The right eggs in the right basket.

The need for money varies on different stages of your life. Education can be top notch priority in your twenties while managing the find for health care, gifting and spending can be the highest importance after your sixties. So, you need to plan now to meet these future priorities

Your investment horizon as an investor can be divided into three phases in your life. In these phases, investors have different priority and investment horizon.

Portfolio Management:

There is high risk if you invest in an individual security as the return changes in value of the security.  This is analogous to keeping all your eggs in the same basket. For example: If you investall the money in securities of banking industry, any adverse outcome of the overall industry can hamper your investment. Alternatively, if you invest forming portfolio ofsecurities in different sectors, any loss incurred from inefficiency of an industry can be compensated by the gain you make from another sector. Therefore, portfolio management helps you in maximizing the total return with risk diversification.

You can benefit colossally with portfolio management with high value return provided it is performed on regular basis and implemented appropriately

Portfolio management presents the best investment plan to you as per your income, budget, age and ability to undertake risks. It minimizes the risks involved in investing and also increases your chance of making profits and enables your portfolio managers to provide customized investment solutions to you as per your needs and requirements. Portfolio Managers understand your financial needs and suggest the best and unique investment policy for you with minimum risks involved.

You can benefit colossally with portfolio management with high value return provided it is performed on regular basis and implemented appropriately.Portfolio management provides you various advantages that generally include:

  • Maximizing overall returns
  • Balancing the risks posed by projects
  • Optimizing allocation of resources

 

Portfolio Management Services in Nepal

Looking down at the history of Portfolio Management Services in Nepal, Beed Invest is the first company to start portfolio management services in Nepal. Beed Invest, after getting license from Securities Board of Nepal (SEBON), started its operations as a portfolio management company in September 2008. Currently most of the merchant banks of Nepal are providing Portfolio Management Services.

Although you as an investor attempt to create a portfolio yielding the desired return at the lowest possible risk, your effort might often go in vain due to frequent fluctuations in the stock market. Not using an appropriate method for portfolio formation and analysis,you are often found to be exposed to greater risk. Therefore, the role of Investment Bankers has become inevitable in dealing with this that shall help you generate maximum return

Most of the licensed Merchant Banker in Nepal is found to be offeringPortfolio Administration and Portfolio Management Services under two broad categories: Discretionary Portfolio Management Services and Non- Discretionary Portfolio Management Services.

  1. Discretionary Portfolio Management Service:

The Discretionary Portfolio Management service is a platform where you as a client allow managing the portion of your investments to the company. The portfolio manager individually and independently manages yourfunds in accordance your needs.

Under this, there are typically undermentioned investment schemes:

1.1 Value Portfolio:

Value portfolio comprises of stocks that are currentlyunderpriced relative to their Earning per Share (EPS) andBook Value per Share (BVPS). Hence, value stocks will havelow P/E and P/B ratios compared to other stocks. Earningsof companies that are categorized as value stocks aretemporarily depressed; as a result, investors punish thesestocks and price fall below the fair value. The rationalefor value investing is that because earnings of thesecompanies are only temporarily depressed and will againrevert back to the mean, there is potential to capture priceappreciation.

1.2 Growth Portfolio:

This includes stocks of those companies that have higher future earning potential. The rationale for investing in growth portfolio is that higher expected growth in earnings will drive the stock price even higher. Because growth stocks’ price rises rapidly as long as earnings potential is realized, even clients with short investment horizon invests in growth portfolio.

1.3 Small/Mid Cap Portfolio:

Small Cap/Mid Cap portfolio comprises of stocks of companies that are smaller or average in nature in terms of market capitalization. Because these companies are relatively small and unknown, the potential returns are high because of two reasons: first, as they are small and relatively unknown, their price will increase as they grow and expand, and second, because of low price, even a small increment in price will lead to higher return. However, the risks involved in these small companies are also high as they are often in their initial stage of business.

1.4 Large Cap Portfolio:

Large cap portfolio comprises of stocks of companies with large market capitalization. These companies are well known to investors and have been around for a long time. Hence, the risk involved with these large cap stocks is less compared to small cap stocks. However, because many investors hold these large cap stocks and these stocks are widely followed, they are usually fairly priced.

The rationale for investing in growth portfolio is that higher expected growth in earnings will drive the stock price even higher.

  1. Non-Discretionary Portfolio Management Service:

In non-discretionary portfolio management services, the portfolio manager manages your funds in accordance with your directions. The portfolio manager cannot make buy-sell decisions at his own discretion; he has to refer to you for every transaction. The choice as well as the timings of the investment decisions rest solely with you as an investor. However the execution of trade is done by the portfolio manager

Laxmi Capital also provides Management of existing portfolio and different advisory services to clients.

  1. Portfolio Administrative Service:

Portfolio Administrative Service is a service where portfolio administrator- The licensed Merchant Banker provides you clerical assistance related to the stock holding on your portfolio. Portfolio Administration provides services like IPO/FPO subscription, right share subscription; bonus share collection and dematerialization (demat) of shares with fixed annual charge.