PGDFM 14-15

RESEARCH REPORTRELEVANCE OF PORTFOLIO INVESTMENT AND MANAGEMENT

ByAnkit Agrawal Varin Lunia

Under the guidance ofProf. Aneesh Day

Post-Graduate Diploma in Financial Management (PGDFM)Symbiosis Institute of Business ManagementPune2014 2015

DECLARATION

We, Ankit Agrawal & Varin Lunia, hereby declare that the research report, titled Relevance of portfolio investment and management submitted to Symbiosis Institute of Business Management, is a record of original and independent research work done by us during 2014-2015 under the supervision and guidance of Prof. Aneesh Day, PGDFM and it has not formed the basis for the award of any Degree/Diploma/Associate ship/fellowship or other similar title of recognition to any candidate of any University.

Date:AnkitVarin

CERTIFICATE

This is to certify that the research report, titled Relevance of portfolio investment and management submitted to Symbiosis Institute of Business Management, in partial fulfillment of the requirements for the award of the Degree of Post Graduate Diploma in Financial Management, is a record of original research work done by Ankit and Varin, during the period 2014-2015 of their study in the Department of Management Studies at Symbiosis Institute of Business Management, Pune, under my supervision and guidance and the report has not formed the basis for the award of any Degree/Diploma/Associate ship/Fellowship or other similar title of recognition to any candidate of any University.

Date:Prof. Aneesh Day

ACKNOWLEDGEMENT

We would like to express our profound gratitude to all those who been instrumental in the preparation of this project report. We wish to place on record, our deep gratitude to our Subject Co-Ordinator Prof. Aneesh Day, for his expert advice and help.We would like to thank

for their support and encouragement.Lastly, I would like to thank God, Elders and Friends for their constant help and support.

AnkitVarin

TABLE OF CONTENTS -

SNO.TOPICPAGE

1EXECUTIVE SUMMARY

2CHAPTER 1 : INTRODUCTION

3CHAPTER 2 : LITERATURE REVIEW

4CHAPTER 3 : RESEARCH DESIGN

5CHAPTER 4 : DATA COLLECTION ANALYSIS

6CHAPTER 5 : FINDINGS & CONCLUSIONS

7APPENDIX

8BIBLIOGRAPHY

9CERTIFICATION

Table of Contents

Executive summary8CHAPTER 1:10CHAPTER 2 :21CHAPTER 3 :32SAMPLE SIZE :33OBJECTIVES :33DATA COLLECTION METHODS :34LIMITATIONS OF THE STUDY :35CHAPTER 4 :37CHAPTER 5 :41CONCLUSION42On the whole it can be concluded that there is no conclusive evidence which suggests that any form of investing if superior to others but it can be said that most of the investors(normal people with limited income) prefer to invest their money through mutual funds.42Each investment scheme has its own advantage , strengths and weaknesses. However it was found out that equity related funds give more returns but also attach a high risk with them to the investor. On the other hand investing in safer instruments like bank deposits, government bonds gives investors assured return with no risk. Investors who invest the money with the aim to safely path their savings usually go with this alternative. Mutual funds stand out of this investing league is because of their diversified investment in different sectors which assures safety and greater returns compared with investing in the same sector. Therefore investors have a variety of choices to path their savings in the area which they according to their future plans and objectives.42FINDINGS43It would be desirable to review the various aspects of the present study and an attempt has been made for the same to provide the important findings of the study.431)All the equity related funds invested in high growth, current high importance sectors like Energy, Infrastructure, IT, Telecom etc.432)The one year equity related funds is higher than other funds. It provides principal of high risk high return.433)The investment scheme of investors is mostly to earn money with a very few aiming to keep it as a secure investment.434)To maintain liquidity mutual funds have cash holdings of nearly 20% out of there total assets.435)Average cost, average price in one time investment was found to be less in comparison to other investing ways.436)Growth fund options gives investors good returns as well as capital appreciation.43SUGGESTIONS441)Best time to invest in stock market is when it is down because with the same investment money he/she would get more value.442)Mutual funds is the best way for new investor to enter in share markets with limited money sand wanting to earn reasonable returns on their investment.443)Diversification of portfolio is must as it will reduce the unsystematic risk and give the return an edge.444)Those who are risk averse must invest in open-ended funds because they can look at the past performance of the fund under consideration.445)Mutual fund companies must device fund considering the end investor in mind.44BIBLIOGRAPHY 45APPENDIX 46

Executive Summary

In todays world of uncertainty it is important for every individual to allocate his/her funds and manage risks. It is important to ensure that the funds are invested in a safe, secured and productive area. Portfolio investment is a very easy and convenient way of investing funds in a productive way but has an amount of risk involved with it. It helps an individual to invest his/her money in different sectors of business according to their wish. This also gives them an opportunity to allocate their funds in different areas so as to minimize the risk attached to it. Portfolio investment is a very common and easy method for all sections of the society to invest their money. It is controlled and co-ordinated by the SEBI (securities and exchange board of India). Investment analysis and portfolio management course objective is to help entrepreneurs and practitioners to understand the investments field as it is currently understood and practiced for sound investment decisions making.

The other basic objectives are: 1) SAFETY: We can get close to ultimate safety for our investment funds through the purchase of government-issued securities in stable economic systems, or through the purchase of the highest quality corporate bonds issued by the economy's top companies. Such securities are arguably the best means of preserving principal while receiving a specified rate of return.

2) INCOME: The safest investments are also the ones that are likely to have the lowest rate of income return, or yield. Investors must inevitably sacrifice a degree of safety if they want to increase their yields. This is the inverse relationship between safety and yield: as yield increases, safety generally goes down, and vice versa.

3) TAX PLANNING: Since taxation is an important variable in total planning, a good portfolio should enable its owner to enjoy a favorable tax shelter. The portfolio should be developed considering not only income tax, but capital gains tax, and gift tax, as well. What a good portfolio aims at is tax planning, not tax evasion or tax avoidance.

CHAPTER 1: INTRODUCTION

About the industry

A portfolio investment is a passive investment in securities, none of which entails in active management or control of the securities' issued by the investor. Portfolio investment is investment made by an investor are not particularly interested in involvement in the management of a company.It is also the investment in securities that is intended for financial gain only and does not create a lasting interest in or effective management control over an enterprise.It includes investment in an assortment or range of securities, or other types of investment vehicles, to spread the risk of possible loss due to below expectations performance of one or a few of them. Portfolio management is the practice of managing funds for an institution by researching and analyzing potential investments and deciding where to allocate funds. The institution can be a large business (i.e. bank), a nonprofit like a university with a large endowment, or a small independent fund. Not only does portfolio management vary on the institution, but by the type of investments that are managed. A range of investment vehicles can be managed including retail or mutual funds, institutional funds, hedge funds, trust and pension funds, commodity and high net worth investment pools, or fixed income investment funds.

HistoryWhile talking about investingportfolios, very few people are confused by the term. An investment portfolio is a collection of income-producing assets that have been bought to meet a financial goal. If went back 50 years in a time machine, however, no one would have the slightest clue what you were talking about. It is amazing that something as fundamental as an investment portfolio didn't exist until the late 1960s.

TheWastelandsIn the 1930s, before the advent of portfolio theory, people still had "portfolios." However, their perception of the portfolio was very different, as was the primary method of building one. In 1938, John Burr Williams wrote a book called "The Theory of Investment Value" that captured the thinking of the time: thedividend discount model. The goal of most investors was to find a good stock and buy it at the best price. Whatever an investor's intentions, investing consisted of laying bets on stocks that you thought were at their best price. During this period, information was still slow in coming and the prices on theticker tapedidn't tell the entire story. The loose ways of the market, although tightened via accounting regulations afterThe Great Depression, increased the perception of investing as a form of gambling for people too wealthy or haughty to show their faces at the track.

In this wilderness, professional managers likeBenjamin Grahammade huge progress by first getting accurate information and then by analyzing it correctly to make investment decisions. Successful money managers were the first to look at a company'sfundamentalswhen making decisions, but their motivation was from the basic drive to find good companies on the cheap. No one focused onriskuntil a little-known, 25-year-old grad student changed the financial world.

Serendipity strikesThe story goes thatHarry Markowitz, then a graduate student in operations research, was searching for a topic for his doctoral thesis. A chance encounter with a stock broker in a waiting room started him in the direction of writing about the market. When Markowitz read John Burr Williams' book, he was struck by the fact that no consideration was given to the risk of a particular investment.

This inspired him to write "Portfolio Selection," first published in the March 1952Journal of Finance. Rather than causing waves all over the financial world, the work languished in dusty library shelves for a decade before being rediscovered.

One of the reasons that "Portfolio Selection" didn't cause an immediate reaction is that only four of the 14 pages contained any text or discussion. The rest were dominated by graphs and numerical doodles. The article mathematically proved two old axioms: "nothing ventured, nothing gained" and "don't put all your eggs in one basket."The interpretations of the article led people to the conclusion that risk, not the best price, should be the crux of any portfolio. Furthermore, once an investor'srisk tolerancewas ascertained, building a portfolio was an exercise in plugging investments into the formula.

"Portfolio Selection" is often considered in the same light as Newton's "Philosophiae Naturalis Principia Mathematica;" someone else would have eventually thought of it, but he or she probably would not have done so as elegantly.

Implications for Investors

Markowitz's work formalized the investor trade-off. On one end of the investing teeter-totter, there are investment vehicles like stocks that are high-risk with high returns. On the other end, there aredebt issueslike short-termT-billsthat are low-risk investments with low returns. Trying to balance in the middle are all the investors who want the most gain with the least risk. Markowitz created a way to mathematically match an investor's risk tolerance and reward expectations to create an ideal portfolio.

He chose the Greek letterbetato represent thevolatilityof a stock portfolio as compared to a broad marketindex. If a portfolio has a low beta, it means it moves with the market. Mostpassive investingand couch-potato portfolios have low betas. If a portfolio has a high beta, it means it is more volatile than the market.

Despite the connotations of the word volatile, this is not necessarily a bad thing. When the market gains, a more volatile portfolio may gain significantly more, when the market falls, the same volatile portfolio may lose more. This style is neither good nor bad, it is just prey to more fluctuation.

Investors were given the power to demand a portfolio that fit theirrisk/rewardprofile rather than having to take whatever their broker gave them.Bullscould choose more risk;bearscould choose less. As a result of these demands, theCapital Assets Pricing Model(CAPM) became an important tool for the creation of balanced portfolios. Together with other ideas that were solidifying at the time, CAPM and beta created theModern Portfolio Theory(MPT).

The Bottom Line

The implications of MPT broke over Wall Street in a series of waves. Managers who loved their "gut trades" and "two-gun investing styles" were hostile toward investors wanting to dilute their rewards by minimizing risk.

The public, starting withinstitutional investorslike pension funds, won out in the end. Today, even the most gung-ho money manager has to consider a portfolio's beta value before making a trade. Moreover, MPT created the door through which indexing and passive investing entered Wall Street.

About the topicThe term investing could be associated with the different activities, but the common target in these activities is to employ the money (funds) during the time period seeking to enhance the investors wealth. Funds to be invested come from assets already owned, borrowed money and savings. By foregoing consumption today and investing their savings, investors expect to enhance their future consumption possibilities by increasing their wealth.But it is useful to make a distinction between real and financial investments. Real investments generally involve some kind of tangible asset, such as land, machinery, factories, etc. Financial investments involve contracts in paper or electronic form such as stocks, bonds, etc. The key theoretical investment concepts and portfolio theory are based on these investments and allow to analyze investment process and investment management decision making in the substantially broader context.

Corporate finance typically covers such issues as capital structure, short-term and long-term financing, project analysis, current asset management. Capital structure addresses the question of what type of long-term financing is the best for the company under current and forecasted market conditions; project analysis is concerned with the determining whether a project should be undertaken. Current assets and current liabilities management addresses how to manage the day-by-day cash flows of the firm. Corporate finance is also concerned with how to allocate the profit of the firm among shareholders (through the dividend payments), the government (through tax payments) and the firm itself (through retained earnings). But one of the most important questions for the company is financing. Modern firms raise money by issuing stocks and bonds. These securities are traded in the financial markets and the investors have possibility to buy or to sell securities issued by the companies. Thus, the investors and companies, searching for financing, realize their interest in the same place in financial markets. Corporate finance area of studies and practice involves the interaction between firms and financial markets and Investments area of studies and practice involves the interaction between investors and financial markets. Investments field also differ from the corporate finance in using the relevant methods for research and decision making. Investment problems in many cases allow for a quantitative analysis and modeling approach and the qualitative methods together with quantitative methods are more often used analyzing corporate finance problems. The other very important difference is, that investment analysis for decision making can be based on the large data sets available form the financial markets, such as stock returns, thus, the mathematical statistics methods can be used.But at the same time both Corporate Finance and Investments are built upon a common set of financial principles, such as the present value, the future value, the cost of capital). And very often investment and financinge analysis for decision making use the same tools, but the interpretation of the results from this analysis for the investor and for the financier would be different. For example, when issuing the securities and selling them in the market the company perform valuation looking for the higher price and for the lower cost of capital, but the investor using valuation search for attractive securities with the lower price and the higher possible required rate of return on his/ her investments.Together with the investment the term speculation is frequently used. Speculation can be described as investment too, but it is related with the short-term investment horizons and usually involves purchasing the salable securities with the hope that its price will increase rapidly, providing a quick profit. Speculators try to buy low and to sell high, their primary concern is with anticipating and profiting from market fluctuations. But as the fluctuations in the financial markets are and become more and more unpredictable speculations are treated as the investments of highest risk. In contrast, an investment is based upon the analysis and its main goal is to promise safety of principle sum invested and to earn the satisfactory risk.

There are two types of investors: individual investors; Institutional investors. Individual investors are individuals who are investing on their own.Sometimes individual investors are called retail investors. Institutional investors are entities such as investment companies, commercial banks, insurance companies, pension funds and other financial institutions. In recent years the process of institutionalization of investors can be observed. As the main reasons for this can be mentioned the fact, that institutional investors can achieve economies of scale, demographic pressure on social security, the changing role of banks.One of important preconditions for successful investing both for individual and institutional investors is the favorable investment environment.Our focus in developing this course is on the management of individual investors portfolios. But the basic principles of investment management are applicable both for individual and institutional investors.

* Direct versus indirect investingInvestors can use direct or indirect type of investing. Direct investing is realized using financial markets and indirect investing involves financial intermediaries.The primary difference between these two types of investing is that applying direct investing investors buy and sell financial assets and manage individual investment portfolio themselves. Consequently, investing directly through financial markets investors take all the risk and their successful investing depends on their understanding of financial markets, its fluctuations and on their abilities to analyze and to evaluate the investments and to manage their investment portfolio.Contrary, using indirect type of investing investors are buying or selling financial instruments of financial intermediaries (financial institutions) which invest large pools of funds in the financial markets and hold portfolios. Indirect investing relieves investors from making decisions about their portfolio. As shareholders with the ownership interest in the portfolios managed by financial institutions (investment companies, pension funds, insurance companies, commercial banks) the investors are entitled to their share of dividends, interest and capital gains generated and pay their share of the institutions expenses and portfolio management fee. The risk for investor using indirect investing is related more with the credibility of chosen institution and the professionalism of portfolio managers. In general, indirect investing is more related with the financial institutions which are primarily in the business of investing in and managing a portfolio of securities (various types of investment funds or investment companies, private pension funds). By pooling the funds of thousands of investors, those companies can offer them a variety of services, in addition to diversification, including professional management of their financial assets and liquidity.Investors can employ their funds by performing direct transactions, bypassing both financial institutions and financial markets (for example, direct lending). But such transactions are very risky, if a large amount of money is transferred only to ones hands, following the well known American proverb don't put all your eggs in one basket (Cambridge Idioms Dictionary, 2nd ed. Cambridge University Press 2006). That turns to the necessity to diversify your investments. From the other side, direct transactions in the businesses are strictly limited by laws avoiding possibility of money laundering.

Types of investing and alternatives for financingCompanies can obtain necessary funds directly from the general public (those who have excess money to invest) by the use of the financial market, issuing and selling their securities. Alternatively, they can obtain funds indirectly from the general public by using financial intermediaries. And the intermediaries acquire funds by allowing the general public to maintain such investments as savings accounts, Certificates of deposit accounts and other similar vehicles.

CHAPTER 2 : LITERATURE REVIEW

Article 1Ahmed Masood observes that the early 90s in the investment sector was marked by a huge increase in the portfolio (equity and bond) investment in developing countries. The year 1990, 1991, 1992 saw an unprecedented increase in privateportfolio investmentflows to developing countries, increasing from $7.6 billion in 1989 to $20.3 billion in 1991, and are estimated to have reached over $27 billion in 1992. Portfolioequityinvestment increased 15-fold, from $0.4 billion in 1989 to over $6.0 billion in 1991, and are estimated to have reached $5.2 billion in 1992. The year 1991-92 also saw a remarkable growth of international bond financing by developing countries.The recent surge inportfolioflows is of interest to developing country policymakers for a variety of reasons. First, as part of a broader resumption of private market financing, these flows signal the return to market access after the decade of the debt crisis for a number of mainly middle-income developing countries. Second, the very different nature of these flows--compared with the syndicated bank lending of the 1970s and the early 1980s--reflects important structural changes that have taken place on both the borrowing and lending sides over the past decade. These changes include the growing importance of institutional investors as the source of long-term finance, even as commercial banks have cut back their activities in this area. And in the developing countries themselves, there has been a parallel movement away from public sector dominated borrowing to a more balanced mix of access to foreign capital by private corporations and sovereign borrower alike.This sudden increase in investment were the signal of the return to market access after the decade of the debt crisis for a number of mainly middle-income developing countries. In the developing countries themselves, there has been a parallel movement away from public sector dominated borrowing to a more balanced mix of access to foreign capital by private corporations and sovereign borrower alike.Theportfolio investmentflows have, however, been concentrated in a few countries, primarily in Latin America. Five countries--Argentina, Brazil, Mexico, South Korea, and Turkey--accounted for over two thirds of the cumulative total grossportfolio investmentflows between 1989 and 1992. Mexico, which led the process of restoring access to voluntary financing by previously debt-distressed countries, was the largest recipient of bothportfolioequity and bond financing flows. Moreover, most of the increase in the supply of private funds went to private borrowers, especially "blue chip" companies that have a good credit rating in their own right in international capital markets.Portfolioequity flows also help to reduce the cost of capital for companies in emerging markets and introduce an important element of risk sharing between international investor and host country. Some analyst mention push" effect of the unusually low interest rates prevailing in the United States, that led to this sudden increase in the portfolio investment sector. While others give the pull effect and there are even a few that give both the reasons of this sudden increse in the investment sector.Much of the initial growth inportfolio investmentwas financed by returning flight capital. Domestic nationals with substantial overseas holdings also continue to be a major investor category, particularly forportfolioflows to Latin America. But these individual investors have been joined by a more diverse--and potentially much bigger-group of institutional investors. These institutional investors, which include pension funds and life insurance companies, are motivated primarily by theportfoliodiversification benefits that accrue frominvestinga small part of their large overall holdings in developing country obligations. They generally have a longer-terminvestmenthorizon and look for stability and long-term growth prospects in the market in which they invest. Recent research has shown that even though developing country stock markets are more volatile than developed markets, they have not been found to be correlated with one another or with developed markets

ARTICLE 2Hanafizadeh Payam observes that over the period of time portfolio investment has gained a lot of importance throughout the world. Earlier it was taken as investment sceme only available for rich people who could afford big risks and high investments. But with the upcoming of mutual funds, competiton and consumer satisfaction all the sections of the society have an opportunity to invest their money in portfolios. There was a major assault on the idea that investors could consistently beat the market by picking winning stocks. Sharpe's model suggests that the market is efficient and that the research-gathering and extra transaction costs incurred by stock-picking activities cannot be expected to yield superiorinvestmentperformance. According to this view, a stock's price quickly reflects all known information about its value. Only unanticipated information would cause the stock to deviate from its expected performance. Obviously, such unanticipated information frequently occurs, but it occurs randomly and is equally likely to be negative or positive. As a result, an investor cannot predict future price changes, and thus cannot reliably discern winning stocks in advance.It has a bit of risk involved in it with even the knowledable managers failing to invest successfully in the share market. It is a speculation in which every individual has its own opinion and perspective. This article also focuses on asset class investing scheme. As passive management evolves into the indexing of more precisely defined sectors of the economy, we move away from the world of individual security selection into the more modern world of asset-classinvesting.Practitioners can pursue an asset-classinvestingstrategy by using index mutual funds to gain an almost generic access to the various sectors of the capital markets. This strategy has important cost and theoretical advantages for our clients. In this context, practitioners recommending a 1950s boutique-style of security selection operate at a severe disadvantage.Various investing ideas have also been focused on like :Focus on investing in a more diversified market and in different industriesTo invest both in capital and consumer market based companies.To invest in companies of different countries.To first understand the portfolio and its limit and then proceed with investment. A portfolio might not be capable of investing in a risk containg company.

ARTICLE 3Gooptu sudarshan observes the new approach presented in this article included portfolio formation by considering the expected rate of return and risk of individual stocks and, crucially, their interrelationship as measured by correlation. Prior to this investors would examine investments individually, build up portfolios of attractive stocks, and not consider how they related to each other. Markowitz showed how it might be possible to better of these simplistic portfolios by taking into account the correlation between the returns on these stocks.The diversification plays a very important role in the modern portfolio theory. Markowitz approach is viewed as a single period approach: at the beginning of the period the investor must make a decision in what particular securities to invest and hold these securities until the end of the period. Because a portfolio is a collection of securities, this decision is equivalent to selecting an optimal portfolio from a set of possible portfolios.

The method that should be used in selecting the most desirable portfolio involves the use of indifference curves. Indifference curves represent an investors preferences for risk and return. These curves should be drawn, putting the investment return on the vertical axis and the risk on the horizontal axis. The investors are assumed to prefer higher levels of return to lower levels of return, because the higher levels of return allow the investor to spend more on consumption at the end of the investment period. Thus, given two portfolios with the same standard deviation, the investor will choose the portfolio with the higher expected return. This is called an assumption of Nonsatiation.Investors are risk averse. It means that the investor when given the choise, will choose the investment or investment portfolio with the smaller risk. This is called assumption of risk aversion.The most often used measure for the risk of investment is standard deviation, which shows the volatility of the securities actual return from their expected return. If a portfolios expected rate of return is a weighted average of the expected rates of return of its securities, the calculation of standard deviation for the portfolio cant simply use the same approach. The reason is that the relationship between the securities in the same portfolio must be taken into account. Indifference curves represent an investors preferences for risk and return. These curves should be drawn, putting the investment return on the vertical axis and the risk on the horizontal axis.

The expected rate of return of the portfolio can be calculated in somealternative ways. The focus was on the end-of-period wealth (terminalvalue) and using these expected end-of-period values for each security in the portfolio the expected end-of-period return for the whole portfolio can be calculated. But the portfolio really is the set of the securities thus the expected rate of return of a portfolio should depend on the expected rates of return of each security included in the portfolio. Because a portfolios expected return is a weighted average of the expected returns of its securities, the contribution of each security to the portfolios expected rate of return depends on its expected return and its proportional share from the initial portfolios market value (weight). Nothing else is relevant.ARTICLE 4Hogan Paula H. observes that Portfoliostrategy subsumes a set of decision-making rules which determine the composition and development of aportfolioin a strategic business area. A strategic business area (SBA) is a distinct environmental segment in which the firm does (or intends to do) business. In a turbulent environment, probable social, political, economic and technological perturbation may affect any estimations of profitability of each SBA and such evaluations should take account of probable fluxes in the future ([5] Ansoff and McDonnell, 1990).Strategic asset allocation (SAA) and determining the referenceportfoliois the principal phase ininvestment. SAA not only establishes the composition of the long-term normalportfoliobut also represents the interface around which tactical decisions can be made; this is necessary in taking advantage of imbalances in shorter-term market situations. Scenario planning has significant applications in the field of strategic management and facilitating decision making under uncertainty, and hence this study aims to integrate scenario planning and the preference ranking organisation method for enrichment evaluations (PROMETHEE) method to propose a new methodology to design aportfolio. The methodology has been designed in two stages, the first of which identifies theinvestmentenvironment in Iran and defines possible scenarios for the future based upon the opinion of experts and uncertainties established in the identified environment. In the second stage, the views of experts are elicited on business area performance within each scenario. The business areas are subsequently ranked based on their final performance scores in each scenario area using the PROMETHEE method. Through use of a linear programming model, the percentage ofinvestmentin each business area is then determined according to the net flow of the area (i.e. the priority of a certain area relative to others). Theportfoliodesign in an Iranianinvestmentcompany has been considered as a case study. The building industry and cement industry have been selected as preferable strategic business areas based on hypothetical scenarios forinvestment environment in Iran over five years (2008-2012) and the strategies of theinvestmentcompany. Strategic asset allocation (SAA) and determining the referenceportfoliois the principal phase ininvestment. SAA not only establishes the composition of the long-term normalportfoliobut also represents the interface around which tactical decisions can be made; this is necessary in taking advantage of imbalances in shorter-term market situations; in this regard, SAA is extremely important and has significant influence on the performance of theportfolio.The conclusion that can be reached from the expert opinions regarding business area performance in the final scenarios is that in the storm scenario, financial and trade services and mineral and metal industries will perform less effectually. In the recession scenario, the performance of mineral and metal industries and the petrochemical industry will be weakened but that of the cement industry and financial and trade services will remain almost unaffected, while the construction industry shall remain unchanged or perhaps will see a slight improvement. The dynamicity of today's environment in which organizations operate gives rise to many uncertainties. Accordingly, theportfoliostrategy performance of the country is impacted by the dynamicity of the environment. The main objective ofportfoliodesign is to determine the right combination of profitable industries, which enable the organization to achieve its expectations of theinvestmentstrategy. The present financial methods for selectingportfoliohave lost their efficiency in today's uncertain and agitated environment.

CHAPTER 3 : RESEARCH DESIGN

TITLE :RELEVANCE OF PORTFOLIO INVESTMENT AND MANAGEMENTSCOPE :In the present study an attempt has been made to understand the importance of a good portfolio in the minds of the consumers in Pune City. The scope is limited to certain MNCS and EDUCATIONAL INSTITUTIONS and RESIDENTIAL APARTMENTS only. We have taken interviews, distributed questionnaires, referred articles/journals and come to a conclusion. Investors have different views and opinions about portfolio which affect their success in the investing schemes. SAMPLE SIZE : The sample frame consists of Young Adults ( Aged 19-24 ) and Middle Aged Persons ( Aged 25 & above ) which consists of employees working in MNCS and EDUCATIONAL INSTITUTIONS.50 people will be taken into consideration overall.

OBJECTIVES :1. To find out the importance of porfolios in the field of investing.2. To understand investors behavior or attitude towards investing and the factors affecting it.3. To gain knowledge on the different field of investing.4. To study the effect on economy by understanding the working of share markets.

HYPOTHESIS :1. Portfolio investment is the most effective way to path your savings in a productive manner.2. Income level is the only factor that influences a portfolios success.

DATA COLLECTION METHODS : The various methods using which data was collected are :1. Questionnaire

2. Internet websites

PLAN OF ANALYSIS :Quantitative method to be used and graphs to be used for each question to be depicted in a more convenient manner.

LIMITATIONS OF THE STUDY :

1. The portfolio published by the various asset management companies might not be the real one.2. Some of the questionnaire have not been filled seriously.3. Most of the people had no knowledge about investing and share markets.

GLOSSARY :

Perception Understanding or ideaAttitude Mental OutlookBrand A kind or variety of something distinguished by some distinctive characteristicLoyalty FaithfulnessStrategy Plan of actionMotivator Something that incitesTariff Tax or FeeIndispensable Necessary Regime Leadership of OrganizationLiberalize Remove or loosen restrictionsConceptualize To form into a conceptSatisfaction State of being contentEvaluate To Determine or set the value ofExplicit Clearly developed or formulatedIntrinsic Basic or InbornExtrinsic Foreign or AcquiredCues Signal to actRobust Healthy or strongReferred MentionedDemographic Relating to the structure of populationsCredibility The quality of being trustedInconspicuously Not noticeable or prominent Entice Allure or persuadeImpulse Drive or resolveExpedition A voyage made for some purpose

CHAPTER 4 : DATA COLLECTION ANALYSIS

Primary Source ( Questionnaire Analysis ):

In the 1st Question What is your main aim of investing , it was noticed that majority of the people invest their money with the main objective of making profits followed by both securing and making profits through investing. While least number of people(20%) invest just to secure their money and keep it safe.

In the 2nd Question Does your income level determine your investment, it was noticed that most of the investors believe that income level plays a very crucial role in investing your money. While very few of them do not take income into consideration before investing.

In the 3rd Question What is the level of risk you are willing to take out of your savings, it was observed that majority of people are willing to risk their maximum of 40% savings while very few are bold enough to invest 40-70% of their savings. Young Adults concentrated majorly on the 40-70% risk level.

In the 4th Question How much money do you save in a month, it was noticed that majority of the people save around Rs10000-30000 a month. A few also save Rs30000-50000 a month with minimum falling under the range of Rs50000 and above.

In the 5th Question Do you think social aspects should be taken into consideration before investing, it was noticed that majority of the people said yes to this question while around 36% of the people said they wont consider the social aspects before investing. Social aspects include culture, norms, ethics, religion and many other things.

In the 6th Question which of the following according to you is the most secured investment field, it was noticed that majority of the people believe that mtual funds and followed by NSCs and venture capitalist. Basically people were not sure about their answers and it was noticed that all the options got almost equal voting.

In the 7th Question according to you how long should an ideal portfolio be, it was noticed that majority of the people think that 5 to 7 years is the best lifetime of a portfolio followed by 2 to 5 years. While most of them feel portfolio more than 7 years is not ideal.

In the 8th Question How much return on investment do you expect from your portfolio, it was observed that most of the investors expect a return of 20% and above followed by 15 to 20%. While very few of them expect a return of less than 15 % which states that most of the people invest with an objective of earning huge profits.

In the 9th Question which of these do you think affects a portfolio the most, it was observed that all the three factors changes in market conditions, changes in investment circumstances and asses mix in portfolio have equal influence in a portfolios success.

In the 10th Question To what extent do you believe advertisements, it was noticed that majority of the Teenagers believed advertisements to a large extent. Majority of the Young Adults and Middle-Aged people believed advertisements to a small extent. A minute of them from all the three age groups believed advertisements always.

CHAPTER 5 : FINDINGS & CONCLUSIONS

CONCLUSIONOn the whole it can be concluded that there is no conclusive evidence which suggests that any form of investing if superior to others but it can be said that most of the investors (normal people with limited income) prefer to invest their money through mutual funds.Each investment scheme has its own advantage , strengths and weaknesses. However it was found out that equity related funds give more returns but also attach a high risk with them to the investor. On the other hand investing in safer instruments like bank deposits, government bonds/T-Bills gives investors assured return with no risk. Investors who invest the money with the aim to safely path their savings usually go with this alternative. Mutual funds stand out of this investing league is because of their diversified investment in different sectors which assures safety and greater returns compared with investing in the same sector. Therefore investors have a variety of choices to path their savings in the area which they according to their future plans and objectives.

FINDINGSIt would be desirable to review the various aspects of the present study and an attempt has been made for the same to provide the important findings of the study.

1) All the equity related funds invested in high growth, current high importance sectors like Energy, Infrastructure, IT, Telecom etc.2) The one year equity related funds is higher than other funds. It provides principal of high risk high return.3) The investment scheme of investors is mostly to earn money with a very few aiming to keep it as a secure investment.4) To maintain liquidity mutual funds have cash holdings of nearly 20% out of there total assets.5) Average cost, average price in one time investment was found to be less in comparison to other investing ways.6) Growth fund options gives investors good returns as well as capital appreciation.

SUGGESTIONS

1) Best time to invest in stock market is when it is down because with the same investment money he/she would get more value.2) Mutual funds is the best way for new investor to enter in share markets with limited money sand wanting to earn reasonable returns on their investment.3) Diversification of portfolio is must as it will reduce the unsystematic risk and give the return an edge.4) Those who are risk averse must invest in open-ended funds because they can look at the past performance of the fund under consideration.5) Mutual fund companies must device fund considering the end investor in mind.

BIBLIOGRAPHY

Ackert, Lucy F., Deaves, Richard (2010). Behavioral Finance. South-Western Cengage Learning. Arnold, Glen (2010). Investing: the definitive companion to investment and the financial markets. 2nd ed. Financial Times/ Prentice Hall.Black, John, Nigar Hachimzade, Gareth Myles (2009). Oxford Dictionary of Economics. 3rd ed. Oxford University Press Inc., New York. Bode, Zvi, Alex Kane, Alan J. Marcus (2005). Investments. 6th ed. McGraw Hill. Encyclopedia of Alternative Investments/ ed. by Greg N. Gregoriou. CRC Press, 2009. Fabozzi, Frank J. (1999). Investment Management. 2nd. ed. Prentice Hall Inc.Francis, Jack C., Roger Ibbotson (2002). Investments: A Global Perspective. Prentice Hall Inc. Gitman, Lawrence J., Michael D. Joehnk (2008). Fundamentals of Investing. Pearson / Addison Wesley.

www.google.comwww.proquest.comwww.yahoo.com

APPENDIX QUESTIONAIRE

NAME :

AGE GROUP : ( 15-18 ) ( 19-24 ) ( 25 & Above )

FAMILY INCOME APPROX :

PHONE :

1) What is your main aim of investing?Securing the moneyEarning profitsBoth

2) Does your income level determine your investment?YesNo

3) What is the level of risk you are willing to take out of your savings ?0-25%25-40%40-70%70-100%

4) How much money do you save in a month?Up to 10,00010,000 to 3000030000 to 5000050,000 & above

5) Do you think social aspects should be taken into consideration before investing?YesNo

6) Which of the following according to you is the most secured investment field (according to todays market scenario) ?Mutual fundsStock MarketsVenture CapitalistNSCs (National Savings Certificate)Boolean market(commodity market)If others, please specify ____________________________________

7) According to you how long should an ideal portfolio be?0-2 years2-5 years5-7 years7 or above

8) How much return on investment do you expect from your portfolio?0-15%15-20%20% and above.

9) Which of these do you think affects the portfolio the most?Changes in the market conditionsChanges in investment circumstancesAssest mix in the portfolio

10) According to you to, to what extent is advertisement helpul in getting more knowledge about the markets?No extentSmall extentLarge extentAlways

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