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The nature and function of investment management
Section:   eng » Investment Management  
The nature and function of investment management  Investment management is a part of general management. Accordingly, the investment management - a combination of techniques, principles of management of the investment process, traffic control, investment resources to produce income (profit) in the future while minimizing costs and expenses.


Management activities associated with the investment process, can occur at different levels: state, territory, region, industry, enterprise. This creates a particular investment management across the state and within individual businesses. However, management at all levels is based on a common methodological framework assessing the effectiveness of limited resources.


Investment management performs several functions:


• Plan - the stage of the management process by which the development of investment strategies and investment policies. The investment strategy is directly linked with the general policy of industrial - economic activities of economic entities aimed at ensuring its stability and reliability in the current period and in the future;

• organizational - for developed investment strategy and policy is necessary to determine the funding needs, the relationship between own and attracted resources, forms of fund raising. Necessary to seek strategic investors, the most profitable investment projects and portfolios, algorithm organization controls the investment process in general;

• co-ordinating - to get effective results from investing activities is required at each stage of the investment process to monitor and coordinate all actions and activities on the achievement of investment policy objectives and targets, corrective action decisions taken in connection with changing conditions in the investment market.


Investment management is aimed at the following tasks:


• Ensuring economic growth and productive capacity of business entity;

• maximize profitability of the investment object;

• minimize the risk of investment activities;


Investment management involves the analysis, selection and evaluation of investment projects, taking into account risk and return.


The purpose of investment management is to choose the investment that would give the greatest benefit (income) and was accompanied with the least risk.


Thus, investment management can be defined as a system of effective measures aimed at preserving and increasing the capital of an economic entity. Large role in the implementation of effective management of the investment process is an investment manager.



The Investment Manager performs the following functions:


• provides investment activity of business entity;

• determines the investment strategy and tactics;

• developing an investment policy;

• is a business plan of the project;

• reduces the risk and increase the profitability of various investments;

• examines the financial state of businesses to invest;

• determine the number and quality characteristics of investment securities;

• seek to optimize the investment portfolio;

• performs the adjustment of investment portfolios;

• predicts the evaluation of investment attractiveness and selection of specific projects;

• Evaluate the effectiveness of investment projects;

• provides planning and operational management of the implementation of specific investment projects;

• Provides management of the investment process.


The investment manager must be a qualified expert in their field. He must know the theory of investment management, accounting, micro-and macroeconomics, principles of technical and fundamental analysis, mathematical modeling, the basic laws and regulations, including those relating to taxation issues. Manager must be able to organize the collection of necessary information, conduct analysis and on that basis make a business plan. The task manager is to assess the effectiveness of programs and investment projects, the adoption of adequate investment decisions and bringing it to successful completion.


Investment Management - is an art. It appears that certain investors can choose the investment properties that generate more income than other investors, sometimes with less risk. But intuition is not enough. Without knowledge, without calculations, without appropriate analysis of the investor can not achieve successful results. For fruitful work in the field of investment management requires knowledge of many disciplines. Developed the theory on which the established method of calculating the risk / return investment funds, investment optimization, evaluation of investment projects. The development of such methods, techniques, principles, it is desirable for anyone who intends to engage in investment.

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