Portfolio Construction
Portfolio Construction is the process of building and managing investment portfolios for clients. It's like creating a customized recipe for investing money, where professionals decide what mix of stocks, bonds, and other investments will best help reach a client's financial goals. Think of it as similar to putting together a balanced meal plan, but with investments instead of food groups. Related terms include "Asset Allocation" and "Investment Management." Portfolio managers use this approach to make sure investments are properly balanced and aligned with how much risk a client is willing to take.
Examples in Resumes
Managed $500M in client assets using Portfolio Construction techniques
Developed Portfolio Construction models to optimize risk-adjusted returns
Led Portfolio Construction and Asset Allocation strategies for high-net-worth clients
Typical job title: "Portfolio Managers"
Also try searching for:
Where to Find Portfolio Managers
Professional Organizations
Job Boards
Professional Networks
Example Interview Questions
Senior Level Questions
Q: How do you approach building a portfolio for a client with complex requirements?
Expected Answer: Should explain their process of understanding client goals, risk tolerance, and constraints, then detail how they would create a diversified portfolio strategy that meets these needs while considering market conditions.
Q: How do you handle portfolio rebalancing during market volatility?
Expected Answer: Should discuss their approach to maintaining target allocations, managing risk, and making strategic adjustments while keeping client objectives in mind. Should mention communication with clients during volatile periods.
Mid Level Questions
Q: What factors do you consider when selecting investments for a portfolio?
Expected Answer: Should discuss how they evaluate investment options based on risk/return profiles, costs, liquidity needs, and how these align with client goals and market conditions.
Q: How do you measure and report portfolio performance?
Expected Answer: Should explain their approach to tracking investment results, comparing against benchmarks, and communicating performance to clients in an understandable way.
Junior Level Questions
Q: What is diversification and why is it important?
Expected Answer: Should explain how spreading investments across different types of assets helps reduce risk, using simple examples to demonstrate understanding of basic portfolio management principles.
Q: What are the main asset classes used in portfolio construction?
Expected Answer: Should be able to describe basic investment types like stocks, bonds, and cash, and explain their general characteristics and roles in a portfolio.
Experience Level Indicators
Junior (0-2 years)
- Understanding of basic investment concepts
- Knowledge of main asset classes
- Ability to use financial software
- Basic performance reporting
Mid (2-5 years)
- Portfolio analysis and rebalancing
- Investment selection
- Client relationship management
- Risk management
Senior (5+ years)
- Advanced portfolio strategy development
- Team leadership
- Complex client portfolio management
- Investment policy creation
Red Flags to Watch For
- No understanding of basic investment principles
- Lack of knowledge about risk management
- Poor communication skills
- No experience with portfolio analysis tools
- Unable to explain investment decisions clearly
