February 2019
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Mutual funds portfolio management comprises 3 Words –

1.Mutual Funds

2. Portfolio

3. Management Services

  1. Mutual Fund-

    Mutual funds are trusts which are managed by the Fund Managers. They offer schemes where they pool the savings of many investors in various debt and equity instruments. The sponsors of the trust setup an Asset Management Company or simply called AMC, which can offer various schemes as per the guidelines provided by AMFI or Association of Mutual Funds of India.

    Currently 43 AMC’s under operation and put together they offer close to 43,000 schemes across equity and debt schemes.

  2. What are SIP funds?

    Investments in mutual funds can be done either as lumpsum (one time investment) or through SIP (Systematic Investment Plan) ,where in investments are done at periodic intervals (daily, monthly etc). Each method has its own use and merit.

    • Investment in lump sum is better when the markets are at all time low. Than there is chance of the stock price moving higher is high.
    • Investments in SIP is better when the market is at a high & you expect a correction in the market. At that time, investing a specified sum will help in averaging out the risk. And at the same time helps capture any opportunity on the upside.
  1. What is Portfolio?

    There are many avenues of investment for each individual. They include investment in debt (govt.securities, fixed deposits, PPF, bonds and other non risky options), equity (which includes stocks, mutual funds etc),In liquid Funds( where you can park your money for short duration and it gives you returns approx 7%). Investing in all these asset class options is termed as a portfolio. Asset diversification balance the risk and return equilibrium. 

  2. Management- 

    A person who manages all above mentioned investment Avenue-i.e. Equity,Hybrid, Debt & Liquid mutual funds is known as PORTFOLIO MANAGER. As per investor Risk Profile, need, taxation, retirement,short term and long term goals PORTFOLIO MANAGER allocates assets .Portfolio manager is responsible to give the desired returns to his /her investor .

    This management can be done by Financial Planners, who have a good understanding of how the financial instruments operate and the factors affecting them. These include knowledge of macro & micro economic factors, inflation, currency rates, loan growth, interest rates, stock markets, sector impacts, regulatory approvals or issues etc.

    Since many of the individuals don’t have concrete knowledge of the effect of these factors on the investments, they take the support of an external financial manager called the Portfolio Manager and the services are termed as Portfolio Management Services or PMS in short.

    Now A days awareness on mutual funds and inflows are increasing.Investors do have there portfolios but they are lacking most important term PORTFOLIO MANAGEMENT SERVICE. It Causes fund mismanagement and depreciation of the funds. Retail investors just purchase SIP/Mutual funds from different Banks/Agents and understand that they secured there future. This is not a right way for wealth creation. For your mutual fund regular health check ups, balancing the funds, proper asset allocation you need a PORTFOLIO MANAGER. Basic Duties of portfolio manager are to plan and give assured returns from investment.  He might need to switch from under-performing funds. Get the services of a mutual fund expert and distributor.


 A mutual fund portfolio manager Review Investment in  Financial segment

The starting step in a portfolio review process should be to check the asset allocation and line it up to one’s marked allocation in case it has changed significantly. If your marked allocation is 50% in equities and debt respectively.At the end of 1 year, this proportion has changed to 60% and 40% for equities and debt,due to swinging performance of the asset classes. It would be sensible to rebalance the portfolio by depreciating the proportion to equity by 5% to 10% and increasing the allocation to debt so as to line it up to the targeted/marked allocation.

The next step, to check the underlying investments in the portfolio is briefly described here. In case of a portfolio of mutual funds, the performance of each fund could be compared to other funds in the similar category. For an instance, the performance of a large-cap fund could be compared with some other Large-cap funds and an accurate benchmark index. Besides this, in case you have specific views on areas like large cap in relation to mid-caps etc. The portfolio can be checked in the context of any changes in the views.

 So you need to have a portfolio management service for Mutual fund Portfolio also….

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Happy investing