INVESTMENT PORTFOLIO

Investment Portfolio

Investment Portfolio

Introduction

The study is related to the management of portfolio, which specifically focuses on the investment portfolio of GBP 500,000. Management of portfolio is an ongoing practical work that is management of finance which has the goal to let the investor know about the portfolio and how it works because it is known that the selection of portfolios is one of the cornerstones of modern management of assets financial.

In recent times there has been an increase in investment in stock items there are several reasons for the formation of a portfolio, both for an individual to a company or institution, being able to obtain a stress profitability and liquidity acceptable resources idle eventually achieve long term permanent surpluses provide investors with additional income at the end of life work, such as acquiring shares in a company needed to exercise control over its management effectiveness. That is why management of investment portfolio will give a clear idea of how to manage a portfolio and what is its diversification in the fund investment.

Discussion

Portfolio Risk Management Strategies

For an investor, it is recommended to follow, the given mentioned strategies for the portfolio risk management:

Considering the objective value of the financial period. Depending on how close you are the duration of the portfolio investment horizon that is the time period we want to maintain the investment. One could talk about strategies, active coverage and immunizations.

Taking into account the movement of the portfolio. Depending on the degree of rotation of the assets comprising the portfolio can speak of static and dynamic strategies.

Position on expectations of interest rates. Depending on the expectations are on the form and level of interest rates. Active and passive strategies, the latter when there are no such expectations in mind.

Considering the level of risk assumed in the development of the strategy. Distinguishing those that are aimed at eliminating the risk of those aimed at the disruption or modulation of the same.

Based on the position before the return-risk. Distinguish between passive and active strategies. The former are designed to achieve a number of objectives, may be to achieve a certain level of profitability, whatever the evolution of interest rates. In contrast with active type management is to achieve higher levels of profitability than passive strategies in exchange for assuming greater levels of risk within this group also would be possible to identify those strategies that have the characteristic of limiting the risk of those without.

As portfolio risk management strategies based on the concept of financial duration which can be noted as;

Active Management

Taking short positions that is financial term investment horizon of less than investment or long that is length greater financial time horizon. The first type of positions will benefit from increases in interest rates, as it dominates the effect that reinvestment gains from reinvestment at higher interest rates would cover the losses from the decline in market value of investment and generate a surplus. By contrast, long positions are particularly beneficial in scenarios down in interest rates, because the loss ...