Professional Documents
Culture Documents
ON
PORTFOLIO MANAGEMENT
TO
BY
Gunjan Chawla
ENROLLMENT NO.
01291101717
TECHNOLOGY
1
DECLARATION
Signature:
____________________
DATE:
2
COMPANY CERTIFICATE
This is to certify that Ms. Gunjan Chawla D/o sh. Shyam Chawla , a
student of BBA program , studying in Sri Guru Teg Bahdur Institute Of
Management & Technology adjacent to Gurudwara Nanak Piao ,
affiliated to GGSIPU . She has successfully completed internship
program 5th june to 30th july 2019 at our firm . During the period of her
internship programme she found punctual , hardworking and inquisitive.
Atul chawla
( authorized signatory)
3
TABLE OF CONTENTS
CHAPTER 1
4
Chartered accountancy is the core of all business, be it big or small. A chartered
accountant’s work involves auditing, taxation, accounting and financial planning. It
can be a very challenging and rewarding job.
A Chartered Accountant’s work area has become so wide and involves so many
activities that sometimes a CA is perceived as almost an enigma. A CA can start
career with auditing activities, which is the basic work area of a CA.Professional
Chartered Accountants have the option to be appointed as auditors of companies.
Chartered Accounts also can take private audit as their profession.
From here a more fulfilling career in finance can be pursed after getting enough
exposure of intricacies of finance. As an investment consultant and as a fund
manager a CA can play the role of a top decision maker. CAs also work in project
management and consultancy services
They can also indulge in their private practice of audit and consultancy. The
consultancy work is becoming more and more profitable now a days.
5
Tax Management is another type of consultancy taken up by Chartered
Accountants. It requires minimization of incidence of direct and indirect taxes
using legal means. Besides this, Chartered Accounts often indulge in providing
consultancy services in the fields related to finance and accounts. They can
efficiently provide services in areas like corporate law advice, project planning and
finance and business advice . they can also serve as a management and corporate
caretaker.
INDUSTRY OVERVIEW
Mission of ICAI:
6
Is to achieve excellence in professional competence, add value to businesses and
economy, safeguard public interest; ensure ethical practices and good corporate
governance while recognizing the needs of globalization.
These kinds of firms provide different kinds of professional services like audit,
taxation and management consultancy to its clients.
"That person who is awake among those who sleep" - This is from an ancient
Sanskrit text and signifies the function of a Chartered Accountant as a sentinel. The
Institute has also introduced a new logo for Members - 'CA' - Alphabets of Trust.
During its more than fifty years of existence, the ICAI has achieved recognition as
the premier accounting body, for its contribution in the field of education,
professional development and maintenance of highly meritorious and ethical
standards of accounting and auditing. The accountancy profession in India has the
distinction of not only being one amongst the largest in the world, but also of
enjoying the reputation of being one that is highly professional and technically
sound, having a high degree of financial discipline and rigor . The accounting
profession has a very dynamic role to play in the growth and development of a
country’s business and economy. Its role becomes far more crucial in the wake of a
series of concerns such as lack of resources, unplanned investment, high level of
development expenditure, and, above all, the need for effecting economy,
efficiency and accountability in the utilization of scarce resources. It is the
responsibility of this profession to provide systems, standards, procedures, tools
and training to bring about financial discipline, control and accountability at all
7
stages of developmental expenditure and resource mobilization. It has to provide
realistic methods of evaluation and future projections and also the ability to foresee
and avoid pitfalls inherent in the development process.
In the constantly changing world, one can find a major shift in the role of an
accountant. Today’s accountant is a total business solution provider. The new
economic realities have further changed the form, content and context of
accounting and auditing. With more and more people entering the business world,
they consider CAs as trustees of the stake holder’s interest and expect CAs to be
watchful in their role as a business advisor as well as an auditor.
CAs are no longer merely 'number crunchers' or 'people who handle taxation
matters'. Though they are aces in matters of auditing and taxation, they also
manage the financial matters of both public as well as private sector organizations.
Some CAs also hold powerful positions in the companies like Chief Financial
Officer (CFO).
So, what does it take to be a CA? Well, to put it in a few words -- dedication,
perseverance, and an aptitude for numbers, analytical thinking, and a lot of hard
work.
The CA course is a very difficult one. It takes a lot of hard work coupled with
dedication and patience to emerge as a successful candidate. You must be mentally
prepared for it before you join the course. Otherwise you shall be shocked at the
situations faced by you.
9
manage tax matters. Later these figures and statements are examined, verified and
then certified by auditors.
Nature of Work :-
10
3. COST ACCOUNTING: Cost accounting deals with working out the cost of
a particular operation or job, taking into account relevant overheads. It is
quite a complex task usually undertaken for monitoring expenditure,
preventing it from over-shooting, minimizing costs, forecasting future needs
and providing reports for management accounting etc. It also helps in
drawing comparisons, analyzing costs and explaining financial information.
4. TAX MANAGEMENT: Sometimes Chartered Accountants specialize in tax
management. Their job is to legally ensure minimum incidence of tax. In
doing so they have to cope with taxation laws and policies on national as
well as international scale depending on the kind of company they work for.
Tax management relates not only to direct taxes e.g. income tax but to
indirect taxes like sales tax, excise tax, agricultural income tax etc.
5. CONSULTANCY: The changing scenario in the business world has opened
promising and challenging career opportunities for the aspiring young.
Consulting services is one such opportunity which has drawn a lot of
attention these days. Chartered Accountants often indulge in providing these
services in the fields related to finance and accounts. They can efficiently
provide services in areas like corporate law advice, project planning and
finance, investigations relating to share valuation for takeovers,
amalgamation, business advice, secretarial work etc.
Personality
Accountants must have good numerical ability and analytical mind to interpret
facts and figures correctly. They should have logical and methodical approach.
Concentration and attention to detail are critical. As their work often relates to
discussing financial matters with number of people, sometimes with people who
don't have background in finance, they should be able to express themselves
11
clearly. This makes it imperative to have good understanding of the subject with
equally good verbal and written skills. Sometimes the work can be extremely
strenuous and exhausting especially during financial year closing, so stamina both
physical and mental with patience to handle such situation is of added advantage.
For accountants practicing privately, it is important to have necessary business
skills and shrewdness to generate clientele.
COMPANY PROFILE
Atul chawla & Associates established in 1996, it is at North West Avenue Club
Road, Kothi Number 1, 1st Floor, Opposite Siddarth OpticalsWest Punjabi Bagh,
Delhi - 110026 , which makes it easy for first-time visitors in locating this
establishment. It is a top player in the category GST Registration Consultants in
the Delhi. This well-known establishment acts as a one-stop destination servicing
customers both local and from other parts of Delhi. Over the course of its journey,
this business has established a firm foothold in it’s industry. The belief that
customer satisfaction is as important as their products and services, have helped
this establishment garner a vast base of customers, which continues to grow by the
day. This business employs individuals that are dedicated towards their respective
roles and put in a lot of effort to achieve the common vision and larger goals of the
company. In the near future, this business aims to expand its line of products and
services and cater to a larger client base. In Delhi, this establishment occupies a
prominent location in West Punjabi Bagh. It is an effortless task in commuting to
this establishment as there are various modes of transport readily available. It is at
North West Avenue Club Road, Opposite Siddarth Opticals, which makes it easy
for first-time visitors in locating this establishment. It is known to provide top
service in the following categories: GST Registration Consultants, Pan Card
Consultants, Trademark Registration Consultants, Company Registration
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Consultants, Digital Signature Services, Tax Return Filing Agents, Income Tax
Consultants, Tds Return Consultants.
Atul Chawla & Associates has employees and members who are experienced.
All members have developed their management skills working with Our Partners
are reservoirs of talent and professionalism. We set the highest quality standards
for ourselves and this is seen in not only our choice of partners and professional
staff, but also in their further training. Our associates constantly attend external
professional seminars in order to strengthen their specialized knowledge in various
areas& Associates Members of our firm have risen to various top positions and
prove to be great motivators and role models for staff members.
VISION
Atul Chawla & Associates tend to achieve this through our fair business practices
and we are committed to highest level of ethics and integrity. This is evident from
the quality with which we complete our work.
Ensuring Client focuses on its core business and spends least time and
money in performing business support functions, thereby maximizing its
business and profitability.
SERVICES
Tax Clinic near West Punjabi Bagh offers a wide range of services which are
tailored to our clients' needs. Their spectrum of services cover accountancy internal
audit management audit direct taxes indirect taxes business setup and BPO/KPO
setup. Specialising in providing end-to-end support to start-ups the services cover
company formation LLP formation shop act registration IEC code MVAT/ CST
registration and excise registration.
14
Atul Chawla & Associates provides high quality audit and assurance services with
the best tools, resources and procedures. Our professional staff offers business
advice that helps the entrepreneurs to run their entity efficiently and effectively.
Through analysis of the market, rigorous risk assessment and continuous
assessment of market position we formulate a business plan that helps our clients
to be competitive. It is our Audit division’s endeavour to highlight the
shortcomings in internal control system in client’s organisation and suggest
improvements therein as suggested by our QCS Division, and at the completion of
audit we issue a “Management Report/Reportable conditions”
We have a team of experienced & seasoned professionals, who understand the
needs of clients and provide them with the best of their service through excellence,
integrity and independence.
Statutory Audit
Revenue Audit
Bank Audit
Internal Audit
System Audit
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Quality Audit
Special Audit
Income Tax
At Atul Chawla & Associates, we believe that all of our clients are entitled to the
highest level of service. Our Tax Consultants undergo the most rigorous training
program to ensure that our clients should get maximum benefit from every
deduction and rebate available.
Our Tax & Regulatory Division not only provides advice and assistance on direct
taxes like income tax, wealth tax, capital gains tax but also on indirect taxes
like Service tax, GST, Excise & Custom duties, etc.
16
Our Tax & Regulatory Division assist the clients in preparation & filing of Income
Tax Returns for Corporate & Non-Corporate sector, Income Tax Compliance
Audits & Certificates, handling Appellate matters up-to Tribunal level, Tax
Planning for a Corporate and Non-Corporate, Registration of Charitable Trust /
Institutions up to Ministry level.
Atul Chawla & Associates was founded on principles of trust, integrity and the
delivery of outstanding services. For over 20 years, Atul Chawla & Associates has
been committed to client’s satisfaction and has maintained their privacy. We are
proud to say that your online information will be treated with the same integrity
you would receive at any one of our 04 branches nation-wide.
Our Services
Atul Chawla & Associates provides a wide range of services necessary for the
setting up of business and operation in India by foreign investors and Indian
17
business houses. The Corporate & Commercial Division (C&C Division) of Atul
chawla & Associates provides the following services to its clients from the last 20
years in India, with the help of professionally qualified team consist of Chartered
Accountants, Company Secretary and Lawyers.
About Book-keeping
Since the last twenty years, Atul Chawla & Associates through its Accounts
Division maintained Books of Accounts (BoA) for SME Sector of India and try to
made it’s life easier by assisting them with outsourced accountancy & data
management. Our outsourced accounts processing and outsourced data processing
business models are developed to make things convenient for our clients.
We believe that the BoA of an entity is a history of all its transactions & events,
which took place in a year. On the basis of this concept, we have developed our
18
Accounts division. Therefore, our service is accurate, dependable and flexible
enough to stay aligned to the preferences of our clients. Professionals at Accounts
Division of P A R Y possess in-depth knowledge of Indian GAAP, US GAAP,
IAS and IFRS to deliver the final outcome (i.e.,BoA) as required by the
management, Auditors and other parties of an entity interested therein.
At PARY we try to make our client feel that we are a part of their setup, only
located some distance away.
Financial Analysis
Payroll Processing
Confidentiality Statement
CONSULTING DIVISION
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Power Sector
Atul Chawla & Associates could be instrumental for the entities in exploring this
sun rising sector by way of:
20
Assisting in preparation of bid documents, financial modelling, vetting of
legal documents (i.e. PPA etc.) and Liasioning with the government
officials.
Arranging the funds at a reasonable rates from the FI’s /Private funding/ VC
route.
Road Sector
A well-developed network of roads is a key foundation that sets the pace for
infrastructure development to transform a nation from developing country to
developed one. The Government of India (GoI), has initiated various programs and
one of them is National Highways Development Project (NHDP)which at present
is being implemented in 4 phases I, II, IIIA & V through National Highways
Authority of India (NHAI).
21
At present Atul Chawla & Associates has contributed to the development of nation
by way of providing the financial consultancy to GoI/State Governments, in more
than 20 road projects under NHDP plan, which are being developed on PPP model
as per our Services and Work Plan. In addition to this the firm is also provide its
professional services in the form of Compliance Audit to the various state
government level through Gram Sadak Development Authority, District Rural
Development Agency & PWD.
The Consulting Division of Atul Chawla & Associates provides services to private
sector also, who are aspirant to explore this sun rising Road sector. The dedicated
team of professionals is well equipped to provide the services in the range of:
Formation of SPV
If you are a Non-Resident Indian (NRI) living abroad and having income from
both the countries then you must file two returns each year:
You must file an Indian Income Tax Return (ITR), if you have any income
in India from any sources exist in India, e.g. Rent from property situated in
India, Capital gain from sale of assets exist in India, Commission, Interest or
royalty received from India, etc.
Beside this you must file a U.S. return, if you are a resident (i.e., if you stay
there for a period more than 181 days in a year) of U.S.A. As a resident of
USA you must file U.S. Form 1040 every year, reporting your worldwide
income.
Highly qualified and experienced staff of our Tax & Regulatory Division
will assist you in filing these returns and you can avail the benefits of
Double Tax Treaty (DTT) for the tax paid by you in India & USA, as there
are several mechanisms available to ensure that you are not taxed doubly.
We assist our clients with the tax implications of living and working abroad
with a variety of tax preparation solutions.
23
Service for Foreign Resident in India
You must file an Indian Income Tax Return (ITR), if you are working in
India and stayed here for a period more than 181 days in a financial year (i.e.
1st April to 31st March) and having income in India from any sources exist
in India, e.g. Salary, Rent from property situated in India, Capital gain from
sale of assets exist in India, Commission, Interest or royalty received from
India, etc.
Highly qualified and experienced staff of our Tax & Regulatory Division will
assist in filing ITR and if Indian Government have any Double Tax Treaty (DTT)
with your country of origin then you can avail the benefits of provisions of DTT
for any tax paid by you in your country of origin against any income accrue or
arise in your country of origin. There are several mechanisms available to ensure
that you are not taxed doubly. We assist our clients with the tax implications of
living and working abroad with a variety of tax preparation solutions.
24
We will help you in your information needs, financial needs, competition and
market evolution, business costs and human resources needs.
Our strong focus on new technology enables us to speak the same language as our
clients both in business and technical terms. We also utilise our expertise to
develop new and innovative products, which provide our clients with easy and fast
access to our know-how.
When Atul Chawla & Associates undertakes a BAS assignment, a partner will be
allocated to the project to ensure an efficient co-ordination and an effective
performance of the same. The responsible partner will appoint a suitable team to
carry out the assignment.
We continually exceed the business’ objectives through the ability to establish and
develop an excellent rapport with clients.
FUND/ASSET MANAGEMENT
CORPORATE FINANCING
SWOT ANALYSIS
25
Strengths
Atul Chawla & Associates Ltd. provides multi-channel access to all its
customers through a strong online presence with working force in big
metropolis in India and a call-center based Dial-n-Trade facility
Weaknesses
Opportunities
With the booming capital market it can successfully launch new services
and raise its client’s base.
26
Threats
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CHAPTER 2
PORTFOLIO MANAGEMENT
28
as a Portfolio Manager shall also be bound by the rules and regulations as
applicable to the portfolio manager.
Realizing the importance of portfolio management services, the SEBI has laid
down certain guidelines for the proper and professional conduct of portfolio
management services. As per guidelines only recognized merchant bankers
registered with SEBI are authorized to offer these services.
The stock markets have become attractive investment options for the common
man. But the need is to be able to effectively and efficiently manage investments in
order to keep maximum returns with minimum risk.
Portfolio manager means any person who enters into a contract or arrangement with
a client. Pursuant to such arrangement he advises the client or undertakes on behalf
of such client management or administration of portfolio of securities or invests or
manages the client’s funds.
29
manage the funds of each client in accordance with the needs of the client in a
manner which does not resemble the mutual fund.
A non discretionary portfolio manager shall manage the funds in accordance with
the directions of the client.
Portfolio management is an art of putting money in fairly safe, quite profitable and
reasonably in liquid form. An investor’s attempt to find the best combination of risk
and return is the first and usually the foremost goal. In choosing among different
investment opportunities the following aspects risk management should be
considered:
a) The selection of a level or risk and return that reflects the investor’s tolerance
for risk and desire for return, i.e. personal preferences.
The very risk-averse investor might choose to invest in mutual funds. The more
risk-tolerant investor might choose shares, if they offer higher returns. Portfolio
management in India is still in its infancy. An investor has to choose a portfolio
according to his preferences. The first preference normally goes to the necessities
and comforts like purchasing a house or domestic appliances. His second preference
goes to some contractual obligations such as life insurance or provident funds. The
30
third preference goes to make a provision for savings required for making day to
day payments. The next preference goes to short term investments such as UTI
units and post office deposits which provide easy liquidity. The last choice goes to
investment in company shares and debentures. There are number of choices and
decisions to be taken on the basis of the attributes of risk, return and tax benefits
from these shares and debentures. The final decision is taken on the basis of
alternatives, attributes and investor preferences.
For most investors it is not possible to choose between managing one’s own
portfolio. They can hire a professional manager to do it. The professional managers
provide a variety of services including diversification, active portfolio management,
liquid securities and performance of duties associated with keeping track of
investor’s money.
31
the principles governing such allocation. The modern view of investment is oriented
more go towards the assembly of proper combination of individual securities to
form investment portfolio.
The modern theory is the view that by diversification risk can be reduced.
Diversification can be made by the investor either by having a large number of
shares of companies in different regions, in different industries or those producing
different types of product lines. Modern theory believes in the perspective of
combination of securities under constraints of risk and returns.
4) Marketability: i.e. is the case with which a security can be bought or sold.
This is essential for providing flexibility to investment portfolio.
32
6) Diversification: The basic objective of building a portfolio is to reduce risk
of loss of capital and / or income by investing in various types of securities
and over a wide range of industries.
7) Favorable Tax Status: The effective yield an investor gets form his
investment depends on tax to which it is subject. By minimizing the tax
burden, yield can be effectively improved.
There are two basic principles for effective portfolio management which are given
below:-
a) Fiscal, financial and monetary policies of the Govt. of India and the
Reserve Bank of India.
b) To assess the financial and trend analysis of companies Balance Sheet and
Profit and Loss Accounts to identify the optimum capital structure and better
33
performance for the purpose of withholding the investment from poor
companies.
c) To analyze the security market and its trend in continuous basis to arrive at a
conclusion as to whether the securities already in possession should be
disinvested and new securities be purchased. If so the timing for investment
or dis-investment is also revealed.
To know how the investment made in different securities minimizes the risk
and maximizes the returns.
To get the knowledge of different factors that affects the investment decision
of investors.
To know how different companies are managing their portfolio i.e. when and
in which
sectors they are investing.
To know what is the need of appointing a Portfolio Manager and how does he
meets the needs of the various investors.
To get the knowledge about the role (played) and functions of portfolio
manager.
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CHAPTER 3
RESEARCH METHODOLOGY
Each and every project study along with its certain objectives also has scope for
future. And this scope in future gives to new researches a new need to research a
new project with a new scope. Scope of the study not only consist one or two
future business plan but sometime it also gives idea about a new business which
becomes much more profitable for the researches then the older one. Scope of the
study could give the projected scenario for a new Successful strategy with a proper
implementation plan. Whatever scope I observed in my project are not exactly
having all the features of the scope which I described above but also not lacking all
the features.
35
Risk is the potential that a chosen action or activity (including the choice of
inaction) will lead to a loss (an undesirable outcome). The notion implies that a
choice having an influence on the outcome exists (or existed). Potential losses
themselves may also be called "risks". Almost any human endeavor carries some
risk, but some are much more risky than others.
Return is the capital gain or the profit earned on the investment done. Return can
be negative also. It is calculated by the rate of return.
2. Investment Analysis
Analysis of the investment for maximizing the return and minimizing the risk.
The purpose of the study is to help the customers in choosing the best investment
option which will maximize the return for a given risk.
TYPE OF RESEARCH
The result of the project is completely based upon the research of the facts and
figures collected through the different ways of research. The different types of
research used in this project are of qualititative type.
RESEARCH DESIGN
36
Exploratory research - These are also termed as formulative research studies. The
main purpose of such studies is that of formulating a problem for more precise
investigation or of developing the working hypotheses from an operational point of
view. The major emphasis in such studies is on the discovery of ideas and insights.
Descriptive research - These are those studies which are concerned with
describing the characteristics of a particular individual, or of a group, whereas
diagnostic research studies determine the frequency with which something occurs
or its association with something else. The studies concerning whether certain
variables are associated are examples of diagnostic research studies. As against
this, studies concerned with specific predictions, with narration of facts and
characteristics concerning individual, group or situation are all examples of
descriptive research studies.
SOURCE OF DATA
In the data collection method, we have collected secondary as well as primary data
to meet our objectives.
Primary data → It is data that has not been previously published, i.e. the data is
derived from a new or original research study and collected at the source, e.g., in
marketing, it is information that is obtained directly from first-hand sources by
means of surveys, observation or experimentation. Primary data, by contrast, are
collected by the investigator conducting the research.
Secondary data → It is data collected by someone other than the user. Common
sources of secondary data for social science include censuses, organizational
37
records and data collected through qualitative methodologies or qualitative
research.
SAMPLING
Sample size → 50
38
CHAPTER 4
ANALYSIS
4%
12%
0
24% 1
2
3
24% More than 3
36%
Interpretation : Among the 50 persons who were surveyed, more than fifty
percent of them were having only 1 or 2 dependent family members. With less
dependent family members a person can save or invest more
39
Respondents age group
Age Group %
10% 22%
24%
Below 30
30 - 40
40 - 50
Above 50
43%
40
Nature of the Business of the Respondents
Nature of Business
5
10
Professional
Private Job
Govt. Employee
Business Man
17
18
Interpretation : The respondents were engaged in all the four types of the
businesses, however the number of respondents in the Govt. Employee category
were larger than in any other category, closely followed by the private job
category.
41
Which of the following best describes your current stage of life?
15
19
Interpretation : All the respondents belonged to different stages of life except the
retired stage. Most number of respondents came under the stage of life when they
all had a mature family. The second largest group of respondents came under
young family with a home stage.
The different stages of life directly affects a person's investment type and amount
as the stages define that how much risk can be taken by the respondent.
42
Investments done by the respondents in different categories
Upto 5,00,000
5,00,000 - 15,00,000
15,00,000 - 30,00,000
50% Above 30,00,000
42%
43
Investment Options Opted by People
30
25
20
15
10
0
Property Mutual Equity Ulip Plans Fixed Others
Funds Deposits
44
Ques. → How familiar are you with investment matters?
8
4
25
Interpretation : When asked about the familiarity with the investment matters,
exactly half of the respondents categorized themselves as fairly familiar, while
approximately 25% of the respondents came under the category of somewhat
familiar. Although about 8 % of the total respondents when asked, were not at all
familiar with the investment matters.
45
Respondents Opinion Towards Choosing an Investment
Choosing an Investment
16%
20%
30%
34%
Interpretation : All the options were duly considered by the respondents as all the
options given to choose collected considerable amount of the respondents.
Although the most chosen option for the investment was balance risk and fair
return with 34%. The second most chosen was more diversified investment and
better return containing 30% of the respondent
46
Time Preference for Investment
7
3
21
Less than 2 Years
Between 2 Year & 5 Years
Between 5 Year & 10 Years
More than 10 Years
19
Interpretation : When asked about the time preference period for an investment
approximately 80 percent of the respondents did fall under only two categories -
between 5 year & 10 years and above 10 years, which clearly specified that the
investors usually do not opt for short term investments rather they prefer long term
investments
47
Purpose of the investment
Purpose of Investment
14
12
Interpretation : When asked about the purpose of the investment, almost half of
the respondents had done investments mainly for the purpose of the capital gain
and to earn profit. 12 out of the 50 respondents had done investments to evade
taxes and the rest had done investments to enjoy both the benefits.
48
Correlation between age of investor and risk taken
0.9
0.8
0.7
0.6
Investment option
0.5
0.4
0.3
0.2
0.1
0
less than 30 30 - 40 40 - 50 Above 50
Interpretation : Analysis shows that the age of the investors and their risk
aptitude have an indirect relationship, lesser the age of the investor more the
number of investors has taken high risk and more the age of investors less number
of investors has taken risk.
49
CHAPTER 5
FINDINGS
After interacting with a number of people during the project and after designing
portfolio for some of them following points came to light:
Even though the number of asset management companies and insurance companies
along with investment schemes available has been increasing, it was seen that still
a large number of people don’t know about mutual funds or ULIP plans in
Insurance. People were found to be knowledgeable about the post office schemes
and other traditional investment products, but not much about the modern plans of
investment.
Conservative attitude
Tax benefit
Out of the various cases handled it was seen that many people invest just to save
tax under section 80 C. They were not very picky in choosing the products for
investment, there main objective was to get tax benefit. Even after investing they
are not very concerned about it. So it’s easy to pitch tax savings products to people
in the months of February and March.
50
Peer pressure
It was found that some people are very dogmatic and they want to invest just
because of peer pressure. Even if the product is not matching his requirements he
wants this product in his portfolio just because his friend or family has that
product.
Businessman
From the cases handled it was seen that businessman generally have a big risk
appetite and are more interested in one time investment. As there might be up &
down in the business, a business men want higher liquidity of money.
Professional
Govt. Employee
It was seen that the govt. employees were not very familiar with the tradings and
the investment matters. They only invested their earnings to earn profits and for
future security.
Purpose of Investments
Risk Capability
Singles as well as more independent ones can take more risk compared to others
51
CHAPTER 6
CONCLUSION
In India, there are a large number of savers, barring the population who are below
the poverty line. In a poor country like this, it is surprising that its saving rate is as
high as 27% of GDP per annum and investment at 28% of GDP. But the return in
the form of output growth is 3!: low as 5 to 7% per annum. One may ask why is it
that high levels of investment could not generate, comparable rates of growth of
output? The answer is poor investment strategy, involving high capital output
ratios, low productivity of capital and high rates of obsolescence of capit1l. What
is true of the nation at that Macro level is also true at Micro level of individuals
and institutions.
The use of capital in India is wasteful and inefficient, despite the fact that India is
labor rich and capital poor. Thus, the Portfolio Managers in India lack the expertise
and experience, which will enable them to have proper strategy for investment
management.
Secondly, the average Indian Household saves around 60% in financial form and
40% in physical form. Of those in financial form, nearly 42% is held in cash and
bank deposits, as per the latest RBI data and they have negative real returns or
return less than the inflation rates. Besides, a proportion of35% of financial savings
is held in form of Insurance, P.F., Pension Funds etc., while another l2% is in
government instruments and Certificates like Post Office Deposits, N.S.
Certificates, Public Provident Funds, National Saving Scheme etc. The real returns
on Insurance, P.F., etc., are low and many times lower than the average inflation
rates. With the removal of many tax concessions for investments in P.O. Savings
instruments, Certificates, etc., they also become less attractive to small and
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medium investors. The only investments, satisfying all their objectives are capital
market instruments. These objectives are income, capital appreciation, safety,
marketability, Liquidity and hedge against inflation, and investment by average
household in shares and debentures is only around 5% of the total financial
savings.
All investments involve risk taking. However, some risk free investments are
available like bank deposits or P.O. Deposits whose returns are called risk free
returns of about 5-12%. So the returns on more risky investments are higher than
that, having risk premium. Risk is variability of return and uncertainty of payment
of interest and repayment of principal. Risk is measured by standard deviation of
the returns over the mean for a given period. Risk varies directly with return. The
higher the risk taken, the higher is the return, under normal market conditions.
Wealth managers are beginning to investigate innovative segmentation methods to
manage the changing client profile. Over the next 20 years’ wealth managers will
hone their segmentation methods. Wealth managers will develop segmentation as a
service efficiency initiative. Segmentation models will apply holistic criteria to
wealth management. The most important segments globally will be entrepreneurs
and SMES/ CEOs. Financial advisers will become an important separate client
segment for wealth managers The organization of direct client ownership will also
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change Availability and flexibility will become vital components of the business
model Internal restructuring will aim to integrate client services. The rise of the
mass affluent represents an opportunity for wealth managers in the medium term
Wealth managers will capture the higher value mass affluent market by offering a
scaled down wealth management service. The mass affluent proposition will run
along the lines of the current wealth management service. Liability management is
currently not part of the wealth management agenda but has proven potential.
Clients in developed markets are seeking more holistic wealth management
services Liability management is clearly a profitable area with a proven existing
client base. The incorporation of lending into wealth management will shift the
focus of the service. Specialist forms of lending will also become common
additions to the offerings of many wealth managers. Some will fail due to a
persistence of the “asset focused” service model and a lack of commitment. There
are significant benefits in the area of liability management for the wealthy, and that
the importance of liability management as part of wealth management will
inevitably grow over the next 20 years, until it becomes a key service area. Rising
income and wealth inequalities, if not matched by a corresponding rise of incomes
across the nation, can lead to social unrest. An area of great concern is the level of
ostentatious expenditure on weddings and other family events. Such vulgarity
insults the poverty of the less privileged, it is socially wasteful and it plants the
seeds of resentment in the minds of the have-nots.
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CHAPTER 7
RECOMMENDATIONS
More awareness about the mutual funds to the customers should be done.
Maintain a continuous relationship with customers to understand their
investment portfolio better and churn their portfolio according to their
requirement.
Mutual fund schemes should be promoted amongst the investors belonging to
the age bracket of 25 yrs to 40 yrs because they are the potential customers of
the company.
As per the research, tax saving schemes are a popular option among the
investors hence they should be promoted with other schemes to attract
customers.
Financial knowledge should be imparted to the customer by the AMC.
Gold fund schemes should be promoted among the customers who have less
risk appetite.
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APPENDIX
QUESTIONNAIRE
Name :
Gender : Male Female
Marital Status : Yes No
Age :
Number of Dependant Members :
Occupation :
Educational Qualification :
1. Which of the following best describes your current stage of life?
a. Single with few financial burdens.
b. A couple without children.
c. Young family with a home
d. Mature family.
e. Preparing for retirement.
f. Retired.
2. Present Annual Income:-
a. Below 3,00,000
b. 3, 00,000 – 5, 00,000
c. 5, 00,000 – 8, 00,000
d. 8, 00,000 & above
3. Amount Invested
Up to 5,00,000
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5,00,000 - 15,00,000
15,00,000 - 30,00,000
Above 30,00,000
4. Investment Field
Property
Mutual Funds
Equity
Ulip Plans
Fixed Deposits
Others
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6. Which one of the following statements describes your feelings towards choosing
an investment?
a. Low Risk & Low Return
b. Balance Risk & Fair Return
c. More diversified Investment & Better Return
d. High Risk & High Return
7. How do you rate your risk aptitude on a scale of 1 to 10 where 1 being the least
and 10 being maximum.
ss
Yes
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Can't say
No
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Bibliography
1. Newspaper
a. Economic Times
b. Business Standard
c. Business Line
2. Magazine
Business World (Issue: 25th July, 2005)
3. Research Reports
a. Research report by UBS Warburg
b. Report by Pictet Fund
c. Report of The President’s Working Group on Financial Markets on LTCM (April
1999)
d. Report of Pricewaterhouse Coopers on the regulation and distribution of
Portfolio management. (May 2003)
e. Fund Manager Performance Evaluation: Macro-factor model vs Option-based
model Applied to Market Neutral and Long/Short Index Strategies by Leila ZAIRI
& Nikoletta SIDERI.
f. A Primer on portfolio management by William Fung and David A. Hsieh
g. Fund Style Allocation – A Risk Adjusted Fund of Hedge Funds Perspective by
Patrik Adlersson and Patrik Blomdahl
h. DEMOCRATIZING THE mutual fund FUND: Considering the Advent of Retail
Hedge Funds by Donald E. Lacey, Jr.
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4. Websites
a. Invetopedia.com
b. Economictimes.com
c. Vanguard.com
d. Reliancepms.com
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