Project On

To study the awareness of

Exchange Traded Fund
among Investors and
comparison with Mutual fund

Presented By-
Under the guidance of-
Akshita Jain
Prof.Prabodhan Patil
Roll No: 28
 Executive Summary

ETF
 It is an essential prerequisite for the formation of capital and the faster growth of
the economy.

 ETFs are just what their name implies: basket of securities that are traded, like
individual stocks on an exchange. They can be bought and sold throughout the
day (between trading hours)

 ETFs are passively managed funds, hence expense ration is less than other
securities options

 This study tries to identify the gap area for which, despite being an effective
investment vehicle ETF is still not very popular among Indian investors.
 OBJECTIVES
 To study about ETF
 To do a comparative analysis of mutual funds and ETFs
 To know about the awareness of ETF among Investors.
 COMPANY PROFILE
Sharekhan is ranked second largest stock broker portal and is present in over 575
cities through 150 branches, more than 2600 business partners. Sharekhan offers
its services to all kinds of customers including individual investors and traders,
corporate, institutional and NRI’s. Sharekhan offers trade execution facilities for
equity cash and derivatives segments on BSE and NSE, commodities trading
facilities on MCX (Multi Commodity Exchange) and NCDEX (National
Commodity & Derivatives Exchange).

Sharekhan.com is the finest investment portal for India stock market.

Sharekhan Offerings:
 Research Methodology
Researcher used quantitative research methodology for the project.
For quantitative research methodology researcher used questionnaire method by
which primary data is collected.
And secondary data is collected from various websites and books.

Type of Research Descriptive

Sampling Unit Investors from Nasik City

Sampling Area Nasik city

Sampling Size 100 Investors

Sampling Method Simple Random Sampling

Type of Data Primary and secondary

Research Instrument Structured Questionnaire

Contact Method Face to Face Interview

 Data Analysis & Interpretation

What is your age?

Age Respondents
Below 30 16
31-40 52
41-50 26
Above 50 6
Total 100

Age
Below 30 31-40 41-50 Above 50
6%
16%
26%

52%
 What is your occupation?

Occupation Respondents
Government Employee 25
Private Employee 23
Businessmen 36
Others 16
Total 100

Occupation
Govt Employees Private Employees
Businessman Others
16%
25%

36% 23%

Interpretation:
Most of the businessman invest in stock markets. There are also plenty of people (government
employees, private employees, farmers etc.)
who either make a comfortable amount of money at their current position, thus invest in the
stock market.
What kind of investment do you prefer most?

Investment Percentage
Savings 11
Fixed Deposits 28
Insurance 11
Stock Market 50
Total 100

Investment
Savings
11%

Stock Fixed
market Deposits
50% 28%

Insurance
11%
 While investing money, which factor do you
prefer most?

Preferred Factors Percentage

Liquidity 14
Low Risk 20
High Returns 54
Company Reputation 12 Prefered Factors
Total 100 liquidity Low Risk
High Returns Company Reputation

12% 14%
20%

Interpretation: 54%
54% people seem to be obsessed with just Returns while
excluding other factors. But there are multiple factors
that go into selecting the right investment products to
meet financial goals. Most investors don’t dare to take
risk in investment because of past experience and wrong
choice of companies.
 Are you aware about ETF?

Awareness
Awareness Respondents
yes No
Yes 40

No 60

40%
Total 100
60%

Interpretation

These passively managed funds (ETF) are yet to pick up in India. This
is because the actively managed funds continue to outperform their
benchmarks. Hence 60% of people are still unaware about ETF and its
advantages.
 Have you ever invested
in ETF?

People Invest In ETF

Invest in ETF Respondents Yes No

Yes 20

No 20
50% 50%
Total 40

Interpretation:
People are still unaware about advantages of ETF. As less Fund Managers and stock
brokers suggest ETF to investors, investors don’t invest in ETF.
 What percentage of savings
people invest in ETF?

Interpretation:

We can observe that no investors like to invest their

20% of savings in ETF. ETF have not got so much
attention because investors prefer to park their money
in bank deposits and life insurance and other options.
 Which factors people
Consider while investing in ETF?

Principles Percentage
Enquiring about Fund 6
Manager
Finding about its past 4 Principles
performance Enquiring about
Fund Manager
Identify own objectives 8
others 5 15% 25% Finding about its
past
Total 20 40% 20% performance
Identify own
objectives

Interpretation:

If investor deciding between similar ETFs and Mutual

Funds, they study the different fee structures of each,
including the trading fees. Most of the investors invest in
ETFs due to low cost, tax benefit, transparency, and
passive management.
 Why people don’t invest in ETF?

Reasons Percentage
Inefficient Investment Advisor 8
Bitter Past experience 2
Lack Of Knowledge 9
Difficulty In Selection 1
Total 20

Reason
Bitter Past Experience 10%
Lack of Knowledge 40%

Difficulty in selection 45%

Ineffiecient Investment Advisor

5%
Interpretation:

Investors in India do not have too many choices when it comes to investing in
ETFs.
Currently, there are limited ETF linked to the index and apart from gold not
many commodity ETFs are available in the market.
We can see that, 45% of investors not invest in ETF due to lack of
knowledge.
Because of low margins, not enough has been done to make ETFs popular
amongst investors in India. Also distributors not getting any margins, they are
not promoting them much.
 Advantages & Disadvantages Of ETF
Advantages
 ETFs trades like stocks.
 ETFs typically have lower annual taxable distributions because they trade less
frequently than mutual funds.
 Its annual expenses and trading cost are usually lower than Mutual Funds.

Disadvantages

 Limited to larger companies

 Limited choice in India for types of ETF
 Because of low trading volume, advantage of purchasing ETF diminishes.
 Findings
• These passively managed funds (ETF) are yet to pick up in India. This is because
the actively managed funds continue to outperform their benchmarks.

• ETF have not got so much attention because investors prefer to park their money
in bank deposits, life insurance, and other stock options.

• Most of the investors invest in ETFs on the basis of their objectives such as low
cost, tax benefit, transparency, and passive management.

• Most Investors take advice from fund manager who recommend least cost and
efficient instruments to their clients. In India, we are observing slow but steady
increase in such advisors and managers as market matures and evolve. This
definitely augurs well for ETFs.
 Suggestions
• ETF should be promoted through educational videos to promote greater
knowledge of ETFs among investors and financial advisors. The video
must be in straightforward language and contain easy to understand
content revolving around the benefits and mechanics of ETFs.

• Financial Advisors and stock brokers should target the market in order to
implement marketing strategies to draw more investors.

• To promote ETF, government, companies should create a plan that

explains how the money will be put to use. It should include details about
the market, the competition, operational strategies and the financial
situation, including the role of the potential investor’s funding.

• Companies should provide link in local search directories and include

search engine optimization on their website to make it easier for investors
to locate and learn about your product (ETF).
 Conclusion
Even though investor’s understanding of ETFs has grown significantly over the past
several years, there is still a lot of confusion and misunderstanding about potential
pitfalls attached to these investments.

Unlike US and other developed countries, ETF haven’t taken off really in India.

Exchange Traded Funds (ETFs) take the Mutual Fund investing to the next level.
ETFs can offer lower operating costs than traditional open-end funds, flexible trading,
greater transparency, and better tax efficiency in taxable accounts. Most informed
financial experts agree the pluses of ETFs overshadow the minuses by a sizable
margin.

The situation will change because of more transparency and due to the improving
pricing efficiency in the Indian market. And the low cost of ETFs and low expense
ratio will be the prime attraction of investors.
 Bibliography

I refer various websites and books to carried out this project.

Websites such as:
• www.etf.com
• www.moneycontrol.com
• www.nseindia.com
• www.investopedia.com
• www.indianeconomy.net

And books are:

• ETFs and indexing are simple and powerful investment tool.