a project report on portfolio management

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A project report on portfolio management — Document Transcript 1. INTRODUCTION From The Rational Edge: The first in a new series of articles on portfolio management, this introduction expresses IBM’s viewpoint about the foundations and essentials of portfolio management, and discusses ideas and assets that support and enable effective portfoliomanagement practices.A good way to begin understanding what portfolio management is(and is not) may be to define the term portfolio. In a business context,we can look to the mutual fund industry to explain the terms origins.Morgan Stanleys Dictionary of Financial Terms offers the followingexplanation:If you own more than one security, you have an investment portfolio.You build the portfolio by buying additional stocks, bonds, mutualfunds, or other investments. Your goal is to increase the portfoliosvalue by selecting investments that you believe will go up in price.According to modern portfolio theory, you can reduce your investmentrisk by creating a diversified portfolio that includes enough differenttypes, or classes, of securities so that at least some of them mayproduce strong returns in any economic climate. 2. Note that this explanation contains a number of important ideas: • A portfolio contains many investment vehicles.

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Page 1: A Project Report on Portfolio Management

A project report on portfolio management — Document Transcript

1. INTRODUCTION

From The Rational Edge: The first in a new series of articles on portfolio management, this

introduction expresses IBM’s viewpoint about the foundations and essentials of portfolio

management, and discusses ideas and assets that support and enable effective

portfoliomanagement practices.A good way to begin understanding what portfolio

management is(and is not) may be to define the term portfolio. In a business context,we can

look to the mutual fund industry to explain the terms origins.Morgan Stanleys Dictionary of

Financial Terms offers the followingexplanation:If you own more than one security, you

have an investment portfolio.You build the portfolio by buying additional stocks, bonds,

mutualfunds, or other investments. Your goal is to increase the portfoliosvalue by selecting

investments that you believe will go up in price.According to modern portfolio theory, you

can reduce your investmentrisk by creating a diversified portfolio that includes enough

differenttypes, or classes, of securities so that at least some of them mayproduce strong

returns in any economic climate.

2. Note that this explanation contains a number of important ideas:

• A portfolio contains many investment vehicles.

• Owning a portfolio involves making choices -- that is, deciding what additional stocks,

bonds, or other financial instruments to buy; when to buy; what and when to sell; and so

forth. Making such decisions is a form of management.

• The management of a portfolio is goal-driven. For an investment portfolio, the specific

goal is to increase the value.

• Managing a portfolio involves inherent risks.Over time, other industry sectors have

adapted and applied theseideas to other types of "investments," including the

following:Application portfolio management: This refers to the practice ofmanaging an

entire group or major subset of software applicationswithin a portfolio. Organizations regard

Page 2: A Project Report on Portfolio Management

these applications asinvestments because they require development (or acquisition) costsand

incur continuing maintenance costs. Also, organizations mustconstantly make financial

decisions about new and existing softwareapplications, including whether to invest in

modifying them, whetherto buy additional applications, and when to "sell" -- that is, retire --

anobsolete software application.

3. Product portfolio management:

Businesses group major productsthat they develop and sell into (logical) portfolios,

organized by majorline-of-business or business segment. Such portfolios requireongoing

management decisions about what new products to develop(to diversify investments and

investment risk) and what existingproducts to transform or retire (i.e., spin off or divest).

Project orinitiative portfolio management, an initiative, in the simplest sense, isa body of

work with:

• A specific (and limited) collection of needed results or work products.

• A group of people who are responsible for executing the initiative and use resources, such

as funding.

• A defined beginning and end.Managers can group a number of initiatives into a portfolio

thatsupports a business segment, product, or product line. These effortsare goal-driven; that

is, they support major goals and/or componentsof the enterprises business strategy.

Managers must continuallychoose among competing initiatives (i.e., manage the

organizationsinvestments), selecting those that best support and enable diversebusiness goals

(i.e., they diversify investment risk). They must alsomanage their investments by providing

continuing oversight anddecision-making about which initiatives to undertake, which

tocontinue, and which to reject or discontinue.

4. INTRODUCTION TO INDIAN BANK

A premier bank owned by the Government of India

• Established on 15th August 1907 as part of the Swadeshi movement

Page 3: A Project Report on Portfolio Management

• Serving the nation with a team of over 22000 dedicated staff

• Total Business crossed Rs. 76000 Crores as on 31.03.2007

• Operating Profit increased to Rs.1358.59 Crores as on 31.03.2007

• Net Profit increased to Rs.759.77 Crores as on 31.03.2007

• Net worth improved to Rs.3621 Crores as on 31.03.2007

• 1476 Branches spread all over

India International Presence

• Overseas branches in Singapore and Colombo including a Foreign Currency Banking Unit at

Colombo

• 229 Overseas Correspondent banks in 69 countries

Diversified banking activities - 3 Subsidiary companies

• Indbank Merchant Banking Services Ltd

• IndBank Housing Ltd.

• IndFund Management Ltd

A front runner in specialized banking

• 88 Forex Authorized branches inclusive of 3 Specialized Overseas Branches at Chennai ,

Bangalore and Mumbai exclusively for handling forex transactions arising out of Export,

Import, Remittances and Non Resident Indian business

• 5 specialized NRI Branches exclusively for servicing Non- Resident Indians

• 1 Small Scale Industries Branch extending finance exclusively to SSI units

Page 4: A Project Report on Portfolio Management

Leadership in Rural Development

• Loan products like Artisan Card, Kisan Card, Kisan Bike Scheme, Yuva Kisan Vidya Nidhi

Yojana to meet diverse credit needs of farmers.

Provision of technical assistance and project reports in Agriculture to entrepreneurs through

Agricultural Consultancy & Technical Services (ACTS)

• 2 Specialised Agricultural Finance branches to finance High Tech Agricultural Projects.A

pioneer in introducing the latest technology in Banking

• 100% Business Computerisation

• 168 Centres throughout the country covered under Anywhere Banking

• Core Banking Solution(CBS) in 1204 branches and 77 extension counters.

• 429 connected Automated Teller Machines(ATM) in 99 cities/towns

• 24 x 7 Service through 8500 ATMs under shared network

• Internet and Tele Banking services to all Core Banking customers

• e-payment facility for Corporate customers

• Cash Management Services

• Depository Services

• Reuter Screen, Telerate, Reuter Monitors, Dealing System provided at all Overseas Branches

• I B Credit Card Launched

• I B Gold CoinProjectsformba.blogspot.com

Page 5: A Project Report on Portfolio Management

Indian Bank enters into a Strategic Alliance with Pnb Principal

Chennai, January 25, 2006: Indian Bank is enlarging its activities todeliver value-added

services to its customers. The Bank is presentlyselling the Insurance products, both Life

and Non-life as a CorporateAgent. The Bank is concentrating on optimizing the 3 Ps,

People,Process and Products to give maximum advantage to its customersand to face the

market competition by exploiting the emergingopportunities.

Indian Bank today announced a strategic alliance with Pnb PrincipalInsurance Advisory

Co., Pvt. Ltd. in the insurance advisory businessand Pnb Principal Financial Planners Pvt.

Ltd. in the financialplanning business. As the alliance will enable access to the

Financialproducts of 30 Insurance companies both life and non-life and anequal number

of Investment solutions to the Bank’s Customers underone roof, the Bank’s emphasis

would be to serve as an “agent to itscustomers”.

As per the scope of the alliance with Pnb Principal InsuranceAdvisory Co., Pvt. Ltd.,

Indian Bank has taken an equity stake in theCompany. This partnership will also deliver

risk managementsolutions to Indian Bank customers through the Insurance advisoryroute.

The solutions offered will include risk assessment, insuranceportfolio analysis &

placement, insurance portfolio administration, andclaims management.

As per Indian Bank’s strategic alliance with Pnb Principal FinancialPlanners Pvt. Ltd.,

the Bank will distribute the investment solutionsoffered by Pnb Principal Financial

Planners through its extensivebranch network. Pnb Principal Financial Planners will

provide supportin the area of financial planning, investment advisory, research,systems

and business development to Indian Bank. The strategic alliance will enable customers of

Indian Bank to access a wide rangeof superior investment solutions.

Announcing the partnership with Indian Bank, Sanjay Sachdev,Country Manager-India,

Principal International said, “Banks havecurrently emerged as the largest distribution

channel for financialinvestment options. We are pleased to associate ourselves withIndian

Bank. This partnership with Indian Bank will make a range ofinvestment solutions more

accessible to retail investors of IndianBank.”

Page 6: A Project Report on Portfolio Management

Dr. K.C. Chakrabarty, Chairman and Managing Director, IndianBank said,” The alliance

with Pnb Principal in the areas of RiskManagement, Insurance and Investment will help

in providing aOne-stop solution to the 15 million strong customers of IndianBank

throughout the country. The Tie-up will help realize ourcherished goal of making our

Bank, “the best people to bankwith”.

Elaborating, Mr. B Sambamurthy, Executive Director has saidthat this is a part of Bank’s

mission to provide all financialproducts under one roof. This tie-up brings a paradigm

shift frombeing an agent of Insurance Company to one of being acustomer agent.

METHODOLOGY

Portfolio Management is used to select a portfolio of new productdevelopment projects to

achieve the following goals:

• Maximize the profitability or value of the portfolio

• Provide balance

• Support the strategy of the enterprise

Portfolio Management is the responsibility of the senior management teamof an

organization or business unit. This team, which might be called theProduct Committee,

meets regularly to manage the product pipeline andmake decisions about the product

portfolio. Often, this is the same groupthat conducts the stage-gate reviews in the

organization.

A logical starting point is to create a product strategy - markets, customers,products,

strategy approach, competitive emphasis, etc. The second step is tounderstand the budget

or resources available to balance the portfolio against.Third, each project must be

assessed for profitability (rewards), investmentrequirements (resources), risks, and other

appropriate factors.

Page 7: A Project Report on Portfolio Management

The weighting of the goals in making decisions about products varies fromcompany. But

organizations must balance these goals: risk vs. profitability, products vs. improvements,

strategy fit vs. reward, market vs. productline, long-term vs. short-term.

Several types of techniques have been used to support the portfoliomanagement process:

• Heuristic models

• Scoring techniques

• Visual or mapping techniques

The earliest Portfolio Management techniques optimized projectsprofitability or financial

returns using heuristic or mathematical models.However, this approach paid little

attention to balance or aligning theportfolio to the organizations strategy. Scoring

techniques weight and scorecriteria to take into account investment requirements,

profitability, risk andstrategic alignment. The shortcoming with this approach can be an

overemphasis on financial measures and an inability to optimize the mix ofprojects.

Mapping techniques use graphical presentation to visualize aportfolios balance. These are

typically presented in the form of a two-dimensional graph that shows the trade-offs or

balance between two factorssuch as risks vs. profitability, marketplace fit vs. product line

coverage,financial return vs. probability of success, etc.

Diagram – miss in word

The chart shown above provides a graphical view of the project portfoliorisk-reward

balance. It is used to assure balance in the portfolio of projects -neither too risky nor

conservative and appropriate levels of reward for therisk involved. The horizontal axis is Net

Present Value; the vertical axis isProbability of Success. The size of the bubble is

proportional to the totalrevenue generated over the lifetime sales of the product.

While this visual presentation is useful, it cant prioritize projects.Therefore, some mix of

these techniques is appropriate to support thePortfolio Management Process. This mix is

often dependent upon thepriority of the goals.

Page 8: A Project Report on Portfolio Management

The recommended approach is to start with the overall business plan thatshould define the

planned level of R&:D investment, resources (e.g.,headcount, etc.), and related sales

expected from new products. Withmultiple business units, product lines or types of

development, werecommend a strategic allocation process based on the business plan.

Thisstrategic allocation should apportion the planned R&D investment intobusiness units,

product lines, markets, geographic areas, etc. It may alsobreakdown the R&D investment

into types of development, e.g., technologydevelopment, platform development, new

products, andupgrades/enhancements/line extensions, etc.

Once this is done, then a portfolio listing can be developed including therelevant portfolio

data. We favor use of the development productivity index(DPI) or scores from the scoring

method. The development productivityindex is calculated as follows: (Net Present Value x

Probability of Success) /Development Cost Remaining. It factors the NPV by the probability

of bothtechnical and commercial success. By dividing this result by thedevelopment cost

remaining, it places more weight on projects nearercompletion and with lower uncommitted

costs. The scoring method uses aset of criteria (potentially different for each stage of the

project) as a basisfor scoring or evaluating each project. An example of this scoring method

isshown with the worksheet below.

Weighting factors can be set for each criterion. The evaluators on a ProductCommittee score

projects (1 to 10, where 10 are best). The worksheetcomputes the average scores and applies

the weighting factors to computethe overall score. The maximum weighted score for a

project is 100.

This portfolio list can then be ranked by either the developmentpriority index or the score.

An example of the portfolio list is shownbelow and the second illustration shows the

category summary forthe scoring method.

Diagram not in word

Once the organization has its prioritized list of projects, it then needs todetermine where the

cutoff is based on the business plan and the plannedlevel of investment of the resources

avaialable. This subset of the highpriority projects then needs to be further analyzed and

Page 9: A Project Report on Portfolio Management

checked. The firststep is to check that the prioritized list reflects the planned breakdown

ofprojects based on the strategic allocation of the business plan. Pie chartssuch as the one

below can be used for this purpose.

Diagram-not in word

Other factors can also be checked using bubble charts. For example,the risk-reward balance

is commonly checked using the bubble chartshown earlier. A final check is to analyze

product and technologyroadmaps for project relationships. For example, if a lower

priorityplatform project was omitted from the protfolio priority list, thesubsequent higher

priority projects that depend on that platform or platform technology would be impossible to

execute unless thatplatform project were included in the portfolio priority list.

Finally, this balanced portfolio that has been developed is checkedagainst the business plan

as shown below to see if the plan goalshave been achieved - projects within the planned

R&D investmentand resource levels and sales that have met the goals.

With the significant investments required to develop new productsand the risks involved,

Portfolio Management is becoming anincreasingly important tool to make strategic decisions

about productdevelopment and the investment of company resources. In manycompanies,

current year revenues are increasingly based on newproducts developed in the last one to

three years.

MEANING OF PORTFOLIO MANAGEMENT

The asset may be physical or financial like Sharesis a collection of asset. The individual

investor or aBonds, Debentures, and Preference Shares etc. fund manager would not like

to put all his money in the shares of one company, Main objective is to maximize

portfoliofor that would amount to great risk. return and at the same time minimizing the

portfolio risk by diversification. Portfolio management is the management of various

financial assets, which According to Securities and Exchange Board of Indiacomprise the

portfolio. (Portfolio manager) Rules, 1993; “ portfolio” means the total holding of

Designing portfolios to suit investorsecurities belonging to any person; requirement often

Page 10: A Project Report on Portfolio Management

involves making several projections regarding the future, When the actual situation is at

variancebased on the current information. One of the keyfrom the projections portfolio

composition needs to be changed. inputs in portfolio building is the risk bearing ability of

the investor. Portfolio management can be having institutional, for example, Unit Trust,

Mutual Funds, Pension Provident and Insurance Funds, Investment Companies and non-

Investment Companies.Projectsformba.blogspot.com

Institutional e.g. individual, Hindu17. Projectsformba.blogspot.com The large

institutionalundivided families, Non- investment Company’s etc. A professional, who

manages otherinvestors avail services of professionals. people’s or institution’s investment

portfolio with the object of profitability, The portfoliogrowth and risk minimization, is

known as a portfolio manager. In case of medium and largemanager performs the job of

security analyst. sized organization, job function of portfolio manager and security analyst

are Portfolios are built to suit the return expectations and the riskseparate. appetite of the

investor.Projectsformba.blogspot.com

18. Projectsformba.blogspot.com INVESTMENT PORTFOLIO MANAGEMENT AND

PORTFOLIO THEORYPortfolio theory is an investment approach developed by University

ofChicago economist Harry M. Markowitz (1927 - ), who won a NobelPrize in economics in

1990. Portfolio theory allows investors toestimate both the expected risks and returns, as

measuredstatistically, for their investment portfolios.Markowitz described how to combine

assets into efficiently diversifiedportfolios. It was his position that a portfolios risk could be

reducedand the expected rate of return could be improved if investmentshaving dissimilar

price movements were combined. In other words,Markowitz explained how to best assemble

a diversified portfolio andproved that such a portfolio would likely do well.There are two

types of Portfolio Strategies:A. Passive Portfolio StrategyA strategy that involves minimal

expectation input, and instead relieson diversification to match the performance of some

market index.B. Active Portfolio StrategyA strategy that uses available information and

forecasting techniquesto seek a better performance than a portfolio that is simply

diversifiedbroadlyProjectsformba.blogspot.com

19. Projectsformba.blogspot.com BASIC CONCEPTS AND COMPONENTS FOR

PORTFOLIO MANAGEMENTNow that we understand some of the basic dynamics and

Page 11: A Project Report on Portfolio Management

inherentchallenges organizations face in executing a business strategy viasupporting

initiatives, lets look at some basic concepts andcomponents of portfolio management

practices.1.The PortfolioFirst, we can now introduce a definition of portfolio that relates

moredirectly to the context of our preceding discussion. In the IBM view, aportfolio is: One

of a number of mechanisms, constructed to actualizesignificant elements in the Enterprise

Business Strategy.It contains a selected, approved, and continuously evolving, collectionof

Initiatives which are aligned with the organizing element of thePortfolio, and, which

contribute to the achievement of goals or goalcomponents identified in the Enterprise

Business Strategy. The basisfor constructing a portfolio should reflect the enterprises

particularneeds. For example, you might choose to build a portfolio aroundinitiatives for a

specific product, business segment, or separatebusiness unit within a multinational

organization.Projectsformba.blogspot.com

20. Projectsformba.blogspot.com2.The Portfolio StructureAs we noted earlier, a portfolio

structure identifies and contains anumber of portfolios. This structure, like the portfolios

within it, shouldalign with significant planning and results boundaries, and withbusiness

components. If you have a product-oriented portfoliostructure, for example, then you would

have a separate portfolio foreach major product or product group. Each portfolio would

contain allthe initiatives that help that particular product or product groupcontribute to the

success of the enterprise business strategy.3.The Portfolio ManagerThis is a new role for

organizations that embrace a portfoliomanagement approach. A portfolio manager is

responsible forcontinuing oversight of the contents within a portfolio. If you haveseveral

portfolios within your portfolio structure, then you will likelyneed a portfolio manager for

each one. The exact range ofresponsibilities (and authority) will vary from one organization

toanother,1 but the basics are as follows: • One portfolio manager oversees one portfolio. •

The portfolio manager provides day-to-day oversight. • The portfolio manager periodically

reviews the performance of, and conformance to expectations for, initiatives within the

portfolio.Projectsformba.blogspot.com

21. Projectsformba.blogspot.com • The portfolio manager ensures that data is collected and

analyzed about each of the initiatives in the portfolio. • The portfolio manager enables

periodic decision making about the future direction of individual initiatives.4. Portfolio

Reviews and Decision MakingAs initiatives are executed, the organization should conduct

Page 12: A Project Report on Portfolio Management

periodicreviews of actual (versus planned) performance and conformance tooriginal

expectations. Typically, organization managers specify thefrequency and contents for these

periodic reviews, and individualportfolio managers oversee their planning and execution.

The reviewsshould be multi-dimensional, including both tactical elements (e.g.,adherence to

plan, budget, and resource allocation) and strategicelements (e.g., support for business

strategy goals and delivery ofexpected organizational benefits).A significant aspect of

oversight is setting multiple decision points foreach initiative, so that managers can

periodically evaluate data anddecide whether to continue the work.

These"continue/change/discontinue" decisions should be driven by anunderstanding

(developed via the periodic reviews) of a giveninitiatives continuing value, expected

benefits, and strategiccontribution, Making these decisions at multiple points in theinitiatives

lifecycle helps to ensure that managers will continuallyexamine and assess changing internal

and external circumstances,needs, and performance.Projectsformba.blogspot.com

22. Projectsformba.blogspot.com5. GovernanceImplementing portfolio management

practices in an organization is atransformation effort that typically involves developing

newcapabilities to address new work efforts, defining (and filling) newroles to identify

portfolios (collections of work to be done), anddelineating boundaries among work efforts

and collections.Implementing portfolio management also requires creating a structureto

provide planning, continuing direction, and oversight and control forall portfolios and the

initiatives they encompass. That is where thenotion of governance comes into play. The IBM

view of governanceis:An abstract, collective term that defines and contains a framework

fororganization, exercise of control and oversight, and decision-makingauthority, and within

which actions and activities are legitimately andproperly executed; together with the

definition of the functions, theroles, and the responsibilities of those who exercise this

oversightand decision-making.Portfolio management governance involves multiple

dimensions,including: • Defining and maintaining an enterprise business strategy. • Defining

and maintaining a portfolio structure containing all of the organizations initiatives

(programs, projects, etc.).Projectsformba.blogspot.com

23. Projectsformba.blogspot.com • Reviewing and approving business cases that propose the

creation of new initiatives. • Providing oversight, control, and decision-making for all

ongoing initiatives. • Ownership of portfolios and their contents.Each of these dimensions

Page 13: A Project Report on Portfolio Management

requires an owner -- either an individual ora collective -- to develop and approve plans,

continuously adjustdirection, and exercise control through periodic assessment andreview of

conformance to expectations.A good governance structure decomposes both the types of

work andthe authority to plan and oversee work. It defines individual andcollective roles,

and links them to an authority scheme. Policies thatare collectively developed and agreed

upon provide a framework forthe exercise of governance. The complexities of

governancestructures extend well beyond the scope of this article. Manyorganizations turn to

experts for help in this area because it is socritical to the success of any business

transformation effort thatencompasses portfolio management. For now, suffice it to say that

itis worth investing time and effort to create a sound and flexiblegovernance structure before

you attempt to implement portfoliomanagement practices.Projectsformba.blogspot.com

24. Projectsformba.blogspot.com6.Portfolio management essentialsEvery practical discipline

is based on a collection of fundamentalconcepts that people have identified and proven (and

sometimesrefined or discarded) through continuous application. These conceptsare useful

until they become obsolete, supplanted by newer and moreeffective ideas.For example, in

Roman times, engineers discovered that if theupstream supports of a bridge were shaped to

offer little resistance tothe current of a stream or river, they would last longer. They

appliedthis principle all across the Roman Empire. Then, in the Middle Ages,engineers

discovered that such supports would last even longer iftheir downstream side was also

shaped to offer little resistance to thecurrent. So that became the new standard for bridge

construction.Portfolio management, like bridge-building, is a discipline, and anumber of

authors and practitioners have documented fundamentalideas about its exercise. Recently,

based on our experiences withclients who have implemented portfolio management practices

andon our research into the discipline, we have started to shape an IBMview of fundamental

ideas around portfolio management. We arebeginning to express this view as a collection of

"essentials" that are,in turn, grouped around a small collection of portfolio

managementthemes.Projectsformba.blogspot.com

25. Projectsformba.blogspot.comFor example, one of these themes is initiative value

contribution. Itsuggests that the value of an initiative (i.e., a program or project)should be

estimated and approved in order to start work, and thenassessed periodically on the basis of

the initiatives contribution to thegoals and goal components in the enterprise business

Page 14: A Project Report on Portfolio Management

strategy.These assessments determine (in part) whether the initiative warrantscontinued

support.Projectsformba.blogspot.com

26. Projectsformba.blogspot.com OBJECTIVES OF PORTFOLIO MANAGEMENT The

basic objective of Portfolio Management is to maximize yield and minimize risk. The other

objectives are as follows: a) Stability of Income: An investor considers stability of income

from his investment. He also considers the stability of purchasing power of income. b)

Capital Growth: Capital appreciation has become an important investment principle.

Investors seek growth stocks which provide a very large capital appreciation by way of

rights, bonus and appreciation in the market price of a share. c) Liquidity: An investment is a

liquid asset. It can be converted into cash with the help of a stock exchange. Investment

should be liquid as well as marketable. The portfolio should contain a planned proportion of

high-grade and readily salable investment. d) Safety: safety means protection for investment

against loss under reasonably variations. In order to provide safety, a careful review of

economic and industry trends is necessary. In other words, errors in portfolio are

unavoidable and it requires extensive diversification.Projectsformba.blogspot.com

27. Projectsformba.blogspot.com e) Tax Incentives: Investors try to minimize their tax

liabilities from the investments. The portfolio manager has to keep a list of such investment

avenues along with the return risk, profile, tax implications, yields and other

returns.Projectsformba.blogspot.com

28. Projectsformba.blogspot.comThere are three goals of portfolio management: 1.

Maximize the value of the portfolio 2. Seek balance in the portfolio 3. Keep portfolio

projects strategically alignedIt provides a set of portfolio management tools to help achieve

these goals.With multiple business units, product lines or types of development,

werecommend a strategic allocation process based on the business plan. TheMaster Project

Schedule provides a summary of all-active as well asproposed projects and classifies them

by status (active, proposed, on-hold)and by business unit/product line to align projects with

the strategicallocation. The Master Project Schedule also provides additional

portfolioinformation to prioritize projects using either a scorecard method or

thedevelopment productivity index (DPI *). In addition to this prioritization,PD-Trek

provides a Risk-Reward Bubble Chart and a Project Type Pie Chartto assure balance. A

Product or Technology Roadmap template is providedto help visualize platform and

Page 15: A Project Report on Portfolio Management

technology relationships to assure criticalproject relationships are not overlooked with this

prioritization. This willallow management to develop a balanced approach to selecting

andcontinuing with the appropriate mix of projects to satisfy the three

goals.Projectsformba.blogspot.com

29. Projectsformba.blogspot.com FUNCTIONS OF PORTFOLIO MANAGEMENTThe

basic purpose of portfolio management is to maximize yield andminimize risk. Every

investor is risk averse. In order to diversify therisk by investing into various securities

following functions arerequired to be performed.The functions undertaken by the portfolio

management are asfollows: 1. To frame the investment strategy and select an investment

mix to achieve the desired investment objective; 2. To provide a balanced portfolio which

not only can hedge against the inflation but can also optimize returns with the associated

degree of risk; 3. To make timely buying and selling of securities; 4. To maximize the after-

tax return by investing in various taxes saving investment

instruments.Projectsformba.blogspot.com

30. Projectsformba.blogspot.com STEPS IN PORTFOLIO MANAGEMENT Performance

Portfolio Evaluation Revision Portfolio Execution STEPS Selection of Asset Mix

Identification Portfolio Of Strategy ObjectivesProjectsformba.blogspot.com

The31. Projectsformba.blogspot.com 1) IDENTIFICATION OF THE OBJECTIVES

starting point in this process is to determine the characteristics of the various investments

and then matching them with the individuals need and All the personal investing is designed

in order to achievepreferences. These objectives may be tangible such as buying a

car,certain objectives. house etc. and intangible objectives such as social status, security

etc. Similarly, these objectives may be classified as financial or personal Financial

objectives are safety, profitability and liquidity. objectives. Personal or individual

objectives may be related to personal characteristics of individuals such as family

commitments, status, depends, educational requirements, income, consumption and

provision for retirement etc. 2) The aspect of Portfolio Management is

theFORMULATION OF PORTFOLIO STRATEGY Whilemost important element of

proper portfolio investment and speculation. planning, a careful review should be conducted

about the financial situation and This will suggest a set of investment andcurrent capital

market conditions. The statement of investment policiesspeculation policies to be

Page 16: A Project Report on Portfolio Management

followed. includes the portfolio objectives, strategies and

constraints.Projectsformba.blogspot.com

Portfolio strategy means plan or policy to32. Projectsformba.blogspot.com There are

differentbe followed while investing in different types of assets. They require changes as

time passes, investor’s wealthinvestment strategies. Therefore, thechanges, security

price change, investor’s knowledge expands. The strategic assetoptional strategic asset

allocation also changes. allocation policy would call for broad diversification through an

indexed holding of virtually all securities in the asset class. 3) SELECTION OF ASSET

The most important decision in portfolio management is selection of assetMIX It means

spreading out portfolio investment into different asset classesmix. In other words

selection of asset mixlike bonds, stocks, mutual funds etc. means investing in different

kinds of assets and reduces risk and volatility and Selection of asset mix refers

tomaximizes returns in investment portfolio. The securitythe percentage to the invested

in various security classes. classes are simply the type of securities as under: » money

market instrument » fixed income securityProjectsformba.blogspot.com

33. Projectsformba.blogspot.com » equity shares » real estate investment » Once the

objective of the portfolio is determined theinternational securities Normally

thesecurities to be included in the portfolio must be selected. portfolio is selected from a

list of high-quality bonds that the portfolio The portfolio manager has to decide the goals

beforemanager has at hand. The goal may be to achieve pure growth, growthselecting

the common stock. with some income or income only. Once the goal has been selected, the

portfolio The process ofmanager can select the common stocks. 4) PORTFOLIO

EXECUTION: portfolio management involves a logical set of steps common to any

decision, Applying this process to actual portfoliosplan, implementation and monitor.

Therefore, in the execution stage, three decisions need to becan be complex. made, if the

percentage holdings of various asset classes are currently different from desired

holdings.Projectsformba.blogspot.com

The portfolio than, should be rebalanced.34. Projectsformba.blogspot.com If the

statement of investment policy requires pure investment strategy, this is However, many

portfolioonly thing, which is done in the execution stage. managers engage in the

speculative transactions in the belief that such Such speculativetransactions will generate

Page 17: A Project Report on Portfolio Management

excess risk-adjusted returns. Timingtransactions are usually classified as timing or

selection decisions. decisions over or under weight various asset classes, industries or

economic Such timing decisions are knownsectors from the strategic asset allocation. as

tactical asset allocation and selection decision deals with securities within The investor has

toa given asset class, industry group or economic sector. begin with periodically adjusting

the asset mix to the desired mix, which is Then the investor or portfolio managerknown as

strategic asset allocation. can make any tactical asset allocation or security selection

decision. 5) Portfolio management would be an incomplete exercisePORTFOLIO

REVISION The portfolio, which is once selected, has to bewithout periodic review.

continuously reviewed over a period of time and if necessary revised depending on the

objectives of investor.Projectsformba.blogspot.com

Thus, portfolio revision means changing35. Projectsformba.blogspot.com Investment

portfolio management involvesthe asset allocation of a portfolio. maintaining proper

combination of securities, which comprise the investor’s Forportfolio in a manner that

they give maximum return with minimum risk. this purpose, investor should have

continuous review and scrutiny of his Whenever adverse conditions develop, he can dispose

ofinvestment portfolio. However, the frequency of review dependsthe securities, which

are not worth. upon the size of the portfolio, the sum involved, the kind of securities held

The review should include a carefuland the time available to the investor. examination of

investment objectives, targets for portfolio performance, actual The review should

beresults obtained and analysis of reason for variations. There are techniques of

portfoliofollowed by suitable and timely action. Investors buy stock according to their

objectives and return-riskrevision. These fluctuations may be related to economic activity

or due toframework. Ideally investors should buy when prices are low and sell

whenother factors. prices rise to levels higher than their normal

fluctuations.Projectsformba.blogspot.com

36. Projectsformba The investor should decide how often the.blogspot.com If revision

occurs to often, transaction andportfolio should be revised. If revision is attempted too

infrequently theanalysis costs may be high. The important factor to take intobenefits of

timing may be foregone. consideration is, thus, timing for revision of portfolio. 6)

PORTFOLIO Portfolio management involves maintaining a properPERFORMANCE

Page 18: A Project Report on Portfolio Management

EVALUATION: combination of securities, which comprise the investor’s portfolio in a

manner The investor should havethat they give maximum return with minimum risk.

These rates ofcontinues review and scrutiny of his investment portfolio. Completereturn

should be based on the market value of the assets of the fund. evaluation of the portfolio

performance must include examining a measure of the A portfolio manager, by evaluating

his owndegree of risk taken by the fund. It can be viewed asperformance can identify

sources of strength or weakness. a feedback and control mechanism that can make the

investment management process more effective.Projectsformba.blogspot.com

Good performance in the past might have37. Projectsformba.blogspot.com resulted from

good luck, in which case such performance may not be expected to On the other hand, poor

performance in the past mightcontinue in the future. Therefore, the first task in

performancehave been result of bad luck. Then theevaluation is to determine whether

past performance was good or poor. second task is to determine whether such performance

was due to skill or luck. Good performance in the past may have resulted from the actions

of a highly The performance of portfolio should be measuredskilled portfolio manager.

The performance of anperiodically, preferably once in a month or a quarter. individual

stock should be compared with the overall performance of the

market.Projectsformba.blogspot.com

38. Projectsformba.blogspot.com TYPES OF PORTFOLIO MANAGEMENT:The two

types of portfolio management services are available o theinvestors: Discretionary portfolio

Non-discretionary Management portfolio Management 1. The Discretionary In this type of

services, the clientportfolio management services (DPMS): parts with his money in favor

of manager, who in return, handles all the paper work, makes all the decisions and gives a

good return on the investment and for In this discretionary PMS, to maximize thethis he

charges a certain fees. yield, almost all portfolio managers parks the funds in the money

market securities such as overnight market, 182 days treasury bills and 90 days Normally,

return on such investment varies from 14 to 18 percommercial bills. cent, depending on

the call money rates prevailing at the time of investment.Projectsformba.blogspot.com

39. Projectsformba.blogspot.com 2. The Non-discretionary portfolio The manager function

as a counselor, but the investor ismanagement services: free to accept or reject the

manager’s advice; the manager for a services charge The manager concentrates on stock

Page 19: A Project Report on Portfolio Management

marketalso undertakes the paper work. instruments with a portfolio tailor made to the risk

taking ability of the investor.Projectsformba.blogspot.com

It is logical40. Projectsformba.blogspot.com EQUITY PORTFOLIO MANAGEMENT

that the expected return of a portfolio should depend on the expected return of There are

two approaches to the selection ofthe security contained in it. One is technical analysis

and the other is fundamentalequity portfolio. Technical analysis assumes that the price of

a stock depends onanalysis. All financial and market information ofsupply and demand

in the stock market. Charts are drawn togiven security is already reflected in the market

price. Theseidentify price movements of a given security over a period of time. charts

enable the investors to predict the future movement of the price of Equity portfolio is a risky

portfolio, but at the same time thesecurity. An Equity portfolio provides highest returns.

return is also higher. efficient portfolio manager can obviously give more weight age to

fundamental analysis than the technical analysis.Projectsformba.blogspot.com

The fundamental analysis includes the41. Projectsformba.blogspot.com study of ratio

analysis, past and present track record of the company, quality There may be several

combinations ofof management, government policies etc. Allocation of funds for equity

portfolio is a questioninvestment portfolio. Among all risky investments,of top most

importance to any portfolio manager. selection of the best possible combination and

allocation of funds among these selected investment groups are of great

importance.Projectsformba.blogspot.com

The individual42. Projectsformba.blogspot.com BONDS PORTFOLIO MANAGEMENT

The portfolio can be spared overinvestors can invest in bond portfolio. Investment in

bond is less risky and safe as comparedvariety of securities. There are no However, the

return on bond is very low. to equity investment. Therefore, there is no capital

appreciationmuch fluctuations in bond prices. Some bonds are tax saving which help the

investor to reduce hisin this case. There is no much liquidity in bonds, investment in

bondtax liability. portfolio is less risky and safe but, return is reasonable, low liquidity and

tax saving are some of the more important features of bond portfolio investment. However,

it is suitable for normal investors for getting average return over Bond portfolio includes

different types of bond, tax freetheir investment. bonds and taxable

bonds.Projectsformba.blogspot.com

Page 20: A Project Report on Portfolio Management

Tax free bonds are issued by public sector43. Projectsformba.blogspot.com undertaking

or Government on which interest s compounded half yearly and payable They have a

maturity of 7 to 10 years with the facility foraccordingly. The tax free bonds means the

interest income on these bonds is notbuyback. However, Therefore, the interest rates on

these bonds are very low. taxable. taxable bonds yield higher interest compounded half

yearly and also payable half They also have buy back facilities similar to taxableyearly.

bonds.Projectsformba.blogspot.com

44. Projectsformba.blogspot.com ADVANTAGES OF PORTFOLIO MANAGEMENT

Individuals will benefits immensely by taking portfolio management services for the

following reason: - a) Whatever may be the status of the capital market; over the long period

capital markets have given an excellent return when compared to other forms of investment.

The return from bank deposits, units etc., is much less than from stock market. b) The Indian

stock markets are very complicated. Though there are thousands of companies that are listed

only a few hundred, which have the necessary liquidity. It is impossible for any individual

whishing to invest and sit down and analyses all these intricacies of the market unless he

does nothing else. c) Even if an investor is able to visualize the market, it is difficult to

investor to trade in all the major exchanges of India, look after his deliveries and payments.

This is further complicated by theProjectsformba.blogspot.com

45. Projectsformba.blogspot.com volatile nature of our markets, which demands constant

reshuffling of portProjectsformba.blogspot.com

46. Projectsformba.blogspot.com IMPORTANCE OF PORTFOLIO MANAGEMENT ⇒ In

the past one-decade, significant changes have taken place in the investment climate in India. ⇒ Portfolio management is becoming a rapidly growing area serving a broad array of

investors- both individual and institutional-with investment portfolios ranging in asset size

from thousands to cores of rupees. ⇒ It is becoming important because of: i. Emergence of

institutional investing on behalf of individuals. A number of financial institutions, mutual

funds, and other agencies are undertaking the task of investing money of small investors, on

their behalf. ii. Growth in the number and the size of invisible funds–a large part of

household savings is being directed towards financial assets. iii. Increased market volatility-

risk and return parameters of financial assets are continuously changing because of frequent

Page 21: A Project Report on Portfolio Management

changes in governments industrial and fiscal policies, economic uncertainty and instability.

iv. Greater use of computers for processing mass of data.Projectsformba.blogspot.com

47. Projectsformba.blogspot.com v. Professionalization of the field and increase use of

analytical methods (e.g. quantitative techniques) in the investment decision-making, and vi.

Larger direct and indirect costs of errors or shortfalls in meeting portfolio objectives-

increased competition and greater scrutiny by investors.Projectsformba.blogspot.com

48. Projectsformba.blogspot.com QUALITIES OF PORTFOLIO MANAGER 1. Sound

Portfolio management is an existing and challenging job. general knowledge: In theHe

has to work in an extremely uncertain and conflicting environment. stock market every new

piece of information affects the value of the securities He must be able to judge andof

different industries in a different way. He must have sharp memory,predict the effects of

the information he gets. alertness, fast intuition and self-confidence to arrive at quick

decisions. 2. He must have his own theory to arrive at the value of theAnalytical Ability:

An analysis of the security’s values, company, etc. is continues jobsecurity. A good

analyst makes a good financial consultant. of the portfolio manager. The analyst can know

the strengths, weakness, opportunities of the economy, industry and the

company.Projectsformba.blogspot.com

He must be good49. Projectsformba.blogspot.com 3. Marketing skills: He He has to

convince the clients about the particular security. salesman. In this Marketinghas to

compete with the Stock brokers in the stock market. In the cyclical behavior of the

stockskills help him a lot. 4. Experience: market history is often repeated, therefore the

experience of the different The experience of different types ofphases helps to make

rational decisions. securities, clients, markets trends etc. makes a perfect professional

manager.Projectsformba.blogspot.com

50. Projectsformba.blogspot.com CODE OF CONDUCT- PORTFOLIO MANAGERS: 1. A

portfolio manager shall, in the conduct of his business, observe high standards of integrity

and fairness in all his dealings with his clients and other portfolio managers. 2. The money

received by a portfolio manager from a client for an investment purpose should be deployed

by the portfolio manager as soon as possible for that purpose and money due and payable to

a client should be paid forthwith. 3. A portfolio manager shall render at all time high

standards of services exercise due diligence, ensure proper care and exercise independent

Page 22: A Project Report on Portfolio Management

professional judgment. The portfolio manager shall either avoid any conflict of interest in

his investment or disinvestments decision, or where any conflict of interest arises; ensure

fair treatment to all his customers. He shall disclose to the clients, possible sources of

conflict of duties and interest, while providing unbiased services. A portfolio manager shall

not place his interest above those of his clients. 4. A portfolio manager shall not make any

statement or become privy to any act, practice or unfair competition, which is likely to be

harmful to the interests of other portfolio managers or it likely to place such other portfolio

managers in a disadvantageousProjectsformba.blogspot.com

51. Projectsformba.blogspot.com position in relation to the portfolio manager himself, while

competing for or executing any assignment. 5. A portfolio manager shall not make any

exaggerated statement, whether oral or written, to the client either about the qualification or

the capability to render certain services or his achievements in regard to services rendered to

other clients. 6. At the time of entering into a contract, the portfolio manager shall obtain in

writing from the client, his interest in various corporate bodies, which enables him to obtain

unpublished price-sensitive information of the body corporate. 7. A portfolio manager shall

not disclose to any clients or press any confidential information about his clients, which has

come to his knowledge. 8. The portfolio manager shall where necessary and in the interest of

the client take adequate steps for registration of the transfer of the client’s securities and for

claiming and receiving dividend, interest payment and other rights accruing to the client. He

shall also take necessary action for conversion of securities and subscription of/or rights in

accordance with the client’s instruction. 9. Portfolio manager shall ensure that the investors

are provided with true and adequate information without making

anyProjectsformba.blogspot.com

52. Projectsformba.blogspot.com misguiding or exaggerated claims and are made aware of

attendant risks before they take any investment decision. 10.He should render the best

possible advice to the client having regard to the client’s needs and the environment, and his

own professional skills. 11.Ensure that all professional dealings are affected in a prompt,

efficient and cost effective manner.Projectsformba.blogspot.com

53. Projectsformba.blogspot.com FACTORS AFFECTING THE INVESTORThere may be

many reasons why the portfolio of an investor mayhave to be changed. The portfolio

manager always remains alert andsensitive to the changes in the requirements of the

Page 23: A Project Report on Portfolio Management

investor. Thefollowing are the some factors affecting the investor, which make itnecessary

to change the portfolio composition. 1. Change According to the utility theory, the risk

taking ability of thein Wealth It says that people can afford toinvestor increases with

increase in wealth. But, intake more risk as they grow rich and benefit from its reward.

As people get rich,practice, while they can afford, they may not be willing. they become

more concerned about losing the newly got riches than getting The fund So they may

become conservative and vary risk- averse. richer. manager should observe the changes in

the attitude of the investor towards risk If the investor turns to beand try to understand

them in proper perspective. conservative after making huge gains, the portfolio manager

should modify the portfolio accordingly.Projectsformba.blogspot.com

As time54. Projectsformba.blogspot.com 2. Change in the Time Horizon passes, some

events take place that may have an impact on the time horizon of Births, deaths, marriages,

and divorces – all have their ownthe investor. There are, of course, many other

importantimpact on the investment horizon. events in the person’s life that may force a

change in the investment horizon. The happening or the non-happening of the events will

naturally have its effect. For example, a person may have planned for an early retirement,

considering But, after turning 55 years of age, if his healthhis delicate health.

Investorsimproves, he may not take retirement. 3. Change in Liquidity Needs very often

ask the portfolio manager to keep enough scope in the portfolio to This forces portfolio

manager to increase theget some cash as and they want. Due to this, the amountsweight

of liquid investments in the asset mix. available for investment in the fixed income or

growth securities that actually help in achieving the goal of the investor get

reduced.Projectsformba.blogspot.com

That is, the money taken out today from55. Projectsformba.blogspot.com the portfolio

means that the amount and the return that would have been earned on it are no longer

available for achievement of the investor’s goals. 4. It is said that there are onlyChanges in

Taxes two things certain in this The only uncertainties regarding them relate to theworld-

death and taxes. Portfolio manager have to constantly look out fordate, time, place and

mode. changes in the tax structure and make suitable changes in the portfolio The rate of

tax under long- term capital gains is usually lowercomposition. than the rate applicable for

income. If there is a change in the minimum holding period for long-term capital gains, it

Page 24: A Project Report on Portfolio Management

may lead to revision. The specifics of There can bethe planning depend on the nature of

the investments. 5. Others many of other reasons for which clients may ask for a change in

the asset mix in For example, there may be change in the return available on thethe

portfolio. investments that have to be compulsorily made with the government say, in the

form of provident fund.Projectsformba.blogspot.com

This may call for a change in the return56. Projectsformba.blogspot.com required from

the other investments.Projectsformba.blogspot.com

57. Projectsformba.blogspot.comPORTFOLIO MANAGEMENT SCHEMES (PMS)

PRESENT “The regulatory environment has totally changed now and with

SEBISCENARIO fixing strict norms for companies launching PMS, only the serious

players are The PMS members today have full transparency:going to enter his business.”

managers are required to maintain individual accounts showing all dealings in a Secondly,

They must also advise him on all transactions. client’s portfolio. all PMS Managers have

to send their clients at least a quarterly report giving Thethe status of their portfolio and the

transactions that have taken place. It has several checksclient-PMS manager contract is as

per SEBI ground rules. to protect investor’s interest like laying the custodial responsibility

on the manager and preventing any alterations in the scheme without the client’s Finally,

managers have to send half-yearly reports to SEBI on theirconsent. Experienced handling

of cash and money powerportfolio management activities. apart, PMS also takes care of a

number of the headaches endemic with investing The biggest one is custodialin the

markets. services.Projectsformba.blogspot.com

All PMS Managers act as custodians of58. Projectsformba.blogspot.com shares and are

responsible for the load of paper work related to the share transfer, documentation work,

postal work and even ensuring that dividends are SEBI directives also put the onus on the

PMScredited to clients account. promoters to take follow-up action in case shares are lost

or damaged. Difficulties such as late transfer and postal theft are reduced in case of brokers,

because they not only have direct access to registrars but also have All these services come

for a fee,branch offices to ensure quicker transfers. While the actual PMS charges vary

from a high of 7% of the amountof course. As in allinvested to a low of around 3.5%,

follow-up services charges extra. schemes, there is a downside to putting cash into portfolio

management as well. PMS ManagersThe most important is the fact that despite all the

Page 25: A Project Report on Portfolio Management

SEBI checks. This really discharges theare not allowed to assured any fixed returns. So

investors have tomanagers for any responsibility if the scheme does badly. Problem

inherent in most schemes onbe very careful in choosing the promoters. offer will be

misused of investor’s funds to some extent.Projectsformba.blogspot.com

Funds collected from investors will aid59. Projectsformba.blogspot.com the brokers

concerned in their own games in the market.Projectsformba.blogspot.com

60. Projectsformba.blogspot.com PROSPECTS OF POTFOLIO MANAGEMENT ⇒ At

present, there are a very few agencies which render this type of services in an organized and

professional way. ⇒ However, their share in the total volume is very small. ⇒ There is no

constraint on the demand for this type of financial service as every entity would be saving

and investing and interested in optimizing the rate of return. ⇒ The size of capital market is

increasing. ⇒ There is an increase in the number of stock exchanges. ⇒ New instruments

are being introduced in the capital market. ⇒ The equity cult is spreading in the interiors

and rural areas. ⇒ The percentage of investment of the household savings is bound to go up. ⇒ It is conservatively estimated that during the eighth plan resources to the tune of over

Rs.50000crore will be mobilized through the stock market. ⇒ India today has 20 million

investors, as compared to 2 million in 1980. .Projectsformba.blogspot.com

61. Projectsformba.blogspot.comSECURITIES AND EXCHANGE BOARD OF INDIA

RULES, No person to act as portfolio manager1993 REGARDING PORTFOLIO

MANAGERS without certificate. » No person shall carry on any activity as a portfolio

manager unless he holds a certificate granted by the Board under this regulation. » Provided

that such person, who was engaged as portfolio manager prior to the coming into force of the

Act, may continue to carry on activity as portfolio manager, if he has made an application

for such registration, till the disposal of such application. » Provided further that nothing

contained in this rule shall apply in case of merchant banker holding a certificate granted by

the board of India Regulations, 1992 as category I or category II merchant banker, as the

case may be. » Provided also that a merchant banker acting as a portfolio manager under the

second provision to this rule shall also be bound by the rules and regulations applicable to a

portfolio manager.Projectsformba.blogspot.com

Conditions for grant or renewal of62. Projectsformba.blogspot.com certificate to portfolio

manager. » The board may grant or renew certificate to portfolio manager subject to the

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following conditions namely: a) The portfolio manager in case of any change in its status

and constitution, shall obtain prior permission of the board to carry on its activities; b) He

shall pay the amount of fees for registration or renewal, as the case may be, in the manner

provided in the regulations; c) He shall make adequate steps for redressed of grievances of

the clients within one month of the date of receipt of the complaint and keep the board

informed about the number, nature and other particulars of the complaints received; d) He

shall abide by the rules and regulations made under the Act in respect of the activities

carried on by the portfolio manager. Period of validity of the certificate. » The certificate of

registration on its renewal, as the case may be, shall be valid for a period of here years from

the date of its issue to the portfolio manager.Projectsformba.blogspot.com

63. Projectsformba.blogspot.com SECURITIES AND EXCHANGE BOARD OF INDIA

Registration of Portfolio Managers: 1. Application for grantREGULATIONS, 1993 An

application by a portfolio manager for grant of aof certificate Notwithstanding

anythingcertificate shall be made to the board on Form A. contained in sub regulation (1),

any application made by a portfolio manager prior to coming into force of these regulations

containing such particulars or as near thereto as mentioned in form A shall be treated as an

application made in pursuance of sub-regulation and dealt with accordingly. 2. Application

of Subject to the provisions of sub-regulation (2) ofconfirm to the requirements regulation

3, any application, which is not complete in all respects and does not confirm to the

instructions specified in the form, shall be rejected: Provided that, before rejecting any such

application, the applicant shall be given an opportunity to remove within

theProjectsformba.blogspot.com

64. Projectsformba.blogspot.com time specified such objections as may be indicated by the

board. 3. Furnishing of further information, clarification and The Board may require the

applicant to furnishpersonal representation. further information or clarification regarding

matters relevant to his activity Theof a portfolio manager for the purposes of disposal of

the application. applicant or, its principal officer shall, if so required, appear before the The

BoardBoard for personal representation. 4. Consideration of application. shall take into

account for considering the grant of certificate, all matters which are relevant to the activities

relating to portfolio manager and in particular whether the applicant complies with the

following requirements The applicant has the necessary infrastructure like to adequate

Page 27: A Project Report on Portfolio Management

officenamely: Thespace, equipments and manpower to effectively discharge his

activities; applicant has his employment minimum of two persons who have the experience

to conduct the business of portfolio manager;Projectsformba.blogspot.com

A person, directly or indirectly connected65. Projectsformba.blogspot.com with the

applicant has not been granted registration by the Board in case of the The applicant, fulfils

the capital adequacyapplicant being a body corporate; The applicant, his partner, director

orrequirements specified in regulation 7 principal officer is not involved in any litigation

connected with the securities market and which has an adverse bearing on the business of the

The applicant, his director, partner or principal officer has notapplicant; at any time been

convinced for any offence involving moral turpitude or has been The applicant has the

professionalfound guilty of any economic offences; qualification from an institution

recognized by the government in finance, law, and accountancy or business

management.Projectsformba.blogspot.com

To66. Projectsformba.blogspot.com PRIMARY SURVEY Purpose of the study: ascertain

investor awareness about services provided by portfolio management institutions and the

interest shown by investor to invest in portfolio To know whether they are interested to hire

such servicesmanagement services. in future and if not, why?

Projectsformba.blogspot.com

67. Projectsformba.blogspot.com SPECIMEN QUESTIONNAIRESurvey on investor’s

views about Portfolio Management Name: Age: Occupation: » Are you aware of services

offered by portfolio manager? Yes No » If yes, what types of services you are aware of ?

Management of Mutual fund investment Management of Equities Management of Money

market investmentProjectsformba.blogspot.com

68. Projectsformba.blogspot.com Advisory or consultancy services Others (If other please

specify) » Would you want to hire a portfolio manager at present or in future? Yes No » If

yes, for what type of services? Investments in Mutual Funds Investments in Equities

Investments in Money market Investments in other[s] (If other please specify) Advisory or

consultancy service » If No, why?

__________________________________________________

__________________________________________________ » What is the Percentage of

Page 28: A Project Report on Portfolio Management

commission that you are ready to pay to portfolio manager for services provided by him in ?

Equities Money market investmentProjectsformba.blogspot.com

69. Projectsformba.blogspot.com Mutual fund investment Advisory or consultancy services

Other investment (If other please specify) » Do you think there will be growth in portfolio

management in future? If Yes why? If No, why? » What type of services would you want

from portfolio manager in future?

__________________________________________________

__________________________________________________ » Suggestions if any:

__________________________________________________

__________________________________________________

__________________________________________________

____________Projectsformba.blogspot.com

70. Projectsformba.blogspot.com SignatureProjectsformba.blogspot.com

71. Projectsformba.blogspot.com FINDINGSThis case study has been conducted on various

age groups ofindividual investors on portfolio management. These consist of agegroup

ranging from 18-30, 30-45, 45-60 and 60 & above. Followinginterpretation has been made

on the basis of the informationcollected Agefrom individual investor’s of various age

groups throughquestionnaire: group of 18-30 is more aware about services offered by

portfolio manager whereas age group of 60 & Management ofabove is less aware of such

services. mutual fund investment, management of equities, management of money market

investment, advisory and consultancy services are the services provided by the portfolio

management institution. Amongst these, advisory and consultancy Dueservices are the

services that the individual investors are more aware of. to lack of experience and market

knowledge, the age group of 45-60 is more interested to hire portfolio manager at present in

order to manage their portfolio. The age group ranging from 18-30 is more interested in

making investment in equities whereas group ranging from 60 & above are more interested

in making investment in mutual fund. On the otherProjectsformba.blogspot.com

72. Projectsformba.blogspot.com hand, age group of 30-45 and 45-60 are least interested in

any of the services provided by portfolio management institution. Reasons specified for the

presence of disinterest in any of these services were that the investors are having good hold

on their investment. Also they possess good knowledge with regards to market fluctuations,

Page 29: A Project Report on Portfolio Management

investment portfolio’s and All the age groups ofother factors relating to portfolio

management. individual investors in portfolio management believe that there is a better

scope for portfolio management in future. Investors would prefer the introduction of services

like advisory and consultancy services, investment in mutual funds in the near

future.Projectsformba.blogspot.com

73. Projectsformba.blogspot.com CONCLUSIONWith the help of given project I got an in-

depth knowledge about theworking of portfolio management. Also I got an insight as too

how toinvest in portfolio management, which scheme provide better returnas compared to

other and who are the portfolio management playersin the Indian market.It can be concluded

from the project that future of portfoliomanagement is bright provided proper regulations

prevail andinvestor’s needs are satisfied by providing variety of schemes. Theinterest of

investors is protected by SEBI. Portfolio management isgoverned by SEBI Act.Due to the

benefits available to the individual’s such as reduction inrisk, expert professional

management, diversified portfolios, taxbenefits etc. young generation (i.e. age group bet. 18-

30) is willing toinvest in different investment avenues through portfolio manager orthrough

mutual funds which are again managed by portfoliomanagers. On the other hand, age group

of 60 & above are leastinterested in making investment in different avenues through

portfolioProjectsformba.blogspot.com

74. Projectsformba.blogspot.commanagers. They believe in investing and managing their

portfolio ontheir own.However, it can be said that the future of portfolio management

isbright in years to come.Projectsformba.blogspot.com