Wealth Management: An analysis of wealth

management plans for existing and potential

HNWI investors

NAME:MEENAKSHI GUPTA
PROGRAM: MBA - 2009
ENROLL. NO: 0841703908
FACULTY GUIDE : Mr.AJAI PAL SHARMA

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Concept

 Wealth management is a professional service which is the combination of

financial/ investment advice, accounting/tax services, and legal/estate. As
information and awareness is rising more and more people wants to enjoy the
benefits of investing in various asset classes.
 It involves giving suggestions by wealth management firms to potential
investors on the basis of their profile and financial objectives so that investor
can get huge returns on their investment and then continuously monitor the
changes in investors profile, risk and financial objectives so that changes can be
done in investors portfolio
 Number of HNWIs around the world and value of their assets has been
reduced. Number of HNWIs globally is estimated to be around 9.5 million in
year 2006, an reduction of over 14.9% over previous year.

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Concept
List Of Different Asset Classes in which investor can invest is given below.
• Fixed deposit
• Mutual Fund
• Equity
• Real-Estate Fund
• Insurance product
• Gold etc.
Investor can invest in the above asset classes on the basis of the returns he/she is
expecting and risk he is willing to take.

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Objectives of Study

 To have a conceptualized view on wealth management services.

 To know the process of wealth management.
 To study different asset classes available in financial market.
 To do comparative analysis of ELSS(Equity Linked Saving Scheme)
mutual fund of selected companies namely HDFC tax saver, ICICI
prudential tax plan,CANARA ROBECCO equity tax saver,BARODA

PIONEER ELSS 96 and UTI equity tax savings.

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Research Methodology

 Research Type: Secondary data collected

from Company sites
 Research Instrument: Alpha,Beta and
Standard Deviation
 Analytical Tool: Graphs and Table

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Data Analysis
Mutual Fund
A mutual fund is a professionally managed firm of collective investments that
collects money from many investors and puts it in stocks, bonds, short-term
money market instruments, and/or other securities.

let’s begin with the comparative analysis of the five funds

I have chosen EQUITY LINKED TAX SAVING SCHEME of five companies namely
1. HDFC tax saver
2. ICICI prudential tax plan
3. CANARA ROBECCO equity tax saver
4. BARODA PIONEER ELSS 96
5. UTI equity tax savings.

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Data Analysis
What are Equity Linked Savings Schemes?
An ELSS gives a tax benefit and comes with a lock in period of 3 years.
Investment avenues of an ELSS are a mix of various asset classes such as
equity, debt, gold and real estate.
Advantages of ELSS
•The 3 year lock in period prevents withdrawals and thus allows your money
to grow over a period of time. Long term investment in equities gives better
returns than any other investment instrument.
* It gives tax benefits (Up to 30% for people in the highest tax slab). As per
our Indian IT laws every tax payer is eligible for savings under section 80C
for amounts up to Rs. 1,00,000/-

The comparison is based on Alpha, Beta and Standard Deviation. It would

also include the return analysis.
MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009
 TABLE
Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Data Analysis
Comparison on the basis of Returns
RETURNS 1 month 6 month 1 year 3 year 5 year

HDFC tax saver 4.09 77.99 15.61 8.76 29.77

ICICI 6.82 84.62 8.40 4.06 26.56

prudential tax
plan

CANARA 7.26 82.43 35.29 21.62 30.57

ROBECCO
equity tax saver

BARODA 0.91 72.69 2.72 6.64 18.06

PIONEER elss
96

UTI equity tax1.82 54.92 2.08 5.39 18.26

savings

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Data Analysis
From the above data we can interpret that

1. Canara Robecco equity tax saver fund is outperforming all the other
funds and is giving better return in every period of time
2. On second position HDFC equity tax saver lies.
3. ICICI prudential tax plan lies to third position as it has lesser retuns as
compared to HDFC.
4. Baroda Pioneer ELSS 96 lies to fourth position very close to ICICI.
5. UTI equity tax savings is showing very close returns with Baroda
Pioneer on a long term horizon.

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Data Analysis
Comparison on the basis of Alpha, Beta and Standard deviation
RISK α β Standard Deviation

HDFC tax saver -1.10 0.94 34.29

ICICI prudential-4.17 1.00 37.85
tax plan
CANARA 8.36 1.04 38.10
ROBECCO equity
tax saver

BARODA -1.64 1.02 37.23

PIONEER elss 96

UTI equity tax-3.93 0.89 32.21

savings

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Data Analysis
Alpha
Alpha is a financial term describing that part of an investor’s return that is due to the skills of
the investment manager.A positive alpha is the extra return awarded to the investor for taking
a risk, instead of accepting the market return.
From the table, we can interpret that
1. Canara Robecco equity tax saver has alpha more than 1.It shows that the fund has
outperformed the market based return.

2. HDFC tax saver, ICICI prudential plan, BARODA pioneer ELSS 96 and UTI equity tax
savings has negative alpha that is -1.10,-4.17, -1.64 and -3.93 respecvtively. Negative alphas
are bad in that they indicate that the fund underperformed for the amount of extra.

Beta
A Beta is a measure of risk. It compares a mutual fund’s volatility with that of a benchmark.
If the beta of the stock is 1, it means that the returns in the stock are highly correlated to the
benchmark index.
If Beta is greater than 1, it means the stock is more volatile.
If Beta is less than 1, than the stock is less volatile.
MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009
 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Data Analysis
From the table, we can interpret that
1 .Canara Robecco has Beta of 1.04 that is more than 1.This means that the fund is more
volatile.
2. Second comes the Baroda pioneer ELSS 96 of Beta 1.02.It is also more volatile as
compared to others.
3. Third comes the ICICI prudential tax plan with a Beta of 1 which means that the returns in
the stock are highly correlated to the benchmark index
4. UTI equity tax saving and HDFC tax saver has negative Beta of -3.93 and -1.10
respectively which means that the funds are less volatile.

Standard Deviation
Investors like using standard deviation because it provides a precise measure of how varied a
fund's returns have been over a particular time frame—both on the upside and the downside.
From the table, we can interpret that
1. Canara Robecco equity tax saver has the highest Standard deviation that is 38.10 so it is
considered to be more risky than other funds.

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Data Analysis

2. ICICI prudential tax plan stands on second position with standard deviation of 37.85 which
is very close to Canara Robecco equity tax saver. So it is also a risky fund.

3. Baroda Pioneer ELSS 96 has standard deviation of 37.23 very close to above 2 fund . So it
is also a risky fund.

4. HDFC tax saver has standard deviation of 34.29.so it is slightly less risky then above three
funds.

5. UTI equity tax savings are less risky with a standard deviation of 32.21.

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Research Findings
 HNWI wealth totals US$37.2 trillion, representing a decrease of around 11.4% since 2005
 Number of HNWIs around the world and value of their assets has been reduced.
 Investors has become risk aversion.
 Conservative investor should invest less in equities and more in fixed income assets.
 Aggressive investor should invest more in equities as he is willing to take risk.
 From the study it is observed that Mutual Fund as an Investment tool is a very good option for an risk averse investor. Although mutual funds are
not free of risk but the risk factor is less as compared to other investment options.
 Canara Robecco equity tax saver fund is outperforming all the other funds and is giving better return in every period of time as compared to
others.
 HDFC tax saver has the highest net asset value of Rs.160.29.So fund manager has enough funds to invest in various securities to increase
investors returns.
 Canara Robecco equity tax saver has alpha more than 1.It shows that the fund has outperformed the market based return.
 HDFC tax saver, ICICI prudential plan, BARODA pioneer ELSS 96 and UTI equity tax savings has negative alpha that is -1.10,-4.17, -1.64 and
-3.93 respectively. Alphas are bad in that they indicate that the fund underperformed for the amount of extra.
 Canara Robecco has Beta of 1.04 that is more than 1.This means that the fund is more volatile.
 Canara Robecco equity tax saver has the highest Standard deviation that is 38.10 so it is considered to be more risky than other funds.
 ICICI prudential tax plan stands on second position with standard deviation of 37.85 which is very close to Canara Robecco equity tax saver. So it
is also a risky fund.
 High quality of service can also motivate the investor to invest.
 UTI equity tax savings fund is less risky and returns are less in it.
 Gold is the best investment for HNWI investors because it requires large investment and less risk is attached to it as price fluctuations are less in
it.

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Recommendations
 More asset classes should be developed in which returns should be higher and risk should be low.
 An investor looking for capital growth has to consider mutual funds.
 Investing in different asset classes is generally the best option as it averages the risks in each
category.
 As UTI equity tax saver has not provided good returns, it should take various steps to improve the
performance.
 Real estate is considered to be risky and long term investment, so HNWIs can avail this option.
 Before going for investment investor should identify his risk bearing capacity.
 Investor having market knowledge can easily identify the assets in which he should invest.
 More and better schemes should come in market.
 Planners can be encouraged to interact regularly with clients, since there are lots of
miscommunication and rumors regarding the worsening financial crisis and could delays to
elements of greed and fear which are false and baseless.
 People who wants to invest in ELSS scheme can go for Canara Robecco equity tax saver if they
want high returns and who can bear high risk.

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009

 Wealth Management: An analysis of wealth
management plans for existing and potential
HNWI investors
Bibliography
 www.moneycontrol.com.
 www.valueresearchonline.com.
 ICICI Prudential Asset Management Report.
 World Wealth Report 2008 - Merrill Lynch, Capgemini.
 “Year-End Review of Markets & Finance,” The Wall Street
Journal,January2,2009Russia Trading System, http://www.rts.ru/en, accessed April
2009.
 www.amfiindia.com
 Axis bank reports.
 Goldman Sachs Asia Pacific Report.
 IBM Business Consulting’s Wealth Management Report.
 World wealth report

MEENAKSHI GUPTA TECNIA INSTITUTE OF ADVANCED STUDIES Programme: MBA – 2009