Treasury and Fund Management

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18 Νοε 2013 (πριν από 3 χρόνια και 7 μήνες)

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Treasury and Fund Management


Commercial Banks

&

Asset Management

An Intro….



With

the

growth

of

International

business

and

the

spread

of

Multinational

Enterprise,

the

treasury

function

has

acquired

a

new

meaning
.




No

longer

the

treasury

operations

restricted

to

borrowing

and

lending

of

funds

only

to

one

money

market
.



The

treasury

function

now

includes

a

diversity

of

currencies

which

can

be

converted

into

one

another

through

the

exchange

markets

and

which

are

transacted

in

money

markets
.



The
Role….



Managing
Asset & liabilities of the bank.



Managing
'gaps' and the 'risks'.



Maximizing
profits operating within acceptable risk parameters,



Maximizing
yield on treasury/inter bank investment.



Providing
rates to branches and customers.



Inter
-
Dept
Chart….













Investment in Shares.



CFS/Badla

Transaction.



IPO’s and Pre IPO’s.



Ready Future Arbitrages.





Spot and Forward Transaction.



FX Swaps.



Third Currencies.



Nostro Management.



Dealing with branches and
clients.

Treasurer

Treasurer

Head of M.M

Head of
Equity

Head of FX



Repo and Rev Repo
Transaction.



SLR and CRR management.



Govt. Securities.

C. Desk

TREASURY

Front Office

Lending to
Branches

Borrower

Investment

Reserve

Requirement

Depositor

Branch

Excess

Liquidity

Borrowing

Funding

Spread


Branches

Receive

Deposits



Branches

Lend

To

Customers



Branches

Remit

Excess

liquidity

to

try

at

an

average

rate

(Pool

Rate)


Try

maintenance

reserve

with

SBP
.



Invest

in

MM

Instruments



Invest

in

Govt
.

Securities


Invest

in

Debt

Securities



Capital

Market



Fund

FCY

Trade

Nostro

Account


Lend

to

Other

Branch


Treasury

Back Office
Functions

Functionality….

Interest
Rate….




The
interest rate used in determining the present value of future cash
flows.


OR



The interest rate that an eligible depository institution is charged to borrow short
-
term
funds directly from a Central Bank.


















The

income

return

on

an

investment
.

This

refers

to

the

interest

or

dividends

received

from

a

security

and

is

usually

expressed

annually

as

a

percentage

based

on

the

investment's

cost,

its

current

market

value

or

its

face

value
.



There

are

two

stock

dividend

yields
.

Cost

Yield

&

Current

Yield
.



Bonds

have

following

yields
:

C
oupon

(the

bond

interest

rate

fixed

at

issuance),

current

(the

bond

interest

rate

as

a

percentage

of

the

current

price

of

the

bond),

and

Yield

to

maturity

(an

estimate

of

what

an

investor

will

receive

if

the

bond

is

held

to

its

maturity

date
)
.







Yield….

Yield
Curve….



A

line

that

plots

the

interest

rates,

at

a

set

point

in

time,

of

bonds

having

equal

credit

quality,

but

differing

maturity

dates”
.

OR

“The

yield

curve

is

the

relationship

between

an

interest

rate

and

the

time

to

maturity

for

a

given

debt”
.




The

shape

of

the

yield

curve

is

closely

monitored

because

it

helps

to

give

an

idea

of

future

interest

rate

change

and

economic

activity
.


Yield

Maturity


Normal Yield Curve:
Is one

in which longer maturity

bonds have a higher yield
compared to shorter
-
term

bonds due to the risks associated with time.










Inverted

Yield

Curve
:

Is

one

in

which

the

shorter
-
term

yields

are

higher

than

the

longer
-
term

yields,

which

can

be

a

sign

of

upcoming

recession
.



8%
9%
10%
11%
12%
13%
14%
15%
16%
17%
Interest Rate
Maturity Cycle
Yield Curve
8%
9%
10%
11%
12%
13%
14%
15%
16%
17%
Interest Rate
Maturity Cycle
Yield Curve

Flat

Yield

Curve
:

Is

one

in

which

the

shorter
-

and

longer
-
term

yields

are

very

close

to

each

other,

which

is

also

a

predictor

of

an

economic

transition
.



10.00%
10.05%
10.10%
10.15%
10.20%
10.25%
10.30%
10.35%
10.40%
10.45%
10.50%
Interest Rate
Maturity Cycle
Yield Curve
Money Market….


The

money

market

is

a

wholesale

market

for

low

risk,

highly

liquid,

short
-
term

&

long

term

debt

instruments
.




It

serves

as

an

avenue

through

which

banks

and

financial

institutions

can

offload

their

excess

liquidity

or

meet

their

funding

requirements
.



To

the

government

an

organized

money

market

represents

a

means

for

it

to

implement

it’s

monetary

policies

in

a

more

efficient

manner
.

Moreover,

it

provides

it

with

a

liquid

market

for

securities

through

which

it

can

finance

it’s

own

borrowing

requirements
.



The

large

role

of

commercial

banks

in

the

money

market

can

be

easily

envisioned

by

looking

at

their

assets

and

liabilities
.



A

major

portion

of

their

liabilities

are

demand

deposits
.

Another

large

portion

of

bank

liabilities

are

time

deposits
.



On

the

asset

side,

in

addition

to

loans

banks

have

part

of

their

assets

invested

in

marketable

securities
.


M.M Objective….


Managing

liquidity

and

interest

risk
.



Coordinating

with

corporate/retail

banking

departments

for

assets/liability

pricing
.



To

deploy

excess

funds

in

order

to

save

liquidity

wastage




To

manage

funding

requirements

which

may

arise

from

time

to

time

keeping

in

view

the

cost

and

interest

scenario
.


Purpose of
M. M….


The

need

for

financial

institutions

to

indulge

in

money

market

transactions

arises

primarily

from

the

reserve

requirements

imposed

by

the

State

Bank
.



All

commercial

banks

are

required

to

maintain

25
%

Statuary

Liquidity

Requirements

(SLR)

of

their

Demand

and

Time

Liabilities

(DTL)
.



Commercial

banks

also

have

to

maintain

a

certain

portion

of

their

DTL

in

a

cash

reserve

maintained

with

the

SBP

at

0
%

interest
.

This

ratio

is

known

as

the

CRR

(Cash

Reserve

Requirement)

and

stands

at

5
.
00
%
.

M.M Instruments & Transactions….


Pakistan Investment Bonds


Treasury Bills


Repo / Rev. Repo Transactions


Call / Clean Money


Term Finance Certificate


Certificate of Investments


Commercial Papers

M.M Instruments & Transactions….


Pakistan

Investment

Bonds
:

These

are

long

term

bonds

of

three,

five,

ten,

fifteen,

twenty

&

30

years,

maturity

issued

at

market

price

and

carrying

a

different

coupon

rate

according

to

the

interest

rates

scenario
.

Moreover,

another

reason

for

issuing

PIBs

is

to

set

up

a

yield

curve

and

corporate,

mutual

funds

etc
.

to

invest

in

long

term
.



Treasury

Bills
:

T
-
Bills

are

short

term

securities

issued

by

the

State

Bank

on

behalf

of

the

Ministry

of

Finance

through

auctions
.

They

are

zero
-
coupon

bonds

issued

at

a

discount,

have

a

par

value

of

Rs

100

and

a

maturity

of

three,

six

or

twelve

months
.

Bank

borrowing

is

one

of

the

various

measures

the

government

takes

to

fill

it’s

budgetary

deficit

and

this

bank

borrowing

currently

takes

place

against

T
-
Bills
.



Term

Finance

Certificate
:

TFCs

are

redeemable

capital

instruments

and

may

be

issued

by

a

company

directly

to

the

general

public,

which

includes

institutions
.

Unlike

straight

bonds,

they

are

redeemable

capital

and

are

of

long

tenors
.

Issued

by

corporate

to

raise

long
-
term

fund
.





M.M Instruments & Transactions….


Repurchase

Transactions
:

Borrowing

secured

by

collateral

in

the

form

of

securities
.




Rev
.

Repo

Transactions
:

Lending

secured

by

collateral

in

the

form

of

securities
.



Call

Money
:

Call

transactions

consist

of

non
-
collateralized

lending

and

borrowing

of

Funds
.



Clean

Money
:

Clean

funds

are

similar

to

call

funds

in

the

sense

that

this

is

unsecured

lending/

borrowing

of

funds
.

The

only

difference

is

that

this

sort

of

borrowing

is

done

by

investment

banks

and

leasing

companies
.


FX MARKET….



Domestic

markets

trade

in

local

currency

and

operate

under

regulations

governing

domestic

market
.

When

funds

in

any

other

currency

are

traded

outside

the

regulations

governing

domestic

markets,

then

we

have

the

transaction

of

Foreign

Exchange

Markets
.



Nostro Management.



Exposure Management



Blotter Management


FX TRANSACTION….



Any

financial

transaction

that

involves

more

than

one

'convertible'

currency

is

a

foreign

exchange

transaction
.




Most

important

characteristic

of

a

foreign

exchange

transaction

is

that

it

involves

foreign

exchange

risk/Exposure
.




The

exchange

rate

is

determined

by

the

market

forces

of

demand

&

Supply
.




Exchange

Rate

is

the

price

of

one

currency

in

terms

of

another
.






Net Open Position


A

measure

of

foreign

exchange

risk
.



NOP

is

the

Net

Asset/Net

Liability

position

in

all

FCs

together




Net

Asset

Position

is

also

called

"LONG"

or

"Overbought"

position
.



Net

liability

Position

is

also

called

"SHORT"

or

"Oversold"

position



NOP

is

a

single

statistic

that

provides

a

fairly

good

idea

about

exchange

risk

assumed

by

the

bank
.


Net Open Position




Currency
-
wise NOP in equivalent PKR



NOP calculating in the following manner.














TOTAL






-
549/84



NOP







-
6.53

USD

+10

84

+840

POUND

-
10

138

-
1380

YEN

-
10

0.9

-
9

Foreign Exchange Exposure Limit


FX Exposure is the higher of the long and short positions in Foreign Currency.



FEEL is the 10% of the paid
-
up capital of the bank or PKR1.5bln whichever is higher.



FEEL(PKR)



=

-
1389/84



FEEL(USD)



=

-
16.53

Corporate
Desk….


Dealing

with

branches

and

large

clients
.



Treasury

acts

as

a

separate

profit

unit

versus

branches
.


FORWARD

RATES
:

Forward

rates

depend

upon

interest

rate

differential

between

the

two

currencies
.



Currency

with

higher

interest

rates

is

at

discount

w
.
r
.
t

currency

having

lower

interest

rate
.



Currency

with

lower

interest

rates

is

at

premium

w
.
r
.
t

currency

having

higher

interest

rate
.



C
ALCULATING FORWARD RATE



Interest rate of USD


=


4.75
%

Interest rate of PKR



=
9
%

Spot Rate



= 5
9.95

Tenure




=

Six Month




Six month Forward Rate

=
s
pot rate + (
spot

rate

*
Int. rate differential * Tenure/365)


Six month Forward Rate

= 59.95 + (59.95 * (9%
-

4.75%) * 180 / 365)


Six month Forward Rate

= 61.20



Equity Market….


The

investment

of

the

bank

will

be

structured

around

passive

management

with

majority

of

the

portfolio

invested

for

a

medium

to

long

term

horizon

based

on

the

fundamental

developments

in

the

economy
.


E.M Objective….



The

key

investment

objective

behind

developing

an

equity

portfolio

for

the

bank

is

to

create

and

manage

an

investment

portfolio

that

allows

earning

of

superior

yields

in

comparison

to

other

alternate

investment

opportunities
.





Risk Mitigation….

The

risk

of

the

equity

portfolio

will

be

managed

through
:



Comprehensive

focus

on

fundamental

research

and

equity

analysis
;


Diversification

of

the

investment

portfolio
;


Rigorous

investment

review

procedures
;

and


Development

of

controls

and

procedures

for

the

trading

portfolio
.



KSE Clearing House

Broker

Buyer

Broker

Seller

T+2 Settlement

Payment

Shares

Equity Trading Mechanism

ARBITRAGE

Opportunity

taken

for

higher

return

to

avoid

market

risk
.

This

opportunity

arises

from

inefficiency

of

the

market
.

ARBITRAGE OPPURTINUITIES IN EQUITY MARKET

There are mainly two types of arbitrage in equities.






Simple Arbitrage


Ready Future Arbitrage






SIMPLE ARBITRAGE

Price differential between two exchanges or market of the same instrument.





PTC Rs. 30

PTC
Rs
. 32

K.S.E

L.S.E

T+2 Settlement

Buy

Sell

READY FUTURE ARBITRAGE

Price differential between ready and future contracts of the same instrument in the
same exchange or market.


PTC (ready)
Rs
. 30

PTC (future) Rs. 34

K.S.E

T+15

Settlement

T+2

Settlement






Introduction



The

equity

portfolio

of

the

bank

envisages

a

passive

portfolio

management

strategy


Focused

on

developing

a

fundamentally

strong

and

truly

diversified

portfolio
.

However,


a

trading

portfolio

will

be

maintained

to

supplement

and

enhance

the

overall

yield

of

the


equity

portfolio
.




The

Equity

Portfolio

is

to

be

distributed

between

growth

stocks

and

income

stocks
;


the

initial

indication

is

to

equally

distribute

the

portfolio

however

this

would

depend


on

the

overall

performance

of

the

sector

and

sub
-
sectors
.



Every

transaction

or

trade

should

be

based

on

strong

reasoning

and

should

be


justifiable

on

fundamental,

valuation

and/or

market

expectations
;




Generate

recurring

income

through

dividend

yield

from

specific

securities

which


is

higher

than

the

yields

on

Government

securities
;

and



Reduce

the

cost

and

undue

risk

through

maintaining

an

appropriate

balance

between


volumes

and

duration

of

the

transaction
.








EQUITY

PORTFOLIO

MANAGEMENT


The general guidelines with regards to portfolio management are as hereunder:


1.
Every equity investment has to be classified as “Overnight Portfolio”,

“Short Term Portfolio”, “Investment Portfolio” or “Strategic Portfolio” based

on the asset allocation policy and departmental strategy for execution of a

certain trade;


2.
The above mentioned portfolio classifications are defined as:

a)
Overnight Portfolio:
Daily Trading Positions;

b)
Short Term Portfolio:
Any trading position with more than overnight horizon


but less than a 3 months horizon;

c)
Medium

to

Long

Term

Portfolio
:

The

stocks

purchased

based

on

the



fundamental

earnings

or

valuation

strength
.

The

investment

exits

will

be

laid



down

in

terms

of

the

target

price

and/or

time

horizon,

which

will

be

at

least



90

days
.

The

initial

time

horizon

can

be

extended

based

on

investment



committees

approval
;

and

d)
Strategic

Investment

Portfolio
:

The

stocks

purchased

for

either

a

horizon

of



more

than

2

years

and/or

acquiring

significant

stake

to

allow

the

bank

to

turn



around

the

company

and/or

any

company

which

fits

the

strategic

focus

of

the

bank
.

Portfolio
Management Guidelines

WORKFLOW


The

overall

department

will

be

divided

into

two

sub

units
:

Front

Office

and

Back

Office
.


Typically

the

equity

market

unit

should

be

able

to

manage

the

following

activities
:


1
.

Strategy

Formulation



Yearly

Asset

Allocation

Strategy

Paper
;


Target

Yield

Setting

on

the

Investment

and

Trading

Portfolio
;



Quarterly

Review

of

the

Asset

Allocation

Strategy
;



Management

of

Research

Resources
;

and


Daily

Trading

Guidelines
.


2
.

Front

Desk

Trading





Execution

of

the

investment

decisions
;



Distribution

of

stocks

for

trading
;



Identification

of

trading

opportunities
;

and



Delivering

on

the

trading

yield

targets
.



WORKFLOW


The

overall

department

will

be

divided

into

two

sub

units
:

Front

Office

and

Back

Office
.


Typically

the

equity

market

unit

should

be

able

to

manage

the

following

activities
:


3
.

Risk

Management




Development

of

Standard

Operating

Procedures

(“SOPs”)
;



Development

of

Risk

Management

Policies

and

Alert

Mechanism
;



Ensuring

Adherence

to

the

Policies

and

Procedures
;

and



Development

of

discretionary

investment

and

trading

authorities
.



4
.

Settlements





Settlement

of

the

T+
2

and

Futures

transaction
;



Assistance

in

managing

the

badla

book
;



Providing

counter

trading

reports

to

management

to

reconcile

with

Front

Office

report
;



Providing

value

date

cash

flow

statement

to

the

accounts

/

finance

department



Ensuring

compliance

with

the

prudential

and

other

related

regulations
.


“The market will collapse!”



“Investing in stocks is just like gambling.”



“Stocks should be bought when they have momentum.”



“Heavyweights manipulate the market.”



“To begin investing, I need to accumulate a lot of money first.”

Myths about the stock market

-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Today
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Yr 6
Yr 7
Yr 8
Yr 9
Yr 10
Yr 11
Yr 12
Yr 13
Yr 14
Yr 15
Yr 16
Yr 17
Yr 18
Yr 19
Yr 20
Un-invested
Average Prices
?
Today:
PkR 1,000

Inflation Adjusted
Value of PkR
1,000: PkR 122

Nominal Value
of PkR 1,000 :
PkR 6,727

Inflation gradually erodes the value the

Rupee

23,106
11,523
6,727
-
5,000
10,000
15,000
20,000
25,000
Today
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Yr 6
Yr 7
Yr 8
Yr 9
Yr 10
Yr 11
Yr 12
Yr 13
Yr 14
Yr 15
Yr 16
Yr 17
Yr 18
Yr 19
Yr 20
Pure Equity
Pure Fixed Income
Average Prices
20yr CAGR: 10%
20yr CAGR: 17%
20yr CAGR: 13%
Investments provide protection from inflation

The crash of 2008
…and the recovery
Index @ 18th Apr '08
15,676


Index @ 26th Jan ''09
4,815


Index @ 26th Jan ''09
4,815


Index @ 20th Apr '11
11,745


Return
-69%
Return
144%
“The market will collapse!”

Index @ Mar '04
4,854


Index @ Mar '06
11,456


Return
136.0%
…zoomed
-
in view of the crash of 2005


Riding out short
-
term depression in the market can pay off in the long
-
run




It pays to stay invested

Gambling/ Trying to catch the momentum


Investments are made using a systematic approach based on studies of business dynamics.



Scrips are selected on the basis of their potential for long
-
term earnings growth driven by
fundamentals.



Portfolio allocations are adjusted periodically to reflect a change in the underlying dynamics of the
company.

“Investing in stocks is not like gambling.”


Yes!



Speculators facilitate price discovery in any market


financial institutions look to
take advantage of any pricing opportunity created by the actions of the
speculators.



However, manipulation doesn’t last long



In the long
-
run, it’s earnings and cash flows that move stock prices


not the punters

Do heavyweights manipulate the market?

“To begin investing, I need to accumulate
a lot of money first.”


No,

A

person

can

make

investment

with

only

PKR

500

in

a

mutual

fund

and

gradually

build

its

investment

through

SIP
.

“To begin investing, I need to accumulate
a lot of money first.”



Comparison with fixed
-
income returns and
inflation

In fact, equities have outperformed all
other asset classes in the past 15 years



Un
-
informed decision
-
making



Monitoring costs



Diversified exposure not possible with small amounts



Brokerage fees

Drawbacks of direct investment in equities



A large number of people with money to invest buy shares in a mutual fund.



They pool their money for buying power.



The fund manager invests the money in a collection of stocks, bonds or other
securities.



If the manager is successful in selecting good companies that generate value, the
fund will grow.



Investors receive periodic distributions and can book capital gains by redeeming
their investments.


How A Mutual Fund Works

Why Equity Funds?



Diversification



Active management



Hedge against inflation



Professional Management



Benefits of automatic re
-
investment



Rupee
-
cost averaging



Investment Options: SIP, STP, SPT




The Reasons…

A

stock

fund

reduces

the

overall

risk

faced

by

an

investor

through
:



Diversification

is

the

key

to

success

with

safety

when

investing

in

stocks
.




A

risk

management

technique

that

mixes

a

wide

variety

of

investments

within

one

portfolio
.



A

well

diversified

portfolio

is

expected

to

yield

higher

average

returns

over

the

long

run

while

at

the

same

time

keeping

your

portfolio

at

a

lower

amount

of

risk
.



There

are

a

number

of

alternative

methods

for

building

stock

investment

portfolios

without

holding

stocks

directly
.

One

such

method

is

to

use

mutual

funds

to

gain

exposure

to

varied

market

segments
.


Diversification


The manager of an equity fund can periodically adjust the fund’s allocation in
order to maximize the potential returns from the portfolio



Selection of Scrips is done on the basis of a rigorous screening criteria that will
ensure returns over the next year



Active management of a portfolio requires substantial time and energy


which the
average retail investor cannot afford



The investor gets the benefit of active management of an equity portfolio at a very
low cost

Active management


Historically, equities have generally outpaced inflation, thus ensuring that the real
-
value of the investment is protected.

Hedging against inflation


Alpha

indicates

the

additional

return

that

is

generated

through

professional

management

of

the

portfolio
.



This

superior

performance

is

due

to

extensive

research

and

the

professional

experience

of

the

fund

manager
.


Professional Management



The Markets are volatile: they move up and down in an unpredictable manner



By

using

a

systematic

investment

process

such

rupee
-
cost

averaging,

the

investor

can

purchase

more

units

when

the

prices

are

relatively

low

and

fewer

units

when

prices

are

relatively

high
.



This

method

can

provide

the

investor

with

an

effective

cushion

against

a

sharp

downturn

in

the

equity

market

and

protect

investor’s

capital

to

some

extent
.

FY06
FY07
FY08
FY09
FY10
Average KSE100 Idx
9,518


11,168

13,899

8,013


9,348


July KSE100 Idx
7,465


9,604


13,930

12,222

7,271


June KSE100 Idx
9,989


13,772

12,289

7,162


9,722


Lump Sum Return
33.8%
43.4%
-11.8%
-41.4%
33.7%
Avg. Cost Return
4.9%
23.3%
-11.6%
-10.6%
4.0%
Rupee
-
cost averaging

Rupee
-
cost

averaging: USF

-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
FY07*
FY08
FY09
FY10
Lump Sum Return
Avg. Cost Return
* Since inception

USF Cost Averaging
FY07*
FY08
FY09
FY10
Beginning NAV**
100.00


129.73
123.91
81.79
Ending NAV
129.73


124.39
80.54
99.96
Avg/NAV
106.48


134.24
102.23
103.85
Lump Sum Return
30%
-4%
-35%
22%
Avg. Cost Return
22%
-7%
-21%
-4%
*Since inception
**Div Adjusted NAVs

This

is

especially

true

for

investments

in

equities
.

When

you

invest

the

same

amount

in

a

fund

at

regular

intervals

over

time,

you

buy

more

units

when

the

price

is

lower
.

Thus,

you

would

reduce

your

average

cost

per

share

(or

per

unit)

over

time
.

This

strategy

is

called

'rupee

cost

averaging'
.

With

a

sensible

and

long
-
term

investment

approach,

rupee

cost

averaging

can

smoothen

out

the

market's

ups

and

downs

and

reduce

the

risks

of

investing

in

volatile

markets
.


Investment Options: SIP


SIP

works

on

the

principle

of

regular

investments
.

It

is

like

your

recurring

deposit

where

you

put

in

a

small

amount

every

month
.

It

allows

you

to

invest

in

a

MF

by

making

smaller

periodic

investments

(monthly

or

quarterly)

in

place

of

a

heavy

one
-
time

investment
.



SIP

has

brought

mutual

funds

within

the

reach

of

an

average

person

as

it

enables

even

those

with

tight

budgets

to

invest

with

minimum

amount

on

a

regular

basis

in

place

of

making

a

heavy,

one
-
time

investment
.



While

making

small

investments

through

SIP

may

not

seem

appealing

at

first,

it

enables

investors

to

get

into

the

habit

of

saving
.

And

over

the

years,

it

can

really

add

up

and

give

you

handsome

returns

Investment Options: SIP

Investment Options: SPT and STP


STP

refers

to

Systematic

Transfer

Plan

where

in

an

investor

invests

a

lump

sum

amount

in

one

scheme

and

regularly

transfers

(i
.
e
.

switches)

a

pre
-
defined

mount

into

another

scheme
.

Every

month

on

a

specified

date

an

amount

you

choose

is

transferred

from

one

mutual

fund

scheme

to

another

of

your

choice
.



SPT

refers

to

Systematic

Profit

Transfer

where

in

an

investor

invests

a

lump

sum

amount

in

one

scheme

and

regularly

transfers

profit

amount

into

another

scheme
.

Every

month

on

a

specified

date

profit

amount

is

transferred

from

one

mutual

fund

scheme

to

another

of

your

choice
.


Investment Options: SPT and STP

Final Verdict


It

finally

proves

that

equity

investment

through

mutual

fund

provides

best

hedge

against

inflation

in

the

long

term
.

Diversified

portfolio

allows

superior

yields

in

comparison

to

other

alternate

investment

opportunities
.

It

also

offer

variety

of

plans,

such

as

regular

investment,

regular

withdrawal

and

dividend

reinvestment

plans,

systematic

plans

like

(SIP,

SPT

&

STP)

which

enhance

the

overall

return

in

the

longer

period
.

These

plan’s

depending

upon

one’s

preferences

and

convenience,

one

can

invest

or

withdraw

funds,

accordingly
.

JAZAK ALLAH