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SUBMITTED TO: PROF.

MUHAMMAD AZFAR ALI


SUBMITTED BY:
Sonia Shafiq Mehar Ghana L1F12MCOM MehreenSajid SaharNaz L1F12MCOM0096 L1F12MCOM0132 L1F12MCOM00

SECTION : C

Investment & portfolio management

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List of contents:

Acknowledgement: ....................................................................................................................................... 2 ACTIVE INVESTMENT..................................................................................................................................... 3 PURCHASE OF SHARE ................................................................................................................................ 3 SALE OF SHARE.......................................................................................................................................... 3 TOTAL RETURN FROM ACTIVE STRATEGY ................................................................................................. 3 GEOMETRIC MEAN.................................................................................................................................... 4 CUMMULATIVE WEALTH INDEX............................................................................................................... 5 PASSIVE INVESTMENT ................................................................................................................................... 5 PURCHASE OF SHARE ................................................................................................................................ 5 SALE OF SHARE.......................................................................................................................................... 5 TOTAL RETURN.......................................................................................................................................... 5 CUMMULATIVE WEALTH INDEX............................................................................................................... 5 Fundamental Analysis ................................................................................................................................... 6 Economy of Pakistan ..................................................................................................................................... 6 Positive Points of Pakistans Economy: ..................................................................................................... 6 Negative Points of Pakistans Economy: ................................................................................................... 6 Economic Analysis: ........................................................................................................................................ 7 Industry Analysis ........................................................................................................................................... 7 Company Analysis ......................................................................................................................................... 8 Adam jee Insurance Company Limited (AICL) ........................................................................................... 8 Company profile.................................................................................................................................... 8 Shaheen Insurance Company.................................................................................................................... 8 Company profile.................................................................................................................................... 8 EFU General Insurance .............................................................................................................................. 9 Company Profile .................................................................................................................................... 9 End Result ................................................................................................................................................... 10

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Acknowledgement:

We are extremely grateful to Almighty ALLAH, who blessed us and have mercyand kindness in our way to complete this project because nothing can be donewithout his blessings. We are also grateful to PROF.MUHAMMAD AZFAR ALIwho gave us a project through which we cometo know Investment & Portfolio Management in real terms. He also contributed with hisprecious time for us to complete this report. At the end, we want to thank all of our group members who coordinated with usin many ways. Without their support it seems to be quite a difficult task to getresults for the completion of this report.

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ACTIVE INVESTMENT

PURCHASE OF SHARE
DATE 15-Jan 17-Jan 20-Jan 23-Jan 27-Jan COMPANY SHNI EFUG AGIC EFUG AGIC MR 6.55 101 19 106 21.45 TAX 0.131 2.02 0.38 2.12 0.429 B.C 0.1 0.1 0.1 0.1 0.1 PUR.PRI 6.781 103.12 19.48 108.22 21.979 SHARE.PUR 14747.08745 1167.882949 6522.87807 1216.641528 6296.600109 TOTAL 100,000 120432.1 127065.7 131664.9 138393

SALE OF SHARE
DATE 17-Jan 20-Jan 23-Jan 27-Jan 30-Jan COMPANY SHNI EFUG AGIC EFUG AGIC MR 8.35 110 20.49 115 25 TAX 0.0835 1.1 0.2049 1.15 0.25 B.C 0.1 0.1 0.1 0.1 0.1 SALE.PRI 8.1665 108.8 20.1851 113.75 24.65 SHARE.SELL 14747.08745 1167.882949 6522.87807 1216.641528 6296.600109 TOTAL 120432.1 127065.7 131664.9 138393 155211.2

TOTAL RETURN FROM ACTIVE STRATEGY


COMPANY SHNI EFUG AGIC EFUG AGIC P.C 1.3855 5.68 0.7051 5.53 2.671 TR 0.204321 0.055081 0.036196 0.0511 0.121525 %AGE 20.43209 5.508146 3.61961 5.109961 12.15251

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TOTAL RETURN
25 20 15 10 5 0
0 0 COMPANY 0

20.43209

5.508146 3.61961
0 0

5.109961
0

SHNI

EFUG

AGIC

EFUG

GEOMETRIC MEAN
TR 0.204321 0.055081 0.036196 0.0511 0.121525 1+TR 1.204321 1.055081 1.036196 1.0511 1.121525 PRODUCT 1/N 1.552112 1.091904 ANS-1 0.091904

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CUMMULATIVE WEALTH INDEX


TR 0.204321 0.055081 0.036196 0.0511 0.121525 1+TR 1.204321 1.055081 1.036196 1.0511 1.121525 PRODUCT 1.552112

PASSIVE INVESTMENT

PURCHASE OF SHARE
DATE 15-Jan COMPANY MR TAX B.C PUR .PRI AGIC 20 0.4 0.1 20.5 SHARE.PUR 4878.04878 TOTAL 100,000

SALE OF SHARE
DATE 30-Jan COMPANY MR TAX B.C SALE.PRI SHARE.SELL AGIC 25 0.25 0.1 24.65 4878.04878 TOTAL 120243.9

TOTAL RETURN
24.65-20.5=4.15 4.15/20.5=0.202439*100=20.2439%

CUMMULATIVE WEALTH INDEX


0.202439+1=1.202439 1.202439*100=120.2439%

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Fundamental Analysis
In fundamental analysis done Economic Analysis Industry Analysis Company Analysis

Economy of Pakistan

Positive Points of Pakistans Economy:


CP Inflation while high is showing signs of becoming range bound; Foreign Remittances continue to rise (the PRI scheme launched under my stewardship has borne fruit with remittances expected to cross the $l2b annual mark this year); We have finally started to debate/define our role in the devastating War on Terror and the end game of Afghan conflict have started to be played out. Pakistans banking system remains insulated from the Western banking meltdown. Booming Agrarian economy, despite devastating floods; with corporate sector moving into dairy, live-stock and value added processing. While most of the rest of the world is ageing our population is getting younger Democracy is still holding on!

Negative Points of Pakistans Economy:


Dr.Ishart Husain, former governor of State Bank of Pakistan has said that bad governance is the root cause of all economic ills. Unrelenting and crippling energy shortages. Lack of Scale/infrastructure to support GDP growth. Security and Law and order situation (Perception twice as worse as reality with the reality bad enough especially in Karachi and Quetta) Weak Social Sector reforms/indicators. Increasing friction amongst state institutions

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Economic Analysis:

This study provides an economic analysis of life insurance company expenses and develops a methodology for the construction of benchmark expense factors. These benchmarks can facilitate the pricing of new business, cost control within companies, and expense comparisons among companies. We derive the expense factors by estimating a cost function wherein total general expenses are modeled as a function of input prices and physical outputs, and the physical outputs are proxies for the cost drivers of the different lines of business. This methodology has two important advantages: first, the derived expense factors are independent of the methods that insurers use in allocating total expenses across lines of business. Second, the estimated cost function explicitly accounts for different degrees of economies of scale and consequently in the present value of marginal expenses across insurers.

Industry Analysis

Insurance is a risk management tool primarily used to hedge against the risk of a contingent Loss. The role of the insurance sector is significant in promoting the stability of the overall Macroeconomic environment by providing a mitigated against uncertainty to economic agents by an equitable transfer of risk, in exchange for a premium. Life insurance companies in particular, due to the nature of their premiums, are also among the large institutional investors for capital and money market instruments. The insurance sector in Pakistan has seen considerable improvements since CY01 on account of the rise in the demand for insurance by corporate, households and public sector entities. However, with two-thirds of the population living in rural areas and low per capita income, the insurance sector faces various hurdles in its growth and its share in the assets of the financial system of the country was only 4.1 percent in CY06. Insurance business in Pakistan is categorized into two sub-sectors: non-life insurance and life insurance. There are 53 companies providing non-life insurance and 5 companies which offer life insurance

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products. Despite fewer companies, the life insurance sector accounts for 67 percent of total insurance .

Company Analysis

Adamjee Insurance Company Limited (AICL)


Company profile

Adamjee Insurance Company Limited (AICL) was incorporated as a Public Limited Company on September 28, 1960 and is listed on all three stock exchange of Pakistan. The Company is also registered with the Central Depository Company of Pakistan Limited (CDC) and is involved in the business of general insurance. The head office is located in Karachi and it operates a network of branches all across Pakistan and two in UAE (Dubai & Abu Dhabi). The Company commenced operations with a paid-up capital of Rupees 2.5 million, which has grown phenomenally in the past five decades to Rupees 1.24 billion, as on 31 December 2011. A strong asset base, significant paid-up capital, substantial reserves, balanced portfolio mix along with steady growth in gross premium account gives Adamjee Insurance a well deserved competitive edge within the insurance industry.

Shaheen Insurance Company


Company profile

Shaheen Insurance is a project of Shaheen Foundation set up by Pakistan Air Force and was incorporated as a public limited company in 1996 under Companies Ordinance 1979 and is involved in general insurance business.

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We are a public limited company and are listed at all the three stock exchanges of Pakistan. Our initial paid-up capital was Rs.20 million and at present has further grown to Rs.175 million in different phases. Our equity base is increasing every year since started our operations. Since its inception, the Companys performance remained excellent despite various ups & downs faces in its infant age. The Company is run by a team of professionals and is one of the most well managed companies in the market. Despite the fact that we are a relatively new company we have a very impressive list of corporate and multinational blue chip clients on our book. In the brief span of 9 years we have built up a good image in the market. Hollard insurance, our major shareholders take very keen interest in our strategic management and formulation of our future plans. We are optimistic about our future business prospects and strongly feel that our company will grow substantially in the years to come because of the positive economic climate and also because of the active support of the shareholders, clients and re-insurers. Shaheen Insurance proven as one of the most reputable and brightest names in the insurance sector since it started operations and its sustained growth over the last half a decade has secured a place among the Top Ten insurers of Pakistan in terms of gross direct premium base. The small and well knitShaheen team offers its personalized and efficient services to all its valued clients because it strongly believes that a satisfied claimant is the most effective advertisement for an insurance company.

EFU General Insurance


Company Profile

The Company was incorporated on September 2, 1932 and is engaged in non-life insurance business comprising of Property, Marine/Aviation, Motor and other miscellaneous products.The shares of the company are quoted on Karachi and Lahore Stock Exchanges of Pakistan.The Principal place of business is located at EFU House, M.A. Jinnah Road, Karachi, Pakistan.EFU is one of the few Pakistani organizations run totally by professional management and highly motivated field force.Policies accepted by all institutions in the country.Rating: Insurer Financial Strength AA, Outlook: Stable (Rating Agency: JCR-VIS).Client-base comprises of many leading business houses and multinational companies.EFU gave the emerging insurance industry the leadership, the manpower and the drive needed to grow in a situation where at one time, three-fourths of insurance was held by foreign companies.

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The company has also taken the initiative to transform its Enterprise Information System with an end to end solution comprising Oracle's latest technological software and hardware as part of the infrastructure solution to meet Company's projected Online Transaction Processing needs, keeping in view both the present requirements and future needs such as Data Warehouse, business intelligence and Customer Relationship Management System.

End Result
We invest in Three companies for active investment from 15th Jan, 2014 to 30th Jan, 2014. 1. ADAM JEE insurance 2. SHAHEEN insurance 3. EFUG insurance Period of purchase and sale of securities of those companies from15th Jan, 2014 to 30thJan, 2014. During the period we face loss in some securities and also gains.

Mean
Geometric Mean Cumulative Wealth Index

%
9.1904% 155.2112%

For the passive investment we select one company. The name of the company is EFU Insurance. Period of purchase and sale of that companys security from 15th Jan, 2014 to 30thJan, 2014.During the period we gain in the security. Total Return Cumulative Wealth Index 20.2439% 120.2439%

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We invest in active and passive in the same period and same amount but difference in return between active and passive investment due to transaction cost which are incurred purchase and sale securities in active investment. The sale and purchase of share in passive investment are one time and hold that share so the transaction cost e.g. (Tax and commission) are less paid comparatively the active investment. So the profit in passive investment is more than the active investment.

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