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 Gupta
 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 unit



 SWOT analysis of training
unit of RMF Ludhiana


 Strengths
  
• Brand value
• Distribution channel
strategy
• Good working
environment
• Cooperative staff
• Good return funds
basket
  
 Weakness
  
 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
 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
 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 and
Limitations 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
Title – awareness level with
respect to ETFs (N = 25)
Graph 4.2a

 
 Title – Recommendation of
ETFs as an investment option.
(N = 25)
Graph 4.3a

 
Title – Types of ETFs
recommended.
(N = 9)
Graph 4.4a

 
 Title – Mode of ETFs
sold/recommended (N=9)
 Title – Preferred AMC
(N = 9)

•

Title – Reason of preference of
AMC
(N = 9)
 Title – Factors considered
before recommending any fund
(N = 9)
 
 Title – Reason for not
recommending ETFs to
investors (N = 16)
 Title – Attractiveness of ETFs
as an investment option (N = 25)
Title – Reason of ETFs still at
evolving stage (N = 25)
Benefits of investing in ETFs
(N = 25)
Future trends regarding
volumes of ETFs ( N = 25)
 Title – Recommendation of
ETFs as an investment option
in future (N = 25)
 For investors 
Title – Age group of investors (N
= 50)
 Title - Awareness level of
investors with respect to ETFs
(N = 50)
 Title- source of your
awareness of ETFs (N = 22)
Title- Investment in ETFs (N =
22)
Title - Type of ETFs in which
investors invest (N = 10)
Title - Channel of investment
in ETFs
(N = 10)
Title - Preference of AMC by
investors (N = 10)
Reason of preference of
AMC (N = 10)
Title - Factors according to investors
consideration to evaluate ETFs before
investing
 Title – Investors satisfaction level
regarding the decision of investing in
ETFs (N = 10)
Title - Reason of not investing in ETFs
(N = 40)
 Title - Rate the return on
investment in ETFs (N = 50)
Title - Benefits of ETFs according
to investors preference (N = 50)
 Title - Steps should be taken for
making ETFs familiar among investors
( N = 50)
 Title – Investors willing to
invest in ETFs in near future (N
= 50)
 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
 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

Queries