranteed schemes provide risk free returns at competitive rates of returns. This is why mutual funds have difficulty competing retail business. f) Huge scope for expansion: There are only 33 AMC which is very small figure compared to the mature markets. g) Distribution: One of the major factors impacting the growth of mutual fund industry is the absence of any regulation in distribution of mutual funds. Mutual fund investors need distributors who are able to inform them about the efficacy of distribution product for a particular risk profile and stage in lifecycle. Lack of distributor awareness and the absence of any disclosures from distributors make misspelling of MF products commonplace.

BENEFITS OF MUTUAL FUND

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. We have explained the key benefits in this section. The benefits have been broadly split into universal benefits, applicable to all schemes and benefits applicable specifically to open-ended schemes. 1. AFFORDABILITY A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon the investment objective of the scheme. An investor can buy in to a portfolio of equities, which would otherwise be extremely expensive. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs.500/-. This amount today would get you less than quarter of an Infosys share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock market. 2. 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 underperform 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

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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. 3. VARIETY Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; Secondly, it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and equity. For example, an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme)depending on his risk appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme. 4. PROFESSIONAL MANAGEMENT Qualified investment professionals who seek to maximize returns and minimize risk monitor investor's money. When you buy in to a mutual fund, you are handing your money to an investment professional that has experience in making investment decisions. It is the Fund Manager's job to (a) find the best securities for the fund, given the fund's stated investment objectives; and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio, as and when required. 5. 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 confessional rate of 10.5%. In case of Individuals and Hindu Undivided Families a deduction unto 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. 6. 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. 7. CONVENTIONAL ADMINISTRATION Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. Return Potential Over a medium to long-term; Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.

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8. LIQUIDITY In open-ended mutual funds, you can redeem all or part of your units any time you wish. Some schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period.

9. CONVENIENCE An investor can purchase or sell fund units directly from a fund, through a broker or a financial planner. The investor may opt for a Systematic Investment Plan (SIP) or a Systematic Withdrawal Advantage Plan (SWAP). In addition to this an investor receives account statements and portfolios of the schemes.

CATEGORIES OF MUTUAL FUNDS:

Mutual Fund can be classified as follows:Based on the Structure:1. OPEN-ENDED MUTUAL FUNDS: The holders of the shares in the Fund can resell them to the issuing Mutual Fund company at the time. They receive in turn the net assets value (NAV) of the shares at the time of re-sale. Such Mutual Fund Companies place their funds in the secondary securities market. They do not participate in new issue market as do pension funds or life insurance companies. Thus they influence market price of corporate securities. Open-end investment companies can sell an unlimited number of Shares and thus keep going larger. The open-end Mutual Fund Company Buys or sells their shares. These companies sell new shares NAV plus a Loading or management fees and redeem shares at NAV. In other words, the target amount and the period both are indefinite in such funds. 2. CLOSED-ENDED MUTUAL FUNDS:A closed end Fund is open for sale to investors for a specific period, after which further sales are closed. Any further transaction for buying the units or repurchasing them, Happen in the secondary markets, where closed end Funds are listed. Therefore new investors buy from the existing investors, and existing investors can liquidate their units by selling them to other willing buyers. In a closed end Funds, thus the pool of funds can technically be kept constant. The asset management company (AMC) however, can buy out the units from the investors, in the secondary markets, thus reducing the amount of funds held by outside investors. The price at which units can be sold or redeemed Depends on the market prices, which are fundamentally, linked to the NAV. Investors in closed end Funds receive either certificates or Depository receipts, for their holdings in a closed end mutual Fund.

Based on their investment objective:

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1. 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 smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment inequity funds should be considered for a period of 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 indexboth in terms of composition and individual stock weightages. 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 equity diversified funds except that they invest in companies offering high yield dividends. iv)Thematic funds- Invest 100% of the assets in sectors which are related through 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 sector fund will invest in banking stocks. vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors. 2. BALANCED FUNDS: 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 ideal mutual funds 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. 3. DEBT FUND: They invest only in debt instruments, and are a good option for investors averse to idea of taking 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. 16

Put your money into any of these debt funds depending on your investment horizon and needs. i) Liquid funds- These funds invest 100% in money market instruments, a large portion being invested in call money market. ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and Tbills. 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 cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. 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.

THE WAY TO INVEST IN MUTUAL FUND Mutual funds normally come out with an advertisement in news papers publishing the date of launch of the new schemes. Investors can also contact the agents and distributors of mutual funds who are spread all over the country for necessary information and application forms. Forms can be deposited with mutual funds through the agents and distributors who provide such services. Now days, the post offices and banks also distribute the units of mutual funds. However, the investors may please note that the mutual funds schemes being marketed by banks and post offices should not be taken as their own schemes and no assurance of returns is given by them. The only role of banks and post offices is to help in. distribution of mutual funds schemes to the investors. Investors should not be carried away by commission/gifts given by agents/distributors for investing in a particular scheme. On the other hand they must consider the track record of the mutual fund and should take objective decision. ONE TIME INVESTMENT

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The amount that has to be invested in onetime is known as One time Investment. The investor has to pay the whole amount at once. The minimum amount is Rs. 5000 and maximum is as per the investors Choice. This investment is generally preferred for the business man who Are able to pay at one time.

SYSTEMATIC INVESTMENT PLAN (SIP) The amount that has to be invested through same monthly installment is known as Systematic Investment Plan. The investor has to pay the minimum amount Rs.1000 monthly for all equity and balanced schemes like that for 6months. And Rs.500 monthly for Tax Saver scheme like that for 12 months. The minimum amount that the investor has to invest isRs6000 and maximum as per their choice. This type of investment is generally preferred for the salaried people.

What is mean by mutual fund? Mutual funds are pools of money that are managed by an investment company. They offer investors a variety of goals, depending on the fund and its investment charter. Some funds, for example, seek to generate income on a regular basis. Others seek to preserve an investor's money. Still others seek to invest in companies that are growing at a rapid pace. Funds can impose a sales charge, or load, on investors when they buy or sell shares. Many funds these days are no load and impose no sales charge. Mutual funds are investment companies regulated by the Investment Company Act of 1940. Related: openend fund, closed-end fund.

Concept of mutual funds A mutual fund is a trust that pools the savings of a no. of investors, who share a common financial goal. 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 to 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 diversified, professionally managed basket of securities at a relatively low cost. 18

Historical Aspect Mutual fund firstly was established in 1822 in the form of Society General De Belguique. It mainly gains the progress in Switzerland & little in franc and Germany in its initial days. The first investment trust The foreign and colonial govt. trust Was founded in London in 1868.

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

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

Types of Mutual Fund

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Structure

Investment objective
Growth

Special schemes

Open Ended

Industry specific Specific Index schemes

Close

Income

Internal

Balanced

Sector schemes

Money Market

Advantages of Mutual Funds

Diversification. Professional Management. Liquidity (mainly in case of opened mutual funds). Regulatory. Convenience. Low cost. Reduction of transaction cost. Diverse returns. Advantages to Industrial concern. Tax relief. Attract foreign Capital. Reduction / Diversification of risk.

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Drawbacks of Mutual fund

No guaranties. Fees & Commission. Taxes. Management Risk.

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Introduction to Companies

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HDFC Mutual Fund HDFC mutual fund was set up on June 30, 2000 with two sponsors namely Housing Development Finance Corporation ltd. and Standard Life Insurance ltd. HDFC mutual fund came into existence on 10 Dec. 1999 and got approval from the SEBI on 3rd July 2000. Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd, was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by Reserve Bank of India (RBI). It was one of the first banks to receive an 'in principle' approval from RBI, for setting up a bank in the private sector. The bank was incorporated with the name 'HDFC Bank Limited', with its registered office in Mumbai. The following year, it started its operations as a Scheduled Commercial Bank. Today, the bank boasts of as many as 1412 branches and over 3275 ATMs across India. Products and Schemes of HDFC mutual fund Equity funds. Balanced funds. Debt funds. Liquid funds.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential PLC. Of America, one of the largest life insurance companies in the USA. Prudential ICICI mutual fund was set up on 13th of Oct. 1993 with two sponsors. ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial institution, in 1994. Four years later, when the company offered ICICI Bank's shares to the public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank offered made an equity offering in the form of ADRs on the New York Stock Exchange (NYSE), thereby becoming the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. In the next year, it acquired the Bank of Madura Limited in an all-stock amalgamation. Later in the year and the next fiscal year, the bank made secondary market sales to institutional investors

Products and Schemes of HDFC mutual fund Equity funds. Balanced funds. Debt funds. Liquid funds. Childrens gift fund 23

Other Players in Mutual Fund

Bank of Baroda mutual fund (BOB MF) 30OCT. 1992. Benchmark mutual funds (June 12, 2001). Birla Sun life MF (1871). Chola mutual fund (3 Jan. 1997). Can bank mutual fund (Dec. 19, 1987). LIC mutual fund (19th June, 1989). Reliance mutual fund (30June, 1995). Sahara mutual fund (18 July, 1996). GIC (General Insurance Corporation of India). Etc.

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Review of Literature

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COMPANY PROFILE
ICICI Bank is India's second-largest bank with total assets of about Rs. 1 trillion and a network of about 540 branches and offices and over 1,000 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-Banking , venture capital, asset management and information technology. ICICI Bank's equity shares are listed in India on stock exchanges at Chennai, Muzaffarnagar, Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

HDFC Banks exposure to market risk a function of its trading and asset and liability management activities and its role as a financial intermediary in customer-related transactions. HDFC had tried its best in mutual fund sector. It has grown up its market share in a meanwhile time. The objective of market risk management is to minimize the impact of losses due to market risks on earning and equity capital.

Source:- www.sribd.com www.artclenich.com

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 Need of study Scope of study Objectives of study

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Need of the study The need of study arises for learning the variables available that distinguish the mutual fund of two companies. To know the risk & return associated with mutual fund. To chose best company for mutual investment between HDFC & ICICI. To project mutual fund as the productive avenue for investing activities.

Scope of the study To make people aware about concept of mutual fund. To provide information regarding advantages and demerits of mutual fund. To advice where to invest or not to invest. To provide information regarding types of mutual fund which is beneficial for whom.

Objectives . . To analysis which provides better returns from HDFC &ICICI. To analyze the concept and parameters of mutual fund. To know how many people are satisfied by their investment (in HDFC or ICICI). To know people behavior regarding risk factor involved in mutual fund.

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Research Methodology

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Research refers to search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific topic. It is an art of scientific investigation. Research Methodology:It is the way to systematically solve a problem. The methodology adopted in this study is explained below: Research Design A. Problem Defining: In a competitive situation with multiple mutual funds operating in Indian market, it is necessary to know about the performance of different mutual funds as the performance of mutual fund decides about the future of Mutual Fund Company. In this study my focus is upon performance of investors regarding HDFC &ICICI. This is my problem to be studied for research. B. Literature Survey: I have used newspapers, magazines related to business & finance & apart from websites. C. Type of research: The research is qualitative & descriptive in nature. Qualitative research is that talk about the quality of the subject to be researched and Descriptive research is one that describes things as exists in present. D. Data collection Design: I. Sources of data = Primary Sources I have used questionnaire as primary source for collecting data for my study. Secondary sources I had collected my secondary data from websites & journals.

II. Sampling = It represents whole population. It is the processes of choosing a sample from whole population .I have choose a sample of high class & middle class people who have invested in mutual funds as a sample.

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III. Tools = I have used some charts (Pie chart, column chart, cylinder chart, cone chart) and hypothesis tests (chi-square one sample Ttest etc.) IV. Sampling Size = It represents that how many candidates youve chosen to be filled up your questionnaire or candidates upon whom you can study. I had chosen sample of 100 candidates. V. Sampling Techniques = Deliberate & Convenience Sampling. VI. Data Interpretation = Data interpretation is that in which we analysis the whole collected data & tries to give it in simple words to be understandable.

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Analysis

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1. Do you invest in mutual fund? .

YES NO

100 0

120 100 80 60 40 20 0
YES NO

100

Interpretation:All the candidates who are asked to fill the questionnaire have invested in mutual fund.

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

HDFC ICICI Reliance SBI LIC Kotak Mahindra Others

65 35 0 0 0 0 0

70 60 50 40 30 20 10

65
HDFC ICICI Reliance SBI LIC Kotak Mahindra

35

Others

0 0

Interpretation: Out of 100 candidates up to 65have invested in mutual fund with HDFC & 35 have invested with ICICI. There is no investor who have invested in mutual fund with any another company.

34

VAR00001

Observed N HDFC 65

Expected N 50.0

Residual 15.0

ICICI 35 Total 100 50.0 -15.0

Test Statistics VAR00001 Chi-Square df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 50.0. 9.000a 1 .003

35

3. What is your age? . 8 15-25 25-35 35-45 More than 45 12 60 20

60 60 50 40 30 20 20 12 10 0 8
15-25 25-35 35-45 More than 45

Interpretation: 60 investors are of age between 35-45. 20 are of age more than 45. 12 are of between of 25-35. 8 are of 15-25. This data shows that many investors are of middle age & there are less investors of young age in mutual fund.

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One-Sample Statistics

N VAR00001 100

Mean

Std. Deviation

Std. Error Mean

2.9200

.80000

.08000

One-Sample Test

Test Value = 0

95% Confidence Interval of the Difference

t VAR00001 36.500

df 99

Sig. (2-tailed) .000

Mean Difference 2.92000

Lower 2.7613

Upper 3.0787

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4. What is your income? (Yearly based)

1 lakh 2-4 lakh 4-5 lakh More than 5

0 10 20 70

70 60 50

70

1 lakh

40

2-4 lakh 4-5 lakh More than 5

30
20 10 0 0 10 20

Interpretation: Up to 70 investors have income more than 5 lakh. 20 have between 4-5 lakh.10 investors have income between 2-4 lakh & there is no investor who have income up to 1akh.

38

VAR00001 Observed N 1 lakh 2-4 lakh 4-5 lakh more than 5 Total 8 12 60 20 100 Expected N 25.0 25.0 25.0 25.0 Residual -17.0 -13.0 35.0 -5.0

Test Statistics VAR00001 Chi-Square df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 25.0. 68.320a 3 .000

39

5. From where you come to know about this companys mutual fund schemes?

Family & relatives Friends & peers Company employee Others

35 40 15 10

40 40 35 35 30
Family & relatives Friends & peers

25
20 15 15 10 10 5 0

Company employee Others

Interpretation: Many investors (up to 40) have been come to know about the company to be invested by their friends & peers.35 have been known by their family & relatives .15have been come to know by company employees & 10 by others. This means many have come to know by their friends & peers.

40

VAR00001 Observed N Family & relatives friends & peers Company employee Others Total 35 40 15 10 100 Expected N 25.0 25.0 25.0 25.0 Residual 10.0 15.0 -10.0 -15.0

VAR00001 Observed N Family & relatives friends & peers Company employee Others Total 35 40 15 10 100 Expected N 25.0 25.0 25.0 25.0 Residual 10.0 15.0 -10.0 -15.0

41

6. What is the time duration of your investment?

0-1 year 1-2 year 2-4year more than 4

15 35 30 20

35

35
30

30
25 20 15 10 5 0 15

20

0-1 year 1-2 year 2-4year more than 4

Interpretation: 15 investors have time of investment less than one year. 20 have time duration of their investment between of 1-2 year. 30 have between 2-4 year & 35 have more than 4 years. So, we can say that 35 investors have more experience than others.

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VAR00001 Observed N 0-1 year 1-2 year 2-4 year more than 4 Total 15 35 30 20 100 Expected N 25.0 25.0 25.0 25.0 Residual -10.0 10.0 5.0 -5.0

Test Statistics VAR00001 Chi-Square df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 25.0. 10.000a 3 .019

43

7. Are you satisfied by service of the companys employees / peoples behavior?

Highly satisfied Satisfied Neutral Dissatisfied Highly Dissatisfied

15 35 30 15 5

35 35 30 30 25 20 15 15 10 5 5 0
Highly Dissatisfied Dissatisfied Highly satisfied Satisfied

15

Neutral

Interpretation: Out of 100 investors 15 are highly satisfied. 35 are satisfied. 30 are neutral towards employee behavior of a company. 15 are dissatisfied. 5 are highly dissatisfied. We say that many people are satisfied by employee behavior.

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VAR00002

Observed N highly satisfied satisfied neutral dissatisfied highly dissatisfied Total 15 35 30 15 5 100

Expected N 20.0 20.0 20.0 20.0 20.0

Residual -5.0 15.0 10.0 -5.0 -15.0

Test Statistics VAR00002 Chi-Square df Asymp. Sig. 30.000a 4 .000

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 20.0.

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8. What is your risk profile?

Innovator Moderate Risk adverse

20 65 15

70 60 50 40 30 20 20 10 0 Innovator

65

Innovator Moderate Risk adverse 15

Moderate

Risk adverse

Interpretation: 20% investors are innovator means they like to take risk for more returns. 15% are moderate towards risk means they are indifferent towards risk. 65% are risk adverse means they mainly try to avoid risk.

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VAR00002

Observed N innovator 20 moderate 65 risk adverse 15 Total 100

Expected N 33.3

Residual -13.3

33.3

31.7

33.3

-18.3

Test Statistics VAR00002 Chi-Square df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 33.3. 45.500a 2 .000

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

Highly Satisfied Satisfied Neutral Dissatisfied Highly dissatisfied

15 25 40 15 5

5% 15%

15%

Highly Satisfied Satisfied Neutral 25% Dissatisfied

40%

Highly Dissatisfied

Interpretation: 15% investors are highly satisfied by companys documentation policy (filling up the forms etc.). 25% are satisfied, 40% never cares about it or are moderate towards it , 15% are dissatisfied by it & 5% are highly dissatisfied.

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VAR00002 Observed N highly satisfied satisfied neutral dissatisfied highly dissatisfied Total 15 25 40 15 5 100 Expected N 20.0 20.0 20.0 20.0 20.0 Residual -5.0 5.0 20.0 -5.0 -15.0

Test Statistics VAR00002 Chi-Square df Asymp. Sig. 35.000a 4 .000

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 20.0.

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10. What you say which provides better returns?

HDFC

68

ICICI

32

70 60 50 40

68

32 30 20 10 0

HDFC ICICI

Interpretation: According to collected data 68 investors thinks that HDFC provides better returns where as 32 to think that ICICI provides better returns.

50

VAR00001

Observed N HDFC 68

Expected N 50.0

Residual 18.0

ICICI 32 Total 100 50.0 -18.0

Test Statistics VAR00001 Chi-Square df Asymp. Sig. a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 50.0. 12.960a 1 .000

51

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

Yes No

15 85

90
80 70 60 50 40 30 20 10 0 15

, 85

Yes No

Interpretation: 15 investors said that they would like to change their investment with each another between HDFC & ICICI. But 85 investors say that they are ok with their companies and they wouldnt like to exchange their investment.

52

VAR00001

Observed N Yes 15

Expected N 50.0

Residual -35.0

No

85

50.0

35.0

Total 100

Test Statistics VAR00001 Chi-Square df Asymp. Sig. 49.000a 1 .000

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 50.0.

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 Findings Limitations Recommendations Conclusion

54

Findings: - In my research I have founded following things: Investors have more faith HDFCs mutual fund. As the age increases investors are much satisfied, see more risk & become more risk adverse. Old people &Widows prefer lower risk. Investors are not highly satisfied by company rules & employee behavior. Investors think that HDFC provides better returns than ICICI.

Limitations: - There are some limitations of my study, those are as Following: Sample limitation: - which sample is taken by me is very small in size to Compare mutual fund of two companies. Reliability: - The data collected by me is not much reliable because many investors chosen by me have invested in HDFC. Parameters: - All the parameters have not been taken. Time limitation: - I had the shortage of time because of that I was not able to do my study in a good manner. Awareness: - Investors chosen for study are not fully aware of all the terms and conditions related to mutual fund .So, it is very difficult to construct right information from them.

Recommendations / Suggestions: - In my study I have found some limitations. For that I can suggest both companies following suggestions or areas of improvement: ICICI bank should try to provide better returns to its investors as compare to HDFC. Both companies should try to invest in better securities for better profits. Both companies should try to satisfy their customer by better customer service or by improving customer relationship management. Companies should try to make people initiative towards risk. Investors should be made fully aware of the concept of mutual fund & all the terms and conditions. It should more emphasize in advertising, as it is the most Powerful tool to position ant brand in the mindsets of customers

55

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

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Bibliography

57

Bibliography: Books:C.R.Kothari, Research Methodology. New Delhi, Vikas Publishing house Pvt.Ltd.2007. ICICI and HDFC Brochure . Websites:www.wiki.answers.com www.scribd.com www.hdfc.com www.icici.com www.google.com

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Annexure

59

Annexure Name ________________________ Age _________ Adress_____________________________________ Pin ___________ Sex _________ Phone _________

1. Do you invest in mutual fund? Yes No .

2. With which company do you have invested in mutual funds? HDFC Reliance SBI ICICI LIC Kotak Mahindra

Others Please specify 3. What is your age? 15-25 35-45 25-35 above 45 .

4. What is your income? (Yearly based) 1 lakh 4-5 lakh 2 - 4lakh more than 5

5. From where you come to know about this companys mutual fund schemes? Family members & relatives Friends & peers Companyemplooyes

Others Please specify . 60

6. What is the time duration of your investment? 0-1 year 2-4year 1-2 year more than 4 .

7. Are you satisfied by service of the companys employees / peoples behavior? Highly satisfied Satisfied Neutral

Dissatisfied

Highly dissatisfied 8. What is your risk profile? Innovator

Moderator

Risk adverse

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

Satisfied

Neutral

Dissatisfied Highly dissatisfied 61

10. What you say which provides better returns? HDFC ICICI

11. Would you like to exchange your investment with one another between HDFC & ICICI? YES NO

62