“ULIPS v/s Mutual fund” as an
Investment Option among the
Investors of Ludhiana
Presented byManinder Vadhrah
Historical background of the group
It was established in 1865.
Aimed to finance the growing trade between
Europe, India & China.
By 1880s, the bank was acting as banker to
Hong Kong Government.
It is also participated in the management of
British government accounts in China, Japan,
Penang & Singapore.
Introduction to HSBC
HSBC is world’s local bank.
Headquarters in London.
HSBC’s international network comprises over
9500 offices in 76 countries & territories in
Europe, the Asia-Pacific region, the Americas,
the Middle East & Africa.
HSBC provides a comprehensive range
of financial services like1)
2)
3)
4)
Personal financial services
Commercial Banking
Corporate Banking
Investment Banking
HSBC Group in India
 It offers a full range of Banking & Financial Services to
its over 2.8 million customers.
 It has 47 branches & 170 ATMs across 26 cities.
 It has over 34,000 employees in its Banking,
Investment Banking & Capital Markets.
 With Asset Management, 2 Global IT development
centres & 6 Global resourcing operations in the country.
Sale of Stake in Investsmart to HSBC
 HSBC acquired 29.36% stake in IL&FS InvestSmart
Ltd.
 HSBC acquired 43.85%
E*TRADE Mauritius Ltd.
of
InvestSmart
from
 HSBC has accepted shares to Public shareholders
equivalent to 20.65% of InvestSmart’s capital.
 Thus, it has completed its acquisition of 93.86% of
IL&FS for a consideration of US$296.4 million.
Vision & Mission
Vision :To become the preferred long term financial
partner to a wide base of customers whilst optimizing
stakeholders value.
Mission: To establish a base of 1 million satisfied
customers by 2010. We will create this by being a
responsible and trustworthy partner.
PRODUCT PROFILE
All the products of IL&FS can be broadly
divided into the following two categories:
Online Trading Products.
Advisory Services.
Other services.
Online Trading Product of IL&FS
Investsmart
Basically IL&FS Investsmart offers three types
of products to its retail customers.
Smart Start
Smart Invest
Smart Trade
Advisory Services
1. Mutual fund advisory services.
2. Portfolio management services.
3. IPO Advisory and Distribution Services.
4. Insurance Advisory Services.
5. Investment Advisory services
Other Services
1) Online services.
2) Research and Financial Analysis.
3) Value added services.
Organisational Members
 Mr. Manasije Mishra
MD & CEO
 Mr. Avdhoot Deshpande
Head - Equity
and Capital Markets
 Mr. Vipul Shah
Head - NBFC
 Mr. Dharmen shah
Vice President
- Institutional Equity
 Mr. Jaideep Anand
Senior Vice President Institutional Sales & Dealing
 Mr. C. Diwakar
Chief Information Officer
 Mr. K. Venkatesh
Head – Distribution
Organization Chart
Branch Manager
Mr. Saurabh Talwar
Offline
Relationship
Manager(3
Persons)
Supporting Staff (3
Persons)
Online
Dealers (4 Persons)
ASM
Mr. Sarbjit Pal
Opeartions (3
Persons)
Acquisitions
ASM
Mr. Abhishek
Aggarwal
ASM
Mr. Rahul Sood
SWOT ANALYSIS
Strengths:1) Customization.
2) Expertise.
3) Unique Features.
4) Research Agency.
5) Extensive reach.
6) Brand image.
7) Competitive pricing.
Weaknesses:1) Expensive Products.
2) Tedious Procedures.
3) Fund Transfer.
4) Attrition.
Continued……….
Opportunities:1) Right Time to
Investors to re-enter
into market.
2) Huge untapped
Markets.
3) Increasing number of
Graduates.
4) Increase Tie-ups for
Fund Transfer.
Threats:1) Stiff Competition.
2) Increasing awareness
of Mutual Funds &
ULIPS.
RATIO ANALYSIS
1) Current Ratio
Current Ratio
2.5
2
1.5
1
0.5
0
Current Ratio
2007
2.2
2008
2.3
2009
1.9
Quick Ratio
Quick Ratio
1.12
1.1
1.08
1.06
1.04
1.02
1
0.98
0.96
0.94
Quick Ratio
2007
1
2008
1.1
2009
1.1
Return on Total Assets
Return on Total Assets
14
12
10
8
6
4
2
0
Return on Total Assets
2007
12.5
2008
12
2009
9.9
Net Profit Ratio
Net Profit Ratio
6.8
6.6
6.6
6.4
6.2
6.1
6
5.8
5.6
5.5
5.4
5.2
5
4.8
Net Profit Ratio
2007
6.1
2008
5.5
2009
6.6
Debt-Equity Ratio
Debt-Equity Ratio
3
2.59
2.5
2
1.5
1.44
1.42
2007
1.44
2008
1.42
1
0.5
0
Debt-Equity Ratio
2009
2.59
Introduction to the ULIPs
 Unit-linked insurance plans, popularly known
as Ulips are life insurance policies which offer
a mix of investment and insurance similar to
traditional life insurance policies, but with one
major difference.

Unlike traditional policies, in Ulips
investment risk lies with the insured (i.e.,
policy holder) and not with the insurance
company
•
•
•
•
•
•
•
•
Different types of charges under
ULIPs
Premium Allocation Charge
Fund Management Charge (FMC)
Policy Administration Charge
Surrender Charge
Switching Charge
Mortality charge
Rider premium charge
Partial withdrawal charge
Working of ULIPs
 ULIPs work on the lines of mutual funds. The
premium paid by the client (less any charge) is
used to buy units in various funds (aggressive,
balanced or conservative) floated by the insurance
companies.
 Units are bought according to the plan chosen
by the policyholder. On every additional
premium, more units are allotted to his fund.
USP of ULIPS
Insurance cover plus savings
Multiple investment options
Flexibility
Works like an SIP
Fund Switching Option
HURDLES OF ULIP
No standardization
Lack of Flexibility in Life cover
Overstating the Yield
Internally made Sales Illustration
Not all Show the Benchmark Return
Early exit Options
Creeping Cost
Introduction to Mutual Funds
A Mutual Fund is a trust that pools the savings
of a number of investors who share a common
financial goal.
The money thus collected is then invested
in capital market instruments such as shares,
debentures and other securities.
J
Set up of Mutual fund
Types of Mutual Fund Scheme
1)
a)
b)
c)
By Structure
Open ended Scheme.
Close ended Scheme.
Interval Scheme.
2)
a)
b)
c)
d)
By Investment Objective
Growth Scheme.
Income Scheme.
Balanced Scheme.
Money Market Scheme.
3) Other Schemes
a) Tax Saving Scheme.
b) Special Scheme.
Advantages of Investing in Mutual
Funds
•
•
•
•
Diversification
Professional management
Liquidity
Convenience
Disadvantages of Investing in
Mutual Funds
•
•
•
•
No Guarantees
Fees and commissions
Taxes
Management risk
Comparison between ULIPS and
Mutual fund
Unit Linked Insurance Policies (ULIPs) as an
investment avenue are closest to mutual funds
in terms of their structure and functioning.
ULIPs can be termed as mutual fund scheme
with a insurance component
Points of difference between ULIPs
& Mutual fund
 Objective
 Cost
 Investment Duration
 Flexibility
 Liquidity
 Investment Objective
 Tax Implication
Title
“ULIPS v/s Mutual fund” as an
investment option among the
investors of Ludhiana
Objectives
 To know the customers awareness about Ulips
and Mutual Fund.
 To compare the investment in ULIPS plan with
the Mutual fund.
 To study the degree of risk involved in both.
 To analyze the future prospective of these
investment option.
Research Methodology
Research Design: Descriptive Research Design.
Data Collection: Primary Research:- Questionnaires
Secondary Research: - Journals &
Magazines.
Sampling Unit:People of Ludhiana who are investing in ULIPs
or Mutual fund
Sample Size:- 100.
Percentage of people who have invested in
ULIPS, in Mutual fund and both
60%
51%
50%
40%
30%
30%
19%
20%
10%
0%
ULIPS
Mutual fund
Both
Annual income of the investors
70%
58%
60%
50%
40%
40%
37%
33%
30%
20%
10%
26%
17%
20%
14%
23%
16%
11%
5%
0%
Below 2 lacs
2lacs-4 lacs
4lacs-6 lacs
Above 6 lacs
ULIPS
Mutual Fund
Both
Factors consider by investors before
investing in ULIPS and Mutual fund
45%
40%
42%
39%
35%
30%
25%
20%
15%
12%
10%
7%
5%
0%
Safety of Principal
High Return
Maturity Period
Terms and
Conditions
Information Sources helpful to the
investor in making investment decision
70%
66%
60%
50%
40%
30%
21%
20%
10%
5%
5%
3%
0%
Journals
Reference
Group
Television
Brokers
Newspaper
Preference
of
investor
different types of funds
regarding
0.35
0.306
0.3
0.25
0.268
0.215
0.2
0.15
0.115
0.096
0.1
0.05
0
Equity based
fund
Debt based
fund
Balanced fund
Open ended
fund
Close ended
fund
The reasons for investing in ULIPS
Reason
Strongly Agree
Agree
(1)
(2)
49
Tax
Rebate
98
31
31
53
Life
Insurance
106
Capital
Growth
0
34
76
8
34
22
0
-9
1.18
2
133
1.33
5
96
.96
13 12
.12
-5
29
-29
118
-4
9
13
Mean
-4
-3
0
2
3
14
23
23
7
-7
0
34
Disagree Strongly Total
(-1)
Disagree
(-2)
11
34
38
Investment
of excess
money
44
Neutral
(0)
-26
The reason for investing in Mutual Fund
Reasons
Strongly Agree
Agree
(1)
(2)
24
Tax Rebate
26
26
58
48
Capital
Growth
96
64
0
39
21
-21
5
0
28
28
Disagree Strongly Total
(-1)
Disagree
(-2)
8
39
32
Investment
of excess
money
Neutral
(0)
0
-6
.31
2
1.25
-4
24
-24
16 31
-32
6
7
Mean
125
9
-18
.50
50
Preference of ULIPS or mutual fund on the
basis of following factors
120%
100%
80%
60%
62%
60%
66%
83%
88%
40%
20%
0%
38%
40%
34%
Mutual fund
17%
12%
ULIPS
Investment in ULIPS and Mutual fund by risk
profile
70%
61%
60%
53%
50%
40%
ULIPS
33%
30%
26%
20%
14%
12%
10%
0%
Low risk
Moderate risk
High risk
Mutual
fund
Expected annual Return from both ULIPS
and Mutual fund
60%
53%
50%
47%
40%
36%
35%
ULIPS
30%
MUTUAL FUND
20%
10%
10%
7%
10%
2%
0%
less than 10%
11-15%
15-20%
20-25%
Preferred tenure of investment for ULIPS and
Mutual Fund
80%
70%
70%
60%
51%
50%
37%
40%
Mutual Fund
30%
23%
20%
10%
ULIPS
12%
7%
0%
Short term
Mid term
Long term
Awareness among peoples regarding the
controversy of ULIPS
41%
yes
no
59%
Preferred investment option for investing
their money in future
31%
Mutual fund
ULIPS
69%
Findings
• People are aware regarding ulips &Mutual fund but, the
awareness regarding mutual fund is high comparative to
ulips.
• People with high income group are more likely to invest
their money but, people who invest in both ulips and mutual
fund mostly belongs to the income group of more than 6
lacs.
• Broker and reference group plays an important role while
making an investment decision of an investor.
• Open ended funds & closed funds are more popular among
investors of Ludhiana.
Insurance and tax rebate is the most important
reason for investing in ulips & people are
investing in mutual fund for the appreciation
of the capital invested by them.
Among the various advantages liquidity &
flexibility plays the most important role for the
preference of mutual fund over ulips
Low risk is taken in case of ulips & moderate
risk in case of mutual funds.
 The expected annual return is high for mutual
fund comparative to ulips.
 The preferred tenure of investment is same for
both ulips & mutual fund
The recent controversy related to ulips will
going to affect its future demand &in future
also more number of investors will like to
invest their money in mutual fund.
 So future is bright for mutual funds.
Conclusion
RECOMMENDATIONS
 The people do not want to take risk. The AMC should
launch more diversified funds so that the risk becomes
minimize. This will lure more and more people to
invest in mutual funds and ulips.
 The expectation of the people from the mutual funds is
high. So, the portfolio of the fund should be prepared
taking into consideration the expectations of the people.
 Try to reduce fund charges, administration charges and
other charges which help to invest more funds in the
security market and earn good returns
 Different campaigns should be launched to
educate people especially regarding SIP.
 Companies should give regular dividends as it
depicts profitability.
 Companies should give handsome brokerage to
brokers so that they get attracted towards
distribution of the funds.
 ULIPs is good for those who prefer investment
plus insurance.