Portfolio Management Process

Summaries

A. Planning:

Evaluate Investor characteristics: risk-return, constraints

Evaluate Market characteristics: macro,micro

Develop investment policy statement (IPS)

Determine asset allocation strategy

B. Execution:

C. Feedback:

Measuring and evaluating performance

Monitor dynamic investor objectives and market conditions

Investment objectives: what the investor wants to accomplish with the portfolio

Risk objectives:

Absolute risk: variation

Relative risk: compare to benchmark

Return Objectives

Desired vs required

Investment constraints

1. Liquidity
2. Time horizons
3. Tax
4. Legal and regulatory
5. Others circumstances

Investment Policy Statement (IPS)