Professional Documents
Culture Documents
Certificate
This is to certify that this report entitled An Organizational Study of
ICICIdirect.com is a compilation of the internship study carried out by Mr.
Vikas Maheshwari (Reg. No. 05XQCM6112), a Student Executive of MP
Birla Institute of Management, Bangalore.
Mr. Vikas Maheshwari worked under my guidance and
supervision.
Bangalore
September 29,
2006
( B.V. Rudramurthy)
Dr. N. S. Malavalli
PRINCIPAL
Certificate
This is to certify that this report entitled An Organizational Study of
ICICIdirect.com is the output of internship carried out by Mr. Vikas
Maheshwari, a Student Executive of MP Birla Institute of Management,
Bangalore under the guidance and supervision of Prof, B. V. Rudramurthy,
MPBIM, Bangalore (Internal Guide) and Mr. Ravi Agarwal, Unit Manager,
ICICI DIRECT, Malleshwaram, Bangalore(External Guide) and Mr. Pradeep
K.,Regional
product
manager,ICICIdirect.com,Bangalore.
Bangalore
October 29,
2006
(N. S. Malavalli)
ACKNOWLEDGEMENT
Vikas Maheshwari
CONTENTS
Chapter I
INDUSTRY/COMPANY PROFILE
Chapter II
ORGANISATION STRUCTURE
Chapter III
PRODUCT PORTFOLIO
Chapter IV
HUMAR RESOURCE OF ICICI BANK
Chapter V
SWOT ANALYSIS, VISION & GOALS
Chapter VI
RECOMMENDATIONS
BIBLIOGRAPHY
Part B
Analysis between Equity and Mutual Funds
Executive summary
ICICI Ltd. Is one of the Indias largest financial institution is gearing up to
transform itself in to a universal bank leveraging on the click and mortar
strategy. The company has a presence in diverse segments of the financial
market by way of its subsidiaries.
In the present scenario the service industry has given utmost
importance of doing a particular task at a faster time in order to satisfy the
customers and to attract new customers. The main reason of establishing a
depositary system is to lessen the work and fast the processing. This system
is overcoming the disadvantages of the physical trading of the securities in
the stock exchange.
ICICI Direct.com is a truly online share trading site, which means that
from the time you punch in a buy or sell trade on you computer to the final
settlement in you account, everything happens completely online. The 3-in-1
e-invest account integrates your brokerage, bank and one or more depository
accounts to make sure that you can do the otherwise cumbersome share
trading from your home or office, absolutely at any time of the day.
Objectives of The Study
Study of ICICI
Study of ICICIdirect.com
Study of the product offered by ICICIdirect.com
Study of demat service providers
Study of the organizational structure of ICICIdirect.com
SWOT analysis.
Recommendations
CHAPTER I
INDUSTRY / COMPANY PROFILE
Overview
ICICI Bank is India's second-largest bank with total assets of about
Rs.2513.89 bn and a network of over 614 branches and offices and about
2200 ATMs. ICICI Bank offers a wide range of banking products and
financial services to corporate and retail customers through a variety of
delivery channels and through its specialised subsidiaries and affiliates in the
areas of investment banking, life and non-life insurance, venture capital and
asset management. ICICI Bank's equity shares are listed in India on stock
exchanges at Kolkata and Vadodara, the Stock Exchange, Mumbai and the
National Stock Exchange of India Limited and its American Depositary
Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
Being the first development bank registered under the Companies Act,
1956, the range of services offered by the bank has expanded considerably.
The following services assume a significant portion of the banks activities;
Commercial Banking
Development Banking
Trading in Securities
Merchant Banking
Insurance
Mutual Funds
Foreign Exchange Dealings
The bank has made significant inroads into the retail banking sector,
thereby, indicating growth in business and exploitation of consumer
potential integrated with the overall policy objective of mobilization of
savings into investments.
INDUSTRY PROFILE
The Indian middle class is large and growing; wages are low; many
workers are well educated and speak English; investors are optimistic and
local stocks are up. Despite political turmoil, the country presses on with
economic reforms. The only cause of worry that India could face is
Infrastructural hassles.
The rapid economic growth of the last few years has put heavy stress
on India's infrastructural facilities. The projections of further expansion in
key areas could snap the already strained lines of transportation unless
massive programs of expansion and modernization are put in place.
Problems include power demand shortfall, port traffic capacity mismatch,
poor road conditions (only half of the country's roads are surfaced), low
telephone penetration (1.4% of population).
Diverse Market
The Indian market is widely diverse. The country has 17 official
languages, 6 major religions, and ethnic diversity as wide as all of Europe.
Thus, tastes and preferences differ greatly among sections of consumers.
Therefore, it is advisable to develop a good understanding of the Indian
market and overall economy before taking the plunge. Research firms in
India can provide the information to determine how, when and where to
enter the market. There are also companies which can guide the foreign firm
through the entry process from beginning to end --performing the requisite
research, assisting with configuration of the project, helping develop Indian
partners and financing, finding the land or ready premises, and pushing
through the paperwork required.
CHAPTER II
ORGANIZATION STRUCTURE
ORGANIZATION STRUCTURE
ICICI Bank believes that the structure of an organization needs to be
dynamic, constantly evolving and responsive to changes both in the external
and internal environments. The organizational structure is designed to
support our business goals, and is flexible while at the same time ensuring
effective control and supervision and consistency in standards across
business groups. The organizational structure is divided into five principal
groups Retail Banking, Wholesale Banking, Project Finance, Special
Assets Management, International Business and Corporate Centre.
The Retail Banking Group comprises ICICI Bank's retail assets
business including various retail credit products, retail liabilities (including
our own deposit accounts as well as distribution of third part liability
products) and rural micro-banking.
The Wholesale Banking Group comprises ICICI Bank's corporate
banking business including credit products and banking services, with
separate dedicated groups for large corporates. Government and public
sector entities and emerging corporates. Treasury, structured finance and
credit portfolio management also form part of this group.
The Project Finance Group comprises our project finance operations
for infrastructure, oil and gas, manufacturing and shipping sectors. The
Special Assets Management Group is responsible for large non-performing
loans and accounts under watch.
The International Business Group is responsible for ICICI Bank's
international operations as well as coordinating the international strategies
and alliances of its subsidiaries and affiliates.
ORGANISATIONAL CHART
ICICI direct .com
PRODUCT
PRODUCT
DEVELOPMENT
RETAIL
OPERATIONS
DIRECT
BUSINESS
DIRECT BUSINESS
CATALYST
CATALYST
HUGE NETWORTH
HUGE
NETWORTH
INDIVIDUAL DESK
DESK
INDIVIDUAL
SALES
E - INVEST
WISE INVEST
PRODUCT
CO-ORDINATOR
CROSS
SELLING
HIGH NETWORTH
INDIVIDUAL
REGIONAL
PRODUCT
MANAGER
SEGMENT
MANAGER
EXIBITIONS /
STALLS
CORPORATE
RETAIL
SEGMENT
MANAGER
SEGMENT
MANAGER
SEGMENT
MANAGER
UNIT MANAGERS
WISE INVEST
PRODUCT
CO-ORDINATOR
REGIONAL PRODUCT
MANAGER
SEGMENT
MANAGER
UNIT
MANAGER
TRAINEES/
AGENTS
Sales consists of two products E-Invest and Wise Invest. For both
these products there are product co-ordinators.
Sales of both these products are regionally looked after by Mr.
Madhusudhan, Regional Product manager for South India.
These products are divided into four categories:Corporate Retail
Exhibitions/ stalls
HNI handled by
Cross Selling
CHAPTER III
PRODUCT PORTFOLIO
THE PRODUCTS
1. E-Invest Account
--Online Share Trading A/c
E-Invest
Derivatives
Mutual
Funds
Cash
Futures
Purchases
Margin
Options
Redemption
Equity
BTST
Spot
Switch In / Out
Transfer In
IPOs
GOI Bonda
Bonds
ICICI Bonds
DEMAT
ICICI Bank Demat Services boasts of an ever-growing customer base of
over 5 Lakh Account Holders. In its continuous endeavor to offer best of the
class services to its customers it offers the following features:
Online access to the customers demat account. Checks holdings, and
status of requests and much more.
Dedicated specially trained customer care executives at its call centre,
to handle all queries.
Holding and Transaction details available round the clock on IVR
(Interactive Voice Response) system.
With a countrywide network of over 614 branches, one is never far
from an ICICI Bank Demat Services outlet.
Customers can also avail online share trading services from
ICICIdirect.com and get a 3 in 1 account inclusive of a demat, ICICI
bank account and a online trading account.
EQUITY:
Trading shares - The past
Calling broker
Waiting for pick-up
Placing orders
Placing wrong orders
Waiting for order confirmation
Waiting for contract notes
Writing cheques/ TIFDs for pay-in
Chasing broker for monies/ shares after payout
Margin Trading
Spot Trading
BTST
CallNTrade
Trading on NSE/ Through ICICI direct. com, you can trade on NSE as
BSE
well as BSE
Market Order
Limit Order
Speed:
You can now get the latest quotes of scrips on ICICIdirect.com
and place an order almost instantly.
Control:
You can be assured that you have in fact placed an order at the
price you always wanted to, but may not have been able to do so till
now. Thereby giving you control over your own trades.
Independence:
Instead of transferring monies to a broker's pool or towards
deposits, you can manage your own demat and bank accounts when
you trade through ICICIdirect.com.
Trust:
ICICIdirect.com comes to you from ICICI, the organisation
trusted by millions of Indians.
INVESTMENTS
ICICI Bank Bonds
GOI Bonds
Mutual Funds
IPO
Equity
IPO
Invest in IPO's Online:
One can invest in IPOs online through www.ICICIdirect.com with
same convenience of investing in equities - hassle-free and with zero paper
work. Also, get in-depth analyses of new IPOs issues (Initial Public
Offerings) which are about to hit the market. IPO calendar, recent IPO
listings, prospectus/offer documents and live prices will help customers to
keep on top of the IPO markets.
WISE Invest
Mutual funds
Insurance
Bank Deposits
GOI Bonds
Purchase
New Policies
FD
Redemption
Premium Payments
RD
Bonds
IPOs
Switch In / Out
Transfer In
CHAPTER IV
HUMAN RESOURCE OF ICICI BANK
SELECTION PROCESS
In the continuous endeavor to improve the selection process for recruitment
at all levels in ICICI Bank, it has carried out an in-depth study of the
competencies required to succeed in ICICI Bank. As per our research, the
competencies which indicated success at the entry level in ICICI Bank are:
Drive for results
Process Orientation
Interpersonal Effectiveness
Analytical Thinking
Innovation
Team Effectiveness
In order to assess the same ICICI Bank uses a set of 3 tools: 1. A Mental Ability Tests (for candidates with 0-2 years of work
experience)
2. A Personality profiling system
3. A Personal Interview
The Mental Ability Test gives ICICI Bank a fair and objective
assessment of candidates skills in the areas of verbal reasoning, numerical
reasoning & diagrammatic reasoning. These are important skills for the role
of an entry level manager and people who do well in these tests tend to do
well in their jobs at ICICI Bank. The total time taken in this exercise is 2
hours with each of the three sections lasting 40 minutes. Candidates (at all
levels regardless of the number of years of work experience) are also
required to complete the Occupational Personality Questionnaire (OPQ)
before they appear for the interview, the results of which are integrated into
ICICI Bank's interview process.
CHAPTER V
SWOT ANALYSIS, VISION AND
GOALS
SWOT ANALYSIS
STRENGTH:
1) BACKED BY A STRONG COMPANY:
ICICI Bank is India's First Universal Bank, which offers the widest range of
financial products and services. It is also Indias largest private sector bank
and has a nationwide network of 614 branches.
2) PRODUCT AIMED AT CONVENIENCE:
ICICIdirect.com is the first company to offer 3 in 1 account.
ICICIdirect.com is unique innovative and distinguished product that reduces
the hassles and offers wide convenience to the customers.
3) EVER INCREASING USAGE:
ICICIdirect.com has a growing customer base of more than 6 million and is
rapidly adding more due to increased use of internet and more and more
investors entering the stock market.
4) AUTOMATIC TRADING :
ICICIdirect.com has a feature where in at a previously determined price fed
to the computer results in buy/sell of the desired security automatically
without any manual presence.
WEAKNESS:
1) HIGH BROKERAGE RATES
The brokerage charged by the company, especially on the delivery
transactions is very high in comparison to the competitors. Company is
charging .75% brokerage on delivery calls which is very high in comparison
with other stock broking firm.
2) CUSTOMER SERVICE
The customer service department is not efficient to handle the grievances of
the retail customers. Also there is no such relationship manager for retail
customer to handle the problems faced by them.
3) ACCOUNT OPENING TIME
The time taken for opening the account is too much in comparison with
other companies. Customer often complain of delays in receiving accounts
details or login and passwords.
OPPORTUNITIES:
1) EVER INCREASING USERS OF INTERNET:
As per research India is adding millions of internet users every year. This
provides a huge opportunity to ICICIdirect.com to tap such users.
2) INCREASE IN THE NUMBER OF INVESTORS ENTERING THE
STOCK MARKET:
Recently due to the surge in IPOs and increased income of people in India
has led to more and more people taking interest in stock market which is a
huge opportunity for ICICIdirect.com.
3) TAX SAVINGS ONLINE:
ICICIdirect.com offers many products like Tax saving Bonds and Mutual
funds. People today are keen on saving tax and for the same they can invest
in these products online. Thus this brings in a huge potential market for
ICICIdirect.com.
4) PROVIDING TRUE SERVICE:
ICICIdirect.com reduces paper work, reduces hassles like tracking the
brokers and following the investment along with this it assures safety and
security. Thus ICICIdirect.com is potentially one of the most revolutionary
product which will find increased usage in this modern world.
THREATS:
1) FEAR OF SAFETY:
People in India are very avert to giving out their credit card numbers or
buying and selling shares. This mentality possesses a significant trend
because ICICIdirect.com in its essence is a portal for online trading in
securities.
2) EMERGENCE OF OTHER PLAYERS:
New players like Reliance are about to enter the market which is a big threat
for the company. Reliance being substantially good company can definitely
give tough competition to ICICIdirect.com
3) FLUCTUATIONS IN THE SECURITY MARKET:
Stock market scams, increase in oil prices, terrorist attacks etc cause huge
fluctuations in securities market which dissuades investors who opt for
liquidity or gold.
4) THREAT FROM LOCAL BROKERS :
Local brokers charged less brokerage as compare to ICICIdirect.com which
can lead to a shift in loyalty favouring the local brokers.
CHAPTER VI
RECOMMENDATIONS
RECOMMENDATIONS
1) EDUCATING THE CUSTOMERS:Educating the customers that as interest rate on fixed deposits or mutual
funds or postal deposits are coming down, there is no difference between
investing in share market and in banks.
2) REDUCTION
IN
BROKERAGE
AND
ACCOUNT
OPENING
CHARGES:
ICICIdirect.com charges its customers higher brokerage charges than the
local brokers which sometime amounts to double the local brokerage
charges. Therefore reduction in brokerage charges has to be seriously looked
into by ICICIdirect.com.
3) BE IN TOUCH WITH THE CUSTOMERS :
Addressing the customers queries and receiving constant feedback is a must
because ICICIdirect.com is an online portal and there is very less exchange
of communication between the customers and the principal.
4) PROCESSING TIME:
It was noted that during the recent IPOs other players like Karvy opened
demat accounts in one day where as the minimum required time for
ICICIdirect.com was four days. This led to the loss of many customers.
BIBLIOGRAPHY
WEBSITES:
www.ICICIdirect.com
www.ICICIbank.com
www.google.com
MAGAZINES AND BOOKS REFERRED:
India Today
Business World
Marketing Management by Philip Kotler
RESEARCH EXTRACT
In the current economic scenario interest rates are falling and fluctuation in
the share market has put investors in confusion. One finds it difficult to take
decision on investment. This is primarily, because of investments are risky
in nature and investors have to consider various factors before investing in
investment avenues.
These factors include risk, return, volatility of shares and liquidity.
The main objective of comparing investment in equity shares with mutual
fund schemes is to analyze the performance of mutual funds with their
benchmark and comparing them with equities by using risk, return, beta and
alpha as a parameter.
Historical data were taken for calculating risk, return, alpha and beta.
Analysis has done on percentage method for comparing equity shares with
mutual fund schemes. Compare to equities mutual funds are less risky with
stable returns and mutual funds gives the investor a diversified portfolio.
Those who have well knowledge in equity market they can go for equity
investments rather that investing in mutual funds because no control on the
expenses made by the fund manager.
The study will guide the new investor who wants to invest in equity
and mutual fund schemes by providing knowledge about how to measure the
risk
and return of particular scrip or mutual fund scheme. The study recommends
new investors to go for mutual funds rather than equities, because of high
risk and market instability.
UTI commenced its operations from July 1964 " with a view to encouraging
savings and investment and participation in the income, profits and gains
accruing to the Corporation from the acquisition, holding, management and
disposal of securities." Different provisions of the UTI Act laid down the
structure of management, scope of business, powers and functions of the
Trust as well as accounting, disclosures and regulatory requirements for the
Trust.
One thing is certain the fund industry is here to stay. The industry was
one-entity show till 1986 when the UTI monopoly was broken when SBI
and Canbank mutual fund entered the arena. This was followed by the entry
of others like BOI, LIC, GIC, etc. sponsored by public sector banks. Starting
with an asset base of Rs. 25 crore in 1964 the industry has grown at a
compounded average growth rate of 27% to its current size of Rs.90000
crore.
The period 1986-1993 can be termed as the period of public sector mutual
funds (PMFs). From one player in 1985 the number increased to 8 in 1993.
The party did not last long. When the private sector made its debut in 199394, the stock market was booming.
The opening up of the asset management business to private sector in 1993
saw international players like Morgan Stanley, Jardine Fleming, JP Morgan,
George Soros and Capital International along with the host of domestic
players join the party. But for the equity funds, the period of 1994-96 was
one of the worst in the history of Indian Mutual Funds.
1999YEAR OF THE FUNDS
Mutual funds have been around for a long period of time to be precise for 36
yrs but the year 1999 saw immense future potential and developments in this
sector. This year signaled the year of resurgence of mutual funds and the
regaining of investor confidence in these MFs. This time around all the
participants are involved in the revival of the funds ----- the AMCs, the unit
holders, the other related parties. However the sole factor that gave lifer to
the revival of the funds was the Union Budget. The budget brought about a
large number of changes in one stroke. An insight of the Union Budget on
mutual funds taxation benefits is provided later.
It provided centre stage to the mutual funds, made them more attractive and
provides acceptability among the investors. The Union Budget exempted
mutual fund dividend given out by equity-oriented schemes from tax, both at
the hands of the investor as well as the mutual fund. No longer were the
mutual funds interested in selling the concept of mutual funds they wanted
to talk business which would mean to increase asset base, and to get asset
base and investor base they had to be fully armed with a whole lot of
schemes for every investor .So new schemes for new IPOs were inevitable.
The quest to attract investors extended beyond just new schemes. The funds
started to regulate themselves and were all out on winning the trust and
confidence of the investors under the aegis of the Association of Mutual
Funds of India (AMFI)
One cam say that the industry is moving from infancy to adolescence, the
industry is maturing and the investors and funds are frankly and openly
discussing difficulties opportunities and compulsions.
The term Equity literally means the stock or ownership of a company. They
are also known as ordinary shares. The rate of dividend on equity shares
varies according to the amount of profit available and the intention of board
of directors. In the event of winding up of the company, equity shares can be
refunded only after all other claims, including those of preference shares for
the refund of their capital, have been met.
Equity capital or financing is money raised by a business in exchange for a
share of ownership in the company. Ownership is represented by owning
shares of stock outright or having the right to convert other financial
instruments into stock of that private company. Two key sources of equity
capital for new and emerging businesses are angel investors and venture
capital firms.
Equity capital is represented by funds that are raised by a business, in
exchange for a share of ownership in the company. Equity financing allows
a business to obtain funds without incurring debt, or without having to repay
a specific amount of money at a particular time.
The Equity Capital Markets Group (ECM) oversees the Firm's activities in
the primary equity and equity-linked markets, as well as monetization
derivatives. It provides support in the origination of primary market
transactions and manages their structuring, syndication, marketing and
distribution.
The world over, its been shown that over long tenures, equitieswith their
risk premiahave provided approximately 7 percentage points higher returns
than risk-free options. People have to accumulate significant amounts of
wealth during their working years. Right now, a 17-year bond gives you
only 5.5 per cent. So, it is imperative that these people have some exposure
to equity.
A mutual fund is a trust that pools the money of many investors -- its
shareholders -- to invest in a variety of different securities. Investments may
be in stocks, bonds, money market securities or some combination of these.
Those securities are professionally managed on behalf of the shareholders,
and each investor holds a pro rata share of the portfolio -- entitled to any
profits when the securities are sold, but subject to any losses in value as well.
A mutual fund is a group of investors operating through a fund manager to
purchase a diverse portfolio of stocks or bonds. There are myriad kinds of
mutual funds, each with its own goals and methodologies. Whether or not a
mutual fund is a good investment is a matter of much public debate, with
many claiming they are excellent for the average person, and others saying
they are simply a poor way to invest.
For the individual investor, mutual funds provide the benefit of having
someone else manage your investments, take care of recordkeeping for your
account, and diversify your rupees over many different securities that may
not be available or affordable to you otherwise. Today, minimum investment
requirements on many funds are low enough that even the smallest investor
can get started in mutual funds.
A mutual fund, by its very nature, is diversified -- its assets are invested in
many different securities. Beyond that, there are many different types of
mutual funds with different objectives and levels of growth potential,
furthering your chances to diversify.
Many critics of mutual funds point out that scarcely over 20% of mutual
funds outperform the Standard and Poor's 500 Index. This means that nearly
80% of the time, an investor would have been more profitable by simply
buying equal shares in all 500 of the companies currently on the S&P 500.
equity and debt instruments. These funds are also affected because of
fluctuations in share prices in the stock markets. However, NAVs of such
funds are likely to be less volatile compared to pure equity funds.
Money Market or Liquid Fund:
These funds are also income funds and their aim is to provide easy liquidity,
preservation of capital and moderate income. These schemes invest
exclusively in safer short-term instruments such as treasury bills, certificates
of deposit, commercial paper and inter-bank call money, government
securities, etc. Returns on these schemes fluctuate much less compared to
other funds. These funds are appropriate for corporate and individual
investors as a means to park their surplus funds for short periods.
Gilt Fund:
These funds invest exclusively in government securities. Government
securities have no default risk. NAVs of these schemes also fluctuate due to
change in interest rates and other economic factors as is the case with
income or debt oriented schemes.
Index Funds:
Index Funds replicate the portfolio of a particular index such as the BSE
Sensitive index, S&P NSE 50 index (Nifty), etc, these schemes invest in the
securities in the same weightage comprising of an index. NAVs of such
schemes would rise or fall in accordance with the rise or fall in the index,
though not exactly by the same percentage due to some factors known as
"tracking error" in technical terms. Necessary disclosures in this regard are
made in the offer document of the mutual fund scheme.
as
specified in
4. Many privileges and rights:Equity shareholders enjoy many privileges and rights. For example, they can
vote at meetings, elect directors, control the directors to run the company
efficiently and profitably, look into the books and records of the company
and transfer or sell their shareholdings.
4. Convenience and Flexibility:You own just one security rather than many, yet enjoy the benefits of a
diversified portfolio and a wide range of services. Fund managers decide
what securities to trade, clip the bond coupons, collect the interest payments
and see that your dividends on portfolio securities are received and your
rights exercised.
5. Quick, Personalized Service:Most funds now offer extensive websites with a host of shareholder services
for immediate access to information about your fund account. Or a phone
call puts you in touch with a trained investment specialist at a mutual fund
company who can provide information you can use to make your own
investment choices, assist you with buying and selling your fund shares.
6. Ease of Investing:You may open or add to your account and conduct transactions or business
with the fund by mail, telephone or bank wire. You can even arrange for
automatic monthly investments by authorizing electronic fund transfers from
your checking account in any amount and on a date you choose.
7. Total Liquidity, Easy Withdrawal:You can easily redeem your shares anytime you need cash by letter,
telephone, bank wire or check, depending on the fund. Your proceeds are
usually available within a day or two.
8. Life Cycle Planning:With no-load mutual funds, you can link your investment plans to future
individual and family needs -- and make changes as your life cycles change.
You can invest in growth funds for future college tuition needs, then move
to income funds for retirement, and adjust your investments as your needs
change throughout your life.
9. Market Cycle Planning:For investors who understand how to actively manage their portfolio, mutual
fund investments can be moved as market conditions change. You can place
your funds in equities when the market is on the upswing and move into
money market funds on the downswing or take any number of steps to
ensure that your investments are meeting your needs in changing market
climates.
10. Investor Information:Shareholders receive regular reports from the funds, including details of
transactions on a year-to-date basis. The current net asset value of your
shares (the price at which you may purchase or redeem them) appears in the
mutual fund price listings of daily newspapers. You can also obtain pricing
and performance results for the all mutual funds at this site, or it can be
obtained by phone from the fund.
11. Periodic Withdrawals:If you want steady monthly income, many funds allow you to arrange for
monthly fixed checks to be sent to you, first by distributing some or all of
the income and then, if necessary, by dipping into your principal.
12. Dividend Options:You can receive all dividend payments in cash. Or you can have them
reinvested in the fund free of charge, in which case the dividends are
automatically compounded. This can make a significant contribution to your
long-term investment results.
13. Automatic Direct Deposit:You can usually arrange to have regular, third-party payments -- such as
Social Security or pension checks -- deposited directly into your fund
account. This puts your money to work immediately, without waiting to
clear your checking account, and it saves you from worrying about checks
being lost in the mail.
14. Recordkeeping Service:With your own portfolio of stocks and bonds, you would have to do your
own recordkeeping of purchases, sales, dividends, interest, short-term and
long-term gains and losses. Mutual funds provide confirmation of your
transactions and necessary tax forms to help you keep track of your
investments and tax reporting.
15. Safekeeping:When you own shares in a mutual fund, you own securities in many
companies without having to worry about keeping stock certificates in safe
deposit boxes or sending them by registered mail. You don't even have to
worry about handling the mutual fund stock certificates; the fund maintains
your account on its books and sends you periodic statements keeping track
of all your transactions.
16. Retirement and College Plans:Mutual funds are well suited to Individual Retirement Accounts and most
funds offer IRA-approved prototype and master plans for individual
retirement accounts (IRAs) and Keogh, 403(b), SEP-IRA and 401(k)
retirement plans.
17. Online Services:The internet provides a fast, convenient way for investors to access financial
information. A host of services are available to the online investor including
direct access to no-load companies. Visit Company Links to access these
Companies.
18. Sweep Accounts:With many funds, if you choose not to reinvest your stock or bond fund
dividends, you can arrange to have them swept into your money market fund
automatically. You get all the advantages of both accounts with no extra
effort.
19. Asset Management Accounts:These master accounts, available from many of the larger fund groups,
enable you to manage all your financial service needs under a single
umbrella from unlimited check writing and automatic bill paying to discount
brokerage and credit card accounts.
4. High risk:Equity share holders cannot claim dividend as a matter of right, because the
decision to fit the rate of dividend on equity shares is vested in the Board of
Directors. Therefore investors as a class may find equity shares unsafe,
unattractive and unremunerative.
5. Unhealthy Speculation:During the period of boom, the market value of shares will go up, which
leads to unhealthy speculation in the stock market.
3. Fees and Expenses:Most mutual funds charge management and operating fees that pay for the
fund's management expenses (usually around 1.0% to 1.5% per year). In
addition, some mutual funds charge high sales commissions, 12b-1 fees, and
redemption fees. And some funds buy and trade shares so often that the
transaction costs add up significantly. Some of these expenses are charged
on an ongoing basis, unlike stock investments, for which a commission is
paid only when you buy and sell (see Investor Guide University: Fees and
Expenses).
4. Poor Performance:Returns on a mutual fund are by no means guaranteed. In fact, on average,
around 75% of all mutual funds fail to beat the major market indexes, like
the S&P 500, and a growing number of critics now question whether or not
professional money managers have better stock-picking capabilities than the
average investor.
5. Loss of Control:The managers of mutual funds make all of the decisions about which
securities to buy and sell and when to do so. This can make it difficult for
you when trying to manage your portfolio. You also should remember that
you are trusting someone else with your money when you invest in a mutual
fund.
6. Trading Limitations:-
Although mutual funds are highly liquid in general, most mutual funds
(called open-ended funds) cannot be bought or sold in the middle of the
trading day. You can only buy and sell them at the end of the day, after
they've calculated the current value of their holdings.
7. Size:Some mutual funds are too big to find enough good investments. This is
especially true of funds that focus on small companies, given that there are
strict rules about how much of a single company a fund may own. If a
mutual fund has $5 billion to invest and is only able to invest an average of
$50 million in each, then it needs to find at least 100 such companies to
invest in; as a result, the fund might be forced to lower its standards when
selecting companies to invest in.
8. Inefficiency of Cash Reserves:Mutual funds usually maintain large cash reserves as protection against a
large number of simultaneous withdrawals. Although this provides investors
with liquidity, it means that some of the fund's money is invested in cash
instead of assets, which tends to lower the investor's potential return.
QESTIONNAIRE
Name :
Occupation:
Age:
Annual Income(approx):
Address:
1. Do you make Investments in the capital market?
Yes
No
High Return
Low Risk
Low Return
answer.
6. Are you aware of the risk and returns in Equity and Mutual funds?
Yes
No
7. Do you know about Mutual Funds Schemes? If yes, name few of
them.
Conclusions
Investors
Some 50 people were included in the survey.
86% of them had made investment in capital market.
14% of them had not invested in capital market but still they were aware
of the Equity market.
Type of investment
62% of the investors were interested in long term investments.
16% of the investors were interested in long term investments.
22% of the investors were interested in short term investments.
We can say that people dont invest much from long term perspective.
The reason is simple that they dont want to get their money blocked.
Majority of them invest for short term or medium term only.
62% of the investors were aware about the risk and returns in both
Equity and Mutual Funds.
38% were not aware about the risk and returns in Equity and Mutual
funds.
Mutual Funds
To name few of the Mutual Funds where in investors have invested their
money, they are as follows :
DSP Merrill Lynch
SBI
UTI
ICICI Prudential
Birla Sun Life
Franklin Templeton
Kotak Mahindra
Prudential ICICI
Tata
Standard Chartered
Reliance
HDFC