PORTFOLIO MANAGEMENT

1. Leadership, Strategic IQ, and Organizational Health
BY RAHUL GUPTA
BCAF005
Portfolio Management

2. Overview of Project Portfolio Management
Portfolio is a combination of
securities such as stocks, bonds and
money market instruments
WHAT IS PORTFOLIO
??

3. Overview of Project Portfolio Management
Project portfolio management is a combination of
various management disciplines:
%Management Disciplines
General management
Business management
Project and program management

4. Overview of Project Portfolio Management
Portfolio Management is an ongoing process that
includes decision-making, prioritization, review,
realignment, and reprioritization.”
Financial Portfolio Quote
“Portfolio management is the strategy-
based, prioritized set of all projects and
programs in an organization reconciled to
the resources available to accomplish
them.”

5. Overview of Project Portfolio Management
Portfolio is constructed on following
basis :
• Determining the objectives of the portfolio.
• Selection of securities to be included in the
portfolio.

6. Overview of Project Portfolio Management
The Purpose of Portfolio Management
• Execute Strategy
• Deliver Business Value
• Enhance Decision Making
• Manage Organizational Change

7. Overview of Project Portfolio Management
SELECTION OF SECURITIES
• Once the asset allocation decision has been
made, the portfolio manager has pick the
securities that go into the portfolio.
• Again, the decision can be made on
• Active basis or
• on Passive basis.

8. Overview of Project Portfolio Management
`
ACTIVE STRATEGIES
• The objective is to use the skills of your security analysts to
select stocks that will outperform the market, and create a
portfolio of these stocks. The security selection skills can take
on several forms.
• Technical Analysis, where charts reveal the direction of
future price movements
• Fundamental Analysis, where public information is used to
pick undervalued stocks
• Access to private information, which enables the analyst to
pinpoint mis-valued securities.

9. Overview of Project Portfolio Management
PASSIVE
• Index FUNDS are created by holding STOCKS in a wider index in
proportion to their MARKET value. No attempt is made to trade on a
frequent basis to catch market upswings or downswings or select 'good'
stocks.
• Assumptions:MARKETS are efficient. Attempts to time the market and
pick good stocks are expensive and do not provide reasonable returns.
Holding a well diversified portfolio eliminates unsystematic risk.
• Advantages: Transactions costs are minimal as is the cost of searching for
information.

10. Overview of Project Portfolio Management
Markowitz Portfolio:
• A Markowitz efficient portfolio is created by searching through all possible
combinations of the universe of securities to find that combination that
maximizes expected return for any given level of risk.
• Assumptions: The portfolio manager can identify the inputs (mean,
variance, covariance) to the model correctly and has enough computer
capacity to run through the optimization exercise.
• Advantages: If historical data is used, the process is inexpensive and easily
mechanised.
• Disadvantages: The model is only as good as its inputs.

11. Overview of Project Portfolio Management
Factors affecting investment decisions
in portfolio management
RISK TOLERANCE
RETURN NEEDS
INVESTMENT TIME HORIZON
TAX EXPOSURE

12. Overview of Project Portfolio Management
HOW THE SELECTIONPROCESSGOES ??

13. Overview of Project Portfolio Management
At the highest level, Project Portfolio Management has four basic components:
All the steps necessary to
construct an optimal portfolio
given current limitations and
constraints
Ensure value is delivered by
comparing expected benefits
with actual benefits; drive PPM
maturity
Selected projects must align
with the business strategy and
meet other important criteria
Optimize
Portfolio Value
Project benefits must be
protected in order to deliver
maximum portfolio value
Protect
Portfolio Value
Deliver
Portfolio Value
The Goal:
Maximize value
delivered to customers
and stakeholders
Select the Right
Projects

14. Overview of Project Portfolio Management
Deliver
Portfolio Value
Optimize
Portfolio Value
Select the
Right Projects
Protect
Portfolio Value
Prioritization
Portfolio Balancing
Project Sequencing
Capacity Planning
Portfolio Analysis
Project Monitoring
Portfolio Risk Mgt
Benefits Realization
Lessons Learned
Improve Portfolio Maturity
Efficient Frontier
Portfolio Planning
Portfolio Selection
Ideation
Work In-take
Decision Gates
Opportunity Mgt

15. Overview of Project Portfolio Management
Art Science
Successful portfolio management is a combination of art and science

16. Overview of Project Portfolio Management
You need portfolio management when…
Your Project Managers feel like
this
Employees react to
organizational goals like this
Your organization acts like this
`

17. Overview of Project Portfolio Management