summer training ppt

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.

Continue……

• 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

Continue……

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

Ratio analysis

• Current ratio: It measures the firms short term solvency that is the ability to meet short term obligations.

Current ratio = Current assets Current liabilities

2006/07 2007/08 2008/09

Current assets 131.54 686.29 520.26

Current liabilities 69.63 164.36 53.20

Current ratio 1.89 4.17 9.78

Absolute Liquid RatioThis ratio is more rigorous test of liquidity as it establishes the

relationship between absolute liquid assets and current liabilities.

Absolute liquid ratio = Absolute liquid assets Current liabilitiesAbsolute liquid assets = Cash and bank balance + short term term investments 2006/07 2007/08 2008/09

Absolute liquid asset

31.42 516.71 476.62

Current liabilities 69.63 164.36 53.20

Absolute liquid ratio

0.45 3.14 8.95

Debt equity ratio

Debt equity ratio = Outsiders funds Shareholders funds Outsiders funds = Long term liabilities + short term liabilities Shareholders fund = Equity share capital + preference

share capital + reserves and surplus - Accumulated losses and deferred expenses.

2006/07 2007/08 2008/09

Outsiders funds 69.63 164.36 53.20

Shareholders funds 114.57 709.38 842.33

Debt equity ratio 0.61 0.23 0.063

PROPRIETORY RATIO

Equity Ratio = Shareholders funds Total Assets Shareholders funds = Equity Share Capital + Preference Share

Capital + Reserves And Surplus - Accumulated Losses and Deferred Expenses.

Total assets = Fixed Assets + Investments + Current Assets, Loans, Advances

2006/07 2007/08 2008/09

Shareholders funds 114.57 709.38 842.33

Total assets 183.23 873.74 895.53

Equity ratio 0.625 0.812 0.940

RETURN ON CAPITAL EMPLOYEDReturn on capital employed = Net profits before taxes and interest * 100 Capital Employed Gross Capital Employment = Total of liabilities side - accumulated losses -

fictitious and intangible assets Net Capital Employed = Gross capital employed - Current liabilities 2006/07 2007/08 2008/09 Net profits before taxes and

interest74.83 142.76 176.86

Gross capital employed 184.20 873.74 895.53

Net capital employed 114.57 709.38 842.33

Return on gross capital employed 40.84% 16.34% 19.75%

Return on net capital employed 65.31% 20.12% 20.99%

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


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%


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%


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


Title - Channel of investment in ETFs (N = 10)

NFO Online trading both0

10

20

30

40

50

60

35

2

30

50

20


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


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


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


Title – Investors willing to invest in ETFs in near future (N = 50)

38%

62%


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

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summer training ppt