Project Preeti

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    A

    PROJECT REPORT

    ON

    Study on perceptions of advisors regarding

    Mutual Fund business

    &

    Investment habits of people

    (A SEMI URBAN AREA PERSPECTIVE)

    With reference to summer training at

    PRUDENT CAS LTD

    AHMEDABAD

    Submitted to:

    Prof. Gurmeet singh

    Submitted by:

    Rungta Preeti V.

    Enrollment no. 117140592004

    GLS Institute of computer technology- MBA

    2011-13

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    PREFACE

    Financial market has always been talking about the investors. Companies offer

    financial products and their returns but in this competitive market, recent trends say

    that this is dependent on the mediators. Mediators are the advisors. This is important

    to know the channel because the channel is very important for sustaining in

    competition.

    This report is prepared for such an indirect channel where the mutual fund

    companies are depending upon the mediators and these mediators are advisors and

    advisory firms. Hence, until they find good advisors and agents, the expansion is not

    possible. Return is an uncertain part which can be controlled at a certain level

    through mutual fund but the awareness part is in companies hands. They need to

    focus on the agents and find new opportunities. In urban areas, people are aware

    about their moneys investment options but in a country like India, man y rural and

    semi urban areas exist where savings are done wisely but investment is leading to

    few hands who either dont know about the investment or try to fill their own pockets.

    Preeti Rungta

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    ACKNOWLEDGEMENT

    A survey takes many days and many tasks. While doing this work, I was not alone.

    There are many people who directly or indirectly are joined to this report and helped

    me in learning and finding many things important for this project and my

    understandings.

    The first thanks for the GUJARAT TECHNOLOGY UNIVERSITY for giving us the

    opportunity to learn in the open market and prepare this report.

    Then I would like to thank the director of our college Mr. Hitesh Ruparel who is

    always working as the indirect but the most important hand to us. This is his effortsthat we are getting good opportunities in the market. I thank my internal guide Prof.

    Gurmeet Singh who has supported and guided me in this project at each and every

    phase of the training.

    A hearty thanks to PRUDENT CAS LTD for allowing us to join them and work under

    them as a fresher and a special thanks to Mr. Ayaj Mansuri and Mr. Chirag Modh

    from the indirect channel for their continuous support. They have spent a lot of time

    behind me for making me learn many things and help me in each difficulty I faced on

    the field.

    Last but not the least, thanks to all those people who directly or indirectly helped me

    in understanding the facts, filling up the questionnaire and spending time in making

    this research what it is in this report.

    Preeti Rungta

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    EXECUTIVE SUMMARY

    This report is prepared in context to the mutual fund advisory business. In India,

    people are good at savings but their investments are poor. The inflation rate is

    growing faster while the investment returns are not high. The current market

    situations in the country are very uncertain. The market has dramatically increased

    and decreased twice in the last 5 years. In this condition, people dont want to take

    risk. There are many stocks which have continuously performed well but people

    dont know about this. So there is a need of advisory and a new business arose.

    In this report, result of a survey is analyzed. The survey is on two groups. The first

    group is insurance agents who are considered as the potentials for mutual fund

    advisory business. The second group is of the investors who invest their money in

    the market either directly or by way of advisors. The sample size is kept 50 and the

    location is chose Kadi. This is a semi urban area.

    The factors that are forcing the advisory business include the foreign companies

    coming in for getting investment, increasing competition in the advisory business due

    to uncertain markets, low commission for advisors and a very tough competition fromother financial products making it difficult to get agents.

    The survey said that most of the agents who are working in Kadi as LIC agents are

    not interested in working for mutual funds business. They feel that the business is

    going very down and the income of agents is very low. Hence, they are good at LIC

    and dont want to enter in this business. They are also not aware of the mutual fund

    business completely. Some are not even interested in knowing more about it.

    On the other hand the investors are having an overall 40% saving perception. They

    give an equal priority to savings and want some good returnable products. Due to

    lack of knowledge regarding mutual funds, investors are not being able to take the

    advantage of it. Advisors are not getting into this business at this place hence; the

    benefits of mutual fund are not entering into this market. The investors are investing

    much of the money in the banks and FDs but the return is very low. They have a

    perception that mutual fund contains same risk as the stock market has. Hence, they

    dont like to invest in it.

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    As a suggestion to Prudent, they should try to enter in this area that contains a lot of

    investment opportunities for them. The companies should raise the benefits for

    advisors and advisories should find the fresher for this business and train them from

    beginning. This will solve the loyalty issue and provide them a long run benefit to

    sustain in the market. The firm anticipates that this business will grow wide in next

    few years. So this training cost will be an investment and covering such semi urban

    areas from beginning will strengthen their base. People in these areas are more

    disciplined towards their advisors for any field and their shift is very less.

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    TABLE OF CONTENT

    Sr. No. Particulars Page No.Preface

    Acknowledgement

    Executive Summary

    1 Introduction 8

    2 Research methodology 11

    3 Industry 143.1 Structure of mutual fund in India 15

    3.2 Types of schemes 16

    3.3 How mutual fund industry works? 17

    3.4 How does advisors earn? 18

    3.5 Why mutual fund is so important? 19

    3.6 MF activities for previous years 20

    3.7 10 major sectors in India 223.8 Why mutual fund advisory 24

    3.9 MF advisory industry five force

    analysis

    25

    4 Company 28

    4.1 About overall work 29

    4.2 What prudent does for advisors who

    join?

    31

    4.3 SWOT of prudent 33

    5 Location of survey- Kadi 35

    6 Literature review 37

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    7 Analysis 41

    7.1 Data analysis and hypothesis testing

    of 1 st questionnaire

    42

    7.2 Data analysis and hypothesis testing

    of 2nd questionnaire

    64

    7.3 Hypothesis together 77

    7.4 Reviews of advisors in open ended

    questions

    78

    7.5 Reviews of investors in open ended

    questions

    80

    8 Conclusion 81

    9 Findings and suggestion 84

    10 Bibliography 87

    11 Annexure 89

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    Introduction

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    This research leads to two sided approach where we focus on customers as well as

    advisors. The main work of advisory firms is to find the best mutual fund companies

    who give greater return at lower risk and associate a connection among these

    companies and advisors. Hence, this research tries to understand the perception of

    investors regarding the savings and investments. It also tries to know about the

    advisors dealing in financial instruments and try to know their perceptions regarding

    mutual fund. It helps them understand the benefits of mutual fund, help advisory

    firms to get more advisors and help the mutual fund companies in selling their

    products.

    Objectives

    To know the investment pattern of people at Kadi as a rural area

    To know the current trend of investment choices among investors

    To know the investment objectives of people

    To know the perceptions of financial advisors working in other instruments

    regarding the mutual funds

    To know possible steps for attracting advisors in mutual fund businessTo understand the loopholes in the mutual fund business as a subject of

    advisors income

    Importance

    Helpful in deciding the scheme according to customer likings

    Helpful in finding new ways to attract advisors

    Spreads the real knowledge of mutual funds among advisors and investorsThis study may give an idea about the rural area and investment opportunities

    in these areas.

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    Differentiated research

    This research involves two surveys. One is about advisors and second is

    about investors.

    This research is done in a specific region on a specific target of advisors whoare dealing in life insurance. The sample size is 20% of the population of

    advisors. Hence, the worth of research is more

    In past, there are very few or none researches about the mutual fund

    advisories and even if they are present, no meaningful insights are available

    according to my knowledge.

    Limitations

    This research has been limited to one area only. So the results will be useful

    to that small area only.

    This research has good sample size for advisors but the investors sample

    size is low. The sample size in figures is same but as a proportion, it is very

    low. Hence, the investors view cant be taken as a complete result. But in this

    study, this much of research was worth. The only need was a general

    perception of people in that specific reason and the attitude that they have

    towards such things.

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    Research

    Methodology

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    Design : Descriptive research (a comparative analysis done for checking the pattern

    of research and bringing out important analysis)

    Data used:

    Primary data

    Secondary data

    Methods of data collection :

    Primary data collected through Sample survey

    Secondary data collected from Prudent CAS ltd, Public magazines & journals

    and internet

    Instrument of data collection

    For sample survey I used questionnaires

    For survey, I used social networking website FACEBOOK and Google+

    For secondary data I used Printed instruments and search engine Google

    Sampling

    Sampling unit:

    Agents dealing in insurances and other such products having client base

    suitable for mutual funds. Contacted to the LIC agents of Kadi

    General public who earn or not earn but know the importance of savings and

    live in Kadi.

    Sampling frame: geographically located in Kadi area which is a town in Mehsana

    district and 50 KMs away from Ahmedabad where the prudent office is located

    Sample design: Convenience sampling

    Sample size:

    50 investors

    50 advisors

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    Time schedule

    June-July 2012, 45 days

    Researcher

    The whole report was prepared by Preeti Rungta under the guidance of the following

    people.

    External Guides from Prudent CAS ltd.

    Mr. Ayaj Mansuri

    Mr. Chirag ModhInternal guide

    Prof. Gurmeet singh

    Qualification: I am doing MBA at present and wishing to opt for finance

    specialization. I have done BBA as graduation. I have undertaken many researches

    informally hence the experience of research is informally joined to me.

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    Industry

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    This project is about mutual fund advisory and not about the mutual fund selling.

    Hence, there is no need of detailed description about the mutual fund. Here is a

    quick review of what mutual fund is.

    A mutual fund is a professionally managed type of collective investment schemethat pools money from many investors and invests it in stocks, bonds, short-term

    money market instruments and other securities.

    Source: http://www.nseindia.com/content/ncfm/MFBM-workbook.pdf

    Structure of mutual fund working in India

    Sponser

    Trustee AMC

    Fundmanager

    Scheme

    Investors

    Custodian

    SEBI

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    TYPES OF SCHEMES AVAILABLE

    Open ended schemes Close ended schemes Interval schemes

    Structure

    Growth schemes Income schemes Balanced schemes Money market schemes

    Objectives

    Sector specific funds Tax saving funds Special purpose funds Index funds

    Otherspecifictypes

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    How mutual fund industry works?

    AMFI is the regulatory authority of mutual fund in India that makes all the rules

    regarding mutual fund. All the mutual fund companies are working under their

    regulations. There are many mutual fund companies with many mutual fund

    schemes. Each fund is managed separately. These companies depend on advisors

    for their work. Hence, they hire their own advisors or join a good advisory firm that

    can sell their mutual fund products. These firms also hire advisors who convince andguide investors for investing in mutual fund by using their own contacts and client

    base.

    AMFI

    Mutual fund companies

    Mutual fund advisors

    Advisors

    Investors

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    How does the advisor earn?

    The AMC (mutual fund companies) invest in a large portfolio after collecting money

    from small investors. This money is invested in a portfolio designed by expert

    keeping in mind the objective of investment. AMC keeps some percentage of investment received as the fees of management. The rest is distributed among the

    investors.

    Mutual fund advisors receive their income from three different sources.

    1. Commission

    this commission is given by the customers for managing their fund. Nowadays

    this commission is removed by many of the companies because the

    customers find it a high cost hence; very few schemes include this

    commission.

    2. Trail

    trail is the most important thing that an advisor gets. This amount is given by

    AMC to advisors. This is a return on the market value of total investment. The

    main problem of mutual fund advisory business arises here. This trail is

    around 0.5% of the investment which seems very low to advisors. This 0.5%

    is on the whole investments market value every year. Hence, the efficient

    advisors can make handsome money if understood properly. It is a small

    looking income but the total value is very high.

    3. Upfront

    upfront is another income that investors get on every investment. Its currently

    around 0.5% on each investment. This again depends upon the numbers and

    level of investment advisors find.

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    Why mutual fund is so important?

    The highest growing sectors in the economy are real estate and gold. With the

    increase in these two sectors, the returns of investors have increased dramatically

    but this is only possible for those who have a large amount to invest. What aboutother people? Most of the people in the India are falling in middle class families.

    These people have savings but at a very low level. They are facing problems

    regarding their houses and gold for various purposes. Education has also been

    costly at the same time.

    In such condition its not easy to depend on earnings. Bank investments are giving a

    return of 8-9% only. They cant invest in gold because they dont have more money.

    The answer to their problem is mutual fund. See the annexure for gold SIP.

    Mutual fund invests in such growing sector and allows you to invest a small amount

    as an installment that can serve you high return as well as systematic investment

    plans for achieving some specific future goals. At the current inflation rate, its very

    essential to save high and invest for specific purposes especially house and

    education.

    Mutual fund works on systematic investment base. There are three types of plans in

    this.

    - Systematic investment plan that allows you to invest regularly in a disciplined

    way. This is helpful because you just need to invest a part of your salary every

    month. One time huge investment is not required here.

    - Systematic withdrawal plan especially designed for elder is such that your

    money can be used for your regular expense as well as gain some return on it

    regularly so that you can use it for long

    - Systematic transfer plan is designed for making your investment flexible. You

    can transfer your fund from one scheme to another scheme after a specific

    period of time.

    These three plans are designed as per the requirement of the investors. This allows

    you to plan systematically and increase the worth of your money. It also provides

    flexibility to your investment.

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    MF Activity for previous years for equity market

    Year Gross

    Purchase(Cr)

    Gross Sale(Cr) Net

    Investment(Cr)2011 131,729.70 125,488.40 6,241.202010 159,151.80 186,786.90 -27,635.802009 181,535.60 186,559.50 -5,024.602008 181,054.30 166,941.60 14,111.702007 186,800.52 180,140.20 6,661.002006 135,840.95 120,456.69 15,382.262005 78,271.44 64,634.15 13,637.712004 42,043.39 43,309.58 -1,366.142003 28,096.03 27,744.62 274.162002 15,254.33 18,248.17 -2,711.522001 12,669.82 17,841.21 -5,177.652000 16,418.41 16,386.50 160.96

    Source: http://www.indiainfoline.com/MarketStatistics/MF-Activity

    This shows how mutual fund industry has been down in the 2009 and 2010. The

    same time was when the markets have fallen drastically. But when it was at peak,

    the investment was very high. The same happened in year 2001 and 2002 when

    people were not being able to trust on markets, but the market revived and

    performed outstanding. The same pattern is expected to be seen now.

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    MF Activity for previous years for debt market

    Year Gross

    Purchase(Cr)

    Gross Sale(Cr) Net

    Investment(Cr)2011 945,618.80 653,452.80 292,166.102010 738,589.00 545,856.50 192,734.602009 527,600.50 325,338.80 202,264.302008 317,141.40 268,548.00 48,593.602007 245,853.20 181,539.00 64,314.402006 136,324.81 88,941.60 47,383.252005 109,410.22 69,056.13 40,379.072004 54,889.76 43,321.63 11,552.012003 58,352.08 38,382.54 19,959.942002 44,879.39 31,341.79 13,752.382001 28,808.34 19,620.86 9,190.832000 9,479.51 6,338.19 3,291.38

    Source: http://www.indiainfoline.com/MarketStatistics/MF-Activity

    This shows how the investments in debt funds have raised every year. There comes

    a shortfall in investments when the market is down but the overall investment is quite

    higher in debt funds. These are secured funds telling that people are investing more

    in debt funds. These figures show how Indian economy is distributed in debt and

    equity market. People are not much risk taking and prefer debt market for many

    years and the culture is still followed.

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    10 major sectors of India

    Food & Beverage

    Industry food and drinks in India has gained in popularity over the last 3-4

    years, mainly because of changing lifestyles and eating habits of people.

    Block most of the increase in revenues from 2005 to 2009, the section of the

    top wines being recorded. 7.5 percent growth rate between 2009 and 2013, it

    expects $ 330 billion industry by 2013.

    IT Industry

    Business India Information Technology in 2009 to 14.1 percent for 2010should increase. 67000000000 analyses of industry experts provide dollar

    industry in 2010 to become year 2013 increased 11 percent. IT services and

    software, hardware components such as B2B commerce contributed to the

    growth of the IT industry are.

    Health Care Industry

    Costs of health care in India and the West because of a huge separation of the health care industry of the country is experiencing a boom in business

    terms. The analysis shows that the current dollar 35000000000 industry by

    2017 the figure of 75 billion dollars in 2012 and 150 billion dollars will touch.

    Telecommunications Industry

    The growth of the telecommunications business in India as easily is called a

    revolution. India is the second largest provider in the telecommunicationsnetwork. The growth of 3G services and mobile telephone in the region has

    made significant contributions to growth. For 11 percent of mobile subscribers

    in the country from 2010 to 2014 is likely to grow.

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    Automotive

    Indian automotive component industry since 2000 with a growth rate of about

    20 per cent growth rate constant and is assumed to remain constant until

    2015. Engine parts, transmission parts advertising campaign steering,suspension and brake parts and electric parts, the overall B2B commerce are

    the main contributors to development.

    Construction Industry

    Accounting for 11 percent of India's total gross domestic product side, the

    construction industry is an exporter of raw materials to the other world. For

    example, China, India exports the largest consumer of steel. In addition, thecement industry is an important contribution in this category.

    Crafts

    Indian handicrafts is a huge demand in foreign markets such as USA, UK and

    Australia, those to enjoy wooden crafts, jewelry, hand-printed fabrics and

    knitted goods mainly to land areas that 3 billion in foreign currency are to be

    made.Energy

    Both renewable energy and non renewable energy, energy sector in India has

    contributed to growth. Natural gas, LPG and solar energy are growing.

    Banking and insurance

    Bank credit cards investment, mortgages and insurance products in areas that

    the banking sector of India and insurance are to contribute to development.

    For example, the number of debit cards increased 40 percent over 2006 and

    2009.

    Source: http://www.made-from-india.com/article/Top-10-Business-Sectors-in-India-

    719.html

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    Why mutual fund advisory?

    A mutual fund company will focus on receiving more of the investments through

    investors. But in reality, the way of financial planning is different. This planning is

    essential for any individual for securing the life. An expert can properly guide themfor their overall financial planning and investment options. People do not know the

    importance of planning and badly invest at one place while overlooking the need of

    other. Every person has different goals in life and for achieving them they will need

    fund at different times. Hence, they must consult advisors before investment.

    Financial planning!

    A good financial planning says that return is not the sole goal of what you save out of your income, security is very important. Hence the financial planning goes in a

    specific direction for distributing the income.

    1st

    Life insurance Health insurance

    2nd

    Savings in secured options savings in uncertain but high return

    3rd keeping cash in hand

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    MUTUAL FUND ADVISORY INDUSTRY FIVE FORCE ANALYSIS

    Mutual fund advisory business

    Threats from new entrantsForeign market and new funds

    Bargaining power of suppliersFund is managed by those whom investors don't know

    Bargaining power of buyersInvestors and agents can leave when they want. no entry or

    exit restrictions

    Threats from substitutesInsurance, post, PPF, direct equity and so on

    Threat from existing playersMany advisory firms emerging in Ahmedabad and other places

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    Threat from new entrants

    Mutual fund industry is threatened by the new coming mutual fund players.

    Foreign companies are entering into the industry. Mutual fund industry is

    itself entering in Indian market and not so grown. In past, there were very

    few companies in MF while today there are many AMCs existing with many

    funds. Due to this, a confusion regarding the performance has increased.

    Threat from existing players

    There are many mutual fund advisories existing in the market. There are

    many mutual fund products competing and the returns have been uncertain.

    Due to some of the frauds happened in the past, the investors are not

    trusting on the mutual funds. Yet there are companies who are not

    performing well and due to that the advisory business is not being able to

    convince them for investing.

    Threat of substitutes

    The biggest threat to mutual fund and its advisory business is of substitutes.

    There are many investment substitutes available in the industry for

    investment as well as business. According to investors, banks are safer

    than mutual funds and giving same returns while the agents are not

    attracted towards the earnings. This is due to the high commission in the

    other businesses that are not so risky also.

    Bargaining power of customers

    In mutual fund industry, bargaining power of customers is such that they can

    withdraw their investment anytime. They have many options available withthem and due to this, they can choose any option that they find the best. So

    the industry has threat of losing investments at any time when investors

    want. If the investors are having high stake in mutual funds, they can control

    the investment options and if not done so, they can withdraw their

    investment. Advisory firms have to continuously keep a contact with them

    for retaining the investments and also keep a continuous watch on the

    industry performance so that they can choose the best products.

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    Bargaining power of suppliers

    In this industry, bargaining power of suppliers is indirect. It is said that the

    regulations enable investors to assure that the investment is not drawn to

    any personal interest. But generally this is not the scenario. Many funds are

    using the money for their own stake and many a times markets are

    dramatically drawn by big investors. The agents who work for mutual fund

    advisory are also uncertain. The whole work depends on their

    understandings and their own reviews. They need high returns which can

    attract them and if they do not get the return, a bad word of mouth can spoil

    the image of product.

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    Company

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    PRUDENT CORPORATE ADVISORY

    Prudence (prdns): the exercise of good judgment, common sense and caution,

    especially in the conduct of practical matters

    It was incorporated in year 2000 with a clear vision of providing professional

    services in the area of personal and corporate investments. It has created a

    niche segment over a period to time with an excellent quality client base. Over

    the past few years Prudent Corporate Advisory Services has created in-house

    capabilities of analyzing funds on various parameters before suggesting them

    to clients.

    The team approach worked wonders and in the short-span of just one

    decade, the Prudent Group expanded its horizon by offering specialized

    services in the areas of Personal and Corporate Investment Planning through

    Mutual Funds, Equities, Derivatives, Third Party Products, Fixed Income

    Products, Life/General Insurance and Real Estate through various companies

    listed below.

    Prudent Corporate Advisory Services Ltd

    As the flagship company, Prudent Corporate Advisory Services remains the

    primary arm of the Prudent Group. It offers specialized services in the area of

    Personal and Corporate Investment Planning through Mutual Funds, Debt and

    Third party products.

    Besides having a large pool of their own clients, the company also manages

    its geographically-spread business operations through a unique platform for independent financial advisors(IFA) which helps them to grow and expand

    their services & support through sales and marketing, technology, operations,

    back- office support, training & consultation.

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    Prudent Broking Services Pvt Ltd

    Incorporated in 2004, Prudent Broking Services Pvt. Ltd is a Stock Broking

    and Depository Participant service provider. Company is a member with

    Bombay Stock Exchange (BSE) & National Stock exchange (NSE) & Central

    depository services (India) Limited (CDSL). Company is in the process of

    creating its national presence by opening offices in various parts of the

    country.

    Prudent Properties

    The Property sector is an important part of the asset class, but the effort and

    paperwork involved in purchasing the same can be intimidating. Prudent

    Property provides real estate solutions not only in creating an asset class but

    is also helping the customers in buying their dream realty, whether it is homes

    or offices.

    Source: http://www.prudentcorporate.com/aboutprudent.aspx

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    What Prudent does for advisors who join?

    1. a large variety of products in the same desk

    - Mutual Fund- Life Insurance

    - General Insurance

    - Fixed Income Product

    - Financial Planning

    - Broking

    - Real Estate

    2. Complete financial planning module and new planning ways for changing

    market circumstances

    Prudent has a team of experts who are working in this field for many years.

    They continuously prepare some planning modules that can help in fulfilling

    the different investment objectives of investors. Advisors need more specific

    and customized planning for their clients. When there are more plans, the

    customization is more. While doing internship, I have seen some of examples

    that show how efficiently their experts make such plans which are extremely

    beneficial after a bit of changes and fit many of the investors.

    3. Priority accounts for advisors as well as clients

    This is a unique facility that Prudent is providing. They provide their own

    accounts especially designed for their database maintenance and easy record

    through internet. They also provide the clients with a facility to offer such

    special account for each of their clients so that they can understand their own

    investments in the past. Advisors can charge their clients for these services

    while Prudent does not charge anything for the same.

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    SWOT ANALYSIS OF PRUDENT CAS LTD.

    Strength

    Prudent has a good expert team that can analyze the market very well. This

    helps them in finding the best products available in the market so that the

    investors are more attracted and stay for long. This is the main strength of

    Prudent that they provide such support and other facilities to agents and

    that too at no cost. The other main strength is the big combo of servicesprovided. There are many things included in same bracket so many financial

    services can be provided under one head. There are many reputed

    companies which are connected with prudent because of the excellence of

    work they have and the experience in this field.

    StrengthExcellence

    Weaknes sRetention

    OpportunityUnexploited market and

    need for expert

    ThreatSubstitute businesses

    and uncertain rules of MF

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    Weakness

    Prudent needs a lot of market work. Its not easy to collect many advisors

    who can join this business. They are spending a lot behind advisors and its

    not easy to get work from them. They are not being able to retain more of

    the advisors with them. This is due to the changing rules of mutual funds.

    Their work and facilities are excellent but many of the new advisors are

    joining them and leaving after getting experiences.

    Opportunity

    They have an opportunity to secure a large market because people need to

    invest in secured funds. People need expert advice for investment because

    markets are being very uncertain. So they need trustworthy advisor to get

    suggestions and secure their money. There are many rural markets where

    people have money to invest but awareness is less. These markets are yet

    to be explored and a great opportunity is hidden for them in such markets.

    They also have opportunity to provide guidance and literacy about MF at

    rural markets and gain life time loyalty and a huge investment.

    Threat

    There are many threats to Prudent. The first one is most obvious direct

    competition from other advisory firms that exist at different places. At

    present the number of mutual fund advisories is not high but its increasing

    day by day. Except that, the advisory business is facing threat of the other

    financial services, especially insurance where the initial income is so

    attractive that the agents are moving in to that. The advisory business hasseen downfall in advisors income hence the agents are not attrac ted to the

    income and prudent is focusing on the existing advisors, that is very tough.

    So it can be a challenge for them to attract such advisors and train them for

    MF business or find new comers to train from starting.

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    Location

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    Kadi as a location

    Kadi is a small town that has a population of around 1 lakh people. This is a place

    which is at the centre of many villages that are not much developed. These villages

    find most of their facilities from Kadi. Kadi is a semi developed region where

    education has been a priority for many years. Due to this, the place is developing

    and attracting other villages to join.

    People in Kadi are earning their incomes from good sources as their education

    quality is good and they are surrounded with a good industrial area. Big cities like Ahmedabad, Mehsana, and Patan etc are very close to the town. In these cities,

    there are numerous jobs available and easy travelling is possible.

    In Kadi town, excluding the other villages included in that, there are 300 LIC agents

    who are working at their best client base. Each of them is having a high client base

    in Kadi and nearby villages. These people are not much involved in any of the risky

    financial products while the public has money to invest. In such a situation, it is

    worthwhile to know about their perceptions of investment and target the place for investment.

    In Kadi, mutual fund business has been established previously. Reliance and Kotak

    are working at this place for few years but the overall coverage is very low. These

    companies are also not being able to cover much market because of the limitation of

    having little choice in products.

    This place can be targeted for attracting the investors by making them aware aboutproper financial planning. This is the main topic of this research and proven in this

    research.

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    Literature

    review

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    Mutual fund industry has not grown much in India yet.It needs advisors who can sell these schemes to clients as they have good

    client base. For this, mutual fund companies need to think about advisors

    also.

    There is a lack of awareness among advisors regarding mutual funds. They

    generally consider it so risky as equity

    The advisors are given trails on the investment which they consider as low

    due to its small percentage size which is 0.5% but in long run the total amount

    grows larger. This is the fact of mutual fund industry which may or may not be

    known to these advisors.

    There is a huge share market in India but people do not understand the

    importance of mutual funds and find it riskier which is not.

    People do not invest on the complete investigation. They invest on their

    intuitions and incomplete knowledge. Hence, their perceptions are important

    to know.

    Its important to find advisors if the mutual fund industry needs to grow and for

    this reason, their perceptions are needed to learn and rectification is needed

    by giving them true knowledge of the same.

    Investment market for mutual fund schemes SIP / STP are threatened by bank

    deposits, post office, etc. Main reason behind that is people are more concern about

    the security of money and life after retirement and also fixed rate of return. The

    misconception that prevails among the most of investor and investment advisor is

    that mutual funds schemes SIP / STP are only for middle c lass & it is invested in

    stock markets. Very small numbers of investor are aware about the mutual fund and

    its concept. So, the success lies in creating awareness among investor and brokers.

    Source: research report 1*

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    People generally tend to save 20% to 40% of their income while investment Kit of

    that tends to remain 40% to 60%. As we have seen in the analysis, investors are

    always searching for the safe investment. And they also want healthy returns. So

    mutual fund is the safest way for getting healthy returns. In the case of timings most

    individuals prefer only two options:

    (1) As per yearly schedule in order to have proper returns & regular flow of income

    can be generated very easily.

    (2) As & when they have surplus in order to go for the option of wealth generation.

    In the case of opinions people take more opinion from spouse/ parents & financial

    advisor thinking that professionals always help in such decisions.

    On a comparative basis we found certain similarities like need for safety and wealth

    generation top the list of criterion they consider while investing. They all prefer to

    invest their savings at least in 2 avenues or more and the most preferred avenues

    are government securities basically for tax saving purpose i.e. PPF, Post Office

    Deposits, RBI Bonds, Banks/FIs which remain the top three preferences for investing

    and then the rest. Here, it is also found that comparative investment in mutual fund is

    quite less.

    When it comes at safety being 1st criteria, individuals are very well aware about the

    investment avenues available under this criterion. So attitude is likely to invest in

    PPF, Post Office Deposits, & INSURANCE.

    When it comes at liquidity as 1st criteria people are not clear about its meaning & as

    they are keeping some amount on hand instead of saving therefore it becomes

    indifferent for people as investment criteria.

    When it comes at tax efficiency Insurance, PPF & RBI tax-free bonds are preferred

    the most. It has been ranked 2nd as far as it is concerned with investment criteria.

    When people are asked about a scheme that is available at lesser return rate but

    with liquid funds & tax-free return, generally people are ready to accept it. As far as

    knowledge about different statements of portfolio is concerned, it is observed that

    people are having proper understanding of portfolio market & its scenario concern.

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    There was an open-ended question that was asked to know the effect of inflation &

    government policy. And it was very perfectly asked by individuals. Most of them have

    started planning for Retirement, Children education and meeting with future

    contingencies.

    So, overall we can conclude that people are less aware about the working & different

    schemes offered by mutual fund schemes. People always consider Safety as 1st

    criteria & now-days they are also taking an advantage of tax-free schemes. They are

    perfectly aware of portfolio market may be the help by professionals.

    Source: research report 2*

    Currently industry is gradually growing phase and Indian Mutual Fund industry has

    been definitely maturing over the last few years and the level of awareness today is

    much more than what it was in the past. But the level of awareness has not yet

    reached the rural and other smaller towns and it is more of a smaller towns and it is

    more of an urban phenomenon. What is needed is the spread of awareness beyond

    regional limits. Mutual Fund as a concept is well known, but the target audience still

    needs to gain more awareness.

    Source: research report 3*

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    Analysis

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    General data regarding advisor survey

    The client base of agents who are working as the agents at LIC

    Client base Frequency

    Less than 100 0

    100-300 5

    300-500 10

    500-1000 21

    more than 1000 14Total 50

    As discussed earlier, agents in Kadi have a large client base. They all have anaverage client base of 1000. This shows that people are investing money in the lifeinsurances.

    100-30010%

    300-50020%

    500-100042%

    more than100028%

    Client Base

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    Age group of sample

    The age group of most of the agents is 31-40. This age group is generallyconsidered as the most enthusiastic age. This is an age where a person is

    experienced and enthusiastic to learn.

    26-3010%

    31-3536%

    35-4024%

    41-4518%

    46-5012%

    Age

    Age Frequency

    26-30 5

    31-35 18

    35-40 12

    41-45 9

    46-50 6

    Total 50

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    Agents who know about royalty income in mutual fund

    This shows that agents who know about mutual fund also know about mutual fund

    royalty income. There are 40% people who know about this. Our perception initially

    said that they are not aware of this royalty income.

    no60%

    yes40%

    Royalty income

    Do you know it gives royalty income

    Frequency

    no 30

    yes 20

    Total 50

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    Agents who would like to enter in mutual fund business

    This shows that agents are not ready to enter in mutual fund business. They are

    having a trendy negative impact on this thought. Only 22% are ready that too with no

    serious thought of joining it without knowing about it.

    no78%

    yes22%

    Enter in MF business

    Enter in MF business

    Frequency

    no 39

    yes 11

    Total 50

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    H0: There is no significant relation between approximate client base and interest in

    joining with MF.

    H1: There is a significant relation between approximate client base and interest in

    joining with MF.

    Enter in MF

    business

    TotalNo Yes

    Approximate client

    base

    100-300 3 2 5

    300-500 7 3 10

    500-1000 19 2 21

    more than

    100010 4 14

    Total 39 11 50

    Chi-square tests

    Value D/f

    Value

    2 tailed

    Pearson chi-square 3.574 3 .311

    N of valid cases 50

    Result

    There is no significant relation between approximate client base and interest in

    entering to MF. Only 22% people wishes to join in MF and they are not from any

    specific category.

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    H0: there is no relation between client base and advisors wish for record and

    maintenance.

    H1: there is a significant relation between client base and advisors wishing for

    record and maintenance support.

    Advisor record and

    maintenance

    Total

    If not

    selected If selected

    Approximate clientbase

    100-300 5 0 5300-500 7 3 10

    500-1000 21 0 21

    More than

    100012 2 14

    Total 45 5 50

    Chi-Square Tests

    Value D/f

    Value

    (2-sided)

    Pearson Chi-

    Square7.619 3 .055

    N of Valid Cases 50

    Result

    H0 is accepted hence there is no such relationship. Generally we find that people

    having more clients, complaint that their record maintenance is tough. But in this

    sample, most of the people are not giving importance to record maintenance. It

    shows that they dont know the importance of record maintenance.

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    H0: there is no relation between client base and interest in knowing about mf.

    H1: there is significant relation.

    It's good to know about mf as it's an emerging business in

    India

    Total

    Approximate

    client base Highly

    agreed

    Moderatel

    y agreed Neutral

    Moderatel

    y

    disagreed

    Highly

    disagree

    d

    100-300 1 1 1 1 1 5

    300-500 8 1 1 0 0 10

    500-1000 7 10 1 1 2 21

    More than

    10006 3 5 0 0 14

    Total 22 15 8 2 3 50

    Chi-square tests

    Value D/f

    Value

    (2-sided)

    Pearson chi-square 21.19 12 .048

    N of valid cases 50

    Result.

    There is a significant relation between client base and interest in knowing about

    mf. People with more client base are interested in knowing more about MF.

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    H0: there is no relation between knowing about royalty income and joining mutual

    fund.

    H1: there is a significant relation between knowing about royalty income and

    entering into MF business.

    Enter in MF

    business

    TotalNo Yes

    Do you know it

    gives royalty

    income

    No 27 3 30

    Yes12 8 20

    Total 39 11 50

    Value D/f

    Value

    (2-sided)

    Pearson Chi-

    Square6.294 1 .012

    N of Valid Cases 50

    Result

    The null hypothesis is rejected. There is a significant relation between knowing

    about royalty income and joining mutual fund. Most of the people do not know

    about royalty income. Those who dont know about royalty income, 90% of them

    are not joining MF

    Those who know about royalty income, 40% of them are wishing to join MF.

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    H0: there is no relation between age and client base.

    H1: there is a significant relation between age and client base.

    Approximate client base

    Total100-300 300-500

    500-

    1000

    More than

    1000

    Age 26-303 2 0 0 5

    31-35 2 8 8 0 1835-40 0 0 9 3 12

    41-45 0 0 2 7 9

    46-50 0 0 2 4 6

    Total 5 10 21 14 50

    Chi-Square Tests

    Value D/f

    Value

    (2-sided)

    Pearson Chi-

    Square

    50.82

    912 .000

    N of Valid Cases 50

    Result

    Null hypothesis is rejected. There is a significant relation between client base and

    age. People with more age have more client base.

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    H0: there is no relation between age and knowing about MF

    H1: there is significant relation between age and client base.

    Do you know about mf

    TotalNo Yes

    Age 26-303 2 5

    31-35 4 14 18

    35-40 5 7 1241-45 4 5 9

    46-50 6 0 6

    Total 22 28 50

    Chi-Square Tests

    Value D/f

    Value

    (2-sided)

    Pearson Chi-

    Square

    11.64

    84 .020

    N of Valid Cases 50

    Result

    Null hypothesis is rejected. Hence, there is a significant relation between age and

    knowledge of MF. Age group of 31-35 knows more about MF while agents above

    45 do not at all know about it.

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    This data is about how many advisors are aware about the business of mutual fund

    and if not aware then what is the reason for the same.

    Do you know

    about mf businessFrequency

    No 22

    Yes 28

    Total 50

    From the above data it is clear that 56% people know about mf. It cant be said that

    they know completely but they feel that they are aware about mf business. Out of

    those who dont know about mf business say that either their workload is high or

    they can t spend time for this low income option.

    Why you dont know about mf business?

    Frequency

    Dun know about mf 3

    Cant understand clients return 1

    Cant handle the workload 8

    Income seems low to me 9Cant understand product difference 1

    Total 22

    System 28

    50

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    Advisors viewpoints regarding beneficial variables for their clients are likewise.

    Selected

    High return 46

    Low risk 30

    Diversified product category 9

    Tax savings 20

    Low charges on investment 4

    It can be said that people are more likely to see the return and risk factor while

    investing or advising for investment. They also focus on tax saving as a purpose of

    investment.

    46

    30

    9

    20

    40

    5

    10

    15

    2025

    30

    35

    40

    45

    50

    High return Low risk Diversifiedproduct

    category

    Tax savings Low chargeson investment

    Investor's benefit

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    Advisors viewpoints regarding their own benefit in the following variables are

    likewise.

    Selected

    Commission 50

    Extra incentives 14

    Easy record and maintenance 5

    Complete knowledge of instruments 6

    Continuous guidance 5

    Free of charge entry and exit 6

    This chart and data shows that advisors are mainly focusing on commission while

    looking for any business. Other factors are not so important. Extra incentives are

    preferred by some people but commission is the main benefit.

    50

    14

    5 6 5 60

    10

    20

    30

    40

    50

    60

    Commission Extraincentives

    Easy recordand

    maintenance

    Completeknowledge

    of instruments

    Continuousguidance

    Free of charge entry

    and exit

    Advisors' benefits

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    Decision of advisors about Prudent Frequency

    interested in knowing more 21Interested in joining now 0

    interested in joining but later 1

    not t all interested 28

    Total 50

    There is no one who would like to join the business at present. In fact only 2%people are wishing to join afterwards. Many people are interested in knowing but

    they dont seem to be joining or thinking about joining later.

    interested inknowing more

    42%

    interested in joining but later

    2%

    Not at allinterested

    56%

    Decision of advisor

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    Analysis regarding following statements

    1 2 3 4 5

    Mutual fund is less risky than stock

    market.

    4 20 14 9 3

    Advisors income is more in long

    run in MF business

    1 2 15 15 17

    Expert advice plays an important

    role

    24 18 6 2 0

    At costless support there is no

    harm in joining MF business.

    3 3 10 10 24

    MF is an emerging business andits good to know about it.

    22 15 8 2 3

    18%

    240%

    328%

    418%

    56%

    MF is less risky than

    stock market

    Most of the agents are saying that mutual

    fund is less risky than the stock market.

    But a few people do not agree with this

    statement. Only 8% people were agree

    that its highly safe than stock market.

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    12% 24%

    330%

    430%

    534%

    Advisor income ismore in MF in long run

    148%236%

    312%

    44%

    Expert advice plays animportant role

    Most of the advisors are not agreed

    with the statement that the income in

    MF business is more in long run. They

    are not agreed with the incomeopportunities in long run also.

    Most of advisors are in the favor of

    expert advice and all of them feel that

    the importance of expert advice is

    inevitable for any investment .

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    1

    6% 26%3

    20%

    420%

    548%

    At costless supportthere is no harm in

    joining MF business

    144%

    230%

    316%

    44%

    56%

    It's good to know about

    MF business

    This analysis is clarifying the fact

    that such a free support is also not

    attracting the advisors and they are

    not ready to join the business for such facilities.

    In the above graph it was shown that

    agents are not interested in joining thebusiness but this graph shows that they

    would like to know about the business.

    There can be a hidden line between

    these two statements that they dont

    want to join because they dont know

    about this business.

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    Analysis regar ding to facilities of Prudent and agents view on that

    1 2 3 4 5

    Online back office support for managing your and

    your clients data

    5 10 5 9 21

    Basic business opportunity knowledge 3 8 10 12 17

    Complete knowledge of MF 22 14 5 6 3

    Exam preparation 21 26 3 0 0

    Knowledge of best products available 13 25 10 0 2

    Continuous support and suggestions 6 10 13 12 9

    Every week awareness seminar 2 8 19 14 7

    Special seminar for your clients at our cost 3 10 18 9 10

    Health insurance added to the same bracket 21 26 3 0 0

    110%

    220%

    310%

    418%

    542%

    Online backfficesupport

    Very few people are interested in such

    kind of support though it can be very

    useful and provided at no cost.

    Basic business opportunity knowledgeis not given much importance by the

    advisors. They dont find is so

    essential and feel that it can be done

    easily by anyone who is joining

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    16%

    2

    16%

    320%

    424%

    534%

    BOK

    144%

    228%

    310%

    4

    12%

    56%

    Complete knowledge of MF

    Prudent provides complete

    knowledge of mutual fund before

    starting with the business. Most of

    the people have agreed that this isvery important as they do not know

    about mutual fund .

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    142%

    252%

    36%

    Exam preparation

    126%

    250%

    320%

    54%

    Knowledge of bestproducts available

    Exam preparation is a task that

    every advisor has to pass

    through before entering in any

    of the financial productbusiness. Hence, exam

    preparation is chosen as

    important by advisors.

    There are many schemes available

    in the mutual fund and the advisors

    always need to know about the best

    products that they can offer to their

    clients. Hence, the advisors are

    looking at this point as important .

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    112%

    220%

    326%

    424%

    518%

    Continuous supportand suggestions

    1

    4%2

    17%

    341%

    431%

    5

    7%

    Every week seminar

    Continuous support is a good

    facility that every advisory has

    to compulsorily provide. This

    point is equally distributed andhence any specific like or dislike

    is not seen. However, the more

    part is on negative side.

    The every week seminar is not

    much understood by agents as

    it is new to them and of no use

    until they understand the

    complete business. Hence, they

    havent given much importance.

    There is no such highly positive

    or highly negative response .

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    17%

    223%

    342%

    421%

    57%

    Special seminars

    142%

    252%

    36%

    Health insurance

    The special seminar is also

    having same kind of response as

    in every week seminar. There

    are equally distributedfrequencies in this and most of

    the people stayed neutral.

    As the sample is taken from LIC

    agents, the health insurance option

    is more liked by the agents. They

    are most likely to select the health

    insurance part as this is quite

    familiar product to them.

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    General data regarding the investors survey

    18-2328%

    23-2814%

    28-3522%

    35-5032%

    50-654%

    Age

    Age Frequency18-23 14

    23-28 7

    28-35 11

    35-50 16

    50-65 2

    Total 50

    Gender Frequency

    Male 29

    Female21

    Total 50

    male58%

    female42%

    Gender

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    Salary Frequency

    None 22Less than 10000 pm 2

    10001-20000 pm 12

    20000-30000 pm 10

    30000-45000 pm 3

    Above 45000 pm 1

    Total 50

    Occupation Frequency

    Student 11Profession 8

    Business 9

    Housewife 8

    Government

    employee6

    Private employee 8

    Total 50

    Student22%

    Profession16%

    business18%

    housewife16%

    governmentemployee

    12%

    privateemployee

    16%Occupation

    none44%

    less than 10000pm4%

    10001-20000pm

    24%

    20000-30000pm

    20%

    30000-45000

    pm6%

    above 45000pm2%

    salary

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    H0: there is no relation between age and saving perceptions.

    H1: there is a significant relation between age and saving perceptions.

    How much should be saved

    Total0-15%

    15%-

    30%

    30%-

    50%

    50%-

    75%

    Age 18-

    230 6 8 0 14

    23-

    28 2 4 1 0 7

    28-

    350 1 8 2 11

    35-

    500 1 11 4 16

    50-

    650 1 1 0 2

    Total 2 13 29 6 50

    Chi-square tests

    Value D/f

    Value

    (2-sided)

    Pearson chi-square 28.904 12 .004

    N of valid cases 50

    Result

    Null hypothesis is rejected. There is a significant relation between age and saving

    perceptions. Elder people are saving more than the younger.

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    H0: there is no relation between age and knowing about mf

    H1: there is a significant relation between age and knowing about mf

    Do u know about mf

    TotalNo Yes

    Age 18-23 7 7 14

    23-28 1 6 7

    28-35 5 6 11

    35-50 11 5 16

    50-65 1 1 2

    Total 25 25 50

    Chi-square tests

    Value D/f Value(2-sided)

    Pearson chi-square 5.912 4 .206

    N of valid cases 50

    Results

    Null hypothesis is accepted. There is no relation between age and knowledge

    regarding mf. With my surprise, there are an equal proportion of people who know

    about mf and who dont. I believe that the population result would surely be

    different. But the age factor will not decide the knowledge regarding mf.

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    H0: there is no relation between age and type of investment they like

    H1: there is a significant relation between age and their investment perception.

    Which kind of investment u prefer

    Total

    Stable return

    low risk

    High risk high

    return

    High risk high

    return at lower

    risk on

    investment

    Age 18-23 3 3 8 14

    23-28 1 1 5 7

    28-35 3 4 4 11

    35-50 12 2 2 16

    50-65 1 0 1 2

    Total 20 10 20 50

    Chi-Square Tests

    Value D/f

    Value

    (2-sided)

    Pearson Chi-Square16.080 8 .041

    N of Valid Cases 50

    Result

    Null hypothesis is rejected. There is a significant relation between age and

    investment type. Elder people mostly like stable return at low risk while the

    younger people like high return and ready to bear risk.

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    H0: there is no relation between age and preference of investing in mf.

    H1: there is a significant relation between age and preference of investing in mf.

    Would you like to invest

    TotalNo Yes

    Age 18-23 4 10 14

    23-28 4 3 7

    28-35 9 2 11

    35-50 13 3 16

    50-65 1 1 2

    Total 31 19 50

    Chi-square tests

    Value D/f

    Value

    (2-sided)

    Pearson chi-square 11.183 4 .025

    N of valid cases 50

    Result

    The null hypothesis is rejected. There is a relation between age and preference of

    investing in mf. Younger are ready to invest in mutual fund while elders are not

    ready to invest.

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    H0: there is no relation between gender and saving perceptions.

    H1: there is a significant relation between gender and saving perceptions

    How much should be saved

    Total0-15%

    15%-

    30%

    30%-

    50%

    50%-

    75%

    Gend

    er

    Male 1 7 19 2 29

    Fem

    ale1 6 10 4 21

    Total 2 13 29 6 50

    Chi-square tests

    Value D/f

    Value

    (2-sided)

    Pearson chi-square 2.316 3 .509

    N of valid cases 50

    Result

    The null hypothesis is accepted. There is no relation between gender and saving

    perceptions. Women are also having same perceptions regarding savings as men

    are having. May be this is because we are talking about family savings.

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    H0: there is no relation between gender and knowledge regarding mf

    H1: there is a significant relation between gender and knowledge regarding mf

    Do u know about mf

    TotalNo Yes

    Gender Male 11 18 29

    Female 14 7 21

    Total 25 25 50

    Value D/f

    Value

    (2-sided)

    Pearson chi-square 4.023 1 .045

    N of valid cases 50

    Result

    The null hypothesis is rejected. There is a significant relation between gender and

    knowledge regarding mf. Females are not much aware about mf.

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    H0: there is no relation between occupation and knowledge regarding mf

    H1: there is a significant relation between occupation and knowledge regarding mf

    Do u know about mf

    TotalNo Yes

    Occupation Student 5 6 11

    Profession 2 6 8

    Business 5 4 9

    Housewife 7 1 8

    Government employee 5 1 6

    Private employee 1 7 8

    Total 25 25 50

    Chi-square tests

    Value D/f

    Value

    (2-sided)

    Pearson chi-square 13.869 5 .016

    N of valid cases 50

    Result

    The null hypothesis is rejected. There is a significant relation between occupation

    and knowledge regarding mf. Private employees and those who are in profession

    know about mf (most of them are professors and teachers) while the housewives,

    government employees and unexpectedly businessmen are not aware about mf.

    Students are equally proportioned in knowing or not knowing about mf.

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    H0: there is no relation between occupation and type of investment preferred.

    H1: there is a significant relation between occupation and type of investment

    preferred.

    Which kind of investment u prefer

    Total

    Stable return

    low risk

    High risk

    high return

    High risk high

    return at lower risk

    on investment

    Occupati

    on

    Student 2 2 7 11

    Profession 2 2 4 8

    Business 2 4 3 9

    Housewife 6 1 1 8

    Government

    employee6 0 0 6

    Private

    employee2 1 5 8

    Total 20 10 20 50

    Chi-square tests

    Value D/f

    Value (2-

    sided)

    Pearson chi-square 21.989 a 10 .015

    N of valid cases 50

    Result

    The null hypothesis is rejected. There is a significant relation between occupation

    and type of investment preferred. Students, professionals and private employees

    are more likely to invest in high return high risk with low risk on investment while

    housewives and government employees prefer stable return at low risk.

    Businessmen are most likely to invest in high risk high return investment options.

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    Investment pattern of people

    Investment

    option

    Frequency

    Short term

    Savings

    account

    34

    Fixed deposits 34

    Money market 9

    S. Equity 15

    Physical

    Gold 41

    Real estate 10

    Commodity 28

    Long term

    Post office 10

    PPF 2

    Company FD 8

    Bonds 15

    Mutual Fund 14

    L. Equity 24

    See top five- dark colored

    34

    34

    9

    15

    41

    10

    28

    10

    2

    8

    15

    14

    24

    0 10 20 30 40 50

    Savings account

    Fixed deposits

    Money market

    S. Equity

    Gold

    Real estate

    Commodity

    Post office

    PPF

    Company FD

    Bonds

    Mutual Fund

    L. Equity

    Investment

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    Market perception of people

    See top 4 darkened

    Current market perception in investors mind

    Commodity 5 Oil and gas 11Banking 23 FMCG 9

    For-ex 14 Food processing 13

    Real estate 46 Steel 23

    Pharmacy 13 Heavy electronics 19

    IT 18 Power 31

    Financial services 3

    5

    23

    14

    46

    13

    18

    3

    11

    9

    13

    23

    19

    31

    0 10 20 30 40 50

    Commodity

    Banking

    For-ex

    Real estate

    Pharmacy

    IT

    Financial services

    Oil and gas

    FMCG

    Food processing

    Steel

    Heavy electronics

    Power

    Current market

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    Ranking of investment objectives

    1 2 3 4

    Regular income 12 11 17 10

    Capital appreciation 22 19 8 1Tax saving 8 13 11 18

    For specific reason 8 7 14 21

    People are mostly doing investment for capital appreciation. The second objective

    is regular income. Third objective is tax saving and forth is for specific reason. That

    means people are not concerned with the fact that they will need money for some

    specific task in future and there should be a systematic investment for that.

    12

    22

    8 8

    11

    19

    137

    17

    8

    11

    14

    10

    1

    1821

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    Regular income Capitalappreciation

    Tax saving For specificreason

    1 2 3 4

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    Hypothesis

    H0 H1 Comparison Result

    There is no significant

    relation between

    There is a significant

    relation between

    Advisors

    Client base and interest in joining MF business 0.311 > 0.05 H0 accepted

    Client base and importance of record and

    maintenance

    0.055 > 0.05 H0 accepted

    Client base and interest in knowing about MF

    business

    0.048 < 0.05 H0 rejected

    H1 accepted

    Age and client base 0 < 0.05 H0 rejected

    H1 accepted

    Age and knowledge about MF business 0.02< 0.05 H0 rejected

    H1 accepted

    Knowing about royalty income and interest in

    joining MF business

    0.012< 0.05 H0 rejected

    H1 accepted

    Investors

    Age and saving perception 0.0040.05 H0 accepted

    Age and investment perception 0.041

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    Reviews of advisors in open ended questions

    - They would like to know about MF but they dont want to join

    MF business for various reasons.

    - 0.50% trail and 0.5% upfront is not a good amount of commission. Its better to focus on life insurance.

    - Mutual fund is risky for advisors and investors. Only long term

    income is possible. In short run, there is nothing to earn.

    - Mutual fund is completely risky as it depends on the market.

    - They will wait for the commission to grow up and then think of

    entering in market

    - The money of investors has been lost. Their clients and their own investment has seen losses in mutual funds.

    - They are having lots of work and not having time to learn

    about mutual fund.

    - They are not able to understand these many products

    - They dont want any online support as they cant work on

    internet a nd they dont have time to spend after it.

    - It needs lots of market knowledge and ability to understand theproduct. Youngsters with financial knowledge should join it.

    - People do not understand MF and they cant take such

    products which they cant offer suc cessfully.

    - Commission is the main income as upfront and trail, other

    incentives are not so attractive and they cant be taken as real

    income.

    - MF industry is declining so there is no need to enter it

    - There are many other options available to deal along with the

    life insurance. These products are better than mutual fund

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    Advisors dealing with insurance and MF

    - People are not aware about MF

    - Very few people know about MF and they invest in those

    products which their advisors offer - There is a huge money to at tract but the investors dont have

    any knowledge regarding the returns hence they invest in

    insurance as a safe measure

    - They have passed through bad experiences in the past. Many

    advisors without any expertise have shown them huge losses

    which they cant f orget hence they like to stay away from

    market investment whether its in stock market or mutualfunds.

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    Comments of investors

    Stocks manage by only knowledge of market and for knowledge of market

    you have full concentrate on market up dates but this not possible for a

    working person, businessman or student .

    Stock market gives higher returns than the mutual funds. The risk level is

    same in both. There is nothing like low risk in mutual fund.

    Stock market and mutual funds are risky and its not wise to invest in that. Its

    better to invest in any physical product such as real estate or gold.

    Its good to invest for long term. Short term investment in the market is very

    risky and without any analytical skills, its not advisable to invest for short

    term. I always keep a long term perspective.

    Stock market volatility is the major issue for the short term investment

    nowadays, but for long term as usual specific stock approach can lead you to

    capital gain or a good return.

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    Conclusion

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    - These advisors are not interested in joining mutual fund business

    because of the commission they receive.

    - The second mostly preferred reason is their workload and age. They are

    already in to a business where they feel they are getting high income.

    They are not in a condition to learn so many products for a lesser

    amount of income.- The starters are ready for it but there has to be an awareness and

    proper earnings that can attract youth towards it.- Many research papers say that MF needs to increase awareness for

    increasing investment but my research shows that people are aware of mutual fund but the unattractive pattern of income and some bitter

    experiences are forcing them to go against it.- Advisors have been investors and experienced outflow of money so they

    do not want their clients to suffer through it. They find some reasons for

    not joining MF.

    The past investment experiences were badThey are unaware of what advisory businesses do

    They are not attracting towards the o.50% income pattern.

    Advisors are not ready for MF as it includes many products

    and dependent on market conditions. Hence, they find it

    uncomfortable and risky

    Many people feel that MF is a pool of learning stock market but

    there is no earning. We cant go for this business just for learning. We have to earn.

    Everyone believes that MF gives rewards in long run and that

    too is uncertain. Hence, they dont want to enter.

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    - On the other hand, investors are saving a large amount. They are ready to

    invest in stock market and MF. Many are ready for risk taking. Their

    incomes and savings are good and they are just earning low in savings

    account and other such things because they are not aware of mutual funds.- If there is saving then there is surely a scope of putting mutual fund.

    Perhaps insurance agents are not the targets.- People have lost money in bad funds. They need proper guidance and that

    can be given by advisory businesses.

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    Findings and

    suggestion

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    Findings

    - Kadi is a place where income level is higher than other nearby

    villages. It has a large population and their income level and literacy

    level is also high.- This place is a good target for the mutual fund business if done

    properly- Awareness regarding mutual fund advisory is less among investors

    and due to past experience; people are not ready to invest in MF.- LIC agents are attracted towards the huge initial income.

    - Due to general trend, the responses are dependent on each other

    and true perceptions of advisors are not arrived.- Investors are investing their money in equity market hence the scope

    of mutual fund is high.

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    Suggestions

    - The MF advisory should turn to Kadi and spread awareness

    among investors. When investors will understand they will

    demand mutual fund and advisory support. This way can behelpful in attracting advisors.

    - The perceptions of advisors can be changed only when their

    clients will tell them. Hence, focus on clients rather than on

    advisors- Those who are starting with career are more interested in entering

    the MF business. It can be a great opportunity to focus on them

    and make them ready for long run. Its not so easy to attractpeople who are already into a business earning good amount.

    Hence, prepare the new comers for this work, let them

    understand market under your guidance and cover new markets.

    When there will rise the competition, all agents including

    insurance will get attracted.- Most of the advisors dont know about royalty income, its good to

    arrange programs at different cities regarding mutual fundbusiness and do the same in business related colleges. This will

    attract the youngsters to enter.- Kadi is a place which is covering many villages around it and

    these places are full of investors who depend on their advisors. If

    advisory firms can prepare agents for consulting with these

    people, they can get huge investments.

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    Bibliography

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    Reports

    1. Ladani V., Patel Z. (2010). A project report on Investor perception about

    different investment products. R. B. Institute of management studies.

    2. Upadhyay S (2011). Study about the investment attitude of individuals.NSVKNS, MBA College.

    3. Patel S., Sharma A. (2010). Survey on investor perception with respect to

    different investment avenues. R. B. Institute of management studies.

    Websites

    1. http://www.prudentcorporate.com/aboutprudent.aspx

    2. http://www.itrust.in/fixed-deposit.action3. http://www.indiainfoline.com/MarketStatistics/MF-Activity

    4. http://www.made-from-india.com/article/Top-10-Business-Sectors-in-India-

    719.html

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    Annexure

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    Questionnaire -1 for advisor survey

    1. In which of the following things you deal apart from life insurance? Alsostate the company name.

    Instruments Yes/noHealth insuranceGeneral insuranceMutual fundPPFPost recurringFixed depositsDirect Equity

    2. What is the approximate client base at present?

    Less than 100

    100-300

    300-500

    500-1000

    More than 1000

    3. Do you know mutual fund business?

    - Yes

    - No

    If no then why not?

    Dont know about mutual fund Cant understanding my earningsCant understand clients return(performance of MF) Cant handle the work load Income seems low to me

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    Cant understand the product difference Any other..

    4. Out of the following, which of these attracts you for the benefit of your clientmore?

    High returnsLow riskDiversified product categoryTax savingsLow charges on investmentIf any other

    5. Which of the following do you consider are of importance to you as an

    advisor?

    CommissionExtra incentivesEasy records and maintenanceComplete knowledge of instrumentContinuous guidanceFree of charge entry and exitIf any other..

    6. If you are said to be receiving all the above mentioned facilities at no cost,would you like to enter in the mutual fund business?

    - Yes - No

    7. Do you know the mutual fund is the only business which gives royaltyincome along with trail, upfront, transaction and application fees and giftpackages?

    - Yes - No

    8. How much do you agree with the following statements?

    1 2 3 4 5

    Mutual fund is less risky than stock market. Advisors income is more in MF in long run.Expert advice plays important role.When support is costless, there is no harmin joining this business.

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    Its good to know about MF as its anemerging business in India.

    9. Prudent is giving the following facilities without any cost , which of theseare very important to you? give rank

    1 2 3 4 5Online back office support for managing your andyour clients data Basic business opportunity knowledgeComplete knowledge of MFExam preparationKnowledge of best products availableContinuous support and suggestionsEvery week awareness seminar Special seminar for your clients at our costHealth insurance added to the same bracket

    10. Leave any comment or views regarding the mutual fund business.

    11. What is your decision after knowing about the facilities provided by Prudent

    and income in MF?

    Interested in knowing moreInterested in joining nowInterested in joining but after sometimeNot interested

    12. Personal information

    Name AgeGender Contact number

    Area

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    Questionnaire 2 for investors

    1. Do you earn salary/profit?

    YesNo

    2. How much you think a person should save out of his/her family earnings?

    - In percentage

    3. Do you know about mutual fund?

    4. Which of the following do you like for investments? Mention if other.

    Short term Long termSavingsaccount

    Post office

    Fixed deposit PPFMoney market Company FDEquity Bonds

    Mutual FundPhysical EquityGoldReal estateCommodity

    5. Which kind of investments you prefer more

    Stable return low riskHigh risk high returnHigh risk high return at low risk on investment

    6. At present, which are the top 5 sectors performing well in market accordingto you?

    YesNo

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    Sectors Description if any12345

    7. What should be the allocation of savings?

    Life insuranceHealth insuranceSavings

    - High risk high/low return- Low risk fixed return

    Liquid ( cash)100%

    8. Rank the following according to your investment objective.

    Regular incomeCapital appreciationTax savingsSpecific purpose investment

    9. If you invest in stock market, minimum, how many different stocks will bring

    the risk near to 0? (At least how many stocks should be added in the

    portfolio to avoid risk?)

    -

    10. Mutual fund is a good option for diversifying your small investment indifferent sectors and lessening the risk. This is the investment option whereyou can systematically save and invest at comparative lower risk and thenumber of products available is large. So if you wish to decide your ownlevel of risk, you get a suitable product for it. Would you like to invest?

    Yes

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    11. What would you like to say about the stock market and your investment

    pattern at present?

    -

    Personal info

    Name AgeGender OccupationSalary, if any

    No

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    GOLD SIP

    Years Monthly

    investment in Rs.

    Total investment

    in Rs.

    Total return

    in Rs.

    Collected

    gold in Grams

    For 5 years

    1000 60000 75424 24.272000 120000 150848 48.53

    5000 300000 377121 121.34

    10000 600000 754241 242.67

    For 10 years

    1000 120000 193514 39.77

    2000 240000 387029 79.53

    5000 600000 967571 198.83

    10000 1200000 1935143 397.67

    For 15 years

    1000 180000 378406 49.67

    2000 360000 756812 99.33

    5000 900000 1892029 248.33

    10000 1800000 3784058 496.66

    For 20 years

    1000 240000 667887 55.99

    2000 480000 1335774 111.98

    5000 1200000 3339434 279.9510000 2400000 6678869 559.89