Portfolio Management at Standard Chartered

STANDARD CHARTERED BANK
A PROJECT REPORT ON
INVESTMENT OBJECTIVES & PORTFOLIO MANAGEMENT AT STANDARD CHARTERED BANK
ICFAI
BUSINESS
SCHOOL
SUBMITTED BY
2008
SACHIN MAHIPAL 078456105
2ND FLOOR,20, COMMUNITY CENTRE, NEW FRIENDS COLONY, NEW DELHI-110065
Investment Objective & Portfolio Mgmt.
ACKNOWLEDGEMENT
Life is a journey; it's not the years in your life that count. It's the life in your years. But Life cant be completed without the support of many people. Any accomplishment requires the effort of many people and this work is not different. I would like to take this opportunity to thanks STANDARD CHARTERED BANK for giving me an opportunity to be a part of their esteem organization and enhance my knowledge by granting permission to do summer training project. I would also like to extend my sincere regards to Mr.NITISH DIPANKAR (Area Sales Manager, Standard Chartered Bank), my project guide for his guidance and support throughout my training .My learning has been immeasurable and working under him was great experience. I would always be grateful to him for the providing such an opportunity; and exposure to ground realities of business operations and functionalities. I would also thank Prof.P.C. VERMA my faculty guide ICFAI Business School, Gurgaon, for his immense guidance and suggestions in carrying out this project. Last but not the least I also wish to thanks to everybody who helped me
through the successful completion of the project. The learning from this experience has been immense and would be cherished throughout my life. It is good to have an end to journey toward; but it is the journey that matters, in the end.
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CONTENTS
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. Introduction..4 Investments6 Planning Your Investment8 Investment Options Available in India.14 Current Banking Scenario of Indian Banking System.26 Indian Banking: Strength & Weaknesses31 Standard Chartered Bank.33 Standard Chartered Bank in India.36 Products Offered..42 Saving Accounts43 ULIPs..48 Mutual Funds.59 ULIPs Vs Mutual Funds108 Impact of Union Budget 2008-09..114 Survey123 Profile of Respondents.125 Analysis.130 Recommendations..161 Conclusion..163 Annexure.167 References.171
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INTRODUCTION
Rationale of the Project
In the current banking scenario, all the banks are engaged in an in-depth introspection for analyzing their strengths and weakness and identifying core competencies to set a mission in which they are likely to find themselves as leaders.
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In all private and foreign banks stress is being laid on knowing their customers. This involves not just finding the profile details about the customer but also catering to their different needs. The needs and investment pattern of all individual change according to their life stages and are strongly influenced by their demographics. This project helps to analyze customer investment habits and suggest portfolio.
Methodology
The study was exploratory in nature and aimed at exploring the factors, which formed the basis for selection of different types of investments by individuals. The study also aimed at finding out what type of investment pattern is followed by individuals of different profiles and what is their frequency of investments so as to know where a person should invest. Individuals already availing or planning to avail the services of different banking firms both in public and private functioning at Delhi and Gurgaon, formed the population from where the sample was drawn. a sample of approx 100 respondents was studied for the purpose of this study. The research was carried out by collecting primary data for the study through a self-developed, non-disguised questionnaire for the customers of various banks. For developing the profile of the customers, the
respondents were classified into various groups on the basis of their age, occupation and income. For age wise classification the respondents were categorized into four groups - group of 18-30 yrs, group of 30-40, 4050 and groups above 50. For income group there were four categories low income group of less than 250000, middle income 250000-500000, 500000-100000, high level income group of greater than 1000000. We tried to find keeping income as constant what are the various instruments they invest, for how long they invest etc..
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For occupation wise classification four categories were selected namely service, business, self-employed and others for people like housewives. Limitation of the Study The study which is being conducted is limited by following reasons:1) Disclosure of information from the banks is a constraint-when I approached the various banks for information there was lack of cooperation on the part of the employees in giving the right information. 2) Unwillingness of the respondents to provide information-when I approached the customers for filling the questionnaire, I encountered 2 kinds of problems. First they did not have time to fill the questionnaire, second they did not want to answer any question regarding income. 3) Incapacity to survey large number of people. I could survey approx 100 people. So whatever analysis has been done is done accordingly. 4) The people surveyed belonged to NCR region only-investment habits of people in different regions differ.
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INVESTMENTS
In finance, the purchase of a financial product or other item of value with an expectation of favorable future returns. In general terms, investment means the use money in the hope of making more money. Done wisely, it can help meet individual financial goals like buying a new house, paying for college education of children, enjoying a comfortable retirement, or whatever is important to an individual. Savings form an imperative part of the economy of any nation. With the savings invested in various options available to the people, the money acts as the driver for growth of the country. Indian financial scene too presents an excess of avenues to the investors. You do not have to be wealthy to be an investor. Investing even a small amount can produce considerable rewards over the long-term, especially if one does it regularly. But one need to decide about how much you want to invest and where. To choose wisely, one need to know the investment options thoroughly and their relative risk exposures. An investment can be described as perfect if it satisfies all the needs of all investors. So, the starting point in searching for the perfect investment would be to examine investor needs. If all those needs are met by the investment, then that investment can be termed the perfect investment. Understanding the needs of the investor and ensuring that the most appropriate investments are selected is the most essential. The investment needs of an investor are simply his lifestyle needs converted into financial terms. These include the normal living expenses, food, accommodation, as well as education, health, recreation, transport, special occasions like marriages, festivals etc.
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Investment Strategies
You can make your own investment picking approach or adopt one after consulting financial experts or investment advisors. Whatever method you use, keep in mind the importance of diversification, or variety in your investment portfolio and the need for a strategy, or a plan, to guide your choices.
Investment approaches
The options you choose to put your money in reflect the investment strategy you are using - whether you realize it or not. Most people adopt the following approaches:Conservative These investors take only limited risk by concentrating on secure, fixedincome investments etc. Moderate Such Investors take moderate risk by investing in mutual funds, bonds, select blue chip equity shares etc. Aggressive These are investors who take major risk on investments in order to have high (above-average) returns like speculative or unpredictable equity shares, etc. As a matter of fact, the investment approach of an investor is directly linked to his or her ability to shoulder risk. The ability to take risks depends largely on personal circumstances and factors like age, past experiences with investment, level of responsibility, etc.
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Planning Your Investment:

Investment Planning is the process of identifying and implementing effective investment strategies to create and accumulate the financial resources for achieving financial planning goals. This section includes in-depth information related to investment planning. One of the parts of developing a comprehensive financial plan is the development of an investment plan. There are six steps that one should follow while developing an investment plan. y The Means to Invest.
In order to even begin this portion of your financial plan, one must determine that he/she is ready to save. In this step one need to determine if one is going to use the money on some good or service (spend it), or if one will invest or save the money. y Investment Time Horizon
In this step, you will be determining how long you plan to invest and when you will need the funds to meet your financial objective(s). You must decide, based on the time horizon of your objectives, among short-term
investments, long-term investments or some combination. In this step you are going to be determining what you will be saving for, which should give some indication of your time horizon. y Risk vs Return
Risk and returns go hand in hand. Higher the risk, higher is the possibility of earning a good return. Thus, it follows that all types of investment have some form of risk attached to it. Theoretically, even 'safe' investments (such as bank deposits) are not without some element of risk. Broadly, here are the various types of risks that you might have to face as an investor. IBS, GURGAON Page 9
Credit Risk The risk is that the issuer of the security will default, or not repay the principal amount. This is valid for corporate bonds etc. Liquidity Risk If you invest in securities, stocks, bonds, you are risking their sell ability. In other words, your money gets stuck unnecessarily, creating an asset-liability mismatch. Market Risk Financial markets are volatile in nature. Volatility means sudden swings in value from high to low, or the reverse. The more volatile an investment is, the more profit or loss you can make, since there can be a big spread between what you paid and what you sell it for. But you also have to be prepared for the price to drop by the same amount. Those who invest in stocks and mutual funds typically run this risk. Interest Rate Risk Depending on the interest rate movement in the economy, the rates of interest investment instruments may go up or come down, resulting in a subsequent reverse movement of their prices. Such a scenario of economic instability might affect mutual funds etc. The whole idea behind investment planning is to evaluate the risk associated with various types of investments and take steps so as to balance it with the desired return.
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You will need to determine what your level of risk tolerance is. As the level of risk tolerance increases so does the potential for higher returns as well as larger losses. y Investment Selection
Based on above three considerations, investments should be selected to meet your goals. These investments must satisfy your time horizon and your risk tolerance. y Evaluate Performance
Once investments are chosen and expectations are established, the performance of your investments should be determined by comparing the actual realized returns against the expected returns. The returns should also be compared to a benchmark, such as the S&P 500 index. In addition, the investments should be reevaluated to determine if they continue to meet your investment criteria. y Adjust the Portfolio
Your portfolio should be adjusted to maintain your goals and your investment criteria. If your goals change, your investments should be reviewed to determine if they continue to meet your objectives. To summarize, once you have determined that you are financially able to begin investing (or saving), you should evaluate your investment goals and set out a plan to accomplish these goals. Once you have begun your investment plan, you must periodically review the performance of your investments and re-evaluate your objectives and investments to make certain there is a good fit.
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Inflation Devil
Inflation, the rate at which the general level of prices for goods and services rises, can steadily erode the purchasing power of your income. That is why you should invest a portion of your savings at a rate higher than the inflation rate to recover the loss of purchasing power. This means that over time a rupee will be able to buy a lesser amount of goods and services. If the inflation rate is 5%, then Rs. 100 worth of goods will cost Rs. 105 after a year. The following table indicates how the value of Rs 1,00,000 will change over time at different levels of inflation.
Inflation % p.a. Years 5 10 15 20 25 30 2 90,573 82,035 74,301 67,297 60,953 55,207 3 86,261 74,409 64,186 55,368 47,761 41,199 4 82,193 67,556 55,526 45,639 37,512 30,832 4.5 80,245 64,393 51,672 41,464 33,273 26,700 5 78,353 61,391 48,102 37,689 29,530 23,138 6 74,726 55,839 41,727 31,180 23,300 17,411
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The Power of Compounding

Regardless of where you choose to put your money - cash, stocks, bonds, or a combination of these - the key to saving for the future is to make your money work for you. This is done through the power of compounding. Compounding investment earnings is what can make even small investments become larger, given enough time. You are probably already familiar with the principle of compounding. The money you put into a bank account earns an interest. Then, you earn interest on the money you originally put in, plus on the interest you have accumulated. As the size of your account grows, you earn interest on a bigger and bigger pool of money.
The following table shows how much your money would grow when you invest a fixed amount per month over a period of 10, 15, 20, 25, and 30 years, assuming an interest rate of 10% p.a.
Amount (Rs) Years 5 10 15 20 25 30 1000 78,082 206,552 417,924 765,697 1,337,890 2,279,325 2000 156,165 413,104 835,849 1,531,394 2,675,781 4,558,651 3000 234,247 619,656 1,253,773 2,297,091 4,013,671 6,837,976 4000 312,330 826,208 1,671,697 3,062,788 5,351,561 9,117,301 5000 390,412 1,032,760 2,089,621 3,828,485 6,689,452 11,396,627
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How power of compounding makes your money grow, when you invest a fixed amount every month Here's how much your money would grow if you make an lump sum (onetime) investment and leave it untouched. The interest rate has been assumed to be 10%.
Amount (Rs) Years 5 10 15 20 25 30 100000 161,051 259,374 417,725 672,750 1,083,471 1,744,940 200000 322,102 518,748 835,450 1,345,500 2,166,941 3,489,880 300000 483,153 778,123 1,253,174 2,018,250 3,250,412 5,234,821 400000 644,204 1,037,497 1,670,899 2,691,000 4,333,882 6,979,761 500000 805,255 1,296,871 2,088,624 3,363,750 5,417,353 8,724,701
The real power of compounding comes with time. The earlier you start saving, the more your money can work for you. To attain certain amount of corpus within a set period of time, a pro-active investment style is preferable. Thus, no matter how young you are, the sooner you begin saving for the future, the better it is.
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Investment options available in India

Today choosing a best investment plan is difficult because there are so many investment options available in India. These days we are getting more money compared to last decades.
1) Bank Fixed Deposits (FD)

Fixed Deposit or FD is the most preferred investment option today. Minimum period is 15 days and maximum is 5 years and above. Senior citizens get special interest rates for Fixed Deposits. This is considered to be a safe investment because all banks operated under the guidelines of Reserve Bank of India. Other features are;
y y
Very low risk and low liquidity. Low returns, but assured. Depending on the tenure and bank, could be around 6-9%
y y
Since returns are fully taxable, the post-tax returns will be still lower. Good for very low risk investors and those in the nil or low tax brackets. As interest rate scenario seems to be peaking, one could consider investing in 3-5 year FDs.
2) Fixed maturity plans (FMPs)

FMPs, as they are popularly known, are the equivalent of a fixed deposit in a bank, with a caveat. The maturity amount of a fixed deposit in a bank is 'guaranteed', but only 'indicated' in the FMP. Its other features are;
y y
Low risk and low Liquidity. No assured returns but depending on tenure and the MF, could be around 6-9%. (Ability to deliver the indicative returns).
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MFs attract much lower taxation and hence give better post-tax returns vis--vis Bank FDs.
Good for low risk investors, but in high tax brackets. Good for investing the debt portion of ones portfolio.
3) National Saving Certificate (NSC)

NSC is backed by Govt. of India so it is a safe investment method. Minimum amount is Rs 100 and no upper limit. From FY 2005-'06 onwards interest accrued on NSC is taxable.
y y y
Low risk with low liquidity (6 years lock-in). 8% assured returns. Interest fully taxable. But eligible for Sec 80C benefit.
Not very attractive vis--vis other options like 5-year Bank FDs.
4) Public Provident Fund (PPF)

PPF is another form of investment backed by Govt. of India. Minimum amount is Rs500 and maximum is Rs70,000 in a financial year. A PPF account can be opened in a head post office, GPO and selected branches of nationalized banks. Both PPF and NSC considered to be best investment option as it is backed by Government of India
y
Low risk with very low liquidity (15-year lock-in period. Partial withdrawal allowed after 6 years).
8% assured returns. Interest is tax-free. Also Sec 80C benefit. Hence a good scheme.
Good tax saving investment option. Good for investing the debt portion of ones portfolio
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5) Equity
This need high risk appetite. Ideal for those investors who have a good corpus, good knowledge and time to track the stock markets regularly. Care should be taken to invest in good profit making companies. Penny stocks should be avoided
y y y
High risk and high liquidity. Market linked returns. Good potential. Attractive tax treatment. No Long Term (investment of more than 1 year) Capital Gain Tax and 10% Short Term Capital Gains Tax.
6) Mutual Funds Mutual Fund companies collect money from investors and invest in share market. Investing in mutual funds is also subject to market risks but return is good. The various fund options are; Equity Funds
y y y
High risk and high liquidity in open-ended funds. Market linked returns. Good potential. Attractive tax treatment. No Long Term Capital Gain Tax and 10% Short Term Capital Gains Tax.
Ideal for small and common investors, but with high risk appetite. SIP and a long term investment horizon can cut down risk and increase the probability of making good returns. Ideally, one should build a welldiversified portfolio with say 40-50% money in 5-7 diversified funds (large cap oriented), 20-30% money in 3-4 mid/small-cap funds, 1015% in 3-4 sector funds and 10-20% in balanced funds.
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ELSS Funds
y y y
High risk with low liquidity (3 years lock-in period). Market linked returns. Good potential. Attractive tax treatment. No Long Term Capital Gain Tax and 10% Short Term Capital Gains Tax. Also Sec 80C benefit.
Good tax saving investment option. Amounts beyond Rs.1 lakh limit could be invested in open-ended funds. SIP in ELSS would reduce the volatility risk.
Balanced Funds
y y y
Medium to High risk. High Liquidity. Medium to high returns. Market linked. Attractive tax treatment. No Long Term Capital Gain Tax and 10% Short Term Capital Gains Tax.
Though convenient as both debt and equity investment is covered under one fund, it may be better to invest separately in equity and debt funds for better control.
Debt Funds
y y
Low to Medium risk. High Liquidity. Returns are market-linked. Today could be around 5-7%, but susceptible to interest rate risk.
y y
Lower taxation of MFs makes such funds attractive. Can be avoided in a rising interest rate scenario but is good in a falling interest rate scenario.
7) Unit Linked Insurance Plans ULIPs are remarkably alike to mutual funds in terms of their structure and functioning; premium payments made are converted into units and a IBS, GURGAON Page 18
net asset value (NAV) is declared for the same. In traditional insurance products, the sum assured is the corner stone; in ULIPs premium payments is the key component.
y
Low to High Risk depending on the investment option i.e. Pure Debt or Mixed or Pure Equity. Low Liquidity (3-5 years lock-in period).
Low to high depending on the investment option. Market linked returns.
y y
Tax free returns also Sec 80 C benefit available. Not an attractive option due to high charges, low flexibility and low diversification. There are other better similar investment products like MFs with low charges, high flexibility and high diversification. As regards life cover, the same could be done through a term policy.
8) Endowment/Money back Plan These policies are term policies. Investors have to pay the premiums for a particular term, and at maturity the accrued bonus and other benefits are returned to the policyholder if he survives at maturity
y y y
Low risk and very low liquidity Low returns. Generally around 6-6.5%. Tax free returns. Also Sec 80 C benefit available.
Not an attractive option due to low returns. There are other better similar investment products like PPF. As regards life cover, the same could be done through a term policy There are many investment options available like investing in Gold, Real Estate , commodities etc. the features of this options are;
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9) Real Estate
y
Variable risk and variable liquidity depending on the type and location of property.
y y y
Market linked returns. Good potential. No tax advantages, except attractive tax benefits on the home loans. High initial investment required which could make ones portfolio lopsided; high transactions costs like title-search, registration
brokerage etc.; and cannot be partly liquidated. Therefore, real-estate MFs (expected in the near future) may be a better alternative than direct property investment. If investing directly, it is important to assess the potential and clear title.
10)
y y y y
Commodities
High risk with high liquidity. Market linked returns. No tax advantages. Highly cyclical.
11)
Gold
Low long-term risk. But volatile in short term. High Liquidity. Has traditionally been a hedge against inflation. So returns could be around inflation levels.
y y
y y
No tax advantages. Not an attractive investment option. Can be used for portfolio diversification to partly hedge against inflation. Gold MFs are better than buying physical gold.
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Because of these unique properties, gold has traditionally been the currency of choice for much of the world's population. The value of gold has transcended all national, political, and cultural borders, making it the ideal currency.
12)
y y y y
Post Office Schemes

Low risk and low Liquidity. MIS scheme give 8% interest. Time deposit 6.25-7.5%. Since returns are taxable, the post-tax returns will be still lower. Good for very low risk investors and those in the nil or low tax brackets.
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BANKING
The banking section will navigate through all the aspects of the banking system in India. It will discuss upon the matters with the birth of the banking concept in the country to new players adding their names in the industry in coming few years. The banker of all banks, Reserve Bank of India (RBI), the Indian Banks Association (IBA) and top 20 banks like IDBI, HSBC, ICICI, ABN AMRO etc, has been well defined. However, in the introduction part of the entire banking cosmos, the past has been well explained under four different heads namely: History of Banking in India Nationalization of Banks in India Scheduled Commercial Banks in India. Current Scenario of Banking in India. History of Banking in India Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades Indias banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of Indias growth process.
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The governments regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. Not long ago. An account holder had to wait for hours at the bank counters for getting a draft of for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank transferred money from one branch to other in two days. Now it is simple as instant messaging or dials a pizza. Money has become the older of the day. Nationalization of Banks in India The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then Prime Minister. It nationalized 14 banks then. These banks were mostly owned by businessmen and even managed by them.
Central Bank of India Bank of Maharashtra Dena Bank Punjab National Bank Syndicate Bank Canara Bank Indian Bank Indian Overseas Bank Bank of Baroda Union Bank Allahabad Bank United Bank of India UCO Bank Bank of India
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Before the steps of nationalization of Indian banks, only State Bank of India (SBI) was nationalized. It took place in July 1955 under the SBI Act of 1955. Nationalization of seven State banks of India (formed subsidiary) took place on 19th July, 1960. The State Bank of India is Indias largest commercial bank and is ranked one of the top five banks worldwide. It serves 90 million customers through a network of 9000 branches and it offers either directly or through subsidiaries a wide range of banking services. The second phase of nationalization of Indian banks took place in the year 1980. Seven more banks were nationalized with deposits over 200 crores. Till this year, approximately 80% of the banking segment in India was under government ownership. After the nationalization of banks in India, the branches of the public sector banks rose to approximately 800% in deposits and advances took a huge jump by 11,000%. 1955: Nationalization of State Bank of India. 1959: Nationalization of SBI subsidiaries. 1969: Nationalization of 14 major banks. 1980: Nationalization of seven banks with deposits over 200 crores.
Scheduled Commercial Banks in India

The commercial banking structure in India consists of: Scheduled Commercial Banks in India Unscheduled Banks in India
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Scheduled banks in India constitute those banks which have been included in the second schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 42(6) (a) of the act. As on 30th June, 1999, there were 300 scheduled banks in India having a total network of 64,918 branches. The scheduled commercial banks in India comprise of State Bank of India and its associates (8), nationalized banks (19), foreign banks (45), private sector banks (32), co-operative banks and regional rural banks.
Scheduled banks in India means the State Banks of India constituted under the State Banks of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the banking companies (Acquisition and Transfer of Undertaking) Act, 1970 (5 of 1970). Or under section 3 of the banking companies ( Acquisition and Transfer of Undertakings) Act, 1980 ( 40 of 1980), or any other bank being a bank included in the second schedule to the Reserve Bank of India Act, 1934 ( 2 of 1934), but does not include a co-operative. Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank.
The following are scheduled Banks in India (Public Sector):

State Bank of India State Bank of Bikaner and Jaipur State Bank of Hyderabad State Bank of Indore
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State Bank of Mysore State Bank of Patiala State Bank of Saurashtra State Bank of Travancore Andhra Bank Allahabad Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Overseas Bank Indian Bank Oriental Bank of Commerce Punjab National Bank Punjab and Sind Bank Syndicate Bank Union Bank of India United Bank of India UCO Bank Vijaya Bank
The following are the Scheduled Banks in India (Private Sector)

y y y y
Vysya Bank Ltd Axis Bank Ltd Indusind Bank Ltd ICICI Banking Corporation Bank Ltd IBS, GURGAON Page 26
y y y y y
Global Trust Bank Ltd HDFC Bank Ltd Centurion Bank Ltd Bank of Punjab Ltd IDBI Bank Ltd
The following are the Scheduled Foreign Banks in India

y y y y y y y y
American Express Bank Ltd. ANZ Grid lays Bank Plc. Bank of America NT & SA Barclays Bank Plc Citi Bank N.C. Deutsche Bank A.G. Hongkong and Shanghai Banking Corporation Standard Chartered Bank.
Current Scenario of Indian Banking System

Indian economy is one of the fastest growing economies in the world. The countrys GDP is growing at an average rate of almost 7% during the last decade with the GDP growth rate touching 9.4% in the last year. The Indian banking industry also had its share in the growth of the Indian economy.
With the Indian economy moving on to a high growth trajectory, consumption levels soaring and investment riding high, the Indian banking sector is at a watershed. The industry has been growing faster than the real economy, resulting in the ratio of assets of commercial banks to GDP increasing to 92.5% at end-March 2007. The Indian banks have also been doing exceptionally well in the financial sector with the price-to-book value
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being second only to China.
Consequently, the degree of leverage enjoyed by the banking system, as reflected in the equity multiplier (measured as total assets divided by total equity), has increased from 15.2% at end March 2006 to 15.8 % at the end of March 2007.
Growth of the sector
A burgeoning economy, financial sector reforms, rising foreign investment, favorable regulatory climate and demographic profile has led to India becoming one of the fastest growing banking markets in the world. The overall banking industry's business grew at a CAGR of about 20 per cent from US$ 469.4 billion as of March 2002, to US$ 1171.29 billion by March 2007.
In the current fiscal, aggregate bank deposits increased by 23.8 per cent, year-on-year, as of January 4, 2008 as against 21.5 per cent a year ago. While aggregate demand deposits increased by 15.6 per cent, aggregate time deposits increased by 25.3 per cent in the same period, indicating migration from small savings schemes of the Government.
Similarly, aggregate deposits of the scheduled commercial banks (SCB), after growing by 17.8 per cent and 24.6 per cent in 2005-06 and 2006-07, rose by 25.2 per cent, year-on-year, as on January 4, 2008. In fact, the absolute increase of US$ 96.34 billion (14.6 per cent) in the current fiscal year up to January 4 2008 was higher than the US$ 70.59 billion (13.2 per cent) increase in the same period last year.
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Simultaneously, loans and advances of SCBs rose by over 30 per cent (i.e. 33.2 per cent in 2004-05, 31.8 per cent in 2005-06 and 30.6% cent in 2006-07) in the last three financial years, underpinned by the robust macroeconomic performance. The growth has continued in the current fiscal with non-food credit by SCBs increasing by 22.2 per cent, year-on-year, as on January 4, 2008.
Private Sector
Ever since the banking operations had been opened to the private sector in 1990s, the new private banks have been increasing its role in the Indian banking industry. Against the industry average growth of about 20 per cent in the past five years, the new private sector banks registered a growth of about 35 per cent per annum, growing from US$ 41.63 billion as of March 2002 to US$ 186.71 billion by March 2007.
Consequently, new private banks market share has increased from about 9 per cent in 2001-02 to 16 per cent as of March 2006-07. Foreign banks, which totaled 29 in June 2007, have also been expanding at a rapid pace. For example, India was the fastest growing market for Global banking major HSBC in 2006-07, with a growth rate of 64 per cent.
The balance sheet of private banks and foreign banks in India expanded by 38.7 per cent and 39.5 per cent during 2006-07, taking their combined share (along with private banks) in total assets of the banking sector to grow from 22.3 per cent at the end of March 2006 to 24.9 per cent by March 2007.
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Investment Banking
The flurry of mergers and acquisition deals by Indian corporate has boosted the investment banking revenues to a record high. Investment banking revenues from India crossed the US$ 1 billion mark for the first time in 2007 to US$ US$ 1.069 billion.
This is significantly higher than the US$ 400 million investment banking revenues recorded in 2006. Also, this surge in revenues has propelled India to become the third largest market for investment banking in Asia-Pacific in 2007.
Potential
While this growth has been very impressive, the potential banking market waiting to be tapped in India is still fairly huge. Out of the 203 million Indian households, three-fourths, or 147 million, are in rural areas and 89 million are farmer households. In this segment, 51.4 per cent have no access to formal or informal sources of credit, while 73 per cent have no access to formal sources of credit.
In fact, according to a report by Boston Consultancy Group, India has the second largest financially excluded households of about 135 million, which is next only to china. Also, about 60 million new households are expected to be added to India's bankable pool between 2005 and 2009. With such a large untapped market, the Indian banking industry is estimated to grow rapidly, faster than even china in the long run.
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Some of the high growth potential areas to be looked at are: the market for consumer finance stands at about 2%-3% of GDP, compared with 25% in some European markets, the real estate market in India is growing at 30% annually and is projected to touch $ 50 billion by 2008, the retail credit is expected to cross Rs 5, 70,000 crore by 2010 and huge SME sector which contributes significantly to Indias GDP.
Road Ahead Banks aspiring to become global must have a presence in India and other emerging markets, as they are set to become a major source of financial sector revenue and profit growth. As the Indian banking industry continues its rapid growth along with rise in financial services penetration in the Indian economy, the industry's profit is likely to simultaneously surge ahead. According to a report by Boston Consultancy Group, the profit pool of the Indian banking industry is estimated to increase to US$ 20 billion in 2010 and further to US$ 40 billion by 2015. Simultaneously, driven by the expansion of the middle class population. With such a favorable scenario, India is likely to emerge as the third largest banking hub in the world by 2040, says a Price Waterhouse Coopers report.
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Indian Banking: Strength & Weaknesses
Major Strength Areas * Regulatory Systems Economic Growth Rate Technological Advancement Risk Assessment Systems Credit Quality
Area to be geared up for future Growth. Diversification of markets beyond big cities Size of banks HR Systems Banking Infrastructure Labour Inflexibilities
High Transaction Costs
Indian Banking Sector
Turnaround success strategies
Strategies To Be Adopted For Creating World Class Banking System Consolidation Strict Corporate Governance Norms Regional Expansion (Both within India as well as Outside) Higher FDI limits FTA with countries where India has comparative advantage in banking sector
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New Business Opportunities With the interest income coming under pressure, banks are urgently looking for expanding fee-based income activities. Banks are increasingly getting attracted towards activities such as mutual funds and insurance policies offering credit cards to suit different categories of customers and services such as wealth management and equity trading. These are indeed proving to be more profitable for banks than plain vanilla lending and borrowing. The current policy environment enables a fair level of foreign participation even in the non-banking financial sector of the country.
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STANDARD CHARTERED BANK: BACKGROUND Standard chartered: leading the way in Asia, Africa and Middle East Standard Chartered Bank is a British bank headquartered in London with operations in more than seventy countries. It operates a network of over 1,700 branches and outlets (including subsidiaries, associates and joint ventures) and employs 73,000 people. The name Standard Chartered comes from the two original banks from which it was founded The Chartered Bank of India, Australia and China, and The Standard Bank of British South Africa.
The Chartered Bank of India, Australia & China Founded in 1853
Friendly Merger in 1969 to form Standard Chartered Bank
The Standard Bank of British South Africa Founded in 1862
It is listed on the London Stock Exchange and the Hong Kong Stock Exchange and is among the top 25 constituent members of the FTSE 100 Index. IBS, GURGAON Page 34
In its unique position as an international bank with strong franchise, Standard Chartered combines an in-depth knowledge of local markets with global product expertise to offer effective financial solutions. The bank capitalizes on its onshore presence across Asia, Africa and the Middle East to offer customers convenient and reliable access to the widest range of currency markets, to date local market information, country-specific global risk management strategies, and customized capital raising and liquidity management solutions.
Group chief executive peter sand The present CEO is PETER SAND he was nominated as the CEO in November 2006 Sands has been with the bank since 2002, and was most recently serving as Group Finance Director. Prior to his appointment to the Board of Standard Chartered PLC, Peter was a Director with worldwide consultants McKinsey & Co. Peter had been with McKinsey since 1988 where he worked extensively in the banking and technology sectors in a wide range of international markets. He was elected a partner of McKinsey in 1996 and became Director in 2000.
Standard Chartered Today

Today Standard Chartered is the world's leading emerging markets bank employing 30,000 people in over 500 offices in more than 50 countries primarily in countries in the Asia Pacific Region, South Asia, the Middle East, Africa and the Americas.
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The new millennium has brought with it two of the largest acquisitions in the history of the bank with the purchase of Grind lays Bank from the ANZ Group and the acquisition of the Chase Consumer Banking operations in Hong Kong in 2000. These acquisitions demonstrate Standard Chartered firm committed to the emerging markets, where it has a strong and established presence and where it sees their future growth.
Awards
Standard Chartered Bank has ended 2007 on a high note by bagging best bond house titles from three well-respected finance titles, fortifying its strengths and capabilities as a bond powerhouse in the key markets of Asia, Africa and the Middle East. Some of the awards which standard chartered received last year are
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Best Trade Finance Bank in Singapore, Best Transaction Bank in Korea - SC First Bank, Best Domestic Custodian in Korea - SC First Bank. best structured trade finance bank, best sub-custodian in Indonesia, Korea and Thailand, best trade finance bank in Singapore, best bank for liquidity management Africa. there are many more awards which the bank received for its good and efficient performance throughout the world.
Recent Acquisitions
In the year 2000 standard chartered plc was in news because of its acquisition of Grid lays bank. Standard Chartered Completes Acquisition Of American Express Bank For $823 Million. AEB is a wholly-owned subsidiary of AXP. Founded in 1919 and
headquartered in New York, this acquisition will Significantly enhance Standard Chartereds Financial Institutions transaction banking business by bringing both new client relationships and new capabilities to this key customer segment.
Standard Chartered Bank in India

The name is derived from Standard & Chartered. Standard Bank of British South Africa merged with Chartered Bank of India, Australia and China in 1969. Chartered Bank opened its first overseas branch in India, at Kolkata, on 12th April 1858. During that time Kolkata was the most important commercial city and was the hub of jute and indigo trades. The merger with the Standard Bank of British South Africa in 1969 and the acquisition of Grind lays Bank in 2000 were two key events that were have played an important role in making the Bank the largest international Bank in India. IBS, GURGAON Page 37
Mr. NEERAJ SWARUP is the present CEO of standard Chartered bank India. Mr. Swarup had been heading HDFC Bank's consumer banking business for the last four years. He was also associated with the Bank of America. Standard Chartered Bank is the largest international banking group in India with 83 branches in 33 cities. It also has 231 ATMs. The Bank is having a combined customer base of 2.5 million in retail banking and over 1200 corporate customers. Stan Charts Indian operations now accounts for 17% of its global revenues in 2007, making it the second largest contributor (with operating profit of $690 million) to the global revenues after Hong Kong. The key business of Standard Chartered Bank in India include consumer bankingmortgages, personal loans and wealth management- and wholesale banking, where the bank specializes in the provision of cash management, trade, finance, treasury and custody services.
Standard Chartered was the first to issue global credit card in India, the first to issue photo card, the first picture card and was the first credit card issuer to be awarded the ISO 9002 certification. Some other product innovations of Standard Chartered Bank in India include the Sap nay credit card, the international debit card that provides free access to over 1500 visa ATMs, a first in the banking industry, Mileage, an overdraft facility against the security of a car and smart credit, a personal line of credit for salaried customers.
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PRESENCE OF STANDARD CHARTERED BANK IN INDIA: 33 CITIES WITH MORE THAN 83 BRANCHES.
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MORE THAN BANKING Corporate Social Responsibility (CSR) is at the core of the values of Standard Chartered Bank. The Bank is committed to the communities and
environments in which it operates. The Bank strongly supports the trend towards delivering shareholder value in a socially, ethically and
environmentally responsible manner. Living with HIV is a global community initiative of Standard Chartered that is aimed at raising awareness of HIV/AIDS amongst employees through workshops and amongst stakeholders by providing thought leadership. Under Seeing is believing, a programme that aims to restore sight to one million people globally by 2007, the Bank has raised funds to help 8000 people to see.
In partnership with Sight Savers International and VISION2020 the Bank is now involved in two flagship projects at Vishakhapatnam and Muzaffarpur, both aimed at the elimination avoidable blindness. Furthermore, in support of the communities ravaged by the Asian Tsunami
Crisis in 2004 the Standard Chartered Group committed US$ 1 million to India. The Bank is utilizing these funds for the rehabilitation of two villages adopted near Chennai.
In
2004,
Standard
Chartered
initiated
the
phenomenally
successful
Standard Chartered Mumbai Marathon - an event dedicated to charity fund raising. The two marathons held so far have forged partnerships with customers and charities and deepened the Banks ties with the community, with over US$ 1 million being raised in 2005. IBS, GURGAON Page 40
Products offered by standard chartered
OPERATION
SME BANKING
COMMERCIAL BANKING
PERSONAL BANKING
INSURANCE
INVESTMENT SERVICES
LOANS
ACCOUNTS
ULIP
SAVINGS ACCOUNT
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ACCOUNTS
TERM
DEMAT
2-IN-1
SAVINGS
CURRENT
aaSaan
Parivaar
No Frills Account
aXcessPlus
Super Value
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PRODUCTS OFFERED
Standard Chartered bank provides different products and services in order to cater the needs of the customers which can be broadly classified into the following categories: 1. PERSONAL BANKING: To cater the diverse financial needs, Standard Chartered offers a wide range of premium banking products and services through its network of 83 branches in 33 cities across the country. As a privileged customer of this bank, the customers can always be assured of a banking service that is flexible enough to tailormake a product suite to take care of his specific banking needs.
2. SME BANKING: SME Banking provides integrated financial solutions to small and medium businesses, through a relationship management approach. Its customer focused product offerings include working capital finance, trade services, foreign exchange, and cash
management.
3. COMMERCIAL BANKING: Standard Chartered has maintained a long local presence, since 1858, with particular emphasis on relationship banking. Significant networks have been established with vendors and financial-related organizations to enable it to offer the customers a comprehensive range of flexible financial services, with special focus on transactional banking products. Supported by state-of-the-art operations, Standard Chartered is pro-active in improving every part of services. Electronic Delivery system has been put in place to ensure that transactions are handled speedily. It has its Cash Product
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Specialists and dedicated Customer Service Centers to provide its customers with effective solutions.
To fully understand the workings and functions of Standard Chartered Bank, the scope of this project has been limited to the detailed study of only three products offered by this bank under the above mentioned categories: 1. Savings Account : Personal banking 2. Unit Linked Insurance Plan (ULIP): Personal banking 3. Mutual Funds: Commercial banking
SAVINGS ACCOUNT
An account primarily opened for and operated by individuals, wherein the numbers of transactions are few and which give the customer liquidity, with the facility to earn some interest on the residual balances. For details of different saving accounts offered by StanC & comparison with different
banks a/s see annexure. Standard Chartered bank offers four types of Savings account catering to the needs of different customers namely: 1) Axcess Plus -Standard Chartered bank's aXcess Plus is an innovatory savings account that provides you with unparalleled aXcess to your money. The customer can get instant cash at over 1 Million ATMs across the world through the Visa network. And a globally valid Debit Card that lets you shop at over 326,000 outlets in India and at over 21 Million outlets across the world. Minimum average quarterly balance to be maintained is Rs.10,000.
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Unique Features: y y Free aXcess to cash anytime, anywhere, across India Free Unlimited Visa ATM transactions* (Cash withdrawal and balance enquiry) y y y y Free Standard Chartered Bank branch access across the country Free Doorstep Banking Free Demand Drafts/Pay Orders* (drawn at SCB locations) Free Payable at Par Chequebook
Other features are: y y y y y International debit card Phone banking Internet banking Extended banking hours 365 days branches open
The aXcess plus customers get FREE aXcess to cash withdrawals at over 6500 Visa ATMs in up to four free transactions per month. This is over and above unlimited free aXcess to all Standard Chartered Bank ATMs.
2) Super Value An account with lots of facilities and can be termed as an account much more than an ordinary saving account. You name it and they offer it. The unique SuperValue savings account is proof that the best things in life come free. With an average quarterly balance of just Rs. 50,000, you get a host of services from Standard Chartered absolutely free.
Free globally valid Debit cum ATM card.
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y y
Free doorstep banking. Free payable at par cheque books/ account statements/ demand drafts.
y y y
Free Bill Pay, Inter banks funds transfer. Free foreign inward remittance certificate. Free access to 6500 ATMs across India.
Other benefits of the Super Value account y Globally valid debit card - make purchases at over 12 million merchant outlets and withdraw cash at over 810,000 ATMs worldwide using funds from your account. y Multicity Banking - access your account even when you are out of town. y Enjoy extended banking hours at all our branches, and Speed Cheque Clearing and Metro Clearing facilities. y y 24-hour branches, 365 day branches available at select locations. Phone banking - available to you 365 days a year on a 24-hour basis in the metros and everyday of the week at other centers. y Internet banking - access and transact on your accounts through the Internet from any part of the world. y Free Investment Advisory Services to assist you in investing in a range of mutual funds. y Full suite of complimentary banking services including credit cards, loan products and capital market services.
3) No Frills Saving Accounts - No Frills Savings Account, a New account to meet your basic banking requirements
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You can now open an account with Standard Chartered Bank, with an average quarterly balance of as low as Rs. 250. Whats more you can avail of Anywhere Banking, by which you can access your account from any branch of Standard Chartered Bank in India. Unique features are; y y y Quarterly Average Balance, as low as Rs. 250 ATM card & Debit Card available 4 free transactions per month at any Standard Chartered Bank channel (Internet banking, Phone Banking, ATM & Branch) y Anywhere banking Access your account from any branch of Standard Chartered Bank. y y Access to Phone Banking and Internet Banking Free Cheque deposit at any SCB Branch or ATM.
Eligibility criteria This account is available to individual Resident Indian customers.
Account may be opened after being properly introduced in a manner approved by the Bank
4) aaSaan - Here's introducing Standard Chartered Bank's aaSaan savings account - the easy solution to all your banking needs. Its unique features are:y y No Minimum Balance requirement Free unlimited access to any SCB branch across the country for Customer in-person IBS, GURGAON Page 47
y y
Unlimited Free access to Standard Chartered Bank ATM's Up to 4 free cash withdrawal transactions per month at other domestic VISA ATMs.
Nominal quarterly fee of Rs. 100 (reversed if the Average Balance in the quarter is Rs 10,000 or more
Other Facilities y y y y y y International Debit Card Phone banking Net Banking Extended banking hours* Locker facility* Doorstep banking
To open an aaSaan account, you have to initially fund the account with Rs. 10,000 (Rs. Ten Thousand)
5) Parivaar- Parivaar is a unique Wealth Management Solution from Standard Chartered Bank that offers your family flexibility, convenience and essential tools for wealth accumulation and preservation.
Your family can maintain individual savings accounts with the benefit of clubbing balances in grouped accounts.
Anytime, anywhere access to accounts through ATMs, Phone Banking and Inter Net banking.
Option of Systematic Investment Plan (SIP), a well known long term IBS, GURGAON Page 48
wealth building tool that allows you to invest a fixed amount of money every month in specific mutual funds. This comes with a direct debit facility and avoids the need to remember dates and write cheques every month.
Globally valid ATM-cum-debit card can be used at 55,000 merchant outlets in India and 12 million outlets worldwide.
ULIP (Unit Linked Insurance Plan)
ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy which provides a combination of risk cover and investment. The dynamics of the capital market have a direct bearing on the performance of the ULIPs. ULIP is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). ULIP came into play in the 1960s and became very popular in Western Europe and Americas. The reason that is attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which it offers. As times progressed the plans were also successfully mapped along with life insurance need to retirement planning. In todays times, ULIP provides solutions for insurance planning, financial needs, financial planning for childrens future and retirement planning. A ULIP, as the name suggests, is a market-linked insurance plan. A ULIP is a IBS, GURGAON Page 49
unit linked insurance plan. This is the type of investment where the characteristics of insurance and mutual fund are combined. Some part of the money invested goes into the insurance cover and the remaining goes into an asset class. The main difference between a ULIP and other insurance plans is the way in which the premium money is invested. Premium from, say, an endowment plan, is invested primarily in risk-free instruments like government securities (gsecs) and AAA rated corporate paper, while ULIP premiums can be invested in stock markets in addition to corporate bonds and govt. securities.
Type of Funds
Most insurers offer a wide range of funds to suit ones investment objectives, risk profile and time horizons. Different funds have different risk profiles. The potential for returns also varies from fund to fund. The following are some of the common types of funds available along with an indication of their risk characteristics.
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General Description
Nature of Investments
Risk Category
Equity Funds
Primarily
invested
in Medium to High
company stocks with the general aim of
capital appreciation Income, Fixed Interest Invested in corporate Medium and Bond Funds bonds, securities fixed instruments Cash Funds Sometimes known as Low Money Market Funds government and other income
invested in cash, bank money instruments Balanced Funds Combining equity Medium deposits and
market
investment with fixed interest instruments
ULIPs offer a variety of options to the individual depending on his risk profile. For instance, an individual with an above-average risk appetite can choose a ULIP option that invests up to 60% of premium in equities. Likewise, an
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individual with a lower risk appetite can select a ULIP that invests up to 20% of premium in equities.
SUM ASSURED
Perhaps the most fundamental difference between ULIPs and traditional endowment plans is in the concept of premium and sum assured. When you want to take a traditional endowment plan, the question your agent will ask you are -- how much insurance cover do you need? Or in other words, what is the sum assured you are looking for? The premium is calculated based on the number you give your agent. With a ULIP it works in reverse. When you opt for a ULIP, you will have to answer the question -- how much premium can you pay?
Reasons why ULIPs score over endowment plans

Such has been the popularity of ULIPs in the recent past that they have outpaced the growth of regular endowment plans. We take a look at the most important reasons why ULIPs score over endowment plans. 1. The power of equity Simply put, ULIPs are life insurance plans, which have a mandate to invest upto 100% of their corpus in equities. While individuals have the choice to shift between equity and debt (explained later in this article), several studies have shown that equities are best equipped to deliver better returns compared to their fixed-return counterparts like bonds and gsecs. And given the fact that life insurance is a long-term contract, equity-oriented ULIPs augur well for the policyholder.
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2. Flexibility While ULIPs offer the opportunity to invest up to 100% in equity, it is also true that ULIPs provide individuals the flexibility to shift to up to 100% debt. It is entirely upon the individual how he wishes to allocate his premiums between equity and debt. This is not the case with endowment type plansindividuals can't choose their investment avenues and have to be content with the insurance company's investment decisions which revolve largely around debt. ULIPs are available in 3 broad variants: 'Aggressive' ULIPs, which invest upto 100% of their corpus in equities, 'Balanced' ULIPs which invest upto 60% of their corpus in equities and 'Conservative' ULIPs which invest up to 100% of their corpus in debt instruments and the money market instruments*. Individuals are free to decide where they want to invest their money. For example, individuals with an appetite for risk can invest their entire money in equities while conservative individuals have the option to park their money in balanced or conservative ULIPs. * The percentages given in the paragraph above may differ across life insurance companies. That apart, ULIPs also provide individuals with the flexibility of
terminating/resuming premiums, increasing/decreasing premiums and paying top-ups (i.e. a one-time sum over and above the regular premium) whenever possible. These options are not available in regular endowment plans. 3. Transparency For the first time, ULIPs introduced transparency into the manner in which life insurance products were being managed. This is something that was missing IBS, GURGAON Page 53
in conventional savings-based insurance products (like endowment/ moneyback/ pension plans). To understand why we are saying this, one has to first understand the structure of traditional endowment plans. Traditional
endowment plans have been opaque in more ways than one. To begin with, traditional endowment plans have invested a sizable portion of their corpus in debt instruments like gsecs and bonds. The quantum of money invested is not known. Individuals do not have access to portfolios of endowment plans so they never find out how much money is in debt/equities. Add to this the fact that the expenses, which form a sizable percentage of the premium in the first few years, are also not clear and you have a situation where the individual is 'investing' in life insurance purely on the basis of faith and little else! Unit linked plans brought transparency into the scheme of things. Today, if an individual wants to invest in a ULIP, he knows upfront what percentage of the premium is being invested, what are the charges being levied and where his monies are being invested. This is a welcome change for the policyholder. Another advantage ULIPs offer is that they enable insurance seekers to compare plans across companies and help him buy a plan that fits well into his portfolio. Also ULIPs disclose their portfolios at regular intervals, so you know exactly where your money is being invested. 4. TAX BENEFITS Taxation is one area where there is common ground between ULIPs and traditional endowment. Premiums in ULIPs as well as traditional endowment plans are eligible for tax benefits under Section 80C subject to a maximum limit of Rs 100,000. On the same lines, monies received on maturity on ULIPs and traditional endowment are tax-free under Section 10.
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5. Liquidity ULIPs offer liquidity to the individual. He can withdraw money anytime he wishes to once the initial years' premiums are paid. He will not be levied with any surrender charges i.e. he stands to get the full market value of his investments, net of charges, till date. This is unlike conventional endowment plans where individuals tend to lose out on surrender charges on surrendering their policies. Besides, part surrender is also allowed in ULIPs. Simply put, part surrender allows individuals to withdraw a part of their corpus and thus keep the policy alive, albeit with some adjustments. This helps individuals tide over a situation where they need cash but have few 'liquid' investments at their disposal. So does this mean that it is the end of the road for endowment plans? Not quite! Individuals need to understand the de-merits of investing in marketlinked products like ULIPs. The latter are susceptible to the vagaries of markets and can burn a hole in your portfolio over the short term. So if you can't withstand that kind of volatility, equity-oriented ULIPs are not the right investment option for you. Insurance seekers would do well to take into consideration their risk appetite as well as their overall financial portfolio before taking a final call on ULIP investments. The ideal option is to have a prudent mix of endowment and ULIPs depending on your preference for either long-term growth or stability.
CHARGES
Premium Allocation Charge This is a percentage of the premium appropriated towards charges before IBS, GURGAON Page 55
allocating the units under the policy. This charge normally includes initial and renewal expenses apart from commission expenses.
Mortality Charges These are charges to provide for the cost of insurance coverage under the plan. Mortality charges depend on number of factors such as age, amount of coverage, state of health etc Fund Management Fees These are fees levied for management of the fund(s) and are deducted before arriving at the Net Asset Value (NAV). Policy/ Administration Charges These are the fees for administration of the plan and levied by cancellation of units. This could be flat throughout the policy term or vary at a predetermined rate. Surrender Charges A surrender charge may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions. Fund Switching Charge Generally a limited number of fund switches may be allowed each year without charge, with subsequent switches, subject to a charge. Service Tax Deductions Before allotment of the units the applicable service tax is deducted from the risk portion of the premium.
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Investors may note, that the portion of the premium after deducting for all charges and premium for risk cover is utilized for purchasing units.
ULIP STANDARD CHARTERED The flexible Unit linked life insurance plans at Standard Chartered bank provides the opportunity to participate in market-linked returns while enjoying the valuable benefits of life insurance. Insurance Plans for Standard Chartered Bank customers is issued by Bajaj Allianz Life Insurance Company Limited.
BAJAJ ALLIANZ: Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Auto Limited and Allianz SE. Both enjoy a reputation of expertise, stability and strength. The Allianz Group is one of the leading global services providers in insurance, banking and asset management. With approximately 181,000 employees worldwide (as of December 31, 2007), the Allianz Group serves more than 80 million customers in about 70 countries. On the insurance side, Allianz is the market leader in the German market and has a strong international presence. In fiscal 2007 the Allianz Group achieved total revenues of over 102 billion euros. Allianz is also one of the worlds largest asset managers, with thirdparty assets of 765 billion euros under management at year end 2007. Bajaj Auto Ltd, the flagship company of the Rs80bn Bajaj Group is the largest manufacturer of two-wheelers and three-wheelers in India and one of the largest in the world. Bajaj Auto has a strong brand image & brand loyalty synonymous with quality & customer focus in India
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In the Indian market, together are committed to offer Insurance solutions that provide all the security needed for a family.
BAJAJ ALLIANZ NEW SECURE FIRST PLAN Bajaj Allianz New Secure First offers the unique option of combining the protection of life insurance with the attractive prospect of investing in securities. It provides you with an opportunity to have a direct stake in the performance of financial market. . By choosing an appropriate premium level and term, individual can match the maturity date of the plan to a specific savings need such as childs education, wedding, retirement etc. This is the one-stop solution to investment, tax-saving and protection needs. The key features of New Secure First Plan are: y It is a unit linked plan with a minimum of 5 years and maximum maturity age 70 y y Guaranteed death benefit: Value of units plus Sum Assured. Choice of 5 investment funds today with flexible investment
management: you can change funds at any time and also invest in the newer funds that would be introduced from time to time. y y Attractive investment alternative to fixed interest securities Provision for full/partial Withdrawl any time after three years from commencement if three full years premium are paid. y Unmatched flexibility to match changing needs of customer to manage investments, pay top-ups, and cash withdrawal option.
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Other benefits are; y Maturity benefit- On maturity, the value of units in the fund will be paid out and policy will terminate. y Option of choosing from a host of additional rider benefits:
UL Accidental Death Benefit, UL Accidental Permanent Total/Partial Disability Benefit, UL Critical Illness; Benefit and UL Hospital Cash Benefit y y Increase savings by paying top up premiums Flexibility to increase / decrease the regular premiums
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MUTUAL FUNDS
A mutual fund is a pool of money, collected from investors, and is invested according to certain investment objectives. A mutual fund uses the money collected from the investors to buy those assets which are specifically permitted by its stated investment objective. The funds assets are owned by the investors in the same proportion as their contribution bears to the total contributions of all investors put together.
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank
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the. The history of mutual funds in India can be broadly divided into four distinct phases First Phase 1964-87 GROWTH OF UNIT TRUST OF INDIA Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management. Second Phase 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.
Third Phase 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and IBS, GURGAON Page 61
governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.
Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of IBS, GURGAON Page 62
consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes. The graph indicates the growth of assets over the years.
CHARGES
The Asset Management Companies (AMCs) managing the Mutual Funds levy a load as a percentage of NAV at the time of entry into the Schemes or at the time of exiting from the Schemes. Entry Load - It is the load charged by the fund when an investor invests into the fund. It increases the price of the units to more than the NAV and is expressed as a percentage of NAV. Exit Load - It is the load charged by the fund when an investor redeems the units from the fund. It reduces the price of the units to less than the NAV and is expressed as a percentage of NAV.
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Cost of Churning/Turnover cost - It refers to the costs associated with the churning (or changes made to the holdings) of the portfolio. Portfolio changes have associated costs of brokerage, custody fees, transaction fees and registration fees, which lower the returns. The quantum depends on the management style of the fund manager. Expense Ratio - The Expenses of a mutual fund include management fees and all the fees associated with the fund's daily operations. Expense Ratio refers to the annual percentage of fund's assets that is paid out in expenses.
Tax
Capital Gains Tax- The profit realizations on sale of securities and certain other capital assets (including units of mutual funds) are called capital gains. The gains can be classified into long-term or short-term depending on the period of holding of the asset and are charged to tax at different rates. Gains on mutual fund units held for a period of 12 months or more are long-term gains. These gains are taxable. Dividend Distribution Tax The Mutual Fund schemes distributing dividends on their units to the investors attract a distribution tax as per tax laws. Securities Transaction Tax AMCs managing the portfolio have to pay STT on transaction (buying/selling) of different securities in the stock market. Presently the tax rate is 0.025%.
Pointers to Mutual Fund Performance Mutual Fund industry today, with about 34 players and more than five hundred schemes, is one of the most preferred investment avenues in India. However, with a plethora of schemes to choose from, the retail investor IBS, GURGAON Page 64
faces problems in selecting funds. Factors such as investment strategy and management style are qualitative, but the funds record is an important indicator too. Though past performance alone can not be indicative of future performance, it is the only quantitative way to judge how good a fund is at present. Therefore, there is a need to correctly assess the past performance of different mutual funds. Quite simply then a fund generating more returns than the other is considered better than the other. But this is just half the story. Return alone should not be considered as the basis of measurement of the performance of a mutual fund scheme, it should also include the risk taken by the fund manager because different funds will have different levels of risk attached to them.
Risk associated with a fund can be defined as fluctuations in the returns generated by it. The higher the fluctuations in the returns of a fund during a given period, higher will be the risk associated with it. These fluctuations in the returns generated by a fund are resultant of two guiding forces. First, general market fluctuations affecting all the securities present in the market are called market risk or systematic risk and second, fluctuations due to specific securities present in the portfolio of the fund, called unsystematic risk. The Total Risk of a given fund is sum of these two and is measured in terms of standard deviation of returns of the fund.
Systematic risk is measured in terms of Beta, which represents fluctuations in the NAV of the fund vis--vis market. The more responsive the NAV of a mutual fund is to the changes in the market; higher will be its beta. Beta is calculated by relating the returns on a mutual fund with the returns in the IBS, GURGAON Page 65
market. While unsystematic risk can be diversified through investments in a number of instruments, systematic risk cannot. By using the risk return relationship, we try to assess the competitive strength of the mutual funds vis--vis one another in a better way. It should be appreciated that there is a level of risk that a fund has taken to generate this return. So what is really relevant is not just performance or returns. What matters therefore are Risk Adjusted Returns (RAR). The only caveat whilst using any risk-adjusted performance is the fact that their clairvoyance is decided by the past. Each of these measures uses past performance data and to that extent are not accurate indicators of the future.
There are different statistical parameters available on which a fund may be analyzed. These are:
1. Standard Deviation
The most basic of all measures- Standard Deviation allows evaluating the volatility of the fund. Alternatively, it allows measuring the consistency of the returns.
Volatility is often a direct indicator of the risks taken by the fund. The standard deviation of a fund measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return, the average return of a fund over a period of time.
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A security that is volatile is also considered higher risk because its performance may change quickly in either direction at any moment.
A fund that has a consistent four-year return of 3%, for example, would have a mean, or average, of 3%. The standard deviation for this fund would then be zero because the fund's return in any given year does not differ from its four-year mean of 3%. On the other hand, a fund that in each of the last four years returned -5%, 17%, 2% and 30% will have a mean return of 11%. The fund will also exhibit a high standard deviation because each year the return of the fund differs from the mean return. This fund is therefore more risky because it fluctuates widely between negative and positive returns within a short period. 2. Beta () Beta is a fairly commonly used measure of risk. It basically indicates the level of volatility associated with the fund as compared to the benchmark. So quite naturally the success of Beta is heavily dependent on the correlation between a fund and its benchmark. Thus if the fund's portfolio doesn't have a relevant benchmark index then a beta would be grossly inadequate.
A beta that is greater than one ( >1) means that the fund is more volatile than the benchmark, while a beta of less than one ( <1) means that the fund is less volatile than the index. A fund with a beta very close to 1 ( ~1) means the fund's performance closely matches the index or benchmark.
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If, for example, a fund has a beta of 1.03 in relation to the BSE Sensex, the fund has been moving 3% more than the index. Therefore, if the BSE Sensex increased 10%, the fund would be expected to increase 10.30%. Investors expecting the market to be bullish may choose funds exhibiting high betas, which increase investors' chances of beating the market. If an investor expects the market to be bearish in the near future, the funds that have betas less than 1 are a good choice because they would be expected to decline less in value than the index. 3. R-Square
The success of Beta is dependent on the correlation of a fund to its benchmark or its index. Thus whilst considering the beta of any security, investors should also consider another statistic- R squared that measures the Correlation. The R-squared of a fund advises investors if the beta of a mutual fund is measured against an appropriate benchmark. Measuring the correlation of a fund's movements to that of an index, R-squared describes the level of association between the fund's volatility and market risk, or more
specifically, the degree to which a fund's volatility is a result of the day-today fluctuations experienced by the overall market. R-squared values range between 0 and 1, where 0 represents no correlation and 1 represents full correlation. If a fund's beta has an R-squared value that is close to 1, the beta of the fund should be trusted. On the other hand, an R-squared value that is less than 0.5 indicates that the beta is not particularly useful because the fund is being compared against an
inappropriate benchmark.
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4. Alpha
Alpha = (Fund return-Risk free return) - Funds beta *(Benchmark returnrisk free return) Alpha is the difference between the returns one would expect from a fund, given its beta, and the return it actually produces. An alpha of -1.0 means the fund produced a return 1% higher than its beta would predict. An alpha of 1.0 means the fund produced a return 1% lower. If a fund returns more than its beta then it has a positive alpha and if it returns less then it has a negative alpha. Once the beta of a fund is known, alpha compares the fund's performance to that of the benchmark's risk-adjusted returns. It allows you to ascertain if the fund's returns outperformed the market's, given the same amount of risk. The higher a funds risk level, the greater the returns it must generate in order to produce a high alpha. Normally one would like to see a positive alpha for all of the funds owned. But a high alpha does not mean a fund is doing a bad job nor is the vice versa true as alpha measures the out performance relative to beta. So the limitations that apply to beta would also apply to alpha.
Alpha can be used to directly measure the value added or subtracted by a fund's manager. The accuracy of an alpha rating depends on two factors: 1) The assumption that market risk, as measured by beta, is the only risk measure necessary. 2) The strength of fund's correlation to a chosen benchmark such as the BSE Sensex or the NIFTY. IBS, GURGAON Page 69
5. Sharpe Ratio
Sharpe Ratio= Fund return in excess of risk free return/ Standard deviation of Fund In case funds have low correlation with indices or benchmarks, they should be evaluated using the Sharpe ratio. Since it uses only the Standard Deviation, which measures the volatility of the returns there is no problem of benchmark correlation. The higher the Sharpe ratio, the better a funds returns relative to the amount of risk taken.
Performance of Diversified Funds
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Sharpe ratios are ideal for comparing funds that have a mixed asset classes. That is balanced funds that have a component of fixed income offerings.
ADVANTAGES OF INVESTING IN MUTUAL FUNDS

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Flexibility: The investments pertaining to the Mutual Fund offers the public a lot of flexibility by means of dividend reinvestment, systematic investment plans and systematic withdrawal plans.
Affordability: The Mutual funds are available in units. Hence they are highly affordable and due to the very large principal sum, even the small investors are benefited by the investment scheme.
Liquidity: In case of Open Ended Mutual Fund schemes, the investors have the option of redeeming or withdrawing money at any point of time at the current rate of net value asset.
Diversification: The risk pertaining to the Mutual Funds is quite low as the total investment is distributed in several industries and different stocks.
Professional Management: The Mutual Funds are professionally managed. The experienced Fund Managers pertaining to the Mutual Funds examine all options based on research and experience.
Potential of return: The Fund Managers of the Mutual Funds gather data from leading economists and financial analysts. So they are in a better position to analyze the scopes of lucrative return from the investments.
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Low Costs: The fees pertaining to the custodial, brokerage, and others is very low.
Regulated for investor protection: The Mutual Funds sector is regulated by the Securities Exchange Board of India (SEBI) to safeguard the rights of the investor.
DISADVANTAGES OF INVESTING IN MUTUAL FUNDS: The Drawbacks of Mutual Funds are the major obstacles for the growth of the same. Management risks, trading limitations and absence of taxes are some of the major drawbacks of mutual funds.
Fees and commissions: The Mutual funds charge administrative fees to meet the daily expenses. Many funds charge brokerage or 'loads' to pay financial planners or financial consultants, brokers. In case a shareholder does not use the services of financial adviser, he still has to pay a sales commission.
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No Guarantees: All investments bear risk factors. The Mutual Funds are no different. It depends on the stock market. A fall in the stock market would trigger a fall in the value of the mutual fund shares. Although the risk factor pertaining to Mutual funds are much lower compared to Mutual Funds.
Inefficiency of Cash Reserves: The Mutual Funds maintain big cash reserves, for situations such as a number of large withdrawals. The investors are provided with liquidity, and a major portion of the financial resources is maintained as cash, and it is not invested in some assets.
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Management risk: The investment pertaining to the Mutual Funds depends on the fund manager and his selection of the mutual fund portfolio, which is based on speculation. If things do not go as expected, the investments may not earn enough money.
Taxes: The proceeds from the sale of mutual funds are taxable, even if the same is reinvested in mutual funds.
No Insurance: The Mutual funds are regulated by the central government. However mutual funds are still not insured against losses.
Trading Limitations: The Mutual Funds usually have high liquidity, but most of the mutual funds, such as open-ended funds, are bought or sold at the end of the day
Loss of Control: In case, if the mutual funds are managed by the investor himself, the portfolio management may go bad and have an adverse effect on the earnings from the investment.
TYPES OF MUTUAL FUNDS

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By Structure
o o o
Open - Ended Schemes Close - Ended Schemes Interval Schemes
By Investment Objective
o o o o
Growth Schemes Income Schemes Balanced Schemes Debt Schemes
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Money Market Schemes
Other Schemes
o o o
Tax Saving Schemes Load & No Load Schemes Special Schemes

Index Schemes Sector Specific Scheme Gilt Funds
Open-ended Funds Open-ended or open mutual funds are much more common than closed-ended funds and meet the true definition of a mutual fund a financial intermediary that allows a group of investors to pool their money together to meet an investment objective to make money! An individual or team of professional money managers manage the pooled assets and choose investments, which create the funds portfolio They are established by a fund sponsor, usually a mutual fund company, and valued by the fund company or an outside agent. This means that the funds portfolio is valued at "fair market" value, which is the closing market value for listed public securities. An open-ended fund can be freely sold and repurchased by investors.
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Buying and Selling: Open funds sell and redeem shares at any time directly to shareholders. To make an investment, you purchase a number of shares through a representative, or if you have an account with the investment firm, you can buy online, or send a check. The price you pay per share will be based on the funds net asset value as determined by the mutual fund company. Open funds have no time duration, and can be IBS, GURGAON Page 74
purchased or redeemed at any time, but not on the stock market. An open fund issues and redeems shares on demand, whenever investors put money into the fund or take it out. Since this happens routinely every day, total assets of the fund grow and shrink as money flows in and out daily. The more investors buy a fund, the more shares there will be. There's no limit to the number of shares the fund can issue. Nor is the value of each individual share affected by the number outstanding, because net asset value is determined solely by the change in prices of the stocks or bonds the fund owns, not the size of the fund itself. Some open-ended funds charge an entry load (i.e., a sales charge), usually a percentage of the net asset value, which is deducted from the amount invested.
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Advantages: Open funds are much more flexible and provide instant liquidity as funds sell shares daily. You will generally get a redemption (sell) request processed promptly, and receive your proceeds by check in 3-4 days. A majority of open mutual funds also allow transferring among various funds of the same family without charging any fees. Open funds range in risk depending on their investment
strategies and objectives, but still provide flexibility and the benefit of diversified investments, allowing your assets to be allocated among many different types of holdings. Diversifying your investment is key because your assets are not impacted by the fluctuation price of only one stock. If a stock in the fund drops
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in value, it may not impact your total investment as another holding in the fund may be up. But, if you have all of your assets in that one stock, and it takes a dive, youre likely to feel a more considerable loss.
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Risks: Risk depends on the quality and the kind of portfolio you invest in. One unique risk to open funds is that they may be subject to inflows at one time or sudden redemptions, which leads to a spurt or a fall in the portfolio value, thus affecting your returns. Also, some funds invest in certain sectors or industries in which the value of the in the portfolio can fluctuate due to various market forces, thus affecting the returns of the fund.
Closed-ended Funds
Close-ended or closed mutual funds are really financial securities that are traded on the stock market. Similar to a company, a closed-ended fund issues a fixed number of shares in an initial public offering, which trade on an exchange. Share prices are determined not by the total net asset value (NAV), but by investor demand. A sponsor, either a mutual fund company or investment dealer, will raise funds through a process commonly known as underwriting to create a fund with specific investment objectives. The fund retains an investment manager to manage the fund assets in the manner specified.
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Buying and Selling: Unlike standard mutual funds, you cannot simply mail a check and buy closed fund shares at the calculated net asset value price. Shares are purchased in the open market
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similar to stocks. Information regarding prices and net asset values are listed on stock exchanges, however, liquidity is very poor. The time to buy closed funds is immediately after they are issued. Often the share price drops below the net asset value, thus selling at a discount. A minimum investment of as much as $5000 may apply, and unlike the more common open funds discussed below, there is typically a five-year commitment.
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Advantages: The prospect of buying closed funds at a discount makes them appealing to experienced investors. The discount is the difference between the market price of the closed-end fund and its total net asset value. As the stocks in the fund increase in value, the discount usually decreases and becomes a premium instead. Savvy investors search for closed-end funds with solid returns that are trading at large discounts and then bet that the gap between the discount and the underlying asset value will close. So one advantage to closed-end funds is that you can still enjoy the benefits of professional investment management and a diversified portfolio of high quality stocks, with the ability to buy at a discount.
Risks: Investing in closed-end funds is more appropriate for seasoned investors. Depending on their investment objective and
underlying portfolio, closed-ended funds can be fairly volatile, and their value can fluctuate drastically. Shares can trade at a hefty discount and deprive you from realizing the true value of your shares. Since there is no liquidity, investors must buy a fund with
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a strong portfolio, when units are trading at a good discount, and the stock market is in position to rise.
Equity
An equity fund can invest in a large-cap, mid-cap or a small-cap stock. You might have heard these words being thrown around rather liberally by all the new funds on offer. 'Cap' refers to market capitalization (Mcap) of a stock. M-cap is defined as the total market value of the equity of a company. For example, if a company has 1,000 shares outstanding and the price of each share is Rs 20, the market value of the total equity of the company is Rs 20,000 (1,000*20). To exemplify, the market capitalization of Reliance is approx Rs 200,000 crore (Rs 2,000 billion), while that of Hero Honda is around Rs 15,000 crore (Rs 150 billion). Large cap, hence, refers to companies which have a large market capitalisation (usually above Rs 5,000 crore). Mid-cap refers to
companies whose market value lies between Rs 1,000 crore to Rs 5,000 crore. Any company with market capitalization of less than Rs 1,000 crore is called a small cap company. Now different fund houses have different definitions of where a 'cap' ends and where the other begins but these are rough bench-marks. One of the biggest selling points currently of the new fund offers is that the small cap companies of today will increase in value so much that they will become the next mid-cap or large-cap companies. Looking at managing equities differently, we say that the fund manager may pick a growth or a value stock. Growth companies are typically ones
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which are witnessing high amount of growth in their profits (due to growth in underlying demand, increase in prices, new technology, etc). These firms command a valuation which is superior to firms with a lower growth potential. Value companies, on the other hand, are in mature industries where they offer more stable cash flows and a reasonable valuation to buy them. Note that in a market downturn, a growth stock can become a value stock if it is available cheap! A fund manager may decide to invest exclusively in growth or value stocks or in a combination of both.
Debt
Debt funds can similarly be classified in to long, medium and short tenor funds. While the definitions are flexible again, long funds typically invest in instruments with maturity greater than 5 years, while short-term funds invest in instruments with less than one year of maturity; mediumterm funds invest in the 1-year to 5-year range. Note that the longer the duration (roughly average maturity) of the investments, the more sensitive it is to interest rate movements. Also remember that the price of bonds varies inversely with interest rates. On the other axis, a debt fund can invest in high quality instruments like government of India bonds, bonds issued by healthy PSUs, top-notch corporate, etc. It can progressively lower its investment quality by investing in not-so-stable corporate or in fixed deposits of co-operative banks. The advantage of lowering credit quality is higher expected returns.
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Balanced Fund
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 40-60% 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.
Money Market or Liquid Fund These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, Certificates of deposit, commercial paper and inter-bank call money, Government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short Periods.
Gilt Fund
These funds invest exclusively in government securities. Government Securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.
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Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges.
Load Funds
A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history.
No-Load Funds
A No-Load Fund is one that does not charge a commission for entry or exit .That is, no commission is payable on purchase or sale of units in the fund .The advantage of a no load fund is that the entire corpus is put to work.
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Other Special Schemes:
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NAV Scheme 1. ABN AMRO Tax Advantag e Plan ABN AMRO AMC OBJ. Dt. NAV Wk Mth Qtr 1 Yr 3 Yrs Inceptn
21Equity- AprELSS 08 2114.36 5.86 13.87 12.4 12.65 -NA12.55
2. BOBELSS 96 3. Birla Equity Plan 4. Canara Robeco Equity Tax Saver - 93 5. DBS Chola Tax Saver Fund 6. DSP Merrill Lynch Tax Saver Fund
Equity- AprBOB ELSS 08 21Equity- AprBirla ELSS 08 24.1 4.37 9.55
5.97 23.95 26.15 17.3
12.51 3.99 10.71 5.37 14.89 31.56 30.26
21Equity- AprCanbank ELSS 08 16.67 5.64 -7.7 17.7 3.78 25.95 11.56
21Equity- AprChola ELSS 08 14.32 7.19 14.74 0.07 7.38 -NA15.29
21DSP Merrill Equity- AprELSS 08 13.74 6.24 14.11 4.62 35 -NA28.77
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Investment Objective & Portfolio Mgmt. 177. DWS Tax Saving Fund Deutsche Equity- AprELSS 08 218. Escorts Tax Plan 9. Fidelity Tax Advantag e Fund 10.Franklin India Taxshield Templeton ELSS Fidelity Equity- AprEscorts ELSS 08 54.81 2.14 3.2 4.26 25.74 33.29 23.63 13.78 5.45 11.7 19.8 32.5 -NA11.49
21Equity- AprELSS 08 21Equity- Apr08 21154.6 5.64 11.18 3.15 22.6 32.1 35.41 15.44 5.62 11.48 2.03 19.52 -NA21.91
11.HDFC Tax Saver 96 12.HSBC Tax Saver Equity Fund 13.ICICI Prudential Tax Plan 14.ING Vysya Tax Savings Fund
Equity- AprHDFC ELSS 08 157.6 4.14 9.86
7.05 10.88 31.9 40.49
21Equity- AprHSBC ELSS 08 21Equity- AprPrudential ELSS 08 101.8 6.83 17.75 1.41 16.13 28.75 28.93 11.11 4.52 9.05 11.1 11.33 -NA7.42
21Equity- AprING ELSS 08 27.02 6.17 15.27 3.81 3.23 28.41 28.17
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15.J M Equity Tax Saver Fund Series I 16.Kotak Tax Saver Scheme Kotak JM
21Equity- AprELSS 08 21Equity- AprELSS 08 2117.14 5.67 10.82 -6.1 16.62 -NA25.02 11.13 7.62 13.42 27.5 5.26 -NA6.15
17.LICMF Taxplan 18.Libra Taxshield 96 19.Lotus India Tax Plan 20.OptiMix Retireinve st FundSerie sI 21.Principal Tax Savings Fund 22.Reliance Tax Saver (ELSS) Fund Reliance Principal ING Lotus Taurus LIC
Equity- AprELSS 08 21Equity- AprELSS 08 21Equity- AprELSS 08 12.66 4.03 8.3 7.32 33.33 -NA18.69 27.18 6.3 22.65 3.34 59.38 26.66 12.5 28.3 6.24 10.91 -5.3 10.42 20.71 10.88
21Equity- AprELSS 08 85.69 6.46 11.53 11.7 20.62 36.89 24.05
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23.SBI Magnum Tax Gain 24.Sahara Tax 97 25.Standard Chartered Tax Saver (ELSS) Fund 26.Sundaram BNP Paribas Taxsaver Sundaram Stanchart Gain Sahara SBI
21Equity- AprELSS 08 21Equity- AprELSS 08 26.48 5.71 11.27 3.79 29.98 34.53 31.77 53.37 4.75 10.25 5.29 20.06 42.12 22.98
21Equity- AprELSS 08 35.5 4.99 10.55 2.94 28.84 38.79 26.17
27.Tata
Tax
21Tata Mutual Equity- AprELSS 08 47.34 3.66 10.33 4.77 10.37 23.66 27.41
Saving Fund 28.UTI Equity Tax Saving Plan-2000
21Equity- AprUTI ELSS 08 35.87 5.1 9.96 -4.4 20.05 25.42 24.01
Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity Linked Savings Schemes IBS, GURGAON Page 86
(ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity oriented scheme.
Sector specific funds/schemes These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the Performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert. The graph below shows the risk and return from various kinds of funds. there are certain funds where the return is more but at the same time the risk associated is more.
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Equity Linked Savings Scheme A special product offered by mutual funds. These schemes invest in equity i.e. shares and generally have a lock-in period of three years. Balanced Funds These funds invest part of their corpus into Debt Instruments which give a fixed rate of return and the remaining part of the corpus into Equity giving a high rate of return. Thus, overall the balanced funds give a moderate rate of return with lower risk as compared to the pure equity funds. IBS, GURGAON Page 88
NA V Dat Scheme ABN RO Dual Advant age Fund Plan B Series 1Regula r 1. BOB Balanc e Fund 2. Bench mark Split Capital Fund Preferr ed Units Benc hmar k Balanc ed 16Apr -08 142. 49 1.6 0.1 11. 13. 9 8 1 58 -NA14.32 BOB ABN AMR O Balanc ed 21Apr -08 21Balanc ed Apr -08 27.2 7 9.79 3.2 3.3 2.9 9 6 7 3.8 2.4 11. 21. 9 8 1 4 19.8 6 24.48 1.2 9 -NA-2.23 AMC OBJ. e NAV Wk Mt h Qtr 1 Yr 3 Yrs Incept n
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(Class A)
3. Birla Balanc e Fund 4. Birla Sun Life 95 Fund 5. Canara Robec o Balanc e - II 6. DSP Merrill Lynch Balanc ed Fund 7. Escort s Balanc ed Fund DSP Merri ll Canb ank Birla Birla
21Balanc ed Apr -08 31.4 6 3.4 7.5 2.2 5 9 1 12. 37 21.7 6 14.52
21Balanc ed Apr -08 211. 39
5.7 6.1 8.2 1 2 2 17. 33 26.8 8
26.27
21Balanc ed Apr -08 44.4 6 2
8.1 0.2 8 2 20. 63 31.9 9 10.4
17Balanc ed Apr -08 48.6 7 3.1 7.4 0.8 9 5 2
74. 8 30.4 3 3.33
21Escor Balanc ts ed Apr -08 57.1 3
1.9 4.1 6.3 7 9 4 21. 4 29.6 3 28.02
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8. Escort s Opport unities Fund 9. FT India Balanc ed Fund 10. HDF C Balanc ed Fund 11. HDF C Pruden ce Fund 12. ICIC I Pruden tial Balanc ed Fund Prud Balanc 21Apr -08 38.5 1 3.5 6.1 3.1 8 2 2 10. 03 25.2 7 16.36 HDF C Balanc ed 21Apr -08 132. 07 2.8 8.1 6.0 1 8 9 15. 51 29.2 6 19.88 HDF C Balanc ed 21Apr -08 36.0 4 4.5 9.8 0.8 7 2 7 16. 78 21.9 1 18.34 Tem pleto n Balanc ed 21Apr -08 39.3 9 3.8 7.4 3.2 1 4 7 18. 39 27.8 18.03 Escor Balanc ts ed 21Apr -08 28.5 8 1.5 7.4 1 13. 55 14.4 2 16.99
0.2 2
ential ed
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13. ICIC I Pruden tial Blende d Plan A 14. ICIC I Pruden tial Blende d Plan B 15. ING Vysya Balanc ed Fund 16. J M Balanc JM ed ING Balanc ed 21Apr -08 22.1 7.2 3.1 4.1 8 1 18. 26 24 10.49 Prud Balanc 21Apr -08 12.3 9 0.1 0.4 1.0 5 6 9 9.6 8 -NA7.68 Prud Balanc 21Apr -08 12.6 1 0.0 0.5 1.0 3 2 9 8.8 5 -NA8.35
ential ed
ential ed
Balanc ed Fund 17. Kota k Balanc e 18. LIC MF Kota k
21Apr -08 25.4 5
4.7 11. 7.2 9 1 2 8.4 9 25.1 16.79
21Balanc ed Balanc LIC ed Apr -08 21Apr 22.6 2 53.7 9
18.5 2 25.7 9 3.11 17.75
3.8 9.3 19. 4.2 7 6 8 6.6 9 24. 4
5.5 10. 9 71
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Balanc ed Fund 19. Princ ipal Balanc ed Fund 20. SBI Magnu m Balanc ed Fund 21. Sun daram BNP Pariba s Balanc ed Fund 22. Tata Balanc ed Fund 23. Tata Young Citizen Sund aram Balanc ed SBI Balanc ed Princi Balanc pal ed
-08
21Apr -08 26.4 8
7.1 2.7 3.6 6 5 21. 39 22.8 8 12.49
21Apr -08 42.0 7
3.0 6.9 2.8 4 7 9 18. 5 31.4 7 20.57
21Apr -08 38.8 1
3.8 6.6 2.3 3 2 8 17. 61 24.3 6 18.9
Tata Mutu al Tata Mutu al Balanc ed Balanc ed
21Apr -08 21Apr -08 15.9 2 61.0 5 4
8.4 5.2 8 6 1.7 3.2 3.3 1 8 2 5.7 9 16.6 7 15.67 18. 91 27.0 1 18.78
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s Fund
24. Tem pleton India Childre n`s Asset Plan Gift 25. UTI Balanc ed Fund 26. UTI Unit Linked Insura nce Plan (US) 1971 27. UTI VIS ILP UTI UTI Balanc ed 21Apr -08 21Balanc ed Apr -08 17.1 5 3.9 9 0.0 7.7 2 3.8 4 15.1 3 16.5 8 2.8 1.2 7 1.3 17. 04 11.3 8 10.09 UTI Balanc ed Tem pleto n Balanc ed 21Apr -08 34.9 3.6 5 1.7 8.1 6 11. 51 18.8 3 13.89
21Apr -08 63.4 1
3.8 8.6 2.3 8 3 4 15. 91 21.4 2 15.19
12.07
GILT FUNDS
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NAV Scheme AMC OBJ. Date NAV 211. UTI Fund 2. Templeton India Govt.Sec.Fun d Composite Plan Templeton Gilt 21Apr08 213. Libra Fund Gilt AprTaurus Gilt 08 214. Tata High Fund 5. Sundaram BNP Paribas Sundaram Gilt Gilt Tata Mutual Gilt Apr08 21Apr08 14.04 -0.1 0.2 0.9 13.41 -0.03 1.19 1.1 8.1 G-SEC AprUTI Gilt 08 Week Mth Qtr 1 Yr
3 Yrs
20.26 -0.38 1.74 1.82 5.85
4.74
26.43 -0.02 0.84 0.74 3.82
5.7
1.21
15.44 -0.11 0.37 0.04 8.11
5.44
Gilt Fund
10.01 4.09
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6. Grindlays Govt.Sec.Fun d P F Stanchart Gilt
21Apr08 2112.31 0.25 0.55 0.07 9.98 7.39
Regular
7. Sahara Fund
Gilt
AprSahara Gilt 08 21AprSBI Gilt 08 18.23 0.12 5.17 13.41 0.17 0.58 1.12 5.24 5.65
8. SBI Magnum Gilt Long
Term Plan 9. Reliance Gilt Securities Fund - Short Term Plan 10. ICICI
0.49 1.81 5.72
21AprReliance Gilt 08 12.06 -0.2 4.15
1.19 1.06 6.92
Prudential Gilt fund Prudential Gilt
21Apr08 6.07
Investment Plan 11. ICICI
24.08 -0.13 3.09 5.25 7.76
Prudential Gilt fund Prudential Gilt
21Apr08 19.44 -0.01 0.63 0.09 8.89 5.99
Treasury Plan
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12.
ICICI 21AprPrudential Gilt 08 7.07
Prudential Gilt fund
Investment Plan - PF 13. al Govt.Sec.Fun d-Wholesale Plan 14. al Govt.Sec.Fun d-Investment Plan 15. India Fund Lotus Gilt Short Princip Princip
12.78 -0.28 2.99 4.91 7.3
21AprPrincipal Gilt 08 14.68 0.13 0.56 1.22 9.18 4.69
21AprPrincipal Gilt 08 17.54 0.07 6.09
1.96 2.85 -NA-
21AprLotus Gilt 08 9.97 -NANA-
Duration Plan - Institutional 16. India Fund Lotus Gilt Long
-0.09 0.73 NA-
21AprLotus Gilt 08 9.45 6.08 NA-
Duration Plan - Retail
-0.55 3.88 NA-
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17.
LICMF LIC Gilt
21Apr08 20.15 0.05 0.12 0.36 6.08 5.12
Government Securities 18. LICMF
Government Securities PF 19. Gilt Investment Plan 20. Gilt Plan 21. Sec JM GJM Gilt Kotak Savings Kotak Gilt Kotak Gilt Kotak LIC Gilt
21Apr08 11.62 0.05 0.12 0.36 7.41 5.12
21Apr08 21Apr08 21Apr08 2122.17 0.16 0.54 0.24 4.91 4.04 19.48 0.16 0.16 1.16 7.83 5.82 25.3 0.04 1.43 -3 6.94 4.76
Fund-
Regular plan 22. ING Gilt
Vysya Fund 23. ING
AprING Gilt 08 12.9 0.14
0.05 1.33 8.2 4.41
Vysya Provident Fund
Gilt
21AprING Gilt 08 12.45 0.14 5.14
Dynamic Plan
0.04 1.95 4.04
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24. Gilt Short Plan 25. Gilt
HSBC Fund HSBC Gilt
21Apr08 21AprHDFC Gilt 08 21AprHDFC Gilt 08 2114.49 -0.11 0.58 0.19 3.38 4.72 3.07 11.69 0.12 0.43 1.2 4.08 4.3
Term
HDFC Long
Term Plan 26. Gilt HDFC Short
16.24 -1.24 4.62 5.72 5.55
Term Plan
27.
Escorts
AprEscorts Gilt 08
3.84
Gilt Fund 28. DSP
15.38 -0.13 1.64 1.91 6.92
Merrill Lynch Govt.Securiti es Fund-Plan A 29. DSP DSP Merrill Gilt
21Apr08 5.08
24.64 -0.42 2.27 2.45 6.19
Merrill Lynch Govt.Securiti es Fund-Plan B DSP Merrill Gilt
21Apr08 18 0.11 0.27 1.26 7.56 5.64
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30. Chola
DBS Gilt Chola Gilt
21Apr08 21AprCanbank Gilt 08 20.43 0.13 0.38 1.19 7.12 6.37 20.09 0.16 0.67 1.53 10.08 3.77
Investment Plan 31. Canara Gilt
Robeco PGS 32.
Birla
Sun Life G Sec Term 33. Birla Long Birla Gilt
21Apr08 19.82 NA 2.52
2.73 4.35 3.57
Sun Life G Sec Term Short Birla Gilt
21Apr08 2116.61 0.1 0.39 0.59 3.67 4.69
34.
BOB
AprBOB Gilt 08 11.84 0.1 0.82 1.55 4.6
Gilt Fund
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Best Mutual Funds
Best Mutual Funds are selected on the basis of specific characteristics of a mutual fund. Performance, management and administrative fees are the major considerations in selecting best mutual funds.
The Best Mutual Funds are sorted out with the help of the characteristics the mutual funds. Choosing the Best Mutual Funds needs vivid knowledge about the features and concepts of the Mutual Funds.
Best Mutual Funds - Selection

y y y
The selection of Mutual Funds is highly critical for various reasons The Mutual Fund are investments in multiple securities Every single share of a mutual fund is like a small investment in thousands of stocks and bonds
The advantages of the mutual funds are that they allow small investors to put their money in a large variety of securities
The
Mutual
Funds
charges
administrative
fees
to
all
the
shareholders, which becomes a discouraging factor for small investors Best Mutual Funds - Characteristics
y
Low administrative fees: The administrative fees, front-end IBS, GURGAON Page 101
loads, and management fees are some of the fees charged on the investments. These fees considerably lower the return from
investments. In case the performance varies, the fees remain constant. It is wise to invest in a mutual fund with low
administrative fees rather than a mutual fund which is performing superbly for the past three to four years.
y
Experienced management: The Fund Manager pertaining to the Mutual Funds, also referred as the portfolio manager trades, realizes the capital losses and gains, and collects the income in form of interest. A lot depends on the manager, as one who is inexperienced without any previous record of performance may deliver well, but there is guarantee, whereas a manager with a performance record has proved his worth.
Above average performance: Investors look for mutual funds, which have performed well for the past three to four years, but the problem is that there is no guarantee that it would perform in the same manner at present. It is wiser to invest in those funds which have performed better than those having higher returns.
Tax Saving Mutual Funds
Tax Saving Mutual Funds are highly preferred by the investors as they can enjoy the benefits of Section 88 (of the Income Tax Act). There are a range of parameters which should be followed by the IBS, GURGAON Page 102
investors who wish to invest in the tax saving mutual fund to ensure returns over a long period. A Short Note on Tax Saving Mutual Funds in IndiaTax Saving Mutual Funds are one of the most preferred areas for investments. This is mainly because the investors treat the tax saving funds at par with the regular diversified equity funds.
They would just follow the same process while choosing a tax saving fund just as they would have done in case of equity fund. A proper study on the performance of the tax saving mutual fund for at least a period of three years or five years is essential for every investor to avoid unnecessary hassles that might pop up later on. The lock-in period for the fund is determined by the fund manager so that the investors cannot sell the stocks anytime they want as selling of stocks at wrong time, especially when the value of stocks lower down is quite inexpedient for the company. Ways To Select a Tax Saving Mutual Fund Performance of a Tax Saving Mutual Fund: The investors are advised to assess the tax saving mutual fund on the returns of its Net Asset Value before going for a purchase. A tax saving mutual fund is determined on the basis of its performance on the Nifty, Sensex and BSE 200. To evaluate the performance of a tax saving mutual fund, it is essential to invest in it for three or five consecutive years. Investment Approach: It is also very important for the investors to have a profound knowledge IBS, GURGAON Page 103
about the investment approach of the fund manager of the tax saving mutual fund. The investment patterns are either managed through strong systems or individually of which the first one is more relevant though the fund managers enjoy the full privilege to make decisions on the fund. In the first process, the investors get a clear picture beforehand about the investment patterns. Volatility and risk-return: The investors should choose a fund that has a lower 'standard deviation' as this is used to determine the volatility in the performance of the fund's NAV. Expenses: There are a lot of expenditures entailed in a tax saving mutual fund. These expenses include the fund manager's salary, costs for marketing or advertising of the fund, and other administration costs. The investors should consider the expense ratio of the fund before investing in it. The expense ratio precisely implies the percentage of the fund's assets that corresponds with the cost set for running that particular fund. A lower expense ratio is advantageous for the returns of the fund as the Net Asset Value is calculated after subtracting the expenses. Other Parameters that should be considered by the Investors: The investors must also consider the entry load and track record of the asset management company of the tax saving mutual fund. Some AMCs do not charge the entry load on investments which are made through systematic investment plans.
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Some of the Top Performing Tax Saving Mutual Funds During 2007-08 SBI HDFC HDFC Birla Mutual Magnum Fund (Long Fund life Term Tax Advantage (Tax Mutual gain Fund) Saver) Fund
Mutual Sun
Franklin India Tax shield
Association of Mutual Funds of India
Association of Mutual Funds in India (AMFI) was set up on 22nd August, 1995. It was established with the aim to function as a non-profit organization. This association is the chief governing body of all Asset Management Companies (AMC) and is registered with Securities and Exchange Board of India (SEBI). Association of Mutual Funds of India at a GlanceAssociation of Mutual Funds in India (AMFI) was set up on 22nd August, 1995.
The members of Asset Management Companies (AMC) have always carried out the responsibility of introducing new mutual fund schemes under the governance and guidelines of its Board of Directors. Association of Mutual Funds in India has played a significant role in creating a healthy and professional market for mutual funds. It has elevated the standard of the mutual fund investment patterns by introducing more beneficiary IBS, GURGAON Page 105
schemes to attract more investors. The Association of Mutual Funds is also the main governing body of all Asset Management Companies (AMC). The Association of Mutual Funds in India (AMFI) has been registered with the Securities and Exchange Board of India (SEBI). The main principle religiously followed by AMFI is to protect and promote the mutual funds along with the investors or shareholders. Important Aspects of Association of Mutual Funds of Indiay
AMFI provides professionalism and a proper balance in the mutual fund industry.
It promotes the highly-efficient business practices as well as the code of conduct in the mutual fund industry among its members and those who are involved in mutual fund investments.
AMFI is registered with SEBI and follows its suggestions while executing its activities.
AMFI also represents the Government of India, the Reserve Bank of India and other related higher authority bodies in the mutual fund operations.
It also provides training programs to hone the skills of those who are involved in mutual fund investments and also develops a team of efficient and skilled agents.
AMFI also carries out various campaigns and awareness programs to inform the individuals about the basic concept of mutual fund investments.
Contact Details of AMFIAssociation of Mutual Funds in India 106, Free Press House, Nariman Point, Mumbai - 400 021, India. IBS, GURGAON Page 106
Criticism of managed mutual funds Historically, only a small percentage of actively managed mutual funds, over long periods of time, have returned as much, or more than comparable index mutual funds. This, of course, is a criticism of one type of mutual fund over another. Another criticism concerns sales commissions on load funds, an upfront or deferred fee as high as 8.5 percent of the amount invested in a fund. Critics point out that high sales commission can sometimes represent a conflict of interest, as high commissions benefit the sales people but hurt the investors. Although in reality, "A shares", which appear to have the highest up front load, (around 5%) are the "cheapest" for the investor, if the investor is planning on 1) keeping the fund for more than 5 years, 2) investing more than 100,000 in one fund family, which likely will qualify them for "breakpoints, which is a form of discount, or 3) staying with that "fund family" for more than 5 years, but switching "funds" within the same fund company. High commissions can sometimes cause sales people to
recommend funds that maximize their income. Mutual fund managers, and companies need to disclose by law, if they have a conflict of interest due to the way they are paid. In particular fund managers may be encouraged to take more risks with investors money than they ought to: Fund flows (and therefore compensation) towards successful, market beating funds are much larger than outflows from funds that lose to the market. Fund managers may therefore have an incentive to purchase high risk investments in the hopes of increasing their odds of beating the market and receiving the high inflows, with relatively less fear of the consequences of losing to the market. IBS, GURGAON Page 107
Many analysts, however, believe that the larger the pool of money one works with, the harder it is to manage actively, and the harder it is to squeeze good performance out of it. This is true, due to the fact that there are only so many companies that one can identify to put the money into ( buy shares of) that fit with the "style" of the mutual fund, due to what is disclosed in the prospectus. Thus some fund companies can be focused on attracting new customers, and forget to "close" their mutual funds to new customers, when they get too big, to invest the assets properly, thereby hurting its existing investors' performance. A great deal of a fund's costs are flat and fixed costs, such as the salary for the manager. Thus it can be more profitable for the fund to try to allow it to grow as large as possible, instead of limiting its assets. Most fund companies have closed some funds to new investors to maintain the integrity of the funds for existing investors. If the funds reach more than 1 billion dollars, many times, these funds, have gotten too large, before they are closed, and when this happens, the funds tend to not have a place to put the money and can and tend to lose value. Other criticisms of mutual funds are that some funds illegally are guilty of market timing and that some fund managers, also illegal, accept
extravagant gifts in exchange for trading stocks through certain investment banks, which presumably charge the fund more for transactions than would non-gifting investment bank. This practice, although done, is completely illegal. As a result, all fund companies strictly limit -- or completely bar -such gifts.
ULIPs vs Mutual Funds:

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Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the cases with mutual funds, investors in ULIPs are allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis. Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as mutual fund schemes with an insurance component. However it should not be construed that barring the insurance element there is nothing differentiating mutual funds from ULIPs. How ULIPs can make you RICH! Despite the seemingly comparable structures there are various factors wherein the two differ. In this article we evaluate the two avenues on certain common parameters and find out how they measure up.
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ULIP Vs Mutual Fund ULIPs Mutual Funds Minimum investment amounts Investment amounts Determined by the investor are determined by the fund and can be modified as well house No upper limits, expenses Upper determined Expenses Portfolio disclosure Modifying asset allocation Generally permitted for free Entry/exit loads have to be or at a nominal cost Section available Tax benefits investments borne by the investor 80C benefits are Not mandatory* by limits for expenses
the chargeable to investors have been set by the regulator Quarterly mandatory disclosures are
insurance company
80C benefits are Section on all
ULIP available only on investments in tax-saving funds
1. Mode of investment/ investment amounts Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house. ULIP investors also have the choice of investing in a lump sum (single premium) or using the conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting point for the investment activity.
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This is in stark contrast to conventional insurance plans where the sum assured is the starting point and premiums to be paid are determined thereafter. ULIP investors also have the flexibility to alter the premium amounts during the policy's tenure. For example an individual with access to surplus funds can enhance the contribution thereby ensuring that his surplus funds are gainfully invested; conversely an individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). The freedom to modify premium payments at one's convenience clearly gives ULIP investors an edge over their mutual fund counterparts. 2. Expenses In mutual fund investments, expenses charged for various activities like fund management, sales and marketing, administration among others are subject to pre-determined upper limits as prescribed by the Securities and Exchange Board of India. For example equity-oriented funds can charge their investors a maximum of 2.5% per annum on a recurring basis for all their expenses; any expense above the prescribed limit is borne by the fund house and not the investors. Similarly funds also charge their investors entry and exit loads (in most cases, either is applicable). Entry loads are charged at the timing of making an investment while the exit load is charged at the time of sale. Insurance companies have a free hand in levying expenses on their ULIP products with no upper limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development Authority. This explains the complex and at times 'unwieldy' expense structures on ULIP offerings. The only
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restraint placed is that insurers are required to notify the regulator of all the expenses that will be charged on their ULIP offerings. Expenses can have far-reaching consequences on investors since higher expenses translate into lower amounts being invested and a smaller corpus being accumulated. ULIP-related expenses have been dealt with in detail in the article "Understanding ULIP expenses". 3. Portfolio disclosure Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit most fund houses do so on a monthly basis. Investors get the opportunity to see where their monies are being invested and how they have been managed by studying the portfolio. There is lack of consensus on whether ULIPs are required to disclose their portfolios. During our interactions with leading insurers we came across divergent views on this issue. There is lack of consensus on whether ULIPs are required to disclose their portfolios. While some insurers claim that disclosing portfolios on a quarterly basis is mandatory, others state that there is no legal obligation to do so. 4. Flexibility in altering the asset allocation As was stated earlier, offerings in both the mutual funds segment and ULIPs segment are largely comparable. For example plans that invest their entire corpus in equities (diversified equity funds), a 60:40 allotment in equity and debt instruments (balanced funds) and those investing only in debt instruments (debt funds) can be found in both ULIPs and mutual funds. If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the same fund house, he could have to bear an exit load and/or entry load. IBS, GURGAON Page 112
On the other hand most insurance companies permit their ULIP inventors to shift investments across various plans/asset classes either at a nominal or no cost (usually, a couple of switches are allowed free of charge every year and a cost has to be borne for additional switches). Effectively the ULIP investor is given the option to invest across asset classes as per his convenience in a cost-effective manner. This can prove to be very useful for investors, for example in a bull market when the ULIP investor's equity component has appreciated, he can book profits by simply transferring the requisite amount to a debt-oriented plan. 5. Tax benefits ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds good, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits. Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for example diversified equity funds, balanced funds), if the investments are held for a period over 12 months, the gains are tax free; conversely investments sold within a 12-month period attract short-term capital gains tax @ 10%. Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-term capital gain is taxed at the investor's marginal tax rate. Despite the seemingly similar structures evidently both mutual funds and ULIPs have their unique set of advantages to offer. As always, it is vital for investors to be aware of the nuances in both offerings and make informed decisions. IBS, GURGAON Page 113
Impact Analysis on the Mutual Fund Industry Of the Union Budget 2008-09
Fixed Income Markets to Benefit Measures y Revenue deficit target reduced to 1% in FY09 from 1.4% in FY08; fiscal deficit target reduced to 2.5% in FY09 from 3.1% in FY08 y Gross borrowings lower at Rs.1.45 trillion in FY09 from Rs.1.56 trillion in FY08; net borrowing also lower at Rs.1.01 trillion from Rs.1.11 trillion in FY08 y Measures announced to develop bond, currency and derivatives markets that will include launching exchange-traded currency and interest rate futures and developing a transparent credit derivatives market with appropriate safeguards. y Measures announced to enhance tradability of domestic convertible bonds by putting in place a mechanism that will enable investors to separate embedded equity options from convertible bonds and trade them separately. y Measures announced to encourage development of a market-based system for classifying financial instruments based on their complexity and implicit risks. y Proposal announced to exempt from TDS, corporate debt instruments issued in demat form and listed on recognized stock exchanges.
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Impact
Decision of expanding the corporate debt market will help in increased focus towards bond funds and in a scenario where interest rates are not expected to be adverse in the medium term, this would further assist in increasing the popularity of bond funds which have not been doing well in the last few years.
Development of the derivatives markets can in turn enhance the development of the structured products market.
Better than targeted fiscal position of the government can impart some bullishness to G-Secs and hence to Gilt funds.
Service Taxes Realigned for ULIPs Measures
Asset management services provided under Unit Linked Insurance Plans (ULIPs) would be brought on par with asset management services provided under mutual funds as regards chargeability to service tax.
Services provided by stock/commodity exchanges and clearing houses would also be brought under the service tax net.
Impact
The competitiveness of mutual funds vis--vis ULIPs in the investment basket of investors is expected to increase somewhat.
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Transactional expense levels of mutual funds are expected to go up marginally on account of their exposure to stock and commodity exchanges which are expected to pass on the service tax. But clarity on what would define services here and on what amount the service tax would be levied is awaited
Tax Calculation in India
The Tax Calculation in India is the method for calculating the amount of tax for different individuals. Any individual income i.e., income of a public sector employee and income of private sector employee is taxable under the Income Tax Act of India. The tax calculation in India is done on the basis of the income of an individual under various defined heads of income, as mentioned in the 4th chapter of the Income Tax Act, 1961 (Section 14)
The different heads of income for tax calculation in India Salary House property Profit in business or profession Capital gains Other sources There are different slabs given for taxation under the new budget given by the finance minister which are different for man, woman and senior citizens which are as follows:
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FOR MAN Income Up to Rs. 1,50,000 Rs. 1,50,001 to Rs. 3,00,000 Rs. 3,00,001 to Rs. 5,00,000 More 5,00,000 FOR WOMAN Income Up to Rs. 1,80,000 Rs. 1,80,001 to Rs. 3,00,000 Rs. 3,00,001 to Rs. 5,00,000 More 5,00,000 FOR CITIZENS Income Up to Rs. 2,25,000 Rs. 2,25,001 to Rs. 3,00,000 10% Tax Rate Nil SENIOR than Rs. 30% 20% 10% Tax Rate Nil than Rs. 30% 20% 10% Tax Rate Nil
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Rs. 3,00,001 to Rs. 5,00,000 More 5,00,000 than Rs. 30% 20%
Now for the calculation of income tax, section 88 is no more valid, only section 80C is applicable. Section 88 offered a rebate. A rebate is when the government gives you a concession on your income if you invest in certain instruments. Section 80C does not offer a rebate but a deduction from taxable income. The upper limit under both, Section 88 and Section 80C is Rs 1, 00,000. Under Section 88 Since the maximum amount that could be invested under Section 88 was Rs 1, 00,000, the maximum tax that could be saved was up to Rs 20,000. Let us explain it with the help of an example as: You had to pay tax = Rs 28,000 your rebate = 20%
you invested Rs 1, 00,000 in the instruments eligible for a rebate. Your savings = Rs 20,000 of your tax (20% of Rs 1, 00,000).
So instead of paying tax of Rs 28,000, you pay a tax of Rs 8,000 (Rs 28,000 - Rs 20,000).
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Under Section 80C Let's say your taxable income is Rs 100,000. You invest Rs 70,000 in the Public Provident Fund. Your taxable income drops to Rs 30,000 (Rs 1, 00,000 - Rs 70,000). So if you up to Rs 1, 00,000 invest in the relevant instruments, you save tax up to that amount. Section 80C gives more investment flexibility No more sub-caps exist. The maximum amount under Section 88 (Rs 1, 00,000) has several subcaps. For instance, a maximum of Rs 10,000 in Equity Linked Savings Schemes. These are diversified mutual funds with a tax benefit. They invest in the shares of various companies of various sectors. Then there was a minimum of Rs 30,000 that had to be invested in infrastructure bonds. These were the bonds that were issued by financial institutions like ICICI and IDBI. These restrictions do not exist anymore. There is much more freedom to select where to invest under Section 80C. You can decide how much percentage of your income can go in which investment. So, if you want to invest the entire Rs 1, 00,000 in ELSS, no one is there to stop you.
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Eligible avenues for Section 80C: 1. Payment of life insurance premium. 2. Contribution to Provident Fund. 3. Repayment of principal amounts on housing loans. 4. Payment of tuition fees. 5. Investments in PPF. 6. Investments in NSC. 7. Investments in Equity-Linked Savings Schemes. 8. Investments in Infrastructure Bonds.
Why Section 80C scores over Section 88 Investing in line with one's risk appetite is a tenet of financial planning and Section 80C promotes the same. Removal of sectoral caps on investments for tax-planning purposes means that investors can invest in line with their risk appetites and needs. A risk-taking investor can invest his entire corpus of Rs 100,000 in a highrisk instrument like ELSS; conversely a risk-averse investor can select small savings schemes like PPF and NSC. As a result, every investor's tax-saving portfolio can now reflect his individual preferences. Another advantage that Section 80C offers is for investors whose gross total income is greater that Rs 500,000. Under the earlier tax regime, these investors were not eligible for Section 88 tax rebates. However, Section 80C has done away with this disparity and investors across tax brackets can claim the Rs 100,000 deduction.
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Impact
This is expected to increase the disposable income in the hands of the individuals to some extent which could translate into increased retail investments in mutual funds.
Increase in Short term Capital Gains Measures
Short Term Capital Gains Tax raised from 10% to 15%
Impact
Since long term capital gains tax has been left unchanged, this hike in short-term capital gains tax could encourage long-term investments which augur well to the development of the concept of long term in the Indian Mutual Fund industry, which is conspicuous by its absence but which is coveted by the fund industry given the greater flexibility that this provides in fund management.
At the same time since the short term capital gains tax is still lower than the income tax slabs of typical capital market investors, it is not expected to cause too many investors to turn away from mutual funds.
The fact that the dividend distribution tax structure has not changed would mean that dividend reinvestment plans in liquid schemes will continue to be popular and also the liquid plus category will continue to IBS, GURGAON Page 121
attract inflows as the tax rates there would continue to be lower than the liquid category.
Thrust on Infrastructure Sector Measures y y y Call for more reforms in coal and electricity sectors Coal sector regulator to be appointed. Fourth Ultra Mega Power Project (UMPP) at Tilaiya to be awarded shortly; five more UMPPs in Chhattisgarh, Karnataka, Maharashtra, Orissa and Tamil Nadu likely y Allocation for National Highway Development Programme (NHDP) raised from Rs.109 billion in FY08 to Rs.130 billion in FY09 y Rural Infrastructure Development Fund (RIDF) corpus in FY09 raised to Rs.140 billion y Oil and Gas - New Exploration Licensing Policy (NELP) to attract investment of the order of $3.5 - 8 bn for exploration and discovery. y Government of India is expected to list more PSUs to unlock their values.
Impact y With so much focus on the infrastructure sector, it is expected that infrastructure funds which have been the key out-performers in the industry of late both in terms of returns performance as well as attracting fund flows, will continue to occupy a prominent place.
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SURVEY
As a part of our project, a survey of customers was being conducted in Delhi NCR region to know the perceptions of the investors about the investment schemes basically ULIP and MUTUAL FUNDS OBJECTIVE OF THE SURVEY: The major objective of the study y To know the current pattern of investment among different age groups and different occupations. y To know the investors perceptions about different investment options and their investment concerns, their expected returns, and their future expectations from different investment schemes. y To know the reputation and acceptability of the two products i.e. ULIP and MUTUAL FUNDS (of Standard Chartered bank specially) among the above mentioned categories. y To know the potential customers for the investment schemes: ULIP and Mutual Funds of Standard Chartered bank.
RESEARCH METHODOLOGY The survey process involved two phases: First phase included identification and selection of the target audience to be studied and to determine the parameters on which respondents will justify their preferences. The audience were targeted and analyzed basically on the basis of three important parameters: Age, Occupations and Income. Demographical information was also taken in order to know the investment patterns according to the
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location, age, gender etc. A questionnaire (shown in the end of the report) was designed to collect the needed information from the respondents. In the second phase data was collected through questionnaire from more than 100 respondents within Gurgaon region. First component of the survey was age brackets. Age brackets taken were: y y y y 18-30 30-40 40-50 Above 50
The aim of taking small age brackets was to find out which age group of people, company need to tape, to increase the sales of the companys products, since generally people make their investment decision on the basis of their age. So, age was the vital component of my survey and I tried to make sure that, to do the survey among the people of different age groups. Next component of the questionnaire was the purpose of investment, to find out the need of the people that why they make investment planning like, for future security purpose or for tax saving purpose or for any other reason. Next component was the type of investment to find out whether people are interested or not to invest in the kind of product which the company is offering. Next component of the questionnaire was the nature of job; this component was taken to find out the relationship between risk appetite and the nature of job and also the relationship between type of investment and nature of job. Another component of the questionnaire was to find out the risk appetite of people. This was also very important component to conduct the survey.
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One more very important component of questionnaire was the duration of investment to find out the current trend of the market; that is, to find out whether people are interested in long-term investment plan or short-term investment plan. Results were viewed cautiously as sample was from a specific population. The responses that were generated during this exercise were converted in the form of percentages to have a comparative outlook, as the numbers itself cannot explain the true picture. These percentages were then represented through the simple tools like bar graphs, pie charts.
Sample size A sample is a part of the target population carefully selected to represent that population. As this study is based on finding the investment behavior towards different investment options in the market. The sample size is 200. Limitations of the study Every research is incomplete without its own limitations. In this research too there were some limitations. They are: y Results are just an indication of the present scenario and may not be applicable in the future. y As the study was conducted only in Delhi & NCR so it can be said that the study was regionally biased. y Since sampling was done under the simple random sampling method, where easily approachable respondents were picked up. So this may not represent the whole universe. y The size of the sample is small i.e. 200. IBS, GURGAON Page 125
Profile of Respondents
Age Wise Distribution of Respondents

18-30 30-40 40-50 >50
9%
21%
38%
32%
Analysis A major chunk of people surveyed fall in the age-group of 18-30 years, followed by the age-group of 30-40 years. Only 9% of the respondents consisted of above 50 years.
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Gender Wise Distribution of Respondents
Female 24%
Male 76%
Analysis 76% of the respondents are male while female consisted of a small group of 24%.
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Occupation Wise Distribution of Respondents

Others 5%
SelfEmployed 17%
Service 38%
Business 40%
Analysis Most of the respondents belongs to Business which covers 40% of the distribution and it is closely followed by service which comprised of 38% and further followed by self-employed and others (e.g. house-wives) which are smaller in proportion.
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Income Wise Distribution of Respondents
>10L 10%
<2.5L 19%
5-10L 19%
2.5-5L 52%
Analysis More than half of the respondents belong to the income group of 2.5 5 Lacs. 19% of the respondents belong to 5-10 Lacs whereas same proportion of respondents fall under the category of less than 2.5 Lacs.
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ANALYSIS
1.) FINDINGS BASED ON AGE: Risk appetite of people belonging to different age groups
100 90 80 70 60 50 40 30 20 10 0
15
69 61 89 93
15 18 6 18-30 16 11 40-50 Low Moderate High >50
30-40 Very Low
Age plays a very crucial role in taking risk. From the graph, it is very much clear that people in all the age groups falls mainly in the moderate risk category. As the age factor increases, people divert more towards low risk category. It is further explained individually in the form of pie-charts as:
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Risk appetite of age group 20-30

very low 6%
Analysis:
low 18%
high 15%
moderate 61%
Pie- chart indicates that people with age group 2030 years are neither too much risk lover nor they are highly risk averse, but all have a medium risk appetite.
low 16% moderate 15% high 69%
Analysis: People of this age group prefer to spend their money in highly risky instruments, and mutual funds form the major part of their investments.
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very low 11%
Analysis: This age group is risk averse and wants to have safer investments with moderate returns.
moderate 89%
Risk appetite of age group above 50

moderate 7%
Analysis: People of this age group are highly conservative in nature and want to invest their money in very low risky investments like fixed deposits.
low 93%
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Relation between Age & Withdrawl of Money
80% 70% 60% 48% 50% 40% 30% 20% 8% 10% 0 0% 18-30 0-1 Year 30-40 1-3 Years 40-50 3-10 Years >10 Years 0% 0% 0% 12% 14% 32% 53% 47% 48% 38%
75%
17% 8%
above 50
ANALYSIS From the above graph it can be concluded that respondents across all age groups withdraw their money within 1-3 years, followed by the horizon of 310 years with the only exception being the people above 50 years who didnt find it safe to invest for 3-10 years.
It is further explained individually in the form of pie-charts as:
AGE AND AVENUES USED FOR INVESTMENT IBS, GURGAON Page 133
40 35 30 25 20 15 10 5 0 18-30 30-40 40-50 >50 FD Mutual Fund ULIP Insurance Stocks Others
ANALYSIS The most favorite and sort out investment option favored by each and every age group is Mutual Funds which is getting a close competition with stock investment.
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Age Group18-30
Others 10% Stocks 19% FD 14%
Mutual Fund 36% ULIP 13%
Insurance 8%
ANALYSIS PEOPLE IN THE AGE GROUP OF 18-30 YEARS ARE RISK-AVERSE & THIS CLEARLY SHOWS THEIR INTEREST IN MUTUAL FUNDS.ONLY 13% OF THE RESPONDENTS FINDS IT SAFE TO INVEST IN ULIP. AS THE AGE-GROUP IS QUIET YOUNG THESE PEOPLE DONT WANT TO INVEST IN FIXED DEPOSIT. THE YOUNG BLOOD TAKES INTEREST IN STOCK INVESTMENT AS 19% OF THIS AGE-GROUP OPTED FOR STOCKS. BUT ONLY 8% OF THE PEOPLE TAKE UP INSURANCE AT THIS POINT OF LIFE, WHERE AS OTHERS (REAL ESTATE.GOLD ETC.) COMPRISES OF ONLY 10%.
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Age Group 30-40

Others 8% FD 12%
Stocks 21%
Mutual Fund 29% Insurance 18%
ULIP 12%
ANALYSIS
PEOPLE IN THE AGE GROUP OF 30-40 YEARS ARE IN THE MIDDLE OF THEIR CAREERS AT THIS POINT OF TIME THEY CAN TAKE RISK AS IT IS CLEAR FROM THE GRAPH ITSELF THAT 29% ARE OPTING MUTUAL FUND WHEREAS STOCK OPTION WHICH COMPRISES OF 21% HAS EMERGED AS THE SECOND MOST PREFERRED INSTRUMENT FOLLOWED BY INSURANCE HAVING 18% SHARES. ULIP IS NOT KNOWN TO EVERYBODY AT THIS POINT OF TIME. FDS AND OTHERS ARE HAVING SHARE OF 12% AND 8% RESPECTIVELY.
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Age Group 40-50
Others 12% Stocks 17%
FD 13%
Mutual Fund 26%
Insurance 20%
ULIP 12%
ANALYSIS
MUTUAL FUND REMAINS A FAVORITE INVESTMENT OPTION OF THIS MID AGE GROUP AS 26% OF THE RESPONDENTS FAVOURS THIS INSTRUMENT FOLLOWED BY INSURANCE WHICH OCCUPIES QUITE A HEALTHY STAKE OF 20% IN THE CHART. STOCKS STILL REMAINS A CANDY IN THE HANDS OF INVESTORS AS 17% OF THE PEOPLE BELONGING TO THIS AGE GROUP HAVE FAITH IN STOCKS WHERE AS FDS, ULIP HAVE 13% & 12% RESPECTIVELY.
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Age >50
Others 26% FD 19%
Stocks 15% Insurance 8%
Mutual Fund 31%
ULIP 1%
ANALYSIS
PEOPLE ABOVE 50 YEARS OF AGE PREFER PUTTING MONEY IN MUTUAL FUNDS ONLY BECAUSE OF ITS HEAVY RETURN AS 31% OF THESE INVESTORS IN THE CHART FAVORS MUTUAL FUNDS. NOW AT THIS POINT OF TIME PEOPLE CHANGE THEIR PREFERENCE FROM FD & STOCKS TO OTHERS (GOLD, REAL ESTATE ETC.)BECAUSE AT THIS STAGE I.E BEFORE RETIREMENT PEOPLE NEED HOUSE FOR THEMSELVES & THERE ARE MANY OTHER RESPONSIBILITIES. THE MOST PREFEERED INSTRUMENT FOR THE PEOPLE ABOVE 50 YEARS OF AGE IS INVESTING IN FIXED DEPOSIT, FOLLOWED BY A NEAR EQUAL DISTRIBUTION FOR STOCKS.
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Age and Purpose behind Investment
100 90 80 70 60 50 40 30 20 10 0
56
52
48
50
21 24 15 5 18-30 Retirement 28 17 14 6 30-40 Future needs 14 40-50 Capital Gains
14 14 22
>50 Tax saving
ANALYSIS
PEOPLE OF ALL THE AGE GROUPS HAVE HIGH INCLINATION TOWARDS SAVING TAXES.NEARLY PEOPLE OF EACH AGE-GROUP SAVES MONEY TO SAVE THEIR TAX RETURNS. THOUGH THERE ARE PEOPLE WHO INVEST BECAUSE OF CAPITAL GAINS.
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Age Group 18-30

Retirement 5% Future needs 15%
Tax saving 56%
Capital Gains 24%
ANALYSIS
INVESTORS IN THE AGE-GROUP OF 18-30 YEARS ARE HIGHLY INCLINED TOWARDS TAX SAVING AS 56% OF THE INVESTORS PREFER TAX SAVING WHEN THEY GO FOR AN INVESTMENT. AT THIS AGE PEOPLE DONT SAVE FOR RETIREMENT BUT 24% OF INVESTORS GO FOR CAPITAL GAINS AS THEIR MOTIVE FOR INVESTMENT & ONLY 15% INVEST FOR FUTURE NEEDS.
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Age Group 30-40

Retirement 6% Future needs 14%
Tax saving 52% Capital Gains 28%
ANALYSIS
A PERSON IN THE AGE GROUP OF 30-40 YEARS INVESTS TO SAVE THEIR TAXES. MORE THAN 50% OF THE INVESTORS FIND TAX SAVING AS THE BEST OPTION AS THEY ARE SAVING FOR FUTURE AS WELL AS DOESNT HAVE TO GIVE THEIR HARD EARNED MONEY TO THE GOVERNMENT. THIS GROUP OF PEOPLE ALSO FAVORS CAPITAL GAINS TO INCREASE THEIR MONEY AS 28% OF THE INVESTORS INVEST BECAUSE OF CAPITAL GAINS. ONLY 14% OF THE PEOPLE GIVE PREFERENCE TO FUTURE NEEDS 6% THINK OF THEIR RETIREMENT & THEN INVEST.
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Age Group 40-50

Retirement 14%
Tax saving 48%
Future needs 17%
Capital Gains 21%
ANALYSIS
PEOPLE IN THE AGE GROUP OF 40-50 YEARS HAVE A HIGH INCLINATION TOWARDS TAX SAVINGS & CAPITAL GAINS WHEN THEY GO FOR AN INVESTMENT. THOUGH THE TAX SAVING CHUNK ACCOUNTS TO 48% AND THE OTHER 52% ARE OCCUPIED BY CAPITAL GAINS, FUTURE NEEDS & RETIREMENT WHICH CONSTITUTE OF 21%, 17% & 14% RESPECTIVELY.
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Age >50
Retirement 22% Tax saving 50% Future needs 14% Capital Gains 14%
ANALYSIS
INTERESTINGLY PEOPLE ABOVE 50 YEARS OF AGE ARE MORE INTERESTED IN SAVING THEIR TAX LIABILITY AS THESE PEOPLE OCCUPY HALF OF THE CHART. 25% OF THE PEOPLE ARE INTERESTED TO INVEST IN THE RETIREMENT PLANS TO MAKE THEIR FUTURE SAFE. THIS FIGURE CAN BE EASILY DRAWN OUT AS THIS GROUP OF PEOPLE IS NEARING THE RETIREMENT AGE & THEY HAVE TO MAKE THEIR FUTURE SAFE. CAPITAL GAINS & FUTURE NEEDS GETS AN EQUAL WEIGHTAGE OF 14%.
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2) FINDING BASED ON OCCUPATION
Occupation & Avenues used for Investment

Insurance Mutual fund Stocks ULIP Fixed deposit Others
5 9 18
4 9 17 13
6 37
11 49 34 13 17 11 8 Business 23 16 Service
Self-employed
ANALYSIS THE BAR GRAPH ABOVE SHOWS HOW PEOPLE OF DIFFERENT OCCUPATION INVEST. INVESTING IN STOCK MARKET IS NOT EVERYONES CUP OF TEA. PEOPLE WHO CAN TAKE RISK CAN INVEST IN STOCK MARKET & INVESTING IN STOCKS IS VERY MUCH PREVALANT AMONG BUSINESSMEN. MUTUAL FUND INVESTMENT IS SAFE AMONG SELF-EMPLOYED.
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Business
Fixed deposit 9% Others 5% Insurance 8% Mutual fund 11%
ULIP 18%
Stocks 49%
ANALYSIS BUSINESSMEN ARE PEOPLE WHO ARE CONSIDERED TO TAKE RISK IN STOCK INVESTMENT.49% OF BUSINESSMEN INVESTS IN STOCKS TO GET HIGH RETURN & OTHER 50% CONTITUTE OF ULIP, FIXED DEPOSIT, INSURANCE, MUTUAL FUNDS, & OHTERS (REAL ESTATE, GOLD ETC.) THIS CATEGORY OF PEOPLE CANNOT SUSTAIN WITH A FIXED RETURN SO THEY INVEST IN SHARE MARKET & THEY ARE ALSO RISK TAKERS.
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Self-employed
Fixed deposit 9% Others 4% Insurance 23%
ULIP 17%
Stocks 13%
Mutual fund 34%
ANALYSIS SELF-EMPLOYED (CA, DOCTORS ETC.) HAVE A STRONGER PREFERENCE FOR INVESTING IN MUTUAL FUNDS & INSURANCE WHICH CONSTITUTE OF 34% & 23% RESPECTIVELY. THIS CATEGORY OF INVESTORS WANT THEIR HARD EARNED MONEY TO BE SAFE SO THEY PLAY SAFELY WITH MUTUAL FUNDS & ONLY 13% TAKES RISK & INVESTS IN STOCKS. THIS TYPE OF PEOPLE NEED A CONTINUOUS GROWTH & MUTUAL FUNDS ONLY PROVIDE THEM WITH THIS GROWTH ENGINE. 17% OF SELF-EMPLOYED GROUP INVESTS IN ULIP & ONLY 9% TAKES INTEREST IN FD.
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Service
Others 6% Insurance 16% Fixed deposit 37% Mutual fund 17%
ULIP 11%
Stocks 13%
ANALYSIS SERVICEMEN PREFER TO PLAY WITH THEIR MONEY SAFELY. SO 37% OF THESE PEOPLE KEEP THEIR MONEY IN BANK ACCOUNTS I.E HAVING THEIR FIXED DEPOSITS. AFTER THIS THEY PREFER INSURANCE & MUTUAL FUNDS WHICH COMPRISES OF 16% & 17% OF THEIR INVESTMENT RESPECTIVELY. THESE PEOPLE DONT WANT TO TAKE RISK WITH THEIR HARD EARNED MONEY SO ONLY 13% INVESTS IN STOCKS & 11% INVESTS IN ULIP. ONLY 6% OF PEOPLE INVESTS IN OTHERS(GOLD, REAL ESTATE.)
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OCCUPATION & INVESTMENT PURPOSE
100 90 80 70 60 50 40 30 20 10 0
13
17
51
47
41
22 18
21 19
22 20
Business Tax saving
Self-employed Future needs
Service Retirement
Capital gains
ANALYSIS IT IS CLEAR FROM THE BAR GRAPH THAT PEOPLE HAVE THE STRONGEST PREFERENCES FOR ACHIEVING CAPITAL GAINS WHETHER THEY BELONG TO BUSINESS, SELF-EMPLOYED, OR SERVICE CLASS. MORE OR LESS EQUAL PREFERENCE IS SEEN IN FUTUTE NEEDS, TAX-SAVING & RETIREMENT.
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Business
Retirement 9% Tax saving 18% Future needs 22%
Capital gains 51%
ANALYSIS BUSINESS CLASS IS RISK TAKERS & THEIR MAIN INTEREST IS WEALTH MAXIMIZATION. THIS CLASS OF PEOPLE HAVE THE STRONGEST PREFERENCE FOR ACHIEVING CAPITAL GAINS WITH 51% OF SHARE, FOLLOWED BY FUTURE NEEDS WHICH COMPRISES 22%.IT SEEMS THEY ARE LESS WORRIED ABOUT THEIR TAX SAVING & RETIREMENT.
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Self-employed
Retirement 13% Tax saving 19% Future needs 21%
Capital gains 47%
ANALYSIS
LIKE BUSINESS CLASS, THE MAIN INTEREST OF THE SELF-EMPLOYED IS TO ACHIEVE CAPITAL GAINS. IT COMPRISES OF ALMOST HALF OF THE TOTAL SELF-EMPLOYED.OTHER HALF COMPRISES OF FUTURE NEEDS, TAX SAVING & RETIREMENT, IN WHICH FUTURE NEEDS HAD THE MAXIMUM SHARE WHICH IS CLOSELY FOLLOWED BY TAX SAVING & RETIREMENT.
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Service
Retirement 17% Tax saving 20%
Capital gains 41%
Future needs 22%
ANALYSIS LOOKING AT THE ABOVE CHART IT IS CLEAR THAT SERVICE CLASS HAS ALSO CLOSE AFFINITY WITH CAPITAL GAINS LIKE THE OTHER TWO CLASSES I.E BUSINESS & SELF-EMPLOYED. BUT PEOPLE IN THE SERVICE CLASS ARE WILLING TO SAVE MORE FOR TAX SAVING & RETIREMENT.AND 22% PEOPLE ALSO SAVE FOR FUTURE NEEDS.
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3) FINDING BASED ON INCOME
INCOME & PERCENTAGE OF INVESTMENT
70 60 50 40 30 20 10
65
65 60 48 46 35 24 14 6 0 16
21
0 <2.5 Lakh 2.5-5 Lakh 0-10% 10-25% 5-10 Lakh Above 25% >10 Lakh
ANALYSIS PEOPLE IN EACH GROUP OF INCOME LEVEL APPROXIMATELY SAVE TO 1025% OF THEIR INCOMES. THIS BAR GRAPH GIVES A CLEAR CUT PICTURE OF PEOPLES INCOME & THEIR SAVING PATTERN.
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Income <2.5 Lakh

Above 25% 0% 10-25% 35%
0-10% 65%
ANALYSIS
IN THE LOWER INCOME GROUP I.E PEOPLE HAVING INCOME OF LESS THAN 2.5 LACS, ONLY TWO CATEGORIES EXISTS. ONE IS PEOPLE WHO INVEST 010% OF THEIR EARNING WHICH CONSTITUTE OF 65% AND THE OTHER CATEGORY WHICH INVESTS 10-25% OF ITS EARNING COMPRISES OF 35%.
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Income between 2.5-5 Lakh

Above 25% 6%
0-10% 48% 10-25% 46%
ANALYSIS IN THE MIDDLE INCOME GROUP I.E 2.5-5 LACS THERE IS ALMOST AN EQUAL DISTRIBUTION OF PEOPLE INVESTING THEIR TOTAL EARNINGS. 46% OF THIS GROUP INVESTS THEIR 10-25% OF THEIR INCOME WHERE AS 48% INVESTS ONLY 0-10% OF THEIR MONEY. ONLY 6% OF PEOPLE INVESTS ABOVE 25% OF THEIR HARD EARNED MONEY.
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Income between 5-10 Lakh

Above 25% 14% 0-10% 21%
10-25% 65%
ANALYSIS
65% OF THE PEOPLE WHO EARN MORE THAN 5 LACS INVEST 10-25% OF THEIR EARNINGS WHERE AS 21% PEOPLE INVESTS 0-10%. IN THE INCOME GROUP OF 5-10 LACS 14% OF THE POPULATION INVESTS ABOVE 25%.
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Income >10 Lakh

Above 25% 24% 0-10% 16%
10-25% 60%
ANALYSIS
AS PEOPLE INCOME INCREASES THEIR INVESTMENT PATTERN ALSO CHANGES. PEOPLE OF HIGH INCOME GROUP I.E HAVING EARNING OF MORE THAN 10 LACS SAVES OR INVESTS A GOOD AMOUNT OF MONEY. 24% OF THIS CATEGORY OF PEOPLE INVESTS ABOVE 25% OF THEIR EARNINGS. THOUGH 60% OF PEOPLE INVEST 10-25% OF THEIR TOTAL EARNINGS. AND ONLY 16% OF THIS GROUP INVESTS IN THE RANGE OF 0-10% OF THEIR EARNINGS.
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INCOME & PURPOSE OF INVESTMENT
100% 90% 80% 70% 60% 50% 40% 30% 51 20% 10% 0% Retirement <2.5 Lakh Capital gains 2.5-5 Lakh Tax saving 5-10 Lakh 17 27 11 8 19 15 19 54 13 21 58
8 12
22
45
Future needs >10 Lakh
ANALYSIS PEOPLE HAVE DIFFERENT INCOMES & ACCORDING TO THEIR INCOME THEIR PURPOSE OF INVESTMENT ALSO VARY. IT IS CLEARLY VISIBLE IN THIS GRAPH THAT EACH LEVEL OF INCOME GROUP HAVE DIFFERENT REQUIREMENT & ACCORDING TO THAT INVESTMENT PATTERN DIFFERS.
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Income <2.5 Lakh

Retirement 17%
Future needs 45% Tax saving 11% Capital gains 27%
ANALYSIS
PEOPLE IN THE LOW INCOME GROUP I.E LESS THAN 2.5 LACS HAVE A TENDANCY TO SAVE FOR FUTURE NEEDS & 45% PEOPLE FALLS IN THIS CLASS. AND THESE PEOPLE HAVE A TENDANCY TO INVEST FOR FUTURE NEEDS & TO EARN CAPITAL GAINS IN THAT ORDER.THEY DO NOT HAVE MUCH TAX LIABILITY SO THEY DO NOT HAVE TO BOTHER ABOUT THAT.BUT 17% PLAN THEIR FUTURE.
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Income between 2.5-5 Lakh

Retirement 8% Future needs 22% Capital gains 19%
Tax saving 51%
ANALYSIS
AS PEOPLE S INCOME INCREASES SO THE TENDANCY TO SAVE FOR TAX DEDUCTIONS ALSO INCREASES.PEOPLE WHOS INCOME RANGES FROM 2.55 LACS FALLING IN THE MIDDLE INCOME GROUPS INVEST FOR THE PURPOSE OF TAX SAVING, FUTURE NEEDS & CAPITAL GAINS WHICH STANDS OUT TO BE 51%, 22%, & 19% RESPECTIVELY.
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Income between 5-10 Lakh

Future needs 12% Retirement 15%
Capital gains 19% Tax saving 54%
ANALYSIS
PEOPLE WHO FALLS UNDER THE CATEGORY OF 5-10 LACS INCOME SLAB INVESTS FOR THE PURPOSE OF TAX SAVING. 54% OF PEOPLE INVEST TO SAVE TAX. OTHER INVESTMENTS COMPRISES NEARLY OF 50% & CAPITAL GAINS, RETIREMENT, & FUTURE NEEDS ACCOUNT TO THIS 50%.
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Income >10 Lakh

Future needs 8% Retirement 13%
Capital gains 21% Tax saving 58%
ANALYSIS
PEOPLE BELONGING TO THE HIGH LEVEL OF INCOME GROUPS MAIN MOTTO IS TO SAVE TAX THESE PEOPLE INVESTS FOR THE PURPOSE OF TAX REDUCTIONS & CAPITAL GAINS. A LARGE NUMBER OF PEOPLE I.E 58% INVESTS ONLY TO SAVE TAX.21% SAVES FOR CAPITAL GAINS, 13% PLAN FOR THEIR RETIREMENT & ONLY 8% ACCOUNTS FOR FUTURE NEEDS.
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Recommendations
Age
y The segment (18-30) can be a potential customer segment for the bank as most of the people are falling in the income group of less than Rs.15000 per month. The company can target this segment by offering its ULIP product both as an insurance and investment product, which can provide high returns as the investments and provide the insurance cover too, as a large segment doesnt have an insurance cover. The return in new Capital Unit Gain Plan is around 20% which is quite good enough. Mutual Fund Schemes can also be offered to those
respondents in this age group who are risk takers as in mutual funds small amounts can invested. The need is to make this segment aware of the products like ULIP (which is promising return of 20-25% p.a.) and tap as many customers as possible. Also Positioning of the Mutual Funds should be such that attracts customers. y In order to tap the 30-40 years segment ULIP can be promoted as an investment option rather than an insurance product. Mutual funds need to be promoted as only a small segment is investing in mutual funds. Mutual funds and ULIP both can be the best investment option for this segment. y As the segment 40-50 years is an investing and risk taking segment, Mutual funds promising higher returns can be promoted in this segment. The product ULIP is also highly acceptable by this segment, so both of these products can be promoted as a best investment options promising high returns and low risks. People in this age group can also invest in real estate as by this age people are in the position to invest large lump sum money for this investment. IBS, GURGAON Page 162
In the segment of above 50 age group people be targeting for the Mutual funds as can be seen that very few people are investing M.Fs. this is because this segment consists of risk averters as this segment have invested in Fixed Deposits and government securities and insurance than any other investment product as safety is the most important factor which is being considered while investing by this segment. But these people are neutral for these investments. These thus theses products can be promoted as safe investments and better than F.Ds only then this segment can be tapped.
Income
y The income bracket less than Rs.15000 per month are basically safe investors and have not and do not prefer investing in mutual funds and ULIP. Thus positioning of these products should be such that people are attracted towards this scheme. Emphasis on marketing of the products should be given. y Respondents under income bracket Rs.15000-Rs.30000 have
mainly invested in insurance and real estate. But when survey was done and their preference was asked these respondents strongly preferred investing in these strategies. y Income Bracket of Rs.30000-Rs.50000 is the strong contenders for investing their money and these people have invested in real estate, insurance and fixed deposits. Moreover there is mixed preferences for their investments thus proper segmentation of the sample should be done accordingly marketing strategies should be adopted.
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Though there is a small percentage of respondents in income bracket above Rs.50000 who least prefer investing in mutual fund. But this is the segment which can be well targeted and their portfolio should be such that gives them more returns. The case of ULIP is different as people strongly prefer investing in this investment strategy. Thus emphasis for selling ULIP in this income bracket.
Occupation
The survey conducted has resulted in the observation that the business class should be targeted for ULIP and Mutual funds as they strongly prefer investing in these two products. These products should be positioned as safe investment and then been sold it to service class and retirees as these investors are the safe investor.
Conclusion
As the main objective of the project is to analyze the investment strategies of various retail investors, the whole analysis of project is divided into three phases Phase 1 Investment is integral part of savings i.e. people invests from the amount which they saved after their daily expenditures. But still anyone rarely invests the whole amount he saved, and thus the question arise where to keep the savings? and the most common answer to this question is saving a/cs of the banks.
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Thus while analyzing the investment strategies our first target segment was saving bank a/c of our organization. Standard Chartered bank offers 5 types of Savings account matching different needs of customers namely: Axcess plus Super Value Parivaar account Saral Account Aasan Account The product which we analyze for our bank was axcess plus saving a/c of it in context with the same type of saving a/cs of the other organizations. For this we did an organization survey and collect the information about the different banks a/cs. This collected data was then posted in the excel sheet and thus a comparative analyses was done focusing the different competitive strategies followed by the banks in marketing their product. E.g. ICICI bank & HDFC bank follows the aggressive marketing policy whereas banks as STANDARD CHARTERED & ABN AMRO follow the targeted marketing policy. The former cater to the needs of every customer and target the mass customer segment present in market while the latter focuses only on the selected segment and provides a very good service with charges
comparatively high than other banks. As our main objective behind this research was to analyze the competitive strategies we also did selling of this product so that we can analyze the need of the different customers while choosing a saving bank a/c. Thus we sell the axcess plus and did a comparative analyses of the various needs of the customer e.g. very good service, always filled ATMs, low charges etc.
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PHASE 2
People used to invest from the savings and some of the major investment instruments are ULIPs, MUTUAL FUNDS, LIC, etc. which caters to different investment needs of the investors as mentioned earlier. Every investor has lot of expectations from his investment but there is always priority given to the one expectation on the other. E.g. a customer might expect very high returns from his investment but when it comes to the risk he prefer to
invest in bonds as he didnt want to bear risk at all. Thus his priority is safe investment rather than very high returns. To analyze this we did a market survey considering the following facts in mind It consist sample from all the age groups of investors. It caters to all class of society i.e. businessmen, servicemen and self employed. People from different income groups were included in sample size. Sample size also consist sample of respondents with different disposable incomes. Etc Thus a questionnaire was formed including all these factors and a market survey was done in Delhi NCR region. The main aim of survey was to analyze the risk appetite of different respondents in different age groups, with different annual income, disposable income etc. so that while designing the portfolio of the customer we can actually identify the need of the customer and suggest him the investments according to his need. After collecting the required information an excel sheet was prepared in which the data was posted. Then we plan to did the graphical analyses of whole the data collected. These graphs will analyze the relations between different factors which were kept in mind while doing the analyses.
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To go into more depth of the investors thinking we did selling of this product too. The main aim behind this selling was to know the factors which an investor kept in mind before investing in any instrument. One of the most common factors we came to know was BRAND NAME. Apart from the ULIPs we also laid emphasis on deep theoretical study of mutual funds which are one of the most common investment instruments. This study includes comparative analyses of returns in different ULIP plans with different types of MUTUAL FUNDS. In this study comparison is done not only for returns but also keeping risk factor in mind.
IBS, GURGAON
Page 167
ANNEXURE-I
COMPARISON OF SERVICE CHARGES AMONG DIFFERENT PRIVATE BANKS
Service Charges Average Balance Non maintenance of AB <5000 >=5000 to < 7500 >=7500 to 10000 1500 1250 750 500/month 400/month 300/month 750/quarter* 750/quarter* * 750 STAN C 10000 ABN AMRO 10000 ICICI 5000 HDFC 5000 KOTAK M 10000
* Rs. 250/quarter for sr.citizens & young star customers (minors) ** if customer is semi urban than AQB will be 2500/quarter Debit card fees Free for 1st year Rs.100 for subsequent years na na
normal debit card
200/yr
180/yr
99/yr
100/yr
smart fill card gold card Additional cards supplementary cards add on cards replacement card fee damaged card fee woman s card
399/yr 799/yr
na 400/yr
99/yr* na
na 500/yr
na na
na
180/yr 180/yr** 200/card 200/card na
na na 200/card 200/card na
na 500/yr*** 100/card free 150/card
100/card 250/card 100/card free na
* smart fill card is HPCL DEBIT CARD in ICICI ** minimum limit for add on card in ABN AMRO is RS.15000 & service charge will be as <7500 500/month >=7500 to <10000 400/month >=10000 to < 15000 300/month
IBS, GURGAON
Page 168
***for easy shop woman s card fee will be RS 150/yr in HDFC ATM's transaction free UTI ATMS* ICICI cash withdrawal(fro m partners Rs 20 & from non partners Rs 60) SBI** HDFC & KOTAK M
Charged
rs 25 from any other bank except SBI
Others( Visa domestic ATMs
Cheque Book At par cheque book 0 to 500 50*** 501 & above cheque return Inward
50****
free Rs 1/ 1000(min Rs 50) free
300
350
200
400 100
300 300
100 OUTWARD 100 100***** *subsequent to the month where transaction criteria not fulfilled & bal<10,000 ** only in gold card , 2 transactions per month *** only if AQB is not maintained otherwise free **** free 1st cheque book of 25 leaves ***** 50/Cheque for local cheque deposited by customer statements monthly statement Adhoc statement Facilities Dmat a/c Dmat maintain charges
200/yr 50/yr
200/yr na
free* 100/stat
free 100/yr
na na
free 360 per yr
Internet Banking Phone Banking
free free
free free
free free
free free
free free
IBS, GURGAON
Page 169
DD/POS DD COMMISON On same bank on other bank * min 50 max 5000 ** min 50 max 8000 HDFC commission schedule on branch location up to 10000 10000-50000 50000-100000 above 100000 * for sr.citizens /rural areas ** min 150/***min 250/- & max 5000
50 2.5/1000**
2/1000(min 50) 4/1000 (100 min)
shown below
2.5/1000*
50,40* 75,60* 2.5/1000** 2/1000***
On non branches location-----rs 50/- plus charges as below rs 500/500/- to 1000/1000/- to 5000/5000/- to 10000/10000/ to 100000/100000 and above * max rs 5000 PO commission schedule * 75 for PO Upto 50000 max 5000 50 1/1000*
10 15 25 30 3/1000 6/1000*
dd charges
dd charges
Account closing charge
500 less than 6 months
within 12 months 500/-
250 within 1 yr, nil after 1 yr
< 14 & >6 months no charge, 15 days to 6 months 100/-
Rs.600 if closed within 6 months. Else no charges
Door step banking
courier Rs. 25 & DD Rs. 50 par transaction
Rs. 10 par transaction
na
IBS, GURGAON
Page 170
ANNEXURE-II
QUESTIONNAIRE NameAge
QUESTIONNAIRE
Name: Gender: Date of Birth: No of dependents: Address:
Male Female
1) What is your Educational Qualification? 10th or below 10+2 Graduate Post Graduate Others (Please Specify)
2) Your Occupation : Salaried

Business Man Retired Housewife Student 3) Your Residence is: Owned Rented Company Provided
4) What is your annual Income? Up to 200000 200000 600000 600000 1000000 1000000 or above
Telephone NoOccupation a) Service c) Self employed Current annual incomea) <2,50,000 c) Rs 5,00,000-10,00,000 1) Have you invested in any of the following? a) Fixed deposits. c) Stocks
b)Business d) Others b) Rs 2,50,000-5,00,000 d) >Rs 10,00,000
b) Mutual Fund d) ULIP e) Others
2) You begin to withdraw money from your investment IBS, GURGAON Page 172
a) 0-1 yr c) 3-10 yrs 3) What is your primary investment focus? a) Retirement c) Future uncertainty
b) 1-3 yrs d) 10 yrs or more
b) Wealth creation d) Tax rebate
4) Brand name is considered while making a decision to invest a) Disagree b) Uncertain c) Agree e) dont know 5) What is the most important criterion for you selecting a particular investment plan? a) Past performance b) Service c) Promoters background d) any other________________ 6) Your approx. fixed monthly expenses? a) < Rs.10,000 c) Rs. 25,000-50,000
b) Rs 10,000-25,000 d) Rs >50,000
7) How would you describe yourself as a risk taker? a) Willing to take risk for higher return b) Can take calculated risk. c) Low risk taking capabilities. e) Extremely averse to risk
References
www.standardchartered.co.in www.bajajallianz.com www.nseindia.com

www.mutualfundsindia.com
www.valueresearchonline.com
ICFAI Journals
The Economic Times
IBS, GURGAON
Page 174

Portfolio Management at Standard Chartered

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Portfolio Management at Standard Chartered

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STANDARD CHARTERED BANK

SACHIN MAHIPAL 078456105

2ND FLOOR,20, COMMUNITY CENTRE, NEW FRIENDS COLONY, NEW DELHI-110065

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