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March 15,

2014WEALTH MANAGEMENT – ICICI BANK

[Chetanas’s Institute of Management and Research] of 41

“Wealth Management – ICICI bank ”

SUBMITTED BYChinmay Pranav Kalelkar

UNDER THE GUIDANCE OF

PROF.LAXMI GORITIYAL

SUBMITED FOR PARTIAL FULFILLMENT OF REQUIREMENT FOR THE

AWARD OF

POST GRADUATE DIPLOMA IN MANAGEMENT (PGDM)

SESSION 2012-2014

TO

CHETANA’S INSTITUTE OF MANAGEMENT & RESEARCH BANDRA (EAST),

MUMBAI – 400051



March 15,



Contents

Table of Contents

Contents .................................................................................................................................................. 2

Acknowledgement .............................................................................................................................. 4

DECLARATION ......................................................................................................................................... 5

Executive summary ................................................................................................................................. 6

Introduction: ............................................................................................................................................ 7

OBJECTIVES ......................................................................................................................................... 8

Research Methodology ........................................................................................................................... 9

Key Challenge Areas ............................................................................................................................ 11

Core Elements of Wealth Management Services .................................................................................. 11

Determination of Portfolio Constituents and Allocation of Assets ....................................................... 15

Key Challenge Areas ............................................................................................................................ 17

Solution Framework .............................................................................................................................. 19

SERVICES PROVIDED BY WEALTH MANAGEMENT INSTITUTIONS .................................... 21

Wealth Management Practice Orientation Overview ........................................................................... 22

ADVANTAGES AND LIMITATIONS ............................................................................................... 24

Consumer point of view ........................................................................................................................ 25

CONCEPT OF ASSET CLASSES .......................................................... Error! Bookmark not defined.

Fixed Deposits .................................................................................................................................. 29

MUTUAL FUND.............................................................................................................................. 30

Commodities Market ........................................................................................................................ 32

ART FUND ....................................................................................................................................... 32

Diversified portfolio .......................................................................................................................... 33

REAL ESTATE FUND .................................................................................................................... 33

Insurance Product .............................................................................................................................. 33

Structured Product ............................................................................................................................ 34

GOLD ............................................................................................................................................... 34

Currency ............................................................................................................................................ 34Portfolio composition of currency .................................................................................................... 35



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ICICI Wealth Management introduction .............................................................................................. 35

PRODUCTS ...................................................................................................................................... 37

Wealth Management – Indian opportunities and concerns ................................................................... 38

Growth .............................................................................................................................................. 39Risk aversion of Indian customers .................................................................................................... 39

Conclusion ............................................................................................................................................ 40

Bibliography .......................................................................................................................................... 41



March 15,



Acknowledgement

We think if any of us honestly reflects on who we are, how we got here, what we think we

might do well and so forth, we discover a debt to others that spans written history. The work

of some unknown person makes our lives easier every day. We believe it‘s appropriate to

acknowledge all of these unknown persons; but it is also necessary to acknowledge those

people, we know have directly shaped our lives and our work.

I thank my school Chetanas‘s Institute of Management and Research for being the constant

driving force to put to practice, the theoretical know ledge that I imparted in the PGDM

program. I thank the internship coordinators. Prof Laxmi Goritiyal for imparting her

wisdom on my thought process.

Last but not of least importance. I take the opportunity to thank my parents and friends who

have been with me and offered emotional strength moral support.



March 15,



DECLARATION

I do, hereby declare that the Project Report entitled ―Wealth Management – ICICI

bank .‖, is the Record of genuine work carried out by me

The abstract or Report Data is Original work done by me, References used for work

& related source have been given at the end of report chapter. This project work is

submitted in part completion of the Degree of Masters of Business Administration to

Chetanas‘s Institute of Management & Research, under the guidance of

Prof. Laxmi Goritiyal.

Place:

Date:

Mr. Chinmay Kalelkar

(PGDM – C – 142)



March 15,



Executive summary

ICICI Bank is an Indian multinational banking and financial services company headquartered

in Mumbai. It is the second largest bank in India by assets and by market capitalization, as of

2014. It offers a wide range of banking products and financial services to corporate and retail

customers through a variety of delivery channels and through its specialized subsidiaries in

the areas of investment banking, life, non-life insurance, venture capital and asset

management.

ICICI Bank Wealth Management provides discretionary wealth management service, in

which wealth managers give recommendations to customers and invest according to customer

discretion. My Project is the study of Wealth Management sector, an analysis of existing and

potential Market

This report deals with an extensive analysis of the potential of wealth management sector and

understanding company‘s procedure in wealth management department along with having a

general notion on different asset classes available in financial market

The main objective of the study lies in understanding the organization and studying wealth

management. This report will give an insight on the norms, underlying processes, initiatives

and strategies to keep functioning of wealth management smooth and effortless.



March 15,



Introduction:

Wealth management is an investment advisory discipline that incorporates financial planning,

investment portfolio management and a number of aggregated financial services. High Net

worth Individuals (HNWIs), small business owners and families who desire the assistance of

a credentialed financial advisory specialist call upon wealth managers to coordinate retail

banking, estate planning, legal resources, tax professionals and investment management.

Wealth managers can be an independent Certified Financial Planner, MBAs, Chartered

Strategic Wealth Professional, CFA Charter holders or any credentialed professional money

manager who works to enhance the income, growth and tax favoured treatment of long-term

investors. Wealth management is often referred to as a high-level form of private banking for

the especially affluent. One must already have accumulated a significant amount of wealth

for wealth management strategies to be effective. Private wealth management (PWM) is the

term generally used to describe highly customized and sophisticated investment management

and financial planning services delivered to high net worth investors. Generally, this includes

advice on the use of trusts and other estate planning, vehicles, business succession or stock

option planning, and the use of hedging derivatives for large blocks of stock. Traditionally,

the wealthiest retail clients of investment firms demanded a greater level of service, product

offering and sales personnel than were received by the average clients. With an increase in

the number of affluent investors in recent years, there has been an increasing demand for

sophisticated financial solutions and expertise throughout the world



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OBJECTIVES

1) Through the past results, to identify the potential of wealth management sector

2) Understanding company‘s procedure in wealth management department.

3) To know the comparative position of the companies offering wealth management

services.

4) To have a general notion on different asset classes available in financial market.

5) To have a general notion on different asset classes available in financial market.

6) To have a conceptualized view on wealth management services.



March 15,





March 15,



Key Challenge Areas

Wealth management firms face many challenges in formulating winning services, offering

meeting the client needs. Some of the key challenges faced by wealth management firms are:

1. Highly Personalized and Customized Services

2. Personal relationship driving the business

3. Evolving Client Profile

4. Client Involvement Level

5. Passion Investment (Philanthropy and Social Responsibility)

6. Limited Leveraging Capabilities of Technology (as an enabler)

7. Technical Architecture and Technology Investment

8. Intricate Knowledge of Cross-functional Domain



March 15,



Core Elements of Wealth Management Services

In most basic sense, wealth management services involve fiduciary responsibilities in

providing professional investment advice and investment management services to

Institutions, funds (Pension/mutual/Hedge), corporations, trusts as well as HNWIs.

Depending on the mandate of the services given to the Wealth Manager, wealth management

services could be packaged at various levels:

a) Advisory

Wealth manager‘s role is limited to the extent of providing guidance on investment / financial

planning and tax advisory, based on client profile. Investment decisions are solely taken by

the client, as per his /her own judgment.

b) Investment processing (transaction oriented)

Client engages wealth manager to execute specific transaction or set of transactions.

Investment planning, decision and further management remain vested with the client.

c) Custody, Safekeeping and Asset Servicing

Client is responsible for investment planning, decision and execution. Wealth manager is

entrusted with management, administration and oversight of investment process.

d) End-to-end Investment Lifecycle Management

Wealth manager owns the whole gamut of investment planning, decision, execution and

management, on behalf of the client. He is mandated to make

Financial planning, implement investment decisions and manage the investment throughout

its life.



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Wealth management services comprises of following Key function areas:

a) Financial Planning

b) Portfolio Strategy Definition / Asset Allocation

c) Strategy Implementation

d) Portfolio Management

e) Strategy Review and Alignment

a) Financial Planning

Client Profiling

Client profiling takes in account multitude of behavioural, demographic and investment

characteristics of a client that would determine each client‘s wealth management

requirements. Some of key characteristics to be evaluated for defining client‘s investmentobjective are:

Current and future Income level

Family and life events

Risk appetite / tolerance

Taxability status

Investment horizon

Asset Preference/restriction

Cash flow expectations

Religious belief

Behavioural History (Pattern of past investment decisions)

Level of client‘s engagement in investment management (active/ passive)

Present investment holding and asset mix



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Investment Objective

Based on the client profile, investment expectations and financial goals of the client could be

clearly outlined. Defining investment objectives helps to identify investment options to be

considered for evaluation. Investment objective for most of the investors could be generally

considered amongst the following:

Current Income

Growth (Capital Appreciation)

Tax Efficiency (Tax Harvesting)

Capital Preservation (often preferred by elderly people to make sure they don‘t outlive

their money.)

b) Portfolio Strategy Definition / Asset Allocation

Defining Portfolio Strategies and Portfolio Modelling

After establishing investment objectives, a broad framework for harnessing possibleinvestment opportunities is formulated. This framework would factor for risk-return trade off

of considered options, investment horizon and provide a clear blueprint for investment

direction. Investment strategy helps in forming broad level envisioning of asset class

(Securities, Forex, Commodity, Real State, Reference and Indices, Art/Antique and Lifestyle

Assets (Car, Boat, and Aircraft), market, geography, sector and industry. Each of these asset

classes is to be comprehensively evaluated for inclusion in portfolio model, in view of

defined investment objectives. While defining the strategy, consideration of client preferenceor avoidance for specific asset class, risk tolerance, religious beliefs is the key element, which

would come into picture. Thus, for a client with a belief of avoidance of investment in sin

industries (alcohol, tobacco, gambling etc.) is to be duly taken care of. Likewise, for a client

looking for Sharia-compliant investment, strategy formulation should consider investment

options meeting with the client expectations.



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Determination of Portfolio Constituents and Allocation of Assets

Guided with the investment strategy, constituents in portfolio model are determined, which

would directly and efficiently contribute towards client‘s investment objectives. Thus, a

broad level investment guidance of - ―investment in fixed income in emerging market‖ would

further determine classification within Fixed Income such as Govt. or corporate bonds, fixed

or variable rate bonds, Long or short maturity bonds, Deep discounted or Par bonds, Asset

backed or other debt variants. Return profile, risk sensitivity and co-relation of constituents

within portfolio model would help to determine the size (weightage) of each individual

constituent in the portfolio.

c) Strategy Implementation

Having decided the portfolio constituents and its composition, transactions to acquire specific

instruments and identified asset class is initiated. As acquisition cost would be having bearing

on overall performance of the portfolio, many times process of asset acquisition may be

spread over a period of time to take care of market movement and acquire the asset at

favourable price range.

d) Portfolio Management

Portfolio Administration

Portfolio Administration involves handling of investment processes and asset servicing. This

would also require tax management, portfolio accounting, fee administration, client reporting,

document management and general administration relating with portfolio and client. This

function would involve back office administration and custodial services to manage

transaction processes (trading and settlement) - interfacing with brokers/dealers/agents, Fundmanagers, Custodians, Cash Agent and many other market intermediaries.

Performance Evaluation and Analytics

Performance evaluation of the portfolio is an ongoing process. Portfolio return is

continuously monitored and analyzed with respect to defined portfolio objectives. Analysis

dimension could be varied - simple and complex. These may include -absolute return, relative

return (in comparison to chosen benchmark), trend, pattern, cost impact, tax impact,

concentration, lost opportunity and other form of sensitivity and what-if analysis. Any



March 15,



deviation of portfolio performance observed during performance evaluation would lead to

strategy review and any possible alignment of portfolio strategy.

e) Strategy Review and Alignment

Recalibration of Portfolio Strategy

Based on performance evaluation and future outlook of the investment, portfolio strategy is

evaluated on periodic basis. To keep it aligned with the defined investment objectives, portfolio strategy is suitably re-calibrated from time to time. Many times, review of portfolio

strategy would be necessitated due to change in client profile or expectations.

Rebalancing, Reallocation and Divestment of Assets

Any re-calibration of strategy and consequent change in portfolio model would require

rebalancing of the assets in portfolio. This would be achieved through rebalancing the asset

(divesting over-allocated part and acquiring under allocated), relocation (from one sector the

other or from one instrument to other instrument in the same class) or complete divestment.



March 15,



Key Challenge Areas

While immense business potentiality of this emerging sector is a driving point for most of the

firms, they face many challenges in formulating winning services offering meeting the client

needs. In the following section, we would briefly take a look on the key challenges area in the

present context.

• Highly Personalized and Customized Services

Unlike other stream of financial services, mostly being transactional / commoditized in

nature, wealth management services require client specific solution and service offering. No

one solution exactly meets the needs of other client. In a situation of highly personalized and

customized nature of service offering, developing any form of generic service model does not

support growth of the business.

• Personal r elationship driving the business

To meet client expectation of personal attention, mode of communication in wealth

management services tends to be highly personalized. Thus, the conventional grids of

communication, such as call centre, data centre does not fit well. Success of wealth

management services heavily draws on personal interaction with the dedicated relationship

manager, who takes care of whole investment management lifecycle for bunch of clients on

one-to-one basis. This essentially requires service firm to invest heavily in human processes

to groom and retain a team on competent relationship managers with cross functional skills.

• Evolving Client Profile

The biggest challenge in providing wealth management service offering is to factor and

reckon the evolving nature of client profile, in terms of investment objective, time horizon,

risk appetite and so on. Thus, a service model developed for a particular client cannot remain

static over a period of time. Any service model has to be flexible enough to consider the

dynamic nature of client profile and expectations arising out of it.



March 15,



• Client Involvement Level

The conventional adage - the more money you have, more effort is needed to manage it -

proves to be otherwise in case of HNWIs. Generally, client involvement in managing the

finance remains on the lower side. This brings onus of managing the whole gamut of

investment and due performance single-handedly on the shoulders of investment manager.



March 15,



Solution Framework

Generic services offering model is going to draw big blank in case of wealth management

services. A HNWI client expects exclusiveness in services in a normal manner. In highly

competitive market, key to success for a firm lies in offering exclusiveness in services

delivery (high quality services on most personalized basis), going beyond the client

expectations.

A solution framework with considered inclusion of following key elements would help firms

in meeting and exceeding client needs towards sustainable business growth.

• Quality of Service Level

Quality of service level provided by the service provider firm would the key determinant of

growth and success in client acquisition, client satisfaction and client retention aspects. In a

sense, service offering could be developed in the form of partnership with the client based on

trust and integrity, where the relationship manager remains highly responsive to client

sensitivities and expectations

• Universal Service Offering

To meet the client needs in holistic manner, product and service offering range of the firm

should be wide enough to c over the investment spectrum across its lifecycle. In an ideal

situation, a client would expect to deal with a single firm to get complete range of investment

management services.

• Investment in People Processes

As relationship manager remains the face of the firm to a client, success of the firm would be

greatly dependent on the skills, drive and enthusiasm of relationship managers (to take an

extra mile), while bonding and dealing with any of client issues. This aspect is more

challenging than as it appears. This necessitates transformation of organizational philosophy

towards its people and people processes contributing to business success. Firms would be

required to invest heavily in human processes to attract, groom and retain a motivated team of

relationship managers, who will make the real difference between winning and losing the

game.



March 15,



• Price not a True Differentiator

Pricing as a key differentiator to distinct the service offering from one firm to other may not

be highly relevant in case of wealth management services. Focused on performance andquality of service, pricing in isolation will not make much meaning to service seeking clients.

Client would always value the pricing from the quality of services received. He will certainly

not mind paying extra, if he finds services offered to him meeting and exceeding his

expectations.

• Unconventional Delivery Channel and Communication

Delivery channel for service content and mode of communication has to be greatlycustomized - aligned with the client-desired vehicles. This would require a process of

continuous re-inventing and re-defining the grid of delivery and communication channels to

meet client expectations .Impact of technological advancements and its interplay on service

delivery and communication method would certainly be an equally challenging aspect to be

factored in, while designing such strategies.



March 15,



SERVICES PROVIDED BY WEALTH MANAGEMENT

INSTITUTIONS

(1) Custodian Services

(A) Securities Safekeeping

(B) Income collection from Securities

(C) Settlement of Securities trades as directed

(D) Payment of fund when directed

(E) Timely settlement delivery

(2) Trust Services

(A) Charitable Trust

(B) Revocable Trust

(C) Irrevocable life Insurance Trust

(D) Special Need Trust

(E) Institutional Trust

(3) Retirement Plan Services

(A) IRA‘s Custodian Or Trustee

(B) Defined Benefit Plans

(C) Defined Contribution Plans



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Wealth Management Practice Orientation Overview



March 15,



Transactors:

• Product Expert: Handles high-volume transactions involving sophisticated products or

asset classes, such as foreign exchange derivatives.

• Investment Broker: Handles transactions involving basic asset classes, such as equities,

fixed income and options.

Investment Managers:

• Investment Advisor: Offers strategic investment planning, as well as playing a hands-on

role in constructing, reviewing and rebalancing client portfolios.

• Relationship Manager: Establishes and nurtures client relationships, delegating portfolio

management to internal or external managers.

Wealth Planners:

• Wealth Planner: Offers holistic advice in accordance with client‘s finances and short/long-

term goals, such as real estate, retirement and generational wealth transfer.

• Personal CFO: Aspires to provide quasi family-office services, often acting in a leaddiscretionary role coordinating with the client‘s other trusted advisors.



March 15,



ADVANTAGES AND LIMITATIONS

ADVANTAGES: The following are the advantages of Wealth management concept.

1) Helpful in Tax Planning: The Wealth management professional always shows the good

path to the customers and provide the service of tax planning. How to minimize the tax and

save more money?

2) Helpful In Selection of Investment Strategy: Another advantage from the customer

point of view is with the help of WM Professional the customer can easily know the

investment strategy and analyze risk and return.

3) Helpful in Estate Management: With the help of Wealth management professional .They

can also manage their estate. Estate management is a task to provide objective administration

of their funds tailored to aim in responsible distribution and protection of their overall estate.

4) Helpful in forward looking: They can say planning, that recognizes as their estate grows

and changes occurs. They require some team of professionals who help us in future planning.

5) Helpful for Indian Economy: Banks which are engaged in business of WM earning

revenues from the foreign countries i.e. outsourcing for economy.

LIMITATIONS

1. WM Reduces The Scope Of Management: Though They all know that management has

existence at all levels of life and society but the term Wealth management only related with

the higher level means rich people, and is not having any plans and provisions for poor and

lower and middle level of society.

2. Chances of Fraud: Another demerit or limitation of the WM concept is it is not showing

the actual position. The customer doesn‘t know about the things going on with using his

Wealth and there may be chances of forgery and fraud with customers.

3. Actual Picture VS Inflation : What is the actual position of market they don‘t know

because everything is done by some WM professionals. So they cannot assume their

position in the market that also results in inflation because economy is unknown about the

actual state. There may be chance that the customers are in risk but they are showing the false

return and vice-versa.



March 15,



Consumer point of view

Technically, PMS can be defined as hybrid service provided by portfolio managers, which

includes customised stock and mutual fund investing. Portfolio managers can be of two

kinds, discretionary or non-discretionary. Discretionary portfolio managers manage the funds

of clients independently on their own accord, while the latter manage the funds according to

their clients‘ direction. Any person who is registered with Securities and Exchange Board of

India (Sebi) as a portfolio manager is allowed to offer PMS. A list of these entities can be

found at www.sebi.gov.in.

PMS vs Wealth Manager and Fund Manager.

PMS is completely different from priority banking and Wealth management. Priority banking

or Wealth management is the umbrella of products while PMS is a product. So if priority

banking and Wealth management is a grocery shop then PMS is a specific grocery. Priority

banking is usually offered to premiere customer‘s who have a relationship manager

appointed, who would advice you on your investments across the products offered by the

bank like insurance, and investment linked products (mutual funds, bonds and unit linked

insurance plan).

Mutual funds and PMS differ on the degree of customization, minimum investment and on

the fee structure. Minimum investment required for PMS is more than mutual fund. Unlike

PMS, there is no concept of profit sharing in mutual funds. Also, the level of customization

of your investments is higher in PMS.

Is PMS for you?

PMS is for those people who don‘t have the time or the expertise to do enough research to

take informed investment decisions. If you have the required time and expertise, then you

don‘t need these services. Also, SEBI has prescribed a minimum of Rs 5 lakh investment for

PMS, which means the service, is not for small and medium investors.

http://www.sebi.gov.in/






March 15,



Risks involved.

Though PMS is a good option for managing your Wealth, it is not entirely without risk or

pain.

How to choose a PMS

Investment philosophy.

Akhilesh Singh, business head, Emkay Wealth, says, ―The most important factor is to

understand the fund manager‘s investment philosophy and strategy, which must align with

the investor‘s objectives.‖ Singh adds, ―Some portfolio managers structure long-term

portfolios, while some prefer to actively churn the portfolio for higher short term returns,

which adds to the overall cost and tax liability.‖

HSBC, for instance, has a product called Strategic, which is for the long term, while Angel‘s

Blue chip is for medium to long term investors. Scheme benchmarks make sure that the

portfolio is benchmarked to an appropriate index. This helps measure the performance of the

scheme and the portfolio manager.

Benchmarks are important also as profit-sharing is linked to the performance of the portfolio

above the benchmark. So, an aggressive portfolio benchmarked to a low-return index will

mean higher over-the-benchmark returns. This means that you will have to share a larger

portion of your profit. The wrong benchmark distorts the performance of the fund‘s minimum

investment. There are many portfolio managers whose thresholds are much higher than the

Sebi mandated minimum of Rs 5lakh. Choose a scheme that fits the size of your portfolio

returns. It is difficult to judge a scheme‘s performance based on returns, as it may vary from

the returns of an investor. Also, depending on the time of entry, an investor‘s returns may

vary from that of others. Before signing the contract, make sure your portfolio manager has afair record of surpassing the returns from the benchmark index for numerous years.



March 15,



Cost structure.

Portfolio managers usually have two kinds of charges — management fee, which is fixed, and

profit sharing, which is variable. You can also pay a fully fixed fee. Further, if the portfolio is

churned frequently, it adds to the cost due to higher tax and brokerage. On each transaction

you pay brokerage and short-term gains tax of 20 per cent.

Management fee ranges from scheme to scheme. You could opt for a higher performance-

linked charge as it puts pressure on the fund manager to perform better a she has a share in

the profits.

Frequency of disclosure.

This varies from firm to firm, and largely depends on the agreement between the investor and

the company. Most NAVs are disclosed daily, but you can opt for a company that also

discloses portfolios daily.

Broking house.

If the broker is internal, it may be possible that your portfolio is churned frequently. Usually,

asset management companies have external brokers, while some, such as Religare, have both

external as well as internal broking.

Assets under management (AUM).

Though higher AUMs do not guarantee higher returns, it remains an important factor. A low

AUM could be an indicator of poor performance. They believe that Rs 100core AUM is a

healthy floor.



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CONCEPT OF ASSET CLASSES

Asset Mix

Asset mix is the allocation of a portfolio between asset classes, it balances return and

risk. Returns are a combination of the income from an investment and the price appreciation

over the period. Risk is usually proxied by the ―standard deviation‖ of returns, how much the

return change about the long-term average.

List of Different Asset Class

1. Fixed deposit

2. Mutual Fund

3. Equity

4 Commodities

5. Art Fund

6. Real-Estate Fund

7. Insurance product

8. Structured product

9. Gold

10. Currency

11. Oil



March 15,



Fixed Deposits

FDs, are the most popular today. With FDs you deposit a lump sum of money for a fixed period ranging from a few weeks to a few years and earn a pre-determined rate of interest.

FDs are offered by both banks and companies though putting your money with the latter is

generally considered riskier.

Merits and Demerits

The main advantage is that FDs from reputed banks are a very safe investment because such

banks are carefully regulated by the Reserve Bank of India, RBI, and the banking regulator in

India.

Note that company FDs isn‘t as safe as bank FDs because if the company goes

bankrupt you may lose your money. Make sure you check the credit rating of a company

before investing in its FDs.

A fixed deposit also doesn‘t offer protection against inflation. If inflation rises steeply

during the maturity of the FD your inflation adjusted return will fall. The rate of interest

on FDs varies according to the maturity with longer deposits generally earning a higherinterest rate. Interest paid on a fixed deposit is paid either monthly or quarterly according to

the investor‘s choice. So if you invest Rs 3 lakhs in a one year fixed deposit which pays

8 per cent you can earn Rs 2,000 of interest every month or Rs 6,000 of interest every

quarter.

Interest rates on FDs

The rate of interest on FDs varies according to the maturity with longer deposits generallyearning a higher interest rate. Here are the interest rates offered by ICICI Bank on their FDs.

Note that FDs vary quite a bit from bank to bank so you should search around before

investing. Interest paid on a fixed deposit is paid either monthly or quarterly according to the

investor‘s choice.

So if you invest Rs 3 lakhs in a one year fixed deposit which pays 8 per cent you can earn

Rs 2,000 of interest every month or Rs 6,000of interest every quarter.



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Effective Return

Before you invest in FDs you need to understand the concept of effective return which is

higher than the rate of interest on the FD. Effective return is relevant if you choose to reinvestyour interest every year which means that you will be earning compound interest.

MUTUAL FUND

A mutual fund is a professionally managed firm of collective investments that collects money

from many investors and puts it in stocks, bonds, short-term money market instruments,

and/or other securities. The fund manager, also known as portfolio manager, invests and

trades the fund‘s underlying securities, realizing capital gains or losses and passing any

proceeds to the individual investors

Types of mutual funds

Open-end fund

The term mutual fund is the common name for what is classified as an open-end investment

company by the SEC. Being open-ended means that, at the end of every day, the fund issues

new shares to investors and buys back shares from investors wishing to leave the fund.

Exchange-traded funds

A relatively recent innovation, the exchange-traded fund or ETF, is often structured as an

open-end investment company. ETFs combine characteristics of both mutual funds and

closed-end funds. ETFs are traded throughout the day on a stock exchange, just like closed-

end funds, but at prices generally approximating the ETF‘s net asset value.

Equity funds

Equity funds, which consist mainly of stock investments, are the most common type of

mutual fund. Equity funds hold 50 percent of all amounts invested in mutual funds in

the United States. Often equity funds focus investments on particular strategies and certaintypes of issuers.



March 15,



Bond funds

Bond funds account for 18% of mutual fund asset Types of bond funds include term funds,

which have a fixed set of time (short-, medium-, or long-term) before they mature. High-yield bond funds invest in corporate bonds, including high-yield or junk bonds. With the potential

for high yield, these bonds also come with greater risk.

Money market funds

Money market funds hold 26% of mutual fund assets in the United States. Money

market funds entail the least risk, as unlike certificates of deposit (CDs), money market

shares are liquid and redeemable at any time. The interest rate quoted by money market fundsis known as the 7 Day SEC Yield.

Funds of funds

Are mutual funds which invest in other underlying mutual funds (i.e., they are funds

comprised of other funds). The funds at the underlying level are typically funds which an

investor can invest in individually. A fund of funds will typically charge a management fee

which is smaller than that of a normal fund because it is considered a fee charged for asset

allocation services. The fees charged at the underlying fund level do not pass through thestatement of operations, but are usually disclosed in the fund‘s annual report,

prospectus, or statement of additional information. The fund should be evaluated

on the combination of the fund-level expenses and underlying fund expenses, as these both

reduce the return to the investor.

Hedge funds

Hedge funds in the United States are pooled investment funds with loose SECregulation and should not be confused with mutual funds. Some hedge fund managers are

required to register with SEC as investment advisers under the Investment Advisers Act.

The Act does not require an adviser to follow or avoid any particular investment

Strategies, nor does it requires or prohibits specific investments. Hedge funds typically

charge a management fee of 1% or more, plus a ―performance fee‖ of 20% of the hedge

fund‘s profits.



March 15,



Equity investment

Generally refers to the buying and holding of shares of stock on a stock market by

individuals and funds in anticipation of income from dividends and capital gain as thevalue of the stock rises. It also sometimes refers to the acquisition of equity (ownership)

participation in a private (unlisted) company or a start-up (a company being created or newly

created.)

Direct holdings and pooled funds

The equities held by private individuals are often held via mutual funds or other forms of

pooled investment vehicle, many of which have quoted prices that are listed in financialnewspapers or magazines; the mutual funds are typically managed by prominent fund

management firms (e.g. Fidelity Investments or the Vanguard Group).Such holdings allow

individual investors to obtain the diversification of the fund(s)and to obtain the skill of the

professional fund managers in charge of the fund(s).

Commodities Market

Commodity markets are markets where raw or primary products are exchanged. These rawcommodities are traded on regulated commodities exchanges, in which they are bought and

sold in standardized contracts.

ART FUND

Wealth management now includes art, real estate investments. WITH prices of paintings

rising 10 times in the last two years, three new financial entities have launched ‗art advisory‘services as part of Wealth management services. While Citibank has been providing art

advisory services like art insurance, art storage and using art as a tradable collateral for

some time, the recent surge in prices has driven Yes Bank, ABN Amro and Dawnay Day to

start this service.



March 15,



Diversified portfolio

Individuals looking at alternative investments rather than the usual investments inequity-related products.―Investments in alternative asset classes give clients a diversified

portfolio across a variety of asset classes‖

Yes Bank is expected to launch a Wealth management service that will offer investment in

real estate, art and jewellery. It expects to kick-start the real estate service during this fiscal.

―The bank is planning tie-ups with real estate consultant agencies. The service will largely

cater to non-resident Indians seeking opportunities to invest in real estate in the country‖

REAL ESTATE FUND

India Real Estate Fund is a significant component of the Indian realty market flooded with

Indian and foreign financial institutions. The growing increase in the industrial, commercial

and residential projects have boosted the real estate market in India. This has thrown open

unlimited scope for the incoming of the India Real Estate Funds. The profits have encouraged

financial assistance from not only domestic funds but also lured many foreign investors to

participate in the India Real Estate Fund.

The cooperating assistance from the government has further encouraged liquidity

flow into the India real estate market sector. The foreign contributions in the India Real

Estate Fund have been witnessing a steady rise of 40%-45% per year. The domestic financial

institutions have also build up their investments like their foreign counterparts. This

combined participations from both along with contributions of the corporate houses has

accelerated the growth of India Real Estate Fund.

Insurance Product

The present insurance business is not even able to penetrate 20%/30% of the total population

of 1.2billion. The order of the day will be to refocus on micro insurance in India to

capture the huge potential of rural customers Unit Linked Insurance Plan (ULIP)

provides for life insurance where the policy value at any time varies according to the value of

the underlying assets at the time.



March 15,



ULIP is life insurance solution that provides for the benefits of protection and

flexibility in investment. The investment is denoted as units and is represented by the value

that it has attained called as Net Asset Value (NAV).

Structured Product

A structured product is generally a pre-packaged investment strategy which is based on

derivatives, such as a single security, a basket of securities, options, indices, commodities,

debt issuances and/or foreign currencies, and to a lesser extent, swaps. The variety of

products just described is demonstrative of the fact that there is no single, uniform definition

of a structured product. A feature of some structured products is a ―principal guarantee‖function which offers protection of principal if held to maturity

GOLD

Today, like all investments and commodities, the price of gold is ultimately driven by

supply and demand, including hoarding and disposal. Central banks and the International

Monetary Fund play an important role in the gold price. In times of national crisis, people

fear that their assets may be seized and that the currency may become worthless. They see

gold as a solid asset which will always buy food or transportation. Thus in times of great

uncertainty, particularly when war is feared, the demand for gold rises.

Currency

The modern hedge fund manager‘s liberal tongue-in-cheek definition is: ―If it moves up and

down independently, then it‘s an asset class.‖ While currencies surely do a lot of moving upand down, they also stand out for other reasons:

• The global foreign-exchange (FX) market can be considered by far the largest marketplace

in the world, not only geographically but also with reference to trading volume. The daily

turnover is growing constantly and has long ago surpassed the $1 trillion mark: forty times

the size of world trade.



March 15,



• An important difference between currencies and other markets is that currency prices allow

us to analyse also their reciprocal values. A falling dollar/yen is synonymous with a rising

yen because the dollar can be expressed in yen and, vice versa, the yen in dollars. By

comparison, the dollar is never measured in units, as the Dow Jones for example.

Portfolio composition of currency

Modern portfolio theory postulates that relative risk can be reduced by diversification into at

least six or more components. This is not necessarily true for currency portfolios. Most

delivering percentage returns. The index serves as a proxy for available currency manager

portfolio returns in general and has the added benefit of being uncorrelated to returns of otherasset classes. Low correlation, liquidity and transparency are good enough reasons for

currencies to be considered a prime candidate for inclusion in any investment portfolio.



March 15,



ICICI Wealth Management introduction

A pioneer in banking services, ICICI bank is also a leader in the wealth management service

with its exclusive ICICI wealth management offerings. In this article, we will review the

ICICI bank wealth management exclusive service.

ICICI bank wealth management department has a dedicated team of experts with a rich

experience in finance and related areas. When you subscribe to ICICI wealth management

services, a dedicated wealth manager works closely with you in understanding your current

assets, your risk profiles and your financial objectives. The wealth managers are backed up

by a highly expert ICICI bank wealth management team. Based on a thorough study, your

wealth manager along with the ICICI wealth management team comes up with solutions and

recommendations.

A professionally built portfolio is the main output of the whole exercise. Of course, it is an

ongoing process with regular portfolio updates and reviews done by the same ICICI wealth

management experts. However, we also recommend that the customer should weight all the

options before implementing the wealth manager suggestions. It is good to clear your doubts

and ask questions to your wealth manager and the bank. ICICI bank customer care has

usually been under some criticism and ICICI bank wealth management services are no

different. However, there have been improvements after some improvements after customer

feedback.

There is a dedicated toll free customer care contact number for the ICICI wealth management

customers. You can also lodge your concerns and complaints online at the ICICI bank

website. Talking of online services, there is also a provision for the ICICI bank wealth

management customers to check their own risk profile online by answering just few simple

questions. ICICI wealth management customers also enjoy some exclusive privileges like

free access to any other bank‘s ATM, discounts on buying gold through ICICI bank etc.



March 15,



PRODUCTS

Asset classes used

ONLINE TRADING: They also bring to you the best value for money through competitively

priced brokerage charges for online share trading services from www.icicidirect.co. With a 3-

in-1 account consisting of a trading account, ICICI Bank savings account and demat account,

you can stay connected to the market at all times. To add to this, they give you waiver on the

account opening charges too!

With a 3-in-1 account consisting of trading, ICICI Bank account and demat account, you canenjoy:

• Competitive priced brokerage rates

o Reduced account opening charges

o Online share trading services

MUTUAL FUNDS:

They offer you advice on the entire universe of mutual funds. So be it equity funds, where

you look for growth and capital appreciation or debt funds for capital preservation, They can

help you select the right mix to suit you. Choose from an array of more than 15 fund houses

with innumerable schemes.

Customised Products

• Structured Products: Their Structured Product offerings are tailor -made to suit your

investment objective and risk appetite. Their services include Portfolio Management Servicesand specially designed products that are Equity or Index-linked in nature.

• Alternate Asset Products: They offer products which complement your existing

investments e.g. Art Funds, Private Equity Funding, Realty Funds. So, if you‘re looking

beyond the stock market, you‘ll find us there too!



March 15,



Growth

In the annual survey done by Cap Gemini, SA and Merrill Lynch it was found that ranks ofmillionaires grew 6% in the previous year, because the number of richer people grew in

India & China where India is competing China. India & China posted the biggest gain in

millionaires advancing by 23% &20% respectively. When they are watching the world wide

increase in number of millionaires the facts collected by Cap Gemini, S.A. and Merrill

Lynch survey report. India has 23% growth in the last year. The biggest Asian economy

China stands on second position with 20%, West Asia 16%, United States 4% and

United Kingdom (UK) 2%. So they can understand that there is more opportunities in the

Wealth management business in Asia specially in India.

Risk aversion of Indian customers

The repercussions of the mutual fund scandal of the 1990s are still evident. Many Indian

retail customers averse to diversifying their asset base into higher risk classes. To account

for this conservative tendency, PFS offerings can be tailored to emphasize the value of a

lower-risk investing approach.

―New money‖ mass affluent customers are not accustomed to Wealth management. Mostcustomers are used to obtaining financial services on and as needed basis without much

regard to a full view of their financial well-being. As part of the opportunity to define and

develop offerings for India‘s emerging HNW population, customers may need an

introduction to the concept of private banking (or Wealth management).

Shortage of skilled personal financial advisors. To date, the PFS opportunity has been limited

to a very small segment of the population, so domestic banks have not generally developed

expertise incomprehensive personal financial management. Global banks can take advantage

of this gap by leveraging advisory competencies that they have cultivated in other markets,

importing that expertise into the Indian market.



March 15,



Conclusion

Wealth managers are beginning to investigate innovative segmentation methods to manage

the changing client profile. Over the next 20 years wealth managers will hone their

segmentation methods Wealth managers will develop segmentation as a service efficiency

initiative. Segmentation models will apply holistic criteria to wealth management. The most

important segments globally will be entrepreneurs and SMES/ CEOs. Financial advisers will

become an important separate client segment for wealth managers The organization of direct

client ownership will also change Availability and flexibility will become vital components

of the business model Internal restructuring will aim to integrate client services. The rise of

the mass affluent represents an opportunity for wealth managers in the medium term Wealthmanagers will capture the higher value mass affluent market by offering a scaled down

wealth management service. The mass affluent proposition will run along the lines of the

current wealth management service. Liability management is currently not part of the wealth

management agenda but has proven potential. Clients in developed markets are seeking more

holistic wealth management services Liability management is clearly a profitable area with a

proven existing client base. The incorporation of lending into wealth management will shift

the focus of the service. Specialist forms of lending will also become common additions to

the offer ings of many wealth managers. Some will fail due to a persistence of the ―asset

focused‖ service model and a lack of commitment. There are significant benefits in the area

of liability management for the wealthy, and that the importance of liability management as

part of wealth management will inevitably grow over the next 20 years, until it becomes a

key service area. Rising income and wealth inequalities, if not matched by a corresponding

rise of incomes across the nation, can lead to social unrest. An area of great concern is the

level of ostentatious expenditure on weddings and other family events. Such vulgarity insults

the poverty of the less privileged, it is socially wasteful and it plants the seeds of resentment

in the minds of the have-nots.



March 15,


Bibliography

www.google.com

www.moneycontrol.com

www.wikipedia.com

http://www.icicibank.com/wealth-management

IBM Business Consulting Wealth Management Report

http://www.google.com/


http://www.moneycontrol.com/


http://www.wikipedia.com/








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