lesson 1

• Portfolio management involves understanding the meaning of portfolio management, the needs it addresses, and the steps involved in creating a portfolio

  
• Objectives of portfolio management include safety of principal amount, investment of disposable income, growth of capital, marketability, liquidity, a well-diversified portfolio, and minimal tax burden

  
• Phases of portfolio management:

  • Security analysis
  • Portfolio analysis
  • Portfolio selection
  • Portfolio revision
  • Portfolio evaluation

  
• Security analysis is crucial for understanding the risk-return characteristics of securities, while portfolio analysis helps in determining the best investment option by assessing risks and returns of selected securities

  
• Portfolio selection involves choosing securities for greater returns at a given risk level, and portfolio revision includes monitoring and adjusting the portfolio to maintain optimality

  
• Types of risk in portfolio management:

  • Systematic risk (interest rate risk, market risk, purchasing power risk)
  • Unsystematic risk (business risk, financial risk)

  
• Unsystematic risk decreases as the number of securities in a portfolio increases, as diversification across many securities reduces the impact of any one company or industry on the portfolio

  
• Portfolio Return:

  • Meaning: return on a portfolio
  • Formula for calculating portfolio return

  
• Key points in portfolio management:

  • Asset allocation can be active or passive
  • Investor's strategy choice depends on goals, age, market expectations, and risk tolerance
  • Expertise is needed for allocation approaches involving market movements
  • Timing the market accurately is challenging, so strategies should be resilient to unforeseeable errors

  
• Portfolio management involves the selection and revision of investment portfolios

  
• Portfolio management includes understanding the needs of investors and selecting the best investment portfolio

  
• Portfolio selection and revision involves setting goals, selecting a portfolio, and ongoing monitoring and revision

  
• Asset allocation strategies include strategic asset allocation, integrated asset allocation, tactical asset allocation, insured asset allocation, constant weighting asset allocation, and dynamic asset allocation

  
• Conclusion slide on asset allocation:

  • Asset allocation can be active or passive
  • Investor's choice of strategy depends on goals, age, market expectations, and risk tolerance
  • Approaches involving market movements require expertise
  • Timing the market accurately is challenging

  
• Portfolio management involves managing a collection of investments to meet specific financial goals

  
• Objectives of portfolio management include safety of principal amount, investment of disposable income, growth of capital, marketability, liquidity, and minimal tax burden

  
• Phases of portfolio management:

  1. Security analysis

  2. Portfolio analysis

  3. Portfolio selection

  4. Portfolio revision

  5. Portfolio evaluation
• Two main types of risk in portfolio management are systematic risk (affecting the entire market) and unsystematic risk (affecting a specific company or industry)

  
• Asset allocation strategies include strategic, integrated, tactical, insured, constant weighting, and dynamic asset allocation

  
• Main points of the presentation on investment portfolio management:

  • Asset allocation can be active or passive
  • Investor's choice of strategy depends on goals, age, market expectations, and risk tolerance
  • Expertise is needed for strategies involving market movements
  • Timing the market accurately is challenging, so strategies should be robust