investment banking process

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Describe the investment banking process, including portfolio construction.

First of all, investment bankers would assess the investment objectives of the investor by asking him several questions pertaining to his age, networth, risk taking ability, previous investing history, longer term objectives and goals, requirements of funds in short and long term, investment size, etc.

On the basis of above mentioned factors, portfolio managers from investment banks will educate investors about the various asset classes available at investor's disposal. The portfolio manager will guide the investor about the potential return and risks associated with each asset class and will also show the historical returns offered by different asset classes in the recent years. After discussing each asset class, the portfolio manager will advise investor on an appropriate mix of different asset classes based on investor's objectives and goals. Once the investor approves, the portfolio manager will start investing in different asset classes.

The portfolio manager regularly updates investor on the status of the portfolio, ie, the current net asset value of the investments and performance of different asset classes. He regularly discusses with investors on changing market conditions and adjustments that need to be made in the portfolio to suit investment climate or to tap on opportunities available in the capital markets and financial world.

Portfolio managers charge a percentage fee based on the total portfolio size or fixed fee or percentage in profits as per agreement between the investment firm and the investor.

Describe factors that must be considered when selecting among asset classes for an investment portfolio.

There are numerous factors that must be considered when selecting among asset classes for an investment portfolio as each investor is unique in terms ...