Elements of Portfolio Management
Asset allocation: This concept of portfolio management is concerned with the right mix of assets as such to have long term mix of assets. All assets are not same, they do not move in same concert and as we know some assets are volatile than the others. The aim is to create such an asset investment mix that have low correlation to each other.
Diversification: The concept of diversification is to create a basket of investment in a way to spread risks judiciously. It is not possible to predict winners and losers hence a prudent way is to create a right asset mix. Diversification is about spreading and balancing out risk.
Rebalancing: This concept is all about bringing the investment mix or a portfolio back to it's original profile otherwise it can be exposed to greater risk due to the volatility and market fluctuations.
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Objectives of Portfolio Management
When an investor builds a portfolio there are certain objectives, there are some expectations they have from it. All of this is very individualistic and is done basis individual preferences. There are certain objectives as discussed below.
Capital growth can be one of the aims that a portfolio manager may have, there has to be a mix which will aim to result in maximizing your capital.
Another objective is that it might be the main of the investor to bring security and safeguard the principal or the main investment amount.
One of the most significant and common aims are to get returns, a person does an investment to get profits and returns hence this is also common aim.
Couple of others include tax planning, diversification of the risks, liquidity of the investment, marketability of invested securities.
Investors also employ professional portfolio managers who are professionals in return of a fixed fee. They provide their guidance for right mix of portfolio so that maximum advantages can be fetched. Students generally do not get much time to do research and write those lengthy homework writing as there is a lot of time they invest at studies, students do not have the professional understanding of writing assignments and miss of font, reference styles etc. They can instead work with top notch professionals like BookMyEssay and secure the remarkable portfolio management assignment help.