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39 Portfolio Management: An Overview (Portfolio Management Process…
39 Portfolio Management: An Overview
Portfolio approach
Definition
From the perspective of risk and returns
, evaluate
individual securities in relation to their contribution
to the investment characteristics of the whole portfolio.
Diversification
provides an investor with a way to
reduce the risk
without necessarily decreasing their expected rate of return.
The type of investment management clients
Individual investors
DC plan
Institutional investors
DB plan
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University endowments
Charitable foundations
Banks
Insurance companies
Investment companies
Mutual funds
Sovereign wealth funds (SWFs)
Portfolio Management Process
Planning step
Analysis the investor|s needs
investment objectives and constraints
Develop an IPS
Execution step
Asset allocation
Security analysis
Portfolio construction
Feedback step
Monitor and rebalance the portfolio
Measure portfolio performance and report