9 Things Portfolio Management Companies Can Do Better

IN-COM Portfolio Management

Portfolio Management is one of the cornerstones of value investing. It is a powerful yet simple concept: Manage your portfolio by identifying its “bigger” goals and identifying similar investments. Portfolio management focuses on identifying and measuring the risk of holding selected stocks.

Why Portfolio Management?

This practice is often implemented by companies as part of an overall investment strategy, using investment management tools such as Portfolio Management Information Systems (PMIS), Portfolio Analysis Software (PAAS), or Case Sense. There are several advantages to utilizing a solid Portfolio Management System (PMS), and we will discuss those in this article. 

portfolio management best practices

1. Dashboards  

Portfolio management dashboards are important for project portfolio management software, also known as Project Portfolio Management (PPM). A dashboard shows the results of a management system within a data warehouse. Data is pulled from internal and external resources and is organized according to task or value. Project management software provides a data model and a format for representing project portfolio information in a format that can be consumed and understood by others in the organization. 

2. Strategy 

Investment companies use many different strategies to invest in certain areas. Some of those strategies become integral parts of their overall portfolio strategy. Other strategies are used only to supplement the main portfolio strategy. The best portfolio management solutions incorporate all of these strategies. 

3. Internal Reporting  

Some businesses utilize internal portfolio management software, with all of the same business applications used to conduct other business functions. More common business applications used internally, such as ERP, are Sales, Real Estate, Finance, Supply Chain Management, Human Resources, and Purchasing. Internally-developed portfolio management applications are designed to efficiently manage existing business applications, and internal reports provide managers the information they need to make informed decisions about investing in certain areas.  

4. External Application  

External application software projects include investment management, wealth management, risk management, and insurance portfolio management. External application uses tools and technologies that have been developed internally, but have been modified for use in other locations. External applications are designed to perform all of the same tasks that internal portfolio management software projects do, but may also have additional features not found in internal applications. External project managers may be responsible for managing financial responsibilities outside of an individual company. 

5. Strategy Implementation  

The next step is strategy implementation. Appoint managers to manage the project, and require members of the portfolio staff to undergo training on the new processes. The Appraisal Management Association (AMP) has developed several handy apps that managers can use during strategy implementation to help them get started. 

6. Metrics  

Dashboards provide a quick overview of portfolio performance. Metrics allow managers to more effectively gauge performance against goals, helping them decide whether to enhance strategy implementation or rework certain processes. The metrics strategy helps improve business effectiveness by identifying business processes that are costing money, while enabling managers to better understand how business applications are being managed and what value they are providing to their organization. 

7. Simplification  

Appraisal dashboards and other appraisal tools can simplify the process of reviewing risk factors, identifying policy initiatives, and quantifying business improvement proposals. Using these tools alongside AMP can lay the foundation for the deployment of a more robust strategy, making it easier to evaluate future business applications and their effect on organizational profitability. 

8. Transformation  

Applying an appraisal methodology can also facilitate transformation. AMP practitioners and project managers can identify risk areas, review business applications, and make necessary policy changes. Appraisals may also facilitate transformation by driving change through engagement and management. The key is getting companies on board and engaging with them. AMP practitioners and project managers can facilitate this transformation by providing a comprehensive resource capacity planning framework and developing an action plan from the start. 

9. Improving Strategic Alignment  

When the portfolio approach is applied correctly, the strategic goals of a company can be aligned with organizational objectives. This improves overall business performance and exposes companies to the risks that are necessary to optimize productivity. Appraisal dashboards and other appraisal tools can help companies determine which resources are currently being utilized and how they can be better utilized. This is particularly important in the global marketplace, where many companies are competing for a limited number of customers. AMP application strategies can improve strategic alignment, thereby improving overall company performance.