TASK 2

Name: B Naga Shreya Batch ID: 22HR60 B10

SWOT ANALYSIS OF VARIOUS ASSET CLASSES

SWOT ANALYSIS OF EQUITY

STRENGTHS OPPORTUNITY
• They provide higher capital • High dividends based on performance
appreciation of the company
• If the investor gets return, then it will • Equity shareholders have voting rights
be higher than the other funds in the company
• They are the real owners of the • Best investment option if you are
company seeking for high return

WEAKNESS THREAT
• There is no security or guarantee of • They re highly volatile, i.e., small
returns change in the economy leads to high
• There will be high risk if the investor impact on the returns
did not get any return from the • The global factors will also affect the
company share prices

SWOT ANALYSIS OF MUTUAL FUNDS

STRENGTHS OPPORTUNITY
• Performance • Overall market
• Brand name • Taking advantages of trends
• Historical Record • Change in government regulatory
environment
WEAKNESS THREAT
• Fund’s fees • Recession
• Risk • Having no plan
• High expense ratio
 SWOT ANALYSIS OF GOLD

STRENGTHS OPPORTUNITY
• Ready marketability and liquidity • Inflationary monetary and fiscal
• YTD Return on gold investment has policies followed by US and other
been more than 20% in the recent times major economies
• Safe against any economic, political, • Rising long term saving, investment
social or flat currency crises and jewelry demand for gold especially
from India and China
WEAKNESS THREAT
• Idle asset with no regular return profile • Subject to speculation especially using
• Gold storage has costs, including cost future contracts and derivatives
of insurance • Price of gold is driven by speculation
• Gold prices have been volatile in recent and supply and demand as well.
times

SWOT ANALYSIS OF REAL ESTATE

STRENGTHS OPPORTUNITY
• Value Multiplies Overtime • Global Demand
• Less Risky investment • Rapidly growing
• Authority over the use of land • New areas have great potential
• Inflation Hedge
• Used as collateral
WEAKNESS THREAT
• Difficult to transfer ownership • Economic Recession
• No liquid asset • Competition with other assets
• Huge capital required • Price falls due to less demand
• Limited supply
 SWOT ANALYSIS OF FIXED INCOME SECURITIES

STRENGTHS OPPORTUNITY
• Distribution and Reach • Internet
• Cost structure • E commerce
• Return on capital expenditure • Technological Developments

WEAKNESS THREAT
• Research and development • New entrants
• High day sales inventory • Technological developments by
• Low current ratio competitors
• Increasing competition

PRODUCT NOTES

1. Equity:

Equity represents the value that would be returned to a company’s shareholders if all of the assets
were liquidated and all of the company's debts were paid off.
Return on equity (ROE) is a measure of financial performance calculated by dividing net income
by shareholders' equity. Because shareholders' equity is equal to a company’s assets minus its
debt, ROE is considered the return on net assets.

2. Non-convertible debentures:

Non-convertible debentures (NCDs) are a financial instrument that is used by companies to raise
long-term capital. This is done through a public issue. NCDs are a debt instrument with a fixed
tenure and people who invest in these receive regular interest at a certain rate. Some debentures
can be converted into shares after a certain point in time. This is done at the discretion of the
owner. However, this is not possible in the case of NCDs. That’s why they are known as non-
convertible.
The rate of return on NCDs is around 11-12%. This is high compared to most investment options.
For example, fixed deposits (FDs) are another popular avenue where people put their money for
regular returns. However, the returns are much lower.
 3. Public provident fund
Public Provident Fund (PPF) was introduced in India in 1968 with the objective to mobilise small
savings in the form of investment, coupled with a return on it. It can also be called a savings-cum-
tax savings investment vehicle that enables one to build a retirement corpus while saving on
annual taxes. Anyone looking for a safe investment option to save taxes and earn guaranteed
returns should open a PPF account. The current interest rate is 7.1% p.a. that is compounded
annually.

The Finance Ministry set the interest rate every year, which is paid on 31st March. The interest is
calculated on the lowest balance between the close of the fifth day and the last day of every
month.

4. National pension scheme:

National Pension System (NPS) is a voluntary retirement savings scheme laid out to allow the
subscribers to make defined contribution towards planned savings thereby securing the future in
the form of Pension. It is an attempt towards a sustainable solution to the problem of providing
adequate retirement income to every citizen of India.
At the time of normal exit from NPS, the subscribers may use the accumulated pension wealth
under the scheme to purchase a life annuity from a PFRDA empaneled life insurance company
apart from withdrawing a part of the accumulated pension wealth as lump-sum, if they choose
so. PFRDA is the nodal agency for implementation and monitoring of NPS.
5. Senior Citizens Savings Scheme (S.C.S.S.):

The Senior Citizens' Savings Scheme (SCSS) is a government scheme that helps seniors save
money for retirement and receive quarterly interest payments. This account can be created at any
bank or post office singly or jointly with your spouse. It has a 5-year maturity period that can be
extended up to an additional 8-year period.
The interest rate on SCSS for the quarter ending March 31, 2022 is 7.4%.

6. Sukanya Samriddhi Yojana (S.S.Y.)

The Sukanya Samriddhi Yojana scheme is aimed at betterment of girl child in the country.
Sukanya Samriddhi scheme has been launched to offer a means of saving to the girl child in every
family. Tenure of SSY is 21 years from the date of opening of the account or till the marriage of
the girl after she attains the age of 18 years

Sukanya Samriddhi Yojana (SSY) scheme was launched by Prime Minister Narendra Modi under
the Beti Bachao Beti Padhao campaign with the main aim of securing the future of a girl child.
The main benefits of the SSY scheme is mentioned below:

• Interest rate was reduced from 8.4% to 7.6%

• Tax benefits of up to Rs.1.5 lakh
• Account can be transferred

7. Mutual funds
A mutual fund is a company that pools money from many investors and invests the money in
securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund
are known as its portfolio. Investors buy shares in mutual funds. Each share represents an
investor’s part ownership in the fund and the income it generates.

8. Equity based mutual funds:

Equity mutual funds try generating high returns by investing in the stocks of companies across all
market capitalisations. Equity mutual funds are the riskiest class of mutual funds, and hence, they
have the potential to provide higher returns than debt and hybrid funds. The performance of the
company plays a significant role in deciding the investors’ returns.

9. Debt based mutual funds

Debt Funds are a kind of Mutual Funds that generate returns by lending your money to the
government and companies. The lending duration and the kind of borrower, determine the risk
level of a Debt Fund.

• Debt Funds can be considered for an investment horizon of 1 day to up to 3 years

• They offer better post-tax returns compared to FDs if you stay invested for at least 3
years

• Liquid Debt Funds are a great option to park your emergency funds. You can earn better
returns than savings bank account without taking too much risk

10.Hybrid Mutual Funds

Hybrid Funds invest in a mix of asset classes. Most Hybrid Funds invest in equity and debt
although there are funds that have more asset classes like gold, international equities, etc. in their
portfolio.
 • Hybrid Funds allow you to have a diversified portfolio with just one fund

• Invest in them for goals you want to achieve in 3 to 5 years

• Multi-Asset Funds give you exposure to at least 3 asset classes together

11.Index Fund
An “index fund” is a type of mutual fund or exchange-traded fund that seeks to track the returns
of a market index. The S&P 500 Index, the Russell 2000 Index, and the Wilshire 5000 Total
Market Index are just a few examples of market indexes that index funds may seek to track.

A market index measures the performance of a “basket” of securities (like stocks or bonds),
which is meant to represent a sector of a stock market, or of an economy. You cannot invest
directly in a market index, but because index funds track a market index they provide an indirect
investment option.

12.Exchange Traded Funds

An exchange-traded fund (ETF) is a type of pooled investment security that operates much like a
mutual fund. Typically, ETFs will track a particular index, sector, commodity, or other asset, but
unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a
regular stock can. An ETF can be structured to track anything from the price of an individual
commodity to a large and diverse collection of securities. ETFs can even be structured to track
specific investment strategies. The first ETF was the SPDR S&P 500 ETF (SPY), which tracks
the S&P 500 Index, and which remains an actively traded ETF today.

13.Portfolio Management Services

Portfolio Management Service (PMS) is a facility offered by a portfolio manager with the intent
to achieve the required rate of return within the desired level of risk. An investment portfolio can
be a mix of stocks, fixed income, commodities, real estate, other structured products, and cash.

14.Systematic Investment Plan:

A systematic investment plan involves investing a consistent sum of money regularly, and usually
into the same security. A SIP generally pulls automatic withdrawals from the funding account and
may require extended commitments from the investor. SIPs operate on the principle of dollar-cost
averaging. Most brokerages and mutual fund companies offer SIPs.
15.Gold Investment

The gold price tends to move in an inverse direction to the US dollar, making it a potential hedge
against a decline in the relative value of the world's reserve currency. It also tends to gain value as
an investment during inflation and periods of uncertainty driven by geopolitical instability or
other global events.