Choice of the value writings for a successful strategy

The right process of the choice of the value writings for a successful strategy for active port folio management

In the modern economy different strategies exist for active port folio management. Besides, with a choice of the value writings the right process plays for a successful strategy an important role. Within the port folio theory acceptances about the behaviour are met by investors: Statements about the investment behaviour can be thereby met. High investment success can be achieved exceptionally by active port folio management. Besides, within an investment segment a higher performance should originate from it. If a high short growth is forecast for a market segment, it is invested in this area.

The right process of the choice of the value writings

Securities, called also value writings, are an important component of the economic business, as for example within a security pension business. Interest papers are distinguished in the kind of the interest, after firm, variable or economic interest. Value writings are distinguished according to the following criteria:

• after the yield
• after the economic function
• after the juridical transference

Within the active port folio management port folios are constructed. Single securities are bundled up, for example, and receive a certain weighting. Besides, the following securities are weighted in a certain manner:

• Shares
• securities fixed-interest
• Money market papers
• Raw materials
• Precious metals
• Real estate and more.

With the investment strategies it is distinguished between active and passive port folio management. With the active port folio management a port folio manager invests invested in certain securities, she shops for a low price and sells them for higher price. A Überrendite should arise from it compared with the market. The selection of securities and the steady forecast of future security courses are of essential importance with this process. Moreover, an identification of undervalued titles must occur. This process plays with the passive port folio management only one minor part, future forecasts and the selection of the securities are not here from primary meaning. The passive port folio management serves with priority the simulation of capital market clue, the representation of the port folio and the Index-Tracking. The choice and the weighting of the securities orientate themselves by the construction of the underlying index. The advantage of both strategies, the active one and the passive port folio management lies in the cost comparison and in the scientific knowledge from the theory of efficient markets. Besides, the port folio diversification reduces the risk.

Unit trust with wide dispersion

According to the so-called "Markowitz diversification" it is distinguished between systematic and unsystematic risk from arrangements. Unsystematic risk referring on single security, is diversifiable. Systematic risk is not diversifiable by contrast and concerns the whole arrangement. As a consequence it is renounced, for example, floor Picking. Therefore, investment in unit trust with wide dispersion about branches, countries and different investment classes are very recommendable. The port folio diversification by arrangements with counter-rotating yield development pays the port folio diversification in a high degree to itself, because by a counter-rotating yield development losses and profits can compensate themselves, for example, precious metals and real estate concerning. Often an uncoupling of shares and loan markets takes place. The risk of a loss is reduced by a wide-scattered arrangement in different investment categories. Besides, the investment categories should not be tied together too firmly with each other.

Besides, the globalisation process on the financial markets progresses on and on. The coenterprises, the enterprise structure, the finance management and, for example, branch standards which can promote positive criteria of an enterprise are for trade, besides, from bigger and bigger meaning. Just nowadays the market participants within the financial market must take over more and more responsibility. Within the port folio management responsibility for the decisions and the right process of the choice of the value writings must be taken over steadily. Moreover, the reading of articles and scientific, analytic books which form as a basis for the right process for a successful, active port folio management belongs to strategy processes. Besides, the progressing globalisation opens numerous, new investment possibilities, offers a broader dispersion of the finance arrangements and contributes to the lowering of the investment risk. Besides, it is important that the market participants co-operate with each other and profit of each other, not only financially, but also economic knowledge concerning. The globalisation on financial markets has led, as everybody knows, to a narrower connection of the development of capital markets in industrial states and thereby to a stronger synchronisation of yield developments. The advantages of the port folio diversification are lower. Difficulties exist concerning the increasing transmission of crises as a result of the globalisation process:

• stronger transference of financial crises up to now not unambiguously confirms
• Stability of the financial system
• Hedge fund debate
• Real estate crisis with central bank intervention

Moreover, has turned out that crises have numerous effects on the capital markets in developed states in developing countries. Moreover, in addition effects come like environmental editions or tax duties. Numerous economic researchers and professional port folio managers try to master these worldwide difficulties and by an active investment strategy in the market to exist more and more co-operating than competing. A passive beginning means the replication of an index of which wide-scattered port folio forms the basis. If one compares active to a passive investment strategy, explanations above the costs arise first.

With the active investment strategy the issue impacts which amount up to 3% of the investment are raised by the purchase by unit trust. A passive port folio management has less costs than an active port folio management. Nevertheless, therefore, an active investment strategy delivers no higher yield than the market and the cost disadvantage is not overcompensated. Capital markets are already efficient markets and systematically accurate course forecasts, therefore, are not possible basically. The topical course delivers at the market daily all relevant and available information. With systematically accurate forecasts about future course of securities the success of active investment strategies stands and falls.

Successful port folio management

The port folio manager of an enterprise provides and administers a port folio within an active port folio management. The conditions of this bundle in investments are agreed with the investor by contract, with regard to the investment criteria. Besides, special attention to purchases and sales is laid concerning the expected market developments. Within the theory of the top Down beginningthe aims in which the strategy is derived then are looked. At every time the strategy arises from the analysis and the decision. As soon as a Taktig has arisen or has developed, this is checked by the performance analysis. Another procedure is known than Bottom Up beginning. This port folio management process contains the port folio planning, port folio realisation and the port folio control. Within the port folio management process investor's analyses, finance analyses, checks, the so-called monitoring and many other factors are included like the performance measurement in the education of an optimum strategy. Also within the active port folio management it is difficult to weigh the future yield and the risks: This presents itself over and over again as a problem. Investors are interested as a rule in the investment medium, the investment politics, the risk classes and the dispersion. The port folio structure and the port folio style are fixed by thestrategical port folio management. With an active yield divergence a divergence of the yield of the comparative index takes place. Moreover, this divergence can occur through instruments beyond the comparative index. Also the passive investment style plays an important role for the choice of the value writings: For example, yield divergences compared with the index can be held by special technologies like the picture of the index value writings low. The active one and the passive port folio management can be connected directly with each other. With the so-called "semi passive" port folio management becomes, for example, a Tracking Error of 2%, besides, serves as the greatest possible percentage and unit for a semi passive investment style. The basis for every tactics and strategy forms the analysis which serves to make decisions which were weighed out before thoroughly. The analysis of the value writings forms the basis for the port folio management. Basic analyses enable to find out an adequate price of securities, and are based on economic data and the so-called basic data. Also methods of the balance analysis are applied, for example and the relation of course and profit are analysed. Thereby one receives, for example, as a result a course aim. This aim delivers tips to undervalued and overrated shares or enterprises. Then the knowledge which is won from the analysis of the tip can promote a certain action strategy in the stock market which is called "Value Investing". Moreover, short-term and medium-term to long-term aims are distinguished: The differentiation of the criteria "short" and "long" plays a very important role with regard to the floor Pickings. Besides, it is possible to the investor to determine certain rules for the tactics, the possible risks should prevent. Therefore, in the area of the short-term aims, in the short area, the port folio management often occurs with technical support through computer programs. Besides, the costs can be thereby reduced.

With the help of the performance analysis the success of a port folio is examined. With this kind of analysis the yield and the risk are balanced with each other and the result is split in different components. By the right port folio management can be found out which securities and which number of these securities can be taken up in an optimum port folio. The futures contract allows the observance of the Tracking Errors with Benchmarks and is an important instrument in the port folio management because he steers bonds-port folios. Investments can be thereby administered optimally. Moreover, it is thereby possible to anticipate future market developments. Then according to the analysis of a port folio and the decisions the market strategy which must adapt itself to the steadily changing market arises. Accordingly of the port folio aims is fixed which value writings are kept in the port folio. This can be, for example, shares, pensions or derivatives. Here a coarse subdivision of the structural components, for example , 60% of shares and 40% of pensions occurs. The dispersion qualitatively occurs (perhaps, also quantitatively) after regions, branches and between standard and Nebenwerten.

The performance analysis serves the inquiry of the success of a port folio and can be explained in different way:

By the comparison with a Benchmark, the comparison of yield and risk, for example, by the Sharpe-Ratio or the Attributionsanalyse. Within the Attributionsanalyse the result is disassembled in different components. Besides, market-conditioned, tactically or structurally can influence conditioned components the results. There are numerous analysis methods of the port folio analysis to put together the security bundles and to reach an optimum payment of interest of the invested capital. With the help of the port folio analysis the different market segments are looked in isolation. Besides, the port folio analysis allows a graphic representation of the commercial processes of an enterprise. By this analysis it is put outside whether the shops of an enterprise behave consistently. The port folio manager of an enterprise puts investment possibilities and bundles up with it other possible financial transactions to lower risks by a dispersion. Within the modern port folio theories it is distinguished between active and passive investment strategies. For example, the interest structures are analysed by active strategies to improve the business systematically. Passive strategies serve to make certain yields of interest variations independent. Verzinsliche securities serve the long-term investment.

A pension business is a short-term loan which is with a security besichert and was granted to the pension giver by the pension taker. Within a real security pension business the pension taker is obliged to sell the securities once more. Besides, the pension giver has a repurchase obligation. In a pension system after the capital cover procedure the pension contributions with interest and compound interest are accumulated. Then at the age the pension is tipped out. Asset managers look, for example, worldwide for the best investment possibilities to offer individual investment solutions and to guarantee investment possibilities. In any case, the competent behaviour within the economic forecasts decisively determines the decision with a choice of the value writings. In the investment process the important decisions which rescue different advantages and risks, profits and losses are made within the port folio management. Therefore, must be also respected by a decision for an active port folio management furthermore to the steadily developing economic processes and with a choice of the value writings must become perfectly gone forward. Also the advantages and disadvantages of the active and passive port folio management must be compared steadily with each other. Every decision must follow a thorough analysis, because exclusively in this manner new chances can develop and risks more often be avoided. Besides, in the areas of the port folio management the cooperation is a more and more important subject, so that active and passive port folio management strategies can be connected with each other and be realised better: And this best of all in a lasting way for all involved market participants. If the right choice is made at the right time the effected investments can be increased with the help of the active port folio management by leaps and bounds upward. Therefore, the strategies of the active port folio management must provide dependable future expectations.

Because the financial markets are unpredictable on the one hand though solidly, on the other hand, nevertheless, management strategies serve, in any case, rather the short-term planning. If, nevertheless, all risks were included, there are, in any case, the opportunities of evasion on which the port folio management can fall back then strategically and systematically. The right investments can be sense-donating: Therefore, reliable forecasts form the basis for the choice of the value writings. The investments should pay off in the long term on the financial market and can be used differently. Basically, for example, the trend goes with the investments in the direction of education and health service. In addition, the ethical added value also receives at many enterprises more and more in meaning. The profits which result from the investments can be used in many different kinds: Future thinking is asked for a successful active port folio management – the analysis, the decision: Then the strategy can occur. Moreover, by decisions the respective law situation must be considered. Also laws and other existing regulations determine the trend of a port folio strategy.