Project Report

(Submitted for the degree of B. Com Honours

In Accounts and Finance under the University of Calcutta)

Title of the Project

Analysis of Mutual Funds

Submitted By
Name of the Candidate: Atharva Shivam
Registration No: 017-1111-3237-21
CU Roll No: 211017-21-1677
Name of the College: The Bhawanipur Education Society College
College UID: 0101211195

Supervised by
Name of the Supervisor: Dr. Mohit Shaw
Name of the College: The Bhawanipur Education Society College

Month & Year of Submission

June, 2024

1
ANNEXURE-1A

Supervisor’s Certificate

This is to certify that Mr. Atharva Shivam a student of B.com Honours in Accounts and
Finance of Bhawanipur Education Society College under the University of Calcutta has
worked under my supervision and guidance for his project work and prepare a project
report with the title “Analysis of Mutual Funds” which he is submitting, is his genuine and
original work to the best of my knowledge.

Place: Kolkata

Date:

Signature:

Name: Dr. Mohit Shaw

Designation: Assistant Professor

Name of the College: Bhawanipur Education Society College

2
ANNEXURE-1B

Student’s Declaration

I hereby declare that the project work with the title “Analysis of Mutual Funds” submitted
by me for the partial fulfilment of the degree of B.com honours in Accounts and Finance
under the university of Calcutta is my original work and has not been submitted earlier to
any other university/institution for the fulfilment of the requirement for any course of
study.

I also declare that no chapter of this manuscript in whole or in part has been incorporated
in this report from any earlier work done by other or by me. However, extracts of any
literature which has been used for this report has been duly acknowledged providing
details of such literature in the references.

Place: Kolkata

Date:

Signature:

Name: Atharva Shivam

Address: East Kolkata Township, Kasba

Registration No: 017-1111-3237-21

3
 Acknowledgment

I would like to express my sincere gratitude towards the University of Calcutta for
incorporating such an exercise as a part of the curriculum in the third year of our B.Com.
Honours course since it has presented me with an excellent opportunity to explore my
analytical and report-writing skills, consequently preparing me for my corporate future.

Secondly, I would like to thank my supervisor – Dr. Mohit Shaw and Prof. Dilip Shah
[Dean of student affairs] for giving me a step-by-step guidance and tremendous support on
the project work based on “Analysis of Mutual Funds”. Without their encouragement this
project would not have materialized.

Thirdly, I would like to show my greatest appreciation to all the people who very
courteously answered the questionnaire without which successful completion of this
project was not possible.

Last but not the least; I am grateful to my family and friends for supporting me
throughout.

4
 Table of Contents
SL. No. Contents Page. No.

1. Chapter 1- Introduction 6-11

1.1 Background of Study
1.2 Need of Study
1.3 Literature Review
1.4 Methodology
1.5 Limitations
1.6 Plan of work
2. Chapter 2- Conceptual Framework 12-25
2.1 What is mutual fund
2.2 Objectives of mutual fund
2.3 Limitations of mutual fund
2.4 Mutual fund Industry in India

3. Chapter 3- Data Analysis and Findings 26-43

4. Conclusion & Recommendations 44-45

5. Bibliography 46

6. Annexures: Questionnaire 47-48

5
 Chapter- 1

Introduction

6
1.1 Background of Study

The Indian financial system, like any such system, is based on four basic components like financial
markets, financial institutions, financial services and financial instruments. All play important roles
in smooth transfer of funds and their allocation.

Over the years, the financial services in India have undergone revolutionary changes and had become
more sophisticated, in response to the varied needs of the economy. The process of financial sector
reforms, economic liberalization and globalization of Indian Capital Market had generated and
augmented the interest of the investors in equity. But, due to inadequate knowledge of the capital
market and lack of professional expertise, the common investors are still hesitant to invest their hard-
earned money in the corporate securities. The advent of mutual funds has helped in garnering the
investible funds of this category of investors in a significant way. As professional experts manage
mutual funds, investment in them relieves investors from the emotional stress involved in buying and
selling of securities. A Mutual Fund is a scheme in which several people invest their money for a
financial cause. The collected money is invested in Capital Markets and the money which they earn
is divided based on the number of units which the investors hold. The Mutual Fund industry was
started in India in a small way with the UTI creating what was effectively a small savings division
within the RBI. Due to this RBI gave a go ahead to public sector banks and financial institutions to
start Mutual Funds in India and their success gave way to Private Sector Mutual Funds Mutual Funds
have to follow specific rules and regulations which are prescribed by the SEBI. AMFI is the apex
body of all the Asset Management Companies (AMC) and is registered with the SEBI.

7
1.2 Need of Study

In view of the above, I have undertaken the current project work to assess the scenario of the
Indian mutual fund industry with a special focus on the appraisal of investor perception about
two selected mutual fund houses — HDFC Mutual Fund and ICICI Prudential Mutual Fund
and SBI Mutual fund. These two funds have been selected as they are at present the top two
mutual fund houses in terms of average assets under management (AAUM). This study is a
humble attempt to:

 To study the basic concepts of mutual funds. To study the origin and development of
mutual funds industry in India.
 To compare the investor perception about two selected mutual fund houses
 To draw appropriate conclusions about the performance of the schemes based on the
study.

8
1.3 Literature Review

Agarwal, R K. and Mukhtar, W. (2010) says that today mutual funds represent the most
appropriate opportunity for small investors. As financial markets become more complex,
investors need a financial intermediary who provides the required knowledge and professional
expertise on successful investing. This analysis covers a broad range of equity growth funds.
Twentyfour Equity growth funds have been studied for the application of composite portfolio
performance measures like Treynor ratio, Sharpe ratio, Jensen ratio, Information ratio, M
squared, Specific ratio, etc.

Rao, D. N. and Rao, S. B. (2009) had conducted research on commonly held belief among
Indian investors and Fund Managers that (A) Market outperforms Balanced and Income
Funds during Bull run (B) Balanced and Income Funds outperform the stock market during
Bear run, (C) Market outperforms Balanced and Income Funds over a long holding period (a
minimum period of three years). The objective of the study was to empirically investigate
whether the above stated perceptions are valid in the Indian context. The performance of the
47 Balanced and 72 Income Funds were analyzed in terms of Return, Risk, Return per unit of
Risk and Sharpe ratio over the past three years (2006, 2007 and 2008) during which period the
Indian Stock Market had witnessed much volatility. Further, the performance of these funds
was compared with that of the Market and Benchmark Indices. They concluded that Market
outperformed both the Balanced and Income Funds over Bull runs and 3-year periods while
both the funds outperformed the Market over Bear run period which confirms the popular
belief of the investors and Fund Managers in India.

Agrawal, D and Patidar, D (2009) have conducted a study on Mutual funds are key
contributors to the globalization of financial markets and one of the main sources of capital
flows to emerging economies. This article provides an overview of mutual fund activity in
emerging markets. It describes their size and their asset allocation. The study revealed that the
performance is affected by the saving and investment habits of the people and at the second
side the confidence and loyalty of the fund Manager and rewards- affects the performance of

9
 the MF industry in India.

Mukherjee (2011) studied the performance of 54 equity-linked schemes of various mutual

fund houses and concluded that since the launch of the maiden mutual fund scheme US 64 in
1964,

the Indian mutual fund industry has grown manifold in respect of all relevant parameters
number of funds, range of products, investor base, and assets under management. However,
during the decade, there has been a gradual shift of investor base towards private sector funds
from the public sector. Several public sector mutual funds have wound up their business during
this period. India and its neighbours are lagging way behind, occupying a miniscule share of
the total fund assets globally.

1.4 Methodology

The methodology adopted in this study is explained below:

In this study my focus is upon perception of investors regarding HDFC Mutual fund and ICICI
Prudential Mutual Fund and SBI Mutual Fund. The research is exploratory in nature. I have
used newspapers, magazines related to business and finance and websites.
I have used questionnaires as a primary source for collecting data for my study and have
collected my secondary data from websites and journals.

1.5 Limitations

There are some limitations of my study. Those are as follows:

The sample taken by me is very small in size to compare two giant mutual fund houses each with
a plethora of schemes.

The data collected by me is not very reliable because many investors chosen by me have
invested in HDFC MF.

All the parameters have not been tested due to shortage of time.
10
 Investors chosen for the study are not fully aware of all the terms and conditions related
to Mutual Funds. So, it is very difficult to construct the right information from them

1.6 Plan of Work

This research work is organised into four chapters as detailed below:

 Chapter One makes an introductory approach to the overall study.

 Chapter Two deals with the conceptual frame-work regarding mutual funds and the
current Indian scenario;
 Chapter Three analyses the data obtained from field survey among investors regarding
their perception about two selected mutual fund houses HDFC Mutual fund and ICICI
Prudential Mutual Fund; and
 Chapter Four concludes the entire study with some recommendations.

11
 CHAPTER 2

Conceptual Framework

12
2.1 What is a Mutual Fund?

Among the different investment avenues available to retail investors, mutual funds offer an
excellent opportunity to channelize their small savings into investments. A mutual fund is a
mechanism that pools the savings of a large number of investors who share a common
financial goal. The money so collected is then invested in capital market instruments such as
shares, debentures, bonds, etc. and in money market instruments such as treasury bills,
certificates of deposit, commercial paper and interbank call money, etc. Sometimes, the money
is invested in real assets also, e.g., gold and property. The incomes earned through these
investment processes and appreciation as realised thereof are shared by the investors in
proportion to their investments. A mutual fund is, thus, regarded as the most sensible and
efficient vehicle of investment, globally, for the common man as it offers an opportunity to
invest in a diversified, professionally managed basket of securities at a relatively low cost and
risk as well. The following figure explains the working principle of a mutual fund. In this
context, it is worthwhile to note the concept of a mutual fund as outlined by the Securities
Exchange Board of India (SEBI) which states that a ‘“mutual fund” means a fund established
in the form of a trust to raise monies through the sale of units to the public or a section of the
public under one or more schemes for investing in securities, including money market
instruments or gold or gold related instruments or real estate assets.

The terms ‘fund’ and ‘scheme’ are many a times interchangeably used. For most mutual funds,
shareholders are free to sell their shares at any time, although the price of a share in mutual
fund may fluctuate daily, depending upon the performance of the securities held by the fund.
Mutual funds offer choice, liquidity and convenience, but charge fees an often Among the
different investment avenues available to retail investors, mutual funds offer an excellent
opportunity to channelize their small savings into investments. A mutual fund is a mechanism
that pools the savings of a large number of investors who share a common financial goal. The
money so collected is then invested in capital market instruments such as shares, debentures,
bonds, etc. and in money market instruments such as treasury bills, certificates of deposit,
commercial paper and interbank call money, etc. Sometimes, the money is invested in real
assets also, e.g., gold and property. The incomes earned through these investment processes
and appreciation as realised thereof are shared by the investors in proportion to their
investments. A mutual fund is, thus, regarded as the most sensible and efficient vehicle of
13
investment, globally, for the common man as it offers an opportunity to invest in a diversified,
professionally managed basket of

securities at a relatively low cost and risk as well. The following figure explains the working
principle of a mutual fund. In this context, it is worthwhile to note the concept of a mutual
fund as outlined by the Securities Exchange Board of India (SEBI) which states that a
‘“mutual fund” means a fund established in the form of a trust to raise money through the sale
of units to the public or a section of the public under one or more schemes for investing in
securities, including money market instruments or gold or gold related instruments or real
estate assets.

The terms ‘fund’ and ‘scheme’ are many a times interchangeably used. For most mutual funds,
shareholders are free to sell their shares at any time, although the price of a share in mutual
fund may fluctuate daily, depending upon the performance of the securities held by the fund.
Mutual funds offer choice, liquidity and convenience, but charge fees an often require a
minimum investment.

Types of Mutual Fund Schemes

By Tenure —

14
 • Open-ended Schemes

• Close-ended Scheme

By Investment Objective —

• Growth/Equity Schemes

• Income/Debt Schemes

• Balanced Schemes

• Money Market

Schemes Other Schemes —

• Tax Savings Schemes

• Index Schemes

• Gold Exchange Traded Schemes

• Real Estate Schemes

• Country Funds

Meaning of Net Asset Value (NAV)

In the context of mutual funds, NAV per share is computed once a day based on the closing market prices
of the securities in the fund’s portfolio. All mutual funds’ buy and sell orders are processed at the NAV of
the trade date. However, investors must wait until the following day to get the trade price. In short, The
NAV per unit is the market value of securities of a scheme divided by the total number of units of the
scheme on any particular date.

15
2.2Objective of Mutual Fund

Fund Types
There are three basic types of mutual funds. Equity funds invest exclusively in stock. Fixed-
income funds invest in bonds, and money market funds invest in Treasury bills and short- term,
liquid, high quality securities. All mutual funds are made up of one or more of these three asset
classes. Funds are sometimes named, ostensibly, for their objective and have catchy names
such as Global, International, Growth and Overseas. Evaluate the prospectus rather than
drawing a conclusion from the fund's title.

Diversification
One consistent mantra of investing is diversification. Simply put, you should not place your
entire investment in one company. Because mutual funds are based on the securities of many
companies, buying shares in a fund automatically diversifies your portfolio. This might be an
otherwise impossible task. Consider that one share of Apple Inc. trades for as much as $600, as
of 2012. You might not have enough money available to adequately diversify.

Goals
To select the funds in which to invest, a clear understanding of your investment goals is
crucial. If you don't have clear investment objectives, you might as well choose your fund by
throwing

a dart or tossing a coin. If you are young with a healthy earnings future ahead, investment in a
fund that is geared more toward growth than safety may be appealing. Alternatively, if you are
approaching retirement, a more conservative fund such as a balanced income fund may suffice.

If you are already enjoying your retirement, you might

be a candidate for a money market fund, which offers little in the way of return but is
extremely low in risk. Become acquainted with the securities in the fund you are considering.

16
This will help ensure your comfort level

Costs
Mutual funds earn income from fees charged to account holders. Transaction fees are incurred
each time you buy or sell shares. These fees are couched in the term "load." Then there are
annual fees, which are akin to a membership fee and serve to pay operating expenses. Taken as
a whole, these fees can range from 0.2 percent to as much as 2 percent. The average fees are
1.3 percent to 1.5 percent. If you are in a specialty or global fund, you will likely pay more
because they require managers with a higher level of expertise. You don't need to break out the
calculator to see how these fees can be a drag on your return. High fees do not guarantee
superior performance. Select your mutual fund on the basis of its track record and don't be
lulled into thinking a high fee will guarantee exceptional performance, as there usually is no
correlation.

Benefits of Investing in Mutual Funds

 Professional expertise in buying and selling of units
 Professional management of securities transactions
 Opportunity to hold wide spectrum of securities
 Long-term planning by fund managers
 Safety of funds
 Spreading of risk through diversification
 Freedom from stress of emotional involvement
 Automatic re-investment of dividends and capital gains, wherever applicable
 Dissemination of information on the performance of the schemes and their fund
managers.

17
 Mutual fund is a pool of money from many investors that is used to invest in one portfolio of
securities for the benefit of all the investors in the fund. Mutual fund investors buy shares in
the mutual fund. Each share represents a piece of every investment made by the money
managers that oversee the mutual fund. Although mutual funds allow you to invest in many
sectors of the economy at once, mutual funds do have limitations worth considering before you
invest.

2.3Limitations of Mutual Fund

Decisions
Since mutual funds are professionally managed, you do not have any control in how the money in the
mutual fund is invested. Money managers are responsible for researching and interpreting data
related to the investments that make up the mutual fund. As a result, you have no way of influencing
what investments are bought and sold by the money manager

Costs.
The returns you generate by investing in a mutual fund are limited in part by the cost of maintaining
the mutual fund. According to the U.S. Securities and Exchange Commission, a mutual fund is
similar to a business. The mutual fund incurs costs to buy and sell investments on the open financial

18
market place. Some of these fees may include advising fees, transaction costs, and fees for marketing
and distribution. These fees reduce the returns you make from the investments in your mutual fund.

Projections
A prospectus for a mutual fund is one of the most common sources of information for investors. A
key consideration when you examine a prospectus is that projections of future earnings are only
estimates of how the mutual fund may perform in the future. Projections are commonly based on past
performance, but there is no guarantee that a mutual fund will generate the same level of returns as
past years.

Insurance
The money you invest in a mutual fund is not insured by the Federal Deposit Insurance Corporation.
If your bank participates in FDIC insurance, your deposits are repaid to you if your bank fails, but the
money you invest in mutual funds is not protected against investment losses or bank closure

Risk
Mutual funds are exposed to risk like any other investment in the financial markets. Mutual funds try
to minimize risk by investing in an assortment of securities like stocks and short- and long-term
bonds. This strategy is commonly called diversification, and it protects you from losses in one area of
the portfolio with gains in another. While mutual funds invest in several sectors, some specialize in
certain investments like money market funds, bond funds and stock funds, which carry additional risk
of loss.

The Concepts of Assets Under Management (AUM)

The phrase Assets under Management or AUM is a financial term denoting the market value of all
the funds being managed by a mutual fund house/asset management company, on behalf of its
clients, investors, depositors, etc. This metric is very popular within the financial industry and is a
sign of the size and success of any mutual fund. The AUM figure is usually not a constant one. It is
reduced due to redemptions and withdrawals and can increase when new assets are brought into the
scheme in question.

19
Legal Framework of Mutual Funds

The mutual funds, as defined in SEBI (Mutual Funds) Regulations 1996, are modelled after the UK's
unit trusts, and are basically contractual plans. The legal framework for India's mutual funds is built
around the concept of a sponsor, a mutual fund, a board of trustees, and an asset management
company (AMC). The sponsor establishes the mutual fund, the board of trustees, and the AMC. SEBI
regulations require that a sponsor must own at least 40 per cent share of an AMC and have a track
record of at least five years in the financial industry. The concept of a mutual fund under SEBI
regulations, unlike that in Europe and USA, does not mean an individual fund offered as a product to
final investors. Such individual funds are referred to as schemes. A mutual fund is defined as a fund
established in the form of a trust, and with a trust deed. It is, therefore, a pass-through vehicle that
does not make decisions or have the status of a juridical person. In fact, the typical use of the term
mutual fund in India is similar to what is known as a fund family in the USA.The board of trustees
has the authority to make all decisions related to the mutual fund and is governed by both SEBI
regulations and the Indian Trusts Act. Many of these mutual funds take the form of a trustee
company, in which case the Companies Act 1956 applies. The Board of Trustees shoulders all the
liabilities of a mutual fund, retains oversight over the AMC and has a good role in protecting the
rights and interests of the final investors. Two- thirds of the trustees must be independent of the
sponsor. The AMC, upon approval from the Board of Trustees and SEBI, establishes and manages a
scheme under the mutual fund. The operations of mutual funds are governed by 89 regulations in
total, promulgated by SEBI in exercise of the powers conferred by section 30, read with clause (c) of
subsection (2) of section 11 of the Securities and Exchange Board of India Act 1992. The current set
of mutual fund regulations was originally promulgated in 1996, and has since been amended from
time to time.“In order to remove any difficulties in the application or interpretation of these
regulations” Regulation 77 of the mutual funds regulations additionally

authorises SEBI to issue “clarifications and guidelines in the form of notes or circulars which shall be
binding upon the sponsor, mutual funds, trustees, asset management companies and custodians”.

20
 The SEBI Regulations of 1996 comprise eleven chapters and twelve schedules and cover the
following aspects: (i) registration of mutual funds; (ii) constitution and management of mutual funds
and operation of trustees; (iii) constitution and management of asset management companies and
custodians; (iv) launching, administration and winding up of schemes; (v) investment objectives and
valuation policies regarding investments; (vi) aspects regarding real estate mutual fund schemes; (vii)
general obligations of mutual funds and asset management companies including disclosure norms;
(viii) inspection and audit of fund schemes, and investigation by SEBI; (ix) procedure for action in
case of any default by a mutual fund; and (x) other relevant miscellaneous aspects.

The following figure explains the relationship:

SPONSOR

AMC
TRUSTE

MUTUAL
FUND

CUSTODIAN
TRANSFER
AGENT

UNIT HOLDERS

2.4Mutual Fund Industry in India

The Indian mutual fund industry is among the top fifteen nations in terms of assets under
management. As a global significant player, the industry is attracting a bigger chunk of household
investments. The mutual fund industry in India started in the year 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve Bank of India. The history of
mutual funds in India can be broadly divided into the following four distinct phases:

21
The First Phase – (1964-1987)

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the
Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve
Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of
India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme
launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700 crores of assets
under management

The Second Phase – (1987-1993)

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 Can bank Mutual
Fund (December ’87), Punjab National Bank Mutual Fund (August ’89), Indian Bank Mutual Fund
(November ’89), Bank of India (June ’90), Bank of Baroda Mutual Fund (October ’92). LIC
established its mutual fund in June 1989 while GIC set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47004 crores.

The Third Phase – (1993-2003)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry,
giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first
Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be
registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was
the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised
Mutual Fund Regulations in 1996. The industry now is guided by the SEBI (Mutual Fund)
Regulations 1996. The number of mutual fund houses went on increasing during the phase, with
many foreign mutual funds setting up funds in India and also the industry witnessed several mergers
and acquisitions. At the end of January 2003, there were 33 mutual funds with total assets of
Rs.121805 crores. The Unit

22
 Trust of India with Rs. 44,541 crores of assets under management was way ahead of other mutual
funds.

The Fourth Phase – (2003 onwards)

In February 2003, following the repeal of the Unit Trust of India Act 1963, UTI was bifurcated into
two separate entities. One was the Specified Undertaking of the Unit Trust of India with assets under
management of Rs.29835 crores as at the end of January 2003, representing broadly, the assets of US
64 scheme, assured return schemes and certain other ones. The Specified Undertaking of Unit Trust
of India or UTI has since been functioning under an administrator and under the rules framed by the
Government of India and does not come under the purview of SEBI’s Mutual Fund Regulations. The
other arm was the UTI Mutual Fund or UTI II, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and is covered by the Mutual Fund Regulations of 1996. With the bifurcation of
the erstwhile UTI which had in March 2000 more than Rs.76000 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
is ventured well into its current phase of consolidation and growth.

2.5 Association of Mutual Funds in India

The Association of Mutual Funds in India (AMFI) is dedicated to developing the Indian Mutual Fund
Industry on professional, healthy and ethical lines and to enhance and maintain standards in all areas
with a view to protecting and promoting the interests of mutual funds and their unit holders. AMFI,
the association of SEBI registered mutual funds in India of all the registered Asset Management
Companies was incorporated on August 22, 1995, as nonprofit organization As of now, all the 43
Asset Management Companies that are registered with SEBI are its members.

Asset management companies in India

A. Bank Sponsored

Joint ventures Predominantly Indian

23
  BOI AXA Investment Managers Private Limited
 Canara Robeco Asset Management Company Limited

 SBI Funds Management Private Limited

 Union Asset Management Company Private Limited (formerly Union KBC Asset
Management Co. Pvt. Ltd)
Others
 Baroda Asset Management India Limited (formerly known as Baroda Pioneer Asset
Management Co. Ltd)
 IDBI Asset Management Ltd
 UTI Asset Management Company Ltd.

B. Institutions

Indian

 IIFCL Asset Management Co. Ltd.

 LIC Mutual Fund Asset Management Limited

C. Private Sectors
Indian

 DSP Investment Managers Private Limited

 Edelweiss Asset Management Limited

 Essel Finance AMC Limited

 IDFC Asset Management Company Limited

 IIFL Asset Management Ltd. (Formerly known as India Infoline Asset Management

 IL&FS Infra Asset Management Limited

 Indiabulls Asset Management Company Ltd.

 ITI Asset Management Limited

 JM Financial Asset Management Limited

 Kotak Mahindra Asset Management Company Limited (KMAMCL)

24
 L&T Investment Management Limited

 Mahindra Asset Management Company Pvt. Ltd.

 Motilal Oswal Asset Management Company Limited

 PPFAS Asset Management Pvt. Ltd.

 Quant Money Managers Limited

 Quantum Asset Management Company Private Limited

 Sahara Asset Management Company Private Limited

 Shriram Asset Management Co. Ltd.

 Sundaram Asset Management Company Limited

 Tata Asset Management Limited

 Taurus Asset Management Company Limited

 YES, Asset Management (India) Ltd.

Foreign

 BNP Paribas Asset Management India Private Limited

 Franklin Templeton Asset Management (India) Private Limited

 Invesco Asset Management (India) Private Limited

 MiraeAsset Global Investments (India) Pvt. Ltd

 Principal Asset Management Pvt. Ltd.

 Aditya Birla Sun Life AMC Limited

 Axis Asset Management Company Ltd

 HDFC Asset Management Company Limited

 ICICI Prudential Asset Management Company Limited

25
.

CHAPTER 3

Analysis & Findings

26
3.1 The top five Asset Management Companies in India
The top five mutual funds in India, in terms of average assets under management (AAUM), are
HDFC Mutual Fund, ICICI Prudential Mutual Fund, SBI Mutual Fund, Aditya Birla Sun Life
Mutual Fund and Reliance Mutual Fund (AMFI Newsletter October-December Quarter, 2020.

Mutual Fund September December %

2020 (Rs. In 2020 (Rs. In Change
Crores) Crores)
HDFC Mutual Fund 306,360 334,964 9.34
ICICI Prudential 310,257 307,735 -0.81
Mutual
Fund
SBI Mutual Fund 253,829 264,353 4.15
Aditya Birla Sun Life 254,223 242,344 -4.67
Mutual Fund
Reliance Mutual Fund 244,843 236,256 -3.51

A. HDFC Mutual Fund

HDFC Mutual Fund is at now at the top in terms of the size of AUM. With fund size of a
little more than Rs. 3 lakh crore, it is one of the largest mutual fund companies or AMCs
in the country. HDFC Asset Management Company (AMC) was incorporated in 1999. It
was approved to act as AMC for HDFC Mutual Fund in 2000. Mr. Deepak S. Parekh is
the Chairman of HDFC Mutual Fund.

27
 Top HDFC Mutual Fund schemes are:
 HDFC Balanced Fund
 HDFC Short Term Debt Fund

B. ICICI Prudential Mutual Fund

With the AUM size of more than Rs. 3 lakh crore, ICICI Prudential Asset Management
Company Ltd. is the second largest asset management company (AMC) in the country. It
is a joint venture between ICICI Bank in India and Prudential Plc, in UK. It was started in
1993. Mr. Nimesh Shah is the Chairperson of this AMC. Apart from mutual funds, the
AMC also caters to Portfolio Management Services (PMS) and Real Estate for investors.

SBI Funds Management Private Limited is a joint venture between the State Bank of India
(SBI) and financial services company Amundi, a European Asset Management company
in France. It was launched in 1987. Ms. Anuradha Rao is the Managing Director and
CEO. In 2013, SBI Fund Guru, an investor education initiative was launched

Top ICICI Prudential Mutual Fund schemes are:

 ICICI Prudential Balanced Advantage Fund
 ICICI Prudential Long-Term Plan
 ICICI Prudential Banking and Financial Services Fund

C. SBI Mutual Fund

SBI Funds Management Private Limited is a joint venture between the State Bank of
India (SBI) and financial services company Amundi, a European Asset Management
company in France. It was launched in 1987. Ms. Anuradha Rao is the Managing
Director and CEO. In 2013, SBI Fund Guru, an investor education initiative was
launched.

Top SBI Mutual Fund Schemes:

 SBI Gold Fund Growth

 SBI Blue Chip Fund

 SBI small cap Fund

28
 D. Aditya Birla Sun Life Mutual Fund
Formerly known as Birla Sun Life Asset Management Company, this fund house is the
4th largest in terms of the AUM size. Presently it is known as Aditya Birla Sun Life
(ABSL) Asset Management Company Ltd. It is a joint venture between the Aditya
Birla Group in India and Sun Life Financial Inc of Canada. It was set up as a joint
venture in 1994.

Top ABSL Mutual Fund Schemes:

 Aditya Birla Sun Life Tax Relief96

 Aditya Birla Sun Life Small and Mid cap Fund

 Aditya Birla Sun Life Advantage Fund

E. Reliance Mutual Fund

With assets under management of approximately Rs. 2.5 lakh crore, Reliance Mutual
Fund is one of India’s leading mutual fund companies. A part of Reliance Anil
Dhirubhai Ambani (ADA) Group, Reliance Mutual Fund is one of the fastest growing
AMCs in India. Reliance Capital Limited (RCL) is the sponsor and Reliance Capital
Trustee Co. Limited is the trustee of Reliance Mutual Fund (RMF). It was registered on
June 30, 1995. Reliance Mutual Fund was originally Reliance Capital Mutual Fund and
changed its name in 2004.

Top Reliance Mutual Fund Schemes:

 Reliance Tax saver ELSS Fund

 Reliance Top 200 fund

 Reliance Regular Saving Fund

 Reliance Small cap fund

The sample funds: HDFC Mutual Fund and ICICI Prudential Mutual Fund
29
HDFC Mutual Fund and SBI Mutual Fund

HDFC Mutual Fund

HDFC Mutual Fund is at the 2nd number by the size of AUM. With fund size of nearly Rs. 3
lakh crore, it is one of the largest mutual fund companies or AMC in the country. HDFC Asset
Management Company (AMC) was incorporated in 1999. It was approved to act as AMC for
HDFC Mutual Fund in 2000. Mr. Deepak S. Parekh is the Chairman of HDFC Mutual Fund.

Products of HDFC Mutual Funds:

 Equity Fund

 Balance Fund

 Debt Fund

 Liquidity Fund

ICICI Prudential Mutual Fund

With the AUM size of approximately Rs. 3 lakh crore, ICICI Prudential Asset Management
Company Ltd. is the largest asset management company (AMC) in the country. It is a joint
venture between ICICI Bank in India and Prudential Plc, in UK. It was started in 1993. Mr.
Nimesh Shah is the Chairperson of this AMC. Apart from mutual funds, the AMC also caters
to Portfolio Management Services (PMS) and Real Estate for investors.

30
Products of ICICI Mutual Funds:

 Equity Schemes

 Debt Schemes

 Balanced Schemes

 Liquid Schemes

 Children Debt Funds

SBI Mutual Funds

SBI Mutual Fund is an Asset Management Company introduced by State Bank of India (SBI)
and incorporated in 1987 with its corporate head office located in Mumbai, India. SBIFMPL is
a joint venture between the State Bank of India, an Indian public sector bank, and Amundi, a
European asset management company. With the AUM size of approximately Rs. 7.2 Lakh
crore.

Products of SBI Mutual Funds:

 Equity Funds

 Exchange Traded Funds

 Hybrid Funds

 Liquid Funds

 Debt Funds

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  Tax saving Funds

The Survey on the sample funds

I have done an analysis between the three Asset Management Companies. These three are
HFDC Mutual Funds and ICICI Prudential Mutual Funds and SBI Mutual Fund as these three
are the three top Mutual Funds in terms of AUM. I compare between HDFC Mutual Funds and
ICICI Prudential Mutual Funds and SBI Mutual Fund in this Project. The comparison is
necessary so that the investors can find it useful for making a proper idea about their
investments. 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 funds have invested with HDFC MF and
they also think that it provides better returns than ICICI Prudential MF and also SBI Mutual
Fund. There is also an effect of age on mutual fund investors like old people and widows want
regular returns than capital appreciation. In my study I have attempted a comparative analysis
of the schemes of HDFC Mutual Fund and ICICI Prudential Mutual Fund and SBI Mutual Fund
in terms of investor perception.

Analysis of the responses in the survey

A. Do you invest in Mutual Funds?

Particulars Yes No
Frequency 70 130
Percentage 35 % 65 %

32
 YES 35%

NO 0.65

YES NO

Fig 1

Interpretation: 70 candidates out of 200 have invested in Mutual Fund

B. Between HDFC and ICICI Prudential and SBI Mutual Fund, with which Company
do you have invested in Mutual Funds?

Particulars Hdfc Mutual Fund Icici Sbi Mutual Others

Prudential Fund
Frequency 10 10 15 35

Percentage 14% 14.% 22% 50%

33
 Investments
HDFC MU-
TUAL FUND
14%

ICICI PRU-
DENTIAL 14%
OTHERS
50%

SBI MUTUAL
FUND
22%

Fig 2

Interpretation: Out of 70 candidates, 10 have invested in Mutual Funds with HDFC and
10 have invested with ICICI, and 15 have invested with SBI and rest of them are invested
in other mutual funds.

C. What is the age of the investors?

Particulars 18-25 26-35 36-45 Above

45
Frequency 45 18 5 2

Percentage 64% 26% 7% 3%

34
 Investors Age Group

3%
7%

26%

64%

18 - 25 yrs 26 - 35 yrs 36 - 45 yrs 45+ yrs

Fig. 3

Interpretation: There are 45 investors who have aged between 18 to 25 and 18 investors
aged between 26 to 35 and 5 investors are aged between 36 to 45 and 2 investors are aged
above 45

D. What is your annual Income?

Particulars Under Rs. 1 Rs. 1 Lakh - 5 More than Rs.

Lakh Lakh 5 Lakh
Frequency 30 15 25
Percentage 43% 21.5% 35.5%

35
 Annual income

5L+
35.5%
Under 1L
43%

Rs 1L- 5L
21.5%

Under Rs 1L 1L - 5L 5L+

Fig. 4

Interpretation: There are 30 investors have annual income under 1 lakh, 15 investors
have annual income of 1 to 5 Lakh and 25 investors have annual income of more than 5
Lakh.

E. From where you come to know about the schemes of Mutual Funds?

Particulars Family and Friend Circle Social media Others

Relatives
Frequency 15 30 20 5
Percentage 21 % 43% 29% 7%
36
 Source
7%
21%

29%

43%

Family and relatives Friend Circle Social Media Others

Fig. 5

Interpretation: 15 investors came to know about the Mutual Funds Schemes from Family
and Relatives, 30 knew from Friends Circle, 20 knew from social media and 5 from others

F. What is the duration of investment?

Particulars Below 1-4 years More than 4

1 Year Years
Frequency 19 45 6
Percentage 27% 64% 9%

37
 Duration of Investment
9%

27%

64%

Below 1 yr 1-4 yrs more than 4 yrs

Fig. 6

Interpretation: 19 Investors have time of investment for less than 1 year, 45 investors
have the investment duration of 1-4 years and 6 have more than 4 years.

G. Are investors satisfied with the mutual fund annual returns?

Particulars Highly Satisfie Neutral Dissatisfied

satisfied d
Frequency 30 15 15 10

38
 Percentage 43% 21% 21% 14%

Satisfaction with Returns

14%

43%
21%

21%

Highly Satisfied Satisfied Neutral Dissatisfied

Fig. 7

Interpretation: 30 investors are highly satisfied about the annual returns while 15 are
satisfied, 15 are neutral, 10 are dissatisfied investors.

H. What is your risk profile?

Particulars Innovator Moderate Risk Adverse

Frequency 35 20 15

Percentage 50% 29% 21%

39
 Risk Profile

21%

50%

29%

1st Qtr Moderate Risk Adverse

Fig. 8

Interpretation: 50% investors are innovator means they like to take risk for more returns.
29% are moderate towards risk means they are indifferent towards risk. 21% are risk
adverse means they mainly try to avoid risk

I. What Investors feel about the Company Norms, Documentation and Formalities?

Particulars Highly Satisfied Neutral Dissatisfied

Satisfied
Frequency 10 17 35 8
Percentage 14% 24% 50% 12%
40
 7%

12%

58%
24%

Highly Satisfied Satisfied Neutral Dissatisfied

Fig. 9

Interpretation: 14% investors are highly satisfied by company’s documentation policy

(filling up the forms etc.). 24% are satisfied, 50% are moderate towards it, 12% are
dissatisfied by it.

J. What Investors say which Company provides better returns?

Particulars HDFC Mutual Fund ICICI Prudential SBI Mutual Fund

Frequency 15 30 25
Percentage 21% 43% 36%

41
 Better Returns

21%

36%

43%

HDFC ICICI SBI

Fig. 10

Interpretation: According to collected data 15 investors thinks that HDFC Mutual Funds
provides better returns whereas 30 think that ICICI Prudential Mutual Funds provides
better returns and 25 investors think that SBI Mutual Fund provides best return.

K. Would you like to exchange your investment with one another between HDFC Mutual
Funds and ICICI Prudential Mutual Funds?

Particulars Yes No
Frequency 22 48
Percentage 31.5% 68.5%

42
 31%

69%

Yes No

Fig. 11

Interpretation: 22 investors said that they would like to change their investment with
each another between HDFC & ICICI. But 48 investors say that they are okay with their
companies and they would not like to exchange their investment.

Findings
In findings 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
ICICI MF and they think that it provides better returns than HDFC MF. And most of the
people think ICICI MF is the best MF which provides best return.
43
ICICI have also respondents and it can increase its investors by improving itself in some
terms.

We can say mutual fund is a best investment vehicle for the old as well as for those who
want regular returns on their investment.

Would you like to exchange your investment with one another between HDFC Mutual
Funds and ICICI Prudential Mutual Funds? Yes No

Mutual fund is also better and preferable for those who want their capital appreciation.
Both HDFC MF and ICICI MF are performing very well in the Indian mutual fund sector.
There are also so many competitors involved who affect performance of both the fund.

44
 CHAPTER 4
Conclusion
&
Recommendations

Conclusion

On the basis of my research, I may conclude as follows.

45
a) Investors have more faith in SBI Mutual Fund and HDFC Mutual Funds than ICICI Prudential
Mutual Funds.
b) As the age increases investors are much satisfied, see more risk and become more risk averse.
c) Old people and widows prefer lower risk
d) Investors are not fully satisfied with the customer service of the selected fund houses
e) Investors, in general think that HDFC Mutual Funds provide better returns than ICICI Prudential
and
SBI Mutual Fund.

Recommendations

I have some recommendations for the mutual fund authorities as stated below:

a) ICICI Prudential Mutual Fund should try to provide better returns to its investors as compared to
HDFC Mutual Fund. SBI MF is better than HDFC MF and ICICI PMF.
b) Three mutual funds should try to invest in better securities for better profits.
c) Three mutual funds should try to satisfy their customer by better customer service or by improving
customer relationship management.
d) Investors should be made fully aware of the concept of mutual fund and all the terms and conditions
must be explained as far as possible

Bibliography

46
 Books:
 Kothari, C. R. Research Methodology. Vikas Publishing House Private Limited, New Delhi,
(2007).
 ICICI Prudential Mutual Funds Brochure
 HDFC Mutual Funds Brochure
 SBI Mutual Funds Brochure

Websites:
 www.wikipedia.org
 www.quora.in
 www.scribd.com
 https://moneycontrol.com
 https://www.amfiindia.com
 https://hdfc.com

Questionnaire

1) Do you invest in Mutual Fund?

47
 a) Yes
b) No
2) Between HDFC and ICICI Prudential, with which Company do you have invested in
Mutual Funds?

a) HDFC Mutual Funds

b) ICICI Mutual Funds
c) SBI Mutual Funds
d) Others
3) What is the age of the investor?

a) 18-25.
b) 26-35
c) 36-45
d) 45+.
4) What is your annual income?

a) Under 1 Lakh
b) 1 Lakh – 5 Lakh
c) 5 Lakh above.
5) From where you come to know about the schemes of Mutual Funds?

a) Family and relatives

b) Friend circle.
c) Social media
d) Others.
6) What is the duration of Investment?

a) Below 1 year
b) 1 year – 4 years
c) 4 years +.

48
7) Are investors satisfied about the service and behaviour of the Company’s Employees?

a) Highly satisfied.
b) satisfied.
c) neutral
d) dissatisfied.
8) What is your risk profile?

a) Innovator
b) Moderate
c) Risk adverse.
9) What Investors feel about the Company Norms, Documentation and Formalities?

a) Highly satisfied
b) Satisfied
c) Neutral
d) Dissatisfied.
10) What Investors say which Company provides better returns?

a) HDFC Mutual Funds

b) ICICI Mutual Funds
c) SBI Mutual Funds.
11) Would you like to exchange your investment with one another between HDFC &
ICICI Prudential Mutual Funds?

a) Yes
b) No.

49