Investment analysis and portfolio management mainly focus on covering the different levels of decisions that are made by the investor for improving the return on the portfolio. In addition, the investment analysis focuses on selecting adequate investment options, which investors could use to maximise their return while addressing the required risk levels. Moreover, portfolio management states about the measures used by the investors to manage the portfolio on a daily or time internal basis for detecting the risk and reward conditions of the investment. The investment analysis requires the evaluation of different investment assets, which the investor can use to eliminate the risk attributes and generate higher returns. Hence, the portfolio analysis pools together different assets in a single portfolio to increase the diversification process. The portfolio management sets certain rules, where transactions are done to maintain return and reduce risk from investment.
There are mainly four different types of portfolios, which investors can select for improving their returns from investment, which are as follows.
The investment portfolio is mainly analysed based on the performance and risk attributes. The performance of the portfolio is the main attribute, where the investors compare the risk and return the position of the portfolio before making the investment decisions. Furthermore, the analysis requires the measurement of Portfolio studying an investment portfolio, while detecting whether the investor's needs, preferences, and resources are met by the investment manager. In addition, the analysis also requires evaluating the likelihood of meeting the goals and objectives of the investors, which are present in the investment mandate. Thus, the portfolio analysis is a steps wise process, where the returns, objective, goals, risk and returns of the investment are analysed while detecting whether the managers of the portfolio has achieved the targeted returns from investment.
The major difference between Investment Management and Portfolio Management are as follows.
The key elements of portfolio management are effective diversification, active management, cost efficiency and tax efficiency. Thus, the managers use the key element for improving the returns, while reducing the level of risk involved in the investment. The effective diversification process is effective for the portfolio management process, as maintaining the diversification is essential for freezing the risk at certain levels. In addition, the active management process would ensure that the volatility in the market does not affect the risk and return attributes of the portfolio. Moreover, the cost-efficiency measures would ensure that the portfolio would maintain a lower level of transactions, which can minimise the brokerage cost and improve return. The use of tax efficiency is one of the key components in the portfolio management process, where the sales of the stocks are done at a time, where the tax consequences are the lowest.
Investment option |
Amount |
Weight |
Returns |
WxR |
Security 1 |
15,000 |
25.00% |
8.00% |
2.00% |
Security 2 |
15,000 |
25.00% |
5.50% |
1.38% |
Security 3 |
15,000 |
25.00% |
9.50% |
2.38% |
Security 4 |
15,000 |
25.00% |
11.60% |
2.90% |
|
60,000 |
Portfolio return |
8.65% |
The above table provides information on the portfolio management examples, where the alteration in the levels of investment are conducted for improving the returns from the exposure in the capital market. The table indicates that portfolio management would conduct the selling and buying process to maintain the weights in the portfolio. This management process would ensure that the overall portfolio is distributed adequately while minimising the probability of risk components involved in investment. Thus, risk and return attributes are maintained in the portfolio management process, which allow the investors to maintain the required weight in the portfolio.
All investment portfolio management is not the same, as there are different levels of the portfolio management process, which are Active Portfolio Management and Passive Portfolio Management. The active portfolio management would mainly allow the investors to manage the portfolio on each risk investor while adjusting the investment horizon while reducing the loss occurrence. The Passive portfolio management process does not require a quick response to the change in the portfolio, where the portfolio is not managed actively. Thus, portfolio management are not same and changes with the perception of the investors and requirement.
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