1. Concept and goals of forming an investment portfolio
2. Classification of investment portfolios
3. Principles and sequence of investment portfolio formation
4. Models of optimal investment portfolio
5. Investment portfolio management strategies
(1) In the process of ID, the investor inevitably faces the situation of choosing investment objects with different investment characteristics in order to most fully achieve the goals they have set for themselves. Most investors, when placing funds, choose several investment objects, thus forming. their specific set.
A targeted set of such objects represents the process of forming an investment portfolio.
Investment portfolio is a certain set of real individual entrepreneurs and financial instruments investment, allowing you to implement the developed investment strategy of the enterprise under existing restrictions (time, money, risk)
An investment portfolio is an integral management object, although it consists of individual instruments and investment objects
Modern portfolio theory proceeds from the fact that when implementing investment investment, investors can invest not in one, but in several investment objects. This set has those investment qualities that are not achievable from the standpoint of a separate investment object, but are possible only with their combination.
The main task of portfolio investment is to create optimal investment conditions while providing the investment portfolio with such investment characteristics that are impossible to achieve when investing funds in a separate object.
Goals of forming an investment portfolio:
Main: ensuring the implementation of the developed investment strategy enterprises by selecting the most effective and reliable investments.
Depending on the direction of the enterprise’s investment strategy, a system of specific local goals for portfolio formation is determined:
1. Ensuring high rates economic development enterprises through effective ID.
2. Ensuring maximization of income (profit) from ID in the current period.
3. Ensuring high rates of growth of invested capital in the long term (shares of young growing companies, real estate with growing value).
4. Ensure level is minimized investment risk.
5. Ensuring the necessary liquidity of the investment portfolio (ID is associated with the diversion of large amounts of financial resources for a long period of time, which can lead to a decrease in liquidity and solvency for current activities)
6. Provision financial stability enterprises in the ID process
The listed local goals are closely interrelated and at the same time quite contradictory. Given the inconsistency of specific local goals, it is impossible to achieve them simultaneously, so the investor must prioritize a specific goal when forming a portfolio.
(2) Modern approaches To typify an investment portfolio, a number of classification characteristics are distinguished:
1. by type of investment object:
1.1. real investment portfolio (IP)
1.2.financial investments (financial portfolio)
1.3 mixed investment portfolio
If the financial portfolio contains only securities
Stock. If only the loan agreements are credit agreements. For enterprises carrying out production activities the main one is a portfolio of real investments. For institutional – portfolio of financial instruments
Compared to other types, the investment portfolio of real investment instruments usually is:
More capital intensive
More risky due to the duration of implementation
Less liquid
More complex and time-consuming to manage
These qualities determine the high level of requirements for the formation of a portfolio of real investments and the careful selection of each individual entrepreneur included in the portfolio.
The securities portfolio is characterized by:
Higher liquidity
Easier to manage
However, the portfolio is different:
High level of risk (which applies not only to income, but also to the entire invested capital)
Lower level of profitability
The absence in most cases of the possibility of real impact on profitability
Low inflation protection of such a portfolio
Limited options for selecting individual financial instruments
2. By the nature of formation investment income
2.1. income portfolio – the formation criterion is to maximize the investor’s profitability in the short term (therefore it consists of objects that ensure the payment of high current income)
2.2. growth portfolio – the criterion is maximizing the growth rate of invested capital in the long term. The formation of such an investment portfolio can only be afforded by fairly stable financially enterprises.
3. In relation to risks
3.1. Aggressive (high risk, speculative)
3.2. Moderate (medium risk, compromise)
3.3. Conservative (low risk)
4. According to the degree of liquidity of investment objects included in the portfolio:
4.3. Highly liquid
4.4. Medium liquid
4.5. Low liquidity
5. By investment goals (by achieved compliance with investment goals)
5.1. Balanced – has the qualities specified during its formation and most fully meets the investment goals of the enterprise
5.2. Unbalanced – does not meet the set goals
5.3. Unbalanced is a type of unbalanced, which represents a previously balanced optimal portfolio, but due to changes in the external investment environment no longer meets the set goals
Combining the main criteria approaches to the portfolio according to the goals of generating investment income and the level of risks taken, we distinguish 6 main options for the investment portfolio:
1. Aggressive income portfolio
2. Moderate income portfolio.........
Since the objects in the investment portfolio are selected in accordance with the preferences of investors, there is a connection between the type of investor and the portfolio: a conservative investor corresponds to a highly reliable but low-income portfolio, a moderate investor corresponds to a diversified portfolio, and an aggressive investor corresponds to a highly profitable but risky portfolio.
(3) The formation of the investment portfolio is based on the following basic principles:
1. principle of ensuring the implementation of the investment strategy determines the compliance of the goals of portfolio formation with the goals of the investment strategy, the continuity of planning and implementation of investment activities for the medium and long term.
2. the principle of ensuring that the portfolio matches investment resources allows you to link the total volume and structure of costs necessary for the implementation of selected IPs, the formation of a portfolio of securities, with the volume and structure of sources of financing for IPs available to the enterprise
3. principle of optimizing the ratio of profitability and risk is ensured by diversifying the investment portfolio. The purpose of such optimization is to prevent financial losses and damage, depending on the priority goal of portfolio formation and the investor’s attitude to risk
4. principle of optimizing the ratio of profitability and liquidity ensures the financial stability and solvency of the enterprise and involves the selection of the optimal portfolio structure with technical specifications. compliance with the proportions between profitability indicators on the one hand and liquidity and long-term creditworthiness of the enterprise on the other.
5. portfolio management principle the portfolio must be manageable
The process of forming a portfolio of real IPs:
I. Search for options for real IPs for their possible implementation by the enterprise. The search goes on regardless of the availability of investment resources. The number of projects involved in development should always significantly exceed the number of projects accepted for implementation. How more projects is considered, the greater the chances of forming efficient portfolio
II. Review and evaluation of business plans of individual individual entrepreneurs
III. Primary selection of IPs for more in-depth subsequent analysis
When selecting, you need to consider:
The degree of development of the IP and its provision with the main factors of production
The required amount of investment and the period for its implementation before the start of operation of the project
Projected payback period of investment or some other indicator
Investment risk level
Anticipated sources of funding
Compliance of the IP with the directions of industry and regional diversification of the IP.
Compliance of the IP with the strategy of the enterprise’s activities
The primary selection of IPs is carried out on the basis of multi-criteria:
External criteria (legal support for the project, the project from an environmental perspective, the possible reaction of public opinion to the project, etc.)
Criteria for scientific and technical prospects (prospects of scientific and technical solutions, positive impact on other investor projects)
Economic criterion(project payback period, positive balance of real cash flows, stability of income from the project, value of the NPV profitability index)
Topic: Development as a special type of investment and construction activity.
1. Economic essence, functions and types of development
2. Development financing: sources and methods
3. Analysis of the commercial real estate market in the city of Voronezh during the development and implementation of development projects
(1) Development (English) – development. In relation to the real estate market, this is the promotion of projects related to the qualitative transformation of real estate.
Most specialists in the field of development consider this phenomenon in two senses:
1. As a material process
2. As a special kind professional activity On the market
Development is a purposeful change, as a result of which a property acquires qualitatively new properties and characteristics.2 components:
1. Carrying out construction or other work on buildings or land
2. Change in functional use of buildings or land
The purpose of development: generating income (profit) through the creation of objects that satisfy the needs of real estate purchasers.
The result of the development: the emergence of a new property that satisfies the specific needs of business and the population
Redevelopment: building transformation
Land development: transforming land
IN developed countries There are 2 main types of d-ta:
1. Moderate
2. Risky
Table: Types of development and their main characteristics
Investment portfolio- is a purposefully formed set of objects of real and financial investment, intended for implementation investment policy enterprises in the coming period (in a narrower, but most often used meaning - a set of stock instruments formed by the investor).
Formation of an investment portfolio
The main goal of forming an investment portfolio is to ensure the implementation of the main directions investment activities enterprises by selecting the most profitable and safe investment objects. Taking into account the formulated main goal, a system of specific local goals for forming an investment portfolio is built, the main of which are:
- ensuring high rates of capital growth in the upcoming long-term perspective;
- ensuring a high level of income in the current period;
- ensuring the minimization of investment risks;
- ensuring sufficient liquidity of the investment portfolio.
The listed specific goals for forming an investment portfolio are largely alternative. Thus, ensuring high rates of capital growth in the long term is, to a certain extent, achieved by reducing the level of current profitability of the investment portfolio (and vice versa). The rate of capital growth and the level of current profitability of the investment portfolio are directly dependent on the level of investment risks.
Providing sufficient liquidity may prevent inclusion in a portfolio investment projects providing high capital gains in the long term. Taking into account the alternative nature of the objectives of forming an investment portfolio, each investor himself determines their priorities.
The priority of the goals of forming an investment portfolio is determined by its fundamental type:
- aggressive (the priority of which is to obtain a high current income);
- compromise or moderate (the priority of the formation of which is to ensure high rates of capital growth or an average level of current profitability with a balanced average level of risk);
- conservative (the priority of its formation is to minimize investment risks and ensure high liquidity).
Taking into account these three fundamental approaches to the formation of investment portfolios, their typification can be significantly expanded due to options that have intermediate criteria.
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Investment portfolio- this is a purposefully formed set of real and financial investment objects intended for carrying out investment activities in accordance with the developed investment strategy of the enterprise. The main goal of forming an investment portfolio can be formulated as ensuring the implementation of the developed investment policy by selecting the most effective and reliable investments. In the process of forming a portfolio by combining investment assets a new investment quality is achieved: the required level of income is ensured at a given level of risk. Depending on the direction of the chosen investment policy and the characteristics of the implementation of investment activities, a system of specific goals is determined.
When forming any investment portfolio the investor sets certain goals:
achieving the required level of profitability;
capital gains;
minimizing investment risks;
liquidity invested funds at a level acceptable to the investor.
Taking into account priority goals when forming an investment portfolio is the basis for determining the appropriate regulatory indicators that serve as a criterion for selecting investments for the investment portfolio and its evaluation. Depending on the adopted priorities, the investor can set the maximum growth values as such a criterion capital value, income, level of acceptable investment risks, liquidity. The investment portfolio can combine objects with different investment qualities, which makes it possible to obtain sufficient total income when consolidating risk for individual investment objects.
The main purpose of investment activity at an enterprise, as well as the main goal of forming an investment portfolio, is to ensure the implementation of its investment strategy. If the investment strategy of an enterprise is aimed at expanding its activities (increasing production volume and sales of products or services provided), then the main investments will be invested in investment projects or assets related to production, and existing (planned) investments will be invested in other objects (in securities or bank deposits) and will be of a subordinate nature in relation to them, which will be reflected, for example, in the timing and volume of placement.
As in general case When carrying out investment activities and when forming an investment portfolio, the investor expects profit (income), acting within the limits of risk acceptable to him. Income can take the form not only of current payments or profits from the implementation of investment projects, received with a certain degree of regularity and certainty (predictability) at specified intervals, but also in the form of an increase in the value of acquired assets.
Achieving a specific level of profitability involves receiving regular income in the current period, usually at a predetermined frequency. This could include interest payments on bank accounts. deposits, planned income from the operation of real investment objects (real estate, new equipment), dividends and interest, respectively, on stocks and bonds. Receipt of current income affects the solvency of the company and is taken into account when planning cash flows. This goal is the main one when forming a portfolio, especially in a situation of short-term placement of funds (for example, if there is a surplus of funds and it is impossible or impractical to use it for production purposes in the current period).
Capital gain is ensured by investing funds in objects that are characterized by an increase in their value over time. This is true for shares of young issuing companies (mainly innovative), as their activities expand, a significant increase in the prices of their shares is expected, as well as for real estate and etc. It is the increase in value that provides the investor with income. This type of investment requires a longer period of investment and, as a rule, is considered long-term.
Minimizing investment risks, or investment security, means the invulnerability of investments from market shocks investment capital and stability of income. The selection of objects for which the return of capital and the receipt of income of the planned level is most likely allows us to achieve this goal.
However, minimizing risks does not always completely eliminate the likelihood of negative consequences, but only helps to achieve their acceptable level while ensuring the return required by the investor. It depends on the investor's attitude to risk.
Ensuring sufficient liquidity of invested funds presupposes the possibility of quick and break-even (without significant losses in value) conversion of investments into cash or the possibility of their rapid sale. This goal is not necessarily related to previous goals; it is most achievable by placing funds in financial assets that are in steady demand on the stock market (shares and bonds of well-known companies, government securities).
At the same time, none of the investment values has the properties listed above in their entirety, which makes the above-mentioned goals of forming an investment portfolio alternative. Thus, security is usually achieved at the expense of high returns and investment growth. In world practice, safe (risk-free) are debentures government, but their income rarely exceeds the average market level and, as a rule, there is no significant increase in investments. Securities of other issuers and real investment projects can bring the investor greater income (both current and future), but there is an increased risk in terms of return of funds and income generation. Investment objects that involve investment growth are, as a rule, the least liquid - real estate has the minimum liquidity.
Given the alternative nature of investment goals, it is impossible to achieve them simultaneously. Therefore, an investor must prioritize a specific goal when constructing his portfolio.
The difference in the goals of forming investment portfolios, the types of investment objects included in them and other conditions determines the variety of options for the focus and composition of these portfolios in individual companies. They can be classified as follows.
Classification by types of investments included
The classification of investment portfolios by the types of investment objects included in them is associated, first of all, with the focus and volume of the company’s investment activities.
Portfolio of real investment projects is formed by investors carrying out production activities and includes real investment objects of all types. The formation and implementation of a portfolio of these projects ensure high rates of development of the enterprise, the creation of additional jobs, the formation of a high image and a certain state support investment activities. At the same time, compared to other types of investment portfolios, a portfolio of real investment projects is usually the most capital-intensive, riskier due to the duration of implementation, and also the most complex and labor-intensive to manage. This determines the high level of requirements for its formation and the careful selection of each investment project included in it.
Securities portfolio contains a certain set of securities. Compared to a portfolio of real investment projects, it has higher liquidity and is easy to manage. At the same time, this portfolio is distinguished by:
- a high level of risk, which applies not only to income, but also to the entire invested capital;
- more low level profitability;
- absence in most cases of opportunities for real impact on profitability (except for the possibility of reinvesting capital in other instruments stock market);
- low inflation protection;
- limited options for selecting individual financial instruments.
Portfolio of other objects investment usually complements the investment portfolio of individual companies (for example, foreign exchange portfolio, deposit portfolio).
Mixed investment portfolio simultaneously includes heterogeneous investment objects listed above.
Classification by priority goals
The classification of investment portfolios according to priority investment goals is associated, first of all, with the implementation of the enterprise's investment strategy and, to a certain extent, with the position of its management in investment management.
Growth Portfolio is formed in order to increase the capital value of the portfolio along with the receipt of dividends and consists mainly of investment objects that ensure the achievement of high rates of capital growth (as a rule, from shares of companies with a growing market value); the level of risk is correspondingly high.
Income Portfolio focused on obtaining current income - interest and dividend payments. It consists mainly of investment objects that provide income in the current period (stocks characterized by a moderate increase in market value and large dividends, bonds and other securities, distinctive feature which is the payment of current income). This portfolio is usually formed by investments that contribute to high growth rates of return on invested capital.
Conservative portfolio includes mainly investment objects with average (sometimes minimal) risk levels (accordingly, the growth rates of income and capital for such investment objects are much lower). It is formed through low-risk investments that provide correspondingly lower rates of income and capital growth than a growth and income portfolio.
The listed types of portfolios have a number of intermediate varieties. Portfolios of growth and income at the maximum values of their target indicators are sometimes called aggressive portfolios.
Classification according to achieved compliance with objectives
The classification of investment portfolios according to the achieved compliance with investment goals is associated, first of all, with the process of realizing the goals of their formation.
Balanced portfolio characterized by the full implementation of the investor’s goals through the selection of investment projects or financial instruments that best meet these goals.
Unbalanced portfolio stands out from other investment portfolios due to the discrepancy between its composition and the stated goals of its formation. A type of unbalanced portfolio is an unbalanced portfolio, which is a previously balanced (optimized) portfolio that no longer satisfies the investor due to a significant change in the external conditions of investment activity (for example, tax conditions) or internal factors (for example, a significant delay in the implementation of individual real investment projects) .
When managing an organization's investment portfolio, assessing the liquidity of various types of investments plays an important role. Such an assessment is carried out in the process of changing the strategy and tactics of investment activities, when reinvesting capital in more profitable assets, as well as when exiting ineffective projects (sales of low-yield financial instruments).
Liquidity of investments expresses their potential ability to turn into cash.
Liquidity has a significant impact on profitability financial transactions. The lower the liquidity of individual objects (investment instruments), the higher should be the required level of profitability on them, ensuring compensation for financial losses associated with long term their implementation when reinvesting capital. The relationship between these parameters (liquidity – profitability) is inverse and forms a “profitability – liquidity” scale, which determines the quantitative proportions of their levels in the process of investing capital.
In practice there are several liquidity levels:
- Normal liquidity– the most favorable situation that ensures uninterrupted receipts and payments of funds in reporting period.
- Limited liquidity- means that the organization is not able to take advantage of profitable commercial opportunities, it has limited freedom to choose the most promising financial transactions.
- Low liquidity- means that the company cannot pay off its current financial obligations V deadlines, which can subsequently lead to intensive sales capital assets, and in the worst case scenario – to insolvency (bankruptcy).
To study the impact of the liquidity factor, a number of terms are used:
- Liquidity of the company's investment portfolio– this is its liquidity for all objects (financial instruments) included in the portfolio.
- Liquidity of individual investment objects characterizes the state of liquidity in relation to these objects.
- Investment liquidity level – a meter reflecting the possible speed of sale of objects (financial instruments) according to their real market value.
- The ratio of the level of profitability and liquidity – this is one of the main basic concepts of investment management, which determines the inverse relationship between these two parameters. Based on this concept, a decrease in the level of investment liquidity should be accompanied (otherwise equal conditions) increasing the required level of profitability.
- Prize for low liquidity – This is additional income paid to the investor in order to compensate for the risk of possible financial losses associated with the insignificant liquidity of investment objects.
When assessing the liquidity of investments, they use 2 key criteria:
- time transforming them into cash (their equivalents)
- amount of financial losses investor associated with such transformation
Liquidity of investments over time measured by the number of days required to sell investment goods on the market. According to this criterion, the range of liquidity of various investment objects is extensive.
Table 2.2. Assets by descending degree of liquidity
So, the most highly liquid are deposits and demand deposits, which can be converted into cash for reinvestment within 1-3 business days. Real estate has the lowest liquidity, the sale of which often takes several months.
In investment practice, according to the criterion of time spent on implementation, the liquidity of individual objects is usually classified as follows:
- Urgent liquid investment items (financial instruments) that can be converted into cash within 7 days.
- Highly liquid investment objects with a period of turning into money from 8 to 30 days.
- Medium-liquid investment objects with a implementation period from 1 to 3 months.
- Low liquidity with a possible sale period of over 3 months.
In some cases, an investor needs to assess over time the liquidity of individual assets of an operating enterprise in which funds are invested. This assessment is carried out based on data balance sheet on reporting date based on the following grouping of articles:
Table 2.3. Grouping assets by liquidity groups
| Asset group | Types of assets |
| Quickly Realized Assets (ARAs) | Cash and short-term financial investments |
| Average Realizable Assets (ASA) | Accounts receivable according to current business transactions with a maturity date within the next 2 months. |
| Slow moving assets (SRA) | Productive reserves, work in progress, deferred expenses, finished products not in demand (or in limited demand) |
| Hard to sell assets (TRA) | Fixed assets, construction in progress, long-term financial investments, intangible assets |
The liquidity of investments can be assessed based on the time of implementation using absolute and relative indicators.
Main absolute indicator assessments their liquidity is the total period of possible implementation of the corresponding object(investment instrument).
The calculation is carried out using the following formula
where is the general period of liquidity of a specific object (investment instrument) in days; – possible period of conversion of a specific investment object into cash in days; – technical period of investment conversion from absolute liquidity in cash, usually accepted within 7 days.
Main relative indicator liquidity assessments investment serves liquidity ratio:
where is the investment liquidity ratio.
Example. PC B = 45 days; PC T = 7 days. Then OP L = 38 days, and CL I = 0.16.
An assessment of the liquidity of investments based on the time of implementation can be carried out not only for individual objects, but also for the entire investment portfolio. To do this, the following parameters are calculated:
rewrite several formulas - and look and check up to the bracket
I C – total assessment of urgent liquid investment objects; I B – total assessment of highly liquid investment objects; And SR – total assessment of medium-liquid investment objects; And SL is the total assessment of low-liquid investment objects.
The higher the value of this ratio, the more liquid the investment portfolio is considered. Enterprises with high level coefficient physical wear and tear fixed capital (more than 50%).
Most enterprises, as part of their investment activities, choose several objects of real or financial investment, i.e. form a certain set of them. The targeted selection of such objects is the process of forming an enterprise’s investment portfolio.
Investment portfolio of the enterprise call a set of real and financial investment objects formed in accordance with the investor’s investment goals, intended for carrying out investment activities and considered as an integral management object.
The main goal of forming an investment portfolio is to ensure the implementation of the enterprise's investment strategy by selecting the most effective and safe investment projects and financial instruments. If the investment strategy of an enterprise is aimed at expanding its activities (increasing the volume of production and sales of products or provision of services), the main investments will be directed to projects or assets related to production, and investments in financial assets (for example, in securities or bank deposits) will be in relation to them, a subordinate nature, which will be reflected in the terms, volumes of placement, etc.
The main task of portfolio investments is to create optimal investment conditions, while providing the investment portfolio with such investment characteristics that are impossible to achieve when investing funds in a single object.
When conducting investment activities, the investor aims to obtain profit (income), while acting within the limits of risk acceptable to him. In the process of forming a portfolio by combining investment assets, a new investment quality is achieved: the required level of income is ensured at a given level of risk.
Taking into account the chosen development strategy of the enterprise and the specifics of investment activities, the specific goals of forming an investment portfolio may be:
high rates of capital growth;
high income growth rates;
minimizing investment risks;
sufficient liquidity of the investment portfolio.
Capital gains are ensured when investing funds
into objects that are characterized by an increase in their value over time. This applies to shares of young issuing companies (mainly innovative ones), as their activities expand, a significant increase in the prices of their shares is expected, as well as real estate objects, hoarding, etc. It is the increase in value that provides the investor with income. These types of investments are usually long-term.
For a short-term investment situation, the main goal is to obtain regular income, usually at a predetermined frequency. This may include interest payments bank deposits, dividends and interest on securities, planned income from the operation of real investment objects (enterprise capacities, real estate).
Minimizing investment risks ensures the invulnerability of investments from market shocks and the stability of income generation. This goal is achieved by selecting investment objects for which the return of capital and income of the planned level are most likely, and depends on the investor’s attitude to risk.
The liquidity of the investment portfolio presupposes a fairly quick sale of investment assets without significant losses in value. This goal is most achievable when investing funds in financial assets that are in demand on the stock market.
When forming an enterprise’s investment portfolio, the priority goals of investment activity must be determined, since to a large extent, the specific goals of the portfolio are often alternative, in particular: security is usually achieved at the expense of high profitability and investment growth; investment objects that involve investment growth are, as a rule, the least liquid. In turn, the selected goals can be used as the basis for determining criteria for selecting investment instruments for a portfolio, for example, standard values of minimum capital growth rates acceptable for an enterprise; minimum level of current profitability; maximum level of investment risk; minimum capital intensity share of highly liquid investment projects, etc.
The formation of an enterprise’s investment portfolio is based on certain principles, which include:
implementation of the enterprise's investment strategy;
portfolio compliance with investment resources;
optimization of the ratio of profitability and risk;
optimization of the ratio of profitability and liquidity;
ensuring portfolio management.
Principle implementation of investment strategy follows from the continuity of long-term and medium-term planning of the investment activities of the enterprise and their subordination. The goals of the enterprise portfolio being formed must be linked to the goals of its investment strategy.
Principle portfolio compliance with investment resources means the need to strictly link the total capital intensity of instruments and objects selected for the portfolio with the volume of available investment resources. The implementation of this principle determines the limited possibilities of financing the objects selected for the portfolio.
Principle optimization of the ratio of profitability and risk associated with specific priority goals for portfolio formation. Optimal proportions between risk and income indicators are achieved through portfolio diversification.
Principle optimizing the ratio of profitability and liquidity also determines the necessary proportions between these indicators, based on the priority goals of forming an investment portfolio. At the same time, optimization should take into account ensuring the financial stability and current solvency of the enterprise.
Principle ensuring portfolio management means the need to take into account the capabilities of the enterprise’s personnel for the operational management of the portfolio, its monitoring, audit and implementation of the necessary reinvestment of funds.
Based on the focus and scale of investment activity, the investment portfolio of an enterprise includes a portfolio of real investment projects and a portfolio of securities.
5.2. Portfolio of real investment projects and securities portfolio
Real investment forms the basis of the investment activity of an enterprise. Currently, this type of investment is the main one for most enterprises, since management real investments in the system of investment activities is carried out at a higher level and allows to minimize investment risks.
Portfolio of real investment projects, formed by enterprises, has a number of features due to the specific features of real investments.
Real investment is the main form of implementation of an enterprise’s economic development strategy. This strategy is ensured by the implementation of effective real investment projects, and the process itself strategic development is a collection of these projects implemented over time. Real investment allows the enterprise to enter new products and regional markets, as well as ensure a constant increase in its market value.
Real investment is closely related to the operating activities of the enterprise. As a result of real investment, an enterprise can expand the boundaries of its operating activities, increase the volume of production and sales of products, expand the range of manufactured goods, improve their quality, reduce operating costs, etc. The parameters of the future operational process and high rates of enterprise development depend on the successful implementation of real projects.
Real investments provide, as a rule, a more stable level of profitability in comparison with financial investments. This pattern makes it possible to more accurately predict financial results, which is a motivation for entrepreneurial activity in the real sector of the economy.
Realized real investments provide the company with a stable cash flow. Clean cash flow is formed due to depreciation charges from fixed assets and intangible assets even in those periods when the operation of implemented real investment projects does not bring profit to the enterprise.
Real investments are highly protected from inflation. In an inflationary economy, the rate of price growth for many real investment objects often exceeds the rate of inflation.
The portfolio of real investment projects is highly capital-intensive, which is associated with the high capital intensity of the projects included in the portfolio.
The portfolio of real investment projects is the most risky, which is due to high risk obsolescence of real investments. Rapid technological progress has created a trend towards increasing given risk at the stage of both the implementation of real investment projects and their operation.
The portfolio of real investment projects is characterized by low liquidity. This is due to the narrowly targeted orientation of most forms of real investment, which have practically no alternative economic use in their unfinished form. In this regard, it is extremely difficult to financially compensate for incorrect management decisions associated with the start of real investments.
The portfolio of real investment projects is the most difficult to manage.
The ability of an enterprise to flexibly use investment resources is of utmost importance in increasing production efficiency. Financial investment is an active form of using temporarily free capital and a tool for achieving the strategic goals of an enterprise related to the diversification of its operating activities.
Financial investments are a separate independent direction economic activity enterprises real sector economy. As a rule, they do not solve strategic production problems and are carried out in order to generate additional income and protect against inflation.
Enterprises can make financial investments in the form of investing capital in the authorized funds of joint ventures, in profitable types of monetary and financial instruments. Latest form for last years has become widespread. It is characterized by investing capital in various types of securities that are freely traded on the stock market. This form of financial investment provides a wide selection of alternative investment solutions, both in terms of investment instruments and terms. It is characterized by a high level of government regulation and investment protection. The main goal of such investments is to obtain investment profit, although in some cases the goal may be to establish forms of financial influence on individual enterprises by acquiring a controlling (or sufficiently significant) block of shares.
Currently, investing in Russian securities is a rather risky way of increasing capital, due to the underdevelopment of the domestic stock market, which is characterized by: instability, depending mainly not on financial and economic indicators Russian issuers, and from world stock markets and political situations in the country; low liquidity of most domestic securities; large spread (the difference between the purchase price and the sale price); lack of open information on production in the market enterprise results, whose shares are traded on the secondary market, etc.
However, despite the very modest period of operation of the Russian stock market and the relatively small number of truly liquid corporate securities, the absence of long-term statistical base For each of the Russian issuers, the portfolio approach to managing financial investments is already appropriate today and is gradually occupying its niche in the market.
The company's securities portfolio. One of the features of financial investments is the possibility of a wide range of choice for an enterprise of investment instruments on the “return - risk” scale. the main objective in this case, it consists in achieving the optimal balance between risk and income, which allows you to form an optimal portfolio. This goal is achieved through portfolio diversification (i.e., distributing investor funds among various assets) and careful selection of stock instruments.
The choice of the optimal portfolio is possible from two options: a portfolio focused on primarily generating income through interest and dividends (income portfolios), and a portfolio focused on the primary increase in the market value of the securities included in it (growth portfolio). Establishing a combination of portfolio risk and return that is beneficial for an enterprise is achieved taking into account the rule: the higher the income a security brings to an investor enterprise, the greater the potential risk it has.
An investor can be aggressive or conservative. If priority goal The investor's goal is to obtain high income; preference is given to aggressive portfolios consisting of low-liquidity and high-risk securities of young growing enterprises. If the investor is conservative and seeks to ensure the safety and increase of capital, the portfolio includes highly liquid securities issued by well-known, reliable companies with a high rating (conservative portfolio).
Compared to real ones, financial investments are characterized by a higher level of liquidity, although this level fluctuates quite widely. The liquidity of an enterprise's securities portfolio is considered, on the one hand, as the ability to quickly transform the contents of the portfolio (or part of it) into cash with minimal costs for the sale of securities, and on the other hand, as the ability of the enterprise to timely repay its obligations to creditors who participated in the formation of a portfolio (for example, to bond holders).
A portfolio of securities has a lower level of return compared to real investments. Dividends paid even on the highest-yielding common stocks are only 40-60% of the amount net profit received from the implementation of real investment projects, and in most cases, enterprises do not have the opportunity to really influence this profitability (except for the possibility of reinvesting capital in other stock instruments). The securities portfolio has relatively low inflation protection.
Compared to a portfolio of real investment projects, a portfolio of securities is relatively easy to manage. Due to the volatility of the market financial market management decisions related to the formation of a securities portfolio are more operational in nature.
Test questions and assignments
Define the essence of portfolio investing.
Define an investment portfolio.
What are the basic principles of forming an investment portfolio?
What are the features of forming a portfolio of real investment projects?
Name the factors that determine the need for enterprises to form a securities portfolio.
List the features of forming a securities portfolio.