Overview of portfolio management

OVERVIEW OF PORTFOLIO MANAGEMENT

Introduction

A portfolio can be defined as basket of diversified investment instruments such as stocks, shares, mutual funds, bonds, and cash in a certain ratio depending upon the investor’s income level, budget, risk appetite and the holding period. In other words, a portfolio is a group of assets. The portfolio gives an opportunity to diversify risk.  Diversification of risk does not mean that risk is completely eliminated. With every asset, there are two types of risk; unsystematic risk (inherent to a specific company or industry) and market/ systematic risk. Even an optimum portfolio cannot eliminate systematic risk, but can only reduce or eliminate the element of unsystematic risk.

Meaning of Portfolio Management

Portfolio Management is the art of making decisions about the investment mix for investors  ensuring maximum returns and minimum risk within a given timeframe. In common terms, it refers to the selection of assets and securities and their continuous churning in the portfolio to optimize the overall returns. The riskiness of portfolios depends on the attributes of individual assets, as well as the interrelationships among assets. Therefore, it is primarily for this reason that portfolio management is desirable.

The theory of portfolio management describes the resulting risk and return of a combination of individual assets and securities. One of the major objectives of the theory is to identify combinations of assets and securities that are efficient. Here, efficiency means the highest expected rate of return on an investment for a given level of risk. The starting point for portfolio theory requires an assumption that investors are risk averse. This means that for a given level of return, investors prefer less risk to more risk.

Modern portfolio theory has been largely defined by the work of Harry Markowitz in a series of articles published in the late 1950s. In 1952, Harry Markowitz's article on "Portfolio selection" was published in which he analyzed the implications of the fact that investors seeking high expected returns generally wish to avoid risk. This is the basis of all scientific portfolio management. Portfolio theory explains that some sources of risk associated with individual assets can be eliminated, or diversified away, by holding a proper combination of assets.

Objectives of Portfolio Management

• Security/safety of principal: Security in this context implies keeping the principal amount   secured. Safety means protection of investment against loss and uncertainty. In order to ensure safety of investment, a careful review of the underlying economic and industry trends is necessary before selecting the investment avenue.
• Stability of income: To ensure a steady flow of income to take care of financial needs of the family.
• Growth of capital: Investors seek appreciation in capital and want their money to grow quickly.
• Liquidity: This is one of the major objective of investors so that they can get the money back when needed. It also helps them to maintain the purchasing power.
• Diversification: The basic objective of building a portfolio is to reduce risk of loss of capital and / or income by investing in various types of securities and over a wide range of industries.

Types of Portfolio Management                                               

There are primarily two types of portfolio management strategies:

·         Passive portfolio management: A passive strategy requires the investor to buy and hold some replica of the market portfolio and accept an expected return equal to the market.

·         Active portfolio management: In this strategy, specific investments are made focusing on outperforming an investment benchmark index or market return by actively buying and selling securities.  

Conclusion

To summarize, portfolio management is a process to manage investment in assets and securities as per the income, budget and risk appetite of the investors. It is a dynamic concept and involves regular and systematic analysis, judgment and action. Further, it is quite relevant as it helps investors in effective and efficient management of their investments to achieve their overall financial goals over a period of time.

Mahabaleshwar Travel

We planned a trip to Mahabaleshwar and surrounding areas during the Commonwealth games season in Delhi. Our journey began on 11 October, when we boarded the colorful Doronto Express at 11 a.m. to reach Pune, the next morning around 7:30 a.m. We had equipped ourselves with a pack of cards and a couple of magazines to keep us occupied during the overnight train journey. My son was so excited about the train journey and flooded us with questions regarding the engine and related technical aspects.
The train journey was real fun as we engaged ourselves into activities for which we would never find time at home (playing cards, twenty questions, hogging, etc). The support staff also deserve a mention as they made us feel really special by extending their hospitality and prompt service. During the daytime, we admired the changing landscapes as the train travelled through the dusty plains of Mathura and surrounding areas to the dark and dingy ravines of Madhya Pradesh and the desert land of Rajasthan.
From Pune, we embarked on our (120 km.) road journey to Mahabaleshwar. We were greeted by bright sunshine and clear weather. The hill station is located at an altitude of 4500 ft along the Sahyadri range of Western Ghats. As we climbed up, one could observe the mountains were not very steep and they bore a reddish imprint unlike the Himalayas of Northern India. Another aspect that really struck me was the pristine forest cover extending over the hill station which was untouched by human influence. The forest cover predominantly comprised of Jamun trees spread all over the landscape.
We pampered ourselves by getting into a shopping spree in the local market at the end of our first day excursion. The market was flooded with jutebags of all hues and varieties. Also, one could find sleek Kohlapuri sandals and slippers displayed outside and I could simply not resist from picking them up. At the hotel, we savoured our taste buds by digging into exotic North Indian and Gujarati cuisine.
The next day, weather gods were generous and we visited the famous Lord Shiva and Panchganga temple located in Old Mahabaleshwar. There was an ethereal charm around this place and it made me feel so calm and serene from inside. During the next half of the day, we travelled to Panchgani. The town got its name from the five rivers flowing through it; Krishna, Koyna, Gayatri, Savitri, and Venna. The town also boasts of several shooting sites for Bollywood movies including, the commonly found cliff hanging scenes. There was a flat table top land spread across a radius of 6 km. We took a bumpy ride on a single horse carriage across the table land and it gave us quite a countryside feel. An icecream seller became our self proclaimed guide and shared with us the historical significance of the place where Pandavas had once come and left their footprints.
The very next day we checked out of our hotel after a sumptuous breakfast and started descending towards Pune. On the way, we stopped by, at an icecream factory and took a neat break, admiring the factory interiors, at the same time relishing our strawberry icecream. The cab driver made us stop again at few spots in Panchgani which offered a wonderful glimpse of the picturesque valley below (Wai and Chikli village).
Having visited the place, I would recommend this hill-station for couples wishing to spend their vacation in solitude away from the humdrum of the city. Also, recommended for families with kids as the weather is pleasantly cold, food is really hot, and there are strawberries in abundance.

Kashmir Odyssey

We visited Kashmir in May this year. Long hours had been spent in planning our itinerary and finally, we zeroed in on the Kashmir valley. Our first brush with Kashmir were the snow-capped peaks of Himalayas which were visible as we started nearing the Srinagar airport. We could view a picturesque valley which was literally (going back to the definition found in our NCERT geography textbooks) surrounded by cliffs on all sides. There was a strike on the day we reached Srinagar and the city appeared quite calm and peaceful unlike what we had heard about it. Our booking was in Butt's Cleremont Houseboats and we got a wonderful welcome from our host, Mr Gulam Butt. He devoted personal attention to make our stay comfortable. Not to be missed was the visitors gallery which showcased a number of distinguished people from the media, diplomatic relations and political background who had stayed in his houseboat.

We managed to pack in the beautiful Shalimar Gardens, Chashme-Shahi and the Pari Mahal in the daytime. This was followed by a Shikara ride in the Dal Lake arranged by Mr Butt. We could watch the skyline of Srinagar in the backdrop of the setting sun which created wonderful reflections in the tranquil waters of Dal Lake. The boatman shared some insights on the society and youth of Kashmir who had grown up in a fearful environment influenced by the politics of the land. Inspite of very high education levels, majority of the youth are unemployed which has led to rising discontent and widespread public agitation. We came across a small island in the middle which was in a bad state after it suffered a terrorist attack. Dilapidated structure stood where there was a restaurant once. I was deeply touched by the poignant tales of the boatman. At night, we were treated to a sumptuous Kashmiri meal in the houseboat. It was a great way to unwind after a long and tiring day.

The very next day, after picking some momentoes (coasters, bangles) we were off to Pahalgam by noon. As we were crossing Srinagar, we passed through the historic Lal Chowk which appeared unusually quiet and peaceful unlike what we had seen and heard on television. We saw a lot of bat factories on the way to Pahalgam. Saffron farming was visible across stretches of land.

It was almost evening when we reached Pahalgam. This valley is located alongside the Lidder river, at an altitude of 2130 metres above sea level. It is also the starting point for the Amarnath trek. I was completely spell-bound watching the landscape which offered an ideal location for shooting of a romantic Hindi movie. Early next morning, we took a pony ride to Bysaran valley. The route was quite slippery owing to heavy rains and I almost clinged to the ponyman during the entire journey praying silently along the way. Bysaran was a dream valley with lush green meadows stretching across the horizon. There was hardly any human civilization except a few shepherds and a couple of tea stalls. We had some hot maggi, toast and paranthas to complement the cold weather. It was great fun just running along the slopes. The pony ride was a real adventure as we had to cross several streams and slippery terrain downhill. But we had gained some confidence while descending so we did not feel the adrenalin rush as much as we did uphill
By the time we reached our hotel, it was almost time to bid adieu to Pahalgam and proceed to Gulmarg. We just wished that next time we would keep more days for Pahalgam so that we visit the places we missed on this trip. We had to cross Srinagar and then proceed to Gulmarg as there was no direct link between Pahalgam and Gulmarg.

Gulmarg was quite a discovery. It was a treat to watch the valley unfold beautifully before your eyes. Not to be missed is the Gondola ride to Kongdoor and subsequently, Khilanmarg. The Children's Park and the Golf Course offer a great ambience to unwind. The best part were the tiny bridges built over streams which resembled the description found in fairy tales. The kind of place which makes you feel like you are in heaven!

Scores of CRPF personnel posted outside the airport and several rounds of security check before entering the airport reminded us of the political turmoil that the place is going through. Inspite of abundant beauty, the potential for tourism has been limited by the ongoing man-made conflicts. In the days after we returned from the valley, the conflict intensified and there was curfew in the valley for several weeks altogether. I thanked God for making our travel possible so that we could appreciate the beauty around us in a peaceful environment.

Singapore Moments

Landing at Changi Airport, I was struck by its sheer size and existing standard of cleanliness. There were skytrains connecting different terminals. The airport was truly world-class and showcased the developed face of Asia to the world. As we came out from the airport and entered the city, this feeling got even stronger. Green canopies of trees stretched over the roadside. The traffic was free flowing without any hindrance and the cars zoomed past following their lanes. We could also view live traffic updates flashing at major intersections. Our first outdoor excursion at Singapore was in Boat/Clarke Quay along the Singapore river. The statue of Merlion welcomed us in Boat Quay. Merlion as a symbol of Singapore has its roots in history. It commemorates the legend taken from "Malay Annals" explaining how SINGAPORE got its present name. We took a boat cruise from Boat Quay to Clarke Quay listening to the history of this area which housed a couple of buildings that had become synonymous with the city. Among them, particularly noteworthy were the Singapore Exhibition House, Asian Civilization Museum, Fullerton Hotel and MayBank. The dazzling lights of the buildings glittered in the late evening and created wonderful reflections in water. The whole place had an aura of romance and tranquility surrounding it and young couples were embracing each other . There were numerous food joints and glitzy restaurants to satisfy our taste-buds. As we returned back we were just in time to catch the last MRT to our destination. To my surprise, even at 11:30, the metro was quite crowded and I just about managed to get a seat. Next day, we packed some lunch to visit Sentoza island. It was pouring so we had to manage with our umbrellas. On reaching Sentoza, we made our way to the Siloso Beach. We found some place in the sandy shore and parked our belongings. My son, Yuvraj was fascinated by the ripples being formed on the surface of the waves and busied himself in recreating those. There were scores of people playing volleyball on the beach while others made merry swimming in the beach waters. We took out our packed vegetarian lunch and enjoyed eating it while observing the periodic motion of the waves. After some beach fun, and entertaining dolphin show on one side of the island, we went to see the underwater world. Different species of fish swam in the man-made water reservoirs enclosed in glass frames. This was a museum with a difference. It displayed exotic species of fish and other marine creatures unlike unique works of art and artefacts from the ancient culture. It was interesting to watch the fish swim around so effortlessly flapping their fins in water. Their colors were so exotic that we just could not resist the urge to capture them in our cameras. I was amazed to find that marine creatures like fish did not show the slightest signal of being disturbed by human movement. We ended our day at Sentoza island with the Song of the Seas laser show. It was a fusion of lights, sound, music and drama in water. The main characters of the story unfolded themselves through the images formed by laser beams in water. It was a unique show with an underlying message to awaken our senses and revive our connection with the soul. The following day, we decided to explore the Singapore Zoo at length. As we began our walking trail inside the zoo, we were welcomed by two coloured parrots. We stopped for a while as they formed the perfect backdrop for our family potrait. Once, we walked further inside the zoo, we were greeted by apes and monkeys jumping on the branches of trees. There were ducks and flamingos quacking loudly to make their presence felt. I was struck by the variety of beasts in the zoo particularly Orang Utan and Polar Bear which had distinct physical characteristics. And in all this wilderness, we were able to find a restaurant serving delicious vegetarian Thali to satisfy our hunger. I would recommend Ah Meng for all those planning to spend their day in the zoo. Also, it would be worthwhile to visit the souveneir store before one exits the zoo. It offers a rich collection of souveneirs and artefacts to carry back home. I invested some time in this shop and picked up a few interesting souveneirs. We braced ourselves for a night safari as darkness descended in the forest. At night-time, we could watch the animals roam freely in their natural habitat. As we made our way through the dense forest, we could view endangered species of the Indian rhinoceros and the Barasingha glowing in the dark. The activities of the nocturnal creatures were visible in the dark. The lion looked quite intimidating from a close distance and the wolves appeared to be busily scouting around for their prey. Last but not the least, we saw a herd of Indian elephants displaying their ivory tusks and thick trunks. The very next day, we had to catch our return flight to Delhi. There was not enough time for shopping to our heart's content but we managed to pick up a few items before we made our way to the airport. Alongwith the souveneirs and other sundry items we also carried back the vivid memories of this country notably, the well-planned design and man-made outdoors which were maintained perfectly over time. The civic sense and self-discipline exercised by citizens was truly exemplary and worth emulating. Weaving it all together, each excursion in Singapore was a unique experience but the common thread running through all of them was the underlying young and vibrant human spirit.

Tryst with Kumaon hills

On the night of 6th May, we were busy packing our luggage and bracing ourselves for a journey to the Kumaon Himalayas. This was to be the most unorganized travel of my life as we had not made any hotel bookings and the itinerary was still open for last minute changes . We embarked on our journey at 7:30 am on 7th morning. It was the day of polling in Delhi and the city was quiet and peaceful moving at a sluggish pace compared to its natural momentum. Its seldom that one gets a chance to escape from the heat and the humdrum of city life and what better than to immerse ourselves completely in the natural beauty and landscape of hills.

We were carrying home-made food (sandwitches and poori Aloo) to survive during the day. Our first halt was at Country Inn, Bhimtal approximately 288 kms from Delhi. For all those planning to stay in Bhimtal (and willing to shell out a decent amount), I would recommend this resort as it combines the best of everything (luxury, comfort, relaxation and fun activities). We took off for Mukteshwar after enjoying a sumptuous lunch at Country Inn. We went via Ramgarh, famous for its apple orchards and stopped just 10 kms short of Mukteshwar at Shitla situated at an average height of 7000 ft. The place was surrounded by a thick forest of oak and rhododendrons and offered a very peaceful ambience to unwind oneself away from the hectic lifestyle of metros. In the night, just before dinner when we went for a small walk outside, we observed a cluster of sparkling lights in a hillock below. The hotel manager informed us that the lights of Almora city were clearly visible from Shitla. Also, our resort was quite strategically located at a corner of the cliff so we could get a wide angle view of the Kumaon Himalayas. During clear weather conditions, the snow-capped peaks of the upper Himalayan range are visible from here but we not fortunate enough to catch a glimpse of them . Next morning, we decided to visit the historic temples of Jageshwar dedicated to Lord Shiva. We had just enough time to explore the surrounding area around our resort. There was a small handicrafts shop (Kilmora) nearby selling locally made woollens and handicraft items and the manager informed us that these were displayed in Dilli Haat during Uttarakhand festival.

In a short while, we began our journey to Jageshwar. We crossed Almora in the first leg of our journey. We did not pass through the main city and the crowded Lal Bazaar but cut across the city through a bypass section. As we approached the outskirts of the city, and crossed the Narayan Dutt Tewari wall, cement and concrete gave way to a green cover of oak and pine trees dotting the landscape. On our way, we came across a number of marriage processions with menfolk dancing to the tunes of popular Hindi numbers and women adorning the traditional pahari costume and accessories. We had to cut through the busy Almora Pithoragarh highway and take a turn towards Jageshwar. From here onwards, we observed a distinct change in the flora. It was fascinating to watch nature unfolding its pristine beauty all around us with pine trees giving way to deodar. The sight was awesome and we felt like stopping over at every turn and spending some carefree time in the laps of nature. Situated amidst a flowing river and a thick forest of deodar, the historic temples of Jageshwar are an archaelogical site dating back to 8th century B.C. There were a cluster of temples dedicated to Hindu Gods for the devotees to offer prayers and seek blessings of their revered deities. It was amazing to see how well these temples had been preserved from centuries without any semblance of aging.The place had an aura of timelessness and an ethereal charm which was unfaded through the aeons of time. The natural beauty of the surroundings captivated our senses and and we experienced a state of bliss surrendering ourselves to the grace of the Gods. It was a welcome treat for our eyes and it felt almost like we were dreaming in broad daylight. As we were running terribly late from our schedule for the day we had to bid goodbye to Jageshwar so that we could reach our next destination, Kasaar Jungle Resort before darkness descended on the hills. We retraced our route till Almora, and from there took the Binsar Road to stop 10 km short of the Binsar sanctuary at the Kasaar jungle resort. The resort was situated amidst a thick forest and a little below the Kasaar Devi temple. It was built on a hilly terrain and gave the feel of a typical mountain resort situated couple of meters above the main road. I would recommend this resort for those of you keen to visit the Kasaar Devi temple and spend some moments of solitude in the embrace of nature.However, food was a big disappointment as the choice was really limited and our desire of digging into a local dish remained unfulfilled. The rooms were well done with nice interiors and matching decor. Next day, we started our return journey to Delhi after having a decent breakfast at the hotel. Kosi river was flowing all along our descent from Almora to Garam Paani and was a wonderful sight to gaze at . We stopped by at Bhimtal to savour some mouth-watering pickles and squash made by local women and entice our taste-buds. We decided to take a detour to Naukuchiyataal and enjoy a boat ride. The stop-over at Naukuchiyataal was worthwhile as we spent almost an hour going around the lake in a row boat. The waters were cool and placid and we really enjoyed dipping our fingers into it. Also, the boat man had some interesting local tales to narrate and enough time to familiarize us with the dynamics of local politics. We discovered some beautiful bungalows and resorts around the lake and somewhere deep down I felt a desire for owning a summer cottage overlooking the tranquil waters of Naukuchiyataal.

We ended up travelling 1000 kms in a span of less than 3 days which sounds almost like a whirlwind tour of the Kumoan Himalayas. It was a bit taxing for our bodies but the travellers spirit steered us throughout the journey. Though each of our destinations had their own story to tell, yet one theme common to all of them was the panoramic view of the lower Himalayas that they offered. As we came back we rewinded the memories of the Kumoan Himalayas captured in our videos and still photographs to be shared with family and friends.

Stay in Mudfort Kuchesar

Located 75 kms from Akshardham temple, Mudfort offers an excellent option to unwind oneself in the countryside. We booked rooms for the night of 29th and prepared ourselves for the travel. When we woke up on 29th, it was unusually foggy outside. The fog got thicker and dense with the passage of time. At one point of time , we thought of cancelling the booking. However, I was determined to make it and motivated others to wait patiently. Finally, the weather gods listened to us and the fog got cleared by 2'oclock when we could embark on our journey. Outside, it was bright and sunny, much to our astonishment. As we reached the country roads, we could see mustard and sugarcane all around the fields. On the way, we stopped by to eat some raw sugarcane. We reached our destination at sharp 4 in the evening. As we entered the compound of the fort we could see a magnificent fort wall defining the boundary of the palace. The entrance was marked with a huge iron gate which reminded us of royal lineage.There was a big open courtyard with a fountain in the middle. My son, Yuvraj was so excited that he kept running around it. We checked into our rooms and dumped our luggage first. Then we went out to explore the place and the best way to do that was to take a bullock cart ride arranged by the resort. The drive was unique as we were steered through the uneven village roads by Raju, a well-bred buffalo. The ride was quite bumpy but we enjoyed every bit of it. The village was dotted with mud huts having thatched roofs. It was a typical village sight which we are deprived of seeing in the cities. The place appeared slow and calm compared to the fast pace of life in our metros. People were just about winding up their day at 6'o clock and retiring to their huts for dinner. We could smell charcoal and bio-gas fuel in the air. As we returned back to the resort, we heard the sounds of Rajasthani music echoing in the courtyard. We felt like conossuiers of art patronizing music and dance performance. It was also captured in our video camera to be shared with friends and family. Our meals at the palace were marked with farm fresh vegetables and curd produced in the fort complex itself. It was a pleasure to savour these meals which tasted like home-cooked food and combined spices and condiments in the perfect proportion. However, the menu was limited so we had to be content with what was prepared for us and did not have options to choose from. The resort staff shared with us that it was a lean period for them and a lot of bookings by foreigners had been cancelled owing to terror attacks in Mumbai (26/11). On this particular night of 29th, we were the only family staying in the resort. It was our privilege and we got VIP treatment from the staff. Next morning, we spared some time to see the family photographs which narrated the royal lineage of Kuchesar. It was interesting to see how the family tradition was preserved generation after generation. We understood that the current royal descendant was managing the establishment and running the entire show. As we returned back we carried vivid memories of our royal retreat to cherish in the future.