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Introduction
LIFE INSURANCE
MEANING:
Life insurance is a contract providing for payment of a sum of money to the person assured or, failing him, to the person entitled to receive the same, on the happening of a certain event. A family is generally dependent for its food, clothing and shelter on the income brought by the familys breadwinner. The family is secure so long as this breadwinner is alive and is capable of earning his income. A sudden death (or inability) may leave this family in a financially difficult situation. Uncertainty of death is inherent in human life. This uncertainty makes it necessary to have some protection against the financial loss arising from death. And life insurance exactly offers this kind of protection.
ORIGIN:
The idea of insurance had emanated from out of the needs and desires of people to cover the likely losses to be suffered during a persons lifetime. Insurance was initially restricted to cover items other than for a persons life. Today insurance covers almost everything. Life insurance had commenced under framework of societies formed for purpose of giving service to the members in case of sickness, unemployment and premature deaths. Following a death, the need for immediate finance was felt to have a Decent funeral. Over a period of time, the financial loss due to the demise of the bread-earner was extended to cover future needs too. In the Indian context, the Aryans had perceived the idea of community insurance more than 3000 years ago, as would be evident from the Reeg Veda, in which the word Yogakshema was meant to suggest some form of communities had existed to help out family of the deceased in building a house, protecting the widow and also marrying off the girls.
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Capacity to contract :
The proposer has to fulfill certain eligibility conditions, e.g., he must be a major.
Consensus ad idem :
The proposer has to understand the implication of the plan, premium, etc. and the insurer must be equipped with all the necessary information regarding the proposer, so that there is no ambiguity regarding the terms of the contract.
Capability of performance :
The agent will have to have the ability to perform well.
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PURPOSE OF INSURANCE:
Insurance is income protection investment. The person you name as your beneficiary will receive proceeds from an insurance company. Insurance policies are always an intelligent decision while investing your hard-earned money. More than a tax saving instrument or an interest earning investment, an insurance policy is a guarantee that your loved ones would not have any financial difficulties in case any unfortunate incident happens to you. Insurance policies with high premium and low risk cover are similar to deposits and bonds.
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STRENGHTS:
Insurance provides an excellent peace of mind in case unfortunate incident happens to you. Insurance policies are a relatively low risk investment. Insurance provides tax deferred savings and capital appreciation.
WEAKNESS:
Cash value funds can fluctuate depending on what the financial markets are doing. provides nominal income as it is less risky.
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Diversification:
Diversification is nothing but spreading out your money across available or different types of investments. By choosing to diversify respective investment holdings reduces risk tremendously up to certain extent. The most basic level of diversification is to buy multiple stocks rather than just one stock. Mutual funds are set up to buy many stocks. Beyond that, you can diversify even more by
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Stocks:
Stocks represent shares of ownership in a public company. Examples of public companies include Reliance, ONGC and Infosys. Stocks are considered to be the most common owned investment traded on the market.
Bonds:
Bonds are basically the money which you lend to the government or a company, and in return you can receive interest on your invested amount, which is back over predetermined amounts of time. Bonds are considered to be the most common lending investment traded on the market. There are many other types of investments other than stocks and bonds (including annuities, real estate, and precious metals), but the majority of mutual funds invest in stocks and/or bonds.
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Overview of existing schemes existed in mutual fund category: by structure 1.Open - Ended Schemes:
An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asse Value ("NAV") related prices. The key feature of open-end schemes is liquidity.
2. Close - Ended Schemes: A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. 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 they 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. 3. Interval Schemes: Interval Schemes are that scheme, which combines the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices.
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of the fund may vary different for different schemes and the fund managers outlook on different stocks. The Equity Funds are sub-classified depending upon their investment objective, as follows: Diversified Equity Funds Mid-Cap Funds Sector Specific Funds Tax Savings Funds Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-return matrix.
2. Debt funds: The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are further classified as:
Gilt Funds:
Invest their corpus in securities issued by Government, popularly known as Government of India debt papers. These Funds carry zero Default risk but are associated with Interest Rate risk. These schemes are safer as they invest in papers backed by Government.
Income Funds:
Invest a major portion into various debt instruments such as bonds, corporate debentures and
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Liquid Funds:
Also known as Money Market Schemes, these funds provides easy liquidity and preservation of capital. These schemes invest in short-term instruments like Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds. 3. Balanced funds: As the name suggest they, are a mix of both equity and debt funds. They invest in both equities and fixed income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to provide investors with the best of both the worlds.
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RISK RETURN:
Mutual funds, like securities investments, are subject to market risks and there is no guarantee against loss in the Scheme or that the Schemes objectives will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on various factors and forces affecting capital markets.
TYPES OF RETURNS:
There are three ways, where the total returns provided by mutual funds can be enjoyed investors: Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution. If fund holdings increase in price but are not sold by the fund manager, the fund's shares by
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Diversification :
Purchasing units in a mutual fund instead of buying individual stocks or bonds, the investors risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others.
Economies of Scale :
Mutual fund buy and sell large amounts of securities at a time, thus help to reducing transaction costs, and help to bring down the average cost of the unit for their investors.
Liquidity :
Just like an individual stock, mutual fund also allows investors to liquidate their holdings as and when they want.
Simplicity :
Investment in mutual fund is considered to be easy, compare to other available
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Costs :
The biggest source of AMC income is generally from the entry & exit load which they charge from investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of jargon.
Dilution :
Because funds have small holdings across different companies, high returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money.
Taxes :
When making decisions about your money, fund managers don't consider your personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability.
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According to SEBI Regulations, two thirds of the directors of Trustee Company or board of trustees must be independent. The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual funds that the mutual funds function within the strict regulatory framework. Its objective is to increase public awareness of the mutual fund industry. AMFI also is engaged in upgrading professional standards and in promoting best industry practices in diverse areas such as valuation, disclosure, transparency etc.
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INDUSTRY PROFILE
INTRODUCTION:
The Insurance sector in India governed by Insurance Act, 1938, The Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalization) Act, 1972 Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related acts. With such a large population and the untapped market area of this population insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15 - 20% annually. Together with banking services, it adds about 7% to the countrys GDP. In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life Insurance cover and the Health Insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation Malhotra Committee was constituted by the Government in 1993 to examine the various aspects of the industry. The key element of the reform process was participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Since then the insurance industry has gone through many sea changes. The competition LIC started facing from these companies were threatening to the existence of LIC. Since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run.
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What Is Insurance?
Insurance is a contract between two parties, the insurer or the insurance company, and the insured, the person seeking the cover. Within this contract, the insurer agrees to pay the insurer for financial losses arising out of any unforeseen events or risk in return for a regular payment of premium. Thus, these insurance plans are also called as a Risk Cover Plans, which means to financially compensate for losses that occur uncertainly through accident, illness, theft, natural disaster. As you can not fight against these man-made and natural calamities, so at least be prepared for them and their aftermath by taking insurance policies.
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It protects the interests of the policy holders in any insurance company in the matters related to the assignment of policy, nomination by policy holders, insurable interest, and resolution of insurance claim, submission value of policy and other terms and proposals in the contract. It also specifies obligatory credentials, code of conduct and practical instructions for mediator as well as the insurance company. Apart from this, it also defines the code of conduct for the surveyors and loss assessors involved with the insurance business.
One of the major functions of IRDA includes endorsing competence in the insurance business. Apart from this, upholding and regulating professional organizations in insurance and re-insurance business is also a major duty of IRDA.
IRDA is also entitled to for asking information, undertaking inspection and investigating the audit of the insurers, mediators, insurance intermediaries and other organizations related to the insurance sector. It is also concerned with the regulation of the rates, profits, provisions and conditions that may be offered by insurers in respect of general insurance business if it is not controlled or regulated by the Tariff Advisory Committee. It is also entitled to supervise the functioning of the Tariff Advisory Committee. IRDA specifies the terms and pattern in which books of accounts are to be maintained and statement of accounts shall be provided by insurers and other insurance mediators.
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IRDA also specifies the share of life insurance business and general insurance business to be accepted by the insurer in the rural or social sector.
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The General Insurance Business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd. The first general insurance company established in the year 1850 in Calcutta by the British. Some of the important Milestones in the general insurance business in India are given in the table 2.
The Indian Mercantile Insurance Ltd. set up the first company to transact all classes o general insurance business.
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General Insurance Council, a wing of the Insurance Association of India, frames a cod of conduct for ensuring fair conduct and sound business practices.
1968
The Insurance Act amended to regulate investments and set minimum solvenc margins and the Tariff Advisory Committee set up.
1972
The General Insurance Business (Nationalization) Act, 1972 nationalized the genera
insurance business in India which effect from 1st January 1973. 107 insure
amalgamated and grouped into four companies viz. the National Insurance Compan
Ltd. The New India Assurance Company Ltd. The oriental Insurance Company Ltd And the United India Insurance Company Ltd. GIC incorporated as a company.
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Insurance Market-Present:
The insurance sector was opened up for private participations four years ago. For years now, the private players are active in the liberalized environment. The insurance market have witnessed dynamic charges which includes presence of a fairly large number of insures both life and non-life segment. Most of the private insurance companies have formed joint venture partnering well recognized foreign players across the globe. There are now 29 insurance companies operating in the Indian market 14 private insurers, nine private non life insurers and six public sector companies. With many more joint venture in the offing, the insurance industry in India today stands at a crossroads as competition intensifies and companies prepare survival strategies in a detariffed scenario.
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Intense competition:
In a de-tariffed environment, competition will manifest itself in prices, products, underwriting criteria, innovative sales and credit worthiness. Insurance company will vie with each other to capture market share through batter pricing and client segmentation. The battle has so far been fought in the big urban cities, but in the next few years, increase competition will drive insurers to rural and semi-urban markets.
Global standards:
While the world is eyeing India for growth and expansion, Indian company are becoming increasingly world class. Take the case of LIC, which has set its site on becoming a major global player following a 280crore investment from the Indian government. The company now operates in Mauritius, Fiji, the UK, Sri Lanka, and Nepal and will soon start operation in Saudi Arabia. It also plans to venture into the African and Asia-Pacific regions in 2006.
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COMPANY PROFILE
INTRODUCTION:
Established on 14th August 2000, HDFC Standard Life Insurance Co. Ltd. is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited) - India's leading housing finance institution, and a Group Company of the Standard Life Plc, UK. The Company is one of leading private insurance companies, offering a range of individual and group insurance solutions, in India. Being a joint venture of top financial services groups, HDFC Standard Life has adequate financial expertise to manage long-term investments safely and resourcefully.
HDFC Standard Life Insurance offers a range of individual and group solutions, which can be easily personalized to specific needs. Its group solutions have been planned to offer complete flexibility, together with a low charging structure. As of 31 December, 2008, the Company's new business premium income stood at Rs. 1,839.70 Crores; it has covered over 812,811 lives so far.
The partnership:
HDFC Standard Life first came together for a possible joint venture, enter the Life Insurance market, in January 1995. It was clear from the outset that both companies shared similar value and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a 3 years joint venture agreement. Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the relationship.
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Values:
SECURITY: Providing long term financial security to our policy holders will be our constant Endeavour. We will be do this by offering life insurance and pension products.
TRUST: We appreciate the trust placed by our policy holders in us. Hence, we will aim to manage their investments very carefully and live up to this trust.
INNOVATION: Recognizing the different needs of our customer, we will be offering a range of innovative products to meet these needs.
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Guiding Principles:
Customer Care and Satisfaction. Corporate Governance. Creativity and Innovation. Competitiveness.
COMPETITORS:
Life Insurance Companies Aviva Life Insurance Bajaj Allianz Life Insurance Birla Sun-Life Insurance HDFC Standard Life Insurance ING Vysya Life Insurance Life Insurance Corporation Max New York Life Insurance
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ORGANISATION STRUCTURE
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B.O.D C.E.O
Branch Manager
Finance Officer
Finance Executive
Insurance consultants
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Protection Plans:
HDFC Term Assurance Plan HDFC Loan Cover Term Assurance Plan HDFC Home Loan Protection Plan
Children's Plans:
HDFC Children's Plan HDFC Unit Linked Young Star II HDFC Unit Linked Young Star Plus II HDFC Unit Linked YoungStar Champion
Retirement Plans:
HDFC Personal Pension Plan HDFC Unit Linked Pension II HDFC Unit Linked Pension Maximiser II HDFC Immediate Annuity
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Health Plans:
HDFC Critical Care Plan HDFC SurgiCare Plan
Group Plans:
Group Term Insurance Plan Group Variable Term Insurance Plan Group Unit Linked Plan - Gratuity Group Unit Linked Plan - Superannuation Group Unit Linked Plan - Leave Encashment HDFC Standard Life believes that establishing a strong and ethical foundation is an essential prerequisite for long-term sustainable growth. To ensure this, we have concentrated our focus on expansion of branch network, organising an efficient and well trained sales force, and setting up appropriate systems and processes with optimum use of technology. As all these areas form the basic infrastructure for establishing the highest possible customer service standards.
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Strong Promoter:
HDFC Standard Life is a strong, financially secure business supported by two strong and secure promoters HDFC Ltd and Standard Life. HDFC Ltds excellent brand strength emerges from its unrelenting focus on corporate governance, high standards of ethics and clarity of vision. Standard Life is a strong, financially secure business and a market leader in the UK Life & Pensions sector.
Investment Philosophy:
We follow a conservative investment management philosophy to ensure that our customers money is looked after well. The investment policies and actions are regularly monitored by a
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Focus on Training
Training is an integral part of our business strategy. Almost all employees have undergone training to enhance their technical skills or the softer behavioural skills to be able to deliver the service standards that our company has set for itself. Besides the mandatory training that Financial Consultants have to undergo prior to being licensed, we have developed and
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Cash Funds :
Some times known as money market funds invested in cash, Bank deposits and money market instruments. Risk and Return: Low
Balanced Funds:
Combining equity investment with fixed interest in the instrument. Risk and Return: Medium
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80%
99%
85%
99%
90%
99%
95%
99%
97.5%
99%
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benefit charges
proportionately from each of the funds you have chosen. Switching charge 24 switches will be given free in a policy year and any additional switch will be charged at Rs. 100 per switch. Partial withdrawal Charge 6 partial withdrawal requests will be free in a policy year and any additional partial withdrawal requests will be charged at Rs. 250 per request. Revival charge A charge of Rs. 250 is for revival to cover for administration expenses. Miscellaneous charge This is a charge levied for any alterations within contract like premium redirection or adhoc policy servicing, 12 premium redirection requests will be free in a policy year any premium redirection requests will be charge at 250 per request, 6 policy servicing requests will be free in a policy year and any additional policy Servicing requests will be charged at Rs.250 per request.
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Alteration charges:
Current charges cannot be charged without prior approval from IRDA. The fund management charge cannot exceed 2% per annum. The surrender charge can be increased subject to a maximum of 10% of the fund applicable for the first 3 years. The policy administration charge can increase in line with inflation subject to a maximum of 5% per annum over the period since inception. The mortality charge rates and accidental death benefit charge rate are guaranteed for full duration of your policy term and critical illness charge rates can be reviewed at the end of every 3 years from date of launch of this product. And can be increased subject to a maximum increase 200% of every rate. The maximum switching charge allowed is Rs. 100 per switch increased in line with inflation subject to a maximum of 5% per annum over period since inception. We can charge up to Rs. 250 per request for premium redirection, partial withdrawal and other adhoc policy servicing requests. We can increase this amount in line with inflation subject to a maximum of 5% per annum over the period since inception.
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Research design
INTRODUCTION:
A Research Design is a logical and systematic plan prepared for directing a research study. It specifies the objectives of the study, the methodology and the techniques to be adopted for achieving the objectives. It constitutes the blueprint for the collection, measurement and analysis of data. It is the plan, structure, and strategy of investigation conceived so as to obtain answers to research questions. A research design is the program that guides the investigator in the process of collecting, analyzing and interpreting observation. It provides a systematic plan of procedure for the researcher to follow. It is indispensable for a research project.
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The study will reflect the portfolio break-up of the different funds of the company. It will also develop a comparative analysis of the various NAV schemes and hence, offer suggestions to the investors for directing their investment which would fetch them with maximum yield.
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INSURANCE:
It is a contract providing for payment of a sum of money to the person assured or, failing him, to the person entitled to receive the same, on the happening of a certain event.
MUTUAL FUND:
A Mutual Fund is an actively managed investment company that collects money from individuals and institutions, which share a common financial goal. A mutual fund raises money from investors to invest in stocks, bonds, and other securities. It is a package made up of several individual investments.
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PRIMARY SOURCES:
Primary Sources are original sources from which the researcher directly collects data that have not been previously collected. Primary data are first-hand information collected through various methods such as observation, interviewing, etc. Here, the primary data is collected as follows: (a) Interview with the Sales Manager. (b) Discussions with other personnel such as advisors and trainers.
SECONDARY SOURCES:
These are sources containing data which have been collected and compiled for another purpose. The secondary sources consists of readily available compendia and already compiled statistical statements and reports whose data may be used by researchers for their studies. These data are not collected directly as in case of primary sources. Here, the secondary data is obtained from: Brochures. Different books on mutual funds and insurance. Internal circulatory documents of the company. Website of the company.
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6. FINDINGS
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7. SUGGESTIONS
This chapter consists of the suggestions that have been made for the improvement of overall performance of the company.
8. CONCLUSION
This chapter of the study where a conclusion has been drawn based on the findings of this report.
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1. Unit Linked Pension Champion: Growth Fund as on 30/NOV/2009 Portfolio break-up by asset class:
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Govt. Securities & Bonds Money Market & Public Deposits Equity
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MONTHS
March 2007
11.35
June 2007
12.29
September 2007
13.91
December 2007
14.71
INTERPRETATION:
The above table clearly reveals that the NAV of the Growth Fund as on 31.03.2007 was Rs.11.35 for the schemes Pension champion, Endowment plan & Simple life. After that it increased considerably over the months and, at the end of the year (i.e. on 31st Dec, 2007) it raised to Rs.14.71. Hence, the companys Growth Fund saw a rise in its NAV at the end of the year.
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16 14 11.35 12 10 NAV(in Rs.) 8 6 4 2 0 upto 31st March 2007 upto 3oth June 2007 upto 30th Sep 2007 13.91 12.29
14.71
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 29.6%, for the purpose of calculation we are taking base month i.e. 31st march 2007.
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MONTHS
March 2008
16.65
June 2008
15.76
September 2008
17.45
December 2008
18.86
INTERPRETATION:
As seen in the table above, the NAV of the Growth Fund at the beginning of the year (2008) was Rs.16.65 which is slightly more as compared to the year 2007. Although it had gone down in the middle of the year but later, it managed to reach a value of Rs.18.86.
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18.86
NAV(in Rs)16.5
16 15.5 15 14.5 14
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 13.3%
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MONTHS
March 2009
18.54
June 2009
21.1
September 2009
23.54
December 2009
27.61
INTERPRETATION:
From the above table it is very much clear that the NAV of the Growth Fund had seen an overall increase over the past two years (i.e. 2007 & 2008). It touched the level of Rs.27.61 at the end of the year as compared to 2007 & 2008 which was only Rs.14.71 & Rs.18.86. Hence, the Growth Fund of the company is showing an upward trend over the years, which is a good sign for the company.
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27.61
NAV(in Rs) 15
10 5 0 upto 31st March 2009 upto 3oth June 2009 upto 30th Sep 2009
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 48.92%
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MONTHS
March 2007
10.73
June 2007
11.30
September 2007
12.20
December 2007
12.63
INTERPRETATION:
The above table reveals that the NAV of the Balanced Managed Fund as on 31.03.2007 was Rs.10.73. It saw an increase in its value by Rs.1.90 at the year end (i.e. Rs.12.63 as on 31.12.2007).
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NAV(in Rs)
11 10.5 10 9.5 upto 31st March 2007 upto 3oth June 2007 upto 30th Sep 2007 upto 31st Dec 2007
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 17.7
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MONTHS
March 2008
13.61
June 2008
13.25
September 2008
14.16
December 2008
14.86
INTERPRETATION:
During the year ending 2008, the NAV raised to only Rs.14.86 which is slightly more as compared to the year 2007. It was Rs.13.61 at the end of the first 3 months but, it saw a decline in its value in the middle of the year (i.e.Rs.13.25). Hence, the overall performance of the fund during the year was on an average level.
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14.86
13.25
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 9.18%
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MONTHS
March 2009
14.81
June 2009
15.86
September 2009
17.12
December 2009
18.92
INTERPRETATION:
From the above table it is clear that the NAV of the Balanced Managed Fund increased to Rs.18.92 as on 31.12.2009. It increased considerably over the months from Rs.14.81 to Rs.15.86 and so on, thus ending at Rs.18.92 which is little high as compared to the previous year.
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18.92
NAV(in Rs) 10
8 6 4 2 0 upto 31st March 2009 upto 3oth June 2009 upto 30th Sep 2009 upto 31st Dec 2009
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 27.75%
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MONTHS
March 2007
10.47
June 2007
10.78
September 2007
11.27
December 2007
11.47
INTERPRETATION:
As seen in the table above the NAV of the Defensive Managed Fund as on 31.03.2007 was Rs.10.47. Later on, it reached the level of Rs.11.47 at the end of the year. Hence, it is very much clear that the performance of the Fund throughout the year was not so satisfactory.
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11.47
NAV(in Rs)
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 9.55%
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MONTHS
March 2008
11.89
June 2008
11.84
September 2008
12.30
December 2008
12.65
INTERPRETATION:
The above table shows that the there is not much of change in the NAV of the Defensive Managed Fund (i.e.2008) as compared to the year 2007. The value at the end of the first quarter was only Rs.11.89. It did not increase much and was only up to the extent of Rs.12.65 at the year end.
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Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 6.39%
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MONTHS
March 2009
12.7
June 2009
13.27
September 2009
13.87
December 2009
14.57
INTERPRETATION:
From the above table it is clear that during the year 2009, the NAV of the Defensive Managed Fund raised to Rs.14.57 (i.e. on 31.12.2009) which is slightly more as compared to the past two years.
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NAV(in Rs)
13 12.5 12 11.5
Months
INERENCE: From the above graph it can be inferred that the percentage increase over the
months was 14.72%
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MONTHS
March 2007
10.24
June 2007
10.38
September 2007
10.49
December 2007
10.57
INTERPRETATION:
The above table reveals that the NAV of the Secure Managed Fund was Rs.10.24 on 31.03.2007. Its value was almost stable during the year and it increased only by Rs.0.33 at the end of the year (Rs.10.57). Hence, it is seen that the returns given to the investors by Secure Managed Fund is not so high.
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10.6 10.55 10.5 10.45 10.4 10.38 10.35 10.3 10.25 10.2 10.15 10.1 10.05 upto 31st March 2007 upto 3oth June 2007 upto 30th Sep 2007 10.24 10.49
10.57
NAV(in Rs)
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 3.22%
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MONTHS
March 2008
10.63
June 2008
10.77
September 2008
10.93
December 2008
11.03
INTERPRETATION:
From the above table it is clear that the Secure Managed Funds NAV during the year 2008 was also consistent. It raised to only Rs.11.03 at the end of the year, while it was Rs.10.63 as on 31.03.2008. Hence, its return for the year 2008 is little more compared to 2007.
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NAV(in Rs)
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 3.76%
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MONTHS
March 2009
11.19
June 2009
11.44
September 2009
11.72
December 2009
11.94
INTERPRETATION:
From the above table it is clear that the Secure Managed Funds NAV during the year ending 2009 was Rs.11.94. It did not rise much throughout the year and was lying sum where within the value 12.
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11.94 11.72
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 6.70%
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YEARS
GROWTH FUND
2007
13
12
11
10
2008
17
14
12
11
2009
23
17
14
12
INTERPRETATION:
The above table clearly shows the returns given to the investors by each of the Growth, Balance, Defensive and, Secure Managed Funds for the period 2007-2009 when determined on an average annual basis. The Growth Fund increased considerably over the years, thus raising to Rs.23 at the end of the year 2009, while it was only Rs.13 in the year 2007. But, in case of Balanced Managed Fund the NAV was little less (i.e. Rs 17 during the year ending 2009) as compared to
Growth Fund. On the other hand, the Defensive Managed Funds NAV was not so high and, increasing in a slow manner its value raised to Rs.14 at the end of the year 2009. And, as Secure Managed
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13. PENSION CHAMPION / ENDOWMENT PLAN / SIMPLE LIFE: Average Annually comparison of Growth, Balance, Defensive, and Secure Managed Fund (2007, 2008 & 2009)
25
20
15
Growth fund Balance Fund
10
INFERENCE:
From the above graph it can be inferred that the percentage increase over the years for Secure, Defensive, Balance & Growth Fund were 20%, 27.27%, 41.67% & 76.92%, respectively.
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MONTHS
March 2008
10.80
June 2008
10.09
September 2008
11.10
December 2008
12.20
INTERPRETATION:
The above table reveals that the NAV of the Growth Fund as on 31.03.2008 was Rs.10.80. It saw an increase in its value by Rs.1.40 at the year end (i.e. Rs.12.20 as on 31.12.2008).
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NAV(in Rs)
6 4 2 0 upto 31st upto 3oth March 2008 June 2008 upto 30th Sep 2008 upto 31st Dec 2008
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 12.96%
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MONTHS
March 2009
11.49
June 2009
12.20
September 2009
14.34
December 2009
16.71`
INTERPRETATION:
The above table reveals that the NAV of the Growth Fund as on 31.03.2009 was Rs.11.49. It saw an increase in its value by Rs.5.22 at the year end (i.e. Rs.16.71 as on 31.12.2009).
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16.71
NAV(in Rs)
10 8 6 4 2 0 upto 31st March 2009 upto 3oth June 2009 upto 30th Sep upto 31st Dec 2009 2009
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 45.43%
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PENSION CHAMPION
MONTHS
March 2008
10.26
June 2008
9.97
September 2008
10.80
December 2008
11.40
INTERPRETATION:
The above table reveals that the NAV of the Balanced managed fund as on 31.03.2008 was Rs.10.26. It saw an increase in its value by Rs.1.14 at the year end (i.e. Rs.11.40 as on 31.12.2008).
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11.5
11.4
11
10.8
10.5
10.26 9.97
NAV(in Rs)
10
9.5
9 upto 31st upto 3oth March 2008 June 2008 upto 30th Sep 2008 upto 31st Dec 2008
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 11.11%
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PENSION CHAMPION
MONTHS
March 2009
10.87
June 2009
11.79
September 2009
12.78
December 2009
13.80
INTERPRETATION:
The above table reveals that the NAV of the Balanced managed fund as on 31.03.2009 was Rs.10.87. It saw an increase in its value by Rs.2.93 at the year end (i.e. Rs.13.80 as on 31.12.2009).
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14 12 10 8 NAV(in Rs) 6 4 2 0 upto 31st March 2009 upto 3oth June 2009 11.79 10.87
13.8 12.78
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 26.95%
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MONTHS
March 2008
10.08
June 2008
10.90
September 2008
10.61
December 2008
10.45
INTERPRETATION:
The above table reveals that the NAV of the Defensive managed funds on 31.03.2008 was Rs.10.08. It saw an increase in its value by Re.0.37 at the year end (i.e. Rs.10.45 as on 31.12.2008).
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10.9
10.61 10.45
NAV(in Rs)
10.2 10 9.8 9.6 upto 31st March 2008 upto 3oth June 2008 upto 30th Sep 2008 upto 31st Dec 2008 10.08
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 3.67%
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PENSION CHAMPION
MONTHS
March 2009
10.79
June 2009
11.35
September 2009
12.67
December 2009
13.78
INTERPRETATION:
The above table reveals that the NAV of the Defensive managed funds on 31.03.2009 was Rs.10.80. It saw an increase in its value by Rs.1.40 at the year end (i.e. Rs.12.20 as on 31.12.2009).
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13.78
NAV(in Rs)
6 4 2 0 upto 31st March 2009 upto 3oth June 2009 upto 30th Sep 2009 upto 31st Dec 2009
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 27.71%
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PENSION CHAMPION
MONTHS
March 2008
10.04
June 2008
10.77
September 2008
10.33
December 2008
11.26
INTERPRETATION:
The above table reveals that the NAV of the Secure Managed Fund as on 31.03.2008 was Rs.10.04. It saw an increase in its value by Rs.1.22 at the year end (i.e. Rs.11.26 as on 31.12.2008).
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11.26
10.33
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 12.15%
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PENSION CHAMPION
MONTHS
March 2009
10.58
June 2009
10.84
September 2009
11.26
December 2009
11.94
INTERPRETATION:
The above table reveals that the NAV of the Secure Managed Fund as on 31.03.2009 was Rs.10.58. It saw an increase in its value by Rs.1.36 at the year end (i.e. Rs.11.94 as on 31.12.2009).
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12
11.94
11.5
11
NAV(in Rs)
10.5 10 9.5
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 12.85%
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MONTHS
June 2009
21.08
September 2009
23.54
December 2009
27.61
INTERPRETATION:
The above table reveals that the NAV of the Growth Fund as on 30.06.2009 was Rs.21.08. It saw an increase in its value by Rs.6.53 at the year end (i.e. Rs.27.61 as on 31.12.2009).
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NAV(in Rs) 15
10
0 upto 3oth June 2009 upto 30th Sep 2009 upto 31st Dec 2009
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 30.97%
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ENDOWMENT PLAN
MONTHS
June 2009
13.27
September 2009
13.87
December 2009
14.57
INTERPRETATION:
The above table reveals that the NAV of the Defensive managed fundas on 30.06.2009 was Rs.13.27. It saw an increase in its value by Rs.1.30 at the year end (i.e. Rs.14.57 as on 31.12.2009).
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14.57
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 9.79%
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ENDOWMENT PLAN
MONTHS
June 2009
15.86
September 2009
17.12
December 2009
18.92
INTERPRETATION:
The above table reveals that the NAV of the Balanced managed fund as on 30.06.2009 was Rs.15.86. It saw an increase in its value by Rs.3.06 at the year end (i.e. Rs.18.92 as on 31.12.2009).
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18.92
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 19.29%
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ENDOWMENT PLAN
MONTHS
June 2009
11.44
September 2009
11.72
December 2009
11.94
INTERPRETATION:
The above table reveals that the NAV of the Secure Managed Fund as on 30.06.2009 was Rs.11.44. It saw an increase in its value by Re.0.5 only at the year end (i.e. Rs.11.94 as on 31.12.2009).
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11.94
NAV(in Rs)
11.6 11.5 11.4 11.3 11.2 11.1 upto 3oth June 2009 upto 30th Sep 2009 upto 31st Dec 2009 11.44
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 4.37%
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MONTHS
June 2009
10.49
September 2009
12.56
December 2009
15.32
INTERPRETATION:
The above table reveals that the NAV of the Balanced as on 30.06.2009 was Rs.10.49. It saw an increase in its value by Rs.4.83 at the year end (i.e. Rs.15.32 as on 31.12.2009).
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16 14 12.56 12 10 10.49
15.32
NAV(in Rs)
8 6 4 2 0 upto 3oth June 2009 upto 30th Sep 2009 upto 31st Dec 2009
Months
INFERENCE:
From the above graph it can be inferred that the percentage increase over the months was 46.04%
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findings
As per the study done on Comparative analysis of various NAV schemes of HDFC STANDARD Life Insurance Co. Ltd for the past three years and the factors influencing the changes in NAV the following findings have been summarized:
(A) In case of plans like Pension Champion, Endowment Plan, Simple Life; all the four funds of the Company (i.e. Growth, Balance, Defensive, and Secure Managed Fund) have given different types of returns to the investors.
During the year ending 2007, the NAV of the Growth Fund was Rs.14.71. Although the value declined in the middle of the year 2008, but ultimately it reached the value of Rs.18.86 as on 31st Dec, 2008. Also, the percentage change during the year 2008 was 13.27%. However, the NAV increased considerably during 2009 and raised to the extent of Rs.27.61 as on 31st December 2009.
Also, during the two years 2007 & 2008, the Balanced Managed Fund was seen to give balance returns to the investors as there was not much of fluctuation in its NAV. However, it saw a rise in the year 2009 reaching the level of Rs.18.92 on 31st Dec, 2009 which was only Rs.14.81 as on 31st March 2009.
The returns given by Defensive Managed Fund over the years (i.e. 2007, 2008 & 2009) were stable. The NAVs as on the last date of each year, i.e. on 31st of December were Rs.11.47, Rs. 12.61 and Rs.14.57. Hence, the Defensive Managed Fund showed signs of a little higher return only during the year 2009 as there was an increase in its NAV. As the Secure Managed Fund provides stable returns by longing in relatively low risk assets, so there is hardly any remarkable change in its NAV over the years and hence, its
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(B) In case of Pension Champion, the Growth Fund was at the top order in providing good returns to the investors. Its NAV was Rs.16.71 during the year ending 31st Dec, 2009 as compared to the year 2008 which was only Rs.11.80. Also, the percentage gradually increased during the year 2009 was 45.43%. However, the Balanced Managed Funds scenario was different from that of Growth Fund. During the year 2008 the percentage change was only 11.11% but it raised to the level of 26.95% in the year 2009.
The Defensive Managed Fund could not show good performance during the year 2008 but there was an increase in its NAV in the year 2009. The NAV as on 31.12.2009 was Rs.13.78, which was only Rs.10.79 on 31st March 2009. The returns provided by Secure Managed Fund over the years were more or less stable only. There was not seen much of rise in its NAV in the two years. Also, the percentage change in 2009 was only 5.95%. Its NAV as on 31st Dec, 2009 was Rs.11.21 as compared to Rs.10.44 on 31st Dec, 2008; which is slightly higher.
(C) In case of Endowment Plan, the Growth Fund was also seen to give good returns to the investors apart from the Growth Fund. The NAV of Growth Fund on 30th June 2009 was Rs.10.49, which increased considerably during the year and went high to the value of Rs.15.31 as on 31st Dec, 2009. Compared to the Balanced Managed Fund, both the Defensive Managed Fund as well as the Secure Managed Fund did not show signs of good returns to the investors. The percentage change in case of the two Funds during the year 2009 was only 9.8% & 4.37%. But, the percentage change in case of Balance Fund was little higher (i.e. 19.29%).
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suggestions
(A) To the Investors :
After a clear analysis of the aforesaid investment types, the following can be recommended: If investors have the flexibility for a direct investment, they should go for Growth and Balanced as both the funds long mostly on equities. When the investors are ready to take a risk with the expectation of a greater growth, investment in Unit Linked Insurance Plans are a better option since they provide the investor with a life insurance cover and the premium paid is longed in either debt or equity products or a combination of the two. They can be viewed as a combination of Insurance and Mutual Funds. Investors can expect for a good return if they make an investment in Growth Fund as it longs mostly on equities (upto 70%). However, the Fund will also long in government securities, bonds and money market instruments. The investors can either go for plans like Pension Champion, Endowment Plan or Simple Life, where the Growth Fund is showing signs of good returns. Investors can also opt for Balanced as it longs on equities upto 100%. So, it gives an excellent return according to the market conditions. The fund may also long in government securities, bonds and money market instruments. Investors can choose from plans like, Pension Champion, Endowment Plan wherein the Balanced is seen to fetch a high return to the investors.
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Thus, investors can opt for Unit Linked Insurance Plans as they provide Capital Appreciation and also, we are allowed to long our policy in stock, bond or money market funds. Moreover, the policy holder also gets the facility of switching over from one fund to another.
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Conclusions
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.
Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the relationship.
During the last three (3) years the company is found to be growing at a very good rate and as increased its profitability position.
In case of plans like Pension Champion, Endowment Plan, Simple Life; all the four funds of the Company (i.e. Growth, Balance, Defensive, and Secure Managed Fund) have given different types of returns to the investors
The NAV (Net Asset Value) of Growth Fund declined in the year 2008, but the company has been able to increase the NAV in the year 2009. This shows a positive growth a company.
There was not much fluctuation in the NAV Balanced Fund, but it has increased in the year 2009.
The Defensive Managed Fund has given stable returns during the last three (3) years, however the return has increase in the year 2009 because of increase in the NAV.
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In case of Pension Champion, the Growth Fund has provided very good returns to the Investor. However the Balance Managed Fund has raised only the year 2009.
The Defensive Managed Fund was found to the weak in performance, but the NAV increase in the year 2009. The Secured Managed Fund was found to be more stable over the years.
In case Endowment Plan also the Growth Fund has a given a very good return the Investor, but the other Funds did not so the good performance.
When the investors do not want to take much of risk with their investments, they should go for Defensive and Balance Funds, where the growth is nominal but their money is secured. Over the years since its inception the company has made a very good progress an increase its Goodwill & Brand name and now its is a well know company.
Investors can opt for an ULIP as it provides tax relief and also the returns are good. More over the maturity benefit is the NAV (Net Asset Value) of the units, and the policy holder can switch between schemes of the various Funds. Hence, an ULIP is an ideal tool to gain security and ensure savings.
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BIBLIOGRAPHY
Books
Financial Institutions & Markets Indian Financial System Gordon & Natarajan Himalaya Publication House
Authors Name
L.M. Bhole
Publishers Name
Kalyani Publishers
Life Insurance
---
M.
WEBSITES:
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