Chapter 15: Introduction to the Portfolio Approach

In this section

• 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.