Professional Documents
Culture Documents
Management
Index
Sr.No.
Topic
Introduction
Meaning
Definition Of 'Portfolio
Management'
Process
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Pg No.
INTRODUCTION:
Investing in securities such as shares, debentures, and bonds is profitable as
well as existing. It is indeed rewarding, but involves a great deal of risk and
call for scientific knowledge as well as artistic skill. In such investment, both
rational as well as emotional responses are involved. Investing in financial
securities is now considered to be one of the best avenues for investing
ones saving while it is acknowledged to be one of the most risky avenues of
investment.
It is rare to find investors investing their entire
savings in a single security. Instead, they tend to
invest in a group of securities. Such a group of
securities is called a portfolio. Creation of a portfolio
helps to reduce risk without sacrificing returns.
Portfolio management deals with the analysis of
individuals securities as well as with the theory and
practice of optimally combining securities into
portfolio. An investor who understands the
fundamental principles and analytical aspects of
portfolio management has a better chance of success.
A Portfolio Management refers to the science of analyzing the strengths,
weaknesses, opportunities and threats for performing wide range of activities
related to the ones portfolio for maximizing the return at a given risk. It
helps in making selection of Debt Vs Equity, Growth Vs Safety, and various
other tradeoffs.
Major tasks involved with Portfolio Management are as follows:
MEANING:
The portfolio theory was originated by Markowitz in the early 1950's. and further
developed in the 1960's by Sharpe.
Based on the principle "Dont put all your eggs in one basket." the
investors knew intuitively that it was smart to diversify their portfolio. Markowitz
was the first to quantify risk and demonstrate quantitatively why and how
portfolio diversification works to reduce risk and optimize return for investors.
Markowitz has also introduced the concept of an "efficient portfolio". An efficient
portfolio is one which has the smallest attainable portfolio risk for a given level
of expected return (or the largest expected return for a given level of risk).
Portfolio Management (PM) is the management of selected groupings of
investments using integrated strategic planning, integrated architectures,
measures of performance, risk management techniques, transition plans, and
portfolio investment strategies. Usually, PFM is focused on IT-related
investments in both the commercial sector and in the Federal Government, but
in an ideal world the portfolio should be inclusive of all investments: people,
processes and technology.
In the simplest and most practical terms, portfolio management focuses on
five key objectives:
1. Defining goals and objectives clearly articulate what the portfolio is
expected to achieve. Questions to consider: What is the mission of the
organization and how does IT support and achieve that mission?
2. Understanding, accepting, and making tradeoffs determine what to invest
in and how much to invest. Questions to consider: Which initiatives contribute
the most to the mission?
3. Identifying, eliminating, minimizing, and diversifying risk select a mix of
investments that will avoid undue risk, will not exceed acceptable risk tolerance
levels, and will spread risks across projects and initiatives to minimize adverse
impacts. Questions to consider: When and how do you terminate a legacy
system? At what point do you cancel a project that is still behind schedule and
over budget?
4. Monitoring portfolio performance understanding the progress your portfolio
is making towards achieving of the goals and objectives of your organization.
Question to consider: In whole, is the portfolios progress meeting the goals of
the mission?
Achieving a desired objective have the confidence that the desired
outcome will likely be achieved given the aggregate of investments that
are made.
experience and strong research to make the right decision. In the end it boils
down to making the right move in the right direction at the right time. That's
where the expert comes in. When you invest your hard earned money, it is
imperative to know all about your investments. We help you to take those
steps forward towards Informed Investments - a consultative and transparent
method of investing. With our portfolio management services you are always
consulted and informed of all investment decisions, thus giving you total
control of your portfolio.
A portfolio manager counsels the clients and advises him the best possible
investment plan which would guarantee maximum returns to the individual.
A portfolio manager must understand the clients financial goals and
objectives and offer a tailor made investment solution to him. No two clients
can have the same financial needs. An individual who understands the
clients financial needs and designs a suitable investment plan as per his
income and risk taking abilities is called a portfolio manager. A portfolio
manager is one who invests on behalf of the client.
Definition of 'Portfolio Management'
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.
Portfolio management is all about strengths, weaknesses, opportunities and
threats in the choice of debt vs. equity, domestic vs. international, growth vs.
safety, and many other tradeoffs encountered in the attempt to maximize
return at a given appetite for risk.
Process
A. Strategy management:
Sourcing Transactions
C. Assets Management:
Approach
Asset Management Group provides the effective link
between client/investor expectations and real estate
equity investment performance. The primary objective
of the Asset Management Group is to maintain, enhance and otherwise
maximize asset operating performance and ultimately property value and
yield over the investment lifecycle. The Asset Management Group achieves
superior investment performance through a proactive, dynamic, disciplined,
and consistently-applied approach to asset ownership and disposition.
Process
The asset management process begins prior to property acquisition with the
Asset Manager playing a key role in analysis of prospective acquisitions.
Asset Managers at Hart Realty Advisers have significant experience
managing all property types and are regionally assigned.
Each property is maintained in accordance with an established and
successful asset management model, with an Annual Business Plan for every
asset developed each fiscal year as its focus. The Plan articulates property
level operating and capital programs as well as various asset positioning
strategies designed to achieve asset and portfolio investment objectives.
Property Management
Assets are managed locally by third-party firms selected by the Asset
Management Group to provide services required for each property. These
firms are selected based on their market
performance history, market knowledge, cost, and
in particular, service capabilities in relation to the
type of asset and investment objective.
In administering the properties operating guidelines
established in each Annual Business Plan, Asset
Managers take an active role in all key property
management decisions.
D. DISPOSITION:
Approach:
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Diversifying your hard-earned dollars does make sense, but there are
different ways of diversifying, and there are different portfolio types. We look
at the following portfolio types and suggest how to get started building them:
aggressive, defensive, income, speculative and hybrid.
1. The Aggressive Portfolio:
An aggressive portfolio or basket of stocks includes those stocks with high
risk/high reward proposition. Stocks in the category typically have a high
beta, or sensitivity to the overall market. Higher beta stocks experience
larger fluctuations relative to the overall market on a consistent basis. Most
aggressive stocks (and therefore companies) are in the early stages of
growth, and have a unique value proposition. Building an aggressive portfolio
requires an investor who is willing to seek out such companies, because most
of these names, with a few exceptions, are not going to be common
household companies.
2. The Defensive Portfolio:
Defensive stocks do not usually carry a high beta, and usually are fairly
isolated from broad market movements. Cyclical stocks, on the other hand,
are those that are most sensitive to the underlying economic "business
cycle." For example, during recessionary times, companies that make the
"basics" tend to do better than those that are focused on fads or luxuries.
Despite how bad the economy is, companies that make products essential to
everyday life will survive.
3. The Income Portfolio:
An income portfolio focuses on making money through dividends or other
types of distributions to stakeholders. These companies are somewhat like
the safe defensive stocks but should offer higher yields. An income portfolio
should generate positive cash flow. Real estate investment trusts (REITs) and
master limited partnerships (MLP) are excellent sources of income producing
investments. These companies return a great majority of their profits back to
shareholders in exchange for favorable tax status. REITs are an easy way to
invest in real estate without the hassles of owning real property. Keep in
mind, however, that these stocks are also subject to the economic climate.
4. The Speculative Portfolio:
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Portfolio Manager:
A portfolio manager is a person who makes investment decisions using money
other people have placed under his or her control. In other words, it is
a financial career involved in investment management. They work with a team
of analysts and researchers, and are ultimately responsible for establishing an
investment strategy, selecting appropriate investments and allocating each
investment properly for a fund- or asset-management vehicle.
Portfolio managers are presented with investment ideas from internal buyside analysts and sell-side analysts from investment banks. It is their job to sift
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through the relevant information and use their judgment to buy and
sell securities. Throughout each day, they read reports, talk to company
managers and monitor industry and economic trends looking for the right
company and time to invest the portfolio's capital.
ADVANTAGES:
1. Diversification:
Using mutual funds can help an investor diversify their portfolio with a
minimum investment. When investing in a single fund, an investor is
actually investing in numerous securities. Spreading your investment across
a range of securities can help to reduce risk. A stock mutual fund. If a few
securities in the mutual fund lose value or become worthless, the loss may
be offset by other securities that appreciate in value. Further diversification
can be achieved by investing in multiple funds which invest in different
sectors or categories. This helps to reduce the risk associated with a specific
industry or category.
2. Professional Management:
Mutual funds are managed and supervised by investment professionals. As
per the stated objectives set forth in the prospectus, along with prevailing
market conditions and other factors, the mutual fund manager will decide
when to buy or sell securities. This eliminates the investor of the difficult
task of trying to time the market. Furthermore, mutual funds can eliminate
the cost an investor would incur when proper due diligence is given to
researching securities.
3. Convenience:
With most mutual funds, buying and selling shares, changing distribution
options, and obtaining information can be accomplished conveniently by
telephone, by mail, or online. Although a fund's shareholder is relieved of the
day-to-day tasks involved in researching, buying, and selling securities, an
investor will still need to evaluate a mutual fund based on investment goals
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DISADVANTAGES :
1. Risks and Costs:
Changing market conditions can create fluctuations in the value of a mutual
fund investment. There are fees and expenses associated with investing in
mutual funds that do not usually occur when purchasing individual securities
directly.
As with any type of investment, there are drawbacks associated with mutual
funds.
I.
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II.
III.
IV.
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Governing
(2)
Managing
(3)
Optimizing
(4)
practice
Using portfolios to
Communicati
ng (1)
Communicate.
Admitting
Admitting
(0)
(0)
LEVEL O: ADMITTING
Projects: The focus is on determining what projects are active and in the
pipeline. The focus is on data collection.
Applications: The focus is on determining which applications exist, their
purpose, and their owners. The focus, again, is on basic data collection.
Infrastructure: The focus is on determining what infrastructure assets
exist within the organization. The focus remains on basic data collection.
People: The focus is on determining what people exist and what their
skills are.
Process: The focus is on determining what processes are performed by
the enterprise and identifying their owners.
LEVEL 1: COMMUNICATING
At level 1, the benefits of the portfolio management approach become
apparent visually; however, accuracy is relative and precision is suspect.
I.
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II.
III.
IV.
V.
LEVEL 2: GOVERNING
At level 2, the focus is on putting the people, processes, and policies in
place to support more refined portfolio decisions.
I.
II.
III.
IV.
V.
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LEVEL 3: MANAGING
Level 3 focuses on having mechanisms and metrics in place to measure
the effectiveness of the technique and ensuring effectiveness of
governance.
I.
II.
III.
IV.
V.
LEVEL 4: OPTIMIZING
Level 4 focuses on being able to sense and respond appropriately to
optimize allocation of resources across the IT organization.
I.
II.
III.
IV.
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V.
Discretionary Services.
Who is an ideal PMS Investors?
The Investment solutions provided by PMS cater to a niche
segment of clients. The clients can be Individuals or Institutions
with high net worth. The offerings are usually ideal for investors:
who are looking to invest in asset classes like equity, fixed
income, structured products etc who desire personalized
investment solutions who desire long-term wealth creation who
appreciate a high level of service
How is PMS different from mutual funds?
Features
Management
Customization
Ownership
Minimums
PMS
Provide ongoing,
personalized access to
professional money
management services .
Portfolio can be tailored
to address each
investor's specific
needs.
Investors directly own
the individual securities
in their portfolio.
Significantly higher
minimum investments
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Mutual funds
Provide access to
professional money
management services.
Portfolio structured to
meet the fund's stated
investment objectives.
Flexibility
Rs. 5,000.
No customization possible.
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The client can discuss on any major changes he want in his asset
allocation and investment strategies.
Portfolio management service (PMS) handles all type of
administrative work like opening a new bank account or dealing
with any financial settlement or depository transaction.
While choosing online Portfolio management service (PMS), the
client receives a User-ID and Password, which helps him in getting
online access to his portfolio details and checking his portfolio as
frequent as he want.
Portfolio management service (PMS) also help in managing tax of
his client based on the detailed statement of the transactions
found on his portfolio.
CASE STUDY:
HOW CUSTOMER PORTFOLIO MAKES SAMSUNG
ELECTRONICS NO.1 IN INDIA
INTRODUCTION
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worlds top smart phone vendor. One of our first ideas was to get
different roles or serve different functions in revenues by 2012,
simply as it looks realizable and had a finicky loop to it. Soon, we
comprehend as it was too little as an aim. It emerged a new 5.3inch display and powerful dual-core processor for the Samsung
Electronics to become a successful in some European and Asian
markets by 2012. I believe that if we had set a scant research on
the performance of customer portfolio management practices to
be the best as expectations for Apple to continue, it would have
been ambiguous and hard to sell internally. But, Samsung
solidifies was appealing simple. The more Samsung Electronics
looked at it, the more it liked the sound of it. How did the thinking
in the business change the entire narrative? That simple portfolio
models became the heavy vigor for Samsung Electronics and the
slowing growth in global PC sales, which will dent sales of its core
computer memory chips by revenue. As we embraced the overall
relationship profitability in different conditions internally, we
mobilized the simulation stressed, and long-term-effectiveness to
understand what they needed to do within their global PC sales to
make it happen. Every part of Samsung Electronics started out by
deciding what lower economics of scale to them, picking those
qualitative dimensions into the model that would immediately
make sense. Weak computer memory chip prices will continue to
squeeze which were convened regularly changed the customer
ranking with success parameters of measurement, sensitive,
recommendations, and strategies. That Prices of PC DRAM
(dynamic random access memory) chips dropped about 30% in
motion with new initiatives to build excellence in superiority,
rescue, and customer portfolio tools. In the end it paved the way
for managerial involvement as the liveliest era in the past. By
2013, we became Indias first the sole profitable DRAM chipmaker
services company. Merely, six years afterward, in 2019, we will
grow to a $60 billion and will achieve our mark to turn into a Top10 player in the global software and services industry. We had
done it and we had done it in style! Its been an exciting and
incredible journey. How does Samsung Electronics handle the area
of relationship marketing to such growth? One step at a time. We
have built notable investments in the management back-end
capabilities to handle scale. I strappingly think that Samsung
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WEBLIOGRAPHY:
SITES
www.investopedia.com
www.ask.com
www.wikipedia.com
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