SUMMER TRAINING PROJECT REPORT

On

“INVESTMENT PORTFOLIO OF A CUSTOMER

IN INDIAN MARKETS”

Towards partial fulfillment of

Master of Business Administration (MBA)

School of Management, BabuBanarasi Das University, Lucknow

SUBMITTED BY
AAFAQUE SHAMIM
ROLL NO. -1220672001
MBA IIIRD SEMESTER

Session 2023-2024
School of Management
Babu Banarasi Das University
Sector I, Dr. Akhilesh Das Nagar, Faizabad Road, Lucknow (U.P.) India.
Certificate from the Organization
Bona-fide Certificate of Dean -School of Management

2
 DECLARATION

I do hereby declare that all the work presented in the Summer Training report entitled

“INVESTMENT PORTFOLIO OF A CUSTOMER IN INDIAN MARKETS” is carried

out and being submitted at the school of management for the award of Master of

Business Administration (MBA), is an authentic record of AAFAQUE SHAMIM. The

work is carried out under the guidance of Ms. Anuradha Maurya(Associate professor)

(faculty guide). It hasn‘t been submitted at any other place for any other academic

purpose.

AAFAQUE SHAMIM

ROLL NO.-1220672001

MBA IIIRD SEMESTER

BBDU, LUCKNOW

3
 ACKNOWLEDGEMENT

It would be insufficient just to say ―word of thanks‖ for all those people who have been so

instrumental in the success of this project. However, as a small token of my appreciation I

have named here all those wonderful people, without whom all this would not have been

possible.

I would like to express my deep sense of gratitude to the respectable Prof.Dr. Sushil

Pande personalities for their precious suggestions and encouragement during the project.

I want to give my sincere thanks as I am deeply indebted to my faculty guide, Ms. Anuradha

Maurya(Associate professor) From BBDU, Lucknow for her guidance and support

throughout our project. It is due to her efforts that my project has gained its present stature.

And I can never thank my family enough for all they have done.

The experience which is gained by me during this project is essential for me at this turning point

of my career.

Last but not least, it was the blessing of my Parent, brother& friends for keeping me

motivated throughout the research period their close attitude and expressions of love and

patience have been nothing short of incredible.

AAFAQUE SHAMIM

ROLL NO.-1220672001

MBA IIIRD SEMESTER

BBDU, LUCKNOW

4
 EXECUTIVE SUMMARY

We turn towards the stock market, expecting to make a fortune. Yet a majority of times, most

of the investors are victimized between the emotions of greed and fear. The trouble is that

many investors tend to over-diversify their portfolio by adding more number of stocks, which

is likely to take the investor backwards rather than forward. Investing is an art form. It takes

knowledge about the stock market, but more importantly, it requires a strategy and

understanding of the businesses and economic cycles.

Portfolio Management Services (PMS), is investment management services offered by the

Portfolio Manager. The investment portfolio can be diversified into stocks, fixed income, and

other structured products. These services can potentially be structured and tailored to meet

specific investment objectives based on the risks, rewards and the goals of the investor as

reflected in the Investment Policy Statement (IPS). PMS offers customized equity options,

but to avail service of a Portfolio manager, you should have a large sum of money to invest.

A portfolio manager has a thorough understanding of the businesses and uses it to improve

investor's gains. The manager must have a clarity of the investor's risk and reward

expectations to use an appropriate and suitable strategy in order to deliver the high potential

returns.

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 TABLE OF CONTENTS

Declaration
Acknowledgement
Executive Summary
Sr. Topic Page no.
1. Introduction

2. Company Profile

3. Research Objectives

4. Research Methodology

5. Data Analysis and Interpretations

6. Finding

7. Suggestions

8. Limitations

9. Conclusions

Bibliography

Appendix

6
INTRODUCTION

7
 INTRODUCTION TO PORTFOLIO MANAGEMENT

SERVICES

Stock exchange operations are peculiar in nature and most of the Investors feel insecure in

managing their investment on the stock market because it is difficult for an individual to

identify companies which have growth prospects for investment. Further due to volatile

nature of the markets, it requires constant reshuffling of portfolios to capitalize on the growth

opportunities. Even after identifying the growth oriented companies and their securities, the

trading practices are also complicated, making it a difficult task for investors to trade in all

the exchange and follow up on post trading formalities.

Portfolio Management Services (PMS), service offered by the Portfolio Manager, is an

investment portfolio in stocks, fixed income, debt, cash, structured products and other

individual securities, managed by a professional money manager that can potentially be

tailored to meet specific investment objectives. When you invest in PMS, you own individual

securities unlike a mutual fund investor, who owns units of the fund. You have the freedom

and flexibility to tailor your portfolio to address personal preferences and financial goals.

Although portfolio managers may oversee hundreds of portfolios, your account may be

unique.

WHAT IS A PORTFOLIO?

A portfolio is a

collection of financial

investments like stocks,

bonds, commodities,

8
cash, and cash equivalents, including closed-end funds and exchange traded funds (ETFs).

People generally believe that stocks, bonds, and cash comprise the core of a portfolio.

Though this is often the case, it does not need to be the rule. A portfolio may contain a wide

range of assets including real estate, art, and private investments.

You may choose to hold and manage your portfolio yourself, or you may allow a money

manager, financial advisor, or another finance professional to manage your portfolio.

One of the key concepts in portfolio management is the wisdom of diversification—which

simply means not to put all your eggs in one basket. Diversification tries to reduce risk by

allocating investments among various financial instruments, industries, and other categories.

It aims to maximize returns by investing in different areas that would each react differently to

the same event. There are many ways to diversify. How you choose to do it is up to you.

Your goals for the future, your appetite for risk, and your personality are all factors in

deciding how to build your portfolio.

WHAT IS PORTFOLIO MANAGEMENT?

Portfolio management‘s meaning can be

explained as the process of managing
individuals‘ investments so that
they maximise their earnings within
a given time horizon. Furthermore,
such practices ensure that the capital
invested by individuals is not exposed to
too much market risk. The entire process is based on the ability to make sound decisions.
Typically, such a decision relates to – achieving a profitable investment mix, allocating
assets as per risk and financial goals and diversifying resources to combat capital erosion.
Primarily, portfolio management serves as a SWOT analysis of different investment

9
avenues with investors‘ goals against their risk appetite. In turn, it helps to generate
substantial earnings and protect such earnings against risks.

HOW DOES PMS WORK?

It is offered by brokerages and mutual funds registered with SEBI. There are two types of

PMS: Discretionary and Non Discretionary. In discretionary , the fund manager takes

investment decisions on behalf of the investor. In non-discretionary , the fund manager

suggests investment ideas, while the decision is taken by the client.

IS PMS SIMILAR TO A MUTUAL FUND?

The biggest similarly between PMS (discretionary) and mutual funds is that the manager

han

dles

the

mon

ey

on

the

beha

lf of

the

clie

nts. But, the key difference is that investors in MF get units that represent stocks. In a PMS,

the investor holds the stock in a demat account owned by him, but the fund manager has the

power of attorney to operate it.

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IS THERE A MINIMUM INVESTMENT AMOUNT FOR PMS?

Investors need to bring in atleast Rs 25 lakh to invest in a PMS. Alternatively , they can give

shares worth Rs 25 lakhs to the fund manager.

WHAT IS THE STRUCTURE OF A PMS SCHEME? HOW DOES AN

INVESTOR MONITOR THEM?

When you opt for a PMS scheme, a bank

account and DEMAT account are

separately opened in the your name and

all investments are made in your name

only. Accordingly , any income or

dividend coming out of the investment

made will also be credited in your bank

account and the shares will be held in

the DEMAT account in your name.

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EVOLUTION OF PORTFOLIO MANGEMENT

Portfolio management is essentially a systematic method of maintaining one‗s

investmentefficiently. Many factors have contributed to the existence and development of the

concept.

In the early years of the century analyst used financial statements to find the value of these

securities. The first to be analyzed using this was Railroad Securities of the USA. Abooklet

entitled ―The Anatomy of the Railroad‖ was published by Thomas F. Woodlock in 1900. As

the time progressed this method became very important in the investment field, although

most of the writers adopted different ways to publish their data.

The other major method adopted was the study of stock price movement with the help

of price charts. This method later on was known asTechnical Analysis. It evolved

during1900-1902 when Charles H. Dow, the founder of the Dow Jones and Co. presented his

view in the series of editorials in the Wall Street Journal in USA. The advocates of technical

analysis believed that stock prices movement is ordered and systematic and the definite

pattern could be identified. There investment strategy was build around the identification of

the trend and pattern in the stock price movement.

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Another prominent author who supported the technical analysis was Ralph N. Elliot who

published a book in the year 1938 titled ―The Wave Principle‖. After analyzing 75 yearsdata

of share price, he concluded that the market movement was quite orderly and followed a

pattern of waves. His theory is known as Elliot Wave Theory.

OBJECTIVES OF PORTFOLIO MANAGEMENT

1. Security of Principal Investment : Investment safety or minimization of risks is one of

the most important objectives of portfolio management. Portfolio management not only

involves keeping the investment intact but also contributes towards the growth of its

purchasing power over the period. The motive of a financial portfolio management is to

ensure that the investment is absolutely safe. Other factors such as income, growth, etc.,

are considered only after the safety of investment is ensured.

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2. Consistency of Returns: Portfolio management also ensures to provide the stability of

returns by reinvesting the same earned returns in profitable and good portfolios. The

portfolio helps to yield steady returns. The earned returns should compensate the

opportunity cost of the funds invested.

3. Capital Growth : Portfolio management guarantees the growth of capital by reinvesting

in growth securities or by the purchase of the growth securities. A portfolio shall

appreciate in value, in order to safeguard the investor from any erosion in purchasing

power due to inflation and other economic factors. A portfolio must consist of those

investments, which tend to appreciate in real value after adjusting for inflation.

4. Marketability : Portfolio management ensures the flexibility to the investment portfolio.

A portfolio consists of such investment, which can be marketed and traded. Suppose, if

your portfolio contains too many unlisted or inactive shares, then there would be

problems to do trading like switching from one investment to another. It is always

recommended to invest only in those shares and securities which are listed on major stock

exchanges, and also, which are actively traded.

5. Liquidity : Portfolio management is planned in such a way that it facilitates to take

maximum advantage of various good opportunities upcoming in the market. The portfolio

should always ensure that there are enough funds available at short notice to take care of

the investor‘s liquidity requirements.

6. Diversification of Portfolio : Portfolio management is purposely designed to reduce the

risk of loss of capital and/or income by investing in different types of securities available

in a wide range of industries. The investors shall be aware of the fact that there is no such

thing as a zero risk investment. More over relatively low risk investment give

correspondingly a lower return to their financial portfolio.

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7. Favourable Tax Status: Portfolio management is planned in such a way to increase the

effective yield an investor gets from his surplus invested funds. By minimizing the tax

burden, yield can be effectively improved. A good portfolio should give a favourable tax

shelter to the investors. The portfolio should be evaluated after considering income tax,

capital gains tax, and other taxes.

THE NEED FOR PORTFOLIO MANAGEMENT SERVICES

PMS or Portfolio Management Service is a professional service where qualified and

experienced portfolio managers backed by a research team manage equity portfolios on

behalf of clients instead of clients managing it themselves. India being one of the oldest stock

market ecosystems,the direct equity investing cult has been prevalent for decades and has

especially taken deeper root since many marquee listings in the markets since late 1970s.

There are a large number of investors who own equity portfolios in their demat accounts that

they manage based either on their own experiences or with inputs from broking companies

and equity advisors.

There are millions of demat accounts; in fact some of the largest listed companies

individually have 2-3mn shareholders each. While brokers provide equity research, advisory

services and an operational platform; this usually needs the investors' involvement in

investment discretion as well as operational aspects. More importantly, the onus of outcomes

15
is shared between investors as well as the service providers. On the other hand, professionally

managed portfolios make the portfolio manager answerable to the investor. They are

managed for a fee and everything including, research, investing, operations, etc. are available

to the investor.

PMS could either be Discretionary; i.e. where the fund manager takes decisions on investors'

behalf or Non-Discretionary; i.e. where the fund manager needs to take approvals from the

investors on suggested investments. The other alternative for professionally managed

investments into equities is through Mutual Funds; which is a very popular choice too

ADVANTAGES OF INVESTING IN PORTFOLIO MANAGEMENT

SERVICES

I. QUALITY PORTFOLIO

People who manage their own portfolios on an average buy less of quality and focus

more on price, rather than value

Data shows that while there are thousands of listed companies; individual investors (Non

Promoter Non Institutional [NPNI]) have a lower share of holding in the larger indices like

Nifty, BSE 200 or even Nifty 500. Retail or NPNI holding is higher in non-index smaller

companies. There is a skew to lesser quality stocks in their portfolios. It is equally remarkable

that Nifty accounts for almost 60% of total market cap, BSE 200 accounts of nearly 85% of

market cap and Nifty 500 accounts for nearly 94% of market cap

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II. INDEPENDENT PORTFOLIO

PMS Holdings are isolated and hence not impacted by other investors behavior

Mutual Funds being managed and held as a pool may be at times exposed to vagaries of the

sum totalbehavior of hundreds of thousands of investors. In general, investors tend to invest

in rising markets or improving fund performance and there could be times of panic in rapidly

falling markets and times of poor fund performance. It may happen that mutual funds at times

are forced to buy in rising markets and sell in falling markets because fund managers have

discretion on stock picks but not on fund flows. Apart from managing the portfolio, managing

fund flows is a significant activity on a daily basis.

III. ONLINE TOP UP

Mini PMS facility

Registering SIP in Motilal Oswal PMS is an interesting experience because our portfolios

have very low churn. As an investor when one registers PMS- SIP more often than not, one

17
knows the curated focused list of high quality stocks that one will end up buying month on

month. Also, one can register a paperless and user-friendly PMS-SIP, online. Similarly,

Motilal Oswal PMS also enables an investor to purchase additional amounts into the PMS

portfolio online on a same day basis.

IV. TRANSPARENT HOLDINGS

PMS is transparent

If we were to use cricket parlance, one can say that in PMS an investor can get a ball by ball

update on the portfolio. Every trade is intimated to the investor and a live portfolio view is

available on the managers' website. Specifically for Motilal Oswal PMS portfolios, there is a

focused portfolio of curated stocks which the client can view in his holdings. Mutual Funds

typically tend to have large diffused portfolios ranging from 25, 30 to even a 100 stocks,

(which restrict the transparency) and the holdings are made available only once in a month or

a quarter.

V. POSSIBILITY OF SUPERIOR RETURNS

PMS can be more aggressive (hence more risky) and has the potential to generate higher

returns

Mutual Funds being structured for a wide mass of retail investors tend to be regulated strictly;

for instance there are regulatory norms for benchmarking, scrip level exposure, investment

patterns etc. More specifically in Mutual Funds, no stock can be over 10% of portfolio

exposure. In PMS for instance; if a stock has 8% exposure and all things being static, this

stock appreciates to become 12% of the portfolio, there is no compulsion to sell.

VI. FOCUSED CUSTOMER

PMS helps focus on the mass affluent and affluent customer

While Mutual Funds can focus on the new to market and lower sized segments through SIPs

etc; PMS by definition, focuses on the mass affluent and affluent. This audience in India is

18
growing by leaps and bounds, values flexibility and most importantly they are familiar with

equity investing. The number of equity investors is almost 3 times the number of Mutual

Fund investors. Significant wealth creation in the last decade has anyway occurred by way of

sweat equity. It is then easy to diversify the holdings by investing in PMS. Hence, while there

is a market for Mutual Fund investors, there also exists a market for PMS products

DISADVANTAGES OF INVESTING IN PORTFOLIO MANAGEMENT

SERVICES

 AFFECTS WITH THE QUALITY

There are only a few good investment opportunities available, with diversification of the

portfolio, we divide the limited capital into small fractions over a large number of average

investments.

This reduces the quality of returns on the overall investment.

 ELABORATE PROCESS

Portfolio management is a step by step process which involves planning, execution and

feedback.

For an investor with very basic or zero under-standing, it becomes a time-consuming and

difficult task.

 BELOW AVERAGE RETURNS

For small individual investor, the amount for investment is very less, which is further divided

into a set of securities to diversify and create a well-balanced portfolio.

This results in generating below average returns, as some sector could out-perform where as

some sectors might under-perform, so the overall return on the portfolio would be very small.

 TIME CONSTRAINTS FOR EVALUATION OF PORTFOLIO

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Portfolio management is a time consuming activity as it requires constant evaluation with the

market changes so that the objective of investment can be achieved.

Investors who have time constraints may not be able to monitor the performance of the

portfolio and capitalize on some great opportunities.

 LACK OF GOOD INVESTMENT OPPORTUNITIES

Investment opportunities are many, but then there are only a few investment opportunities

that will give good returns.

There are chances that due to diversification, an individual will have to compromise on good

investment opportunities to balance the risk and returns of the portfolio.

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PORTFOLIO MANAGEMENT THEORIES

A portfolio is a collection or culmination of various securities like money markets

instruments ,shares, government bonds etc to achieve a desired result at minimum risk. There

are several theories to create an idealistic portfolio that maximizes the returns and minimizes

he risk and help an investor achieve the desired investment objective.

Portfolio management theories can be divided into two based on the approach

1. Traditional Approach

2. Modern Approach

1. TRADITIONAL APPROACH

This approach considers the income , expenses ,loans and other cash outflows, desired goal

,liquidity constraints, tax saving and time span for the completion of the objective while

determining the security combination in the portfolio.

It can be further classified into

 Dow Jones theory

 Random walk theory

 Formula Theory

DOW JONES THEORY

This theory was given by Charles Dow , editor of the Wall street Journal.

According to this theory, the price movements in the market are not casual but are reflection

of market trends.

There are 3 components that affect the stock prices.

1. PRIMARY TREND

It signifies the long term trend of the price movement.

Example- If the stock prices are increasing over a long period of time, we say that the market

is bullish or the primary trend is bull.

21
Similarly, if the stock prices are decreasing over a long period of time, we say that the market

is bearish or the primary trend is bear.

2. SECONDARY TREND

It signifies the short term trend of price movement which do not last long and have no impact

on the the primary trend.

This could be due to day to day activities of the company which gets reflected in the stock

prices.

3. DAILY MINOR FLUCTUATIONS

These are random changes in the price movement which gives adds no value to the

information available.

This theory uses price to determine the stock price movement. It uses two averages for price

discovery:-

 The Dow Jones Industrial Average (DJIA)

 The Dow Jones Transportation Average (DJTA)

RANDOM WALK THEORY

This is also known as Efficient Market Hypothesis. It was developed by Prof. Eugene Fama.

It states that stock prices change only when there is any new information.

This Theory suggests that at all times, every available information is reflected in the stock

price. This information includes the present market conditions but also reflect future

expectations of the stock like the profitability, company‘s performance, dividends, etc

This theory assumes that the market is highly competitive and at any given time perfect

information is available to all the buyers and sellers,who quickly react to it and the stock

market is effiecient.

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FORMULA PLANS

This theory has devised certain technical formulation and calculation which can help to

minimize the loss and try to capitalize on the opportunities due to price movements.

This theory helps an investor to understand the buying opportunities that is when the stock

prices are very low and the selling opportunities that is when the stock price are very high.

This theory is applicable only when there is a fixed amount available for investment and two

portfolios are constructed

One- An aggressive portfolio

Two- A defensive portfolio

This is done to control the risk associated with investment and maximise the returns.

The ratio of the two portfolios are pre-determined.

2 MODERN APPROACH OR MODERN PORTFOLIO THEORY

This portfolio theory tries to establish a risk-return relationship such that for minimum level

of risk maximum returns can be capitalized from a portfolio. This can be done by efficient

diversification where in the same portfolio a security with very high risk and higher returns

and combined with a security of low risks to minimise the overall risk associated with the

portfolio.

This technique of investment or allocation of funds is also called as Tactical asset allocation

For example- An investor wants to create a portfolio to achieve his desired goals but is risk

averse and wants decent returns over a long term.

As per the objectives of the investor a portfolio is constructed with 10% G-sec Bonds, 30%

mutual funds, 25% Mid-cap stocks ,10% Small-cap stocks, 5% ULIP, 10% Large Cap stocks

and 10% Money market instruments.

Many reseachers and investors criticise this theory as they believe it is better to analyse the

market and capitalise on the opportunities than buy and wait for returns.

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PORTFOLIO MANAGERS

Portfolio Managers are professionals having qualification and technical knowledge about the

capital markets, investments and portfolio management.

They provide portfolio management services to clients in a pre-decided arrangement.

Portfolio Managers are very helpful for small individual investors who lack the technical

know-how of capital markets and investment.

They help clients by understanding their goals, objectives and constraints, devise a strategy

for asset allocation and implements these strategies on behalf of the client.

Portfolio Managers can be further divided into two categories based on the discretion:-

 DISCRETIONARY PORTFOLIO MANAGER

In this the portfolio manager enters into an agreement with the client where all the powers to

handle the portfolio lies in the hands of the portfolio manager.

It is the responsibility of the portfolio manager to carry out all the necessary actions needed to

achieve the objective of the client.

 NON-DISCRETIONARY PORTFOLIO MANAGER

In this the client does not give away the control of its investment. The portfolio manager shall

act in accordance to the discretions given by the client.

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PORTFOLIO STRATEGY MIX

Portfolio is a combination of various securities in such a manner that the investor can achieve

his desired result over a period of time.

Diversification of portfolio refers to combination of various securities from different sectors

so as to minimize the impact to sector-specific risk as well as be able to capitalise on a large

number of opportunities present in different sectors.

It is the process of distributing fractions of the amount available for investment into various

available assets so as to meet the investor‘s objective.

It is important for every investor to identify a strategy for investment that would help him to

achieve their goals and objective within the required time span.

Asset allocation is done by preparing a financial plan considering all the factors like goals,

income source, time horizon available for accomplishment of the goal, risk appetite and then

implementing this information into allocation of funds.

There are the following strategies for asset allocation:-

 Strategic Asset Allocation

 Constant-Weighting Asset Allocation
 Tactical Asset Allocation
 Dynamic Asset Allocation
 Insured Asset Allocation
 Integrated Asset Allocation
STRATEGIC ASSET ALLOCATION

This method of asset allocation uses ―base policy mix‖.

This means that the investor develops a portfolio mix based on the expected returns of

various assets.

For example the investor wants to earn an average return of 15% per year.

25
From the past data, it has been observed that equity gives 20% returns annually and

debentures and bonds give 10% return.

So the investor can prepare a portfolio of 50% equity and 50% debentures to get an annual

return of 15%.

CONSTANT-WEIGHTING ASSET ALLOCATION

This method of asset allocation involves constant shuffling of the assets based on the market

conditions to capitalize on any available opportunities to earn returns.

For example- A portfolio mix has 30% equity shares from the infrastructure industry, giving

10% returns, but in the current market conditions, the pharmaceutical industry is out-

performing and giving 25% returns.

So the investor will add the shares of pharmaceuticals and remove the infrastructure shares

and capitalize on the opportunity.

TACTICAL ASSET ALLOCATION

This strategy is a combination of Constant-Weighting Asset Allocation and Strategic Asset

Allocation. In the long run it follows the strategic method but occasionally when there is an

opportunity to earn high returns, it follows constant weighting method.

DYNAMIC ASSET ALLOCATION

This asset allocation depends on the economy and how strong or weak the market conditions

are.

For example, if there is a prevailing negative sentiment in the markets and the market

conditions are declining, the investor begins to sell its assets and vice versa.

INSURED ASSET ALLOCATION

This asset allocation technique is suitable for risk averse investors.

According to this strategy a minimum or base value is decided for the portfolio, below which

the value of the portfolio should not drop.

26
If it drops then the investor is recommended to change his strategy or seek guidance from a

professional.

INTEGRATED ASSET ALLOCATION

This asset allocation strategy considers both risk and returns of the portfolio and determines a

portfolio mix such that the investor is tolerant to the amount of risk and still be able to

capitalize on the opportunities available.

TYPES OF PORTFOLIO MANAGEMENT

Stock investors constantly hear the wisdom of diversification. The concept is to simply not

put all of your eggs in one basket, which in turn helps mitigate risk, and generally leads to

better performance or return on investment. Diversifying your hard-earned dollars does make

sense, but there are different ways of diversifying, and there are different portfolio types. We

look at the following portfolio types and suggest how to get started building them:

aggressive, defensive, income, speculative and hybrid. It is important to understand that

building a portfolio will require research and some effort. Having said that, let's have a peek

across our five portfolios to gain a better understanding of each and get you started.

THE AGGRESSIVE PORTFOLIO

An aggressive portfolio or basket of stocks includes those stocks with high risk/high reward

proposition. Stocks in the category typically have a high beta, or sensitivity to the overall

market. Higher beta stocks experience larger fluctuations relative to the overall market on a

consistent basis. If your individual stock has a beta of 2.0, it will typically move twice as

much in either direction to the overall market - hence, the high-risk, high-reward description.

Most aggressive stocks (and therefore companies) are in the early stages of growth, and have

a unique value proposition. Building an aggressive portfolio requires an investor who is

willing to seek out such companies, because most of these names, with a few exceptions, are

not going to be common household companies. Look online for companies with earnings

27
growth that is rapidly accelerating, and have not been discovered by Wall Street. The most

common sectors to scrutinize would be technology, but many other firms in various sectors

that are pursuing an aggressive growth strategy can be considered. As you might have

gathered, risk management becomes very important when building and maintaining an

aggressive portfolio. Keeping losses to a minimum and taking profit are keys to success in

this type of portfolio.

THE DEFENSIVE PORTFOLIO

Defensive stocks do not usually carry a high beta, and usually are fairly isolated from broad

market movements. Cyclical stocks, on the other hand, are those that are most sensitive to the

underlying economic "business cycle." For example, during recessionary times, companies

that make the "basics" tend to do better than those that are focused on fads or luxuries.

Despite how bad the economy is, companies that make products essential to everyday life

will survive. Think of the essentials in your everyday life, and then find the companies that

make these consumer staple products.

The opportunity of buying cyclical stocks is that they offer an extra level of protection

against detrimental events. Just listen to the business stations and you will hear portfolios

managers talking about "drugs," "defense" and "tobacco." These really are just baskets of

stocks that these managers are recommending based upon where the business cycle is and

where they think it is going. However, the products and services of these companies are in

constant demand. A defensive portfolio is prudent for most investors. A lot of these

companies offer a dividend as well which helps minimize downside capital losses.

28
THE INCOME PORTFOLIO

An income portfolio focuses on making money through dividends or other types of

distributions to stakeholders. These companies are somewhat like the safe defensive stocks

but should offer higher yields. An income portfolio should generate positive cash flow. Real

estate investment trusts (REITs) and master limited partnerships (MLP) are excellent sources

of income producing investments. These companies return a great majority of their profits

back to shareholders in exchange for favorable tax status. REITs are an easy way to invest in

real estate without the hassles of owning real property. Keep in mind, however, that these

stocks are also subject to the economic climate. REITs are groups of stocks that take a

beating during an economic downturn, as building and buying activity dries up.

An income portfolio is a nice complement to most people's paycheck or other retirement

income. Investors should be on the lookout for stocks that have fallen out of favor and have

still maintained a high dividend policy. These are the companies that can not only supplement

income but also provide capital gains. Utilities and other slow growth industries are an ideal

place to start your search.

THE SPECULATIVE PORTFOLIO

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A speculative portfolio is the closest to a pure gamble. A speculative portfolio presents more

risk than any others discussed here. Finance gurus suggest that a maximum of 10% of one's

investable assets be used to fund a speculative portfolio. Speculative "plays" could be initial

public offerings (IPOs) or stocks that are rumored to be takeover targets. Technology or

health care firms that are in the process of researching a breakthrough product, or a junior oil

company which is about to release its initial production results, would also fall into this

category. Another classic speculative play is to make an investment decision based upon a

rumor that the company is subject to a takeover. One could argue that the widespread

popularity of leveraged ETFs in today's markets represent speculation. Again, these types of

investments are

alluring: picking the

right one could lead to

huge profits in a short

amount of time.

Speculation may be

the one portfolio that,

if done correctly,

requires the most homework. Speculative stocks are typically trades, and not your classic

"buy and hold" investment.

THE HYBRID PORTFOLIO

Building a hybrid type of portfolio means venturing into other investments, such as bonds,

commodities, real estate and even art. Basically, there is a lot of flexibility in the hybrid

portfolio approach. Traditionally, this type of portfolio would contain blue chip stocks and

some high grade government or corporate bonds. REITs and MLPs may also be an investable

theme for the balanced portfolio. A common fixed income investment strategy approach

30
advocates buying bonds with various maturity dates, and is essentially a diversification

approach within the bond asset class itself. Basically, a hybrid portfolio would include a mix

of stocks and bonds in a relatively fixed allocation proportions. This type of approach offers

diversification benefits across multiple asset classes as equities and fixed income securities

tend to have a negative correlation with one another.

THE BOTTOM LINE

At the end of the day, investors should consider all of these portfolios and decide on the right

allocation across all five. Here, we have laid the foundation by defining five of the more

common types of portfolios. Building an investment portfolio does require more effort than a

passive, index investing approach. By going it alone, you will be required to monitor your

portfolio(s) and rebalance more frequently, thus racking up commission fees. Too much or

too little exposure to any portfolio type introduces additional risks. Despite the extra required

effort, defining and building a portfolio will increase your investing confidence, and give you

control over your finances.

COMPANIES PROVIDING PORTFOLIO MANAGEMENT SERVICES

1. PORINJU VELIYATH PMS

PorinjuVeliyath PMS was incorporated in the year 2002 since then it has grown as one of the

best PMS in India. The company has various classes of clientele from India and abroad The

value of PMS it manages starts from a few lakhs to millions.

31
 Mr

PorinjuVeliyath is the founder & CEO of the company. His name comes under one of the

best fund managers in India.

The simple investment philosophy of the company is to buy something for a rupee, which is

worthtwo rupees!

The minimum amount required to make the investment in PorinjuVeliyath is 250,00,000

The company offers the investment strategy Equity Intelligence strategy. The best thing about

this strategy is that the investor can withdraw money whenever they want

One has the capacity to invest the minimum amount of criteria to join this strategy The

performance/return of the strategy is outstanding. The PMS service has returned 47% in

FY17 which is better than the benchmark index NIFTY 18.56%) and BSE 500 (24.03%).

The management fee of the company will be charged as follows:

FEE:

Fixed management fee 2% per annum and 0.5% quarterly on the basis of average NAV .

Performance Fee: 10% of returns above 10% per annum.

32
2. MOTILAL OSWAL PMS

The name of Motilal Oswal PMS comes

under the name of the largest PMS

houses in the country and is

certainly a deserving part of this

list on the Best PMS in India. The

company was established by Mr

Motilal Oswal and Mr Ramdea Agarwal in the

year 1987. The asset management company offers an excellent return to the investors by

investing in small cap and mid-cap companies. The PMS house offers three types of

strategies which are Value strategy, Next trillion dollar strategy, and the India opportunities

portfolio strategy

The total number of stocks in the portfolio is in the range of 20-26 stocks. These strategies

best suit the clients who can't wait for the medium to long term to get the return.

The minimum investment in PMS amount for these strategies is 50,00,000 additional

250,00,000 as a top-up in any of the strategies the strategies model.

A client can add The performance/return of the company in the last 5 years is approx 32%

and for the last one year the return is 19% An NRI can also invest in Motilal Oswal PMS.

FEE:

The management fee of the company will be charged according to the strategies model.

33
3. INVESCO PMS

Mr Saurabh Nanavati is the founder of Invesco PMS. He started the company in the year

2007. The company is well known to offer superior performance over the years. Invesco PMS

is among the best PMS in India.

INVESCO

It offers three types of strategies:

• Factor Investing strategy: A particular factor is considered while investing rather than

asector industry • Smart Beta Strategy: Generally delivered through Exchange-traded funds

(ETFS). Alternative strategy: Investment is done other than long-term equities and Fixed

deposits.

Like Commodities, Natural resources, Infrastructure, real estate etc. Now as per the PMS

SEBI rules, the minimum investment changed from 725 lakh to 250 lakh.

All three strategies perform very well and provide a healthy return to investors. The

performance of the company in the last 5 years is 8.5%, while the return is 9% for 10 years

CAGR.

The management fee of the company will be charged according to the investment strategy

model opted by both the parties.

4. ASK PMS

Ask PMS is one of the best PMS in India. The

company runs its business on the philosophy of

capital appreciation with capital protection as

well. The strong professional team of the

company takes care of risk minimization with

a healthy return

34
ASK

Ask PMS offers various strategies which are created according to the financial investment

objectiveof clients and their risk bearing capacity.

The strategies offered by the company are:

• Ask Growth strategy

· Ask Life strategy

. Ask Indian Entrepreneur portfolio strategy . Ask Strategic portfolio strategy

• Ask India Select portfolio strategy

The minimum investment required to make an investment under these strategies is

Rs.50,00,000.

The company offers an attractive return to investors. The return for the last S years is 17%

and for the last 10 years is 17%.

ASK PMS FUND MANAGERS DETAILS

The table given below is providing the entire details about the fund manager of Ask PMS

company.

Fund Manager’s Details

Name Prateek Agrawal (CIO)

Experience 22 Years

Highest Qualification MBA

AUM (in Cr.) Approx 18,000 Cr.

Number of Clients 290+

Investment Tenure Minimum 3 yr.

35
FEE:

The management fee of the company will be charged as follows:

• Fixed management fee: 2.5% of portfolio value per annum • Performance Fee: There is a

fixed fee of 1.5% of returns 20% gain above 10% of the profit.

5. KOTAK PMS

Kotak stock broking company is highly renowned and largest portfolio management service

providing company across India.

The broking house was founded by Uday S. Kotak in the year 1985. The Kotak Portfolio

Management Services is listed under SEBI and its headquarters of the company is located in

Mumbai, Maharashtra.

It‘s a highly renowned and successful model is portfolio management services. They have a

wide list of experienced fund managers who look after their PMS based clients.

The Kotak stockbroking house has both the types of portfolio management services namely-

Discretionary and Non-Discretionary.

There are so many people who look after investing in well-managed and fundamental

companies. Clients normally make use of Discretionary PMS, where the whole portfolio is

managed by the portfolio manager.

KOTAK PMS STRATEGIES

Kotak portfolio management service providing company is one the best and top-notch

company, registered under the securities exchange board of India.

Its main concentration is in making investments in highly-managed and qualitative industries

that are normally purchased at appreciable discounts to their fundamental values. Like stocks

36
can be unfavourable but after a long period of time, they set broad standards in terms of

healthy returns.

The broking house makes such kind of bets because it has confidence in that particular

approach or strategy. They mainly focus on large-cap strategies, diversified strategies and

small-mid cap strategies and are renowned in the market for their great PMS performance.

KOTAK PMS CHARGES

The charges imposed by the Kotak portfolio management service platform are listed below-

 Management Charges- According to the commission model opted by investors, the

management charges are levied by the Kotak portfolio management service company.

 Upfront Fees- The Kotak PMS industry also levy upfront fees from all of its clients. It is

the same as prepaid charges. The upfront charges levied by the company range from 1.2%

to 2.2% of the total asset value.

 Brokerage Charges- Brokerage charges are also levied by the Kotak PMS from its

investors. Such kind of charges is tailor-made with a range of 0.015% to 0.035% of the

total transaction value.

 Custodian Charges- Custodian charges taken by Kotak PMS portal ranges from 0.35%

to 0.45% of the total asset value.

 Depository Charges- The Kotak PMS company has also included depository charges

under its investment management package. Depository charges mainly range from 2% to

0.25% of the total asset value.

 Exit Load Charges- Exit load charges are charged on the basis of withdrawal amount

and time duration of withdrawal. For instance, if the withdrawal of the particular

transaction takes place within 12 months then the commission charge will be 1.5% to

2.5% of the total withdrawal amount. If the withdrawal is done after a year then in some

cases it is free and in some cases, it is 0.8% of the total withdrawal amount.

37
KOTAK PMS FUND MANAGERS DETAILS

The below-mentioned table is providing the entire details about the fund manager of the

Kotak portfolio management service company

Fund Manager’s Details

Name Anshul Saigal

Experience 16 Years

Highest Qualification MBA

AUM (in Cr.) Approx 20,000 Cr.

Number of Clients 325+

Investment Tenure Minimum 3 yr.

Kotak portfolio management service providing company is one the best and top-notch

company, registered under the securities exchange board of India.

Its main concentration is in making investments in highly-managed and qualitative industries

that are normally purchased at appreciable discounts to their fundamental values. Like stocks

can be unfavorable but after a long period of time, they set broad standards in terms of

healthy returns.

The broking house makes such kind of bets because it has confidence in that particular

approach or strategy. They mainly focus on large-cap strategies, diversified strategies and

small-mid cap strategies and are renowned in the market for their great PMS performance.

38
 RISK ANALYSIS

Risk refers to uncertainty.

It is happening of an event which could lead to possible financial loss. Every investment has

certain degree of risk associated with it. Risk and return are two important characteristics of

any investment. They are directly related to each other. Higher the risk associated higher will

be the returns on that investment and vice versa. Every investor assumes certain return also

called as expected returns before making the actual investment. However the return that an

investor usually receives is much lesser than the expected amount. The difference between

the expected returns and the actual returns is due to the factor known as Risk. Every asset has

a different degree of risk associated with it. Depending on the risk taking ability, investors

put in their funds to earn returns. Risk associated with an asset can range between 0 to

infinity. Government bonds also known as G-sec bonds are assumed to have zero or

negligible risk.

There are various types of risk that can affect the returns from investment

They are classified under two main categories

A. Systematic Risk

B. Unsystematic Risk

SYSTEMATIC RISK

This risk affects the market as a whole and therefore has an impact on all the securities

This risk cannot be controlled

The impact of such risk can be reduced by asset allocation and hedging

UNSYSTEMATIC RISK

This risk is specific to either a company, industry or a sector. As a result it affects only that

particular company, industry or sector.

This risk arises due to internal factors like mismanagement

39
 This risk can be reduced by portfolio diversification.

Following are a few other risks that affect the outcome of an investment.

 MARKET RISK

It is a risk which occurs due to certain changes in the market conditions that impacts the

overall returns of the portfolio.

This can be further divided into

a) CURRENCY RISK

This risk affects parties that are involved in import-export or have bills receivable or payable

in some other currency.

b) EQUITY RISK

Stock prices are mainly determined by its supply and demand.

Equity risk is the risk of changes in the stock price due to some market developments.

 FOREIGN INVESTMENT RISK

It is risk arising due to investment in a foreign country.

This risk occurs due to difference in law, politics, social and cultures.

 HORIZON RISK

It is risk which occurs when the time period for which the amount was invested is changed

and reduced.

This means that the investment would not reap average benefits and the expected returns and

actual returns would have a great variation.

 INTEREST RATE RISK

This risk occurs when the interest rates of stocks fluctuate, which could affect the total cash

outflow of the investment.

40
 REINVESTMENT RISK

This risk occurs when the investor has to reinvest his principal amount at a lower rate of

interest than the previous one.

For example, a person having 12% debentures in a company reinvests that amount after

maturity in 8% debentures.

 CONCENTRATION RISK

This risk occurs when an investor concentrates all his savings in the same asset.

This means if that asset out-performs, the investor will earn high returns, but if the asset

under-performs, the investor will suffer a huge loss.

 POLITICAL RISK

The Government of a country has an impact on the stock prices.

If there is instability among the political parties or the government is bringing up regulations

hindering the growth of business, it will have a negative impact on the stock price movement

which will result in variations of actual returns from the expected returns.

 LIQUIDITY RISK

Liquidity refers to conversion of assets into cash.

This risk refers to being unable to convert assets at the right time into cash, either due to lack

of demand or any other reasons.

Liquidity risk can lead to major financial loss to an investor because he is unable to sell his

assets at the right time.

 CREDIT RISK

This risk occurs when the party that has issued the security defaults payment of dividend or

interest as well as the principal amount due to some financial crisis.

41
 INFLATION RISK

This risk occurs when the rate of return from the investment is less than the inflation rate.

Inflation affects purchasing power of an individual. Many investors have an objective to

reduce the impact of inflation with the help of investment.

 LONGEVITY RISK

This risk affects people who rely on the returns from the investments as it is their source of

income.

Longevity risk is when the returns earned over some investments are less than what was

needed to continue a given standard of living, that is they do not suffice the cause for which

the investment was made.

RETURNS ON PORTFOLIO

Every investment is subjected to risk-return relationship.

Risk is directly proportional to returns. So if an investor wishes to earn high returns, he is

forced to undertake high levels of risks.

Risk is basically the difference between the expected returns and the actual returns.

It is the variation in returns on an investment.

Risk on investment can range between 0 to infinity. Government security bonds are assumed

to have zero or almost negligible risk associated.

Returns on portfolio or the portfolio performance can be calculated using various methods

like

 Sharpe Ratio

 Treynor Ratio

 Jensen‘s alpha

42
COMPARISON OF PORTFOLIO RETURNS USING SHARPE RATIO,

TREYNOR RATIO AND JENSEN’S ALPHA

Portfolio is a cumulative of various securities like equity, stocks, bonds, debentures, ULIP, g-

sec bonds to achieve a desired objective based on the return and risk associated with each

security.

A Portfolio manager or an investor uses his skills and knowledge to prepare an efficient

portfolio in such a manner that it achieves the desired objective.

For this the portfolio manager or investor can use a combination of strategies and asset

allocation techniques to get an efficient portfolio mix.

Strategies like active portfolio management (Buying and selling of assets and shuffling and

reshuffling of assets based on the market conditions prevailing to capitalize on the

opportunities available) and passive portfolio management( Buying and holding the assets for

a period of time to get returns irrespective of the prevailing market conditions) are used based

on the investor‘s time constraints.

Success of a portfolio mix depends on the strategy used, the knowledge and skills of the

portfolio manager, but it is majorly determined by the returns earned and also the variations

of the expected returns and the actual returns.

CALCULATION OF PORTFOLIO RETURN:-

Portfolio Return Formula

Dividends + Interest + Realized Gains or Losses + Unrealized Gains

or Losses
Portfolio
=
Return
Initial Investment + Time Weighted Adjustment of the Portfolio
Return

43
Portfolio return is a combination of current income and capital gains.

Dividends pay-outs on stocks and interest received on bonds and debentures constitute

current income.

Capital gains or losses occur when a security is sold at a price which is equal to the difference

of sale price and purchase price.

The return of the portfolio is equal to the net of the capital gains or losses plus the current

income for the holding period.

Unrealized capital gains or losses on securities still held are also added to the return to

evaluate the holding period return of the portfolio.

The portfolio return is adjusted for the addition of funds and the withdrawal of funds to the

portfolio, and is time-weighted according to the number of months that the funds were in the

portfolio

Realized gains (or losses) are gains or losses actualized by the selling of the securities,

whereas unrealized gains or losses are securities that are still owned but are marked to market

to determine the portfolio's return.

COMPARING PORTFOLIO RETURNS

A portfolio‘s success is usually calculated by comparing their returns.

There are several factors that affect the performance of a portfolio like- risk, economic

changes, financial developments, market changes, time horizon and many more.

So if a person compares the returns of two portfolios as it is, then he may not determine the

performance accurately. It is important to consider all the other factors to calculate the

performance of a portfolio.

There are many methods to calculate the returns on the portfolio.

Some common methods are as follows:-

 Sharpe Ratio

44
 Treynor Ratio

 Jensen’s Alpha

SHARPE RATIO

This ratio was formulated by William F. Sharpe in 1966. This ratio considers the impact of

risk on the returns of the portfolio. It helps the investors to calculate the risk adjusted returns.

The ratio is the average return earned in excess of the risk-free rate per unit of volatility or

total risk Subtracting the risk-free rate from the mean return allows an investor to better

isolate the profits associated with risk-taking activities. Generally, the greater the value of the

Sharpe ratio, the more attractive the risk-adjusted return

Risk Premium = Total Portfolio Return – Risk free Rate

Sharpe Ratio = Risk Premium /

Deviation of Portfolio Return Standard

WHERE:

 σp = standard deviation of the portfolio‘s excess return

 Rf = risk-Free rate

 Rp = return of portfolio

Higher the Sharpe Ratio better is the portfolio‘s performance.

This means that the investor should take that extra risk to earn excess returns.

 TREYNOR RATIO

This ratio was formulated by Jack L. Treynor.

This ratio considers the impact of market volatility on the returns of the portfolio.

45
It helps investors calculate on how much more returns can be expected for every unit of risk

undertaken. That means it is a measure of the return per unit risk, where more returns means

return above the expected returns.

WHERE:

 βp = beta of the portfolio

 rf = risk-free rate

 rp = portfolio return

Where Beta refers to systematic risk or market risk that has an impact on all the securities in

the market Beta of market is always 1. Higher the Treynor Ratio better is the portfolio or

investment.

JENSEN’S ALPHA

Jensen's alpha was formulated by Michael C. Jensen in 1968. This helps to calculate the

actual return from an investment from the expected returns. Formula:-

Alpha = R(i) - (R(f) + B x (R(m) - R(f)))

R(i) = the realized return of the portfolio or investment

R(m) = the realized return of the appropriate market index

R(f) = the risk-free rate of return for the time period

B = the beta of the portfolio of investment with respect to the chosen market index

Jensen‘s alpha can be positive, negative, or zero.

For market, Jensen‘s alpha is 0.

The portfolio is under-performing if alpha is negative The portfolio is out-performing if

alpha is positive

46
 HOW IS PORTFOLIO MANAGEMENT SERVICES DIFFERENT
FROM MUTUAL FUNDS?

Portfolio Management Services Mutual Funds

A person to seek for PMS should have a A person can start investing
minimum of Rs.2500000 worth savings or in mutual funds with a
Investing shares of an equivalent amount. minimum of Rs.500.
amount

PMS communicate information regularly to Mutual funds are well

investors to keep them updated about their regulated.
Transparency
portfolio. A person can get daily
performance of his mutual
funds.

Data regarding an investor‘s portfolio is All the data regarding mutual

available only to him. funds are available publicly
Availability of No data of PMS is available on any public on various platforms.
data platform.

The investor owns the assets of his portfolio. Investor does not have
All the assets are reflected in his Demat ownership directly.
Ownership account.

Taxation They are taxable under capital gains and not They are taxable and come
under business income. under capital gains.
Equity mutual funds are some
tax exemptions.

Fee charged A fixed fee which is decided at the beginning is Fee is charged as a
charged. percentage of total AUM

PMS helps create a portfolio mix that will help They are customized as per
to meet the goals of the investor. the objective of the fund.
Custom-made

47
BENEFITS OF CHOOSING PORTFOLIO MANAGEMENT SERVICES

(PMS) INSTEAD OF MUTUAL FUNDS:

While selecting Portfolio management service (PMS) over mutual funds services it is found

that portfolio managers offer some very services which are better than the standardized

product services offered by mutual funds managers. Such as:

Asset Allocation: Asset allocation plan offered by Portfolio management service PMS helps

in allocating savings of a client in terms of stocks, bonds or equity funds. The plan is tailor

made and is designed after the detailed analysis of client's investment goals, saving pattern,

and risk taking capacity.

Timing: portfolio managers preserve client's money on time. Portfolio management service

PMS help in allocating right amount of money in right type of saving plan at right time. This

means, portfolio manager provides their expert advice on when his client should invest his

money in equities or bonds and when he should take his money out of a particular saving

plan. Portfolio manager analyzes the market and provides his expert advice to the client

regarding the amount of cash he should take out at the time of big risk in stock market.

Flexibility: portfolio

managers‘ plan saving of

his client according to

their need and

preferences. But

sometimes, portfolio

managers can invest

client's money according to his preference because they know the market very well than his

client. It is his client's duty to provide him a level of flexibility so that he can manage the

investment with full efficiency and effectiveness.

48
In comparison to mutual funds, portfolio managers do not need to follow any rigid rules of

investing a particular amount of money in a particular mode of investment.

Mutual fund managers need to work according to the regulations set up by financial

authorities of their country. Like in India, they have to follow rules set up by SEBI.

WHY SHOULD YOU OPT FOR PORTFOLIO MANAGEMENT

SERVICES?

Here are a few aspects on which portfolio managers say they score on top like:-

1. Balanced Portfolio: Professional research and advice will help you with information on

the best investment options and ideas for your portfolio.

2. Maximum Returns, Minimum Risks: Portfolio management services assure you of the

best downside protection for your portfolio. You will benefit with practical financial

advice that can help convert all paper gains into real profits in the shortest time.

49
3. Adjust Your Portfolio To Market Trends: When you avail of portfolio management

services, you enjoy greater freedom and flexibility to diversify your investments.

4. Personalized Advice: Get investment advice and strategies from expert Fund Managers.

5. Professional Management: Money management services that work for you.

6. Continuous Monitoring: You are informed about your investment decisions.

7. Hassle Free Operation: High standards of service and complete portfolio transparency.

8. Greater control: You have greater control over the asset allocation in PMS. Here the

portfolio can be customized to suit your risk-return profile.

9. Transparency: PMS provides comprehensive communications and performance

reporting that will give investors a complete picture regarding the securities held on his

behalf

50
LITERATURE REVIEW

51
 LITERATURE REVIEW

Meera, E (1995), conducted a study on equity investment strategy and portfolio selection,

which overviewed that investors mainly follow either the active strategy or the passive

strategy for formulation of a portfolio based on their forecasting ability and judgement of

the market conditions. The study also compared portfolios, one followed active strategy and

one followed passive strategy on the basis of returns, frequency of disposal of assets,

portfolio revision, with every factor there was a variation in the performance. After

evaluation of the portfolios, It can be concluded that returns were higher from portfolios

which had less diversification as compared to a portfolio having assets diversified over a

large number of sectors.

MahsaMaleki, conducted a thesis of construction and management of optimal portfolio.

The study showed that portfolio constructed by Sharpe single index model is a much better

approach as compared to Markowitz model, as the number of inputs are lower in Sharpe

Model than in Markowitz model. If the number of inputs is not considered as a deciding

factor, then both the models gave almost similar results. The study also proved that investors

can use market index to correlate with the returns.

Anu Antony (2016), conducted a research on risk model and portfolio selection.

The overview targeted to comprehend the behaviour of investors while making investment

decision. It proved that investors not just consider risk as a major deciding factor, emotional

sentiments, like over confidence, human nature of following others are sometimes major

deciding factors while selecting assets. The study helped in understanding how modern

portfolio theories consider just risk and return while making investments and not human

behaviour and sentiments.

Zabiulla, completed an overview on portfolio strategies and performance of equity mutual

fund schemes in india. The study showed that even as the Indian stock market is growing

52
rapidly and there are new investors entering the market, the portfolio managers are not able to

meet the desired goals of their clients as they are inefficient in predicting the future and

understanding the stock market. They follow a passive strategy in managing their client‘s

portfolio and thus are not able to capitalize on the opportunities arising out of market

changes.

Sachan Abhishek (2017), performed a study on relationship between personality traits and

demographic characteristics with behavioural biases of individual investors

The study revealed that behaviour, emotions, demographics, and significant relationships

played an important role in decision making for investment.

The demographics like age, gender, residence, education, marital status and profession,

openness to experience, optimism are considered and how each demographic had different

impact on investment decision.

Lal, Kavitha (2011), conducted a study of security analysis and portfolio management with

special reference to retirement planning.

The study explained the factors that needs to be considered while portfolio management in

context to retirement planning. Factors like source of income, desired standard of living,

insurance, liquidity requirements, current balance sheet, expected returns to maintain the

current lifestyle are needed to be considered to formulate a financial plan.

Based on the financial plan, the assets have to be allocated in different fractions and needs to

be constantly evaluated to get the desired returns on retirement. The researcher also suggested

consulting a financial planner for a more professional and efficient planning.

53
COMPANY PROFILE

54
 COMPANY PROFILE

PNB MetLife India Insurance Company Limited

Type Subsidiary

Industry Financial services

Founded 2001; 22 years ago

Headquarters Mumbai, India

Area served India

Key people Ashish Kumar Srivastava (MD & CEO)

Products Life insurance

Employee benefits
Investment management

Number of employees 10,444+

Parent Punjab National Bank

MetLife

Website www.pnbmetlife.com

55
PNB MetLife India Insurance Company Limited (PNB MetLife) established in 2001 is one of

the leading life insurance companies in India. PNB MetLife shareholders include MetLife

International Holdings LLC (MIHL), Punjab National Bank (PNB), Jammu & Kashmir Bank

Limited (JKB), and M. Pallonji and Company Private Limited, as well as other private

investors. MIHL and PNB are the majority shareholders in the company. The company serves

customers in over 7000 locations providing a range of health, life and retirement insurance

products.

HISTORY

PNB MetLife was initially launched as MetLife India Insurance Company Limited in 2001.

In 2011, PNB acquired a 30% stake in MetLife India Insurance. On 7 December 2012, PNB

and MetLife India approached the Competition Commission of India (CCI). In January 2013,

PNB received full approval to purchase a 30% stake in MetLife India Insurance. This new

private sector life insurer was re-branded as PNB MetLife India Ltd.

PNB MetLife now has over 150 branches across the country and serves customers at more

than 7,000 locations through its bank partnerships with PNB, Jammu and Kashmir Bank

Limited (JKB), and Karnataka Bank Limited.

56
KEY PEOPLE

Name of key person Designation

Ashish Kumar Srivastava Managing director & CEO

Asha Murali Appointed actuary

Khalid Ahmad Chief financial officer

Sameer Bansal Chief distribution officer

Samrat Das Chief operating officer

Sanjay Kumar Chief investment officer

Sarang Cheema Chief compliance officer

Shishir Agarwal Chief human resource officer

Vineet Maheshwari Chief strategy officer

Motty John Chief legal officer & head of board affairs

Viraj Taneja Chief of internal audit

57
PRODUCTS AND SERVICES

SOME KEY PLANS INCLUDE:

PNB MetLife – Mera Term Plan Plus – Term Plan

PNB MetLife – Mera Guaranteed Future Plan

PNB MetLife – Century Plan

PNB MetLife – Goal Ensuring Multiplier

PNB MetLife – Guaranteed Goal Plan

PNB MetLife – Super Saver Plan

PNB MetLife – Immediate Annuity Plan

PNB MetLife – Grand Assured Income Plan

58
AWARDS

2016: PNB MetLife won the ‗Website of the Year‘ award at the E-Commerce Summit &

Awards in Mumbai.

2016: PNB MetLife won the ‗Celent Model Insurer Asia‘ award for the most responsive

eCommerce platform on a mobile.

2016: PNB MetLife won honors at the prestigious Asia Training & Development Excellence

Awards 2016 held in Singapore in two categories – Best Education Training Campaigns and

Programs and Best Sales Development Program.

OTHER ACHIEVEMENTS

In August 2014, the company launched its corporate social responsibility program to support

the education of children in Karnataka. The project, which is part of the existing Rajiv

Gandhi Crèche Scheme, supports the government's priority of strengthening and supporting

the 30 crèche centers.

On the occasion of World Health Day, PNB MetLife announced the fifth edition of Guinness

Record-holding PNB MetLife Satara Hill Half Marathon 2016.

A new digital campaign, including a 75-second film conceptualized by McCann Erickson,

was launched by PNB MetLife in June 2016.

Punjab National Bank (PNB) is an Indian financial services company based in New Delhi,

India. Founded in 1895, the bank has over 5,800 branches and over 6,000 ATMs across 764

cities. It serves over 80 million customers. Punjab National Bank is one of the Big four banks

of India, along with the state bank of India, ICICI bank and Bank of Baroda. It is the third

largest bank of India in terms of assets size. The bank has been ranked 248th biggest in the

world by Banker‘s Almanac. PNB has its banking subsidiary in the UK, as well as branches

in Hong Kong, Dubai, and Kabul. It has representative offices in Almaty (Kazakhstan),

Dubai, Shanghai (China), Oslo (Norway) and Sydney (Australia). Punjab National Bank, one

59
of the leading nationalized Banks of the country has a national presence through a widespread

network of over 5600+ Service Out-Lets (SOLs) in branches/Offices spread across the

country. It has established specialized branches to cater to the needs of key customer

segments in the core areas of Agriculture, Industrial Finance and Foreign Exchange. The

bank has already implemented a Core Banking Solution (Financial), which provides

anywhere any time banking to all its customers of more than 5600 Service Outlets in more

than 2700 Centers across the country. Internet Banking Service is being provided to the

customers of these Service Outlets / branches. Complementing these services, the bank also

offers a modern, competitive full service to its commercial, retail and corporate customers

through its service outlets like Branches / ATMs / Extension counters etc. The design of the

network enables the bank to have operational capabilities, which is at par with international

business practices. Various Mail Servers have been located at different controlling offices to

provide corporate email facility to its staff.

Punjab National Bank (PNB) is an Indian financial services company based in New Delhi,

India. Founded in 1895, the bank has over 5,800 branches and over 6,000 ATMs across 764

cities. It serves over 80 million customers. Punjab National Bank is one of the Big four banks

of India, along with the state bank of India, ICICI bank and Bank of Baroda. It is the third

largest bank of India in terms of assets size. The bank has been ranked 248th biggest in the

world by Banker‘s Almanac. PNB has its banking subsidiary in the UK, as well as branches

in Hong Kong, Dubai, and Kabul. It has representative offices in Almaty (Kazakhstan),

Dubai, Shanghai (China), Oslo (Norway) and Sydney (Australia). Punjab National Bank, one

of the leading nationalized Banks of the country has a national presence through a widespread

network of over 5600+ Service Out-Lets (SOLs) in branches/Offices spread across the

country. It has established specialized branches to cater to the needs of key customer

segments in the core areas of Agriculture, Industrial Finance and Foreign Exchange. The

60
bank has already implemented a Core Banking Solution (Financial), which provides

anywhere any time banking to all its customers of more than 5600 Service Outlets in more

than 2700 Centers across the country. Internet Banking Service is being provided to the

customers of these Service Outlets / branches. Complementing these services, the bank also

offers a modern, competitive full service to its commercial, retail and corporate customers

through its service outlets like Branches / ATMs / Extension counters etc. The design of the

network enables the bank to have operational capabilities, which is at par with international

business practices. Various Mail Servers have been located at different controlling offices to

provide corporate email facility to its staff.

ABOUT THE BANK:

 Distinction of being the first Indian bank to have been started solely with Indian capital.

 Largest branch network in India- 4525 offices including 432 extension counters and more

than 58300 employees spread throughout the country.

 Serves over 3.5 cores customers.

 Strong correspondent banking relationship with more than 217 international banks of the

world.

 More than 50 renowned international banks maintain their rupees accounts with PNB.

61
VISION OF THE BANK:

―To be Leading Global Bank with Pan India footprints and become a household brand in the

IndoGangetic Plains, providing entire range of financial products and services under one

roof.‖

Mission of the Bank:

―Banking for the unbanked‖

Punjab National Bank-First Office at Ganpatrai Road, Lahore

PNB was founded in the year 1895 at Lahore (presently in Pakistan) as an off-shoot of the

Swadeshi Movement. Among the inspired founders were:-

a. Sardar Dayal Singh Majithia,

b. Lala HarKishen Lal

c. Lala Lalchand,

d. Shri Kali Prosanna Roy,

62
e. Shri E.C. Jessawala,

f. Shri Prabhu Dayal,

g. Bakshi Jaishi Ram, and

h. Lala Dholan Doss.

With a common missionary zeal they set about establishing a national bank; the first one with

Indian capital — owned, managed and operated by the Indians for the benefit of the Indians.

The Lion of Punjab, Lala Lajpat Rai, was actively associated with the management of the

Bank in its formative years. The Bank made steady progress right from its inception. It has

shown resilience to tide over many a crisis. It withstood the crisis in banking industry of 1913

and the severe depression of the thirties.

With the passage of time the Bank grew to strength spreading its wings from one corner of

the country to another. Some smaller banks like, The Bhagwan Dass Bank Limited, Universal

Bank of India, The Bharat Bank Limited, The Indo-Commercial Bank Limited, The

Hindustan Commercial Bank Limited and The Nedungadi Bank were brought within its fold.

PNB has the privilege of maintaining accounts of the illustrious national leaders like

Mahatma Gandhi, Shri Jawaharlal Nehru, Shri Lal Bhadhur Shashtri, and Shrimati Indira

Gandhi besides the account of the famous Jalianwala Bagh Committee. Nationalization of the

14 major banks on 19th July 1969 was major step for the banking industry. PNB was

amongst these. As a result, banking was given new direction and thrust.

63
TIMELINE OF PNB

1895:- PNB established in Lahore.

1904:- PNB established branches in Karachi and Peshawar. 1939:-PNB acquired Bhagwan

Dass Bank Limited.

1947:-Partition of India and Pakistan at Independence. PNB lost its premises in Lahore but

continued to operate in Pakistan. 1960:- PNB amalgamated Indo-Commercial bank limited

(established in 1933) in a rescue.

1961:-PNB acquired Universal Bank of India.

1963:-The Government of Burma nationalized PNB‘s branch in Rangoon (Yangon). 1965:-

After the Indo-Pak war the government of Pakistan seized all the offices in Pakistan of Indian

banks, including PNB's head office, which may have moved to Karachi. PNB also had

branches in East Pakistan (Bangladesh).

64
1969:- The Government of India nationalized PNB and 13 other major banks on 19th July,

1969.

1978:-PNB opened branch in London. 1986:- The Reserve Bank of India required PNB to

transfer its London branch to State Bank of India after the branch was involved in a fraud

scandal.

1988:- PNB acquired Hindustan Commercial Bank Limited in a rescue.

1993:- PNB acquired New Bank of India, which the Government of India had nationalized in

1980.

1998:- PNB set up a representative office in Almaty, Kazakhstan.

2003:- PNB took over Nedungadi Bank (established the bank in 1899), the oldest private

sector bank in Kerala. It was incorporated in 1913 and in 1965 had acquired selected assets

and deposits of the Coimbatore National Bank. At the time of the merger with PNB,

Nedungadi Bank's shares had zero value, with the result that its shareholders received no

payment for their shares.

AWARDS WON DURING THE YEAR 2013-14:-

1. Punjab national bank has been declared winner of golden peacock innovative

product/service award for the year 2014.

2. PNB awarded niryat bandhu bronze trophy.

3. Vigilance Excellence Award 2013-14

4. PNB Received Excellent Performance in Lending under PMEGP Scheme award.

5. 2nd prize of Indira Gandhi Rajbhasha Shield by Dept. of Indian Official Language,

Ministry of Home Affairs, GOI.

6. Gold trophy of Scope Meritorious Award for Excellence in Corporate Governance in.

7. 5th Social and Corporate Governance Award under the Category of "Best Corporate Social

Responsibility Practice"

65
8. Global HR excellence award for the outstanding contribution to the cause of education.

9. Asia Best Employer Brand Award" for Excellence in Training.

10. Award for Brand Excellence" under Banking & Financial Services.

11. Punjab National Bank conferred with Appreciation Certificate in 6th Global CSR Summit

- cum – Excellence Awards.

66
ORGANIZATION STRUCTURE:

An organizational structure defines how activities such as task allocation, coordination and

supervision are directed towards the achievement of organizational aims. Organizations are a

variant of clustered entities. An organization can be structured in many different ways,

depending on their objectives. The structure of an organization will determine the modes in

which it operates and performs.

PNB Organizational Structure:-

Bank has its Corporate Office at New Delhi, with its 13 Field General Managers and 69

Circle Offices under which the branches function. The delegation of powers is decentralized

into the branch level to facilitate quick decision making.

67
PNB PRODUCTS

Punjab National Bank is extensively catering to banking needs of Non-resident Indians,

Importers & Exporters particularly relating to foreign exchange business including Imports &

Exports of Goods & Services as also Remittances etc.

 Corporate banking

 Personal banking

 Industrial finance

 Agricultural finance

 Financing of trade

 International banking

 Home loan

 Auto loan

 ATM/DEBIT Card

 Deposit Interest rates

 Credit Interest rates

 Other Services: Locker Facilities, Senior Citizen Schemes, Merchant Banking,

 Electronic Fund Transfer & Clearing Services, etc.

PNB METLIFE ANNOUNCES RS 532 CRORE BONUS FOR

POLICYHOLDERS IN FY21

PNB MetLife India Insurance Company has announced a bonus of Rs 532 crore for the

eligible policyholders of participating products during 2020-21.

PNB MetLife India Insurance Company has announced a bonus of Rs 532 crore for the

eligible policyholders of participating products during 2020-21.

This bonus is 7 per cent higher than that in previous year.

68
PNB MetLife said it has been consistently declaring bonus on participating products every

year and 4.6 lakh customers, whose policies are in force as of March 31, 2021, will be

benefiting from this bonus.

Policyholder bonus is the share of profits generated by the company's participating funds

which is paid to the customers at various benefit events.

PNB MetLife's strong fund management capabilities coupled with robust risk management

practices have enabled the company to reward policyholders with higher bonus payouts, the

insurer said in a release on Friday.

Ashish Kumar Srivastava, MD & CEO, PNB MetLife, said despite these trying times, the

company has delivered steady growth on participating products over the years.

"The declaration of this Rs 532 crore bonus reinforces our commitment to help our customers

reach their financial aspirations through every stage of Life," he said.

PNB MetLife's shareholders include MetLife International Holdings LLC. (MIHL), Punjab

National Bank (PNB), Jammu & Kashmir Bank, M Pallonji and Company Pvt Ltd and other

private investors. MIHL and PNB are the majority shareholders.

PNB METLIFE RECEIVES THREE NEW INTERNATIONAL

ORGANIZATION FOR STANDARDIZATION (ISO) CERTIFICATIONS

Mumbai: PNB MetLife has received three coveted International Organization for

Standardization (ISO) certificates recognizing its leadership in Business Continuity

Management System - ISO/IEC 22301:2012, Information Security Management System -

ISO/IEC 27001:2013, and IT Security Management System - ISO/IEC 2000-1:2011.

The three ISO certifications, established by DNV GL Business Assurance UK Limited, set

international standards and provide guidelines, for managing business continuity challenges

and risks which can be implemented across the lifecycle of the organization.

69
With the onset of the global COVID-19 pandemic, PNB MetLife enacted a robust business

continuity plan that went beyond IT infrastructure. It ensured the safety and wellbeing of

employees, continued customer engagement and digital servicing, and simplified premium

payment and claims processes.

The governing body also recognised PNB MetLife‘s information security and IT service

management systems for planning, establishing, implementing, operating, monitoring,

reviewing, maintaining and improving IT Service Management Systems. With increased

digital transactions and servicing during the lockdown, PNB MetLife‘s robust information

security and service management practices ensured customers could continue to access its full

range of products and services and transact with confidence that their data was secure.

Ashish Kumar Srivastava, MD & CEO, PNB MetLife, said ―The ISO certifications provide

global validation to PNB MetLife‘s rigorous efforts in developing and implementing a quality

management system that continuously delivers beyond the expectations of all the

stakeholders. We are building a resilient organisation that is prepared to support our

customers in any situation.‖

SN ISO Certificate Standard Name Description

1 ISO/IEC 22301:2012 Business Business

Continuity Continuity
Management Management
System System for design,
development, issue
and servicing of
Life Insurance
Products and
supporting
processes

2 ISO/IEC 27001:2013 Information Establishing,

Security implementing,
Management maintaining and
System continually
improving an

70
 Information
Security
Management
system

3 ISO/IEC 20000-1:2011 IT Service Planning,

Management establishing,
System implementing,
operating,
monitoring,
reviewing,
maintaining and
improving an IT
Service
Management
Systems

PNB MetLife India Insurance Company Limited (PNB MetLife) has as its shareholders

MetLife International Holdings LLC. (MIHL), Punjab National Bank Limited (PNB), Jammu

& Kashmir Bank Limited (JKB), M. Pallonji and Company Private Limited and other private

investors, with MIHL and PNB being the majority shareholders.

1. BACKGROUND:

PNB MetLife is a joint venture between Punjab National Bank (PNB), one of India's leading

public sector banks, and MetLife International Holdings LLC, a subsidiary of MetLife Inc., a

global insurance and financial services company based in the United States. The company

was established in 2001 as MetLife India Insurance Company Limited and later became PNB

MetLife India Insurance Company Limited after PNB's participation.

The background of PNB MetLife, also known as PNB MetLife India Insurance Company

Limited, encompasses its origin, ownership structure, and key developments.

71
HERE'S AN OVERVIEW OF ITS BACKGROUND:

1. ESTABLISHMENT AND OWNERSHIP:

PNB MetLife India Insurance Company Limited was established in 2001 as MetLife India

Insurance Company Limited. It began its operations in India as a joint venture between two

entities:

MetLife International Holdings LLC: MetLife Inc., a global insurance and financial services

company headquartered in the United States. MetLife is one of the largest and most well-

established insurance companies globally, with a history dating back to the 19th century.

Punjab National Bank (PNB): PNB is one of India's leading public sector banks, with a rich

history dating back to 1894. PNB's involvement in the joint venture brought extensive

banking expertise and a vast network of branches in India

2. JOINT VENTURE STRUCTURE:

In this partnership, MetLife International Holdings LLC initially held a majority stake, while

Punjab National Bank held a significant minority stake in the insurance company. This

structure allowed for the integration of insurance products into PNB's extensive branch

network, a distribution channel known as bancassurance.

3. TRANSITION TO PNB METLIFE:

Over the years, the company evolved and expanded its operations in India. In 2011, the

company underwent a rebranding and became known as "PNB MetLife India Insurance

Company Limited." This rebranding marked a stronger association with Punjab National

Bank and a clear indication of the bank's participation in the venture.

4. INSURANCE OFFERINGS:

PNB MetLife offers a wide range of life insurance and retirement solutions to cater to the

diverse financial needs of its customers. These offerings include term insurance, whole life

72
insurance, unit-linked insurance plans (ULIPs), savings and investment plans, child and

education plans, retirement plans, health and critical illness plans, and more.

5. DISTRIBUTION NETWORK:

PNB MetLife leverages a robust distribution network to reach customers across India. This

network includes bancassurance through PNB branches, agency sales, direct sales through its

website and mobile app, corporate sales, and intermediaries.

6. DIGITAL INITIATIVES:

To stay competitive and cater to the digital-savvy Indian market, PNB MetLife has

implemented various digital initiatives, including online policy purchases, mobile apps,

digital marketing, and enhanced customer portals.

7. AWARDS AND RECOGNITIONS:

PNB MetLife has received several awards and recognitions for its insurance products,

customer service, risk management, and CSR initiatives, further establishing its presence and

reputation in the Indian insurance sector.

2. PRODUCTS AND SERVICES:

PNB MetLife offers a wide range of life insurance and retirement solutions to meet the

diverse financial needs of its customers. Its product offerings include:

Term Insurance: Provides pure life coverage for a specific term. Whole Life Insurance:

Offers lifelong coverage with savings and investment components. Unit-Linked Insurance

Plans (ULIPs): Combines life insurance with investment opportunities in market-linked

funds. Savings and Investment Plans: Includes endowment and money-back plans. Child and

Education Plans: Tailored to secure a child's future education. Retirement Plans: Designed to

help individuals plan for a financially secure retirement. Health and Critical Illness Plans:

Provides coverage for medical expenses and critical illnesses.

73
PNB MetLife offers a wide range of insurance and financial products and services to cater to

the diverse needs and preferences of its customers in India. Here is an overview of the key

products and services offered by PNB MetLife:

LIFE INSURANCE:

Term Insurance: Term insurance plans provide pure life coverage for a specified term. These

plans offer financial protection to the policyholder's family in the event of the policyholder's

untimely demise.

Whole Life Insurance: Whole life insurance plans provide lifelong coverage. They combine

life insurance with a savings or investment component, allowing policyholders to build a cash

value over time.

Unit-Linked Insurance Plans (ULIPs): ULIPs are investment-linked insurance plans that offer

both life coverage and the opportunity to invest in market-linked funds. Policyholders can

choose from a range of fund options based on their risk tolerance and investment goals.

Savings and Investment Plans: These plans are designed to help individuals build wealth over

time while providing life coverage. They often include maturity benefits and may have

varying investment and savings components.

CHILD AND EDUCATION PLANS:

Child Education Plans: These plans are specifically tailored to secure a child's future

education expenses. They provide financial support for a child's education, even in the

policyholder's absence.

RETIREMENT PLANS:

Retirement Plans: PNB MetLife offers retirement plans designed to help individuals plan for

a financially secure retirement. These plans provide regular income during retirement years.

74
HEALTH AND CRITICAL ILLNESS PLANS:

Health Insurance: PNB MetLife provides health insurance plans that cover medical expenses,

hospitalization costs, and other healthcare-related expenses. These plans offer financial

protection against unexpected medical bills.

Critical Illness Insurance: Critical illness plans provide a lump sum payout upon the

diagnosis of specified critical illnesses. This money can be used to cover medical expenses,

treatment costs, or other financial needs.

RIDERS AND ADD-ONS:

Riders: PNB MetLife offers a range of riders or add-on options that policyholders can attach

to their base insurance policies. These riders enhance the coverage and benefits provided by

the base policy.

Online and Digital Services:

Online Policy Purchase: Customers can explore, compare, and purchase insurance policies

directly through the company's official website and mobile app.

Customer Portals: Policyholders can access online customer portals to manage their policies,

pay premiums, and access policy-related documents and information.

CORPORATE AND GROUP INSURANCE:

Group Insurance: PNB MetLife offers customized group insurance solutions to corporate

clients and organizations. These group insurance policies often include life insurance, health

insurance, and other benefits for employees or group members.

Digital Initiatives:

Digital Services: PNB MetLife has embraced digital technologies to enhance customer

experience and accessibility. This includes mobile apps, online premium payments, and

digital KYC processes.

75
3. DISTRIBUTION NETWORK:

PNB MetLife has a widespread distribution network that includes:

Bancassurance: Leveraging the extensive branch network of Punjab National Bank (PNB) to

reach customers. Agency Sales: Employing a network of insurance agents. Direct Sales:

Selling insurance products directly to customers. Corporate Sales: Providing group insurance

solutions to corporate clients. A distribution network, in the context of an insurance company

like PNB MetLife, refers to the various channels and methods through which the company

sells its insurance products and services to customers. A robust distribution network is crucial

for reaching a wide customer base and ensuring the accessibility of insurance offerings. Here

are common elements of an insurance distribution network:

Bancassurance: Bancassurance is a distribution strategy where insurance products are sold

through banking channels. PNB MetLife leverages its partnership with Punjab National Bank

(PNB) to offer insurance products to the bank's customers. Bank branches serve as points of

sale for insurance policies.

Agency Sales: Insurance agents, often referred to as insurance advisors or agents, play a

pivotal role in selling insurance products. These agents may be affiliated with PNB MetLife

and work directly with the company to sell policies. They typically receive commissions and

incentives based on their sales performance.

Direct Sales: PNB MetLife may offer customers the option to purchase insurance policies

directly through its website or call centers. This approach allows customers to research,

compare, and buy insurance without intermediaries, offering convenience and potentially cost

savings.

Corporate and Group Sales: PNB MetLife may target corporate clients and employers to

provide group insurance policies for their employees. These policies can include life

76
insurance, health insurance, and other benefits tailored to the needs of the organization's

workforce.

Brokers and Intermediaries: Insurance brokers and intermediaries act as intermediaries

between PNB MetLife and customers. They can offer a range of insurance products from

various insurers, including PNB MetLife, and help customers choose the most suitable

policies.

Online Distribution: The company's website and mobile app serve as digital distribution

channels. Customers can explore available policies, obtain quotes, and purchase insurance

online. This approach is particularly relevant in the digital age.

Telemarketing: PNB MetLife may use telemarketing services to reach out to potential

customers via phone calls. Telemarketers provide information about insurance products,

answer questions, and assist in policy purchases.

Affinity Partnerships: PNB MetLife may collaborate with affinity groups, associations, or

organizations to offer specialized insurance products to their members. For example, the

company might partner with professional associations to provide tailored coverage to their

members.

Collaborations with Fintech Companies: In the modern era, some insurance companies

collaborate with fintech startups and technology platforms to reach a younger, tech-savvy

customer base. These partnerships may involve selling insurance within apps or platforms

popular among the target demographic.

International Distribution: If PNB MetLife operates in multiple countries or regions, it may

have an international distribution network to reach customers in those markets. This could

involve partnerships with local financial institutions or insurers.

The effectiveness of a distribution network is crucial for the growth and success of an

insurance company. It allows the company to reach diverse customer segments, offer a wide

77
range of insurance products, and provide convenient access to insurance solutions.

Additionally, a well-managed distribution network helps in delivering personalized services

and support to customers.

4. DIGITAL INITIATIVES:

The company has embraced digital technologies to enhance customer experience and

accessibility. Customers can purchase policies, pay premiums, and access information online

through the company's website and mobile app.

PNB MetLife, like many other insurance companies, has embraced digital initiatives to

enhance customer experience, streamline operations, and stay competitive in the digital age.

While specific initiatives may evolve over time, here are some common digital initiatives that

insurance companies often undertake:

Online Policy Purchase: PNB MetLife offers customers the ability to browse, compare, and

purchase insurance policies through their official website or mobile app. This allows for a

convenient and paperless application process.

Digital Claims Processing: Digitalization of claims processing speeds up the settlement

process. Customers can submit claims online, track the status, and receive payments more

efficiently.

Mobile Apps: PNB MetLife may have developed a mobile app that provides policyholders

with easy access to their insurance information, premium payments, claims status, and other

relevant services on their smartphones.

Online Premium Payment: Customers can pay their insurance premiums online through the

company's website or mobile app. Various payment options, including net banking,

credit/debit cards, and digital wallets, are usually available.

78
Customer Portals: Self-service customer portals allow policyholders to manage their policies,

update personal information, and access policy documents online, reducing the need for

physical paperwork.

Chatbots and Virtual Assistants: AI-powered chatbots and virtual assistants on the website

can answer customer queries, guide them through the insurance buying process, and provide

instant assistance.

Data Analytics: Insurance companies like PNB MetLife use data analytics to assess risk, set

premiums, and personalize offers for customers. Analyzing data can also help in fraud

detection and prevention.

Telematics and IoT: PNB MetLife may explore the use of telematics and Internet of Things

(IoT) devices to collect data on policyholders' behavior, such as safe driving habits, which

can lead to personalized insurance solutions.

Digital Marketing: Digital channels, including social media, email marketing, and search

engine optimization, are used to reach potential customers and engage with the existing

customer base.

Cybersecurity Measures: Given the sensitive nature of insurance data, robust cybersecurity

measures are implemented to protect customer information and prevent cyber threats.

E-KYC (Know Your Customer): Digital KYC processes simplify customer onboarding,

making it easier and more convenient for individuals to purchase insurance policies.

Video Conferencing and Virtual Sales: Especially relevant during the COVID-19 pandemic,

PNB MetLife may have implemented video conferencing and virtual sales processes to reach

and serve customers remotely.

Machine Learning and Predictive Analytics: These technologies help in underwriting, claims

assessment, and fraud detection, ultimately improving the overall efficiency of insurance

operations.

79
Blockchain Technology: Blockchain can be used to enhance the security and transparency of

insurance transactions, particularly in areas like policy issuance and claims settlement.

5. FINANCIAL STRENGTH:

PNB MetLife has demonstrated financial stability and growth in the Indian insurance market.

The company's financial performance is monitored by regulatory authorities, including the

Insurance Regulatory and Development Authority of India (IRDAI).

6. CORPORATE SOCIAL RESPONSIBILITY (CSR):

PNB MetLife is actively involved in CSR activities, focusing on areas like education, health,

and community development. It strives to make a positive impact on society through various

initiatives.

7. AWARDS AND RECOGNITIONS:

Over the years, PNB MetLife has received several awards and accolades for its products,

customer service, and innovation in the insurance sector.

It's important to note that the information provided here is based on my knowledge as of

September 2021. For the most up-to-date information about PNB MetLife, including its

products, services, and recent developments, it's advisable to visit the company's official

website or consult the latest news sources and financial reports.

Best Life Insurance Company - Private Sector (North): PNB MetLife received this award at

the BFSI Awards in 2020. The award recognized the company's excellence in providing life

insurance services in the northern region of India.

Golden Peacock Award for Risk Management: The Golden Peacock Awards are prestigious

honors for business excellence. PNB MetLife was recognized for its effective risk

management practices.

Claims Service Company of the Year: The company received the Claims Service Company

of the Year award at the Indian Insurance Summit & Awards 2020. This award

80
acknowledged PNB MetLife's commitment to providing efficient claims services to its

customers.

Customer Experience Award: PNB MetLife was recognized for its focus on enhancing

customer experience. Such awards often highlight efforts to improve customer satisfaction

and service quality.

Technology Excellence Award: PNB MetLife's innovative use of technology in the insurance

industry earned it recognition in various technology and innovation categories.

Best CSR Practices: The company has also been recognized for its corporate social

responsibility (CSR) initiatives, emphasizing its commitment to making a positive impact on

society.

81
OBJECTIVE OF THE
STUDY

82
 OBJECTIVE OF THE STUDY

1. To get the overall knowledge of securities and investment.

2. To know how the investment made in different securities minimizes the risk and

maximizes the returns.

3. To get the knowledge of different factors that affects the investment decision of

investors.

4. To know how different companies are managing their portfolio i.e. when and in which

sectors they are investing.

83
SCOPE OF THE STUDY:

The study covers all the information related to the Portfolio management. It also covers the

investor risk in the investment in various securities.

1. Identification of the investor‘s objectives, constraints and preferences.

2. To reduce the future risk in advance.

3. To earn maximum profit in the securities.

4. Review and monitoring of the performance of the portfolio.

5. Finally the evaluation of the portfolio.

84
 RESEARCH
METHODOLOGY

85
 RESEARCH METHODOLOGY

METHODS OF DATA COLLECTION

Data has been collected by means of Primary and Secondary Sources.

A) Primary Data: For the Present study primary data is collected through Questionnaire.

B) Secondary Data: Secondary data has been collected through various Publications like

books, newspapers ,web, Reports, etc.

PRIMARY DATA:

In other words, it's data that's collected by the organization that expects to use it. Methods

include surveys, interviews, observation, and focus groups. Data that has been generated by

the researcher himself/herself, surveys, interviews, experiments, specially designed for

understanding and solving the research problem at hand.

SECONDARY DATA:

Secondary data is data collected by someone other than the actual user. It means that the

information is already available, and someone analyses it. The secondary data includes

magazines, newspapers, books, journals, etc. It may be either published data or unpublished

data.

SAMPLE SIZE:

The sample size for this projects report has been kept limited to the number of 100

respondents. On the basis of the information revealed by these respondents the data has been

collected analyzed and interpreted.

HYPOTHESIS STATEMENT:

NULL HYPOTHESIS: Most of the investors prefer return as their investment criteria rather

than risk, liquidity and safety of principal etc.

86
ALTERNATE HYPOTHESIS: Most of the investors don‘t prefer return as their investment

criteria rather go for either risk or liquidity or safety of principal etc.

Methods of data collection

87
 LIMITATIONS

1. The time span in which the whole study was conducted was limited and short for carrying

out the project.

2. Many of the customers did not give correct information. This affects the outcome as well

as the results of the study.

88
DATA ANALYSIS

89
 DATA ANALYSIS AND INTERPRETATION

1 .Age

Age
18-22 22-26 26-30 30 and above

12%

36%
18%

34%

From the responses,

People belonging to the Age group of:-

18-22 = 36.6%

22-26 = 33.7%

26-30 = 17.8%

30-above = 11.9%

Age group of 18-22 forms the majority of the respondents.

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2 .The portion of your total income you currently save is approximately

Total income you currently save

I do not currently save any income 10%-20% 20%-30% more than 30%

13%
20%

31%

36%

From the responses,

36.6% of the respondents save about 10-20% of their income

30.7% of the respondents save about 20-30% of their income

12.9% of the respondents save more than 30% of their income

19.8% of them do not currently save any income.

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3. In the next five years, you expect that your earned income will probably.

Sales
Decrease Stay about the same Increase Modestly Increase Significantly

5%

24%

26%

45%

Respondent‘s expectation in next 5 years:-

45.5% of respondents believe that their income will increase modestly

23.8% believe that it will increase significantly

25.7% of respondents think that their income will remain the same

5% of them think that the income will decrease.

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4. Are you aware about the services offered by Portfolio Managers?

Column1
yes No

31%

69%

Awareness about Portfolio Management Services

69.3% of the respondents were aware about these services

30.7% of them had no idea about these services

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5. If yes, what type of services you are aware of?

Column1
Management of Mutualfunds Management of Equities
Management of MoneyMarket Investment Advisory or Consultancyservices
Others

8%

7% 24%

25%

36%

From the respondents who are about PMS

23.80% are aware about Management of mutual funds

35.7% are aware about Management of equities

25% are aware about Money market investment

7.1% are aware about advisory or consultancy services

8.3% are aware about some other services.

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6. Would you want to hire a Portfolio Manager at present or in future?

Sales
Yes No

27%

73%

From the respondents

About 26.7% of the respondents do not prefer to hire a portfolio manager

73.3 % of the respondents want to hire a portfolio manager.

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7. If yes, for what type of services?

Column1
Investment in Mutual Funds Investment in Money Market
Investment in ConsultancyService Investment in Equities
Other Services

3%

22%
24%

28%
23%

From the respondents

27.7% of them would hire a portfolio manager for investing in money market,

24.1% of them would hire a portfolio manager for investing in equities

22.9% of them would hire a portfolio manager for investing in consultancy services

21.7% of them would hire a portfolio manager for investing in mutual funds.

3.6% of them would hire a portfolio manager for other services.

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8. How would you describe your Portfolio's liquidity requirement?

Sales
Low Average High

13%

26%

61%

From the respondents,

About 61% of them want their portfolio liquidity requirement to be average

About 26% of them want their portfolio liquidity requirement to be low

And about 13% of them want their portfolio liquidity requirement to be high.

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9. Will the investment earnings for this portfolio be needed to meet some
or all of your expenses?

Column1
Yes No

48%

53%

The percentage of respondents did not who needed their earnings to meet some or all of their
expenses were 47.5% while the remaining respondents needed it to meet all some or all of
their expenses.

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10. If you answered yes, what are the approximate annual expenses this portfolio
will need to address?
 Tax payment
 10000
 100000

11. Assessing your risk tolerance as an investor.

Column1
Portfolio A, which may gainupto 60% and lose upto40%
Portfolio B, which maygainupto 50% and lose upto50%
Portfolio C, which may gainupto 70% and lose upto30%
Portfolio D, which may gainupto 40% and lose upto60%

8%

34%

31%

27%

34.3% of the respondents want such kind of portfolio which could fetch them 60% of profit
whereas there were respondents who were ready to make loss of 60% and gain only 40%

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12. Are You comfortable with investment which are very volatile?

Column1
Agree Disagree Strongly Disagree

15%

37%

49%

From the respondents,

36.6% are comfortable with volatile investments and can be called High risk takers

48.5% of the respondents are moderate risk takers

14.9% of the respondents are risk averse

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CONCLUSIONS

101
 CONCLUSIONS

From the above study, we can analyse that people have become more aware about investment

and there has been an increase in demand for portfolio management services and it will

continue to see a rise in the coming time.

Large number of players like various financial institutions, government, high net worth

investors, individual investors are participating and influencing the stock market.

We have also understood the importance of portfolio management, the impact of various

factors like risk-return on investments, the different phases and elaborate procedure of

portfolio management.

We have also become more aware about the advantages and disadvantages of portfolio

management, and what role a portfolio manager plays in investment with the help of his skills

and knowledge.

The above mentioned information also states certain mistakes which are common and should

be avoided while investing in securities like not doing proper research before investing.

The study has helped to understand different investment strategies and how combination of

these strategies in asset allocation will help in achieving the desired returns.

As per the data collected from the respondents, we conclude that the null hypothesis

(Assuming that investors consider returns as their deciding factor while making investments

over liquidity, risk, etc.) has been rejected and the alternate hypothesis (Assuming that

investors consider risk, liquidity , etc as a major factor while making investment over

returns.) has been accepted.

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SUGGESTION

103
 SUGGESTION

According to the research, an average person can take the services of the portfolio

management services from the firms which has been generating previously good annual

returns. The major issue is the minimum amount to invest in the PMS firm. The average

person can start investing small amounts in mutual funds which has a lower bracket of Rs.

500 and keep investing until he can save a large sum of money and invest it with the PMS

firms who are generating high amounts of returns, provide their services charges are not very

high.

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BIBLIOGRAPHY

105
 BIBLIOGRAPHY

 https://www.scribd.com/doc/34313597/Portfolio-Management-Services-and-Investment-

Decision

 http://www.managementparadise.com/rohanrajk/documents/3392/investment-analysis-

amp-portfolio-management/

 http://www.pmsolutions.com/case-studies/category/program-portfolio-management/

 http://www.investopedia.com/walkthrough/corporate-finance/4/capital-markets/risk-

returns.aspx

 http://thismatter.com/money/investments/portfolio-performance.htm

 https://www.google.co.in/?gfe_rd=cr&ei=2iL2V9mFLarT8gf8t4bwCw#q=importance+of

+portfolio+management+in+todays+time+Et

106
ANNEXURE

107
 QUESTIONNAIRE

1)Name

2) Age
o 18-22
o 22-26
o 26-30
o 30 and above

3) The portion of your total income you currently save is approximately.

o I do not currently save any income
o 10%-20%
o 20%-30%
o more than 30%

4) In the next five years, you expect that your earned income will probably.
o Decrease
o Stay about the same
o Increase Modestly
o Increase Significantly

5) Are you aware about the services offered by Portfolio Managers?

o Yes
o No

6) If yes, what type of services you are aware of ?

o Management of Mutual funds
o Management of Equities
o Management of Money Market Investment
o Advisory or Consultancy services
o Others

108
7) Would you want to hire a Portfolio Manager at present or in future?
o Yes
o No

8) If yes, for what type of services?

o Investment in Mutual Funds
o Investment in Money Market
o Investment in Consultancy Service
o Investment in Equities
o Other Services (If other please specify)
o Other:
o

9) How would you describe your Portfolio's liquidity requirement?

o Low
o Average
o High

10) Will the investment earnings for this portfolio be needed to meet some or all of your
expenses?
o Yes
o No

11)If you answered yes, what are the approximate annual expenses this portfolio will need to
address?

12) Assessing your risk tolerance as an investor.

o Portfolio A, which may gain upto 60% and lose upto 40%
o Portfolio B, which may gainupto 50% and lose upto 50%
o Portfolio C, which may gain upto 70% and lose upto 30%
o Portfolio D, which may gain upto 40% and lose upto 60%

109
13) Are you comfortable with investment which are very volatile.
o Agree
o Disagree
o Strongly Disagree

110