BRM RESEARCH PROJECT REPORT’2011

INDUSTRY: FINANCE
ORGANISATION: HDFC V/S TATA MUTUAL FUND

V/S

MBA-IB 2010-12
 Submitted to: Submitted by:

Dr. Harish Jain Ashok Lahoty

Vineet Kaushik

Sushant Sen

Varun Khanna

TITLE: COMPARATIVE ANALYSIS OF MUTUAL FUND OF HDFC & TATA

Acknowledgement:
It is a matter of great pleasure for me in submitting the project report on
comparative analysis of mutual fund of HDFC and TATA for the fulfillment of the
requirement of research project report of this particular subject. I am thankful to
and owe a deep dept gratitude to all those who have helped me in preparing this
report.

I am highly obliged to those who had helped me to procure primary data to

complete my project report. Also not to be forgotten are the lecturer of MBA who
contributed their ideas and suggestions.

I want to thank all who have supported me and gave their timely guidance.
Last but not least I am very grateful to all those who helped me in one-way or the
other at every stage of my work.

Abstract
“ A data envelopment analysis approach to measure the mutual fund
performance.”A Mutual Fund is a form of collective investment that pools money
from many investors, who share common financial goals and invests their money
in stocks, bond, short term money market instruments and/or other securities. Both
the companies covers the entire spectrum of financial services such as Stock
broking, Depository Participants, Distribution of financial products - mutual funds,
bonds, fixed deposit, equities, Insurance Broking, Commodities Broking, Personal
Finance Advisory
Services, Merchant Banking & Corporate Finance, placement of equity, IPOs,
among others. In the introductory chapter, I have consider the role of mutual fund
in today’s investing environment, learn just how popular mutual funds have
become and consider why investors have chosen to put so much money into funds.
Clearly, mutual funds are a major financial asset for numerous investors, and in
many ways they play the dominant role in today’s investing world for millions of
house holds.
The overall objective of my study on this project is to know which company provides
better investment opportunities from HDFC and TATA and make the investors to be able to take
better decisions. Of course, as every study needs, I’d adopted an objective view of overall
situation that examines both sides of the issue situated in HDFC & TATA.

TABLE OF CONTENTS
Contents S.NO.

Title 2

Acknowledgement: 2

Abstract 2

Introduction to subject 4

Introduction of companies 10

Research methodology 12

Data collection/ presentation 14

Interpretation of data 17

Conclusions & Recommendation 17

Bibliography 23
Introduction to the subject:
What is meant by mutual fund?
Mutual fund is an investment company that pools money from shareholders and
invests in a variety of securities, such as stocks, bonds and money market
instruments. Most open-end Mutual funds stand ready to buy back (redeem) its
shares at their current net asset value, which depends on the total market value of
the fund's investment portfolio at the time of redemption. Most open-end Mutual
funds continuously offer new shares to investors. Also known as an open-end
investment company, to differentiate it from a closed-end investment company.
Mutual funds invest pooled cash of many investors to meet the fund's stated
investment objective. Mutual funds stand ready to sell and redeem their shares at
any time at the fund's current net asset value: total fund assets divided by shares
outstanding.

Concept of mutual funds:

Mutual fund is a mechanism for pooling the resources by issuing units to the
investors and investing funds in securities in accordance with objectives as
disclosed in offer document. Investments in securities are spread across a wide
cross-section of industries and sectors and thus the risk is reduced. Diversification
reduces the risk because all stocks may not move in the same direction in the same
proportion at the same time. Mutual fund issues units to the investors in
accordance with quantum of money invested by them. Investors of Mutual funds
are known as unit holders.
ADVANTAGES OF MUTUAL FUNDS:

 Professional Management.
The major advantage of investing in a mutual fund is that you get a
professional money manager to manage your investments for a small fee.
You can leave the investment decisions to him and only have to monitor the
performance of the fund at regular intervals.
 Diversification.
Considered the essential tool in risk management, mutual funds make it
possible for even small investors to diversify their portfolio. A mutual fund
can effectively diversify its portfolio because of the large corpus. However,
a small investor cannot have a well-diversified portfolio because it calls for
large investment.

 Convenient Administration.
Mutual funds offer tailor-made solutions like systematic investment plans
and systematic withdrawal plans to investors, which is very convenient to
investors. Mutual funds also offer specialized schemes like retirement plans,
children’s plans, industry specific schemes, etc. to suit personal preference
 of investors. These schemes also help small investors with asset allocation of
their corpus. It also saves a lot of paper work.

 Costs Effectiveness
A small investor will find that the mutual fund route is a cost-effective
method (the AMC fee is normally 2.5%) and it also saves a lot of transaction
cost as mutual funds get concession from brokerages. Also, the investor gets
the service of a financial professional for a very small fee. You can liquidate
your investments within 3 to 5 working days (mutual funds dispatch
redemption cheques speedily and also offer direct credit facility into your
bank account i.e. Electronic Clearing Services).

 Transparency.
Mutual funds offer daily NAVs of schemes, which help you to monitor your
investments on a regular basis. They also send quarterly newsletters, which
give details of the portfolio, performance of schemes against various
benchmarks, etc. They are also well regulated and Sebi monitors their
actions closely.

 Affordability
Mutual funds allow you to invest small sums. For instance, if you want to
buy a portfolio of blue chips of modest size, you should at least have a few
lakhs of rupees. A mutual fund gives you the same portfolio for meager
investment of Rs.1,000-5,000. A mutual fund can do that because it collects
money from many people and it has a large corpus.

DISADVANTAGES OF MUTUAL FUNDS:

 Professional Management- Did you notice how we qualified the advantage

of professional management with the word "theoretically"? Many investors
 debate over whether or not the so-called professionals are any better than
you or I at picking stocks. Management is by no means infallible, and, even
if the fund loses money, the manager still takes his/her cut. We'll talk about
this in detail in a later section.

 Costs - Mutual funds don't exist solely to make your life easier--all funds are
in it for a profit. The Mutual fund industry is masterful at burying costs
under layers of jargon. These costs are so complicated that in this tutorial we
have devoted an entire section to the subject.

 Taxes - When making decisions about your money, fund managers don't
consider your personal tax situation. For example, when a fund manager
sells a security, a capital-gain tax is triggered, which affects how profitable
the individual is from the sale. It might have been more advantageous for the
individual to defer the capital gains liability.

Equity funds, if selected in the right manner and in the right proportion, have the
ability to play an important role in achieving most long-term objectives of
investors in different segments. While the selection process becomes much easier
if you get advice from professionals, it is equally important to know certain aspects
of equity investing yourself to do justice to your hard earned money.

TYPES OF MUTUAL FUND SCHEMES:

 (A) BY STRUCTURE
 Open – Ended Schemes.
 Close – Ended Schemes.
 Interval Schemes
1. OPEN – ENDED SCHEMES: The units offered by these schemes are available for

sale and repurchase on any business day at NAV based prices. Hence, the unit
capital of the schemes keeps changing each day. Such schemes thus offer very high
liquidity to investors and are becoming increasingly popular in India

2. CLOSED – ENDED SCHEMES: The unit capital of a close-ended product is

fixed as it makes a one-time sale of fixed number of units. These schemes are
launched with an initial public offer (IPO) with a stated maturity period after which
the units are fully redeemed at NAV linked prices. In the interim, investors can buy
or sell units on the stock exchanges where they are listed.

3. INTERVAL SCHEMES: These schemes combine the features of open-ended

and closed-ended schemes. They may be traded on the stock exchange or may be
open for sale or redemption during pre-determined intervals at NAV based price.

 WHAT IS THE PROCEDURE FOR REGISTERING A MUTUAL FUND WITH

SEBI?
An applicant proposing to sponsor a Mutual fund in India must submit an
application in Form A along with a fee of Rs.25, 000. The application is examined
and once the sponsor satisfies certain conditions such as being in the financial
services business and possessing positive net worth for the last five years, having
net profit in three out of the last five years and possessing the general reputation of
fairness and integrity in all business transactions, it is required to complete the
remaining formalities for setting up a Mutual fund. Planning for long term
objectives
Many people get overwhelmed by the thought of retirement and they think how
they will ever save the huge money that is required to lead a peaceful and happy
retired life. However, the fact is that if we save and invest regularly over a period
of time, even a small sum of money can be adequate.

It is a proven fact that the real power of compounding comes with time. Albert
Einstein called compounding "the eighth wonder of the world" because of its
amazing abilities. Essentially, compounding is the idea that one can make money
on the money one has already earned. That's why, the earlier one starts saving, the
more time money gets to grow.

Through Mutual funds, one can set up an investment programme to build capital
for retirement years. Besides, it is an ideal vehicle to practice asset allocation and
rebalancing thereby maintaining the right level of risk at all times.
INTRODUCTION OF COMPANIES:

HDFC Mutual fund:

HDFC mutual fund was set up on June 30,2009 with two sponsors namely
Housing Development Finance Corporation ltd. And standard life insurance ltd.
HDFC mutual fund came into existence on 10th dec. 1999 and got approval from
the SEBI on 3rd July 2000.

Housing Development Finance Corporation ltd. More popularly known as HDFC

Bank ltd. Was established in the year 1994, as a part of liberalization of the Indian
Banking Industry by 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.

Products and schemes of HDFC mutual fund

 Equity funds
 Balanced funds
 Debt funds
 Liquid funds

TATA mutual fund ltd

Tata Asset Management Private Limited is very old house and is well placed in
the market. Tata mutual fund has AUM of Rs. 21304 Crores. Tata opened its office
in Jaipur before 10 yrs. Since than it has good business. Tata have brand advantage
because investor trust in TATA group. Tata has nearly 10-12% of the market share
of Jaipur mutual fund market.

The Mutual Fund was registered with SEBI on 30th Tata Mutual Fund
(TMF) has been constituted as a Trust in accordance with the provisions of the
Indians Trusts Act, 1882 and is registered as a Trust under The Indian Registration
Act, 1908.

Shareholding pattern of TAML:

 Tata sons Ltd. : 67.91%
  Tata Investment Corporation Ltd. : 32.09%

TATA mutual fund 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. TATA had tried its best in mutual fund sector.

OBJECTIVES OF THE STUDY AND RESEARCH

METHODOLOGY
OBJECTIVES OF THE STUDY

 The objective of the research is to study and analyze the awareness level of
investors of mutual funds.
 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.
 To get insight knowledge about mutual funds

 Understanding the different ratios & portfolios so as to tell the distributors

about these terms, by this, managing the relationship with the distributors

 To know the mutual funds performance levels in the present market

 To analyze the comparative study between other leading mutual funds in the
present market.

 To know the awareness of mutual funds among different groups of investors.

 RESEARCH METHODOLOGY

Our research project has a specified framework for collecting the data in an
effective manner. Such framework is called “RESEARCH DESIGN”. The research
process which was followed by me consisted following steps.

A. PROBLEM:

The problem at hand was to study and measure the awareness level of people
regarding mutual funds in the city.

B. DEVELOPING THE RESEARCH PLAN :

The development of Research Plan has the following Steps:
1. DATA SOURCES: Two types of data were taken into consideration i.e.

Secondary data & primary data. My major emphasis was on gathering the
primary data. The secondary data has been used to make things more clear.
(i) Primary Data: Direct collection of data from the source of information,
technology including personal interviewing, survey etc.
(ii) Secondary Data: Indirect collection of data from sources containing past or
recent past information like Bank’s Brochures, Annual publications, Books,
Fact sheets of mutual funds, Newspaper & Magazines etc.

2. RESEARCH INSTRUMENT
A close friend questionnaire was constructed for my survey. Questionnaire
consisting of a set of questions made to be filled by various respondents.

3. SAMPLING PLAN
The sampling plan calls for four decisions.
a) Sampling Unit: I have completed my survey in JAMSHEDPUR.
 b) Sample Size: The sample consisted of 100 respondents. The sample was
drawn from walk in customers of HDFC and TATA mutual fund ltd. The
selection of the respondents was done on the basis of simple random
sampling.
c) Contact Methods
I have contacted the respondents through e-mail and phone.
d) Sampling Method: The sampling method chosen is Area Sampling. As the
primary sampling unit represents a cluster of units based on geographic area.
It is a basically non-probability sampling procedure which does not afford
any basis for estimating the probability that each item in the population has
of being included in the sample.

C. COLLECTING THE INFORMATION

After this, I have collected the information from the respondents with the help
of questionnaire
D. ANALYZE THE INFORMATION
The next step is to extract the pertinent findings from the collected data. I have
tabulated the collected data & developed frequency distributions. Thus the
whole data was grouped aspect wise and was presented in tabular form. Thus,
frequencies & percentages were prepared to render impact of the study.

E. PRESENTATIONS OF FINDINGS

This was the last step of the survey.

DATA PRESSENTATION, ANALYSIS AND

INTERPRETATION
Rationale of choosing these funds-
The above chosen funds have had a market presence of at least 7 yrs. Also the
government of India has a large interest in Indian growth story which is in
complete without have a much impetus in infrastructure sector. Hence, with this
fact we can have a fair idea of their acceptability in the market. The basic rationale
of choosing these funds is to have and present a brief idea of the current mutual
funds market and to understand the latest trends in the market.

Data Collection-
All the data used for the study was primary as well as secondary. This data was
collected from the following sources:

 Fund Fact Sheets

 Magazines
 Journal
 Internet
 Key Information memorandum of various schemes
The data was collected and the collated to give a brief idea about which AMC is
good in products, sales and services.

Data Analysis-
According the data collection method adopted, the size of the population is 100.
Thus, N=100. After collecting the data, data is to be analyzed. Out of the 100
respondents the approx following percentage composition were interested in the
following products:-
 MUTUAL FUNDS: 44%
 SHARE/BONDS: 23%
 LIFE INSURANCE: 7%
 REAL ESTATE: 6%
 COMMODITIES: 8%
 NSC(NATIONAL SAVING SCHEMES): 10%
 OTHER: 2%
The mutual fund has distributed in public as per their demand. Because people
trust investing in mutual fund as well as investing in other resources. The fund
invites investors to contribute their money in the common pool by subscribing to
units issued by various schemes established by the trust as evidence of their
beneficial interest their. The data collected above shows that app. 65% of the
people are aware of the market in general and 44% are aware of mutual funds in
particular. Therefore further analysis made as follows:

 Analysis according to Age

 Analysis according to Income
 Analysis according to occupation
Professional are much interested in investing the mutual funds as compared to their
counterparts. The main reason for such thing is the complete knowledge of the
stock market, past performance, consistent returns, finance knowledge.

Analysis of different category persons about different schemes:-

Interpretation of data:
COMPARISON OF TWO MAJOR MUTUAL FUNDS

TATA MUTUAL FUND

Mutual Fund : Tata Mutual Fund

Scheme Name : Tata Growth Fund - Growth

Objective of schemes: The investment objective of the schemes will be to

provide income distribution & or medium to long term capital gains. The scheme

will invest in equity and equity related instruments of well researched growth

oriented companies.
As Tata mutual fund constituted in 1995 as a trust on the their sponsors and

settlers. Where company now on 7th rank on mutual fund selling and hoping on

their best policy for selling of mutual fund in their upcoming budget. Because the

last few years were highlight the emergence of the mutual fund in the industry as a

major force of the company.

AUM Growth Rate

March 2004 6783 ------
March 2005 13972 110.12
March 2006 14500 0.47
March 2007 23983 34.94%
March 2008 34835 31.15%
March 2009 52357 33.23%
March 2010 74390 29.61%

HDFC MUTUAL FUND

Mutual Fund : HDFC Mutual Fund

Scheme Name : HDFC Mutual FUND - GROWTH

Objective : The Objective of the Scheme is to provide

investors with maximum growth opportunity.

HDFC has grown in leaps and bounds after taking Zurich in 2003 , now it is the

third largest private company in Asset management company. HDFC MF has

become the second mutual fund in the country to cross an average asset under

management of Rs one lac crore.

AUM Growth Rate

March 2004 7483 ------
March 2005 15972 120.12
March 2006 16500 0.37
March 2007 25983 37.94%
March 2008 35835 28%
March 2009 60372 43.23%
March 2010 80962 26.43%

As company’s highest AUM( asset under management) growth in the year of

march 2005 where company grow as a percentage of 120.12% in the AUM sales.

This data is collected by collecting the NAV values of the previous one and half

year their average is taken monthly and a graph is drawn on the basis of the

average values.
The next Graph is based on the income of the consumer and their investment in
various schemes.

Income Vs Investment Scheme

100%

80%
Tax Saving
60%
Money market
40% Balance
Growth
20%
Income
0%
Below 2 2 lac to 4 lac to 6 lac to Above 8
Lac 4 lac 6 lac 8 lac lac

Interpretation

I. Lower income group of below 2 lakh are more attracted towards the income
and money market Schemes as they cannot afford to take too much of risk.
II. Balanced scheme is more popular with the income group of 2 lakh to 6 lakh .
This group is even inclined towards growth Schemes to certain extent .
III. Persons with a salary of 6 lac and above are fascinated by tax saving and
money market schemes.
 INTERPRETATION

As FII’s have entered Indian markets Sensex have crossed 15000 mark and
investors have earned a lot in last financial year. Indians are becoming aware of
various investment options. People have started taking risk as they want to book
profits. Investors prefer more equity schemes than debt schemes, around 60% of
the investors invest in equity schemes and balanced schemes. Investors want to
take risk as they want to yield better returns. Investors want high returns,
liquidity, safety and tax benefit. Among all investors gives want to have safety
for their money. Around 91% of the investors prefer open ended schemes rather
than close ended schemes as there is flexibility in open ended schemes.

Investors prefer both systematic investment plan and lump sum. It depends
upon the availability of funds that the investor wants to invest in SIP or as lump
sum. Some of the investors invest in both ways i.e. through SIP as well as lump
sum. Basically it depends upon the availability of fund. When questions were
asked about the performance of mutual funds in future 50% of investors said
strong future, 35% of the investors said very strong future and 15% of the
investors said moderate future.

Conclusion:

Basic Findings:

1) HDFC mutual fund has a ability to spot the sector trends & it has delivered
handsomely. In current status it emerged as the 2 nd best performing
diversified equity fund.
 2) Tata mutual fund has emerged a strong player in the field of distribution of
financial product within a short period time in particular place. It is
expanding area of business.

Implications of basic Findings:

 HDFC mutual fund:

-The fund's exposure to large-cap stocks is a cushion in the falling markets. It

has not been a top performer as some of the other mid-cap funds, but quite a
consistent one 

-This fund is a good bet for those wanting to invest in mid-caps but not
willing to take too much of a risk.

 Tata mutual fund:

-High returns can be expected from this fund but its aggressiveness does not
make it apt for conservative investors. One of the astonishing features of the
fund’s investment style is the buy-and hold-strategy.

Recommendations:- In my study of this project research I have found some

recommendations. I can suggest both companies following suggestions or areas of
improvement:-

 Tata 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 make people initiative towards risk.
 Investors should be made fully aware of the concept of mutual fund & all
the terms and conditions.
Recommendation of the researcher:

As per researcher indicates, mutual fund consider by the investors when it comes
to investing their money in mutual fund. This industry is growing at a good pace.
Investors who invest their money in mutual fund will be safe if they will indicates
the mode of holding. Investors who are looking for very high instant returns,
mutual funds are not recommended; they are meant for investors committed to
patient investing.

Verification of findings:

 Websites:
o www.hdfcfund.com
o www.tatamutualfund.com
o www.mutualfundsindia.com
o www.google.com
o www.sebi.gov.in
 HDFC and TATA Brochure.
 Books:-
o C. R. Kothari, Research Methodology. New Delhi, Vikas
Publishing house Pvt. Ltd. 2007.