Tài chính doanh nghiệp - Chapter 26: The process of portfolio management

Chapter 26The Process of Portfolio ManagementObjectives Constraints PoliciesReturn Requirements Liquidity Asset AllocationRisk Tolerance Horizon Diversification Regulations Risk Positioning Taxes Tax Positioning Unique Needs Income GenerationDeterminants of Portfolio Policies Type of Investor Return Requirement Risk Tolerance Individual and Personal Trusts Life Cycle Life Cycle Mutual Funds Variable Variable Pension Funds Assumed actuarial rate Depends on  payouts Endowment Funds Determined by income Generally needs and asset growth to conservative maintain real valueMatrix of Objectives Type of Investor Return Requirement Risk Tolerance Life Insurance Spread over cost of Conservative funds and actuarial rates Nonlife Ins. Co. No minimum Conservative Banks Interest Spread VariableMatrix of Objectives (cont’d)LiquidityEase (speed) with which an asset can be sold and created into cashInvestment horizon - planned liquidation date of the investmentRegulationsPrudent man lawTax considerationsUnique needsConstraints on Investment PoliciesManaging Portfolios of Individual InvestorsOverriding consideration is life cycleNeeds for current incomeAppropriate level of riskAppropriate level and type of life insuranceTaxes and tax planningTax Sheltering for Individual InvestorsTax-deferral option - controlling the timing of gains on investments.Tax-deferred retirement plansIRAsKeogh plansDeferred annuitiesFixedVariablePension FundsBasic types of plansDefined contribution plansDefined benefit plansPension investment strategiesDefined contribution versus defined benefitContingent immunizationInvesting in equitiesFuture Trends in Portfolio ManagementIncreased use of inflation-indexed bonds.More direct management of funds by individuals.More companies offering structured financial products.