ACKNOWLEDGEMENT

I take this opportunity to express the feeling of gratitude towards Pune University for
keeping Industrial Training as a part of PGDM Course.
It is an occasion of great pleasure and a matter of deep felt personal satisfaction to
present this complied statement of the Industrial Training undergone at a Company of
great esteemed ICICI PRUDENTIAL LIFE INSURANCE CO.OPERATIVE LTD.

I also forward my special gratitude to our director sir DR. V. S. MANGNALE and
faculty member MS. RASHMY MORAY for guiding me in training programmer.
The valuable suggestion of our faculty member during the course of my project and
giving me inspiration to achieve my goal. The shape that project has been taken is due
to our faculty member’s help, judicious guideline and encouragement.

A deep sense of gratitude to Mr. Rajesh Kumar who gives me guidance related to
Portfolio Management and Portfolio Management Services. He guided me in many
difficulties related to my project. I am grateful to Mr. Pravin Tivari & Mr. Champak
Bhatt who allow me to take summer training.

I express gratitude to all the staff of ICICI Prudential Life Insurance Co. Ltd. who give
me guidance related to their specialize department in which they are doing their work &
give knowledge what the work they do & how it is done.
I take this opportunity to appreciate all those who directly or indirectly were
instrumental in the completion of my project work.

And three most precious part of our life, our parents who have showered their love and
support which can be never repaid in any form but can be commemorated without them
this achievement could not have been achieved.

1
 INTRODUCTION

Investing in securities such as shares, debentures, and bonds is profitable as well as

exciting. It is indeed rewarding, but involves a great deal of risk and calls for scientific
knowledge as well artistic skill. In such investments both rationale and emotional
responses are involved. Investing in financial securities is now considered to be one of
the best avenues for investing one savings while it is acknowledged to be one of the
best avenues for investing one saving while it is acknowledged to be one of the most
risky avenues of investment.
It is rare to find investors investing their entire savings in a single security. Instead, they
tend to invest in a group of securities. Such a group of securities is called portfolio”.
Creation of a portfolio helps to reduce risk, without sacrificing returns. Portfolio
management deals with the analysis of individual securities as well as with the theory
and practice of optimally combining securities into portfolios. An investor who
understands the fundamental principles and analytical aspects of portfolio management
has a better chance of success.
An investor considering investment in securities is faced with the problem of choosing
from among a large number of securities and how to allocate his funds over this group
of securities. Again he is faced with problem of deciding which securities to hold and
how much to invest in each. The risk and return characteristics of portfolios. The
investor tries to choose the optimal portfolio taking into consideration the risk return
characteristics of all possible portfolios. As the risk return characteristics of individual
securities as well as portfolios also change. This calls for periodic review and revision
of investment portfolios of investors. An investor invests his funds in a portfolio
expecting to get good returns consistent with the risk that he has to bear. The return
realized from the portfolio has to be measured and the performance of the portfolio has
to be evaluated.
It is evident that rational investment activity involves creation of an investment
portfolio. Portfolio management comprises all the processes involved in the creation
and maintenance of an investment portfolio. It deals specifically with the security
analysis, portfolio analysis, portfolio selection, portfolio revision & portfolio
evaluation. Portfolio management makes use of analytical techniques of analysis and
conceptual theories regarding rational allocation of funds. Portfolio management is a
complex process which tries to make investment activity more rewarding and less risky.

EVOLUTION OF PORTFOLIO MANAGEMENT

Portfolio management is essentially a systematic method of maintaining one‘s

investment efficiently. Many factors have contributed to the existence and development
of the concept. In the early years of the century analyst used financial statements to find
the value of the securities. The first to be analyzed using this was Railroad Securities of
the USA. A booklet entitled ―The Anatomy of the Railroad‖ was published by Thomas
F. Woodlock in 1900. As the time progressed this method became very important in the

2
investment field, although most of the writers adopted different ways to publish there
data. They generally advocated the use of different ratios for this purpose. John Moody
in his book ―The Art of Wall Street Investing‖ strongly supported the use of financial
ratios to know the worth of the investment. The proposed type of analysis later on
became the ―common-size‖ analysis.
The other major method adopted was the study of stock price movement with the help
of price charts. This method later on was known as Technical Analysis. It evolved
during 1900-1902 when Charles H. Dow, the founder of the Dow Jones and Co.
presented his view in the series of editorials in the Wall Street Journal in USA. The
advocates of technical analysis believed that stock prices movement is ordered and
systematic and the definite pattern could be identified. There investment strategy was
build around the identification of the trend and pattern in the stock price movement.

ROLE OF PORTFOLIO MANAGEMENT

There was a time when portfolio management was an exotic term. A practice which is
beyond the reach of the small investor, but the time has changed now. Portfolio
management is now a common term and is widely practiced in INDIA. The theories and
concepts relating to portfolio management now find their way in the front pages of the
financial newspapers and magazines.
In early 90‘s India embarked on a program of economic liberalization and globalization,
with high participation of private players. This reform process has made the Indian
industry efficient, with rapid computerization, increased market transparency, better
infrastructure and customer services, closer integration and higher volume. The markets
are dominated by large institutional investors with their diversified portfolios. A large
number of mutual funds have come up in the market since 1987. With this development
investment in securities has gained considerable momentum Along with the spread of
the securities investment way among Indian investors have changed due to the
development of the quantitative techniques. Professional portfolio management, backed
by research is now being adopted by mutual funds, investment consultants, individual
investors and big brokers. The Securities Exchange Board of India (SEBI) is a
regulatory body in INDIA. It ensures that the stock market is free from fraud, and of
course the main objective is to ensure that the investor‘s money is safe.
Portfolio not only now include domestic securities but foreign too. Investment is no
longer a simple process. It requires a scientific knowledge, a systematic approach and
also professional expertise. Portfolio management is the only way through which an
investor can get good returns, while minimizing risk at the same time. So portfolio
management objectives can be stated as: -
1. Risk Minimization.
2. Safeguarding Capital.
3. Capital Appreciation.
4. Choosing Optimal Mix of Securities.
5. Keeping Track on Performance.

3
 OBJECTIVES OF STUDY:

1. To identify and analyze risk, portfolio and return.

2. To study ICICI Prudential Portfolio and risk regarding selection of assets.
3. To undertake the company analysis of the sample units of selected industries.
4. To evaluate the performance of securities of selected firms through different
performance evaluation techniques.
5. To understand, analyze and select a best portfolio.

NEED FOR STUDY:

ICICI Prudential Life Insurance has a number of funds for investors to invest. The
ICICI Maximize is such a fund that offers the investors maximum returns with
minimum risk. But the company wants to know the risk and return of the investors by
analyzing the portfolio. Hence the study is taken.

LITERATURE REVIEW

4
Why people invest?

Investors do invest in different instrument to simplify their lifestyle and to make certain
goals in future life. Most investors invest for the long term to fulfill the inflation and for
the capital appreciation. By and large the investors have typical requirement to fill, and
those are:-
Capital preservation: - The chance of losing some capital has been a primary need. This
is perhaps the strongest need among investors in India, who have suffered regularly due
to failures of the financial system.
Wealth generation: - This is largely a factor of investment performance, including both
short-term performance of an investment and long-term performance of a portfolio.
Wealth accumulation is the ultimate measure of the success of an investment decision.
Life Cover:- Many investors look for investments that offer good return with adequate
life cover to manage the situations in case of any eventualities. Recent days investors do
invest in the endowment policies and ULIPs.
Tax savings: - Legitimate reduction in the amount of tax payable is an important part of
the Indian psyche. Every rupee saved in taxes goes towards wealth accumulation.
Income: This refers to money distributed at intervals by an investment, which are
usually used by the investor for meeting regular expenses. Mostly daily traders invest
for income.
Future Uncertainty: - No one has seen the future so every person personally save money
for any contingencies. People invest in short term for this. There must be an easy cash
withdraw for the contingencies.
Ease of withdrawal: -This refers to the ability to invest long term but withdraw funds
when desired. This is strongly linked to a sense of ownership. It is normally triggered
by a need to spend capital, change investments or cater to changes in other needs.
Beat inflation: - inflation is a major player in the economy. It reduced the valuation of
rupee. Investors do in vest to maintain the buying capacity of them.
Retirement planning: - most of the service person do invest to get return after the
vesting period, for that the investment such a manner that the returns comes at the time
of retirement.

Investment Planning

Investors need to identify the financial goals throughout life or for the next 10 to 15
years depending upon the time horizon selected by the investor, and prioritizing them.
Investment Planning is important because it helps in deriving the maximum benefit
from the investments.
Success as an investor depends upon his investment in right instrument in right time and
for the right period. This, in turn, depends on the requirements, needs and goals. For
most investors, however, the three prime criteria of evaluating any investment option
are liquidity, safety and level of return.

5
Investment Planning also helps to decide upon the right investment strategy. Besides
individual requirement, investment strategy would also depend upon age, personal
circumstances and risk appetite.
Investment Planning also helps in striking a balance between risk and returns. By
prudent planning, it is possible to arrive at an optimal mix of risk and returns, which
suits particular needs and requirements.
Investment means putting the ideal money to work to earn more money. Done wisely, it
can help you meet financial goals. Investing even a small amount can produce
considerable rewards over the long-term, especially if you do it regularly. But one needs
to decide about how much he / she wants to invest and where.
Options before investment
Investors choose wisely before investing which solely depends on the present market
conditions, future prospect of the instrument, the return offered by the company and the
season to invest in that particular instrument. For example, a good investment for a
long-term life insurance plan may not be a good investment for higher education
expenses. In most cases, the right investment is a balance of three things: Liquidity,
Risk tolerance and Return.
Liquidity – How easily an investment can be converted to cash, since part of invested
money must be available to cover financial emergencies.

Risk tolerance - The biggest risk is the risk of losing the money that has been invested,
but the main thing is to how much investor can cover up and sustain with that. Another
equally important risk is that investments may not provide enough growth or income to
offset the impact of inflation, which could lead to a gradual increase in the cost of
living. There are additional risks as well (like decline in economic growth). But the
biggest risk of all is not investing at all.

Return - Investments are made for the purpose of generating returns. Safe investments
often promise a specific, though limited return. Those that involve more risk offer the
opportunity to make - or lose - a lot of money.

STEPS INVOLVED IN INVESTMENT PLANNING

Investment is not only prediction it has its own reasons behind every up and down in
the market. So it is has its own theory to move in particular directions. To get in to the
market investors must go through the following process.
Analysis and profiling of the instrument: - The first step is performing a Need Analysis
check. The requirements and expectations of the investor should be met by the
instrument. During the profiling investor should consider their age, their profession, the
number of dependents, and their income. By doing this check, the risk profile of the
investor should be designed.
Evaluating the alternatives - The next step would be revaluating the needs. Other
investment instruments and options should be analyzed. The risk-return profile of
investment products is evaluated in this step. Every investment product varies according

6
to its return potential and riskiness. Investment products giving a high rate of return are
generally risky and volatile. The products giving a lower rate of return usually are less
risky.

Analyse the Profile: - The next step would be analyze the risk-return profile of the
investor on to the investment portfolio. The investment instruments are matched with
the risk-return profile of the investor. All the investment alternatives that offer expected
rate of return are evaluate for consideration.
Preparing an Optimum Portfolio- Then according to the risk appetite and return pattern
an optimum portfolio is designed for the investor. The basket of investment instrument
selected in the previous step are given due weightage and appropriate amount of money
is invested in each of the investment avenue so as to get maximum return with
minimum possible risk.
Consistent Monitoring - Finally a continuous watch on the portfolio is extremely
important. Fundamental analysis of the investment products done in the previous stages
would only help in selecting the right product but the right time of entry or exit from a
particular stream is evaluated by doing a technical analysis. For this professional
portfolio management is a must.

Analysis and profiling of the Evaluating the

instrument alternatives

Investment
Planning
Consistent Monitoring Analyze the
Profile

Preparing an
Optimum

7
Various Investment Options
Savings form an important part of the economy of any nation. With the saving invested
in various options available to the people, the money acts as the driver for growth of the
country. Indian financial scene too presents a plethora of avenue to the investors.
Though certainly not the best or deepest of markets in the World, it has reasonable
options for an ordinary man to invest his savings. There are basically two kinds of
Investments, One that gives returns at fixed rate and other where the rate of return is
depending upon the certain factors of the economy.

1. Fixed Return Options

Post office monthly income scheme

Public provident fund
Bank fixed deposits
Government securities or gilts
RBI taxable bonds
Insurance
Company fixed deposits
Infrastructure bonds

2. Variable Return Options

Mutual Funds
Share and Stock market -1. Primary invested in equity (IPO)
2. Secondary market investment in equity
3. Derivative, Futures and Options
Gold
Real estate
Foreign exchange assets

3. Ulip Linked Insurance Plan-

ULIP capital secure fund.
ULIP balanced fund.
ULIP growth fund
ULIP equity fund
Pension capital secure fund
Pension balanced fund
Pension growth fund

Fixed Return Options

Under fixed return investments, investor will get fixed return on their investments. The
rate of return is pre decided at the time of investment. Rate of return can be calculated
on per annum basis or at completion of particular time period.

8
Post Office Monthly Income Scheme:
In this scheme an investment can be made by individuals in single or joint names
maximum of Rs. 6 lakhs (Rs.3 lakhs per person) with an interest of 8%p.a. in a monthly
income scheme. This will give you Rs. 4000/- per month if you invested the maximum
amount. In addition, this investment will fetch your taxable bonus of 10% on the
deposit maturity (i.e. after 6 years)

Other Post Office Scheme Kisan Vikas Patra:

Money can be doubled in 8 years and 7 months. There is no upper limit on the amount
that you invest. There are no tax benefits for the investments made under this scheme.
The rate of interest works out to a compounded annual return of about 8.4%. There are
no tax deductions at source and banks loans are available against Kisan Vikas Patra.
Interest is paid at maturity and cannot be claimed prior to maturity.

Senior Citizen Savings Scheme (2004):

As per the 2004-2005 budgets, the Government has announced a new Senior Citizen
Savings Scheme. It has
been launched only through designated Post Offices from the 2nd August, 2004. it for
the individuals who have attained the age of 60 years or above on the date of opening of
an account or who have attained the age of 55 years or more but less than 60years, and
who have retired under Voluntary Retirement scheme or a Special Voluntary
Retirement scheme on the date of opening of an account. The main feature of the
scheme is that is carries an interest of 9% p.a. (taxable) on the deposits. Deposits can be
a minimum of Rs. 1000 and maximum of Rs. 15lakhs, to be held for a period of 5 years
and extendable for further 3 years. It can also be prematurely withdrawn after one year
with some deductions. Interest qualifies for deduction u/s 80.

Public Provident Fund:

The rate of public provident fund is 8.5% p.a. currently. This is basically a long term
investment opportunities (maturity 15 year) as the entire amount that is accumulated in
this account can be withdrawn entirely only after 15years. Partial withdrawal is allowed
only after 5 years. Interest is exempt from income tax and contributions are eligible for
tax deductions.

Bank Fixed Deposits:

Bank fixed deposits yield will vary from bank to bank but they are more or less
streamlined. The yields are currently in the region of 5.5% to 6.5% per annum for
deposits ranging from 30 days to five years. The entire schedule banks are covered by
DICGC (Deposit Insurance and Credit Guarantee Corporation)Which means that up to
1 lakh deposited in a bank per person is absolutely safe and insured even if the bank
collapse.

Government Security or Gilts:

9
Government security and gilts are totally secure. Government bonds are issued by the
government of India periodically. These are now available in the secondary market
through satellite dealers and banks. They are known to yield 5% to 6% per annum.
Interest exceeding Rs. 2500 is liable for TDS at
10.455%.

RBI Taxable Bond

These are 8% saving bonds which are taxable. The maturity is after 6 years and there is
no upper limit to investment is these bonds. The interest accrued on these bonds is
taxable under the Income Tax Act,1961

Mutual fund in India

A mutual fund is nothing more than a collection of stocks and/or bonds. You can think
of a mutual fund as a company that brings together a group of people and invests their
money in stocks, bonds, and other securities. Each investor owns shares, which
represent a portion of the holdings of the fund.

You can make money from a mutual fund in three ways:

1) Income is earned from dividends on stocks and internet on bonds. A fund pays out
nearly all of the income it receives over the year to fund owners in the form of a
distribution.
2) If the fund sells securities that have increased in price, the fund has a capital gain.
Most funds also pass on these gains to investors in a distribution.
3) If holding funds increase in price but are not sold by the fund manager, the fund's
shares increase in price. You can then sell your mutual fund shares for a profit.

Funds will also usually give you a choice either to receive a check for distributions or to
reinvest the earnings and get more shares.

Advantages of Mutual Funds:

10
Professional Management - The primary advantage of funds (at least theoretically) is
the professional management of your money. Investors purchase funds because they do
not have the time or the expertise to manage their own portfolios. A mutual fund is a
relatively inexpensive way for a small investor to get a full-time manager to make and
monitor investments.

Diversification - By owning shares in a mutual fund instead of owning individual stocks

or bonds, your risk is spread out. The idea behind diversification is to invest in a large
number of assets so that a loss in any particular investment is minimized by gains in
others. In other words, the more stocks and bonds you own, the less any one of them
can hurt you (think about Enron). Large mutual funds typically own hundreds of
different stocks in many different industries. It wouldn't be possible for an investor to
build this kind of a portfolio with a small amount of money.
Disadvantages of Mutual Funds:

• Professional Management - Did you notice how we qualified the advantage of

professional management with the word "theoretically"? Many investors debate whether
or not the so-called professionals are any better than you or I at picking stocks.
Management is by no means infallible, and, even if the fund loses money, the manager
still takes his/her cut. We'll talk about this in detail in a later section.

• Dilution - It's possible to have too much diversification. Because funds have small
holdings in so many different companies, high returns from a few investments often
don't make much difference on the overall return. Dilution is also the result of a
successful fund getting too big. When money pours into funds that have had strong
success, the manager often has trouble finding a good investment for all the new
money.

11
• Taxes - When making decisions about your money, fund managers don't consider your
personal tax situation. For example, when a fund manager sells a security, a capital-
gains tax is triggered, which affects how profitable the individual is from the sale. It
might have been more advantageous for the individual to defer the capital gains
liability.

It's important to understand that each mutual fund has different risks and rewards. In
general, the higher the potential return, the higher the risk of loss. Although some funds
are less risky than others, all funds have some level of risk - it's never possible to
diversify away all risk. This is a fact for all investments.
Each fund has a predetermined investment objective that tailors the fund's assets,
regions of investments and investment strategies. At the fundamental level, there are
three varieties of mutual funds:
1) Equity funds (stocks)
2) Fixed income funds (bonds)
3) Money market funds.

All mutual funds are variations of these three asset classes. For example, while equity
funds that invest in fast-growing companies are known as growth funds, equity funds
that invest only in companies of the same sector or region are known as specialty funds.

Let's go over the many different flavors of funds. We'll start with the safest and then
work through to the more risky.

Money Market Funds:

The money market consists of short-term debt instruments, mostly Treasury bills. This
is a safe place to park your money. You won't get great returns, but you won't have to
worry about losing your principal. A typical return is twice the amount you would earn
in a regular checking/savings account and a little less than the average certificate of
deposit (CD).

Bond/Income Funds:
Income funds are named appropriately: their purpose is to provide current income on a
steady basis. When referring to mutual funds, the terms "fixed-income," "bond," and
"income" are synonymous. These terms denote funds that invest primarily in
government and corporate debt.
While fund holdings may appreciate in value, the primary objective of these funds is to
provide a steady cash flow to investors. As such, the audience for these funds consists
of conservative investors and retirees.

Bond funds are likely to pay higher returns than certificates of deposit and money
market investments, but bond funds aren't without risk. Because there are many
different types of bonds, bond funds can vary dramatically depending on where they
invest. For example, a fund specializing in high-yield junk bonds is much more risky

12
than a fund that invests in government securities. Furthermore, nearly all bond funds are
subject to interest rate risk, which means that if rates go up the value of the fund goes
down.

Balanced Funds:
The objective of these funds is to provide a balanced mixture of safety, income and
capital appreciation. The strategy of balanced funds is to invest in a combination of
fixed income and equities. A typical balanced fund might have a weighting of 60%
equity and 40% fixed income. The weighting might also be restricted to a specified
maximum or minimum for each asset class.

A similar type of fund is known as an asset allocation fund. Objectives are similar to
those of a balanced fund, but these kinds of funds typically do not have to hold a
specified percentage of any asset class. The portfolio manager is therefore given
freedom to switch the ratio of asset classes as the economy moves through the business
cycle.

Equity Funds:
Funds that invest in stocks represent the largest category of mutual funds. Generally, the
investment objective of this class of funds is long-term capital growth with some
income. There are, however, many different types of equity funds because there are
many different types of equities. A great way to understand the universe of equity funds
is to use a style box, an example of which is below.

The idea is to classify funds based on both the size of the companies invested in and the
investment style of the manager. The term value refers to a style of investing that looks
for high quality companies that are out of favor with the market. These companies are
characterized by low P/E and price-to-book ratios and high dividend yields. The
opposite of value is growth, which refers to companies that have had (and are expected
to continue to have) strong growth in earnings, sales and cash flow. A compromise
between value and growth is blend, which simply refers to companies that are neither
value nor growth stocks and are classified as being somewhere in the middle.

For example, a mutual fund that invests in large-cap companies that are in strong
financial shape but have recently seen their share prices fall would be placed in the

13
upper left quadrant of the style box (large and value). The opposite of this would be a
fund that invests in startup technology companies with excellent growth prospects. Such
a mutual fund would reside in the bottom right quadrant (small and growth).

Index Funds:
The last but certainly not the least important are index funds. This type of mutual fund
replicates the performance of a broad market index such as the S&P 500 or Dow Jones
Industrial Average (DJIA). An investor in an index fund figures that most managers
can't beat the market. An index fund merely replicates the market return and benefits
investors in the form of low fees.

Costs are the biggest problem with mutual funds. These costs eat into your return, and
they are the main reason why the majority of funds end up with sub-par performance.

What's even more disturbing is the way the fund industry hides costs through a layer of
financial complexity and jargon. Some critics of the industry say that mutual fund
companies get away with the fees they charge only because the average investor does
not understand what he/she is paying for.

Fees can be broken down into two categories -

1. On-going yearly fees to keep you
invested in the fund.
2. Transaction fees paid when you buy or sell shares in a fund (loads).

• Front-end loads - These are the most simple type of load: you pay the fee when you
purchase the fund. If you invest Rs.1,000 in a mutual fund with a 5% front-end load,
Rs.50 will pay for the sales charge, and Rs. 950 will be invested in the fund.

• Back-end loads (also known as deferred sales charges) - These are a bit more
complicated. In such a fund you pay the back-end load if you sell a fund within a
certain time frame. A typical example is a 6% back-end load that decreases to 0% in the
seventh year. The load is 6% if you sell in the first year, 5% in the second year, etc. If
you don't sell the mutual fund until the seventh year, you don't have to pay the back-end
load at all.

A no-load fund sells its shares without a commission or sales charge. Some in the
mutual fund industry will tell you that the load is the fee that pays for the service of a
broker choosing the correct fund for you. According to this argument, your returns will
be higher because the professional advice put you into a better fund. There is little to no
evidence that shows a correlation between load funds and superior performance. In fact,
when you take the fees into account, the average load fund performs worse than a no-
load fund.

14
In the Indian economy Mutual funds have grown faster than any other investment
instrument.
The table show net capitalization in Mutual fund sector during 2002 to 2007.
Year UTI Bank-sponsored FI-sponsored Private sector Total
mutual funds mutual funds mutual funds
2004-05 -9434.1 1033.4 861.5 12122.2 4583.0
2005-06 1049.9 4526.2 786.8 41509.8 47872.7
2006-07 -2467.2 706.5 -3383.5 7933.1 2788.9
2007-08 3423.8 5364.9 2111.9 41581 52481.6
2008-09 7326.1 3032.0 4226.1 76687 91271.2
NET RESOURCES MOBILISED BY MUTUAL FUNDS 2004 to 2009

FEW TERMS IN MUTUAL FUNDS NAV: -

Mutual’s price per share or exchange-traded fund's (ETF) per-share value. In both
cases, the per-share rupee amount of the fund is derived by dividing the total value
of all the securities in its portfolio, less any liabilities, by the number of fund shares
outstanding.
(Total asset value –liabilities) /no. of units= Net asset value

In terms of corporate valuations, the value of assets less liabilities equals net asset value
(NAV), or "book value".
In the context of mutual funds, NAV per share is computed once a day based on the
closing market prices of the securities in the fund's portfolio. All mutual fund’s buy
ansell orders are processed at the NAV of the trade date.  However, investors must wait
until the following day to get the trade price.
Mutual funds pay out virtually all of their income and capital gains. As a result, changes
in NAV are not the best gauge of mutual fund performance, which is best measured by
annual total return.

Because ETFs and closed-end funds trade like stocks, their shares trade at market value,
which can be a dollar value above (trading at a premium) or below (trading at a
discount) NAV.

SALE PRICE: - When an investor wants to disinvest from the investment he/she sell
the unit(s) of the stock of the shares of mutual fund. The sell results the loss or gain of
the capital. The tax law provides special rules for determining how much gain or loss
you have, and in what categories, when you sell mutual fund shares. Tax is one of the
main concerns during the sell. The tax gain or loss from mutual fund sales is calculated
by comparing your tax basis in the shares sold to the sales proceeds net of any
transaction costs. In general, the tax-planning objective is to maximize the basis in the
shares being sold to minimize the gain, or maximize the loss.
The Tax Code allows four methods:
1. First-in, first-out (FIFO) method.

15
2. Specific identification (specific ID) method.
3. Single-category or "regular" average basis method.
4. Double-category average basis method.

FIFO Method
This method assumes that shares you sell come out of the earliest-acquired blocks you
own. In a rising market, FIFO tends to generate the biggest tax bill, because the oldest,
cheapest shares are considered sold first. However, FIFO also increases the odds that
your gains will be long term and therefore qualify for the 20% maximum rate.
FIFO is the "default" method. In other words, you must use FIFO to calculate mutual
fund gains and losses,
Specific ID Method
Under this method, one specifies exactly which block (or blocks) of mutual fund shares
you intend to sell, so you can minimize gains or maximize losses by selling your
highest-cost shares first.
Selling the most expensive shares could mean his/her gains will be short term and
therefore taxed at regular income tax rate rather than the long-term capital gains rate of
15%. However, if you are selling losers, it's generally better to sell short-term shares.
Your short-term losses will then offset short-term gains that would otherwise be taxed
at your income tax rate.

Single-Category Average Basis Method

This method is available when one leaves his/her mutual fund shares on deposit in an
account with an agent or custodian, but not when he/she actually has possession of
share certificates.
Each time investor makes a sale, he simply figures his average presale basis for shares
of that fund. For holding period purposes, investor is considered to sell the oldest shares
first.
Double-Category Average Basis Method
Here you separate shares into two pools — one consisting of all long-term shares (held
over 12 months), and the other consisting of all short-term shares. Then each time you
sell, you calculate the average per-share basis for each pool. You can then sell strictly
out of one pool or the other, or mix and match as you see fit. The advantage is you have
more flexibility to control the basis of the shares being sold and whether the resulting
gains will be taxed at 15% or your regular rate.
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial
position, risk tolerance and return expectations etc. The table below gives an overview
into the existing types of schemes in the Industry.

TYPES OF MUTUAL FUND SCHEMES

By Structure

16
Open - Ended Schemes
Close - Ended Schemes
Interval Schemes
By Investment Objective
Growth Schemes
Income Schemes
Balanced Schemes
Money Market Schemes
Other Schemes
Tax Saving Schemes
Special Schemes
Index Schemes
Sector Specific Schemes

Fig: changes in the Mutual fund industry in India till 2006

ULIP AND ENDOWMENT PLANS

Endowment plans are life insurance plans, which not only cover the individual’s life in
case of eventuality but also offer a maturity benefit at the end of the term.
In the event of the individual’s demise, his/her nominees receive the sum assured with
accumulated profits/bonus on investments (till the time of his demise). In case the

17
individual survives the tenure, he/she receives the sum assured and accumulated
profits/bonus.
ULIPs attempts to fulfill investment needs of an investor with protection/ insurance
needs of an insurance seeker. ULIPs work on the premise that there is a class of
investors who regularly invest their savings in products like fixed deposits, bonds, debt
funds, diversified equity funds and stocks. There is another class of individuals who
take insurance to provide for their family in case of an eventuality. So typically both
these categories of individuals have a portfolio of investment as well as life insurance.
ULIP as a product combines both these products (investment and life insurance) into
single product. This saves the investor/insurance seeker the hassles of managing and
tracking a portfolio of product.
Taking into account the changing socio-economic demographics, rate of GDP growth,
changing consumer behavior and occurrences of natural calamities at regular intervals,
the Indian life insurance market is expected to reach the value of around Rs 1683
Billion in the year 2009. The market is expected to grow at a CAGR of more than 200%
YOY from the year 2006.

ULIP - KEY FEATURES (IN GENERAL):

1. Premiums paid can be single, regular or variable. The payment period too can be
regular or variable. The risk cover can be increased or decreased.
2. As in all insurance policies, the risk charge (mortality rate) varies with age.
3. The maturity benefit is not typically a fixed amount and the maturity period can be
advanced or extended.
4. Investments can be made in gilt funds, balanced funds, money market funds, growth
funds or bonds.
5. The policyholder can switch between schemes, for instance, balanced to debt or gilt
to equity, etc.
6. The maturity benefit is the net asset value of the units.
7. The costs in ULIP are higher because there is a life insurance component in it as well,
in addition to the investment component.
8. Insurance companies have the discretion to decide on their investment portfolios.
9. They are simple, clear, and easy to understand.
10. Being transparent the policyholder gets the entire episode on the performance of his
fund.
11. Lead to an efficient utilization of capital.
12. ULIP products are exempted from tax and they provide life insurance.
13. Provides capital appreciation.
14. Investor gets an option to choose among debt, balanced and equity funds.

ULIPs vs. Mutual Funds

18
Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual
funds in terms of their structure and functioning. As is the case with mutual funds,
investors in ULIPs is allotted units by the insurance company and a net asset value
(NAV) is declared for the same on a daily basis.
Similarly ULIP investors have the option of investing across various schemes similar to
the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds
and debt funds to name a few.
Mutual fund investors have the option of either making lump sum investments or
investing using the systematic investment plan (SIP) route which entails commitments
over longer time horizons. The minimum investment amounts are laid out by the fund
house.
ULIP investors also have the choice of investing in a lump sum (single premium) or
using the conventional route, i.e. making premium payments on an annual, half-yearly,
quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting
point for the investment activity.

  ULIPs Mutual Funds

Determined by the
Investment investor and can be Minimum investment amounts are
amounts modified as well determined by the fund house
No upper limits, expenses Upper limits for expenses chargeable
determined by the to investors have been set by the
Expenses insurance company regulator
Portfolio
disclosure Not mandatory* Quarterly disclosures are mandatory
Modifying asset Generally permitted for Entry/exit loads have to be borne by
al location fee or at a nominal cost h the investor
Section 80C benefits are S Section 80C benefits are available
available on all ULIP only on investments in tax-saving
Tax benefits Investments funds

Indian Stock Market overview

The Bombay Stock Exchange (BSE) and the National stock Exchange India Ltd. (NSE)
are the two primary exchanges in India. In addition, there are 22 regional stock
exchanges. However, the BSE and NSE have established themselves as the two leading
exchanges and account for about 80% of equity volume traded in India. The average
daily turnover
NSE has around 1500 shares listed with a total market capitalization of around Rs.
9,21,500 crore. The BSE has over 6000 stocks listed and has a market capitalization of
around Rs. 9,68,000 crore.

19
Most key stocks are traded on both the exchanges and hence the investor could buy
them on either exchange. Both exchanges have a different settlement cycle, which
allows investors to sift their positions on the bourses. The primary index of BSE is BSE
Sensex comprising of 30 stocks. NSE has the S&P NSE 50 Index (Nifty) which consists
of fifty stocks.
The BSE Sensex is the older and more widely followed index. Both these indices are
calculated on the basis of market capitalization and contain the heavily traded shares
from key sectors.
Both exchanges have switched over from the open outcry trading system to a fully
automated computerized mode of trading known as BOLT (BSE online trading) and
NEAT (National Exchange Automated Trading) system. It facilitates more efficient
processing, automatic order matching, faster execution of trades and transparency.
The scripts traded on the BSE have been classified into ‘A’,’B1’,’B2’,’C’, ‘F’,’Z’
groups. The ‘A’ group shares represent those, which are in the carry forward system
(Badla).
The ‘F’ group represents the debt market (fixed income securities) segment.
The ’Z’ groups scripts are the blacklisted companies.
The ‘C’ group covers the odd lot securities in ‘A’, ‘B1’, & ‘B2’ groups and rights
renunciations.

Term deposits
A deposit held at a financial institution that has a fixed term. These are generally short-
term with maturities ranging anywhere from a fifteen days to a few years. When a term
deposit is purchased, the lender (the customer) understands that the money can only be
withdrawn after the term has ended or by giving a predetermined number of days
notice.
Term deposits are an extremely safe investment and are therefore very appealing to
conservative, low-risk investors. By having the money tied up investors will generally
get a higher rate with a term deposit compared with a demand deposit.
Investor some time pledge these term deposits to take house loan, personal load,
education load, etc. these works as the security deposits or asset of the debtor.
Here is a list of Term deposit rates of different Banks I have studied:-

20
Tenure Standard ICICI HDFC ABN-Amro Kotak
Chartered Mahindra
15 days - 59 days 5.25% 4% 5.50% 4%-5.5% 4%
60 days – 89 days 5.75% 4% 5.50% 5.50% 5.50%
90 days – 360 days 6.25% 6.25% 6.75% 6%-8% 8.50%
361 days 8.50% 6.25% 8% 6% 8.50%
362 days< 1year 6.25% 6.25% 6.75% 6% 8.50%
1 year < 2years 6.50% 8% 8% 6%-8% 9.25%
2 years - 4 years 6.75% 8% 8.25% 6.75% 9.25%
Bonds in India.

A bond is just an organization's IOU; i.e., a promise to repay a sum of money at a

certain interest rate and over a certain period of time. In other words, a bond is a debt
instrument. Other common terms for these debt instruments are notes and debentures.
Most bonds pay a fixed rate of interest for a fixed period of time.
Why do organizations issue bonds?
A company needs funds to expand into new market, while Government needs money
for everything from infrastructure to social programs. Whatever the need, a large sum of
money will be needed to get the job done.
One way is to arrange for banks or others to lend the money. But a generally less
expensive way is to issue (sell) bonds. The organization will agree to pay some
interest rate on the bonds and further agree to redeem the bonds (i.e., buy them
back) at some time in the future (the redemption date).

The price of a bond is a function of prevailing interest rates. As rates go up, the price of
the bond goes down, because that particular bond becomes less attractive (i.e., pays less
interest) when compared to current offerings. As rates go down, the price of the bond
goes up, because that particular bond becomes more attractive (i.e., pays more interest)
when compared to current offerings.
A bearer bond is a bond with no owner information upon it; presumably the bearer is
the owner. Bearer bonds included coupons which were used by the bondholder to
receive the interest due on the bond.
Another type of bond is a convertible bond. This security can be converted into shares
of the company that issues the bond if the bondholder chooses. Of course, the
conversion price is usually chosen so as to make the conversion interesting only if the
stock has a pretty good rise.

Different types of bonds

21
In general there are few types of bonds available in the market to buy, like;
Government bonds - these bonds are issued by the government to raise money from the
public.
Bonds - Debt securities maturing in more than ten years.
Marketable securities which are from the Indian government– collectively known as
Treasuries and are as Treasury bonds, Treasury notes and Treasury bills.
Municipal Bonds - Municipal bonds, known as “munis”, are the next progression in
term of risk. The major advantage in munis is that the returns are free from State/central
tax. Local government some time makes their debt non-taxable for residents, thus
making some municipal bonds completely tax free. Because of the tax-savings yield in
munis is lower than the taxable bonds.
Corporate bonds - A company can issue bonds just as it can issue stock. Generally, a
short term corporate bond is less than five years; intermediate is five to twelve years,
and long term is over 12 years.
Zero coupon Bonds - This is a type of bond that make no coupon payments but instead
is issued at a considerable discount to par value. For example, let us say, a zero coupon
bond with a Rs. 1,000 par value and 10 years to maturity is trading at Rs. 600; then
investor would be paying Rs.600 today that will worth Rs. 1,000 after 10 years.

PORTFOLIO MANAGEMENT

Portfolio management is a term that has been used in the financial investment
community for many years. It has recently come into vogue within the project
management community and for one very good reason: Organizations commit huge
amounts of resources to new projects and they need to know if their investments are
paying off.

A collection of investments all owned by the same individual or organization.

These investments often include stocks, which are investments in individual businesses;
bonds, which are investments in debt that are designed to earn interest; and mutual
funds, which are essentially pools of money from many investors that are invested by
professionals or according to indices.

In finance, a portfolio is a collection of investments held by an institution or a

private individual. In building up an investment portfolio a financial institution will
typically conduct its own investment analysis, whilst a private individual may make use
of the services of a financial advisor or a financial institution, which offers portfolio
management services. Holding a portfolio is part of an investment and risk-limiting
strategy called diversification. By owning several assets, certain types of risk (in
particular specific risk) can be reduced. The assets in the portfolio could include stocks,
bonds, options, warrants, gold certificates, real estate, futures contracts, production
facilities, or any other item that is expected to retain its value.

22
 TYPES OF PORTFOLIO

i) Aggressive Portfolio:

This portfolio is aimed at investors who are looking for

higher returns. The portfolio is constructed with a value-
orientation and with adequate diversification, but which will
at times take on certain aggressive positions. Depending on
the market conditions these could include a greater exposure
to high beta / mid-cap / illiquid stocks, an exposure in
momentum stocks etc.
 
ii) Dividend Yield Portfolio:

This portfolio endeavors to generate superior risk-adjusted

returns through a combination of dividend income and capital
appreciation. This portfolio may be considered appropriate for
investors with a relatively low risk appetite, who wish to earn
potentially higher returns offered through the equity markets. It is also
suitable for investors looking for tax-efficient investment options that
offer the scope for high-returns. Investments are proposed to be made
primarily in stocks that offer an attractive dividend yield. Portfolio
Manager seeks to pay particular attention to the dividend track record,
sustainability of free cash flows / dividends, industry prospects, management quality,
business fundamentals etc., with an attempt to include only high-quality companies in
the portfolio.

iii) Deep Value Portfolio:

The objective of the portfolio is to generate returns over the long term, by
investing in a diversified portfolio of undervalued stocks. Various parameters may be
used to judge the degree of under valuation of the stocks including, but not limited to,
price/earnings (p/e), price/book (p/book), dividend yield (DY), price/cash flow,
replacement cost, valuations relative to history/sector/markets, etc. Due attention will be
paid to qualitative parameters such as management quality, industry prospects, liquidity
etc.
 
iv) Focused Portfolio:

The Focused Portfolio endeavors to generate capital appreciation by

taking concentrated positions in stocks and sectors. Greater concentration
of the portfolio will increase both the risks and potential returns from the
portfolio. The Focused Portfolio is not limited by any particular theme /

23
sector / market capitalization and has the flexibility to choose between stocks across
themes / sectors / investment styles.
 
v) Preservation of Investment Amount (Asset Shield):

In addition to the above portfolios, the Portfolio Manager also offers products to
meet specific objectives such as products endeavoring to preserve Investment Amount.
Portfolio Manager would endeavour preservation of a certain percentage of the
Investment Amount by investing in a mix of fixed income and equity derivatives (these
could include both call and put options on indices or individual stocks) in such a
manner so that the same endeavors to preserve the stated percentage of the Investment
Amount while attempting to enhance returns by the use of equity derivatives.
The options component could also be invested in foreign securities with respect to
Resident Individuals under enabling provisions of the RBI circular dated February 4,
2004 viz. RBI USD 25,000 route, which will be subject to modification as permitted by
RBI from time to time. Arbitrage opportunities between the cash and futures market
may also be undertaken (more specifically described in the section below) as part of the
fixed income component. Herein the portfolio is invested in a mix of fixed income
mutual funds / securities and equity derivatives in such a manner so that the same
endeavors to preserve the stated percentage of the Investment Amount while at the same
time an attempt would be made to enhance returns by the use of equity derivatives.

vi) Cash future arbitrage:

The cash futures arbitrage strategy can be employed when the price of the futures
exceeds the price of the underlying stock. Two simultaneous transactions are
undertaken: (a) Selling the futures (b) Buying the underlying stock. The sale of the
futures would require a payment of an initial margin (of which 50% can be paid in the
form of securities i.e. the stock purchased) to the exchange and also mark to market
margins which are a function of market movements. The position may be held till
expiry of the futures contracts. By definition, the price of the futures will equal the
closing price of the stock. Thus, the price differential between the futures and the stock
is realized. However, the position could even be closed earlier in case the price
differential is realized before expiry or better opportunities are available in other stocks.
The strategy is attractive if this price differential (post all costs) is higher than the
investor's cost-of-capital.
 
vii) Only Options Portfolio:

The objective of the portfolio is to earn capital appreciation on the client’s

capital, by investing in a mix of stock options and index options. The investment in
options could include pure long positions in call and put options as well as spreads
where the total liability is limited to the premium paid. The total capital to be invested
will be staggered over the investment tenure, so as to spread the exposure to the option

24
premiums through the investment tenure (i.e. only a proportion of the total clients
capital will be invested in stock option premium in any month). In no month will an
amount greater than the client’s initial capital be invested in options. Returns on the
portfolio will be generated through capital appreciation on the options investments. For
the purchase of options, while the upside is unlimited, losses are limited to the premium
paid. Thus under all possible circumstances, the losses on the portfolio will be limited
to the clients initial capital.

viii) Non-Discretionary Portfolio:

In the case of non-discretionary portfolios, the investment objectives and the

securities to be invested would be entirely decided by the Portfolio Manager based on
the Agreement executed with the Client. The same could vary widely between clients to
client.
ix) Alpha Portfolio:
The Alpha Portfolio seeks to capture Alpha - which is out performance to index
in the client’s portfolio. The entire portfolio will be hedged against overall market
movements by using Nifty futures. The portfolio would remain fully hed ged at all
times. The hedged portfolio would reduce market risk (beta) by insulating the portfolio
against market movements.

x) Infrastructure Portfolio:
The infrastructure portfolio will invest in companies that are
directly or indirectly linked to the infrastructure theme. This could
include sectors such as construction, capital goods, power, cement,
metals, banking, and logistics and other related sectors/sub-sectors

PORTFOLIO MANAGEMENT SERVICE

Portfolio management is about strengths, weaknesses, opportunities and threats in the
choice of debt vs. equity, domestic vs. international, growth vs. safety, and other
tradeoffs encountered in the attempt to maximize return at a given appetite for risk.
In the case of mutual and exchange-traded funds (ETFs), there are two forms of
portfolio management: passive and active. Passive management simply tracks a market
index, commonly referred to as indexing or index investing. Active management
involves a single manager, co-managers, or a team of managers who attempt to beat the
market return by actively managing a fund's portfolio through investment decisions
based on research and decisions on individual holdings. Closed-end funds are generally
actively managed group of experts design and manage your equity portfolio suiting
risk-return
· Appetite
· Benefit of Diversification and an element of customization
· No Settlement hassles
· Separately held securities

25
· Greater Flexibility
· Efficient switch between cash and equity positions
· Portfolio designing is done as per market conditions and market considerations
· Customized Performance Reporting
· 100% Transparency, managed under SEBI license and regulations
· Competitive Fee Structure
So investments under portfolio management are risk diversified and research oriented.

Discretionary Portfolio Management

The Portfolio Manager undertakes the entire management of portfolio. Starting from
buying and selling of securities to reshuffling and safe custody is undertaken. Investor’s
involvement will be minimum. Thereby allowing investor the flexibility to attend to
their personal matters, while the Portfolio Manager takes care of investor’s investments
and keeps it posted on a regular basis

PORTFOLIO MANAGEMENT PROCESS

26
 RESEARCH METHODOLOGY

The scope of the project is related to security form of investment particularly in shares
and setting a portfolio by using various risky shares. The selected of units is made from
specified category shares listed in ICICI Prudential. To achieve the objectives of the
present study the data has been collected from the following sources.

RESEARCH OBJECTIVES
Every research study has its own specific research objective. Without objective no one
is doing any work. To do anything there is a purpose behind it.

“The word objective means purpose behind doing anything.”

Here in ICICI Prudential my research objectives are as follows:

1 .To know the Investment Pattern of ICICI Prudential Life Insurance company.
2. To know the Investor’s approach towards the return provided by the ICICI
Prudential Life Insurance.
3. To know the Satisfaction of the investors towards the return offered by the ICICI
Prudential Life Insurance.

SOURCES OF DATA:
As there are mainly two methods:
(a) Primary data
(b) Secondary data
Primary data:

There are different methods of data collection such as observation, questionnaire etc.
Data collection through questionnaire is to be used in case of very large population is
exist. And it is very difficult to get the required data in specified and accurate format.

27
 Methodology refers to the way by which the information is collected. There are
various methods to collect the information from the company. This research data had
collected the information through

 Personal investigation
All the methods here have their own Pros & Cons. Different researcher are used
varied methods. This research had undergone to the studies in ICICI Prudential Life
Limited. And this research data have collected all information by personal inquiry
along with questionnaire.

SECONDARY DATA:
Data collected from various books and websites.
Data provided by ICICI Prudential as part of the classes undertaken.
Data collected from newspapers and Internet.
Date collected from Stock Exchanges.(BSE/NSE)

COMPANY PROFILE

ABOUT THE ORGANISATION

28
 ICICI GROUP PROFILE

The Industrial Credit and Investment Corporation of India Limited (ICICI) was
incorporated in 1955, at the initiative of the World Bank, the Government of India and
representatives of Indian industry, with the objective of creating a development
financial institution for providing medium-term and long-term project financing to
Indian businesses. Mr.A.Ramaswami Mudaliar elected as the first Chairman of ICICI
Limited. ICICI emerges as the major source of foreign currency loans to Indian
industry.
Besides funding from the World Bank and other multi-lateral agencies, ICICI also
among the first Indian companies to raise funds from International markets.

ICICI Bank is India's second-largest bank with total assets of Rs. 3,446.58 billion (US$
79 billion) at 31 March, 2007 and profit after tax of Rs. 31.10 billion for fiscal 2007.
ICICI Bank is the most valuable bank in India in terms of market capitalization and is
ranked third amongst all the companies listed on the Indian stock exchanges in terms of
free float market capitalization*. The Bank has a network of about 950 branches and
3,300 ATMs in India and presence in 17 countries. ICICI Bank 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 and affiliates in the
areas of investment banking, life and non-life insurance, venture capital and asset
management. The Bank currently has subsidiaries in the United Kingdom, Russia and
Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai
International Finance Centre and representative offices in the United States, United
Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia.
Our UK subsidiary has established a branch in Belgium.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE)

MANAGEMENT

29
 K. V. Kamath
Managing Director and Chief Executive Officer

Lalita Gupte Kalpana Morparia

Joint Managing Director Joint Managing Director

Chanda Kochhar Nachiket Mor

Deputy Managing Director Deputy Managing Director

Board Committees

Audit Committee Board Governance & Remuneration Committee

Mr. Sridar Iyengar Mr. N. Vaghul

Mr. Narendra Murkumbi Mr. Anupam Puri
Mr. M. K. Sharma Mr. M. K. Sharma
Mr. P. M. Sinha
Prof. Marti G. Subrahmanyam

Customer Service Committee Credit Committee

N. Vaghul Mr. N. Vaghul

Narendra Murkumbi Mr. Narendra Murkumbi
M.K. Sharma Mr. M .K. Sharma

30
 P.M. Sinha Mr. P. M. Sinha
K. V. Kamath Mr. K. V. Kamath

Fraud Monitoring Committee Risk Committee

Mr. M. K. Sharma Mr. N. Vaghul

Mr. Narendra Murkumbi Mr. Sridar Iyengar
Mr. K. V. Kamath Prof. Marti G. Subrahmanyam
Ms. Kalpana Morparia Mr. V. Prem Watsa
Ms. Chanda D. Kochhar Mr. K. V. Kamath
Share Transfer & Shareholders'/ Investors'
Asset-Liability Management Committee
Grievance Committee
Mr. M. K. Sharma Ms. Lalita D. Gupte
Mr. Narendra Murkumbi Ms. Kalpana Morparia
Ms. Kalpana Morparia Ms. Chanda D. Kochhar
Ms. Chanda D. Kochhar Dr. Nachiket Mor

Committee of Directors

Mr. K. V. Kamath
Ms. Lalita D. Gupte
Ms. Kalpana Morparia
Ms. Chanda D. Kochhar
Dr. Nachiket Mor

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank and
Prudential plc. It was one of the first players to commence operations when the
insurance industry was opened to the private sector in year 2000. Since inception the
company has written over 3.75 million policies. The company has a network of over 4,
00,000 advisors & 22 bank assurance partners. It is also the only life insurer in India to
get IFS AAA (ind) rating, by Fitch Ratings. For the past six years, ICICI Prudential has
retained its position as No.1 private life insurer in the country with a wide range of
flexible products that meet the needs of the Indian customer at every step in life.
ICICI Prudential Life Insurance Company has mopped up a premium income of Rs 348
core for the year ended march 31, 2010, reflecting a 200 percent growth over the

31
corresponding period last year. It has sold 2, 46,827 policies during the year, against
three-lakh policies sold in fiscal 2009.
Total sum assured increase more than six fold to Rs. 6,005 crore .
ICICI Prudential has corned about 40 per cent of the private sector insurance market,
which today accounts for 10 per cent of incremental sales of the entire industry.
ICICI Prudential chief marketing officer Saugato Gupta attributed the growth in
performance to its distribution ramp-up the ICICI brand, its customer-centric focus and
its product portfolio. ‘People believe in the ICICI brand and with our distribution
happening correspondingly, it had helped increase sales, ‘said Gupta.
The private insurer doubled its reach to 25 towns from 12 cities last year. The
company’s strategy to push need-based selling ands tackle the concept of under-
insurance in the country further helped it push up the average tickle size with the
average sum assured crossing Rs 2 lakh.

Pension products today accounts for 25 per cent of its total sales, giving ICICI
Prudential an overall industry share of 23-25 per cent.

Salient Features of Prudential

 Prudential was founded in 1848 and from since it remained a pioneer insurance
service provider.
 Presence in UK and throughout Asia.
 One of the largest Insurance Company in the UK.
 Investor deposit base in U.K. alone exceeds Rs 53200 crores
 Has over US $270 billion under management.
 4th largest life insurance company in terms of revenues in the world.
 Already established as one of the biggest mutual fund companies in India
(Prudential ICICI AMC).
 Solid reputation builds over 150 years.
 Over 75 years of experience in Asia.
 Operating in 11 countries in South East Asia.
 A truly global brand.
 “One-stop shop for all financial requirements of an investor.”

VISION

To make ICICI Prudential the dominant Life and Pension player built on trust by world-
class people and service.
This we hope to achieve by:-
 Understanding the need of customers and offering them superior products and
service.
 Leveraging technology to service customers quickly, efficiently and
conveniently.

32
  Developing and implementing superior risk management and investment
strategies to offer sustainable and stable returns to our policyholders.
 Providing an enabling environment to foster growth and learning for our
employees.
 And above all, building transparency in all our dealing.

The success of the company will be founded in its unflinching commitment to 5 core
value—Integrity, Customer First, boundary less, Ownership and Passion. Each of the
values describes what the company stands for, the qualities of our people and the way
we work. We do believe that we are on the threshold of an exciting new opportunity,
where we can play a significant role in redefining and reshaping the sector.
Given the quality of our parentage and the commitment of our team, there are no limits
to our growth.

DATA ANALYSIS

GRAPHICAL PRESENTATION

33
 Fig: Distribution of age groups in the sample

Explanation :-
The above pie chart shows that the sample of 153 is predominantly consists of
respondents of the age groups of 18-30 years and 31-40 years. This reveals that most of
the investors are them who are started their carrer recently or working for 10-15 years.
This also shows that the age group of greater than 50 years are very less interested in
invetment.

34
 Fig : Distribution of occupation through out the sample

Explanation :-
This graph shows that the respondents are mostly from the service class (61%) and
business person consists of only 37% of respondents.Self employed are very less in
numbers.
Form the Standard Chartered point of view it is quite useful as the service people are
regular investors. Where as the business class invest large amount in a single time.

Fig : Distribution of sample annual income wise

35
Explanation :-
In the sample the income group of 2,50,000 to 5,00,000 Rs is dominating. It reveals that
this income group were the major respondent in the survey. The second major income
group is the 7,50,000 to 10,00,000.
Most investors are from the income group of 2,50,000 tp 5,00,000 Rsand 7,50,000 to
10,00,000 which is enthusiastic for the companies as the potential customers are from
the medium investor and the bid investors. Combining the two income group company
can have a mixed bag of good investor in the near future.

Fig : Distribution of disposible income

Explanation :-
Disposible income is the strong piller of investment, more the disposible income for the
investors more they invest in the investment instrument. The pie shows that the major
repondents have a dispposible income of 5,000 to 10,000 Rs per month which is good
enough money for an investor who is investing regularly for the longer term. It also
depicts that investors who has a disposible income of more then 20,000 Rs is 1/5th of the
sample. This reveals company got a fair enough data base of high amount investors.

36
Fig : First priority of investment in the sample

Explanation :-
Tax saving is the major concern now in india. The above pie alsoshow that 40% of
people want to invest for the taxsavings, but that is for only 1.5 lakh. It is expeacted that
before the investment investors focus would be the main criteria where he wants to
invest in. depending up on the reponse I have found out that 18% people invest to
secure for Future Uncertainties and 19% fight against inflation and do invest for only
Capital Preservation.
Only 9% people focus on their retirement time and invest for vesting period.

37
Fig : Withdraw from investment
Explantion :-
It shows that how investors want to stay remain invested in.42% of investors want to
stay in the market for the 3-5 years, it has been said that 3 years is a market cycle so,
investor usually want stay in for the two cycle. This is the very normal period for
remain invested due to primary BULL and BEAR turn period go through 5-6 years.
23% investors are the short term investor as they want to get out of market with in 3
years. But it is healthy for the investment market thst 18% investors want to stay
invested for 6-9 years and 17% more than 10 years. These long term investors are
keeping the market more stable than the short term investors.

38
Fig : Risk tolerence ability
Explanation :-
The research showed that the most investors are risk averse and goo for the moderate
risk. 42% investors are in this category. This is good news for the market that only 22%
of insvestors are with low risk apetite. The low risk apetite investor mostly invested in
the fixed return instruments.
7% investors have very high and 29% investors have high risk profile, they useally
invest in the stocks and mutual fund, where the ris is high and the returns are also high
in proportion.

39
Fig :Risk bear acceptablilty
Explanation :-
Investor’s negative return acceptablity shows how he/she can aceept the market up-
downs positively. If they really take it to the account then the can sustain in the market
for the longer time.
In the above pie chart ‘Never accept return’ shows the group with low risk appetite
where as ‘once in 3 years’ & ‘once in 5 years’ represents the group with moderate risk
appetite. ‘once in 7 years’ & ‘can fluctuate in long run’ represents the group with high
or very high risk appetite. Though this is not applied to all, as risk assumption is
different for every other person.
Here, 36% investors need always positive returns or assured return, where as 30% of
investors can have a moderate risk bearing appetite. And rest 34% investors can bear
the high risk.

40
Fig : Disposible income according to age groups
Explanation :-
It clearly shows that the age group of 18-30 years has the most disposible income per
month because most of them are single. More the age grows the disposible income
reduced may be because the family expance and the living expance increased.
So from the company’s point of view 18-30 years age group is the most potential
investors and usually this age group is investing for more profit.
It has to make a point that investors with 5,000 to 10,000 Rs per month are most in the
18-30 years age group.

41
Fig : Investment instrument used by age groups
Explanation :-
Most of the investors are invested in the insurance sector. The age group of 18-30 years
are highly invested in the mutual funds and share market. This group also invested
equally in the FDs and RBI bonds.
The 31-40 years age group is also invested in all the instrument but they are quite
heavily invested in the real estate sectors. But the number of respondent in this group is
less than the 18-30 years sge group.
The more than 50 years age group are most invested in the FD & RBI bonds. They are
less invested in the shares and the mutual funds.

42
 Fig : Risk tolerence according to Age
Explanation :-
Risk tolerence is the major concern in the investment market. If the risk is high then
return expected is high for the investors. Age is also considered for the risk tolerence. It
is expected that the lower the age group risk tolerence is high.
In the above bar graph it is clear that 18-30 years age group have more risk taking
ability than the other age groups, number of respondent in very high, high are most in
this age group. The reason behind this is that this age group wants to earn more and
they are only in the beginning of their carrer.
The next group which is next this is the 31-40 age group in which most are family
person and for that reason the are with mostly moderate risk profile.

Fig : Age wise time Horizon

43
Explanation:-
Time Horizon is very much important for an investor because it determines the time
period the investor need to invest and the market conditions during that time. More the
time horizon the risk diluted more.
Those who invest for very few years (<3 years) the are the short term investors and the
risk takers. They usually invest for the high gain in short term. The above bar graph
shows that age group 18-30 years dominating in this sector.
Most of the respondents are in the 3-5 years group. They remain invested for the a full
cycle of bear turn and bull turn.
The age group of 31-40 years are likely to remain invested in 6-9 years because if they
could invest in the beginning of the bull turn then they can make highest profit after 3
market cycle.
Only the Real Estate investors wants to invested more than 10 years.

Fig : Age wise negative return acceptability.

Expalnation :-
Negative return acceptability shows the risk tolerence, as shown before risk tolerence
is more in 18-30 years age group, this graph also shows that least risk tolerence group is
31-40 years age group.
The age group of >50 years are also risk averse they can not tolerate any fluctuuation
in return part in longer time but they can tolerate minute losses in 7 and 3 years return.
18-30 year age group response are evenly distributed in all ranges of negative return
acceptibility.

44
 Fig : Disposible income-wise Risk tolerence
Explanation:-
Disposible income gives the power of investment to the investor. But the risk tolerence
is the mind set of individual investors. I have tried to corelate these two.
This graph shows that different disposible income group has different risk tolerence.
The < 5,000 Rs income group is with moderate risk takers.
The disposible income group of 5,000-10,000 Rs are more risk takers than the previous
one. Though the response of this group is more concern about the moderate risk.
The next group 10,000-15,000 Rs has diversified their risk, this group tend to invest in
diversified intrument where risk is diluted due to diversity of risk profile.
The 15,000-20,000 Rs disposible income group is the most risk takers in all the groups.

Relation Between Disposible income & Time Horizon

45
Fig:Disposible income wise time horizon
Explanation:-
Time horizon decides the tenure the investor remain invested in the market. This depics
the investment potential along with risk tolerence.
The above graph shows that the Disposible income group of > 20,000 Rs are intended
to quick return,so they intended to invest for below 3 years. 36% of respondent from
more than 20,000 Rs group.
The disposible income group of 5,000-10,000 Rs.is tend to invest for 3-5 years and > 10
years span.
Where as 10,000-15,000 Rs disposible income group is predominently invested in the
6-9 years span.

46
Fig: Occupation wise Investment
Explanation:-
This graph will show how investors of different category tend to invest.
Here in this bar graph service category are like to invest in the Fixed Deposits (23%)
and Mutual Funds (24%). Fixed deposits gives a fiex return where as in mutual funds
the risk is diversified.
Business class is more attracted towards the Shares (18%) and real estate (17%) because
they have the lum sum amount to invest in the single time. More over they also invest in
the mutual funds where high risk may be taken for the higher return.
For the Self employed category, they are mostly invested in the Fixed Deposits (37%)
and Insurance sector(36%).

47
Fig: Occupation wise Time Horizon
Explanation:-
The above graph shows that in all the occupation nearly 22% -25% investors are want
to quit before 3 years. This may be because of the short term investment.
The noticeable thing is that in service category 40% and in Business category 48%
investors are tend to remain invested for 3-5 years. This is very good indicstion for the
investment institution.
In the service category 21% invetors are want to stay invested for more than 10 years
this is because the are invested in the real estate and long term invesment instrument
like bonds.

48
TAX CALCULATION & PORT FOLIO MANAGEMENT
TAX CALCULATION
In the port folio management I have learned how to calculate the Income tax of service
person and businessmen. According to the indian Income tax acts Income tax is defined
as below:
An income tax is a tax levied on the financial income of persons, corporations, or other
legal entities.
Various income tax systems exist, with varying degrees of tax incidence. Income
taxation can be progressive, proportional, or regressive. Individual income taxes often
tax the total income of the individual (with some deductions permitted).
The government of India imposes a Progressive Income Tax on taxable income of
individuals, Hindu Undivided Families (HUFs), companies (firms), co-operative
societies and trusts
.
Income from Salary
All income received as a salary is taxed under this head. Employers must withhold tax
compulsorily, if income exceeds minimum exemption limit, as Tax Deducted at Source
(TDS), and provide their employees with a Form 16 which shows the tax deductions
and net paid income. In addition, the Form 16 will contain any other deductions
provided from salary such as:
1. Medical reimbursement: Up to Rs. 15,000 per year is tax free if supported by bills.
(Company pays Fringe Benefit Tax on this amount)
2. Conveyance allowance: Up to Rs. 800 per month (Rs. 9,600 per year) is tax free if
provided as conveyance allowance. No bills are required for this amount.
3. Professional taxes: Most states tax employment on a per-professional basis, usually
a slabbed amount based on gross income. Such taxes paid are deductible from income
tax.

Income from Business or Profession

The income referred to in section 28, i.e., the incomes chargeable as "Income from
Business or Profession" shall be computed in accordance with the provisions contained
in sections 30 to 43D. However, there are few more sections under this Chapter, viz.,
Sections 44 to 44DA (except sections 44AA, 44AB & 44C), which contain the
computation completely within itself. Section 44C is a disallowance provision in the
case non-residents. Section 44AA deals with maintenance of books and section 44AB
deals with audit of accounts.

Section 80C Deductions

Section 80C of the Income Tax Act [1] allows certain investments and expenditure to
be tax-exempt. The total limit under this section is Rs. 150,000 (Rupees One lakh fifty
thousand) which can be any combination of the below:
* Contribution to Provident Fund or Public Provident Fund
* Payment of life insurance premium
* Investment in pension Plans

49
 * Investment in Equity Linked Savings schemes (ELSS) of mutual funds
* Investment in specified government infrastructure bonds
* Investment in National Savings Certificates (interest of past NSCs is reinvested
every year and can be added to the Section 80 limit)
* Payments towards principal repayment of housing loans. Also any registration fee
or stamp duty paid.

* Payments towards tuition fees for children to any school or college or university or
similar institution. (Only for 2 children)

PERSONAL TAX RATES

For individuals, HUF, Association of Persons (AOP) and Body of individuals (BOI):
For the Assessment Year 2008-09
Taxable income slab (Rs.) Rate (%)
Up to 1,50,000
Up to 1,80,000 (for women)
Up to 2,25,000 (for resident individual of 65 years NIL
or
above)
1,50,001 – 3,00,000 1 0
3,00,001 – 5,00,000 2 0
5,000,001 upwards 3 0*
*A surcharge of 10 per cent of the total tax liability is applicable where the total income
exceeds Rs 1,000,000.

Tax calculation:-
For Men
Illustration: let a person with yearly income of 6,00,000 Rs. The tax he will paid will be
as given below.
For first 1,50,000 Rs tax Nil
For next 1,00,000 Rs.of investment tax Nil
Now tax for 2,50,001-3,00,000 @ 10% 5,000 Rs
For 3,00,001-5,00,000 Rs. @ 20% 40,000 Rs.
For 5,00,001-6,00,000 Rs. @ 30% 30,000 Rs.
Total tax paid 75,000 Rs.

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EXPECTED RETURN
Portfolio Expected Return
The expected rate of return is the weighted average of the expected rates of return on
assets comprising the portfolio. The weights, which add up to 1, reflect the fraction of
total portfolio invested in each asset. Thus, there are two determinants of portfolio
returns:
Expected rate of return on each assets and
Relative share of each asset in the portfolio:
Symbolically:
E (rp) =∑w E (ri)
Where, E (rp) =expected return from the portfolio.
w = proportion invested in the portfolio.
E (ri) =expected return from the assets i.

Portfolio Risk
Total risk is measured in terms of variance or standard deviation of return. Unlike
portfolio expected return, portfolio variance is not the weighted average of variance of
returns on individual assets in the portfolio.
Symbolically:
σ²p= (w1)²(σ1)²+ (w2)²(σ2)²+2(w1) (w2) (σ12)

Where,
σ²= Variance of returns of the portfolio
(w1)= Fraction of the portfolio invested in asset 1
(w2)= Fraction of the portfolio invested in asset 2
(σ²1)= Variance of asset 1
(σ²2)= Variance of asset 2
(σ12)= Covariance between returns of two assets.

Return is not fixed for any investment instrument it depends upon the market liquidity,
interest rate, and some other economic situation of that country. For the calculation of
the risk & return I have chosen the historic data.
I have also showed the risk profile which have been ranging from Low to very high.
List of return expected on the basis of Historical data
Types of investments Historical returns Risk profile
Company Bonds 6%-8% Medium-high
Bond Mutual Funds 8%-10% Medium
Equity Mutual Funds 15%-20% High
Equities 15%-20% Very high
Fixed Deposits 7%-8% Low
PPF 8% Low
Post Office 8% Low
Government Securities 5%-6% Low
ELSS 15%-20% Medium-high

51
Note: higher returns for lower risk (because of Govt. guarantees there) that PPF and
similar A/c appear to have, is misleading. These do not have much liquidity, and since
that is an important measure of risk.

CREATING PORTFOLIO

Making a portfolio is depends on the risk measurement of the investment and the time
horizon he/she prefer to invest. But from the point of view of the portfolio manager,
choosing a investment intrument or a fund is more difficult than to measure the risk
tolerence and time horizon.
For the portfolio managers calculating the risk and return is the main area where they
focused. As an investors before investing alwways watch for the risk and return for
his/her investment. So before creating the portfolio, risk and return calculation is
manditory.
To understand the risk of a specified fund, there are some statistical instruments that
helps to measure the volatality in respect to the market, industry, and peers. Measuring
volatility and risk depics the fluctuation of return investors receive.
For this creation of portfolio I have choose Mutual Funds as investment instrument
because, it has a diversified investment options from equity market, money market, to
debt instrument. To diversified investment investor can investment as he/she wanted to.
Any one can invest in mutual funds as variation in investment instrument is greater than
any other investment instrument.

METHODOLOGY USED

Investing in mutual funds involving an active role of a fund manager is set to be one of
the safest investment avenues as regards the high risk/return equity investment. Being
assumed safe and the responsibility entrusted to fund managers, it is perceived that
investors give a cursory glance at the performance sheet of the fund, gain some money,
and carry on with their investments with the fund.
However, though they make money from the fund, a detailed examination of the fund's
performance in relation to other risk-free investment avenues and the Benchmark index
gives telling insights into the fund's performance. A comparison with risk-free
investments like government securities, treasury bills, and also the Benchmark index
would determine how safer and more profitable your fund is.
Here is an analysis of the ratios that can help investors gauge the performance of your
fund as regards investing in less riskier investment avenues.

Standard Deviation

Standard deviation throws light on a fund's volatility in terms of rise and fall in its
returns. Maximum volatility in a security is the riskiest, considering the unevenness it
brings about in its performance. Standard deviation of a fund measures this risk by

52
measuring the degree to which the fund fluctuates in relation to its mean return. That is
the average return of a fund over a period of time.
A fund that has a consistent four-year return of 3%, for example, would have a mean or
average of 3%. The standard deviation for this fund would then be zero because the
fund's return in any given year does not differ from its four-year mean of 3%. On the
other hand, a fund that in each of the last four years returned -5%, 17%, 2% and 30%
will have a mean return of 11%. The fund will also exhibit a high standard deviation
because each year the return of the fund differs from the mean return. This fund is
therefore riskier because it fluctuates widely between negative and positive returns
within a short period.
To determine how well a fund is maximising its returns received for its volatility, a
comparison can be done for similar investment and similar risky mutual funds. The
fund with the lower standard deviation would be more optimal because it is maximising
the return received for the amount of risk acquired.
Alpha
Alpha determines the sensitivity of the stock with the portfolio. Basically it helps to
estimate the profitability of the portfolio.
Beta
Beta determines the sensitivity, or risk, of a fund in comparison to that of its index or
benchmark. A fund with a beta very close to 1 means the fund's performance closely
matches the index or benchmark. A beta greater than 1 indicates greater volatility than
the overall market, and a beta less than 1 indicates less volatility than the benchmark.
If, for example, a fund has a beta of 1.05 in relation to the Sensex, the fund has been
moving 5% more than the index. Therefore, if the Sensex has increased 15%, the fund
would be expected to increase 15.75%.
On the other hand, a fund with a beta of 2.4 would be expected to move 2.4 times more
than its corresponding index. So if the Sensex moved 10%, the fund would be expected
to rise 24%, and, if the Sensex declined 10%, the fund would be expected to lose 24%.
Investors can choose funds exhibiting high betas, which increase chances of beating the
market. Also if the market is bearish the funds that have betas less than 1 are a good
choice because they would be expected to decline less in value than the index. For
example, if a fund had a beta of 0.5 and the Sensex declined 6%, the fund would be
expected to decline only 3%. However, you must note that beta by itself is limited and
there may be factors other than the market risk affecting your fund's volatility.

53
 SWOT ANALYSIS
Strengths

 ICICI Prudential is the 1st life insurance company to introduce UNIT LINKED,
PENSION PRODUCTS AND LIFE TIME it can get the pioneer advantage.
 Prudential is the 156 year old company founded in 1848 so it has full fledge
experience in this industries.
 ICICI enjoys a rating with the Moody’s which is higher than the severing rating.
 Large distribution channel with 30 branches and more than 30,000 financial
advisors.
 Partners having experience in different markets of the world.
 Synergy with existing operations
 Expertise in the field of insurance
 Professional management
 Good Customer service
 Create a brand name
 Flexible Products

Weakness

 Low capital base

 Yet to build strong distribution network
 Cannot tap rural market
 It has to do operation within the boundary of IRDA.

Opportunities

 Today ICICI Prudential covers 40% Market so yet there is a great potentiality to
increase market share.
 Insurance plan like pension plan, child plan and investment plan of ICICI
Prudential go good response from the market. So in future company can take
benefit for it.
 The brand name that creates ICICI Prudential and awareness level of it is
comparatively quite higher than competition. So it will be helpful in future while
lunching new innovation products.
 Banks ready to tie up for as a readymade distribution network for a small fee.
 Untapped Market.

54
Threats

 Large distribution network of LIC

 Decades of experience and brand name of LIC
 5% service tax on investments.
 It is private company so there is a doubt about solvency and liquidity among the
general people.
 Change in the environmental factors many affects the company.
 The government policies and the annual budget may the insurance market.
 Large distribution network of LIC and trust of people in LIC.

CONCLUSION
The over all project is depending up on the findings that has been explained previously.
All my survey findings are corelated and being explain in the above graphs.
After completing the survey and watching the analysis I come to this conclusiion that
the before investment investors do have focus on Tax savings, Income, Capiatal
preservation etc. They also have a predetermination of the time period of investment.
According to my view the age group of 18-30 can be a great potential investors for the
company as the has high risk profile, more disposible income, and the time horizon is
perfect 3-5 years.

LIMITATIONS OF THE STUDY

The major limitations of the project are:

1. Detailed study of the topic was not possible due to limited time of the project.
2. Direct contact with the companies is not made.
3. Confidential information is not shared due to business secrecy and the lack of trust.
4. They are not at all ready to give any financial information to the trainees for their
study of project.
5. Due to time constraints the executives of the company are not able to allot time to
the trainees.
6. Fluctuations in the market performance of the companies were a big constraint of
the study.

55
 RECOMMENDATION

Recommendation for this category is company must follow up these high potential
customers, they can be offered ULIPs as there is blocking period of 5 years in NEW
SECURE FIRST plan. This ULIP has a 20%-22% return which good enough for
investment. The main focus should be to reach to the customer, these customers are
aware of ULIPs and aware of other product. Company should try to reach them and tap
the investor.
Mutual Funds can also be offered as they have high risk profile. Company should take
initiative to get demat account of these customers.

The age group of 31-40 years, investors are with ‘Moderate’ risk profile, most of the
investors are from the 10,000-15,000 Rs per month disposible income. Company will
get a good investor with diluted risk profile. Company can offer them ULIPs,and Fixed
Deposits as investment instrument. Mutual funds can be an option but that must be a
debt fund to invest.

The age group of 41-50 years, investors are from the 15,000-20,000 Rs disposible
income group. Investor in this group are invested in Insurance sector, the primary focus
of these investors are retirement and time horizon is likely to be 6-9 years. This is also
good potential group for the retirement plan in ULIPs. Mutual funds can be a good
option for them.

For the age group of above 50 years, the rish profile would be low moderate,as the term
is not more than 3 years. Investors have invested in insurance sector but in this age
insurance would not be a good option for investor. Company should try to minimise the
risk tolerence by offering Fixed deposits.

Occcupation
If we see the survey data it will seen that respondents are majorly Service peopole and
Business Class. Depending upon the data I conclude that the srevice class has a time
horizon of 3-5 years and risk tolerence ‘Low- Moderate’. They invested in FDs, Mutual
Fund and ULIPs.
Recommendation company shoul tap these class by innovative marketing strategies as
they already invested, and offer FDs, ULIPs. Mutual fund can be a lucrative offer if the
Fund is any moderate fund or debt fund.
For the business class, the risk profile is high-very high. Most investor are with negative
return acceptability and time horizon is < 3 years. Company should offer Mutual funds

56
with risk profile High to very high thus investor can get a high return. Apart from this
company should offer to open demat account with them.

Disposible Income
The disposible income bracket less than Rs.5000 per month are basically safe investors
and have not and do not prefer investing in mutual funds and ULIP. Thus positioning of
these products should be such that people are attracted towards this scheme. Emphasis
on marketing of the products should be given.
Respondents under disposible income bracket Rs.5,000-Rs.10,000 have mainly invested
in insurance and real estate. But when survey was done and their preferences was asked
these respondents strongly preferred investing in these strategies.
Disposible Income Bracket of Rs.15,000-Rs.20,000 are the strong contenders for
investing their money and these people have invested in real estate, insurance and fixed
deposits. Moreover there is mixed preferences for their investments thus proper
segmentation of the sample should be done accordingly marketing strategies should be
adopted.
Though there is a small percentage of respondents in disposible income bracket above
Rs.20,000 who least prefer investing in mutual fund. But this is the segment which can
be well targeted and their portfolio should be such that gives them more returns. The
case of ULIP is different as people strongly prefer investing in this investment strategy.
Thus emphasis for selling ULIP in this income bracket.

57
 BIBLIOGRAPHY

Sites
www.google.com
www.investopedia.com
www.standardchartered.in
www.iciciprulife.com
www.nseindia.com
www.ampi.com
www.finance.indiamart.com
www.business.india.com
www.valueresearch.com
www.myiris.com

Books

Financial management (Ninth edition) by I M Pandey.

Security analysis and Portfolio management by Ritu Ahuja.
Security analysis and Portfolio management by S. Kevin

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60
 QUESTIONNAIRE FOR INVESTMENT STRATEGIES

Name Age: 18-30 31-40 41-50

>50
Occupation: Service Business Self Employed Other
Contact no.

Q 1.What is your annual income (approx)?

< 2,50,000 2,50,000-5,00,000 5,00,000-7,50,000
7,50,000-10,00,000 > 10,00,000

Q 2. What is your monthly disposible income?

< 5,000 5,000-10,000 10,000-15,000
15,000-20,000 > 20,000

Q 3. What is your primary investment focus (please give ranking 1-5, where 1- best)
Tax Savings Future Uncertainity Income
Retirement Capital Preservation

Q 4. When You want to withdraw money from youe investment?

Less than 3 years 3-5 years
6-9 years >10 years

Q 5. Where you have invested from the followings?(you can tick more than one)
Share Mutual Funds FD/RBI bonds
Real Estate Insurance

Q 6. What is applicable to you?

Never Accept Negative return
Can accept negative return once in 3 years
Can accept negative return once in 5 years
Can accept negative return once in 7 years
Returns can fluctuate in longer term.

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