Portfolio Management

Portfolio Investment Process

The ultimate aim of the portfolio manager is to reduce the risk and increase the return to the investor in order to reach the investment objectives of an investor. The manager must be aware of the portfolio investment process. The process of portfolio management involves many logical steps like portfolio planning, portfolio implementation and monitoring. The portfolio investment process applies to different situation. Portfolio is owned by different individuals and organizations with different requirements. Investors should buy when prices are very low and sell when prices rise to levels higher that their normal fluctuation.

Portfolio Investment Process

Portfolio investment process is an important step to meet the needs and convenience of investors.… Read the rest

Abey Francis

Portfolio Construction Phase in Investment Portfolio Management

Investment portfolio construction refers to the allocation of funds among a variety of financial assets open for investment. Portfolio theory concerns itself with the principles governing such allocation. The objective of the theory is to elaborate the principles in which the risk can be minimized subject to desired level of return on the portfolio or maximize the return, subject to the constraint of a tolerate level of risk.

Thus, the basic objective of portfolio management is to maximize yield and minimize risk. The other ancillary objectives are as per the needs of investors, namely:

  • Safety of the investment
  • Stable current returns
  • Appreciation in the value of capital
  • Marketability and Liquidity
  • Minimizing of tax liability.
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Abey Francis

Portfolio Performance Evaluation in Investment Portfolio Management

Portfolio evaluating refers to the evaluation of the performance of the investment portfolio. It is essentially the process of comparing the return earned on a portfolio with the return earned on one or more other portfolio or on a benchmark portfolio. Portfolio performance evaluation essentially comprises of two functions, performance measurement and performance evaluation. Performance measurement is an accounting function which measures the return earned on a portfolio during the holding period or investment period. Performance evaluation, on the other hand, address such issues as whether the performance was superior or inferior, whether the performance was due to skill or luck etc.… Read the rest

Abey Francis

Portfolio Selection and Revision in Investment Portfolio Management

Portfolio Selection

Portfolio analysis provides the input for the next phase in portfolio management, which is portfolio selection. The proper goal of portfolio construction is to generate a portfolio that provides the highest returns at a given level of risk. A portfolio having this characteristic is known as an efficient portfolio. The inputs from portfolio analysis can be used to identify the set of efficient portfolios. From this set of efficient portfolios the optimum portfolio has to be selected for investment. Harry Markowitz portfolio theory provides both the conceptual framework and analytical tools for determining the optimal portfolio in a disciplined and objective way.… Read the rest

Abey Francis

Portfolio Analysis in Investment Portfolio Management

The main aim of portfolio analysis in investment portfolio management is to give a caution direction to the risk and return of an investor on portfolio. Individual securities have risk return characteristics of their own. Therefore, portfolio analysis indicates the future risk and return in holding of different individual instruments. The portfolio analysis has been highly successful in tracing the efficient portfolio. Portfolio analysis considers the determination of future risk and return in holding various blends of individual securities. An investor can sometime reduce portfolio risk by adding another security with greater individual risk than any other security in the portfolio.… Read the rest

Abey Francis

Security Analysis Phase in Investement Portfolio Management

Security Analysis in Portfolio Management

There are different types of securities are available to an investor for investment. In Indian stock exchanges shares of more than 7000 companies are listed. Traditionally, the securities were classified into ownership such as equity shares, preference shares, and debt as a debenture bonds etc. Recently companies to raise funds for their projects are issuing a number of new securities with innovative feature. Convertible debenture, discount bonds, Zero coupon bonds, Flexi bond, floating rate bond, etc. are some of these new securities. From these huge group of securities the investors has to choose those securities, which he considers worthwhile to be included in his investment portfolio.… Read the rest

Abey Francis