specifically, as I am primarily invested in the US markets, and also allow me to network,

communicate and deliberate with people sharing the same interest as me.

2. We are planning to start an Investment Fund under IAG, for the same we will need a
structure and managing body. Research about such funds/investment bodies from
other colleges in India and suggest a structure for IAG.

There are some institutions which already have investment bodies and their own investment
funds as well like IIT Delhi, IIT Bombay, IIM Ahmedabad etc. For the initial stage of the
development of the investment body and the investment fund, one should keep in mind that
the basic foundation should be rock solid and should have predefined set of rules and
actions which could be taken in cases of a deadlock or some tricky situations.

One should start by establishing the source of the funds; Are the funds provided by the
institution or by certain investors who are confident in the abilities of the group; and, what
are the conditions attached with the using of the funds.

Current structure of IAG: Coordinator, Associate (works with the coordinator), Co-
Coordinator and members of IAG.

Managing body: The managing body should have a fund manager and an investment
committee, composed of skilled and competent individuals. The coordinator and the
associate could be the fund managers and the investment committee could be composed of
the members of the IAG which will be selected through thorough screening and the burning
test of their knowledge. The investment committee would be responsible for the guidance,
the overseeing and making sure that the transactions comply with the regulatory
authorities. They can even give suggestions and advices to the fund managers and the
investment committee would be led by the co-coordinator.

The investment strategy should be predefined; like the investing horizon i.e., a medium-term
or long-term view, the risk appetite i.e., how much risk is the investment body ready to take
(The risk appetite ideally would remain minimal with low volatility, if the portfolio is well
balanced, with only the most solid of the companies). One should also define the sectors in
which the investment body would be investing and what type of security transactions would
be taking place like, will the body be investing in stocks, bonds, real estates, F&Os etc.; a
combination of some or all of them.
The investment body should keep the investors or the institution regularly updated about
the performance of the portfolio and the utilization of the funds. The investment body
should provide with proper and elaborate documentation and reports, stating everything of
need and information that the investors or the institution should be aware about.

Once the investment body is up and running, the body should maintain thorough reports of
everything and keep on adding to the predefined set of rules and actions handbook, as the
body faces and overcomes challenging situations. The delegation of power and how much
authority the position have should also be distinctly mentioned.

Lastly, the profits should be re-invested or certain percentage could be distributed to the
investors or the institution. A reserve should primarily be maintained to tackle any acute
situations as well.

3. Make a three-slide presentation of any one of your favourite Finance topics, which you are
very sure about. Mention sources at the bottom of the slides, if any.

Topic: Will the BRICS currency end the reign of the US dollar as the global reserve currency
and how will it impact the US markets.
Recently, Russia has pushed the BRICS countries to create and trade in the BRICS currency, to
relatively lessen the power and control that US has on the countries who has the US Dollar
as their reserve currency. US imposed sanctions and even blocked some of the foreign
reserve of Russia during the Ukraine invasion, which led to Russia taking this decision
The US dollar will lose its global dominance is not a new topic, and had been prophesized a
few times earlier as well. For example, when the Euro was created in 1999, it started off
really well, and was on a solid uptrend from 1999 to 2008 and everyone at that point of time
was saying that US dollar is nothing but toilet papers. But, since then, the Euro has been
declining up till now and the same would even happen with the BRICS currency as well.
Because, creation of a common currency like the BRICS currency will just lead to more hassle
for the trades, exchanges etc. which would not be sustainable in the long run and would
eventually end up like the Euro situation.
On top of that if we evaluate the situations of the individual currency of the BRICS nation,
then the matter would become much clear. If we see the Chinese Yuan; the Yuan could never
become the common currency as it is a highly controlled currency and it is very difficult for
the Yuan to move in and out of the country. Russian Rouble is also not a healthy alternative
for obvious reasons and the current situation that Russia is in. The Indian Rupee, South
African Rand and Brazilian Real has been depreciating against the USD for many years and is
totally out of the picture.
Another aspect that people bring in while discussing about this topic is that, even the US
dollar is losing its value. What the general masses are missing here is that the USD is itself a
fiat currency and all fiat currencies lose value. It’s just that the USD is the best storehouse of
value as compared to all other currencies, which itself are depreciating. Furthermore, the
USD is the global reserve currency of around 60% of the countries and if you talk about the
USD losing its global dominance as the reserve currency; It is not at all possible in the
coming 30-50 years at least.

4. Give recommendation of an investment opportunity. It can be a Stock, Currency, real

estate, bond, etc. For example, you could choose Reliance Industries Limited,
USD/INR, Indian Sovereign Bond, US Treasury Bonds, Bond by the company Ford.
Specify the reason why the investment is worthwhile. (Reasons can be both
quantitative or qualitative)

A potential investment opportunity could be JUBLFOOD i.e., Jubilant Foodworks. The

company is fundamentally sound and is also significantly undervalued, due to the earnings
coming in lower than expected in consecutive 3 quarters. The sales revenue, net profits and
cash flow from operations are consistently increasing. Even the free cash flow is positive and
increasing. The margins of the company are appreciable and the EPS growth rate according
to the analysts are also positive. It has a sustainable competitive advantage (economic moat)
as well which helps the company to keep the prices of the goods as such that it benefits the
company and the shareholders. The company is also operationally efficient with healthy
levels of ROE and ROIC. The growth of the sales revenue and account receivables are also
good, and the debt structure is also stable. The current ratio on this company as of now
stands at 0.8 which is a little off, but I believe it would stabilise in the coming years.

Overall, according to my calculation, taking that the company grows at 22% for the coming
10 years, the intrinsic value of the company stands at Rs 680, according to discounted cash
flow model, and the price as of now is Rs 470 i.e., the stock is around 31% undervalued. The
price of the stock is also below the 200MA, which is quite a rare thing to happen for a
company which is fundamentally sound. So, one should take advantage of this opportunity
to add shares of this company (always in tranches). One could add a tranche of an allocation
here, and then wait for the next quarter earnings results to come in. If the earnings are again
lower than expected, then the price could go even lower, and one could then again add
another tranche.

5. You are an aspiring Fund Manager in the city of Indore. After putting in a lot of effort,
you have finally found a High Net Worth individual willing to hire your services. But
(s)he puts in a condition to show sustainable returns with minimal risk. Hence, you
have been asked to prepare a report on how you would invest a total of Rs 1 crore in
 NSE/BSE. Prove your mettle to the HNI by preparing a report on how you will invest
the given amount. Show calculations wherever necessary (Word limit: as you deem
fit).

Firstly, there is no time horizon given; So, let’s assume a medium to long term view i.e., 3–5-
year long horizon. Now, in order to create a minimal risk and low volatility portfolio, one
should have narrow and concentrated diversification in all sectors and should at least have a
minimum of 8 stocks in the portfolio. We are given a total capital of 1Cr, and the portfolio
that I would be building would not have any speculative or turnaround stocks or even bonds,
so each stock would be given an equal allocation. The portfolio would have a total of 12
stocks, thus 1Cr would get equally divided among the companies and the ETFs. (i.e., 0.083Cr
allocation for each security)

PORTFOLIO: -

Ticker Symbol Company Sector Investment Category

TCS, INFY Tata Consultancy IT Technology Secular growth

Service, Infosys

HDFCBANK, ICICIBANK HDFC Bank, ICICI Bank Financials Growth

NIFTY50, SENSEX ETFs Market tracking -

BRITANNIA, Britannia, Hindustan Consumer Staples Defensive &

HINDUNILVR Unilever Predictable

DABUR, GODREJCP Dabur, Godrej Consumer Predictable

Consumer products discretionary

RELIANCE, JUBLFOOD Reliance, Jubilant - Growth; Defensive

Foodworks growth

The companies are cherry picked from tons of companies listed in the Indian markets based
on many filters like consistently growing sales revenue, net profits and cash flow from
operations (CFO not for banks).
Even the free cash flow of the companies is kept in mind just to make sure that the company
is not just solid on the face value but is also retaining and using its cash for development and
not just bleeding cash. (Does not apply for banks, Reliance is an exception as it is heavily
investing in in new businesses and projects like the launch of its Jio telecom business,
JioMart, the expansion of its refining and petrochemicals businesses, and the development
of its renewable energy business.)
The gross profit margins and the net profit margins as well are consistent and high and also
is at least at par or more than the industry level.
The growth perspective of these companies is also another aspect; All the companies which
are selected have positive EPS growth rate according to the calculations of the analysts from
reliable sources and site. This ensures that the company will keep on growing its business
and keep increasing its shareholder equity as well.
Moreover, all the companies have a wide economic moat that basically protects them from
competition and even ensures that these companies could prosper in the worst of
conditions by passing on the additional costs to the customers without much hassle.
The ROE and ROIC as well are at good levels; one would not say at the best for some
companies but are better than the other companies in the same sector.
Cash conversion cycles of all the companies and also the correctness of the accounts
receivables and the sales revenue is also covered.
The debt structure is a crucial part for a company to pass as it make or break criteria. The
companies in the portfolio have healthy debt and important ratios like current ratio, debt
servicing ratio, debt/EBITDA etc. are also at healthy numbers.
Overall, the portfolio is well balanced, and is hedged for majority of the market conditions,
but it’s not just the fundamentals that one has to look for. While adding the companies, one
should make sure that he/she doesn’t go all in at once, but create a position by buying in
tranches and only when the prices are at buy levels, which are pre identified, and the
companies are significantly undervalued. The insider news, current headlines,
macroeconomic data should only be viewed just for fun and entertainment, but all the
buying and selling of these securities should be done based solely on the fundamentals and
the technical.