Trust Portfolio Management in Trust Department of Selected Universal Banks in Makati City

Abstract

Trust portfolio management involves the selection of right investment in terms of minimum risk and maximum return while considering the financial goals and risk tolerance of the client. Harry Markowitz(1952) introduced the Model Portfolio Theory which is an investment framework for the selection and construction of investment portfolios based on the maximization of expected returns of the portfolio and the simultaneous minimization of investment risk. This study assessed the effectiveness of trust portfolio management in trust departments of selected universal banks in Makati City by gathering data through questionnaire and portfolio managers were the respondents because of their expertise in portfolio management. Different factors considered in portfolio management such as asset allocation, return on investment, sensitivity to economic forecast, and risk associated with investment were assessed to know how portfolio managers execute their investment decisions in discretionary or managed accounts. The results showed that when respondents were grouped according to age, highest educational attainment, job position level, years of handling investment, the respondent’s assessment were the same in Asset Allocation. While when grouped according to years of experience in portfolio management and annual training/seminar attended for the last three years, their assessments differ in all factors. Overall, portfolio managers play a pivotal role in deciding the best investment plan for an individual. It is a must for them to be a good decision makers, fair in dealing with clients and well-versed in managing investment portfolios.