Investment Management

Need of good investment decisions

Investments are both important and useful in the context of present day conditions. The following points have made investment decision increasingly important.

  1. Planning for retirement
  2. Interest rate
  3. High rate of inflation
  4. Increase rate of taxation
  5. Income
  6. Investment channels

1. Planning for retirement:

A tremendous increase in working population, proper plans for life span and longevity have ensured the need for investment decisions. Investment decision have becomes significant as working people retire between the age 55 and 60. The life expectancy has increased due to improved living conditions, medical facilities etc. The earnings from employment should, therefore, be calculated in such a manner that a portion should be put away as savings.… Read the rest

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Three Types of Portfolio Investments

Portfolio management is a process encompassing many activities of investment in assets and securities. It is a dynamic and flexible concept and involves regular and systematic analysis, judgment and action. The objective of this service is to help the unknown and investors with the expertise of professionals in investment portfolio management. It involves construction of a portfolio based upon the investor’s objectives, constraints, preferences for risk and returns and tax liability. The portfolio is reviewed and adjusted from time to time in tune with the market conditions. The evaluation of portfolio is to be done in terms of targets set for risk and returns.… Read the rest

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Basic Investment Objectives

Investing is a wide spread practice and many have made their fortunes in the process. The starting point in this process is to determine the characteristics of the various investments and then matching them with the individuals need and preferences. All personal investing is designed in order to achieve certain objectives. These objectives may be tangible such as buying a car, house etc. and intangible objectives such as social status, security etc. similarly; these objectives may be classified as financial or personal objectives. Financial objectives are safety, profitability, and liquidity. Personal or individual objectives may be related to personal characteristics of individuals such as family commitments, status, dependents, educational requirements, income, consumption and provision for retirement etc.… Read the rest

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Depositories in India

At present there are two depositories in India, National Securities Depository Limited (NSDL) and Central Depository Services (CDS). NSDL is the first Indian depository, it was inaugurated in November 1996. NSDL was set up with an initial capital of US$28mn, promoted by Industrial Development Bank of India (IDBI), Unit Trust of India (UTI) and National Stock Exchange of India Ltd. (NSE). Later, State Bank of India (SBI) also became a shareholder.

The other depository is Central Depository Services (CDS). It is still in the process of linking with the stock exchanges. It has registered around 20 DPs and has signed up with 40 companies.… Read the rest

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Entities which can register as FII’s in India

Entities who propose to invest their proprietary funds or on behalf of “broad based” funds (fund having more than twenty investors with no single investor holding more than 10 per cent of the shares or units of the fund) or of foreign corporate and individuals and belong to any of the under given categories can be registered for Foreign Institutional Investors (FII’s).

  • Pension Funds
  • Mutual Funds
  • Investment Trust
  • Insurance or reinsurance companies
  • Endowment Funds
  • University Funds
  • Foundations or Charitable Trusts or Charitable Societies who propose to invest on their own behalf
  • Asset Management Companies
  • Nominee Companies
  • Institutional Portfolio Managers
  • Trustees
  • Power of Attorney Holders
  • Banks
  • Foreign Government Agency
  • Foreign Central Bank
  • International or Multilateral Organization
  • or an Agency thereof

Some of the above mentioned types are described below:

Pension funds: A pension fund is a pool of assets that form an independent legal entity that are bought with the contributions to a pension plan for the exclusive purpose of financing pension plan benefits.… Read the rest

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Advantages and disadvantages of FII flows into a country

FII flows into a country are associated with several advantages and disadvantages.

Advantages

  • Enhanced flows of equity capital
  • FIIs have a greater appetite for equity than debt in their asset structure. The opening up the economy to FIIs has been in line with the accepted preference for non-debt creating foreign inflows over foreign debt. Enhanced flow of equity capital helps improve capital structures and contributes towards building the investment gap.
  • Managing uncertainty and controlling risks.
  • FII inflows help in financial innovation and development of hedging instruments. Also, it not only enhances competition in financial markets, but also improves the alignment of asset prices to fundamentals.
… Read the rest
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