Let us go back in history…..

When wealth was with….

The Kings
What did they own?
What else did they own?
The First Generation
Banker
The Landlord
His Assets:
• Land
• Gold

His Income:
• Rentals
• Money Lending (Debt)
What Did We Learn From Them?

Real Estate Gold

• The Process:
• The Process: – Buy
– Buy – Never Sell
– Hold
• How Did They Do It?
• This Became Inheritance – Social Stigma
The Beginning of the Modern World..
Who Had The Wealth ?
Since Oil could not be owned widely, the
Wealth got restricted to the Middle East
Who are the rich now?
Chairman, M.D, Reliance Industries
Net Worth :Rs 2.56 lakhs cr

Chairman, Wipro Ltd

Net Worth : Rs 1.28 lakhs cr

Chairman, Hinduja Group

Net Worth : Rs 1.21 lakhs cr

Chairman, CEO, ArcelorMittal

Net Worth : Rs 1.11 lakhs cr

Chairman: Shapoorji Pallonji Group

Net Worth : Rs 1.07 lakhs cr
What is the meaning of valuation?
Valuation of the Wealthy

 Companies are the new Kingdoms!

 The owner’s Wealth is the valuation of his ownership in his

company

 In other words, it is the Market Value of the Number of

Stocks/Shares he owns in his company

 The new Kings now own EQUITY!

Back to Learning….

What are the asset classes….

Real Estate : Remember the house you stay in is not as

Asset

Gold : Commodity with a time value

Debt : Principal Safety with Interest

Equity : The investment avenue of the Wealthy

Wealth Mgmt Opportunity
 Agar Jeb
main Rs
750000 se
jyada rakhte
ho , toh
zinda ho tum
Itna sab kuch aur
kya
Why hire a RIA ?
Different Strokes Different Folks Who is Who ?
Adding Value to Clients Quantifying it

Total potential
Behavioral coaching
value added for
150 bps
10% client - About
Rebalancing 35 bps 3% in net
Spending strategy (withdrawal order) 0 to 110 bps returns
Asset location 0 to 75 bps
25%
Cost-effective implementation (expense ratios) 40 bps
This shows
Total-return versus income investing >0 bps* there exists
Asset allocation >0 bps*
immense
65%
scope in India

*Value is deemed significant but too unique to each investor to quantify.

Note: bps – basis points. Source: Vanguard Advisor’s Alpha strategy. We believe implementing the Vanguard Advisor's Alpha framework can add abut 3% in net returns for your clients and also
allow you to differentiate your skills and practice. The actual amount of value added may vary significantly, depending on clients' circumstances.
Karvy Stock broking Scam

In a major blow to Karvy Stock Broking Limited, the National Stock Exchange and the BSE on
Monday banned the broking firm on account non-compliance of regulations.
Last month, the Securities and Exchange Board of India (SEBI) had banned the brokerage firm
from taking new clients and executing trades for its brazen modus operandi of misusing client
funds by using their demat accounts.
The prompt action of the market regulator and its effective implementation by the bourses
ensured that nearly 83,000 investors got back their securities which were illegally transferred by
the firm to its own account and were even pledged for raising loan without the authorisation.
However, the matter once again highlighted that Indian markets are prone to manipulations and
stricter and pragmatic regulations are still required for the market players to ensure fair play.
Karvy started its journey as a stock broker way back in 1983 and ever since has managed several
large and prominent market offerings besides being a portfolio manager for key clients.
Its long journey at the bourses gave it the reputation of being a smart broker which could help
investors grow their wealth. But in the process, the company also got aware of the loopholes in
the system and how to use them for its own gains. It is here that the process of illegal transfer of
clients'' funds by the broker to its own account started.
Like a normal brokerage operation, Karvy took money from clients for any buy order and
transferred shares to them upon making payment to the bourses. Similarly, for share sale, the
scrip moved from client''s demat account to the pool account of the broker from where it was
transferred to the exchanges and the money received in return was deposited back into the
client''s account.
It all seemed fair, till the broker started using client shares received into its pool account for
pledging and raising loans. The client shares were then pledged for raising loans without
authorisation for personal gains.
Karvy''s modus operandi involved transferring of shares from demat accounts of its clients, which
were inactive, to demat accounts controlled by the broking house. It then pledged those shares
with lenders and raised funds. These funds were transferred to Karvy Realty.
C. Parthasarathy, Chairman and Managing Director of Karvy group and a chartered accountant by
qualification, had co-founded Karvy in 1983. Last week he resigned from Karvy Fintech, which
acts as a registrar and transfer agent (RTA) for the mutual fund industry. His resignation had come
after SEBI barred Karvy from taking fresh clients.
Bas itna hi risk profile
Types of Wealth Management Architecture
History kya hain
 • The inherent nature of an UMA enables advisors to open a single
account and allocate capital to multiple third party investment
strategies, as well as individual securities. Historically an advisor
would have to open an individual account for each one of these
strategies, and then consolidate the performance and holding
information in another program. This functionality:
• reduces the administrative burden of opening multiple accounts for
the same person

UMA Why ? • eliminates the need to trade each one of these accounts
individually
• simplifies the process of reallocating capital across strategies and
securities
• provides a holistic approach to money management
• consolidates proposals into a single set of documents
• streamlines the billing process
• modernizes account rebalancing and tax-loss harvesting
• What Are Sleeves?
• There are three types of sleeves that sometimes get conflated:
• Sleeve-Level Accounting (AKA “sub accounting” or “partitioning”). Sleeve-level
accounting is the process of breaking a single account into virtual subaccounts (or
“sleeves”) by tagging each tax lot to a particular subaccount.
• Sleeve-Level Rebalancing. Sleeve-level rebalancing, in its purest form, is the
practice of rebalancing each sleeve in isolation from the others. More generally,
“sleeve-level rebalancing” describes any rebalancing process where the presence of
the sleeves has some effect on rebalancing.
• Sleeve-Level Reporting. Sleeve-level reporting is the practice of reporting the
returns of each sleeve/subaccount separately.
• The reason these three types of sleeves are sometimes conflated is that they
usually go together. This is partly unavoidable —  sleeve-level rebalancing and
sleeve-level reporting require sleeve-level accounting. But the reverse is not true. In
particular, it is possible to have sleeve-level accounting and sleeve-level reporting
without sleeve-based rebalancing. You can achieve this by merging all the sleeves
each day, rebalancing the account holistically, and then dividing the account back
up again. In this workflow, the existence of sleeves has no effect on trading. The
question, which we will address later, is whether sleeve-level reports without
sleeve-level rebalancing is useful.
Twelve commandments in Wealth Mgmt
• What is the value of your portfolio %
• Do you need it within five years if yes then how much
• Are you going to withdraw over next 5 years how much
• What is time horizon
• My goal for this portfolio is _% (based on inflation, track record)
• Do you have any asset class limits?
• What is a good investment for you
• Do you have a bucket more than 5 yrs how much
• Risk profiler score
• If my portfolio falls by what time it should recover
• Risk averse or risk seeking?
• Can I live with the volatility of markets?
Your Goal Plan
Inch by Inch
Cash flow
Statement
Insurance
Needs
Mujhe data do
main tumhe
AUM doonga
Ulta Pulta (T op Down Bottom Up)
What is a good investment
What is a good investment
Investment Planning-Problem No 4
• Chidambaram start investing immediately for 10 year annually
Rs 80,000 in the ratio 70:30 in equity & debt products for his
rations .Expects returns from equity & debt to be 12.5% &
9.5% p.a during this period.
• To protect his dhan he rebalance the portfolio in 40:60 of
equity & debt after 10 years & invest in the same ratio
annually Rs 1.5 lakh for next 10 years .
• The return expected from equity & debt in this period
subsides to 10.5%pa & 7.5% pa respectively.
• What could be his total investment value at the end of the
entire tenure of his investment ?

12/24/2020 Ankit Dani 74

Ans 4
• First 10 years , investment amount =80,000(p.a)
Particulars Equity Debt
Allocation 70 30
N 10 10
I 12.5 9.5
PMT -56,000 -24,000
FV 11,32,649 4,08,924

12/24/2020 Ankit Dani 75

Ans 4 continued
• Next 10 years , investment amount =1,50,000 p.a + FV total
of 1st 10 years =15,41,573
Particulars Equity Debt
Allocation 40 60
N 10 10
I 10.5 7.5
Pv -6,16,629 -9,24,944
PMT -60,000 -90,000
FV solve 2,75,501 32,75,069
FV total of next 10 years = 60,30,971

12/24/2020 Ankit Dani 76

Problem 5
• A bond with par value of Rs 1000 & coupon
rate 11% payable semi-annually, next coupon
due immediately & matures after 5 years is
available at Rs 942.50 in market. If the coupon
received can be reinvested till maturity at an
average rate of 8.5%pa , what should be the
realized rate of return from such investment if
the bond is held till maturity.

12/24/2020 Ankit Dani 77

Ans 5
• Step 1 Step 2
• Set=Begin Set =begin
• I%=8.5 • N=5
• PV=0 • I=?(13.15)
• PMT=(-1000 *11%)/2=-55 • PV=-942.50
• Fv=solve(693.06) • PMT=0
• p/y=2; c/y=1 • Fv=(1055+693.06)= 1748
• p/y=1; c/y=1

12/24/2020 Ankit Dani 78

Problem No 6
If the risk-free rate of return is 6%, the beta of
a share is 1.25 and the return on market return is
14%. Compute the required rate of return on the
share according to the CAPM approach.
(Answer: Required rate of return is 16%)
Solution:
Required rate of return of a share as per
CAPM :
Rf + Beta of share*(Rm- Rf)

12/24/2020 Ankit Dani 79

Segmentation
Targeting –
Is that Kotler
in Finance?
How to get
more
customers
Lets part our
ways but
why?
So where is
the money
Customer
Life cycle
Snapshot
Revenues &
costs for
Wealth
mgmt. firm
Profitability Drivers
Value Chain
Analysis
Prevalent Model Mfg-Distributor
 EXPLAIN IT SIMPLE-SHARPE

4 ODI Scores
4 ODI Scores 4 ODI Scores
(0,0.120,160)
(60,60,70,70) (0,0,5,20)

Avg 70 Avg 65 Avg 6.25

Std Dev : 71.21 Std Dev : 10 Std Dev 8.25

Sharpe Sharpe Sharpe

( 70-6.25)/71.21 (65-6.25)/10 (6.25-6.25)/8.25
113
12/24/2020
Ankit
Mutual fund-Life ke har Padhav ke liye…
HOW DOES IT WORK
CHOOSE YOUR FLAVOUR
CHOOSE YOUR FLAVOUR
CHOOSE YOUR FLAVOUR
CHOOSE YOUR FLAVOUR
MASTERCHEF EQUITY
MASTERCHEF EQUITY
MASTERCHEF EQUITY
THE BIG BOYS
THE BIG BOYS
 THELargecaps?
• Why BIG BOYS
SHIPS TO SAIL VOLATILITY
SHIPS TO SAIL VOLATILITY
SHIPS TO SAIL VOLATILITY
DEBT FUNDS KI DHOON
DEBT FUNDS KI DHOON
DEBT FUNDS KI DHOON
DEBT FUNDS HARMONIUM
MATCH THE COLUMNS
MAP YOUR GOALS TO YOUR FUNDS

Objective Horizon Mapped Products (Sample) Possible Goals

Very Short Term <1 Year Liquid Mutual Funds Contingency Funding, Park Your
Bonuses & Windfalls
Short Term 1-3 Years Debt Mutual Funds Vacations, Car Purchase, Park
Retirement Corpus for Fixed Income
Medium Term 3-6 years Balanced Mutual Funds House Purchase, Car Purchase, Start
Up Funding
Long Term 6-10 Years Diversifed Equity Mutual Children’s Education, Children’s
Funds Marriage, Dream House
Very Long Term 10 + Years Diversified, MidCap, Retirement. Chidlren’s Future,
SmallCap & Sectoral MFs Wealth Creation for Next Generation
PROFITABILITY METRIC OF MF

• Profitability metric of MF scheme

A) INTEREST INCOME
B) +DIVIDEND INCOME
C) +REALIZED CAPITAL GAINS
D) +VALUATION GAINS
E) -REALIZED CAPITAL LOSSES
F) -VALUATION LOSSES
G) -SCHEME EXPENSES
Mutual funds …How they operate
• No of units* face value=Unit capital
• Income earned by
1. Dividend / interest
2. Capital Gains
3. Valuation gains
Mutual funds Classification on structure
• Open Ended Funds
• Close ended funds
• Interval funds
Mutual funds Classification on investment objective

Growth
Income
Hybrid
Legal Structure of Mutual funds
• Trust
• One or more sponsors
• Trust deed
• AMC appointed by the sponsor
• Custodian appointed by trustees
• RTA appointed by AMC
E.g.
• Sponsor : ICICI Bank /Prudential PLC
• Trustee :ICICI Prudential Trust Ltd
• AMC : IPRU AMC; Registrar: CAMS; Custodian : HDFC bank
Who is WHO
Mutual ? Classification on investment objective
funds
• Sponsor
Sound track record for 5 yrs, Positive Net worth for each 5 years
Min 40% shareholding of Capital of AMC
• Trustee
Due diligence, rights of investor, never convicted, , 4 in case of individual trustees
and min 4 directors in case of trustee co
2/3rd trustees independent
• AMC
50% independent directors, 75% unitholders can terminate the AMC
Cant invest in own schemes, min net worth Rs 10 cr, CEO, CIO, CCO,CMO,COO reqd
Who is WHO ?
• Custodian
Safekeeping, accept delivery, cannot be controlled by sponsor,
registered with SEBI
• RTA
Investor records, Service centers, RTA not compulsory
• Auditors
Scheme auditor diff from AMC auditor, AMC auditor by AMC, scheme
auditor by trustee
• Fund Accountants, Distributors, Collecting bankers
AGNI & AMFI
• SRO: Regulate own members, only broad framework, ICAI
• AMFI is not a SRO
AMFI objectives
1.Ethics
2.Best practices
3.SEBI interface
4. Represent MF industry
5.Training certification intermediaries, IAP, ACE
DIFFERENCE BETWEEN THREE
• Investment Objective: To generate capital appreciation by investing in
equity
• Investment Policy: Portfolio will invest in mid cap stocks
• Investment Strategy: Overweight on midcap cement stocks
TAT
• NFO : Closure within 5 days
• SIP/STP/SWP: SOA within 10 days
• On specific request: Within 5 days
• NAV published daily in 2 newspapers, AMFI website NAV
• Dividend warrants within 30 days
• Redemption within 10 days
• Interest of 15% p.a. penalty if late
Audits
• Scheme portfolio/ unaudited within 1 month of close of each half yr
• Advertisement in English paper where head office is
• Portfolio disclosure every 3rd on respective website
• Annual report: website
RIGHTS & DUTIES
• Investor rights –unit certificate,nominee upto 3, reg or direct, inspect trust
deed, rta, moa ,aoi etc
• Scheme wise Annual report mailed to unit holders within 4 months of close
of FY
• SID with no of complaints
• Changes in fundamental attribute: 30 days to exit
• Scheme can be wound by 75% unit holders
• Suit against trustees
• Caveat emptor, cant sue trust, prospective investors no right, no protection
under companies act 1956
RIGHTS & DUTIES
• Unclaimed accoutns: must deploy in money mgmt.
• Investor can claim within 3 years on prevailing after 3years at end
NAV
• Remind investors
Illiquid Securities
• If recovered within two years pay to old investros
• Else transfer to IAP
RIGHTS & DUTIES
• Micro Kyc pan exempt KYC
• Can a scheme go bust? They cannot vanish
• New sponsor, option to exit etc
SCHEME INFORMATION DOCUMENT
• SID
• NFO dates, open close, reopen
• Max NFO open for 15 days
• Allotment within 5 days
• AMC decides then SID prepared then Trustees approve then final
approval from SEBI, SID is released , roadshow, advertisement,
application forms
STATEMENT OF ADDITIONAL INFORMATION
• SID vetted by SEBI not approved
1.Nature of scheme
2.Legal doc
3.Merits of scheme
4.Presumed to be read
5.Investment objective
Two parts SAI
WHAT COMES IN SID
• SID
Name type of fund
Face value
Relevant dates
Date of SID
Mutual fund
Standard risk clauses, Name contact of AMC trustee co
Draft available for 21 working days
Final SID hosted 2 days before
WHAT COMES IN SID
• Regular Updates
Scheme launched in first 6 months Jun 10
Within 3 months at the end of financial yr Jun11

Scheme launched in second six months Oct 2010

Within 3 months at end of next fy Jun 12
Need based if change in fundamentals
WHAT COMES IN SAI
• SAI
• info ABT sponsor, Trustee, AMC, Shareholding pattern, Name of
directors, Key personnel, Contact info
• Condensed financial info in last 3 years
• How to apply
• Rights of unitholders
• Investment valuation norms
• Tax , legal , general info, website,
• Update end of 3 months of financial year
WHAT COMES IN KEY INFO MEMORANDUM
• KIM
Summary of SID+SAI
More widely available
Name of AMC, mf, fund mgr
Dates, Plans , Risk profile, Price, benchmark, Dividend policy,
Performance Loads,expenses
Updates atleast once in a year
DISTRIBUTION CHANNELS , REGULATIONS
• Distribution Channels
IFA, Banks , ND, Direct, Sub brokers, MF chains, regional distributors
NISM 5 A exam
Empanel with AMC
No Upfront , only trail , no step up trail , Nominee need ARN , Max 2%
trail, for b15 extra, no contest trips, no vouchers, no passback, no
commission on own funds
No exaggerated claims, no guarantees, disclaimers must, atleast 5
seconds and 80% screen space in all ads
ADVERTISING
No promise of return
No self ranking only ranking by tpa
Only compounded yield for more than 1 yr
And abs for less than 1 year
Performance with benchmark, 1, 3, 5 yr
Best mutual fund strict no
Past performance not indicative of future returns
Ranking recent qtr
No indicative yield, portfolio
Disclosure of risk factors
Investors advised to read sid before investing
• Debt
Market Kabhi Upar Kabhi Niche , Kya Kare…
What Investors Do
What Investor Want Solution
Dynamic Asset
Allocation
Fund

How &
Buying Low,
Sell High,
when to
How to do rebalance
that How much
into debt
and equity
Equity Valuation Equity Valuation
goes Up Comes down

Working of
Dynamic
Asset Allocation
Reduce Equity
Increase Equity
Exposure
Exposure
Investment bhi, control bhi…

Disclaimer: The Terms and conditions pertaining to Trigger facility may change from time to time without prior notice.
Triggers har situation ke liye…
Capital Appreciation Trigger- Aapke gains ko karega preserve…

Stop loss trigger-Aapke losses ko karega kum…

Index trigger- Index value based, profit booking/stop loss trigger.

Time based trigger- Karo apne bday, festival , event pe execute.

Second Salary har mahine ki zaroorat ke liye…

Ek fixed date par

chahiye paisa Kya mera
Tax ka kya
investment puri kar
STCG /LTCG
sakta hain cash flow
needs
Thoda paisa har mahine ki zaroorat ke liye
` Regular Cash Flows

Capital appreciation on
balance investments
SWP
`

Tax efficient*
`

Easy and Convenient

*Short Term/Long Term Capital Gains tax applicable. Information given herein is as per prevailing tax laws, which may change from time to time.
In view of individual nature of circumstances, investors are advised to consult their Tax advisors.
• Types of Mutual funds
• Types of Mutual funds
• Types of Mutual funds
• Types of Mutual funds
• Food for Thought
• Food for Thought
• Food for Thought
• What are largecaps /bluechips ?
Key features of Bluechip Cos.
Why Largecaps?
All you need to Know about Volatility
• Volatility Causes
• How to protect from Volatility
• What are Debt funds ?
• Types of Debt funds
Types of Debt funds
• Common Risk identification methods
Risk Management
Risk Management
• Loss Forecasting
Endowment Assurance
Whole life with profits
Whole life vs Single
Convertible Whole life
Limited pay life
Moneyback with profits
Children Deferred Assurance
Insurance Act 1938
IRDAI
IRDAI functions
IRDAI functions
IRDAI functions