A

SYNOPSIS REPORT
ON
MUTUAL FUNDS
AT
HDFCBANK LTD

Submitted
By
BARDE NARESH
[Link]: 1325-19-672-109
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration

SYNOPSIS

Title of the Project: MUTUAL FUNDS

Student Name: BARDE NARESH

Hall Ticket Number: 1325-19-672-109

Signature of the Student:

Signature of the Guide:

1.1Definition of Mutual Funds

Mutual fund is an investment vehicle made up of a pool of money collected from many

investors for the purpose of investing in securities such as stocks, bonds, money market

instruments and other assets.

A mutual fund is just the connecting bridge or a financial intermediary that allows a group of

investors to pool their money together with a predetermined investment objective. The

mutual fund will have a fund manager who is responsible for investing the gathered money

into specific securities (stocks or bonds). When you invest in a mutual fund, you are buying

units or portions of the mutual fund and thus on investing becomes a shareholder or unit

holder of the fund.

Mutual funds are considered as one of the best available investments as compare to others

they are very cost efficient and also easy to invest in, thus by pooling money together in a

mutual fund, investors can purchase stocks or bonds with much lower trading costs than if

they tried to do it on their own. But the biggest advantage to mutual funds is diversification,

by minimizing risk & maximizing returns

The mutual fund is structured around a fairly simple concept, the mitigation of risk through

the spreading of investments across multiple entities, which is achieved by the pooling of a

number of small investments into a large bucket. Yet, it has been the subject of perhaps the

most elaborate and prolonged regulatory effort in the history of the country. The mutual fund

industry has grown to gigantic proportions in countries like the USA, in India it is still in the

phase of infancy.

The origin of the Indian mutual fund industry can be traced back to 2064 when the Indian

Government, with a view to augment small savings within the country and to channelize
these savings to the capital markets, set up the Unit Trust of India (UTI). The UTI was setup

under a specific statute, the Unit Trust of India Act, 2063. The Unit Trust of India launched

its first open-ended equity scheme called Unit 64 in the year 2064, which turned out to be one

of the most popular mutual fund schemes in the country. In 2087, the government permitted

other public sector banks and insurance companies to promote mutual fund schemes.

Pursuant to this relaxation, six public sector banks and two insurance companies’ viz. Life

Insurance Corporation of India and General Insurance Corporation of India launched mutual

fund schemes in the country.

Securities Exchange Board of India, better known as SEBI, formulated the Mutual Fund

(Regulation) 2093, which for the first time established a comprehensive regulatory

framework for the mutual fund industry. This proved to be a boon for the mutual fund

industry and since then several mutual funds have been set up by the private sector as well as

the joint sector. Kothari Pioneer Mutual fund became the first from the private sector to

establish a mutual fund in association with a foreign fund. Since then several private sector

companies have established their own funds in the country, making mutual fund industry one

of the most followed sector by critics and investors alike. The share of private sector mutual

funds too has gone up rapidly.

1. The mutual funds are dynamic financial intuitions which play a crucial role in the economy

by mobilizing savings and investing them in the capital market.

2. The activities of mutual funds have both short and .long term impact on the savings in the

capital market and the national economy.

3. Mutual funds, trust, assist the process of financial deepening & intermediation.

4. To banking at the same time they also compete with banks and other financial intuitions.

5. India is one of the few countries to day maintain a study growth rate is domestic savings.

1.3 OBJECTIVES OF THE STUDY

1. To show the wide range of investment options available in Mutual Funds by explaining

various schemes offered by four different Asset Management companies.

2. To help an investor to make a right choice of investment, while considering the inherent

risk factors.

3. To understand the recent trends in the Mutual Funds world.

4. To understand the risk and return of the various schemes.

5. To find out the various problems faced by Indian mutual funds and possible solutions.
1.4 SCOPE OF THE STUDY

1. The study is limited to the analysis made for a Growth scheme offered by the asset

management company.

2. Each scheme is calculated their risk and return using different performance

measurement theories

3. The study analyze the performance of company based on that valid suggestion will be

given to the company

4. Graphs are used to reflect the portfolio risk and return.

Research Methodology is the systematic, theoretical analysis of the methods applied to a field

of study. It comprises the theoretical analysis of the body of methods and principles

associated with a branch of knowledge.

Secondary Data

The secondary data collected from the different sites, broachers, newspapers, company offer

documents, different books and through suggestions from the project guide and from the

faculty members of our college.

Company Name : HDFCBANK LTD

Source of Data : Secondary Data

Duration of the Study : 45 Days

Period of the Study : 2019-2020

Tools & Techniques :Beta, Alpha, Correlation Coefficient,

Treynor’s Ratio & Sharpe’s Ratio.

TOOLS AND TECHNIQUES

The following parameters were considered for analysis:

 Beta: It is a measure of the volatility, or systematic risk, of a security or a portfolio in

comparison to the entire market or a benchmark. Beta is used in the Capital Asset

Pricing Model(CAPM), which calculates the expected return of an asset based on its

beta and expected market returns. Beta is also known as the beta coefficient.

 Alpha: “Alpha" (the Greek letter α) is a term used in investing to describe a strategy's

ability to beat the market, or it's "edge." Alpha is thus also often referred to as “excess
 return” or “abnormal rate of return,” which refers to the idea that markets are efficient,

and so there is no way to systematically earn returns that exceed the broad market as a

whole. Alpha is often used in conjunction with beta (the Greek letter β), which

measures the broad market's overall volatility or risk, known as systematic market risk.

 Correlation Coefficient: The correlation coefficient is a statistical measure that

calculates the strength of the relationship between the relative movements of the two

variables.

 .Treynor’s Ratio:The Treynor ratio, also known as the reward-to-volatility ratio, is a

metric for determining how much excess return was generated for each unit of risk

taken on by a portfolio. Excess return in this sense refers to the return earned above the

return that could have been earned in a risk-free investment. Although there is no true

risk-free investment, treasury bills are often used to represent the risk-free return in the

Treynor ratio.

 Sharpe’s Ratio: The Sharpe ratio was developed by Nobel laureate William F. Sharpe,

and is used to help investors understand the return of an investment compared to its

risk. The ratio is the average return earned in excess of the risk-free rate per unit of

volatility or total risk.

.
ARTICLES

ARTICLE 1

TITLE : A Rational Theory of Mutual Funds' Attention Allocation

AUTHOR :Kacperczyk,Laura VeldkampStijn,&Van Nieuwerburgh

JOURNAL : Journal of the Econometic Theory

YEAR : 2016

ABSTRACT :The question of whether and how mutual fund managers provide valuable

services for their clients motivates one of the largest literatures in finance. One candidate

explanation is that funds process information about future asset values and use that

information to invest in high‐valued assets. But formal theories are scarce because

information choice models with many assets are difficult to solve as well as difficult to test.

This paper tackles both problems by developing a new attention allocation model that uses

the state of the business cycle to predict information choices, which in turn, predict

observable patterns of portfolio investments and returns. The predictions about fund

portfolios' covariance with payoff shocks, cross‐fund portfolio and return dispersion, and

their excess returns are all supported by the data. These findings offer new evidence that

some investment managers have skill and that attention is allocated rationally.
ARTICLE 2

TITLE : Why Do Investors Hold Socially Responsible Mutual Funds?

AUTHOR : Arno Rifdl& Paul Smeet

JOURNAL : Journal of Finance

YEAR :2018

ABSTRACT: To understand why investors hold socially responsible mutual funds, we link

administrative data to survey responses and behavior in incentivized experiments. We find

that both social preferences and social signaling explain socially responsible investment

(SRI) decisions. Financial motives play less of a role. Socially responsible investors in our

sample expect to earn lower returns on SRI funds than on willing to forgo financial

performance in order to invest in accordance with their social preferences conventional funds

and pay higher management fees. This suggests that investors are willing to forgo financial

performance in order to invest in accordance with their social preferences.

TITLE : Determinants of Investment Behaviour Of Investors Towards Mutual Funds

AUTHOR : InderjitKaur

JOURNAL : Journal of Indian Business Research

YEAR : 2018

ABSTRACT: Mutual funds in India have not been as favourable investment alternatives as

in developed countries, as assets under management of mutual funds to gross domestic

product in India have been 7-8 per cent compared to 37 per cent globally. Further, investor

base of mutual funds has been narrow, as retail investors constitute 98 per cent of folios but

contributed only 58 per cent of investments in September 2014. To broaden the investor base

for mutual funds in India, it remains imperative to understand the determinants of investment

behaviour of investors towards mutual funds. This study aims to achieve this objective
ARTICLE 4

TITLE : Runs On Money Market Mutual Funds

AUTHOUR : Lawrence Schmidt,Allan Timmermann& Russ werners

JOURNAL : American Economic Review

YEAR :2016

ABSTRACT :We study daily money market mutual fund flows at the individual share class

level during September 2008. This fine granularity of data allows new insights into investor

and portfolio holding characteristics conducive to run risk in cash-like asset pools. We find

that cross-sectional flow data observed during the week of the Lehman failure are consistent

with key implications of a simple model of coordination with incomplete information and

strategic complementarities. Similar conclusions follow from daily models fitted to capture

dynamic interactions between investors with differing levels of sophistication within the

same money fund, holding constant the underlying portfolio.

TITLE : Window Dressing in Mutual Funds

AUTHOUR : VikasAgarwal Gerald D. Gay Leng Ling

JOURNAL : The Review of Financial Studies

YEAR : 2014

ABSTRACT: We provide a rationale for window dressing wherein investors respond to

conflicting signals of managerial ability inferred from a fund's performance and disclosed

portfolio holdings. We contend that window dressers make a risky bet on their performance

during a reporting delay period, which affects investors' interpretation of the conflicting

signals and hence their capital allocations. Conditional on good (bad) performance, window

dressers benefit (suffer) from higher (lower) investor flows compared with non–window

dressers. Window dressers also show poor past performance, possess little skill, and incur

high portfolio turnover and trade costs, characteristics which in turn result in worse future

performance.
 PURPOSED OUT COME

 From the study analysis conducted it is clear that in equity funds- SBI mutual

fund is performing very well.

 Investing in the LIC Nomura Balanced -Growth will leads to profits.

 By seeing the overall performance SBI Mutual Fund is performing very well.

 The prospective investors are needed to be made aware of the investment in mutual funds.
 BIBLIOGRAPHY

BOOK

1. Glenn Hubbard, Michael f. Koehn,” the mutual fund industry: competition and

investor welfare” 1st edition Published by Columbia University Press, 2010.

2. Donald Fischer & Ronald Jordan --“Security Analysis and portfolio

th
Management”,6 edition published by prentice Hall 2095.

3. Prasanna Chandra - “Financial Management Theory and Principle”- 2008.

JOURNAL

1. Glushkov, D. and Statman, M., 2015. Classifying and Measuring the Performance of

Socially Responsible Mutual Funds.

2. Bogle, J.C., 2015. Bogle on mutual funds: New perspectives for the intelligent

investor. John Wiley & Sons.

3. Frankel, T. and Laby, A.B., 2015. The regulation of money managers: mutual

fundsand advisers (Vol. 3). Wolters Kluwer Law & Business

WEB SITE

1. [Link]

2. [Link]

3. [Link]

4. [Link]

NEWSPAPER

1 .Dharmendra Kumar 2020“Should a new investor invest in direct plans of mutual funds?”

on ECONOMIC TIMES, July 17

predictability” BUSINESS STANDARD ,November 15