This study attempts to set out in detail some of the factors and influeuces
affecting portfolio decisions. In particular it attempts to outline the factors affecting portfolio selection decisions in an investment management organisation. Influences on share selection such as the need for diversification in portfolios, the desire to buy marketable stocks and the
use of sector selection - a technique for selecting shares by their industry
characteristics - as well as a variety of institutional factors are discussed at some length. Specific factors involved in investment analysis, such as intrinsic value analysis, and methods of portfolio evaluations are also considered. With this basis it is then possible to investigate more
fully the value and usefulness of one of the managers decision rules. The technique investigated - sector selection - was on the one hand, felt by the investment managers to be a central and important part of their
portfolio construction techniques contributing significantly to the
performance of their portfolios, whilst on the other hand it was believed by the author, on the basis of preliminary observations, to be of rather less consequence. To resolve this conflict a multi-stage analysis (discussed below) was devised to provide empirical evidence as to the theoretical validity and practical usefulness of the technique
