Task 2

SWOT Analysis of Various Asset Classes

Submitted By:
Name – Kaushik Gupta
Designation – Junior Research Analyst
Batch ID - 22WM60 B1
Mentor – Blessin Mary
Date – 11/04/2022
Contents
SWOT Analysis of the various asset’s classes.......................................................1
Equity..........................................................................................................................................1
Mutual Funds (MFs)..................................................................................................................2
Real Estate..................................................................................................................................3
Gold and Precious Metals..........................................................................................................4
Fixed Income Securities.............................................................................................................5
Product Note............................................................................................................6
Equity..........................................................................................................................................6
Non-Convertible Debenture (NCDs)........................................................................................6
Public Provident Fund (PPF)....................................................................................................6
National Pension Scheme (NPS)...............................................................................................7
Senior Citizen Saving Scheme (S.C.S.S)..................................................................................7
Sukanya Samriddhi Yojana (S.S.Y).........................................................................................8
Mutual Funds (MFs)..................................................................................................................8
Equity Based Mutual Funds (MFs)..........................................................................................8
Debt Based Mutual Funds (MFs).............................................................................................9
Hybrid Funds..............................................................................................................................9
Index Fund..................................................................................................................................9
Exchange Traded Funds (ETFs).............................................................................................10
Portfolio Management Services (P.M.S)................................................................................10
Systemic Investment Plan (S.I.P)............................................................................................10
Gold Investment.......................................................................................................................11
SWOT Analysis of the various asset’s classes
SWOT (strengths, weaknesses, opportunities, and threats) analysis is a method adopted to
examine an organization's sensitive matter and to encourage vital planning. SWOT analysis
assesses both internal and external elements, as well as existing and future possibilities.
Here with the Help of SWOT Analysis we will be Analysing the various asset class based on the
various results from SWOT Analysis and we will determine that which mix of Asset class is best
suited for my hypothetical client which I will be determining with the help of this result.
Equity

STRENGTHS WEAKNESSES
Equity has huge potential of providing exceptional Investors who want to invest in safe securities
return as compared to any other form of investment. will not invest in equity due to its volatility.
One of the primary benefits of making investment
in shares is liquidity. When you buy shares in a AS share cannot be redeemed there is always a
corporation, you can quickly sell those on the stock danger of over capitalisation.
exchange. The equities market is intriguing due to the Compared to all other form of securities, cost of
availability of consumers to purchase your shares equity is the highest.
during the trading session.
Fresh issue reduces the earnings of existing
When you buy a company's stock, you gain right to
vote in it. As a result, by purchasing shares in a
shareholders.
company, you can gain control and ownership of the Company may not declare any dividend if they
company. face loss or the management decides not to
As a shareholder you get to see that how the share dividend.
company has grown over time and you get rewarded Equity shareholders bears the highest degree of
when the prices of shares go up. risk for the company.
You become the partner of the business in which you
purchase the shares.

OPPORTUNITIES THREATS
There are various tax advantages to investing Volatility is a major threat for the equity as it
in stocks. In comparison with other countries, can cause huge loss sometimes to the
capital gains of returns on equity capital are shareholder.
taxed at a substantially lower rate. In case the company is facing management
Provides a diversified investmet option for a issues then the prices may tumble.
minimal investment amount. A company facing liquidity crunch will not be
Bonus share is a major opprtunity a person able to pay dividends and there will be rising
chosses to invest in equity as the company speculations for that.
gives bonus shares to existing shareholders A constant volatility causes loss of want to invest
and when share peices goes up your in equity, thus causing loss in the share value.
investment value also goes up. Emotion plays a key role while investing in
Helps in combating inflation as the return from equity as we can see that sometimes people get
the equity is gretaer then the inflation. carried away in the emotions and that causes
By investing in different shares which are huge loss for them.
traded in the share market you can diversify
and reduce your risk potential.

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Mutual Funds (MFs)

STRENGTHS WEAKNESSES
The major strength is the fact that MFs are MFs may be inappropriate for people who want
managed by professionals thus the chances of to have complete control and want to re-
defaulting or losing money gets reduced balance their holdings on regular basis.
drastically
MFs cannot have holdings of more than 25% in
The dividends gets reinvested when the company a particular security in the overall portfolio,
declares those and thus helps in the overall
thus the return gets reduced to certain extent.
growth of the MF portfolio for the client.
The MFs are a cluster of various types of
One cannot trade their MFs as often as you
securuties in which the clients money gets trade the shares as there exsist various front
invested thus it helps in the diversification and and back end charges which one needs to pay
risk reduction of the clients money. while buying or selling MFs.
As they invest in various selected securities the If one purchases or sells their MFs the
return potentials on medium to long term have a transaction takes place at the end of the
higher return potential . transaction day.
There are different variety of MFs available in the Lock in period are there in many MFs and
market for risk taking investors as well as the non during lock in even if the market conditions turn
risk taking investors thus you can choose as per bad you cannot withdraw the money.
your requirements.

OPPORTUNITIES THREATS
In india there is tax exemption under section Ponzi schemes and other black market
80C of the Income Tax Act, of upto Rs. 1.5 operations are its biggest threats as they
lakhs, if one invest via the equity market.
claim return of 40% and people fall for
Investement in MFs are very transparent
that. They don't follow any rules as
The major advantages are enhanced portfolio
management, dividends reinvestment, risk
compared to MFs
minimization, etc. For every kind of MFs one need to be
Can be used by people who have very less aware of its risk factor.
knowledge of share market to get good return. The exit loads can be sometimes high and
There is high liquidity compared to any other that can act as a major deterrent for the
form of investment as MFs are easier to buy or buyer of MFs
sell.
One cannot predict the movement of MFs
based on their past performance thus it
becomes too hard to predict.
You don't get any assured return product
in case of any unforeseen circumstances.

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Real Estate

STRENGTHS WEAKNESSES
It is a type of investment asset that grows in value Ownership rights are difficult to transfer.
over time.
It's a very non liquid asset as the Real estate
It is less variable (risky) than other types of
investments, particularly equities.
takes too much time to convert to liquid cash.
The owner of a real estate asset has complete Investing in it necessitates a huge sum of
control over the asset and can increase its worth money.
through restoration and effective management. There is a scarcity of Real estate as it is not as
It is a good store of wealth and is used to hedge abundant as other forms of securities.
against inflation risk.
There is a lack of organizational policies which
There is no one market for real estate; estate deal with the investment In Real estate market.
agents and surveyors can exchange it at auctions
or open markets.
Financial institutions desire it as
collateral/security.

OPPORTUNITIES THREATS
In Global real estate the demand is strong and A slowing economy may have an impact on
high. demand, resulting in periods of recession.
Real estate is on the edge of booming.
Other investing asset classes, such as
Possibility of diversification into other shares and bonds, pose competition.
industries.
Seasonal demand may have an impact on
Student housing and care homes are two new
industries with a lot of potential. prices.
There is a reduction in the competetion in the There are various kind of legalities and
real estate market . formalities that is involved in the Real
estate investment.
Any kind of rapid change in the economy
can make the market unsuitable for
investment.

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Gold and Precious Metals

STRENGTHS WEAKNESSES
The market for gold and precious metals are quite The volatility in the prices of gold sometimes
strong whether its bullish or bearish. drive away the investors as the price increase
Gold and Precious Metals are valuable all over can make them deter form the path of investing
the world, even the commercial investors invest in in gold.
Gold to diversify the risk.
There are various ways in which you can invest in
The people cannot use gold to pay off expenses
gold like gold bullion, gold coins, etc. as the price is too high and people don't accept
them as form of payement.
It is a great financial asset and it is used to protect
against the danger of inflation. Investing in it necessitates a lump sum amount
Gold acts as an all time best performer as we can of money.
see that even though sometimes other form of Gold being a metal is limited in its availability in
securities fail to perform but gold outperfroms the world and after certain period of time its
them in the performance. supply will diminish.
Gold being the oldest form of trading currency
If someone own gold physically then it involves
people still contribute to investing in gold even
when there is turblency in the market. a security threat .

OPPORTUNITIES THREATS
The prices of Gold and precious metals are In recent years, gold prices have been
ever increasing as more and more people are volatile.Other investing asset classes, such as
invseting in them and the suplly is less so shares and bonds, pose strong competition in
prices are increasing. that.
In the current scenario when there is a threat Prices may be influenced by seasonal
of the covid and other diseases then people fluctuations.
flock towards gold so as to invest in them. A weakening economy could have an effect on
At present many Financial institutions have the market, resulting in lean seasons.
started to accept them as a form of collateral The gold market, like other commodities, is
security against the loans. prone to speculation, particularly through the
use of derivatives and futures.
One can invest easily via paper gold, thus
getting rid of the insecurities of kepping Today, the price of gold, like most commodities,
physical gold and precious metals. is determined by supply and demand as well as
speculation. However, unlike most other
As per the trend the prices go up for the
commodities, hoarding (saving) and disposal
precious metals, thus it become a much
have a greater impact on pricing than
desired investment avenue for the investors.
consumption.

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Fixed Income Securities

STRENGTHS WEAKNESSES
One of the fixed income securities is the Debt MFs If one wants the prinicipal amount at time he
and its greatest strength is that funds are invested needs then it is not returned to the bond or
in debt securities with excellent ratings. deposit holder.
The other Fixed income security are the bomds Interest rates are quite lower as compared to
and the greatest strength is that they have a fixed any form of investment options.
interest rate of return which one is bound to get.
In case the person doean't have money to
There are no interest expenses on the interest
income via the Fixed income securities. deposit that month fo his RD then it is not
possible as there are stringent policies to collect
In case of bonds there is a safeguard against any
dire situation when the government defualts to
the RD money.
pay the interest. In case of repurcahse aggrement there can be
In case the person wants to have a resonable organisational issues which can effect the
return in the short term then RDs provide a crediblility of the fund.
guranteed return on a short term goal. Some of the investment options have
In RDs a person needs to pay a minimal fixed middelman involved in transactions and they
amount of the depoist thus it is best suited for demand under the table money from clients to
people with a low salary. carry out the transactions.

OPPORTUNITIES THREATS
The biggest opportunity is that one can get a In case the debtholder is unable to pay the amount
fixed rate of return by investing in the fixed then we will loose the Principal amount alongwith
deposit securities. the interest.
The investmet done under the Fixed interest The next threat is that due to the bad economic
securities are mostly tax free. situation the intereset rates on these Fixed income
The ownership remains in the hands of the securities have gone down which is acting a major
perosn who has purchased it till the amount deterrent for people to invest money in them.
gets redeemed. Since the rate of interest is declining day by day
people are moving toward other investment
WIth the advent of Flexible Recurring Deposits options like equity, MFs, paper gold as a better
(RDs) people can invest in these options more investment opportunities.
freely.
These investments are illiquid in nature and one
The ease of deposit via the online and various cannot sell those investments as there is no
other forms of payement has played a huge marketplace for that.
role that people have started to invest in these In case of premature withdrawal one has to pay
form of investment. lumpsum amount of fine and almost all the interest
earned gets deducted.

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Product Note
Here I have explained the 15 Investment products which are as follows:
Equity
 An equity investment are funds invested in a company through the purchase of stock in
that company.
 Typically, these shares are exchanged on a stock market.
 The major advantage due to which one invests in equity is that they buy a company's
stock with the hope that it will appreciate and/or pay out capital dividends.
 If the value of an equity investment grows, the investor receives the excess if they
traded their shares or the company's assets were liquidated and all its obligations were
met.
 The major risk one faces while investing in equity is that there is too much volatility in
the price, and one needs to have a good knowledge of the equity market to invest in
them.
Non-Convertible Debenture (NCDs)
 Non-convertible debentures (NCDs) are a type of financial instrument that businesses
use to raise long-term finance. This is accomplished by means of a public issue.
 NCDs are debt instruments with a predetermined maturity period, and those who invest
in them get a fixed rate of interest.
 NCDs are traded on the stock exchange and one can buy or sell them via that.
 The major advantage due to which one invests is that the rate of earnings is around
10%-12%, which is much better as compared to the FDs, RDs, etc.
 The maturity period of NCDs vary from 90 days to 20 years and based on that one can
invest his money as per his short-term or long-term requirements.
 The major Disadvantage is that one if the company doesn’t have a good credit rating
and it offers a eye catching interest rate, then it is possible that at the time of payment it
defaults to pay the earnings and one has to face a lot of trouble in getting his/her money
back.
Public Provident Fund (PPF)
 In India, the Public Provident Fund (PPF) is a savings-cumulative-tax-saving tool
launched in 1968 by the Ministry of Finance's National Savings Institute.
 The scheme's principal goal is to mobilise small savings by delivering a decent return on
investment paired with income tax savings.
 The major advantage is that it is backed by the central government which ensures a
guaranteed return on the investment.
 The contribution made towards PPF is tax free and one can claim tax benefit under the
section 80© of the Income tax Act.
 The major disadvantage is that its lock in period is 15 years and thus can only be used
for achieving the long-term goal.
 During the 15 years one cannot withdraw the money.

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National Pension Scheme (NPS)
 The National Pension System (NPS) is an optional, defined contribution pension and
retirement savings plan that enables subscribers to make the best decisions for their
future by making systematic deposits throughout their working lives.
 The National Pension System aims to instil in residents the habits of saving for
retirement.
 It is an attempt to discover a long-term solution to the challenge of providing a
sufficient income in retirement to every Indian citizen.
 The major advantage is that one gets the Choice i.e., NPS provides two options: auto
selection and active selection. The fund management manages your investment and
spends in a mix of debt and equity, bond funds, treasury bonds, and alternate investment
funds based on prior knowledge and assessment under the auto pick option. This is
perfect if you are unfamiliar with investment portfolio and want an expert to manage
your finances.
 However, if you wish to manage your own asset allocation, you can choose the passive
option. This allows you to invest up to 75% in equities until the age of 50, 5% in
alternative investments, and the rest in bond funds and government securities.
 The major disadvantage is that there exists Tax liability i.e., given the tax breaks, NPSs
wind up paying a lot of tax when they mature. 60% of the amount is deducted from your
taxable income. As a result, your tax yield in retirement grows.
 Because the NPS is a government pension scheme, only a restricted amount and amount
of withdrawal are permitted before maturity. This could be an issue if you are in a
financial crunch and require a large chunk of money quickly.
Senior Citizen Saving Scheme (S.C.S.S)
 A Senior Citizens' Saving Scheme (SCSS) account is a government-backed account that
provides retirement benefits.
 Senior citizens in India can take advantage of the account's benefits by investing a large
sum in the plan, either individually or collectively.
 The accounts will provide post-retirement access to adequate income as well as income
tax benefits.
 The major advantage is that this scheme was created keeping in mind the senior citizens
so SCSS accounts are simple to open and can be obtained from any recognised bank or
post office in India. The account can be transferred across India.
 The major deterrent one won’t spend in SCSS is that in the event of a premature
withdrawal before the end of the two-year period, the penalty is 1.5 percent of the
deposit amount.
 In the event of a premature withdrawal between two and five years, a penalty of one
percent of the deposit amount in the Senior Citizen Savings Scheme is imposed.

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Sukanya Samriddhi Yojana (S.S.Y)
 Sukanya Samriddhi Yojana (SSY) is a government-sponsored small savings scheme for
girl children. This is a component of the Beti Bachao, Beti Padhao Yojana and it can be
accessed by the parents of a girl child under the age of ten.
 It is possible to open it at approved bank or post offices. A SSY Account is valid for 21
years or until girl child reaches the age of 18.
 The major advantage is that there is a flexibility in the deposit of the principal amount
i.e., A minimal deposit of Rupees. 250 and a max deposit of Rupees. 1.5 lakh can be
made in a year. This ensures that persons of varying financial means can participate in
the scheme.
 The major disadvantage one will face is that you need to invest regularly for 15 years
then only one can withdraw, so, it is of no use for investment in short term.
 One cannot withdraw the amount even is there is an emergency, and the withdrawal is
only allowed when the girl dies or on maturity.
Mutual Funds (MFs)
 A mutual fund is a business that collects money from several people and invests it in
financial assets such as stocks, bond funds, and short-term loans.
 The mutual fund's portfolio is comprised of all its holdings. Mutual funds are purchased
by investors. Each share reflects a portion of an investor's stake in the funds and the
income generated by it.
 The major advantages are enhanced portfolio management, dividends reinvestment, risk
minimization, simplicity, and fair pricing are all benefits for investors.
 Another advantage is that the pricing policy of MFs are quite simple as compared to the
equities and people can invest more easily as compared to equities.
 High expense ratios and fees and commissions, managerial abuses, tax inefficiencies,
and poor trade operations are some of the major disadvantages.
Equity Based Mutual Funds (MFs)
 Mutual funds that invest largely in stocks are known as equity based Mutual Funds. You
put money into the fund through a SIP or a lump amount, and it puts it in various
equities shares on your behalf.
 The portfolio's subsequent gains or losses have an impact on the Net Asset Value of
your fund (NAV).
 Equity mutual funds invest a significant amount of their assets in equity share capital of
various corporations. The asset allocation is classified by the characteristics of equity
fund, and it’s fit with the investment goal.
 The major advantage in investing in Equity based Mutual Funds are that you can invest
in the Equities, but the fund gets managed by expert portfolio managers who mostly
spend in good companies across the sector thus providing the benefit of much needed
diversification.

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  The major disadvantage is that one invests in the Equities and thus they will have to
face the price volatility of the equity market, thus one who is not keen to invest in risk
taking investment options will not spend in this investment option.
Debt Based Mutual Funds (MFs)
 Debt based Mutual Fund is a mutual fund that invest in fixed-income instruments such
as bonds and government bills.
 Some of the investing alternatives in debt funds include a gilt fund, monthly income
plans (MIPs), short term plans (STPs), liquid funds, and fixed maturity plans (FMPs).
 One who is not ready to take risks in the Equity based Mutual Funds due risk involved
in it will surely invest in these funds and thus it becomes the major advantage of Debt
based Mutual Funds.
 Since the money gets invested in different areas such as gilt fund, monthly income plans
(MIPs), short term plans (STPs), liquid funds, and fixed maturity plans (FMPs), the
return is lower and not up to the mark as what Equity based Mutual Funds will provide.
So, this becomes the major deterrent for anyone who wants a high return.
Hybrid Funds
 Hybrid Funds are mutual fund plans that invest in many asset classes, including
equities, debt, and other asset classes, depending on the scheme's investment objective.
 These funds are invested in a variety of asset classes to diversify their portfolios and
reduce risk.
 Hybrid funds benefit from the advantages that each asset class provides because they
invest in multiple asset types. Depending on type of fund, these funds have the
capability to gain long-term financial growth by investing in stock, the consistency and
lower volatility of debt funds, gold's perceived haven status, and the high liquidity
afforded by cash.
 Hybrid funds provide diversification to investors by investing in a portfolio that
includes a variety of asset classes. This can help reduce risk by balancing the
profitability of one asset class with the performance of another, so stabilising returns.
 There is no particular on which you can compare its performance as it invests various
asset classes which creates problem if the fund manager is not capable enough to
manage debt as well as the equity.
Index Fund
 An index fund is a stock or bond portfolio that attempts to replicate the structure and
performances of a stock market index.
 In comparison to actively managed funds, index funds have reduced expenses and fees.
A passive investment plan is used by index funds.
 The lower management expense ratio is one of the key benefits of index funds over
actively managed alternatives.
 The expenditure ratio of a fund, also known as the management expense ratio, covers all
operating expenses such as adviser and manager compensation, transaction fees, taxes,
and accounting fees.

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  Investment in an index fund provides the advantage when the markets is doing well, but
it leaves you susceptible to the downside when the markets is doing poorly. Some
traders can hedge their index exposure by selling S&P 500 futures contracts or
purchasing a put option on the index. So, this becomes a major risk for people with less
knowledge of future and derivatives.
Exchange Traded Funds (ETFs)
 An exchange-traded fund (ETF) is a pooled investment asset that works similarly to a
mutual fund.
 ETFs often track a specific index, sector, commodities, or other product, but unlike
mutual fund schemes, ETFs can be bought and sold on a stock market in the same way
that a conventional stock can.
 Passively managed ETFs have substantially lower expense ratios than actively managed
mutual funds, which are more common in mutual funds. Thus, it becomes a great option
for people who want to have less expenses but good returns.
 ETFs may be less expensive to tax than mutual funds. ETFs (and index funds) produce
smaller capital gains versus actively managed mutual funds because they are passively
managed portfolios.
 There are dividend-paying ETFs, but the returns may be lower than owning a high-
yielding share or group of securities. So, one won’t be able to leverage the benefit of the
getting the dividend return.
Portfolio Management Services (P.M.S)
 Portfolio Management Service (PMS) is a service provided by a portfolio manager to
achieve the targeted rate of return while minimising risk.
 Stocks, fixed income, commodity, housing, other structured products, and currency can
all be included in an investment portfolio.
 PMS is a specialised portfolio manager who individually looks after your money and is
supported by a research framework. The research team is made up of SEBI-registered
experts who are always on top of market developments. So, one can easily invest via the
PMS.
 Entry and exit at the correct time profit even in down markets, according to a PMS
expert.
 To begin investing in PMS, one needs have a minimal corpus of 5 lacs, as mandated by
SEBI. This makes it tough for investors with lesser incomes. The bulk of organisations
providing these services have a Rs.25 lac entry hurdle. In summary, you must be an
HNI to use this service. Thus, someone not having so much money to spare at once will
forego this investment option.
Systemic Investment Plan (S.I.P)
 A Systematic Investment Plan (SIP), often known as a SIP, is a service provided by
mutual funds that allows investors to invest in a systematic manner.
 The SIP facility enables a client to invest a set amount of money in a mutual fund
scheme at pre-determined intervals.

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  SIPs allow you to invest in mutual funds for as little as Rs. 500 per month. This can be a
cost-effective approach to invest every month without breaking the bank.
 You can use the SIP step-up feature to raise your monthly investment amount as your
income grows. So, becomes a good option for people with low salary.
 The major drawback is that compared to the market the return on SIP is comparatively
lesser. So, people won’t enjoy the market rate of return if they invest in SIP.
Gold Investment
 In India, gold is a popular investment. Its major selling qualities include its good
liquidity and inflation-beating capacity, not to mention its beauty and grandeur.
 When the markets are volatile, gold prices skyrocket. Though there are times when gold
prices dip, they never linger long and always make a strong rebound.
 Another benefit of investing in gold is the high liquidity. Selling gold is not difficult,
whether you invest in it online or buy it in person. When you need money fast, selling
physical assets such as real estate may be difficult, but gold is not.
 Physical gold, as well as gold held in the form of digital gold or gold ETFs, can easily
find purchasers.
 Gold is an asset that does not provide consistent income, whereas investments in mutual
funds, real estate, and stocks do. So, anyone who wants to get a regular return on his/her
principal amount will deter from investing in gold.
 In case one wants to invest in physical gold then it raises the security issues regarding
keeping the gold.

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