ankush summer training ppt again
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Summer Internship Project
A study on awareness and perception of investors and
wealth advisors of Ludhiana with respect to Exchange Traded Funds
Under Guidance of: Presented by:Mr. P.P. Singh Ankush GuptaDeputy Director, PCTE MBA 2A
Company profile
Reliance was founded by the Indian industrialist Dhirubhai Ambani in 1966 with capital of barely US$ 300.
Group was divided between Mukesh Ambani and Anil Ambani in 2006.
Today Mukesh Ambani is 4th richest person and Anil Ambani is 36th richest person in world.
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• Reliance Anil Dhirubhai Ambani Group is among India’s top three private sector business houses.
• Market capitalization of Rs.325, 000 cr. net assets in excess of Rs.115, 000 cr. and net worth to the tune of Rs.55, 000 cr.
• Group has a customer base of over 100 million and shareholder base of over 12 million.
Reliance Mutual Fund
• One of India’s leading Mutual Fund house with highest Asset Under Management Rs. 1,02,179 Crores
• Investor count of over 73 Lakh folios.• Huge range of plans and schemes according to
the need of investors.• No. 1 AMC declared by CRISIL in India.
Mission and vision statement
Vision Statement• To be a globally respected wealth creator with
an emphasis on customer care and a culture of good corporate governance.
Mission Statement• To create and nurture a world-class, high
performance environment aimed at delighting our customers.
Organization chart of training unitCluster Head • Mr. Amit Kapoor
Branch Manager • Mr. Nishant Mahajan
Relationship Manager
• Mr. Lovepreet Singh • Mr. Rohit Sharma• Mr. Gurjeet Singh• Mr. Ish Sharma
Off rolls•Sandeep Sharma •Navddep•Meghna
SWOT analysis of training unit of RMF Ludhiana
Strengths • Brand value• Distribution channel strategy• Good working environment • Cooperative staff • Good return funds basket Weakness • Delay in operations• Unsatisfied investors
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Opportunities • High potential market• Huge untapped market• Increasing awareness of investors regarding mutual funds Threats • Increasing competition• Increasing of other investment options
Mutual Funds Introduction to industry
Advantages of mutual funds
• Portfolio Diversification • Professional management • Reduction / Diversification of
Risk • Liquidity • Flexibility & Convenience • Reduction in Transaction cost • Transparency
Investment Strategies
• Systematic Investment Plan• Systematic Transfer Plan• Systematic Withdrawal Plan• Trigger scheme• Smart step
Exchange Traded Funds
• Baskets of securities that are traded, like individual stocks, on an exchange.
• Track specific indices and trade just like any other stock, combined with the benefits of a mutual fund.
• Based on the mechanism of creation and redemption of units.
• Transactions are conducted by sending creation or redemption instructions to the fund.
Unit creation
• Bundles of shares of stock or equivalent are borrowed from market by sponsor.
• Sponsor creates ETFs units of the shares of stock.
• ETFs units are issued in the market, and are listed on the exchange for trading.
• As shares of stock are converted into ETF units there is no liability of paying tax.
Unit redemption
• By selling shares in open market.• By gathering enough shares of the ETF to form
a creation unit and then exchange the creation unit for the underlying securities.
• No tax liability even on short term capital gain as compare to other investment option in equity and mutual fund market.
History of ETFs
• Introduced in United States in 1993 by Standard & Poor’s Depositary Receipts SPDR’s or “spiders”
• Entered India in December 2001, launched by Benchmark AMC based on Nifty.
• “Niftybees” and “liquidbees” are two most common ETFs by Benchmark AMC.
• Currently HDFC and Motilal Oswal has launched ETFs in market.
Benefits of ETFs
• Trading Like a Stock • Tax Efficiency• Transparency• Diversification• Low expense• Shorting or Hedging • Arbitrage ability
Types of ETFs
• Commodity ETFs Gold ETFs Silver ETFs• Index based ETFs actively managed index ETFS passively managed index ETFs• Bond ETFs • Currency ETFs
Gold ETFs
• Investment in gold without actually buying it physically.
• Gold has been emerging as a good investment option in recent years.
• Keeping physical gold is very risky and expensive.• Purity of physical gold also cannot be checked by
investors.• No buying premium.• Resale is easy.
Evaluation tools and volatility measures
• Standard deviation • Sharpe ratio• Beta • Alpha • R- squared • Tracking error• Expense ratio
Title
A study on awareness and Perception of investors and wealth advisors of Ludhiana with respect to Exchange Traded Funds
Objectives
• To study the awareness level of investors and wealth advisors regarding ETFs in Ludhiana.
• To study the future perspective of ETFs
according to investors and Advisors in Ludhiana.
• Comparison of Reliance ETFs with respect to its
benchmarks and other AMCs ETFs.
Research design
• Research type : Descriptive • Analysis tools : Statistical • Collection of data : Secondary data: Through journals, e-source and
articles etc.Primary data: Through schedules.• Sampling method : convenience and judgment
sampling.
Sampling
• Sample size : Investors – 50 Wealth advisors – 25
• Universe : Every direct or indirect equity investor and wealth advisor.
• Population – Every direct or indirect equity investor and
wealth advisor in Ludhiana. • Sample unit – Every respondent of study chosen by
convenient and judgment sampling from population.
Assumptions andLimitations of the study
Assumptions • It has been assumed that sample respondents represents the whole
population.• The information given by the customer is unbiased.
Limitations
• 1. Duration of Project was not enough to make a conclusion on such a vast subject time constraint has become a big limitation.
• 2. The Sample Size being taken for drawing a conclusion was too small to get an accurate result.
• 3. There can be an error in the research due to the lazy response of the
respondents.
Data interpretation and analysis Wealth advisors
Title – Age group of the respondents. ( N = 25) Graph 4.1a
below 20 yrs. 20 - 30 yrs. 30 - 40 yrs. 40 - 50 yrs. Above 50 yrs.0
2
4
6
8
10
12
age group
age groups
no. o
f res
pond
ents
Title – awareness level with respect to ETFs (N = 25)Graph 4.2a
Totally aware Partially unaware Partially aware Totally ignorant0
2
4
6
8
10
12
14
6
13
2
4
awareness level
awareness level
no. o
f res
pond
ents
Title – Recommendation of ETFs as an investment option.(N = 25)Graph 4.3a
36%
64%
% of respondentsyes no
Title – Types of ETFs recommended.(N = 9)
Graph 4.4a
commodity ETFs actively managed index funds passively managed index funds0
1
2
3
4
5
6
7
7
2
0
different funds
no. o
f res
pond
ents
Title – Mode of ETFs sold/recommended (N=9)
44%
56%
% of respondentsNFO online trading both
Title – Preferred AMC (N = 9)
reliance benchmark hdfc icici other0
5
10
15
20
25
30
35
4
0
3 34
28.6
0
21.4 21.4
28.6
no. of respondents% of respondents
different AMC
resp
onde
nts
Title – Reason of preference of AMC (N = 9)
services returns special attention investors demand0
10
20
30
40
50
60
70
80
0
6
03
0
66.7
0
33.3 no. of respondents% of respondents
reasons
resp
onde
nts
Title – Factors considered before recommending any fund (N = 9)
Sharp
e rati
o
r- sq
uared
Standard
deviati
on
Expen
se rati
oBeta
Previous r
ate of r
eturn
Tracki
ng erro
r0
1
2
3
4
5
6
7
8
9
10
0 0 0 0
2
9
2
no. of respondents
no. of respondents
Title – Reason for not recommending ETFs to investors (N = 16)
more volatile need of DEMAT account more complex any other0
5
10
15
20
25
30
35
40
45
50
3
7
42
18.75
43.75
25
12.5
Series 1Series 2
reasons
resp
onde
nts
Title – Attractiveness of ETFs as an investment option (N = 25)
highly attractive attractive indifferent unattractive highly unattractive0
10
20
30
40
50
60
3
12
5 5
0
12
48
20 20
0
no. of respondents% of respondents
return of ETFs
resp
onde
nts
Title – Reason of ETFs still at evolving stage (N = 25)
low aware
ness of in
vesto
rs
less f
ocus o
f wea
lth m
anag
ers
good re
turns b
y other
funds
less p
romotion by A
MC
low commiss
ion of dist
ributors
0
1
2
3
4
5
6
7
8
9
8
4
5
2
6
no. of respondents
reasons
resp
onde
nts
Benefits of investing in ETFs (N = 25)
index based Security Purity tax efficiency Organized market0
20
40
60
80
100
120
96
39
58
72
108
3.84 1.56 2.32 2.88 4.32
total of reankingmean
Future trends regarding volumes of ETFs ( N = 25)
Increasing drastically Increasing slowly Indifferent Decreasing slowly Decreasing drastically0
5
10
15
20
25
30
35
40
6
9
6
4
0
24
36
24
16
0
no of respondents% of respondents
Title – Recommendation of ETFs as an investment option in future (N = 25)
44%
56%
% of respondentsyes no
For investors Title – Age group of investors (N = 50)
below 20 yrs. 20 - 30 yrs. 30 - 40 yrs. 40 - 50 yrs. above 50 yrs.0
5
10
15
20
25
0
17
21
8
4
age group
no. o
f res
pond
ents
Title - Awareness level of investors with respect to ETFs (N = 50)
Totally aware Partially unaware Partially aware Totally ignorant0
10
20
30
40
50
60
4
11
7
28
8
22
14
56
no of respondents% of respondents
Title - source of your awareness of ETFs (N = 22)
Wealth manager Internet Advertisement Friend Any other0
10
20
30
40
50
60
70
13
35
1 0
59.1
13.6
22.7
4.6
0
no. of respondent% of respondent
Title - Investment in ETFs (N = 22)
45%
55%
% of respondentsyes no
Title - Type of ETFs in which investors invest (N = 10)
commodity ETF actively managed passively managed0
10
20
30
40
50
60
70
63
1
60
30
10
no. of respondents% of respondents
Title - Channel of investment in ETFs (N = 10)
NFO Online trading both0
10
20
30
40
50
60
35
2
30
50
20
no. of respondents% of respondents
Title - Preference of AMC by investors (N = 10)
Relian
ce as
set m
anag
emen
t compan
y
Bench
mark as
set m
anag
emen
t compan
y
ICICI pru
dential
HDFC m
utual fund
Others
0
0.5
1
1.5
2
2.5
3
3.5
3
0
2 2
3
no. of respondents
no. of respondents
Reason of preference of AMC (N = 10)
Services provided by the AMC
funds return brand value
Wealth managers advice
Any other 0
10
20
30
40
50
60
37
17
21
27
48
3.71.7 2.1 2.7
4.8
no. of respondsmean
Axis Title
Axis Title
Title - Factors according to investors consideration to evaluate ETFs before investing
Sharpe ratio R-Squared Standard deviation Expense ratio Beta Previous rate of returnTracking error0
2
4
6
8
10
12
0 0 0 0
2
10
1
no. of responds
no. of responds
Title – Investors satisfaction level regarding the decision of investing in ETFs (N = 10)
Highly satisfied Satisfied Indifferent Unsatisfied Highly unsatisfied 0
0.5
1
1.5
2
2.5
3
3.5
2
3 3
2
0
no. of respondents
no. of respondents
Title - Reason of not investing in ETFs (N = 40)
Less awareness More volatile Need of DEMAT account
Good returns from other diversified funds
More complex0
10
20
30
40
50
60
21
3
9
52
52.5
7.5
22.5
12.5
5
no. of respondents% of respondents
Title - Rate the return on investment in ETFs (N = 50)
Highly attractive Attractive Indifferent Unattractive Highly unattractive 0
5
10
15
20
25
30
35
40
8
15
18
9
0
16
30
36
18
0
no. of respondents% of respondents
Title - Benefits of ETFs according to investors preference (N = 50)
Convenience Liquidity Index based Returns Security0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
3.84
2.04
3.52
2.28
3.32
Title - Steps should be taken for making ETFs familiar among investors ( N = 50)
Investors awareness programs Seminars/guest lectures Advertisements Any other0
5
10
15
20
25
30
35
40
45
50
23
9
18
0
46
18
36
0
no. of respondents% of respondents
Title – Investors willing to invest in ETFs in near future (N = 50)
38%
62%
% of respondentsyes no
Findings and observations
• It’s clear from the study that ETFs consists various beneficial features which fulfils various needs of the investors.
• Further that the awareness level of the investors regarding ETFs is very low.
• It is also been found that investors and advisors do not evaluate various schemes and funds of various AMCs on various risk measures.
• There has been wrong perception in the mind of investors that ETFs are complex ones.
• No special attention is paid by the AMC to increase the awareness of ETFs amongst investors.
• If investors are given some awareness by conducting some awareness programs, many of them who do not invest presently would possibly like to invest in future.
• Reliance AMC’s ETFs are doing very good in the market on the basis of returns as compare to its benchmark indices and other AMCs ETFs.
Suggestions • There is a high potential market for investments in ETFs in Ludhiana region but this market needs to be explored as investors still hesitate to invest their money in
ETFs. • The most vital problem spotted is of ignorance. Investors should be made aware of
the benefits. Nobody will invest until and unless he is fully aware and convinced.
• Reliance AMC should conduct some investors awareness programs, seminars/guest lectures etc. for investors to make ETFs more popular and familiar amongst them.
• Proper Training and up to date knowledge of ETFs should be given to every employee of Reliance Mutual Fund so that then can explain its benefits and structure to the clients.
• Most of marketing executive are not interested in dealing of ETFs because they
don’t want to expand their services due to lack of time, so company should pay some special attention towards selling of ETFs.
Queries
