PORTFOLIO MANAGEMENT STRATEGIES

1. INSTITUTE OF ENGINEERING AND
TECHNOLOGY
DEPARTMENT OF MBA
SUBJECT : “PORTFOLIO MANAGEMENT
STRATEGIES”
SUBMITTED TO: SUBMITTED BY :
Prof Nitesh V Amaresh I D

3. PORTFOLIO MANAGEMENT
• Portfolio management is the art and science
of making decisions about investment mix
and policy, matching investments to
objectives, asset allocation for individuals and
institutions, and balancing risk against
performance.

4. Portfolio Management Strategies
• Portfolio Management strategies refer to the
approaches that are applied for the efficient
portfolio management in order to generate
the highest possible returns at lowest possible
risks.

5. Types Of Portfolio Management
Strategies
• Active Portfolio Management
Strategies
• Passive Portfolio Management
Strategies

6. Active Portfolio Management
Strategies
• Active Portfolio Management strategy refers to a
portfolio management strategy that involves making
precise investments for outperforming an
investment benchmark index.
• The portfolio manager that follows the active
management strategy that exploits the market
inefficiencies by buying under – valued securities or
by short selling over – valued securities. Any of
these procedures can be used alone or in
combination.

7. Style Of Stock Selection
1. Top Down Approach : in this approach , managers
observes the market as a whole and decide about the
industries and sectors that are expected to perform
well in the ongoing economic cycle.
2. Bottom Up Approach : in this approach , the market
conditions and expected trends are ignored and the
evaluation of the companies are based on the
strength of their product line , financial statements
or any other criteria.

8. Passive Portfolio Management
Strategies
• Passive Portfolio Management strategy refers
to the financial investment strategy where an
investor makes an investment as per the fixed
strategy that does not involve any forecasting.
• It stresses on minimising the investment fees
and avoiding the unpleasant results of failing
to correctly predict the future.

9. Style Of Stock Selection
1. Efficient Market Theory : this theory relies on the fact
that the information that affects the market is
immediately available and processed by all investors.
Thus , such information is always considered in the
evaluation of the market prices.
2. Indexing Theory : According to this theory , the index
funds are used for taking the advantages of efficient
market theory and for creating a portfolio that
impersonate a specific index. The index funds can offer
benefits over the actively managed funds because they
have lower than average expense ratios and transaction
costs.