Investment funds with broad diversification

In addition, the globalization process in financial markets continues to advance. Co-enterprises, the corporate structure, financial management and, for example, industry standards that can promote positive criteria of a company are also of increasing importance for trading. Especially nowadays, market participants have to take more and more responsibility within the financial market. Within portfolio management, constant responsibility must be taken for the decisions and the correct process of choosing securities. Strategy processes also include reading articles and scientific, analytical books, which serve as a basis for the right process for successful, active portfolio management.

The advancing globalization also opens numerous, new investment opportunities, offers a broader diversification of financial assets and contributes to the reduction of investment risk. It is important that market participants cooperate and benefit from each other, not only financially but also in terms of economic insights. As is well known, globalization in financial markets has led to a closer correlation of the development of capital markets in industrialized countries and thus to a stronger synchronization of return developments. The benefits of portfolio diversification with Exness swap are less pronounced. There are difficulties with regard to the increasing transmission of crises as a result of the globalization process:

  •     stronger transmission of financial crises not yet clearly confirmed
  •     Stability of the financial system
  •     Hedge fund debate
  •     Real estate crisis with central bank intervention

Moreover, crises in developing countries have been found to have numerous effects on capital markets in developed countries. In addition, there are effects such as environmental regulations or tax obligations. Numerous economic researchers and professional portfolio managers are trying to cope with these global difficulties and to survive in the market through an active investment strategy, always more cooperating than competing. A passive approach means replicating an index based on widely diversified portfolios. If one compares an active investment strategy with a passive one, the first thing that emerges is the cost.

In the active investment strategy, issue surcharges are levied on the purchase of investment funds, which amount to up to 3% of the capital investment. A passive portfolio management has less costs than an active portfolio management. However, an active investment strategy does not deliver a higher return than the market and the cost disadvantage is not overcompensated. Capital markets are efficient markets anyway and therefore systematically accurate price forecasts are basically not possible. The current price provides all relevant and available information on the market on a daily basis. The success of active investment strategies stands and falls with systematically accurate forecasts of the future price of securities.

This portfolio management process includes portfolio planning, portfolio realization and portfolio control. Within the portfolio management process, investor analyses, financial analyses, revisions, so-called monitoring and many other factors such as performance measurement are included in the formation of an optimal strategy.

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