Investment Management refers to the management of the assets and investment portfolio of an institution or a client and deciding upon the activities of the portfolio such as buying and selling of assets depending upon the market scenario and macro-economic conditions of the firms. The operations of the portfolio is done in order to meet the specified goals of the institution or the client for whom the portfolio management services are conducted. Investment management is performed with the help of several kind of financial strategies that are deployed in order to ensure that the portfolio earns better in terms of return and outperform the benchmark return (Dimmock, Gerken and Marietta-Westberg 2015).
The Broadbridge Company operating in the portfolio management services and financial services sector manages and guides the clients about the various kinds of operating financial software’s and products. The Company incorporates the usage of the technical software’s and other hi-tech software is for managing and incorporating the various kinds of financial services, which can guide the clients on the investing and the financing decisions (Abdullateef et al. 2018). There are several factors and other investment characteristics that should be incorporated for making better financial decisions. Providing Investment Management solutions, which incorporate the various components of the financial services from portfolio management, data management, investors risk and return preferences are some of the characteristics, which is incorporated in the model for providing better financial decisions. The Company modular suite of investment model combines the reporting and the analytics as a separate solution for the integrated problems provided. Effective and timely solutions for the factors incorporated are some of the key benefits of the modular suite (Mattar 2015).
Technical Analysis is one of the form of Investment Strategy where the investment and the financial evaluation for stocks and financial assets are evaluated for forecasting the price movement of the asset. It is used as one of the methods for the analysis and screening of stocks for the possible future movement of the share price in relation to the chart and pattern formed by each of the stocks. Identifying market opportunity for buying and selling of investment by evaluating the historical data of the stock in respect to the volume and the price of the stock are some of the common factor, which are evaluated while assessing the stock. The use of the behavioral economics along with the market conditions the stock price for the company is forecasted for the stock in order to exploit mispricing and to trade on stocks, which can provide better risk and return tradeoff for the investor for investing in stocks.
The application of technical analysis in the investment management services help the portfolio manager use the same as one of the basic form for implementing the trading strategy for the portfolio. Technical analysis can be useful for investors and fund manager for identifying suitable investment asset class for the purpose of investment. There are several charts and models for conducting technical analysis on a stock. Several Strategies and ideas are implement using the volume, price and movement of the shares in order to forecast the share price of the company.
Relative Strength Index: The Relative Strength Index is one of the technical indictor for the identification of the asset change and movement in the price and the rate of change of the movement in the share price of the company. It also shows whether the stock is overbought or oversold depending on the defined parameters of index. The momentum oscillator help us identify the volatility and the rate of change in the stock price of the company. The Relative Strength Index movement is generally across the level of 0-100 where if the index level is below 30 it is defined as oversold and if the index is above 70 then the stock is considered to be overbought and the relevant trading strategies are then implemented according to the level and indication of the index.
Figure 1: Relative Strength Index
(Source: Fidelity.com 2018).
Moving Averages: Moving Average is the other form of technical indicator, which is used for identification of the price trend for the company’s stock price by smoothening the current data of the share price of the company. Removing the excess volatility from the data of the company share price i.e. the noise component from the data so that the past trend can be evaluated and applied for the forecasting of the future price of the share price of the company. The application of the same for an estimate of the volatility of the share price of the company. The volatility is estimated using the past price data of the company share price which is the biggest drawback for the technical indicator as the past price movement is not supportive for the future movement of the share price of the company. The applicability of the current macro-economic conditions, business environments and relevant data are missing in the indicator such that the applicability of the same in the current economic scenario is not given much importance. There are common forms of moving day average used such as 200-day moving average 50 days moving average and other and the same depends on the application and the usage of the data by the portfolio investor depending on the investing type and the type of investment asset class.
Figure 2: Moving Day Average
(Source: Stockcharts.com 2018).
Stochastic Oscillator:
The technical indicator is a common and widely used technical tool used for identifying the momentum indicator of a stock. The indicator uses the support level and the resistance level for the data of the share price of the company for the identification of the share price of the company by incorporating the closing price of the company. The only factor, which is common and is important in the application of the same, is the momentum and the change of the direction of the stock price for the company. The technical indicator is an important tool which can be used for the getting an idea of about the reversal trends i.e.., the bullish or the bearish trend reversal in the stock price of the company so that the relevant investment decision can be made based on the following evaluation.
Reversal of the Trend and the identification of the overall position and level of the stocks are some of the common factors that are analyzed and evaluated. The technical indicator also evaluates the level of the closing price of the high-low range of a stock for a given set of time.
Figure 3: Stochastic Oscillator
(Source: Stockcharts.com 2018).
Bollinger Bands: The technical indicator identifies and characterizes the price of the stock and the respective volatility of the stock price of the company. It uses the common formula, which was founded by the John Bollinger and he developed different band and level for the implementation and determining the level of the volatility. The stock volatility and the movement of the prices are the best determinant with the usage of the technical indicator. The technical indicator can be best applied by the Broadridge financial solutions in there software and analytical tools so that the investors are well aware about the risk and return characteristic of the stock.
Figure 4: Bollinger Bands
(Source: Stockcharts.com 2018).
The modern portfolio theory of the investment refers to the investment approach with the maximization of return and along with the specified level of risk according to the preference of the investors. The allocation of the investible amount into proper asset class which suits best with the characteristic of the investors are some of the key feature of the portfolio management services. The concept of the diversification of the investible amount into different asset classes are some of the key focus of investment. Allocation of asset to get a diversification benefit and along with the reduction of risk among the invested asset class thereby maximizing the return of the portfolio are some of the key focus (Kaiser, El Arbi and Ahlemann 2015).
The application of the portfolio management theory can be applied with determining the investible amount in the portfolio and the relevant preference of the investor. Identification of the risk and return preference of the investors and determining the suitable asset class are some of the key steps followed during the portfolio management services (Szegö 2014). The importance of portfolio management is applicable, as it will define setting up the goals and objectives of the investment. The different kind of asset class included in the portfolio are determined according to the evaluated risk and return characteristic of the asset and the outlook the asset keeping in view with the general macro-economic conditions and the business conditions under which the company operates. The return and the risk of the portfolio is calculated as per the risk and return of the asset class and the weight of each asset class in the portfolio (Bredillet, Tywoniak and Tootoonchy 2018). The evaluation of the asset class in the portfolio is done after the careful analysis and evaluation of the same according to the macro economic conditions and the business environment under which the key fakirs of the asset class may get affected. The concept of the portfolio management is creating a large pool of investible asset class so that the modified risk and return generated form the portfolio is far better and efficient rather than standalone investible asset class. Portfolio which are diversified and which provides a better risk return tradeoff for the investor are generally considered to be efficient and generate better return as in the form of wealth creation for the individual investors (Smith 2015).
Investment Management process refers to the professional and active management of the various kinds of asset class and securities so that the volatility of the portfolio is reduced or the asset class and the returns are smoothened for the time (Yao, Chen and Li 2016). Mitigation of risk and establishment of better risk to return tradeoff is the determination of the effective management. Creation of an investment portfolio schedule for the investor with the desired goals and return of the investor according to the suitable investor’s asset class are some of the key focus (Lan, Moneta and Wermers 2016).
The improvement of the effective investment management in this case by clearly defining the investor’s preference towards investments and the desired goals and objective of the same. The company Broadridge provides various kinds of services in the field of investment management from financial services to data management and risk management are some of the services of the company (Kahn and Lemmon 2014). The global portfolio management solution aims at portfolio accounting, risk management and the order of risk for the company to sustain the risk return tradeoff for the company. The integrated solution provided with the software helps the investor get the financial services, manage data follow investment accounting are some of the factors, which will improve the efficiency of the portfolio management and provide efficiency in the investment management services (HA Davis and Lleo 2015). The improvement of the effective management in the financial services will improve the operational efficiency of the business operations as the integrated solution provided by the software will look after the various objectives and the goals of the investment criteria. The preference of the effective investment management should be such so that the different preference of the investors need and preference towards the risk and return. The efficient frontier of each of the investor and the preference of the investors towards developing a low volatile portfolio so that return per unit of risk taken by investor is maximized (Mao and Zhu 2015).
The risk and return characteristic is some of the important characteristic which every prospective investor should analyze before assessing the feasibility of the investment (Arjaliès et al. 2017). The risk and return characteristic of an asset class shows the reward an investor can get for the amount of risks undertaken by him. The risk and return is said to be correlated i.e., higher the risk taking ability of the investor the better is the chances for the investor to earn better returns in the invested asset class. The risk and return involved in managing the asset class varies from type and nature of investing and the type of funds. Hedge Funds are primarily the best case where the Sharp Ratio is a crucial factor checked and assessed by the hedge fund managers. The risk and return evaluation was evaluated for the Broadridge Financial Solution and the NYSE Composite Index were risk, return, beta and sharp ratio were calculated in order to determine the feasibility of the investment and the risk return characteristic of the asset class (Mishra 2015).
The historical data for the Broadridge and the benchmark index was taken for the five year trend period and the relevant risk and return was calculated. The data taken for the analysis was the five year data of the Broadridge financial solution and the Benchmark Index for analyzing the risk and return evaluation. The return provided by the Broadridge Company was superior to the NYSE Composite Benchmark Index (Kuhle and Lin 2018). However, it is crucial to note that the risk involved in the Broadridge was comparably quite higher than the benchmark index. The sharp ratio was the perfect risk/return evaluation for the investor in order to determine the return generated by taking one unit of risk. The Sharp Ratio for the Broadridge Company was around 0.35 and the sharp ratio for the NYSE Composite Index was around 0.12 times (?mrohoro?lu and Tüzel 2014).
|
Particulars |
BR |
NYA |
|
Monthly Return |
1.83% |
0.33% |
|
Annual Return |
21.92% |
3.94% |
|
Risk |
5.27% |
2.81% |
|
Sharp Ratio |
0.35 |
0.12 |
|
Beta |
0.766849817 |
Conclusion
The Investment Management is a crucial area for the investor for allocating and marinating the invested amount in better asset class which can provided superior and better returns. The Broadridge Financial Solution provides automated investment management solution where clients and investors are able to well asses the performance of the fund. The concept of technical analysis and the application of the same in the different case and scenarios were well discussed. Portfolio management theory plays a crucial role in the management of the asset class and defining the investors goals and objective and the preference of the investors towards an asset class which was well covered under the assignment. There were several effective investment management solutions provided for the improvement of the portfolio and the relevant investment ideas. The risk and return evaluation was carried on by taking the company’s historical return and the benchmark return in order to analyze the risk return characteristic of the investment.
Reference
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