INSTITUTE OF ENGINEERING AND TECHNOLOGY

DEPARTMENT OF MBA

SUBJECT : “PORTFOLIO MANAGEMENT STRATEGIES”

APPA

SUBMITTED TO: SUBMITTED BY : Prof Nitesh V Amaresh I D

PORTFOLIO MANAGEMENT

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

Portfolio Management Strategies

• Portfolio Management strategies refer to the approaches that are applied for the efficient portfolio management in order to generate the highest possible returns at lowest possible risks.

Types Of Portfolio Management Strategies

• Active Portfolio ManagementStrategies

• Passive Portfolio ManagementStrategies

Active Portfolio ManagementStrategies

• Active Portfolio Management strategy refers to a portfolio management strategy that involves making precise investments for outperforming an investment benchmark index.

• The portfolio manager that follows the active management strategy that exploits the market inefficiencies by buying under – valued securities or by short selling over – valued securities. Any of these procedures can be used alone or in combination.

Style Of Stock Selection1. Top Down Approach : in this approach ,

managers observes the market as a whole and decide about the industries and sectors that are expected to perform well in the ongoing economic cycle.

2. Bottom Up Approach : in this approach , the market conditions and expected trends are ignored and the evaluation of the companies are based on the strength of their product line , financial statements or any other criteria.

Passive Portfolio ManagementStrategies

• Passive Portfolio Management strategy refers to the financial investment strategy where an investor makes an investment as per the fixed strategy that does not involve any forecasting.

• It stresses on minimising the investment fees and avoiding the unpleasant results of failing to correctly predict the future.

Style Of Stock Selection1. Efficient Market Theory : this theory relies on the

fact that the information that affects the market is immediately available and processed by all investors. Thus , such information is always considered in the evaluation of the market prices.

2. Indexing Theory : According to this theory , the index funds are used for taking the advantages of efficient market theory and for creating a portfolio that impersonate a specific index. The index funds can offer benefits over the actively managed funds because they have lower than average expense ratios and transaction costs.

THANK YOU