Investments. Formation and classification of an investment portfolio (lecture notes)

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Investments. Formation and classification of an investment portfolio (lecture notes)

Lecture notes, cheat sheets

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LECTURE No. 7. Formation and classification of the investment portfolio

Constantly faced with a situation of choice in the process of investment activity, the investor must achieve his goals. When placing funds, several investment objects are selected, making up a certain set. Purposeful selection of such objects is the process of forming an investment portfolio. An organization's investment portfolio is a set of investment objects obtained in accordance with the investor's investment goals, considered as an integral management object.

The main task of portfolio investment is to create optimal investment conditions and, at the same time, provide the investment portfolio with those investment characteristics that cannot be achieved when placing funds in a single object.

During the formation of the portfolio, the latest investment quality is achieved: the required level of income is provided for a given level of risk by combining investment assets. The main goal of investment activity at the enterprise is to ensure the implementation of its investment strategy.

If the investment strategy of the enterprise is aimed at expanding activities, then the main investments will be directed to investment projects or assets related to the improvement of production. Available investments in other objects will be subordinate to them. This will affect, for example, the terms and volumes of placement.

When forming an investment portfolio, the investor is aimed at making a profit, but at the same time operates under conditions of acceptable risk for him.

Income can be received in the form of an increase in the value of acquired assets.

When forming any investment portfolio, the investor pursues such goals as:

1) achieving a high level of profitability;

2) capital gains;

3) reduction of investment risks;

4) liquidity of the invested funds at an acceptable level for the investor.

Brief description of these goals.

Achieving a high level of profitability involves receiving regular income in the current period.

The frequency of receipts is set in advance.

These can be interest payments on bank deposits, planned income from the operation of real investment objects (real estate, new equipment), dividends and interest on shares and bonds, respectively.

Receipt of current income affects the solvency of the enterprise and is taken into account when planning cash flows.

This is the main goal in the formation of an investment portfolio, especially in a situation of short-term placement of funds (for example, if there is an excess of funds and it is inappropriate or impossible to use it for production purposes in the current period).

Capital gain is provided by investing funds in objects that are characterized by an increase in their value over time.

This is true for the shares of young issuing companies (mainly of an innovative nature), as their activities expand, a certain increase in prices for their shares is expected, as well as for real estate, etc.

As in the general case, when carrying out investment activities, and when forming an investment portfolio, the investor is aimed at making a profit (income), while acting within the limits of acceptable risk for him.

Income can be received not only in the form of current payments or profits from the implementation of investment projects received with a certain degree of regularity and certainty (predictability) at certain intervals, but also in the form of an increase in the value of acquired assets.

Reducing investment risks, or investment security, means the independence of investments from instability in the investment capital market and the stability of income.

To achieve this goal allows the selection of objects that will ensure the return of capital and income of the planned level.

However, risk minimization does not always completely eliminate the likelihood of negative consequences, but only helps to achieve their acceptable level while ensuring the required return for the investor. It depends on the investor's attitude to risk.

Ensuring sufficient liquidity of the invested funds implies the possibility of a quick and without large losses in the value of converting investments into cash, or the possibility of their rapid implementation.

This goal is not necessarily related to the previous goals, it is most achievable when placing funds in financial assets that are in steady demand on the stock market (stocks and bonds of well-known companies, securities).

It should be emphasized that none of the investment values has the properties listed above in the aggregate, which leads to the alternativeness of the named goals for the formation of the investment portfolio.

Thus, security is usually achieved at the expense of high profitability and investment growth.

In world practice, government debt obligations are safe, but income on them rarely exceeds the average market level and, as a rule, there is no significant increase in investments.

Securities of other issuers, real investment projects can bring the investor more income (both current and future), but there is an increased risk in terms of return of funds and income.

As a rule, investment objects that involve an increase in investments are the least liquid - real estate has the minimum liquidity.

Given the alternative investment goals, it is impossible to achieve their simultaneous achievement.

Therefore, the investor must prioritize a specific target when building his portfolio.

The difference in the goals of forming investment portfolios determines the many options for the direction and their composition in individual companies.

The portfolio of real investment projects is formed by investors carrying out production activities and includes objects of real investment of all kinds. The formation and implementation of a portfolio of real investment projects provide a high rate of development of the company, the creation of additional jobs, the organization of a high image and some government support for investment activities.

At the same time, compared with other types of investment portfolios, a portfolio of real investment projects is usually the most capital-intensive, more risky due to the duration of implementation, and also the most complex and labor-intensive to manage.

This determines the high level of requirements for its formation, the thoroughness of the selection of each investment project included in it.

A portfolio of securities contains a certain set of securities.

Compared to a portfolio of real investment projects, it is characterized by higher liquidity and easy manageability.

At the same time, this portfolio is distinguished by: a high level of risk, which applies not only to income, but also to the entire invested capital; lower level of profitability; the absence in most cases of opportunities for a real impact on profitability (except for the possibility of reinvesting capital in other stock market instruments); low inflation protection of such a portfolio; limited options for choosing individual financial instruments.

The portfolio of other investment objects, as a rule, complements the investment portfolio of individual companies (for example, a foreign exchange portfolio, a deposit portfolio).

A mixed investment portfolio simultaneously includes heterogeneous investment objects listed above.

The classification of investment portfolios according to priority investment objectives is primarily related to the implementation of the enterprise's investment strategy and, to a certain extent, to the position of its management in investment management.

The growth portfolio is formed with the aim of increasing the capital value of the portfolio along with the receipt of dividends and consists mainly of investment objects that ensure the achievement of high capital growth rates (as a rule, from shares of companies with a growing market value).

The income portfolio is focused on receiving current income - interest and dividend payments. It consists mainly of investment objects that provide income in the current period (stocks, which are characterized by a moderate increase in market value and high dividends, bonds and other securities, the distinguishing feature of which is the payment of current income).

The conservative portfolio mainly includes investment objects with average (sometimes even minimal) risk levels (for such investment objects, the growth rates of capital and income are much lower).

The above types of portfolios have many intermediate varieties.

Growth and income portfolios at the highest of their targets are sometimes referred to as aggressive portfolios.

The classification of investment portfolios according to the achieved compliance with the investment goals is primarily related to the process of implementing the goals of their formation.

A balanced portfolio is characterized by the full realization of the investor's goals by selecting investment projects or financial instruments that best meet these goals.

An unbalanced portfolio is characterized by a discrepancy between its composition and the goals of formation.

A variety of an unbalanced portfolio is an unbalanced portfolio, which is a previously balanced (optimized) portfolio that no longer satisfies the investor due to a significant change in the external conditions of investment activity (for example, tax conditions) or internal factors (for example, a significant delay in the implementation of individual real investment projects) .

Author: Maltseva Yu.N.

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