PMI tasks new members on diversified portfolio

The President and Chairman of Council, Portfolio Management Institute of Nigeria (PMI), Dr. Isaac Dada has charged its newly inducted members on the need for portfolio diversification.

According to him, the goal of diversification is not necessarily to boost performance, it won’t ensure gains or guarantee against losses but, diversification may provide the potential to improve returns for risk management.

Speaking at the second yearly conference and induction ceremony in Lagos recently, Dada said it is better to give the portfolio of clients regular checkup, saying a professional portfolio practitioner should check investment mix, asset balancing to rebalance the asset mix or reconsider some specific investments.He noted that setting and maintaining strategic asset allocation are among the most important ingredients in long-term investment success.

“No matter what your age or goals, we believe this means diversification both among and within different types of stocks, bonds, and other investments,” he said. To build a diversified portfolio, he said members should look for assets, stocks, bonds, cash, or its equivalent whose returns haven’t historically moved in the same direction, and to the same degree and, ideally, assets whose returns typically move in opposite directions.

He explained that this way, even if a portion of your portfolio is declining, the rest of your portfolio, hopefully, is growing thus practitioners can potentially offset some of the impact of a poorly performing asset class on your overall portfolio.

He mentioned that another important aspect of building a well-diversified portfolio is to try to stay diversified within each type of investment.

“The national conference will continue to be our annual flagship event that, amongst other reasons, brings all Portfolio Management Professional Practitioners together to network and discuss national issues of interest that affect the Nigerian economy as a whole and the portfolio management practitioners in particular. It also provides the forum to tackle protracted challenges faced by professional practitioners and proffer appropriate solutions”, he expounded.

“Professional competence in various aspects of Portfolio Management is a continuous process, and the need to keep abreast through training/workshops/seminars among others cannot be over emphasized,” he said

He disclosed that the Institute is currently working out collaboration with the United Kingdom based Chartered Institute of Securities and Investment (CISI) to give direct membership without examination to the esteemed members of the Institute.