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1. INTRODUCTION
1.1 INTRODUCTION
Investors are confronted with the problem of choosing the best investment
opportunities in the financial market in order to earn higher return for their
investments. The complexities of financial market can be dealt with certain
intuitions with sound technical back ground. A small investor cannot afford to
invest sizeable amount to maintain their position in fact with market conditions. A
mutual fund foresees market conditions and invests substantial funds collected
from the pool of investors.
Whatever be the type of investor there is a mutual fund that fits everyone.
It is important to understand that each mutual fund has different risks and
rewards. In general, the higher the potential return, higher the risk of loss.
Although some funds are less risky than others, all funds have some level of risk-
it's never possible to diversify away all risk. This is a fact for all investments.
Each fund has a predetermined investment objective that tailors the fund's
assets, sectors of investments, and investment strategies.
All mutual funds are varying based on their asset classes. For example,
while equity funds that invest in fast-growing companies are known as growth
funds, equity funds that invest only in companies of the same sector or region are
known as specialty funds. Hence Mutual Funds have their own risk and return
potential.
There are a number of investment options available in the economy. But
there are some investment options available that provides both saving benefit
and return benefits particularly tax benefits. Hence it becomes necessary to
study the investment option which gives maximum benefits to the investor
1.2 STATEMENT OF PROBLEM
Mutual funds could not survive in the early years of inception and went
dark. The initiation made by the government results in the development of Mutual
fund growth in the economy. At the same time the products by Insurance
companies prevail as a good investment option for the investors from the early
periods. Hence the growth of economy made opportunity available to the
investors. The government of India encouraged public sector mutual Funds, set
up public sector Banks and Insurance Corporation. It was not sufficient to
mobilize potential investment and it promoted the private sector Mutual Funds in
1993. Hence there are dozens of leading Mutual funds and Insurance
Companies in the economy. Therefore it is worth while to measure the
performance and benefits to the investors. Such comparison will bring to light any
loopholes in the present system and to offer such suggestions based on such
comparison.
2
2. COMPANY PROFILE
HDFC STANDARD LIFE INSURANCE
HDFC and Standard Life first came together for a possible joint venture, to
enter the Life Insurance market, in January 1995. It was clear from the outset
that both companies shared similar values and beliefs and a strong relationship
quickly formed. In October 1995 the companies signed a 3-year joint venture
agreement.
Around this time Standard Life purchased a 5% stake in HDFC, further
strengthening the relationship. The next three years were filled with uncertainty,
due to changes in government and ongoing delays in getting the IRDA
(Insurance Regulatory and Development authority) Act passed in parliament.
Despite this both companies remained firmly committed to the venture.
In October 1998, the joint venture agreement was renewed and additional
resource made available. Around this time Standard Life purchased 2% of
Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also
started to use the services of the HDFC Treasury department to advise them
upon their investments in India.
Towards the end of 1999, the opening of the market looked very promising
and both companies agreed the time was right to move the operation to the next
level. Therefore, in January 2000 an expert team from the UK joined a hand
picked team from HDFC to form the core project team, based in Mumbai.
Around this time Standard Life purchased a further 5% stake in HDFC and
a 5% stake in HDFC Bank. In a further development Standard Life agreed to
participate in the Asset Management Company promoted by HDFC to enter the
mutual fund market. The Mutual Fund was launched on 20th July 2000
3
2.1 STATEMENT OF OBJECTIVES
Following are the objectives of the study:
► To find the awareness among the customers about investment
alternatives.
► To indicate the Schemes which provides higher returns to the Investors
and also tax benefits.
► To compare the performance of ELSS with ULIP.
► To find the reasons which influence the decision of investors to choose a
particular investment.
► To identify the drawbacks in promoting products of HDFC Mutual Funds
2.2 HYPOTHESIS
1) There is no significant relationship between nature of investment and
choice of schemes.
2) There is no significant relationship between reasons to influence decision
of investors and range of income.
3) There is no significant relationship among awareness of customers and
qualification of respondents.
4) There is no significant relationship between drawbacks in promoting
products and choice of investment.
5) There is no significance relationship between the range of income and risk
taking capacity.
4
3. THEORETICAL FRAMEWORK
MUTUAL FUNDS
A mutual fund is a pool of money, collected from investors and is invested
according to certain investment objectives.
A mutual fund is created when investors put their money together. It is
therefore a pool of the investor’s funds. The most important characteristic of a
mutual fund is that the contributors and the beneficiaries of the fund are the same
class of people, namely the investors. The term mutual means that investors
contribute to the pool and also benefit from the pool.
A mutual fund’s business is to invest the funds thus collected, according to
wishes of the investors who created the pool.
CHARACTERISTICS OF MUTUAL FUND
A mutual fund belongs to the investors who have pooled their funds. The
ownership of the mutual fund is in the hands of the investors.
Investment professionals and other service providers, who earn a fee for
their services, from the fund, manage the mutual fund.
The pool of funds invested in a portfolio of marketable investments. The
value of the portfolio is updated everyday.
The investor’s share in the fund is denominated by “units”. The value of
the units changes with change in the portfolio’s value, everyday. The value
of one unit of investment is called as the Net Asset Value (NAV).
The common retort to the oft-asked question by anxious investors, of the
best way to save tax, is to invest in Post Office savings schemes, or perhaps a
regular investment in a public provident, or to buy insurance policies or Equity
Linked Saving Schemes.
ELSS holds the advantage of being the equity-based tax saving
instrument in the country today and offers tax deduction on investments up to
Rs.100000, under Section 80C of the Income Tax Act.
5
EQUITY LINKED SAVING SCHEME
Equity Linked Saving Schemes (ELSS) is similar to the normal equity
diversified schemes that invest across the board and market segments. Features
that differentiate ELSS from an open-ended equity diversified scheme are tax
saving benefit (deductions under Sec 80C) and a lock-in period of three years,
which are explained hereunder. Also, one can invest in these schemes in small
amounts through a Systematic Investment Plan and begin with a small fund size
to add to this expense (i.e.) of investing in an ELSS is similar to any other equity
scheme.
Tax
Benefit:
Until FY 05, Sec 88 of Income Tax Act had fixed an overall ceiling of
Rs.100000 for investments in the tax saving instruments, including a cap of
Rs.10000 for investment in ELSS. The investors would get a rebate based on his
taxable income. In FY 05 the budget has scrapped Sec 88 and replaced it with
Sec 80C. under this section, investments up to Rs.100000 are eligible for
deduction from Gross Taxable Income and the ceiling on investments in ELSS is
removed. These investments deducted from the Gross Total Income, hence
reducing the taxable income.
6
ELSS
Better Return than that of other savings instruments and similar to other equity schemes
Saves from short-term volatility: Lock in of 3 years
Tax Benefit:Up to Rs.1 lakh, u/s Sec 80C
Illustration:
Particulars Rupees(till 05) Rupees (after 05)
Gross Total Income 4,00,000 4,00,000
(-) Deductions Nil 1,00,000
Taxable Income 4,00,000 3,00,000
Advantages of Lock-in-period
The close-ended nature of the scheme gives the investment team an
opportunity to take decisions without the pressures of dealing with constant
fund cash flow considerations.
This would also help to focus on long-term opportunities in mid-cap
and small-cap companies that are strategically placed to take advantage of
the robust economic growth in India and of the global outsourcing trend.
Since the fund would remain with the fund manager for a long duration,
it would give him more flexibility with regards to the illiquid nature of mid-cap
space. Therefore, the Fund is likely to perform better than an open-ended
scheme.
7
ELSS VS ULIP
ULIPs basically works like a mutual fund with a life cover thrown in. they
invest the premium in market-linked instruments like stocks, corporate bonds and
government securities. Investments in ULIPs attract Tax benefit under Section
80C.
A tax –saving fund is a diversified equity fund. It works like an open-ended
diversified equity fund that invests predominantly in the stock market to generate
growth by way of capital appreciation for investors.
The only difference between an equity fund and taking a tax saving fund is
that the latter has a 3-year lock-in tax benefits under Section 80C. To that end
there is a common ground between tax-saving funds and ULIPs in the shape of
Section 80C tax benefits.
RETURN ASPECTS
The reason why ULIP returns are on the lower side compared to tax-
saving funds is due to the higher expenses charged by them. The expenses take
their toll on the ‘investible surplus’ which reduces to the extent of expenses.
For example, mortality charges as well as the commission paid to agents
are factored into the ULIP expenses. While mortality charges are unique to
ULIPs as compared to tax-saving funds, commissions form a part of tax-saving
funds as well.
Tax-saving funds offer is the option of staying invested in the scheme
during maturity. But ULIP do not give the option of staying invested. The investor
has to necessarily collect the maturity proceeds.
8
Age
Life
Insurance
Premium(Rs)
EPF(Rs) PPF / NSC ELSS
Total
Deduction
u/s 80C
25-35 10% 20% 20% 50-60% 1,00,000
35-40 10% 30% 25% 35-40% 1,00,000
45-55 10% 35% 30% 25-30% 1,00,000
>55 10% 0 65% 20-25% 1,00,000
TAX ASPECTS
Income Tax Provision Impacting Investment in Mutual Funds:
Investors receive two types of incomes from investment in Mutual Funds,
namely, Dividends declared from time to time by the mutual fund and Capital
Gains arising out of redemption of mutual fund units. Both these incomes are
subject to the provisions of the Income Tax Act, 1961.
The following are the Tax provisions, applicable after the Finance Act 2006-
07:
Dividends from mutual funds for the year 2006-07 are tax-free in the
hands of investors.
In case of mutual fund scheme with more than 50% in debt, a dividend
distribution tax of 10% plus surcharge has to be paid by the mutual funds.
In case of mutual funds scheme with more than 50% in equity, the
dividend distribution tax is not to be paid
9
INVESTMENT IN ELSS:
Investment in specific Equity Saving Schemes, as notified by the
Government of India, are eligible for tax rebate under Section 88, up to a
maximum limit of Rs.10000 on the investment. The rebate is available according
to the taxable income of the investor.
Taxable Income Available IT Rebate Maximum Amount of
Rebate
Up to Rs.10,00,000 30% of the investments
made
Rs.3000
> 1.00 lakh < 1.5 lakh 20% of the investments
made
Rs.2000
> 1.5 lakh 15% of the investments
made
Rs.1500
Investors whose taxable income exceeds Rs.5 lakh are not eligible for any
tax rebates under Section 88.
A mutual fund which is registered under the SEBI (mutual Fund)
Regulation, 1996 is fully exempt from paying tax on its incomes, under section 10
(23D) of the IT Act. Since it is only a pass through entity, income is not taxed in
the hands of the mutual fund.
10
4. RESEARCH METHODOLOGY
INTRODUCTION
Research methodology is a systematic way that solves the research
problem. It may be understood as a science of studying how research is done
scientifically. It is, we study the various steps that are generally adopted by a
researcher in studying the research problem along with the logic behind them. It
is necessary for the researcher to know not only the research methods or
techniques but also methodology. Researcher need to know how to develop the
tests, how to calculate the mean , how to apply research techniques which are
relevant and which not the knowledge of research methodology provides tools to
take things objectively.
4.1 RESEARCH DESIGN
Research design is a plan of action that guides the entire research. There
are four types of research design
a) Exploratory research design
b) Descriptive research design
c) Diagnostic research study
d) Experimental research design
The researcher has adopted Descriptive Research design.
4.2 SAMPLE SIZE
The sample size for the study is 120. It is derived from the universe of
250.
11
4.3 SAMPLING METHOD
The sample design used by the researcher in this study is Systematic
Sampling Method. The list of investors in Equity Linked Saving Scheme given by
HDFC Mutual Funds were assigned with numbers. The even numbers have been
chosen as samples.
4.4 PRE-TESTING
Pre-testing as it is known is a method which has to be followed strictly.
Once questionnaire is drafted it should be field tested before finalizing. The
responses are studied to determine the need for restructuring the questionnaire.
Pre-testing was done on a group of 15 respondents. With the result of the pre-
testing the researcher has reframed some of the questions.
4.5 PERIOD OF STUDY
The period of study is from JANUVARY 2007 to APRIL 2007.
4.6 SOURCES OF DATA
a. Primary Data:
Primary data are generally information gather or generated the researcher
for the purposes of the project immediately at hand. When the data are collected
for the first time, the responsibility rests with the researcher to analyze as well.
Primary data has been collected through a structured questionnaire.
12
b. Secondary Data:
Data that has already been collected for some other purpose, perhaps
processed and subsequently stored, are termed Secondary Data. The main
types of secondary data: Documentary, surveys and those from multiple sources.
Researcher has used all the types of secondary data to solve the problem.The
secondary data for the study has been extracted from text-books, offer
documents, magazines and through websites.
The data that have taken for the study is collected from source are:
Published information and other report of HDFC Mutual fund.
Other published material of mutual fund
Records and information available with the fund manager.
Data and information available with SEBI.
Article and information published in various journals.
Other information necessary for the study has been obtained from various
books, journals etc.
4.7 QUESTIONNAIRE DESIGN
Quite often questionnaire is considered as the heart of survey operation.
Hence it should be very carefully constructed. A questionnaire was prepared with
the combinations of various type of questions which have been listed below. The
number of questions used under each type are 2 Yes/No questions, 11 closed
ended questions, 2 open ended questions and 1 Scaling/Ranking question.
13
4.8 STATISTICAL TOOLS
The various statistical tools used by the researcher for data analysis in this study
are:
PERCENTAGE ANALYSIS
Percentage refers to a special kind of ratio in making comparison between
two or more data and to describe relations between the data. Percentage can
also be used to compare the relative terms, the distribution of two or more series
of data. The formula used here is given below:
Percentage (%) = No. of respondents Total no. of respondents
WEIGHTED AVERAGE
Weighted average means assigning weight standards for the relative
importance of relative item. The weight stands for the relative Importance for
different items.
Weighted average method = ( X1W1+X2W2+X3W3+…….)
N
STEPS:
1. Multiply the weights with variable X and obtain the value ΣWX
2. Divide the total by the sum of weight ΣW
14
CHI-SQUARE TEST:
Chi-square test is an important test among the several tests of
significance developed by statisticians. It is a statistical measure used in the
context of sampling analysis for comparing a variance to a theoretical variance.
The Chi-square is one of the most popular statistical inference procedures
today. With the help of Chi-square test we can find out whether two or more
attributes associated or not.
In order to test whether or not the attributes are associated we can take
null hypothesis that there is no association in the attribute under the study or the
attributes are independent.
If the calculated value of Chi-square test is greater than the table value at
a certain level of significance (generally 5%), we say from results that the
attributes are not associated.
The formula used here is given below:
n
χ² = Σ (O – E )²
i=1 E
Where O = Observed frequency from the cell.
E = Expected frequency from the cell.
E = Row Total* Column Total
Grand Total
Degrees of freedom = (r-1)(c-1)
Where r = Number of rows in the column.
c = Number of columns in the table.
15
ANALYSIS OF VARIANCE (ANOVA)
ANOVA is essentially a procedure for testing the difference among
different groups of data for homogeneity.
ANOVA consists in splitting the variance for analytical purpose. Hence, it
is a method of analyzing the variance to which a response is subject into its
various components corresponding to various sources of variation.
Correction Factor = (T)²
n
Total sum of Squares = ΣX²ij – (T)²
n
Where i = 1,2,3,….
j = 1,2,3,…
Between Sum of Square = Σ (Tj)² - (T)²
nj n
Where j =1,2,3,….
Error Sum of Squares = Total Sum of Squares – Between Sum of Squares.
= ΣXij² - Σ (T)²
nj
where i = 1,2,3,…
j = 1,2,3,…
16
SHARPE’S RATIO:
William F.Sharpe (1966) devised an index of portfolio performance measure. He
assumes that a small investor invests fully in the mutual fund and does not hold
any portfolio to eliminate unsystematic risk and hence demands a premium for
the total risk.
Sp = Rp – Rf
σ p
Where Sp = Sharpe’s Ratio,
Rp = portfolio return,
Rf = risk free return, and
σp = standard deviation of portfolio returns.
The Sp for benchmark portfolio is Rm - Rf/ σm
where σm = standard deviation of market returns.
If Sp of the mutual fund scheme is greater than that of the market portfolio,
the fund has out performed the market.
TREYNOR’S RATIO:
In Treynor’s measure, the risk measure of standard deviation, namely total
risk of the portfolio is replaced by market risk, measured by Beta, which is not
diversifiable. The can be set out as
Tn = Rn-Rf
βn
Where
Tn = Treynor’s measure of evaluation.
Rn = Return on the portfolio,
Rf = risk free rate
βn = Beta of the portfolio as a measure of systematic risk.
The Sharpe’s measure relates a portfolio’s excess return to total risk (as
measured by the standard deviation), while the Trenyor measure relates a
portfolio’s excess return to non-diversifiable or systematic risk (as measured by
the beta coefficient).
17
4.9 SCOPE OF THE STUDY
HDFC has various operations like Banking, Insurance, and Mutual Funds
etc. The scope of this study is restricted to Mutual Fund investors only. It is
confined to customers of HDFC Standard life insurance, mutual funds and
concentrates only on the comparison of ELSS and ULIP.
4.10 LIMITATIONS OF THE STUDY
The edifice of this study entirely stands up on the pillars of information
supplied by the respondents.
Limitations applicable to questionnaire method of research may be applicable
to this study also, such as biased answer, memory access variations, in co-
operative and doubtful approach.
The time for the study was very short.
Secondary data available for comparative analysis is only for the period of
2005-2007.
Due to various factors associated, the information provided by customers has
its own bias.
18
5. DATA ANALYSIS AND INTERPRETATION
The data, after collection, has to be processed and analysed in
accordance with the outline laid down for the purpose at the time of developing
the research plan. This is essential for a scientific study and for ensuring that we
have all relevant data for making contemplated comparisons analysis.
Technically speaking, processing implies editing, coding, classification and
tabulation of collected data, so that they are amenable to analysis.
The term ‘analysis’ refers to the computation of certain measures along
with searching for patterns of relationship that exist among data groups-thus, “ in
the process of analysis, relationships or differences supporting or conflicting with
original or new hypothesis should be subjected to statistical tests of significance
to determine with that validity data can be said to indicate any conclusions.
19
TABLE-1
AGE OF RESPONDENTS
AGE NO.OF RESPONDENTS PERCENTAGE20-30 26 21.6731-40 34 28.3341-50 39 32.5>50 21 17.5
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 32.5% are in the age group of 41-50,
28.33 % of are in the age group of 31-40, 21.67 % of respondents are in the age
group 0f 20-30 and 17.5 % 0f respondents are in the age group of above 50.
CHART1
20
TABLE-2
EDUCATION LEVEL OF RESPONDENTS
QUALIFICATION NO OF RESPONDENTS PERCENTAGESSLC 8 6.67+2 20 16.67GRADUATION 54 45POST GRADUATION 38 31.67
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 45% of respondents are Graduates,
31.67 % of respondents are Post Graduates,16.67% of respondents are +2 and
6.67 % of respondents are SSLC.
CHART2
21
TABLE-3
OCCUPATION OF RESPONDENTS
OCCUPATION NO OF RESPONDENTS PERCENTAGEIT 25 20.83MANUFACTURING(PVT) 18 15SELF EMPLOYMENT 24 20GOVT SECTOR 13 10.83OTHERS 40 33.33
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 20.83% of respondents are from IT
sector, 15 % of respondents are from Manufacturing & private sector, 20 % of
respondents are from Self Employment, 10.83 % of respondents are from Govt
Sector and 33.33% are from Others category.
CHART 3
22
TABLE -4
MONTHLY INCOME OF RESPONDENTS
MONTHLY INCOME NO OF RESPONDENTS PERCENTAGEBELOW 20000 56 46.6720-50000 38 31.6750-80000 14 11.67ABOVE 80000 12 10
TOTAL 120 100
INFERENCE:
From the above table , it is clear that 46.67 % of the respondents have
income level of below Rs.20000 per month, 31.67 % of the respondents have
income level between 20 to 50000 per month, 11.67 %of the respondents have
income level between 50 to 80000 and 10 % of the respondents have income
level above 80000 per month.
CHART 4
23
TABLE-5
AVENUES OF INVESTMENT
OPTIONS NO OF RESPONDENTS PERCENTAGEMUTUAL FUNDS 22 18.33INSURANCE 24 20SHARES 22 18.33DEPOSITS 19 15.83REAL ESTATE 10 8.33OTHERS 23 19.16
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 20 % of respondents preferred
Insurance, 19.16 % for others, 18.33 % of the respondents invested in Mutual
Funds, 18.33 % for shares, 15.83 for deposits and 8.33 % for Real Estate.
CHART 5
AVENUES OF INVESTMENT
24
TABLE-6
REASONS FOR INVESTMENT
REASONS NO OF RESPONDENTS PERCENTAGERISK FREE 20 16.67HIGH RETURN 32 26.67SECURE 22 18.33BETTER MARGIN 28 23.33INTEREST 18 15
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 26.67 % of the respondents opt for
High return, 23.33 % opt for Better margin,18.33 % of the respondents opt for
Secure 16.67 % of the respondents opt for Risk free investment and 15 % opt for
Interest.
CHART 6
25
TABLE-7
AWARENESS OF TAX SAVING SCHEMES
OPTIONS NO.OF RESPONDENTS PERCENTAGEYES 87 72.5NO 33 27.5
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 72.5 % of the respondents are aware
of Tax saving schemes and 27.5 % of the respondents are not aware of Tax
saving schemes.
CHART 7
26
TABLE-8
SCHEME PREFERRED BY INVESTORS IN TERMS OF TAX SAVINGS
OPINION NO OF RESPONDENTS PERCENTAGEELSS 38 31.67ULIP 23 19.16OTHERS 37 30.83NIL 22 18.33
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 31.67 % of the respondents consider
that ELSS is better Tax saving scheme, 30.83 % of respondents consider Others,
19.16 % of respondents consider ULIP as better Tax saving scheme and 18.33%
of respondents consider Nil.
CHART 8
27
TABLE – 9
REASONS FOR CHOOSING PARTICULAR INVESTMENT
SCHEMES NO OF RESPONDENTS PERCENTAGETAX BENEFIT 29 24.16FUTURE EXPECTATIONS
28 23.333
PERFORMANCE 14 11.67LIQUIDITY 23 19.16SAVING THE SURPLUS 26 21.67
TOTAL 120 100
INFERENCE:
From the above table it is clear that 24.16 % of respondents have chosen
a particular investment for the purpose of Tax Benefit, 23.33% of respondents
opt because of Future Expectations, 21.67 % of respondents have chosen for the
purpose of saving their surplus, 19.16 % on the basis of Liquidity and 11.67 % of
respondents choose in terms of Performance.
CHART 9
28
TABLE - 10
RISK TAKING CAPACITY OF INVESTORS
OPINION NO OF RESPONDENTS PERCENTAGEHIGH RISK HIGH RETURN
42 25
MODERATE RISK MODERATE RETURN
57 47.5
LOW RISK LOW RETURN
21 17.5
TOTAL 120 100
INFERENCE:
From the above table it is clear that, 47.5 % of the respondents are opt for
Moderate Risk Moderate Return, 25 % of the respondents opt for High Risk High
Return and 17.5 % of respondents opt for Low Risk Low Return.
CHART - 10
29
TABLE – 11
PREFERRED TENURE OF INVESTMENT
OPTION NO OF RESPONDENTS PERCENTAGESHORT TERM 32 26.67MID TERM 54 45LONG TERM 34 28.33
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 45 % of the respondents preferred for
Mid term investment, 28.33 % of respondents preferred to Long term investment
and 26.67% of respondents preferred Short term investment.
CHART – 11
30
TABLE-12
LEVEL OF RETURN EXPECTED
OPINION NO OF RESPONDENTS PERECENTAGELESS THAN 10 % 11 9.16711 – 15 % 32 26.6715 – 20 % 36 30ABOVE 20 % 41 34.167
TOTAL 120 100
INFERENCE:
From the above table it is clear that 34.167 % of respondents expect
above 20 % of return, 30 % 0frespondents expect 15 – 20 % of returns, 26.67 %
of respondents expect 11- 15 % of returns and 9.167 % of respondents expect
less than 10 % of return.
CHART - 12
31
TABLE – 13
SATISFACATION TOWARDS PERFORMANCE OF TAX SAVING SCHEME
OPINION NO OF RESPONDENTS PERCENTAGEYES 83 69.17NO 37 30.83
TOTAL 120 100
INFERENCE:
From the above table it is clear that 69.17% of respondents are satisfied
with the performance of Tax Saving Scheme and 30.83 % of the respondents are
not satisfied.
CHART - 13
SATISFACTION TOWARDS PERFORMANCE
32
TABLE - 14
FACTORS TO BE GIVEN IMPORTANCE BY HDFC
OPINION NO OF RESPONDENTS PERCENTAGECUSTOMER SATISFACTION
17 18.33
PRODUCT PERFORMANCE
29 43.33
CREATING AWRENESS 24 28.33COMPETING THE RIVALS
21 9.16
OTHERS 29 24.16TOTAL 120 100
INFERENCE:
From the above table it is clear that, 43.33 % of respondents are of
opinion that Product performance should be given importance, 28.33 % of
respondents feel that importance should be given to Creating Awareness, 24.16
33
% of respondents opt for others, 18.33 % of the respondents insist Customer
satisfaction and 9.16 % is on the opinion of competing the rivals.
CHART - 14
TABLE – 15
SATISFACTION LEVEL OF RESPONDENTS
OPINION NO OF RESPONDENTS PERCENTAGEVERY GOOD 22 18.33GOOD 52 43.33MEDIUM 34 28.33BAD 11 9.16VERY BAD 1 0.83
TOTAL 120 100
INFERENCE:
From the above table, it is clear that 43.33 % of respondents feel HDFC
Mutual Funds is good, 28.33 % of feels that is medium, 18.33 % of respondents
feels that it is very good, 9.16 % of respondents feels it is bad and 0.83 % of
respondents feels it is very bad.
34
CHART - 15
CALCULATION OF RETURNS FOR HDFC – TAX SAVER (ELSS)
DATE NAVAVERAGE RETURN
SENSEXAVERAGE
BENCHMARK RETURN
31/1/2005 63.41 1768.2531/1/2006 116.56 83.81958682 2585.95 46.2434610531/1/2007 146.13 25.36890872 3393.1 31.21290048
AVERAGE RETURN 54.59425RISK 41.33087
SHARPE'S INDEX 1.199932BETA 219.6366 112.9588755 1.944394
TREYNOR'S INDEX 25.50627AVE BENCHMARK
RETURN38.72818
Average Return = Total Return n = 83.81+25.36/2 = 54.59
Risk = Standard Deviation (σ) of Average Return = STDEV (54.59) = 41.33
Average Benchmark Return = Total Benchmark Return n
35
= 46.24+31.21/ 2 = 38.72
Sharpe’s Index = Average Return – Risk Free Rate Total Risk (σ) = 54.59 – 5 41.33 =1.19
Beta (β) = Covariance of Average Benchmark Return and Average Return = Covariance (46.24:31.21, 83.81:25.36) = 1.94
Treynor’s Index = Average Return – Risk Free Rate Beta (β) = 54.29 – 5 1.94 = 25.
CALCULATION OF RETURNS OF PRUDENTIAL ICICI – TAX PLAN (ELSS)
DATE NAVAVEARGE RETURN
SENSEXAVERAGE
BENCHMARK RETURN31/1/2005 44.06 2057.131/1/2006 76.27 73.10485701 3001.1 45.8898449331/1/2007 93.75 22.91857873 4082.7 36.04011862
AVERAGE RETURN 48.01172RISK 35.48706
SHARPES INDEX 1.21204BETA 123.5803 48.50855413 2.547598
TREYNORS INDEX 16.88325AVE BENCHMARK
RETURN40.96498
Average Return = Total Return N = 73.10+22.91/ 2 = 48.01 Risk = Standard Deviation (σ) of Average Return. =STDEV(48.01) = 35.48
Average Benchmark Return = Total Benchmark Return
36
n = 45.88 + 36.04 / 2 = 40.96
Sharpe’s Index = Average Return – Risk Free Rate Total Risk (σ) = 48.01- 5 35.48 = 1.21
Beta (β) = Covariance of Average Benchmark Return and Average Return = Covariance (45.88:36.04, 73.10:22.91) = 2.54
Treynor’s Index = Average Return – Risk Free Rate Beta (β) = 48.11 - 5 2.54 = 16.88
CALCULATION OF RETURNS OF FRANKLIN TEMPLETON TAX SHIELD (ELSS)
FRANKLIN TEMPLETON MF-TAX SHIELD
DATE NAVAVEARGE RETURN
SENSEXAVERAGE BENCHMARK
RETURN31/1/2005 65.48 1768.2531/1/2006 106.32 62.37018937 2585.9 46.2406333931/1/2007 130.01 22.28179082 3393.1 31.21543757
AVERAGE RETURN 42.32599RISK 28.34678
SHARPES INDEX 1.316763BETA 150.584 112.8782549 1.334039
TREYNORS INDEX 27.97968AVE BENCHMARK
RETURN38.72804
Average Return = Total Return n = 62.37 + 22.28 / 2 = 42.32
Risk = Standard Deviation (σ) of Average Return. = STDEV (42.32) =28.34
Average Benchmark Return = Total Benchmark Return n
37
= 46.24 + 31.21 / 2 = 38.72
Sharpe’s Index = Average Return – Risk Free Rate Total Risk (σ) = 42.32 – 5 28.34 = 1.316
Beta (β) = Covariance of Average Benchmark Return and Average Return = Covariance (46.24:31.21, 62.37:22.28) =1.33
Treynor’s Index = Average Return – Risk Free Rate Beta (β) = 42.32 – 5 1.33 = 27.9
CALCULATION OF RETURNS OF SUNDARAM BNP PARIBAS TAX SAVER (ELSS)
DATE NAVAVEARGE RETURN
SENSEXAVERAGE BENCHMARK
RETURN31/1/2005 13.3806 868.7631/1/2006 22.9837 71.7688295 1251.26 44.0282701831/1/2007 28.5725 24.31636334 1691.45 35.17973882
AVERAGE RETURN 48.0426RISK 33.55396
SHARPES INDEX 1.282787BETA 104.9712 39.14825357 2.681375
TREYNORS INDEX 16.05243AVE BENCHMARK
RETURN39.604
Average Return = Total Return n = 71.76 + 24.31 / 2 = 48.04
Risk = Standard Deviation (σ) of Average Return. = STDEV (48.04) = 33.55
Average Benchmark Return = Total Benchmark Return n
38
= 44.02 + 35.17 2 =39.604
Sharpe’s Index = Average Return – Risk Free Rate Total Risk (σ) = 48.04 – 5 33.5 = 1.28
Beta (β) = Covariance of Average Benchmark Return and Average Return = Covariance (44.02:35.17,71.76:24.31) = 2.68
Treynor’s Index = Average Return – Risk Free Rate Beta (β)
= 48.04 – 5 2.68 = 16.05
CALCULATIONS OF RETIURNS OF BIRLA SUNLIFE – TAX RELIEF (ELSS)
DATE NAVAVEARGE RETURN
SENSEXAVERAGE BENCHMARK
RETURN31/1/2005 126.4 868.7631/1/2006 188.78 49.35126582 1251.26 44.0282701831/1/2007 150.37 -20.346435 1691.45 35.17973882
AVERAGE RETURN 14.50242RISK 49.28372
SHARPES INDEX 0.19281BETA 154.1806 39.14825357 3.938377
TREYNORS INDEX 2.412775AVE BENCHMARK
RETURN39.604
Average Return = Total Return n = 49.35 + -20.34 = 14.50
Risk = Standard Deviation (σ) of Average Return = STDEV (14.50) =49.28
Average Benchmark Return = Total Benchmark Return n = 44.02 + 35.17
39
= 39.60
Sharpe’s Index = Average Return – Risk Free Rate Total Risk (σ) = 14.50 – 5 49.28 = 0.19
Beta (β) = Covariance of Average Benchmark Return and Average Return = Covariance (44.02:35.17,49.35:-20.34) = 3.93 Treynor’s Index = Average Return – Risk Free Rate Beta (β) = 14.50 – 5 3.93 = 2.41
CALCULATION OF RETURNS OF AVIVA - ULIP
DATE NAVAVEARGE RETURN
SENSEXAVERAGE BENCHMARK
RETURN31/1/2005 20.449 1768.2531/1/2006 25.709 25.72252922 2585.95 46.2434610531/1/2007 30.295 17.83811117 3393.1 31.21290048
AVERAGE RETURN 21.78032RISK 5.575125
SHARPES INDEX 3.009855BETA 29.62681 112.9588755 0.26228
TREYNORS INDEX 63.97875AVE BENCHMARK
RETURN38.72818
Average Return = Total Return n = 25.72 + 17.83 / 2 = 21.78
Risk = Standard Deviation (σ) of Average Return. = STDEV (21.78) = 5.57
Average Benchmark Return = Total Benchmark Return n
40
= 46.24 + 31.21 = 38.72
Sharpe’s Index = Average Return – Risk Free Rate Total Risk (σ) = 21.78 – 5 5.57 = 3.009
Beta (β) = Covariance of Average Benchmark Return and Average Return = Covariance (46.24:31.21,25.72:17.83) = 0.26
Treynor’s Index = Average Return – Risk Free Rate Beta (β) = 21.78 – 5 0.26 =63.97
CALCULATIONS OF RETURNS OF MAX NEWYORK LIFE - ULIP
DATE NAVAVEARGE RETURN
SENSEXAVERAGE BENCHMARK
RETURN31/1/2005 11.13 2057.631/1/2006 15.37 38.0952381 3001.1 45.8543934731/1/2007 19.32 25.69941444 4082.7 36.04011862
AVERAGE RETURN 31.89733RISK 8.765171
SHARPES INDEX 3.06866BETA 30.41401 48.15999537 0.63152
TREYNORS INDEX 42.5914AVE BENCHMARK
RETURN40.94726
Average Return = Total Return N = 38.09 + 25.69 / 2 = 31.89
Risk = Standard Deviation (σ) of Average Return. = STDEV (31.89) = 8.76
Average Benchmark Return = Total Benchmark Return n = 45.85 + 36.04
41
2 = 40.94
Sharpe’s Index = Average Return – Risk Free Rate Total Risk (σ) = 31.89 – 5 8.76
= 3.08
Beta (β) = Covariance of Average Benchmark Return and Average Return = Covariance (45.85:36.04, 38.09:25.69) =0.63
Treynor’s Index = Average Return – Risk Free Rate Beta (β) = 31.89 – 5 0.63 = 42.59
CALCULATION OF RETURNS OF KOTAK – ULIP
DATE NAVAVEARGE RETURN
SENSEXAVERAGE BENCHMARK
RETURN31/1/2005 14.365 2057.631/1/2006 17.875 24.43438914 3001.1 45.8543934731/1/2007 22.063 23.42937063 4082.7 36.04011862
AVERAGE RETURN 23.93188RISK 0.710655
SHARPES INDEX 26.64003BETA 2.465882 48.15999537 0.051202
TREYNORS INDEX 369.7498AVE BENCHMARK
RETURN40.94726
Average Return = Total Return n = 24.43 + 23.42 / 2 = 23.93
Risk = Standard Deviation (σ) of Average Return. = STDEV (23.93) = 0.71
Average Benchmark Return = Total Benchmark Return n = 45.85 + 36.04 / 2 = 40.94
42
Sharpe’s Index = Average Return – Risk Free Rate Total Risk (σ) = 23.93 – 5 0.71 = 26.64
Beta (β) = Covariance of Average Benchmark Return and Average Return = Covariance (45.85:36.04, 24.43:23.42) =0.051
Treynor’s Index = Average Return – Risk Free Rate Beta (β) = 23.93 – 5 0.051 = 369.74CALCULATION OF RETURNS FOR ICICI – ULIP
DATE NAVAVEARGE RETURN
SENSEXAVERAGE BENCHMARK
RETURN31/1//2005 24.64 868.7631/1/2006 35.53 44.19642857 1251.26 44.0282701831/1/2007 47.21 32.87362792 1691.45 35.17973882
AVERAGE RETURN 38.53503RISK 8.006429
SHARPES INDEX 4.188512BETA 25.04754 39.14825357 0.639812
TREYNORS INDEX 52.41384AVE BENCHMARK
RETURN39.604
Average Return = Total Return N = 44.19 + 32.87 / 2 =38.53 Risk = Standard Deviation (σ) of Average Return. = STDEV (38.53) =8.006
Average Benchmark Return = Total Benchmark Return n = 44.02 + 35.17 2 = 39.60
Sharpe’s Index = Average Return – Risk Free Rate
43
Total Risk (σ) = 38.53 – 5 8.006 = 4.188
Beta (β) = Covariance of Average Benchmark Return and Average Return = Covariance (44.04:35.17,44.19:32.87) = 0.63
Treynor’s Index = Average Return – Risk Free Rate Beta (β) = 38.33 – 5 0.63
= 52.41
CALCULATION OF RETURNS FOR HDFC - ULIP
DATE NAVAVEARGE RETURN
SENSEXAVERAGE BENCHMARK
RETURN31/1/2005 25.3679 2057.631/1/2006 41.0626 61.86834543 3001.1 45.8543934731/1/2007 54.2531 32.12290503 4082.7 36.04011862
AVERAGE RETURN 46.99563RISK 21.0332
SHARPES INDEX 1.996635BETA 72.98248 48.15999537 1.515417
TREYNORS INDEX 27.71225AVE BENCHMARK
RETURN40.94726
Average Return = Total Return n = 61.86 + 32.12 / 2 = 46.99
Risk = Standard Deviation (σ) of Average Return. = STDEV (46.99) = 21.03
Average Benchmark Return = Total Benchmark Return n = 45.85 + 36.04 2 = 40.94
Sharpe’s Index = Average Return – Risk Free Rate
44
Total Risk (σ) = 46.99 – 5 21.03 = 1.99
Beta (β) = Covariance of Average Benchmark Return and Average Return = Covariance (45.85:36.04, 61.86:32.12) = 1.51
Treynor’s Index = Average Return – Risk Free Rate Beta (β) = 46.99 – 5 1.51 = 27.71
TABLE OF SHARPE’S RATIO
FUNDAVERAGE RETURN
RISK FREE RATE
STANDARD DEVIATION
SHARPE’S INDEX
RANKS
HDFC 54.59 0.05 41.33 1.19 4PRUDENTIAL ICICI
48.01 0.05 35.48 1.21 3
FRANKLIN TEMPLETON
42.32 0.05 28.34 1.31 1
SUNDARAM BNP PARIBAS
48.026 0.05 33.55 1.28 2
BIRLA SUNLIFE
14.50 0.05 49.28 0.19 5
ULIPAVERAGE RETURN
RISK FREE RATE
STANDARD DEVIATION
SHARPE’S INDEX
RANKS
AVIVA 21.78 0.05 5.57 3.009 4
MAX NEW YORK LIFE
31.89 0.05 8.76 3.06 3
KOTAK 23.93 0.05 0.71 26.64 1ICICI 38.53 0.05 8.06 4.18 2HDFC 46.99 0.05 21.03 1.99 5
INFERENCE:
Larger the sharpe index better the fund has performed. Thus in ELSS,
Franklin Templeton ranked as better fund as its index is 1.31. Then, Sundaram
45
follows as its index is 1.28, then Prudential ICICI as 1.21, HDFC as 1.19 and
Birla Sunlife as 0.19.
In ULIP Kotak ranked as better plan as its index is 26.64, then ICICI
follows to it as its index is 4.18, then Max New York Life ranked as its index is
3.06, AVIVA follows next as 3.009 and then HDFC ranked as its index is 1.99.
The inference shows that sharpe index in ULIP shows higher value than
ELSS. This is because of the ULIP’s lesser risk than ELSS. At the same time the
expenses incurred in ULIP is quite higher than ELSS which may result a different
solution.
INFERENCE ON TREYNOR’S INDEX
FUNDAVERAGE RETURN
BETARISK FREE RATE
TREYNOR’S INDEX
RANKS
HDFC 54.59 1.94 0.05 25.50 2PRUDENTIAL ICICI
48.01 2.54 0.05 16.88 3
FRANKLIN TEMPLETON
42.32 1.33 0.05 27.97 1
SUNDARAM BNP PARIBAS
48.026 2.68 0.05 16.05 4
BIRLA SUNLIFE
14.50 3.93 0.05 2.41 5
ULIPAVERAGE RETURN
BETARISK FREE RATE
TREYNOR’S INDEX
RANKS
AVIVA 21.78 0.26 0.05 63.97 2MAX NEW YORK
31.89 0.63 0.05 42.59 4
KOTAK 23.93 0.05 0.05 369.74 1ICICI 38.53 0.63 0.05 52.41 3HDFC 46.99 1.51 0.05 27.17 5
INFERENCE:
Treynor’s Ratio relates a portfolio’s excess return to non-diversifiable or
systematic risk (as measured by beta coefficient). In case of ELSS Franklin
Templeton holds the first rank, in case of HDFC its portfolio is perfectly
46
diversified as the two measures gives identical rankings, Prudential ICICI holds
third rank, Sundaram BNP Paribas holds fourth rank and Birla holds the fifth. In
case of ULIP Kotak holds first rank, Aviva holds the second, ICICI holds the third
Max New York Life holds fifth and HDFC holds the fifth rank.
Based on the above calculations as both Sharpe’s and Treynor’s ratio are
considered ELSS portfolios are perfectly diversified
47
WEIGHTED AVERAGE
Weighted Average Method – 1
The following is a weighted average rating method used to find the level of
satisfaction with HDFC mutual funds given by the respondents.
WEIGHTED AVERAGE OF SATISFACTION LEVEL TOWARDS HDFC MUTUAL FUNDS
OptionsNo. of
Respondents (X)Weights (X) (W) (X)
Very Good 22 1 22Good 52 2 104
Medium 34 3 102Bad 11 4 44
Very Bad 1 5 5TOTAL 120 277
Xw = ΣWX = 277 ΣW 120
=2.3
Weighted average for the option Good = 2
INFERENCE:
On the average the customers are satisfied with HDFC Mutual Funds.
48
Weighted Average Method – 2
The following weighted average analysis was done to find opinion on
priority about the preferred Investment Alternative.
RankPreference
R1(X1) R2(X2) R3(X3) R4(X4) R5(X5) R6(X6) R7(X7)
Mutual Funds
19 26 24 21 21 4 5
Share Market
21 20 22 22 13 12 10
Bonds 14 15 26 20 19 12 10Deposits 30 35 13 20 14 4 4P.O.Savings 10 10 4 14 14 33 35Insurance 19 10 25 10 24 19 13Derivatives 8 3 3 14 13 36 43
XW = ΣWX / ΣW
Mutual Funds = (19 x 7) + (26 x 6) + (24 x 5) + (21 x 4) + (21 x 3) + (4 x 2) + (5 x 1) / 28
= 569 / 28 = 20.32
Share Market = (21 x 7) + (20 x 6) + (22 x 5) + (22 x 4) + (13 x 3) + (12 x 2) + (10 x 1/ 28
= 598 / 28 = 21.35
Bonds = (14 x 7) + (15 x 6) + (26 x 5) + (20 x 4) + (19 x 3) + (12 x 2) + (10 x 1) /28
= 489 / 28 = 17.46
Deposits = (30 x 7) + (35 x 6) + (13 x 5) + (20 x 4) + (14 x 3) + (4 x 2) + (4 x 1) / 28
= 619 / 28 = 22.10
49
Post Office = (10 x 7) + (10 x 6) + (4 x 5) + (14 x 4) + (14 x 3) + (33 x 2) Savings + (35 x 1) / 28 = 349 / 28 = 12.46
Insurance = (19 x 7) + (10 x 6) + (25 x 5) + (10 x 4) + (24 x 3) + (19 x 2) + (13 x 1) / 28
= 481 / 28 = 17.17
Derivatives = (8 x 7) + (3 x 6) + (3 x 5) + (14 x 4) + (13 x 3) + (36 x 2) + (43 x 1) / 28
= 299 / 28 = 10.6
Analysis:
To find out the major preference of Investment Alternatives by the respondents.
Investments Weightage RankMutual Funds 20.3 3Share Market 21.4 2Bonds 17.5 4Deposits 22.1 1Post Office Savings 12.5 6Insurance 17.2 5Derivatives 10.6 7
INFERENCE:
From the above table it is clear that Deposits holds the first rank, Share
Market holds second rank, Mutual Funds holds third rank, Bonds holds fourth
rank, Insurance holds fifth rank, Post Office Savings holds sixth rank and
Derivatives holds seventh rank.
50
CHI-SQUARE ANALYSIS
Chi-Square Test-1
Chi-Square test to find the relationship between nature of investment and choice
of schemes.
HYPOTHESIS
Null Hypothesis (Ho):
There is no significant relationship between the nature of investment and choice
of schemes.
Alternate Hypothesis (H1):
There is significant relationship between the nature of investment and choice of
schemes.
Observed Frequencies:
SchemesInvestment
ELSS ULIP Others Nil TOTAL
Mutual Fund
8 3 7 4 22
Insurance 5 4 9 6 24Shares 4 4 8 6 22Deposits 11 3 2 3 19Real Estate 1 1 6 2 10Others 7 7 7 2 23
TOTAL 36 22 39 23 120 Expected Frequencies:
6.6 4.03 7.15 3.737.2 3.52 7.8 4.66.6 4.03 7.15 3.735.7 3.48 6.18 3.643 1.83 3.25 1.926.9 4.22 7.48 4.4
51
X² TABLE:Oi Ei (Oi – Ei) (Oi – Ei)² (Oi – Ei)² / Ei8 6.60 1.40 1.96 0.293 4.03 -1.03 1.06 0.267 7.15 -0.15 0.0225 0.0034 3.37 0.63 0.40 0.1175 7.20 -2.20 4.84 0.674 3.52 0.48 0.23 0.0659 7.80 1.20 1.44 0.1846 4.60 1.40 1.96 0.424 6.60 -2.60 6.76 1.024 4.03 -0.03 0.0009 0.000228 7.15 0.85 0.73 0.1016 3.37 2.63 6.92 2.052
11 5.70 5.30 28.09 4.933 3.48 -0.48 0.23 0.0662 6.18 4.18 17.47 2.823 3.64 -0.64 0.409 0.1121 3.00 -2.00 4.00 1.331 1.83 -0.83 0.68 0.3726 3.25 2.75 7.56 2.332 1.92 0.08 0.0064 0.00337 6.90 0.10 0.01 0.00147 4.22 2.78 7.73 1.837 7.42 -0.42 0.18 0.0232 4.41 -2.41 5.80 1.315
TOTAL 20.309
Now X² = Σ (Oi-Ei)² / Ei
(i.e.,) Calculated X² = 20.309
Degrees of Freedom = (r-1) (c-1)
= (4-1) (6-1) = 15.
The tabulated value of X² at 15 degrees of 0.05 level of significance is 24.309.Calculated value = 20.309Tabulated value = 24.906. 20.309 < 24.906
Calculated value is less than the tabulated value. Hence the Null Hypothesis is accepted.
INFERENCE: There is no relationship between nature of investment and choice of schemes.
52
Chi-Square Test – 2
Chi-Square test to find out the relationship among awareness of
customers and qualification of respondents.
HYPOTHESIS
Null Hypothesis (Ho):
There is no significant relationship among awareness of customers and
qualification of respondents.
Alternate Hypothesis (H1):
There is significant relationship among awareness of customers and qualification
of respondents.
Observed Frequencies:
QualificationAwareness
SSLC +2 UG PG TOTAL
Yes 5 17 39 24 85No 4 3 15 13 35TOTAL 9 20 54 37 120
Expected Frequencies:
6.375 14.17 38.25 26.202.63 5.83 15.75 10.791
X² TABLE
Oi Ei (Oi-Ei) (Oi-Ei)² (Oi-Ei)² / Ei5 6.38 -1.37 1.88 0.29417 14.17 2.84 8.06 0.56939 28.25 0.75 0.56 0.01524 26.20 -2.2 4.84 0.1854 2.63 1.37 1.88 0.7153 5.83 -2.83 8.008 1.37315 15.75 -0.75 0.56 0.03613 10.79 2.21 4.88 0.452TOTAL 3.639
53
Now X² = Σ(Oi-Ei)² / Ei
(i.e.,) Calculated X² = (r-1) (c-1)
=(2-1) (4-1)
= 3.
The tabulated value of X² at 3 degrees of 0.05 level of significance is 7.815.
3.639 < 7.815
The calculated value is less than the tabulated value. Hence the Null Hypothesis
is accepted.
INFERENCE:
There is no significant relationship among awareness of customers and
qualification of respondents.
54
Chi-Square Test – 3
Chi-Square test to find the relationship between drawbacks in promoting
products and choice of investment.
HYPOTHESIS
Null Hypothesis (Ho):
There is no significant relationship between reasons to influence decision of
investors and range of income.
Alternate Hypothesis (H1):
There is significant relationship between reasons to influence decision of
investors and range of income.
Observed Frequencies:
PreferenceIncome
Risk Free
High Return
SecureBetter Margin
Interest TOTAL
< 20000 8 16 8 13 11 5620-50000 5 12 7 9 5 3850-80000 3 2 5 2 2 14> 80000 3 3 2 3 1 12
TOTAL 19 33 22 27 19 120
Expected Frequencies:
8.87 15.4 10.27 12.6 8.876.01 10.45 6.97 8.55 6.012.22 3.85 2.57 3.15 2.211.90 3.3 2.2 2.7 1.90
55
X² TABLE
Oi Ei (Oi-Ei) (Oi-Ei)² (Oi-Ei)² / Ei8 8.87 -0.87 0.76 0.578
16 15.4 0.6 0.36 0.0238 10.27 -2.27 5.15 0.501
13 12.6 0.4 0.16 0.01211 8.87 2.13 4.54 0.5115 6.02 -1.016 1.03 0.172
12 10.45 1.85 3.42 0.337 6.97 0.03 0.0009 0.000139 8.55 0.45 0.203 0.0245 6.02 -1.016 1.32 1.1713 2.22 0.783 0.613 0.282 3.85 -1.85 3.42 0.895 2.57 2.43 5.90 2.32 3.15 -1.15 1.32 0.422 2.22 -0.217 0.047 0.023 1.9 1.1 1.21 0.643 3.3 -0.3 0.09 0.0272 2.2 -0.2 0.04 0.0183 2.7 0.3 0.09 0.0331 1.9 -0.9 0.81 0.43
TOTAL 8.38 Now X² = Σ (Oi-Ei)² / Ei
(i.e.,) Calculated value X² = 8.38
Degrees of Freedom = (r-1) (c-1)
=(4=1) (5-1)
= 12.
The tabulated value of X² at 12 degrees of 0.05 level of significance is 21.026Calculated value = 8.38
Tabulated value = 21.026
8.38 < 21.026 Calculated value is less than the tabulated value. Hence the Null Hypothesis is
accepted.
INFERENCE
56
There is no significant relationship between reasons to influence decision
of investors and range of income
ANOVA
The following is an Analysis of variance done to find the relation between
the range of income and risk taking capacity.
HYPOTHESIS
Null Hypothesis (Ho):
There is no significant relationship between the range of income and risk taking
capacity.
Alternate Hypothesis (H1):
There is significant relationship between the range of income and risk taking
capacity.
X1 X2 X3 X²1 X ²2 X²314 29 11 196 841 12120 14 4 400 196 164 8 2 16 64 44 8 2 16 64 442 59 19 628 1165 145
Step :1: T = Σx ; = 42 + 59 + 19 = 120
Step :2 : CF(correction factor)= T²/n = (120)²/12 = 1200.
Step :3 : Total Sum of Squares (TSS) = Σxi²- CF
= (628 + 1165 + 145) – 1200
= 1938 – 1200
= 738.
Step :4 : Between Sum of Squares (BSS)= [(42)² + (59)² + (19)² ] - CF
4 4 4
= (441 + 870.25 + 90.25 ) – 1200.
= 201.5
Step :5 : Error Sum of Squares (ESS) = TSS - BSS
57
= 738 – 201.5
= 536.5.
Source Degree of Freedom
Sum of Squares
Mean Sum of Squares
F ratio
BSS 201.5 3 – 1= 2 201.5 / 2= 100.75
F = 100.75 / 59.61= 1.69
ESS 536.5 12 – 3 = 9 536.5 / 9= 59.61
The calculated value F = 1.69
Degree of Freedom r 1 = 2 ; r 2 = 9
Level of Significance = 5 % = 0.05
(i.e.,) Tabulated value F2,9,0.05 = 4.26.
1.69 < 4.26
The calculated value is less than the tabulated value. Hence the Null Hypothesis
is accepted.
INFERENCE
There is no significant relationship between the range of income and risk
taking capacity.
The following is an Analysis of variance done to find the relation between
the range of income and risk taking capacity.
HYPOTHESIS
Null Hypothesis (Ho):
There is no significant relationship between drawbacks in promoting products
and choice of investment.
Alternate Hypothesis (H1):
There is significant relationship between drawbacks in promoting products and choice of
investment.
X1 X2 X3 X4 X5 X6 X1² X2² X3² X4² X5² X6²
3 3 5 3 - 3 9 9 25 9 - 9
58
3 9 3 5 3 6 9 81 9 25 9 36
5 3 4 3 4 5 25 9 16 9 16 25
6 2 3 5 - 5 36 4 9 25 - 25
6 7 6 4 2 4 36 49 36 16 4 16
23 24 21 20 9 23 115 152 95 84 29 111
Step :1: T = Σx ; =23 + 24 + 21 + 20 + 9 + 23 = 120
Step :2 : CF(correction factor)= T²/n = (120)²/12 = 1200.
Step :3 : Total Sum of Squares (TSS) = Σxi²- CF
= (628 + 1165 + 145) – 1200
= 1938 – 1200
= 738.
Step :4 : Between Sum of Squares (BSS)= [(42)² + (59)² + (19)² ] - CF
4 4 4
= (441 + 870.25 + 90.25 ) – 1200.
= 201.5
Step :5 : Error Sum of Squares (ESS) = TSS - BSS
= 738 – 201.5
= 536.5.
Source Degree of Freedom
Sum of Squares
Mean Sum of Squares
F ratio
BSS 201.5 3 – 1= 2 201.5 / 2= 100.75
F = 100.75 / 59.61= 1.69
ESS 536.5 12 – 3 = 9 536.5 / 9= 59.61
The calculated value F = 1.69
Degree of Freedom r 1 = 2 ; r 2 = 9
Level of Significance = 5 % = 0.05
(i.e.,) Tabulated value F2,9,0.05 = 4.26.
6. FINDINGS OF THE STUDY
59
It is found that 72.5% of the investors in ELSS were male.
Most of the respondents monthly income is less than Rs.20000. [46.67%]
33 % of the respondent’s are fall under Other’s category and then from IT
sector 20.83 % and Self employment 20 %.
Among the respondents, 45% of the respondents have completed their under
graduation.
20% of the respondents invest in Insurance normally.
It is found that the majority of the respondents who invested in mutual funds
are under the age group between 41-50. (32.5%)
Most of the respondents have been influenced by the high return to choose a
particular investment.
Majority of the respondents are aware of tax saving schemes.
Among all respondents, it is found that 31.67% of the respondents consider
Equity linked saving scheme to be performing better.
It is found that, 24.16% of the respondents have chosen the investment for
the purpose of tax saving while 23.33% of the respondents have chosen in
anticipation of future expectations.
47.5% of the respondents are willing to take only moderate risk with respect
to their investment.
It is found that 34.17% of the respondents expect more than 20% of return.
60
Among it is found that 45% of the respondents prefer to go for mid-term
investments.(i.e.) 3 years to 5 years.
69.17 % of the respondents are satisfied with the performance of tax saving
scheme.
Majority of the respondents have chosen deposits as the preferred avenue of
investment.
43.33 % of respondents are of opinion that product performance should be
given more importance.
Among the respondents 43.33 % of respondents feel HDFC Mutual Funds is
Good, while 28.33% of the respondents have medium satisfaction towards
HDFC Mutual Funds.
There is no relationship between nature of investment and choice of
schemes.
There is no significant relationship between drawbacks in promoting products
and choice of investment.
There is no significant relationship between the range of income and risk
taking capacity.
There is no significant relationship between reasons to influence decision of
investors and range of income.
Sharpe’s index in ULIP shows higher value than ELSS. This is because of the
ULIP’s lesser risk than ELSS. At the same time the expenses incurred in
ULIP is quite higher than ELSS which may result a different solution.
61
Larger the Sharpe’s index better the fund has performed. Thus in ELSS,
Franklin Templeton ranked as better fund as its index is 1.31. Then,
Sundaram follows as its index is 1.28, then Prudential ICICI as 1.21, HDFC
as 1.19 and Birla Sunlife as 0.19.
HDFC’s portfolio is perfectly diversified as the two measures Sharpe’s index
and Treynor’s index gives identical rankings.
ELSS Franklin Templeton holds the first rank, in case of HDFC holds second
rank, Prudential ICICI holds third rank, Sundaram BNP Paribas holds fourth
rank and Birla holds the fifth as per Treynor’s ratio.
7. SUGGESTIONS AND RECOMMENDATIONS
62
From the analysis it is found that most of the respondents were under the
age group 41 to 50 and are coming under the income level of below
Rs.20000 per month. So the company has to concentrate the above said
income levels and attract the age group of 41 to 50.
Majority of the respondents is in the opinion that HDFC should give more
importance on product performance. Hence the company should
concentrate more on product performance.
Most of the respondents are influenced by high return. Hence the
company should make awareness among the people about its return
earning capacity.
Investors are considering ELSS as the better tax saving scheme. So the
company should make necessary arrangements to make more advantage
on this.
Most of the respondents are willing to take moderate risk, preferring mid
term investment and expecting more than 20 % of returns. Hence the
company should act accordingly.
The company satisfies the customers and at the same time it should
improve its relationship towards its customers.
8. CONCLUSION
63
The study is based on the primary data specially collected for the purpose
of creating a deeper understanding of the changing habits of investment
preferences of investors with regard to the current and future scenario of
investments. Special attention has been given bring to out the concerns of
investors towards Equity Linked Saving Scheme.
The major strands of the analysis may now brought together in order to
derive a broad picture about factors that influence the investor to go for a
particular investment, expectations of investors in terms of return from their
investment and to understand the needs of the investors.
Examination of the perception of investors towards ELSS and its actual
performance is a major part of this study. From the study it was found that ELSS
had a high preference towards the available tax saving instruments, followed by
Unit Linked Insurance Plan.
This study identifies the scenario of Tax Saving Schemes and the
investors risk willingness, expectations in the form of return expected from their
investment and the basic needs of the investors. The observations from the study
will be useful for HDFC which leads to customer satisfaction and in turn it may
generate revenue to the company.
BIBLIOGRAPHY
64
BOOKS REFERRED:
Punithavathy Pandian, “Security Analysis and Portfolio Management”, 3 rd edition,
Vikas Publishing House Pvt Ltd, New Delhi, 2001.
V.K.Bhalla, “Investment Management” ,11th edition Sulthanchand and company
Ltd, New Delhi, 2004.
A.Singaravelu and R.Senapathy, “Quantitative Methods in Business”,3rd edition,
Meenakshi Agency,Chennai,edition 2004.
Kothari C.R., “Research Methodology”, 10th edition, Wishwa Prakashan
Publucations,2000.
JOURNALS:
Business Line,
Economic Times,
Dalal Street.
e REFERENCES:
www.hdfcfunds.com
www.hdfcinsurance.com
www.icicidirect.com
www.bseindia.com
www.crisilindia.com
www.amfi.com
www.valueresearch.com
QUESTIONNAIRE
1) Name :
Address :
65
Phone :
Gender : Male Female
Age : 20-30 31-40 41-50 ABOVE 50
Qualification: SSLC +2 UG PG
2) NATURE OF OCCUPATION:
IT Manufacturing Self Employment Govt Sector
Others
3) YOUR INCOME RANGE: (per month)
Below Rs.20000 Rs.20-50000 Rs. 50-80000
Above Rs.80000
4) WHERE DO YOU INVEST NORMALLY
Mutual Funds Insurance Shares Deposits
Real Estate Others
5) REASON FOR THE ABOVE INVESTMENT
Risk Free High Return Secure Better Margin Interest.
6) ARE YOU AWARE OF TAX SAVING SCHEMES
Yes No
7) WHICH TAX SAVING INVESTMENT YOU CONSIDER BETTER
ELSS ULIP Others Nil
66
8) REASONS FOR CHOOSING A PARTICULAR INVESTMENT
OPTION
Tax Benefit Future Expectations Performance
Liquidity /Flexibility Just to save my surplus
9) MENTION YOUR RISK TAKING CAPACITY
High risk High return
Moderate risk Moderate return
Low risk Low return.
10) MENTION YOUR PREFERRED TENURE OF INVESTMENT
Short term (within 3 years)
Mid term (3 years – 5 years)
Long term. (Above 5 years)
11) WHAT IS THE LEVEL OF RETURN EXPECTED IN PERCENTAGE
IN A YEAR FROM YOUR INVESTMENT
Less than 10 % 11 - 15 % 15 – 20 % Above 20 %
12) ARE YOU SATISFIED WITH THE PERFORMANCE OF TAX
SAVINGS SCHEME
Yes No
67
13) RANK YOUR PREFERRED INVESTMENT ALTERNATIVE
S.NO PARTICULARS RANK
1 Mutual Funds
2 Share Market
3 Bonds
4 Deposits
5 Post Office Savings
6 Insurance
7 Derivatives
14) WHICH AREA DO YOU FEEL THAT HDFC MUTUAL FUND
SHOULD GIVE MORE IMPORTANCE
Customer Satisfaction Product Performance
Creating Awareness Competing the rivals Others
15) SATISFICATION LEVEL WITH HDFC MUTUAL FUNDS
Very Good Good Medium Bad Very bad
16) SUGGESTIONS:
68
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