1. Investment Management
Unit- 1
Investment Setting

2. Investment alternatives
Marketable securities
A security that can be bought and sold in a secondary financial market.
Non-marketable securities:
are investments that cannot be transferred from one party to another.
V.Prabakaran, AP/MBA - Investment Management

3. Marketable securities Non Marketable securities
Money market instruments:
Repos and Reverse Repos
T-bills & Dated securities
Commercial papers
Certificate of deposit
Capital market instruments:
Equity shares
Preference shares
Bonds
Debentures
Mutual funds
Others
Real Assets
Art
Antiques
Real Estate
Bank Deposit
Post office Deposit
National Savings Certificates
Indira vikas patra
Kisan vikas patra
Insurance Policies
NBFC’s Deposit
Provident fund schemes
Public provident fund scheme
Employee provident fund scheme
V.Prabakaran, AP/MBA - Investment Management

4. Money Market Money market is for a maximum tenor of up to one year.
Classified into
Overnight market -  The tenor of transactions is one working day.
Notice money market – The tenor of the transactions is from 2 days to 14 days.
Term money market – The tenor of the transactions is from 15 days to one year.
The money market is regulated by the Reserve Bank of India.
All the money market transactions should be reported on the electronic platform called the Negotiated Dealing System (NDS).
V.Prabakaran, AP/MBA - Investment Management

5. Money market instruments
Repo market
Borrowing funds by selling securities with an agreement to repurchase the said securities on a mutually agreed future date at an agreed price which includes interest for the funds borrowed.
Reverse Repo market
The reverse of the repo transaction is called ‘reverse repo’
Buying of securities
V.Prabakaran, AP/MBA - Investment Management

6. Money market instruments
T-bills/Treasury bills:
To meet short term financial requirements of the government
Are zero coupon bonds issued at discount to face value and are redeemed at par.
No tax deducted at source
Minimum default risk
Government of India issues three types of treasury bills through auctions, namely, 91-day, 182-day and 364-day.
There are no treasury bills issued by State Governments.
Maximum tenure of these securities is one year
Treasury bills are available for a minimum amount of Rs.25,000 and in multiples of Rs. 25,000.
V.Prabakaran, AP/MBA - Investment Management

7. Money market instruments
Dated Securities:
Government paper with tenor beyond one year is known as dated security.
Securities generally carry a fixed interest rate and have a fixed maturity period
Issued and redeemed at face value, interest paid on half yearly routine
Rate of interest and tenure is fixed at the issuance and does not change till maturity.
At present, there are Central Government dated securities with a tenor up to 30 years in the market.
sold through auctions
Subscriptions can be for a minimum amount of Rs.10,000 and in multiples of Rs.10,000.
Auctions are conducted electronically on PDO-NDS(Negotiated dealing system).
V.Prabakaran, AP/MBA - Investment Management

8. Money market instruments
Commercial papers
Issued by companies & commercial banks in the form of a promissory note to raise funds for short term.
Issued at discount to face value and redeemed at par on maturity
Maturity period- minimum 15days to maximum one yr.
Corporate houses that obtain an investment grade rating alone can issue.
Certificate of deposit
a certificate issued by a bank to a person depositing money for a specified length of time at a specified rate of interest.
CDs may be issued at a discount on face value too.
V.Prabakaran, AP/MBA - Investment Management

9. Represent ownership capital of the company
Equity Shares
Represent ownership capital of the company
Stock market classification of shares:
Growth shares – Higher rate of growth in profitability
Income shares – belongs to company that have stable operations and limited growth opportunities
Defensive shares-unaffected by market movements
Cyclical shares – business cycle affects the cyclical shares
Speculative shares-lot of speculative trading involved
V.Prabakaran, AP/MBA - Investment Management

10. Bonds or Fixed Income Securities
A marketable legal contract that promises to pay its investors a stated rate of interest and to repay the principal amount at the maturity date.
Types:
Bearer Bonds:
Interest paid to holder of the bank
Deep Discount Bonds
Issued at discount to face value with long maturities around 10 yrs.
Mortgage Bonds:
A mortgage bond is a secured bond issued by a company. With a mortgage bond, the company pledges specific assets as a collateral for the bond.
V.Prabakaran, AP/MBA - Investment Management

11. Are general creditors of the firm.
Debentures:
A debenture is an unsecured bond issued by a company without providing any specific asset as collateral.
Are general creditors of the firm.
Only well-established and creditworthy companies are able to issue debentures.
V.Prabakaran, AP/MBA - Investment Management

12. Mutual funds
A mutual fund is a type of investment fund that pools money from many investors to purchase securities.
professionally managed
Open-End vs Closed end schemes
Equity schemes
Growth schemes
Index schemes
Sector schemes
Balanced Schemes
Debt schemes
Income schemes
Money market schemes
V.Prabakaran, AP/MBA - Investment Management

13. Time share in a holiday resort New and used residential property
Real Assets:
Gold and silver
Art:
Paintings
Real Estate
Commercial property
Suburban land
Time share in a holiday resort
New and used residential property
Agricultural land
V.Prabakaran, AP/MBA - Investment Management

14. Non Marketable securities
Bank Deposit
Post office Deposit
National Savings Certificates – In denominatons of 100,500,1k..Interest compounded half yearly
Indira vikas patra - interest compounded annually and is taxable and is like a bearer bond
Kisan vikas patra – In denominations of 1k,5k,10k, interest compounded annually and is taxable
Insurance Policies
NBFC’s Deposit – Investment in leasing companies, chit funds,etc
Provident fund schemes
Public provident fund scheme (PPF)
Employee provident fund scheme (EPF)
V.Prabakaran, AP/MBA - Investment Management

15. Thank you …!!!
V.Prabakaran, AP/MBA - Investment Management