Every Super Bowl-winning team needs a coach, right?
A coach is always there to manage the players, analyze their performance, and make sure each member of the team is working together in harmony to help each other achieve their shared goal of winning that shiny Super Bowl ring.
Well, portfolio managers are a lot like coaches.
Businesses rely on portfolios as a way to manage their investments, projects, programs, or resources. But simply pooling all your stuff together in one or more groupings isn’t enough.
If you want your portfolio to work for you and help your business achieve its strategic goals, you need somebody to manage that portfolio.
That’s where portfolio managers come in (surprised, much?).
This article will explain what a portfolio manager is, their role, the portfolio management process and how monday.com can be used to manage portfolios.
What is a portfolio manager?
A portfolio manager (PM) is an individual that’s responsible for managing one or more portfolios for their team or external clients.
And a portfolio is?
It’s basically just a fancy way to describe a group of initiatives or programs that a business takes on to reach its strategic goals. Using a portfolio, you can look at what you’ve got on and then use your existing projects or investments to set organizational goals.
Those goals will then go on to shape your daily operations and any changes you may want to make to your portfolio in the future — so portfolio management is a never-ending circle.
You’ll normally hear about portfolios and portfolio managers in the context of finance and investment. In the wonderful world of finance, portfolio managers oversee investment portfolios for their clients.
Rather than projects or programs, investment portfolios are typically composed of stocks, bonds, mutual funds or hedge funds (or any other kind of fund).
Clients are normally investors like a pension fund, hedge fund, investment banks, charity, an insurance company, management company, or any other group that wants to invest cash.
If you’re a portfolio manager, that means you’re going to be in charge of making sure the portfolios you’re looking after maintain the right asset mix — or project mix — that helps your team or client achieve its goals.
That means striking the right balance between risk and reward so that the portfolio is both generating a solid return on investment (ROI) and helping the organization to achieve its strategic goals.
OK, so we know what a portfolio manager is. But why is a portfolio manager important?
Simply put, portfolio management is important because the project or investment vehicle a company chooses to get involved in is inevitably going to have an impact on the success of that company.
Portfolio managers are the individuals that have to carefully assess what an organization should get involved in (or step away from) to reach its goals. That often means auditing an existing portfolio and making a tough investment decision about the assets or programs that are hurting the company more than they’re actually helping.
So, without proper portfolio management, a business could end up wasting tons of time and money working on stuff that will never end up contributing towards the company’s bigger goals.
What is a portfolio manager’s role?
The role of a portfolio manager can often be quite broad depending on the team or industry he or she’s involved in.
But no matter how big or small a portfolio manager’s remit may be, they’ve all got one thing in common.
As a portfolio manager, they’re responsible for making sure the team’s portfolio is geared towards helping the team realize its strategic goals.
A portfolio manager’s role centers on oversight of one or several portfolios.
In the context of financial portfolio management, a portfolio manager will often deploy financial models or algorithms to make forecasts and try to figure out how investments may perform in the future.
By forecasting future portfolio performance, the portfolio manager can then make an educated guess on whether the investment will generate enough return on investment (ROI) to make it worth the company’s time and money.
That’s why a portfolio manager is so important in the world of finance.
How a portfolio is managed will directly impact the overall returns of the portfolio. In financial portfolio management, you’ll normally hear about 2 types of management: active and passive.
An active portfolio management style is when the manager makes specific investment decisions to help a portfolio achieve the desired level of returns.
Passive portfolio investment is when a portfolio manager will look at the track record of a financial market index or benchmark, and then make changes to a portfolio based on those records.
By basing decisions off a benchmark, the portfolio’s risk-reward balance and ROI should be easier to predict (but maybe not quite as high).
The same principle applies to portfolios that are composed of different projects. The role of a project portfolio manager is to apply KPIs and assess each project prior and after selection to make sure each portfolio item fits in with the company’s goals, values, risk tolerance and more.
Portfolio managers will typically be part of a Project Management Office (PMO).
A PMO is a group that can be either part of a company or an external contractor that creates and maintains project management and portfolio management standards and processes for an organization to follow.
PMOs are also typically responsible for training teams on those processes and helping teams correctly deploy resources to make sure protocols are being followed and standards are being upheld.
How do you manage a portfolio?
It’s important to note that there’s no right or wrong way to manage a portfolio. Every portfolio manager has their own distinct style, and the decisions they make are going to be motivated by very different goals.
That being said, at its core portfolio management generally follows a 5-stage portfolio management process.
This is similar to the 5 stages of the project life cycle, but unlike project management, portfolio management doesn’t have a closure stage. That’s because portfolios usually go on and on indefinitely. As a result, a portfolio manager’s job is never done.
Here are the 5 basic stages of portfolio management:
1. Choose your strategic objectives
Before you can create a portfolio, you’ve got to have a crystal-clear understanding of why you’re building that portfolio. What’s the point, and what are you hoping your portfolio is going to help your team or company achieve?
You’ve got to sit and ask yourself serious questions about your organizational or investment strategy. More importantly, you’ve got to ask all of your team stakeholders to make sure everybody’s on the same page about what you’d like to achieve together.
That means getting a rough idea of budgeting, priorities, targets, and available resources.
Not great at setting goals? We recommend you follow the SMART (Specific, Measurable, Attainable, Relevant, Time-bound) method.
2. Start assessing projects
After you’ve got your strategic goals in place, it’s time to take inventory of what you’ve currently got in terms of existing projects or investments. Think about which projects are working, which aren’t, and which ones can be combined.
Meanwhile, if space allows you should look at other available opportunities that you could work into your portfolio.
To make sure you’re evaluating everything fairly, create assessment criteria and try to look at each project with ROI, available resources, reporting schedule, and any other essential criteria specific to your business in mind.
3. Create a shortlist
After you’re assessed all your projects or potential projects, it’s time to narrow your project list and select your portfolio line-up.
This is where you’ve got to bear in mind resource allocation and making sure you’ve got a healthy mix of projects or investments.
Remember: when you make your shortlist and decide which projects you’d like to have in your portfolio, your goal should be to create a grouping that will balance potential risk while maximizing your potential returns.
4. Portfolio validation
Portfolio validation is just a fancy way of describing the process by which you revisit your portfolio selections and the selection process itself to make sure you’ve picked all the right projects for all the right reasons.
Sometimes you may choose a project based on certain organizational KPIs that seemed important at the time. But — in hindsight — you might realize those KPIs were pointless.
The validation process is your chance to go back and fix the selection process so that it’s easier to make portfolio selections in the future.
Portfolio managers will also often use the validation stage to put any contingency plans into action if a portfolio item isn’t doing so well.
5. Track and manage
Remember how we said a portfolio manager’s job is never done? Well, that’s why step 5 is actually never ending.
As a portfolio manager, you’ve got to constantly keep an eye on projects as they launch and are carried out.
If a project is suddenly becoming a lot riskier or appears to be drowning, you may need to juggle priorities and resources, or decide to cancel it entirely.
How well a project is doing can change at any time, which is why you’re going to want to check out a portfolio management tool to help you keep tabs on everything. But be patient, we’ll get to that in a minute.
Want to know more about how portfolio managers oversee projects? Check out our guide.
How can monday.com help portfolio managers?
OK: so we’ve covered the process portfolio managers use to maintain portfolios. But talking about portfolio management and doing it are 2 very different things.
Keeping track of a portfolio can be pretty tricky in practice. That’s why the best portfolio managers use a Work OS (operating system) to get the job done.A Work OS is a cloud-based software platform that teams use to build custom workflow apps. It helps organizations plan, run and track processes, projects and portfolios.
From a portfolio management point-of-view, a Work OS is particularly useful because it lets you instantly update and share important portfolio information with everybody in your team.
And when it comes to Work OS options, nothing beats monday.com. We’re not just tooting our own horn, either. Check out Capterra to see why they’ve given us the top spot when it comes to project portfolio management software.
Anyway, with monday.com you can expect:
- 200+ ready-made templates to get started instantly
- 8 different work views like Kanban, Gantt, map
- 40+ integrations so you can bring data from the tools you already use
- Automations that take seconds to set up and speed-up repetitive tasks
- An apps framework for developers to create their own apps
- iOS and Android apps
You get the picture — it’s pretty awesome.
But portfolio managers can expect even more goodies thanks to monday.com’s Portfolio Management template.
This template gives you a concise and real-time snapshot of the overall profitability and health of your portfolio. It also spells out how much money or resource you’ve got deployed and where (both the historic and current picture).
Features include:
- Columns to record who’s representing the portfolio on a company’s board
- Flexible interaction so that each user can analyze different portfolio data items as and when required
- Quick start-up so that you don’t have to input the portfolio information manually. Automations make onboarding fast and simple.
Sounds like a winner, huh?
Portfolio managers are key to a balanced portfolio
Listen: we get it. Managing a portfolio isn’t easy. Portfolio managers have a huge weight of responsibility on their shoulders, because they’re the ones having to decide what a team is spending its time, money, and energy on.
That’s why every portfolio manager owes it to his or her team to make sure they’re using all the right tools to reduce risk, maximize returns, and help their company find success. And that’s where Work OS tools come in.
With monday.com, you’re not only getting dozens of integrations, collaboration tools, and automations. You’re also getting a portfolio management template specifically designed to help you update, share, and maintain portfolio information to make sure everything is going smoothly.
We want your portfolio to work hard for you, and we can help make it happen.
So what are you waiting for? Start using monday.com to manage your portfolio for free today.
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