Activities ? Mainly takes the Asset Allocation Decision ? Manages two types of portfolio: ? Discretionary ? Non discretionary Discretionary: This type of portfolio is managed by the portfolio manager however controlled by the client himself. The client directs the portfolio manager and the portfolio manager acts accordingly.
The portfolio may suggest the client for some specific stocks but the portfolio manager has no power of exercising the fund without the client’s consent. Non-discretionary: This type of portfolio is completely controlled by the portfolio manager. The client takes the fund deposited by individual client and then decides to invest in different types of investment opportunities like mutual fund. Here, the client has no role in investment decision. The client gets a return on his fund. ? Portfolio managers monitor the market and takes rebalancing decision on the portfolio daily.
But in case of discretionary portfolio on the dictation of the client himself. ? Prepares product based Investment Policy Statement. In LankaBangla, there are two products ‘Nischinto’ and ‘Alpha Plus’. Flow of Information regarding the investment opportunities: Buy-side Analyst makes an overall analysis regarding Economy, Industry and Company and prepares a report on the best available opportunities. However, portfolio manager is at his discretion whether to allocate assets according to the analytical report of the Buy- side Analyst or not.
Reporting tone: ? In reports, to the boss and in case of discretionary portfolio to the client. ? Portfolio manager reports daily, weekly and monthly according to the necessity. Buy-side Analyst Activities: ? Market analysis: Investment Analyst finds new opportunities in different markets in different industries and in different companies. While doing analysis, the investment analyst takes the following issues into consideration. ? Formal top down approach: ? Finding market for available IPS: Investment manager finds amarket for the product based IPS they prepare e.g. ‘Nischinto’ and ‘Alpha Plus’ as mentioned before.
Reporting: ? Investment manager prepares report daily, weekly, monthly, quarterly basis. ? He communicates with the Head of Research team of buy-side. ? The Research Head submits the report to portfolio manager. No individual reporting is prepared for any particular customer in practical.
Sell-side Analyst Activities: The two main activities of sell-side Analyst are: ? Stock Analysis: Sell-side Analyst finds the best investment opportunities for the client in a particular stock. Through some fundamental and technical analysis, he finds the best investment opportunity and suggests it to their client. ? Stock picking: Sell-side Analyst finds a particular stock and do analysis on that stock to forecast the future movement as well as suggest buy or sell order to their client. Other activities: ? Reporting: Sell-side Analyst publishes situation based report for their client. ? Reporting frequency: Daily, weekly, monthly, quarterly and yearly report to the client.
? Types of report: ? Coverage report: This report is published analysing a particular stock for a client and day to day amendment is made on that report based on the market situation. ? Annual report: when a company publishes an annual report, the sell-side analyst publishes a research report based on that annual report to find investment opportunity. ? Reporting team: 6-7 members form a team. ? Reporting tone: they report mainly for their customers. They have mainly three types of customers: ? Foreign customer ? Corporation ? Individual However, the report exclusively for Foreign clients and Corporations who invest in large volume.
Communication: Customers can directly communicate with researcher and vice-versa which proves, there is a two way communication between sell-side researcher and client. Trader Activities: Trader mainly performs the client’s orders. Trader does not prepare any research report for himself or for the client. Margin account: When any client invests with margin, the trader allows the client to make decision upto the margin limit. Of the margin falls below the limit, the trader sends a signal to the particular client for the depository more money and if the client fails, the trader sells the stocks and rescues the loaned money.
Communication: Client directly communicates with his trader and trader performs the orders. Reporting: ? Trading submits report only at the client’s demand. If the client demands daily, the trader submits daily report. Accordingly, weekly, monthly, quarterly and yearly. ? Trader has to submit performance report to the Branch manager.