Project on Mutual Fund

August 29, 2017 Philosophy

A PROJECT REPORT ON ANALYSES OF SIP, STP & NAV At HDFC Mutual Fund A Report submitted to OXFORD SCHOOL OF MANAGEMENT (AICTE approved- Gujarat Technological University-MBA) As partial fulfilment of Full time Postgraduate Degree in Management Submitted by: Pandya Disha Nileshbhai Enrolment no: 108000592056 PREFACE The objective of summer internship project is to be familiar with corporate life, to broaden horizon of knowledge and to experience practical work. Summer internship project training in esteemed organization like HDFC asset Management Company has been proved a great experience of life.

This has not only broadened vision in financial services but also helped me to developed immense confidence to face the future in corporate world. The project is based on the following objective: •The major objective of this project is analysing the systematic investment plan on of net asset value. •The minor objective of this project is why people transfer funds from to another. After the detailed study, I came to know various techniques and procedure of HDFC mutual funds. I found that hdfc mutual funds like power of 3ace ? HDFC Equity Fund, ?HDFC Top 200Fund, ?HDFC Mid Cap Opportunities Fund Give better return compare to other bank.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

ACKNOWLEGEMENT We really thank all the people at HDFC MUTUAL FUND who provided a great work culture to us and really co-operated in each and every task of ours. We are really thankful to our project mentor Mr. Piyush Lal (Sales Manager) who gave us his precious inputs regarding the project work and we are also thankful to Mr. Kishorbhai Gedvani (Branch Manager) for providing a nice work environment, motivation and this golden opportunity for doing the project for HDFC BANK. We also thank Mr. Jay Sorathiya (Sales Manager) and Ms. Rajesvari Dodiya who provided us the knowledge of every work they done.

Last but not the least; We really thank our institute Director, Mr. Kishorbhai Gedvani, for providing the great opportunity in the form of the summer placement opportunity at HDFC MUTUAL FUND Bank. We really salute each and every member of HDFC MUTUAL FUND family for providing the nice work environment to us. EXECUTIVE SUMMARY The Project a study of Analyses of SIP, STP & NAV HDFC mutual fund & HDFC BANK describes how the bank helps SMEs by providing finance to meet working capital requirements. It also describes the methods of assessment for providing finance and the financial criteria that borrower should fulfils.

This Project gave me a great learning experience and at the same time it gave me enough scope to implement my analytical ability. The analysis and advice presented in this Project Report is based on market research on the saving and investment practices of the investors. This Report will help to know about the investors’ Preferences in Mutual Fund means Are they prefer any particular Asset Management Company (AMC), Which type of Product they prefer, Which Option (Growth or Dividend) they prefer or Which Investment Strategy they follow (Systematic Investment Plan or One time Plan).

It is about Mutual Fund and its various aspects, the Company Profile, Objectives of the study, Research Methodology. One can have a brief knowledge about SIP, STP, &NAV of Mutual Fund and its basics through the Project. This Project covers the topic “ANALYSES OF SIP, STP & NAV. ” The data collected has been well organized and presented. I hope the research findings and conclusion will be use. INDEX (! ) PREFACE (!! ) ACKNOWLEGMENT (!! 1) EXECUTIVESUMMARY No TitlePg. no 1Introduction of MF664 History of the Indian MF industry 9 3AMFI15 4Advantage of MF 18 5Disadvantage of MF 21 6Mutual fund schemes (! )Equity fund (!! )Debt fund (!!! )Balanced fund (! v)Hybrid fund 22ss 7MF frame work 28 8Distribution channels of MF 30 9SIP32 10STP41 11NAV45 12Conclusion61 13Recommendation62 14Bibliography 65 INTRODUCTION OF MUTUL FUND “Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. ” This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus “Mutual”, i. e. the fund belongs to all investors.

The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a well- diversified portfolio of equities, bonds and other securities.

Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The fund’s Net Asset value (NAV) is determined each day. Investment 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.

HDFC ASSET MANAGEMENT COMPANY LIMITED (AMC) HDFC Trustee Company Limited: A company incorporated under the Companies Act, 1956 is the Trustee to the Mutual Fund vide the Trust deed dated June 8, 2000, as amended from time to time. HDFC Trustee Company Limited is a wholly owned subsidiary of HDFC Limited. HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000. The registered office of the AMC is situated at Ramon House, 3rd Floor, H. T.

Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai-400020. In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 45. 161crore. HDFC Asset Management Company (AMC) is the first ,AMC in India to have been assigned the ‘CRISIL Fund House Level – 1’ rating. This is its highest Fund Governance and Process Quality Rating which reflects the highest governance levels and a fund management practice at HDFC AMC It is the only fund house to have been assigned this rating for two years in succession.

Over the past, we have won a number of awards and accolades for our Performance. HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY 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. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise.

Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) was Rs67 billion. The private sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion. The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. First Phase – 1964-87 Second Phase-1987-00 Third Phase-1900-00 Fourth Phase-1900-00

First Phase – 1964-87 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. At the end of 1988 UTI had Rs. 6,700 cores of assets under management. Second Phase – 1987-1993 (Entry of Public Sector Funds) 987 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 Can bank 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.

At the end of 1993, the mutual fund industry had assets under management of Rs. 47, 004 cores Third Phase – 1993-2003 (Entry of Private Sector 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. 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.

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 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 crores. The Unit Trust of India with Rs. 44,541 crores of assets under management was way ahead of other mutual funds.

Fourth Phase – since February 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 cores 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, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000 cores 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. The graph indicates the growth of assets over the years.

Authorities to the mutual fund firm of India. The mutual fund firms in India are regulated by the Association of Mutual Funds of India (AMFI). Further, the Association of Mutual Funds of India (AMFI) operates in accordance with the laid down guidelines of the Securities and Exchange Board of India (SEBI). Some of the most popular mutual fund firms of India are as follows: •SBI Mutual Funds •Prudential ICICI •Bank Of Baroda •Bajaj Capital •DSP Merrill Lynch Mutual Fund India •Franklin Templeton Mutual Fund India Standard Chartered Mutual fund India Top 5 Mutual fund Companies in India in Terms of AUM) Reliance Mutual Fund10451122. 90 HDFC Mutual Fund9017873. 87 ICICI Prudential Mutual Fund6876863. 06 Birla Sun Life Mutual Fund6421751. 38 UTI Mutual Fund6417280. 41 The types of funds offered by the mutual fund firms of India are as follows: •Open-End Funds •Large Cap Funds •Interval Funds •Income Funds •Tax Saving Funds •Index Funds •Fund of Funds •Mid-Cap Funds •Equity Funds •Balanced Funds •Growth Funds •No Load Funds •Exchange Traded Funds •Value Funds •Money Market Funds •Sector-Specific Funds •Fixed-Income Funds •Closed-End Funds •International Mutual Funds Regional Mutual Funds •Sector Funds ?Association Of Mutual Funds In India (AMFI) The Association of Mutual Funds in India (AMFI) is dedicated to developing the Indian Mutual Fund Industry on professional, healthy and ethical lines and to enhance and maintain standards in all areas with a view to protecting and promoting the interests of mutual funds and their unit holders. Objectives of AMFI ?To define and maintain high professional and ethical standards in all areas of operation of mutual fund industry. To recommend and promote best business practices and code of conduct to be followed by members and others engaged in the activities of mutual fund and asset management including agencies connected or involved in the field of capital markets and financial services. ?To interact with the Securities and Exchange Board of India (SEBI) and to represent to SEBI on all matters concerning the mutual fund industry. Future of mutual fund in India. The Future of Mutual Funds in India suggests that the industry has got huge scopes of development in the times to come. The Future of Mutual Funds in India is quite bright.

Mutual Funds are one of the most popular forms of investments as these funds are diversification, professional management, and liquidity. In the year 2004, the mutual fund industry in India was worth Rs 1, 50,537 cores. The mutual fund industry is expected to grow at a rate of 13. 4% over the next 10 years Mutual fund AUN-Growth. In March 1998, the MF AUM was ` 68984 cores. •In March 2000, the MF AUM was ` 93717 cores and the percentage growth was 26 %. •In March 2001, the MF AUM was ` 83131 cores and the percentage growth was 13 %. •In March 2002, the MF AUM was ` 94017 cores and the percentage growth was 12 %. In March 2003, the MF AUM was ` 75306 cores and the percentage growth was 25 %. •In March 2004, the MF AUM was ` 137626 cores and the percentage growth was 45 %. •In September 2004, the MF AUM was ` 151141 cores and the percentage growth was 9 % in 6 months time. In December 2004, the MF AUM was ` 149300 cores and the percentage growth was 1 % in 2 months time FUTURE OF MUTUAL FUND IN INDIA-Facts on growth. •The growth rate was 100 % in 6 previous years. •The saving rate in India is 23 %. •There is a huge scope in the future for the expansion of the mutual funds industry. A number of foreign based assets management companies are venturing into Indian markets. •The Securities Exchange Board of India has allowed the introduction of commodity mutual funds. •The emphasis is being given on the effective corporate governance of Mutual Funds. •The Mutual funds in India has the scope of penetrating into the rural and semi urban areas. Financial planners are introduced into the market, which would provide the people with better financial planning OBJECTIVE OF STUDY The Objective of the study is to get the practical exposure of the field and to learn various aspects of financial activities of banking sector.

Analyses of systematic investment plan why people invest in that way. Why they are transfer the funds from one firm to another firm. net asset value is important in to invest in any type of fund. ADVANTAGES OF MUTUAL FUND Mutual Funds offer several benefits to an investor that are unmatched by the other investment options. Last six years have been the most turbulent as well as exiting ones for the industry. New players have come in, while others have decided to close shop by either selling off or merging with others. Product innovation is now passe with the game shifting to performance delivery in fund management as well as service.

Those directly associated with the fund management industry like distributors, registrars and transfer agents, and even the regulators have become more mature and responsible. 1. Affordability : Small investors with low investment fund are unable to invest in high-grade or blue chip stocks. An investor through Mutual Funds can be benefited from a portfolio including of high priced stock. 2. Diversification : Investor’s investment is spread across different securities (stocks, bonds, money market, real estate, fixed deposits etc. ) and different sectors (auto, textile, IT etc. ).

This kind of a diversification add to the stability of returns, reduces the risk for example during one period of time equities might under perform but bonds and money market instruments might do well do well and may protect principal investment as well as help to meet return objectives. 3. Variety : Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and equity. 4. Professional Management :

Mutual Funds employ the services of experienced and skilled professionals and dedicated investment research team. The whole team analyses the performance and balance sheet of companies and selects them to achieve the objectives of the scheme. 5. Tax Benefits : Depending on the scheme of mutual funds, tax shelter is also available. Investments in Mutual Funds are subject to varied tax benefits and liabilities on dividend, dividend distribution and capital gains. Tax rates differ depending on the type of scheme it may be, i. e. debt, equity, liquid, etc. , as well as the type of investor. It should be noted that tax rates are subject to change. . Regulation : All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI. OTHER BENIFIT ?Potential Return: Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. ?Low Costs: Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Liquidity: In open-ended schemes, investor can get money promptly at net asset value related prices from the Mutual Fund itself. In close-ended schemes the units can be sold on a stock exchange at the prevailing market price or avail of the facility of direct repurchases at NAV related prices which some close-ended and interval schemes offer you periodically. ?Transparency : Mutual Funds have to disclose their holdings, investment pattern and the necessary information before all investors under a regulation framework. ?Flexibility :

Investment in Mutual Funds offers a lot of flexibility with features of schemes such as regular investment plans, regular withdrawal plans and dividend reinvestment plans; you can systematically invest or withdraw funds according to your needs and convenience. DISADVANTAGE OF MUTUAL FUND ?No control over Cost in the Hands of an Investor. ?No tailor-made Portfolios. ?Managing a Portfolio Scheme Funds. ?Difficulty in selecting a Suitable Fund. Mutual Fund schemes: 1. Open Ended Scheme: units at “NAV” (Net Asset Value) related price at any time. Open-Ended fund scheme is open for subscription all through year.

An investor can buy or sell the 2. Close Ended Scheme: A Close-Ended fund is open for subscription only during a specified period, generally at the time of initial public issue. The Close-Ended fund scheme is listed on the some stock exchanges where an investor can buy or sell the units of this type of scheme. 3. Interval Schemes: These combine the features of open- ended and close-ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during pre- determined intervals at NAV related prices. Mutual Fund schemes by Investment Objectives: (I) EQUITY FUNDS

These funds invest a major part of their corpus in equities. The composition of the fund may vary from scheme to scheme and the fund manager’s outlook on various scrip’s. The Equity Funds are sub-classified depending upon their investment objective, as follows: 1. Growth Fund : Aim to provide capital appreciations over the medium to long term. These schemes normally invest a majority of their funds in equities and are willing to bear short term decline in value for possible future appreciation. These schemes are not for investors seeking regular income or needing their money back in the short-term 2. Diversified Equity Fund :

Diversified equity funds are the most popular among investors. They invest in many stocks across many sectors, and because they have the freedom to chop and churn their portfolios as they like, diversified equity funds are a good proxy to the stock market. If a general exposure to equities is what you want, they are a good option. They can invest in all listed stocks, and even in unlisted stocks. They can invest in which ever sector they like, in what ever ratio they like. 3. Equity – Linked Savings Schemes (ELSS) : Equity – linked savings schemes (ELSS) are diversified equity funds that additionally offer income tax benefits to individuals.

ELSS is one of the many section 80c instruments, along with the more popular debt options like the PPF, NSC and infrastructure bonds. In this Section 80c grouping. ELSS is unique. Being the only instrument to offer a total equity exposure. 4. Index Fund : An index fund is a diversified equity fund; with a difference- a fund manager has absolutely no say in stock selection. At all times, the portfolio of an index fund mirrors an index, both in its choice of stocks and their percentage holding. As of March 2004, equity index funds tracked either the Sensex or the Nifty. So, an index fund that mirrors the Sensex will invest nly in the 30 Sensex stocks, that too in the same proportion as their weight age in the index. 5. Sector Fund : Sector funds invest in stocks from only one sector, or a handful of sectors. The objective is to capitalize on the story in the sectors, and offer investors a window to profit from such opportunities. It’s a very narrow focus, because of which sector funds are considered the riskiest among all equity funds. 6. Mid – Cap Fund : These are diversified funds that target companies on the fast – growth trajectory. In the long run, share prices are driven by growth in a company’s turnover and profits.

Market players refer to them as ‘mid-sized companies’ and ‘mid-cap stocks’ with size in this context being benchmarked to a company’s market value. So, while a typical large cap stock would have a market capitalization of over Rs 1,000 cores, a mid-cap stock would have a market value of Rs 250-2,000 cores. (II) DEBT FUNDS These Funds invest a major portion of their corpus in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors.

Debt funds are further classified as: 1. Gilt Funds: Invest their corpus in securities issued by Government, popularly known as GOI debt papers. These Funds carry zero Default risk but are associated with Interest Rate risk. These schemes are safer as they invest in papers backed by Government. 2. Income Funds: Income funds aim to maximize debt returns for the medium to longer term. Invest a major portion into various debt instruments such as bonds, corporate debentures and Government securities. 3. MIPs: Invests around 80% of their total corpus in debt instruments while the rest of the portion is invested in equities.

It gets benefit of both equity and debt market. These scheme ranks Slightly high on the risk-return matrix when compared with other debt schemes. 4. Short Term Plans (STPs): Meant for investors with an investment horizon of 3-6 months. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in corporate debentures. 5. Liquid Funds: Also known as Money Market Schemes, These funds are meant to provide easy liquidity and preservation of capital.

These schemes invest in short-term instruments like Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds. 6. Floating Rate Funds: These income funds are more insulated from interest rate than their conventional peers. In other words, interest rate changes, which cause the NAV of a conventional debt fund to go up or down, have little, or no, impact on NAVs of floating rate funds. III) BALANCED FUNDS These funds, as the name suggests, are a mix of both equity and debt funds. They invest in both equities and fixed income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to provide investors with the best of both the worlds. Equity part provides growth and the debt part provides stability in returns. Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives of the fund. The investor can align his own investment needs with the funds objective and invest accordingly. IV) HYBRID FUNDS 1. Growth and Income Fund: Strike a balance capital appreciation and income for the investors. In these funds portfolio is a mix between companies with good dividend paying record and those with potential capital appreciation. These funds are less risky than growth funds bit more than income funds. 2. Asset Allocation Fund : These funds follow variable asset allocation policy. These move in an out of an asset class (equity, debt, money market or even non-financial assets). Asset allocation funds are those, which follow more stable allocation policies like balanced funds.

Those, which flexible allocation policies, are like aggressive growth or speculative funds. METHODOLOGY OF THE STUDY In my report I have tried to show the basic analyses of SIP, STP& NAV of HDFC Mutual Fund. They are good in terms of customer satisfaction. HDFC is preferred for this activity because it is more approachable for the customers. Process of invest in mutual fund is more linent in HDF bank. Family members & increasing standard of living plays an important role in influencing the decision of investment in mutual fund. This Entity…….. Does this……

Sponsor Forms Mutual Fund as a trust Registers with SEBI the Govt regulatory body. TrusteesHolds Funds invested in a form of units Ensure compliance with SEBI Appoints AMC. Asset Management Company Floats Mutual Fund Schemes Manages Funds /Cash. Registrar Holds Investor Data Serves Investors. Distributors Market various schemes of Mutual Fund. Distribution Channels For Mutual Fund Mutual Funds are primary vehicles for large collective investments, working on the principle of pooling funds. A substantial portion of the investments happen at the retail level.

Agents and distributors are a vital link between the mutual funds and investors. Agents ? Is a broker between the fund and the investor and acts on behalf of the principal. ? He is not exclusive to the fund and also sells other financial services. This in a way helps him to act as a financial advisor. Distribution Companies ? Is a company which sells mutual funds on behalf of the fund. ? It has several employees or sub-broker under it. ? It manages distribution for several funds and receives commission for its services. Banks and NBFCs Several banks, particularly private and foreign banks are involved in a fund distribution by providing similar services like that of distribution companies. ? They work on commission basis. Direct Marketing ? Mutual funds sell their own products through their sales officers and employees of the AMC. ? This channel is normally used to mobilise funds from high net worth individuals and institutional investors. Systematic Investment Plan (SIP) A Systematic Investment Plan or SIP allows us to take advantage of the growth potential of stock mutual funds, even if we do not have a large sum of money to invest.

Infect most mutual funds require a minimum of just Rs. 500 per month to get started. Most of us are used to paying for a car or home purchase with monthly EMIs (Equated Monthly Investments). Think of a SIP investment along those lines – only, you are paying yourself a monthly sum, and investing in the stock market, to build long-term wealth! Advantages of a Systematic Investment Plan You can budget for a SIP investment every month if you are say, looking to invest only a small amount on a regular basis. Even if you have a lump sum to invest, you may not want to invest all of it at one go.

And a systematic investment plan where you spread out the investment in the stock market over several months can provide several advantages. It will help you mitigate market risk and volatility. It helps you test out the waters and build your portfolio one step at a time. In above table, it’s become clear that most importantly SIP provides the benefits of what is called ‘rupee cost averaging’, In other words if the stock market goes down your next payment will buy more units, and if the market goes up , your investment increase in value. ?What’s a Systematic Investment Plan?

SIP is a way of investing specifically designed for those who are interested in building wealth over a long-term and plan out a better future for themselves and their family. It is useful for those who want to get their investments going, but don’t have a large sum of money to invest. ?So, what’s a good time to start a SIP? We have seen record highs in 2007 and record lows too, in 2008. Now in June 2009, we are seeing a market that showed a remarkable recovery from the lows of as recent as March 2009. Will it sustain or go down again? No one knows.

It is simply not possible to time the market accurately. If it was that easy all the fund managers would be sitting at home with their fortunes, isn’t it. So, how do you decide when is a good time to start investing in a SIP? The answer is simple. Anytime is good. If you can maintain the discipline of making regular monthly investments. Consider the graphic below carefully. We are looking at an example where a investor started at possibly the worst time in the recent history of our markets – February 2000 – at the peak of the dot-com bull market. He started investing Rs. 000 every month in a composite fund (consisting of the 10 largest open-ended equity funds with 10 yr plus track records) and continued investing till Sep 2008. ?Who can buy a Systematic Investment Plan? Anyone can enrol for this facility by starting an account with minimum investment amount – usually Rs 500 per month for one year. One can give post-dated cheques based on one’s convenience. ?Why you should invest in a Systematic Investment Plan? 1. Discipline The cardinal rule of building your corpus is to stay focused, invest regularly and maintain discipline in your investing pattern.

A few hundreds set aside every month will not pinch your monthly disposable income too much. You will also find it easier to part with a few hundred every month rather than investing a big lump sum in o. 2. Power of compounding Investment gurus always recommend that one must start investing early in life. One of the main reasons for doing that is the benefit of compounding. ?To explain with an example. Person A started investing Rs 10,000 per year at the age of 30. Person B started investing the same amount every year at the age of 35. When they attained the age of 60 respectively, person A had built a corpus of Rs 12. 3 lakh while person B’s corpus was Rs 7. 89 lakh. A rate of return of 8% compounded has been assumed. So the difference of Rs 50,000 in amount invested made a difference of more than Rs 4 lakh to their end corpus. That difference is due to the effect of compounding. The longer the compounding period, the better for you. Now instead of investing Rs 10,000 each year, suppose a person An invested Rs 50,000 after every 5 years, starting at the age of 35. The total amount invested, thus remains the same, which is Rs 3 lakh. However, when he is 60, his corpus will be Rs 10. 3 lakh. Again Loses the advantage of compounding in the early years 3. Rupee cost averaging This is especially true for investments in equities. When you invest the same Amount in a fund at regular intervals over time, you buy more units when the price is lower. Thus, you would reduce your average cost per share or per unit over time. This strategy is called ‘rupee cost averaging’. With a sensible And long-term investment approach, rupee cost averaging can smooth out the market’s ups and downs and reduce the risks of investing in volatile markets.

Sharma aptly sums it up, “In developing economies like India, where securities markets (equities and fixed income instruments) can be volatile and it is rarely possible to time the markets and predict the future. We can seldom accurately predict when a particular stock will move up or where the interest rates are headed. ” He says, “Systematic Investment Plan makes the volatility of the securities markets work in your favor. Since the amount invested per month is a constant, the investor ends up buying more units when the price is low and fewer units when the price is high.

Therefore, the average unit cost will always be less than the average sale price per unit, irrespective of the market rising, falling, or fluctuating. This concept is called Rupee Cost Averaging (RCA). ” Example: HDFC MUTUAL FUND SCHEME: HDFC TOP 200 FUND ReturnsSIPNormal 5 year41. 81%19. 39% 3 year69. 28%56. 15% 1 year86. 47%47. 62% In the above table , it’s become clear that SIP provides the benefits of what is called “rupee cost averaging’’ ,in other words if the stock market goes down your next payment will buy more units, And if the market goes up , your investment increase in value. . Convenience This is a very convenient way of investing. You have to just submit cheques with the completed enrolment form. The mutual fund will deposit the cheques on the requested date and credit the units to one’s account and will send the confirmation for the same. 5. Other advantages •Most fund houses waive entry or exit loads on SIP investments •Capital gains, wherever applicable, are taxed on a first-in first-out basis. EXAMPLE: Investor A decides to invest Rs. 10000 now. Investor B decides to invest by way of an SIP – Rs. 000 each month The table shows that Investor B is in a better position by investing through a Systematic Investment. It shows that at the end of the investment period of 10 months Investor A who made an Lump sum investment has 1000 units in his portfolio has a market value of Rs. 11000. Whereas, Investor B who made investments through an SIP has 1090 units in his portfolio which has a market value of Rs. 11988. EXAMPLE: Month Investor A (In Rs. )Units Purchased Investor B (In Rs. )Units Purchased Unit Price 110000 1000 1000 100. 0 10. 20 0 1000 105. 3 9. 5 3 0 0 1000 114. 3 8. 8 4 0 0 1000 115. 6 8. 7 50 0 1000118. 3 8. 5 6 0 0 1000 125. 08. 0 70 0 1000 117. 68. 5 8 0 0 1000 107. 5 9. 3 9 00 1000 95. 2 10. 5 10 00 1000 90. 911. 0 Total Investment Rs. 10000 1000 Rs. 10000 1089. 8 Total Value Rs. 11000 Rs. 11988 Systematic Investment Plan is a feature specifically designed for those who are interested in investing periodically rather than making a lump sum investment. It is just like a recurring deposit with the post office or bank where you put in a small amount every month.

The difference here is that the amount is invested in a mutual fund. SIP is provided by Mutual Funds to ensure that the investment goal is reached, and thus to compensate for a potential deficit if the systematic investment plan is interrupted due to premature death. It is a service option that allows investors to buy mutual fund shares on a regular schedule, usually through bank account deductions. The nomenclature of this mode of investment can be different with some mutual fund houses; for example Reliance Mutual Fund calls it Recurring Investment Plan.

Please be clear that a systematic investment plan is not a tool that helps improve your investment returns. The primary objective of a SIP is to enable investors to clearly define an investment goal, and then to help them reach it through systematic investment in select equity-oriented mutual fund schemes that have a track record of consistent good performance. Most of the mutual funds offer this facility. The real value lies in the portfolio of the fund. Almost all schemes have the facility of steady investment plan.

Systematic investment adds value through rupee cost averaging and the power of compounding. The NAVs (net asset value) of these funds can vary widely, but, through rupee cost averaging, an SIP can make this volatility work for you. Many investors tend to think that monthly income plan and systematic investment plan are one and the same. The minimum monthly investment for a systematic investment plan is Rs 1,000. If you are in the 30-40 year age group, you should probably keep to an allocation of 30-40 per cent to equity investments.

It is managed by a team of investment professionals and other service providers with advantages of professional’s management, portfolio diversification, reducing risk, reduction of trading cost, convince and flexibility liquidity, access to information. In simple words Systematic investment plan, is a simple, time-honoured strategy designed to help investors accumulate wealth in a systematic manner over the long-term. Systematic Investment Plan is the most effective way of investing in market especially in a volatile market. SIP is a way to invest in a regular and disciplined manner while taking care of volatility.

It is yet another investment technique which helps in mitigation of risk in terms of the entry point in an equity fund. For individuals or families just getting started, based upon the above mentioned investment analysis, proper investment allocation is determined and a systematic investment plan is established through one of the many mutual fund families offered by various Mutual Funds in India – Principal Income Fund, Monthly Income Plan, Child Benefit Fund, Balanced Fund, Index Fund, Growth Fund, Equity Fund and Tax Savings Fund.

The best way to enter a mutual fund is through a Systematic Investment Plan. But to get the benefit of an SIP, think of minimum three-year time frame when you won’t touch your money. Small but regular investments go a long way in creating wealth over time. SYSTEMATIC TRANSFER PLAN (STP) Under this an investor invests in debt oriented fund and gives instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund. STP refers to Systematic Transfer Plan where in an investor invests a lump sum amount in one scheme and regularly transfer (i. e. witches) a pre-defined amount into another scheme. Every month on a specified date an amount you choose is transferred from one mutual fund scheme to another of your choice Currently, Fixed Systematic Transfer Plan (FSTP) – Monthly Interval and Capital Appreciation Systematic Transfer Plan (CASTP) Monthly Interval facility is available to the Unit holders on 1st, 5th, 10th, 15th, 20th and 25th of a month and FSTP – Quarterly Interval and CASTP – Quarterly Interval facility is available to the Unit holders on 1st, 5th, 10th, 1 5th, 20th and 25th of the first month each. Load Structure

The Entry Load Structure for the transferee schemes – HDFC Growth Fund, HDFC Equity Fund, HDFC Top 200 Fund, HDFC Capital Builder Fund, HDFC Mid Cap Opportunities Fund, HDFC Premier Multi-Cap Fund, HDFC Balanced Fund, HDFC Prudence Fund, HDFC Long Term Advantage Fund and HDFC TaxSaver will be •NIl The Exit Load Structure is as follows: For Transferee Schemes: HDFC Long Term Advantage Fund and HDFC TaxSaver Nil For Transferee Schemes : HDFC Growth Fund, HDFC Equity Fund, HDFC Top 200 Fund, HDFC Capital Builder Fund, HDFC Core & Satellite Fund, HDFC Premier Multi-Cap Fund, HDFC Balanced Fund and HDFC Prudence Fund.

In respect of each investment through STP less than Rs. 5 crore in value, an Exit Load of 1. 25% is payable if units are redeemed / switched-out on or before 2 years from the date of allotment. In respect of each investment through STP equal to or greater than Rs. 5 crore in value, no Exit Load is payable. For Example: If you have Rs 6 lacks lump sum to invest and you want to invest in HDFC Top 200 , The steps you will have to follow are : 1. Choose a good Debt fund or Floating Rate Mutual Fund from HDFC, which allows STP to HDFC Top 200. . Invest all the money in the Debt Fund. 3. Now you can start a 10k/20k/30k per month STP from HDFC Debt fund to HDFC Top 200. ?Why and When to use STP When will it work: STP will make sense from DEBT -> EQUITY when markets are may very volatile and you don’t want to take risk with your money in a short span of time, If you invest through STP in markets and markets fall or have lots of volatile moves, then this situation will be better than the one time investment option.

This is still better than putting money in Bank and doing a SIP, because at least you money is earning some returns on debt part in STP. When will it not work : Incase markets are already at the end of a Bear market and markets can starts it up move anytime, in that case STP will not deliver the best returns like SIP, one time investment is a good choice in that case. But then you never know that when will markets start go up. Given that a retail investor does not have all the tools and time to research the markets, it’s not advisable to invest lump sum in any case.

It’s better to get 4-5% less returns than to see a huge downside of your money in short time, Smart investors think about returns, Smartest one’s take care of risk first . STP advantages: Works as SIP: You can invest in a Debt funds and from there you can start a STP to an Equity Fund, so it works like a systematic Investment Plan (SIP). Works as SWP: So STP can also work like SWP, because with some funds you can do transfer from Equity funds to Debt Funds, so when markets look risky to you, you can start a STP from Equity -> Debt funds, which will act like SWP.

Liquidity: Generally one does STP from Debt -> Equity funds, so your money is invested in Debt fund. This means you can sell it anytime if you want. Hence it works like a Emergency Fund also. In case you need money urgently, it can act like a liquid asset (at least for the time being in the start when you have more money in Debt fund) Growth in Money: Not to forget that your money is invested in Debt funds, so your money is also growing at debt returns , at least the part which is lying in the debt funds . Two types of STP There are two types of STP plans, Fixed and Capital Appreciation.

In Fixed Plan means a fixed sum will be transferred to the target mutual funds, on the other hand in Capital Appreciation, only the amount of capital which is appreciated gets transferred , that was the original lump sum amount invested in the start is protected . Capital Appreciation choice is only with Growth Plan and not dividend plan. Here is the list of all the STP Plans as of now. Important Points •Typically, a minimum of six such transfers are to be agreed on by investors in STP , just like SIP •Generally most of the mutual funds allow Debt -> Equity STP and not reverse , Only handful of Mutual Funds like Kotak allows it . STP is a facility for convenience , when the transfer happens from one mutual funds to another it’s still considered as selling of mutual funds and then buying another one , so tax rules applies in the same way . •Most of the funds allow only Monthly and Quarterly STP, some allow weekly and fortnightly also. •There can be some minimum amount requirement for starting an STP like say at least 1, 00,000 needs to be invested in Debt funds to start a STP to Equity. Some restriction like this will be there. There can be additional Switching Charges for availing STP facility •Entry load and Entry load may still apply while buying and selling of mutual funds through STP. •Securities Transaction Tax @ 0. 25% will be deducted on equity oriented funds at the time of redemption or switch to another scheme in STP. NET ASSET VALUE Meaning Value of a mutual fund’s share (unit) computed daily at the close of financial markets. Also called bid price, NAV per share, or NAV per unit. (NAV) represents a fund’s per share market value.

This is the price at which investors buy (“bid price”) fund shares from a fund company & sell them (“redemption price”) to a fund company. It is derived by dividing the total value of all the cash and securities in a fund’s portfolio, less any liabilities, by the number of shares outstanding. An NAV computation is undertaken once at the end of each trading day based on the closing market prices of the portfolio’s securities. Formula: (Market value of each security in the fund’s portfolio + All other assets – All liabilities) ? Number of outstanding shares (units). NAV PER SHARE The value of a single share of a mutual fund.

Calculated by subtracting the fund’s total LIABILITIES from its total ASSETS and dividing the result by the OUTSTANDING SHARES. Also known as Average Price. A Mutual Fund is a fund which is operated by an investment company which collects money from various shareholders connected with the mutual fund and invests them in a group of assets. The money generated from the selling of shares is used in buying various investment instruments like stocks, bonds, and money market vehicles. The shareholders receive an equity position in the fund depending on the units they hold and succumbing to the underlying securities of the fund.

Some mutual funds in India have securities which are not sold on formal exchange on a regular basis. These securities widely include shares in small scale or insolvent companies, derivatives, and private investments in any unregistered stocks or non-public company. The fund manager forms an estimation of the value of these securities while calculating their net asset value and accordingly determines the amount of fund’s assets to be invested in such securities as these securities usually lack a public market. ?HDFC TOP 200 FUND – GROWTH Fund Features Scheme Particulars TypeOpen Ended

NatureEquity (Equity: 96. 32%, Debt: 0%, Cash: 3. 68%) OptionGrowth Inception DateSep 11, 1996 Face Value10 Fund Size (Rs. Crore)11064. 99 as on Jun 30, 2011 Fund ManagerPrashant Jain, Anand Laddha . SIPNA STPNA SWPNA Expense ratio (%)1. 78 Portfolio Turnover Ratio (%)24. 81 Last Dividend Declared25 Minimum Investment (Rs)5000 Purchase RedemptionsDaily NAV CalculationDaily Entry LoadEntry Load is 0%. Exit LoadIf redeemed bet. 0 Year to 1 Year; Exit load is 1%. ?HDFC EQUITY FUND – GROWTH Fund Features Scheme Particulars TypeOpen Ended NatureEquity (Equity: 97. 7%, Debt: 0%, Cash: 2. 3%)

OptionGrowth Inception DateJan 1, 1995 Face Value10 Fund Size (Rs. Crore)9738. 9 as on Jun 30, 2011 Fund ManagerPrashant Jain, Anand Laddha . SIPNA STPNA SWPNA Expense ratio (%)1. 79 Portfolio Turnover Ratio (%)43. 44 Last Dividend DeclaredNA Minimum Investment (Rs)5000 Purchase RedemptionsDaily NAV CalculationDaily Entry LoadEntry Load is 0%. Exit LoadIf redeemed bet. 0 Year to 1 Year; Exit load is 1%. ?HDFC MID CAP OPPORTUNITIES – GROWTH Fund Features Scheme Particulars TypeOpen Ended NatureEquity (Equity: 93. 32%, Debt: 0%, Cash: 6. 68%) OptionGrowth Inception DateJun 25, 2007 Face Value10

Fund Size (Rs. Crore)1320. 71 as on May 31, 2011 Fund ManagerChirag Setalvad . SIPNA STPNA SWPNA Expense ratio (%)2. 01 Portfolio Turnover Ratio (%)32. 65 Last Dividend DeclaredNA Minimum Investment (Rs)5000 Purchase RedemptionsDaily NAV CalculationDaily Entry LoadEntry Load is 0%. Exit LoadIf redeemed bet. 0 Year to 1 Year; Exit load is 1% ?NAV CACULATION The Term Net Asset Value (NAV) is used by investment companies to measure net assets. It is calculated by subtracting liabilities from the value of a fund’s securities and other items of value and dividing this by the number of outstanding shares.

Net asset value is popularly used in newspaper mutual fund tables to designate the price per share for the fund. The value of a collective investment fund based on the market price of securities held in its portfolio. Units in open ended funds are valued using this measure. Closed ended investment trusts have a net asset value but have a separate market value. NAV per share is calculated by dividing this figure by the number of ordinary shares. Investments trusts can trade at net asset value or their price can be at a premium or discount to NAV. Value or purchase price of a share of stock in a mutual fund.

NAV is calculated each day by taking the closing market value of all securities owned plus all other assets such as cash, subtracting all liabilities, then dividing the result (total net assets) by the total number of shares outstanding. Calculating NAVs – Calculating mutual fund net asset values is easy. Simply take the current market value of the fund’s net assets (securities held by the fund minus any liabilities) and divide by the number of shares outstanding. So if a fund had net assets of Rs. 50 lakh and there are one lakh shares of the fund, then the price per share (or NAV) is Rs. 0. 00. Growth Shares Shares of fast – growing companies which show increasing and higher than average earnings per share than the industry. Good for long term investment, although the current yield of such shares can be insignificant because of their high P/E RATIOS. Price earnings ratio (P/E ratio) is the ratio between market price per equity share and earnings per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company.

Formula of Price Earnings Ratio: Following formula is used to calculate price earnings ratio: Price Earnings Ratio = Market price per equity share / Earnings per share Example: The market price of a share is $30 and earnings per share is $5. Calculate price earnings ratio. Calculation: Price earnings ratio = 30 / 5= 6 The market value of every one dollar of earning is six times or $6. The ratio is useful in financial forecasting. It also helps in knowing whether the share of a company are under or overvalued.

For example, if the earning per share of AB limited is $20, its market price $140 and earnings ratio of similar companies is 8, it means that the market value of a share of AB Limited should be $160 (i. e. , 8 ? 20). The share of AB Limited is, therefore, undervalued in the market by $20. In case the price earnings ratio of similar companies is only 6, the value of the share of AB Limited should have been $120 (i. e. , 6 ? 20), thus the share is overvalued by $20. Significance of Price Earnings Ratio:

Price earnings ratio helps the investor in deciding whether to buy or not to buy the shares of a particular company at a particular market price. Generally, higher the price earnings ratio the better it is. If the P/E ratio falls, the management should look into the causes that have resulted into the fall of this ratio. Shareholders’ funds are the net value of the company’s assets, cash and other current net assets, having deducted all debt, including bank loans, at their fair value and taking into account whether the company has outstanding convertible loan stocks, warrants, options and treasury shares.

Current financial year income is included. The calculation assumes that holders of convertibles have converted, warrants and options have exercised, and treasury shares are re-issued at the mid-market price, if dilution would occur i. e. if the NAV per share is higher than the price each of these shares or securities are ‘in the money’ (therefore could be ‘exercised’). This is known as diluted shareholders’ funds or the diluted NAV (valuing shares held in treasury, on a mid price basis, when shares are trading at a discount, may differ from the actual discount re-issuance policies of individual companies).

Daily NAVs published on the company profile pages are estimated by Morningstar. Month-end actual fair value cum-income asset related data, supplied by Member companies, can be found in the monthly AIC Stats publication. Please note that whilst fair value NAVs including income are published on this site, the long term performance data is currently calculated using the diluted NAV with debt at par value and income excluded, except for the 1 and 3 year data, and the discrete data from 31 May 2008 which are calculated using the diluted NAV with debt at fair value and income included.

This is due to a lack of historic cum income NAVs, with debt at fair value. FREQUENTLY USED TERMS Net Asset Value (NAV) Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date. Sale Price is the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load. Repurchase Price Is the price at which a close-ended scheme repurchases its units and it may include a back-end load.

This is also called Bid Price. Redemption Price is the price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related. Sales Load Is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’ load. Schemes that do not charge a load are called ‘No Load’ schemes. Whenever we buy open ended mutual fund units the number of units we got for our investment is calculated based on NAV of the fund. Similarly when we sell our units the amount to be returned to us is calculated based on NAV.

NAV is actually NAV par unit but everyone use the term NAV as short form . NAV is Net Asset of the fund per number of units’ o/s. It is calculated below formula: [Market value of investment + Receivables + other accrued income + other assets –accrued expenses – other payables – other liabilities/no of units o/s as on the NAV date] Market value of investment is calculated as per the last traded or closing price of the securities/debentures. Accrued income is dividend & interest received. Other assets include cash, cash equivalents etc. If NAV of scheme is high it doesn’t mean that the unit is overpriced.

In case of open ended mutual fund the NAV actually reflects the market prices of the fund’s assets neither at premium nor at discount. The following expenses are charged directly to the scheme which affects its NAV: ?Marketing & selling expenses(including distributors’ fees). ?Brokerage charges. ?Registration charges. ?Audit fees. ?Custodian fees. ?Expenses on investors communication. ?Insurance premium paid by the fund. ?Cost of statutory advertisement. Certain expenses are not charged to the scheme and hence do not affect the NAV they are: ?Penalties and fines for violation of flow. Interest on late payment to unit holder. ?Depreciation on fixed asset and software development expenses. Mutual fund required to declared their NAV’S and sales-repurchase prices of all schemes updated daily on a regular basis on the AMFI web site by 8:00 p. m. and declare NAV’S of their close ended schemes on every Wednesday. Most mutual funds provide multiple options to investor to choose from – Growth, Dividend and Dividend Re-investment Growth: In growth option, NAV (Net Asset Value) reflects the profit or loss made by the fund at any given point of time. When fund makes profit NAV goes up while at loss NAV goes down.

Thus over a period of time if fund makes profit NAV keeps increasing. Only way of realizing profit in this option is to sellunitsofthefund. Tax implication of equity oriented MF schemes is similar to shares – there is no long term capital gains tax (holding period is more than 1 year), and the short term capital gains tax is 15% (holding period is less than 1 year). Dividend: In this option a part of profit made is paid back to the investor in the form of dividend from time to time. The amount and frequency of dividend paid depends on the profit made by the fund and is at the discretion of the fund manager.

Thus dividend payment is not guaranteed. Moreover, dividends are paid out from the asset of the fund. Whenever dividend is paid, NAV of the fund goes down proportionately. That why NAV of dividend mutual funds are less than that of their counterpart with growth option. Example – For HDFC Top 200 fund latest (31 Dec 09) NAV for Growth and Dividend options are 180. 46 and 46. 67 respectively. One key point to note is that dividend paid by mutual funds is “return of capital” and not “return on capital”. This is quite different from the dividend received in stocks.

For example, an investor holds some stocks of Reliance and the company declares dividend. In this case dividend is paid from the profit made by Reliance; money gets transferred from Reliance to the investor. However, CMP (Current Market Price) of Reliance stock remains same. Thus the dividend received by the investor is over and above the money that he can realize by selling Reliance stock. But in case of mutual fund, dividend is paid from the fund asset i. e investor’s money is paid back to the investor. This confusion is often misused by many distributors to sell funds to investors.

Dividends are not taxable in the hands of the investors. Dividend option is relevant if liquidity is required in form of dividend amount. Food for thought – if liquidity is required in short term should you be investing in equity at all? Beyond one year liquidity can be achieved in growth option by selling fund units without any tax. Dividend-investment This is a variant of Dividend option, wherein dividend is paid in form of units of the same fund. Thus dividend that was supposed to be paid to investor is used to buy units and is credited to his account.

For all practical purpose Dividend re-investment is same as growth option. So why have this separate option? For historical reason. Earlier, capital gains were taxed at 20% (for long term) and 30%( for short term). While dividends were taxed much less. Since growth option funds had only capital gains anytime units are sold for liquidity tax liability was more. To offset this dividend re-investment was introduced to ensure that dividends paid lesser tax and re-investment, being usually at a higher NAV as fund is growing, will attract less capital gains tax when sold.

With current tax structure dividend re-investment is not relevant. Thus for all practical purpose this option can be ignored unless there is any change in tax structure in future. •Hera is the list of mutual fund of HDFC which include equity fund, debt fund, balanced fund. Latest NAV Scheme NameNAV (Net Asset Value)Date HDFC High Interest Fund – Short Term Plan-Dividend Option10. 603515-Jul-2011 HDFC High Interest Fund – Short Term Plan-Growth Option19. 85415-Jul-2011 HDFC Income Fund-Dividend11. 109915-Jul-2011 HDFC Income Fund-Growth23. 179815-Jul-2011 HDFC MF Monthly Income Plan-Long Term Plan-Growth Option23. 26415-Jul-2011 HDFC MF Monthly Income Plan-Long Term Plan-Monthly Dividend Option13. 016115-Jul-2011 HDFC MF Monthly Income Plan-Long Term Plan-Quarterly Dividend Option13. 346115-Jul-2011 HDFC MF Monthly Income Plan-Short Term Plan-Growth Option17. 560515-Jul-2011 HDFC MF Monthly Income Plan-Short Term Plan-Monthly Dividend Option11. 257815-Jul-2011 HDFC MF Monthly Income Plan-Short Term Plan-Quarterly Dividend Option11. 522415-Jul-2011 HDFC Short Term Plan-DIVIDEND10. 390315-Jul-2011 HDFC Short Term Plan-GROWTH19. 472415-Jul-2011 HDFC Capital Builder Fund – Dividend Option24. 8215-Jul-2011 HDFC Capital Builder Fund – Growth Option111. 41615-Jul-2011 HDFC Core and Satellite Fund – DIVIDEND21. 17115-Jul-2011 HDFC Core and Satellite Fund – GROWTH40. 90715-Jul-2011 HDFC Equity Fund – Dividend Option47. 48515-Jul-2011 HDFC Equity Fund – Growth Option281. 11215-Jul-2011 HDFC Growth Fund – Dividend Option31. 03815-Jul-2011 HDFC Growth Fund – Growth Option87. 57315-Jul-2011 HDFC Index Fund-Nifty Plan(FV Rs 10. 326)48. 443115-Jul-2011 HDFC Index Fund-Sensex Plus( FV-Rs32. 161)230. 154715-Jul-2011 HDFC Index FundSensex Plan( FV Rs 32. 161)154. 2315-Jul-2011 HDFC Premier Multi-Cap Fund-Dividend15. 25515-Jul-2011 HDFC Premier Multi-Cap Fund-Growth29. 83215-Jul-2011 HDFC Top 200 Fund – Dividend Option45. 77415-Jul-2011 HDFC Top 200 Fund – Growth Option211. 40315-Jul-2011 HDFC Balanced Fund – Dividend Option20. 53315-Jul-2011 HDFC Balanced Fund – Growth Option58. 50815-Jul-2011 HDFC Children Gift Fund-Investment45. 45315-Jul-2011 HDFC Children Gift Fund-Savings23. 62915-Jul-2011 HDFC Prudence Fund – Dividend Option29. 7715-Jul-2011 HDFC Prudence Fund – Growth Option218. 38915-Jul-2011 HDFC Long Term Advantage Fund – Dividend Option36. 7515-Jul-2011 HDFC Long Term Advantage Fund – Growth Option139. 81315-Jul-2011 HDFC TaxSaver-Dividend Plan60. 09515-Jul-2011 HDFC TaxSaver-Growth Plan236. 54315-Jul-2011 HDFC ARBITRAGE FUND RETAIL PLAN DIVIDEND OPTION10. 04115-Jul-2011 HDFC ARBITRAGE FUND RETAIL PLAN GROWTH OPTION12. 73415-Jul-2011 HDFC ARBITRAGE FUND RETAIL PLAN QUARTERLY DIVIDEND OPTION10. 46715-Jul-2011 HDFC ARBITRAGE FUND WHOLESALE PLAN GROWTH OPTION12. 84815-Jul-2011 HDFC ARBITRAGE FUND WHOLESALE PLAN DIVIDEND OPTION1015-Jul-2011 HDFC ARBITRAGE FUND WHOLESALE PLAN QUARTERLY DIVIDEND OPTION10. 2315-Jul-2011 HDFC LONG TERM EQUITY FUND-Dividend12. 69210-Mar-2011 HDFC LONG TERM EQUITY FUND-Growth15. 34210-Mar-2011 Equity DiversifiedRatingAssets (Rs. cr)Abs. Returns in % (as on Jul 15, 11) 3mth6mth1yr3yr5yr HDFC Top 200 Fund (G) 6,699. 64-0. 91. 2 6. 693. 3152. 3 HDFC Equity Fund (G) 5,607. 24-0. 41. 5 8. 0108. 2151. 9 Reliance Growth Fund – RP (G) 4,068. 99-1. 7-2. 5 -3. 256. 9133. 9 UTI Dividend Yield Fund (G) 3,304. 26-1. 40. 7 8. 191. 8166. 2 UTI Infrastructure Fund (G) 2,749. 79-4. 3-5. 1 -11. 712. 959. 0 Reliance RSF – Equity (G) 2,586. 38-0. 4-0. 1. 172. 1177. 2 UTI Mastershare (G) 2,550. 07-0. 31. 7 6. 159. 4105. 4 Franklin India Bluechip (G) 2,346. 32-1. 00. 5 7. 481. 8119. 5 ICICI Pru Dynamic Plan (G) 2,331. 67-0. 11. 9 7. 674. 1133. 0 Sundaram Select Midcap -RP (G) 2,151. 274. 85. 1 7. 187. 4117. 7 IDFC Premier Equity – A (G) 2,087. 301. 43. 3 7. 290. 2251. 2 UTI Equity Fund (G) 2,027. 070. 61. 7 8. 774. 2112. 6 SBI Magnum Contra Fund (G) 1,879. 33-2. 0-1. 8 -4. 149. 194. 5 Reliance Equity Oppor – RP (G) 1,838. 054. 25. 0 7. 4108. 1135. 2 Reliance Natural Resources (G) 1,826. 74-0. 8-0. 8 6. 822. — CONCLUSION ?This report is prepared to get the basic ideas of mutual fund and various schemes of HDFC. The general concept of the market study will help the different individuals to invest in different investment tools as per their appetite. Through research study, it is very much visualized the present market trend opted by the selected number of people and their perception regarding Mutual Fund. ?Hence, from this report I conclude that people are more keen to invest in Mutual Fund due to the stability and getting more diversified options. RECOMMENDATION As some of the people think that mutual fund is risky so the company should show people the advantages of the mutual fund and how it is better than the other investment avenues. ?There is a great potential for the mutual fund because the people are ready to invest in the mutual fund as there is a positive responses. ?Now a day’s people are investing in more of an equity fund because it gives high return as compare to other mutual fund schemes. BIBLIOGRAPHY •Booklet of HDFC MF (year. 10-11)fact sheet •WEBSITES ? http


I'm Amanda

Would you like to get a custom essay? How about receiving a customized one?

Check it out