TASK 2
SWOT ANALYSIS OF ASSET CLASS AND
PROJECT NOTE
GOLD
Strength
▪ It has ready marketability
and liquidity
▪ It is a very important asset
class
▪ Investors buy gold as a safe
haven against crisis.
Opportunity
▪ Gold demand is growing
▪ Fewer economically
recoverable gold mining
sites are made every year.
1|P ag e
Weakness
▪ Drop in gold price will
affect coin sales.
▪ Gold price is volatile in
recent times.
▪ It is an idle asset with no
regular return profile.
▪ It has storage cost.
Threat
▪ Price of gold is driven by
supply and demand and
speculation.
▪ Gold price have been
volatile.
▪ Gold do not have a yield;
it cannot benefit from
compound interest.
 MUTUAL FUNDS
Strength
▪ This is managed by experts
or professionals.
▪ It is a huge market
▪ It has better performance
▪ Consist of variety of
products.
Opportunity
▪ Investment can be done
with small amount
▪ Easy and convenient
▪ Loans can be taken
DEBT
Strength
▪ These are safe form of
investment.
▪ Compared with others it
has low risk
▪ Fixed rate of interest.
Opportunity
▪ Some types of bond are
tax-free
2|P ag e
Weakness
▪ All funds are not liquid.
▪ Subject to market risk.
▪ No guarantee returns
▪ Expense is incurred by
investor on entry and exit.
Threat
▪ Do not offer much security.
▪ Related directly with
performance of companies.
Weakness
▪ No voting rights are
provided
▪ Can be easily traded in
secondary market
▪ It has a maturity date
Threat
▪ Risk of bankruptcy of
issuer.
▪ Price may decrease when
there is an increase in
interest rate.
 EQUITY SHARES
Strength
▪ They have higher dividend
▪ Voting Right
▪ Good liquidity position
▪ Capital Appreciation
Opportunity
▪ Higher return
▪ Right to Vote
▪ Right for Liquidation
▪ Capital appreciation
REAL ESTATE
Strength
▪ They have high demand
▪ Less volatile
▪ Easy availability
▪ Used to hedge inflation
risk.
Opportunity
▪ Rapid growth
▪ It provides high potential
for new sectors.
3|P ag e
Weakness
▪ Low market Value
▪ Risky Investment
▪ Cost of Equity
▪ Uncertain Return
▪ Higher speculation
Threat
▪ Fluctuation in market price
may affect equity shares
▪ Chance of loss
Weakness
▪ Low liquidity
▪ Huge initial capital is
needed.
▪ Ownership right can’t be
transferred.
Threat
▪ Change in environment my
cause change in price.
▪ Economic crashes can
affect real estate.
▪ Natural calamities and
government policies also
affect real estate class.
 Product Notes of All Financial Product

Direct Equity
When we invest in a company's equity stock, we are legally acquiring control of the company.
The overall sum that a company intends to collect is split into small fractions known as shares,
each of which has a rupee value. Through subscribing to these securities, we have the
opportunity to engage in business meetings and express our opinions on decisions, but the main
reason we invest is to win divided – this is like a benefit to us as investors, because the
corporation makes a benefit with our capital, which is now paid to the owners in the form of
dividend. One may also choose to return the shares to the company or sell them to a third party
for a profit.
Advantages:
▪ Less burden
▪ Credit issues gone
▪ Learn and gain from partners

▪ Disadvantages:
▪ Share profit
▪ Loss of control
▪ Potential conflict

Non-Convertible debentures

Non-convertible debentures (NCDs) are a financial instrument that is used by companies to

raise long-term capital. This is done through a public issue. NCDs are a debt instrument with a
fixed tenure and people who invest in these receive regular interest at a certain rate.
Advantages
▪ Every company that seeks to raise money through an NCD is rated by agencies such as
Fitch Ratings, CRISIL, ICRA and CARE so the information provided is verified and
the chances of fraud are zero.
▪ NCDs issued by NBFC’s normally pay an interest rate of 150-175 basis points higher
than what banks pay on their FDs. Since most of the NBFCs issuing these NCDs are
reputed and well-capitalized, investors do not see much risk in investing in them.
▪ The other advantage of NBFCs is if the rates start falling by 25 to 50 basis points from
current levels, then the investor enjoys capital appreciation on these NCDs.
▪ Debentures have a first or second charge on the assets of the issuer so are much safer
as compared to other unsecured forms of investment.

4|P ag e
Disadvantages
▪ Taxwise these NCDs are not very efficient. For example, even though NCD pays
around 9%-10% coupon rate, the actual returns are less than 7% on a post-tax basis.
▪ Inflation is another major risk. Inflation eats into your profit. Most of the NCDs mention
returns in nominal terms which may not give the right idea about the soundness of
return. The real return will always be less than the nominal return. Real return, simply
defined, is nothing but the nominal return minus the inflation. Hence if inflation goes
up, the real return will go down.
▪ There are no guaranteed returns beyond the Government bonds and bank fixed deposits
(even bank FD has risk but it is very low). Hence the moment investors see promises
of returns larger than the returns offered by Government bonds; they should intuitively
understand that this will expose them to risk. This is the cardinal rule of investing.

National Pension Scheme

NPS is an initiative undertaken by the Government of India, which seeks to provide retirement
benefits to all citizens of India, even from the unorganized sectors. This scheme ensures that a
part of savings is utilised to provide a subscriber with retirement benefits.

Advantages
▪ It is voluntary
▪ It is regulated
▪ Diversification
▪ Different schemes to choose from
▪ Convenience
Disadvantages
▪ Partial tax exemption
▪ No withdrawals till maturity
▪ Number% limit on equity investments

Public Provident Fund

Public provident fund is a popular investment scheme among investors courtesy its multiple
investor-friendly features and associated benefits. It is a long-term investment scheme
popular among individuals who want to earn high but are also looking for stable returns.
Safety of the principal amount is the prime target of individuals opening a PPF account.

5|P ag e
 Advantages
▪ Assured returns
▪ Tax benefits
▪ Options to invest in PPF
▪ Safest Investment Avenue
Disadvantages
▪ Accumulated Corpus may not high
▪ Longer lock-in period
▪ Upper limit

Sukanya Samriddhi Yojana

The Sukanya Samriddhi Account is designed to provide a bright future for your girl child. It
offers a high interest rate of 7.6% and tax benefits under 80c. Sukanya Samriddhi Yojana or
SSY is a welfare scheme designed for the girl child. Investing in child insurance plan allows
parents or legal guardians to ensure financial security for a girl child aging ten years or below.
Under the Sukanya Samriddhi Yojana, an account in the name of the girl can be opened across
any of the private and public sector banks for 21 years. The tenure of investment under SSY is
21 years, starting from the account’s opening date.

Advantages
▪ Need a small amount of INR 250 for opening a SSYA.
▪ Helps save for your girl child’s educational expenses
▪ The Triple Tax Benefits you cannot ignore
▪ Attractive interest rates
▪ You only need to deposit for 15 years
▪ Premature withdrawal allowed under special circumstances
Disadvantages
▪ Interest rate is not Fixed
▪ No Premature Withdrawal
▪ Very Long Locking Period
▪ Online Transfer facility

Senior Citizen Saving Scheme

The Senior Citizens Savings Scheme (SCSS) is primarily for the senior citizens of India. The
scheme offers a regular stream of income with the highest of safety and tax saving benefits. It
is an apt choice of investment for those over 60 years of age.

6|P ag e
Advantages
▪ Risk free
▪ High interest rate
Disadvantages
▪ Invalid for NRI’s
▪ Interest is taxable

Mutual Fund
A mutual fund is a type of financial vehicle made up of a pool of money collected from many
investors to invest in securities like stocks, bonds, money market instruments, and other assets.
Mutual funds are operated by professional money managers, who allocate the fund's assets and
attempt to produce capital gains or income for the fund's investors. A mutual fund's portfolio
is structured and maintained to match the investment objectives stated in its prospectus.
Mutual funds give small or individual investors access to professionally managed portfolios of
equities, bonds, and other securities. Each shareholder, therefore, participates proportionally in
the gains or losses of the fund. Mutual funds invest in a vast number of securities, and
performance is usually tracked as the change in the total market cap of the fund—derived by
the aggregating performance of the underlying investments.
Advantages
▪ Advanced Portfolio Management
▪ Dividend Reinvestment
▪ Risk Reduction (Safety)
▪ Convenience and Fair Pricing
Disadvantages
▪ High Expense Ratios and Sales Charges
▪ Management Abuses
▪ Tax Inefficiency

Equity Based Mutual Funds

An equity fund is a mutual fund that invests principally in stocks. It can be actively or passively
(index fund) managed. Equity funds are also known as stock funds. Stock mutual funds are
principally categorized according to company size, the investment style of the holdings in the
portfolio and geography. A Mutual Fund scheme is classified as an Equity Mutual Fund if it
invests more than 60% (sixty percent) of its total assets in the equity shares of different
companies. The balance amount can be invested in money market instruments or debt securities
as per the investment objective of the scheme.

7|P ag e
Advantage
▪ Capital appreciation.
▪ Professional expertise
Disadvantage
▪ High risk
▪ High capital

Debt Based Mutual Funds

Debt funds aim to generate returns for investors by investing their money in avenues like bonds
and other fixed-income securities. This means that these funds buy the bonds and earn interest
income on the money. The yields that mutual fund investors receive is based on this. Debt
funds are also referred to as Fixed Income Funds or Bond Funds.
Advantages
▪ Stable
▪ Low risk
▪ Not affected by market volatility

Disadvantages
▪ Low returns
▪ Miscellaneous costs incurred

Hybrid Mutual Funds

Hybrid funds invest in both debt and equity instruments to achieve diversification and avoid
the concentration risk. Hybrid mutual funds are types of mutual funds that invest in more than
one asset class. Most often, they are a combination of Equity and Debt assets, and sometimes
they also include Gold or even Real estate. These funds typically invest in a mix of stocks and
bonds. They are also known as asset allocation funds.

Advantages
▪ Risk and return are balanced.
▪ Diversification

8|P ag e
Disadvantages
▪ Involves risk.
▪ Difficult to compare returns

Mutual Fund Index Funds

Designed to match the investment results of a specific market index. An index fund is a
portfolio of stocks or bonds designed to mimic the composition and performance of a financial
market index. Index funds have lower expenses and fees than actively managed funds. Index
funds follow a passive investment strategy.
Advantages
▪ Low risks
▪ Offers lower fees than non-index funds.
▪ Enjoys less flexibility than managed funds.

Disadvantages
▪ It Lacks flexibility.
▪ There is not much return.

Exchange Traded Funds (ETF)

An exchange traded fund (ETF) is a type of security that tracks an index, sector, commodity,
or other asset, but which can be purchased or sold on a stock exchange the same as a regular
stock. An ETF can be structured to track anything from the price of an individual commodity
to a large and diverse collection of securities. ETFs can even be structured to track specific
investment strategies.

Advantages
▪ Greater diversifications
▪ Better liquidity than a mutual fund
▪ Favourable tax treatment
▪ Fees are lower than mutual funds.

Disadvantages
▪ Trends and opportunities can be missed out.
▪ ETFs focusing on dividend pays out less and cost more.

9|P ag e
 Portfolio Management Services (PMF)

Portfolio Management Service is a tailor-made professional service which is offered to cater

the investments’ objective of different investor classes. The clients can be Individuals or
Institutions entities with high net worth. 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.
Advantages
▪ Independent portfolio
▪ Quality portfolio
▪ Transparent holdings

Disadvantages
▪ Risk of over diversification
▪ No downside protection

Systematic Investment Plans (SIP)

A systematic investment plan is an investment vehicle offered by many mutual funds to
investors which allows them to invest small amounts periodically instead of lump sums. A
systematic investment plan (SIP) is the most convenient way of investing in mutual funds. By
opting to invest via an SIP, you eliminate the need to have a lump sum to get started with your
mutual fund investment. Through an SIP, you can invest a small sum on a regular basis into
the mutual fund scheme of our choice.
Advantages
▪ Easy to invest
▪ Power of compounding
Disadvantages
▪ Does not suit people having unpredictable cash flows.

Gold
Gold is the most common precious metal for investment of all precious metals. Gold is
typically purchased by investors to diversify risk, especially through the use of futures contracts
and derivatives. The gold market, like most stocks, is prone to uncertainty and fluctuations. In
comparison to other precious metals used for savings, gold has proven to be the most important
safe haven in a variety of countries.

10 | P a g e
Advantages
▪ Liquidity
▪ Gold Maintains its Value Over Time
▪ Stable Investment
▪ Lower Risk
▪ Universal Investment
Disadvantages
▪ Tax rate is high
▪ Difficult to store
▪ Price correction can lead to loses
▪ Not a passive investment

PREPARED BY:

Abin Som

Christ University Bangalore

Junior Research Analyst

(21WM45 B5)

11 | P a g e