Identification of Objectives & Constraints:

 

Begin by clearly identifying the investment objectives, which represent the desired outcomes for the client in terms of return and risk. Additionally, recognize any constraints or limitations that impose boundaries on investment decisions and choices.

 

Capital Market Expectations:

 

Formulate informed expectations regarding the potential investment returns and establish a long-term outlook. By assessing the risks and returns associated with various asset classes, investors can gain insights to make well-informed decisions.

 

Asset Allocation Strategy:

 

Considering two primary strategies: strategic & tactical asset allocation. A strategic asset allocation strategy is designed for the long-term, necessitating periodic rebalancing to ensure alignment with the set goals. On the other hand, a tactical asset allocation strategy adopts a more dynamic approach, responding to changing market conditions. 

Portfolio Selection:

 

During this stage, investors determine which assets to include in their portfolio. It requires finding the right balance between risk and return expectations while considering external factors like inflation and taxes, aiming for a favorable outcome.

 

Portfolio Implementation:

 

Poorly executed portfolio actions can result in significant transaction costs. When implementing a portfolio, it is crucial to consider both explicit and implicit costs.

 

Explicit costs are measurable expenses that are recorded in the financial records of a business. They are used to calculate profitability and include items such as transaction fees and brokerage commissions.

 

Implicit costs, on the other hand, are not explicitly identified or tracked as expenses. They arise when a company allocates its resources to a particular asset, resulting in the opportunity cost of not utilizing those resources elsewhere. Implicit costs represent the cost of operating and maintaining an asset.

Monitoring & Rebalancing:

 

Consistent monitoring and evaluation of risk exposures within the portfolio are essential for a portfolio manager. This enables them to rebalance the portfolio according to the strategic asset allocation, ensuring it stays on track.

 

Performance Evaluation:

 

Evaluating the performance of a portfolio through the assessment of both absolute and relative returns provides a comprehensive understanding of its strengths and weaknesses. This evaluation aids in unlocking the full potential of portfolios and instills confidence in investors that their funds are being managed effectively.

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Monthly Reports:

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Stay informed and empowered with our monthly performance reports on your investment portfolio. Each month, we provide detailed insights and analysis, presenting a comprehensive overview of your portfolio's performance. These reports offer a transparent and data-driven view of your investments, keeping you up-to-date with progress towards your financial goals.