Portfolio management: Bright future for portfolio managers

Hitherto the vocation of stock brokers, portfolio management is all about selection and acquisition of securities and continuous purchase and sale thereof to optimise investment returns.

With the deregulation of financial markets now a global phenomenon, the emerging worldwide money market is experiencing dramatic changes. As the Indian economy integrates with the world beyond, and the complexity and range of financial analyses and products multiply, the need for qualified financial advisors is becoming increasingly critical. Thats why theres a spiralling demand for portfolio managers who help investors make intelligent and informed choices about money investment options. Therefore, portfolio management is likely to be high on the list of career options in the coming years for those good at numbers-crunching and money management.

Portfolio management is all about selection and acquisition of securities and continuous purchase and sale thereof to optimise investment returns. Portfolio managers recommend effective investment planning after evaluating factors like monetary policies of national governments, industrial and economic environments, business performance of companies and their impact on sectoral and corporate growth.

Its only over the past few years that portfolio management — hitherto the vocation of stockbrokers — has become an attractive career option. Today number crunchers such as chartered accountants, certified financial analysts, cost and works accountants, company secretaries, and MBAs in finance are opting for this career in a big way. Success in the job requires information gathering and analytical skills, lateral thinking, and quick decision-making ability.

No specific study programmes are mandated for portfolio managers in India. However, a one-year certified portfolio manager (CPM) programme leading to a Certified International Investment Analyst (CIIA) diploma awarded by the Association of Certified International Investment Analysts (ACIIA), London, is a formal study programme. This programme has been developed by the Council for Portfolio Management and Research (CPMR) for those interested in portfolio management and investment analysis. On completion of the CPM programme, membership of CPMR entitles diploma holders to use the designation of certified portfolio manager. The CIIA programme is offered in India by ICFAI University through its affiliate — Council for Portfolio Management and Research.

Portfolio managers usually start as security analysts and bank trust officers until they acquire sufficient experience of managing money to graduate to portfolio manager status. With huge foreign institution investment (FII) inflows into the stock market, liberal taxation policies, and low bank deposit interest, public interest in listed securities is at an all time high. As a portfolio manager I select and manage securities to meet the objectives of the firms clients. I meet with clients and measure their tolerance for risk, duration of investment and income expectations,” explains Shaival Dharia, investment advisory manager of Khandwala Securities Ltd, one of Mumbais top brokerage houses, which has been in business for seven decades.

Dharia began working as a dealer in equities while studying in H.R. College of Commerce, Mumbai, from where he graduated in 2001. Subsequently he enrolled in the Nirma Institute of Management, Ahmedabad, which awarded him an MBA (finance) in 2004, following which he was immediately signed up by Khandwala Securities.

FAT PAY. Portfolio management profession has been attracting a rising number of youngsters during the past three-four years. Portfolio managers are being given red carpet welcome by brokerage houses, mutual funds, multinational banks, insurance companies, and debt market advisors. They command very good pay packages with huge incentives. After two to three years experience the package could be as much as Rs.12 lakh per year,” says Dharia.

Remuneration apart, its an exciting new age profession as well. The stock market fluctuates all the time, therefore we need to make informed decisions on the run. We have to identify buying or selling opportunities at the right time for our clients, who repose trust in us to get them maximum returns. Moreover, dealing in all types of scrips and securities forces you to become knowledgeable about every industry. Therefore you are learning consistently,” avers Dharia.

With too few portfolio managers available and numerous employers chasing them, Dharia believes theres a big future for young people qualified for this profession. At the moment only a small percentage of the population is investing in listed securities. With per capita incomes rising and the middle class expanding, more people will start investing in the stock market. They will need the advice and services of portfolio managers to help them with saving and financial planning methodologies. This is a promising market for us. With more youngsters opting for this career, it might become mandatory in India, like it is abroad, to possess a qualification in portfolio management, which will be a welcome development,” says Dharia who is quite clearly the right man in the right job at the right time.

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