Portfolio Management in Tough Economic Times

Published by under Portfolio Management

Portfolio Management in Tough Economic Times The implementing of the effective portfolio management is very challenging in the difficult economic conditions. The market volatility and uncertainty exerts pressure on the portfolio managers and investors to minimize the risks and still generate good returns or maintain their investments if not growing them.

Facing the challenges

Portfolio Managers should be prepared to deal with tough market conditions so that they can spend money on and resources on their vital investments. As per the experts and analysts, the economy magnifies the impact of challenges rather than creating any new challenges.

Some of the vital challenges faced by Portfolio Managers are as follows

· Deciding to take an initiative before it’s scoped out.

· Ensuring that right resources are used on most important securities

· Managing the portfolios outside their politics

· Modifying the existing projects and investments in efficient manner so as to maintain the portfolio returns in difficult market conditions

Fewer Funds available for investments in portfolio

The difficult economic conditions usually left the investors with fewer dollars available for maintaining or growing their portfolios. There are many portfolio managers or investors that cut down on their investing for new assets or securities. The costs of maintaining and managing the portfolio increase with the number of securities or assets. The portfolio managers focus on finding ways for sharing the resources between various stocks.

Assessing the Applications and Systems

The portfolio managers can also assess the applications and systems to cut down the costs and evaluate their worth to the company. The PM’s can get rid of various unnecessary tools and outdated systems that are incurring huge costs to the company.

Efficient Portfolio Management

Every proposed investment should be carefully assessed to ensure there is efficient business case for the portfolio. It should also go through a standardised process depending on the unique goals of the organization. A proper planning is required for formulating various metrics and processes.

After selecting the stocks to be invested, the optimal portfolio is finalised and swift action should be taken. The efficient optimization and management of the portfolio should be done for ensuring that portfolio will generate good returns at an acceptable level of risks even in difficult economic times.

The product portfolio management involves grouping of major products that are developed and sold by businesses into (logical) portfolios. These products are organized according to major line-of-business or business segment.

The management team actively manages the product portfolios by taking decisions regarding the development of new products, modifying existing products or discontinue any other products. The addition of new products helps in diversifying the investments and investment risks.

Major tasks involved with Portfolio Management are as follows.

· Taking decisions about investment mix and policy

· Matching investments to objectives

· Asset allocation for individuals and institution

· Balancing risk against performance

As per the modern portfolio theory, a diversified portfolio that includes different types or classes of securities; reduces the investment risk. It is because any one of the security may yield strong returns in any economic climate.

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