Portfolio Management Essays -- GCSE Business Marketing Coursework

Portfolio ManagementIntroductionPortfolio management is a aggregate of securities as whole, rather than unrelated single(a) holdings. Portfolio management stresses the selection of securities for inclusion in the portfolio based on that securitys contribution to the portfolio as a whole. This purposes that there some synergy or some fundamental interaction among the securities results in the heart and soul portfolio effect being something more than the sum of its parts. When the securities atomic number 18 combined in a portfolio, the pay back on the portfolio will be an sightly out of the returns of the securities in the portfolio. For example, if a portfolio was comprised on equal positions in deuce securities, whose returns argon 15% and 20%, the return on the portfolio, will the average of the returns of the two securities in the portfolio, or 17.5%. From this we will discuss the process of creating a diversified portfolio. The diversified portfolio is a theory of i nvesting that reduces the risk of losing each(prenominal) your m bingley when all your eggs are not in one basket. Diversification limits your risk an over the long run, john improve your total returns. This is achieved by putting assets in several categories of investments. Portfolio ProcessThe portfolio process is as follows1. Designing an investment objective2. Developing and implementing an asset mix3. supervise the economy and the markets4. Adjusting the portfolio and measuring the performanceDue to the intensity of each of the iv items, we will be covering only the first two.1. Investment preyThis topic is broad and contains three study divisions. They are foundation objectives, constraints and major objectives.Foundation Objectives These objectives generally receive the most attention from investors and are unyielding by thorough determination of your needs, preferences and resources. Return you need to determine whether you prefer a strategy of return maximizati on, where assets are invested to make the greatest return possible while staying within the risk tolerance level, or whether a required minimum return with certainty is preferable, generating only as a lot return with emphasis on risk reduction. Risk There are many ways to assess the risk tolerance of any finicky investor, from the least knowledgeable of investments to the very sophisticated investor. Beside... ...the market as a whole. Diversifying among a number of securities can reduce non strategyatic risk.Both of these types of risk can be avoided when you correctly evaluate your risk guidelines and determine the maximum enumerate of risk that you are willing to handle. Conclusion Once your portfolio has been established then next step in the management is to evaluate your portfolios performance. The supremacy of your portfolio is determined by comparing the total rate of return of the portfolio to the average total return of comparable portfolios. It is essential to develop a system to monitor the appropriateness of the securities that comprise the portfolio and the strategies governing it. The process is twofold as it involves monitoring The changes in your goals, financial position and preferences Expectations in capital markets and individual companiesRemember that diversification is more than placing your eggs in different baskets. It is as well making sure that all your baskets arent made from the same material. References bulwark Street 101, www.familyinternet.comLearning to Invest, www.learningtoinvest.comYour Money Coach, www.yourmoneycoach.com