NATURE AND SCOPE OF INVESTMENT MANAGEMENT

• NATURE AND SCOPE OF INVESTMENT MANAGEMENT
  FUNDAMENTAL OF INVESTMENT
  SAPM
  MEANING OF INVESTMENT MANAGEMENT

1.     INVESTMENT PORTFOLIO MANAGEMENT IS CONCERNED WITH EFFICIENT MANAGEMENT OF INVESTMENT IS SECURITIES.

2.     ALSO KNOWN AS PORTFOLIO MANAGEMENT

3.     PORTFOLIO MANAGEMENT HAS BEEN PRACTICED AS AN INVESTMENT MANAGEMENT COUNSELLING IN WHICH THE INVESTOR HAS BEEN ADVISED TO SEEK ASSETS THAT WOULD GROW IN VALUE AND PROVIDE INCOME

4.     PORTFOLIO: IS THE COMBINATION OF SECURITIES. IT IS LIST OF SECURITIES THAT BELONG TO AN INDIVIDUAL INVESTORS HAVING CERTAIN GOALS.

5.     MANAGEMENT:- CONSIST OF ALL THE ACTIVITIES CONCERNED WITH TRYING TO ACCOMPLISH THE PARTICULAR GOALS OF THE PORTFOLIO IN AN EXPEDIENT MANNER

6.     PORTFOLIO MANAGEMENT

7.     A PROPER INVESTMENT DECISION MAKING REGARDING WHAT TO BUY AND SELL

8.     PROPER MONEY MANAGEMENT IN TERMS OF INVESTMENT IN BASKET OF ASSETS  SO AS TO SATISFY THE ASSET PREFERENCE OF THE INVESTORS

9.     REDUCE THE RISK AND MAXIMIZE THE RETURN

10.  PORTFOLIO MGMT MAY BE THOUGH OF AS A DECISION MAKING PROCESS WHICH HAS TO DO AWAY WITH CHOOSING AND REVISING PORTFOLIO OF SECURITIES SO AS TO SATISFY INVESTOR OBJECTIVE

• PRINCIPLES OF PORTFOLIO MANAGEMENT

1. IDENTIFICATION OF COLLECTIVE IMPORTANCE OF ALL HOLDING. INDIVIDUAL SECURITIES ARE IMPORTANT ONLY TO THE EXTENT THEY AFFECT THE AGGREGATE PORTFOLIO
2. EVERY PORTFOLIO SHOULD CATER TO THE PARTICULAR NEEDS OF THE INVESTOR
3. DECISION REGARDING THE AMOUNT OF TAKING DECISIONS
4. LARGER RETURN ON INVESTMENT WITH LARGER RISK
5. THE RISK ASSOCIATED WITH A SECURITY DEPENDS UPON WHEN THE INVESTMENT WILL BE LIQUIDATED
6. CAREFUL EVALUATION OF THE RISK AND RETURN

• OBJECTIVE OF INVESTMENT MANAGEMENT

1. IT SHOULD YIELD A STEADY CURRENT INCOME
2.  A GOOD PORTFOLIO SHOULD BE FLEXIBLE AND CONSISTS OF INVESTMENT WHICH CAN BE MARKETED WITHOUT DIFFICULTY
3. SHOULD PROVIDE TAX SHIELD
4. PORTFOLIO SHOULD BE BALANCED AND SHOULD YIELD GOOD RETURN
5. SHOULD ENSURE THAT THERE ARE SUFFICIENT LIQUIDITY
6. INVESTMENT SAFE

• SCOPE OF INVESTMENT MANAGEMENT
• IDENTIFICATION OF THE INVESTOR’S REQUIREMENTS
• FORMULATION OF INVESTMENT POLICY AND STRATEGY

                                          i.    LAY DOWN THE DIFFERENT ASSET CLASSES OF INVESTMENT

                                        ii.    PROPORTION OF THE FUNDS

                                       iii.    PREPARE THE INVESTMENT STRATEGY FOR INCOME AND CAPITAL APPRECIATION

b.    WILL HAVE TO BE CORRELATED WITH THE EXPECTATION OF THE CAPITAL MARKET AND THE INDIVIDUAL SECTORS OF THE INDUSTRY

• EXECUTION OF THE STRATEGY:

1. REQUIRES LOT OF RESEARCH ANALYSIS AND JUDGMENT
2. CONSTRUCTION OF PORTFOLIO MAY RELATE TO THE NEEDS OF GIVEN LEVEL OF INCOME,LIQUIDITY,SAFETY ETC
3. SUCCESS DEPENDS UPON THE INITIATIVE,INNOVATION AND JUDGMENT
   
   

• MONITORING OF PORTFOLIO:-

1. EVALUATION AND ADJUSTMENT OF COMPOSITION OF PORTFOLIO FROM TIME TO TIME
2. DONE WITH THE OBJECTIVE OF MAKING IT MORE OPTIMAL AND EFFICIENT

• FACTORS AFFECTING INVESTMENT DECISION

1. AMOUNT OF INVESTMENT
2. PURPOSE OF THE INVESTMENT
3. FOR SAVING TAX
4. FIXED RETURN
5. APPRECIATION IN THE VALUE OF SECURITIES
6. SELECTION OF THE SECURITIES
7. TIMING OF PURCHASE

• PROCESS OF INVESTMENT DECISIONS
• INVESTMENT POLICY:-

1. DETERMINATION OF INVESTIBLE FUNDS OR THE AMOUNT TO BE INVESTED
2. DETERMINATION OF INVESTMENT OBJECTIVE
3. IDENTIFICATION OF THE POTENTIAL INVESTMENT ASSETS
4. CONSIDERATION OF THE ATTRIBUTES OF VARIOUS INVESTMENTS

• INVESTMENT ANALYSIS:-HELPS IN GENERATING THE EFFICIENT PORTFOLIO.INVESTMENT ANALYSIS IS CONCERNED WITH DETERMINATION OF THE FUTURE RISK AND RETURN IN HOLDING BLENDS OF VARIOUS INDIVIDUAL SECURITIES
• VALUATION OF SECURITIES:-IS THE PRESENT WORTH OF THE FUTURE BENEFITS FROM THE INVESTMENTS
• PORTFOLIO CONSTRUCTION:-

1. DECIDING THE DIVERSIFICATION LEVEL
2. CONSIDERATION THE INVESTMENT TIMING
3. SELECTION OF THE INVESTMENT TIMING
4. ALLOCATION OF ASSETS/SECURITIES

• PORTFOLIO EVALUATION AND REVISIONS:-REQUIRES AN INVESTOR TO BALANCE WHAT HE HAS AGAINST THE AVAILABLE ALTERNATIVES.