Security Analysis & Portfolio Management - Introduction to Investment

1. SECURITY ANALYSIS & PORTFOLIO
MANAGEMENT - INTRODUCTION
BY
VEDAPRADHA.R

3. INTRODUCTION TO
INVESTMENT
MANAGEMENT

4. MEANING OF INVESTMENT
Investment is the application of
present resources which have
been saved or put aside from
current consumption in the hope
that some benefit will occur in
the future.

5. NEED FOR INVESTMENT
Increase in income level
Increase in life expectancy
Retirement benefits
Minimise inflation pressure
Tax benefits

6. OBJECTIVES
Maximise returns
Minimise risk
Hedge against inflation
Regular income
Avail tax benefits
Safety for funds

7. FACTORS INFLUENCING INVESTMENT
DECISIONS
Return
Risk
Liquidity
Tax shelter
Marketability
Convenience

8. INVESTMENT PROCESS
 Determining investment objectives and policy
 Security analysis
 Construction of portfolio
 Portfolio revision/rebalancing
 Portfolio evaluation
Note: KYC from SEBI is mandatory
( registered office) for mutual funds & stock
market entry – Individual investors only

10. INVESTMENT ALTERNATIVES/AVENUES
• FINANCIAL
ASSETS
• Non marketable
financial
securities
• Bonds
• Mutual funds
• Shares
• Money market
instruments
• Life insurance
policies
• REAL
ASSETS
• Precious
stones
• Real estate
• Precious
metals
• Art objects
• FINANCIAL
DERIVATIVES

12. NON MARKETABLE SECURITIES
 Bank deposits
 Post office savings
 Monthly income scheme of post office
 Kisan Vikas Patra
 National savings certificate
 Company deposits
 Employee provident fund scheme (EPF)
 Public Provident fund deposits

13. SHARES
Equity
Preference

14. EQUITY SHARES CAPITALISATION
 Blue chip shares
 Growth shares
 Income shares
 Cyclical shares
 Defensive shares
 Speculative shares
 Tech shares

15. BONDS OR DEBENTURES
Government Bonds –
RBI, PSU
Corporate bonds
Municipal bonds

16. MONEY MARKET INSTRUMENTS
Treasury bills
Certificate of deposits
Commercial paper
Repos

17. MUTUAL FUNDS
Equity scheme
Debt scheme
Balanced scheme

18. LIFE INSURANCE
 Endowment assurance policy
 Money back policy
 Whole life policy
 Term assurance policy
 ULIP

19. REAL ASSETS
 Real estate
 Precious
stones
 Precious
metals

20. FINANCIAL DERIVATIVES
Options
Futures
Forwards
Swaps
Collaterals

21. MATRIX APPROACH TOWARDS INVESTMENT
The below are the criteria for evaluation of
investment alternatives or matrix approach
towards investment decisions.
 Rate of return
 Risk
 Marketability
 Tax shelter
 Convenience
 Liquidity

22. MATRIX APPROACH

24. RISK & UNCERTAINTY
Types of Risk
SYSTEMATIC
• Market risk
• Interest rate risk
• Purchasing
power risk
UNSYSTEMATIC
• Business risk
• Financial risk
• Credit risk

25. RETURN
Realized return - The actual or
income which has been earned
Expected return – It is the return
which an investor expects or
anticipates earning over some
future period

26. COMPONENTS OF RETURN
 Current gains
 Capital gains

27. BENEFITS OF DIVERSIFICATION
 Minimisation of risk
 Portfolio optimization
 Human bias
 Hedging
 Tax benefits
 Economic cycles

28. INVESTMENT STRATEGIES
 Investment objective
 Fluctuations
 Indifferent
 Individual approach
 Diversification
 Speculation Vs Investor
 Liquidity
 Analysis
 Common sense approach
 Long term investor

29. MEASURES OF RISK & RETURN
Range
Standard Deviation &
co-variance
Beta