A fund may receive income in the form of dividends and interest on the securities it owns. The price of the securities a fund owns may increase. When a fund sells a security that has increased in price, the fund has a capital gain. If a fund does not sell but holds on to securities that have increased in price, the value of its shares (NAV) increases. The higher NAV reflects the higher value of your investment.

Any day is the best time to invest in mutual funds. Remember, you must invest according to your financial goals and risk tolerance.

Mutual funds work by pooling money together from many investors. That money gets used to purchase stocks, bonds, and other securities. Because mutual funds invest in a collection of companies, they offer investors instant diversification (thus lower risk).

Here are some guidelines you may consider while selecting mutual funds for investments. (For further details it is advisable to seek the help of a mutual fund advisor) Goals - This is the basic. When you invest in a mutual fund, keep your target in mind. That is, what is the purpose of investment? How long are you planning your investment and with what return expectations? Risk - Risk comes from not knowing what you are getting into. Before choosing a mutual fund, the investor should analyze the risk associated with the investment. Liquidity - Investors should know when he/she may require the investment. That is, if the need is short, it’s not for equity mutual funds. This is because it may not provide the expected return. Fund Performance - Fund performance matters. It should be considered for a reasonable time frame. This is to ensure that the investments have gone through multiple market cycles. This would enable consistent returns over a period.

Professional management Risk diversification Affordability & Convenience (Invest small amounts) Liquidity Low cost Well regulated Tax benefits

Mutual funds are good options for both beginners and more experienced investors alike. Both types of investors will benefit from the diversification benefits of mutual funds.

Yes, you can exit or stop a mutual fund anytime. For stopping the SIP, you can fill out the form of the mutual fund to stop further action and you will have to ask your bank to stop the ECS. However please note if the timing qualifies the exit from the fund as “Early Withdrawal” there could be some tax penalties. It is better to seek the advice of a financial advisor.

Your investments in mutual funds should be based on the financial goals you wish to achieve with this investment, your risk appetite, and the amount of time you can stay invested. You should also consider your income & fixed expenses and from this amount calculate the sum you can safely set aside for investing in your future.

Only investments in equity-linked saving schemes or ELSS qualify for tax deduction under section 80C. Investors can invest in ELSS and claim tax deductions of up to Rs 1.5 lakh under Section 80C of the Income Tax Act.

Your income from mutual funds in the form of dividends is entirely exempt from tax provided the fund is an equity/growth fund. However, the tax rate of capital gains depends on the holding period and type of mutual fund.

Taxation of capital gains

SIPs can be one of the best tax-saving instruments with high returns on your investments. You can claim a deduction of up to Rs. 1.5 lakh from your taxable income for investing in ELSS through SIP under section 80(C) of the Income Tax Act.

Mutual fund holders can claim a deduction of the amount invested in the scheme under section 80C of the Income Tax Act, 1961. The maximum amount of deduction that can be availed under the above-mentioned act is Rs. 1,50,000 for a particular assessment year (AY).

Taxes are applicable on the redemption of an investment. Even in mutual funds, you can incur a short-term or long-term capital gains tax when you redeem your units. These taxes apply similarly to SIP and lump sum investments.

Mutual Funds provide earnings in two forms – Capital Gains and Dividends, and these need to be disclosed in the ITR

Profits gained from investment in mutual funds are subject to taxation like any other asset-class investments. So, before investing in mutual funds, you should clearly understand how your returns are being taxed. Learning about mutual fund taxation will help you plan the investments accordingly and you can also avail of tax deductions in certain cases.

The schemes will be broadly classified into the following categories: 1. Equity Schemes 2. Debt Schemes 3. Hybrid Schemes 4. Solution Oriented Schemes 5. Other Schemes

If you consistently invest in mutual funds regularly and if the market is down the opportunity to generate more returns increases as the market recovers over some time. To understand this concept, we recommend you watch this video: https://www.youtube.com/watch?v=vpBxNW7sXeE

Investments in mutual funds have been proven to be more effective because of the following reasons: Professional management Better Risk diversification Affordability & Convenience (Invest small amounts) Better Liquidity Better flexibility Well regulated Better Tax benefits

Mutual funds as an investment option for wealth creation can work due to compounding potential, easy liquidity, transparency in operations, and diversification across assets, thus reducing risk, are managed by professionals, and require a low investment to start.

Yes, NRI can also invest in mutual funds, however, they have to adhere to the Foreign Exchange Management Act (FEMA). NRIs who wish to invest in mutual funds will have to do so using the rupee. Indian mutual fund houses do not accept investments in any other currency except the rupee. Therefore, NRIs who wish to make investments in mutual funds will have to open either of the following 3 bank accounts: FCNR account (Foreign Currency Non-Resident Account), NRO Account (Non-Resident Ordinary Rupee Account), or NRE Account (Non-Resident External Rupee Account).

Mainly, the generation of negative returns happens due to two main reasons, firstly because of false selection of the mutual funds and secondly due to the market volatility. Let’s discuss each of the reasons one by one: False Selection of Scheme - Review your portfolio and check the performance of the schemes. Analyze the allocation of portfolio and sector to decide the recovery rate of the scheme. If the scheme shows no sign of improvement, then it’s time to exclude it from the portfolio. You can add new plans according to the correct market conditions. It is indeed a good approach to review your portfolio regularly and re-balance it at the same time. Market Volatility - Fluctuation in the market is another reason for poor returns. In such cases, you can use different investment strategies to minimize the loss of money. Utilize the opportunity of market volatility and buy a large number of units at low NAVs when the market is down, this will help you in generating good returns when the market will start to recover in the future.

SIP (Systematic Investment Plan) is an investment strategy offered by different mutual fund houses to investors. Investors can invest a fixed sum of money regularly in their mutual funds. The investment can be made on a quarterly, monthly, or weekly basis. Some of the benefits of SIP are: Disciplined Investing: When investing via SIPs, one need not analyze the market or determine a suitable time to invest as the SIP installment amount gets auto deducted from your account and goes into mutual funds. Rupee Cost Averaging: Rupee cost averaging is a unique feature of SIPs as an investor can buy more units when the market is low. Similarly, one will buy lesser units during an upswing market. As a result, investors can navigate market fluctuations and make their investments averse to volatility. Benefits of Compounding: This is one of the top benefits of SIP investment. A systematic investment plan operates on the principle of compounding, which takes place when profits earned on an investment are reinvested, thereby increasing potential returns. Therefore, one’s investment will generate earnings not only on that initial investment amount but on the interest earned subsequently as well. Simultaneous Investments: As one can invest in SIPs with just ₹500, one can invest in multiple funds simultaneously. Thus, you can reap benefits from various mutual funds at a time.

One can invest in mutual funds by submitting a duly completed application form along with a cheque or bank draft at the branch office or designated Investor Service Centers (ISC) of mutual Funds or Registrar & Transfer Agents of the respective the mutual funds.

It depends on what kind of mutual fund you invest in. Equity & Equity Oriented Debt/Fixed income Hybrid – a mix of both If we have 12% expected returns on one side from equity and 6% expected returns on the other side from debt/bonds. If you invest 50:50 in each of these, your weighted average returns are expected to be (0.5 * 12%) + (0.5 * 6%) = 9%, before taxes. If you invest in the ratio of 80:20 for equity: debt, then your expected weighted average return would be (0.8 * 12%) + (0.2 * 6%) = 10.8%, before taxes.

There are no rules against investing in SIP mutual funds. You can invest in multiple funds at the same time.

To invest in mutual funds, one needs to get KYC complied before investing. KYC registration can be done either by paper-based method or online. The Documents required for KYC include proof of address and proof of identity documents (Aadhaar/Passport/Voter ID/ PAN card etc.)

Firstly, it is not possible to predict the future course of the market and link your investments with it. The rule is, to invest according to your financial goals and risk profile. Choose your options based on these factors rather than the prevailing market condition.

Government Bond Market and Corporate Bond Market

Initial Public Offer (IPO): An initial public offering (IPO) is a company’s first stock sale. In other words, it’s when a business decides to start selling its shares to the public. The company will decide how many shares it wants to offer, and an investment bank will suggest an initial price for the stocks based on their predicted demand.

A Follow On Public Offer (FPO) is a type of public offering where the issuer of the securities already has outstanding shares registered. An FPO allows these shareholders to sell some or all of their holdings and any new investors who may purchase shares through the offer. An FPO can have several benefits for a company, including providing liquidity to shareholders and raising additional capital. It can also help to increase the market visibility and trading volume of a company’s shares.

They will see 15+ such questions at the end of the course They will not attempt to so sample questions in between the course

CRISIL AAA – (Highest Safety) CRISIL AA – (High Safety) CRISIL A – (Adequate Safety) CRISIL BBB – (Moderate Safety) CRISIL BB – (Moderate Risk) CRISIL B – (High Risk) CRISIL C – (Very High Risk) CRISIL D – (Default)

Category I AIF: AIFs which invest in start-up or early stage ventures or social ventures or SMEs or infrastructure, or other sectors or areas that the government or regulators consider as socially or economically desirable and shall include venture capital funds, SME Funds, social venture funds, infrastructure funds, and such other Alternative Investment Funds as may be specified. Category II AIF: AIFs that do not fall in Category I and III and do not undertake leverage or borrowing other than to meet day-to-day operational requirements and as permitted in the SEBI (Alternative Investment Funds) Regulations, 2012. Category II AIF: AIFs employ diverse or complex trading strategies and may employ leverage through investment in listed or unlisted derivatives.

It grows when the economy experiences an expansionary phase and declines during when recessionary phase Consumer durability is a typical example. When people have money, they grow, and when people do not have money, it fails.

Equity Shares Debentures & Bonds Warrants and Convertible Warrants Indices Mutual Funds Exchange Traded Funds Hybrid and Structured Products Commodity & Metals

The portfolio manager should provide the client with a report on a regular basis, according to the agreement, but not more than once every three months and such report shall include the following information: – The portfolio’s composition and value, a description of the securities and commodities, the number of securities, the value of each security held in the portfolio, the units of goods, the value of goods, the cash balance, and the portfolio’s aggregate value as of the date of the report. Transactions made throughout the reporting period, including the date of the transaction and the specifics of the purchases and sales. Beneficial interest was obtained in the form of interest, dividends, bonus shares, rights shares, and so on throughout that time period. Expenses incurred in maintaining the client’s portfolio. Specifics of risk anticipated by the portfolio manager, as well as the risk associated with assets suggested for investment or disinvestment by the portfolio manager. Default in coupon payments or any other payment default in the underlying debt instrument, and, if applicable, downgrade to default rating by rating agencies. Information of the commission paid to the distributor(s) for this client

A stock warrant represents the right to purchase a company’s stock at specific Costs and on a specific date. A stock warrant is issued directly by a company to an investor. Stock options are typically traded between investors. A stock warrant represents future capital for a company.

Investment Basics Securities Markets Investing in Stocks Investing in Fixed Income Derivative Mutual Funds Role of Portfolio Managers Operational Aspects of PMS Portfolio Management Process Performance Measurement and Evaluation of PMS Taxation Regulatory Governance & Ethics

Instruments with this rating are considered to have a high risk of default regarding timely servicing of financial obligation.

The examination seeks to create a common minimum knowledge benchmark for distributors of Portfolio Management Services (PMS). The certification aims to enhance the PMS’s quality distribution and related support services.

No, SEBI has not given its approval to any of the Portfolio Manager’s services. An investor must invest in the services based on the disclosure document’s terms and conditions as well as the portfolio manager’s agreement with the investor.

To become a portfolio manager, an applicant must submit an online application through the SEBI Intermediaries Portal and pay a non-refundable application fee of INR1,00,000/- by direct deposit into SEBI’s bank account via NEFT/RTGS/IMPS or any other mechanism permitted by RBI. Alternatively, the application fee can be paid by demand draft payable to ‘Securities and Exchange Board of India’ and payable in Mumbai or the location of the appropriate regional office. Anyone interested in becoming a Portfolio Manager under the PMS Regulations must submit an application in Form A using the online system at https://siportal.sebi.gov.in.

Stock Exchanges Depositories Depository Participants Trading Members Authorized Persons Custodian Clearing Corporations Clearing Banks Merchant Bankers Underwriters Institutional Clients

Differential Voting Rights (DVR) shares are shares that are permitted to be issued with differential voting and differential dividend rights. DVR shares are different from ordinary shares in two distinct ways. Firstly, they offer lower voting rights compared to ordinary shares.

Inflation Risk Credit Risk Business Risk Market Risk Country Risk Geo-Political Risk Liquidity Risk Re-Investment Risk

The systematic risk or market risk refers to risks applicable to the entire financial market or a wide range of investments.

Instruments with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.

Stock Exchanges Depositories Depository Participants Trading Members Authorized Persons Custodian Clearing Corporations Clearing Banks Merchant Bankers Underwriters Institutional Clients

The Dictionary meaning of the term speculation is “the forming of a theory or conjecture without firm evidence.”

This is a way for companies, usually in India, to raise money by issuing securities to qualified institutional buyers. It was designed to help Indian companies raise capital from the domestic market rather than overseas. SEBI has defined the eligibility criterion for corporates to be able to raise capital through QIP and other terms of issuance under QIP such as quantum and pricing etc.

Equity Shares & Stock Differential Voting Rights Preferential Shares Depository Receipts Equity Warrants

The nominal rate of return is the amount of money generated by an investment before factoring in expenses such as taxes, investment fees, and inflation. If an investment generated a 10% return, the nominal rate would equal 10%. After factoring in inflation during the investment period, the actual (“real”) return would likely be lower. Nominal Rate of Return = Present Market Value – Original Market Value / Original Investment Value.

Charges for all transactions through self or associates in a financial year (broking, Demat, custody, etc.) should be capped at 20% by value per associate (including self) per service. Such restrictions will apply to DEMAT services, custodian services, and other related services. Furthermore, any fees charged to self/associates must not be higher than those charged to non-associated for the identical service. In the case of Broking services, for example, the total amount paid to the associate Stockbroker during the year cannot exceed 20% of the total brokerage paid for trades on behalf of its clients. If Portfolio Manager has multiple associate Stockbrokers, each transaction through each associate Stockbroker is limited to 20% of the total brokerage paid for trades on behalf of the Portfolio Manager’s clients during the year.

Inflation risk represents the risk that the money received on an investment may be worth less when adjusted for inflation. Inflation risk is also known as purchasing power risk. It is a risk that arises from the decline in the value of the security’s future cash flows.

Chapter 1 – 5% Chapter 2 – 3% Chapter 3 – 5% Chapter 4 – 5% Chapter 5 – 6% Chapter 6 – 7% Chapter 7 – 10% Chapter 8 – 12% Chapter 9 – 12% Chapter 10 – 15% Chapter 11 – 5% Chapter 12 – 15%

Create products and services that have low-Income elasticity Minimum impact of economic cycles. Food, agriculture output and health care are typical examples.

Plain Vanilla Bonds Foreign Currency Convertible Bonds Equity Linked Debentures Commodity Linked Debentures Mortgage Based Securities

Professional Investement Management Diversification Convenience Unit Holders account administration and services Reduction in transaction costs Regulatory Protection Product Variety

Low growth of the market along with a low market share of the company Digital Camera

Government Securities Central Govt. State Govt. Public Sector Bonds Government Agencies / Statutory Bodies Public Sector Undertakings Private Sector Bonds Corporates Banks Financial Institutions

Buy Side Research Sell-Side Research Independent Research

Business risk is the risk inherent in the operations of a company. It is also known as an operating risk because it is caused by factors that affect the company’s operations. Common sources of business risk include the cost of raw materials, employee costs, introduction and position of competing products, and marketing and distribution costs.

Instruments with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.

Portfolio Managers must invest funds of their clients in securities listed or traded on a recognized stock exchange, money market instruments, units of Mutual Funds through the direct plan, and other securities as specified by the Board from time to time under the Discretionary Portfolio Management Service (DPMS). Portfolio Managers can invest up to 25% of a client’s AUM in unlisted stocks under the Non-Discretionary Portfolio Management Service (NDPMS), in addition to the securities allowed for discretionary portfolio management. Units of Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), debt securities, shares, warrants, and other securities not listed on any recognized stock exchanges in India are considered “unlisted securities” for investment by Portfolio Managers.

For information on SEBI regulations and circulars relevant to portfolio managers, investors may visit the SEBI website at www.sebi.gov.in. The SEBI website also has the addresses of the registered portfolio managers. Information on monthly reports submitted by Portfolio Managers to SEBI can be accessed at https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doPmr=yes.

Inflation represents the rate the cost of goods and services increases over a period of time.

When you INVEST, the Compounding Method determines the valuation of the investment in the FUTURE. FV = PV (1+r)^n

Fundamental Research Quantitative Research Technical Research Derivative Research Events & News Based Research

No, SEBI does not vouch for the correctness or completeness of the Disclosure Document’s contents.

Instruments with this rating are in default or are expected to be in default soon.

There are 12 Chapters to study.

Exchange rate risk is incurred due to changes in the exchange rate of a domestic currency relative to a foreign currency. When a domestic investor invests in foreign assets or a foreign investor invests in domestic assets, the investment is subject to exchange rate risk.

In a discretionary portfolio management service, the portfolio manager handles each client’s assets and securities separately and independently, according to the client’s needs. The portfolio manager in the non-discretionary portfolio management service administers the money according to the client’s instructions.

Only Subjective case study Only Numerical case study Both numerical and subjective case study

The number of non-associated Stock Brokers, Depository Participants, or Custodians that a Portfolio Manager can work with is unrestricted. For example, the Portfolio Manager may use a single non-associated Stock Broker to execute 100 per cent of its customers’ trades.

The portfolio manager must take a minimum of INR 50 lacs from the customer, or securities with a minimum value of INR 50 lacs.

Currency Derivative Equity Gold Derivative Government Securities Marketable Securities Silver Derivative Mortgage Debt Debt Paper Mutual Fund

Instruments with this rating are considered to have a very high risk of default regarding timely servicing of financial obligation.

Interest rate risk refers to the risk that bond Costs will fall in response to rising interest rates and rise in response to declining interest rates. Bond investments are subject to volatility due to interest rate fluctuations. This risk also extends to debt funds, which primarily hold debt assets. The relationship between rates and bond Costs can be summed up as follows: If interest rates fall or are expected to fall, bond Costs increase. If interest rates rise or are expected to rise, bond costs decline.

A bonus issue definition is an issue of free shares distributed pro rata to existing stockholders instead of a dividend. The formal convention of declaring a Bonus is on a prorated basis like 2: 5 (2 bonus share for every 5 held).

Michael Porter Five Force Model PESTLE Analysis BCG Matrix SCP Analysis

An ESOP is an employee ownership vehicle, allowing the company to provide employees with an ownership stake and benefit from its success. So they are typically Equity warrants that essentially convert into Equity/ownership on a specified date, and that date is called the Vesting Date. The rights may vest fully or partially over the vesting period.

Savings is just the difference between Money Earned and Money Spent.

Equity Shares Debentures & Bonds Warrants and Convertible Warrants Indices Mutual Funds Exchange Traded Funds Hybrid and Structured Products Commodity & Metals Equity Instruments Fixed Income Instruments Real Estate Distressed Products Other Products

Market Risks Sector Specific Risks Company Specific Risks Liquidity Risks

When affected by the extreme effects of economic cycles. During the recession, production drops. During the economic recovery, it experiences massive growth in the early phase. Auto and real estate is the typical example.

EVA or Economic Value Added is referred to as economic profit, as it attempts to capture the true economic profit of a company. This measure was devised by the management consulting firm Stern Value Management, originally incorporated as Stern Stewart & Co.

The agreement between the portfolio manager and the investor governs the portfolio manager’s services. The contract should include the minimum information required by the SEBI Portfolio Manager Regulations. Additional conditions might, however, be set by the Portfolio Manager in the client agreement. As a result, an investor should thoroughly examine the agreement before signing it.

When you buy, the valuation of the company present is determined by the discounting method. Discounted cash flow formula = CFt/(1+r)^t Weighted average cost of Capital (WACC) = (D/D+E)*𝑲_𝒅*(1-t) + (E/D+E)* 𝑲_𝒆

40% will be Theory with sums, 35% will be theory only, and 25% will sum only questions.

Macro Risk – Systematic Risk Industry Risk – Systematic Risk Company Risk – Un-Systematic Risk

The examination consists of 80 multiple choice questions and 3 case-based questions. The assessment structure is as follows: Multiple Choice Question (80*1 Mark Each) – 80 Marks 3 Case-Based Questions 2 Cases (5 Questions * 1 Marks Each) – 10 Marks 1 Case (5 Questions * 2 Marks Each) – 10 Marks The exam should be completed in 2 hours. The passing score for the examination is 60%. There shall be a negative marking of 25% of the marks assigned to a question.

Portfolio Management Services or PMS is a High Conviction best idea basket of stocks built around time-tested investment philosophy and principle by an extremely talented and competent investment professional.

A portfolio manager is a legal entity that, under the terms of a contract with a client, advises, directs, or conducts the management or administration of the client’s portfolio of securities, assets, or money (whether as a discretionary portfolio manager or otherwise).

Preference shares, also commonly known as preferred stock, is a special type of share where dividends are paid to shareholders prior to the issuance of common stock dividends. For preference shareholders, the dividend is fixed; however, they don’t hold voting rights as opposed to common shareholders.

Financial Distributors / IFA / MFDs / Brokers SEBI Registered Investment Advisors Direct Channel

Both market and the market share of the company are growing rapidly SUV segment and Hyundai Creta. Smart home and Cera sanitary appliances

Clients of Portfolio Managers who were onboarded before January 21, 2020, must comply with the new minimum investment amount requirement and top up their accounts to a minimum of INR 50 Lacs.

Step 1: Gross Sales – GST = Net Sales Step 2: Net Sales – Cost = EBITDA Step 3: EBIT (DA) – Interest (Debt + Equity) = Cash flow from operations (EBTDA) Step 4: Cash flow from Operations – Capex or Re-investment Expense = Free Cash flow to FIRM, also known as Profit Before tax (PBT) Step 5: Free Cash flow to FIRM – (Tax & Depreciation & Amortization) = Free Cash flow to EQUITY, also known as Profit After tax (PAT)

The business segment is growing fast, but the company is unable to capture the growing market Tata motors cars /Bajaj pulsar bike Smart mobile and LG mobile phone decision to exit.

Noncompliance is defined as an active violation caused by investor activity in response to corporate acts such as a subscription to rights issues, which leads to a breach of the 25% restriction applicable to NonDiscretionary portfolios. A passive violation caused by business acts such as bonuses based on the value of unlisted securities, on the other hand, will not be considered non-compliance.

Investors may discover the name, address, and phone number of the portfolio manager’s investor relations officer (who handles investor questions and complaints) in the Disclosure Document. The Disclosure Document also mentions the grievance resolution and dispute procedure. Investors can approach SEBI for a redress of their grievances if the Portfolio Manager does not address their concerns. Investors can file complaints via SCORES (SEBI Complaints Redress System – https://scores.gov.in/scores/Welcome.html) or by writing to the address shown below. Office of Investor Assistance and Education, Securities and Exchange Board of India, SEBI Bhavan II Plot No. C7, ‘G’ Block, Bandra-Kurla Complex, Bandra (E), Mumbai – 400 051

Instruments with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

No.

A discretionary portfolio manager’s performance is measured using the time-weighted rate of return (TWRR) technique over the previous three years or duration of operation, whichever is shorter. SEBI Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26, dated February 13, 2020, includes information on portfolio manager performance reporting as well as a client reporting format that includes information on the client account’s performance, portfolio manager’s performance, and the appropriate benchmark.

Begin with the current market value at the start of the term. Make your way to the end of the period by moving ahead in time. Calculate the portfolio’s market value immediately before contributing to or withdrawing from it. Calculate a sub-period return for the time interval between the valuation dates, i.e. the contribution and/or withdrawal dates, using the formula: (Ending Market Value – Beginning Market Value – Contribution + Withdrawal) ÷ (Beginning Market Value + Contribution – Withdrawal) Steps 3 and 4 should be repeated for each contribution and/or withdrawal. Calculate a subperiod return for the last period until the end of the period market value when there are no more contributions and/or withdrawals. Take the product of (1+sub-period returns) to compound the sub-period returns. Geometric linking or chain connecting of sub-period returns is what this is termed. Subtract one from the product value calculated in step seven. To calculate the TWRR for the time period under consideration, multiply the result by a percentage as shown in step 8 above.

Prior to entering into an agreement with the client, the portfolio manager gives the client the Disclosure Document. The Disclosure Document includes the amount and method of payment of fees due by the client for each activity, portfolio risks, complete disclosures regarding transactions with related parties, the portfolio manager’s performance, and the portfolio manager’s audited financial statements for the previous three years.

Company Analysis Industry Analysis Economy Analysis

Price to Earnings Ratio (P/E Ratio) Price to Book Value Ratio (P/BV) Price to Sales Ratio (P/S Ratio) EVA and MVA Price to Earnings Growth (PEG Ratio) Enterprise Value to Sales (EV/S)

When demand for goods or services exceeds production capacity When production costs increase, prices When prices rise, wages rise too, in order to maintain living costs.

The private placement is a term used specifically to denote a private investment in a company that is publicly held. Private equity firms that invest in publicly traded companies sometimes use the acronym PIPEs to describe the activity. Private placements do not have to be registered or limited to listed shares only because no public offering is involved. The limit is less than 50 per financial year and less than 200 in total placement.

No.

Unsystematic risk is the risk specific to individual securities or a small class of investments. Hence it can be diversified away by including other assets in the portfolio.

According to the SEBI (Portfolio Managers) Regulations, 2020, the portfolio manager must charge a fee for portfolio management services based on the agreement with the customer. The cost may be a set sum, a performance-based fee, or a combination of the two. The portfolio manager may not charge the customers any advance fees, either directly or indirectly. The agreement between the portfolio manager and the client must specify, among other things, the amount and manner of fees due by the client for each activity for which the portfolio manager provides services directly or indirectly.

Portfolio managers are unable to enforce a lock-in on their customers’ investments. However, according to the provisions of SEBI Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26, a portfolio manager might charge the client appropriate exit costs for an early withdrawal as specified in the agreement.

Re-investment risk arises from the probability that income flows received from an investment may not be able to earn the same interest as the original interest rate. The risk is that intermediate cash flows may be reinvested at a lower return as compared to the original investment. The rate at which the re-investment of these periodic cash flows will affect the investment’s total returns.

Geographic Migration: Discovery of shell gas helped the US to score over OPEC Cross Industry Migration: Conventional banks were replaced by Digital and Internet banking, and now Neo-banking Value Chain Migration: Higher benefits than the lower value chain. A typical example of a telecom operator – JIO, which benefitted from Vodafone and others Cross Companies Migration: Economic value creation and superior technology or features scores over others – like Samsung and Apple score over other small mobile phone manufacturer. Cross Product Migration: Usage from serving to cloud computing is a typical example.

Low growth market but the high market share of the company ITC classmate – slow growth, but the market growth of the company is increasing rapidly Edible Oil and Saffola Gold

Economic Analysis Industry Analysis Company Analysis

A Mortgage-backed Security (MBS) is fixed income security that is collateralized by a mortgage or a collection of mortgages or loans. An MBS is asset-backed security traded on the secondary market, enabling investors to profit from the mortgage business without the need to buy or sell mortgages or loans directly. A mortgage contained in an MBS must have originated from an authorized financial institution.

Risk is any uncertainty with respect to your investments that has the potential to affect your financial welfare negatively. For example, your investment value might rise or fall because of market conditions.

Instruments with this rating are considered to have a moderate risk of default regarding timely servicing of financial obligations.

35% is about knowledge and concept, and the rest 65% is about experience.

Annexure 2 is an example of how to calculate the performance fee based on the high watermark approach.

National Income Savings and Investment Inflation Un-Employment Rate FDI (Foreign Direct Investment) Foreign Portfolio Investment Fiscal Policy Monetary Policy Balance of Trade Export & Import Exchange Rate Trade Deficit

Default risk or credit risk refers to the probability that borrowers will not be able to meet their commitment to paying interest and principal as scheduled. Debt instruments are subject to default risk as they have pre-committed payouts. The ability of the issuer of the debt instrument to service the debt may change over time, creating default risk for the investor.

In a rights issue – also called a rights offering – a company gives its shareholders the chance to buy additional shares, proportionate to the amount they already hold, and usually at a discounted rate compared to the current market price. The shareholders have a fixed time period to decide whether they want to ‘take up their rights.

No.

Instruments with this rating are considered to have an adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

Investment is the current commitment of savings with an expectation of receiving a higher amount of committed savings. Investment involves some specific time period. It is the process of making the savings work to generate a return.

The time-weighted rate of return divides the return on an investment portfolio into distinct intervals based on whether money was added to or taken out of the fund. Annexure 1 has a full computation and an example illustration in this respect.

OTC Markets – Fragmented Marketplace Exchange Markets – Centralized Marketplace

Initial Public Offer (IPO) Follow on Public Offer (FPO) Rights Issue Private Placement Preferential Issue Qualified Institutional Placement Bonus Issues On-Shore and Off-Shore Offerings Offer for Sale Employee Stock Ownership Plan FCCB (Foreign Currency Convertible Bond) Depository Receipts (ADR + GDR) Anchor Investor – 10crores & above

Anchor Investor is a new concept introduced by regulators recently. Anchor Investors belong to the Qualified Institutional Buyers (QIB) category. Hence, they are always in a better position to measure the fundamentals as well as the future prospects of a company. QIB includes foreign institutional investors (FII), mutual funds, banks, provident funds, and other market intermediaries. The minimum application size for each anchor investor is Rs 10 crore.

While raising capital, issuers can use either issue securities in the domestic market and raise capital or approach investors outside the country. If capital is raised from the domestic market, it is called an onshore offering, and if capital is raised from investors outside the country, it is termed an offshore offering.

Preference Shares are very typical and special shares / equity instruments with some of the common characteristics of debt and equity. They behave like Shares in the form of ownership, and their prices can climb over time as they are traded, but are similar to debt because they pay investors fixed returns in the form of dividends. Preference Shares are used by professional and private investors who prefer a medium risk and return.

The portfolio manager must have a net worth of at least INR 5 crore.

Foreign Portfolio Investor P-Note Participants Mutual Funds Insurance Companies Pension Funds PE Firms Hedge Funds AIFs Investment Advisors Corporate Treasuries Clearing Banks Merchant Bankers Underwriters Foreign Portfolio Investors Institutional Clients

Depository Receipts is a negotiable and transferable instrument in the form of financial security t that is often traded on a local stock exchange. Still, it represents security, which is often an equity instrument that is issued by a foreign company listed on a foreign stock exchange. Thus it is an instrument that allows the investors to hold shares in the equity of other countries on a domestic exchange.

Diversification of Correlated non-asset reduces risks in an investment, and it is also called Cross-sectional Risk Diversification. This is achieved by reducing risk by holding different equities in many different kinds of business at a certain point in time. This is also maximized when you hold uncorrelated equities for a long period of time. That is why it is called TIME IN MARKET is important and NOT the TIMINGS

An FCCB is issued as a fixed income instrument / bond by an Indian enterprise that is expressed in foreign currency. The principal and interest are also payable in denominated foreign currency. The maximum tenure of the bond is 5 years. Structurally, FCCB is a quasi-debt investment, which can be converted into equity shares at the choice of investors either immediately after issue, upon maturity, or during a set period, at a predetermined strike rate or a conversion price.

Step 1: Gross Sales – GST = Net Sales Step 2: Net Sales – Cost = EBITDA Step 3: EBIT (DA) – Interest (Debt + Equity) = Cash flow from operations (EBTDA) Step 4: Cash flow from Operations – Capex or Re-investment Expense = Free Cash flow to FIRM, also known as Profit Before tax (PBT) Step 5: Free Cash flow to FIRM – (Tax & Depreciation & Amortization) = Free Cash flow to EQUITY, also known as Profit Before tax (PBT)

Over-the-Counter Market Exchange Traded Markets Clearing & Settlement Risk Management Trading

Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry the lowest credit risk.

A depositary receipt is a negotiable instrument issued by a bank to represent shares in a foreign public company. The company is considered public since any interested investor can purchase company shares in the public exchange to become equity owners. This allows investors to trade in the global markets.

Mutual funds Pension funds Insurance companies Alternative investment funds Foreign Portfolio Investor Investment Advisors EPFO (Employee Provident Fund Organisations) National Pension System Family Offices Corporate Treasuries

Liquidity or marketability refers to the ease with which an investment can be bought or sold in the market. Liquidity risk refers to an absence of liquidity in an investment. Thus, liquidity risk implies that the investor may not be able to sell his investment when desired, or it has to be sold below its intrinsic value, or there are high costs to carrying out transactions. All of this affects the realizable value of the investment.

In line with the provisions of the client’s agreement with the Portfolio Manager, the customer may withdraw partial sums from his portfolio. The value of the portfolio’s investment following such withdrawal, however, must not be less than the required minimum investment amount.

AIFs that are not classified as Category I or III and do not use leverage or borrow only to satisfy day-to-day operating needs, as approved by the SEBI (Alternative Investment Funds) Regulations, 2012. Real estate funds, private equity funds (PE funds), distressed asset funds, and other types of funds are all classified as Category II AIFs.

The tenure of any AIF scheme is computed from the date of the plan’s final closure.

The entire amount of funds committed to the AIF by way of a written contract or other similar agreement as of a specific date is referred to as the “corpus.”

Yes. The launch of schemes by an AIF is contingent on the submission of a placement memorandum with SEBI. It should also be mentioned that an AIF must pay Rs. 1 lakh in scheme fees to SEBI prior to the commencement of the scheme while filing the placement memorandum. This charge must be paid at least 30 days prior to the start of the plan. Payment of scheme fees is not required in the case of the AIF’s first scheme (other than an angel fund) and angel funds.

An AIF can attract money from any competent investor, including Indians, foreigners, and non-resident Indians, who are willing to take on the risk of investing in predominantly unlisted or illiquid securities. However, an AIF (other than an angel fund) will not take an investment of less than one crore rupee from an investor. The minimum investment amount for investors who are employees or directors of the AIF or employees, or directors of the Manager is twenty-five lakh rupees.

No, Category I and II AIFs must be closed-ended and have a three-year minimum duration. AIFs under Category III might be open-ended or closed-ended.

“Angel Fund” is a sub-category of Venture Capital Fund under Category I alternative Investment Fund that obtains funds from angel investors and invests in compliance with AIF Regulations Chapter III-A. An angel fund will only be able to raise capital by selling units to angel investors. “Angel investor” refers to someone who wants to invest in an angel fund and meets one of the following criteria: An individual investor with at least two crore rupees in net tangible assets, excluding the value of his primary dwelling, and who: Has early-stage investment experience, or Has experience as a serial entrepreneur, or Is a senior management professional with at least ten years of experience. A company with at least ten crore rupees in net value; or A VCF registered under the SEBI (Venture Capital Funds) Laws, 1996, or an AIF registered under similar regulations. Angel funds must take an investment of not less than ’25 lakh from an angel investor for a period of up to three years.

An AIF scheme (other than an angel fund) may not have more than 1000 investors. (Please note that if the AIF is incorporated as a company, the requirements of the Companies Act, 1956 will apply.) No plan may have more than 49 angel investors in the case of an angel fund. An AIF, on the other hand, cannot invite the general public to subscribe to its units and can only receive capital from skilled investors through private placement.

Investors can file complaints against AIFs using SEBI’s web-based centralized grievance resolution system, SEBI Complaint Redress System (SCORES), which can be found at http://scores.gov.in. Furthermore, the AIF, either directly or through the Manager or Sponsor, is required by the AIF Regulations to establish a procedure for resolving disputes between the investors, the AIF, the Manager, or the Sponsor through arbitration or any other mechanism mutually agreed upon by the investors and the AIF.

An AIF may accept the following individuals as joint partners for a minimum investment of one crore rupees: An investor and his/her spouse An investor and his/her parent An investor and his/her daughter/son In the case of the aforementioned investors, no more than two people may participate as joint investors in an AIF. In the case of any additional investors acting as joint investors, the minimum investment amount of one crore rupees would apply to each investor. The term “joint investors” refers to a situation in which each investor contributes to the AIF.

To ensure that the Manager/interests sponsors are aligned with those of the AIF’s investors, the AIF Regulations require that the sponsor/manager have an ongoing interest in the AIF, which cannot be achieved by the waiver of management fees. Such interest shall be not less than two and a half percent of the corpus or five crore rupees, whichever is less, for Category I and II AIFs, and not less than five percent of the corpus or ten crore rupees, whichever is less, for Category III AIFs. Angel funds must pay interest of at least two and a half percent of the corpus or fifty lakh rupees, whichever is lower.

No, any Alternative Investment Fund program (other than an angel fund) must have a minimum capital of twenty crore rupees. A corpus of at least ten crore rupees is required for an angel fund.

The AIF will have a 6-month time constraint to make allocated investments in offshore venture capital enterprises after receiving SEBI clearance. If the applicant does not use the given limitations within the time frame, SEBI may assign the unutilized limit to other applicants.

According to publicly accessible information, a fund of funds is an investment strategy that involves maintaining a portfolio of other investment funds rather than investing directly in stocks, bonds, or other assets. A Fund of Fund, in the context of AIFs, is an AIF that invests in another AIF.

Any individual who establishes the AIF is referred to as a “sponsor,” which includes the promoter in the case of a business and the designated partner in the case of a limited liability partnership.

AIFs trade in a variety of ways and employ leverage, such as investing in listed or unlisted derivatives. Category III AIFs include hedge funds, PIPE Funds, and other types of funds.

Debt funds are Alternative Investment Funds (AIFs) that invest primarily in debt or debt securities of listed or unlisted investee firms in order to achieve the Fund’s stated goals. These funds are classified as Category II funds. It should be noted that because the Alternative Investment Fund is a privately pooled investment vehicle, the funds supplied by the investors will not be used to make loans.

Any fund established or incorporated in India that is a privately pooled investment vehicle that collects funds from sophisticated investors, whether Indian or foreign, for investing in accordance with a defined investment policy for the benefit of its investors is referred to as an Alternative Investment Fund or AIF. AIF does not include funds regulated by the SEBI (Mutual Funds) Laws, 1996, the SEBI (Collective Investment Schemes) Regulations, 1999, or any other Board regulations governing fund management. Furthermore, the AIF Regulations grant certain exemptions from registration to family trusts established for the benefit of relatives as defined by the Companies Act, 1956, employee welfare trusts or gratuity trusts established for the benefit of employees, ‘holding companies’ as defined by Section 4 of the Companies Act, 1956, and so on.

Category I AIF: Venture capital funds (Including Angel Funds) SME Funds Social Venture Funds Infrastructure funds 2. Category II AIF 3. Category III AIF

An AIF can be founded or incorporated in the form of a trust, a company, a limited liability partnership, or a body corporate under the SEBI (Alternative Investment Funds) Regulations, 2012. The majority of SEBI-registered AIFs are in trust form.

The AIF Regulations include both general investment criteria that apply to all AIFs and specialized investment conditions that apply to a particular type or sub-category of AIFs. The AIF Regulations, Chapters III and III-A provide information on investment conditions.

All AIFs must comply with the general obligations, responsibilities, and transparency standards set out in Chapter IV of the AIF Regulations. Chapter IV outlines the AIF’s unique investor disclosure duties, including conflict of interest, information on fund investments, fees, different risks, valuation, and so on. AIFs may also give additional information to investors in the placement memorandum, in addition to what is required by the AIF Regulations. What must information about fees and charges be mentioned in the placement memorandum? Every AIF must include as an annexure to its placement memorandum a thorough tabular example of how the fees and charges will be applied to the investor, including the distribution waterfall.

AIFs that invest in start-up or early-stage ventures, social ventures, infrastructure, SMEs, or other sectors or areas that the government or regulators deem to be socially or economically desirable, including venture capital funds, SME funds, social venture funds, infrastructure funds, and other Alternative Investment Funds that may be specified.

Overseas investments by AIFs are limited to 25% of the AIF’s investible funds, subject to a total maximum of USD 500 million (combined limit for AIFs and Venture Capital Funds registered under the SEBI (Venture Capital Funds) Regulations, 1996).

These modifications may include, but are not limited to: The sponsor/manager has changed (not including an internal restructuring within the group) Changes in the sponsor/control manager’s Changes in the fee structure or hurdle rate that might result in increased costs for unitholders However, in the event of major developments that have a significant impact on the investor’s choice to continue to participate in the AIF, the procedure outlined in Circular No. CIR/IMD/DF/14/2014, dated June 19, 2014, must be followed. The trustee of the AIF (in the case of a trust) or the sponsor (in the case of any other AIF) will be in charge of managing the process, ensuring compliance, and keeping SEBI up to date on developments.

The main objective of financial planning is to ensure that you meet your future financial goals without compromising on your lifestyle or facing undue stress! By helping you manage your cash flows smartly and stick to your investment plan with discipline, financial planning ensures a better financial future for you and your family.

First and foremost, it’s important to know that Financial Planning is not merely a means to achieve higher returns from your investment plan! The process of financial planning is an iterative one, and your financial consultant will use tracking tools and technology to conduct time to time reviews and adjust your investment plan to match your present situation. Secondly, being open and transparent about your present situation with your financial consultant is critical for financial planning success. Finally, it’s important to know that financial planning is a long-term endeavor, and sticking to your plan with discipline and commitment is the key to success.

Put simply, Financial Planning is the process of evaluating your current situation, and then preparing and executing a roadmap for a better financial future! A qualified financial consultant can combine investment planning and financial planning to ensure that you meet your important goals by investing systematically and following correct investing behaviors.

Fantastic technology serves as a critical enabler for the financial planning process. A financial consultant with access to great tech to track and monitor your progress, will be better equipped to seamlessly implement critical investment planning changes from time to time. In a nutshell, technology ensures the continuity of your financial planning journey, so that it doesn’t just remain a one-time conversation with a financial consultant but translates into tangible long-term outcomes!

The investment advisor or financial consultant plays a vital role in the financial planning process! In the long run, “how you invest” matters a lot more than “where you invest”. Even the best investment planning processes fail to deliver results if the “human element” is not managed properly. The investment advisor doesn’t just recommend the best investment plans or suggest market related portfolio changes – she also plays the role of counsellor or behavioral coach to ensure that you remain steadfast on your financial planning journey!