The Key Pillars of Portfolio Construction

The Key Pillars of Portfolio Construction

Trevor Pugh

20 years: Trading & hedge funds

In this video, Trevor introduces the basics of portfolio construction, outlining how the core portfolio is assembled and then explains how the portfolio can be modified due to changes in the economic environment. He finishes with an example of how a portfolio might look once it has been constructed.

In this video, Trevor introduces the basics of portfolio construction, outlining how the core portfolio is assembled and then explains how the portfolio can be modified due to changes in the economic environment. He finishes with an example of how a portfolio might look once it has been constructed.

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The Key Pillars of Portfolio Construction

12 mins 44 secs

Overview

Investment portfolio construction is the process of selecting securities optimally, by taking minimum risk to achieve maximum returns. However, establishing a portfolio isn’t as simple as just buying securities. Objectives of the fund first need to be defined as well as developing an understanding of how different asset classes, funds and weightings impact each other.

Key learning objectives:

  • Understand the importance of setting financial objectives

  • Outline the strategic asset allocation (SAA)

  • Outline the tactical asset allocation (TAA)

  • Understand the importance of benchmarks

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Summary
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