Chapter I
Chapter I
Chapter I
INTRODUCTION
INTRODUCTION
1
It also depends on the fund manager expertise knowledge. It is also seen
that people invest in particular funds depending on who is the fund
manager. A Mutual Fund is a trust that pools the savings of a number of
investors who share a common financial goal. The money thus collected is
invested by the fund manager in different types of securities depending
upon the objective of the scheme.
Thus a mutual fund is the most suitable investment for the common person
as it offers an opportunity to invest in a diversified, professionally
managed basket of securities at a relatively low cost. A collected corpus
can be used to procure a diversified portfolio indicating greater returns has
also create Economies of scale through cost reduction.
SCOPE OF STUDY
The scope of the study is limited to collecting financial data published in the
annual reports of the company every year. The analysis is done to suggest the
possible solutions. The study is carried out for 5 years (2017-2021).
To analyse the information (or) data collected form Branch Manager and
various financial Statements the following tools are used:
1. Percentages
2. Averages
3. Bar Chart
4. Sharpe Ratio
3
1. The study is restricted only to the various mutual funds of few companies
alone.
4. The study is based on the historical data and information provided in the news
papers and magazines, journals and websites and from the host organizations only.
5. The accuracy of the study depends on the accuracy of the data provided.
Hence had to depend fully on secondary data alone.
6. The study is limited to three funds and schemes i.e., tax saving funds, large cap
funds & small cap funds only.
7. The study is limited to only four AMCs. which are UTI, ICICI
PRUDENTIAL, SBI, and HDFC BANK.
4
CHAPTER-II
REVIEW OF LITERATURE
REVIEW OF LITERATURE
This paper is a process to analyse the Indian Mutual Fund Industry pricing
mechanism with empirical studies on its valuation. It also analyses data at
both the fund-manager and fund-investor levels. The study revealed that
the performance is affected by the saving and investment habits of the
people and the second side the confidence and loyalty of the fund Manager
and rewards affects the performance of the MF industry in India.
The sample was selected Tax Saving Schemes, ETF, Growth (Equity
Diversified) and Index/sectorial and Contra Fund.
She finds that Tax saving schemes out-performed the market in terms of
absolute return in different years of the study. However, these schemes
and market returns did not provide an adequate return to cover risk-free
return and total risk of the scheme. The market performance funds have a
significant positive influence on the entire sample schemes performance.
The present NAV is positively and significantly correlated with the past
NAV all the time lags of the selected schemes. The study also suggested
that the mutual fund must ensure not only good performance over the
market but also consistency in their return.
Dr. Sandeep Bansal, Deepak Garg and Sanjeev K Saini (2012), have studied
Impact of Sharpe Ratio & Treynor’s Ratio on Selected Mutual Fund Schemes. This
paper examines the performance of selected mutual fund schemes, that the risk profile
of the aggregate mutual fund universe can be accurately compared by a simple market
index that offers comparative monthly liquidity, returns, systematic & unsystematic
risk and complete fund analysis by using the special reference of Sharpe ratio and
Treynor’s ratio.
Dr. K. Veeraiah and Dr. A. Kishore Kumar (Jan 2017), conducted a research on
Comparative Performance Analysis of Select Indian Mutual Fund Schemes. This
study analysis the performance of Indian owned mutual funds and compares their
performance. The performance of these funds was analysed using a five year NAVs
and portfolio allocation. Findings of the study reveals that, mutual funds out perform
naïve investment. Mutual funds as a medium-to-long term investment option are
preferred as a suitable investment option by investors.
Dr. Yogesh Kumar Mehta (Feb 2012), has studied Emerging Scenario of Mutual
Funds in India: An Analytical Study of Tax Funds. The present study is based on
selected equity funds of public sector and private sector mutual fund. Corporate
and Institutions who form only 1.18% of the total number of investors accounts in
the MFs industry, contribute a sizeable amount of Rs. 2,87,108.01 crore which is
56.55% of the total net assets in the MF industry. It is also found that MFs did not
prefer debt segment.
9
CHAPTER-III
RESEARCH
METHODOLOGY
RESEARCH METHODOLOGY
PRIMARY DATA:
Data that has been generated by the researcher himself/herself, surveys, interviews,
experiments, specially designed for understanding and solving the research problem at
hand
SECONDARY DATA:
Secondary data refers to data that is collected by someone other than the
primary user. Common sources of secondary data for social science
include censuses, information collected by government departments,
organizational records and data that was originally collected for other
research purposes.
⮚ Website
⮚ HDFC BANK Journals
⮚ Security Analysis
⮚ Brochures
10
CHAPTER-IV
THEORETICAL
FRAME WORK
THEORETICAL FRAME WORK
11
Investors
Mutual fund is a solution for investors who lack the time, the inclination
or the skills to actively manage their investment risk in individual
securities. They delegate this role to the mutual fund, while retaining the
right and the obligation to monitor their investments in the scheme.
13
Sponsors
Sponsor is the company, which sets up the Mutual Fund as per the
provisions laid down by the Securities and Exchange Board of India
(SEBI). SEBI mainly fixes the criteria of sponsors based on sufficient
experience, net worth, and past track record.
The AMC manages the funds of the various schemes and employs a
large number of professionals for investment, research and agent
servicing. The AMC also comes out with new schemes periodically. It
plays a key role in the running of mutual fund and operates under the
supervision and guidance of the trustees. An AMC’s income comes from
the management fees, it charges for the schemes it manages.
An AMC has to employ people and bear all the establishment costs that
are related to its activity, such as for the premises, furniture, computers
and other assets, etc. So long as the income through management fees
covers its expenses, an AMC is economically viable. SEBI has issued the
following guidelines for the formation of AMCs:
14
Trustees are an important link in the working of any mutual fund. They are
responsible for ensuring that investors’ interests in a scheme are taken care
of properly. They do this by a constant monitoring of the operations of the
various schemes. In return for their services, they are paid trustee fees,
which are normally charged to the scheme.
Distributors
Registrars
15
The Registrar or the AMC as the case may be maintains an account of the
investor’s investments and disinvestments from the schemes.
Custodian
The custodian maintains custody of the securities in which the scheme
invests. This ensures an ongoing independent record of the investments
of the scheme. The custodian also follows up on various corporate
actions, such as rights, bonus and dividends declared by investee
companies. At present, when the securities are being dematerialized, the
role of the depository for such independent record of investments is
growing. No custodian in which the sponsor or its associates hold 50
percent or more of the voting rights of the share capital of the custodian
or where 50 per cent or more of the directors of the custodian represent
the interest of the sponsor or its associates shall act as custodian for a
mutual fund constituted by the same sponsor or any of its associates or
subsidiary company.
TYPES
16
1. Open-End Funds
Funds that can sell and purchase units at any point in time are classified as
Open-end Funds. The fund size (corpus) of an open-end fund is variable
(keeps changing) because of continuous selling (to investors) and
repurchases (from the investors) by the fund. An open-end fund is not
required to keep selling new units to the investors at all times but is
required to always repurchase, when an investor wants to sell his units.
The NAV of an open-end fund is calculated every day.
2.Closed-End Funds
Funds that can sell a fixed number of units only during the New Fund
Offer (NFO) period are known as Closed-end Funds. The corpus of a
Closed-end Fund remains unchanged at all times. After the closure of the
offer, buying and redemption of units by the investors directly from the
Funds is not allowed. However, to protect the interests of the investors,
SEBI provides investors with two avenues to liquidate their positions.
17
b. Entry Load
It refers to the load charged to an investor at the time of his entry into a
scheme. Entry load is deducted from the investor’s contribution amount to
the fund.
c. Exit Load
d. Deferred Load
In some schemes, the percentage of exit load reduces as the investor stays
longer with the fund.
2. No-load Funds
All those funds that do not charge any of the above mentioned loads are
known as No-load Funds.
Funds that invest in securities free from tax are known as Tax-exempt Funds.
All open-end equity oriented funds are exempt from distribution tax (tax for
distributing income to investors).
18
b. Non-Tax-exempt Funds
Funds that invest in taxable securities are known as Non-Tax-exempt Funds.
In India, all funds, except open-end equity oriented funds are liable to pay tax
on distribution income.
19
3. Equity Funds
Equity funds are considered to be the more risky funds as compared to
other fund types, but they also provide higher returns than other funds. It
is advisable that an investor looking to invest in an equity fund should
invest for long term i.e. for 3 years or more. There are different types of
equity funds each falling into different risk bracket. In the order of
decreasing risk level, there are following types of equity funds:
a. Growth Funds
Growth Funds also invest for capital appreciation (with time horizon of 3
to 5 years) but they are different from Aggressive Growth Funds in the
sense that they invest in companies that are expected to outperform the
market in the future. Without entirely adopting speculative strategies,
Growth Funds invest in those companies that are expected to post above
average earnings in the future.
b. Specialty Funds
Specialty Funds have stated criteria for investments and their portfolio
comprises of only those companies that meet their criteria. Criteria for
some specialty funds could be to invest/not to invest in particular
regions/companies. Speciality funds are concentrated and thus are
comparatively riskier than diversified funds. There are following types of
specialty funds:
20
c. Sector Funds
Equity funds that invest in a particular sector/industry of the market are
known as Sector Funds. The exposure of these funds is limited to a
particular sector (say Information Technology, Auto, Banking,
Pharmaceuticals or Fast Moving Consumer Goods) which is why they are
more risky than equity funds that invest in multiple sectors.
Foreign Securities Equity Funds have the option to invest in one or more
foreign companies. Foreign securities funds achieve international
diversification and hence they are less risky than sector funds. However,
foreign securities funds are exposed to foreign exchange rate risk and
country risk.
21
2. Debt/Income Funds
22
3. Diversified Debt Funds
Debt funds that invest in all securities issued by entities belonging to all
sectors of the market are known as diversified debt funds
. The best feature of diversified debt funds is that investments are properly
diversified into all sectors which results in risk reduction. Any loss
incurred, on account of default by a debt issuer is shared by all investors
which further reduces risk for an individual investor.
Unlike diversified debt funds, focused debt funds are narrow focus funds
that are confined to investments in selective debt securities, issued by
companies of a specific sector or industry or origin. Some examples of
focused debt funds are sector, specialized and offshore debt funds, funds
that invest only in Tax Free Infrastructure or Municipal Bond. Although
not yet available in India, these funds are conceivable and may be offered
to investors very soon.
Although it is not necessary that a fund will meet its objectives or provide
assured returns to investors, but there can be funds that come with a lock-
in period and offer assurance of annual returns to investors during the
lock-in period. Any shortfall in returns is suffered by the sponsors or the
Asset Management Companies (AMCs). These funds are generally debt
funds and provide investors with a low-risk investment opportunity.
However, the security of investments depends upon the net worth of the
guarantor (whose name is specified in advance on the offer document).
23
a. Fixed Term Plan Series
Fixed Term Plan Series usually are closed-end schemes having short term
maturity period (of less than one year) that offer a series of plans and issue
units to investors at regular intervals. Unlike closed-end funds, fixed term
plans are not listed on the exchanges. Fixed term plan series usually invest
in debt / income schemes and target short-term investors. The objective of
fixed term plan schemes is to gratify investors by generating some
expected returns in a short period. Also known as Government Securities
in India, Gilt Funds invest in government papers (named dated securities)
having medium to long term maturity period. Issued by the Government of
India, these investments have little credit risk (risk of default) and provide
safety of principal to the investors. However, like all debt funds, gilt funds
too are exposed to interest rate risk. Interest rates and prices of debt
securities are inversely related and any change in the interest rates results
in a change in the NAV of debt/gilt funds in an opposite direction.
5. Hybrid Funds
As the name suggests, hybrid funds are those funds whose portfolio
includes a blend of equities, debts and money market securities. Hybrid
funds have an equal proportion of debt and equity in their portfolio.
24
CHAPTER-V
INDUSTRY PROFILE
&
COMPANY PROFILE
A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. Banks primarily provide financial services to customers while
enriching investors. Government restrictions on financial activities by banks vary over
time and location. Banks are important players in financial markets and offer services
such as investment funds and loans. In some countries such as Germany, banks have
historically owned major stakes in industrial corporations while in other countries
such as the United States banks are prohibited from owning non-financial companies.
In Japan, banks are usually the nexus of a cross shareholding entity known as the
keiretsu. In France, bancassurance is prevalent, as most banks offer insurance services
(and now real estate services) to their clients.
Introduction
India’s banking sector is constantly growing. Since the turn of the century, there has
been a noticeable upsurge in transactions through ATMs, and also internet and mobile
banking.
Following the passing of the Banking Laws (Amendment) Bill by the Indian
Parliament in 2019, the landscape of the banking industry began to change. The bill
allows the Reserve Bank of India (RBI) to make final guidelines on issuing new
licenses, which could lead to a bigger number of banks in the country. Some banks
have already received licences from the government, and the RBI's new norms will
provide incentives to banks to spot bad loans and take requisite action to keep rogue
borrowers in check.
Over the next decade, the banking sector is projected to create up to two million new
jobs, driven by the efforts of the RBI and the Government of India to integrate
financial services into rural areas. Also, the traditional way of operations will slowly
give way to modern technology.
25
Market size
Total banking assets in India touched US$ 1.8 trillion in FY19and are anticipated to
cross US$ 28.5 trillion in FY25.
Bank deposits have grown at a compound annual growth rate (CAGR) of 21.2 per cent
over FY06–18. Total deposits in FY19were US$ 1,274.3 billion.
Total banking sector credit is anticipated to grow at a CAGR of 20.1 per cent (in terms
of INR) to reach US$ 2.4 trillion by 2021.
In FY17, private sector lenders witnessed decreasable growth in credit cards and
personal loan businesses. HDFC Bank witnessed 171.6 per cent growth in personal
loan disbursement in FY17, as per a report by Emkay Global Financial Services. Axis
Bank's personal loan business also rose 49.8 per cent and its credit card business
expanded by 31.1 per cent.
Investments
26
Export-Import Bank of India (Exim Bank) will increase its focus on supporting project
exports from India to South Asia, Africa and Latin America, as per Mr Yaduvendra
Mathur, Chairman and MD, Exim Bank. The bank has moved up the value chain by
supporting project exports so that India earns foreign exchange. In 2019–18, Exim
Bank lent support to 85 project export contracts worth Rs 24,255 crore (US$ 3.96
billion) secured by 47 companies in 23 countries.
Government Initiatives
The RBI has given banks greater flexibility to refinance current long-gestation project
loans worth Rs 1,000 crore (US$ 173.42 million) and more, and has allowed partial
buyout of such loans by other financial institutions as standard practice. The earlier
stipulation was that buyers should purchase at least 50 per cent of the loan from the
existing banks. Now, they get as low as 25 per cent of the loan value and the loan will
still be treated as ‘standard’.
The RBI has also relaxed norms for mortgage guarantee companies (MGC) enabling
these firms to use contingency reserves to cover for the losses suffered by the
mortgage guarantee holders, without the approval of the apex bank. However, such a
measure can only be initiated if there is no single option left to recoup the losses.
SBI and its five associate banks also plan to empower account holders at the bottom of
the social pyramid with a customer call facility. The proposed facility will help
customers get an update on available balance, last five transactions and cheque book
request on their mobile phones.
27
History
The name bank derives from the Italian word banco "desk/bench", used during the
Renaissance by Jewish Florentine bankers, who used to make their transactions above
a desk covered by a green tablecloth. However, there are traces of banking activity
even in ancient times, which indicates that the word 'bank' might not necessarily come
from the word 'banco'.
In fact, the word traces its origins back to the Ancient Roman Empire, where
moneylenders would set up their stalls in the middle of enclosed courtyards called
macella on a long bench called a bancu, from which the words banco and bank are
derived. As a moneychanger, the merchant at the bancu did not so much invest money
as merely convert the foreign currency into the only legal tender in Rome—that of the
Imperial Mint.
In fact, even today in Modern Greek the word Trapeze (Τράπεζe) means both a table
and a bank.
28
Banks borrow money by accepting funds deposited on current accounts, by accepting
term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend
money by making advances to customers on current accounts, by making instalment
loans, and by investing in marketable debt securities and other forms of money
lending.
Banks provide almost all payment services, and a bank account is considered
indispensable by most businesses, individuals and governments. Non-banks that
provide payment services such as remittance companies are not normally considered
an adequate substitute for having a bank account.
Banks borrow most funds from households and non-financial businesses, and lend
most funds to households and non-financial businesses, but non-bank lenders provide
a significant and in many cases adequate substitute for bank loans, and money market
funds, cash management trusts and other non-bank financial institutions in many cases
provide an adequate substitute to banks for lending savings to.
Entry regulation
Usually the definition of the business of banking for the purposes of regulation is
extended to include acceptance of deposits, even if they are not repayable to the
customer's order—although money lending, by itself, is generally not included in the
definition.
Unlike most other regulated industries, the regulator is typically also a participant in
the market, i.e. a government-owned (central) bank. Central banks also typically have
a monopoly on the business of issuing banknotes. However, in some countries this is
not the case. In the UK, for example, the Financial Services Authority licences banks,
and some commercial banks (such as the Bank of Scotland) issue their own banknotes
in addition to those issued by the Bank of England, the UK government's central bank.
29
Law of banking
Banking law is based on a contractual analysis of the relationship between the bank
(defined above) and the customer—defined as any entity for which the bank agrees to
conduct an account.
The law implies rights and obligations into this relationship as follows:
1. The bank account balance is the financial position between the bank and the
customer: when the account is in credit, the bank owes the balance to the
customer; when the account is overdrawn, the customer owes the balance to
the bank.
2. The bank agrees to pay the customer's cheques up to the amount standing to
the credit of the customer's account, plus any agreed overdraft limit.
3. The bank may not pay from the customer's account without a mandate from
the customer, e.g. a cheque drawn by the customer.
4. The bank agrees to promptly collect the cheques deposited to the customer's
account as the customer's agent, and to credit the proceeds to the customer's
account.
5. The bank has a right to combine the customer's accounts, since each account is
just an aspect of the same credit relationship.
6. The bank has a lien on cheques deposited to the customer's account, to the
extent that the customer is indebted to the bank.
7. The bank must not disclose details of transactions through the customer's
account—unless the customer consents, there is a public duty to disclose, the
bank's interests require it, or the law demands it.
8. The bank must not close a customer's account without reasonable notice, since
cheques are outstanding in the ordinary course of business for several days.
These implied contractual terms may be modified by express agreement between the
customer and the bank. The statutes and regulations in force within a particular
jurisdiction may also modify the above terms.
30
Some types of financial institution, such as building societies and credit unions, may
be partly or wholly exempt from bank licence requirements, and therefore regulated
under separate rules.
The requirements for the issue of a bank licence vary between jurisdictions but
typically include:
1. Minimum capital
2. Minimum capital ratio
3. 'Fit and Proper' requirements for the bank's controllers, owners, directors,
and/or senior officers
4. Approval of the bank's business plan as being sufficiently prudent and
plausible.
Types of banks
Banks' activities can be divided into retail banking, dealing directly with individuals
and small businesses; business banking, providing services to mid-market business;
corporate banking, directed at large business entities; private banking, providing
wealth management services to high net worth individuals and families; and
investment banking, relating to activities on the financial markets. Most banks are
profit-making, private enterprises. However, some are owned by government, or are
non-profit organizations.
Commercial bank: After the Great Depression, the U.S. Congress required that
banks only engage in banking activities, whereas investment banks were
limited to capital market activities. Since the two no longer have to be under
separate ownership, some use the term "commercial bank" to refer to a bank
that mostly deals with deposits and loans.
31
Community Banks: locally operated financial institutions that empower
employees to make local decisions to serve their customers and the partners.
Community development banks: regulated banks that provide financial
services and credit to under-served markets or populations.
Postal savings banks: savings banks associated with national postal systems.
Private banks: banks that manage the assets of high networth individuals.
Offshore banks: banks located in jurisdictions with low taxation and
regulation. Many offshore banks are essentially private banks.
Savings bank: in Europe, savings banks take their roots in the 20th or
sometimes even 20th century. Their original objective was to provide easily
accessible savings products to all strata of the population. In some countries,
savings banks were created on public initiative; in others, socially committed
individuals created foundations to put in place the necessary infrastructure.
Nowadays, European savings banks have kept their focus on retail banking:
payments, savings products, credits and insurances for individuals or small and
medium-sized enterprises. Apart from this retail focus, they also differ from
commercial banks by their broadly decentralised distribution network,
providing local and regional outreach—and by their socially responsible
approach to business and society.
Building societies and Landbanks: institutions that conduct retail banking.
Ethical banks: banks that prioritize the transparency of all operations and make
only what they consider to be socially-responsible investments.
Islamic banks: Banks that transact according to Islamic principles.
32
Types of investment banks
Investment banks "underwrite" (guarantee the sale of) stock and bond issues,
trade for their own accounts, make markets, and advise corporations on capital
market activities such as mergers and acquisitions.
Merchant banks were traditionally banks which engaged in trade finance. The
modern definition, however, refers to banks which provide capital to firms in
the form of shares rather than loans. Unlike venture capital firms, they tend not
to invest in new companies.
Both combined
Islamic banks adhere to the concepts of Islamic law. This form of banking
revolves around several well-established principles based on Islamic canons.
All banking activities must avoid interest, a concept that is forbidden in Islam.
Instead, the bank earns profit (markup) and fees on the financing facilities that
it extends to customers.
33
COMPANY PROFILE
The HDFC Bank was incorporated on August 1994 by the name of 'HDFC Bank
Limited', with its registered office in Mumbai, India. HDFC Bank commenced
operations as a Scheduled Commercial Bank in January 1995. The Housing
Development Finance Corporation (HDFC) was amongst the first to receive an 'in
principle' approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, as part of the RBI's liberalization of the Indian Banking Industry in
1994.
HISTORY
The promoter of the company HDFC was incepted in 1977 is India's premier housing
finance company and enjoys an impeccable track record in India as well as in
international markets. HDFC has developed significant expertise in retail mortgage
loans to different market segments and also has a large corporate client base for its
housing related credit facilities. With its experience in the financial markets, a strong
market reputation, large shareholder base and unique consumer franchise, HDFC was
ideally positioned to promote a bank in the Indian environment.
The shares are listed on the Bombay Stock Exchange Limited and The National Stock
Exchange of India Limited. The Bank's American Depository Shares ( ADS ) are
listed on the New York Stock Exchange (NYSE) under the symbol 'HDB' and the
Bank's Global Depository Receipts (GDRs) are listed on Luxembourg Stock
Exchange.
On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC Bank
was formally approved by Reserve Bank of India to complete the statutory and
regulatory approval process. As per the scheme of amalgamation, shareholders of
CBOP received 1 share of HDFC Bank for every 29 shares of CBOP.
34
HDFC Bank merged with Times Bank in February 2000. This was the first merger
of two private banks in the New Generation private sector banks category. Times
Banwas established by Bennett, Coleman and Co. Ltd., commonly known as The
Times Group, India's largest media conglomerate.
In 2008, Centurion Bank of Punjab (CBOP) was acquired by HDFC Bank. HDFC
Bank's board approved the acquisition of CBOP for ₹95.1 billion in one of the
largest mergers in the financial sector in India.
In 2021, the bank acquired a 9.99% stake in FERBINE, an entity promoted
by Tata Group, to operate a Pan-India umbrella entity for retail payment systems,
similar to National Payments Corporation of India.
September 2021, the bank partnered to launch a range of credit cards powered
by the global card network Visa. with Paytm
On April 4 2022, HDFC Bank announced merger with HDFC Limited.
The merged entity now holds a strong deposit base of around Rs. 1,22,000 crore and
net advances of around Rs. 89,000 crore. The balance sheet size of the combined
entity would be over Rs. 1,63,000 crore. The amalgamation added significant value to
HDFC Bank in terms of increased branch network, geographic reach, and customer
base, and a bigger pool of skilled manpower.
HDFC also has a robust deposits mobilization program. HDFC has been able to
mobilize deposits from over 10 lakh depositors. Outstanding deposits grew from Rs. 1,458 crores in
March 1994 to Rs. 24,625 crores in March 2011. In addition, HDFC has received
'AAA'r a t i n g f o r i t s D e p o s i t p r o d u c t s f o r h i g h e s t s a f e t y f r o m b o t h C
R I S I L a n d I C R A f o r seventeen consecutive years. Over the years, HDFC has
emerged as a financial conglomerate with its presence in theentire gamut of financial
services including banking, insurance (life and non-life), asset management, real estate
venture capital and more recently education loans. today, HDFC is recognized as one of
the Best Managed Companies in India and is a model housing finance company
for developing countries with nascent housing
35
financemarkets. HDFC has undertaken several consultancy assignments in v
arious countries across Asia, Africa and East Europe.
The HDFC Advantage
Background
with the primary objectiveof meeting a social need - that of promoting home
ownership by providing long-term finance to households. The launching of HDFC
was meant to be one small step in dealingwith the availability of housing
accommodation in India which was then virtually non-existent. HDFC as a pioneer
launched India's first specialized home loan company with aninitial capital of Rs. 100
million.
36
Business Objective of HDFC Ltd.
The primary objective is to enhance residential housing stock in the country through
the provision of housing finance in a systematic and professional manner, and to prom
otehome ownership. The aim is to increase the flow of resources to the
housing sector byintegrating the housing finance sector with the overall domestic financial
markets.
Organizational Goals:
Develop close relationships with individual households.
Maintain our position as the premier housing finance institution in the country.
Transform ideas into viable and creative solutions.
To grow through diversification by gaining leverage from our existing client base.
To nurture the values and ethos of Brand HDFC through all its Subsidiaries
and Associate Companies.
Growth strategies
Increase the return on equity each year by 1 percentage point in order to
maximise shareholder value.
Maintain gross Non-Performing Assets (NPA’s) below 1%
37
Euromoney Survey 2018 - Best Private Banking services for Super Affluent
Clients
Best Bank For Financial Inclusion - UTI Mutual fund CNBC TV 18 Financial
Advisory Awards 2017
UTI MF & CNBC- TV18 Financial Advisory Awards - Best Performing Bank
– Private 2018-19.
Euromoney Trade Finance Survey 2019 - Best Service ( Asian Banks only) –
India & Market Leader ( Asian Banks only) - India
The Banker - Bank of the year TB 2018 - The Banker - Bank of the year
award - Best Private Bank in India 2018.
VISSION
MISSION
38
CHAPTER-VI
DATA ANALYSIS
AND
INTERPRETATION
DATA ANALYSIS AND INTERPRETATION
Three funds namely - tax saving funds, large cap funds, and mid cap funds
and under them only funds were chosen to study. The schemes were
selected based on CRISIL ranking. The analysis is mainly based on
secondary data.
Calculations
HDFC 4. HDFC Tax Saver 8. HDFC Equity fund 12. HDFC Mid cap
BANK (G) (G) fund(G)
40
Year Return(R)% D d²
22.0481
STANDARD DEVIATION(σ) √Ʃd²/N=2430.608/5
9%
41
2. ICICI PRU Tax saving- Long term equity fund (G)
Year Return(R)% D d²
17.38%
AVG RETURN ƩR/N=76.9/5
√Ʃd²/ 26.23543%
STANDARD DEVIATION
N=3441.488/5
42
SBI Magnum tax gain (G)
Year Return(R)% D d²
13.74%
AVG RETURN ƩR/N=68.7/5
STANDARD 25.5084%
√Ʃd²/N=3253.392/5
DEVIATION(σ)
Years Return(R)% D d²
STANDARD
√Ʃd²/N=3253.392/5 24.69179%
DEVIATION(σ)
STANDARD
SCHEMES AVG RETURN
DEVIATION(RISK)
15.38% 16.04%
13.74%
10.62%
Companies
INTERPRETATION
From the above table and graph we found that HDFC tax saver scheme
has more return i.e., 18.04% as compared to UTI tax saving has less return
of 10.62%. ICICI PRU tax saving scheme has more risk i.e., 26.23%
whereas UTI is having less risk with 22.04.
46
Ratio
0.4
0.35
0.35
0.3
0.3
0.25
0.25
Percentages
0.2
0.15 0.14
0.1
0.05
Companies
Ratio
INTERPRETATION
From the above table and graph we can found that HDFC tax saver
scheme stands 1st as it has highest Sharpe ratio i.e., 0.35, ICICI PRU Tax
saving- long term equity fund(G) scheme stands 2nd with 0.3, 3rd SBI
magnum with 0.25 and 4th UTI with 0.16.
48
Year Return(R)% D d²
Year Return(R)% d d²
821.395
2017 -18.5 -28.66
6
229.219
2018 27.3 17.16
6
825.987
2020 40.9 28.74
6
175.251
2021 -0.3 -12.46
8
2039.47
ƩR= 60.8 Ʃd²=
2
50
AVG RETURN ƩR/N=60.8/5 12.18
Year Return(R)% d d²
Year Return(R)% d d²
STANDARD
√Ʃd²/N=2138.74/5 20.68207
DEVIATION
STANDARD
SCHEMES AVG RETURN
DEVIATION
29.65%
23.48%
20.19% 20.68%
Percentages
15.08%
13.50%
12.16%
10.90%
0 0 0 0
1 2 3 4
Companies
INTERPRETATION
From the above table and graph we can found that SBI Blue chip fund
scheme has more return i.e., 17.08% and also more risk i.e., 29.65%.
ICICI PRU Focused Blue chip equity (G) scheme has lowest risk i.e.,
20.19% with 12.18% risk.
55
RATIO
RATIO
0.26 0.26
0.23
0.17
Percentages
Companies
INTERPRETATION
From the above graph and table we found that UTI equity fund and SBI
Blue chip fund stands 1st as they has highest Sharpe ratio i.e., 0.26, then
ICICI PRU focused blue chip with 0.23 and HDFC with 0.19.
57
Year Return(R)% D d²
Year Return(R)% D d²
Year Return(R)% D d²
2018
48.3 24.36 593.4096
Year Return(R)% d d²
STANDARD
SCHEMES AVG RETURN
DEVIATION
38.83% 39.41%
33.37%
31.86%
Percentages
24.34% 23.94%
22.58%
20.70%
Companies
INTERPRETATION
From the above graph we found that ICICI PRU mid cap fund scheme has
more risk i.e., 39.41% with less return that is 20.7%, next UTI mid cap
fund scheme has risk i.e., 38.83 % with 24.34% return, then SBI with
33.27% risk with 23.94% return and HDFC with lowest 31.86% risk and
22.58% return.
63
SHARPE RATIO
SHARPE RATIO
0.49
0.47
0.43
0.330000000000001
Percentages
Companies
INTERPRETATION
From the above graph we can interpret that SBI Magnum mid cap fund
scheme stands 1st as it has highest Sharpe ratio i.e., 0.49 and HDFC Mid
cap fund(G) scheme stands 2nd,next UTI with 0.43 and ICICI PRU with
0.33, which is the least.
65
SHARPE RATIO
COMPANIES
TAX SAVING LARGE CAP MID CAP
FUND FUND FUND
66
Sharpe ratio of all funds
0.49
0.47
0.43
0.35
0.330000000000001
Percentages
0.3
0.26 0.25 0.26
0.23
0.17
0.14
Companies
INTERPRETATION
From the above graph we can interpret that Sharpe ratio of UTI Tax
saving funds, large cap fund and mid cap fund are 0.16, 0.26 and 0.43,
ICICI Prudential are 0.30, 0.23, 0.33, SBI are 0.25, 0.26, 0.49 and Hdfc
bank are 0.35, 0.19 and 0.47 respectively.
67
CHAPTER-VII
FINDINGS
&
CONCLUSSION
FINDINGS & CONCLUSION
The following gives the AMCs with the highest return under each fund
i.e., tax saving funds, large cap funds and mid cap funds
o Tax saving fund: HDFC Tax Saver (G)and its return is 18.04%
o Large cap fund: SBI Blue Chip Fund(G)and its return is 17.8%
The following gives the AMCs with the less return under each fund i.e.,
tax saving funds, large cap funds and mid cap funds
o Tax saving fund: UTI Tax saving-Equity long term fund(G)and its
return is 10.62%
o Large cap fund: HDFC Tax Saver (G) and its return is 10.9%
o Mid cap fund: ICICI PRU Mid Cap Fund(G))and its return is
20.7%
The following AMCs schemes has the highest risk under each fund i.e.,
tax saving funds, large cap funds and mid cap funds.
o Tax saving fund: ICICI PRU Tax saving- long term equity
fund(G)and its risk is 26.23%
o Large cap fund: SBI Blue Chip Fund(G)and its risk is 29.65%
o Mid cap fund: ICICI PRU Mid Cap Fund(G)and its risk is 39.41%
68
The following AMCs schemes has the lowest risk under each fund i.e., tax
saving funds, large cap funds and mid cap funds.
● Tax saving fund: UTI Tax saving-Equity long term fund(G)and its
risk is 22.04%
● Large cap fund: ICICI PRU Focused Blue chip equity(G)and its risk is
20.19%
● Mid cap fund: HDFC Mid cap fund(G) and its risk is 31.86%
CONCLSION
The performance of the AMC’s scheme has been evaluated with the help
of Sharpe ratio under each fund and the scheme with highest Sharpe ratio
is given the top rank. Top ranked AMC’s scheme under each fund is as
follows,Tax saving fund: HDFC tax saver fund with 0.35,Large cap fund:
UTI equity fund and SBI Blue chip fund with 0.26,Mid cap fund: SBI
Magnum mid cap fund scheme with 0.49
It is found that among the different types of funds Mid Cap funds are
performing well with more returns and more risk. It is also found that SBI
magnum mid cap fund scheme has highest Sharpe ratio i.e., 0.49 and
investing in the same will lead to profit.
69
CHAPTER VIII
SUGGESITIONS
&
RECOMMENDATIONS
SUGGESTIONS
1.The investor should take moderate risk to invest in HDFC Tax saver (G)
which gives more return.
2.If an investor likes to take less risk he can invest in ICICI PRU Focused
blue chip equity (G).
4.It is better for the investors to have thorough knowledge about the
various financial services and instruments so that better decisions can be
taken.
BIBLIOGRAPHY
Books
Websites
https://www.thebalance.com/mutual-funds-4073989
https://www.amfiindia.com/investor-corner/knowledge-center/what-
are-mutual-funds-new.html
https://www.moneycrashers.com/mutual-fund-types-pros-cons/
https://www.getsmarteraboutmoney.ca/invest/investment-
products/mutual-funds-segregated-funds/7-common-types-of-mutual-
funds/
https://www.bankbazaar.com/mutual-fund/types-of-mutual-
funds.html
https://cleartax.in/s/mutual-fund-types
https://www.hdfcfund.com/learn/beginner/mutual-funds/different-
types-mutual-funds
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Journal Articles