PROJECT REPORT

On
A Study On Performance Evaluation Of Mutual Fund In
India And Its Awareness Among Investors

NAME OF THE COMPANY: HDFC AMC

NAME OF THE STUDENT: SIMRAN LALCHANDANI

ENROLLMENT NO: 17P125

LOACTION: AHMEDABAD

BATCH: 2017-2019

SUBMITTED TO

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 Acknowledgment
Research is formalized curiosity. It is poking and prying with a purpose. It is
difficult to acknowledge precious a debt as that of learning as it is the only debt that is
difficult to repay except through gratitude. I take this opportunity to express my deep
sense of gratitude to all those who made this research possible.

I owe my deep gratitude to to the my management institute Unitedworld School

of Business which created a great platform to attain profound technical skills in
the field of MBA, thereby fulfilling our most cherished goal.

I would thank the Industry guide of HDFC AMC Maninagar specially Mr.
Arpit Kotecha (Manager) and Mr.Amit Mallick sir for guiding me and helping
me in successful completion of the project.

I also want to covey thanks to our Faculty guide Dr. Himanshu Barot sir for
extending his cooperation in completion of Project.

Also I acknowledge the contribution of the respondents and friends who helped
me directly or indirectly in bringing this project successfully.

Simran Lalchandani
17P125

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 Declaration
I hereby declare that the internship project entitled “A Study On Performance
Evaluation Of Mutual Fund In India And Its Awareness Among Investors” is done as
a HDFC AMC intern, submitted in partial fulfillment of the requirements for award of
the degree of MBA at Unitedworld School of Business, affiliated to Karnavati
University, Gandhinagar, is done by me and to the best of my knowledge and no such
work has been submitted by any other person for the award of degree or diploma. I
also declare this as an authentic work and has not been submitted to any other
University/Institute for award of any degree/diploma.

Simran Lalchandani
17P125

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 Index
SR Content Page
no no
Acknowledgement 2
Declaration 3
1 Introduction 06

1.1 History Of Mutual Funds 08

1.2 Industry Profile 10
1.3 Company Profile 18
2 Review of literature 24
2.1 Article by Vedala Shelja 24
2.2 Article by G. Balamurugan, M Rangeela 24
2.3 Article by Naresh Kumar 25
2.4 Article by Sushil kumar1 25
2.5 Article by Dr. Kavita Arora 26
2.6 Article by Prasanna Kumar, S. Rajkumar 26
2.7 Article by R. Kumar Gandhi 27
2.8 Article by Dr.Shantanu Mehta, Charmi Shah 27
3. Research Methodology 29
3.1 Purpose of the study 29
3.2 Objectives 29
3.3 Limitations Of The Study 29
4 Data Collection and Analysis 30

4.1 Uni variate Analysis 31

4.2 Bi variate Analysis 37
4.3 Hpothesis 40
5 Findings And Recommendations 42
6 Summary And Conclusion 44
Reference and Bibliography 45
Annexure 46

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 List of Tables
Table
What the table is about Page no
number
1 The statistics of return factor 32
2 The mode of investment or saving 5 years back 33
The number of respondents doing investment in
3 35
mutual fund
4 The reason people don’t invest in mutual funds. 36
5 Respondents investing in different mutual fund companies 37
Cross tabulation on bjectives of the investments and
6 38
duration of the investments.
The age of the people who are mostly investing in the
7 40
mutual funds.
8 One-Way ANOVA Test 41
9 Chi-Square Tests 42
10 Chi-Square Tests 42

List of Figures
Figure
What the figure is about Page no
number
1 The statistics of return factor 32
2 The mode of investment or saving 5 years back 33
The number of respondents doing investment in
3 35
mutual fund
4 The reason people don’t invest in mutual funds. 36
5 Respondents investing in different mutual fund companies 37
Cross tabulation on objectives of the investments and
6 duration of the investments.
38
The age of the people who are mostly investing in the
7 40
mutual funds.

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 1. Introduction
Meaning of Mutual Fund

A mutual fund is a common pool of money in to which investors with common

investment objective place their contributions that are to be invested in accordance
with the stated investment objective of the scheme. This common pool is managed by
the professional and expert called as the fund manager. The fund manager would
invest the collected money in to assets that are permitted by the stated objective of the
scheme. For example an equity fund would invest in equity and equity related
instruments and a debt fund would invest in bonds, debentures, gilts etc.

The main idea of a mutual fund is to enable investors to pool their money and place it
under professional investment management. The manager makes the trades, realizing
a gain or loss, and collects the dividend or interest income. The investment proceeds
are then passed along to the individual investors. Mutual funds can invest in many
different kinds of securities. The most common are cash, stock, and bonds, but there
are hundreds of sub-categories. Stock funds, for instance, can invest primarily in the
shares of a particular industry, such as high technology or utilities.

Mutual funds are institutions that collect money from several sources - individuals or
institutions by issuing 'units', invest them on their behalf with predetermined
investment objectives and manage the same all for a fee.

They invest the money across a range of financial instruments falling into two broad
categories – equity and debt. Individual people and institutions no doubt, can and do
invest in equity and debt instruments by themselves but this requires time and skill on
both of which there are constraints. Mutual funds emerged as professional financial
intermediaries bridging the time and skill constraint. They have a team of skilled
people who identify the right stocks and debt instruments and construct a portfolio
that promises to deliver the best possible 'constrained' returns at the minimum
possible cost. In effect, it involves outsourcing the management of money. More
explicitly, the benefits of investing in equities and debt instruments are supposedly
much better if done through mutual funds.

This is because of the following reasons :

 Firstly, fund managers are more skilled. They are trained to identify the best
investment options and to assess the portfolio on a continual basis.
 Secondly, they are able to invest in a diversified portfolio consisting of 15-20
different stocks or bonds or a combination of them. For an individual such
diversification reduces the risk but can demand a lot of effort and cost. Each

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 purchase or sale invites a cost in terms of brokerage or transactional charges
such as demat account fees in India.
 The need to possibly sell 'poor' stocks/bonds and buy 'good' stocks/bonds
demands constant tracking of news and performance of each company they
have invested in. Mutual funds are able to maintain and track a diversified
portfolio on a constant basis with lesser costs. This is because of the pecuniary
economies that they enjoy when it comes to trading and other transaction
costs.
 Funds also provide good liquidity. An investor can sell her/his mutual fund
investments and receive payment on the same day with minimal transaction
costs as compared to dealing with individual securities, this totals to superior
portfolio returns with minimal cost and better liquidity. This can be
represented with the following flow chart:

In India one can gain additional benefit by investing through mutual funds tax
savings. Investment in certain types of funds such as Equity Linked Tax Savings
Schemes (ELSS) allows for certain amount of income tax benefits.

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 1.1 HISTORY OF MUTUAL FUNDS

The mutual fund industry started in 1963 with the formation of the Unit Trust of India
which was the initiative of the Government of India and the Reserve Bank of India.
The history of mutual funds in India can be broadly classified into four distinct
phases.

1) First Phase : 1964 – 1987

An Act of Parliament established Unit Trust of India(UTI) on 1963. It was set up by

the Reserve Bank of India and functioned under the Regulatory and administrative
control of the RBI. In 1978, UTI was delinked from RBI and the 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. 6700 crores of AUM.

2) Second Phase : 1987 – 1993 (Entry of Public Sector Funds)

In 1987, it was the entry of non-UTI, public sector mutual funds setup by public
sector banks and the 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.

Mobilization as % of
Amount Mobilized Assets Under
1992 – 93 Gross Domestic
(Cr.) Management
Savings
UTI 11057 38247 5.2%
Public Sector 1964 8757 0.9%
Total 13021 47004 6.1%

3) Third Phase : 1993 – 2003 (Entry of Private Sector Funds)

With the entry of the private sector funds in 1993, a new era started in the Indian
Mutual Fund Industry, giving the investors a wider choice of fund families. Also,
1993 was the year in which 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 industry now functions under SEBI
Regulations, 1996. At the end of January 2003, there were 33 mutual funds with total
assets of Rs. 121805 crores. The UTI with Rs. 44541crores of AUM was way ahead
of other mutual funds.

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 4) Fourth Phase – Since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit
Trust of India with assets under management of Rs.29835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations .The Assets
under Management(AUM) have grown at a rapid pace over the past few years at a
CAGR of 35% for the past few years at a CAGR of 35 percent for the five- year
period from 31 March, 2005 to 31 March, 2009. Over the 10-year period from 1999 to
2009encompassing varied economic cycles, the industry grew at 22% CAGR. This
growth was despite two falls in the AUM the first being after year 2001 due to dotcom
bubble burst and the second in 2008, consequent to the global economic crisis.

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1.2 INDUSTRY PROFILE
Regulatory Framework

Securities and Exchange Board of India (SEBI)

The Government of India constituted Securities and Exchange Board of India, by an
Act of Parliament in 1992, the apex regulator of all entities that either raise funds in
the capital markets or invest in capital market securities such as shares and debentures
listed on stock exchanges. Mutual funds have emerged as an important institutional
investor in capital market securities. Hence they come under the purview of SEBI.
SEBI requires all mutual funds to be registered with them. It issues guidelines for all
mutual fund operations including where they can invest, what investment limits and
restrictions must be complied with, how they should account for income and
expenses, how they should make disclosures of information to the investors and
generally act in the interest of investor protection. To protect the interest of the
investors, SEBI formulates policies and regulates the mutual funds.

MF either promoted by public or by private sector entities including one promoted by

foreign entities are governed by these Regulations. SEBI approved Asset
Management Company (AMC) manages the funds by making investments in various
types of securities. Custodian, registered with SEBI, holds the securities of various
schemes of the fund in its custody. According to SEBI Regulations, two thirds of the
directors of Trustee Company or board of trustees must be independent.

Association of Mutual Funds in India (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association
in India was generated to function as a non-profit organization. Association of
Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995. AMFI is an
apex body of all Asset Management Companies (AMC) which has been registered
with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its
member. It functions under the supervision and guidelines of its Board of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund
Industry to a professional and healthy market with ethical line enhancing and
maintaining standards. It follows the principle of both protecting and promoting the
interests of mutual funds as well as their unit holders.
The Objectives of Association of Mutual Funds in India

The Association of Mutual Funds of India works with 30 registered AMCs of the
country. It has certain defined objectives which juxtaposes the guidelines of its Board
of Directors. The objectives are as follows :

 This mutual fund association of India maintains high professional and ethical
standards in all areas of operation of the industry.

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  It also recommends and promotes the top class business practices and code of
conduct which is followed by members and related people engaged in the
activities of mutual fund and asset management.
 AMFI interacts with SEBI and works according to SEBIs guidelines in the
mutual fund industry.
 Associations of Mutual Fund of India do represent the Government of India,
the Reserve Bank of India and other related bodies on matters relating to the
Mutual Fund Industry.
 It develops a team of well qualified and trained Agent distributors. It
implements a program of training and certification for all intermediaries and
other engaged in the mutual fund industry.
 AMFI undertakes all India awareness program for investors in order to
promote proper understanding of the concept and working of mutual funds.
 At last but not the least association of mutual fund of India also disseminate
information on Mutual Fund Industry and undertakes studies and research
either directly or in association with other bodies.

Structure of a Mutual Fund

There are many entities involved and the diagram below illustrates the organizational
set up of a mutual fund. The important terms of the figure are explained as follows:

Sponsor :-

A ‟sponsor” is any person who, acting alone or in combination with another body
corporate, establishes a MF. The sponsor of a fund is similar to the promoter of a

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company. In accordance with SEBI Regulations, the sponsor forms a trust and
appoints a Board of Trustees, and also generally appoints an AMC as fund manager.
In addition, the sponsor also appoints a custodian to hold the fund assets. The sponsor
must contribute at least 40% of the net worth of the AMC and possess a sound
financial track record over five years prior to registration.

Trust :-

The “Trust” can either be managed by the Board of Trustees, which is a body of
individuals, or by a Trust Company, which is a corporate body. Most of the funds in
India are managed by Board of Trustees. The trustee being the primary guardian of
the unit holders funds and assets has to be a person of high repute and integrity. The
trustees, however, do not directly manage the portfolio securities. The portfolio is
managed by the AMC as per the defined objectives, accordance with Trust Deed and
SEBI (Mutual Funds) Regulations.

Asset Management Company (AMC) :-

The AMC, which is appointed by the sponsor or the trustees and approved by SEBI,
acts like the investment manager of the trust. The AMC functions under the
supervision of its own Board of Directors, and also under the direction of the trustees
and SEBI. AMC, in the name of the trust, floats and manages the different investment
‟schemes‟ as per the SEBI Regulations and as per the Investment Management
Agreement signed with the Trustees.

Others :-

Apart from these, the Mutual Fund has some other fund constituents, such as
custodians and depositories, banks, transfer agents and distributors. The custodian is
appointed for safe keeping of securities and participating in the clearing system
through approved depository. The bankers handle the financial dealings of the fund.
Transfer agents are responsible for issue and redemption of units of Mutual Fund.

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Types of Mutual Funds

Mutual funds can be divided depending upon various factors and variables, such as,
maturity period, investment objectives etc.

1) Schemes according to Maturity Period :- A mutual fund can be classified into

close-ended or open-ended scheme depending upon its maturity period.

a) Open-ended fund :

An open-ended fund is one that is available for subscription and repurchase on

continuous basis. These schemes do not have a fixed maturity period.
Investors can conveniently buy and sell units at Net Asset Value(NAV) related
prices which are declared on a daily basis. The key feature of open-end
scheme is liquidity.

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 b) Close-ended fund :

A close-ended scheme has a stipulated maturity period e.g. 5-7 years. The
fund is open for subscription only during a specified period at the time of
launch of the scheme. Investors can invest in the scheme at the time of initial
public issue and thereafter they can buy or sell the units of the scheme on the
stock exchanges where the units are listed. In order to provide an exit route to
the investors, some close ended funds give an option of selling back the units
to mutual funds through periodic repurchase at NAV related prices. SEBI
regulation stipulated that at least one of the two exit routes is provided to the
investors i.e. either repurchase facility or through listing on stock exchanges.
These mutual funds schemes disclose NAV generally on weekly basis.

2) Schemes according to Investment Objectives :-

A scheme can also be classified as growth scheme, income scheme, or

balanced scheme considering its investment objective. Such schemes may be open-
ended or close-ended schemes as described earlier.

a) Growth or Equity oriented fund :

The aim of growth funds is to provide capital appreciation over the

medium to long term. Such schemes normally invest a major part of
their corpus in equities. Such funds have comparatively high risk. These
schemes provide different options to the investors like dividend option,
capital appreciation etc... and the investors may choose an option
depending on their performance. The investors must indicate the option
in the application form. The mutual funds also allow the investors to
change the options at a later date. Growth schemes are good for
investors having a long term outlook seeking appreciation over a period
of time.

b) Balanced fund :

The aim of balanced funds is to provide both growth and regular

income as such schemes invest both in equity and fixed income
securities. These are appropriate for the investors looking for moderate
growth. They generally invest 40% to 60% in equity and debt
instruments. However, NAVs of such funds are likely to be less volatile
compare to pure equity funds.

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c) Income / debt oriented fund :

The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds,
corporate debentures, Govt. securities and money market instruments. Such
funds are less risky compared to equity schemes. These funds are not affected
because of fluctuations in equity markets. However, opportunities of capital
appreciation are also limited in such funds. The NAVs of such funds are
affected because of change in interest rates in the country. If the interest fall,
NAVs of such funds are likely to increase in the short run and vice-versa.
However, long term investors may not bother about these fluctuations.

d) Money market or liquid fund :

These funds are income funds and their aim is to provide easy liquidity,
preservation of capital and moderate income. These schemes invest
exclusively in safer short-term instruments such as treasury bills,
certificates of deposits, commercial paper and inter-bank call money,
government securities, etc. Returns on these schemes fluctuate much
less compared to other funds. These funds are appropriate for corporate
and individual investors as a means to park their surplus funds for short
periods.

e) Gilt fund :

These funds invest exclusively in Govt. securities. Govt. securities have no

default risk. NAVs of these schemes also fluctuate due to change in interest
rates and other economic factors as is the case with income or debt oriented
schemes.

f) Index funds :

Index funds replicate the portfolio of a particular index such as the BSE
sensitive index, S&P NSE-50 index (Nifty) etc. These schemes invest in the
securities in the same weight-age comprising of an index. The NAVs of such
schemes would rise or fall in accordance with the rise or fall in the index,
though not exactly by same percentage due to some factors known as ―
tracking error‖ in technical terms. Necessary disclosures in this regards are
made in the offer document of the mutual fund scheme. These are also
exchange traded index funds launched by the mutual funds which are traded
on the stock exchange.

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 g) ELSS :
Equity linked savings scheme (ELSS) are equity funds floated by
mutual funds. This scheme is suited for young people as they have the
ability to take on higher risk. The ELSS funds should invest more than
80 per cent of their money in equity and related instruments. It is ideal
to invest in them when the markets are down. These funds are now open
all the year round. The other way of investing in these funds could be a
systematic investment.

The Indian mutual funds industry is witnessing a rapid growth as a result of

infrastructural development, increase in personal financial assets, and rise in foreign
participation. With the growing risk appetite, rising income, and increasing
awareness, mutual funds in India are becoming a preferred investment option
compared to other investment vehicles like Fixed Deposits (FDs) and postal savings
that are considered safe but give comparatively low returns, according to “Indian
Mutual Fund Industry”.

Employment opportunities
Indian Mutual Fund Industry is playing an active role in the capital market today and
is one of the fastest growing industries in the country. The industry offers multiple
career options to the youths irrespective of their academic subjects. Graduates from
arts, science and commerce can easily find a job in this promising and growing sector.
Due to the participation of private players and many financial institutions into the
mutual funds markets, they have further widened the scope of employment in this
sector. Career in Mutual funds require the minimum qualification of a certification
(Advisor Module) and a registration number from the Associations of Mutual Funds
in India (AMFI). SEBI has made mandatory for any entity or person engaged in
marketing and selling of mutual fund products to pass AMFI certification test
(Advisors Module) and obtain registration number from. This certification remains
valid for 5 years from the date of the test.

Current Scenario of mutual fund industry

 Average Assets Under Management (AAUM) of Indian Mutual Fund Industry

for the month of May 2018 stood at ₹ 23.43 lakh crore. Assets Under
Management (AUM) as on May 31, 2018 stood at ₹22.60 lakh crore.
 The AUM of the Indian MF Industry has grown from ₹ 5.05 trillion as on 31st
March 2008 to ₹22.60 trillion as on 31st May, 2018, about four and half fold
increase in a span of 10 years!!
 The MF Industry’s AUM has grown from ₹7.01 trillion as on 31st March,
2013 to ₹22.60 trillion as on 31st May 2018, more than three fold increase in a
span of 5 years !!
 The Industry’s AUM had crossed the milestone of ₹10 Trillion (₹10 Lakh
Crore) for the first time in May 2014 and in a short span of about three years,
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 the AUM size had increased more than two folds and crossed ₹ 20 trillion (₹20
Lakh Crore) for the first time in August 2017. The Industry AUM stood at
₹22.60 Trillion (₹ 22.60 Lakh Crore) as on 31st May, 2018.
 The total number of accounts (or folios as per mutual fund parlance) as on
May 31, 2018 stood at 7.35 crore (73.5 million), while the number of folios
under Equity, ELSS and Balanced schemes, wherein the maximum investment
is from retail segment stood at 6.13 crore (61.3 million).
 The total folio count at the end of March 2017 stood at 5.54 crore, 1.9%
higher than February 2017, according to data from the Securities and
Exchange Board of India (SEBI). In FY2017, the mutual fund industry
added 77.4 lakh new folios or around 6.4 lakh new folios every month
despite volatility in overall market conditions.

March 2017 saw the highest number of folios added in a month in FY2017
at 10.1 lakh. The growth was driven by the ELSS category that added 3.2
lakh folios in the month. Out of the 10.1 lakh folios, 7.4 lakh came from the
Equity (including the ELSS) category. The folio count for the Liquid
category more than doubled in FY2017, suggesting retail investors are
looking at this route for surplus cash deposit.

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1.3 COMPANY PROFILE
 Overview of the company

HDFC Mutual Fund has been constituted as a trust in accordance with the provisions
of the Indian Trusts Act, 1882, as per the terms of the trust deed dated June 8, 2000
with Housing Development Finance Corporation Limited (HDFC) and Standard Life
Investments Limited as the Sponsors / Settlors and HDFC Trustee Company Limited,
as the Trustee. The Trust Deed has been registered under the Indian Registration Act,
1908. The Mutual Fund has been registered with SEBI, under registration code
MF/044/00/6 on June 30, 2000.

HDFC Asset Management Company Ltd (AMC) was incorporated under the
Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset
Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July
3, 2000.

The registered office of the AMC is situated at “HDFC House”, 2nd Floor, H. T.
Parekh Marg, 165-166, Backbay Reclamation, Churchgate, Mumbai - 400 020. The
Company Identification Number(CIN) is U65991MH1999PLC123027.

As on September 30, 2017, HDFC Limited holds 57.36 per cent stake and Standard
Life holds 38.24 per cent stake, while other investors hold 4.40 per cent stake in the
company.

Trustees

HDFC Trustee Company Limited, a company incorporated under the Companies Act,
1956 is the Trustee to HDFC Mutual Fund vide the Trust deed dated June 8, 2000, as
amended from time to time. HDFC Trustee Company Ltd is wholly owned subsidiary
of HDFC.

The registered office of the Trustee company is situated at “HDFC House”, 2nd Floor,
H. T. Parekh Marg, 165-166, Backbay Reclamation, Churchgate, Mumbai - 400 020.
The Company Identification Number (CIN) is U65991MH1999PLC123026.

Sponsers

 HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

(HDFC Ltd.)

HDFC was incorporated as a public limited company on October 17, 1977 under the
Companies Act, 1956 and received a certificate of commencement of business on
December 3, 1977. HDFC received a certificate of registration dated July 31, 2001
from the NHB under Section 29A of the NHB Act. Its CIN is
L70100MH1977PLC019916 and its registered office is situated at Ramon House,

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169, Backbay Reclamation, H. T. Parekh Marg, Mumbai 400 020, Maharashtra, India.
The equity shares of HDFC were listed on BSE in 1978 and NSE in 1996. The equity
shares of HDFC are currently listed on NSE and BSE.

As per the terms of the memorandum of association of HDFC, its main object is to,
inter alia, advance money to any person, company, association or society, either at
interest or without, and / or with or without any security, for the purpose of enabling
the borrower to erect or purchase or enlarge or repair any house or building or lease
any property in India on such terms and conditions as it may deem fit.

As on date, HDFC carries on the business of financing by way of loans for the
purchase or construction of residential houses, commercial properties and certain
other purposes, in India. All other activities of HDFC revolve around the main
business carried out by it.

 STANDARD LIFE INVESTMENTS LIMITED

Standard Life Assurance Company (“Standard Life”) was, founded in 1825 and
present in the Indian life insurance market from 1847 to 1938 when agencies were set
up in Kolkata and Mumbai. Standard Life re-entered the Indian market in 1995,
launching an insurance joint venture with HDFC.

In 1998, Standard Life Investments launched as a separate company, rapidly

becoming a leading global asset manager. In 2017, Standard Life merged with
Aberdeen Asset Management forming the Standard Life Aberdeen Group.

Standard Life Aberdeen is one of the world’s largest investment companies, dedicated
to creating long-term value for clients and shareholders.

On completion of the merger, Standard Life Investments Limited remains a wholly

owned subsidiary of Standard Life Investments (Holdings) Limited, which in turn is a
wholly owned subsidiary of Standard Life Aberdeen plc, the ultimate parent of the
Standard Life Aberdeen Group.

While retaining distinct investment philosophies and processes, Standard Life

Investments and Aberdeen Asset Management share a set of common investment
beliefs. The combined investment business has a substantial global presence with
clients across 80 countries and £575.7bn assets under management*. It manages a
diverse portfolio covering all major markets world-wide, including a range of private
and public equities, government and company bonds, property investments and
various derivative instruments. For more information log on to
www.aberdeenstandard.com

* AUM of Aberdeen Standard Investments based on a Pro forma basis as at 31

December 2017.

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  In terms of the Investment Management Agreement, the Trustee has appointed
the HDFC Asset Management Company Limited to manage the Mutual Fund.
The paid up capital of the AMC is approx. Rs. 1052.77 million as on March
15, 2018.
 Snapshot of the company

The company had 7.61 million active client accounts as of December 2017. It offered
127 investment schemes across asset classes comprising 28 equity-oriented schemes,
91 debt schemes, three liquid schemes, and five other schemes (including exchange-
traded schemes and funds of fund schemes).

Equity-oriented schemes account for 53.0% of its total assets under management
(AUM) of 2.93 lakh crore as of December this year compared with the industry
average of 44.1%.

HDFC AMC also provides portfolio management and segregated account services,
including discretionary, non-discretionary and advisory services, to high net-worth
individuals (HNIs), family offices, domestic corporates, trusts, provident funds and
domestic and global institutions.

Financials

 The company claims to be the most profitable AMC since the financial year
2012-2013.
 It reported net profit of Rs 495.55 crore for nine months ended December
2017 on revenue (from operations) of Rs 1209.97 crore for the same duration.
 The company’s net profit for 2016-17 stood at Rs 550.24 crore on revenue of
Rs 1,480.03 crore, while its 2015-16 net profit was Rs 477.88 crore on
revenue of Rs 1442.54 crore.
 HDFC AMC’s net profit has risen at a compounded annual rate (CAGR) of
11.54% in the previous five years beginning fiscal 2013. Revenue has risen at
a CAGR of 15.64%.
 Leading mutual fund house HDFC Asset Management Company (AMC)
reported a 31 per cent jump in net profit at Rs 722.61 crore in 2017-18
compared to Rs 550.24 crore in the previous financial year.
 The company's total revenue surged 17.6 per cent year-on-year to Rs 1,867.24
crore in financial year 2017-18.
 Currently (2017-18), HDFC AMC manages assets base to the tune of over Rs
3 lakh crore. HDFC AMC is a joint venture between HDFC and Standard Life
Investments.

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Summary of Schemes

 Corpus under management : Rs. 300793.7259 crs. (as on 31-Mar-2018)

 No of schemes : 488 which includes the following:
 Arbitrage Funds (6)
 Balanced (10)
 Equity (33)
 ETFs (3)
 Fixed Maturity Plans (228)
 Floating Rate Income Funds (8)
 Fund of Funds (3)
 Gilt Funds (2)
 Income Funds (15)
 Liquid Funds (11)
 Monthly Income Plans (2)
 Short Term Income Funds (9)
 Ultra Short Term Funds (8)

Distribution network

 HDFC Mutual Fund is one of the largest mutual funds in India with an
investor base of over 25 lakh which is serviced primarily Wide network of
distributors. Distributions are intermediaries between the investor and the fund
house, who sell schemes of the fund house and earn a commission or fee from
us. Distributors are an important part of the asset management business. To
help distributors to advise and service their clients better together with the
registrar (CAMS) offer a range of facilities to us.

 HDFC will set aside some shares in the initial public offering of its mutual
fund arm for its empaneled distributors. In the upcoming HDFC Asset
Management public issue, the firm has reserved 7.2 lakh shares for these
intermediaries. Distributions are intermediaries between the investor and the
fund house, who sell schemes of the fund house and earn a commission or fee
from us. Distributors are an important part of the asset management business.
Such a reservation help build a deeper connect with distributors. HDFC Ltd,
the second largest mutual fund company by assets has 80,000 empanelled
distributors.

Customer service

There is a dedicated page for the benefit of unit holder of HDFC Mutual Fund who
wish to communicate with us. At HDFC Mutual Fund, they believe in offering the
very best of products and ensuring high service standards. As part of this endeavour,
they believe that you should be able to contact us to offer comments on our products /

21 | P a g e
services and also to air your grievances, if any. They earnestly values feedback as it
helps us review our present standards and improve upon us at every possible
opportunity. The following are the various avenues for you as an investor to contact /
write to us, depending on convenience.

 Call Centre
 e-Mail
 SMS
 Investor Service Centres
 Investor Relations Officer

Feedback And Grievances

They normally respond to in 2 business days from the date of receipt of

communication or earlier wherever possible.

Technology

 The most important technology adopted is “Towards a paperless

experience”. First Unit Holder (hereinafter referred to as 'User') or an
authorized person of the User to carry out certain transactions / give
instructions electronically on behalf of the User in respect of the User’s
folio whilst availing the eServices offered by HDFC Mutual Fund. The
eServices presently offered by HDFC Mutual Fund to an Investor includes
HDFCMFOnline, HDFCMF Mobile, edocs, eAlert and ePayouts.

 CRM Technology- Client relationship management (CRM) software is

the key technology enabler for asset managers who want to take a strategic
approach to coordinated, profitable business relationships. It offers a
compelling opportunity for asset managers to improve operational
efficiencies, build a loyal client base, capitalize on opportunities to grow
assets under management, and gain a competitive edge. Financial services
fi rms can rapidly and cost-effectively adapt CRM to meet changing
compliance and operational demands and grow with their business—
meeting their business needs today, tomorrow, and in the future.

Competition

Major competitors of HDFC AMC are

 Reliance Mutual Funds

 ICICI Prudential Mutual Fund
 Birla Sun Life Mutual Fund
 UTI Mutual Fund.
 SBI Mutual Fund

22 | P a g e
  AXIS Mutual Fund
 IDFC Mutual Fund
 HSBC Mutual Fund
 L&T Mutual Funds

 Swot Analysis

Strength:

 Large Employee Base: It has huge customer base. More than 50000
employees are working there.
 Brand strategy: Well-regained and reputed brand of HDFC. The company
operates under numerous well-known brand names, which allows the company
to appeal to many different segments of the market.
 Experience: Experience of Standard Life Investment.
 Diversification: Large portfolio of schemes.
 Well aware of customer need.

Weakness

 Untapped sector: Less presence of HDFC MF in rural market.

 Emerging Markets: Since there is more investment demand in the United
states, Japan and the rest of Asia, HDFC should concentrate on these markets,
especially in view of low global interest rates.
 Fees: In mutual funds, the fees are classified into two categories: shareholder
fees and annual operating fees. The shareholder fees, in the forms of loads and
redemption fees are paid directly by shareholders purchasing or selling the
funds. The annual fund operating fees are charged as an annual percentage –
usually ranging from 1-3%. These fees are assessed to mutual fund investors
regardless of the performance of the fund. As you can imagine, in years when
the fund doesn’t make money, these fees only magnify losses.

Opportunities

 Creating Awareness: Day by day increasing Knowledge about Mutual

Fund. Aware people regarding mutual funds and its benefits.
 Untapped Sectors: Tapped the rural sector and the increase the existing
potential of urban sector.
 Entry Of MNCS: Due to multinationals are entering into market job
opportunities are increasing day by day. Also, India mutual fund majors are tie
up with other financial institutions.

23 | P a g e
Threats

 Competition: Increase in competition and competitor.

 Higher Risk: There is involvement of high risk.
 Hedge Funds: Sometimes referred to as hot money, are also causing a threat
for mutual funds have gained worldwide notoriety for bringing the markets
down. Be it a crash in the currency, a stock or a bond market, a usually a
hedge fund prominently figures somewhere in the picture.

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 2. Literature Review

2.1 Article 1

Vedala, Sailaja, (March 2018), A Study On Investors Awareness Towards Mutual

Funds Investment, International Journal of Civil Engineering and Technology
(IJCIET), 9(3), 376–382.

The scientist did the review with the intend to quantify the "Client Awareness towards
different sorts of Mutual Funds". It centers its consideration towards the conceivable
outcomes of measuring the desires and fulfillment level of more shared reserve items.
It additionally intends to recommend strategies to enhance the present level of
recognition. The review will help the firm in understanding the desires, future needs
and necessities and protests of the purchasers. The review had been devoted basically
towards the advancement of item or idea in the Chennai Market. The scientist utilized
the Descriptive kind of research plan in her review. The analyst utilized the Primary
information accumulation technique in her review by confining an organized
Questionnaire. The scientist ran with helpful sort of inspecting strategy in her review.
The example is taken as 204 by the specialist. With the end goal of Analysis and
Interpretation the specialist utilized the accompanying measurable apparatuses to be
specific Simple Percentage Analysis, Chi-Square Test, Karl Pearson's Correlation and
One way Anova. In view of the Analysis and Interpretation the scientist touched base
out with the real discoveries in her review and Suggestions are given in such a route
along these lines, to the point that the clients can accomplish the riches expansion.

2.2 Article 2

Balamurugan, G & Rangeela, M, (Mar-Apr 2018), A Study on Investors' Perception

Towards Mutual Funds and its Scopes in India, International Open Access Journal,
2(3), 668-672.

This study on Investors perception towards and development and progress of Mutual
Fund investments. The mutual fund investors’ behaviors also the researcher
concentrates only the urban investors. The rural investor`s views are completely
excluded from the study. The mutual fund investments in relation to investor’s
behavior. Investors’ opinion and perception has been studied relating to various issues
like type of mutual fund scheme, investors’ opinion relating to factors that attract
them to invest in mutual funds. Different investment avenues are available to
investors. Mutual funds also offer good investment opportunities to the investors.
Like all other investments, they also carry certain risks. The investors should compare
the risks and expected yields after adjustment of tax on various instruments while
taking investment decisions.

25 | P a g e
2.3 Article 3

Kumar, Naresh,( December 2017), An Overview on Mutual Funds Working Process,

International Journal of Research in Management, 7(12), 93-98.

According to Prof. K. Geert Rouwenhorst, the Mutual Funds concept started in the
late 1700s in Europe. He stated this in “The Origins of Mutual Funds”, explained as
“a Dutch merchant and broker invited subscriptions from investors to form a trust to
provide an opportunity to diversify small investors with limited means." The Mutual
Fund industry in India started in 1963 with the formation of Unit Trust of India (UTI).
The objective then was to attract and introduce small investors to the investments
market. Mutual Funds become a platform to participate in the Indian capital market
for the Investors, with a Professional Fund Management. The fund which is an
investment vehicle brought up of a pool of money collected from many investors for
the purpose of investing in securities. Mutual funds are operated by professional
money managers. These people allocate the investments out of the funds pooled from
the investors and attempt to produce capital gains for those funds. A structured mutual
funds portfolio which is the line with the investment objective of the scheme hence,
this article will help us to learn about the working of Mutual funds and its benefits.
Keywords: Mutual Funds, Investors, Debt Funds, AMC activities, GST impact.

2.4 Article 4

kumar1, Sushil & Ahlawat2, Rajneesh,( Year 2017), Investors’ Attitude towards
Mutual Funds: A Study on Retail Investors, 8(10), 206-212.

During the past decades the Financial Market of India witnessed extraordinary
innovations and developments. These developments is narrate to lot of financial
alternatives such as Insurance, Mutual Funds, a variety of financial services such as
Factoring, Merchant Banking etc. It is the fact that financial security is considered a
very much important factor in the Investors’ life. The decisions like where to invest,
when to invest and how much to invest are complex for a common investor. The
reason behind this approach is that Investing directly in stock market is a risky task
containing careful judgment regarding the valuation of stocks. In the last few years
there are plenty of investment alternatives have been emerged. The investors have to
choose the best among the different investment alternatives. Basic choice for the
investors is to either invest directly into stock markets or they can invest directly
through the Financial Intermediaries. Financial Intermediaries collect the saving of
investors and invest their funds in the portfolio of the Financial Assets. This study is
carried out with the help of ANOVA taking a sample of 150 retail mutual fund
investors from various areas.

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2.5 Article 5

Arora, Kavita, (April : 2015), THE INFORMATION RATIO ON INDIAN MUTUAL

FUNDS, BVIMSR’s Journal of Management Research, 7(1), 34-42.

The mutual fund industry is a fast growing sector of the Indian capital and financial
markets. Total assets under management of mutual funds in India as on December 31,
2015 were Rs. 10,51,343 crore under 1,861 schemes. The enormous growth in the
number of mutual funds and the volume of investment in them worldwide has led to
an increasing demand for techniques to evaluate their performance. In the present
study an attempt has been made to assess the performance of mutual fund managers
on the basis of Information Ratio (IR). IR is a measure of fund manager’s
performance against risk and return relative to a benchmark. The sample contains 100
mutual fund schemes selected on the basis of availability of consecutive data during
the period 1st April, 2000 to 31st March, 2008.The study period 2000-2008 has been
segregated into two sub-periods, sub-period I (2000-2004) and sub-period II (2004-
2008) to ascertain whether the performance of mutual fund schemes varied during the
two sub-periods as these were bear and bull phases. The findings suggest that
although, majority of the schemes had positive Information ratio which indicates
above average performance of the fund managers, yet none of the schemes had an
information ratio higher than or equal to 0.5. The results indicate signs of an efficient
market since a manager’s ability per se, can neither add nor subtract value in such a
percent so as to be worth noticing.

2.6 Article 6

Kumar, Prasanna & Rajkumar, S., (2014), Awareness and Knowledge of Mutual Fund
among the Investors with Special Reference to Chennai – A Critical Study, 2(4), 1-4.

In this study, it is discussed about the mutual fund knowledge and awareness among
the investors with a special reference to Chennai city. It is difficult to selective group
the investors in a sample as such the population of Chennai city is large in number.
Compared to earlier days the investment options are changing from risk free to riskier
investments. The analyses also shows that compared to earlier days the growth of
investments in the stock market increased to significant level compared to other
conventional investments which are of lesser risks and lower returns. The ignorance
of investors about mutual fund coupled with aggressive selling by promising higher
returns to the investors have resulted into loss of investors’ confidence due to inability
to provide higher return. This necessitates the Asset Management Companies (AMCs)
to understand the fund/scheme selection/switching behaviour of the investors to
design suitable products to meet the changing financial needs of the investors. With
this background a survey was conducted among 250 Mutual Fund Investors in
Chennai to study the factors influencing the fund/scheme selection by the Investors.
For analyzing the impact of knowledge and awareness of mutual fund done through
SPSS, one way ANOVA analysis has been made. Hence, this study is made to

27 | P a g e
evaluate the knowledge, general and variable effects about the investors’ perception
and performance of investment avenues.

2.7 Article 7

Gandhi, kumar, (March 2016), PERFORMANCE OF SELECTED BANK MUTUAL

FUND SCHEMES IMPACT IN INVESTORS’ DECISION MAKING, International
Journal of Advanced Research in Management and Social Sciences, 5(3), 361-370.

This article focused on investors’ investment decision making towards mutual funds
by using of Statistical tools and ratio analysis of mutual fund schemes (tax saving
schemes) of selected banks (State Bank of India, Canara Bank- Public Bank, ICICI
Bank, HDFC Bank-Private Bank).The objective of this research work is to exploits
the use of statistical tools and ratio analysis in terms of financial performance of
selected mutual fund schemes through the statistical parameters (Standard Deviation,
Beta and Alpha) and ratio analysis (Sharpe Ratio, Treynor Ratio, Jenson Ratio,
Information Ratio).The results of the research work concern Among the Open ended –
Tax Saving schemes. Based on the findings of the Research work Canara bank
performance is higher and useful for the investor to make their investment decision in
it. Also the research findings are useful to the Mutual Fund Companies in terms of
understand their performance among the mutual fund companies in the market.

2.8 Article 8

MEHTA, SHANTANU, (September 2012), Preference of Investors for Indian Mutual

Funds and its Performance Evaluation, Pacific Business Review International, 5(3),
62-76.

Mutual funds have opened new vistas to millions of small investors by virtually
taking investment to their doorstep. In India, a small investor generally goes for such
kind of information, which do not provide hedge against inflation and often have
negative real returns. He finds himself to be an odd man out in the investment game.
Mutual funds have come, as a much needed help to these investors. Thus the success
of MFs is essentially the result of the combined efforts of competent fund managers
and alert investors. A competent fund manager should analyze investor behavior and
understand their needs and expectations, to gear up the performance to meet investor
requirements. Therefore, in this current scenario it is very important to identify needs
of mutual funds investors, their preference for mutual funds schemes and its
performance evaluation. In this research paper, researcher has an objective to know
preference of mutual funds investors and performance evaluation of the preferred
schemes by the investors. The survey is undertaken of 100 educated investors of
Ahmedabad and Baroda city and the major findings reveal the major factors that
influence buying behavior mutual funds investors, sources that investor rely more
while making investment and preferable mode to invest in mutual funds market. The
study will be immensely useful to the AMC';s , Brokers, distributors and to the other

28 | P a g e
potential investors and last but not least to academician as well. Keywords: Mutual
funds, buying behavior, performance evaluation.

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 3. Research Methodology

3.1 Purpose of the study

The purpose of the study is to evaluate the performance of mutual funds in India and
its awareness among the investors. For this purpose descriptive type of research
design has been opted. Two type of data were taken into consideration i.e. Primary
and Secondary data.
i. Primary data: Primarily data has been collected by designing a questionnaire
which was filled up by 50 respondents within the premises of Ahmedabad and
Baroda when the survey had been conducted. Additional information was also
extracted while interacting with the people surveyed and interviewed which
also contributed to the details of the study.
ii. Secondary Data: Secondary Data were collected from various official
websites, articles, blogs, news articles and research work already done by
previous researchers. Various customer and expert review on financial blogs,
and various websites also facilitated as source of secondary data basis.

3.2 Objectives

 To study the growth of mutual fund industry in India.

 To analyze the investors awareness and perception regarding investing in
mutual funds.
 To find out the investors opinion regarding major deficiencies in the working
of the mutual fund industry
 To find out the suggestions from the investors that can help in plugging out
these deficiencies.
 To measure the satisfaction level of investors regarding mutual funds.
 An attempt has been made to measure various variable’s playing in the minds
of investors in terms of safety, liquidity, service, returns, and tax saving.

3.3 Limitations Of The Study

 Results are just an indication of the present scenario and may not be applicable
in the future.
 As the study was conducted only in Gwalior (M.P.) only, so it can be said that
the study was regionally biased
 Since sampling was done under the simple random sampling method, where
easily approachable respondents were picked up. So this may not represent
the whole population.
 Respondents may fill the partially correct information in questionnaire.
 Lack of time on the part of respondents for filling up the questionnaire

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4. Data Collection and Analysis
This chapter basically consists of a detailed analysis of the data collected (primary
data) from the respondents through the survey done. This is almost the main part
of the research process. Mainly three main kinds of research methods has been
used here to do the detailed analysis, namely Univariate, Bivariate analysis and
hypothesis. . It is this Analysis which helps to derive a significant conclusion from
the data of the of the 50 respondents. Some of them are projected by some tables
as well as bar graph and pie chart in some cases.

Univariate Analysis

Bivariate Analysis

Hypothesis

31 | P a g e
 4.1 Univariate Analysis

The following table shows the statistics of the factors which investors consider while
investing in mutual funds.

Table 1
Return Factor

Rank Frequency Percent

1 22 44.0
2 13 26.0
3 10 20.0
4 3 6.0
5 2 4.0
Total 50 100.0

Figure 1

Return Factor
25 22

20
13
15
10
10 Frequency
3 2
5

0
1 2 3 4 5
Rank

Interpretation

There are many factors which are important while doing any kinds of investments.
Factors like liquidity, risk, return, goodwill of the company, tax benefits etc. In the
survy that was conducted, out the 50 samples, 22 respondents considered return as
their important factor in case of investments. Hence 44% of people give main
focus on return factor while performing the act of investments.

32 | P a g e
 Table 2

The following table and graphs help us to know the mode of investment or saving
5 years back. This helps help us to conclude how people used to save 5 years back
with the help of which we can draw the pattern of the investment for the same.

Frequency Percent

Bank fixed deposit/savings 25 50.0

Insurance 3 6.0
Mutual funds 7 14.0
Equity market 2 4.0
Government securities 3 6.0
Real estate 5 10.0
Postal savings/ Fixed deposit 4 8.0
Others 1 2.0
Total 50 100.0

Figure 2

Investment mode 5 years back

50.0
45.0
40.0
35.0
30.0
25.0 50.0
20.0
15.0
10.0 14.0
5.0 6.0 6.0 10.0 8.0
4.0 2.0 Percent
0.0

Mutual Funds

33 | P a g e
Interpretation

The above graphs depict about the mode of investment which people use to do
savings or investments 5 years back. With the help of this one can trace the pattern
of investments and what changes have taken place. From the above graph it can be
seen that 50% of the respondents do investments in the bank whether savings or
fixed accounts. It can be concluded that bank was the leading and trustable mode
of people from 5 years back. Apart from that 14% were doing investments in the
mutual funds, 10% in real estate, 6% in insurance and government securities and
2% in others.

34 | P a g e
Table 3 and figure 3 helps us to know about how many of the respondents really
do investments in the mutual funds.

Table 3

Frequency Percent

yes 33 66.0
no 17 34.0
Total 50 100.0

Figure 3

Investment done in mutual fund

34.0
yes
no
66.0

Interpretation

The above pie chart depicts the percentage of respondents who has invested in the
mutual funds. It can be seen that 66% of the people have invested in the mutual
funds whereas 34% haven’t invested yet. This can’t be deducted that that 34% of
the respondents aren’t aware of the mutual funds at all. This could be the case
there is some other reason like trust issues, risk, return, lack of professionalism
etc. Hence more steps need to be taken to increase the percentage of investments
in the mutual funds.

35 | P a g e
Table 4 and figure 4 helps us to know about the reason due to which the people
are not investing in mutual funds.

Table 4

Frequency Percent

Bitter past experience 5 10.0

Lack of knowledge 12 24.0

Lack of confidence in service being provided 1 2.0

Difficulty in selection of schemes 4 8.0

Inefficient investment advisors 1 2.0

Total 23 46.0

Figure 4

Reasons for not investing in mutual funds

24.0
25.0
20.0
15.0 10.0
8.0
10.0
5.0 2.0 2.0 Percent

0.0
Bitter past Lack of Lack of Difficulty in Inefficient
experience knowledge confidence selection of investment
in service schemes advisors
being
provided

Interpretation

The above chart shows the reasons due to which the investors are not investing in
mutual funds. There can be n number of reasons but some of the common are been
shown. Among which 24% of the respondents don’t invest in mutual fund due to
lack of knowledge. Where as 10% due to bitter past experience, 8% difficulty in
selection of schemes and 2% due to lack of confidence in service being provided
and inefficient investment advisors. This shows that there is need of making

36 | P a g e
people aware of the mutual funds and give them knowledge regarding their
schemes and risks and returns.

Table 5 and figure 5 shows the percentage of the respondents investing in

different mutual fund companies.

Table 5

Frequency Percent
HDFC 17 34.0
SBI 14 28.0
ICICI 9 18.0
UTI 1 2.0
L&T 2 4.0
Others 7 14.0
Total 50 100.0

Figure 5

Investment in mutual fund

40.0
34.0
35.0
28.0
30.0
25.0
18.0
20.0
14.0 Percent
15.0
10.0
4.0
5.0 2.0

0.0
HDFC SBI ICICI UTI L&T Others

The above graph shows the percentage of the respondents who do investment in
various mutual fund companies. From the graph it can be conclude that 34% of
the total respondents do investment in mutual funds of HDFC that is 17
respondents. Whereas 28% of the people select SBI mutual funds and 18% in
ICICI and 14% in others. Whereas 4% in L&T and 2% in UTI. This shows there is
tough competition in this industry and to be competitive and survive in the market
they have come up with new different schemes which can fit in the expectation
frame of the investors.

37 | P a g e
4.2 Bivariate Analysis

Table 6

The following table and graphs helps in deriving the conclusion about the objectives
of the investments and duration of the investments.

objective of the investments * duration of the investments

Crosstabulation
Count
duration of the investments
Long
Short
Medium term
term Total
term (3 to (more
(upto 1
5 years) than 5
year)
years)
To build a
corpus for 1 1 2 4
retirements.
To provide for
medical 0 1 0 1
emergencies.
objective of
the To provide for
investments family 2 8 1 11
financial
securities.
To create
2 8 2 12
wealth.
All of the
4 10 8 22
above.
Total 9 28 13 50

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Figure: 6

100%
90%
80%
70%
60%
50%
40%
30%
20% duration of the investments
10% Long term (more than 5 years)
0%
duration of the investments

All of the above.

To build a corpus for retirements.

To create wealth.
To provide for medical emergencies.

To provide for family financial

Medium term (3 to 5 years)
duration of the investments
Short term (upto 1 year)
securities.

objective of the investments

The above graph gives us the detail about the investments objective and the
duration of the investments. It can be inferred that most of respondents keep the
duration of the investments for 3-5 years that is for medium term. The maximum
no of respondents who do investment for medium duration likes to invest to
provide for medical emergencies. Apart from them people do medium term
investments to provide family financial securities. Then the people who do
investments for long duration invest with the objective of retirements so that they
can enjoy after they are retired.

39 | P a g e
Table 7 and figure 7 help to know about the age of the people who are mostly
investing in the mutual funds.

Table 7

Age invested in mutual funds

yes no
between 20-30 15 6

between 30-40 6 8

between 40-50 7 3
above 50 5 0
Total 33 17

Figure 7

16 15
F
r 14
e 12
q
10
u 8 ever invested in mutual
e 8 7 funds yes
6 6
n 6 5 ever invested in mutual
c funds no
4 3
y
2
0
0
between between between above 50
20-30 30-40 40-50

Interpretation
The above table and graphs show the age of the people who are investing in the
mutual funds. From the above graph it can be seen that the age group of 20-30 are
highly inclined to mutual funds in case of investments. Whereas other age group
of are also investing in mutual funds. It can be say that this is because the at youth
that has started their corporate life they are free from any kind of family or any
burden and they are ready to take higher risks hence they are more attracted to
mutual funds as more risk, more return.

40 | P a g e
 4.3 Hypothesis Testing

One-Way ANOVA Test

Ho – There is no significant difference between the investors’ age and the

awareness about mutual fund.
H1 – There is significant difference between the investors’ age and the awareness
about mutual fund.

Table 8 shows the Statement Of Association Between The Investors’ Age And
Awareness About Mutual Fund.

Table 8

ANOVA
age
Sum of Mean
df F Sig.
Squares Square
Between Groups .001 1 .001 .001 .972
Within Groups 50.979 48 1.062
Total 50.980 49

Interpretation
The above table depicts the result with regarding to the calculated value of “F” test.
The calculated “F” value is less than the tabulated value at 5% level of significance
for v1 = 1, and V2 = 48 degrees of freedom. Hence, the null hypothesis is accepted
and alternative hypothesis is rejected. It is proved that there is no significant
difference between the investors’ age and the knowledge level about mutual fund.
Therefore, it can be understood that the awareness among of the investors associated
with the respondent age.

Chi Square tests

H0 = There is no significance difference between the awareness of mutual funds

among the people and actual number of people investing in it.

H1= There is significance difference between the awareness of mutual funds among
the people and actual number of people investing in it.

Table 9 and Table 10 tries to establish a relationship between the awareness of mutual
funds among the people and actual number of people investing in it. Here if null
hypothesis or H0 is rejected and alternative hypothesis is not rejected then these two
are not independent and if null hypothesis is accepted then the two are independent.

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Table 9

aware about mutual funds * ever invested in mutual funds Crosstabulation

ever invested in mutual funds

Total
yes no
Yes
aware about 33 13 46
mutual funds
no 0 3 3
Total 33 16 49

Table 10

Chi-Square Tests
Asymp.
Exact Sig. Exact Sig.
Value df Sig. (2-
(2-sided) (1-sided)
sided)
Pearson Chi-
6.591a 1 .010
Square
Continuity
3.732 1 .053
Correctionb
Likelihood Ratio 7.129 1 .008
Fisher's Exact
.030 .030
Test
Linear-by-
Linear 6.457 1 .011
Association
N of Valid Cases 49

Interpretation
The first table is the cross tabulation of frequency of the awareness of mutual funds
among the people and actual number of people investing in it. If we see the table it
can be inferred that out of the total respondents 46 are aware about the mutual funds.
But out the people who are investing in the mutual funds 16 respondents are not
investing.

The second table establishes the hypothetical relationship between the awareness of
mutual funds among the people and actual number of people investing in it. As here
the pearson chi square value is 0.010 which means it is less than 0.05 therefore null
hypothesis is rejected. Hence it means it indicates that these two variables are not
independent.

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5. Findings And Recommendations

Many things can be derived from the findings of the survey that was conducted on
the performance evaluation of mutual funds in India and its awareness among the
investors. The following are some of the major findings:

 The mode of investment or savings from the past 5 years back is changing.
Previously most of the people do their investments in bank using savings
or fixed deposit account. But now the scenario is changing. In banks, no
doubt there is safety and risk is negligible but in return the interest rates
are also less. Currently the interests rate of saving account is between 4-
6% and of fixed account is between 5-7%. Whereas in mutual fund there
are chances to get good returns as compared to banks.

 Investments are too important in today’s life. In order to survive a good

well being life it is very necessary to do savings and invest the same in an
appropriate way. The objectives behind investments can be many like to
build a corpus for retirements, to save for children education/marriage, to
provide for medical emergencies, to provide for family financial securities,
to create wealth etc. Hence people are getting more aware to different
modes of investments in which mutual fund are doing well.

 Most of the people consider return as their major factor while doing any
kind of investments. Then it is followed by risk and tax benefit, goodwill
of the company and return. In youth the risk taking ability is high and
that’s why they always seek the option that gives them maximum return.

In March, net inflows via SIP route hit an all-time high of Rs. 7120 crores,
having average ticket size of Rs 3375 per account. This shows people are
investing SIPs that offer them huge diversification of schemes and decent
return according to their risk taking ability.

 Most of the people are aware about the mutual fund. But the awareness
need to be spread though. There are such people who are aware of the
mutual funds but they are afraid to invest due to lack of knowledge of all
the different schemes of different companies. So that need to spread. Apart
from them the return along with risk also need to be know and understand
by the people. Then only they will start trusting and investing in the
mutual funds.

 Mutual fund companies may try to educate the investors to invest in

mutual funds through regular awareness programs. Fund Managers should

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 try to give clear information about the mutual fund terms and various
schemes. Fund Agents may take steps to shrink the terms and conditions
and can make them easily understandable to the prospective investors.
Mutual Fund Agencies may spread the information about all the aspects of
investing in mutual funds.Various schemes may be introduced to attract
female respondents as the economy is leaning towards women’s financial
empowerment.

 Mutual fund industry is a growing one. So there is a huge competition in

the market. There are many companies that are offering more or less the
similar schemes. It is the company who has to identity the need of the
clients and the market scenario and analyse them properly in order to
survive in this competitive field. They also have to adopt new marketing,
sales and promotional activities in order to be unique in the crowd.

Like in the survey most of the people do investments in HDFC but there is
a tough competition to it by SBI, ICICI, UTI, Reliance, L&T etc. So they
have to do take care of the existing clients and new prospects in order to
expand their market share.

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 6. Summary And Conclusion
Now a day, mutual fund is gaining its popularity, with the emphasis on increase in
domestic savings and improvement in deployment of investment through markets, the
need and scope for mutual fund operation has increased tremendously. Mutual funds
pumped in Rs. 54912 crores into the country’s equity market as against Rs. 52977
crores by FIIs/FPIs during the year gone by.

The level of financial awareness among the educated professional class is also very
low and people are skeptical about thinking beyond traditional investment avenues
Like Bank FDs, gold and property; hampering the spread and penetration of Mutual
Funds in India. Majority of people in India can’t think beyond traditional avenues of
investment like Bank FD’s, gold and property and consider Capital Market
(commonly referred to as Share Market) highly risky, volatile and unsafe for capital
protection and appreciation.

Lack of financial literacy leads to a fallacious understanding that mutual funds are
also as unsafe and risky as capital market. Awareness of Mutual Funds in Tier-II
towns is comparatively far less than the Ten Tier-I cities. Thus, for Mutual Fund
Industry to grow, proper financial literacy and awareness programs must be initiated
to tap the hitherto untapped market in the hinterland and small towns of India.

Hence it can be concluded that Indian financial system has been expiring the vast
effect of globalization i.e. drastic interest rate cut, political disturbances, security
scam etc have scattered the common investor’s perception in selecting various
investment portfolio. Most of the people hesitate to invest in the mutual funds or the
existing investors fear to invest more. Hence the potential investors don’t invest in the
mutual funds. Today a lot of investment opportunities are available to the investors in
the financial markets. Running a successful mutual fund requires complete
understanding of the peculiarities of the small investors.

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BIBLIOGRAPHY

 Investment & Portfolio Management – Prasanna Chandra

 Financial management - M Y Khan and P K Jain

Web References

www.moneycontrol.com

www.m.economictimes.com

www.hdfcfund.com

www.google.com

www.amfiindia.com

www.valueresearchonline.com

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 Annexure
Questionnaire
Survey On Performance Evaluation Of Mutual Fund And Its Awareness Among Investors

Name: Gender: Male O Female O Others O

Age: 20-30 O 30-40 O 40-50 O 50 above O
Qualification: Graduate O Under Graduate O Post Graduate O Other
Occupation: Student O Professional O Salaried O Business O Other
1) What is the objective of the investments?
a) To build a corpus for retirements.
b) To save for children education/marriage.
c) To provide for medical emergencies.
d) To provide for family financial securities.
e) To create wealth.
f) All of the above.

2) Rank the factors you consider while investing your money.

a) Liquidity O
b) Risk O
c) Return O
d) Goodwill/Image of the company O
e) Tax benefit O

3) What is the duration of the investments?

a) Short term (upto 1 year)
b) Medium term (3 to 5 years)
c) Long term (more than 5 years)

4) How often you do investments?

a) Once a month
b) Once in 6 months
c) Once a year

5) Are you aware about mutual funds?

Yes O No O

If Yes, how did you come to know about mutual funds?

a) Advertisements
b) Banks
c) Financial advisors
d) Newspaper/ magazines
e) Internet
f) Peer group
g) Other

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6) Have you ever invested in mutual funds?
Yes O No O

 If yes then,
i) Are you aware of various schemes offered by mutual funds?
Yes O No O
ii) On whose external advice do you invest?
Bank O Distributor O Agents O Direct investments O CA O
 If No then what is the reason?
a) Bitter past experience
b) Lack of knowledge
c) Lack of confidence in service being provided.
d) Difficulty in selection of schemes.
e) Inefficient investment advisors.

7) In which mutual fund do you invest frequently?

a) HDFC
b) SBI
c) ICICI
d) UTI
e) L&T
f) Others

8) Approximately how much portion of your income do you save?

a) Below 10%
b) 10-30 %
c) 30-50%
d) Above 50%

9) How important the following feature of mutual fund is to you?

Most Important Neutral Less Not
important important important
Professional
management
Diversification
Return
potential
Transparency
Low cost
Flexibility

10) What was the savings/investment mode 5 years back?

a) Bank fixed deposit/savings
b) Insurance
c) Mutual funds
d) Equity market
e) Government securities
f) Real estate
g) Postal savings/ Fixed deposit
h) Others

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