Portfolio Management
The Accounting Homework Help Online Desk can provide information on Portfolio Management, which includes policies for asset management and valuation, loan and investment portfolios. Asset management determines the value of each entity in your portfolio. Loan and investment portfolios form a related category, that is where they are concerned they define how to manage a number of investments into one portfolio.
Equity in companies and other securities may be jointly managed. These investments are normally available to all equity holders, depending on the general nature of the securities and the specific rules of the companies. All investment decisions are made by the managing executive officer of the company.
A company’s strategy is usually set by the individual investor. However, it is the general principles of management that guide the decision making process.
Portfolio management differs from individual management. Asset and loan portfolios are meant to be managed on behalf of the company, and the individual investor. The difference between the two is that in the case of asset management decisions and market analysis decisions are taken on behalf of the company, while in case of portfolio management decisions are taken on behalf of the individual investor.
Portfolio management includes the responsibility of following any significant changes in equity market conditions, including the performance of equities, banks, mutual funds, ETFs and currency pairs. The objective of the portfolio management is to attain balance among the various assets, whereas in case of investment decisions, these objectives are disregarded. It is not possible to attain consistent results.
Asset management is concerned with making investment decisions in a market environment where numerous competing institutions may compete for the same market. The overall objective of management is to provide the safest and most profitable investment opportunities that will help to make the portfolio stable. Most companies do not have a fixed strategy. Therefore, the responsibility of portfolio management lies with the investors and the senior management, asthe ultimate fiduciary.
The focus of asset management is the behavior of financial markets and management of asset portfolios in comparison with market performance. The firm must make timely investment decisions and provide efficient operations.
Portfolio management may be divided into two categories. Firstly, portfolio asset management is involved in the determination of the relative value of various assets, whereas portfolio management activities are concerned with the operation of various assets in a particular portfolio. The objective of the portfolio managers is to ensure the maximum return and minimum risk.
The second category of portfolio management is the diversification of equity by means of incorporating various fixed income instruments into the portfolio. Portfolio management of an equity portfolio may involve the identification of low-risk investments, and the creation of an appropriate risk-adjusted return schedule. In order to achieve that desired objective, portfolio managers will periodically make investment decisions that are based on various relevant considerations.
The difference between the two types of portfolio management is that, while a diversified portfolio minimizes risk, it focuses on global growth, while, in the case of a direct allocation portfolio manager maximizes returns. In fact, a direct allocation portfolio manager will find the most attractive and productive investment opportunities on the undervalued side of the spectrum and undervalue the high risk opportunities to take advantage of high market return.
The importance of portfolio management is that, if this task is performed incorrectly it may negatively impact on a firm’s global growth. For example, portfolio management of an equity portfolio may not allocate its capital efficiently, thereby undermining the profitability of the investment. An average annual cost of capital, which measures the total potential costs of ownership, of a portfolio, is computed by dividing the index return by the total market risk premium.
If you require assistance with portfolio management, then a Portfolio Manager is probably needed. These are specifically trained professionals who have a comprehensive range of resources to offer when handling any financial obligation.