ANALYSIS ANALYSIS OF INVESTMENT DECISIONS Submitted By
T.DINESH
(HT.NO. (HT.NO. 011060128) 011060128 )
Project submitted in !rti!" #u"#i""ment #or t$e !%!rd o# de&ree o# 'STE O* O * +,SINESS D'INISTTION D'INISTTION +-
IE/NND SHOO O* P ST,DIES ST,DI ES OS'NI ,NIESIT3
2006 - 2008
1
DETION
I heeby de!"#e th#t thi$ %&'e!t %&'e!t e%&t tit"ed N3SIS O* INEST'ENT DEISIONS $ubmitted by me t& the De%#tme(t &) IE/NND SHOO O* POST D,TE u(det#+e( by me #(d it i$ (&t $ubmitted $ubmitted t& #(y &the ,(ie$ity ,(ie$ity ST,DIES i$ # b&(#)ide *&+ u(det#+e( & I($tituti&( )& the #*#d &) #(y de.ee di%"&m# / !eti)i!#te & %ub"i$hed #(y time be)&e
T.DINESH
2
ABSTACT The %&'e!t ANANLYSIS OF INVESTMENT O3TIONS4 .ie$ the bie) ide# e.#di(. the #i&u$ i(e$tme(t &%ti&($ th#t #e %e#i"i(. i( the )i(#(!i#" m#+et$ i( I(di# 5ith "&t$ &) i(e$tme(t &%ti&($ "i+e b#(+$ Fi7ed De%&$it$ &e(me(t b&(d$ $t&!+ m#+et e#" e$t#te .&"d #(d mutu#" )u(d$ the !&mm&( i(e$t& e(d$ u% m&e !&()u$ed th#( ee E#!h #(d eey i(e$tme(t &%ti&( h#$ it$ &*( meit$ #(d demeit$ Thi$ %&'e!t I h#e di$!u$$ed #b&ut )e* i(e$tme(t &%ti&($ ##i"#b"e
A(y i(e$t i(e$t& & be)&e be)&e i(e$t i(e$ti(. i(. $h& $h&u"d u"d t#+e t#+e i(t& i(t& !&($ide !&($ide#t #ti&( i&( t#e $#)ety $#)ety "i9ui "i9uidit dity y etu( etu($ $ e(ty/e7it b#ie$ #(d t#7 e))i!ie(!y %##mete$ 5e (eed t& e#"u#te e#!h i(e$tme(t &%ti&( &( the #b&e-me(ti&(ed b#$i$ #(d the( i(e$t m&(ey T&d#y i(e$t& )#!e$ t&& mu!h !&()u$i&( i( #(#"y:i(. the #i&u$ i(e$tme(t &%ti&($ ##i"#b"e #(d the( $e"e!ti(. the be$t $uit#b"e &(e I( the %e$e(t %&'e!t i(e$tme(t &%ti&($ #e !&m%#ed &( the b#$i$ &) etu($ #$ *e"" #$ &( the %##mete$ "i+e $#)ety "i9uidity "i9uidity tem h&"di(. et! thu$ #$$i$ti(. the i(e$t& #$ # .uide )& i(e$tme(t %u%&$e
;
AC
I *&u"d "i+e t& .ie $%e!i#" #!+(&*"ed.eme(t t& D3V#& die!t& Vie+#(#(d# S!h&&" &) 3&$t #du#te Studie$ )& hi$ !&($i$te(t $u%%&t #(d m&ti#ti&( I #m .#te)u" t& MV#.hu(#dh A$$&!i#te %&)e$$& i( )i(#(!e Vie+#(#(d# S!h&&" &) 3&$t #du#te Studie$ )& hi$ te!h(i!#" e7%eti$e #di!e #(d e7!e""e(t .uid#(!e =e (&t &("y .#e my %&'e!t # $!u%u"&u$ !iti!#" e#di(. but #dded m#(y e7#m%"e$ #(d ide#$ t& im%&e it
I #m i(debted t& my &the )#!u"ty membe$ *h& .#e time #(d #.#i( eie*ed &%ti&($ &) thi$ %&'e!t #(d %&ide m#(y #"u#b"e !&mme(t$
I *&u"d "i+e t& e7%e$$ my #%%e!i#ti&( t&*#d$ my )ie(d$ )& thei e(!&u#.eme(t #(d $u%%&t th&u.h&ut thi$ %&'e!t
A )i(#" *&d &) th#(+$ .&e$ t& eey&(e e"$e *h& m#de thi$ %&'e!t %&$$ib"e Y&u !&(tibuti&($ h#e bee( m&$t #%%e!i#ted
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TABLE OF CONTENETS CONTENTS
3AE NO
Li$t &) t#b"e$
6
Li$t &) Fi.ue$
?
C=A3TE-1 1INTOD,CTION
8
2OB@ECTIVE OF T=E ST,DY
;MET=ODOLOY
10
>LIMITATIONS OF T=E ST,DY
11
C=A3TE-2 INTOD,CTION TO INVESTMENT DECISIONS
12
6TY3ES OF INVESTMENT OF O3TIONS
1;
C=A3TE-; ?ALL ABO,T E,ITY INVESTMENT
1
8ALL ABO,T BONDS INVESTMENT
21
ALL ABO,T OLD INVESTMENT
2?
10ALL ABO,T M,T,ALF,ND INVESTMENT
;1
11ALL ABO,T EAL ESTATE INVESTMENT
;?
12ALL ABO,T LIFE INS,ANCE INVESTMENT
>1
C=A3TE-> 1;3EFOMANCE ANALYSIS OF ET,NS
>?
C=A3TE- 1>FINDINS OF T=E ST,DY
?
1CONCL,SION
62
16BIBLIOA3=Y
6>
LIST OF TABLES
TABLE
3AE NO
1 B&(d #ti(.
2;
2 A$$et id
; 3##mete$ T#b"e
61
6
LIST OF FI,ES FI,ES
3AE NO
1 Se($e7 Ch#t
>?
2 BSE 100 Ch#t
>8
; BSE 200 Ch#t
>
> BSE 00 Ch#t
0
&"d Ch#t
1
6 E9uity T#7 S#i(. Ch#t
2
? E9uity B#"#(!ed Ch#t
;
?
INTOD,CTION TO INVESTMENTS Thee #e m#(y di))ee(t de)i(iti&($ &) *h#t i(e$tme(t #(d i(e$ti(. #!tu#""y me#($ O(e &) the $im%"e$t *#y$ &) de$!ibi(. it i$ u$i(. y&u m&(ey t& ty #(d m#+e m&e m&(ey Thi$ !#( h#%%e( i( m#(y di))ee(t *#y$
A"" i(e$t&$ #e di))ee(t The !&mm&( )#!t& i$ th#t y&u *&u"d "i+e t& i(e$t m&(ey t& #im t& m#+e it .&* & t& e!eie # e.u"# i(!&me )&m it 5e *&u"d "i+e t& $h&* y&u th#t !h&&$i(. the m&$t $uit#b"e i(e$tme(t )& y&u d&e$ (&t (eed t& be di))i!u"t A"" y&u (eed i$ the i.ht he"% #"&(. the *#y
The #!t !&mmitti(. m&(ey & !#%it#" t& #( e(de#& *ith the e7%e!t#ti&( &) &bt#i(i(. #( #dditi&(#" i(!&me & %&)it i$ +(&*( #$ i(e$tme(t I(e$ti(. me#($ %utti(. y&u m&(ey t& *&+ )& y&u
8
OB@ECTIVE OF T=E ST,DY The %im#y &b'e!tie &) the %&'e!t i$ t& m#+e #( #(#"y$i$ &) #i&u$ i(e$tme(t de!i$i&( The #im i$ t& !&m%#e the etu($ .ie( by #i&u$ i(e$tme(t de!i$i&( T& !#te the di))ee(t (eed$ &) i(e$t& the$e &%ti&($ #e #"$& !&m%#ed &( the b#$i$ &) #i&u$ %##mete$ "i+e $#)ety "i9uidity i$+ e(ty/e7it b#ie$ et!
The %&'e!t *&+ *#$ u(det#+e( i( &de t& h#e # e#$&(#b"e u(de$t#(di(. #b&ut the i(e$tme(t i(du$ty The %&'e!t *&+ i(!"ude$ +(&*i(. #b&ut the i(e$tme(t DECISIONS "i+e e9uity b&(d e#" e$t#te .&"d #(d mutu#" )u(d A"" i(e$tme(t DECISIONS #e di$!u$$ed *ith thei ty%e$ *&+i(.$ #(d etu($
MET=ODOLOY E9uitie$ B&(d$ e#" E$t#te &"d Mutu#" Fu(d$ #(d Li)e I($u#(!e *ee ide(ti)ied #$ m#'& ty%e$ &) i(e$tme(t de!i$i&(
The %im#y d#t# )& the %&'e!t e.#di(. i(e$tme(t #(d #i&u$ i(e$tme(t DECISIONS *ee !&""e!ted th&u.h i(te#!ti&($ h#d *ith M#.hu(#dh Si
The $e!&(d#y d#te )& the %&'e!t e.#di(. i(e$tme(t #(d #i&u$ i(e$tme(t DECISIONS *ee !&""e!ted )&m *eb$ite$ te7tb&&+$ #(d m#.#:i(e$
The( the #e#.e$ &) etu($ &e # %ei&d &) ye#$ #e !&($ideed )& the %u%&$e &) !&m%#i$&( &) i(e$tme(t &%ti&($ The( !iti!#" #(#"y$i$ i$ m#de &( !et#i( %##mete$ "i+e etu($ $#)ety "i9uidity et! ii(. *ei.ht#.e t& the di))ee(t ty%e &) (eed$ &) the i(e$t&$ #(d the( mu"ti%"yi(. the $#me *ith the #"ue$ #$$i.(ed d&e$ thi$
10
LIMITATIONS OF T=E ST,DY
The $tudy *#$ "imited t& &("y $i7 i(e$tme(t &%ti&($
M&$t &) the i()&m#ti&( !&""e!ted i$ $e!&(d#y d#t#
The d#t# i$ !&m%#ed #(d #(#"y:ed &( the b#$i$ &) %e)&m#(!e &) the i(e$tme(t &%ti&($ &e the %#$t )ie ye#$
5hi"e !&($idei(. the etu($ )&m mutu#" )u(d$ &("y t&% %e)&mi(. $!heme$ *ee #(#"y:ed
It *#$ ey di))i!u"t t& &bt#i( the d#te e.#di(. the etu($ yie"ded by e#" e$t#te #(d he(!e #e#.e$ *ee t#+e(
11
INVESTMENT DECISIONS I(t&du!ti&( The$e d#y$ #"m&$t eey&(e i$ i(e$ti(. i( $&methi(. ee( i) it$ # $#i(.$ #!!&u(t #t the "&!#" b#(+ & # !he!+i(. #!!&u(t the e#($ i(tee$t & the h&me they b&u.ht t& "ie i(
=&*ee m#(y %e&%"e #e &e*he"med *he( they bei(. t& !&($ide the !&(!e%t &) i(e$ti(. "et #"&(e the "#u(dy "i$t &) !h&i!e$ )& i(e$tme(t ehi!"e$ Ee( th&u.h it m#y $eem the eey&(e #(d thei b&the$ +(&*$ e7#!t"y *h& *h#t #(d *he( t& i(e$t i( $& they !#( m#+e +i""i(. %"e#$e d&(t be )&&"ed M#'&itie$ &) i(e$t& ty%i!#""y 'um% &( the "#te$t i(e$tme(t b#(d*#.&( #(d %&b#b"y d&(t +(&* #$ mu!h #b&ut *h#t$ &ut thee #$ y&u thi(+
Be)&e y&u !#( !&()ide(t"y !h&&$e #( i(e$tme(t %#th th#t *i"" he"% y&u #!hiee y&u %e$&(#" .&#"$ #(d &b'e!tie$ it$ it#""y im%&t#(t th#t y&u u(de$t#(d the b#$i!$ #b&ut the ty%e$ &) i(e$tme(t$ ##i"#b"e <(&*"ed.e i$ y&u $t&(.e$t #""y *he( it !&me$ t& *eedi(. &ut b#d i(e$tme(t #di!e #(d i$ !u!i#" t& $u!!e$$)u" i(e$ti(. *hethe y&u .& #t it #"&(e & u$e # %&)e$$i&(#"
The i(e$tme(t &%ti&( be)&e y&u #e m#(y 3i!+ the i.ht i(e$tme(t t&&" b#$ed &( the i$+ %&)i"e !i!um$t#(!e time ##i"#b"e et! i) y&u )ee" the m#+et &"#ti"ity i$ $&methi(. *hi!h y&u !#( "ie *ith the( buy $t&!+$ I) y&u d& (&t *#(t i$+ the &"#ti"ity #(d $im%"y de$ie $&me i(!&me the( y&u $h&u"d !&($ide )i7ed i(!&me $e!uitie$ =&*ee emembe th#t i$+ #(d etu($ #e die!t"y %&%&ti&(#" t& e#!h &the =i.he the i$+ hi.he the etu($
12
TY3ES OF INVESTMENT O3TIONS A bie) %eie* &) di))ee(t i(e$tme(t &%ti&($ i$ .ie( be"&*G
E9uitie$G I(e$tme(t i( $h#e$ &) !&m%#(ie$ i$ i(e$ti(. i( e9uitie$ St&!+$ !#( be b&u.ht/$&"d )&m the e7!h#(.e$ H$e!&(d#y m#+et & i# I3O$ J I(iti#" 3ub"i! O))ei(.$ H%im#y m#+et St&!+$ #e the be$t "&(.-tem i(e$tme(t &%ti&($ *heei( the m#+et &"#ti"ity #(d the e$u"t#(t i$+ &) "&$$e$ i) .ie( e(&u.h time #e miti.#ted by the .e(e#" u%*#d m&me(tum &) the e!&(&my Thee #e t*& $te#m$ &) ee(ue .e(e#ti&( )&m thi$ )&m &) i(e$tme(t
1Diide(dG 3ei&di! %#yme(t$ m#de &ut &) the !&m%#(y$ %&)it$ #e temed #$ diide(d$ 2&*thG The %i!e &) the $t&!+ #%%e!i#te$ !&mme($u#te t& the .&*th %&$ted by the !&m%#(y e$u"ti(. i( !#%it#" #%%e!i#ti&( O( #( #e#.e #( i(e$tme(t i( e9uitie$ i( I(di# h#$ # etu( &) 2K &&d %&t)&"i& m#(#.eme(t %e!i$e timi(. m#y e($ue # etu( &) >0K & m&e 3i!+i(. the i.ht $t&!+ #t the i.ht time *&u"d .u##(tee th#t y&u !#%it#" .#i($ ie .&*th i( m#+et #"ue &) $t&!+ %&$$e$$i&($ *i"" i$e
B&(d$G It i$ # )i7ed i(!&me Hdebt i($tume(t i$$ued )& # %ei&d &) m&e th#( &(e ye# *ith the %u%&$e &) #i$i(. !#%it#" The !e(t#" & $t#te .&e(me(t !&%&#ti&($ #(d $imi"# i($tituti&($ $e"" b&(d$ A b&(d i$ .e(e#""y # %&mi$e t& e%#y the %i(!i%#" #"&(. *ith )i7ed #te &) i(tee$t &( # $%e!i)ied d#te !#""ed #$ the m#tuity d#te Othe )i7ed i(!&me i($tume(t$ i(!"ude b#(+ de%&$it$ debe(tue$ %e)ee(!e $h#e$ et! The #e#.e #te &) etu( &( b&(d #(d $e!uitie$ i( I(di# h#$ bee( #&u(d 10-1;K %#
Mutu#" Fu(dG The$e #e &%e( #(d !"&$e-e(ded )u(d$ &%e#ted by #( i(e$tme(t !&m%#(y *hi!h #i$e$ m&(ey )&m the %ub"i! #(d i(e$t$ i( # .&u% &) #$$et$ i( #!!&d#(!e *ith # $t#ted $et &) &b'e!tie$ It i$ # $ub$titute )& th&$e *h& #e u(#b"e t& i(e$t die!t"y i( e9uitie$ & debt be!#u$e &) e$&u!e time & +(&*"ed.e !&($t#i(t$
Be(e)it$ i(!"ude die$i)i!#ti&( #(d
%&)e$$i&(#" m&(ey m#(#.eme(t Sh#e$ #e i$$ued #(d edeemed &( dem#(d b#$ed &( the )u($
1;
(et #$$et #"ue *hi!h i$ detemi(ed #t the e(d &) e#!h t#di(. $e$$i&( The #e#.e #te &) etu( #$ # !&mbi(#ti&( &) #"" mutu#" )u(d$ %ut t&.ethe i$ (&t )i7ed but i$ .e(e#""y m&e th#( *h#t e#( i$ )i7ed de%&$it$ =&*ee e#!h mutu#" )u(d *i"" h#e it$ &*( #e#.e #te &) etu( b#$ed &( $ee#" $!heme$ th#t they h#e )"&#ted I( the e!e(t %#$t Mutu#" Fu($ h#e .ie( # etu( &) 18 J ;K
e#" E$t#teG F& the bu"+ &) i(e$t&$ the m&$t im%&t#(t #$$et i( thei %&t)&"i& i$ # e$ide(ti#" h&u$e I( #dditi&( t& # e$ide(ti#" h&u$e the m&e #))"ue(t i(e$t&$ #e "i+e"y t& be i(tee$ted i( eithe #.i!u"tu#" "#(d & m#y be i( $emi-ub#( "#(d #(d the !&mme!i#" %&%ety
3e!i&u$ 3&'e!t$ G 3e!i&u$ &b'e!t$ #e item$ th#t #e .e(e#""y $m#"" i( $i:e but hi.h"y #"u#b"e i( m&(et#y tem$ S&me im%&t#(t %e!i&u$ &b'e!t$ #e "i+e the .&"d $i"e %e!i&u$ $t&(e$ #(d #"$& the u(i9ue #t &b'e!t$
Li)e i($u#(!eG I( b&#d $e($e "i)e i($u#(!e m#y be eie*ed #$ #( i(e$tme(t I($u#(!e %emium$ e%e$e(t the $#!i)i!e #(d the #$$ued the $um the be(e)it$ The im%&t#(t ty%e$ &) i($u#(!e %&"i!ie$ i( I(di# #eG
E(d&*me(t #$$u#(!e %&"i!y
M&(ey b#!+ %&"i!y
5h&"e "i)e %&"i!y
Tem #$$u#(!e %&"i!y
,(it-"i(+ed i($u#(!e %"#(
1>
ALL ABO,T E,ITY INVESTMENT St&!+$ #e i(e$tme(t$ th#t e%e$e(t &*(e$hi% --- & e9uity --- i( # !&%&#ti&( 5he( y&u buy $t&!+$ y&u h#e #( &*(e$hi% $h#e --- h&*ee $m#"" --- i( th#t !&%&#ti&( #(d #e e(tit"ed t& %#t &) th#t !&%&#ti&($ e#(i(.$ #(d #$$et$ St&!+ i(e$t&$ --- !#""ed $h#eh&"de$ & $t&!+h&"de$ --- m#+e m&(ey *he( the $t&!+ i(!e#$e$ i( #"ue & *he( the !&m%#(y the i$$ued the $t&!+ %#y$ diide(d$ & # %&ti&( &) it$ %&)it$ t& it$ $h#eh&"de$ S&me !&m%#(ie$ #e %i#te"y he"d *hi!h me#($ the $h#e$ #e ##i"#b"e t& # "imited (umbe &) %e&%"e $u!h #$ the !&m%#(y$ )&u(de$ it$ em%"&yee$ #(d i(e$t&$ *h& )u(d it$ dee"&%me(t Othe !&m%#(ie$ #e %ub"i!"y t#ded *hi!h me#($ thei $h#e$ #e ##i"#b"e t& #(y i(e$t& *h& *#(t$ t& buy them
The I3O A !&m%#(y m#y de!ided t& $e"" $t&!+ t& the %ub"i! )& # (umbe &) e#$&($ $u!h #$ %&idi(. "i9uidity )& it$ &i.i(#" i(e$t& & #i$i(. m&(ey The )i$t time # !&m%#(y i$$ue$ $t&!+ i$ the i(iti#" %ub"i! &))ei(. HI3O #(d the !&m%#(y e!eie$ the %&!eed$ )&m th#t $#"e A)te th#t $h#e$ &) the $t&!+ #e te#ded & b&u.ht #(d $&"d &( the $e!uitie$ m#+et$ #m&(. i(e$t&$ but the !&%&#ti&( .et$ (& #dditi&(#" i(!&me The %i!e &) the $t&!+ m&e$ u% & d&*( de%e(di(. &( h&* mu!h i(e$t&$ #e *i""i(. t& %#y )& it O!!#$i&(#""y # !&m%#(y *i"" i$$ue #dditi&(#" $h#e$ &) it$ $t&!+$ !#""ed # $e!&(d#y &))ei(. t& #i$e #dditi&(#" !#%it#"
Ty%e$ O) St&!+$ 5ith th&u$#(d$ &) di))ee(t $t&!+$ t#di(. &( ,S #(d i(te(#ti&(#" $e!uitie$ m#+et$ thee #e $t&!+$ t& $uit eey i(e$t& #(d t& !&m%"eme(t eey %&t)&"i& F& e7#m%"e $&me $t&!+$ $te$$ .&*th *hi"e &the$ %&ide i(!&me S&me $t&!+$ )"&ui$hed dui(. b&&m time *hi"e &the$ m#y he"% i($u"#te y&u %&t)&"i&$ #"ue #.#i($t tubu"e(t & de%e$$ed m#+et$ S&me $t&!+$ #e %i!ey *hi"e &the$ #e !&m%##tie"y i(e7%e($ie A(d $&me $t&!+$ #e i(hee(t"y &"#ti"e *hi"e &the$ te(d t& be m&e $t#b"e i( #"ue
1
&*th I(!&me S&me $t&!+$ #e !&($ideed .&*th i(e$tme(t$ *hi"e &the$ #e !&($ideed #"ue i(e$tme(t$ F&m #( i(e$ti(. %e$%e!tie the be$t eide(!e &) .&*th i$ #( i(!e#$i(. %i!e &e time St&!+$ &) !&m%#(ie$ th#t ei(e$t thei e#(i(.$ #the th#( %#yi(. them &ut #$ diide(d$ #e &)te( !&($ideed %&te(ti#" .&*th i(e$tme(t$ S& #e $t&!+$ &) y&u(. 9ui!+"y e7%#(di(. !&m%#(ie$ V#"ue $t&!+$ i( !&(t#$t #e the $t&!+$ &) !&m%#(ie$ th#t %&b"em$ h#e bee( u(de %e)&mi(. thei %&te(ti#" & #e &ut &) )#& *ith i(e$t&$ A$ e$u"t thei %i!e$ te(d t& be "&*e th#( $eem$ 'u$ti)ied th&u.h they m#y $ti"" be %#yi(. diide(d$ I(e$t&$ *h& $ee+ &ut #"ue $t&!+$ e7%e!t them t& $t#.e # !&meb#!+
M#+et C#%it#"i:#ti&( O(e &) the m#i( *#y$ t& !#te.&i:e $t&!+$ i$ by thei m#+et !#%it#"i:#ti&( $&metime$ +(&*( #$ m#+et #"ue M#+et !#%it#"i:#ti&( Hm#+et !#% i$ !#"!u"#ted by mu"ti%"yi(. # !&m%#(y$ !ue(t $t&!+ %i!e by the (umbe &) it$ e7i$ti(. $h#e$ F& e7#m%"e # $t&!+ *ith # !ue(t m#+et #"ue &) ;0 # $h#e #(d # hu(ded mi""i&( $h#e$ &) e7i$ti(. $t&!+ *&u"d h#e # m#+et !#% &) ; bi""i&(
3/E #ti& A %&%u"# i(di!#t& &) # $t&!+$ .&*th %&te(ti#" i$ it$ %i!e-t&-e#(i(.$ #ti& & 3/E J & mu"ti%"e J !#( he"% y&u .#u.e the %i!e &) # $t&!+ i( e"#ti&( t& it$ e#(i(.$ F& i($t#(!e # $t&!+ *ith # 3/E &) 20 i$ t#di(. #t # %i!e 20 time$ hi.he th#( it$ e#(i(.$ A "&* 3/E m#y be # $i.( th#t # !&m%#(y i$ # %&& i(e$tme(t i$+ #(d th#t it$ e#(i(.$ #e d&*( But it m#y #"$& i(di!#te th#t the m#+et u(de#"ue$ # !&m%#(y be!#u$e it$ $t&!+ %i!e d&e$(t e)"e!t it$ e#(i(.$ %&te(ti#"
Simi"#"y # $t&!+ *ith # hi.h 3/E m#y "ie u% t& i(e$t&
e7%e!t#ti&($ &) !&(ti(ui(. .&*th & it m#y be &e#"ued
16
I(e$t& dem#(d 3e&%"e buy # $t&!+ *he( they be"iee it$ # .&&d i(e$tme(t dii(. the $t&!+ %i!e u% But i) %e&%"e thi(+ # !&m%#(y$ &ut"&&+ i$ %&& #(d eithe d&(t i(e$t & $e"" $h#e$ they #"e#dy &*( the $t&!+ %i!e *i"" )#"" I( e))e!t i(e$t& e7%e!t#ti&($ detemi(e the %i!e &) # $t&!+ F& e7#m%"e i) "&t$ &) i(e$t&$ buy $t&!+ A it$ %i!e *i"" be die( u% The $t&!+ be!&me$ m&e #"u#b"e be!#u$e thee i$ dem#(d )& it But the ee$e i$ #"$& tue I) # "&t &) i(e$t&$ $e"" $t&!+ it$ %i!e *i"" %"ummet The )uthe the $t&!+ %i!e )#""$ the m&e i(e$t&$ $e"" it &)) dii(. the %i!e d&*( ee( m&e
The Diide(d$ The i$i(. $t&!+ %i!e #(d e.u"# diide(d$ th#t e*#d i(e$t&$ #(d .ie them !&()ide(!e #e tied die!t"y t& the )i(#(!i#" he#"th &) the !&m%#(y Diide(d$ "i+e e#(i(.$ &)te( h#e # die!t i()"ue(!e &( $t&!+ %i!e$ 5he( diide(d$ #e i(!e#$ed the me$$#.e i$ th#t the !&m%#(y i$ %&$%ei(. Thi$ i( tu( $timu"#te$ .e#te e(thu$i#$m )& the $t&!+ e(!&u#.i(. m&e i(e$t&$ t& buy #(d ii(. the $t&!+$ %i!e u%*#d 5he( diide(d$ #e !ut i(e$t&$ e!eie the &%%&$ite me$$#.e #(d !&(!"ude th#t the !&m%#(y$ )utue %&$%e!t$ h#e dimmed O(e ty%i!#" !&($e9ue(!e i$ #( immedi#te d&% i( the $t&!+$ %i!e C&m%#(ie$ +(&*( #$ "e#de$ i( thei i(du$tie$ *ith $i.(i)i!#(t m#+et $h#e #(d (#me e!&.(iti&( te(d t& m#i(t#i( m&e $t#b"e #"ue$ th#( (e*e y&u(.e $m#""e & e.i&(#" !&m%etit&$
E#(i(.$ #(d 3e)&m#(!e I(e$t& e(thu$i#$m )& # $t&!+ !#( $&metime$ t#+e &( # m&me(tum &) it$ &*( dii(. %i!e$ u% i(de%e(de(t &) # !&m%#(y$ #!tu#" )i(#(!i#" &ut"&&+ Simi"#"y di$i(tee$t !#( die %i!e$ d&*( But t& # "#.e e7te(t i(e$t&$ b#$e thei e7%e!t#ti&($ &( # !&m%#(y$ $#"e$ #(d e#(i(.$ #$ eide(!e &) it$ !ue(t $te(.th #(d )utue %&te(ti#" 5he( # !&m%#(y$ e#(i(.$ #e u% i(e$t& !&()ide(!e i(!e#$e$ #(d the %i!e &) the $t&!+ u$u#""y i$e$ I) the !&m%#(y i$ "i$i( . m&(ey& (&t m#+i(. #$ mu!h #$ #(ti!i%#ted -- the $t&!+ %i!e u$u#""y )#""$ $&metime$ #%id"y
1?
I(ti($i! V#"ue A !&m%#(y$ i(ti($i! #"ue & u(de"yi(. #"ue i$ !"&$e"y tied t& it$ %&$%e!t$ )& )utue $u!!e$$ #(d i(!e#$ed e#(i(.$ F& th#t e#$&( # !&m%#(y$ )utue #$ *e"" #$ it$ !ue(t #$$et$ !&(tibute$ t& the #"ue &) it$ $t&!+ Y&u !#( !#"!u"#te i(ti($i! #"ue by )i.ui(. the #$$et$ # !&m%#(y e7%e!t$ t& e!eie i( the )utue #(d $ubt#!ti(. it$ "&(.-tem debt The$e #$$et$ m#y i(!"ude %&)it$ the %&te(ti#" )& i(!e#$ed e))i!ie(!y #(d the %&!eed$ )&m the $#"e &) (e* !&m%#(y $t&!+ The %&te(ti#" )& (e* $h#e$ #))e!t$ # !&m%#(y$ i(ti($i! #"ue be!#u$e &))ei(. (e* $h#e$ #""&*$ the !&m%#(y t& #i$e m&e m&(ey A(#"y$t$ "&&+i(. #t i(ti($i! #"ue diide # !&m%#(y$ e$tim#ted )utue e#(i(.$ by the (umbe &) it $ e7i$ti(. $h#e$ t& detemi(e *hethe # $t&!+$ !ue(t %i!e i$ # b#.#i( Thi$ me#$ue #""&*$ i(e$t&$ t& m#+e de!i$i&($ b#$ed &( # !&m%#(y$ )utue %&te(ti#" i(de%e(de(t &) $h&ttem e(thu$i#$m & m#+et hy%e
St&!+ S%"it$ I) # $t&!+$ %i!e i(!e#$e$ d#m#ti!#""y the i$$ui(. !&m%#(y m#y $%"it the $t&!+ t& bi(. the %i!e %e $h#e d&*( t& # "ee" th#t $timu"#te$ m&e t#di(. F& e7#m%"e # $t&!+ $e""i(. #t 100 # $h#e m#y be $%"it 2 )& 1 d&ub"i(. the (umbe &) e7i$ti(. $h#e$ #(d !utti(. the %i!e i( h#") The $%"it d&e$(t !h#(.e the #"ue &) y&u i(e$tme(t #t "e#$t i(iti#""y I) y&u h#d 100 $h#e$ *he( the %i!e *#$ 100 # $h#e y&u"" h#e 200 $h#e$ *&th 0 # $h#e #)te the $%"it Eithe *#y th#t$ 10000 But i) the %i!e %e $h#e m&e$ b#!+ t&*#d the %e-$%"it %i!e #$ it m#y d& y&u i(e$tme(t *i"" i(!e#$e i( #"ue F& e7#m%"e i) the %i!e .&e$ u% t& ? # $h#e y&u $t&!+ *i"" be *&th 1000 # 0K i(!e#$e I(e$t&$ *h& h&"d # $t&!+ &e m#(y ye#$ th&u.h # (umbe &) $%"it$ m#y e(d u% *ith # $ub$t#(ti#" i(e$tme(t ee( i) the %i!e %e $h#e d&%$ )& # time A $t&!+ m#y be $%"it 2 )& 1 ; )& 1 & ee( 10 )& 1 i) the !&m%#(y *i$he$ th&u.h 2 )& 1 i$ the m&$t !&mm&(
18
St&!+ e$e#!h #(d E#"u#ti&( Be)&e i(e$ti(. i( # $t&!+ it$ im%&t#(t t& e$e#!h the i$$ui(. !&m%#(y #(d u(de$t#(d h&* the i(e$tme(t i$ "i+e"y t& %e)&m )& e7#m%"e y&u"" *#(t t& +(&* #he#d &) time *hethe y&u $h&u"d #(ti!i%#te # hi.h de.ee &) &"#ti"ity & m&e $t#b"e $"&*e .&*th A .&&d %"#!e t& $t#t i$ the !&m%#(y$ 10 + e%&t *hi!h it mu$t )i"e *ith the Se!uitie$ #(d E7!h#(.e C&mmi$$i&( HSEC e#!h ye# It$ e7teme"y det#i"ed #(d 9uite dy but it i$ th&u.h Y&u"" *#(t t& %#y #tte(ti&( t& the )&&t(&te$ #$ *e"" #$ the m#i( te7t $i(!e they &)te( %&ide hi(t$ &) %&te(ti#" %&b"em$
C&m%#(y Ne*$ #(d e%&t$ C&m%#(ie$ #e e9uied by "#* t& +ee% $h#eh&"de$ u% t& d#te &( h&* the bu$i(e$$ i$ d&i(. S&me &) th#t i()&m#ti&( i$ %&ided i( the )im$ #((u#" e%&t *hi!h $umm#i:e$ the !&m%#(y$ &%e#ti&($ )& i(diidu#" i(e$t&$ A $umm#y &) !ue(t %e)&m#(!e i$ #"$& %&ided i( the !&m%#(y$ 9u#te"y e%&t$
Buyi(. #(d Se""i(. St&!+ T& buy & $e"" # $t&!+ y&u u$u#""y h#e t& .& th&u.h # b&+e e(e#""y the m&e .uid#(!e y&u *#(t )&m y&u b&+e the hi.he the b&+e$ )ee S&me b&+e$ u$u#""y !#""ed )u""-$ei!e b&+e$ %&ide # #(.e &) $ei!e bey&(d )i""i(. buy #(d $e"" &de$ )& !"ie(t$ $u!h #$ e$e#!hi(. i(e$tme(t$ #(d he"%i(. y&u dee"&% "&(. #(d $h&t-tem i(e$tme(t .&#"$ Di$!&u(t b&+e$ !#y &ut t#($#!ti&($ )& !"ie(t$ #t "&*e )ee$ th#( )u""-$ei!e b&+e$ but ty%i!#""y &))e m&e "imited $ei!e$ A(d )& e7%eie(!ed i(e$t&$ *h& t#de &)te( #(d i( "#.e b"&!+$ &) $t&!+ thee #e dee%-di$!&u(t b&+e$ *h&$e !&mmi$$i&($ #e ee( "&*e O("i(e T#di(. i$ the !he#%e$t *#y t& t#de $t&!+$ O("i(e b&+e#.e )im$ &))e $ub$t#(ti#" di$!&u(t$ *hi"e .ii(. y&u )#$t #!!e$$ t& y&u #!!&u(t$ th&u.h thei 5eb Site$ Y&u !#( e$e#!h $t&!+$ t#!+ i(e$tme(t$ #(d y&u t& t#de be)&e #(d #)te (&m#" m#+et h&u$ M&$t &) t&d#y$ "e#di(. )u""-$ei!e #(d di$!&u(t b&+e#.e )im m#+e &("i(e t#di(. ##i"#b"e t& thei !u$t&me$ O("i(e t#di(. i$ #( e7teme"y !&$t-e))e!tie &%ti&( )& i(de%e(de(t i(e$t&$ *ith # $&"id $t#te.y *h& #e *i""i(. t& u(det#+e thei &*( e$e#!h =&*ee the e#$e &) m#+i(. t#de$ #(d the #b$e(!e &) #di!e m#y tem%t $&me i(e$t&$ t& t#de i( #(d &ut &) $t&!+$ t&& 9ui!+"y #(d m#.(i)y the %&$$ibi"ity &) "&!+i(. i( $h&t-tem "&$$e$ 1
V&"#ti"ity O(e &) the i$+$ y&u"" (eed t& %"#( )& #$ # $t&!+ i(e$t& i$ &"#ti"ity V&"#ti"ity i$ the $%eed *ith *hi!h #( i(e$tme(t .#i($ & "&$e$ #"ue The m&e &"#ti"e #( i(e$tme(t i$ the m&e y&u !#( %&te(ti#""y m#+e & "&$e i( the $h&t tem
M#(#.i(. i$+ O(e thi(. )& !et#i(G Y&u $t&!+ i(e$tme(t *i"" d&% i( #"ue #t $&me %&i(t Th#t$ *h#t i$+ i$ #"" #b&ut <(&*i(. h&* t& t&"e#te i$+ #(d #&id $e""i(. y&u $t&!+$ &)) i( # %#(i! i$ #"" %#t &) # $m#t i(e$tme(t $t#te.y Setti(. e#"i$ti! .&#"$ #""&!#ti(. #(d die$i)yi(. y&u #$$et$ #%%&%i#te"y #(d t#+i(. # "&(.tem ie* !#( he"% &))$et m#(y &) the i$+$ &) i(e$ti(. i( $t&!+$ Ee( the m&$t $%e!u"#tie $t&!+ i(e$tme(t *ith it$ %&te(ti#" )& "#.e .#i($ m#y %"#y #( im%&t#(t &"e i( # *e""die$i)ied %&t)&"i&
20
A"" ABO,T BONDS INVESTMENT
=#e y&u ee-b&&*ed m&(eyP O) !&u$e y&u h#e *hethe *e hit &u %#e(t$ u% )& # )e* bu!+$ t& buy !#(dy #$ !hi"de( & #$+ed the b#(+ )& # m&t.#.e m&$t &) u$ h#e b&&*ed m&(ey #t $&me %&i(t i( &u "ie$
@u$t #$ %e&%"e (eed m&(ey $& d& !&m%#(ie$ #(d .&e(me(t$ A !&m%#(y (eed$ )u(d$ t& e7%#(d i(t& (e* m#+et$ *hi"e .&e(me(t$ (eed m&(ey )& eeythi(. )&m i()#$tu!tue t& $&!i#" %&.#m$ The %&b"em "#.e &.#(i:#ti&($ u( i(t& i$ th#t they ty%i!#""y (eed )# m&e m&(ey th#( the #e#.e b#(+ !#( %&ide The $&"uti&( i$ t& #i$e m&(ey by i$$ui(. b&(d$ H& &the debt i($tume(t$ t& # %ub"i! m#+et Th&u$#(d$ &) i(e$t&$ the( e#!h "e(d # %&ti&( &) the !#%it#" (eeded e#""y # b&(d i$ (&thi(. m&e th#( # "&#( )& *hi!h y&u #e the "e(de The &.#(i:#ti&( th#t $e""$ # b&(d i$ +(&*( #$ the i$$ue Y&u !#( thi(+ &) # b&(d #$ #( IO, .ie( by # b&&*e Hthe i$$ue t& # "e(de Hthe i(e$t&
O) !&u$e (&b&dy *&u"d "&#( hi$ & he h#d-e#(ed m&(ey )& (&thi(. The i$$ue &) # b&(d mu$t %#y the i(e$t& $&methi(. e7t# )& the %ii"e.e &) u$i(. hi$ & he m&(ey Thi$ e7t# !&me$ i( the )&m &) i(tee$t %#yme(t$ *hi!h #e m#de #t # %edetemi(ed #te #(d $!hedu"e The i(tee$t #te i$ &)te( e)eed t& #$ the !&u%&( The d#te &( *hi!h the i$$ue h#$ t& e%#y the #m&u(t b&&*ed H+(&*( #$ )#!e #"ue i$ !#""ed the m#tuity d#te B&(d$ #e +(&*( #$ )i7edi(!&me $e!uitie$ be!#u$e y&u +(&* the e7#!t #m&u(t &) !#$h y&u"" .et b#!+ i) y&u h&"d the $e!uity u(ti" m#tuity F& e7#m%"e $#y y&u buy # b&(d *ith # )#!e #"ue &) 1000 # !&u%&( &) 8K #(d # m#tuity &) 10 ye#$ Thi$ me#($ y&u"" e!eie # t&t#" &) 80 H1000Q8K &) i(tee$t %e ye# )& the (e7t 10 ye#$ A!tu#""y be!#u$e m&$t b&(d$ %#y i(tee$t $emi-#((u#""y y&u"" e!eie t*& %#yme(t$ &) >0 # ye# )& 10 ye#$ 5he( the b&(d m#tue$ #)te # de!#de y&u"" .et y&u 1000 b#!+
F#!e V#"ue / 3# V#"ue The )#!e #"ue H#"$& +(&*( #$ the %# #"ue & %i(!i%#" i$ the #m&u(t &) m&(ey # h&"de *i"" .et b#!+ &(!e # b&(d m#tue$ Ne*"y i$$ued b&(d u$u#""y $e""$ #t the %# #"ue C&%&#te b&(d$ (&m#""y h#e # %# #"ue &) 1000 but thi$ #m&u(t !#( be mu!h .e#te )& .&e(me(t b&(d$ 21
5h#t !&()u$e$ m#(y %e&%"e i$ th#t the %# #"ue i$ (&t the %i!e &) the b&(d A b&(d$ %i!e )"u!tu#te$ th&u.h&ut it$ "i)e i( e$%&($e t& # (umbe &) #i#b"e$ Hm&e &( thi$ "#te 5he( # b&(d t#de$ #t # %i!e #b&e the )#!e #"ue it i$ $#id t& be $e""i(. # %emium 5he( # b&(d $e""$ be"&* )#!e #"ue it i$ $#id t& be $e""i(. #t # di$!&u(t
C&u%&( HThe I(tee$t #te The !&u%&( i$ the #m&u(t the b&(dh&"de *i"" e!eie #$ i(tee$t %#yme(t$ It$ !#""ed # !&u%&( be!#u$e $&metime$ thee #e %hy$i!#" !&u%&($ &( the b&(d th#t y&u te# &)) #(d edeem )& i(tee$t =&*ee thi$ *#$ m&e !&mm&( i( the %#$t N&*#d#y$ e!&d$ #e m&e "i+e"y t& +e%t e"e!t&(i!#""y A$ %ei&u$"y me(ti&(ed m&$t b&(d$ %#y i(tee$t eey $i7 m&(th$ but it$ %&$$ib"e )& them t& %#y m&(th"y 9u#te"y & #((u#""y The !&u%&( i$ e7%e$$ed #$ # %e!e(t#.e &) the %# #"ue I) # b&(d %#y$ # !&u%&( &) 10K #(d it$ %# #"ue i$ 1000 the( it"" %#y K100 &) i(tee$t # ye# A #te th#t $t#y$ #$ # )i7ed %e!e(t#.e &) the %# #"ue "i+e thi$ i$ # )i7ed-#te b&(d A(&the %&$$ibi"ity i$ #( #d'u$t#b"e i(tee$t %#yme(t +(&*( #$ # )"&#ti(.-#te b&(d I( thi$ !#$e the i(tee$t #te i$ tied t& m#+et #te$ th&u.h #( i(de7 $u!h #$ the #te &( Te#$uy bi""$ Y&u mi.ht thi(+ i(e$t&$ *i"" %#y m&e )& # hi.h !&u%&( th#( )& # "&* !&u%&( A"" thi(.$ bei(. e9u#" # "&*e !&u%&( me#($ th#t the %i!e &) the b&(d *i"" )"u!tu#te m&e
M#tuity The m#tuity d#te i$ the d#te i( the )utue &( *hi!h the i(e$t&$ %i(!i%#" *i"" be e%#id M#tuitie$ !#( #(.e )&m #$ "itt"e #$ &(e d#y t& #$ "&(. #$ 20 ye#$ Hth&u.h tem$ &) 100 ye#$ h#e bee( i$$ued A b&(d th#t m#tue$ i( &(e ye# i$ mu!h m&e %edi!t#b"e #(d thu$ "e$$ i$+y th#( # b&(d th#t m#tue$ i( 20 ye#$ Thee)&e i( .e(e#" the "&(.e the time t& m#tuity the hi.he the i(tee$t #te A"$& #"" thi(.$ bei(. e9u#" # "&(.e-tem b&(d *i"" )"u!tu#te m&e th#( # $h&te-tem b&(d
I$$ue The i$$ue &) # b&(d i$ # !u!i#" )#!t& t& !&($ide #$ the i$$ue$ $t#bi"ity i$ y&u m#i( #$$u#(!e &) .etti(. %#id b#!+ F& e7#m%"e the ,S .&e(me(t i$ )# m&e $e!ue th#( #(y !&%&#ti&( It$ de)#u"t i$+ Hthe !h#(!e &) the debt (&t bei(. %#id b#!+ i$ e7teme"y $m#"" J $& $m#"" th#t ,S 22
.&e(me(t $e!uitie$ #e +(&*( #$ i$+-)ee #$$et$ The e#$&( behi(d thi$ i$ th#t # .&e(me(t *i"" #"*#y$ be b#"e t& bi(. i( )utue ee(ue th&u.h t#7#ti&( A !&m%#(y &( the &the h#(d mu$t !&(ti(ue t& m#+e %&)it$ *hi!h i$ )# )&m .u##(teed Thi$ #dded i$+ me#($ !&%&#te b&(d mu$t &))e # hi.he yie"d i( &de t& e(tie i(e$t&$ J thi$ i$ the i$+ / etu( t#de&)) i( #!ti&(
The b&(d #ti(. $y$tem he"%$ i(e$t&$ detemi(e # !&m%#(y$ !edit i$+ Thi(+ &) # b&(d #ti(. #$ the e%&t !#d )& # !&m%#(y$ !edit #ti(.
B"ue-!hi% )im$ *hi!h #e $#)e
i(e$tme(t$ h#e # hi.h #ti(. *hi"e i$+y !&m%#(ie$ h#e t& "&* #ti(. The !h#t be"&* i""u$t#te$ the di))ee(t b&(d #ti(. $!#"e$ )&m the m#'& #ti(. #.e(!ie$ i( the ,S
M&&dy$ St#(d#d #(d 3&&$ #(d Fit!h #ti(.$
B&(d #ti(. M&&dy$ S3 / Fit!h A## A# A B## B# B C##/C#/C C
AAA AA A BBB BB B CCC/CC/C D
#de I(e$tme(t I(e$tme(t I(e$tme(t I(e$tme(t @u(+ @u(+ @u(+
i$+ =i.he$t u#"ity =i.h u#"ity St&(. Medium #de S%e!u"#tie =i.h"y S%e!u"#tie I( De)#u"t
N&ti!e th#t i) the !&m%#(y )#""$ be"&* # !et#i( !edit #ti(. it$ .#de !h#(.e$ )&m i(e$tme(t 9u#"ity t& 'u(+ $t#tu$ @u(+ b&(d$ #e #%t"y (#medG they #e the debt &) !&m%#(ie$ i( $&me $&t &) )i(#(!i#" di))i!u"ty Be!#u$e they #e $& i$+y they h#e t& &))e mu!h hi.he yie"d$ th#( #(y &the debt Thi$ bi(.$ u% #( im%&t#(t %&i(tG (&t #"" b&(d$ #e i(hee(t"y $#)e th#( $t&!+$ Cet#i( ty%e$ &) b&(d$ !#( be 'u$t i$+y i) (&t i$+ie th#( $t&!+$
Yie"d t& M#tuity O) !&u$e the$e m#tte$ #e #"*#y$ m&e !&m%"i!#ted i( e#" "i)e 5he( b&(d i(e$t& e)e$ t& yie"d m#tuity HYMT YTM i$ m&e #d#(!ed yie"d !#"!u"#ti&( th#t $h&* the i(tee$t %#yme(t y&u *i"" e!eie H#(d #$$ume$ th#t y&u *i"" ei(e$t the i(tee$t %#yme(t #t the $#me #te #$ the
2;
!ue(t yie"d &( the b&(d %"u$ #(y .#i( Hi) y&u %u!h#$ed #t di$!&u(t & "&$$ Hi) y&u %u!h#$ed #t # %emium <(&*i(. h&* t& !#"!u"#te YTM i$(t im%&t#(t i.ht (&* I( )#!t the !#"!u"#ti&( i$ #the $&%hi$ti!#ted #(d bey&(d the $!&%e &) thi$ tut&i#" The +ey %&i(t hee i$ th#t YTM i$ m&e #!!u#te #(d e(#b"e$ y&u t& !&m%#e b&(d *ith di))ee(t m#tuitie$ !&u%&($
The "i(+ bet*ee( 3i!e #(d yie"d The e"#ti&($hi% &) yie"d t& %i!e !#( be $umm#i:ed #$ )&""&*$G *he( %i!e .&e$ u% .&e$ d&*( #(d i!e e$# Te!h(i!#""y y&ud $#y the b&(d$ #(d it$ yie"d #e i(e$e"y e"#ted =ee$ # !&mm&("y #$+ed 9ue$ti&(G =&* !#( hi.h yie"d #(d hi.h %i!e$ b&th be .&&d *he( they !#(t h#%%e( #t the $#me timeP The #($*e de%e(d$ &( y&u %&i(t &) ie* I) y&u #e # b&(d buye y&u *#(t hi.h yie"d$ A buye *#(t$ t& %#y 800 )& the 1000 b&(d *hi!h .ie$ the b&(d # hi.h yie"d &) 12K O( the &the h#(d i) y&u #"e#dy &*( # b&(d y&ue "&!+ed i( y&u i(tee$t #te $& y&u h&%e the %i!e &) the b&(d .&e$ u% Thi$ !#( !#$h &ut by $e""i(. y&u b&(d i( the )utue
3i!e i( the M#+et S& )# *ee di$!u$$ed the )#!t&$ &) )#!e #"ue !&u%&( m#tuity i$$ue$ #(d yie"d A"" i) the$e !h##!tei$ti!$ &) # b&(d %"#y # &"e i( it$ %i!e =&*ee the )#!t& th#t i()"ue(!e$ # b&(d m&e th#( #(y &the i$ the "ee" &) %e#i"i(. i(tee$t #te$ i( the e!&(&my 5he( i(tee$t #te$ i$e the %i!e$ &) b&(d$ i( the m#+et )#"" theeby #i$i(. the yie"d &) &"de b&(d$ #(d bi(.i(. them i(t& "i(e *ith (e*e b&(d$ bei(. i$$ued *ith hi.he !&u%&($ 5he( i(tee$t #te$ )#"" the %i!e$ &) b&(d$ i( the m#+et i$e theeby "&*ei(. the yie"d &) the &"de b&(d$ #(d bi(.i(. them i(t& "i(e *ith (e*e b&(d$ bei(. i$$ued *ith "&*e !&u%&($
Di))ee(t Ty%e$ &) B&(d$
&e(me(t B&(d$ I( .e(e#" )i7ed-i(!&me $e!uitie$ #e !"#$$i)ied #!!&di(. t& the "e(.th &) time be)&e m#tuity The$e #e the thee m#i( !#te.&ie$G Bi"" J debt $e!uitie$ m#tui(. i( "e$$ th#( &(e ye#
2>
N&te$ J debt $e!uitie$ m#tui(. i( &(e t& 10 ye#$ B&(d$ - debt $e!uitie$ m#tui(. i( m&e th#( 10 ye#$
Mu(i!i%#" B&(d$ Mu(i!i%#" b&(d$ +(&*( #$ mu(i$4 #e the (e7t %&.e$$i&( i( tem$ &) i$+ Citie$ d&(t .& b#(+u%t th#t &)te( but it !#( h#%%e( The m#'& #d#(t#.e t& mu(i$ i$ th#t the etu($ #e )ee )&m )ede#" t#7 Futhem&e "&!#" .&e(me(t$ *i"" $&metime$ m#+e thei debt (&(-t#7#b"e )& e$ide(t$ thu$ m#+i(. $&me mu(i!i%#" b&(d$ !&m%"ete"y t#7-)ee Be!#u$e &) the$e t#7 $#i(.$ the yie"d &( # mu(i # u$u#""y "&*e th#( th#t &) # t#7#b"e b&(d De%e(di(. &( y&u %e$&(#" $itu#ti&( # mu(i !#( be .e#t i(e$tme(t &( #( i(e$tme(t &( #( #)te-t#7 b#$i$
C&%&#te B&(d$ A !&m%#(y !#( i$$ued b&(d$ 'u$t #$ it !#( i$$ue $t&!+ L#.e !&%&#ti&($ h#e # "&t &) )"e7ibi"ity #$ t& h&* mu!h debt they !#( i$$ueG the "imit i$ *h#tee the m#+et *i"" be# e(e#""y # $h&t-tem !&%&#te b&(d i$ "e$$ th#( )ie ye#$R i(temedi#te i$ )ie t& 12 ye#$ #(d "&(. tem i$ &e 12 ye#$ C&%&#te b&(d$ #e !h##!tei:ed by hi.he yi8e"d be!#u$e thee i$ # hi.he i$+ &) # !&m%#(y de)#u"ti(. th#( # .&e(me(t The u%$ide i$ th#t they !#( #"$& be the m&$t e*#di(. )i7edi(!&me i(e$tme(t$ be!#u$e &) the i$+ the i(e$t& mu$t t#+e &( The !&m%#(y$ !edit 9u#"ity i$ ey im%&t#(tG the hi.he the 9u#"ity the "&*e the i(tee$t #te the i(e$t& e!eie$ Othe #i#ti&($ &( !&%&#te b&(d$ i(!"ude !&(etib"e b&(d$ *hi!h the h&"de !#( !&(et i(t& $t&!+ #(d !#""#b"e b&(d$ *hi!h #""&* the !&m%#(y t& edeem #( i$$ue %i& t& m#tuity
i$+$ A$ *ith #(y i(e$tme(t thee #e i$+$ i(hee(t i( buyi(. ee( the m&$t hi.h"y e"#ted b&(d$ F& e7#m%"e y&u b&(d i(e$tme(t m#y be !#""ed & edeemed by the i$$ue be)&e the m#tuity d#te
E!&(&mi! d&*(tu($ #(d %&& m#(#.eme(t &( the %#t &) the b&(d i$$ue !#( #"$&
(e.#tie"y #))e!t y&u b&(d i(e$tme(t The$e i$+$ !#( be di))i!u"t t& #(ti!i%#te but "e#(i(. h&* t& bette e!&.(i:e the *#(i(. $i.($ #(d +(&*i(. h&* t& e$%&(d *i"" he"% y&u $u!!eed #$ # b&(d i(e$t&
2
ALL ABO,T OLD INVESTMENT &"d i$ the &"de$t %e!i&u$ met#" +(&*( t& m#( Thee)&e it i$ # time"y $ub'e!t )& $ee#" e#$&($ It i$ the &%i(i&( &) the m&e &b'e!tie m#+et e7%et$ th#t the t#diti&(#" i(e$tme(t ehi!"e$ &) $t&!+$ #(d b&(d$ #e i( the #e#$ &) thei #""-time hi.h$ #(d m#y due )& # $eee !&e!ti&( 5hy .&"d i$ .&&d #$ &"d4 i$ #( i(ti.ui(. 9ue$ti&( =&*ee *e thi(+ th#t the m&e %#.m#ti! #(!ie(t E.y%ti#($ *ee %eh#%$ m&e #!!u#te i( &b$ei(. th#t .&"d$ #"ue *#$ # )u(!ti&( &) it$ %"e#$i(. %hy$i!#" !h##!tei$ti!$ it$ $!#!ity
5OLD ODL IND,STY •
&"d i$ %im#i"y m&(et#y #$$et #(d %#t"y # !&mm&dity
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The &"d m#+et i$ hi.h"y "i9uid #(d .&"d he"d by !e(t#" b#(+$ &the m#'& i($tituti&($ #(d et#i" @e*e"e +ee% !&mi(. b#!+ t& the m#+et
•
E!&(&mi! )&!e$ th#t detemi(e the %i!e &) .&"d #e di))ee(t )&m #(d i( m#(y !#$e$ &%%&$ed t& the )&!e$ th#t i()"ue(!e m&$t )i(#(!i#" #$$et$
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I(di#( i$ the *&"d$ "#.e$t .&"d !&($ume *ith #( #((u#" dem#(d &) 800 t&($
5&"d &"d M#+et$ 3hy$i!#" - L&(d&( ui!h I$t#(bu" Dub#i Si(.#%&e =&(. <&(. Mumb#i Futue$ J NYME i( Ne* Y&+ TOCOM i( T&+y& I(di#( &"d M#+et •
&"d i$ #"ued i( I(di# #$ # $#i(.$ #(d i(e$tme(t ehi!"e #(d i$ the $e!&(d %e)eed i(e$tme(t #)te b#(+ de%&$it$
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I(di# i$ the *&"d$ "#.e$t !&($ume &) .&"d i( 'e*e"e #$ i(e$tme(t
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I( @u"y 1? the BI #uth&i:ed the !&mme!i#" b#(+$ t& im%&t .&"d )& $#"e & "&#( t& 'e*e"e$ #(d e7%&te At %e$e(t 1; b#(+$ #e #!tie i( the im%&t &) .&"d
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Thi$ edu!ed the di$%#ity bet*ee( i(te(#ti&(#" #(d d&me$ti! %i!e$ &) .&"d )&m ? %e!e(t dui(. 186 t& 11 t& 8 %e!e(t i( 2001
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The .&"d h&#di(. te(de(!y i$ *e"" i(.#i(ed i( I(di#( $&!iety
26
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D&me$ti! !&($um%ti&( i$ di!t#ted by m&($&&( h#e$t #(d m#i#.e $e#$&( I(di#( 'e*e""ey &)) t#+e$ i$ $e($itie t& %i!e i(!e#$e #(d ee( m&e $& t& &"#ti"ity
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I( the !itie$ .&"d i$ )#!i(. !&m%etiti&( )&m the $t&!+ m#+et #(d # *ide #(.e &) !&($ume .&&d$
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F#!i"itie$ )& e)i(i(. #$$#yi(. m#+i(. them i(t& $t#(d#d b#$ i( I(di# #$ !&m%#ed t& the e$t &) the *&"d #e i($i.(i)i!#(t b&th 9u#"it#tie"y
=&* .&"d $t#!+$ u% #$ i(e$tme(t &%ti&( &"d #(d $i"e h#e bee( %&%u"# i( I(di# be!#u$e hi$t&i!#""y the$e #!ted #$ # .&&d hed.e #.#i($t i()"#ti&( I( th#t $e($e the$e met#"$ h#e bee( m&e #tt#!tie th#( b#(+ de%&$it$ & .i"ted.ed $e!uitie$ De$%ite e!e(t hi!!u%$ .&"d i$ #( im%&t#(t #(d %&%u"# i(e$tme(t )& m#(y e#$&($G •
I( m#(y !&u(tie$ .&"d em#i($ #( i(te.#" %#t &) $&!i#" #(d e"i.i&u$ !u$t&m$ be$ide$ bei(. the b#$i! )&m &) $#i(. Sh#+e$%e#e !#""ed it the $#i(t-$edu!i(. .&"d
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Su%e$titi&( #b&ut the he#"i(. %&*e$ &) .&"d %e$i$t$ Ayuedi! medi!i(e i( I(di# e!&mme(d$ .&"d %&*de #(d %i""$ )& m#(y #i"me(t$
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&"d i$ i(de$tu!tib"e It d&e$ (&t t#(i$h #(d i$ #"$& (&t !&&ded by #!id-e7!e%t by # mi7tue &) (iti! #(d hyd&!h"&i! #!id$
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&"d i$ $& m#""e#b"e th#t &(e &u(!e &) the met#" !#( be be#te( i(t& # $heet !&ei(. (e#"y # hu(ded $9u#e )eet
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&"d i$ $& du!ti"e th#t &(e &u(!e &) it !#( be d#*( i(t& )i)ty mi"e$ &) thi( .&"d *ie
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&"d i$ #( e7!e""e(t !&(du!t& &) e"e!ti!ityR # mi!&$!&%i! !i!uit &) "i9uid . &"d %i(ted &( # !e#mi! $ti% $#e$ mi"e$ &) *ii(. i( # !&m%ute
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&"d i$ $& hi.h"y #"ued th#t # $i(."e $mu.."e !#( !#y .&"d *&th $0 "#+h u(de(e#th hi$ $hit
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Fi(#""y .&"d i$ $!#m-)ee S& )# thee h#e bee( (& Mu(d#-ty%e & Meht#-ty%e $!#m$ i( .&"d
2?
Thu$ the "ue &) thi$ ye""&* met#" !&(ti(ue$ O(e the &the h#(d it i$ i(tee$ti(. t& (&te th#t #%#t )&m it$ #e$theti! #%%e#" .&"d h#$ (& i(ti($i! #"ue Y&u !#((&t e#t it di(+ it & ee( $me"" it Thi$ #$%e!t &) .&"d !&m%e""ed =e(y F&d the )&u(de &) F&d M&t&$ t& !&(!"ude th#t .&"d i$ the m&$t u$e"e$$ thi(. i( the *&"d
5hy 3e&%"e Buy &"d HA I(du$ti#" #%%"i!#ti&($ t#+e #d#(t#.e &) .&"d$ hi.h e$i$t#(!e t& !&&$i&( it$ m#""e#bi"ity hi.h e"e!ti!#" !&(du!tiity #(d it$ #bi"ity t& #dhee )im"y t& &the met#"$ Thee i$ # *ide #(.e &) i(du$tie$ )&m e"e!t&(i! !&m%&(e(t$ t& %&!e"#i( *hi!h u$e .&"d De(ti$ty i$ #( im%&t#(t u$e &) .&"d The 'e*e""ey i(du$ty i$ #(&the HB A!9ui$iti&( &) .&"d be!#u$e &) it$ "&(.-%&e( #bi"ity t& et#i( #"ue #(d t& #%%e!i#te i( #"ue HC 3u!h#$e$ by the !e(t#" b#(+$ #(d i(te(#ti&(#" m&(et#y &.#(i:#ti&($ "i+e the I(te(#ti&(#" M&(et#y Fu(d HIMF
I(e$tme(t O%ti&($ Thee h#$ bee( # $hi)t i( dem#(d )&m 'e*e""ey H&(#me(t#ti&( t& !&i($ #(d b#$ Hi(e$tme(t$
C&i($ !&$t "e$$ *he( !&m%#ed t& 'e*e""ey H*hi!h h#$ #dditi&(#" m#+i(.
!h#.e$ A$$#yed !eti)ied !&i($ #(d b#$ #e ##i"#b"e th&u.h #uth&i:ed b#(+$ Dem#(d )& 'e*e""ey em#i($ $t&(. i( t#diti&(#" !i!"e$ th&u.h .&"d-%"#ted 'e*e""ey i$ #"$& be!&mi(. %&%u"# &"d )utue$G i.ht (&* ?K &) I(di#($ dem#(d i$ )& 'e*e""ey the e$t i$ )& !&i($ #(d b#$ I(e$t&$ !#( #"$& d#bb"e i( .&"d )utue$R *ith dem#t de"iey &( $t&!+ e7!h#(.e$ Thi$ i$ "&* !&$t #(d %hy$i!#" de"iey i$ #t 0 %uity &"d )utue$ t#di(. !"&!+ed # e!e(t tu(&e &) $> ;00 !&e &"d ETF$G M&e $&%hi$ti!#ted i(e$tme(t %&du!t$ *i"" !&me O(e %&$$ibi"ity i$ e7!h#(.e t#ded )u(d$ HETF$ *hee .&"d i$ the u(de"yi(. #$$et I(e$t&$ !#( t#de ETF u(it$ *ith e#" time 9u&te$ &"d ETF i$ "&(. &edue $#y$ N#ee(
28
5&"d*ide m&e th#( 600 e7!h#(.e "i$ted $tu!tued %&du!t$ b#$ed &( .&"d #e ##i"#b"e Steet t#!+ #( ETF &*(ed by the 5&"d &"d C&u(!i" i$ "i$ted &( the NYSE C&mm&dity b&+e$ "i+e <&t#+ #e &))ei(. !#%it#" %&te!ted b&(d$R the$e #e &%e( )& # $%e!i)i! %ei&d Hu$u#""y &(e ye# *ith .&"d #$ the u(de"yi(. #$$et O( #%%e!i#ti&( %&)it i$ $h#ed #(d i) the %i!e )#""$ the !#%it#" i$ $#)e
&"d B#(+i(. I(di#( 'e*e"e$ &))e .&"d #!!umu"#ti&( %"#( M&(ey !#( be de%&$ited &( # e.u"# b#$i$ #(d 'e*e"e !&(et$ i(t& .&"d #t %e#i"i(. %i!e$ I(tee$t i$ e#(ed dui(. the )i7ed %ei&d &) te(ue &) i(e$tme(t O( edem%ti&( the !&%u$ i$ !&(eted i(t& .&"d !&i($ Thi$ i$ "i+e # )&!ed $tu!tue $#i(. $!heme
2
ALL ABO,T M,T,AL F,ND INVESTMENT A Mutu#" Fu(d i$ #( e(tity th#t %&&"$ the m&(ey &) m#(y i(e$t&$it$ ,(it-=&"de$ -- t& i(e$t i( di))ee(t $e!uitie$ I(e$tme(t$ m#y be i( $h#e$ debt $e!uitie$ m&(ey m#+et $e!uitie$ & # !&mbi(#ti&( &) the$e Th&$e $e!uitie$ #e %&)e$$i&(#""y m#(#.ed &( beh#") &) the ,(it-=&"de #(d e#!h i(e$t& h&"d # %&-#t# $h#e &) the %&t)&"i& ie e(tit"ed t& #(y %&)it$ *he( the $e!uitie$ #e $&"d but $ub'e!t t& #(y "&$$e$ i( #"ue #$ *e"" Mutu#" Fu(d$ #(d $e"" $t&!+$ b&(d$ & &the $e!uitie$ A Fu(d #i$e$ m&(ey t& m#+e it$ %u!h#$e$ +(&*( #$ it$ u(de"yi(. i(e$tme(t$ by $e""i(. $h#e$ i( the )u(d E#(i(.$ the )u(d e#"i:e$ &( it$ i(e$tme(t %&t)&"i& #)te the t#di(. !&$t$ #(d e7%e($e$ &) m#(#.i(. #(d #dmi(i$tei(. the )u(d #e $ubt#!ted #e %#id &ut t& the )u(d$ $h#eh&"de$
Mutu#" Fu(d Set ,% A Mutu#" Fu(d i$ $et u% i( the )&m &) # tu$t *hi!h h#$ S%&($& Tu$tee$ A$$et M#(#.eme(t C&m%#(y HAMC #(d !u$t&di#( The tu$t i$ e$t#b"i$hed by # $%&($& & m&e th#( &(e $%&($& *h& i$ "i+e %&m&te &) # !&m%#(y The tu$tee$ &) the mutu#" )u(d h&"d it$ %&%ety )& the be(e)it &) the u(it h&"de$ A$$et M#(#.eme(t C&m%#(y HAMC #%%&ed by SEBI m#(#.e$ the )u(d$ by m#+i(. i(e$tme(t$ i( #i&u$ ty%e$ &) $e!uitie$ Cu$t&di#( *h& i$ e.i$teed *ith SEBI h&"d$ the $e!uitie$ &) #i&u$ $!heme$ &) the )u(d i( it$ !u$t&dy The tu$tee$ #e i(e$ted *ith the .e(e#" %&*e &) $u%ei(te(de(!e #(d die!ti&( &e AMC They m&(it& the %e)&m#(!e #(d !&m%"i#(!e &) SEBI e.u"#ti&($ by the mutu#" )u(d SEBI e.u"#ti&($ e9uie th#t #t "e#$t t*& thid$ &) the die!t&$ &) Tu$tee C&m%#(y & b&#d &) tu$tee mu$t be i(de%e(de(t Ie they $h&u"d (&t be #$$&!i#ted *ith the $%&($&$ A"$& 0K &) the die!t&$ &) ANC mu$t be i(de%e(de(t A"" mutu#" )u(d$ #e e9uied t& be e.i$teed *ith SEBI be)&e they "#u(!h #(y $!heme =&*ee ,(it Tu$t &) I(di# H,TI i$ (&t e.i$teed *ith SEBI H#$ &( @#(u#y 1 2002
Ty%e$ &) Fu(d$ •
St&!+ )u(d$ #"$& !#""ed e9uity )u(d$- i(e$t %im#i"y i( $t&!+$
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B&(d )u(d$ i(e$t %im#i"y i( !&%&#te & .&e(me(t b&(d$
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B#"#(!ed )u(d$ i(e$t i( b&th $t&!+$ #(d b&(d$
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M&(ey m#+et )u(d$ m#+e $h&t-tem i(e$tme(t #(d ty t& +ee% thei $h#e #"ue )i7ed #t 1 # $h#e
Eey )u(d i( e#!h !#te.&y h#$ # %i!e +(&*( #$ it$ (et #$$et #"ue HNAV #(d e#!h NAV di))e$ b#$ed &( the #"ue &) the )u(d$ h&"di(.$ #(d the (umbe &) $h#e$ i(e$t&$ &*( The %i!e !h#(.e$ &(!e # d#y #t # > %m EST *he( the m#+et$ !"&$e )& the d#y A"" t#($#!ti&($ )& the d#y J buy$ #(d $e""$ J#e e7e!uted #t th#t %i!e
S!heme$ A!!&di(. t& M#tuity 3ei&d A mutu#" )u(d $!heme !#( be !"#$$i)ied i(t& &%e(-e(ded $!heme & !"&$e-e(ded $!heme de%e(di(. &( it$ m#tuity %ei&d
O%e( JE(ded Fu(d/S!heme A( &%e(-e(ded )u(d & $!heme i$ &(e th#t i$ ##i"#b"e )& $ub$!i%ti&( #(d e%u!h#$e &(e !&(ti(u&u$ b#$i$ The$e $!heme$ d& (&t h#e # )i7ed m#tuity %ei&d I(e$t&$ !#( !&(e(ie(t"y buy #(d $e"" u(it$ #t Net A$$et V#"ue HNAV e"#ted %i!e$ *hi!h #e de!"#ed &( # d#i"y b#$i$ The +ey )e#tue &) O%e(-E(d S!heme$ i$ "i9uidity
C"&$e-E(ded Fu(d / S!heme A C"&$e-E(ded Fu(d & S!heme h#$ # $ti%u"#ted m#tuity %ei&d e. -? ye#$ The )u(d i$ &%e( )& $ub$!i%ti&( &("y dui(. # $%e!i)ied %ei&d #t the time &) "#u(!h &) the $!heme I(e$t&$ !#( i(e$t i( the $!heme #t the time &) the i(iti#" %ub"i! i$$ue #(d thee#)te they !#( buy & $e"" the u(it$ &) the $!heme &( the $t&!+ e7!h#(.e$ *hee the u(it$ #e "i$ted I( &de t& %&ide #( e7it &ute t& the i(e$t&$ $&me !"&$e-e(ded )u(d$ .ie #( &%ti&( &) $e""i(. b#!+ the u(it$ t& the mutu#" )u(d th&u.h %ei&di! e%u!h#$e #t NAV e"#ted %i!e$ SEBI e.u"#ti&($ $ti%u"#te th#t #t "e#$t &(e &) the t*& e7it &ute$ i$ %&ided t& the i(e$t& ie eithe e%u!h#$e )#!i"ity & th&u.h "i$ti(. &( $t&!+ e7!h#(.e$ The$e mutu#" )u(d$ $!heme$ di$!"&$e NAV .e(e#""y &( *ee+"y b#$i$
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S!heme$ #!!&di(. t& I(e$tme(t Ob'e!tie A S!heme !#( #"$& be !"#$$i)ied # .&*th $!heme i(!&me $!heme & b#"#(!ed $!heme !&($idei(. it$ i(e$tme(t &b'e!tie Su!h $!heme$ m#y be &%e(-e(ded & !"&$e-e(ded $!heme$ #$ de$!ibed e#"ie Su!h $!heme$ m#y be !"#$$i)ied m#i("y #$ )&""&*$
&*th / E9uity Oie(ted S!heme The #im &) .&*th )u(d$ i$ t& %&ide !#%it#" #%%e!i#ti&( &e the medium t& "&(.-tem Su!h $!heme$ (&m#""y i(e$t # m#'& %#t &) thei !&%u$ i( e9uitie$ Su!h )u(d$ h#e !&m%##tie"y hi.h i$+$ The$e $!heme$ %&ide di))ee(t &%ti&($ t& the i(e$t&$ "i+e diide(d &%ti&( !#%it#" #%%e!i#ti&( et! A(d the i(e$t&$ m#y !h&&$e #( &%ti&( de%e(di(. &( thei %e)ee(!e The i(e$t&$ mu$t i(di!#te the &%ti&( i( the #%%"i!#ti&( )&m The mutu#" )u(d$ #"$& #""&* the i(e$t&$ t& !h#(.e the &%ti&($ #t # "#te d#te &*th $!heme$ #e .&&d )& i(e$t&$ h#i(. # "&(.-tem &ut"&&+ $ee+i(. #%%e!i#ti&( &e # %ei&d &) time
I(!&me /Debt Oie(ted S!heme The #im &) i(!&me )u(d$ i$ t& %&ide e.u"# #(d $te#dy i(!&me t& i(e$t&$ Su!h $!heme$ .e(e#""y i(e$t i( )i7ed i(!&me $e!uitie$ $u!h #$ b&(d$ !&%&#te debe(tue$ &e(me(t $e!uitie$ #(d m&(ey m#+et i($tume(t$ Su!h )u(d$ #e "e$$ i$+y !&m%#ed t& e9uity $!heme$ The$e )u(d$ #e (&t #))e!ted be!#u$e &) )"u!tu#ti&($ i( e9uity m#+et$ =&*ee &%%&tu(itie$ &) !#%it#" #%%e!i#ti&( #e #"$& "imited i( $u!h )u(d$ The NAV$ &) $u!h )u(d$ #e #))e!ted be!#u$e &) !h#(.e i( i(tee$t #te$ i( the !&u(ty I) the i(tee$t #te$ )#"" NAV$ &) $u!h )u(d$ #e "i+e"y t& i(!e#$e i( the $h&t u( #(d i!e e$# =&*ee "&(. tem i(e$t&$ m#y (&t b&the #b&ut the$e )"u!tu#ti&($
B#"#(!ed Fu(d The #im &) b#"#(!ed )u(d$ i$ t& %&ide b&th .&*th #(d e.u"# i(!&me #$ $u!h $!heme$ i(e$t b&th i( e9uitie$ #(d )i7ed i(!&me $e!uitie$ i( the %&%&ti&( i(di!#ted i( thei &))e d&!ume(t$ The$e #e #%%&%i#te )& i(e$t&$ "&&+i(. )& m&de#te .&*th They .e(e#""y i(e$t >0K60K i( e9uity #(d debt i($tume(t$ The$e )u(d$ #e #"$& #))e!ted be!#u$e &) )"u!tu#ti&($ i(
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$h#e %i!e$ i( the $t&!+ m#+et$ =&*ee NAV$ &) $u!h )u(d$ #e "i+e"y t& be "e$$ &"#ti"e !&m%#ed t& %ue e9uity )u(d$
Se!t& $%e!i)i! Fu(d$/$!heme$ The$e #e the )u(d$/$!heme$ *hi!h i(e$t i( the $e!uitie$ &) &("y th&$e $e!t&$ & i(du$tie$ #$ $%e!i)ied i( the &))e d&!ume(t$ E. 3h#m#!euti!#"$ S&)t*#e F#$t M&i(. C&($ume &&d$ HFMC 3et&"eum $t&!+$ et! the etu($ i( the$e )u(d$ #e de%e(de(t &( the %e)&m#(!e &) the e$%e!tie $e!t&$/i(du$tie$ 5hi"e the$e )u(d$ m#y .ie hi.he etu($ they #e m&e i$+y !&m%#ed t& die$i)ied )u(d$ I(e$t&$ (eed t& +ee% # *#t!h &( the %e)&m#(!e &) th&$e $e!t&$/i(du$tie$ #(d mu$t e7it #t #( #%%&%i#te time They m#y #"$& $ee+ # di!e &) #( e7%et
T#7 S#i(. S!heme$ The$e $!heme$ &))e t#7 eb#te$ t& the i(e$t&$ u(de $%e!i)i! %&i$i&($ &) the I(!&me T#7 A!t 161 #$ the &e(me(t O))e$ T#7 I(!e(tie$ )& i(e$tme(t i( $%e!i)ied #e(ue$ E. E9uity Li(+ed S#i(.$ S!heme$ HELSS 3e($i&( $!heme$ "#u(!hed by the mutu#" )u(d$ #"$& &))e t#7 be(e)it The$e $!heme$ #e .&*th &ie(ted #(d i(e$t %e-d&mi(#(t"y i( e9uitie$ Thei .&*th &%%&tu(itie$ #(d i$+$ #$$&!i#ted #e "i+e #(y e9uity-&ie(ted $!heme
The A%%e#" &) Mutu#" Fu(d$ Mutu#" Fu(d$ $im%"i)y *h#t y&u m#y )i(d m&$t !&m%"i!#ted #b&ut i(e$ti(.)i.ui(. &ut *h#t t& buy #(d *he( t& $e"" t& meet y&u %#ti!u"# .&#"$ & &b'e!tie$ F& e7#m%"e i) y&u #e $ee+i(. .&*th by i(e$ti(. i( b"ue !hi% $t&!+$ thee #e # *ide #iety &) )u(d$ t& !h&$e )&m th#t %u$ui(. %e!i$e"y thi$ $t#te.y T& !h&$e the )u(d th#t *i"" he"% y&u meet # $%e!i)i! .&#" y&u !#( !&m%#e it$ "&(.-tem %e)&m#(!e J &e & 10 ye#$ J t& &the )u(d$ *ith $imi"# &b'e!tie$ "e#( #b&ut *h&m the m#(#.e i$ #(d h&* the )u(d i$ u( #(d !he!+ &ut it$ )ee $tu!tue Y&u !#( u$e the )u(d$ %&$%e!tu$ i()&m#ti&( &( the )u(d !&m%#(y$ 5eb Site$ #(d %&)e$$i0&(#" #di!e Mutu#" )u(d$ !#( he"% y&u die$i)y y&u %&t)&"i& & $%e#d &ut the m&(ey y&u h#e t& i(e$t t& meet di))ee(t .&#"$ O(e *#y t& die$i)y i$ t& !h&$e )u(d$ *ith di))ee(t &b'e!tie$ #"i.(ed *ith y&u &*( & e%e$e(ti(. di))ee(t $e.me(t$ &) the m#+et F& e7#m%"e y&u mi.ht buy # b"ue-!hi% )u(d # $m#"" !&m%#(y .&*th )u(d #( i(te(#ti&(#" $t&!+ )u(d #(d # .&e(me(t )u(d ;;
Die$i)i!#ti&( M&$t e7%et #.ee$ th#t it$ m&e e))e!tie t& i(e$t i( # #iety &) $t&!+$ #(d b&(d$ th#( t& de%e(d &( # $t&(. %e)&m#(!e &) 'u$t &(e & t*& $e!uitie$ But die$i)yi(. !#( be # !h#""e(.e be!#u$e buyi(. # %&t)&"i& &) i(diidu#" $t&!+$ #(d b&(d$ !#( be e7%e($ie A(d +(&*i(. *h#t t& buy J #(d *he( J t#+e( time #(d !&(!e(t#ti&( Mutu#" )u(d$ !#( &))e $&"uti&( 5he( y&u %ut m&(ey i( t& # )u(d it$ %&&"ed *ith m&(ey )&m &the i(e$t&$ t& !e#te mu!h .e#te buyi(. %&*e th#( y&u bui"d # die$i)ied %&t)&"i& Si(!e # )u(d m#y &*( hu(ded$ &) di))ee(t $e!uitie$ it$ $u!!e$$ i$(t de%e(de(t &( h&* &(e & t*& h&"di(. d&
I(e$tme(t &b'e!tie$ T& #!hiee it$ i(e$tme(t &b'e!tie J *hethe it i$ "&(. J tem .&*th & !#%it#" %e$e#ti&( & #(ythi(. i( bet*ee( J the )u(d$ m#(#.e i(e$t$ i( $e!uitie$ he & $he be"iee$ *i"" %&ide the e$u"t the )u(d $ee+$ T& ide(ti)y th&$e $e!uitie$ # )u(d$ e$e#!h $t#)) &)te( u$e$ *h#t$ +(&*( #$ # b&tt&m J u% $ty"e *hi!h i(&"e$ # det#i"ed #(#"y$i$ &) the i(diidu#" !&m%#(ie$ i$$ui(. the $e!uitie$ 5he( the &b'e!t i$ $m#""J !&m%#(y .&*th & the )&!u$ i$ &( eme.i(. m#+et$ the %&!e$$ !#( be m&e di))i!u"t be!#u$e thee$ "imited i()&m#ti&( ##i"#b"e Y&u m#y !h&&$e mutu#" )u(d$ *ith $%e!i)i! i(e$tme(t &b'e!tie$ t& &u(d &ut y&u %&t)&"i& &) i(diidu#" h&"di(.$ O y&u m#y !h&&$e # (umbe &) mutu#" )u(d$ *ith di))ee(t &b'e!tie$ !e#ti(. # die$i)ied %&t)&"i& i( th#t *#y
3&)e$$i&(#" m#(#.eme(t A(&the e#$&( i(e$t&$ #e #tt#!ted t& mutu#" )u(d$ i$ th#t e#!h )u(d h#$ # %&)e$$i&(#" m#(#.e *h& $et$ it$ i(e$tme(t buyi(. $ty"e #(d die!t$ the +ey buy #(d $e"" de!i$i&($ A buyi(. $ty"e de)i(e$ the %#ti!u"# i(e$tme(t$ & ty%e$ &) i(e$tme(t$ # )u(d m#+e$ )&m the %&&" th#t m#y be #%%&%i#te )& meeti(. it$ &b'e!tie F& e7#m%"e i( $ee+i(. "&(.-tem !#%it#" #%%e!i#ti&( $&me e9uity )u(d m#(#.e$ $te$$ #"ue i(e$tme(t$ *hi!h me#( they buy $t&!+$ *h&$e %i!e$ #e "&*e th#( mi.ht be e7%e!ted Othe$ $te$$ .&*th i(e$tme(t$R &)te( y&u(.e dy(#mi! !&m%#(ie$ the m#(#.e be"iee$ *i"" be!&me m#'& %"#ye$ i( thei i(du$ty & i( the e!&(&my #$ # *h&"e ;>
S&me e7%et$ be"iee th#t # )u(d$ m#(#.e h#$ # m#'& &"e i( detemi(i(. the e$u"t$ # )u(d #!hiee$ They #di$e th#t y&u !&()im th#t # $u!!e$$)u" m#(#.e i$ $ti"" *ith the )u(d be)&e y&u i(e$t #(d th#t y&u !&($ide $e""i(. y&u $h#e$ i) th#t m#(#.e "e#e$
ei(e$tme(t Bei(. #b"e t& ei(e$t y&u di$tibuti&($ t& buy #dditi&(#" $h#e$ i$ #(&the #d#(t#.e &) i(e$ti(. i( mutu#" )u(d$ Y&u !#( !h&&$e th#t &%ti&( *he( y&u &%e( # (e* #!!&u(t & #t #(y time *hi"e y&u &*( $h#e$ A(d &) !&u$e y&u #"$& h#e the &%ti&( t& e!eie y&u di$tibuti&($ i) y&u (eed the i(!&me the )u(d *&u"d %&ide By i(e$ti(. e.u"#"y y&u bui"d the i(e$tme(t b#$e &( *hi!h )utue e#(i(.$ *i"" be #b"e t& #!!umu"#te # %&!e$$ +(&*( #$ !&m%&u(di(. The m&e y&u h#e i(e$ted the .e#te y&ue %&te(ti#" )& )utue .&*th A(d be!#u$e the )u(d h#(d"e$ the %&!e$$ &""i(. &e di$tibuti&($ i(t& (e* $h#e$ #$ they #e %#id y&u d&(t h#e t& bud.et )& i(e$ti(. & emembe t& *ite the !he!+
i$+ Thee i$ #"*#y$ the i$+ th#t # mutu#" )u(d *&(t meet it$ i(e$tme(t &b'e!tie & %&ide the etu( y&u #e $ee+i(. A(d $&me )u(d$ #e by de)i(iti&( i$+ie th#( &the$ F& e7#m%"e # )u(d th#t i(e$t$ i( $m#"" (e* !&m%#(ie$-*hethe )& .&*th & #"ue Je7%&$e$ y&u t& the i$+ th#t the !&m%#(ie$ *i"" (&t %e)&m #$ *e"" #$ the )u(d m#(#.e e7%e!t$ A(d i( m#+et d&*(tu($ )#""i(. %i!e$ )& # )u(d$ u(de"yi(. i(e$tme(t m#y %&du!e # "&$$ #the th#( # .#i( )& the )u(d
Sh&t-Tem #i($ E#!h time # mutu#" )u(d $e""$ #( i(e$tme(t )& m&e th#( the )u(d %#id t& buy it the )u(d e#"i:e$ # !#%it#" .#i( A(d th&$e .#i($ #e %#$$ed #"&(. t& the )u(d$ i(e$t&$ i( %&%&ti&( t& the (umbe &) $h#e$ i( the )u(d th#t i(e$t& &*($ M&$t #!tie"y m#(#.ed )u(d$ d&(t *#it m&e th#( # ye# be)&e $e""i(. i(e$tme(t$ Th#t me#($ th#t #(y %&)it &( the $#"e i$ # $h&t-tem !#%it#" .#i( *hi!h i$ t#7ed #t y&u e.u"# t#7 #te A(d $i(!e # )u(d ty%i!#""y d&e$(t *ithh&"d t#7ed &( y&u beh#") #$ #( em%"&ye d&e$ y&u mu$t !&me u% *ith the #m&u(t y&u &*e )&m &the $&u!e$ i) y&u d&(t *#(t t& $e"" $h#e$-#t # %&te(ti#" #dditi&(#" .#i( J t& #i$e the m&(ey y&u &*e ;
ALL ABO,T EAL ESTAES INVESTMENT Be)&e the $t&!+ m#+et #(d mutu#" )u(d$ be!#me %&%u"# %"#!e$ )& %e&%"e t& %ut thei i(e$tme(t d&""#$ i(e$ti(. i( e#" e$t#te *#$ e7teme"y %&%u"# 5e $ti"" m#i(t#i( th#t i(e$ti(. i( e#" e$t#te i$ (&t 'u$t )& "#(d b#&($ & the i!h #(d )#m&u$ A$ # m#tte &) )#!t the h&me *e buy #(d "ie i( i$ &)te( &u bi..e$t i(e$tme(t
F"yi(. hi.h &( the *i(.$ &) b&&mi(. e#" e$t#te %&%ety i( I(di# h#$ be!&me # de#m )& eey %&te(ti#" i(e$t& "&&+i(. )&*#d t& di. %&)it$ A"" #e eyei(. I(di#( %&%ety m#+et )& # *ide #iety &) e#$&($ It$ ee .&*i(. e!&(&my *hi!h i$ &( # !&(ti(u&u$ i$e *ith 81 %e!e(t i(!e#$e *it(e$$ed i( the "#$t )i(#(!i#" ye# The b&&m i( e!&(&my i(!e#$e$ %u!h#$i(. %&*e &) it$ %e&%"e #(d !e#te$ dem#(d )& e#" e$t#te $e!t&
O(!e y&u h#e m#de the de!i$i&( t& be!&me # h&me&*(e it u$u#""y me#($ y&u *i"" h#e t& b&&* the "#.e$t #m&u(t y&u h#e ee b&&*ed t& %u!h#$e $&methi(. Thi$ e#"i:#ti&( m#y m#+e y&u *#(t t& buy y&u he#d i( the $#(d #(d $i.( &( the d&tted "i(e but y&u $h&u"d(t F& m&$t %e&%"e thi$ i$ the "#.e$t %u!h#$e they *i"" ee m#+e dui(. thei "i)etime #(d thi$ m#+e$ it #"" the m&e im%&t#(t t& .#the #$ mu!h +(&*"ed.e #$ %&$$ib"e #b&ut *h#t theye .etti(. i(t&
5e .ie y&u the i()&m#ti&( y&u (eed i(!"udi(. m#+i(. the de!i$i&( &( *hethe *he( #(d *h#t y&u $h&u"d %u!h#$eR )i(di(. the ty%e$ &) m&t.#.e$ #(d )i(#(!i(. ##i"#b"eR h#(d"i(. the !"&$i(.R #(d +(&*i(. *h#t y&u"" (eed *he( it$ time t& $e"" y&u h&me 5e #"$& e7%"#i( the i(!&me t#7 !&($e9ue(!e$ #(d #$$et %&te!ti&( #d#(t#.e$ &) h&me &*(e$hi%
Y&u !#( #"$& u$e e#" e$t#te *hethe "#(d & bui"di(. $ti!t"y #$ i(e$tme(t ehi!"e$ #(d de%e(di(. &( y&u i(diidu#" $itu#ti&( y&u !#( d& it &( # .#(d & $m#""e $!#"e Let$ "&&+ #t the *&"d &) e#" e$t#te #(d the i(e$ti(. &%ti&($ ##i"#b"e
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=&me #$ #( I(e$tme(t G O*i(. # h&me i$ the m&$t !&mm&( )&m &) e#" e$t#te i(e$ti(. Let u$ $h&* y&u h&* y&u h&me i$ (&t 'u$t the %"#!e y&u "ie but it$ #"$& %eh#%$ y&u "#.e$t #(d $#)e$t i(e$tme(t #$ *e""
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I(e$tme(t e#" E$t#teG The i( #(d &ut$ &) i(e$ti(. i( e#" e$t#te #(d *hethe it$ the i.ht i(e$tme(t ehi!"e )& y&u 5hethe y&u #e thi(+i(. i( tem$ &) e(ti(. &ut y&u )i$t h&me *he( y&u m&e &( t& # bi..e &(e & i(e$ti(. i( # bui"di(. )u"" &) #%#tme(t$ *e *i"" e7%"#i( *h#t y&u (eed t& +(&*
e#" E$t#te 3&%ety ,$u#""y the )i$t thi(. y&u "&&+ #t *he( y&u %u!h#$e # h&me i$ the de$i.( #(d the "#y&ut But i) y&u "&&+ #t the h&u$e #$ #( i(e$tme(t it !&u"d %&e ey "u!#tie ye#$ d&*( the &#d F& the m#'&ity &) u$ buyi(. # h&me *i"" be the "#.e$t $i(."e i(e$tme(t *e m#+e i( &u "i)etime e#" e$t#te i(e$ti(. d&e$(t 'u$t me#( %u!h#$i(. # h&u$e- it !#( i(!"ude #!#ti&( h&me$ !&mme!i#" %&$%eitie$ "#(d Hb&th dee"&%ed #(d u(dee"&%ed !&(d&mi(ium$ #(d m#(y &the %&$$ibi"itie$
5he( buyi(. %&%ety )& the %u%&$e &) i(e$ti(. the m&$t im%&t#(t )#!t& t& !&($ide i$ the "&!#ti&( ,("i+e &the i(e$tme(t$ e#" e$t#te i$ d#m#ti!#""y #))e!ted by the !&(diti&( &) the immedi#te #e# $u&u(di(. the %&%ety #(d &the "&!#" )#!t&$ See#" )#!t&$ (eed t& be !&($ideed *he( #$$e$$i(. the #"ue &) e#" e$t#te Thi$ i(!"ude$ the #.e #(d !&(diti&( &) the h&me im%&eme(t$ th#t h#e bee( m#de e!e(t $#"e$ i( the (ei.hb&h&&d !h#(.e$ t& :&(i(. e.u"#ti&($ et! Y&u h#e t& "&&+ #t the %&te(ti#" i(!&me # h&u$e !#( %&du!e #(d h&* it !&m%#e$ t& &the$ h&u$e$ i( the #e#
Ob'e!tie$ #(d i$+$ e#" e$t#te i(e$ti(. #""&*$ the i(e$t& t& t#.et hi$ & he &b'e!tie$ F& e7#m%"e i) y&u &b'e!tie i$ !#%it#" #%%e!i#ti&( the( buyi(. # %&mi$i(. %ie!e &) %&%ety i( # (ei.hb&h&&d *ith .e#t %&te(ti#" *i"" he"% y&u #!hiee thi$ O( the &the h#(d i) *h#t y&u $ee+ i$ i(!&me the( buyi(. # e(t#" %&%ety !#( he"% %&ide e.u"# i(!&me
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Thee #e $i.(i)i!#(t i$+$ i(&"ed i( h&"di(. e#" e$t#te 3&%ety t#7e$ m#i(te(#(!e e7%e($e$ #(d e%#i !&$t$ #e 'u$t $&me &) the !&$t$ &) h&"di(. the #$$et Futhem&e e#" e$t#te i$ !&($ideed t& be ey i""i9uid J it !#( $&metime$ be h#d t& )i(d # buye i) y&u (eed t& $e"" the %&%ety 9ui!+"y
=&* t& Buy & Se"" it e#" e$t#te i$ #"m&$t e7!"u$ie"y b&u.ht th&u.h e#" e$t#te #.e(t$ & b&+e$ thei !&m%e($#ti&( u$u#""y i$ # %e!e(t#.e &) the %u!h#$e %i!e &) the %&%ety e#" e$t#te !#( #"$& be %u!h#$ed die!t"y? )&m the &*(e *ith&ut the #$$i$t#(!e &) # thid %#ty I) y&u )i(d buyi(. %&%ety t&& e7%e($ie the( !&($ide i(e$ti(. i( e#" e$t#te i(e$tme(t tu$t$ HEIT$ *hi!h #e di$!u$$ed i( the (e7t $e!ti&( Let$ t#+e # "&&+ #t the di))ee(t ty%e$ &) i(e$tme(t e#" e$t#te y&u mi.ht !&(tem%"#te &*i(.
Fi7e-,%%e$ Y&u !#( m#+e m&(ey th&u.h i(e$ti(. i( e#" e$t#te i) y&u buy h&u$e$ !&(d&mi(ium$ bui"di(.$ et! *hi!h (eed $&me *&+ #t # b#.#i( %i!e #(d )i7 them u% Y&u !#( %&b#b"y $e"" the e#" e$t#te )& # hi.he %i!e th#( y&u %#id #(d m#+e # %&)it =&*ee d&(t u(dee$tim#te the *&+ time #(d m&(ey th#t .&e$ i(t& buyi(. e%#ii(. #(d $e""i(. # h&me *he( y&u #e detemi(i(. *hethe it *i"" be %&)it#b"e )& y&u t& i(e$t A"$& emembe th#t di))ee(t t#7 u"e$ *i"" #%%"y t& the %u!h#$e #(d $#"e &) # h&me i) it i$ (&t y&u %i(!i%#" e$ide(!e
e(t#" 3&%ety Y&u !#( buy e#" e$t#te )& e(t#" %u%&$e$ #(d e!eie #( i(!&me $te#m )&m e(te$ Y&u m#y #"$& be #b"e t& ee(tu#""y $e"" the %&%ety )& m&e th#( y&u b&u.ht it )& #(d m#+e # .&&d %&)it A"th&u.h d&(t )&.et th#t y&u *i"" (&* be # "#(d"&d *h& m#y h#e t& de#" *ith (&(%#yi(. te(#(t$ #(d de$tu!tie te(#(t$ Ee( i) y&u h#e the *&"d$ be$t te(#(t$ y&u $ti"" h#e t& de#" *ith u%+ee% &) the %&%ety #(d #(y %&b"em$ th#t !&me u% S&me i(e$t&$ hie # %&%ety m#(#.e & m#(#.eme(t !&m%#(y t& m#(#.e thei i(e$tme(t e#" e$t#te Thi$ i$ )i(e but d&(t )&.et t& )#!t& i( the m#(#.eme(t )ee$ *he( y&u #e !#"!u"#ti(. y&u %&)it )&m the i(e$tme(t
;8
3"e#$e emembe th#t e(t#" e#" e$t#te i$ $ub'e!t t& di))ee(t t#7 u"e$ th#( the h&me y&u e$ide i( y&u m#y be #b"e t& t#+e t#7 dedu!ti&($ )& "&$$e$ !#%it#" e7%e(ditue #(d de%e!i#ti&( i) y&u meet !et#i( e9uieme(t$ but &the dedu!ti&($ $%e!i)i! t& %i(!i%"e e$ide(!e m#y (&t be ##i"#b"e t& y&u
,(im%&ed L#(d ,(im%&ed "#(d i$ di))i!u"t i(e$tme(t t& m#+e # %&)it i( ,("e$$ y&u m#(#.e t& buy # %ie!e &) "#(d th#t i$ e7teme"y de$i#b"e #t # .&&d %i!e #(d #e !et#i( th#t it i$ (&t b#ed )&m %&)it#b"e u$e )& the (ei.hb&h&&d it i$ "&!#ted i( Hbe!#u$e &) :&(i(. & &the i$$ue$ it *i"" %&b#b"y !&$t y&u m&e t& &*( the %&%ety th#( y&u *i"" ee m#+e $e""i(. it Hemembe y&u *i"" $ti"" h#e t& %#y %&%ety t#7e$ #(d *i"" #"$& "i+e"y i(!u &the u%+ee% !&$t$ &( the "#(d #(d y&u *&(t be e!eii(. #(y i(!&me )&m e(t$ I) y&u h#e $&me $&t &) i($ide $!&&% &( # %ie!e &) "#(d H)& e7#m%"e the %e$&( i( the h&u$e &( the "&t (e7t t& the "#(d i$ # *e#"thy e!"u$e #(d d&e$ (&t *#(t the %&%ety bui"t u%&( $& y&u !#( (#me y&u %i!e t& $e"" it t& him & %"#( &( dee"&%i(. it y&u$e") Hbui"di(. y&u h&me &( # %ie!e &) %&%ety (e7t t& # "#+e i( th#t !#$e it m#y be # .&&d i(e$tme(t
Se!&(d =&me$ Se!&(d =&me$ & #!#ti&( h&me$ $h&u"d be %u!h#$ed %im#i"y )& #!#ti&( %u%&$e$ (&t i(e$tme(t %u%&$e$ M&$t %e&%"e e(d u% *ith # "&$$ &( thei #!#ti&( h&me %&%etie$ be!#u$e ee( i) y&u !#( m#(#.e t& e(t the h&me the !&$t$ &) &*(i(. the h&me #"m&$t #"*#y$ e7!eed the e(t#" i(!&me it bi(. i(
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ALL ABO,T LIFE INS,ANCE INVESTMENT
Li)e I($u#(!e i$ i(!&me %&te!ti&( i( the ee(t &) y&u de#th The %e$&( y&u (#me #$ y&u be(e)i!i#y *i"" e!eie %&!eed$ )&m #( i($u#(!e !&m%#(y t& &))$et the i(!&me "&$t #$ # e$u"t &) y&u de#th Y&u !#( thi(+ &) "i)e i($u#(!e #$ # m&bid )&m &) .#mb"i(.G i) y&u "ied "&(.e th#( the i($u#(!e !&m%#(y e7%e!ted y&u t& the( y&u *&u"d "&$e4 the bet But i) y&u died e#"y the( y&u *&u"d *i(4 be!#u$e the i($u#(!e !&m%#(y *&u"d h#e t& %#y &ut y&u be(e)i!i#y
I($ue$ H& u(de*ite$ "&&+ !#e)u""y #t de!#de$ *&th &) d#t# t& ty t& %edi!t e7#!t"y h&* "&(. y&u *i"" "ie I($u#(!e u(de*ite$ !"#$$i)y i(diidu#"$ b#$ed &( thei hei.ht *ei.ht "i)e$ty"e Hie *hethe & & (&t they $m&+e #(d medi!#" hi$t&y Hie i) they h#e h#d #(y $ei&u$ he#"th !&m%"i!#ti&($ A"" the$e #i#b"e$ *i"" detemi(e *h#t #te !"#$$ !#te.&y # %e$&( )it$ i(t& Thi$ d&e$(t me#( th#t $m&+e$ #(d %e&%"e *h& h#e h#d $ei&u$ he#"th %&b"em$ !#(t be i($ued it 'u$t me#($ they"" %#y di))ee(t %emium$
Thee #e t*& ey !&mm&( +i(d$ &) "i)e i($u#(!e tem "i)e #(d %em#(e(t "i)e Tem "i)e i($u#(!e i$ u$u#""y )& # e"#tie"y $h&t %ei&d &) time *hee#$ # %em#(e(t "i)e %&"i!y i$ &(e th#t y&u %#y i(t& th&u.h&ut y&u e(tie "i)e The$e %#yme(t$ #e u$u#""y )i7ed )&m the time y&u %u!h#$e y&u %&"i!y
B#$i!#""y the y&u(.e y&u #e *he( y&u $i.(-u% )& thi$ ty%e &)
i($u#(!e the !he#%e y&u m&(th"y %#yme(t$ *i"" be
Need )& "i)e i($u#(!e i$+$ #(d u(!et#i(tie$ #e %#t &) "i)e$ .e#t #de(tue J #!!ide(t i""(e$$ the)t (#tu#" di$#$te J theye #"" bui"t i(t& the *&+i(. &) the ,(ie$e *#iti(. t& h#%%e( I($u#(!e the( i$ m#($ #($*e t& the #.#ie$ &) "i)e I) y&u !#((&t be#t m#(-m#de #(d (#tu#" !#"#mitie$ *e"" #t "e#$t be %e%#ed )& them #(d thei #)tem#th
>0
Ty%e$ &) "i)e I($u#(!e M&$t &) the %&du!t$ &))eed by I(di#( Li)e i($ue$ #e dee"&%ed #(d $tu!tued #&u(d the$e b#$i!4 %&"i!ie$ #(d #e u$u#""y #( e7te($i&( & # !&mbi(#ti&( &) the$e %&"i!ie$ S& the di))ee(t ty%e$ &) i($u#(!e %&"i!ie$ #e
Tem I($u#(!e 3&"i!y •
A tem i($u#(!e %&"i!y i$ # %ue i$+ !&e )& # $%e!i)ied %ei&d &) time 5h#t thi$ me#($ i$ th#t the $um #$$ued i$ %#y#b"e &("y i) the %&"i!yh&"de ide$ *ithi( the %&"i!y tem F& i($t#(!e i) # %e$&( buy$ $2 "#+h %&"i!y )& 10-ye#$ %ei&dP 5e"" the( he i$ (&t e(tit"ed t& #(y %#yme(tR the i($u#(!e !&m%#(y +ee%$ the e(tie %emium %#id dui(. the 10-ye# %ei&d
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5h#t i) he $uie$ the 10-ye# %ei&dP 5e"" the( he i$ (&t e(tit"ed t& #(y %#yme(tR the i($u#(!e !&m%#(y +ee%$ the e(tie %emium %#id dui(. the 10-ye# %ei&d
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S& thee i$ (& e"eme(t &) $#i(.$ & i(e$tme(t i( $u!h # %&"i!y It i$ # 100 %e!e(t i$+ !&e It $im%"y me#($ th#t # %e$&( %#y$ # !et#i( %emium t& %&te!t hi$ )#mi"y #.#i($t hi$ $udde( de#th =e )&)eit$ the #m&u(t i) he &ut"ie$ the %ei&d &) the %&"i!y Thi$ e7%"#i($ *hy the Tem I($u#(!e 3&"i!y !&me$ #t the "&*e$t !&$t
E(d&*me(t 3&"i!y C&mbi(i(. i$+ !&e *ith )i(#(!i#" $#i(.$ #( e(d&*me(t %&"i!y i$ the m&$t %&%u"# %&"i!ie$ i( the *&"d &) "i)e i($u#(!e •
I( #( E(d&*me(t 3&"i!y the $um #$$ued i$ %#y#b"e ee( i) the i($ued $uie$ the %&"i!y tem
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I) the i($ued die$ dui(. the te(ue &) the %&"i!y the i($u#(!e )im h#$ t& %#y the $um #$$ued 'u$t #$ #(y &the %ue i$+ !&e
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A %ue e(d&*me(t %&"i!y i$ #"$& # )&m &) )i(#(!i#" $#i(. *heeby i) the %e$&( !&eed em#i($ #"ie bey&(d the te(ue &) the %&"i!yR he .et$ b#!+ the $um #$$ued *ith $&me &the i(e$tme(t be(e)it$
>1
I( #dditi&( t& the b#$i! %&"i!y i($ue$ &))e #i&u$ be(e)it$ $u!h #$ d&ub"e e(d&*me(t #(d m#i#.e / edu!#ti&( e(d&*me(t %"#($ The !&$t &) $u!h # %&"i!y i$ $"i.ht"y hi.he but *&th it$ #"ue
5h&"e Li)e 3&"i!y •
A$ the (#me $u..e$t$ # 5h&"e Li)e 3&"i!y i$ #( i($u#(!e !&e #.#i($t de#th ie$%e!tie &) *he( it h#%%e($
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,(de thi$ %"#( the %&"i!yh&"de %#y$ e.u"# %emium$ u(ti" hi$ de#th )&""&*i(. *hi!h the m&(ey i$ h#(ded &e t& hi$ )#mi"y
Thi$ %&"i!y h&*ee )#i"$ t& #dde$$ the #dditi&(#" (eed$ &) the i($ued dui(. hi$ %&$tetieme(t ye#$ It d&e$(t t#+e i(t& #!!&u(t # %e$&($ i(!e#$i(. (eed$ eithe 5hi"e the i($ued buy$ the %&"i!y #t y&u(. #.e hi$ e9uieme(t$ i(!e#$e &e time By the time he die$ the #"ue &) the $um #$$ued i$ t&& "&* t& meet hi$ )#mi"y$ (eed$ A$ # e$u"t &) the$e d#*b#!+$ i($u#(!e )im$ (&* &))e eithe # m&di)ied 5h&"e Li)e 3&"i!y & !&mbi(e i( *ith #(&the ty%e %&"i!y
M&(ey B#!+ 3&"i!y •
The$e %&"i!ie$ #e $tu!tued t& %&ide $um$ e9uied #$ #(ti!i%#ted e7%e($e$ Hm#i#.e edu!#ti&( et! &e # $ti%u"#ted %ei&d &) time 5ith i()"#ti&( be!&mi(. # bi. i$$ue !&m%#(ie$ h#e e#"i:ed th#t $&metime$ the m&(ey #"ue &) the %&"i!y i$ e&ded Th#t i$ *hy *ith J%&)it %&"i!ie$ #e #"$& bei(. i(t&du!ed t& &))$et $&me &) the "&$$e$ i(!ued &( #!!&u(t &) i()"#ti&(
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A %&ti&( &) the $um #$$ued i$ %#y#b"e #t e.u"# i(te#"$ O( $ui#" the em#i(de &) the $um #$$ued i$ %#y#b"e
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I( !#$e &) de#th the )u"" $um #$$ued i$ %#y#b"e t& the i($ued
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The %emium i$ %#y#b"e )& # %#ti!u"# %ei&d &) time
>2
,NIT-"i(+ed i($u#(!e Bim# 3"u$ i$ # u(it-"i(+ed e(d&*me(t %"#( The %"#( i$ ##i"#b"e &e # du#ti&( &) 10 ye#$ 3emium !#( be %#id eithe ye#"y h#")-ye#"y & #t &(e $h&t The %emium i$ u$ed t& %u!h#$e u(it$ i( # )u(d &) &(eU$ !h&i!e #)te the (e!e$$#y dedu!ti&($ The #"ue &) the u(it$ #ie$ *ith the i(e$tme(t %e)&m#(!e &) the #$$et$ i( the )u(d I(e$tme(t$ !#( be m#de i( &(e &) thee ty%e$ &) )u(d$G Se!ued )u(d *hi!h i(e$t$ %ed&mi(#(t"y i( debt #(d m&(ey m#+et i($tume(t$R i$+ )u(d i( *hi!h the ti"t i$ t&*#d$ e9uitie$R #(d # B#"#(!ed Fu(d # b"e(d &) the t*& S*it!hi(. bet*ee( )u(d$ i$ #""&*ed t*i!e dui(. the %&"i!y tem $ub'e!t t& the !&(diti&( th#t they #e #t "e#$t t*& ye#$ #%#t Ch#.e$ )& $*it!hi(. #e 2 %e !e(t &) the )u(dU$ !#$h #"ue
4$!t t$e bene#ici!r- recei5es deends on %$en t$e de!t$ o# t$e o"ic-$o"der occurs. •
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Bet*ee( m&(th$ $ee( #(d 12 &) the %&"i!y the %#y&ut i$ 60 %e !e(t &) the $um #$$ued %"u$ !#$h #"ue &) u(it$
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A)te )i$t ye# the $um #$$ued #(d !#$h #"ue &) the u(it$ i$ %#id
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Dui(. the 10th ye# 10 %e !e(t &) the $um #$$ued #(d !#$h #"ue &) u(it$ i$ %#id &ut
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A((uitie$ #(d 3e($i&( I( #((uity the i($ue #.ee$ t& %#y the i($ued # $ti%u"#ted $um &) m&(ey %ei&di!#""y The %u%&$e &) #( #((uity i$ t& %&te!t #.#i($t i$+ #$ *e"" #$ %&ide m&(ey i( the )&m &) %e($i&( #t e.u"# i(te#"$ Oe the ye#$ i($ue$ h#e #dded #i&u$ )e#tue$ t& b#$i! i($u#(!e %&"i!ie$ i( &de t& #dde$$ $%e!i)i! (eed$ &) # !&$$ $e!ti&( &) %e&%"e
Ob'e!tie$ #(d i$+$ N& m#tte *h& y&u #e &(e be(e)it &) "i)e i($u#(!e i$ the %e#!e &) mi(d it .ie$ y&u I) #(ythi(. h#%%e($ t& y&u y&u be(e)i!i#y *i"" e!eie # !he!+ i( # m#tte &) d#y$ Li)e I($u#(!e !#( #"$& be u$ed t& !&e #(y debt$ & "i#bi"itie$ y&u "e#e behi(d The b#(+ d&e$(t 'u$t *ite &)) y&u m&t.#.e &(!e y&u %#$$ #*#y J the$e %#yme(t$ mu$t be m#de & y&u h&u$e m#y be "i9uid#ted Li)e I($u#(!e !#( #"$& !e#te #( i(heit#(!e )& y&u hei$ & it !#( be u$ed t& "e#e # "e.#!y i) it$ %ut t&*#d d&(#ti&($ t& !h#it#b"e &.#(i:#ti&($ M&$t "i)e i($u#(!e %&"i!ie$ !#y e"#tie"y "itt"e i$+ be!#u$e i($u#(!e !&m%#(ie$ #e u$u#""y $t#b"e #(d he#i"y e.u"#ted by the .&e(me(t I( !#$h #"ue4 %&"i!ie$ y&u #e #""&*ed t& i(e$t y&u %&"i!y i( $t&!+ b&(d & m&(ey m#+et )u(d$ I( the$e ty%e$ &) %&"i!ie$ the #"ue &) y&u i($u#(!e de%e(d$ &( the %e)&m#(!e &) th&$e )u(d$
=&* t& Buy & Se"" it Thee #e th&u$#(d$ &) i($u#(!e b&+e$ #(d b#(+$ #!&$$ N&th Amei!#
Ste(.th$ •
Li)e i($u#(!e %&ide$ e7!e""e(t %e#!e &) mi(d J it e#$e$ !&(!e($ #b&ut *h#t *i"" h#%%e( t& y&u "&ed &(e$ i) y&u die $udde("y
•
A "i)e i($u#(!e %&"i!y i$ # e"#tie"y "&* i$+ i(e$tme(t
>
5e#+(e$$e$ •
I) y&u "ie # "&(. "i)e y&u )#mi"y "i+e"y *&(t .et the )u"" #"ue &ut &) y&u %&"i!y
•
C#$h #"ue )u(d$ !#( )"u!tu#te de%e(di(. &( the )i(#(!i#" m#+et$
Thee M#i( ,$e$ •
I(!&me 3&te!ti&(
•
C#%it#" A%%e!i#ti&(
•
T#7-De)eed S#i(.$
e#"ity Che!+ 5h#t$ the edi!tP D& y&u h#e the time di$!i%"i(e #(d )i(#(!i#" #*#e(e$$ t& t#+e !h#.e &) y&u )i(#(!e$ #(d (&t !&u(t &( the "&*"y etu($ )&m e(d&*me(t %"#($P D& y&u *#(t #b$&"ute"y !et#i(ty i( y&u i(e$tme(t$P I) the #($*e t& the )i$t 9ue$ti&( i$ # (& #(d the $e!&(d # ye$ y&u &%ti&($ *i"" be $eee"y "imited Thee #e # )e* e(d&*me(t %"#($ th#t &))e .u##(teed etu($ #(d the be$t it .et$ i$ #b&ut 6 %e!e(t I) &( the &the h#(d y&u #e *i""i(. t& t#+e !#"!u"#ted i$+$ y&u !#( !et#i("y d& bette th#( th#t *ith # mi7 &) %&$t &))i!e $!heme$ #(d b#(+ de%&$it$ #t the ey "&*-i$+ e(d &) the $%e!tum t& e9uity )u(d$ #(d $t&!+ $ #t the &the e(d *ith debt )u(d$ #(d b#"#(!ed )u(d$ )e#tui(. $&me*hee i( the midd"e Fi(e y&u !&m)&t "ee" #(d y&u *i"" +(&* i) i($u#(!e %"#($ !#( d&ub"e u% y&u i(e$tme(t$ )& y&u
>6
Introduction to the Organisation Karvy Stock Broking Limited KARVY is a premier integrated financial services provider and ranked among the top five in the country in all its business segments. It services over 16 million individual investors in various capacities and provides investor services to over !! corporate. It is a member of all three"# $ational %tock &'change ($%&)
*ombay %tock &'change (*%&)
+yderabad %tock &'change (+%&)
Karvy utili,ed its e'perience and superlative e'pertise to capitali,e on its strengths and better its service- innovate and provide ne ones. It diversified in the process and thus evolved as India/s premier integrated financial service enterprise. Karvy has been a customer centric company since its inception. It offers a single platform servicing multiple financial instruments in its bid to offer complete financial solutions to the varying needs of both corporate and retail investors- here an e'tensive range of services are provided ith great volume#management capability. KARVY covers the entire spectrum of financial services such as %tock broking0epository articipants- 0istribution of financial products # mutual funds-bonds- fi'ed deposit- e2uities- Insurance *roking- 3ommodities *roking- ersonal 4inance Advisory %ervices- 5erchant *anking 3orporate 4inance- placement of e2uity- I7s- among others. Karvy has a professional management team and ranks among the best in technology- operations and research of various industrial segments.
>?
BACKGROUND 8he flagship company- Karvy 3onsultants 9imited as found ith the vision and enterprise of a group of practicing 3hartered Accountants on a modest scale in 1:;1 in +yderabad- here it no has 1 branches .8he name KARVY is actually the Initials of their names.
K !r" Kutum# Rao A !r A$ay Kumar R !r" Ramas%amy &!r" &enkat Naidu '!r" 'ugandhar
It initiated ith
>8
handled over 6>? issues as Registrars to public issues- processed over ?= million applications and is servicing over 16 million investors from various locations spread over =!? cities.
+o!rd o# Directors
!r" C (arthasarathy- a leader in the financial services industry in India is responsible
for building Karvy as one of India@s truly integrated 4inancial %ervices rovider he is a fello member of the Institute of 3ompany %ecretaries of India- a 4ello 5ember of the Institute of 3hartered Accountants of India and a graduate in la. As 3hairman- he oversees the group@s operations and renders vision and business direction. +is passion and vision for achieving leadership in the business made KARVY a leading financial intermediary ranking them as number one in the registrar- %hare 8ransfer and I7 0istribution businesses. +e also holds directorship in Karvy %tock *roking 9imited-
>
Karvy Investor %ervices 9imited- Karvy 3omputershare rivate 9imited- Karvy 3omtrade 9imited- Karvy Insurance *roking vt 9td "
!r" ! 'ugandhar - 5anaging 0irector- founder member of Karvy 3onsultants 9imited-
has varied e'perience in the field of financial services spanning over =! years. +e is a 4ello 5ember of the Institute of 3hartered Accountants of India and as involved in the statutory and branch audit of banks for =6 years.
!r" ! S Ramakrishna - 0irector- founder member of Karvy 3onsultants 9imited is
orchestrator of technology initiatives such as the call center in the service of the customer. 5r. Ramakrishna is a member of the +yderabad %tock &'change and is the director of Karvy %tock *roking 9imited- Karvy Investor %ervices 9imited- Karvy
0
3omputershare rivate 9imited- Karvy 3omtrade 9imited- Karvy Insurance *roking vt 9td. +e has helped Karvy diversify into the field of medical transcription leveraging on the company@s core competency of transaction processing. +e has more than =! years of e'perience in the financial services arena.
!r" (rasad & (ot)uri - 0irector- is an entrepreneur of repute in the I8 professional
services arena. In Bune 1::6- he founded CroconC building the organi,ation into one of the fastest groing I8 services players in the D% ith ==? employees and revenues of E==m in => months. +e successfully merged the company ith R35 for E=m in $ovember 1::;. In =!!!- he founded @ Albion 7rion 3ompany@- a roll up in I8 services sector in the D%.
1
Karvy*s !ission+
“
7ur mission is to be a leading and preferred service provider to our customers- and
e aim to achieve this leadership position by building an innovative- enterprising- and technology driven organi,ation hich ill set the highest standards of service and business ethics F.
&ision o, Karvy+ 8o achieve sustain market leadership- Karvy shall aim for complete customer satisfaction- by combining its human and technological resources- to provide orld class 2uality services. In the process Karvy shall strive to meet and e'ceed customer@s satisfaction and set industry standards.
-UALI.' (OLIC'+ 8o achieve and retain leadership- Karvy aims for complete customer satisfaction- by combining its human and technological resources- to provide superior 2uality financial services. In the process- Karvy strives to e'ceed 3ustomer@s e'pectations.
As /er the -ua)ity (o)icy0 Karvy %i))+ •
*uild in#house processes that ill ensure transparent and harmonious relationships ith its clients and investors to provide high 2uality of services.
•
&stablish a partner relationship ith its investor service agents and vendors that ill help it in keeping up to its commitments to the customers.
•
rovide high 2uality of ork life for all its employees and e2uip them ith ade2uate knoledge skills so as to respond to customer@s needs.
•
3ontinue to uphold the values of honesty integrity and strive to establish unparalleled standards in business ethics.
2
•
Dse state#of#the art information technology in developing ne and innovative financial products and services to meet the changing needs of investors and clients.
•
%trive to be a reliable source of value#added financial products- services and constantly guide the individuals and institutions in making a
•
%trive to keep all stake#holders (shareholders- clients- investors- employeessuppliers and regulatory authorities) proud and satisfied.
Achievements+
•
•
•
•
•
•
•
•
Among the top ? stock brokers in India (GH of $%& volumes) India@s $o. 1 Registrar %ecurities 8ransfer Agents Among the top 0epository articipants 9argest $etork of *ranches *usiness Associates Among top 1! Investment bankers 9argest 0istributor of 4inancial roducts Ad
KAR&' !IL1S.ON1S Karvy has travelled a success route over the past =! years and positioned itself as an emerging financial service giant in hich embeds the confidence and support of enviable patrons across the financial orld. atrons are also of diversified fields hich includes over 16 million individual investors in various capacities and !! corporate comprising the best out of the hole lot .Years of e'perience of holistic financial
;
services and e'pertise in this industry has helped it gain the status it en
2ourney o, Karvy+ Success 'ear a,ter 'ear 'ear
Addition
34543467
Karvy and 3ompany
34633468
Karvy 3onsultants 9td
3469346:
4oray into capital markets as registrars and transfer agents.
34653466
4irst branch at 5umbai
34663464
%tock broking
3447
&ntry into retail stock broking
>
3448
%et up investor service centers
344;
4inancial roducts 0istribution
344<
&ntry into 5utual 4und %ervices
3449
3orporate 4inance and Investment banking
3445
4irst Registrar in the country to be aarded I%7 :!!=
3444
I8 enabled service # *7
8777
& *usiness .karvy.com
8773
Insurance and 9aunch of retail arm Karvy the 4inapolis Your ersonal 4inance Advisor
8778
9aunch of 3J
877;
3ommencement of %econdary 0ebt and 05 trading
877<
BV ith 3omputer share 9imited - Australia 9aunch of Karvy Jlobal %ervice Karvy 3omtrade
8779
Karvy Insurance *roking vt. 9td.
877:
Karvy Realty %ervices (India) 9imited KR%9
8775
Karvy 4ortune - 4unding by I3I3I Ventures 9td.*arings Asia
Karvy rivate ealth
8776
8774
Karvy 0ata 5anagement %ervices 9td Karvy 4inancial %ervices 9td
!i)estones to #e achieved in ,uture+ •
8o set up its on Asset 5anagement 3ompany
•
8o set up its on *ank by =!1=
Karvy Grou/ o, Com/anies
As discussed earlier- KARVY offers a single platform servicing multiple financial instruments in its bid to offer complete financial solutions to the varying needs of both corporate and retail investors. 8he range of products and services are provided by the folloing ings.
3= Karvy Consu)tants Limited+
6
8his is the flagship company of Karvy Jroup and it controls the organi,ational affairschannels of progress- ork affairs and pioneering business policies. 8his as the first business the KARVY group ventured into- but no they have transferred it into a
8= Karvy Stock Broking Limited
It is undisputable fact that the stock market is unpredictable and volatile- but despite this K%*9 en
?
;= Karvy Com/utershare Limited
Karvy Computershare Limited 8his ing of Karvy has traversed ide spaces to tie up ith the orld/s largest transfer agent- the leading Australian company 3omputershare 9imited. 8his company services more than >? million shareholders across >!!! clients and makes its presence felt in over 1= countries across ? continents. It has also entered into a ?!#?!
<= Karvy Comtrade Limited
Karvy 3ommodities focuses on taking commodities trading to ne dimensions of reliability and profitability. 8hey have made commodities trading- an essentially age#old practice- into a sophisticated and scientific investment option. It helps in enabling trade in all goods and products of agricultural and mineral origin that include lucrative
8
commodities like gold and silver and popular items like oil- pulses and cotton through a ell#systemati,ed trading platform.
9= Karvy Insurance Broking Limited+
Karvy Insurance *roking vt. 9td.- provides both life and non#life insurance products to retail individuals- high net#orth clients and corporates. ith the opening up of the insurance sector and entry of a large number of private players in the business- it is in a position to provide tailor made policies for different segments of customers.
:= Karvy Investor Services Limited+
8his ing of Karvy is registered ith %&*I as a category 1 merchant banker and is also recogni,ed as a leading merchant banker of the country. It has built its reputation by capitali,ing the opportunities as and hen it comes- be it in corporate consolidationsmergers and ac2uisitions or corporate restructuring. Involvement in raising resources for
corporate or government undertaking successfully over the past to decades has given it a tremendous confidence boost.
5= Karvy Data !anagement Services Limited+
%tarted in =!!;-Karvy 0ata 5anagement %ervices is the domestic *7 arm of the Karvy Jroup and services corporate across various industry verticals and business hori,ons. K05%9 is emerging as a leading service provider in the areas of &# governance processing- insurance back office processing- record keeping- back office for *4%I clientele and is in pursuit to establish credentials in the areas of 8elecom processing- 0ata management re2uirements of large corporate.
6= Karvy G)o#a) Services+
Karvy Jlobal %ervices is a knoledge services company. It provides specialist resources to e'tend in house analyst teams in driving clear business results. It serves investment banks- insurance providers- brokerages- hedge funds- research agenciesand life settlement providers across the Dnited %tates- 5iddle &ast- and &urope. 8heir areas of focus include e2uity and industry research- commodity research- credit analytics- technology#based orkflo solutions- insurance policy and portfolio valuationand other speciali,ed services.Incorporated in =!!G- 8he 3ompany is backed by over =? years of e'perience through India/s largest financial services company- the Karvy
60
Jroup. It is located in $e York and have primary global delivery centre in +yderabadIndia.
4= Karvy >inance+
Karvy 4inancial %ervices 9td. is a holly oned subsidiary of Karvy %tock *roking 9td .It as established in the year =!!:.KARVY Jroup- a pioneer in financial services in Indiahas forayed into retail finance space ith its $on *anking 4inancial 3orporation ($*43) Karvy 4inancial %ervices 9td or Karvy 4inance. Karvy 4inance has a vision to be the M3ategory 3hampionF for Retail 4inance in India. Karvy 4inance aims to offer a complete bou2uet of financial services products to its customers ith secured and unsecured lending products (such as loans against securities- loans against property and personalLbusiness loans).
37=Karvy Rea)ty India Limited+
61
Karvy Realty (India) 9imited (KRI9) is promoted by the Karvy Jroup- India/s largest financial services group. 8he group carries forard its legacy of trust and e'cellence in investor and customer services delivered ith passion and the highest level of 2uality that align ith global standards. Karvy Realty (India) 9imited is engaged in the business of real estate and property services offering" •
*uyingL sellingL renting of properties
•
Identifying valuable investments opportunities in the real estate sector
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4acilitating financial support for real estate and investments in properties
•
Real estate portfolio advisory services.
33=Karvy >ortune+
4rom the year =!!>.Karvy %tock *roking 9imited started offering its franchisee through Karvy 4ortune- a separate vertical hich ould handle all the matters related to franchisees. It provided opportunities for the franchisees to
62
Organisationa) Structure
6;
3EFOMANCE ANALYSIS OF ET,NS E9uity etu($ #t # ."#(!e I) *e h#e # "&&+ #t e9uity etu($ &) the %#$t ? ye#$ it i$ "i+e thi$G
SENSE YEA 2000 2001 2002 200; 200> 200 2006 200? 2008
INDIEQ
ABSOL,TE
3ECENTAE
;?2 ;262 ;;?? 8;8 6602 ;? 1;?86 1;08 20;2;
C=ANE 0 -?10 11 2>61 ?6> 2? >;8 122 6>1
C=ANE HK 0 -1?88 ;2 ?288 1;08 >2;> >6?0 088 ;1?
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BSE100
YEA 2000 2001 2002 200; 200> 200 2006 200? 2008
INDE
ABSOL,TE
3ECENTAE
20;2 1 166> ;0?6 ;80 >; 682 ?026 1;2
C=ANE 0 ->?? 10? 1>12 06 1;?; 202 >> 2106
C=ANE HK 0 -2;;8 688 8>?> 16>6 ;8;2 >06 06 2;06
1!!!! :!!! ;!!! >!!! 6!!! ?!!! G!!! !!! =!!! 1!!! ! =!!!
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BSE200
YEA 2000 2001 2002 200; 200> 200 2006 200? 2008
INDEQ
ABSOL,TE
3ECENTAE
>;? ;>0 ;> ?66 88> 1186 16 1662 2160
C=ANE 0 - ; ;?2 118 ;00 >6 ? >8
C=ANE HK 0 -216 1> >>1 166 ;;86 ;> 0>2 2;0
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BSE00 YEA 2000 2001 2002 200; 200> 200 2006 200? 2008
INDEQ
ABSOL,TE
3ECENTAE
1;0> 100 11?6 2;68 2?? ;? 268 2 688;
C=ANE 0 -2 1?1 112 >1; 1016 1>?; 2 188
C=ANE HK 0 -22; 1?01 10120 1?>6 ;66 ;886 0>? 2;0?
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B&(d$ etu($ #t # ."#(!e I) *e h#e # "&&+ #t the #e#.e etu( *hi!h the !e(t#" .&e(me(t $e!uitie$ h#e .ie( &e # %ei&d &) &(e ye# it i$ 11K N&* i) *e "&&+ #t the #e#.e etu( *hi!h the $t#te .&e(me(t $e!uitie$ h#e .ie( &e # %ei&d &) &(e ye# it i$ 28K
&"d etu($ #t # ."#(!e &"d $hi(e$ *he( eeythi(. e"$e )#""$ #%#t4 .&e$ #( &"d #d#.e Tue the ."itte i$ b#!+ Dui(. the 0$ .&"d #%%e!i#ted m#.i(#""y The (e7t de!#de 160-1?0 it m&ed )&m ; t& >0 #(d bet*ee( 1?0-180 !#me the m#$$ie i$e )&m >0 t& 61> # *h&%%i(. 1>0?K The te(d &) .&"d %i!e$ i( I(di# i( the "#$t )e* ye#$ i$ .ie( i( the )&""&*i(. t#b"e
YEA 2000 2001 2002 200; 200> 200 2006 200? 2008
3ICE HQ
ABSOL,TE
3ECENTAE
2?2 2?8 ;>6 >1> >;8 1? 1? 6;6
C=ANE 6 68 68 2> ? ? 11 ;
C=ANE HK 220 2>>6 16 ? 180; 180; 2;01 ;608
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Q3i!e i(di!#te$ De!embe e(d %i!e$ &) th#t %#ti!u"# ye#
Mutu#" Fu(d$ etu( #t # ."#(!e E,ITY TA SAVIN8
NAV
1 Y
68
2 Y
; Y
=!!;
M#.(um T#7 #i(
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10??0
;>0
112;0
3i(!i%#" T#7 S#-i(.$
?>60
120
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?;?0
=DFC T#7 S#e
1;80
10>60
8;60
160
3<7 387 377 67 :7 <7 87 7 NA&
3 'R
8 'R
!AGNU! .A? GAIN
; 'R
(RINCI(AL .A? GAIN
@D>C .A? SA&1R
6
E,ITY BALANCED
NAV
1 Y
2 Y
2 Y
;2>0
?>60
;>0
6;?0
2;80
?110
>10
280
6;0
6180
>20
0
M#.(um B#"#(!ed
<&t#+ B#"#(!ed =DFC 3ude(ti#"
377 67 :7 <7 87 7 NA&
3 'R
8 'R
!AGNU! BALANC1D
; 'R
KO.AK BALANC1D
@D>C (RUD1NC1
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e#" E$t#te etu($ e#" E$t#te i(du$ty i( I(di# h#$ !&me &) #.e #(d !&m%ete$ *ith &the i(e$tme(t &%ti&($ i( the $tu!tued m#+et$ C&mme!i#" e#" e$t#te !&(ti(ue$ t& be # de$i#b"e i(e$tme(t &%ti&( i( I(di# O( #( #e#.e the etu($ )&m e(t#" i(!&me &( #( i(e$tme(t i( !&mme!i#" %&%ety i( met&$ i$ #&u(d 10K *hi!h i$ the hi.he$t i( the *&"d I( !#$e &) &the i(e$tme(t &%%&tu(itie$ "i+e b#(+ de%&$it$ #(d b&(d$ the etu($ #e i( the #(.e &) K - 6K e'ue(#ted dem#(ded $i(!e e#"y 200> h#$ "ed t& the )imi(. u% &) e#" e$t#te m#+et$ #!&$$ the thee $e!t&$ J !&mme!i#" e$ide(ti#" #(d et#i" The $u%%"y 'u$t #b&ut m#t!he$ dem#(d i( #"m&$t #"" met&$ #&u(d the !&u(ty Thee h#$ bee( #( u%*#d %e$$ue &( the e#" e$t#te #"ue$ F&m # te!h(i!#" %e$%e!tie &bu$t dem#(d #(d u%*#d %i!e$ #e he"%i(. eie i(e$tme(t #(d $%e!u"#tie i(tee$t i( e#" e$t#te #(d thi$ i$ bei(. )uthe #ided by e7!e$$ m&(ey $u%%"y $t&!+ m#+et .#i($ #(d %&"i!y !h#(.e$ i( )#& &) the e#" e$t#te $e!t&
I(e$tme(t Yie"d I(!e#$i(. dem#(d )&m the IT/ITES #(d B3O $e!t& h#$ "ed t& #%%&7im#te"y 20K - >0K i(!e#$e i( !#%it#" #"ue$ )& &))i!e $%#!e i( the "#$t 12-18 m&(th$ #!&$$ m#'& met&$ i( I(di# #de-A &))i!e %&%ety (et yie"d$ h#e !&me d&*( )&m 12K -1K i( 200; #(d !ue(t"y #e#.e #&u(d 10K - 11K %# The )#"" i( yie"d$ h#$ e$u"ted )&m de!e#$i(. i(tee$t #te$ #(d i(!e#$i(. #%%etite )&m i(e$t&$ Thi$ h#$ i( tu( e$u"ted )&m #bu(d#(t "i9uidity &%ti&($ ##i"#b"e !&u%"ed *ith the #!!e%t#bi"ity &) e#" e$t#te #$ # !&(e(ti&(#" !"#$$ &) #$$et L&*e i(tee$t #te$ e#$y ##i"#bi"ity &) h&u$i(. )i(#(!e e$!#"#ti(. $#"#ie$ #(d '&b %&$%e!t$ h#e bee( "e(di(. bu&y#(!y t& the e$ide(ti#" $e!t& The (et yie"d$ H#)te #!!&u(ti(. )& #"" &ut.&i(.$ &( e$ide(ti#" %&%ety #e !ue(t"y #t >K - 6K %# =&*ee the$e i(e$tme(t$ h#e be(e)ited )&m the im%&i(. e$ide(ti#" !#%it#" #"ue$ A$ $u!h i(e$t& !#( !&u(t &( %&te(ti#" !#%it#" .#i($ t& im%&e thei &e#"" etu($ C#%it#" #"ue$ i( the e$ide(ti#" $e!t& h#e i$e( by #b&ut 2K - >0K %# i( the "#$t 1 J 18 m&(th$ The et#i" m#+et i( I(di# h#$ bee( .&*i(. due t& i(!e#$i(. dem#(d )&m et#i"e$ hi.he di$%&$#b"e i(!&me$ #(d de#th &) 9u#"ity $%#!e #$ &( d#te Th&u.h the (et yie"d$ &( et#i" %&%ety h#e e.i$teed # )#"" )&m 10K - 1;K %# e%&ted e#"ie t& K - 10K %# !ue(t"y the !#%it#" #%%e!i#ti&( i( thi$ $e!t& i$ !"&$e t& 20K >0K %# =&*ee the i$+$ #$$&!i#ted *ith thi$ $e!t& #e hi.he #$ et#i"e$ #e %&(e t& !y!"i!#" !h#(.e$ ty%i!#" &) # bu$i(e$$ !y!"e Ch#(.i(. !&($ume %$y!h&.#%hi!$
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Li)e I($u#(!e etu($ #t # ."#(!e Li)e I($u#(!e #$ I(e$tme(t4 I($u#(!e i$ #( #tt#!tie #tt#!tie &%ti&( )& i(e$tme(t i(e$tme(t 5hi"e m&$t %e&%"e e!&.(i:e the i$+ hed.i(. #(d t#7 $#i(. %&te(ti#" &) i($u#(!e m#(y #e (&t # #*#e &) it$ #d#(t#.e$ #$ #( i(e$tme(t &%ti&( #$ *e"" I($u#(!e %&du!t$ yie"d m&e !&m%#ed t& e.u"# i(e$tme(t &%ti&($ #(d thi$ i$ be$ide$ the #dded i(!e(tie$ Hb&(u$e$ &))eed by i($ue$ Y&u !#((&t !&m%#e #( i($u#(!e %&du!t *ith &the i(e$tme(t $!heme$ )& the $im%"e e#$&( th#t it &))e$ )i(#(!i#" %&te!ti&( )&m i$+$ $&methi(. th#t i$ mi$$i(. i( (&(-i($u#(!e %&du!t$ I( )#!t the %emium %emium y&u %#y )& #( i($u#(!e %&"i!y %&"i!y i$ #( i(e$tme(t #.#i($t i$+ Thu$ be)&e !&m%#i(. *ith &the $!heme$ y&u mu$t #!!e%t th#t # %#t &) the t&t#" #m&u(t i(e$ted i( "i)e i($u#(!e .&e$ t&*#d$ %&idi(. )& the i$+ !&e *hi"e the e$t i$ u$ed )& $#i(.$ I( "i)e i($u#(!e e7!e%t )& tem i($u#(!e u("i+e (&(-"i)e %&du!t$ y&u .et m#tuity be(e)it$ &( $ui#" $ui#" #t the e(d &) the tem tem I( &the *&d$ *&d$ i) y&u t#+e # "i)e i($u#(!e i($u#(!e %&"i!y %&"i!y )& 20 ye#$ #(d $uie #(d $uie the tem the #m&u(t i(e$ted #$ %emium i( the %&"i!y *i"" !&me b#!+ t& y&u *ith #dded etu($ etu($ I( the u()&tu(#te u()&tu(#te ee(t &) de#th *ithi( *ithi( the te(ue &) the %&"i!y the )#mi"y &) the de!e#$ed *i"" e!eie the $um #$$ued N&* "et u$ !&m%#e i($u#(!e #$ #( i(e$tme(t &%ti&($ I) y&u i(e$t IN 10000 i( 33F y&u m&(ey .&*$ t& $100 #t K i(tee$t &e # ye# But i( thi$ !#$e the #!!e$$ t& y&u )u(d$ *i"" be "imited O(e !#( *ithd#* 0K &) the i(iti#" de%&$it &("y #)te > ye#$ The $#me #m&u(t &) $10000 !#( .ie y&u #( i($u#(!e !&e &) u% t& #%%&7im#te"y
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Li)e I($u#(!e #$ T#7 3"#((i(.4 I($u#(!e $ee$ #$ #( e7!e""e(t t#7 $#i(. me!h#(i$m t&& The &e(me(t &) I(di# h#$ &))eed t#7 i(!e(tie$ t& "i)e i($u#(!e %&du!t$ i( &de t& )#!i"it#te the )"&* &) )u(d$ i(t& %&du!tie #$$et$ ,(de $e!ti&( 88 &) i(!&me t#7 #!t 161 #( i(diidu#" i$ e(tit"ed t& # eb#te &) 20K &( the #((u#" %emium %#y#b"e &( hi$/he #(d "i)e &) hi$/he !hi"de( & #du"t !hi"de(
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FINDINS OF T=E ST,DY E#"u#ti(. #( i(e$tme(t &%ti&( i$ (ee #( #ttem%t t& u( d&*( the !ede(ti#"$ &) &the i($tume(t$ i( the b"&!+ #the the #im i$ t& u(!&e *#y$ t& m#+e the $!e(e m&e %e$u#$ie #(d m&e #ti&(#" #ti&(#" Mutu#" )u(d$ #e #e #( ide#" i(e$tme(t i(e$tme(t i( m&e m&e *#y$ th#( &(e A)te # (umbe &) i(e$ti.#ti&( #(d b#!+ $e#t $9u#bb"i(. &e the "#te$t bud.et i(e$t&$ h#e )i(#""y $t#ted #$+i(. #$+i(. )& the i.ht i(e$tme(t i(e$tme(t i($tume(t i($tume(t th#t tu"y tu"y )it$ hi$ (eed$ At the b#!+d&% b#!+d&% &) thi$ u(!e u(!et t#i #i(t (ty y I #m tyi tyi(. (. t& $i:e $i:e u% the the de%t$ de%t$ A(d be# be#dt dth h &) be(e be(e)i )it$ t$ &) $i7 $i7 i(e$ i(e$tm tme( e(tt i($tume(t$ i( thi$ $e!ti&( $e!ti&( &) ti..ei(. th&u.ht$ Ab#(d&(i(. the m#+eti(. ti!+$ I $tet!hed $tet!hed &ut &ut my #(#" #(#"y$ y$i$ i$ *ith *ith # #(+i #(+i(. (. $!#" $!#"ee &) 10 #$ # )u(d )u(d#m #me(t e(t#" #" )i.u )i.uee !u(! !u(!hi hi(. (. e7e e7e!i !i$e $e #du#""y I h#e ide(ti)ied #(d !#te.&i:ed #"" the i(e$tme(t e9uieme(t$ i(t& thee b&#d he#d$ t& $ei:e the )"#*$ )"#*$ i(t& %&!edue %&!edue A(d i( # em#+#b"e em#+#b"e )i(di(. )i(di(. mutu#" )u(d$ #%%e#$ #%%e#$ t& #!t #$ # te#t t& #"" emb&die$ i(e$tme(t #t it$ be$t #(d *ide"y #dde$$e$ the $#i(.$ !&m%&(e(t &) $#)ety t& $uite y&u i(!&me t&"e#(!e
3im#y Need$ The b#$i! e9uieme(t$ #( i(e$t& "&&+$ )& i( #( i(e$tme(t #e $#)ety etu($ #(d "i9uidity A)te the ,S-6> )i#$!& m#(y %e&%"e #e !&()u$ed !&()u$ed *hethe t& i(e$t i( #(y .&e(me(t .&e(me(t b#!+ed )i(#(!i#" )i(#(!i#" i($tituti i($tituti&($ &($ M&$t &) them #e (&* t#($)e t#($)ei(. i(. thei m&(ey t& b#(+ FDU$ *hi!h *hi!h #!!&di(. t& them i$ &(e &) the $#)e$t i(e$tme(t &%ti&($ M#(y $t#te th#t I d&(t mi(d .etti(. "&* etu($ but I $h&u"d be $ue t& e!eie them
Se!&(d#y Need$ A(!i""#y e9uieme(t$ )& #( i(e$tme(t #e #b$e(!e &) e(ty b#ie t#7 e))i!ie(t"y #(d !#$h )"&* e))e!tie(e$$ I( #( #ttem%t t& e(!&u#.e e#" e$t#te & the h&u$i(. bu$i(e$$ i( the !&u(ty # "&t &) t#7 $&#%$ h#e bee( .ie( .ie( t& thi$ $e!t& $e!t& A t#7%#y t#7%#ye e !#( !"#im the dedu!ti&( dedu!ti&( &) u% t& $1 "#+h %e ye# &( the i(tee$t %#y#b"e &( the )u(d$ b&&*ed )& the %u!h#$e &) the h&u$e & )& !&($tu!ti&( C&mi(. t& mutu#" )u(d$ th&u.h th&u.h the diide(d$ #e bei(. t#7ed i( the h#(d$ &) the i(e$t& thi$ ye# thee i$ #(&the &ute t& $#e t& t#7 J the .&*th &%ti&( & the $y$tem#ti $y$tem#ti!! *ithd#*#" *ithd#*#" %"#($ I( the !#$e &) "&(e tem !#%it#" .#i( t#7 &(e h#$ the &%ti&( &) eithe %#yi(. 20K t#7 *ith i(de7#ti&( be(e)it$ & # )"#t #te &) 10K A%#t )&m .&&d t#7 $&#%$ ?>
mutu#" )u(d$ #"$& e('&y the be(e)it$ &) e(ty b#ie$ ie u("i+e i( b&(d$ #(y %e$&( (eed (&t h#e t& *#it )& #( i$$ue t& be &%e( t& i(e$t i( # mutu#" )u(d i($te#d !#( e(te #(ytime he *i$he$ t& d& $& O(e m#y thi(+ th#t *ith $& m#(y m#(y #d#(t#.e$ mutu#" )u($ (eed hu.e i(e$tme(t t& $t#t &)) but &(e !#( $t#t i(e$ti(. i( mutu#" )u(d$ *ith # (&mi(#" #m&u(t &) $00/- i( !#$e &) $y$tem#ti! i(e$tme(t %"#(
Teti#y Need$ The $t&!+ m#+et m#+et i$ &(e &) the &%ti&($ )& i(e$ti i(e$ti(. (. y&u m&(ey m&(ey St&!+$ #e u(m#t!hed u(m#t!hed t& #(y &the i(e$tme(t i(e$tme(t t&&" t&&" They #e the be$t *#y t& m#+e m&(ey #(d $t#y #he#d &) i()"#ti&( i()"#ti&( &e time time Thi$ i$ ide#" i) y&u h#e "&(.-tem "&(.-tem i(e$tme(t i(e$tme(t .&#"$ .&#"$ 5he( y&u buy $t&!+ i( # !&m%#(y #(d i) they .& b#(+u%t the( the $t&!+ *i"" (&t be the *&th the the %i!e y&u %#id )& it The$e thi(. d& h#%%e( .ut i) i(e$t *ith %&%e % &%e $t#te.ie$ y&u *i"" u$u#""y !&me &ut # *i((e F& e. I) $&me&(e $&me&(e h#d i(e$ted i(e$ted $1 "#+h i( the e9uity m#+et 22 ye#$ b#!+ the thi(. *&u"d h#e #%%e!i#ted t& $2 "#+h$ t&d#y t&d#y A(&the !"#$$i! !"#$$i! e7#m%"e i$ the I()&$y$ $t&!+ $t&!+ *hee i( i) &(e h#d i(e$ted $10000 i( @u(e 1; *he( it !#me &ut *ith it$ m#ide( I3O y&u h&"di(. *&u"d be *&th m&e th#( $8 "#+h$ Oe the $#me %ei&d debt h#$ .e(e#ted #( #((u#" etu( &) 12K *hee#$ .&"d ;>K #(d e#" e$t#te th&u.h it .#e 10K dui(. thi$ %ei&d it !&(ti(ued t& be b&..ed *ith %&b"em$ e"#ti(. #"u#ti&( "i9uidity "i9uidity $#"e %&!eed$ et! #(&the .&&d &%ti&( i$ the $y$tem#ti! i(e$tme(t %"#( HSI3 i( the mutu#" )u(d$ Thi$ i$ )e#tue i( m&$t &) the mutu#" )u(d$ $%e!i)i!#""y de$i.(ed )& th&$e *h& #e i(tee$ted i( bui"di(. *e#"th &e "&(.-tem #(d %"#($ # bette )utue )& them$e"e$ #(d thei )#mi"y )#mi"y Thee #e thee m#'& be(e)it$ &) SI3 SI3 They #e be(e)it &) !&m%&u(di(. u%ee !&$t #e#.i(. #(d !&(i(!e 5ith !&$t #e#.i(. &(e (eed (&t *&y #b&ut the %i!e %i!e &) the u(it i($te#d 'u$t 'u$t i(e$t e.u"#"y &e # "&(.-tem %ei&d Thi$ #%%&#!h tu($ the &dd$ i( y&u )#& &e the "&(.-tem %ei&d
I(deed the "#$t !&u%"e !&u%"e &) ye#$ *ee b#d )& the mutu#" )u(d i(du$ty i(du$ty =&*ee =&*ee #$ the $#yi(. $#yi(. .&e$ eey d#+ !"&ud h#$ # $i"e "i(i(. $& the $#me i$ h#%%e(i(. t& mutu#" )u(d i(du$ty 5ith m&$t &) AMC$ !&mi(. u% *ith i((&#tie %&du!t$ t& be#t the d#*b#!+$ &) *h#t they )#!ed )#!ed i( the the %#$t %#$t de)i( de)i(it ite"y e"y the i(du$ i(du$t ty y *i"" *i"" t#+e # (e* hi.h hi.h )&m )&m hee hee
F& F& # bett bette e
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# !h&i!e &) i(e$tme(t A !#e)u" "&&+ #t th&$e )i.ue$ be"&* e)"e!t$ th#t i(e$ti(. i( mutu#" $t#(d #t #( #d#(t#.e &e the &the$
3im#y
E9uity 2;;
B&(d$ 10
&"d 2;;
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E9uity MF 21
Debt MF 26>
Need$ Se!&(d#y
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16
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26
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Need$ Teti#y
10
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12?
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220
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6
2
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Need$ V#"ue S%e!i)i!
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3&!edue )&""&*ed Fi$t"y the %im#y e9uieme(t$ h#e bee( b&#d"y !"#$$i)ied i(t& thee ie B#$i! e9uieme(t$ A(!i""#y e9uieme(t$ #(d 3&t)&"i& Fit The$e h#e bee( )uthe !"#$$i)ied i(t& 3im#y (eed$ S#)ety etu($ #(d Li9uidity Se!&(d#y (eed$ J t#7 e))i!ie(!y e(ty b#ie$ #(d !#$h )"&* e))e!tie(e$$ Teti#y (eed$ J "&(. tem .&#"$ #(d h&"di(.$/"i9uid#ti&( !&$t The %im#y $e!&(d#y #(d teti#y (eed$ h#e bee( #$$i.(ed >0K ;0K ;0K e$%e!tie"y #(d e#!h &) the $ub!#te.&ie$ h#e #"$& bee( #$$i.(ed i(diidu#" *ei.ht$
The$e #(+$ #e mu"ti%"ied *ith e$%e!tie *ei.ht$ e#!h !#te.&y #(d i( tu( the $um &) the$e #e mu"ti%"ied *ith by the *ei.ht$ #$$i.(ed t& the %im#y e9uieme(t$
F& $#)ety #$ the
%##mete i( !&m%#i$&( *ith mutu#" )u(d$ e9uity i$ #(+ed the "&*e$t be!#u$e &) the i$+ it !#ie$ *ith it M&$t &) the $!i%t$ #e m#+et die( A(ythi(. & #(y&(e !#( #))e!t the m#+et O( the &the h#(d b&(d$ #e #(+ed the hi.he$t be!#u$e they #e .&e(me(t b#!+ed C&(t#$t e9uity i$ #(+ed the hi.he$t )& etu($ #$ it i$ &(e &) the be$t i(e$tme(t &%ti&($ t& .ie .&&d etu($ B&(d #e #ted the "&*e$t be!#u$e &) the #$$ued etu($ %&mi$ed by the .&e(me(t B&th &) them %#y #&u(d 8K - K &) #((u#" etu($
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F& "i9uidity mutu#" )u(d$ #(d .&"d #e #(+ed the hi.he$t #$ the$e !#( be !&(eted i(t& !#$h immedi#te"y #$ #(d *he( the i(e$t& *i$he$ t& d& $& =&*ee th#t i$ (&t the !#$e *ith the e#" e$t#te & 33F #!!&u(t #$ the )&me i$ (&t e#$y t& di$%&$e #(d the "#te h#$ # "&!+ i( %ei&d &) 1 ye#$ Ee( i( !#$e &) e(ty b#ie e9uity #(d mutu#" )u(d$ #e #(+ed the hi.he$t #t they !#( be b&u.ht #t #(y %&i(t &) time *ith mi(im#" i(e$tme(t But it $ i$ (&t the $#me *ith the e#" e$t#te $i(!e y&u !#((&t buy the "#(d y&u *i$h t& u(ti" #(d u("e$$ thee i$ $&me&(e *i$hi(. t& $e"" it
T#+i(. i(t& !&($ide#ti&( the t#7 #(."e &) #( i(e$tme(t the( the m&$t #d#(t#.e&u$ #e the e#" e$t#te #(d e9uity mutu#" )u(d$ I( !#$e &) e#" e$t#te # m#7imum #m&u(t &) $1 "#+h$ i$ #""&*ed #$ dedu!ti&( )& the i(tee$t %#id )& the "&#( t#+e( t& eithe buy # h&u$e & !&($tu!t it Ee( i( !#$e &) mutu#" )u(d$ i) the u(it$ #e he"d )& m&e th#( # ye# &("y 10K &) the !#%it#" #%%e!i#ti&( i$ t#7ed #(d (&t #t the %e#+ #te$ B#(+ FD$ #e the *&(. !h&i!e i) &(e i$ "&&+i(. )& the t#7 #$%e!t be!#u$e )i$t"y the #m&u(t &) i(tee$t %#id i$ "e$$ #(d $e!&(d"y TDS i$ #%%"i!#b"e Thee #e # )e* &%ti&($ *hi!h meet &u "&(.-tem .&#"$ The $y$tem#ti! i(e$tme(t %"#( # $%e!i#" )e#tue i( mutu#" )u(d$ i$ the be$t &%ti&( t& meet y&u "&(.-tem e9uieme(t$ )& the $#me mutu#" )u(d$ h#$ the hi.he$t $!&e i( the #$$et .id The $#me thi(. i$ ee( #%%"i!#b"e t& the e#" e$t#te #$ thee i$ # hi.h %&$$ibi"ity &) #%%e!i#ti&( &e time #(d eey !h#(!e$ &) de%e!i#ti&( B#(+ FD$ #e #(+ed the "e#$t be!#u$e the !#%it#" #%%e!i#ti&( i$ (&t hu.e
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Thi(.$ !h#(.ed i( e#"y m#y 2006 $i(!e the( the $t&!+ m#+et m&ed u% m&e th#( ?0K *hi"e m#(y $t&!+$ h#e m&ed m&e e#" e$t#te %i!e$ #e #"$& $*i(.i(. u% #"th&u.h it i$ di))i!u"t t& m#% i( thi$ )#.me(ted m#+et &"d #(d Si"e %i!e$ h#e $%uted
B&(d$ !&(ti(ue t& .ie e#$&(#b"e etu($ but it i$ (& "&(.e "e#d$ i( the !&m%##tie #(+i(.$ i.ht (&* e9uity "&&+$ the be$t bet *ith e#" $t#te !&mi(. i( $e!&(d The 9ue$ti&( i$ h&* "&(. *i"" thi$ "#$tP I) it i$ # $h&t-tem %he(&me(&( .&i(. th&u.h the h#$$"e &) $*it!hi(. &e )&m debt m#y (&t be *&th it I) it$ # "&(.-tem $itu#ti&( #$$et$ $h&u"d be m&ed i(t& e9uity #(d e#" e$t#te Thi$ m#y be "&(.-tem $itu#ti&( The etu($ )&m the m#+et *i"" be .&&d #$ "&(. #$ %&)it#bi"ity i(!e#$e$
Si(!e the e!&(&my i$ 'u$t .etti(. i(t& e!&ey m&de th#t !&u"d h&"d
tue )& $ee#" ye#$ e#" e$t#te #"ue$ e$%e!i#""y i( $ubub#( #e#$ & $m#"" t&*($ !&u"d im%&e )uthe
The im%&eme(t i( &#d (et*&+$ *i"" %u$h u% the #"ue &) )#-)"u(.
dee"&%me(t Thee i$ #"$& $&me #ttem%t t& #me(d te(#(!y "#*$ #(d "i)t ub#( !ei"i(.$ *hi!h h#e $tu(ted the e#" e$t#te m#+et My .ut )ee"i(. i$ th#t # "#.e *ei.ht#.e i( e9uity #(d i( e#" e$t#te *i"" %#y &)) dui(. 200?2008 But d&(t e7it debt & $e"" &)) y&u .&"d Ty #(d buy m&e i( the *#y &) e9uity #(d e$e#!h e#" e$t#te &%ti&($ i( $m#"" t&*($/$ubub$
e.#d"e$$ &) y&u me#($ &) meth&d +ee% i( mi(d th#t thee i$ (& .e(ei! die$i)i!#ti&( m&de" th#t *i"" meet the (eed$ &) eey i(e$t& Y&u %e$&(#" time h&i:&( i$+ t&"e#(!e i(e$tme(t
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.&#"$ )i(#(!i#" me#($ #(d "ee" &) i(e$tme(t e7%eie(!e *i"" %"#y # "#.e &"e i( di!t#ti(. y&u i(e$tme(t e7%eie(!e *i"" %"#y # "#.e &"e i( di!t#ti(. y&u i(e$tme(t mi7 St#t by )i.ui(. &ut the mi7 &) $t&!+ b&(d$ #(d !#$h th#t *i"" be e9uied t& meet y&u (eed$ F&m thee detemi(e e7#!t"y *hi!h i(e$tme(t$ t& i( !&m%"eti(. the mi7 $ub$tituti(. t#diti&(#" #$$et$ )& #"te(#tie$ #$ (eeded
80
