A portfolio manager is a designated professional who deals with portfolio investments to attain their client’s demands. Recently, the job of a portfolio manager is getting widely acclaimed. Portfolio managers can be of two types: Organizational and Independent. But the job description remains the same in the case of both. There are various merchant portfolio acquisitions that a portfolio manager has to handle. For your convenience, we have listed the duties and responsibilities of a portfolio manager:
• Understanding Client’s Demand
An independent client might have shorter demands, such as small-scale investments for specific periods. On the other hand, institutional clients might have large-scale investments for longer time horizons. Thus, a portfolio manager must know how to handle different clients and cater to their needs accordingly.
• Selecting Company’s Asset Classes
A portfolio manager is also responsible for selecting the most appropriate deals, such as bonds, equities, etc., based on the client’s requirements.
• Determining Asset Weights & Portfolio Performance
A merchant portfolio manager must conduct the SAA or Strategic Asset Allocation according to the deal. Strategic asset allocation is a process of determining asset weights on asset classes.
Portfolios need to be balanced frequently due to the deviation in asset weights over a subsequent period. Portfolio performances can be determined by Capital Asset Pricing Model (also known as CAPM).
• Adjusting Asset Weights
There are two methods to adjust asset weights: IAA (Insured Asset Allocation) and TAA (Tactical Asset Allocation). The two methods work differently; for example, IAA or Insured Asset Allocation adjust the asset weights simply by surveying the client’s previous records at a specific interval. At the same time, TAA studies the capital changes in terms of new market opportunities. It depends entirely on the portfolio manager which one they wish to choose at a time. There are various merchant services that a portfolio manager offers.
• Risk Management
There are various risks that a portfolio manager must take care of before investing. Investment risks and security risks are some common managing areas. One needs to make sure that the asset classes are the same as asset class benchmarks.
To Summarize
A portfolio manager has a lot to look after. One must make sure to cater to their client’s deals adequately. Nevertheless, a path of a portfolio manager is successful in the longer run.
