Background of research study
Discuss about the Portfolio Management Of Central Bank Of Oman.
The present research proposal provides an overview on the portfolio management of investors at the Central Bank of Oman. Portfolio management refers to the procedure through which the combination of assets is generally maintained for achieving stated objectives of investment. It indicates the art of making proper decisions about the investment mix as well as policy, allocation of assets for institutions or individual and also balancing risk against their performance. Some of the vital elements of the portfolio management involve- asset allocation, rebalancing and diversification (Brown 2012). Asset allocation mainly seeks in optimizing risk and return profile of the investor by making investment in combination of the financial securities that have les correlation with one another. Diversification is another vital element of investor’s portfolio management that spreads risk as well as return within asset class. Rebalancing is another element of portfolio management refers to the method integrated in returning portfolio to actual target allocation at one year intervals.
When a particular investor decides to make investment in funds or stocks, then they select the shares of the listed enterprises (Andritzky 2012). These investments generally have various levels of return as well as risk. As there are various options of investment, the chances become higher for these investors to gain success if proper strategy is applied for selecting among these investments. Moreover, investors get better chance if they implement different strategies such that each one might fit in particular economic situation. The investors also specify which investment strategies are appropriate for the situation as well as investment goals (Kevin 2015). The portfolio management of investors is generally different from that of institutional investor.
The Central Bank of Oman is the country’s central bank that is mainly responsible for maintaining as well as promoting financial as well as monetary stability in Sultanate of Oman. It also fosters progressive financial system in the nation that is helpful to its economic growth. The central Bank of Oman is the single regulator of financial as well as banking services sector in the nation. This bank performs several functions as mandated by the Banking laws 1974, which are given below-
- ?Formulates as well as manages monetary policy for achieving variety of target involving stable price, employment and growth (Cbo.gov.om 2018).
- Regulates, licenses and supervises commercial banks, money exchange enterprises and financial as well as leasing enterprises
- It act as banker to banks
- It acts as banker to this nation’s government
- It manages liquidity in this nation banking system
The Central Bank of Oman held the foreign exchange reserves, which is the financial asset denominated in international currency. The main objectives of this bank in administering foreign reserves are to stabilize the currency and support policy of exchange rate. In fact, the FXRAP(foreign Exchange Reserve Assets Portfolio)is managed by the investment officials and Treasury in Compliance with Investment Guidelines, Banking law, Directives of RAMC(Reserve Asset Management Committee)and IC(Investment Committee)aims to meet the following objectives-
- Preservation of capital
- Maintenance of sufficient reserves as well as liquidity for ensuring sustainability of currency.
- Optimal mix of risk and return
Introduction about the Central Bank of Oman
Moreover, a certain portion of FXRAP might be earmarked for the placement with more than one fund manager with approval of Board of Governors.
For most of the central Banks involving Central Bank of Oman, portfolio of the assets is mainly mobilized through external reserves management function as well as intervention (sale or purchase of securities) in domestic financial market for controlling liquidity in the economy. The portfolio managers of the Central Bank of Oman have been making an effort to adapt with this approach in order to manage funds of their individual investors (Chandra 2017). The portfolio managers of the Central Bank of Oman vary highly in terms of personality of investors. However, the portfolio managers mainly focuses on the point that their investment purpose is to gain higher return within risk budget constraint while fulfilling secondary needs that highlights their investors personality. It has been evident from few studies that portfolio managers are also implementing effective strategy for managing portfolio of investors at Central Bank of Oman.
The key terms used in this research study are portfolio strategy, optimization of risk and return, asset allocation, rebalancing and diversification.
The main objectives of the research are-
- To identify whether portfolio management of investors at Central Bank of Oman helps investor to attain capital growth
- To recognize whether portfolio management of investors facilitates them to give consistent returns
- To see whether this helps the investors to provide security of the principal amount invested
- To identify whether it provides the investors opportunity to diversify risk
- To examine whether the investors obtain marketability of the securities they invests in
The research questions for this specific research study are given as under-
- What is the significance of portfolio management of investors at Central Bank of Oman?
- What are the strategies used for portfolio management of investors at Central Bank of Oman?
- Whether the investor’s portfolio management procedure is effective at the Central Bank of Oman?
This particular research project provides huge scope to the investors to know whether the whole procedure at the Central Bank of Oman can help them to gain consistent returns from their investment (Ekeland, Mbodji and Pirvu 2012). In addition to this, this research study will also aid the portfolio managers to understand their lack in the management procedure and improve it accordingly. This study will also help the investors to have an overview of the investment portfolio at the Central Bank of Oman.
The research hypothesis for this study will be-
H0: The portfolio management of investors at central Bank of Oman helps the investors to reduce their risk in investment.
H1:The portfolio management of investors at Central Bank of Oman do not help the investors to reduce their risk in investment.
In this research study, the researcher will conduct quantitative research in order to gain knowledge about the research topic that aligns with the portfolio management of investors at the Central Bank of Oman. The researcher will be using different methods as well as tools for conducting this specific research. These methods will involve – research philosophy, method of data collection and sampling design or technique (Cooper, Schindler and Sun 2006). This section will also provide an overview on the sampling size, limitations and ethical issues of the research.
Key terms used
Research philosophy usually assists in categorizing the principle of research by using different aspect of research study. Research philosophy is generally of four types such as- pragmatism, realism, interpretivism and realism. Positivism signifies collection of data that is usually attained through observations. This philosophy involves the present theories that aids in developing hypothesis testing during the research study. Moreover, it also utilizes the facts for validating the data.
Realism philosophy mainly depends upon those ideas which not dependent on reality. In addition to this, few facet of reality is mainly independent of beliefs as well as perceptions.
Pragmatism philosophy refers to the approach which facilitates in assessing the theories that is utilized in research study in terms of practical application.
Interpretivsim philosophy refers to the type of approach which usually combats with positivism philosophy. This kind of philosophy is associated with idealism and is adopted by using qualitative research. Moreover, in this philosophy the researcher assesses elements as well as combines individual interest (Panneerselvam 2014).
In this particular research paper, positivism research philosophy will be used for analyzing the significance of portfolio management of investors at the Central Bank of Oman. This philosophy will be applied in this research study as it uses the facts to validate the data.
Sampling Design indicates the sampling technique which involves few components of total population in a sample. Several methods are applied for doing sampling design such as- cluster sampling, simple random sampling, stratified sampling and so on. Sampling design is mainly applied to select the subsection of elements from target population for gathering accurate information about the research study. Moreover, the information collected also helps to know about the total population.
For this research study, simple random sampling will be used as the samples are to be selected from huge population, thereby all investors will be provided equal opportunity to be chosen. Apart from this, it will also help the researcher to gather information from the investors in easier way.
Sample size mainly determines act of choosing the respondents in order to include in statistical sample. This is one of the vital attributes in research study as it aids the researcher to draw conclusion about the target population (Flick 2015). There are different methods that are applied for selecting sample size such as- experience, confidence level, target variance and so on. For this research study, sample size of 50 investors will be taken from the huge population in order to gather accurate outcome of the research study.
Objectives of the research
Sampling technique is classified into two types, which includes- probability and non- probability sampling. Probability sampling includes random unit selection from huge population where each unit has equal chance of getting chosen. On the other hand, non- probability sampling indicates non- random procedure of unit selection from total population. In this research study, probability sampling technique will be used to attain precise results for completing this project.
The information which the researcher gathers to disclose legitimacy of research mainly relies on collection of correct data. Data gathering method is of two types- primary and secondary. Primary data is gathered from observations and surveys whereas secondary data is gathered from website, newspapers, journals and so on. Moreover, secondary data has been considered as unreliable in comparison with primary data since secondary data can be inadequate at times. Primary data can be categorized into- quantitative and qualitative. Quantitative data are assessed by using statistical inferences (Neuman 2015). Quantitative data collection needs various processes including surveys, experiments. On the other hand, qualitative data are categorized based on characteristics and properties. Moreover, these types of data are gathered from observations, interviews.
In this research study, primary data will be used to conduct the research study that aligns with portfolio management of investors in the Central Bank of Oman. The primary data will be collected by utilizing survey questionnaire. A questionnaire will be prepared and given to 50 investors in order to attain genuine outcome. Moreover, quantitative data has been used over the qualitative data since the response gathered from the investors will be noteworthy(DeFusco et al. 2015).
There are few limitations of this research study, which are given below-
- It will take longer time period for conducting this research study
- There might be ambiguity in the nature of investors while taking responses
- This research can be difficult if the investors do not disclose the facts due to fear of privacy
Every researcher should abide by rules or principles of research. Ethical issues must be taken into account while conducting the research study. For this research, the researcher will maintain confidentiality of information since it might reveal the investor’s name who wants to stay unidentified. Moreover, the researcher will take the investors consent during the survey questionnaire process. In fact, the emotions of the investors will also be considered while doing this research.
Conclusion
From the above discussion, it can be concluded that now- a- days portfolio management of investors helps the investors to minimize the risk and attain consistent returns from their investment. Moreover, the portfolio managers face huge difficulties in managing their investor’s portfolio. Thus, proper implementation of portfolio strategy aids the manager to administer the portfolio of investors in better way.
References
Andritzky, M.J.R., 2012. Government bonds and their investors: What are the facts and do they matter? (No. 12-158). International Monetary Fund.
Brown, R., 2012. Analysis of investments & management of portfolios.
Cbo.gov.om. (2018). Central Bank of Oman – Reserve Management. [online] Available at: https://cbo.gov.om/Pages/ReserveManagement.aspx [Accessed 24 May 2018].
Chandra, P., 2017. Investment analysis and portfolio management. McGraw-Hill Education.
Cooper, D.R., Schindler, P.S. and Sun, J., 2006. Business research methods (Vol. 9). New York: McGraw-Hill Irwin.
DeFusco, R.A., McLeavey, D.W., Pinto, J.E., Anson, M.J. and Runkle, D.E., 2015. Quantitative investment analysis. John Wiley & Sons.
Ekeland, I., Mbodji, O. and Pirvu, T.A., 2012. Time-consistent portfolio management. SIAM Journal on Financial Mathematics, 3(1), pp.1-32.
Flick, U., 2015. Introducing research methodology: A beginner’s guide to doing a research project. Sage.
Kevin, S., 2015. Security analysis and portfolio management. PHI Learning Pvt. Ltd..
Nardi, P.M., 2018. Doing survey research: A guide to quantitative methods. Routledge.
Neuman, W.L., 2013. Social research methods: Qualitative and quantitative approaches. Pearson education.
Panneerselvam, R., 2014. Research methodology. PHI Learning Pvt. Ltd..
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