Asset Manager: Contents and Steps of Portfolio Management

Contents and steps of securities investment management

Securities investment management is a very complex system engineering, involving planning, analysis, selection, supervision and adjustment, and there are many contents to be managed.

Generally, portfolio management includes the following five steps:

(a) to formulate investment guidelines and policies

Making investment guidelines and policies is the first step of securities investment management. As mentioned above, different investors are influenced by many factors, such as the source of investment funds, financial status, tax status and so on, and their investment purposes are different. To achieve the specific investment goals expected by investors, it is necessary to determine the investment guidelines and policies in advance.

When investors invest in real estate, the investment targets are mainly different types of real estate in different lots, which is bound to be related to factors such as risk, income and investment period. Therefore, we need to consider the investment principles and policies: investment quantity, risk tolerance and investment period.

(2) Investment analysis

Investment analysis is the second step of portfolio management, including macro analysis, industry analysis and micro analysis. Its purpose is to analyze various factors (such as macroeconomic factors, market micro-factors, political factors, etc. ) affect the changes of investment activities and regional planning, so as to identify the income risk characteristics of different investment objects, judge whether the current price of investment objects is reasonable, so as to find better investment opportunities and lay the foundation for building investment portfolio.

(C) the establishment of investment portfolio

Building a portfolio is an important step in portfolio management. Any investment goal needs to be achieved through portfolio. Therefore, under the guidance of investment principles and policies, according to the results of investment analysis, it is particularly important to choose different properties and establish a suitable investment portfolio through appropriate methods. In the process of building a portfolio, portfolio managers must consider important issues such as timing, selection and diversification.

Timing refers to grasping market opportunities and is closely related to macro-analysis. Through macro analysis, we can predict the future trend of the market, so as to grasp the opportunity to enter and leave the market and rationally allocate the amount of funds of various assets. Selection refers to determining which properties to invest in and the investment ratio, which is related to micro-analysis. Diversification refers to the diversified investment strategy adopted to reduce non-systematic risks.

(D) Adjustment of investment portfolio

Appropriate adjustment of investment portfolio is an important means to ensure the realization of investment objectives. Many internal and external factors, such as the ups and downs of the national economy, the ups and downs of industries, government policies, etc., will change over time, thus affecting the income and risk structure of various properties. Therefore, some originally unattractive properties may become attractive, while the originally attractive properties may lose their attractiveness. Therefore, it is necessary to continuously monitor the established portfolio. Once the market changes make it unable to meet the requirements of investors, which is not conducive to the realization of investment objectives, the investment portfolio should be adjusted in time.

(v) Portfolio performance evaluation

Portfolio performance evaluation is the last link of portfolio management, which is to check and evaluate the performance and work performance of portfolio managers by scientific methods according to certain standards.

Usually, the method of portfolio performance evaluation is to compare the results of the portfolio to be evaluated with those of other alternative portfolios, and then investigate whether the investment performance comes from the skill or luck of the investment manager.

If the manager of the portfolio is the owner of the asset, good investment performance will promote the original portfolio to remain, while poor investment performance will promote the asset owner to adjust the investment process or portfolio. If the manager of the portfolio is not the owner but the agent, good investment performance can make the client repay the manager, while poor investment performance will lead to the increase of the constraint of the asset owner on the manager or the transfer of investment funds by the client.