1%20-%20The%20Investment%20Management%20Process - BANK 3004...

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BANK 3004 Portfolio and Fund Management Page 1 of 5 Topic 1 – The Investment Management Process © H. Bassan, 2009 Topic Overview An investment is generally held as a portfolio – a group of assets (which may include financial assets such as shares and bonds as well as real assets like residential property). Portfolio management involves a series of decisions and actions required by every investor: individual, investment manager or institution. Portfolios must be managed whether investors follow a passive or active approach to selecting and holding their assets. Investment strategies or policies result from setting objectives, considering the circumstances and meeting constraints of investors. Investor objectives and constraints affect the formation of investment policies. In this topic, we consider the overall framework for the practice of portfolio management and the characteristics of major types of investors. That is, we learn about the process involved with the decision to invest based on the characteristics of the investor. We explore why and how portfolio management is helpfully considered as a process. This systematic approach provides a consistent framework that the professional manager can use in managing the portfolio of any investor. Learning Objectives After studying this topic, you should be able to: 1. Describe the features of the investment environment: its major sectors, instruments and markets. 2. Identify the main types of investors and their special needs. 3. Explain the steps in the portfolio management process. 4. Explain why portfolio management should be practiced as a process. 5. Explain how the objectives, constraints and circumstances of investors affect the formation of investment policies. 6. Compare and contrast active versus passive portfolio management. 7. Distinguish between the top-down approach and the bottom-up approach for investment strategies. 8. Apply the investment management process to typical investment situations. 9. Discuss the meaning of asset allocation. Textbook Reading Chapter 21 in: Bodie, Zvi, Alex Kane and Alan J. Marcus (2008) Essentials of Investments , Seventh Edition, McGraw-Hill/Irwin, New York Pages 11, 238-239 and 333-334 for passive and active investment strategies Pages 9-10 and 149 for the “top-down” approach to portfolio construction Review of Basic Knowledge Chapters 1 to 4 A quick review, or a more detailed one, is recommended to learn the basics of the investment environment, financial instruments and securities markets. Most of this material would have been covered in one or more your previous courses. You should, in particular be aware of the security characteristics, players, classifications and trading activities for the financial instruments (or products) in the following markets:
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This note was uploaded on 10/19/2011 for the course BANK 3004 taught by Professor Hb during the Three '10 term at South Australia.

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1%20-%20The%20Investment%20Management%20Process - BANK 3004...

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