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    Portfolio Management - Part 2: Portfolio Management, #2
    Portfolio Management - Part 2: Portfolio Management, #2
    Portfolio Management - Part 2: Portfolio Management, #2
    Ebook64 pages31 minutes

    Portfolio Management - Part 2: Portfolio Management, #2

    By Rohit Singh

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    About this ebook

    Part 2 of 2 of Portfolio Management.

    Many people consider investing to be a daunting activity. They are bewildered by the profusion and proliferation of investment alternatives, rattled by the fluctuations in financial prices, overwhelmed by the presence of mighty institutional investors, confused by exotic instruments and complicated investment strategies, confused by the intricacies of the tax system, and exasperated by the financial scams that periodically rock market.

    Notwithstanding these concerns, investing can be fairly manageable, rewarding, and enjoyable experience, if we adhere to certain principles and guidelines. By this we can expect and hope to maximize our returns by diversifying our investments into suitable portfolios. For this, each and every investor has to be well educated about economy, investment options, market conditions and its consequences.

    The main objective is to select the suitable investment criteria like if we want better returns, or consider risk factors, or liquidity or safety of principal. By this we can set our portfolio objectives and construct our portfolio according to our needs and manage it with respect to the market conditions and the securities fairing in the market.

    LanguageEnglish
    PublisherRohit Singh
    Release dateMay 14, 2017
    ISBN9781386727040
    Portfolio Management - Part 2: Portfolio Management, #2

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      Portfolio Management - Part 2 - Rohit Singh

      SECONDARY DATA

      4.1 POINTS TO REMEMBER IN EQUITY INVESTING:

      The key objective of any kind of investment is optimizing wealth creation. This essentially means the rate of return should surpass the rate of inflation. Else, the actual value of investment made diminishes in net worth.

      There are essentially two types of instruments for investment -equity and debt. Though debt instruments or other fixed income instruments like income funds, bonds etc offer consistent returns they may be outdone by inflation in the long run.

      The known remedy to make capital surpass inflation is to invest in equity instruments. This helps investor grow their capital much faster and will help beat inflation inspite of sharp periods of decline.

      Equity investment refers to the buying and holding of shares of stock on a stock market by individuals and funds in anticipation of income from dividends and capital gain as the value of the stock rises.

      4.2 ELECTING FUNDS BASED ON PAST PERFORMANCE IS RISKY

      Common factors in stock returns [value vs. growth, large cap vs. small cap, high beta vs. low beta] and investment expenses almost completely explain persistence in equity fund returns.

      Looking at past one-year returns relative to those of the subsequent year, there are relatively few funds that stay in their initial decile ranking, although funds in the top and bottom deciles maintain their rankings more frequently than the 10 percent that mere chance would suggest. The 17 percent of funds repeating in decile one seems less than compelling. The 46 percent of funds repeating in decile ten, on the other hand, is quite imposing, a performance that seems largely explained by the fact that many low-decile funds tend to be trapped there by their high costs. Relying on past records to select funds that will provide superior performance in the future is a challenging task.

      4.3 INVESTOR WORKFLOW CYCLE:

      Figure 8

      Manage Portfolio: Create pro forma portfolio from underlying funds, stress test and optimize portfolio, visualize impact of portfolio changes, reach long-term goals with retirement and wealth planner feature.

      Screen Funds: Subscribe to investment databases, conduct searches, compare risk and return statistics, run peer group analysis.

      Conduct Due Diligence: Store and update contact information for managers, references, prime brokers, administrators organize offering memoranda, questionnaires and other documents track emails, phone calls and meetings.

      Invest in and Monitor Funds: Manage fund subscriptions and redemptions, track fund performance.

      4.4 KEY TO MAXIMIZE RETURNS

      It is not timing the market, but time in the market that counts.  Financial planning is a science. Creating and managing a portfolio is not a passive but an active exercise.

      It's been

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