A Project Report

On
“COMPARATIVE ANALYSIS OF INVESTOR PREFERENCES BETWEEN
PMS AND EQUITIES”

Submitted By
Name of Student: Aziz Umrethwala
Roll No - 40405
Semester - III

In partial fulfillment of
MBA Executive
Symbiosis Institute of Business Management
Pune
(2017-18)

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 Declaration

I hereby declare that the Project Report entitled “Comparative Analysis of Investor Preferences
between PMS and Equities” submitted in the partial fulfilment of the requirement of Executive
Master of Business Administration (Exe MBA) of Symbiosis Institute of Business Management,
Pune is based on primary through survey and secondary data found by me from various journals,
presentation, articles, factsheets and websites.

Name: Aziz Umrethwala

Roll No: 40405

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 CERTIFICATE OF COMPLETION
This is to certify that the report submitted is the outcome of the project work entitled
“Comparative Analysis of Investor Preferences between PMS and Equities” carried out by Aziz
Umrethwala bearing Roll No. 40405 was executed under my guidance and supervision.
To the best of my knowledge the report
1. Embodies the work of the candidate himself
2. Has duly completed
3. Fulfils the requirement of the ordinance relating to the MBA Executive degree of the
SI(DU) and
4. Is up to the desired standard for the purpose of which it is submitted.
The project work as mentioned above is hereby being recommended and forwarded for further
evaluation.

Guide’s Name & Signature: Dr. Shubhra Anand

Name & Address of the Institute:
SIBM Pune, Symbiosis Knowledge Village,
Gram: Lavale, Tal: Mulshi
District: Pune

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 ACKNOWLEDGEMENT
I express my deepest sense of gratitude to Dr. Shubhra Anand, my guide for her valuable guidance
and encouragement provided to complete the project.

I thank Director- SIBM Pune Dr. R Raman, for extending all his support.

My sincere thanks to Ms. Poorva Zende, academic coordinator, for keeping me updated about the
project milestones and deadlines.

Finally, I would like to thank the Institute, my classmates and family members without whom this
project would have been a distant reality.

Name:Aziz Umrethwala
Roll No:40405
Batch: MBA Exe 17-20 Lavale Batch

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 Executive Summary
Project Summary: The project is about doing comparative analysis of investor preferences between
PMS and Equities. The project has been chosen to know the preferences opted by the investors in
terms of investing into the market and what will they choose to suppose they have any two options
equities and PMS.
The problem is that people do possess money, but they are not aware in how many ways they can
invest into the market securities in better way.
The purpose of this research was to know about the awareness of PMS which is tailored made
service provided to HNI clients by the distributor/advisors as per their objectives of investment.
To know which has a better role to play in the long run equities or PMS and to be acquainted with
risk and return analysis among them.

Background: The earlier studies has been done only on one aspect either on equities or PMS, but
I could not find any journal or article wherein there is comparison done between equities and PMS.
The other studies have been only on other investment avenues like mutual funds, gold/silver,
commodities, equities etc. This study is first of its kind and not much, but it has helped me to get
a clear picture between these two market securities.

Process: The process was conducted through physical survey via questionnaire. The questionnaire
consisted 15 question with multiple choice answers. It took me 7 days to collect 54 responses in
my network. The sample included my office staff, relatives, friends and academic class. The
secondary data has been collected from various web sites which are given in references.

Finding and Conclusions:

Findings are as follows:
1. According to the results fetched from survey conducted, people consider equity risker than
PMS.
2. As returns are concerned, 43% people consider both as the option whereas 33% people
consider equities over PMS.
3. Majority would like to invest through broker or advisor into the market.
4. For long term purpose, people think that they both are equivalent for investment purpose.
5. Almost half of the population aren’t aware about portfolio management services and its
operation.
6. Due to minimum requirement investment amount in PMS, people hesitate to invest through
it, due to unavailability of funds or savings.

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 7. If the masses are given a hypothetical amount like Rs 30 lacs to invest into stocks, they
would prefer PMS which simplifies diversification of the amount into various other stock
which are tailor made and managed by portfolio manager as per the investors objective.
8. The fees charged by PMS are more as compared to direct equites.
9. PMS is only for HNI clients, very niche segment clients and not for every investor.
10. People who would like to go ahead with PMS as an investment tool, then most of them
would like to take advisory type of PMS wherein the portfolio manager only suggests the
investment ideas. The choice as well as the execution of the investment decisions rest solely
with the Investor.

Conclusion:

This study was a unique since there was no other studies conducted on it in history. There
are various studies which are done on market securities available for the investment, their
technicality to prove which is better over the other. People invest more in mutual funds now days
and therefore the percentage of investment into the stock market has been tremendously increased.
The difference between equities and PMS has been explained thoroughly throughout this study
and depending on various aspect like investment amount, objectives, time-period, risk and return
basis etc investors must choose between equities and PMS. It was a great experience and learning
throughout this project.

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 INDEX

Sr. Particulars Pg
No No.
1 EXTENDED ABSTRACT 8
2 INTRODUCTION 10

3 LITERATURE REVIEW 18

4 RESEARCH GAPS 20

5 OBJECTIVE OF STUDY 20

6 RESEARCH QUESTIONS 20

7 RESEARCH METHODOLGY 22

8 DATA COLLECTION 22

9 DATA ANALYSIS AND INTERPRETATION 23

10 FINDINGS AND CONCLUSION 30

11 LIMITATION OF THE STUDY 32

12 SUGGESTIONS 32

13 REFERENCES 33

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 EXTENDED ABSTRACT
Abstract: -

This study is about doing comparative analysis between Portfolio Management Services (PMS)
against Equities on the other side.

PMS is a tailor-made professional service offered to cater the investments objective of different
investor classes. The Investment solutions provided by PMS cater to a niche segment of clients
(in briefly HNI). The clients can be Individuals or Institutions entities with high net worth. In
simple words, a portfolio management service provides professional management of your
investments to create wealth.

Whereas Equities are stocks – shares in a company. If you buy stocks, you’re buying equities. In
other words, it means that you are getting an ownership in the company. The percentage of holding
shares/equities determine the percentage of you owning the company. This can be bought by any
class of the investor and by the corporates.

Purpose: 1. To determine which one has a better role to play in the financial market and which
one has a great future or large number of investors. 2. To find out Risk and Return Analysis of
PMS and Equities in the minds of the investors.

Design/ Methodology/ Approach: The approach of this project would be analytical and practical
where more of the data would be primary through survey and based on some secondary researches
done by some researchers.

Research Limitations: The survey will be carried on a small sample size which will depict the
picture of whole population. This study won’t take mutual fund services into picture which is more
in demand in the current market.

Expected Findings (based on literature review and the study you intend to do): The probability of
findings could be that PMS can be only opted by HNI investors or corporates because it provides
consistent long-term performance controlling risk at the other side and due its basic huge
investment which retail investors won’t be able to do. Whereas Equities would be preferred by any
class of investors and corporates by opening an DMAT account. There is no minimum investment
required as like in PMS of Rs. 25 lacs but the risk will be bigger compared to PMS. So, the
investors who can bare risk and with little investment can go with equities whereas client subjected

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to investment above then Rs. 25 lacs can go for PMS. As far as what I can see is that neither of it
is safest because it is related to market volatility during time but considering with services and all
PMS will be the safest mode to invest in the market compared to investing directly into equities
because it is monitored by professional and experts of the market.

Implications (Practical & Theoretical): This study will help us to understand which class of
investors would like to have either of them and why (as per their objectives or goals). This will
also help us to understand which one should be chosen if you have a budget to invest more than
Rs. 25 lacs into the market through risk and return analysis of PMS and equities.

Originality/Value: This study advances our understanding of the types of investor preference
prevailing in the market along with their different goals. To scrutinize the risk and return that each
of them holds and how they can be more useful to the investor along with their own benefits.

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 1. Introduction:
What are Equities?

Equities are a stock or any other security representing an ownership interest. They are shares of
the company. It means that if you are buying equities, you are buying stocks of the company. You
may also get “equity” when you join a new company as an employee. That means you’re a partial
owner, or can be, of shares in your company. Because equities don’t pay a fixed interest rate, they
don’t offer guaranteed income. In other words, with equities comes risk.

Basics: In simplest terms, equities are shares in the ownership of a company. When a company
issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s
selling partial ownership in the company.

People invest in equities because of their potential for high returns. In your investing portfolio,
your “equity exposure” is another way of describing your exposure to the risk that you will lose
money when the value of the stocks you own declines.

Equities = Assets – Liabilities

For example, if someone owns a car worth $15,000 (an asset) but owes $5,000 on a loan against
that car (a liability), the car represents $10,000 of equity. Equity can be negative if liabilities
exceed assets.

Types of Equities or Shares:

In financial accounting, owner's equity consists of the net assets of an entity. Net assets are the
difference between the total assets and total liabilities. Equity appears on the balance sheet (also
known as the statement of financial position), one of the four primary financial statements.

The assets of an entity can be both tangible and intangible items. Intangible assets include items
such as brand names, copyrights or goodwill. Tangible assets include land, equipment, and cash.
The types of accounts and their description that comprise the owner's equity depend on the nature
of the entity and may include:

 Share capital (common stock)

 Preferred stock
 Capital surplus
 Retained earnings
 Treasury stock
 Stock options
 Reserve

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What are Prices of Equity and how it is determined in India?

The amount of money for which one may buy or sell a share of common stock. The price of equity
changes throughout a trading day, especially in times of high trading volume.

Determination of equity price:

A couple of factors determine the opening price of a stock:

1. Demand and supply for a stock (major factor)

2. Previous day’s closing price (used as reference point in some cases)

Before we move into how the opening price is computed, let’s understand the timeline of the pre-
open session.

Pre-open session

Pre-open session is a 15-minute long session (9:00 AM to 9:15 AM), which helps in the discovery
of opening prices of stocks.

It has three parts:

Opening price

The pre-open session begins with intake of orders from market participants. Then, the matching of
buy and sell orders is carried out by the stock exchange in order to arrive at the opening price. The
opening price, also known as equilibrium price, is computed such that a maximum number of
shares get traded based on the buy and sell orders received. This method is known as call auction.

I will try to explain the method using an example to make it easy for everyone to understand.

So, let’s use State Bank of India as an example. Let’s say that SBI closed at 274 in the previous
session. In today’s session, the exchange has received multiple orders for the stock and we will
consider the below as the order book for SBI at 9:08 AM, which marks the end of the pre-open
session.

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Going by the above order book, we have a single price at which both buy and sell orders can be
matched. The equilibrium price for SBI is 275, since this is the price at which maximum number
of shares can be matched. Hence, the opening price of SBI will be 275.

The above example is a simple scenario. In reality, we may have situations where there is:

1. More than one price point with same matched quantity: The opening price will be the price at
which the imbalance quantity is the minimum.

2. More than one price point with same matched quantity and same imbalance quantity: The
opening price will be the price which is nearer to the previous day’s closing price.

3. No price discovery in pre-open session: In cases when there is no price discovery in the pre-
open session, the price for the first trade in the normal market shall serve as the opening price.
This could happen at times when there are no limit orders for a stock and hence opening price
would not get discovered.

Risk associated with Equities

Equity risk is "the financial risk involved in holding equity in a particular investment". Equity risk
often refers to equity in companies through the purchase of stocks, and does not commonly refer
to the risk in paying into real estate or building equity in properties.

India is one of the emerging economies, which has witnessed significant developments in the stock
markets during the liberalization policy initiated by the government. However, investing in shares
include high risks which can be guided but not controlled. Most of these risks affect the market or
the economy and require investors to adjust portfolios or ride out the storm.

I always wondered what these risks are? And what are the factors affecting our investment decision
in the instrument? Risk is nothing but the deviation from expected returns. Higher the risk, higher

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the returns and visa-versa. So, risk and return are said to be inversely related. Likewise investing
in equities comes with the higher risk while investing in bonds are considered to low risky and
expected return are also less.

Our portfolio should be built on risk taking capacity as well as the investment risk. There are
several parameters one should consider before investing. Here are different types of risk associated
with investment, which we need to be carefully throughout our investment.

Economy Risk: The country's economy plays a vital role in performance of financial instruments.
The economic risk includes growth of the country, inflation, interest rates, balance of payment etc.
Any hindrance in any of the sector will directly impact the financial status of the country. This will
have direct impact on the company performance, indirectly hitting our shares and our money. So,
one has to keep eye on the economy and developments.

Exchange Rate Risk: Most of the company’s revenue is dependent from outside country especially
software and import-export companies who are mainly dependent on the exchange rate. Any
fluctuations in currency will direct impact the company profit and shares. So, people with such
exposure can enter into futures and option where they can minimize their losses by hedging.

Financial Risk: It is also very important that how the company manages its finances. The
company's equity-debt ratio. How the company prefers to borrow money? If the company is highly
leveraged than there are chances of not meeting liabilities and can go bankrupt. Before investing
any shares, do look at all the possible ratios which could impact your investment.

Industry level Risk: All industries face cyclical growth. So, one should examine the previous
performance of the industry to know whether the company is in growth phase of decline phase and
invest accordingly. Any new industry specific news will also hamper the stocks of the company.

Apart from these there are other risks like management risk, business risk, interest rate risk. Most
of the investment risk can be reduced by being update and the best way is diversifying your stocks
into different sectors.

What are Dividends?

Dividends are in the form of returns on shares. It’s is typically a sum of money paid regularly
(annually) by a company to its shareholders out of its profit (or Reserves) for that year.

Types of Dividends:

 Cash – this is the payment of actual cash from the company directly to the shareholders
and is the most common type of payment. The payment is usually made electronically (wire
transfer) but may also be paid by a check or cash (in rare cases).

 Stock – stock dividends are paid out to shareholders by issuing new shares in the company.
Just as with cash dividends, these are paid out pro rata based on the number of shares the
investor owns.

 Assets – a company is not limited to paying distributions to its shareholders in the form of

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 cash or shares. A company may also pay-out other assets such as investment securities,
physical assets, property, real estate and others.

 Special – a special dividend is one that’s paid outside of a company regular policy (i.e.
quarterly, annual, etc.) and is usually the result of an excess cash build up.

 Common – this refers to the class the shareholders (i.e. common shareholders), not what’s
being received as payment.

 Preferred – this also refers to the class of shareholder receiving the payment.

 Other – other, less common, types of financial assets can be paid out such as options,
warrants, shares in a new spin-out company, etc.

What do you mean by Portfolio Management Services (PMS)?

Portfolio Management Services (PMS), service offered by the Portfolio Manager, is an investment
portfolio in stocks, fixed income, debt, cash, structured products and other individual securities,
managed by a professional money manager that can potentially be tailored to meet specific
investment objectives. When you invest in PMS, you own individual securities unlike a mutual
fund investor, who owns units of the fund. You have the freedom and flexibility to tailor your
portfolio to address personal preferences and financial goals. Although portfolio managers may
oversee hundreds of portfolios, your account may be unique.

Types of PMS:

 Discretionary:

Under these services, the choice as well as the timings of the investment decisions rest solely with
the Portfolio Manager.

 Non-Discretionary

Under these services, the portfolio manager only suggests the investment ideas. The choice as well
as the timings of the investment decisions rest solely with the Investor. However, the execution of
trade is done by the portfolio manager.

 Advisory

Under these services, the portfolio manager only suggests the investment ideas. The choice as well
as the execution of the investment decisions rest solely with the Investor.

Ideal Investor: The Investment solutions provided by PMS cater to a niche segment of clients.
The clients can be Individuals or Institutions entities with high net worth. The offerings are usually
ideal for investors: who are looking to invest in asset classes like equity, fixed income, structured
products etc, who desire personalised investment solutions, who desire long-term wealth creation,
who appreciate a high level of service.

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Benefits of PMS:

 Professional Management:

The service provides professional management of portfolios with the objective of delivering
consistent long-term performance while controlling risk.

 Continuous Monitoring

It is important to recognise that portfolios need to be constantly monitored and periodic changes
made to optimise the results.

 Risk Control

A research team responsible for establishing the client's investment strategy and providing the
PMS provider real time information to support it, backs any firm's portfolio managers.

 Hassle Free Operation

Portfolio Management Service provider gives the client a customised service. The company takes
care of all the administrative aspects of the client's portfolio with a periodic reporting (usually
daily) on the overall status of the portfolio and performance.

 Flexibility

The Portfolio Manager has fair amount of flexibility in terms of holding cash (can go up to 100%
also depending on the market conditions). He can create a reasonable concentration in the investor
portfolios by investing disproportionate amounts in favour of compelling opportunities.

 Transparency

PMS provide comprehensive communications and performance reporting. Investors will get
regular statements and updates from the firm. Web-enabled access will ensure that client is just a
click away from all information relating to his investment. Your account statements will give you
a complete picture of which individual securities you hold, as well as the number of shares you
own. It will also usually provide:

a) the current value of the securities you own;

b) the cost basis of each security;

c) details of account activity (such as purchases, sales and dividends paid out or reinvested);

d) your portfolio's asset allocation;

e) your portfolio's performance in comparison to a benchmark;

f) market commentary from your Portfolio Manager

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  Customised Advice

PMS give select clients the benefit of tailor made investment advice designed to achieve his
financial objectives. It can be structured to automatically exclude investments you may own in
another account or investments you would prefer not to own. For example, if you are a long-term
employee in a company and you have acquired concentrated stock positions over the years and
have become over exposed to few company's stock, a separately managed account provides you
with the ability to exclude that stock from your portfolio.

Investors in PMS:

Individuals and Non-Individuals such as HUFs, partnerships firms, sole proprietorship firms and
Body Corporate.

Risk associated with PMS:

Yes. All investments involve a certain amount of risk, including the possible erosion of the
principal amount invested, which varies depending on the security selected. For example,
investments in small and mid-sized companies tend to involve more risk than investments in larger
companies.

Working of a Portfolio Management Services (PMS)

Each PMS account is unique and the valuation and portfolio of each account may differ from one
another. There is no NAV for a PMS scheme; however, the customer will get the valuation of his
portfolio on a daily basis from the PMS provider. Each PMS account is unique from one another.
Every PMS scheme has a model portfolio and all the investments for a particular investor are done
in the Portfolio Management Services on the basis of model portfolio of the scheme. However, the
portfolio may differ from investor to investor. This is because of:

1. Entry of investors at different time.

2. Difference in amount of investments by the investors

3. Redemptions/additional purchase done by investor

4. Market scenario – Eg: If the model portfolio has investment in Infosys, and the current
view of the Fund Manager on Infosys is “HOLD” (and not “BUY”), a new investor may
not have Infosys in his portfolio.

Under PMS schemes the fund manager interaction also takes place. The frequency depends on the
size of the client portfolio and the Portfolio Management Services provider. Bigger the portfolio,
frequency of interaction is more. Generally, the PMS provider arranges for fund manager
interaction on a quarterly/half yearly basis.

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Portfolio Management Services (PMS) Charges

A PMS charges following fees. The charges are decided at the time of investment and are vetted
by the investor.

Entry Load – PMS schemes may have an entry load of 3%. It is charged at the time of buying the
PMS only.

Management Charges – Every Portfolio Management Services scheme charges Fund Management
charges. Fund Management Charges may vary from 1% to 3% depending upon the PMS provider.
It is charged on a quarterly basis to the PMS account.

Profit Sharing – Some PMS schemes also have profit sharing arrangements (in addition to the fixed
fees), wherein the provider charges a certain amount of fees/profit over the stipulated return
generated in the fund. For Eg: PMS X has fixed charges of 2% plus a charge of 20% of fees for
return generated above 15% in the year. In this case if the return generated in the year by the
scheme is 25%, the fees charged by the PMS will be 2% + {(25%-15%)*20%}.

The Fees charged is different for every Portfolio Management Services provider and for every
scheme. It is advisable for the investor to check the charges of the scheme.

Apart from the charges mentioned above, the PMS also charges the investors on following counts
as all the investments are done in the name of the investor:

 Custodian Fee

 Demat Account opening charges

 Audit charges

 Transaction brokerage

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 2. Literature Review:
The review of some of the literature has been listed below:

1. V. Alagu Pandian and G. Thangadurai (2013) conducted a study on Investor preference

towards various investment avenues in Dehradhun district wherein they say that the
major investment nis safety of principal amount, liquidity, income stability,
appreciation and easy transferability. A variety of investment avenues are available
such as shares, bank, companies, gold and silver, real estate, life insurance, postal
savings and so on. All the investors invest their surplus money in the above-mentioned
avenues based on their risk-taking attitude. The researcher has concluded that most of
the investors prefer bank deposits followed by gold investment in the study Area.
2. Dr. K. Sowmya and J. Mounika Reddy 4th April 2016 conducted a study on investor
preference towards investment avenues where the study investigates the perceptions
towards various investment avenues in Hyderabad city of Telangana. The study
employs both primary and secondary data and the size of the sample is 200.The study
finding implicates that investor preferring to invest in bank deposit shows higher
likelihood to make their investment avenues than higher risk.
3. Dr. R. Angamuthu conducted a study on the Investors Preference towards Equity-
Shares as a Best of Investment wherein the analysis was done, and findings were listed
down, and the researcher made suitable recommendations. The recommendations were
made to avoid risks and select good stocks. The result on the analysis during the
research shows that if the investment was dealt in a proper manner, then Equity Shares
is the best form of investments while comparing with other types.
4. Dr. Swati Modi (Article Jan-2016) did study on a study on Investor's Preference
Towards Equity in Ahmedabad where she tried to find out which is the most popular
mode of investment. The objective of the study was to find out which age groups of
investors are actively participating in the stock market, people’s perception and
preference towards equity market in Ahmedabad. The investors also differ in risk
taking ability. Another objective was to find out in Ahmedabad investors are having
aggressive approach or conservative approach. To get higher returns people, prefer to
invest in the equity market. Though they are risk takers, but their major investment is
not in Equity.
5. Ms. Ghazal Aggarwal and Mr. Pawan Kumar (Article Aug-2012) did study on various
trends in portfolio management services of Axis Bank, ICICI and HDFC Bank where
the study is done to make a comparison of Portfolio management services in Axis,
HDFC & ICICI Banks in terms of progress and reforms they have made for the proper
utilization of people’s hard-earned income. The comparison of these shows that banks
dependence on traditional activities has decrease during the period under consideration.
In this paper different components of Portfolio Management Services like Real Estate,
Insurance and Investment in Securities are considered. Earning scenario of all the banks
has been studied and the differences are probed into briefly. The analysis of the contents
of portfolio Management Services are done through statistical tools like growth rate,
trend value and compound growth rates.

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6. Dr. Dhiraj Jain and Ms. Anupama Jhala (2012) examined study on preferences for
wealth management services: An empirical study in Udaipur, Rajasathan wherein study
proposes to outline the concept of ‘Wealth Management’ and traces its growth and
future in India. The main objective of this study is to identify the preference for wealth
management services and to study the relation between various demographic
determinants and the preference for wealth management services. A survey was been
carried out by using questionnaire distributed among 100 respondents in Udaipur
district. The study found that there was a significant correlation between various
demographic determinants in determining wealth management services preference
7. Ruchi Nityanand Prabhu (Journal-Mar 2018) defined his study about risk & return
analysis of nifty stock in Indian capital market wherein the study compares the
performance of the 50 stocks in the NSE. Indian banking industry, the backbone of the
country’s economy has always played a positive key role in prevention the economic
disaster from reaching horrible volume in the country. Risk & Return is a concept that
denotes a potential negative impact to an asset or some characteristic of value that may
arise from some present process or future event. The study evaluates the performance
of stocks mainly to identify the required rate of return and risk of a stock based upon
different risk elements prevailing in the market and other economic factors.
8. Ronak Nangalia and Sohrab Kothari from Flame university did study on basics of stock
market where in they have quoted some basics things about stock market like the need
to invest in market, when to start investing, options for investment, why to trade in
market, types of market.

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3. Research Gaps:
The earlier studies haven’t discussed about the correlation between equities and portfolio
management services. The studies have been only conducted either on equities or PMS solely but
not to gather. This project gives you a glance what is major difference between both the securities
and how the investors choses either of them for investing purpose.

4. Objective of the Study:

1. To determine which one has a better role to play in the financial market and which one has a
great future or large number of investors.
2. To find out Risk and Return Analysis of PMS and Equities as per the investors perspective.

5. Research Questions:

QUESTIONNAIRE ON COMPARATIVE ANALYSIS OF INVESTOR PREFERENCE ON

PMS AND EQUITIES

Q.1) You belong to which one of the following categories:

a) Government Employee b) Professional c) Private Firm Employee d) Self Employed
e) Business Person f) Others

Q.2) Your annual income is in the range of:

a) Below 2.5 Lacs
b) Between 2.5 to 5 lacs
c) Between 5 lacs to 10 lacs
d) Between 10 lacs to 20 lacs
e) Above 20 lacs

Q.3) Where do you invest your savings? (Multiple ticks are allowed)
a) Saving Bank b) FD c) Equity(shares) d) Debentures e) Gold/Silver f) Real Estate g) Mutual
Funds h) Insurance I) Portfolio management Services j) Others

Q.4) What is the percentage of savings from your total income?

a) <=25%
b) <=50%
c) <=75%
d) Others

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Q.5) What are the factors to which you give priority when you invest?
a) Safety b) High return c) Liquidity d) Less Risk e) Marketability

Q.6) Do you know about Portfolio Management Services (PMS)?

a) Yes b) No

Q.7) Way to invest into the market?

a) Self
b) Broker / Advisor
c) Others

Q.8) At the age range of 35 to 45 years (currently/future), what would you prefer to invest in?
a) Equities b) PMS c) Others

Q.9) Which one do you think has more risk or to be less safe?
a) Equities b) PMS

Q.10) What is your opinion, if returns are concerned?

a) Equities b) PMS c) Both d) Others

Q.11) If you have 30 lacs as your saving and want to invest in the market securities, how would
you go through?
a) Only Equities
b) Diversification through a portfolio management service

Q.12) According to you, which one among them is more advisable for long term investment
purpose?
a) Equities b) PMS c) Both d) Neither of them

Q.13) Select the correct one.

a) Equities pays off more than PMS
b) PMS is more transparent than Equities
c) Equities and PMS both are flexible in nature (invest/pull back of money at given period)
d) Portfolio management services requires minimum investment of Rs. 25 lac and equities require
only a Demat account to operate and with no minimum investment.
e) A & B
f) B, C & D
g) All of the above

Q.14) Why would you not invest through PMS?

a) Due to minimum investment required is Rs. 25 lacs
b) Equities pays more return rather than PMS
c) Money is easily invested / pull back in Equities
d) More reliability on Portfolio Manager
e) All of the above

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Q.15) If you have opted for PMS, which one would be more preferably type?
a) Discretionary, where the fund manager takes investment decision on behalf of investor.
b) Non-Discretionary, where the fund manager suggests investment ideas, while decision is taken
by the client.
c) Advisory, where the suggestion will be given by portfolio manager whereas execution of the
investment decision will be taken by investor.

7. Research Methodology:
The approach of this project was analytical and practical where more of the data has been collected
primarily through survey and based on some secondary data done by some researchers. The
interpretation of the data has been done as per the responses collected via survey through the
medium of questionnaire.

8. Data Collection
The data will be more of primary and has been collected through survey. Based on it, the findings
and gaps during research has been illustrated. The data has been also taken from secondary source
which relies on various research journals, articles, news, presentations and other web sites like
moneycontrol.com, efinancemanagment.com, bseindia.com, etc. Questionnaire is prepared for the
survey and its enclosed with document.

The data consist more of analytical knowledge of investor preference on Equities and Portfolio
management services where risk and return analysis will also be taken into consideration as per
the investor preferences.

The questionnaire was made on online with the help of surveymonkey.com and was spread
accordingly into the network with web link. The survey was also posted on social sites like
Facebook and LinkedIn, but there were no responses collected from it. The responses were
collected 54 throughout and in a course of a week’s time dated 21.08.2018 till 28.08.2018. All the
responses were collected via web link which was forwarded to my college mates, office colleagues,
friends and relatives.

The major drawback of this survey was uninterested audience or sample, like nobody takes interest
in filling out survey unnecessary until there is a gain out of it. With all by reminders again and
again the responses reached up to 54. All the response which are collected have different IP
address.

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9. Data Analysis and Interpretation:

Data Interpretation

Interpretation 1: This is an introductory question to be sure that how many percentages of the
investors lies in which categories as mentioned in the graph and believes in investment. So, there
were 70% of the people as per my survey who belonged to Private firm subsequently followed by
11% as professionals, 9% self-employed, 5.5% are business people, and 3.7% are other
professions. This helped me out to know that there was no single government employee in my
network.

Interpretation 2: This question helped to know the salary range of the sample which can be
estimated in further question of how much percentage of savings are done and through which they
can invest into the market. So, in this question there is very minor difference among investors in
their earnings between a range of 2.5 lacs to 20 lacs.

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Interpretation 3: This was a multi choice option question, because people would not invest into
one security of their money / savings and it is always advisable also. This proved to be helpful
question to know where most of them invest their money. So, the outcome was that 77% invest
into mutual funds, 57% of the money lies in the saving bank account, 52% lies in FD, 41% into
equity, 9% into PMS and rest others. This shows that people invest money more in equities as
compared to PMS as per their individual earnings which was illustrate in the above question.

Interpretation 4: Like 69% of the people save less than 25% of their savings and rest 31% save less
than 50% of their savings. It means that people who saves less 25% of their saving will have more
expenditure, investment, etc. as compared to the people who saves more than 25%. When the
savings are more then there is an opportunity to invest more. Hence, 31% of the sample can invest
more into the market securities.

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Interpretation 5: This helps us to understand the objective of the investors who would like to invest
somewhere. So, what they are seeking for out of the investment and where their interest lies. In
my survey I found that majority are looking out for High return and safety which considerably
says that want to be a part of major returns and should be also safe with no risk involved which
could be losing of money invested. Now as we have found that people have invested more in
mutual funds which gives good returns and as recommended to be considerably safe. Where people
in equity is looking out for more returns and less safety.

Interpretation 6: This is to know about the awareness of PMS among the masses. There are 45%
of the people among the sample who doesn’t know what PMS means? and what are its benefits,
purpose or its requirements? This is like almost half of the population aren’t aware about this
service. This is a major flaw in my findings out of this survey though the masses were qualified
well enough. What if a person does have lot of money but don’t have a right medium to use it and
want to invest into the market.

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Interpretation 7: So how does people among the masses invest into the market, just to know their
channel of investing or about possessing knowledge. Now results were 48% of the people invest
into the market on their own who have a better knowledge or experience or might have taken a
chance to just invest and learn gradually. They might have half knowledge or no idea as well like
where to invest money, but may this could be the right one, so they invested in that security. 44%
of the people invest through a broker or an advisor into the market which seem to be good and
advisable. There are 8% of the people who invest into the market through other means like Family
advise, Friends recommendation, etc.

Interpretation 8: This is a hypothetical question, to know that at the age of 35 to 45 where people
would like to invest whether in equities, PMS or others. At the age of 35 to 45 people are more
family oriented and might take less risk. Since we got to know that half of the sample doesn’t know
about PMS facility they would not like to invest in it. Another possibility would be a minimum
requirement of 25 lacs into PMS that they would not like to invest a big amount into the market at
that age.

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Interpretation 9: This is to know the opinion among the masses that which one has a more risk and
considered to be less safe. 66% have pointed out that equities are riskier or less safe than PMS.

Interpretation 10: This was to know the opinion among the masses that which one gives you more
return in the market, PMS or Equities. 42% have said both gives more return whereas Equities
single handed gives 33% and PMS gives 11%. Other at 13% gave opinion that there are other
securities in the market which gives more return than either of them. Other investment could be
real estates, derivatives, options etc.

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Interpretation 11: This is again a hypothetical question knowing about if the masses have more
than 30 lacs as their savings currently or in future and they would like to invest in market, where
they would like to invest in. 71% of the people said that they would like to invest through PMS
and rest 19 % through equities. So, here we can come to know that major reason of not investing
through PMS is money.

Interpretation 12: To get the opinion among the masses, there is equal proportion of responses that
has been collected around 32% to invest in equities, PMS and both for long term. Only 4% of the
people doesn’t seems to be interested in investing in these securities for long term.

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Interpretation 13: This is just to know the sample’s knowledge about Equities and PMS. The actual
answer is All of the above where the responses are also major as 19% why because all the options
presented are true as per their characteristics.

Interpretation 14: As stated in the interpretation 11, the major problem lies in PMS is the
requirement of the minimum amount to be invested in the facility around Rs. 25 lacs. In this
question the proof has been given like around 33% believes that due to minimum requirement of
Rs. 25 lacs in PMS. While other have different opinion as well that why they would not like to
invest in PMS. 25% of the people are who thinks all the options in the question are valid for not
investing through PMS.

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 26.42% (14)

Interpretation 15: This is again to know the opinion after knowing how many of them would not
like to invest through PMS, still if at given point and in any chance, they would like to invest
through PMS which type of PMS they would choose. 53% of the people chose Advisory as option
which says that suggestion will be given by portfolio manager and the decision will be taken by
client. Whereas 26% of the people said that they would like to opt with Non-Discretionary type
where the fund manager would suggest the investment ideas and final decision will be taken by
the investor. The least type was selected at 21% which is Discretionary where clients doesn’t
possess any power and decision is fully taken by fund manager.

10. Findings and Conclusion

Findings are as follows:

1. According to the results fetched from survey conducted, people consider equity risker
than PMS.
2. As returns are concerned, 43% people consider both as the option whereas 33% people
consider equities over PMS.
3. Majority would like to invest through broker or advisor into the market.
4. For long term purpose, people think that they both are equivalent for investment purpose.
5. Almost half of the population aren’t aware about portfolio management services and its
operation.
6. Due to minimum requirement investment amount in PMS, people hesitate to invest through
it, due to unavailability of funds or savings.
7. If the masses are given a hypothetical amount like Rs 30 lacs to invest into stocks, they
would prefer PMS which simplifies diversification of the amount into various other stock
which are tailor made and managed by portfolio manager as per the investors objective.

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 8. The fees charged by PMS are more as compared to direct equites.
9. PMS is only for HNI clients, very niche segment clients and not for every investor.
10. People who would like to go ahead with PMS as an investment tool, then most of them
would like to take advisory type of PMS wherein the portfolio manager only suggests the
investment ideas. The choice as well as the execution of the investment decisions rest solely
with the Investor.

Major Differences
Portfoili Management Services
Particulars Equities
(PMS)
It’s a tailor made services which
contains 10-20 stocks which will be
Its basically a stock which gives you a
Meaning balances as per the objectives of the
entilement of ownership into the company
investors and will be managed by the
market specialiest.
Share capital, Preferred stock, Capital
Discretionary, Non-Discreationary, and
Types surplus, Retained earnings, Treasury
Advisory
stock, Stock options, Reserves
Its comparatively less because the risk
Risk Its more and unpredictable
is spread among other stocks
Its more because the more the risk the Its comparatively less because the risk
Return
more is the return is also less
Time Period Generally for short and medium term Its done for medium and long term
Minimum Demat account as well as Rs. 25 lac
Demat Account
requirement initial investment
There are fees charged to the investors
Fees Charges There is no fees charged to the investors
for the services provided
Entry load There is nor entry load in direct equites There is entry load of 3% in PMS
It is less volatile in nature because the
It is more valotile in nature subject to
Voltality stocks are taken to maintain a balance
market conditions and future
ratio
Niche Clients-HNI's, HUF's, Solely
Clients Served Anyone
partnership firms, corporate bodies
The stocks are professionally managed
by your portfolio manager and would
Management There is no management in direct equites
be updating you on a daily basis with
various statements and advices.
Advices or suggestions to buy and sell
If you are investing through adviors then stock will be given every day to the
Advice
you would probably get it investors to fetch the benefit and be
risk free
Conclusion:
This study was a unique since there was no other studies conducted on it in history. There are
various studies which are done on market securities available for the investment, their technicality
to prove which is better over the other. People invest more in mutual funds now days and therefore
the percentage of investment into the stock market has been tremendously increased. The
difference between equities and PMS has been explained thoroughly throughout this study and
depending on various aspect like investment amount, objectives, time-period, risk and return basis
etc investors must choose between equities and PMS. It was a great experience and learning
throughout this project.

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11. Limitation of the study:
The limitation of the studies are as follows:
1. This study mainly focuses only on two investment avenues and not taking other securities
like mutual funds, insurance, real estates, gold silver, bonds, FD’s etc. into consideration
and giving investors preferences to opt either out of them.
2. According to survey conducted many of the them like 50% of the crowd doesn’t know the
concept of portfolio management services.
3. The major drawback why people doesn’t want to invest in PMS due to its minimum
requirement of investment of Rs. 25 lacs which is only for niche segment client’s preferably
HNI’s.
4. This study requires an extension in time, so that more responses could have been collected
if the time was stretched a bit for more like a month.
5. There was a chance to select a better sample who would be aware of PMS and other
securities available in the market for investment purpose.
6. The risk and return analysis have been done just on the responses collected from the survey
and not done technically or looking at stock market and taking a stock or a portfolio and
comparing it.
7. Since there was no background of this study, very limited idea that I could fetch through
other studies conducted on either of them.

12. Suggestions:
Suggestion would be as follows:
1. If the investors are willing to take higher risk to fetch the higher returns than any other
securities available in the market, then they can invest through direct equities.
2. If the investors are willing to take relatively less risk than direct equities and higher returns
than mutual funds along with that if they could afford to invest minimum amount of Rs. 25
lacs they can invest through PMS.
3. PMS is best option in case if your investment is more than Rs. 25 lacs. They give you better
returns than mutual funds. The services will be provided by the distributor every day. Also,
the PMS consist of 10 to 15 stocks where your money would be chipped in and that too in
balanced way so that your portfolio gives you nearby returns as per your objectives.
4. Equities could be a better option to invest if you want to earn higher returns in short term
and can bare risk on a higher basis. The minimum amount requires only a de-mat account
to transact.
5. Currently in the market if investors are not willing to take higher risk and want to invest in
the market with average returns which is better than bank FD’s, saving account etc. than a
better or wiser decision would be to invest into mutual fund schemes with a minimum
amount of Rs. 500 or through SIP basis. This is for medium and long-term investment gains
with less risk involved. The risk is spread across 40 to 50 stocks normally and in an equity
debt ratio.

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13. References:
Journal Referred:
1. V. Alagu Pandian and G. Thangadurai (2013) conducted a study on Investor preference
towards various investment avenues in Dehradhun district.
2. Dr. K. Sowmya and J. Mounika Reddy 4th April 2016 conducted a study on investor
preference towards investment avenues where the study investigates the perceptions
towards various investment avenues in Hyderabad city of Telangana.
3. Dr. R. Angamuthu conducted a study on the Investors Preference towards Equity-
Shares as a Best of Investment.
4. Dr. Swati Modi (Article Jan-2016) did study on a study on Investor's Preference
Towards Equity in Ahmedabad.
5. Ms. Ghazal Aggarwal and Mr. Pawan Kumar (Article Aug-2012) did study on various
trends in portfolio management services of Axis Bank, ICICI and HDFC Bank.
6. Dr. Dhiraj Jain and Ms. Anupama Jhala (2012) examined study on preferences for
wealth management services: An empirical study in Udaipur, Rajasathan.
7. Ruchi Nityanand Prabhu (Journal-Mar 2018) defined his study about risk & return
analysis of nifty stock in Indian capital market.
8. Ronak Nangalia and Sohrab Kothari from Flame university did study on basics of stock
market.

Websites Referred:
a. http://www.moneycontrol.com
b. https://myinvestmentideas.com/2017/11/best-portfolio-management-services-pms-in-
india/
c. https://economictimes.indiatimes.com/all-you-need-to-know-about-portfolio-
management-services/articleshow/52563504.cms
d. https://www.personalfn.com/fns/pms-vs-mutual-funds-which-one-should-you-opt-for
e. https://economictimes.indiatimes.com/wealth/invest/should-you-invest-in-a-pms-or-in-
mutual-funds/articleshow/58193843.cms
f. https://smartasset.com/investing/what-are-equities
g. https://www.goodreturns.in/personal-finance/planning/2014/11/what-are-the-different-
types-risk-with-equity-investment-323875.html

Enclosure:

-Questionnaire

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