Project Report Sharekhan MBA

8/14/2019 Project Report Sharekhan MBA

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SUMMER TRAININIG REPORT ON

PORTFOLIO MANAGEMENT SERVICES -AN

INVESTMENT OPTION

For

SHAREKHAN LIMITED

Under the supervision

Of

Su!"itted #$% Su!"itted to%

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ACKNOWLEDGEMENT

Expression of feelings by words makes them less significant when it

comes to make statement of gratitude

&ith re'(rd to "$ Pro)e*t +ith Sh(re Kh(n, Ne+ De-hi, I +ou-d -i.e to th(n. e(*h(nd ever$one +ho offered he-p, 'uide-ines (nd support +henever re/uired0

I (" e1tre"e-$ 'r(tefu- to "$ *o--e'e 'uide, ??(nd (-- the f(*u-t$ "e"!er of "$

*o--e'e for their v(-u(!-e su''estions (nd 'uid(n*e0

I e1press "$ deep sense of 'r(titude to "$ *o"p(n$ "entors, Mr. ?? +ithout+hose support (nd *ooper(tion this pro)e*t *ou-d not h(ve !een *o"p-etedsu**essfu--$0

L(st, !ut not the -e(st, "$ he(rtfe-t -ove for "$ p(rents (nd "$ friends, +hose*onst(nt support (nd !-essin's .ept "e enthusi(sti* throu'hout this pro)e*t0

Tanya Bhatnagar

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DECLARATION

I Tanya Bhatnagar student of ?? Batch (??) declare that every part of the Project

Report2PORTFOLIO MANAGEMENT SER3I4ES %AN IN3ESTMENT OPTION5th(t I h(ve su!"itted is ori'in(-.

I +(s in re'u-(r *ont(*t +ith the no"in(ted 'uide (nd *ont(*ted 6 ti"es for dis*ussin'the pro)e*t.

(Tanya Bhatnagar)

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ANNEXURE 90-91

BIBLIOGRAPHY 92

EXECUTIVE UMMA!"

Investin' is !oth Arts (nd S*ien*e0 Ever$ Individu(- h(s their o+n spe*ifi*fin(n*i(- need (nd e1pe*t(tion !(sed on their ris. t(.in' *(p(!i-ities, +here(s so"eneeds (nd e1pe*t(tion (re univers(-0 Therefore, +e find th(t the s*en(rio of the Sto*.M(r.et is *h(n'in' d($ !$ d($ hours !$ hours (nd "inute !$ "inute0 The ev(-u(tionof fin(n*i(- p-(nnin' h(s !een in*re(sed throu'h de*(des, +hi*h *(n !e !est seen in

*usto"ers0 No+ ( d($7s invest"ents h(ve !e*o"e ver$ i"port(nt p(rt of in*o"es(vin'0

In order to .eep the Investor s(fe fro" "(r.et f-u*tu(tion (nd "(.e the"profit(!-e, Portfo-io M(n('e"ent Servi*es 8PMS9 is f(st '(inin' Invest"ent Optionfor the Hi'h Net+orth Individu(- 8HNI90 There is 'ro+in' *o"petition !et+een!ro.er('e fir"s in post refor" Indi(0 For investor it is (-+($s diffi*u-t to de*ide +hi*h!ro.er('e fir" to *hoose0

The rese(r*h desi'n is (n(-$ti*(- in n(ture0 A /uestionn(ire +(s prep(red (nddistri!uted to Investors0 The investor7s profi-e is !(sed on the resu-ts of (/uestionn(ire th(t the Investors *o"p-eted0 The S("p-e *onsists of :;; investors fro"v(rious !ro.er7s pre"ises0 The t(r'et *usto"ers +ere Investors +ho (re tr(din' in thesto*. "(r.et0

In order to identif$ the effe*tiveness of Sh(re.h(n PMS servi*es this Rese(r*h is*(rried throu'hout the (re( of Ne+ De-hi0 At the ti"e of investin' "one$ ever$one-oo. for the Ris. f(*tor invo-ve in the Invest"ent option0 The Report is prep(red onthe !(sis of Rese(r*h +or. done throu'h the different Rese(r*h Methodo-o'$ the d(t(is *o--e*ted fro" !oth the sour*e Pri"(r$ sour*es +hi*h *onsist of


6/97

"(r.et (nd ho+ ( *-ient7s portfo-io *(n !e desi'ned (nd +h(t f(*tors ( portfo-io"(n('er "ust *onsider for desi'nin' ( portfo-io0

C8A7TE!95

INTRODUCTION

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INTRODUCTION TO STUDY

The fie-d of invest"ent tr(dition(--$ divided into se*urit$ (n(-$sis (nd portfo-io"(n('e"ent0 The he(rt of se*urit$ (n(-$sis is v(-u(tion of fin(n*i(- (ssets0 3(-ue inturn is the fun*tion of ris. (nd return0 These t+o *on*epts (re in the stud$ ofinvest"ent 0Invest"ent *(n !e defined the *o""it"ent of funds to one or "ore (ssets

th(t +i-- !e he-d over for so"e future ti"e period0

In tod($ f(st 'ro+in' +or-d "(n$ opportunities (re (v(i-(!-e, so in order to "ove+ith *h(n'es (nd 'r(! the !est opportunities in the fie-d of invest"ents ( profession(-fund "(n('er is ne*ess(r$0

Therefore, in the present s*en(rio the Portfo-io M(n('e"ent Servi*es 8PMS9 is f(st'(inin' i"port(n*e (s (n invest"ent (-tern(tive for the Hi'h Net+orth Investors0

Portfo-io M(n('e"ent Servi*es 8PMS9 is (n invest"ent portfo-io in sto*.s, fi1edin*o"e, de!t, *(sh, stru*tured produ*ts (nd other individu(- se*urities, "(n('ed !$ (profession(- "one$ "(n('er th(t *(n potenti(--$ !e t(i-ored to "eet spe*ifi*invest"ent o!)e*tives0

&hen $ou invest in PMS, $ou o+n individu(- se*urities un-i.e ( "utu(- fundinvestor, +ho o+ns units of the entire fund0 >ou h(ve the freedo" (nd f-e1i!i-it$ tot(i-or $our portfo-io to (ddress person(- preferen*es (nd fin(n*i(- 'o(-s0 A-thou'hportfo-io "(n('ers "($ oversee hundreds of portfo-io, $our (**ount "($ !e uni/ue0

Invest"ent M(n('e"ent So-ution in PMS *(n !e provided in the fo--o+in' +($s?

i0 Dis*retion(r$

ii0 Non Dis*retion(r$

iii0 Advisor$

D%scret%onar3:Under these servi*es, the *hoi*e (s +e-- (s the ti"in's of theinvest"ent de*isions rest so-e-$ +ith the Portfo-io M(n('er0

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Non D%scret%onar3:Under these servi*es, the portfo-io "(n('er on-$ su''ests theinvest"ent ide(s0 The *hoi*e (s +e-- (s the ti"in's of the invest"ent de*isions restso-e-$ +ith the Investor0

Ho+ever the e1e*ution of tr(de is done !$ the portfo-io "(n('er0A'%sor3:Under these servi*es, the portfo-io "(n('er on-$ su''ests the invest"entide(s0

The *hoi*e (s +e-- (s the e1e*ution of the invest"ent de*isions rest so-e-$ +ith theInvestor0

!)le ;1*-(use 8d9 of the SE#I 8portfo-io "(n('ers9 !)les1 522,defines the ter"

2Portfo-io5 (s 2tot(- ho-din' of se*urities !e-on'in' to (n$ person50As ( "(tter of f(*t, portfo-io is *o"!in(tion of (ssets the out*o"es of +hi*h

*(nnot !e defined +ith *ert(int$ ne+ (ssets *ou-d !e ph$si*(- (ssets, re(- est(tes, -(nd,!ui-din', 'o-d et*0 or fin(n*i(- (ssets -i.e sto*.s, e/uit$, de!enture, deposits et*0

Portfo-io "(n('e"ent refers to "(n('in' effi*ient-$ the invest"ent in these*urities he-d !$ profession(- for others0

Mer*h(nt !(n.er (nd the portfo-io "(n('e"ent +ith ( vie+ to ensure "(1i"u"return !$ su*h invest"ent +ith "ini"u" ris. of -oss of return on the "one$ investedin se*urities he-d !$ the" for their *-ients0 The (i" Portfo-io "(n('e"ent is to(*hieve the "(1i"u" return fro" ( portfo-io, +hi*h h(s !een de-e'(ted to !e"(n('ed !$ "(n'er or fin(n*i(- institution0

There (re -ots of or'(ni=(tion in the "(r.et on the -oo.out for the peop-e -i.e $ou+ho need their portfo-ios "(n('ed for the" 0The$ h(ve tr(ined (nd s.i--ed t(-ent +i--+or. on $our "one$ to "(.e it do "ore for $ou0

Therefore, if (n$ investors sti-- insist on "(n('in' their o+n portfo-io, then ensure$ou !ui-d dis*ip-ine into their invest"ent0 &or. out their str(te'$ (nd st(nd !$ it0

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M"T8 A6OUT 7M

There (re t+o "ost *o""on "$ths found (!out Portfo-io M(n('e"ent Servi*es8PMS9 +hi*h +e found ("on' "ost of the Investors0 The$ (re (s fo--o+s0

Myth No. 1: PMS and Mutual Fund are Siilar a! the

in"e!tent o#tion$

As in the Fin(n*e #(s.et !oth the PMS (nd Mutu(- Fund (re used for "ini"i=in'ris. (nd "(1i"i=e the profit of the Investors0 The o!)e*tives (re si"i-(r (s in !oth theprodu*t !ut the$ (re different fro" e(*h other in *ert(in (spe*ts0 The$ (re (s fo--o+s0

Mana*e&ent %'e

In PMS, it7s on'oin' person(-i=ed (**ess to profession(- "one$ "(n('e"ent

servi*es0 &here(s, in Mutu(- fund 'ives person(-i=e (**ess to "one$0

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M%n%&)&s

PMS 'ener(--$ 'ives hi'her "ini"u" invest"ents th(n "utu(- funds0 Gener(--$,

"ini"u" r(n'es fro"? Rs0 : 4rore B for E/uit$ Options Rs0 C 4rore B for Fi1edIn*o"e Options Rs0 ; L(*s B for Stru*tured Produ*ts, +here(s in Mutu(- FundProvide on'oin', person(-i=ed (**ess to profession(- "one$ "(n('e"ent servi*es0

le@%b%l%t3

PMS is 'ener(--$ "ore f-e1i!-e th(n "utu(- funds0 The Portfo-io M(n('er "($ "ove

to :;; *(sh if it re/uired0 The Portfo-io M(n('er "($ t(.e his o+n ti"e in !ui-din'

up the portfo-io0 The Portfo-io M(n('er *(n (-so "(n('e ( portfo-io +ithdisproportion(te (--o*(tion to se-e*t *o"pe--in' opportunities +here(s, in Mutu(-

Fund *o"p(r(tive-$ -ess f-e1i!-e0

Myth No. %: PMS i! ore Ri!& 'ree than other

Finan(ial In!truent$

In Fin(n*i(- M(r.et Ris. f(*tor is *o""on in (-- the fin(n*i(- produ*ts, !ut $es it istrue th(t Ris. F(*tor v(r$ fro" e(*h other due to its n(ture0A-- invest"ents invo-ve (*ert(in ("ount of ris., in*-udin' the possi!-e erosion of the prin*ip(- ("ount invested,+hi*h v(ries dependin' on the se*urit$ se-e*ted. For e1("p-e, invest"ents in s"(--(nd "id%si=ed *o"p(nies tend to invo-ve "ore ris. th(n invest"ents in -(r'er*o"p(nies0

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2 ;+1

;. )b9bro$er:

A su!%!ro.er (*ts (s ('ent of sto*. !ro.er0 He is not ( "e"!er of( sto*. e1*h(n'e0 He (ssists the investors in !u$in', se--in' or de(-in' in se*uritiesthrou'h sto*.!ro.er0 The !ro.er (nd su!%!ro.er shou-d enter into (n ('ree"ent in

+hi*h o!-i'(tions of !oth shou-d !e spe*ified0 Su!%!ro.er "ust !e re'istered SE#I for( de(-in' in se*urities0 For 'ettin' re'istered +ith SE#I, he "ust fu-fi-- *ert(in ru-es(nd re'u-(tion0

,. Mar$et Ma$ers: M(r.et "(.er is ( desi'n(ted spe*i(-ist in the spe*ified

se*urities0 The$ "(.e !oth !id (nd offer (t the s("e ti"e0 A "(r.et "(.er h(s to(!ide !$ !$e%-(+s, ru-es re'u-(tions of the *on*erned sto*. e1*h(n'e0 He is e1e"pt

fro" the "(r'in re/uire"ents0 As per the -istin' re/uire"ents, ( *o"p(n$ +here thep(id%up *(pit(- is Rs0 4rore !ut not "ore th(n Rs0 C *ore (nd h(vin' ( *o""er*i(-oper(tion for -ess th(n $e(rs shou-d (ppoint ( "(r.et "(.er (t the ti"e of issue ofse*urities0

+. 7ortfol%o Cons)ltants:

A *o"!in(tion of se*urities su*h (s sto*.s, !onds (nd"one$ "(r.et instru"ents is *o--e*tive-$ *(--ed (s portfo-io0 &here(s the portfo-io

*onsu-t(nts (re the persons, fir"s or *o"p(nies +ho (dvise, dire*t or undert(.e the"(n('e"ent or(d"inistr(tion of se*urities or funds on !eh(-f of their*-ients0

Tr(dition(--$ sto*. tr(din' is done throu'h sto*. !ro.ers, person(--$ or throu'hte-ephones0

As nu"!er of peop-e tr(din' in sto*. "(r.et in*re(se enor"ous-$ in -(st fe+ $e(rs,so"e issues -i.e -o*(tion *onstr(ins, !us$ phone -ines, "iss *o""uni*(tion et* st(rt'ro+in' in sto*. !ro.er offi*es0 Infor"(tion te*hno-o'$ 8Sto*. M(r.et Soft+(re9

he-ps sto*. !ro.ers in so-vin' these pro!-e"s +ith On-ine Sto*. Tr(din'0

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Sto*.s (re ph$si*(- *o""odities (nd if ( tr(der +ishes to 'o short then the !ro.er"ust h(ve (rr(n'e"ents in p-(*e to !orro+ th(t sto*. fro" ( sh(reho-der unti- thetr(der *-oses their position0 This -i"its the opportunities (v(i-(!-e for short se--in'0

4ontr(st this to futures tr(din' +here se--in' is (s e(s$ (s !u$in'0-. Costs

A-thou'h on-ine tr(din' *osts for sto*. tr(din' (re -o+ the$ sti-- (dd *onsider(!-$to the *osts of d($ tr(din'0 On-ine futures tr(din' (re (!out : of the *ost for thee/uiv(-ent v(-ue0 In the UK ;0C st("p dut$ is (-so -evied on (-- sh(re pur*h(ses"(.in' tr(din' virtu(--$ i"possi!-e, hen*e the popu-(rit$ of spre(d !ettin'0

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C8A7TE!9 ;

COMPAN, PROFILE

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COM7AN" 7!OILE

Sh(re.h(n is one of the -e(din' ret(i- !ro.er('e of 4iti 3enture +hi*h is runnin'

su**essfu--$ sin*e :J in the *ountr$0 E(r-ier it +(s the ret(i- !ro.in' (r" of theMu"!(i%!(sed SSKI Group, +hi*h h(s over ei'ht de*(des of e1perien*e in the sto*.!ro.in' !usiness0 Sh(re .h(n offers its *usto"ers ( +ide r(n'e of e/uit$ re-(tedservi*es in*-udin' tr(de e1e*ution on #SE, NSE, Deriv(tives, depositor$ servi*es,on-ine tr(din', invest"ent (dvi*e et*0

E(r-ier +ith ( -e'(*$ of "ore th(n ; $e(rs in the sto*. "(r.ets, the SSKI 'roupventured

Into institution(- !ro.in' (nd *orpor(te fin(n*e : $e(rs ('o0 SSKI is one of the-e(din' p-($ers in institution(- !ro.in' (nd *orpor(te fin(n*e (*tivities0 SSKI ho-ds (si=e(!-e portion of the "(r.et in e(*h of these se'"ents0 SSKI7s institution(- !ro.in'(r" (**ounts for of the "(r.et for Forei'n Institution(- portfo-io invest"ent (ndC of (-- Do"esti* Institution(- portfo-io invest"ent in the *ountr$0

It h(s ; institution(- *-ients spre(d over Indi(, F(r E(st, UK (nd US0 Forei'nInstitution(- Investors 'ener(te (!out C of the or'(ni=(tion7s revenue, +ith ( d(i-$

turnover of over US "i--ion0 The *ontent%ri*h (nd rese(r*h oriented port(- h(sstood out ("on' its *onte"por(ries !e*(use of its ste(df(st dedi*(tion to offerin'*usto"ers !est%of%!reed te*hno-o'$ (nd superior "(r.et infor"(tion0 The o!)e*tiveh(s !een to -et *usto"ers "(.e infor"ed de*isions (nd to si"p-if$ the pro*ess ofinvestin' in sto*.s

M%ss%on of the Sh(re.h(n is

To e')cate an' e&0o=er t#e %n'%%')al %nestor to &a$e better %nest&ent

'ec%s%ons t#ro)*#

UALIT" ADVICE

INNOVATIVE 7!ODUCT an'

U7E!IO! E!VICE.

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WO!K T!UCUT!E O 8A!EK8AN

Sh(re.h(n h(s (-+($s !e-ieved in investin' in te*hno-o'$ to !ui-d its !usiness0 The

*o"p(n$ h(s used so"e of the !est%.no+n n("es in the IT industr$, -i.e SunMi*ros$ste"s, Or(*-e, Mi*rosoft, 4("!rid'e Te*hno-o'ies, Ne1'eni1, 3i'nette,3eriSi'n Fin(n*i(- Te*hno-o'ies Indi( Ltd, Spider Soft+(re Pvt0 Ltd0 to !ui-d itstr(din' en'ine (nd *ontent0 The 4iti 3enture ho-ds ( "()orit$ st(.e in the *o"p(n$0HS#4, Inte- 4(r-$-e (re the other investors0

On Apri- :, ;; Sh(re.h(n -(un*hed Speed Tr(de (nd Tr(de Ti'er, (re net%!(sede1e*ut(!-e (pp-i*(tion th(t e"u-(tes the !ro.er ter"in(-s (-on' +ith host of other

infor"(tion re-ev(nt to the D($ Tr(ders0 This +(s for the first ti"e th(t ( net%!(sedtr(din' st(tion of this *(-i!er +(s offered to the tr(ders0 In the -(st si1 "onths SpeedTr(de h(s !e*o"e ( de facto st(nd(rd for the D($ Tr(din' *o""unit$ over the net0Sh(re.h(n7s 'round net+or. in*-udes over ;;B Sh(reshops in :;B *ities in Indi(0

The fir"7s on-ine tr(din' (nd invest"ent site +++0sh(re.h(n0*o" % +(s -(un*hedon Fe! , ;;;0 The site 'ives (**ess to superior *ontent (nd tr(ns(*tion f(*i-it$ toret(i- *usto"ers (*ross the *ountr$0 Kno+n for its )(r'on%free, investor friend-$

-(n'u('e (nd hi'h /u(-it$ rese(r*h, the site h(s ( re'istered !(se of over L(*s*usto"ers0 The nu"!er of tr(din' "e"!ers *urrent-$ st(nds (t over L(*s0 &hi-eon-ine tr(din' *urrent-$ (**ounts for )ust over C per *ent of the d(i-$ tr(din' in sto*.sin Indi(, Sh(re.h(n (-one (**ounts for per *ent of the vo-u"es tr(ded on-ine0

The 4orpor(te Fin(n*e se*tion h(s ( -ist of ver$ presti'ious *-ients (nd h(s "(n$firsts7 to its *redit, in ter"s of the si=e of de(-, se*tor t(pped et*0 The 'roup h(sp-(*ed over US C !i--ion in priv(te e/uit$ de(-s0 So"e of the *-ients in*-ude #PL

4e--u-(r Ho-din', Gu)(r(t Pip(v(v, Ess(r, Hut*hison, P-(net(si(, (nd Shopper7s Stop0Fin(--$, Sh(re.h(n shifted h(nds (nd 4iti venture 'et ho-ds on it0

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7!ODUCT AND E!VICE OE!D 6" 8A!EK8AN

:% E/uit$ Tr(din' P-(tfor" 8On-ineOff-ine90

% 4o""odities Tr(din' P-(tfor" 8On-ineOff-ine90

% Portfo-io M(n('e"ent Servi*e0

% Mutu(- Fund Advisor$ (nd Distri!ution0

C% Insur(n*e Distri!ution0

%Fore1

0 Fore10

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!EAON TO C8OOE A8!EK8AN LIMITED

E@0er%ence

SSKI h(s "ore th(n ei'ht de*(des of trust (nd *redi!i-it$ in the Indi(n sto*."(r.et0 In the Asi( Mone$ !ro.er@s po-- he-d re*ent-$, SSKI +on the @Indi(@s !est!ro.in' house for ;;@ (+(rd0 Ever sin*e it -(un*hed Sh(re.h(n (s its ret(i- !ro.in'division in Fe!ru(r$ ;;;, it h(s !een providin' institution(-%-eve- rese(r*h (nd!ro.in' servi*es to individu(- investors0

Tec#nolo*3

&ith their on-ine tr(din' (**ount one *(n !u$ (nd se-- sh(res in (n inst(nt fro" (n$

P4 +ith (n internet *onne*tion0 4usto"ers 'et (**ess to the po+erfu- on-ine tr(din'too-s th(t +i-- he-p the" to t(.e *o"p-ete *ontro- over their invest"ent in sh(res0

Access%b%l%t3

Sh(re.h(n provides AD3I4E, EDU4ATION, TOOLS AND EQE4UTIONservi*es for investors0 These servi*es (re (**essi!-e throu'h "(n$ *enters (*ross the*ountr$ 8Over C; -o*(tions in :C; *ities9, over the Internet 8throu'h the +e!site

+++0sh(re.h(n0*o"9 (s +e-- (s over the 3oi*e Too-0

Kno=le'*e

In ( !usiness +here the ri'ht infor"(tion (t the ri'ht ti"e *(n tr(ns-(te into dire*tprofits, investors 'et (**ess to ( +ide r(n'e of infor"(tion on the *ontent%ri*h port(-,+++0sh(re.h(n0*o"0 Investors +i-- (-so 'et ( usefu- set of .no+-ed'e%!(sed too-s th(t+i-- e"po+er the" to t(.e infor"ed de*isions0

Conen%enceOne *(n *(-- Sh(re.h(n7s Di(-%N%Tr(de nu"!er to 'et invest"ent (dvi*e (nd

e1e*ute hisher tr(ns(*tions0 The$ h(ve ( dedi*(ted *(--%*enter to provide this servi*evi( ( To-- Free Nu"!er :;; %C;; J;C;; fro" (n$+here in Indi(0

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23/97

er%ce

Its *usto"er servi*e te(" (ssist their *usto"er for (n$ he-p th(t the$ need re-(tin'to tr(ns(*tions, !i--in', de"(t (nd other /ueries0 Their *usto"er servi*e *(n !e

*ont(*ted vi( ( to--%free nu"!er, e"(i- or -ive *h(t on +++0sh(re.h(n0*o"0

Inest&ent A'%ce

Sh(re.h(n h(s dedi*(ted rese(r*h te("s of "ore th(n ;peop-e for fund("ent(-(nd te*hni*(- rese(r*h0 Their (n(-$sts *onst(nt-$ tr(*. the pu-se of the "(r.et (ndprovide ti"e-$ invest"ent (dvi*e to *usto"er in the for" of d(i-$ rese(r*h e"(i-s,on-ine *h(t, printed reports et*0

6enef%ts

Free Depositor$ A*

Inst(nt 4(sh Tr(nsfer

Mu-tip-e #(n. Option0

Se*ure Order !$ 3oi*e Too- Di(-%n%Tr(de0

Auto"(ted Portfo-io to .eep tr(*. of the v(-ue of $our (*tu(- pur*h(ses0 1 3oi*e Too- (**ess to $our tr(din' (**ount0

Person(-i=ed Pri*e (nd A**ount A-erts de-ivered inst(nt-$ to $our Mo!i-e

Phone E%"(i- (ddress0

Live 4h(t f(*i-it$ +ith Re-(tionship M(n('er on >(hoo Messen'er

Spe*i(- Person(- In!o1 for order (nd tr(de *onfir"(tions0

On%-ine 4usto"er Servi*e vi( &e! 4h(t0

En)o$ Auto"(ted Portfo-io0

#u$ or se-- even sin'-e sh(re

An$ti"e Orderin'0

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#are$#an offers t#e follo=%n* 0ro')cts:9

CLAIC ACCOUNT

This is ( User Friend-$ Produ*t +hi*h (--o+s the *-ient to tr(de throu'h +e!site+++0sh(re.h(n0*o" (nd is suit(!-e for the ret(i- investors +ho is ris.%(verse (ndhen*e prefers to invest in sto*.s or +ho does not tr(de too fre/uent-$0

eat)res

On-ine tr(din' (**ount for investin' in E/uit$ (nd Deriv(tives vi(

+++0sh(re.h(n0*o"

Live Ter"in(- (nd Sin'-e ter"in(- for NSE 4(sh, NSE FO #SE0

Inte'r(tion of On%-ine tr(din', S(vin' #(n. (nd De"(t A**ount0

Inst(nt *(sh tr(nsfer f(*i-it$ ('(inst pur*h(se s(-e of sh(res0

4o"petitive tr(ns(*tion *h(r'es0

Inst(nt order (nd tr(de *onfir"(tion !$ E%"(i-0

Stre("in'


25/97

Sin'-e s*reen tr(din' ter"in(- for NSE 4(sh, NSE FO #SE0

Te*hni*(- Studies0

Mu-tip-e 4h(rtin'0 Re(-%ti"e stre("in' /uotes, ti*%!$%ti* *h(rts0

M(r.et su""(r$ 84ost tr(ded s*rip, hi'hest *-ue et*09

Hot .e$s si"i-(r to !ro.er7s ter"in(-0

A-erts (nd re"inders0

#(*.%up f(*i-it$ to p-(*e tr(des on Dire*t Phone -ines0

Live "(r.et de!ts0

DIAL9N9T!ADE

A-on' +ith en(!-in' (**ess for tr(de on-ine, the 4LASSI4 (nd SPEEDTRADE A44OUNT (-so'ives Di(-%n%tr(de servi*es0 &ith this servi*e, one *(n di(- Sh(re.h(n7s dedi*(ted phone -ines :;;%

%C;;, J;%C;;0 #eside this, Re-(tionship M(n('ers (re (-+($s (v(i-(!-e on Offi*e Phone (ndMo!i-e to reso-ve *usto"er /ueries0

8A!E MO6ILE

Sh(re.h(n h(d introdu*ed Sh(re Mo!i-e, "o!i-e !(sed soft+(re +here one *(n +(t*h Sto*.Pri*es, Intr( D($ 4h(rts, Rese(r*h Advi*e (nd Tr(din' 4(--s -ive on the Mo!i-e0 (As per SEBIregulations, uying!sellingshares through a "oile phone are not yet per"itted#)

7!E7AID ACCOUNT4usto"ers p($ Adv(n*e #ro.er('e on tr(din' A**ount (nd en)o$ uninterrupted tr(din' in their

A**ount0 #eside this, 're(t dis*ount (re (-so (v(i-(!-e 8up to C;9 on !ro.er('e07re0a%' Class%c Acco)nt: 9 !s. ;7re0a%' 0ee' tra'e Acco)nt: 9 !s.

I7O ON9LINE

4usto"ers *(n (pp-$ to (-- the forth*o"in' IPOs on-ine0 This is /uite h(ss-e%free, p(per-ess (nd

ti"e s(vin'0 Si"p-$ (--o*(te fund to IPO A**ount, App-$ for the IPO (nd Sit #(*. Re-(15

2/


26/97

M)t)al )n' Onl%ne

Investors *(n (pp-$ to Mutu(- Funds of Re-i(n*e, Fr(n.-in Te"p-eton Invest"ents, I4I4IPrudenti(-, S#I, #ir-(, Sund(r(", HDF4, DSP Merri-- L$n*h, PRIN4IPAL (nd TATA +ith

Sh(re.h(n5

Fero 6alance ICICI a%n* Acco)nt

Sh(re.h(n h(d tied%up +ith I4I4I !(n. for ero #(-(n*e A**ount for Sh(re.h(n7s 4-ients0 No+

their *usto"ers *(n h(ve ( ero #(-(n*e S(vin' A**ount +ith I4I4I #(n. (fter $our de"(t (**ount

*re(tion +ith Sh(re.h(n5

26


27/97

C8A7TE!9,

R)S)*RC+ M)T+ODO,O-

27


28/97

!EEA!C8 MET8ODOLOG"

O6ECTIVE O T8E 7!OECT

E(*h rese(r*h stud$ h(s its o+n spe*ifi* purpose0 It is -i.e to dis*over to


29/97

co0e of t#e t)'3

T#e st)'3 of t#e 7ortfol%o Mana*e&ent er%ces %s #el0f)l %n t#e follo=%n*

areas.

In tod($@s *o"p-e1 fin(n*i(- environ"ent, investors h(ve uni/ue needs +hi*h(re derived fro" their ris. (ppetite (nd fin(n*i(- 'o(-s0 #ut re'(rd-ess of this,ever$ investor see.s to "(1i"i=e his returns on invest"ents +ithout *(pit(-erosion0 Portfo-io M(n('e"ent Servi*es 8PMS9 re*o'ni=e this, (nd "(n('e theinvest"ents profession(--$ to (*hieve spe*ifi* invest"ent o!)e*tives, (nd not tofor'et, re-ievin' the investors fro" the d($ to d($ h(ss-es +hi*h invest"entre/uire0

It is offers profession(- "(n('e"ent of e/uit$ invest"ent of the investor +ith(n (i" to de-iver *onsistent return +ith (n e$e on ris.0

Identif$ the .e$ Sto*. in e(*h portfo-io0

To -oo. out for ne+ prospe*tive *usto"ers +ho (re +i--in' to invest in PMS0

To find out the Sh(re.h(n, PMS servi*es effe*tiveness in the *urrent situ(tion0

It (-so *overs the s*en(rio of the Invest"ent Phi-osoph$ of ( Fund M(n('er0

29


30/97

MET8ODOLOG" O! DATA COLLECTION

This report is !(sed on pri"(r$ (s +e-- se*ond(r$ d(t(, ho+ever pri"(r$ d(t(*o--e*tion +(s 'iven "ore i"port(n*e sin*e it is overhe(rin' f(*tor in (ttitude studies0One of the "ost i"port(nt users of rese(r*h "ethodo-o'$ is th(t it he-ps in identif$in'the pro!-e", *o--e*tin', (n(-$=in' the re/uired infor"(tion d(t( (nd providin' (n(-tern(tive so-ution to the pro!-e" 0It (-so he-ps in *o--e*tin' the vit(- infor"(tion th(tis re/uired !$ the top "(n('e"ent to (ssist the" for the !etter de*ision "(.in' !oth

d($ to d($ de*ision (nd *riti*(- ones0

The stud$ *onsists of (n(-$sis (!out Investors Per*eption (!out the Portfo-ioM(n('e"ent Servi*es offered !$ Sh(re.h(n Li"ited0 For the purpose of the stud$ :;;*usto"ers +ere pi*.ed up (t r(ndo" (nd their vie+s so-i*ited on different p(r("eters0

The "ethodo-o'$ (dopted in*-udes

)est%onna%re !an'o& sa&0le s)re3 of c)sto&ers D%sc)ss%ons =%t# t#e concerne'

OU!CE O DATA

7r%&ar3 'ata?


31/97

D)rat%on of t)'3

The Stud$ +(s *(rried out for the period of one (nd h(-f "onths fro" :;thM($ to;thof une ;:0

AM7LING 7LAN

a&0l%n*:

Sin*e Sh(re.h(n Li"ited h(s "(n$ se'"ents I se-e*ted Portfo-io M(n('e"entServi*es 8PMS9 se'"ent (s per "$ profi-e to do "(r.et rese(r*h0 :;; *over('e +(sdiffi*u-t +ithin the -i"ited period of ti"e0 Hen*e s("p-in' surve$ "ethod +(s(dopted for the purpose of the stud$0

7o0)lat%on:8Universe9 *usto"ers non *onsu"ers of Sh(re.h(n -i"ited

a&0l%n* s%


32/97

a&0l%n* 0roce')re:Fro" -(r'e nu"!er of *usto"ers non *onsu"ers s("p-e -ot +ere r(ndo"-$

pi*.ed up !$ "e0

%el' t)'3:

Dire*t-$ (ppro(*hed respondents !$ the fo--o+in' str(te'ies

Te-e%*(--in' Person(- 3isits 4-ients Referen*es Pro"otion(- A*tivities D(t(!(se provided !$ the Sh(re.h(n Li"ited0

C8A7TE!9+

PORTFO,IO M*N*-M)NTS)R/IC)S

32


33/97

7O!TOLIO MANGEMNT E!VICE (7MB

Portfo-io 8fin(n*e9 "e(ns ( *o--e*tion of invest"ents he-d !$ (n institution or (priv(te individu(-0 Ho-din' ( portfo-io is often p(rt of (n invest"ent (nd ris.%-i"itin'

str(te'$ *(--ed diversifi*(tion0 #$ o+nin' sever(- (ssets, *ert(in t$pes of ris. 8inp(rti*u-(r spe*ifi* ris.9 *(n !e redu*ed0 There (re (-so portfo-ios +hi*h (re (i"ed (tt(.in' hi'h ris.s these (re *(--ed *on*entr(ted portfo-ios0

Invest"ent "(n('e"ent is the profession(- "(n('e"ent of v(rious se*urities8sh(res, !onds et*9 (nd other (ssets 8e0'0 re(- est(te9, to "eet spe*ified invest"ent'o(-s for the !enefit of the investors0 Investors "($ !e institutions 8insur(n*e*o"p(nies, pension funds, *orpor(tions et*09 or priv(te investors 8!oth dire*t-$ vi(

invest"ent *ontr(*ts (nd "ore *o""on-$ vi( *o--e*tive invest"ent s*he"es e0'0"utu(- funds90

The ter" (sset "(n('e"ent is often used to refer to the invest"ent "(n('e"ent of*o--e*tive invest"ents, +hi-st the "ore 'eneri* fund "(n('e"ent "($ refer to (--for"s of institution(- invest"ent (s +e-- (s invest"ent "(n('e"ent for priv(teinvestors0 Invest"ent "(n('ers +ho spe*i(-i=e in (dvisor$ or dis*retion(r$"(n('e"ent on !eh(-f of 8nor"(--$ +e(-th$9 priv(te investors "($ often refer to their

servi*es (s +e(-th "(n('e"ent or portfo-io "(n('e"ent often +ithin the *onte1t ofso%*(--ed priv(te !(n.in'0

The provision of @invest"ent "(n('e"ent servi*es@ in*-udes e-e"ents of fin(n*i(-(n(-$sis, (sset se-e*tion, sto*. se-e*tion, p-(n i"p-e"ent(tion (nd on'oin' "onitorin'of invest"ents0 Outside of the fin(n*i(- industr$, the ter" invest"ent "(n('e"entis often (pp-ied to invest"ents other th(n fin(n*i(- instru"ents0 Invest"ents (re often

"e(nt to in*-ude pro)e*ts, !r(nds, p(tents (nd "(n$ thin's other th(n sto*.s (nd!onds0 Even in this *(se, the ter" i"p-ies th(t ri'orous fin(n*i(- (nd e*ono"i*(n(-$sis "ethods (re used0

33


34/97

Nee' of 7M

As in the *urrent s*en(rio the effe*tiveness of PMS is re/uired0 As the PMS 'ivesinvestors periodi*(--$ revie+ their (sset (--o*(tion (*ross different (ssets (s theportfo-io *(n 'et s.e+ed over ( period of ti"e0 This *(n !e -(r'e-$ due to(ppre*i(tion depre*i(tion in the v(-ue of the invest"ents0

As the fin(n*i(- 'o(-s (re diverse, the invest"ent *hoi*es (-so need to !e differentto "eet those needs0 No sin'-e invest"ent is -i.e-$ to "eet (-- the needs, so one shou-d.eep so"e "one$ in !(n. deposits (nd -i/uid funds to "eet (n$ ur'ent need for *(sh(nd .eep the !(-(n*e in other invest"ent produ*ts s*he"es th(t +ou-d "(1i"i=e thereturn (nd "ini"i=e the ris.0 Invest"ent (--o*(tion *(n (-so *h(n'e dependin' onone7s ris.%return profi-e0

3.


35/97

3/


36/97


37/97

7O!TOLIO CONT!UCTIONThe Portfo-io 4onstru*tion of R(tion(- investors +ish to "(1i"i=e the returns on

their funds for ( 'iven -eve- of ris.0 A-- invest"ents possess v(r$in' de'rees of ris.0Returns *o"e in the for" of in*o"e, su*h (s interest or dividends, or throu'h 'ro+thin *(pit(- v(-ues 8i0e0 *(pit(- '(ins90

The portfo-io *onstru*tion pro*ess *(n !e !ro(d-$ *h(r(*teri=ed (s *o"prisin' thefo--o+in' steps?

:0ett%n* obHect%es0

The first step in !ui-din' ( portfo-io is to deter"ine the "(in o!)e*tives of the fund'iven the *onstr(ints 8i0e0 t(1 (nd -i/uidit$ re/uire"ents9 th(t "($ (pp-$0 E(*hinvestor h(s different o!)e*tives, ti"e hori=ons (nd (ttitude to+(rds ris.0 Pensionfunds h(ve -on'%ter" o!-i'(tions (nd, (s ( resu-t, invest for the -on' ter"0 Theiro!)e*tive "($ !e to "(1i"i=e tot(- returns in e1*ess of the inf-(tion r(te0 A *h(rit$"i'ht +ish to 'ener(te the hi'hest -eve- of in*o"e +hi-st "(int(inin' the v(-ue of its*(pit(- re*eived fro" !e/uests0 An individu(- "($ h(ve *ert(in -i(!i-ities (nd +ish to"(t*h the" (t ( future d(te0 Assessin' ( *-ient7s ris. to-er(n*e *(n !e diffi*u-t0 The

*on*epts of effi*ient portfo-ios (nd diversifi*(tion "ust (-so !e *onsidered +hensettin' up the invest"ent o!)e*tives0

0 Def%n%n* 7ol%c3 0

On*e the o!)e*tives h(ve !een set, ( suit(!-e invest"ent po-i*$ "ust !eest(!-ished0 The st(nd(rd pro*edure is for the "one$ "(n('er to (s. *-ients to se-e*ttheir preferred "i1 of (ssets, for e1("p-e e/uities (nd !onds, to provide (n ide( of the

nor"(- "i1 desired0 4-ients (re then (s.ed to spe*if$ -i"its or "(1i"u" (nd"ini"u" ("ounts the$ +i-- (--o+ to !e invested in the different (ssets (v(i-(!-e0 The"(in (sset *-(sses (re *(sh, e/uities, 'i-ts!onds (nd other de!t instru"ents,deriv(tives, propert$ (nd overse(s (ssets0 A-tern(tive invest"ents, su*h (s priv(tee/uit$, (re (-so 'ro+in' in popu-(rit$, (nd +i-- !e dis*ussed in ( -(ter *h(pter0Att(inin' the opti"(- (sset "i1 over ti"e is one of the .e$ f(*tors of su**essfu-investin'0

37


38/97

0 A00l3%n* 0ortfol%o strate*30

At either end of the portfo-io "(n('e"ent spe*tru" of str(te'ies (re (*tive (ndp(ssive str(te'ies0 An (*tive str(te'$ invo-ves predi*tin' trends (nd *h(n'in'e1pe*t(tions (!out the -i.e-$ future perfor"(n*e of the v(rious (sset *-(sses (nd(*tive-$ de(-in' in (nd out of invest"ents to see. ( !etter perfor"(n*e0 For e1("p-e,if the "(n('er e1pe*ts interest r(tes to rise, !ond pri*es (re -i.e-$ to f(-- (nd so !ondsshou-d !e so-d, un-ess this e1pe*t(tion is (-re(d$ f(*tored into !ond pri*es0 At thisst('e, the (*tive fund "(n('er shou-d (-so deter"ine the st$-e of the portfo-io0 Fore1("p-e, +i-- the fund invest pri"(ri-$ in *o"p(nies +ith -(r'e "(r.et *(pit(-i=(tions,in sh(res of *o"p(nies e1pe*ted to 'ener(te hi'h 'ro+th r(tes, or in *o"p(nies +hosev(-u(tions (re -o+ A p(ssive str(te'$ usu(--$ invo-ves !u$in' se*urities to "(t*h (prese-e*ted "(r.et inde10 A-tern(tive-$, ( portfo-io *(n !e set up to "(t*h theinvestor7s *hoi*e of t(i-or%"(de inde10 P(ssive str(te'ies re-$ on diversifi*(tion toredu*e ris.0 Outperfor"(n*e versus the *hosen inde1 is not e1pe*ted0 This str(te'$re/uires "ini"u" input fro" the portfo-io "(n('er0 In pr(*ti*e, "(n$ (*tive funds(re "(n('ed so"e+here !et+een the (*tive (nd p(ssive e1tre"es, the *ore ho-din's ofthe fund !ein' p(ssive-$ "(n('ed (nd the !(-(n*e !ein' (*tive-$ "(n('ed0

0 Asset select%ons .

On*e the str(te'$ is de*ided, the fund "(n('er "ust se-e*t individu(- (ssets in+hi*h to invest0 Usu(--$ ( s$ste"(ti* pro*edure .no+n (s (n invest"ent pro*ess isest(!-ished, +hi*h sets 'uide-ines or *riteri( for (sset se-e*tion0 A*tive str(te'iesre/uire th(t the fund "(n('ers (pp-$ (n(-$ti*(- s.i--s (nd )ud'"ent for (sset se-e*tionin order to identif$ underv(-ued (ssets (nd to tr$ to 'ener(te superior perfor"(n*e0

C0 7erfor&ance assess&ents0

In order to (ssess the su**ess of the fund "(n('er, the perfor"(n*e of the fund isperiodi*(--$ "e(sured ('(inst ( pre%('reed !en*h"(r. perh(ps ( suit(!-e sto*.e1*h(n'e inde1 or ('(inst ( 'roup of si"i-(r portfo-ios 8peer 'roup *o"p(rison90 Theportfo-io *onstru*tion pro*ess is *ontinuous-$ iter(tive, ref-e*tin' *h(n'es intern(--$(nd e1tern(--$0 For e1("p-e, e1pe*ted "ove"ents in e1*h(n'e r(tes "($ "(.eoverse(s invest"ent "ore (ttr(*tive, -e(din' to *h(n'es in (sset (--o*(tion0 Or, if"(n$ -(r'e%s*(-e investors si"u-t(neous-$ de*ide to s+it*h fro" p(ssive to "ore

(*tive str(te'ies, pressure +i-- !e put on the fund "(n('ers to offer "ore (*tive funds0

38


39/97

Poor perfor"(n*e of ( fund "($ -e(d to "odifi*(tions in individu(- (sset ho-din's or,(s (n e1tre"e "e(sure the "(n('er of the fund "($ !e *h(n'ed (-to'ether0

te0s to toc$ elect%on 7rocess

39


40/97

T30es of assets

The stru*ture of ( portfo-io +i-- depend u-ti"(te-$ on the investor7s o!)e*tives (ndon the (sset se-e*tion de*ision re(*hed0 The portfo-io stru*ture t(.es into (**ount (r(n'e of f(*tors, in*-udin' the investor7s ti"e hori=on, (ttitude to ris., -i/uidit$re/uire"ents, t(1 position (nd (v(i-(!i-it$ of invest"ents0 The "(in (sset *-(sses (re*(sh, !onds (nd other fi1ed in*o"e se*urities, e/uities, deriv(tives, propert$ (ndoverse(s (ssets0

Cas# an' cas# %nstr)&ents

4(sh *(n !e invested over (n$ desired period, to 'ener(te interest in*o"e, in ( r(n'e

of hi'h-$ -i/uid or e(si-$ redee"(!-e instru"ents, fro" si"p-e !(n. deposits,ne'oti(!-e *ertifi*(tes of deposits, *o""er*i(- p(per 8short ter" *orpor(te de!t9 (ndTre(sur$ !i--s 8short ter" 'overn"ent de!t9 to "one$ "(r.et funds, +hi*h (*tive-$"(n('e *(sh resour*es (*ross ( r(n'e of do"esti* (nd forei'n "(r.ets0 4(sh isnor"(--$ he-d over the short ter" pendin' use e-se+here 8perh(ps for p($in' *-(i"s!$ ( non%-ife insur(n*e *o"p(n$ or for p($in' pensions9, !ut "($ !e he-d over the-on'er ter" (s +e--0 Returns on *(sh (re driven !$ the 'ener(- de"(nd for funds in (ne*ono"$, interest r(tes, (nd the e1pe*ted r(te of inf-(tion0 A portfo-io +i-- nor"(--$

"(int(in (t -e(st ( s"(-- proportion of its funds in *(sh in order to t(.e (dv(nt('e of!u$in' opportunities0

6on's

#onds (re de!t instru"ents on +hi*h the issuer 8the !orro+er9 ('rees to "(.einterest p($"ents (t periodi* interv(-s over the -ife of the !ond this *(n !e for t+o tothirt$ $e(rs or, so"eti"es, in perpetuit$0 Interest p($"ents *(n !e fi1ed or v(ri(!-e,

the -(tter !ein' -in.ed to prev(i-in' -eve-s of interest r(tes0 #ond "(r.ets (reintern(tion(- (nd h(ve 'ro+n r(pid-$ over re*ent $e(rs0 The !ond "(r.ets (re hi'h-$-i/uid, +ith "(n$ issuers of si"i-(r st(ndin', in*-udin' 'overn"ents 8soverei'ns9 (ndst(te%'u(r(nteed or'(ni=(tions0 4orpor(te !onds (re !onds th(t (re issued !$*o"p(nies0 To (ssist investors (nd to he-p in the effi*ient pri*in' of !ond issues, "(n$!ond issues (re 'iven r(tin's !$ spe*i(-ist ('en*ies su*h (s St(nd(rd Poor7s (ndMood$7s0 The hi'hest invest"ent 'r(de is AAA, 'oin' (-- the +($ do+n to D, +hi*his 'r(ded (s in def(u-t0 Dependin' on e1pe*ted "ove"ents in future interest r(tes, the

*(pit(- v(-ues of !onds f-u*tu(te d(i-$, providin' investors +ith the potenti(- for*(pit(- '(ins or -osses0 Future interest r(tes (re driven !$ the -i.e-$ de"(nd supp-$ of

.0


41/97

"one$ in (n e*ono"$, future inf-(tion r(tes, po-iti*(- events (nd interest r(tese-se+here in +or-d "(r.ets0 Investors +ith short%ter" hori=ons (nd -i/uidit$re/uire"ents "($ *hoose to invest in !onds !e*(use of their re-(tive-$ hi'her return

th(n *(sh (nd their prospe*ts for possi!-e *(pit(- (ppre*i(tion0 Lon'%ter" investors,su*h (s pension funds, "($ (*/uire !onds for the hi'her in*o"e (nd "($ ho-d the"unti- rede"ption for perh(ps seven or fifteen $e(rs0 #e*(use of the 're(ter ris., -on'!onds 8over ten $e(rs to "(turit$9 tend to !e "ore vo-(ti-e in pri*e th(n "ediu"% (ndshort%ter" !onds, (nd h(ve ( hi'her $ie-d0

E>)%t%es

E/uit$ *onsists of sh(res in ( *o"p(n$ representin' the *(pit(- ori'in(--$ provided!$ sh(reho-ders0 An ordin(r$ sh(reho-der o+ns ( proportion(- sh(re of the *o"p(n$(nd (n ordin(r$ sh(re *(rries the residu(- ris. (nd re+(rds (fter (-- -i(!i-ities (nd *ostsh(ve !een p(id0 Ordin(r$ sh(res *(rr$ the ri'ht to re*eive in*o"e in the for" ofdividends 8on*e de*-(red out of distri!ut(!-e profits9 (nd (n$ residu(- *-(i" on the*o"p(n$7s (ssets on*e its -i(!i-ities h(ve !een p(id in fu--0 Preferen*e sh(res (re

(nother t$pe of sh(re *(pit(-0 The$ differ fro" ordin(r$ sh(res in th(t the dividend on( preferen*e sh(re is usu(--$ fi1ed (t so"e ("ount (nd does not *h(n'e0 A-so,preferen*e sh(res usu(--$ do not *(rr$ votin' ri'hts (nd, in the event of fir" f(i-ure,preferen*e sh(reho-ders (re p(id !efore ordin(r$ sh(reho-ders0 Returns fro" investin'in e/uities (re 'ener(ted in the for" of dividend in*o"e (nd *(pit(- '(in (risin' fro"the u-ti"(te s(-e of the sh(res0 The -eve- of dividends "($ v(r$ fro" $e(r to $e(r,ref-e*tin' the *h(n'in' profit(!i-it$ of ( *o"p(n$0 Si"i-(r-$, the "(r.et pri*e of (sh(re +i-- *h(n'e fro" d($ to d($ to ref-e*t (-- re-ev(nt (v(i-(!-e infor"(tion0

A-thou'h not 'u(r(nteed, e/uit$ pri*es 'ener(--$ rise over ti"e, ref-e*tin' 'ener(-e*ono"i* 'ro+th, (nd h(ve !een found over the -on' ter" to 'ener(te 'ro+in' -eve-sof in*o"e in e1*ess of the r(te of inf-(tion0 Gr(nted, there "($ !e periods of ti"e,even $e(rs, +hen e/uit$ pri*es trend do+n+(rds usu(--$ durin' re*ession(r$ ti"es0The over(-- -on'%ter" prospe*t, ho+ever, for *(pit(- (ppre*i(tion "(.es e/uities (n(ttr(*tive invest"ent proposition for "()or institution(- investors0

.1


42/97

Der%at%es

Deriv(tive instru"ents (re fin(n*i(- (ssets th(t (re derived fro" e1istin' pri"(r$(ssets (s opposed to !ein' issued !$ ( *o"p(n$ or 'overn"ent entit$0 The t+o "ostpopu-(r deriv(tives (re futures (nd options0 The e1tent to +hi*h ( fund "($in*orpor(te deriv(tives produ*ts in the fund +i-- !e spe*ified in the fund ru-es (nd,dependin' on the t$pe of fund est(!-ished for the *-ient (nd dependin' on the *-ient,"($ not !e (--o+(!-e (t (--0

A f)t)res contract is (n ('ree"ent in the for" of ( st(nd(rdi=ed *ontr(*t !et+eent+o *ounterp(rties to e1*h(n'e (n (sset (t ( fi1ed pri*e (nd d(te in the future0 Theunder-$in' (sset of the futures *ontr(*t *(n !e ( *o""odit$ or ( fin(n*i(- se*urit$0E(*h *ontr(*t spe*ifies the t$pe (nd ("ount of the (sset to !e e1*h(n'ed, (nd +here itis to !e de-ivered 8usu(--$ one of ( fe+ (pproved -o*(tions for th(t p(rti*u-(r (sset90Futures *ontr(*ts *(n !e set up for the de-iver$ of *o*o(, stee-, oi- or *offee0 Li.e+ise,fin(n*i(- futures *ontr(*ts *(n spe*if$ the de-iver$ of forei'n *urren*$ or ( r(n'e of'overn"ent !onds0 The !u$er of ( futures *ontr(*t t(.es ( -on' position7, (nd +i--"(.e ( profit if the v(-ue of the *ontr(*t rises (fter the pur*h(se0 The se--er of thefutures *ontr(*t t(.es ( short position7 (nd +i--, in turn, "(.e ( profit if the pri*e ofthe futures *ontr(*t f(--s0 &hen the futures *ontr(*t e1pires, the se--er of the *ontr(*t isre/uired to de-iver the under-$in' (sset to the !u$er of the *ontr(*t0 Re'(rdin'fin(n*i(- futures *ontr(*ts, ho+ever, in the v(st "()orit$ of *(ses no ph$si*(- de-iver$of the under-$in' (sset t(.es p-(*e (s "(n$ *ontr(*ts (re *(sh sett-ed or *-osed out+ith the offsettin' position !efore the e1pir$ d(te0

An o0t%on contract is (n ('ree"ent th(t 'ives the o+ner the ri'ht, !ut noto!-i'(tion, to !u$ or se-- 8dependin' on the t$pe of option9 ( *ert(in (sset for (spe*ified period of ti"e0 A *(-- option 'ives the ho-der the ri'ht to !u$ the (sset0 A putoption 'ives the ho-der the ri'ht to se-- the (sset0 Europe(n options *(n !e e1er*isedon-$ on the options7 e1pir$ d(te0 US options *(n !e e1er*ised (t (n$ ti"e !efore the*ontr(*t7s "(turit$ d(te0 Option *ontr(*ts on sto*.s or sto*. indi*es (re p(rti*u-(r-$popu-(r0 #u$in' (n option invo-ves p($in' ( pre"iu" se--in' (n option invo-vesre*eivin' the pre"iu"0 Options h(ve the potenti(- for -(r'e '(ins or -osses, (nd (re*onsidered to !e hi'h%ris. instru"ents0 So"eti"es, ho+ever, option *ontr(*ts (re usedto redu*e ris.0 For e1("p-e, fund "(n('ers *(n use ( *(-- option to redu*e ris. +henthe$ o+n (n (sset0 On-$ ver$ spe*ifi* funds (re (--o+ed to ho-d options0

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43/97

7ro0ert3

Propert$ invest"ent *(n !e "(de either dire*t-$ !$ !u$in' properties, or indire*t-$

!$ !u$in' sh(res in -isted propert$ *o"p(nies0 On-$ "()or institution(- investors +ith-on'%ter" ti"e hori=ons (nd no -i/uidit$ pressures tend to "(.e dire*t propert$invest"ents0 These institutions pur*h(se freeho-d (nd -e(seho-d properties (s p(rt of (propert$ portfo-io he-d for the -on' ter", perh(ps t+ent$ or "ore $e(rs0 Propert$se*tors of interest +ou-d in*-ude pri"e, /u(-it$, +e--%-o*(ted *o""er*i(- offi*e (ndshop properties, "odern industri(- +(rehouses (nd est(tes, hote-s, f(r"-(nd (nd+ood-(nd0 Returns (re 'ener(ted fro" (nnu(- rents (nd (n$ *(pit(- '(ins onre(-i=(tion0 These invest"ents (re often hi'h-$ i--i/uid0

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44/97

!%s$ an' !%s$ Aers%on

Portfo-io theor$ (-so (ssu"es th(t investors (re !(si*(--$ ris. (dverse, "e(nin'

th(t, 'iven ( *hoi*e !et+een t+o (ssets +ith e/u(- r(tes of return the$ +i-- se-e*t the(sset +ith -o+er -eve- of ris.0

For e1("p-e, the$ pur*h(sed v(rious t$pe of insur(n*e in*-udin' -ife insur(n*e,He(-th insur(n*e (nd *(r insur(n*e0 The 4o"!in(tion of ris. preferen*e (nd ris.(version *(n !e e1p-(ined !$ (n (ttitude to+(rd ris. th(t depends on the ("ount of"one$ invo-ved0

A dis*ussion of portfo-io or fund "(n('e"ent "ust in*-ude so"e thou'ht 'iven tothe *on*ept of ris.0 An$ portfo-io th(t is !ein' deve-oped +i-- h(ve *ert(in ris.

*onstr(ints spe*ified in the fund ru-es, ver$ often to *(ter to ( p(rti*u-(r se'"ent ofinvestor +ho possesses ( p(rti*u-(r -eve- of ris. (ppetite0 It is, therefore, i"port(nt tospend so"e ti"e dis*ussin' the !(si* theories of /u(ntif$in' the -eve- of ris. in (ninvest"ent, (nd to (tte"pt to e1p-(in the +($ in +hi*h "(r.et v(-ues of invest"ents(re deter"ined

Def%n%t%on of !%s$

A-thou'h there is ( differen*e in the spe*ifi* definitionsof ris. (nd un*ert(int$, forour purpose (nd in "ost fin(n*i(--iter(ture the t+o ter"s (re used inter*h(n'e(!-$0 Inf(*t, one+($ to define ris. is t#e )ncerta%nt3 of f)t)re o)tco&es. An(-tern(tivedefinition "i'ht !e t#e 0robab%l%t3 of an a'erse o)tco&e.

Co&0os%te r%s$s %nole t#e '%fferent r%s$ as e@0la%ne' belo=:9>.)/ Int'r'+t rat' r%+20 -

It o**urs due to v(ri(!i-it$ *(use in return !$ *h(n'es in -eve- of interest r(te0 In

-on' runs (-- interest r(te "ove up or do+n+(rds0 These *h(n'es (ffe*t the v(-ue of

se*urit$0 R#I, in Indi(, is the "onitorin' (uthorit$ +hi*h effe*t(-ises the *h(n'e in

interest r(te0 An$ up+(rd revision in interest r(te (ffe*ts fi1ed in*o"e se*urit$, +hi*h

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45/97

*(rr$ o-d -o+er r(te of interest (nd thus de*-inin' "(r.et v(-ue0 Thus it est(!-ishes (n

inverse re-(tionship in the pri=e of se*urit$0

TYPES RS! E"TE#T 4(sh e/uiv(-ent Less vu-ner(!-e to interest r(te ris.

Lon' ter" #ond More vu-ner(!-e to interest r(te ris.0

>1) Pr9ha+%ng (#"'r r%+20

It is .no+n (s inf-(tion ris. (-so0 This ris. e"(n(tes fro" the ver$ f(*t th(tinf-(tion (ffe*ts the pur*h(sin' po+er (dverse-$0 Pur*h(sin' po+er ris. is "ore ininf-(tion(r$ ti"es in !onds (nd fi1ed in*o"e se*urities0 It is desir(!-e to invest in su*hse*urities durin' def-(tion(r$ period or ( period of de*e-er(tin' inf-(tion0 Pur*h(sin'

po+er ris. is -ess in f-e1i!-e in*o"e se*urities -i.e e/uit$ sh(res or *o""on stuffs+here rise in dividend in*o"e offset in*re(se in the r(te of inf-(tion (nd provide(dv(nt('e of *(pit(- '(ins0

>5) B+%n'++ r%+20

#usiness ris. e"(n(tes fro" s(-e (nd pur*h(se of se*urities (ffe*ted !$ !usiness*$*-es, te*hno-o'i*(- *h(n'e et*0 #usiness *$*-e (ffe*ts (-- the t$pe of se*urities vi=0

there is *heerfu- "ove"ent in !oo" due to !u--ish trend in sto*. pri=es +here (s!e(rish trend in depression !rin's do+nf(-- in the pri=es of (-- t$pes of se*urities0F-e1i!-e in*o"e se*urities (re ne(r-$ (ffe*ted th(n fi1 r(te se*urities durin' depressiondue to de*-ine n the "(r.et pri=e0

>7) F%nan9%a4 r%+20

Fin(n*i(- ris. e"(n(tes fro" the *h(n'es in the *(pit(- stru*ture of the *o"p(n$0 Itis (-so .no+n (s -ever('ed ris. (nd e1pressed in ter" of de!t e/uit$ r(tio0 E1*ess ofde!ts ('(inst e/uit$ in the *(pit(- stru*ture indi*(tes the *o"p(n$ to !e hi'h-$ 'e(red

./


46/97

or hi'h-$ -evered0 A-thou'h -ever('ed *o"p(n$7s e(rnin's per sh(re (E7B (re "ore!ut dependen*e on !orro+in' e1poses it to the ris. of +indin' up0 For, its in(!i-it$ tothe honor its *o""it"ents to+(rds the *reditors (re "ost i"port(nt0

Here it is i"per(tive to e1press the re-(tionship !et+een ris. (nd return, +hi*h isdepi*ted 'r(phi*(--$ !e-o+

Ma;%*%=' r'trn+? *%n%*%=' r%+2+

!IK VE!U !ETU!N

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47/97

Ris. versus return is the re(son +h$ investors invest in portfo-ios0 The ide(- 'o(- inportfo-io "(n('e"ent is to *re(te (n opti"(- portfo-io derived fro" the !est ris.

return opportunities (v(i-(!-e 'iven ( p(rti*u-(r set of ris. *onstr(ints0 To !e (!-e to"(.e de*isions, it "ust !e possi!-e to /u(ntif$ the de'ree of ris. in ( p(rti*u-(ropportunit$0 The "ost *o""on "ethod is to use the st(nd(rd devi(tion of thee1pe*ted returns0 This "ethod "e(sures spre(ds, (nd it is the possi!-e returns of thesespre(ds th(t provide the "e(sure of ris.0 The presen*e of ris. "e(ns th(t "ore th(none out*o"e is possi!-e0 An invest"ent is e1pe*ted to produ*e different returnsdependin' on the set of *ir*u"st(n*es th(t prev(i-0

or e@a&0le1 *%en t#e follo=%n* for Inest&ent A:

C%rc)&stance !et)rn(@B 7robab%l%t3(0B

I 5/ .;II 5;/ .,III 5-/ .+IV 52/ .5

It is possi!-e to *(-*u-(te?

:0 The e1pe*ted 8or (ver('e9 returnMean (aera*eB @ e@0ecte' al)e (EVB J0@

C%rc)&stance

!et)rn(@B 7robab%l%t3(0B 0@

I 5/ .; ;.II 5;/ ., ,.III 5-/ .+ .IV 52/ .5 5.2

E@0ecte' !et)rn (J0@B 5,.-/

0 The St(nd(rd devi(tion

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48/97

tan'ar' 'e%at%on J0(@9 @B;

A4+#/ Var%an9' >VAR) %+ '6a4 t# th' +tan$ar$ $'%at%#n +6ar'$ #r @1

C%rc)&stance !et)rn 7robab%l%t3

De%at%on fro&

e@0ecte' !et)rn (@ 9@B 0 (@ 9@B;

I 5/ .; 9,.-/ ;.+-

II 5;/ ., 95.-/ .4

III 5-/ .+ 5.-/ 5.2

IV 52/ .5 -.-/ ,.,

VA!AIANCE .

tan'ar' 'e%at%on (B Var%ance

.

;./

The st(nd(rd devi(tion is ( "e(sure of ris., +here!$ the 're(ter the st(nd(rddevi(tion, the 're(ter the spre(d, (nd the 're(ter the spre(d, the 're(ter the ris.0

If the (!ove e1er*ise +ere to !e perfor"ed usin' (nother invest"ent th(t offeredthe s("e e1pe*ted return, !ut ( different st(nd(rd devi(tion, then the fo--o+in' resu-t

"i'ht o**ur?

If the (!ove e1er*ise +ere to !e perfor"ed usin' (nother invest"ent th(t offered

the s("e e1pe*ted return, !ut ( different st(nd(rd devi(tion, then the fo--o+in' resu-t

"i'ht o**ur?

7lan E@0ecte' !et)rn !%s$(stan'ar'

'e%at%onBInest&ent A 2/ ;.-/

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49/97

Inest&ent 6 2/ +./

Sin*e !oth invest"ents h(ve the s("e e1pe*ted return, the !est se-e*tion of

invest"ent +ou-d !e Invest"ent A1+hi*h provides the -o+er ris.0 Si"i-(r-$, if there(re t+o invest"ents presentin' the s("e ris., !ut one h(s ( hi'her return th(n theother, th(t invest"ent +ou-d !e *hosen over the invest"ent +ith the -o+er return forthe s("e ris.0

In the re(- +or-d, there (re (-- t$pes of investors0 So"e investors (re *o"p-ete-$ris. (verse (nd others (re +i--in' to t(.e so"e ris., !ut e1pe*t ( hi'her return for th(tris.0 Different investors +i-- (-so h(ve different to-er(n*es or thresho-d -eve-s for ris.

return tr(de%offs i0e0 for ( 'iven -eve- of ris., one investor "($ de"(nd ( hi'her r(teof return th(n (nother investor0

INDIE!NCE CU!VE

)00ose t#e follo=%n* s%t)at%on e@%sts

7lan E@0ecte' !et)rn !%s$(tan'ar'De%at%onB

Inest&ent A 5/ -/Inest&ent 6 ;/ 5/

The /uestion to (s. here is, does the e1tr( :; return *o"pens(te for the e1tr( ris.There is no ri'ht (ns+er, (s the de*ision +ou-d depend on the p(rti*u-(r investor7s(ttitude to ris.0 A p(rti*u-(r investor7s indifferen*e *urve *(n !e (s*ert(ined !$p-ottin' +h(t r(te of return the investor +ou-d re/uire for e(*h -eve- of ris. to !e

indifferent ("on'st (-- of the invest"ents0

For e1("p-e, there "($ !e (n investor +ho *(n o!t(in ( return of C; +ith =ero ris.(nd ( return of CC +ith ( ris. or st(nd(rd devi(tion of C +ho +i-- !e indifferent!et+een the t+o invest"ents0 If further invest"ents +ere *onsidered, e(*h +ith (hi'her de'ree of ris., the investor +ou-d re/uire sti-- hi'her returns to "(.e (-- of theinvest"ents e/u(--$ (ttr(*tive0 The investor !ein' dis*ussed *ou-d present thefo--o+in' (s the indifferen*e *urve sho+n in Fi'ure0

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50/97

In'%fference C)re

E@0ecte' !et)rn !%s$-/ /--/ -// 5/

5/ 5-/5;/ 54/;,/ ;-/

In'%fference c)re

It *ou-d !e the *(se th(t this investor +ou-d h(ve different indifferen*e *urves'iven ( different st(rtin' -eve- of return for =ero ris.0 The e1er*ise +ou-d need to !erepe(ted for v(rious -eve-s of ris.return st(rtin' points0 An entire set of indifferen*e*urves *ou-d !e *onstru*ted th(t +ou-d portr($ ( p(rti*u-(r investor7s (ttitude to+(rdsris.

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51/97

In'%fference C)re

Ut%l%t3 scores

At this st('e the *on*ept of uti-it$ s*ores *(n !e introdu*ed0 These *(n !e seen (s (+($ of r(n.in' *o"petin' portfo-ios !(sed on the e1pe*ted return (nd ris. of thoseportfo-ios0 Thus if ( fund "(n('er h(d to deter"ine +hi*h invest"ent ( p(rti*u-(rinvestor +ou-d prefer, i0e0 Invest"ent A e/u(-in' ( return of :; for ( ris. of C orInvest"ent # e/u(-in' ( return of ; for ( ris. of :;, the "(n('er +ou-d *re(teindifferen*e *urves for th(t p(rti*u-(r investor (nd -oo. (t the uti-it$ s*ores0 Hi'her

uti-it$ s*ores (re (ssi'ned to portfo-ios or invest"ents +ith "ore (ttr(*tive ris.returnprofi-es0 A-thou'h sever(- s*orin' s$ste"s (re -e'iti"(te, one fun*tion th(t is*o""on-$ e"p-o$ed (ssi'ns ( portfo-io or invest"ent +ith e1pe*ted return or v(-ueE3 (nd v(ri(n*e of returns ;the fo--o+in' uti-it$ v(-ue?

U EV .-A; +here?

UV uti-it$ v(-ueA V (n inde1 of the investor7s (version, 8the f(*tor of 0;;C is ( s*(-in' *onvention

th(t (--o+s e1pression of the e1pe*ted return (nd st(nd(rd devi(tion in the e/u(tion (s( per*ent('e r(ther th(n ( de*i"(-90

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52/97

Uti-it$ is enh(n*ed !$ hi'h e1pe*ted returns (nd di"inished !$ hi'h ris.0 Investors*hoosin' ("on'st *o"petin' invest"ent portfo-ios +i-- se-e*t the one providin' thehi'hest uti-it$ v(-ue0 Thus, in the e1("p-e (!ove, the investor +i-- se-e*t the

invest"ent 8portfo-io9 +ith the hi'her uti-it$ v(-ue of :0

E@0ecte'!et)rn(EVB

tan'ar''e%at%on(B

Ut%l%t3EV9.-A;

5/ -/ 5 .- P+ PQ;- 2.-

;/ 5/ ; .- PQ+ P5 54

(Ass)&e A + %n t#%s caseB

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53/97

7ortfol%o D%ers%f%cat%onThere (re sever(- different f(*tors th(t *(use ris. or -e(d to v(ri(!i-it$ in returns on

(n individu(- invest"ent0 F(*tors th(t "($ inf-uen*e ris. in (n$ 'iven invest"ent

vehi*-e in*-ude un*ert(int$ of in*o"e, interest r(tes, inf-(tion, e1*h(n'e r(tes, t(1r(tes, the st(te of the e*ono"$, def(u-t ris. (nd -i/uidit$ ris. 8the ris. of not !ein'(!-e to se-- on the invest"ent90 In(ddition, (n investor +i-- (ssess the ris. of ( 'iveninvest"ent 8portfo-io9 +ithin the *onte1t of other t$pes of invest"ents th(t "($(-re(d$ !e o+ned, i0e0 st(.es in pension funds, -ife insur(n*e po-i*ies +ith s(vin's*o"ponents, (nd propert$0

One +($ to *ontro- portfo-io ris. is vi( '%ers%f%cat%on, +here!$ invest"ents(re"(de in ( +ide v(riet$ of (ssets so th(t the e1posure to the ris. of (n$ p(rti*u-(rse*urit$ is -i"ited0 This *on*ept is !(sed on the o-d (d('e do not put (-- $our e''s inone !(s.et70 If (n investor o+ns sh(res in on-$ one *o"p(n$, th(t invest"ent +i--f-u*tu(te dependin' on the f(*tors inf-uen*in' th(t *o"p(n$0 If th(t *o"p(n$ 'oes!(n.rupt, the investor "i'ht -ose :;; per *ent of the invest"ent0 If, ho+ever, theinvestor o+nssh(res in sever(- *o"p(nies in different se*tors, then the -i.e-ihood of(-- of those *o"p(nies 'oin' !(n.rupt si"u-t(neous-$ is 're(t-$ di"inished0 Thus,

diversifi*(tion redu*es ris.0 A-thou'h !(n.rupt*$ ris. h(s !een*onsidered here, thes("e prin*ip-e (pp-ies to other for"s of ris.0

!IK !ETU!N MAT!IX

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54/97

Coar%ance an' Correlat%on

The 'o(- is to ho-d ( 'roup of invest"ents or se*urities +ithin ( portfo-iopotenti(--$ to redu*e the ris. -eve- suffered +ithout redu*in' the -eve- of return0 To"e(sure the su**ess of ( potenti(--$ diversified portfo-io, 9#ar%an9'(nd 9#rr'4at%#n

(re *onsidered0 4ov(ri(n*e "e(sures to +h(t de'ree the returns of t+o ris.$ (ssets"ove in t(nde"0 A positive *ov(ri(n*e "e(ns th(t the returns of the t+o (ssets "oveto'ether, +hi-st ( ne'(tive *ov(ri(n*e "e(ns th(t the$ "ove in inverse dire*tions0

Coar%anceCOV(@1 3B J0(@9@B (393B for t+o invest"ents 1 (nd $, +here p is the pro!(!i-it$0

4ov(ri(n*e is (n (!so-ute "e(sure, (nd *ov(ri(n*es *(nnot !e *o"p(red +ith one(nother0 To o!t(in ( re-(tive "e(sure, the for"u-( for *orre-(tion *oeffi*ient WrX isused0

Correlat%on coeff%c%ent

r COV@3

/.


55/97

@3To %ll)strate t#e aboe1 #ere %s t#e e@a&0le:

C%rc)&stance 7robab%l%t3 @9@ 393

J0(@9@B (393BI .; 5. 9,.- 9.

II ., 95.-

III .+ 5.- 5.- .2

IV .5 9+ -.- 9;.;

COV@3 9;.

For d(t( re'(rdin' (3 39, see e(r-ier e1("p-e0 Assu"e th(t ( si"i-(r e1er*ise h(s!een run for d(t( re'(rdin' (@ @B.Assu"e the v(ri(n*e or ; of @ ;.+-, (nd the

v(ri(n*e or ;of 3 .. Thus, the *orre-(tion *oeffi*ient +ou-d !erV 9;. V %.+45

Y 0C R.-

If, the s("e e1("p-e is run ('(in, !ut usin' ( different set of nu"!ers for 3, (different *orre-(tion *oeffi*ient "i'ht resu-t of s($, .2440 It *(n !e *on*-uded th(t (

-(r'e ne'(tive *orre-(tion *onfir"s the stron' tenden*$ of the t+o invest"ents to"ove inverse-$0

7erfect 0os%t%e correlat%on 8*orre-(tion *oeffi*ient V B:9 o**urs +hen the returnsfro" t+o se*urities "ove up (nd do+n to'ether in proportion0 If these se*urities +ere*o"!ined in ( portfo-io, the offsettin'7 effe*t +ou-d not o**ur0

7erfect ne*at%e correlat%on 8*orre-(tion *oeffi*ient V :9 t(.es p-(*e +hen one

se*urit$ "oves up (nd the other one do+n in e1(*t proportion0 4o"!inin' these t+ose*urities in ( portfo-io +ou-d in*re(se the diversifi*(tion effe*t0

Uncorrelate' 8*orre-(tion *oeffi*ient V ;9 o**urs +hen returns fro" t+o se*urities"ove independent-$ of e(*h other th(t is, if one 'oes up, the other "($ 'o up ordo+n or "($ not "ove (t (--0 As ( resu-t, the *o"!in(tion of these t+o se*urities in (portfo-io "($ or "($ not *re(te ( diversifi*(tion effe*t0 Ho+ever, it is sti-- !etter to !ein this position th(n in ( perfe*t positive *orre-(tion situ(tion0

Uns3ste&at%c an' s3ste&at%c r%s$

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56/97

As "entioned previous-$, diversifi*(tion di"inishes ris.? the "ore sh(res or (ssetshe-d in ( portfo-io or in invest"ents, the 're(ter the ris. redu*tion0 Ho+ever, it isi"possi!-e to e-i"in(te (-- ris. *o"p-ete-$ even +ith e1tensive diversifi*(tion0 Theris. th(t re"(ins is *(--ed "(r.et ris. the ris. th(t is *(used !$ 'ener(- "(r.etinf-uen*es0 This ris. is (-so .no+n (s s$ste"(ti* ris. or non%diversifi(!-e ris.0 Theris. th(t is (sso*i(ted +ith ( spe*ifi* (sset (nd th(t *(n !e (!o-ished +ithdiversifi*(tion is .no+n (s uns$ste"(ti* ris., uni/ue ris. or diversifi(!-e ris.0

Total r%s$ 3ste&at%c r%s$ Uns3ste&at%c r%s$

Sy+t'*at%9 r%+2 the potenti(- v(ri(!i-it$ in the returns offered !$ ( se*urit$ or (sset*(used !$ 'ener(- "(r.et f(*tors, su*h (s interest r(te *h(n'es, inf-(tion r(te"ove"ents, t(1 r(tes, st(te of the e*ono"$0

Un+y+t'*at%9 r%+2 V the potenti(- v(ri(!i-it$ in the returns offered !$ ( se*urit$ or(sset *(used !$ f(*tors spe*ifi* to th(t *o"p(n$, su*h (s profit(!i-it$ "(r'ins, de!t-eve-s, /u(-it$ of "(n('e"ent, sus*epti!i-it$ to de"(nds of *usto"ers (nd supp-iers0

As the nu"!er of (ssets in ( portfo-io in*re(ses, the tot(- ris. "($ de*-ine (s (

resu-t of the de*-ine in the uns$ste"(ti* ris. in th(t portfo-io0 The re-(tionship("on'st these ris.s *(n !e /u(ntified (s fo--o+s

T!; !; U!;or ;% s; );

W#ere:

Z[ V the invest"ent7s tot(- ris. 8st(nd(rd devi(tion9Zs Vthe invest"ents s$ste"(ti* ris.

ZuVthe invest"ent7s uns$ste"(ti* ris.0

The *orre-(tion *oeffi*ient !et+een t+o invest"ent opportunities *(n !e e1pressed(s?

s % CO!%&

W#ere1Zs V the invest"ent s$ste"(ti* ris.

ZiV the invest"ent7s tot(- ris. 8s$ste"(ti* (nd uns$ste"(ti*9

/6


57/97

4ORi" V the *orre-(tion *oeffi*ient !et+een the return of the invest"ent (nd thoseof the "(r.et0

If (n invest"ent +ere perfe*t-$ *orre-(ted to the "(r.et so th(t (-- its "ove"ents

*ou-d !e fu--$ e1p-(ined !$ "ove"ents in "(r.et, then (-- of the ris. +ou-d !es$ste"(ti* % sIf(n invest"ent +ere not *orre-(ted (t (-- to the "(r.et, then (--of its ris. +ou-d !e uns$ste"(ti*

TEC8NOUE O 7O!TOLIO MANAGEMENT

3(rious t$pes of portfo-io re/uire different te*hni/ues to !e (dopted to (*hieve thedesired o!)e*tives0 So"e of the te*hni/ues fo--o+ed in Indi( !$ portfo-io "(n('ers (resu""(ri=ed !e-o+0

>.)/ E6%ty (#rt%#-

E/uit$ portfo-io is (ffe*ted !$ intern(- (nd e1tern(- f(*tors?

>a) Int'rna4 &a9t#r+

Pert(in to the inner +or.in' of the p(rti*u-(r *o"p(n$ of +hi*h e/uit$ sh(res (rehe-d0 These f(*tors 'ener(--$ in*-ude?

85B Mar$et al)e of s#ares(;B 6oo$ al)e of s#ares(,B 7r%ce earn%n*s rat%o (7SE rat%oB(+B D%%'en' 0a3o)t rat%o

>3) E;t'rna4 &a9t#r+

(5B Goern&ent 0ol%c%es(;B Nor&s 0rescr%be' b3 %nst%t)t%ons(,B 6)s%ness en%ron&ent(+B Tra'e c3cles

>1)/ E6%ty +t#92 ana4y+%+

/7


58/97

The !(si* o!)e*tive !ehind the (n(-$sis is to deter"ine the pro!(!-e future v(-ue

of the sh(res of the *on*erned *o"p(n$0 It is *(rried out pri"(ri-$ fe+er th(n t+o

+($s0 ?

(aB Earn%n*s 0er s#are(bB 7r%ce earn%n*s rat%o

>A) Tr'n$ #& 'arn%ng0 -

A hi'her pri*e%e(rnin's r(tio dis*ount e1pe*ted profit 'ro+th0 4onverse-$, (

do+n+(rd trend in e(rnin' resu-ts in ( -o+ pri*e%e(rnin's r(tio to dis*ount

(nti*ip(ted de*re(se in profits, pri*e (nd dividend0 Risin' EPS *(uses

(ppre*i(tion in pri*e of sh(res, +hi*h !enefits investors in -o+er t(1 !r(*.ets

Su*h investors h(ve not p($ t(1 or to 'ive -o+er r(te t(1 on *(pit(- '(ins0

M(n$ institution(- investor -i.e st(!i-it$ (nd 'ro+th (nd support hi'h EPS0

Gro+th of EPS is di-uted +hen ( *o"p(n$ fin(n*es intern(--$ its e1p(nsion

pro'r(" (nd offers ne+ sto*.0

EPS in*re(se r(pid-$ (nd resu-t in hi'her PE r(tio +hen ( *o"p(n$ fin(n*es

its e1p(nsion pro'r(" fro" intern(- sour*es (nd !orro+in's +ithout offerin'

ne+ sto*.0

>B) a4%ty #& r'(#rt'$ 'arn%ng0 -


59/97

R'+'ar9h an$ $''4#(*'nt #t4't+ 0 -

There is hi'her PE r(tio for ( *o"p(n$, +hi*h *(rries RD pro'r("s0

RD enh(n*es profit e(rnin' stren'th of the *o"p(n$ throu'h in*re(sed future

s(-es0

In'nt#ry an$ #th'r n#n-r'9rr%ng ty(' #& (r#&%t 0 -

Lo+ *ost inventor$ "($ !e so-d (t hi'her pri*e due to inf-(tion(r$

*onditions ("on' profit !ut su*h profit "($ not (-+($s o**ur (nd hen*e -o+

PE r(tio0

>C) D%%$'n$ (#4%9y0 -

Dividend po-i*$ is si'nifi*(nt in (ffe*tin' PE r(tio0 &ith hi'her dividend r(tio, e/uit$

pri*e 'oes up (nd thus r(ises PE r(tio0 Dividend r(tes (re r(ised to push in sh(re

pri*es up0 Dividend *over is *(-*u-(ted to find out the ti"e the dividend is prote*ted,

In ter"s of e(rnin's0 It is *(-*u-(ted (s under?

D%%'en' Coer E7 S D%%'en' 0er #are

>D) In'+t#r+ $'*an$0 -

De"(nd fro" institution(- investors for e/uit$ (-so enh(n*es the PE r(tio0

>5) a4%ty #& *anag'*'nt0 -

/9


60/97

Investors de*ide (!out the (!i-it$ (nd *(-i!er of "(n('e"ent (nd ho-d (nd dispose

of e/uit$ (*(de"$0 PE r(tio is "ore +here ( *o"p(n$ is "(n('ed !$ reputed

entrepreneurs +ith 'ood p(st re*ords of "(n('e"ent perfor"(n*e0

T30es of 7ortfol%os

The different t$pes of Portfo-io +hi*h is *(rried !$ (n$ Fund M(n('er to "(1i"i=eprofit (nd "ini"i=e -osses (re different (s per their o!)e*tives 0The$ (re (s fo--o+s0

Aggr'++%' P#rt%#0

ObHect%e:Gro+th0 This str(te'$ "i'ht !e (ppropri(te for investors +ho see.Hi'h 'ro+th (nd +ho *(n to-er(te +ide f-u*tu(tions in "(r.et v(-ues, over the shortter"0

Gr#"th P#rt%#0

ObHect%e:Gro+th0 This str(te'$ "i'ht !e (ppropri(te for investors +ho h(ve (preferen*e for 'ro+th (nd +ho *(n +ithst(nd si'nifi*(nt f-u*tu(tions in "(r.et v(-ue0

60


61/97

Ba4an9'$ P#rt%#0

ObHect%e:4(pit(- (ppre*i(tion (nd in*o"e0 This str(te'$ "i'ht !e (ppropri(te forinvestors +ho +(nt the potenti(- for *(pit(- (ppre*i(tion (nd so"e 'ro+th, (nd +ho

*(n +ithst(nd "oder(te f-u*tu(tions in "(r.et v(-ues\\\\\\\\\\

C#n+'rat%' P#rt%#0

ObHect%e:In*o"e (nd *(pit(- (ppre*i(tion0 This str(te'$ "($ !e (ppropri(te forinvestors +ho +(nt to preserve their *(pit(- (nd "ini"i=e f-u*tu(tions in "(r.etv(-ue0

61


62/97

#are$#an 7ortfol%o Mana*e&ent er%ces

7ro 7r%&e

62

PMS

PRO

PRIME

PRO

ARBITRAGE

PRO TECH


63/97

7ro')ct A00roac#

Invest"ent +i-- !e .eepin' in "ind invest"ent tenets0

:0 4onsistent, ste(d$ (nd sust(in(!-e returns0

0 M(r'in of S(fet$

0 Lo+ 3o-(ti-it$

7ro')ct offer%n*

Pro Pri"e is the ide(- for investors -oo.in' (t ste(d$ (nd superior +ith -o+ (nd"ediu" ris. (ppetite0

The portfo-io *onsists of ( !-end of /u(-it$ !-ue *hip (nd 'ro+th sto*.s ensurin' (!(-(n*ed portfo-io +ith re-(tive-$ "ediu" ris. profi-e0

The portfo-io *onstitutes of re-(tive-$ -(r'e *(pit(-i=(tion sto*.s, !(sed on se*tor(nd the"es +hi*h h(ve "ediu" to -on' ter" 'ro+th potenti(-0

7ro')ct C#aracter%st%cs

#otto" up sto*. se-e*tion

In depth ,independent fund("ent(- rese(r*h

Hi'h /u(-it$ *o"p(nies +ith re-(tive-$ -(r'e *(pit(-i=(tion

63


64/97

Dis*ip-ined v(-u(tion (ppro(*h (pp-$in' "u-tip-e v(-u(tion "e(sure0

Mediu" to -on' ter" vision, resu-tin' in -o+ portfo-io turnover0

8o= to %nest?

Mini"u" Invest"ent ? :; L(*s

Lo*. in ? "onths

Reportin'? A**ess to +e!site sho+in' *-ients ho-din' 0Month-$ reportin' ofportfo-io ho-din' tr(ns(*tion0

4h(r'es? 0C p( AM4 8Annu(- M(inten(n*es 4h(r'es9 fees *h(r'ed ever$/u(rter ,;0C !ro.er('e ,; profit sh(rin' (fter :C hurd-e is *rossed*h(r'e(!-e (t the end of fis*(- $e(r0

7ro Arb%tra*e

7ro')ct A00roac#

An opportunit$ -ies in !(sis +hi*h is the differen*e !et+een *(sh (nd future0&henever !(sis is hi'h +e !u$ the sto*.s (nd se-- the future to -o*. in differen*e 0Thedifferen*e is !ound to !e =ero (t e1pir$0

7ro')ct Offere'

Cas# f)t)re arb%tra*e:

The produ*t intends to spot -o+ ris. opportunities +hi*h +i-- $ie-d "ore th(n thenor"(- -o+ ris. produ*t 0&henever su*h opportunit$ is spotted sto*.s +i-- !e !ou'ht

6.


65/97

(nd to -o*. in the !(sis, future +i-- !e so-d 0This position +i-- !e -i/u(ted in the e1pir$or !efore th(t if the !(sis v(nishes e(r-$ 0Si"i-(r-$ the s*he"e +i-- "ove on fro"opportunit$ to opportunit$0


Lo= !%s$: This is re-(tive-$ -o+ ris. produ*t +hi*h *(n !e *o"p(red +ith -i/uidfunds issued !$ "utu(- funds0

8%*# ret)rn: 4o"p(red +ith other -o+ ris. produ*ts, this produ*ts offers (nindi*(tive post t(1 return of to :; p-us0

7ro')ct Deta%ls

Mini"u" Invest"ent?Rs0: 4rore

Lo*. in ? "onths

Reportin'? Fortni'ht-$ for portfo-io Net +orth, Month-$ reportin' pf portfo-ioHo-din' tr(ns(*tion0

4h(r'es? ;0;C !ro.er('e for future ,;0; for de-iver$

7ro Tec#

Prote*h usin' the .no+-ed'e of te*hni/ue (n(-$sis (nd the po+er of depr(vities

"(r.ets to identif$ tr(din' opportunities in the "(r.et 0The prote*h -ine of the produ*tis desi'ned (round v(rious ris. Sre+(rd Svo-(ti-it$ profi-es for the different .ind ofinvest"ent needs0

7ro')ct A00roac#

#etter perfor"(n*e is possi!-e fro" superior "(r.et ti"in' (nd fro" pi*.in'sto*.s !efore inf-(tion points in their tr(din' *$*-es 0Line(r return (re possi!-e fro"

6/


66/97

h(vin' hed'edS se-- "(r.et positions in do+ntrends 0A!so-ute return (re t(r'eted !$fo*usin' on findin' tr(din' opportunities not out perfor"(n*e of (n inde10

7ro')ct offere'

5. N%ft3 T#%rt3?

Nift$ futures +i-- !e !ou'ht (nd so-d on the !(sis of (n (uto"(ted tr(din's$ste" 'ener(ted *(--s to 'o -on'short0 The e1posure +i-- never e1*eed thev(-ue of portfo-io i0e0 no -ever('in' !ut (--o+s us to !e short hed'ed in Nift$in f(--in' "(r.et therefore (--o+in' the *-ient to e(rn irrespe*tive of the "(r.et

dire*tion0

;. 6eta 7ortfol%o?

Position(- tr(din' opportunities (re identified in the future se'"ent !(sed onte*hni*(- (n(-$sis 0Inf-e*tion points in the "o"entu" *$*-es (re identified to 'o

-on' short on sto*.inde1 futures +ith :% "onths ti"e hori=on 0The ide( is to'ener(te the !est possi!-e return in the "ediu" ter" irrespe*tive of thedire*tion of the "(r.et +ithout re(--$ -ever('in' !e$ond the portfo-io v(-ue0Ris. prote*tion is done !(sed on stop -osses on d(i-$ *-osin' pri*es0

,. tar N%ft3:

S+in' tr(din' te*hni/ue (nd Do+ theor$ is used to identif$ short ter"revers(- -eve-s for Nift$ futures (nd ride +ith trend !oth on the -on' (nd shortside 0This return *(n !e e(rned in !u-- (nd !e(r "(r.et 0Stop (nd reverse "e(nsto reverse ones position fro" -on' to short or vi*e ( vers( (t the revers(- -eve-ssi"u-t(neous-$ 0The e1posure never e1*eeds v(-ue of portfo-io i0e0 there is no-ever('in'0

+. Tra%l%n* to0s.

66


67/97

Mo"entu" tr(din' te*hni/ues (re used to spot short ter" "o"entu" of C%:; d($s in sto*.s (nd sto*.s inde1 futures 0Tr(i-in' stop -oss "ethod of ris."(n('e"ent or profit prote*tion is used to -o+er the portfo-io vo-(ti-it$ (nd

"(1i"i=e return 0Tr(din' opportunities (re e1posed !oth on the -on' side (ndthe short side (s the "(r.et de"(nds to 'et the !est of !oth up+(rd (nddo+n+(rd trends0


Usin' s+in' !(sed inde1 tr(din' s$ste"s stop (nd reverse 0trend fo--o+in' (nd"o"entu" tr(din' te*hni/ue0

Nift$ !(sed produ*ts for -o+ i"p(*t *ost (nd -o+ produ*t vo-(ti-it$

#oth -on' (nd short str(te'ies to e(rn returns even in f(--in' "(r.et0

Tr(din' in future "(r.et to (--o+ for (*tive ris. prote*tion usin' tr(i-in' stop-osses0

8o= to %nest?

Mini"u" ? Rs0:; L(*s

Lo*. in ? "onths

Reportin'? Fortni'ht-$ reportin' of portfo-io Net &orth, "onth-$reportin' of portfo-io Ho-din' STr(ns(*tion0

4h(r'es? ; AM4 8Annu(- M(inten(n*e 4h(r'es9, ;0;C !ro.er('e for

deriv(tives, ; profit sh(rin' on !oo.ed profit /u(rter-$ !(sis

7rotec# 7erfor&ance !e0ort

67


68/97

N%ft3 T#r%ft3:

8o= %t =or$s:

68

NIT" T8!IT"Date NAV ense@

;:;;;

:;0;; JCJ0

J;;;J

:J0::;0

C!et)rns(/B

2+., 5-.


69/97

Our first produ*t is !(sed *o"p-ete-$ on ( "(the"(ti*(- "ode- +ith =ero hu"(nintervention0 This produ*t h(s *o"e out of its fifth dr(+%do+n period 8in $e(rs of!(*. testin'9 (nd the net (sset v(-ue 8NA39 is t(.in' off to ne+ hei'hts0

6eta 0ortfol%o:

6ETA 7O!TOLIODate NAV ense@

;;;;

:;0;;:C:0

;J;;;

J:0:

::;0C

!et)rns(/B

,4.5 9;+.

8o= %t =or$s:

Our produ*t is !(sed on position(- tr(din' +ith ( -on' (nd short "ode- investin' in

p-(in v(ni--( sto*. futures0 In this, +e identif$ sto*.s +ith 're(ter ris.%re+(rd r(tios

+ith ( ti"e hori=on of : to "onths, !(sed on the prev(-ent "(r.et situ(tion0

Tra%l%n* to0s:

T!AILING TO7 NAV ense@

;:;;; :;0;; :CCJ0J;;;J :C0 J;0C;

!et)rns(/B

+,.- 9,-.

8o= %t =or$s:

The tr(din' str(te'$ is to !u$ short%ter" "o"entu" over ( ti"e fr("e of : to C

d($s (nd then !oo. s"(-- profits *onsistent-$0

69


70/97

C8A7TE! 9-

D*T* *N*,SIS *NDINT)RPR)T*TION

70


71/97

5. Do 3o) $no= abo)t t#e Inest&ent O0t%on aa%lable?

Inter0retat%on

As the (!ove t(!-e sho+s the .no+-ed'e of Investor out of :;; respondent *(rriedthrou'hout the H$der(!(d Are( is on-$ C0 The re"(inin' :C t(.e hisherresidenti(- propert$ (s (n invest"ent0 A**ordin' to -(+ purpose this is not (ninvest"ent !e*(use of it is not *re(te (n$ profit for the o+ner0 The "(in pro!-e" isth(t in this ti"e fro" $e(r ;;%;;J , the re*ession (nd the Inf-(tion "(.e theinvestor thin. !efore investin' ( even ( Rs0 :;;0So , it (-so *re(te the pro!-e" for theInvestor to not t(.e interest in Invest"ent option0

71


72/97

;. W#at %s t#e bas%c 0)r0ose of 3o)r Inest&ents?

Inter0retat%on

As +ith the (!ove (n(-$sis, it is found C peop-e (re interested in -i/uidit$,returns (nd t(1 !enefits0 And re"(inin' C (re interested in *(pit(- (ppre*i(tions,ris. *overin', (nd others0 In the entire respondent it is *o""on th(t this ti"e ever$oneis -oo.in' for "ini"i=in' the ris. (nd "(1i"i=in' their profit +ith the short ti"e ofperiod0

As e1p-(inin' the" A!out the Portfo-io M(n('e"ent Servi*es of Sh(re.h(n, the$+ere /uite interested in Prote*h Servi*es0

72


73/97

,. W#at %s t#e &ost %&0ortant factor 3o) cons%'er at t#e t%&e ofInest&ent?

Inter0retat%on

As the (!ove (n(-$sis 'ives the *-e(r ide( th(t "ost of the Investors *onsidered the"(r.et f(*tor (s (round : for Ris. (nd Return, !ut "ost i"port(nt *o""onthin's in (-- (re th(t the$ (re even re(d$ for t(.in' !oth Ris. (nd Return in (roundC investor0

Moreover, the M(r.et is f-u*tu(tin' no+ d($s, so (s it (-so 'ettin' i"prove"ent0So, Investor (re -oo.in' for Invest"ent in -on' ter" (nd Short%ter"0

73


74/97

+. ro& =#%c# o0t%on 3o) =%ll *et t#e best ret)rns?

Inter0retat%on

Most of the respondents s($ the$ +i-- 'et "ore returns in Sh(re M(r.et0 Sin*eSh(re M(r.et is s(id to !e the !est p-(*e to invest to 'et "ore returns0 The ris. in theinvest"ent is (-so hi'h0

Si"i-(r-$, the Investor (re "ore Interested in Investin' their "one$ in Mutu(-Fund S*he"es (s th(t is (-so ver$ i"port(nt fin(n*i(- produ*t due to its n(ture of

7.


75/97

"ini"i=in' ris. (nd "(1i"i=in' the profit0 As the *o""odities "(r.et is doin' +e--fro" -(st fe+ "onths so Investor (-so prefer to invest their "one$ in 4o""oditiesM(r.et !(si*(--$ in GOLD no+(d($s0

Moreover, even +ho don7t +(nt to t(.e Ris. the$ (re -oo.in' for investin' inFi1ed Deposit for -on' period of ti"e0

-. Inest%n* %n 7M %s far safer t#an Inest%n* %n M)t)al )n'. Do 3o)

a*ree?

Inter0retat%on

In the (!ove 'r(phs it7s *-e(r th(t of respondent out of hundred fee- th(tinvestin' their "one$ in Mutu(- Fund S*he"e (re f(r s(fer th(n Investin' in PMS0 thisis !e*(use of -(*. of proper infor"(tion (!out the Portfo-io "(n('e"ent servi*es0 Asthe !(sis is s("e for the "utu(- fund (nd PMS !ut the invest"ent p(ttern is tot(--$different fro" e(*h other (nd +hi*h depends upon different ris. f(*tor (v(i-(!-e in!oth the Fin(n*i(- Produ*ts0

7/


76/97

. 8o= &)c# 3o) carr3 t#e e@0ectat%on %n !%se of 3o)r Inco&e fro&

Inest&ents?

Inter0retat%on

The opti"is" is sho+n in the (ttitude of the respondents0 The *onfiden*e +(s(ppre*i(!-e +ith +hi*h the$ (re -oo.in' for+(rd to ( rise in their invest"ents0 M()orp(rt of the s("p-e fee-s th(t the rise +ou-d !e of (round :C0 On-$ of therespondents +ere *onfident enou'h to e1pe*t ( rise of upto C0

As (-- the respondents +ere *onsiderin' the Ris. f(*tor (-so !efore fi--in' the

/uestionn(ire (nd the$ +ere (s.in' (!out the perfor"(n*e report of (-- the PMSservi*es offered !$ Sh(re.h(n -i"ited0

76


77/97

. If 3o) %neste' %n #are Mar$et1 =#at #as been 3o)r e@0er%ence?

Inter0retat%on

; of the respondents h(ve invested in Sh(re "(r.et (nd re*eived s(tisf(*tor$returns, ; of the respondents h(ve not (t (-- invested in Sh(re M(r.et0 So"e of theinvestors f(*e pro!-e"s due to -ess .no+-ed'e (!out the "(r.et0 So"e of therespondents don7t h(ve *o"p-ete overvie+ of the h(ppenin's (nd invest their "one$in +ron' sh(res +hi*h resu-t in Loss0 This is the re(son "ost of the respondents preferPortfo-io M(n('e"ent Servi*es to tr(deno+ ( d($s, +hi*h 'ives the Investor the *-e(r

ide( +hen is the ri'ht ti"e to !u$ (nd ri'ht ti"e to se-- the sh(res +hi*h isre*o""ended !$ their Fund M(n'er0

77


78/97

408o= 'o 3o) tra'e %n #are Mar$et?

Inter0retat%on

As +e .no+ th(t Sh(re "(r.et is tot(--$ !(sed on ps$*ho-o'i*(- p(r("eters ofInvestors, +hi*h *h(n'ed (s per the "(r.et *ondition, !ut (t the s("e ti"e the (roundC investor tr(de on the !(sis of spe*u-(tion (nd : depend upon Invest"entoption #onds, Mutu(- Funds et*0

78


79/97

Moreover, the no+ ( d($7s Hed'in' is "ost *o""on deriv(tives too-s +hi*h isused !$ the Investor to 'et "ore return fro" the M(r.et ,this is "ost-$ used in the4o""odities M(r.et0

2. 8o= 'o 3o) &ana*e 3o)r 7ortfol%o?

Inter0retat%on

A!out C of the respondents s($ the$ the"se-ves "(n('e their portfo-io (nd of the respondents s($ the$ depends on the se*urit$ *o"p(n$ for portfo-ioM(n('e"ent0 of the respondents prefer PMS of the *o"p(n$ !e*(use the$ don7th(ve to .eep ( *-ose e$e on their invest"ent the$ 'et (-- the infor"(tion ti"e to ti"e

fro" their Fund M(n('er0

79


80/97

Moreover, t(-.in' (!out the Sh(re.h(n PMS servi*es the$ (re f(r s(tisfied +ith theProte*h (nd Prop ri"e Perfor"(n*e durin' -(st $e(r0 The$ (re s(tisfied +ith the /ui*.(nd (*tive servi*es of Sh(re.h(n *usto"er servi*es +here, the$ 'et the upd(ted

.no+-ed'e (!out the s*rip det(i- ever$d($ fro" their Fund M(n('er0

5. If 3o) tra'e =%t# #are$#an l%&%te' t#en =#3?

Inter0retat%on

As the (!ove rese(r*h sho+s the re(sons (nd the p(r("eters on +hi*h investor -ieon Sh(re.h(n (nd the$ do the tr(de0

A"on' hundred respondents C respondents do the tr(de +ith the *o"p(n$ dueto its rese(r*h Report, !(sed on #ro.er('e R(te +here(s (re h(pp$ +ith its

Servi*es0

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L(st !ut not the -e(st, :C respondents (re depends upon the tips of Sh(re.h(n+hi*h 'ives the" ide( +here to invest (nd +hen to invest0

At the ti"e of rese(r*h +h(t I found is th(t sti-- Sh(re.h(n need to "(.e the *-ients

"ore .no+-ed'e (!out their PMS produ*t0

55. Are 3o) )s%n* 7ortfol%o Mana*e&ent ser%ces (7MB of #are$#an?

Inter0retat%on

As t(-.in' (!out the Invest"ent option, in "ost of *-ients it +(s *o""on th(t the$

.no+ (!out the Option !ut (s the PMS of Sh(re.h(n h(ve different Produ*t offerin',

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Produ*t 4h(r(*teristi*s (nd the Invest"ent ("ount is (-so different this "(.es the

*-ients to thin. different-$0

It is found th(t C of Sh(re.h(n *-ient +here usin' PMS servi*es (s for theirInvest"ent Option0

5;. W#%c# 7ortfol%o T30e 3o) 0referre'?

Inter0retat%on

The (!ove (n(-$sis sho+s, in +hi*h portfo-io the investor -i.e to de(- "ore in

PMS0

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As C investor -i.es to 'o for E/uit$ Portfo-io (nd +ith #(-(n*ed Portfo-io,

+here(s (round investor -i.e to, 'o for De!t Portfo-io0

5,. 8o= =as 3o)r e@0er%ence abo)t 7ortfol%o Mana*e&ent ser%ces (7MB of

#are$#an L%&%te'?

Inter0retat%on

In the (!ove (n(-$sis it is *-e(r th(t the Investor h(ve the 'ood (nd the !(d

e1perien*e !oth +ith the Sh(re.h(n PMS servi*es0

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In this *urrent s*en(rio C of the Investor e(rned, +here(s (round : h(ve to

suffer -osses in the "(r.et0 Si"i-(r-$ ; of the Respondents (re there in #re(.even

Point 8#EP9, +here no -oss (nd no profit0

5+. Does #are$#an L%&%te' $ee0 %t 7M 0rocess Trans0arent?

Inter0retat%on

The (!ove (n(-$sis is t(-.in' (!out the Sh(re.h(n Tr(nsp(ren*$ of their PMS

servi*es0 In hundred respondents s(id th(t the$ 'et (-- the infor"(tion (!out their

s*rip !u$in' (nd se--in' infor"(tion d($ !$ d($, +here (s of respondents (re not

8.


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s(tisfied +ith the PMS infor"(tion (nd Tr(nsp(ren*$ !e*(use the$ don7t 'et (n$ t$pe

of e1tr( servi*es in PMS (s the$ +ere s($in'0

5-. Do 3o) reco&&en' #are$#an 7M to ot#ers?

Inter0retat%on

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86/97

The (!ove (n(-$sis sho+s the Investor per*eption to+(rd the Sh(re.h(n PMS (s on

the !(sis of their 'ood (nd !(d e1perien*e +ith Sh(re.h(n -i"ited0 A"on' hundred

respondents respondents +ere ('ree to re*o""end the PMS of Sh(re.h(n to

their peers, re-(tives et*0

C8A7TE!9

CONCU,SION

*ND

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SU--)STIONS

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88/97

O6E!VATION AND INDING

A!out C Respondents .no+s (!out the Invest"ent Option, !e*(use

re"(inin' :C t(.e his her residenti(- propert$ (s Invest"ent, !ut in (*tu(- it

not (n invest"ent phi-osoph$ *(rries th(t (-- the Invest"ent does not *re(te (n$

profit for the o+ner0

More th(n C Investors (re investin' their "one$ for Li/uidit$, Return (nd

T(1 !enefits0

At the ti"e of Invest"ent the Investors !(si*(--$ *onsidered the !oth Ris. (nd

Return in "ore ('e (round C0

As ("on' (-- Invest"ent Option for Investor the "ost i"port(nt (re( to 'et

"ore return is sh(re (round (fter th(t Mutu(- Fund (nd other *o"es into

e1isten*e0

More th(n of Investors fee-s th(t PMS is -ess ris.$ th(n investin' "one$ in

Mutu(- Funds0

As e1pe*ted return fro" the M(r.et "ore th(n respondents e1pe*t the rise

in In*o"e "ore th(n :C, respondents (re e1pe*tin' !et+een :C%C

return0

As the e1perien*e fro" the M(r.et "ore th(n Investor h(d -ose their

"one$ durin' the *on*erned $e(r, +here(s ; respondents h(ve 'ot s(tisfied

return0

A!out C respondents do the Tr(de in the M(r.et +ith Deriv(tives Too-s

Spe*u-(tion *o"p(re to throu'h Hed'in' 0And the rest : tr(de their

"one$ in Invest"ents0

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Around C residents "(n('e their Portfo-io throu'h the different *o"p(n$

+here(s Investor "(n('e their portfo-io the"se-ves0

The "ost i"port(nt re(sons for doin' tr(de +ith Sh(re.h(n -i"ited isSh(re.h(n Rese(r*h Dep(rt"ent th(n its #ro.er('e r(te Stru*ture0

Out of hundred respondents C respondents (re usin' Sh(re.h(n PMs

servi*es0

Investors preferred "ore th(n C e/uit$ Portfo-io, #(-(n*eed Portfo-io

(nd (!out De!t Portfo-io +ith Sh(re.h(n PMS0

A!out C Respondents e(rned throu'h Sh(re.h(n PMS produ*t, +here(s :

investor f(*ed -oses (-so0

More th(n Investor (re h(pp$ +ith the Tr(nsp(ren*$ s$ste" of Sh(re.h(n

-i"ited0

As !(sed on the 'ood (nd !(d e1perien*e +ith Sh(re.h(n -i"ited (round

(re re(d$ to re*o""ended the PMS of Sh(re.h(n to their peers, re-(tives et*0

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LIMITATION O T8E 7!OECT

As on-$ Ne= Del#% =as 'ealtin the surve$ so it does not represent the vie+ of

the tot(- Indi(n "(r.et0

The s("p-e si=e +(s restri*ted +ith hundred respondents0

There +(s -(*. of ti"e on the p(rt of respondents0

The surve$ +(s *(rried throu'h /uestionn(ire (nd the /uestions +ere !(sed on

per*eption0

There "($ !e !i(sness in infor"(tion !$ "(r.et p(rti*ip(nt0

4o"p-ete d(t( +(s not (v(i-(!-e due to *o"p(n$ priv(*$ (nd se*re*$0

So"e peop-e +ere not +i--in' to dis*-ose the invest"ent profi-e0

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CONCLUION AND UGGETION

On the !(sis of the stud$ it is found th(t Sh(re.h(n Ltd is !etter servi*es provider

th(n the other sto*.!ro.ers !e*(use of their ti"e-$ rese(r*h (nd person(-i=ed (dvi*e

on +h(t sto*.s to !u$ (nd se--0 Sh(re.h(n Ltd0 provides the f(*i-it$ of Tr(de ti'er (s

+e-- (s re-(tionship "(n('er f(*i-it$ for en*our('e"ent (nd prote*ts the interest of the

investors0 It (-so provides the infor"(tion throu'h the internet (nd "o!i-e (-erts th(t

+h(t IPO7s (re *o"in' in the "(r.et (nd it (-so provides its rese(r*h on the future

prospe*t of the IPO0 &e *(n *on*-ude the fo--o+in' +ith (!ove (n(-$sis0

Sh(re.h(n Ltd h(s !etter Portfo-io M(n('e"ent servi*es th(n Other 4o"p(nies

It .eeps its pro*ess "ore tr(nsp(rent0

It 'ives "ore returns to its investors0

It *h(r'es (re -ess th(n other portfo-io M(n('e"ent Servi*es

It provides d(i-$ upd(tes (!out the sto*.s infor"(tion0

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Investors (re -oo.in' for those invest"ent options +here the$ 'et "(1i"u"returns +ith -ess returns0

M(r.et is !e*o"in' *o"p-e1 it "e(ns th(t the individu(- investor +i-- noth(ve the ti"e to p-($ sto*. '("e on his o+n0

Peop-e (re not so "u*h +(re (+(re (!out the Invest"ent option (v(i-(!-e in theM(r.et0

S!!"#$%'#

The *o"p(n$ shou-d (-so or'(ni=e se"in(rs (nd si"i-(r (*tivities to enh(n*e

the .no+-ed'e of prospe*tive (nd e1istin' *usto"ers, so th(t the$ fee- "ore

*o"fort(!-e +hi-e investin' in the sto*. "(r.et0

Investors "ust fee- s(fe (!out their "one$ invested0

Investor7s (**ounts "ust !e "ore tr(nsp(rent (s *o"p(red to other *o"p(nies0

Sh(re.h(n -i"ited "ust tr$ to pro"ote "ore its Portfo-io M(n('e"ent Servi*es

throu'h Advertise"ents0

Sh(re.h(n needs to i"prove "ore it7s 4usto"er Servi*es

There is need to *h(n'e in -o*. in period in (-- three PMS i0e0Prote*h, Propri"e,

Pro Ar!itr('e0

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93


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ANNEXU!E

0U)STIONN*IR)

NAME(((((((((((((.

AGE((((((((((((((((

OCCUPATION(((((((((((... PHONE

NO..................................

1. Do $ou .no+ (!out the Invest"ents Option (v(i-(!-e

A9 >ES #9 NO

0 &h(t is the !(si* purpose of $our Invest"ents

A9 Li/uidit$ #9 Return 49 T(1 #enefits D9 Ris. 4overin'

E9 4(pit(- Appre*i(tion F9 Others

0 &h(t is the "ost i"port(nt f(*tor $ou *onsider (t the ti"e of Invest"ent

A9 Ris. #9 Return 49 #oth

0 Fro" +hi*h option $ou +i-- 'et the !est returns

A9 Mutu(- Funds #9 Sh(res 49 4o""odities M(r.et D9 #onds

E9 Fi1ed Deposits F9 Propert$ G9 Others

C0 2Investin' in PMS is f(r s(fer th(n Investin' in Mutu(- Fund50 Do $ou ('ree

A9 >es #9 No

0 Ho+ "u*h $ou *(rr$ the e1pe*t(tion in Rise of $our In*o"e fro" Invest"ents

A9 Upto :C #9 :C%C 49 C%C D9 More th(n C

0 If $ou invested in Sh(re M(r.et, +h(t h(s !een $our e1perien*e

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A9 S(tisf(*tor$ Return #9 #urned Fin'er 49 Uns(tisf(*tor$ Resu-tsD9 No

0 Ho+ do $ou tr(de in Sh(re M(r.et A9 Hed'in' #9 Spe*u-(tion 49 Invest"ent

J0 Ho+ do $ou "(n('e $our Portfo-io

A9 Se-f #9 Depends on the *o"p(n$ for portfo-io

:;0 If, $ou tr(de +ith Sh(re.h(n -i"ited then +h$

A9 Rese(r*h #9 #ro.er('e 49 Servi*es D9 Invest"ents Tips

::0 Are $ou usin' Portfo-io M(n('e"ent servi*es 8PMS9 of Sh(re.h(n

A9 >es #9 No

:0 &hi*h Portfo-io T$pe $ou preferred

A9 E/uit$ #9 De!t 49 #(-(n*ed

:0 Ho+ +(s $our e1perien*e (!out Portfo-io M(n('e"ent servi*es 8PMS9 ofSh(re.h(n Li"ited

A9 E(rned #9 F(*ed Loss 49 No profit No -oss

:0 Does Sh(re.h(n Li"ited .eep it PMS pro*ess Tr(nsp(rent

A9 >es #9 No

:C0 Do $ou re*o""end Sh(re.h(n PMS to others

A9 >es #9 No

9/


96/97

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97/97

6I6LIOG!A78"

!EE!ENCE

===.s#are$#a.co&

===.seb%.*o.%n

===.&one3control.co&

===.$ar3.co&

===.al)eresarc#onl%ne.co&

===.3a#oof%nance.co&

===.t#eecono&%st.co&

===.nse%n'%a.co&

===.bse%n'%a.co&

6oo$ !eferre'

3(-ue 'uide !$ Sh(re.h(n

Investors E$es !$ Sh(re.h(n

#usiness +or-d0
http://www.sharekha.com/http://www.moneycontrol.com/http://www.karvy.com/http://www.valueresarchonline.com/http://www.yahoofinance.com/http://www.theeconomist.com/http://www.nseindia.com/http://www.bseindia.com/http://www.sharekha.com/http://www.moneycontrol.com/http://www.karvy.com/http://www.valueresarchonline.com/http://www.yahoofinance.com/http://www.theeconomist.com/http://www.nseindia.com/http://www.bseindia.com/

Documents

Project Report Sharekhan MBA