Process of Portfolio Management

 

Capital Market Expectations

To help investors assess the potential investment returns and determine the long-term outlook, formulate expectations for risk and return of various asset classes.

Asset Allocation Strategy

There are two strategies to consider here, strategic and tactical. 

A strategic asset allocation strategy is a long-term strategy that necessitates regular rebalancing to ensure you do not deviate from your goals.

A tactical asset allocation strategy, on the other hand, takes a more active approach that reacts to changing market conditions. This means that despite having a long-term plan, you make frequent changes for short-term gains.

Feedback

Any changes are thoroughly examined to ensure they are consistent with long-term objectives.

Monitoring and Rebalancing

A portfolio manager should regularly monitor and evaluate risk exposures within the portfolio to rebalance it according to the strategic asset allocation.

Performance Evaluation

Evaluating a portfolio using absolute and relative returns gives a complete picture of its strengths and weaknesses. Such help portfolios reach their full potential and give investors the confidence that their funds are managed well.

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