SWOT ANALYSIS OF ASSET CLASSES

INTRODUCTION

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and so a SWOT Analysis
is a technique for assessing these four aspects of the business.

ASSET STRENGTH WEAKNESS OPPOTUNITY THREAT

EQUITIES  Strong financials  High debt  Internal growth  High risk

 Scalable business  Risky investment opportunity investment
models  Lack of capital  External growth  No guarantee
 Indicate ownership  High speculation opportunity of returns
 Cost advantages  Right in liquidation  Fluctuations in
 No interest  High returns in the the market
payments long run prices.

GOLD  Gold is ready  Gold does not  Gold demand is  Governments

marketable and generate yield. growing. with mega
liquid  Gold is an idle Asset  Some gold Miners gold reserves
 Used as an with no regular provide a dividend. could decide
investment vehicle return profile.  Carrying gold to sell and this
 Tends to maintain  Gold prices have jewellery gives the would cause
its purchasing been volatile in carrier a form of a prices to drop.
power over time. recent times. recognisable asset  Given that
 A safe-haven asset which can be used in gold does not
 Cannot be emergencies. have a yield, it
destroyed cannot benefit
 from
compound
interest.
 If gold
experiences
extreme price
rises it could
be the subject
of a windfall
tax.
DEBT  Fixed or regular  Interest rates will  Uplift the standard  Affect the
INSTRUMENTS returns not be high as of living credit rating
 Cash flow at equities  Ownership can be of the
maturity are known  Principle is not retained business
 Able to generate returned whenever it  Some bonds are tax  Credit risks
highly predictable is been asked by the free on bonds
streams of revenue debt holder  Rik of default
from operations.  Low flexibility in or bankruptcy
accessing funds of concerned
parties.
REAL ESTATE  It is an investment  Ownership rights  Global demand for  Economic
asset that increases cannot be easily real estate is strong slowdown
in value over time. transferred. and high. may affect
 It is less volatile  Highly illiquid  Real estate is poised demand
than other asset. for rapid growth.  Competition
investment assets  It requires a large  Potential to from other
particularly capital to invest in. diversify into other investment
equities.  Low supply. sectors. asset classes
 There is no single such as
market for real equities and
estate. bonds.
  Seasonal
demand may
affect prices
MUTUAL FUNDS  Volatility of bank  Poor participation  Loans can be taken  Increasing
interest rate. of retail investors against mutual fund competition
 Offer liquidity to  No guaranteed  High level of among the
the investors at return savings habit among players.
any time.  Entry and exit the people  High level of
 Give stable returns expenses to be  Using on-line mode volatility in
incurred by the of trading systems. the stock
investor market.
 Tax
inefficiencies

PRODUCT NOTES

PUBLIC PROVIDENT FUND

Public provident fund is a popular investment scheme among investors courtesy its multiple
investor-friendly features and associated benefits. It is a long-term investment scheme popular
among individuals who want to earn high but stable returns. Proper safekeeping of the principal
amount is the prime target of individuals opening a PPF account.

 Tax benefits
 Generate guaranteed returns

NON-CONVERTIBLE DEBENTURES

Non-convertible debentures (NCD) are fixed-income instruments, usually issued by high-rated

companies in the form of a public issue to accumulate long-term capital appreciation. They offer
relatively higher interest rates when compared to convertible debentures.

 High risk
  Fixed instrument
 Cannot be withdrawn before maturity

SENIOR CITIZEN SAVING SCHEME

Senior Citizens Savings Scheme (SCSS) is a government-backed savings instrument offered to

Indian residents aged over 60 years. The deposit matures after 5 years from the date of account
opening but can be extended once by an additional 3 years.

 Offers reasonable returns

 Higher tax exemption limit
 Low risk

SUKANYA SAMRIDDHI YOJANA

Sukanya Samriddhi Yojana is a small deposit scheme of the Government of India meant
exclusively for a girl child and is launched as a part of Beti Bachao Beti Padhao Campaign. The
scheme is meant to meet the education and marriage expenses of a girl child.

 Low risk
 Ease of investment
 Transferrable deposit scheme

Anooja Sajeev

Junior Research Analyst

Hedge school of Applied Economics