Fundamentals of Investment Management

This course provides a comprehensive, non-mathematical introduction to the key elements of investment management.

Key Learning Outcomes:

• Understand what institutional investors are and how they operate
• Identify the characteristics of the principal asset classes
• Identify and distinguish between the principal investment products
• Understand the importance of establishing investor preferences
• Understand the basic principles of portfolio construction
• Distinguish between active and passive portfolio strategies and styles
• Differentiate between equity and fixed income management styles
• Understand the interaction between institutional investors and brokers/investment banks

Introducing the Investment Manager

• What is investment management?
• Industry development, ownership and structure
• Industry drivers
• Current trends and themes

The Investment Management Process

• Establishing investor objectives
• Investment return profile
• Risk tolerances and investment constraints
• Portfolio construction and risk management
• Portfolio monitoring and administration
• Performance evaluation –measurement and attribution

Principals of Portfolio Construction

• Strategic asset allocation – definition and formulation
• Principal asset characteristics - expected return and volatility (risk)
• Typical strategic weightings and a stylized investment cycle
• Tactical asset allocation
• The concept of correlation
• Diversification and the efficient frontier

Key Players in the Investment Decision Process

• The asset allocation committee
• The Trustee Board and consulting actuaries
• The portfolio manager and the ‘buy-side’ analyst
• The centralized dealing desk

Managing an Equity Portfolio

• Active equity investment strategies – motivations and characteristics
• Styles: growth, income, value, technical etc.
• Passive equity investment
• Strategies – motivations and characteristics
• Methods: replication, sampling, optimization and synthetic
• Hedge funds: a different active strategy

Managing a Fixed Income Portfolio

• Active fixed income investment strategies – motivations and characteristics
• Passive fixed income investment strategies – motivations and characteristics

Fund Management and Derivatives

• The major products: equity, debt, foreign exchange
• Equity options: volatility / delta /gamma
• Equity futures / equity swaps
• Fixed income derivatives / interest rate swaps
• Credit derivatives / default swaps

Investment Products - An Overview

• Pension funds – defined benefit and contribution
• Collective investment schemes –mutual funds, unit trusts & OEICs
• Investment trusts
• ISAs
• Exchange-Traded Funds (ETFs)
• Hedge funds – the new investors
• Private client wealth management