The main problem of market relations is the problem of money. Money as a commodity in conditions of inflation exists in abundance, or (paradoxically) there is an acute shortage of it.

Society is divided into two layers. Most of the population does not know how to make money, and a smaller part - the more active one - does not know how to use it. Such conditions create favorable environment for the development of credit and investment relations.

On modern stage development, the investment activity of individual investors and legal entities involves investing excess (temporarily free) funds not in one, but preferably in a large number of investment objects, thereby generating a certain set of them.

This method is called “portfolio investing”.

An investment portfolio is a purposefully formed set of financial and real investment objects, which is intended to implement a pre-developed strategy in accordance with the investment goals defined in this strategy.

Principles for forming an investment portfolio:

Compliance of the composition of the portfolio with the company’s investment strategy.

Mandatory assessment of all possible alternatives for each project.

Ensuring acceptable ratios (proportions) for the company between the main goals: profitability, capital growth, risk minimization and liquidity.

Collegiality (for the company) in making decisions regarding the composition of the portfolio.

Ensuring responsibility and management of the portfolio in accordance with the charter of the corporation (business entity).

Briefcase real projects is formed, as a rule, from medium- and long-term investments. IN in some cases The portfolio may also include short-term projects - the acquisition of enterprises and production facilities, equipment that does not require installation, unfinished objects, and other real estate. Short-term real investments also include projects for the reconstruction and technical re-equipment of enterprises, the duration of which does not exceed one year.

The principle of mandatory assessment of possible alternatives dictates the need to calculate economic efficiency investments for all possible options for project implementation: new construction, reconstruction and expansion, technical re-equipment of an existing enterprise or an unfinished facility, etc. Of course, it is very difficult to take into account all possible options, however, it is necessary to try to evaluate as many of these options as possible.

Ensuring acceptable relationships between the main goals for the company is determined by the interrelation of these goals, on the one hand, and the different nature and direction of the partners, on the other.

As a rule, the profitability is in inverse relationship to capital growth, liquidity and risk. However, depending on the priority of the goals and directions of the partners, investment managers must develop certain proposals regarding the values ​​​​of these indicators accepted by the company as a whole.

Collegiality in decision-making on the composition of the project determines the need for unity of opinions (consensus), since each partner is responsible with his capital (shares) for the implementation of the project and hopes to receive a certain profit on the invested capital.

Responsibility for feasibility studies, project selection and portfolio formation lies with investment managers (project managers).

As a rule, managers carry out operational management of the portfolio. Project managers are accountable to the company management and the Board of Founders.

A securities portfolio is formed, as a rule, after determining the company's investment policy, as well as after forming a portfolio of real investments.

Methods for forming and evaluating a securities portfolio is one of the main ones in modern economic theory market. It should be noted that for last years several were awarded Nobel Prizes for developments related to certain aspects this problem.

Portfolio management requires a logical approach and produces best results after a thorough analysis of the investor's needs as well as the investment instruments available for inclusion in the portfolio. When forming a portfolio, one should take into account following conditions: required level current income, capital preservation, capital gains, tax aspects, risk, etc.

Any of these factors and their combinations play a significant role in determining the type of portfolio that is suitable for a particular investor. In current conditions, a portfolio can be formed as a combination of a certain number of objects of real and financial investment, or due to certain type financial instruments, that is, for subjects of investment activity, in accordance with the law, the opportunity to form investment portfolios of a certain type (types) is predetermined.

Formation loan portfolio is the prerogative of commercial banks, although in many countries this activity is also permitted to other elements of the non-banking system.

A loan is an investment of funds for a relatively short period of time, subject to the return of it or its equivalent in an amount exceeding the initial amount by the amount of interest on the loan. Investment, unlike a loan, is the use of money with the aim of making a profit over a relatively long period of time, until the moment when the invested funds are returned to the bank.

The client turns to the bank in order to receive funds that he lacks for this moment for carrying out business activities. He is usually the initiator of the loan agreement. In turn, the bank initiates investment in securities in order to make a profit.

When lending, the bank is the main and only or one of the few lenders, but investment provides significant amount creditors (shareholders). From this we can assume another difference between portfolios: the provision of a loan predetermines a personal relationship between the debtor and the creditor, while investing is a separate, impersonal activity.

The formation and management of credit and investment portfolios are closely related. Since credit and investment operations are the most profitable for the bank, then, as a rule, they largely determine the level of risk banking. Therefore, banks are obliged to maintain an optimal structure of their assets and, accordingly, to economic situation change it either for the benefit of loans or for the benefit of investments.

At certain conditions the bank may feel an urgent need for resources due to clients withdrawing their contributions, a sharp increase in interest rates on loans, or receiving large quantity applications for loans. If the need for funds significantly exceeds available resources, the bank can reduce the size of the investment portfolio by selling a share of securities.

In some cases, having studied financial condition client, the bank decides not to renew the loan and convert the issued loan into shares of the debtor company. In this case, assets are transferred from the loan to the investment portfolio.

Thus, the peculiarity of the formation of an investment portfolio commercial bank is to include two levels of securities:

Primary reserves intended to generate income;

Secondary reserves that can be sold to maintain liquidity.

To mobilize resources and ensure liquidity, secondary reserve securities are sold first, and if this is not enough, a share of primary reserves is sold. In this case, assets are moved from the investment to the loan portfolio.

Thus, the bank’s investment policy must provide for the observance of a certain proportionality between the primary and secondary reserves of securities and, accordingly, between the investment and loan portfolios. The most “liberal”, given the existing legal restrictions, are operations with securities, their acquisition is allowed to everyone, from individual investors to large firms and corporations. Exist certain restrictions according to the issue individual species stock instruments. The formation of a portfolio of assets can be carried out through a wide range of stock instruments, the main of which are:

State and municipal bonds;

Shares of open joint stock companies;

Enterprise bonds;

Commercial papers (bills);

Share Certificates and Options;

Privatization securities;

Derivatives (derivative securities);

Bank certificates of deposit, savings certificates And so on. According to the investment objectives, the portfolio includes stock

tools. Investment in which has different purpose and the formation of which is influenced by many both subjective and objective factors, including: financial opportunities investor ( internal source financing), opportunities to attract external sources financing for the purpose of investment (domestic and foreign), investment climate in the state, investment market conditions, personal qualities of the investor (aggressiveness of the economic strategy, investor’s appetite for risk, ability to effectively manage a portfolio, ability to instantly respond to changes and make appropriate decisions, etc. .).

An analysis of all factors gives the investor the opportunity to choose one or more goals in accordance with which the investment portfolio is formed. The formed portfolio can be assigned to one type or another, which requires appropriate management and supervision methods.

Any investment portfolio is formed in accordance with the principles that follow from the investment strategy. The following principle is considered basic:

The principle of compliance of the composition of the portfolio with the company’s investment strategy provides for the attraction to the portfolio of such projects that should ensure the investor’s realization of his strategic goals. Naturally, depending on the status of the investor, the goals pursued by him may be different. Even more, business entities with mixed forms of ownership (private and public) may have their own dominant and alternative goals.

Introduction.

Recently, many commercial banks have a fairly large amount of available funds, which can be either invested in various types of activities or used to purchase securities. When investing in securities, a bank, like any other investor, is faced with various investment goals.

It is the portfolio of securities that is the tool with which the required balance of all investment goals can be achieved, which is unattainable from the perspective of a single security, and is possible only with their combination.

Commercial banks' securities portfolios are part of an interconnected system of higher-level portfolios. The functioning of the entire portfolio system is subordinated to the interests of ensuring the sustainability and profitability of the institution, ensuring the sustainability of the entire financial system.

These factors determine the choice of the topic of this work - Principles and methods of forming an investment portfolio.

The work consists of three chapters in which issues directly related to this topic are discussed in detail. The first chapter covers the basic principles of forming an investment portfolio. At the conclusion of the chapter, the structure of the investment process is considered. In the second chapter, we highlighted the main methods for forming the optimal structure of an investment portfolio: the Markowitz model and the Sharpe index model. In the third chapter, we tried to form a portfolio of 3 companies with the most liquid shares. We calculated the expected return, risk of shares and the portfolio as a whole, using the Markowitz model.

CHAPTER 1. Principles of investment portfolio formation

1.1. Investment portfolio: essence, goals.

So, Let's start with the basic concepts. Investment portfolio – a portfolio of securities and investing.

The concept of “Securities Portfolio” - The totality of securities held by an investor (individual, organization, firm) 1. Investment in a broad sense refers to any process aimed at preserving and increasing the value of money or other assets. Funds intended for investment represent investment capital. Over time, this capital can take on different specific forms. One or the other specific type investment capital is called an investment asset. From the definitions of investment and investment assets given above, it is clear vital role two factors: time and cost. The most important principle of investing is that the value of an asset changes over time.

Another characteristic of the investment process is related to time - risk. Although investment capital has a well-defined value at the initial point in time, its future value at this point is unknown. For an investor, this future value is an expected value.

An investment portfolio is understood as a certain set of securities owned by an individual or legal entity, or legal entities or individuals, acting as an integral object of management. Typically, the market sells some investment quality with a given Risk/Return ratio, which can be improved through portfolio management.

The portfolio is a certain set of corporate shares, bonds with varying degrees of collateral and risk, as well as securities with fixed income guaranteed by the state, i.e. with minimal risk of loss on the principal amount and current income. Theoretically, a portfolio can consist of securities of one type, and also change its structure by replacing some securities with others. However, each security individually cannot achieve this result. The main task of portfolio investment is to improve investment conditions by giving a set of securities such investment characteristics that are unattainable from the perspective of an individual security, and are possible only with their combination 2 .

Only in the process of portfolio formation is a new investment quality with specified characteristics achieved. Thus, a securities portfolio is the instrument with which the investor is provided with the required stability of income with minimal risk.

When forming an investment portfolio, you should be guided by the following considerations:

investment security (invulnerability of investments from shocks in the investment capital market),

stability of income,

liquidity of investments, that is, their ability to participate in the immediate purchase of goods (works, services), or quickly and without loss in price to turn into cash.

None of the investment values ​​has all the properties listed above. Therefore, a compromise is inevitable. If the security is safe, the yield will be low, since those who prefer safety will bid high and drive down the yield. The main goal when creating a portfolio is to achieve the most optimal combination between risk and return for the investor. In other words, the appropriate set of investment instruments is designed to reduce the investor’s risk to a minimum and at the same time increase his income to the maximum.

1.2. Basic principles of investment portfolio formation

To effectively manage your investment portfolio Financial Manager must use the following principles, which are widely used in world practice when forming an investment portfolio:

The success of investments mainly depends on the correct allocation of funds among types of assets by 94% choosing the type of investment instruments used (shares large companies, short-term treasury bills, long-term bonds: etc.); by 4% by choosing specific securities of a given type,

by 2% by the assessment of the moment of purchase of securities. This is explained by the fact that securities of the same type are highly correlated, i.e. If an industry is experiencing a decline, then the investor’s loss does not really depend on whether the securities of one or another company predominate in his portfolio. The risk of investing in a particular type of security is determined by the likelihood of earnings deviating from expected values. The predicted profit value can be determined based on the processing statistical data

The overall return and risk of an investment portfolio can change by varying its structure.

There are various programs that allow you to design the desired proportion of assets of various types, for example, minimizing risk at a given level of expected profit or maximizing profit at a given level of risk, etc. The estimates used in compiling the investment portfolio are probabilistic in nature. Construction of a portfolio in accordance with the requirements of classical theory is possible only in the presence of a number of factors: a mature securities market,

certain period

its functioning, market statistics, etc. The formation of an investment portfolio is carried out in several stages: formulating the goals of its creation and determining their priority (in particular, what is more important - regular receipt of dividends or growth

asset value ), setting risk levels, minimum profit, deviation from expected profit, etc.; choice

financial company

(this can be a domestic or foreign company; when making a decision, you can use a number of criteria: the reputation of the company, its accessibility, the types of portfolios offered by the company, their profitability, the types of investment instruments used, etc.);

choosing a bank that will maintain an investment account. The main question when managing a portfolio is how to determine the proportions between securities with different properties. Thus, the main principles of constructing a classic conservative (low-risk) portfolio are: the principle of conservatism, the principle of diversification and the principle of sufficient liquidity.

The principle of conservatism.

The ratio between highly reliable and risky shares is maintained in such a way that possible losses from the risky share are overwhelmingly covered by income from reliable assets 3 . The investment risk, therefore, does not consist in losing part of the principal amount, but only in receiving an insufficiently high income. Naturally, without taking risks, you cannot count on any super-high incomes. However, practice shows that the vast majority of clients are satisfied with incomes ranging from one to two bank deposit rates

highest category Diversification of investments is the basic principle of portfolio investment. The idea of ​​this principle is well illustrated in the old English proverb: do not put all eggs in one basket - “do not put all your eggs in one basket.”

In our language it sounds - do not invest all your money in one paper, no matter how profitable this investment may seem to you. Only such restraint will avoid catastrophic damage in the event of an error.

Diversification reduces risk due to the fact that possible low income on some securities will be offset by high income on other securities. Risk minimization is achieved by including in the securities portfolio a wide range of industries that are not closely related to each other in order to avoid synchronicity of cyclical fluctuations in their business activity. The optimal value is from 8 to 20 different types of securities.

The dispersion of investments occurs both between those active segments that we mentioned and within them. For government short-term bonds and treasury bonds, we are talking about diversification between securities of different series, for corporate securities - between shares of different issuers.

Simplified diversification simply consists of dividing funds among several securities without serious analysis.

A sufficient amount of funds in the portfolio allows you to take the next step - to carry out the so-called sectoral and regional diversification.

An even more in-depth analysis is possible using serious mathematical tools. Statistical studies show that many stocks rise or fall in price, usually at the same time, although there are no such visible connections between them, such as belonging to the same industry or region. Price changes for other pairs of securities, on the contrary, are in antiphase. Naturally, diversification between the second pair of securities is much more preferable. Correlation analysis methods make it possible, by exploiting this idea, to find the optimal balance between various securities in a portfolio.

The principle of sufficient liquidity. It consists of maintaining the share of quick-selling assets in the portfolio at least at a level sufficient to carry out unexpectedly high-yield transactions and satisfy clients' cash needs. Practice shows that it is more profitable to keep a certain part of the funds in more liquid (even if less profitable) securities, but to be able to quickly respond to changes in market conditions and individual profitable offers. In addition, contracts with many clients simply oblige them to keep part of their funds in liquid form.

Income from portfolio investments represents gross profit for the entire set of securities included in a particular portfolio, taking into account risk. The problem of quantitative correspondence between profit and risk arises, which must be solved promptly in order to constantly improve the structure of already formed portfolios and the formation of new ones, in accordance with the wishes of investors. It must be said that this problem is one of those for which it is possible to quickly find a solution. general scheme decisions, but which are practically not resolved to the end.

1.3. Structure of the investment process

The investment process represents the investor making a decision regarding the securities in which investments are made, the volume and timing of investment. The following five-step procedure forms the basis of Investment Process 4:

Choice of investment policy.

Analysis of the securities market.

Formation of a securities portfolio.

Revision of the securities portfolio.

Evaluating the effectiveness of a securities portfolio.

The first stage – choosing an investment policy – ​​includes determining the investor’s goal and the amount of funds to be invested. Investment goals should be formulated taking into account both profitability and risk.

It is necessary to assess the available available resources, which should play the role of investment capital, it is necessary to collect sufficient information about available investment funds, to preliminarily assess the economic situation and forecasts for the future, etc. At this stage, the investor determines his investment horizon with varying degrees of accuracy, those. the period of time over which his strategy applies and in relation to which the results of the investment process are assessed. The size of the time horizon is determined both by the investor's goals and his ability to predict the future state of affairs.

The development of an investment strategy is always based on an analysis of the return on investment, the time of investment and the risks that arise. These factors in conjunction determine the effectiveness of investments in a particular stock market instrument. The adopted investment strategy determines the investment tactics: how much money and in what securities should be invested and, therefore, is always the basis of operations with securities. Investment performance varies depending on whether the investment uses only own funds or borrowed resources are also attracted.

This stage of the investment process ends with the selection of potential species financial assets for inclusion in the main portfolio. Thus, in the modern securities market there are tens of thousands of different bonds and stocks, most of which the average investor usually knows nothing about. Even financial market professionals limit their attention to a small number of securities about which they have sufficient information and whose behavior they carefully monitor.

The second stage of the investment process, known as security analysis, involves examining individual types of securities (or groups of securities) within the main categories outlined above. One of the purposes of such research is to identify those securities that appear to be mispriced. currently. There are many different approaches to security analysis.

Traditional security analysis typically takes a top-down approach, starting with economic analysis, then moving to industry analysis, and finally to fundamental analysis.

Economic analysis aims to assess general condition economy and its potential impact on securities returns. As a rule, when the economy is stable, stock prices tend to grow, and when economic stability is disrupted, stock prices fall. There is no doubt that this relationship is not perfect, but it is nonetheless strong.

Industry analysis is associated with the sector of the economy within which a particular company operates, as well as with the prospects for this industry. Technical analysis in its simplest form involves the study of stock market conditions in order to predict the dynamics of the stock prices of a particular company. Tools for technical analysis - charts. They clearly reflect the final picture of market movements and rates of individual issues. Information about price movements is presented by a graph (curve), in which the analyst tries to find stable, repeating patterns. The main types of such configurations (types of behavior) are classified, and an attempt is made to detect one of them in the current price information. If this succeeds, then future price behavior is predicted based on this configuration.

Fundamental analysis involves an in-depth study of the financial position of a particular company and the resulting behavior of its securities. In this case, information is obtained primarily from studying the financial statements of the corporation for the current and past years. A company's position is compared with similar companies in its industry using so-called performance ratios: measures calculated from the balance sheet and other financial statements. These ratios characterize various relative characteristics of the enterprise’s performance efficiency (liquidity ratio, financial leverage, earnings per share, etc.). But the main purpose of fundamental analysis is to forecast the magnitude of the company's future profits and related dividends and growth book value stock. The latter is the ratio of the current market value of the company's equity to the number of all issued shares.

Both fundamental and technical analyzes have many ardent supporters and no less convinced opponents. Both of these approaches have a long history (in the West) and represent two traditional methods of investment analysis.

The third stage of the investment process - the formation of a securities portfolio - includes the determination of specific assets for investment, as well as the proportions of distribution of invested capital between assets. At the same time, the investor faces problems of selectivity, timing of operations and diversification. Selectivity, also called microforecasting, refers to the analysis of securities and is associated with forecasting the price dynamics of certain types of securities. Timing of transactions, or macro forecasting, involves predicting changes in the level of stock prices relative to prices for fixed income instruments such as corporate bonds. Diversification is the formation of an investment portfolio in such a way as to minimize risk, subject to certain restrictions.

The fourth stage of the investment process - portfolio review - is associated with the periodic repetition of the three previous stages. That is, after some time, investment goals may change, as a result of which the current portfolio will no longer be optimal. Another reason for portfolio review is changes in securities prices over time. The decision to revise a portfolio depends, among other factors, on the size of transaction costs and the expected increase in profitability of the revised portfolio. Individuals professionally involved in investing in securities often make a distinction between passive and active management.

The fundamental principle in passively managed investing can be stated as “buy and hold.” However, its implementation involves the formation of a widely diversified portfolio. However, if market changes cause it to fall short of its investment objectives, the composition of the portfolio changes. To ensure timely audits, the stock market is monitored. Passive portfolio management requires costs: reducing risk is accompanied by increasing costs to reduce it, and therefore this investment strategy is used by banking and large corporate investors.

The fifth stage of the investment process, portfolio performance assessment, involves periodic assessment of both the return received and the risk indicators faced by the investor. In this case, it is necessary to use acceptable indicators of profitability and risk, as well as appropriate standards (“reference” values) for comparison.

Chapter 2.Formation methods optimal structure portfolio

2.1. Markowitz model

In practice, many methods are used to form the optimal structure of a securities portfolio. Most of them are based on the Markowitz technique. He first proposed a mathematical formalization of the problem of finding the optimal structure of a securities portfolio in 1951, for which he was later awarded the Nobel Prize in Economics.

The main postulates on which classical portfolio theory is built are the following 5:

The market consists of a finite number of assets, the returns of which for a given period are considered random variables.

The investor is able, for example, based on statistical data, to obtain an estimate of the expected (average) values ​​of returns and their pairwise covariances and the degree of possibility of risk diversification.

The investor can create any acceptable (for this model) portfolios. Portfolio returns are also random variables.

Comparison of selected portfolios is based on only two criteria - average return and risk.

An investor is risk averse in the sense that, of two portfolios with the same return, he will definitely prefer the portfolio with less risk.

Let us take a closer look at the currently developed portfolio theories, some of which will be applied further in the practical calculation of the optimal securities portfolio.

The main idea of ​​the Markowitz model is to statistically consider future income, brought financial instrument, as a random variable, that is, income on individual investment objects varies randomly within certain limits. Then, if in some way we randomly determine quite certain probabilities of occurrence for each investment object, we can obtain a distribution of probabilities of receiving income for each investment alternative. This is called a probabilistic market model. To simplify, the Markowitz model assumes that income is normally distributed.

According to the Markowitz model, indicators are determined that characterize the volume of investment and risk, which makes it possible to compare various alternatives for investing capital in terms of the goals set and thereby create a scale for evaluating various combinations.

In practice, the most probable value, which in the case of a normal distribution coincides with the mathematical expectation, is used as the scale of the expected income from a number of possible incomes.

Mathematical expectation of income by i th security ( m i) is calculated as follows 6:

Where R i– possible income from i th security, rub.;

P ij– probability of receiving income;

n– number of securities.

Dispersion indicators are used to measure risk, therefore, the greater the dispersion of possible income values, the greater the danger that the expected income will not be received. The measure of dispersion is the standard deviation:

. (8)

Unlike the probabilistic model, the parametric model allows for efficient statistical evaluation. The parameters of this model can be estimated based on available statistical data for past periods. These statistics represent a series of returns over successive periods in the past.

Any portfolio of securities is characterized by two quantities: expected return

, (9)

Where X i– the share of the total investment attributable to i-th security;

m i– expected profitability i th security, %;

m p– expected portfolio return, %

and a measure of risk - the standard deviation of profitability from the expected value 7

(10)

where  p– measure of portfolio risk;

 ij – covariance between returns i th and j th securities;

X i And X j– shares of the total investment attributable to i-yu and j-th securities;

n– number of portfolio securities.

Covariance of security returns ( ij) is equal to the correlation between them multiplied by the product of their standard deviations:

(11)

where  ij– return correlation coefficient i-oh and j-th securities;

 i ,  j– standard deviations of returns i-oh and j th securities.

For i = j covariance is equal to the variance of the stock.

Considering the theoretical limiting case in which a portfolio can include an infinite number of securities, the variance (a measure of the portfolio's risk) will asymptotically approach the mean covariance. The total risk of a portfolio can be broken down into two components: market risk, which cannot be eliminated and to which all securities are exposed almost equally, and own risk, which can be avoided through diversification. In this case, the amount of invested funds for all objects must be equal to the total volume of investment investments, i.e. the sum of the relative shares in the total volume must be equal to one.

The problem lies in numerically determining the relative proportions of stocks and bonds in a portfolio that are most beneficial to the owner. Markowitz limits the solution of the model to the fact that from the entire set of “admissible” portfolios, i.e. satisfying the restrictions, it is necessary to identify those that are riskier than others. Using the critical line method developed by Markowitz, it is possible to identify unpromising portfolios. This leaves only efficient portfolios.

The portfolios selected in this way are combined into a list containing information about the percentage composition of the portfolio of individual securities, as well as the income and risk of the portfolios. The figure shows invalid, feasible and efficient portfolios, as well as the efficient set line. Due to the inadmissibility of short positions in the Markowitz model, a non-negativity condition is imposed on the shares of securities in the portfolio. Therefore, a feature of this model is the limited return of acceptable portfolios, because The return on any standard portfolio does not exceed the highest return on the assets from which it is constructed.

Indifference curves can be used to select the most appropriate securities portfolio for an investor. In this case, these curves reflect the investor's preferences in graphical form. Assumptions made about preferences ensure that investors can indicate a preference for one of the alternatives or a lack of difference between them.

R
Figure 2.2 – Admissible and effective sets

If we consider the investor’s attitude to risk and return in graphical form, plotting risk on the horizontal axis, the measure of which is the standard deviation ( p), and along the vertical axis – remuneration, the measure of which is the expected profitability ( r p), then we can obtain a family of indifference curves. Having information about the expected returns and standard deviations of possible securities portfolios, it is possible to construct a map of indifference curves reflecting investor preferences. An indifference curve map is a way of describing an investor’s preferences towards the possible risk of completely or partially losing the money invested in a portfolio of securities or receiving maximum income.

The investor must choose a portfolio that lies on an indifference curve located above and to the left of all other curves. The efficient set theorem states that an investor should not consider portfolios that do not lie on the left upper limit reachability set, which is its logical consequence. Based on this, the optimal portfolio is located at the tangency point of one of the indifference curves of the most efficient set. In Figure 2.4, the optimal portfolio for some investor is indicated O * .

Determining a customer's indifference curve is not an easy task. In practice, it is often obtained in an indirect or approximate form by assessing the level of risk tolerance, defined as the greatest risk that an investor is willing to accept for a given increase in expected return.

Therefore, from the point of view of methodology, the Markowitz model can be defined as practical-normative, which does not mean imposing on the investor a certain style of behavior in the securities market. The purpose of the model is to show how the goals set are achievable in practice 8 .

2.2. Sharpe index model

In the 1960s, William Sharp pioneered regression analysis US stock market. To avoid high labor intensity, Sharpe proposed an index model. Moreover, he did not develop a new method for compiling a portfolio, but simplified the problem in such a way that an approximate solution can be found with much less effort. Sharpe introduced the -factor, which plays special role in modern portfolio theory.

where  iM– covariance between the growth rate of the security price and the market growth rate;

 2 M– dispersion of market returns.

The “beta” indicator characterizes the degree of risk of a security and shows how many times the change in the price of a security exceeds the change in the market as a whole. If beta is greater than one, then this security can be classified as an instrument with an increased degree of risk, because its price moves on average faster than the market. If the beta is less than one, then the risk level of this security is relatively low, since during the period of depth of calculation its price changed more slowly than the market. If beta is less than zero, then on average the security's movement was opposite to that of the market during the settlement depth period.

The Sharpe index model uses the close correlation between changes in individual stock prices. It is assumed that the required inputs can be approximated using just one underlying factor and the relationships that relate it to changes in individual stock prices. As a rule, the value of some index is taken as such a factor. The dependence of the yield of a security on the index is described by the following formula 9:

Where r i – yield of security i for a given period;

r I– return on market index I for the same period;

 iI– displacement coefficient;

 iI– slope coefficient;

 iI– random error.

Chapter 3: Investment portfolio optimization using the Markowitz model.

On the recommendation of the investment company BrokerCreditService, we selected a moderate portfolio of the 3 most liquid stocks with an average trading pace based on technical analysis, taking into account the news background and macroeconomic situation.

The daily dynamics of stock prices of Lukoil, Sberbank and Rosneft for the period 01.02.-01.05.2010 is presented in Appendix.1. We present the weekly in Table 3.1.

Table 3.1. Dynamics of stock prices for the period 02/01/2010-05/01/2010

There is an increasing trend for all stocks included in our portfolio.

Markowitz model.

The main idea of ​​the Markowitz model is to statistically consider the future income generated by a financial instrument as a random variable, that is, income on individual investment objects varies randomly within certain limits.

The first step is to find the stock return values ​​for each calculation step (week) using the formula:

,

where p(k) is the stock price at the end of the step, p(n) is the stock price at the beginning of the calculation step.

Then, we find the expected (arithmetic average) returns on the shares of our three companies (Table 3.2.):

We measure the risk of an individual stock in the portfolio. A measure of such risk is the dispersion of the stock's return, calculated as the expected value of the squared deviations r(i) from the expected stock return E(r):

Thus, we can determine the value standard deviation:

,

Let's calculate the variances and standard deviations of the stock returns of our three companies (Table 3.3.):

When assessing the investment attractiveness of shares, you should prefer the one that provides a higher expected return and a lower level of risk.

Investment choices can be made using the CV variance ratio:

,

Showing what share of risk falls on one percent of the expected return.

Having analyzed the results obtained (Table 3.4.), we concluded that the share of the Sberbank company should be preferred, because it has the lowest CV value.

Measuring portfolio return and risk. An investment portfolio is a collection of several securities. To find the return and risk of the entire portfolio, the investor first needs to determine what proportion each stock will make up. We form a portfolio from the same share of shares, respectively = 33%.

The expected return of a portfolio is the weighted average of the expected return of the shares included in the portfolio.

,

where w(i) is the share of total investment expenses spent on the purchase of the i-th share.

We calculate the expected profitability:

Measuring Portfolio Risk. The risk of a portfolio is assessed using the dispersion of its return.

Table 3.5. Auxiliary table

The above figures show that the profitability of Rosneft and Sberbank tends to change in opposite directions. The profitability of other pairs of companies moves in the same direction.

To determine the degree of relationship, we use the correlation coefficient:

We present the calculations in tabular form (Table 3.6.):

Table 3.6. Calculation of correlation coefficients.

The results obtained evaluate the relationship between the shares of three companies. The connection between Lukoil and the others is direct and weak. And between the companies Sberbank and Rosneft the opposite is true and just as weak.

To assess the risk of an investment portfolio, let’s estimate the dispersion of the portfolio’s return.

Using the portfolio return dispersion, we estimated the risk = 0.56%

Thus, we formed a portfolio of shares of 3 companies: Lukoil, Sberbank and Rosneft. Having measured the risk and return of each share in the portfolio, we concluded that the Sberbank share should be preferred, because it has the smallest CV (deviation coefficient) value. Having calculated the covariance between stock returns, we came to the conclusion that the returns of Rosneft and Sberbank companies tend to change in opposite directions. The profitability of other pairs of companies moves in the same direction. The expected return of the entire portfolio was 2.67%, and the variance of the portfolio return was 0.56%

Conclusion.

Investors' circumstances vary and portfolios must be designed to take these differences into account. In this case, the determining factors are permissible level risk and investment period, which depend on the preferences of a particular investor. Theoretically, a portfolio can consist of securities of one type, and also change its structure by replacing some securities with others. However, each security individually cannot achieve this result.

It is believed that the ability to make portfolio investments indicates the maturity of the market, and this, in our opinion, is absolutely fair. Back in 1994 in Russia, the controversy regarding portfolio investment methods was purely theoretical, although even then there were banks and financial companies that took client funds in trust management. However, only a few of them approached portfolio investment as a complex financial entity, which has subtle specificity and is subject to the corresponding theory.

Practice shows that today two types of clients are interested in portfolio investment. The first includes those who are faced with an acute problem of placing temporarily available funds (large and inert state corporations that grew out of former ministries, various funds created under ministries, and other similar structures, as well as clients from those regions where the market is not able to absorb large funds). The second type includes those who, having sensed this need for “money bags” and are in dire need of working capital, put forward the idea of ​​a portfolio as a “bait” (not very large banks, financial companies and small brokerage houses).

Of course, many clients are not fully aware of what an asset portfolio is, and in the process of communicating with them it often turns out that at this stage they need simpler forms of cooperation. And the level of market development in different regions is different - in many regions the process of forming a class of professional market participants and qualified investors is still far from complete. However, the strengthening of client demand for services for the formation of an investment portfolio has recently been obvious. This suggests that the issue is ripe. However, as with everything new, the process of forming an investment portfolio is accompanied by a number of problems, which were discussed in this work.

Of course, the range of issues related to portfolio investment is extremely wide, and it is impossible to address them all in such a review. The main thing that needs to be emphasized is that the future belongs to portfolio management, but its capabilities must be used in the current conditions.

Bibliography.

Alekhin B. – Liquidity and microstructure of the government securities market // Securities market. – 2001. – No. 20. – P.20-30.

Byltsov S.F. Desk book Russian investor: Proc. practical

Ilyina L.I. Organization and financing of investments: Textbook. – Syktyvkar, 2002.

Deeva A.I. Investments. –M.: Exam 2004.

Ivanov A.P. Financial Investments in the securities market. – M.: Dashkov and K, 2006.

Investments. – M.: Knorus, 2004.

Serov V.M. Investment management. – M.: Infra-M.2000.

Formation investment portfolio enterprises (using the example of OJSC MCC EuroChem) Thesis >> Financial Sciences

... "EuroChem"). Subject of study - methods formation and optimization investment portfolio analyzed company. The purpose of the work is ... risk portfolio determines the composition portfolio. The first work that outlined principles formation portfolio V...

1. Formation investment portfolio (6)

   Abstract >> Banking

   ... Principles formation investment portfolio 3 Historical models formation investment portfolio 5 Types portfolios 7 Contents portfolios 8 Investment and structure portfolio 9 Management portfolio... urgency ( method"stairs") Using method « ...

2. Formation investment portfolio (2)

   Coursework >> Financial Sciences

   ... Investment briefcase enterprises are generally formed on such principles like: Ensuring implementation investment strategists. Formation investment portfolio ...

We will describe the principles of the investment portfolio, methods of reducing risk, W. Buffett’s investment strategy, types of management strategies and modern tendencies portfolio formation.

Objectives and principles of the investment portfolio

Investment portfolio is a combination of different types of assets that realize the investor’s goals. The main parameters of an investment portfolio are risk and profitability. Let us highlight several principles for the formation and management of an investment portfolio:

Investment Portfolio Principle #1. Portfolio diversification

Portfolio diversification– distribution of investor capital among various types of assets that are weakly economically related to each other. For example, a portfolio consisting only of stocks has a lower degree of diversification than a portfolio that includes various financial instruments: stocks, bonds, options and futures. Diversification is an investor's strategy aimed at minimizing risk.

The goal of diversifying the investment portfolio– reducing the impact of systematic (market risks) due to the “erosion” of capital. Diversification can be achieved in various ways:

• Distribution of investment capital across various types of financial instruments (stocks, bonds, futures, options, etc.)
• Distribution of investment capital across different types of assets: securities, real estate and business.
• Distribution of capital between economic sectors, investing in shares of companies in various industries: oil, gas, heavy industrial, trade, transport, electric power, light industry etc.
• Distribution of capital between assets with different development strategies. For example, investing in shares of a telecommunications company engaged in the development of a national network, and in a company whose policy is aimed at entering a foreign market.

The figure below shows a diagram of possible portfolio diversification according to various criteria.

Types of investment portfolio diversification

Diversification of the investment portfolio in the modern economy. W. Buffett's strategy

It should be noted that excessive diversification averages the returns of the investment portfolio with the general market trend. The diversification approach was actively used during the period of the efficient capital market of the 50-80s of the twentieth century. Currently financial situation the stock market does not have proper stability due to frequent crises.

Thus, W. Buffett adheres to the strategy of reverse diversification - concentration. It is necessary not to distribute your capital among different types of assets, but to focus on one or several assets and quickly manage their level of profitability and risk. As we see, passive portfolio management and following the market index is a thing of the past; many domestic mutual funds investment funds(Mutual Funds) lost more than 70% of their capital during periods of crisis. Nowadays, it is focusing and mastery of managing 1-2 assets that allows you to increase the return on investment and reduce risks.

Investment Portfolio Principle #2. Optimal risk-return ratio of an investment portfolio

When forming an investment portfolio, the investor needs to determine the acceptable level of profitability and risk. Return is a measure of the effectiveness of a portfolio, its profitability on invested capital. The risk is reflected as possible future financial losses. It should be noted that there is a close relationship between profitability and risk, so the higher the risk, the higher the profitability of the portfolio. In practice, there are different types of investment portfolio management strategies (types of investment portfolios).

The return/risk ratio is determined by each investor individually and largely reflects his ability to adequately manage his portfolio at the selected level of risk.

You can study in more detail the methods of compiling an investment portfolio, approaches to assessing risk and profitability of shares in the article: “ “.

Investment portfolio principle #3. Asset liquidity

Portfolio liquidity shows the speed with which the investment portfolio can be restructured. Liquidity reflects how quickly the assets in a portfolio can be sold. Each type of asset has different liquidity. Let's consider the liquidity rating starting from the most liquid:

1. Futures on financial instruments have highest degree liquidity.
2. Blue chip stocks. Shares of companies included in the market index (RTS, MICEX) have the maximum degree of liquidity on the stock market.
3. Bonds and Eurobonds.
4. "Second tier shares." Shares of companies traded on the stock market, but having a smaller capitalization and attractiveness for investment.
5. Options. In Russia, the options market is poorly developed; only options on key stocks have liquidity.
6. Real estate. An asset with low liquidity middle period its implementation ranges from 6 months to 2 years.
7. Business. A low-liquid asset, as it requires both significant capital for acquisition and the availability of skills to manage it.
8. Exotic investments. Investments in antiques, paintings and other historical valuables.

Investment Portfolio Principle #4. Assessing the effectiveness of investment portfolio management

An investment portfolio is formed for a certain period of time, called a period. Upon expiration of the period, the management strategy is assessed, and adjustments are made to reorganize the shares of assets and their types. To assess management effectiveness use different odds, one of the most common criteria is the Sharpe ratio. The indicator is the following formula:

Where:

r p – average return on the investment portfolio;

r f – average return of a risk-free asset;

σ p is a measure of the risk of an investment portfolio, calculated as the standard deviation of the returns of the assets included in it.

Based on the Sharpe index, one can draw a conclusion about the effectiveness of profitability/risk management.

In addition to the Sharpe ratio, there are other indicators of portfolio management efficiency: Jensen's alpha, Modigliani ratio, Treynor and Sortino ratio, beta coefficient, etc. You can study these indicators and their practical construction in my article: ““.

Summary

The principles discussed are key to the formation of any investment portfolio. It is always necessary to monitor the level of risk and carry out prompt restructuring of the portfolio in accordance with market and economic conditions; the speed of response will be maximum if there is liquidity in financial instruments. Wide diversification of the investment portfolio is currently not effective, since capital is heavily averaged out. Concentrating capital in clearly selected assets and operational portfolio management will significantly increase profitability. Ivan Zhdanov was with you, thank you for your attention.

Principles of investment portfolio formation

The investment portfolio of an enterprise is generally formed on the basis of the following principles:

• – ensuring the implementation of the investment strategy. The formation of an investment portfolio must correspond to the investment strategy of the enterprise, ensuring the continuity of long-term and medium-term planning of its investment activities;
• – ensuring that the portfolio matches investment resources, i.e. the list of selected investment objects should be limited by the possibilities of providing them with resources;
• – optimization of the ratio of profitability and liquidity, which means compliance with the proportions between income and risk determined by the investment strategy of the enterprise;
• – optimization of the ratio of profitability and risk is compliance with the proportions between income and liquidity determined by the investment strategy of the enterprise;
• – ensuring portfolio manageability – compliance of investment objects with human resources and the possibility of prompt reinvestment of funds.

Stages of investment portfolio formation

The formation of an investment portfolio is carried out after the goals of the investment policy are formulated and the priority goals for the formation of the investment portfolio are determined, taking into account the current conditions of the investment climate and market conditions.

• 1. Starting point the formation of an investment portfolio is an interconnected analysis of the investor’s own capabilities and investment attractiveness external environment in order to determine acceptable level risk in light of the profitability and liquidity of the balance sheet.
• 2. As a result of the analysis, the main characteristics of the investment portfolio are set (degree acceptable risk, the size of the expected income, possible deviations from it, etc.), the proportions of various types of investments are optimized within the entire investment portfolio, taking into account the volume and structure of investment resources.
• 3. An important stage in the formation of an investment portfolio is the selection of specific investment objects for inclusion in the investment portfolio based on an assessment of their investment qualities and the formation of an optimal portfolio.
• 4. Examination of selected investment projects according to the criterion of efficiency (profitability) plays the most significant role in carrying out further analysis due to the high importance of this factor in the assessment system. During the examination, the reality of the main indicators given in the business plan related to the volume of investment resources, the investment flow schedule and the projected amount of cash flow at the stage of operation (sale) of the facility is checked.
• 5. The final selection of investment projects for the portfolio being formed, taking into account its optimization and ensuring the necessary diversification of investment activities, takes place taking into account the relationship of all the considered criteria.

Investment portfolio management

The effectiveness of securities portfolio management involves monitoring the securities portfolio in order to make the necessary adjustments to decisions made. An important principle monitoring is the comparability of results, to ensure which it is necessary to apply a unified methodology and use it through equal intervals time. The effectiveness of monitoring largely depends on the quality of the construction of the portfolio indicator system, the degree of its representativeness, as well as sensitivity to unfavorable changes related to the investment object under consideration.

Of great importance in the process of managing an investment portfolio is its assessment according to the risk criterion, which is carried out taking into account risk coefficients and the volume of investments in the relevant types of investments. The goal of qualified management is the formation of the least risky portfolio, which is achieved by determining the optimal shares of investment objects in it different types, i.e. diversification, which is designed to reduce investment risks while ensuring maximum profitability.

In investment portfolio management, two main strategies can be distinguished: passive and active. Passive strategy adhered to by managers who believe that the market is efficient. In this case, there is no need to frequently review the portfolio, since the efficient market always prices assets “correctly”, and the same expectations of investors regarding return and risk mean that they are all guided by the same asset market lines and capital market lines. A passive portfolio is revised only if the investor's attitudes have changed or a new general opinion has formed in the market regarding the risk and return of the market portfolio. A passive manager does not set himself the goal of obtaining a higher return than the average market offers for a given level of risk.

Active strategy conducted by managers who believe that the market is not always, at least for individual securities, efficient, and investors have different expectations regarding their return and risk. As a result, the price of these assets is overestimated or underestimated. Therefore, an active strategy comes down to frequently reviewing the portfolio in search of financial instruments that are incorrectly priced by the market and trading them in order to obtain higher returns.

The state of the financial market and the investor's capabilities are determined by his investment strategy. Special meaning The investor's investment strategy includes portfolio investments that have a number of features and advantages over other types of capital investments.

An investment portfolio is understood as a set of securities owned by an investor (owner of capital) as property or equity participation and acting as an object of control.

In other words, a portfolio of securities on the stock market is recognized as an independent product, the sale of which satisfies the needs of the investor when investing available funds in the stock market.

In addition, portfolio investments allow you to plan, evaluate, and control the results of the investor’s investment activities.

Typically, an investment portfolio is a selection of different securities with varying levels of income and risk. Although there are also investment portfolios of the same type of securities.

The main goal of portfolio investment is to improve investment conditions, facilitating the acquisition by securities of such investment characteristics that cannot be achieved by any single security and are possible only through combination and combination.

When forming an investment portfolio, the investor must develop the most optimal investment strategy, which is integral part financial management.

The formation of an investment strategy occupies the main part of the activity of financial analysts and financiers, since only with its correct and effective formation is the desired result of the entire investment activity of the investor possible.

Thus, the task of financial management is to develop an investment strategy that promotes the efficient allocation of assets. It should be noted that the basis of a successful long-term investment strategy is the most optimal asset allocation.

In practice, there are a number of methods for managing assets in the stock market that allow achieving optimal returns with limited risks.

It should be noted that the formation of an investment strategy is necessary not only for institutional investors, but also for individual investors forming their investment portfolio in order to avoid additional investment risks.

Forming the correct and most optimal strategy allows the investor to receive the greatest profit with the least risk.

To draw up an investment strategy and implement an investment, it is necessary to identify and designate the main investment goals, which may include:

1) increasing the value of the investment portfolio;

2) financing the transaction;

3) investing available funds at a rate higher than a bank deposit, etc.

In addition, it is necessary to determine the desired investment period, as well as the risk sensitivity of the investments made.

When developing a strategy, it is necessary to determine the maximum possible risk that the investor can bear at the lowest cost.

When assessing risk, the standard deviation of securities returns is determined, as well as possible risks by asset class and security.

For example, if the main purpose of investing is to preserve capital for a relatively short-term period, then it makes more sense to finance it in bonds. If the goal of making a profit is set, regardless of the preservation of capital, the main investment should be directed to shares, etc.

When developing a strategy, it is also necessary to determine the long-term relationships between various asset classes (municipal bonds, corporate bonds, second-tier stocks, etc.) that must be followed when constructing investment portfolios in order to achieve long-term goals.

A particularly important point in the formation of an investment strategy is portfolio diversification, that is, the distribution of investments in different kinds valuable papers. The formation of investment portfolios of the same name, that is, investing in one type of asset or one type of security, characterizes the investment portfolio as risky, since its profitability depends on only one security.

When carrying out investment activities, it is necessary to form an investment portfolio so that the investment risk can be compensated by the appropriate return. While an investment portfolio consisting of securities of one type can generate income comparable to the level of risk. Which characterizes it as an extremely risky investment portfolio.

When forming an investment portfolio, you should also Special attention pay attention to the selection of individual securities within types of different assets. It should be noted that a more complete study of information about certain securities and a more thorough approach to their selection provide a higher return on investment in long term with the lowest investment risks.

At the same time, the formation of a diversified (balanced) investment portfolio is only part of the success of the investments made. In the future, it is necessary to constantly review the already formed portfolio in order to timely identify deviations from the investment strategy in order to adjust it.

The main reasons for revising the investment portfolio are:

1) changes in the situation on the stock market;

2) change in investment goals;

3) identification of new investment opportunities.

Due to the fact that over time, the quotes of some securities increase, while others, on the contrary, decrease, then, accordingly, the portfolio structure may deviate from the set goal. So, if the quotes of one type of securities in the investment portfolio have increased significantly and began to occupy a disproportionately large share of the portfolio, then in this case the portfolio must be reviewed and rebalanced again, that is, it must be brought to the structure that was determined to be optimal. IN otherwise the investment portfolio may become too risky and low in return. Which, in turn, does not correspond to investment goals.

At the same time, the question may arise: why is it necessary to reduce high-growth stocks that provided the main income and direct funds to less profitable securities? It should be noted that when rebalancing an investment portfolio, a number of important principles must be taken into account:

1) the profitability unexpectedly received at the moment on any financial instrument or type of asset cannot be the basis that the same profitability will be received in the future;

2) financial markets in the long term, as a rule, are characterized by cyclicality, that is, an increase in quotations is replaced by some (sharp) decrease. Thus, when selling a significantly increased security or type of asset, it is possible to insure that the quotation of these securities or assets will decrease in the future. Conversely, when purchasing undervalued securities, it is possible to receive additional income from their growth in the future.

When other investment goals appear, the investor also revises his investment portfolio in order to achieve the newly set goal.

In addition, the review of the investment portfolio is also carried out with the aim of including new securities and sectors and excluding less promising securities in the future, which will also ensure higher profitability of the investment portfolio.

The basis for the formation of an investment strategy for the placement of funds is the choice between the profitability and riskiness of investments. It is known that the higher the return on investment, the greater the risk the investor takes on.

The formation of an investment portfolio can also be based on the requirements for liquidity of investments, obtaining a small but constant income, etc.

Thus, we can distinguish three main principles for forming an investment portfolio:

1) the principle of conservatism;

2) the principle of diversification;

3) the principle of sufficient liquidity.

The principle of conservatism is based on the fact that the ratio between highly reliable and risky securities and assets is determined in such a way that possible losses from risky securities and assets are covered by returns from reliable securities and assets.

The principle of diversification is the basic principle of portfolio investment. Diversification of the investment portfolio helps reduce investment risk due to the fact that possible high income on some securities and assets will be offset by high returns on other securities and assets.

Simplified diversification of an investment portfolio consists of distributing funds between several types of securities.

It should be noted that diversification of the investment portfolio can be carried out not only by types of securities and assets, but also by organizations, industries, etc.

The principle of sufficient liquidity is to maintain a certain level of quickly marketable (liquid) assets in the portfolio to carry out highly profitable transactions if necessary or convert securities into cash.

As noted, the return and risk of an investment portfolio are primarily based on the allocation of funds between stocks and bonds.

For example, when choosing a savings strategy, the share of bonds and stocks in the portfolio should be about 85 and 15%, respectively.

With this strategy, returns can be very low, almost at the level of inflation. At the same time, the liquidity of such investments is quite high and there is practically no risk of losing investments. The expected return on such a portfolio, according to experts, is about 17% per annum, while the real (taking into account inflation) return on such investments can be about 4 - 5% per annum with minimal risk.

When choosing a stable income strategy, the proportion of bonds and stocks should be about 70 and 30%, respectively. With this structure of the investment portfolio, there is a small risk of losing the principal amount of investment with a fairly high return. The expected return on such a portfolio is about 21% per annum, and the real return can be about 10% above the inflation rate with a low risk of losing investments.

The choice of strategy for increasing the value of the investment portfolio is based on uniform distribution funds between bonds and shares, that is, 50% each. However, with such a strategy, the risk of losing investments is quite high, but the profitability of such a portfolio can be even higher. The expected return on such an investment portfolio can be 25%, and the real return can be up to 13% and higher with moderate risk.

When choosing a strategy for rapid growth in portfolio value, the distribution of bonds and shares in the portfolio is made in shares of 10 and 90%, respectively. Such an investment portfolio brings a very high income, but the risk of losing the principal amount of investment is also very high.

Investors can also include low-liquid stocks in their investment portfolio, which also provide ample interesting opportunities investing.

There is a certain price inefficiency in low-liquidity stocks. However, with this weak attention of financial analysts to organizations and companies of the so-called “second tier”, as well as the limited information on them, quite attractive investment opportunities are created that can provide considerable income in the future.

Directing part of your investments into low-liquidity stocks will also allow you to diversify the risks of your investment portfolio.

It should also be noted that prices of low-liquid stocks can increase significantly in a relatively short period of time.

However, when including low-liquidity stocks in an investment portfolio, one should take into account the specifics of investing in this type of securities. One should take into account the fact that investing in low-liquidity stocks usually involves long-term investments (from several months to several years). The long-term nature of such investments is explained by their low liquidity, since if they are quickly sold, the investor loses part of their original value due to the difference between the purchase price and the sale price.

Thus, low-liquidity stocks with a sufficiently large capitalization can generate quite high income in the long term. It must be remembered that high returns are a consequence of higher risk. Based on this, when distributing funds and forming an investment portfolio, it is also necessary to take into account low-liquid assets, which must be compensated by more stable and liquid securities and assets.

In addition to shares, as already noted, the investment portfolio should also include bonds that occupy fairly high positions in the stock market, since financing funds by purchasing shares is a more expensive type of investment than investing in bonds.

When purchasing bonds, you should clearly understand their essence and be able to manage them. A bond is a debt financial instrument in which the investor makes investments in the form of a loan to the issuer of the bond. It should be noted that financial flows on bonds are predetermined in time and volume. In other words, the price of a bond at a given interest rate can be unambiguously determined at any time, since the formation of its price is based on the principle of the time value of money.

Bond yield is determined according to two main criteria:

1) the market risk-free interest rate for the corresponding period, representing the cost of investments;

2) a risk premium determined by the credit quality of the issuer.

Thus, changes in the value of bonds depend on changes in the market interest rate and changes in the credit quality of the issuer, which determines the risk of loss of the initial investment for these investments. In turn, changes in the credit quality of the issuer may be influenced by changes in industry development prospects, changes in market conditions, actions of competitors, regulatory authorities, etc. The level of the market interest rate is influenced by factors such as inflation, the ratio of supply and demand, dynamics exchange rates and the situation on the stock market, as well as the actions of the monetary authorities, etc.

It should also be noted that changes in market interest rates have different effects on the value of different bond issues. The sensitivity of bond prices to changes in interest rates is significantly influenced by the “duration” factor. The meaning of this factor is that the longer the bond's maturity, the higher its duration and the more the value changes when the interest rate changes.

It should be noted that bonds are a specific financial instrument that has a number of features and differences from the same shares. These differences and features also determine investors interested in investing in bonds.

For example, bonds as a financial instrument are less risky than stocks. This is a consequence of the fact that financial flow for bonds is established in advance and clearly defined, that is, the investor is guaranteed a return on his investments in a certain size and in certain period, which significantly reduces the level of uncertainty in bond cash flows and reduces investor risk.

In addition, when investing in the form of purchasing bonds, the investor assumes only the risk of loss of solvency and creditworthiness of the issuer, since payments on issued bonds can be made by the issuer almost independently of the dynamics of profit and the long-term prospects for the development of the issuer’s activities and the industry as a whole.

In addition, an investor always has the opportunity to receive additional income from bonds if the price dynamics of a particular bond issue are quite favorable. When purchasing bonds, the investor is always confident of receiving a certain level of return on the invested funds, since they are determined and clearly fixed in advance, which has already been noted. Therefore even unfavorable situation in the investment market and price instability cannot affect the already fixed income. However, it should be noted that changes in the market value of bonds are significantly limited and, as a rule, amount to several percent.

Thus, we can conclude that bonds, unlike shares and other financial instruments, are more attractive to investors focused on the lowest level of risk. In other words, bonds are a less profitable, but at the same time less risky financial instrument than stocks. It should also be noted that bonds are the most attractive instrument for placing temporarily free funds and investor assets, since their structure is based on the terms and return on investment.