What is mean by mutual fund?

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

Indian Scenario of Mutual Fund

The origin of mutual fund industry in India is with the introduction of the concept of by UTI
in the year 1963. Through the growth was slow, but it accelerated from the year 1987 when
non-UTI players entered in industry. The mutual fund industry goes through four phases:

First phase 1964-87 (Establishment of UTI).

Second phase 1987-93 (Entry of public sector funds).
Third phase 1993-2003 (Entry of a private sector funds).
Fourth phase since feb.2003 (Bifurcated of UTI).

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

1978 it was delinked from RBI & the IDBI took over the control of UTI. In second phase,
SBI entered as first non-UTI mutual fund provider then it was followed by can bank (Dec.
87). PNB (Aug 89) & LIC in 1989. In third phase, the private sector entered in it. The
Erstwhile Kothari pioneer (now merged with Franklin Templeton) was first registered in July

1993 in mutual fund. In revised registration of SEBI I n 1993 the industry functions under
SEBI. And the fourth phase had bitter experience for UTI. It was bifurcated into two
separate entities. One is the specified under taking of UTI with AUM of 29,835cr. The
second is UTI mutual fund ltd. Sponsored by SBI, PNB, BOB and LIC& it is registered with
SEBI.

Types of
Mutual Fund

Structure

Open Ended

Investment
objective
Growth

Close

Income

Internal

Balanced

Money Market

Advantages of Mutual Funds

Special schemes

Industry specific
Specific
Index schemes

Sector schemes

Diversification.
Professional Management.
Liquidity (mainly in case of opened mutual funds).
Regulatory.
Convenience.
Low cost.
Reduction of transaction cost.
Diverse returns.
Advantages to Industrial concern.
Tax relief.
Attract foreign Capital.
Reduction / Diversification of risk.

Drawbacks of Mutual fund

No guaranties.
Fees & Commission.
Taxes.
Management Risk.

Introduction to Companies

HDFC Mutual Fund

HDFC mutual fund was set up on June 30, 2000 with two sponsors namely Housing
Development Finance Corporation ltd. and Standard Life Insurance ltd. HDFC mutual fund
came into existence on 10 Dec. 1999 and got approval from the SEBI on 3rd July 2000.
Housing Development Finance Corporation Limited, more popularly known as HDFC
Bank Ltd, was established in the year 1994, as a part of the liberalization of the Indian
Banking Industry by Reserve Bank of India (RBI). It was one of the first banks to receive an
'in principle' approval from RBI, for setting up a bank in the private sector. The bank was
incorporated with the name 'HDFC Bank Limited', with its registered office in Mumbai. The
following year, it started its operations as a Scheduled Commercial Bank. Today, the bank
boasts of as many as 1412 branches and over 3275 ATMs across India.
Products and Schemes of HDFC mutual fund

Equity funds.
Balanced funds.
Debt funds.
Liquid funds.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with
Prudential PLC. Of America, one
of the largest life insurance companies in the USA.
Prudential ICICI mutual fund was set up on 13th of Oct. 1993 with two sponsors.
ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial
institution, in 1994. Four years later, when the company offered ICICI Bank's shares to the
public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank offered made
an equity offering in the form of ADRs on the New York Stock Exchange (NYSE), thereby
becoming the first Indian company and the first bank or financial institution from non-Japan
Asia to be listed on the NYSE. In the next year, it acquired the Bank of Madura Limited in an
all-stock amalgamation. Later in the year and the next fiscal year, the bank made secondary
market sales to institutional investors
Products and Schemes of HDFC mutual fund

Equity funds.
Balanced funds.
Debt funds.
Liquid funds.
Childrens gift fund

Other Players in Mutual Fund

Bank of Baroda mutual fund (BOB MF) 30OCT. 1992.

Benchmark mutual funds (June 12, 2001).
Birla Sun life MF (1871).
Chola mutual fund (3 Jan. 1997).
Can bank mutual fund (Dec. 19, 1987).
LIC mutual fund (19th June, 1989).
Reliance mutual fund (30June, 1995).
Sahara mutual fund (18 July, 1996).
GIC (General Insurance Corporation of India). Etc.

Review of Literature

COMPANY PROFILE
ICICI Bank is India's second-largest bank with total assets of about Rs. 1
trillion and a network of about 540 branches and offices and over 1,000
ATMs. ICICI Bank offers a wide range of banking products and financial
services to corporate and retail customers through a variety of delivery
channels and through its specialized subsidiaries and affiliates in the areas
of investment banking, life and non-Banking , venture capital, asset
management and information technology. ICICI Bank's equity shares are
listed in India on stock exchanges at Chennai, Muzaffarnagar, Kolkata and
Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange
of India Limited and its American Depositary Receipts (ADRs) are listed on
the New York Stock Exchange (NYSE).

HDFC Banks exposure to market risk a function of its trading and asset
and liability management activities and its role as a financial intermediary
in customer-related transactions. HDFC had tried its best in mutual fund sector. It has grown up
its market share in a meanwhile time. The objective of market risk management is to minimize
the impact of losses due to market risks on earning and equity capital.

Source:- www.sribd.com
www.artclenich.com

Need of study
Scope of study
Objectives of study

Need of the study

The need of study arises for learning the variables available that distinguish the mutual
fund of two companies.
To know the risk & return associated with mutual fund.
To chose best company for mutual investment between HDFC & ICICI.
To project mutual fund as the productive avenue for investing activities.

Scope of the study

To make people aware about concept of mutual fund.

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

Objectives
.

To analysis which provides better returns from HDFC &ICICI.

To analyze the concept and parameters of mutual fund.
To know how many people are satisfied by their investment (in HDFC or ICICI).
To know people behavior regarding risk factor involved in mutual fund.

Research Methodology

Research refers to search for knowledge. One can also define research as a scientific and
systematic search for pertinent information on a specific topic. It is an art of scientific
investigation.
Research Methodology:It is the way to systematically solve a problem. The methodology adopted in this study
is explained below: Research Design
A. Problem Defining:
In a competitive situation with multiple mutual funds operating in
Indian market, it is necessary to know about the performance of different mutual
funds as the performance of mutual fund decides about the future of Mutual Fund
Company. In this study my focus is upon performance of investors regarding
HDFC &ICICI. This is my problem to be studied for research.
B. Literature Survey:
I have used newspapers, magazines related to business & finance &
apart from websites.
C. Type of research:
The research is qualitative & descriptive in nature. Qualitative
research is that talk about the quality of the subject to be researched and
Descriptive research is one that describes things as exists in present.
D. Data collection Design:
I. Sources of data =
Primary Sources I have used questionnaire as primary source
for collecting data for my study.
Secondary sources I had collected my secondary data from
websites & journals.
II. Sampling =
It represents whole population. It is the processes of choosing a
sample from whole population .I have choose a sample of high class &
middle class people who have invested in mutual funds as a sample.
III. Tools =

I have used some charts (Pie chart, column chart, cylinder chart,
cone chart) and hypothesis tests (chi-square one sample T- test etc.)
IV. Sampling Size =
It represents that how many candidates youve chosen to be filled
up your questionnaire or candidates upon whom you can study. I had
chosen sample of 100 candidates.
V. Sampling Techniques =
Deliberate &
Convenience Sampling.
VI. Data Interpretation =
Data interpretation is that in which we analysis the whole
collected data & tries to give it in simple words to be understandable.

Analysis

1. Do you invest in mutual fund?

.

YES

100

NO

120
100

100
80
60

YES

NO

40
20
0

Interpretation:All the candidates who are asked to fill the questionnaire have invested in mutual fund.

2. With which company do you have invested in mutual funds?

HDFC

65

ICICI

35

Reliance

SBI

LIC

Kotak Mahindra

Others

70

65

60
50
40

HDFC

35

ICICI Reliance

SBI LIC

Kotak Mahindra Others

30
20
10
0

Interpretation:
Out of 100 candidates up to 65have invested in mutual fund with HDFC & 35 have invested with
ICICI. There is no investor who have invested in mutual fund with any another company.

VAR00001

Observed N
HDFC
ICICI
Total

Expected N

Residual

65

50.0

15.0

35

50.0

-15.0

100

Test Statistics
VAR00001
Chi-Square

9.000a

df
Asymp. Sig.

1
.003

a. 0 cells (.0%) have expected frequencies less than 5.

The minimum expected cell frequency is 50.0.

3. What is your age?

.

8
15-25
25-35

12

35-45

60

More than 45

20

60
60
50
40
30

15-25

25-35

35-45

More than 45

20

20

12
8

10
0

Interpretation:
60 investors are of age between 35-45. 20 are of age more than 45. 12 are of between of 25-35. 8
are of 15-25. This data shows that many investors are of middle age & there are less investors of
young age in mutual fund.

One-Sample Statistics

Mean

Std. Deviation

Std. Error Mean

VAR00001
100

2.9200

.80000

.08000

One-Sample Test
Test Value = 0

95% Confidence Interval of the

Difference
t
VAR00001

36.500

df

Sig. (2-tailed) Mean Difference

99

.000

4. What is your income? (Yearly based)

1 lakh

2-4 lakh

10

4-5 lakh

20

More than 5

70

2.92000

Lower
2.7613

Upper
3.0787

70
70
60
50
40 1 lakh

2-4 lakh

30

4-5 lakh

More than 5

20

20

10

10
0

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

VAR00001
Observed N
1 lakh

Expected N

Residual

25.0

-17.0

2-4 lakh

12

25.0

-13.0

4-5 lakh

60

25.0

35.0

more than 5

20

25.0

-5.0

Total

100

Test Statistics
VAR00001
68.320a

Chi-Square
df

Asymp. Sig.

.000

a. 0 cells (.0%) have expected frequencies less than 5.

The minimum expected cell frequency is 25.0.

5. From where you come to know about this companys mutual fund schemes?

Family & relatives

35

Friends & peers

40

Company employee

15

Others

10

40
40

35

35
Family & relatives
30

Friends & peers Company employee Others

25
15

20

10

15
10
5
0

Interpretation:
Many investors (up to 40) have been come to know about the company to be invested by their
friends & peers.35 have been known by their family & relatives .15have been come to know by
company employees & 10 by others. This means many have come to know by their friends &
peers.

VAR00001
Observed N

Expected N

Residual

Family & relatives

35

25.0

10.0

friends & peers

40

25.0

15.0

Company employee

15

25.0

-10.0

Others

10

25.0

-15.0

Total

100

VAR00001
Observed N

Expected N

Residual

Family & relatives

35

25.0

10.0

friends & peers

40

25.0

15.0

Company employee

15

25.0

-10.0

Others

10

25.0

-15.0

Total

100

6. What is the time duration of your investment?

0-1 year

15

1-2 year

35

2-4year

30

more than 4

20

35
35

30

30
25

20

20 0-1 year 15

1-2 year

2-4year

more than 4

15
10
5
0

Interpretation:
15 investors have time of investment less than one year. 20 have time duration of their
investment between of 1-2 year. 30 have between 2-4 year & 35 have more than 4 years.
So, we can say that 35 investors have more experience than others.

VAR00001
Observed N

Expected N

0-1 year

Test Statistics
15

1-2 year

35

Chi-Square
2-4 year
df
more than 4
Asymp. Sig.

Residual

25.0

-10.0

VAR00001
25.0

10.0
a

30

25.0

10.000

5.0

3
20

25.0

.019 -5.0

Total a. 0 cells (.0%) have expected

100frequencies less than 5. The
minimum expected cell frequency is 25.0.

7. Are you satisfied by service of the companys employees / peoples behavior?

Highly satisfied

15

Satisfied

35

Neutral

30

Dissatisfied

15

Highly Dissatisfied

35
35

30

30
25

Highly satisfied

20

Satisfied

15

Neutral

Dissatisfied

15

15
10 Highly Dissatisfied

5
0
Response
Interpretation:
Out of 100 investors 15 are highly satisfied. 35 are satisfied. 30 are neutral towards employee
behavior of a company. 15 are dissatisfied. 5 are highly dissatisfied. We say that many people are
satisfied by employee behavior.

VAR00002
Observed N

Expected N

Residual

highly satisfied

15

20.0

-5.0

satisfied

35

20.0

15.0

neutral

30

20.0

10.0

dissatisfied

15

20.0

-5.0

20.0

-15.0

highly dissatisfied
Total

100

Test Statistics
VAR00002
Chi-Square

30.000a

df

Asymp. Sig.

.000

a. 0 cells (.0%) have expected frequencies less than

5. The minimum expected cell frequency is 20.0.

8. What is your risk profile?

Innovator

20

Moderate

65

Risk adverse

15

65

70
60
50
40
30

20
15

20
10
0
Innovator

Moderate

Risk adverse

Interpretation:
20% investors are innovator means they like to take risk for more returns. 15% are moderate
towards risk means they are indifferent towards risk. 65% are risk adverse means they mainly try
to avoid risk.

VAR00002

Observed N
innovator
moderate

risk adverse
Total

Expected N

Residual

20

33.3

-13.3

65

33.3

31.7

15

33.3

-18.3

100
Test Statistics
VAR00002
45.500a

Chi-Square
df

Asymp. Sig.

.000

a. 0 cells (.0%) have expected frequencies less than 5. The

minimum expected cell frequency is 33.3.

9. What you feel about the company norms, documentation & formalities?

Highly Satisfied

15

Satisfied

25

Neutral

40

Dissatisfied

15

Highly dissatisfied

VAR00002
Observed N

Expected N

Residual

highly satisfied

15

20.0

-5.0

satisfied

25

20.0

5.0

neutral

40

20.0

20.0

dissatisfied

15

20.0

-5.0

20.0

-15.0

highly dissatisfied
Total

5%

100

Highly Satisfied

15%

15%
Satisfied
Neutral
25%
Dissatisfied
40%

Highly
Dissatisfied

Interpretation:
15% investors are highly satisfied by companys documentation policy (filling up the forms etc.).
25% are satisfied, 40% never cares about it or are moderate towards it , 15% are dissatisfied by it
& 5% are highly dissatisfied.

Test Statistics
VAR00002
Chi-Square

35.000a

df

Asymp. Sig.
a. 0 cells (.0%) have expected frequencies less than 5. The
minimum expected cell frequency is 20.0.

10. What you say which provides better returns?

HDFC

68

ICICI

32

.000

68
70
60
50
32

HDFC

40

ICICI

30
20
10
0

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

VAR00001

Observed N
HDFC
ICICI
Total

Expected N

Residual

68

50.0

18.0

32

50.0

-18.0

100

Test Statistics
VAR00001
12.960a

Chi-Square
df

Asymp. Sig.

.000

a. 0 cells (.0%) have expected frequencies less than 5.

The minimum expected cell frequency is 50.0.

11. Would you like to exchange your investment with one another between
HDFC & ICICI?

Yes

15

No

85

85
90
80
70
60
50

Yes

No

40
30

15

20
10
0

Interpretation:
15 investors said that they would like to change their investment with each another between
HDFC & ICICI. But 85 investors say that they are ok with their companies and they wouldnt
like to exchange their investment.

VAR00001

Observed N
Yes
No

Expected N

Residual

15

50.0

-35.0

85

50.0

35.0

Test Statistics
Total

100
Chi-Square

VAR00001
49.000a

df
Asymp. Sig.

1
.000

a. 0 cells (.0%) have expected frequencies less

than 5. The minimum expected cell frequency is
50.0.

Findings
Limitations
Recommendations
Conclusion

Findings: - In my research I have founded following things: Investors have more faith HDFCs mutual fund.
As the age increases investors are much satisfied, see more risk & become more risk
adverse.
Old people &Widows prefer lower risk.
Investors are not highly satisfied by company rules & employee behavior.
Investors think that HDFC provides better returns than ICICI.

Limitations: - There are some limitations of my study, those are as

Following: Sample limitation: - which sample is taken by me is very small in size to Compare
mutual fund of two companies.
Reliability: - The data collected by me is not much reliable because many investors
chosen by me have invested in HDFC.
Parameters: - All the parameters have not been taken.
Time limitation: - I had the shortage of time because of that I was not able to do my
study in a good manner.
Awareness: - Investors chosen for study are not fully aware of all the terms and
conditions related to mutual fund .So, it is very difficult to construct right information
from them.
Recommendations / Suggestions: - In my study I have found some limitations. For that I can
suggest both companies following suggestions or areas of improvement: ICICI bank should try to provide better returns to its investors as compare to HDFC.
Both companies should try to invest in better securities for better profits.
Both companies should try to satisfy their customer by better customer service or by
improving customer relationship management.
Companies should try to make people initiative towards risk.
Investors should be made fully aware of the concept of mutual fund & all the terms
and conditions.
It should more emphasize in advertising, as it is the most
Powerful tool to position ant brand in the mindsets of customers

Conclusion: - To conclude we can say that mutual fund is a very much profitable tool for
investment because of its low cost of acquiring fund, tax benefit, and diversification of profits &
reduction of risk. Many investors who have invested in mutual fund have invested with HDFC
and them also thinks that it provides better returns than ICICI .There is also an affect of age on
mutual fund investors like; old people & widows want regular returns than capital appreciation.
Companies can adopt new techniques to attract more & more investors. In my study I was
suppose to do comparative analyses the mutual fund of HDFC &ICICI and I had found that
people consider HDFC better than ICICI. But ICICI have also respondents and it can increase its
investors by improving itself in some terms.
To conclude we can say mutual fund is a best investment vehicle for old & widow, as
well as to those who want regular returns on their investment.
Mutual fund is also better and preferable for those who want their capital appreciation.
Both the companies are doing considerable achievements in mutual fund industry.
There are also so many competitors involved those affects on both companies.