Portfolio management
Formation of the securities portfolio consists of five stages: identification of investment objectives, analysis of securities, a portfolio, portfolio review, performance evaluation of the portfolio.The first stage - the definition of investment objectives. All investors, both individual and institutional buying those or other securities that seek to achieve certain goals. The main objectives of investors could be: security investments, return on investment, growth in investments. Under the security means invulnerability investments from market shocks and stability of investment capital to generate income. Security is usually achieved at the expense of profitability and growth investments, ie, the goals are to some extent alternative. The most reliable, safe, are government securities, they virtually eliminate the risk of the investor. While referring to recent events, everything is relative. More profitable securities are traded firms, but they carry and the greater degree of risk. The most risky are investments in stocks of young high-tech companies, but they may be most beneficial in terms of capital gains.
As one of the investment objectives sometimes emit liquidity of investments. Liquidity is not necessarily linked to other investment purposes, it only means the ability to quickly and breakeven for the owner of the circulation of securities in the money. Investment objectives are determined by the type of investor, and his attitude toward risk. Balanced - is called a portfolio that corresponds to the representation of investors about the optimum combination of investment objectives. The priority of reason or the other determines the type of portfolio. If the main purpose of the investor is to ensure safety of investments, in your conservative portfolio will include securities issued by known and trusted by issuers with low risk and stable medium, or low income, as well as having high liquidity. Conversely, if the most important for an investor is to build equity, preference will be given the aggressive portfolio consisting of high-risk securities of young companies. For conservative investors include many people of middle-aged and elderly, as well as most institutional investors: mutual funds, pension funds, etc.
