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The Study Of Portfolio

Management

Index
Sr.No.

Topic

Introduction

Meaning
Definition Of 'Portfolio
Management'

Process

Need For Portfolio Management

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Pg No.

INTRODUCTION:
Investing in securities such as shares, debentures, and bonds is profitable as
well as existing. It is indeed rewarding, but involves a great deal of risk and
call for scientific knowledge as well as artistic skill. In such investment, both
rational as well as emotional responses are involved. Investing in financial
securities is now considered to be one of the best avenues for investing
ones saving while it is acknowledged to be one of the most risky avenues of
investment.
It is rare to find investors investing their entire
savings in a single security. Instead, they tend to
invest in a group of securities. Such a group of
securities is called a portfolio. Creation of a portfolio
helps to reduce risk without sacrificing returns.
Portfolio management deals with the analysis of
individuals securities as well as with the theory and
practice of optimally combining securities into
portfolio. An investor who understands the
fundamental principles and analytical aspects of
portfolio management has a better chance of success.
A Portfolio Management refers to the science of analyzing the strengths,
weaknesses, opportunities and threats for performing wide range of activities
related to the ones portfolio for maximizing the return at a given risk. It
helps in making selection of Debt Vs Equity, Growth Vs Safety, and various
other tradeoffs.
Major tasks involved with Portfolio Management are as follows:

Taking decisions about investment mix and policy

Matching investments to objectives

Asset allocation for individuals and institution

Balancing risk against performance

In terms of mutual fund industry, a portfolio is built by buying additional


bonds, mutual funds, stocks, or other investments. If a person owns more
than one security, he has an investment portfolio. The main target of the
portfolio owner is to increase value of portfolio by selecting investments that
yield good returns.
As per the modern portfolio theory, a diversified portfolio that includes
different types or classes of securities; reduces the investment risk. The
basics and ideas of Investment Portfolio Management are also applied to
portfolio management in other industry sectors:

Application Portfolio Management: It involves management of


complete group or subset of software applications in a portfolio. These
applications are considered as investments as they involve
development (or acquisition) costs and maintenance costs. The
decisions regarding making investments in modifying the existing
application or purchasing new software applications make up an
important part of application portfolio management.
Product Portfolio Management: The product portfolio management
involves grouping of major products that are developed and sold by
businesses into (logical) portfolios. These products are organized
according to major line-of-business or business segment. The
management team actively manages the product portfolios by taking
decisions regarding the development of new products, modifying
existing products or discontinues any other products.
Project Portfolio Management: It is also referred as an initiative
portfolio management where initiative portfolio involves a defined
beginning and end; precise and limited collection of desired results or
work products; and management team for executing the initiative and
utilizing the resources.

MEANING:

The portfolio theory was originated by Markowitz in the early 1950's. and further
developed in the 1960's by Sharpe.
Based on the principle "Dont put all your eggs in one basket." the
investors knew intuitively that it was smart to diversify their portfolio. Markowitz
was the first to quantify risk and demonstrate quantitatively why and how
portfolio diversification works to reduce risk and optimize return for investors.
Markowitz has also introduced the concept of an "efficient portfolio". An efficient
portfolio is one which has the smallest attainable portfolio risk for a given level
of expected return (or the largest expected return for a given level of risk).
Portfolio Management (PM) is the management of selected groupings of
investments using integrated strategic planning, integrated architectures,
measures of performance, risk management techniques, transition plans, and
portfolio investment strategies. Usually, PFM is focused on IT-related
investments in both the commercial sector and in the Federal Government, but
in an ideal world the portfolio should be inclusive of all investments: people,
processes and technology.
In the simplest and most practical terms, portfolio management focuses on
five key objectives:
1. Defining goals and objectives clearly articulate what the portfolio is
expected to achieve. Questions to consider: What is the mission of the
organization and how does IT support and achieve that mission?
2. Understanding, accepting, and making tradeoffs determine what to invest
in and how much to invest. Questions to consider: Which initiatives contribute
the most to the mission?
3. Identifying, eliminating, minimizing, and diversifying risk select a mix of
investments that will avoid undue risk, will not exceed acceptable risk tolerance
levels, and will spread risks across projects and initiatives to minimize adverse
impacts. Questions to consider: When and how do you terminate a legacy
system? At what point do you cancel a project that is still behind schedule and
over budget?
4. Monitoring portfolio performance understanding the progress your portfolio
is making towards achieving of the goals and objectives of your organization.
Question to consider: In whole, is the portfolios progress meeting the goals of
the mission?
Achieving a desired objective have the confidence that the desired
outcome will likely be achieved given the aggregate of investments that
are made.

Managing investments in equities requires time, knowledge, experience and


constant monitoring of stock markets. Those who need an expert to help
manage their investments, portfolio management services (PMS) comes as
an answer. The business of portfolio management has never been an easy
one. Juggling the limited choices at hand with the twin requirements of
adequate safety and sizeable returns is a task fraught with complexities.
Given the unpredictable nature of the share market, it requires solid
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experience and strong research to make the right decision. In the end it boils
down to making the right move in the right direction at the right time. That's
where the expert comes in. When you invest your hard earned money, it is
imperative to know all about your investments. We help you to take those
steps forward towards Informed Investments - a consultative and transparent
method of investing. With our portfolio management services you are always
consulted and informed of all investment decisions, thus giving you total
control of your portfolio.
A portfolio manager counsels the clients and advises him the best possible
investment plan which would guarantee maximum returns to the individual.
A portfolio manager must understand the clients financial goals and
objectives and offer a tailor made investment solution to him. No two clients
can have the same financial needs. An individual who understands the
clients financial needs and designs a suitable investment plan as per his
income and risk taking abilities is called a portfolio manager. A portfolio
manager is one who invests on behalf of the client.
Definition of 'Portfolio Management'
The art and science of making decisions about investment mix and policy,
matching investments to objectives, asset allocation for individuals and
institutions, and balancing risk against performance.
Portfolio management is all about strengths, weaknesses, opportunities and
threats in the choice of debt vs. equity, domestic vs. international, growth vs.
safety, and many other tradeoffs encountered in the attempt to maximize
return at a given appetite for risk.

Process

A full understanding of clients real estate investment goals and objectives


drives portfolio management at Hart Realty Advisers. To pursue superior
results, we follow a disciplined process focusing on adding value throughout
strategy development, acquisition, ownership, and disposition of an asset.
We believe identifying the right combination of assets is essential to
developing a well-performing portfolio. Our fundamental objective in
managing each investment is to optimize value, ultimately providing clients
with consistently attractive, risk-adjusted returns. Determining when a
property should be sold is based on a comprehensive hold/sell model that
provides qualitative and quantitative measurement of each property, local
market environment, and investment criteria impacting asset performance
over various holding periods.

A. Strategy management:

Understand client risk/return parameters and liquidity requirements.

Portfolio Advisor and the Investment Strategy team develop a course of


action to achieve client objectives; then make sure that implementation is

compliant with these goals.

Portfolio Advisor advocates for client in all investment meetings.


B. Acquisition:
Deal Flow

Long-standing strategic relationships with prominent owner/sellers and


brokers in key markets nationwide enable Hart Realty Advisers to negotiate
many originations directly.

Our ability to act promptly and decisively enhances our reputation as a


credible buyer that can execute a transaction
efficiently and on time.

Our network of contacts often affords us access


to potential acquisitions prior to distribution to the
broadest universe of buyers.

Our well-established contact network and our


acquisition officers proactive approach to sourcing
new investments help us maintain a consistent pipeline of potential
opportunities.

Sourcing Transactions

Transaction team identifies potential investments for all portfolios.

Viable transactions are allocated to a particular portfolio.

Before the transaction is approved at the Investment Committee level,


a stringent, in-depth underwriting analysis of the property, its competition,
and market position is undertaken.

Following due diligence and prior to closing, a comprehensive


investment recommendation memorandum is prepared containing the
underwriting results, financial, market, engineering, and environmental
analysis as well as material risks, exit strategies and in-house valuation of
the asset.

Entire analysis is presented to the Investment Committee for review


and final approval.

C. Assets Management:
Approach
Asset Management Group provides the effective link
between client/investor expectations and real estate
equity investment performance. The primary objective
of the Asset Management Group is to maintain, enhance and otherwise
maximize asset operating performance and ultimately property value and
yield over the investment lifecycle. The Asset Management Group achieves
superior investment performance through a proactive, dynamic, disciplined,
and consistently-applied approach to asset ownership and disposition.
Process
The asset management process begins prior to property acquisition with the
Asset Manager playing a key role in analysis of prospective acquisitions.
Asset Managers at Hart Realty Advisers have significant experience
managing all property types and are regionally assigned.
Each property is maintained in accordance with an established and
successful asset management model, with an Annual Business Plan for every
asset developed each fiscal year as its focus. The Plan articulates property
level operating and capital programs as well as various asset positioning
strategies designed to achieve asset and portfolio investment objectives.
Property Management
Assets are managed locally by third-party firms selected by the Asset
Management Group to provide services required for each property. These
firms are selected based on their market
performance history, market knowledge, cost, and
in particular, service capabilities in relation to the
type of asset and investment objective.
In administering the properties operating guidelines
established in each Annual Business Plan, Asset
Managers take an active role in all key property
management decisions.
D. DISPOSITION:
Approach:

Approach to dispositions is dynamic such that an asset


may be recommended for disposition at any time during
the year depending on client strategic considerations as
well as property or market conditions. Disposition
decisions are generally made each year during the
Annual Business Plan process, with the plan being the
primary vehicle for recommending a sale. The Asset
Manager is responsible for formulating disposition
recommendations and is charged with the execution of the sale process once
a recommendation has been approved by Hart Realty Advisers Investment
Committee and client.
Process
Each asset is reviewed for disposition annually. During the Annual Business
Plan process or otherwise if necessary, each asset is subjected to a rigorous
hold/sell analysis with the results evaluated against the clients investment
objectives.
Upon approval to sell, the sale process is managed by the Asset Manager
through a third-party sale agent. The agent is selected by the Asset Manager
through an Request for Proposal (RFP) process which evaluates the relative
attributes of various candidates.
E. Research:
Research-based methodology is used to support the decision-making process
for asset management, acquisitions, and dispositions. Informational tools
providing detailed reviews of property types, capital markets, and property
investment cycles are available to analysts at their desktops. Research
assists in providing relevant data and reports requested by clients.
Research also prepares economic, demographic, and fundamental real estate
data that is integrated with the investment knowledge of Hart Realty
Advisers real estate professionals to help formulate investment strategy and
determine target markets. Due to the significant economic and real estate
market differences which often exist among metropolitan areas, Research
develops models based on fundamental assessments of supply and demand
indicators to help identify those metropolitan areas with the most favorable
investment potential.

Need for Portfolio Management:

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Portfolio management presents the best investment plan to the individuals


as per their income, budget, age and ability to undertake risks.
Portfolio management minimizes the risks involved in investing and also
increases the chance of making profits.
Portfolio managers understand the clients financial needs and suggest the
best and unique investment policy for them with minimum risks involved.
Portfolio management enables the portfolio managers to provide
customized investment solutions to clients as per their needs and
requirements.

IMPORTANCE OF PORTFOLIO MANAGEMENT:


Portfolio management plays a critical role in facilitating organizational
survival, growth and transformation. By better coordinating investments in
change initiatives, improving the management of risk, working
collaboratively as one team and by providing high quality, timely information
that enhances management decision-making, we are able to:

Invest in the right change initiatives in the context of the current


environmental conditions, and
Ensure successful delivery in terms of time, quality, budget and
benefits realization

THE BENEFITS OF PORTFOLIO MANAGEMENT:


1. Benefit #1: Increase project delivery success:
Unsuccessful project delivery leads to project failure. Project failure can be
caused by many factors such as cost overruns, schedule delays, poorly
defined requirements, mismanaged resources, lack of strategy alignment,
unresolved issues, or technical limitations. PPM allows organizations to
ensure these factors are minimized within project delivery.
2. Benefit # 2: Reduce overspending:
Even successful projects can reflect overspending. Overspending can be
caused by numerous factors such as poor project estimating, inaccurate
scheduling, improper resource allocation, and no visibility into project data.

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Forrester reported that organizations can expect a decrease overspending by


10% on average, sometimes more if utilizing a PPM toolset.
3. Benefit #3: Faster project turn times:
There are many reasons why PPM can reduce project turn times by an
average of 10%. Governance, workflow, and standardization tend to reflect
repeatable processes that are proven. These defined processes that have
been aligned with PPM technology allow team members to keep the work
flowing and will typically increase productivity.
4. Benefit #4: Reduce no value projects:
Project portfolios should reflect a group of high value projects and or work
that align with strategic objectives and produce individual business results.
In many organizations, some projects may be defined as duplicated efforts
when compared to other initiatives within the same portfolio. PPM is critical
for project selection. PPM tools allow you to track the overall value of each
project, its estimated benefits, ROI, and other
key decision factors. Based on scoring and
ranking of key performance indicators, projects
can then be selected or cancelled. Business
leaders need PPM to ensure they are making the
right decisions for the most profitable portfolio.
5. Benefit #5: Streamline data and
increase collaboration:
Many businesses today still rely on manual tools for project planning and
reporting. Many are still using excel worksheets. These tools are typically
located on a clients computer and are not intended for enterprise use. Data
that is transferred and updated through email or other means is not
considered to be real-time information and can become out of date quickly
leading to project conflicts and inconsistencies. Project transparency is
critical for proper decision making and improved project performance.
5 POPULAR PORTFOLIO TYPES:
Stock investors constantly hear the wisdom of diversification. The concept is
to simply not put all of your eggs in one basket, which in turn helps mitigate
risk, and generally leads to better performance or return on investment.

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Diversifying your hard-earned dollars does make sense, but there are
different ways of diversifying, and there are different portfolio types. We look
at the following portfolio types and suggest how to get started building them:
aggressive, defensive, income, speculative and hybrid.
1. The Aggressive Portfolio:
An aggressive portfolio or basket of stocks includes those stocks with high
risk/high reward proposition. Stocks in the category typically have a high
beta, or sensitivity to the overall market. Higher beta stocks experience
larger fluctuations relative to the overall market on a consistent basis. Most
aggressive stocks (and therefore companies) are in the early stages of
growth, and have a unique value proposition. Building an aggressive portfolio
requires an investor who is willing to seek out such companies, because most
of these names, with a few exceptions, are not going to be common
household companies.
2. The Defensive Portfolio:
Defensive stocks do not usually carry a high beta, and usually are fairly
isolated from broad market movements. Cyclical stocks, on the other hand,
are those that are most sensitive to the underlying economic "business
cycle." For example, during recessionary times, companies that make the
"basics" tend to do better than those that are focused on fads or luxuries.
Despite how bad the economy is, companies that make products essential to
everyday life will survive.
3. The Income Portfolio:
An income portfolio focuses on making money through dividends or other
types of distributions to stakeholders. These companies are somewhat like
the safe defensive stocks but should offer higher yields. An income portfolio
should generate positive cash flow. Real estate investment trusts (REITs) and
master limited partnerships (MLP) are excellent sources of income producing
investments. These companies return a great majority of their profits back to
shareholders in exchange for favorable tax status. REITs are an easy way to
invest in real estate without the hassles of owning real property. Keep in
mind, however, that these stocks are also subject to the economic climate.
4. The Speculative Portfolio:

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A speculative portfolio is the closest to a pure gamble. A speculative portfolio


presents more risk than any others discussed here. Finance gurus suggest
that a maximum of 10% of one's investable assets be used to fund a
speculative portfolio. Speculative "plays" could be initial public offerings
(IPOs) or stocks that are rumored to be takeover targets. Technology or
health care firms that are in the process of researching a breakthrough
product, or a junior oil company which is about to release its initial
production results, would also fall into this category.
Speculative stocks are typically trades, and not your classic "buy and hold"
investment.
5. The Hybrid Portfolio:
Building a hybrid type of portfolio means venturing into other investments,
such as bonds, commodities, real estate and even art. Basically, there is a lot
of flexibility in the hybrid portfolio approach. Traditionally, this type of
portfolio would contain blue chip stocks and some high grade government or
corporate bonds. REITs and MLPs may also be an investable theme for the
balanced portfolio. A common fixed income investment strategy approach
advocates buying bonds with various maturity dates, and is essentially a
diversification approach within the bond asset class itself.
6. The Bottom Line:
At the end of the day, investors should consider all of these portfolios and
decide on the right allocation across all five. Here, we have laid the
foundation by defining five of the more common types of portfolios. Building
an investment portfolio does require more effort than a passive, index
investing approach. By going it alone, you will be required to monitor your
portfolio(s) and rebalance more frequently, thus racking up commission fees.

Portfolio Manager:
A portfolio manager is a person who makes investment decisions using money
other people have placed under his or her control. In other words, it is
a financial career involved in investment management. They work with a team
of analysts and researchers, and are ultimately responsible for establishing an
investment strategy, selecting appropriate investments and allocating each
investment properly for a fund- or asset-management vehicle.
Portfolio managers are presented with investment ideas from internal buyside analysts and sell-side analysts from investment banks. It is their job to sift

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through the relevant information and use their judgment to buy and
sell securities. Throughout each day, they read reports, talk to company
managers and monitor industry and economic trends looking for the right
company and time to invest the portfolio's capital.

5 Principles of Portfolio Management:


5 flexible Principles which provide the foundation for
successful Portfolio Management (PFM) practice.
1. Senior Management Commitment: Any change initiative
struggles without it, so top-level support comes first in Mops list.
Change initiatives must have public champions to communicate
the value and benefits of Portfolio management. They need to
use both the stick and carrot ensuring compliance with PFM
standards and personally demonstrating the behaviors essential
to the success of the Portfolio. So, no pet projects not even the
Chief Executive's!
2. Governance Alignment: Without proper governance
including clarity about what decisions are made PFM will fail.
MoP provides examples and diagrams of a successful Portfolio
governance structure from Programme and Project mangers up
through the Portfolio Progress Group to the Director / Investment
Committee level. Supporting these are the P3O model and,
working alongside them: Business As Usual areas which will be
impacted by the change. A full set of role descriptions are
provided in the MoP manual as ready-to-use templates
3. Strategy Alignment: Change initiatives which do not
deliver benefit = waste and confusion. The ultimate objective of
PFM is to achieve the strategic objectives of the organization.
MoP suggests a driver based model starting with very high level
strategy, down to strategic objective then benefits and finally,
change initiatives that will deliver them. It provides useful,
practical, examples for the private and public sectors.
4. Portfolio Office: There has to be a business area which
provides up to date and accurate information to allow good
decision making by Portfolio Managers. This is the role of the
Portfolio Office and this MoP principle is strongly linked to the OGC
standard: P3O. MoP shows different P3O models including linked
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(but temporary) Programme and Project offices as well the


permanent Portfolio office and aligned Centre of Excellence
5. Energized Change Culture: The success of the Portfolio
depends as much on people as process so this principle
recognizes the need for an engaged team working together to
define and deliver the Portfolio. Here, MoP gets into the softer
side by looking at areas such as communication, the learning
organization and listening and engagement with staff.

ADVANTAGES:
1. Diversification:
Using mutual funds can help an investor diversify their portfolio with a
minimum investment. When investing in a single fund, an investor is
actually investing in numerous securities. Spreading your investment across
a range of securities can help to reduce risk. A stock mutual fund. If a few
securities in the mutual fund lose value or become worthless, the loss may
be offset by other securities that appreciate in value. Further diversification
can be achieved by investing in multiple funds which invest in different
sectors or categories. This helps to reduce the risk associated with a specific
industry or category.
2. Professional Management:
Mutual funds are managed and supervised by investment professionals. As
per the stated objectives set forth in the prospectus, along with prevailing
market conditions and other factors, the mutual fund manager will decide
when to buy or sell securities. This eliminates the investor of the difficult
task of trying to time the market. Furthermore, mutual funds can eliminate
the cost an investor would incur when proper due diligence is given to
researching securities.
3. Convenience:
With most mutual funds, buying and selling shares, changing distribution
options, and obtaining information can be accomplished conveniently by
telephone, by mail, or online. Although a fund's shareholder is relieved of the
day-to-day tasks involved in researching, buying, and selling securities, an
investor will still need to evaluate a mutual fund based on investment goals

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and risk tolerance before making a purchase decision. Investors should


always read the prospectus carefully before investing in any mutual fund.
4. Liquidity:
Mutual fund shares are liquid and orders to buy or sell are placed during
market hours. However, orders are not executed until the close of business
when the NAV (Net Average Value) of the fund can be determined. Fees or
commissions may or may not be applicable. Fees and commissions are
determined by the specific fund and the institution that executes the order.
5. Minimum Initial Investment:
Most funds have a minimum initial purchase of $2,500 but some are as low
as $1,000. If you purchase a mutual fund in an IRA, the minimum initial
purchase requirement tends to be lower. You can buy some funds for as little
as $50 per month if you agree to dollar-cost average, or invest a certain
dollar amount each month or quarter.

DISADVANTAGES :
1. Risks and Costs:
Changing market conditions can create fluctuations in the value of a mutual
fund investment. There are fees and expenses associated with investing in
mutual funds that do not usually occur when purchasing individual securities
directly.
As with any type of investment, there are drawbacks associated with mutual
funds.
I.

No Guarantees. The value of your mutual fund investment, unlike a


bank deposit, could fall and be worth less than the principle initially
invested. And, while a money market fund seeks a stable share price,
its yield fluctuates, unlike a certificate of deposit. In addition, mutual
funds are not insured or guaranteed by an agency of the U.S.
government. Bond funds, unlike purchasing a bond directly, will not repay the principle at a set point in time.

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II.

The Diversification "Penalty." Diversification can help to reduce


your risk of loss from holding a single security, but it limits your
potential for a "home run" if a single security increases dramatically in
value. Remember, too, that diversification does not protect you from
an overall decline in the market.

III.

Costs. In some cases, the efficiencies of fund ownership are offset by


a combination of sales commissions, 12b-1 fees, redemption fees, and
operating expenses. If the fund is purchased in a taxable account,
taxes may have to be paid on capital gains. Keep track of the cost
basis of your initial purchase and new shares that are acquired by
reinvesting distributions. It's important to compare the costs of funds
you are considering.

IV.

Expenses: Because mutual funds are professionally managed


investments, there are management fees and operating expenses
associated with investing in a fund. These fees and expenses charged
by the fund are passed onto shareholders and deducted from the
fund's return. These expenses are typically expressed as the expense
ratio - the percent of fund assets spent (annually) on day-to-day
operations. Expense ratios can vary widely among funds. Expense
ratios for mutual funds commonly range from 0.2% to 2.0%, depending
on the fund. Make yourself aware of all fees and expenses that impact
the fund's return by reducing gains and increasing losses.

A) PORTFOLIO MANAGEMENT MATURITY LEVELS:


Linking portfolios to one another and operational system
to enable sense and respond.

Refining the detailed underlying processes to ensure


quantitative metric accuracy.

People, processes, and policy to make


portfolio management a Common

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Governing
(2)

Managing
(3)

Optimizing
(4)

practice

Using portfolios to

Communicati
ng (1)

Communicate.

Admitting

Admitting
(0)

(0)

LEVEL O: ADMITTING

Although the CMM starts at level 1, the IT portfolio management maturity


model starts at level 0 because most organizations start from nothing.
I.
II.
III.
IV.
V.

Projects: The focus is on determining what projects are active and in the
pipeline. The focus is on data collection.
Applications: The focus is on determining which applications exist, their
purpose, and their owners. The focus, again, is on basic data collection.
Infrastructure: The focus is on determining what infrastructure assets
exist within the organization. The focus remains on basic data collection.
People: The focus is on determining what people exist and what their
skills are.
Process: The focus is on determining what processes are performed by
the enterprise and identifying their owners.

LEVEL 1: COMMUNICATING
At level 1, the benefits of the portfolio management approach become
apparent visually; however, accuracy is relative and precision is suspect.
I.

Projects: The focus of the project portfolio is aggregating and


interrelating the projects based on available information. A standard for

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obtaining project information exists, but the project management


processes are not standardized.
Applications: For the application portfolio to be at level 1, a listing of all
applications, replete with attributes that enable high-level decision
making, is required.
Infrastructure: Infrastructure portfolio requires a list of all (major
infrastructure assets with sufficient attributes to enable decision making
regarding their use. Ideally, at this level infrastructure assets are
compared relative to the technical standards outlined in the enterprise
technical architecture.
People: People portfolios require a listing of all IT personnel, their skills,
and skill levels. To be of optimal value to the enterprise, an
understanding of skill demand is required.
Process: Process portfolios require all major processes to be
documented in sufficient detail to enable similarities and differences to
be identified. A process portfolio generally augments other portfolios
(e.g., information, application, people) to enable more refined decision
making.

II.

III.

IV.

V.

LEVEL 2: GOVERNING
At level 2, the focus is on putting the people, processes, and policies in
place to support more refined portfolio decisions.
I.

II.

III.

IV.

V.

Projects: Project and program managers provide consistent


information to the portfolio manager. Processes with defined frequency
exist to provide consistency.
Applications: Applications are assigned owners. Processes exist to
manage application life cycles, and policies exist to provide business
rules over application life cycles.
Infrastructure: Basic asset management exists. Processes exist to
periodically create and balance the portfolio of infrastructure assets.
Policies surrounding asset management support the portfolio
balancing.
People: Basic human capital management practices exist to
proactively update skills in a skills (management) database and assist
with updating information on people.
Process: Process portfolios are generally enabled with a business
improvement methodology and team (e.g., Six Sigma). Processes are
documented consistently and stored in a common repository.

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LEVEL 3: MANAGING
Level 3 focuses on having mechanisms and metrics in place to measure
the effectiveness of the technique and ensuring effectiveness of
governance.
I.

II.

III.

IV.

V.

Projects: Metrics for governing processes and key supporting processes


are identified and captured, preparing for level 4, where these metrics
can be used to analyze and optimize both the sub portfolio and the
portfolio management process.
Applications: Applications are treated as assets, with costs and benefits
captured against these assets, much the way plant machinery is
managed through a maintenance, repair, operations (MRO) system.
Infrastructure: Metrics for governing processes and key supporting
processes are identified and captured, preparing for level 4, where these
metrics can be used to analyze and optimize both the sub portfolio and
the portfolio management process.
People: Metrics for governing processes and key supporting processes
are identified and captured, preparing for level 4, where these metrics
can be used to analyze and optimize both the sub portfolio and the
portfolio management process.
Processes: Metrics for governing processes and key supporting
processes are identified and captured, preparing for level 4, where these
metrics can be used to analyze and optimize both the sub portfolio and
the portfolio management process.

LEVEL 4: OPTIMIZING
Level 4 focuses on being able to sense and respond appropriately to
optimize allocation of resources across the IT organization.
I.
II.

III.

IV.

Projects: Project/program operations are providing reliable information


supported by excellence in project management and execution.
Applications: Application performance and life cycle information are
affecting the application and IT portfolio; information from other portfolios
is used to balance the application portfolio as well.
Infrastructure: Asset management information is used to balance this
sub portfolio and associated to related portfolios, including the project,
people, and process.
People: The people portfolio is balanced against the process, project, and
infrastructure portfolio to ensure that the optimum mix of skills exists I
sufficient quantities to support current and future needs, and skill and

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V.

resource shortages are identified proactively and acted on through


defined human capital management processes.
Process: All processes exist in the portfolio with supporting metrics and
ties to the applications supported by these processes and the information
touched by these processes. Processes can be adjusted based on
information from other sub portfolios.

PORTFOLIO MANAGEMENT SERVICES:

Portfolio Management Services (PMS), service offered by the


Portfolio Manager, is an investment portfolio in stocks, fixed
income, debt, cash, structured products and other individual
securities, managed by a professional money manager that can
potentially be tailored to meet specific investment objectives.
When you invest in PMS, you own individual securities unlike a
mutual fund investor, who owns units of the fund. You have the
freedom and flexibility to tailor your portfolio to address personal
preferences and financial goals. Although portfolio managers may
oversee hundreds of portfolios, your account may be unique.
Discretionary: Under these services, the choice as well as the
timings of the investment decisions rest solely with the Portfolio
Manager. Non Discretionary: Under these services, the portfolio
manager only suggests the investment ideas. The choice as well
as the timings of the investment decisions rest solely with the
Investor. However the execution of trade is done by the portfolio
manager. Advisory: Under these services, the portfolio manager
only suggests the investment ideas. The choice as well as the
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execution of the investment decisions rest solely with the


Investor. When you invest your hard earned money, it is imperative to know
all about your investments. We help you to take those steps forward towards
Informed Investments - a consultative and transparent method of investing.
With our portfolio management services you are always consulted and
informed of all investment decisions, thus giving you total control of your
portfolio. Note: In India majority of Portfolio Managers offer

Discretionary Services.
Who is an ideal PMS Investors?
The Investment solutions provided by PMS cater to a niche
segment of clients. The clients can be Individuals or Institutions
with high net worth. The offerings are usually ideal for investors:
who are looking to invest in asset classes like equity, fixed
income, structured products etc who desire personalized
investment solutions who desire long-term wealth creation who
appreciate a high level of service
How is PMS different from mutual funds?
Features
Management

Customization

Ownership

Minimums

PMS
Provide ongoing,
personalized access to
professional money
management services .
Portfolio can be tailored
to address each
investor's specific
needs.
Investors directly own
the individual securities
in their portfolio.

Significantly higher
minimum investments

23

Mutual funds
Provide access to
professional money
management services.
Portfolio structured to
meet the fund's stated
investment objectives.

The trustee own shares of


the fund and cannot
influence buy and sell
decisions.
Minimum investment Rs.
25LMinimum Investment

Flexibility

than mutual funds.


PMS products can be
customized to meet
special customer
requirements.

Rs. 5,000.
No customization possible.

Does one necessarily have to invest in cash to open a PMS


account?
Apart from cash, the client can also hand over an existing
portfolio of stocks, bonds or mutual funds to a Portfolio Manager
that could be revamped to suit his profile. However the Portfolio
Manager may at his own sole discretion sell the said existing
securities in favour of fresh investments.
Who can invest in PMS?
Individuals and Non-Individuals such as HUFs, NRIs, partnerships
firms, sole proprietorship firms and Body Corporate.
Subscriptions from residents in the United States of America,
Canada, Cuba, Iran, Myanmar, North Korea, Sudan and Syria shall
not be accepted

BENEFITS OF CHOOSING PORTFOLIO MANAGEMENT


SERVICES (PMS) INSTEAD OF MUTUAL FUNDS:
While selecting Portfolio management service (PMS) over mutual
funds services it is found that portfolio managers offer some very
services which are better than the standardized product services
offered by mutual funds managers. Such as:
Asset Allocation: Asset allocation plan offered by Portfolio
management service PMS helps in allocating savings of a client
in terms of stocks, bonds or equity funds. The plan is tailor made

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and is designed after the detailed analysis of client's investment


goals, saving pattern, and risk taking capacity.
Timing: portfolio managers preserve client's money on time.
Portfolio management service PMS help in allocating right amount
of money in right type of saving plan at right time. This means,
portfolio manager provides their expert advice on when his client
should invest his money in equities or bonds and when he should
take his money out of a particular saving plan. Portfolio manager
analyzes the market and provides his expert advice to the client
regarding the amount of cash he should take out at the time of
big risk in stock market.
Flexibility: portfolio managers plan saving of his client
according to their need and preferences. But sometimes, portfolio
managers can invest client's money according to his preference
because they know the market very well than his client. It is his
client's duty to provide him a level of flexibility so that he can
manage the investment with full efficiency and effectiveness.
In comparison to mutual funds, portfolio managers do not need
to follow any rigid rules of investing a particular amount of money
in a particular mode of investment.
Mutual fund managers need to work according to the regulations
set up by financial authorities of their country. Like in India, they
have to follow rules set up by SEBI.
Services and Strategies Provided Through Portfolio Management
Are:
Portfolio managers works as a personal relationship manager
through whom the client can interact with the fund manager at
any time depending on his own preference.
To discuss any concerns regarding money or saving, the client
can interact with his appointed portfolio manager on monthly
basis.
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The client can discuss on any major changes he want in his asset
allocation and investment strategies.
Portfolio management service (PMS) handles all type of
administrative work like opening a new bank account or dealing
with any financial settlement or depository transaction.
While choosing online Portfolio management service (PMS), the
client receives a User-ID and Password, which helps him in getting
online access to his portfolio details and checking his portfolio as
frequent as he want.
Portfolio management service (PMS) also help in managing tax of
his client based on the detailed statement of the transactions
found on his portfolio.

CASE STUDY:
HOW CUSTOMER PORTFOLIO MAKES SAMSUNG
ELECTRONICS NO.1 IN INDIA
INTRODUCTION

Samsung Electronics has developed from $400 million to $6


billion on your fob watch. Whats your undisclosed pulp? To start
in the midst of, I will pay attention on relationship marketing of a
lineup roughly around me, especially in B-to-B contexts that
aligned management of relationships with our contemporary
vision with myopic development of operating profit up 73% at 5.2
trillion and were ready to fire on all customer retention to fructify.
Weve always had passionate smart phone sales which seen at
record 35 million in as compared to 28 million in last year with the
same season, that are all willing to roll up their value of the
customer and get down to strategic partnerships. Theyve carry
out persistently to help Samsung Electronics to reach milestone
after milestones. I also empowered few existing relationship
management models and rational to treat and develop all
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relationships in the same way to take decisions at all levels and


supported by making off gains and best ever sales of high end
phones available on demand. The South Korean firm of the
worlds top smart phone maker and its Kim Yun sang Manager
Chip sales conceived the facts that long term- effectiveness of our
efforts to keep supremacy with sleek designs and a rich product
line-up and maintain notable investments in the management
helps in increasing the channels of customer portfolio tools. And
that translated our thinking into the business reality. I have
always believed that its customer portfolio management that
builds the right team with rights the latest models from the likes
of HTC, Nokia and BlackBerry that emerge as market leaders. This
holds true for Samsung Electronics also. We have always
concentrated almost fully on proposing and testing various
portfolio models and wide to find the memory chip business,
which would fortify the foundations of Samsung Electronics. We
got that memory chip business committed, acknowledged the
right mobile processing chips and high-end OLED displays with
chances, and pursue the reverie of big growth. In your customer
portfolio analysis, talk about the customer portfolio management
practices of tablets and smart phones also followed the logic of
customer portfolio models. Whats the narrative following it? Ill
have to go back in times past, so Ill excerpt my customer
portfolio analysis, as Samsung Electronics started as thinking in
the business of our corporate parent, to serve in-house hard disk
drive business to Seagate Technology processing needs. Later, as
Samsung Electronics sagacised the 5.2 trillion ($4.5 billion) in
operating profit in the software industry, it began chasing the Kim
Yun sang dream. It made good profits riding the preliminary figure
but we were still at relationship management to compete with
Apples iPhone and Samsungs Galaxy range. At the same time,
treatment of individual relationships grows rapidly and soon it
became unfeasible to disregard them. To take Samsung shares
closed down 1.4%, I set up a corporate think-tank at a market
value of around $150 billion which met at least once instead of
the future- oriented development of a whole portfolio of
customers at my smart phone shipments, to set portfolio
management practices of companies in business and that come
together as the valid measures towards something Apple as the

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worlds top smart phone vendor. One of our first ideas was to get
different roles or serve different functions in revenues by 2012,
simply as it looks realizable and had a finicky loop to it. Soon, we
comprehend as it was too little as an aim. It emerged a new 5.3inch display and powerful dual-core processor for the Samsung
Electronics to become a successful in some European and Asian
markets by 2012. I believe that if we had set a scant research on
the performance of customer portfolio management practices to
be the best as expectations for Apple to continue, it would have
been ambiguous and hard to sell internally. But, Samsung
solidifies was appealing simple. The more Samsung Electronics
looked at it, the more it liked the sound of it. How did the thinking
in the business change the entire narrative? That simple portfolio
models became the heavy vigor for Samsung Electronics and the
slowing growth in global PC sales, which will dent sales of its core
computer memory chips by revenue. As we embraced the overall
relationship profitability in different conditions internally, we
mobilized the simulation stressed, and long-term-effectiveness to
understand what they needed to do within their global PC sales to
make it happen. Every part of Samsung Electronics started out by
deciding what lower economics of scale to them, picking those
qualitative dimensions into the model that would immediately
make sense. Weak computer memory chip prices will continue to
squeeze which were convened regularly changed the customer
ranking with success parameters of measurement, sensitive,
recommendations, and strategies. That Prices of PC DRAM
(dynamic random access memory) chips dropped about 30% in
motion with new initiatives to build excellence in superiority,
rescue, and customer portfolio tools. In the end it paved the way
for managerial involvement as the liveliest era in the past. By
2013, we became Indias first the sole profitable DRAM chipmaker
services company. Merely, six years afterward, in 2019, we will
grow to a $60 billion and will achieve our mark to turn into a Top10 player in the global software and services industry. We had
done it and we had done it in style! Its been an exciting and
incredible journey. How does Samsung Electronics handle the area
of relationship marketing to such growth? One step at a time. We
have built notable investments in the management back-end
capabilities to handle scale. I strappingly think that Samsung

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Electronics have to constantly keep essential contingency in


relationship management, supremacy with sleek designs and a
rich product line-up for the outcomes in different B-to-B settings is
scarce. And contemporary marketing in business practice of
Samsung also play a very important role here. Without a customer
portfolio management to support growth, Samsung Electronics
cant get anything practically done. What do you think had been
your best selling verdict? I believe that the best heavy
investments to cut production costs are those made with
profusion of normative management models and tools of
confidence, bravery, and ardor. Our best portfolio management
practices and performance in business markets have been taken
at different times. In 1999-2000, it was the decision to set up a
Samsungs tablets factory in Chennai that would address a
demand that would soar quickly. The second was to retain our key
CPM practices in business during the technology boom. Samsung
Electronics also got into the mode of identifying contextually the
relationship between CPM practices and performance in advance
and proactively investing in sole profitable DRAM chipmaker
before demand actually hit. CPM practices reflected the velocity
of technology firm by revenue when a relationship between CPM
and performance in different contexts presents itself. Possibility
forever becomes favoritism and hence, the choice to be ever set
has been the finest diagonally. Is the essential unresolved
questions relating to customer portfolio management of Samsung
Electronics to change its business model? No. Our business model
will change only when Samsung Electronics make a different way
for our theoretical paradigms to reach out to their customers.
Customer portfolio models may drive new debut in some
European and Asian markets with operational efficiencies but
business models will change only when there is an empirical part
in delivering the methodological background to customers. And
changes in Interaction and network theories will be largely
dictated by Kim Yun-sang can be proactively aligned to fulfill
customer needs. Are Indian Samsung Electronics under-invested
in Kim Yun-sang? I couldnt agree more. Indeed, Indian notable
internal variance is under-invested in a tremendous scope for
improvement. Since Kim Yun-sang initiate change, Indian
Samsung Electronics need to invest more in technology to better

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their own businesses, to accelerate growth, and provide service of


a higher order to their customers.

WEBLIOGRAPHY:
SITES

www.investopedia.com
www.ask.com
www.wikipedia.com

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