Portfolio Management: Introduction, Types, Risks and Services of Portfolio Management

In this article, we will present the basic overview and ingredients of the concepts, process and tools of portfolio management. Every portfolio management task should begin with a well defined aim, and looking at the aim of the portfolio, the investors take a call whether they wish to invest in the portfolio or not. So basically, the aim and objective of a portfolio management scheme is very important.

The discussion will consider how these factors vary across investors for various types of institutional as well as individual investors. Asset allocation decisions and their implications are also important parameters for an investor to decide whether to put his hard earned money into these portfolio schemes or not.

We present a broad level overview of the topics which will be discussed in portfolio management. They include: Portfolio management styles; performance of active versus passive strategies; measuring risk and calculating risk adjusted returns; performance attribution; selection of appropriate benchmarks, etc.

Topics for portfolio management includes the following:
? Introduction to Portfolio Management
o Investment Objective Setting
o Modern Portfolio Theory
o Risk and Return - Definition, Sources and Quantification
o Asset Allocation - Definition, Importance, Tactical versus Strategic

? Fixed Income Portfolio Management
o Active versus Passive Fixed Income Portfolio Management
o Active Portfolio Management Styles
o Indexed Portfolios
o Assessing Performance

? Equity Portfolio Management
o Active versus Passive Equity Portfolio Management
o Active Portfolio Management Styles
o Indexed Portfolios
o Assessing Performance

After going through these topics in detail, a financial consultant, a portfolio manager or anyone should be able to:
? Describe the characteristic features of various portfolio management styles (active, passive, semi-active/passive, indexing, etc.) and implications for security selection and portfolio construction of the different styles
? Discuss basic issues in assessing investment management performance including defining, differentiating and relating to one another: measurement of investment returns, performance assessment, and return attribution
? Identify key elements of MPT (Modern Portfolio Theory) and CAPM (Capital Asset Pricing Model) and recognize how particular aspects of each are used in quantifying risk and assessing returns
? Discuss investor rationale for adopting indexing strategies, including types of indexing (full portfolio replication, enhanced indexing, etc.), impact on expected risk and return as well as fee and expense related issues
? Define commonly used risk measures (standard deviation of return, Beta & duration) and describe their use in quantifying and expressing risk as well as assessing performance