sip report on motilal oswal asset management ltd

EXECUTIVE SUMMARY

Mutual fund industry is on a booming path right now. With 44 players in the Indian market, the competition is like never before. Every company is claiming to give the best of the returns. The structure of the industry is such that it requires a vast, yet synchronized distribution network. The presence of middle man namely the distributors makes it even more critical to not only make investors happy with good returns but keep the distributors satisfied with best of services and excellent co-ordination with the fund house. So, the qualities of services offered become a critical area of concern.

I was privileged to work on a project with „Motilal Oswal Asset Management Company Ltd, with AAUM (Annual Assets Under Management) of over 367 crores, as on 31st March, 2012(source:www.amfiindia.com).

My project entitled, “Study on Mutual Fund industry and promotion of sales in Retail Vertical”, gave me the real insight into the mutual fund industry, as to how the services are rendered in financial service sector and what is the nitty-gritty of the flow of services.

The project was for the duration of 8 weeks, where the initial weeks were primarily focusing on operations side of the workflow. I observed how all the transactions are performed in the office and how it is processed in later stages. Then I had great learning opportunity as the latest ETF was launched by the MOAMC and thus I was closely involved in the promotional activities, giving me real insights of the industry. I had performed the sales function and worked in the Retail vertical. I generated many leads and empaneled many distributors to MOAMC and also observed how the Relationship Managers are undertaking their work. The project aimed at studying the entire process and suggesting some ways to improve the functioning of sales as well as few operational aspects. 1

INTRODUCTION

Mutual fund industry is on a booming path right now. With 44 players in the Indian market, the competition is like never before. Every company is claiming to give the best of the returns. The structure of the industry is such that it requires a vast, yet synchronized distribution network. The presence of middle man namely the distributors makes it even more critical to not only make investors happy with good returns but keep the distributors satisfied with best of services and excellent co-ordination with the fund house. So, the qualities of services offered become a critical area of concern. I was privileged to work on a project with „Motilal Oswal Asset Management Company Ltd, with AAUM (Annual Assets Under Management) of over 367 crores, as on 31st March, 2012(source:www.amfiindia.com). My project entitled, “Study on Mutual Fund industry and promotion of sales in Retail Vertical”, gave me the real insight into the mutual fund industry, as to how the services are rendered in financial service sector and what is the nitty-gritty of the flow of services. The project was for the duration of 8 weeks, where the initial weeks were primarily focusing on operations side of the workflow. I observed how all the transactions are performed in the office and how it is processed in later stages. Then I had great learning opportunity as the latest ETF was launched by the MOAMC and thus I was closely involved in the promotional activities, giving me real insights of the industry. I had performed the sales function and worked in the Retail vertical. I generated many leads and empaneled many distributors to MOAMC and also observed how the Relationship Managers are undertaking their work. 2

The project aimed at studying the entire process and suggesting some ways to improve the functioning of sales as well as few operational aspects. Mutual Fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread across a wide cross- section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual Fund issues units to the investors in accordance with quantum of money by them. Investors of mutual funds are known as Unit Holders. The profits and losses are shared by the investors in proportion to their investments. The Mutual Fund normally comes out with a number of schemes with different investment objectives which are launched from time to time. A Mutual Fund is required to be registered with SEBI which regulates securities markets before it can collect funds from the public.

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ORIGIN OF MUTUAL FUND

The origin of Mutual Fund industry in India is with the introduction of the concept of Mutual Fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. In the past decades, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise before, the monopoly of the market had seen an ending phase, the AUM was Rs.67 bn. The private sector entry to the fund family raised the AUM to Rs. 470 bn. The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under:

FIRST PHASE-1964-87 UTI was established on 1963 by an Act of Parliament. It was set up by the Reserve bank of India. In 1978 UTI was de-linked from the RBI and IDBI took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was unit scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of AUM.

SECOND PHASE-1987-1993 Entry of non-UTI mutual funds SBI mutual fund was the first followed by canbank mutual Fund (Dec 87), Punjab National Bank mutual fund(Aug 89), Indian Bank mutual fund(Nov 89), Bank of India (Jun 90), Bank of Baroda (Oct 92), LIC in 1989 and GIC in 1990. The end of 1993 Marked Rs.47,004 as AUM.

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THIRD PHASE-1993-2003

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first mutual fund regulations came into being, under which all mutual funds except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs.1, 21,805 crores. The UTI with Rs.44, 541 crores of AUM was way ahead of other mutual fund.

FOURTH PHASE-SINCE FEBRUARY 2003

This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the specified undertaking of the UTI with AUM of Rs.29, 835 crores. The specified undertaking of UTI, functioning under an administrator and under the rules framed by government of India and does not come under the purview of the mutual fund regulations. This second is the UTI mutual fund ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the mutual fund regulation. With the bifurcation of the rest while UTI which had in March 2000 more than Rs.76, 000 crores of AUM.

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GROWTH IN ASSETS UNDER MANAGEMENT

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FLOW CHART SHOWING THE WORKING OF MUTUAL FUND

ORGANISATION OF MUTUAL FUND

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TYPES OF MUTUAL FUNDS There are over 849 MF schemes available for investing today. This diversity may confuse an investor. However, most mutual funds can be classified into various categories according to the type of their structure. On the Basis of Participation

MUTUAL FUNDS

OPEN ENDED FUNDS

CLOSE ENDED FUNDS

INTERVAL FUNDS

SYSTEMATIC INVESTMENT Plans

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On Basis of Income distribution method:

MUTUAL FUND

GROWTH SCHEME

DIVIDEND SCHEME

DIVIDEND

DIVIDEND REINVESTMENT

PAYOUT

On the Basis of Investment Objectives:

MUTUAL FUND

EQUITY FUND

DEBT FUND

MONEY MARKET FUND

BALANCED FUND

FUND OF FUND

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Equity Funds: EMF invest corpus of the fund primarily in the stocks of public listed companies. Stocks represent part ownership, or equity, in companies; many mutual funds invest primarily in companies of particular types and are thus classified according to the underlying asset. Equity fund managers employ different styles of stock picking when they make investment decisions. EMF is not suitable for investors seeking regular income or those interested in short-term returns. They are ideal for investors who have a long-term investment horizon.

EQUITY FUNDS MARKET CAPS FUND

INDUSTRY

FUTURE GROWTH LARGE CAP

GROWTH

MID CAP

VALUE

SPECIAL INDEX FUND

EXG TRADED GOLD FUND

SMALL CAP MIXED CAP

TECHNOLOGY PHARMA FMCG OTHERS

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There are four constituents of a mutual fund in India:

1. The sponsor

2. The board of Trustees or Trustee Company,

3. The asset management company

4. The custodian

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Exchange traded Funds

ETFs are baskets of securities that are traded, on an exchange. Unlike regular OEMF, ETFs can be bought and sold throughout the trading day like any stock. ETFs charge lower annual expenses than index mutual funds. However, investor must pay a brokerage to buy and sell ETF units, which can be an important drawback for those who trade frequently or invest regular sums of money. An exchange traded fund is similar to an index fund in that it will primarily invest in the securities of companies that are included in a selected market index. However it may choose to invest only in a representative sample of those securities only. The investment objective of an ETF is to achieve the same return as a particular market index.

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ROLE OF REGULATOR IN INDIA

THE MONEY REGULATORS OF INDIA ARE:  SEBI – the capital markets regulators The Government of India constituted Securities and Exchange of India, by an Act of Parliament in 1992, as the apex regulator of all entities that either raise funds in the capital markets or invest in capital market securities such as shares and debentures listed on stock exchanges. Mutual funds have emerged as an important institutional investor in capital market securities. Hence they come under the purview of SEBI. SEBI requires all mutual funds to be registered with them. It issues guidelines for all mutual fund operations including where they can invest, what investment limits and restrictions must be complied with, how they should account for and income and expenses , how they should make disclosures of information to the investors and generally acts in the issue equity or debt, share registrars, custodians, bankers in the primary markets, stock exchanges and brokers in the secondary markets and foreign and institutional investors such as FIIs, offshore mutual funds with dedicated Indian mutual funds or venture capital investors.  RBI – the money markets regulator RBI as supervisor of Bank owned mutual funds: The first non-UTI mutual funds were started by public sector banks. Banks come under the regulatory jurisdiction of the RBI. Therefore, the operations of bank- owned mutual funds are governed by guidelines issued by the Reserve Bank of India. Subsequently, it has been clarified that all mutual funds, being primarily capital market players, come under the regulatory umbrella of SEBI. Thus, the bank-owned funds continue to be under the joint supervision of both the RBI and the SEBI. It is generally understood that all market related and investor related 13

activities of the funds are to be supervised by SEBI, while any issued concerning the ownership of the AMCs by banks fall under the regulatory ambit of the RBI. RBI as supervisor of money market mutual funds: RBI is the only government agency that is charged with the sole responsibility to control the money supply in the country. Therefore, it has the sole supervisory responsibility over all entities that operate in the money markets, be it banks and companies that issue securities such as certificates of deposit or commercial paper, or banks and mutual funds who are allowed to borrow from or lend in all money market  Ministry of finance The Ministry of finance, which is charged with implementing the government policies, ultimately supervises both the RBI and the SEBI. Besides being the ultimate policy making and supervising entity, the MOF has also been playing the role of an Appellate Authority for any major disputes over SEBI guidelines on certain specific capital market related guidelines- in particular any cases of insider trading or mergers and acquisitions.

 Company law board, Department of company affairs and Registrar of companies Mutual fund Asset Management Companies and corporate trustees are companies registered under the companies act, 1956 and are therefore answerable to regulatory authorities empowered by the companies Act. The primary legal interface for all companies is the Registrar of Companies (RoC). RoC in turn is supervised by the department of company affairs. The DCA forms part of the Company Law Board, which is part of the Ministry of Law and Justice of the govt. of India.

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All AMC account and records are filed with the RoC who may demand additional information and document from the company. The RoC plays the role of a watchdog with respect to regulatory compliance by companies. The Company Law Board (CLB) is the apex regulatory authority under the companies Act. While the CLB guides the DCA, another arm of the CLB called Company Law Bench is the Appellate Authority for corporate offences.  Stock Exchanges Stock exchanges are self-regulatory organizations supervised by SEBI. Many closedended schemes of mutual funds are listed on one or more stock exchanges through a listing agreement between the fund and the stock exchange.  Office of the Public Trustee Mutual funds, being Public Trusts are governed by the Indian Trust Act, 1882. The Board of Trustee or the Trustee Company is accountable to the office of the Public Trustee, which in turn reports to the charity commissioner.

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COMPANY PROFILE

MOTILAL OSWAL ASSET MANAGEMENT COMPANY

Motilal Oswal Asset Management Company Ltd. (AMC) is public limited company incorporated under the Companies Act, 1956 on November 14, 2008, having its Registered Office at 81/82, Bajaj Bhavan, Nariman Point, and Mumbai 400021. Motilal Oswal Asset Management Company Ltd. has been appointed as the Investment Manager to Motilal Oswal Mutual Fund vides Investment Management Agreement (IMA) dated May 21, 2009, executed between Motilal Oswal Trustee Company Ltd. and Motilal Oswal Asset Management Company Ltd.

The AMC is also registered with SEBI as a Portfolio Manager vides Registration No. INP000000670 dated September 16, 2008 under SEBI (Portfolio Managers) Regulations, 1993 pursuant to the endorsement of Certificate of Registration as a Portfolio Manager held by Motilal Oswal Securities Limited in the name of Motilal Oswal Asset Management Company Limited with effect from October 21, 2010. The certificate is valid till September 15, 2011. There is no conflict of interest between the activities of managing the schemes of Motilal Oswal Mutual Fund.

The board of directors of the asset management company comprises eminent personalities with varied experience. To understand the operations at MOAMC, it was necessary to observe the employee structure at the office, to know the responsibility and accountability of every employee at MOAMC. 16

PRODUCTS OFFERED BY MOAMC MOAMC at present has 5 different types of mutual funds in the market according to the market situations/conditions and change with the demands. 1. MOST SHARES M50: This is the first mutual fund introduced by MOAMC, Most shares M50 ETF was introduced on 28th July 2010.ETF based on Nifty  Type of scheme: An open ended exchange traded fund.  Objective

: The scheme seeks investment return that corresponds (Before fees and expenses) generally performances of subject to the tracking error. However, there can

MOSt50 basket,

be no assurance or

guarantee that the investment objective of the scheme would be achieved.  Benchmark

:MOSt 50 Basket and S&P CNX Nifty index

 Cont. offer

: On NSE, investor can buy/sell units of the scheme in round lot of 1 unit and in multiple thereof.

 Fund Manager : Mr. Rajnish Kr. Rastogi  India‟s 1st Fundamentally weighted ETF based on S&P CNX Nifty Index (Nifty50) NSE Symbol: M50  It is essentially “Nifty50 Re-mixed”, consists of all stocks of Nifty50 but not in same proportion  Inception date of MOSt 50 Basket : 3rd April 2007 17

2. MOST SHARES MIDCAP 100: This is the second mutual fund introduced by MOAMC, Most shares M100 ETF introduced on31st January 2011. ETF based on Nifty  Type of scheme: An open ended exchange traded fund.  Objective

: The scheme seeks investment return that corresponds (Before fees and expenses) generally performances of CNX Midcap index, subject to the tracking error. However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.

 Benchmark

: CNX Midcap index

 Cont. offer

: On NSE, investor can buy/sell units of the scheme in round lot of 1 unit and in multiple thereof.

 Fund Manager : Mr. Rajnish Kr. Rastogi  India's first Midcap ETF based on CNX Midcap Index. Midcap companies are hidden gems as they are under-researched, under-owned and under-valued yet come with a potential to become large caps. So here's your chance to invest in budding large caps.  Top five holdings :

Ultra tech cement  Titan industries  Yes bank  Lic housing finance  Colgate Palmolive 18

3. MOST SHARES NASDAQ 100: This is the third mutual fund introduced by MOAMC, Most shares NASDAQ 100

ETF

introduced on 29th March 2011. ETF based on Nifty  Type of scheme: An open ended exchange traded fund.  Objective

: The scheme seeks investment return that corresponds (Before fees and expenses) generally performances of NASDAQ 100 index, subject to the tracking error. However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.

 Benchmark

: NASDAQ 100 index

 Cont. offer

: On NSE and BSE, investor can buy/sell units of the scheme in round lot of 1 unit and in multiple thereof.

 Fund Manager : Mr. Rajnish Kr. Rastogi India's first US based ETF, Now Investors can access US stocks like Apple, Google, Microsoft, Intel, Dell, Starbucks, Yahoo and many more that are part of NASDAQ-100; that too in Indian Rupees.  Top five holdings: o Apple Inc. o Microsoft Corp o Google Inc. o Oracle Corp Com o Intel Corp 19

4. MOST 10 YEAR GILT FUND: This is the fourth mutual fund introduced by MOAMC, Most 10 year Gilt Fund introduced on 12th Dec 2011. ETF based on Nifty  Type of scheme: An open ended Gilt scheme.  Objective

: The primary investment objective of the scheme is to generate credit Risk-free return by investing in a portfolio of securities issued by the central government & state government. However there can be no assurance or guarantee that the investment objective of the scheme would be achieved.

 Benchmark

: 10 years benchmarks GOI Data Securities and CRISIL Gilt Index.

 Cont. offer

: Minimum application amount : Rs 10000/- and in multiples of Rs 1/- after

 Fund Manager: Mr. Abhiroop Mukherjee. India‟s first fund is to give easy access to 10 year bench mark government bonds. {A Government security is a tradable security issued by the Central Government or the State Governments, acknowledging the Government‟s debt obligation. Such securities can be short term (usually called Treasury Bills, with original maturities of less than 1 year) or long term (usually called Government bonds or dated securities with original maturity of one year or more)}.

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5. MOST GOLD SHARES: This is the fifth mutual fund introduced by MOAMC, MOST GOLD SHARES introduced on 22th Mar 2012. ETF based on Nifty  Type of scheme: An open ended Exchange traded fund.  Objective

: The primary investment objective of the scheme is to generate credit Risk-free return by investing in a portfolio of securities issued by the central government & state government. However there can be no assurance or guarantee that the investment objective of the scheme would be achieved.

 Benchmark

: 10 years benchmarks GOI Data Securities and CRISIL Gilt Index.

 Cont. offer

: Minimum application amount : Rs 10000/- and in multiples of Rs 1/- after

 Fund Manager: Mr. Abhiroop Mukherjee. India‟s first is fund to give easy access to 10 year bench mark government bonds. {A Government security is a tradable security issued by the Central Government or the State Governments, acknowledging the Government‟s debt obligation. Such securities can be short term (usually called Treasury Bills, with original maturities of less than 1 year) or long term (usually called Government bonds or dated securities with original maturity of one year or more)}.

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INTRODUCTION TO THE PROJECT

My project is “Study on Mutual Fund industry and promotion of sales in Retail Vertical” In the initial few weeks at MOAMC, my main objective was to get acquainted with the mutual fund industry as a whole as well as understand various products and schemes of Motilal Oswal. I participated in all the functions being performed at the Delhi Branch of the MOAMC and tried to understand the functioning of the mutual fund industry. This part has been covered till now where I have mentioned the details of the industry and how its functioning affects the investors. Thus project involved firstly the understanding of the operational structure of MOAMC, and then the functional analysis of the sales and how the leads are generated and investors are attracted. I myself generated many leads and got investors for the MOAMC. My work was deeply appreciated by Mr. Kshitiz Mahajan, Regional head, MOAMC, North India.

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PROJECT DETAILS

In the initial few weeks at Motilal Oswal Asset Management Company, my main objective was to get acquainted with the mutual fund industry as a whole as well as understand various products and schemes of Motilal Oswal. I participated in all the functions being performed at the Delhi Branch of the MOTILAL OSWAL ASSET MANAGEMENT COMPANY, and tried to understand the functioning of the mutual fund industry. This part has been covered till now where I have mentioned the details of the industry and how its' functioning affects the investors. Now my approach was to get familiarize with operations of the MOTILAL OSWAL ASSET MANAGEMENT COMPANY, and it was a great learning opportunity as MOTILAL OSWAL ASSET MANAGEMENT COMPANY, launched its latest fund last year. I was closely involved with the entire hustle bustle associated with this fund called NASDAQ 100. Thus project involved firstly the understanding of the operational structure of MOTILAL OSWAL ASSET MANAGEMENT COMPANY, and then the functional analysis of the sales and how the leads are generated and investors are attracted. I myself generated many leads and got investors for the MOAMC. My work was deeply appreciated by Mr. Kshtiz Mahajan, Zonal head, MOAMC, North India. After one month of internship MOAMC shifted me to Aarvee consultants for direct sells and to meet different clients who are interested in Mutual funds and also to convince database clients to invest money in Mutual funds 23

OBJECTIVES OF THE PROJECT At MOAMC included:  To visit various securities  To promote various schemes of MOAMC  To study engagement levels  Recall of schemes  Service levels  Removing communication gap  Network Strengthening  Information Dissemination  Providing relevant material and information  Trying to promote the less sales generating branches  Customer Queries (FAQs)  Send statements (hard and soft copy)  Current amount  Current NAV  Redemption amount not yet received  Dividend not yet received 

To provide information regarding various schemes

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At Aarvee Consultants Included:  To get an insight knowledge of Mutual funds market.  Understanding different ratios and portfolios so as to tell the investors about the terms and conditions with updated market situations, by this, managing the relationship with the clients.  To know the Mutual Funds performance levels in the present market.  To analyze the comparative study between other leading MFs in the present market.  To know the awareness of MFs among different group of Investors.  Evaluating consumer feedback on ETFs.  Finding out ways and means to improve the services by MOAMC I satisfied my objectives of the project in the following manner:  Complete insight knowledge about the MFs that were mentioned in the project.  Different ratios with complete graphical representations were explained in the project.  To know the consumer awareness, I have visited different customers so as to analyze reviews about the Mutual funds and perception of the customers in the present scenario.

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VARIOUS PROCESSES IN OPERTAIONS  Application acceptance process – commercial transaction  Time stamping process  Systematic transfer plan  Systematic investment plan  Return of undelivered documents  Non-commercial transaction  Addressing employees concern  QRC process  LMS- Lead Management System.

TARGETS TO BE MET I was supposed to meet the following targets during my internship period:  To talk to at least 35 to 45 Walk-in clients per securities.  To make new distributors for MOAMC to promote sales.  To give information about Motilal Oswal products.  To tell the Clients and distributors about new Schemes, their specific attributes their expected returns & why the Client should invest in this fund.  To solve clients queries.

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STRATEGIES EMPLOYED I observed the processes mentioned vide supra and also talked to the personnel involved. I tried to learn the nitty-gritties of the whole process. I took feedback from the operations staff, taking their roles one by one and thus tried to note the processes which involved duplications and thus avoidable delays in the system. I had to visit various securities and meet all the persons concerned with the selling of the ETFs. First few days, I accompanied one of the MOAMC personnel but after I gained experience and confidence, I visited the branches all by myself. After looking and interacting with various Walk-in clients, I could gain experience as to who could be the potential investors. Their certain characteristics are:  Confident body language  Well, neat and clean dress  Polished shoes  Male gender (females generally don‟t exercise the authority of investing)  Preferably middle aged &  Most important is the Gut-feeling For selling various schemes /funds effectively and aggressively four points have to be kept in mind:  Efficient teamwork  Good relationship building  Efficient marketing strategies  Better pre and post sales services 27

I took Empanelment forms, fact sheets and one-pagers with me to show and give them to the potential investors. I also took laminated sheets with me to show them showing the performance of top equity funds and SIP returns in the form of tables. As we know data in the form of tables can be understood better, so that customer could be persuaded easily. This all also helped me as I could build faith in them and they had a genuine reason to trust me. During the initial period I visited following branches and met the retailers and distributors .i.e., HDFC Securities, SMC Consultants, Bajaj Capital Ltd, Integrated Securities Ltd, Karvy Pvt. Ltd, Aditya Birla Money, Credent etc. My task at all the above-mentioned branches was to:  To talk with walk-in clients and apprise them of the MOAMC products (equity funds)  To promote sales of the MOAMC products to RM‟s and other officials.  To get the feedback from the clients of their reasons for not investing in the MOAMC products During my training I also visited some of the distributors and IFA‟s who were not empanelled with Motilal Oswal Asset Management Company Ltd. My work was to give complete details of MOAMC mutual funds to the distributors and convince them to be empaneled with Motilal Oswal.

The empanelment form is attached below as Annexure 1

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DETAILS OF WOK DONE  Work of any AMC is to increase Sales and also at the same time remove loopholes in the functioning. There are a lot of banks in Delhi and NCR selling ETFs but only the branches, which are giving more of business, are taken care of.  Since, a single Sr. Manager can‟t concentrate on all of them. So management trainees are very useful here and they perform the important function of pushing forward the products and also getting the much-needed feedbacks from the Retailers, Distributors, and Brokers.  Also, since attrition rate in the market at present is very high i.e. the persons selling ETFs in different firms may change because of market dynamics. So, it is very necessary to find out the details of all the persons selling investment products  There is also a need to maintain proper communication with Retailers & Distributors which will help AMC in promoting its products and thus increasing its sales.  The AMCs also need to provide knowledge about new products and performance of existing products and thus keeping the RMs updated.  The Walk-in clients need to be apprised about the latest products and their queries have to be resolved and they have to be persuaded to invest in the ETF.  Thus the work of Management Trainees provides an overall view of functioning of the ETF industry at its very grass root level.  Contacted with corporate and individuals and making them aware of Mutual Funds (ETF‟s), Gilt Fund and PMS.  The process created a database and fetched leads for the company 29

AT MOAMC:  I was able to generate several leads for the company. I have made twelve new empanelment of distributor to MOAMC.  I have visited several MF consultants who are empaneled with MOAMC to discuss about Motilal Oswal mutual funds to increase sales by making them aware of the product.

AT AARVEE CONSULTANTS:

During my internship, I was sent to Aarvee consultants located at Gagan vihar (near preet vihar) for 20 days under the supervision of Mr. Ramesh Narula for direct sales of Mutual funds. Under the guidance of Mr. Ramesh Narula, I am able to meet several clients and my work is to give each and every detail of mutual funds and to suggest best fund as per requirement of the client.

At this phase of my internship I was able to learn following things: STEP- 1:  Know the requirement of client that for what purpose he/she is investing the money.  How much money they want to invest.  For what period of time he/she want to invest.  Are they aware of MOAMC mutual funds?

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STEP- 2:  Advice best Mutual fund to the client.  Aware the client about all the risk factors of mutual funds.  Advice client to invest more and more money to generate more revenue.  Advice client to keep mutual funds for long period of time.  Built good relationship with client by being in touch with clients through calls and emails.  Portfolio management: In this process I have to manage the portfolio of the clients. Portfolio is the complete detail of any client. In this system clients can easily see the status of their funds. If clients want to Sell/purchase their mutual fund then they able to see which fund is giving well return and in another side which fund are in loss.

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ACTIVITY SHEET

DATE May 7th, 2012-May 12th,2012

ACTIVITY PERFORMED Learning and understanding about the mutual fund industry.

May 13th,2012-May 18th2012

Study of mutual funds of Motilal Oswal Asset Management Company.

May19th,2012-May 31st, 2012

Went to different distributors of Mutual Funds for promotion of ETF‟S offered by MOAMC.

June 1st,2012-June 20th, 2012

Sent to Aarvee consultants by MOAMC for direct sale of Mutual Funds

June 21st,2012-July 7th,2012

New empanelment of the distributors of Mutual Fund and promotion of ETF‟s to new and existing distributors.

Weekly activity which I did in my internship was to first understand and study about Mutual Fund industry later about the market of Mutual Funds and ETF‟S of MOAMC. Secondly promotion of ETF‟S and Mutual Funds to the already existing empaneled distributors was done by me. All details of Mutual Funds are available in the fact sheet of the company which I used to explain the distributors along with relationship managers. Later on my job was shifted to Aarvee consultant for direct sales of Mutual Funds.

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In which I promoted and sold the mutual funds to data based clients. My job was to convince the clients to invest money in mutual fund (ETF‟s) I even solved the queries of the clients related to their portfolio. Lastly new empanelment of the distributors along with sales promotion of Mutual Funds was done by me after returning to MOAMC.

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OBSERVATION FROM MOAMC ASSIGNMENT POSITIVE RESPONES  It is Motilal Oswal and so I shall surely invest  It‟s because you have asked us we will surely invest, might be little, so that your morale does not go down  Yes, Earlier also Motilal Oswal has given good returns and so I will invest  Let me ask my CA  What commission will I get back for investing in fund  Let me think  Any other benefit do I get except for returns which you expect NEGATIVE RESPONSES  No, Motilal does not do any social work and so we don‟t have any attachment with Motilal and even if it does give good returns, we are not interested at all  No, I will rather invest in property  No, I will invest through my broker  Investment through cheque or draft is problematic as I can invest only white money, which I don‟t have much to invest.  Don‟t really know about mutual fund  No, I have invested in other options and policies  I want to invest only in tax saving funds  I have other plans for investment  No one ever visited us from Motilal Oswal Thus the responses varied from clients getting attracted to strong Brand Image of Motilal Oswal to people shunning Motilal because of lack of Social work done by Motilal.

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This also showed that people are still unaware about the mutual fund industry in general and are wary about investing in MF‟s. OTHER INCIDENTAL FINDINGS:  Motilal Oswal has a very good Brand Name and Awareness. Because of which, even if it‟s services are not good, then also, the RM concerned person has to sell Motilal Oswal ETFs due to the strong demand from the customers.  Promotion of Motilal ETFs in the surveyed Securities, Distributors, Retailers are very less i.e., Banners, Stands, dispensers etc. are not available to them.  After sales Services is a major area of concern in all the surveyed Securities, Distributors, and Retailers.  Incentives are provided after a long time Gifts like pens, stands, diaries etc. are mostly provided to persons at higher designation.

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The current AUM of MOAMC was 4.5 billion(appx) in which the share of MF‟s are: Sales contribution 13% 10 yr Giit fund 44%

17%

Gold ETF M-50 ETF Midcap-100 ETF Nasdaq-100 ETF

19% 7%

At the time of my internship the share market was at 16000 (BSE Sensex) and 4900 (Nifty) which was very low as compared to the share market of last 2 years. So the response of all products was not good as compared to earlier time. But After looking the market condition MOAMC launched 2 new products Gold ETF and Nasdaq 100 ETF last year.

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Current observation of all the products of MOAMC is changed due to market condition and the graphical representation is shown below

Current Response 10% 10 year gilt fund Gold ETF

45% 32%

M-50 ETF Midcap-100 ETF Nasdaq-100 ETF

8%

5%

This happens due to increasing price of gold and value of dollar as compared to rupee in Indian marketing clients wants to invest in these funds. As Nasdaq-100 fund is a good vehicle to participate in the much-awaited economic recovery in the US economy and the developed nations and gold prices are going higher day by day in current scenario in Indian economy.

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OBSERVATION FROM AARVEE ASSIGNMENT Throughout the process of query handling of the clients I concluded that different people have different requirements. I analyzed the preferences of the customers for buying mutual funds according to  Investment Needs.  Occupation  Preference of Investment options  Preferences of funds  Reasons for not spending in Mutual funds



Objective behind investing in mutual funds. These criteria showed all the reasons behind buying a mutual fund. This will depend on a customer if they buy mutual funds on the basis of above mentioned criteria.

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Graphical Representation (Primary)

Investment Needs To create wealth All the above 2% 5%

To build a corpus for the retirement 23%

To save for children’s education /marriage 13% To provide for family financial securities 45%

To provide for medical emergencies 12%

From the above graph, it is clear that there are many people who are interested in investing in mutual fund for the sake of their family financial security. From the above graph it also reveals that the minor portion of the graph i.e. to build a corpus for retirement does not play a major role in the investment decisions.

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Occupation

OTHERS

STUDENT Series1 BUSINESS

EMPLOYEE

0

5

10

15

20

25

30

35

In terms of occupation it was seen by me that the investors in mutual fund industries are maximum employees and then businessman which includes the number of participants and the type of participants.

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Preference of Investment options

13%

22% BANK

7% 7%

POS MUTUAL FUND

23%

SHARE 28%

BOND AND DEBENTURE INSURANCE

Various investment options available to the individuals are Bank Deposits, Post Office (PO) Schemes, Mutual Funds, Shares etc. and investors put their money according to their financial needs and risk appetite. Majority of the respondents prefer share, bank and mutual fund as their favorite investment option. However, about 28 % of respondents favor mutual funds as the most preferred investment options across the groups; this trend clearly shows the traditional investment attitude still remains in the Investors‟ mind. 41

REASONS FOR NOT INVESTING IN MUTUAL FUNDS

20% 40% Lack of knowledge 17%

Risky investment Lack of guidance 23%

Low return

Respondents from the student and unmarried group does not invest in ETFs because of lack of knowledge whereas working people with younger children does not invest in the MF because of lack of guidance in the right kind of investment portfolio . Retired people say that they are not in a position of taking risk in that stage of life (Reaping Stage).Overall among all the respondents who do not want to invest in the MF, show that the lack of knowledge is the main factor not investing (40 %). 42

OBJECTIVES BEHIND INVESTMENT IN MF

13% Growth of investment 42%

17%

Tax Savings Regular Dividend 28% Assured Return

Investment objectives can be classified as  Growth of Investments  Regular Dividend  Tax Saving  Assured Return Majority of the respondents invest in mutual fund for growth of investment. 43

FUND PREFERENCE

22% 35%

DEBT EQUITY HYBRID 43%

Majority of the investors across the investor groups prefer equity fund (43%) and also for hybrid funds (35%).

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FINDINGS



Most Shares NASDAQ 100 is the best performing mutual fund at present.



Most gold ETF has also shown good returns. But it will take some time to take a stable position in the market as the fund is comparatively new.



Most M 50 reflects the Nifty index. Thus their return depends only on the profits of the companies listed by nifty.



Most Midcap 100 reflects the CNX Midcap index. It has shown returns as its portfolio mainly consists of consumer non-durables, banks, pharmaceuticals etc.



Most gilt fund is a fund for the investors who do not wish to take risks and get fixed returns like the other G-sec funds.

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MAJOR LEARNING The working with MOAMC, one of the leading mutual fund houses of the country has been a thoroughly enriching and enthralling experience.  I got a real insight into the functioning of a Business conglomerate like Motilal Oswal  Working with the sales, I learnt the importance of patience, persuasive communication and perseverance  I also got to know the spontaneity required in the sales department where one faces different kinds of clients and thus different kinds of challenges every day and how one has to come up with them on one‟s own.  I experienced the thrill of making the lead successful when one of my clients invested Rs 1, 00,000 in the NFO and appreciation I received from the Zonal Head for the same.  I also envisaged that how each and every process is important in the overall efficiency of the functioning of the financial services sector. 

The training also helped me in improving my relationship creating and managing skills with better communication skills

 The Internship also helped me interacting with persons ranging from very high standard to a low class people  Study of Mutual Fund concept  Study of different types of mutual funds  Study of structure of an AMC‟s

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Other Learning’s during Summer Internship  Professionalism  Marketing Skills – how to deal with clients and pitch the product  Enhanced my knowledge of the working and operations in mutual fund industry.  Learned about different types of financial products offering by Motilal Oswal Mutual Fund and how best they meet the client needs.

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RECOMENDATIONS

Spending two quality months at Motilal Oswal, Delhi Branch, was quite an enriching experience. I learnt a lot about the functioning of the mutual fund industry and also how a specific product is launched. Based on my observations and also feedbacks from various colleagues, I would like to suggest following recommendations, which, in my view, can improve the functioning and increase the efficiency of work at MOAMC:  The Retail investors must be attracted by some small gifts or other benefits so that the target segment increases. This will automatically improve the hit ratio.  The marketing strategy has to be more aggressive. With more and more mutual funds launching their products, there is urgent need to beat the competition. Here more audio-visual strategies should be adopted, targeted specifically at the retail investor.  The Relationship Managers (excepting those from Motilal) should be properly incentivized so as to give push to MOAMC products over other Mutual funds.  “There is a very slight different in products of different AMC’s, at present the services provided by the company is the key.”

Thus the company

providing better services will rule the roost.  Motilal Oswal should focus on the improving their promotional activities i.e., they should provide banners, stands, dispensers etc. to the retailers, distributors.  There should be proper care of the Pay back commission.  At least once in month, Persons dealing in ETFs like the Brokers, Dealers etc. must be visited, so that their queries related to fund are solved and anything they need should be timely served.

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 After-sales service should be given more care as after the investor has invested, he does not get any correspondence from RM and this gives bad mouth-tomouth publicity to the ETF.  There should be a structured and standardized feedback system so that regular feedbacks can be taken from the RMs and investors, and any major complaints thus can be timely addressed.  There is need, especially for Motilal Oswal to do some works of CSR (Corporate Social Responsibility) so that goodwill of the company is raised in the eyes of an average retail investor.  Best time to invest in stock market is when it is down because with same investment money he will get more value.  Mutual Fund is the best way to enter into market particularly for those investors who want good returns with minimum risk as fund of mutual funds is handled by an expert.  To get good returns investor must invest considering the time horizon of at least two to three years. This will help him in getting good returns.  Portfolio management is a difficult task. So fund managers must choose optimal number of securities which meets the objectives of fund.  Mutual Fund Companies must devise fund considering the end investor in mind.  Individual investors must also choose a basket of securities instead of making investment in only one or two instruments, so that even if one instruments return is negative other instruments return can compensate that.  Diversification of portfolio is must as it will reduce the unsystematic risk and give the return an edge.

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CONCLUSION

The future of mutual funds is growing at a very high pace. Indian equity markets have been transforming, which is a continuous process in the converging. The industry is fast approaching its adolescent stage. Taking this thing into consideration, there are lots of opportunities for Motilal Oswal Mutual Funds to tap the golden opportunities from the Indian market. MOAMC has emerged as a very strong player in the field of wealth management giving stiff competition to all the established players. It is expanding its area of business, if the progress of MOAMC goes in the same way, the total AUM of Motilal Oswal Asset Management will cross four hundred Crores by the next year. They have much potential to expand their distribution network in northern India. The company is currently following huge investment and growth strategies. Hence the firm should be selective using growth strategies. This is not to undermine the bright future of MOAMC, just a check to be a cautious. People in India are little aware of Mutual Funds but are still averse to it because they still consider investing in mutual funds as a risky business. Equity will become one of the most sought after investment avenues. The only thing, which the equity investment industry needs to focus on, is that they should have a strong network, strive for good performance by well researched investment decisions, prompt services, more customer- oriented products and an efficient system to spread more and more awareness about equity investments- mutual funds and portfolio management services, etc. In this way, MOAMC will become the market leader not just in terms of AUM but also customer base, returns, etc. 50

BIBLIOGRAPHY Websites  www.google.co.in  www.motilaloswal.com  www.motilaloswal.com/assetmanagement  www.mostshares.com  www.amfiiindia.com  www.crisil.com  www.moneycontrol.com  www.mutualfundsindia.com  www.valueresearchonline.com  www.moneylife.com  www.crisilratings.com  www.franklinindiatempleton.com  www.nseindia.com  www.bseindia.com  www.fundoodata.com  www.justdial.com

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