PROJECT REPORT

ON

“A STUDY OF VARIOUS ASPECTS

OF

WEALTH MANAGEMENT

IN

CHOLAMANADALAM”

A Report Submitted In Partial Fulfillment Of The Requirements Of PGDM Program

Of IPER-PGDM Bhopal

Submitted To: Submitted By:

Prof. A.S. Khalsa Harsha Chotrani Dean-
IPER-PGDM, Bhopal

Mr. Vikas Jain Date of Submission:

Assistant Vice President July 5th, 2010
Cholamandalam, Delhi

1
 ACKNOWLEDGEMENT

An Old Chinese proverb says : “When eating your bamboo sprouts, remember the men who planted
them. Now that my sprouts are ready to eat, it is time for me to express my deepest gratitude to All
those who have made this possible.”

I would like to thank my Dean Prof. A.S.Khalsa and my sir Prof. Hersh Sharma for providing me with
this opportunity of having such a wonderful company like CHOLAMANDALAM for my summer
training.

No work is complete without the help & co-operation of a knowledgeable and expert mentor, I would
like to thank Mr.Vikas Jain-Assistant Vice President, Delhi and Mr.Ashish Shoundik, Branch Head
and finally Mr.Sambit Sawant, Senior Relationship Manger who have been extremely dedicated
towards me. Without there cooperation my knowledge about the Financial sector would have been nil.
All of them have been very much cooperative and dedicated towards passing on the knowledge to me.
Sincere thanks to Vikas sir.

In the end I would like to thank all those who have been associated with my research project and this
report.

2
 PREFACE

The wealth management industry is changing rapidly to meet the evolving needs of the participants .
This is one area where true financial services convergence seems to be happening as trust and private
banks, brokerage and retirement planning focused companies are all trying to get a bigger slice of
action .Opportunities in new geographies and asset classes are driving a lot of in the industry today.
According to a new research conducted by Celent, a Boston based financial research and consultancy
firm, the Indian wealth management industry is gearing up to meet expanding market opportunities.
The report titled "Overview of Indian Wealth Management Market" reveals that over the next four-five
years, the revenue from wealth management service is expected to contribute to over one third(32-37
percent) of full-service financial institutions.

By 2017 disposable income is expected to grow from present 2 percent to 5 percent. The wealth
management market currently registers a 30 percent plus growth and is expected to touch $1 trillion by
2012.

This Project report has been a sincere effort on the study of this upcoming sector in the Financial
Industry, Cholamandalam being a premier in the industry and proficient in the wealth management
industry. The report concentrates on the way of wealth management process and correct financial
planning of an individual and the entire business cycle of wealth management in Cholamandalam.

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 INDEX

PAGE NO.

CHAPTER 1:

CONCEPTUAL OVERVEIW-

CHAPTER 2:

RESEARCH METHODOLOGY

CHAPTER 3:

CASE STUDY-

CHAPTER 4:

ANALYSIS OF DATA

CHAPTER 5:

FINDINGS

REFRENCES

4
Chapter 1

5
 THE CONCEPT OF WEALTH MANAGEMENT
Wealth usually refers to money and property or something which has economic value attached to it. It
is the abundance of objects of value and also the state of having accumulated these objects.
The concept of wealth management refers to management of both the sources and the facets of various
forms of both tangible and non-tangible wealth. India has become a highly potential market for wealth
management because wealth managers, both domestic and international, are able to establish the
beginnings of a market with few obstacles, relative to the other emerging markets, where there are
regulatory restrictions, these are less problematic than those in China or the Middle East.

“WEALTH MANAGEMENT is a service provided by financial institutions to help high net worth
individuals protect and grow their wealth. This advanced investment advisory discipline involves
providing a diverse range of services, such as financial planning, investment management, tax
planning and cash flow and debt management, based on client requirements.”

There are Two aspects to the wealth management process:-

Protecting assets from creditors, market crashes or slowdowns, taxes, lawsuits and other
unexpected events
Growing asset values through methods that actively manage risk and reward profiles to clients
needs.

Wealth Management is an advanced investment advisory discipline that incorporates Financial

Planning and Specialist Financial Services.

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 WEALTH MANAGEMENT SERVICES

Wealth management offers the following services:

Investment planning: Assists investor in investing money into various investment markets,
keeping in mind investment goals and risk appetite.
Insurance planning: Assists in selecting from various types of insurances, self insurance options
and captive insurance companies.
Retirement planning: This is one of the important service as it is critical to understand how much
funds you require in your old age.
Asset protection: Begins with financial advisor trying to understand preferred lifestyle and then
helping an investor to deal with threats, such as taxes, volatility, inflation, creditors and lawsuits,
to maintaining this lifestyle.

Tax planning: helps in minimizing tax returns. This might include planning for charity,
supporting your favorite causes while also receiving tax benefits.
Estate planning: helps in protecting you and your estate from creditors, lawsuits and taxes. This
service is critical for every person whose net worth is high.
Business planning: This service aims at optimizing the tax free advantages of running your own
business.
Business succession planning: assists in planning for the inevitable to maximize returns.
Wealth transfer: helps you pass on your wealth to your dependents.

BENEFITS OF WEALTH MANAGEMENT

Wealth management helps in:

Reducing taxes associated with income, capital gains and estate.

Protecting assets from misjudgments and creditors.
Improving yields with more diversification and less risk.
Managing liabilities such as mortgages and college funding.

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 LITERATURE REVIEW

STATE OF WEALTH MANAGEMENT INDUSTRY GLOBALLY

Global high net worth wealth totals around $37 trillion, and is expected to reach $51.6 trillion by 2011,
growing at an annual rate of 6.8% a year according to the 2009 Merrill Lynch/Capgemini World
Wealth Report.

Merrill Lynch Global Wealth Management and Capgemini's 14th World Wealth Report
revealed that high net worth individuals (HNWI) -defined as those with more than $1 million
(£673,000) of disposable assets -had recouped most of the money lost in the previous
year when the global downturn took its toll on their portfolios.

HNWI wealth had declined by $7.9 trillion in 2008 but last year(2009) climbed $6.2 billion
according to the report which also showed that the world's population of HNWIs had
increased to 10 million from 8.6 million last year(2009), bringing it close to the 10.1 million
level of 2007.

At the end of 2008, the world’s population of HIGH NET WORTH INDIVIDUALS
(HNWIs) was down 14.9% from the year before, while their wealth had dropped 19.5%.
The unprecedented declines wiped out two robust years of growth in 2006 and 2007, reducing
both the HNWI population and its wealth to below levels seen at the close of 2005.
Ultra-HNWIs suffered more extensive losses in financial wealth than the HNWI population
as a whole. The Ultra-HNWI population fell 24.6%, as the group’s wealth dropped 23.9%,
pushing many down into the ‘mid-tier millionaire’3 pool.

The financial crisis and economic uncertainty of 2008 clearly had an impact on HNWI
investments of passion and lifestyle spending, with luxury goods makers, auction houses, and
high-end service providers reporting significantly reduced demand worldwide. The cost of luxury
items also rose.

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 HNWI Population by country,2008

By 2013, it is forecasted that global HNWI financial wealth to recover to $48.5 trillion, after
advancing at a sustained annual rate of 8.1%. By 2013, it is expected that Asia-Pacific to overtake
North America as the largest region for HNWI financial wealth.
HNWIs are defined as those having investable assets of US$1 million or more, excluding
primary residence, collectibles, consumables, and consumer durables.

Ultra-HNWIs are defined as those having investable assets of US$30 million or more, excluding
primary residence, collectibles, consumables, and consumer durables.

More than a quarter of HNWI clients surveyed withdrew assets from their wealth
management firm or left that firm altogether in 2008, primarily due to a loss of trust and
confidence.

Firms need to be client-focused . 88% of surveyed HNWI clients said SERVICE QUALITY
was a “very important” reason for staying with their wealth management firm in 2008, and 87%
of Advisors anticipated that would be the case.

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World GDP did manage to produce some growth in 2008 (2.0%),but it was down from 3.9% in
2007 and 4.0% in 2006. GDP in G7 economies deteriorated progressively as the crisis unfolded,
and ended the year showing growth of just 0.6%.

BRIC (Brazil, Russia,India,China) nations continued to outpace many economies, led by China,
despite the steep slowdown in the fourth quarter.

Real GDP Growth Rates , 2007-2009F

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HNWIs reduced their exposure to equities across the globe in 2008, but allocated more to
fixed-income instruments. By year-end 2008, equities accounted for 25% of total global HNWI
financial assets, down from 33% a year earlier, and fixed-income accounted for 29%, up from 27%
a year earlier.

HNWIs kept far more cash/deposits in 2008—of global HNWI financial assets, 21% was in
cash-based holdings at the end of 2008, up 7 percentage points from pre-crisis levels in 2006.
HNWIs are expected to remain fairly conservative investors in the short term, with capital
preservation being a priority over the pursuit of high returns. Looking toward 2010, though, the
profile of HNWI portfolios is likely to shift as economic conditions improve, instigating a tentative
return to equities and alternative investments as HNWIs regain their appetite for risk.

Breakdown of HNWI Financial Assets , 2006-2010F

11
 STATE OF WEALTH MANAGEMENT INDUSTRY IN INDIA

“While Maharashtra is home to the largest number of affluent individuals of any state
in India and also the fastest growing affluent population, it is Delhi that has by far the
highest proportion of affluent individuals”

(Source: Data monitor Customer Research)

According to the report, India is slated to become a US$1 trillion market (in assets under management)
for wealth management providers by 2012, with a target market size of 42 million households.

In the annual survey done by Cap Gemini, SA and Merrill Lynch it was found that ranks of
millionaires grew 6% in the previous year(2009), because the number of richer people grew in India &
China where India is competing China. India & China posted the biggest gain in millionaires
advancing by 23% & 20% respectively.

Wealth management is just emerging in India. The growth of the economy has already been widely
showcased. Wealth management services have been getting more attention over the last two years. A
booming economy, rising stock prices and an increase in salaries and spending power have turned the
spotlight on this sector. The wealth management space was earlier the preserve of some foreign banks
which offered these "exclusive services" to a select few. This was not a service you could apply for.

The unsaid tagline was "Don't call us. We'll call you (if you are that wealthy!)." Today, a number
of private banks and distribution houses offer this service. Also entering this arena and carving a niche
for themselves are standalone entities that offer the full range of services — investment advice,
portfolio management, taxation advice.

According to Celent, with large segments of the population showing interest in financial products and
service lines, growth and buoyancy across sectors are boosting the financial service industry of India.
The report estimated an addition of 500 million people to the working class in the next decade, with
the young population enjoying increase in income levels. These will lead to increased investments in
the core processing platforms as well as the need to tie the various platforms together.

12
The wealth management service providers have segmented Indian market into four categories,
namely:-

 The Mass market (investible surplus $5,000 to $25,000)

 The Mass affluent ($25,000 to $1 million)

 The High net worth (HNW $1 million to $30 million) and

 The Ultra-high net worth (ultra-HNW greater than $30 million).

The lower rung of this pyramid is currently clocking tremendous growth at 30 percent for mass
affluent and 27 percent for mass market and will continue the same phase says the report.
The wealth management market currently registers a 30 percent plus growth and is expected to touch
$1 trillion by 2012.

The latest Wealth Report 2010 Attitudes Survey has forecast that real estate sector in India is likely
to witness fluctuations with prices of prime properties in India forecast to be zooming northwards
by 12-15 per cent in 2010 on one hand and demographics change supporting demand on the other.

With the number of high net worth investors (HNWIs) in India growing at 20 per cent a year,
second only to Singapore and the huge community of wealthy non-resident Indians living
overseas—keen in investing back home—the Mumbai and New Delhi realty markets now hold a
significant level of promise for these potential investors, as per Pranab Datta, vice-chairman and
MD, Knight Frank India.

India's FY10,nominal GDP is estimated at US$1.3 trillion. Assuming 12.4% annual growth (7%
real and 5% inflation), India's GDP in FY15 works out to US$2.3 trillion i.e. addition of US$1
trillion in the next 5 years.

13
India is growing at a fast pace and according to LiveMint Report India's economy between the
year '2007 and 2050' is likely to come in at 8.5% CAGR, significantly higher than China's 6.8% .

India is going to be one of the powerful nations of the world as far as human resource and
technological wise...Not just this, India will also going to be powerful economically. The power of
economy can put India one among the top ten developed nations.

14
 COMPANY OVERVIEW

“CHOLAMANDALAM DISTRIBUTION COMPANY “

The Company, was incorporated on August 17, 1978, as a public limited company under the name of
“Cholamandalam Investment and Finance Limited”. Cholamandalam Financial Services Group is a
pan-Indian, composite financial services provider. It comprises the parent company, Cholamandalam
Finanace Limited (CFL), and its subsidiaries and associates Cholamandalam Distribution Limited,
Cholamandalam Asset Management Company Limited and Cholamandalam Securities Limited. The
shares of CFL are listed in the Mumbai(BSE) and National (NSE) Stock Exchange.
In 1993-94 Cholamandalam Investment and Finance Company ventured into vehicle finance
operations. It has since then continuously augmented its product range and geographical presence.
They have a total asset base of Rs. 17,000 crores as on March 31, 2010 (including assets securitized
and assigned) out of that Cholamandalam has around 1700 crores. They were registered as a deposit
taking NBFC, and in December 2006 it converted into a non-deposit taking NBFC. They currently
enjoy LAA rating for debentures and subordinated debt programme, MAA+ rating for fixed deposits
and A1+ rating for Short Term debt programme from ICRA; AA rating for fixed deposits and P1+
rating for short term debt programme from CRISIL and AA (Ind) rating for subordinated debt
programme from FITCH .

Cholamandalam Finance is a part of giant Murugappa Group of Companies, which has 28 companies,
like Parryware , Tube India etc., leading in their industries. The major companies of the Group are:
 Carborundum Universal Limited
 Cholamandalam Finance Limited
 Cholamandalam MS General Insurance
 Coromandel Fertilizers Limited
 EID Parry India Limited
 Tube Investments of India Limited
 Parry Agro Industries Limited

15
The Group has forged strong joint venture alliances with leading international companies like DBS
Bank, Mitsui Sumitomo, Cargill, Roca and Group Chimique Tunisien has consolidated its status as
one of the fastest growing diversified business houses in India.

Cholamandalam was a venture between Development Bank Of Singapore, (DBS) and Cholamandalam
Finance of Murugappa Group India. On 30 March.2010 Cholamandalam acquired its stake back from
DBS. DBS sold its 37.5 percent stake in Cholamandalam DBS Finance in a deal worth 3.76 billion
rupees. The deal price of 91 rupees ($2) for each Cholamandalam DBS share with a premium of 1.2
percent was agreed.

L&T had bought 100% stake in Cholamandalam Asset Management Ltd. on 29,Sept 2009 for 45
crores.

Cholamandalam Distribution Limited (CDL) is in the business of distribution of a wide array of

financial services products – both in-house and third party – to high net worth and retail client.
Products offered include mutual funds, fixed income, share trading, savings instruments, capital bonds,
IT/PAN processing services, equity IPOs and life and general insurance.

Wealth management practices have been started in the company, with a brand name of a giant venture.
The company has steered two separate departments for marketing. One in Retail, who take cares of the
budding millionaires of India, and other the Private Client Group (referred as PCG) which handles the
big wig individuals under its Wealth Management Department. India is growing so does the
individuals of the country, with better financial planning and good investment techniques the goals of
all the individual can be achieved in a better professionalized manner. This is the belief of the
company which has always been referred as the most trust worthy company in the industry.

“Club Chola” is the Private client group of DCDL that offers personalized investments advisory
services to address clients’ financial needs holistically through a wide variety of products, asset classes
and service offerings, backed by strong in – house research.

16
Its Closest Competitors are DSP Black rock, Citi Bank , Standard Chartered ,HSBC , India infoline ,
Bajaj capital and Birla Sunlife Distribution and in wealth managemenmt its closest competitor is Bajaj
Capital.

• To be the most trusted financial advisor to India's

emerging millionaires.
Vision

• Providing customized financial planning alligned to set

goals and objective through a wide range of product
Mission offerings.

• " UNBIASED PRODUCT SELECTION"

• Multi Product Platforms , Superior research, Financial
USP Planning Process Advisory Quality.

• 46 Cities , 70 Branches , 800 Relationship Managers , 16

Research Analysts.
Reach

17
 PRODUCTS & SERVICES OF CHOLAMANDALAM

Cholamandalam provides with new investment opportunities and investment advice which allows an
individual to choose from a broad spectrum of products and services. With Cholamandalam Wealth
Management one can be rest assured will have access to the most viable wealth management products and
solutions.

Various Products offered are :-

Direct Equity :

An Investor can enjoy convenient, simple and efficient trading in Indian equities that is offered by
Cholamandalam. They provide a seamless platform to invest in the Indian secondary markets. Chola’s
wealth management advisor provide valuable advice based on in-house research.

Structured Products:

Cholamandalam offer customized investment solutions to access various asset classes. Most structures
will offer principal protection with returns based on performance of an associated asset class. Based on
investor preference, returns can be linked to a variety of asset types such as equity indices, basket of
stocks.

Real Estate

Chola offers niche property investment services. They bring in a combination of in-depth market
knowledge and real estate industry experience to offer a range of specialized real estate investment
services. According to the analysis of the needs and objectives of the investor, they provide expert advice
and innovative real estate solutions to their clients. They are partnered with JLLM (Jones Lang LaSalle
Meghraj) . It is a financial and professional service firm specializing in real estate services.

Gold

18
A healthy portfolio is about the diversification and management of risk. Holding gold in a portfolio can
provide distinct benefits, its most valuable contribution to a portfolio lies in the fact that it is not
correlated with most other assets. Chola offers multiple avenues of investing in gold so that investor can
benefit from effective portfolio diversification .Here Gold is traded through Exchange Traded Fund.

Life Insurance

While offering solutions for building and preserving capital, Cholamandalam also offers comprehensive
advice on how best to protect yourself and your family against all the most serious risks that you face.
They have tie up with TATA-AIG Life Insurance that provides the opportunity to obtain more favorable
offers, which can result in lower costs and greater benefits. TATA – AIG IA GOLD Product is the hot
cake for Cholamandalam in terms of clients.

MF PMS ( Mutual Fund -Portfolio Management Service ):

MF PMS offer investors a unique and excellent investment proposition. They invest in the schemes of
best performing mutual funds .While mutual funds invest in promising stocks of sound companies, MF
PMS invests in the best schemes of various mutual funds .Best of the best fund managers working to
maximize your wealth Hassle-free, tension-free, selection and management of Mutual Fund Portfolio.

Chola’s Three in-house products are :-

– Discretionary Portfolio Management Services – SIGMA

– Non-discretionary Portfolio Management Services – EASE

– Transaction based Service Offering – EZ Invest

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Various Services offered are :-

Research

Chola provides quality research to their clients with the information they need to make informed
investment decisions. The Cholamandalam Wealth Management Research team is dedicated to keep
investor updated with an access to various publications and to a wide range of research tools including
market depth, breaking commentary, long-term forecasts to detailed daily updates and the latest financial
news.

Highly proactive services

They deliver a fast, effective and friendly service that often exceeds client's expectations. The service
includes daily Market Update, Weekly Update on MF, Event Based SMS, investor will be kept fully
informed on the markets.

Financial planning

To complement Cholamandalam investment strategy they offer comprehensive financial planning. This
planning session is followed by a complimentary personalized report containing specific
recommendations on the actions needed to take to achieve financial goals.

Regular Portfolio Reviews

Periodic reviews to ensure the integrity of the portfolio and continued viability of assets within the
portfolio. Chola believe in diversification and are committed to providing a sound and conservative
investment acumen.

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 SWOT ANALYSIS OF CHOLAMANDALAM

STRENGTH WEAKNESS

 Wide Product Range  Do not focus on advertisements.

 Strong Client Base at Delhi.  Brand name not established other than
south.

 PAN INDIA Presence  Brand Positioning not done properly.

 Well defined business model

 Entire process is in-housed with

experienced man power.

 Strong management in the core business &

execution

 Market Led Company

 Part Of Murugappa Group worth having

13500 crores.

 Low charges as compared to other

distribution houses.

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 OPPORTUNITES THREATS
 HNI population is growing rapidly at a  Increasing Competition.
faster pace so huge market potential .

 Concept Financial planning is developing  Regulatory changes by SEBI has led to

in india. erosion of margins.

 Power of Equity Unmatched, has  Local Market players playing a spoil

outperformed all other Asset Classes. sport.

 Equity forms only 10% of the of the total

Portfolio of the investors.

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 BUSINESS CYCLE OF WEALTH MANAGEMENT IN CHOLAMANDALAM

The business cycle of Wealth management starts from targeting the HNI Clients .There is CAT team (
Client Acquisition Team ) in Chola which focuses on acquiring clients .

Following is the Procedure Of CAT to acquire clients :-

 Search HNI Clients :-
1. Through various Database like of Airtel , Kotak etc.
2. Through Phone directories.
3. Through Club Memberships
4. Through Locality
5. Through References.
6. Cold Calling
7. Events

 Then Mailers are send to clients regarding the Cholamandalam before first call to client.
There is reason for not calling first as clients are given reference regarding first mail .

 Then Clients are given first call. And meeting is fixed .

 On 1st meeting , there’s a mantra that let client have more interaction with RM ( Relationship
Manager ) and try to know what is the past investments and its behavior, risk appetite and
return expectation of the client through filling OF RAPP(Risk Analysis and Portfolio Planer).

Then either Restructuring of Portfolio is done or New Product is pitched in 2 nd meeting

according to the need of the client and is presented to the client.

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  Following Points are considered while Portfolio Creation :-
1. Investment Objective
2. Return Expectation
3. Risk Appetite
4. Time Horizon
5. Total Corpus
6. Liquidity
7. Current Investment
8. Insurance (if any)

Then starts the Wealth management Back Office Process , it entails the following :-

After Meeting fixation and Client Pitching -

 Utilizing client feedback and personal network to develop intelligence .

 Then Coordinating with all AMC’s .
 Keep the track of portfolios of the clients on Portfolio MF Online tracker .Their
Client wise details are prepared.
 Prepare comprehensive financial reports and proposals for senior management to
review revenue generation on Telesto Software .
 Handling complete branch operations.

And then from time to time Active Review & Monitoring is done.

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HOW CHOLAMANDALAM RECOMMENDS PRODUCTS TO ITS CLIENTS

To analyze the risk appetite and return expectation and goals of the investor, RAPP FORM (RISK
ANALYSIS AND PORTFOLIO PLANNER) is get filled by the clients.

Then RAPP Form is send to Chennai Head Office where research team is based to judge the
client’s risk appetite. Research team has divided the client into 3 category’s :-

 Tortoise ( Conservative Client )

 Elephant ( Moderately Aggressive )

 Cheetah (Highly Aggressive )

After 3-4 days they send their feedback to Delhi office.

If the client comes under Tortoise Category they are suggested Debt Funds, Capital Protection
funds, FD’s (Fixed Deposit) and if client is above 60 yrs (retired) they are suggested MIP’s
(Monthly Income Plans).

If the client comes under Elephant Category they are suggested Balanced Funds, Large Cap Equity
Funds and stocks of Blue Chip Companies and SIP(Systematic Investment Plan )and Gold too.

If the client comes under Cheetah Category they are suggested Small and Midcap funds , Real
estate funds, Stocks of Small and Midcap Companies.

The information regarding in which sector/funds/stocks to invest are based on the research which
is carried out by the research team .

25
I also did some of the research work that gave an idea about the rolling returns of different indices
, analysis of various mutual funds .

This research work is useful to the Relationship Manager while pitching a product to the client.

26
Chapter 2

27
 METHOD OF DATA COLLECTION
All the techniques and process of doing wealth management is studied in Cholamandalam :

PRIMARY SOURCE : Risk Appetite and investment behavior of HNI clients of Delhi is
studied through Marketing research and then analysis is done in SPSS software.
In SPSS following steps were taken for data entry :-
1. For entering the data one needs to enter the specifications of the data to be entered.

2. Click on variable view, in column “Name” enter the Variable Name and in type enter
numeric if data is in numeric form/ string if data is in words or alphabets.

3. In column LABEL, enter the sentence or question on which analysis is to be done. The
output will display the text entered in the LABEL column. Then Enter the options of
the question asked in the VALUE column and then click on the DATA VIEW, and
enter the data in respected Columns.

4. After Entering the Data, Steps are to be followed for ANALYSIS :

Analyses Descriptive Statistics Frequencies.

Then a dialog box appears s, then select the variable for the analysis. Click on Charts
and select the “Bar graph” or “Pie Chart” and Click on Continue and then OK. Output
window will open showing analysis.

5. FOR INSTANCE, The analysis is to be done for the question “How do you manage
your investments?”

6. Click on VARIABLE VIEW, in column “NAME” enter “Manage”.

7. Select “TYPE” as “Numeric”.

8. Enter “LABEL” as “Manage Investments”.

9. Click on “VALUES”, a dialog box appears. Enter value as 1, Label as “Self”, then
value as 2, Label as “Financial Advisor”, value as 3, Label as “Both”.

28
 10. Now Click on DATA VIEW, and we can see a column named as “Manage” and enter
the data in that column.

11. These steps are repeated for every question on which analysis is to be done.

SECONDARY SOURCE :
 Collection of data from reports published by various national and international journals on
wealth Management.
 RBI and SEBI rules and regulation and their reports on the subject.

29
 OBJECTIVES OF STUDY

To Study the aspects of wealth management.

To analyze the evolution and growth of wealth management market in India.
To derive the potentiality and the future prospect of the wealth management industry in India.
To analyze the investment behavior and risk appetite of HNI clients in Delhi.

SCOPE OF STUDY
This report provides a holistic and top-down view on the current situation of Financial market and the
role of Cholamandalam in building the industry. I would be analyzing the aspects of wealth
management and analysis of investment behavior of HNI clients in Delhi .As study has been done
only in Delhi it may vary in different cities and study has been done in Cholamandalam wealth
management division , there is a probability that business cycle of wealth management would be
different in other companies.

LIMITATIONS OF THE STUDY

Since the study is done only in Delhi, these results cannot be generalized. Investors also tend to hide
some facts and figures due to some reasons which can hinder the results we get from this survey.
Although I have tried my level best to prepare this report an error free report every effort has been
made to offer the most authenticate position with accuracy.

30
Chapter 3

31
In Cholamandalam I did research work in which I had to analyze various mutual funds in connection
to its performance with its benchmarks either they are outperforming the market or underperforming
according to returns they are giving . This analysis of the funds that are outperforming and giving
better returns would be then suggested to Cholamandalam clients according to their risk appetite of
client.

MUTUAL FUND ANALYSIS

A mutual fund is a collective investment vehicle formed with the specific objective of raising
money from a large number of individuals and investing it according to a pre specified objective

Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The fund manager in different types of securities then invests the money thus collected.
These could range from shares to debentures to money market instruments, depending on the scheme’s
stated objectives.

Mutual funds can be classified in different ways according to there investments objectives, their
constitution, etc. and are as follows :-

 Equity Funds: These are funds that invest solely in equity shares of various companies. Since
equities as an asset class fluctuates widely, the net asset value of these funds is also subject to
these fluctuations. Hence, these funds are the riskiest.

 Debt / Income Funds : These are funds that invest solely in income bearing instruments like
bonds , debentures , government securities , commercial papers etc . Income bearing
instruments are much less volatile , though they do carry credit risk.

 Balanced funds : These are funds that invest both in equity shares and income bearing
instruments . The idea is to reduce the volatility of the funds while providing some upside for
capital appreciation

 Liquid Funds / money market funds: These are funds that invest in highly liquid money
market instruments. They have emerged as an alternative savings and short term fixed deposits
accounts.

32
 Sector Funds – These are funds investing in a particular business sector or industry like the
Tata Infrastructure Fund, Pharma and FMCG funds which invest in shares of companies in their
respective sector

 Index Funds – This is a large class of equity mutual funds, that invest in the popular market
indices e.g. S&P 500, NASDAQ composite etc This concept is referred to as passive investing
wherein the investor wants to invest in a particular asset class but does want any fund manager
to choose specific investments.

Research was done on the various funds according to its Past Performance and top funds that are
suggested to clients as per their risk appetite are as follows :

33
 TOP EQUITY DIVERSIFIED FUNDS

Scheme Name Latest Benchmark Alpha Beta Type Of Fund Compo

NAV sition

Equity Debt Cash

Birla sun Life Dividend Yield 75.56 S&P CNX 11.80 0.83 Medium Cap - G 95.30 0.00 4.70
Plus-Growth 500

Birla Sun Life Frontline 79.25 BSE 200 6.57 0.93 Large Cap- G 92.74 0.00 7.26
Equity Fund - Plan A –
Growth
Birla Sun Life Mid Cap Fund 105.27 CNX Midcap 9.66 1.11 Medium Cap - B 93.83 0.00 6.17
- Plan A - Growth

DSP BlackRock Equity Fund 47.26 S&P CNX 8.72 0.91 Medium Cap - G 94.81 0.00 5.19
- Growth Nifty

DSP BlackRock Small and 16.10 CNX Midcap 6.95 1.00 Medium Cap - G 95.00 0.00 5.00
Midcap Fund - Growth

DSP BlackRock Top 100 89.92 BSE 100 5.95 0.84 Large Cap- G 96.23 0.00 3.77
Equity Fund - Growth

Fidelity Equity Fund - 31.24 BSE 200 4.02 0.86 Large Cap - G 98.56 1.66 0.22
Growth

HDFC Equity Fund – Growth 239.32 S&P CNX 7.78 0.99 Large Cap - G 97.80 0.00 2.20
500

ICICI Prudential Discovery 44.31 BSE 0.99 Mid cap - G 91 0.00 9.04

34
 10.5

ICICI Prudential Dynamic 95.24 3.89 0.81 Large Cap - G 78 5.25 22.01
IDFC Premier Equity Plan A 28.39 16.3 0.92 Mid cap - G 92.4 0.00 2.34

IDFC Small & Midcap Equity 16.77 NA NA Mid cap - G 89 6.34 4.68

Magnum Contra 54.01 3.97 0.99 Large Cap - G 93.7 0.97 5.3

Reliance Growth 441.95 8.76 1.01 Mid cap - G 90.6 0.00 9.36

Reliance Regular Savings 28.16 13.51 1.08 Large Cap - G 93.4 0.00 6.63
Equity

Sundaram BNP Paribas 24.28 BSE CG 6.33 1.18 Medium Cap - G 97.12 0.00 2.88
CAPEX Opportunities Fund -
Growth

Sundaram BNP Paribas 31.61 CNX Midcap 12.59 1.19 Medium Cap - G 96.07 0.00 3.93
SMILE Fund - Growth

UTI Dividend Yield Fund - 28.49 BSE 100 10.94 0.84 Large Cap - G 89.56 1.48 8.96
Growth

UTI Opportunities Fund - 23.67 BSE 100 9.92 0.9 Large Cap - G 95.5 2.13 2.41
Growth

HDFC Top 200 192.46 BSE 200 9.01 .92 Large Cap – G 96.81 0.00 3.19

35
 TOP BALANCED FUNDS

Scheme Name Latest Benchmark Alpha Beta Type Of Fund Compo

NAV sition

Equity Debt Cash

DSP BlackRock Balanced 60.71 Crisil 7.52 0.93 Medium Cap - G 72.65 20.99 6.36
Fund - Growth Balanced

HDFC Prudence Fund - 187.17 Crisil 9.01 1.07 Medium Cap - G 73.73 22.98 3.29
Growth Balanced

Reliance RSF - Balanced - 20.49 Crisil 12.37 1.04 Large Cap - G 64.7 37.95 2.65
Growth Balanced

36
 TOP SECTOR FUNDS

Scheme Name Latest Benchmar Alpha Beta Type Of Fund Compo

NAV k sition

Equity Deb Cash

t

Reliance Banking Fund - 84.62 CNX Banks 11.99 0.81 Large Cap - 94.76 0.00 5.24
Growth Blend

UTI Thematic Banking 36.37 CNX Banks 4.71 0.84 Large Cap - G 89.63 0.00 9.96
Sector Fund - Growth

37
 TOP ELSS ( EQUITY LINKED SAVING SCHEME) FUNDS

Scheme Name Latest Benchmark Alpha Beta Type Of Fund Compo

NAV sition

Equity Debt Cash

Fidelity Tax Advantage 19.31 5.33 0.86 large cap - G 98.76 1.16 0.08

HDFC Tax saver 205.83 4.04 0.93 large cap - G 91.18 0.00 8.82

ICICI Prudential Tax 127.08 5.6 0.97 large cap - G 89.95 0.00 10.05
Plan

Reliance Tax Saver 18.98 2.95 0.87 medium cap - G 97.97 0.00 2.03

38
After mutual fund analysis then I did the comparison of various sector indices to ascertain that which
sectors have performed well and which sectors have given better returns in past 3 months , 5 months,
1year , 2 year , 5 year , 7years and 10 years.

COMPARISON OF VARIOUS INDICES

1. COMPARISON OF BSE-100,BSE-200,BSE-500,SENSEX,NIFTY MIDCAP,SMALLCAP

39
2. COMPARISON OF BSE-100,BSE-200,BSE-500,SENSEX

3. COMPARISON OF MIDCAP,SMALLCAP,BSE-500,SENSEX

40
Analysis :- From the above three graphs it can be depicted that Small Cap is highly volatile and
has given more returns over the period of 10 years when the market has gone positive as compare
to other indices.

41
 COMPARISON OF VARIOUS SECTOR INDICES

1. COMPARISON OF HEALTH CARE, CONSUMER DURABLES, IT, CAPITAL GOODS

,BANKEX, & METAL SECTORS :

42
2. COMPARISON OF FMCG , AUTO , PSU, OIL & GAS SECTORS :

Analysis :- From the above 2 graphs of various sectors , in 1 st graph Capital Goods has
outperformed all the other sectors over a period of 7 years whereas in 2 nd Graph Auto industry has
outperformed all the other Sectors almost every period.

43
 SENSEX CAGR RETURNS OF 2 , 3 , 5 YEARS

1. Sensex 2 Yr CAGR Returns (Compounded Annual Growth Rate):

44
`

45
Analysis :- From the above 3 graphs it can be interpretated that Sensex has always given Positive
returns in long term and it is better to hold the investment for 5 yrs rather 2 or 3 yrs. As CAGR is
more in 5 yrs and only two times the return has gone negative otherwise it has always given high
returns.

46
COMPARISON OF SENSEX VS BSE- 500 ROLLING RETURNS

47
48
Analysis :- From the above comparison of SENSEX and BSE-500 graphs it can be interprated
that BSE – 500 has almost every time outperformed Sensex. The reason behind is that BSE - 500
consists of large cap, midcap & small cap companies . As small cap & midcap are highly volatile
and give more returns than large caps & are highly risky whereas in case of large cap they are not
affected easily.

49
Chapter 4

50
 MARKETING RESEARCH

Objective:

To determine the Investment behavior and Risk Appetite Of HNI Clients.

SAMPLE DESIGN

Sample Element:

Shops Of Khan Market and Greater Kailash-I(GK) M-Block Market, Delhi.

Sample Unit :

 Shop Owners OF Khan Market and GK Market.

Sample Size:

45 Respondents

51
 QUESTIONNAIRE
i. How do you manage your investments ?
 Self
 Financial Advisor
 Both

ii. Which Wealth Management company you consult ?

__________________________________________

iii. Rank these factors that you consider while selecting the advisory company ? ( as 1 to 5 )
 Products & Services
 Relationship Manager
 Brand Name
 Research
 References

iv. Which Asset Class forms a major chunk of your Total Investment Portfolio ?
 Debt
 Equity
 Real Estate
 Commodities
 Gold
 Any Other Specify:-
v. Of your total portfolio what is the % of investment in equity ?
 Less than 25 %
 25 % - 50 %
 50 % - 75 %
 More than 75 %

52
 vi. What is the average time horizon of your investment ?
 Less than 1 Yr
 1- 2 Yr
 2-5 Yr
 More than 5 Yr

vii. How would you define your Risk Profile ?

 Conservative (5-8 % return)
 Moderately conservative (9-12 % return)
 Moderately Aggressive (13-18% return)
 Aggressive ( >18% return )

viii. For the types of investments you have made, what has been the satisfaction level of your
experience?
Very Good Fair Poor Never Invested

 Bonds
 Mortgages
 Stocks
 Mutual funds
 Real Estate
 Commodities
 Gold
 FD’s

53
 DATA ANALYSIS
TABLE 1 :
Respondents Manage their Investments

Cumulative
Frequency Percent Valid Percent Percent
Valid Self 24 53.3 53.3 53.3
Financial Advisor 6 13.3 13.3 66.7
Both 15 33.3 33.3 100.0
Total 45 100.0 100.0

Analysis : Out of the 45 Respondents, 53.3% manage their investment by themselves and 46.7%
by their Financial Advisor.

54
 TABLE 2 :

Consult wealth management company

Cumulative
Frequency Percent Valid Percent Percent
Valid Citi gold 6 13.3 28.6 28.6
Bajaj Capital 6 13.3 28.6 57.1
Barclays 3 6.7 14.3 71.4
Birla Sunlife 3 6.7 14.3 85.7
HSBC 3 6.7 14.3 100.0
Total 21 46.7 100.0
Missing System 24 53.3
Total 45 100.0

Analysis : Out of the 21 Respondents that have Financial Advisory services, 28.6% are of Citi Gold
And Bajaj Capital, and 14.3% of Barclays, Birla Sunlife and HSBC.

55
 TABLE 3:
Asset Class forms major chunk of your Total Investment
Cumulative
Frequency Percent Valid Percent Percent
Valid Debt 6 13.3 13.3 13.3
Equity 6 13.3 13.3 26.7
Real Estate 15 33.3 33.3 60.0
Gold 9 20.0 20.0 80.0
LIC, FD's 9 20.0 20.0 100.0
Total 45 100.0 100.0

Analysis : Result from the 45 respondents surveyed shows that 33.3% respondents have major chunk
of their total investment in Real Estate, followed by Gold(20%), LI & FD’s(20%), Equity(13.3%) &
Debt(13.3%).

56
 TABLE: 4

Percentage of equity investment

Cumulative
Frequency Percent Valid Percent Percent
Valid Less than 25% 21 46.7 58.3 58.3
25%-50% 6 13.3 16.7 75.0
50%-75% 9 20.0 25.0 100.0
Total 36 80.0 100.0
Missing System 9 20.0
Total 45 100.0

Analysis : Result from the 45 respondents surveyed shows that 36 respondents(i.e. 80%) have
investments in equity. 58.3% have less than 25% in equity out of their total investment, 16.7%
between 25%-50% and 20% between 50%-75% have equity exposure.

57
 TABLE: 5

Average time horizon for investment

Cumulative
Frequency Percent Valid Percent Percent
Valid Less than 1 Yr 6 13.3 13.3 13.3
1-2 Yrs 9 20.0 20.0 33.3
2-5 Yrs 15 33.3 33.3 66.7
More than 5 yrs 15 33.3 33.3 100.0
Total 45 100.0 100.0

Analysis : Out of the 45 respondents, 33.33% hold their investment for more than 5 Years followed
and only 13% hold their investment for less than a Year.

58
 TABLE: 6

Return expectation(Risk Profile) of respondents

Cumulative
Frequency Percent Valid Percent Percent
Valid Conservative (5-8 % return) 15 33.3 33.3 33.3
Moderately conservative (9-12 3 6.7 6.7 40.0
% return)
Moderately Aggressive (13- 12 26.7 26.7 66.7
18% return)
Aggressive ( >18% return ) 15 33.3 33.3 100.0
Total 45 100.0 100.0

59
Analysis : Result from the 45 respondents surveyed shows that 33.3% are Aggressive and 26.7%
expect 13%-18% from their Investments.

TABLE 7 :

Factors that Investors consider while selecting the advisory company

Product & Services Relationship Manager Brand Name Research References3

4 2 1 3 5

2 1 3 4 5

1 4 2 3 5

3 5 2 1 4

R 1 5 3 2 4

A 3 5 1 4 2

N 1 3 4 5 2

K 2 1 3 4 5

S 4 1 2 3 5

1 2 3 4 5

2 3 4 1 5

3 5 2 4 1

1 4 2 3 5

3 5 2 1 4

1 3 4 5 2

4 2 1 3 5

2 1 3 4 5

1 4 2 3 5

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 Total 39 56 44 57 74

First Third Second Fourth Fifth

Analysis : While investing the most important factor that is considered while selecting an Wealth
Management Company is Product & Services offered followed by Brand Name, Relationship
Manager, Research and last is Reference.

TABLE 8 :
Experience of Investors in different Asset Classes

Asset Class Good(5) Fair(3) Poor(-1) Total Ranks

Bonds 5 -10 5 SEVENTH
Mortgages 0 EIGHTH
Stocks 10 5 -5 60 SECOND
Mutual Funds 10 -15 15 FIFTH
Real Estate 15 10 -5 100 FIRST
Commodities 5 -5 10 SIXTH
Gold 5 10 55 THIRD
Fixed Deposits 5 10 55 THIRD

61
Chapter 5

62
 LEARNINGS
Wealth management is an investment advisory discipline that incorporates financial planning,
investment portfolio management and a number of aggregated financial services. It basically deals
with High net worth individuals who have net worth of 1 million USD and Ultra HNI’s who have
net worth of 5 million USD.
The whole process of Client Acquisition right from searching of HNI client to fixing of meeting
and Portfolio creation.
Products and services are offered according to risk appetite and return expectation of client.
There are various Asset Classes like equity, debt, real estate, Gold, commodities, FD’s and
structured products.

If we invest in equity for longer duration they give higher returns.

Relationship is maintained with clients basically on 3 things :

 Honesty

 Knowledge

 Quality Service

One of the learning was how to do Tele-Calling and how difficult is to crack the meeting with
client.

 Some clients are very arrogant whereas some are Down-to- earth.
 They don’t invest their whole amount upfront at once, first they invest a small amount as to
have confidence on the relationship manager and then accordingly invest the rest.
 The meeting with client while calling totally depends on 2 factors: the way of speaking
and luck.
 To build repo with client the discussion with the client should be of his interest and related
to his field and what are his current investments are to be known so accordingly proposal is
made.

On your 1st meeting with client you should only know your customer what is his investment
behavior, his risk appetite.

63
Different types of products suit different category of clients according to their risk appetite such
as conservative client are suggested debt funds and Highly aggressive are suggested Pure Equity
Small and Midcap Funds.

Market is highly volatile for past 2 months according to the experts it would remain same for this
year.

64
 RECOMMENDATIONS
Brand Positioning Strategy should be strengthen through various means of Marketing like
Advertisement through media, hoardings, internet.

Should conduct seminars for HNI Clients to promote Chola’s Product and Services.

Should Increase Branches.

Khan Market has more Potential as compared to GK Market as It is one of the Costliest
Commercial Property in the World and more than 50% of People manage their Investments
on their own.

65
 BIBLIOGRAPHY

CHANDRA PRASANNA, Financial Management, TATA McGraw-Hill Publications

KHAN M.Y. and JAIN P.K., Financial Management Text and Problems, 4th ed. TATA
Mc Graw-Hill

Economic Times (Investors Guide)

www.investopedia.com

Web sites – mutualfundsindia.com, amfiindia.com

CHOLAMANDALAM monthly magazines.

Cholamandalam website.

66