Portfolio Theory and Management

Abstract

Abstract The world of portfolio management has expanded greatly over the past three decades, and along with it, so have the theoretical tools necessary to appropriately service the needs of both private wealth and institutional clients. While the foundations of modern finance emerged during the 1950s and asset pricing models were developed in a portfolio context in the 1960s, portfolio management has now expanded into more complex models. Further, the traditional assumption of rational investor behavior with decisions made on the basis of statistical distributions has expanded to consider behavioral attributes of clients as well as goals-based strategies. Performance assessment has taken on greater importance since the 1990s. Portfolio management today emerges as a dynamic process that continues to evolve at a rapid pace. This 30-chapter book takes readers through the foundations of portfolio management with the contributions of financial pioneers up to the latest trends. Portfolio Theory and Management provides a comprehensive discussion of portfolio theory, empirical work, and practice. It not only attempts to blend the conceptual world of scholars with the pragmatic view of practitioners, but it also synthesizes important and relevant research studies in a succinct and clear manner including recent developments. Chapters are grouped into seven broad categories of interest: (1) portfolio theory and asset pricing, (2) the investment policy statement and fiduciary duties, (3) asset allocation and portfolio construction, (4) risk management, (5) portfolio execution, monitoring, and rebalancing, (6) evaluating and reporting portfolio performance, and (7) special topics.