FINANCIAL MARKET

Portfolio Management in
different sectors
 Individual Portfolio of a Doctor:
A doctor who has saved 10 lakhs wants to invest
in the market. In this respect, the portfolio
manager can construct his portfolio as under:
Serial No. Investment Amount Percentage
(000)
1. Equity 300 30
2. Debt 200 20
3. Fixed Deposits 250 25
4. NSC 150 15
5. PPF 100 10
Total 1,000 100
 Corporate’s Portfolio:
Investment by corporates can be made in physical
as well as financial assets. A Corporate portfolio
can be as follows:
Serial No. Investment Amount (000) Percentage
1. Preference Capital 500 20
2. Equity Capital 1,000 40
3. Reserves & Surplus 500 20
4. Debentures 300 12
5. Term Loans 200 08
Total 2,500 100
 Banking Company’s Portfolio:
The percentage of investments will vary from time
to time as per RBI guidelines, amount of deposits
and market conditions also depending upon
liquidity, interest rates, repo rates and inflation.
Serial No. Investment Amount Percentage
(000)
1. Cash reserve ratio 800 05

2. Statutory liquidity 4,000 25

ratio
3. Advances 8,000 50

4. Investments * 3,200 20

Total 16,000 100

 Mutual Fund’s Portfolio:
The investment policy of the fund may depend
upon on the objectives(income or growth). They
invest their funds in stock market, money market,
government securities and debt market .
Serial No. Investment Amount (000) Percentage

1. Equity 4,000 20

2. Debt 6,000 30

3. Money market 4,000 20

4. Bank deposits 4,000 20

5. IPO 2,000 10

Total 20,000 100

 MUTUAL FUNDS
 It is a trust that pools the savings of a
number of investors who share a common
financial goal. The income earned through
these investments and the capital
appreciation realized are shared by its units
owned by the investors. It offers an opportunity
for the common man to invest in a diversified,
professionally managed basket of securities at a
relatively low cost.
WORKING OF A MUTUAL FUND
INVEST
ORS
RETUR
NS

FUND
MANAGER

SECURI
TIES
 TYPES OF MUTUAL FUNDS
 OPENENDED
 CLOSE ENDED

Funds can be classified further depending

upon the investment categories, risk and
return which are as follows:
 Money market mutual funds
 Gilt Funds
 Income Funds
 High yield debt funds
 Equity funds for long term growth
 Diversified equity funds
 Aggressive growth funds
 Mid-cap or small cap funds
 Equity Linked Saving Schemes (ELSS)
 Equity Index funds
 Dividend yield funds
 Monthly Income plans
 Balanced funds
 Commodity funds
 Real estate funds
 Fund of funds
 CONSTITUENTS OF MUTUAL
FUNDS
UNIT HOLDERS

SPONSORS

AMC
TRUSTEES

TRANSFER AGENT
MUTUAL FUND

CUSTODIAN
SEBI
 AMFI CODE OF ETHICS
 Funds are to be managed in the interest of unit
holders
 Unit holders should be treated equally and fairly
 Ensure meaningful disclosures
 Avoid conflict of interest
 Ensure segregate accounting
 Adhere ethical standards and fairness in dealings
 High standards of care, diligence, services and
disclosure announcements.
MERITS OF MUTUAL FUNDS
 Diversification
 Professional Management
 Regulatory oversight
 Liquidity
 Convenience
 Low cost
 Tax benefits
 How does one select a good mutual
fund ?
 Quality of promoters
 Track record of returns to unit holders
 Investment philosophy and process
 Product basket
 Adherence to compliance
 Net Asset Value
Goals of mutual fund investors
100% 92%
80%
60%
40% 30%
19% 14%
20%
0%