Competitive Analysis of Portfolio Management Services by Brokrage Firms

8/13/2019 Competitive Analysis of Portfolio Management Services by Brokrage Firms

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COMPETITIVE ANALYSIS OF POR TFOLIOMANAGEMENT SERVICES BY BROKRAGE FIRMS

Submitted By:H itendra Choudhary

I N PARTI AL FUL FI LL M ENT FOR THEAWARD OF PG DEGREE OF

M aster of Business Administration2006-2008

Department of M anagement StudiesM alaviya National I nstitute of Technology

(Deemed University)M alaviya Nagar, Jaipur


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ACKNOWLEDGEMENTS

This project has given me immense insights about the practical aspect of Share broking industry and its

working. I got to learn a lot about the online broking and the way they handle their clients and projects.

This project also helped me to improve my report making skills and the true meaning of Broking.

At the outset, I would like to thank India Infoline Ltd. for giving me the opportunity to work on this

project, in an environment which was stimulating and charged with the excitement to do some thing

productive.

I would like to express my sincere gratitude to Mr Priyesh Singhvi (AVP) and Saransh Jain (Sales

Manger), my mentor for his valuable inputs and support through out the project.

Further I express sincere thanks to Mr. Kadam Shah ( Regional Manager) and Mr. Avdesh Bharadwaj

(HOD, DMS, MNIT) for their valuable guidance & constant encouragement which inspired me to

complete this project successfully.

Lastly, I would like to thank all my colleagues in the Office who assisted me day in and day out andmade me feel like one of them. It was truly a delightful experience working with all of them.

VIJAY SHARMA

S.S.G.PAREEK INSTITUTE OF PROFESSIONAL STUDIES,

JAIPUR, RAJASTHAN.


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TABLE OF CONTENTS

1. ABSTARCT 4

2. INDIAN STOCK MARKET 5

3. IMPORTANCE OF STOCK MARKET 6

4. DYNAMICS OF BROKING INDUSTRY 7-8

5. COMPANY PROFILE INDIA INFOLINE 9-24

6. PROJECT REPORT 25-55

1. INTRODUCTION 26-27

2. LITERATURE REVIEW 28-35

3. RESEARCH METHODOLOGY 36

4. RECOMMENDATION 37

5. CONCLUSION 42

6. ANNEXURE 44-55

a. Transcripts of interviews

b. Questionnaire7. REFERENCE 56


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ABSTRACTInvesting is simple but not easy .

India, the World's largest democracy, is opening up to the global competition with the advent of

liberalization. It has the largest middle-class population in the world having substantial purchasing and

investing power. So far in India, most of the middle class earners have been risk-averse and therefore

park most of their savings in Fixed Deposits and Other Savings Accounts, though the yield from such

investment avenues is very low. However, the recent trend has been such that more people have been

attracted towards investment in Mutual Funds and Equities. It is in this light that Portfolio Management

Companies have been gaining prominence in India. The trend is only set to go upwards in the years to

come, as the Indian middle class becomes more risk friendly.

Managing a portfolio is not an easy task and thats the reason why we need experts for doing this task.

These experts are well experienced and definitely have more knowledge about the markets than an

individual.

In todays world where everyone is so busy that nobody has time even for themselves so to manage

their own portfolio is next to impossible. They cannot track the markets every single day and therefore

it is really very important to have an expert.

When it comes to managing hard- earned money, its very important to make sure that the extra mile is a

task best left to the experts and this extra mile when covered by the right people gives the right returns.

This report shows a comparative analysis of the Portfolio Management Services of the broking firms.

The survey includes a few companies, which have competitive portfolio management service like Kotak

Secutities, Sharekhan Securities, Motilal Oswal Securities, India Infoline, Birla Sunlife and JM Morgan

Stanely. Interviews of people belonging to this company have been taken to get a clear picture of how

these companies are providing their services and how effective they are.


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INDIAN STOCK MARKET

The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Limited (NSE) are the

two primary exchanges in India. In addition, there are 22 Regional Stock Exchanges. However, the BSE

and NSE have established themselves as the two leading exchanges and account for about 80% of the

equity volume traded in India. The NSE and BSE are equal in size in terms of daily traded volume. The

average daily turnover at the exchanges has increased from Rs851crore in 1997-98 to Rs1284crore in

1998-99 and further to Rs2273crore in 1999-2000. NSE has around 1500 shares listed with the total

market capitalization of around Rs9, 21,500crore.

The BSE has over 6000 stocks listed and has a market capitalization of around Rs9, 68,000crore. Most

key stocks are traded on both the exchanges and hence the investor could buy on either of the

exchanges. Both exchanges have a different settlement cycle, which allows investors to shift their

position on the bourses. The primary index of BSE in BSE Sensex comprises 30 stocks. NSE has the

S&P NSE 50 Index (Nifty), which consists of fifty stocks. The BSE Sensex is the older and most widely

followed index. Both these indices are calculated on the basis of market capitalization and contain the

heavily traded shares from key sectors.

The markets are closed on Saturdays and Sundays. Both the exchanges have switched over from the

open outcry trading system to a fully automated computerized mode of trading known as BOLT (BSE

On Line Trading) and NEAT (National Exchange Automated Trading) system. It facilitates more

efficient processing, automatic order matching, faster execution of trades and transparency.

The scrip traded on the BSE has been classified into A, B1, B2, C, F, and Z groups. The A

group shares represent those, which are in the carry forward system (Badla). The F group represents

the dept market (fixed income securities) segment. The Z group scrip is the blacklisted companies.

The C group covers the odd lot securities in A, B1, & B2 groups and Rights renunciations. The

key regulator governing Stock Exchanges, Brokers, Depositories, Depository participants, Mutual

Funds, FIIs and other participants in Indian secondary and primary market is the Securities and

Exchange Board of India (SEBI) Limited.


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IMPORATNCE OF STOCK MARKET

The stock market is one of the most important sources for companies to raise money . This allows

businesses to go public, or raise additional capital for expansion. The liquidity that an exchange

provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of

investing in stocks, compared to other less liquid investments such as real estate .

The term 'the stock market' is a concept for the mechanism that enables the trading of company stocks

(collective shares), other securities , and derivatives. Bonds are still traditionally traded in an informal,

over-the-counter market known as the bond market . Commodities are traded in commodities markets ,

and derivatives are traded in a variety of markets (but, like bonds, mostly 'over-the-counter').

The size of the worldwide 'bond market' is estimated at $45 trillion. The size of the 'stock market' isestimated as about half that. The world derivatives market has been estimated at about $300 trillion .[1]

The major U.S. Banks alone are said to account for about $100 trillion. It must be noted though that the

derivatives market, because it is stated in terms of notional outstanding amounts, cannot be directly

compared to a stock or fixed income market, which refers to actual value.

The stocks are listed and traded on stock exchanges which are entities (a corporation or mutual

organization ) specialized in the business of bringing buyers and sellers of stocks and securities together.

The stock market in the United States includes the trading of all securities listed on the NYSE , the NASDAQ , the Amex , as well as on the many regional exchanges, the OTCBB , and Pink Sheets

European examples of stock.
http://en.wikipedia.org/wiki/Companieshttp://en.wikipedia.org/wiki/Companieshttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Securitieshttp://en.wikipedia.org/wiki/Securitieshttp://en.wikipedia.org/wiki/Over-the-counter_%28finance%29http://en.wikipedia.org/wiki/Over-the-counter_%28finance%29http://en.wikipedia.org/wiki/Bond_markethttp://en.wikipedia.org/wiki/Bond_markethttp://en.wikipedia.org/wiki/Commodities_marketshttp://en.wikipedia.org/wiki/Commodities_marketshttp://en.wikipedia.org/wiki/Commodities_marketshttp://www.bis.org/statistics/derstats.htmhttp://www.bis.org/statistics/derstats.htmhttp://www.bis.org/statistics/derstats.htmhttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Mutual_organizationhttp://en.wikipedia.org/wiki/Mutual_organizationhttp://en.wikipedia.org/wiki/Mutual_organizationhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/NASDAQhttp://en.wikipedia.org/wiki/NASDAQhttp://en.wikipedia.org/wiki/American_Stock_Exchangehttp://en.wikipedia.org/wiki/American_Stock_Exchangehttp://en.wikipedia.org/wiki/OTC_Bulletin_Boardhttp://en.wikipedia.org/wiki/OTC_Bulletin_Boardhttp://en.wikipedia.org/wiki/Pink_Sheetshttp://en.wikipedia.org/wiki/Pink_Sheetshttp://en.wikipedia.org/wiki/Pink_Sheetshttp://en.wikipedia.org/wiki/OTC_Bulletin_Boardhttp://en.wikipedia.org/wiki/American_Stock_Exchangehttp://en.wikipedia.org/wiki/NASDAQhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Mutual_organizationhttp://en.wikipedia.org/wiki/Mutual_organizationhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Stock_exchangehttp://www.bis.org/statistics/derstats.htmhttp://en.wikipedia.org/wiki/Commodities_marketshttp://en.wikipedia.org/wiki/Bond_markethttp://en.wikipedia.org/wiki/Over-the-counter_%28finance%29http://en.wikipedia.org/wiki/Securitieshttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Companies


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DYNAMICS OF BROKING INDUSTRY

How is the future shaping for Indian brokers?

There is a new sense of confidence among the domestic brokers as the broking industry is passing

through the most exciting times. Those who have survived the earlier bear phase have made their

fortunes as the overall revenues have gone up multifold. Hence, some of the leading domestic brokers

are attracting talents even from the foreign broking houses as domestic houses are now able to afford

the same salary levels and lure people by offering employee stock ownership plans (Esops).

Even the smaller brokers have changed their way of marketing and advertising that was never the case

earlier. Everyone is focusing on value-added services. Dynamics of domestic stock broking industry is

changing and the best is yet to come!

What are the challenges before the industry?

In coming days, shortage of skilled talent and proper infrastructure will be one of the major challenges.

Going forward, technology will play a key role and the domestic broking houses have to upgrade it.

Depth of multiple products is also a challenge for the domestic houses.

Also on the regulatory front, domestic institutional investors can not give more than five per cent

business to any single broker. However, FIIs have no such restrictions resulting in restriction of

revenues. As the dynamics of the mutual fund (MF) industry has changed in India, the current

restriction also needs to be reconsidered.

How is this direct market access (DMA) facility will impact smaller brokers?

DMA is mainly for the investors who have large programme trades or arbitrage business. This move

will surely make the proprietary trading/arbitrage type businesses more competitive and less attractive.

Will falling volumes in last few months affect the business of small brokers?

Brokers were painful for the last three months due to falling volumes, so their business will be affected.

But for the last two years, most of them have made good money. Hence, there is a headroom for

survival. There is also a possibility of consolidation among the retail brokerages.


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How is the IPO market looking?

Though the liquidity is good enough, investment sentiments of the initial public offering (IPO) are not

fully back. Since companies are able to manage their liquidity and operations, they are waiting for right

time to enter the market for better valuations..

Some more regulatory measures are expected, like 100 per cent payment along with application

for IPO. Will it affect IPO market?

Such measures are better for the system. What will happen is that genuine buyers will apply and the

ratio of oversubscription will come down resulting in better allocations to the long-term investors.

Hence, such move is needed for the long-term sustainability of the IPO market. Good issues at an

attractive price will in any case not find any difficulty to raise funds in the new system too.

What is the view on the secondary market?

Though there is good liquidity globally, markets will be range-bound till monsoon and based on that the

markets will take further direction. Inflation, oil price and elections are the major challenges for markets

to have a strong sustainable rally.

Global issues have not settled down completely, hence, the volatility will continue. One has to remain

cautious. In terms of volumes, this year will not be in any case like last year, there fore; the return

expectations have to be toned down. In such uncertain environment, the theme for investors is hard

assets. Oil and gas, mining, manufacturing and engineering are some of the sectors that are expected to

outperform. One will see stronger interest when power and real estate corrects as they are good long-

term bets. But they are currently very expensive.


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INDIA INFOLINE

India Infoline has the most de-risked revenue model with a little over 55 per cent of the total

revenues coming from the equity brokerage business the least among listed broking

companies. This is probably one reason for the company being the best pick among most

mutual fund managers.

Thanks to its diversified portfolio, the company bucked the trend and reported a sequential

rise of about 25 per cent in its operating income and a marginal one per cent increase in net

profit in the March 2008 quarter. The growth in FY08 was largely driven by its institutional

broking business, financing income and better utilisatio n of its branch network, which has

grown rapidly in the past few years.

Going ahead, its institutional broking and lending businesses are expected to gain more scale

and will be the revenue drivers.

The company hired four high profile professionals from CLSA a few months earlier to

spearhead its foray in institutional broking. Plus, its partnership with New York-based

brokerage firm, Auerbach Grayson and Co will increase its access to institutional clients in

the US and offer them access to Indian capital markets.

Also, its lending portfolio comprising of margin finance and consumer finance products

(mortgages, personal loans, business loans and loans against shares) should grow at a higher

rate.

The company's newly set up subsidiary for wealth management and its move to set up an asset

management company should lead to positive results in the respective businesses. The stock

looks reasonably priced at 25 times FY09 estimated earnings, but looks more attractively

priced (PE of 18.7 times) based on FY10 estimated earnings.


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STORY OF GLORY

Incorporated on October 18, 1995 as Probity Research & Services by a group of professionals

Launched Internet portal www.indiainfoline.com in May 1999 Rated as Best of the Web byForbes

Promoted by Mr. Nirmal Jain and Mr. R. Venkataraman

Launched 5paisa.com revolutionized brokerage rates

Largest distributor of ICICI Prudential Life Insurance

Our Rs. 900 million public issue was oversubscribed 7.22 times

Listed on NSE and BSE on May 17, 2005

Today, we are one of the fastest growing company in the financial services space

We are a Leading Financial Services Intermediary

BUSINESSES

Equities and commodities broking

Portfolio and Wealth Management services

Investment banking

Distribution of Life Insurance products

Distribution of Mutual funds, Fixed Deposits, RBI Bonds and Small Savings among others

Distribution of Mortgages and other Loan products


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COMPANY STRUCTURE

BRANCHES ACROSS INDIA

India Infoline

Investment

Services Ltd

IIFL (Asia) Pte

Ltd

(For international

operations)

India Infoline

Media &

Research

Services Ltd

India Infoline

Commodities

Ltd

India Infoline

Marketing

& Services Ltd

Moneyline Credit Ltd(Consumer Finance)

India Infoline Housing Finance Ltd(Home Loans)

India Infoline Distribution Co Ltd(Distribution of Financial Products)

India InfolineInsurance Services Ltd

Cor orate a enc

India Infoline

Insurance Brokers LtdInsurance Brokin

DMCC, Dubai

(membership

with DGCX)

India Infoline

Ltd.


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CORPORATE STRUCTURE

Executive DirectorR. Venkataraman

Channels

Branches

Direct Sales

Corporate & Institutional

Products

Insurance

5 aisa

Commodities

Research

Content Services

News desk/ websites

Market/ Institutional

Managing Director Nirmal Jain

Board of Directors

Audit

PMS

Cor orate Plannin

Customer Service

Support

Online Media/ SMS

Com liance

Finance

Technology

Com liance

Cor orate Plannin

Marketin


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BUSINESS MODEL

BUSINESS REVIEW

EQUITIES BROKING

Market share (currently ~3.5%) on NSE rising consistently

Average daily turnover Rs35.3 bn on NSE : up 66% q-q and 279% YoY

Commodities broking contributed 1.4% of total revenues

Growth driven by higher productivity of retail branches as well as increased traction in institutional

business

Advisory services powered by world-class research

Execution backed by cutting edge technology andpersonalized service

Businessdescription

Advisory & execution services for the entire gamut offinancial services

Corecompetencies

Serviceofferings

Equitiesbroking

Commoditiesbroking

Mutual Fundsdistribution

Mortgagesdistribution

PortfolioManageme

nt

Research& Contentservices

LifeInsurance

agency

PersonalLoans

distribution

InvestmentBankingservices

Other Debtproducts


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INSTITUTIONAL EQUITIES

Research team built up with a blend of industry and equity research experience

Launched a daily synopsis on Indian markets titled The Front Page

Research focus on original bottom-up ideas

Research products have been received well by institutional clients

A number of new products in the pipeline


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FINANCIAL SERVICES DISTRIBUTION

INSURANCE

The largest corporate agency for the largest private sector life Insurance company

Currently partner with ICICI Prudential, No1 private sector player

Life Insurance mobilization in Q1 Rs 1.14 bn : up 24% q-q and 21% y-y

M UTUAL F UNDS

Distri butors for all the leading AMCs.

Leveraging pan-India presence

Mutual funds income has improved increased focus on equity funds

Industry structure will change radically with t he recent SEBI ruling


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CONSUM ER F I NANCE

Started distribution of own loan products under the brand name Moneyline

Commenced business in August 07 with current portfolio size of Rs941mn

Currently present in 10 locations, presence in 32 additional locations by March 08

New Initiatives: Loans against Mutual Funds/ Business Loans/ Auto Loans/ Loans against ESOPS/

Loans for Commercial Vehicles

Loans through internet are showing a huge response and our lead conversion is one of the highest in

the industry

Started distribution of own loan products under the brand name MONEYLINE .

Commenced business in August 07 with current portfolio size of Rs941mn

Currently present in 10 locations, presence in 32 additional locations by March 08

New Initiatives: Loans against Mutual Funds/ Business Loans/ Auto Loans/ Loans against ESOPS/

Loans for Commercial Vehicles


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Loans through internet are showing a huge response and our lead conversion is one of the highest in

the industry.


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FINANCIAL REVIEW

Latest quarterly results highlights

Performance of Q3FY08 (Oct - Dec, 2007) Consolidated Revenue at Rs 3.1 bn, up 171% y-y and up 59% q-q

EBITDA was Rs 1.23 bn, up 261% y-y and up 84% q-q

EBITDA margin at 39.6%, up 33% y-y and up 16% q-q

PBT before exceptional items was Rs1.02 bn, up 279% y-y and up 90%q-q

Performance of 9 months ending Dec. 31, 2007 (y-y)

Consolidated Revenue up 127% to Rs 6.39 bn

EBITDA up 146% to Rs 2.3 bn

EBITDA margins up 8.55% to 36.68%

PBT before exceptional items up 144% to Rs1.9 bn

Highlights

Average daily trading turnover grows 279% y-y to Rs 35.3 bn and market share on NSEgrows to 3.5%

Institutional brokerage contribution improves equities volumes and yield

Insurance mobilization Rs 1.14bn, up 35% y-y

Consumer finance takes off with disbursal of Rs 947 mn

Separate subsidiary for Wealth Management


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Q3 FY08 (OCT- DEC 2007) RESULTS

Rs Mn Q3 FY08 Q2 FY 08 Y-Y Q-Q 9M FY08 9M FY07 Y-Y

Income from operations 3,072.6 1,898.1 174% 62% 6,267.8 2,751.1 128%

Equities brokerage & related income 2,151.8 1,127.8 255% 91% 3,973.0 1,672.6 138%Financing income 312.8 207.6 175% 51% 678.7 196.2 246%Online & other media income 182.5 178.6 23% 2% 563.4 303.4 86%Life insurance commission 295.2 286.9 85% 3% 740.8 353.0 110%Commodities brokerage 43.4 36.1 36% 20% 118.7 83.1 43%Mutual funds etc distribution 54.8 31.3 65% 75% 119.6 106.7 12%Mortgages and loans distribution 27.2 9.0 201% 201% 46.2 17.9 159%Merchant Banking income 4.9 20.9 -73% -76% 27.4 18.2 50%Other income 34.1 54.8 37% -38% 126.0 70.4 79%Total Income 3,106.7 1,952.9 171% 59% 6,393.8 2,821.5 127%

A Direct cost 681.4 422.4 185% 61% 1,384.4 586.9 136%B Employee cost 772.0 501.7 149% 54% 1,619.8 684.4 137%C Administration expenses 422.8 361.0 66% 17% 1,044.4 596.8 75%

EBITDA 1,230.5 667.8 261% 84% 2,345.2 953.4 146%Interest 92.4 64.7 251% 43% 201.1 72.2 179%Depreciation & amortisation 118.0 66.4 161% 78% 243.8 103.4 136%

PBT before exceptional items 1,020.1 536.7 279% 90% 1,900.2 777.8 144%

Exceptional item 440.0 -

Profit / (Loss) before tax 1,020.1 536.7 279% 90% 1,460.2 777.8 88%

Provision for taxation 359.9 176.2 306% 104% 511.5 267.8 91%

Profit / (Loss) After Tax 651.4 360.6 260% 81% 939.9 510.0 84%


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FUTURE PLANS AND STRATEGY

Wealth M anagement

New initiative- team identified.

Plans for aggressive growth.

Upper middle class is growing at 10-12% p.a.

Strategy will be to deliver value and target mid segment.

Leverage our brand, research capability and distribution reach.


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INVESTMENT COMMITTEE OF INDIA INFOLINE

Unlike most of the Portfolio Management firms operating in India, India Infoline has got the concept

of an Investment Committee, which takes the decision regarding investment into the portfolios. Themembers of this committee:

Mr. Nirmal Jain :- He is the founder and Chairman of India Infoline Ltd. Being an MBA from IIM

Ahmedabad, and a Chartered Accountant (All India Rank 2) and a Cost Accountant; he has had an

impeccable professional and academic track record. He started his career in 1989 with Hindustan Lever

Limited. During his stint with Hindustan Lever, he handled a variety of responsibilities, including

exports and trading in agro- commodities with Rs3bn annual turnover. He then joined hands with two

local brokers to set-up their equity research division Inquire in 1994. His work set new standards for equity research in India. In 1995, he founded his own independent financial research company, now

known as India Infoline Ltd.

Mr. R. Venkataraman :- He is the co-promoter and Executive Director of India Infoline Ltd. He is a

Bachelor in Technology (B. Tech) in Electronics and Electrical Communications Engineering from IIT

Kharagpur and an MBA from IIM Bangalore. He has held senior managerial positions in various

divisions of ICICI Limited, including ICICI Securities Limited, their investment banking joint venture

with J P Morgan of USA and with BZW and Taib Capital Corporation Limited. He has also held the

position of Assistant Vice President with G E Capital Services India Limited in their private equity

division. He has varied experience of more than 14 years in the financial services sector


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COMPETITIVE ANALYSIS OF POR TFOLIO

M ANAGEM ENT SERVI CES BY BROKRAGE

FIRMS


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INTRODUCTIONIn a laypersons language,

Portfolio Management Service is like music to investors' ears with the perfect art of varied

expertise work over the years with our experience in the stock markets.

Managing money has always been difficult. There is a great deal of requirement of an expertise to

evaluate various savings and investment plans. There is simply no time to do it on your own. Until and

unless the investments are large it might also turnout to be expensive trying to set up an own investment

wing. It might be prudent asking a professional to manage the funds for a small fee. There is a surety

that the money will be deployed after scientifically analyzing pros and cons.

Portfolio Management Service ensures that your money goes that extra mile or earns that extra return,

which dramatically improves the returns structure for the investments made.

Portfolio management is the art and science of:

Making decisions about investment mix and policy,

Matching investments to objectives,

Asset allocation for individuals and institutions,

Balancing risk vs. performance

PMS is a product wherein a customized investment portfolio is created to suit the investment objectives

of a client.

In PMS, the portfolio manager handles the responsibility of creating and tracking the portfolio.

The PMS provider does the following things like:

Idea generation,

Order execution and

Settlement and performance reportingThis service is particularly advisable for investors who cannot afford to give time or dont have those

expertises for day-to-day management of their equity portfolio.

However, the key of successful portfolio management lies in the execution. A strong portfolio

management program can turn any sinking investment around and do the following:


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LITERATURE REVIEWPortfolio Management - an emerging strategy for excellence

YOU earn money in bagfuls, but don't have the time or inclination to manage it If this description fits

you, do consider entrusting your money to a professional portfolio management service (PMS). In

return for a fee, portfolio managers offer to craft a basket of stocks,

bonds or even mutual funds that would fit your personal investment goals and risk preferences.

Though a few portfolio managers offer standardised packages for a sum as small as Rs 5-10 lakh, it may

take a minimum investment size of Rs 25-50 lakh to fetch you a customised portfolio. Apart from cash,

you can also hand over an existing portfolio of stocks, bonds or mutual funds to a PMS that could be

revamped to suit your profile.

Why not mutual funds?

But why should you opt for PMS instead of a mutual fund? Here are a few aspects on which portfolio

managers say they score over the standardised products offered by mutual funds:

Asset allocation: You may know what stocks, equity funds or bonds you would like to own, but

do you know how much of your savings you should allocate to each of these? The decision on

asset allocation will be crucial in determining investment returns over the long term. With PMS,

an asset allocation plan is tailor-made for you, after a detailed check on your investment goals,

savings pattern and appetite for risk. Timing: Have you ever kicked yourself for switching your entire portfolio into equities just

before they tanked? If you have, you probably need help with regard to timing of investments.

Once you hire a portfolio manager, you can expect assistance on when you should be investing

more money into equities and when you should be bailing out. A portfolio manager may also

switch a portion of your portfolio into cash, if he perceives a big risk to stock prices. The focus

is on preserving value.

Flexibility: You are bullish on FMCG stocks, but find that equity funds have marginal

exposures to the sector. In a PMS, you can expect the portfolio manager to accommodate your

sector preferences when he invests. But don't expect to completely dictate what stocks or sectors

your portfolio manager will buy for you, as he will be the best judge of that.


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Also, portfolio managers do not have to stick to any rigid rules on what proportion of your money will

be invested in each sector or stock. They can also use liberal doses of cash or derivative instruments to

pep up your returns. Mutual fund managers have their hands tied on these aspects by SEBI regulations.

What to expect from PMSOkay, you have fallen for the sales pitch and entrusted your money to a PMS. What can you now expect

from this service?

More handholding from your portfolio manager than you have been accustomed to from your

mutual fund. You can expect to have a personal relationship manager through whom you can

interact with the fund manager at any time of your choice. You can also expect frequent (maybe

monthly) interaction with the portfolio manager to discuss any concerns that you might have.

Expect to be consulted on any major changes in asset allocation or in the investment strategy

relating to your portfolio. All administrative matters, including operating a bank account and

dealing with settlement and depository transactions, will be handled by the PMS.

If you are the type who likes to watch over your money like a baby, the disclosures offered by a

PMS may be just right for you. On handing over your money, you will receive a user-ID and

password from the PMS, which will grant you online access to your portfolio details. You can

use these to check back on your portfolio as often as you like.

Keeping track of capital gains (and losses) for the taxman can be a depressing chore, when you

have furiously churned your investments through the year. Opting for PMS will free you of this

chore, as a detailed statement of the transactions on your portfolio for tax purposes comes as a

part of the package.

What you pay

Most portfolio managers allow you to choose between a fixed and a performance-linked management

fee. If you opt for the fixed fee, you may pay between 2-2.5 per cent of portfolio value; this is usually

calculated on a weighted average basis. The structure for the performance-linked fee differs across players; usually, this includes a flat fee of 0.5-1.5 per cent. The portfolio manager also gets to share a

percentage of your profit usually 15-20 per cent earned over and above a threshold level, which

may range between 8 per cent and 15 per cent. Apart from management fees, separate charges will be

levied towards brokerage, custodial services and towards meeting tax payments.


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There are wide variations in fee structure between players and across products. For instance, Birla Sun

Life charges only a performance-linked fee for its portfolio services. Way2Wealth has a differential fee

structure for its debt and equity dominated portfolios.

When you opt for a performance-based fee, the profits are reckoned on the basis of "high

watermarking". That is, you pay the fee only on the positive returns on your portfolio. For instance, ifyou invest Rs 100 in a PMS and its value appreciates to Rs 150 at the end of the year, you pay a fee on

the profit of Rs 50. Subsequently, a fee will be levied only on gains over and above the Rs 150 mark. If

the value of your portfolio slumps to Rs 70, and climbs back to Rs 110, the Rs 40 you earn will not be

reckoned as profit. You will again be charged a fee only if the value of your portfolio recovers to over

Rs 150, the previous "high watermark."

Who should hire a portfolio manager?

Anybody with a nest egg, which meets the minimum investment requirement, can consider using a

PMS. However, a PMS may only add significant value in the following cases:

Equity bias : Portfolio management services may be ideal for a person who seeks a substantial

investment in the stock markets. An equity portfolio also offers greater scope for a manager to

add value than does a debt portfolio. Several of the established players in the PMS business

focus on equity investments, though some also offer hybrid products.

Large surplus to invest: The minimum portfolio size that portfolio managers accept for a

customised portfolio ranges from Rs 25 lakh to Rs 5 crore. So consider a PMS only if you have

a substantial surplus to invest in stocks. If you don't, evaluate if you can use the services of a

financial planner or an advisor, instead of a PMS.

If you are willing to handle the paperwork associated with investing, you can get a financial planner or

advisor to construct an asset allocation plan and guide you on the choice of investments for a one-time

fee of Rs 5,000-15,000.

Reasons for having a portfolio manager:

There are two important reasons To take maximum advantage of market conditions

To protect yourself against downturns


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The New Structure

New Approach to Portfolio Management

Originate to distribute

Portfolio Management acts as buyer, seller and manager of risk Support OR profit center?

Support in a cross sell environment

Hold to be at least SVA neutral

Fundamental shift in viewing exposures from Approved commitments to Economic capital

usage

Origination versus Ownership of risk Portfolio managers are owners of risk and CAPITAL

Given scarcity of capital and unattractive loan products in most markets, pure origination of loan

products with no cross sell makes little economic sense

Close linkages however exist (especially in loan products) where a residual piece sits in the

portfolio. Quality of origination hinges on the risk appetite of the Portfolio Manager

BB uu yy SS ee ll ll ,, HH ee dd gg ee

Borrower

s

Se

condary

Mk t

ClientManagement

Origination

PP oorr tt f f oolliioo MM aa nn aa ggeerr

Credit decisionRisk Rating

Pricing/ReturnPortfolio Decision

Syndication

LoanTrading

Hedging &Securitization

Servicing


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Origination would be limited to Portfolio balancing to ensure appropriate weight age achieved

through credit swaps, CDOs, secondary markets etc.

Most CIB platforms today are evolving & do not have NIR as an independent financial target.

Portfolio Management PhilosophyImprove credit / risk and product delivery processes to transform the traditional lending business into an

issuer and investor-driven, mark-to-market- based, Originate to Distribute business.

Portfolio Management: Role

The New Structure - Advantages

Leads to increased transparency and reduces cross subsidization

Balances issuers and investors the universal debt model has traditionally been based on whatIssuers need (and not what Investors want)

Leads to sharper risk-return discipline while putting the b/s on line

Benchmarks the portfolio to market especially for loan products

Focused on Distribution that will reduce Credit Capital and hence increases ROE

II SSSSUUEE R R II NNVV EE SSTT OO R R

PP oorr tt f f oolliioo MM aa nn aa ggeemm eenn tt PP rr oocceessss

DDiisstt rr iibb uu tt iioon Process OO rr iiggiinn aa tt iioonn

Process

MM aa rr k k eett CC lleeaa rr iinn gg PP rr oocceessss

SStt rr aa tt

SS tt rr uu ccttuu rr iinn PP rr oocceessss

DDCC MM DDeerr iivvaa tt iivveess OO tthh eerr


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Key Transfer pricing challenges

Portfolio Management is the advocate of shareholder value. Approval of all exposure

is contingent on the return, irrespective of where revenues are booked or recognized.

Key challenge is to be able price loan products appropriately while en suring an

acceptable return on the entire credit exposure Loans should be priced to be at least SVA or Economic profit neutral

Loan structure and pricing should be reflective of the prevailing investor market to

provide liquidity to the loan portfolios

Maximizing Shareholder Value - SVA

Why a new metric?

Driven by the growth strategy and the increasing focus on shareholder value creation

What is Shareholder Value-Added (SVA)?

SVA is a measure of firms profit after subtracting the cost of all capit al

employed. It is defined as the current period after-tax economic earnings less a

charge for the use of capital.*

Simply put, it is the portion of the dollar return generated by the business that is

in excess of the dollars paid for the use of capital to support the business

The economic capital framework creates a common currency for measuring risks

and returns

Different forms of risk: Credit, Market, Country and Business risks are

quantified on a uniform scale

Performance is expressed as an after-tax return on economic capital

The framework creates incentives to deploy capital toward activities with better

risk adjusted returns


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Measuring return relative to risk

Key Challenges to implement this Approach in our Markets

Lack of liquidity (both depth and breath) in the secondary loan trading markets

Most profitability models are global and need to be customized for regional /

emerging markets

Not enough volume to sustain an active model in the current environment

tendency is to hang onto good quality assets

Potential negative impact on client relationships. Need to align all product

specialists to a common goal vis a vis clients to avoid different agendas

Teamwork is critical for success. Creates another silo in an already over matrix

environment Severe compression in spreads which makes the ultimate hold position

uneconomical and the portfolio manager lukewarm to the transaction

Investors Required Return

Return

ExpectedCashflow

Growth ofInvestment

Risk

Firm value


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RESEARCH METHODOLOGYObjective :

To know more about Portfolio Management Services.

To do a competitive analysis on the most of the firms which provide Portfolio ManagementServices

Hypothesis:

All Portfolio Management firms provide very good services

Sample:

The sample consists of the following: -

Sharekhan securities

JM Morgan Stanely

Kotak securities limited

India Infoline (5 Paisa)

Birla Sun Life

Motilal Oswal Securities Limited


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RESEARCH ANALYSIS

Name Product Brokerage Fee Hedging Horizon Approach Corpus Cos

SSKI Proprime Initial 0.75%

then 0.5%

2.5% p.a.

chargeable

quarterly AMCProfit sharing

20% shares in

profits after a

15% hurdle.

Equity /debt Medium

term

Bottoms Up 5lacs All

Protech Initial 0.75%

then 0.5%

0% AMC fees

Profit share is

only on profit.

Equity /debt Short term Bottoms Up 5lacs All

Arbitrage Initial 0.75%

then 0.5%

Safe returns

(8% post tax

return per

annum

effectively 12%

pretax)

Equity /debt

0.05 on

derivative

0.3 on

delivery

Medium

to long

term

Bottoms Up 5lacs All

JM

Morgan

Core 0.50% AMC of 2%

Profit sharing

Equity Long-term Bottoms up 50lac All


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Stanley NIL

AMC of 1.25%

Profit sharing

20% of rest

after deducting

10%


Voyager

(for the time

not using)

- - - Short term - - -

India

Infoline

5P

Momentum

0.50% Fixed = 2% flat

with 20% profit

sharing

Recurring = 4%

flat no profitsharing

Equity and

debt

Short to

medium

Value based 5lacs All

5P Focus 0.50% Fixed = 2% flat

with 20% profit

sharing

Recurring = 4%

flat no profit

sharing

Equity and

debt

Long-term Value based 5lacs All


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5P NRI 0.50% Fixed = 2% flat

with 20% profit

sharing

Recurring = 4%

flat no Sharing

Equity and

debt

Long-term Value based 5lacs Medium

to large

cap

5P Growth 0.50% Fixed = 2% flat

with 20% profit

Recurring = 4%

flat no profit

sharing

Equity and

debt

Long-term Value based 5lacs Medium

to large

cap


Kotak Select 0.50% 2% flat with

20% profit

sharing

3% flat no profit sharing

Equity and

debt

Long and

medium

Bottoms up 1crore Mid and

small

Klassic 0.50% 2% flat with

20% profit

sharing

3% flat no

profit sharing

Equity and

debt

Medium

to long-

term

Bottoms up 1crore Small,

medium

and

large


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Core 0.50% 2% flat with

20% profit

sharing

3% flat no

profit sharing

Equity and

debt

Long-term Bottoms up 1crore Small,

medium

and

large

cap

Dividend

Yield

0.50% 2% flat with

20% profit

3% flat no

profit sharing

Equity and

debt

Long and

medium

Bottoms up 1crore Small,

medium

and

large

cap

Birla

Sunlife

Recently

launched the

PMS

0.50% AMC charges

1.25%

20% profit

sharing of

portfolio growth

over 15%

Equity and

debt and

derivative

not more

than 50%

Medium

to long

term

Bottoms up 50lacs

Custom

option

Rs.2.5crore

Small,

medium

and

large

cap


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Most of the above companies have a very different brokerage to offer. Motilal Oswal Securites

Limited has the most expensive brokerage to offer.

All the firms have different products through which they invest in all types of companies. Some

schemes invest in small cap and mid cap whereas there are some schemes which invest only in

large caps and there are some more schemes which invest in all the three types of companies likemid cap small cap and large cap companies. Depending on the risk and the return ratio of

customer these schemes are offered to them.

The minimum corpus offered by the companies is quite less only in India Infoline and

Sharekhan all other companies have a very high minimum corpus.

The most amounts of products are offered by India Infoline and Kotak Securites which is also

very good because customers have a wide variety to choose from. They have more options open

to them which suit their convienience.

Almost all the companies believe in hedging which means that they all try to maximize the

returns for their customers and minimize their risks.

Almost all the companies follow bottoms up approach except for a few companies like the India

Infoline. Both the ways are good in their own way depending on how you follow it.

The fund managers of all these companies are excellent. They excel in their own way, highly

skilled and good at what they are doing.

All the companies have their different products to offer which give them different time frame to

invest. Some invest for long term and some for medium term again depending on the type of

time frame the customer wants.


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RECOMMENDATIONS

According to me all the companies are good in their own respective way. Some are good at their

brokerage whereas some are good at their services; some have good companies in their portfolio

whereas some have good fund managers. All the companies are fighting competition in different

different ways and all are good in their own way and they all provide the following benefits:

Bespoke Advice - The advice designed to achieve your financial objectives.

Professional Management - The service provides professional management of equity portfolios

with the objective of delivering consistent long-term performance while controlling risk.

Continuous Monitoring - Portfolios need to be constantly monitored and periodic changes

made to optimize the results.

Risk Control - A research team responsible for establishing our investment strategy and

providing us real time information to support it, backs our portfolio managers.

Hassle Free Operation- Our Portfolio Management Service gives you a customized service.

We take care of all the administrative aspects of your portfolio with a monthly reporting on the

overall status of the portfolio and performance.

Flexibility - We specialize in providing a personal investment management service to achieve

your investment objective.

Transparency - You will get regular statements and updates from us. Web-enabled access will

ensure that you are just a click away from all information relating to your investment.

No one company can be recommended as they all are good in their own way and all are competitive in

their own way. All the companies are good at providing their services in their own way. The companies

are very competitive, if one company takes a step the other company takes two steps and all the benefits

go the customer towards the end. Therefore the only benefit that someone achieves is the customers

who gain from these competitive firms in terms of service provided by them as well as in cost terms.


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CONCLUSION

Investing in equities is a very complex process. It involves studying, tracking and understanding factors

like the economy both domestic and global, interest rates, the political and legal environment among

others.

Clearly, this is a full time activity that is best left to experts. A fund manager does precisely that for

investors, that too at an affordable cost. Effectively, portfolio management services offer the

opportunity to the access the markets in a hassle-free and convenient manner.

Secondly, portfolio management services investment offers investors the benefits of diversification.

Any financial planner worth his salt will vouch for the importance of holding a well-diversified

portfolio.

A portfolio created by an expert offers diversification across stocks (a diversified equity fund invests in

various stocks) and asset classes (a balanced fund/monthly income plan invests in both equities and debt

instruments).

Finally, the single most important reason why one should appoint an expert is -- the versatility they

afford. Whether you wish to plan for your retirement, children's marriage or even buy a car, a portofolio

manager will expose you only to the risk you can face and the return you expect and thus can help you

achieve these objectives and more and the most important thing is that these services are offered to

clients as different schemes, which are based on differing investment strategies made to reflect thevaried risk- return preferences of clients and in todays world where

On the other hand, equities serve the broad purpose of achieving capital appreciation. However,

achieving financial goals would imply building a portfolio of equities and debt instruments and actively

managing the same. Investing is serious business and should be seen as a means for achieving one's

financial objectives.


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ANNEXURE

TRANSCRIPTS

RESPONDENT 1: Mr. Varsheet Jain

Company Name: Motilal Oswal Securities Limited

Email : [email protected]

Designation : Senior Relationship Manager

Asset under management Rs.700crore

Entry/ Exit Load NIL

Companies preferred No bias towards market capitalization

Minimum Portfolio Size : Rs.25Lakhs cash or approved securities per individual or group.

Lock in period No lock in period

Investment philosophy Value investing with bottoms up approach

Investment in only equity

Brokerage 0.25% to 0.50 %

Value PMS

Investment horizon Long-term time horizon

Bulls Eye PMS

Investment horizon Short to medium term

SCHEME 1

Minimum Portfolio Size : Rs.25Lakhs cash or approved securities per individual or group.

Investing philosophy - value investing philosophyHedging - Various derivatives strategies are used to hedge the portfolio based on prevailing market

conditions.

Fee structure:

Management Fees: Base Minimum fees charged based on opening NAV for the quarter or corpus

whichever is higher.


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Rs.25lakhs to Rs.100lakhs: 0.25% per quarter (maximum group members 4)

Rs.100lakhs & above: 0.1875% per quarter.

Management fees on any infusion and with-drawls within quarter would be charged on

weighted basis.

Performance based Management Fees :Performance based management fees would be charged based on performance in terms of positive

returns on portfolio.

Fee structure is as follows:

Profits Fees as % of

Opening NAV

1% 0.1%

2% 0.2% 3% 0.3%

4% 0.4%

5% 0.5%

SCHEME 2

Minimum Portfolio Size: Rs.25Lakhs cash or approved securities per individual or group.

Fee structure:

Management Fees : Base Minimum fees charged based on opening NAV for the quarter or corpus

amount whichever is higher

Rs.25lakhs to Rs.100lakhs: 0.625% per quarter (2.5% p.a.) (Maximum group members 4)

Rs.100lakhs & above: 0.5625% per quarter (2.25% p.a.).


weighted basis.

SCHEME 3 Minimum Portfolio Size : Rs.25Lakhs cash or approved securities per individual or group.

Fee structure:

Management Fees: Base Minimum fees charged based on opening NAV for the quarter or corpus

whichever is higher


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Rs.25lakhs to Rs.100lakhs: 0.25% per quarter (maximum group members 4)

Rs.100lakhs & above: 0.1875% per quarter.


weighted basis.

Performance based Management Fees :

Performance based management fees would be charged based on performance in terms of positive

returns on the portfolio. This effectively works out to 20% of profits above 7% p.a. return.

Fee structure is as follows:

Profits Fees as % of

Opening NAV

0 to 7% 0

8% 0.2

10% 0.6

15% 1.6

20% 2.6

25% 3.6

And so on

RESPONDENT 2 : Amit Sothani

Company Name: ShareKhan


Designation : Executive Advisor

Entry/ Exit Load Nil

Minimum size of the portfolio Not less than 5lacs

Investment horizon - Long-term view (calculated risk with disciplined trading and low turnover)

Investment philosophy Bottoms Up approach

Brokerage initially 0.75% and then depending on the size of the portfolio becomes 0.5%


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1. PROPRIME PORTFOLIO

The research is only fundamental research.

Prefer blue chip companies and relatively medium term profile.

Fee structure 2.5% p.a. chargeable quarterly AMC

Profit sharing20% shares in profits after a 15% hurdle chargeable at the end of the fiscal year.

2. PROTECH PORTFOLIO

Protech has two kinds of products, which are newly launched: -

Nifty- thrifty (NT) automated index trading

Beta- cash and option - (based on 80/ 20 chart)

These two products would meet the needs of today's investors and traders both. For a pre-defined higher

level of risk the products would be targeting a higher level of return. The products would use a

combination of delivery-based trading and derivatives trading to maximise the returns. Using technical

analysis these would also optimise the entry and exit timings. What's more, with the help of money

management rules these products would control portfolio risk.

Nifty- thrifty (NT)

Nifty futures will be bought and sold on the basis of an automated trading system that will generate

calls to go long/short. The system has been tested over the last 20 years of data and performance has

been very good [details or returns v/s risk are available for interested investors]. The portfolio's

exposure will never exceed the value of the portfolio that is there shall be no leveraging. But the

strategy will allow them to go short/hedge on Nifty in falling markets, thereby yielding returns

irrespective of the market direction. The portfolio will either be long or short at all points of time.

Beta- cash and optionStocks in long-term technical uptrend will be identified for trading at various inflection points in their

trading cycles. As much as 80% of the portfolio's corpus will be used to conduct delivery-based trading.

The balance 20% will be used to create an options book, which is buying calls/puts of the

indices/stocks, to increase the beta of the portfolio to over two and to hedge against any pitfalls [details


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of working are available for interested investors]. The use of timing for delivery and options for a higher

beta will attempt to offer a superior rate of return by taking a risk with only 20% of the capital. Here too

money management rules will be in place to see that the capital is not eroded. Portfolio rebalancing may

be conducted between cash and options segments based on profitability of each segment.

Fee structure

0% AMC fees

Profit share is only on book profit.

Investment into : - Equity and debt both

0.05% on derivatives

0.3% on delivery

Lock in period - 3months

Reporting time 15days

3. PORTFOLIO ARBITRAGE

Fee structure

Safe returns (8% post tax return per annum effectively 12% pretax)

Lock in period one month

Brokerage = no AMC no profit sharing

Only brokerage as applicable depending upon the investments made

0.25% (flexible because Intraday)

RESPONDENT 3 : Tanuj Mishra

Company Name: JM Morgan Stanely



Investment philosophy Bottoms up approach

Entry and exit load Nil

Minimum size of the portfolio Rs.50lacs

Types of companies preferred No bias towards market capitalisation

1. CORE PORTFOLIO


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Investment horizon long-term perspective

Two schemes under this portfolio : -

With profit sharing

Without profit sharing

Fee structure Without profit sharing: -

AMC of 2%

Profit sharing NIL

With profit sharing: -

AMC of 1.25%

Profit sharing 20% of the rest after deducting 10%

Brokerage 0.50%

2. VOYAGER PORTFOLIO

Investment horizon : - Short term

They have stopped providing this scheme due to the market volatility and because it is for short-term

investments.

RESPONDENT 4 : Abhijit Patharkar

Company Name: Kotak Securities



Asset under management Rs.2500crores


Investment philosophy Bottoms up approachInvestment in Equity and derivative both but the derivatives do not cross more than 50%

Minimum size of the portfolio Rs.1crore

This portfolio caters to the high-end customers.

They Hedge portfolio their portfolio through investment in futures and options. PMS can be terminated

in after 30 days.


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Brokerage 0.50%

Fee structure

With profit sharing = 2% flat with 20% profit sharing

Without profit sharing = 3% flat no profit sharing

1. SELECT PORTFOLIO

Companies preferred Mid cap and small cap companies

Stocks in portfolio 10 to 15 stocks

Lock in period 12 to 18 months

Investment horizon Long and medium term perspective.

2. KLASSIC PORTFOLIO

Companies preferred Small, medium and large capitalized companies

Stocks in portfolio Up to 20 stocks

Investment horizon Medium to long-term perspective.

3. DIVIDEND YIELD PORTFOLIO

Companies preferred Small, medium and large capitalization companies

Stocks in portfolio 20 to 25 stocks

Lock in period 12 to 18 months

Investment horizon Long and medium term perspective.

4. CORE PORTFOLIO

Companies preferred Small, medium and large capitalization companies

Stocks in portfolio 15-20 stocks

Lock in period at least 18 months

Investment horizon Long-term perspectiveThey may hedge their portfolio may investing into futures and options.

Invest in equity and debt and the derivative would not be more than 50%.


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RESPONDENT 5 : Sameer Shah

Company Name: India Infoline




Minimum size of the portfolio Not less than Rs.5lacs either cash or shares.

Investment philosophy Value based approach

Brokerage 0.50%

Fee structure Three types

Up to Rs.25Lacs = 2% p.a. coupled with 20% of profit as performance fees

More than Rs.25Lacs = 1% p.a. coupled with 10% performance fees

No performance fees = 3% AMC will be charged upfront

Reporting time every 15 days (send the entire statement at the end of the year)

USP

Own research

Experienced research team

Committee takes the entire decision

Forbes rated

1. 5P MOMENTUM

Investment horizon Short term to medium term

Investment in deal in equity as well as debt

Types of companies all three types

Brokerage 0.25%

Hedging may be done in futures and options to balance the portfolio

2. 5P GROWTH

Investment horizon Long-term perspective

Investment in Deal in equity as well as debt

Types of companies - Medium to large capitalization companies

Brokerage 0.50%


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3. 5P FOCUS

This portfolio will comprise of always 7 scrip at any point of time

Investment horizon Long-term perspective

Investment in deal in equity as well as debt but debt is for short term only if the equity market is not

favorable.Types of companies All the three kinds of companies.

Lock in period One month

5. 5P CUSTOMISED

Investment horizon Medium to long-term perspective

Investment in Equity or equity related instruments including Mutual Funds, debt and debt related

instruments including debt mutual funds, commodities markets, etc.

Types of companies Medium to large capitalization companies (blue chipped companies)

6. P N VIJAY WEALTH ENRICHMENT SCHEME

Investment horizon Medium to long-term perspective

Investment in Equity or equity related instruments.

Types of companies Medium to large capitalization companies

RESPONDENT 6 : Nilesh Shah

Company Name: Birla Sunlife


Designation : Senior Manager

Asset under management Rs.950crores

There is no lock in period can make withdrawals whenever required.Entry/ Exit Load Nil

Companies preferred - Small, medium and large capitalization companies

Minimum size of the portfolio Rs.50lacs

Custom option Rs.2.5crore

Investment horizon medium term to long term perspective


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Investment philosophy Bottoms up approach

Investment in Equity and derivative both but the derivatives do not cross more than 50%

Hedging may hedge the portfolio by using futures and options.

Brokerage 0.50%

Fee structure

With profit sharing = AMC charges 1.25%

20% profit sharing of the portfolio growth over 15%


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QUESTIONNAIRE

Dear Sir/Madam,

We are doing a survey on the different kinds of Portfolio Management Services offered by the

brokerage companies of Mumbai.

We would be very grateful to you if you could give us some of your time.

OFFICE - RECORD

Name of Respondent:

Designation:

Email-ID:

Phone No.:

==========================================================================

=======================

1. How many schemes do you offer and which are they?

2. What kind of companies does your company prefer?Mid Caps A-Group Mix companies

3. What is the minimum size of your portfolio?

4. What is your investment horizon?

Long term

Medium term

Both

5. What kind of an investment philosophy does your company follow?

(Bottoms up, top down, momentum based stocks etc)


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6. What type of Fees structure do you follow?

Fixed fees

Profit sharing

7. Do you hedge your portfolio?

Yes No

8. If yes then how?

9. How much brokerage does your company charge?

10. Do you try and time the market?

Yes No

11. What do you invest in?

Equity

Equity and debt

12. If both then what percentage?

Thank you for your participation!


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REFERENCE

Firms Contacted:

My thesis guide Mr. Sharansh Jain helped me out and used their contacts to get these firms to

participate in the interview.

Websites referred:

www.indiainfoline.com

www.sharekhan.com

http://www.financialexpress.com/fe_full_story.php?content_id=147783

http://en.wikipedia.org/wiki/India

http://www.censusindia.net/results/provindia3.html

sify.com/sifyimagine/fullstory.php?id=13213758

http://sify.com/sifyimagine/fullstory.php?id=13213758

http://www.forbes.com/facesinthenews/2005/04/21/0421autofacescan02.html

http://www.thehindubusinessline.com/iw/2006/10/08/stories/2006100800591300.htm

www.icicidirect.com

http://www.hinduonnet.com/businessline/iw/2000/09/03/stories/0703g051.htm

http://www.hinduonnet.com/businessline/iw/2000/09/03/stories/03g051t1.htmhttp://www.traderji.com/brokers-demat-matters/1854t

http://www.traderji.com/brokers-demat-matters/3608-new-c-icici-direct.html
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