Hsbc Project Report DRAFT1

8/6/2019 Hsbc Project Report DRAFT1

1/94

1

PROJECT REPORT

A study on growth of Investment & WealthManagement Businesses in UAE

In the Partial Fulfillment of the Requirement for the Degree of

BACHELOR OF BUSINESS ADMINISTRATION

By

BADOOR ZAIDI

REG. NO:0801025

Under the Guidance and Supervision of

Mr. Vishwanathan Bharathan

MANIPAL UNIVERSITY

DEPARTMENT OF MANAGEMENT STUDIES

ACADEMIC CITY, DUBAI, U.A.E


2/94

2

MAY 2011

Mr. Vishwanathan Bharathan

Department Of Management Studies

Manipal University Dubai Campus

International Academic City

Dubai, U.A.E.

Date: 01/05/2011

CERTIFICATE

This is to certify that the project work entitled, Study on Growth of Wealth and Innvestment

Management in UAE Banking Sector , submitted to the MANIPAL UNIVERSITY DUBAI CAMPUS for the

award of the degree of Bachelors of Business Administration, is a record of the original work done by

BADOOR ZAIDI during the period of her study in the Department of Management Studies, Manipal

University - Dubai Campus, UAE, under my supervision and guidance, and the project work has not

previously formed the basis for the award of any degree, diploma, fellowship, associate ship or any

other similar title, to any candidate of any University.

Signature of the Guide


3/94

3

DECLARATION

I hereby declare that matter embodied in this project work entitle STUDY OF WEALTH AND

INVESTMENT BUSINESS IN UAE BANKING SECTOR is the result of the analysis of observations and

interviews carried out by me under the guidance of Mr VISHWANATHAN BHARATHAN Department of

Management Studies, Manipal University - Dubai Campus, UAE. This project work has not previously

formed the basis for the award of any degree, diploma, fellowship, associate ship or any other similar

title, to any candidate of any University.

Badoor Zaidi

REG. NO:0801025Department of Management Studies

Manipal University - Dubai Campus

International Academic City

Dubai, UAE.


4/94

4

AKNOWLEDGEMENT

I would like to convey my sincere gratitude to Dr. B. Ramjee, director, Manipal

University, Dubai Campus for providing an excellent learning environment. I

would like to thank Mr. Vishwanathan Bharathan, Faculty of manipal University ,

Dubai Campus for giving me an opportunity to do and complete my project report

as well as guiding me with my project report.

Im also greatful to my professors, family and friends for their corporation and

guidance which enabled me to finish the project successfully.


5/94

5

Date: 1st may, 2011 Badoor Zaidi

Executive Summary

Practical part is an essential part of management studies as it helps one to

visualize the management practices in the field and the theoretical aspects of

which we have learnt in the classroom.

This research study of investment & wealth management business analysis is

based on financial market (wealth maximization options) , I have completed this

research by collecting past quantitative data of financial market and about the

financial instruments performance in the market. This research study has done

on Several type of investment options which are very popular in the market

(MF, SIP, TMD, INS). This research provides us knowledge of investment options

and the a way to managing our wealth in a profitable way. It was very

challenging as well as interesting for me to work on this kind of topic

investment & wealth management businessanalysis. I have learnt practical &

theoretical aspects which has implemented by the company in its business

practices.


6/94

6

Table of Contents

Chapter Title Page Number

1. Introduction 9

2. Organization Profile 13

3. Theoretical background/review of Literature 22

4. Research Methodology 53

5. Analysis and interpretation 60

6. Findings 79

7. Recommendation and Conclusion 91

Reference 93

Appendix 95


7/94

7

List of Tables

Table 1 Balance sheet of2007

Table 2 Cash flow of2007








8/94

8

List of Figures

Figure 1

Figure 2

Figure 3

Figure 4

Figure 5

Figure 6

Figure 7

Figure 8

Figure 9

Figure 10


9/94

9

CHAPTER 1

INTRODUCTION


10/94

10

Introduction

Investment management is the professional management of various securities

(shares, bonds and other securities) and assets (e.g., real estate) in order to meetspecified investment goals for the benefit of the investors. Investors may beinstitutions (insurance companies, pension funds, corporations etc.) or privateinvestors (both directly via investment contracts and more commonly via collective

investment schemes e.g. mutual funds or exchange-traded funds).

The provision of 'investment management services' includes elements of financial

statement analysis, asset selection, stock selection, plan implementation andongoing monitoring of investments. Investment management is a large andimportant global industry in its own right responsible for caretaking of trillions ofyuan, dollars, euro, pounds and yen. Coming under the remit of financial servicesmany of the world's largest companies are at least in part investment managers andemploy millions of staff and create billions in revenue.

Wealth management is an investment advisory discipline that incorporatesfinancial planning, investment portfolio management and a number of aggregated

financial services. High Net worth Individuals (HNWIs), small business ownersand families who desire the assistance of a credentialed financial advisoryspecialist call upon wealth managers to coordinate retail banking, estate planning,legal resources, tax professionals and investment management. Wealth managerscan be an independent Certified Financial Planner, MBAs, and Chartered StrategicWealth Professional. CFA Charter holders or any credentialed professional moneymanager who works to enhance the income, growth and tax favored treatment of

long-term investors. Wealth management is often referred to as a high-level formof private banking for the especially affluent. One must already have accumulateda significant amount of wealth for wealth management strategies to be effective.


11/94

11

NEED FOR STUDY

The need for investment management arises due to:

The existence of a large number of complex financial products

Financial market volatility

Changes in regulatory requirements

Every individual practices investment management to some degree, including

budgeting, saving, investing and spending. However, an investment manager is one

who specializes in placing money in diverse instruments in order to accomplish predetermined goals. Investment managers are also widely known as fund

managers. Investment managers may specialize in advisory or discretionary

management. When an investment manager merely offers suggestions regarding

where to invest money and when to sell securities, the practice is known as

advisory investment management. When an investment manager can take action in

managing portfolios without requiring client approval, it is called "discretionary"

investment management.


12/94

12

OBJECTIVE OF THE STUDY

To understand the growth of UAE banking sector on investment and wealth

activities.

To study the progress of investment and wealth management activities of HSBC

U.A.E for the period of 2007 to 2011

To compare the growth of investment and wealth management in HSBC activities

with industry standards

To forecast the future for investment and wealth management business in banks in

U.A.E


13/94

13

CHAPTER 2

ORGANIZATION PROFILE


14/94

14

Organization Profile

Introduction

We are the worlds local bank. Headquarters in London, HSBC is one of the

largest banking & financial services organization in the world. HSBCs

international network comprises over 9500 offices in 76 countries & territories inEurope, the Asia-Pacific region, the Americas, the Middle East & Africa. With

listings on the London, Hongkong, New York, Paris & Bermuda stock exchange

shares in HSBC holdings places are held by nearly 200,000 shareholders in some

100 countries & territories. The shares are traded on the New York stock exchange

in the form of American Depository Receipts. Through an international network

linked by advertisement techniques, including a rapidly growing e-commerce

capability, HSBC provides a comprehensive range of financial services like-

Personal financial services

Commercial Banking

Corporate Banking

Investment Banking

Like all banks, HSBC is in business to make a profit. Yet returning the maximum

investment to its shareholders is not the sole focus of this global financial

institution. From its roots in rural Asia to its advancement to a global corporation,HSBC has maintained a core focus on basic principles. Achieving its aims and

objectives by adhering to its values has allowed HSBC to maintain both

profitability and high ethical standards.


15/94

15

1. History

o HSBC's origins and early history help to explain its values today.

HSBC began in Hong Kong in 1865. Originally known as The

Hongkong and Shanghai Banking Corporation Limited, the bankdeveloped from the early needs of traders along the China coast.

According to HSBC, the founding principles of the bank derived from

local ownership and management; from the start, the bank was in

business to help strengthen business communities and aid local

investment. HSBC went on to develop a strong presence not only in

Asia, but also in Europe and America. Today, HSBC is headquartered

in London, England.

Basics

o The aims of HSBC are revealed through its slogan and business focus.

Branding itself as "The World's Local Bank," HSBC continues to

concentrate on local investment as an engine of economic growth. In

addition, the company's four key businesses are Global Banking and

Markets, Private Banking, Commercial Banking, and Personal

Finance Services; each of these business sectors allows HSBC to

harness global economic trends to service both its current and

emerging markets.

Function

o Through its core business principles, HSBC functions to accomplish it

objectives. HSBC.com lists these as outstanding customer service;

effective and efficient operations; strong capital and liquidity; prudent

lending policy; and strict expense discipline. HSBC also stresses that

commitment by employees helps to create long-term customer

relationships, a keystone of the bank's profitability model. HSBC.comstates this is accomplished through attention to integrity, ethics and

managerial oversight.

Significance


16/94

16

o HSBC's commitment to its values has allowed the company to

accomplish many of its goals for expansion and profitability, as well

as commitment to local investment and excellent customer service.HSBC is designed to be both global and local. Bankers Almanac

ranked HSBC as the 14th largest bank in the world, in terms of assets,

in 2009. In addition, HSBC is carrying its objectives forward into the

Information Age: Global Finance Magazine rated HSBC as one of the

world's best Internet banks for 2009.

Outlook

o In the banking crisis that began in late 2007, financial institutions

showed serious operational deficiencies, and banks have subsequently

been called upon to reexamine their commitment to both their

customers and to ethical standards. For example, HSBC in 2009

closed its U.S. "subprime" lending unit, which made controversial

high interest loans to customers with weak credit profiles. The bank

also made new commitments to support what it calls "sustainable

finance," aiding investment in renewable energy markets and

companies that address climate change.


17/94

17

COMPANY HISTORY

The U.A.E based HSBC bank, its formal name HSBC Holdings plc, is the world's

largest banking organization and ranks sixth in the world as the biggest company.Its name derives from the Hongkong and Shanghai Banking Corporation of Hong

Kong. HSBC Holdings, established in 1990, is the parent company of the Hong

Kong institution.

1. Origins

o Sir Thomas Sutherland, founder of what is today HSBC

Holdings plc.

The Hongkong and Shanghai Banking Corporation was founded by Scotsman

Thomas Sutherland in 1865 shortly after the United Kingdom established a colony

in Hong Kong. Sutherland wanted to facilitate the burgeoning trade between

Europe and China by offering financing to new and established businesses. The

new company established a branch in Shanghai, then another in Japan before

offering public loans in 1874.

2. Expansion

o An HSBC branch in Brunei in 1961.

Under manager Thomas Bart's leadership through 1902, the bank became the

leading financial institution in Asia and served as the official Hong Kong

government bank. New branches continued to open during the 1920s in Penang,

Singapore, Bangkok, Manila and another in Shanghai. A new headquarters opened

in 1935 in Hong Kong.


18/94

18

3. On Hold

o The HSBC headquarters in Shanghai was built in 1923.

The bank's expansion plans stalled when Japanese troops seized Hong Kong in

1941 and then used the bank's headquarters as a military office. Two of the

company's high-ranking managers died in an internment camp. But the bank made

up for lost time in the early postwar years by acquiring the British Bank of the

Middle East and the India-based Mercantile Bank.

4. More acquisitions

o The HSBC building in London.

During the next 30 years, the bank acquired the Hong Kong-based Hang Seng

Bank and created Wardley Ltd. in 1972 as a merchant bank service. It attempted a

hostile takeover the Royal Bank of Scotland in 1980, but failed when the British

government interceded on the behalf of RBS. Yet it continued to acquire more

properties, this time in the United States by purchasing a 51 percent holding inMarine Midland Bank.

5. HSBC Holdings

o An HSBC storefront branch during a period of the bank's

rapid growth.

By establishing public limited company (plc) the new HCBS was eligible to trade

shares on the New York, London, Paris, Hong Kong and Bermuda stock

exchanges. Throughout the 1990s it went on a spending spree, buying the Banco

Bamerindus of Brazil for $1 billion in 1997; the Roberts SA de Inversiones in

Argentina for $600 million two months later; and the New York-based Republic

National Bank for $10.3 billion in 1999.


19/94

19

6. A Stumble

o HSBC Chairman Stephen Green acknowledged some ofHSBC's financial missteps.

In its effort to acquire vulnerable financial companies, especially subprime lenders,

HSBC acquired the U.S.-based Household Finance Corporation for $15.5 billion in

2002. It was an early foray into subprime lender acquisitions. But by 2009, HSBC

lost $262 billion and shuttered its U.S. HSBC Finance division. HSBC Chairman

Stephen Green later acknowledged the Household Finance deal was a disaster.

7. Standing Tall

o While competitor Lloyds Banking Group, the parent company for the

Royal Bank of Scotland and Halifax plc, recorded steep losses for the

first quarter of 2009 due to bad loans, HSBC's previous sound

acquisitions kept it in good shape as it reported first quarter 2009

profits. HSBC still wrote off about $25 billion in bad debts in 2008

but the losses were lower in the fourth quarter of that year than the

first.

The HSBC Group is named after its founding member, The Hongkong and

Shanghai Banking Corporation Limited, which was established in 1865 to finance

the growing trade between Europe, India and China.

The inspiration behind the founding of the bank was Thomas Sutherland, a Scot

who was then working for the Peninsular and Oriental Steam NavigationCompany. He realized that there was considerable demand for local banking

facilities in Hong Kong and on the China coast and he helped to establish the bank,which opened in Hong Kong in March 1865 and in Shanghai a month later.

Soon after its formation the bank opened agencies and branches around the world.Although that network reached as far as Europe and North America, the emphasiswas on building up representation in China and the rest of the Asia-Pacific region.HSBC was a pioneer of modern banking practices in a number of countries. In


20/94

20

Japan, where a branch was established in 1866, the bank acted as adviser to thegovernment on banking and currency. In 1888, it was the first bank to beestablished in Thailand, where it printed the countrys first banknotes.

From the outset trade finance was a strong feature of the local and international

business of the bank, an expertise that has been recognized throughout its history.

Bullion, exchange, merchant banking and note issuing also played an important

part.


21/94

21

SERVICES PROVIDED

Personal financial services-: HSBC provides more than 100 million customers

worldwide with a full range of personal financial services, including current andsavings accounts, mortgage loans, car financing, insurance, credit cards, loans,

pensions and investments.

Commercial Banking:- HSBC provides financial services to small, medium-sized

and middle-market enterprises. The group has more than 3 million of such

customers, including sole proprietors, partnerships, clubs and associations,

incorporated businesses and publicly quoted companies.

Investment Banking:- Global Banking and Markets is the investment banking arm

of HSBC. It provides investment banking and financing solutions for corporate and

institutional clients, including corporate banking, investment banking, trade

services, payments and cash management, and leveraged acquisition finance. It

provides services in credit and rates, foreign exchange, money markets and

securities services, in addition to asset management services.

Global Banking and Markets has offices in more than 60 countries and territories

worldwide, and describes itself as "emerging markets-led and financing-focused.

Global Banking and Markets is currently being led by former fixed-income trader

Samir Assaf, who was promoted from global head of markets on 10 December

2010.


22/94

22

CHAPTER 3

THEOROTICAL BACKGROUND/LITERATURE REVIEW


23/94

23

Theoretical background

Wealth Management & Branch Banking

Wealth Management services are delivered to customers through qualified Wealth

Management across each of these branches.

Wealth Management helps customers develop & execute a realistic & practical

long term savings, investments & protection plans by investing in mutual funds,

bonds & purchase of insurance products .

Qualified, trained & accredited Wealth Management assist customers in charting a

road map to achieve their individual financial goals & protect their family from

unforeseen eventualities keeping in mind their available resources & based on each

customers independent risk profile. Wealth Management services is currently

offered to HSBC Premier & Power Vantage customers

COMMERCIAL BANKING

HSBC is a leading provider of financial services to small, medium-sized and

middle-market enterprises. The Group has over 43,000 such customers in India,including sole proprietors, clubs and associations, incorporated businesses and

publicly quoted companies. Commercial Banking provides a full range of banking

services to these customers including multi-currency business accounts, payment

and cash management, trade services, factoring and a range of borrowing solutions.

In India, Commercial Banking has a presence in 47 branches covering 26 key cities

and for the convenience of our customers, a multi channel service including

Internet and Phone banking. For SME customers, HSBC offers the complete range

of transaction baking services as well as unsecured loans and loans for and against property. The services are supported by a large Sales and Relationship

Management team in key locations across the country. India is the first country in

the HSBC Group where Commercial Banking lends to Microfinance Institutions,

thus providing indirect funding to hundreds of small business owned and run by

members of underprivileged sections of society. A dedicated unit has been formed


24/94

24

to focus on Microfinance and other Priority Sector institutions, with a view to

further reach out to the marginalized and under banked.

Factoring

HSBC India offers a comprehensive range of Factoring and Supply Chain FinanceSolutions, which include the following products:

For Vendors/Suppliers/Purchase Channel of our corporate customers

Payables Financing

Purchase Order Financing

For the Sales Channel of our corporate customers

Factoring (With or Without Credit Protection)

Export Factoring (With or Without Credit Protection)

Portfolio Invoice Discounting (With partial credit protection)

Distributor Finance

Payables Financing: HSBC Indias Payable Financing product enables companies

to finance their payables to vendors. This helps companies to provide immediate

liquidity to vendors against their supplies at competitive rates and will enable the

company to negotiate better pricing terms with vendors.

It also enables the vendors to improve their cash flow by providing continuous

liquidity against their receivables. Our payables financing products can be

structured either against Bills of Exchange or Accepted Invoices.

Purchase Order Financing: is a facility to suppliers of our Corporate BankingClients to finance their pre shipment working capital requirements. Pre shipment

working capital lines are sanctioned to the suppliers against Purchase Orders

issued to the suppler.

Factoring: This is a service that covers the financing and collection of account

receivables in domestic trade. Receivables are factored, by HSBC with added


25/94

25

service of credit protection, collection and sales ledges administration. Thus the

management of the company may concentrate on production and sales and need

not concern itself with non-core activities like collection and sales ledger

administration.

Export Factoring: enables companies to finance their open account export sales at

competitive rates either in Rupees or Foreign Currency. Through a network of

overseas based correspondent factors, HSBC provides credit protection against

buyer default and collection services.

Portfolio Invoice Discounting: Essentially covers purchase of receivables with

partial credit protection based on a First Loss Deficiency Guarantee. The portfolio

should be well spread with acceptable levels of concentration and the debtors must

have had a satisfactory track record with the company. A field audit will beconducted to determine portfolio quality based on which a First Loss Deficiency

Guarantee percentage will be agreed. Collection remains the responsibility of the

Corporate with repayments either on a pre-agreed schedule or based on actual

collections.

Distributor Finance: is currently offered to the distribution channel of Large

Corporate Banking Clients and can be structured to suit the specific requirements

of each corporate and its distribution channel. Through the Distribute Finance

Program, HSBC finances companys dealers, which will assist the company in

providing steady, assured credit to its distribution chain.

Payments and cash management

Integrated domestic and regional cash management solutions are provided to

corporate and institutional customers in India. The suite of offerings under the cashmanagement umbrella includes comprehensive Receivables Management

solutions, with an endeavor to completely integrate with the customers back-end

operating systems and processes. HSBC is the leading foreign bank in India in

providing capital market solutions, which include Bankers to Issue, Escrow

account Services and Dividend payments solutions. Six Sigma measurement


26/94

26

practices are followed for our operational capabilities. HSBC net, the HSBC

Groups online real time web-enabled corporate banking platform, allows

customers to execute financial transactions, obtain international financial market

information and review details of their domestic and international accounts form

anywhere in the world, 24 hours a day.

Trade (international and domestic) service

HSBC offers a wide range of international and domestic Trade products. In India,

we offer one of the largest trade processing capabilities among peer banks, spread

across 5 cities. Each of our Trade processing centers is ISO 9001-2000 certified.

We work closely with Group Offices overseas and leverage our extensive global

network to offer structured, tailor made solutions to a wide range of customers.

Our clients in India include large India and multinational companies, Mid Marketcompanies as well as customers in the Small and Medium Enterprises segment.

CORPORATE AND INSTITUTIONAL BANKING

Corporate Banking (CB) is an integral part of the Global Banking structure, which

focuses on offering a full range of service to multinationals, large domestic

corporate and institutional clients.

Provides a wide range of banking and financial services provided to domestic and

international operations of large local corporate and local operations of

multinationals corporations. Services include access to commercial banking

products, including working capital facilities such as domestic and international

trade operations and funding, channel/distributor financing, and overdrafts, as well

as domestic and international collections and payments, INR and Foreign currency

term loans (external commercial borrowing in foreign currency), letters of

guarantee etc.

Institutional Banking drives the Groups relationship with banks, financial

institutions, securities houses, insurance companies, and asset management

companies and other non-banking companies, non-government and development

organizations operating in India. Market leadership position based on strong

relationships with major financial institutions. Investment Banking and Markets

brings together the advisory and financing, equity


27/94

27

Securities, equity linked transactions, asset management, treasury and capital

markets, and private equity activities of the Groups to complete the Global

Banking structure and provide a complete range of financial products to our

clients.

Clients are serviced by sector based client service teams that combine relationship

managers, product specialists and industry specialists to develop customized

financial solutions. These form the relationship team along with the Investment

Banking structure and provide a complete range of financial products to our

clients.

Clients are serviced by sector based client service teams that combine relationship

managers, product specialists and industry specialists to develop customized

financial solutions. These form the relationship team along with the InvestmentBanking & Advisory division. Each team supports the clients local and global

needs, ensuring a full understanding of the companys business and financial

needs. Based on our clients requirement, HSBC assigns Global Relationship

Management teams to provide structured solutions for all its needs.

Our Global Relationship Management teams are tasked with understanding in

depth the sectors in which our clients operate with the aim of adding value through

detailed industry knowledge and structured financial solutions.

Focus on overseas acquisition financing, corporate finance and advisory roles,

overseas cash management opportunities, cross border funding, project & export

finance through concerted marketing with all product providers.

The Corporate Bank (CB) in India was top ranked (1st

overall) in the 2005

Greenwich Survey with a Greenwich Quality Index (GQI) of 647. Currently CB

manages approx. 470 CB relationships with total advances of approx. USD 1.08Bn

as at end of Dec05 and total deposits of USD .98Bn.

Sect oral account management- Improved industry knowledge andsector4

expertise. The CB portfolio is largely spread within the following sectors divided

as under:


28/94

28

Corporate Institutional

Consumer Brands Banks

Industrials &Technology Financial Institutions

Energy and Utilities Securities

Telecommunications Mutual Funds/Asset Management Companies

Automotive Insurance

Healthcare Financial Sponsors

Transport and Logistics Business Process Outsourcing (BPOs)

Media Broker and Dealers

INVESTMENT BANKING

HSBC FIXED DEPOSITS

When it comes to assured returns, choosing the right type of savings scheme makes

all the difference. HSBC Fixed Deposits let you make the most of value-added

benefits as you create wealth at low risk.

Features & Benefits

The superior Fixed Deposit to invest in, for a secure future

You can now open a Fixed Deposit with Rs. 10,000 only

Enjoy high rate of returns on your HSBC Fixed Deposits

Choose from a wide range of tenors as per your convenience


29/94

29

Avail of our special rates for select tenors

Certificate of Deposit

Earn interest for funds invested from 15 days to one year, with HSBCs Certificate

of Deposit (CDs).

CDs can be availed by individuals (other than minors), corporations,

banks, companies, trusts, funds, associations etc. Non-Resident Indians

(NRIs) may also subscribe to CDs on a non-reparable basis only.

Advantage

Tenure A Certificate of Deposit is issued for a period not less than 15 days &not exceeding 1 year from the date of issue.

Transfer Mechanism Certificate of Deposit held in a physical form are freely

transferable by endorsement & delivery. Those in demit form can be transferred as

per the procedure applicable to other demit securities.

MUTUAL FUNDS

It is a type of investment where a number of investors money is pooled together &

used by the fund manager (referred to as the Asset Management Company or

AMC) to invest in underline securities in line with the objectives of the scheme.

By this method you can achieve a much wider spread of investments than if you

were investing directly in the underlying investments. It is generally accepted that

by spreading your investment you are spreading your risk, therefore investing in

mutual funds is considered to be lower risk than direct investment.

When you invest in mutual funds you do not own the underlying investments but

have a claim to a number of units in the fund representing the size of your

investment. The value of each unit of the mutual fund scheme, calculated based on

the market value of the underlying investments after deducting expenses and

liabilities, is referred to as the Net Asset Value or NAV.


30/94

30

The first time a mutual fund scheme is available for purchase is referred to as a

New Fund Offering or NFO.

Important Characteristics Of A Mutual Fund

A mutual fund actually belongs to the investors who have pooled their funds is in

the hands of the investors.Investment professionals and other service providers, who earn a free for theirservices, from the fund, manage a mutual fund.

The pool of funds invested in a portfolio of marketable investments. The value ofthe portfolio is updated every day.The investors share in the fund is denominated by units. The value of the unitschanges in the portfolios value, every day. The value of one unit of investment iscalled as the net asset value of NAV.The investment portfolio of the mutual fund is created according to the stated

investment objectives of the fund.


31/94

31

Types of Mutual Funds

There are thousands of different mutual funds offered on the market. They range

from funds that include a broad variety of investments to funds that investexclusively in single securities or narrow sectors of the market. With the many

different investment styles and objectives, theres bound to be a number of mutual

funds that are suited to your investing profile. Each of these funds has expense,

risk, and return characteristics. Be sure you understand these characteristics before

you invest. There are 15 principal types of funds. We have listed them according to

their primary objectives: growth, income, and specialized.


32/94

32

Balanced Funds

Balanced funds seek to obtain the highest return consistent with a low-risk

strategy. They hold a mix of common and preferred stocks, bonds and cash

reserves. The mix can vary according to current market conditions. Balanced funds

usually offer higher yields than pure stock funds. Balanced funds are generally the

least risky of growth-oriented mutual funds.

Growth and Income Funds

Growth and income funds attempt to achieve both long-term growth and current

income. They invest primarily in high-yield common stock, preferred stock, and

convertible debt (bonds) to generate both growth and income. Because they

include a mix of investments, these funds are typically less risky than growth

funds.

Growth Funds

Growth funds seek long-term appreciation by investing in the stocks of established

companies that may be poised for growth. These companies typically pay low

dividends yet offer the potential for long-term capital appreciation. Some growth

funds limit their investments to specific sectors of the economy. Growth funds are

generally less risky than aggressive growth funds.

International and Global Growth Funds

International and global mutual funds offer diversification into international stock

markets. International funds invest only in foreign securities. Global funds, on the

other hand, can invest in foreign and U.S. securities. The risks associated with


33/94

33

investing on a worldwide basis include differences in regulation of financial data

and reporting, currency exchange differences, as well as economic and political

systems that may be different that those in the United States

Aggressive Growth Funds

Aggressive growth funds, sometimes known as "small-cap" funds, seek maximumcapital gains. They invest primarily in the stock of smaller, less establishedcompanies. Since these companies generally pay little or no dividends, aggressivegrowth funds rely on capital growth for returns. These funds tend to be the riskiestof growth-oriented mutual funds.

Money Market Funds

Money market funds seek current income while maintaining a stable $1.00 pershare net asset value by investing in short-term debt securities, including T-bills,certificates of deposit, commercial paper, and other highly liquid and safesecurities. They offer modest current income and no potential for capital gains.They generally offer the lowest returns but the most safety of all fund types. Somemoney market funds also offer tax-free income. Money market funds are neitherinsured nor guaranteed by the Federal Deposit Insurance Corporation or any other

government agency. Although the fund seeks to preserve the value of yourinvestment at $1.00 a share, it is possible to lose money by investing in the fund.

Government Securities Funds

Government securities funds invest primarily in Treasury and government agencysecurities. Because they are issued or guaranteed by the U.S. government, they areconsidered the credit worthiest alternatives available

Government securities offer moderate current income and high safety.Treasury securities are backed by the full faith and credit of the U.S. governmentas to the timely payment of principal and interest. Government agency securitiesare not considered government obligations and therefore are not backed by the full


34/94

34

faith and credit of the government. The principal value of these funds will fluctuatedue to changes in interest rates.

Municipal Bond Funds

Municipal bond funds seek tax-free income by investing in the bonds of state andlocal governments. In many cases, it may be wise to consider municipal bondfunds issued by your state because they may offer double or even triple tax-freeincome. In some states you will have to pay income tax if you buy shares of amunicipal bond fund that invests in bonds issued by other states. In addition, whilesome municipal bonds in the fund may not be subject to regular income taxes, theymay be subject to federal, state, or local alternative minimum tax. If you sell a tax-free bond fund at a profit, there are capital gains taxes to consider. As with alltypes of bond funds, the principal value will fluctuate with changes in interestrates.

Corporate Bond Funds

Corporate bond funds invest in debt securities issued by corporations. The risk of

corporate bond funds may vary depending on the objectives of the fund. Because

credit risk is somewhat higher, these funds may offer higher returns than funds

specializing in government securities. Principal will fluctuate with changes in

interest rates.

High-Yield Bond Funds

High-yield bond funds seek to maximize current income by investing in lower-quality high-yielding corporate bonds. The bonds held by these funds aregenerally rated BB or lower by rating agencies. They offer the high current yieldsto compensate for the greater risk of default. Since they are more volatile than and

pay higher yields than investment grade bonds, they tend to be suited to investorswith a high degree of risk tolerance.


35/94

35

Sector Funds

Sector funds invest in specific industries or sectors of the economy, such as

communications, aerospace and defense, or health care. While they may be

diversified within a particular sector, they lack broad diversification. This increasestheir investment risk. These funds typically seek long-term capital appreciation.

Growth-Income Funds

Growth-income funds are specialists in blue chip stocks. These funds invest in

utilities, Dow industrials, and other seasoned stocks. They work to maximize

dividend income while also generating capital gains. These funds are suitable as a

substitute for conservative investment in the stock market.

Income Funds

Income funds focus on dividend income, while also enjoying the capital gains that

usually accompany investment in common and preferred stocks. These funds are

particularly favored by conservative investors.

Asset Allocation Funds

Asset allocation funds don't invest in just stocks. Instead, they focus on stocks, bonds, gold, real estate, and money market funds. This portfolio approachdecreases the reliance on any one segment of the marketplace, easing any declines.A plus factor is limited by this strategy as well.

Precious Metal Funds

Precious metal funds invest in gold, silver, and platinum. Gold and silver often

move in the opposite direction from the stock market, and thus these funds can

provide a hedge against investments in common stocks.


36/94

36

Bond Funds

Bond funds invest in corporate and government bonds. A commonmisunderstanding among investors is that the return on a bond fund is similar to

the returns of the bonds purchased. One might expect that a fund that ownsprimarily 8 percent-yielding bonds would return 8 percent to investors. In fact, theyield from the fund is based primarily on the trading of bonds, which areextraordinarily sensitive to interest rates. Thus, one could find a bond fund that wasearning double-digit returns as the prime rate climbed from 4 percent to 6 percent.

In addition to mutual funds, there are money market funds, which are essentiallymutual funds that invest solely in government-insured short-term instruments.

Benefits of Mutual Fund

Reduction in risk:

Mutual funds invest in a portfolio of securities. This means that all funds are not

invested in the same Investment Avenue. Holding a portfolio that is diversifiedacross investment avenues is a wise way to manage risk. When such a portfolio isliquid and marked to market, it enables investors to continuously evaluate the

portfolio and manage their risks more efficiently.

Reduction in transaction costs:

Through the individual investors contribution may be small; the mutual fund itself

is large enough to be able to reduce costs in its transactions. These benefits are

passed on to the investors.

Portfolio Diversification:

By offering readymade diversified portfolios, mutual fund enables investors to

hold diversified portfolios. Through investors can create their own diversified

portfolios, the costs of creating and monitoring such portfolios can be high, apart


37/94

37

from the fact that investors may lack the professional expertise to manage such a

portfolio.

Liquidity:

Open-ended funds are very liquid as the Mutual Fund companies offer an open

window for redemption on all working days. The redemption proceeds are

normally dispatched within three to four working days.

Tax efficiencies:

Investing in mutual funds is tax efficient. If investors choose the growth option andstay invested for a year, they only pay long term Capital Gains of 20.4% of

indexed returns or 10.2% of un indexed returns (whichever is lower).

Diversification:

Diversification is the core of any investment strategy. It allows you to minimize

the risks associated with any investment. However, it is very

difficult for individuals to have the requisite diversification for your investment

given smaller portfolios and transaction costs. Mutual Funds can pool in the

investments of thousands of investors and achieve the desired level of

diversification for each.

FAQs

Do all mutual funds carry the same investment risks?


38/94

38

No, they do not. Some mutual funds have been designed for investors who are

cautious, while others for investors who are aggressive in their outlook to risk.

There are also funds designed for investors having a balanced outlook

on risk. You therefore need to decide what level of investment risk you are happyto accept and then choose a mutual fund scheme, which matches your appetite for

risk.

How do I know which mutual fund scheme is right for me?

This will depend upon the level of risk you are prepared to take, your investment

horizon, what your investment objectives are and whether you have a particular

preference in the type of securities you would like to invest in. However before

you invest you need to ensure you fully understand the features and risks relating

to the mutual fund scheme you ultimately decide to invest in.

3. SYSTEMATIC INVESTMENT PLAN (SIP)

What is SIP?

An SIP is a regular investment plan for purchasing units of a mutual fund scheme.

Offered by mutual funds to help you save regularly. When investing in mutual

funds, you would normally identify a scheme & invest a predetermined amount in

it at its prevailing net asset value (NAV). If you invest a sum of 10,000 at an NAV

of .10, you will receive 1,000 units. The timings of your investment in such a case

may turn out to be favorable or unfavorable.


39/94

39

Under SIP, however, your investment is staggered over a period. Instead of

investing .10,000 at one go, you might consider investing specified amounts in a

scheme at pr-specified intervals. For instance, you could spread out the 10,000investment over 10 months, with Rs.1,000 being invested each month. The number

of units that accrue to you on each periodic investment would depend on the NAV

of the scheme prevailing at the time of your purchase. By doing this, you would

have done away with the need to time the market. SIPs also in calculate some

much needed discipline into your investing habits. .

It is just like a recurring deposit with the post office or bank where you put in

every month. The difference here is that the amount is invested in a mutual fund.

The minimum amount to be invested can be as small as Rs.500 & the frequent

investment is usually monthly or quarterly.

How does SIP works?

An SIP allows you to take part in the stock market without trying to second guess

movements.

An SIP means you to commit yourself to investing a fixed amount every month.

Let Rs.1000

When the NAV is high, you will get fewer units. When it drops, you will get more

Date NAV Approx number of units you

will get at 1000

Jan 1 10 100

Feb 1 10.5 95.23

Mar 1 11 90.90

Apr 1 9.5 105.26


40/94

40

May 1 9 111.11

Jun 1 11.5 86.95

Within six months, you would have 5,894 units by investing just Rs.1000 every

month.

How does SIP scores?

It makes you disciplined in your savings. Every month you are forced to keep

assured amount. This could either be debited directly from your account or you

could give mutual fund post-dated cheques. As you see above, it helps you makemoney over the long term. Since you get more when the NAV drops & fewer when

it raises, the cost averages out over time. So over all the ups & downs of the market

without any drastic losses.

Also, a number of mutual funds do not charge an entry load if you opt for an SIP a

percentage of the amount you are investing. & if you do not exit (sell your units a

year of buying the units, you do not have to pay an exit load) (same as an entryload, except this is charged when you sell your units).

If, however, you do sell your units within a year, you would be charged an exit low

pays to stay invested for the long-run.

The best way to enter a mutual fund is via an SIP. But to get the benefit of an SIP

at least a three-year time frame is needed when you wont touch your money

4. INSURANCE

Insurance, in law and economies, is a form of risk management primarily used to

hedge against the risk of a contingent loss. Insurance is defined as the equitable

transfer of the risk of a potential loss, from one entity to another, in exchange for a

premium. Insurer, in economics, is the company that sells the insurance.


41/94

41

Insurance rate is a factor used to determine the amount, called the Premium, to

be charged for a certain amount of insurance coverage. Risk management, the

practice of appraising and controlling risk, has evolved as a discrete field of study

and practice.

A large number of homogeneous exposure units. Vast majority of insurance

policies are provided for individual members of very large classes. Automobile

insurance, for E.g., covered about 175 million automobiles in the United States in

2004. The existence of a large number of homogeneous exposure units allows

insurers to benefit from the so-called law of large numbers, which is effect states

that as the number of exposure units increases, the actual results are increasingly

likely to become close to expected results. There are exceptions to this criterion.Lloyds of London is famous for insuring the life or health of actors, actresses and

sports figures. Satellite Launch insurance covers events that are infrequent, large

commercial property policies may insure exceptional properties for which there are

no homogeneous exposure units. Despite failing of this criterion, many exposures

like these are generally considered to be insurable

Definite Loss. Event that gives rise to the loss that is subject to insurance should,at least in principle, take placed at a known time, in a known place, and from a

known cause. The classic example is death of an insured on a life insurance policy.

Fire, automobile accidents, and worker injuries may all easily meet this criterion.

Other types of losses may only be definite in theory, Occupational disease, for

instance, may involve prolonged exposure to injurious conditions where no

specific time, place or cause is identifiable, Ideally, time, place and cause of a loss

should be clear enough that a reasonable person.

Accidental Loss. The event that constitute the trigger of a claim should befortuitous, or at least outside the control of the beneficiary of the insurance. The

loss should be pure, in the sense that it results from an event for which there is

only the opportunity for cost. Events that contain speculative elements, such as

ordinary business risks, are generally not considered insurable.


42/94

42

Large Loss. The size of the loss must be meaningful from the perspective of the

insured. Insurance Premiums need to cover both the expected cost of losses, plus

the cost of issuing and administering the policy, adjusting losses, and supplying the

capital needed to reasonable assure that the insurer will be able to pay claims. For

small losses these latter costs may be several times the size of the expected cost oflosses. There is little point in paying such costs unless the protection offered has

real value to a buyer.

Affordable Premium. If the likelihood of an insured event is so high, or the cost

of the event so large, that the resulting premium is large relative to the amount of

protection offered, it is not likely that anyone will buy insurance, even if on offer.

Further, as the accounting profession formally recognizes in financial accounting

standards (See FAS 113 for example), the premium cannot be so large that there is

not a reasonable chance of a significant loss to the insurer. If there is no such

chance of loss, the transaction may have the form of insurance, but not the

substance.

Calculable Loss. There are two elements that must be at least estimatable , if not

formally calculable exercise, while cost has more to do with the ability of a

reasonable presented under that policy to make a reasonably definite and objective

of the amount of the loss recoverable as a result of the claim.

Limited risk of catastrophically large losses. The Essential risk is often

aggregation. If the same event can cause losses to numerous policyholders of the

same insurer, the ability of that insurer to issuer policies becomes constrained, not

by factors surrounding the individual characteristics of a given policyholder, but by

the factors surrounding the sum of all policyholders so exposed. Typically, insurers

prefer to limit their exposure to a loss from a single event to some small portion of

their capital base, on the order of 5%. Where the loss can be aggregated, or an

individual policy could produce exceptionally large claims, the capital constraint

will restrict an insurers appetite for additional policyholders. The classic exampleis earthquake insurance, where the ability of an underwriter to issue a policy

depends on the number and size of the policies that it has already underwritten.

Wind insurance in hurricane zones, particularly along coast lines, is another

example of this phenomenon. In extreme cases, the aggregation can affect the

entire industry, since the combined capital of insurers and reinsures can be small


43/94

43

compared to the needs of potential policyholders in areas exposed to aggregation

risk. In commercial fire insurance it is possible to find single properties whose total

exposed value is well in excess of any insurers, or are insured by a single insurer

who syndicates the risk into the reinsurance market.

Insurers business model

Profit = earned premium + investment income - incurred loss - underwriting

expenses.

Insurers make money in two ways: (1) through underwriting, the process by

insurers selects the risks to insure and decide how much in

premiums to charge for accepting those risks and (2) by investing the

premiums they collect from insureds.

The most difficult aspect of the insurance business is the underwriting of policies.

Using a wide assortment of data, insurers predict the likelihood that a claim will be

made against their policies and price products accordingly. To this end, insurers

use actuarial science to quantify the risks they are willing to assume and the

premium they will charge to assume them. Data is analyzed to fairly accurately

project the rate of future claims based on a based on a given risk. Actuarial science

uses statistics principles aura used to determine an insurers overall exposure.

Upon termination of a given policy, the amount of premium collected and the

investment gains thereon minus the amount paid out in claims is the insurers

underwriting profit on that policy. Of course, from the insurers perspective, somepolicies are winners (i.e., the insurers pays out more in claims and expenses than it

receives in premiums and investment income)


44/94


45/94

45

Business insurance can be any kind of insurance that protects businesses against

risks. Some principal subtypes of business insurance are (a) the various kinds of

professi

onal liabili

tyinsu

rance

, also called professional indemnity insurance,which

are discussed below under that name; and (b) the business owners policy (BOP),

which bundles into one policy many of the kinds of coverage that a business owner

needs, in a way analogous to how homeowners insurance bundles the coverages

that a homeowner needs.

Casualty insurance insures against accidents, not necessarily tied to any specificproperty.

Credit insurance repays some or all of a loan back when certain things happen to

the borrower such as unemployment, disability, or death. Mortgage insurance

(which sees below) is a form of credit insurance, although the name credit

insurance more often is used to refer to policies that cover other kinds of debt.

Crime insurance insures the policyholder against losses from the criminal acts of

third parties. For example, a company can obtain crime insurance to cover losses

arising from theft or embezzlement.

Crop insurance Farmers use crop insurance to reduce or manage various risks

associated with growing crops. Such risks include crop loss or damage caused byweather, hail, drought, frost damage, insects, or disease, for instance.

Health insurance policies will often cover the cost of private medical treatments if

the National Health Service in the UK (NHS) or other publicly-funded health


46/94

46

programs do not pay for them. It will often result in quicker health care where

better facilities are available.


47/94

47

Review of literature

HSBC named Best Trade Bank in UAE and Middle East

Results of poll were announced recently at GTR's 7th Annual Middle East Trade

and Export Finance Conference in Dubai. Kersi Patel, Regional Head of Trade andSupply Chain, HSBC Middle East:

"Winning these awards are always an honor as it is recognition by our clients for

the innovative services and products HSBC provides in the Middle East. Market

conditions over the past 12 months have highlighted the strategic importance of a

strongly capitalized trade and supply chain provider with global distribution

capabilities and risk control frameworks."

"With more than 140 years of international trade experience and our extensive

global network, HSBC provides it's customers with a unique combination of global

reach with local knowledge. Our dedicated teams of trade and supply chain

specialists enable customers to maximize their working capital potential, mitigate

trading counter party risks and provide the best strategies for growth," he added.

Speaking about trade in the UAE, Kersi said, "The United Arab Emirates isexceptionally well positioned as the trade gateway to the region for Middle East

based importers and exporters with cross-border trade conducted by

entrepreneurial importers and exporters being a critical component of the

economy."

"With almost universal presence in the Middle East and presence in all major

commercial cities in the world, HSBC is uniquely placed to support business needs

of Middle Eastern corporate at both ends, thereby making it easier for them to

break into and grow their business in global markets," he added.

The survey reflects the opinions of readers of Global Trade Review, who cast their

votes to select their preferred trade bank. Winners were chosen based on the

institutions' performance in the trade, commodity and export finance markets


48/94

48

during 2009.HSBC Trade and Supply Chain is one of the largest trade services

organizations in the world with dedicated trade services offices in over 60

countries and territories worldwide.

HSBC lowers UAE mortgage rates for new customers

HSBC announced today it is decreasing its rates across its variable rate mortgage

and Amanah Home Finance for new customers, effective immediately. First time

buyers and new customers with a 25% deposit can take advantage of HSBC's

revised rate at 6.75% when purchasing a completed property.

HSBC Premier Customers will receive a further reduction on the rate of 0.5%

while HSBC Status customers will receive a reduction of 0.25%.

Current HSBC mortgage customers will have their rates reviewed on 1st April

2010 in line with the bank's commitment to review rates every quarter.Ishrat Kiyani, Head of Premier and Wealth Management, UAE, HSBC said,

"HSBC is very much open for business, and wants to provide more flexibility and

choice for customers who are looking to own a home. Price valuations are

currently very attractive in the housing market and our new reduced rate will make

it easier for end-users to get affordable mortgage finance.

"We understand that investor confidence has been low, however we believe that

owning a home continues to be an extremely important decision for residents of the

UAE. It is also key to point out that in attractive locations across the UAE, buying

a home can be cheaper then renting."

"With our new rate reduction and a variety of options at competitive prices, we

continue to support the UAE housing market as well as what is important to our

customers."HSBC mortgages are available to expatriates and nationals with loan

terms of up to 25 years or until the age of 65, whichever occurs first.

HSBC launches world selection investment portfolios in the UAE

HSBC Bank today announced the launch of an innovative range of investment

portfolios for its customers that provide diversified global exposure to a mix of


49/94

49

asset classes. The investment portfolios will be available in the UAE, Bahrain,

Oman, Qatar and Jordan. The HSBC World Selection Portfolios are globally-

diversified, multi-asset growth portfolios that can hold both traditional investments

such as bonds and equities, as well as modern assets including commodities and

private equity. Many of these modern asset classes would not readily be accessibleto the private investor. World Selection combines sophisticated investment

techniques, a very wide range of global investments and the best investment skills

available in the market, monitored around the clock by HSBC experts.There are

five portfolios in the World Selection range that cater to different levels of risk and

return.

Each portfolio in the World Selection range offers the expertise of a range of some

of the best fund managers, from throughout the world. These managers arehandpicked by the extensive Multi-manager team at HSBC Global Asset

Management to deliver steady long-term returns, with low levels of volatility. The

portfolios will also hold passive instruments such as Exchange Traded Funds

(ETFs) when it is considered these present a better risk/reward profile than actively

managed funds.

Ishrat Kiyani, Head of Premier Banking and Wealth Management, UAE, HSBC,

said:"The steep declines in stock markets over 2008 have been a painful reminder

of the risks inherent with putting all of your investment eggs in one basket. When

researching this product launch, our customers have told us "I don't like the

rollercoaster effect" and "I'm more interested in preserving what I've got than

risking it all."

"That's why it is important to diversify geographically and to hold different asset

classes in order to achieve good long-term results without taking a rollercoasterride along the way. Research by HSBC (1) demonstrates that various asset classes

will move in and out of favor at different stages in the economic cycle. By being

truly diversified, this should, over the longer term, lead to smoother and more

stable returns from your investment portfolio (compared to holding a single asset

class)."


50/94


51/94

51

"We saw a tremendous level of interest in the region from Asian and European

market players. In spite of the uncertainty and difficult macro-environment, there is

a real optimism and confidence in the long-term outlook for the Mena region,

especially in terms of its interplay with other emerging markets, said Rafi Ahmed,

Head of Global Markets for HSBC in Mena.


52/94

52

CHAPTER 4

RESEARCH METHODOLOGY


53/94


54/94

54

Secondary sources:

The Secondary data are those, which have already been collected and being

processed through the statistical process.

We got the secondary data through

PREVIOUS TRANSACTION RECORDS-

We got the records of those people who have already invested in HSBC.

Through directory- We got the records of Exporters, Businessmen, architects etc.

Population Definition

Element: Retail Investors, Business Men, Builders, Industrialists, Exporters, Senior

Citizens, and others.

Sampling Method- Simple Random Sampling

Sampling Size- Based on ages, income area etc.

Data collection- through directories, Previous records through friends and relatives

Modes of Marketing & Promotion

Directly Approaching:-

We directly approach people to invest like builders, investors, exporters,

businessmen, & even general mass.


55/94

55

Canopies:-

We put canopies in front of Banks, Financial Institutions & other public gathering

places. There we approach people and take their telephone numbers. & contact

them or even in canopies itself make them invest.

Through Brokers:-

Major part of our promotion & marketing is done through brokers, because they

are more reliable for knowledgeable. Thus people trust them.

SWOT ANALYSIS


56/94

56

STRENGTHS:-

Brand Name:

The biggest strength is the tag of HSBC is going to be the largest group of MNCs.

Compatible Price:

Prices of different schemes of HSBC are much more compatible than others.

Diversified Schemes:

We have diversified schemes, which is an exception case of HSBC.

Less Risk:

Our debt schemes are 100% free form market risk. Even as our portfolio is thatdiversified so equities are also less risky than others.

Easy procedures for account opening too:

We have an easy system for opening the account as it includes investment & being

named as saving account for the costumer future benefits.

Debit cum ATM card facility:

The main advantage of HSBCs Debit cum ATM card is that you can access thiscard through any VISA supported ATMs & withdraw your amount, without any

single charge to be paid.

WEAKNESS:-

Prone to Market Risk:

Mutual Funds depend on overall macroeconomic condition and market scenario.


57/94


58/94

58

THREATS:-

Tough Competition:

As there are so many banks having almost same kind of schemes, so its tough to

compete with.

Unawareness:

Majority of population is not aware of HSBC brand name and even because of

other banking facilities which are much cheaper than HSBCs services, so its hard

to convince people.

Changing Scenario:

Our market scenario is changing day-by-day i.e. our market is fluctuating, so this

makes investor hard to invest.


59/94

59

CHAPTER 5

ANALYSIS AND INTERPRETATIONS

Equity50%

Debt40%

Cash10%

AGRESSIVE iNVESTORS

Equity

Debt

Cash


60/94

60

Equity 75

Debt 60

Cash 15

In the above table 75 investors in Equity, 60 in Debt, & 15 in Cash.

Debt instruments are- Company fixed deposits, bonds, Government Securities

fund, and Govt. Saving schemes, Pension Schemes

Equity Instruments are- Equity funds diversified, Equity funds Sectoral Plan,

Balanced Fund (Equity Portion), Equity IPO.

Cash Instruments- Liquid Funds, Government Securities, Income Funds long Term

(Including MIP).

Aggressive investors comprises of 50% in Equity, 10% in Cash, 40% in Debt.

60%30%

10%

Moderate Investor

Debt

Equity

Cash


61/94

61

Debt 90

Equity 45

Cash 15

In the above table 45 investors invest in Equity, 90 in Debt, & 15 in Cash.Debt

instruments are- Company fixed deposits, bonds, Government Securities fund, and

Govt. Saving schemes, Pension Schemes.

Equity Instruments are- Equity funds diversified, Equity Funds Sectoral Plan,


Cash Instrument- Liquid Funds, Government Securities, Income Funds Long term(including MIP)./

Moderate investor comprises of 60 % in Debt, 10% in cash, and 30% in Equity.

Debt 70

70%10%

20%

Conservative Investor

Debt

Cash

Equity


62/94

62

Cash 10

Equity 20

In the above table 20 investors invest in Equity, 70 in Debt, &10 in Cash

Debt Instruments are- Company fixed deposits, bonds, Government Securities

fund, and Govt. Saving Schemes, Pension Schemes.

Equity Instruments are- Equity funds diversified, Equity funds Sectoral Plan,


Cash Instruments- Liquid Funds, Government Securities, and Income Funds Long

Term (including MIP).

Conservative Investors comprises of 70% in Debt, 10% in Cash, and 20% in

Equity.

Debt 120

Debt80%

Cash10%

Equity10%

Very Conservative Investor

Debt

Cash

Equity


63/94

63

Cash 15

Equity 15

In the above table 15 investors invest in Equity, 120 in Debt, &120 in Cash.

Debt Instruments are- Company fixed deposits, bonds, Government Securities

Fund, and Govt Saving Schemes, Pensions Schemes.

Equity Instruments are- Equity Funds diversified, Equity Funds Sectoral Plan,

Balanced Fund (Equity portion), and Equity IPO.

Cash Instruments- Liquid Funds, Government Securities, and Income Funds Long

Term (including MIP)

Very conservative investors comprises of 80% in debt, 10% in Cash & 10

% in Equit

0

10

20

30

40

50

60

70

60K-1LAKH

1LAKH-2LAKH

2LAKH-3LAKH

3LAKH-ABOVE

No. Of Invesotors Found With Their AnnualIcomes

Series1


64/94

64

60K-1LAKH 62

1LAKH-2LAKH 48

2LAKH-3LAKH 24

3LAKH-ABOVE 16

In the above table 62 investors are those who fell in the income slab from 60

thousand to 1 lakh, 48 investors fell in the income slab form 1 lakh-2lakh, 24Investors fell in the income slab from 2 lakh-3lakh, 16 investors fell in the

income slab of above 3 lakhs.


65/94

65

Aggressive Investors 18

Moderate Investors 60

Conservative Investors 47

Very Conservative Investors25

18 investors are found Aggressive, 60 investors are found Moderate, and 47

Investors are found Conservative & 25 Investors are found very conservative in the

survey.

0

10

20

30

40

50

60

70

AggressiveInvestors

ModerateInvestors

ConservativeInvestors

VeryConservative

Investors

Types of Investors


66/94

66

In the above table 38 Investors up to 5% of their income, 69 investors invest up to

5%-10% of their income & 43 investors invest more than 10% of their income.

In the above graph 25% of total surveyed investors invest up to 5% monthly.

46% of the total surveyed investors invest up to 5%-10% monthly.

29% of the total surveyed investors invest more than 10% monthly.

up to 5% 38

5%-10% 69

More Than 10% 43

Investment made in % by the Investors

25%

4

%

29%

Upto 5% 5%-10% More Than 10%


67/94

67

1-5 Years 24

5-10 Years 55

10 Years & Above71

16% of the investors were investing since last 1-5 years.

37% of the investors were investing since last 5-10 years.

43% of the investors were investing since last 10 years & above.

1-5 Years

16%

5-10 Years

37%

10 Years & Above

47%

Investment Made For The LastNumber Of Years

1-5 Years 5-10 Years 10 Years & Above


68/94

68

Steadily 20

At average92

Fast 38

In the above table 20 investors expected their investment to grow steadily.

92 investors expected their investment to grow at a average rate.

38 investors expected their investment to grow at a fast rate.

In the above graph 13% of the surveyed investors expected their investments togrow steadily 62% of the surveyed investors expected their investments to grow at

an average rate. 25% of the surveyed investors expected their investments to grow

at a fast rate.

13%

62%

25%

Expectation Of Investors regardingtheir Investments to grow

Steadily

At average

Fast


69/94

69

Safety of Principal 22

Earning return above inflation rate 96

Earning High returns 32

In the above table 22 surveyed investors gave more importance to safety of

principal, 96 investors gave more importance to earning returns above inflation

rate, 32 investors gave more importance to earning high returns.

15% of the surveyed investors had a primary motive of the safety of principal, 64%

of the surveyed investors were more concerned about earning returns above

inflation rate. 21% of the surveyed investors were more concerned about earning

high returns.

15%

64%

21%

Perception of Investors withrespcetive to returns

Safety of Principal

Earning return above inflation rate

Earning High returns


70/94

70

Nil 12

Average 104

Good 34

In the above table 12 investors were found with no knowledge about various

investment schemes, 104 investors were found with average knowledge about

various investment schemes, 34 investors were found with good knowledge about

various investment schemes.

In the above graph out of total surveyed investors 8% were found with nil

investment knowledge, 69% were found with average investment knowledge, 23%

were found with good investment knowledge.

Nil

8%

Average6

%

Good23%

Investor's Knowledge about variousInvestment Schemes

Nil

Average

Good


71/94

71

In this above table out of the total surveyed investors 76 investors are above 50years, 48 are between 30-50 years & 26 investors are between 20-30 years.

In the above graph 51% were above 50 years 17% were between 20-30, & 32%

were between 30-50.

Above 5051%Between 30-50

32%

Between 20-3017%

Age Group of Various Investors

Above 50 Between 30-50 Between 20-30

Above 50 76

Between 30-50 48

Between 20-30 26


72/94

72

Secured 98

Not Secured 28

Doesn't affect24

In the above table out of the total surveyed investors 98 investors were found with

job security, 28 investors were found with unsecured jobs & 24 investors were

found in a no affect status.

In the above graph 65% of the investors were in a state of secured jobs, 19% of the

investors were in the state of unsecured jobs & 16% of the investors were in the

state where this factor doesnt affect them

Secured65%

Not Secured19%

Doesn't affect

16%

Occupation Status of VariousInvestors

Secured Not Secured Doesn't affect


73/94

73

More than 2 98

1-2 dependents32

None 20

In the above table out of the total surveyed investors 98 investors were those who

are having more than 2 dependents, 32 investors were those who are having 1-2

dependents, 20 investors were those who didnt had any dependent.

In the above graph 66% investors were those who are having more than 2

dependents, 21% investors were those who are having 1-2 dependents & 13%

investors are those who having no dependents.

More than 265%

1-2 dependents21%

None14%

Family Status of Various Investors

More than 2

1-2 dependents

None


74/94

74

Educated View 22

Friendly Advice73

Guess Work 55

In the above table out of the total surveyed investors 22 investors took educated

view before investment, 73 took friendly advice before investment & 55 made

guess work.

In the above graph 48% took friendly advice, 15% took educated view & 37%

made guess work.

Educated View15%

Friendly Advice48%

Guess Work

37%

Investor's approach in making an Investmentdecisions

Educated View Friendly Advice Guess Work


75/94

75

Withdraw28

Wait 79

Invest 43

Out of the total surveyed investors 28 investors were found in a state of withdrawal

of money, 79 investors were found out in the state of wait & watch & 43 investors

were found out in the state of more investment in the market if the market crashes

down.

In the above graph 52% will wait & watch 29% will invest more & 19% investors

will withdraw their money.

Withdraw

19%

Wait52%

Invest29%

Views of the Investors if the stockmarket crashed down


76/94

76

M

A

R

K

E

T

G

R

O

W

T

H

MARKET SHARE

STAR CATEGORY PRODUCT: These are the products that are not only market

leaders but are also growing fast. By this study it can be analyzed that FD is a

product of STAR CATEGORY. If we analyze the current status of investments,

then all respondents have their investments & if they are provided with 10, 00,000

STAR

(F.D.)

QUESTION MARK

(M.F.)

CASH COW

(SIP)

DOG

(INSURANCE)


77/94

77

then too they will invest a part of it in FD. Hence presently FD has a large Market

Share & in future also its market share will increase but not decrease.

CASH COW PRODUCT: Such products are weak in both the factors i.e., lowgrowth & low market share. The investment avenues coming in this category are

SIPs. Professional have invested in SIP, but this is restricted to their future & SIP

is best option for the businessmen. Rather people would like to invest money in

post office.

DOG CATEGORY PRODUCT: Products of this category are categorized by

Dominant share & Low growth. The investments avenues coming in this category

is INSURANCE. It is among todays growing sector. But if we point our

consideration towards professionals, as it is in this study, then Insurance comes

under Cash Cow. Its market share is large, but at the same time these people are

less interested in it as a future investment avenue.

QUESTION MARK CATEGORY PRODUCT: High growth & Subordinate Share

characterize these products. SHARES, MUTUAL FUNDS & BONDS comes

under this category. At present they have low market share but growth prospectus

of these products are very high.


78/94

78

CHAPTER 6

FINDINGS


79/94

79

The basic thrust of the research is to find out types of investors & their portfolio &

their profile.

On the basis of questionnaire certain points are given to the investors.

Those investors who obtained between 160-260 are very conservative.

Those investors who obtained between 261-340 are conservative investors.

Those investors who obtained between 341-410 are moderate investors.

Those investors who obtained between 411-480 are aggressive investors.

A. In the survey 18 investors were found aggressive out of the total of 150

surveyed investors. The asset allocations of aggressive Investors are as follows;

They invest 50% in equity instruments, 40% in debt instruments & 10% in cash

instruments.

B. 60 investors were found to be moderate Investors. The asset allocations of these

investors are as follows;

60% of the surveyed investors invest in debt & 30% of the them invest in equity &

remaining 10% of them invest in cash instruments.

C. 47 investors found to be conservative investors out of the total 150 surveyed

investors. The asset allocations of conservative investors are as follows;

70% of them invest in debt instrument,20% of them invest in equity instruments, &

10% of them invest in cash instruments.


80/94

80

D. 25 investors were found to be very conservative out of the total 150 surveyed

investors. Their asset allocations are as follows;

80% of them invest in debt instruments, 10% of them invest in equity instruments,& 10% of them invest in cash instruments.

E. In the survey the data was obtained regarding the investment capacity of the

investors also in order to get the purchasing power and financial efficiency of the

investors.

25% of the total surveyed investors invested up to 5% of their monthly income.

46% of the total surveyed investors invested up to 5% to 10% of their monthly

income.

29% of the total surveyed investors invested more than 10 to their monthly income.

F. The investment made for the last number of years is also taken into

consideration to take into account their investment periods.

16% of the total surveyed investors were investing since last 1-5 years.

37% of the total surveyed investors were investing since last 5-10 years.

43% of the total surveyed investors were investing since last 10 years and above.

G. Expectations of the investors regarding their investments to grow were also

found out because on its basis we can make out consumers investment decisionsand consumers mind setup it was all psychological based.

Out of the total surveyed investors only 13% expected their investment to grow

steadily.


81/94

81

Out of the total surveyed investors only 62% expected their investment to grow at

average rate.

Out of the total surveyed investors only 25% expected their investment to grow at

a fast rate.

H. The most important part of this survey was to know about the perception of the

investors with respect to returns. The following results were obtained.

15% of the total surveyed investors had a perception that safety of principal is their

primary area of concern.

64% of the total surveyed investors had a perception that earning returns above

inflation rate is their primary area of concern.

21% of the total surveyed investors had a perception that earning high returns is

their primary area of concern.

I. As far as investors knowledge part regarding various investment schemes is

concerned it was found that

69% of the total surveyed investors had average knowledge about various

investment schemes.

8% of the total surveyed investors had no knowledge about various investment

schemes

23% of the total surveyed investors had good knowledge about various investment

schemes.

J. Age group was also a rational issue to know while carrying out the research.

It was found that 17% of the total surveyed investors were between 20 to 30 years.


82/94

82

It was found that 32% of the total surveyed investors were between 30 to 50 years.

It was found that 51% of the total surveyed investors were above 50 years.

K. Occupation status is also a great factor to know because it affects consumer

buying behavior and buying decisions.

65% of the total surveyed investors had secured occupation.

19% of the total surveyed investors were in the state of non-security of occupation.

16% of the total surveyed investors were in that state where occupation doesnt

affect them.

L. To know about investment approach in making investment decisions gives

significance to the research as by knowing this aspect we can conclude to a great

extent about the type of investors.

37% of the total surveyed investors relied on guesswork.

15% of the total surveyed investors relied on the educated view.

48% of the total surveyed investors relied on the friendly advice.

LIMITATIONS

UNCERTAINITY OF MARKET:-

HSBCs securities investments are subject to market risks and there is

Hsbc Project Report DRAFT1

Documents

Transcript of Hsbc Project Report DRAFT1