a project report on portfolio management
TRANSCRIPT
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
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
• 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
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
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.”
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.
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.
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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,
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