FromResearch Desk

VALUE PLUS - The Family OfficeKNOWLEDGE PLUSFor Wealth

Plus+

14th September- 2013

Hot Topic Of The Week

Risk Profiling

Last week at the Financial Markets!!!

• SENSEX rose by 462 points (2.40%) and closed to 19732 at end of the week.

• (FIIs) remained net buyer in equity with net inflow of Rs. 5490 crore and net seller in debt segment with net outflow of 2071.5 crore.

Knowledge Plus for Wealth +

News Impact

• India’s trade deficit for the month of August narrowed to $10.9 billion against $12.26 billion in July 2013.

• Lower trade deficit will lead to higher GDP growth

• Volatility in rupee may reduce.• Economy downgrade fear will reduce

• TRAI recommends big cut in base price for upcoming 2G auctions

• Profit margin may improve of telecom operators.

• Voice and data charges may not increased as cost of spectrum will reduce.

Last week at the Financial Markets!!!

Knowledge Plus for Wealth +

Price Performance of Different Asset Class Better than expected Chinese economy data and reduce tension in

Syria shows profit booking in Gold & Silver.

Better than expected Chinese economy data and reduce tension in

Syria shows profit booking in Gold & Silver.

Next Week in the Financial Markets...?

Knowledge Plus for Wealth +

• Wholesale price Index (WPI) data for the month of August 2013 will be released on September 16, 2013

• Federal Open Market Committee (FOMC) meeting is scheduled on 17th & 18th September, 2013. The committee would provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program.

• Reserve Bank of India (RBI) will release its next mid-quarter monetary policy review, on September 20, 2013

Hot Topic Of The Week

Risk Profiling

Introduction• Risk profiling is one of the most important part of the

investment process.

• It plays an essential role in ensuring the suitability of asset class in your portfolio.

• Risk profiling generally revolve around two questions:1. "How much risk can you handle psychologically?"2. "How much risk should you ideally take on?”

Knowledge Plus for Wealth +

IntroductionThese question reflects 2 important aspects of risk profiling:

1. Risk Tolerance (Emotional/Psychological Aspect)2. Ability to take Risk (Financial Aspect)

Answers to both the above questions may not necessarily be the same

Knowledge Plus for Wealth +

Risk Tolerance• Risk tolerance is a measure of your willingness to accept higher

risk or volatility.

• Those with high tolerance are aggressive investors, willing to accept losing their capital in search for higher returns and vice versa

• There is also an emotional aspect attached to it. An investor may have a high risk tolerance. But when actually the event occurs and he sees his portfolio significantly down he may not be willing to accept it.

Knowledge Plus for Wealth +

Risk Tolerance• An individual should have a realistic understanding of his or her

ability and willingness to stomach large swings in the value of his or her investments.

• Risk tolerance is a measure of how much risk you can handle,

but that is not necessarily the same as the appropriate amount of risk you should take.

Knowledge Plus for Wealth +

Risk Taking Ability• Financial risk capacity can be measured in many different ways,

including time horizon, liquidity, income etc.

• Those with high income can make higher-risk investments as fall in the amount of their portfolios will not make much difference to their finances.

• An investor may have high risk tolerance but if a small drop in value affects his monthly budget, then his risk taking ability is considered to be low.

Knowledge Plus for Wealth +

Asset Class Risk• Every asset class (Safe or Risky) comes with its own set of risk

Knowledge Plus for Wealth +

• Equity Market Risk• Corporate Event Risk (Bonus, Split)• Small Firm Risk • Hedging Demand Risk(International Investment)• Complexity or Efficiency Risk • Liquidity Risk • Interest Rate Risk• Credit Risk• Forex Risk• Extreme Event (War, natural ca)• Operational Risk (System failure)• Regulatory Risk

Tools To Measure Risk

Knowledge Plus for Wealth +

Knowledge Plus for Wealth +

Research Desk

@VALUE PLUS - The Family Office

Office: (0265 -2324600,6629800)Email: info@valueplusinv.comWebsite: www.valueplusinv.com