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Need for designing an Investment portfolio: • • • • • • • In India the use of capital is wasteful and inefficient. Therefore portfolio management . Post office savings. low productivity of capital. Pension funds 5% in govt securities like NSC. There are large number of savers in India. PF. The portfolio managers lack the expertise and experience. liquidity. Saving rate is as high as 32% of GDP per annum And Investment at 34% of GDP. NSS 45% in Physical form 6% in capital market • The investment in capital market s main objectives are safety. Indian Household Saving 55% in Financial form 64% in Cash & bank deposits 24% in Insurance . High level of investment could not generate comparable rates of growth of output because of poor investment strategy.
Therefore portfolio management is required. Portfolio Management is required for proper investment decision – making regarding buy and sell of securities. a number of brokers and investment consultants have become Portfolio Managers. After the success of Mutual Fund in India . .Contd • … • • • It is possible to estimate expected returns for individual securities without regard to any investor. There is a need of money management to increase the returns and to reduce the risk. but it is impossible to construct on optimal portfolio for an investor without taking personal preferences into account.
Individual Portfolio: – There are individual investors like employees. • 1. – The % of portfolio may differ from individual to individual depending upon their objectives requirements. – Engineers Portfolio : • • • • • Equity Debt Fixed deposits NSC PPF 30% 20% 25% 15% 10% • TOTAL 100% .Relevance of Portfolio Management in different sectors. businessmen & professionals. – PM will help them to take right decisions at the right time. who are not having proper knowledge about the market & time. For making analysis of their investment for them portfolio management is very important. etc .
.Corporate Portfolio • There are two types of investments done by corporate.2.