Unveiling the dynamics of Investment Portfolio Management: Ecocapital Investment Management Ltd.

In recent months, we have initiated our investment educational drive covering a range of investment topics. Today, we want to talk about investment portfolio management, which may appear to be a new concept for many investors in Ghana and most of Africa.

Investment portfolio management, often referred to simply as portfolio management, is the process of managing a collection of investments with the goal of achieving specific financial objectives while considering the individual’s or institution's risk tolerance, investment horizon, and financial situation. A well-managed investment portfolio aims to optimize returns while managing risk associated with investing.

It is very important to note that Portfolio Management Services (PMS) encompass a range of investment strategies and services offered by financial institutions and wealth management firms tailored to address the diverse investment requirements and risk tolerances of their clientele.

There are various types of Portfolio Management Services available, each designed to meet specific investment objectives and preferences of the investor. There are 3 common types of Portfolio Management Services based on the investment and execution control of investment decision.

 Discretionary Portfolio Management Services (DPMS)
 Non-discretionary Portfolio Management Services (NDPMS)
 Advisory Portfolio Management Services

In our part of the world, Discretionary PMS and Non-discretionary PMS are the most popular types of PMS among individual investors.
In a broader sense, here are some common types of Portfolio Management Services listed below in details.

Discretionary Portfolio Management:

• In this type of PMS, the portfolio manager has full discretion to make investment decisions on behalf of the client within approved assets. They select securities and make trading decisions without requiring client approval for each transaction.

Non-Discretionary Portfolio Management:

• In non-discretionary PMS, the portfolio manager provides investment advice and recommendations to the client. However, the client retains the authority to make the final investment decisions and execute trades.

Active Portfolio Management:

• Active PMS involves frequent buying and selling of securities within the portfolio to take advantage of short-term market opportunities. The portfolio manager aims to outperform the market or a specific benchmark.


Passive Portfolio Management:

• Passive PMS, often associated with index funds and exchange-traded funds (ETFs), aims to replicate the performance of a specific market index or benchmark. The portfolio manager does not engage in frequent trading and seeks to match the index's returns.
Equity Portfolio Management:

• Equity-focused PMS concentrates on managing a portfolio of individual stocks or equity-based instruments. The goal is to optimize returns from equity investments.

Fixed-Income Portfolio Management:

• Fixed-income PMS focuses on managing a portfolio of bonds and debt instruments. The objective is typically to generate regular income while managing interest rate and credit risk.
Balanced Portfolio Management:

• Balanced PMS involves investing in a mix of asset classes, such as stocks, bonds, and cash or cash equivalents. The goal is to achieve a balance between growth and income. In fact, this is one of the common portfolio management strategies across board.
Alternative Portfolio Management:

• Alternative PMS includes investments in non-traditional assets like hedge funds, private equity, real estate, and commodities. The aim is often to diversify the portfolio and potentially enhance returns.
Model Portfolio Management:

• Model PMS offers pre-structured portfolios with different risk profiles and investment strategies. Clients can choose a model portfolio that aligns with their risk tolerance and investment goals.
Sustainable or ESG Portfolio Management:

• Sustainable or Environmental, Social, and Governance (ESG) PMS focuses on investments that meet ESG criteria. The investment goal for this type of portfolio management service is to generate returns for investors while aligning with ethical and sustainability principles. In recent year, we have seen an increase in this type of PMS since many investors are becoming aware of environmental social and governance issues globally.

Factor-Based Portfolio Management:

• Factor-based PMS constructs portfolios based on specific factors such as value, growth, momentum, or low volatility. The goal is to capture factors that are believed to drive returns.

Customized Portfolio Management:

• Customized PMS is tailored to meet the unique investment objectives and preferences of individual clients. The portfolio manager designs a portfolio based on the client's specific requirements.
Fund-of-Funds Portfolio Management:

• Fund-of-funds PMS involves investing in a diversified portfolio of mutual funds or hedge funds rather than individual securities. The objective is to achieve diversification across different funds.

International Portfolio Management:

• International PMS focuses on investing in assets and securities from global markets. It can help clients diversify geographically and access international investment opportunities. Apart from the positive, this type of investment portfolio management strategy has its level of risk in terms of political risk, and foreign exchange risk.

Tax-Efficient Portfolio Management:

• Tax-efficient PMS aims to minimize tax liabilities on investment gains by using strategies like tax-loss harvesting, selecting tax-efficient investments, and optimizing tax planning. We currently don’t have many investors in Ghana with this type of investment of investment objectives but in other developed markets, there are several investors with this objective.

Clearly, there are numerous categories of portfolio management services, as previously enumerated. The selection of a particular Portfolio Management Service is contingent upon an individual's or institution's investment objectives, risk tolerance, and financial circumstances.

Each investor possesses unique risk levels and objectives, making it vital for clients to meticulously evaluate their goals. When feasible, consulting with a financial advisor, such as EcoCapital Investment Management Limited, is advisable to determine the most appropriate PMS type that aligns perfectly with their investment needs and requirements.

For a deeper understanding of this subject and further assistance kindly contact EcoCapital Investment Management Ltd., on +233(0)50 155 3502.
EcoCapital Investment Management Limited (EIML) is a company incorporated in Ghana and licensed by the Securities and Exchange Commission (SEC) as an Investment Management firm, and by the National Pensions Regulatory Authority (NPRA) as Fund Manager of both second and third tiers of the national pension scheme.

The corporate mandate of the firm is to deliver premium financial solutions and investment management services to both retail and institutional investors in Ghana. Services on offer at EcoCapital include: Wealth Creation and Management, Investment Portfolio Management, Pension Fund Management, Mutual Funds, Retirement Planning, Investment research and Advisory.

The firm has three mutual fund products under management, namely; Prime Fund, Nordea Income Growth Fund and the Weston Oil and Gas fund