PROJECT REPORT A Research Study on Investment & Wealth Management Business A Portfolio Analysis For HSBC Bank
ACKNOWLEDGEMENT On this threshold of my life when I look back to thank a few people who helped me immensely in completion of my tasks, a few word seem to less. May be I should thank a many people who have made me what I am today. For completion of this project I would very sincerely thank my project coordinator Mrs. XYZ (Financial Planning Manager). Without whom the completion seemed - Mission Impossible. His guidance gave me a great insight about the ways of data collection and the sources of data collection. I would also like to thankXYZ for their sincere help. I would also like to thank to all the HSBC Jodhpur Staff Members, Specially for CAT team for their support & co-operation. Finally I express my regards to my college staff especially DrXYZ for their immense help and support in completion of my project.
• Introduction -Organization structure - Company milestones • Financial Services Personal Financial Services Commercial Banking Corporate Banking Investment Banking a) Fixed Deposits b) Mutual funds c) SIP d) Insurance • HSBC Tie-Up with TATA-AIG • Research Methodology • SWOT Analysis • Analysis & interpretation • Findings • Limitation • Recommendation • Questionnaire • Bibliography • Abbreviation • Conclusion
4 5 10 12 15 17 18 31 33 38 43 45 46 67 70 71 72 75 77 78
PREFACE Practical part is an essential part of management studies as it helps one to visualize the management practices in the field and the theoretical aspects of which we have learnt in the classroom.
This research study of investment & wealth management business analysis is based on financial market (wealth maximization options) , I have completed this research by collecting past quantitative data of financial market and about the financial instruments performance in the market. This research study has done on Several type of investment options which are very popular in the market (MF, SIP, TMD, INS). This research provides us knowledge of investment options and the a way to managing our wealth in a profitable way . This training constitutes an integral part of my master of business administration at INTERNATIONAL INSTITUTE OF PLANNING & MANAGEMENT
(NEW DELHI). The training period consist of 30 days from January 29nd to 28th Febraury 2009
It was very challenging as well as interesting for me to work on this kind of topic investment & wealth management business analysis. I have learnt practical & theoretical aspects which has implemented by the company in its business practices.
INTRODUCTION HSBC Company History: The HSBC Group is named after its founding member, The Hongkong and Shanghai Banking Corporation Limited, which was established in 1865 to finance the growing trade between Europe, India and China. The inspiration behind the founding of the bank was Thomas Sutherland, a Scot who was then working for the Peninsular and Oriental Steam Navigation Company. He realized that there was considerable demand for local banking facilities in Hong Kong and on the China coast and he helped to establish the bank, which opened in Hong Kong in March 1865 and in Shanghai a month later. Soon after its formation the bank opened agencies and branches around the world. Although that network reached as far as Europe and North America, the emphasis was on building up representation in China and the rest of the Asia-Pacific region. HSBC was a pioneer of modern banking practices in a number of countries. In Japan, where a branch was established in 1866, the bank acted as adviser to the government on banking and currency. In 1888, it was the first bank to be established in Thailand, where it printed the countryâ€™s first banknotes. From the outset trade finance was a strong feature of the local and international business of the bank, an expertise that has been recognized throughout its history. Bullion, exchange, merchant banking and note issuing also played an important part. By the 1880s, the bank was acting as banker to the Hong Kong government and also participated in the management of British government accounts in China, Japan, Penang and Singapore. In
1874 the bank handled China’s first public loan and thereafter issued most of China’s public loans.
What is HSBC? We are the world’s local bank. Headquarters in London, HSBC is one of the largest banking & financial services organization in the world. HSBC’s international network comprises over 9500 offices in 76 countries & territories in Europe, the Asia-Pacific region, the Americas, the Middle East & Africa. With listings on the London, Hongkong, New York, Paris & Bermuda stock exchange shares in HSBC holdings places are held by nearly 200,000 shareholders in some 100 countries & territories. The shares are traded on the New York stock exchange in the form of American Depository Receipts. Through an international network linked by advertisement techniques, including a rapidly growing e-commerce capability, HSBC provides a comprehensive range of financial services like1. 2. 3. 4.
Personal financial services Commercial Banking Corporate Banking Investment Banking
THE HSBC GROUP IN INDIA Year of commencement of operations in India The Mercantile Bank of India, China & London : 1853 The Hongkong & Shanghai Banking Corporation Limited (HBAP) : 1867 HSBC Securities & Capital Markets (India) Private Limited (HBAP) : 1995 HSBC Private Equity Management (Mauritius) Limited (India liaison Office) (PEIN) : 1995 HSBC Electronic Data Processing India Private Limited (HDPI) : 2000 HSBC Primary Dealership (India) Private Limited (HCPD) : 2001 HSBC Professional Services (India) Private Limited (HPSI) : 2001 HSBC Software Development (India) Private Limited (HSDI) : 2002
HSBC Asset Management (India) Private Limited (ISIN) HSBC Insurance Brokers (India) Private Limited (ININ) HSBC Operations & processing enterprise(India) Pvt. Ltd. (HOPE) Canara HSBC Oriental bank of commerce Life insurance co. Ltd.
Offices in india HBAP : HSCI : PEIN : HDPI : HPSI : HSDI : ININ : HOPE : AMIN : HFHI :
57 2 1 8 1 4 5 13 18 01
Number Of employees as at 31st july 2008 8,532 109 13 16,650 54 5,882 20 3,274 168 01 34,307
: 2002 : 2003 : 2003 : 2008
THE HONGKONG & SHANGHAI BANKING CORPORATION LIMITED (HSBC) Zone
No. of Branches
Kolkata Bihar Chhattisgarh
7 1 1
Mumbai Ahmedabad Pune Thane Vadodara Indore Nagpur
9 1 2 1 1 1 1
New Delhi Gurgaon Chandigarh Noida Jaipur Jodhpur Ludhiana Lucknow
5 1 1 1 1 1 1 1
Chennai Kochi Coâ€™atore Banglore Hyderabad Trivandrum Visakhapatnam Mysore
2 1 1 2 1 1 1 1
The HSBC Group commenced operations in India in 1867 with a branch in Calcutta. They claim an earlier commencement, as the Mercantile Bank of India, China & London, which the group acquired in 1959, was established in 1853, with a branch in Bombay. The Bank has relocated some branches in Mumbai, New Delhi, Chennai, Banglore, Kolkata & Visakhapatnam from what were once important trade centres to more appropriate present day locations that hold our target customer base.
PERSONAL FINANCIAL SERVICES (PFS) HSBC India offers a wide range of competitively priced services & products to over 1.75 million individual resident Indians as well a Non-resident Indian customers across India, USA, UK, Middle East & South East Asia. HSBC’s 150 year presence in India allows it to enjoy the advantage of deep rooted knowledge of local markets & customs. This has lead to development of products & services, which are attuned to the financial needs of Indians in the cities where HSBC operatives. The HSBC brand is associated with core values such as transparency, trust & honesty. These factors enable HSBC India to remain highly competitive & at the leading edge of the retail & commercial banking market in the country. The distribution network in India consists of 47 branches in 26 cities supported by 170 ATMs at 142 locations. In addition, self service banking channels, such as Internet Banking & a 24 hour centralized all India Call Centre provide a strong backbone to the distribution capabilities. A second load balancing Call Centre became operational in January 2005 at HSBC Operations & Processing Enterprise (India) Private Limited, Chennai. Customers can apply for all products & services online at www.hsbc.co.in The bank offers a complete suite of products & services including HSBC Premier International, HSBC Premier, Power Vantage, Savings & Current Accounts, International Debit Cards & Term Deposits in addition to consumer loan products like International Credit Cards, Mortgage, Personal Loans, Educational loans & Overdrafts. HSBC is the 6th largest Credit Card issuer in India with over 1.3 million cards in force. Premier & mid market customers have access to comprehensive Financial Planning & HSBC is a market leader in the provision of Wealth Management services. In 2005,HSBC was the largest distributor of Retail Mutual Funds in India, & the biggest sales channel for Banc assurance partner TATA AIG. Non-Resident Indians (NRI’s) constitute 56% of the Bank’s deposit base. The banking a needs of NRIs are fulfilled from branches in India & 11 NRI centres abroad. We have over 84,000 NRI Customers, & have started referring customers to Financial Planning Managers & the Private Bank in
the host countries, to address their needs for investment products. A free remittance service is offered between accounts held by NRIs with HSBC
overseas & onshore. In 2006, an International Banking Centre was established facilitate cross border business referrals. In October 2005, HSBC launched an onshore Private Banking proposition branded HSBC Private Banking. The proposition targets clients with minimum assets of INR 25 M & encompasses asset classes such as Real Estate, Equity Derivatives & Commodities. This is an addition to Fixed Income & Equities, which are already being offered. The proposition uses â€œActive Advisoryâ€? as its cornerstone & key differentiator. The Bank has sought RBI approval to establish a separate consumer finance branch network under a non banking financial institution, which will distribute personal loans & ancillary products to a broader segment of the Indian consumer base than is currently served by the Bankâ€™s existing product portfolio. The personal loan product is being piloted through the bank branch network & initial results are promising.
Wealth Management & Branch Banking HSBC has 47 branches Pan-India across 26 locations. Wealth Management services are delivered to customers through qualified Wealth Management across each of these branches. Wealth Management helps customers develop & execute a realistic & practical long term savings, investments & protection plans by investing in mutual funds, bonds & purchase of insurance products manufactured by TATA AIG. Qualified, trained & accredited Wealth Management assist customers in charting a road map to achieve their individual financial goals & protect their family from unforeseen eventualities keeping in mind their available resources & based on each customers independent risk profile. Wealth Management services is currently offered to HSBC Premier & Power Vantage customers
COMMERCIAL BANKING HSBC is a leading provider of financial services to small, medium-sized and middle-market enterprises. The Group has over 43,000 such customers in India, including sole proprietors, clubs and associations, incorporated businesses and publicly quoted companies. Commercial Banking provides a full range of banking services to these customers including multi-currency business accounts, payment and cash management, trade services, factoring and a range of borrowing solutions. In India, Commercial Banking has a presence in 47 branches covering 26 key cities and for the convenience of our customers, a multi channel service including Internet and Phone banking. For SME customers, HSBC offers the complete range of transaction baking services as well as unsecured loans and loans for and against property. The services are supported by a large Sales and Relationship Management team in key locations across the country. India is the first country in the HSBC Group where Commercial Banking lends to Microfinance Institutions, thus providing indirect funding to hundreds of small business owned and run by members of underprivileged sections of society. A dedicated unit has been formed to focus on Microfinance and other Priority Sector institutions, with a view to further reach out to the marginalized and under banked.
Factoring HSBC India offers a comprehensive range of Factoring and Supply Chain Finance Solutions, which include the following products: For Vendors/Suppliers/Purchase Channel of our corporate customers Payables Financing Purchase Order Financing For the Sales Channel of our corporate customers Factoring (With or Without Credit Protection) Export Factoring (With or Without Credit Protection) 12
Portfolio Invoice Discounting (With partial credit protection) Distributor Finance
Payables Financing: HSBC India’s Payable Financing product enables companies to finance their payables to vendors. This helps companies to provide immediate liquidity to vendors against their supplies at competitive rates and will enable the company to negotiate better pricing terms with vendors. It also enables the vendors to improve their cash flow by providing continuous liquidity against their receivables. Our payables financing products can be structured either against Bills of Exchange or Accepted Invoices. Purchase Order Financing: is a facility to suppliers of our Corporate Banking Clients to finance their pre shipment working capital requirements. Pre shipment working capital lines are sanctioned to the supplier’s against Purchase Orders issued to the suppler. Factoring: This is a service that covers the financing and collection of account receivables in domestic trade. Receivables are factored, by HSBC with added service of credit protection, collection and sales ledges administration. Thus the management of the company may concentrate on production and sales and need not concern itself with non-core activities like collection and sales ledger administration. Export Factoring: enables companies to finance their open account export sales at competitive rates either in Rupees or Foreign Currency. Through a network of overseas based correspondent factors, HSBC provides credit protection against buyer default and collection services. Portfolio Invoice Discounting: Essentially covers purchase of receivables with partial credit protection based on a First Loss Deficiency Guarantee. The portfolio should be well spread with acceptable levels of concentration and the debtors must have had a satisfactory track record with the company. A field audit will be conducted to determine portfolio quality based on which a First Loss Deficiency Guarantee percentage will be agreed.
Collection remains the responsibility of the Corporate with repayments either on a pre-agreed schedule or based on actual collections.
Distributor Finance: is currently offered to the distribution channel of Large Corporate Banking Clients and can be structured to suit the specific requirements of each corporate and its distribution channel. Through the Distribute Finance Program, HSBC finances companyâ€™s dealers, which will assist the company in providing steady, assured credit to its distribution chain.
Payments and cash management Integrated domestic and regional cash management solutions are provided to corporate and institutional customers in India. The suite of offerings under the cash management umbrella includes comprehensive Receivables Management solutions, with an endeavor to completely integrate with the customerâ€™s back-end operating systems and processes. HSBC is the leading foreign bank in India in providing capital market solutions, which include Bankers to Issue, Escrow account Services and Dividend payments solutions. Six Sigma measurement practices are followed for our operational capabilities. HSBC net, the HSBC Groupâ€™s online real time web-enabled corporate banking platform, allows customers to execute financial transactions, obtain international financial market information and review details of their domestic and international accounts form anywhere in the world, 24 hours a day.
Trade (international and domestic) service HSBC offers a wide range of international and domestic Trade products. In India, we offer one of the largest trade processing capabilities among peer banks, spread across 5 cities. Each of our Trade processing centers is ISO 9001-2000 certified. We work closely with Group Offices overseas and leverage our extensive global network to offer structured, tailor made solutions to a wide range of customers. Our clients in India include large India and multinational companies, Mid Market companies as well as customers in the Small and Medium Enterprises segment.
CORPORATE AND INSTITUTIONAL BANKING Corporate Banking (CB) is an integral part of the Global Banking structure, which focuses on offering a full range of service to multinationals, large domestic corporate and institutional clients. Provides a wide range of banking and financial services provided to domestic and international operations of large local corporate and local operations of multinationals corporations. Services include access to commercial banking products, including working capital facilities such as domestic and international trade operations and funding, channel/distributor financing, and overdrafts, as well as domestic and international collections and payments, INR and Foreign currency term loans (external commercial borrowing in foreign currency), letters of guarantee etc. Institutional Banking drives the Groupâ€™s relationship with banks, financial institutions, securities houses, insurance companies, and asset management companies and other non-banking companies, non-government and development organizations operating in India. Market leadership position based on strong relationships with major financial institutions. Investment Banking and Markets brings together the advisory and financing, equity Securities, equity linked transactions, asset management, treasury and capital markets, and private equity activities of the Groups to complete the Global Banking structure and provide a complete range of financial products to our clients. Clients are serviced by sector based client service teams that combine relationship managers, product specialists and industry specialists to develop customized financial solutions. These form the relationship team along with the Investment Banking structure and provide a complete range of financial products to our clients. Clients are serviced by sector based client service teams that combine relationship managers, product specialists and industry specialists to develop
customized financial solutions. These form the relationship team along with the Investment Banking & Advisory division. Each team supports the
client’s local and global needs, ensuring a full understanding of the company’s business and financial needs. Based on our client’s requirement, HSBC assigns Global Relationship Management teams to provide structured solutions for all its needs. Our Global Relationship Management teams are tasked with understanding in depth the sectors in which our clients operate with the aim of adding value through detailed industry knowledge and structured financial solutions. Focus on overseas acquisition financing, corporate finance and advisory roles, overseas cash management opportunities, cross border funding, project & export finance through concerted marketing with all product providers. The Corporate Bank (CB) in India was top ranked (1 st overall) in the 2005 Greenwich Survey with a Greenwich Quality Index (GQI) of 647. Currently CB manages approx. 470 CB relationships with total advances of approx. USD 1.08Bn as at end of Dec05 and total deposits of USD .98Bn. Sectoral account management- Improved industry knowledge andsector4 expertise. The CB portfolio is largely spread within the following sectors divided as under: Corporates
Consumer Brands Industrials &Technology Energy and Utilities Telecommunications Automotive Healthcare Transport and Logistics Media
Banks Financial Institutions Securities MutualFunds/AssetManagement Companies Insurance Financial Sponsors Business Process Outsourcing (BPO’s) Broker and Dealers
INVESTMENT BANKING 1. HSBC FIXED DEPOSITS When it comes to assured returns, choosing the right type of savings scheme makes all the difference. HSBC Fixed Deposits let you make the most of value-added benefits as you create wealth at low risk. Features & Benefits The superior Fixed Deposit to invest in, for a secure future • You can now open a Fixed Deposit with Rs. 10,000 only • Enjoy high rate of returns on your HSBC Fixed Deposits • Choose from a wide range of tenors as per your convenience • Avail of our special rates for select tenors Interest Rates Fixed Deposit Period Interest Rate Senior Citizen’s Interest (% p.a.) Rate** (% p.a.) 7 days 3.00 3.25 8 to 14 days 3.00 3.25 15 to 29 days 3.50 3.75 30 to 59 days 4.25 4.50 60 to 89 days 5.25 5.50 90 to 179 days 5.25 5.50 180 to 269 days 5.50 5.75 270 to 12 months 8.00 8.25 366 to 399 days 8.00 8.25 400 days 8.75 9.00 401 to less than 18 months 7.25 7.50 18 months to 730 days 7.50 7.75
731 days 732 to less than 36 months
Certificate of Deposit Earn interest for funds invested from 15 days to one year, with HSBC’s Certificate of Deposit (CDs). CDs can be availed by individuals (other than minors), corporations, banks, companies, trusts, funds, associations etc. Non-Resident Indians (NRIs) may also subscribe to CDs on a non-repatriable basis only. Advantage • Tenure – A Certificate of Deposit is issued for a period not less than 15 days & not exceeding 1 year from the date of issue. • Transfer Mechanism – Certificate of Deposit held in a physical form are freely transferable by endorsement & delivery. Those in demat form can be transferred as per the procedure applicable to other demat securities.
2. MUTUAL FUNDS It is a type of investment where a number of investors money is pooled together & used by the fund manager(referred to as the Asset Management Company or AMC) to invest in underline securities inline with the objectives of the scheme. By this method you can achieve a much wider spread of investments than if you were investing directly in the underlying investments. It is generally accepted that by spreading your investment you are spreading your risk, therefore investing in mutual funds is considered to be lower risk than direct investment. When you invest in mutual funds you do not own the underlying investments but have a claim to a number of units in the fund representing the size of your investment. The value of each unit of the mutual fund scheme, calculated based on the market value of the underlying investments after deducting expenses and liabilities, is referred to as the â€™Net Asset Valueâ€™ or NAV. The first time a mutual fund scheme is available for purchase is referred to as a New Fund Offering or NFO.
Important Characteristics Of A Mutual Fund 1-
A mutual fund actually belongs to the investors who have pooled their funds is in the hands of the investors. 19
Investment professionals and other service providers, who earn a free for their services, from the fund, manage a mutual fund.
The pool of funds invested in a portfolio of marketable investments. The value of the portfolio is updated every day. The investor’s share in the fund is denominated by “units”. The value of the units changes in the portfolio’s value, every day. The value of one unit of investment is called as the net asset value of NAV. The investment portfolio of the mutual fund is created according to the stated investment objectives of the fund.
Types of Mutual Funds There are thousands of different mutual funds offered on the market. They range from funds that include a broad variety of investments to funds that invest exclusively in single securities or narrow sectors of the market. With the many different investment styles and objectives, there’s bound to be a number of mutual funds that are suited to your investing profile. Each of these funds has expense, risk, and return characteristics. Be sure you understand these characteristics before you invest. There are 15 principal types of funds. We have listed them according to their primary objectives: growth, income, and specialized.
Balanced Funds Balanced funds seek to obtain the highest return consistent with a low-risk strategy. They hold a mix of common and preferred stocks, bonds and cash reserves. The mix can vary according to current market conditions. Balanced funds usually offer higher yields than pure stock funds. Balanced funds are generally the least risky of growth-oriented mutual funds. Growth and Income Funds Growth and income funds attempt to achieve both long-term growth and current income. They invest primarily in high-yield common stock, preferred stock, and convertible debt (bonds) to generate both growth and income. Because they include a mix of investments, these funds are typically less risky than growth funds. Growth Funds Growth funds seek long-term appreciation by investing in the stocks of established companies that may be poised for growth. These companies typically pay low dividends yet offer the potential for long-term capital
appreciation. Some growth funds limit their investments to specific sectors of the economy. Growth funds are generally less risky than aggressive growth funds. International and Global Growth Funds International and global mutual funds offer diversification into international stock markets. International funds invest only in foreign securities. Global funds, on the other hand, can invest in foreign and U.S. securities. The risks associated with investing on a worldwide basis include differences in regulation of financial data and reporting, currency exchange differences, as well as economic and political systems that may be different that those in the United States Aggressive Growth Funds Aggressive growth funds, sometimes known as "small-cap" funds, seek maximum capital gains. They invest primarily in the stock of smaller, less established companies. Since these companies generally pay little or no dividends, aggressive growth funds rely on capital growth for returns. These funds tend to be the riskiest of growth-oriented mutual funds. Money Market Funds Money market funds seek current income while maintaining a stable $1.00 per share net asset value by investing in short-term debt securities, including T-bills, certificates of deposit, commercial paper, and other highly liquid and safe securities. They offer modest current income and no potential for capital gains. They generally offer the lowest returns but the most safety of all fund types. Some money market funds also offer tax-free income. Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 a share, it is possible to lose money by investing in the fund. Government Securities Funds Government securities funds invest primarily in Treasury and government agency securities. Because they are issued or guaranteed by the U.S. government, they are considered the credit worthiest alternatives available
Government securities offer moderate current income and high safety. Treasury securities are backed by the full faith and credit of the U.S. government as to the timely payment of principal and interest. Government agency securities are not considered government obligations and therefore are not backed by the full faith and credit of the government. The principal value of these funds will fluctuate due to changes in interest rates. Municipal Bond Funds Municipal bond funds seek tax-free income by investing in the bonds of state and local governments. In many cases, it may be wise to consider municipal bond funds issued by your state because they may offer double or even triple tax-free income. In some states you will have to pay income tax if you buy shares of a municipal bond fund that invests in bonds issued by other states. In addition, while some municipal bonds in the fund may not be subject to regular income taxes, they may be subject to federal, state, or local alternative minimum tax. If you sell a tax-free bond fund at a profit, there are capital gains taxes to consider. As with all types of bond funds, the principal value will fluctuate with changes in interest rates. Corporate Bond Funds Corporate bond funds invest in debt securities issued by corporations. The risk of corporate bond funds may vary depending on the objectives of the fund. Because credit risk is somewhat higher, these funds may offer higher returns than funds specializing in government securities. Principal will fluctuate with changes in interest rates. High-Yield Bond Funds High-yield bond funds seek to maximize current income by investing in lower-quality â€” high-yielding â€” corporate bonds. The bonds held by these funds are generally rated BB or lower by rating agencies. They offer the high current yields to compensate for the greater risk of default. Since they are more volatile than and pay higher yields than investment grade bonds, they tend to be suited to investors with a high degree of risk tolerance.
Sector Funds Sector funds invest in specific industries or sectors of the economy, such as communications, aerospace and defense, or health care. While they may be diversified within a particular sector, they lack broad diversification. This increases their investment risk. These funds typically seek long-term capital appreciation. Growth-Income Funds Growth-income funds are specialists in blue chip stocks. These funds invest in utilities, Dow industrials, and other seasoned stocks. They work to maximize dividend income while also generating capital gains. These funds are suitable as a substitute for conservative investment in the stock market. Income Funds Income funds focus on dividend income, while also enjoying the capital gains that usually accompany investment in common and preferred stocks. These funds are particularly favored by conservative investors. Asset Allocation Funds Asset allocation funds don't invest in just stocks. Instead, they focus on stocks, bonds, gold, real estate, and money market funds. This portfolio approach decreases the reliance on any one segment of the marketplace, easing any declines. A plus factor is limited by this strategy as well. Precious Metal Funds Precious metal funds invest in gold, silver, and platinum. Gold and silver often move in the opposite direction from the stock market, and thus these funds can provide a hedge against investments in common stocks. Bond Funds Bond funds invest in corporate and government bonds. A common misunderstanding among investors is that the return on a bond fund is similar to the returns of the bonds purchased. One might expect that a fund that owns primarily 8 percent-yielding bonds would return 8 percent to investors. In fact, the yield from the fund is based primarily on the trading of
bonds, which are extraordinarily sensitive to interest rates. Thus, one could find a bond fund that was earning double-digit returns as the prime rate climbed from 4 percent to 6 percent. In addition to mutual funds, there are money market funds, which are essentially mutual funds that invest solely in government-insured short-term instruments. These funds nearly always reflect the current interest rates, and rarely engage in interest-rate speculation.
Mutual funds available through HSBC
AIG Global Investment Group Mutual Fund Birla Sun Life Mutual Fund DSP Merrill Lynch Investment Managers Fidelity Mutual Fund Franklin Templeton Mutual Fund HDFC Mutual Fund HSBC Mutual Fund ICICI Prudential Mutual Fund JPMorgan Mutual Fund Kotak Mahindra Mutual Fund Reliance Mutual Fund Standard Chartered Mutual Fund Sundaram BNP Paribas Mutual Fund Tata Mutual Fund
Benefits of Mutual Fund Reduction in risk: Mutual funds invest in a portfolio of securities. This means that all funds are not invested in the same Investment Avenue. Holding a portfolio that is diversified across investment avenues is a wise way to manage risk. When such a portfolio is liquid and marked to market, it enables investors to continuously evaluate the portfolio and manage their risks more efficiently. Reduction in transaction costs: Through the individual investorâ€™s contribution may be small; the mutual fund itself is large enough to be able to reduce costs in its transactions. These benefits are passed on to the investors. Portfolio Diversification: By offering readymade diversified portfolios, mutual fund enables investors to hold diversified portfolios. Through investors can create their own diversified portfolios, the costs of creating and monitoring such portfolios can be high, apart from the fact that investors may lack the professional expertise to manage such a portfolio. Liquidity: Open-ended funds are very liquid as the Mutual Fund companies offer an open window for redemption on all working days. The redemption proceeds are normally dispatched within three to four working days. Professional fund management: Investing in markets requires both knowledge and expertise. Experienced fund managers are able to trade or negotiate better deals, manage the price risk effectively, exploit trends and opportunities and constantly monitor the environment.
Tax efficiencies: Investing in mutual funds is tax efficient. If investors choose the growth option and stay invested for a year, they only pay long term Capital Gains of 20.4% of indexed returns or 10.2% of un indexed returns (whichever is lower). Diversification: Diversification is the core of any investment strategy. It allows you to minimize the risks associated with any investment. However, it is very difficult for individuals to have the requisite diversification for your investment given smaller portfolios and transaction costs. Mutual Funds can pool in the investments of thousands of investors and achieve the desired level of diversification for each.
FAQâ€™s Do all mutual funds carry the same investment risks? No, they do not. Some mutual funds have been designed for investors who are cautious, while others for investors who are aggressive in their outlook to risk. There are also funds designed for investors having a balanced outlook on risk. You therefore need to decide what level of investment risk you are happy to accept and then choose a mutual fund scheme, which matches your appetite for risk. How do I know which mutual fund scheme is right for me? This will depend upon the level of risk you are prepared to take, your investment horizon, what your investment objectives are and whether you have a particular preference in the type of securities you would like to invest in. However before you invest you need to ensure you fully understand the features and risks relating to the mutual fund scheme you ultimately decide to invest in.
What charges are involved? Charges do vary between different types of mutual fund schemes to reflect the level of management and the type of underlying security involved. However there are three main types of charges involved but you must refer to the offer document of the fund to find out exactly what charges are involved and their amounts. Initial charges – these expenses are incurred by the fund house for the scheme(s) before/during its launch towards marketing, publicity, advertising, registrar’s expenses, broker’s /agents’ commission etc. Subject to an overall limit (as a percentage of the corpus mobilized), these are subsequently amortized to the scheme over a few years. Annual Recurring Expenses (ARE) – These are charges towards the annual management of the scheme, including investment management, marketing, investor communication, registrar’s expenses and other expenses and other expenses directly attributable to the scheme. • Entry load This is a charge that is levied on investors at the time of investment into a scheme. Entry loads are typically restricted to equity funds and balanced funds and have the impact of reducing the net amount that is available for investment by the scheme. • Exit Charges/ Exit loads Although described as a charge it is really a penalty for early encashment. Not all mutual funds include this charge. This tends to be expressed as a percentage of the amount to be encashed. Some fund managers use this type of charge where the underlying securities are illiquid in nature or where they do not charge an initial charge or to discourage premature redemptions from close-ended funds. A variant of the exit loads is a Contingent Deferred Sales Charge (CDSC) where the exit load is charged on graded basis and declines with increasing time period.
What is the effect of these charges? The effect of the initial charge is to immediately reduce the amount available to purchase units. This means immediately after you invest the value of your investment will be below the amount you invested. This is one reason why you should be happy to leave your capital invested for the medium to long term to allow possible future growth to overcome the effect of the initial charge. The ARE will have the effect of reducing the overall returns you receive either in the income you receive or the capital growth you experience. This ARE is deducted from the overall value of the fund irrespective of whether the fund has made a profit or not therefore deduction of the ARE can also increase the loss the fund may have made. The effect of Entry Load would be to reduce the net amount available for investment by the fund. The effect of an Exit Load will be to reduce the actual amount you receive on encashment, which means you will receive less than market value of the underlying investment. Such a charge acts as a deterrent to early encashment. If I invest what am I committing to? You are committing to invest at least the minimum amount, which varies from fund to fund. In case of funds designed for a medium or long term horizon, you should also be prepared to commit your investment for the appropriate time horizon and not use capital that you might need in the short term, especially. With regard to close-ended funds, you should be prepared to commit funds for the complete tenor of the specific scheme. Any investment in mutual funds means that you are happy to take a degree of investment risk in return of the potential for superior returns than can be obtained from fixed deposits, in the full knowledge that this outcome is not guaranteed and that it is possible you could make a loss on your investment.
You should also consider carefully how much you want to commit to any; one type of investment, as over exposure to any particular investment is not recommended. Can I change my mind and encash my investments at any time? Yes you can. You will however incur any exit loads / CDSC as may be applicable and if the price of the units has moved against you, then you will experience a capital loss. In case of close-ended funds, premature exit costs can be especially steep. How do I keep track of my investment? Very easily, the price of units is available through a variety of sources including newspapers, the internet (at www.amfiindia.com), statements received from the AMC or direct enquiry to your HSBC Relationship Manager. What about tax? You should refer to the specific fund documentation for a full appreciation of the tax consequences of both the fund itself and any effect this will have on you personally. HSBC does not give tax advice and we recommend you consult your usual tax adviser for fuller details as to how you will be personally affected. The tax benefits and implications mentioned in any marketing material provided by the fund house are as per currently applicable tax laws and are subject to change in future.
3. SYSTEMATIC INVESTMENT PLAN (SIP) What is SIP? An SIP is a regular investment plan for purchasing units of a mutual fund scheme. Offered by mutual funds to help you save regularly.When investing in mutual funds, you would normally identify a scheme & invest a predetermined amount in it at its prevailing net asset value (NAV). If you invest a sum of Rs.10,000 at an NAV of Rs.10, you will receive 1,000 units. The timings of your investment in such a case may turn out to be favourable or unfavourable. Under SIP, however, your investment is staggered over a period. Instead of investing Rs.10,000 at one go, you might consider investing specified amounts in a scheme at pr-specified intervals. For instance, you could spread out the Rs.10,000 investment over 10 months, with Rs.1,000 being invested each month. The number of units that accrue to you on each periodic investment would depend on the NAV of the scheme prevailing at the time of your purchase. By doing this, you would have done away with the need to time the market. SIPâ€™s also in calculate some much needed discipline into your investing habits. . It is just like a recurring deposit with the post office or bank where you put in every month. The difference here is that the amount is invested in a mutual fund. The minimum amount to be invested can be as small as Rs.500 & the frequent investment is usually monthly or quarterly.
How an SIP works? 31
An SIP allows you to take part in the stock market without trying to second guess movements. An SIP means you to commit yourself to investing a fixed amount every month. Let Rs.1000 When the NAV is high, you will get fewer units. When it drops, you will get more Date NAV Approx number of units you will get at Rs.1000 Jan 1 10 100 Feb 1 10.5 95.23 Mar 1 11 90.90 Apr 1 9.5 105.26 May 1 9 111.11 Jun 1 11.5 86.95 Within six months, you would have 5,894 units by investing just Rs.1000 every month. How an SIP scores? It makes you disciplined in your savings. Every month you are forced to keep assured amount. This could either be debited directly from your account or you could give mutual fund post-dated cheques. As you see above, it helps you make money over the long term. Since you get more when the NAV drops & fewer when it rises, the cost average out over time. So over all the ups & downs of the market without any drastic losses. Also, a number of mutual funds do not charge an entry load if you opt for an SIP a percentage of the amount you are investing. & if you do not exit (sell your units a year of buying the units, you do not have to pay an exit load) (same as an entry load, except this is charged when you sell your units). If, however, you do sell your units within a year, you would be charged an exit low pays to stay invested for the long-run. The best way to enter a mutual fund is via an SIP. But to get the benefit of an SIP at least a three-year time frame is needed when you wonâ€™t touch your money.
Insurance, in law and economies, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the Premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. 1. A large number of homogeneous exposure units. The vast
majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004 (http://www.economicinsurancefacts.org/economics/state/insuredc ars/). The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called “law of large numbers,” which is effect states that as the number of exposure unit’s increases, the actual results are increasingly likely to become close to expected results. There are exceptions to this criterion. Lloyds of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent, large commercial property policies may insure exceptional properties for which there are no ‘homogeneous’ exposure units. Despite failing of this criterion, many exposures like these are generally considered to be insurable a. Definite Loss. The event that gives rise to the loss that is subject to insurance should, at least in principle, take placed at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory, Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable , Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information,could objectively verify all three elements.
2. Accidental Loss. The event that constitute the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be â€˜pure,â€™ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable. 3. Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance Premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonable assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer. 4. Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards (See FAS 113 for example), the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. 5. Calculable Loss. There are two elements that must be at least estimatable, if not formally calculable exercise, while cost has more to do with the ability of a reasonable presented under that policy to make a reasonably definite and objective of the amount of the loss recoverable as a result of the claim. 6. Limited risk of catastrophically large losses. The Essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issuer policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss
from a single event to some small portion of their capital base, on the order of 5%. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurer’s appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsures can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.
Insurer’s business model Profit = earned premium + investment income - incurred loss underwriting expenses. Insurers make money in two ways: (1) through underwriting, the process by insurers selects the risks to insure and decide how much in premiums to charge for accepting those risks and (2) by investing the premiums they collect from insured’s. The most difficult aspect of the insurance business is the underwriting of policies. Using a wide assortment of data, insurers predict the likelihood that a claim will be made against their policies and price products accordingly. To this end, insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Data is analyzed to fairly accurately project the rate of future claims based on a based on a given risk. Actuarial science uses statistics principles aura used to determine an insurer’s overall exposure. Upon termination of a given policy, the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer’s underwriting profit on that policy. Of course, from the insurer’s perspective, some policies
are winners (i.e., the insurers pays out more in claims and expenses than it receives in premiums and investment income)
Types of insurance Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as “perils”. An insurance policy will set out in details which perils are covered by the policy and which are not. Below is a (non-exhaustive) list of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set forth below. For example, auto insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims form causing an accident). A homeowner’s insurance policy in the U.S. typically includes property insurance covering damage to the home and owner’s belongings, liability insurance covering certain legal claims against the owner, and even a small amount of health insurance for medical expenses of guests who are injured on the owner’s property. Automobile insurance, know in the UK as motor insurance, is probably the most common from of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured’s vehicle itself. Throughout most of the United States an auto insurance policy is required to legally operate a motor vehicle on public roads. In some jurisdictions, bodily injury compensation for automobile accident victims has been changed to a no-fault system, which reduces or eliminates the ability to sure for compensation but provides automatic eligibility for benefits.
Aviation insurance insures against hull, spares, deductible, hull war and liability risks. Business insurance can be any kind of insurance that protects businesses against risks. Some principal subtypes of business insurance are (a) the various kinds of professional liability insurance, also called professional indemnity insurance, which are discussed below under that name; and (b) the business owners policy (BOP), which bundles into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners insurance bundles the coverage’s that a homeowner needs. Casualty insurance insures against accidents, not necessarily tied to any specific property. Credit insurance repays some or all of a loan back when certain things happen to the borrower such as unemployment, disability, or death. Mortgage insurance (which sees below) is a form of credit insurance, although the name credit insurance more often is used to refer to policies that cover other kinds of debt. Crime insurance insures the policyholder against losses from the criminal acts of third parties. For example, a company can obtain crime insurance to cover losses arising from theft or embezzlement. Crop insurance “Farmers use crop insurance to reduce or manage various risks associated with growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease, for instance. Health insurance policies will often cover the cost of private medical treatments if the National Health Service in the UK (NHS) or other publicly-funded health programs do not pay for them. It will often result in quicker health care where better facilities are available.
HSBC TIE-UP WITH TATA AIG Tata AIG Life Insurance Company limited(Tata AIG life) is a joint venture company, formed by the Tata Group and American International Group, Inc. (AIG). Tata AIG life combines the Tata Group’s pre-eminent leadership position in India and AIG’s global presence as the world’s leading international insurance and financial services organization. The Tata Group holds 74 percent stake in the insurance venture with AIG holding the balance 26 percent. Tata AIG life provides insurance solutions to individuals and corporates. Tata AIG life insurance company was licensed to operate in India on February 12,2001 and started operations on April 1,2001
A. UNIT LINKED INSURANCE PLAN (ULIP) Unit linked insurance products are different from the traditional insurance products and are subject to the risk factors of fluctuations in investment returns and possibility of increase in changes. The performance of the managed portfolios and funds is not guaranteed and the fund value may increase or decrease in accordance with the future experience of the managed portfolios and managed funds. The fund value during the period of continuance of policy and at maturity may be more or less than the premiums invested depending on market performance. Past returns are not necessarily a guide to future performance. The premium paid in unit linked life insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of the funds and factors influencing the capital market and the insured is responsible for his/her decisions. Buying a life insurance policy is a long-term commitment. An early termination of the policy usually involves high costs and the surrender value payable may be less than the total premiums paid.
Tata AIG Life Insurance Company Limited is only the name of the insurance company. Invest Assure II is only the name of the Unit Linked Life Insurance Contract and does not in any way indicate the quality of the contract, future prospects or returns. The various funds offered under this contract are the names of the funds and do not any ways indicate the quality of the contract, future prospects and returns.
B. Invest Assure II An inspirational that translates into a host of innovative products for you. Tata AIG Life introduces Invest Assure II, a unique investment linked insurance plan for flexibility and protection. Given a choice, many people would like to increase the earning potential of their insurance premium by deciding their own investment and risk limitations. Invest Assure II, a unique, flexible insurance plan combines to exploit the upside of market returns by investing in different kinds of securities through multiple fund options. What's more, you can direct the investments by creating your own investment fund portfolio from a range of options to suit your needs and preferences.
Enjoy Multiple Benefits-INVESTASSURE II Provides security to your family in case of the Life Insured’s unfortunate demise. Gives you the flexibility to choose your funds based on your risk profile. Enables you to enjoy marked-linked returns with a potential for higher growth.
C. Invest Assure Gold Invest Assure Gold, a non-participating whole Life Unit Linked Plan, which offers you the unique advantage of combining the protection and tax advantages of life insurance with the attractive prospects of investing in different kinds of securities through multiple fund options. And you can keep reaping the benefits for a lifetime! What’s more, you can direct the investments by creating your own investment fund portfolio from a range of options to suit your needs and performances. Key Benefits Choose your premium payment term; five years or for the entire duration of the policy Entry age: 30 days to 70years Benefit period: for the entire life till 100 years of age Facility to increase the premium through Top-Up Premium Provides security to your family in case of your unfortunate death Facility to increase the Sum Assured through Top-Up Premium Gives you the flexibility to choose your fund based on your risk profile – whole Life Mid Cap Equity, whole Life income, and whole life Short Term Fixed Income. You may choose to switch between the Funds, anytime Enables you to enjoy market-linked returns with a potential for higher growth Opportunity to bring you additional income on funds that might have otherwise given you minimum returns in your savings account, subject to market performance Loyalty benefit: Additional 0.25% of units under the Regular Premium Account every five years, provided the policy is in force.
Invest Assure Gold Offers you • • • • • • • • • • • • • •
Flexibility of Choosing The Amount of Death Cover Flexibility of Increasing Sum Assured Cover For the Whole of Life Loyalty Additions Flexibility in Paying Premiums Flexibility of Choosing your Investment Fund Flexibility of Switching Between Funds Flexibility of Topping-Up your premium Discontinuance of Premium within Three Years From Inception Flexibility of a Premium Holiday Flexibility of Partial withdrawal Flexibility of Policy Reinstatement Flexibility of Premium Mode Flexibility of Adding Rider
D. MahaLife: The Whole Life Plan Tata AIG Life’s MahaLife plan is truly one of a kind. For a start, it offers you way too many benefits: Only a 12 year premium paying period for lifetime coverage. th Guaranteed annual payment for life from the 12 policy anniversary onwards. Tax –free. On death or at maturity at age 100, the entire sum assured will be paid. Tax-free. th Cash dividends from the 6 policy anniversary onwards. Tax-free.
Premiums paid eligible for tax exemption benefit. As per current tax laws.
Who is eligible for this policy? The minimum age of eligibility for this policy is 30 days, which means, if you buy this policy for your child you only have to pay premiums for 12 years, after which the child gets an income as well as coverage for his entire life. The maximum age if eligibility is 50 years, which makes it ideal for you as well, because it provides both a pension and lifetime coverage.
RESEARCH METHODOLOGY The study undertaken by me was regarding a detailed analysis of MARKETING AND PROMOTION of HSBC products, studying its current scenario and studying the challenges and difficulties faced by HSBC bank.
Research Objective The main objective of my study is to find the main strategies, policies used & various sales promotional activities of HSBC bank in & Jodhpur sector. The data source being used under such type of study are mainly of 2 types: 1. Primary Data 2. Secondary Data Among which the former is being taken through the research undergone within the organizational level itself & various other organizing reforms only. While the latter had been taken through different statistical approaches or we can say through different marketing reforms.
SAMPLE PLAN: Data Source: Primary Data: The primary data are which are collected afresh and for the first time, and thus happen to be original in character. A primary survey was conducted at JODHPUR city. The survey was carried out at various levels & the target group was retail investors, business men, builders, industrialists, exporters, doctors etc. Questionnaires were used as an instrument to collect the primary data. This data was obtained by various promotion schemes like-
CANNOPIES- we put canopies in front of various financial institutions like banks, commercial places, and entertainment places like Agarwal tower, Shastri circle, Corporate hub etc. There people approach us and we give them the questionnaire to fill and provide the details of HSBC products. APPROACHING TO INDUSTRIAL UNITS - We approach to industrial areas like MIA, BASNI, HIA, Boranada industrial area and give the questionnaire to fill and explain the details of various HSBC products. Secondary sources: The Secondary data are those, which have already been collected and being processed through the statistical process. We got the secondary data through PREVIOUS TRANSACTION RECORDS-
i. We got the records of those people who have already invested in HSBC. ii. Through directory- We got the records of Exporters, Businessmen, architects etc. Marketing Approach: o Directly meeting them o Through telephonic calls o Through Canopies Population Definition • Element: Retail Investors, Business Men, Builders, Industrialists, Exporters, Senior Citizens, and others. • Sample Unit- JODHPUR City • Sampling Method- Simple Random Sampling • Sampling Size- Based on ages, income area etc. • Data collection- through directories, Previous records through friends and relatives
Modes of Marketing & Promotion Directly Approaching:We directly approach people to invest like builders, investors, exporters, businessmen, & even general mass. Telephonic Calls:We approach them through telephones and take appointments & then directly contact them for investment. Canopies:We put canopies in front of Banks, Financial Institutions & other public gathering places. There we approach people and take their telephone numbers. & contact them or even in canopies itself make them invest. Through Distribution Houses:Even most of our funds are promoted through distribution houses viz. Bajaj Capital, RR Investors, Alliance Capital, Reliance mutual funds etc. Through Brokers:Major part of our promotion & marketing is done through brokers, because they are more reliable for knowledgeable. Thus people trust them.
SWOT ANALYSIS STRENGTHS:1. Brand Name: The biggest strength is the tag of HSBC is going to be the largest group of MNC’s. 2. Compatible Price: Prices of different schemes of HSBC are much more compatible than others. 3. Diversified Schemes: We have diversified schemes, which is an exception case of HSBC. 4. Less Risk: Our debt schemes are 100% free form market risk. Even as our portfolio is that diversified so equities are also less risky than others. 5. Easy procedures for account opening too: We have an easy system for opening the account as it includes investment & being named as saving account for the costumer future benefits. 6. Debit cum ATM card facility: The main advantage of HSBC’s Debit cum ATM card is that you can access this card through any VISA supported ATM’s & withdraw your amount, without any single charge to be paid.
Prone to Market Risk: Mutual Funds depend on overall macro economic condition and market scenario.
Tough Competitions: There is a very tough competition because of large number of Asset Management Companies.
Incapability of Customers: HSBC only provides 2 types of account opening of which one is PVA (Power Vantage Account) under which an aqb of 1 lakh is to be maintained & the second one is Premier Account , under which an aqb of 25 lakh is to be maintained. This is sometimes beyond the reach of a middle class person.
Hoarding: Most of the Indians have black money that too in huge amount i.e. the do not have money in banks, so approaching them is beneficial, so that through the opening of this account they can make further investment.
Indian Capital Market is Growing: So more & more new investors are interested in investments.
Tailor Made Products: We have tailor made products like sector specified schemes & even diversified schemes.
Branch Expansion: Large no. of branches are opening day by day and even we are traping the countries having almost same type of socio-economic condition & even same culture etc.
Tough Competition: As there are so many banks having almost same kind of schemes, so it’s tough to compete with.
Unawareness: Majority of population is not aware of HSBC brand name and even because of other banking facilities which are much cheaper than HSBC’s services, so it’s hard to convince people.
Changing Scenario: Our market scenario is changing day-by-day i.e. our market is fluctuating, so this makes investor hard to invest.
INTERPRETATION & ANALYSIS
Equity 75 Debt 60 Cash 15 In the above table 75 investors in Equity, 60 in Debt, & 15 in Cash. Debt instruments are- Company fixed deposits, bonds, Government Securities fund, and Govt. Saving schemes, Pension Schemes Equity Instruments are- Equity funds diversified, Equity funds Sectoral Plan, Balanced Fund (Equity Portion), Equity IPO. Cash Instruments- Liquid Funds, Government Securities, Income Funds long Term (Including MIP). Aggressive investors comprises of 50% in Equity, 10% in Cash, 40% in Debt.
Debt 90 Equity 45 Cash 15 In the above table 45 investors invest in Equity, 90 in Debt, & 15 in Cash. Debt instruments are- Company fixed deposits, bonds, Government Securities fund, and Govt. Saving schemes, Pension Schemes. Equity Instruments are- Equity funds diversified, Equity Funds Sectoral Plan, Balanced Fund (Equity Portion), Equity IPO. Cash Instrument- Liquid Funds, Government Securities, Income Funds Long term (including MIP)./ Moderate investor comprises of 60 % in Debt, 10% in cash, and 30% in Equity.
Debt 70 Cash 10 Equity 20 In the above table 20 investors invest in Equity, 70 in Debt, &10 in Cash
Debt Instruments are- Company fixed deposits, bonds, Government Securities fund, and Govt. Saving Schemes, Pension Schemes. Equity Instruments are- Equity funds diversified, Equity funds Sectoral Plan, Balanced Fund (Equity Portion), Equity IPO. Cash Instruments- Liquid Funds, Government Securities, and Income Funds Long Term (including MIP). Conservative Investors comprises of 70% in Debt, 10% in Cash, and 20% in Equity.
Debt 120 Cash 15 Equity 15 In the above table 15 investors invest in Equity, 120 in Debt, &120 in Cash.
Debt Instruments are- Company fixed deposits, bonds, Government Securities Fund, and Govt Saving Schemes, Pensions Schemes. Equity Instruments are- Equity Funds diversified, Equity Funds Sectoral Plan, Balanced Fund (Equity portion), and Equity IPO. Cash Instruments- Liquid Funds, Government Securities, and Income Funds Long Term (including MIP) Very conservative investors comprises of 80% in debt, 10% in Cash & 10 % in Equity
60K-1LAKH 1LAKH-2LAKH 2LAKH-3LAKH 3LAKH-ABOVE
62 48 24 16
In the above table 62 investors are those who fell in the income slab from 60 thousand to 1 lakh, 48 investors fell in the income slab form 1 lakh-2lakh, 24 Investorâ€™s fell in the income slab from 2 lakh-3lakh, 16 investorâ€™s fell in the income slab of above 3 lakhs.
Aggressive Investors Moderate Investors Conservative Investors Very Conservative Investors
18 60 47 25
18 investors are found Aggressive, 60 investors are found Moderate, and 47 Investors are found Conservative & 25 Investors are found very conservative in the survey.
up to 5% 5%-10% More Than 10%
38 69 43
In the above table 38 Investors up to 5% of their income, 69 investors invest up to 5%-10% of their income & 43 investors invest more than 10% of their income. In the above graph 25% of total surveyed investors invest up to 5% monthly. 46% of the total surveyed investors invest up to 5%-10% monthly. 29% of the total surveyed investors invest more than 10% monthly.
1-5 Years 5-10 Years 10 Years & Above
24 55 71
16% of the investors were investing since last 1-5 years. 37% of the investors were investing since last 5-10 years. 43% of the investors were investing since last 10 years & above.
Steadily At average Fast
20 92 38
In the above table 20 investors expected their investment to grow steadily. 92 investors expected their investment to grow at a average rate. 38 investors expected their investment to grow at a fast rate. In the above graph 13% of the surveyed investors expected their investments to grow steadily 62% of the surveyed investors expected their investments to grow at an average rate. 25% of the surveyed investors expected their investments to grow at a fast rate.
Safety of Principal Earning return above inflation rate Earning High returns
22 96 32
In the above table 22 surveyed investors gave more importance to safety of principal, 96 investors gave more importance to earning returns above inflation rate, 32 investors gave more importance to earning high returns. 15% of the surveyed investors had a primary motive of the safety of principal, 64% of the surveyed investors were more concerned about earning returns above inflation rate. 21% of the surveyed investors were more concerned about earning high returns.
Nil Average Good
12 104 34
In the above table 12 investors were found with no knowledge about various investment schemes, 104 investors were found with average knowledge about various investment schemes, 34 investors were found with good knowledge about various investment schemes. In the above graph out of total surveyed investors 8% were found with nil investment knowledge, 69% were found with average investment knowledge, 23% were found with good investment knowledge.
Above 50 Between 30-50 Between 20-30
76 48 26
In this above table out of the total surveyed investors 76 investors are above 50 years, 48 are between 30-50 years & 26 investors are between 20-30 years. In the above graph 51% were above 50 years 17% were between 20-30, & 32% were between 30-50.
Secured Not Secured Doesn't affect
98 28 24
In the above table out of the total surveyed investors 98 investors were found with job security, 28 investors were found with unsecured jobs & 24 investors were found in a no affect status. In the above graph 65% of the investors were in a state of secured jobs, 19% of the investors were in the state of unsecured jobs & 16% of the investors were in the state where this factor doesnâ€™t affect them.
More than 2 1-2 dependents None
98 32 20
In the above table out of the total surveyed investors 98 investors were those who are having more than 2 dependents, 32 investors were those who are having 1-2 dependents, 20 investors were those who didnâ€™t had any dependent. In the above graph 66% investors were those who are having more than 2 dependents, 21% investors were those who are having 1-2 dependents & 13% investors are those who having no dependents.
Educated View Friendly Advice Guess Work
22 73 55
In the above table out of the total surveyed investors 22 investors took educated view before investment, 73 took friendly advice before investment & 55 made guess work. In the above graph 48% took friendly advice, 15% took educated view & 37% made guess work.
Withdraw Wait Invest
28 79 43
Out of the total surveyed investors 28 investors were found in a state of withdrawal of money, 79 investors were found out in the state of wait & watch & 43 investors were found out in the state of more investment in the market if the market crashes down. In the above graph 52% will wait & watch 29% will invest more & 19% investors will withdraw their money.
A R K E T G R O W T H MARKET
STAR CATEGORY PRODUCT: These are the products that are not only market leaders but are also growing fast. By this study it can be analysed that FD is a product of STAR CATEGORY. If we analyse the current status of investments, then all respondents have their investments & if they are provided with Rs.10,00,000 then too they will invest a part of it in
FD. Hence presently FD has a large Market Share & in future also its market share will increase but not decrease.
CASH COW PRODUCT: Such products are weak in both the factors i.e., low growth & low market share. The investment avenues coming in this category are SIPâ€™s. Professional have invested in SIP, but this is restricted to their future & SIP is best option for the businessmen. Rather people would like to invest money in post office.
DOG CATEGORY PRODUCT: Products of this category are categorized by Dominant share & Low growth. The investments avenues coming in this category is INSURANCE. It is among todayâ€™s growing sector. But if we point our consideration towards professionals, as it is in this study, then Insurance comes under Cash Cow. Its market share is large, but at the same time these people are less interested in it as a future investment avenue.
QUESTION MARK CATEGORY PRODUCT: High growth & Subordinate Share characterize these products. SHARES, MUTUAL FUNDS & BONDS comes under this category. At present they have low market share but growth prospectus of these products are very high.
FINDINGS The basic thrust of the research is to find out types of investors & their portfolio & their profile. On the basis of questionnaire certain points are given to the investors. 1. Those investors who obtained between 160-260 are very conservative. 2. Those investors who obtained between 261-340 are conservative investors. 3. Those investors who obtained between 341-410 are moderate investors. 4. Those investors who obtained between 411-480 are aggressive investors. A. In the survey 18 investors were found aggressive out of the total of 150 surveyed investors. The asset allocations of aggressive Investors are as follows; They invest 50% in equity instruments, 40% in debt instruments & 10% in cash instruments. B. 60 investors were found to be moderate Investors. The asset allocations of these investors are as follows; 60% of the surveyed investors invest in debt & 30% of the them invest in equity & remaining 10% of them invest in cash instruments.
C. 47 investors found to be conservative investors out of the total 150 surveyed investors. The asset allocations of conservative investors are as follows; 70% of them invest in debt instrument,20% of them invest in equity instruments, & 10% of them invest in cash instruments. D. 25 investors were found to be very conservative out of the total 150 surveyed investors. Their asset allocations are as follows; 80% of them invest in debt instruments, 10% of them invest in equity instruments, & 10% of them invest in cash instruments.
E. In the survey the data was obtained regarding the investment capacity of the investors also in order to get the purchasing power and financial efficiency of the investors. 25% of the total surveyed investors invested up to 5% of their monthly income. 46% of the total surveyed investors invested up to 5% to 10% of their monthly income. 29% of the total surveyed investors invested more than 10 to their monthly income. F. The investment made for the last number of years is also taken into consideration to take into account their investment periods. 16% of the total surveyed investors were investing since last 1-5 years. 37% of the total surveyed investors were investing since last 5-10 years. 43% of the total surveyed investors were investing since last 10 years and above. G. Expectations of the investors regarding their investments to grow were also found out because on its basis we can make out consumerâ€™s investment decisions and consumerâ€™s mind setup it was all psychological based. Out of the total surveyed investors only 13% expected their investment to grow steadily. Out of the total surveyed investors only 62% expected their investment to grow at average rate. Out of the total surveyed investors only 25% expected their investment to grow at a fast rate.
H. The most important part of this survey was to know about the perception of the investors with respect to returns. The following results were obtained. 15% of the total surveyed investors had a perception that safety of principal is their primary area of concern. 64% of the total surveyed investors had a perception that earning returns above inflation rate is their primary area of concern. 21% of the total surveyed investors had a perception that earning high returns is their primary area of concern
I. As far as investorâ€™s knowledge part regarding various investment schemes is concerned it was found that 69% of the total surveyed investors had average knowledge about various investment schemes. 8% of the total surveyed investors had no knowledge about various investment schemes 23% of the total surveyed investors had good knowledge about various investment schemes. J. Age group was also a rational issue to know while carrying out the research. It was found that 17% of the total surveyed investors were between 20 to 30 years. It was found that 32% of the total surveyed investors were between 30 to 50 years. It was found that 51% of the total surveyed investors were above 50 years. K. Occupation status is also a great factor to know because it affects consumer buying behavior and buying decisions. 65% of the total surveyed investors had secured occupation. 19% of the total surveyed investors were in the state of non-security of occupation. 16% of the total surveyed investors were in that state where occupation doesnâ€™t affect them. L. To know about investment approach in making investment decisions gives significance to the research as by knowing this aspect we can conclude to a great extent about the type of investors. 69
37% of the total surveyed investors relied on guesswork. 15% of the total surveyed investors relied on the educated view. 48% of the total surveyed investors relied on the friendly advice.
LIMITATIONS UNCERTAINITY OF MARKET:HSBC’s securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved. As with any investment in securities, the NAV of the units issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets. LACK OF PUBLIC AWARENESS:In JODHPUR, HSBC has just completed 3 years & is in infantry stage so people are unaware of it. So people are afraid to invest & they only trust of some govt funds like UTI, SBI, Govt. securities.Which give assured returns? HIGH COMPETITION:Due to the existence of large number of AMC’s & banks the competition is high. Investors are confused that where they have to invest and where not. Other banks also offers the same type of product/schemes which diversified the investors. RIGID AND TRADITIONAL STRUCTURE:The people believe investing in Bank FD’s and Post Office saving and are reluctant to invest in Mutual Fund. People like to secure money in terms of lending to the people on high interest they meant their amount is safe, or further to invest in their own business which will give them high return obviously.
SOCIO- ECONOMIC FACTOR:The standard of living is low and people have low saving so investment in HSBCâ€™s schemes is low & beyond their capability. The most of the people of this country are agriculture dependent.so, they have less to invest. POLITICAL FACTOR:Due to volatile govt & their policies regarding investor & investment, the stock market is not integrated which in turn affects the mutual fund industry.
RECOMMENDATIONS 1. The investors above the age of 50 years must be taken into consideration as they are having great potential regarding investment. 2. HSBC must lay down some sound strategies to trap more customers by giving them more commission in comparison to other investment centers. 3. HSBC must use marketing tools like point of purchase, advertisement through Mass Media like loading Newspapers, Magazines, Television, Exhibition, Fairs, SMS on Mobiles, advertisement on the internet. 4. The organization is lacking on the parameters of motivation. It is recommended that the organization must adopt the concept of motivation.
5. HSBC should organize programs for customer awareness in developing areas and establish a confidence and belief among the customers residing there.
1. NAME: 2. ADDRESS: 3. PHONE NO: (R) (O) 4. AGE: 20-30 30-50 Above 50 5. PROFESSION: Entrepreneur Industrialist
Private Job Exporter
6. INCOME LEVEL: 60,000 – 1, 00,000 72
2, 00,000 – 3, 00,000
1, 00,000 – 2, 00,000
Above 3, 00,000
7. FAMILY STATUS: Dependents
8. Have you ever invested in the market? Yes a. b. c. d.
If Yes, What is your Portfolio? Mutual Fund Insurance Shares Others
9. Are you aware of various HSBC’s investment schemes? Nil
10.Have you ever invested in HSBC? Yes
If yes, you’re Diversification (Mention your preferences) 1. Equity: 2. Debt: 3. Cash: 11.Please tick, I Am 73
First time Investor Regular
12.How long you are investing in market? a. 1-5 years b. 5-10 years c. Above 10 years 13.You made invested through: Your own Through broker
Through Distribution house others
14.Are you: Long-term investor Short-term investor 15.What would you take into account while investing? a. Safety principle b. Earning high returns c. Earning return above inflation rate 16.Views of the investor – if the stock market crashes down: a. Wait and Watch b. State of withdrawal c. State of more investment
17.What % of your income would you like to invest? a. Up to 5% b. 5%-10% c. Above 10%
BIBLIOGRAPHY BOOKS: .
1. Kotler Philip: Marketing in New Millennium, Millennium Edition Prentince Hall of India, New Delhi. 2. C.R Kothari: Research Methodology; Wishva Publication, New Delhi. 3. M.J Methew : Risk & Insurance Management MAGAZINES:1 2 3 4 5 6
Business world. Invest one Business Today Invest time by TATA-AIG Fund Fact Sheets of Reliance Mutual Fund. Offer Documents of Different Schemes.
Financial Time. Economic Times.
WEBSTIES: www.reliancemutualfund.com www.hsbc.co.in 75
www.google.com www.yahoo.com www.indiainfiline.com www.bse.com
ABBREVIATION SIP: Systematic investment plan TMD: Term deposit AMFI: Association of mutual funds of India AMC: Asset management company BSE : Bombay stock exchange MF: Mutual fund
CONCLUSION From the analysis of the responses received from the investors in JODHPUR City, a majority of investors are found to be conscious and enlightened regarding their investments, return & growth. We have very good market in JODHPUR which comprises potential investors but due to lack of basic promotion & publicity these investors are not fully aware of our company & whosoever is aware of our company their investment decisions are done on the basis of security, analysis of risk yield & return few parameters like Demographic, Physiological, Income, etc. So my findings are that HSBC market should make little more efforts to trap the potential investors, like Media Advertisement, Paper Advertisement, Seminars & Business Meets & building a good relationship with potential business, moreover friendly guidance.
Again I would like to say thanks to all staff members of HSBC jodhpur branch for there co-operation & support in during my training period.
RAJAT CHOUDHARY SS-2008-10 77
I.I.P.M NEW DELHI
Published on Apr 24, 2012
A Research Study on Investment & Wealth Management Business A Portfolio Analysis For HSBC Bank