Portfolio Management Concepts Essay

742 words - 3 pages

Portfolio Management Concepts
The concept of portfolio management is a lucrative sword as not only it offers not only returns but the investor also have to face risk associated with it. If the Investor is willing to earn higher return he has to associate higher return with higher risk. For an investor to diversify away the risk he can follow diversification rule. Under diversification, investor can include the assets which are not correlated to each other and thus by including these asset classes he can diversify away the risk. However, in terms of the risk there are two kinds of risk i.e Unsystematic Risk and Systematic Risk and an investor can diversify only unsystematic risk by following diversification rule including the asset classes that are not correlated with other and the risk left will be systematic risk, which is not possible to diversify even if the investor includes all the securities available in the investment universe.

Systematic Risk

For KMK Holdings, diversification is an important part of portfolio construction. Considering the market conditions which have grown highly risk on account of low interest rates and high volatility, the company in order to diversify away the risk will be using the asset allocation strategy by investing in Stocks, ADR’s and ETF in a rationale proportionate manner. The portfolio consists of 15 stocks, 3 ADR and 1 ETF, the net worth of portfolio at the time of writing was $103892.97 while the total borrowing power is $108931. The portfolio have earned a return of 3.89% on overall basis while on daily basis the return is 1.35%. However, the portfolio has not outperformed the S&P 500 benchmark as the benchmark return of 7.67% is not achieved by the portfolio.
Despite of poor performance of the portfolio in comparison to benchmark, the portfolio has still achieved a satifactory diversification by investing in range of asset clases. Had the investor followed only 1 stock portfolio i.e Kaisser Stock, on daily basis the portfolio would have lost 263.58% in value. Thus, by investing in range of asset classes, the portflio had achieved a satisfactory return as by including non-correlated asses in the portfolio it removed the unsystematic risk. However, in comparison to benchmark return, we can conluded that portfolio has still not achieved...

Find Another Essay On Portfolio Management Concepts

Compare how the organizational structures and communication policies of The Communications Task Force and Company K

6770 words - 27 pages her financial planning course and achieved the First Level Insurance License, management added to Jane's authority by allowing her to take full responsibility for some clients' needs. In effect, she became the Portfolio Manager for some of the smaller clients. Portfolio Managers also increased her incentive pay share however; she was not recognized as a Portfolio Manager because Peter would not let her into morning meetings. Peter excused her by

Strategic Program Management Worksheet Essay

10049 words - 40 pages Strategic Program Management Worksheet IMPLEMENTING ORGANIZATIONAL INITIATIVES The purpose of this assignment is to begin the process of Problem Based Learning. In this step, you will be looking at one or more realistic situations and using them, in the context of this course, to identify the key concepts involved that you will need to understand in order to solve whatever problems you might encounter in those situations. Complete the

Product Concept Definition

1694 words - 7 pages concept phase begins when an idea or new product innovation is documented and initially reviewed by management. If management commits to supporting the definition and evaluation of the concept for possible funding, as part of the project portfolios, it enters the product concept phase.After a new product concept has been selected from the portfolio for implementation, it is entered by management into the product concept phase and put through a

Analysis of the Limited Household Participation in the Stock Market Phenomenon

2813 words - 11 pages move together more than others and this creates possibilities for portfolio diversification. (Pohlmeyer, 2013) Diversification, being one of the most important concepts of Modern Portfolio Theory, is a tool to reduce overall portfolio volatility by choosing appropriate weights of assets within portfolios or deciding to invest in less correlated securities. For example, the choice of how much percent of one’s overall portfolio to invest in which

What Happens when You do Not Manage Risk

1336 words - 5 pages generally do so because their leaders do two things well. (Kendrick, 2009). They realize much of the work is not new and they plan project work accordingly. Effective project risk management involves these concepts – looking backwards to avoid past mistakes and looking forward many problems can be eliminated. Project risk management involves the process of conducting risk management planning, identification, analysis, response planning, and

The Vision and Mission Statements of Kingdom Financial Holdings Limited.

960 words - 4 pages INTRODUCTIONKingdom Financial Holdings Limited is a Zimbabwe based financial services firm serving its clients in the areas of money, equity, capital and foreign exchange markets.The Company is also involved in investment banking, portfolio management, company research and advisory services.The Holding Company has the following principal subsidiaries: -KINGDOM ASSET MANAGEMENT (PVT) LTDThe company manages institutional and private client's funds

Risk management for Supplier Global Expansion Plan

1107 words - 4 pages Safety Contract Relationships w/ customers and suppliers Project Management Risks Project management Program/portfolio management Operations management Organization Cost Estimates Schedule Estimates Communication Production Risk Risks Contractual Terms and Conditions Internal procurement Client/ Customer stability Partnerships and joint Ventures External Risks Legislation Competition Political Procurement Material availability Lead

The Influence of a Student Teacher

980 words - 4 pages a child has the entire day. Because I feel I have the inborn characteristics that it takes to become a teacher, good management skills, patience, love of learning and most importantly, the love of children, I can reach children on a personal and professional level. I have the ability to bring the curiosity within a child out. Observing a child when they have learned something new is what makes teaching worth while. When I graduate from college

Managerial Accounting, Applied to Successful Project Accounting Practices

1844 words - 8 pages ). Managerial Accounting (14th ed.). New York, NY: McGraw-Hill Irwin Heerkens, G., (2002). Project Management. New York, NY: McGraw-Hill Investor Dictionary, (2014). Project Accounting. Retrieved from: http://www.investordictionary.com/definition/project-accounting Liberatore, M. J., Stout, D. E., & Robbins Jr., J. (2007). Key Project Management Concepts for Accountants. Management Accounting Quarterly, 8(2), 15-23. Retrieved from: http

Toyota Motor Corporation: Processes and Strategies

1541 words - 6 pages , and robots among other auto items. Toyota is known for its unique management accounting concepts that utilize lean accounting philosophy, the just in time strategy, the kaizen and the kaiben approaches to manufacturing. To be in tune with this practice, Toyota has a unique management system known as the Toyota Production System, which is an integrated socio-technical system that is inclusive of its management philosophy and practices (Lu and

Organizational alignment definition for Countrywide Home Loans

1499 words - 6 pages Management: The Managerial Process (3th ed.).New York: McGraw-Hill Companies.Ivancevich, J.M. (2004). Human Resources Management. New York: The McGraw-Hill Companies.Kerin, R. A., Berkowitz, E. N., Hartley, S. W., & Rudelius, W. (2006). Marketing. New York: McGraw Hill Companies.Lunenburg, F.C., & Ornstein, A.C. (2004). Educational Administration Concepts and Practices (4th ed.). New York: Thomson Learning.Rue, L.W., & Byars, L.L. (2003). Management Sills and Applications (10th ed.). New York: McGraw-Hill Companies.

Similar Essays

Information Portfolio Secondary Information Collected And Gathered For Analysis (Good Or Bad) To Identify The Concepts Of Sports Marketing.

2373 words - 9 pages heightens the appeal of them in the minds of the average sport fan. The Olympic games have been successful as corporate entertainment venues attracting large sponsorship deals.The high profile athletes that perform their skill for a large salary will often have managers that negotiate their wages from clubs, deferred compensation packages and endorsements of products and services.Competition/event management and operations raises revenue through

Why Diversify Essay

9140 words - 37 pages differentiate your management approaches to encompass the needs of diverse kinds of businesses, and when it is reasonable to adjust the corporate portfolio to a particular management style, or to a single managerial dominant logic. Work is also needed to clarify how to operationalize the concepts of dominant logic and strategic relatedness. We do not yet know how the limits of a dominant logic should be defined, how managers and corporations develop

Leadership And Self Identity Essay

847 words - 3 pages (Tochel et al., 2009). At Marian University, students in the undergraduate and graduate nursing program are required to submit a portfolio. In correlation to the things mentioned that influence the effectiveness of portfolios, aren’t these the same things that can influence nursing practice? Things like a good attitude, implementation of competent nursing skills, compliance with policies and nursing protocols, having support from mentors and peers, and good time management skills are all very crucial things that can make nurses better!

Developing A Strategic Plan Essay

1894 words - 8 pages * This mission leads to a hierarchy of objective, including business objectives and marketing objectives. * Marketing strategies must be developed to support these marketing objectives. * Each broad marketing strategy must then be defined in greater detail. C. Designing the Business Portfolio Guided by the company’s mission statement and objectives, management now must plan its business portfolio. Business portfolio: the collection of