– By Gyan Anand, T. A. PAI MANAGEMENT INSTITUTE, Manipal


“Sir, our scheme has beaten the nifty year on year”

“Our fund manager has a reputation for generating regular alpha”

Claims as these by investment firms, mutual funds, or insurance providers are regularly seen. The clients often fall for it as they see these claims as something done right by the managers.

However, there exists a catch to this, general understanding. The aim of this paper is to remove the exploitation done, using such claims by companies.

Stock Index

The practice of using a set of stocks to represent the performance of the market was started by Charles H Dow, a financial journalist in 1896, who built the first stock market index The Dow Jones Industrial Average, which was an average of the top 12 stocks in the market. This index was calculated by taking all of the stock prices, adding them together and then dividing them by the number of stocks.

The methodology has changed with the passage of time but the true sense of the index remains intact. Today almost all the major indexes in the world are price indexes, including likes of S&P 500, Nifty, Dow Jones, NASDAQ etc.

The index provides a benchmark against which performance of various investment opportunities is measured. It is a tool which is put to use by investors, financial managers and the likes of them to describe the market and measure performances and returns on various instruments. For instance, mutual funds create portfolios which are actively managed by portfolio managers. When an investor needs to measure which mutual fund has better performance, he needs a benchmark, this is where the ‘Indices’ come in handy. Since an index is a mathematical construct it cannot be traded directly, so various instruments try and imitate the index and if possible beat it (generate alpha).

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Fin-O-Health – Article writing competition

Write an article on any of the below topics:

  • Upcoming Models in Health Insurance Industry in India
  • Financial Spending on Healthcare and its impact on economy
  • New financial regulations in Healthcare Industry
  • Paradigm Shift in the burden of Healthcare Finance: PPP Model
  • GST exemption on healthcare services to the end consumer. A good move from the government?






The global financial services sector is an epitome of transformation for the other industrial segments to follow suit. Automation and digitalization have caused a paradigm shift in the way in which banks and financial institutions operate. In the words of Barclays’ former CEO Anthony Jenkins, “Banking is headed for an Uber moment”. The latest to join the bandwagon of disruption in the financial sector is the blockchain technology. Originally developed as a DLT (distributed ledger technology) supporting bitcoin transactions, financial institutions are now exploring several use cases apart from payments for application of this technology. They have been developing proof of concepts thus trying to assess the technical, legal and compliance aspects of implementing this technology. The fundamental motivation for most of the potential applications of blockchain technology in the financial services segment is to achieve cost savings and security, increase availability, speed up processes by eliminating the need for intermediaries, middlemen thus reducing effort duplication, easing reconciliation and improving the efficiency of services. This research paper strives to enlist and elaborate upon potential blockchain use cases in the banking and financial markets ecosystem, some of which have already been experimented with and others which are still at the idea level.

Application of Blockchain Technology

The following figure illustrates how most of the blockchain use cases aim to modify the modus operandi of banks and financial institutions.


Source: A joint report by Infosys Consulting and HHL Leipzig Graduate School of Management, titled “Blockchain Technology and the Financial Services Market”, November 2016

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