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Swot Analysis of Asset Classes Equity Strength Weakness
Swot Analysis of Asset Classes Equity Strength Weakness
Swot Analysis of Asset Classes Equity Strength Weakness
Equity
Strength Weakness
Shareholders are entitled to a
portion of the company's profits. Investment in equity is associated
with high degree of risk.
High rate of return as more risk is
associated Extra costs like brokerage and
transaction costs need to incur.
Shareholders receives dividends There is high speculation in equity
and there is also an increase in the investment which leads to no
price or value of assets (capital security and uncertain return.
appreciation).
Opportunities Threats
To proceed with raising funds,
Considered the best investment legal and regulatory matters must
opportunity for the highest returns be addressed.
in the long term.
Dividend paid on stock is not tax High Chances of loss as Capital
deductible. risk is the possibility that an entity
will lose money from an
Investment in equity provides
investment in equity.
Voting rights in the company for
important decision making. There is high fluctuations in the
price.
Commodities (Gold)
Strength Weakness
Investors generally buy gold as a Gold storage has costs including
hedge against the equity market. cost of insurance.
Gold is recognized as one of the Gold prices have been volatile in
most valuable assets in the world. recent times.
Gold is a highly liquid assets and
can be used for the purpose of
investment.
Opportunities Threats
There is demand for gold across The gold market is also subject to
the word because of different speculation as other commodities
events as people purchase gold in are, especially through the use of
wedding or any other auspicious futures contracts and derivatives.
event. Like most commodities, the price
of gold is driven by supply and
Gold can be used to diversify the
demand as well as speculation.
portfolio.
However unlike most other
Gold can be used as collateral for commodities, hoarding (saving)
loans. and disposal plays a larger role in
affecting its price than its
consumption.
Gold prices have been volatile in
recent times.
Real Estate
Strength Weakness
The Law of Diminishing Returns Not a very liquid investment
never apply here
There are many government
There is a high rate of return regulations involved with in
investment into land
Relatively low risk investment
There are possibilities of
litigations
Small amount cannot be invested
Need bulk amount to invest in
land
Opportunities Threats
High rate of industrialization and Government take-over
urbanization
Private builders
It has multiple usage- residential,
agricultural and commercial Natural calamity
Mutual funds
Strength Weakness
No taxes are charged on dividends Cannot be provided as a collateral
received in the hands of the security
investors as well as the mutual
Long term capital losses cannot be
fund house
set off against capital gains •
There is a stable average rate of
Suitable for no risk tolerance
return
investors
Functions of the mutual fund are
Maturity amount not known as
regulated by SEBI, thus are well
rate of return fluctuates
governed
Payment of entry and exit load and
High liquidity is there as invested
high maintenance charges
money can be withdrawn at any
point of time
Long term capital gains are also
tax free
Opportunities Threats
Investors can write cheque out of Fixed deposits are safer and more
their money market mutual fund stable- regulated by RBI
account
Suitable for investors and Investors looking for higher return
corporate to park their surplus will prefer investing in Equity
funds for a short period of time market
Allows investors with small Investors ready to make long term
amount of money to invest in a investments will look at land,
number of schemes government security as other
options as they are safer and can
be provided as a collateral security
PRODUCT NOTES
EQUITY
National Pension Scheme (NPS) India is a voluntary and long-term investment plan for
retirement under the purview of the Pension Fund Regulatory and Development
Authority (PFRDA) and Central Government.
Largely focused on one’s retirement. It is designed to encourage systematic saving during
the subscriber’s working life with an aim to offer old-age income.
National Pension Scheme (NPS) has higher return.
Sukanya Samriddhi Yojana (SSY) is a government-backed small savings scheme for the
benefit of girl child.
Higher Rate of Return on Investment and eligible for 100% tax deduction.
MUTUAL FUNDS
A mutual fund is a company that pools money from many investors and invests the
money in securities such as stocks, bonds, and short-term debt. The combined holdings of
the mutual fund are known as its portfolio.
Mutual funds give small or individual investors access to professionally managed
portfolios of equities, bonds, and other securities.
A mutual fund holds a variety of investments which can make it easier for investors to
diversify than through ownership of individual stocks or bonds
Equity Funds invest in the shares of different companies. The fund manager tries to offer
great returns by spreading his investment across companies from different sectors or with
varying market capitalizations.
Equity funds are known to generate better returns than term deposits or debt-based funds.
There is an amount of risk associated with these funds since their performance depends
on various market conditions.
Debt funds invest in securities which generate fixed income like treasury bills, corporate
bonds, commercial papers, government securities, and many other money market
instruments.
The returns are usually not affected by fluctuations in the market. Therefore, debt
securities are considered to be low-risk investment options.
Hybrid funds are a combination of equity and debt investments which are designed to
meet the investment objective of the scheme. Each hybrid fund has a different
combination of equity and debt targeted at different types of investors.
New investors who are unsure about stepping into the equity markets tend to turn towards
hybrid funds
Hybrid funds are considered to be riskier than debt funds but safer than equity funds.
They tend to offer better returns than debt funds and are preferred by many low-risk
investors.
An index fund is a type of mutual fund or exchange-traded fund that seeks to track the
returns of a market index.
An index mutual fund is said to provide broad market exposure, low operating expenses,
and low portfolio turnover.
Exchange traded funds pool the financial resources of several people and use it to
purchase various tradable monetary assets such as shares, debt securities such as bonds
and derivatives. It is like a Mutual Fund that one can buy and sell in real-time at a price
that change throughout the day.
ETFs involves diversification, trades like a stock, less fees, and limited capital gain tax.