The Products That Can Be Introduced For Different Investor Types by a Startup Financial Company in t...
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The Products That Can Be Introduced For Different Investor Types by a Startup Financial Company in the Context of Bangladesh Capital Market . Ahmad Sajid 1010048. WE ARE CURRENTLY HERE. 1 of 15. Over view. Of The Capital Market. Prob lems

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We are currently here

The Products That Can Be Introduced For Different Investor Types by a Startup Financial Company in the Context of Bangladesh Capital Market

Ahmad Sajid

1010048

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Overview

Of The Capital Market

  • Problems

  • Small Size & Immaturity : Capital Market of Bangladesh is very small compared with other south Asian countries. Therefore competition is very intense

  • Volatility : Bangladesh Capital market is highly volatile. From last quarter of 2010 to first quarter market correction wiped out $27 billion in market capitalization

Market Information

○ Market capital: 2918.035 billion BDT

○ Equity Company : 21

○ Mutual Funds : 38

○ Corporate Bond : 3

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Problem Statement

“Financial institutions think that investors do not want different types of products. They expect that the investors will follow the rule that SEC and financial institutes make and all types of investor are covered by the same financial product that they have built.”

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Purpose of the Study

For Financial Institutions

For Customers

A guide to understand their customers better

A future guide to all the potential investors

A guide for coming up with suitable and exciting new financial products

An way to assess themselves to find out their orientation as investors

A forward step in setting a strong strategy to achieve the desired growth

Finally getting the financial products they want.

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Research &Hypothesis


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Methodology & Design

The concept behind the research is that there is a direct relationship between the dependent variables (preferred product) and the independent variable (investor orientation), that is, there is direct relationship between investor orientation and the kinds of product they prefer. Our goal is to explore this relationship so that we can properly recommend products for different customer types.

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Survey Instrument & Sampling

Survey Instrument

Sampling

Total 22 Respondents

2 Questionnaires:

Four Investor Categories : conservative, moderately conservative, aggressive, and moderately aggressive

To find out the customer orientation

To find out what type of products that particularly oriented customer wants

One way ANOVA test to compare means

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The Respondents

The respondents were real investors who have at least 1 year of investment profile

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Hypothesis

Ho: μ1 = μ2 = μ3 = μ4

The null hypothesis is that the mean strategy or product is same for every customer of financial startups in Bangladesh.

H1: The mean strategies are not equal

The alternate hypothesis is that the mean strategy or product is not same for every customer.

If the null hypothesis is not rejected, we conclude that different strategies should not be taken based on customers’ scores. If null hypothesis is rejected, we conclude that different products should be launched to match the customers’ scores.

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The ANOVATest

  • Calculated F Value = 8.991.

  • .05 level of significance

  • The critical value = 3.16.

  • decision rule = reject Ho is the computed value of F exceeds 3.16.

Degrees of freedom in the numerator = k -1 = 4 – 1 = 3

Degrees of freedom in the denominator = n – k = 22 – 4 = 18

  • The test statistic follows the F distribution. We are assuming the following (to use the ANOVA test):

    • The population (the customers’ decision) follows the normal distribution.

    • The population (the agreement between customers) have equal standard deviation.

    • The populations (the customers’ decision) are independent.

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Tables

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Recommendation

For the aggressive investor

For the Moderately Aggressive Investor

highest speed with the relevant corresponding risk over a period of 1-3 years. As it is a high growth product, the risk undertaking is also higher.

Risk and return: over a period of 1-3 years, the targeted return is 22%-25% with a risk of about 20%.

Fund growth over a period of 1-3 years and also have the ability to bear the corresponding risk. As it is a growth product, it gives focus on the portfolio appreciation with appropriate asset allocation strategy.

Risk and return: over a period of 1-3 years, the targeted return is 20%-22% with a risk of about 19%.

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Recommendation

For The Conservative Investor

For The Moderately Conservative Investor:

This product will be developed for investors who want to get a positive return with the lowest corresponding risk.

Risk and Return: Over a period of 6 months-3 years, the targeted return is 18%-20% with a risk of about 18%.

Portfolio over a period of 1-3 years as well as portfolio protection with a relatively lower corresponding risk.

Risk and Return: Over a period of 1-3 years, the targeted return is 18%-20% with a risk of about 18%.

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Recommendation

Sharia Compliant Portfolio

For Female Investors

A financial product can be designed for the investors who would like to invest in a sharia compliant portfolio. The corresponding risk associated can vary depending on the customer’s orientation as an investor.

In our study, almost every participant in the research wanted a product created solely for female investors. The product for female investors can be designed in a way that it will have lower risk with moderate return. As the women in Bangladesh typically has less money than men and also risk averse, they will also need a portfolio that does not fluctuate very often.

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Thank You!

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