Explaining The Process Of Portfolio Management For Stock Funds Performance

Research Paper
Finance & Accounting
Pages 24 (6024 words)
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Introduction This research is aimed at explaining the process of portfolio management for stock funds performance. The portfolio management entails the process that is divided into four stages: they are mentioned by Bodie et al., (2005) that explains “specifying objectives, identifying constraints, formulating policies and later monitoring and updating the portfolio as needed” In specifying portfolio objectives, the main focus is on the trade-off between return requirements and risk tolerance of investors.


Subsequently, as an investor, the third step of portfolio management is asset allocation that is able to make an attempt of satisfying investors' needs and objectives and at the same time, help in making decision regarding the proportion of wealth invested in each major asset categories (Bodie et al., 2005). As an investor, the main aim of asset allocation and investment is capital appreciation. I intend to make sound investment decisions while maintaining a level of moderate risk tolerance in the pursuit of high return. Hence I will define myself as a moderate investor with a risk aversion of 6 (Bodie et al., 2005). Considering my age, I am a young investment with a long investment horizon, hence my investment decisions will be based on less need for immediate liquidity, long term investment need and at the same time be able to tolerate greater risk in the short time. In the macro level, my investment decisions will be affected by the overall economic growth of the country and region and at the same time government decisions like Tax concerns and regulatory factors. ...
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