Course Details

Overview

All investors and money managers know that investing has risks. A primary aspect of investing is managing investment performance risk and doing so in the context of one's risk/return objectives.

Firstly, the presentation defines investment risk in general terms.

Investment performance risk is a multifaceted subject and it must be understood with respect to the causes of investment risk, the degree of risk present in a portfolio or single investment, the correlation of risk undertaken relative to  an investor’s risk/return objectives and the consequences of inappropriate or misunderstood levels of investment risk when an investment manager is engaged or one is managing their own investments.

Next, the presentation examines investment performance risk from both the perspective of the investor and from the perspective of the money manager.

An investor managing one's own investments must understand the various risk generating aspects of one’s portfolio and individual investment decisions as well as the extent the contribution of the investment risk taken will contribute to the return objective of a portfolio or an individual investment. The investment performance risk and return objectives of a portfolio should be viewed continuously within a defined timeframe.

When employing a money manager to manage one's investments, it is equally important that the risk elements to present in the management of a portfolio be well defined and understood, addressed in guidelines, and be consistent with the investor’s portfolio performance objectives.   

One of the elements contributing to investment performance risk is the presence of leverage. The use of leverage can be an important means of enhancing the return of a portfolio, but it can also dramatically increase the performance risk of a portfolio.

Leverage is frequently a misunderstood investment management component of a portfolio strategy and this presentation will provide an in depth look at leverage with respect to the understanding of leverage, its identification, the degree of leverage present in a portfolio and the methods by which leverage can be created.

Why you should Attend

To gain an in depth understanding of investment performance risk and how to address it as an individual investor, as an investment management firm and in an investor/money manager relationship. Particular focus is given to the relationship of investors and their money managers and the attention that must be given to the portfolio components generating investment performance risk, their management and their consistency with an investor's objectives.

Portfolio management is quite complex. Breaking down, understanding and managing the elements that can generate investment performance risk is critical. An investment portfolio over its life is managed in many different economic and financial environments and the elements producing risk to a portfolio must be managed in the context of changing environments.

In addition, investors are frequently introduced to individual structured investments and hereto, an investor must be able to dissect and understand the risks of a standalone structured investment and effectively evaluate the risk/return profile of the investment.

Areas Covered in the Session

• Understanding Investment Risk relative to:
  • Absolute risk/return objectives
  • Relative risk/return objectives
• Establishing performance targets or performance benchmarks
• Evaluating Investment performance risk from the perspective of:
  • The investor
  • The money manager
• Nature of an investor and money manager relationship
  • Discretionary
  • Non-discretionary
• Consequences of investment performance risk
  • To the investor
  • To the money manager
• Causes of investment performance risk
  • Elements generating risk or significantly increasing risk
• Performance risk analytics
• Understanding leverage 
  • Definition
  • Identification
  • Degree of leverage
  • Creating leverage

Who Will Be Benefited

• High net worth Individual Investors
• Family Offices
• Asset Managers