FTM 102: Investment Theory & Portfolio Management
| Course Code | FTM 102 |
| Course Name | Investment Theory & Portfolio Management |
| Department | Finance |
| Semester Offered | Even (usually Term 2) |
| Tuition Hours | 30 hours |
| Course Level | Intermediate |
| Pre-requisite | - |
| Co-requisite | QMA 102: Probability & Statistics for Finance TFS 102: Data Analysis & Financial Modeling |
| Course Objective | Investing is not about picking stocks. It is about making decisions under uncertainty with incomplete information and real consequences. This course introduces the intellectual backbone of modern investing: risk, return, diversification, market efficiency, and factor-driven thinking. Students will move from naive intuition to structured thinking. Why diversification works. Why most investors underperform. Why markets are hard to beat. And when they are not. The goal is simple: to think like someone responsible for capital. Not someone giving opinions, but someone allocating money with discipline, logic, and accountability. |
| Course Philosophy | This course emphasizes
|
| Course Learning Outcomes | Upon successful completion of this course, students will be able to:
|
| Course Author | Sagar Udasi MSc Statistics and Data Science with Computational Finance from The University of Edinburgh. Contact: sagar.l.udasi@gmail.com |
| Course Organiser | TBD |
| No. | Lecture Title | Concepts Covered | Lecture Objective |
|---|---|---|---|
| 01 | Why Most Investors Lose Money | Active vs passive investing, behavioral traps, market reality | Reset expectations early. Students must understand that investing is not easy before they start managing real capital in the capstone. |
| 02 | What Does “Return” Actually Mean? | Absolute vs relative returns, compounding, CAGR | Build clarity on how performance is measured before they start tracking portfolio outcomes. |
| 03 | Risk Is Not What You Think | Volatility, variance, downside risk, drawdowns | Shift thinking from returns to risk. Critical for avoiding reckless decisions in live portfolios. |
| 04 | The Only Free Lunch in Finance | Diversification, correlation, covariance | Teach why diversification works so students don’t overconcentrate in their capstone portfolio. |
| 05 | Can You Really Beat the Market? | Efficient Market Hypothesis (weak, semi-strong, strong) | Ground students in reality. Helps define whether they are competing against the market or riding it. |
| 06 | Building Your First Portfolio | Asset allocation basics, constraints, objectives | Directly applied to CAPSTONE 102. Students begin structuring their portfolio. |
| 07 | Risk vs Return Tradeoff | Efficient frontier, portfolio optimization intuition | Help students understand tradeoffs instead of chasing maximum returns blindly. |
| 08 | The Math Behind Diversification | Covariance matrices, portfolio variance | Connect statistical thinking from QMA 102 to real portfolio construction. |
| 09 | CAPM: The Simplest Model That Changed Finance | Beta, market risk, expected returns | Introduce a core model used across industry. Students begin estimating expected returns. |
| 10 | Why CAPM Is Both Useful and Wrong | Limitations of CAPM, real-world deviations | Teach critical thinking. Models are tools, not truths. |
| 11 | What Actually Drives Returns | Factor investing (value, momentum, size, quality) | Move beyond CAPM. Students start identifying real drivers of performance. |
| 12 | Smart Beta and Systematic Investing | Factor portfolios, rules-based investing | Show how institutional investors operationalize factors. |
| 13 | Measuring Performance Like a Pro | Sharpe ratio, alpha, beta, information ratio | Essential for capstone reporting and evaluation. |
| 14 | Attribution: Why Did You Make or Lose Money? | Performance attribution, sector vs stock selection | Students learn to explain results, not just report them. |
| 15 | Benchmarking Is Not Optional | Indexes, benchmarks, tracking error | Teach accountability. Every portfolio must be compared against something. |
| 16 | Portfolio Construction in the Real World | Constraints, transaction costs, liquidity | Bridge theory and execution. Helps avoid unrealistic strategies. |
| 17 | When Diversification Fails | Correlation breakdowns, crises behavior | Prepare students for stress scenarios in markets. |
| 18 | Decision-Making Under Uncertainty | Probabilistic thinking, expected value | Reinforce rational thinking in ambiguous situations. |
| 19 | Building Your Investment Philosophy | Personal frameworks, strategy definition | Students formalize their approach before final capstone decisions. |
| 20 | Investment Committee Simulation | Portfolio defense, critique, iteration | Mimics real-world investment committees. Direct preparation for capstone presentations. |
| Component | Weightage |
|---|---|
| Portfolio Construction Assignment (Team-based) | 25% |
| Investment Thesis Reports (2) | 25% |
| Investment Committee Simulation (Oral Defense) | 20% |
| Final Written Examination (2 hours) | 30% |
| Type | Resource | Provider |
|---|---|---|
| Lecture | Investment Management Series | Aswath Damodaran (NYU Stern) |
| Lecture | Portfolio Management Course | Yale SOM (David Swensen archives) |
| Reading | The Little Book of Common Sense Investing | John C. Bogle |
| Reading | Expected Returns | Antti Ilmanen |
| Tool | Portfolio Visualizer | Online Tool |
| Tool | Yahoo Finance + Python (pandas) | Practical Data Analysis |