PORTFOLIO

MANAGEMENT FINANCIAL SERVICES

Group A

The art of balancing assets

SUBMITTED TO
and investments Prof. Ahuti Mishra

23rd August 2023

 Group Members
1. Manasvineet Goli(2045) - Presentation management, introduction
2. Aryan Nagdawne(2020) - Evolution and latest trends
3. Adit Padhye(2007) - Regulatory aspect
4. Vasundhara Bharadwaj(2084) - A case study of a well-managed portfolio
5. Roundak Choudhary(226) - Specific instrument discussion
6. Harshita Soni(2025) - Popular fraud case
7. Yash Raheja(2484
Agenda

1 Acknowledgement 5 Regulatory aspect

2 Introduction 6 Popular Fraud Case

3 Evolution and Latest Trends 7 Specific instrument discussion

4 Example of a Portfolio 8 Conclusion and Reference

 Introduction to
Portfolio Management
Portfolio management is a strategic method for handling an individual's or an institution's investment
assets in an efficient and effective manner. It entails the art and science of formulating investment mix
and policy decisions, matching investments to objectives, and managing risk and performance. Portfolio
management's major purpose is to maximise returns while minimising risk, taking into account the
investor's financial goals, risk tolerance, and time frame.

A portfolio is essentially a collection of financial assets including stocks, bonds, real estate, cash, and
other investment instruments. These assets are gathered and managed with the goal of attaining certain
financial objectives, such as capital appreciation, income production, or a combination of both.
Key Concepts
1. Diversification
Diversification is a fundamental principle of portfolio management.
This involves distributing investments across a variety of assets to
reduce risk. Diversification helps reduce the impact of a single
investment's poor performance.

2. Risk and Return

In general, bigger potential profits are associated with higher degrees
of risk. The issue is maintaining the ideal balance between risk
tolerance and financial desires.
3. Asset Allocation
Asset allocation is the process of determining how much of the
portfolio should be invested in different asset types such as stocks,
bonds, and cash.
 Key Concepts
4. Market Research and Analysis
Portfolio managers make knowledgeable investment selections based on detailed market
analysis, economic research, and company appraisals. They take into account things like
corporate finances, industry trends, geopolitical events, and macroeconomic variables.

5. Evaluation of Performance
It is critical to evaluate the portfolio's performance on a regular basis. This involves
assessing actual returns to benchmarks and objectives, and making adjustments if the
portfolio deviates from its expected direction.

6. Rebalancing
The value of various assets in a portfolio may change over time, causing the allocation to
deviate from the goals that are set. Rebalancing involves adjusting the portfolio to return
it to the suitable asset allocation.
7. Tax Considerations
Effective portfolio management considers the tax implications of various investment decisions.
This includes strategies for lowering tax liabilities and increasing after-tax returns.
Active and Passive Management
Passive Active

Passive portfolio management, also known as

Active portfolio management involves actively
index investing, involves creating a portfolio
making investment decisions with the goal of
that closely mimics a specific benchmark index
outperforming a specified benchmark index or
(The primary goal is to achieve returns that are
the overall market. In this approach, portfolio
similar to the index's performance, rather than
managers and investment professionals use
trying to outperform the market.
research, analysis, and their expertise to select
individual securities (such as stocks and bonds)
that they believe will generate superior returns
compared to the market or a benchmark.
 Key Characteristics of Passive
and Active Management
PASSIVE ACTIVE

1) Replication of Benchmark 1) Security Selection

2) Low costs 2) Market Timing

3) Limited Portfolio Turnover 3) Higher Costs

4) Market Returns 4) Potential for Higher Returns

5) Consistency 5) Risk of Underperformance

6) Reduced manager risk

Portfolio Managers

Portfolio managers play a pivotal role in the

financial industry by overseeing and making
strategic investment decisions for a portfolio of
assets on behalf of individuals, institutions, or
funds. Their primary objective is to optimize
returns while managing risk according to the
specific goals and risk tolerance of their clients. In
essence, portfolio managers are financial
professionals who combine analytical skills,
market knowledge, and strategic thinking to create
and manage investment portfolios that help clients
achieve their financial objectives while navigating
the complexities of the financial markets.
 Evolution
History 1950-60s 1960-70s 1970-90s 1990-2000s
the practice of strategically
managing a collection of
investments to achieve
specific financial goals, has
evolved significantly over time
due to changing market
dynamics, technological Traditional Capital Asset Efficient Market Modern
advancements, and shifts in Portfolio Theory Price Modelling Hypothesis Portfolio Theory
investment philosophies. (CAPD)
Latest Trends
in Portfolio 1 Factor Based Investing

Management 2 Quantitative and Algorithmic Strategies

Technology improvements, changing
investor preferences, and market
dynamics are all driving a 3 Smart Beta
transformation in portfolio
management. Maintaining awareness of
the most recent developments is 4 ESG and Sustainable Living
essential for maximizing investing
strategies in this constantly changing
environment. This introduction offers a
5 Robo-Advisors
brief overview of the innovations
influencing the modern world of
portfolio management.
Specific Instrument Real Assets
8%

Discussions
Alt. Inv
10%

Stocks (Equities)
45%
Portfolio management is the art and science of Cash
choosing and managing a variety of assets to 10%

meet specific financial objectives while taking

risk tolerance into account. Let's talk about
three specific sorts of assets that are
frequently encountered in portfolios in this
context: stocks, ETFs, and bonds.
Bonds (Income)
25%

MODERN PORTFOLIO DISTRIBUTION

This applies to high-level players in the
market only.
 Standard Assets
1. Shares: Equities, usually referred to as stocks, signify ownership in a business. By
purchasing a company's stock, you become a shareholder and have the chance to benefit
from its expansion and success. Stocks are renowned for their potential for huge returns, but
due to market swings, they also entail a higher amount of risk. To spread risk, investors
frequently diversify their stock holdings across different industries.

2. Exchange-Traded Funds (ETFs): ETFs are investment funds that, like stocks, are
exchanged on stock exchanges. Stocks, bonds, commodities, and other financial instruments
are among the diverse array of assets they provide. ETFs offer a cost-effective approach to
obtaining exposure to a large market or a particular industry without having to purchase each
asset separately. In comparison to conventional mutual funds, they frequently have cheaper
costs and provide the benefits of diversification.

3. Bonds: Bonds are debt securities that are issued by firms or governments to raise money.
In essence, when you buy a bond, you are lending the issuer money in return for periodic
interest payments and the repayment of the principle at maturity. Bonds are typically thought
of as lesser risk than stocks, making them a more cautious investing option. They are
frequently utilized to give a portfolio stability and income.
Modern Assets
1. Cryptocurrency and Online Assets Cryptocurrencies like Bitcoin, Ethereum, and other altcoins
have grown in popularity as alternative assets. They are recognized for their tremendous volatility,
but they have also demonstrated the potential for significant gains. Cryptocurrencies expose
investors to a new and expanding technology ecosystem, and some see them as a hedge against
traditional financial markets.

2. Art and Collectibles: Artwork, collectibles, and other tangible assets can be used as alternative
investments. Their worth might rise over time as a result of variables like scarcity, historical
relevance, and cultural changes. Their illiquidity, however, and the specialized knowledge necessary
for valuation, can cause difficulties.

3. Venture Capital: Venture capital focuses on early-stage businesses with significant room for
expansion. Due to the unpredictability of startups, this asset class exposes investors to innovation
and revolutionary technology, but it also entails a significant level of risk. Venture capital
investments frequently call for hands-on management and participation in the expansion plans of
the financed businesses.
Examples of well-managed portfolios
1) Tiger Global
Since the fund ventured into India in 2007, Tiger
Global has emerged as one of the most active
investors in the Indian startup ecosystem.
The New York-based VC firm counts 39 Indian
unicorns in its portfolio, including names such as
Flipkart, Bharatpe, and NoBroker, among others.
In June 2023, the firm raised $2.7 billion for its
16th fund, a far cry from the target of $6 billion set
by the investment firm previously.
2) Trifecta
Founded in 2015 by Nilesh Kothari and Rahul Khanna,
Trifecta offers equity as well as debt funding to startups. The
alternate financing firm also offers financial advisory services
to its portfolio startups.
With more than $600 Mn in AUM, Trifecta focuses on
startups from industries such as consumer services,
consumer brands, ecommerce, mobility, edtech, and
agritech, among others.
rifecta Capital claims to have pumped in more than INR
5,500 Cr in Indian startups since 2015. It counts 25 unicorns
in its kitty, including big names such as Meesho, NoBroker,
BharatPe, Urban Company, Licious, and Rebel Foods.

THE ORACLE OF OMAHA
One of the most known and successful
investors in the world is Warren Buffett.
His style of managing a portfolio stands
out for its emphasis on long-term
investments and distinct value
investing philosophy. Here is a quick
breakdown of Warren Buffett's
approach to managing his portfolio:
Margin of Safety
In order to create a safety net against
unexpected recessions and other
negative events, Buffet seeks to buy
assets at an important discount to
Value investing
their true value.
philosophy
This approach involves Limited Diversification
identifying companies whose
He thinks that concentrating on
intrinsic value is higher than
a small number of high-quality
their market price.
assets allows greater control and
understanding of each position.
Long term planning
Buffett places emphasis on maintaining Hands-On Approach
investments for the long term in his
Buffett is known for being
portfolio management strategy. He
involved in the businesses he
thinks that the short-term fluctuations
invests in. He advises
in the market have lesser impact on the
management groups and at
fundamental value of good companies.
times has an impact on
tactical decisions.
 Regulatory Aspect Reporting and
Storage of Data
Market Abuse and
Insider Trading

The set of rules, regulations, and

guidelines put in place by regulatory Risk
bodies to control the operations and Management
activities of portfolio managers and
investment firms is referred to as
the regulatory element of portfolio ESSENTIAL
Fiduciary Duty AML and CTF
management. These rules are in COMPONENTS
place to safeguard investors, uphold
measures
market integrity, and advance
openness and equity in the financial
markets. The following are some Disclosure
essential components of the legal requirements
framework for managing portfolios:

Licensing and Suitability and

Registration know your client
(KYC) obligations
More on Regulatory

Regulatory
SEC and FINRA
Frameworks

Aspect Anti-fraud
legislation
1) The Securities Act 1993
2) Securities Exchange Act 1994
3) Investment Advisors Act 1940

Fintech Digital Platforms, Crowdfunding, Robo-advisors,

Regulation and Cryptocurrencies.

Penalties and
Fines, Jail time, C and Whistleblower Programs
Enforcement

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 Popular fraud cases
1. Saradha Group
The Saradha Group financial scandal was a major
political scandal caused by the collapse of a Ponzi
scheme run by Saradha Group, a consortium of over
200 private companies that was believed to be
running collective investment schemes popularly but
incorrectly referred to as chit funds in Eastern India.
Essentials of the case:
Widespread investor base
Promise of High Returns
Media Ventures
2.The King of Good Times
The King of Good Times, as Mallya was known, is
one of the biggest offenders when it comes to bank
fraud. The businessman is now bankrupt. Kingfisher
Airlines owes more than Rs 10,000 crore to several
banks, with SBI, PNB, and IDBI all loaning him
money. Mallya fled India in early 2016. Types of
frauds committed:
Misappropriation of Funds
Forgery and Falsification
Embezzlement
Learnings and Key Takeaways

The importance of diversification

The relationship between risk and return

The effect of costs and fees

Behavioural Biases

Asset Allocation Strategy

Importance of Financial Goals

The role of technology

Thank you for considering our
portfolio management project.
presentation. I hope you found
it informative and valuable.