This document discusses portfolio management. It defines a portfolio as a group of financial assets like stocks, bonds, and mutual funds that are combined to reduce risk. Portfolio management is the process of creating and maintaining investment portfolios. There are active and passive approaches to portfolio management. The key phases of portfolio management are security analysis, portfolio analysis, selection, revision, and evaluation. Models like the Capital Asset Pricing Model (CAPM), Capital Market Line (CML), and Security Market Line (SML) are used to calculate risk and return of portfolios and individual securities.

1. PORTFOLIO MANAGEMENT
By
Shyamolima Sarmah
Suparna pani

2. What is a portfolio?
 Portfolio is a group of financial assets
such as shares, stocks, bonds, debt
instrument, mutual funds, cash
equivalents etc. A portfolio is planned to
stabilize the risk of non-performance of
various pools of investment
 Portfolio refers to invest in a group of
securities rather to invest in a single
security
 “Don’t put your all eggs in one basket”
 Portfolio help in reducing risk without
sacrificing return

3. What is management?
 Management is the organization and
coordination of activities of an
enterprise in accordance with well-
defined policies and in achievement of
its predefined objectives

4. Portfolio management
 Portfolio management is the process
of creation and maintenance of
investment portfolio
 Portfolio management is a complex
process which tries to make
investment activity more rewarding
and less risky

5. Types of portfolio
management
 Active portfolio management: The portfolio
manager are actively involved in buying and
selling of securities to ensure maximum profit to
individual
 Passive portfolio management: The portfolio
manager deals with a fixed portfolio designed to
match the current market scenario
 Discretionary portfolio management service: An
individual authorizes a portfolio manager to take
care of his financial needs on his behalf
 Non-discretionary portfolio management: The
portfolio manager can merely advice the client
what is good and bad for him but the client
reserve full right to take his own

6. Phases of portfolio
management
 Portfolio management is a process of many activities that
aimed to optimizing the investment.
 SECURITY ANALYSIS: Classification of securities, examining
the risk-return characteristics of individual securities,
fundamental and technical analysis
 PORTFOLIO ANALYSIS: Identification of range of possible
portfolio from different set and ascertaining risk and return
 PORTFOLIO SELECTION: Efficient portfolio is identified and
optimal
 portfolio is selected
 PORTFOLIO REVISION: Addition or deletion of securities
due to change in availability of additional fund, change in risk,
need for cash etc.
 PORTFOLIO EVALUATION: Comparison of objective norms
with relative performance. Provide feedback mechanism for
improving the entire portfolio management process.

7. Capital asset pricing
model(CAPM)
 CAPM is the tool used by finance professionals in order to
calculate the return that an investment should bring
 Developed by Harry Markowitz in 1952
 Mathematically,
 The securities market as a whole has a beta coefficient of 1.0
 If beta is greater than 1.0 it implies a higher risk than the
market average
 If beta is less than 1.0 it implies a less risk than the market
average

8. Capital market line(CML)
 CML is the tangent line drawn from the point of
risk-free assets to the feasible region for risky
assets
 The portfolio will lie on the efficient frontier which
is the market portfolio ‘M’
 It provides a linear relation between expected
return and the risk that describes the proportion of
a risk-free asset and an efficient portfolio of assets
that an investor can hold

9. Security market line(SML)
 SML is the representation of CAPM
 The SML is the line that reflects an investment’s
risk versus its return. A line that graphs the
systematic or market ,risk versus return of the
whole market at a certain time and shows all risky
marketable securities
 It is also known as the “characteristic line”
 Individual securities are plotted on SML graph

10. THANK YOU