Portfolio Management Unit – 1 Session No.1 Topic: Portfolio Perspective Unit – 1 Session No.1 Topic: Portfolio Perspective

Session Plan Course Briefing What is a Portfolio? What is an Investment? What is Investment Management? & Need for Investment Management Discussion on different types of Investors. Summarizing and Q & A

Unit 1: Portfolio Management Process Unit 2: Managing Individual Investor Portfolios Managing Institutional Investor Portfolios Unit 3: Capital Market Expectations Asset Allocation Unit 4: Risk Management Unit 5: Monitoring and Rebalancing Evaluating Portfolio Performance Text Book: John L. Maginn et al. (2007), Managing Investment Portfolios: A Dynamic Process, John Wiley & Sons, Inc, 3 rd Edition Course Briefing

What is a Portfolio? A Portfolio is a group of securities held together as investment. Investor invest their funds in a portfolio of securities rather than in a single security because they are risk averse. A grouping of financial assets such as stocks, bonds and cash equivalents, as well as their mutual, exchange-traded and closed- fund counterparts. Portfolios are held directly by investors and/or managed by financial professionals. Portfolio Securities: Stocks, Bonds, Mutual Funds, Derivatives, Real Estates, etc.,

What is a Portfolio? As per the modern portfolio theory, a diversified portfolio that includes different types or classes of securities; reduces the investment risk. It is because any one of the security may yield strong returns in any economic climate. What is a Portfolio? List the different securities in Portfolio. What is a equity? What is a Bond? Ans: A group of securities Ans: Equities, Bonds, Mutual Funds etc., Ans: An equity is a title of ownership that represents a share in a company Ans: Bonds are securities that represent a loan.        

What is an Investment? Investment is an activity that is engaged in by people who have savings, i.e., investments are made from savings, or in other words, people invest their savings. What is the difference between savings and investment? Characteristics of Investment: – Return – Risk – Safety – Liquidity Example:  One person may purchase of Gold for the purpose of price appreciation  A person may purchase an Insurance plan for the various benefits it promises in future  

What is Investment Management? Investment Management is the service of professionally investing money. As profession, Investment Management has its roots in the activities of Investment Bankers in managing the fortunes created by the industry. Investment Banker : An investment banker is a financial institution that assists individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities (or both). Example: JP Morgan, HSBC, Citi Group, BNP Baribas, Barclays etc.,

Need for Investment Management Establishing Investment Policy Selecting a Portfolio Strategy: – Active- applies information and forecasting techniques – Passive- diversifies to match a market index Choosing a Strategy Selecting the Assets Measuring and Evaluating Performance Structure of the Money Management Process

Types of Investors Individual Investors Institutional Investors – Banks – Insurance Companies – Mutual Funds – Investment Companies – Sovereign Wealth funds

Characteristics of Investors InvestorRisk ToleranceInvestment Horizon Liquidity needsIncome Needs IndividualsDepends on individual Depends on Individual BanksLowShortHighPay interest EndowmentsHighLongLowSpending level InsuranceLowLong – Life Short – P & C HighLow Mutual FundsDepends on fund HighDepends on fund

Q & A What is a Portfolio? List out the Securities. What is an Investment? List out the characteristics of Investment What is Investment Management? What are the different types of Investors? What are the distinguish characteristics of Investors?