HNCC – MBA Dept

CHAPTER 1. INTRODUCTION TO THE STUDY

1.1 Introduction: -

What is mean by mutual fund?

Mutual funds are pools of money that are managed by an investment
company. They offer investors a variety of goals, depending on the fund
and its investment charter. Some funds, for example, seek to generate
income on a regular basis. Others seek to preserve an investor's money.
Still others seek to invest in companies that are growing at a rapid pace.
Funds can impose a sales charge, or load, on investors when they buy or
sell shares.
Many funds these days are no load and impose no sales charge. Mutual
funds are investment companies regulated by the Investment Company
Act of 1940. Related: open- end fund, closed-end fund.
Concept of mutual funds.
A mutual fund is a trust that pools the savings of a no. of investors, who
share a common financial goal. The money thus collected is then invested
in capital market instruments such as shares, debentures and other
securities. The income earned through these investments and the capital
appreciations realized are shared by its unit holders in proportion to the
number of units owned by them. Thus a mutual fund is the most suitable
investment for the common man as it offers an opportunity to invest in
diversified, professionally managed basket of securities at a relatively
low cost.
Historical Aspect
Mutual fund firstly was established in 1822 in the form of Society
General De Belguique. It mainly gains the progress in Switzerland &
little in franc and Germany in its initial days. The first investment trust
“The foreign and colonial govt. trust” Was founded in London in 1868.
Indian Scenario of Mutual Fund
The origin of mutual fund industry in India is with the introduction of the concept
of by UTI in the year 1963. Through the growth was slow, but it accelerated from
the year 1987 when non-UTI players entered in industry. The mutual fund industry
goes through four phases: -

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 First phase 1964-87 (Establishment of UTI): -

The Mutual fund industry in India made its debut with the setting up of first
mutual fund namely, UNIT TRUST OF INDIA. It was set up in 1963 by an
act of Parliament. It is functioning under the regulation and control of Reserve
Bank of India. It has started its functioning in 1964 with the main aim of
mobilizing the savings of public and investing in securities of different
companies for maximizing return and capital appreciation. The first most
popular open-ended scheme launched by UTI is US-64 (unit scheme 64). After
that number of schemes had been subsequently introduced by UTI. In 1978,
UTI was de-linked from Reserve bank of India and took over by IDBI. UTI
has maintained its monopoly and consistent growth till 1987. In this phase, the
investor base has grown to about 2million investors.
 Second phase 1987-93 (Entry of public sector funds): -
The second phase of mutual fund has started with the entry of mutual fund
companies owned by public sector companies and insurance companies. SBI
mutual fund and Canara bank mutual fund was set up as trusts in 1987 under
the Indian Trust Act, 1882. The two largest insurance companies and
nationalized banks has started its operations of wholly-owned subsidiaries of
mutual funds in1990. In 1989, RBI issued first regulatory guidelines which
were applicable only to mutual funds sponsored by banks. Further, Govt. of
India issued more comprehensive guidelines in1990 which were applicable to
all kind of mutual funds. These guidelines require compulsory registration
with SEBI. There was a tremendous growth in mutual fund industry with the
entry of nationalized funds. The number of investors has grown to over 23
million. Equity funds are becoming more attractive for investment in 1991-92
because of tax-benefits available under equity-linked saving schemes.
 Third phase 1993-2003 (Entry of a private sector funds): -
In 1993, a new era started in the Indian mutual fund industry with the entry of
private sector mutual funds in India, giving the Indian investors a wider choice
of fund families. SEBI issued guidelines for mutual fund in January 1993,
under which all mutual funds except UTI has to be registered and governed by
it. In July1993, the first private sector mutual fund registered was Kothari
Pioneer now merged with Franklin Templeton. Kothari introduced the first
open-ended fund in1993 named Prima. Many other private sector mutual

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funds were set up during this phase. There was decline in the value of
investment of unit holders in 1995 and 1996 due to decrease in the NAV of
equity funds. The 1996 SEBI (Mutual Fund) Regulations were more
comprehensive and revised Mutual Fund Regulations after regulations in
1993. The industry now functions under the SEBI (Mutual Fund) Regulations
1996. With the entry of foreign mutual funds setting up funds in India and
including various mergers and acquisitions, the no. of mutual funds in India
has increased. Due to failure of foreign funds and lack of performance of
public sector funds, the confidence of investor in mutual fund has declined.
Due to this, it was found extremely difficult to raise money through mutual
funds.
 Fourth phase since feb.2003 (Bifurcated of UTI): -
The UTI was bifurcated into two separate entities in February 1993 followed
by the repeal of Unit Trust of India Act, 1964. One is the Specified
Undertaking of the Unit Trust of India, representing the assets of US 64
scheme with assured return and certain other schemes. The Specified
Undertaking of Unit Trust of India, functions under the rules and regulations
framed by government. It is registered with SEBI and functions under the
Mutual Fund Regulations. During this phase, the flow of funds into mutual
funds has increased sharply. There is significant growth in mutual fund due to
various tax-benefits, improvement in quality of investor service and positive
sentiment in the capital market. The Indian mutual fund industry has stagnated
around Rs. 100,000 crore assets till 2000-01.
The mutual fund industry has entered its current phase of consolidation and
growth. There has been increase in AUM by 11% during the year 2002. On the
other hand, UTI lose more than 11%in AUM. The private sector mutual funds
have benefited the most from the sudden ending of US-64 scheme of UTI. The
AUM has grown around 60% for the year ending march 2002. The graph
indicates the growth of assets over the years.

In the first phase, UTI was established in 1963 by an act of parliament. In

1978 it was delinked from RBI & the IDBI took over the control of UTI. In
second phase, SBI entered as first non-UTI mutual fund provider then it was
followed by can bank (Dec. 87). PNB (Aug 89) & LIC in 1989. In third phase,

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the private sector entered in it. The Erstwhile Kothari pioneer (now merged
with Franklin Templeton) was first registered in July 1993 in mutual fund. In
revised registration of SEBI I n 1993 the industry functions under SEBI. And
the fourth phase had bitter experience for UTI. It was bifurcated into two
separate entities. One is the specified under taking of UTI with AUM of
29,835cr. The second is UTI mutual fund ltd. Sponsored by SBI, PNB, BOB
and LIC& it is registered with SEBI.

1.2 Objectives Of The Study: -

The Study Has Following Research Objectives: -

1) To Know Source Of Information For Investors Investment In Mutual Fund.

2) To Study Purpose Behind Investing In Mutual Fund.

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3) To Study Investment Pattern.

4) To Know Factors Affecting Investment Behavior of Mutual Fund.
5) To Know Satisfaction Level Of Investors On Their Investment.
6) To Analyze Which Institution Provides Better Returns.

1.3 SCOPE AND LIMITATIONS OF THE STUDY: -

1) To make people aware about concept of mutual fund.

2) To provide information regarding advantages and demerits of mutual fund.
3) To advice where to invest or not to invest.
4) To provide information regarding types of mutual fund which is beneficial for
whom.

1.4 RESEARCH METHODOLOGY: -

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

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Descriptive research is one that describes things as exists in present.

D. Data collection Design: -

1. Sources of data =
 Primary Sources – I have used questionnaire as primary source
for collecting data for my study.
 Secondary sources – I had collected my secondary data from
websites & journals.
2. Sampling =
It represents whole population. It is the processes of choosing a
sample from whole population. I have choose a sample of high
class & middle class people who have invested in mutual funds
as a sample.
3. Tools =
I have used some charts (Tables, Pie chart, column chart,)
4. Sampling Size =
It represents that how many candidates you’ve chosen to be
filled up your questionnaire or candidates upon whom you can
study. I had chosen sample of 102 candidates.
5. Sampling Techniques =
 Deliberate &
 Convenience Sampling.

1.5 Significance of the study: -

This is significance of the study report of mutual fund performance. A survey
was conducted on awareness of products offered by HDFC & ICICI Bank. The result
show how to make customers attract towards mutual funds. This research is carried to
know the study offered by HDFC & ICICI bank.

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2.1.1Background and inception of the company:

HDFC ASSET MANAGEMENT COMPANY LIMITED:

AMC was incorporated under the Companies Act, 1956, on December 10, 1999, and
was approved to act as an AMC for the Mutual Fund by SEBI on July 30, 2000. The
registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh
Marg, 169, Back bay Reclamation, Church gate, Mumbai - 400 020. In terms of the
Investment Management Agreement, the Trustee has appointed HDFC Asset
Management Company Limited to manage the Mutual Fund As per the terms of the
Investment Management Agreement, the AMC will conduct the operations of the
Mutual Fund and manage assets of the schemes, including the schemes launched from
time to time.

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund,
following a review of its overall strategy, had decided to divest its Asset Management
business in India. The AMC had entered into an agreement with ZIC to acquire the
said business, subject to necessary regulatory approvals. On obtaining the regulatory
approvals, the Schemes of Zurich India Mutual Fund has now migrated to HDFC
Mutual Fund on June 19, 2003. The AMC is also providing portfolio management /
advisory services and such activities are not in conflict with the activities of the
Mutual Fund. The AMC has renewed its registration from SEBI vide Registration No.
- PM / INP000000506 dated December 22, 2000 to act as a Portfolio Manager under
the SEBI (Portfolio Managers) Regulations, 1993. The Certificate of Registration is
valid from January 1, 2004 to December 31, 2006.

ICICI ASSET MANAGEMENT COMPANY LIMITED:

The Industrial Credit and Investment Corporation of India Limited (ICICI)

incorporated at the initiative of the World Bank, the Government of India and
representatives of Indian industry, with the objective of creating a development
financial institution for providing medium-term and long-term project financing to
Indian businesses. Mr.A.Ramaswami Mudaliar elected as the first Chairman of ICICI

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Limited. ICICI emerges as the major source of foreign currency loans to Indian
industry. Besides funding from the World Bank and other multi-lateral agencies,
ICICI was also among the first Indian companies to raise funds from international
markets.

2.1.2 Nature of the business carried:

HDFC Mutual Fund Overview:

We are one of India’s largest and most profitable mutual fund manager with ₹3.5
trillion in assets under management. Started in 1999, we were set up as a joint venture
between Housing Development Finance Corporation Limited (“HDFC”) and Standard
Life Investments Limited (“SLI”). During FY18-19 we carried out an initial public
offering, and became a publicly listed company in August 2018. Currently, 26.1% of
the company is owned by the public. HDFC Asset Management Company (“HDFC
AMC”) is the investment manager to the schemes of HDFC Mutual Fund (“HDFC
MF”).

We offer a comprehensive suite of savings and investment products across asset

classes, which provide income and wealth creation opportunities to our large retail
and institutional customer base of 9.3 million live accounts. We have a dominant
position in equity investments, with the highest market share in actively managed
equity-oriented funds. Our strengths lie in delivering simple and accessible
investment products for the average Indian household. We are the most preferred

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choice for retail investors, with the highest market share in assets from individual
investors. Over one in four Indian mutual fund investors have invested in at least one
of our schemes. Our offering of systematic transactions further enhances our appeal to
individual customers looking to invest periodically in a disciplined and risk-mitigating
manner.

Our schemes have weathered multiple market cycles and carry track records of up to
25 years. We work with diverse sets of distribution partners which helps us expand
our reach. We currently have over 65 thousand empaneled distributors which include
independent financial advisors, national distributors and banks. We serve our
customers and distribution partners in over 200 cities through our network of 223
branches and 1,176 employees. Our highly stable Management has steered the
company since its inception through the ever-evolving industry. Our consistent
position as one of India’s leading asset management companies is driven by our
comprehensive investment philosophy, process and risk management. Our 29-member
investment team is highly experienced and competent with a track record of
performance, stability and a deep understanding of businesses. We also provide
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.

About HDFC Group: Our company is part of HDFC Group, a recognized financial
conglomerate, with presence in housing finance, banking, life and non-life insurance,
asset management, real estate funds and education finance. HDFC Ltd is one of
India’s leading housing finance companies and our majority shareholders.

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC Ltd.)

Our principal shareholders include Housing Development Finance Corporation
Limited (HDFC) and Standard Life Investments Limited (“SLI”) who own 52.7% and
21.2% stake respectively. HDFC was incorporated in 1977 as a specialized mortgage
finance company and is today a financial conglomerate having a dominant presence in
housing finance, banking, life and non-life insurance, asset management, real estate
funds and education finance.

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ICICI Mutual Fund Overview:

ICICI Prudential Asset Management Company Ltd. is a leading asset management

company (AMC) in the country focused on bridging the gap between savings &
investments and creating long term wealth for investors through a range of simple and
relevant investment solutions.　

The AMC is a joint venture between ICICI Bank, a well-known and trusted name in
financial services in India and Prudential Plc, one of UK’s largest players in the
financial services sectors. Throughout these years of the joint venture, the company
has forged a position of pre-eminence in the Indian Mutual Fund industry. 　

The AMC manages significant Assets under Management (AUM) in the mutual fund
segment. The AMC also caters to Portfolio Management Services for investors,
spread across the country, along with International Advisory Mandates for clients
across international markets in asset classes like Debt, Equity and Real Estate. 　

The AMC has witnessed substantial growth in scale; from 2 locations and 6
employees at the inception of the joint venture in 1998, to a current strength
of 1926 employees with a reach across over 300 locations reaching out to an investor
base of 6.2 million investors (as on September 30, 2020). The company’s growth
momentum has been exponential and it has always focused on increasing accessibility
for its investors. 　

Driven by an entirely investor centric approach, the organization today is a suitable

mix of investment expertise, resource bandwidth and process orientation. The AMC
endeavors to simplify its investor’s journey to meet their financial goals, and give a
good investor experience through innovation, consistency and sustained risk adjusted
performance.

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2.1.3 Vision, Mission and Quality Policy

HDFC:
Vision
To be a dominant player in the Indian mutual fund space recognized for its high levels
of ethical and professional conduct and a commitment towards enhancing investor
interests. Our CSR initiatives will be aligned with the same principles to serve a social
purpose, sustainable development of the society and the environment in which it
operates.
Mission
To be a dominant player in the Indian mutual fund space recognized for its high levels
of ethical and professional conduct and a commitment towards enhancing investor
interests.
ICICI:
Vision
To be the leading service provider of financial services in India.
Mission
Be the banker of first choice for our customers by delivering high quality, excellent
products and services. Expand the frontiers of our business globally. Play a proactive
role in the full realization of India’s potential. Maintain a healthy financial profile and
diversify our earnings across businesses and geographies. Maintain high standards of
governance and ethics. Contribute positively to the various countries and markets in
which we operate. Create value for our stakeholders.
2.1.4 Products /Services Profile

Mutual fund products by HDFC

a. HDFC EQUITY FUNDS.
b. HDFC DEBT/INCOME FUNDS.
c. HDFC LIQUID FUNFS.

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d. HDFC CHILDREN'S GIFT FUND.

e. HDFC RETIREMENT SAVINGS FUND.
f. HDFC FIXED MATURITY PLANS.
g. HDFC EXCHANGE TRADED FUNDS.
Mutual fund products by ICICI

a. ICICI Prudential Dynamic Plan

b. ICICI Prudential Focused Bluechip Equity Fund
c. ICICI Prudential Value Discovery Fund
d. ICICI Prudential Infrastructure Fund
e. ICICI Prudential Long Term Equity Fund (Tax Saving)
f. ICICI Prudential Savings Fund
g. ICICI Prudential Short Term Plan
h. ICICI Prudential Income Plan
i. ICICI Prudential Money Market Fund
2.2 Market Scenario

HDFC

HDFC asset management company Ltd. Or HDFC mutual Fund is currently the
largest mutual fund and actively managed equity mutual fund in India. It is the most
profitable asset management company (AMC) in the country as of 31 March,
2018.The Company manager’s assets worth Rs.3.43 Lakh Crore as of 31March,2019.
According to SEBI, its net worth Stood at Rs. 61,402 Crore, Total income at 35,229
Crore, profit (after tax) at Rs. 12,163 Crore in March 2018.
During FY 2018-19, the AMC reported a YOY increase in profit of 61%. They
registered a profit of Rs.930 Crore in March 2019, a 31% YoY growth. For the March
2019 quarter alone, their profits stood at Rs.276 Crore.
HDFC AMC recorded a 16.2% market share in the actively managed equity oriented
schemes in FY 2018-19.
ICICI
The AMC manages significant Assets under Management (AUM) in the mutual fund
segment. It is the largest AMC in the country as per average assets under management
as on 31 March 2018 of Rs 305,739 Crores.

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The AMC also caters to Portfolio Management Services for investors, spread across
the country, along with International Advisory Mandates for clients across
international markets in asset classes like Debt, Equity and Real Estate.

The AMC has witnessed substantial growth in scale, from 2 locations and 6
employees at the inception of the joint venture in 1998, to a current strength of 1913
employees with a reach across over 200 locations reaching out to an investor base of
more than 3 million (As onMarch31,2018).

2.2.1 Competitors information

Competitors information of HDFC and ICICI Mutual Fund
Aditya Birla Sun life Mutual Fund:
Formerly known as Birla Sun Life Asset Management Company, this fund house is
the 3rd 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.
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.

SBI Mutual Fund:

SBI Funds Management Pvt 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.

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Ms. Anuradha Rao is the Managing Director and CEO.

In 2013, SBI Fund Guru, an investor education initiative was launched.

L&T Mutual Fund :

L&T Investment Management Limited is the Asset Management Company (AMC)
for all L&T Mutual Fund schemes. L&T Finance Holdings Limited (LTFH), a listed
company, is the sponsor for the AMC. It started its operations in 2010.

Kotak Mahindra Mutual Fund:

Kotak Mahindra Mutual Fund is a part of the Kotak Group established in 1985 by Mr.
Uday Kotak. Kotak Mahindra Asset Management Company (KMAMC) is the asset
manager for Kotak Mahindra Mutual Fund (KMMF). KMAMC started its operations
in 1998.
Axis Mutual Fund:
Axis Mutual Fund had launched its first scheme in 2009. Mr. Chandresh Kumar
Nigam is the MD & CEO. Axis Bank Limited holds 74.99% in Axis Mutual Fund.
The remaining 25% is held by Schroder Singapore Holdings Private Limited.
IDFC Mutual Fund:
IDFC Asset Management Company Ltd. was established in 2000. IDFC Financial
Holding Company Limited holds the entire shareholding in IDFC Asset Management
Company. IDFC continues to be the sponsor of IDFC Mutual Fund.Moreover, it also
continues to hold controlling interest in IDFC AMC.

UTI Mutual Fund:

UTI Mutual Fund is a part of Unit Trust of India (UTI). It was registered with SEBI in
2003. It is promoted by SBI, LIC, Bank of Baroda and PNB.

UTI is one of the oldest and largest mutual funds in India.

UTI Mutual Fund was the pioneer in launching various schemes like Unit Linked
Insurance Plan (ULIP). Mr. Leo Puri is the Managing Director for this mutual fund
house.

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DSP Mutual Fund:

DSP BlackRock is a joint venture between DSP Group and BlackRock, world’s
largest investment management firm. DSP BlackRock Trustee Company Private Ltd.
is the trustee for the DSP BlackRock Mutual Fund.

2.2.2 Achievements/ Award If Any

HDFC Mutual Fund Achievements:
HDFC Asset Management Company (AMC) is the first AMC in India to have been
assigned the CRISIL Fund House Level – 1’ rating.
This is its highest Fund Governance and Process Quality Rating which reflects the
highest governance levels and fund management practices at HDFC AMC.
It is the only fund house to have been assigned this rating for two years in succession

ICICI Mutual Fund Achievements:

 Franchisor of the year award 2009
 Retail concept of the year awards 2009
 ICICI Direct wins the prestigious Outlook Money - India's Best e-Brokerage House
for 2009.
 ICICI Direct has also won the CNBC AWAAZ Consumer Award for the Most
Preferred Brand of Financial Advisory Services.
 ICICI Direct been winning the prestigious Outlook Money - India's Best e-
Brokerage House for 2003-2004, 2004-2005, 2006-2007 and 2007-2008.
 ICICI Direct wins the prestigious Outlook Money - India's Best e-Brokerage House
for 2008.
 ICICI Direct, the neighborhood financial superstore won the prestigious Franchise
India `Service Retailer of the Year 2008 award.
 Best Broker - Web 18 Genius of the Web Awards 2007
 CMO Asia Awards for Excellence in Branding and Marketing
 Brand Leadership Award (overall)
 'Campaign of the Year' for the Trade Racer Campaign
 Brand Excellence in Banking and Financial Services for the store format
 Award for Brand Excellence in the Internet Business
 Frost and Sullivan Award for Customer Service Leadership

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3.1 Brief Review Of Literature

Literature Review Of HDFC & ICICI Mutual Fund

1. Manish Mittal and Arunna Dhademade (2005):

They found that higher profitability is the only major parameter for evaluating
banking sector performance from the shareholder’s point of view. It is for the banks to
strike a balance between commercial and social objectives. They found that public
sector banks are less profitable than private sector banks. Foreign banks top the list in
terms of net profitability. Private sector banks earn higher non-interest income than
public sector banks, because these banks offer more and more fee based services to
business houses or corporate sector. Thus there is urgent need for public sector banks
to provide such services to stand in competition with private sector banks.

2. I.M. Pandey (2005):

An efficient allocation of capital is the most important financial function in modern

times. It involves decision to commit the firm's funds to the long term assets. The
firm’s value will increase if investments are profitable and add to the shareholder’s
wealth. Financial decisions are important to influence the firm’s growth and to
involve commitment of large amount of funds. The types of investment decisions are
expansion of existing business, expansion of new business and replacement and
modernization. The capital budgeting decisions of a firm has to decide the way in
which the capital project will be financed. The financing or capital structure decision.
The assets of a company can be financed either by increasing the owners claims on
the creditors’ claims. The various means of financing represent the financial structure
of an enterprise.

3. Medhat Tarawneh (2006):

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financial performance is a dependent variable and measured by Return on Assets

(ROA) and the intent income size. The independent variables are the size of banks as
measured by total assets of banks, assets management measured by asset utilization
ratio (Operating income divided by total assets) operational efficiency measured by
the operating efficiency ratio (total operating expenses divided by net income)

4. Vasant Desai (2007):

The Reserve Bank of India plays a very vital role. It is known as the banker’s bank.
The Reserve Bank of India is the head of all banks. All the money formulations of
commercial banks are done under the Reserve Bank of India. The RBI performs all
the typical functions of a good central bank as it is involved in planning the economy
of the country. The main function is that the RBI should control their credit. It is
mandatory for the Bank to maintain the external value of the rupee. Major function is
that it should also control the currency.

5. K. C. Sharma (2007):

Banking has entered the electronic era. This has been due to reforms introduced
under the WTO compliances. Private sector banks have been permitted to open their
shops in the country. These banks are either foreign or domestic banks with foreign
partnerships. Some of them have been set up by Development Financial Institutions in
order to embrace concept of universal banking, as practiced in advanced countries.
The private sector on the other hand have began their high tech operations from the
initial stage and made the elite of the country to taste the best banking practices that
happens in the western countries. They have foreseen the digital world and have seen
the emerging electronic market, which has encouraged them to have a better customer
service strategy that would be able to deliver the things as per customer’s
requirement.

6. HR Machirajn international publishers (2009):

Efficiency can be considered from technical, economical or empirical considerations.

Technical efficiency implies increase in output. In the case of banks defining inputs

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and output is difficult and hence certain ratios of costs to assets or operating revenues
are used to measure banks efficiency. In the Indian context public sector banks
accounts for a major portion of banking assets, it is necessary to evaluate the financial
decisions of these banks and compare them with private sector banks to know the
quality of financial decisions on its impact or performance of banks in terms of
efficiency, profitability, competitiveness and other economic variables.

7. DR.S. Gurusamy (2009):

One of the key elements of importance for shaping the financial system of a country
is the pension fund. The fund contributes to the development of social security
systems of a country is the pension fund. The fund contributes to the development of
social security system of a country. A fund is established by private employers,
governments, or unions for the payment of retirement benefits. Pension funds are
designed to provide for poverty relief, consumption smoothing etc. Pension funds not
only provide compensation for the loyal service rendered in the past, but in a broader
significance. Works as a measure of socio- economic justice. Pension system refers to
the framework of arrangement under which individuals gain specified entitlements to
a regular income in retirement called pension.

8. Dangwal and kapoor (2010):

also undertook the study on financial performance of nationalized banks in India and
assessed the growth index value of various parameters through overall profitability
indices. They found that out of 19 banks, four banks had excellent performance, five
banks had good performance and six banks had poor performance. Thus the
performance of nationalized banks differ widely

9. Prasana Chandra (2010):

Fundamental of financial management covers all the aspects of the subject from the
basics overview of the financial environment to the financial analysis and financial
planning. The basic consists of forms of business organization which gives detailed
information about the financial management of the organization. After the analysis
part budgeting of capital and fundamental valuation of concept is in detail. It provides
an introduction to the financial management and to the financial environment. The

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fundamental of financial management provides a good coverage of the basic concepts

relating to the financial environment. The topics are explained with various examples
like the tax system, financial institution, banking arrangement & the regulatory
framework. All the concepts are explained using numerous examples & illustration
besides the illustration given within the chapter, additional concepts, tools &
technique with illustration are provided at the end of chapter section. The book takes
an analytical approach and explains the various analytical methods in context.

10. Jha DK and D S Sarangi (2011):

The financial performance of seven public sector and private sector banks during the
period 2009-10. They used three sets of ratio, operating performance ratio, financial
ratio and Efficiency ratio. The study revealed that Axis bank was on the top of these
banks followed by ICICI, BOT, PNB, SBI, IDBI and HDFC.

11.Renu Bagoria (2014):

The main objective of this paper is to make a comparative study between private
sector banks and public sector banks and the adoption of various services provided by
this bank. The different services provided by these banks are M-Banking, Net
banking, ATM, etc. One of the services provided by the bank i.e. Mobile banking
helps us to conduct numerous financial transactions through mobile phone or personal
digital assistant (pda). Data analysis had been made in private sector banks like ICICI
Bank, INDUSSIND Bank, HDFC Bank, Axis Bank and public sector banks like SBI
Bank, SBBJ, IDBI and OBC Bank. These banks also provide Mobile Banking service.
The overall study showed that the transaction of Mobile banking through public sector
bank is higher than private sector.

3.2 Conceptual Framework

Mutual fund is a trust that pools the savings of a number of investors who share a
common financial goal. This pool of money is invested in accordance with a stated
objective. The joint ownership of the fund is thus “Mutual”, i.e., the fund belongs to
all investors. The money thus collected is then invested in capital market instruments
such as shares, debentures and other securities. The income earned through these
investments and the capital appreciations realized are shared by its unit holders in
proportion the number of units owned by them. Thus, a Mutual Fund is the most

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suitable investment for the common man as it offers an opportunity to invest in a

diversified, professionally managed basket of securities at a relatively low cost. A
Mutual Fund is an investment tool that allows small investors access to a well-
diversified portfolio of equities, bonds and other securities. Each shareholder
participates in the gain or loss of the fund. Units are issued and can be redeemed as
needed. The fund’s Net Asset value (NAV) is determined each day.

Investments in securities are spread across a wide cross-section of industries

and sectors and thus the risk is reduced. Diversification reduces the risk because all
stocks may not move in the same direction in the same proportion at the same time.
Mutual fund issues units to the investors in accordance with quantum of money
invested by them. Investors of mutual funds are known as unit holders. When an
investor subscribes for the units of a mutual fund, he becomes part owner of the assets
of the fund in the same proportion as his contribution amount put up with the corpus
(the total amount of the fund). Mutual Fund investor is also known as a mutual fund
shareholder or a unit holder. Any change in the value of the investments made into
capital market instruments (such as shares, debentures etc) is reflected in the Net
Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual
Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing
the market value of scheme's assets by the total number of units issued to the
investors.

Advantages of Mutual Funds: -

 Portfolio Diversification:-Investing in a diversified portfolio can be very

expensive. The nice thing about mutual funds that they allow anyone to hold a
diversified portfolio. The reason why investors invest in a diversified portfolio
is because it increases the expected returns while minimizing the risk.
 Liquidity: - Another nice advantage to mutual funds is that the assets are
liquid. In financial language, liquidity basically refers to converting your
assets to cash with relative ease. Mutual funds are considered liquid assets
since there is high demand for many of the funds in the marketplace.
 Professional Management: - Mutual funds do not require a great deal of time
or knowledge from the Investor because they are managed by professional

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managers. They can be a big help to inexperienced investor who is looking to

maximize their financial goals.
 Ease of Companies: - Mutual funds are also convenient because they are easy
to compare. This is because many mutual fund dealer allow the investor to
compare the funds on metrics such as level of risk, return price. Because
Information is easily available, the Investor is able to make wise decisions.
 Less Risk: - Investors acquire a diversified portfolio of securities even with a
small investment in a mutual fund. The risk in diversified portfolio is lesser
than investing in 2 or 3 securities.
 Low Transaction cost: - Due to Economies of scale mutual funds pay lesser
transaction cost. The benefits are passed on to investors.
 Transparency: - Funds provide investors with updated information pertaining
to market & schemes. All material facts are disclosed to the investor as
required by regulator.
 Safety: - Mutual funds industry is a part of well-regulated investment
environment where interest of the investors is protected by the regulators. All
funds are registered with SEBI & complete transparency is followed.

Disadvantages of Mutual Funds: -

 Cost: -The downside of mutual funds is that they have a high cost associated
with them in relation to the returns they produce. This is because investors are
not only charged for the price of the fund but they will often face additional
fees. Depending on the fund, commission charges can be significant. You will
need to pay fee that will go towards the fund manager.

 Index Does Better: - In some cases, the stock Index may outperform the
mutual fund. However this is not always the case as it depends in large part
on the mutual fund the investor has invested in, as well as the skill set of fund
manager. Therefore, it is a good idea to do your research before investing in
fund. It is historical data indicates that is consistently underperformed
compared to an index, then it is not wise investment.

 Fees: -The fees that are charged will depend on the type of mutual fund
purchased. If a fund is risker and more aggressive, the management fee will

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tend to be higher. In addition, the investor will also be required to pay taxes,
transaction fees as well as other costs related to maintaining the fund.

 No Control over Investments: - You have absolutely no control over what

the Fund Manager Des with your money. You can’t advise him on how your
money is to be invested. You only sit back and hope for the best.

 Profitability of High returns reduced significantly : - A mutual fund

contains a diversified basket of securities. If a single security outperforms by a
significant margin the impact will be limited. Don’t Expect your Investment to
grow and give you profit Overnight. There will also be downward fall in the
limits of the fund.

 Personal Tax situation is not considered : - When you Invest in a Mutual

Fund, your money is pooled together with others and your personal tax
situation is not considered while making Investment decisions. The most you
can do is to choose between growth fund.

Chapter No 4

Table No.1

Gender No of Respondents Percentage

Male 66 65

Female 36 35

Total 102 100

4.1 Gender of Respondents

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35%

65%
Male Female

Interpretation:
From the above Chart it is interpreted that there is total 65 % respondents are
male respondents and 35% respondents are female.

Table No:2

Age Response Percentag

Group s e

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15-25 38 37
25-35 24 24
35-45 31 30
Above
45 9 9
Total 102 100

4.2 Age of Respondents

9%
37%
30% 15-25
25-35
35-45
24% Above 45

Interpretation:
From the above chart it is interpreted that there is 37% respondents are in
between 15-25 age group and 30% and 24% respondents are in 25-35 age group
and 35-45 age group respectively. And remaining 9% respondents are from
Above 45 age group.

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Table No:3

Response Percentag
Income s e
1-2 Lakh 27 27
2-4 Lakh 30 29
4-5 Lakh 32 31
more Than 5
Lakh 13 13
Total 102 100

4.3 Income of Respondents

13%
26% 1-2 Lakh
2-4 Lakh
4-5 Lakh
31%
more Than 5 Lakh

29%

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

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Table No:4

Age
Group Female Male
15-25 8 30
25-35 12 12
35-45 12 19
Above 45 4 5
Total 36 66

4.4 Age & Gender of Respondents

5
Above 45
4

19
35-45
12

12
25-35
12

30
15-25
8

0 5 10 15 20 25 30 35

Female Male

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Interpretation :

From the above chart it is interpreted that, age between 15-25 there is
total 30 respondents are male respondents and 8 female respondents, then
25-35 age group there is 12 male respondents and 12 female respondents,
then again 19 male and 12 female respondents belongs from 35-45 age
group, remaining 5 male respondents and 4 female respondents belongs
from Above 45 age group.

Table No:5

Row Labels HDFC ICICI

Company's Employee 22 5
Family Members and Relatives 18 17
Friends and Peers 28 10
Internet 1 0
Mentor 0 1
toal 69 33

4.5 Referral information showing chart

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30 28

25 22

20 18
17

15
10
10
5
5
1 1
0 0
0
Company's Family Friends and Internet Mentor
Employee Members and Peers
Relatives

HDFC ICICI

Interpretation:

From The above chart it is interpreted that Many respondents (up to 28) have
been come to know about the HDFC company to be invested by their friends &
peers and (up to 10) have been come to know about ICICI. 18 respondents have
been known by their family & relatives about HDFC company and 17 have been
come to known about ICICI company .22 have been come to know by company
employees about HDFC company and 5 respondents have been known about
ICICI company & 2 by others. This means many have come to know by their
friends & peers.

Table No:6

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What kind of Investment do you Prefer most No of Respondents Percentage

Saving Account 33 10

Fixed Deposit 68 21

Insurance 32 10

Mutual Funds 73 22

Shares/ Debentures 37 11

Post Office 15 5

Real Estate 29 4

Gold/Silver 44 13

Total 331 100

4.6 Most preferred Investment tools

13% 10%
Saving Account
9% Fixed Deposit
21%
5% Insurance
Mutual Funds
11% Shares/ Debentures
10% Post Office
22% Real Estate
Gold/Silver

Interpretation:

From the above chart it is interpreted that out of total respondents 22%
respondents mostly prefer Mutual fund as a investment, then after that 21%
respondents prefer fixed deposit and 13% prefer gold/silver then 11%
respondents prefer real estate then 10% respondents prefer saving account
facility and remaining 9%,10% and 4% respondent prefer shares and
debenture, insurance and post office as investment source.

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Table No:7

No Of Percentag
What do you prefer while investing? Respondents e
Previous Schemes 31 30
Previous Data 21 21
Growth Rate 37 36
Advise from Financial Advisor 13 13
Total 102 100

4.7 Preferred Reasons while investment

13%
30%

Previous Schemes
Previous Data
36% Growth Rate
Advise from Financial Advisor
21%

Interpretation:

From the above chart it is interpreted that 36% respondents prefer Growth rate
factor while investing, then 30% respondents prefer previous schemes data while
investing, again 13% respondents prefer the advice from financial advisor while
investing and remaining 21% respondents prefer previous data for investment.

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Table No:8

No of
Which Mutual Fund Scheme have you used Respondents
Closed Ended 26
Growth Fund 10
Liquid Fund 19
long-Cap 2
Mid-Cap 9
Open Ended 19
Regular Income fund 16
Sector Fund 1
Total 102

4.8 Mutual Fund Scheme used by Investors

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26

19 19
Axis Title

16

10
9

2
1
Closed Growth Liquid long-Cap Mid-Cap Open Regular Sector
Ended Fund Fund Ended Income Fund
fund
Axis Title

Interpretation:

From the collected data 26 investors Used Closed Ended Scheme for investment.
19 investors used open Ended Scheme for investment. 19 investors used Liquid
fund Scheme For investment. 16 investors used Regular income fund for
investment. 10 investors are used Growth Fund For investment. 2 investors used
Long-cap for investment.1 investors used Sector Fund For investment.

Table No:9

In which kind of mutual fund would you like to No of Percentag

invest? Respondents e

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Public 56 55
Private 46 45
Total 102 100

4.9 which kind of mutual fund would Investors like to invest

Chart Title

Public
45%
Private
55%

Interpretation:

According to collected data and Above Chart 55% investors thinks that Public
Sector company is the best option for investment. Whereas 45% Investors think
that Private Sector Mutual fund providing Company is the best option for
investment.

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Table No: 10

What feature of Mutual fund attracts you No.Of Percentag

most? Respondents e
Better returns and Safety 39 38%
Diversification 8 8%
Reduction in risk and transaction cost 27 26%
Regular Income 11 11%
Tax Benefit 17 17%
Total 102 100%

4.10 Reasons of attraction for investment

No.Of Respondents

39

27
No.Of Respondents

17

11
8

Better returns Diversification Reduction in Regular Income Tax Benefit

and Safety risk and
transaction cost

Interpretation:

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Form the above collected data 39 Respondents says that Better Returns And
safety is attracts them most.27 Respondents says that Reduction in risk and
transaction cost attracts them most.17 respondents says that Tax benefits attract
them. 11 Respondents says that regular income attracts them.8 Respondents says
that Diversification attracts them most.

Table No:11

No of Percentag
What is your Risk Profile? Respondents e
Risk Adverse 16 16%
Moderator 53 52%
Innovator 33 32%
Total 102 100%

4.11 Risk showing Chart

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16%
32%

Risk Adverse
Moderator
Innovator
52%

Interpretation:

52% investors are innovator means they like to take risk for more returns. 16%
are moderate towards risk means they are indifferent towards risk. 16% are risk
adverse means they mainly try to avoid risk.

Table No:12

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Above
Row Labels 15-25 25-35 35-45 45
Company's Employee 2 12 9 4
Family Members and
Relatives 19 3 9 4
Friends and Peers 15 9 13 1
Internet 1 0 0 0
Mentor 1 0 0 0

4.12
Who informed you that the company provides Mutual Fund Scheme?
Referral distribution by age of respondents

Chart Title
19
20
18
15
16
13
14 12
12
9 9 9
10
8
6 4 4
3
4 2
1 1 1
2 0 0 0 0 0 0
0
Company's Family Friends and Internet Mentor
Employee Members and Peers
Relatives

15-25 25-35 35-45 Above 45

Interpretation:

From the above Chart it is interpreted that in the age group 15 to 25,
respondents got 2 referrals from company employee and 19 from family
members and relatives 15 from friends and peers and then 1 and 1 from internet
and mentor. Again, remaining most of the respondent’s from different age group
are referred from company employees, family members and relatives and friends
and peers only.

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Table No:13

Are you satisfied by Service of companies / Employee No of

behavior? Respondents Percentage
Satisfied 37 36
Neutral 30 29
Highly Satisfied 19 19
Highly Dissatisfied 8 8
Dissatisfied 8 8
Total 102 100

4.13 Satisfaction Showing Chart

8%
8%
36%
Satisfied
19% Neutral
Highly Satisfied
Highly Dissatisfied
Dissatisfied
29%

Interpretation:

Above Chart Shows That Out of 100 investors 36% investors are satisfied. 29%
investors are neutral towards employee behavior of a company. 19% investors

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are highly satisfied. 8% investors are dissatisfied. 8% investors are highly

dissatisfied. We say that many people are satisfied by employee behavior.

Table No:14

What do you say, which institution provides

better returns on Investmen No of Respondents Percentage

HDFC 69 68

ICICI 33 32

Total 102 100

4.14 Returns Comparison showing chart

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32%

HDFC
ICICI
68%

Interpretation:

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

Table No:15

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Which type of mutual Funds have higher Percentag

returns? No Of Respondents e
Liquid 20 20
Equity 52 51
Debt 30 29
Total 102 100

4.15 Type wise Returns comparison showing file

20%
29%

Liquid
Equity
Debt

51%

Interpretation:

From the collected data 51% investors think that Equity type of mutual fund is
Provides higher returns. 29% investors think that Debt type of mutual fund
provide higher returns. 20% investors think that Liquid type of mutual fund
provide higher returns.

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Table No 16

Where do you find yourself as mutual fund No of Percentag

investor? Respondents e
Totally Ignorant 27 26
Partial Knowledge of Mutual Funds 37 36
Fully Aware 14 14
Aware only of Specific Schemes in which you Invested 24 24
Total 102 100

4.16 Awareness of Mutual fund to Investors

24% 26%
Totally Ignorant
Partial Knowledge of Mutual
Funds
14% Fully Aware
Aware only of Specific Schemes
36% in which you Invested

Interpretation:

From the above table and chart, it is seen that 36% of the total respondents have
partial knowledge of mutual funds and 26% are totally ignorant. 24% respondents are
aware only of specific schemes in which they invest and only 14% respondents are
fully aware about mutual funds.

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Chapter 5 Findings:
1) While investing in Mutual Funds, most of the investors are influenced by
family and friends. It means that they are investing in those mutual funds
which are suggested by family and friends.
2) The most preferred investment avenue is Mutual Funds. This is because these
are highly liquid, available at cheapest price and we can easily divert the
amount from one plan to another.
3) We can see that most of the respondents go for investment on basis of growth
rate of the particular investment plan.
4) Majority of respondents have used closed ended mutual fund scheme.
5) Investors are more interested to invest in public mutual funds are they are
more reliable as they are owned by government, this means there are very low
chances of losing the principal amount. Infact, such mutual funds earns more
returns as compared to others.
6) While investing in mutual funds, the most preferred part is to earn good profits
from the investment, second important thing is the security of principal
amount. Thus, the most preferred feature considered while investing is safety
with good returns
7) The risk profile of most of respondents is moderate means they are able to take
medium risk.
8) While studying satisfaction level of respondents, it is seen that majority of the
respondents are satisfied with the present mutual fund scheme they are
investing in.

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Chapter 6 Conclusion

A. Conclusion: - To conclude we can say that mutual fund is a very much

profitable tool for investment because of its low cost of acquiring fund, tax
benefit, and diversification of profits & reduction of risk. Many investors who
have invested in mutual fund have invested with HDFC and them also thinks
that it provides better returns than ICICI .There is also an affect of age on
mutual fund investors like; old people & widows want regular returns than
capital appreciation. Companies can adopt new techniques to attract more &
more investors. In my study I was suppose to do comparative analyses the
mutual fund of HDFC &ICICI and I had found that people consider HDFC
better than ICICI. But ICICI have also respondents and it can increase its

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investors by improving itself in some terms.

A. To conclude we can say mutual fund is a best investment vehicle for old &
widow, as well as to those who want regular returns on their investment.
B. Mutual fund is also better and preferable for those who want their capital
appreciation.
C. Both the companies are doing considerable achievements in mutual fund
industry.
D. There are also so many competitors involved those affects on both companies.

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