Basic Investment Management Functions

Basic

Investment management is an all-encompassing science that involves a vast array of strategies, activities, and decision-making processes geared towards expanding, shielding, and investing individual/institutional monetary resources in the most efficient manner possible.
The sole objective of investment management is not always to make returns, but to make returns in a way that is cautious of risk taking in consideration of the objectives of the investor, the length of his or her holding horizon and the risk tolerance of the investor.

These professionals utilize financial analysis, market research, economic forecasting and portfolios management approaches to take effective decisions that can in turn develop profitably, besides staying safe and liquid. Proper management of investments calls upon a keen insight into international financial markets, economic cycles, and the individual or organizational objectives of the investor. Upon learning these fundamental functions, investors will be in a better position to make wiser decisions, use their resources more effectively, and maneuver through intricate and volatile financial markets with ease, guaranteeing their wealth accumulates over time as well as hedge against unexpected market shocks.

Portfolio Diversification

Portfolio diversification is one of the most basic and well-known principles used in investment management.
Diversification is the distribution of investments in different classes of assets, sectors, countries and financial products to minimize effects of any single negative event on the overall portfolio.
Often diversified stocks, bonds, real estate and other properties within an investment portfolio could overcome market volatility more readily, because a failure or instability in one area can be compensated by a prosperity or stability in another area. Diversification is especially important in times of economic uncertainty or market volatility, when the possibility of suffering financial losses due to a tightfisted commitment to the investments in one area or one direction is quite a possibility.
To create the best combination of stability, growth potential, and liquidity, investment managers create portfolios by carefully examining the interplay among assets, historical performance trends, and market factors.
This would be a course of action that would assure the financier that he/she is able to invest his/her money and achieve his/her economic objectives with minimal risk and that is the reason why diversification is a paradigm in personal and institutional portfolio.