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The Investment Management Process - An Overview

By Rodney Wincaster

Republish: EasyPublish™ Published: 21Feb2012 Word count: 505 Viewed: 123 time(s) Get Free Content For Your Site

Investment management, also referred to as portfolio management is the practice of professionally managing and selecting several securities and assets, examining the market, assessing the securities and arriving at calculated decisions and choices so as to meet the investor's specific investment goals and reach the greatest ROI. Investors could be from varying demographics such as establishments like banks, firms, or private investors such as Oprah Winfrey, David Beckham or you. With various investment options offering you choppy waters, numerous investors like you are looking at discovering, analyzing and seeking to delve into investment management. Here are some aspects that will help you explore and understand the investment management process.

The investment management process (and how consultants can help manage investment)

The first step for an investor is to set an investment goal. This goal differs for every individual investor (whether the investor is a bank, an institution or an individual). After setting the investment goal, the next step is to create an investment policy. This starts with asset allotment between the key asset categories present in the capital market ranging from equities, fixed income securities, property, currency and the like. An investment management consultant keeps into consideration various parameters during the process of instituting the investment policy for the investor. These parameters include constraints of the environment such as the governmental rules, laws, etc. Moreover, the parameters also include the constraints of the investor such as monetary ability, time constraints, risk profile, etc.

The next step that an investment management consultant follows is the selection of the portfolio strategy. This is done in compliance with the investment goals and investment policy guiding principles. This step is equally crucial as the aforementioned ones. Hence it is pertinent to seek the guidance of an expert investment management consultant if you are unsure about the entire investment management process because any inconsistency here would make the things topsy-turvy and cause the entire process to go kaput and lead you in the direction of losses. Portfolio strategies are primarily categorized into two forms; viz. active and passive. Active strategies provide more prospects regarding the features that are projected to control the asset categories' performance, whereas passive strategies involve fewer prospects.

The next step in line is the process of selecting the assets. The selection and inclusion of specific assets in the portfolio is extremely important. It is here that the investment management consultant advises the investor about building a well organized portfolio, one that would give the anticipated ROI.

Following this is the measurement and evaluation of the performance. This is done in absolute and relative terms, against a preset, practical and attainable yardstick. Additionally, the portfolio performance is assessed in the context of the goal and various performance considerations.

Alternatives for Investment Management: As investment management calls for extensive economic know-how and market awareness, not every investor makes a decision to manage his/ her investments by themselves. Professional and reliable investment consultants can help in such cases.

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