Question

The Investment Management Process is broken down into 3 stages. What are they and what is the most important one?

Answer 1

The Investment management process basically involves 5 main stages/ steps which are explained below:

1) Inverstment advice and planning:

It invlolves review of current financial situatuin in detail in order to better understnadour short term as wel as the long term objectives, be it risk tolerance, liquidity requirements, return objectives and the income requirements expected out of the investments made.This stage helps us to define our goals and expectations.

2)Portfolio Modeling and design:

In this stage, we aim our objective of maximisingthe investments returns potential along with balancing the stated risk tolerance level.SO we employ some sophisticated modelling tools which illustrate the future implications of different portfoliosapplied to our financial situations, assets and cash flow needs.TOgether then we optimiseallocation and document it in the individualised policy statement.

3) Manager selection:

This step involves chosing the money managers, the mutual funds managers , companies or the exchange traded funds, objective being to support shareholder to make effective selections by application of a disciplined selection process.

Criteria for manager selection is integrity, investment risk einvolved, his work experience, past performance, expense ratio etc

4) Implementation

5)AReviewing, Due diligence and reporting thereon.