A unique collection of assets and investments, financial portfolios are more than just the sum of their parts. Portfolios are an indication of financial objectives and market expertise, shaping the industry standing of investment managers. From asset allocation to risk management, effective portfolio managers know how to ensure aggregate returns for their investors.
While best practices will vary with each portfolio, finance students can prepare for success by learning some management basics. Top finance degrees can help students manage successful portfolios of all sizes, offering them a head-start on their future careers.
Are you curious about the importance of effective portfolio management? Here are four tips for students in international finance.
1. Graduates of BBA Programs Must Adopt the Right Management Style
Portfolio managers make investment decisions to suit particular company priorities. Accordingly, a first step is identifying a management style that fits investment resources and objectives. While managing their investors’ capital, successful investment teams define priorities and clarify decision-making powers among team members. Establishing parameters around portfolio decisions helps investment teams avoid costly mistakes – and ensures that new deals are in line with core principles.
Portfolio managers might also be required to choose between a passive or active approach, especially as it pertains to exchange-traded funds. Whereas passive management follows the market index – a practice also known as index investing – active management tries to beat market return through frequent and well-researched investment decisions.
2. Understand Asset Allocation and Diversification
Among their most crucial – and often hard-won – insights, investment managers know how volatile some asset classes can be. Asset allocation is an important step toward protecting a portfolio against market instability, ensuring a stable mix of assets with a low market correlation to one another. This insight guides asset allocation within single portfolios, protecting investors against market volatility.
Diversification is a related practice that extends beyond asset classes. In addition to security classes, portfolio managers seek investment diversity across sectors of the economy and even geographic regions – a chief concern after an international finance degree.
Portfolio management lessons can help students make more informed career choices
3. Successful Portfolio Managers Adapt and ‘Rebalance’
The market often requires a recalibration of portfolio objectives. Accounting for market changes, ‘rebalancing’ allows managers to reprise a portfolio’s original risk/reward profile. Rebalancing typically involves selling high-priced assets with low values to procure low-priced assets at a higher value – protecting the portfolio against unnecessary market risk or weak returns.
Rebalancing a portfolio is an effective way of reassuring investors, demonstrating a keen awareness of market influence and the adjustments required to match investment expectations. Managers are advised to keep investors abreast of such procedures, noting how it can help their returns.
4. Portfolio Managers Draw on Key Skills Developed in International Finance Degrees
Should you choose to work in investments after your degree, it will be important to draw on your education throughout your career to guide your decision-making. Students in top BBA programs can develop skills and insights that will prove incredibly helpful in future roles as portfolio managers, completing portfolio management courses alongside other key subjects such as international finance and asset management.
Those anticipating work as portfolio managers can also familiarize themselves with key concepts of market data gathering, investment psychology and tax liability. Future managers are also advised to follow industry developments and conferences, many of which present the hard-won market insights of seasoned professionals. This preparation can help students accelerate careers, acceding to leadership roles through both formal training and personal initiative.
Portfolio management insights can also help students manage their personal finances
Are your hoping to learn about portfolio management with a leading Bachelor of International Finance?
Contact Geneva Business School to learn more about our program!