4 Types of Portfolio Management Services

Portfolio Management Services

In this world of recession, inflation, and competition it is very important to invest carefully so that during rainy days you are well covered under a safety umbrella. There is so much info on how to invest your money from listening to your neighbours to your office colleagues everyone has their own idea and agenda when it comes to investing and building a well-balanced portfolio.

Some people think investing is a scam and you should always be aware of people glorifying stock markets or mutual funds. Maybe because they or someone they know had to suffer at the hands of poor bankers. And hence they warn others about it! We believe that the issue is not with investing but rather how you chose to invest. You can do some research and put in the time and effort to learn about the field that you would like to invest in. It would take up a lot of time and mentally drain you and still wouldn’t guarantee results.

Though at least the comfort of knowing that you did it after taking all the calculated risk and it wasn’t a scam. Or you can search for a well-established and trustworthy consultancy and work with them. Searching for a suitable agency might be a bit of work at the beginning though it would have you hours of pain in the long run. Put in the work one time and reap the fruits every time.

And if you are looking to an investment consultancy do check out our profile and the types of portfolio we manage.

WC Securities is a specialist Private Wealth Management Firm set up by entrepreneurs with a Private Banking background to provide a professional platform of Private Wealth Management services.

Portfolio management

A well-read and experienced investor would always tell you to diversify your portfolio and never to put your eggs in one basket. It’s no hidden secret that any kind of investment, be it the stock market or mutual funds has its risks. For anyone to believe otherwise would be naive on their part. SO the best and safest practice is to diversify your investment. So even if one industry is going through a rough time you still would have your other investment to keep you afloat.

Now that we know that one can break down their assets and invest into different segments, let’s have a look at all the different types of investment options available in the market.

4 Types of Portfolio Management Services

Types of Portfolio Management Services

Active Portfolio Management

The aim of the active portfolio manager is to make better returns than what the market dictates. Active managers buy stocks when they are undervalued and start selling when they climb above the norm.

A portfolio manager plays a very important role in this approach as your manager would be consistently and actively scanning the stock market in order to find you the best investment stocks possible. It involves high return but high risks too!

So the big question Should you go for it?

Well, if you are someone who isn’t afraid of taking risks and would love to make big returns on your investment then this kind of approach might suit you the best.

Passive Portfolio Management

If you understood active portfolio management then it wouldn’t be difficult for you to understand passive portfolio management as its the exact opposite. Those who subscribe to this theory believe in the efficient market hypothesis. The claim is that the fundamentals of a company will always be reflected in the price of the stock. Therefore, the passive manager prefers to dabble in index funds which have a low turnover, but good long-term worth.

Here the growth yield is slow but they generate consistent gain long term. Moreover the cost of implementation is also low.

So if you are just starting out in the stock market or starting to build your investment portfolio then we’d suggest you could start with passive portfolio management.

Discretionary Portfolio Management

In this type of portfolio management investment funds are placed with a broker or manager who has discretion to invest them on the client’s behalf. Here the investor only has to invest money and no time. Once you communicate your goals and respective timeline to your manager, rest is taken care of by him/her.

Your fund manager would do all the heavy lifting whilst you’ll enjoy profits. Only go for this approach if you do not have a lot of time to be there for sale and purchase of every single stock and do not want any stress. Though as with every other major thing in life, trusting someone else could require a lot of calculative risk and when done right could prove to be one of the best decisions.

Non-Discretionary Portfolio Management

And if you are not ready to hand over your entire portfolio responsibility to someone else so quickly you can start with Non-Discretionary Portfolio Management where your manager basically acts as a counsellor and advises you based upon the current market and your future goals to the best of his/her ability. To follow through on the advice would completely be your own decision. Whether you decide to use a portfolio manager or you choose to take on the role yourself, it is important to opt for a viable strategy and ensure that it is put forward in a logical way.

CA Mukesh Gupta
CA Mukesh Gupta
Mukesh Gupta is the founder and director of Wealthcare. He is Fellow chartered accountant, Certified Financial Planner and Certified Public Financial advisor. He is in financial services industry since 1994. He conducts free money management sessions for corporates and associations on topics related to Personal finance. His previous engagement was with Birla Sunlife group. He regularly writes on topics related to Personal finance and occasionally appear on electronic media.

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