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Nikhil Chandran-Swot-analysis-of-asset-classes - Task 2

The document analyzes various asset classes through SWOT analyses. It examines equities, mutual funds, gold, and real estate. For equities, strengths include dividends and appreciation while weaknesses are uncertain returns and risk. Mutual fund strengths are customer base and tax benefits, weaknesses include participation and performance. Gold strengths are liquidity and stability, weaknesses are costs and volatility. Real estate strengths are value and inflation hedge, weaknesses are illiquidity and costs. The document provides an overview of opportunities and threats for each asset class.

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Nikhil Chandran
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147 views6 pages

Nikhil Chandran-Swot-analysis-of-asset-classes - Task 2

The document analyzes various asset classes through SWOT analyses. It examines equities, mutual funds, gold, and real estate. For equities, strengths include dividends and appreciation while weaknesses are uncertain returns and risk. Mutual fund strengths are customer base and tax benefits, weaknesses include participation and performance. Gold strengths are liquidity and stability, weaknesses are costs and volatility. Real estate strengths are value and inflation hedge, weaknesses are illiquidity and costs. The document provides an overview of opportunities and threats for each asset class.

Uploaded by

Nikhil Chandran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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TASK-2 SWOT ANALYSIS ON VARIOUS ASSET

CLASSES

Wealth Management Service-


Wealth management is an investment advisory service that combines other
financial services to address the needs of affluent clients.

Financial Products
Financial products are investments and securities that are created to provide
buyers and sellers with a long term or short-term financial gain
Asset Class
In finance, an asset class is a group of financial instruments which have similar
financial characteristics and behave similarly in the marketplace.

Mainly there are 4 types of Asset Classes: -


SWOT ANALYSIS OF EQUITY SHARES

Strength
 Higher dividend.
 Voting Right.
 Capital Appreciation.
 Right shares.
 Good liquidity position.

Weakness

 Uncertain return.
 Residual claim on income as well as assets.
 Low market value.
 Risky investment.
 Higher speculation.
 Dilution of control.
 Cost of equity.

Opportunity
 Higher return.
 Capital appreciation.
 Right to vote.
 Right in liquidation.

Threat
 Chance of loss.
 Fluctuations in market price.

SWOT ANALYSIS OF MUTUAL FUNDS

STRENGTHS
1. Large number of potential customers are base.
2. Government support by way of tax concession for MF investors
3. Volatility of bank interest rate.
4. Better scope for accessing market information
5. Offer liquidity to the investors at any time.
6. Offers variety of products to the investors.
7. The size of the market is large.
WEAKNESS

1. Poor participation of retail investors


2. Lack of focus
3. Under performance
4. Poor service conditions
5. Distribution network is confines only to metro cities

OPPORTUNITIES

1. Huge untapped market in semi-urban and rural areas.


2. High level of savings habit among the people
3. Liberalized business environment.
4. Growth opportunities in developing markets
5. Using on-line mode of trading systems.
6. Investment opportunities abound in the international market.
7. Failures of non-bank financial company operations.

THREATS

1. Increasing competition among the players.


2. High level of volatility in the stock market.
3. Low yields with inflationary risks.
4. Possibility of more stringent regulations by SEBI, RBI, AMFI, etc.., in future.
5. Stagnant growth in developed world.
6. Fluctuations of domestic currencies against Dollar.

GOLD ASSET CLASS - SWOT ANALYSIS

STRENGTHS
1. Gold is an asset class which was used as an investment vehicle (a store of value) since
ancient times. Gold continues to be an important asset class even in modern times.

2. Gold has ready marketability and Liquidity


3. Gold is one of the few asset classes which have performed well in the recent times. YTD
return on Gold investment has been more than 20% in 2010.
4. Investors generally buy gold as a hedge or safe haven against any economic, political, social,
or fiat currency crises (including investment market declines, burgeoning national debt, currency
failure, inflation, war and social unrest).
WEAKNESSES

1. Gold is an idle Asset with no regular return profile.


2. Gold storage has costs, including cost of insurance.
3. Gold prices have been volatile in recent times. A correction cannot be ruled-out which may
involve significant reversal.

OPPORTUNITIES

The factors which support bullish sentiments in Gold:


1. Inflationary monetary and fiscal policies followed by US and other major economies which
have supported price rallies in Gold and other commodities.

2. Rising long-term saving, investment, and jewelry demand for gold from China, India, and
other gold-friendly nations enjoying healthy growth in business activity and household incomes
— growth that is likely to continue at least several years.
3. The continuing maturation of what can be called as the “gold-investment infrastructure” —
in other words, the development of new gold-investment products and channels of distribution in
many important geographic markets.

THREATS

1. The gold market is also subject to speculation as other commodities are, especially through
the use of futures contracts and derivatives.

2. Today, like most commodities, the price of gold is driven by supply and demand as well as
speculation. However, unlike most other commodities, hoarding (saving) and disposal plays a
larger role in affecting its price than its consumption.

3. Gold prices have been volatile in recent times. A correction cannot be ruled-out which may
involve significant reversal.

SWOT ANALYSIS OF -Real Estate

STRENGTHS
 It is an investment asset that increases in value over time.
 It is less risky than other investment assets particularly equities.
 The owner of a real estate asset has full rights over the asset and can add value to
it through refurbishment and good management.
 It is used to hedge inflation risk and is a good store of wealth.
 Preferred collateral/security by financial institutions.
 There is no single market for real estate i.e. it can be traded at auctions or open
markets by estate agents and surveyors.

WEAKNESSES

 Ownership rights cannot be easily transferred.


 It is a highly illiquid asset.
 It requires a large capital to invest in.
 Low supply.

OPPORTUNITIES

 Global demand for real estate is strong and high.


 Real estate is poised for rapid growth.
 Potential to diversify into other sectors.
 New sectors offer great potential i.e. student accommodation & care homes.

THREATS

 Economic slowdown may affect demand i.e. periods of recession.


 Competition from other investment asset classes such as equities and bonds.
 Seasonal demand may affect prices

Submitted By- Nikhil Chandran


Relationship Manager

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