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Portfolio management services

Date post:13-Nov-2014
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The word document states about the portfolio management services & also company structure of hdfc bank portfolio management service is shown
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  • 1. 1 INTRODUCTION OF PORTFOLIO MANAGEMENT A portfolio refers to a collection of investment tools such as stocks, shares, mutual funds, bonds, and cash and so on depending on the investors income, budget and convenient time frame. The art of selecting the right investment policy for the individuals in terms of minimum risk and maximum return is called as portfolio management. Portfolio management refers to managing an individuals investments in the form of bonds, shares, cash, mutual funds etc so that he earns the maximum profits within the stipulated time frame. Portfolio management refers to managing money of an individual under the expert guidance of portfolio managers. Portfolio management refers to the management or administration of a portfolio of securities to protect and enhance the value of the underlying investment. It is the management of various securities (shares, bonds etc) and other assets (e.g. real estate), to meet specified investment goals for the benefit of the investors. It helps to reduce risk without sacrificing returns. It involves a proper investment decision with regards to what to buy and sell. It involves proper money management. It is also known as Investment Management. PMS SERVICES OFFERED BY PORTFOLIO MANAGERS 1. Personal Relationship Manager The portfolio manager acts as a personal relationship manager that enables the client to interact with the fund manager at any given point of time depending on his preference. 2. Monthly Discussion Clients can discuss any concerns or issues related to the money or savings with their appointed portfolio manager on monthly basis. The client can interact and discuss regarding any major changes related to the investment strategies and asset allocation.

2. 2 3. Asset Allocation Portfolio Manager assists in the allocation of assets or savings of clients by advising regarding the investments in stocks, bonds or equity funds. The Asset allocation plan is customized as per the risk preference and goals of the clients. This plan is designed by doing the detailed analysis and evaluation of the clients risk taking capacity, savings pattern, and investment goals. 4. Timing Portfolio managers help the clients in taking timely decisions and thereby preserving their money on time. Portfolio management service assists in the allocating of money at precise time in suitable saving plan. Thus, portfolio managers offer their professional and proficient advice to the clients and suggest when the money should be invested in equities or bonds and when it should be taken out from a particular saving plan. Portfolio managers give their recommendations after analyzing the market thoroughly. They ask the clients to withdraw their money from market in times big risk in stock market and prevents heavy losses. 5. Flexibility Portfolio managers have detailed knowledge of the market conditions and they are the experts of field. They can plan the savings of the client according to his preferences and requirements. It is possible that portfolio managers can invest the clients money according to his preference as they are specialists of the market. Thus, clients can provide flexibility to the portfolio managers to manage their investment with complete efficiency and effectiveness. 6. Administration handling Portfolio management service (PMS) involves handing and care of all type of administrative work by the portfolio managers such as opening a new bank account or taking financial settlement, etc. 3. 3 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 clients 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. SWOT ANALYSIS: PORTFOLIO MANAGEMENT SERVICES A) Strength: Diversified Investment - PMS are having a number of investment objectives from which an investor can choose according to his requirements, time to get returns etc. Easy procedure - The procedure involved for purchasing or selling shares is not very easy. Individual investor can also easily understand and can himself buy or sell shares. Professional Management - The service provides professional management of portfolios with the objective of delivering consistent long-term performance while controlling risk. Continuous Monitoring - It is important to recognize that portfolios need to be constantly monitored and periodic changes made to optimise the results. Risk Control - A research team responsible for establishing the clients investment strategy and providing the PMS provider real time information to support it backs any firms portfolio managers. 4. 4 Hassle Free Operation - Portfolio Management Service provider gives the client a customized service. The company takes care of all the administrative aspects of the clients portfolio with a periodic reporting (usually daily) on the overall status of the portfolio and performance. Flexibility - The Portfolio Manager has fair amount of flexibility in terms of holding cash (can go up to 100% also depending on the market conditions). He can create a reasonable concentration in the investor portfolios by investing disproportionate amounts in favour of compelling opportunities. Transparency PMS provide comprehensive communications and performance reporting. Investors will get regular statements and updates from the firm. Web enabled access will ensure that client is just a click away from all information relating to his investment. Your account statements will give you a complete picture of which individual securities you hold, as well as the number of shares you own. It will also usually provide: a. the current value of the securities you own; b. the cost basis of each security; c. details of account activity (such as purchases, sales and dividends paid out or reinvested); d. your portfolios asset allocation; e. your portfolios performance in comparison to a benchmark; f. market commentary from your Portfolio Manager Customised Advice - PMS give select clients the benefit of tailor made investment advice designed to achieve his financial objectives. It can be structured to automatically exclude investments you may own in another account or investments you would prefer not to own. For example, if you are a long-term employee in a company and you have acquired concentrated stock positions over the years and have become over exposed too little companys stock, a separately managed account provides you with the ability to exclude that stock from your portfolio. Personalised Approach Some Portfolio Managers may provide a personal investment management service to achieve the clients investment objective. In PMS, you may gain direct personalised access to the professional money managers who actively manage your portfolio. 5. 5 This interaction may come in various different ways including in-person meetings, conference calls, written commentary, etc with the fund management team. B) Weakness: Market risk - The capital market is highly volatile in nature. No matter how much one is precautious, he will always be under threat of incurring losses. No control over cost - There is not much control over the cost of operations as the market is volatile and the cost increases quickly or dawn rapidly. High risk - The share market is a place where price of the shares goes up & down rapidly so its always create a high risk. Ticket size Most of the Portfolio Management Schemes have ticket size in more than few Lakhs and Crores in compare with other Financial Instrument like MF which is less attract small investors towards investing PMS. Profit Sharing Most of the companies are in the term of profit sharing with their clients and for that they do hedge in the equity market to generate the profit which is very risky. C) Opportunities: Growing PMS Market with Capital Market - PMS market in India is growing at a very fast pace with the Indian Capital Market and if this pace continuous then Indian PMS and capital market will be one of the strongest economies of the world and investment in this today will then be very fruitful. Branch expansion - Large no. of branches are opening day by day which are trapping the countries having almost same type of socioeconomic condition & even same culture etc. Untapped Retail Investors Most of the companies are only doing niche marketing for their portfolio schemes and they are targeting maximum to the high net worth investors. So, retail investors are getting less attention for that which can be also a part of getting huge market. 6. 6 Untapped rural market - Rural market in India is still not covered fully by the various AMCs. Rural market in India is a very big market and if this market is tapped then awareness about PMS can boost a lot. Debt fund oriented schemes As the day to day changing scenario of Stock market, risk is increasing. So, for that companies should focus in the purely Debt fund oriented schemes which is less focused by most of the companies in the present time. D) Threats: Tough competition - There is very tough competitions because of large number of companies are providing Portfolio Services these days. New Entrant As per the SEBI data of growth of PMS market year by year, numbers of new companies which include foreign companies are entering in this part of the Investment as there is a huge potential in India in the future and also which create the very tough competition. Unawareness Major percent of population is not aware of PMS, so its hard to convince people. Changing scenario - Our market scenario is changing day by day i.e. our

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