This course has now expired please email us to find out when the course will next be running.
Strategic Portfolio Management and Asset Allocation
'Strategic Portfolio Management and Asset Allocation' is a 4-day course for those from the financial sector, including asset managers, wealth and private bankers, brokers, relationship managers, back office and administrative, corporate finance, and retail banking officers, who seek to further develop their skills, competences, and knowledge of strategic risk management and global asset allocation, in order to improve their business relationships and performance with their clients.
Course overview
'Strategic Portfolio Management and Asset Allocation' is a 4-day course for those from the financial sector, including asset managers, wealth and private bankers, brokers, relationship managers, back office and administrative, corporate finance, and retail banking officers, who seek to further develop their skills, competences, and knowledge of strategic risk management and global asset allocation, in order to improve their business relationships and performance with their clients.
Summary of course content
- Measure and manage risk in global portfolios and client relationships
- Manage the risk-return equation and global clients' expectations
- Understand the benefits and the practical limitations of modern and postmodern portfolio theories, the capital market theory, and the arbitration pricing theory, when determining risk premiums and measuring global performance
- Analyse the importance of economic cycles and the need for strategic investment planning under different economic scenarios
- Learn how to manage risk and performance in emerging markets
- Use different investment management styles
- Construct efficient portfolios using behaviour at finance when making investment recommendations
- Understand more about alternative investments and how to use them efficiently in their clients' portfolios
- Thoroughly understand of equity value and company valuation methodologies
Methodology
The course is an interactive mix of the following:
- Lectures using Power Point slides
- Interactive exercises and case studies for group discussion
- Short films on DVD or internet clips of selected topic related to the course
- Hand-outs containing articles, statistics, and theoretical support
- Delegates' own ideas, experiences and questions
- The Course Director's extensive experience in global investment management
- Comprehensive supporting literature and statistical research from different reliable sources
Computer-based exercises
All delegates are encouraged to bring along their laptops to facilitate in-class studies and exercises.
Who should attend this training course?
- Portfolio and asset managers
- Heads of investment
- Investment analysts and advisors
- Private bankers
- Wealth managers
- Pension fund managers and trustees
- Regulators and auditors
- Performance measurement specialists
- Compliance officers
- Brokerage salespeople
Supporting publications:
DAY ONE
Introduction: "From Crisis to Recovery"
- The crisis in the financial sector
- Up-dated analysis on the recent effects of the credit crunch and financial crisis in the asset
management, banking, and wealth management industry
- Analytical summary of the major consequences of the crisis on financial markets and the impact on clients' risk perceptions
- Overview of the strategies pursued by asset mangers and banks during the financial crisis
- Signs of economic recovery
- Analysis of the post-crisis scenarios
- Planning our strategy into the recovery
Modern Portfolio Theory
- Defining risk
- Measuring and managing risk strategically
- Modern Portfolio Theory
- Expected returns and volatility
- Variance and standard deviation
- Covariance and coefficient of correlation
- Probabilities of occurrence and normal distribution
- Measuring portfolio volatility
- Measuring and managing volatility in practice
- Limitations and restrictions of the variance and standard deviation
- Practical use of the Modern Portfolio Theory and its limitations
- Portfolio optimisation and the efficient frontier concept
Exercise: delegates examine the impact of probabilities of occurrence when analysing in volatility measures and expected returns.
Exercise: delegates analyse in an Excel spreadsheet the effects of positive and negative asset correlations when measuring total portfolio volatility.
Capital market theory and capital asset pricing model
- Diversifiable vs. undiversifiable risk
- Pricing risky assets
- The required rate of return following William Sharpe's model
- The variables of the Capital Asset Pricing Model (CAPM)
- Theoretical required rate of return
- The Securities Market Line (SML) model
- Finding over-valued and undervalued assets under the SML
- Practical uses of the CAPM
- Market reality of the CAPM
- Limitations and problems when using Beta as a risk measure
- Adjustments and proposals to the CAPM and to Beta as a risk measure
Exercise: delegates will determine undervalued and overvalued assets using the CAPM.
The arbitration pricing theory
- Multifactor models to price risky assets
- The Arbitration Pricing Theory
- Comparing the Arbitration Pricing Theory to the CAPM
- Practical difficulties of implementing the Arbitrage Pricing Theory
- Practical use of the Arbitrage Pricing Theory when calculating risk premiums
Exercise: delegates determine the required rate of return of different assets using the Arbitration Pricing Theory vs. the CAPM.
Post Modern Portfolio Theory
- Understanding down-side risk
- Fundamentals of Post Modern Portfolio Theory
- Recognising investment risk according to the investor's goals
- Measuring risk below the client's minimum accepted rate
- The semi-variance and down-side volatility
- Practical analysis of down-side volatility
- Managing expectations with down-side volatility
Case study: delegates examine the differences between volatility on the up-side and down side, and the volatility below the client's required rate of return.
Risk adjusted performance measures
- Managing the risk-return equation in a portfolio
- Efficiency and added value vs. performance
- Risk adjusted performance ratios
- Michael Jensen's Alpha and Sharpe, Treynor, and Sortino ratios
- Link with "Value at Risk" (VaR) when managing risk actively across business units, products, and global markets
- Conclusions on risk measurements, management, and performance
Exercise: using an Excel spreadsheet, delegates allocate assets complying with different specific volatility and return objectives. Delegates will then change volatilities, correlations, and the returns of the assets in order to reflect an adverse financial scenario. To see if their allocation was efficient in an adverse financial scenario.
DAY TWO
Investing in different economic cycles
- What are economic cycles and what causes them?
- Examining recoveries, expansions, slow-downs and recessions
- Analysing what assets tend to outperform in the different cycles
- Asset allocation during economic booms and recessions
- Economic Indicators to watch during the cycles
- Macroeconomic figures
- Monetary and fiscal policies
- Stimulus, demand and supply shocks
- Experiences and realties behind the indicators
Exercise: delegates analyse different global indicators and their significance in asset allocation and portfolio construction.
Emerging markets
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Concepts and criteria for defining emerging markets
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World strategic importance of emerging markets
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Stages of development in emerging markets
Case study: delegates analyse the different experiences of investors in emerging markets. Delegates determine warning signs and whether the critical events were manageable and predictable. Lastly, delegates will propose a new strategy to conduct investments in emerging markets successfully.
Equity investments: finding value in equity portfolios
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Why invest in equity?
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Equity from an accounting and legal point of view
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Approaches to stock valuation
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Earnings: historical, forecasts, and trends
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Where is the value in equity?
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Earning ratios and multiples
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Efficiency ratios, size ratios, value ratios, growth ratios, and distress ratios
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Dividend discount models
Case study: delegates analyse market and financial ratios of different companies from Asia, Europe, and the USA in order to determine which ones offer more value for their price, which ones would grow more, and which ones are better managed companies.
- Discounted cash-flows models
- Rational, characteristics, and value drivers
- Perpetuity method and residual value
- Limitations of the valuations methods
- Ratios comparisons: limitations when comparing companies in different countries
Exercise: delegates conduct an equity valuation to compare the discounted free cash-flow method, with existing market values of price to earnings, EBITDA, book value, sales, etc. The aim is to detect economic value not incorporated in the market price.
- Credit and company risk indicators
- Risk ratings for equities and for fixed income issues
- What ratings are and are not
- Financial ratios
- Issues when valuing distressed companies
- Indicators of distresses and company value
- Company value when there is no equity value?
- What are we buying when purchase in distress?
DAY THREE
Alternative investments
- The universe of investing opportunities
- Rational for alternative investments
- Mutual funds and special funds vehicles
- Investment programmes
- Exchange Traded Funds (ETFs)
- Concept and rational
- Characteristics and benefits
- Types and legal structures
- Hidden risks and issues of ETF's
- Performance of ETF's
Case study: delegates analyse different structures and types of ETFs determining the risks, the benefits and value for the client.
Hedge funds
- What are hedge funds?
- Origins characteristics
- Concepts and legal definitions
- Legal vehicles
- Hedge fund universe
- By styles, strategy, tools, type of assets, sectors, and securities
- Rational of hedge funds in the investor's portfolio
- Hedge fund structures and fees
- Hedge funds statistics
- Off-shore vs. on-shore funds
- Benefits, limitations and risks
- Absolute returns vs. benchmarks
- Differences with mutual funds
- Hedge fund styles
- Tactical or directional
- Macrocentric or global macro
- Managed futures
- Emerging markets
- Sector specific
- Long-short
- Arbitrage or relative value
- Fixed income arbitrage
- Convertible arbitrage
- Equity market neutral
- Event-driven
- Distressed securities
- Merger arbitrage
- Reasonable value
- Opportunistic events
- Hybrid
- Multi-strategy
- Fund of hedge funds
- Values-based investments
- Analysis of best performing hedge funds
- Strategies and style
- Risk-return measurements
- Long-term consistency
- The use of leverage in hedge funds strategies
- Hedge fund collapses and crashes
- The alternatives to hedge funds in the investor's portfolio?
- Funds that actually hedge?
- Speciality and alternative funds
Case studies: delegates analyse different hedge funds performances, characteristics, fee structures, styles and strategies, in order to understand the added value and risk they would provide in the investor's portfolio.
Private equity
- The concept of private equity
- Different types of transactions
- Venture capital, buy-outs
- The value in private equity
- Key characteristics
- Stages in private equity
- Valuation and returns
- Planning the exit
- Integrating private equity in the client's portfolio
Structured products (optional session if time permits)
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What are structure products?
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Rational and characteristics
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Types of structure products
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Structuring the investment vehicles
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Goals, objectives, strategy, and client's needs
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Benefits and correct use of structured products
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Considerations and limitations when selling and buying structured products
Case study: delegates analyse the benefits and constraints of a typical structured product compared to a traditional investment alternative.
DAY FOUR
Strategic asset allocation: the strategic view to investing
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Market perception and reality
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Value, growth and contrarian investors
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Styles and strategies
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Macro economic top-down allocation
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Concepts, practical uses, and strategies
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Microeconomic bottom-up allocation
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Concepts, practical uses, and strategies
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Fundamental vs. technical analysis
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Concepts, practical uses, and strategies
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Types of asset allocation
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Strategic
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Concepts, practical uses, and strategies
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Tactical
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Concepts, practical uses, and strategies
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Integrated
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Concepts, practical uses, and strategies
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Active and passive asset management
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Concepts and practical uses
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Advantages and disadvantages
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Strategic use of active and passive styles
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Investment strategies
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Buy and hold, market timing, growth, value, GARP, quality, income, cost averaging, contrarian, etc.
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Applying portfolio construction fundamentals strategically
The efficient market hypothesis and behavioural finance
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The fundamentals of Eugene Fama's Market Efficient Theory
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The case for rational markets with irrational investors
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Investors' beliefs and expectations
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Implications of the Efficient Markets Theory in asset and wealth management
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Behavioural finance
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Fundamentals of the behavioural finance discipline and criticism to the efficient market hypothesis
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Psychology applied to finance
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Description of the main anomalies analysed by behavioural finance
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Behavioural finance ratios and market indicators
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Constructing portfolios using behavioural finance concepts
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The cycle of emotions and the cycle of bubbles
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Integrating traditional, quantitative, and behavioural finance managers' styles
Technical analysis and market timing: the tactical approach
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The value of technical analysis
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Market trends and trend changes
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Charting, volume, moving averages and technical analysis main indicators
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Integrating technical analysis to fundamental analysis
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Tactical use of technical analysis
Exercise: delegates analyse different market movements in order to determine if there is a bullish, bearish, or side-ways trend. In addition, the delegates will determine if the market movements present an opportunity to buy or to sell.
Portfolio rebalancing
- The investment process
- What is rebalancing and why do it?
- The benefits of rebalancing and the costs of not rebalancing
- Outperforming benchmarks
- Issues in emerging markets
Closing session
- Brief questions and answers session
- Course Director's summary
- Course valuation on behalf of the delegates
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Eduardo Bustos
Eduardo Bustos started his career in international finance in 1983, by joining First Interstate Bank of California’s Mexico City Rep. Office as a Credit Analyst, and accomplished his formal commercial credit training at their Main Office in Los Angeles, California. Eduardo continued his career by managing a private investment firm –family office concept, in the State of Texas, in the USA, where he specialized in structuring discretionary alternative portfolios for Latin American high net worth individuals, and developing corporate treasury services for institutional investors.
Eduardo joined Citigroup in Buenos Aires in 1992, heading the Research Department which allowed him to later become the Senior Equity Portfolio Manager for Citibank Argentina’s equity mutual funds and discretionary portfolios. Eduardo was an active and permanent member of Citibank’s Emerging Markets Investment Committee based in London, and a member of the Account Reviews Committee in Buenos Aires. He travelled world-wide making presentations on macroeconomic trends and equity portfolio recommendations to mutual funds directors, ultra-high net worth investors, and to the bank’s senior management.
Eduardo’s product knowledge and global background allowed him to join Citibank’s Private Banking Group as an Investment Product Specialist and Coordinator with the responsibility of developing a competitive investment product pipe-line of alternative portfolios and structured products. Eduardo was a permanent member of the Investment Product Panel for the Private Bank.
Eduardo continued his career by joining HSBC in Buenos Aires, as a Product Manager with the responsibility of developing a wide range of investment products for the banks’ Private Bank division. In 2002, he relocated to Madrid, Spain where he became an Independent Global Investment Consultant, providing portfolio risk-management consultancy services to Latin American financial institutions and high-net worth individuals .
Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.
This course has now expired please email us to find out when the course will next be running.