CHAPTER-1: INTRODUCTION

This chapter gives the brief information about the mutual funds and overview of the selected

organisation/company which deals in mutual funds. Further in this chapter, objectives and scopes

are described which are relevant for conducting a research. For conducting a research different

tools and techniques are needed which are mention under the head of research methodology.

1.1 ORGANISATION/COMPANY:

Mutual fund is a investment tool made up of a pool of funds collected from many investors. It

pools the savings of a large number of investors who share a common financial goal and invest

their funds in different securities. There are different types of securities in which an investor can

invest their funds such as in equity fund, debt fund etc. Mutual fund helps the investor to reduce

the losses occur due to changing in the stock market by making diversified investments in

different securities.

The first mutual fund scheme was introduce in India in 1963 with the formation of Unit Trust of

India, at the initiative of the Government of India and Reserve Bank of India. In 1993 a new era

started in the Indian mutual fund Industry because mutual funds were made open to private

players which giving the Indian Investors a wider choice of fund families. With rise of mutual

fund industry need for regulatory body was arise so government of India establishes Security

Exchange Board of India. SEBI was established under which all the mutual funds in India were

required to be registered. SEBI was set up as a governing body to protect the interest of investor.

By the end of 2008, the number of players in the industry grew enormously with 46 fund houses

functioning in the country. With the rise of the mutual fund industry, establishing a mutual fund

association became a prerequisite. This is when AMFI (Association of Mutual Funds India) was
set up in 1995 as a non-profit organization. Today AMFI ensures mutual funds function in a

professional and healthy manner thereby protecting the interest of the mutual funds as well as its

investors.

There are two type of Mutual fund open ended and close ended. Open ended funds dont have a

limit on issue of shares, sale of shares take place directly between investors and the fund

company. While close ended fund issued only a limited number of shares through an initial

public offering and do not issue new shares as investor demand. In open ended price are

determine by the net asset value of the fund, while in close ended fund price are determine on the

basis of investor demand.

For further study of Mutual funds we have taken HDFC mutual fund and ICICI prudential

mutual fund.

1.1.1 HDFC MUTUAL FUND

HDFC Bank was founded in 1977, its headquarter in Mumbai. It was the first specialized

mortgage company in India. HDFC bank provide a number of products and services which

includes accounts and deposits, loan, insurance, investment (mutual fund, gold, equities etc,.) etc.

In 2000 HDFC Assets Management Company was incorporated under the companies act 1956

and was approved to act as an Asset Management company for the Mutual Fund by SEBI. 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 / Settlers and HDFC Trustee Company Limited, as the Trustee. HDFC have

different types of products : -

 a) Equity Fund
b) Debt/income Fund,
c) Liquid Funds,
d) Exchange Traded Funds
e) Dual advantage Fund,
f) Childrens Gift Fund,
g) Fixed Maturity Fund etc.

In HDFC mutual fund HDFC LTD have 59.99% stake in HDFC mutual fund, Standard life

investment limited have 39.99% while other have 0.02% in HDFC mutual fund

Vision and Mission

To be a dominant player in the Indian mutual fund space, recognized for its high levels of ethical

and professional conduct and a commitment towards enhancing investor interests

1.1.2 ICICI Prudential Mutual Funds

ICICI is a multinational and financial bank in India. It was incorporated in 1994. It offers a wide

range of banking products and services under a single roof for corporate and retail customers like
investment banking, life and non life insurance, venture capital and asset management. The AMC

is the joint venture between the ICICI Bank and Prudential Plc one of the UKs largest players in

the financial services sector. ICICI Prudential have a different products which includes equity

funds, debt funds, balanced funds, exchange traded funds and fund of funds.

ICICI Prudential Mutual Fund (the Fund) offers a wide range of retail and corporate investment

solutions across different asset classes like Equity, Fixed Income and Gold.

The Fund House has continuously aimed to provide investors with financial solutions to aid them

in achieving their lifecycle objectives. It has constantly been on the forefront of innovation and

has introduced products aligned to meet customer needs leading to a well-diversified portfolio of

around 57 mutual fund products. The success of the endeavors is evident in the mutual fund

investor base that has witnessed significant growth from 210 to over 2 Million currently.

ICICI Prudential Mutual Fund gained from managing funds as per its investment objectives and

was able to deliver superior risk adjusted returns. The consistent long term performance was

achieved on the strength of fundamentals, process driven investment approach with enough

flexibility for the fund managers to manage their funds in their unique style and insight.

The fund house over the last 18 years has garnered trust of its investors and has emerged as the

leading and preferred investment solution provider in India. The fund house has always aimed to

fulfill its fiduciary responsibility of managing investor's wealth with prudence and due diligence.

Products under ICICI Prudential Mutual Funds are: -

a) Equity Funds
b) Balance/Hybrid
c) Debt Funds
d) Fund of Funds
e) Exchange Traded Funds
Vision:

To be the leading provider of financial services in India and a major global bank.

Mission:

We will leverage our people, technology, speed and financial capital to:

a) be the banker of first choice for our customers by delivering high quality, world-class

products and services.

b) expand the frontiers of our business globally.

c) play a proactive role in the full realisation of Indias potential.

d) maintain a healthy financial profile and diversify our earnings across businesses and

geographies.

e) maintain high standards of governance and ethics.

f) contribute positively to the various countries and markets in which we operate.

g) create value for our stakeholders.

1.2 OBJECTIVES

1.2.1 To evaluate the Performance of HDFC mutual fund and ICICI prudential mutual fund.
1.2.2 To compare the performance of HDFC mutual fund and ICICI prudential mutual fund

with reference to BSE.

1.3 SCOPE OF THE STUDY

The study is carried out for the evaluating the performance of the mutual fund of ICICI

Prudential mutual fund and HDFC mutual fund. This study will help the investor to identify
which mutual fund scheme out of these two banks are performing good and which scheme have

low risk and high return. In India mutual fund industry is growing at a rapid speed after

liberalization of policy of the government. There are totally 46 mutual fund houses in India out

of which 38 are private sector AMCs and the remaining are public sector and UTI AMCs.

1.3.1 This study will help the investor to select and evaluate different schemes of HDFC

Mutual Fund and ICICI Prudential Mutual Funds.

1.3.2 This study is help to evaluate the performance of different schemes of mutual funds

1.4 RESEARCH METHODOLOGY

1.4.1 Research Design: - Empirical Research

1.4.2 Data collection: - Sources of Secondary data. Internet.( Money control, value

research online, National stock exchange and mutual fund India.), Journals,

Magazines.
1.4.3 Sampling Frame: - HDFC Mutual Fund and ICICI Prudential Mutual Fund.
1.4.4 Sampling Unit: - It includes schemes of HDFC Mutual Fund and ICICI Prudential

Mutual Fund.

1.4.5 Sample Size: - Broadly the sample of 4 mutual fund scheme is taken.

Basis HDFC Mutual Fund ICICI prudential

Equity HDFC premier Multicap Fund ICICI Prudential Multicap

HDFC MidCap opportunity Fund Fund
HDFC Arbitrage Fund ICICI Prudential MidCap
HDFC Balanced Fund Fund
HDFC Large Cap Fund ICICI Prudential Equity
Arbitrage Fund
ICICI Prudential Balanced
Advantage Fund
 ICICI Prudential Large Cap
Fund

Debt HDFC short term plan. ICICI Prudential Short Term

HDFC MF Monthly Income Plan
HDFC corporate bond fund
HDFC Banking And PSU Debt
Fund
HDFC Gift Fund long term
ICICI Prudential Income Plan
ICICI Prudential Corporate
Bond Fund
ICICI Prudential Banking And
PSU Debt Fund
ICICI Prudential Long Term
Gilt Fund

Exchange HDFC Gold Exchange Traded Fund ICICI Prudential Gold iWIN
traded funds Growth. ETF.
HDFC Sensex ETF - HDFC Sensex ICICI Prudential Sensex iWIN
ETF Plan. ETF.
HDFC Nifty ETF - HDFC Nifty ICICI Prudential NIFTY iWIN
ETF Plan. ETF.

Fund of HDFC Gold Fund ICICI Prudential Regular Gold

Funds Savings Fund

1.4.6 Sampling Technique: - Random sampling

1.4.7 Research Technique: - Correlation, Sharpe Ratio, Treynor Ratio.

1.5 Tools: - SPSS 23.0, Excel