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Index of concepts
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Subject: Portfolio Management
Chapter/Topic: Understanding the investor and his needs
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Concept Definition and Explanation
In the Investment policy statement or Investor policy statement, investors have to specify their objectives and constraints.
In general terms, the objectives can be:
-Capital preservation
---minimize risk of real loss
or
-Capital appreciation
---Growth of the portfolio in real terms to meet future need
-Current income
---Focus is in generating income rather than capital gains
or
-capital gains
Investment Constraints can be due to:
-Liquidity needs
---Vary between investors depending upon age, employment, tax status, etc.
-Liquidity needs
---Vary between investors depending upon age, employment, tax status, etc.
-Time horizon
Influences liquidity needs and risk tolerance
-Tax concerns
References:
Reilly, Frank and Keith Brown, Investment Analysis and Portfolio Management, 7th Edition, Thomson-South Western, 2003
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Originally posted in Knol
http://knol.google.com/k/narayana-rao/investment-objectives-and-constraints/ 2utb2lsm2k7a/ 883
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