UNIVERSITY OF MUMBAI

PROJECT REPORT ON

Portfolio Management
(FINANCIAL SERVICES)

MASTERS OF COMMERCE
(BANKING AND FINANCE)
SEMESTER 1
2014-15

SUBMITTED BY
Miss. VISHAKHA HARISH MARU
ROLL NO.:31

PROJECT GUIDE
Ms. SHRADDHA SHUKLA

K.P.B HINDUJA COLLEGE OF COMMERCE

315, NEW CHARNI ROAD, MUMBAI-400 004

M.Com (Banking and Finance)

1st SEMESTER

PORTFOLIO MANAGEMENT

SUBMITTED BY
Miss. VISHAKHA HARISH MARU
ROLL NO: 31

CERTIFICATE
This is to certify that Ms. MARU VISHAKHA HARISH of M.Com
BANKING AND FINANCE Semester- 1 [2014-2015] has successfully completed
the Project on PORTFOLIO MANAGEMENT under the guidance of Ms.
SHRADDHA SHUKLA

Project Guide

________________

Course Coordinator

________________

Internal Examiner

________________

External Examiner

________________

Principal

________________

Date: ______
Place: Mumbai

DECLARATION

I, Ms. VISHAKHA HARISH MARU student of M.Com-Banking and

Finance, semester- 1 (2014-2015), hereby declare that I have completed the project
on PORTFOLIO MANAGEMENT
The information submitted is true and original copy to the best of my
knowledge.

VISHAKHA MARU

ACKNOWLEDGEMENT

I owe my special thanks to the Principle Dr. Chitra Natrajan and the Cocoordinator of M.com Dr. (Ms) Minu Madlani for giving me an opportunity for this
project work. I would like to give my thanks to the Project Guide Ms.
SHRADDHA SHUKLA

for her guidance and kind assessment that she has

provided me and the inspiration in valued guidance and ideas throughout the
project. I am also thankful to the library staff of K. P. B. Hinduja College Of
Commerce who co-operated with me and even all those seen and unseen hands and
heads which helped me in he completion of this project.

INDEX
CHAPTER

PAGE
TOPICS

NO.
1
2
3
4

NO.
INTRODUCTION
TIPS OF DIVERSIFY YOUR PORTFOLIO
PROJECT PORTFOLIO MANAGEMENT
PPM STUDIO
PORTFOLIO MANAGEMENT IN TOUGH ECONOMIC

5
6
7
8
9
10

1-2
3-4
5-7
7-9
9-12

TIMES
MODERN PORTFOLIO THEORY (MPT)
HOW TO BUILD PORTABLE PORTFOLIO
STOCK PORTFOLIO MANAGEMENT
EQUITY PORTFOLIO MANAGEMENT
CARRERS IN PORTFOLIO MANAGEMENT
ROLES & RESPONSIBILITIES OF PORTFOLIO

11

12-14
14-18
18-20
20-22
22-24
24-25

MANAGEMENT
12

CASE STUDY

26-29

13

BIBLOGRAPHY

29-30

INTRODUCTION TO PORTFOLIO MANAGEMENT

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. 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.

Taking decisions about investment mix and policy

Matching investments to objectives

Asset allocation for individuals and institution

Balancing risk against performance

There are basically two types of portfolio management in case of mutual and exchange-traded
funds including passive and active.

Passive management involves tracking of the market index or index investing.

Active management involves active management of a funds portfolio by manager or

team of managers who take research based investment decisions and decisions on
individual holdings.

Portfolio:In term mutual fund industry, a portfolio is built by buying additional bonds, mutual
funds, stocks, or other investments. If a person owns more than one security, he has an
investment portfolio. The main target of the portfolio owner is to increase value of portfolio by
selecting investments that yield good returns.

Facts about Portfolio

There are many investment vehicles in a portfolio.

Building a portfolio involves making wide range of decisions regarding buying or selling
of stocks, bonds, or other financial instruments. Also, one needs to make decision
regarding the quantity and timing of the buy and sell.

Portfolio Management is goal-driven and target oriented.

There are inherent risks involved in the managing a portfolio.

The basics and ideas of Investment Portfolio Management are also applied to portfolio
management in other industry sectors.
Application Portfolio Management: It involves management of complete group or subset of
software applications in a portfolio. These applications are considered as investments as they
involve development (or acquisition) costs and maintenance costs.
The decisions regarding making investments in modifying the existing application or purchasing
new software applications make up an important part of application portfolio management.
Product Portfolio Management: The product portfolio management involves grouping of
major products that are developed and sold by businesses into (logical) portfolios. These
products are organized according to major line-of-business or business segment.
diversifying the investments and investment risks. The management team actively manages the
product portfolios by taking decisions regarding the development of new products, modifying
existing products or discontinue any other products.

Tips for Diversifying Your Portfolio

Diversification of the assets in the portfolio is widely used tool used by financial planners, fund
managers and individual investors. The markets are usually very dynamic and it is impossible to
predict the exact movement of the indexes. In such conditions, diversified portfolio plays an
important role in minimizing the risks and maximizing the profits.

Investors should practise disciplined investing along with a diversified portfolio. The
diversification of portfolio is a prerequisite to receive good returns from the market in the long
run. Due to fluctuations in the market, investors may lose about 80% in the market before
reacting to the situation. Thus, Investors can rely on the diversification as a suitable offense for
best defence. Generally, a well-diversified portfolio along with an investment horizon for a time
period of three to five years can survive major upheavals in the markets.
Investing can be rewarding, informative and educational; if one follows the below mentioned
steps.
Disciplined approach
Using diversification
Buy-and-hold
Dollar-cost-averaging strategies
Spreading out the investments
Investors should invest in the equities as they provide great returns, however it is strictly advised
to not put all of your money in the investments of one stock or specified sector. It is
recommended that investor should create his/her own virtual mutual fund by making investments
in few companies that are doing well and trustworthy. It is good to make the investments in the
companies you know well or whose goods and services you use. It is a good way of making
healthy approach to one sector.
Invest in Index or Bond Fund
As an investor you should consider adding fixed-income funds or index funds to your portfolio.
One of the excellent ways for long-term diversification investment is to invest in securities that
track various indexes. Another way of further hedging your portfolio against market uncertainties
is to add some fixed-income solutions.

Continue Building your portfolio

It is important to keep adding investments on a standard regular basis and grow your portfolio.
One should avoid investing the Lump-sum amount in volatile or uncertain market conditions.
This strategy of investing helps in smoothing out the peaks and valleys produced by volatile
market conditions. Thus, as an investor, one should invest money regularly into a specified
portfolio of funds/stocks.
Aware of the time to Exit
It is mandatory for a smart investor to know when to exit the market. Some of the sound
strategies of managing portfolios are dollar-cost averaging, purchasing, and holding. One should
not ignore the fact that time to exit the market is very crucial for remaining in tune with market
conditions and staying current with the market investments. One should know the current
happenings in the companies you have invested in.

Be alert regarding your commissions

In case, you are not a trader, you should comprehend what you are receiving by paying fees to
the firms for managing your portfolio. There are some firms that charges monthly fees while
others charge transactional fees. One should be aware of the payments you are making and
returns you are receiving.

Project Portfolio Management (PPM)

A Project Portfolio Management (PPM) refers to set of procedure or methods used for analyzing
and collectively managing a group of projects (current or proposed) depending on the various
key characteristics. It is widely used by project managers and project management organizations.
The basic objective of Project Portfolio Management is the determination of the optimal mix and
proper sequencing of proposed projects in order to achieve the overall goals of organization.

It takes into account various factors such as business strategy goals, hard economic measures or
technical strategy goals.
The project portfolio management involves the analysis of various attributes of projects as
mentioned below.
Projects total expected cost
Consumption of scarce resources
Expected timeline
Schedule of investment
Expected nature
Magnitude of benefitS
Timing of benefits to be realized
Relationship or inter-dependencies with other projects
There are various vendors of PPM software that highlight ability of their products to treat
projects as part of entire investment portfolio. PPM focuses on management of project portfolio
as an informal approach for project investment decision making.
There are various PPM tools that enable companies in managing the continuous flow of projects
from beginning of concept to its completion. There are many PPM tools and methods that
provide techniques and technologies for allowing improvement, visibility, measurement and
standardization of process.
Decision Trees
One of the popular PPM tools is decision trees with decision nodes that allow multiple options
and enable the project managers to optimize project against a constraint.

Decision centric view

A decision centric view is an approach for including uncertainty and risk in portfolio
optimization. There are five key decisions that are made while taking decision centric view of the
project portfolio optimization process.
Decision D1: It includes making decisions about strategic initiatives, benefits, and resource
limitation criteria that are used for portfolio ranking and project filtering.
Decision D2: It includes making decisions about criteria that are important to achieve.
Decision D3: It includes making decisions regarding the project ideas that can be developed
into business case.
Decision D4: It includes making decisions about the Business Cases that should be considered
as element of the portfolio.
Decision D5: It includes making decisions about the projects that should be funded.

Resource allocation makes up a significant constituent of PPM. The available resources of a

company is evaluated for its capability to fulfil the demands of project once it is determined that
project or projects meet defined objectives. The resource allocation can be done effectively by
funding resource commitments, funding the skills available in the resource pool and
understanding of existing labour. The project investment must be made in projects where the
required resources are available during a particular time period.
Pipeline Management
Pipeline Management involves the determination of various ways for executing a set of projects
in the portfolio in a specified time; given there are only finite development resources in the
organisation. The pipeline management relies on the ability of the project managers to measure
the planned allocation of development resources as per the strategic plan.

PPM Studio

PPM Studio is a Project Portfolio Management software program that ensures that every project
investment is aligned with the business objectives of the organization. It helps in prioritizing,
monitoring and delivering the likely business values.
Benefits of PPM Studio
Competitive evaluation of projects investments
PPM Studio enables the portfolio managers to evaluate the competitive project investments by
implementing the PPM Studio Project Governance Framework. Project Portfolio Manager assist
the companies in setting up this project governance framework that ensures that any project
investment shall be comprehensively analysed in terms of capacity available , business
objectives , risks involved, budget required, Return On Investment(ROI), etc. It also allows the
PM Managers to rank the portfolio investments among all the competing investments. This
exercise is performed for ensuring that vital projects should be accepted and executed.
Enables Real-time visibility across the Portfolio
PM Studio enables the real-time visibility of the projects across the Portfolio. The Key
Performance Indicators (KPI) are used for analysing the real time portfolio health for taking
corrective and informed decisions on time. It also allows keeping the projects in the portfolio on
track to meet the defined objectives.
Enhancing the utilization of resources by using ERP
PPM Studio allows the portfolio managers to use Enterprise Resource Planning tools for
enhancing the utilization of resources. It offers clear visibility of resource allocation and its

utilization through the projects and business units. The optimal utilization of resource capability
is ensured by the skill based resource allocation.
Pipeline Management
PPM Studio Portfolio Manager helps in the determination of ways for executing the projects in
the portfolio in a specified time. As there are many projects in the portfolio and limited resources
are available for their implementation. Therefore it is important to have a proper pipeline
management of the projects in place to ensure that only the best and worthy projects are selected
and executed.
PPM Studio enables the portfolio managers in maintaining the projects pipeline for measuring
the planned resource allocation and utilization as per the defined strategic plan. The projects
execution can be done on the basis of strategic value, business benefits and criticality.
Best Practices PPM Studio offers the best practices for efficient managements of projects in the
portfolio. It enables the portfolio managers to select, execute, monitor and delivery the projects
on time. PPM Studio complies with numerous project management methodologies that are
widely followed across the world. The portfolio managers can also configure workflows that are
specific to the organization.
Efficient Project Portfolio Management
Allows the portfolio management to organise the projects in groups and leveraging appropriate
staff for building a efficient project team
Leads to the completion on projects on time and there are no project delays due to lack of
enough resources
Effective utilisation of the key project contributors so that they are available on time for
executing the projects
Project status remain stable for longer duration

 Cooperation between various departments and sub-organizations for achieving the portfolio

Portfolio Management in Tough Economic Times

The implementing of the effective portfolio management is very challenging in the difficult
economic conditions. The market volatility and uncertainty exerts pressure on the portfolio
managers and investors to minimize the risks and still generate good returns or maintain their
investments if not growing them.
Facing the challenges
Portfolio Managers should be prepared to deal with tough market conditions so that they can
spend money on and resources on their vital investments. As per the experts and analysts, the
economy magnifies the impact of challenges rather than creating any new challenges.
Some of the vital challenges faced by Portfolio Managers are as follows
Deciding to take an initiative before its scoped out.
Ensuring that right resources are used on most important securities
Managing the portfolios outside their politics
Modifying the existing projects and investments in efficient manner so as to maintain the
portfolio returns in difficult market conditions
Fewer Funds available for investments in portfolio
The difficult economic conditions usually left the investors with fewer dollars available for
maintaining or growing their portfolios. There are many portfolio managers or investors that cut
down on their investing for new assets or securities. The costs of maintaining and managing the

portfolio increase with the number of securities or assets. The portfolio managers focus on
finding ways for sharing the resources between various stocks.
Assessing the Applications and Systems
The portfolio managers can also assess the applications and systems to cut down the costs and
evaluate their worth to the company. The PMs can get rid of various unnecessary tools and
outdated systems that are incurring huge costs to the company.
Efficient Portfolio Management
Every proposed investment should be carefully assessed to ensure there is efficient business case
for the portfolio. It should also go through a standardised process depending on the unique goals
of the organization. A proper planning is required for formulating various metrics and processes.
After selecting the stocks to be invested, the optimal portfolio is finalised and swift action should
be taken. The efficient optimization and management of the portfolio should be done for
ensuring that portfolio will generate good returns at an acceptable level of risks even in difficult
economic times.
The product portfolio management involves grouping of major products that are developed and
sold by businesses into (logical) portfolios. These products are organized according to major
line-of-business or business segment.
The management team actively manages the product portfolios by taking decisions regarding the
development of new products, modifying existing products or discontinue any other products.
The addition of new products helps in diversifying the investments and investment risks.
Major tasks involved with Portfolio Management are as follows.
Taking decisions about investment mix and policy
Matching investments to objectives
Asset allocation for individuals and institution

 Balancing risk against performance

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.
No responses yet

Portfolio Management for Young Investors

Published by Sushant under Portfolio Management
The young investors have to deal with unique set of challenges in portfolio management and one
has to make every decision carefully in order to receive good returns on his/her investments.
Tips for young investors
Learning by making investments
The portfolio of young investors not only allows them to make money but also serves as an
educational tool. Investors can become a knowledgeable investor by learning while doing.
Invest in savings
Young investors should focus their strategies for making enough savings to ensure rich
retirement. Although it may sound like a simple advice, it should be emphasized and repeated.
Most of the time, investors tend to procrastinate about investment in savings; however they
should not ignore the savings from the beginning in order to reap the benefits at the end.
Get rid of any pending debt
Young investors should get rid of any pending loan amount as soon as possible by paying off
credit card bills and other high interest loans. Investors can get rid of high interest charges that
are incurred by paying them off. The average annual return from stocks is usually 10.7% and
therefore it is impractical to expect the 20%+ returns as experienced by the expert investors in

during last couple of years. Investors should not commence an investing commitment till the
debt is cleared.
Savings are not investing
Young investors should not confuse savings with investing. For example, one should make
savings for house, car, education or other, however one should avoid invest the savings in stocks
and stock mutual funds. It is especially helpful in cases where one is planning to make a large
purchase in coming 4 to 5 years. Any investment that is less than five years does not provide
sufficient time for recovering from a significant drop in the market.
There are cases of bear market in the stock markets that are marked by sustained down market.
When investors make investment for short time periods, a correction in the bear market may
rob you off with your money at time when you need your money. If investors would like to make
investments for a short-term objective, investors need to invest in money market fund, certificate
of deposit, or short-term bond fund.
Taking Advantage of retirement plan
There are retirement plans where employee is required to make contributions. These plans allow
the investor to invest his/her money and provide great opportunity for accumulating large amount
of money. The money contributed by employee is tax-deductible and grow gradually without
being taxed. In some cases, there are some companies that will match employees contributions
and provide retirement plan as huge wealth building tool.
Automatic investments
Young investors should select an automatic investment plan as it enables the investors to pay for
the investments before beginning to spend or pay other bills. It also inculcates discipline in the
investor. It assists in avoiding the pitfalls of market timings. It also assists in making smart
decisions as investors purchase more shares at low prices and fewer shares at high prices.

Modern Portfolio Theory (MPT)

Modern Portfolio theory (MPT) presents the concept of diversification in investing by using
mathematical formulation. It aims to select a collection of investment assets which has lower risk
than any individual asset. It can be observed spontaneously as dynamic market conditions cause
changes in value of different types of assets in conflicting ways. The prices in the bond market
may fall independently from prices in the stocks market, thus there is overall lower risk in a
collection of both bond and stocks assets as compared to individual asset. Moreover, the
diversification reduces the risk even if cases where assets returns are positively correlated.
MPT stress the fact that assets in an investment portfolio must not be chosen individually where
each asset is selected on the basis of its own merits. Instead, it is important to observe the
changes in price of each asset relative to changes in the price of every other asset in the portfolio.
Investing in the assets is basically the exchange between risk and expected return. The assets
with higher expected returns are
usually more risky.
A Portfolio Manager is responsible
for building a portfolio of assets
such as stocks, bonds and other
assets that generates the maximum
possible rate of return at the least
possible level of risk. The
portfolio management involves
allocation of funds in various assets to achieve diversification of portfolio that offer maximum
return at the lowest possible risk.
MPT assists in the selection of a portfolio with the maximum possible expected return at a given
level of risk. Similarly, MPT assists in the selection of a portfolio with the lowest possible risk at
a given amount of expected return. Thus, it is not possible to have a targeted expected return
exceeding the highest-returning available security except there is possibility of negative

holdings. MPT stresses the diversification and assists the portfolio managers in finding the best
possible diversification strategy.
Modern portfolio theory (MPT) refers to the theory of investment that seeks to maximize the
expected return of portfolio at a given level of risk. Similarly it also attempts to diminish risk for
a given level of return expected. To achieve this, portfolio manager choose the proportions of
different assets in a portfolio carefully. The modern portfolio theory is extensively used for
practice in the financial industry, however basic assumptions of this theory has faced certain
challenges in fields like behavioral economics.
In technical terms, a Modern Portfolio theory (MPT) represents the return of asset as a normally
distributed function or as an elliptically distributed random variable where risk is defined as the
standard deviation of return. According to MPT, the return of a portfolio is equivalent to the
weighted combination of the assets returns because the portfolio is modelled as a weighted
combination of assets. MPT aims to reduce the total variance of the return of portfolio by
combining various assets whose returns are negatively correlated or not positively correlated.

How to build a Profitable Portfolio

Portfolio management is basically an approach of balancing risks and rewards. Investors should
keep the following tips in mind while deciding about the right portfolio blend.
Goals: You should be clear about your goals as an investor. The objective of the portfolio
management should be utmost clear if one wants to accumulate wealth by good returns or to hold
on his investments.
Risk Tolerance: As an investor one should know how to handle the fluctuations of ever
changing volatile market. It is important to know the ways for tolerating the risks and subsequent
rise and fall of net worth. If you are not capable of handling the pressure of sharp decline in the

values of tour investments then you should try to invest in more stable funds/stocks. By this way,
you may not make the returns quickly however it can offer you sound sleep at night.
Know your investments: It is recommended to invest in the stocks/funds of the businesses and
industries that you are aware of. You should know the activities of the companies and procure
knowledge about the sector you are investing in. This way you would be able to know if the
company will continue to be successful. The performance of the specific business or industry
cannot be easily predicted with certainty.
When to Buy/Sell: In order to succeed in the stock markets, it is very important to know when
to buy or when to sell. You should do every purchase with a purpose, and constantly re-assess
that purpose as per the prevailing market and other conditions.
Measuring Return on Investment (ROI): The performance of the portfolio is measured by the
return on investment (ROI). The individuals can successfully formulate a logical moneymanagement strategy by knowing the probability of returns received by each dollar invested.
ROI = (Gains Cost)/Cost
The ROI can change depending on the improvement or worsening of the market conditions. It
also depends on the kind of assets or securities held by the investor. In general, the higher
potential ROI involves higher risk and vice-versa. Thus, one of the major tasks of the portfolio
management is the proper risk control.
Measuring Risk: The risk tolerance of the person determines the pace of his/her returns. The
risks and rewards are in essence interrelated to each other where tolerance of the risks tends to
influence or even dictate the rewards. An investor whose goal is to maintain his/her current assets
instead of growing them, he/she will keep only safe and secure investments in the portfolio.
Diversification of the portfolio: The diversification of the portfolio is required to minimize the
risks and maximizes the returns in the long term. It is preferred to diversify your portfolio
however; one should take care to avoid over-diversifying. The diversified portfolio led to
smoothing of peak-and-valley pricing effects caused by the fluctuations in the normal market and

in surviving long term market downturns. The over diversification can become
counterproductive so it needs to be avoided.
Avoiding the gambling: As an investor, one should avoid portfolio that relies on high-risk, highreturn investments. It is because; the higher speculative investment can lead to conditions where
investor may require selling his holdings prematurely at a loss due to liquidity crisis and
expected returns wont materialize.

Benefits of Portfolio Management

Published by Sushant under Portfolio Management
There is large number of benefits of Portfolio Management that can provide high value returns in
case it is performed on regular basis and implemented properly. There are many companies that
aimed to utilize their management efforts on balanced project portfolio for achieving optimal
performance and returns for the entire portfolio.
Maximize overall returns
The proper portfolio management ensures the proper mix of projects for achieving the maximum
overall returns. The project portfolio comprises of projects that provide values that differ widely
from each other. The projects in the portfolio vary in terms of following factors.
Short- and long-term benefit
Synergy with corporate goals
Level of investment
Anticipated payback
By considering all these factors, PPM focuses on optimization of the returns of the entire
portfolio by doing the following activities.
Executing the most value-producing projects

 Directing the funds towards worthy initiatives

Eliminating the redundancies between projects
Saving time and costs
Balancing the Risks posed by Projects
The PPM involves the balancing of the risks posed by the projects in the portfolio. The
companies should evaluate and balance the projects risks in their portfolios for minimizing the
risks and maximizing the returns by diversifying portfolio holdings.
A traditional portfolio may minimize the risk and protect principal; however it also limits the
prospective returns. On the contrary, the hard-line project portfolio may provide greater chances
of good returns however it also poses considerably higher risk of failure or loss. PPM balances
the risks with potential returns by diversifying the project portfolio of the companies.
Optimal Allocation of Resources
The resources are optimally allocated among various projects of the portfolio. As the resources
are really limited, all the projects should compete with each other for resources. PPM involves
measuring, comparing, and prioritizing the projects in order to classify and implement the most
valuable projects only. The conflicts between the projects for resources are resolved by the high
level management. The skill sets required for each project and ideal source of these resources are
determined by incorporating formal sourcing strategies.
Correction of Performance problems
The performance problems are corrected prior to their development in major issues. Although,
PPM cannot completely get rid of performance crisis, however it assists in addressing the
performance issues early. The PPM involves identification, escalation and addressing of any
issues related to execution and helps in keeping the progress of projects on track.
Aligning projects according to business goals

PPM ensures that projects remain aligned to the business goals during their execution by
performing following activities.
Management oversight and monitoring throughout the project
Standard communication and coordination
Regular course correction for checking the project drifts
Redirecting projects for maintaining alignment and changing business objectives
Executive level Project Oversight
Executives are involved for prioritizing and oversighting the project responsibilities. This
ensures that projects receive the required support and they can be completed successfully.
Executives have the required business acumen and they can align project by using various
business strategies.

Stock Portfolio Management

A stock portfolio management refers to the management of investment decisions for a stock
portfolio and it is usually performed by stock management professional due to its complex
nature. The stock portfolio managers are the experts in the field of stocks and well suited for
making decisions for those who want to manage their own investment.
Stock Portfolio Management Softwares
There are various stock management softwares available in the market that assists in process of
stock management. There programs are well designed to provide assistance for those investors
who are good with numbers and stocks.

Benefits of Stock Portfolio Management Softwares

Assists in evaluation of various stocks
Before investing, these programs educate a person about tracking the history of stocks
Recommendations based on personal information
Well designed to help the investor who can manage his own stock portfolio
Some programs can do monthly analysis of stocks for a monthly fee
Some programs can be set to buy and sell certain stocks automatically on the basis of preset
conditions when the stocks reach certain levels on the stock market.
Saves time for knowledgeable investors for managing the stock portfolios.
In addition to providing software for investor for managing his/her stock holdings, there are
various contacts that are available online for offering expert advice in managing an individuals
stock shares.
The portfolio for large number of investors are managed by stock management company who
have stock portfolio managers that will make the decisions for protecting the persons initial
investment and ensures its growth for good returns in future.
The stock portfolio management company handles the IRA accounts for an employer that
provides options to the stock portfolio managers regarding the investment limit and certain
percentage of money for investment in various kinds of stocks.
The employee who has the stock account with the company is free to ask for any modifications
by submitting the written request to the company at any time. The investment firm keeps the
investors away from suffering huge losses by issuing various useful recommendations from time
to time. As the market dynamics changes constantly so it is not possible to avoid the losses all
the time, however the amount of loss can be kept to minimum by taking the services of stock
portfolio managers.

The companies owned by stockholders forms an important component of the free enterprise
system and offer advantages to many people. These stockholders are eligible to take their stand
on company policy decisions by the way of voting and they also share the profits or losses
earned by the company. The stockholders are basically wealthy people who can bear heavy
losses if any incurred during the financial crisis.
The investment in stocks is opened to anyone who would like to invest in stocks. The proper
management of investment in stocks can allow the investors to receive dividends on the
investment and enjoy the profits of a company. In fact, there are many companies that provide
stock shares to their employees on retirement as part of their savings.

Equity Portfolio Management

The Equity Portfolio Management refers to the planning and implementation of various
philosophies, methodologies, and strategies for beating the equity market. The primary objective
of all investment analysis is to take investment decisions or advise others for making their own
investment decisions. Thus, there exists a strong correlation between equity portfolio
management and science of equity analysis.
Equity Portfolio Investment Philosophy
Professional portfolio managers follow the rigid policy with strictly defined parameters for
investment management and stock selection. These portfolio managers work for an investment

management company and do not have freedom to follow general investment philosophy for
governing the portfolios they manage. The portfolio managers are generally guarded by market
capitalization guidelines and thus, equity portfolio management involves understanding of the
investment universe for selecting the efficient investments.
Tax Sensitivity
There are many institutional equity portfolios that are not taxable like pension funds. This
provides more managerial flexibility to portfolio managers as compared to taxable portfolios.
These non-taxable portfolios utilize greater exposure to short-term capital gains and dividend
income than their taxable counterparts.
Portfolio managers of taxable portfolios take special care of following factors.
Stock holding periods
Tax lots
Capital losses
Tax selling
Dividend income generated by portfolios
In comparison to non-taxable portfolio, the taxable portfolios are more successful with a lower
portfolio turnover rate. The portfolio management activity plays a major part in building and
managing portfolios over time.

Building the Portfolio Model

Building and maintaining a portfolio model is a common aspect of equity portfolio management.
It may involve running either one portfolio or many portfolios in one equity investment product.
The individual portfolios are matched against a portfolio model.

Every stock in the portfolio model is assigned a percentage weighting by a Portfolio manager. It
is followed by modifications of individual portfolios for matching against this weighting mix.
The computerization of Portfolio models is done by using either Microsoft Excel or portfolio
management software tools.
Achieving Portfolio Efficiency
An equity portfolio manager can achieve analytical efficiency by running all the portfolios in a
similar way. The portfolio manager is required to have the knowledge and understanding of 30 or
40 stocks that are owned in comparable proportions in all portfolios instead of 100 or 200 stocks.
The analysis of 30 or 40 stocks is easily applied to other portfolios by modifying the model
weights in the portfolio model with passage of time. The dynamic market causes the rise and fall
of individual stocks over time and the portfolio manager is required to change the model
weightings that for reflecting the investment decision in all portfolios.
Equity portfolio management involves the portfolio modelling as an effective way for evaluating
the key set of stocks to a set of portfolios in one group. It acts as an efficient link between
portfolio management and equity analysis.

Career in Portfolio Management

Published by Sushant under Courses and Career
The career in portfolio management is regarded as one of the most desirable and rewarding
careers in the financial industry. Portfolio managers are required to work in collaboration with a
team of analysts and researchers. They are responsible for taking crucial decisions regarding
making final investment decisions regarding various assets or securities.
A Portfolio manager usually has the exposure to diverse array of financial fields and project
management scenarios.
Types of Portfolio Manager Positions

The portfolio manager has to play diverse kinds of roles in the organisation. The position of a
portfolio manager in an organisation depends on the following criteria:
Size of Fund: A portfolio manager may be assigned the responsibility of managing the assets for
a comparatively small independent fund or big asset management institution. A portfolio
manager is also accountable for managing the capital of a large business like bank or
organization like college or university with huge donations.
A portfolio manager manages the assets for management institution with large sums of money
while fund manager are responsible for managing the smaller fund assets. In cases, where a
portfolio manager is assigned the tasks of managing the assets for a large business organization,
he/she is called as a chief investment officer (CIO).
Type of Investment Vehicles: The management of the assets for the respective investment
vehicle is the common task of various money managers. There is a wide range of investment
vehicles comprising of commodity, hedge fund products, retail or mutual funds, high net worth
investment pools, institutional funds, trust and pension funds, etc. Portfolio managers may also
perform the asset management for equity or fixed-income investment vehicles. They may also
specialize in one investment vehicle or multiple investment vehicles.
Investing Style: A portfolio manager may also specialise in various styles of investing apart
from the specialization in equity or fixed income investing.
The range of investment styles incorporates the following.
Hedging techniques
Growth style of management
Value style of management
Small cap specialties
Large cap specialties

 Domestic fund investing

International fund investing

Roles and responsibilities of Portfolio Manager

A portfolio manager has a wide range of roles and responsibilities. He/she checks the status of
dynamic financial markets and monitors the changes in the market economy. He/she should be
aware of the various current events in the market and stay informed. A portfolio manager also
engages in meeting with his or her analysts regularly for discussing the market developments and
tracking the trends of applicable current events.
A day of a portfolio manager is governed by the beginning of the financial markets and they are
among the first employees who come to the office in the morning. A portfolio manager also
directs all the trades of fund or securities in the market by taking final decisions on the securities
involved.
A portfolio manager has to work in team with his team members and analysts that conduct
research on various securities. The final decisions are made by the portfolio manager after their
recommendations about buying or selling of securities. In some cases, a portfolio manager
communicates with the high-level investors or potential investors over the phone or by meeting
them in person

Portfolio Management - Case Study

J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $2 trillion
and operations in more than 50 countries. The firm is a leader in investment banking
financial services for consumers and businesses, financial transaction processing, asset and
wealth management, and private equity.
'Programme Management is now like being an air traffic controller, you need the skills and tools
to assimilate information in multiple dimensions in real-time and then make decisions that are
focused on a busy and changing landing zone three to six months ahead.'

The Challenge
This global investment bank needed one unified set of management information from their
financial systems transformation projects to manage them as global programmes and portfolios.
They needed to demonstrate progress and compliance for senior stakeholders in closer to realtime, rather than in historical reports. With a new solution, management sought to better
coordinate and deliver a complex series of international reorganisation decisions and reap their
cost savings and business opportunities. Many organisations face similar challenges; needing to
relate their projects to the business in a meaningful way for a variety of stakeholders.
The Solution
Empowered Systems created a Programme Management Office (PMO) portal, using Portfolio
Governance. This portfolio management tool is accessible via a web-browser, and it integrates
the bank's complex array of organisational and project information. The system is centred on
roles, creating views of programme information that are more relevant to a users work area and
help to prioritise activity.
The interface works with a system of dynamic scorecards for projects and programmes, so
executives and programme managers can drill into key areas and see risks. The universally
recognised 'red, amber, green' (traffic light) colour coding gives a quick assessment based on
business rules that monitor key indicators such as cost, benefits and the status of milestones,
risks and issues. Inside the tool, the rules and indicators can be customised by the business, and
the various users can collaborate online in a variety of ways.

The relationship of projects and programmes inside the software tool mirrors the organisation's
operating model. Starting with a summary screen, the user can make an infinite number of
queries or 'slice & dice' analyses where different parameters are compared.
The PMO Portal was implemented in phases and continues to evolve in response to
organisational needs and priorities. The current version is a third iteration now providing
portfolio management metrics for risk management, approval workflow of pipeline projects, and
surveys for capturing qualitative assessment.
'Portfolio Governance ensures visibility of our programme and project catalogue and
dynamically prioritises the most important projects according to the bank's specific criteria. The
portal enables senior management to make crucial decisions with all the necessary and relevant
granular information made available to them. It has introduced effective governance and brought
a consistent, consolidated view, delivering a powerful executive decision making tool. It has
brought a greater degree of discipline to previously diverse programme management processes
and capabilities.'
Divisional CIO
The Benefits
Business perspective: The solution has become more than an everyday PMO tool - it now
connects the performance of enterprise-wide programmes and initiatives to strategic business
objectives. The Senior Vice President says it is providing a new level of enterprise performance
visibility.
Evolution: This PMO Portal using Portfolio Governance was first implemented in 2002 and has
now has around 1,000 users globally and three major upgrades delivered on time and to budget.
Flexibility: The portal measures the progress and success of transitioning pipelines into projects.
Issue & Risk Logs, associated project documents and policy documents are linked and are
accessible from the document repository. Managers can easily and flexibly define new groupings
of projects to compare status based on automated aggregations and consistent reporting in
scorecards.

Governance: The portal empowers people by decentralising the acceptance processes to

individual work-stream functions. This includes validation, refinement and review of cost benefit
at standard phase points and in the case of Six Sigma projects, at the Improve phase of the
DMAIIC life cycle. The Compliance Reporting Manager testifies that the Portfolio Governance
PMO Portal enforces rigor and discipline in our PMO process and methodology."
Dependency management: Programme and project mangers use milestone dependencies in the
tool to identify and track interrelationships as they arise, which eliminates the need for manual
investigations.
The product underpins our Finance Transformation, business acquisition and merger integration
governance process and is used to proactively manage, control and report on (scorecard) our
wide portfolio of Finance programmes, projects and application portfolio (delivery dates,
milestones, risks, issues, dependencies, costs, benefits). This has helped to ensure transparency
and visibility to senior management down through the programme/project managers and
workstream teams managing over 80 key programmes and 420 applications."
Senior Vice President.

Bibliography

BOOKS :

Financial service, E.Jordan & K.Natrajan, Himalya Publishing House, Ninth Revised edition

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