Sip Final Report.pdf

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 no

Page no

1

Acknowledgement Declaration Introduction

2 3 06

1.1

History Of Mutual Funds

1.2 1.3 2

Industry Profile Company Profile Review of literature

08 10 18 24

2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 3.

Article by Vedala Shelja Article by G. Balamurugan, M Rangeela Article by Naresh Kumar Article by Sushil kumar1 Article by Dr. Kavita Arora Article by Prasanna Kumar, S. Rajkumar Article by R. Kumar Gandhi Article by Dr.Shantanu Mehta, Charmi Shah Research Methodology

24 24 25 25 26 26 27 27 29

3.1 3.2 3.3 4

Purpose of the study Objectives Limitations Of The Study Data Collection and Analysis

29 29 29 30

4.1 4.2 4.3 5 6

Uni variate Analysis

31 37 40 42 44 45 46

Bi variate Analysis Hpothesis Findings And Recommendations Summary And Conclusion Reference and Bibliography Annexure

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List of Tables Table number 1 2 3 4 5 6 7 8 9 10

What the table is about The statistics of return factor The mode of investment or saving 5 years back

The number of respondents doing investment in mutual fund The reason people don’t invest in mutual funds. Respondents investing in different mutual fund companies Cross tabulation on bjectives of the investments and duration of the investments. The age of the people who are mostly investing in the mutual funds. One-Way ANOVA Test Chi-Square Tests Chi-Square Tests

Page no 32 33 35 36 37 38 40 41 42 42

List of Figures Figure number 1 2 3 4 5 6 7

What the figure is about The statistics of return factor The mode of investment or saving 5 years back

The number of respondents doing investment in mutual fund The reason people don’t invest in mutual funds. Respondents investing in different mutual fund companies Cross tabulation on objectives of the investments and duration of the investments. The age of the people who are mostly investing in the mutual funds.

Page no 32 33 35 36 37 38 40

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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 6|Page

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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.

1992 – 93

Amount (Cr.)

UTI Public Sector Total

11057 1964 13021

Mobilization as % of Mobilized Assets Under Gross Domestic Management Savings 38247 5.2% 8757 0.9% 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. 10 | P a g e

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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 11 | P a g e

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. 13 | P a g e

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 openended 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 

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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, 16 | P a g e

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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 (HDFC Ltd.)

FINANCE

CORPORATION

LIMITED

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, 18 | P a g e

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 exchangetraded 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   

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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.

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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.

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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

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AXIS Mutual Fund IDFC Mutual Fund HSBC Mutual Fund L&T Mutual Funds

 Swot Analysis Strength:  

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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.

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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 (20042008) 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 30 | P a g e

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

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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 2 3 4 5 Total

22 13 10 3 2 50

44.0 26.0 20.0 6.0 4.0 100.0

Figure 1

Return Factor 25

22

20 13

15

10 Frequency

10 3

5

2

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.

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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 Real estate Postal savings/ Fixed deposit Others Total

3 5 4 1 50

6.0 10.0 8.0 2.0 100.0

Figure 2

Investment mode 5 years back 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0

50.0

6.0

14.0 4.0

6.0

10.0

8.0

2.0

Percent

Mutual Funds

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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.

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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.

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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 2.0

5.0

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

HDFC SBI ICICI UTI L&T Others Total

Frequency

Percent

17 14 9 1 2 7 50

34.0 28.0 18.0 2.0 4.0 14.0 100.0

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 2.0

5.0

4.0

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.

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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 Crosstabulation Count

investments

*

duration

of

the

investments

duration of the investments Long Short Medium term Total term term (3 to (more (upto 1 5 years) than 5 year) years) To build a corpus for 1 retirements.

1

2

4

To provide for medical 0 emergencies.

1

0

1

2

8

1

11

2

8

2

12

4

10

8

22

9

28

13

50

objective of To provide for the investments family financial securities. To create wealth. All of the above. Total

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Figure: 6

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

All of the above.

To create wealth.

To provide for family financial securities.

To provide for medical emergencies.

To build a corpus for retirements.

duration of the investments Long term (more than 5 years) duration of the investments Medium term (3 to 5 years) duration of the investments Short term (upto 1 year)

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.

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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 Total

5 33

0 17

Figure 7

F r e q u e n c y

16

15

14 12 10 8

8 6

6

ever invested in mutual funds yes

7 5

6

ever invested in mutual funds no

3

4 2

0

0 between 20-30

between 30-40

between 40-50

above 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.

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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

Between Groups Within Groups Total

Sum of Squares .001 50.979 50.980

df 1 48 49

Mean Square .001 1.062

F

Sig.

.001

.972

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 yes no aware about mutual funds

Yes no

Total

Total

33

13

46

0 33

3 16

3 49

Table 10

Value

Chi-Square Tests Asymp. df Sig. (2sided)

Pearson ChiSquare

6.591a

1

.010

Continuity Correctionb

3.732

1

.053

Likelihood Ratio

7.129

1

.008

Fisher's Exact Test Linear-byLinear Association N of Valid Cases

6.457

1

Exact Sig. (2-sided)

Exact Sig. (1-sided)

.030

.030

.011

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. 42 | P a g e

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 46% 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 43 | P a g e

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

Age: 20-30 O

30-40 O

40-50 O

Female O Others 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 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.

CA O

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 important important Professional management Diversification Return potential Transparency Low cost Flexibility

Not important

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 48 | P a g e