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SUMMER TRAINING PROJECT REPORTON
Mutual funds and its market
Underthe partial fulfillment of the requirements of MBA curriculum
Gautam Budha Technical University
Under the guidance of
(Mr.Aman Verma)&
Summer Training Faculty Guide(Mrs.sonali singh)
Submitted To:Dr.M.K. Rastogi
(H.O.D)
Submitted By:
SHOBHNAM BISHTMBA Sem(2012-13)
Department of Management StudiesBabu Banarsi Das Northern Indian Institute of Technology
Lucknow
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COMPANY PROFILE
INTRODUCTION OF COMPANY
HDFC LIMITED
HDFC was incorporated in 1977 with the primary objective of meeting a social need that of
promoting home ownership by providing long-term finance to households for their
housing needs. HDFC was promoted with an initial share capital of Rs. 100 million.
Business Objectives
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The primary objective of HDFC is to enhance residential housing stock in the country through
the provision of housing finance in a systematic and professional manner, and to
promote home ownership. Another objective is to increase the flow of resources to the
housing sector by integrating the housing finance sector with the overall domestic
financial markets.
Organizational Goals
HDFCs main goals are to
a) Develop close relationships with individual households,
b) Maintain its position as the premier housing finance institution in the country,
c) Transform ideas into viable and creative solutions,
d) Provide consistently high returns to shareholders,
e) To grow through diversification by leveraging off the existing client base.
HDFC GROUP COMPANIES
HDFC Limited
HDFC Bank
HDFC Asset Management Co. Limited
HDFC Securities Limited
HDFC Standard Life Insurance Company
Intel net Global
CIBIL Credit Information Bureau Investigation Ltd
HDFC Chubb General Insurance.3
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HDFC securities Ltd, a trusted financial services intermediary is a subsidiary of
India's respected private sector Bank - HDFC Bank.
A leading stock broking company having completed 10 years in operation, serves a diverse
customer base of retail and institutional investors.
Discerning investors experience a robust platform to trade in Equities, derivatives, currency
futures and mutual funds through both NSE & BSE and other investment options like IPO's,
bonds, corporate fixed deposits, insurance etc.
Investors are also provided with niche - Equity Investment advise and execution platform with
superior technology aid and unbiased research across sectors, economy and scrips.
Our webportal is designed to meet the requirements of everyone from a beginner to a savvy
and well-informed trader with highest service standards,convenience and hassle-free trading
tools.
The Webportal aims to provide a one stop window for all financial needs with seamlessness
and customer centric services
WEBPORTAL
Based on Web 2.0 technology.
SPEED
State-of-the art technology enabling seamless trading experience on both the exchanges BSE
and NSE..4
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CONVENIENCE
Clients could adopt to trade with us either online, or on the phone, or relationship
managers from the convenience of their home or office.
The 4-in-1 Advantage account enables clients to seamlessly move funds and securities
across your bank, Demat and trading account.
Clients get to enjoy limits across exchanges to trade
No need to issue cheques or delivery instructions.
Place IPO / NCD applications via few clicks using the trading account or by the
phone. No standing in queues or filling application forms.
ASBA application facility.
Customer care centre to address all queries and grievances.
REACH
HDFC securities has a strong unified call centre catering to clients across India and overseas
aiding clients who wish to have their orders placed by a tele-agent. 7 Regional language call
centre facility is available for clients.
Over 128 exclusive branches across India also service clients locally by dedicated
relationship managers.
TRANSPARENCY
With our trusted pedigree, a client can be assured of best services in a transparent manner and
is in total control of their funds and stocks.
EXPERTISE
With a decade of experience and a rating of A1+1, HDFC securities has a admired lineage of
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providing financial services to customers in a transparent and trusted manner. We have a
dedicated, motivated and experienced team of professionals to provide you top class service.
TIMELY AND RELEVANT INFORMATION
We realize the importance of making information available to clients as it happens.
Empowered with the latest news, developments and unbiased research, enables a client to take
informed decisions.
YOUR INTEREST
For HDFC securities, client's interest comes first. We endeavor to provide high quality
investment services, in a simple, direct and cost-effective manner to help you achieve your
financial goals.
MISSION
We aim to be the top new investment company in the market.
This does not just mean being the largest or the most productive company in the market,
rather it is a combination of several things like-Customer service of the highest
order Value for money for customers Professionalism in carrying out business Innovative
products to cater to different needs of different customers Use of technology to improve
service standards Increasing market share
VISION
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The most successful and admired Investment company, which mean that we are
the most trusted company, the easiest to deal with, offer the best value for
money, and set the standards in the industry. In short, The most obvious
choice for all
SECURITY : Providing long term financial security to its policy holders will
be the companys constant endeavor. It will do this by offering
life insurance and pension products.
TRUST : HDFC Securities appreciates the trust placed by its policy holders in
it. Hence, it will aim to manage their investments very carefully
and live up to this trust.
INNOVATION : Recognizing the different needs of its customers, it will be
offering a range of innovative products to meet these needs. The
companys mission is to be the best new life insurance company
in India and these are the values that will guide it in this
Simple Saying "A right Path will always lead
to the right way".
HISTORY OF ORGANISATION
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HDFC LTD.
HDFC is India's premier housing finance company and enjoys an impeccable track record in
India as well as in international markets. Since its inception in 1977, the Corporation has
maintained a consistent and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling units. 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 Housing Development Finance Corporation Limited (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. The
bank was incorporated in August 1994 in 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.
Registered office
Hdfc bank HouseSenapati Bapat MargLower ParelMumbai 400013Tel No: 56521000
Fax No: 24960739Web site : www.hdfcbank.com
HDFC SECURITIES
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HDFC Bank Ltd is a major Indian financial services company based in Mumbai. The Bank is
a publicly held banking company engaged in providing a wide range of banking and financial
services including commercial banking and treasury operations. The Bank at present has an
enviable network of 2201 branches and 7110 ATMs spread in 996 cities across India. They
also have one overseas wholesale banking branch in Bahrain, a branch in Hong Kong and two
representative offices in UAE and Kenya. The Bank has two subsidiary companies, namely
HDFC Securities Ltd and HDB Financial Services Ltd. The Bank has three primary business
segments, namely banking, wholesale banking and treasury. The retail banking segment
serves retail customers through a branch network and other delivery channels. This segment
raises deposits from customers and makes loans and provides other services with the help of
specialist product groups to such customers. The wholesale banking segment provides loans,
non-fund facilities and transaction services to corporate, public sector units, government
bodies, financial institutions and medium-scale enterprises. The treasury segment includes net
interest earnings on investments portfolio of the Bank. The Bank`s ATM network can be
accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro,
Plus/Cirrus and American Express Credit/Charge cardholders. The Bank`s shares are listed on
the Bombay Stock Exchange Limited and The National Stock Exchange of India Ltd. The
Bank`s American Depository Shares (ADS) are listed on the New York Stock Exchange
(NYSE) and the Bank`s Global Depository Receipts (GDRs) are listed on Luxembourg Stock
Exchange. HDFC Bank Ltd Was incorporated on August 30, 1994 by Housing Development
Finance Corporation Ltd. In the year 1994, Housing Development Finance Corporation Ltd
was amongst the first to receive an "in principle" approval from the Reserve Bank of India to
set up a bank in the private sector, as part of the RBI`s liberalization of the Indian Banking
Industry. HDFC Bank commenced operations as a Scheduled Commercial Bank in January
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1995. In the year 1996, the Bank was appointed as the clearing bank by the NSCCL. In the
year 1997, the launched retail investment advisory services. In the year 1998, they launched
their first retail lending product, Loans against Shares. In the year 1999, the Bank launched
online, real-time Net Banking. In February 2000, Times Bank Ltd, owned by Bennett,
Coleman & Co. / Times Group amalgamated with the Bank Ltd. This was the first merger of
two private banks in India. The Bank was the first Bank to launch an International Debit Card
in association with VISA (Visa Electron). In the year 2001, they started their Credit Card
business. Also, they became the first private sector bank to be authorized by the Central Board
of Direct Taxes (CBDT) as well as the RBI to accept direct taxes. During the year, the Bank
made a strategic tie-up with a Bangalore-based business solutions software developer, Tally
Solutions Pvt Ltd for developing and offering products and services facilitating on-line
accounting and banking services to SMEs. During the year 2001-02 the bank was listed on the
New York Stock Exchange. Also, they made the alliance with LIC for providing online
payment of insurance premium to the customers. During the year 2002-03, the Bank increased
the number of branches from 171 Nos to 231 Nos and the size of the Bank`s ATM network
expanded from 479 Nos to 732 Nos. They also expanded their presence in the "merchant
acquiring" business. During the year 2003-04, the Bank expanded the distribution network
with the number of branches increased from 231 Nos to 312 Nos and the size of the Bank`s
ATM network increased from 732 Nos to 910 Nos. In September 2003, they entered the
housing loan business through an arrangement with HDFC Ltd, whereby they sell HDFC
Home Loan product. During the year 2004-05, the Bank expanded the distribution network
with the number of branches increased from 312 Nos to 467 Nos and the size of the Bank`s
ATM network increased from 910 Nos to 1147 Nos. During the year 2005-06, the Bank
launched the "no-frills account", a basic savings account offering to the customer. Also, the
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distribution network was expanded with the number of branches increased from 467 Nos (in
211 cities) to 535 Nos (in 228 cities) and the number of ATMs from 1147 Nos to 1323 Nos.
During the year 2006-07, the distribution network was expanded with the number of branches
increased from 535 Nos (in 228 cities) to 684 Nos (in 316 cities) and the number of ATMs
from 1323 Nos to 1605 Nos. They commenced direct lending to Self Help Groups. Also, they
opened a dedicated branch for lending to SHGs, in Thudiyalur village (Tamil Nadu). In
September 28, 2005, the Bank increased their stake in HDFC Securities Ltd from 29.5% to
55%. Consequently, HDFC Securities Ltd became a subsidiary of the Bank. During the year
2007-08, the Bank added 77 Nos new branches take the total to 761 Nos branches. Also, 372
Nos new ATMs were also added taking the size of the ATM network from 1605 Nos to 1977
Nos. HDB Financial Services Ltd became a subsidiary company with effect from August 31,
2007. In June 2, 2007, the Bank opened 19 branches in a day in Delhi and the National
Capital Region (NCR). During the year 2008-09, the Bank expanded their distribution
network from 761 branches in 327 cities to 1,412 branches in 528 Indian cities. The Bank`s
ATMs increased from 1,977 to 3,295 during the year. As per the scheme of amalgamation,
Centurion Bank of Punjab Ltd was amalgamated with the Bank with effect from May 23,
2008. The appointed date for the merger was April 01, 2008. In October 2008, the bank
opened their first overseas commercial branch in Bahrain. The branch offers the bank`s suite
of banking services including treasury and trade finance products for corporate clients and
wealth management products for Non-resident Indians. During the year 2009-10, the Bank
expanded their distribution network from 1,412 branches in 528 cities to 1,725 branches in
779 cities. The Bank`s ATMs increased from 3,295 Nos to 4,232 Nos during the year. During
the year 2010-11, the Bank expanded their distribution network from 1,725 branches in 779
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cities to 1,986 branches in 996 Indian cities. The Bank`s ATMs increased from 4,232 to 5,471
Nos.
REGISTERED OFFICE / CORPORATE OFFICE
HDFC Securities Limited
Office Floor 8, "I THINK" Bldg,
Jolly Board Campus,
Kanjurmarg (East),
Mumbai - 400042. India.
Tel : 022 - 30753400
Fax : 022 -30753435
ORGANISATION STRUCTURE
The Composition of the Board of Directors of the Bank is governed by the Companies Act,
1956, the Banking Regulation Act, 1949 and the listing requirements of the Indian Stock
Exchanges where securities issued by the Bank are listed. The Board has strength of 12
Directors as on March 31, 2008. All Directors other than Mr. Aditya Puri, Mr. Harish
Engineer and Mr. Paresh Sukthankar are non-executive directors. The Bank has five
independent directors and seven non-independent directors. The Board consists of eminent
persons with considerable professional expertise and experience in banking, finance,
agriculture, small scale industries and other related fields. None of the Directors on the Board
is a member of more than 10 Committees and Chairman of more than 5 Committees across all
the companies in which he/she is a Director. All the Directors have made necessary
disclosures regarding Committee positions occupied by them in other companies. Mr. Jagdish
Capoor, Mr. Keki Mistry, Mrs. Renu Karnad, Mr. Vineet Jain, Mr. Aditya Puri, Mr. Harish
Engineer and Mr. Paresh Sukthankar are non-independent Directors on the Board. Mr. Arvind
Pande, Mr. Ashim Samanta, Mr. Gautam Divan, Mr. C. M. Vasudev and Dr. Pandit Palande
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are independent directors on the Board. Mr. Keki Mistry and Mrs. Renu Karnad represent
HDFC Limited on the Board of the Bank. Mr. Vineet Jain represents Bennett, Coleman Group
on the Board of the Bank. The Bank has not entered into any materially significant
transactions during the year, which could have a potential conflict of interest between the
Bank and its promoters, directors, management and/or their relatives, etc. other than the
transactions entered into in the normal course of business. The Senior Management have
made disclosures to the Board confirming that there are no material, financial and/or
commercial transactions between them and the Bank which could have potential conflict of
interest with the Bank at large. List of the directors-
NameDesignation
C M Vasudev Chairman
Aditya Puri Managing Director
Sanjay Dongre Company Secretary
Paresh Sukthankar Executive Director
Harish Engineer Executive Director
Renu Karnad DirectorAshim Samanta Director
Pandit Palande Director
Partho S Datta Director
Bobby Parikh Director
Anami N Roy Director
Keki Mistry Additional Director
Renu Karnad Additional Director
Partho Datta Additional Director
Bobby Parikh Additional Director
A N Roy Additional Director
Awards and Achievements
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HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian
Bank". They realized that only a single-minded focus on product quality and service
excellence would help them get there. Today, they are proud to say that they are well on the
way towards that goal.
2010
Business Today : Best Bank in India.
Forbes Top 2000 Companies : Bank at 632nd Position
Business world : Best Bank (large)
The Banker Magazine : Words Top 1000 bank
Asia money Awards : Best Local Cash Management Bank in Large and Mediumsegments
Euro money Awards : "Best Bank" in India
2009
Asia money Awards : Best Domestic Commercial Bank
Asia money Awards : Best Cash Management Bank India
Global Finance Award : Best Trade Finance Bank.
The Asian Banker Excellence : Retail Banking Risk Management Award in India: BestBank India
Economic Times Awards : Best Bank in India 2009
2008
Finance Asia Country Awards For Achievement 2008 : Best Bank and Best Cash andManagement Bank.
Buisness India : Best bank 2008
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Forbes Asia : Fab 50 Companies in pacific Asia.
Buisness Today : Best Bank Award
Till Year 2007
HDFC Bank named the "Most Customer Responsive Company - Banking and Financial
Services in The Economic Times - Avaya Global IT User in Banking' at the IT Users Awards
2003. Outlook Money & NDTV Profit : Best Bank in the Private sector category.
The Asian Banker Excellence in Retail Financial Services Award : Best Retail Bank in India.
Asian Banker : Managing Director Aditya Puri wins the Leadership Award For india.
Most Improved Company for Best Management Practices in India 2004
HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A Country
Awards 2005.
The Business Today-KPMG Survey published in the leading Indian business magazine
Business Today has named HDFC Bank "Best Bank in India" for the third consecutive year in2005.
The Asset magazine named HDFC Bank "Best Cash Management Bank" and "Best Trade
Finance Bank" in India, in 2006.
Connect Customer Responsiveness Awards 2005"
HDFC Bank has been named Best Domestic Bank in India Region in The Asset Triple ACountry Awards 2004 and 2003.
In 2004, HDFC Bank was selected by BusinessWorld as "One of India's Most Respected
Companies" as part of The Business World Most Respected Company Awards 2004.
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In 2004, Forbes Global again named us in its listing of Best under a Billion, 100 Best Smaller
Size Enterprises in Asia/Pacific and Europe, in its November 1, 2004 issue.
In 2004, HDFC Bank won the award for "Operational Excellence in Retail Financial
Services" - India as part of the Asian Banker Awards 2003.
In 2003, Forbes Global named us in its ranking of "Best under a Billion, 200 Best Small
Companies for 2003".
Leading business newspaper The Financial Express named HDFC Bank the "Best New
Private Sector Bank 2003" in the FE-Ernst & Young Best Banks Survey 2003.
Leading Personal Finance Magazine in India Outlook Money named HDFC Bank the "BestBank in the Private Sector" for the year 2003.
Leading Indian business magazine Business Today in a survey rated us "Best Bank in India"
2003, and "Best Private Sector Bank" in India in 1999.
NASSCOM and economictimes.com have named us the 'Best
There have been some other proud moments as well
London-based Euromoney magazine gave us the award for "Best Bank - India" in 1999, "Best
Domestic Bank" in India in 2000, and "Best Bank in India" in 2001 and 2002
Asia money magazine has named us "Best Commercial Bank in India 2002".
For our use of information technology we have been recognized as a "Computerworld Honors
Laureate" and awarded the 21st Century Achievement Award in 2002 for Finance, Insurance
& Real Estate category by Computerworld, Inc., USA.
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Our technology initiative has been included as a case study in their online global archives.The
Economic Times has conferred on us The Economic Times Awards for Corporate Excellence
as the Emerging Company of the Year 2000-01.
Leading Indian business magazine Business India named us "India's Best Bank" in 2000.
In the year 2000, leading financial magazine Forbes Global named us in its list of "The 300
Best Small Companies" in the world and as one of the "20 for 2001" best small companies in
the world.
PRODUCT AND SERVICES OFFERED BY ORGANISATION
OUR OFFERINGS' ONE STOP SHOP, FOR ALL YOUR INVESTMENT NEEDS
Equity and Derivatives
IPO
Mutual Fund
Fixed Deposits
Non Convertible Debentures
General Insurance
Life Insurance
Bonds
Currency Derivatives
PMS
Derivatives Trading
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For the mature investor, who is aware of risks in the market, Derivatives could be a great way
to trade, and we offer a robust platform to trade Derivatives.
Derivatives lets you trade in a large number of stocks and also in Index for a small margin.
For example, if you had only Rs 2 lakh instead of Rs 10 lakh to buy a stock, by paying margin
of Rs. 2 Lakh you can create position in Derivatives Futures for higher value.
HDFC Securities delivers crisp information on Futures and Options, contract specifications,
and calculators on Option pricing and cost of carry. Use our robust platform to trade
derivatives.
IPO
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HDFC securities has made applying in IPO/FPOs as easy as ordering a Pizza.
No more filling up lengthy forms & providing supporting documents, you can apply in IPOsas per your convenience.
How can you apply in IPO/FPO through HDFC securities?
Online
Log on to yourtrading account & Visit IPO section
Over the Phone
Call ourCall N trade deskor any of ourBranch Dealing desk
Through your HDFC Securities Trading A/c, you can place order through ASBA process.
Benefits of ASBA process
Amount will debited on allotment of shares
Earn interest on you application money
No refund hassles
NRI OFFERINGS
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Our offerings for NRI Clients:
Comprehensive NRI NRI Derivative Product
Convenient trading platform options - Online, Relationship Manager-NR desk,
Mobile, LITS, BLINK.
Off- Market facility (different time zones / when markets are closed) to help place
order to buy & sell.
Delivery based trading, on both NSE & BSE.
Invest in ETF's (Gold, Index, sectoral) using the trading account.
Do It Yourself SIP (Equity SIP) .
PIS (Portfolio Investment Scheme) transactions online.
Invest through Repatriable & non-repatriable funds.
Apply forIPO's online through NRE/NRO account.
Daily Investment Calls from our Research desk.
Dedicated NR-desk with Relationship managers.
Advanced Portfolio Tracker tracking all asset classes with alerts.
Dedicated customer care.
Hassle- free
Simplified account opening process.
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Open 2 different sets of account (i.e. NRE & NRO Bank, PIS, Demat & Trading
account) all integrated.
No need to separately send transaction details to RBI.
Seamless
No need to write cheques or TIFD.
Just few clicks with your online trading account or a phone call is all that is necessary
to apply for IPO's, NCD's etc
Funds/shares credited directly to client's linked HDFC Bank/DP account.
Direct pay-out of funds on the same day as that of exchange.
Secure
Secured Socket Layer with 128 bit encryption on Internet and Mobile trading
systems.
Detailed audit trail of transaction with stamp on all orders.
Funds/ Securities with HDFC Bank is remitted directly into Clients accounts
Insurance
General Insurance
Life Insurance
Motor Insurance
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You can trust HDFC ERGO Motor Insurance to protect your vehicle, your most prized
possession. It ensures you to get back in the driver's seat quickly, no matter what happens to
your vehicle. We ensure that you not only get Motor Insurance but also package post-accident
assistance, when you need it.
With a focus on Package policies for Private cars, HDFC ERGO General Insurance offers you
the convenience of purchasing a policy online without any documentation!...
Critical illness
A diagnosis of a critical illness for you or your loved one may get your life to a stand still,
literally. What could worsen the situation would be the unavailability of the requisite funds
for treatment costs and associated expenses. It's a known fact that medical treatment costs for
critical illnesses are really high.
HDFC ERGO's Critical Illness Insurance Policy ensures that you can avail the best-in-class
treatment coupled with easy and hassle free claims process, you can spend your precious time
with your loved one, than arranging for funds.
Travel Insurance
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Staying away from home brings with it worries ranging from inconvenience to safety in a
foreign land. With HDFC ERGO Travel Insurance, there is a plan to suit every need. These
plans come with a host of features including no medical check ups, cashless hospitalization
and 24x7 international helpline assistance. With a range of plans covering pleasure and
business travel, you will find adequate coverage for a premium that is much lower than you
ever expected
Health Suraksha
With medical costs spiraling out of control, healthcare today is at its all-time-high in terms of
treatment costs. In the event of an unforeseen illness, you may have no option but to utilize
your hard - earned savings, built over your life time.
With HDFC ERGO's Health Suraksha ensure complete peace of mind with minimum out-of-
pocket expenses. Now, make sure that you use your hard-earned savings for the real reasons
Be it your child's higher education, a well deserved family vacation or just about anything you
dreamt of
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Life Insurance
HDFC SL Crest
Any uncertainty should not affect your plans. Be it of life, or of markets. You want to secure
happiness for yourself and your loved ones.
We present HDFC SL Crest insurance cum investment plan that provides valuable financial
protection to your family when needed the most along with an investment option for certainty
of highest NAV along with a miniumum guaranteed NAV of Rs.15 on returns*.
HDFC SL ProGrowth Super IIYou will settle for nothing but the best. Be it for self or for your loved ones. With HDFC SL
ProGrowth Super II, you have a unit linked savings-cum-insurance plan that will help you
effortlessly provide the finest for your family, be it today or tomorrow.
HDFC SL YoungStar Super II
There is no bigger joy than being able to fulfill your child's dream on your own. With HDFC
SL YoungStar Super II you can fulfill your child's immediate and future needs. So tomorrow
when your child needs your support you don't have to depend on anyone else.
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Fixed Deposit Schemes & Bonds
Corporate Fixed Deposits Infrastructure Bonds
Non Convertible Debentures
Bonds
Benefits of Investing in Corporate Fixed Deposit::
Fixed Return on investment
Relatively Safe and stable return on Investments
No Income Tax is deducted at source if the interest income is up to Rs 5,000 in one
financial year
Investment can be spread in more than one company, so that interest from one
company does not exceed Rs. 5,000.
If highly volatile markets, other attractive investment options that give good returns are your
concerns, we recommend a rich menu of Fixed Income options. As a prudent investor, you
could take advantage of the current high interest rate and choose from "rated" to diversified
corporate as per your investment horizon and appetite.
Capture these high interest rates, hurry.
Loans Against Securities
Get liquidity from your investments, without selling them.
Multiply your Trading Power with HDFC Bank LAS Equity account
Features & Benefits :
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You can enjoy the benefits of your securities and still avail a loan on the same.
No EMIs
No Post Dated cheques
No Pre-payment charges
Interest charged only on utilised amount
Exhaustive number of approved securities
Upto 80% Loan
Simple and speedy processing
Term Loan facility also available against select securities
Overdraft facility can be availed against pledge of :
Equity Shares* - Demat Shares up to 50% of the value.
Mutual Fund units* - Mutual Funds up to 50% of NAV (Net Asset Value)..
Gold ETF
NABARD's Bhavishya Nirman Bonds
RBI Bonds (8% Savings Bonds 2003 (Taxable))
Life Insurance Policies issued by LIC & Select Private Insurance Companies.
National Savings Certificate (NSC)
Kisan Vikas Patra(KVP)
Gold Deposit Certificates (GDC)
Non Convertible Debentures
*The contribution of single scrip should not exceed 65% of the total portfolio value at any
point of time during the tenure of the account. Loan is sanctioned as per applicable internal
policy of the Bank.
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Single Scrip Lending - up to 50% of the value with any Depository Participant.
Minimum loan amount - Rs. 2,00,000/-
Pay interest only on the amount outstanding and only for the time you use it. Interest is
calculated on the daily outstanding balance and debited to your account every month end.
Shares can be pledged from any Depository (NSDL or CDSL) and any Depository
Participant across the country.
Loan available to NRIs against Shares, Mutual Funds(equity,Debt,FMPs), Insurance
Policies, NSC, KVP
Careers
We @ HDFC Securities Ltd. EMPOWERS our employees to contribute to our success with
personal growth and development.
We initiate culture of leading with a zeal for teamwork. Putting on Show behaviors of high
performance with honesty, integrity and teamwork is what employees are motivated here for.
Integration of business with ethics and long-term relationships is what we believe at HDFC
Securities.
We also initiate open door policy, a platform to share the vision and mission of business and
working together towards it.
At HSL we create a young culture of work and fun, with providing various challenges,
responsibilities, stage for innovation along with celebrations, events making our growth
contributors feel special.
If you feel you have the Zeal to lead and the passion to deliver then we are right here for you
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INTRODUCTION OF MUTUAL FUND:
Mutual funds are for everyone. Around the world, millions of investor invests in mutual
funds because of their safety, ease of investing and the many advantages they offer.
A mutual fund is financial intermediary that pools the saving of investors for
collective investment in a diversified portfolio of securities. A fund is mutual as all of its
returns, minus its expenses, are shared by the fund investors.
The securities and Exchange Board of India(Mutual Fund) Regulation, 1996 defines a
mutual fund as a a fund established in the form of a trust to raise money through the sale of
units to the public or a section of the public under one or more schemes for investing in
securities, including money market instrument.
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According to this definition, a mutual fund in India can raise resources through the
sale of units to the public. It can be set up in the form of Trust under the Indian Trust Act,
1882. The definition has been further extended by allowing mutual fund to diversify their
activities in the areas under:
Portfolio management services
Management of offshore funds
Providing advice to offshore funds
Management of pension or provident funds
Management of venture capital funds
Management of money market funds
Management of real estate funds
A mutual fund serves as a link between the investors and the securities market by
mobilizing savings from the investors and investing them in the securities to generate returns.
Thus, a mutual fund is akin to portfolio management services (PMS). Although, both are
conceptually same, they are different from each other. Portfolio management services are
offered to high net worth individuals; taking into account their risk profile, their investment
are managed separately. In the case of mutual funds, saving of small investors is pooled under
a scheme and the returns are distributed in the same proportion in which the investments are
made by the investors/unit holders.
Mutual Fund is collective saving scheme. Mutual Fund plays an important role in
mobilizing the savings of small investors and channelizing the same for productive venture in
the Indian economy.
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Mutual Fund Operation Flow Chart
ORGANISATION OF A MUTUAL FUND
There are many entities involved and the diagram below illustrates the organisational set up of
a mutual fund:
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Organisation of a Mutual Fund
Investments and you:
Investment is never an easy process. However, a sound understanding of some basic
concepts make the process of investment decision-making much easier and the experience
much more enjoyable. The following step can help you get started on your path to becoming a
successful investor:
1. Identify your financial needs and goals:
The first step is to get a clear understanding of your own financial needs and goals. Ask
yourself the question When do I need money and for what purpose? List down your financial
goals and when they will materialise (daughters higher education after 6 years, purchase of a
house after 10 years), and how much money you will need for the same. The answer will help
you arrive at the time frame for your investment short term, medium term or long term.
Financial Goals Amount required
at todays price
Years to achieve
your goal
Investment horizon
Retirement
Daughters higher
Education
Buying a car
Sons Computer
Education
Rs. 25 Lakhs
Rs. 2 Lakhs
Rs. 4 Lakhs
Rs. 0.5 Lakhs
20 years
6 years
2 years
6 months
Long term
Long term
Medium term
Short term
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2. Understand your tolerance to risk:
Before making an investment decision, it is very necessary for an investor to know his
risk tolerance limits. Will he be comfortable with fluctuations in the value of his investments?
Or would he prefer to settle down for a lower return without many ups and downs. By
knowing risk tolerance limit of himself an investor can decide his portfolio and also choose
from a variety of financial investment tools , one which suit his portfolio the most.
3. Estimate your required rate of return:
Your required rate of return depends on your financial goals and the time you have to
achieve them. Take an example that your retirement goal at 58 years is Rs.20 lakhs and your
monthly savings is Rs.5000, your required rate of return depending on your current age would
be:
Present Age Returns
43 years
48 years
9.5 %
21.2%
As you can see, the later you start, the higher will be your required rate of return, hence as
your investment horizon reduces, for the same level of saving you may need to take higher
risk. Alternatively, if you were not willing to take a higher risk, you would have to save a
higher amount every month- Rs 9800, almost twice the original savings required to achieve
your target accumulation.
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These three steps give a very basic idea about how to invest, when an investor is seeking
investment in different financial tools. Though there are different steps of investment in each
financial tool, these acts as blue print for them too.
Mutual Funds and You:
What is a mutual fund?
A mutual fund is a type of financial intermediary that pools the funds of investors who
seek the same general investment objective and invests them in a number of different types of
financial claims (e.g. equity shares, bonds, money market instrument). These pooled funds
provide thousands of investors with proportional ownership of diversified managed by
professional investment managers.
Where do mutual funds invest?
Broadly, mutual funds invest basically in three types of asset classes:
Stocks:
Stocks represent ownership or equity in a company. These are also called as shares .
Bonds:
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These represent debt from companies, financial institutions or govt. agencies.
Money Market Instruments:
These include short term debt instrument such as treasury bills, certificates of deposits
and inter bank money.
History of Mutual Funds in India:
The history of Mutual Funds, dates back to 19th century Europe, in particular, Great
Britain. Robert Fleming set up in 1868th first investment trust called Foreign and Colonial
Investment Trust which promised to manage the finances of the moneyed classes of Scotland
by spreading the investment over a number of different stocks. This investment trust and other
investment trusts which were subsequently set up in Britain and the US, resembled toadys
close-ended mutual funds. The first mutual fund in the US, Massachusetts Investors trust, was
set up in March1924. This was the first open-ended mutual fund.
The stock market crash in 1929, the Great Depression, and the outbreak of Second
World War slackened the pace of growth of the mutual fund industry. Innovations in products
and services increased the popularity of mutual funds in the 1950s and 1960s.The first
international stock mutual fund was introduced in the U.S. in the 1940s.In 1976,the first tax-
exempt municipal bond funds emerged and in 1979,the first money market mutual fund were
created. The latest additions are the international bond fund in 1986 and arm funds in
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1990s.This industry witnessed substantial growth in the eighties and nineties when there was
a significant increase in the number of mutual fund, schemes, assets and shareholders. In the
U.S.,the mutual fund industry registered a ten fold growth in the eighties (1980-1990) only,
with 25 percent of the household sectors investment in financial assets made through them.
Fund assets increased from less than $150 billion in 1980 to over $4trillion by the end
of1997.Since 1996, mutual fund assets have exceeded bank deposits. The mutual fund
industry and the banking industry virtually rival each other in size.
In India the setting up of Unit Trust of India (UTI) in 1963 marked the advent of mutual
fund industry. Unit Trust of India was set up by an Act of Parliament. The purpose of
establishing of Unit Trust of India was to give a fillip to the equity market. In the wake of
Indo-China war of 1962, there was shortage of savings going into industrial investment for
economic development. There was a need to mobilize adequate amount of risk capital for
industrial enterprise. The household savings were sought to be channelized into primary and
secondary market through units. However, in the initial years, the emphasis in UTI was on
income product. Master Share launched in 1986 ushered in the equity-oriented schemes in
India. Unit Trust of India launched a variety of innovative products suited to meet diverse
needs of investors, virtually the complete life cycle of investors.
Evolution of Mutual Fund in India:
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The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank the. The history of
mutual funds in India can be broadly divided into four distinct phases.
1. Phase 1 (1964-1987)
2. Phase 2 (1987-1993)
3. Phase 3 (1993-2003)
4. Phase 4 (Since February 2003)
First Phase: 1964-1987
Unit Trust of India
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set
up by the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and administrative
control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. Over the
years, US-64 attracted, and probably still has, the largest number of investors in any single
investment scheme. It was also at least partially the first open-end scheme in the country.
Later in 1970s and 80s, UTI started innovating and offering different schemes to suit the
needs of different classes of investors. Unit Linked Insurance Plan (ULIP) was launched in
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1971. Six new schemes were introduced between 1981 and 1984. During 1984-87, new
schemes like Childrens Gift Growth
Fund (1986) and Mastershare (1987) were launched. Mastershare could be termed as the
first diversified equity investment scheme in India. The first Indian offshore fund, India Fund,
was launched in 1986. During 1990s, UTI catered to the demand for income-oriented
schemes by launching Monthly Income Schemes, a somewhat unusual mutual fund product
offering assured returns.
The Mutual fund industry in India not only started with UTI, but still counts UTI as its
largest player with the largest corpus of investible funds among all mutual funds currently
operating in India. Until 1980s, UTIs operations in the stock market often determined the
direction of market movements. Now, many Indian investors have taken to direct investing on
the stock markets. Foreign and other institutional players have brought in. So direct influence
of UTI on the markets may be less than before, though it remains the largest player in the fund
industry. In absolute terms, the investible funds corpus of even UTI was still relatively small
at about Rs. 600 crores in 1984. But, at the end of this Phase One, UTI had grown large as
evidenced by the following statistics:
.
1987-1988
Amount Mobilised
(Rs. Crores)
Assets Under
Management
(Rs. Crores)
UTI 2,175 6,700
Total 2,175 6,700
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At the end of 1988 UTI had Rs.6,700 crores of assets under management
Second Phase: 1987-1993 (Entry of Public Sector Funds)
Entry of Public Sector Funds
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of
India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987
followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),
Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund
(Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund
in December 1990. These mutual funds helped enlarge the investor community and the
investible funds. From 1987 to 1992-93, the fund industry expanded nearly seven times in
terms of Assets under Management, as seen in the following figures:
1992-1993
Amount
Mobilised
(Rs. Crores)
Assets Under
Management
(Rs. Crores)
UTI 11,057 38,247
Public Sector 1,964 8,757
Total 13,021 47,004
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Third Phase: 1993-2003 (Entry of Private Sector Funds)
Entry of Private Sector Funds&
SEBI Regulation for Mutual Funds
With the entry of private sector funds in 1993, a new era started in the Indian mutual
fund industry, giving the Indian investors a wider choice of fund families and increasing
competition for the existing public sector funds. Quite significantly, foreign fund management
companies were also allowed to operate mutual funds, most of them coming into India
through joint ventures with Indian promoters. These private funds have brought in with them
the latest product innovations, investment management techniques and investor servicing
technology that make the Indian mutual fund industry today a vibrant and growing financial
intermediary.
Also, 1993 was the year in which the first Mutual Fund Regulations came into being,
under which all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual
fund registered in July 1993.
During the year 1993-94, five private sector mutual funds launched their schemes
followed by six others in 1994-95. Initially, the mobilization of funds by the private mutual
funds was slow. But, this segment of the fund industry now has been witnessing much greater
investor confidence in them. One influencing factor has been the development of a SEBI
driven regulatory framework for mutual funds. But another important factor has been the
steadily improving performance of several funds themselves. Investors in India now clearly
see the benefits of investing through mutual funds and have started becoming selective.
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The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI
(Mutual Fund) Regulations 1996.
The entire mutual fund industry in India, despite initial hiccups, has since scaled new
heights in terms of mobilization of funds and number of players. Deregulation and
liberalization of the Indian economy has introduced competition and provided impetus to the
growth of the industry. Finally, most investors small or large have started shifting towards
mutual funds as opposed to banks or direct market investments.
More investor friendly regulatory measures have been taken both by SEBI to protect the
investor and by the government to enhance investors returns through tax benefits. A
comprehensive set of regulations for all mutual funds operating in India was introduced with
SEBI (Mutual Fund) Regulations, 1996. These regulations set uniform standards for all
mutual funds and will eventually be applied in full to Unit Trust of India as well, even though
UTI is governed by its own UTI Act. In fact, UTI has been voluntarily adopting SEBI
guidelines for most of its schemes. Similarly, the 1999 Union Government Budget took a big
step in exempting all mutual fund dividends from income tax in the hands of the investors.
Both the 1996 regulations and the 1999 Budget must be considered historic importance, given
their far-reaching impact on the fund industry and investors. 1999 marks the beginning of a
new phase in the history of the mutual fund industry in India, a phase of significant growth in
terms of both amounts mobilized from investors and assets under management.
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and acquisitions.
As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805
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crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way
ahead of other mutual funds.
MUTUAL FUND MOBILIZATION ANDASSETS UNDER MANAGEMENT
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1987-88 1992-93 1998-99 1999-00
Period
Mutual Fund Mobilisation
Public Sector
Private Sector
UTI
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1987-88 1992-93 1998-99 1999-00
Period
Mutual Fund Assets Under Management
Public Sector
Private Sector
UTI
Fourth Phase: Since 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of
India with assets under management of Rs.29, 835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other schemes.
The Specified Undertaking of Unit Trust of India, functioning under an administrator and
under the rules framed by Government of India and does not come under the purview of the
Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation
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of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector funds,
the mutual fund industry has entered its current phase of consolidation and growth. As at the
end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under
421 schemes.
The graph indicates the growth of assets over the years
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Note:
Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified
Undertaking of the Unit Trust of India effective from February 2003. The Assets
under management of the Specified undertaking of the Unit Trust of India has
therefore been excluded from the total assets of the industry as a whole from February
2003 onwards.
TYPES OF MUTUAL FUNDS: -
Mutual Funds have specific investment objectives such as growth of capital, safety of
principal current income or tax exempt income, one can select one fund or any number of
different funds to help one meets ones specific goals. In general mutual fund fall under 3
general categories: -
Equity fund invest in shares of common stocks.
Fixed income funds invest in government or corporate securities which offer fixed rate
of returns.
Balanced fund invest in a combination of both stocks and bonds.
AGGRESSIVE GROWTH FUNDS :-
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These funds seek to provide maximum growth of capital with secondary emphasis on
dividend or interest income. They invest in common stocks with a high potential for rapid
growth and capital appreciation.
Aggressive growth funds are suitable for those investors who can afford to assume the
risk of potential loss in value of their investment in the hope of achieving substantial and
rapid gains. They are not suitable for investors who must conserve their principal or who must
maximize their current income.
GROWTH FUNDS:-
Like aggressive growth funds, growth fund generally invests in stocks for growth rather
than income. They are considered more conservative in their approach because they usually
invest in established companies to achieve long-term growth. Growth fund provides low
current income but the investor principal is more stable then it would be in an aggressive
growth fund. While the growth potential may be less over the short term, many growth funds
have superior long-term performance records.
These funds are suitable for growth oriented investors but not investors who are unable
to assume risk or who are dependent on maximizing current income from there investments.
GROWTH AND INCOME FUNDS:-
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Growth and income funds seek long-term growth of capital as well as current income.
The investments strategies use to reach these goals vary among funds.
Growth and income funds have low to moderate stability of principal and moderate
potential for current income and growth. They are suitable for investors who can assume some
risk to achieve growth of capital but want to maintain a moderate level of current income.
FIXED INCOME FUNDS:-
The goal of fixed income fund is to provide high current income consistent with the
level of capital. Growth of capital is of secondary importance.
Fixed income funds offer a higher level of current income than money market funds,
but a lower stability of principal. Fixed income funds are suitable for investors who want to
maximize current income and who can assume a degree of capital risk in order to do so.
EQUITY FUNDS:-
Funds that invest in stocks represent the largest category of mutual fund. Generally the
investment objective of this class of fund is long-term capital growth with some income.
There are however many type of equity funds.
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BALANCED FUNDS:-
The Balanced funds aims to provide both growth and income. These funds invest in both
shares and fixed income securities in the proportion indicated in their offer documents. It is an
idea for investors who are looking for the combinations of income and moderate growth.
MONEY MARKET FUNDS/ LIQUID FUNDS:-
For the cautious investors these funds provide a very high stability of principal while
seeking a moderate to high current income. They invest in highly liquid; virtually risk free,
short-term debt securities of agencies of the Indian government, banks and corporation and
treasury bills. Because of their short-term investments, money market mutual funds are able to
keep a virtually constant unit price; only the yield fluctuates.
Money market funds are suitable for those investors who want high stability of
principal and current income with immediate liquidity.
SPECIALITY / SECTOR FUNDS:-
These funds invest in securities of a specific industry or sector of the economy such as
health care, technology, leisure, utilities or precious metals. The funds enable investor to
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diversify holding among many companies within an industry, a more conservative approach
than investing directly in one particular company.
Sector funds offer a opportunity for sharp capital gains in cases where the funds
industry is in favor but also entail the risk of capital losses when the industry is out of favor.
While sectors funds restrict holdings to a particular industry, other specialty funds such as
index funds gives investors a broadly diversified portfolio and attempt to mirror the
performance of various market averages.
OPEN ENDED SCHEMES:-
Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units
at NAV- related prices from and to the mutual fund on any business day. These schemes have
unlimited capitalization, open-ended schemes do not have a fixed maturity, there is no cap on
the amount you can buy from the fund and the unit capital keep growing. These funds are not
generally listed on any exchange.
Open-ended schemes are preferred for their liquidity. Such funds can issue and redeem
units any time during the life of schemes. Hence unit capital of open-ended funds can
fluctuate on a daily basis. The advantages of open ended schemes are: -
1. Any time exit option
2. Any time enter option.
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CLOSE ENDED SCHEMES:-
Close-ended schemes have fixed maturity periods. Investors can buy into these funds
during the period when these funds are open in the initial issue. After that such scheme cannot
issue new units except in case of bonus or right issue. However after the initial issue you can
buy or sell units of the schemes on the stock exchange where they are listed. The market price
of the unit could vary from the NAV of the schemes due to demand and supply factor
HOW LONG TO KEEP INVESTMENT TO GET MAXIMUM
RETURNS?
Technically open-ended funds you can withdraw your investments even within a week,
but to get desired returns positive time frame is required are:
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WHAT RETURNS CAN I EXPECT IF I KEEP MY MONEY
FOR SUGGESTED TIME FRAMES?
.
Funds Time Period
Equity Funds 3 Years (plus)
Balanced Funds 18 months to 3 Years
MIPs 1 Year (plus)
Income Funds 6 months to 1 Year
Liquid Funds few days to 6 months
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The above-mentioned returns in the table are indicative and not assured. All
investments in MUTUAL FUNDS are securities and are subject to market risk and the NAVs
of the schemes may go up and down depending upon the factors and forces affecting the
security market including the fluctuations in the internal rates .The past performance of the
MUTUAL FUNDS is not indicative of future performance.
.
Funds Returns
Sector funds 22% to 25% p.a
Balance funds 15% to 18% p.a
MIPs Pension Plans 12% to 15% p.a
Income Funds 10% to 12% p.a
Liquid Funds 7% to 9% p.a
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THE RISK RETURNS GRAPHS FOR VARIOUS FUNDS:-
The above Graph shows the Risk and Returns generated by different Funds. Liquid
Funds are less Risky and also generate less Returns where as Sector Funds are more Risky but
generate more Returns by the example of above two Funds it is clear that Risk and Returns
are directly proportional to each other. Other Funds like Equity Funds, Balanced Funds and
Income Funds also gives the same percentage of Returns as the Risk involved.
.
Liquid Funds
Income Funds
Balanced Funds
Equity Funds
Sector Funds
R
E
T
UR
N
S
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HDFC MUTUAL FUND
Mutual Fund HDFC Mutual Fund
Setup Date Jun-30-2000
Incorporation Date Dec-10-1999
Sponsor Housing Development Finance Corporation Limited, Standard Life
Investments LimitedTrustee HDFC Trustee Company Limited
Chairman Mr. Deepak Parekh
CEO / MD Mr. Milind Barve
CIO Mr. Prashant Jain
Compliance Officer Mr. Yezdi Khariwala
Investor Service
OfficerMr. John Mathews
Assets Managed Rs. 92624.52 crore (Jun-30-2012)
Introduction to HDFC Asset Management Company.
Overview and Background: - The Housing Development Finance Corporation Limited
(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. The bank was incorporated in August 1994 in 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. HDFC is India's premier
housing finance company and enjoys an impeccable track record in India as well as in
international markets. Since its inception in 1977, the Corporation has maintained a consistent
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and healthy growth in its operations to remain the market leader in mortgages. Its outstanding
loan portfolio covers well over a million dwelling units. 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. HDFC provides financial
assistance to individuals, corporate and developers for the purchase or construction of
residential housing. It also provides property related services (e.g. property identification,
sales services and valuation), training and consultancy. Of these activities, housing finance
remains the dominant activity. HDFC has a client base of around 11 lac borrowers, 9 lac
depositors, 1.95 lac shareholders and about 25,000 deposit agents, as at December 31, 2010.
HDFC had raised funds from international agencies such as the World Bank, IFC
(Washington), USAID, DEG, ADB and KfW, international syndicated loans, domestic term
loans from banks and insurance companies, bonds and deposits. HDFC has received the
highest rating for its bonds and deposits program for the fifteenth year in succession.
HDFC Standard Life Insurance Company Limited, promoted by HDFC was the first life
insurance company in the private sector to be granted a Certificate of Registration (on
October 23, 2000) by the Insurance Regulatory and Development Authority to transact life
insurance business in India. (Data source from-www.hdfcfund.com) 2011
STANDARD LIFE INVESTMENTS LIMITED
Standard Life Investments was launched as an investment management company in 1998. It is
the dedicated investment management company of the Standard Life group and is a wholly
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owned subsidiary of Standard Life Investments (Holdings) Limited, which in turn is a wholly
owned subsidiary of Standard Life plc With global assets under management of
approximately US$213.9 billion as at June 30, 2010 Standard Life Investments Limited is one
of the world's major investment companies, operating in the UK, Canada, Hong Kong, China,
Korea, Ireland and the USA, and is responsible for investing money on behalf of five million
retail and institutional clients worldwide The Standard Life Assurance Company was
established in 1825 and has considerable experience in global financial markets. The company
was present in the Indian life insurance market from 1847 to 1938 when agencies were set up
in Kolkata and Mumbai. The company re-entered the Indian market in 1995, when an
agreement was signed with HDFC to launch an insurance joint venture. In April 2006, the
Board of The Standard Life Assurance Company recommended that it should demutualise and
Standard Life plc float on the London Stock Exchange. At a Special General Meeting held in
May voting members overwhelmingly voted in favor of this. The Court of Session in Scotland
approved this in June and Standard Life plc floated on the London Stock Exchange on 10th
July 2006.
In order to meet the different needs and risk profiles of its clients, Standard Life Investments
Limited manages a diverse portfolio covering all of the major markets world-wide, which
includes a range of private and public equities, government and company bonds, property
investments and various derivative instruments. The company's current holdings in UK
equities account for approximately 1.8% of the market capitalization of the London Stock
Exchange.
VISION
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To be a dominant player in the Indian Mutual Fund industry recognized for its high levels of
ethical and professional conduct and a commitment towards enhancing investor interests.
SPONSOR
HOUSING DEVELOPMENT FINANCE CORPORATION (HDFC).
The sponsor of HDFC MF is Housing Development Finance Corporation (HDFC). HDFC
was incorporated in 1977 as the first specialized housing finance institution in India. HDFC
provides financial assistance to individuals, corporate and developers for purchase or
construction of residential housing. As on December 31st, 2002, HDFCs cumulative loan
disbursement are Rs.40, 060 crores financing over 2.1 million units all over India.
PARTNERS
Standard Life Insurance Company of UK set up base in 1825. It is today the largest pension
fund in UK and the largest Mutual life assurance company in Europe. Standard Life
Investment was set up as a dedicated investment management company.
MANAGEMENT
HDFC Trustee Company Limited
A company incorporated under companies Act, 1956 is the trustee to the Mutual Fund vide
the trust deed dated June 8th, 2000 as amended from time to time. HDFC Trustee Company
Limited is a wholly owned subsidiary of HDFC Limited.
HDFC ASSET MANAGEMENT COMPANY LIMITED (HDFC AMC)
It was incorporated under the companys act, 1956, on December 10th, 1999 and was
approved to act as an asset management company for the MF by SEBI on July 3rd 2000. In
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terms of the Joint participation agreement dated October 29th, 1999 entered between Housing
Development Finance Corporation (HDFC) and Standard Life Investment , 25.6% of the paid
up share capital of the AMC had been transferred by HDFC to Standard Life assurance
company, the parent company of Standard Life Investment Limited, on April 17th 2001.
Pursuant to the shareholders agreement dated October 17th entered between Housing
Development Finance Corporation Limited (HDFC) and Standard Life Investments Limited.
13.9% of the paid up share capital of the AMC has been transferred by HDFC to Standard
Life Investments Limited as on January 31st, 2002.
The present share holding pattern of the AMC is as follows:
HDFC 50.1%
Standard Life Investments 49.9%
The AMC is managing many schemes as per the requirements of the varied class of investors.
The AMC has obtained registration from SEBI vide registration no. PM /inp0000000506
dated December 22nd, 2000 to act as a portfolio manager under the SEBI regulations, 1993.
The certificate of registration is valid from January 1st, 2003 to December 31st, 2003. The
AMC is also providing portfolio management / advisory services and such activities are not in
conflict with the activities of the mutual funds.
The Board of Directors of the HDFC Asset Management
Company Limited (AMC)
Mr. Deepak S Parekh
Mr. N. Keith Skeoch
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Mr Mark Connolly
Mr. Hoshang S. Billimoria
Mr. Humayun Dhanrajgir
Mr. P. M. Thampi
Dr. Deepak Phatak
Mr Rajeshwar Raj Bajaaj
Ms. Renu S. Karnad
Mr. Milind Barve
The AMC is managing 3 close ended schemes
HDFC Fixed Investment Plan
HDFC Long Term Equity Fund and
HDFC Fixed Maturity Plans
22 open-ended schemes of the Mutual Fund
HDFC Growth Fund (HGF)
HDFC Balanced Fund (HBF)
HDFC Income Fund (HIF)
HDFC Liquid Fund (HLF)
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HDFC Long Term Advantage Fund (formerly HDFC Tax Plan 2000)
(HTP)
HDFC Children's Gift Fund (HDFC CGF)
HDFC Gilt Fund (HGILT)
HDFC Short Term Plan (HSTP)
HDFC Index Fund
HDFC Floating Rate Income Fund (HFRIF)
HDFC Equity Fund (HEF)
HDFC Top 200 Fund (HT200)
HDFC Capital Builder Fund (HCBF)
HDFC TaxSaver (HTS)
HDFC Prudence Fund (HPF)
HDFC High Interest Fund (HHIF)
HDFC Cash Management Fund (HCMF)
HDFC MF Monthly Income Plan (HMIP)
HDFC Core & Satellite Fund (HCSF)
HDFC Multiple Yield Fund (HMYF)
HDFC Premier Multi-Cap Fund. (HPM)
HDFC Multiple Yield Fund - Plan 2005 (HMY2005)
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The AMC is also providing portfolio management / advisory services and such activities are
not in conflict with the activities of the Mutual Fund.The AMC has renewed its registration
from SEBI vide Registration No. - PM / INP000000506 dated December 4, 2003 to act as a
Portfolio Manager under the SEBI (Portfolio Managers) Regulations, 1993.The Certificate of
Registration is valid from January 1, 2004 to December 31, 2006 .
HDFC mutual fund was incorporated on December, 10th 1999. It was setup on June 30th,
2000. In 2003 HDFC Asset Management Company had entered into an agreement with
Zurich Insurance Company to acquire the asset management business. Consequently, all the
schemes of Zurich Mutual Fund in India had been transferred to HDFC Mutual Fund. The
HDFC AMC now offers Equity Funds, Balanced Funds and Debt Funds. They have been the
best performing mutual funds in the last several years.
The assets under management are Rs 86,648.10 crores as of June 30, 2010.
InvestmentYogi analyses the best performing HDFC mutual funds in the Balanced Fund,
Equity Fund and Equity Linked Savings Scheme (ELSS) categories.
Best performing Balanced Funds are:
HDFC Prudence Fund: The objective is to provide periodic returns and capital
appreciation over a long period of time, by investing in equity and debt investments,
with an aim to minimize any capital erosion. This scheme was launched on December
16, 1993. The top sector allocations for this fund are BFSI, Pharmaceuticals, Oil and
Gas. The fund manager is Prashant Jain.
HDFC Balanced Fund: The objective is to generate capital appreciation along with
current income from a combined portfolio of equity, debt and money market
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instruments. This scheme was launched on September 11, 2000. The top sector
allocation for this fund is Pharmaceuticals. The fund manager is Chirag Setalvad.
Source: Morningstar Direct Data as of June 30, 2010
The annualized return for both the funds during the last three years is equivalent to 16%
(approx). This shows both funds performed equally well during the recession period. When
markets were recovering in the last one year the returns for HDFC Prudence showed 4%
higher returns while comparing to its peer fund HDFC Balanced. Also, in the last five years
HDFC Prudence has managed to outperform HDFC Balanced fund.
Best performing Equity Funds are:
HDFC Equity Fund: The objective of this fund is to provide capital appreciation
through investments in equity oriented securities. This scheme was launched on
December 8, 1994. The benchmark index is S&P CNX 500. The top sector allocations
for this fund are BFSI, Pharmaceuticals, Oil and Gas. The fund manager is Prashant
Jain .
HDFC Top 200: The objective of this fund is to generate long term capital
appreciation by investing in a portfolio of equities and equity linked instruments
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drawn from the BSE 200 Index. This scheme was launched on August 19, 1996. The
benchmark index is BSE 200. The top sector allocations for this fund are BFSI, Oil
and Gas. The fund manager is Prashant Jain.
Source: Morningstar Direct Data as of June 30, 2010
The annualized return for HDFC Equity Fund was 46.5% in the last one year. These returns
are much higher by comparing it with its peer fund HDFC Top 200. This shows when markets
were recovering, the fund manager made the right investment decisions and managed to
generate better returns for their investors in HDFC Equity Fund. Whereas, when you compare
the returns for the last three years (i.e during the global slowdown) its HDFC Top 200 fund
generated 2% higher returns by comparing it to HDFC Equity Fund. In the last five years both
funds have given equivalent returns of 28% (approx).
Best performing Tax Saving Funds are:
HDFC Long Term Advantage Fund: The objective is to generate long term
capital appreciation from a portfolio that is predominantly in equity and equity
related instruments and providing tax benefits to investors. This scheme was
launched on January 2, 2001. The benchmark index is BSE Sensitive Index. The
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top sector allocations for this fund are Information Technology and
Pharmaceuticals. The fund manager is Chirag Setalvad.
HDFC Taxsaver: The objective is to provide tax benefits along with capital
appreciation. This scheme was launched on December 18, 1995. The benchmark
index is S&P CNX 500. The top sector allocations for this fund are Information
Technology, Pharmaceuticals and BFSI. The fund manager is Vinay Kulkarni.
Source: Morningstar Direct Data as of June 30, 2010
The annualized return for HDFC Taxsaver is much better while comparing to its peer fund
HDFC Long Term Advantage Fund. As, you can analyze HDFC Taxsaver fund has
outperformed in the 1st and 3rd year, as well as in the 5th year returns. In the last three years
of global slowdown, which had impacted Indian stock market, HDFC Taxsaver fund managed
to deliver 11.7% returns. This is quite appreciable. Also, during the recovery phase in the last
one year, HDFC Taxsaver has managed to generate 48.7% returns for their
investors.
There are many HDFC Mutual Funds in each category other than the schemes discussed
above. An investor needs to identify their own risk taking ability, time-frame of investments
and goals while taking a decision to invest in any particular mutual funds.
ADVANTAGE OF MUTUAL FUND:-
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The advantages of investing in a Mutual Fund are:
Diversification: The best mutual funds design their portfolios such that individual
investments will react differently to the same economic conditions. For example,
economic conditions like a rise in interest rates may cause certain securities in a
diversified portfolio to decrease in value. Other securities in the portfolio will respond
to the same economic conditions by increasing in value. When a portfolio is balanced
in this way, the value of the overall portfolio should gradually increase over time, even
if some securities lose value.
Professional Management: Most mutual funds pay topflight professionals to
manage their investments. These managers decide what securities the fund will buy
and sell.
Regulatory oversight: Mutual funds are subject to many government regulations
that protect investors from fraud.
Liquidity: It's easy to get your money out of a mutual fund. Write a check, make a
call, and you've got the cash.
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Convenience: You can usually buy mutual fund shares by mail, phone, or over the
Internet.
Low cost: Mutual fund expenses are often no more than 1.5 percent of your
investment. Expenses for Index Funds are less than that, because index funds are not
actively managed. Instead, they automatically buy stock in companies that are listed
on a specific index.
Transparency: Mutual Fund schemes are said to be Transparent because they
show the clear allocation of Funds to Investors.
Flexibility: Mutual funds are flexible because they change time to time and also if
an Investor wants his money back before the maturity of the Fund He/she can easily
redeem it.
DRAWBACKS OF MUTUAL FUNDS:-
Mutual funds have their drawbacks and may not be for everyone:
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No Guarantees: No investment is risk free. If the entire stock market declines in
value, the value of mutual fund shares will go down as well, no matter how balanced
the portfolio. Investors encounter fewer risks when they invest in mutual funds than
when they buy and sell stocks on their own. However, anyone who invests through a
mutual fund runs the risk of losing money.
Fees and commissions: All funds charge administrative fees to cover their day-
to-day expenses. Some funds also charge sales commissions or "loads" to compensate
brokers, financial consultants, or financial planners. Even if you don't use a broker or
other financial adviser, you will pay a sales commission if you buy shares in a Load
Fund.
Taxes: During a typical year, most actively managed mutual funds sell anywhere
from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit
on its sales, you will pay taxes on the income you receive, even if you reinvest the
money you made.
Management risk: When you invest in a mutual fund, you depend on the fund's
manager to make the right decisions regarding the fund's portfolio. If the manager
does not perform as well as you had hoped, you might not make as much money on
your investment as you expected. Of course, if you invest in Index Funds, you forego
management risk, because these funds do not employ managers.
ASSOCIATION OF MUTUAL FUNDS IN INDIA:-
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With the increase in mutual fund players in India, a need for mutual fund association in
India was generated to function as a non-profit organization. Association of Mutual Funds in
India (AMFI) was incorporated on 22nd August 1995.
AMFI is an apex body of all Asset Management Companies (AMC), which has been
registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are
its members. It functions under the supervision and guidelines of its Board of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund Industry
to a professional and healthy market with ethical lines enhancing and maintaining standards.
It follows the principle of both protecting and promoting the interests of mutual funds as well
as their unit holder
The objectives of Association of Mutual Funds in India:-
The Association of Mutual Funds of India works with 30 registered AMCs of the
country. It has certain defined objectives, which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:
This mutual fund association of India maintains high professional and ethical
standards in all areas of operation of the industry. It also recommends and promotes
the top class business practices and code of conduct which is followed by members
and related people engaged in the activities of mutual fund and asset management. The
a