Wealth Management - Chinmay - Kalelkar - PGDMC - 142

March 15,
2014
WEALTH MANAGEMENT ICICI BANK

[Chetanass Institute of Management and Research] Page 1 of 41

Wealth Management ICICI bank

SUBMITTED BY
Chinmay Pranav Kalelkar

UNDER THE GUIDANCE OF
PROF.LAXMI GORITIYAL

SUBMITED FOR PARTIAL FULFILLMENT OF REQUIREMENT FOR THE
AWARD OF
POST GRADUATE DIPLOMA IN MANAGEMENT (PGDM)
SESSION 2012-2014
TO

CHETANAS INSTITUTE OF MANAGEMENT & RESEARCH BANDRA (EAST),
MUMBAI 400051

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Contents

Table of Contents
Contents .................................................................................................................................................. 2
Acknowledgement .............................................................................................................................. 4
DECLARATION ......................................................................................................................................... 5
Executive summary ................................................................................................................................. 6
Introduction: ............................................................................................................................................ 7
OBJECTIVES ......................................................................................................................................... 8
Research Methodology ........................................................................................................................... 9
Key Challenge Areas ............................................................................................................................ 11
Core Elements of Wealth Management Services .................................................................................. 11
Determination of Portfolio Constituents and Allocation of Assets ....................................................... 15
Key Challenge Areas ............................................................................................................................ 17
Solution Framework .............................................................................................................................. 19
SERVICES PROVIDED BY WEALTH MANAGEMENT INSTITUTIONS .................................... 21
Wealth Management Practice Orientation Overview ........................................................................... 22
ADVANTAGES AND LIMITATIONS ............................................................................................... 24
Consumer point of view ........................................................................................................................ 25
CONCEPT OF ASSET CLASSES .......................................................... Error! Bookmark not defined.
Fixed Deposits .................................................................................................................................. 29
MUTUAL FUND.............................................................................................................................. 30
Commodities Market ........................................................................................................................ 32
ART FUND ....................................................................................................................................... 32
Diversified portfolio .......................................................................................................................... 33
REAL ESTATE FUND .................................................................................................................... 33
Insurance Product .............................................................................................................................. 33
Structured Product ............................................................................................................................ 34
GOLD ............................................................................................................................................... 34
Currency ............................................................................................................................................ 34
Portfolio composition of currency .................................................................................................... 35
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ICICI Wealth Management introduction .............................................................................................. 35
PRODUCTS ...................................................................................................................................... 37
Wealth Management Indian opportunities and concerns ................................................................... 38
Growth .............................................................................................................................................. 39
Risk aversion of Indian customers .................................................................................................... 39
Conclusion ............................................................................................................................................ 40
Bibliography .......................................................................................................................................... 41

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Acknowledgement

We think if any of us honestly reflects on who we are, how we got here, what we think we
might do well and so forth, we discover a debt to others that spans written history. The work
of some unknown person makes our lives easier every day. We believe its appropriate to
acknowledge all of these unknown persons; but it is also necessary to acknowledge those
people, we know have directly shaped our lives and our work.
I thank my school Chetanass Institute of Management and Research for being the constant
driving force to put to practice, the theoretical know ledge that I imparted in the PGDM
program. I thank the internship coordinators. Prof Laxmi Goritiyal for imparting her
wisdom on my thought process.
Last but not of least importance. I take the opportunity to thank my parents and friends who
have been with me and offered emotional strength moral support.

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DECLARATION

I do, hereby declare that the Project Report entitled Wealth Management ICICI
bank., is the Record of genuine work carried out by me
The abstract or Report Data is Original work done by me, References used for work
& related source have been given at the end of report chapter. This project work is
submitted in part completion of the Degree of Masters of Business Administration to
Chetanass Institute of Management & Research, under the guidance of
Prof. Laxmi Goritiyal.

Place:
Date:
Mr. Chinmay Kalelkar
(PGDM C 142)

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Executive summary

ICICI Bank is an Indian multinational banking and financial services company headquartered
in Mumbai. It is the second largest bank in India by assets and by market capitalization, as of
2014. It offers a wide range of banking products and financial services to corporate and retail
customers through a variety of delivery channels and through its specialized subsidiaries in
the areas of investment banking, life, non-life insurance, venture capital and asset
management.
ICICI Bank Wealth Management provides discretionary wealth management service, in
which wealth managers give recommendations to customers and invest according to customer
discretion. My Project is the study of Wealth Management sector, an analysis of existing and
potential Market
This report deals with an extensive analysis of the potential of wealth management sector and
understanding companys procedure in wealth management department along with having a
general notion on different asset classes available in financial market

The main objective of the study lies in understanding the organization and studying wealth
management. This report will give an insight on the norms, underlying processes, initiatives
and strategies to keep functioning of wealth management smooth and effortless.

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Introduction:

Wealth management is an investment advisory discipline that incorporates financial planning,
investment portfolio management and a number of aggregated financial services. High Net
worth Individuals (HNWIs), small business owners and families who desire the assistance of
a credentialed financial advisory specialist call upon wealth managers to coordinate retail
banking, estate planning, legal resources, tax professionals and investment management.
Wealth managers can be an independent Certified Financial Planner, MBAs, Chartered
Strategic Wealth Professional, CFA Charter holders or any credentialed professional money
manager who works to enhance the income, growth and tax favoured treatment of long-term
investors. Wealth management is often referred to as a high-level form of private banking for
the especially affluent. One must already have accumulated a significant amount of wealth
for wealth management strategies to be effective. Private wealth management (PWM) is the
term generally used to describe highly customized and sophisticated investment management
and financial planning services delivered to high net worth investors. Generally, this includes
advice on the use of trusts and other estate planning, vehicles, business succession or stock
option planning, and the use of hedging derivatives for large blocks of stock. Traditionally,
the wealthiest retail clients of investment firms demanded a greater level of service, product
offering and sales personnel than were received by the average clients. With an increase in
the number of affluent investors in recent years, there has been an increasing demand for
sophisticated financial solutions and expertise throughout the world

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OBJECTIVES

1) Through the past results, to identify the potential of wealth management sector

2) Understanding companys procedure in wealth management department.

3) To know the comparative position of the companies offering wealth management
services.

4) To have a general notion on different asset classes available in financial market.

5) To have a general notion on different asset classes available in financial market.

6) To have a conceptualized view on wealth management services.

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Research Methodology

DATA SOURCES:

(a) PRIMARY DATA SOURCES USED: -
None

(b) SECONDARY DATA: -
Secondary data means data which is already available i.e. we refer to the data which has
already been collected and analyzed by someone else. Secondary data may be either
published data or unpublished data. In this project secondary data collected from following
sources. Usually published data are available:
Telephone directory, which contains telephone number of all residents of the area, companies
and shops.
Newspapers, books and magazines.
Reports and publications of various associations connected with business and industry.
Websites and other publications of company.
Previous reports about ICICI.

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Key Challenge Areas

Wealth management firms face many challenges in formulating winning services, offering
meeting the client needs. Some of the key challenges faced by wealth management firms are:

1. Highly Personalized and Customized Services
2. Personal relationship driving the business
3. Evolving Client Profile
4. Client Involvement Level
5. Passion Investment (Philanthropy and Social Responsibility)
6. Limited Leveraging Capabilities of Technology (as an enabler)
7. Technical Architecture and Technology Investment
8. Intricate Knowledge of Cross-functional Domain

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Core Elements of Wealth Management Services

In most basic sense, wealth management services involve fiduciary responsibilities in
providing professional investment advice and investment management services to
Institutions, funds (Pension/mutual/Hedge), corporations, trusts as well as HNWIs.

Depending on the mandate of the services given to the Wealth Manager, wealth management
services could be packaged at various levels:

a) Advisory
Wealth managers role is limited to the extent of providing guidance on investment / financial
planning and tax advisory, based on client profile. Investment decisions are solely taken by
the client, as per his /her own judgment.

b) Investment processing (transaction oriented)
Client engages wealth manager to execute specific transaction or set of transactions.
Investment planning, decision and further management remain vested with the client.

c) Custody, Safekeeping and Asset Servicing
Client is responsible for investment planning, decision and execution. Wealth manager is
entrusted with management, administration and oversight of investment process.

d) End-to-end Investment Lifecycle Management
Wealth manager owns the whole gamut of investment planning, decision, execution and
management, on behalf of the client. He is mandated to make
Financial planning, implement investment decisions and manage the investment throughout
its life.

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Wealth management services comprises of following Key function areas:
a) Financial Planning
b) Portfolio Strategy Definition / Asset Allocation
c) Strategy Implementation
d) Portfolio Management
e) Strategy Review and Alignment

a) Financial Planning

Client Profiling

Client profiling takes in account multitude of behavioural, demographic and investment
characteristics of a client that would determine each clients wealth management
requirements. Some of key characteristics to be evaluated for defining clients investment
objective are:

Current and future Income level
Family and life events
Risk appetite / tolerance
Taxability status
Investment horizon
Asset Preference/restriction
Cash flow expectations
Religious belief
Behavioural History (Pattern of past investment decisions)
Level of clients engagement in investment management (active/ passive)
Present investment holding and asset mix

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Investment Objective
Based on the client profile, investment expectations and financial goals of the client could be
clearly outlined. Defining investment objectives helps to identify investment options to be
considered for evaluation. Investment objective for most of the investors could be generally
considered amongst the following:
Current Income
Growth (Capital Appreciation)
Tax Efficiency (Tax Harvesting)
Capital Preservation (often preferred by elderly people to make sure they dont outlive
their money.)

b) Portfolio Strategy Definition / Asset Allocation

Defining Portfolio Strategies and Portfolio Modelling
After establishing investment objectives, a broad framework for harnessing possible
investment opportunities is formulated. This framework would factor for risk-return trade off
of considered options, investment horizon and provide a clear blueprint for investment
direction. Investment strategy helps in forming broad level envisioning of asset class
(Securities, Forex, Commodity, Real State, Reference and Indices, Art/Antique and Lifestyle

Assets (Car, Boat, and Aircraft), market, geography, sector and industry. Each of these asset
classes is to be comprehensively evaluated for inclusion in portfolio model, in view of
defined investment objectives. While defining the strategy, consideration of client preference
or avoidance for specific asset class, risk tolerance, religious beliefs is the key element, which
would come into picture. Thus, for a client with a belief of avoidance of investment in sin
industries (alcohol, tobacco, gambling etc.) is to be duly taken care of. Likewise, for a client
looking for Sharia-compliant investment, strategy formulation should consider investment
options meeting with the client expectations.

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Determination of Portfolio Constituents and Allocation of Assets

Guided with the investment strategy, constituents in portfolio model are determined, which
would directly and efficiently contribute towards clients investment objectives. Thus, a
broad level investment guidance of - investment in fixed income in emerging market would
further determine classification within Fixed Income such as Govt. or corporate bonds, fixed
or variable rate bonds, Long or short maturity bonds, Deep discounted or Par bonds, Asset
backed or other debt variants. Return profile, risk sensitivity and co-relation of constituents
within portfolio model would help to determine the size (weightage) of each individual
constituent in the portfolio.

c) Strategy Implementation
Having decided the portfolio constituents and its composition, transactions to acquire specific
instruments and identified asset class is initiated. As acquisition cost would be having bearing
on overall performance of the portfolio, many times process of asset acquisition may be
spread over a period of time to take care of market movement and acquire the asset at
favourable price range.

d) Portfolio Management
Portfolio Administration
Portfolio Administration involves handling of investment processes and asset servicing. This
would also require tax management, portfolio accounting, fee administration, client reporting,
document management and general administration relating with portfolio and client. This
function would involve back office administration and custodial services to manage
transaction processes (trading and settlement) - interfacing with brokers/dealers/agents, Fund
managers, Custodians, Cash Agent and many other market intermediaries.

Performance Evaluation and Analytics
Performance evaluation of the portfolio is an ongoing process. Portfolio return is
continuously monitored and analyzed with respect to defined portfolio objectives. Analysis
dimension could be varied - simple and complex. These may include -absolute return, relative
return (in comparison to chosen benchmark), trend, pattern, cost impact, tax impact,
concentration, lost opportunity and other form of sensitivity and what-if analysis. Any
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deviation of portfolio performance observed during performance evaluation would lead to
strategy review and any possible alignment of portfolio strategy.

e) Strategy Review and Alignment

Recalibration of Portfolio Strategy
Based on performance evaluation and future outlook of the investment, portfolio strategy is
evaluated on periodic basis. To keep it aligned with the defined investment objectives,
portfolio strategy is suitably re-calibrated from time to time. Many times, review of portfolio
strategy would be necessitated due to change in client profile or expectations.

Rebalancing, Reallocation and Divestment of Assets
Any re-calibration of strategy and consequent change in portfolio model would require
rebalancing of the assets in portfolio. This would be achieved through rebalancing the asset
(divesting over-allocated part and acquiring under allocated), relocation (from one sector the
other or from one instrument to other instrument in the same class) or complete divestment.

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Key Challenge Areas

While immense business potentiality of this emerging sector is a driving point for most of the
firms, they face many challenges in formulating winning services offering meeting the client
needs. In the following section, we would briefly take a look on the key challenges area in the
present context.

Highly Personalized and Customized Services
Unlike other stream of financial services, mostly being transactional / commoditized in
nature, wealth management services require client specific solution and service offering. No
one solution exactly meets the needs of other client. In a situation of highly personalized and
customized nature of service offering, developing any form of generic service model does not
support growth of the business.

Personal relationship driving the business
To meet client expectation of personal attention, mode of communication in wealth
management services tends to be highly personalized. Thus, the conventional grids of
communication, such as call centre, data centre does not fit well. Success of wealth
management services heavily draws on personal interaction with the dedicated relationship
manager, who takes care of whole investment management lifecycle for bunch of clients on
one-to-one basis. This essentially requires service firm to invest heavily in human processes
to groom and retain a team on competent relationship managers with cross functional skills.

Evolving Client Profile
The biggest challenge in providing wealth management service offering is to factor and
reckon the evolving nature of client profile, in terms of investment objective, time horizon,
risk appetite and so on. Thus, a service model developed for a particular client cannot remain
static over a period of time. Any service model has to be flexible enough to consider the
dynamic nature of client profile and expectations arising out of it.

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Client Involvement Level
The conventional adage - the more money you have, more effort is needed to manage it -
proves to be otherwise in case of HNWIs. Generally, client involvement in managing the
finance remains on the lower side. This brings onus of managing the whole gamut of
investment and due performance single-handedly on the shoulders of investment manager.

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Solution Framework

Generic services offering model is going to draw big blank in case of wealth management
services. A HNWI client expects exclusiveness in services in a normal manner. In highly
competitive market, key to success for a firm lies in offering exclusiveness in services
delivery (high quality services on most personalized basis), going beyond the client
expectations.
A solution framework with considered inclusion of following key elements would help firms
in meeting and exceeding client needs towards sustainable business growth.

Quality of Service Level
Quality of service level provided by the service provider firm would the key determinant of
growth and success in client acquisition, client satisfaction and client retention aspects. In a
sense, service offering could be developed in the form of partnership with the client based on
trust and integrity, where the relationship manager remains highly responsive to client
sensitivities and expectations

Universal Service Offering
To meet the client needs in holistic manner, product and service offering range of the firm
should be wide enough to c over the investment spectrum across its lifecycle. In an ideal
situation, a client would expect to deal with a single firm to get complete range of investment
management services.

Investment in People Processes
As relationship manager remains the face of the firm to a client, success of the firm would be
greatly dependent on the skills, drive and enthusiasm of relationship managers (to take an
extra mile), while bonding and dealing with any of client issues. This aspect is more
challenging than as it appears. This necessitates transformation of organizational philosophy
towards its people and people processes contributing to business success. Firms would be
required to invest heavily in human processes to attract, groom and retain a motivated team of
relationship managers, who will make the real difference between winning and losing the
game.

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Price not a True Differentiator
Pricing as a key differentiator to distinct the service offering from one firm to other may not
be highly relevant in case of wealth management services. Focused on performance and
quality of service, pricing in isolation will not make much meaning to service seeking clients.
Client would always value the pricing from the quality of services received. He will certainly
not mind paying extra, if he finds services offered to him meeting and exceeding his
expectations.

Unconventional Delivery Channel and Communication
Delivery channel for service content and mode of communication has to be greatly
customized - aligned with the client-desired vehicles. This would require a process of
continuous re-inventing and re-defining the grid of delivery and communication channels to
meet client expectations .Impact of technological advancements and its interplay on service
delivery and communication method would certainly be an equally challenging aspect to be
factored in, while designing such strategies.

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SERVICES PROVIDED BY WEALTH MANAGEMENT
INSTITUTIONS

(1) Custodian Services
(A) Securities Safekeeping
(B) Income collection from Securities
(C) Settlement of Securities trades as directed
(D) Payment of fund when directed
(E) Timely settlement delivery

(2) Trust Services
(A) Charitable Trust
(B) Revocable Trust
(C) Irrevocable life Insurance Trust
(D) Special Need Trust
(E) Institutional Trust

(3) Retirement Plan Services
(A) IRAs Custodian Or Trustee
(B) Defined Benefit Plans
(C) Defined Contribution Plans

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Wealth Management Practice Orientation Overview

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Transactors:
Product Expert: Handles high-volume transactions involving sophisticated products or
asset classes, such as foreign exchange derivatives.
Investment Broker: Handles transactions involving basic asset classes, such as equities,
fixed income and options.

Investment Managers:
Investment Advisor: Offers strategic investment planning, as well as playing a hands-on
role in constructing, reviewing and rebalancing client portfolios.
Relationship Manager: Establishes and nurtures client relationships, delegating portfolio
management to internal or external managers.

Wealth Planners:
Wealth Planner: Offers holistic advice in accordance with clients finances and short/long-
term goals, such as real estate, retirement and generational wealth transfer.
Personal CFO: Aspires to provide quasi family-office services, often acting in a lead
discretionary role coordinating with the clients other trusted advisors.

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ADVANTAGES AND LIMITATIONS

ADVANTAGES: The following are the advantages of Wealth management concept.
1) Helpful in Tax Planning: The Wealth management professional always shows the good
path to the customers and provide the service of tax planning. How to minimize the tax and
save more money?
2) Helpful In Selection of Investment Strategy: Another advantage from the customer
point of view is with the help of WM Professional the customer can easily know the
investment strategy and analyze risk and return.
3) Helpful in Estate Management: With the help of Wealth management professional .They
can also manage their estate. Estate management is a task to provide objective administration
of their funds tailored to aim in responsible distribution and protection of their overall estate.
4) Helpful in forward looking: They can say planning, that recognizes as their estate grows
and changes occurs. They require some team of professionals who help us in future planning.

5) Helpful for Indian Economy: Banks which are engaged in business of WM earning
revenues from the foreign countries i.e. outsourcing for economy.

LIMITATIONS

1. WM Reduces The Scope Of Management: Though They all know that management has
existence at all levels of life and society but the term Wealth management only related with
the higher level means rich people, and is not having any plans and provisions for poor and
lower and middle level of society.
2. Chances of Fraud: Another demerit or limitation of the WM concept is it is not showing
the actual position. The customer doesnt know about the things going on with using his
Wealth and there may be chances of forgery and fraud with customers.
3. Actual Picture VS Inflation : What is the actual position of market they dont know
because everything is done by some WM professionals. So they cannot assume their
position in the market that also results in inflation because economy is unknown about the
actual state. There may be chance that the customers are in risk but they are showing the false
return and vice-versa.
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Consumer point of view

Technically, PMS can be defined as hybrid service provided by portfolio managers, which
includes customised stock and mutual fund investing. Portfolio managers can be of two
kinds, discretionary or non-discretionary. Discretionary portfolio managers manage the funds
of clients independently on their own accord, while the latter manage the funds according to
their clients direction. Any person who is registered with Securities and Exchange Board of
India (Sebi) as a portfolio manager is allowed to offer PMS. A list of these entities can be
found at www.sebi.gov.in.

PMS vs Wealth Manager and Fund Manager.
PMS is completely different from priority banking and Wealth management. Priority banking
or Wealth management is the umbrella of products while PMS is a product. So if priority
banking and Wealth management is a grocery shop then PMS is a specific grocery. Priority
banking is usually offered to premiere customers who have a relationship manager
appointed, who would advice you on your investments across the products offered by the
bank like insurance, and investment linked products (mutual funds, bonds and unit linked
insurance plan).
Mutual funds and PMS differ on the degree of customization, minimum investment and on
the fee structure. Minimum investment required for PMS is more than mutual fund. Unlike
PMS, there is no concept of profit sharing in mutual funds. Also, the level of customization
of your investments is higher in PMS.

Is PMS for you?
PMS is for those people who dont have the time or the expertise to do enough research to
take informed investment decisions. If you have the required time and expertise, then you
dont need these services. Also, SEBI has prescribed a minimum of Rs 5 lakh investment for
PMS, which means the service, is not for small and medium investors.

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Risks involved.
Though PMS is a good option for managing your Wealth, it is not entirely without risk or
pain.

How to choose a PMS
Investment philosophy.
Akhilesh Singh, business head, Emkay Wealth, says, The most important factor is to
understand the fund managers investment philosophy and strategy, which must align with
the investors objectives. Singh adds, Some portfolio managers structure long-term
portfolios, while some prefer to actively churn the portfolio for higher short term returns,
which adds to the overall cost and tax liability.
HSBC, for instance, has a product called Strategic, which is for the long term, while Angels
Blue chip is for medium to long term investors. Scheme benchmarks make sure that the
portfolio is benchmarked to an appropriate index. This helps measure the performance of the
scheme and the portfolio manager.
Benchmarks are important also as profit-sharing is linked to the performance of the portfolio
above the benchmark. So, an aggressive portfolio benchmarked to a low-return index will
mean higher over-the-benchmark returns. This means that you will have to share a larger
portion of your profit. The wrong benchmark distorts the performance of the funds minimum
investment. There are many portfolio managers whose thresholds are much higher than the
Sebi mandated minimum of Rs 5lakh. Choose a scheme that fits the size of your portfolio
returns. It is difficult to judge a schemes performance based on returns, as it may vary from
the returns of an investor. Also, depending on the time of entry, an investors returns may
vary from that of others. Before signing the contract, make sure your portfolio manager has a
fair record of surpassing the returns from the benchmark index for numerous years.

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Cost structure.

Portfolio managers usually have two kinds of charges management fee, which is fixed, and
profit sharing, which is variable. You can also pay a fully fixed fee. Further, if the portfolio is
churned frequently, it adds to the cost due to higher tax and brokerage. On each transaction
you pay brokerage and short-term gains tax of 20 per cent.
Management fee ranges from scheme to scheme. You could opt for a higher performance-
linked charge as it puts pressure on the fund manager to perform better a she has a share in
the profits.

Frequency of disclosure.

This varies from firm to firm, and largely depends on the agreement between the investor and
the company. Most NAVs are disclosed daily, but you can opt for a company that also
discloses portfolios daily.

Broking house.

If the broker is internal, it may be possible that your portfolio is churned frequently. Usually,
asset management companies have external brokers, while some, such as Religare, have both
external as well as internal broking.

Assets under management (AUM).

Though higher AUMs do not guarantee higher returns, it remains an important factor. A low
AUM could be an indicator of poor performance. They believe that Rs 100core AUM is a
healthy floor.

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CONCEPT OF ASSET CLASSES

Asset Mix
Asset mix is the allocation of a portfolio between asset classes, it balances return and
risk. Returns are a combination of the income from an investment and the price appreciation
over the period. Risk is usually proxied by the standard deviation of returns, how much the
return change about the long-term average.

List of Different Asset Class

1. Fixed deposit
2. Mutual Fund
3. Equity
4 Commodities
5. Art Fund
6. Real-Estate Fund
7. Insurance product
8. Structured product
9. Gold
10. Currency
11. Oil

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Fixed Deposits

FDs, are the most popular today. With FDs you deposit a lump sum of money for a fixed
period ranging from a few weeks to a few years and earn a pre-determined rate of interest.
FDs are offered by both banks and companies though putting your money with the latter is
generally considered riskier.

Merits and Demerits

The main advantage is that FDs from reputed banks are a very safe investment because such
banks are carefully regulated by the Reserve Bank of India, RBI, and the banking regulator in
India.
Note that company FDs isnt as safe as bank FDs because if the company goes
bankrupt you may lose your money. Make sure you check the credit rating of a company
before investing in its FDs.
A fixed deposit also doesnt offer protection against inflation. If inflation rises steeply
during the maturity of the FD your inflation adjusted return will fall. The rate of interest
on FDs varies according to the maturity with longer deposits generally earning a higher
interest rate. Interest paid on a fixed deposit is paid either monthly or quarterly according to
the investors choice. So if you invest Rs 3 lakhs in a one year fixed deposit which pays
8 per cent you can earn Rs 2,000 of interest every month or Rs 6,000 of interest every
quarter.

Interest rates on FDs
The rate of interest on FDs varies according to the maturity with longer deposits generally
earning a higher interest rate. Here are the interest rates offered by ICICI Bank on their FDs.
Note that FDs vary quite a bit from bank to bank so you should search around before
investing. Interest paid on a fixed deposit is paid either monthly or quarterly according to the
investors choice.

So if you invest Rs 3 lakhs in a one year fixed deposit which pays 8 per cent you can earn
Rs 2,000 of interest every month or Rs 6,000of interest every quarter.

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Effective Return
Before you invest in FDs you need to understand the concept of effective return which is
higher than the rate of interest on the FD. Effective return is relevant if you choose to reinvest
your interest every year which means that you will be earning compound interest.

MUTUAL FUND

A mutual fund is a professionally managed firm of collective investments that collects money
from many investors and puts it in stocks, bonds, short-term money market instruments,
and/or other securities. The fund manager, also known as portfolio manager, invests and
trades the funds underlying securities, realizing capital gains or losses and passing any
proceeds to the individual investors

Types of mutual funds

Open-end fund
The term mutual fund is the common name for what is classified as an open-end investment
company by the SEC. Being open-ended means that, at the end of every day, the fund issues
new shares to investors and buys back shares from investors wishing to leave the fund.

Exchange-traded funds
A relatively recent innovation, the exchange-traded fund or ETF, is often structured as an
open-end investment company. ETFs combine characteristics of both mutual funds and
closed-end funds. ETFs are traded throughout the day on a stock exchange, just like closed-
end funds, but at prices generally approximating the ETFs net asset value.

Equity funds
Equity funds, which consist mainly of stock investments, are the most common type of
mutual fund. Equity funds hold 50 percent of all amounts invested in mutual funds in
the United States. Often equity funds focus investments on particular strategies and certain
types of issuers.
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Bond funds
Bond funds account for 18% of mutual fund asset Types of bond funds include term funds,
which have a fixed set of time (short-, medium-, or long-term) before they mature. High-yield
bond funds invest in corporate bonds, including high-yield or junk bonds. With the potential
for high yield, these bonds also come with greater risk.

Money market funds
Money market funds hold 26% of mutual fund assets in the United States. Money
market funds entail the least risk, as unlike certificates of deposit (CDs), money market
shares are liquid and redeemable at any time. The interest rate quoted by money market funds
is known as the 7 Day SEC Yield.

Funds of funds
Are mutual funds which invest in other underlying mutual funds (i.e., they are funds
comprised of other funds). The funds at the underlying level are typically funds which an
investor can invest in individually. A fund of funds will typically charge a management fee
which is smaller than that of a normal fund because it is considered a fee charged for asset
allocation services. The fees charged at the underlying fund level do not pass through the
statement of operations, but are usually disclosed in the funds annual report,
prospectus, or statement of additional information. The fund should be evaluated
on the combination of the fund-level expenses and underlying fund expenses, as these both
reduce the return to the investor.

Hedge funds
Hedge funds in the United States are pooled investment funds with loose SEC
regulation and should not be confused with mutual funds. Some hedge fund managers are
required to register with SEC as investment advisers under the Investment Advisers Act.
The Act does not require an adviser to follow or avoid any particular investment

Strategies, nor does it requires or prohibits specific investments. Hedge funds typically
charge a management fee of 1% or more, plus a performance fee of 20% of the hedge
funds profits.

March 15,
2014


Equity investment
Generally refers to the buying and holding of shares of stock on a stock market by
individuals and funds in anticipation of income from dividends and capital gain as the
value of the stock rises. It also sometimes refers to the acquisition of equity (ownership)
participation in a private (unlisted) company or a start-up (a company being created or newly
created.)

Direct holdings and pooled funds
The equities held by private individuals are often held via mutual funds or other forms of
pooled investment vehicle, many of which have quoted prices that are listed in financial
newspapers or magazines; the mutual funds are typically managed by prominent fund
management firms (e.g. Fidelity Investments or the Vanguard Group).Such holdings allow
individual investors to obtain the diversification of the fund(s)and to obtain the skill of the
professional fund managers in charge of the fund(s).

Commodities Market

Commodity markets are markets where raw or primary products are exchanged. These raw
commodities are traded on regulated commodities exchanges, in which they are bought and
sold in standardized contracts.

ART FUND

Wealth management now includes art, real estate investments. WITH prices of paintings
rising 10 times in the last two years, three new financial entities have launched art advisory
services as part of Wealth management services. While Citibank has been providing art
advisory services like art insurance, art storage and using art as a tradable collateral for
some time, the recent surge in prices has driven Yes Bank, ABN Amro and Dawnay Day to
start this service.

March 15,
2014


Diversified portfolio

Individuals looking at alternative investments rather than the usual investments in
equity-related products.Investments in alternative asset classes give clients a diversified
portfolio across a variety of asset classes
Yes Bank is expected to launch a Wealth management service that will offer investment in
real estate, art and jewellery. It expects to kick-start the real estate service during this fiscal.
The bank is planning tie-ups with real estate consultant agencies. The service will largely
cater to non-resident Indians seeking opportunities to invest in real estate in the country

REAL ESTATE FUND

India Real Estate Fund is a significant component of the Indian realty market flooded with
Indian and foreign financial institutions. The growing increase in the industrial, commercial
and residential projects have boosted the real estate market in India. This has thrown open
unlimited scope for the incoming of the India Real Estate Funds. The profits have encouraged
financial assistance from not only domestic funds but also lured many foreign investors to
participate in the India Real Estate Fund.

The cooperating assistance from the government has further encouraged liquidity
flow into the India real estate market sector. The foreign contributions in the India Real
Estate Fund have been witnessing a steady rise of 40%-45% per year. The domestic financial
institutions have also build up their investments like their foreign counterparts. This
combined participations from both along with contributions of the corporate houses has
accelerated the growth of India Real Estate Fund.

Insurance Product

The present insurance business is not even able to penetrate 20%/30% of the total population
of 1.2billion. The order of the day will be to refocus on micro insurance in India to
capture the huge potential of rural customers Unit Linked Insurance Plan (ULIP)
provides for life insurance where the policy value at any time varies according to the value of
the underlying assets at the time.

March 15,
2014


ULIP is life insurance solution that provides for the benefits of protection and
flexibility in investment. The investment is denoted as units and is represented by the value
that it has attained called as Net Asset Value (NAV).

Structured Product

A structured product is generally a pre-packaged investment strategy which is based on
derivatives, such as a single security, a basket of securities, options, indices, commodities,
debt issuances and/or foreign currencies, and to a lesser extent, swaps. The variety of
products just described is demonstrative of the fact that there is no single, uniform definition
of a structured product. A feature of some structured products is a principal guarantee
function which offers protection of principal if held to maturity

GOLD

Today, like all investments and commodities, the price of gold is ultimately driven by
supply and demand, including hoarding and disposal. Central banks and the International
Monetary Fund play an important role in the gold price. In times of national crisis, people
fear that their assets may be seized and that the currency may become worthless. They see
gold as a solid asset which will always buy food or transportation. Thus in times of great
uncertainty, particularly when war is feared, the demand for gold rises.

Currency

The modern hedge fund managers liberal tongue-in-cheek definition is: If it moves up and
down independently, then its an asset class. While currencies surely do a lot of moving up
and down, they also stand out for other reasons:

The global foreign-exchange (FX) market can be considered by far the largest marketplace
in the world, not only geographically but also with reference to trading volume. The daily
turnover is growing constantly and has long ago surpassed the $1 trillion mark: forty times
the size of world trade.

March 15,
2014


An important difference between currencies and other markets is that currency prices allow
us to analyse also their reciprocal values. A falling dollar/yen is synonymous with a rising
yen because the dollar can be expressed in yen and, vice versa, the yen in dollars. By
comparison, the dollar is never measured in units, as the Dow Jones for example.

Portfolio composition of currency
Modern portfolio theory postulates that relative risk can be reduced by diversification into at
least six or more components. This is not necessarily true for currency portfolios. Most
delivering percentage returns. The index serves as a proxy for available currency manager
portfolio returns in general and has the added benefit of being uncorrelated to returns of other
asset classes. Low correlation, liquidity and transparency are good enough reasons for
currencies to be considered a prime candidate for inclusion in any investment portfolio.

March 15,
2014


ICICI Wealth Management introduction

A pioneer in banking services, ICICI bank is also a leader in the wealth management service
with its exclusive ICICI wealth management offerings. In this article, we will review the
ICICI bank wealth management exclusive service.
ICICI bank wealth management department has a dedicated team of experts with a rich
experience in finance and related areas. When you subscribe to ICICI wealth management
services, a dedicated wealth manager works closely with you in understanding your current
assets, your risk profiles and your financial objectives. The wealth managers are backed up
by a highly expert ICICI bank wealth management team. Based on a thorough study, your
wealth manager along with the ICICI wealth management team comes up with solutions and
recommendations.
A professionally built portfolio is the main output of the whole exercise. Of course, it is an
ongoing process with regular portfolio updates and reviews done by the same ICICI wealth
management experts. However, we also recommend that the customer should weight all the
options before implementing the wealth manager suggestions. It is good to clear your doubts
and ask questions to your wealth manager and the bank. ICICI bank customer care has
usually been under some criticism and ICICI bank wealth management services are no
different. However, there have been improvements after some improvements after customer
feedback.
There is a dedicated toll free customer care contact number for the ICICI wealth management
customers. You can also lodge your concerns and complaints online at the ICICI bank
website. Talking of online services, there is also a provision for the ICICI bank wealth
management customers to check their own risk profile online by answering just few simple
questions. ICICI wealth management customers also enjoy some exclusive privileges like
free access to any other banks ATM, discounts on buying gold through ICICI bank etc.

March 15,
2014


PRODUCTS

Asset classes used
ONLINE TRADING: They also bring to you the best value for money through competitively
priced brokerage charges for online share trading services from www.icicidirect.co. With a 3-
in-1 account consisting of a trading account, ICICI Bank savings account and demat account,
you can stay connected to the market at all times. To add to this, they give you waiver on the
account opening charges too!
With a 3-in-1 account consisting of trading, ICICI Bank account and demat account, you can
enjoy:
Competitive priced brokerage rates
o Reduced account opening charges
o Online share trading services

MUTUAL FUNDS:
They offer you advice on the entire universe of mutual funds. So be it equity funds, where
you look for growth and capital appreciation or debt funds for capital preservation, They can
help you select the right mix to suit you. Choose from an array of more than 15 fund houses
with innumerable schemes.
Customised Products
Structured Products: Their Structured Product offerings are tailor-made to suit your
investment objective and risk appetite. Their services include Portfolio Management Services
and specially designed products that are Equity or Index-linked in nature.
Alternate Asset Products: They offer products which complement your existing
investments e.g. Art Funds, Private Equity Funding, Realty Funds. So, if youre looking
beyond the stock market, youll find us there too!

March 15,
2014


Wealth Management Indian opportunities and concerns

March 15,
2014


Growth

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, 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. When they are watching the world wide
increase in number of millionaires the facts collected by Cap Gemini, S.A. and Merrill
Lynch survey report. India has 23% growth in the last year. The biggest Asian economy
China stands on second position with 20%, West Asia 16%, United States 4% and
United Kingdom (UK) 2%. So they can understand that there is more opportunities in the
Wealth management business in Asia specially in India.

Risk aversion of Indian customers

The repercussions of the mutual fund scandal of the 1990s are still evident. Many Indian
retail customers averse to diversifying their asset base into higher risk classes. To account
for this conservative tendency, PFS offerings can be tailored to emphasize the value of a
lower-risk investing approach.
New money mass affluent customers are not accustomed to Wealth management. Most
customers are used to obtaining financial services on and as needed basis without much
regard to a full view of their financial well-being. As part of the opportunity to define and
develop offerings for Indias emerging HNW population, customers may need an
introduction to the concept of private banking (or Wealth management).
Shortage of skilled personal financial advisors. To date, the PFS opportunity has been limited
to a very small segment of the population, so domestic banks have not generally developed
expertise incomprehensive personal financial management. Global banks can take advantage
of this gap by leveraging advisory competencies that they have cultivated in other markets,
importing that expertise into the Indian market.

March 15,
2014


Conclusion

Wealth managers are beginning to investigate innovative segmentation methods to manage
the changing client profile. Over the next 20 years wealth managers will hone their
segmentation methods Wealth managers will develop segmentation as a service efficiency
initiative. Segmentation models will apply holistic criteria to wealth management. The most
important segments globally will be entrepreneurs and SMES/ CEOs. Financial advisers will
become an important separate client segment for wealth managers The organization of direct
client ownership will also change Availability and flexibility will become vital components
of the business model Internal restructuring will aim to integrate client services. The rise of
the mass affluent represents an opportunity for wealth managers in the medium term Wealth
managers will capture the higher value mass affluent market by offering a scaled down
wealth management service. The mass affluent proposition will run along the lines of the
current wealth management service. Liability management is currently not part of the wealth
management agenda but has proven potential. Clients in developed markets are seeking more
holistic wealth management services Liability management is clearly a profitable area with a
proven existing client base. The incorporation of lending into wealth management will shift
the focus of the service. Specialist forms of lending will also become common additions to
the offerings of many wealth managers. Some will fail due to a persistence of the asset
focused service model and a lack of commitment. There are significant benefits in the area
of liability management for the wealthy, and that the importance of liability management as
part of wealth management will inevitably grow over the next 20 years, until it becomes a
key service area. Rising income and wealth inequalities, if not matched by a corresponding
rise of incomes across the nation, can lead to social unrest. An area of great concern is the
level of ostentatious expenditure on weddings and other family events. Such vulgarity insults
the poverty of the less privileged, it is socially wasteful and it plants the seeds of resentment
in the minds of the have-nots.

March 15,
2014


Bibliography

www.google.com
www.moneycontrol.com
www.wikipedia.com
http://www.icicibank.com/wealth-management
IBM Business Consulting Wealth Management Report

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