portfolio management services 2

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CHAPTER: 1

INTRODUCTION

Portfolio Managementis a science for managing the varying

combination of Portfolio elements. These elements are the sub-

components, of which the larger portfolio is formed; say, the elements

may be plans for a portfolio of plans, or strategies for portfolio of

strategies, or securities for a portfolio of securities, and so on. In

general, we may say that the elements of a portfolio are different

forms of assets and in essence, portfolio management is managing

these assets. We shall henceforth refer to portfolio management asthe management of these assets. In particular, the scope of this

report has been focused to handle and discuss securities as the

typical sub-component of portfolio of assets.

The objectives of the project report are:

- To find out the awareness level of Investors about various

parameters of Portfolio Management Schemes. Particularly, the rate

of return to the investor.

- To investigate and determine the various strategies and practice

adopted by the institution offering Portfolio Management Services and

the resultant satisfaction level of investors

Portfolio management service is a professional service rendered by

the experts for management of portfolio of others. It may be an

individual portfolio or an institutional portfolio. The portfolio

management service is an advisory service which involves the advice

regarding the worthwhileness of any particular investment or it is an


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advice to buy or sell the securities. It also involves continuing

relationship with client to manage investments with or without

discretion for the client as per his requirements.

Portfolios are built to suit the return expectations and the risk appetite

of the investor. It is a combination of assets or securities which meet

the level of return expected provided the investor is willing to meet

the associated risk. Thus, building a portfolio which meets both the

return expectations and the risk taking ability of the investor is not

possible

In the present day, the financial markets are quite complex, with each

investor having his or her own specific financial needs based on the

financial goals and risk appetite. But ultimately, every investor aims at

maximizing returns on his/her investment, along with capital

protection. This calls for professional management of investments for

attaining investment objectives.

By definition, portfolio management is nothing but allocation of assets

that is the process of deciding the distribution pattern of an investors

wealth among varying asset classes, which may or may not be in

different countries, for the purpose of investment. The process

depends on the level of risks that the investor is ready to take as well

as her or his investment constraints and goals.

Keeping in mind the stock markets unpredictable nature, there is a

requirement of being equipped with strong research and expertise for


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taking the right decision. Portfolio management is quite a challenging

task as it requires one to strike a balance between the restricted

choices for ensuring adequate earnings with adequate safety.

An investors needs and requirements keep on changing with his or

her age, financial status and future plans. Additionally, the various

stages in an investors life cycle affects his or her return and risk

preferences.

Since management of investments in equity involves factors like

experience, right mindset, knowledge, time and constant tracking of

share market happenings, a person expert in this job, called a

portfolio manager, is roped in. He/she advises, manages as well as

administers the funds and securities on behalf of the client.

Hence, Portfolio Management Services refer to the science and art of

taking decisions regarding investment policy and mix, aligning

investments and objectives, asset allocation for institutions and

individuals, and balancing performance and risk. This specialized

service offers numerous customized investment strategies for

capitalizing market opportunities.


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ABOUT THE REPORT:

1) Title of the study:

The present study is title as, A PROJECT REPORT ONPORTFOLIO MANAGEMENT SERVICES and it was done with

special reference to KOTAK MAHINDRA BANK.

2) Objective of the study:

a) The project helps in understanding the basic concept of

financial planning, and also how to recommend differentinvestment product to different investors according to their

goals and requirement.

b) With help of this project, I will able to know the role of bank in

portfolio management.

c) This project helps to know practical aspect of PMS and make

best use in personal investment in future.

3) Limitation:

All the limitation of case study is applicable here also in this

project.

a) Some of the investor might not be willing to disclose all the

information due to some reason or other.


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4) Data and methodology:

For the purpose of present study both primary secondary data

were used.

Primary data

1) Directly contact with the organization:

I have visited to kotak bank (mulund branch) to collect the

information about kotak PMS service.

Secondary data:

1) Websites and search engines:

The internet, being the largest sources of information and

knowledge, proved to be biggest help in data collection. The

website of kotak bank provides lots of information.

2) Book available:The data was also collected from the book with us and the

brochures also proved very useful.

PRESENTATION OF THE STUDY:

Chapter I: Introduction

Chapter II: Profile of bank

Chapter III: Theoretical view

Chapter IV: Case study

Chapter V: Conclusion


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CHAPTER :2

PROFILE OF BANK

PROFILE OF KOTAK MAHENDRA BANk

Kotak Mahindra Group:

Kotak Mahindra is one of India's leading banking and financial

services organizations, offering a wide range of financial services that

encompass every sphere of life. From commercial banking, to stock

broking, to mutual funds, to life insurance, to investment banking, the

group caters to the diverse financial needs of individuals and

corporate sector.

The group has a net worth of over Rs. 100.6 billion and has a

distribution network of branches, franchisees, representative offices

and satellite offices across cities and towns in India, and offices in

New York, London, San Francisco, Dubai, Mauritius and Singapore

servicing around 8 million customer accounts.

Kotak Mahindra is one of India's leading banking and financial

services groups, offering a wide range of financial services that

encompass every sphere of life.


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DEVELOPMENT OF KOTAK GROUP

SUBSIDIARY:

1) Kotak mahindra bank ltd

2) Kotak mahindra old mutual life insurance ltd

3) Kotak securities ltd

4) Kotak Mahindra Capital Company

5) Kotak Mahindra prime ltd

6) Kotak international business


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7) Kotak Mahindra asset management company ltd

8) Kotak private equity group

9) Kotak realty fund

Corporate responsibility:

Kotak Mahindra views Corporate Social Responsibility as an

investment in society and in its own future. Kotak uses the power of

its human and financial capital to help in transforming communitiesinto vibrant, desirable places for people to live. The group leverages

its core competencies in three areas:

Sustainability

an integral part of all Kotak Mahindra Group activities is to be

consistently responsible to shareholders, clients, employees, society

and the environment.

Economic Development

by helping people achieve their financial goals, Kotak strengthens the

fabric of communities and helps them overcome unemployment and

poverty to help them shape their future.

Doing My Bit

a growing number of employees are committed to civic leadership

and responsibility with the support and encouragement of the Kotak

Group. A number of employees have been involved in strengthening

communities through voluntary work, payroll giving and management

inputs.


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Kotak securities:

Kotak Securities is one of the largest broking houses in India with a

wide geographical reach. Kotak Securities operations include stock

broking and distribution of various financial products including private

and secondary placement of debt, equity and mutual funds.

Kotak Securities operate in five main areas of business:

Stock Broking (retail and institutional)

Depository Services

Portfolio Management Services

Distribution of Mutual Funds

Funds


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Distribution of Kotak Mahindra Old Mutual Life Insurance Ltd

products

KOTAK MAHINDRA BANK

Established in 1985, the Kotak Mahindra group has been one of

India's most reputed financial conglomerates. It was previously

known as Kotak Mahindra Finance Limited, a non-banking financial

company. In February 2003, Kotak Mahindra Finance Ltd, the

group's flagship company was given the license to carry on banking

business by the Reserve Bank of India (RBI). This approval created

banking history since Kotak Mahindra Finance Ltd. is the first non-

banking finance company in India to convert itself in to a bank as

Kotak Mahindra Bank Ltd. Today, kotak Mahindra bank one of the


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fastest growing bank and among the most admired financial

institutions in India.

As one of the leading players in financial solutions. Kotak Mahindra

Bank Ltd is a one stop shop for all banking needs. The bank offers

personal finance solutions of every kind from savings accounts to

credit cards, distribution of mutual funds to life insurance products.

Kotak Mahindra Bank offers transaction banking, operates lending

verticals, manages IPOs and provides working capital loans. Kotak

has one of the largest and most respected Wealth Management

teams in India, providing the widest range of solutions to high net

worth individuals, entrepreneurs, business families and employed

professionals.

Kotak Mahindra has a network across 300 cities in India employing

around 20,000 people. The net worth of the group is Rs. 3100 crore

and it serves around 2.2 million customers. It also has offices in

London, New york, Dubai and Mauritius.

HISTORY AND DEVELOPMENT OF BANK:

The Kotak Mahindra Group was born in 1985 as Kotak Capital

Management Finance Limited. This company was promoted by Uday

Kotak, Sidney A. A. Pinto and Kotak & Company. The customer base

of this group is more than 14 lakh. Industrialists Harish Mahindra and

Anand Mahindra took a stake in 1986, and that's when the company

changed its name to Kotak Mahindra Finance Limited.


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It bought stressed assets from a number of banks, at full loan value

of Rs 1,000 crore in 2005.In January 2011, the bank reported a 32%

rise in net profit to Rs188 crore for the quarter ended December 2010

against Rs. 142 crore the corresponding quarter last year. Kotak

Mahindra bank also reached the top 100 most trusted brands of India

in The Brand Trust Report published by Trust Research Advisory in

2011.

IN 2003

- The proposal of changing the name from 'Kotak Mahindra

Finance Ltd' to 'Kotak Mahindra Bank Ltd' and the proposal to

change the Authorized capital from 100,00,00,000 divided into

10,00,00,000 equity shares of Rs.10 each has been approved by

the company shareholders.

- In same year RBI has granted license to Kotak Mahindra Finance

Ltd to embark on its banking business.- Kotak Mahindra Bank has received a lot of interest from portfolio

investors, private equity investors and potential strategic

investors

- Kotak Mahindra Bank has entered into an ATM sharing

agreement with UTI Bank, which would allow KMB's customer

free access to around 800 ATM's.

- Kotak Mahindra bank has unveiled several home finance

products options which includes Home loan, Home equity Loan,

Home loan transfer and Home improvement loans.


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IN 2004

- Kotak Mahindra Bank inks pact with Reuters

- Kotak Mahindra Bank sets up branch in Surat

- Kotak Mahindra Bank Limited has informed that the Bank's equity

shares will be delisted from The Stock Exchange, Ahmedabad

with effect from January 20, 2004.

IN 2005

- Kotak Mahindra Bank purchases stressed assets worth Rs 1,000

cr

- Kotak Bank join hands with IndianNGOs.com

- Kotak Mahindra Bank invests Rs 25 cr in BFW

IN 2006

- Kotak Mahindra joins hand HDFC Bank to share ATMs.

- Kotak Mahindra Bank sets up branch in Valsad

IN 2007

- Kotak Mahindra Bank Launches Home Banking, Improves

Banking Experience

- Kotak Mahindra Bank Launches Salary 2 Wealth

- Kotak Mahindra Bank Launches Kotak Gold Debit Card

- Kotak Mahindra Bank Ties up with Taxshax.com, Simplifies Filing

of IT Returns


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IN 2008

- Kotak Mahindra Bank launched credit cards for its customers.

IN 2009

- Kotak entered into tie up with Russia's top investment bank

- Kotak Mahindra Bank Wins IT Team of the Year for 3rd

Consecutive Time at the Banking Technology Awards 2008

REACH:

Kotak Mahindra Bank has over 323 branches and a customer

account base of over 2.7 million. Spread all over India, not just in the

metros but in Tier II cities and rural India as well, we are redefining

the reach and power of banking.

AWARDS:

At Kotak Mahindra Group we take a client-centric view and

constantly innovate to provide you with the best of services and

infrastructure. Banks have regularly received accolades that stand

testimony to bank success in this endeavor. Some of our recent

achievements are:

ICAI Award

- Excellence in Financial Reporting under Category 1 - Banking

Sector for the year ending 31st March, 2010


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Asia money

- Best Local Cash Management Bank 2010

IDG India

- Kotak won the CIO 100 'The Agile 100' award 2010

IDRBT

- Banking Technology Excellence Awards Best Bank Award in IT

Framework and Governance Among Other Banks' - 2009

- Banking Technology Award for IT Governance and Value Delivery,

2008

IR Global Rankings

- Best Corporate Governance Practices - Ranked among the top 5

companies in Asia Pacific, 2009

Finance Asia

- Best Private Bank in India, for Wealth Management business, 2009

Kotak Royal Signature Credit Card

- Was chosen "Product of the Year" in a survey conducted by Nielsen

in 2009

IBA Banking Technology Awards

- Best Customer Relationship Achievement - Winner 2008 & 2009

- Best overall winner, 2007

- Best IT Team of the Year, 4 years in a row from 2006 to 2009

- Best IT Security Policies & Practices, 2007

VISION:

1) The Global Indian Financial brand:


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The customers will enjoy the benefit ofdealing with global Indian

brand that best understand their need and delivers customized

pragmatic solution across multiple platforms. We will be a world

class Indian financial services group. Our technology and best

practices will be benchmarked along international lines while

our understanding of customer will

be uniquely Indian. Bank will more responsible for their

customers savings.

2) MOST PREFERRED EMPLOYER IN FINANCIAL SERVICE:

A cultural of empowerment and spirit of enterprise attracts

bright minds with an entrepreneurial streak to join with bank.

Working with home-grown professionally-managed company,

which has partnership with international leaders, gives our

people a perspective that is universal as well as unique.

3) T HE MOST TRUSTED FINANCIAL SERVICES COMPANY

The bank will create an ethos of trust across all our

constituents. Adhering to high standard of compliance and

corporate governance will be an integral part of building trust.

4) VALUE CREATION:

Value creation rather than size along will be our business

driver.

BOARD OF DIRECTOR:

NAME DESIGNATION


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Mr. K. M. Gherda Executive Chairman

Mr. Udya Kotak Executive vice chairman and

Managing Director

Mr. Anand Mahindra Co-Promoter of Kotak Mahindra

Bank and Managing Director of

Mahindra and Mahindra

Mr. Cyril Shroff Co-promoter

Mr. Pradeep N Kotak Agri Division of Kotak and

company limited

Mr. Shivaji Dam Managing Director Kotak

Mahindra old mutual life

insurance limited

Mr.C. Jayaram Executive Director

Mr. Dipak Gupta Executive Director

Dr. Shankar Acharya Director

REGISTERED OFFICE:

Kotak Mahindra Bank Limited

36-38A, Nariman Bhavan, 227, Nariman point,


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Mumbai 400 021

Tel +91 22 6658 1100

Fax + 91 22 2285 5577

Customer care services:

24 hours customer care toll free: 1800 102 602

WEBSITE:

www.Kotak.com
http://www.kotak.com/http://www.kotak.com/http://www.kotak.com/


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CHAPTER: 3

THEROTICAL VIEW

Portfolio management:

Portfolio means combined holding of many kinds of financial

securities. Such as shares, debenture, government bonds, units and

other financial assets. Making a portfolio means putting ones eggs in

different baskets with varying elements of risk and returns. The

object of portfolio is to reduce risk by diversification and maximize

gain. Portfolio management is also known as investmentmanagement

Objectives of Portfolio Management

There are seven objectives of portfolio management:

1) Return

Portfolio management is technique ofinvesting in securities. The

ultimate object of investment in the securities is return. Hence, the

first objective of portfolio management is getting higher return.

2) Capital Growth

Some investors do not need regular returns. Their object of portfolio

management is that not only their current wealth is invested in the

securities; they also want a channel where their future incomes will

also be invested.
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3) Liquidity

Some investors prefer that the portfolio should be such that whenever

they need their money, they may get the same.

4) Availability of Money at Pre-decided Time

Some persons invest their money to use it at pre-decided time, say

education of children, etc. Their objective of portfolio planning would

be that they get their money at that time.

5) FavorableTaxTreatment

Sometimes, some portfolio planning is done to obtain some tax

savings.

6) Maintaining thePurchasing Power

Inflation eats the value of money, i.e., purchasing power. Hence, one

object of the portfolio is that it must ensure maintaining the

purchasing power of the investor intact besides providing the return.

7) Risk ReductionthroughDiversification

It is the perhaps most important object of the portfolio management.

All other objectives (mentioned above) can be achieved even without
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portfolio, i.e., through investment in a single security, but reduction

(without sacrificing the return) is possible only through portfolio.

If we invest in a single security, our return will depend solely on

that security; if that security flops, our entire return will be severely

affected. Clearly, held by itself, the single security is highly risky. If we

add nine other unrelated securities to that single security portfolio, the

possible outcome changes if that security flops, our entire return

wont be as badly hurt. By diversifying our investments, we can

substantially reduce the risk of the single security. Diversification

substantially reduces the risk with little impact on potential returns.

The key involves investing in categories or securities that are

dissimilar.

The two basic principles of effectiveportfolio management :

(i) Invest on the basis of fundamentals of the security.

(ii) Review and update the portfolio regularly.

The object of the portfolio management is to provide maximum

return on the investments by taking only optimum risk. To achieve

these objectives, the portfolio managershould invest in

diversified securities and see that the coefficient of

correlation between these securities is as less as possible (only then

the portfolio will be able to reduce the risk). This is the foundation of

portfolio management. The portfolio manager should follow the
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above-mentioned principles to further strengthen his targets of higher

returns and optimum risk.

The first principle suggests that investment should be made only in

those securities which are fundamentally strong. The strength of a

security depends upon three strengths:

(a) Strength of the company,

(b) Strength of the industry, and

(c) Strength of the economy.

The strength of the company depends upon various factors like

I. Intelligent, dedicated and motivated human resources,

II. Having positive values and vision,

III. Policy regarding encouraging R&D

IV. Integrity of promoters, and

V. Long range planning for profits.

The fundamentals of the industry depend upon the product

consumer surplus the product provides to its users, various possible

alternative uses of the product, and availability (rather we should say

non-availability of the substitutes). Economy, here, means national

economy. By fundamentals of the economy we mean

recession/boom, tax policy, monetary policy, budgetary policies,

stability of government, possibility of war and its impact on economy,

closed/open economy and finally the governments attitude towards

business houses. The portfolio manager should see that most of the

fundamentals are favorably placed.
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The second principle suggests that the portfolio should be reviewed

continuously and if need be, revised immediately.

TheFundamentals of the company, industry and economy keep onchanging. Accordingly, the portfolio should be revised according to

emerging situations. For example, in case of monsoon failure,

investments should move from fertilizer companies to irrigation

companies, in case some sick-minded person takes over as CEO of

the company, perhaps desired step will be to disinvest the securities

of the company, in case cheaper substitutes have emerged for any

industrys product, better move to some other industry, etc.

Two more points regarding the second principle

(i) Sometimes, after making the investment in some securities,

portfolio manager realizes that his decision of investing in that

security is wrong, he should not wait for happening of some event

which will make his decision as a right one (if there is some loss on

that investment, he should not even wait for breakeven); rather he

should move immediately liquidate his position in that security.

[Remember that no portfolio manager has ever made 100 per cent

correct decisions (Warren Buffet is perhaps exception)

(ii) Do not bother much about transaction cost related to reshuffling

of the portfolio, consideration of such small costs generally result inheavy losses or foregone opportunities of earning profit.
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7 Principles of Portfolio Management :

1 Emphasize a Disciplined Process to eliminate response to short-

term market volatility.

2. Deliver Great Capability to all investment management solutions.

3. Align your investment strategy with your Objectives and Risk

Tolerance.

4. Emphasize the importance of Asset Allocation

5. Implement a plan using the most Appropriate Investment

Strategies.

6. Monitor and Adjust your portfolio on an ongoing basis

7. Assess your Progress regularly.

PORTFOLIO MANAGEMENT SERVICES:

Portfolio management service (PMS) is a type of professional

service offered by portfolio managers to their client to help them in

managing their money in less time. Portfolio managers manage the

stocks, bonds, and mutual funds of clients considering their personal

investment goals and risk preferences. In addition to money, the

portfolio managers manage the portfolio of stocks, bonds, and mutual

funds.

Portfolio management service is strictly for investors having loads of


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money but not have enough time and expertise to manage the

portfolio. You will get a personalized fund manager and can call up to

discuss at any time

The business of portfolio management has never been an easy one.

Juggling the limited choices at hand with the twin requirements of

adequate safety and sizeable returns is a task fraught with

complexities.

Given the unpredictable nature of the share market it requires solid

experience and strong research to make the right decision. In the end

it boils down to make the right move in the right direction at the right

time. That's where the expert comes in.

PORTFOLIO MANAGEMENT SERVICE

A 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

Greater Flexibility

Efficient switch between cash and equity positions

Portfolio designing is done as per market conditions and market

considerations

Customized Performance Reporting
http://www.kotaksecurities.com/home/index.htmlhttp://www.kotaksecurities.com/home/index.html


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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. Investors involvement will be

minimum thereby allowing investor the flexibility to attend to their

personal matters, while the Portfolio Manager takes care of investors

investments and keeps it posted on a regular basis.


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PORTFOLIO MANAGEMENT PROCESS

Portfolio management is a complex activity, which may be broken

down into the

Following steps:

Specification of investment objectives and constraints:

The typical objectives sought by an investor are current income,

capital appreciation, safety, fixed returns on principal investment.

Choice of asset mix:

The most important decision in portfolio management is the asset mix

decision. This is concerned with the proportions of stock or units of


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mutual fund or Bond in the portfolio. The appropriate mix of Stock

and Bonds will depend upon the risk tolerance and investment

horizon of the investor.

Formulation of portfolio strategy:

Once the certain asset mix has been chosen an appropriate portfolio

strategy has to be decided out. Two broad portfolio choices are

available. An active portfolio management: it strive to earn superior

risk adjusted returns by resorting to market timing, or sector rotation

or security selection or some combination of these.

A passive portfolio management involves holding a broadly diversifiedportfolio and maintaining a pre-determined level of risk exposure.

BENEFITS OF PORTFOLIO MANAGEMENT SERVICES

While selecting Portfolio management service (PMS) over mutual

funds services it is found that portfolio managers offer some very

services which are better than the standardized product services

offered by mutual funds managers. Such as:

Asset Allocation:

Asset allocation plan offered by Portfolio management service PMS

helps in allocating savings of a client in terms of stocks, bonds or

equity funds. The plan is tailor made and is designed after the

detailed analysis of client's investment goals, saving pattern, and risk

taking capacity.


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Timing:

portfolio managers preserve client's money on time. Portfolio

management service PMS help in allocating right amount of money in

right type of saving plan at right time. This means, portfolio manager

provides their expert advice on when his client should invest his

money in equities or bonds and when he should take his money out

of a particular saving plan. Portfolio manager analyzes the market

and provides his expert advice to the client regarding the amount of

cash he should take out at the time of big risk in stock market.

Flexibility:

portfolio managers plan saving of his client according to their need

and preferences. But sometimes, portfolio managers can invest

client's money according to his preference because they know the

market very well than his client. It is his client's duty to provide him a

level of flexibility so that he can manage the investment with full

efficiency and effectiveness.

Balanced Portfolio: Professional research and advice will help you

with information on the best investment options and ideas for your

portfolio.

Maximum Returns, Minimum Risks: Portfolio management services

assure you of the best downside protection for your portfolio. You will

benefit with practical financial advice that can help convert all paper

gains into real profits in the shortest time.


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Adjust Your Portfolio To Market Trends: When you avail of portfolio

management services you enjoy greater freedom and flexibility to

diversify your investments. Professionals will help you with prudent

advice and financial solutions so that your portfolio is in sync with the

latest market trends.

Services and Strategies Provided Through Portfolio Management

Are:

portfolio managers works as a personal relationship manager

through whom the client can interact with the fund manager at any

time depending on his own preference.

To discuss any concerns regarding money or saving, the client can

interact with his appointed portfolio manager on monthly basis.

The client can discuss on any major changes he want in his asset

allocation and investment strategies. Portfolio management service (PMS) handles all type of

administrative work like opening a new bank account or dealing with

any financial settlement or depository transaction.

While choosing online Portfolio management service (PMS), the

client receives a User-ID and Password, which helps him in getting

online access to his portfolio details and checking his portfolio as

frequent as he want.

Portfolio management service (PMS) also help in managing tax of

his client based on the detailed statement of the transactions found

on his portfolio


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Portfolio Management Payment Criteria:

There are types of payment criteria offered by portfolio managers to

their client, such as:

Fixed-linked management fee.

Performance-linked management fee.

In fixed-link management fee the client usually pays between 2-2.5%

of the portfolio value calculated on a weighted average method.

In performance-linked management fee the client pays a flat fee

ranging between 0.5-1.5% based on the performance ofportfolio

managers. The profits are calculated on the basis of 'high

watermarking' concept. This means, that the fee is paid only on the

basis of positive returns on the investment.

In addition to these criteria, the manager also gets around 15-20% ofthe total profit earned by the client. The portfolio managers can also

claim some separate charges gained from brokerage, custodial

services, and tax payments.

Value Your Money Before Selecting Portfolio Management Services

(PMS):


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Equity bias:

Equity portfolio offered by Portfolio management services helps in

adding high value than what a debt portfolio offers. Because of this,

many portfolio managers emphasis on equity investments and some

offer hybrid products.

Large surplus to invest:

The client should always choose the portfolio managers after

considering his portfolio size and the fee he would charge for

managing his portfolio. PMS are recommended to those clients who

have large surplus amount of money to invest. Otherwise, the

company can also think for cheap options like a financial planner or

advisor to construct an asset allocation plan and to manageinvestment.

Eligibility

Securities and Exchange Board of India, SEBI stipulates the

minimum investment required for a Portfolio Management Service to

be Rs. 5 Lakhs. Large brokerage firms offer PMS starting with a

minimum investment limit ranging from Rs. 25 Lakhs to Rs. 1 Crore.

ACTIVITIES IN PORTFOLIO MANAGEMENT:-


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There are three major activities involved in an efficient portfolio

management which are as follows:-

a. Identification of assets or securities, allocation of investment and

also identifying the classes of assets for the purpose of investment.

b. They have to decide the major weights, proportion of different

assets in the portfolio by taking in to consideration the related risk

factors.

c. Finally they select the security within the asset classes as identify.

The above activities are directed to achieve the sole purpose to

maximize return and minimize risk in the investment even if there is

unlimited risk in the market.


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CHAPTER: 4

CASE STUDY

KOTAK PORTFOLIO MANAGEMENT:

The portfolio management services combine competent fund

management, dedicated research and technology to ensure a

rewarding experience for its clients.

KOTAK SECURITIES:

A Kotak security is one of the oldest portfolio management in India. It

is also one of the largest with assets under management of over

RS.3300 Crores. Kotak portfolio management comes as an answer to

those who would like to grow exponentially on the crest of stock

market, with backing of an expert.

Kotak, measure our success through the success of their clients.

Whatever be customer requirement, kotak will tailor your stock

market portfolio to your specific investment need.

At the very base of financially sound portfolio lies the identification of

ones investment objective. Kotak help you identify customerinvestment objective and also outline important requirement like

liquidity, capital appreciation, current income, time span and fiscal

implication and then suggest an appropriate scheme.


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Kotak securities see investing from customer perspective, and make

recommendation based on customer needs. Bank, one of important

goals is to simplify investing ofcustomer, along with this bank also

provide long term values to their customer.

Bank also has a million reasons for customer to choose kotak bank

listed below are a few:

STABILITY:

Kotak security are a 100% subsidiary of kotak Mahindra bank and

one of the oldest and largest stock broking firms in the industy.kotakhave been the first and only NBFC to receive the license to be

converted into a bank.

INNOVATION IN THE INDUSTRY:

- First to provide margin financing to the customer- First to enable investing in ipos and mutual fund on the phone.

- Providing SMS alerts before execution of depository

transaction.

- Launching of mobile application to track portfolio.

AUTO INVEST

A systematic investing plan in equities and mutual fund. Provision of

margin against securities automatically against shares in customer

demat account


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RELIABILITY

Bank accolades are a testimony to our services and high standards.

Kotak have been awarded as:

- Best broker in India by finance Asia for 2010 and 2009

- UTI MF-CNBC TV 18 Financial Advisor Awards- Best

performing equity broker for year 2009

- Best brokerage firm in India by Asian money in 2009, 2008,

2007 and 20006

- Best performing equity broker in India-CNBC Financial Advisor

Awards2008

- Avaya Customer Responsiveness Awards 2007 in Financial

Service sector

- The leading equity house in India in ThomasExtelSurveys

awarded for the year 2007

- Euro money award 2006 and 2007- best provider of portfolio

management equities

VALUE:

A customer with a small or large wallet size, banksays, you can

expect us to bring value to you in every form.

- Quality research

- Quick trade execution

- Low brokerage

- Account that suit customer investment profile


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- Risk profiler

- Superior customer service

SERVICE:

Bank believes in high standards ofservice and thats precisely what

we offer. Its an honor to be awarded the most customer responsive

company award in the financial institution sector by AVAYA

Global connected award both in 2006 and 2007.

ROBUST TECHNOLOGY:

Bank have developed their own proprietary trading platform which is

robust and among the best in the industry. Banks have more than

150 technology professionals constantly working on upgrading and

speeding up all our systems.

CENTRALISED RISK MANAGEMENT SYSTEM

Unlike many other players bank have a centralized risk management

system. This allows us to offer the same levels of service to

customers across all location

EXCEPTIONAL RESEARCH


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Unlike most other competition bank have our own in house research

team. Bank in house research team is among the best in the industry

and they have years of experience in the financial markets. They

scan through the plethora of stocks and find the scrips that have a

high potential of providing customer good returns.

Bank provides research Technical, Fundamental, derivatives, macro

economic and mutual fund research for this customers.

LARGE PRESENCE

Bank is present in more than 450 cities with more than 1400 offices

all over the country. Bank employee strength extends beyond 4000.

TAX STATUS

Bank expect all client to consult their tax consultant before investing

in to any form of securities, at kotak securities, bank provides each

client an audited tax statement of their portfolio annually, the same

client can use at time of filing return.

RISK FACTOR

Equity investments are subject to market risk and there is no

assurance or guarantee that the objective of the portfolio

management service will be achieved. With any investment in

securities, the net asset value of the managed portfolio can go up or


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down depending on the factors and forced affecting capital markets.

Past performance of the portfolio does not indicate future

performance.

FACTS OF KOTAK PORTFOLIO MANAGEMENT SERVICES

- One of Indias oldest and largest portfolio management bank

- Over a decade of experience

- Assets under management (AUM) of over RS. 3300 crores

BENEFITS OF KOTAK PORTFOLIO MANAGEMENT SERVICE:

- An investment relationship manager will ensure that customer

receive all the services related to their investment needs.

- A dedicated website and a customer services desk allows

customer to keep a tab on their portfolio performance.

- Customer portfolio of investment in stock market is tailored after

a thorough research backed by the experience from the kotak

securities research team.

- An experienced team of portfolio managers ensure that

customer portfolio is tracked monitored and optimized at all

times.

- The personalized services also translate in to zero paper work

and all customers financial statement will be e-mailed.


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KOTAK HAVE A PRODUCT FOR EVERY INVRSTORE NEED

AND PERIOD.KOTAK BANK OFFERS SEVEN TYPES OF

PORTFOLIO PRODUCTS:

- Bep large cap focus portfolio

- GEMS portfolio

- Origin equity portfolio

- klassic portfolio flexi

- select optima

- select portfolio

- customized portfolio


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BEP-LARGE CAP FOCUS PORTFOLIO

Security and multiplication are the criteria under which investments

are made. But market fluctuations are generally unpredictable.

While the reasons for this are many, what matters is that your

investments keep performing profitably.

Hence kotak bank bring the BE Large cap focus portfolio for their

customers, where investments will be made in mis-priced large

cap stocks that have a high growth potential and can withstand

macro level risks to sustain in an adverse environment. Large

Caps are dominant players in their respective sectors, and hence

have the strength and ability to maintain margins in a tough

operating environment.

FEARTURES OF THE BEP- LARGE CAP FOCUS PORTFOLIO:

- The portfolio will seek to achieve returns through broad

participation in large cap companies.

- The portfolio will primarily invest scrips which are mis-

priced, but have a very high growth potential over a period of

time.

- These large cap companies have defensive businesses and

can withstand macro level risks.

- These large cap companies are dominant players in their

respective sectors.


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ADVANTAGES OF INVESTING IN THE BEP-LARGE CAP FOCUS

PORTFOLIO:

- Concentrated and compact portfolio

- The portfolio shall adopt the active management style to

identify mis- priced assets and use various stock selection

strategies to outperform.

- Portfolio to focus on large caps with stable and visible

growth potential.

WHY LARGE CAPS:

Large caps have a high growth rate in adverse environment as:

- They can sustain hardening interest rates.

- They have adequately capitalized balance sheets.

- They have underleveraged capital structure.

- They have higher capital productivity.

- They can manage lower cost of financing.

- They have large size of cash flows.

Large caps recovered more than mid-caps in JuneJuly 2008. This

indicates the superior risk- return trade-off in volatile markets. See

illustration below,


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GEMS PORTFOLIO:

Objective

The main objective of the scheme is to generate capital appreciation

in the medium term to to long term through investments in equities

and equity related instruments. The scheme will seek to achieve

returns through investments in stocks of small, medium and large

capitalized companies. The portfolio manager may invest in private

placements or pre Follow on Public Offering (FPO) placement of

securities.

PORTFOLIO STYLE:

- Concentrated and compact portfolio

- Shift investment themes to participate in multiple growth

drivers of the economy of corporate sector.

- Predominantly bottom up approach.


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PORTFOLIO CHARACTERISTICS:

- Portfolio with companies across large cap, mid cap andsmall cap segment.

- Option to participate in pre FPO or private placement of

listed companies.

- This will be a diversified scheme investing across the sector

and will not have sectorial restriction.

- Benchmark: BSE 200 Index

INVESTMENT DOMAIN:

- Investment in companies which have a global footprint or

aspire to become global leaders in their business.

- Companies from emerging sectors which have the potential

to deliver higher growth vis--vis broad markets.

- Competitive players from the manufacturing sector.

- Companies participating in the robust growth in the services

sector.

KEY FEATURES OF GEMS PORTFOLIO:

- Option to participate in pre FPO placement or private

placement of listed companies.

- Potential to capture superior upside with commensurate risk

in the medium to long term.


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- Provides flexibility to the portfolio manager.

- Ability to meaningfully participate in companies with strong

growth prospectus through the pre FPO/ private placement

route.

- These investments have a lock on clause for a pre specified

time horizon.

ORIGIN EQUITY PORTFOLIO:

Objective:

The portfolio would aim to invest in growth oriented companies with

sustainable business models backed by strong management

capabilities with emphasis on smaller capitalized companies with a

market capitalization not exceeding Rs. 2500 crore at the time of

investment.

TRAITS OF SUCCESSFUL COMPANIES IN ORIGIN DOMAIN:

- Differentiated business models/new business segments.

- Scalable businesses are as large opportunity to grow.

- Equipped with adequate financial resources.

- Entrepreneur backed/strong professionally managed.

- Possess strong execution skills.

- Can demonstrate consistency in profitability/profitable

growth.

- Presence in Niche business segments.


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DISSECTING THE TARGET COMPANY

- Adequate management strengths to ensure growth.

- Companies with competitive advantage in the domestic

market exploring geographical reach.

- Companies building strong multiple revenue streams.

- Companies with critical mass targeting manifold growth in

size of operation.

- Entrepreneur led companies

- Beneficiaries of positive policy initiatives- banking, telecom,

insurance, media & infrastructure.

- New media/digital companies- internet media, online media

and mobile technologies.

INVESTMENT STRATEGY:

- Buy & Hold a basket of 15-25 companies with a medium to

long term horizon.

- De-risked strategy through diversification.

- Target companies in quest of growth in any market

environment.

- Endeavour shall be to focus on emerging businesses at a

nascent stage or matured businesses at attractive

valuations.

- Stocks could have trigger events creating potential for

valuation unlocking over longer term.


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KLASSIC PORTFOLIO- FLEXI

Description:

The scheme will seek to achieve returns through broad basedparticipation in equity markets by creating a diversified equity portfolio

of small, medium and large capitalized companies.

INVESTMENT STRATEGY

Present market conditions hints at growth as a central premises tosupport valuations.

- Identify companies with higher growth as compared to the

market.

- Scan the investment universe.

- Scout for discount in valuations as compared to the market.

- Select valuations which provide a case for higher returnspotential as compared to the market.

- Scout for companies which can result in higher growth in

earnings on a sustained basis.

SECTORAL COMPOSITION:

Across all market capitalization.


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NO. OF STOCKS

Customer can keep a maximum of up to 20 stocks, in one portfolio.

INVESTOR PROFILE

- An investor willing to invest for medium to long term without

being about short term returns, volatility and market

momentum.

- Any investor with a penchant for medium to high risk taking

qualifies for the portfolio.

SELECT OPIMA

Objective:

Select portfolio will seek to achieve returns through investment in

stock of concentrated number of small, medium and large capitalized

companies. In optima plan portfolio will seek to achieve return

through broad based participation in equity market by constructing a

focused portfolio of sizably capitalized companies.

INVESTMENT STRATEGY:

1) The environment clearly points towards shrinkage in the

number of stocks participating in a market rally. Hence the


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investment mantra shall be to get stocks right in the portfolio.

Stock specific approach shall be followed to optimize returns.

2) Stock selection to be influenced by the following parameters,

- Growth at reasonable price (GARP)

- Companies with growth in earning considerably higher than

that of all companies in an companies in an index put

together.

- Companies with consistency and better visibility of future

growth.

- Companies with sufficient diversification in revenues

streams.

- Companies with high ROI compared to its cost of capital

- Companies with lesser need for raising capital.

- Companies with adequate capitalization to carry out organic

and inorganic growth.

- Portfolio strategy driven by a mix of active and passive

management actions.

- Buy and Hold approach.

- Investments driven by both medium and long term

investment horizon.

- Medium term: 9-12 months

- Long term : 12-24 months

- Portfolio shall be diversified over 15-20 stocks across the

sect oral spectrum.


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TARGET COMPANIES:

Target Domain companies having marketing capitalization of more

than Rs. 4000 crores.

- Hunger for organic as well as inorganic growth

- Strong competitive advantage

- Sustainable growth aided by geographical diversification

- Built scale in rapidly growing sectors

- At the forefront of Indian economic development.

SELECT PORTFOLIO:

DESCRIPTION:

The scheme will seek to achieve returns through broad based

participation in equity markets by constructing a concentratedportfolio of capitalized companies.

PORTFOLIO STYLE:

- Aggressive concentrated portfolio consisting of 10-12 stocks.

- Buy and hold approach.

PORTFOLIO CHARACTERISTICS:


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Multi cap portfolio with companies spread large cap, mid cap & small

cap.

INVESTMENT DOMAIN AND COMPOSITION:

- Sectors expected to be beneficiaries of demographic

patterns & reforms.

- Sectors expected to benefit from infrastructure spending.

PORTFOLIO TENURE:

The customer can keep the long term portfolio for a maximum up to

18 months.

INVESTOR PROFILE:

- An investor willing to invest for medium to long term without

being perturbed about short-term returns, volatility and

market momentum.

- Any investor with a penchant for medium to high risk taking

qualifies for the portfolio.

CUSTOMIZED INVESTOR PORTFOLIO

Different product plays different roles in portfolio construction. If

returns are one side of the story, risk is the other. Balancing these is

the key to customized investor portfolio.


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Customer investment plans must be based on various insights. The

main source for these insights will be from your risk profile and the

understanding of which asset classes meet customer return

expection.At this point it is important to understand that different

products play different roles in portfolio construction. If returns are

one side of the story, risks are the other. Balancing these is key to a

customized investor.

RISK RETURN GRAPH:


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CHAPTER :5

CONCLUSION

The kotak bank is one of the largest players in portfolio management

service. Customers can keep a tab on their portfolio performance

even with help of website of Kotak.

Kotak has various types of portfolio management products, as per

the requirement of the clients. All the products of kotak portfolio

management is the best, but the customers have to choose the

product as per their risk and return profile. Kotak has some products

with high risk and high returns and on the other hand, some product

with low return and stable income.

I found that the kotak is lacking in some places such as branches,

customer awareness, feedback system and mainly in advertisement.

Kotak have very limited no of branches as compared to other

developed banks. Regarding to customer awareness, still people

keep money in their house, due to the risk factor people feel it is

better to keep money with themselves rather than investing

somewhere.kotak also has to improve their feedback system and

advertisement strategies.

The project helps me to understand the basic concept of finance

planning and why there is a need of professional portfolio manager to

manage the securities. The portfolio managers of Kotak provide best


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services to their clients. Kotak always says that they measure the

success of the bank base on success of clients.


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SUGGESTION AND RECOMMENDATION:

Some of the suggestion and recommendation for improving the

present image as well as the services of kotak are as follows:

More branches:

Some more branches should be opened so it becomes more easy

and approachable for the people to do their transaction. The

branches should have well trained employees.

Customer Awareness:

The people should be updated with the new issues and scheme

started by the organization to the existing customer.

Regular contact with the customer through telephone can be

maintained for smooth running of business.

Proper feedback system:

A proper feedback system should be designed to take care of the

dissatisfied customer and solving their problems as their bad works of

mouth publicity can make loose its potential as well as existing

customer.


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More advertisement:

Newspaper and agents are most effective tools for awareness, so

Kotak should use these tools more for advertisement.


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BIBLOGRAPHY:

1) SECURITIES ANALYSIS AND PORTFOLIO MANAGEMENT

- V. A. Avadhani.

2) INVESTMENT MANAGEMENT

- Preeti Singh.

WEBLIOGRAPHY:

www.google.com

www.kotak.com

www.wikipedia.com
http://www.google.com/http://www.google.com/http://www.kotak.com/http://www.kotak.com/http://www.kotak.com/http://www.google.com/

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