Analyzing Portfolios Daily
Paul R. Daniels, CFA Executive Committee Chairman Investortools, Inc.
As a professional portfolio manager of municipal bonds, it is likely that you represent a financial institution that manages its own assets, or the holdings of a group of publicly available funds or individual investor accounts. You may be responsible for investment decisions at a casualty insurance company, a bank trust department or a specialized money management firm. You could be an employee of a family office or of a very high net worth individual. You may manage a single portfolio—or several.
You probably work with one or more general managers, staff-function colleagues and possibly members of a Board of Directors/Trustees of publicly held funds. Each of your portfolios has investment objectives and restrictions, informal or formal. In the long run, your job performance is connected to your ability to generate acceptable total returns. You expect those returns to be compared with returns of similar portfolios, whether or not you like being graded on a curve. If managing public fund portfolios, you experience performance pressure of peer-group total return comparisons calculated by Lipper and Morningstar. For other portfolios, you deal with the more subtle performance pressure of “risk-adjusted” benchmark comparisons. Even if your mandate is to maximize income, total return almost certainly will be a factor in your long-term success, because of the ultimate importance ...

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