Ketki Prabhat Roll no:44 Background of the Investor This is the portfolio of Ms.Malala who is 25 years old.

She is working at BNP Paribas in the Brand & Communication department. Malala has recently inherited Rs.50,00,000 which she would like to invest. Since she has a monthly salary for her everyday expenses, she wants to invest the entire amount. The investor has a high risk appetite considering her age, job stability and investible money available. Objective of the Investor Spreading the assets across a wide range of investments is an effective way to reduce risk and increase potential returns over the long term. Holding a mixture of different types of investments will help cushion the portfolio from downturns, as the value of some investments may go up while the value of others may go down. EQUITIES As an asset class, equity can provide high returns, but they also come with their fair share of risks. The challenge lies in understanding the behavior of equity markets over a long period of time. Despite some volatility, equity has delivered the best return in the long run. In the last 10 years, the average return from equity funds has been quite impressive. So, If you are investing for your long-term financial goals, then you must have equity in your portfolio. Dr. Reddy's Laboratories: It is one of the best bet to play on US business. Robust domestic and international generic market growth along with improving outlook of PSAI (Pharmaceuticals Services and Active Ingredients) provides comfort. Expect revenue and PAT to witness a CAGR of 17% and 21% over FY12-15E, respectively. LIC Housing Finance: Aided by margin recovery, the housing finance major would revert back to high earnings growth trajectory over FY13-15 (estimated 30% CAGR). This along with improving return ratios should drive a structural valuation re-rating over the medium term. The stock trades at attractive discount to its larger peer HDFC. Shriram Transport Finance Co: Robust lending yields, strong credit rating and brand equity underpin STFC's attractive net interest margin in the range of 7-9%.

Petronet LNG: FY15E earnings are expected to jump 29.4% (following a flattish FY14). On FY15E earnings per share of Rs. 19.8, the stock trades at an attractive P/E (price/earnings) multiple of 8-times. Wockhardt: Its debt to equity ratio as on Q2 FY13 stands at 0.5% compared to 5.5-times in FY10. Wockhardt has also beaten the street expectations consequently for four quarter by delivering strong sales growth and margin expansion. ICICI Bank:ICICI Bank's core return on assets has seen structural improvement of 15-20 basis points. Expect core RoA to remain above 1.5% and RoE to improve on the back of increasing leverage.

MUTUAL FUNDS Mutual fund companies invest in a diverse group of securities, such as equity, debt, money market, government, corporate or state bonds and even other funds, and in several companies in each group. You get two advantages from this: you have shares in a greater spectrum of securities than you otherwise could, and are covered if one has a bad year. Also, the investment pattern of each fund is different; a bad return on one is balanced by a market-beating return from another. Securities underlying the fund are traded on their merits, to maximize your returns. Poor performers are regularly exchanged for good value. ICICI Pru focused blue chip fund (large cap): This fund has had 11.5% annualized returns in the last three years compared to large cap mutual fund category average of 5.1% annualized return. Invested Rs.3,00,000 in this fund. UTI Opportunities Fund (large cap): This scheme has been running for over 5 yearsand providing consistent returns. Crisil ranked this as Rank 1 in large cap category. Invested another Rs.3,00,000. HDFC Mid cap opportunities fund (mid cap & small cap): 15% annualized returns in the last 3 years. This scheme has been running for 5+ years and is a consistent performer. Invested Rs.1,00,000 SBI Magnum emerging fund (mid cap & small cap):This is a high risk fund meant for an investor who is looking for short term capital appreciation with high returns. It has had 24% annualized returns in the last 3 years compared to category average of 9% annualized return. Invested Rs.1,00,000.

Reliance Pharma fund (pharma): The pharma sector is fast growing and this scheme has 18% annualized returns in the last 3 years compared to category average of 7% annualized return. Invested Rs.1,00,000. HDFC Balanced fund (balanced): Balanced funds invest 20 to 35% in debt and money market instruments. Due to this strategy of investments in equity instruments it will get balanced off. It is a moderate risk and moderate return investment option. Invested Rs.1,00,000.

BONDS Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Bonds and stocks are both securities, but the major difference between the two is that (capital) stockholders have an equity stake in the company (i.e., they are owners), whereas bondholders have a creditor stake in the company (i.e., they are lenders). Jaiprakash Associates Ltd (manufacturing): 12.5% interest pa for 36 months. Invested Rs.2,00,000 GOI Savings Bonds (government): 8% pa for 6 year period. Rs.2,00,000 invested. Deutsche Bank (foreign bank): 9% pa for 5 years. Rs.1,00,00

BANK FDs Malala has invested in 2 Fixed Deposit schemes, one in a private and the other in a government bank. In case she requires to withdraw Rs.30,000 urgently in the future she can break one deposit while the other remains untouched. Vijaya Bank - V Vaibhav scheme: This is a short term fixed deposit scheme for 1 year offering highest interest rate, 9.1%. The amount invested is Rs.2,50,000. ING Vyasya Bank - Akshaya Deposit: It has been rated FAAA by CRISIL. 3 year deposit of Rs.2,50,000 with an interest rate of 8.75%.

The reason for investing in Fixed deposits is that, while mutual funds and stocks are considered to range from moderate to risky. Fixed deposits are known to be a safer investment option. Fixed deposits earn fixed interest rates for their entire tenure, which is usually compounded quarterly. So, those who want an income on a regular basis can invest into fixed deposits and use the interest rate as their income.

SUMMARY OF INVESTMENTS Asset class Amount allocated to the asset class (INR) 30,00,000 % of investment portfolio 30

Equity

Mutual Funds

10,00,000

20

Debt (Bonds)

5,00,000

30

Debt (Fixed Term Bank Deposits)

5,00,000

20