HDFC - Nakul Project

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The report is authorized by"6$&* $+

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Ê report submitted in partial fulfillment of the requirements of MBÊ program of ICFÊI University,
Dehradun.
Êuthorized Signature
Prof. Kapil Gupta
Faculty, IBS, Gurgaon
Ê

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Êny activity in the tradition of India begins with Guru Vandana. I first seek the blessings of my
Honorable "6$&* $+
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discussion to face the ground realities of finance a fraction of whose wisdom I strove to absorb.
I am grateful to Dr. O.P. Gupta Director, Icfai Business School for giving me the opportunity to do
my Summer Internship Project.
When I started off with the project, the only thing I knew was the objective, rest was a s hazy as
winter fog. The constant guidance and untiring support and motivation I received from my faculty
guide Prof. Kapil Gupta, Faculty, IBS Gurgaon who enabled me to proceed this project. To thank
them would be an injustice, I owe them much more.
I am indebted to 6* ;* $, Channel Development Manager, Rohini Branch, my company
guide, for his help in learning actual corporate environment.
I would also like to thank to various respondents, who took time out of their busy schedules and
provided me with their advice, information and expertise.
Finally I would like to thank my family and friends who have been constant sources of
encouragement and support.
Regards,
Reeturaj Borah

'

The project has a detailed study of various ULIPs offered by the major players in the insurance
sector. I made a comparative analysis of ULIPs available in HDFC Standard life insurance company
with that of other major players. I also carried out an in-depth study of all the major ULIP funds
available in the market & analyse their performance since their inception. The mathematical
techniques I have used for calculating the risk and return profile are beta values, variance, Sharpe
ratio & standard deviations followed by graphically plotting the calculated values and make a
comparative analysis of the data which I have gathered from various sources. The project also aims to
help understand the consumer behavior towards various financial services like insurance and what are
the factors should be taken in to consideration before investing in Unit Linked Insurance Plans. The
report enhances the knowledge on how various financial concepts learnt in the classroom are
implemented in a real life environment.

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Insurance is a contract providing for payment of a sum of money to the person assured or failing him
to the person entitled to receive the same on the happening of certain event. Uncertainty of death is
inherent in human life. It is this risk, which gives rise to the necessity for some form of protection
against the financial loss arising from death. Insurance substitutes this uncertainty by certainty.
The objective of insurance is normally to provide;
a) Family protection and/or

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b) Provision for old age
c) Protection against risks
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Insurance cover is essential because it provides the following benefits:
> Ê lump sum payment to the nominees at the time of the death of the policy holder.
> Ê regular payment to the nominees in the event of the death of the policy holder.
> Tax benefits, as premiums paid reduce the liability of tax
> Relieves economic hardships in the family on the uneventful death of the sole income holder
> Inculcates the habit of savings
> Superior to an ordinary savings plan as it provides full protection against risk of death
> |ncourages and forces compulsory savings unlike other saving instruments wherein the saved
money can be easily withdrawn
> Provides loan to tie over a temporary difficult phase and is also acceptable as security for a
commercial loan
> Hedges risk against uncertainty
> For a policy taken under the MWP Êct( married women¶s property act), a trust is created for
wife and children as beneficiaries
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> Based on the concept of sharing of losses, the society will be benefited as catastrophic losses
are spread globally.
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The need for life insurance comes from the need to safeguard the family. Today insurance has
become even more important due to the disintegration of the prevalent joint family system, a system
in which a number of generation co- existed in harmony, and a system in which a sense of financial
security was always there as they were more earning members. Times have changed and the nuclear
family has emerged. Êpart from other pitfalls of a nuclear family, a high sense of insecurity is
observed in it today besides, the family has shrunk. Needs are increasing with time and fulfillment of
these needs is a big question mark. How will we be able to satisfy all those needs Better lifestyle,
good education, long desired house. But again- we just cannot fritter away all our earnings; we need
to save a part of it for the future too- a wise decision. This is where insurance helps us. Êmbitions etc
are some the reasons why insurance have gained importance and where insurance plays a successful
role.

,6.

6

HDFC STÊNDÊRD LIF| is one of India¶s leading private life insurance companies, which offers a
range of individual and group insurance solutions. It is a joint venture between Housing Development
Finance Corporation Limited (HDFC), India¶s leading housing finance institution and STÊNDÊRD
LIF|, a leading provider of financial services in the United Kingdom.
HDFC STÊNDÊRD LIF|¶S product portfolio comprises solutions, which meet various customer
needs such as protection, pension, savings, investments and health.
:
HDFC Incorporated in 1977 with a share capital of Rs. 10 Cr. HDFC has since emerged as the largest
residential mortgage finance institution in the country. The corporation has had a series of issued
raising its capital to Rs. 119 Cr. The gross premium income for the year ending March 31, 2009 stood
at Rs. 5,564.69 Cr. The company during the current year registered a positive growth of 14.53%. The
sum assured in force for the current year was Rs. 57,158 Cr. as compared to Rs. 45,753 Cr. for the
previous year.
HDFC operates through almost a network of 595 cities serving over 720 cities and towns across the
country. The company has increased its depth in existing markets with a strong base of more than
207,000 financial consultants, having its head quarters in Mumbai. HDFC also has an international
office in Dubai, UÊ| with service associates in Kuwait, Oman and Qatar. HDFC is the largest
housing company in India for the last 33 years.
HDFC standard life was one of the first private companies to get license and allowed to do business
in the insurance sector. HDFC is RÊT|D µÊÊÊ¶ by CRISIL and ICRÊ. Similarly STÊNDÊRD
LIF| is rated µÊÊÊ¶ by MOODY¶S ÊND STÊNÊDÊRD ÊND POOR¶S. This reflects the efficiency
with HDFC and STÊNDÊRD LIF| manages their asset base of Rs. 15000 Cr. and Rs. 600000 Cr.
respectively.
HDFC STÊNDÊRD LIF| was incorporated on 14th Êugust 2000. HDFC is the majority stakeholder
in insurance JV with 76% staple and STÊNDÊRD LIF| of as a staple of 24%. Mr. Êmitabh
Chaudhary is the MD and C|O of the venture.
Since inception, HDFC SL is continuously among the top three private players which has performed
up to the mark as par the consumer satisfaction
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,69? > The main objective of my project is to make known to all people how the ULIPs
managed by the insurance company. Besides this main objective, my project has the following
objectives-
áTo understand an investor can make a balance between the risk and return of his/her
chosen portfolio.
áTo understand the factors should be taken in to consideration by an investor while
choosing a particular portfolio under an ULIP.
áTo understand investors risk taking appetite.
áTo understand assets allocations of insurance company.
áTo understand the average return given by the each portfolio and how much having
volatility among the securities of a particular portfolio.
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My proposed project how ULIP funds are managed and operate in the capital market by the
insurance company (HDFC Standard life insurance Company). Though most of the people are
attracted towards the ULIP products because of getting more fund value than what they initially
invested in the company, but sometimes they lost their believes on the insurance company when
they get lesser amount. The main reason of this conflict between the insurance company and the
investors is that the investors do not have sufficient knowledge about ULIP fund performance in
the capital market.
Ên investor can get maximum appreciation in his/her investment only when he/she properly
manages money in the appropriate funds. For this purpose the investors should have minimum
knowledge about in which companies shares are managed under one portfolio and how these
included companies perform in the capital market as a whole. Unless and until the investors do
not know how their portfolios perform and managed in the capital market, they may invest their
money in wrong funds which leads to depreciation of their fund value and all of these finally
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lead to humors among the prospective customers that the investments in the ULIPs give lesser
returns. This may make a huge negative impact in the insurance industry in near future.

,64*
For completion of this project, we use the following methodologies--

á Using average return and standard deviation techniques in each portfolio for
determining average portfolio return and fluctuation having for a particular time
period
á Ê market survey done through preparing questionnaire to understand investors
risk taking appetite.
á For determining the risk of a portfolio, we use Beta calculation technique.
á For evaluating the performance of a portfolio, we use-
á Treynor Measure
á Sharpe Measure.
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Unit linked insurance plan which is popularly known as 'ULIP' is the flavor of the season. The
conventional Insurance policies have a fixed relationship between the premium and the sum assured.
Whereas ULIP allows the policyholder to choose his own sum assured within certain limits, for any
given premium. The policyholder may then have the right to adjust his sum assured up or down, again
within certain limits according to his circumstances.
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Features of a Unit Linked Insurance Plan
Unit linked insurance plan (ULIP) is life insurance solution that provides for the protection and
flexibility in investment. The investment is denoted as units and is represented by the value that it has
attained called as Net Êsset Value (NÊV). The policy value at any time varies according to the value
of the underlying assets at the time.
ULIP provides multiple benefits to the consumer. The benefits include:
" Life protection
" Investment and Savings
" Flexibility - in Sum assured, to increase the sum assured, investment, etc
" Êdjustable Life Cover
" Investment Options
" Transparency
" Options to take additional cover against - Death due to accident, Disability, Critical illness etc
" Liquidity
" Tax planning
Unit linked Insurance plan provides insurance protection against the risk of death combined with a
provision for long term investment in the equity market, which are structured differently.
ULIPS are basically an investment type of plan, wherein the Life assured decides the quantum of
contribution which he can set aside on a regular basis towards premium. He also has the flexibility to
decide the risk cover, i.e the Sum Êssured for his policy.
Based on the Sum assured and the contribution for the policy, insurer deducts charges towards life
insurance which are mainly²
á #"!')Ê fee is charged for administration from the policy every month.
Êdministration charges are deducted by cancelling units proportionately from each of the
funds chosen.
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#)#!')These charges are towards meeting expenses related to
managing the fund. This is charged as a percentage of the fund¶s value and is deducted before
arriving at the net asset value of the fund.
á 3!'!')The investor can switch between the funds available to suit his/her changing
needs and goals. In a policy year, a fixed number of such switches are available free of cost.
Subsequent to this, each switch would attract a certain charge. These charges are deducted by
cancelling units proportionately from each of the funds you have chosen.
á !')These charges are levied for premature encashment of units. They are
charged as a percentage of the fund value and depend on the policy year in which the policy
has been surrendered.
á "& ')Depending upon the age, and the amount of cover, these charges are
levied towards providing a death cover to the insured.
á # # &&"!" ')This charge is deducted as a fixed percentage of the premium

received, and is usually charged at a higher rate in the initial years of a policy. This charge
varies depending upon whether the policy is a single premium or regular premium policy, the
size of the premium, premium frequency and payment mode.
á &A'3& ')Lump sum withdrawals are allowed from the fund after the
lapse of three years of the policy term and subject to pre-specified conditions. However, such
withdrawals attract charges mentioned in the respective policy brochures.
The policyholder's share in the fund is represented by the number of units held in his account. The
value of the unit is determined by the total value of all the investments made by the fund divided by
the total number of units.
Êt any point of time i.e., maturity or surrender, the cash value will be equivalent to the number of
units held by the insured multiplied by the unit price. In case of death claim, it will be unit value, plus
the sum assured if any under the policy.
To know the method of ³Pricing of Units´
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Method of pricing the units depends on whether the company is purchasing or selling assets (stocks).
While purchasing of assets the units will be priced on Êppropriation basis and while selling of assets
the |xpropriation basis of pricing will be applied.
1.Êppropriation Price
This will be applied when the fund is expanding. In this method of pricing, the unit price is calculated
as follows:
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2.|xpropriation Price
|xpropriation Price will be applied when the fund is contracting. In this method of pricing, the unit
price is calculated as follows:
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There are two different prices for a stock. One is a Bid price and the other is Offer price. Bid price is
the price at which the investor can sell the shares and the offer price is the price at which the investor
can buy them. The first is always lower than the second, and the difference between them is called the
spread.
Ên example of different prices for different stocks of HDFC Standard Life Insurance Company
Limited are shown in below-
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Liquid Fund II 11.4746 11.4746
Stable Managed Fund II 11.3088 11.3088
Secure Managed Fund II 11.5325 11.5325
Defensive Managed Fund II 12.7908 12.7908
Balanced Managed Fund II 14.2127 14.2127
|quity Managed Fund II 14.8671 14.8671
Growth Fund II 17.1348 17.1348
CGF2 Fund * 10.0507 10.0507
Insurance companies offer a range of funds like Growth Fund (|quity Fund), Balanced Fund, Secured
Fund, Income Fund etc. The insured can direct the company to invest his contribution in the fund of
his choice.
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Balanced Fund
This type of fund buys a combination of common stock, preferred stock, bonds and short-term bonds,
to provide both for income and capital appreciation while avoiding excessive risk. Such diversified
holdings ensure that these funds will manage downturns in the stock market without too much of a
loss.
Growth fund
This fund aims to achieve capital appreciation by investing in growth stocks. They focus on
companies that are experiencing significant earnings or revenue growth, rather than companies that
pay out dividends. The hope is that these rapidly growing companies will continue to increase in
value, thereby allowing the fund to reap the benefits of large capital gains. In general, growth funds
are more volatile than other types of funds, rising more than other funds in bull markets and falling
more in bear.
Income fund
This fund emphasizes on current income in the form of dividends or payments from bonds, rather
than emphasizing growth. Income funds are considered to be conservative investments, since they
avoid growth of stocks.
Comparison between Unit Linked Plans and Conventional Plans
1.Description Unit Linked Insurance Plans offered by insurance companies allow policy holders to
direct part of their premiums into different types of funds (equity, debt, money market, hybrid etc.)
Here the risk of investment is borne by the policyholder.
Conventional Plans are traditional insurance plans. They usually invest in low risk return options
and offer guaranteed maturity proceeds along with declared bonuses.
2.Flexibility of investment Unit Linked Plans give the investor flexibility to invest as per his risk
profile, financial commitments and convenience. The investor can choose to invest either in equity, or
in debt or in hybrid fund and even change his investment strategy.
But the conventional plans do not allow him to choose investment avenues. The funds are invested
as per the strategy and discretion of the company.
3.Transparency:Most Unit Linked Plans allow the investor to track his portfolio. They also regularly
intimate regarding the percentage of the premium that is invested along with the charges levied. The
investors are also kept informed about the value and number of fund units that the investor holds.
In conventional plans, the premiums are invested in a common 'with profits' fund and therefore the
investor cannot track his individual portfolio.
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4.Maturity benefits payout: Êt the time of maturity the investor redeems the units collected at the
prevailing unit prices. Some plans also offer loyalty or additional units annually or at the time of
maturity.
Êt the time of maturity the conventional investor gets the sum assured plus bonuses, if applicable
in the plan.
5.Partial withdrawal Unit Linked Plans allow the investor to make withdrawals from his fund,
provided the fund does not fall below the minimum fund value and subject to other conditions.
Conventional plans do not allow the investor to withdraw part of your fund. Instead, some policies
offer the investor the facility to take a loan against his investment.
6.Switching options The investor can change his investment fund decision by switching between the
funds as being offered by the policy.
Not available since the investment decision is taken by the insurance company.
7.Charges structure Unit Linked Plans specify the charges under various heads.
Conventional plans do not specify the charges involved.
IS ULIP FUND ÊS SÊM| ÊS MUTUÊL FUND
1.Description :Unit Linked Insurance Plans allow the investors to direct part of their premiums into
different types of funds (equity, debt, money market, hybrid etc.)
Ê mutual fund pools the money from investors and uses it to invest in various securities according to
a pre-specified investment objective.
Key Features
2.Objective Unit Linked Plans are long term plans offering the investor a dual benefit of insurance
and investment.
Mutual funds are ideal investment tool for the short to medium term.
3.Tax Benefit Êll Unit Linked Plans offer tax benefits under section 80C.
Some mutual funds are eligible for section 80C benefits.
4.Switching options: Unit Linked Plans allow the investors to switch investment between the funds
linked to the plan. This enables the investors to change the risk- return.
No switching option is available in mutual funds.
5.Êdditional Benefits Some of the Unit Linked Plans give to the investors an additional benefit or
loyalty benefit by issuing extra fund units. There are no additional benefits issued by mutual funds .
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6.Liquidity Unit Linked Plans have limited liquidity. One needs to stay invested for a minimum
period of time as specified in the policy before redeeming the units. The investors can easily sell
mutual fund units (except for |LSS and funds that have a minimum lock-in period)
7.Charges structure Charges in a unit linked plan include mortality charges for the life insurance
provided. In addition, premium allocation charge, fund management charge and administration
charges are applicable. Mutual fund charges include an entry load, the annual fund management
charge and an exit load, if applicable.
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For fulfilling this objective, I made analysis the following points so that I can understand how
an investor can make a balance between the risk and return of his/her chosen portfolio.
In an insurance portfolio, there is a mixer of equity and debt securities. Ên investor can make
minimization of risk and maximization of return of that particular portfolio by portfolio
rebalancing technique. Before understanding this technique, we should understand pros and
cons of equity and debt.
Understand the pros and cons of |quity and Debt
|QUITY
Yros : High returns , Low risk in Long term , High Liquidity

Cons : Risky , not suitable for short term investment

D|BT
Yros :Stable and assured returns , Good investment for short term goals
Cons Low returns
|quity + Debt : When we combine |quity and Debt , returns are better than Debt but less than
|quity , but at the same time risk is also minimized compared to |quity and Debt , and when
we apply technique of Portfolio Rebalancing ,both risk and returns are well managed.
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Portfolio rebalancing is the technique through which an investor can make rearrange his portfolio by
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changing equity and debt in some ratio, it may be 40:60, 30:70 or any ratio. The ratio depends on a
persons risk taking capability and return expectation. For an example let take the ratio to 60:40 ,
portfolio rebalancing is nothing but rebalancing investor¶s portfolio in same ratio , in case the
portfolio got changed after some months or years . Preferably the good time is every 6 months or 1 yr
, but not 15 days or 1 month.
WHY SHOULD ÊN INV|STOR DO IT
|very investor should understand his/her both risk and return expectation and accordingly the
investor should proceed rebalancing his/her portfolio. Ên investor may use the following concepts
while rebalancing his/her portfolio-
, |quity: Debt goes up .

!" Decrease the |quity part and shift it to Debt so that |quity: Debt is same as earlier.
" Ês the |quity has gone up , the investor could loose a lot of it if some thing bad happens , he
shift the excess part to Debt so that it is safe and grows at least.
. |quity: Debt Goes Down.

!" Decrease the Debt part and shift it to |quity, so that |quity: Debt is same as earlier.
" Ês |quity part has decreased, the investors make sure that it is increased so that he does not
loose out on any opportunity.

#"Lets also talk about the limitations of this strategy, once equity exposure has gone up , if
the investor rebalance and bring down his |quity |xposure , he will loose out on the profits if |quity
provides great returns after that , or if his |quity exposure as gone down and he bring up his exposure
from |quity and if |quity does bad , then the investor will loose more.
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The primary objective of rebalancing of a portfolio is managing risk and profit is secondary .We
know that market is unexpected and it can go in any direction, so better be safe than sorry . Many
people are confused that if there equity has done very well then shall they book profits and get out
with money and wait for markets to come down so that they can reinvest. Portfolio rebalancing is the
same thing but a little different name and methodology , so once an investor get good profit in
something which was risky he transfers some part to non-risk Debt.
When we say |quity we mean shares or mutual funds which are related to Stock markets, which tend
to go up and down , if it goes up , there are high chances that it will come down and when it comes
down, its highly probable that it will move up again . "33'C#$&G
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Mr. X has Rs 1,00,000 to invest and he wants to invest it for 5 yrs and the 5 yrs returns are 30% , -
35% , 40% , 60% and -30% .Here we use two techniques i.e. without rebalancing and rebalancing of
portfolio and we will see which technique will maximize return and minimize risk of his investment.

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1&%
1( B%"#"A3'" ""&"%&!)D
Year Return Return/100 |quity Debt@9% |quity+Debt |quity+Debt
(30:70) (70:30)
1 30 0.30 130000 109000 115300 123700
2 -35 -0.35 84500 118810 108517 94793
3 40 0.40 118300 129503 126142 121661
4 60 0.60 189280 141158 155595 174843
5 -30 -0.3 132496 153862 147452 138906
We can see here that Debt performed better than |quity , because of the uncertain movement in
returns , also the |quity+Debt performed better than |quity but not Debt .
UND|R PORTFOLIO R|BÊLÊNCING
Let us now see the performance of |quity + Debt (with portfolio rebalance)
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So now , every time our |quity and Debt ratio changes , the investor can rebalance it .
Ratio = 30:70
Investment = 1,00,000
|quity = 30,000
Debt = 70,000
Êt the end of 1st year (|quity return = 30% , and debt = 9%)
|quity = 30,000 * (1.3) = 39,000
Debt= 70,000 * (1.09) = 76,300
Total Capital = 39,000 + 76,300 = 1,15,300
Now the investor will rebalance the portfolio
|quity= 30% of 115300 = 34590

Debt = 70% of 115300 = 80710
Now this is new |quity and Debt investment
Êt the end of 2nd year (|quity return = -35%, and debt = 9%) :
|quity = 34590 * (1-.35) = 22484
Debt= 80710 * (1.09) = 87974
Total Capital = 22484 + 87974 = 110457
Now the investor will again rebalance the portfolio
|quity= 30% of 110457 = 33137

Debt = 70% of 110457 = 77320
Year Return |+D |+D |quity Debt New New |+D |+D
(30:70) (70:30) |quity Debt PR* PR*
(30:70) (70:30)
1 30 115300 123700 39000 76300 34590 80710 115300 123700
R
2 -35 108517 94793 22484 87974 33137 77320 110457 96733
3 40 126142 121661 46392 84279 39201 91470 130671 126431
4 60 155595 174843 62722 99702 48727 113697 162424 182945
5 -30 147452 138906 34109 123930 47412 110627 158039 149466
'3';"2$%&!)'$""&"&$"#!"4
*PR-portfolio rebalancing.
Here, we can see that the column (|+D with PR) is our main column which shows the performance
with portfolio rebalancing. Here we have example for two ratios¶ 30:70 and 70:30 , we can clearly see
that at the end of every year the final corpus for rebalanced portfolio is always greater than the non-
balanced portfolio for both the ratio .
From the following table, it is very clear that an Investor can get maximum return with minimum risk
if he/she follows Portfolio Rebalancing technique-
For ratio 30:70
Year Rebalancing Without Rebalancing
1 115300 115300
2 110457 108517
3 130671 126142
4 162424 155595
5 158039 147452
For ratio 70:30
Year Rebalancing Without Rebalancing
Rc
1 123700 123700
2 96733 94793
3 126431 121661
4 182945 174843
5 149466 138906
Êlso we see that for most of the years re-balanced portfolio outperformed ³Only |quity´ and ³Only
Debt´ except 1st year and 4th year . 1st yr is very easy to understand why it happened and for 4th
year , the returns were positive again after 3rd year and the investor made more profit in ³Only
|quity´ portfolio because of high concentration on |quity side , but we see that in 5th year , when
there was a negative return of -35% , then the ³Only |quity´ fell heavily , but the rebalanced
Portfolio fell very little because the investor has rebalanced it already and dropped his/her |quity
|xposure to be safe.
So in this way, an investor can make a balance his portfolio by using Portfolio rebalancing
technique which leads to at least minimum return on his/her investment in ULIPs.
.696A > *

I also try to find out what is the risk and average return from the date of inception of each funds. It is
assumed that before expecting a minimum rate of return by an investor on his funds, he should be
expected to know what is the amount of volatility having in his/her chosen funds and what is the
average rate of return of each funds.

We know that there is always a relationship between the expected rate of return and risk. If an
investor wants to expect more return then he obviously bears higher risk and vise-versa. So , in this
regard the investor should be very carful before chosen a particular fund according to his risk taking
capacity.
Now we discus the risk and return of various funds available in HDFC Standard Life Insurance
Company Limited--

RR
Liquid Stable Secured Defensive Balanced Growth |quity
fund Managed Managed Managed Managed Fund Fund
Risk* 0.72 0.60 1.29 7.43 18.80 40.81 41.91
Ênnual 9.05 8.77 8.93 15.42 28.89 35.82 36.38

avg.
return*
(*- Ê )
Interpretation: From the above table ,we can say that some funds provide more returns with more
risk and vise-versa. On the basis of more risk and return, we can give the following ranking of the
funds available under LIF| FUND S|RI|S 1----
1.|quity Fund
2.Growth Fund
3.Balanced Managed Fund
4.Defensive managed Fund
5. Secured Managed Fund
6. Liquid Managed Fund
7.Stable Managed Fund
(*- Ê )
Liquid Stable Secured Defensive Balanced Growth |quity

fund Managed Managed Managed Managed Fund Fund
Risk* 0.77 0.40 1.20 14.98 19.46 35.79 37.90
Ênnual 9.43 9.07 9.01 7.05 24.77 41.32 42.56

avg.
return*
Ranking of funds on the basis of High risk with High return----
1.|quity fund
2.Growth Fund
RÈ
3.Balanced Managed Fund
4.Defensive Managed Fund
5.Secured Managed Fund
6.Liquid Fund
7.Stable Managed Fund.
4

Liquid Stable Secured Defensive Balanced Growth

fund Managed Managed Managed Managed Fund
Risk* 0.84 0.28 1.12 6.55 18.72 62.12
Ênnual 9.40 8.05 8.64 14.89 23.97 59.69

avg.
return*
(*- Ê )
Ranking of funds on the basis of High risk with High return----
1. Growth Fund

2. Balanced Managed
3. Defensive Managed
4. Secured Managed
5. Liquid fund

6. Stable Managed
.6-6"2"3'&&"!""
! "#$#
Êsset allocation is the strategy used in choosing between the various kinds of possible investments, in
other words, the strategy used in choosing in what asset classes such as stocks and bonds one wants to
invest. Ê large part of financial planning consists of finding an asset allocation that is appropriate for
R_
a given person in terms of their appetite for and ability to shoulder risk. This can depend on various
factors.
Êsset allocation is based on the idea that in different years a different asset is the best-performing
one. It is difficult to predict which asset will perform best in a given year. Thus, although it is
psychologically appealing to try to predict the "best" asset, proponents of asset allocation consider it
risky. Ê fundamental justification for asset allocation is the notion that different asset classes offer
returns that are not perfectly correlated, hence diversification reduces the overall risk in terms of the
variability of returns for a given level of expected return. Therefore having a mixture of asset classes
is more likely to meet the investor's wishes in terms of amount of risk and possible returns.
In HDFC Standard Life Insurance Company Limited, there are various types of portfolio available for
their customers. How these portfolios are managed are shown in below------

Balanced Managed Investment fund-

%:!;:To generate long term capital appreciation along with current income from a
combined portfolio of equity and debt market instruments. The equity exposure will be between 30%-
60%
D|B|NTUR|S/BONDS % to Fund
8.55% Power Finance Corp Ltd NCD Mat 07/09/2011 3.33%
8.10% Shree Cement Ltd. Mat 23/11/2012 2.16%
5.55% |xport and Import Bank of India NCD Mat 27/11/2012 1.79%
6% |xport and Import Bank of India NCD Mat 07/01/2013 1.67%
9.33% Power Grid Corp of India Ltd Mat- 15-Dec-2015 1.56%
7.75% Rural |lec Corp Ltd NCD Mat 17/11/2012 1.52%
R'
IRFC PTC S|RI|S - Ê12 MÊT 15-10-2015. 1.48%
10.60% IRFC NCD Mat 11.09.2018 1.48%
0% IDFC LTD DDB Mat 04/11/2011 1.28%
0% HDFC LTD DDB MÊT 24/08/2011. 1.15%
8.80% Power Grid Corp of India Ltd Mat- 29-Sep-2015 1.08%
10.00% IDFC NCD Mat 16 Dec 2013. 1.01%
Others 17.10%
|quity % to fund
R±
Infosys Technologies Ltd 3.03%
Reliance Industries Ltd 2.78%
ICICI Bank Ltd 1.92%
Oil & Natural Gas Corporation Ltd 1.79%
Larsen & Toubro Limited 1.77%
BHÊRTI ÊIRT|L LTD 1.67%
Crompton Greaves Ltd 1.60%
State Bank of India 1.51%
Bharat Heavy |lectricals Ltd 1.43%
ITC Ltd 1.32%
Union Bank Of India 1.25%
Tata Steel Ltd 1.23%
Bank of Baroda 1.22%
Punjab National Bank 1.18%
National Thermal Power Corporation Ltd 1.12%
Others 17.38%
Total 42.20%
RÖ
Government securities % to Fund
7.56% GOI MÊT 03/11/2014 3.32%
7.32% GOI 2014 Mat 20/10/2014 3.22%
7% Oil Bonds Mat 09.Sep.2012 1.56%
7.44% Oil Bonds Mat. 23/03/2012 1.10%
Others 2.20%
Total 11.40%
Deposits, Money Market Securities and other Êssets. 7.68%
Graphically presentation of Êsst Êllocation

cc_

Ö±:
| _RR

È:ÖÈ
&&"!"!"3
R:

"
!

|

' c c' R R'
Defensive Managed Investment
%:!;To enhance long term returns for a portfolio predominantly invested in fixed income
securities by taking a moderate to medium exposure to equity and equity related securities. The
equity exposure will be between 15%-30%.
Debentures/Bonds % to
fund
R]
6.40% National Housing Bank NCD Mat - 27/01/2013. 3.05%
7.45% LIC Housing Finance Ltd. MÊT - 21-JULY-2012 2.52%
7.76% LIC Housing Finance Ltd. MÊT - 06-Nov-2012 1.99%
11.45% Reliance Industries Ltd NCD 25/11/2013 1.97%
9.15% Larsen & Tourbo Ltd. NCD Mat 05-Jan-2019 1.97%
10.60% IRFC NCD Mat 11.09.2018 1.85%
0% IDFC LTD DDB Mat 04/11/2011 1.77%
9.50% NÊBÊRD MÊT 15/10/2012 1.65%
8.46% IRFC NCD Mat 15.01.2014. 1.59%
10.00% IDFC NCD Mat 16 Dec 2013. 1.41%
0% HDFC LTD DDB MÊT 24/08/2011. 1.28%
fund

9.90% HDFC LTD NCD MÊT 19/12/2013 1.15%
Others 18.34%
"& 54.84%
|quity % to
fund

Others 18.63%
"& 20.92%
È
Government securities % to fund
7.56% GOI MÊT 03/11/2014 3.67%

6.35% GOI 02/01/2020 1.38%
8.20% GOI 15/02/2022 1.16%
Others 2.63%
Total 8.84%
Deposits, Money Mkt Securities and other Êssets. 15.40%
Graphically presentation of´ asset allocation´:
| R]R

::_

'_:_
c'_
Èc
Êllocation by sector:

"

!

' c c' R R'
|QUITY MÊNÊG|D INV|STM|NT:
%:!;To achieve long term capital appreciation by investing pre-dominantly in equity and
equity related securities and balancing it by shifting assets to the fixed income securities depending on
the fund manager's views. The minimum allocation to equity will be 60%.
Debentures/Bonds % to fund
0% HDFC LTD DDB MÊT 24/08/2011. 2.31%
6.85% LIC Housing Finance Ltd. MÊT - 28-Sep-2011 1.78%
8.25% ICICI Securities Primary Dealership Ltd NCD Mat - 21/02/2012 1.04%
Others 4.59%
ÈR
"&
,96,-H
|QUITY % to fund

ITC Ltd 2.37%
RURÊL |L|CTRIFICÊTION CORPORÊTION LTD 2.10%
United Phosphorous Limited 2.09%
Zee |ntertainment |nterprises Ltd 2.02%
Siemens Ltd 1.99%
Glaxo Smithkline Cons 1.80%
Nestle India Limited 1.78%
Colgate Palmolive (India) Ltd 1.76%
|quity % to
fund
Blue Star Limited 1.75%

Sun Pharmaceuticals Industries Ltd 1.69%
Mahindra & Mahindra Ltd 1.64%
Êsian Paints (India) Ltd 1.50%
OIL INDIÊ LIMIT|D 1.46%
Divis Laboratories ltd 1.44%
|xide Industries Ltd 1.43%
Power Finance Corporation Ltd 1.24%
ÊMT|K ÊUTO LTD 1.13%
Indraprastha Gas Ltd 1.12%
IPCÊ Laboratories Ltd 1.04%
Dishman Pharmaceuticals & chemicals Limited 1.02%
ÈÈ
Others 3.82%
"&
7<6.4H
Govt. securities % to
fund

Others 1.17%
Total 3.29%
Graphically presentation of ³Êsset allocation´:
È_

cÈc_

'ÈR

ÈR]
| Ö:R'
ÊLLOCÊTION OF ÊSS|T WIS|
È'
RÈ'R
cÈ_' cR]
ccR_
±±_ Ö:_ ']R
R]] È'È ÈÈR RR_ R±: R': c]c
±
GROWTH FUND INV|STM|NT:
%:!;" generates long term capital appreciation from a diversified portfolio of equity
and equity related securities.
|quity % to
fund

Siemens Ltd 3.11%
ITC Ltd 2.65%
|quity % to
È±
fund

Sterlite Industries Limited. 1.01%
Others 3.69%
"&
85675H
Graphically presentation of ³Êsset class´:

ÈR_
| ]±Ö±
ÈÖ
RRR'
c±:]
cc]' c]_
±±_ ÖcÖ
_]
R'R Èc: ÈÖR RR R_R R_c RÖR
c] ±
LIQUID FUND INV|STM|NT:
%:!;:To deliver returns linked to Money Market levels with minimal interest rate risk and
minimal credit risk so as to provide a high level of safety of capital.
Ê

c
È:
S|CUR|D MÊNÊG|D INV|STM|NT:
%:!;:To provide reasonable returns through investments in high credit quality debt
instruments while maintaining an optimal level of interest rate risk.
Fund
0% IDFC LTD DDB Mat 15/04/2011 7.00%

8.46% IRFC NCD Mat 15.01.2014. 5.25%
9.50% National Bank for Êgriculture & Rural Development MÊT 15/10/2012 3.70%
0% Sundaram Finance NCD Mat 15-Sep-2011 2.64%
0% IDFC LTD DDB Mat 04/11/2011 2.62%
9.45% Citi Financial Consumer Finance India Ltd MD 03 Dec 2010. 1.88%
8.40% Sundaram Finance NCD Mat 06/07/2011 1.75%
6.75% National Housing Bank NCD Mat - 21/12/2012 1.65%
9.08% HDFC LTD NCD Mat 18-Jan-2013 1.57%
8.90% Steel Êuthority of India Ltd (SÊIL) NCD Mat 01/05/2019. 1.57%
10.00% IDFC NCD Mat 16 Dec 2013. 1.50%
8.90% Power Finance Corp NCD mat 16/02/2014 1.50%
8.90% STÊT| BÊNK OF INDIÊ NCD MD 19-D|C-2023. 1.17%
10.00% NÊBÊRD Mat 14.05.2012 1.11%
9.85% Rural |le Corp NCD 28-Sep-2017 1.05%
Others 10.67%
"&
576<8H
Government securities % to fund
7.44% Oil Bonds Mat. 23/03/2012 4.25%

7.32% GOI 2014 Mat 20/10/2014 3.37%
7.61% Oil Bonds Mat 07/03/2015 1.81%
6.35% GOI 02/01/2020 1.27%
Others 3.56%
Total 14.26%
È]
Graphically presentation of ³Êsset Class´.

c
Ö:'

c_R±

±Ö:]
SOV|R|IGN FUND LIF|
%:!;:To generate high returns through investments in Central and State Government
securities such that credit risk is alleviated and the returns are commensurate to the interest rate risks.
Govt. securities % to fund
7.02% GOI MÊT 17/08/2016 28.86%

7.27% GOI 03/09/2013 28.47%
9.39% GOI Mat 02/07/2011 17.82%
7.61% Oil Bonds Mat 07/03/2015 12.25%
7.59% GOI 2016 8.50%
"&
8468/H
_
Deposits, Money Mkt Securities and other Êssets.-6,/H
STÊBL| MÊNÊG|D LIF|:
%:!;:To generate optimal returns for investors through short term investments in high credit
quality securities soas to keep interest rate risks low and provide safety of capital over the medium term
horizon.
8.00% Infrastructure Dev Fin Corp NCD Mat 13 Êpr 2011 18.42%
6.75% LIC Housing Finance Ltd. MÊT - 13-May-2011 8.33%
6.90% LIC Housing Finance Ltd. Mat. 23-Êpr-2011 5.48%
6.84 % HDFC LTD NCD MÊT 22/04/2011 5.40%
9.80% G| Money Fin Ser Mat 25 Êpr 11 5.21%
7.75% T|CH MÊHINDRÊ LIMIT|D NCD MÊT 24/03/2011 1.82%
0% IDFC LTD DDB Mat 15/04/2011 1.60%
Others 2.29%
"&
4/6/5H
Graphically presentation of´ Êsset Class´:

_]]_

'±
_c

Balanced Managed Investment:
%:!;To generate long term capital appreciation along with current income from a
60%.
fund

Others 10.68%
"&
.<6,<H
|quity % to fund

Others 14.94%
"& -,69.H
_R
Govt. Securities % to fund
6.35% GOI 02/01/2020 6.11%

6.07% GOI MÊT 15/05/2014 1.80%
7.44% Oil Bonds Mat. 23/03/2012 1.39%
7.61% Oil Bonds Mat 07/03/2015 1.17%
Others 3.14%
"& ,965.H
eposits, Money Mkt Securities and other Êssets. 16.89%
Graphically presentation of ³Êsset allocation´:

R:c: | _cÈR

c±:]

cÈ±R
_È
Graphically presentation of ³Êllocation by sector´:
È
R'
R
c'
c
'

Defensive Managed Investment:
%:!;To enhance long term returns for a portfolio predominantly invested in fixed income
securities by taking a moderate to medium exposure to equity and equity related securities. The equity
exposure will be between 15%-30%.
6% |xport and Import Bank of India NCD Mat 07/01/2013

10.75% 6.62%
10.00% IDFC NCD Mat 16 Dec 2013. 4.95%
0% IDFC LTD DDB Mat 04/11/2011 2.20%
11.15% PFC NCD mat 15/09/2011 1.13%
7.45% Tata Capital Ltd NCD Mat 21/01/2011 1.08%
Others
"& -.697H
|quity % to fund
Others 17.41%

__
7.59% GOI 2016 8.75%

6.35% GOI 02/01/2020 7.23%
6.07% GOI MÊT 15/05/2014 2.33%
Others 1.09%
"& ,86-,H
Graphically presentation of ³Êsset Êllocation´

| cÖ_c

_RÈÖ

c]_c

R:
Graphically presentation of Êllocation by sector:
_'
R'
RcÈ'
R
c±]_
c':
c'
c±_
c
ÖÈ
_:± _±È
' ÈÖ È±Ö È_]
R'] R_c
c±R cÖ:

|quity Managed Investment:

Others 4.18%
"&
86-7H
|quity

_±
Siemens Ltd 1.83%
ITC Ltd 1.54%
|quity % to fund

Power Grid Corporation of India Ltd 1.08%
Others 6.05%
"& 7-6,/H
Govt securities % to fund
7.32% GOI 2014 Mat 20/10/2014 1.14%

Others 0.75%
"& ,6<8H
Graphically presentation of Êsset class:
_Ö

]_Ö

c_'_

c:]
| Ö_c
Êllocation by Sector:
È
R'
R
c'
c
'

_:
GROWTH FUND INV|STM|NT:
%:!;:To generate long term capital appreciation from a diversified portfolio of equity and
equity related securities.
|quity % to fund

|quity % to fund

Siemens Ltd 2.03%
ITC Ltd 1.46%
Shree Cement Limitesd 1.17%
Dabur India Ltd 1.03%
Others 5.11%
_]
"& 92.94%
Êllocation by sector:
R'
R
c'
c
'
Liquid Fund Investment:
Fund Objective :To deliver returns linked to Money Market levels with minimal interest rate risk and
minimal credit risk so as to provide a high level of safety of capital
Secured Managed Investment:
'
Fund Objective :To provide reasonable returns through investments in high credit quality debt
10.00% NÊBÊRD Mat 14.05.2012 15.50%

8.46% IRFC NCD Mat 15.01.2014 . 4.53%
0% HDFC LTD DDB MÊT 24/08/2011. 1.89%
9.90% HDFC LTD NCD MÊT 19/12/2013 1.85%
10.60% IRFC NCD Mat 11.09.2018 1.79%
8.75% IDFC NCD Mat 20 JULY 2010 1.07%
Others 6.73%
"& 7.6/.H
7.02% GOI MÊT 17/08/2016 5.51%

6.35% GOI 02/01/2020 3.94%
7.61% Oil Bonds Mat 07/03/2015 2.81%
6.07% GOI MÊT 15/05/2014 2.25%
Others 1.20%
"& ,467,H
Stable Managed Life:

'c
Fund Objective :To generate optimal returns for investors through short term investments in high credit
quality securities so as to keep interest rate risks low and provide safety of capital over the medium term
horizon.
6.84 % HDFC LTD NCD MÊT 22/04/2011 12.07%
0% IDFC LTD DDB Mat 15/04/2011 11.36%
8.00% Housing Dev Finance Corp Ltd NCD MÊT 08/04/2011. 5.23%
10.70% G| Capital Ser NCD 06.06.11 3.93%
10.27% Sundaram Fin Co NCD MD 03-S|P-2010 3.28%
Total 64.50%

Balanced Managed Investment:
Fund Objective: To generate long term capital appreciation along with current income from a combined
portfolio of equity and debt market instruments. The equity exposure will be between 30%-60%.
'R
8.80% Power Grid Corp of India Ltd Mat- 29-Sep-2015 2.12%
0% IDFC LTD DDB Mat 04/11/2011 1.81%
10.00% IDFC NCD Mat 16 Dec 2013. 1.69%
0% HDFC LTD DDB MÊT 24/08/2011. 1.43%
9.90% Housing Dev Finance Corp Ltd NCD MÊT 29/12/2018 1.20%
8.10% Shree Cement Ltd. Mat 23/11/2012 1.19%

1.19%9.32% Housing Dev Finance Corp Ltd NCD MÊT 17/12/2012 1.17%
Others 15.78%
|quity % to fund

ITC Ltd 1.38%
Siemens Ltd 1.10%
Others 16.97%
"& -,6<.H
'È

Govt. securities Hto fund
7.56% GOI MÊT 03/11/2014 4.76%

7.32% GOI 2014 Mat 20/10/2014 3.40%
7.02% GOI MÊT 17/08/2016 1.25%
Others 3.18%
"& ,.65/H
Graphically presentation of Êsset class

| _c:R
È:c]

cR±

ÖÈ]
'_
R'
R
c'
c
'
%:!;To enhance long term returns for a portflio predominantly invested in fixed income
8.50% |xport and Import Bank of India Mat 12/09/2011 5.01%

9.50% NÊBÊRD MÊT 15/10/2012 4.58%
8.75% IDFC NCD Mat 20 JULY 2010 3.26%
9.80% LIC Housing Finance Ltd. Mat. 22-Oct-2017 2.55%
9.00% Tata Sons Ltd MD 27-JUL-2010 2.14%
''
10.48 % GRÊSIM NCD MD 16 D|C|MB|R 2013 1.04%
Others 10.89%
"& 4.6-/H
|quity % to fund

Others 15.15%
"& ,<697H
6.35% GOI 02/01/2020 6.72%

7.44% Oil Bonds Mat. 23/03/2012 3.48%
7.56% GOI MÊT 03/11/2014 2.79%
11.03% GOI 18/07/2012 2.18%

Others 0.59%
"& ,4675H
'±
| c:ÈÖ

'R_

cÈ_Ö

c'Ö±
R'
R
c'
c
'

|quity managed Investment:

'Ö
0% HDFC LTD DDB MÊT 24/08/2011. 1.49%
8.25% ICICI Securities Primary Dealership Limited NCD Mat - 21/02/2012 1.48%
Others 2.48%
"& ,.6,,H
|quity % to fund

ITC Ltd 2.30%
Siemens Ltd 2.02%

':
Others 3.93%
"& </6</H

Others 0.34%
"& 96,5H
Graphically presentation of Êsset Class:

È]È cRcc

Èc±
| ::

']

Graphically presentation of Êsset Êllocation:
R'
R
c'
c
'

Growth fund:
%:!;:To generate long term capital appreciation from a diversified portfolio of equity and
|quity % to fund

Siemens Ltd 3.06%
Nestle India 2.78%
ITC Ltd 2.76%
±
Others 4.09%
"& 87685H
R'
R
c'
c
'
±c
Liquid Fund:
%:!;To deliver returns linked to Money Market levels with minimal interest rate risk and
Deposits, Money Mkt Securities and other Êssets. 100.00
Secured Managed Fund:

%:!;To provide reasonable returns through investments in high credit quality debt

9.90% HDFC LTD NCD MÊT 19/12/2013 2.79%
8.90% Steel Êuthority of India Ltd (SÊIL) NCD Mat 01/05/2019. 2.67%
10.48 % GRÊSIM NCD MD 16 D|C|MB|R 2013 2.64%
9.55% Citi Maruti Finance 05/10/2010 2.45%
10.60% IRFC NCD Mat 11.09.2018 1.96%
9.08% HDFC LTD NCD Mat 18-Jan-2013 1.87%
0% IDFC LTD DDB Mat 04/11/2011 1.73%
10.00% IDFC NCD Mat 16 Dec 2013. 1.71%
8.20% IRFC NCD MÊT 27.04.2017. 1.47%
8.46% IRFC NCD Mat 15.01.2014. 1.46%
±R

10.00% NÊBÊRD Mat 14.05.2012 1.10%
Others 13.45%
"& 5<6,<H
Govt, securities % to fund
7.61% Oil Bonds Mat 07/03/2015 9.34%

7.56% GOI MÊT 03/11/2014 5.33%
7.32% GOI 2014 Mat 20/10/2014 4.99%
Others 4.03%
"& .9658H
Stable Managed Pension Fund:
%:!;:To generate optimal returns for investors through short term investments in high credit
horizon.

8.00% Housing Dev Finance Corp Ltd NCD MÊT 08/04/2011 . 4.84%
6.84 % HDFC LTD NCD MÊT 22/04/201 14.09%
0% IDFC LTD DDB Mat 15/03/2011 1.53%
Others 0.81%
"& 4<6--H
±È

Balance Managed Investment:
%:!;To generate long term capital appreciation along with current income from a
60%.

0% HDFC LTD DDB MD 10/01/2011 2.64%
9.75% LIC Housing Finance Ltd. Mat. 24-Mar-2018 2.55%
8.90% Steel Êuthority of India Ltd (SÊIL) NCD Mat 01/05/2019 2.03%
HDFC BÊNK 9.92% MD 08/09/2036 1.25%
Others 10.64%
"& 9/695H
|quity % to fund

±_

Others 12.12%
"& -.64.H
7.44% Oil Bonds Mat. 23/03/2012 2.14%

6.07% GOI MÊT 15/05/2014 1.78%
6.35% GOI 02/01/2020 1.27%
Others 3.16%
"& <694H
±'

ÈÈ± | _R'R

c:ÖÖ

:È'
Graphically presentation of Êllocation by Sector:
R'
R
c'
c
'

%:!;:To enhance long term returns for a portfolio predominantly invested in fixed income
±±

10.60% IRFC NCD Mat 11.09.2018 4.73%
8.20 % IRFC NCD MÊT 27/04/2012 3.92%
0% HDFC LTD DDB MD 10/01/2011 2.81%
9.50% NÊBÊRD MÊT 15/10/2012 2.00%
9.00% Tata Sons Ltd MD 27-JUL-2010 1.98%
Others 3.27%
"& 986/<H
|quity % to fund

Others 14.84%
"& ,76..H
6.35% GOI 02/01/2020 8.46%

7.44% Oil Bonds Mat. 23/03/2012 7.79%
7.32% GOI 2014 Mat 20/10/2014 6.56%
6.07% GOI MÊT 15/05/2014 3.29%
Others 2.33%
"& .<6-.H
±Ö

| cÖRR

È]:

R:_R

c'R:
R'
R
c'
c
'
|quity Managed Investment:

±:


Others 1.07%
"& 86.-H
|quity % to fund

Siemens Ltd 1.84%
±]
Gas Êuthority of India Ltd(GÊIL) 1.24%
Others 5.28%
"& 746./H
Others 1.53%

]R_
c_È

c'È
| Ö'R
Ö
È
R'
R
c'
c
'

*"3'

%:!;To generate long term capital appreciation from a diversified portfolio of equity and
|quity % to fund

Öc
Siemens Ltd 2.21%
ITC Ltd 2.18%
Others 5.68%
"& 8-6,5H
R'
R
c'
c
'

Liquid Fund Investment:
%:!;:To deliver returns linked to Money Market levels with minimal interest rate risk and
ÖR
Secured Managed Investment:
%:!;:To provide reasonable returns through investments in high credit quality debt
instruments while maintaining an optimal level of interest rate risk
10.00% NÊBÊRD Mat 14.05.2012 13.14%

8.46% IRFC NCD Mat 15.01.2014. 3.84%
9.55% Citi Maruti Finance 05/10/2010 2.08%
10.10% STÊT| BÊNK OF INDIÊ NCD MD 12-S|P-2022 1.90%
9.90% HDFC LTD NCD MÊT 19/12/2013 1.73%
10.60% IRFC NCD Mat 11.09.2018 1.21%
0% IDFC LTD DDB Mat 04/11/2011 1.03%
Others 1.60%
"& 7-69/H
6.35% GOI 02/01/2020 5.53%

7.44% Oil Bonds Mat. 23/03/2012 1.85%
7.02% GOI MÊT 17/08/2016 1.63%
6.07% GOI MÊT 15/05/2014 1.27%
Others 2.61%
"& ,.6<8H
ÖÈ
Stable Managed Pension:
%:!;To generate optimal returns for investors through short term investments in high credit
horizon.
Debentures/Bondss % to fund
0% HDFC LTD DDB MÊT 24/08/2011. 18.69%
0% IDFC LTD DDB Mat 15/03/2011 7.87%
0% HDFC LTD DDB MD 10/01/2011 7.59%
6.90% LIC Housing Finance Ltd. Mat. 23-Êpr-2011
2.12%
Others 0.85%
"& <.6-5H
A&'% &
BlueChip Wealth Builder Fund:
%:!;The fund aims to provide medium to long term capital appreciation by investing in a
portfolio of predominantly large cap companies which can perform through economic and market
cycles. The fund will invest atleast 80% of the ÊUM in companies which have a market capitalization
gretaer than the company with the least weight in BS|100 index. The fund may also invest upto 20% in
money market instruments/cash.
|quity % to fund
Ö_
Siemens Ltd 5.12%
ITC Ltd 1.69%
Maruti Suzuki India Ltd 1.65%
"& 82.35
È
R'
R
c'
c
'

Income Wealth Builder Fund:

Ö'

%:!;:The fund aims to provide superior returns through investments in high credit quality
debt instruments while maintaining an optimal level of interest rate risk. The fund may also invest upto
20% in money market instruments/cash.

8.94% LIC Housing Finance Ltd. Mat. 16-Jan-2011 11.23%
0% IDFC LTD DDB Mat 15/03/2011 7.27%
0% IDFC LTD DDB Mat 15/04/2011 5.76%
0% HDFC LTD DDB MÊT 24/08/2011. 4.03%
0% HDFC LTD DDB MD 10/01/2011 2.95%
Others 2.49%
"& 786/9H
7.02% GOI MÊT 17/08/2016 3.93%

Others 0.82%
"& -674H
Opportunities Wealth Builder Fund:
%:!;' fund aims to generate long term capital appreciation by investing pre-dominantly
in mid cap stocks which are likely to be the blue chips of tomorrow. The fund will invest in stocks
which have a market capitalization equal to or lower than the market capitalization of the highest
weighted stock in the NS| CNX Midcap Index. The fund may also invest upto 20% in money market
instruments/cash.
|quity % to fund

Êllahabad Bank. 11.03%
Ö±
Karnataka Bank Limited 7.39%
Castrol India Ltd 4.17%
Thermax Ltd 3.59%
P & G Hygine & Health Care Ltd 3.06%
MindTree Limited 3.00%
Lupin Limited. 2.68%
Oriental Bank of Commerce 2.65%
Êpollo Tyres Ltd 2.63%
Êlstom Projects India Ltd. 1.76%
Êshok Leyland Ltd 1.69%
Êndhra Bank 1.59%
Others 2.23%
"& <96-.H
È
R'
R
c'
c
'

Vantage Wealth Builder Fund:
ÖÖ

%:!;This is a fund of funds which will invest in the Income Wealth Builder Fund, Bluechip
Wealth Builder Fund and Opportunities Wealth Builder Fund. The allocation to each fund will depend
on the fund manager's market view and will be within the limits
HDFC SL Income Wealth Builder Fund 39.65%
|quity % to fund
HDFC SL Opportunities Wealth Builder Fund 33.97%

HDFC SL Blue Chip Wealth Builder Fund 26.38%
"& 5/694H
A&'#C#0 :
Bond Opportunities Fund:
%:!;To provide reasonable returns through investments in high credit quality debt

0% HDFC LTD DDB MD 10/01/2011 1.19%
Others 9.40%
Ö:
"& 9/65<H
7.02% GOI MÊT 17/08/2016 18.71%

6.07% GOI MÊT 15/05/2014 9.80%
7.61% Oil Bonds Mat 07/03/2015 7.41%
6.35% GOI 02/01/2020 3.20%
7.59% GOI 2016 3.18%
7.32% GOI 2014 Mat 20/10/2014 2.71%
7.27% GOI 03/09/2013 2.66%
7.56% GOI MÊT 03/11/2014 2.20%
7.44% Oil Bonds Mat. 23/03/2012 2.18%
Others 0.81%
"& 4.6<7H
Graphically presentation of Êsset Êllocation:
Ö]

È±:
| 'R:Ö

c±_'
Large Cap Niche Life Fund:
%:!;:To generate long term capital appreciation from a diversified portfolio of pre-
dominantly in large cap equity and equity related securities.
|quity % to fund

Maruti Suzuki India Ltd 3.99%
ITC Ltd 3.24%
Siemens Ltd 2.96%

Cipla Limited 2.92%
:
Hero Honda Motors Ltd 2.01%
Gas Êuthority of India Ltd(GÊIL) 1.89%
ÊXIS Bank Limited 1.26%
"& 8764-H
È
R'
R
c'
c
'

Mid Cap Niche Life fund:
%:!;:To generate long term capital appreciation from a diversified portfolio of pre-
dominantly in mid cap equity and equity related securities.
|quity % to fund
:c
Êllahabad Bank. 5.38%
Gujarat Gas Company Limited 4.12%
Shree Cement Limitesd 4.07%
MindTree Limited 4.04%
Thermax Ltd 3.87%
Castrol India Ltd 3.76%
Bajaj Holdings & Investment Limited 3.31%
Êndhra Bank 3.14%
Lupin Limited. 2.97%
Cummins India Ltd.. 2.95%
Oriental Bank of Commerce 2.83%
Corporation Bank Ltd 2.76%
Mahindra & Mahindra Finacial Services Limited 2.69%
F|D|RÊL BÊNK 2.67%
Êpollo Tyres Ltd 2.45%
P & G Hygine & Health Care Ltd 2.37%
Êshok Leyland Ltd 2.10%
PUNJ LLOYD LIMIT|D 1.96%
Titan Industries Limited 1.63%
Power Trading Corporation of India Ltd 1.60%
Tata Tea Ltd 1.53%
Êlstom Projects India Ltd. 1.48%
Tata Chemicals Ltd 1.29%
Chennai Petroleum Corporation Ltd 1.22%
Karnataka Bank Limited 1.16%
MÊRICO LIMIT|D 1.02%
Others 2.51%
"& 8564.H
:R
R'
R
c'
c
'

Wealth Maximizer Managers Fund:
%:!;:This is a fund of funds which will invest in Money Plus Niche Life Fund, Bond
Opportunities Niche Life Fund, Large Cap Niche Life Fund and Mid Cap Niche Life Fund. The
allocation to each fund will depend on the fund manager's market view and will be within the limits.
Bond Opportunities Niche Life Fund. 35.27%

Money Plus Niche Life Fund 4.78%
"&
-/6/4H
|quity % to fund
Mid Cap Niche Life Fund 33.18%

Large Cap Niche Life Fund 26.78%
"& 48684H
:È
.64>

It is very difficult to evaluate the performance of the funds available in an insurance sector because the
performance of the funds are influenced by many factors. I try to evaluate the performance of the funds
by using Trynore and Sharp method within by limited knowledge.
I. What Treynor measurement says----
The Treynor measure of portfolio performance relates the excess return on a portfolio to the
portfolio beta because according to Jack Treynor, systematic risk or beta is the appropriate
measure of risk, as suggested by the capital asset pricing model. It reflects the excess return
earned per unit of risk.
Treynor¶s measure= ( Êvg. rate of return on portfolio

± Êvg rate of return on a risk-free invt.)
/ Beta of portfolio

II. What Sharpe measurement says----
The sharpe measure is similar to the Treynor measure except that it employs standard deviation,
not beta, as measurement of risk. Thus,
Sharpe measure= ( Êvg. rate of return on portfolio

± Êvg rate of return on a risk-free invt.)
/ Standard deviation of return of portfolio

Hence, Sharpe measure reflects the excess return earned on a portfolio per unit of its total risk
(standard deviation)
|valuation of fund performance available under LIF| FUND S|RI|S I:

Period |xpected Return Risk- Beta Mean Standard

on free value
:_
Return market return deviation
Balanced 14.68 12.89 7.23 1.32 23.89 18.80
fund
Defensive 10.42 6.91 7.81 -2.9 15.42 7.43
fund
|quity 14.13 14.39 6.33 0.97 36.38 41.91
fund
Secured 06.00 04.56 8.00 0.58 8.93 1.29

fund
Stable 09.11 07.93 7.57 4.28 8.77 0.60
fund
Mean of risk-free return-7.39
Fund names Treynor measure Sharpe measure
Balanced fund (23.89-7.39)/1.32=12.5 (23.89-7.39)/18.80=0.89
Defensive fund (15.42-7.39)/-2.9=-2.76 (15.42-7.39)/7.43=0.4
|quity fund (36.38-7.39)/0.97=29.87 (36.38-7.39)/41.91=4
Secured fund (8.93-7.39)/0.58=2.65 (8.93-7.39)/1.29=0.72
Stable fund (8.77-7.39)/4.28=0.32 (8.77-7.39)0.60=2
&"
Under Treynor measure:
Funds¶ names Ênalysis
:'
I. Balanced fund It reflects excess 16.5 return earned per 1.32 unit of risk (23.89-
7.39=16.5)
II. Defensive fund It reflects excess 8.03 return earned per -2.9 unit of risk (15.42-
7.39=8.03)
III. |quity fund It reflects excess 28.99 return earned per 0.97 unit of risk
(36.38-7.39=28.99)
IV. Secured fund It reflects excess 1.54 return earned per 0.54 unit of risk (8.93-
7.39=1.54)
V. Stable fund It reflects excess 1.38 return earned per 0.32 unit of risk (8.77-
7.39)/4.28
Under Sharpe measure:
I. Balanced fund It reflects excess 16.5 return earned per 18.80 unit of total risk (
Standard deviation) (23.89-7.39=16.5)
II. Defensive fund It reflects excess 8.03 return earned per 7.43 unit of total risk
(15.42-7.39=8.03)
III. |quity fund It reflects excess 28.99 return earned per 41.91 unit of total risk
(36.38-7.39=28.99)
IV. Secured fund It reflects excess 1.54 return earned per 1.29 unit of total risk
(8.93-7.39=1.54)
V. Stable fund It reflects excess 1.38 return earned per 0.60 unit of total risk
(8.77-7.39)/4.28
|valuation of fund performance available under P|NSION FUND S|RI|S I:
Funds¶ Return Market Risk-free Beta value Êvg. return Standard

names return return deviation
:±
Balance 13.97 12.89 7.39 1.20 24.77 19.46
fund
Defensive 8.71 6.91 7.10 (8.47) 14.98 7.05
Managed
fund
Liquid fund 7.45 5.83 8.81 0.45 9.43 0.77
Secured 5.74 4.56 7.66 0.62 9.01 1.20

fund
Stable fund 9.20 7.93 8.08 (7.47) 9.07 0.40
Fund names Treynor measure Sharpe measure
Balanced fund (24.77-7.81)/1.20=14.13 (24.77-7.81)/19.46=0.87
Defensive fund (14.98-7.81)/(8.47)=(0.85) (14.98-7.81)/7.05=1.02
Liquid fund (9.43-7.81)/0.45=3.6 (9.43-7.81)/0.77=2.10
Secured fund (9.01-7.81)/0.62=1.94 (9.01-7.81)/1.20=1
Stable fund (9.07-7.81)/(7.47)=(0.17) (9.07-7.81)/0.40=3.15
&";&%&

I. Balanced fund It reflects excess 16.96 return earned per 1.20 unit of risk
:Ö
II. Defensive fund It reflects excess 7.17 return earned per -8.47 unit of risk
III. Liquid fund It reflects excess 1.62 return earned per 0.45 unit of risk
IV. Secured fund It reflects excess 1.20 return earned per 0.62 unit of risk
V. Stable fund It reflects excess 1.26 return earned per -7.47 unit of risk.
Standard deviation)
III. Liquid fund It reflects excess 1.62 return earned per 0.77 unit of total risk
V. Stable fund It reflects excess 1.26 return earned per 0.40 unit of total risk
|valuation of fund performance available under OLD GROUP FUND S|RI|S :
Period |xpected Return Risk- Beta Mean Standard

on free value
Return market return deviation
Balanced 19.02 18.05 7.57 1.09 21.96 20.59
::
fund
Defensive 12.35 8.29 8.01 1 17.98 8.80
fund
Secured 6.01 4.80 6.95 0.44 8.03 1.33

fund
Fund names Treynor measure Sharp measure
Balanced fund (21.96-7.51)/1.09=13.25 (21.96-7.51)/20.59=0.70
Defensive fund (17.98-7.51)/1=10.47 (17.98-7.51)/8.80=1.19
Secured fund (8.03-7.51)/0.44=1.18 (8.03-7.51)/1.33=0.39
&";&%&

I. Balanced fund It reflects excess 14.45 return earned per 1.09 unit of risk
II. Defensive fund It reflects excess 10.47 return earned per 1 unit of risk
:]
IV. Secured fund It reflects excess 0.52 return earned per 0.44 unit of risk
Standard deviation)
.65 " ' !" '" & % 2 " !"" % ;" 3'&
!'"")' ""& ! #.

Ên investor can earn a good return in his/her investment only if he/she able to classify
himself/herself under which category i.e. whether he/she belongs to high risk or low risk group. If
he is able to classify himself as under high risk group, then he should go to ULIP because the
return of the ULIP is subject to the market risk, otherwise he should go for traditional plans.
There are many factors influenced while an investor divide himself in to either high risk or low
risk such as annual income, no of dependent members, age etc.
For this purpose, I use discriminate analysis technique among 58 sample size through which an
investor may identify himself whether he belongs to high risk or low risk and accordingly he may
go for ULIP if he belongs to high risk group or he may go traditional plans if he belongs to low
risk group.
]
Here I use discriminant analysis and advise HDFC Standard Life Insurance Company on
how to set up its system to screen potential good high risk customer and low risk customer. In
particular, I build a discriminant function and find out:
1. The percentage of customer that it is able to classify correctly.\

2. Statistical significance of the discriminant function.
3. Which variable (age, income, no. of family member) are relatively better in discriminating
between µlow risk¶ and µhigh risk¶ applicants.
4. How to classify a new applicant into of two groups- µ low risk¶ or µhigh risk¶ by building a
decision rule and a cut off score.
The code for low risk customer is 1 and the code for high risk customer is 2 in the following table.
]c

R ### R
R R####
R $

# R
$ ###
R ####
$ $### $
R $###
$ $ ###
R $R###
R $### R
$ R
### R
R R### $
$ RR### #
R R### #
R R### R
R RR###
R RR R
$ R ###
R R### #
R R### #
$ R ### $
$ RR###

$ $
### #
$ RR### R
R

$ R
###
R R###

R R R
$ $####
$ $R### R
$ $ ### #
R $ ## #
R ### R R
R ###

R ### R
R
R ### R

R ### #
R ## RR
R $#### R
R ### R
$ R ### R
$ $#### R
$ $### R
R R#### R
$ $### R]
R #### #
$ $### R ] ]R
$ R#### R

$ $#### RR
$ R#### RR
$ $### R
$ R ### RR
We found the following outcome from the SPSS
!#
[DataSet1]
& "!) ##

Unweighted Cases N Percent
Valid 54 100.0
|xcluded Missing or out-of-range
0 .0
group codes
Êt least one missing
0 .0
discriminating variable
Both missing or out-of-
range group codes and
0 .0
at least one missing
Total 0 .0
Total 54 100.0
*" $!
Valid N (listwise)
risk Unweighted Weighted
1 income 27 27.000
age 27 27.000
nofmem 27 27.000
2 income 27 27.000
age 27 27.000
nofmem 27 27.000
Total income 54 54.000
age 54 54.000
]È
*" $!
Valid N (listwise)
risk Unweighted Weighted
1 income 27 27.000
age 27 27.000
nofmem 27 27.000
2 income 27 27.000
age 27 27.000
nofmem 27 27.000
Total income 54 54.000
age 54 54.000
nofmem 54 54.000
&,

##" "!&!#
!"
);&
Functi % of Cumulative Canonical
on |igenvalue Variance % Correlation
1 .561a 100.0 100.0 .600
a. First 1 canonical discriminant functions were used in the
analysis.
A&2I#%
Test
of
Functi Wilks'
on(s) Lambda Chi-square df Sig.
1 .641 22.496 3 .000
]_
0
"!&
!#

!"
"!
Function
1
income -.841
age 1.184
nofmem .175
! C

Function
1
age .726
income -.143
nofmem .108
Pooled within-groups
correlations between
discriminating
variables and
standardized
canonical discriminant
functions
Variables ordered by
absolute size of
correlation within
function.
]'
"!&
!#
!"
"!
Function
1
income .000
age .112
nofmem .108
(Constant) -2.696
Unstandardized
coefficients

!"
*" $ "
Function
risk 1
1 -.735
2 .735
Unstandardized
canonical
discriminant
functions evaluated
at group means
&!""!) ##
Processed 54
0
group codes
0
Used in Output 54
]±
&!""!) ##
Processed 54
0
group codes
0
""%%&"*" $
Cases Used in Ênalysis
risk Prior Unweighted Weighted
1 .500 27 27.000
2 .500 27 27.000
Total 1.000 54 54.000
&!" &
Predicted Group
Membership
risk 1 2 Total
Original Count 1 21 6 27
2 6 21 27
% 1 77.8 22.2 100.0
2 22.2 77.8 100.0
77.8% of original grouped cases correctly classified.

We made analysis of the data found in the SPSS through some questions which will help us to
come to the conclusion of our objective for why we use the discriminant analysis.
6,"3)""'#"&F"3#"'4-$""!&!"!&F
]Ö
To answer this question, we look at the computer output labeled Table classification result. This is a
part of the discriminantion analysis output from any computer pacage as spss, statistica, sas and so
on. For example if a priori probabilities chosen for the classification into the two groups are equal, as
we have assumed while generating this output, then we will very likely see similar number in our
output.
This classification result table also called the classification matrix( also known as the confusion
matrix), and it indicate that the discriminant function we have obtained is able to classify 77.8% of
the 54 object correctly.
More specifically, it also says that out of 27 cases predicted to be in group1, 21 are observed to be in
group1 and 6 in group 2.
Similarly, 27 cases predict in group 2, we understand that 21 are observed to be in group in 2 and 6 in
group 1.
Thus, on the whole, only 12(6+6) cases out of 54 were misclassified by discriminant model, thus
giving us a classification accuracy level of ± (54-12)/54 or 77.8%.
6.6"3# !'!# !"!&&)!!F
This question is answered by looking at Wilks¶ Lambda and the probability value for f-test given in
Wilks¶ Lambda table.
A&2I#%
Test
of
Functi Wilks'
on(s) Lambda Chi-square df Sig.
1 0.641 22.496 3 .000
The value of wilks¶ lambda is 0.641.This the value is between 0 and 1, and a low value indicate better
discriminant power of model. Thus, 0.641 is an indicator of the model being relatively good.
The value of the f- test indicates that the discriminant between the two group is highly significant.
Which indicate that f- test would be significant at confidence level of up to
(1-000)*100=100%
696 A'!'$;%&&;&%!#)%3&"32
')'2F

To answer this question, we look at the standardized coefficient in out put. This output show that
age is the best predictor, with the coefficient of 1.184, followed by no. of family member, with a
coefficient of 0.175, income is the last, with a coefficient of:-0.841.
]:
0
"!&
!#

!" "!
Function
1
income -0.841
age 1.184
nofmem 0.175
6-6"3"3!&;""J')'KJ&"3K2!)"+#2!"
3''';" %&"'"& #" 6
=This is the most important question to be answered. Please remember why we started out with the
discriminant analysis in this problem. Through the discriminant analysis so that we can understand
the risk taking capacity of the investors.
The way to do this is to use the output in table unstandardised coefficients in the discriminant
function and table means of canonical variable ( function at group cenroids)

!"
*" $ "
Function
risk 1
1 -0.735
2 0.735
Unstandardized
canonical
discriminant
functions evaluated
at group means
The function of group centroids, gives us the new means for the transformed group centroids. Thus,
the new mean for group 1(low risk)is -0.735 and the mean for group 2(high risk) is +0.735.This
means that the midpoint of these two is 0. This is clear when we plot the two means on a straight line,
and locate their midpoint, as shown below-
]]
0
+0.735
-0.735
Mean of Group 1( high risk)
Mean of Group 2( Low risk)
This also gives us a decision rule for classifying any new case. If the discriminant score of an
applicant falls to the right of the midpoint, we classify him as µhigh risk¶, and if the discriminant
score of an applicant falls to the left of the midpoint, we classify him as µlow risk¶. In this case, the
midpoint is 0. Therefore, any positive(greater than 0) value of discriminant score will lead to
classification as¶high risk¶ any negative( less than 0) value of
the discriminant score will lead to classification as µ low risk¶. But how do we compare the
discriminant of an investor
We use the investor¶s age, income and no. of family member and plug these into the unstandardised
discriminant function. This gives us his discriminant score.
"!&
!#
!"
"!
Function
1
income .000
age 0.112
nofmem 0.108
(Constant) -2.696
Unstandardized
coefficients
Y= -2.696+ income(0.000) + age(0.112) + nofmem (0.108)
Where Y will give us the discriminant score of any person whose age, income, and no.of family
member were known.
c
In this way we can ascertain of any person whether he is suitable for ULIP or traditional life
insurance policies which will minimize the conflict between the risk and return.

Insurance sector plays a very important role in Indian economy, how it plays a vital role in Indian
economy are as follows---
!'"&!"3'!')&")#;)
Insurers are increasingly introducing innovative products to meet the specific needs of the prospective
policyholders. Ên evolving insurance sector is of vital importance for economic growth. While
encouraging savings habit it also provides a safety net to both enterprises and
Individuals.
Insurance Companies receive, without much default, a steady cash stream of premium or
contributions to pension plans. Various actuary studies and models enable them to predict, relatively
accurately, their expected cash outflows.
Liabilities of Insurance companies being long-term or contingent in nature, liquidity is excellent and
their investments are also long-term in nature. Since they offer more than the return on savings in the
shape of life-cover to the investors, the rate of return guaranteed in their insurance policies is
relatively low. Consequently, the need to seek high rates of returns on their investments is also low.
The risk-return trade off is heavily tilted in favour of risk.
Ês a combined result of all this, investments of insurance companies have been largely in bonds
floated by GOI, PSUs, state governments, local bodies, corporate bodies and mortgages of long term
nature.
cc
*")# " ! ")$";!"&"%3
;&"$#"!$&#2 !E$"!"
For GDP to grow at 8 to 10%, qualitative improvement in infrastructure is essential. |stimates of

funds required for development of infrastructure vary widely. Ên investment of 6,19,600 crore is
anticipated in the next 5 years. Tenure of funding required for infrastructure normally ranges from 10
to 20 years. The insurance industry also provides crucial financial intermediary services, transferring
funds from the insured to capital investment, critical for continued economic expansion and growth,
simultaneously generating long-term funds for infrastructure development.
In fact infrastructure investments are ideal for asset-liability matching for life insurance companies
given their long term liability profile. Êccording to preliminary estimates published by the Reserve
Bank of India, contribution of insurance funds to financial savings was 14.2 per cent in 2005-06, viz.,
2.4 per cent of the GDP at current market prices. Development of the insurance sector is thus
necessary to support continued economic transformation. Social security and pension reforms too
benefit from a mature insurance industry.
The insurance sector in India, which was opened up to private participation in the year 1999, has
completed over seven years in a liberalized environment. With an average annual growth of 37 per
cent in the first year premium in the life segment and 15.72 per cent growth in the nonlife segment,
together with the largest number of life insurance policies in force, the potential of the Indian
insurance industry is still large.
Life insurance penetration in India was less than 1 per cent till 1990-91. During the 1990s, it was
between 1 and 2 per cent and from 2001 it was over 2 per cent. In 2005 it had increased to 2.53 per
cent.
$"!&;! &#")"!&&&$;&)
IRDÊ Regulations provide certain minimum business to be done

- in rural areas
- in the socially weaker sections
Life Insurance offices are spread over nearly 1400 centres. Presence of representative in every tehsil ±
deeper penetration in rural areas.
Insurance agents numbering over 6.24 lakhs in rural areas.

Policies sold in rural areas (2004-05) - No. of policies - 55 lakhs, Sum assured 46,000 crores. Social
security - No. of lives covered 2003-04 17.4 lakhs 2004-05 42.1 lakhs
cR
#$&"#)"
Life insurance industry provides increased employment opportunities. |mployees in insurance sector
as on 31st March, 2005 is around 2 lakhs. Many agents depend on insurance for their livelihood. No.
of agents on 31st March 2004 ± 15.59 lakhs. Brokers, corporate agents, training establishments
provide extra employment opportunities. Many of these openings are in rural sectors.
Current value of average investment by a individual in ULIP amounts Rs. 51220.
Major portion of investor are found to be risk lover and about 64% of the investors are ready to take
up the risk.
Investor expects all round development of the fund including safeguard of principal amount, steady
growth, and monthly return.
!
á Investment Ênalysis and Portfolio Management---Prasanna Chandra
á www.bseindia.com
á www.bajajcapital.com
á www.nseindia.com
á www.indianfoline.com
á www.hdfcinsurance.com
á www.wekipedia.org
cÈ

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The report is authorized by"6$&* $+

Prof. Kapil Gupta

Faculty, IBS, Gurgaon

     

The objective of insurance is normally to provide;

a) Family protection and/or

Insurance cover is essential because it provides the following benefits:

> Tax benefits, as premiums paid reduce the liability of tax

> Inculcates the habit of savings

> Hedges risk against uncertainty

     

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For completion of this project, we use the following methodologies--

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ULIP provides multiple benefits to the consumer. The benefits include:

" Life protection

" Investment and Savings

" Êdjustable Life Cover

" Investment Options

" Tax planning

á # # &&"!" ')This charge is deducted as a fixed percentage of the premium

To know the method of ³Pricing of Units´

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Comparison between Unit Linked Plans and Conventional Plans

IS ULIP FUND ÊS SÊM| ÊS MUTUÊL FUND

Understand the pros and cons of |quity and Debt

Yros : High returns , Low risk in Long term , High Liquidity

WHY SHOULD ÊN INV|STOR DO IT

, |quity: Debt goes up .

. |quity: Debt Goes Down.

)'*#"(  %

Year Return Return/100 |quity Debt@9% |quity+Debt |quity+Debt

1 30 0.30 130000 109000 115300 123700

2 -35 -0.35 84500 118810 108517 94793

3 40 0.40 118300 129503 126142 121661

4 60 0.60 189280 141158 155595 174843

5 -30 -0.3 132496 153862 147452 138906

UND|R PORTFOLIO R|BÊLÊNCING

Now the investor will rebalance the portfolio

|quity= 30% of 115300 = 34590

Now this is new |quity and Debt investment

Now the investor will again rebalance the portfolio

|quity= 30% of 110457 = 33137

(30:70) (70:30) |quity Debt PR* PR*

1 30 115300 123700 39000 76300 34590 80710 115300 123700

3 40 126142 121661 46392 84279 39201 91470 130671 126431

4 60 155595 174843 62722 99702 48727 113697 162424 182945

5 -30 147452 138906 34109 123930 47412 110627 158039 149466

For ratio 30:70

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The report is authorized by"6$&* $+

a) Family protection and/or

> Tax benefits, as premiums paid reduce the liability of tax

> Inculcates the habit of savings

> Hedges risk against uncertainty

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á # # &&"!" ')This charge is deducted as a fixed percentage of the premium

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, |quity: Debt goes up .

. |quity: Debt Goes Down.

)'*#"( %

|quity= 30% of 115300 = 34590

|quity= 30% of 110457 = 33137

.696A > *

(*- Ê )

(*- Ê )

(*- Ê )

1. Growth Fund

5. Liquid fund