PROJECT REPORT

ON

“A STUDY OF VARIOUS ASPECTS

OF

WEALTH MANAGEMENT

IN

CHOLAMANADALAM”

A Report Submitted In Partial Fulfillment Of The

Requirements Of PGDM Program Of IPER-PGDM

Bhopal

Submitted To: Submitted By:

Prof. A.S.Khalsa Harsha Chotrani
Dean-IPER-PGDM, Bhopal

Mr. Vikas Jain Date of Submission:

Assistant Vice President July 5th, 2010
Cholamandalam, Delhi

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 ACKNOWLEDGEMENT

An Old Chinese proverb says : “When eating your bamboo

sprouts, remember the men who planted them. Now that my
sprouts are ready to eat, it is time for me to express my deepest
gratitude to All those who have made this possible.”

I would like to thank my Dean Prof. A.S.Khalsa and my sir

Prof. Hersh Sharma for providing me with this opportunity of
having such a wonderful company like CHOLAMANDALAM for
my summer training.

No work is complete without the help & co-operation of a

knowledgeable and expert mentor, I would like to thank
Mr.Vikas Jain-Assistant Vice President, Delhi and Mr.Ashish
Shoundik, Branch Head and finally Mr.Sambit Sawant, Senior
Relationship Manger who have been extremely dedicated
towards me. Without there cooperation my knowledge about
the Financial sector would have been nil. All of them have
been very much cooperative and dedicated towards passing on
the knowledge to me. Sincere thanks to Vikas sir.

In the end I would like to thank all those who have been
associated with my research project and this report.

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 CERTIFICATE

This is to certify that the project titled “A STUDY OF

VARIOUS ASPECTS OF WEALTH MANAGEMENT IN
CHOLAMANADALAM.” Made by Harsha Chotrani is an
authentic work carried out by them under my guidance and
supervision.

During the making of the project she took keen interest in

completing the work assigned to her.

EXTERNAL MENTOR:

MR.VIKAS JAIN

INTERNAL MENTOR:

PROF. A.S .KHALSA

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 PREFACE
The wealth management industry is changing rapidly to meet the
evolving needs of the participants . This is one area where true
financial services convergence seems to be happening as trust and
private banks, brokerage and retirement planning focused companies
are all trying to get a bigger slice of action .Opportunities in new
geographies and asset classes are driving a lot of in the industry today.
According to a new research conducted by Celent, a Boston based
financial research and consultancy firm, the Indian wealth
management industry is gearing up to meet expanding market
opportunities. The report titled "Overview of Indian Wealth
Management Market" reveals that over the next four-five years, the
revenue from wealth management service is expected to contribute to
over one third(32-37 percent) of full-service financial institutions.

By 2017 disposable income is expected to grow from present 2 percent

to 5 percent. The wealth management market currently registers a 30
percent plus growth and is expected to touch $1 trillion by 2012.

This Project report has been a sincere effort on the study of this
upcoming sector in the Financial Industry, Cholamandalam being a
premier in the industry and proficient in the wealth management
industry. The report concentrates on the way of wealth management
process and correct financial planning of an individual and the entire
business cycle of wealth management in Cholamandalam.

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 INDEX

I. Objective Of Study

II. Scope Of Study

III. Method Of Data Collection

IV. Limitations Of Study

V. Concept OF Wealth Management -:

 Wealth Management service

 Benefits Of Wealth Management

VI. Literature Review –:

 State OF Wealth Management Globally

 State OF Wealth Management Industry in India

VII. Company Overview – “Cholamandalam Distribution

Company”

 Product and Services Of Cholamandalam

 SWOT Analysis OF Cholamandalam

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VIII. Business Cycle OF Wealth Management in

Cholamandalam

IX. How Cholamandalam Suggests Products to its Clients

 Research Work

 Mutual Fund Analysis

X. Questionnaire and its Analysis

XI. Learning’s

XII. Recommendations

XIII. Bibliography

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 OBJECTIVES OF STUDY

To Study the aspects of wealth management.

To analyze the evolution and growth of wealth management market
in India.
To derive the potentiality and the future prospect of the wealth
management industry in India.
To analyze the investment behavior and risk appetite of HNI clients
in Delhi.

SCOPE OF STUDY
This report provides a holistic and top-down view on the current
situation of Financial market and the role of Cholamandalam in
building the industry. I would be analyzing the aspects of wealth
management and analysis of investment behavior of HNI clients in
Delhi .As study has been done only in Delhi it may vary in different
cities and study has been done in Cholamandalam wealth
management division , there is a probability that business cycle of
wealth management would be different in other companies.

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 METHOD OF DATA COLLECTION
All the techniques and process of doing wealth management is studied
in Cholamandalam :

Primary Source : Risk Appetite and investment behavior of HNI

clients of Delhi is studied through Marketing research .

Secondary Source :
 Collection of data from reports published by various national
and international journals on wealth Management.
 RBI and SEBI rules and regulation and their reports on the
subject.

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 LIMITATIONS OF THE STUDY

Since the study is done only in Delhi, these results cannot be

generalized. Investors also tend to hide some facts and figures due to
some reasons which can hinder the results we get from this survey.
Although I have tried my level best to prepare this report an error free
report every effort has been made to offer the most authenticate
position with accuracy.

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 THE CONCEPT OF WEALTH MANAGEMENT
Wealth usually refers to money and property or something which has
economic value attached to it. It is the abundance of objects of value
and also the state of having accumulated these objects.
The concept of wealth management refers to management of both the
sources and the facets of various forms of both tangible and non-
tangible wealth. India has become a highly potential market for wealth
management because wealth managers, both domestic and
international, are able to establish the beginnings of a market with few
obstacles, relative to the other emerging markets, where there are
regulatory restrictions, these are less problematic than those in China
or the Middle East.

“WEALTH MANAGEMENT is a service provided by financial

institutions to help high net worth individuals protect and grow their
wealth. This advanced investment advisory discipline involves
providing a diverse range of services, such as financial planning,
investment management, tax planning and cash flow and debt
management, based on client requirements.”

There are Two aspects to the wealth management process:-

Protecting assets from creditors, market crashes or slowdowns,

taxes, lawsuits and other unexpected events
Growing asset values through methods that actively manage risk
and reward profiles to clients needs.

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Wealth Management is an advanced investment advisory discipline
that incorporates Financial Planning and Specialist Financial Services.

WEALTH MANAGEMENT SERVICES

Wealth management offers the following services:

Investment planning: Assists investor in investing money into

various investment markets, keeping in mind investment goals and
risk appetite.
Insurance planning: Assists in selecting from various types of
insurances, self insurance options and captive insurance
companies.
Retirement planning: This is one of the important service as it is
critical to understand how much funds you require in your old age.
Asset protection: Begins with financial advisor trying to
understand preferred lifestyle and then helping an investor to deal
with threats, such as taxes, volatility, inflation, creditors and
lawsuits, to maintaining this lifestyle.

Tax planning: helps in minimizing tax returns. This might

include planning for charity, supporting your favorite causes
while also receiving tax benefits.
Estate planning: helps in protecting you and your estate from
creditors, lawsuits and taxes. This service is critical for every person
whose net worth is high.
Business planning: This service aims at optimizing the tax free
advantages of running your own business.

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 Business succession planning: assists in planning for the
inevitable to maximize returns.
Wealth transfer: helps you pass on your wealth to your dependents.

BENEFITS OF WEALTH MANAGEMENT

Wealth management helps in:

Reducing taxes associated with income, capital gains and estate.

Protecting assets from misjudgments and creditors.
Improving yields with more diversification and less risk.
Managing liabilities such as mortgages and college funding.

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 LITERATURE REVIEW
STATE OF WEALTH MANAGEMENT INDUSTRY GLOBALLY

Global high net worth wealth totals around $37 trillion, and is
expected to reach $51.6 trillion by 2011, growing at an annual rate of
6.8% a year according to the 2009 Merrill Lynch/Capgemini World
Wealth Report.

Merrill Lynch Global Wealth Management and Capgemini's

14th World Wealth Report revealed that high net worth
individuals (HNWI) -defined as those with more than $1 million
(£673,000) of disposable assets -had recouped most of the money
lost in the previous year when the global downturn took its toll on
their portfolios.

HNWI wealth had declined by $7.9 trillion in 2008 but last

year(2009) climbed $6.2 billion according to the report which also
showed that the world's population of HNWIs had increased to 10
million from 8.6 million last year(2009), bringing it close to the
10.1 million level of 2007.

At the end of 2008, the world’s population of HIGH NET

WORTH INDIVIDUALS (HNWIs) was down 14.9% from the year
before, while their wealth had dropped 19.5%. The
unprecedented declines wiped out two robust years of growth in
2006 and 2007, reducing both the HNWI population and its wealth
to below levels seen at the close of 2005.

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Ultra-HNWIs suffered more extensive losses in financial wealth
than the HNWI population as a whole. The Ultra-HNWI
population fell 24.6%, as the group’s wealth dropped 23.9%,
pushing many down into the ‘mid-tier millionaire’3 pool.

The financial crisis and economic uncertainty of 2008 clearly had

an impact on HNWI investments of passion and lifestyle spending,
with luxury goods makers, auction houses, and high-end service
providers reporting significantly reduced demand worldwide. The
cost of luxury items also rose.

HNWI Population by country,2008

By 2013, it is forecasted that global HNWI financial wealth to

recover to $48.5 trillion, after advancing at a sustained annual rate
of 8.1%. By 2013, it is expected that Asia-Pacific to overtake North
America as the largest region for HNWI financial wealth.

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HNWIs are defined as those having investable assets of US$1
million or more, excluding primary residence, collectibles,
consumables, and consumer durables.

Ultra-HNWIs are defined as those having investable assets of

US$30 million or more, excluding primary residence, collectibles,
consumables, and consumer durables.

More than a quarter of HNWI clients surveyed withdrew assets

from their wealth management firm or left that firm altogether
in 2008, primarily due to a loss of trust and confidence.

Firms need to be client-focused . 88% of surveyed HNWI clients

said SERVICE QUALITY was a “very important” reason for staying
with their wealth management firm in 2008, and 87% of Advisors
anticipated that would be the case.

World GDP did manage to produce some growth in 2008 (2.0%),but

it was down from 3.9% in 2007 and 4.0% in 2006. GDP in G7
economies deteriorated progressively as the crisis unfolded, and
ended the year showing growth of just 0.6%.

BRIC (Brazil, Russia,India,China) nations continued to outpace

many economies, led by China, despite the steep slowdown in the
fourth quarter.

Real GDP Growth Rates , 2007-2009F

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HNWIs reduced their exposure to equities across the globe in
2008, but allocated more to fixed-income instruments. By year-
end 2008, equities accounted for 25% of total global HNWI financial
assets, down from 33% a year earlier, and fixed-income accounted
for 29%, up from 27% a year earlier.

HNWIs kept far more cash/deposits in 2008—of global HNWI

financial assets, 21% was in cash-based holdings at the end of
2008, up 7 percentage points from pre-crisis levels in 2006.

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HNWIs are expected to remain fairly conservative investors in
the short term, with capital preservation being a priority over the
pursuit of high returns. Looking toward 2010, though, the profile of
HNWI portfolios is likely to shift as economic conditions improve,
instigating a tentative return to equities and alternative investments
as HNWIs regain their appetite for risk.

Breakdown of HNWI Financial Assets , 2006-2010F

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 STATE OF WEALTH MANAGEMENT INDUSTRY IN INDIA

“While Maharashtra is home to the largest number of affluent individuals

of any state in India and also the fastest growing affluent population, it
is Delhi that has by far the highest proportion of affluent individuals”

(Source: Data monitor Customer Research)

According to the report, India is slated to become a US$1 trillion

market (in assets under management) for wealth management
providers by 2012, with a target market size of 42 million households.
In the annual survey done by Cap Gemini, SA and Merrill Lynch it was
found that ranks of millionaires grew 6% in the previous year(2009),
because the number of richer people grew in India & China where India
is competing China. India & China posted the biggest gain in
millionaires advancing by 23% & 20% respectively.

Wealth management is just emerging in India. The growth of the

economy has already been widely showcased. Wealth management
services have been getting more attention over the last two years. A
booming economy, rising stock prices and an increase in salaries and
spending power have turned the spotlight on this sector. The wealth
management space was earlier the preserve of some foreign banks
which offered these "exclusive services" to a select few. This was not a
service you could apply for.

The unsaid tagline was "Don't call us. We'll call you (if you are that
wealthy!)." Today, a number of private banks and distribution houses
offer this service. Also entering this arena and carving a niche for

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themselves are standalone entities that offer the full range of services
— investment advice, portfolio management, taxation advice.

According to Celent, with large segments of the population showing

interest in financial products and service lines, growth and buoyancy
across sectors are boosting the financial service industry of India. The
report estimated an addition of 500 million people to the working class
in the next decade, with the young population enjoying increase in
income levels. These will lead to increased investments in the core
processing platforms as well as the need to tie the various platforms
together.

The wealth management service providers have segmented Indian

market into four categories, namely:-

 The Mass market (investible surplus $5,000 to $25,000)

 The Mass affluent ($25,000 to $1 million)

 The High net worth (HNW $1 million to $30 million) and

 The Ultra-high net worth (ultra-HNW greater than $30 million).

The lower rung of this pyramid is currently clocking tremendous

growth at 30 percent for mass affluent and 27 percent for mass market
and will continue the same phase says the report.
The wealth management market currently registers a 30 percent plus
growth and is expected to touch $1 trillion by 2012.

The latest Wealth Report 2010 Attitudes Survey has forecast that
real estate sector in India is likely to witness fluctuations with prices
of prime properties in India forecast to be zooming northwards by

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12-15 per cent in 2010 on one hand and demographics change
supporting demand on the other.

With the number of high net worth investors (HNWIs) in India

growing at 20 per cent a year, second only to Singapore and the
huge community of wealthy non-resident Indians living overseas—
keen in investing back home—the Mumbai and New Delhi realty
markets now hold a significant level of promise for these potential
investors, as per Pranab Datta, vice-chairman and MD, Knight
Frank India.

India's FY10,nominal GDP is estimated at US$1.3 trillion. Assuming

12.4% annual growth (7% real and 5% inflation), India's GDP in
FY15 works out to US$2.3 trillion i.e. addition of US$1 trillion in the
next 5 years.

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India is growing at a fast pace and according to LiveMint Report
India's economy between the year '2007 and 2050' is likely to come
in at 8.5% CAGR, significantly higher than China's 6.8% .

India is going to be one of the powerful nations of the world as far as

human resource and technological wise...Not just this, India will
also going to be powerful economically. The power of economy can
put India one among the top ten developed nations.

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 COMPANY OVERVIEW
“CHOLAMANDALAM DISTRIBUTION COMPANY “
The Company, was incorporated on August 17, 1978, as a public
limited company under the name of “Cholamandalam Investment and
Finance Limited”. Cholamandalam Financial Services Group is a pan-
Indian, composite financial services provider. It comprises the parent
company, Cholamandalam Finanace Limited (CFL), and its subsidiaries
and associates Cholamandalam Distribution Limited, Cholamandalam
Asset Management Company Limited and Cholamandalam Securities
Limited. The shares of CFL are listed in the Mumbai(BSE) and National
(NSE) Stock Exchange.
In 1993-94 Cholamandalam Investment and Finance Company
ventured into vehicle finance operations. It has since then
continuously augmented its product range and geographical presence.
They have a total asset base of Rs. 17,000 crores as on March 31, 2010
(including assets securitized and assigned) out of that Cholamandalam
has around 1700 crores. They were registered as a deposit taking
NBFC, and in December 2006 it converted into a non-deposit taking
NBFC. They currently enjoy LAA rating for debentures and
subordinated debt programme, MAA+ rating for fixed deposits and A1+
rating for Short Term debt programme from ICRA; AA rating for fixed
deposits and P1+ rating for short term debt programme from CRISIL
and AA (Ind) rating for subordinated debt programme from FITCH .

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Cholamandalam Finance is a part of giant Murugappa Group of
Companies, which has 28 companies, like Parryware , Tube India etc.,
leading in their industries. The major companies of the Group are:
 Carborundum Universal Limited
 Cholamandalam Finance Limited
 Cholamandalam MS General Insurance
 Coromandel Fertilizers Limited
 EID Parry India Limited
 Tube Investments of India Limited
 Parry Agro Industries Limited

The Group has forged strong joint venture alliances with leading
international companies like DBS Bank, Mitsui Sumitomo, Cargill,
Roca and Group Chimique Tunisien has consolidated its status as one
of the fastest growing diversified business houses in India.

Cholamandalam was a venture between Development Bank Of

Singapore, (DBS) and Cholamandalam Finance of Murugappa Group
India. On 30 March.2010 Cholamandalam acquired its stake back from
DBS. DBS sold its 37.5 percent stake in Cholamandalam DBS Finance
in a deal worth 3.76 billion rupees. The deal price of 91 rupees ($2) for
each Cholamandalam DBS share with a premium of 1.2 percent was
agreed.

L&T had bought 100% stake in Cholamandalam Asset Management

Ltd. on 29,Sept 2009 for 45 crores.

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Cholamandalam Distribution Limited (CDL) is in the business of
distribution of a wide array of financial services products – both in-
house and third party – to high net worth and retail client. Products
offered include mutual funds, fixed income, share trading, savings
instruments, capital bonds, IT/PAN processing services, equity IPOs
and life and general insurance.

Wealth management practices have been started in the company, with

a brand name of a giant venture. The company has steered two
separate departments for marketing. One in Retail, who take cares of
the budding millionaires of India, and other the Private Client Group
(referred as PCG) which handles the big wig individuals under its
Wealth Management Department. India is growing so does the
individuals of the country, with better financial planning and good
investment techniques the goals of all the individual can be achieved in
a better professionalized manner. This is the belief of the company
which has always been referred as the most trust worthy company in
the industry.

“Club Chola” is the Private client group of DCDL that offers

personalized investments advisory services to address clients’ financial
needs holistically through a wide variety of products, asset classes and
service offerings, backed by strong in – house research.

Its Closest Competitors are DSP Black rock, Citi Bank , Standard
Chartered ,HSBC , India infoline , Bajaj capital and Birla Sunlife
Distribution and in wealth managemenmt its closest competitor is
Bajaj Capital.

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 • To be the most trusted financial advisor to India's
emerging millionaires.
Vision

• Providing customized financial planning alligned to set

goals and objective through a wide range of product
Mission offerings.

• " UNBIASED PRODUCT SELECTION"

• Multi Product Platforms , Superior research, Financial
USP Planning Process Advisory Quality.

• 46 Cities , 70 Branches , 800 Relationship Managers , 16

Research Analysts.
Reach

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 PRODUCTS & SERVICES OF CHOLAMANDALAM

Cholamandalam provides with new investment opportunities and

investment advice which allows an individual to choose from a broad
spectrum of products and services. With Cholamandalam Wealth
Management one can be rest assured will have access to the most viable
wealth management products and solutions.

Various Products offered are :-

Direct Equity :

An Investor can enjoy convenient, simple and efficient trading in Indian

equities that is offered by Cholamandalam. They provide a seamless
platform to invest in the Indian secondary markets. Chola’s wealth
management advisor provide valuable advice based on in-house
research.

Structured Products:

Cholamandalam offer customized investment solutions to access various

asset classes. Most structures will offer principal protection with returns
based on performance of an associated asset class. Based on investor
preference, returns can be linked to a variety of asset types such as
equity indices, basket of stocks.

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 Real Estate

Chola offers niche property investment services. They bring in a

combination of in-depth market knowledge and real estate industry
experience to offer a range of specialized real estate investment services.
According to the analysis of the needs and objectives of the investor, they
provide expert advice and innovative real estate solutions to their clients.
They are partnered with JLLM (Jones Lang LaSalle Meghraj) . It is a
financial and professional service firm specializing in real estate services.

Gold

A healthy portfolio is about the diversification and management of risk.

Holding gold in a portfolio can provide distinct benefits, its most valuable
contribution to a portfolio lies in the fact that it is not correlated with
most other assets. Chola offers multiple avenues of investing in gold so
that investor can benefit from effective portfolio diversification .Here Gold
is traded through Exchange Traded Fund.

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 Life Insurance

While offering solutions for building and preserving capital,

Cholamandalam also offers comprehensive advice on how best to protect
yourself and your family against all the most serious risks that you face.
They have tie up with TATA-AIG Life Insurance that provides the
opportunity to obtain more favorable offers, which can result in lower
costs and greater benefits. TATA – AIG IA GOLD Product is the hot cake
for Cholamandalam in terms of clients.

MF PMS ( Mutual Fund -Portfolio Management Service ):

MF PMS offer investors a unique and excellent investment proposition.

They invest in the schemes of best performing mutual funds .While
mutual funds invest in promising stocks of sound companies, MF PMS
invests in the best schemes of various mutual funds .Best of the best
fund managers working to maximize your wealth Hassle-free, tension-
free, selection and management of Mutual Fund Portfolio.

Chola’s Three in-house products are :-

– Discretionary Portfolio Management Services – SIGMA

– Non-discretionary Portfolio Management Services – EASE

– Transaction based Service Offering – EZ Invest

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Various Services offered are :

Research

Chola provides quality research to their clients with the information they
need to make informed investment decisions. The Cholamandalam
Wealth Management Research team is dedicated to keep investor
updated with an access to various publications and to a wide range of
research tools including market depth, breaking commentary, long-term
forecasts to detailed daily updates and the latest financial news.

Highly proactive services

They deliver a fast, effective and friendly service that often exceeds
client's expectations. The service includes daily Market Update, Weekly
Update on MF, Event Based SMS, investor will be kept fully informed on
the markets.

Financial planning

To complement Cholamandalam investment strategy they offer

comprehensive financial planning. This planning session is followed by
a complimentary personalized report containing specific
recommendations on the actions needed to take to achieve financial
goals.

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 Regular Portfolio Reviews

Periodic reviews to ensure the integrity of the portfolio and continued

viability of assets within the portfolio. Chola believe in diversification and
are committed to providing a sound and conservative investment
acumen.

SWOT ANALYSIS OF CHOLAMANDALAM

STRENGTH WEAKNESS

 Wide Product Range  Do not focus on

advertisements.

 Strong Client Base at Delhi.  Brand name not

established other than
south.

 PAN INDIA Presence  Brand Positioning not

done properly.

 Well defined business model

 Entire process is in-housed

with experienced man power.

 Strong management in the

30
 core business & execution

 Market Led Company

 Part Of Murugappa Group

worth having 13500 crores.

 Low charges as compared to

other distribution houses.

OPPORTUNITES THREATS
 HNI population is growing  Increasing Competition.
rapidly at a faster pace so
huge market potential .

 Concept Financial planning is  Regulatory changes by SEBI

developing in india. has led to erosion of margins.

 Power of Equity Unmatched,  Local Market players playing

has outperformed all other a spoil sport.
Asset Classes.
 Equity forms only 10% of the
of the total Portfolio of the
investors.

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 BUSINESS CYCLE OF WEALTH MANAGEMENT IN
CHOLAMANDALAM
The business cycle of Wealth management starts from targeting the
HNI Clients .There is CAT team ( Client Acquisition Team ) in Chola
which focuses on acquiring clients .

Following is the Procedure Of CAT to acquire clients :-

 Search HNI Clients :-
1. Through various Database like of Airtel , Kotak etc.
2. Through Phone directories.
3. Through Club Memberships
4. Through Locality
5. Through References.
6. Cold Calling
7. Events

 Then Mailers are send to clients regarding the Cholamandalam

before first call to client. There is reason for not calling first as
clients are given reference regarding first mail .

 Then Clients are given first call. And meeting is fixed .

 On 1st meeting , there’s a mantra that let client have more

interaction with RM ( Relationship Manager ) and try to know
what is the past investments and its behavior, risk appetite and
return expectation of the client through filling OF RAPP(Risk
Analysis and Portfolio Planer).

32
 Then either Restructuring of Portfolio is done or New Product is
pitched in 2nd meeting according to the need of the client and is
presented to the client.

 Following Points are considered while Portfolio Creation :-

1. Investment Objective
2. Return Expectation
3. Risk Appetite
4. Time Horizon
5. Total Corpus
6. Liquidity
7. Current Investment
8. Insurance (if any)

Then starts the Wealth management Back Office Process , it

entails the following :-

After Meeting fixation and Client Pitching -

 Utilizing client feedback and personal network to

develop intelligence .
 Then Coordinating with all AMC’s .
 Keep the track of portfolios of the clients on Portfolio MF
Online tracker .Their Client wise details are prepared.
 Prepare comprehensive financial reports and proposals
for senior management to review revenue generation on
Telesto Software .

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  Handling complete branch operations.

And then from time to time Active Review & Monitoring is done.

34
HOW CHOLAMANDALAM RECOMMENDS PRODUCTS
TO ITS CLIENTS
To analyze the risk appetite and return expectation and goals of the
investor, RAPP FORM (RISK ANALYSIS AND PORTFOLIO PLANNER)
is get filled by the clients.

Then RAPP Form is send to Chennai Head Office where research

team is based to judge the client’s risk appetite. Research team has
divided the client into 3 category’s :-

 Tortoise ( Conservative Client )

 Elephant ( Moderately Aggressive )

 Cheetah (Highly Aggressive )

After 3-4 days they send their feedback to Delhi office.

If the client comes under Tortoise Category they are suggested Debt
Funds, Capital Protection funds, FD’s (Fixed Deposit) and if client is
above 60 yrs (retired) they are suggested MIP’s (Monthly Income
Plans).

If the client comes under Elephant Category they are suggested

Balanced Funds, Large Cap Equity Funds and stocks of Blue Chip
Companies and SIP(Systematic Investment Plan )and Gold too.

35
If the client comes under Cheetah Category they are suggested Small
and Midcap funds , Real estate funds, Stocks of Small and Midcap
Companies.

The information regarding in which sector/funds/stocks to invest

are based on the research which is carried out by the research team
.

I also did some of the research work that gave an idea about the
rolling returns of different indices , analysis of various mutual funds
.

This research work is useful to the Relationship Manager while

pitching a product to the client.

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 RESEARCH WORK
COMPARISON OF VARIOUS INDICES
1. COMPARISON OF BSE-100,BSE-200,BSE-500,SENSEX,NIFTY
MIDCAP,SMALLCAP

2. COMPARISON OF BSE-100,BSE-200,BSE-500,SENSEX

37
3. COMPARISON OF MIDCAP,SMALLCAP,BSE-500,SENSEX

Analysis :- From the above three graphs it can be depicted that

Small Cap is highly volatile and has given more returns over the
period of 10 years when the market has gone positive as compare to
other indices.

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 COMPARISON OF VARIOUS SECTOR INDICES

1. COMPARISON OF HEALTH CARE, CONSUMER DURABLES, IT,

CAPITAL GOODS ,BANKEX, & METAL SECTORS :

2. COMPARISON OF FMCG , AUTO , PSU, OIL & GAS SECTORS :

39
 Analysis :- From the above 2 graphs of various sectors , in 1st graph
Capital Goods has outperformed all the other sectors over a period
of 7 years whereas in 2nd Graph Auto industry has outperformed all
the other Sectors almost every period.

SENSEX CAGR RETURNS OF 2 , 3 , 5 YEARS

1. Sensex 2 Yr CAGR Returns (Compounded Annual Growth Rate):

40
`

41
Analysis :- From the above 3 graphs it can be interpretated that
Sensex has always given Positive returns in long term and it is
better to hold the investment for 5 yrs rather 2 or 3 yrs.
As CAGR is more in 5 yrs and only two times the return has gone
negative otherwise it has always given high returns.

COMPARISON OF SENSEX VS BSE- 500 ROLLING RETURNS

42
43
Analysis :- From the above comparison of SENSEX and BSE-500
graphs it can be interprated that BSE – 500 has almost every time
outperformed Sensex. The reason behind is that BSE - 500 consists
of large cap, midcap & small cap companies . As
small cap & midcap are highly volatile and give more returns than
large caps & are highly risky whereas in case of large cap they are
not affected easily.

44
 MUTUAL FUND ANALYSIS
A mutual fund is a collective investment vehicle formed with the
specific objective of raising money from a large number of individuals
and investing it according to a pre specified objective .

Mutual Fund is a trust that pools the savings of a number of investors

who share a common financial goal. The fund manager in different
types of securities then invests the money thus collected. These could
range from shares to debentures to money market instruments,
depending on the scheme’s stated objectives.

Mutual funds can be classified in different ways according to there

investments objectives, their constitution, etc. and are as follows :-

 Equity Funds: These are funds that invest solely in equity shares
of various companies. Since equities as an asset class fluctuates
widely, the net asset value of these funds is also subject to these
fluctuations. Hence, these funds are the riskiest.

 Debt / Income Funds : These are funds that invest solely in

income bearing instruments like bonds , debentures , government
securities , commercial papers etc . Income bearing instruments
are much less volatile , though they do carry credit risk.

 Balanced funds : These are funds that invest both in equity

shares and income bearing instruments . The idea is to reduce the
volatility of the funds while providing some upside for capital
appreciation

 Liquid Funds / money market funds: These are funds that

invest in highly liquid money market instruments. They have

45
 emerged as an alternative savings and short term fixed deposits
accounts.

 Sector Funds – These are funds investing in a particular business

sector or industry like the Tata Infrastructure Fund, Pharma and
FMCG funds which invest in shares of companies in their
respective sector

 Index Funds – This is a large class of equity mutual funds, that

invest in the popular market indices e.g. S&P 500, NASDAQ
composite etc This concept is referred to as passive investing
wherein the investor wants to invest in a particular asset class but
does want any fund manager to choose specific investments.

46
 Research was done on the various funds according to its Past
Performance and top funds that are suggested to clients as per their
risk appetite are as follows :

TOP EQUITY DIVERSIFIED FUNDS

Scheme Name Latest Benchmark Alpha Beta Type Of Fund Compo

NAV sition

Equity Debt Cash

Birla sun Life Dividend Yield 75.56 S&P CNX 11.80 0.83 Medium Cap - G 95.30 0.00 4.70
Plus-Growth 500

Birla Sun Life Frontline 79.25 BSE 200 6.57 0.93 Large Cap- G 92.74 0.00 7.26
Equity Fund - Plan A –
Growth
Birla Sun Life Mid Cap Fund 105.27 CNX Midcap 9.66 1.11 Medium Cap - B 93.83 0.00 6.17
- Plan A - Growth

DSP BlackRock Equity Fund 47.26 S&P CNX 8.72 0.91 Medium Cap - G 94.81 0.00 5.19
- Growth Nifty

DSP BlackRock Small and 16.10 CNX Midcap 6.95 1.00 Medium Cap - G 95.00 0.00 5.00
Midcap Fund - Growth

DSP BlackRock Top 100 89.92 BSE 100 5.95 0.84 Large Cap- G 96.23 0.00 3.77
Equity Fund - Growth

Fidelity Equity Fund - 31.24 BSE 200 4.02 0.86 Large Cap - G 98.56 1.66 0.22
Growth

HDFC Equity Fund - Growth 239.32 S&P CNX 7.78 0.99 Large Cap - G 97.80 0.00 2.20
500

47
ICICI Prudential Discovery 44.31 BSE 0.99 Mid cap - G 91 0.00 9.04
10.5

ICICI Prudential Dynamic 95.24 3.89 0.81 Large Cap - G 78 5.25 22.01
IDFC Premier Equity Plan A 28.39 16.3 0.92 Mid cap - G 92.4 0.00 2.34

IDFC Small & Midcap Equity 16.77 NA NA Mid cap - G 89 6.34 4.68

Magnum Contra 54.01 3.97 0.99 Large Cap - G 93.7 0.97 5.3

Reliance Growth 441.95 8.76 1.01 Mid cap - G 90.6 0.00 9.36

Reliance Regular Savings 28.16 13.51 1.08 Large Cap - G 93.4 0.00 6.63
Equity

Sundaram BNP Paribas 24.28 BSE CG 6.33 1.18 Medium Cap - G 97.12 0.00 2.88
CAPEX Opportunities Fund -
Growth

Sundaram BNP Paribas 31.61 CNX Midcap 12.59 1.19 Medium Cap - G 96.07 0.00 3.93
SMILE Fund - Growth

UTI Dividend Yield Fund - 28.49 BSE 100 10.94 0.84 Large Cap - G 89.56 1.48 8.96
Growth

UTI Opportunities Fund - 23.67 BSE 100 9.92 0.9 Large Cap - G 95.5 2.13 2.41
Growth

HDFC Top 200 192.46 BSE 200 9.01 .92 Large Cap – G 96.81 0.00 3.19

48
 TOP BALANCED FUNDS

Scheme Name Latest Benchmark Alpha Beta Type Of Fund Compo

NAV sition

Equity Debt Cash

DSP BlackRock Balanced 60.71 Crisil 7.52 0.93 Medium Cap - G 72.65 20.99 6.36
Fund - Growth Balanced

HDFC Prudence Fund - 187.17 Crisil 9.01 1.07 Medium Cap - G 73.73 22.98 3.29
Growth Balanced

Reliance RSF - Balanced - 20.49 Crisil 12.37 1.04 Large Cap - G 64.7 37.95 2.65
Growth Balanced

TOP SECTOR FUNDS

Scheme Name Latest Benchmar Alpha Beta Type Of Fund Compo

NAV k sition

Equity Deb Cash

t

Reliance Banking Fund - 84.62 CNX Banks 11.99 0.81 Large Cap - 94.76 0.00 5.24
Growth Blend

UTI Thematic Banking 36.37 CNX Banks 4.71 0.84 Large Cap - G 89.63 0.00 9.96
Sector Fund - Growth

49
 TOP ELSS ( EQUITY LINKED SAVING SCHEME) FUNDS

Scheme Name Latest Benchmark Alpha Beta Type Of Fund Compo

NAV sition

Equity Debt Cash

Fidelity Tax Advantage 19.31 5.33 0.86 large cap - G 98.76 1.16 0.08

HDFC Tax saver 205.83 4.04 0.93 large cap - G 91.18 0.00 8.82

ICICI Prudential Tax 127.08 5.6 0.97 large cap - G 89.95 0.00 10.05
Plan

Reliance Tax Saver 18.98 2.95 0.87 medium cap - G 97.97 0.00 2.03

50
 MARKETING RESEARCH

Objective:

To determine the Investment behavior and Risk Appetite Of HNI

Clients.

SAMPLE DESIGN

Sample Element:

Shops Of Khan Market and Greater Kailash-I(GK) M-Block Market,

Delhi.

Sample Unit :

 Shop Owners OF Khan Market and GK Market.

Sample Size:

45 Respondents

51
 QUESTIONNAIRE
i. How do you manage your investments ?
 Self
 Financial Advisor
 Both

ii. Which Wealth Management company you consult ?

__________________________________________

iii. Rank these factors that you consider while selecting the advisory
company ? ( as 1 to 5 )
 Products & Services
 Relationship Manager
 Brand Name
 Research
 References

iv. Which Asset Class forms a major chunk of your Total Investment
Portfolio ?
 Debt
 Equity
 Real Estate
 Commodities
 Gold
 Any Other Specify:-

52
 v. Of your total portfolio what is the % of investment in equity ?
 Less than 25 %
 25 % - 50 %
 50 % - 75 %
 More than 75 %

vi. What is the average time horizon of your investment ?

 Less than 1 Yr
 1- 2 Yr
 2-5 Yr
 More than 5 Yr

vii. How would you define your Risk Profile ?

 Conservative (5-8 % return)
 Moderately conservative (9-12 % return)
 Moderately Aggressive (13-18% return)
 Aggressive ( >18% return )

53
viii. For the types of investments you have made, what has been the
satisfaction level of your experience?
Very Good Fair Poor Never Invested

 Bonds
 Mortgages
 Stocks
 Mutual funds
 Real Estate
 Commodities
 Gold
 FD’s

54
 DATA ANALYSIS
TABLE 1 :
Respondents Manage their Investments

Cumulative
Frequency Percent Valid Percent Percent
Valid Self 24 53.3 53.3 53.3
Financial Advisor 6 13.3 13.3 66.7
Both 15 33.3 33.3 100.0
Total 45 100.0 100.0

Analysis : Out of the 45 Respondents, 53.3% manage their

investment by themselves and 46.7% by their Financial Advisor.

55
 TABLE 2 :

Consult wealth management company

Cumulative
Frequency Percent Valid Percent Percent
Valid Citi gold 6 13.3 28.6 28.6
Bajaj Capital 6 13.3 28.6 57.1
Barclays 3 6.7 14.3 71.4
Birla Sunlife 3 6.7 14.3 85.7
HSBC 3 6.7 14.3 100.0
Total 21 46.7 100.0
Missing System 24 53.3
Total 45 100.0

Analysis : Out of the 21 Respondents that have Financial Advisory

services, 28.6% are of Citi Gold And Bajaj Capital, and 14.3% of
Barclays, Birla Sunlife and HSBC.

56
 TABLE 3:
Asset Class forms major chunk of your Total
Investment
Cumulative
Frequency Percent Valid Percent Percent
Valid Debt 6 13.3 13.3 13.3
Equity 6 13.3 13.3 26.7
Real Estate 15 33.3 33.3 60.0
Gold 9 20.0 20.0 80.0
LIC, FD's 9 20.0 20.0 100.0
Total 45 100.0 100.0

Analysis : Result from the 45 respondents surveyed shows that 33.3%

respondents have major chunk of their total investment in Real
Estate, followed by Gold(20%), LI & FD’s(20%), Equity(13.3%) &
Debt(13.3%).

57
 TABLE: 4
Percentage of equity investment
Cumulative
Frequency Percent Valid Percent Percent
Valid Less than 25% 21 46.7 58.3 58.3
25%-50% 6 13.3 16.7 75.0
50%-75% 9 20.0 25.0 100.0
Total 36 80.0 100.0
Missing System 9 20.0
Total 45 100.0

Analysis : Result from the 45 respondents surveyed shows that 36

respondents(i.e. 80%) have investments in equity. 58.3% have less
than 25% in equity out of their total investment, 16.7% between 25%-
50% and 20% between 50%-75% have equity exposure.

58
 TABLE: 5
Average time horizon for investment
Cumulative
Frequency Percent Valid Percent Percent
Valid Less than 1 Yr 6 13.3 13.3 13.3
1-2 Yrs 9 20.0 20.0 33.3
2-5 Yrs 15 33.3 33.3 66.7
More than 5 yrs 15 33.3 33.3 100.0
Total 45 100.0 100.0

Analysis : Out of the 45 respondents, 33.33% hold their investment

for more than 5 Years followed and only 13% hold their investment for
less than a Year.

59
 TABLE: 6

Return expectation(Risk Profile) of respondents

Cumulative
Frequency Percent Valid Percent Percent
Valid Conservative (5-8 % return) 15 33.3 33.3 33.3
Moderately conservative (9- 3 6.7 6.7 40.0
12 % return)
Moderately Aggressive (13- 12 26.7 26.7 66.7
18% return)
Aggressive ( >18% return ) 15 33.3 33.3 100.0
Total 45 100.0 100.0

Analysis : Result from the 45 respondents surveyed shows that

33.3% are Aggressive and 26.7% expect 13%-18% from their
Investments.

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 TABLE 7 :
Factors that Investors consider while selecting the advisory
company

Product & Services Relationship Manager Brand Name Research References3

4 2 1 3 5

2 1 3 4 5

1 4 2 3 5

3 5 2 1 4

R 1 5 3 2 4

A 3 5 1 4 2

N 1 3 4 5 2

K 2 1 3 4 5

S 4 1 2 3 5

1 2 3 4 5

2 3 4 1 5

3 5 2 4 1

1 4 2 3 5

3 5 2 1 4

1 3 4 5 2

4 2 1 3 5

2 1 3 4 5

1 4 2 3 5

Total 39 56 44 57 74

First Third Second Fourth Fifth

61
Analysis : While investing the most important factor that is considered
while selecting an Wealth Management Company is Product & Services
offered followed by Brand Name, Relationship Manager, Research and
last is Reference.

TABLE 8 :
Experience of Investors in different Asset Classes

Asset Class Good(5) Fair(3) Poor(-1) Total Ranks

Bonds 5 -10 5 SEVENTH
Mortgages 0 EIGHTH
Stocks 10 5 -5 60 SECOND
Mutual Funds 10 -15 15 FIFTH
Real Estate 15 10 -5 100 FIRST
Commodities 5 -5 10 SIXTH
Gold 5 10 55 THIRD
Fixed Deposits 5 10 55 THIRD

62
 LEARNINGS
Wealth management is an investment advisory discipline that
incorporates financial planning, investment portfolio management
and a number of aggregated financial services. It basically deals with
High net worth individuals who have net worth of 1 million USD and
Ultra HNI’s who have net worth of 5 million USD.
The whole process of Client Acquisition right from searching of HNI
client to fixing of meeting and Portfolio creation.
Products and services are offered according to risk appetite and
return expectation of client.
There are various Asset Classes like equity, debt, real estate, Gold,
commodities, FD’s and structured products.

If we invest in equity for longer duration they give higher returns.

Relationship is maintained with clients basically on 3 things :

 Honesty

 Knowledge

 Quality Service

One of the learning was how to do Tele-Calling and how difficult is to

crack the meeting with client.

 Some clients are very arrogant whereas some are Down-to-

earth.
 They don’t invest their whole amount upfront at once, first they
invest a small amount as to have confidence on the
relationship manager and then accordingly invest the rest.
 The meeting with client while calling totally depends on 2
factors: the way of speaking and luck.
63
  To build repo with client the discussion with the client
should be of his interest and related to his field and what are
his current investments are to be known so accordingly
proposal is made.

On your 1st meeting with client you should only know your customer
what is his investment behavior, his risk appetite.

Different types of products suit different category of clients

according to their risk appetite such as conservative client are
suggested debt funds and Highly aggressive are suggested Pure
Equity Small and Midcap Funds.

Market is highly volatile for past 2 months according to the experts

it would remain same for this year.

64
 RECOMMENDATIONS
Brand Positioning Strategy should be strengthen through
various means of Marketing like Advertisement through media,
hoardings, internet.

Should conduct seminars for HNI Clients to promote Chola’s

Product and Services.

Should Increase Branches.

65
 BIBLIOGRAPHY

CHANDRA PRASANNA, Financial Management, TATA McGraw-

Hill Publications

KHAN M.Y. and JAIN P.K., Financial Management Text and

Problems, 4th ed. TATA Mc Graw-Hill

Economic Times (Investors Guide)

www.investopedia.com

Journals from P.H.D. chambers of Commerce and Industry.

Web sites – mutualfundsindia.com, amfiindia.com

CHOLAMANDALAM monthly magazines.

Cholamandalam website.

66