The document outlines a comprehensive approach to portfolio modeling focused on assessing client risk and return, including demographic evaluation, business analysis, and financial commitments. It emphasizes the importance of customized investment strategies based on risk appetite and market conditions. Ongoing monitoring and quarterly reviews are also highlighted to ensure effective portfolio management.

1. PORTFOLIO
MODELING
CLIENT RISK RETURN ASSESSMENT

2. STARTS WITH …..
PORTFOLIO MODELING

3. PRELIMINARY UNDERSTANDING
o Demography Assessment
o Age & Qualification
o Health profile / Hereditary risks
o Insurance policies for self and dependents
o Dependent details – associated capital expenditure [weddings /
education / etc.] and likely period of capital expenditure
o Existing debts [if any]
o Average monthly commitments & duration
o Existing work details
o How secured is your work / business [against competition]?
o Is the income sufficient to meet routine life style commitments?
PORTFOLIO MODELING

4. PRELIMINARY UNDERSTANDING
o Detailed understanding of existing business
o Fluctuations in revenues
o Level of competition
o Scope of growth
o Capital inflow requirement for next 2 to 3 years
o Likelihood of savings to be generated
o Existing Investment details
o Debts, equities, FD, bullion, annual insurance commitments
o Existing Asset details
o Residence, office, rental yielding properties, others
PORTFOLIO MODELING

5. TIME TO ANALYSE …
PORTFOLIO MODELING

6. DECISION MAKING
o Size of Portfolio account
o Plus, planned additional commitment quarter on quarter
o Type of Portfolio account
o Discretionary – PMS manager will take decisions on your behalf
o Non – Discretionary – PMS manager will offer suggestions but you
will decide
o Allocation amongst asset classes
o Debt & money market, Equity & equity related, others
o Investment horizon. Can be different for different entities / asset
classes
PORTFOLIO MODELING

7. DECISION MAKING
o Allocations in equity instruments
o Market capitalization – Low, Medium & High
o Risk aspects – Low, Medium, High
o Exposure limits – Entity, Industry, Business house
o Defining allocations on basis of your risk appetite
o Industry risks – Competition, cyclical & regulatory
o Performance risks – Sales growth, profit growth, RONW, OPM
o Management risks – Transparency, holding, promoter pledging's
o Leverage risks - Debt – Equity, Interest coverage
o Valuations – PE multiple, beta, past consistency in performances
PORTFOLIO MODELING

8. PORTFOLIO MODELLING
o Initial Tasks
o Creation of customized universe of stocks and debt instruments for
you. Investments will never be done outside your universe and
within maximum or minimum parameters laid.
o Follow – up Tasks
o on continuous basis – monitor market and stocks within universe.
Take decisions to buy, hold or sell.
o quarterly – review your universe and add or remove entities
accordingly. Furnish your performance and outlook report.
PORTFOLIO MODELING

9. TIME TO ROLL OUT …
PORTFOLIO MODELING

10. THANK YOU
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