Basics

Risk-Return Framework
Risk(Standard Deviation, Beta)
Risk Adjusted Return
Sharpe Ratio,
Treynor Ratio
Alpha

Risk profiling & Asset Allocation

Risk Profiling
Why Asset Allocation?
Strategic Asset Allocation
Tactical Asset Allocation
Fixed Asset Allocation
Flexible Asset Allocation
Asset Allocation Returns in Equity and Debt(Fixed Asset
Allocation with Annual Re-balancing, Flexible Asset
Allocation)
Allocation to Speculation
Diversification in Perspective
Asset allocation is the implementation of investment strategies that attempts to balance risk
and reward by adjusting percentage of each asset in an investment portfolio according to
investors risk tolerance investment goals and time frame work.
Strategic Asset allocation is a traditional approach , it is a practice of maintaining a strategic
mix of stock bonds cash and per the risk profile and long term investing goals of the
investors. It deteremines how much of the investors money should be in asset classas per the
long term expected returns and risk levels of each asset class. Eg.
An investor strategically allocate 70% in stock 20% in bond and 10% in cash.
Or he can invest 60% in stock 40% in bonds. This strategy is a long term strategy is not
intented to take advantage of short term market opportunity.

Tactical Asset allocation in this is strategy in which a range of percentages in defined for
each asset class. Example bonds 40-50% this straetgy involves active portfolio management
that is the investor has to re-balance the percentage of assets held in different categories to
take advantage of current market conditions. In order to maximize the profit. E.g. if the stock
prices are falling the investor would shift to its asset allocation to stock.

Fixed Ratio Asset Allocation means tht balance is maintained by liquidating a portion in the
assets class with higher return and re investing the other asset with lower return.
Flexible Asset Allocation
Portfolio rebalancing is correcting the deviation in the origional asset allocaiton.
If 25-35 Equity 65% to 75% thru mutual funds schemes 60% Large Cap or Divident Yield ,
balance fund 40% Mid Cap samll cap funds & rest in international fund Gold 5 to 10 %
35 to45 age 60 75 equit
Debt 35-45
Gold 5 to 10 percent

45 o 55 years
Equity 45-60%
Debt 50-60 % Gold 5 to 10 percent

Risk Management through Insurance

Risk Assessment
Life Insurance
Health Insurance
General Insurance
Safeguards in Insurance
Basic Elements
Key Considerations