in the sector of finance portfolio manag. is very important but i don`t know abou this very much so plz help
2 Replies
jagruti supekar
(CA Final)
(335 Points)
Replied 21 January 2010
Hi Ajay,
As per my knowledge,Portfolio Mgmt. is the management of securities portfolio.The purpose of Portfolio mgmt.is that how we can get overall returns highest from all the securities in which investment has been done by reducing the overall risk from those securities.
For example,if v hv invested in different securities then this group is called as a portfolio.
If u want to know something more about PF Mgmt.Please let me specify about that I will try to help u again at my best coz it is a very detailed topic.About Wt u want to know exactly in Portfolio M.?
Rahul Bansal
(Finalist)
(35929 Points)
Replied 21 January 2010
Portfolio Management is used to select a portfolio of new product development projects to achieve th following goals:
- Maximize the profitability or value of the portfolio
- Provide balance
- Support the strategy of the enterprise
Portfolio Management is the responsibility of the senior management team of an organization or business unit. This team, which might be called the Product Committee, meets regularly to manage the product pipeline and make decisions about the product portfolio. Often, this is the same group that conducts the stage-gate reviews in the organization.
A logical starting point is to create a product strategy - markets, customers, products, strategy approach, competitive emphasis, etc. The second step is to understand the budget or resources available to balance the portfolio against. Third, each project must be assessed for profitability (rewards), investment requirements (resources), risks, and other appropriate factors.
The weighting of the goals in making decisions about products varies from company. But organizations must balance these goals: risk vs. profitability, new products vs. improvements, strategy fit vs. reward, market vs. product line, long-term vs. short-term. Several types of techniques have been used to support the portfolio management process:
- Heuristic models
- Scoring techniques
- Visual or mapping techniques
The earliest
Portfolio Managementtechniques optimized projects' profitability or financial returns using heuristic or mathematical models. However, this approach paid little attention to balance or aligning the
portfolioto the organization's strategy. Scoring techniques weight and score criteria to take into account investment requirements, profitability, risk and strategic alignment. The shortcoming with this approach can be an over emphasis on financial measures and an inability to optimize the mix of projects. Mapping techniques use graphical presentation to visualize a portfolio's balance. These are typically presented in the form of a two-dimensional graph that shows the trade-off's or balance between two factors such as risks vs. profitability, marketplace fit vs. product line coverage, financial return vs. probability of success, etc
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