Where to Invest

Neena PrasadSingapore Exchange30th September 2013

SGX The Asian Gateway

SGX The Asian GatewaySGX The Asian Gateway

• When it comes to investing, risk and reward are inextricably entwined

• Asset Allocation is equal parts science (quantitative analysis of risk and return) and art (driven by experience of risk, return and market cycles)

• Market dynamics are researched and debated from different angles

• Macroeconomics

• Fundamentals of the economy

– domestic and global

• Dynamics of different asset classes with geo-political and other market trends

• Upcoming events that are expected to impact investments and markets

• Data available on volatility, inflation, forex flows, growth numbers, etc

Benefits of Asset Allocation

· Diversification resulting in risk reduction

· Eliminate unintended asset class exposure

· Increase investment efficiency

· Helps you to sell high & buy low, by maintaining asset-wise exposure.

· Disciplined investing -with pre-defined book profit and cut loss levels

· Periodic reviews

Asset Allocation – Why It Matters

2

Combination of Portfolios

Capital market Line

Standard Deviation (Risk)

Exp

ecte

d R

etur

n

Efficient Frontier

Most Efficient Portfolio

The Science of Asset Allocation

SGX The Asian GatewaySGX The Asian Gateway

Model Portfolios

Research

Equity

Real Estate

Commodity Fixed Income

Alternative Investments Cash

Strategic Asset Allocation

Tactical Asset Allocation

Your Investment Objectives

Your Portfolio

Risk Management

Process Flow - Asset Allocation

3

SGX The Asian GatewaySGX The Asian Gateway

Model Portfolios – Recommended Allocation in %

Asset Class

Strategic Tactical Strategic Tactical Strategic Tactical

Equity 20 19 40 39 65 61

India Equity 16 16 33 33 55 55

Global Equity 4 3 7 6 10 6

Fixed Income 70 77 45 56 15 33

Short Term (incl cash) 30 32 20 24 10 22

Medium Term 20 35 15 27 2 10

Long Term 20 10 10 5 3 1

Alternate Investment 10 4 15 5 20 6

Real Estate 5 0 7 0 8 0

Private Equity 0 0 0 3 4 5Commodity 5 4 8 2 8 1

Total 100 100 100 100 100 100

Conservative Moderate Aggressive

4

SGX The Asian GatewaySGX The Asian Gateway

L, M, H refers to low, mid and high respectively. All returns are annualized, pre-tax.

Product Exp Ret Inv Horizon

Liquid / Liquid Plus L M H 8% - 9.5% 1 Days +

Short Term Plans L M H 8% - 12% 3 - 6 Months

Gilt Funds L M H 8% - 12% 12 Months +

LT Bond Funds L M H Upto 10% 12 Months +

FMPs / CP / CD L M H 8.5% - 9.25% Variable

Arbitrage Funds / Structures L M H 6% - 12% 18 Months +

Risk

Product Matrix – Fixed Income

5

SGX The Asian GatewaySGX The Asian Gateway

Risk

Low

High

FD

T Bills

Corporate Deposit

CP / CD / ICD

Short Term Plans (MF)

Structured Notes, PTC, High Yielding Corporate Bonds

Income Funds

Gilt Funds

PSU Bonds

State Govt Bonds

Tax Free PSU Bonds

CorporateBonds

Risk Spectrum Matrix – Fixed Income

6

SGX The Asian GatewaySGX The Asian Gateway

All fixed income investments involve some form of risk that must be borne by the investor. Below is a general overview of the main areas of risk that should be considered before investing in any fixed income security.

Interest Rate RiskThe risk that the market value of securities might rise or fall, primarily due to changes in prevailing interest rates. All fixed income securities are susceptible to fluctuations in interest rates; if interest rates rise, bond prices will fall and vice versa.

Credit RiskThe risk that the issuer might be unable to pay interest and/or principal on a timely basis. Widely recognized rating agencies, such as Moody's, Standard & Poor’s, CRISIL, Fitch offer their assessment of an issuer’s creditworthiness. Government securities are considered the “safest” investment as they are backed by the “full faith and credit” of the Indian Government. On the other end of the scale, pass through certificates, high yield corporate bonds are considered have the greatest credit risk.

Reinvestment RiskThe risk that the income stream from the investment may be reinvested at a lower interest rate. This risk is especially evident during periods of falling interest rates where coupon payments are reinvested at a lower rate than the current instrument.

By holding a diversified portfolio, the above risks may be managed and minimized.

While a secondary market exists for most fixed income securities, they may not be liquid for smaller lots and if sold prior to maturity, the price received may be more or less than the amount of the original investment.

Risk Considerations While Investing in Fixed Income

7

SGX The Asian GatewaySGX The Asian Gateway 8

Investing in Overseas Market - Singapore

Business Trusts

Exchange Traded

ProductsREITs

CatalistMainboard

Funds GDRs Equities (IPO)

Structured Warrants

Equities (IPO/Sec)

Debt Securities

Perpetual Bonds Fixed and Floating Rate Bonds

Convertible & Exchangeable Bonds

Covered Bonds

Commercial Papers Hybrid Capital Securities Structured Products

Asset Backed Securities

Loan Participation Notes

SGX The Asian GatewaySGX The Asian Gateway

This presentation is being made available to certain authorized recipients for their general information only.

While SGX and its affiliates have taken reasonable care to ensure the accuracy and completeness of the information provided in this presentation, they will not be liable for any loss or damage of any kind (whether direct, indirect or consequential losses or other economic loss of any kind) suffered due to any omission, error, inaccuracy, incompleteness, or otherwise, any reliance on such information. Neither SGX nor any of its affiliates shall be liable for the content of information provided by or quoted from third parties. Examples provided are for illustrative purposes only. The information in this presentation is subject to change without notice. 

Any recirculation, transmission or distribution of this presentation or any part thereof by any third party requires the prior written permission of SGX. SGX and its affiliates disclaim all responsibility and liability arising in connection with any unauthorised recirculation, transmission or distribution of this presentation or any part thereof.

© SGX Ltd, November 2010

www.sgx.com

Thank You

9

Singapore Exchange • London • Tokyo • Beijing

2 Shenton Way, #19-00 SGX Centre 1, Singapore 068804Main: (65) 6236 8888 Fax: (65) 6535 6994

For more information, please contact:

Head of Listings , India Neena Prasad neena.prasaad@sgx.com +(91) 981 150 4600

SGX The Asian Gateway

Investing in Overseas Markets - Singapore

Debt

10