This document discusses different types of investments including equity, debt, and alternative investments. Equity investments like stocks can be made directly through shares or indirectly through mutual funds and have higher risk but also higher potential returns. Debt investments like bonds have lower risk but also lower potential returns. Alternative investments include real estate, commodities, private equity, and hybrid funds that invest in a mix of asset classes. The document provides definitions and examples for different types of investments within each category.

1. Types of Investments
Shailesh Kumar Agrawal - shailesh@beaconfinser.co.in, 9603118000, @beaconfinser

2. Investing – What it means!
• Investment is what an investor does to grow wealth.
• Investing in a simple terms means, to purchase a financial product, with a hope to have value higher
then what is invested.
• When an individual purchases a good as an investment, the intent is not to consume the good but
rather to use it in the future to create wealth.
• An investment always concerns the outlay of some asset today—time, money, or effort—in hopes of a
greater payoff in the future than what was originally put in.
• Investments can be done in product or services.

3. Types of Investments
No Surety of Capital &
Return or high risk
with potential higher
returns.
Equity
Surety of Capital &
Return or Low risk
with potential low
returns.
Debt
Is not an Equity or
Debt – A Hybrid –
High risk with
potential High
returns.
Alternate

4. ‘Equity – What it means’
Explanation –
Equity typically referred as shareholder’s equity. Represent the ownership of
the company to the extent one owns.
Its price is derived after payoff all the loans and debtors. It also means the
value at which it can be sold to another.
Equities can be found on asset side of balance sheet & is an important piece
of data for an analysist to figure out financial health of a company.

5. Types of Equity Investments
• Ownership Companies at discretion.
• It is done through organized Stock Exchanges like – NSE, BSE etc.Direct Equity/Shares
• Indirect ownership of shares
• Bought at pool level.
• Non Discretionary – Investors has no say in purchase or sale.
• Professionally managed
Equity Mutual Funds
• Indirect ownership of shares
• Bought at pool level.
• Non Discretionary – Investors has no say in purchase or sale.
• Professionally managed
PMS – Portfolio
Management Service

6. Direct Equity - Shares
• Transaction (Buy & Sell) of all those companies which are Public Listed.
• It is done through organized stock exchanges. India has many stock exchanges, the major ones are NSE & BSE.
• A registered broker is needed to transact. Orders can be placed online & offline & by calling up the broker.
• One need to have a Trading and a Demat account for participation. (Trading account is a transaction account and
Demat is for retaining it. Just like a bank account is needed to retain cash electronically, similarly demat account
retains shares in digital form.
• A professional Fund Manager may not be needed here, investors can take decisions on investments.
• It’s a low cost product, just a small percentage is paid out to broker & as Exchange fees.
• There are no lock in – one can choose to trade daily, monthly, yearly or even ones in a decade.
• There are more than 6300 companies traded in India.

7. Mutual Funds
Explanation -
• It’s a collective investment vehicle, meaning – money is collected from more than one investors
across geography and invested with a common objective.
• Investment are made by professionals called ‘Fund Managers’.
• Mutual Funds can invest in debt, equity or mix of both.
• There is a fee charged to investors to manage the money.
• Investors has no say in purchase or sale.
• A registered product of SEBI.

8. Equity Mutual Fund
Explanation -
• It’s a collective investment vehicle, meaning – money is collected from more than one investors
across geography and invested with a common objective in equity and equity related instruments.
• They buy only shares/equity of different companies and size of companies denoted by Market
Capitalization (Market Cap).
• The company hire professionals to look after the money – ‘Fund Managers’.
• Equity Mutual Funds are of vivid type*
• There is a fee charged to investors to manage the money. Investors has no say in purchase or sale.
• A registered product of SEBI.

9. Types of Equity Mutual Fund -1.
Equity Mutual Funds Categories
Large Cap
Funds
Mid Cap
Funds
Multi Cap
Funds
Small Cap
Funds
Focused Funds Value Funds Index Funds
Specialty
Funds
Thematic &
Sectoral Funds
Fund of Funds
Foreign Funds

10. Types of Equity Mutual Fund -2.
• Market Capitalization(MC) means – No of shares outstanding * Price of the Share
Categorization as per Market Cap(MC)
• Large Cap – MC is above INR 45000 Crores.
• Mid Cap – MC is INR 18000 – 45000 Crores
• Small Cap – MC is INR 5000 – 18000 Crores – Below is Micro Cap & Penny
Stocks.
• Multi Cap – Across all market size companies.
• Focused Fund – No of stocks in the Portfolio is less, Avg is 20-25 in no.

11. Types of Equity Mutual Fund -3.
• Value Funds – Price the company is below its intrinsic value or less
than what it should be. Fund buy such companies only.
• Index Fund – Instead of thinking what to buy, index that represent the
market is bought the way it is. The idea is to deliver market level
returns. Eg – NSE, BSE, NSE Mid Cap 100, BSE Multi Cap 500 etc.
• Thematic/Sector Fund – Funds that track a sector or a theme, like IT,
Banking, Pharmaceuticals.
• Fund of Funds – Funds that invest in some other fund both domestic
and abroad. It is done in one or multiple funds even countries
simultaneously.
• Foreign Funds – Funds that raise money in one country to be invested
in another country or countries.

12. Portfolio Management Services (PMS)
Explanation –
• It’s a an investor specific product, meaning – money is collected from
individual investor geography and invested with a pre defined objective, on
individual investors name and not at pool level, unlike way Mutual Funds does.
• Investment are made by professionals – ‘Fund Managers’.
• PMSs can debt, equity, Real Estate, Unlisted Securities or mix of all.
• There is a fee charged to investors to manage the money.
• Investors involvement depends on investor’s will or as per agreement.
• A registered product of SEBI.
• Risker than Equity Mutual Fund.
• Typically HNIs invests in this product.

13. Debt – its Meaning
• Explanation-
• Debts simply means where safety exist about capital and its return i.e. one is aware pre
hand the value at maturity.
• It is the value of money one party borrowed/lend from another.
• Debts generally carries a coupon -an interest rate, which the borrower pays to the lender,
either at maturity or at regular intervals.
• It is safe as compared to equities, so long the financial health of the borrower is sound.
• A borrower can be a individual, an entity, even The Government..

15. Types of Debt Investments
• GOI Bonds
• PSU Debts
• Bank’s Deposit/Fixed Deposits
• Corporate Debts
• Debentures
• Certificate of Deposit & Commercial Papers
• Debt Mutual Funds*

16. *Debt Mutual Fund - Types

17. Risk Matrix of Debt Mutual Funds

18. Alternate Investment
Explanation-
• Any thing that does not fall under the previous mentioned category is pooled under alternate investments.
• Alternate investments can be a separate asset class like *Real Estate, Gold, Commodities or can be a Hybrid options
(Mutual Funds) also trading strategy in *Currency, Commodity, *Futures & Options is part of it or mix of all.
• *Private Equity, *Angel Funding, *Start Up funding are new brain child under alternate category.
• *Structured Products are great financial innovation.
• Highly regulated by SEBI & Professionally managed.
• Low liquidity and Low transparency.
• Investment in this options are generally large and so is limited to HNI section of society.

19. *Real Estate Investments
• Purchase & management fixed assets either for an individual or pool
of Investors ( land, commercial, SEZs, warehouses, residential etc).
• It is done under individual, trust or at SEZ level, depends on the
contact.
• Easy accessible of large size properties with comparative small sum of
investment.
• Professionally managed so better control over money.
• Handsome fee is charged to investors for managing the fund.
• Regulated by SEBI.

20. *Investment in Gold, Commodity, Currency
• Gold- Physical or electronic purchase of Gold, either individually or by
collective pooling of funds(Mutual Funds). The object could be buy, sell or
both to make profit.
• Commodities – Just like one can buy companies through stock
exchange(BSE & NSE), one can trade commodities too through
Commodities Exchanges (MCX & NCDEX). Commodities like food grains –
Wheat, Rice, Pulse, Species, to metals like steel, aluminum, nickel can be
traded. Farmers use it to hedge their crop and investors for profits.
• Currency – All global currency can be traded with objective to either hedge
or profit.

21. *Hybrid Mutual Funds
• Mutual Fund basket also offers options to investors in this category
through Funds like;
• A) Balanced/ Balanced Advantage/Dynamic funds – These has underlined
assets of debts and equity of different mix. The mix can change with time
at the discretion of Fund Manager.
• B) Contra Funds – This means a contrarian approach, meaning, opposite of
what others do. Strategy could be in cash, equities or in *derivatives.
• C) MIP: Monthly Income Plan – Product aim to generate monthly income –
just like pension every month. It can buy both debt and equity.
• D) Multi Asset Funds – It invests in all assets classes, Equity, debt, gold,
commodities etc.

22. *Futures & Options - Derivatives
• As the name ‘Derivatives’ suggest- It does not have an underline securities or assets like,
Equity, Debt or Commodity. It derives its value basis other asset class. It is only a strategy
and so has defined expiry.
• Derivative strategy can be created in all assets which has a base value.
• These are complex in nature with vivid interest of participants using it. Some to make
money and others for Hedging.
• The word ‘Future’ here means at the future date – One can buy a bushels of paddy from
the farmer once harvesting is done at a price fixed today, by paying a token advance.
• ‘Option’ is referred as ‘No obligatory agreement’ – meaning, one can choose not take
delivery of paddy after harvest from the farmer and loose only advance.
• These are traded on exchanges just like equities.

23. *Private Equity – Angel Funding – Start Up Funding
• Private Equity – Purchase & Sale of shares in unlisted companies or Private
ltd companies. The difference being, exchange has no role here. Two or
more parties agrees to transact among themselves.
• Angel Funding – It is for new start ups, where thought and initial capital is
made & a financial push is needed to take the company to next level. It is a
budding field and a niche segment.
• Start Up Funding – It’s a level before Angel funding. A company doesn't
have existence beyond a thought/idea. It require money to kick start the
idea.

24. *Structured Products
• It is a complex financial product where multiple assets clubbed to
fulfill the criteria.
• For eg – An Investor has a view that in next 3 Years, markets would
not move up beyond 30%, but wants to make more than 30%. The
manufacturer can utilize structured product strategy and can come up
with a solutions. Like – If market stays within 30% range in 3yrs time,
than investors profits can be as high as 200% of the growth, else
make a fixed coupon.
• These product put in use debts, cash and complex option strategies to
fulfill commitment.
• It works on ‘what if’ concept. What if the market doesn’t move or go
negative.
• No liquidity, low transparency and a SEBI regulated product.

25. Investment Risk & Return Trade off
PE, AF &
SP

26. Thank You for Reading!