Portfolio management for financial and investment management

1. Madan Mohan Malaviya University of Technology Gorakhpur (UP) India
Department of Humanities and Management Sciences
Seminar Report on the
Topic
“Portfolio Management”
For the Course
Master of Business Administration (MBA)
For Academic Year
2018 – 2020
SUBMITTED BY
Mohammad Jilani
2018213028
GUIDED BY
Dr. Vinay Kumar Yadav

2. Meaning :- It refers to a collection of investment tools such stock, mutual fund, bond, cash etc depending on
the investor’s income, budget, and convenient time frame.
Portfolio management is the art and science of making decisions about investment mix and policy, matching
investments objectives, asset allocation for individuals and institutions, and balancing risk against
performance. Portfolio management is all about determining strengths, weaknesses, opportunities and threats
in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other trade-offs
encountered in the attempt to maximize return at a given appetite for risk.

3. Portfolio management is the art and science of making decisions about investment mix and policy, matching
investments objectives, asset allocation for individuals and institutions, and balancing risk against
performance.

4. Objective of Portfolio
Management
Safety of
Principal
Amount
Investment
of Disposal
Income
Growth of
Capital
Marketability
Well
Diversified
Portfolio
Minimal Tax
Burden
Liquidity

5. Process of Portfolio Management
1
2
3
4
5
6

6. Need for Portfolio Management
 Portfolio management presents the best investment plan to the individuals as per their income, budget,
age and ability to undertake risks.
 Portfolio management minimizes the risks involved in investing and also increases the chance of making
profits.
 Portfolio managers understand the client’s financial needs and suggest the best and unique investment
policy for them with minimum risks involved.
 Portfolio management enables the portfolio managers to provide customized investment solutions to
clients as per their needs and requirements.

7. Capital Asset Pricing Model (CAPM)
The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk
and expected return for assets, particularly stocks. CAPM is widely used throughout finance for pricing
risky securities and generating expected returns for assets given the risk of those assets and cost of
capital. Pricing Model is used to calculate the asset’s rate of profit or rate of return (ROI). Investors
expect to be compensated for risk and the time value of money. The risk-free rate in the CAPM formula
accounts for the time value of money.
In Capital Asset Pricing Model, the asset responds only to: (Assumption)
• Market risks or non-diversifiable risks often represented by beta
• Expected return of the market
• Expected rate of return of an asset with no risks involved

8. The beta of a potential investment is a measure of how much risk the investment will add to a
portfolio that looks like the market. If a stock is riskier than the market, it will have a beta
greater than one. If a stock has a beta of less than one, the formula assumes it will reduce the
risk of a portfolio.

9. Beta of Yes
Bank and Gail
ltd.

10. Key Elements of Portfolio Management
• Asset Allocation: The key to effective portfolio management is the long-term mix of assets. Asset allocation is
based on the understanding that different types of assets do not move in concert, and some are more volatile than
others.
• Diversification: The only certainty in investing is it is impossible to consistently predict the winners and losers,
so the prudent approach is to create a basket of investments that provide broad exposure within an asset
class. Diversification is the spreading of risk and reward within an asset class,
• Rebalancing is a method used to return a portfolio to its original target allocation at annual intervals. It is
important for retaining the asset mix that best reflects an investor’s risk/return profile. Otherwise, the movements
of the markets could expose the portfolio to greater risk or reduced return opportunities.

11. Conclusion
Portfolio management is believed to be the leading strategy in the success of the modern
companies investment. Portfolio is collection of different securities and assets by which we can
satisfy the basic objective "Maximize yield minimize risk. Further we have to remember some
important investing rules which are:
• Investing rules to be remembered.
• Don't speculate unless it's full-time job.
• Beware of irrelevant outside information or tips.
• Before buying a security, it’s better to find out everything one can about the company, its
management and competitors, its earnings and possibilities for growth.

12. Thank You