Task Number 2

S.W.O.T. Analysis and Product Note of Various Asset

Classes

Submitted by,
Name: Yana Pranati Sharma
Designation: Junior Research Analyst
Batch I.D.: 21FMCG30 B30
Date: 26/12/2021
 S.W.O.T. Analysis of Various Asset Classes
The following asset classes explained through S.W.O.T. Analysis-
1. Equity
2. Mutual Funds
3. Real Estate
4. Gold & Precious Metals
5. Fixed Income Securities

Equity
STRENGTHS
 Capital Appreciation-Equity shares are
known to provide higher returns % as
compared to other asset classes.
 Equity shares are highly liquid in nature
and one can easily buy/off-load shares in
large quantity
 There’s nothing as lock in period in equity
shares and one can buy/sell even on the
same day.
WEAKNESSES
 Few of the stocks listed at the stock
exchanges are not liquid and investors get
stuck in them.
 Stock prices are highly volatile in nature.
 Equity financing will lead to dilution of
control for the equity holders.

OPPORTUNITIES
 Small or Mid companies have huge
potential for growth if bought at early
stages.
 Equity is one of the most effective ways to
build wealth.
THREATS
 Retail investors don’t have minute details
about the happenings in the company,
hence they get trapped.
 The poor corporate governance leads to
failure/bankruptcy of the company.
 No guarantee regarding the
success/failure of the business in the
competitive market space.

Mutual Funds
 STRENGTHS
 A best-in-class research department or
methodology that has a track record of
picking winners is a huge asset as well.
 Performance-An outperforming fund
would be a big selling point.
 They are a perfect investment asset class
for retail investors though lumpsum or SIP
mode.
OPPORTUNITIES
 It is crucial to have a birds’ eye view of the
overall market and to take advantage of
economic trends.
 New government policies shift demand
towards specific industries that would
have huge growth potential.
Real Estate
STRENGTHS
 It is an investment asset that increases in
value over time.
 It is less volatile (risky) than other
investment assets particularly equities.
 The owner of a real estate asset has full
rights over the asset and can add value to it
through refurbishment and good
management.
OPPORTUNITIES
 Global demand for real estate is strong and
high.
 Real estate is poised for rapid growth.
 Potential to diversify into other sectors.
 New sectors offer great potential i.e.,
student accommodation & care homes.
WEAKNESSES
 High Expense ratio eats up a good % of the
investors returns.
 Management of the mutual fund often
changes the stocks which lead to low
returns.
 When talking of small cap funds,
expansion/growth may present itself as a
weakness.
THREATS
 Not all funds would perform well in
extreme economic conditions like
recessions, etc.
 The performance of the mutual fund solely
depends on the fund manager.
WEAKNESSES
 Ownership rights cannot be easily
transferred.
 It is a highly illiquid asset.
 It requires a large capital to invest in.
THREATS
 Economic slowdown may affect demand
i.e. periods of recession.
 Competition from other investment asset
classes such as equities and bonds.
 Seasonal demand may affect prices
 Gold & Precious Metals
STRENGTHS
 Bullish market-The market for gold
seemed promising.
 Valuable all over the world-As an
investment, gold is ideal since it’s accepted
all over the world.
 Various denominations-Gold bullion and
various gold coins allow gold investments
to be made in a number of different
denominations.  accepted by the payee.
OPPORTUNITIES
 Gold demand will grow forever due to its
limited supply.
 Given that some Governments hold huge
reserves of gold, they have an interest to
see that gold’s value is unlocked.
Fixed Income Securities
STRENGTHS
 It protects the investor's money and
decreases the risk of losing it.
 It is chosen by investors because of the
little risk it entails.
WEAKNESSES
 High price-While this is perfect for
existing investors, first time investors will
be affected by the high price. The
increasing price of gold will surely drive
away some.
 Illiquid at times-Gold can be illiquid at
times. Its high value means it cannot be
used to pay off expenses, or that it isn’t
THREATS
 Other precious metals- Silver and
palladium too have been performing well
this year.
 When investing in precious metals, make
sure they are in line with your investing
objectives, whether that be capital gain or
liquidity reversal.
WEAKNESSES
 Even though fixed income investments
appear to be risk-free and completely safe,
this is not the case.
 Another factor to consider is currency
depreciation, which can have a major
impact on the worth of your money.
 OPPORTUNITIES
• It delivers a return that may be modest
when compared to other sorts of
investments but is predictable.
 It allows you to earn money on a regular
basis.
THREATS
 When the interest rate in the market where
the individual has invested rises, the risk
increases. Because his money is already
locked, he/she is unable to invest in fresh
securities that provide significant returns.

Product Note
The following investment products are explained below:

1. Equity- Shares/Equity are units of equity ownership in a corporation. For some companies,
shares exist as a financial asset providing for an equal distribution of any residual profits, if any
are declared, in the form of dividends

2. Non-Convertible Debentures (N.C.D.)- The debentures which can’t be converted into shares or
equities are called non-convertible debentures (or NCDs). Description: Non-convertible
debentures are used as tools to raise long-term funds by companies through a public issue.

3. Public Provident Fund (P.P.F.)- Public Provident Fund (PPF) scheme is a long-term investment
option that offers an attractive rate of interest and returns on the amount invested. The interest
 earned and the returns are not taxable under Income Tax. The PPF is popular because it is one
of the safest investment products. i.e., the government of India guarantees your investments in
the fund

4. National Pension Scheme (N.P.S.)- National Pension System (NPS) is a pension cum investment
scheme launched by Government of India to provide old age security to Citizens of India. It
brings an attractive long-term saving avenue to effectively plan your retirement through safe
and regulated market-based return. The Scheme is regulated by Pension Fund Regulatory and
Development Authority (PFRDA). National Pension System Trust (NPST) established by PFRDA is
the registered owner of all assets under NPS.

5. Senior Citizens Savings Scheme (S.C.S.S.)- The Senior Citizens Savings Scheme (SCSS) was
launched with the main aim of providing senior citizens of the country a regular income after
they attain the age of 60 years old. Some of the main benefits of the scheme are:
• Tax benefits are provided
• Safe to invest in the scheme
• Interest rate has been reduced from 8.6% to 7.4%
• Premature withdrawal is allowed

6. Sukanya Samriddhi Yojana (S.S.Y.)- Sukanya Samriddhi Yojana (SSY) is a small deposit scheme for
the girl child launched as a part of the ‘Beti Bachao Beti Padhao’ campaign. One of the reasons
why this scheme has become popular is due to its tax benefit. It comes with a maximum tax
benefit of Rs 1.5 lakh under section 80C of the Income-tax Act. Further, the interest accrued and
maturity amount are exempt from tax.

7. Mutual Funds- A mutual fund is a type of financial vehicle made up of a pool of money collected
from many investors to invest in securities like stocks, bonds, money market instruments, and
other assets. Mutual funds are operated by professional money managers, who allocate the
fund’s assets and attempt to produce capital gains or income for the fund’s investors. A mutual
fund’s portfolio is structured and maintained to match the investment objectives stated in its
prospectus.

8. Equity Based Mutual Funds- These are funds that invest in equity stocks/shares of companies.
These are considered high-risk funds but also tend to provide high returns. Equity funds can
include specialty funds like infrastructure, fast moving consumer goods and banking to name a
few.

9. Debt Based Mutual Funds- These are funds that invest in debt instruments e.g. company
debentures, government bonds and other fixed income assets. They are considered safe
investments and provide fixed returns. These funds do not deduct tax at source so if the earning
from the investment is more than Rs. 10,000 then the investor is liable to pay the tax on it
himself.

10. Hybrid Mutual Funds- These are funds that invest in a mix of asset classes. In some cases, the
proportion of equity is higher than debt while in others it is the other way round. Risk and
returns are balanced out this way. An example of a hybrid fund would be Franklin India Balanced
 Fund-DP (G) because in this fund, 65% to 80% of the investment is made in equities and the
remaining 20% to 35% is invested in the debt market.

11. Index Fund- These are funds that invest in instruments that represent a particular index on an
exchange to mirror the movement and returns of the index e.g., buying shares representative of
the BSE Sensex.

12. Exchange Traded Funds (E.T.F.)- ETFs or exchange traded funds are like index mutual funds.
However, they trade just like stocks. ETFs were started in 2001 in India. They comprise a
portfolio of equity, bonds, and trade close to its net asset value. These funds mainly track an
index, a commodity, or a pool of assets

13. Portfolio Management Services (P.M.S.)- Portfolio Management Service (PMS) is a facility
offered by a portfolio manager with the intent to achieve the required rate of return within the
desired level of risk. An investment portfolio can be a mix of stocks, fixed income, commodities,
real estate, other structured products, and cash.

14. Systematic Investment Plan (S.I.P.)- A systematic investment plan (SIP) is a plan in which
investors make regular, equal payments into a mutual fund, trading account, or retirement
account. SIPs allow investors to save regularly with a smaller amount of money while benefiting
from the long-term advantages of dollar-cost averaging (DCA).

15. Gold Investment- Gold is the most popular as an investment. Investors generally buy gold as a
way of diversifying risk, especially using futures contracts and derivatives. The gold market is
subject to speculation and volatility as are other markets. Compared to other precious metals
used for investment, gold has been the most effective safe heaven across a number of countries.