MANAGEMENT STRATEGIES - Coggle Diagram
BOND MANAGEMENT STRATEGIES
a) Active Bond - the goal is to maximizing return
Interest rate Participation
Involves forecasting interest rates to gain maximazation of profits. It is risky strategy that rely on uncertain forecasting
Select bonds based on their intrinsic value which are thought to lower price
Choose bonds that issued by companies which have low credit rating but have high potential for great improvement.
Yield Spread Analysis
to compare between the security which to know the price whether it is cheap or expensive
b) Passive Bond - to maximize the income generate properties of bonds
Buy and hold
Purchase and hold a security to maturity then reinvest cash proceeds in similar securities
to build fixed income allocation. This approach is to mimic the other published bond index.
EQUITY MANAGEMENT STRATEGIES
Relies on historical financial data that follow the company's track record. Eg; asset, liability, etc
analyze trend of the stock market which belief that when the best time to buy and sell is when the other investor are sure about ii.
Anomalies and Attributes
A market which is mysterious and regularly unpredictable.
buy and hold the same security where they want to track
This approach use when the price of stock is too expensive so that we dont suffer losses. Then we follow benchmark index when want to buys a sample of stock. Eg Lower stock lower commission.
Historical information on price changes and correlations between securities are input into a computer program that determines the composition of a portfolio that will minimize tracking error