Who is an Investor An Investor is a person who allocates capital with the expectation of a financial return. NATIONAL STOCK EXCHANGE OF INDIA LTD. 2 Income Expenses Savings Investment -+= Savings v/s Investment SavingsInvestment Short termLonger term EmergencyPlanned Outlay Low returnsBeating the inflation
Investment & Returns NATIONAL STOCK EXCHANGE OF INDIA LTD. 3 Why People Invest Achieve financial goals Increase current income Financial security Retirement Investment Returns Interest Dividend Rent Capital Gain
Investment Planning 4 Start of Career RetirementMarriageHouseCar Children’s Education Children’s Marriage 5 Goal Setting What are the key financial stages in my life? In how much time will I reach these stages? How much money would I require at these stages? Assessment Monitoring What is my risk taking ability? How much return can I expect with the risk taking ability? How much money do I need to invest each month? What is the performance of my investments? Have my needs or risk taking capabilities changed? Is there any need to adjust my investment portfolio? NATIONAL STOCK EXCHANGE OF INDIA LTD.
Investment Avenues NATIONAL STOCK EXCHANGE OF INDIA LTD. 5 There are many options today to invest your money in An investor who owns a stock is known as a shareholder SMALL SAVING SCHEMES PPF FD/RD STOCKS MUTUAL FUNDS CORPORATE DEBT REAL ESTATE GOLD EXCHANGE TRADED FUNDS Traditional Avenues Modern Avenues
Risk-Return Relationship High Risk Moderate Risk Low Risk Zero Risk 6%18%9%12% 15% Govt. Bonds, Post office, PPF Bank Fixed Deposits Corporate bonds, Debt funds Mutual Fund, ETFs Equities Expected return 6
Why Capital Markets? NATIONAL STOCK EXCHANGE OF INDIA LTD. 7 Easy Liquidity Risk Diversification Maximum Returns Tax Benefits One can easily buy and sell shares and gets quick redemption of investment. Products available for all classes of investors. Allows investments customized to personal risk appetite. Historically outperformed all other asset classes – Compound Annual Growth Rate (CAGR) of over 18%. No Income is payable if shares are sold after 1 year of purchase. Tax Exemption is also available for investing in ELSS and RGESS schemes. Price Transparency Trading is screen based and information about current prices of shares are available easily.
Why NSE NATIONAL STOCK EXCHANGE OF INDIA LTD. 8 Technology Innovation Investor Protection Transparency We are the pioneers in developing the latest of technologies to ensure efficiency in markets. We have a consistent track record of successfully introducing innovative products in the financial markets. We enable you to explore opportunities in the markets. We have the developed a world class surveillance system that ensures integrity of the markets. All investors, big and small are now on the same platform. No one has advantages over the other. There is an enhanced transparency as you yourself can verify your trades directly on NSE website.
Asset Classes at NSE Asset Classes Asset Classes Equity Derivatives Capital Markets Other Markets Other Derivatives Stock Futures Stock Options Index Futures Index Options Currency Futures and Options Interest Rate Futures SLBS Debt Market MFSS Equities, Debt, ETFs, Mutual Funds IPO NATIONAL STOCK EXCHANGE OF INDIA LTD.
10 Highly liquid Index Covering more than 24 sectors Nifty is calculated using free-float market capitalization method. Captures the largest market capitalization, represents about 65% of total free-float market capitalization of NSE. Nifty linked Derivatives contracts available for trading on Singapore Exchange, Chicago Mercantile Exchange & Osaka Securities Exchange. Over 30 International and Domestic ETFs/Index Funds on Nifty. Structured Products/ Index-linked Debentures issued in domestic and international market across the Globe. Our Flagship Index – NIFTY 50 NATIONAL STOCK EXCHANGE OF INDIA LTD.
Mutual Funds NATIONAL STOCK EXCHANGE OF INDIA LTD. 11 A Mutual Fund is a type of professionally managed collective investment scheme that pools money from many investors to purchase securities. Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors save regularly. Investor commits to invest a fixed amount every month. Currently there are around 45 Mutual Fund Companies.
Introduction to ETFs An Exchange Traded Fund (ETF) is primarily a mutual fund scheme which is listed and traded on a stock exchange. An ETF can invest in: Equities – replicating the composition and performance of an equity index. Commodities – tracking the actual price of a commodity like Gold. Money market instruments like short-term government securities and call money. Exchange Traded Fund (ETF) – Simplicity – Transparency – Lower Expenses – Diversification – Open-End Fund – Simplicity – Transparency – Lower Expenses – Diversification – Open-End Fund – On Exchange – Real time prices – Trading flexibility – Trading strategies – On Exchange – Real time prices – Trading flexibility – Trading strategies + INDEX MUTUAL FUND STOCK EXCHANGE TRADED FUND NATIONAL STOCK EXCHANGE OF INDIA LTD.
What is an ETF? NATIONAL STOCK EXCHANGE OF INDIA LTD. 13 What makes it attractive? ETFs have been pioneered in India by NSE Exposure to an index or a basket of securities Lists and trades on a stock exchange Not actively managed What is an ETF?
ETFs: BENEFITS FOR THE RETAIL INVESTOR 14 1 1 2 2 3 3 4 4 5 5 Very Simple to Trade: Can be traded on NSE like any stock Quick Diversification: Opens up multiple asset classes are affordable costs Economical: Lowest expense ratio amongst all equity mutual funds Only brokerage payable in buying or selling on exchange You can track your investment value in real time Safe Simple Fast NATIONAL STOCK EXCHANGE OF INDIA LTD.
Gold ETF NATIONAL STOCK EXCHANGE OF INDIA LTD. 15 Typically, ETFs are safe and secure They hold physical gold But then why ETFs? You can buy just one unit It is very easy to buy Buy it unit by unit as you want and build wealth You can buy just one unit It is very easy to buy Buy it unit by unit as you want and build wealth SIMPLE You can be assured of quality Demat holding allows security You can be assured of quality Demat holding allows security SAFE Accepted as collateral for loans TRUSTED GOLD V/s GOLD ETF Quality riskNo quality risk Less price transparency High level of transparency Very high bid-ask spread Low bid-ask spread Not tax efficientTax Efficient 1 ETF unit ≈1g of Gold in spot JUST REMEMBER ETF is an easier and more secure way to buy gold. ETF is an easier and more secure way to buy gold.
NIFTY ETF NATIONAL STOCK EXCHANGE OF INDIA LTD. 16 Instant Diversification Affordable Diversification No bias towards sectors or stocks Minimum expense ratio Nifty ETF is the simplest and safest way to enter into equity markets NarrowBroad HighLow HighLow HighLow Market RatesNAV at EODMarket Rates EXPOSURE VOLATILITY COST OF MAINTENANCE CAPITAL REQ PRICE STOCKS NIFTY MUTUAL FUND NIFTY ETF NIFTY ETF
CPSE ETF Central Public Sector Enterprises (CPSE) ETF is a part of the Government of India initiative to dis-invest some of its stake in selected CPSEs through the ETF route. The ETF was opened for subscription in March 2014 and the same was listed on NSE in the first week of April 2014. 1 1 2 2 3 3 4 4 Ability to participate in the long-term development of India. Instant Diversification: Single scrip to trade in diverse set of PSEs. Economical: Lowest expense ratio amongst all equity mutual funds. Enables large investment in blue chip Public Sector enterprises without the constraint of market liquidity on the underlying individual stock. KEY BENEFITS OF CPSE ETF NATIONAL STOCK EXCHANGE OF INDIA LTD.
Liquid ETF Liquid ETFs are funds whose unit price is derived from money market securities comprising of Government bonds, treasury bonds, call money market, etc.” Benefits of Liquid ETFs: NAV per unit is maintained at Rs.1000/- Daily returns are passed on as dividend The dividend after Dividend Distribution Tax in units No STT Listed and Traded on the NSE with a minimum lot size of 1 unit Liquid ETFs listed on NSE NATIONAL STOCK EXCHANGE OF INDIA LTD. 18 SymbolUnderlying AssetUnit PriceAMC Name LIQUIDBEES Government Securities Rs.1000 (Face value) Goldman Sachs Mutual Fund
Regulatory/Safety Measures Unique Client Code, KYC, PAN Client code at the time of order entry Price Time Priority Contract Notes, Quarterly Statement Stringent Compliance on members in respect of dealings with investors Trade Verification Direct information to investors on random basis SMS Notification to Investors 19 NATIONAL STOCK EXCHANGE OF INDIA LTD.
Investor, Information, Awareness Information dissemination through multiple channels Key information on Corporate entities, Members, Complaints on Exchange website Programs on products, safety aspects Investor related alerts Rumor verification 20 NATIONAL STOCK EXCHANGE OF INDIA LTD.
Takeaways NATIONAL STOCK EXCHANGE OF INDIA LTD. 21 Clear Understanding of various asset classes in terms of risks and returns Historically Stock Market provides best return on investment in the long term NSE aspires to Educate, Empower and Protect all Investor Stock Exchanges are highly regulated and ensure investor protection However the decision of Investing is solely of the Investor Stock Markets are market driven and are subject to market risks
NATIONAL STOCK EXCHANGE OF INDIA LTD. 22 THANK YOU