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PROJECT REPORT

ON

“A STUDY OF VARIOUS ASPECTS

OF

WEALTH MANAGEMENT

IN

CHOLAMANADALAM”

A Report Submitted In Partial Fulfillment Of The

Requirements Of PGDM Program Of IPER-PGDM

Bhopal

Submitted To: Submitted By: Prof. A.S.Khalsa Harsha Chotrani Dean-IPER-PGDM, Bhopal

Mr. Vikas Jain Date of Submission: Assistant Vice President July 5th, 2010 Cholamandalam, Delhi

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ACKNOWLEDGEMENT

An Old Chinese proverb says : “When eating your bamboo

sprouts, remember the men who planted them. Now that my

sprouts are ready to eat, it is time for me to express my deepest

gratitude to All those who have made this possible.”

I would like to thank my Dean Prof. A.S.Khalsa and my sir

Prof. Hersh Sharma for providing me with this opportunity of

having such a wonderful company like CHOLAMANDALAM for

my summer training.

No work is complete without the help & co-operation of a

knowledgeable and expert mentor, I would like to thank

Mr.Vikas Jain-Assistant Vice President, Delhi and Mr.Ashish

Shoundik, Branch Head and finally Mr.Sambit Sawant, Senior

Relationship Manger who have been extremely dedicated

towards me. Without there cooperation my knowledge about

the Financial sector would have been nil. All of them have

been very much cooperative and dedicated towards passing on

the knowledge to me. Sincere thanks to Vikas sir.

In the end I would like to thank all those who have been

associated with my research project and this report.

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CERTIFICATE

This is to certify that the project titled “A STUDY OF VARIOUS ASPECTS OF WEALTH MANAGEMENT IN CHOLAMANADALAM.” Made by Harsha Chotrani is an

authentic work carried out by them under my guidance and

supervision.

During the making of the project she took keen interest in

completing the work assigned to her.

EXTERNAL MENTOR:

MR.VIKAS JAIN

INTERNAL MENTOR:

PROF. A.S .KHALSA

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PREFACE

The wealth management industry is changing rapidly to meet the

evolving needs of the participants . This is one area where true

financial services convergence seems to be happening as trust and

private banks, brokerage and retirement planning focused companies

are all trying to get a bigger slice of action .Opportunities in new

geographies and asset classes are driving a lot of in the industry today.

According to a new research conducted by Celent, a Boston based

financial research and consultancy firm, the Indian wealth

management industry is gearing up to meet expanding market

opportunities. The report titled "Overview of Indian Wealth

Management Market" reveals that over the next four-five years, the

revenue from wealth management service is expected to contribute to

over one third(32-37 percent) of full-service financial institutions.

By 2017 disposable income is expected to grow from present 2 percent

to 5 percent. The wealth management market currently registers a 30

percent plus growth and is expected to touch $1 trillion by 2012.

This Project report has been a sincere effort on the study of this

upcoming sector in the Financial Industry, Cholamandalam being a

premier in the industry and proficient in the wealth management

industry. The report concentrates on the way of wealth management

process and correct financial planning of an individual and the entire

business cycle of wealth management in Cholamandalam.

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INDEX

I. Objective Of Study

II. Scope Of Study

III. Method Of Data Collection

IV. Limitations Of Study

V. Concept OF Wealth Management -:

Wealth Management service

Benefits Of Wealth Management

VI. Literature Review –:

State OF Wealth Management Globally

State OF Wealth Management Industry in India

VII. Company Overview – “Cholamandalam Distribution

Company”

Product and Services Of Cholamandalam

SWOT Analysis OF Cholamandalam

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VIII. Business Cycle OF Wealth Management in

Cholamandalam

IX. How Cholamandalam Suggests Products to its Clients

Research Work

Mutual Fund Analysis

X. Questionnaire and its Analysis

XI. Learning’s

XII. Recommendations

XIII. Bibliography

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OBJECTIVES OF STUDY

To Study the aspects of wealth management.

To analyze the evolution and growth of wealth management market

in India.

To derive the potentiality and the future prospect of the wealth

management industry in India.

To analyze the investment behavior and risk appetite of HNI clients

in Delhi.

SCOPE OF STUDY

This report provides a holistic and top-down view on the current

situation of Financial market and the role of Cholamandalam in

building the industry. I would be analyzing the aspects of wealth

management and analysis of investment behavior of HNI clients in

Delhi .As study has been done only in Delhi it may vary in different

cities and study has been done in Cholamandalam wealth

management division , there is a probability that business cycle of

wealth management would be different in other companies.

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METHOD OF DATA COLLECTION All the techniques and process of doing wealth management is studied

in Cholamandalam :

Primary Source : Risk Appetite and investment behavior of HNI

clients of Delhi is studied through Marketing research .

Secondary Source :

Collection of data from reports published by various national

and international journals on wealth Management.

RBI and SEBI rules and regulation and their reports on the

subject.

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LIMITATIONS OF THE STUDY

Since the study is done only in Delhi, these results cannot be

generalized. Investors also tend to hide some facts and figures due to

some reasons which can hinder the results we get from this survey.

Although I have tried my level best to prepare this report an error free

report every effort has been made to offer the most authenticate

position with accuracy.

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THE CONCEPT OF WEALTH MANAGEMENT Wealth usually refers to money and property or something which has

economic value attached to it. It is the abundance of objects of value

and also the state of having accumulated these objects.

The concept of wealth management refers to management of both the

sources and the facets of various forms of both tangible and non-

tangible wealth. India has become a highly potential market for wealth

management because wealth managers, both domestic and

international, are able to establish the beginnings of a market with few

obstacles, relative to the other emerging markets, where there are

regulatory restrictions, these are less problematic than those in China

or the Middle East.

“WEALTH MANAGEMENT is a service provided by financial

institutions to help high net worth individuals protect and grow their

wealth. This advanced investment advisory discipline involves

providing a diverse range of services, such as financial planning,

investment management, tax planning and cash flow and debt

management, based on client requirements.”

There are Two aspects to the wealth management process:-

Protecting assets from creditors, market crashes or slowdowns,

taxes, lawsuits and other unexpected events

Growing asset values through methods that actively manage risk

and reward profiles to clients needs.

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Wealth Management is an advanced investment advisory discipline

that incorporates Financial Planning and Specialist Financial Services.

WEALTH MANAGEMENT SERVICES

Wealth management offers the following services:

Investment planning: Assists investor in investing money into

various investment markets, keeping in mind investment goals and

risk appetite.

Insurance planning: Assists in selecting from various types of

insurances, self insurance options and captive insurance

companies.

Retirement planning: This is one of the important service as it is

critical to understand how much funds you require in your old age.

Asset protection: Begins with financial advisor trying to

understand preferred lifestyle and then helping an investor to deal

with threats, such as taxes, volatility, inflation, creditors and

lawsuits, to maintaining this lifestyle.

Tax planning: helps in minimizing tax returns. This might

include planning for charity, supporting your favorite causes

while also receiving tax benefits.

Estate planning: helps in protecting you and your estate from

creditors, lawsuits and taxes. This service is critical for every person

whose net worth is high.

Business planning: This service aims at optimizing the tax free

advantages of running your own business.

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Business succession planning: assists in planning for the

inevitable to maximize returns.

Wealth transfer: helps you pass on your wealth to your dependents.

BENEFITS OF WEALTH MANAGEMENT

Wealth management helps in:

Reducing taxes associated with income, capital gains and estate.

Protecting assets from misjudgments and creditors.

Improving yields with more diversification and less risk.

Managing liabilities such as mortgages and college funding.

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LITERATURE REVIEW

STATE OF WEALTH MANAGEMENT INDUSTRY GLOBALLY

Global high net worth wealth totals around $37 trillion, and is

expected to reach $51.6 trillion by 2011, growing at an annual rate of

6.8% a year according to the 2009 Merrill Lynch/Capgemini World

Wealth Report.

Merrill Lynch Global Wealth Management and Capgemini's

14th World Wealth Report revealed that high net worth

individuals (HNWI) -defined as those with more than $1 million

(£673,000) of disposable assets -had recouped most of the money

lost in the previous year when the global downturn took its toll on

their portfolios.

HNWI wealth had declined by $7.9 trillion in 2008 but last

year(2009) climbed $6.2 billion according to the report which also

showed that the world's population of HNWIs had increased to 10 million from 8.6 million last year(2009), bringing it close to the

10.1 million level of 2007.

At the end of 2008, the world’s population of HIGH NET WORTH INDIVIDUALS (HNWIs) was down 14.9% from the year before, while their wealth had dropped 19.5%. The

unprecedented declines wiped out two robust years of growth in

2006 and 2007, reducing both the HNWI population and its wealth

to below levels seen at the close of 2005.

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Ultra-HNWIs suffered more extensive losses in financial wealth than the HNWI population as a whole. The Ultra-HNWI

population fell 24.6%, as the group’s wealth dropped 23.9%,

pushing many down into the ‘mid-tier millionaire’3 pool.

The financial crisis and economic uncertainty of 2008 clearly had

an impact on HNWI investments of passion and lifestyle spending,

with luxury goods makers, auction houses, and high-end service

providers reporting significantly reduced demand worldwide. The

cost of luxury items also rose.

HNWI Population by country,2008

By 2013, it is forecasted that global HNWI financial wealth to

recover to $48.5 trillion, after advancing at a sustained annual rate

of 8.1%. By 2013, it is expected that Asia-Pacific to overtake North

America as the largest region for HNWI financial wealth.

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HNWIs are defined as those having investable assets of US$1

million or more, excluding primary residence, collectibles,

consumables, and consumer durables.

Ultra-HNWIs are defined as those having investable assets of

US$30 million or more, excluding primary residence, collectibles,

consumables, and consumer durables.

More than a quarter of HNWI clients surveyed withdrew assets from their wealth management firm or left that firm altogether in 2008, primarily due to a loss of trust and confidence.

Firms need to be client-focused . 88% of surveyed HNWI clients

said SERVICE QUALITY was a “very important” reason for staying

with their wealth management firm in 2008, and 87% of Advisors

anticipated that would be the case.

World GDP did manage to produce some growth in 2008 (2.0%),but

it was down from 3.9% in 2007 and 4.0% in 2006. GDP in G7

economies deteriorated progressively as the crisis unfolded, and

ended the year showing growth of just 0.6%.

BRIC (Brazil, Russia,India,China) nations continued to outpace

many economies, led by China, despite the steep slowdown in the

fourth quarter.

Real GDP Growth Rates , 2007-2009F

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HNWIs reduced their exposure to equities across the globe in 2008, but allocated more to fixed-income instruments. By year-

end 2008, equities accounted for 25% of total global HNWI financial

assets, down from 33% a year earlier, and fixed-income accounted

for 29%, up from 27% a year earlier.

HNWIs kept far more cash/deposits in 2008—of global HNWI

financial assets, 21% was in cash-based holdings at the end of

2008, up 7 percentage points from pre-crisis levels in 2006.

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HNWIs are expected to remain fairly conservative investors in the short term, with capital preservation being a priority over the

pursuit of high returns. Looking toward 2010, though, the profile of

HNWI portfolios is likely to shift as economic conditions improve,

instigating a tentative return to equities and alternative investments

as HNWIs regain their appetite for risk.

Breakdown of HNWI Financial Assets , 2006-2010F

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STATE OF WEALTH MANAGEMENT INDUSTRY IN INDIA

“While Maharashtra is home to the largest number of affluent individuals

of any state in India and also the fastest growing affluent population, it

is Delhi that has by far the highest proportion of affluent individuals”

(Source: Data monitor Customer Research)

According to the report, India is slated to become a US$1 trillion

market (in assets under management) for wealth management

providers by 2012, with a target market size of 42 million households.

In the annual survey done by Cap Gemini, SA and Merrill Lynch it was

found that ranks of millionaires grew 6% in the previous year(2009),

because the number of richer people grew in India & China where India

is competing China. India & China posted the biggest gain in

millionaires advancing by 23% & 20% respectively.

Wealth management is just emerging in India. The growth of the

economy has already been widely showcased. Wealth management

services have been getting more attention over the last two years. A

booming economy, rising stock prices and an increase in salaries and

spending power have turned the spotlight on this sector. The wealth

management space was earlier the preserve of some foreign banks

which offered these "exclusive services" to a select few. This was not a

service you could apply for.

The unsaid tagline was "Don't call us. We'll call you (if you are that wealthy!)." Today, a number of private banks and distribution houses

offer this service. Also entering this arena and carving a niche for

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themselves are standalone entities that offer the full range of services

— investment advice, portfolio management, taxation advice.

According to Celent, with large segments of the population showing

interest in financial products and service lines, growth and buoyancy

across sectors are boosting the financial service industry of India. The

report estimated an addition of 500 million people to the working class

in the next decade, with the young population enjoying increase in

income levels. These will lead to increased investments in the core

processing platforms as well as the need to tie the various platforms

together.

The wealth management service providers have segmented Indian

market into four categories, namely:-

The Mass market (investible surplus $5,000 to $25,000)

The Mass affluent ($25,000 to $1 million)

The High net worth (HNW $1 million to $30 million) and

The Ultra-high net worth (ultra-HNW greater than $30 million).

The lower rung of this pyramid is currently clocking tremendous

growth at 30 percent for mass affluent and 27 percent for mass market

and will continue the same phase says the report.

The wealth management market currently registers a 30 percent plus

growth and is expected to touch $1 trillion by 2012.

The latest Wealth Report 2010 Attitudes Survey has forecast that

real estate sector in India is likely to witness fluctuations with prices

of prime properties in India forecast to be zooming northwards by

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12-15 per cent in 2010 on one hand and demographics change

supporting demand on the other.

With the number of high net worth investors (HNWIs) in India

growing at 20 per cent a year, second only to Singapore and the

huge community of wealthy non-resident Indians living overseas—

keen in investing back home—the Mumbai and New Delhi realty

markets now hold a significant level of promise for these potential

investors, as per Pranab Datta, vice-chairman and MD, Knight

Frank India.

India's FY10,nominal GDP is estimated at US$1.3 trillion. Assuming

12.4% annual growth (7% real and 5% inflation), India's GDP in

FY15 works out to US$2.3 trillion i.e. addition of US$1 trillion in the

next 5 years.

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India is growing at a fast pace and according to LiveMint Report

India's economy between the year '2007 and 2050' is likely to come

in at 8.5% CAGR, significantly higher than China's 6.8% .

India is going to be one of the powerful nations of the world as far as

human resource and technological wise...Not just this, India will

also going to be powerful economically. The power of economy can

put India one among the top ten developed nations.

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COMPANY OVERVIEW

“CHOLAMANDALAM DISTRIBUTION COMPANY “

The Company, was incorporated on August 17, 1978, as a public

limited company under the name of “Cholamandalam Investment and

Finance Limited”. Cholamandalam Financial Services Group is a pan-

Indian, composite financial services provider. It comprises the parent

company, Cholamandalam Finanace Limited (CFL), and its subsidiaries

and associates Cholamandalam Distribution Limited, Cholamandalam

Asset Management Company Limited and Cholamandalam Securities

Limited. The shares of CFL are listed in the Mumbai(BSE) and National

(NSE) Stock Exchange.

In 1993-94 Cholamandalam Investment and Finance Company

ventured into vehicle finance operations. It has since then

continuously augmented its product range and geographical presence.

They have a total asset base of Rs. 17,000 crores as on March 31, 2010

(including assets securitized and assigned) out of that Cholamandalam

has around 1700 crores. They were registered as a deposit taking

NBFC, and in December 2006 it converted into a non-deposit taking

NBFC. They currently enjoy LAA rating for debentures and

subordinated debt programme, MAA+ rating for fixed deposits and A1+

rating for Short Term debt programme from ICRA; AA rating for fixed

deposits and P1+ rating for short term debt programme from CRISIL

and AA (Ind) rating for subordinated debt programme from FITCH .

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Cholamandalam Finance is a part of giant Murugappa Group of

Companies, which has 28 companies, like Parryware , Tube India etc.,

leading in their industries. The major companies of the Group are:

Carborundum Universal Limited

Cholamandalam Finance Limited

Cholamandalam MS General Insurance

Coromandel Fertilizers Limited

EID Parry India Limited

Tube Investments of India Limited

Parry Agro Industries Limited

The Group has forged strong joint venture alliances with leading

international companies like DBS Bank, Mitsui Sumitomo, Cargill,

Roca and Group Chimique Tunisien has consolidated its status as one

of the fastest growing diversified business houses in India.

Cholamandalam was a venture between Development Bank Of

Singapore, (DBS) and Cholamandalam Finance of Murugappa Group

India. On 30 March.2010 Cholamandalam acquired its stake back from

DBS. DBS sold its 37.5 percent stake in Cholamandalam DBS Finance

in a deal worth 3.76 billion rupees. The deal price of 91 rupees ($2) for

each Cholamandalam DBS share with a premium of 1.2 percent was

agreed.

L&T had bought 100% stake in Cholamandalam Asset Management

Ltd. on 29,Sept 2009 for 45 crores.

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Cholamandalam Distribution Limited (CDL) is in the business of

distribution of a wide array of financial services products – both in-

house and third party – to high net worth and retail client. Products

offered include mutual funds, fixed income, share trading, savings

instruments, capital bonds, IT/PAN processing services, equity IPOs

and life and general insurance.

Wealth management practices have been started in the company, with

a brand name of a giant venture. The company has steered two

separate departments for marketing. One in Retail, who take cares of

the budding millionaires of India, and other the Private Client Group

(referred as PCG) which handles the big wig individuals under its

Wealth Management Department. India is growing so does the

individuals of the country, with better financial planning and good

investment techniques the goals of all the individual can be achieved in

a better professionalized manner. This is the belief of the company

which has always been referred as the most trust worthy company in

the industry.

“Club Chola” is the Private client group of DCDL that offers

personalized investments advisory services to address clients’ financial

needs holistically through a wide variety of products, asset classes and

service offerings, backed by strong in – house research.

Its Closest Competitors are DSP Black rock, Citi Bank , Standard

Chartered ,HSBC , India infoline , Bajaj capital and Birla Sunlife

Distribution and in wealth managemenmt its closest competitor is

Bajaj Capital.

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Vision• To be the most trusted financial advisor to India's

emerging millionaires.

Mission

• Providing customized financial planning alligned to set goals and objective through a wide range of product offerings.

USP

• " UNBIASED PRODUCT SELECTION"• Multi Product Platforms , Superior research, Financial

Planning Process Advisory Quality.

Reach• 46 Cities , 70 Branches , 800 Relationship Managers , 16

Research Analysts.

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PRODUCTS & SERVICES OF CHOLAMANDALAM

Cholamandalam provides with new investment opportunities and

investment advice which allows an individual to choose from a broad

spectrum of products and services. With Cholamandalam Wealth

Management one can be rest assured will have access to the most viable

wealth management products and solutions.

Various Products offered are :-

Direct Equity :

An Investor can enjoy convenient, simple and efficient trading in Indian

equities that is offered by Cholamandalam. They provide a seamless

platform to invest in the Indian secondary markets. Chola’s wealth

management advisor provide valuable advice based on in-house

research.

Structured Products:

Cholamandalam offer customized investment solutions to access various

asset classes. Most structures will offer principal protection with returns

based on performance of an associated asset class. Based on investor

preference, returns can be linked to a variety of asset types such as

equity indices, basket of stocks.

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Real Estate

Chola offers niche property investment services. They bring in a

combination of in-depth market knowledge and real estate industry

experience to offer a range of specialized real estate investment services.

According to the analysis of the needs and objectives of the investor, they

provide expert advice and innovative real estate solutions to their clients.

They are partnered with JLLM (Jones Lang LaSalle Meghraj) . It is a

financial and professional service firm specializing in real estate services.

Gold

A healthy portfolio is about the diversification and management of risk.

Holding gold in a portfolio can provide distinct benefits, its most valuable

contribution to a portfolio lies in the fact that it is not correlated with

most other assets. Chola offers multiple avenues of investing in gold so

that investor can benefit from effective portfolio diversification .Here Gold

is traded through Exchange Traded Fund.

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Life Insurance

While offering solutions for building and preserving capital,

Cholamandalam also offers comprehensive advice on how best to protect

yourself and your family against all the most serious risks that you face.

They have tie up with TATA-AIG Life Insurance that provides the

opportunity to obtain more favorable offers, which can result in lower

costs and greater benefits. TATA – AIG IA GOLD Product is the hot cake

for Cholamandalam in terms of clients.

MF PMS ( Mutual Fund -Portfolio Management Service ):

MF PMS offer investors a unique and excellent investment proposition.

They invest in the schemes of best performing mutual funds .While

mutual funds invest in promising stocks of sound companies, MF PMS

invests in the best schemes of various mutual funds .Best of the best

fund managers working to maximize your wealth Hassle-free, tension-

free, selection and management of Mutual Fund Portfolio.

Chola’s Three in-house products are :-

– Discretionary Portfolio Management Services – SIGMA

– Non-discretionary Portfolio Management Services – EASE

– Transaction based Service Offering – EZ Invest

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Various Services offered are :

Research

Chola provides quality research to their clients with the information they

need to make informed investment decisions. The Cholamandalam

Wealth Management Research team is dedicated to keep investor

updated with an access to various publications and to a wide range of

research tools including market depth, breaking commentary, long-term

forecasts to detailed daily updates and the latest financial news.

Highly proactive services

They deliver a fast, effective and friendly service that often exceeds

client's expectations. The service includes daily Market Update, Weekly

Update on MF, Event Based SMS, investor will be kept fully informed on

the markets.

Financial planning

To complement Cholamandalam investment strategy they offer

comprehensive financial planning. This planning session is followed by

a complimentary personalized report containing specific

recommendations on the actions needed to take to achieve financial

goals.

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Regular Portfolio Reviews

Periodic reviews to ensure the integrity of the portfolio and continued

viability of assets within the portfolio. Chola believe in diversification and

are committed to providing a sound and conservative investment

acumen.

SWOT ANALYSIS OF CHOLAMANDALAM

STRENGTH WEAKNESS

Wide Product Range Do not focus on

advertisements.

Strong Client Base at Delhi.

Brand name not

established other than

south.

PAN INDIA Presence Brand Positioning not

done properly.

Well defined business model

Entire process is in-housed with experienced man power.

Strong management in the

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core business & execution

Market Led Company

Part Of Murugappa Group worth having 13500 crores.

Low charges as compared to other distribution houses.

OPPORTUNITES THREATS

HNI population is growing rapidly at a faster pace so huge market potential .

Increasing Competition.

Concept Financial planning is developing in india.

Regulatory changes by SEBI has led to erosion of margins.

Power of Equity Unmatched, has outperformed all other Asset Classes.

Local Market players playing a spoil sport.

Equity forms only 10% of the of the total Portfolio of the investors.

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BUSINESS CYCLE OF WEALTH MANAGEMENT IN CHOLAMANDALAM

The business cycle of Wealth management starts from targeting the

HNI Clients .There is CAT team ( Client Acquisition Team ) in Chola

which focuses on acquiring clients .

Following is the Procedure Of CAT to acquire clients :-

Search HNI Clients :-

1. Through various Database like of Airtel , Kotak etc.

2. Through Phone directories.

3. Through Club Memberships

4. Through Locality

5. Through References.

6. Cold Calling

7. Events

Then Mailers are send to clients regarding the Cholamandalam

before first call to client. There is reason for not calling first as

clients are given reference regarding first mail .

Then Clients are given first call. And meeting is fixed .

On 1st meeting , there’s a mantra that let client have more

interaction with RM ( Relationship Manager ) and try to know

what is the past investments and its behavior, risk appetite and

return expectation of the client through filling OF RAPP(Risk

Analysis and Portfolio Planer).

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Then either Restructuring of Portfolio is done or New Product is

pitched in 2nd meeting according to the need of the client and is

presented to the client.

Following Points are considered while Portfolio Creation :-

1. Investment Objective

2. Return Expectation

3. Risk Appetite

4. Time Horizon

5. Total Corpus

6. Liquidity

7. Current Investment

8. Insurance (if any)

Then starts the Wealth management Back Office Process , it

entails the following :-

After Meeting fixation and Client Pitching -

Utilizing client feedback and personal network to

develop intelligence .

Then Coordinating with all AMC’s .

Keep the track of portfolios of the clients on Portfolio MF

Online tracker .Their Client wise details are prepared.

Prepare comprehensive financial reports and proposals

for senior management to review revenue generation on

Telesto Software .

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Handling complete branch operations.

And then from time to time Active Review & Monitoring is done.

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HOW CHOLAMANDALAM RECOMMENDS PRODUCTS TO ITS CLIENTS

To analyze the risk appetite and return expectation and goals of the

investor, RAPP FORM (RISK ANALYSIS AND PORTFOLIO PLANNER)

is get filled by the clients.

Then RAPP Form is send to Chennai Head Office where research

team is based to judge the client’s risk appetite. Research team has

divided the client into 3 category’s :-

Tortoise ( Conservative Client )

Elephant ( Moderately Aggressive )

Cheetah (Highly Aggressive )

After 3-4 days they send their feedback to Delhi office.

If the client comes under Tortoise Category they are suggested Debt

Funds, Capital Protection funds, FD’s (Fixed Deposit) and if client is

above 60 yrs (retired) they are suggested MIP’s (Monthly Income

Plans).

If the client comes under Elephant Category they are suggested

Balanced Funds, Large Cap Equity Funds and stocks of Blue Chip

Companies and SIP(Systematic Investment Plan )and Gold too.

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If the client comes under Cheetah Category they are suggested Small

and Midcap funds , Real estate funds, Stocks of Small and Midcap

Companies.

The information regarding in which sector/funds/stocks to invest

are based on the research which is carried out by the research team

.

I also did some of the research work that gave an idea about the

rolling returns of different indices , analysis of various mutual funds

.

This research work is useful to the Relationship Manager while

pitching a product to the client.

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RESEARCH WORK

COMPARISON OF VARIOUS INDICES

1. COMPARISON OF BSE-100,BSE-200,BSE-500,SENSEX,NIFTY MIDCAP,SMALLCAP

2. COMPARISON OF BSE-100,BSE-200,BSE-500,SENSEX

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3. COMPARISON OF MIDCAP,SMALLCAP,BSE-500,SENSEX

Analysis :- From the above three graphs it can be depicted that

Small Cap is highly volatile and has given more returns over the

period of 10 years when the market has gone positive as compare to

other indices.

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COMPARISON OF VARIOUS SECTOR INDICES

1. COMPARISON OF HEALTH CARE, CONSUMER DURABLES, IT, CAPITAL GOODS ,BANKEX, & METAL SECTORS :

2. COMPARISON OF FMCG , AUTO , PSU, OIL & GAS SECTORS :

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Analysis :- From the above 2 graphs of various sectors , in 1st graph

Capital Goods has outperformed all the other sectors over a period

of 7 years whereas in 2nd Graph Auto industry has outperformed all

the other Sectors almost every period.

SENSEX CAGR RETURNS OF 2 , 3 , 5 YEARS

1. Sensex 2 Yr CAGR Returns (Compounded Annual Growth Rate):

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`

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Analysis :- From the above 3 graphs it can be interpretated that

Sensex has always given Positive returns in long term and it is

better to hold the investment for 5 yrs rather 2 or 3 yrs.

As CAGR is more in 5 yrs and only two times the return has gone

negative otherwise it has always given high returns.

COMPARISON OF SENSEX VS BSE- 500 ROLLING RETURNS

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Analysis :- From the above comparison of SENSEX and BSE-500

graphs it can be interprated that BSE – 500 has almost every time

outperformed Sensex. The reason behind is that BSE - 500 consists

of large cap, midcap & small cap companies . As

small cap & midcap are highly volatile and give more returns than

large caps & are highly risky whereas in case of large cap they are

not affected easily.

45

MUTUAL FUND ANALYSIS

A mutual fund is a collective investment vehicle formed with the

specific objective of raising money from a large number of individuals

and investing it according to a pre specified objective .

Mutual Fund is a trust that pools the savings of a number of investors

who share a common financial goal. The fund manager in different

types of securities then invests the money thus collected. These could

range from shares to debentures to money market instruments,

depending on the scheme’s stated objectives.

Mutual funds can be classified in different ways according to there

investments objectives, their constitution, etc. and are as follows :-

Equity Funds: These are funds that invest solely in equity shares

of various companies. Since equities as an asset class fluctuates

widely, the net asset value of these funds is also subject to these

fluctuations. Hence, these funds are the riskiest.

Debt / Income Funds : These are funds that invest solely in

income bearing instruments like bonds , debentures , government

securities , commercial papers etc . Income bearing instruments

are much less volatile , though they do carry credit risk.

Balanced funds : These are funds that invest both in equity

shares and income bearing instruments . The idea is to reduce the

volatility of the funds while providing some upside for capital

appreciation

Liquid Funds / money market funds: These are funds that

invest in highly liquid money market instruments. They have

46

emerged as an alternative savings and short term fixed deposits

accounts.

Sector Funds – These are funds investing in a particular business

sector or industry like the Tata Infrastructure Fund, Pharma and

FMCG funds which invest in shares of companies in their

respective sector

Index Funds – This is a large class of equity mutual funds, that

invest in the popular market indices e.g. S&P 500, NASDAQ

composite etc This concept is referred to as passive investing

wherein the investor wants to invest in a particular asset class but

does want any fund manager to choose specific investments.

47

Research was done on the various funds according to its Past

Performance and top funds that are suggested to clients as per their

risk appetite are as follows :

TOP EQUITY DIVERSIFIED FUNDS

Scheme Name Latest

NAV

Benchmark Alpha Beta Type Of Fund Compo

sition

Equity Debt Cash

Birla sun Life Dividend Yield Plus-Growth

75.56 S&P CNX 500

11.80

0.83

Medium Cap - G

95.30

0.00

4.70

Birla Sun Life Frontline Equity Fund - Plan A – Growth

79.25

BSE 200

6.57

0.93

Large Cap- G

92.74

0.00

7.26

Birla Sun Life Mid Cap Fund - Plan A - Growth

105.27

CNX Midcap

9.66

1.11

Medium Cap - B

93.83

0.00

6.17

DSP BlackRock Equity Fund - Growth

47.26

S&P CNX Nifty

8.72

0.91

Medium Cap - G

94.81

0.00

5.19

DSP BlackRock Small and Midcap Fund - Growth

16.10

CNX Midcap

6.95

1.00

Medium Cap - G

95.00

0.00

5.00

DSP BlackRock Top 100 Equity Fund - Growth

89.92

BSE 100

5.95

0.84

Large Cap- G

96.23

0.00

3.77

Fidelity Equity Fund - Growth

31.24

BSE 200

4.02

0.86

Large Cap - G

98.56

1.66

0.22

HDFC Equity Fund - Growth

239.32

S&P CNX 500

7.78

0.99

Large Cap - G

97.80

0.00

2.20

48

ICICI Prudential Discovery

44.31

BSE

10.5

0.99

Mid cap - G

91

0.00 9.04

ICICI Prudential Dynamic IDFC Premier Equity Plan A

95.24 28.39

3.89 16.3

0.81 0.92

Large Cap - G Mid cap - G

78 92.4

5.25 0.00

22.01 2.34

IDFC Small & Midcap Equity 16.77

NA

NA

Mid cap - G

89

6.34

4.68

Magnum Contra

54.01

3.97

0.99

Large Cap - G

93.7

0.97

5.3

Reliance Growth

441.95

8.76

1.01

Mid cap - G

90.6

0.00 9.36

Reliance Regular Savings Equity

28.16

13.51

1.08

Large Cap - G

93.4

0.00 6.63

Sundaram BNP Paribas CAPEX Opportunities Fund - Growth

24.28

BSE CG

6.33

1.18

Medium Cap - G

97.12

0.00 2.88

Sundaram BNP Paribas SMILE Fund - Growth

31.61

CNX Midcap

12.59

1.19

Medium Cap - G

96.07

0.00 3.93

UTI Dividend Yield Fund - Growth

28.49

BSE 100

10.94

0.84

Large Cap - G

89.56

1.48

8.96

UTI Opportunities Fund - Growth

23.67

BSE 100

9.92

0.9

Large Cap - G

95.5

2.13

2.41

HDFC Top 200

192.46 BSE 200 9.01 .92 Large Cap – G 96.81 0.00 3.19

49

TOP BALANCED FUNDS

TOP SECTOR FUNDS

Scheme Name Latest

NAV

Benchmar

k

Alpha Beta Type Of Fund Compo

sition

Equity Deb

t

Cash

Reliance Banking Fund - Growth

84.62

CNX Banks

11.99

0.81

Large Cap - Blend

94.76

0.00

5.24

UTI Thematic Banking Sector Fund - Growth

36.37

CNX Banks

4.71

0.84

Large Cap - G

89.63

0.00

9.96

Scheme Name Latest

NAV

Benchmark Alpha Beta Type Of Fund Compo

sition

Equity Debt Cash

DSP BlackRock Balanced Fund - Growth

60.71

Crisil Balanced

7.52

0.93

Medium Cap - G

72.65

20.99

6.36

HDFC Prudence Fund - Growth

187.17

Crisil Balanced

9.01

1.07

Medium Cap - G

73.73

22.98

3.29

Reliance RSF - Balanced - Growth

20.49

Crisil Balanced

12.37

1.04

Large Cap - G

64.7

37.95

2.65

50

TOP ELSS ( EQUITY LINKED SAVING SCHEME) FUNDS

Scheme Name Latest

NAV

Benchmark Alpha Beta Type Of Fund Compo

sition

Equity Debt Cash

Fidelity Tax Advantage

19.31

5.33

0.86

large cap - G

98.76

1.16

0.08

HDFC Tax saver

205.83

4.04

0.93

large cap - G

91.18

0.00 8.82

ICICI Prudential Tax Plan

127.08

5.6

0.97

large cap - G

89.95

0.00

10.05

Reliance Tax Saver

18.98

2.95

0.87

medium cap - G

97.97

0.00 2.03

51

MARKETING RESEARCH

Objective:

To determine the Investment behavior and Risk Appetite Of HNI

Clients.

SAMPLE DESIGN

Sample Element:

Shops Of Khan Market and Greater Kailash-I(GK) M-Block Market, Delhi.

Sample Unit :

Shop Owners OF Khan Market and GK Market.

Sample Size:

45 Respondents

52

QUESTIONNAIRE

i. How do you manage your investments ?

Self

Financial Advisor

Both

ii. Which Wealth Management company you consult ?

__________________________________________

iii. Rank these factors that you consider while selecting the advisory

company ? ( as 1 to 5 )

Products & Services

Relationship Manager

Brand Name

Research

References

iv. Which Asset Class forms a major chunk of your Total Investment

Portfolio ?

Debt

Equity

Real Estate

Commodities

Gold

Any Other Specify:-

53

v. Of your total portfolio what is the % of investment in equity ?

Less than 25 %

25 % - 50 %

50 % - 75 %

More than 75 %

vi. What is the average time horizon of your investment ?

Less than 1 Yr

1- 2 Yr

2-5 Yr

More than 5 Yr

vii. How would you define your Risk Profile ?

Conservative (5-8 % return)

Moderately conservative (9-12 % return)

Moderately Aggressive (13-18% return)

Aggressive ( >18% return )

54

viii. For the types of investments you have made, what has been the

satisfaction level of your experience? Very Good Fair Poor Never Invested

Bonds

Mortgages

Stocks

Mutual funds

Real Estate

Commodities

Gold

FD’s

55

DATA ANALYSIS

TABLE 1 : Respondents Manage their Investments

Frequency Percent Valid Percent

Cumulative

Percent

Valid Self 24 53.3 53.3 53.3

Financial Advisor 6 13.3 13.3 66.7

Both 15 33.3 33.3 100.0

Total 45 100.0 100.0

Analysis : Out of the 45 Respondents, 53.3% manage their

investment by themselves and 46.7% by their Financial Advisor.

56

TABLE 2 :

Consult wealth management company

Frequency Percent Valid Percent

Cumulative

Percent

Valid Citi gold 6 13.3 28.6 28.6

Bajaj Capital 6 13.3 28.6 57.1

Barclays 3 6.7 14.3 71.4

Birla Sunlife 3 6.7 14.3 85.7

HSBC 3 6.7 14.3 100.0

Total 21 46.7 100.0 Missing System 24 53.3 Total 45 100.0

Analysis : Out of the 21 Respondents that have Financial Advisory

services, 28.6% are of Citi Gold And Bajaj Capital, and 14.3% of

Barclays, Birla Sunlife and HSBC.

57

TABLE 3: Asset Class forms major chunk of your Total

Investment

Frequency Percent Valid Percent

Cumulative

Percent

Valid Debt 6 13.3 13.3 13.3

Equity 6 13.3 13.3 26.7

Real Estate 15 33.3 33.3 60.0

Gold 9 20.0 20.0 80.0

LIC, FD's 9 20.0 20.0 100.0

Total 45 100.0 100.0

Analysis : Result from the 45 respondents surveyed shows that 33.3%

respondents have major chunk of their total investment in Real Estate, followed by Gold(20%), LI & FD’s(20%), Equity(13.3%) &

Debt(13.3%).

58

TABLE: 4

Percentage of equity investment

Frequency Percent Valid Percent

Cumulative

Percent

Valid Less than 25% 21 46.7 58.3 58.3

25%-50% 6 13.3 16.7 75.0

50%-75% 9 20.0 25.0 100.0

Total 36 80.0 100.0 Missing System 9 20.0 Total 45 100.0

Analysis : Result from the 45 respondents surveyed shows that 36

respondents(i.e. 80%) have investments in equity. 58.3% have less than 25% in equity out of their total investment, 16.7% between 25%-

50% and 20% between 50%-75% have equity exposure.

59

TABLE: 5

Average time horizon for investment

Frequency Percent Valid Percent

Cumulative

Percent

Valid Less than 1 Yr 6 13.3 13.3 13.3

1-2 Yrs 9 20.0 20.0 33.3

2-5 Yrs 15 33.3 33.3 66.7

More than 5 yrs 15 33.3 33.3 100.0

Total 45 100.0 100.0

Analysis : Out of the 45 respondents, 33.33% hold their investment

for more than 5 Years followed and only 13% hold their investment for

less than a Year.

60

TABLE: 6

Return expectation(Risk Profile) of respondents

Frequency Percent Valid Percent

Cumulative

Percent

Valid Conservative (5-8 % return) 15 33.3 33.3 33.3

Moderately conservative (9-

12 % return)

3 6.7 6.7 40.0

Moderately Aggressive (13-

18% return)

12 26.7 26.7 66.7

Aggressive ( >18% return ) 15 33.3 33.3 100.0

Total 45 100.0 100.0

Analysis : Result from the 45 respondents surveyed shows that

33.3% are Aggressive and 26.7% expect 13%-18% from their

Investments.

61

TABLE 7 :

Factors that Investors consider while selecting the advisory company

Product & Services Relationship Manager Brand Name Research References3

4 2 1 3 5

2 1 3 4 5

1 4 2 3 5

3 5 2 1 4

R 1 5 3 2 4

A 3 5 1 4 2

N 1 3 4 5 2

K 2 1 3 4 5

S 4 1 2 3 5

1 2 3 4 5

2 3 4 1 5

3 5 2 4 1

1 4 2 3 5

3 5 2 1 4

1 3 4 5 2

4 2 1 3 5

2 1 3 4 5

1 4 2 3 5

Total 39 56 44 57 74

First Third Second Fourth Fifth

62

Analysis : While investing the most important factor that is considered

while selecting an Wealth Management Company is Product & Services

offered followed by Brand Name, Relationship Manager, Research and

last is Reference.

TABLE 8 : Experience of Investors in different Asset Classes

Asset Class Good(5) Fair(3) Poor(-1) Total Ranks

Bonds 5 -10 5 SEVENTH

Mortgages 0 EIGHTH

Stocks 10 5 -5 60 SECOND Mutual Funds 10 -15 15 FIFTH

Real Estate 15 10 -5 100 FIRST

Commodities 5 -5 10 SIXTH Gold 5 10 55 THIRD

Fixed Deposits 5 10 55 THIRD

63

LEARNINGS

Wealth management is an investment advisory discipline that

incorporates financial planning, investment portfolio management

and a number of aggregated financial services. It basically deals with

High net worth individuals who have net worth of 1 million USD and

Ultra HNI’s who have net worth of 5 million USD.

The whole process of Client Acquisition right from searching of HNI

client to fixing of meeting and Portfolio creation.

Products and services are offered according to risk appetite and

return expectation of client.

There are various Asset Classes like equity, debt, real estate, Gold,

commodities, FD’s and structured products.

If we invest in equity for longer duration they give higher returns.

Relationship is maintained with clients basically on 3 things :

Honesty

Knowledge

Quality Service

One of the learning was how to do Tele-Calling and how difficult is to

crack the meeting with client.

Some clients are very arrogant whereas some are Down-to-

earth.

They don’t invest their whole amount upfront at once, first they

invest a small amount as to have confidence on the

relationship manager and then accordingly invest the rest.

The meeting with client while calling totally depends on 2

factors: the way of speaking and luck.

64

To build repo with client the discussion with the client

should be of his interest and related to his field and what are

his current investments are to be known so accordingly

proposal is made.

On your 1st meeting with client you should only know your customer

what is his investment behavior, his risk appetite.

Different types of products suit different category of clients

according to their risk appetite such as conservative client are

suggested debt funds and Highly aggressive are suggested Pure

Equity Small and Midcap Funds.

Market is highly volatile for past 2 months according to the experts

it would remain same for this year.

65

RECOMMENDATIONS

Brand Positioning Strategy should be strengthen through

various means of Marketing like Advertisement through media,

hoardings, internet.

Should conduct seminars for HNI Clients to promote Chola’s

Product and Services.

Should Increase Branches.

66

BIBLIOGRAPHY

CHANDRA PRASANNA, Financial Management, TATA McGraw-

Hill Publications

KHAN M.Y. and JAIN P.K., Financial Management Text and

Problems, 4th ed. TATA Mc Graw-Hill

Economic Times (Investors Guide)

www.investopedia.com

Journals from P.H.D. chambers of Commerce and Industry.

Web sites – mutualfundsindia.com, amfiindia.com

CHOLAMANDALAM monthly magazines.

Cholamandalam website.