PROJECT REPORT

ON

PORTFOLIO MANAGEMENT

Submitted By:
Harpreet Singh Sobti - 0901120511
Raj Kumar Patel – 0901120519
Uma Shankar Patel - 0901120527
MBA (2009-11)
Definition of Portfolio Management:
Portfolio management services refer to managing the funds of individuals or institutional
customers, talking into consideration their short-term and long term needs. This involves
maximization the result for the customers while mitigating the risk.

Portfolio management needs the processional expertise of the portfolio management, who
technically analysis each investment option and choose the ones that best suit the customer
needs. It also involves distributing and available funds among the investment option for the best
result.

Portfolio managers design a customized Portfolio of investment option to cater to the needs of
individual customers. They then invest customer’s saving across the Portfolio and manage the
funds they track the performance of different sector like the equity market, bonds, real, etc. and
make the necessary changes in the Portfolio from time to time, to maximize return. They charge
a fee for their services. However, customer does not seem to mind that as they benefit from the
professional individualized Portfolio for the maximum returns at minimum risk.

Market Segmentation and Marketing Mix:

Portfolio management services are used by high net-worth individuals (HNIs) and corporate.
However, the market is evolving and the service is being extended to individual investor with an
investment sum of even Rs, 4lakh. Investment for example, offers its services to individual with
a portfolio of Rs.5lakh, while most foreign banks require a minimum portfolio of Rs. 25 lakh.
Therefore, based on the customer profile, the market can be segmented into three categories,
average individuals’ investor, and high net worth individual and corporate investor. Marketers
can target a specific segment and cater to its need rather than try to service the whole market.
This is because the needs of each of this segment are very different forming those of others.

Based on the services offered` and the requirement if the customer, the market can be divided`
into discretionary services and non-discretionary services. While discretionary portfolio
management allows the portfolio manager to take independent investment decision within the
board framework of assets allocation, non-discretionary portfolio management require that every
decision taken by the manager be vetted by the investor.
Product:
As discussed under segmentation, portfolio managers would do better to identify manager gains
target segment to serve them better. For example, say a portfolio managers gains understands
their requirements and their risk-talking abilities better. When the need to advise an individual
investor with a portfolio of Rs.10 lakh, he might not be able to do a good job. Each product
should take into consideration the following aspect:

 Fitment with investment needs.

 Adherence to per-determined goals.

 Conformity to market guidelines and constraints.

 Ensuring of investment return.

Price:
Pricing is very important in the PMS sector as high free can turn away potential customer who
would then be lured by mutual fund schemes. Therefore, pricing service competitively is almost
a necessity for the survival of the PMS companies. However, reputed companies with strategic
tie-ups with international bank can afford to charge a premium price.

People:
Once customer specifies their requirement, they leave investment decision to the portfolio
managers in the case of PMS. Portfolio management allows the portfolio managers to take
investment decisions on the behalf of his clients within the board parameters of assets allocation.

Many service organizations involve their personal both at the point of frontline delivery and
during the production process that does not involve the final consumer. Therefore the role is very
significant in the case of portfolio to on expect managers in their advertisement and promotional
campaigns.
Place:
This inseparability of services makes it impossible for service provider to produce the service at
a place where the cost are low and sell it at a place where there is high demand for it. There is no
distribution channel for service marketing. Or if at all there is one, it is very small.

The decision to use particulars types of intermediate to offers easy accessibility to the customer
and improve operation efficiency of the organization. For example the decision of a service
provider to sell holiday packages either directly or through tour operators to the customers.

Promotion:
As a Promotion is specialized services targeted at a select a few customer, companies would do
well to employ promotional strategies like personal selling and price discounting instead of
going in fir advertising and publicity. Some companies offer price discount schemes wherein
only the performance fee is charged, that is the customer need to pay only if their portfolio
performance well.

This can be best achieved by encouraging and promotion positive word-of-mouth publicity,
developing strong brand offering a trial use of service for the customer and finally, by managing
to clearly communicate the message to the customer. For example a bank customer can identify
and relate to a service offer in a better way when the service provider (the bank employees or the
brand name) is known.

Process:
The process of portfolio management starts with understanding the requirement of the customer
and his profile. This includes understanding his investment objective, liquidity constraints, time
horizon, and tax status and risk profile. The communication channel between the customer and
the management should always be open and there should be transparency. At the same time, the
customer should not face any the hassles and the process should be simplified.

Customer service encounters have an impact on the quality of service delivered by the
organization. A service encounter is the actually time period during which an interaction takes
place between the service provider and the customer
Physical Evidence:
Physical evidence is the most financial service that providing physical evidence is not very easy
for the service provide of PMS. However since it a high involvement service and the customer
investment is quite high, there is a greater chance of the customer visiting the office of the
service provider.

Services are intangible by nature. However, we rarely come across a service organization that
does not offer any tangible to its customer. We cannot imagine a bank without a single chair to
sit down on, a coffee shop with dowdy interiors or a star hotel will-dress service personal. It is
but natural for people to judge the quality of service at a service provider based on the look of
the office.

Recent Trends in Portfolio Management:

Industry in India:

The portfolio management service industry in india was almost non-existent till the early 21
century. However, it has since emerged as a strong player in the financial service sector.
Whatever development have taken place in the industry are quite recent and have contribution to
this industry,

 Special service provider is offering service to institutional investors.

 It is not only high net-worth investment too, who are being targeted.

 Special portfolio management service is being offered to NRIs.

 India investors are forcing their portfolio manager to come up with new ideas.

 SEBI is working on fresh guideline for portfolio managers so as to reduce regulation.