A Comparative Analysis on Investment Portfolio of Business & Service Class Investors of HSBC InvestDirect
in Ludhiana
Presented by-
Supriya Nayyar
Historical background of the group
It was established in 1865.Aimed to finance the growing trade between
Europe, India & China.By 1880s, the bank was acting as banker to
Hong Kong Government.It is also participated in the management of
British government accounts in China, Japan, Penang & Singapore.
Introduction to HSBC
HSBC is world’s local bank.
Headquarters in London.
HSBC’s international network comprises over 9500 offices in 76 countries & territories in Europe, the Asia-Pacific region, the Americas, the Middle East & Africa.
HSBC provides a comprehensive range of financial services like-
1) Personal financial services
2) Commercial Banking
3) Corporate Banking
4) Investment Banking
HSBC Group in India
It offers a full range of Banking & Financial Services to its over 2.8 million customers.
It has 47 branches & 170 ATMs across 26 cities.
It has over 34,000 employees in its Banking, Investment Banking & Capital Markets.
With Asset Management, 2 Global IT development centres & 6 Global resourcing operations in the country.
Sale of Stake in Investsmart to HSBC
HSBC acquired 29.36% stake in IL&FS InvestSmart Ltd.
HSBC acquired 43.85% of InvestSmart from E*TRADE Mauritius Ltd.
HSBC has accepted shares to Public shareholders equivalent to 20.65% of InvestSmart’s capital.
Thus, it has completed its acquisition of 93.86% of IL&FS for a consideration of US$296.4 million.
Vision & Mission Vision :To become the preferred long term financial
partner to a wide base of customers whilst optimizing stakeholders value.
Mission: To establish a base of 1 million satisfied customers by 2010. We will create this by being a responsible and trustworthy partner.
PRODUCT PROFILE
All the products of IL&FS can be broadly divided into the following two categories:
Online Trading Products.Advisory Services.Other services.
Online Trading Product of IL&FS Investsmart
Basically IL&FS Investsmart offers three types of products to its retail customers.
Smart StartSmart InvestSmart Trade
Advisory Services
1) Mutual fund advisory services.
2) Portfolio management services.
3) IPO Advisory and Distribution Services.
4) Insurance Advisory Services.
5) Investment Advisory services
Other Services
1) Online services.
2) Research and Financial Analysis.
3) Value added services.
Organisational Members Mr. Manasije Mishra MD & CEO Mr. Avdhoot Deshpande Head - Equity and
Capital Markets Mr. Vipul Shah Head - NBFC Mr. Dharmen shah Vice President -
Institutional Equity Mr. Jaideep Anand Senior Vice
President - Institutional Sales & Dealing Mr. C. Diwakar Chief Information Officer Mr. K. Venkatesh Head – Distribution
Organization Chart
Branch ManagerMr. Saurabh Talwar
Offline
Opeartions (3 Persons)
Online
SWOT ANALYSIS
Strengths:-
1) Customization.
2) Expertise.
3) Unique Features.
4) Research Agency.
5) Extensive reach.
6) Brand image.
7) Competitive pricing.
Weaknesses:-
1) Expensive Products.
2) Tedious Procedures.
3) Fund Transfer.
4) Attrition.
Continued……….
Opportunities:-
1) Right Time to Investors to re-enter into market.
2) Huge untapped Markets.
3) Increasing number of Graduates.
4) Increase Tie-ups for Fund Transfer.
Threats:-
1) Stiff Competition.
2) Increasing awareness of Mutual Funds & ULIPS.
RATIO ANALYSIS1) Current Ratio
2007 2008 2009
Current Ratio 2.2 2.3 1.9
0.25
0.75
1.25
1.75
2.25
Current Ratio
Quick Ratio
2007 2008 2009
Quick Ratio 1 1.1 1.1
0.95
0.97
0.99
1.01
1.03
1.05
1.07
1.09
1.11
Quick Ratio
Return on Total Assets
2007 2008 2009
Return on Total Assets 12.5 12 9.9
1
3
5
7
9
11
13
Return on Total Assets
Net Profit Ratio
2007 2008 2009
Net Profit Ratio 6.1 5.5 6.6
4.9
5.1
5.3
5.5
5.7
5.9
6.1
6.3
6.5
6.7
Net Profit Ratio
Debt-Equity Ratio
2007 2008 2009
Debt-Equity Ratio 1.44 1.42 2.59
0.25
0.75
1.25
1.75
2.25
2.75
Debt-Equity Ratio
Investment PortfolioInvestment is a commitment of funds made in the
expectation of some positive rate of return.
The Investment needs of an Investor:-
1) Capital Preservation.
2) Wealth Generation.
3) Tax Savings.
4) Income.
5) Future Uncertainty.
6) Retirement Planning.
Investment Planning
It helps in deciding upon the right Investment strategy.
It is a balance of three components:-
1) Liquidity.
2) Risk Tolerance.
3) Return.
Types of Investment
Portfolio Management
A Portfolio is a collection of securities that are grouped together to diversify the total Risk.
An Optimal Portfolio provides the highest possible utility, given the constraints imposed by the opportunity set and efficiency frontier.
Beta measures the risk associated with Individual Portfolio in relation to the Market Portfolio.
Meaning of Portfolio Management
The Art & Science of making decisions about Investment mix & policy, matching Investments to Objectives, asset allocation for Individuals & balancing risk vs. Performance.
Portfolio Objectives:-
1) Stability of Principal.
2) Income.
3) Growth of Income.
4) Capital Appreciation.
Investment Pyramid
PMS by HSBC1) iPreserve:- It is a discretionary investment management schemes,
offering investment solutions in Mutual Funds that are aligned to suit investor’s financial goals.
The Primary objective of iPreserve is to manage investments in Mutual Funds, encompassing both debt as well as equity schemes.
It takes care of complete execution of the investment and
monitoring on investor’s behalf.
Continued…………2) iGrowth:- iGrowth is a discretionary portfolio management
scheme focusing on investments in equities and derivatives with an objective of growth.
It aims at creating long-term wealth through judicious stock selection and asset allocation.
Features of PMS by HSBC1) Smart Portfolio:-
Adding Scrips
Scrip wise split of Portfolio Holdings
Realized Gains Report
Title
A Comparative Analysis on Investment Portfolio of Business & Service Class Investors of HSBC InvestDirect in Ludhiana.
Objectives1) To study the demographical factors affected the
choice of Portfolio of Investors.
2) To identify the purpose of investment & extent of financial literacy of Investors.
3) To know the most preferred Investment avenues of Investors.
4) To find out the Risk Tolerance limit of Investors.
Research Methodology
Research Problem: -“A Comparative Analysis on Investment Portfolio of
Business & Service Class Investors of HSBC Invest Direct in Ludhiana”.
Research Design: -
Descriptive Research Design.
Data Collection: -
Primary Research:- Questionnaires & Telephonic Interviews.
Secondary Research: - Journals & Magazines.
Sample:-
The Business & Service class Investors of HSBC InvestDirect in Ludhiana.
Sampling Unit:-
Those Business & Service class Investors using PM Services of HSBC InvestDirect.
Sample Size:- 100.
50- Business Class Investors
50- Service Class Investors.
Sampling Frame:- It includes the Clients Database using PMS of HSBC InvestDirect, Ludhiana & the Walking Investors in Ludhiana Branch.
Sampling Technique:- Simple Random Sampling & Convenience Sampling Techniques.
Data Analysis & Interpretation
Fig 4.1:- The Investors’ Demographic Profile (Gender)
Male Female
Business 88% 12%
Service 78% 22%
5%
15%
25%
35%
45%
55%
65%
75%
85%
95%88%
12%
78%
22%
Demoghraphic Profile of Investors
Perc
enta
ge O
f Inv
esto
rs
Fig.4.2:- The Age Group of Investors.
Below 35 35-50 51-60 Above 60
Business 30% 56% 10% 4%
Service 78% 20% 2% 0%
5%
15%
25%
35%
45%
55%
65%
75%
85%
30%
56%
10%4%
78%
20%
2% 0%
Age Group of Investors
Perc
enta
ge O
f Inv
esto
rs
Fig. 4.3:- The Marital Status of Investors.
Unmarried Married
Business 20% 80%
Service 52% 48%
5%
15%
25%
35%
45%
55%
65%
75%
85%
20%
80%
52%48%
Marital Status of Investors
Perc
enta
ge o
f Inv
esto
rs
Fig. 4.4:- The Investors are having Dependents.
0 to 1 2 to 3 More than 3
Business 24% 38% 38%
Service 54% 38% 8%
5%
15%
25%
35%
45%
55%
24%
38% 38%
54%
38%
8%
Dependents on the Investors
Perc
enta
ge o
f Dep
ende
nts
Fig.4.6:- Monthly Flow of Income of Investors.
Under Rs.10,000 Rs.10,001 to Rs.20,000
Rs.20,001 to Rs.30,000
Above Rs.30,000
Business 12% 20% 22% 46%
Service 4% 22% 44% 30%
3%
8%
13%
18%
23%
28%
33%
38%
43%
48%
12%
20%22%
46%
4%
22%
44%
30%
Monthly Inflow of Income
Perc
enta
ge o
f Inv
esto
rs
Fig.4.7.1:- Awareness among Business class Investors regarding various Investment Plans.
Bank & P.O. Fixed Deposits
Insurance Schemes
Equities Commodities/Derivatives
Real Estate
Yes 100% 92% 92% 48% 86%
No 0% 8% 8% 52% 14%
10%
30%
50%
70%
90%
110%100%
92% 92%
48%
86%
0%8% 8%
52%
14%
Perc
enta
ge O
f Bus
ines
s Cl
ass
Inve
stor
s
Fig.4.7.2:- Awareness among Service Class Investors regarding various Investment Plans.
Bank & P.O. Fixed Deposits
Insurance Schemes
Equities Commodities/ Derivatives
Real Estate
Yes 100% 98% 88% 66% 80%
No 0% 2% 12% 34% 20%
10%
30%
50%
70%
90%
110% 100% 98%88%
66%80%
0% 2%12%
34%20%
Awareness regarding various Investment Plans
Perc
enta
ge o
f Ser
vice
Cla
ss In
vest
ors
Fig.4.8:- The Purpose of Investors behind their Investments.
Capital Appreciation Balance of Capital App. & Current Income Supplement to Current Income
Business 30% 62% 8%
Service 46% 38% 16%
5%
15%
25%
35%
45%
55%
65%
30%
62%
8%
46%
38%
16%
Purpose of Investors behind their Investments
Per
cen
tage
of
Inve
stor
s
Fig.4.9:- The Basis which initiates the Investors to invest in any Financial Security.
Fundamental Analysis Financial Advisor Portfolio Services
Business 0.277 0.349 0.374000000000002
Service 0.342 0.237 0.421
0.025
0.075
0.125
0.175
0.225
0.275
0.325
0.375
0.425
0.277
0.349
0.374000000000002
0.342
0.237
0.421
Basis of Investments
Mea
n/A
vera
ge
Fig.4.10:- Important Features required in Investors’ Portfolio Plan.
Growth Income Safety Tax Efficiency
Business 2.48 1.84 3.34 2.34
Service 2.62 1.9 3.26 2.22
0.25
0.75
1.25
1.75
2.25
2.75
3.25
3.75
2.48
1.84
3.34
2.34
2.62
1.9
3.26
2.22
Features required in Investors' Portfolio Plan
Mea
n/A
vera
ge
3
3
1
1 4
4
2
2
Fig.4.11:- Most Preferred Investment Avenues by the Investors.
Bank & P.O. Fixed De-posits
Insurance Schemes Mutual Fund Schemes Equities Commodities/Deriva-tives
Real Estate
Business 3.6 4.18 2.72 2.58 4.42 3.38
Service 3.14 3.3 2.88 2.96 4.82 3.92
0.5
1.5
2.5
3.5
4.5
5.5
3.6
4.18
2.722.58
4.42
3.383.14
3.3
2.88 2.96
4.82
3.92
Most Preferred Investment Avenues
Mea
n/A
vera
ge
4
3
5
4
21
12
6
6 3
5
Fig.4.12:- Type of Investments which are covered under their Current Portfolio.
Mainly Cash/Bank Deposits with small portion in Low risk Bonds
Mainly Debt Instruments & some Portion in Blue Chip Stocks
A mix of Debt Instrument, Blue Chip & Aggressive Stocks
Mostly Speculative or High Risk Investments
Business 18% 14% 52% 16%
Service 36% 28% 30% 6%
5%
15%
25%
35%
45%
55%
18%
14%
52%
16%
36%
28%30%
6%
Current Portfolio of Investors
Per
cen
tage
Of
Inve
stm
ents
Fig.4.13:- Important sources of Information which influence the Investors’ decision regarding their Investments.
Newspaper/ Magazines Electronic Media (T.V.) Peer Group/ Friends Broker/ Financial Advisor Internet
Business 0.26 0.4 -0.58 0.700000000000001 -0.760000000000005
Service 0.8 0.34 -0.88 0.380000000000002 -0.640000000000005
-0.9
-0.7
-0.5
-0.3
-0.1
0.1
0.3
0.5
0.7
0.9
0.260.4
-0.58
0.700000000000001
-0.760000000000005
0.8
0.34
-0.88
0.380000000000002
-0.640000000000005
Sources Of Information
Mea
n
Fig.4.15:- The Time Period for which Investors prefer to keep their Investments.
Less than 1 month 1 month - 6 months 6 months - 12 months More than 12 months
Business 2% 20% 38% 40%
Service 0% 16% 34% 50%
5%
15%
25%
35%
45%
55%
2%
20%
38%40%
0%
16%
34%
50%
Time Period of keeping Investment
Per
cen
tage
of
Inve
stor
s
Fig.4.16:- The Decision of the Investors at the time of Fluctuation in the Market.
Withdraw your Money Wait & Watch Invest more in it
Business 10% 52% 38%
Service 34% 36% 30%
5%
15%
25%
35%
45%
55%
10%
52%
38%
34%36%
30%
Investors' Decision
Per
cen
tage
of
Inve
stor
s
Fig.4.17:- The Investors belong to Risk Category.
Aggressive Capital Preservation Balanced Portfolio Aggressive Capital Appreciation Portfolio
Business 14% 36% 50%
Service 20% 54% 26%
5%
15%
25%
35%
45%
55%
14%
36%
50%
20%
54%
26%
The Investors' Risk Categories
Per
cen
tage
of
Inve
stor
s
Findings & ConclusionConclusion of 1st Objective:- Majority of Business class Investors are adults and they have
the family size of more than 3 because 80% of them are married and they have monthly Income of above Rs. 30,000. It means high incomes Business Investors are doing more Investments.
Whereas majority of Service class Investors is Young and they have less number of dependents (0-1) because majority (80%) is unmarried and they start doing Investments with the Salary Package of Rs.20,001 to Rs.30,000 because as they have less number of dependents so they are using more of their money into Investments.
Conclusion of 2nd Objective The Business Investors have the awareness of all Investment avenues
especially Equities & Real estate, few of them don’t know about Commodities/Derivatives & that’s why they do Investments with the purpose of appreciation in their Capital as well as a source of their current Income & whenever they do Investment in any security, they do so because their Portfolio Management Services & Financial Advisor initiate them to do so.
Whereas Service class Investors have the awareness of all Investment avenues especially Insurance schemes and Equities and very few of them don’t know about Derivatives. They do Investments with the purpose of Capital Appreciation & they do Investments by having Portfolio Services Initiation as well as Fundamental analysis of that particular Scrip/Company.
Conclusion of 3rd Objective
Business class Investors have given the highest preference means Rank 1 to Equities.
Whereas Service class Investors have given the highest preference to Mutual Funds.
Conclusion of 4th Objective The most preferred Investment Avenue for Business Investors is Equity &
Real Estate and they keep it with themselves for more than 12 months because Equity is a long term Investment.
They wait & watch or they invest more whenever they noticed any fluctuation in the market .
That’s why they come under Aggressive Capital Appreciation Category which refers to higher risk & higher returns.
Whereas the Service class Investors have most preferred Investment Avenue is Mutual Fund so they keep it for long period and most of them withdraw their Investment or they wait & watch when any fluctuation is noticed in the market.
That’s why; they have a Balanced Portfolio which refers to moderate risk & moderate return.
Conclusion Business Class Investors are more Risk taking. They prefer to
invest in High risk Investments such as Equity & hold their securities for a longer period of time.
They come under the Aggressive Capital Appreciation Portfolio.
Whereas; the Service Class Investors are less Risk taking.
Whenever they noticed any fluctuation in the market they try to withdraw their money.
They do Safer Investments such as Mutual Fund and prefer to take moderate risk & moderate return. So, they come under a Balanced Portfolio.
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