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Re: ethics

Postby shreyas » Fri Sep 07, 2012 3:39 pm

1st Statement:-
Buy side clients are portfolio managers who invest according to investor's mandate, these can be Hedge fund managers, mutual fund managers. These managers hold large positions in various stocks,bonds, and so on. The sell side analyst makes research reports and are associated in the investment banking division. In where the buy side client and sell side analyst are associated with the same company there leads to a conflict a interest as the Portfolio manager may hold long position in a particular stock and the analyst downgrades based on his research report. So the portfolio manager should work in the best interest of his clients but not affecting the independence and objectivity of the sell side analyst by stopping him to share his view with the company.

2nd Statement:-
Portfolio managers may not have all the expertise of investing in all asset classes, sector investing or international investing
Eg: A US portfolio manager may not have expertise of investing in Emerging markets. So in this case a outside manager is hired to handle a section of the portfolio exposed to international investing
So these managers are evaluated based on many criteria. In this case the portfolio manager should be unbiased when selecting outside managers and not get influenced

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