AN ANALYTICAL STUDY OF INVESTMENT PATERN OF HSBC CLIENTS UNDER WEALTH MANAGEMENT SERVICES
BY KAMLESH PALSANIYA HSBC
AN ANALYTICAL STUDY OF INVESTMENT OF HSBC CLIENTS UNDER WEALTH MANAGEMENT SERVICES
BY KAMLESH PALSANIYA
A report to be submitted in partial fulfillment of The requirements of BBA program
COMAPANY GUIDE MR. NITIN VERMA SALES MANAGER
FACULTY GUIDE RONAK MAHESHWARI
It would be prudent to commence this report with an expression of gratitude towards all those who have played an indispensable role in accomplishment of this project by providing their valuable guidance. I would first like to thank MR. PARMINDER SINGH, branch manager, HSBC, Jaipur for giving me a platform to apply my theoretical knowledge in the practical world. With due indebtedness, I am grateful to MR.NITIN VERMA, sales manager-acquisitions, PFS for his cooperation in respect of fulfillment of the project. My increased spectrum of knowledge in this field is the result of his relevant and high quality information. Further I would like to extend my gratitude to the entire staff of HSBC for giving me inspiration, guidance and support throughout my project. Lastly I would also like to thank my faculty guide RONAK MAHESHWARI, MAHARISHI ARVIND INSTITUTE OF SCIENCE AND MANAGEMENT, Jaipur for his regular guidance in the project and to sharpen our rough edges from time to time. It was indeed an enriching experience for me as a management student for getting a chance to do a project in an organization of international repute like HSBC (HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED).
KAMLESH PALSANIYA MAHARISHI ARVIND INSTITUTE OF SCIENCE AND MANAGEMENT
Investment management is one of the services provided under the wealth management. Investment management is all about strengths, weakness, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety and many other tradeoffs encountered in the attempt to maximize return at a given appetite for risk. This service specifies investment objectives and constraints to the client and then tries to elaborate the choices that are available in the asset mix and then future formulation of the investment portfolio strategy takes place and then selection of the best possible securities and portfolio execution takes place after that. It becomes mandatory to keep revising and evaluating the portfolio by the relationship manager or financial advisor because of the changing market scenario and to achieve higher returns with good growth perspective. Each one of us harbors a dream that is distinct as our fingerprints and to achieve these different needs we need different plans and different approaches, this calls for the services or the suggestions which are now days are provided by the different banks and different financial institutions like HSBC (launched its services in India in may 2005), HDFC, ICICI, CITI GROUP, STANDARD CHARTED, ABN AMRO and lot more. For a plan to be successful the first requirement is to know about the client, his present and future needs, to know about is risk appetite and the time horizon, all these are included in the personal financial review which is demanded from the client. The project aims at studying about the investment pattern of different customers and the factors which influence the designing of their investment portfolio. HSBC” which is actually HONGKONG AND SHANGHAI banking corporation limited. It’s presence in India dates back to 1853 when the mercantile bank of India was established In Mumbai. HSBC’s international network comprises over 10000 offices in 83 countries and territories in Europe, Asia-pacific region, Americas, the middle east and Africa with headquarters in London. 4
The shares are traded on NEW YORK stock exchange in the form of American depository receipt. In the very first week I got familiar with the various products offered by the bank which includes different types of account, different schemes, credit facilities and other products related to wealth management service. I gathered the information through websites and brochures and also interacted with the persons in charge of these facilities in HSBC itself. The second week was more focused on investment management and wealth management services which included studying of personal financial reviews (PFR). The PFR provides with the necessary and basic information about the client, his risk appetite and returns expected. During this week I was working under a relationship manager with whom I went to the existing clients and got to know about the requirement of the client and his expectations from the bank in respect of the returns and other services. With the starting of third week I was guided by a relationship manager to approach new clients and make some cold calls. He guided me from time to time about how to pitch a customer as this is the key step in banking it was followed by an appointment where I went with my relationship manager. These types of meetings helped me in knowing how the clients react to the various situations and also I got to know the product and services more. This also helped me in future calls where I could talk to my client more confidently and pitch him in a more proper way. The meeting helped us in knowing the clients in a better way, knowing his needs and requirements. All these helped me in preparing my questionnaire. I was helped by my company guide in preparation of the questionnaire. The questionnaire aims to study the investment portfolio of the clients and included questions which would help in knowing that what factors affect their investment and up to what extent these factors affect their decisions. The questionnaire also contains questions relating in which I will be able to judge that what type of investments does the investor favors and also their investment patterns. The questionnaire included questions on demographic, psychographic and behavioral aspects.
On the completion of the project it was found that most of the investors investing through HSBC were from the age group 20-29 years of age also they wants to invest in the avenues which have low risk attached to it and which gives the maximum returns. LIST OF ILLUSTRATIONS
SR. NO 1. 1.1 1.2 1.3 1.4 1.5 1.6 2 2.1 2.2 2.3 2.4 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.7.1 3.7.2 3.7.3 3.8 4 5 5.1 5.2 5.3 DESCRIPTION Introduction of the project Investment management as part of wealth management A general introduction of wealth management Investment avenues Role of financial advisor Investment management process Importance of diversification Company profile Introduction to banking Introduction of the organization Entities present in India Products and services of HSBC Main text Objectives Scope of study Research design Sampling procedure Sample size Data collection Data analysis and interpretation Phase I-graphical analysis of questionnaire Phase II-collective analysis Phase III-hypothesis testing Suggestions and recommendations References & bibliography Appendices Questionnaire Respondent details Investment portfolio of the clients PAGE NO 8 8 9 11 15 17 21 21 21 22 23 24 30 30 30 30 31 31 32 32 33 54 56 59 60 61 61 65
1. INTRODUCTION OF THE PROJECT
AN ANALYTICAL STUDY OF INVESTMENT OF HSBC CLIENTS UNDER
WEALTH MANAGEMENT SERVICES
INVESTMENT AND INVESTMENT MANAGEMENT
Investment is putting aside and employing money in financial instruments in the present, with the expectation of positive rate of return in the future. It can also be quoted as the investing of money or capital in order to gain profitable returns as interest, income, or appreciation in value. Investment management is the art of administering the employment of money in financial instruments in the present, with the expectation of positive rate of return in the future.
1.1 INVESTMENT MANAGEMENT AS THE PART OF WEALTH MANAGEMENT
Investment management is one of the services provided under wealth management. The wealth management is all about managing the wealth that is surplus amount of money or the saving of the individual by investing them into diversified tools like mutual funds, insurance, gold, real estate etc. Wealth management is an all-encompassing investor service comprising of: Investment advisory Management of investments ranging from insurance to stocks Maximizing returns on investments. The concept of wealth management was originated in U.S. in 1990. It is investment advisory service covering financial planning keeping in mind the individual’s current and future needs. It provides the individual with personalized banking, asset management, taxation advisory and portfolio management or investment management. Since early 1970’s there has been a dramatic transformation in the way financial institutions and advisors serve the wealthy individual and families. Today they follow a holistic and multi disciplinary approach to manage client affairs. Large numbers of banks and financial institutions like HSBC(HSBC launched its services in 7
India in may 2005), HDFC, ICICI, CITI GROUP, STANDARD CHARTED, ABN AMRO and lot more are seeking share in fast growing wealth management service market that sets to double every two years. Wealth management actually means more than just sticking to your budget it rather helps to plan your future, this is actually a right kind of approach and a customized solution to fulfill and achieve your financial goals. It claims to manage your money and provide you with complete wealth management services which makes your path easier for the achievement of the bright future and make us feel comfortable and assured that the wealth is managed in the best way. Now because of the ongoing market scenario where the markets have become more complex, with the kind of the current interest rate and taxation environment there is a need arising where the people require somebody who is specialized in the field and can guide them in the best way, where there wealth can be managed prudentially and professionally because the age of guaranteed returns have gone and this calls for the wealth management services which include all the services from cradle to grave, services like banking, investment, tax management, legal solutions and transmission of wealth to next generation. The various services offered are: Private banking Investment and banking Banking and credit solutions
1.2 A GENERAL INTRODUCTION OF INVESTMENT MANAGEMENT
As wealth management, which is still regarded as new and is unknown to the people so as the investment management which is nearly a new concept A concept wherein the wealth of the individual is managed looking at the various factors. 8
Investment management or asset allocation is an investment portfolio technique that aims to balance risk and create diversification by dividing assets among major categories such as cash, bonds, stocks, real estate and derivatives. Each asset class has different levels of return and risk, so each will behave differently over time. For instance, while one asset category increases in value, another may be decreasing or not increasing as much. Investment management can also be explained as the professional management of various securities (shares and other bonds) or assets (gold or real estate) to meet the specified goal or meet the requirements; it is for the overall benefit of the investor. Investors could either be institution (corporate, insurance company), or the private individuals who either do the investments directly or attaches with either the bank or some institution for the investment. It can also be said to be a disciplined management approach which combines an understanding of the goals and objectives of the investors with a fine tuned plan out by various software and managers keeping in mind all the factors which will affect the investment portfolio. An investment management service includes Financial analysis Asset selection Stock selection Plan implementation Ongoing monitoring of investments Investment could be done in various avenues like: Gold Direct investment in the equity market Mutual funds Fixed deposits
ULIP SIP Insurance linked investments But the kind of portfolio designing done under investment management in HSBC majorly includes the following avenues in the investment Mutual funds SIP Insurance ULIP
1.3 INVESTMENTS AVENUES
An investment portfolio may include investments in: Real estate Gold Direct investment in the equity market Mutual funds Fixed deposits ULIP SIP Insurance
REAL ESTATE Real estate is dealing in land and property. Due to increase in population, urbanization, and developments have lead to increase in the prices of the land. If the investor has long time horizon with the perspective of growth then this kind of investment is the best suited one
DIRECT INVESTMENT IN THE EQUITY MARKET Equity investment generally refers to buying and holding of shares of stock on the stock market by individuals and funds in anticipation of income from dividends and capital gains as the value of the stock rises. It also sometimes refer to the acquisition of equity (ownership) participation in private (unlisted) company or startup (a company being created or newly created). When the investment is in infant companies, it is referred to as venture capital investing and is generally understood to be higher risk then investment in listed and going concern situations. MUTUAL FUNDS A mutual fund is a corporation (trust) that pools the savings, which are then invested in money market, debt market and capital market instruments such as shares, debentures and other securities. Thus the mutual fund serves as a link between the public and the capital markets so as to mobilize savings from the investors and invest them in the capital markets to generate returns. It can also be said that a mutual fund is an investment tool that allows small investors to access to well defined equities, bonds and other securities. Each share holder participates in the gain or the loss of the fund. Units are issued according to the: Money put in by the investor Type of equity or bond chosen NAV of the security prevailing in the market NAV is the main performance indicator. A fund’s NAV is calculated as total assets minus all the expenses and divided by the number of its total outstanding units. 11
Mutual Funds are financial intermediaries. They are companies set up to receive your money, and then having received it, make investments with the money Via an AMC. It is an ideal tool for people who want to invest but don't want to be bothered with deciphering the numbers and deciding whether the stock is a good buy or not. A mutual fund manager proceeds to buy a number of stocks from various markets and industries. Depending on the amount you invest, you own part of the overall fund.
TWO TYPES OF MUTUAL FUND ARE: STRUCTURED BASED INVESTMENT BASED
STRUCTURED BASED MUTUAL FUND ARE: OPEN ENDED FUNDS- an Open-ended Fund is that kind of fund that are available for subscription all through the year. These do not have a fixed maturity. CLOSE ENDED FUNDS- A Close-ended Fund has a stipulated maturity period, which generally ranges from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the Stock Exchanges, if they are listed. The market price at the stock exchange could vary from the scheme's NAV on account of demand and supply situation, unit holders' expectations and other market Factors.
INVESTMENT BASED MUTUAL FUNDS ARE:
GROWTH FUNDS- growth funds is to provide capital appreciation over the medium to long term. Growth schemes are ideal for investors who have a long-term outlook and are seeking growth over a period of time. INCOME FUNDS- The aim of Income Funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income funds are ideal for regular income and capital stability BALANCED FUNDS- The aim of Balanced Funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. This proportion affects the risks and the returns associated with the balanced fund - in case equities are allocated a higher proportion, investors would be exposed to risks similar to that of the equity market. MONEY MARKET FUNDS- The aim of Money Market Funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as Treasury Bills, Certificates of Deposit, Commercial Paper and Inter-Bank Call Money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for corporate and individual investors as a means to park their surplus funds for short periods.
ADVANTAGES OF MUTUAL FUND PORTFOLIO DIVERSIFICATION/RISK REDUCTION: An investor holds a diversified portfolio even with a small amount of investment, which would otherwise require a big capital. Further, the fund invests in diverse portfolios, hence reducing the riskiness of the investments. REDUCTION OF TRANSACTION COSTS: While investing through the funds, an investor has the benefit of economies of scale; the funds incur lesser costs because of larger volumes, a benefit passed on to its investor. PROFESSIONAL MANAGEMENT: Mutual funds are managed by professional 13
management who has requisite skills and resources to analyze the various investment options in these fast-moving, global and sophisticated markets. LIQUIDITY: Often, investors hold shares or bonds they cannot directly, easily and quickly sell. If they invest in the units of a fund, they can generally cash their investment any time, by selling their units to the fund if open-end, or selling them in the market if the fund is close-end. CONVENIENCE AND FLEXIBILITY: - Investors have the option of transferring their holdings from one scheme to the other, get updated market information and so on.
FIXED DEPOSITS Fixed deposit is made for those investors who want to deposit a lump sum amount of money for a fixed period of time say a minimum of 15 days to 5 years and above there by earning a higher rate of interest in return. Investors get a lump sum amount at the maturity at the deposit. Banks fixed deposit are one of the common saving scheme open to an average investor. Fixed deposits are one of the most common savings schemes open to an average investor. Fixed deposits also give a higher rate of interest than a savings bank account. The facilities vary from bank to bank. Some of the facilities offered by banks are overdraft (loan) facility on the amount deposited, premature withdrawal before maturity period (which involves a loss of interest) etc. ULIP ULIP stands for unit linked insurance plan. It is a kind of the life insurance where the policy value at any time varies according to the value of the underlying assets at that time. It is a kind of the policy which provides the benefit of protection with the flexibility in the investment. The investment is denoted as units and is represented by the value that it has attained called as net asset value (NAV). It is performance indicator of the fund. A fund’s NAV is calculated as total assets minus expenses and divided by number of its total outstanding units. ULIP came into play
In 1960 and soon became popular in many countries in the world. The reason for the wide popularity was because it is a very transparent scheme and the flexibility it offers in investments. ADVANTAGES OF UNIT LINKED INSURANCE PLAN Simple, clear and easy to understand Transparent and visible for customers to take decisions Flexible and adaptable Puts the policyholder in control Policyholder gets the entire upside on the performance of his fund.
SIP SIP is termed as systematic investment plan. In this the investor has the option of managing his investments on the periodic basis and thus inculcates the regular saving habit. The investor has to issue post dated cheques in favor of the fund and then gets the no. of units on the date of the cheque. The number of units depends on the amount, the kind of fund and the NAV of that date. SIP allows the investor to invest a prefixed amount with the scheme at set intervals, and derive the benefit of fluctuating share prices and NAV. SIP works on the concept rupee cost averaging. So if the NAV is high the entire investment is valued.
1.4 ROLE OF FINANCIAL ADVISOR
For this every institute or the bank provides the investor with a manager also called as a relationship manager or the financial advisor who undertakes these jobs and design and looks after the investment portfolio of the investor. It is the relationship manager who after listening and studying the needs of the investor decides 15
What to buy When to buy What to sell When to sell The role of the relationship manager or the financial advisor is very critical in the respect that he is the one who makes the commitment to the investor on the behalf of his organization. His job is to understand the needs and the goals of the investor properly prior to the decision of investment and then decides that which strategy will work for the investor in terms of achieving his goals and accordingly the investments are done. The relationship manager studies the investment portfolio of the client on regular basis and also updates the investor about his portfolio and market conditions. The relationship manager meets the client in regular intervals and discusses about the satisfaction level of the investor, they discuss about the risk and return and also about the prevailing market scenario. The relationship manager also guides the investor about the new schemes prevailing in the market which could fetch him good returns with low risk. This may seem to be a very short process but the whole process is rather long and involves a lot of study and deep thinking and decision making power. The main emphasis while designing a particular portfolio is given to the following points: Stock specific selection procedure based on research. Focus on minimizing investment risk by following rigorous valuation Capital preservation Selling discipline and use of derivatives to control volatility Enhance absolute returns for the investor
While designing a particular investment portfolio it becomes essential to know the client fully like To know about his future needs and desire To know about the profile of the client which includes that currently what his source of income, his family, his background in terms of whether he was ever involved in investments and if yes then what kind, what were the returns. To know about his risk appetite To know about the kinds of returns expected. To know about his current assets and liabilities To know about his savings and expenditure To know the time period for which he wants to invest. All these become the part of the personal financial review which is a kind of a form presented to the investor during his meeting with the relationship manager. Now with different kind of investors with different attitude and different demands there are different kinds or styles of portfolios designed keeping in mind the risk and return appetite and also the needs and demand of the investor for example Growth Value Market neutral Small capitalization Indexed As it is known that even the market plays a major role while designing the investor’s investment portfolio, because market has the direct role in investment. While investing the money of the 17
investor the relationship manager has to keep in mind that the investment should be diversified so that a downward trend in the particular sector does not effect the investment portfolio and it can be covered by other sectors thus reducing the risk and increasing the returns. Investment management is a part of wealth management services which are provided today by various banks and other private institution. It is the growing trend.
1.5 INVESTMENT MANAGEMENT PROCESS
Investment management is six steps process Determination of fit Personal financial review Financial planning Investment management Reporting and service Periodic review and updating DETERMINATION OF FIT This step includes the understanding and matching of the thoughts about the management of the wealth of the client and looking for the best way out. It happens at the very first meeting with the client. It is kind of the interaction where the client conveys his thoughts and looks for the schemes or the products beneficial for him from his point of view.
PERSONAL FINANCIAL REVIEW
Every client is unique and deserves customized service, his needs and wants are different. Every client has different attitude and different state of mind. So this is the first step to know about the customer about his needs and his risk taking behavior. This further will help the portfolio manager to decide upon his investment attitude. Personalized financial review (PFR) is personalized to suit individual and hopes and aspirations. The PFR assists in analyzing client’s financial situation and present and future needs by taking into consideration his lifestyle, investment objectives, income stability, risk profile and financial obligations. A financial planner or portfolio manager or financial advisory manager uses the information to help draw up a comprehensive financial plan that incorporates the most suitable financial program that are available on the basis of best value to the client using a combination of deposits, mutual funds, insurance schemes, FD’s and various other investments. The aim of the financial advisors is to work closely with the client and achieve your financial goals. Planning the life insurance, investment and pension program is the only way of ensuSring that the financial objectives are achieved. The main area is identified and then it is worked upon by the manager and it is worked out with mutual consent between the relationship manager and the client. The investment pattern is prioritized according to the clients. From the personal financial review it becomes easy to construct and understand the income and expenditure and the current assets and liability portion. There is well defined format which is filled in by the client at the very 1 st or 2nd meeting. It is kind of the form which contains questions about his family background, his needs, his liabilities, his assets, and other information which makes it easier to know the client in a better way. FINANCIAL PLANNING The main concern of any individual are: wealth accumulation-three key accumulation scenarios shared by investors are: saving for retirement
sending children or grand children to college or school Buying home or other properties to safe guard future. Wealth preservation-managing the cash flow and taxes on the portfolio. This includes the investment pattern where the core issues are tax planning, retirement planning and estate planning and other issues like education savings and insurance protection. The financial advisor works with the client to develop a long term investment strategy that is designed to help the client preserve his wealth. INVESTMENT MANAGEMENT It consists of 2 integrated parts Determining a strategic asset allocation Investment allocation Asset allocation is the distribution of assets among a variety of different asset categories such as stocks, bonds, and cash equivalent instruments. At the foundation of a comprehensive wealth management approach is an asset allocation strategy. The principle of asset allocation offers investors several potential advantages: Reducing emotional response to market volatility, allowing you to stay invested over the long term. Helping to minimize overall portfolio risk for a given level of return. Seeking to provide more consistent long-term performance that can improve the likelihood of achieving a desired investment goal over time. Encouraging a long-term investment perspective. REPORTING AND SERVICE Once the portfolio is discussed and designed by the investor and the capital is divided in the different asset classes. After this the financial advisor has to update the client about his portfolio 20
in regular interval of time. It becomes the prime duty of the financial advisor to be in touch with the client and report him with major up’s and down’s in the market and hence in the portfolio. If the financial advisor feels the need of adding the stocks to his portfolio or to remove some of the stock, he first needs to consult the client before taking any decisions. The financial advisor meets the client either weekly, monthly or the meetings are conducted on semiannual basis. PERIODIC REVIEW Once you have an established portfolio, you need to analyze and rebalance it periodically because the market is very volatile and market movements may cause the initial weightings to change. The other factors that are likely to change over time are: Current financial situation Future needs Risk tolerance If at any point of time the financial advisor or the investor feels the need to revise his portfolio in terms of the prevailing marketing condition or due to some reasons he can revise his portfolio with the help of the financial advisor. Portfolio revision is basically selling some of the stocks and buying the stocks or investing more due to the reasons of risk and returns or may be the investor is in the urgent need of the liquid or cash. It is analyzing all the factors which effects the portfolio directly or indirectly.
1.6 IMPORTANCE OF DIVERSIFICATION IN THE INVESTMENT OR THE INVESTMENT PORTFOLIO
Diversification is the key to growth in respect of investments. While deciding on the investment avenues it is the prime factor to be kept in mind. It is not enough to own securities from each asset class but there should be diversification within each of these asset classes. Investors can achieve excellent diversification by investing in mutual funds. This kind of investment vehicles allow the individual investors to attain economies of scale because of the large amount money of many investors being invested in different categories and this is the reason why a small investor with small amount money will not be able to produce the same results as above.
2. COMPANY PROFILE
Bank is a financial institution that acts as a payment agent for customers, and borrows and lends money. The first modern bank was founded in Italy in Genoa in 1406; its name was Banco di San Giorgio (Bank of St. George). The first bank in India through Bank majorly act as a payment agents by conducting checking for current accounts for customers on the bank, and collecting cheques deposited to customer’s accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer and ATM. Bank’s activities can be divided into RETAIL BANKING- dealing directly with individuals and small businesses. BUSINESS BANKING- providing services to mid market business CORPORATE BANKING- directed at large business entities. PRIVATE BANKING- providing wealth management services to high net worth individuals and families
INVESTMENT BANKING- relating to activities on financial market. Most banks are profit making, private enterprises. Whereas some banks are owned by government or are non profit making.
2.2 INTRODUCTION OF THE ORGANIZATION HSBC-“THE WORLD’S LOCAL BANK”
“HSBC” which is actually HONGKONG AND SHANGHAI banking corporation limited. It’s presence in India dates back to 1853 when the mercantile bank of India was established In Mumbai. HSBC’s international network comprises over 10000 offices in 83 countries and territories in Europe, Asia-pacific region, Americas, the middle east and Africa with headquarters in London. The shares are traded on NEW YORK stock exchange in the form of American depository receipt. HSBC is one of the largest banking and financial services organization in the world. Through an international network linked by advanced technology, including a rapidly growing e-commerce capability it provides a comprehensive range of financial services like Personal financial services Commercial banking Investment banking which in general terms is also known as portfolio designing or portfolio management under wealth management services. Private banking
The HSBC group is named after its founding member, the HONGKONG AND SHANGAI banking corporation limited. It was established in 1865 to finance the growing trade between china and Europe. In India this group offers a comprehensive suite of world class products and services to its corporate and commercial banking clients and is also growing fast in personal banking.
2.3 ENTITIES PRESENT IN INDIA
PRIVATE EQIUTY-HSBC private equity management (Mauritius) limited a subsidiary of HSBC private equity (Asia) limited in Hong Kong, has a liaison office in Mumbai. The company specializes in provision of equity capital to unlisted growth companies in India and Srilanka. AUDIT SERVICES- HSBC professional service (India) private limited provides internal audit unit worldwide with particular emphasis on it, treasury, asset management, private banking and insurance functions. INVESTMENT BANKING- HSBC securities and capital markets (India) private limited has two main business lines. It’s institutional and proprietary, broking services are based in Mumbai and has seat on two of India’s primer stock exchange, the Bombay stock exchange and national stock exchange. It deals in the Indian securities for both Indian and international institutions and for select retail clients and is backed by extensive research team. The corporate finance and advisory business with office in Mumbai and new Delhi, offers a full range of integrated investment banking services in India and internationally Software development- HSBC software development (India) private limited has established a software centre in Pune to develop solutions for HSBC’s group office worldwide. FINANCIAL PLANNING SERVICES- inflation falling interest rates and fluctuating market conditions entails to plan the finance carefully. HSBC financial planning services offer assistance to secure the future. 24
HSBC PREMIER- HSBC premier is all about the finer aspects of relationship banking. It embraces a rage of benefits combining global expertise with local understanding.
2.4PRODUCTS AND SERVICES OF HSBC
Saving account Current account Fixed deposit ULIP SIP Insurance My term credit loans Credit card Criti care HSBC SAVING ACCOUNT The different types of saving account offered by HSBC are: HSBC PREMIER ACCOUNT POWER VANTAGE ACCOUNT MASS MARKET ACCOUNT HSBC PREMIER HSBC premier is one of the world’s first linked up banking service that enables you to explore and seize rich opportunities the world has to offer. At the heart of premier linked up banking, lies the network of over 250 international premier centers. In every single one of them the client is recognized by someone who is qualified to resolve the problems as quickly as a customer would 25
expect back home. HSBC helps the premier clients with basic banking transactions and with preferential access to phone banking and internet banking services. With HSBC premier, have a dedicated relationship manager, who, supported by a team of experienced financial experts, gains thorough understanding of client’s current needs, risk profile and future financial goals to help and develop personalized wealth management solutions. The relationship manager will suggest different investment avenues that suit the profile and helps in deriving optimum returns on the investments. The premier relationship manager is the single point of contact with the bank and takes care of all the banking needs of the customer. The various other benefits and privileges provided by HSBC under premier are: 24*7 BANKING- the banking services can be availed through personal telephone all 24 hours and 7 days a week. HOME BANKING- the client is entitled to the privileges of banking from the comforts of the home. It offers physical delivery of cash and cheques, drafts etc. NO BOUNCE CHEQUE PROTECTION-“no bounce cheque protection” of up to 100000 rupees is also one of the benefits provided to the premier customer. SAFE DEPOSIT LOCKER SERVICE HSBC PREMIER DEBIT CARD-with the debit card the withdrawal of rupees 1, 00,000 in a day from any visa or HSBC ATM without any charges. EXCLUSIVE HSBC PREMIER CENTRES- the premier customer has an access to the exclusive premier centers around the world in 33 countries where he can obtain money with ease, seek assistance, and conduct banking transactions. HSBC PREMIER MASTER CREDIT CARD- an approved HSBC premier master credit card which has a minimum limit of rupees 2, 00,000. GLOBAL PREVILIGES-various global privileges like: o Exchange foreign currency without any commission at any branch of HSBC that handles foreign currency exchange. 26
o Avail of emergency encashment service as an able backup in case of loss of card or money during travel o Air travel, hotel, and car hire reservation o Medical and dental referral services o Track lost luggage o Information to help to know the destination better, even before the arrival. POWER VANTAGE HSBC's Power Vantage Account is a proposition that offers, amongst other benefits, a feature called the Personalized Financial Review (PFR). A trained Financial Planner uses the PFR to help you evaluate your finances, identify your current and future financial needs and assist you in drawing up a plan to meet them. While analyzing your current and future need we take into consideration your lifestyle, investment objectives, income stability, risk profile and financial obligations. Under Power Vantage account all the avenues of investment are available to a client All these sets it apart from other ordinary banking accounts.
FEATURES OF POWER VANTAGE ACCOUNT ⇒ A Power Vantage Relationship Manager to there to assist the client in their banking and financial planning needs ⇒ Unlimited free transactions (cash withdrawals and balance enquiries) at 23,500 HSBC and non - HSBC Visa ATMs in India using your Power Vantage debit card ⇒ Dedicated Service Desk and Teller Counters to assist you with your banking needs, enabling you to save time
⇒ Higher cash withdrawal limit of up to Rs. 50,000 and funds transfer up to Rs. 100,000 with your Power Vantage debit card, across 23,500 HSBC and non-HSBC Visa ATMs in India and more than 1 million ATMs overseas ⇒ Use your Power Vantage debit card for purchases of up to Rs. 50,000 per day at over 350,000 merchant establishments in India and over 26 million such establishments overseas ⇒ Free Cheques Payable at Par (CPP) facility in all cities where HSBC has branches, helping you save on out-station clearing time and costs ⇒ No-bounce Cheque Protection which means cheques presented through clearing irrespective of funds available, will be honored (overdrawing of a maximum of Rs. 10,000) ⇒ Monthly Composite Statement giving you a snapshot of all deposits and loans ⇒ Joining fee waiver and 50% off on the annual fee for your credit card MASS MARKET ACCOUNT It is the kind of the account which targets the large mass of people who has a balance of less than rupees 100000 and maintaining the average quarterly balance of rupees 25000.
fixed deposit is made for those investors who want to deposit a lump sum amount of money for a fixed period of time say a minimum of 15 days to 5 years and above there by earning a higher rate of interest in return. Investors get a lump sum amount at the maturity at the deposit. Banks fixed deposit are one of the common saving scheme open to an average investor. Fixed deposits are one of the most common savings schemes open to an average investor. Fixed deposits also give a higher rate of interest than a savings bank account. The facilities vary from bank to bank. Some of the facilities offered by banks are overdraft (loan) facility on the amount deposited, premature withdrawal before maturity period (which involves a loss of interest) etc. ULIP-UNIT LINKED INSURANCE PLAN 28
ULIP stands for unit linked insurance plan. It is a kind of the life insurance where the policy value at any time varies according to the value of the underlying assets at that time. It is a kind of the policy which provides the benefit of protection with the flexibility in the investment. The investment is denoted as units and is represented by the value that it has attained called as net asset value (NAV). It is performance indicator of the fund. A fund’s NAV is calculated as total assets minus expenses and divided by number of its total outstanding units. ULIP came into play In 1960 and soon became popular in many countries in the world. The reason for the wide popularity was because it is a very transparent scheme and the flexibility it offers in investments. SIP-SYSTEMATIC INVESTMENT PLAN SIP is termed as systematic investment plan. In this the investor has the option of managing his investments on the periodic basis and thus inculcates the regular saving habit. The investor has to issue post dated cheques in favor of the fund and then gets the no. of units on the date of the cheque. The number of units depends on the amount, the kind of fund and the NAV of that date. SIP allows the investor to invest a prefixed amount with the scheme at set intervals, and derive the benefit of fluctuating share prices and NAV. SIP works on the concept rupee cost averaging. So if the NAV is high the entire investment is valued. INSURANCE Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. Insurer is the company that sells the insurance. Insurance rate is a factor used to determine the amount called premium. Different types of insurance provided by HSBC are: Insurance for single Insurance for married Family insurance Retirement insurance 29
Life insurance Nirvana pension plan Loan repayment protection insurance Non life insurance Travel guard Home secure Maharaksha personal injury policy MY TERM CREDIT LOANS My term credit loan is the only personal loan which lets you choose how to repay. It is Just like a friend who lets you to repay the way you want. My Terms Credit Personal Loan gives client 4 easy repayment options, from which the client can select one that suits him the best. Loan covers financing marriage, furnishing home or a family holiday. It's just like borrowing money from a friend. FETURES AND BENEFITS Lower EMI in the first year Interest on utilized amount only, not on the entire loan Last EMI waiver Standard EMI repayment
CREDIT CARDS A credit card is a plastic card that is issued by the bank authorizing payment for purchases and an interest is charged on the outstanding balance. The card is issued by the bank which allows the holder to buy goods and pay for them latter. HSBC provides 52 days of credit period by which a 30
customer has to pay back the amount, but if the customer does not pays back the amount till the due date he is charged by the bank. There are two types of credit card in which HSBC deals in: HSBC gold credit card HSBC classic credit card FETURES AND BENEFITS 0% fuel surcharge Lower interest options Balance transfer facility Loan on phone Travel cash back CRITICARE Criti Care is a special product of HSBC which is provided only to existing HSBC clients. These could be the account holders or a credit card holder of HSBC. CritiCare is basically an illness insurance policy, which allows a client to nurse himself back to good health without financial burdens about his medical expenses. It is a group insurance policy from TATA AIG GENERAL INSURANCE COMPANY Ltd., it covers 11 critical illnesses and surgeries. 11 diseases that are covered under Criti Care are : First heart attack Stroke Cancer (excluding skin cancer) Kidney failure Major organ transplant 31
Coma Major burn (75%) Multiple sclerosis Paralysis Total blindness Features A client becomes eligible for the claim on the policy at the first diagnosis only No pretest is required Second opinion is provided Tax exempted premium.
To study the profile of the HSBC clients To analyze the pattern of investments of HSBC clients To study the investment portfolio of special clients of HSBC. To study the major factors influencing investment pattern. To suggest the various measures for HSBC clients based upon the finding of the study.
3.2 SCOPE OF STUDY
The area covered under the project study was Jaipur. The study was conducted through questionnaires and interaction with the investors. The questionnaire was filled by different investors who were the existing clients of HSBC from different part of the city. The interaction was done with the walk in customers of HSBC.
3.3 RESEARCH DESIGN
The research design constitutes the blueprint for the collection, measurement and analysis of the data. Basically research design is the plan and structure of investigation, so conceived as to obtain answers to the research questions. The kind of research design used for the completion of our project study is a combination of exploratory and descriptive. Exploratory study- it is a kind of study in which the researcher is not clear with the idea of problem. Exploratory study helps the researcher to develop the concepts more clearly, establish priorities, develop operational definitions, and improve the final research design.
3.4 SAMPLING PROCEDURE
The basic idea of sampling is that by selecting some of the elements in a population, we may draw conclusions about the entire population. It is an essential part of research process. Convenience sampling- The selection of units from the population based on their easy availability and accessibility to the researcher. Convenience sampling is best used in surveys dealing with an exploratory purpose for generating ideas and hypothesis. In our study we have also used this kind of sampling because majorly the respondents were walking customers of the bank.
3.5 SAMPLE SIZE: the sample size taken for the research study is 100(respondents) 3.6 DATA COLLECTION
Data collection for the research and to fulfill the objective will be done through Primary sources Secondary sources Under primary sources it includes questionnaire which will be filled by the investors as well as the financial advisors. The respondents of my questionnaire will restrict to HSBC only. The questionnaire compromises of the close ended. The sample size taken for this is 100 respondents who are the clients of HSBC and the sampling done is the convenient sampling. The reason for preparing a questionnaire is that after analysis I will be able to present the data about exactly what kind of investment does an investor prefers to do. The data from secondary sources will be collected through various published and unpublished sources
3.7 DATA ANALYSIS AND DATA INTERPRETATION
Data interpretation will be done through statistical tools like Bar graphs Pie charts Hypothesis testing In the hypothesis testing, we use two kinds of hypothesis first the null hypothesis and the other one is the alternative hypothesis. NULL HYPOTHESIS (Ho): it is the statement that that says that there exists no difference between the parameter (a measure taken by a census of the population and prior measurement of a sample of the population) and the statistic being compared to it (a measure from a recently drawn sample of the population)
ALTERNATIVE HYPOTHESIS (Ha): it is the statement that says that there exists a difference between the parameter (a measure taken by a census of the population and prior measurement of a sample of the population) and the statistic being compared to it (a measure from a recently drawn sample of the population). A alternative hypothesis is the logical opposite of the null hypothesis.
PHASE I DATA ANALYSIS THROUGH GRAPHS AND CHARTS
1. INVESTORS FROM DIFFETERNT AGE GROUP
20-29 years 48 30-39 years 22 40-49 years 17 50 & above 13
Interpretation Total no of respondents taken were 100 The pie chart above indicates that the most of the investors are from the age group of 20 -29 years, out of the 100 respondents almost half falls in this category that is 48. This is due to the availability of more versatile avenues available in the market as well as due to increasing knowledge about these products. This age group trusts in multiplication of money. This age group is followed by 22 respondents from the age group of 30-39. The next two are 17 respondents from 40-49 and the least number of respondents from 50 and above age group.
2. INVESTORS FROM DIFFERENT INCOME SOURCE
Interpretation The figures and the pie chart states that majority of the investor are from either the business or service background. The distribution of the investors in these categories is equal. Out the 100 respondents 45 investors own the business and 45 are into service, the remaining 10 investors were professional like lawyers and C.A. The investor from other category is blank due to the reason that it was convenient sample and investors from this category were not found but this does not say that the persons belonging to this category does not invest.
3. FINANCIAL DEPENDENTS ON THE INVESTOR
NUMBER OF DEPENDENTS NO DEPENDENTS 1-2 DEPENDENTS 3-4 DEPENDENTS 5 OR MORE DEPENDENTS NUMBER OF RESPONDENTS 31 27 28 2
Interpretation Most of the investor has none of the persons dependent on them. This may be due to the reasons that as the major age group of people as respondents were from the age group of 20 -29 years, which has rather less burden in terms of family and kids or it could be due to the fact that both the spouses are working. This was followed by the respondents which have 1-4 persons as dependents as this can be thought upon as most of the families are nuclear.
4. RISK TAKING ABILITY OF THE INVESTORS
HIGH RISK TAKER 37
LOW RISK TAKER 45
RISK AVOIDER 18
Interpretation The graph above
shows that there are very few investors who believe in avoiding risk while investing in different investment avenues. Out of the 100 respondents only 18 respondents were such who are risk avoiders remaining 82 persons out 100 believed in taking risk as it is very much associated with investments and the returns. Of these 82 respondents, 45 respondents which is almost the half of the total no of respondents belonged to low risk taker and the rest 37 were from the category of high risk taking. As it has been already interpreted above that the major proportion is those of low risk taker. Here the investors majorly invest their wealth in mutual funds, debts or fixed deposits. 5. INVESTORS INVESTING FROM PAST YEARS
INITIAL STARTER 20
1-3 YEARS 42
4-6 YEARS 27
7 OR MORE 11
Interpretation The graph shows that the majority of the investors are investing from past 1-3 years. The numbers of respondents out 100 who are investing from last 1- 3 years are 42 investors; it is then followed by almost equal but small number of investors investing from either 4-6 years or is the initial starter. 27 investors out of the total were investing from 4-6 years and 20 investors have just started investing. The least number of investors fall in the category who are old investors investing from last 7 or more years. The numbers of these investors were found out to be 11. The reason for the above result which shows majority of investors investing fro past 1-3 years could be that HSBC is comparatively new bank in Jaipur and this stusy restricts only to HSBC clients only. 6. PROPORTION OF INCOME DIVERTED TOWARDS PAYMENT OF LOANS AND LIABILITY.
10%&LESS THAN 10% 51 11-20% 34 21-30% 12 MORE 30% 3 THAN
Interpretation The graph says that out of the 100 respondents more than half of the respondents fall in the category wherein the respondents have small liabilities on him and most of the amount can be invested. 34 respondents are those whose 11-20% of the income goes in paying the liabilities.12 respondents are those paying loans and liabilities of 21-30% and a negligible no of people have the liabilities of 31% or more.
7. PROPORTION OF SAVINGS GOING INTO INVESTMENTS
25% OR LESS THAN 25% 26-50% 51-75% 75% AND ABOVE 26 29 37 8
Interpretation Everybody saves some proportion of the income looking at the present and the future needs and tries to judicially invest the saving for the purpose of keeping the principal amount intact, looking forward for growth and multiplication of the money, and its easy liquidity. The saving is also invested keeping in mind the risk that can be taken by the investor. There are 37 respondents who say that they invest 51-75% of their saving whereas there are 29 who invests 26-50% and 26 investors invests 25% or less than 25% of their savings. A very less no. of 8 respondents invests 76% or more of their savings.
8. PREFERRED TIME HORIZON OF THE INVESTOR FOR THE INVESTMENT
1-2 YEARS 27
3-5 YEARS 40
6-10 YEARS 13
MORE YEARS 20
Interpretation Preferred time horizon for investment is the time for which an investor wants to keep his investment in the different avenues. It is the average time period for which the investment portfolio in different investment avenues remains the same. As it is clearly indicated in the table and the graph that the major respondents are those who wants to keep their investments for approximately 3-5 years which is actually neither a very short period for keeping the investments nor very long. This is then followed by those who keep their investments for relatively short time of 1-2 years with the number falling in this category are 27 respondents. Almost similar to these number 20 respondents are those who are long time investors who keep their investments for approximately for more than 10 years. 13 respondents are those who keep their investments for relatively long period of 6- 10 years.
9. KNOWLEDGE REGARDING THE INVESTMENT AVENUES
EXCELLENT GOOD AVERAGE POOR 12 51 29 8
Interpretation The pie chart and figures make it very clear that majority of the investor have good knowledge about the different investment avenues. The figures for this are 51 falling in the category of good knowledge,29 in the category of average, 12 in the category of excellent and only 8 In the category of poor knowledge about the investment and its different investment avenues. These figures speaks that in the present scenario where everybody do investments, there is a fair knowledge about the investment and the avenues of the investments. The help is also rendered by different institutions and banks which help the investor in guiding on the right path.
10. FREQUENCY OF INVESTMENTS OF THE INVESTORS
WITHIN 4 MONTHS 32 5-8 MONTHS 18 9-12 MONTHS 35 MORE MONTHS 15 THAN 12
Interpretation As the figures from the table itself speaks that most of the investors investing in different avenues of investment, invest within 9 to 12 months. The least number of investors are those who invest with the frequency of investing in more than 12 months. The frequency of investment within 9-12 months may be because of tax planning and a handsome amount of money can be invested when accumulated throughout the whole year. There is equal number of distribution within the two categories of frequency of investments, within 4 months and 5-8 months. 32 respondents are those which invest within 4 months and with not much difference 35 are those who invest within 9-12 months. 5- 8 months constitutes 18 respondents and more than 12 months constitutes 15 respondents out of the total number of 100 respondents surveyed. 11. APPROXIMATE SIZE OF INVESTMET PORTFOLIO OF THE INVESTORS OF HSBC
0-20 LAC 65 21-40 LAC 27 41-60 LAC 5 61 AND ABOVE 3
Interpretation Although 0-20 lac of investments is considered to be small investments but still the major number occupied this group of investments. As this group may be occupying the highest number of 65 respondents out of the total 100 respondents but this does not prove that only small investors exists but it says that the majority of the investors belong to this group. There may be a case wherein the investor might have invested his money through different banks and institution but this study restricts only to HSBC. Following this category is the one with the investments of 21-40 lacs and the numbers of respondents from this group are 27. The next two groups are 41-60 lac and 61 and above are 5 and 3 respectively. 12. INVESTMENTS AVENUES IN THE CURRENT PORTFOLIO OF THE CLIENTS
MUTUAL FUNDS 78
FIXED DEPOSITS 75
DIRECT INVESTMENT IN EQUITY 51
Interpretation The graph makes it very clear that among the different categories of investment avenues the most preferred avenues are the mutual funds and the fixed deposits. Almost equal number of respondents had investments in these avenues. The numbers of respondents preferring these avenues are 78 for mutual funds and 75 for fixed deposits, which is one third of the respondents being surveyed. The next three avenues which hold the equal position in the investor’s preference are investments in equity, ULIP (unit linked insurance plan), SIP (systematic investment plan). The number of respondents responded to these avenues were half that is 50 respondents. The least preferred one were debt and ELSS (equity linked saving scheme) with 31 and 18 respondents respectively. These figures shows that the investor believes in multiplication of the money, preservation of the capital and growth keeping the principal amount intact by taking low risk.
13. WEALTH DIVIDED IN DIFFERENT INVESTMENT AVENUES CONTAINED IN THE CURRENT PORTFOLIO
INVESTMENT AVENUES MUTUAL FUNDS FIXED DEPOSITS DIRECT INVESTMENT IN EQUITY DEBT ULIP SIP
1-20% 28 22 22 27 42 27
21-40% 40 32 23 4 4 24
41-60% 8 14 2 0 0 2
61-80% 0 4 2 0 0 1
81-100% 2 0 1 0 0 0
Interpretation The graph and figures shows that major part of the investments goes into the mutual funds followed by fixed deposits. This may be due to the low risk attached to these avenues. Although lot of investors invests in ULIP but the proportion of investment is considerably low this is around 1-20% and that too because of the tax saving purpose
14. RETURNS FROM THE CURRENT PORTFOLIO
Up to 20% 50 21-30% 40 31-40% 8 41 and above 2
Interpretation Out of 100 respondents, half of the respondents belong to that group wherein the investor re getting up to 20% of returns from their current portfolio. The closest to this is that category where 40 respondents who are getting 21-30% returns from their current portfolio. Only 8 respondents are getting return of 31-40% and the negligible number falls in the category of 41% and above. 49
The return from the investments depends on various things like the investment avenues, time horizon for the investment, and the risk appetite, market trends and diversification of the investments.
15. EXTENT TO WHICH SENSEX AND OTHER GLOBAL CUES EFFECT THE INVESTMENTS OF THE INVESTORS
Interpretation The majority of the respondents feel that the SENSEX and other global cues effect their investments by 21-40%. The numbers of respondents feeling this are 42 and the next 30 50
respondents feel that their investments are affected by these changes up to 20%. 41-60% and 6180% effect is felt by 12 and 13 respondents respectively, which are equal in number. Out of 100 respondents only 3 investors feel that their investments are effected by 80- 100%. Every investment portfolio is affected by changes in SENSEX and other global cues but the extent of effect depends on avenues in which the investment is done.
16. NEEDS FOR INVESTMENT AND THEIR PREFERENCE
MAXIMIZE RETURNS SAVING TAXES KIDS PLANNING FAMILY PLANNING BUILDING CORPUS
Rank 1 69 21 13 16 18
Rank 2 12 36 20 20 25
Rank 3 7 14 14 19 21
Rank 4 3 12 16 16 11
Rank 5 3 12 32 21 19
Interpretation 69 respondents have marked maximization of returns as the very first choice for investment. The second choice followed by this is for the tax saving purpose with 36 respondents responding towards it. Others are almost rated equally (kids planning rated as least prioritized need for investments). By looking at the graph we can very well interpret that the primary aim of investment of most of the investor is maximization of the returns that is multiplication of the money or earning returns on the principal amount keeping the principal amount intact.
17. FACTORS AFFECTING THE INVESTMENT PORTFOLIO ACCORDING TO THE PREFERENCE NEEDS OF THE INVESTORS
RANK 1 44 50 30 26 14 10 4 RANK 2 22 29 14 28 13 7 4 RANK 3 10 10 34 18 13 9 2 RANK 4 11 4 15 23 9 11 8 RANK 5 7 2 3 1 34 13 10 RANK 6 4 5 2 1 7 32 14 RANK 7 2 0 2 3 4 12 52
RISK GROWTH MARKET INCOME OCCUPATION AGE OTHERS
Interpretation The major factors affecting the investment portfolio of the investors are risk, growth, market, income, occupation, age, and others like family size and marital status. Among them growth is ranked as 1st by 50 investors as majorly the objective of people is to multiply their wealth .The next factor following this is risk which is ranked 1st by 44 investors as risk is associated with the returns and which is an integral part of the investments. The factor following risk and growth is the market trends which effect the investments of the investors. According to the investors the factor least affecting the investment decisions are age group and others like family size and marital status. This was ranked as last by 52 investors for others and 32 investors rated age as 6th.
18. INVESTMENT AVENUES IN AN IDEAL PORTFOLIO DEPENDING ON THE PREFERENCE NEEDS
REAL ESTATE GOLD MUTUAL FUNDS FIXED DEPOSITS DIRECT INVESTMENT IN EQUITY DEBT ULIP
RANK 1 56 6 26 24 20
RANK 2 10 28 39 18 27
RANK 3 9 6 18 22 13
RANK 4 6 14 8 10 17
RANK 5 5 13 1 6 14
RANK 6 3 16 0 6 2
RANK 7 9 12 3 8 2
Interpretation The graph shows that in a ideal portfolio respondents feel that real estate is the best option to be invested ideally, for this the figures are 56.the second most prioritized by the investor is mutual funds with 39 respondents giving it 2nd rank and 26 giving it 1st rank.
The reason behind the investment in real estate and mutual funds because of moderate risk attached to it with higher returns. Among the least prioritized one are ULIP (unit linked insurance plan).the respondents responding for ULIP giving it 7th rank are 39. Debt and gold are also not given preference by the investors to be covered in ideal portfolio. Although the investment in debt and gold is comparatively less as compared to other investment avenues available in the market still people invest a little amount of their wealth in these avenues for the safety of principal.
19. PREFERENCE OF PEOPLE TOWARDS DIFFERENT INVESTMENT AVENUES IN THE PRESENT MARKET SCENARIO
INVESTMENT AVENUES REAL ESTATE COMMODITIES MUTUAL FUNDS DIRECT INVESTMENT IN EQUITY FIXED DEPOSITS DEBT INSURANCE RESPONDENTS 70 18 48 30 38 13 32
Interpretation It can be interpreted from the graph the major proportion of the investor states real estate their choice, the reason being the up and down trends prevailing in the market with lot of risk attached to the investments without any security for even the principal amount. Also it shows that the investor know that land is one avenue which never depreciates giving him the sense of security and adding more assets to his balance sheet. Following this is mutual funds which do depend on the market fluctuations but still with low risk attached to the investment. Fixed deposits, insurance are almost equally favored because fixed deposits provides with the easy liquidation and the other with the protection and safety. The figures supporting the statement are: 70 for real estate, 48 for mutual funds, 38 for fixed deposit and 35 for insurance.
PHASE II COLLECTIVE ANALYSIS
As stated above that the study restricts only to HSBC clients and more over it was a convenient sampling. After the analysis was done it can be summed up that the major group of investors out of the 100 being surveyed belonged to the age group of 20-29 years. This can be due to various reasons like that it was more of the young crowd that participated and helped us in filling the questionnaires, it can be also said that it is the young generations who are more cautious about the brand image, technology and the non banking services and hence choosing HSBC which is no.1 international bank as ranked by KPMG. The reason for choosing wealth management services by this age group could be for the multiplication of money, safeguarding the future, personalized services. During the analysis it also came out that most of the investor preferred taking low risk this could be because of the prevailing market conditions, like the downward trend in SENSEX and unstable market conditions also because of dollar depreciation. Most of the investors feel that SENSEX and other global cues effect their investment by 21-40%. The study also revealed that most of the investors either had their own business or they belonged to the service background. The time horizon preferred by them was 3-5 years which is neither a very long term investment nor a very short term investment. Majorly the investors invest in the avenues like mutual funds, fixed deposits which have low risk attached to it. The other reasons for investing in these avenues are easy liquidity, multiplication of money. Almost 40-50% of the money for the investment goes in these avenues. Small investments are also done in ULIP which are also contained in the existing portfolio of the HSBC clients. ULIP is favored by the investor as an avenue for investment because it is the product which provides the benefit of both the insurance and investment. Majorly the investment portfolio size of the investor was 20 lac which is although a small portfolio but there were clients who had the portfolio of above 50 lac but very few high end clients were surveyed due to the scope of the study. The returns coming from the current portfolio is up to 20%. There were investors who said that they are getting higher returns but the majority of them fall in the category of 20%. Investment depends on the various factors which influence it either directly or indirectly. Various factors were rated by the investor and among those the most influencing factor was risk and 57
returns, which are the integral part of the investments. Among the factors which were least prioritized were family size and marital status. Talking about the investment preference needs of the investor, the prime need came out of the study was maximization of the returns (multiplication of the wealth) followed by tax saving purposes. Other like family planning and kids planning was not given much importance because the major age group was 20-29 years of age. The study also gave the idea about the part of savings which goes into investment. The result came out to be that almost 70% of the investor invests their one-third of the savings. The frequency of investments is 9-12 months i.e. within a year. When the respondents were asked that what all avenues do they prefer looking at the present market condition and in which avenue will they invest the most in the present time. The collective result for this came out to be that 70% of the investors said that they will go for real estate as it is one avenue where there is no depreciation. This choice of avenue was followed by mutual funds and fixed deposits. Ideally according to the study and investors responses the investment should be in real estate, mutual funds and fixed deposits as there is low risk attached to these avenues. Although investment in equity fetches good returns but the amount of risk attached with it is very high. During the investment one thing should be clear that investments should be diversified and it should not restrict to only few of the sectors because diversification lowers down the risk and also increases the returns.
PHASE III HYPOTHESIS TESTING
The hypothesis taken for the study was whether there is any significant relationship between the factors affecting the investment portfolio and the choosing of the investment avenues. THE NULL HPOTHESIS TAKEN IS (H0)
There is no significant relationship between the factors affecting the investment portfolio and the choosing of the investment avenues. THE ALTERNATIVE HYPOTHESIS TAKEN IS (H1) There is significant relationship between the factors affecting the investment portfolio and the choosing of the investment avenues. Chi square test will be applied for finding the hypothesis. TABLE-1
RISK 44 22 10 11 7 4 2 MARKET 50 29 10 4 2 5 0 GROWTH 30 14 34 15 3 2 2 INCOME 26 28 18 23 1 1 3
RANK 1 RANK 2 RANK 3 RANK 4 RANK 5 RANK 6 RANK 7
Degree of freedom = (Number of rows-1)*(number of coloumns-1) =(R-1)*(C-1) = (7-1)*(4-1) = (6)*(3) So, D.F. =18 Confidence level =.95 Value=9.390 R = rows
C =columns Fo =observed frequency Fe = expected frequency
ROWS 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 COLOUMNS 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 Fo 44 50 30 26 22 29 14 28 10 10 34 18 11 4 15 23 7 Fe=RT*CT/N 37.5 37.5 37.5 37.5 23.25 23.25 23.25 23.25 18 18 18 18 13.25 13.25 13.25 13.25 3.25 Fo-Fe 6.5 12.5 -7.5 11.5 -1.25 5.75 9.25 4.75 -8 -8 16 0 -2.25 -9.25 1.75 9.75 3.75 (Fo-Fe)^2/Fe 1.126 4.166 1.5 3.526 0.06 1.422 3.68 0.97 3.555 3.555 14.22 0 0.382 6.457 0.2311 7.174 4.326
5 5 5 6 6 6 6 7 7 7 7
2 3 4 1 2 3 4 1 2 3 4
2 3 1 4 5 2 1 2 0 2 3
3.25 3.25 3.25 3 3 3 3 1.75 1.75 1.75 1.75
-1.25 -0.25 -2.25 1 2 -1 -2 0.25 -1.75 0.25 1.25
0.48 0.0192 1.557 0.333 1.333 0.333 1.333 0.035 1.75 0.035 0.8928 64.4511
Tabulated value=9.390 Calculated value=64.4511 INTERPRETATION: since the calculated value is more than the tabulated value, the null (Ho) hypothesis which was taken is rejected, whereas the alternate hypothesis (Ha) is accepted which means that there is a significant relationship between the factors affecting the investment portfolio and the choosing of the investment avenues.
Investment avenues- investment avenues provided by HSBC to its clients are less as compared to the avenues provided by other institutions. Demat account- HSBC should provide its clients with the Demat account facility. Although this was not part of the study but during the survey it was found to be the most common complaints from the investors. The no of branches should be increased do that it becomes easy for the clients to approach the bank Most of the people in Jaipur are not even aware of the additional services provided by the bank; to promote this HSBC should aggressive marketing strategy.
www.hsbc.co.in www.hsbc.com www.google.com www.investopedia.com www.wikipedia.com www.amfi.com www.valueresearchonline.com www.moneycontrol.com 62
Donald R Cooper and Pamela S Schindler, Business research methods 9th edition, TATA MCGRAW-HILL publishing company page nos.138, 143,403,494,423 ICFAI UNIVERSITY, Financial Management October, 2005 edition, page nos.89 and 91 Levin and Rubin,
5.1 QUESTIONNAIRE We the students of IBS are here to collect data and study about investment management .The information given here will not be dispersed or used other than academic purpose. PERSONAL DETAILS: Name Address Marital status Telephone no Date
1. Please indicate your age group. a) 20-29 years b) 30-39 years d) 50 years and above
c) 40-49 years
2. What is your present income source a) Business b) Service d) Others………………..
3. Please indicate the number of financial dependents on you. a) None c) 3-4 b) 1-2 d) 5 and more
4. How would you describe your investment knowledge a) Excellent c) Average b) Good d) Poor
Please divide your total income in terms of % under the following categories. Less than 20%
61% and more
Expenditure…………… Savings ………………..
6. What % of your saving goes into investment
a) 25% or less than 25%
b) 26-50% d) 76% or more
7. % of income goes towards paying of installments of loans and other liabilities?
a) 10% or less than 10%
b) 11-20% d) 31% & above
8. Describe yourself in terms of risk taking ability 1. 2. High risk taker Low risk taker
9. You are investing from last… a) Initial starter b) 1-3 years c) 4-6 years
d) 7 or more
10. What is your investment time horizon you prefer (the period for which the recommended investment portfolio will be appropriate) in years? a) 1-2 years b) 3- 5 years c) 6-10 years d) More than 10 years
11. Please rank on the scale of 1 to 5 based on your investment preference needs( where 1 is most preferred and 5 is the lest preferred)
a) Maximize returns………………………. b) Saving taxes……………………………. c) Kids planning………………………….. d) Family planning………………………... e) Building corpus…………………………
12. How frequently do you do investments a) Within 4 months b) 5-8 months c) 9-12 months d) More than 12 months
13. Rank the following investment avenues on the scale of 1 to 7 (where 1 is the most prioritized and 7 is the least prioritized) that your ideal portfolio may contain. Please give a unique rank to each of the category.
a) Real estate …………………. b) Gold…………………………. c) Mutual funds……………….... d) Fixed deposits……………….. e) Direct investment in equity….. f) Debt…………………………. g) ULIP…………………………
14. Please rank on the scale of 1 to 7(where 1 is the most and 7 is the least) the following factors which according to you affect the investment portfolio.
a) Risk …………………………………... b) Growth……………………………......... c) Market ………………………………….. d) Income…………………………………... e) Occupation………………………………. f) Age………………………………………. g) Others like family size or marital status….
15. What is the approximate size of your portfolio
a) Rs.0-20 lakh b) Rs.21-40 lakh c) Rs.41-60 lakh d) Rs.61 & above
16. Your current investment portfolio contains the following investment avenues. (Please tick) a) Mutual funds b) Fixed deposits c) Direct investment in equities d) Debt e) ULIP(unit linked insurance plan) f) SIP(systematic investment plan) g) ELSS(Equity linked saving scheme)
17. How is your wealth divided in the above categories you mentioned in your current investment portfolio a) Mutual funds b) Fixed deposits c) Direct investment in equity d) Debt e) ULIP(unit linked insurance plan) f) SIP(systematic investment plan) g) ELSS(equity linked saving scheme)
18. What returns are you getting from your current portfolio? a) Up to 20% b) 21-30% c) 31-40%
d) 41% or above 67
19. How often do you review your portfolio? a) Within a year b) 2-3 years c) 4-5 years d) More than 5 years
20. Up to what extent does the SENSEX or the other Global cues affect your portfolio? Please rate on the scale of 1 to 5(where 1 is strongly effected and 5 is not effected)
a) 0-20 % b) 21-40% c) 41-60% d) 61-80% e) 81-100 %
21. Looking at the present market scenario in which avenue will you prefer to invest? a) Real estate b) Commodities(like gold and silver) c) Mutual funds d) Direct investment in equities e) Fixed deposits f) Debt g) Insurance
5.2 DETAILS OF THE RESPONDENTS
SR. NO 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. NAME MRS. SAROJ KABRA MR. AMIT KABRA MR.AMIT MAHESHWARI MRS. POOJA KABRA MR. KAMAL SARDA MR. JWALA PRASAD JI KABRA MR. DWARKA PRASAD JI KABRA MR. RAMESH MAKHARIA MR. PURSHOTTAM GUPTA MR. B.D MALOO MR. VINOD MAKHARIA MR. MAHENDRA GUPTA MR. B.L. AGGARWAL MR. RISHABH CHAUDHARY MR. PRAKASH JAIN MR. AKSHAY MITTAL MR. HEMANT VIJAY MR. S.L. VIJAY MR. HEMANT CHANDAK MR. ANSHUL SHARMA MR. UTTAM RATHI MR. AMIT KUMAR MR. VIJAY KASLIWAL MR. VINAY SINGHAL MR. ARJUN SHARMA MR. VINAY AJMERA MR. ANKUSH SARDA MR. GIRISH BHUTRA MISS. SONAL KHANDELWAL MR. RISHABH GARG MR. HANS SHARMA MR. RAVI JAIN MR. K.K. MORYA MR. SURESH BHANSALI MRS. RUCHI AKAR MR. RAJENDRA GANGWAL MR. SHISHIR MR. AMAN VERMA MR. MANPREET CHUGH MR. RAVI MEHTA MR. ALPESH KANUNGO MR. ANKIT VAJPAYEE MR. VISHAL MAKHARIA MR. RADHEY SHYAM KABRA MR. ASHUTOSH BANSAL AREA OF THE RESPONDENT GAURAV NAGAR, CIVIL LINES SHYAM NAGAR C-SCHEME GAURAV NAGAR, CIVIL LINES C-SCHEME SANGRAM COLONY SHYAM NAGAR GAURAV NAGAR, CIVIL LINES AMBABARI GAURAV NAGAR, CIVIL LINES GAURAV NAGAR, CIVIL LINES GAURAV NAGAR, CIVIL LINES GAURAV NAGAR, CIVIL LINES GAURAV NAGAR, CIVIL LINES GAURAV NAGAR, CIVIL LINES MANSAROVAR VAISHALI NAGAR VAISHALI NAGAR HATHROI FORT SHYAM NAGAR SHYAM NAGAR SHYAM NAGAR JOHRI BAZAR JOHRI BAZAR M.I. ROAD KESHAV NAGAR, HAWA SARAK HATHROI FORT SHYAM NAGAR BANI PARK KANTI NAGAR BAIS GODAM TILAK NAGAR JANPATH, SHYAM NAGAR ADARSH NAGAR BANI PARK MALVIYA NAGAR AGGARWAL FARM MANSAROVAR ADARSH NAGAR JAWAHAR NAGAR JAWAHAR NAGAR C-SCHEME GAURAV NAGAR GAURAV NAGAR, CIVIL LINES VAISHALI NAGAR
46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80.
MRS. NISHA AGGARWAL MR. SHALENDRA SHRDA MR. BRIJESH VYAS MISS. ALPA RANKA MR. NAVAL KISHORE AKAR MR. ANAND KABRA MR. NITIN VERMA MR. VAIBHAV CHANDOLA MAYANK BIDYASAR MR.PATEL SING CHAUDHRAY MR. SUDHIR GUPTA MR. SANJEEV AKAR MR. SANDEEP CHAUDHARY MR. MANISH SHARMA MR. ABHEENAV AKAR MR. N.K. SHARMA MR. NEERAV AKAR MR. DEEPAK AKAR MR. SANJAY GUPTA MR. PRATEEK JAIN MR. GAURAV SHARMA MRS. ANUBHA BAHETI MR. ANKIT JAIN MR. DILIP PALIWAL MR. BANNEY CHAN JAIN MR. G.D. RATHOD MR. PRIYANSHU BANSAL MR. N.K. AKAR MR. JITENDRA SINGH MRS. HIMANI JETHANI MR. MANUJ SHARMA MR. GAURAV MISHRA MR. C.B. GUPTA MISS. RASHMI JETHANI MR. ASHISH SHARMA
SURAJ NAGAR,CIVIL LINES GAURAV NAGAR,CIVIL LINES ADARSH NAGAR TONK ROAD BANIPARK GAURAV NAGAR SHYAM NAGAR V.K.I. INDUSTRAIL AREA JAWAHAR NAGAR QUEENS ROAD DULESHWAR GARDEN KISHANPOLE BAZAR QUEENS ROAD TRANSPORT NAGAR AKAR MARG,BANI PARK MALVIYA NAGAR BANIPARK BANIPARK SHASTRI NAGAR SETHI COLONY NEW VIDHAN SABHA BAHETI MARG, BANI PARK SETHI COLONY SINDHI COLONY GAURAV NAGAR, CIVIL LINES IBS JAIPUR VAISHALI NAGAR AKAR MARG, BANIPARK VAISHALI NAGAR BEES DUKAN, ADARSH NAGAR BHAGIRATHI COLONY,C-SCHEME MALVIYA NAGAR KAVERI PATH,MANSAROVAR ADARSH NAGAR RAM NAGAR, SODALA
81. 82. 83. 84. 85. 87. 88. 89. 90. 91. 92.
MR. BHARAT GUPTA MR. RAKESH BAHETI MR.SUMMET GUPTA MR. ANUJ SHARMA MRS. RAKHI DATTA MR. PAWAN KUMAR GOYAL MR. AMIT SABOO MRS. PUSHPA GOYAL MR. PREM PRAKASH MR. T.D VYAS MR. SUNEEL MAKHARIA
KISHANPOLE BAZAR DHULESHWAR GARDEN NIRMAN NAGAR CHITRAKOOT, VAISHALI NAGAR RAJA PARK VISHESHWARIYA NAGAR EXT. SHANTI NAGAR, AJMER ROAD VIDYADHAR NAGAR CHITRAKOOT,VAISHALI NAGAR ADARSH NAGAR MANSAROVAR INDUSTRAIL AREA
93. 94. 95. 96. 97. 98. 99. 100.
MR. GOVIND LODHA MR.PAWAN BANTHIA MR.SUJEET LUHADIA MR.GORISHANKAR KABRA DR. JUGAL PRASAD KABRA DR. SHYAM SUNDER KABRA MAJOR. AMIT SHARMA MRS. ANITA BHOOP
KESHAV NAGAR, HAWA SARAK BURMEESE COLONY MAHAVEER NAGAR SHYAM NAGAR EXT. SETHI COLONY SETHI COLONY NEAR SANGANER AIRPORT RAM NAGAR,SODALA