A portfolio represents a combination of different investment tools like shares, mutual funds, bonds, cash, and stocks. This is on the basis of the income risk appetite, holding period and budget of the investor. Companies create a portfolio in a way that introduces stability to the risk of non-performance of different pools of investments.
Portfolio management, which is one of our consulting services at The Swiss Quality is the art and science of deciding about the investment mix, its policy, allocating assets to individuals and institutions, and matching investments to objectives. It also encompasses balancing risk against performance, according to Investopedia.
Think of portfolio management as a scenario where someone has given you their money and you want to help them increase the capital in some diversified ways. You have concerns about doing this in a way that you can maintain the risk-return ratio putting the profits in mind as much as the holding period of the investments in question.
Portfolio management therefore means managing the investment of an individual such as shares, cash, mutual funds, bonds in a way that such a person earns the maximum profits within a stipulated period.

TYPES OF PORTFOLIO MANAGEMENT

There are four major types of portfolio management and they are:

• Discretionary portfolio management: Here, the concerned investor authorizes the portfolio manager to handle and cater to his financial needs on his behalf
• Non-discretionary portfolio management: In this case, the portfolio manager can give mere advice to the client about what is good, bad, correct or incorrect to make an accurate investment decision. The client owns the right to take the full decisions on his own.
• Passive Portfolio Management: It is the portfolio management where the individual tracks the index.
• Active Portfolio Management: An active portfolio management entails a team of members who take active decisions based on intense research before investing into any avenue.

Objectives of Portfolio Management

It is important to understand why you might need portfolio management.

• Portfolio management is the customization of the investment needs handled by portfolio managers according to the requirements
• With portfolio management, individuals can get the best options for investments according to the defined criteria of budget, age, income, risk-taking capacity and holding period.
• It is primarily done by portfolio managers who understand the financial needs of the investors and suggest the right investment policy that ensures maximum returns with the least risks.
• Most people who prefer this method are those who believe in having liquidity in investments such that they can get their money back whenever they need it
• Several portfolio management schemes are designed to save for taxes
• Portfolio management guarantees that the investors maintain their purchasing power

Practical Application of Portfolio Management

Practically, the actual method of portfolio management is different from the way it is being done academically. The investors conduct a market survey on the different schemes and their past performances. Also, the fund managers introduce their experience and incorporate some risk-reward ratio after which they select the particular fund in which they would invest.
Thus,

• Portfolio management is an initiation of a contract between an investor and a company with many portfolio schemes. Most times, these are purely stock- or shares-oriented or sometimes, they might be a blend of several investment avenues
• Once you establish the contract, you can then decide on the fee structure verification, the time frame, risk exposure, and the type- whether discretionary or non-discretionary
• The fund manager then performs his responsibility with the portfolio being structured based on the agreed terms. He has to churn the portfolio regularly.
• Afterward, the report of the portfolio’s performance is sent to the investors periodically.
• Many computer-software can be used by the portfolio managers to monitor the developments unfolding in the portfolio
• The fund manager thereafter decides based on quality and profound research which concerns the company and the market-related ones carried out by the team of portfolio managers.

Why Portfolio Management

Portfolio management thus becomes a necessity in this present era where we have quality money in the markets. They take it as the most preferred method of investing and owing to the diverse number of products available across different schemes, every individual can make a good choice based on the criteria that suit them.
Business owners treat portfolio management as an ongoing process through which they can manage the portfolio of their client’s assets. There are many things involved to ensure that a portfolio meets the investment objectives within the constraints. Therefore, with a team of experienced and renowned portfolio managers, The Swiss Quality conscientiously charts out the specific strategies that suit the portfolio management to maintain the trade-off of the risk-return.
We integrate a compilation of steps to create and manage a portfolio of assets to achieve the specified goals of our clients. If you want us to handle or manage your clients for you, we can do that too. Only ensure that you are on the same page with us in terms of expectations and the portfolio’s outlook.

STEPS OF PORTFOLIO MANAGEMENT

The Swiss Quality applies the following steps for a viable portfolio management process:

PLANNING

Planning is the most crucial step in managing portfolio because it sets the foundation of the entire process which comprises an identification of objectives and constraints, drafting the investment policy statement, forming expectations regarding the capital markets and putting up a strategic asset allocation. To be clear, objectives are the return and risk objectives that you can state in absolute or relative terms. Constraints may include liquidity, time horizon, legal, taxes, and other unique circumstances.

EXECUTION

Having completed the planning, executing the planned portfolio comes next, and this is where you decide on the particular portfolio to select, and its implementation. Under the asset allocation stage, the portfolio manager decides on the class of assets they would include in the client’s portfolio and in what exact proportion. For instance, the asset allocation of a client may comprise 10% alternative investments, 30% fixed-income securities, and 60% equities. Security selection then follows the asset allocation. Here, you analyze and select the individual securities. You determine the particular securities you want to purchase.

FEEDBACK

In case you might need to change some things, the feedback stage is where you analyze the changes to ensure they are according to the long-run considerations. Basically, the feedback step contains monitoring & re-balancing and evaluating the performance.

WHAT IS AN INVESTMENT POLICY STATEMENT?

An investment policy statement is a formal written document that businesses create to govern every investment decision-making after taking the client’s objectives and constraints into account. It is best to prepare the investment policy statement in the planning stage.

With decisions about matching investments to objectives, allocating assets and balancing risk against performance, mix investment and their respective policies, there is an art and science involved known by a qualified and experienced team of portfolio managers. The Swiss Quality prides herself on this.
We understand that portfolio management is not a one-size-fits-all approach or strategy, and thus, we treat it just like that. We believe everyone has a unique investment portfolio and needs a customized investment plan. One investment plan that seems best for one person might be different for the other person. Income, budget, risk ability and age could affect this.
Therefore, if you plan to retire soon, now is the best time to consider hiring a professional portfolio manager or consultant to manage your financial portfolio. We incorporate savvy financial and retirement planning and take measures to prevent financial mistakes. That way, we can develop a financial portfolio which you will be proud of, and one that will influence a better life and guarantees huge financial success. Candidly, maximizing return with the market’s appetite for risk can be stressful and this is one reason many people are turning towards professional portfolio management services and operation consultants like The Swiss Quality to assist with making their financial narratives and profile a proud one that spans many years.
There are many factors that affect managing a portfolio successfully. They include a class of assets to select, a method of diversification, the specific strategic management style to deploy and ways to consider tax implications. While some investors are fine with managing their own portfolios and can do it efficiently, others do not have the luxury of time to do that. Now, wouldn’t you rather work with professionals at The Swiss Quality? You will make a wise choice by deciding on partnering with us on planning your financials.
On the basic level, we inform you on how essential diversification is, help you get a grip on expenditures, guide on understanding your risk profile, debt and equities, and studying the market.