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ADITYA BIRLA MONEY

MART
LTD.

WEALTH MANAGEMENT DIVISION

Submitted By:
Abhijeet Patil (15020241002)
MBA-IB (2015-17)
Symbiosis Institute of International Business

Under the guidance of

Project Guide: Mr. Gauranga Goswami, Area Sales


Manager, ABMM
Faculty mentor: Dr. Jeevan Nagarkar
Abhijeet Patil

5th June, 2015

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SR. NO.
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PARTICULARS

PAGE
NO.

INTRODUCTION
DEFINATION
NEED OF PORTFOLIO AND PORTFOLIO MANAGEMENT
GOALS OF PORTFOLIO MANAGEMENT
OBJECTIVE OF PORTFOLIO MANAGEMEBT
BASIC OBJECTVE
SUBSIDRY OBJECTIVE
SCOPE OF PORTFOLIO MANAGEMENT
STEPSOF PORTFOLIO MANAGEMENT
SEPECIFICATION OF INVESMENTS OBJECTIVES
AND CONSTRAINTS
SELECTION OF ASSET MIX
FORMULATION OF PORTFOLIO STRATEGY
SELESTION OF SECURITY
PORTFOLIO EXECUTION
PORTFOLIO REVISION
PORTFOLIO EVALUTION
ASPECTS OF PORTFOLIO MANAGEMENT
TYPES OF RISK IN PORTFOLIO MANAEMENT
SYSTEMATIC RISK
UNSYSTEMATIC RISK
SEBI GUIDELINES TO PORTFOLIO MANAGEMENT
PORTFOLIO MANAGEMENT SERVICES
BENEFITS AND SERVICE AND STRATIGES OFFERED
THROUGH PMS
PORTFOLIO MANAGER
GENERAL RESPONSIBLITIES OF PORTFOLIO MANAGER
PAYMENT CRITERIA
FIXED-LINKED MANAGEMENT FEE
PERFORMANCED-LINKED MANAGEMENT FEE
CODE OF CONDUCT OF PORTFOLIO MANAGER
OBJECTIVES OF INVESTOR FOR SELECTING PMS
INVESTOS ALERTS
DOS
DONTS
DIFFERENCE BETWEEN PORTFOLIO MANAGER & MTUAL
FUNDS
BENEFIT OF CHOOSING PORTFOLIO MANAGEMENT

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20
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SERVICE INSTEAD OF MUTUAL FUNDS


CONCLUSION
BIBLOGRAPHY

Acknowledgement
I would like to thank the company, Aditya Birla Money Mart Limited for selecting me as
a summer intern. This gave me an opportunity to be a part of a NBFC group and also get involved in
financial services and wealth management (insights).
I convey my sincere thanks to my mentor, Mr. Gouranga Goswami for his constant
encouragement and support at each stage of the project. The words of guidance and advice received
from him were very useful during the project. His stress on learning different things and igniting me to
be a part of small projects are highly appreciated.
My special thanks to Mr. Suyog Aparajit (Regional Head), who is an exceptional leader
and motivator. In spite of being at a high position, he never let us feel the same and made himself
available for us whenever we needed. The receptiveness and appreciation of the work was very
motivating.
I would also like to thank Mr. Ankit Dubey & Mr. Prakalp Mishra for providing us
various tasks and other employees in the company for helping us throughout. Interaction with all of
them was very fruitful.
I am also thankful to my college authorities at SIIB, for allowing me to undertake this
project and get a nuance of the business world.
Abhijeet Patil
Intern ABMM, Pune

Abhijeet Patil

5th June, 2015

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Executive Summary
My internship at ABMM started on 4th April, 16 and went on for two months. This report is
basically based on my learnings and experiences in the company. All the work and activities which I
did are detailed in this report.
Aditya Birla Money Mart Limited offers wealth management, financial planning and
investment solutions, mainly through a range of products like mutual funds, insurance, PE funds,
alternate investments, select fixed deposits and IPOs and structured products.
The company provides life insurance products of Birla Sun Life Insurance, sourced through
its wholly owned subsidiary BSDL Insurance Advisory Services Ltd (BSDLIAS), licensed to act as a
Corporate Agent of Birla Sun Life Insurance Company Limited.
The Corporate & Institutional section caters to banks, financial institutions and other
companies; Wealth Management service focuses on HNIs; while the Retail section offers solutions
through Channel Partners and branches. A combination of personal attention, ethical practices, strong
research, state-of-the-art technology, streamlined processes and innovative marketing has made
ABMML one of the premier distribution companies in India, well poised to serve the growing
economy and increasing investor population.
The organization where I conducted my project was Aditya Birla Money. The project focuses on
the Acquisition of Wealth Clients and Understanding of Portfolio Management, Mutual funds
& Real estate, Pune. Every process in finance starts with client acquisition and hence the concept of
sales pitch for financial products is of utmost importance.

We were also taught a script according to which we had to pitch in while doing sales calls. We
were told that only 10% of the total calls that we make usually ends in a meeting with the
prospective client of which only 10% onboard at ABMM that we later found out as true.
Macroeconomic scenario of each month is captured by a magazine published by ABMM
known by the name Monthly Market Review. It encompasses the historical happenings in
all major financial markets around the world and its impact on Indian financial markets.
Magazine also predicts the direction in which the market was supposed to move in the coming
month. This magazine was particularly useful in improving the financial literacy of clients and
even us.

Similarly we contacted some corporates. We interacted with some customers and had discussion
with them regarding their investment pattern. Building faith and relationship is a must to have a long
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term relationship with the client. The relationship with clients was based on faith, honesty and
transparency.

The Objective of Project is:


The overall objective may be divided into the following:
Selling of mutual Funds:
1. To know the market with regards to the investment activities of people.
2. To understand as how people had their experience with Mutual funds.

Know the Customer and prospects:


1. Expectations of peoples towards Mutual Funds.
2. To Study the other factors that are related with while investing in Mutual Funds
schemes.

Organization Profile
A US $40 billion corporation, the Aditya Birla Group is in the
League of Fortune 500. It is anchored by an extraordinary force of
over 120,000 employees belonging to 42 nationalities. The Group
has been ranked Number 4 in the global 'Top Companies for Leaders'
survey and ranked Number 1 in Asia Pacific for 2011. 'Top
Companies for Leaders' is the most comprehensive study of
organisational leadership in the world conducted by Aon Hewitt,
Fortune Magazine, and RBL (a strategic HR and Leadership Advisory firm). The Group has topped the
Nielsen's Corporate Image Monitor 2013-14 and emerged as the Number 1 corporate, the 'Best in
Class', for the second consecutive year.
Over 50 per cent of the Aditya Birla Group's revenues flow from its overseas operations. The Group
operates in 36 countries Australia, Austria, Bangladesh, Brazil, Canada, China, India etc.
Aditya Birla Group The Global Scenario

It is one of the No.1 in viscose staple fiber three biggest producers of primary aluminum in
Asia with the largest single location copper smelter
No.1 in carbon black
The fourth-largest producer of insulators

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The fourth-largest producer of acrylic fiber


Among the top 10 cement producers
Among the best energy-efficient fertilizer plants
The largest Indian MNC with manufacturing operations in the USA
A metals powerhouse, among the world's most cost-efficient aluminum and copper producers

Aditya Birla Group The Indian Scenario

The largest fashion (premium branded apparel) and lifestyle player


The second-largest manufacturer and largest exporter of viscose filament yarn
Among the top three mobile telephony companies
A leading player in life insurance and asset management
Among the top two supermarket chains in the retail business

CSR Activities

Works in 3,000 villages


Reaches out to seven million people, annually, through the Aditya Birla Centre for Community

Initiatives and Rural Development


Focuses on healthcare, education, sustainable livelihood, infrastructure and espousing social
reform in India, Brazil and Egypt, as well as Philippines, Thailand, Laos, Indonesia, Korea and
other Asian countries

Aditya Birla Money

Aditya Birla Money formerly known as Apollo Sindhoori Capital Investments is a leading
player in the broking space with nearly 15 years of experience. It became a part of Aditya Birla
Group in March 2009, when the group acquired 76% of the company.
The Company has a strong distribution network of over 800 own branches and franchisee
network, a large customer base in excess of 1,80,000, a strong technology backbone and a
range of products delivered through a robust online and offline model. The Company boasts of
immense talent pool and vertical specialists which add to its positioning as a major player in
this segment.
Aditya Birla Money is listed on National Stock Exchange of India Limited [NSE] and The
Bombay Stock Exchange Limited [BSE]. It is also registered as Depository Participant with
both NSDL and CDSL.

Aditya Birla Money offers the following services:

Trading facility in Equity segment on and Derivative segment on NSE & BSE through a single
platform

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Trading facility in commodity segment, including bullion, oils, gaur seed etc. through its
subsidiary, Aditya Birla Commodities Broking Limited
Depository Participant [DP] services of NSDL and CDSL
Online bidding for IPO and Mutual funds
Subscription based brokerage plans
Distribution of Mutual Funds
Real estate investment

Aditya Birla Money Mart


Aditya Birla Money Mart Limited is a wealth management and distribution player, offering third party
products like company deposits, mutual funds, insurance, structured products, alternate investments,
property services, and has a premium wealth management service arm to cater to HNI and ultra HNI
customers.
Incorporation Year
Registered Office

1995
Ali Towers,No 55 Greams Road,
Chennai,
Tamil Nadu-600006
91-44-39190000/39190001
91-44-28290835

Telephone
Fax
Chairman
Managing Director
Company Secretary
Auditor
Face Value
Market Lot
Listing
Registrar

Kanwar Vivek
S Balaji
S R Batliboi & Associates
1
1
Chennai,Mumbai,NSE
Cameo Corporate Services Ltd
Subramanian Building,1ST Floor
No 1,Club House Road,Chennai
600002

Products & Services


Following are the products for financial investment which are offered by Aditya Birla Money ltd.

Portfolio management service (PMS), Equity, Commodity, Derivatives, IPO, Currency


Mutual Fund, Life Insurance
Alternative Investments
Fixed Deposits, General Insurance, Health Plan, Property Services,
Depository Participant, Structured products

Nature of Business Carried


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What is Portfolio Management Service?

The art and science of making decisions about investment mix and policy, matching
investments to objectives, asset allocation for individuals and institutions, and balancing risk
against performance.
Portfolio management is all about strengths, weaknesses, opportunities and threats in the
choice of debt vs. equity, domestic vs. international, growth vs. safety, and much other tradeoffs encountered in the attempt to maximize return at a given appetite for risk.
In the case of mutual and exchange-traded funds (ETFs), there are two forms of portfolio
management: passive and active. Passive management simply tracks a market index,
commonly referred to as indexing or index investing. Active management involves a single
manager, co-managers, or a team of managers who attempt to beat the market return by

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actively managing a fund's portfolio through investment decisions based on research and
decisions on individual holdings. Closed-end funds are generally actively managed.
Mutual Funds (through Birla Sun life Asset Management Company Limited (BSLAMC))

Our foray in to asset management services is through the joint venture with Sun Life Finanical
Incorporated Canada wherein we have 50% stake in it. As on August 31, 2006, BSLAMC
manage Rs 17,099 Crores of assets under us, with an investor base of over 0.1 crore customers.
Our joint venture offers a range of investment options, which include sector specific equity
schemes, income plans, debt and treasury products, and offshore funds. It currently has a range
of 35 investment schemes including two offshore funds, designed to cater to every need of the
investor. We also offer portfolio advisory services for high net-worth investors, which is a
rapidly growing business segment for the Company. We are the Indias first asset management
Company to be awarded the ISO 9001:2000 certification by DNV Netherlands.

Life Insurance [through Birla Sun Life Insurance Company Limited (BSLI)]

We have presence in life insurance through our subsidiary Birla Sun Life Insurance Company
Limited wherein we hold 74% shareholding and rest is with our joint venture partner, Sun Life
Financial Incorporated, Canada. BSLI has strategy to create value for all its stakeholders namely, policyholders, employees and shareholders.
This has been driven through customer-focused products, a portfolio mix, risk management
practices and a multi-channel distribution capability in individual and group insurance. BSLI
started operations with the launch of innovative unit-linked insurance products.
It has geared up through superior value creation and technology in fulfilling our aim to provide
multiple products and benefits, greater investment opportunities and to provide the investor
populace in India with better liquidity and security.

Vision, Mission & Quality Policy


Our Vision
To be a leader and role model in financial services sector with a broad based and integrated
business

Our Mission
To deliver superior value to our customers, Share holders, employees and society at large.

Our Values
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Integrity Conduct business in an Ethical & Transparent manner.


Commitment Towards all Stakeholders and to our Business to provide a healthy,

profitable environment.
Passion Bring in passion in all our activities. Keep Clients and Partners the foremost in all

dealings.
Seamless-ness Work seamlessly across functions to provide "A" Class Service.
Speed Deliver promises on time.

INTRODUCTION:
MUTUAL FUNDS:

A mutual fund is a common pool of money in to which investors with common investment
objective place their contributions that are to be invested in accordance with the stated
investment objective of the scheme. The money thus collected is then invested in capital

market instruments such as shares, debentures and other securities.


The income earned through these investments and the capital appreciation realized are shared
by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is
the most suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost.

The MUTUAL FUND industry started in 1963 with the formation of the Unit Trust of India, at
the initiative by Reserve Bank of India and the Government of India.

HISTORY OF MUTUAL FUND

Mutual Fund Started in US

First Mutual Funds in India Started in 1963 (UTI MF)

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First Scheme in India was US 64

Public Sector Banks were allowed to set up Mutual funds in 1987

First public sector bank to set up Mutual was SEBI

Private sector was allowed in 1993 (Kothari Pioneer)

In 1996 SEBI formed Mutual Funds Regulation

In 1999 the dividends from muutual funds were made tax free

In 2003 a level playing field was created & all Mutual funds including UTI came under
SEBI Regulations.

CHARACTERSTICS OF MUTUAL FUND


Investors own the Mutual Fund
AMC manages the funds for a fee
Fee is expressed as %of assets managed

Fee is within limits specified by SEBI


The funds are invested in a portfolio of marketable securities, reflecting the investment
objective.
Value of the portfolio & investors holdings, alters with change in the market value of
investments.

TYPES OF MUTUAL FUND SCHEMES


BY STRUCTURE

Schemes can be classified as Closed-ended or Open-ended depending upon whether they give
the investor the option to redeem at any time (open-ended) or whether the investor has to wait

till maturity of the scheme (closed-ended scheme).


Open ended Schemes
An open-ended fund or scheme is one that is available for subscription and repurchase on a
continuous basis. These schemes do not have a fixed maturity period. Investors can
conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on
a daily basis. The key feature of open-end schemes is liquidity.

Closed ended Schemes


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A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open
for subscription only during a specified period at the time of launch of the scheme. Investors
can invest in the scheme at the time of the initial public issue and thereafter they can buy or

sell the units of the scheme on the stock exchanges where the units are listed.
In order to provide an exit route to the investors, some close-ended funds give an option of
selling back the units to the mutual fund through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor
i.e. either repurchase facility or through listing on stock exchanges. These mutual funds
schemes disclose NAV generally on weekly basis.

Interval Schemes

These schemes combine the features of open-ended and closed-ended schemes. They may be
traded on the stock exchange or may be open for sale or redemption during pre-determined
intervals at NAV based prices.

BY INVESTMENT OBJECTIVE
Growth Scheme

These schemes seek to invest a majority of their funds in equities and a small portion in money
market instruments. Such schemes have the potential to deliver superior returns over the long

term.
However, because they invest in equities, these schemes are exposed to fluctuations in value
especially in the short term. Equity schemes are hence not suitable for investors seeking

regular income or needing to use their investments in the short-term.


They are ideal for investors who have a long-term investment horizon. The aim of growth
funds is to provide capital appreciation over the medium to long- term

Income Schemes

The aim of income funds is to provide regular and steady income to investors. Such schemes
generally invest in fixed income securities such as bonds, corporate debentures, Government
securities and money market instruments. Such funds are less risky compared to equity

schemes.
These funds are not affected because of fluctuations in equity markets. However, opportunities
of capital appreciation are also limited in such funds. The NAVs of such funds are affected
because of change in interest rates in the country. If the interest rates fall, NAVs of such funds

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are likely to increase in the short run and vice versa. However, long-term investors may not
bother about these fluctuations.
Balanced Schemes

These schemes are commonly known as Hybrid Schemes. These schemes invest in both
equities as well as debt. The aim of balanced funds is to provide both growth and regular
income as such schemes invest both in equities and fixed income securities in the proportion

indicated in their offer documents.


These are appropriate for investors looking for moderate growth. They generally invest 4060% in equity and debt instruments. These funds are also affected because of fluctuations in
share prices in the stock markets. However, NAVs of such funds are likely to be less volatile
compared to pure equity funds.

OTHER SCHEMES
Index schemes

The primary purpose of an Index is to serve as a measure of the performance of the market as a
whole, or a specific sector of the market. An Index also serves as a relevant benchmark to
evaluate the performance of mutual funds. Some investors are interested in investing in the

market in general rather than investing in any specific fund.


Such investors are happy to receive the returns posted by the markets. As it is not practical to
invest in each and every stock in the market in proportion to its size, these investors are
comfortable investing in a fund that they believe is a good representative of the entire market.
Index Funds are launched and managed for such investors.

STRUCTURE OF MUTUAL FUND INDISTRY IN INDIA

There

are many entities

involved and the diagram

below illustrates the organisational

set up of a mutual fund:


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THE STRUCTURE CONSISTS OF

Sponsor -Sponsor is the person who contribute at least 40% of the net worth of the Investment
Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board
of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible or liable for any
loss or shortfall resulting from the operation of the Schemes beyond the initial contribution

made by it towards setting up of the Mutual Fund.


Trust -The Sponsor constitutes the Mutual Fund as a trust in accordance with the provisions of
the Indian Trusts Act, 1882. The trust deed is registered under the Indian Registration Act,

1908.
Trustee -Trustee is usually a company (corporate body) or a Board of Trustees (body of
individuals). The main responsibility of the Trustee is to safeguard the interest of the unit
holders and inter alia ensure that the AMC functions in the interest of investors and in
accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations,
1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes. At
least 2/3rd directors of the Trustee are independent directors who are not associated with the

Sponsor in any manner.


Asset Management Company (AMC) -The Trustee as the Investment Manager of the Mutual
Fund appoints the AMC. The AMC is required to be approved by the Securities and Exchange
Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least
50% of the directors of the AMC are independent directors who are not associated with the
Sponsor in any manner. The AMC must have a net worth of at least 10 crore at all times.

Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the
Mutual Fund. The Registrar processes the application form, redemption requests and
dispatches account statements to the unit holders. The Registrar and Transfer agent also
handles communications with investors and updates investor records.

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ADVANTAGES OF MUTUAL FUND IN INDIA

Affordability

A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon the
investment objective of the scheme. An investor can buy in to a portfolio of equities, which
would otherwise be extremely expensive. Thus it would be affordable for an investor to build a
portfolio of investments through a mutual fund rather than investing directly in the stock
market.

Diversification

It means that you must spread your investment across different securities (stocks, bonds,
money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile,
information technology etc.). This kind of a diversification may add to the stability of your
returns

Variety

Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways:
first, it offers different types of schemes to investors with different needs and risk appetites;
secondly, it offers an opportunity to an investor to invest sums across a variety of schemes,
both debt and equity.

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Professional Management

Qualified investment professionals who seek to maximize returns and minimize risk monitor
investor's money. When you buy in to a mutual fund, you are handing your money to an
investment professional who has experience in making investment decisions. It is the Fund
Manager's job to (a) find the best securities for the fund, given the fund's stated investment
objectives; and (b) keep track of investments and changes in market conditions and adjust the
mix of the portfolio, as and when required.

Tax Benefits

Any income distributed after March 31, 2002 will be subject to tax in the assessment of all
Unit holders. However, as a measure of concession to Unit holders of open-ended equityoriented funds, income distributions for the year ending March 31, 2003, will be taxed at a

concessional rate of 10.5%.


In case of Individuals and Hindu Undivided Families a deduction upto Rs. 9,000 from the Total
Income will be admissible in respect of income from investments specified in Section 80L,
including income from Units of the Mutual Fund. Units of the schemes are not subject to
Wealth-Tax and Gift-Tax.

Regulations

Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly defined
rules, which govern mutual funds. These rules relate to the formation, administration and
management of mutual funds and also prescribe disclosure and accounting requirements. Such
a high level of regulation seeks to protect the interest of investors

Liquidity
In open-ended mutual funds, you can redeem all or part of your units any time you wish. Some
schemes do have a lock-in period where an investor cannot return the units until the completion of
such a lock-in period.
Convenience

An investor can purchase or sell fund units directly from a fund, through a broker or a financial
planner. The investor may opt for a Systematic Investment Plan (SIP) or a Systematic

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Withdrawal Advantage Plan (SWAP). In addition to this an investor receives account


statements and portfolios of the schemes
Flexibility

Mutual Funds offering multiple schemes allow investors to switch easily between various
schemes. This flexibility gives the investor a convenient way to change the mix of his portfolio
over time.

Transparency

Open-ended mutual funds disclose their Net Asset Value (NAV) daily and the entire portfolio
monthly. This level of transparency, where the investor himself sees the underlying assets
bought with his money, is unmatched by any other financial instrument. Thus the investor is in
the know of the quality of the portfolio and can invest further or redeem depending on the kind
of the portfolio that has been constructed by the investment manager.

Drawbacks of Mutual Fund


Mutual funds have their drawbacks and may not be for everyone:

No Guarantees: No investment is risk free. If the entire stock market declines in value, the
value of mutual fund shares will go down as well, no matter how balanced the Portfolio.
Investors encounter fewer risks when they invest in mutual funds than when they buy and sell
stocks on their own. However, anyone who invests through a mutual fund runs the risk of
losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-day
expenses. Some funds also charge sales commissions or "loads" to compensate brokers,
financial consultants, or financial planners. Even if you don't use a broker or other financial

adviser, you will pay a sales commission if you buy shares in a Load Fund.
Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70
percent of the securities in their portfolios. If your fund makes a profit on its sales, you will

pay taxes on the income you receive, even if you reinvest the money you made.
Management risk: When you invest in a mutual fund, you depend on the fund's manager to
make the right decisions regarding the fund's portfolio. If the manager does not perform as well
as you had hoped, you might not make as much money on your investment as you expected. Of

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course, if you invest in Index Funds, you forego management risk, because these funds do not
employ managers.

ROLE OF SEBI IN MUTUAL FUNDS INDUSTRY

In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The
objectives of SEBI are to protect the interest of investors in securities and to promote the
development of and to regularities.

SEBI REGULATIONS

Mutual Funds are highly regulated financial entities that must comply with a large number of
regulates mutual funds as per the Security and Exchange Board of India (Mutual Funds)
Regulations,1996(SEBI Regulations)

Registration

All mutual funds are required to be registered with SEBI. SEBI Regulations lay down the
terms and conditions of registration, including fee mutual funds may charge investors.

Constitution and Management

SEBI Regulations highlight the manner in which the mutual fund ought to be constituted
including the contents of the trust deed. It also mentions the eligibility criteria for the
appointment of assets management company, custodian and registers & share transfer agents.

Advertising Code

SEBI Regulations lays down strict norms for any advertisements by a mutual fund with a view
to ensure that there are no inaccurate and misleading statements.

Investment Objectives and Valuation Policies

SEBI Regulations restrict the type of investments by any mutual funds. And the investment
objective and policies in respect of any scheme should be clearly mentioned in the offer
document pertaining to such scheme in accordance with the regulations. SEBI Regulations also
lay down guidelines and method for valuation of investments, computation of NAV and pricing
of units.

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SEBI'S CODE OF CONDUCT FOR INTERMEDIARIES OF MUTUAL


FUNDS
1. Take necessary steps to ensure that the clients' interest is protected.
2. Adhere to SEBI Mutual Fund Regulations and guidelines related to selling, distribution and
advertising practices. Be fully conversant with the key provisions of the offer document as well
as the operational requirements of various schemes.
3. Provide full and latest information of schemes to investors in the form of offer documents,
performance reports, fact sheets, portfolio disclosures and brochures, and recommend schemes
appropriate for the client's situation and needs.
4. Highlight risk factors of each scheme, avoid misrepresentation and exaggeration, and urge
investors to go through offer documents/key information memorandum before deciding to
make investments.
5. Disclose all material information related to the schemes/plans while canvassing for business.
6. Abstain from indicating or assuring returns in any type of scheme, unless the offer document is
explicit in this regard.
7. Maintain necessary infrastructure to support the AMCs in maintaining high service standards
to investors, and ensure that critical operations such as forwarding forms and cheques to
AMCs/registrars and
8. Dispatch of statement of account and redemption cheques to investors are done within the time
frame prescribed in the offer document and SEBI Mutual Fund Regulations.
9. Avoid colluding with clients in faulty business practices such as bouncing cheques, wrong
claiming of dividend/redemption cheques, etc.
10. Avoid commission driven malpractices such as:
(a) recommending inappropriate products solely because the intermediary is getting higher
commissions there from.
(b) Encouraging over transacting and churning of mutual fund investments to earn higher
commissions, even if they mean higher transaction costs and tax for investors.
11. Avoid making negative statements about any AMC or scheme and ensure that comparisons if
any, are made with similar and comparable products.
12. Ensure that all investor related statutory communications (such as changes in fundamental
attributes, exit/entry load, exit options, and other material aspects) are sent to investors reliably
and on time.
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13. Maintain confidentiality of all investor deals and transactions.


14. When marketing various schemes, remember that a client's interest and suitability to their
financial needs is paramount, and that extra commission or incentive earned should never form
the basis for recommending a scheme to the client.
15. Intermediaries will not rebate commission back to investors and avoid attracting clients
through temptation of rebate/gifts etc.
16. A focus on financial planning and advisory services ensures correct selling, and also reduces
the trend towards investors asking for pass back of commission.
Returns in Mutual Funds
Returns are the key indicators of the investment performance in mutual fund and are calculated
from the historical NAVs. By comparing returns, the investor will get the fair idea about the fund
whether it is suitable for achieving his financial goals
Types of Returns in Mutual Funds

Dividends
Unit holders earn dividends on mutual funds, which are
declared from distributable income

Capital Gains
Investors get capital gains on mutual funds. If the fund
sells securities that have appreciated in value, it earns
capital gains. Most funds distribute these capital gains
also to investors

Calculating Returns in Mutual Funds


P o in t t o P o in t
R e tu rn s

R e tu rn s a re
c a lc u la te d b y
c o n s id e rin g th e
N AV s a t tw o p o in ts
in tim e -e n try d a te
a n d e x it d a te
M ost com m on
m e th o d to
in te rp re t th e
in v e s tm e n t
p e rfo rm a n c e

Abhijeet Patil

R o llin g R e t u r n

R o llin g re tu rn s
m e a s u re th e
c o n s is te n c y o f th e
re tu rn s o f th e
fu n d s
R e tu rn s a re
c a lc u la te d o n a
c o n tin u o u s b a s is
fo r e a c h d e fi n e d
in te rv a l

5th June, 2015

X IR R

X IR R is a n e x c e l
c a lc u la tio n
m e th o d w h ic h is
u s e d to m e a s u re
th e S IP
p e rfo rm a n c e o f
th e s c h e m e s

Page 20

Risk in Mutual Funds


1. Investments in shares, debentures and deposits are not always risk-free.
2. A very important risk involved in mutual fund investments is the market risk. When
the market is in doldrums, most of the equity funds will also experience a downturn
3. Some of the other risks include Industry risk, Credit Risk, Inflation risk, Interest rate
risk, Fund Manager Risk, Country risk, Currency Risk, etc.

Ways to invest in/redeem from Mutual Funds


In SIP, one can invest a fixed sum of money in a
particular scheme at predetermined periodical
intervals of time
SWPs can be used to regularly disinvest either fixed
amounts or some or all of the appreciation that is
generated from your investment in the scheme

Systema
tic
Investm
ent
Plans
Systema
tic
Withdra
wal
Plans

Through STPs you can transfer fixed amounts of


Transfer
money at regular intervals (monthly or quarterly) from Plans
one scheme to another

Systema
tic

Systematic Investment Plan (SIP) is an investment technique whereby the investor invests a fixed
sum of money at regular intervals, say once a month or once a quarter.
By investing through SIP, you end up buying more units when the price is low and fewer units
when the price is high. However over a period of time these market fluctuations are generally
averaged and the average cost of your investment is often reduced.

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Why Systematic Investment Plan (SIP)?

SIP

Other methods of investing

Uncomplicated
and
largely automatic
Small amounts of
funds required
No need to time the
market
Averages out cost
per unit

Good amount of research and


market tracking required
Lump sum funds required
Make your best attempt to time
the market
Cost per unit depends on your
market timing

Benefits of SIP:

Disciplined investments (Remember, an investors worst enemy is not the stock market, but his

own emotions)
Reach your financial goals
Take advantage of Rupee Cost Averaging, i.e. get more units when prices are low and buy less

when prices are high


Grow your investments with compounded benefits
Do all this effortlessly

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Parameters for Selecting Mutual Funds

Investment
Objective

Risk profile

Fund
performanc
e &
managemen
t

Fund size

Fund costs

Riskometer in Mutual Funds

The SEBI introduced a pictorial meter named "Riskometer" and this meter would appropriately
depict the level of risk in any specific scheme. The mutual funds would need to mention the risk
level of a scheme through that Riskometer
THE DIFFICULTY OF TIMING THE MARKET
Stay invested for the Long Term
Equity markets are influenced by innumerable factors, which determine the movement of stocks.
Due to which it is very difficult to time the market. The graph alongside shows that if you had
invested in stocks (as measured by the S&P BSE Sensex) on January 1, 1990 and stayed invested
till September 30, 2014, you would have earned compounded annual returns of 15.30% which
means 10,000 invested on January 1, 1990, would have compounded to 3,39,956 on September
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Page 23

30, 2014. The returns drop drastically if you missed the 10, 20, 30 and 40 best days. A prudent
investor is one who always remains invested for the long term and allows his money to
compound.
Invest through Equity Mutual Funds and enjoy the benefits of compounding along with
diversification and professional management.
Introduction to Equity Linked Savings Scheme (ELSS)
Equity Linked Savings Scheme (ELSS) is a type of mutual fund scheme. Going by its name, ELSS
invests its corpus in equity and equity related products. An investment in ELSS comes with a lock
in period and has tax benefits attached to it. It is suitable for investors having a high risk profile as
returns in ELSS fluctuate depending upon the equity market and there are no fixed returns. ELSS
schemes are open ended in nature, that is, investors can subscribe to the fund on any day. NAV or
the price of the fund is declared on every business day.
Benefits / Features
1.
2.
3.
4.
5.

3 years lock-in period (lowest compared to other select tax saving options)
Growth potential of equity
Tax free dividends
No tax on long-term capital gains
An Individual/HUF is entitled to deduction from gross total income for
investments Equity-Linked Savings Scheme (ELSS) up to 1.5 Lakh (along
with other prescribed investments) under Section 80C of the Income-tax
Act, 1961.

Options while making an investment in an ELSS


Growth option In growth option, income earned by ELSS is not distributed
to unit holders. Any income/profit earned by ELSS increases the NAV of the
option and vice versa. Whenever the investor sells his holdings, he will realize
long term capital gain/loss.
Dividend option In this option, ELSS distributes income earned by it to the
investors under this option as dividends. The date of distribution is declared by
the fund, however if the ELSS has negative income it will not distribute any
dividend. Any dividend received by the investors, is not liable for tax in the
hands of investors
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Tax Deduction under Section 80C**


As per Section 80C and subject to provisions of the Income-tax Act, 1961, an individual/HUF is
entitled to a deduction from Gross Total Income maximum up to 1.50 Lakhs for prescribed
investments which include amounts invested in ELSS.

1. Tax Benefits / Consequences to Unit holders


Income-tax All Unit holders
Income received, otherwise than on transfer (subject to the exemption of long-term capital
gains provided for in section 10(38) of the Act, discussed elsewhere in this Statement), in
respect of units of a mutual fund would be exempt from tax under Section 10(35) of the
Act.2.
2. Tax Deduction at Source
All Unit holders
No income-tax is deductible at source, on any income distribution by the Mutual Fund
under the provisions of Section 194K and 196A of the Act.
3. Capital Gains Tax
Foreign Institutional Investors
Long-term capital gains on sale of Units, held for a period of more than twelve months,
would be taxed at the rate of 10% (plus applicable surcharge, education cess and secondary
and higher education cess) under Section 115AD of the Act (subject to the exemption of
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Page 25

long-term capital gains provided for in section 10(38) of the Act, discussed elsewhere in
this Statement). Such gains would be calculated without indexation of cost of acquisition.
Short-term capital gains would be taxed at 30% (plus applicable surcharge, education
access and secondary and higher education cess) (subject to the concessional rate of tax
provided for in Section 111A of the Act, discussed elsewhere in this Statement).
4. As per Section 111A of the Act, short-term capital gains on sale of units of an equityoriented fund, where such transaction of sale is chargeable to STT, shall be subject to tax at
a rate of 15 per cent (plus applicable surcharge, education cess and secondary and higher
education cess).
Exemption of capital gain from income tax

As per Section 10(38) of the Act, any long-term capital gains arising from the sale of units
of an equity-oriented fund where such transaction of sale is chargeable to STT, shall be

exempt from tax.


Income by way of long term capital gain of a company shall be taken into account in
computing the Book profit and income-tax payable under Section 115JB (Minimum
Alternate Tax)[MAT]. The matter is however not free from doubt in case of Corporate
Foreign Institutional Investors.

Tax Deduction at Source


All Unit holders
No income-tax is deductible at source from income by way of capital gains under the present
provisions of the Act in case of residents. However, the provisions of section 195 of the Act may
apply to non-residents (other than Foreign Institutional Investors and long-term capital gains
exempt under section 10(38) of the Act).

Topic: Real Estate


The Indian Parliament recently unanimously cleared the much-delayed Real Estate Bill 2016.
Formally known as the Real Estate (Regulation and Development) Bill 2016, it is
expected to promote fair play in real estate transactions and to ensure timely execution of
projects. This will both, protect home-buyers and give the real estate sector a much needed
boost. This is expected to revive the sector infamous for delays, shortcomings, overpricing and
worse.

Why is the Real Estate Bill 2016 needed?


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Page 26

1.
2.
3.
4.

Buyers holding back money due to lack of confidence in the Indian real estate market.
Buyers avoid getting into legal battles with developers.
Projects being endlessly delayed and possession not given on time.
Builders not compensating for delayed possession, but levying penalties on buyers for

delayed payments.
5. Arbitrary changes in layout plans and the actual construction turning out to be different
from the advertised project.
6. Land Hoarding: Money collected for one project being diverted to fund other projects
or buy different lands. It results in scarcity of land and hence escalates land prices.

General Points of the bill


1. The bill will regulate both commercial and residential real estate projects.
2. It seeks to set up Real Estate Regulatory Authority (RERA) to oversee real estate
transactions.
3. It will also help establish state-level RERAs.
4. It makes registration of real estate projects and real estate agents mandatory.
5. It mandates that builders upload details of all registered projects, layout plans, land
status, approvals, agreements along with details of real estate agents, contractors,
architect, structural engineer etc. on the website of the RERAs.

Rules for Builders/Promoters


1) All commercial and residential real estate projects with land over 500 square metres, or
having 8 apartments, must be registered with RERA.
2) Builders must maintain 70% of the amount collected for the project in a separate
escrow account and use it ONLY for the construction of the said project. However,
individual state governments can alter this amount to less than 70% in their particular
state. Escrow is a temporary account held by a 3rd party during transaction between 2
parties.
3) Builders need to specify a timeframe of the project, or else they have to pay penalties.
4) It stops promoters from changing plans and design without consent of two-thirds of the
consumers.
5) The Bill defines carpet area of a property as net usable floor area, excluding the area
covered by its external walls, under shafts, balconies and terraces.
6) Builders to be responsible for fixing structural defects for 5 years after transferring the
property to a buyer.

Dispute Settlements
1. The bill seeks to establish fast track dispute resolution mechanisms through
adjudicating officers and Appellate Tribunal.
2. It bars civil courts from taking up real estate matters. However, consumer courts are
allowed to hear such matters.
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Fast-tracking
1. Allow RERAs to direct state govt. to establish a single window system for providing
clearances for projects.
2. A time limit should be specified for state and local authorities to issue completion
certificates.

Penalties
1. If promoter does not register his property: Penalty up to 10% of the project cost.
2. If promoter dodges order issued by the RERA: Imprisonment for up to 3 years, and/or
an additional fine of 10% of the estimated project cost.
3. If promoter provides false information: Penalty up to 5% of the estimated project cost.
4. If promoter violates any other provision of the act: Penalty up to 5% of the estimated
project cost.
5. Fine for the agents is INR 10,000 per day during the period of violation of provisions.

Impact of the bill on the Real Estate Industry


1)
2)
3)
4)
5)
6)
7)

Ensures efficiency and transparency in all property related transactions.


Improves accountability of the developers and protects consumer interest.
Promotes fair-play and timely execution of the projects.
Helps in differentiating a good developer from a bad one.
Single window clearance will aid faster execution of the projects.
Boosts positive sentiments among the buyers and will in turn bring more FDI.
Timely completion will result in increase in supply of homes and help bring down

prices.
8) Overall boost to the economy as housing sector has many backward and forward
linkages with other industries.
9) Backward Linkages: steel, cement and other building materials
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10)Forward Linkages: furniture and furnishings, electrical and electronics, interior


decoration.
11) Creation of more employment opportunities.
12) It will help achieve government's ambitious plan of Housing for All by 2020.
13) It will help curb black money as real estate sector constitutes about 11% of GDP and is
particularly vulnerable to black money through underreporting of transaction prices
while paying taxes.

Conclusion from Bill:


The real estate bill is anticipated to bring on a stimulating modification in how various
stakeholders revamp their structural capabilities and boost investors confidence in the realty sector.
However, it'll take time before the real estate regulator becomes a reality, as states have to be
compelled to follow up once it gets presidential assent.

What is Portfolio?
Portfolio refers to invest in a group of securities rather to invest in a single security. Dont put all
your eggs in one basket Portfolio help in reducing risk without sacrificing return.

Portfolio Management is the process of creation and maintenance of investment portfolio.


Portfolio management is a complex process which tries to make investment activity more
rewarding and less risky.

Portfolio management refers to the management or administration of a portfolio of securities to


protect and enhance the value of the underlying investment. It is the management of various
securities (shares, bonds etc.) and other assets (e.g. real estate), to meet specified investment goals
for the benefit of the investors.

It helps to reduce risk without sacrificing returns. It involves a proper investment decision
with regards to what to buy and sell. It involves proper money management. It is also

known as Investment Management


Portfolio management involves deciding what assets to include in the portfolio, given the
goals of the portfolio owner and changing economic conditions. Selection involves deciding
what assets to purchase, how many to purchase, when to purchase them, and what assets to

divest.
These decisions always involve some sort of performance measurement, most typically
expected return on the portfolio, and the risk associated with this return (i.e. the standard
deviation of the return). Typically the expected return from portfolios of different asset
bundles is compared.

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The unique goals and circumstances of the investor must also be considered. Some investors

are more risk averse than others.


Mutual funds have developed particular techniques to optimize their portfolio holdings. The
art and science of making decisions about investment mix and policy, matching investments
to objectives, asset allocation for individuals and institutions, and balancing risk against
performance.

Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of
debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs
encountered in the attempt to maximize return at a given appetite for risk.

Portfolio management involves maintaining a proper combination of securities which


comprise the investors portfolio in a manner that they give maximum return with

minimum risk. This requires framing of proper investment policy.


Investment policy means formation of guidelines for allocation of available funds among
the various types of securities including variation in such proportion under changing
environment. This requires proper mix between different securities in a manner that it can
maximize the return with minimum risk to the investor.

Broadly speaking investors are those individuals who save money and invest in the market in
order to get return over it. They are not much educated, expert and they do not have time to
carry out detailed study. They have their business life, family life as well as social life and the
time left out is very much limited to study for investment purpose. On the other hand
institutional investors are companies, mutual funds, banks and insurance company who
have surplus fund which needs to be invested profitably. These investors have time and
resources to carry out detailed research for the purpose of investing.
Major tasks involved with Portfolio Management

Taking decisions about investment mix and policy


Matching investments to objectives
Asset allocation for individuals and institution
Balancing risk against performance

Phases of Portfolio Management


Portfolio management is a process of many activities that aimed to optimizing the investment. Five
phases can be identified in the process:
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Security Analysis.
Portfolio Analysis.
Portfolio Selection.
Portfolio revision.
Portfolio evaluation.

Each phase is essential and the success of each phase is depend on the efficiency in carrying
out each phase.

1. Security Analysis
Security analysis is the initial phase of the portfolio management process. There are many types
of securities available in the market including equity shares, preference shares, debentures and
bonds. It forms the initial phase of the portfolio management process and involves the evaluation
and analysis of risk return features of individual securities. The basic approach for investing in
securities is to sell the overpriced securities and purchase underpriced securities. The security
analysis comprises of Fundamental Analysis and technical Analysis.

2. Portfolio Analysis:
A portfolio refers to a group of securities that are kept together as an investment. Investors
make investment in various securities to diversify the investment to make it risk averse. A large
number of portfolios can be created by using the securities from desired set of securities obtained
from initial phase of security analysis.

By selecting the different sets of securities and varying the amount of investments in each
security, various portfolios are designed. After identifying the range of possible portfolios,
the risk-return characteristics are measured and expressed quantitatively. It involves the
mathematically calculation of return and risk of each portfolio.

3. Portfolio Selection
During this phase, portfolio is selected on the basis of input from previous phase Portfolio
Analysis. The main target of the portfolio selection is to build a portfolio that offer highest returns
at a given risk. The portfolios that yield good returns at a level of risk are called as efficient
portfolios. The set of efficient portfolios is formed and from this set of efficient portfolios, the
optimal portfolio is chosen for investment. The optimal portfolio is determined in an objective and
disciplined way by using the analytical tools and conceptual framework provided by Markowitzs
portfolio theory.

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4. Portfolio Revision
After selecting the optimal portfolio, investor is required to monitor it constantly to ensure that
the portfolio remains optimal with passage of time. Due to dynamic changes in the economy and
financial markets, the attractive securities may cease to provide profitable returns.

These market changes result in new securities that promises high returns at low risks. In
such conditions, investor needs to do portfolio revision by buying new securities and selling
the existing securities. As a result of portfolio revision, the mix and proportion of securities
in the portfolio changes.

5. Portfolio Evaluation
This phase involves the regular analysis and assessment of portfolio performances in terms of
risk and returns over a period of time. During this phase, the returns are measured quantitatively
along with risk born over a period of time by a portfolio. The performance of the portfolio is
compared with the objective norms. Moreover, this procedure assists in identifying the weaknesses
in the investment processes.

Need of Portfolio and Portfolio Management


The portfolio is needed for the selections of optimal, portfolio by rational risk averse
investors i.e. by investors who attempt to maximize their expected return consistent with
individually acceptable portfolio risk. The portfolio is essential for portfolio construction. The
portfolio construction refers to the allocation of funds among a variety of financial assets open for
investments. Portfolio concerns itself with the principles governing such allocation.
The objective of the portfolio theory is to elaborate the principles in which the risk can be
minimized, subject to the desired level of return on the portfolio or maximize the return, subject to
the constraints of a tolerable level of risk.

The need for portfolio management arises due to the objectives of the investors. The
emphasis of portfolio management varies from investors to investor. Some want income,
some capital gains and some combination of both. However, the portfolio analysis enables
the investors to identify the potential securities, which will maximize the following
objectives:

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Securities of principal, stability of income, capital growth, marketability, liquidity and


diversification. Thus the basic need of portfolio is to maximize yield and minimize yield and
minimize the risk. The other ancillary needs are as follows:
1.
2.
3.
4.

Providing regular or stable income.


Creating safety of investments and capital appreciation.
Providing marketability and liquidity.
Minimizing the tax liability

GOALS OF PORTFOLIO MANAGEMENT


1. Value Maximization
Allocate resources to maximize the value of the portfolio via a number of key objectives
such as profitability, ROI, and acceptable risk. A variety of methods are used to achieve this
maximization goal, ranging from financial methods to scoring models.
2. Balance
Achieve a desired balance of projects via a number of parameters: risk versus return; short-term
versus long-term; and across various markets, business arenas and technologies. Typical methods
used to reveal balance include bubble diagrams, histograms and pie charts.
3. Business Strategy Alignment
Ensure that the portfolio of projects reflects the companys product innovation strategy and
that the breakdown of spending aligns with the companys strategic priorities. The three main
approaches are: top-down (strategic buckets); bottom-up (effective gate keeping and decision
criteria) and top-down and bottom-up (strategic check).
4. Pipeline Balance
Obtain the right number of projects to achieve the best balance between the pipeline
resource demands and the resources available. The goal is to avoid pipeline gridlock (too many
projects with too few resources) at any given time. A typical approach is to use a rank ordered
priority list or a resource supply and demand assessment.
5. Sufficiency

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Ensure the revenue (or profit) goals set out in the product innovation strategy are achievable
given the projects currently underway. Typically this is conducted via a financial analysis of the
pipelines potential future value.

ASPECTS OF PORTFOLIO MANAGEMENT


Basically, portfolio management involves:
1. A proper investment decision-making of what to buy and sell
2. Proper money management in terms of investment in a basket of assets to satisfy the asset
preferences of the investors.
3. Reduce the risk and increase the returns.
4. Balancing fixed interest securities against equities.
5. Balancing high dividend payment companies against high earning growth companies as
6.
7.
8.
9.

required.
Finding the income or growth portfolio as required.
Balancing transaction costs against capital gains from rapid switching.
Balancing income tax payable against capital gains tax.
Retaining some liquidity to seize upon bargains.

Benefits of PMS
1. Advice: A client gets investment advice and strategies from expert Fund Managers.
An Investment Relationship Manager will ensure that you receive all the services
related to your investment needs. The personalized services also translates into zero
paper work and all your financial statements will be e-mailed
2. Management: An experienced team of portfolio managers ensure your portfolio is
tracked, monitored and optimized at all times.
3. Continuous Monitoring: The clients are informed about your investment decisions.
A dedicated website and a customer services desk allow you to keep a tab on
portfolios performance.
4. Timing: Portfolio managers preserve clients money on time. Portfolio management
services (PMS) help in allocating right amount money in right type of saving plan at
right time. This means portfolio managers analyzes the market and provides his
expert advice to the client regarding the amount he should take out at the time of big

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risk in stock market.


5. Professional Management: MS provides benefits of professional money
management with the flexibility, control and potential tax advantages of owing
individual stocks or other securities. The portfolio managers take care of all the
administrative aspects of clients portfolio with a monthly or semiannual reporting on
overall status of the portfolio and performance.
6. Flexibility: Portfolio managers plan saving of his client according to their need and
preferences. But sometimes, portfolio managers can invest clients money according
to his preference because they know the market very well than his client. It is his
clients duty to provide him a level of flexibility so that he can manage the investment
with full efficiency and effectiveness.

Benefits of Choosing Portfolio Management


service Instead of Mutual Funds
While selecting a portfolio management service over mutual fund services it is found that the
portfolio manager offer some very service which are better than standardized product services
offered by the mutual fund manager. Such as:
1. Asset Allocation: Asset allocation plan offered by portfolio management service (PMS)
helps in allocating savings of the client in terms of stock bonds or equity funds. The plan is
tailor made and is designed after a detailed analysis of clients investment goals, saving
pattern and risk taking goal.
2. Timing: Portfolio manager preserves clients money on time. Portfolio management
services helps in allocating right amount of money in right type of saving plan at right time.
This means the portfolio manager provides their expert advice when his client should invest
his money in equity or bonds or when he should take his money out of particular saving
plan. Portfolio manager analyzes market and provides his expert advice to the client
regarding the amount of cash he should take out at the time of big risk in stock market.
3. Flexibility: Portfolio manager plan saving of his client according to their need and
preferences. But sometime portfolio manager can invest the clients money according to his
own preferences because they know the market very well than his client. It is his clients
duty to provide him a level of flexibility so that he can manage the investment with full
efficiency and effectiveness.
4. Rules and Regulation: In comparison to mutual funds, portfolio managers do not need to
follow any rigid rules of investing a particular amount of money in a particular mode of

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investment. Mutual fund managers need to work according to the regulations set up by
financial authorities of their country. Like in India, they have to follow rules set up by SEBI

General Responsibilities of Portfolio Manager


Following are some of the responsibilities of a Portfolio Manager:
1. The portfolio manager shall act in a fiduciary capacity with regard to the client's funds.
2. The portfolio manager shall transact the securities within the limitations placed by the
client.
3. The portfolio manager shall not derive any direct or indirect benefit out of the client's funds
or securities.
4. The portfolio manager shall not borrow funds or securities on behalf of the client.
5. Portfolio manager shall ensure proper and timely handling of complaints from his clients
and take appropriate action immediately. The portfolio manager shall not lend securities
held on behalf of clients to a third person except as provided under these regulations.

Portfolio Manager
Portfolio Manager is a professional who manages the portfolio of an investor with the
objective of profitability, growth and risk minimization. According to SEBI, Any person who
pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the
client the management or administration of a portfolio of securities or the funds of the client, as the
case may be is a portfolio manager.
He is expected to manage the investors assets prudently and choose particular investment
avenues appropriate for particular times aiming at maximization of profit. He tracks and monitors
all your investments, cash flow and assets, through live price updates. The manager has to balance
the parameters which defines a good investment i.e. security, liquidity and return. The goal is to
obtain the highest return for the client of the managed portfolio.
There are two types of portfolio manager known as Discretionary Portfolio Manager and
Non-Discretionary Portfolio Manager. Discretionary portfolio manager is the one who individually
and independently manages the funds of each client in accordance with the needs of the client and
non-discretionary portfolio manager is the one who manages the funds in accordance with the
directions of the client.

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Project Information & Timeline


Project Information
Project Title:
Acquisition of Wealth Clients and Understanding of Portfolio Management, Mutual funds &
Real estate
Project Scope:
Acquiring clients by understanding their investment pattern, providing them value services by
advising them different financial investment products.
Abstract:

The basic idea behind our internship project was locate the HNI and ultra HNI investors
across Pune, understanding their financial needs pattern of investment, risk appetite and advising
them products based on that with the help of our senior Relationship managers. Advisory solutions
would be provided to clients that too without charging anything from them

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During
During this
this week
week we
we were
were briefed
briefed about
about what
what is
is security
security lending
lending and
concept &

and borrowing
borrowing concept
&
its market
participants. Mechanism
Mechanism and
and features
features were
were explained
explained later
later on.
on. On
On other
other days
days we
we
its
market participants.
were provided Doctors data who are gynecologist and surgeon and physician can be a potential
investors if pitched properly.
Describes
Describes the
the market
market practice
practice by
by which,
which, for
for a
a fee,
fee, securities
securities are
are transferred
transferred temporarily
temporarily

from one
one party,
party, the
to another,
the borrower.
borrower.
from
the lender,
lender, to
another, the
The last
last weeks
weeks were
were all
all about
about follow-ups
follow-ups and
and setting
setting meetings
meetings for
for the
the interested
interested people
people with
with
The
our Relationship Manager.

7th & 8th


Week (16th
(16th
Week
-21st -- 23rd
-21st
23rd
-27th May)
-27th
May)

In this particular week we were introduced to Returns, Risks & Investing in


5th & 6th
nd
Week (2
(2nd
Week

Mutual Funds also various TAX Free Bonds which gives the Dual Benefit of Fixed
th
th
7
7th May
May 9
9th
Return and Tax Free Income also explained in detail.
th
th
Returns are the key indicators of the investment performance in mutual fund and are 13 May))
calculated from the historical NAVs. By comparing returns, the investor will get the
fair idea about the fund whether it is suitable for achieving his financial goals

we had a session on life insurance. Life Insurance can be termed as an


agreement between the policy owner and the insurer, where the insurer for a
consideration agrees to pay a sum of money upon the occurrence of the
4th Week
th
th
(25th
to 30th
insured individual's or individuals' death or other event, such as terminal
April)
illness, critical illness or maturity of the policy.
Various Tax slabs and on basis of age and total income of a person. Tax
deduction is done on the basis of slabs provided below is detailed information
about the same
we did calling based on data provided to us i.e. Pune Business Men. Targeting new
customers or clients based on their interest towards investment and their risk
appetite.
rd
we had a session on Real Estate where we got to know about diferent kinds of
3rd
Week
properties like under construction sites, residential site and commercial site of real
th
to
(17th
estate where one can invest and grow their investment.
nd
22nd
April)
Carpet(Area inside compound), Buildup(walls plus Carpet Area), Super
buildup Area(Car parking + driveway + garden) also Floor Space Index (FSI),
circle rate which is fair market value of property according to market demand and
supply condition
we had a session on Mutual Funds. We were told about the diferent aspects and
why are they so popular and important.
Systematic Investment Plan (SIP) is an investment technique whereby the
investor invests a fixed sum of money at regular intervals,
We had a session on Insurance. We were told the types of it, products, principles, and
concepts which they sell in the company.
We were also taught a script according to which we had to pitch in while doing sales
calls. We were told that only 10% of the total calls that we make usually ends in a
meeting.
Monthly Market Review. It encompasses the historical happenings in all major
financial markets around the world and its impact on Indian financial markets.
Magazine also predicts the direction in which the market was supposed to move
There was a session on Operations of the company. We were told how we are to
cater to the clients needs and make sure everything is handled smoothly, Cold
Calling Started to aquire clients

Week 2
11-16th
April

Week1
th
4-8th
April

Project timeline

Training
During the first few weeks of our internship, we were trained about the financial products and
services given by our company.
There was an introductory session on which instruments they deal in the company. It was
important to know them so that we can understand the working and know what exactly and
basically we are going to do. After that we had a session on Real Estate. We got to know about it as
a whole in the country, plus the facts about Pune city (rates, etc.)
We had a session on Equity Market and equity shares. We got to know how trading is done
basically (the process), the types of accounts, prices, trading and other important and interesting
knowledge. We also had a session on derivatives. Next we had a session on Mutual Funds. We were
told about the different aspects and why are they so popular and important. Some points include
SIP, hybrid market, NEB, etc.
There was a session on Operations of the company. We were told how we are to cater to the
clients needs and make sure everything is handled smoothly. We were shown some customer forms
and made aware of certain technicalities.
Next we had a session on Sales. We got to know different aspects of it and how to pitch to a
customer, what he expects and what we are expected to do. We had a session on Insurance. We
were told the types of it, products, principles, and concepts which they sell in the company.
Further we had sessions on their products, Health Insurance and Loan under mortgage.
We got to know about the benefits of health insurance and how good that particular product has
been, being reputed among the few old and best health insurance products in India.
The following days we got briefed in stages, what would be our upcoming tasks? We were
grouped as teams of 4 and coordinated among each other as there were interns from another college
as well. All these sessions were quite interesting and they gave us a basic insight into the
instruments and a proper understanding of them.

Abhijeet Patil

5th June, 2015

Page 39

Activities
Cold Calling: It is a technique whereby a salesperson contacts individuals who have not previously
expressed an interest in the products or services that are being offered. It typically refers to phone
calls but can also entail drop-in visits such as with door to door sales people. We developed a sales
pitch for our calling and different ones for corporates as well as others, like doctors and chartered
accountants.

Cold calling is soliciting potential customers (HNI or Ultra HNI Clients) who were not
expecting to speak with you. The term 'cold' refers to the fact that you haven't laid any
groundwork for your call.
We did a lot of cold calling and arranged many wealth calls. Our senior relationship

managers accompanied us in the call and helped us understand the client requirement of
investment. Then we took the follow up with the clients and tried to fulfil their requirements either
by mailing them the details or by personally meeting them with our RMs. We have always tried to
maintain relationship with the clients by advising them in managing their portfolio so that they can
get the better returns from their investment patterns. We got the task of calling possible clients for
the company and making aware the products and benefits to them.
Tapping all HNIs of IT Professionals in Pune
1. The IT professionals which are HNI themselves earning more than 16 Lakhs per annum
targeting those individuals by cold calling was our strategy calling them and advise them
about various tax benefits can give us more and more idea about the Tax schemes and
saving and benefit of saving at early ages.
2. Through this platform we would get their clients and they would share profits from the
services we distribute to their clients, whether directly or indirectly. Our job was also to
provide them information regarding the products and services that we have and guide them
in the whole process.
Tapping all doctors and BMW owners of Pune: We started calling Doctors and BMW owners and
Businessman who all are having very got wealth and can ready to invest as they have lots of money
in their bank account but doesnt know how to invest properly. Got some responses with some of
them eager to meet and some willing to work with our company.
Abhijeet Patil

5th June, 2015

Page 40

We were teamed up with other interns and together we called hundreds of them. But we got very
few responses as most were not available and others were not interested. Out of the few responses
we got, we called them again to set up meetings with our relationship managers. We also mailed
them the terms and conditions and other documents regarding the whole proposition and the
benefits.
Corporates
We had also made a list of corporates whom we had to call and make them aware about wealth
management in our company. We decided that calling them is not going to work, so we visited
some of the companies ourselves to see if we could tell them about our financial services. Some of
the companies we visited are given in the annexure.
Face-to-face Interaction with new people:
1. During meeting investors always eager to know which mutual fund is doing good and which
having good maturity period and returns as best possible return and less riskier fund.
2. Many IT professionals want only SIP of minimum amount starting form Rs. 10000 and thus
can invest a particular amount each month.
3. During face to face interaction investors always want more information regarding product
and as policy of the company we are not providing anything which is false so we as
working in Aditya Birla believe in Straight Talk.

Abhijeet Patil

5th June, 2015

Page 41

EXPERIENCE AT ADITYA BIRLA MONEY


I had a great learning experience during my 6 weeks training at Aditya Birla Money. I got to
learn about the basics of stock market, equity, mutual funds, and real estate and portfolio
management services (PMS) during my training duration. I am sure that these topics will help me a
great deal in comprehending finance more easily during the completion of my MBA program. Also
these 8 weeks corporate exposure will help me face the working challenge in my future
life.Competitors Analysis helped me to understand the cutthroat competition in the financial
market.
Wealth management division which encompasses of Investment Analysis helped me to
understand the mindset of the investors and the attitude of the investors towards the stock market &
right investment plan to be suggested for particular individual investor.
The CRM analysis taught me the various aspects of Customer Relationship Management.
During my training I got to learn how to deal with the customers. My first practical learning
experience was with Mr. Anant R. Kalkute Managing Director ,GR Greenlife Energy Pvt. Ltd,
Sakal Nagar, Baner Road, Aundh, Pune.. He was a tough client; ask numerous questions which I
unable to handle so, quickly I make a call to my boss who lastly close the deal. Through doing
practical my times I gain my confidence and now I feel quiet comfortable in handling customer
individually.
At the end I never forget to indebt my gratitude to industry mentor Mr. Gourang Goswami
who constantly gave small inputs from his side to increase my knowledge. All the members in the
branch were very supportive.

Abhijeet Patil

5th June, 2015

Page 42

CONCLUSION
The project is Acquisition of Wealth Clients and Understanding of Portfolio
Management, Mutual funds & Real estate So to acquire clients whose net worth is more and
can be interested in review of their portfolio and ready to invest in equity and debt market. Findings
have been obtained about the Indian investors and Indian investment organization. Most of the
Indians are aware about high risk and high return. So it is necessary that government will
encourage to investors to invest in Market.
Large census are not well aware of this financial instruments, they only known with the
term mutual & share are something which exit in the market. Traditional person take it as a
speculation. Lack of awareness is declining the market of such financial product so from my point
of view proper mechanism should be adopted to make learn this census about the product and make
him able to understand the market of such product so that they also penetrate.
Some important findings are that the HNI people want to invest in some safe and risk free
mutual funds and only few HNI are ready to share their portfolios for second opinion. Investment
related organization should be transparent and they should be less flexible. Government should
guide to people about the investment Organization and investment options .Because people are very
conscious about the government approval organization. Because they are ready to take the risk if
government is ready to prevent or sustain them.
ADITYA BIRLA MONEY LTD. has a great opportunity to increase their market potential
especially in this market situation. Most of the branded broking agencies are coped by security
exchange board of India due to their illegal works and scams related to IPOs.
ADITYA BIRLA MONEY LTD has a unique brand name who assures to people about the
transparent work and obtaining their belief.

Abhijeet Patil

5th June, 2015

Page 43

RECOMMENDATION
Since the project is related to assess the risk profile of investor and how to increase the
market potential of ADITYA BIRLA MONEY LTD. So every precise aspect like risk taking,
influencing factors of investment Organization government role, age, sex income factors have been
analyzed.
Since the problem is related to investors profiles. Market potential of ADITYA BIRLA
MONEY LTD therefore some Recommendations are being putted for improvement.

Investors (especially lower and middle income group should invest some percent of their

income in stock market or mutual fund.


Investment related organization should be transparent and they should guide to see the

mentality of investors like attacking investors or defensive investors


Government should monitor the stock market closely and they should provide some guide
to investors about investment

Abhijeet Patil

5th June, 2015

Page 44

Annexure
IT professionals data (cold calling: sample)

Abhijeet Patil

5th June, 2015

Page 45

Name
Dnyanesh
war Ahire

Mobile
9823358
009

Qualification
ManagerOperator
Business ROM n Goa

Gopal
More
Amol
Kshirsagar

9850735
288
9881719
536

Principle Infrastructure
Engineer
Manager Sourcing
Electrical

Vinay Darp
Vinod
Upadhyay

9822247
907
9766631
792

Ramesh
Karmalkar
Manoj
Prasad
Kailash
Beedkar

9881303
536
9561818
264
9822020
008

--

9922081
219

Planning Manager

Kartik Iyer

9823579
492

vinay
kamat

9890965
957

Lead Analyst-Servce
levels and Supplier
Management
Project Manger

Milind
Phaterpek
ar
Prashant
Yadav

9890968
575

Project Lead

8793379
566

Project Manager

Shailesh
Mhapanka
r
Anand S
Chaudhari
dr suresh
vaidya

9970002
999

Manager (Market
Leader)- Sales

9890622
059
9822842
154

Deputy Manager
Finance
consulting
physician+Asso.Prof,me
dicine

Neelima
Srivastav

9881239
335

Technology Manager

Mohan
Ghate

9960625
899

Oracle Apps-Functional
Consultant

Jeetu
9225517
Abhijeet Patil
Mohan
142
Pardeshi
anil variar
9890447
544

Senior Test
Engineer
5th June, 2015

Manager-HR

Senior Manager
Zonal Modality Manager
MANAGER SUPPLY
CHAIN

D.MANAGER

Employer
The
MobilleStore
Ltd.
mphasis ltd
KIRLOSKAR OIL
ENGINES
MEBG
MWH

Response
12 noon
Tomorrow 3rd
feb
after 3 months
after 5 call
back
call back 4 pm

Tata
BlueScope
Steel Limited
Behr India

330 call back

Wipro GE
Healthcare
WAVE
Suspension
Systems India
Pvt Ltd Gut
No417 Village
Takve
Spirax
Marshall Pvt
Ltd
SITA

6 pm call back

sterling
& wilson
ltd
Syntel India

1030 meeting

tooltech global
engineering
pvt ltd
Pall India Pvt
Ltd.

call after an
hour

SKF INDIA
LIMITED
MIMER Medical
College ,
Pune+consulta
tion
Avaya India
Pvt. Ltd

call after an
hour
Monday
meeting call
him

KPIT Cummins
Infosystems
Ltd
WMS Gaming
Pvt Ltd
MRF LTD

after 3 o clock

call back 4 to
5 pm

630 pm call

Monday call
back

call after an
hour

call after 5

Monday
meeting call
him
Monday
meeting call
him
after 10 min
Page 46
call after a week

Similarly, we collected data of Doctors: (sample)

Name
Dr.
Kulkar
ni
Sadan
and
Dr.
Kulkar
ni
Sandh
ya
Dr.
Lunkad
Subhas
h
Indrab
han
Dr.
Padbid
ri
Vasant
Dr
padbid
ri
vikram
Dr
Pathak
Ketki
Niranja
n

Dr.
Dighe
Tushar
Anil
Dr.
Huprik
ar
Abhay
Gopal
Dr.
kolhatk
ar
Meetali

Address
B-604 Kapil
Abhijeet
Dahanukar
Colony Pune
411029
B-604 Kapil
Abhijeet
Dahanukar
Colony Pune
411029
Lunkad
Hospital, A/2
indra park
Pune-nagar
Road,Yerwada,
Pune 411006
D-18 Gita
Society,
Synagogue
street Pune
411001
D-18 Gita
Society,
Synagogue
street Pune
411001
Teaching Staf
Quarters, A-1
Mimer Medical
College,
talegaon
410507
B-A,29,
Swapnashila,
S.No. 19/2,
near CDSS,
Gandhi
Lawns,
Ganeshnagar,
Kothrud,Pune411029
17,
Chintamani
Society, Karve
Nagar,
411052
56, Mayur
Colony ,
Kothrud,Pune411039

Abhijeet Patil

Ph number

Email id

Respons
e

9850053426 /
66406264

drskanad@yahoo.co.
uk

Not
Intereste
d

drskanad@yahoo.co.
uk

Not
Intereste
d

9850053426 /
66406264

Meeting
at 3pm
tomorro
w

020-4024243

9890098624

vspadbidri@hotmail.
com

Not
Intereste
d

9822334543

vikram.padbidri@gm
ail.com

Meet me
after 2
weeks

8087536978/973
0490292

nrnjnpats@gmail.co
m

call
after a
week

not
picking

020-25411509

020-25461749
8888819210

madhurihuprikar@g
mail.com
meetali.kolhatkar@g
mail.com

5th June, 2015

No
Call after
4 pm

Page 47

Sanjay
Dr.
Patil
Sachin
Bajirao
Dr.
Prabhu
Indra
Vinaya
k

C-501, Runwal
Regency,
Sadhu
Vaswani
Chowk, Pune
411001

020-66099999,
8390860174

drsachinbpatil.sp@g
mail.com

not
picking

A1/203,Mayur
pankh ,
Kondhwa,pun
e -411048

9860457953/268
31939

indrajit269@gmail.co
m

she will
call
back

REFERENCES
WEBLIOGRAPHY
http://www.amfiindia.com/showhtml.aspx?page=mfconcept
http://finance.wikia.com/wiki/Portfolio_Management_Services_a_customized_investing_option_for_HNI_indi
viduals
http://www.mbaknol.com/investment-management/portfolio-investment-process/
http://www.mutualfundsindia.com/
http://www.valueresearchonline.com/
http://www.moneycontrol.com/mf/portfolio/portupmore.php
www.adityabirlamoney.com/

Reference books:
1. Prasanna Chandra Security Analysis and Portfolio Management.
2. V.A. Adadani- Security Analysis and Portfolio Management.
3. V. Gangadhar- Security Analysis and Portfolio Management

BIBLIOGRAPHY
Mutual funds in India by Nalini Prava Tripathy

Abhijeet Patil

5th June, 2015

Page 48