AN INTERIM REPORT ON VALUE PROPOSITION TO REACTIVATE CLIENT RELATIONSHIP.
By- Manjot Singh Sethi Enrollment No.-16BSPHH01C0526
AT ICICI SECURITIES
Interim report is submitted in partial fulfillment of the requirements of MBA Program of IBS, Hyderabad.
SUBMITTED TO:
FACULTY GUIDE COMPANY GUIDE
Dr Radha Mohan Gauraw Srivastava
DATE OF SUBMISSION
11/04/2017
Synopsis
The internship program consisted of 2 stages.
In the 1st stage the Objective was to get an overall development through customer handling and grievance identification and solving along with studying about the research methodology undertake for various funds. For this the company wanted to handle the problem of ST/NT customers. These are the Stop Trading and Not Trading customers and thus needed to be contacted. Contact was made to 1000 of these premier customers and their concern was recorded for the company.
In the 2nd stage insights into Mutual Funds and Systematic Investment Plans(SIP) were obtained about the advice that the company offers and how it comes to a specific list of focus funds for recommendation to its customers. It also provided detailed knowledge about various ratios and research methodologies used by the company and the ratings that the fund houses gain.
Introduction
Like most developed and developing countries the mutual fund cult has been catching on in India. There are various reasons for this. Mutual funds make it easy and less costly for investors to satisfy their need for capital growth, income and/or income preservation.
And in addition to this a mutual fund brings the benefits of diversification and money management to the individual investor, providing an opportunity for financial success that was once available only to a select few.
Understanding Mutual funds is easy as it's such a simple concept: a mutual fund is a company 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.
For the individual investor, mutual funds provide the benefit of having someone else manage your investments and diversify your money 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.
Mutual Funds are offered by an Asset Management Company (AMC) which is managed by a Fund Manager, a technical person having expertise and skill required to make investment decisions of various companies. In order to protect the investors’ money they hedge the portfolios means that the investment is not made into one stock only, instead the amount to be invested is divided among the shares of various companies in various sectors so that in case of some industry not performing well, the investors’ money is safe as some other company may give great returns. An Asset Management Company (AMC) is a highly regulated organisation that pools money from investors and invests the same in a portfolio. They charge a small management fee, which is normally 1.5-2 per cent of the total funds managed.
NAV or Net Asset Value of the fund is the cumulative market value of the assets of the fund net of its liabilities. NAV per unit is simply the net value of assets divided by the number of units outstanding. Buying and selling into funds is done on the basis of NAV-related prices.
¬ On the basis of structure:
♣ Open Ended Schemes
Open Ended Funds have been in the market from long time back. Such schemes do not have any particular maturity date and investment date. Usually investors can enter and exit from these schemes at any particular time which is one of the most beneficial feature of such schemes.
♣ Close Ended Schemes
Close-ended mutual fund Schemes have a fixed or stipulated maturity period wherein the investor can invest directly in the scheme which is at the time of the initial issue and thereafter units of the scheme can be traded (bought/ sold) on the stock exchanges where the scheme is listed. The market prices at the stock exchange could vary from the schemes’ NAV on account of demand and supply in the market, expectations from unit holders and also other market factors. Usually a characteristic feature of close-ended schemes is that they are generally traded at a discount to NAV (Net Asset Value); but closer to maturity date, the discount narrows.
♣ Interval Schemes
Interval Schemes are those schemes that combine the features of both open-ended and close-ended schemes. The units of such scheme may be traded on the stock exchange or they may be open for sale or even for redemption during pre-determined intervals at NAV (Net Asset Value) related prices.
¬ On the basis of Investment Objective:
♣ Equity Funds / Growth Funds
Funds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over the medium to long-term. The returns in such funds are volatile since they are directly linked to the stock markets. They are best suited for investors who are seeking capital appreciation. There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.
♣ Diversified Funds
These funds invest in companies spread across sectors. These funds are generally meant for risk-taking investors who are not bullish about any particular sector.
♣ Sector Funds
These funds invest primarily in equity shares of companies in a particular business sector or industry. These funds are targeted at investors who are extremely bullish about a particular sector.
♣ Index Funds
These funds invest in the same pattern as popular market indices like S&P 500 and BSE Index. The value of the index fund varies in proportion to the benchmark index.
♣ Tax Saving Funds
These funds offer tax benefits to investors under the Income Tax Act. Opportunities provided under this scheme are in the form of tax rebates U/s 88 as well saving in Capital Gains U/s 54EA and 54EB. They are best suited for investors seeking tax concessions.
♣ Debt / Income Funds
These Funds invest predominantly in high-rated fixed-income-bearing instruments like bonds, debentures, government securities, commercial paper and other money market instruments. They are best suited for the medium to long-term investors who are averse to risk and seek capital preservation. They provide regular income and safety to the investor.
♣ Liquid Funds / Money Market Funds
These funds invest in highly liquid money market instruments. The period of investment could be as short as a day. They provide easy liquidity. They have emerged as an alternative for savings and short-term fixed deposit accounts with comparatively higher returns. These funds are ideal for Corporates, institutional investors and business houses who invest their funds for very short periods.
♣ Gilt Funds
These funds invest in Central and State Government securities. Since they are Government backed bonds they give a secured return and also ensure safety of the principal amount. They are best suited for the medium to long-term investors who are averse to risk.
♣ Balanced Funds
These funds invest both in equity shares and fixed-income-bearing instruments (debt) in some proportion. They provide a steady return and reduce the volatility of the fund while providing some upside for capital appreciation. They are ideal for medium- to long-term investors willing to take moderate risks.
♣ Hedge Funds
These funds adopt highly speculative trading strategies. They hedge risks in order to increase the value of the portfolio.
¬ On the basis of nature of funds:
♣ Equity based Funds
♣ Debt based Funds
♣ Hybrid/Balanced Funds
Some popular objectives of a mutual fund are:
Fund Objective:
Fund Investment in:
Equity (Growth)
Only in stocks
Debt (Income)
Only in fixed-income securities
Money Market (including Gilt)
In short-term money market instruments (including government securities)
Balanced
Partly in stocks and partly in fixed-income securities, in order to maintain a 'balance' in returns and risk
Abstract of Work Done
With the 1st part of the internship completed, there were a lot of findings that were drawn when contacted to the premier NT/ST customers.
An overview of some conclusions is listed below-
Customers currently trading through ICICI Securities were requested to rate their services that is- Quality Advice, Convenience, Product offering, Price and RM relations.
Those not trading through them were given a brief about the advantges of being an ICICI customer.
Below is the summary that was made from the 1st phase.
The following questionnaire was used for interacting with customers
1. Have you been investing in MF in the past 12 months?
• Yes-as we have noticed that you have not traded through us in the recent past, so are you doing it through someone else
• No-In spite of having an A/c you are not using it, so is there any specific reason which is not within our knowledge.
If Yes
1. On a scale of 1 being the best and 5 being the worst please rate the following
¬ What do you value the most while trading through an agent/broker.
• Price
• Quality Advice
• Convenience of investing
• Product offering
• Relationship with RM
2. Your earlier experience through us
¬ 1…2…3…4….5….6….7….8….9….10
If <5
Since you value _____ the most, is there anything we could do or have done to improve our relations so that we can transact more frequently
If >5(close to 10)
You indicate your earlier satisfaction of our experience, so is there any specific reason or anything you were expecting more from us that we were not able to deliver due to which you stopped trading with us.
If NO
1. Have you ever made any trade in MF? YES-
o What did you like the most and the worst in your dealing-
• Price
• Quality Advice
• Accessibility
• Product offering
• Suitability
• Relationship with RM
• Services
NO-
• Since you have an A/c with us I would like to take you through the benefits of investing through us.
• Through us you can invest your money in a wide range of products namely equities, debt, MF, ETF, Insurance, NPS etc which can be designed according to your needs.
• We also provide services related to tax management, loans etc.
• You can transact anytime, anywhere without any hassle through our secure website enabled trading.
• Our Wealth managers are always ready to manage your portfolio and the open architecture lets you track and review your portfolio along with the research recommendations.
This was the result of the understanding of the customers interactions-
ST calling summary
These customers generated the following output
Customers who are investing in the past 12 months
The above figures represent an average of the ratings that the ST clients who were investing provided.
It is arrived by summing all the ratings of a service and dividing by the number of responses (71).
A Rating of 5 was considered as best and of 1 being the least.
Customers who did not invest in the past 12 months
The figures are a count of the most preferred service that a perspective customer is looking for while investing his money through middlemen.