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INTRODUCTION
From The Rational Edge: The first in a new series of articles on
portfolio management, this introduction expresses IBM’s viewpoin
about the foundations and essentials of portfolio management, an
discusses ideas and assets that support and enable effective portfolio management practices.
A good way to begin understanding what portfolio management i
(and is not) may be to define the term portfolio. In a business context
we can look to the mutual fund industry to explain the term's origins
Morgan Stanley's Dictionary of Financial Terms offers the following explanation: If you own more than one security, security, you have an investment investment portfoli
You build the portfolio by buying additional stocks, bonds, mutua
funds, or other investments. Your goal is to increase the portfolio'
value by selecting investments that you believe will go up in price. Sign up to vote on this title
According to modern portfolio theory, you can reduce your investmen
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risk by creating a diversified portfolio that includes enough differen
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Note that this explanation contains a number of important ideas: Sheet Music •
A portfolio contains many investment vehicles.
•
Owning a portfolio involves making choices -- that is, decidin
what additional stocks, bonds, or other financial instruments t
buy; when to buy; what and when to sell; and so forth. Making such decisions is a form of management. •
The manag anage ement ent of a portf rtfoli olio is goa goal-dr -driven. For For investment portfolio, the specific goal is to increase the value.
•
Managing a portfolio involves inherent risks.
Over time, other industry sectors have adapted and applied thes ideas to other types of "investments," including the following:
Application portfolio management: management: This refers to the practice o
managing an entire group or major subset of software application with within in a port portfo foli lio. o. Orga Organi niza zati tion ons s rega regard rd thes these e appl applic icat atio ions ns
investments because they require development (or acquisition) cost
and incur incur continu continuing ing mainten maintenanc ance e costs. costs. Also, Also, organiz organizati ations ons mus Sign up to vote on this title
constantly make financial decisions about existing Useful and useful softwar new Not
applications, including whether to invest in modifying them, whethe
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Product portfolio management: management: Businesses group major product Sheet Music
that they develop and sell into (logical) portfolios, organized by majo line line-o -off-bu busi sine ness ss or busi busine ness ss segme egment nt.. Such Such port portfo foli lios os requ requ
ongoing management decisions decisions about what new products products to develo (to dive divers rsif ify y inves investm tment ents s and inve invest stmen mentt risk risk)) and and what what exis existi ti
products to transform or retire (i.e., spin off or divest). Project o
initiative initiative portfolio management, an initiative, initiative, in the simplest sense, i a body of work with: •
A specific (and limited) collection of needed results or wor products.
•
A grou group p of peop people le who who are are resp respon onsi sibl ble e for for exec execut utin ing g initiative and use resources, such as funding.
•
A defined beginning and end.
Manage Managers rs can can group group a numbe numberr of initi initiat ativ ives es into into a portf portfol olio io th
supports a business segment, product, or product line. These effort
are goal-driven; that is, they support major goals and/or component
of the enterpr enterprise ise's 's busines business s strate strategy. gy. Manager Man agers s onmust mus t contin continuall uall Sign up to vote this title
Useful Not useful choose among competing initiatives (i.e.,manage the organization'
investments), selecting those that best support and enable divers
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INTRODUCTION TO INDIAN BANK A premier bank owned by the Government of India •
•
•
•
•
•
•
Established on 15th August 1907 as part of the Swadeshi movement Serving the nation with a team of over 22000 dedicated staff Total Business crossed Rs. 76000 Crores as on 31.03.2007 Oper Operat atin ing g Prof Profit it incr increa ease sed d to Rs.1 Rs.135 358. 8.59 59 Crores as on 31.03.2007 Net Profit increased to Rs.759.77 Crores as on 31.03.2007 Net worth improved to Rs.3621 Crores as on 31.03.2007 1476 Branches spread all over India
International Presence •
•
Overse Overseas as branche branches s in Singapore and Colombo includi including ng Foreign Currency Banking Unit at Colombo 229 Overseas Correspondent banks in 69 countries
Diversified banking activities - 3 Subsidiary companies •
•
•
Indbank Merchant Banking ServicesSign Ltdup to vote on this title IndBank Housing Ltd. Useful Not useful IndFund Management Ltd
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Leadership in Rural Development Sheet Music •
•
•
Loan Loan produ product cts s like like Art Artisa isan n Car Card d, Ki Kisa san n Ca Card rd,, Ki Kisa san n Bi Scheme,, Yuva Kisan Vidya Nidhi Yojana to meet diverse Scheme diverse cred needs of farmers. Prov Provis isio ion n of tech techni nica call assi assist stan ance ce and and proj projec ectt repo report rts s Agriculture to entrepreneurs through Agricultural Consultancy & Technical Services (ACTS) 2 Specia Specialis lised ed Agricul Agricultur tural al Finance Finance branche branches s to financ finance e Hig Tech Agricultural Projects.
A pioneer in introducing the latest technology in Banking •
•
•
•
•
•
•
•
•
•
•
•
100% Business Computerisation 168 Centres throughout the country covered under 'Anywher Banking' Core Co re Ba Bank nkin ing g So Solu luti tion on(C (CBS BS)) in 12 1204 04 br bran anch ches es and extension counters. 429 429 conn connec ecte ted d Auto utomate mated d Telle ellerr Mach Machiines( nes(A ATM) TM) in cities/towns 24 x 7 Service through 8500 ATMs under shared network Inte Intern rnet et and and Tele Tele Banki anking ng serv servic ices es to all all Core ore Banki anki customers e-payment facility for Corporate customers Cash Management Services Depository Services Reut Reuter er Scree Screen, n, Tele Telerat rate, e, Reute Reuterr Sign Moni Moup nitor tors, s, onDeal De ing g Syst Syst to vote thisalin title provided at all Overseas Branches Useful Not useful I B Credit Card Launched I B Gold Coin
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Indian Bank enters into a Strategic Alliance with Pnb Principal
Chennai, Chennai, January 25, 2006: Indian Bank is enlarging enlarging its activities activities t deliver value-added services to its customers. The Bank is presentl selling selling the Insurance products, products, both Life and Non-life Non-life as a Corpora Agent. The Bank is concentrating on optimizing the 3 Ps, People Process and Products to give maximum advantage to its customer and and to face face the the mark market et comp compet etit itio ion n by expl exploi oiti ting ng the the emer emergi gi opportunities.
Indian Bank today announced a strategic alliance with Pnb Principa Insurance Insurance Advisory Advisory Co., Pvt. Ltd. in the insurance insurance advisory busines and and Pnb Pnb Prin Princi cipa pall Fina Financ ncia iall Plan Planne ners rs Pvt. Pvt. Ltd. Ltd. in the the fina financ nc planning business. As the alliance will enable access to the Financia products of 30 Insurance companies both life and non-life and a equal number of Investment solutions to the Bank’s Customers unde one roof, the Bank’s emphasis would be to serve as an “agent to it customers”.
As per per the the scop scope e of the the alli allian ance ce with with Pnb Pnb Prin Princi cipa pall Insu Insura ranc nc Advisory Co., Pvt. Ltd., Indian Bank has taken an equity stake in the to rvoterisk title nage Comp Compan any. y. This This part partne ners rshi hip p will will also also Sign deli deup live ver rion skthis mana ma geme me Not useful advisor Useful solutions to Indian Bank customers through the Insurance route. The solutions offered will include risk assessment, insurance portfolio analysis & placement, insurance portfolio administration, an
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alliance will enable customers of Indian Bank to access a wide rang of superior investment solutions.
Annou Announc ncin ing g the the partn partner ershi ship p with with Indi Indian an Bank Bank,, Sanj Sanjay ay Sach Sachdev dev Country Country Manager Manager-Ind -India, ia, Princi Principal pal Interna Internatio tional nal said, said, “Banks “Banks hav current currently ly emerged emerged as the largest largest distri distribut bution ion channel channel for financi financi inves investm tment ent option options. s. We are are pleas pleased ed to asso associ ciat ate e ourse ourselv lves es wi Indian Bank. This partnership with Indian Bank will make a range o invest investment ment soluti solutions ons more access accessibl ible e to retail retail invest investors ors of Indi Bank.” Dr. K.C. Chakrabarty, Chairman and Managing Director, Indian Bank said,” The alliance with Pnb Principal in the areas of Risk Management, Insurance and Investment will help in providing a One-stop solution to the 15 million strong customers of Indian Bank throughout the country. The Tie-up will help realize our cherished goal of making our Bank, “the best people to bank with”.
Elaborating, Mr. B Sambamurthy, Executive Director has said that that this this is a part part of Bank Bank’s ’s miss missio ion n to prov provid ide e all all fina financ ncia iall products under one roof. This tie-up brings a paradigm shift from bein being g an agen agentt of Insu Insura ranc nce e Comp Compan any y to one one of bein being g a customer agent. Sign up to vote on this title
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Portfolio Management is used to select a portfolio of new produc Sheet Music
development projects to achieve the following goals: •
Maximize the profitability or value of the portfolio
•
Provide balance
•
Support the strategy of the enterprise
Portfolio Management is the responsibility of the senior management team
of an organization or business unit. This team, which might be called the
Product Committee, meets regularly to manage the product pipeline and
make decisions about the product portfolio. Often, this is the same group that conducts the stage-gate reviews in the organization.
A logical starting point is to create a product strategy - markets, customers
products, strategy approach, competitive emphasis, etc. The second step is to
understand the budget or resources available to balance the portfolio against Third, each project project must be assessed assessed for profitability profitability (rewards), investm requirements (resources), risks, and other appropriate factors.
Signabout up to vote on this titlevaries from The weighting of the goals in making decisions products Useful Not useful company. But organizations must balance these goals: risk vs. profitability
new products vs. improvements, strategy fit vs. reward, market vs. produc
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•
Scoring techniques
•
Visual or mapping techniques
Sheet Music
The The
earl earlie iest st
Port Portfo foli lio o
Mana Manage geme ment nt
Portfolio Management
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tech techni niqu ques es
opti optimi mize zed d
proj projec ec
profitabil profitability ity or financial financial returns using using heuristic heuristic or mathematica mathematicall model Howeve However, r, this this approa approach ch paid paid little little attent attention ion to balanc balancee or aligni aligning ng
portfolio to the organization's strategy. Scoring techniques weight and score
criteria to take into account investment requirements, profitability, risk and
strategic alignment. The shortcoming with this approach can be an ove
emphasis on financial measures and an inability to optimize the mix o projec projects. ts. Mappin Mapping g techni technique quess use graphi graphical cal presen presentat tation ion to visual visualize ize
portfolio's balance. These are typically presented in the form of a two
dimensional graph that shows the trade-off's or balance between two factor
such as risks vs. profitability, marketplace fit vs. product line coverage financial return vs. probability of success, etc.
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The chart shown above provides a graphical view of the project portfolio risk-reward balance. It is used to assure balance in the portfolio of projects
neither too risky nor conservative and appropriate levels of reward for the
risk involved. The horizontal axis is Net Present Value; the vertical axis i
tota Probability of Success. The size of the bubble is proportional to the Sign up to vote on this title
Useful Not useful product. revenue generated over the lifetime sales of the
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The recommended approach is to start with the overall business plan tha Sheet Music
shou should ld defi define ne the the plan planne ned d leve levell of R&:D R&:D inve invest stme ment nt,, reso resour urce cess (e head headco coun unt, t, etc. etc.), ), and and rela relate ted d sale saless expe expect cted ed from from new new prod produc ucts ts.. Wi mult multip iple le busi busine ness ss unit units, s, prod produc uctt line liness or type typess of deve develo lopm pmen ent, t,
recommend a strategic allocation process based on the business plan. Thi
strateg strategic ic alloca allocatio tion n should should apport apportion ion the planne planned d R&D inves investme tment nt int
business units, product lines, markets, geographic areas, etc. It may als
breakdown the R&D investment into types of development, e.g., technology development,
platform
development,
new
products,
a
upgrades/enhancements/linee extensions, etc. upgrades/enhancements/lin
Once this is done, then a portfolio listing can be developed including the
relevant portfolio data. We favor use of the development productivity index (DPI) or scores from the scoring method. The development productivit index is calculated as follows: (Net Present Value x Probability of Success)
Development Cost Remaining. It factors the NPV by the probability of both tech techni niccal and and comme ommerc rcia iall succ succeess. ss. By div dividin iding g this this resu resullt by develo developme pment nt cost cost remaini remaining, ng, it places places more more weight weight on projec projects ts nea Sign up to vote on this title
completion and with lower uncommitted costs. The scoring method uses a Useful Not useful set of criteria (potentially different for each stage of the project) as a basi
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Weighting factors can be set for each criterion. The evaluators on a Produc Sheet Music
Comm Commit itte teee scor scoree proj projec ects ts (1 to 10, 10, where where 10 are best best). ). The The works workshe he
computes the average scores and applies the weighting factors to compute the overall score. The maximum weighted score for a project is 100.
This This portf portfol olio io list list can can then then be rank ranked ed by eithe eitherr the the devel developm opm priority index or the score. An example of the portfolio list is show
below and the second illustration shows the category summary fo the scoring method.
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Once the organization has its prioritized list of projects, it then needs to Sheet Music
determine where the cutoff is based on the business plan and the planned
level of investment of the resources avaialable. This subset of the high
priority projects then needs to be further analyzed and checked. The firs
step is to check that the prioritized list reflects the planned breakdown o
projects based on the strategic allocation of the business plan. Pie chart such as the one below can be used for this purpose.
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Other factors can also be checked using bubble charts. For example
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platf platfor orm m techn technol olog ogy y woul would d be impos impossi sibl ble e to exec execut ute e unles unless s th Sheet Music
platform project were included in the portfolio priority list. Finally, this balanced portfolio that has been developed is checke against the business plan as shown below to see if the plan goal
have been achieved - projects within the planned R&D investmen and resource levels and sales that have met the goals.
With the significant investments required to develop new product and and the the risk risks s invo involv lved ed,, Port Portfo foli lio o Mana Manage geme ment nt is beco becomi ming ng
increasingly increasingly important tool to make strategic decisions decisions about produc
develop development ment and the invest investmen mentt of company company resourc resources. es. In man
companies, current year revenues are increasingly based on new products developed in the last one to three years.
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MEANING OF PORTFOLIO MANAGEMENT
Portfolio is a collection of asset.
The asset may be physical or financial like Shares Bonds Debentures, and Preference Shares etc.
The individual investor or a fund manager would not lik to put all his money in the shares of one company, for that woul amount to great risk.
Main objective is to maximize portfolio return and at the
same time minimizing the portfolio risk by diversification.
Port Portfol folio io manag managem ement ent is the the manag managem ement ent of vario vario financial assets, which comprise the portfolio.
Acco Accordi rding ng to Secu Securit ritie ies s and Exch Exchang ange e Board Board of India India (Port (Portfo fo mana manage ger) r) Rule Rules, s, 1993 1993;; “ port portfo foli lio” o” mean means s the the tota totall hold holdin ing g securities belonging to any person;
Desi Designi gning ng portf portfol olio ios s to suit suit inves investo torr requir requireme ement nt often often invol involve ve
making several projections regarding the future, based on the curren information.
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When the actual situation situation is at variance variance from the projections portfol composition needs to be changed.
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Institutional e.g. individual, Hindu undivided families, Non-investmen Company’s etc.
The large institutional investors avail services of professionals. A
professional,
who
manages
other
people’s
institution’s investment portfolio with the object of profitability, growt and risk minimization, is known as a portfolio manager.
The portfolio manager performs the job of security analyst.
In case case of medi medium um and and large large size sized d organ organiz izat atio ion, n, job job func functi tion on portfolio manager and security analyst are separate.
Portfolios are built to suit the return expectations and the risk appetite of the investor.
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Portfolio theory is an investment approach developed by University o Sheet Music
Chicago economist Harry M. Markowitz (1927 - ), who won a Nobe Prize Prize in econo economi mics cs in 1990. 1990. Port Portfo foli lio o theor theory y allo allows ws inve invest stor ors s est estimat imate e both both the expe expect cted ed ris risks and and ret returns urns,, as meas measur ur statistically, for their investment portfolios.
Markowitz described how to combine assets into efficiently diversified
portfolios. It was his position that a portfolio's risk could be reduced
and the expected rate of return could be improved if investment
having dissimilar price movements were combined. In other words
Markowitz explained how to best assemble a diversified portfolio an proved that such a portfolio would likely do well. There are two types of Portfolio Strategies: A. Passive Portfolio Strategy
A strategy strategy that involves involves minimal expectation input, and instead instead relie on diversification to match the performance of some market index. Sign up to vote on this title
B. Active Portfolio Strategy
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Now that we understand some of the basic dynamics and inheren Sheet Music
challenges organizations face in executing a business strategy via
supp suppor orti ting ng init nitiat iatives ives,, let's et's look look at some ome basi basic c conc concep epts ts an components of portfolio management practices.
1.The Portfolio
First, we can now introduce a definition of of portfolio portfolio that relates mor
directly to the context of our preceding discussion. In the IBM view, a
portfolio is: One of a number of mechanisms, constructed to actualize sign signif ific ican antt
elem elemen ents ts
in
the the
Ente Enterp rpri rise se
Busi Busine nes ss
Strat rategy. egy.
It contains a selected, approved, and continuously evolving, collectio of Initiatives which are aligned with the organizing element of th
Portfolio, and, which contribute to the achievement of goals or goa
components identified in the Enterprise Business Strategy. The basi
for constructing a portfolio should reflect the enterprise's particula
needs. For example, you might choose Sign to up build aroun to voteaonportfolio this title
Useful Not initi initiat ativ ives es for for a spec specif ific ic produ product ct,, busi busines ness s segme segment, nt,useful or separ separ
business unit within a multinational organization.
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As we noted earlier, a portfolio structure identifies and contains Sheet Music
number of portfolios. This structure, like the portfolios within it, should align align with with sign signif ific icant ant plann plannin ing g and and resu result lts s bounda boundari ries es,, and and wi busi busine ness ss comp compon onen ents ts.. If you you have have a prod produc uctt-or orie ient nted ed port portfo fo
structure, for example, then you would have a separate portfolio fo
each major product or product group. Each portfolio would contain a the init initia iati tive ves s that that help help that that parti particu cula larr produc productt or produc productt gro contribute to the success of the enterprise business strategy.
3.The Portfolio Manager This This is a new new role role for orga organi niza zati tion ons s that that embr embrac ace e a port portffol mana manage geme ment nt appr approa oach ch.. A port portfo foli lio o mana manage gerr is resp respon onsi sibl ble e
continuing oversight of the contents within a portfolio. If you hav
several portfolios within your portfolio structure, then you will likel need need a port ortfoli olio manage nagerr for each ach one one. The exact rang ange respons responsibil ibiliti ities es (and authorit authority) y) will will vary vary from from one organiz organizati ation on another,1 but the basics are as follows:
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One portfolio manager oversees one portfolio.
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The portfolio manager enables periodic decision making abou the future direction of individual initiatives.
4. Portfolio Reviews and Decision Making
As initiatives are executed, the organization should conduct periodi
reviews of actual (versus planned) performance and conformance t
original expectations. Typically, organization managers specify th
frequenc frequency y and conten contents ts for these these periodic periodic review reviews, s, and indivi individua dua
portfolio managers oversee their planning and execution. The review
should be multi-dimensional, including both tactical elements (e.g
adherence to plan, budget, and resource allocation) and strategi
elements (e.g., support for business strategy goals and delivery o expected organizational benefits).
A significant aspect of oversight is setting multiple decision points fo each initiative, so that managers can periodically evaluate data an decide
whether
to
continue
the
work.
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The
"cont "contin inue/ ue/ch chan ange/ ge/di disc scont ontin inue ue"" decis decisio ions ns shoul should d be drive driven n by
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unde unders rsta tand ndin ing g (dev (devel elop oped ed via via the the peri period odic ic revi review ews) s) of a give give
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Implementing Implementing portfolio management management practices practices in an organization organization is Sheet Music
tran transf sfor orma mattion ion
effo effort rt
that hat
typi typica call lly y
invol nvolv ves
deve develo lopi ping ng
ne
capabilities to address new work efforts, defining (and filling) new
roles roles to ident identif ify y portf portfol olio ios s (coll (collec ecti tions ons of work work to be done) done),, an deli deline neat atiing
boun bounda dari ries es
amon among g
work ork
eff efforts orts
and and
coll collec ecti tion on
Implementing portfolio management also requires creating a structur
to provide planning, continuing direction, and oversight and control fo
all portfolios and the initiatives they encompass. That is where the
notion of governance comes into play. The IBM view of governance is:
An abstract, collective term that defines and contains a framework fo
organization, exercise of control and oversight, and decision-makin
authority, authority, and within within which actions and activities activities are legitimately legitimately an
properly executed; together with the definition of the functions, th
roles, and the responsibilities of those who exercise this oversigh and decision-making. Sign up to vote on this title
Useful Not e useful tiple Portfol Portfolio io managem management ent governa governance nce involv inv olves es multipl mul dimensi dimensions ons
including:
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Prov Provid idin ing g over oversi sigh ght, t, cont contro rol, l, and and deci decisi sion on-m -mak akin ing g for for ongoing initiatives.
•
Ownership of portfolios and their contents.
Each of these dimensions dimensions requires an owner -- either an individual individual o a collec collectiv tive e -- to develop develop and approve approve plans, plans, contin continuous uously ly adj
direc directi tion, on, and and exerc exercis ise e cont control rol throu through gh peri periodi odic c asse assess ssme ment nt an review of conformance to expectations.
A good governance structure decomposes both the types of work and
the autho authorit rity y to plan plan and and overs oversee ee work work.. It defin defines es indiv individ idual ual an
collective roles, and links them to an authority scheme. Policies tha
are collectively developed and agreed upon provide a framework fo the the exer exerci cise se of gove govern rnan ance ce.. The The comp comple lexi xiti ties es of gove govern rnan an stru struct ctur ures es exte extend nd well well beyo beyond nd the the scop scope e of this this arti articl cle. e. Ma
organizations turn to experts for help in this area because it is so criti critica call to the the succ succes ess s of any busi busine ness ss trans transfo form rmat atio ion n effo effort rt th encompasses portfolio management. For now, suffice it to say that Sign up to vote on this title
is wort worth h inve invest stin ing g time time and effo effort rt to creat create e a sound sound and and flex flexib ib
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gover governan nance ce struc structu ture re before before you you atte attemp mptt to impl impleme ement nt portf portfol ol
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6.Portfolio management essentials
Every practical discipline is based on a collection of fundamenta
concept concepts s that that people people have identifie identified d and proven proven (and someti sometime me
refined or discarded) through continuous application. These concept
are useful until they become obsolete, supplanted by newer and mor effective ideas.
For example example,, in Roman Roman times times,, engin enginee eers rs disco discove vered red that that if
upstream supports of a bridge were shaped to offer little resistance to
the current of a stream or river, they would last longer. They applie
this principle all across the Roman Empire. Then, in the Middle Ages engineers discovered that such supports would last even longer
their downstream their downstream side was also shaped to offer little resistance to the current. So that became the new standard for bridge construction.
Portfol Portfolio io managem management, ent, like like bridge-b bridge-buil uildin ding, g, is a discip disciplin line, e, and
number of authors and practitioners have documented fundamenta Sign up to vote on this title
Not useful Useful experiences ideas about its exercise. Recently, based on our with
clients who have implemented portfolio management practices an
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For example, example, one of these themes is initiative value contribution Sheet Music
suggests that the value of an initiative (i.e., a program or project
should be estimated and approved in order to start work, and the
assessed periodically on the basis of the initiative's contribution to the goals goals and goal goal comp compone onent nts s in the the enter enterpri prise se busin busines ess s stra strateg teg
These assessments determine (in part) whether the initiative warrant continued support.
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OBJECTIVES OF PORTFOLIO MANAGEMENT
The basic objective of Portfolio Management is to maximize yiel and minimize risk. The other objectives are as follows:
a)
Stability of Income:
An investor considers stability o
inco income me from from his his inve invest stme ment nt.. He also also cons consid ider ers s stability of purchasing power of income.
b)
Capital Capital Growth: Growth:
Capital appreciation has become a
importan importantt invest investment ment princip principle. le. Invest Investors ors seek seek grow
stocks which provide a very large capital appreciation b
way of rights, bonus and appreciation in the market pric of a share.
c)
Liquidity:
An investment is a liquid asset. It can b
converted into cash with the help of a stock exchange
Signwell up to vote this title Investment should be liquid as asonmarketable. Th
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portf portfol olio io shou should ld cont contain ain a planne planned d propor proporti tion on of hi grade and readily salable investment.
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Tax Incenti Incentives: ves:
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Inve Invest stors ors try try to mini minimi mize ze their their
liabilities from the investments. The portfolio manager ha
to keep a list of such investment avenues along with the return return risk risk,, profi profile le,, tax tax impli implica cati tions ons,, yiel yields ds and ot returns.
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There are three goals of portfolio management: 1. Maximi Maximize ze the valu value e of the portf portfoli olio o 2. Seek Seek balance balance in the the portfo portfolio lio 3. Keep portfoli portfolio o projects projects strateg strategically ically aligned
It provides a set of portfolio management tools to help achieve these goals
With multiple business units, product lines or types of development, we
recommend a strategic allocation process based on the business plan. The Mast Master er Proje Project ct Sche Schedu dule le prov provid ides es a summ summary ary of allall-ac acti tive ve as well well
proposed projects and classifies them by status (active, proposed, on-hold and and by busi busine ness ss unit unit/p /pro rodu duct ct line line to alig align n proj projec ects ts with with the the stra strate te
allocation. The Master Project Schedule also provides additional portfolio
information to prioritize projects using either a scorecard method or the
development productivity index (DPI *). In addition to this prioritization
PD-Trek provides a Risk-Reward Bubble Chart and a Project Type Pie Char
to assure balance. A Product or Technology Roadmap template is provided
to help visualize platform and technology relationships to assure critica
up to vote on this title This wil project relationships are not overlooked withSign this prioritization. Useful Not useful allo allow w manag manageme ement nt to deve develo lop p a bala balanc nced ed appr approa oach ch to sele select ctin ing g an
continuing with the appropriate mix of projects to satisfy the three goals.
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FUNCTIONS OF PORTFOLIO MANAGEMENT
The basic purpose of portfolio management is to maximize yield and
minimize risk. Every investor is risk averse. In order to diversify the risk risk by inve invest stin ing g into into vari various ous secu securit rities ies foll follow owin ing g func functi tions ons required to be performed.
The The func functi tion ons s unde undert rtak aken en by the port portfo foli lio o mana manage geme ment nt are are follows:
1. To frame the invest investment ment strategy strategy and select select an investment investment m to achieve the desired investment objective;
2. To prov provid ide e a bala balanc nced ed port portfo foli lio o whic which h not not only only can can hedg hedg
against the inflation but can also optimize returns with th associated degree of risk;
3. To make timely buying and selling selling ofSign securit securities; ies; up to vote on this title
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4. To maximiz maximize e the after-t after-tax ax return return by invest investing ing in various various taxe
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STEPS IN PORTFOLIO MANAGEMENT
Performance Evaluation
Portfolio Revision
Portfolio Executio
STEPS
Selection Asset Mi
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1) IDENTIFIC IDENTIFICATION ATION OF THE THE OBJECTIVE OBJECTIVES S Sheet Music
The starting point in this process is to determine the char charac acte teri rist stic ics s of the the vari variou ous s inve invest stme ment nts s and and th
matching them with the individuals need and preferences
All All the the pers person onal al inve invest stin ing g is desi design gned ed in orde orderr achieve certain objectives.
These objectives may be tangible such as buying a car
house etc. and intangible objectives such as social status security etc.
Similarly, these objectives may be classified as financia or personal objectives.
Financial objectives are safety, profitability and liquidity.
Pers Persona onall or indiv individ idual ual objec objecti tive ves s may may be relat related ed perso personal nal char charact acteri erist stic ics s of indi indivi vidua duals ls such such as fami fami
commitments, status, depends, educational requirements income, consumption and provision for retirement etc.
Sign up toEGY vote on this title 2) FORMULATIO FORMULATION N OF PORTFOLIO PORTFOLIO STRATEGY STRAT
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The aspect of Portfolio Management is the most importan element of proper portfolio investment and speculation.
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The statement of investment policies includes the portfoli objectives, strategies and constraints.
Portfolio strategy means plan or policy to be followed while investing in different types of assets.
There are different investment strategies.
They require changes as time passes, investor’s wealt
changes changes,, securit security y price price change, change, invest investor’s or’s knowledg knowledg expands.
There Therefo fore, re, the the opti optiona onall strat strateg egic ic asse assett alloc allocat atio ion n al changes.
The strategic asset allocation policy would call for broad
diversification through an indexed holding of virtually a securities in the asset class.
3) SELECTION OF ASSET MIX
The most important decision in portfolio management i selection of asset mix.
Sign up to vote on this It means spreading spreading out portfolio investme investment nt title into differe
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asset classes like bonds, stocks, mutual funds etc.
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»
money market instrument
»
fixed income security
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equity shares
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international securities
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Once Once the the objec objecti tive ve of the the port portfo foli lio o is deter determi mined ned
securities to be included in the portfolio must be selected
Normally the portfolio is selected from a list of high-qualit bonds that the portfolio manager has at hand.
The portfolio manager has to decide the goals befor selecting the common stock.
The goal may be to achieve pure growth, growth with some income or income only.
Once the goal has been selected, the portfolio manage can select the common stocks. Sign up to vote on this title
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Therefore, in the execution stage, three decisions nee
to be made, if the percentage holdings of various asse classes are currently different from desired holdings.
The portfolio than, should be rebalanced. If the statemen of invest investment ment policy policy require requires s pure invest investment ment strate strate this is only thing, which is done in the execution stage.
Howev owever er,, many many port portffolio olio mana manage gers rs enga engage ge in speculative
transactions
in
the
belief
that
su
transactions will generate excess risk-adjusted returns.
Such Such specul speculati ative ve transac transactio tions ns are usuall usually y classi classifie fied d timing or selection decisions.
Timin Timing g decis decisio ions ns over over or under under weig weight ht vari various ous as
classes, industries or economic sectors from the strategi asset allocation.
Such Such timi timing ng deci decisi sion ons s are are know known n as tact tactic ical al as
allocat allocation ion and select selection ion decisio decision n deals deals with with securi securitie tie
within a given asset class, industry group or economi sector.
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The investor has to begin with periodically adjusting th
asset mix to the desired mix, which is known as strategic
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Portfolio management would be an incomplete exercis without periodic review.
The The port portfo foli lio, o, which hich is once nce selec electted, ed, has has to cont contin inu uousl ously y revi review ewed ed over over a peri period od of time and and nece necess ssar ary y rev revised ised depe depend ndin ing g on the the obje objec ctiv tives investor.
Thus Thus,, port portfo foli lio o revi revisi sion on means eans chang hangin ing g the the as allocation of a portfolio.
Investment Investment portfolio portfolio management management involves involves maintainin maintainin proper proper comb combin inat atio ion n of secu securit ritie ies, s, whic which h comp compris rise e
investor’s portfolio in a manner that they give maximum return with minimum risk.
For this purpose, investor should have continuous review and scrutiny of his investment portfolio.
Whenever adverse conditions develop, he can dispose o the securities, which are not worth.
However, the frequency of review depends upon the siz
Sign up tothe vote kind on this title of the portfolio, the sum involved, of securitie
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held and the time available to the investor.
Th
iew shoul should d incl include ude
ful ful
inati inati
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Inve Invest stor ors s buy buy stoc stock k acco accordi rding ng to their their objec objecti tive ves s an return-risk framework.
These fluctuations may be related to economic activity o due to other factors.
Ideally investors should buy when prices are low and se when hen pric prices es ris rise to leve levels ls high highe er than han their heir norm norm fluctuations.
The investor should decide how often the portfolio should be revised.
If revision occurs to often, transaction and analysis cost may be high.
If revision is attempted too infrequently the benefits o timing may be foregone.
The important factor to take into consideration is, thus timing for revision of portfolio.
6) PORTFOLIO PERFORMANCE EVALUATION: Sign up to vote on this title
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Port Portfol folio io manag managem ement ent invo involv lves es main mainta tain ining ing a pro
Sheet Music
combination of securities, which comprise the investor’
portfolio in a manner that they give maximum return wit minimum risk.
The investor should have continues review and scrutiny of hi investment portfolio.
These rates of return should be based on the market value o the assets of the fund.
Complete evaluation of the portfolio performance must includ
examining a measure of the degree of risk taken by the fund.
A portfolio manager, by evaluating his own performance ca identify sources of strength or weakness.
It can be viewed as a feedback and control mechanism tha can can make make the the inve invest stme ment nt manage manageme ment nt proc proces ess s mo effective.
Good performance in the past might have resulted from goo
vote on title y not luck luck,, in whic which h case case such such Sign per perup form foto rman anc cethismay ma not
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expected to continue in the future.
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On the other hand, poor performance in the past might hav
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Good performance in the past may have resulted from th actions of a highly skilled portfolio manager.
The The perf perfor orm mance ance of port portfo foli lio o shoul hould d be meas measur ur periodically, preferably once in a month or a quarter.
The The perf perfor orma manc nce e of an indi indivi vidu dual al stoc stock k shou should ld compared with the overall performance of the market.
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TYPES OF PORTFOLIO MANAGEMENT:
The two types of portfolio management services are available o the investors:
Discretionary portfolio Management
Non-discretionary portfolio Management
1. The Discretion Discretionary ary portfolio portfolio managemen managementt services (DPMS): (DPMS):
In this type of services, the client parts with his money in
favor of manager, who in return, handles all the pape
up gives to vote onathis title return o work, makes all the decisions Sign and good
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the investment and for this he charges a certain fees.
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The Non-discretionary portfolio management services:
The manager function as a counselor, but the investor i fre free to acce accep pt or reje reject ct the the mana manage ger’ r’s s advi advic ce;
manager for a services services charge also undertakes undertakes the pape work.
The manager concentrates on stock market instrument
with a portfolio tailor made to the risk taking ability of the investor.
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EQUITY PORTFOLIO MANAGEMENT
It is logical that the expected return of a portfolio should
depend on the expected return of the security contained in it
There are two approaches to the selection of equity portfolio One One is tech techni nica call anal analys ysis is and and the the othe otherr is fund fundam amen en analysis.
Tec Technic hnical al anal analy ysis sis ass assumes umes that that the the pric price e of a stoc stoc depends on supply and demand in the stock market. All All finan financi cial al and and marke markett infor informat matio ion n of give given n secu securi rity ty already reflected in the market price.
Charts are drawn to identify price movements of a given security over a period of time. Thes These e char charts ts enab enable le the the inve invest stor ors s totovotepred pr t the the futu futu Sign up onedic thisict title movement of the price of security.
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The The funda undame ment ntal al anal analys ysis is inclu nclude des s the study udy of ra analy analysi sis, s, past past and pres present ent trac track k record record of the the compa compa quality of management, government policies etc. There may be several combinations of investment portfolio.
Allocation of funds for equity portfolio is a question of top most importance to any portfolio manager.
Among all risky investments, selection of the best possible
combination and allocation of funds among these selecte investment groups are of great importance.
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BONDS PORTFOLIO MANAGEMENT
The individual investors can invest in bond portfolio. The portfolio can be spared over variety of securities.
Investment in bond is less risky and safe as compared to equity investment. However, the return on bond is very low. There are no much fluctuations in bond prices. Therefore, there is no capital appreciation in this case. Some bonds are tax saving which help the investor t reduce his tax liability.
There is no much liquidity in bonds, investment in bond le,, portf portfol olio io is less less risk risky y and and safe safe but, but, Sign retur retup urn nvote is onreaso rea to this sonab titlenable
Useful Not useful more liquidity and tax saving are some of the important features o
bond portfolio investment.
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Tax free bonds are issued by public sector undertaking o
Gover Governme nment nt on whic which h inte interes restt s compo compound unded ed half half yearl yearly y an payable accordingly.
They have a maturity of 7 to 10 years with the facility fo buyback.
The tax tax free free bonds bonds means means the the intere interest st inco income me on thes thes bonds is not taxable. Therefore, the interest rates on these bonds are very low.
However, taxable bonds yield higher interest compounde half yearly and also payable half yearly. They also have buy back facilities similar to taxable bonds.
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ADVANTAGES OF PORTFOLIO MANAGEMENT
Individuals will benefits immensely by taking portfolio managemen services for the following reason: -
a) Whatever Whatever may be the status status of the capital capital market; market; over the the lon
period capital markets have given an excellent return whe comp compare ared d to other other forms forms of inves investm tment ent.. The The retu return rn fr
bank bank depo deposi sits ts,, unit units s etc. etc.,, is much much less less than than from from stoc stoc market. b) The Indian Indian stock stock markets markets are very very complicat complicated. ed. Though Though the are are thou thousa sand nds s of comp compan anie ies s that that are are list listed ed only only a fe
hundred, which have the necessary liquidity. liquidity. It is impossibl Sign up to vote on this title
for for any any indi indivi vidu dual al whish hishin ing g toinve inUseful vest st and anNot d useful sit sit down down an
analyses all these intricacies of the market unless he doe
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IMPORTANCE OF PORTFOLIO MANAGEMENT
In the past one-decade, significant changes have taken place i the investment climate in India.
Portfo Portfolio lio manageme management nt is becomi becoming ng a rapidly rapidly growin growing g are
serv servin ing g a broa broad d arra array y of inve invest stor orss- both both indi indivi vidu dual al an
institutional-with investment portfolios ranging in asset size from thousands to cores of rupees.
It is becoming important because of: i. Emergence
of
institutional
investing
on
behalf
indiv individ idual uals. s. A numbe numberr of finan financi cial al inst instit itut ution ions, s, mutu mutu
funds, and other agencies are undertaking the task o investing money of small investors, on their behalf. ii. ii. Growt Growth h in the number number and the size size of invi invisi sibl ble e funds funds
Signis up being to vote ondirected this title large part of household household savings toward
financial assets.
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iii Increas Increased ed market market volatili volatilityty- risk risk and return paramet parameters ers o
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v. Prof Profes ess siona ionallizat izatio ion n of the fiel field d and and incre ncreas ase e use use Sheet Music
analyti analytical cal methods methods (e.g. (e.g. quantit quantitati ative ve techniq techniques ues)) in investment decision-making, and
vi. vi. Larger Larger direc directt and and indire indirect ct costs costs of error errors s or shortf shortfal alls ls i
meeting portfolio objectivesobjectives- increased increased competition competition an greater scrutiny by investors.
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QUALITIES OF PORTFOLIO MANAGER 1. Sound Sound gener general al know knowled ledge: ge: Portfolio management is an existing and challenging job.
He has to work in an extremely uncertain and conflicting
environment. In the the stoc stock k mark market et ever every y new new piec piece e of info inform rmat at
affec affects ts the valu value e of the the secu securit ritie ies s of diffe differen rentt indus industr trie ies s in different way.
He must be able to judge and predict the effects of th
information he gets.
He must have sharp memory, alertness, fast intuition an
self-confidence to arrive at quick decisions. Sign up to vote on this title
2. Analyt Analytical ical Abilit Ability: y:
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He must have his own theory to arrive at the value of th
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3. Marke Marketi ting ng ski skill lls: s:
He must be good salesman.
He has has to conv convin ince ce the the clie client nts s abou aboutt the the part partic icul ul security.
He has to compete with the Stock brokers in the stoc market.
In this Marketing skills help him a lot.
4. Expe Experi rien ence ce::
In the cyclical behavior of the stock market history is often
repeated, therefore the experience of the different phase helps to make rational decisions.
The experience of different types of securities, clients mark market ets s
trend rends s
etc. etc. mak makes a
perf perfec ectt
prof profes essi sion on
manager. Sign up to vote on this title
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CODE OF CONDUCT- PORTFOLIO MANAGERS: 1.
A po portfolio ma manager sh shall, in in th the co conduct of of hi his bu busine observe high standards of integrity and fairness in all his dealing with his clients and other portfolio managers.
2.
The money received by a portfolio manager from a client
an investment purpose should be deployed by the portfolio manage
as soon as possible for that purpose and money due and payable to a client should be paid forthwith.
3.
A portfolio manager shall render at all time high standards
services exercise due diligence, ensure proper care and exercis indepe independe ndent nt profe profess ssio ional nal judg judgmen ment. t. The port portfol folio io manag manager er sh either
avoid
any
conflict
of
interest
in
his
investment
disinv disinvest estment ments s decisio decision, n, or where where any confli conflict ct of interes interestt aris ensure fair treatment to all his customers. He shall disclose to th clie client nts, s, possi possibl ble e sourc sources es of conf confli lict ct of dutie duties s and inte interes rest, t, wh
Sign up to voteshall on this not title place hi providing unbiased services. A portfolio manager
interest above those of his clients.
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A portfolio manager shall not make any exaggera stat statem ement ent,, whet whethe herr oral oral or writ writte ten, n, to the the clie client nt eith either er about about qual qualif ific icat atio ion n or the the capa capabi bili lity ty to rend render er cert certai ain n serv servic ices es or achievements in regard to services rendered to other clients.
6.
At th the titime of of entering in into a contract, the po portfolio ma mana
shall obtain in writing writing from the client, his interest in various various corporat bodie bodies, s, whic which h enabl enables es him him to obtain obtain unpub unpubli lish shed ed price price-s -sens ensit it information of the body corporate.
7.
A portfolio manager shall not disclose to any clients or pre any confidential information about his clients, which has come to hi knowledge.
8.
The po portfolio ma manager sh shall wh where ne necessary an and in in t inter interes estt of the the clie client nt take take adequ adequat ate e steps steps for for regi regist strat ratio ion n of trans transfe ferr of the the clie client’ nt’s s secu securi riti ties es and and for for clai claimi ming ng and and rece receiv iv Sign up to vote on this title
Useful Not dividend, interest payment and other rights accruing touseful the client. H
shall shall also also take take necess necessary ary action action for convers conversion ion of securi securitie ties s an
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He shou should ld rende renderr the bes bestt possi possibl ble e advic advice e to the the clie client nt havi havi
regard to the client’s needs and the environment, and his ow professional skills.
11.
Ensu Ensure re that that all all profe profess ssio ional nal deal dealing ings s are affe affect cted ed in a promp promp efficient and cost effective manner.
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following are the some factors affecting the investor, which make i Sheet Music
necessary to change the portfolio composition.
1. Chan Change ge in Wealt Wealth h
According to the utility theory, the risk taking ability of the investo increases with increase in wealth.
It says that people can afford to take more risk as they grow rich and benefit from its reward.
But, in practice, while they can afford, they may not be willing.
As people get rich, they become more concerned about losing the newly got riches than getting richer.
So they may become conservative and vary risk- averse.
The fund manager should observe the changes in the attitude o
the investor towards risk and try to understand them in prope perspective.
If the investor turns to be conservative after making huge gains the portfolio manager should modify the portfolio accordingly. Sign up to vote on this title
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There are, of course, many other important events in th
person’s life that may force a change in the investmen horizon.
The happening or the non-happening of the events wi naturally have its effect.
For example, a person may have planned for an earl retirement, considering his delicate health.
But, after turning 55 years of age, if his health improves he may not take retirement.
3. Change Change in Liqu Liquidi idity ty Needs Needs
Investors very often ask the portfolio manager to keep
enough scope in the portfolio to get some cash as an they want.
This forces portfolio manager to increase the weight o liquid investments in the asset mix.
Due to this, the amounts available for investment in the
Sign up to that vote thistuall title fixe fixed d income income or grow growth th secu securi riti ties es th atonactu ac ally y help help
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achieving the goal of the investor get reduced.
That is, the money taken out today from the portfoli
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It is said that there are only two things certain in thi world- death and taxes.
The only uncertainties regarding them relate to the date time, place and mode. Port Portfo foli lio o mana manage gerr have have to cons consta tant ntly ly look look out out
changes in the tax structure and make suitable change in the portfolio composition.
The rate of tax under long- term capital gains is usuall lower than the rate applicable for income. If there is chan change ge in the the mini minimu mum m hold holdin ing g peri period od for for long long-t -ter er
capital gains, it may lead to revision. The specifics of the planning depend on the nature of the investments.
5. Others
There can be many of other reasons for which clients ma ask for a change in the asset mix in the portfolio.
For example, there may be change in the return availabl Sign up to vote on this title
on the investments that have to be compulsorily mad
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with the government say, in the form of provident fund.
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PORTFOLIO MANAGEMENT SCHEMES (PMS) PRESENT SCENARIO
“The regulatory environment has totally changed now and wit
SEBI fixing strict norms for companies launching PMS, onl the serious players are going to enter his business.”
The PMS members today have full transparency: managers ar
required to maintain individual accounts showing all dealing in a client’s portfolio. They must also advise him on all transactions.
Secondly, all PMS Managers have to send their clients at leas
a quarterly report giving the status of their portfolio and th transactions that have taken place.
The client-PMS manager contract is as per SEBI ground rules.
It has several checks to protect investor’s interest like laying the
Sign up to vote on this title custodial responsibility on the manager and preventing an
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alterations in the scheme without the client’s consent.
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All All PMS PMS Mana Manage gers rs act act as cust custod odia ians ns of shar shares es and and
responsible for the load of paper work related to the share transfer
documentation work, postal work and even ensuring that dividend are credited to clients account.
SEBI directives also put the onus on the PMS promoters to take follow-up action in case shares are lost or damaged.
Difficulties such as late transfer and postal theft are reduced in case case of brok broker ers, s, beca becaus use e they they not not only only have have dire direct ct acce access ss registrars but also have branch offices to ensure quicker transfers. All these services come for a fee, of course.
While the actual PMS charges vary from a high of 7% of the
amount invested to a low of around 3.5%, follow-up services charge extra.
As in all schemes, there is a downside to putting cash into portfolio management as well.
The most important is the fact that despite all the SEBI checks Sign up to vote on this title
PMS Managers are not allowed to assured any fixed returns. Useful
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Fund Funds s coll collec ecte ted d from from inve invest stor ors s will will aid aid the the brok brok concerned in their own games in the market.
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PROSPECTS OF POTFOLIO MANAGEMENT
At present, there are a very few agencies which render thi type of services in an organized and professional way. However, their share in the total volume is very small. Ther There e is no cons constr trai aint nt on the dema demand nd for for this this type type
fina financ ncia iall serv servic ice e as ever every y enti entity ty woul would d be savi saving ng an investing and interested in optimizing the rate of return. The size of capital market is increasing. There is an increase in the number of stock exchanges.
New instruments are being introduced in the capital market. The equity cult is spreading in the interiors and rural areas.
The percentage of investment of the household savings i bound to go up.
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It is cons conserv ervat ativ ivel ely y esti estima mated ted that that durin during g the the eighth eighth pl
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SECURITIES AND EXCHANGE BOARD OF INDIA RULES 1993 REGARDING PORTFOLIO MANAGERS No
person
to
act
as
portfolio
manager
witho
certificate.
»
No pers person on shal shalll carr carry y on any any acti activi vity ty as a port portfo fo manag manager er unles unless s he holds holds a certi certifi fica cate te grant granted ed by Board under this regulation.
»
Provided that such person, who was engaged as portfoli
manager prior to the coming into force of the Act, ma
continue to carry on activity as portfolio manager, if he has made made an appli applica cati tion on for for such such regis registr trat ation ion,, till till disposal of such application. »
Provided further that nothing contained in this rule sha
apply in case of merchant banker holding a certificate
to vote on this title gran grante ted d by the the boar board d of Indi InSign dia aup Regu Re gula lati tion ons, s, 1992 1992
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category I or category II merchant banker, as the cas may be.
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Conditions for grant or renewal of certificate to portfolio manager. »
The The board board may may grant grant or renew renew cert certif ific icate ate to portf portfoli oli manager subject to the following conditions namely:
a)
The The port portfo foli lio o mana manage gerr in in case case of any any chan change ge in in its its stat stat
and constitution, shall obtain prior permission of the boar to carry on its activities; b)
He shall pay the amount of fees for registration
renewal, as the case may be, in the manner provided i the regulations; c)
He
shall
make
adequate
steps
for
redressed
grievances of the clients within one month of the date o
recei receipt pt of the the compl complai aint nt and keep keep the the board board info informe rme about about the the numbe number, r, natu nature re and and other other parti particu cula lars rs of complaints received; d)
He shal shalll abi abide by by the the rul rules and and reg regul ulat atiions ons made made und und
Sign up to vote onrrie this the the Act Act in resp respec ectt of the the acti ac tivi viti ties es carr ca ied dtitleon by
portfolio manager.
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SECURITIES AND EXCHANGE BOARD OF INDIA REGULATIONS, 1993
Registration of Portfolio Managers:
1. Application Application for grant of certif certificate icate
An application by a portfolio manager for grant of certificate shall be made to the board on Form A.
Notwit Notwithst hstandi anding ng anythi anything ng contai contained ned in sub regulat regulat
(1), any application made by a portfolio manager prior t
coming coming into into force force of these these regulat regulations ions contai containing ning suc
particulars or as near thereto as mentioned in form A sha
be treated as an application made in pursuance of sub regulation and dealt with accordingly. Sign up to vote on this title
2. Application Application of confirm confirm to the the requirement requirements s Not useful Useful
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the time specified such objections as may be indicated b Sheet Music
the board.
Furnish Furnishing ing of furthe furtherr informa informatio tion, n, clarif clarifica icatio tion n and persona persona
3.
representation.
The Board may require the applicant to furnish furthe
information or clarification regarding matters relevant t
his activity of a portfolio manager for the purposes o disposal of the application.
The applicant or, its principal officer shall, if so required appear before the Board for personal representation.
4. Consid Considerat eration ion of appli applicat cation. ion.
The Board shall take into account fo
considering the grant of certificate, all matters which ar
Sign to up to vote on thismanager title relevant to the activities relating portfolio an
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in parti particu cula larr whet whether her the the appl applic icant ant compl complies ies with with following requirements namely:
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The applicant has his employment minimum of tw pers perso ons who have ave the expe experi rie ence nce to condu onduc ct business of portfolio manager;
A person, person, directl directly y or indirect indirectly ly connec connected ted with with
applicant has not been granted registration by the Boar in case of the applicant being a body corporate;
The
applicant,
fulfils
the
capital
adequa
requirements specified in regulation 7
The applicant, his partner, director or principal principal office is not not invo involv lved ed in any any litig itigat atiion conn connec ecte ted d with ith
securities market and which has an adverse bearing o the business of the applicant;
The applicant, his director, partner or principal principal office
has has not not at any any time time been been conv convin ince ced d for for any any offe offenc nc
involving moral turpitude or has been found guilty of an economic offences;
The applicant has the professional qualification from
Sign up to vote on this titlein finance an institution recognized by the government
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law, and accountancy or business management.
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PRIMARY SURVEY
Purpose of the study:
To ascertain investor awareness about services provided b
portfolio management institutions and the interest shown by investo to invest in portfolio management services.
To know whether they are interested to hire such services i future and if not, why?
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SPECIMEN QUESTIONNAIRE
Survey on investor’s views about Portfolio Management Name: Age: Occupation:
Are you aware of services offered by portfolio manager?
Yes
No
If yes, what types of services you are aware of ?
Management of Mutual fund investment
Management of Equities
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Would you want to hire a portfolio manager at present or in future?
Yes
No
If yes, for what type of services?
Investments in Mutual Funds
Investments in Equities
Investments in Money market
Investments in other[s]
(If other please specify Advisory or consultancy service If No, why?
__________________________________________________
__________________________________________________
What is the Percentage of commission that you are ready to Sign up to vote on this title
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(If other please specify) Sheet Music
Do you think there will be growth in portfolio management i future?
If Yes why?
If No, why?
What type of services would you want from portfolio manager in future?
__________________________________________________
__________________________________________________
Suggestions if any:
__________________________________________________ Sign up to vote on this title
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FINDINGS
This This case case stud study y has has been been cond conduc ucte ted d on vari variou ous s age age grou groups ps individual investors on portfolio management. These consist of ag
group ranging from 18-30, 30-45, 45-60 and 60 & above. Followin inte interp rpre reta tati tion on has has been been made made on the the basi basis s of the the info inform rmat at
collec collected ted from from individ individual ual invest investor’s or’s of various various age groups groups throug throug questionnaire:
Age group of 18-30 is more aware about services offered b
portfolio manager whereas age group of 60 & above is les aware of such services.
Mana Manage geme ment nt of mutu mutual al fund fund inve invest stme ment nt,, mana manage geme ment nt
equities, management of money market investment, advisor and cons consul ulta tanc ncy y serv servic ices es are are the the serv servic ices es provi provided ded by
portfolio management institution. Amongst these, advisory an
up to vote on this cons consul ulta tanc ncy y serv servic ices es are are the the serv seSign rvic ices es that that the thtitle e indi indivi vidu du
investors are more aware of.
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hand, age group of 30-45 and 45-60 are least interested in an Sheet Music
of the services provided by portfolio management institution Reas Reasons ons spec specif ifie ied d for for the the prese presenc nce e of disi disint nter erest est in any any these services services were that the investors are having good hold thei theirr inve invest stme ment nt.. Also Also they they posse possess ss good good know knowled ledge ge wi
regards to market fluctuations, fluctuations, investment portfolio’s portfolio’s and othe factors relating to portfolio management.
All
the
age age
group roups s
of
indiv dividual ual
inve nvestors in
port ortfol
management believe that there is a better scope for portfoli
management in future. Investors would prefer the introductio
of services like advisory and consultancy services, investmen in mutual funds in the near future.
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CONCLUSION
With the help of given project I got an in-depth knowledge about the
working of portfolio management. Also I got an insight as too how to
invest in portfolio management, which scheme provide better return
as compared to other and who are the portfolio management management player in the Indian market.
It can be conc conclu lud ded from from the the proj projec ectt that hat fut future ure of port portffol
mana manage geme ment nt is brig bright ht prov provid ided ed prop proper er regu regula lati tion ons s prev prevai aill an
investor’s needs are satisfied by providing variety of schemes. The
interest of investors is protected by SEBI. Portfolio management i governed by SEBI Act.
Due to the benefits available to the individual’s such as reduction i risk, risk, expe expert rt profe profess ssio ional nal manag managem ement ent,, dive divers rsif ifie ied d port portfo foli lios os,,
benefits etc. young generation generation (i.e. age group bet. 18-30) is willing t
Sign up to vote on this title invest in different investment avenues through portfolio manager o
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thro throug ugh h mutu mutual al fund funds s whic which h are agai again n mana manage ged d by portf ortf
managers. On the other hand, age group of 60 & above are leas
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