Portfolio management process: Portfolio revision

PORTFOLIO revision is one of the key pillars of portfolio management that investors should take note of. It is an art of changing the mix of securities in a portfolio either by changing the securities in the current portfolio or altering the proportion of funds invested in the securities

Portfolio revision is driven by factors such as: An investor receiving some additional money to invest. A change in investment goals The need to modify financial goals (depending on the cash flow) Anticipated risk and uncertainty whereby an investor considers to sell some of his / her assets in response to market fluctuations. The ultimate aim of portfolio revision is to maximise return of a portfolio for a given level of risk or to minimise the risk for a given level of return to a portfolio. It aligns relevant investments to changing business, market and economic trends.

There are two portfolio revision strategies that investors can use, namely active revision strategy and passive revision strategy. The choice of a strategy often depends on an investor‘s objectives, skill, resources and time. An active revision strategy involves frequent changes in an existing portfolio over a certain period of time. In this case an investor or professional portfolio manager is quite hands on with making changes to the portfolio. The strategy is based on the analysis of fundamental factors affecting the economy, industry and company and also technical factors like demand and supply. A passive revision strategy (buy and hold strategy) involves occasional changes to a portfolio over time based on certain predetermined rules. These predefined rules are known as formula plans. Ultimately, the frequency of trading tends to be much higher under active revision strategy resulting in related higher transaction costs. Upcoming AGMs / EGMs

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