Portfolio Management: An Overview

The big picture of portfolio management: why investors should judge assets by what they do to the whole portfolio, the planning-execution-feedback process, what different individual and institutional investors need (including DC versus DB pension plans), how the asset management industry is organised, and how mutual funds compare with ETFs, separately managed accounts, hedge funds and private equity or venture capital funds.

1. 1. The portfolio approach and diversificationJudge every investment by what it adds to the whole portfolio, because combining assets that do not move in lockstep cuts risk far more than it cuts return, although that protection can shrink just when markets crash.Free14 min
2. 2. The portfolio management process: planning, execution, feedbackPortfolio management runs in three repeating steps: plan by understanding the client and writing an IPS, execute by allocating assets, analysing securities and building the portfolio, then use feedback from monitoring, rebalancing and performance measurement to adjust.13 min
3. 3. Individual investors and DC versus DB pension plansIndividual investors have goals that vary person to person and often save through defined contribution plans, where the employee carries the investment risk, whereas in a defined benefit plan the employer promises the pension and carries the funding risk.13 min
4. 4. Institutional investors and their needsEach institutional investor's liabilities shape its needs: pension plans and endowments can take long-term risk, banks and insurers must stay liquid and conservative, while investment companies and sovereign wealth funds vary fund by fund.Video · 7 min15 min
5. 5. The asset management industryAsset managers are buy-side firms that run money actively or passively, as traditional or alternative managers, under various ownership structures, in an industry being reshaped by cheap passive investing, big data and robo-advisers.14 min
6. 6. Mutual funds: open-end, closed-end and fund typesA mutual fund pools investors' money into one professionally managed portfolio priced at net asset value; open-end funds issue and redeem shares at NAV, closed-end funds have a fixed number of shares that trade at a premium or discount, and funds are grouped by what they hold.15 min
7. 7. SMAs, ETFs, hedge funds and private equityBeyond mutual funds, investors can use separately managed accounts for customisation, ETFs for intraday trading of a pooled portfolio, hedge funds for flexible long-short strategies with performance fees, and private equity or venture capital funds to buy, improve and sell companies.15 min