Direct portfolio other investments. Direct and portfolio investments. What is portfolio investment

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on discipline: "Foreign investments"

Topic: Direct and portfolio investments

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Introduction

1. The economic essence and forms of investment

2. Internal and external sources of investment

3. Direct investments

4. Portfolio investment

5. Principles of investment portfolio formation

Conclusion

Bibliography

INTRODUCTION

Currently, the Russian economy is on the rise: budget surplus, lower inflation, strengthening of the ruble, increased business activity in the economy. However, the structure of the Russian economy, in which the main emphasis is on the extractive industry, is not undergoing significant changes. According to experts, almost complete wear and tear of fixed assets of many Russian enterprises will occur in 2005-2007. Accordingly, the modernization of enterprises is a key factor in the successful development of the Russian economy in the coming years.

In this regard, the main and most urgent task of state policy in the field of modernization of the country's industry is to create conditions for a dynamic investment process. As an example, consider the countries that modernized their economies in a relatively short time after the Second World War (Japan and some Western European states). Their distinguishing feature was a very high share of investments in the gross national product. Investment stimulation for the modernization of the industrial structure was carried out in the United States both in the early 60s and in the 80s.

The problem of investment in Russia is further complicated by the fact that many Russian and foreign investors remember the aftermath of the 1998 financial crisis. Until now, many foreign investors who left the Russian market after the 1998 crisis never came back. In this regard, government agencies have recently been paying special attention to the investment climate in Russia, which reflects the risks and efficiency of investment.

The characteristic features of a market economy are the dynamism of the economic environment, a constant change in external factors that determine the policy of an enterprise, a change in competitive prices for products, fluctuations in exchange rates, inflationary depreciation of an economic entity's funds, the emergence of competitors providing products that are identical or superior in quality. To maintain the competitiveness of the enterprise and its market share, the enterprise constantly needs to reconstruct production facilities, update the existing material and technical base, increase the volume of production activities, and develop new types of activities.

To carry out the reconstruction of old and purchase new equipment, the company needs a large investment of money, which the company, most often, is not available due to the lack of free funds. To attract the necessary funds, an enterprise must pursue an aggressive investment policy.

Investment activity, to one degree or another, is inherent in any enterprise. With a large selection of investment types, an enterprise is constantly faced with the task of choosing an investment solution. Making an investment decision is impossible without taking into account the following factors: the type of investment, the cost of the investment project, the multiplicity of available projects, the limited financial resources available for investment, the risk associated with making a particular decision, etc.

Investments - cash, securities, other property, including property rights, other rights that have a monetary value, invested in objects of entrepreneurial and (or) other activities in order to obtain profit and (or) achieve another useful effect.

The significance of a comprehensive study of state regulation of investment activity is determined by the fact that investment management is the most important means of structural transformation of the production and social potential of Russia, increasing its efficiency, and pursuing effective countercyclical and social policies.

The main purpose of this given essay is to disclose the essence of investment. The essay will describe the concepts and essence of investment, and the topic of sources of investment will also be disclosed. Studied direct and portfolio investments and their composition and functions.

1. ECONOMIC ESSENCE AND FORMS OF INVESTMENT

The concept of "investment" is quite multifaceted. In general, investment in the economic literature refers to any current activity that increases the future ability of the economy to produce output. Accordingly, the investment of funds and other capital in the implementation of various economic projects with the aim of their subsequent increase is called investment. Legal entities and individuals making investment investments are investors. The economic motive for investing funds is to receive income from their investment. In other words, investments include only those investments that are aimed at making a profit, increasing the volume of capital. Consumer investments, for example, in the purchase of household appliances, automobiles for household personal use and other goods, in terms of their economic content, are not considered investments. In world practice, there are three main forms of investment:

· Real (capital-forming) investments;

· portfolio investments;

· Investments in intangible assets.

Real (capital-forming) investments are investments in real assets, i.e. in the creation of new, reconstruction and technical re-equipment of existing enterprises, industries, technological lines, various objects of production and social services in order to increase fixed assets or working assets.

Portfolio investments are investments in the purchase of securities of the state, enterprises, banks, investment funds, insurance and other companies. In this case, investors increase their not production, but financial capital, receiving income from the ownership of securities. At the same time, the real investments of funds spent on the purchase of securities are made by enterprises and organizations that issue these securities.

Investments in intangible assets include investments aimed at acquiring licenses, patents for inventions, certificates for new technologies, trademarks, certificates for products and production technologies and other intangible assets.

Investments in the economic literature are usually classified according to the following main characteristics:

1. By the nature of participation in investment:

a) direct investment - direct investment of funds by an investor in investment objects (this type of investment is carried out mainly by trained investors who have sufficiently accurate information about the investment object and are well acquainted with the investment mechanism);

b) indirect investment - investment mediated by other persons (investment or financial intermediaries). These investments are made by investors who do not have sufficient qualifications to select investment objects and further manage them. In this case, they purchase securities issued by investment or other financial intermediaries (for example, investment certificates of investment funds and investment companies), and the latter, the investment funds collected in this way, are placed at their discretion - they choose the most effective investment objects, participate in their management , and the income received is then distributed among their clients.

2. By the investment period:

a) short-term investments - capital investment for a period not exceeding one year (for example, in fast-moving commercial projects, short-term deposits, etc.);

b) long-term investments - capital investment for a period of more than one year (as a rule, in large and long-term investment projects). In the practice of investment companies and banks, long-term investments are detailed as follows: up to 2 years, from 2 to 3 years, from 3 to 5 years, more than 5 years.

3. By the form of ownership:

a) private investments - investments made by citizens, as well as by non-state enterprises and organizations;

b) state investments - investments made by central and local authorities and administration at the expense of budgets, extra-budgetary funds, as well as state enterprises at the expense of their own and borrowed funds;

c) foreign investments - investments made by foreign citizens, legal entities and states;

d) joint investments - investments made by persons of a given country and foreign states.

4. On a regional basis:

a) internal investment - an investment in investment objects located within the borders of a given country;

b) investments abroad - investment in investment objects located outside the country.

2. INTERNAL AND EXTERNAL SOURCES OF INVESTMENT

The main sources of investment are shown in Fig. 1:

Figure 1: Sources of funds for investment

Investments, especially real (capital-forming) investments, can be carried out both at the expense of internal (national) and external (foreign) sources. Both sources of investment play a significant role in enhancing the attraction of capital and the development of the country's economy. First, let's look at internal sources of investment. On a national scale, the overall level of savings depends on the level of savings of the population, organizations and government. Thus, the population can set aside certain funds for the future, companies can reinvest a part of the profits received from their activities, and the government can accumulate funds by exceeding budget revenues over expenditures. At the same time, the volume of savings directly affects the volume of investments in the country, since part of the funds is directed to consumption, and the rest to investment. Based on this, the following main internal sources of investment can be identified:

a) profit

Businesses and organizations often use profit as a source of investment. Part of the profits earned is directed by them to business development, production expansion and the introduction of new technologies. It is obvious that those enterprises and organizations that do not allocate funds for these purposes ultimately become uncompetitive. Lack of financial resources, including for business development, sometimes enterprises try to make up for by raising prices for their products. However, it should be borne in mind that an increase in prices for their products causes a decrease in demand for them, which leads to problems with the sale of products, and, as a consequence, to a decline in production.

b) bank loan

Bank lending in many developed countries is one of the main sources of investment. At the same time, a special role is played by long-term lending, since in this case the load on the borrower is not high and the company has time to “spin up” the business. However, the role of bank lending as a source of investment depends on the development of the banking system and economic stability in the country. There is no doubt that the instability in the country leads to the reluctance of banks to issue long-term loans and finance investment projects. In general, bank lending contributes to a gradual increase in production and, as a result, to the overall recovery of the country's economy.

c) issue of securities

The issue of securities is gradually becoming a source of investment in Russia. At the same time, in developed countries it is the issue of securities that is one of the main sources of financing for investment projects. In order to receive funds, enterprises can issue both shares and bonds. At the same time, buyers of securities, as a rule, can be any legal entities and individuals with free funds. It is they who in this case act as investors, providing their own funds in exchange for the company's securities.

d) budget financing

Currently, there is a state budget surplus in Russia. Thanks to this, it is possible to implement part of the investment projects at the expense of centralized sources of financing. At the same time, both irrevocable budget financing of nationally significant projects and lending to potentially profitable projects can be used. State investments are usually directed to the implementation of a limited number of regional programs, the creation of especially effective structure-forming facilities, the maintenance of the federal infrastructure, etc. At the present stage of development of the Russian economy, the priority areas in terms of budget financing are the stimulation of industrial development and the maintenance of scientific and production potential.

e) depreciation charges

Depreciation deductions are aimed at restoring the means of production that are worn out in the process of being used in the production of goods. However, at present in Russia depreciation charges are depreciating due to inflation, which significantly reduces their role as sources of investment. The financial resources received by the national economy from internal sources of investment are not always sufficient for the successful economic development of the country. This is especially true for countries with developing or transitional economies.

investment foreign portfolio regulation

3. DIRECT INVESTMENT

Direct investments - investments made directly in the production and sale of a specific type of product; investments that ensure the possession of a controlling stake. Direct investment is an investment in the construction of economic facilities abroad. They give the right to complete control over the property. The form of income generation is entrepreneurial profit. Currently prevail over portfolio. They give the right to create their own production abroad, to be included in the economy of other countries, to enjoy benefits as a foreign owner. Direct investments - investments in the authorized capital of an economic entity in order to generate income and obtain the rights to participate in the management of this economic entity.

3.1 Foreign direct investment

Foreign direct investment has a significant impact on the entire world economy, as well as its core - international business.

From an economic point of view, from the standpoint of firms, these are: securing a stable market for themselves directly or as a springboard for entering the world markets of "third countries"; the formation of its own "internal market", certain sectors of which are located in individual countries; inclusion of their interest in interstate relations at the regional and broader international level. Direct investment implies foreign control over 10 percent or more of the common stock, or an "effective voice" in the management of an enterprise. For some, this is only related to property, a share in the share capital, which can be obtained through: the acquisition of shares abroad; reinvestment of profits; intercompany loans or intercompany debt.

There is and is actively developing, in addition, such various non-shareholder forms as subcontracts, management agreements, franchising, licensing transactions, product sharing, etc.

4. PORTFOLIO INVESTMENT

Portfolio investments - investments in long-term securities formed in the form of a securities portfolio; small investments that cannot provide their owner with control over the enterprise. Portfolio investments are investments in securities, the purchase of shares of enterprises in another country. Dominated in countries where the political economic environment is unstable. They do not give the right to control property, but provide influence on the enterprise and receive income in the form of dividends. Portfolio investment is practically capital invested in stocks, bonds, bills of exchange and other types of securities. The emergence and circulation of finance capital is closely related to the functioning of real (i.e., productive) capital.

Thus, investments according to the purpose of capital investment are divided into:

1) real investments;

2) portfolio investments.

Investments are classified by type of ownership. The structure of investments by forms is understood as their distribution according to the criterion to whom these investments belong. By forms of ownership, investments are subdivided into:

1) state;

2) municipal;

3) private (investments by citizens);

4) public associations (consumer cooperatives, etc.);

5) mixed forms (without foreign capital);

6) foreign;

7) mixed form with foreign participation.

4.1 Portfolio foreign investment

Portfolio foreign investment is a form of capital outflow by investing in the securities of foreign enterprises, which does not give investors the opportunity to directly control their activities. The share of portfolio investments in the total volume of foreign investments in the early 2000s was 35 - 40%. The total size of portfolio foreign investments in developing countries alone in 2004 amounted to 86.6 billion dollars.

It is often difficult to draw a clear line between direct and portfolio overseas investment. Portfolio investments are associated with the formation of a portfolio and represent the acquisition of securities and other assets. Portfolio - a set of various investment values brought together, serving as a tool to achieve a specific investment goal of the investor. The portfolio may include securities of the same type (stocks) or different investment values (stocks, bonds, savings and deposit certificates, pledge certificates, insurance policy, etc.).

Portfolio investments are associated with the formation of a portfolio and represent the acquisition of securities and other assets. Portfolio - a set of various investment values collected together, serving as a tool to achieve a specific investment goal of the investor. The portfolio may include securities of the same type (stocks) or different investment values (stocks, bonds, savings and deposit certificates, pledge certificates, insurance policy, etc.).

5. PRINCIPLES OF FORMING AN INVESTMENT PORTFOLIO

The principles of forming an investment portfolio are the safety and profitability of investments, their growth, and the liquidity of investments. Let's consider in more detail the concept of liquidity. The liquidity of any financial resource is understood as its ability to participate in the immediate purchase of goods (works, services). The liquidity of investment values is their ability to quickly and without loss in price turn into cash.

When forming an investment portfolio, one should be guided by the following considerations:

safety of investments (invulnerability of investments from shocks in the investment capital market),

stability of income generation,

liquidity of investments, that is, their ability to participate in the immediate purchase of goods (works, services), or quickly and without loss in price turn into cash.

None of the investment values have all of the properties listed above. Therefore, a compromise is inevitable. If the security is reliable, then the yield will be low, as those who prefer security will bid high and undercut the yield. The main goal in the formation of a portfolio is to achieve the most optimal combination of risk and return for the investor. In other words, the appropriate set of investment instruments is designed to reduce the depositor's risk to a minimum and at the same time increase his income to a maximum.

To effectively manage a portfolio of investments, a financial manager must use the following principles, which are widely used in world practice when forming an investment portfolio:

The success of investments mainly depends on the correct distribution of funds by types of assets by 94% by the choice of the type of investment instruments used (shares of large companies, short-term treasury bills, long-term bonds: etc.); by 4% by the choice of specific securities of a given type, by 2% by the assessment of the moment of purchase of the securities. This is due to the fact that securities of the same type are highly correlated, i.e. if a certain industry is experiencing a recession, then the investor's loss is not very dependent on whether securities of a particular company prevail in his portfolio.

The risk of investing in a certain type of securities is determined by the probability of profit deviation from the expected value. The predicted profit value can be determined based on the processing of statistical data on the dynamics of profit from investments in these securities in the past, and the risk - as the standard deviation from the expected profit.

The total return and risk of an investment portfolio can change by varying its structure. There are various programs that allow you to design the desired proportion of assets of various types, for example, minimizing risk at a given level of expected profit or maximizing profit at a given level of risk, etc.

The estimates used to compile an investment portfolio are probabilistic in nature. The construction of a portfolio in accordance with the requirements of the classical theory is possible only if there are a number of factors: an established securities market, a certain period of its functioning, market statistics, etc.

The investment portfolio is formed in several stages:

formulation of the goals of its creation and determination of their priority (in particular, what is more important - regular receipt of dividends or growth in the value of assets), setting the levels of risk, minimum profit, deviation from the expected profit, etc .;

the choice of a financial company (this can be a domestic or foreign company; when making a decision, a number of criteria can be used: the reputation of the company, its availability, the types of portfolios offered by the company, their profitability, the types of investment instruments used, etc.);

selection of the bank that will maintain the investment account.

The main question in portfolio management is how to determine the proportions between securities with different properties. Thus, the basic principles of building a classic conservative (low-risk) portfolio are: the principle of conservatism, the principle of diversification and the principle of sufficient liquidity.

The principle of conservatism. The ratio between highly safe and risky shares is maintained in such a way that possible losses from a risky share are overwhelmingly covered by income from safe assets.

The investment risk, therefore, does not consist in the loss of part of the principal amount, but only in the receipt of insufficiently high income.

Naturally, without risking, one cannot count on any super-high incomes. However, practice shows that the overwhelming majority of clients are satisfied with incomes ranging from one to two deposit rates of banks of the highest reliability category, and do not want an increase in income due to a higher degree of risk.

Diversification principle. Diversification of investments is the main principle of portfolio investment. The idea of this principle is well reflected in the old English saying: do not put all eggs in one basket - "do not put all eggs in one basket."

In our language it sounds - do not invest all your money in one paper, no matter how profitable this investment may seem to you. Only such restraint will avoid catastrophic damage in the event of a mistake.

Diversification reduces risk due to the fact that possible low returns on some securities will be offset by high returns on other securities. Risk minimization is achieved by including in the securities portfolio a wide range of industries that are not closely related to each other in order to avoid synchronicity of cyclical fluctuations in their business activity. The optimal value is from 8 to 20 different types of securities.

The spraying of attachments occurs both between those active segments that we mentioned, and within them. For government short-term bonds and treasury bonds, we are talking about diversification between securities of different series, for corporate securities - between shares of different issuers. Simplified diversification consists simply of dividing funds among several securities without serious analysis.

A sufficient amount of funds in the portfolio allows us to take the next step - to carry out the so-called sectoral and regional diversification.

The principle of sectoral diversification is to prevent the portfolio from skewing towards the securities of companies in the same sector. The fact is that a cataclysm can befall the industry as a whole. For example, a fall in oil prices on the world market can lead to a simultaneous fall in the share prices of all refineries, and the fact that your investments will be distributed among various enterprises in this industry will not help you.

The same applies to enterprises in the same region. A simultaneous decline in stock prices may occur due to political instability, strikes, natural disasters, the introduction of new transport routes bypassing the region, etc. Imagine, for example, that in October 1994 you invested all your funds in the shares of various enterprises in Chechnya.

An even deeper analysis is possible with the use of a serious mathematical apparatus. Statistical studies show that many stocks rise or fall in price, as a rule, at the same time, although there are no visible connections between them, such as belonging to the same industry or region. Changes in the prices of other pairs of securities, on the contrary, are in antiphase. Naturally, diversification between the second pair of securities is much more preferable. Correlation analysis methods allow, exploiting this idea, to find the optimal balance between various securities in a portfolio.

The principle of sufficient liquidity. It consists in maintaining the share of fast-moving assets in the portfolio at a level sufficient to carry out unexpectedly high-yield transactions and meet the needs of clients in cash. Practice shows that it is more profitable to keep a certain part of the funds in more liquid (even less profitable) securities, but to be able to quickly respond to changes in market conditions and certain lucrative offers. In addition, agreements with many clients simply oblige to keep part of their funds in liquid form.

Portfolio investment income is the gross profit for the entire set of securities included in a given portfolio, taking into account the risk. There is a problem of quantitative correspondence between profit and risk, which must be resolved promptly in order to continuously improve the structure of already formed portfolios and form new ones, in accordance with the wishes of investors. It must be said that the indicated problem is one of those, for the solution of which it is possible to find a general scheme of solution rather quickly, but which are practically not completely solved.

Considering the issue of creating a portfolio, an investor must determine for himself the parameters that he will be guided by:

you need to choose the optimal type of portfolio

assess the combination of risk and return of the portfolio that is acceptable for oneself and, accordingly, determine the share of the portfolio of securities with different levels of risk and return

determine the initial composition of the portfolio

choose a scheme for further portfolio management

CONCLUSION

The investment process plays an important role in the economy of any country. Investment largely determines the economic growth of the state, employment of the population and constitutes an essential element of the basis on which the economic development of society is based. Therefore, the problem associated with the effective implementation of investment deserves serious attention. The importance of economic analysis for the planning and implementation of investment activities can hardly be overestimated. At the same time, a preliminary analysis is of particular importance, which is carried out at the stage of developing investment projects and contributes to the adoption of reasonable and justified management decisions.

The main direction of the preliminary analysis is to determine the indicators of the possible economic efficiency of investments, i.e. return on capital investments that are envisaged for the project. As a rule, the calculations take into account the time aspect of the value of money.

As a result, it should be noted that at present, investments should primarily be directed to the development of production, to invest in production assets and other assets. Therefore, while implementing the strategy of economic growth, the Government must create the conditions and management mechanisms necessary to offer long-term “cheap money” for the development of production and the economy as a whole.

The emerging Russian innovation system should not only ensure the formation of a knowledge-based economy, but also facilitate Russia's participation as an equal partner in the global innovation process. Despite the fact that until now innovative activity has not yet become the basis of the country's economic development, over the past decade, real prerequisites have been created for the transition to an innovative way of development. Based on the analysis of the factors affecting the investment climate and the current political and economic state of Russia, it seems possible to carry out the following measures to improve the investment climate in Russia: ensuring political stability and consistency of reforms in the country, taking measures to further reduce inflation, tax incentives for investment activities, developing the stock market and stimulating the preservation of Russian capital in the country.

In this essay, we examined what investments are and what types of them are found in the economy. We learned the essence of investment, sources of investment and their formation. The most detailed were the direct investments and their value, and portfolio with their detailed description of the concept, composition and use of the portfolio.

In conclusion, I would like to note that investment is a complex mechanism that can significantly increase the economic potential of the state. Therefore, the success achieved in this area will largely predetermine the successful implementation of socio-economic reforms and the economic development of the country as a whole.

BIBLIOGRAPHY

1. Blokhina T. Institutional investment market: state and prospects // Economic Issues, 2003, No. 1.

2. The Big Dictionary of Economics. M .: Book world. 2008 - 860.

3. Balabanov IT / Financial management: Textbook. allowance - M .: Finance and statistics, 2000.

4. Birman G., Schmidt S. Economic analysis of investment projects. - M .: Banks and exchanges, UNITI, 2001.

5. Ramilova A. Foreign direct investment as an object of state regulation // Russian economic journal, 2003, no. 7.

6. Serov V.M., Ivanovsky V.S., Kozlovsky A.V. Investment Management: Textbook for Universities / GUU - M .: ZAO Finstatinform, 2002 - 175 p.

7. Urinson J. “On measures to revive the investment process in Russia” // Economic Issues, 2001, no.

8. Cherkasov V.E. International investments. Educational and practical guide. - M .: Delo, 2001 .-- 160 p. Sharpe W., Alexander G., Bailey J. Investments: trans. from English - M .: INFRA-M, 1999 - 1028 p.

9. Khodov L. On the differentiation of direct and portfolio investments. - M., RER, No. 2, 2006.

10. Kornyukhina N.B. Sources of investment resources in Russia. // ECO.- 2001.- No. 1.- P. 76.

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basic information

What is "direct investment"? Any investor has come across this concept, but not everyone understands its essence.

"Direct" investments are those in which the investor becomes the owner of at least 10% of the company's authorized capital or buys a controlling stake (51%). Thus, by investing money, you can enter into the management of a ready-made (fully formed) business.

Direct investments are divided into two large groups:

in the equity capital of foreign companies (the so-called "foreign investment");
into the country's economy.

Direct investments used by large corporations to create their branches outside the country in which the central office is located. Very often, the creation of branches occurs through the absorption of a similar, already operating business. It is enough for an investor to acquire a controlling stake and obtain the right to manage the company.

Large monopolies are interested in buying shares of small firms that are engaged in similar activities.

There are countries where competition in some areas of production is too high, for example, in China there are a lot of small tablet assembly companies.

If there is any investor willing to assemble tablets in China, then it would be advisable to acquire controlling stakes in already functioning companies.

Direct investment is aimed at working in the long term, which is why it is often called “strategic investment”.

Structure of foreign investment inflows by type

Sometimes, for direct investment, special funds are created that accumulate large amounts of capital in order to further "capture" the monopoly in the market. Such funds have been functioning for at least 10 years. After the closure of the fund, all investors receive a payment in the amount of their investment plus a percentage of the income from the sale of assets that were resold by the fund.

Novice investors, due to ignorance or unwillingness to spend a lot of effort and time, use portfolio investing.

Portfolio investment- This is a passive investment of funds in order to obtain short-term and instant benefits. Portfolio investors invest in securities, bonds or stocks of different companies, which form a portfolio of investments or securities, hence the name "portfolio investment".

In fact, such investors acquire a part of the company without any interference in its activities.

Portfolio investments do not provide for the management of the company by the investors.

However, sometimes there are exceptions, for example, when the company is too large and its shares are divided among many small investors. The management of such a company is carried out by an association of investors or the largest of them.

Portfolio investment has some advantages over direct investment.

On the one hand, it is beneficial for the company itself, since its shares are owned by a large number of investors, and a controlling stake is in the hands of one investor.

On the other hand, the portfolio investor also receives a certain benefit, because he does not have to take on the responsibilities of managing the company.

The second positive aspect of portfolio investing is the minimal risk of losing money. The depositor's funds are diversified (distributed) into many parts and invested in the statutory capitals of several companies.

Portfolio investment consists of a company's liabilities and assets. Asset purchase transactions include trading in securities (stocks, certificates, bonds) of large foreign firms.

Financial liabilities can be government loans in the form of cash that the investor has.

Direct and portfolio foreign investments have a certain structure. Private equity investments are divided into four main categories:

investments in fixed assets (new);
creation of fixed assets (PF) through joint investment;
investments in the modernization of the processing plant;
investments with the aim of acquiring 51% of shares.

Portfolio investment consists of deposits in securities and lending to businesses or the government.

According to experts in the field of investment, today direct investment is one of the most developing types of earnings. Although direct investments are more risky than portfolio investments, however, they bring much more profit.

The difference between direct and portfolio investments

The fundamental difference between direct and portfolio investments is their ability to influence the company's activities.

The division of investments into two groups (direct and portfolio) is, of course, a convention.

Direct investments allow you to manage activities, portfolio investments do not.

Sometimes even 10% of the authorized capital is enough to manage a large enterprise (recall the example above, when a corporation is divided among many small investors).

Portfolio investment in the status capital of the company allows you to have a stable passive income, in fact, without interfering with the activities of the company. and planning strategies, as well as the calculation of the return on investment.

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Who can invest?

Individuals and legal entities that use their own or borrowed funds can invest in direct or portfolio investments.

In deciding on the choice of the type of investment, the availability of own funds and the goal pursued by the investor play an important role.

For example, if funds are invested to preserve capital and increase it, then portfolio investments are used.

In addition, small investors also prefer portfolio deposits.

If the investor's task is to obtain the right to manage a business, then a direct type of investment should be chosen.

Before deciding on the choice of the type of investment, it is necessary to analyze the effectiveness of investments.

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Video on the topic

One investor decided to retire after 15 years. Every month he invests 20 thousand rubles.

The purpose of the experiment is to live off dividends in the amount of 50 thousand rubles a month. A public portfolio will allow you to follow the movements and, if desired, join it. @dividendslife

Direct and portfolio investments.

The main forms of international capital migration are the import and export of entrepreneurial and loan capital.

Capital export- this is the export of value with the aim of increasing it abroad. In the 1960s - 1990s. the export of capital grew faster than production and foreign trade, and was the most powerful factor in internationalization in the world economy. Distinguish between the export of entrepreneurial and loan capital.

The export of entrepreneurial capital is a long-term foreign investment leading to the creation abroad of branches, subsidiaries (firms) and mixed (joint) ventures.

In the world capital market, the largest share is occupied by highly developed countries, and above all by their large companies that carry out a significant part of their production and financial activities outside the home country (and these are almost all large companies in highly developed countries) - the so-called transnational corporations (TNCs). ).

Compared to the first half of the 20th century, when capital was invested mainly in the extractive industries of the colonies and dependent countries, in the era of scientific and technological revolution, about 75% of foreign direct investment falls on the investments of developed countries in each other's economies, and the overwhelming part in the processing industries.

Most of TNK's overseas production is usually destined for sale in local markets. This kind of "substitution" for the export of goods and services allows one to overcome protectionist barriers and protect oneself from the influence of fluctuations in foreign exchange resources.

The movement of loan capital in the field of foreign economic relations acts in the form of international credit. In the narrow sense of the word international credit- a loan in cash or credit provided by a lender of one country to a borrower from another country on the terms of urgency, repayment and interest.

Under foreign investment understand the investment of capital by foreign investors, other states, foreign banks or companies. There is an international movement of factors of production in the form of foreign investment to create final products abroad. Foreign investments are carried out with the aim of owning property abroad in order to obtain a higher profit than at home. Through the export of capital, close economic ties are formed between countries.

The main reason for attracting investments from abroad is the need for capital and the expansion of the domestic market. When used rationally, they turn into a powerful source of renewal of the production apparatus and economic growth. Investments do not create external debt, but they contribute to an increase in the number of jobs, the inflow of new technologies into the country and the modernization of national production, and accelerate the process of establishing effective foreign economic relations. The investing company can provide technology, talent and markets in exchange for an equity stake in an overseas company. The international movement of capital leads to an increase in total world production through more efficient redistribution and use of factors of production. In the capital exporting country, the average profit increases, but the demand for labor decreases and the income of the labor owners decreases. It is important to note that negative consequences are not excluded for the capital importing country. With uncontrolled attraction of investments, they can lead to a sharp deterioration in the ecological state of a certain territory (the desire of industrial countries to transfer harmful production abroad), to put whole industries under control.

TO direct investment usually include enterprises created or acquired abroad and controlled by a foreign investing company, ᴛ.ᴇ. full control over it is assumed. Private equity investments include overseas equity investments by private companies, reinvested profits and intercompany capital transfers in the form of loans and borrowings.

Portfolio investments(port-folio investments) - capital investments in foreign securities that do not give the investor the right to real control over the investment object. Such investments are predominantly based on private entrepreneurial capital, although governments often purchase foreign securities.

For centuries, trading in securities was almost exclusively an intra-economic phenomenon - the issuer of the security and the investor were located in the same country. Securities were issued by governments, private enterprises, and subscribed by private individuals. They were given as a dowry, left as an inheritance, presented, sold. But they have become an object of attention for foreign investors relatively recently.

Portfolio of securities- is a set of securities of different types and in different quantities, which provides satisfactory for the investor quality characteristics of this set. The list and volume of securities included in the portfolio is called the structure of the portfolio. The criteria for the quality of securities are their yield, liquidity, reliability and level of risk. The yield is the ratio of the amount of dividends paid to the value of the security. Expressed as a percentage. Liquidity - the ability to quickly convert a security into cash without losses for the owner. Reliability means the ability of securities to maintain their market value when the market conditions for loan capital change. Risk is a quantified amount (level of risk) of potential financial losses. Investment risk is a quantified possibility that the return on an investment will be less than the investor's pre-calculated one.

Reasons for overseas portfolio investment... In general, they are close to the reasons for foreign direct investment, with the amendment that as a result of portfolio investments, the investor does not acquire the right to control the enterprise, capital is invested in ĸᴏᴛᴏᴩᴏᴇ. At the same time, the liquidity of portfolio investments, that is, the ability to quickly convert securities into cash, is significantly higher than that of direct investments. The main reason for making portfolio investments is the desire to place capital in the country and in such securities in which it will bring the maximum profit with an acceptable level of risk. In a sense, portfolio investments are viewed as a means of protecting money from inflation and obtaining speculative income. At the same time, neither the industries nor the types of securities in which investments are made are of particular importance if they provide the desired income due to the growth in market value and paid dividends.

Cross-border flows of portfolio investments are explained by the ability to diversify risk. Usually, the higher the profitability of certain securities, the higher the risk associated with their acquisition. It is important to note that international investment is used to reduce the level of risk of portfolio investments. More than 90% of portfolio foreign investments are made between developed countries and are growing at a rate that is significantly ahead of direct investment.

Direct and portfolio investments. - concept and types. Classification and features of the category "Direct and portfolio investments." 2017, 2018.

Direct and portfolio investments- types of investments in the development of an enterprise or company.

Under direct investment it is customary to understand investing in the capital of a corporation to make a profit and obtain the right to participate in the management of its activities. Provide for a long-term relationship between partners, control over the business organization.

Portfolio investments- capital investment in shares of foreign companies without acquiring a controlling stake, etc. cb. The goal is to obtain an increased return on capital through tax incentives, changes in exchange rates, stock quotes, and so on. Portfolio investment is rarely long-term; it often has a spontaneous, unpredictable nature.

The main difference between direct investment and portfolio investment consists in the fact that with direct investment, the company can count on all kinds of support from the investor: financing for the development of the enterprise, assistance in strategic administration, etc. with his work.

As an example of direct investment, we can consider an investor who purchases equipment for the production of pasta in order to produce and sell this product in the future. If we are talking about an investor who buys shares in Gazprom, but does not intend to take part in the management of the enterprise, and expects to receive income in accordance with the number of acquired shares, then this investor is a portfolio investor. It should be noted that direct investment is much more profitable than portfolio investment.

54 Question Stages of portfolio investment

Investment portfolio- a set of real or financial investments. In the narrow sense, it is a collection of securities of different types, different expiration dates and varying degrees of liquidity, owned by one investor and managed as a whole:

First step includes the definition of investment objectives that can provide them. The goals of portfolio investment can be very different: - receiving income; -support of liquidity; -balancing of assets and liabilities; -fulfillment of future obligations; - redistribution of property; -participation in the management of the activities of this or that entity; -saving accumulated funds, etc.

The essence second stage(analysis or valuation of assets) consists in identifying and researching the characteristics of those of them that are most conducive to the achievement of the objectives pursued.

Stage three(portfolio formation) includes the selection of specific assets for investment, as well as the optimal distribution of the invested capital between them in appropriate proportions. Formation of an investment portfolio is based on a number of fundamental principles, the most significant of which are: -correspondence of the type of portfolio to the set investment goals; -correspondence to the acceptable level of risk; -providing controllability, etc.

Fourth stage(selection and implementation of an adequate portfolio management strategy) is closely related to investment objectives. Portfolio strategies used when investing in financial assets can be divided into active, passive and mixed. Active strategies imply the search for undervalued instruments and frequent portfolio restructuring in accordance with changes in market conditions. The implementation of active strategies requires costs associated with the implementation of constant analysis and monitoring of the market, as well as with the conduct of buy / sell transactions during portfolio restructuring. Passive strategies require a minimum of information and, accordingly, low costs. Mixed strategies, as the name suggests, combine elements of active and passive control. In this case, passive strategies are used to manage the "core", or the main part, of the portfolio, and active ones - the rest (usually risky).

The final stage involves periodic assessment of the portfolio performance both in terms of income received and in relation to the associated risk.

For the purpose of investment, direct and portfolio (indirect) investments are distinguished.

Direct investments act as investments in the authorized capital of enterprises (firms, companies) with the aim of establishing direct control and management of the investment object.

They are aimed at expanding the sphere of influence, ensuring future financial interests, and not only at generating income.

Portfolio investments are funds invested in economic assets in order to generate income (in the form of an increase in the market value of investment objects, dividends, interest, and other cash payments) and diversify risks. As a rule, portfolio investments are investments in the acquisition of securities belonging to various issuers and other assets.

Quite often, real and financial investments are considered as direct and portfolio investments, respectively. At the same time, in some cases, direct investment is understood as direct investment in production, and portfolio investment is the purchase of securities, i.e. the classification criterion is in this case the characteristics of the investment object. In our opinion, such an identification is erroneous, since real investments, in addition to investments in physical elements of productive capital, as noted, include investments in other forms of real assets, and financial investments include investments not only in securities, but also in other financial instruments. In addition, it is hardly legitimate to attribute only direct investments to production investments, since part of portfolio investments (investments in securities of industrial enterprises during their initial placement) are also intended to attract investors' funds into production.

In other cases, the confusion of different groups of investments occurs due to the lack of a clear criterion used in their classification. As noted above, the allocation of real and financial investments is carried out depending on the object of investment, while the basis for dividing investments into direct and portfolio investments is based on a qualitatively different criterion - the purpose of investment.

In particular, direct investments, which are investments aimed at establishing direct control and management of the investment object, can be carried out not only in real economic assets, but also in financial instruments. The ability to manage the investment object is achieved through the acquisition of a controlling stake, other forms of controlling participation. Portfolio investments are investments aimed at obtaining current income.

Consequently, real and financial investments, on the one hand, and direct and portfolio investments, on the other, act as different types of investments.

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