Summer Training Report
On
PORTFOLIO MANAGEMENT OF HIGH NETWORTH INDIVIDUALS
IN EARTH INFRASTRUCTURES LIMITED
Submitted In Partial Fulfillment of the Requirement Of
Masters of Business Administration
Corporate Mentor: Submitted By:
Name: Mr. Sachin Jain Name: Aayushi Jain
Designation: General Manager Enrollment no:
06161203912
Organization: Earth Infrastructures Ltd. Batch: 2012-2014
Submitted To:
Banarsidas Chandiwala Institute of Professional Studies, Dwarka
(Affiliated to Guru Gobind Singh Indraprastha University)
CERTIFICATE
This is to certify that the project work done on “Portfolio Management of High Net worth Individual
Investors in Earth Infrastructures Limited” submitted to Banarsidas Chandiwala Institute of
Professional Studies by Aayushi Jain in partial fulfillment of the requirement for the award of degree of
Master Of Business Administration, is a bonafide work carried out by her under my supervision and
guidance. The work was carried during 10th June, 2013 to 30th July, 2013 in Earth Infrastructures
Limited.
During the training period her behavior & performance was satisfactory.
Date: July 2013
Seal/Stamp of the Organization
BONAFIDE CERTIFICATE
This is to certify that as per best of my belief the project entitled “Portfolio Management of High Net
worth Individual Investors in Earth Infrastructures Limited” is the bonafide research work carried
out by Aayushi Jain student of MBA, BCIPS, Dwarka, New Delhi during June-July 2013, in partial
fulfillment of the requirements for the Summer Training Project of the Degree of Master of Business
Administration.
She has worked under my guidance.
--------------------
Name: Dr. Aparna Mishra
Project Guide
Date:
Counter signed by
-------------
Name:Dr. Satish Taneja
Director
Date:
DECLARATION
I hereby declare that this Project Report titled “Portfolio Management of High Net worth Individual
Investors in Earth Infrastructures Limited” submitted by me to Banarsidas Chandiwala Institute of
Professional Studies, Dwarka is a bonafide work undertaken during the period from June 10 th, 2013 to
August 30th, 2013 by me and has not been submitted to any other University or Institution for the award
of any degree diploma / certificate or published any time before.
(Signature of the Student) Date: / / 2013
Name: Aayushi Jain
Enrollment No.: 06161203912
ACKNOWLEDGMENT
It is said “no learning is possible without any proper guidance and no research endeavor is a solo
exercise, some contribution is performed by various individual”. By acknowledging the guidance,
support and assistance, I pay my deepest sense of guidance to my mentor.
I extend a sincere acknowledgment to Earth Infrastructures Limited for giving me the opportunity to
work with this esteemed organization. I would like to thank Dr. Satish Taneja (Director, Banarsidas
Chandiwala Institute of Professional Studies) who has been a constant source of inspiration. I am highly
indebted to Dr. Aparna Mishra for her guidance and constant supervision as well as for providing
necessary information and support in successful completion of the project.
I would also like to thank my corporate mentor Mr. Sachin Jain for his kind co-operation and
encouragement which helped me in completion of this project.
It has been a great honor and privilege to have been acquainted with them. Although there may be many
who remain unacknowledged in this humble note of gratitude there are none who remain unappreciated.
Under the guidance: Submitted by:
Dr. Aparna Mishra Aayushi Jain
MBA (Finance)
EXECUTIVE SUMMARY
The Title of Research Project is “ Portfolio Management of High Net worth Individuals at Earth
Infrastructure Ltd. ” conducted at the Corporate Office of Earth Infrastructure Ltd, 1501 - 1503, 15th
Floor, Tower-A, Signature Tower Gurgaon, Haryana.
Portfolio Management is a science for managing the varying combination of Portfolio elements. These
elements are the sub-components, of which the larger portfolio is formed; say, the elements may be
'plans' for a portfolio of plans, or 'strategies' for portfolio of strategies. In general, we may say that the
elements of a portfolio are different forms of assets and in essence, portfolio management is managing
these assets. We shall henceforth refer to portfolio management as the management of these assets.
This project undertaken at Earth Infrastructure Ltd was mainly to understand about what portfolio
management is and why is it important to continuously follow it. Since the scenario keeps on changing
every single day, it becomes important to evaluate it on a regular basis and make the required changes.
The project as the title suggests, subjected to Portfolio Management of High Net worth Individuals. The
methodology used for the Research is based on the collection of primary and secondary data and the
sampling technique used for methodology was random sampling. The samples are collected from the
various investors. The questionnaire designed was based on mainly three particulars which are risk
appetite of the investors, the horizon for which they want to keep their investment and the liquidity they
want from their investment. Pie charts were used for the visual display of the result.
The main findings of the project are:
The investors seek the safe schemes to invest as most of the people are risk averse and prefer not
to experiment with their hard earned money.
The investors prefer investing for a long term rather than short term in expectations of earning
long term returns.
The investors want their money to be more liquid in the view that they can get the amount of
their investment in hand as and when required.
INDEX
S.No. TOPIC Page No.
Chapter 1 Introduction
Chapter 2 Literature Review
Chapter 3 Objectives and Scope of study
Chapter 4 Research Methodology
Chapter 5 Company Profile
Chapter 6 Data Analysis and Interpretations
Chapter 7 Findings, Suggestions & Conclusions
Bibliography
Annexure
CHAPTER 1- INTRODUCTION
1.1 Introduction:
Portfolio Management is a science for managing the varying combination of Portfolio elements. These
elements are the sub-components, of which the larger portfolio is formed; say, the elements may be
'plans' for a portfolio of plans, or 'strategies' for portfolio of strategies, or 'securities' for a portfolio of
securities, and so on. In general, we may say that the elements of a portfolio are different forms of assets
and in essence, portfolio management is managing these assets. We shall henceforth refer to portfolio
management as the management of these assets.
1.1.1 Portfolio Management of High Net worth Individuals:
Portfolio planning is a highly personalized exercise, involving a close examination of a person’s needs
and requirements. Often preparation of such investment portfolios differs on a case-to-case basis. The art
of selecting the right investment policy for the individuals in terms of minimum risk and maximum
return is called as portfolio management. Portfolio management refers to managing an individual’s
investments in the form of bonds, shares, cash, mutual funds etc so that he earns the maximum profits
within the stipulated time frame. In a layman’s language, the art of managing an individual’s investment
is called as portfolio management.
1.1.2 Need for Portfolio Management
Portfolio management presents the best investment plan to the individuals as per their income, budget,
age and ability to undertake risks.
Portfolio management minimizes the risks involved in investing and also increases the chance of making
profits.
Portfolio managers understand the client’s financial needs and suggest the best and unique investment
policy for them with minimum risks involved.
Portfolio management enables the portfolio managers to provide customized investment solutions to
clients as per their needs and requirements.
1.1.3 Types of Portfolio Management
Portfolio Management is further of the following types:
Active Portfolio Management: As the name suggests, in an active portfolio management service, the
portfolio managers are actively involved in buying and selling of securities to ensure maximum profits to
individuals.
Passive Portfolio Management: In a passive portfolio management, the portfolio manager deals with a
fixed portfolio designed to match the current market scenario.
Discretionary Portfolio management services: In Discretionary portfolio management services, an
individual authorizes a portfolio manager to take care of his financial needs on his behalf. The individual
issues money to the portfolio manager who in turn takes care of all his investment needs, paper work,
documentation, filing and so on. In discretionary portfolio management, the portfolio manager has full
rights to take decisions on his client’s behalf.
Non-Discretionary Portfolio management services: In non discretionary portfolio management
services, the portfolio manager can merely advise the client what is good and bad for him but the
client reserves full right to take his own decisions.
Personal financial planning is a continuous process of assessing an individual profile and planning his
finances so that he can attain his financial objective in and effective manner. This exercise involves
deciding on the individual investment portfolio. In the other words, deciding upon the various
investment avenues, the quantum that needs to be invested and the investment horizon for each of the
investments are essential components of the personal financial planning process. Before suggesting any
financial plan for the investor it is very important to consider certain basic factors. These factors are
follows:
The income level of the investor: This is one of the most important factors, which has a
significant bearing on the investment portfolio of the investor. His investment plans should be in
line with his income level and in proportion to the amount he is prepared to invest.
Risk appetite: This differs from person to person and is a highly subjective phenomenon. For
example in most of the cases a 65-year-old man who has retired from work will not have a very
aggressive outlook toward s investments. Hence, recommending equity and equity related
investments might not be appropriate. The investment plan that is drawn should be in sync with
the person’s risk appetite.
Investment horizon: some investors tend to remain invested for long period of time. For such
investors liquidity is not the main criteria. Hence, for such persons PPF, ELSS and NSC are the
best bet. Investor, for whom liquidity is of paramount importance, recommending PPF may not
be appropriate.
Nevertheless, one point that needs to be highlighted is that there can be no fixed rule for any personal
financial planning exercise. It differs from person to person.
1.1.4 Risk Profiling
As the name suggests, Risk Profiling is a scientific approach to find out the attitude or the risk taking
capability of an individual towards his/her investments. Risk profiling is an integral part to the
investment process. It underpins decisions about making an investment. It plays an essential part in
ensuring the suitability of investments for an individual. It gives a measure of how risk averse the
individual is as an investor. This would be the corner stone to determine what securities will likely fit
into the individual’s investments or investment goals factors like age, life stage (single, married, etc.),
income, savings, dependents and mindsets on investments and past experiences on your investments are
the factors that would define your attitude towards investing.
Risk Profiling combines two key areas:
1) Estimating an individual’s financial risk-taking capacity
2) Understanding his psychological risk tolerance level.
These two factors determine where and how one should ideally invest. This Risk profiling would give a
Relationship Manager a clear understanding of the client’s risk appetite, so that he can guide him and
provide informed investment decisions.
1.1.5 The Portfolio Management Process
Step One: Determining the Risk Profile
The first step in portfolio construction is determining the client's risk profile. This is a very important
part of the process. All the other aspects of portfolio construction feed off it. It is also important at this
point to explain the risk-return tradeoff. Investors often want complete capital protection in market
downturns and complete participation in market performance during upswings. This is not a realistic
expectation and their misconceptions should be corrected.
There are five Risk Profiles:
Conservative
Cautious
Moderate
Moderately Aggressive
Aggressive
Where clients fall on this scale is one of the main determinants of their portfolio's final characteristics
and performance. Investors have wildly differing attitudes toward risk and risk tolerance.
Step Two: Strategic Asset Allocation
Armed with a risk profile, the next step is strategic asset allocation. Simply put, this is your long term
asset allocation. Research has shown that up to 90% of a portfolio's performance can be explained by
the composition of asset classes. There are five main asset classes to consider:
Equities (Local South African)
Property
Bonds
Foreign (Includes equities and fixed interest)
Money Market (Short term cash instruments)
The amount of exposure a client should have to each asset class depends almost solely on his risk
profile. The table above details the asset allocation of the various risk profiles. In order to populate the
asset bands we suggest using a building block approach.
This involves appointing specialist investment managers to each manage a part of the asset allocation. In
other words, an assertive investor could invest his money as follows.
Equity exposure could be split between two general equity funds.
Select one or two offshore funds to make up the foreign portion of the assets
A Property manager to manage the property portion
A bond manager for the bond portion
A money market fund for the cash portion
This is just one way to populate the asset bands. Instead of using a pure property fund, you could use a
fixed interest varied specialist fund to take care of bonds, cash and property exposure and then only
allocate a small portion to a money market fund.
Another option is to use a core-satellite approach. Select a single core fund that has an asset allocation
mandate to make up the largest part of the portfolio. Then add one or two other funds as satellites in
keeping with the risk profile.
Step Three: Tactical Asset Allocation
Where strategic asset allocation determines the basic construction of the investment over the long term,
tactical asset allocation has a much shorter focus. It involves actively over-or underweighting asset
classes to take advantage of short term market movements. For example an Assertive investor who is
bullish on foreign assets and bearish on property, would allocate assets closer to the top of the band
(35%) in foreign and the bottom of the band in property (0%). If the investor is neutral towards an asset
class he will be somewhere in the middle.
There is a big chance of getting tactical asset allocation wrong, so instead of adding value you reduce it.
That is why we recommend you restrict the changes in asset allocation to within the bounds of the
specified asset bands. If the investor feels neutral towards an asset class or doesn't want to use tactical
asset allocation, staying in the middle of the bands will still enable him to reach his goals.
Step Four: Fund Selection
Fund selection is the next step in the process. How do you choose funds from the hundreds in the
market? When selecting funds from the Shopping List it is important to remember what risk profile the
client has. This will play a large role in determining which funds you select. Choosing three equity
funds for the 20% equity exposure of a Conservative client, or two Money Market funds for an Assertive
investor is unnecessary. Apart from complicating the portfolio it doesn't really add any value.
Step Five: Constructing the Portfolio
Once the client has selected the funds it's time to place them into a portfolio. Remember that the total
risk of the portfolio is less than the average risk of the separate funds. This is due to the benefits of
diversification. By combining asset classes and different management styles you significantly reduce
risk.
Step Six: Rebalancing the portfolio
The portfolio must be rebalanced at least every 6 months. Due to market movements and the inherent
differences in the funds, they will grow at different rates. This could change the weightings in the
portfolio, moving it out of its specified risk profile or asset bands. For this reason we advocate that you
look at the asset and fund allocations on at least a half yearly basis, to keep the portfolios true to their
original risk profile.
Following these 6 steps will ensure that your clients receive a portfolio that matches their risk profile and
will meet the requisite investment goals. This will give you, the financial advisor and the client, peace
of mind.
1.1.6 Real Estate as an Investment Script
Real Estate refers to investment in immovable properties which includes land, buildings, flats etc.
Investing in real estate involves the purchase of real estate and selling it for a profit. Basically
investment in real estate involves a substantial investment and for a long period of time. Majority of
the investors invest in real estate in the form of buying a house. But real estate investment is beyond
this and the objective behind the investment is to make profits.
Before making a real estate investment, the investor should evaluate the risk appetite and
investment amount.
The different types of real estate investments are as follows –
1) Rental – The aim of this form of investment is to rent out property to a tenant and earn a
continuous stream of rent from the tenant. The value of the property also increases over a period of
time. The risk in this form of investment is the owner of the property has to find out a tenant and also
need to pay for the maintenance expenses.
2) Trading – Basically traders in real estate in order to make a quick profit buy properties for a
short tem ( six months) and sell them at a profit. Traders look out for buying undervalued
properties/very hot properties and sell them at a profit.
3) Long Term Investment – There is a certain group of investors who invests in real estate
basically plot of land from a long term perspective. The objective is over a period of time the value
of the property will rise and the owner will make a profit by selling it. The biggest flaw in this
investment is money is blocked for an indefinite period.
1.1.7 Risk Analysis
Although there is a difference in the specific definitions of risk and uncertainty, for our literature the
two terms are used interchangeably. In fact, one way to define risk is the uncertainty of future
outcomes. An alternative definition might be the probability of an adverse outcome. Composite risks
involve the different risk as explained below:-
Systematic Risk - Systematic risk influences a large number of assets. A significant political event,
for example, could affect several of the assets in your portfolio. It is virtually impossible to protect
yourself against this type of risk.
Unsystematic Risk - Unsystematic risk is sometimes referred to as "specific risk". This kind of risk
affects a very small number of assets. An example is news that affects a specific stock such as a
sudden strike by employees. Diversification is the only way to protect you from unsystematic risk.
(We will discuss diversification later in this tutorial).
Interest Rate Risk - Interest rate risk is the risk that an investment's value will change as a result of
a change in interest rates. This risk affects the value of bonds more directly than stocks. Credit Risk
– It is also called default risk. As the first pic of this article shows that people only look at returns &
not risk in it. Let me ask if SBI bank is paying some 9% interest & some NBFC NCD is paying
12.5% – which one you choose. If you think 12.5% NCD will be the right choice – you are ignoring
the credit risk. Credit risk is when company doesn’t have capacity to pay principal or interest
amount. In past there is a long list of companies which defaulted like CRB Capital, Escorts, Morpen
Labs etc. Even Bank FDs have credit risk – there is guarantee only up to Rs 1 lakh. Credit risk is
close to zero in Government Bonds.
Liquidity Risk – If you have some bonds that you would like to sell for immediate requirement but
there is no buyer or fewer buyers than sellers – you may have to sell your bonds at discount.
Volatility Risk – Equity prices keep fluctuating on day to day basis. This can be measured by
standard deviation.
CHAPTER 2- REVIEW OF LITERATURE
2.1 Research Paper on Modern Portfolio Theory: Is There Any Opportunity for Real Estate Portfolio?By Hishamuddin Mohd Ali, Ph.D, Department of Property Management, Faculty of Geoinformation Science and Engineering, University Technologies Malaysia, 81310 Skudai, [email protected]
This paper presents the issues of the applicability and implication of employing MPT on real estate
portfolio analysis. The discussion is merely looking into some previous empirical studies with mixture of
findings. The new paradigm of real estate investment has been shifted from ‘tactical and operational’ to
‘strategic and tactical’ style of management. Therefore, MPT could give a sound analytical view of real
estate portfolio analysis which may offer more opportunities for further research particularly in
Malaysia.
Since Markowitz (1959) introduced Modern Portfolio Theory (MPT), many researchers have attempted
to model the benefits of establishing diversification strategies for portfolio investments. MPT is part of
the branch of finance known as Investment Management. Most of the applications of MPT deal with
paper investments such as stocks, bonds, options and futures rather than real investment like corporate
investment projects and real property.
The purpose of this article is to explore the implications and applicability of MPT in real estate
portfolios. The next sections will discuss the environment of real estate investment with a comparison of
real estate and share markets. The article proceeds by discussing the application of portfolio and capital
market theories on real estate. The most important aspects, including issues on the implementation and
application of MPT, will be highlighted, as well as the implications on real estate research.
Portfolio is simply defined as a list of investment. Managing the portfolio is therefore concerned with the
management of a number of asset classes held for investment purposes. Inefficiencies in the real estate
market, reflecting the in ability to sell short, high transaction costs and wide bid-ask spread, as well as
the complexity of individual properties, require active investment management (Scott Jr., 1994). Most of
the companies aim to maximize the value of the company. Therefore, it is important to understand how
decisions related to the real estate asset affect company value.
In the context of the MPT application, as initially specified by Markowitz (1952), the involvement of
real estate as one of the investment media has lead to the construction of the portfolio within the multi-
asset or the real estate asset class.
Conclusion
The conventional arguments regarding portfolio allocation within real estate have created some
inconclusiveness in structuring the real estate portfolio. The emergence of real estate securitization such
as REITs in the last decade at least has changed the attitude of fund managers on real estate as one of the
best investment options. It has been recognized by investors that the myriad market activities generating
the business cycle are interrelated. It is believed that disturbances in market fundamentals in a given
market generate movements of capital into and out of the affected market. If various markets are
integrated, it is expected that a high degree of asset substitution will take place. As real estate is now one
of the asset classes, its needs to be recognized whether the real estate market and stock market are
integrated. The fact is that, their integration is still inconclusive and therefore, identifying the precise
framework of real estate portfolio construction is difficult. Although there were numerous studies on the
application of MPT, studies of the behavioral aspects concerning expectations of the major players, such
as PLRECs and REITs, were left behind. The paradigm shift of real estate investment from ‘tactical and
operational’ to ‘strategic and tactical’ style of management has transformed the perception of real estate
from just ‘bricks and cement’ to more institutional in business environment Therefore, with the
increasing number of REITs in Bursa Malaysia recently, MPT would be able to offer more opportunities
for further research to explore the behavior and performance of real estate market which may lead to
better investment decisions.
2.2 Research Paper on Investigating the roles, responsibilities and practices of portfolio managers in Australia By Aileen Koh Bond University, MIRVAC School of Sustainable Development, Institute of Sustainable Development and [email protected]
Project Portfolio Management (PPM) is increasingly adopted by organizations in Australia. In order to
select, prioritize and monitor simultaneous on-going projects with limited resources, there is a need for
PPM to optimize investment by utilizing a PPM governance structure to deal with constant change and
focus on achievement of organizational strategy. This is particularly relevant in order to build on
national and global recovery.
The aim of the research discuss in this paper is to investigate the roles, responsibilities and practices of
project portfolio managers in services and products organizations in Australia. It also aims to relate the
relationship between project types and environmental complexity of organization with the practices,
roles and responsibilities of Portfolio Manager. Their influences to ensure that the best projects are
selected and investments are optimized are the concern of this paper.
Project Portfolio Management (PPM) is now a widely used approach by organizations in Australia to
achieve business strategies. It brings great opportunities for organizations to embrace changes and lead
their strategies into reality. PPM is used for selection and resourcing of research and development
projects where project management methods are used to do project rights and portfolio management
methods are used to do the right projects.
Conclusion
Portfolio management as a sound methodology to embrace change and achieve high level strategies has
been increasingly adopted by organizations. The focus of the research is to investigate portfolio
manager’s roles, responsibilities and practices in service and product development organizations in
Australia is investigated. Based on the literature and analysis, a research model is presented. This model
reflects the relationship between different project types and portfolio management’s roles and
responsibilities. The methodology proposed for this research involves (1) validating the research model;
(2) using focus groups to identify the constructs, and refine the related hypotheses; (3) conducting two
case studies through interviews with selected service and product development organizations -qualitative
study; (4) developing a web based questionnaire – quantitative study; (4) data collection and analysis –
to build on the results of the first qualitative phase.
2.3 Research Paper on International Real Estate InvestingBy Seth M. Azria, J.D.
The world has become a market accessible to all those willing to get involved. Global trade, spearheaded
by the multilateral efforts of a vast majority of the world’s nations, is now common place and widely
regarded as the engine of global economic prosperity. Advances in technology have increased the ease
and cost of moving people around the globe. Great economic advances are underway in the world’s two
most populous countries, India and China, with other countries likewise engaged in growth. These
factors combined with creative real estate ownership structures like the Real Estate Investment Trust
(REIT), already firmly entrenched in the United States and gaining popularity around the globe, have
made international real estate both an opportunity and a reality for many people. For United States real
estate investors accustomed to high returns on domestic investments, the global real estate market offers
an alternative to the slumping domestic real estate market. Over the long term, the real estate industry
appears bound toward increased global ownership and involvement. This article reviews some basic
concepts of international real estate investing, the REIT structure, and some hot areas for foreign
investment.
Proliferation of Global Real Estate Investment
The United States has been focused inwardly on growing the domestic economy and has had a relatively
minor role in the global real estate movement up until the late twentieth century. While American
construction companies and banks compete around the world for projects, investment bankers and
advisors, and real estate developers have only more recently seriously moved into international real
estate. Some of the factors that probably contributed to the move are worldwide financial deregulation,
worldwide tax reform, declining property values in the United States, increased economic growth
abroad, government emphasis on exports and better transportation and information
technology. Factors that may have prevented a United States move into the global real estate arena were
lack of foreign language skills among real estate professionals, thriving domestic economy, restated
foreign financial markets, lack of professional training in international real estate and real estate
personnel resistance to traveling and living abroad (Hines, 1988).
Conclusion
The world has become a market accessible to all those willing to get involved. Global trade, spearheaded
by the multilateral efforts of a vast majority of the world’s nations, is now common place and widely
regarded as the engine of global economic prosperity. Advances in technology have increased the ease
and cost of moving people around the globe. Great economic advances are underway in the world’s two
most populous countries, India and China, with other countries likewise engaged in growth. These
factors, combined with creative real estate ownership structures like the Real Estate Investment Trust,
already firmly entrenched in the United States and gaining popularity around the globe have made
international real estate both an opportunity and a reality for many people. For United States real estate
investors accustomed to high returns on domestic investments, the global real estate market offers an
alternative to the slumping domestic real estate market. Over the long term, the real estate industry
appears bound toward increased global ownership and involvement.
2.4 Research Paper on Delegated Portfolio Management: A survey of the theoretical literatureBy Livio Stracca
This paper provides a selective review of the theoretical literature on delegated portfolio management as
a principal-agent relationship. The main focus of the paper is to review the analytical issues raised by the
peculiar nature of the delegated portfolio management relationship within the broader class of principal
agent models. In particular, the paper discusses the performance of linear vs. nonlinear compensation
contracts in a single-period setting, the possible effects of limited liability of portfolio managers, the role
of reputational concerns in a multi period framework, and the incentives to noise trading. In addition, the
paper deals with some general equilibrium dimensions and asset pricing implications of delegated
portfolio management. The paper also suggests some directions for future research.
In most industrialized countries, a substantial part of financial wealth is not managed directly by savers,
but through a financial intermediary, which implies the existence of an agency contract between the
investor (the principal) and a portfolio manager (the agent). Therefore, delegated portfolio management
is arguably one of the most important agency relationships intervening in the economy, with a possible
impact on financial market and economic developments at a macro level. Although there are no
harmonized data across countries, the general view
is that the trend towards delegated portfolio management has not been interrupted by the increased direct
accessibility to financial markets witnessed in recent years, for example through the internet. Davis and
Steil (2001) report that the share of household wealth managed by financial institutions has increased
sharply in recent decades, in particular in the Anglo-Saxon countries but also in Europe and Japan. The
growth of institutional assets has been particularly visible in relation to pension funds. These
developments suggest that gaining a deeper understanding of the nature and consequences of delegated
portfolio management contracts is interesting and relevant, for academics and policy-makers alike.
Delegated portfolio management is a complex phenomenon which encompasses different segments. The
mutual fund industry is predominantly characterized by middle aged households investing individually
in sometimes relatively standardized products. By contrast, pension funds are predominantly managed
by corporate treasures, who often delegate the asset management to a third party, thus creating an
additional layer of agency.
ConclusionsIn this paper we have selectively reviewed the theoretical literature dealing with the analytical issues
arising from delegated portfolio management as a principal-agent relationship between an investor (the
principal) and a portfolio manager (the agent). We have argued that, while this peculiar form of agency
relationship shares many features with a traditional principal-agent model, it also presents its own
challenges. The fact that in a delegated portfolio management setting the agent controls effort and can
influence risk makes it more difficult for the principal to write incentive compatible contracts which are
optimal from her standpoint.
In particular, we have shown how the fact that the portfolio manager can control the scale of his
response to the information signals in a linear (and potentially also nonlinear) way makes the quest for
an optimal linear (and perhaps also nonlinear) contract for the principal very difficult. Indeed, this is a
literature where negative results tend to prevail over constructive ones.
We have also seen how reputation concerns in a multi-period setting may affect the incentives faced by
portfolio managers and in some cases make the job of explicit incentives. At the same time, reputation
concerns may also have distortionary effects insofar as they may lead managers to take on more risk or
to discard private information and herd with the market, none of which necessarily goes to the benefit of
investors. Finally, the literature has emphasized that (implicit or explicit) benchmarking might have
significant implications for asset prices and volatilities at a macro level. Needless to say, there are
several directions in which this literature could be fruitfully extended. Delegated portfolio management
often implies more than one layer of agency, especially in the pension fund industry: how is this likely to
affect incentives and outcomes? Another interesting extension appears to be considering less standard
utility functions for principals, say shortfall risk, which may be again particularly relevant in the pension
fund industry. More generally, gaining a better understanding of the general equilibrium implications of
the agency aspects of delegated portfolio management should be a paramount objective in future
research. This is, in particular, a topic which should be interesting and relevant for policymakers, given
the importance of delegated portfolio management relationships in all developed financial markets.
Notably, the possible impact of delegated portfolio management on the emergence of asset price bubbles
and on excessive trading in capital markets is an issue on which the theoretical literature reviewed in this
paper has definitely shed some light and which would deserve further research.
Ideally, general equilibrium models of delegated portfolio management should be able to determine the
optimal compensation structure ina principal-agent setting and its general equilibrium implications
jointly. Although there is no reason to think that developing such models will be an easy task, since the
literature has not been able to determine the optimal structure of the compensation structure in a
delegated portfolio management context even in a partial equilibrium framework, our conclusion is that
this research agenda should have a high priority in financial economics.
CHAPTER 3- OBJECTIVES AND SCOPE OF THE STUDY
3.1 Objectives of the Study:
The topic of the research project is “Portfolio Management of High Net worth Individual Investors in Earth
Infrastructures Limited” as the title suggested through this study we could study the concept of Portfolio
Management.
Keeping in view the above main objective, the study is carried with:
To analyze the client's risk profile.
To evaluate the duration of the investment made by the client’s.
To understand the client’s expectation of the returns from their investments.
To make the clients aware about the possible benefits of investing in the real estate sector.
To understand the client’s behavior and their need with respect to their investment capacity in the
real estate sector.
3.2 Scope of the Study
The study of the Portfolio Management is helpful in the following areas.
In today's complex financial environment, investors have unique needs which are derived from
their risk appetite and financial goals. But regardless of this, every investor seeks to maximize his
returns on investments without capital erosion. Portfolio Management recognize this, and
manage the investments professionally to achieve specific investment objectives, and not to
forget, relieving the investors from the day to day hassles which investment require.
It offers professional management of real estate investment of the investor with an aim to deliver
consistent return with an eye on risk.
In particular, the scope of this report has been focused to handle and discuss 'real estate' as the
typical sub-component of portfolio of assets.
CHAPTER 4- COMPANY PROFILE
4.1 Introduction to the Company:
Name of the company - Earth Infrastructures Ltd.
Type: Private Limited Company
Industry: Real Estate Development
Founded: 2010
Corporate Office- A-1, C & D, Sector 16, Near Metro Station, Noida, U.P.
Registered Office- 26, Ist Floor, Pusa Road, Adjoining Karol Bagh Metro Station, New Delhi
Gurgaon Office- 1501 - 1503, 15th Floor, Tower-A, Signature Tower Gurgaon, Haryana
4.2 Vision:
With a commitment to deliver unique, integrated projects that best cater to client's needs, Earth strives to
be the most innovative and trusted brand in real estate industry by adopting new technologies with a
focus on green and eco-friendly construction.
4.3 Mission:
Hassle-free operations with total customer satisfaction by resolving customer's issues with utmost
attention and speedy services round the clock. Earth is dedicated to develop and deliver state of art
projects matching to standards around the globe.
4.4 Focus:
They are totally committed to deliver what we have committed to our customers and investors –
specially, quality construction & timely possession.
Every action of the company and its employees is to provide 360 degree customer solution at its
best.
Complaint-free operations with total customer satisfaction by resolving customers’ issues with
utmost attention and speedy services round-the-clock.
4.5 Philosophy:
Driven by the philosophy of 'Innovation beyond Imagination’
We believe in making the finest elements of urban living with a commitment of high-quality
construction
Committed to design lifestyle experiences in the close proximity to environment, harmonizing
concept living with five elements on the planet.
4.6 Greenology- Our bonding with nature:
Our innovation lies in our strong bonding with nature and our unflinching support in re-making
our planet Earth a better and greener place for mankind to live and prosper
We are forging of a new relationship between man and the elements, where architecture is not the
end but the catalyst in the equation
We call this vision Mainstream Green – ensuring a livable and prosperous future, because we
understand the relationship between mankind and nature.
4.7 Customer Centric Approach:
To ensure complaint free operations with total customer satisfaction by resolving customer’s issues with
utmost attention and speedy services round the clock.
4.8 Brand Value:
To deliver the projects ‘differently’ and make the customer to feel at ease and comfort and create the
‘Earth Brand’ a most trusted brand.
4.9 Innovation through Technology:
Earth would be effortful and creative to identify and deliver something new, matching the technological
up gradation in the Realty sector, all around the globe.
4.10 Corporate Social Responsibility
Earth would concentrate towards development of affordable houses for the masses, to reach to the heart
of all.
4.11 Employee Culture
To keep on constantly searching for the talented employees, developing employee retention policies,
providing continuous training and development to facilitate them to contribute completely in the growth
of the organization.
4.12 Character, Ethics and Values
Earth would be governed by its professional policies and procedures to ultimately benefit its values
customers. The transparency of the policies would be maintained through the company’s operational
manual. Adhering to the manual would be mandatory for all, with an ultimatum objective to make the
earth “ Favourite of all” and to create “Ethical Brand Value” within a short span.
4.13 Milestones
We are a group of innovative people, who consider each of our projects as an opportunity to do
something different & unique. Our buildings are a personification of our dynamic imagination and our
vision is to create the finest elements of urban living & working with our wide-ranging experience in
real estate business.
Our ability is to meet the special requirements of the real estate market and clients demand from
its strong foundations of professionalism. Every project which will bear the Earth signature will
stand out from the rest, in terms of design aesthetics and global standards of construction. And,
for the records, we have struck the following Firsts in the Indian realty sector:
First Green Building in Noida Extension
First Bank Guarantee Project in India
First Assured Return in Retail Project in Gurgaon
4.14 Earth’s Associates
Our project offerings are breathtakingly fresh, exquisite and unrivalled in design and engineering
We have partnered with some of the best internationally acclaimed architects and design
consultants
Eigen-UK
CERVERA & PIOZ-Spain
BDP-Netherlands
4.15 Rewards & Recognitions
Due to sheer diligence and dedication many prestigious rewards and recognitions has come our
way in just two-and-a-half year tenure
‘Best Debutant Developer of the Year’ in 2010 by Franchise India
‘Bharat Samman Award’ in 2011 by NRI institute
‘Most Innovative Developer Award’ from Institute of Economic Studies
‘Meri Dilli Award’ – Real Estate Sector
4.16 Earth’s Future Plans
An SEZ at Yamuna Expressway spanning 40 acres of landmass
A sprawling Township in Neemrana (Rajasthan)
Exquisite Country Houses in South West Delhi
High-end Commercial projects at Dwarka Expressway
A 5-Star Hotel at Manesar
To enter the equity market through IPO by 2014
4.17 Corporate Identity
Earth Logo is an epitome of ancient history & modern architecture. The logo is a remarkable union of
the pyramid & the sphere.
The pyramid dates back to early civilizations & for thousands of years, the largest structures on earth
were pyramids. In architecture pyramids are considered as a monumental structure and are looked upon
with reverence & awe. The pyramids have set the foundation for many future constructions.
The use of pyramid therefore makes a lot of sense for a company that deals in real estate. The
circumference of a sphere reinstates the values of Earth infrastructures, as the earth is in itself is a
sphere. It renders a 3D feel to the logo. The presence of both the pyramid & sphere, highlight the truth
that Earth infrastructures was born to create outstanding structures, that’ll leave a deep imprint on future.
Also the latitudinal feel to the logo imbues a direction of growth. The logo symbolizes global appeal,
upward growth & progress. As like on planet earth latitudes, always spiral up and the same outlook is
hoped for the group too.
Earth appears to be blue, due to the presence of water & atmosphere, which is why it is called
The Blue Planet
Also blue is the color of royalty
Blue is calming. It can be strong and steadfast or light and friendly. Almost everyone likes some
shade of the color blue
Blue conveys importance and confidence
Blue brings peace
4.18 Code of Conduct
Objective: Every action of the company & its employees is to provide 360 degree customer solution at
its door step. We ensure to provide full support for any compliance of the customers or the stakeholders.
We are committed to continuously review and update our Policies and Procedures to initiate policies and
action which are customer centric and which promote financial prudence.
Applicability of the Code: The company expects, the Management to exercise good judgment to ensure
the interest, safety and welfare of customers, employees and other stakeholders and to maintain a
cooperative, efficient, positive, harmonious and productive work environment in the organization. The
Code needs to be followed while working in the premises of the company, at offsite locations where the
business is being conducted whether in India or abroad, at company sponsored business and social
events or at any other place where they act as representatives of the company.
4.19 Employment/Outside Assignment
Members of Management are prohibited from engaging in any activity / employment that interferes with
their performance or responsibilities to the company or otherwise is in conflict with or prejudicial to the
company. Business Interest – If any member of Management considers investing in securities issued by
the company’s customer, supplier or competitor, they should ensure that these investments do not
compromise their responsibilities to the company.
4.20 Earth’s Projects
Commercial Projects:
By coming opportunities into real estate Earth is developing its two main commercial projects:
Tech-one
Iconic
Residential Projects
With the booming prospects of real estate in Delhi/ NCR region Earth infra has introduced two
projects for its residential properties. They are as follows;
Elacasa
Gracia
4.21 Competitors
DLF
DLF’s chief business is to develop housing, marketable and retail properties. Currently it has
undertaken the development of 70 million sq ft of housing projects, which it intends to finish in the
next three years. DLF has joined hands with Delhi Development Authority to develop townships in
Pune, Gurgaon, Mumbai and Chennai etc. DLF has been the construction company behind different
malls of the major cities in India.
Omaxe
Omaxe has successfully executed more than one hundred and twenty industrial, institutional,
commercial and residential projects for a number of prestigious Indian private, public sector and
Multinational’s clients such as Amity University, LG, Pepsi, Samsung, Wave Cinemas, National
Brain Research Centre, P.G.I. M.E.R, Apollo Hospitals and Delhi High Court.
Unitech
Recently Ramesh Chandra, Unitech’s chairman has declared an investment of $ 720 million by his
company in the coming four years to develop hotels along with Marriott International. The market
capitalization of the company is Rs.16,867.40 crore. Its chief activities include construction,
expansion of real-estate, consultancy in associated sectors, hotels, electrical broadcast and
information technology.
India Bulls Real Estate
It is one of the India’s largest developers developing residential and commercial real estate. Being a
focused regional player, more than 90% of IBREL’s portfolio by value is in the three major markets
of Mumbai, NCR and Chennai. Established in 2000, the company has grown into one of the leading
Indian business houses with its companies being listed on Indian and overseas financial markets
having a combined net worth in excess of Rs.18,000 crore.
4.22 Industry Profile:
The awe and wonder of Real Estate in India lies in its flexible nature and its value appreciation over
time. Events sweeping at the industry are pushing the limits of people's aspirations, concept of good
living, contemporary working style and recreation, their risk appetite, and money they can promise for
high quality construction and smartly done up space.
The prime drivers of change in Indian real estate have been initiated by path breaking policies like
relaxation in FDI policies by the Government of India. It is mainly combined with strong economic
growth, reforms and policies that lure global investors, easy terms of repaying home loans, rising income
levels and urbanization.
As the biggest part of one's investment portfolio, the idea of capitalizing on existing property has been
taken to stunning heights. Whether it is a retail space in a commercially viable land or the neighborhood
that has stable income/rent potential as investment property; the Indian real estate market is now offering
the best bet on property.
Moreover, the market is also opening up as the viable investment option for the NRIs who vouch to
return to India. The asset that your second home is, your vacation home/retreat, the space that has lease
appeal in retail or just the office space; most cities of India are poised for this and more. There is also a
progressive feel to Tier II cities like Gurgaon, Noida, Faridabad, Bangalore, Hyderabad, Pune, Jaipur,
Kochi and Chandigarh apart from the outstanding metros of Delhi, Mumbai, Bangalore and Chennai.
Present Situation of the Real state industry
The real estate sector is a critical sector of our economy. It has a huge multiplier effect on the Economy
and therefore, is a big driver of economic growth. It is the second-largest employment-generating sector
after agriculture. Growing at a rate of about 20% per annum and this sector has been contributing about
5-6% to India’s GDP. Not only does it generate a high level of direct employment, but it also stimulates
the demand in over 250 ancillary industries such as cement, steel, paint, brick, building materials,
consumer durables and so on.
The Indian real estate industry has been on a roller coaster ride since 2005. Consequent to the
Government’s policy to allow foreign direct investment (FDI) in this sector, there was a boom in
Investment and developmental activities. The sector not only witnessed the entry of many new domestic
realty players but also the arrival of many foreign real estate investment companies including private
equity funds, pension funds and development companies entered the sector lured by the high returns on
investments. The real estate sector has been riding through many highs and lows since then. The industry
achieved new heights during 2007 and early 2008, characterized by a growth in demand, substantial
development and increased foreign investments. However, by mid 2008, the effects of the global
economic slowdown were evident. Here too, and the industry took a ‘u’ turn. FDI inflow into real estate
dropped significantly and what had emerged as one of the most promising markets for foreign
investments experienced a downturn.
Financial Support to the Sector
In the financial years 2007-08, 2008-09 and 2009-10, the housing and real estate sector attracted FDI’s
of 8.9%, 10.3% and 11% respectively, of the total FDI in India. However, the financial year 2011-12
saw a mere 6% FDI in this sector. The year 2010 saw the Indian real estate sector spring back into action
after the gloom and recessionary pressures experienced in the aftermath of the global downturn. The
focus on ‘affordable housing’ helped the sector tide over the financial crunch it had witnessed. There is
no doubt that the sector holds huge potential to attract FDI in its various segments. However, progress is
possible only with the joint efforts of both the industry and the government. On the one hand, the
industry should work towards increased transparency, clear land titles, improved delivery and project
execution while on the other hand the government must provide fiscal incentives to developers to build
low cost and affordable housing for the masses and also review the existing FDI guidelines for
investment and development in Indian real estate in order to increase the flow of foreign capital into the
sector.
Boosting Research and Development in real estate
The government must provide incentives to the public and private sectors to take up R&D activities for
new building materials and technologies so that the industry can deliver low cost, affordable, sustainable
and environment friendly housing and building structures. Government regulations and changes required
the government of India vide press note no. 2 of 2005, permitted FDI up to 100%, under the ‘automatic
route’ in townships, housing, built-up infrastructure and construction development projects. The main
reason for opening up the real estate sector to 100% FDI was to bridge the huge shortage of housing in
the country and to attract new technologies in the housing sector. The original FDI guidelines issued
vide the above press note attracted large amounts of foreign funds to the Indian real estate sector
however, subsequent amendments to the FDI policy relating to real estate, have created unwanted
apprehensions and confusion in the minds of global investors thereby affecting FDI inflows adversely.
Further, lack of consistency in rules relating to development of SEZs, increased monitoring of the sector
by regulatory agencies, tightening of rules for lending to the real estate sector and increase of key rates
by the RBI several times during the last one year, have arrested the growth of the sector. There is a need
to streamline government policies and introduce reforms to boost the real estate sector.
Challenges faced by the Industry
The key challenges that the Indian real estate industry is facing today are:
lack of clear land titles,
absence of title insurance,
absence of industry status,
lack of adequate sources of finance,
shortage of labor,
rising manpower and material costs
approvals and procedural difficulties.
The Indian real estate sector has traditionally been an unorganized sector but it is slowly evolving into a
more organized one. The sector is embracing professional standards and transparency with open arms.
The major established domestic players in the sector are DLF, Jaypee, Unitech, Hiranandani
constructions, Tata housing, Godrej properties, Omaxe, Parsvanath and many more. International
players who have made a name for themselves in India include Hines, Tishman Speyer, Emaar
properties, Ascendas, Capitaland, Portman holdings and Homex.
The road ahead India has huge potential to attract large foreign investments into real estate. With real
estate reaching a point of saturation in developed countries and the demand and prices falling, global real
estate players are looking at emerging economies such as India for tapping opportunities in real estate.
Indian real estate will stay attractive due to its strong economic fundamentals and demographic factors.
Moreover, there is a high level of global uncertainty looming over the developed and developing nations
of the world. While developed economies are still struggling to regain their growth momentum,
developing countries including India and china are expected to grow at a reasonably high rate.
Investments in Indian real estate will fetch higher returns for investors as compared to other global
markets. In the coming years, the opportunities in the real estate sector will attract more global players to
India and hence will help the industry to mature, become more transparent, improve management and
adopt advanced construction techniques.
4.24 SWOT Analysis of Earth Infrastructures Limited(EIL)
Strengths:
1. EIL is a zero debt company that means no financial debt from financial institutions.
2. It is one of the finest few players delivering green building concept. It has been recognized
as a LEED certified.
3. In a span of 3 years it has more than 9 operating projects across india and around 1300
employees working in the company.
4. The company has tie up with International Associations building and Design Partner LBBP
from Netherlands, EIGEN from U.K (designed Burj Khalifa)
Weaknesses:
1. EIL is moving towards becoming a listed company.
2. It has just been 3 years for the company so it is new in the real estate sector.
3. A project takes at least 5 years of time to get completed and since company is just 3 years
old it has not yet delivered any of the projects.
Opportunities:
1. EIL works on a green building concept, this concept is an international concept and new in
india and in future it has a huge amount of scope.
2. It is a zero debt company and which will help lead the company to compete at international
company.
3. EIL has strong management in place which gives an opportunity to the company to acquire
designed land pieces.
Threats:
1. A company has to face a lot of stiff competition as the company is newly established and
there are many well established players in the market.
2. There are many new companies coming up in real sector as there is no such governing
authority to restrict the entry and exit of the companies.
3. There are unavoidable government interventions which many times hamper the delivery of
the projects near Greater Noida Extentio
CHAPTER 5- RESEARCH METHODOLOGY
To study the prospects of Financial Planning in the growing economy like INDIA. People should come
out of the concept of just keeping their money in Saving Account and Fixed Deposits and should
concentrate on their financial planning to maximize returns by taking proper guidance from financial
planner.
One of the most important users of research methodology is that it helps in identifying the problem,
collecting, analyzing the required information data and providing an alternative solution to the problem.
It also helps in collecting the vital information that is required by the top management to assist them for
the better decision making both day to day decision and critical ones.
Research Design:
This project is more of an exploratory research with more of qualitative analysis than quantitative. The
data collection method for this project begins with finding a sample of population. The population for
this project was the entire New Delhi, Gurgaon and Noida region.
The research methodology adopted was both primary and secondary. Questionnaire was designed and
interviews both direct and through telephone were undertaken, to ascertain the investor’s behavior as
well as to depict the future prospects and growth momentum of the wealth management industry. For the
purpose of the study 50 investors were picked up at random and their views solicited on different
parameters.
Research Problem:
Expanding needs and proliferation of financial products are making it difficult for individuals to invest
without planning. Most are aware that planning is critical; yet don’t have the time or the expertise to
develop a plan and therefore the role of financial planner comes in picture.
Factors considered for the analysis:
There exists a potential growth in the portfolio management industry and thus this project authenticates
the feasibility of financial planners in the market. A return of investment depends upon the preference of
HNI’s towards:
Risk
Horizon
Liquidity
Where as in the test, keeping the age factor of the respondent between 30-45 years risk being the most
dominating factor among the above listed three factors.
Keeping into consideration that higher risk fetches higher returns.
Research Tool and Questionnaire:
The questionnaire is a structured technique for collecting primary data in a survey. It is a series of
written or verbal questions that are related to the study of the objective for which the respondent
provides answers.
Most of the questions asked were close ended, as they are quick to answer; the respondents were
employees who have very little time to spare from. Also, at the time of analysis close-ended answers are
always easy to code and interpret. Most of the questions asked by the employees were at 5-pointLikert
scale technique was used to classify the raw data.
It is said that a good questionnaire ends with a comment section that allows the respondent to record any
other issues not covered in the questionnaire. This is one way of avoiding any frustration on the part of
the respondent, as well as allowing them to express any thoughts, questions or concerns they might have.
Type of Research: The research design used in this project report is Exploratory followed by
Descriptive Research Design as the report attempts to describe and explain conditions by using
questionnaires to fully describe the study.
CHAPTER 6-DATA COLLECTION AND DATA ANALYSIS
Data Collection Method & Instruments:
The instrument for data collection was a structured questionnaire targeted towards people who do
investments. This questionnaire was designed to know the investment psyche of a person while investing
in the financial products.
Various HNIs were interviewed to get depth knowledge of how the financial sectors are helping them to
provide quality services and how the company is adding value to their existing portfolio. The mode of
communication was informal and friendly conversation, which does not limit discussion within a well-
defined boundary.
Introduction to Data Analysis:
When planning was completed the survey moved into the field and undertook the fieldwork, that is,
distribution and collection of facts, the total number of questionnaire distributed were hundred, out of
which only sixty were taken into analysis, few rejected due to incomplete data entry and few
questionnaires were not filled.
Questionnaire Respond:
Analysis of data
Researcher must breathe life into the cold data by skillful analysis and hence he need to follow the three
preliminary steps editing classifying and coding of data. The contents of data obtained in a survey were
carefully checked for any possible inconsistencies or incompleteness. Then came the careful content
analysis the data was then coded and tabulated according to the dummy tables prepared in advance with
the help of tally making and then finally the coded was interpreted to reach a final conclusion. For the
survey of the Portfolio Management of high net worth individuals at Earth Infrastructures limited, the
sample size of 50 investors was taken. Random sampling is used for survey. Focus is on high net worth
individuals at Earth Infrastructures limited in Delhi/NCR region. Most of the questions asked in
questionnaire were close ended, as they are quick to answer; the respondents were investors who have
very little time to spare from. Also, at the time of analysis close-ended answers are always easy to code
and interpret. Most of the questions asked to the investors were at 5-point Likert scale technique was
used to classify the raw data. In this, primary data was collected through survey (questionnaire), which
was hand distributed to the present investors of the company.
The Research Analysis is explained below:
Risk appetite:
6.1) I am willing to withstand minor fluctuations in my portfolio but prefer to invest in less risky
investments:
Table : 1
Strongly Disagree DisagreeNeither agree nor
disagreeAgree Strongly Agree
0 0 8 27 15
Graph:1
8
27
16
Willing to withstand minor fluctuations in my portfolio but prefer to invest in less risky investments
Strongly DisagreeDisagreeNeither agree nor disagreeAgreeStrongly Agree
Interpretation
As the above table and graph shows that out of 50 respondents 42 respondents in the Delhi/NCR Area
agree that they prefer less risky investments. The main problem is that at this time, the recession and the
Inflation make the investor think before investing a even a Rs.100. The remaining 8 respondents are
indifferent towards their investment decisions.
6.2) I prefer moderate returns but averse to taking high risk:
Table : 2
Strongly Disagree DisagreeNeither agree nor
disagreeAgree Strongly Agree
2 4 0 22 20
Graph: 2
24
22
20
Prefer moderate returns but averse to taking high risk
Strongly DisagreeDisagreeNeither agree nor disagreeAgreeStrongly Agree
Interpretation
As with the above analysis, it is found 42 respondents are risk averse and are satisfied with moderate
returns. And remaining 6 respondents are the risk takers and agree to take high risk with their
investment. It is common that this time most of the investors are looking for minimizing the risk and
maximizing their profit with the short time of period.
6.3) I seek potentially high investment returns, willing to accept higher risk:
Table : 3
Strongly Disagree DisagreeNeither agree nor
disagreeAgree Strongly Agree
20 22 0 4 2
Graph: 3
20
22
42
Seek potentially high investment returns, willing to accept higher risk
Strongly DisagreeDisagreeNeither agree nor disagreeAgreeStrongly Agree
Interpretation
As the above analysis gives the clear idea that most of the Investors does not like to take higher risks
irrespective of getting higher returns. Only 6 respondents out of 50 are ready to take higher risks
remaining 42 respondents are the risk averse.
Horizon:
6.4) I prefer to invest for not more than 1 year to get dependent returns:
Table : 4
Strongly Disagree DisagreeNeither agree
nor disagreeAgree Strongly Agree
18 15 0 9 8
Graph: 4
18
15
9
8
Prefer to invest for not more than 1 year to get dependent returns
Strongly DisagreeDisagreeNeither agree nor disagreeAgreeStrongly Agree
Interpretation
From the above data it is interpreted that 33 respondents invest their money for more than a year in
expectations of getting higher returns in long run. Only 17 respondents make investments for less than a
year in expectations of getting immediate returns out of their investments.
6.5) I am looking forward for an investment pertaining between 3-5 years with moderate returns:
Table : 5
Strongly Disagree DisagreeNeither agree nor
disagreeAgree Strongly Agree
10 7 0 18 15
Graph: 5
10
7
18
15
Looking forward for an investment pertaining between 3-5 years with moderate returns
Strongly DisagreeDisagreeNeither agree nor disagreeAgreeStrongly Agree
Interpretation
The analysis of the above data is that 33 respondents prefer investing in real estate for 3-5 years in
expectations of getting moderate returns in long run. Only 17 respondents make investments for less
than 3-5 years in expectations of getting immediate returns out of their investments.
6.6) I am seeking for an investment which consists of long horizon varying from 5 years + to get
potential returns:
Table : 6
Strongly Disagree DisagreeNeither agree nor
disagreeAgree Strongly Agree
17 13 0 15 5
Graph: 6
17
13
15
5
Seeking for an investment which consists of long horizon varying from 5 years + to get potential returns
Strongly DisagreeDisagreeNeither agree nor disagreeAgreeStrongly Agree
Interpretation
The analysis of the above data is that 20 respondents prefer investing in real estate for 5 and more years
in expectations of getting higher returns, as they believe the rates of the property would get increased at
a higher rate in long run and so they can get huge amount of profits. 30 respondents prefer making
investments for less than 5 years as they are satisfied with the amount of returns they get by investing in
that time horizon and wants to renew their investment portfolio.
Liquidity:
6.7) I am happy with an investment generating low but consistent returns:
Table : 7
Strongly Disagree DisagreeNeither agree
nor disagreeAgree Strongly Agree
1 4 0 22 23
Graph: 7
1
4
22
23
Happy with an investment generating low but consistent returns
Strongly DisagreeDisagreeNeither agree nor disagreeAgreeStrongly Agree
Interpretation
From the above data it is interpreted that 45 respondents makes investment in order to generate
consistent returns irrespective of the amount of the returns. Only 5 respondents are not expecting
consistent returns, they are ready to wait to receive the returns.
6.8) I am comfortable with an investment which gives moderate liquidity to my portfolio:
Table : 8
Strongly Disagree DisagreeNeither agree nor
disagreeAgree Strongly Agree
7 12 0 17 14
Graph: 8
7
12
17
14
Comfortable with an investment which gives moderate liquidity to my portfolio
Strongly DisagreeDisagreeNeither agree nor disagreeAgreeStrongly Agree
Interpretation
From the above data it is interpreted that 31 respondents invests in the portfolio which gives moderate
liquidity. The remaining 19 respondents are satisfied with their money invested in the real estate and are
not eager to liquidate it.
6.9) I seek substantial liquidity from my investment:
Table : 9
Strongly
DisagreeDisagree
Neither agree
nor disagreeAgree Strongly Agree
5 9 0 13 23
Graph: 9
5
9
13
23
Seek substantial liquidity from my investment
Strongly Disagree
Disagree
Neither agree nor disagree
Agree
Strongly Agree
Interpretation
From the above data it is interpreted that 36 respondents invests in the portfolio which gives substantial
liquidity from their investments. The remaining 14 respondents are those to whom liquidity is not of
vital importance and they are ready to wait for the returns.
7.1 Research Findings & Conclusion:
Risk Appetite
1) The investors go for less risky investments as they prefer to invest in safe schemes and keep a mindset of
conservativeness.
2) The investors who prefer high-risk investments are less as not all people are ready to do the experiment.
Horizon
1) The people who invest are distributed amongst the basis of long term or short term. Therefore people
who invest in less than one year or amidst 3-5 years or probably more than five is prolonged uniform if
not equal. The short-term investors are less as compared to the long run as the investors expects potential
returns out of their investments.
Liquidity
1) Many investors believe in getting consistent returns whether they are small in amount.
2) Moderate returns are what the people urge for.
3) High returns are favorable and equally demanded too.
7.2 Research Suggestions:
• Along with risk and returns, liquidity, tax benefits and other transactional charges should be
considered while investing.
• Financial Instruments with negative correlation in their past returns should be used in portfolio
because it helps in reducing the risk by diversifying the portfolio.
• Fixed Income securities with high liquidity should be included in portfolio, although they provide
very low returns, because high liquidity ensures the cash flow at the time of emergency cash
requirements and fixed income minimizes the overall risk of portfolio to a certain extent.
7.3 Limitations of the Project
As only Delhi and NCR region was dealt in the survey so it does not represent the view of the
total Indian market.
The sample size was restricted with fifty respondents.
There was lack of time on the part of respondents.
The survey was carried through questionnaire and the questions were based on perception.
There may be biasness in information by market participant.
Complete data was not available due to company privacy and secrecy.
Some people were not willing to disclose the investment profile.
BIBLIOGRAPHY
Books:
1. Rustagi, R.P. “Investment Analysis and Portfolio Management” ISBN:81-8054-632-7,
(2nd Edition) Sultan Chand & Sons
Chapter 1- “Understanding Investment”, Page- 3
Chapter 10- “Risk-Return Analysis in Investment”, Page- 337
Chapter 11- “Portfolio Theory: Portfolio Selection and Management”, Page- 369
2. Khatri, Dhanesh Kumar, “Security Analysis and Portfolio Management” ISBN: 978-
0230-32878-5, Rajiv Beri for Macmillion Publishers India Ltd
Chapter 1- “Conceptual Background to Investment”, Page- 1
Chapter 15- “Portfolio Analysis”, Page- 362
3. Constantinides, G. M. & Harris & Stulz R. M. “Handbook of the Economics of Finance:
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Internet:
www.earthinfra.com
www.google.com
www.wikipedia.com
www.usq.edu.au/~/media/USQ/Business-Law/.../Penny%20Clarkpdf.ashx
www.iiste.org/Journals/index.php/IEL/article/download/1079/999
QUESTIONNAIRE
Name
Age of Respondent:
Gender: Date:
Risk appetite:
1) I am willing to withstand minor fluctuations in my portfolio but prefer to invest in less
risky investments:
□ Strongly Disagree
□ Disagree
□ Neither agree nor disagree
□ Agree
□ Strongly Agree
2) I prefer moderate returns but averse to taking high risk:
□ Strongly Disagree
□ Disagree
□ Neither agree nor disagree
□ Agree
□ Strongly Agree
3) I seek potentially high investment returns, willing to accept higher risk:
□ Strongly Disagree
□ Disagree
□ Neither agree nor disagree
□ Agree
□ Strongly Agree
Horizon:
1) I prefer to invest for not more than 1 year to get dependent returns:
□ Strongly Disagree
□ Disagree
□ Neither agree nor disagree
□ Agree
□ Strongly Agree
2) I am looking forward for an investment pertaining between 3-5 years with moderate
returns:
□ Strongly Disagree
□ Disagree
□ Neither agree nor disagree
□ Agree
□ Strongly Agree
3) I am seeking for an investment which consists of long horizon varying from 5 years + to
get potential returns:
□ Strongly Disagree
□ Disagree
□ Neither agree nor disagree
□ Agree
□ Strongly agree
Liquidity:
1) I am happy with an investment generating low but consistent returns:
□ Strongly Disagree
□ Disagree
□ Neither agree nor disagree
□ Agree
□ Strongly Agree
2) I am comfortable with an investment which gives moderate liquidity to my portfolio:
□ Strongly Disagree
□ Disagree
□ Neither agree nor disagree
□ Agree
□ Strongly Agree
3) I seek substantial liquidity from my investment:
□ Strongly Disagree
□ Disagree
□ Neither agree nor disagree
□ Agree
□ Strongly Agree
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