arpit project

COMPARATIVE PERFORMANCE ANALYSIS BETWEEN

DSP BLACK ROCK &

HDFC MUTUAL FUND

&

GUIDENCE BY:- SUBMITTED BY:- ASST. PROF. MR. MANISH SHRIVASTAVA ARPIT GOSWAMI

ASST.PROF. MR. RAHUL PANDEY M.B.A. 1ST SEM BTIRT COLLEGE SAGAR (M.P.

ACKNOWLEDGEMENT

I take this opportunity to place on record my grateful thanks and sincere gratitude to all those who gave me valuable advice and input for my study. My study could not have been completed it I had not been able to get the reference materials from the company. I express my sincere regards to Asst. Prof. Mr. Manish shrivastava and Asst. Prof. Mr. Rahul pandey for valuable support and guidance. Last but not least, I would also like to express. My thanks to my father and my other family members who inspired me to put my best effort for the project report.

ARPIT GOSWAMI

M.B.A. 1st SEM BTIRT COLLEGE

SAGAR (M.P.)

DECLARATION

I Arpit Goswami s/o late Mr. P.G. Goswami , student of M.B.A.(1ST SEM) hereby declare that the desertion entitled comparative performance analysis between DSP Black rock & HDFC mutual fund is the outcome of my authentic work and same has not been submitted to any university, institute for the declared of any degree or any professional diploma.

ARPIT GOSWAMI M.B.A. 1st SEM BTIRT COLLEGE SAGAR (M.P.)

Introduction

Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions.

With an objective to make the investors aware of functioning of mutual funds, an attempt has been made to provide information in question-answer format which may help the investors in taking investment decisions.

What is a Mutual Fund?

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document.

Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.

The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and

Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.

What is the history of Mutual Funds inIndia and role of SEBI in mutual funds industry?

Unit Trust of India was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds.

In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are – to protect the interest of investors in securities and to promote the development of and to regulate the securities market.

As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors.

All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type. It may be mentioned here that Unit Trust of India (UTI) is not registered with SEBI as a mutual fund (as on January 15, 2002).

How is a mutual fund set up?

A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.

SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme. However, Unit Trust of India (UTI) is not registered with SEBI (as on January 15, 2002).

How to invest in a scheme of a mutual fund?

Mutual funds normally come out with an advertisement in newspapers publishing the date of launch of the new schemes. Investors can also contact the agents and distributors of mutual funds who are spread all over the country for necessary information and application forms. Forms can be deposited with mutual funds through the agents and distributors who provide such services. Now a day, the post offices and banks also distribute the units of mutual funds. However, the investors may please note that the mutual funds schemes being marketed by banks and post offices should not be taken

as their own schemes and no assurance of returns is given by them. The only role of banks and post offices is to help in distribution of mutual funds schemes to the investors.

Investors should not be carried away by commission/gifts given by agents/distributors for investing in a particular scheme. On the other hand they must consider the track record of the mutual fund and should take objective decisions

What is Net Asset Value (NAV) of a scheme? The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV).

Mutual funds invest the money collected from the investors in securities markets. In simple words, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day to day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly - depending on the type of scheme.

What are the different types of mutual fund schemes?

Schemes according to Maturity Period

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.

# Open-ended Fund/ Scheme

An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity.

# Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

# Schemes according to Investment Objective

A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:

# Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation,

etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

# Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

# Balanced Fund

The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

# Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.

# Gilt Fund

These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.

# What are sector specific funds/schemes?

These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

# What are Tax Saving Schemes?

These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.

# What is a sale or repurchase/redemption price?

The price or NAV a unit holder is charged while investing in an open-ended scheme is called sales price. It may include sales load, if applicable.

Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unit holders. It may include exit load, if applicable.

# What is an assured return scheme?

Assured return schemes are those schemes that assure a specific return to the unit holders irrespective of performance of the scheme.

A scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or AMC and this is required to be disclosed in the offer document.

Investors should carefully read the offer document whether return is assured for the entire period of the scheme or only for a certain period. Some

schemes assure returns one year at a time and they review and change it at the beginning of the next year.

# Major companies of mutual funds

The major fund houses which have operated in India are as follows –

1. Birla sunlife2. Bank of Baroda

3. HDFC mutual fund

4. ING Vysya

5. ICICI prudential

6. SBI mutual fund

7. Tata

8. Kotak mahindra

9. Unit trust of India

10.Reliance mutual fund

11.IDFC

12.Sundram mutual fund

13.Religare mutual fund

14.Principal mutual fund

15.DSP Black rock

Introduction of DSP Black rock mutual fund

DSP Black Rock Investment Managers Pvt. Ltd. is a joint venture between the DSP Group and Black Rock Inc. The DSP Group, with a track record of over 145 years, is one of the oldest financial services firms in India. Black Rock is the largest listed asset management company in the world, and a premier provider of investment management, risk management and advisory services to institutional, intermediary and individual investors around the world.

Black Rock today has a major presence in most key markets across the United States, Europe, Asia and Australia and has a deep understanding of local markets around the world.

DSP Black Rock Investment Managers aims at investment excellence within the framework of transparent but rigorous risk controls. The team in India is well supported by Black Rock’s Risk and Quantitative Analysis Group, which is a global team that supports investment managers across asset classes, styles and markets.

View/ belief of DSP black rock

The foundation of our business lies in our belief that our investors’ needs are of paramount importance and that our sole business is managing assets on their behalf. Our commitment to investment excellence is anchored in a shared culture that always places the interests of investors first, from

individuals to institutions. We believe in always acting as a fiduciary for our investors and our steadfast integrity has helped us earn their long-term trust.

Company profile of DSP Black rock

Company name - DSP Black rock

Type - Privately held

Company size - 201-500 employees

Web site - http://www.dspblackrock.com

Industry - Financial services

Headquarter - 10th floor, mafatlal center narima point

Mumbai Maharashtra 400021 India

Products or funds of DSP Black rock

DSP Black rock are providing 23 types of product or mutual funds in the Indian mutual fund market according to there Boucher and these are as :-

1. DSP Black rock liquidity fund 2. DSP Black rock floating rate fund

3. DSP Black rock money manager fund

4. DSP Black rock short term fund

5. DSP Black rock bond fund

6. DSP Black rock strategic bond fund

7. DSP Black rock government securities fund

8. DSP Black rock treasury bill fund

9. DSP Black rock cash manager fund

10.DSP Black rock savings manager fund-conservative

11.DSP Black rock manager fund-moderate

12.DSP Black rock manager fund –aggressive

13.DSP Black rock balanced fund

14.DSP Black rock equity fund

15.DSP Black rock top 100 equity fund

16.DSP Black rock opportunities fund

17.DSP Black rock technology.com fund

18.DSP Black rock India TIGER fund (THE INFRASTRUCTURE GROWTH AND ECONOMIC REFORMS FUND)

19.DSP Black rock small and midcap fund

20.DSP Black rock tax saver fund

21.DSP Black rock world gold fund

22.DSP Black rock natural resources and new energy fund

23.DSP Black rock world energy fund

Description of some products or funds

DSP black rock government securities fund

Investment objective An open ended income scheme seeking to generate income through investment in central government securities of various maturities

Asset allocation pattern of scheme

Types of instrument Normal allocation

1. central government securities repos/reverse repos in central govt. securities as may be permitted by RBI

(% OF Net assets)

80%-100%

2. Call money market or alternative investment for call money market as may be provided by the RBI.

0%-20%

Plans and option*Growth *dividend *monthly dividend -payout dividend -payout dividend

-reinvest dividend –reinvest dividend

Minimum application amt.

purchase Additional purchase

5000/- 1000/-

Systematic investment plan(SIP)

Rs 1000/- weekly, monthly, and quarterly options are available.

Systematic Rs 1000/- weekly, monthly, and quarterly

withdrawal plan(SWP)

options are available.

Name of the fund manager

Mr. Dhawal dalal

DSP Black rock Top100 equity fund

Investment objective An open ended growth scheme, seeking to generate capital appreciation from a port folio that is substantially constituted of equity securities and equity related securities of the 100 largest corporates by market capitalization listed in India



1.equity and equity related securities

(%of net assets)

90%-100%

2.debt securitized debt and money market securities

0%-10%

Plans and optionRegular plan Institutional plan*growth *dividend

-pay out dividend

-reinvest dividend

*growth *dividend

-pay out dividend

-reinvest dividend


Purchase Additional purchase

Regular plan Rs 5000 Rs 1000

Institutional plan

Rs 5 crore Rs 1000


Rs 1000/- weekly, monthly, and quarterly options are available.(only in regular plan)

Systematic withdrawal plan(SWP)


Name of the fund manager Apoorva shah

DSP Black rock balanced fund

Investment objective An open ended balanced scheme, seeking to generate long term capital appreciation and current income from a portfolio constituted of equity and equity related securities as well as fixed income securities(debt and money market securities)



1.equity and equity related securities

(%of net assets)

65%-75%

2.debt securities debt and money market securities

25%-35%

Plans and option Plans: none option: growth *dividend

-payout

-reinvest


Purchase

Additional purchase

Rs 5000

Rs 1000





Name of the fund manager Apoorva shah

Introduction of HDFC mutual funds

HDFC assets management company Ltd (AMC) was incorporated under the companies act 1956 on December 10, 1999 and was approved to act as an (AMC)for the HDFC mutual fund by SEBI vide its letter dated July 3, 2000 In the term of the investment management agreement the trustee has appointed the HDFC assets managememt company limited to manage the mutual fund.

Registered office of the assets management company (AMC) is situated at Ramón house 3rd flour, H.T. Parikh marg 169 Back Bay reclamation, charchgate Mumbai 400020

Company profile of HDFC mutual fund

Company name - HDFC Mutual fund

Type - Privately held

Company size - 501-1000 employees

Web site - http://www.hdfcfund.com

Founded - 1999

Headquarter - Ramón house 3rd flour, H.T. Parikh marg

Parikh marg 169 Black bay reclamation

Charchgate Mumbai 400020

Products of funds of HDFC mutual fund

HDFC mutual funds are providing 16 products or funds according to the brochure of that company in the Indian mutual fund market these funds are as :-

1. HDFC Growth fund (HGF)2. HDFC equity fund (HEF)

3. HDFC Top 200 fund (HT 200)

4. HDFC Capital builder fund (HCBF)

5. HDFC Core and satellite fund (HCSF)

6. HDFC Premier multi-cap fund (HDMCF)

7. HDFC Mid-cap opportunities fund (HMCOF)

8. HDFC Long term equity fund

9. HDFC Infrastructure fund

10.HDFC Arbitrage fund (HAF)

11.HDFC Balanced fund (HDF)

12.HDFC Prudence fund (HPF)

13.HDFC Long term advantage fund (HLTAF)

14.HDFC Tax saver (HTS)

15.HDFC Index fund (HIF)

16.HDFC MF Monthly income plan (HMIP)

Description of products or funds

HDFC Growth fund (HGF)

Investment objectiveTo generate long term capital appreciation from a portfolio that is invested predominantly in equity and equity related instrument



1. Equity and equity related instrument.

(%net assets)80-100

2. Debt securities, money market instrument and cash (including CBLO/reverse repo.)

0-20

Plans and option Plans: none option: growth *dividend

-payout

-reinvest


Purchase Additional purchase Rs 5000/- Rs 1000/-


Please refer page no.22 for details of (SIP)


Please refer page no.22 for details of (SWP)


Mr. Srinivas Rao Ravari

HDFC Top 200 funds (HT 200)

Investment objective

To generate long term capital appreciation from a portfolio of equity and equity – linked instrument primarily drawn from the companies in BSE 200 Index


Types of instrument

Normal allocation

1. Equity & equity linked instrument.

(%of net assets)Up to 100%(including use of derivatives for hedging & permitted by prevailing by SEBI regulation)

2. # Debt and money instruments. #Investment in securitized debt. If undertaken would not exceed 20%of the net assets of the scheme.

Plans & options Plans- Nil option – Growth & Dividend - Payout - reinvest


Purchase Additional purchase Rs 5000/- Rs 1000/-


Please refer page no.22 for details of (SIP)


Please refer page no.22 for details of (SWP)


Mr. Prashant Jain

Description of dividend policy of HDFC (SWP)

There is no assurance or guarantee to unit holder as to the rate of dividend distribution nor that dividends will be paid regularly. On payment of dividends ,the NAV will stand reduced by the amount of dividend and dividend tax (if applicable) paid.

Description of Systematic investment plan(SIP)

The first account statement under SIP/STP shall be issued within 10 business days of the initial investment the account statement will be dispatched once every quarter ending march, june, September, and December within 10 business days of the end of the quarter.

Findings in project:-

• DSP black rock are providing 23 schemes or funds to the customer but HDFC mutual are providing 16 types of funds according to the brochure of both the companies.

• Services of DSP black rock are much better then the HDFC mutual fund like systematic investment plan(SIP).

• DSP black rock are providing both type of plan like regular and institutional plan in most of the product or fund but HDFC mutual fund are providing these plans only in few funds

• In DSP black rock systematic withdrawal plan(SWP)are very easy and also easily available but in HDFC mutual fund this is complicated.

• In these funds or schemes HDFC are not providing both type of plan to the public they are providing wholesale or retail plan only in few schemes.

• HDFC are providing systematic investment plan(SIP)or systematic withdrawal plan(SWP) only quarterly.

• Minimum application amount Rs5000 for HDFC plans or additional purchase Rs1000.

• Name of the fund manager Mr. Prashant Jain and Srinivas Rao

RESEARCH METHODOLOGY

Primary Source:- Primary data have been collected through the CAMS agency of mutual fund.

Secondary source:- Secondary data have been collected from the journals, magazines or brochures of both the companies or world wide web.

BIBLIOGRAPHY

WWW.GOOGLE.COM WIKIPEDIA WWW.DSPBLACK.COM WWW.HDFC.COM

http://WWW.HDFC.COM/

http://WWW.DSPBLACK.COM/

THANK YOU!!!!!!!!

arpit project

Economy & Finance