Portfolio Management skills are innate in nature and strong intuitive traits from the portfolio manager. Nevertheless, there are certain principles of good equity management that any portfolio manager can follow to improve his performance.
- Set realistic target returns based on appropriate benchmarks.
- Be aware of the level of flexibility available while managing the portfolio.
- Decide on appropriate investment philosophy, i.e., whether to capitalize on economic cycles, or to focus on the growth sectors or finding the value stocks.
- Develop an investment strategy based on the investment objective, the time frame for the investment and economic expectations over this period.
- Avoid over – diversification. Although diversification is a major strength of mutual funds, the portfolio manager must avoid the temptation to invest into very large number of securities so as to maintain focus and facilitate sound tracking.
- Develop a flexible approach to investing. Markets are dynamic and it is impossible to buy ‘stocks for all seasons’
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