1. Portfolio Management Unit – 1 Session No. 7 Topic: Role of Portfolio Management Unit – 1 Session No. 7 Topic: Role of Portfolio Management

2. Session Plan Recap the Previous Session Role of Portfolio Management Future role of Portfolio Management Ethical responsibilities for portfolios

3. Recap What are the factors influence the investment choice? What is liquidity risk? What is time risk? How to choose term investments? How does time, tax are constraint the investors’ asset allocation?

4. Role of Portfolio Management Portfolio prioritization and selection Stakeholder management Risk management Resource planning Value assessment and benefits realization

5. THE FUTURE OF PORTFOLIO MANAGEMENT Portfolio Management has become a more science-based discipline Advances in basic theory, technology, and market structure constantly translate into improvements. Theoretical advances in investments Technical Analysis in Portfolio Selection and Asset Allocation

6. THE FUTURE OF PORTFOLIO MANAGEMENT Significant recent theoretical advances in investments is the recognition that the risk characteristics of the non-tradable assets owned by an individual client, such as future earnings from a job, a business, or an expected inheritance, should be included in the definition of that client’s portfolio. In the institutional area also, there is an increasing awareness and use of multifactor risk models and methods of managing risk.

7. THE FUTURE OF PORTFOLIO MANAGEMENT Among the most significant market developments is the emergence of a broad range of new standardized derivative contracts— – swaps, futures, and options.

8. THE FUTURE OF PORTFOLIO MANAGEMENT Swaps – Swaps refers to an exchange of one financial instrument for another between the parties concerned. This exchange takes place at a predetermined time. – For example, in the case of a swap involving two bonds, the benefits in question can be the periodic interest (coupon) payments associated with such bonds.

9. THE FUTURE OF PORTFOLIO MANAGEMENT Futures – a futures contract (more colloquially, futures) is a contract between two parties to buy or sell an asset for a price agreed upon today (the futures price) with delivery and payment occurring at a future point, the delivery date. Because it is a function of an underlying asset, a futures contract is considered a derivative product.

10. THE FUTURE OF PORTFOLIO MANAGEMENT Options – An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock or bond, is a security. It is also a binding contract with strictly defined terms and properties.

11. Ethical Responsibilities of a Portfolio Manager Professional standards for managers – Standards of competence and – Standards of conduct Connection to individuals and their welfare is always present Code of ethics

12. Summarizing What is Futures? What is Options? What is Swaps? What is Professional Standards? What is code of ethics?