Investment managment

1. MODULE-4
INVESTMENT
MANAGEMENT

2. MEANING
Investment means employment of funds with the aim of achieving
additional income or growth in value

6. Investment and Gambling
• Investing is based on research, while gambling depends on luck.
• Investing gives ownership of an asset; gambling doesn’t
• Investing is long term, and gambling is short term
• Investing involves less risk than gambling
• Investing is well planned to reach a goal; gambling is unplanned and
non-scientific
• Investment in shares, debentures etc are the examples of investment.
Horse games,card games, lottery etc are the examples of Gambling

7. Characteristics of Investment
RETURNS RISK SAFETY LIQUIDITY

8. Factors
influencing
Investment
Decisions
Return
Risk
Safety
Liquidity
Convenience
Tax implications

9. Objectives Of
Investment
• Primary Objective
 Maximising the return
 Minimising the Risk
 Hedging against
Inflation : Rate of return
should ensure a cover against
inflation

10. •Secondary Objective
•Earn income
•Capital appreciation
•Safety
•Adequate liquidity
•Tax consideration

11. INVESTMENT
MANAGEMENT
It is the professional
management of
various securities
and other assets to
meet specified
investment goals for
the benefit of
investors.

12. Investment Process
Planning
• Objectives of investment should be clearly defined
• Careful review is conducted about financial position of investor
• A prudent decision regarding asset allocation must be carried out
• Detailed analysis of prevailing market conditions should be carried
out
• Investment policies should be formulated

13.  Implementation
• Investor makes investment in various investment
avenues
• Investment strategies cannot be static
• Thus asset allocation planned earlier may also
change
• If reallocation is needed, it is done by considering
current market conditions

14. Monitoring the Portfolio
• It is done to ensure maximum returns at minimum risk
• Actual portfolio should be examined with investment policy
• Then a review of present portfolio should be done and any
adjustment required should be introduced

15. PORTFOLIO MANAGEMENT
• A portfolio means a combination of shares or other
investments that a particular person or company maintains
for investment purposes
• A group of securities held by an investor for his investment
purposes are called portfolio.
• Portfolio management is a process of selecting and
overseeing a group of investments that meet the long-
term financial objectives and risk tolerance of an investor.

16. PHASES OF
PORTFOLIO
MANAGEMENT
Security Analysis
Portfolio Analysis
Portfolio Selection
Portfolio Revision
Portfolio Evaluation

17. SECURITY ANALYSIS
• The investor has to choose the securities which he considers worth
while to be included in an investment
• Detailed analysis of available securities are carried out
• The analysis consists of examining the risk-return characteristics of
individual securities
• Basic objective is to find out whether the security is over priced or
under priced
• Security analysis involves three approaches: fundamental analysis,
technical analysis and efficient market hypothesis

18. PORTFOLIO ANALYSIS
• A portfolio is a collection of financial investments like stocks, bonds,
commodities etc held by an individual.
• Portfolio analysis consists of identifying the range of possible
portfolio that can be constituted from given set of securities and
calculating their return and risk for further analysis.

19. PORTFOLIO SELECTION
• It refers to the process of selecting efficient portfolio
• An efficient portfolio is one that is expected to yield the highest
return for a given level of risk or lower risk

20. PORTFOLIO REVISION
• It refers to the adjustment of composition of portfolio due to changes
in market process, reassessment of companies and portfolio beta.
• Constant market changes necessitates readjustment of portfolio from
time to time
• This involves the purchase and sale of equity, bonds , etc
• Basically there are two techniques of portfolio revision- formula
plans and rupee cost averaging

21. PORTFOLIO EVALUATION
• It is the process which is concerned with assessing the performance of
portfolio over a selected period of time, in terms of return and risk.
• This process involves measurement of actual return realised from
portfolio and the risk borne by the portfolio over the period of
investment
• It also provides mechanism for identifying weakness in the investment
process and helps in its improvement