Section 6: Portfolio Analysis

In this section

• Chapter 15: Introduction to the Portfolio Approach
  • 15.1 Risk and Return
    • 15.1.1 Understanding Risk
      A comprehensive overview of the types of risks in investing, and the tools used to measure and manage them.
    • 15.1.2 Understanding Return
      A detailed exploration of the components and measurement of total investment return, including methods such as arithmetic and geometric averages.
  • 15.2 Relationship Between Risk and Return in a Portfolio
    • 15.2.1 The Risk-Return Tradeoff
      Understanding the intricate balance between risk and potential returns in portfolio management.
    • 15.2.2 The Capital Asset Pricing Model (CAPM)
      Exploring the Capital Asset Pricing Model (CAPM) and its role in determining the expected return of an asset based on its systematic risk, including a detailed look at the Security Market Line (SML) for asset valuation.
  • 15.3 The Portfolio Manager Styles
    • 15.3.1 Active vs. Passive Management
      An in-depth analysis of Active and Passive Management styles within portfolio management, highlighting their methodologies, advantages, disadvantages, and implications for investors.
    • 15.3.2 Growth vs. Value Investing
      Explore the distinct approaches of growth and value investing, focusing on characteristics, strategies, and methods employed by portfolio managers to capitalize on growth stocks and uncover undervalued stocks.
    • 15.3.3 Core-Satellite Approach
      Explore the core-satellite investment approach, blending stable core investments with dynamic satellite strategies aimed at generating alpha, alongside risk and return balance techniques.
    • 15.3.4 Quantitative vs. Qualitative Analysis
      A comprehensive exploration of the Quantitative and Qualitative analytical approaches in portfolio management, their applications, strengths, and weaknesses.
• Chapter 16: The Portfolio Management Process
  • 16.1 The Portfolio Management Process
    • 16.1.1 Overview of the Process
      An introduction to the structured approach of managing investments through a series of integrated steps, ensuring alignment with client goals while managing risk and optimizing returns.
  • 16.2 Step 1: Determine Investment Objectives and Constraints
    • 16.2.1 Identifying Client Goals
      A detailed exploration of identifying client investment objectives and constraints within the portfolio management process.
    • 16.2.2 Assessing Risk Tolerance
      An in-depth exploration of the methods and considerations integral to evaluating a client's risk tolerance as an essential component of the portfolio management process.
    • 16.2.3 Evaluating Constraints
      This section provides an in-depth analysis of evaluating constraints within the portfolio management process, focusing on liquidity needs, legal and regulatory considerations, and unique circumstances.
  • 16.3 Step 2: Design an Investment Policy Statement
    • 16.3.1 Purpose and Structure
      Detailed exploration of the purpose and structure of an Investment Policy Statement (IPS), and its significance in the portfolio management process.
    • 16.3.2 Creating an IPS
      Detailed exploration of the creation and importance of an Investment Policy Statement (IPS) in portfolio management, with client involvement and review processes.
  • 16.4 Step 3: Develop the Asset Mix
    • 16.4.1 Strategic Asset Allocation
      Strategic Asset Allocation focuses on long-term asset allocation to achieve investment goals, leveraging diversification benefits to optimize returns and manage risks.
    • 16.4.2 Tactical Asset Allocation
      Exploration of tactical asset allocation strategies to optimize investment portfolios by adjusting asset allocation in response to short-term market conditions while balancing long-term investment goals.
  • 16.5 Step 4: Select the Securities
    • 16.5.1 Security Selection Criteria
      Overview of the qualitative and quantitative criteria involved in selecting securities as part of the portfolio management process.
    • 16.5.2 Building the Portfolio
      An in-depth exploration of constructing a portfolio, including steps for diversification and risk management, and criteria for buy/sell decisions.
  • 16.6 Step 5: Monitor the Client, the Market, and the Economy
    • 16.6.1 Performance Monitoring
      An in-depth exploration of the role of performance monitoring in the portfolio management process, focusing on the use of performance metrics and regular reporting.
    • 16.6.2 Economic and Market Analysis
      An exploration of the critical role of economic and market analysis in the ongoing process of portfolio management, emphasizing market dynamics and their impact on portfolio performance and risk.
    • 16.6.3 Client Communication
      Explore the importance of client communication in portfolio management, focusing on ongoing dialogue and adapting to client changes.
  • 16.7 Step 6: Evaluate Portfolio Performance
    • 16.7.1 Performance Evaluation Methods
      A comprehensive guide to evaluating portfolio performance through absolute and relative measures as well as risk-adjusted methodologies.
    • 16.7.2 Attributing Performance
      Detailed exploration of the performance attribution analysis in portfolio management, focusing on asset allocation and security selection to enhance learning and inform future decisions.
  • 16.8 Step 7: Rebalance the Portfolio
    • 16.8.1 Rationale and Timing
      An in-depth exploration of the rationale behind portfolio rebalancing and the timing strategies involved.
    • 16.8.2 Rebalancing Strategies
      An in-depth exploration of different strategies for rebalancing investment portfolios, including threshold and calendar rebalancing, with consideration for cost-effectiveness.