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Portfolio management process

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portfolio management process

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Portfolio management process

  1. 1. WHAT IS PORTFOLIO? MEANING Portfolio is a financial term denoting a collection of investments held by an investment company, hedge fund, financial institution or individual. DEFINITION : The term portfolio refers to any collection of financial assets such as cash. Stock X Stock Y Stock X and Stock Y Comprises a portfolio
  2. 2. MEANING: Portfolio management refers to the professional management of securities and other assets. Also referred to as "asset management" and "wealth management."
  3. 3. DEFINITION : The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against performance.
  4. 4. MEANING :  The portfolio management process is the process an investor takes to aid him in meeting his investment goals.  A policy statement is the statement that contains the investor's goals and constraints as it relates to his investments.
  5. 5. Planning Step • Understanding client needs • Preparing an investment policy statement (IPS) Execution Step • Asset allocation • Security analysis • Portfolio construction Feedback Step • Portfolio monitoring and rebalancing • Portfolio measurement and reporting
  6. 6. The procedure is as follows: Create a Policy Statement -A policy statement is the statement that contains the investor's goals and constraints as it relates to his investments. Develop an Investment Strategy - This entails creating a strategy that combines the investor's goals and objectives with current financial market and economic conditions. Implement the Plan Created -This entails putting the investment strategy to work, investing in a portfolio that meets the client's goals and constraint requirements. Monitor and Update the Plan -Both markets and investors' needs change as time changes. As such, it is important to monitor for these changes as they occur and to update the plan to adjust for the changes that have occurred.

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