What is investment portfolio?, what are its types? And how it is being managed in the Kuwait Money markets?
According to executive regulations for the law of establishing the capital markets authority and security activities scheme, the investment portfolio is considered one of the investment tools which includes mix of different stocks in terms of type, return or maturity period as for stocks, bonds and others, which may be in different projects and companies, and that’s with a purpose of capital distribution on a number of different investments to avoid risks that may result from devoting all the capital for one project.
Besides, investment portfolio should be owned from one sole client, but excluded from those cases of inheritance until the shares are distributed to the heirs, also the public legal persons who manage or deal with other people’s money according to its establishing laws.
Types of Investment Portfolios
Due to the expansion and diversification of the Money and investment markets, also the variety of tools available within and stock divergence, there were many types of investment portfolios as a result of the discrepancy n their components and its desired aims, and the degree of risks associated with it, and we mention below the most important portfolio types managed by the authorized person, and that’s for guidance:
- Regular return portfolios – Income.
- Profit portfolios – Growth.
- Profit and yield portfolios – mixed.
- Conservative portfolios.
- High – Risk portfolios.
Investment Portfolio Management
Investment portfolio is being managed whether by an authorized person of capital markets authority, or by the client himself, and mostly for the purpose of trading and investment in domestic and foreign markets and achieving the highest possible benefit under an acceptable level of risk, and this is in the light of the client’s investment objectives, and acceptable degree, level of risks from the client, accordingly the investment portfolio automated management within the authorized person may constitute any of the following forms:
- Investment Portfolio Managed by an Authorized Person for The Clients’ Profit:
The components of this portfolio, taking investment decisions are managed by the authorized person, according to investment desires and objectives of the client being agreed with the authorized person, based on a limited or unlimited scope investment policy, and that is as shown below:
- Limited Scope Investment Policy (Restricted)
The client takes over determining objectives and risks level, besides determining the desired investment tools as for example not only: The security types – Risks degree – The economic activity sector – The target markets. As the authorized person takes over managing investment portfolio according to the client’s objectives.
- Unlimited Scope investment Policy (Absolute)
The client takes over determining objectives and risk levels without touching the determination of the investment policy for portfolio. As the authorized person keeps on determining and managing portfolio by full investment powers in proportion to the client policies and objectives.
- Investment Portfolio Managed by The Client Personally:
The client takes over determining all of the objectives, risks degree, and investment policy for the portfolio, as he takes over personally managing and diversification of investment according to his investment directions and vision, and the role of the authorized person is limited to carry out orders and instructions of the client, follow up on his investments, and providing him with all services related to investment portfolio management
- Investment Portfolio for Preservation:
This type of portfolios serve the client’s purpose to keep security in the medium or long – term through preserving it at the authorized person, and the client keeps on determining fixed policy aims to preserve investment portfolio components, and the role of the authorized person is limited to following up the client portfolio components and providing him by all services related to investment portfolios management, specially using of the investment portfolio components for long – term preservation and investment purposes, aiming to limit – as possible – of using its components for purposes other than preservation.
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