Professional Documents
Culture Documents
Submitted By
Amit Sharma
Roll No-14
XIME
Batch 2016-2018
Acknowledgement
At the completion of my summer internship, I feel it is my privilege to convey my gratitude to all
those who made this possible.
Above all I would like to thank God Almighty for blessing me with this opportunity to be at
ICICI Prudential AMC Ltd. as a part of Summer Project
.
I am truly grateful to our President Prof.J. Philip for having the vision to introduce us to the
corporate world before we could make a mark in our lives. I also thank Prof Joy Varghese,
Senior dean for his support. My sincere thanks to Dr. Purnima Thampi, my mentor for his
support, his coordination and gratitude for helping me complete my report.
I would also like to thank Mr. Vipin Bhandari for selecting me as an intern to work with the
organization. I also would like thank Mr. Apachu for guiding in my project and introducing the
real-life concepts. I would also like to thank Mr. Makesh S channel manager. The work at this
organization has been an enriching experience in terms of learning.
I also thank Mr. Chalapathi, Branch Manager of ICICI Bank, Infosys branch for his support
without any time restrictions and helpful inputs, whenever required.
The real-time experience, which I have received, is something which cannot be replicated. The
experience has not only helped me to understand but also appreciate the corporate life and its
values.
Table of content
Abbreviations
AMC = Asset Management Company
SOV = Sovereign
FD = Fixed Deposit
RD = Recurring Deposit
1. EXECUTIVE SUMMARY
1.1 Introduction:
Debt fund which is one of the secured fund to invest because of the asset allocation, portfolio of
the debt fund is the composition of Government Securities, Certificate of deposits, Corporate
papers, Bonds etc. India is a market where people have a myth in the mind that mutual fund is
fraud and it’s not safe to invest money in mutual fund. So, this study is to know the awareness of
mutual fund in India specially in Bangalore.
Survey was taken my me to know the awareness of mutual fund and what people think of debt
funds followed by competitive analysis between ICICI Prudential debt fund and other company
debt fund. Survey was taken from 765 people where we found that 55% people is still unaware
of mutual fund. So now we are focusing on the marketing strategy that can be done to improve
the awareness and sells of the mutual fund.
1.2 Objective:
To know where does ICICI prudential Debt Fund stand to other company debt funds
Positioning good image in investors mind about mutual fund.
Strategy to improve the revenue of debt fund
Improve the customer service
1.3 Methodology
The data was collected by me at the time of interaction with people.
1.4 Findings
55%(423) of the people still don’t know about mutual fund according to the survey
Out of this 55% people only 36% invest in mutual fund, that means the remaining
64% people still don’t want to invest in mutual fund.
In this 37% only 30percent invest in debt fund which is much lower compared to
equity fund.
Reason of investing in debt fund is lower risk involved.
People generally like to invest in liquid fund because the risk in liquid fund is very
less.
They look for the fund with good credit rating.
Average maturity period of the fund should me low.
Return since inception should be more.
1.5 Conclusion
After analyzing the problem certain aspects has been in considered in order to maintain the
portfolio.
1.6 Recommendation
Start ad campaign on social media.
Distribute pamphlets.
Bill boards on the bus stand, metros and railway stations.
Hoarding on the road.
Mobile ads and email marketing can be done for debt funds
Customer service and follow up is required after sales.
1.7 SWOT Analysis
1.7.1 STRENGHT Better scope for accessing market information
Offer liquidity to the investors at any time.
Large number of potential customers are base.
Offer liquidity to the investors at any time.
The size of the market is large.
1.7.2 WEAKNESS
Meeting with the Distributors are not done on the regular basis.
No customer follows up and after sales service.
1.7.3 OPPORTUNITIES
Can increase awareness.
Spread bad word of mouth from another source and sell your product.
1.7.4 THREATS
There are 44 mutual fund companies in the market so the competition is very tough.
Change in the government regulations.
2. Introduction
ICICI Prudential Asset Management Company Ltd. (IPAMC) is a joint venture between ICICI
Bank, a leading and trusted name in financial services in India and Prudential Plc, one of United
Kingdom’s largest players in the financial services sector. The company has forged a position of
preeminence in the Indian Mutual Fund industry. It is one of the leading Asset Management
Company’s contributing significantly towards the development of the Indian Investor and the
growth of the Indian mutual fund industry.
From a well - diversified range of investment solutions that cater to all its investors needs to
various facilities and services to make investing simpler, ICICI Prudential AMC is always looking
to create long-term wealth and value for investors through innovation, consistency and sustained
risk adjusted performance. Today, the organization is a mix of investment expertise, resource
bandwidth & process orientation. It is always looking to take an extra step to simplify its investor’s
journey to meet their financial goals, while ensuring that it maintains pace with rapidly changing
technologies.
Interest income
Capital appreciation / depreciation in the value of the security due to changes in market dynamics
Debt securities are also assigned a 'credit rating', which helps assess the ability of the issuer of
the securities / bonds to pay back their debt, over a certain period of time. These ratings are issued
by independent rating organizations such as CARE, CRISIL, FITCH, Brickwork and ICRA.
Ratings are one amongst various criteria used by Fund houses to evaluate the credit worthiness of
issuers of fixed income securities.
There is a wide range of fixed income or Debt Mutual Funds available to suit the needs of different
investors, based on their:
Investment horizon
Ability to bear risk
The various benefits of investing in Debt Mutual Funds are listed below -
The tax rates proposed in the Union Budget FY 2013-14 are as per the table below -
Tax on capital gains: Capital gains tax are broken up and taxed as follows -
Short term capital gains (not exceeding 12 months) – Marginal Tax Rate
Long term capital gains (exceeding 12 months) – Indexed Tax Rate (Except for NRIs / QFIs in
case of Unlisted Mutual Fund units, where indexation benefit will not be available)
Indexation Benefit
Indexation adjust the purchase value of your investment to indicate the impact of inflation, while
calculating long term capital gains tax for investments held for over 1 year.
Maturity Profile
It is a graphical representation of the maturity of all holdings of the fund’s portfolio. It gives an
overall picture as to what percentage of the fund’s net assets fall under different time frames,
ranging from 6 months to 1 year to 3 years and so on. This helps understand what percentage of
the funds’ assets invest in which maturity bonds, and to what extent the fund is exposed to the
interest rate risk. In a falling interest rate scenario, debt funds maintain relatively higher portfolio
maturities and vice versa.
The image above is representational of the maturity profile of a debt fund, as presented in a mutual
fund fact sheet.
The image above is representational of the rating profile of a debt fund, as presented in a mutual
fund fact sheet.
A larger exposure to Government of India securities would imply a potential for greater returns in
a falling interest rate scenario (as bond prices and interest rates are inversely related). Investments
in good Corporate and PSU bonds have the potential to earn higher interest income than the
investments in pure government of India bonds. A certain percentage of the portfolio is also held
in cash and net current assets. This is done to ensure availability of funds to meet the day-to-day
redemptions of investors without having to sell securities which might affect the portfolio's
performance.
Duration of portfolio: The duration (not to be confused with maturity) is the measure of the price
sensitivity of the portfolio to a change in interest rates. Funds with a longer duration would be
more sensitive to a given change in interest rates. For example, if interest rates were to go down
(or up) by 1% in a month, the Net Asset Value (NAV) of Bond fund is likely to go up (or down)
by 5 per cent if modified duration of portfolio is mentioned as 5 years.
Yield: The yield is a measure of the interest income generated by the bonds in the portfolio. Funds
that invest in bonds that have a higher coupon rate would have a higher portfolio yield. In a stable
interest rate scenario, this can be considered as an approximate measure of the returns the fund can
generate. However, in a falling interest rate scenario, this is not a true measure of the returns, as it
does not account for trading gains that can accrue from the active buying and selling of bonds. The
yield to maturity of a debt fund indicates the running yield of the fund. Debt funds are total return
products returning both accrual of interest and mark to market gain or losses.
Other than above, investors must also look at the stated investment objective of the debt
fund, its positioning in the style box, other fund features section and its performance record
over a period of time vis-a vis its benchmark.
The points listed below, provide a snapshot of the parameters to consider while deciding in which
Debt Mutual Fund to invest.
The debt fund Portfolio gives a list of the instruments the fund has currently invested in,
indicative of its investment strategy.
Average portfolio maturity indicates the length of time until the principal amount of the bond is
repaid.
Duration of the portfolio indicates the price sensitivity of the portfolio to a given change in
interest rates; a measure of the fund's volatility.
Average maturity and duration fluctuate depending on the view of the fund manager for flexible
and dynamic debt funds. A fund with higher maturity and duration is expected to yield better
results in a falling interest rate scenario and vice versa. This is because interest rates and bond
prices are inversely related and longer the tenure of the bond, the more sensitive it is to changes in
interest rates.
The yield is a measure of the interest income earned on the bonds held in the portfolio.
The maturity profile of the portfolio can be used to understand the composition of the portfolio.
Returns can potentially have enhanced by lowering credit quality of the portfolio, which enhances
the credit risk. The rating profile can be used to understand the credit risk.
4. Market Survey
Yes
No
Yes
No
32
35
30
25
Response
20
15
7
10
5 0
0
Less Risk Category
Moderate Risk High Risk
37 37
40
35 31
30
25 20
Factors
20
15
10
5
0
Credit Rating Investement Asset allocation Return
Horizon
Response
35 32
30
25 22
20
Fund
15
15 12
8
10
0
Liquid Plan Income Plan Regular Corporate Dynamic fund
Savings Plan bond fund
Response
5.Competitve Analysis
These funds invest in highly liquid money market instruments and provide easy liquidity. The
period of investment in these funds could be as short as a day. They aim to earn money market
rates and could serve as an alternative to corporate and individual investors, for parking their
surplus cash for short periods. Returns on these funds tend to fluctuate less when compared with
other funds.
Analysis
Maturity Period: As the average maturity period of ICICI prudential is high compare with Birla
Sun life. So, they can invest in that bonds which can provide principal amount back to investor in
less than a year.
Credit Rating: Credit rating of ICICI prudential is good compare with other funds
Earlier known as Liquid Plus Funds, they invest in very short-term debt securities with a small
portion in longer term debt securities. Most ultra-short-term funds do not invest in securities with
a residual maturity of more than 1 year. Also referred to as Cash or Treasury Management
Funds, Ultra Short-Term Funds are preferred by investors who are willing to marginally increase
their risk with an aim to earn commensurate returns. Investors who have short term surplus for a
time period of approximately 1 to 9 months should consider these funds.
Analysis
Exit Load: 3M for Franklin mutual Fund and Nil for ICICI Prudential AMC and HDFC.
Maturity Period: As the average maturity period and Modifies maturity period of ICICI prudential
is much higher compared to other funds which is a point of concern for the investors because they
invest in these funds to ensure that they get their principal amount as soon as possible. So, they
can invest in that bonds which can provide principal amount back to investor in less than a year.
Credit Rating: Credit rating of ICICI prudential is good compare with another fund.
Asset Allocation in Fund Portfolio: Asset allocation is more than 70% in SOV sectors and AAA
rated bonds, that means ICICI is taking very less risk in managing their portfolio. As, 70% of the
allocation are in AAA rated bonds and SOV sectors which increases the NAV of the Fund so
investor will shift to other funds instead of investing in this fund. Returns are also less compared
to other funds. Franklin India Low Duration Funds Asset allocation is only 7% in AAA rated bonds
and SOV sectors.
These funds invest predominantly in debt securities with a maturity of up to 3 years in comparison
to a Regular Income Fund. These funds tend to have an average maturity that is longer than Liquid
and Ultra Short-Term Funds but shorter than pure Income Funds. These funds tend to perform
when short term interest rates are high and could potentially benefit from capital gains as liquidity
Analysis
Exit Load: 7Days for ICICI Prudential Short term plan, 6 months for IDFC SSIF-ST regular plan
and rest are nil.
Maturity Period: ICICI Pru Short Term Plan and ICICI Pru Banking & PSU Debt Fund -As the
average maturity period and Modifies maturity period of ICICI prudential is much higher
compared to other funds So, they can invest in that bonds which can provide principal amount
back to investor in less than a year.
Credit Rating: Credit rating of ICICI prudential is good compare with another fund.
Asset Allocation in Fund Portfolio: Asset allocation for ICICI Pru Short Term plan is 86% of
money is put into AAA rated bonds and SOV sectors that means fund manager is taking very less
risk to manage the portfolio. Asset allocation of ICICI Pru Banking & PSU Debt Fund is 87% of
Analysis
Exit Load: 1 yr. for Franklin India St Income Plan, HDFC Regular Savings Fund and Reliance
Reg Savings Fund and 3M for ICICI Pru Regular Income Fund.
Maturity Period: Avg Marurity of ICICI Prudential is low compared to other funds which is very
good for the investors.
Credit Rating: Credit rating of ICICI prudential is good compare with another fund.
Asset Allocation in Fund Portfolio: Asset allocation for ICICI Pru Regular Income Fund is 77%
in AAA rated fund and AA rated funds that means the fund manager is taking very less risk which
ultimately effects the fund NAV. NAV of the fund increases when there is high investment in
AAA rated funds and AA rated funds. Whereas if we compare with Franklin India ST Income
Plan, Asset allocation is only 33% in AAA rated bonds and AA rated funds and giving the Return
since inception 8.42% which is just 0.26% lower than ICICI Prudential Regular Income Fund.
ICICI Prudential Regular Savings Fund, an open-ended income fund, is a pure retail debt fund that
seeks to earn superior levels of return at lower levels of risk. As the name suggests, the fund strives
to help individuals save regularly by providing an investment avenue which focuses on accrual
income, limits volatility & strives for healthy yields, over a 1 year plus investment horizon.
Analysis
Exit Load: 1 yr. for all the funds except Franklin India Income Opportunities Fund.
Maturity Period: Avg Marurity of ICICI Prudential is low compared to Birla SL Medium Term
Fund and DSPBR Income Opportunities Fund-Reg. But more than other Franklin, Kotak, L&T
and Reliance Fund.
Asset Allocation in Fund Portfolio: Asset allocation for ICICI Pru Regular Savings Fund is 77%
in AAA rated funds and AA rated funds that means the fund manager is taking very less risk which
ultimately effects the fund’s NAV. NAV of the fund increases when there is high investment in
AAA rated funds and AA Rated Bonds. If we compare with Franklin India Income Opportunities
Fund where Asset allocation is only 3% in AAA rated bonds and AA Rated Bonds and giving the
Return since inception 9.28% which is more than ICICI Prudential Regular Savings fund.
Invest in debt securities of different maturity profiles. These funds are actively managed and the
portfolio varies dynamically according to the interest rate view of the fund managers. These funds
Invest across all classes of debt and money market instruments with no cap or floor on maturity,
duration or instrument type concentration.
Analysis
Maturity Period: Avg maturity period compare to other bonds are very less.
Asset Allocation in Fund Portfolio: Asset allocation in ICICI Pru Dynamic Bond Fund is 82% in
AAA rated bonds and SOV sec that means the fund manager is taking very less risk and able to
manage a return since inception of only 8.59 % which is bad in compare to other fund.
These funds invest predominantly in corporate bonds and debentures of varying maturities that
offer relatively higher interest, and are exposed to higher volatility and credit risk. They seek to
provide regular income and growth and are suitable for investors with a moderate risk appetite
with a medium to long term investment horizon.
Analysis
Exit Load: 1 yr. for ICICI Pru Corporate Bond Fund, Reliance Corporate Bond Fund and DSPBR
Income Opportunities Fund-Reg. 18 month for Kotak Medium Term Fund, 36 months for HDFC
Corporate Debt Opportunities Fund and NIL for Birla SL St Opportunities fund
Maturity Period: Avg Maturity of ICICI Prudential is low compared to other funds which is very
good for the investors.
Asset Allocation in Fund Portfolio: Asset allocation in ICICI Pru Corporate Bond Fund is 25% in
AAA rated fund that means the fund manager is taking risk and able to manage a return of 7.76%
which is good in compare to another fund.
Not only mutual fund companies are the competitors of ICICI Prudential AMC debt fund but also
there are lot of Scheme launched by government of India with better return than debt funds.
5.8.1 Senior citizen savings scheme: Is a deposit scheme introduced by the Government of
India to provide guaranteed returns to senior citizens. This scheme ensures a regular
income stream for senior citizens during their retirement.
Investment Horizon: 5year
Return: 8.6%
Tax Benefit: Can show under 80c
Exil Load: 1.5% before 1year & 2% After 2 years.
5.8.2 Post office Monthly Income Scheme: The Post Office Monthly Income Scheme
(POMIS) is a guaranteed-return investment available at the post office. On the deposit
that you make with the post office, you get an assured monthly income. Currently, one
earns a 7.8 per cent interest per year on the deposit, which is paid every month and
hence the name ‘monthly income scheme’. Once you make the deposit you get the
interest payout each month from the date of making the investment, not from the start
of the month.
Investment Horizon: 5 years
Return: 7.8
Tax benefit: Cannot show in 80c
5.8.3 Fixed Deposit : A fixed deposit (FD) is a financial instrument provided by banks
which provides investors with a higher rate of interest than a regular savings account,
until the given maturity date. It may or may not require the creation of a separate
account. The interest rate varies between 4 and 11 percent. The tenure of an FD can
vary from 7, 15 or 45 days to 1.5 years and can be as high as 10 years.
Investment horizon: 7, 15 or 45 days to 1.5 years and can be as high as 10 years.
Return: varies from bank to bank (4-11%)
5.8.5 Equity Fund of ICICI Prudential AMC: Equity fund of ICIC Prudential AMC itself
is competitor to its Debt Fund. As lot of investment is happening in equity fund and
ICICI Prudential AMCs AUM in Debt fund is going down compare to its equity market.
So, they need to take care of it with proper Segmentation.
Analysis
ICICI Prudential can have actually build relationship with Relationship Manager of
Retail banks so that they can guide people to invest in mutual fund instead of investing
in FD, RD, PPF and SCSS where investment horizon is very high.
Market research
According to Market research conducted in Bangalore, only 45% of people know about mutual
fund but only 36% out of this 45% invest in mutual fund. There are 44 mutual fund company in
the market. So, there are lot of competitors for ICICI Prudential AMC.
Now the question arises what to do in the upcoming year to deal with the problem which ICICI
prudential AMC is facing.
First think what they can do is spreading awareness among the people about mutual fund through
different channels. if you want to sale your product then your prospect should be more because if
your prospect is 100 in that 80 will qualify and after that 40 will be really interested in investing,
out of that 20 will be actually investing.
Every mutual fund brand has an active social media page where they are regularly putting out
content. If we have to nail down 2 sets of customers for a Mutual Fund, they are:
1. People are aware of mutual fund but don’t know where to invest.
2. People are aware of investing in which scheme but don’t know why to invest,
The way to address this situation is to un-complicate the financial jargons that seem to be the norm
in the mutual fund industry. A fixed deposit simply says – Get 6% Fixed Interest rate for an FD
on maturity. Nothing complicated to understand.
But when it comes to selling a mutual fund product, fund houses resort to phrases such as “beating
the benchmark index”. How many of the customers understand what a benchmark index is?
According to research
conducted, awareness is the
biggest problem is awareness
which we got from the survey. I
surveyed around 765 people
and got to know that 423(55%)
of people don’t know about
mutual fund so we can spread
awareness about mutual fund
with the help of social media
marketing. This will help
people to become prospect for
the company. we can start a
social media campaign for the
debt fund of ICICI prudential
“you grow, your money grow”.
In India people spend more than more than an hour in traffic. People basically sit in the car, bus,
two-wheeler for this entire hour and survive to get out of the traffic. What we can do, this people
can be our lead, so what we can do is putting billboard at highways or on the buildings so that the
people who are waiting in the traffic look at the boarding and get the awareness of ICICI prudential
AMC. Now a days marketing
manager look for this
opportunity and make a
creative idea to utilize this time
which people spend waiting
into the traffic so instead of
wasting time they can utilize
the time and get some
knowledge on mutual fund.
Customers relationship is must needed in ICICI Prudential and a permanent employee should be
recruited for this job. In this world if your customer is not happy with you then the customer will
move to your competitor which will be loss for the company.
Investors will be happy because they will feel that their money is in safe hand and
monitored by company person.
Positive word of mouth will be spread by investor to other people which will encourage
other people to come and invest.
According to market research 80% of the revenue comes from the existing investors. So,
CRM should be properly maintained.
Segmentation will help CRM to employee to service better.
Class A = High Potential Customer
Class B = Medium potential Customer
Class C = Lower Potential Customer
The Kind of relationship need with class A customer will be of best quality and the
customer should know all the disclosure of the fund
I had interaction with lot of customers and make the understand about SIP how it works
and basically after pitching the product I always take down customers phone number and
did a proper follow up so that they come and invest in our fund.
After completing my NISM exam I started going to branch for 45 days from 9.00am – 4.30
pm after that I come to office and submit the collected SIP application. Whoever customer
coming for opening RD, FD and PPF account I always pitch them the products what they
came to look for, after explaining I started to explain alternative plan where they can put
their money to get good return and after 1 year it will be tax free.
In this 45 days, I was able to get 189 SIP which was a good number and some lumpsum
were also there. The total sells number was around RS. 7 crore which was a great
contribution from my side to company.
8. Limitation
There was no limitation from the company side.
There was no limitation from the distributors also, I was told to be in the lobby and talk to
customer about SIP and if customer is convinced then you can close the deal according to
customer preference.
When I was Conducting SIP drive that time without any limitation I was taking the survey
from the customers.
I
9. Recommendation
There is customer who are having very less knowledge in about the financial product so he
need a proper guide about when to switch the funds and when to invest in the market.
Bank employee need to be trained because lot of time in the CTF (common transaction form)
mobile no and email id is wrong which is the only way to communicate with the customer so
employees in the bank they should check properly with the customers that this should be taken
care of.
Supply chain management is very weak in ICICI prudential AMC because lot of time if the
customer is applied for the redemption or close of SIP which is supposed to be done in 2 days
but it takes more than 2 days because of no proper SCM.
Market reach is less, so if we can increase market reach then the revenue will also increase and
more people will be aware of mutual fund.
10. Conclusion
This project is an attempt to analyze and compare the Debt scheme of TCTC Prudential AMC with
recommendations on improving the portfolio on the funds.
As we understood that there are 44 other mutual companies so the competition is very high in the
market which will help the confuse the invest whether where to invest.
So ICICI Can take advantage of it an assist investor to invest in correct fund. It is becoming
important to give a serious look at the sales and distribution strategy practiced in this industry.
11. Reference
Thanking You