Training Guides
Portfolio Theory and Construction
If an investment is to achieve its target rate of return, as determined by the benchmark set for the fund, within agreed risk parameters, it is imperative that the fund's assets are combined as efficiently as possible.
By efficient, it is meant that the fund manager, through extensive analysis, adopts the lowest risk way of achieving the desired rate of return.
In constructing the portfolio, consideration must be given to the statistical relationship that exists between the different asset classes.
Here, in the context of portfolio construction, we look at risk, how it can be reduced through diversification, setting performance benchmarks, the different approaches to equity fund management, how best to allocate assets and measure the resulting performance.
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Steve Cleal, Head of Multi-Asset Funds "Against the backdrop of low nominal returns and a widening of pension scheme deficits, trustees, more than ever before, need to understand how best to meet their scheme liabilities by setting an appropriate benchmark, combining asset classes efficiently through the latest asset allocation techniques and, where appropriate, employing truly active management and investment style intelligently." |
| Downloads | |||
|---|---|---|---|
 Asset & Liability management (458KB) |
Asset allocation (854KB) |
Benchmarking and indices (852KB) |
Diversification (870KB) |
| Equity investment styles (850KB) |
Passive vs Active portfolio management (1MB) |
Performance Evaluation (923KB) |
Risk and return (1MB) |